Second Quarter and First Half 2020 results

30th July 2020

AGENDA

  • Highlights
  • Segment Review
  • Outlook
  • Saras Roadmap to Energy Transition
  • Financials
  • Additional Information

SARAS - Second Quarter and First Half 2020 results

2

Important Notice

NON-GAAP MEASURE

ALTERNATIVE PERFORMANCE INDICATORS

In 2019, the Saras Group continued to improve the methodologies used to measure its operating performance and financial results, which includes both GAAP and non-GAAP indicators. In this respect, with effect from Q4/19, the Group decided to update its accounting policy for the classification of derivative instruments in the reported results, classifying the realised and unrealised gains/losses on commodity and CO2 hedging derivatives within the Reported EBITDA, consistently with the entry of the purchase and sale of crude oil and products, against which they are realized and directly related, despite the recognition of the current value of the same as a counterpart of the income statement. In addition to the improvement objective mentioned above, this decision also stemmed from the options offered by IFRS 9, which recently became applicable.

In order to give a representation of the Group's operating performance that best reflects the most recent market dynamics, in line with the consolidated practice of the oil sector, the results at operating level and at the level of Comparable Net Result, non-accounting measures elaborated in this management report, are shown by evaluating the inventories on the basis of the FIFO method, however, excluding unrealized gains and losses on inventories deriving from scenario changes calculated by evaluating opening inventories (including the related derivatives) at the same unit values of closing inventories (when quantities rise in the period), and closing inventories at the same unit values of opening inventories (when quantities decrease in the period). Non-recurring items in terms of nature, materiality and frequency have been excluded from both the operating profit and the comparable net profit. The results thus calculated, which are referred to as "comparable", are not indicators defined by the International Financial Reporting Standards (IAS/IFRS) and are unaudited.

DISCLAIMER

Certain statements contained in this presentation are based on the belief of the Company, as well as factual assumptions made by any information available to the Company. In particular, forward-looking statements concerning the Company's future results of operations, financial condition, business strategies, plans and objectives, are forecasts and quantitative targets that involve known and unknown risks, uncertainties and other important factors that could cause the actual results and condition of the Company to differ materially from that expressed by such statements. This presentation has been prepared solely by the company.

SARAS - Second Quarter and First Half 2020 results

3

H1/20 & Q2/20 Highlights

EUR million

H1/20

H1/19

Q2/20

Q2/19

Reported EBITDA

(114.4)

138.1

(22.4)

89.2

Reported Net Result

(180.7)

24.0

(67.6)

28.2

Comparable EBITDA

71.7

108.8

15.0

55.1

Comparable Net Result

(41.5)

2.5

(41.1)

4.5

EUR million

Jun 30th 2020

Mar 31st 2020

Dec 31st 2019

Net Financial Position ante IFRS 16

(337)

(223)

79

Net Financial Position post IFRS 16

(382)

(271)

30

Positive Group comparable EBITDA at EUR 71.7M in H1/20 and at EUR 15 in Q2/20: positive results of Refining and Marketing in Q2 partially offset the very weak market. Reported Group Results burned by volatility and downturn in oil prices.

Sound performances in Refining supply and trading activities allowed to reach a premium in the high range and above the guidance for FY2020:

  • Q2/20 Refining premium positive at +4,5 $/bl, with EMC negative at -0,7 $/bl (Saras' margin at +3,8$/bl)
  • H1/20 Refining premium positive at +3,5 $/bl, with EMC at 0,3$/bl (Saras' margin at +3,8$/bl)

Marketing performed well in a challenging market with higher unit wholesale margins in Italy weighting positively on negative results

Net Financial Position (ante IFRS 16) as of June 30th, 2020 negative at EUR -337 M, from a Net Debt of EUR -224 M as at March 31st 2020 due to the

negative impact of prices dynamics on inventories and other capital items. Planned turnaround activities completed in H1/20 notwithstanding Covid 19 emergency for an amount of EUR 186M.

SARAS - Second Quarter and First Half 2020 results

4

Historical Crack Spreads Ratios to Brent and crude differentials

Ratios of Product Cracks FOB Med to Brent Dated

90

130

60

80

(%)

70

115

50

70

Cracks CIF Med / Brent Dated

50

100

40

Brent Dated ($/bl)

60

30

85

30

50

70

20

10

55

10

40

-10

40

0

30

-30

25

-10

20

-20

10

-50

10

Mar-19

May-19

Mar-20

May-20

Apr-14Jul-14Oct-14Jan-15Apr-15Jul-15Oct-15Jan-16Apr-16Jul-16Oct-16

Jan-17Apr-17Jul-17Oct-17Jan-18Apr-18Jul-18Oct-18Jan-19Apr-19Jul-19Oct-19Jan-20Apr-20

