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Shiamishis, Hellenic Petroleum S.A. – CFO, Basic Finance Director & Govt Director [three]
Thank you very a lot, Grigorios. It’s all the time a pleasure to be speaking to the markets and to you a very good set of results.

As mentioned, when it comes to our performance, we have a quantity of things that affected our working results: The sturdy benchmarks that we skilled; the self-help, as we call it, in terms of fixing the crude combine and taking advantage of cheaper crudes in the Med, which helped our overperformance; and of course, we’ve slightly greater domestic market volumes. The Elefsina refinery started up in the direction of the end of the quarter, so it hasn’t been able to participate as a lot in this process as we would prefer it to be. But for the fourth quarter, we anticipate that to be working correctly. And at the tip of the day, we have now successfully brought ahead a shutdown that was going to happen in 2018. So successfully, you can call it a timing distinction.

In terms of steadiness sheet and money flows, we are still delivering strong money flows with a relatively stable net debt. We’re utilizing the cash flows to enhance the stability sheet and to finance a dividend distribution payment. In the event you recall, at first of the quarter, we distributed about EUR 60 million to the shareholders. And now we’re announcing an interim dividend of EUR zero.15 per share, which is expected to take place in December this year.

By way of our new “enterprise,” now we have the upstream developments with the lease agreement for Block 2 being signed a few days ago. And we even have the DESFA gross sales course of, which has moved on to the — I wouldn’t say the ultimate stage, however the last but one remaining stage. We count on to get monetary offers in December, which signifies that we’re step by step coming to the tip of the process there as properly.

Web page 3, we have now the efficiency in a nutshell, if you’ll. As you may see, the adjusted EBITDA is quite strong at EUR 206 million. The great factor is that all the business models have delivered at the least nearly as good as last yr, marginal differences. And this supports a 9-month adjusted EBITDA number which is, if I recall, the highest that I have seen for the Group for the 9 months. So assuming that we have a good fourth quarter, 2017 shall be even better than 2016, which was already the highest adjusted EBITDA 12 months.

When it comes to financing costs, again we’ve excellent news. We have now a fabric drop within the quarter. That is expected to continue within the fourth quarter, which implies that we’re delivering on the plan to cut back our financing prices significantly. And naturally, that also supports the distribution of dividends on condition that our financing value is cash popping out of operations effectively.

When it comes to capital expenditure, now we have a slight improve within the quarter with the full yr at round EUR 140 million. This is barely larger than final year and our regular run charge. The explanation for that is the acquisition of a plot of land subsequent to the Elefsina refinery, which is, I would say, an necessary piece of property for ensuring that the refinery is able to operate without any issues and consider any additional plans as effectively. And also the shutdown, which took place in 2017 in comparison with 2018. Apart from that, we have no major development CapEx in this quantity. Effectively, we’ve the normal maintenance capital expenditure.

In terms of the trade atmosphere, if we transfer to Web page 6, you may see right here that we’ve had a comparatively stable crude oil worth for the last couple of quarters. However, that has changed. As you realize, crude oil value has gone up considerably, more than 15%, 20%, in the last few weeks. And the euro-greenback alternate rate can be shifting to a stronger euro.

By way of the crude market, we report and we track the Brent-WTI spread. That is one thing which has a macro impact on European refineries other than our own refineries per se. And what’s more related is the Brent-Urals unfold, which is a bit tighter. And in addition, the availability of varied crudes within the Med, which we have now taken benefit of to drive this overperformance compared to the benchmarks.

Which brings us to Page 6 with the benchmarks. We have a system benchmark at around $6 per barrel. And you may see that the primary advantage of this elevated market environment has been coming from the Aspropyrgos refinery, which is the FCC benchmark at $7.1 per barrel, whereas the Elefsina refinery, which the hydrocracking plus the flexicoker, is slightly below $6. Each not most likely — not the best quantity that now we have seen within the last form of 10 years, but undoubtedly the most effective numbers that we have seen in the final 5 years.

By way of the home market surroundings, we have what I might call a flat demand. Should you return to our previous quarter shows, in the primary quarter we reported a three% growth in domestic market demand. The second quarter, we reported a minus three% motion on domestic market. Within the third quarter, we obtained minus 1%. Auto fuels are pretty much at the identical level as final year, with the swap being continued between MOGAS and diesel, minus three% and plus 3%, as you possibly can see on the chart. And what is vital to notice is that the aviation and bunkering demand has continued to rise in comparison with last 12 months. Again, if I refer you to the earlier quarter’s numbers, we had a rise of 26% in the primary quarter and an increase of 19% within the second quarter, which implies that we could have one of many stronger years by way of aviation and bunkering demand for 2017.

