| Preview of Income Statement, 4th quarter of 1995 |
1. INTRODUCTIONRepsol's net income for the financial year of 1995 was 117,715 million pesetas, 21.6% higher than that for 1994. Net income for the fourth quarter of 1995 reached 25,566 million pesetas as opposed to the year earlier 27,381 million pesetas reported for the term. Operating income for the three month period was 44,015 million pesetas, showing a fall of 10.8% over the 1994 figure. However, accumulated operating results rose by 20.1% over the previous year, to 212,504 million pesetas. In LIFO terms, operating income for 1995 was 213,711 million pesetas, 20.4% higher than that for 1994. Net cash flow for the fourth quarter was 56,203 million pesetas in comparison to 65,152 million pesetas a year earlier. Accumulated figures for the whole financial year registered a 10.6% rise over 1994, at 245,201 million pesetas. Investments amounted to 73,725 million pesetas over the last quarter, and arrived at a total for the year of 203,228 million pesetas against the 190,852 million pesetas disbursed in the previous year. As a result of the foregoing, net debt at the end of the financial year was 175,375 million pesetas and had fallen by 65,038 million pesetas when compared with its level at the close of 1994. The lower results obtained for the fourth quarter of 1995 are basically due to the following circumstances:
Apart from these negative factors, there were also some favourable circumstances:
Apart from the above, there have occurred other events of note:
The following points give a more detailed picture of the different entries making up the profit and loss account attached hereto 2.- ANALYSIS OF RESULTS BY ACTIVITIES2.1 Exploration and ProductionOperating income for the last quarter of 1995 was 2,563 million pesetas, as opposed to 5,293 million for the same term in 1994. A considerable part of this fall in quarterly results is explained by the adjustment of provisions, serving as a basis for entering results on accounts, made on the part of certain operators during the year. Also, a non-recurring profit from the sale of gas, upon conversion of the Gaviota field into an underground storage facility, was entered in the fourth quarter of 1994. Operating income for the whole financial year was 11.3% up at 18,999 million pesetas. Operating cash-flow was 44,033 million pesetas, in comparison to 43,494 million pesetas in 1994. This improvement in results has been achieved because lower production has been compensated by better crude oil prices (Brent crude rose to an average price of 17.04 dollars per barrel in 1995 from the 15.80 dollars per barrel registered in 1994) and income from the sale of assets in Angola and Gabon M'Bya, details of which were given in previous reports. In 1995, overall production was 72.6 million barrels of oil equivalent (9.98 million Toe), in comparison with 77.6 million barrels of oil equivalent (boe) in the previous year. The drop was greatest in Spain, owing to lower production at Casablanca and to Gaviota because payments from Enagas for the gas cushion, following conversion of the field into an underground storage facility, came to an end in March. A fall was also registered in Egypt, Dubai and the United Kingdom (Magnus field) resulting from the decline of these fields. Throughout 1995, several discoveries were made in the United Kingdom, Egypt, Indonesia, Algeria and Spain, including the TUT-21X (Egypt-Khalda); Tifernine-2 (Algeria); South Magnus (U.K.) and Rodaballo-1 (Spain), which together contribute some 33 million boe. 37 exploratory wells were drilled over the year (with a 37% success rate), 20 of them in Indonesia, 9 in Egypt and 8 in other countries. Repsol was operator at 11 of these. 4 appraisals were under way at the end of the year, 3 in Egypt and 1 in Indonesia. 35,333 million pesetas were invested in E&P last year, as opposed to the 39,759 million pesetas spent in 1994. Outlay on the 24 projects under development was 26,701 million pesetas, in comparison with the year-earlier 25,125 million pesetas. In Spain, apart from progress on the Alga and Rodaballo-1 projects - about which we have already written in other reports - work was started on the Poseidon project. The purpose of this project is to set up production from submarine gas fields in the Gulf of Cadiz, which will then permit subsequent use of the installations for underground gas storage. In the United Kingdom, the start up of production from the Harding field is imminent, whereas, according to the schedule for the Libyan project, this goes into production at the end of 1996. A total of 108 development wells was drilled over the year, which is exactly the same amount as in 1994. 