Jan-19

Jul-19

Sep-19

Nov-19

Jan-20

Jul-20

Jan-14

Jul-20

% Crack ULSD FOB Med / Brent Dated

% Crack UNL FOB Med / Brent Dated

% Crack LSFO FOB Med / Brent Dated

Brent Dated Platts (dx)

Crudes premium / discount vs Brent

1.20

1.10

1.00

dtd

0.90

vs Brent

0.80

0.70

Ratio

0.60

0.50

0.40

May-14

May-15

May-16

May-17

Sep-17

May-18

May-19

May-20

Jan-14

Sep-14

Jan-15

Sep-15

Jan-16

Sep-16

Jan-17

Jan-18

Sep-18

Jan-19

Sep-19

Jan-20

Azeri Light / Brent dtd

Ural RCMB / Brent dtd

Bashra Light /Brent dtd

Arabian Heavy / Brent dtd

1.20

1.10

1.00

0.90

0.80

0.70

0.60

0.50

0.40

Apr-19

Oct-19

Apr-20

Jan-19

Jul-19

Jan-20

Jul-20

Data updated at 1st July 2020

SARAS - Second Quarter and First Half 2020 results

5

Financials: Refining and Power Generation Margins

11

9

7

5

3

1

-1

$/bl

8.9

8.1

8.1

7.5

2.5

7.2

5.8

6.4

6.5

3.8

3.0

3.8

2.3

6.4

2.5

2.7

4.5

3.4

4.9

4.3

4.3

3.0

3.9

3.8

2.0

2.4

1.3

1.1

1.1

0.2

0.0

-0.7

2018

2019

Q1/19

Q2/19

Q3/19

Q4/19

Q1/20

Q2/20

Refinery Margin

IGCC margin

EMC Benchmark

Refinery margins: (comparable Refining EBITDA + Fixed Costs) / Refinery Crude Runs in the period

IGCC margin: (Power Gen. EBITDA + Fixed Costs) / Refinery Crude Runs in the period

EMC benchmark: margin calculated by EMC (Energy Market Consultants) based on a crude slate made of 50% Urals and 50% Brent

(*) The refining margins of 2019 have been recalculated on the basis of the new method of determining reported and comparable results introduced in Q4/19. 2018 figures have not been restated.

SARAS - Second Quarter and First Half 2020 results

6

Segment Review

SARAS - Second Quarter and First Half 2020 results

7

Segments Review: Refining

Comparable EBITDA (*)

Q2/20

Sound supply & trading performance partially offset the weak scenario, with a comparable

150

EBITDA at EUR -9.9M (vs EUR -4.8M in Q2/19)

124,3

130

EUR M

EMC margin benchmark negative in Q2/20 and equal to -0,7$/bl

110

Saras achieved a high premium on the EMC, equal to +4,5$/bl, mainly due to good supply and

90

78,4

trading optimization which exploited opportunities from low crudes prices, contango arbitrages on oil

products, and hedging on diesel crack

70

Runs lower at 2.3 Mbl (-36% compared to Q2/19), due to the planned turnaround maintenance from

50

40,9

Q1/20 on T1 and FCC

19,5

30

10,0

FCC kept offline until early July due to lack of gasoline demand

10

H1/20

-10

-4,8

-9,9

-30

Positive Comparable EBITDA at EUR 9.6M (vs EUR 5.1M in H1/19)

Q1/19

Q2/19

Q3/19

Q4/19

FY/19

Q1/20

Q2/20

Low EMC benchmark equal to 0,3$/bl

Comparable EBIT (*)

Saras premium on the EMC at +3,5$/bl

55

44,8

Refinery has operated without interruption, major maintenance started as planned in Q1/20, and

continued thanks to innovative emergency protocols. Distancing rules extended the length of the

EUR M

turnaround, but no cases of Covid and no injuries were reported

30

Very complex turnaround, involving extraordinary technical accomplishments

5

3,1

Less expensive maintenance plan compared to the one which characterized H1/19

Maintenance planned for H2/20 and 2021 has been anticipated to Q2/20 and Q3/20 to take

-20

-10,2

-13,9

advantage of expected improved market conditions

-20,6

-45

-37,4

EUR million

Q2/20

Q2/19

H1/20

H1/19

-44,7

Comparable EBITDA

(9.9)

(4.8)

9.6

5.1

-70

Q2/19

Q3/18

Q4/19

FY/19

Q1/20

Q2/20

Comparable EBIT

(44.7)

(37.4)

(58.6)

(58.1)

Q1/19

SARAS - Second Quarter and First Half 2020 results

8

Segments Review: Refining - Crude Oil Slate and Production

REFINERY RUNS

Q2/20

H1/19

H1/20

Crude oil

K tons

2,293

6,225

5,431

Complementary feedstock

K tons

211

551

443

CRUDE OIL SLATE

Q2/20

H1/19

H1/20

Light extra sweet

5%

38%

18%

Light sweet

20%

29%

15%

Medium sweet/extra sweet

2%

1%

2%

Medium sour

41%

42%

38%

Heavy sour/sweet

31%

15%

27%

Average crude gravity

°API

32.7

34.6

33.0

PRODUCTION (From crude runs and feedstock)