On Page 9, we’ve a summary model of the key drivers of the adjusted EBITDA from the EUR 191 million to EUR 206 million. On the left hand of the page, you’ve got the enhance of clearly EBITDA as a result of benchmark margins and the slightly weaker greenback, which takes slightly bit out of the shine of the outcomes. And on the fitting-hand aspect of the page, we have now the efficiency- and operations-pushed variances. The Elefsina shutdown, as we’ve got reported, is successfully moving from 2018 to 2017. So the loss of two months of production there’s captured in this variance. And the good thing about the crude combine which is proven here, that accounts for most of the EUR 30 million of constructive variance, is again one thing which our provide and trading staff have taken — I would not say the complete benefit but a sizable benefit of current market situations. Now, whether or not this lasts for the remaining of the year, early days, however definitely it’s something which has helped the results of the Group.

Moving to Web page 10 in terms of our stability sheet. Our steadiness sheet has been enhancing during the last 2 to three years. The gross debt number, which effectively is a quantity that drives the financing value given that cash are at greatest 0 by way of returns, we now have been able to reduce our gross debt by about 10% from final yr. If you happen to go back to 2015, this is actually much more. It’s about 15% to 20%, which translates into decrease value of financing.

When it comes to an extra benefit is the truth that we are experiencing considerably decrease financing costs than prior to now. We now have the secondary market for our bonds at around three%, give or take 25 basis factors, and our marginal price of financing is coming down.

By way of the maturity profile, we have now successfully rolled over the 2017 maturity, and we’re in the technique of refinancing the 2018 maturity, the financial institution facility, which will likely be completed, if all goes well, in the direction of the top of the 12 months.

Transferring on to Web page 12 on the domestic refining, provide and trading enterprise. The numbers are successfully driven by the occasions that we described earlier. We’ve a third quarter which is healthier than final year on condition that the setting, the crude mix and the very sturdy operations from Aspropyrgos and Thessaloniki have greater than offset the Elefsina upkeep turnaround.

By way of CapEx, as you possibly can see, the 2 items that we talked about earlier, which account for about EUR 60 million, are captured within the refining business unit CapEx. On a run price, it is best to count on that we now have round EUR 60 million to EUR eighty million of maintenance CapEx coming from the refining business. And then you may have to add, depending on the particular 12 months, one other EUR 30 million to EUR forty million, which needed to do with the shutdown — the large shutdown cycles of the refineries.

In terms of our manufacturing, you possibly can see the impact on the third quarter of 2017, Aspropyrgos and Thessaloniki are doing very effectively. Thessaloniki is actually performing at a very, very excessive rate. Really, it is probably the best that we’ve seen for a variety of years. And Aspropyrgos is delivering not only by way of absolute quantity numbers but additionally by way of yield very nicely.

The efficiency of our refineries is mirrored into the sales efficiency on Page 14, whereby we have a slight enhance in the home market, which is up on account of elevated tourists and, after all, some C&I clients. And you have the decrease exports numbers, which successfully makes sense given that our production has been decrease in the quarter as well.

Web page 15 exhibits the time series of benchmarks and overperformance. The message here is that though we had 1 of our key refineries down for 2 months, the overperformance continues to be very robust. Bid — supply and trading lets feedstock price beat the performance of various petroleum products the refineries’ higher yield. For the commercial premia, we’re still able to draw over $10 per barrel as realized margin, which is a very wholesome number.

Petchems, we’ve got pretty much the identical numbers as final yr. We now have a barely weaker euro-based mostly polypropylene benchmark, which effectively has led to a barely decrease adjusted EBITDA, however nonetheless it’s, on a 9-month basis, precisely the identical as final yr.

Shifting on to the Fuels Advertising web page, which is Page 18. A small improve on the quarterly efficiency compared to last 12 months. We have now EUR 27 million compared to EUR 26 million. Clearly not a cloth move, but it is in the appropriate course. This adds to a really sturdy first quarter efficiency on condition that we had a really robust heating gasoil season. And we now have the fourth quarter which to this point, by way of heating gasoil, seems to be to be a gradual begin. Temperatures are nonetheless quite high, which signifies that we’ll should anticipate the tip of the 12 months to see how the fourth quarter will carry out in terms of retail.

On the international subsidiaries, again efficiency is marginally up from final year. The efficiency from all subsidiaries is robust. There’s a lower of primarily wholesale sales quantity in Bulgaria. But apart from that, all corporations are reporting a superb efficiency.

Shifting on to power and fuel, Page 21. We now have Elpedison; Elpedison continues to be affected by the delay in establishing the capability and flexibility mechanism, which was purported to be put in place in April, May this yr. We don’t know whether or not that’s going to be retroactivity here, however clearly, it continues to be something which successfully fails to remunerate a big a part of this business, which is the capacity and the CapEx that has been invested. This is one thing that we’re following intently, and we count on to see some developments in the next few months.