2.2 Refining and MarketingFourth quarter 1995 operating income for the activity rose by 27.5% over the same period a year earlier, to reach 21,725 million pesetas. The accumulated figure for the year was 75,993 million pesetas as opposed to 89,367 million pesetas reported in 1994. This fall is mainly due to the weakness of international refining margins throughout the whole financial year, although there was an improvement in the second half. In fact, in the first half, results were 38.6% down on the previous year at 29,638 million pesetas, whereas in the second part of the year these were 12.7% higher than in 1994. The following events took place over the last quarter of 1995:
Throughout the year, sales of oil products (not taking into account the exceptional sale to CORES) have been affected by demand behaviour for certain products and the company's policy of supplying oil products to other operators outside its own network. These products would otherwise have been used for export, with a lower unitary margin. Kerosene and gasoil sales rose by 8.8%, fuel oil by 4% and gasoline by 0.9%. In all cases, growth was greater than the rise in home market demand (AOP figures), which was 5%, 2.7%, and -1.4% respectively. Greater use was again made of the CLH logistics network. This company's activity increased by 5% to transport a total of 30 million tonnes of oil products. 98,125 million pesetas were invested in the activity over 1995, as against 80,542 million in 1994. The linking of service stations was further strengthened and, by the end of the year, 73% of Repsol's service station network belonged to the company. Projects under development in the refining area include gasoil desulphurisation plants at La Coru�a and Puertollano, which are scheduled to enter their second phase at the end of 1996. The second MTBE plant at Tarragona and the amine and sulphur-recovering units at Puertollano also went on-stream last year. 2.3 ChemicalsChemicals registered an operating income of 4,917 million pesetas over the last three months of 1995 as opposed to 12,471 million pesetas a year earlier. These results include a provision for stock-loss and annual corporate expenses for 2,978 million pesetas. Taking the above into account, quarterly operating income on a recurring basis would have been somewhat more than 7 billion pesetas. This, together with the fact that margins generally fell over the period (in some cases to below 1992 levels) enables us to state that rationalization and cost cutting measures, together with higher competitivity from the low peseta/deutschemark exchange rate, have placed the company in a much more competitive position. Furthermore, the drop in margins over the second half of the year was, to a considerable extent, brought about by reducing the stock levels of the main European consumers, thus permitting us to contemplate 1996 margins with a certain optimism. Indeed, margins on plastics have shown a clear recovery over the first weeks of the new year. Operating income for the year was 170.9% higher than that for 1994 at 62,859 million pesetas. This was an all-time record for the company's chemical business. In 1995, sales of petrochemical products were similar to those for the previous year, reaching 1.8 million tonnes. Higher sales of base petrochemicals (+9.4%) were counterbalanced by lower sales of derivatives. Investments in this area during 1995 amounted to 9,152 million pesetas as against 5,619 million pesetas in 1994. The main projects under way are a new polypropylene plant and cogeneration unit at Tarragona and re-vamping of the low density polyethylene plant at Tarragona and the polypropylene plant at Puertollano. Negotiations between Repsol and �MV tending to merge their polyolefin businesses were abandoned at the beginning of 1996. The possibility of cooperation between the two companies in areas of mutual interest remains open. 2.4 GasLast quarter 1995 operating income for the activity was 6.7% up over the previous year at 15,322 million pesetas. These good results received an unequal contribution from LPG and natural gas. Quarterly operating income from LPG was 6,859 million pesetas as against 7,713 million pesetas in the last quarter of 1994, showing a fall mainly because of mild weather conditions, as we have already mentioned. Although this factor also influenced the natural gas sector, the industrial market boosted last quarter 1995 operating results by 27.3% over the fourth quarter of 1994, to 8,463 million pesetas. 