Q2/20

H1/19

H1/20

LPG

k tons

32

162

76

Yield

1.3%

2.4%

1.3%

Naphtha + gasoline

k tons

517

1,924

1,371

yield

20.6%

28.4%

23.3%

Middle distillates

k tons

1,178

3,440

2,914

yield

47.0%

50.8%

49.6%

Fuel oil & others

k tons

425

298

655

Yield

17.0%

4,4%

11.2%

TAR

k tons

229

506

546

yield

9.1%

7.5%

9.3%

Balance to 100% are Consumption & Losses

Crude runs down vs H1/19 due to the impact in H1/20 (-13%) of planned turnaround of key units extended due to Covid emergency

Increase in heavy crudes mix with reduction in light sweets, due to the set-up of maintenance plan set up for the FCC in H1/20 and to commercial choices attributable to the low margins of gasoline in the period

lower gasoline due to maintenance on

FCC unit

Higher fuel oil and TAR yield mainly due to the maintenance activity carried out in the period affected T1 and FCC plant

SARAS - Second Quarter and First Half 2020 results

9

Refining - Fixed & Variable costs

Q2/20

H1/19

H1/20

Refinery RUNS

Million barrels

16.7

45.5

39.6

Exchange rate

EUR/USD

1.101

1.130

1.101

Fixed costs

EUR million

68

124

129

$/bl

4.5

3.1

3.6

Variable costs

EUR million

26

89

67

$/bl

1.7

1.9

2.2

SARAS - Second Quarter and First Half 2020 results

10

Segments Review: Marketing

Comparable EBITDA

Q2/20

25

EUR M

22,1

21

Marketing performed well in a challenging market with comparable EBITDA

17

at EUR +8 M (vs. EUR 7.5M in Q2/19):

13

Demand down by approx. 34% (April-June) in Italy and 24% (April-May) in Spain

9

7,5

8,5

8,0

Group sales volumes lower with Italy down 21% and Spain 37% (partly also due to

4,5

4,6

the deconsolidation of the retail station business in Q3/19)

5

1,6

Higher unit wholesale margins in Italy weigh positively on negative results

1

Lower fixed costs (also due to the deconsolidation of the Spanish retail station

-3

Q1/19

Q2/19

Q3/19

Q4/19

FY/19

Q1/20

Q2/20

business)

Lower variable costs

Comparable EBIT

22

EUR M

19,1

20

18

16

14

12

10

7,7

7,4

8

6,7

6

3,8

3,9

4

2 0,9

0

Q1/19

Q2/19

Q3/19

Q4/19

FY/19

Q1/20

Q2/20

H1/20

Marketing comparable EBITDA was EUR 12.6 M (vs EUR 9.2 M in H1/19), thanks to the better margins achieved on the wholesale in Italy and lower fixed and variable costs.

EUR million

Q2/20

Q2/19

H1/20

H1/19

Comparable EBITDA

8.0

7.5

12.6

9.2

Comparable EBIT

7.4

6.7

11.3

7.6

SARAS - Second Quarter and First Half 2020 results

11

Segments Review: Power Generation

Comparable EBITDA

Q2/20

160

151,8

EUR M

Comparable EBITDA at EUR 16.4M (vs. EUR 48.8M in Q2/19) mainly due to

140

the lower contribution of the linearization on revenues (non-monetary effect)

120

and to the less favorable scenario:

100

Less favorable scenario: CIP6/92 tariff -20% YoY, affected by lower gas prices

80

and only partially offset by a reduction in the cost of the TAR, decreased by

14%, while hydrogen costs remained stable

60

48,8

37,0

37,3

Volumes produced down by 9% YoY for not planned maintenance

40

28,7

30,3

16,4

20

Lower contribution of linearization effect

00

Q1/19

Q2/19

Q3/19

Q4/19

FY/19

Q1/20

Q2/20

H1/20

Comparable EBIT

Comparable EBITDA was EUR 46.7 million (vs Eur 85.8 M in H1/19), with

120

EUR M

change mainly due to the lower contribution of the linearization on revenues

100

96,9

(with a non-monetary effect) and to the scenario less favorable than in the

same period of the previous year. Volumes produced up by 6% YoY.