Coming to Page 22 on pure gas, we’ve a very robust efficiency coming from the DEPA Group. That is primarily attributable to elevated sales volumes. DEPA sells on the wholesale degree, so the power producer demand has been stronger. But in addition comes from DESFA, which, given the rise in market sales, has been in a position to report a powerful overabsorption, if you’ll, of its regulated asset base. We anticipate the same efficiency going into the fourth quarter, so DEPA and DESFA particularly are performing fairly well.

The privatization process, as I discussed earlier, is in course of. We have now 2 groups of involved bidders. The due diligence is in process. And as issues stand, we anticipate to get an offering earlier than the end of the year.

That brings us to the end of the presentation of what now we have, and we’re very happy to take any questions you’ll have. Thank you.

Questions and Answers

Operator [1]
(Operator Directions) The first query comes from the line of Patricot, Henri with UBS.

Henri Jerome Dieudonne Marie Patricot, UBS Investment Bank, Analysis Division – Affiliate Director and Fairness Research Analyst [2]

Three questions needed. The primary one on the domestic advertising and marketing. Fairly a strong improve in volumes. Are you able to say how much of that’s driven by the market developments and how a lot of it is driven by positive aspects in market share And then secondly on the refining, you talked about a great performance on the crude procurement aspect within the third quarter. I used to be wondering what you are seeing in the fourth quarter with lower crude differentials. Is it still a comparatively favorable environment for you Or should we count on some compression on the crude differentials for the fourth quarter And then lastly on the interim dividend and customarily the dividend coverage. How should we predict about the overall 2017 dividend Are you looking at some particular payout ratio just at that stage of cash stream technology What is the metric to look at here

Andreas N. Shiamishis, Hellenic Petroleum S.A. – CFO, General Finance Director & Executive Director [three]

Thank you very a lot for the questions, Henri. Let me take the — 2 of the three questions, and Ioannis Psychogios will help us a little bit bit on the fourth quarter crude. Now, on the domestic market, I might say that 80% of the rise is all the way down to market share. It is both market share or the petrol station networks. All are the business and industrial customer base of EKO. So sadly, the domestic market is not growing, as we confirmed earlier, so EKO is successfully gaining market share. On the interim dividend, we anticipate to be reverting again to a dividend payout that we have now seen up to now. I believe that if you use a dividend yield of anything between 5% and 7%, we must be in the correct path. Now on crude combine, Ioannis will try to undertaking and predict what’s going to occur. And then if he will get it proper, then we will all make a lot of money.

Ioannis Psychogios, Hellenic Petroleum S.A. – GM of Group Supply, Refining & Gross sales and Government Director [4]

We can’t make any — every quarter some huge cash (a number of speakers) final quarter. So let’s hope that we’ll keep this performance on the following quarter. So concerning the crude mix, for instance, to begin with, it isn’t procurement of crude solely, it’s the mixture of crude we have now used and operated in the refinery. So having this crude optimized, this mixture of crudes optimized, made us — brought us all these good results. For the following quarter, what we’ve seen up to now’s that, after all, prices are increased. The prices, particularly the prices of the heavy crudes within the East Mediterranean, are costlier in comparison with the earlier quarter. And also, we have seen that, once more, the prices — the steadiness between Brent and Ural is — I mean, this distinction is increasing, and this brings us in a extra — I imply, in a normal — the numbers we see there are the numbers we normally see because the earlier quarter, we had very small distinction between Brent and Urals. Having stated that, we imagine that we could have a superb, I imply, efficiency various petroleum products for the subsequent quarter, and we count on to have all these good outcomes repeated.

Grigorios S. Stergioulis, Hellenic Petroleum S.A. – CEO & Government Director [5]
To be trustworthy, we thought that the previous quarter overperformance that we succeeded is not going to be able to saved for a really, very very long time. But to our large surprise, it is going on. And i can inform you that the first month of the last quarter, I imply, October, it is at nonetheless very high ranges.

Operator [6]
(Operator Directions) The following question comes from the road of Grigoriou, George of Pantelakis Securities.

George Grigoriou, Pantelakis Securities – Analyst [7]
I simply had a question mainly addressed to Andreas. If you may comment on what we should always suppose as a full 12 months estimate for the tax fee given what it was within the third quarter.

