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ROMPETROL RAFINARE S.A. - RRC

2017 H1 financial results

Release Date: 8/11/2017 6:36:18 PM

IRIS Code: AC45E

August 11th, 2016 Contact: Roxana Clinciu

Tel: 021/2723625

Rompetrol Rafinare invested USD 27 million at a constant level of business in H1 2017

Consolidated

Q2 2017

Q2 2016

%

H1 2017

H1 2016

%

Gross turnover

USD

896,964,832

987,817,768

-9%

1,718,414,575

1,702,624,994

1%

EBITDA

USD

23,015,714

55,221,080

-58%

57,538,863

90,198,125

-36%

Net result

USD

(6,966,587)

21,991,076

N/A

(7,030,136)

22,031,313

N/A

Note: Consolidated financial results of Rompetrol Rafinare include the results of Rompetrol Rafinare S.A. and those of subsidiaries Rompetrol Quality Control S.R.L., Rom Oil S.A., Rompetrol Downstream S.R.L., Rompetrol Logistics S.R.L. Rompetrol Gas S.R.L and Rompetrol Petrochemicals S.R.L.

Rompetrol Rafinare, a KMG International group member company, registered a gross consolidated turnover worth USD 1.7 billion in the first half of 2017, a level comparable to that from the same period in 2016. EBITDA operational profit amounted to USD 57.5 million, down by 36% compared to the same period in 2016, in the context of a 17% drop in refining margins in H1 2017 compared to H1 2016. The financial results were also influenced by the scheduled stop of production units in May 2017.

The evolution of the net consolidated result registered in the first half of 2017, of minus 7 million dollars, was also influenced by the drop of refining margins, the steepest of which by 52% being registered in the second quarter of 2017.

According to the individual financial reports expressed in RON, Rompetrol Rafinare registered RON 171 million net profit, up by 20% over the same period last year, when the individual net profit amounted to RON 143 million. A positive influence over the net result registered in the first half of this year was the difference in foreign exchange rate. Moreover, the turnover according to the company’s individual financial reports rose by 14% in the first half of 2017, to RON 4.7 billion, from RON 4.1 billion in the first half of 2016.

Rompetrol Rafinare has carried out investments worth USD 27.5 million in the first half of 2017, both in development projects for certain production units at the Petromidia refinery, and for maintenance works at industrial installations for refining activities, storage and logistics.

Rompetrol Rafinare exported a total quantity of products of over 1.1 million tons in the first half of 2017, a similar level compared to the same period of 2016. The company is the largest exporter of oil products in Romania and the third largest exporter in the country.

Through its operations, Rompetrol Rafinare continued to be an important contributor to the Romania’s state budget, paying over USD 266 million in the second quarter of 2016 and over USD 520 million in the first half of 2017. KMG International has paid since 2007, over USD 13 billion to Romania’s state budget.

The majority shareholder of Rompetrol Rafinare is KMG International group, the Romanian state holding 44.6959% of the shares. Rompetrol Rafinare’s shares automatically reflect upon the companies that the society directly or indirectly controls. Rompetrol Rafinare operates the Petromidia refinery, the Vega refinery, and the petrochemical unit, Rompetrol Downstream operates the Group’s petrol stations network, and Rom Oil the storage capacities network.

Accounting for over 40% of Romania’s refining capacity and over 30% of the regional fuel consumption, Petromidia is the most modern refinery in the country, while total investments carried out by KMG International and KazMunayGas for this platform amount to over USD 1.4 billion.

Refining segment

Financial

Q2 2017

Q2 2016

%

H1 2017

H1 2016

%

Gross turnover

USD

715,911,958

815,890,922

-3%

1,413,931,408

1,392,259,088

2%

EBITDA

USD

15,207,318

37,357,661

-59%

42,246,205

58,042,466

-27%

Net result

USD

(15,841,722)

19,903,637

N/A

(17,210,246)

9,492,502

N/A

Operational

Processed feedstock at the Petromidia refinery

kt

1,222

1,495

-18%

2,422

2,792

-13%

Processed feedstock at the Vega refinery

Kt

91

105

-13%

152

172

-11%

Domestic fuel sales

kt

486

530

-8%

950

906

5%

Fuel exports

kt

461

585

-21%

859

1,143

-25%

Note: The refining sector includes the results of Rompetrol Rafinare SA which operates the Petromidia and Vega refineries.

On the refining segment, the company has carried out a gross turnover worth USD 1.4 billion in the first half of 2017, up by 2% over the same period of 2016. EBITDA amounted to USD 42 million in the first half of 2017. Financial indicators such as net result and EBITDA, which registered a downward trend in the first half of 2017, were influenced by the volatility of international oil products prices.

In the first half of 2017, the total quantity of processed feedstock at the Petromidia refinery amounted to 2.4 million tons tone, down by 13% compared to the same period last year, when 2.7 million tons were processed, the refinery carrying out the works provisioned in the scheduled stop from May 2017. The refinery’s capacity utilization rate in H1, 2017, was 70%.