80

60

EUR million

Q2/20

Q2/19

H1/20

H1/19

40

23,7

35,7

Comparable EBITDA

16.4

48.8

46.7

85.8

23,5

Comparable EBIT

2.7

35.7

19.2

59.4

14,0

16,5

20

2,7

0

Q1/19

Q2/19

Q3/19

Q4/19

FY/19

Q1/20

Q2/20

SARAS - Second Quarter and First Half 2020 results

12

Power Generation - Fixed & Variable costs (IT GAAP)

Q2/20

H1/19

H1/20

Refinery RUNS

Million barrels

16.7

45.5

39.6

Power production

GWh

801

1,870

1,986

Exchange rate

EUR/USD

1.101

1.130

1.101

Fixed costs

EUR million

24

58

46

$/bl

1.6

1.4

1.3

EUR/MWh

30

31

23

Variable costs

EUR million

10

35

24

$/bl

0.7

0.9

0.7

EUR/MWh

12.5

12.1

18.7

SARAS - Second Quarter and First Half 2020 results

13

Segments Review: Wind Power

Q2/20

Comparable EBITDA

Comparable EBITDA at EUR 0.9 M (vs. EUR 2.5 M in Q2/19):

12

EUR M

10,0

Volumes increased by 3% despite unfavorable wind conditions thanks to the

10

entering into operation of additional 30MW capacity ("Maistu" project, equal to

8

approx. 12GWh)

6

The Power Tariff decline by 56%, or by 2.5 EURcent/kWh compared to the 2Q/19

4

3,6

2,5

3,2

The Incentive Tariff increased by 0.7 Eurocent/kWh compared to Q1/19

2,4

2

0,7

0,9

Power production in the quarter equal to 45 GWh

0

H1/20

Q1/19

Q2/19 Q3/19 Q4/19

FY/19

Q1/20 Q2/20

Comparable EBITDA at EUR 3.3 M (vs. EUR 6.1 M in H1/19):

Comparable EBIT

Volumes increased by 8% despite unfavorable wind conditions thanks to the

5

4,6

entering into operation of additional 30MW capacity ("Maistu" project, equal

EUR M

to approx. 12GWh)

3

2,3

The Power Tariff decline by 41%, or by 1.9 EURcent/kWh compared to H1/19

The Incentive Tariff increased by 0.7 Eurocent/kWh compared to H1/19

1,5

1,3

Power production in the quarter equal to 119 GWh

0,8

1

-0,8

EUR million0,8

Q2/20

Q2/19

H1/20

H1/19

Comparable EBITDA

0,9

2.5

3,3

6.1

-1

-0,5

Comparable EBIT

(0,8)

1.3

0,0

3.6

Q1/19

Q2/19

Q3/19

Q4/19

FY/19

Q1/20

Q2/20

SARAS - Second Quarter and First Half 2020 results

14

Outlook

SARAS - Second Quarter and First Half 2020 results

15

Global demand (Source: IEA «Oil Market Outlook», July 2020)

  • IEA expects global oil demand to raise within the range of the past 5 years towards the end of the 3Q/20 and beginning of the 4Q/20
  • Possible new pandemic waves expected to have minor effects on oil consumption: for the time being, all the new outbreaks have been managed with more limited interventions and with limitations to mobility on a local scale. If this were also the case in the future, the recovery of demand could continue without excessive disturbances.
  • Among the products, the one in greatest difficulty continues to be the air jet - the only positive starting point (with an uncertain outcome) are the new "all you can fly" offers launched by Asian airlines, to stimulate travelers to resume flying. If these initiatives, which are currently limited, prove successful, they could also extend to Europe and America, with significant upside for jet consumption.

SARAS - Second Quarter and First Half 2020 results

Global Mobility Indices (Source: IEA «Oil Market Outlook», July 2020)

Transport fuel demand is strictly correlated to mobility.

  • Data up to 3 July indicate that mobility is back to its pre-Covid-19 level in most of Europe
  • Most non-OECD regions lag behind in mobility recovery
  • The recovery in Latin America is particularly fraught, as the outbreak of the virus makes the re-opening of several countries difficult

SARAS - Second Quarter and First Half 2020 results

EU mobility and gasoline consumption (Source: IEA «Oil Market

Outlook», July 2020)

  • In Germany, the impact of lockdowns were relatively mild, and mobility appears to have almost fully recovered. In France and Italy mobility is only back to pre- Covid-19 levels, implying a more than 20% decline in gasoline demand compared to normal levels.
  • While mobility data for the US as a whole continues to recover, regional data show an inflexion in the mobility of states badly hit by the resurgence of Covid-19 (Texas, Arizona, Florida, and California).

SARAS - Second Quarter and First Half 2020 results

EU market indicators: Diesel stocks draw as imports dry up (WoodMacKenzie)

  • Recent increase in demand for ULSD in Europe was met from draws in storage (ARA) hub, rather than increased refinery runs (Genscape's European waterborne report).
  • Imports into Europe from the Baltic region and the Middle East have slumped, tightening the European supply, and further incentivizing inventory draws, as weak refining margins did not support materially higher crude runs.