Andreas N. Shiamishis, Hellenic Petroleum S.A. – CFO, Common Finance Director & Government Director [8]

For the tax fee, we have successfully an effective price of around 30% provided that 29% is the nominal charge. As you understand, unfortunately, not all expenses are allowed, however — so 30% is the efficient fee. That is for the revenue and loss charge. As issues stand, and I’m saying that with a type of ninety% certainty and accuracy, 2018 won’t have any tax outflows provided that we’re still utilizing tax losses on the big drop of crude oil a couple of years in the past of EUR 600 million, EUR 700 million. So the company has an effective tax shield coming from those losses. It seems like for 2017, all profits will fall in that area. And 2018, we don’t anticipate to have any material money outflows on taxes.

George Grigoriou, Pantelakis Securities – Analyst [9]
Okay. But when I’ve bought my numbers right, within the third quarter, your tax charge was about 25% to 26% on a bunch level.

Andreas N. Shiamishis, Hellenic Petroleum S.A. – CFO, Normal Finance Director & Executive Director [10]

Yes. The reduction comes effectively out of two main causes. If you form of — presumably, you have — it is advisable take into account the DEPA and ELPE pension numbers, which are reported publish tax. So by definition, that’s going to drive your tax charge down. And also, the truth that sure subsidiaries operate in a decrease-tax atmosphere, which is Bulgaria and Cyprus, so they will drive profitability down just a little bit as nicely. Aside from that, there isn’t a cause to expect a special tax fee. So in case you alter for that, so you’ll get the 29%.

Operator [eleven]
The following query comes from the line of Mr. Katsenos, Nikos with Alpha Finance Funding Companies.

Nikos Katsenos, Alpha Finance Funding Services S.A. Research Division – Senior Fairness Analyst [12]

One query for me, please. May you please give us an indication of what part of the discount we’ve seen the payables number within the third quarter compared with the previous quarter comes from the scheduled repayments in direction of Iran, if any

Andreas N. Shiamishis, Hellenic Petroleum S.A. – CFO, Basic Finance Director & Government Director [13]

As you recognize, we are not allowed to disclose numbers on the Iranian transaction. What I can say is that clearly, there is a repayment coming in the third quarter to old payables. The thing — the info that we are able to share with you is that by the top of the 12 months, something which has to do with previous payables shall be less than three% or four% of our capital employed. So successfully, the message is that this challenge is regularly being moved out of the radar display.

Operator [14]
The subsequent query comes from the line of Mr. Gkonis, Argyrios with various petroleum products Axia Ventures.

Argyrios Gkonis, Axia Ventures Group Ltd, Analysis Division – Analyst [15]
Two questions from my side. To begin with, if you would share any additional insight on the upcoming IMO Regulation for delivery gas oil, you probably have any indications or any preliminary discussions for how this could play out. And secondly, if you may give us what’s the newest standing of the sale of the state’s stake in the corporate. Where is that this — the understanding at this point

Ioannis Psychogios, Hellenic Petroleum S.A. – GM of Group Provide, Refining & Gross sales and Executive Director [sixteen]

For the IMO Regulation, what we know as much as now is this shall be implemented in 2020, and there are — I imply, there aren’t any different indications, not any indications, that this won’t be in place and these will likely be not valid in 1st of January of 2020. As far as Hellenic Petroleum refineries, we now have already been prepared, and we all know that in accordance with the best of our projections, there can be no — not any, for instance, reductions in our margins because of this IMO projection. On the contrary, we count on that we may have small advantages, but advantages because of this implementation. We have some small, for instance, investments to do there, and we will probably be ready to make these in 2020, not for the IMO Laws but mainly for the introduction of bioethanol in Greece and in the area, which will likely be valid from 2020 additionally.

Grigorios S. Stergioulis, Hellenic Petroleum S.A. – CEO & Govt Director [17]

George Alexopoulos, Hellenic Petroleum S.A. – Normal Manager, Strategic Planning & Joint Ventures [18]

Now, regarding the sale of the 35.5% stake of the privatization fund in the company, I do not think there’s a lot we can say. We know in addition to you already know that it’s a part of the privatization program which is presently being carried out. However as to the details and the schedule, I believe it’s better to ask them directly.

Operator [19]
(Operator Directions) Excuse me, there aren’t any extra questions registered right now. You may now proceed together with your closing statements. Thank you.

Grigorios S. Stergioulis, Hellenic Petroleum S.A. – CEO & Executive Director [20]
Okay. Thanks all for the attention. I believe this session was the most effective we ever had, I imply, on questions-and-solutions. And we hope we satisfied your needs regarding the results and the solutions to the questions. We predict that after again, the administration crew and the company altogether managed to perform passable and fulfill the expectations from the shareholders and the society altogether. The corporate is stable. And the every part — if everything goes as planned, we predict that 2017 will likely be a world file for our firm and ready for even higher results. Thanks all, and good evening.

Operator [21]

Ladies and gentlemen, the convention is now over. You might disconnect your phone. Thank you for calling.

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