1995 accumulated income for Repsol from the gas activity was 57,526 million pesetas in comparison with 47,688 million pesetas for the previous year. The LPG area reported an accumulated operating income for the year of 26,540 million pesetas, which was slightly lower than the 26,798 million pesetas registered in 1994. Under normal weather conditions, operating income would have risen by 3 billion pesetas. Overall LPG sales fell by 1.5% against 1994, to 2.37 million tonnes. A sales break-down shows an 8.5% rise in piped gas and a 3% rise in bulk gas. Apart from this, the pipeline grid is being extended to make piped propane gas available in population nuclei that cannot receive natural gas, at least in the near future. Natural gas registered an accumulated operating income of 30,986 million pesetas, 48.3% higher than the previous financial year, although part of this difference is due to the fact that Enagas consolidation did not take place until July of 1994, and was therefore only included during the second half of that year. The demand for natural gas from the residential-commercial sector reached 24,534 million thermies, showing an 8.1% increase over 1994. The number of residential-commercial customers rose by nearly 200,000 last year, to the figure of 3,400,000. In 1995, demand from the industrial sector rose by 50.8% over the previous year to 63,332 million thermies. Investments in LPG amounted to 9,745 million pesetas for developing new markets and to continue the cost rationalization process. The "Factory 2000" project was introduced in 1995 to optimize operating processes at five facilities, and four factories have been shut down. 48,218 million pesetas were spent on the natural gas sector as opposed to 54,675 million pesetas in 1994. The greater part of this went towards the improvement and extension of the transmission and distribution network. The stake held by Gas Natural in Gas Natural BAN was increased to 52.5% in the last quarter of 1995. 2.5 Corporate and others This caption reported a negative figure of 2,873 million pesetas, as opposed to an also negative amount of 412 million pesetas in 1994. 475 million pesetas of corporate expenses billed over the quarter and losses incurred by the group insurance company have been entered under this caption. The balance was brought down by the reverting back of provisions to found the Repsol Foundation, which were entered as extraordinary items. Net financial expenses for the last quarter of the year were 1,782 million pesetas in contrast to 3,939 million pesetas over the same period a year earlier. This drop may be attributed to lower company debt and a better performance by its portfolio of financial investments. Accumulated financial expenses were 27.3% lower than in 1994, at 10,675 million pesetas. 4. GOODWILL AMORTIZATIONFollowing advance amounts set aside in provision for "goodwill" amortizations over preceding quarters, the figure for the fourth quarter was 128 million pesetas in contrast to the year-earlier 394 million pesetas. 5. EXTRAORDINARY ITEMSIn the last quarter of 1995, this caption registered an extraordinary loss of 3 billion pesetas as a result of reclassifying the 1,750 million peseta provision to create the Repsol Foundation, as mentioned above; the designation of 517 million pesetas to manpower restructuring programmes and an amount to cover tax contingencies and potential losses. 6. TAXESThe estimated cost of company income tax at the end of 1995 was 60,563 million pesetas, at an effective rate of 32.1%. REPSOL SUMMARISED INCOME STATEMENT(Million pesetas)- NON-AUDITED FIGURES -
_________________________________________ ANALYSIS OF REPSOL OPERATING INCOME BY ACTIVITY(Million pesetas)- NON-AUDITED FIGURES -
_________________________________________ ANALYSIS OF REPSOL OPERATING REVENUES BY ACTIVITY(Million pesetas)- NON-AUDITED FIGURES -
_________________________________________ REPSOL'S INVESTMENTS BY ACTIVITIES(Million pesetas)- NON-AUDITED FIGURES -
______________________________________ REPSOL COMPARATIVE BALANCE SHEET(Million pesetas)- NON-AUDITED FIGURES -
REPSOL CONSOLIDATED STATEMENTS OF CASH FLOWS FOURTH QUARTER - 1994 AND 1995Million Pesetas- NON-AUDITED FIGURES -
OPERATING HIGHLIGHTS- NON-AUDITED FIGURES -
___________________________________________________ Madrid, March 1st, 1996 |
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