SARAS - Second Quarter and First Half 2020 results

Outlook for 2020

Refining:

Scenario still affected by uncertainty, with the first signs of recovery in terms of oil prices dynamic - initially expected by market specialists in the second half of the year - now projected between the second half of 2020 and the first quarter of 2021

Relevant maintenance planned for the year completed in H1/20, with full capacity available in the H2/20 to take advantage from the expected recovery in demand

and partially reverse profitability and financial penalizations underwent in the first part of the year

Guidance of delivering an average premium above the benchmark of 2,5÷3,0 $/bl (net of maintenance) confirmed on the Full Year

Power: Standard maintenance activity planned in 2020. Power production expected in line to 2019 level. CIP 6 tariff affected by lower gas prices

Wind: Reblading project of the Ulassai plant is underway, with a consequent increase in production for the same installed capacity. The works, which suffered some delays in the first half of the year, will be carried out in three parts and will be completed instead of the third quarter of 2020 by the first quarter of 2021. In the new set-up, production is expected to be up to 300 GWh/year

Net Financial Position: expected to remain stable with potential areas for improvement in the second half of the year as a function of the recovery of demand and the level of prices.

Q1/20E

Q2/20E

Q3/20E

Q4/20E

2020E

REFINERY

Crude runs

Tons (M)

3.1

2.3

3.0

÷ 3.2

3.5

÷ 3.7

11.9

÷ 12.3

Barrels (M)

22.9

16.7

22.0

÷ 23.0

25.0

÷ 26.0

86

÷ 89

IGCC

Power production

MWh (M)

1.19

0.8

1.05

÷ 1.15

0.90

÷ 1.00

3.90

÷ 4.14

SARAS - Second Quarter and First Half 2020 results

20

Saras roadmap for the Energy Transition

Green Deal, PNIEC and Saras Roadmap

With the Green Deal Europe takes a leading role in the energy transition, and it establishes the main areas of intervention towards «net zero» emission target by 2050:

  • Extend ETS (Emission Trading Scheme) to various sectors (Industry, Transports, Buildings, etc.)
  • Develop Renewable Energy production
  • Implement Energy Efficiency programmes
  • Support Innovative Technologies for the circular economy and environmental protection

Saras Roadmap is

fully aligned to PNIEC & EU Green Deal

Moreover, Saras is preparing all disclosures required for 2020 CDP (Carbon Disclosure Project)*

In line with the EU Green Deal, the Italian PNIEC (National Integrated Plan for Energy and Climate) sets the national mid/long term sustainable strategy:

  1. Carbon Phase-outfor energy production by 2025
  2. Grow Renewable production to 32% of total energy consumption by 2030 (focus on Revamping & Repowering of existing plants)
  3. 14% of biofuels in transport fuels (both diesel & gasoline); EV incentives
  4. Safeguard of Italian «residual» refining industry to reduce dependency on imports of fuels
  5. Support for energy efficiency
  • CDP is a system to report and manage climate related risks, and it is an international benchmark on corporate climate sustainability, highly regarded by a growing number of institutional investors. CDP disclosure helps companies communicate their climate related

strategies and policies, and it also provides a methodology to structure and compare with other players within the same sector

22

Renewable Energy Projects

  • Saras industrial plan 2020-23 includes sizeable development of renewable energy production, with the aim to grow installed capacity by further 400MW vs. current baseline
  • Saras will leverage technical and operational skills acquired in over 10 years of management and development of its Ulassai wind farm, as well as core industrial know-howof the Group
  • Saras will give priority to its Sardinian pipeline of projects.

Category

Overall capacity

Details

Wind

Approx. 300 MW

Connection with power network already discussed

Photovoltaic

50 - 100 MW

Under preliminary analysis

23

Biofuels production at Sarroch refinery

  • "Renewable Energy Directive" (RED II), as well as PNIEC, establish the target to use, by 2030, biofuels up to 14% in terms of energy content of the total liquid fuels used in road transport (both gasoil and gasoline)
  • At Sarroch refinery, the Group already started production for biofuels in gasoil, and it is studying a process for biofuels in gasoline. In particular:
    • HVO (Hydrogenated Vegetable Oil) co-processing: it's a "premium drop-in" biofuel which can be blended in the mineral diesel pool, without the need of any modification to the internal combustion engine, and without causing any operational problem. It can be produced by hydro-treating of various kinds of lipids (vegetable oils, used oils, animal fats, etc). Saras already produces HVO in co-processing, with a production target of about 100 kton/y of HVO by year end, further expandable to about 150 kton/y without CAPEX, and to about 250 kton/y with only small CAPEX
    • Etherification (TAEE): bio-additivation of gasoline can be achieved with simple bio-ethanol blending. However, a more effective process can be the etherification (TAEE), which entails the conversion of our TAME plant currently mothballed, with a potential to use up to 50 kton/y of bio-ethanol
  • Finally, still within biofuels and circular economy development, Saras is studying the reuse of plastics which can be thermally converted in fuels («waste to fuels» processes)