As for the Vega refinery, the total quantity of processed feedstock amounted to 152.017 thousand tons in the first half, while its refining capacity utilization rate was 92% in the same period.

In May 2017, the production activities of the two refineries – Petromidia Navodari and Vega Ploiesti were stopped for carrying out the scheduled technological works established since November last year.

The works were coordinated by Rominserv, the general contractor of KMG International Group, and targeted the optimization and improvement of production flows in line with the new processing capacity of the Petromidia refinery, as well as carrying out certain preventive maintenance works for increasing the safety level of operating the installations and the level of environmental protection.

The two production units of Rompetrol Rafinare ensured the supply of oil products to its clients in this period from stockpiles created previous to the refineries’ stop.

Petrochemical segment

Financial

Trim II 2017

Trim II 2016

%

Sem I 2017

Sem I 2016

%

Gross turnover

USD

39.373.835

40.638.281

-3%

79.984.194

91.069.411

-12%

EBITDA

USD

(3.044.293)

3.829.066

N/A

(3.489.295)

7.045.456

N/A

Net result

USD

(1.921.766)

(2.190.631)

-12%

(5.502.836)

992.488

N/A

Operational

Processed propylene

kt

26

32

-18%

60

65

-8%

Processed ethylene

kt

16

15

9%

28

31

-12%

Total sales

Kt

38

43

-10%

83

98

-15%

Note: The petrochemical segment entails the petrochemical activity of Rompetrol Rafinare as well as the activity of Rompetrol Petrochemicals SRL

Starting with 1 January 2014, the petrochemical activity has been taken over by Rompetrol Rafinare SA., being completely integrated on the propylene, utilities and logistics flow.

Through the petrochemical segment, the company is the only propylene producer in Romania, succeeding constantly to increase its market share also for the secondary product categories.

In the first semester of 2017, the company has produced 64,690 thousand tons of poliymers, 14% less compared to the similar period of last year, when 75,538 thousand tons were produced, the difference resulting as a consequence of the necessary stops made for the maintenance works related to production installations.

The dynamic development strategy ensures a competitive position for the company on the internal and regional market, in the Black Sea and Mediterranean area, in Central and Eastern Europe.

Distribution segment

Financial

Trim II 2017

Trim II 2016

%

Sem I 2017

Sem I 2016

%

Gross turnover

USD

551.419.259

606.170.506

-9%

1.052.015.776

1.033.754.848

2%

EBITDA

USD

11.309.598

14.610.986

-23%

19.174.620

26.521.498

-28%

Net result

USD

12.536.755

6.356.360

97%

15.648.251

15.532.992

1%

Operational

Fuel quantities - retail

kt

173

158

10%

319

294

9%

Fuel quantities - en-gros

kt

282

330

-15%

539

556

-3%

Sold GPL quantities

Kt

81

78

4%

171

145

18%

Nota: The distribution segment includes results of subsidiaries Rom Oil, Rompetrol Downstream, Rompetrol Quality Control, Rompetrol Logistics and Rompetrol Gas

The consolidated gross turnover for the distribution segment for the first semester of 2017 was over 1 billion USD, by 2% higher compared to last year’s similar period, while the net result has been preserved to a level similar to that of the first semester in 2016.

Fuel sales for the retail segment grew by 9% in the first semester of 2017, compared to the same period in 2016, while the total GPL quantity sold grew by 18% in the first semester of 2017, compared to the same period of 2016.

In the second trimester of 2017, compared to the similar period of 2016, Platts quotations (FOB Med Italy-mean), expressed in the reference currency, USD, were, on average, 7% higher for benzine and 10% higher for diesel. The 4% depreciation of the national currency as compared with the USD has determined that the effective decrease, in the national currency, of the two quotations should be at around 11% for benzine and 15% for diesel.

Starting with January 1st 2017, VAT dropped by one percentage point, from 20% to 19%, while fuel excises dropped by 70 eurocents/1000 liters, drops fully integrated in the prices paid by clients at the pump.

At the end of June 2017, the distribution segment of Rompetrol Downstream entailed 789 sales locations, including its network of petrol stations, partner stations, mobile stations: express, CUVE and RBI.

The retail activities of KMG International are conducted in over 1.000 distribution locations for fuels owned and operated in countries like Romania, Georgia, Bulgaria, Moldova.

* Consolidated financial situations of Rompetrol Rafinare include results of Rompetrol Rafinare S.A. and those of subsidiaries Rompetrol Quality Control S.R.L., Rom Oil S.A., Rompetrol Downstream S.R.L., Rompetrol Logistics S.R.L. Rompetrol Gas S.R.L si Rompetrol Petrochemicals S.R.L.

** Results presented are not audited and consolidated, and the reporting was conducted according to IFRS requirements.

Communication and Public Relations Department

KMG International



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