FINANCIAL RESULTS FOR H1 2014
Contact:
INA-Industrija nafte, d.d.
Corporate Communications Sector
Avenija Veceslava Holjevca 10, Zagreb
Public Relations Department
E-mail: PR@ina.hr
or visit Press Centre at www.ina.hr
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INA published financial results for the first half of 2014
Key achievements
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Net profit increase by 76% when compared to the same period last year

Capital investments increased for as many as 33%, compared to H1 2013

Most of the investments went to Upstream projects in Croatia; almost HRK 440
million

Net debt decreased by 18% while net gearing decreased from 25.8% to 24.3%,

INA continued with the trend of reversing the natural production decline trend on
existing domestic field and for the first time in ten years recorded an increase in
crude oil production from domestic fields.
Zagreb, 30 July 2014 – In the first six months of 2014, INA Group recorded EBITDA1 of HRK
1.47 billion and net profit of HRK 372 million. Net sales revenues amounted to HRK 11.76
billion.
The Company continued with intensified investments in the first six months which amounted
to HRK 665 million. Majority of investments, same as in 2013, went to upstream projects in
Croatia, in which almost HRK 440 million was invested.
For the first time in the past ten years INA recorded an increase in the crude oil production
from domestic matured fields while an increase of 3% was recorded in total production of
hydrocarbons.
By further net debt fall for 18% and by decreasing the net gearing, from 25.8% to 24.3%,
when compared to H1 2013, Group’s financial position was additionally improved.
Commenting the half-year results, INA’s President of the Management Board, Mr Zoltán
Áldott's, said “With continuous and conscious management efforts INA delivered improved
operating and net profits for H1 2014, effectively mitigating the adverse effects of still
difficult market conditions and regulatory changes that had negative impact on our
upstream and gas business.
We have strengthened our financial position further while increasing our capital investments
by as much as 33%, primarily in our upstream segment which was also reflected in increasing
crude oil production from existing domestic fields and temporarily reversed production
decline as a result of our intensive well workover program. Additional upside in the start of
production on Izabela filed will be visible from the coming period.
1
EBITDA = EBIT + Depreciation + Impairment + Provisions
2
In downstream business we further demonstrated improvement of the sale structure and cost
control, but these efforts were not able to mitigate strong negative influence of lower
average crack spread and sales volumes related to deepening economic crisis on core
markets. In retail sizeable modernization activities and efforts aimed at increasing the service
level provided for solid business operations despite a shrinking market.”
Operative results overview
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INA Group’s net sales revenues reached HRK 11.76 billion.
Group’s EBITDA was HRK 1.47 billion.
Operating profit amounted to HRK 534 million.
Net profit amounted to HRK 372 million.
Capital expenditures reached HRK 665 million, which is a 33% increase when
compared to the same period last year.
Net gearing was decreased from 25.8% to 24.3% and the operating cash flow
amounted to HRK 1.18 billion, while the net debt decreased for 18%.
For the first time in the past ten years INA recorded an increase in the crude oil
production from domestic matured fields.
Negative refining environment and lower crack spread for 22% had a negative impact
on the refining business, same as in 2013.
Regulatory changes (royalty increase from 5 to 10%, HEP assuming the role of the
household gas distributor, and forced sale of INA’s gas from the Okoli storage) had
direct financial consequences for INA.
Prirodni plin’s losses amounted to HRK 497 million due to the regulated gas price and
the mentioned forced gas sale.
Capital expenditures
(HRK million)
665
500
H1 2013
H1 2014
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Exploration and Production – In the first six months of 2014, EBITDA (excl. special items)
reached HRK 2 billion. Investments were increased for as many as 34%, amounting to HRK
487 million.
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Crude oil production was increased for 2.6% when compared to H1 2013.
o INA continued with the trend of reversing the natural production decline
trend on existing domestic field
o For the first time in ten years recorded an increase in crude oil production
from domestic fields.
o Production increase on domestic fields is a result of 4P project (increase the
production on existing fields), which aims to increase the yield from matured
fields, as well as the production from new wells.
o Total hydrocarbon production increase of 3% was recorded.
The Upstream result declined in comparison with 2012 due to lower hydrocarbon
production and lower natural gas price for tariff consumers (households) amidst
regulatory changes. The Segment was further burdened with the increase of royalty
from 5 to 10%.
Forced sale of INA’s gas from the Okoli storage and regulated gas price caused
financial damage to Prirodni plin of HRK 497 million.
Moderating oil production natural decline in Croatia
2009
2010
2011
2012
2013
I-VI 2014
2%
1%
0%
-2%
-2%
-3%
-4%
-5%
-6%
-6%
-8%
-9%
-10%
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Exploration and Production segment’s CAPEX in the first six months of 2014 amounted to
HRK 487 million.
o Almost HRK 440 million was invested in domestic projects.
o The rest was invested abroad (Egypt).
 Compared to the same time last year, an increase of 34% was recorded.
 Increased investments in Croatia mostly reflect current development activities on Ika
field and intensification of EOR project’s activities.
Exploration and production CAPEX
(HRK million)
487
364
H1 2013
H1 2014
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Refining and Marketing, including Retail – Clean CCS-based2 EBITDA amounted to HRK
(405), which is below the last year’s levels. Operating loss (excl. special items) amounted to
HRK (856) million.
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Capital investments in R&M segment were increased for HRK 41 million, amounting
to HRK 158 million.
The Segment also recorded a better sales structure: higher motor fuel and lower fuel
oil share.
The Segment continued with the decrease in energy consumption, which reflects
management’s efforts for business optimization.
Total sales volumes of retail Segment amounted to 448kt
Decreased citizens’ purchasing power was demonstrated by lower sale of premium
fuels in favour of regular fuels with more affordable prices.
Capital investments in Retail amounted to HRK 36 million, of which majority was
directed to modernization of INA’s retail network
o as of beginning of the modernization project, more than HRK 450 million were
invested and 190 petrol stations were modernized
Refining and marketing CAPEX (including Retail)
(HRK million)
158
117
H1 2013
H1 2014
2
CCS (current cost of supplies) is a result adjusted for changes in the price of feedstock in a way that these expenses are
calculated at single price at the end of the reporting period (regardless of price changes over the period).
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With the aim of maintaining the stable financial position, management’s efforts to decrease
the Group’s indebtedness continued.
Net indebtedness of
INA Group
Gearing ratio of INA Group
(%)
(HRK million)
25.8
5,200
24.3
4,269
H1 2013
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H1 2014
H1 2013
H1 2014
Operating cash flow remained strong at HRK 1.18 billion.
Further decrease of net gearing ratio was recorded; from 25.8% to 24.3%, while the
net debt decreased for 18%, which secured the strong financial position and
flexibility for future growth.
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