24

CCS plant for Sarroch «long term» asset

  • Considering that oil will continue to play a relevant role for many decades, and given the need to guarantee stability and continuity of power supply to Sardinia, Saras has developed a long-term plan which will allow to reduce significantly its environmental footprint
  • Competence, technological development and digitalization are the resources which the Group will provide, among others, to achieve EU and national targets for energy transition and decarbonisation, in a sustainable and competitive manner
  • In particular, Saras is studying in an advanced phase a CCS project (Carbon Capture and permanent Storage of CO2 produced) which could reduce CO2 emissions substantially and possibly up to 50%
  • Once the EU and Italian framework for decarbonization will be clearly established, Saras will be ready to promote its own project.

25

LNG availability in Sardinia & opportunities for Saras

  • Sardinia is not connected to the national gas network, existing only on the mainland. However, from time to time, there are social and political requests to make natural gas available also for Sardinian industries and families
  • Saras developed a feasibility study to build a small scale LNG terminal within its industrial site in Sarroch (10kcm storage, pipelines, logistics, and a regasification unit in order to use some of the natural gas as fuel for the refinery's furnaces)
  • Moreover, Saras is also studying the possibility to build a LNG power plant (130 MW capacity), still within Sarroch industrial site, specifically designed to operate as a "Peaker", providing power to the Italian MSD (the power market for the dispatching services)

26

Hydrogen production for Decarbonisation

  • A further long-terminitiative under study for Saras is the production of green and blue hydrogen, as a sustainable energy vector to achieve decarbonisation; this is also strongly supported by the EU Commission, and incentivised under the provisions of the Green Deal
  • Saras already produces grey hydrogen at Sarroch refinery (from IGCC plant and Reforming units), at approx. 120 kNcm/hr. Therefore, the Group already has technological capabilities and know-how in the production and management of this energy vector. Preliminary studies are being made to explore:
    • Green Hydrogen production (from water electrolysis), using electricity produced from renewable sources (with co-production of Oxygen to be used in the IGCC plant and in the refinery Sulphur plants)
    • Blue Hydrogen production (from IGCC), with the construction of the CCS plant to capture and reduce CO2 emissions
  • The Hydrogen will then be used in several ways:
    • Desulphurisation/Hydrogenation of liquid fuels at Sarroch refinery
    • Fuel Cells for road transport (even if in competition with EVs)
    • Injection in the Sardinian natural gas network (reducing its carbon content)
  • Finally, electrochemical hydrogen production compensates overproduction & volatility of renewable power

27

Financials

SARAS - Second Quarter and First Half 2020 results

Financials: Net Financial Position evolution (ante IFRS 16)

Net Financial Position (ante IFRS 16) and Cash flow Q2/20 (EUR million)

-223

+5

+4

-22

-9

-89

-2

-337

NFP at 31 Mar'20

Reported EBITDA

∆ Derivatives Forex

IFRS-ITGAAP

∆Working Capital

CAPEX

Interests & Taxes

before IFRS effect

Power &

IFRS 16 effect

SARAS - Second Quarter and First Half 2020 results

Financials: Key Income Statement Figures

KEY INCOME STATEMENT (EUR

Q1/19 (*)

Q2/19 (*)

Q3/19(*)

Q4/19 (*)

2019(*)

Q1/20

Q2/20

H1/20

million)

EBITDA

48.9

89.2

120.2

(5.4)

252.8

(92.0)

(22.4)

(114.4)

Comparable EBITDA

53.7

55.1

125.7

79.3

313.8

56.7

15.0

71.7

D&A

(46.2)

(47.8)

(49.6)

(55.2)

(198.5)

(49.7)

(44.3)

(94.0)

EBIT

2.7

41.5

70.6

(60.6)

54.1

(141.6)

(73.4)

(215.0)

Comparable EBIT

7.5

7.4

76.1

24.1

115.1

7.0

(36.0)

(29.0)

Interest expense

(5.6)

(3.2)

(5.2)

(4.2)

(18.2)

(4.7)

(2.3)

(7.0)

Other

(4.0)

8.0

(10.8)

6.6

(0.5)

(12.8)

4.8

(8.0)

Financial Income/Expense

(9.6)

4.8

(16.1)

2.3

(18.8)

(17.5)

2.4

(15)

Profit before taxes

(6.9)

46.2

54.5

(58.3)

35.3

(159.2)

(71)

(230.1)

Taxes

2.8

(18.0)

(11.7)

17.8

(9.2)

46.0

3.5

49.5

Net Result

(4.1)

28.2

42.7

(40.6)

26.2

(113.1)

(67.6)

(180.6))

Adjustments

2.1

(23.7)

8.6

54.1

41.1

112.7

26.5

139.2

Comparable Net Result

(2.0)

4.5

51.3

13.5

67.3

(0.4)

(41.1)

(41.5)

  1. Starting from Q4/19, oil hedging derivatives and those on CO2 quotas have been reclassified within the reported EBITDA to better represent the Group's operating performance, consistently with what has already been done in the past with reference to the alternative performance (Non-GAAP measure). Moreover the criteria to determine comparable results have been fine tuned. To provide a better picture all 2019 quarterly figures have been reclassified according to the new methodology.

SARAS - Second Quarter and First Half 2020 results

30

Financials: Comparable Results Adjustments

EBITDA Adjustment

(EUR

Q1/19

Q2/19

Q3/19

Q4/19

2019

Q1/20

Q2/20

H1/20

million)

Reported EBITDA

48.9

89.2

120.2

(5.4)

252.8

(92.0)

(22.4)

(114.4)

Gain / (Losses) on Inventories and on inventories

2.9

(32.5)

11.8

71.7

53.9

155.2

35.9

191.1

hedging derivatives

Forex derivatives

1.9

(1.6)

(6.2)

4.1

(1.9)

(7.6)

0.7

(7.0)

Non-recurring items

0.0

0.0

0.0

8.9

8.9

1.1

0.8

2.0

Comparable EBITDA

53.7

55.1

125.7

79.3

313.8

56.7

15.0

71.7

Net Result Adjustment

(EUR

million)

Reported Net Result

Gain & (Losses) on inventories and on inventories hedging derivatives net of taxes Non-recurring items net of taxes

Comparable Net Result

Q1/19

Q2/19

Q3/19

Q4/19

2019

Q1/20

Q2/20

H1/20

(4.1)

28.2

42.7

(40.6)

26.2

(113.1)

(67.6)

(180.7)

2.1

(23.7)

8.6

51.8

38.9

111.9

25.9

137.8

0.0

0.0

0.0

2.3

2.3

0.8

0.6

1.4

(2.0)

4.5

51.3

13.5

67.3

(0.4)

(41.1)

(41.5)

SARAS - Second Quarter and First Half 2020 results

31

Financials: CAPEX

CAPEX BY SEGMENT

(EUR million)

Q1/19

Q2/19

Q3/19

Q4/19

2019

Q1/20

Q2/20

REFINING

102.7

67.2

36.8

85.3

291.9

95.7

77.4

POWER GENERATION

10.8

2.8

6.8

4.4

24.8

1.0

10.2

MARKETING

0.4

0.2

0.0

0.0

0.6

0.1

0.4

WIND

0.9

18.9

2.4

4.1

26.4

0.3

0.6

OTHER ACTIVITIES

0.2

0.1

0.1

0.4

0.8

0.3

0.2

TOTAL CAPEX

115.0

89.2

46.1

94.3

344.6

97.3

88.7

SARAS - Second Quarter and First Half 2020 results

32

Additional Information

SARAS - Second Quarter and First Half 2020 results

Additional information: Refining

EUR million

Q1/19(*)

Q2/19(*)

Q3/19(*)

Q4/19(*)

2019 (*)

Q1/20

Q2/20

EBITDA

2.4

32.6

73.1

(42.0)

66.0

(123.8)

(42.9)

Comparable EBITDA

10.0

(4.8)

78.4

40.9

124.3

19.5

(9.9)

EBIT

(28.2)

0.1

39.5

(79.8)

(68.5)

(157.1)

(77.7)

Comparable EBIT

(20.6)

(37.4)

44.8

3.1

(10.2)

(13.9)

(44.7)

CAPEX

102.7

67.2

36.8

85.3

291.9

95.7

77.4

REFINERY RUNS

Crude oil (ktons)

2,653

3,571

3,555

3,392

13,172

3,138

2,293

Crude oil (Mbl)

19.4

26.1

26.0

24.8

96.2

22.9

16.7

Crude oil (bl/d)

215

290

282

269

263

255

184

Complementary feedstock (ktons)

281

270

320

406

1,278

232

211

REFINERY MARGINS

EMC benchmark

1.1

0.2

3.0

0.0

1.1

1.3

(0.7)

Saras margin

4.3

2.5

6.4

4.9

4.5

3.9

3.8

  1. Starting from Q4/19, oil hedging derivatives and those on CO2 quotas have been reclassified within the reported EBITDA to better represent the Group's operating performance, consistently with what has already been done in the past with reference to the alternative performance (Non-GAAP measure). Moreover the criteria to determine comparable results have been fine tuned. To provide a better picture all 2019 quarterly figures have been reclassified according to the new methodology.

SARAS - Second Quarter and First Half 2020 results

34

Additional information: Power Generation

EUR million

Q1/19(*)

Q2/19(*)

Q3/19(*)

Q4/19(*)

2019 (*)

Q1/20

Q2/20

Comparable EBITDA

37.0

48.8

37.3

28.7

151.8

30.3

16.4

Comparable EBIT

23.7

35.7

23.5

14.0

96.9

16.5

2.7

EBITDA IT GAAP

44.1

(16.3)

40.7

29.9

98.3

57.1

(36.6)

EBIT IT GAAP

39.2

(21.0)

35.5

23.6

77.3

51.8

(42.0)

CAPEX

10.8

2.8

6.8

4.4

24.8

1.0

10.2

POWER PRODUCTION

MWh/1000

988

883

1,114

1,091

4,075

1,185

801

POWER TARIFF

€cent/KWh

9.2

9.2

9.2

9.2

9.2

7.9

7.5

POWER IGCC MARGIN

$/bl

3.8

3.4

2.5

2.3

3.0

2.5

2.7

  1. Starting from Q4/19, oil hedging derivatives and those on CO2 quotas have been reclassified within the reported EBITDA to better represent the Group's operating performance, consistently with what has already been done in the past with reference to the alternative performance (Non-GAAP measure). Moreover the criteria to determine comparable results have been fine tuned. To provide a better picture all 2019 quarterly figures have been reclassified according to the new methodology.

SARAS - Second Quarter and First Half 2020 results

35

Additional information: Marketing

EUR million

Q1/19

Q2/19

Q3/19

Q4/19

2019

Q1/20

Q2/20

EBITDA

4.4

4.2

8.2

3.5

20.3

(0.8)

3.6

Comparable EBITDA

1.6

7.5

8.5

4.5

22.1

4.6

8.0

EBIT

3.7

3.4

7.4

2.8

17.3

(1.5)

3.0

Comparable EBIT

0.9

6.7

7.7

3.8

19.1

3.9

7.4

CAPEX

0.4

0.2

0.0

0.0

0.6

0.1

0.4

SALES

(THOUSAND TONS)

ITALY

505

522

587

542

2,155

437

412

SPAIN

371

324

359

366

1,418

281

203

TOTAL

876

845

945

908

3,574

718

615

SARAS - Second Quarter and First Half 2020 results

36

Additional information: Wind and Others

Wind

(EUR million)

Q1/19

Q2/19

Q3/19

Q4/19

2019

Q1/20

Q2/20

Comparable EBITDA

3.6

2.5

0.7

3.2

10.0

2.4

0.9

Comparable EBIT

2.3

1.3

(0.5)

1.5

4.6

0.8

0.9

POWER PRODUCTION

MWh

66,054

43,852

26,366

84,091

220,363

74,038

44.980

POWER TARIFF

€cent/k

5.6

4.5

4.7

4.2

4.7

3.9

2.0

Wh

INCENTIVE

€cent/k

9.2

9.2

9.2

9.2

9.2

9.9

9.9

Wh

CAPEX

0.9

18.9

2.4

4.1

26.4

0.3

0.6

Others

(EUR million)

Q1/19

Q2/19

Q3/19

Q4/19

2019

Q1/20

Q2/20

Comparable EBITDA

1.5

1.1

0.9

2.1

5.6

(0.1)

(0.4)

Comparable EBIT

1.2

1.0

0.7

1.8

4.7

(0.3)

(0.4)

CAPEX

0.2

0.1

0.1

0.4

0.8

0.3

0.1

SARAS - Second Quarter and First Half 2020 results

37

Additional information: Key Balance Sheet Figures

EUR million

31/03/2019

30/06/2019

30/09/2019

31/12/2019

31/03/2020

30/06/2020

Trade receivables

252

264

347

352

187

247

Inventories

1,019

1.063

1.206

1.041

599

725

Trade and other payables

(1,217)

(1.414)

(1.540)

(1.649)

(1.084)

(1.057)

Working Capital

54

(87)

12

(256)

(298)

(84,3)

Property, plants and equipment

1,166

1.212

1.227

1.273

1.330

1.377

Intangible assets

101

94

86

78

71

64

Right of use (IFRS 16)

51

50

44

50

49

47

Other investments

1

1

1

1

1

1

Other assets/liabilities

(4)

13

12

46

136

38

Tax assets / liabilities

(86)

(132)

(96)

35

69

(18)

Other Funds

(214)

(163)

(181)

(204)

(153)

(163)

Assets held for sale

35

39

7

7

7

1

Total Net Capital Invested

1,104

1.026

1.112

1.029

1.211

1.262

Total equity

1,100

1,054

1,097

1,059

940

880

Net Financial Position pre IFRS 16

48

77

29

79

(223)

(337)

IFRS 16 effect

(52)

(49)

(44)

(49)

(48)

(45)

Net Financial Position post IFRS 16

(4)

28

(15)

30

(271)

(382)

SARAS - Second Quarter and First Half 2020 results

38

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Saras S.p.A. published this content on 30 July 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 05 August 2020 14:36:27 UTC