December 218
Disclaimer This presentation contains forward-looking statements that reflect the Company management s current views with respect to certain future events. Although it is believed that the expectations reflected in these statements are reasonable, they may be affected by a variety of variables and changes in underlying assumptions that could cause actual results to differ materially. Neither Tüpraş nor any of its directors, managers or employees nor any other person shall have any liability whatsoever for any loss arising from use of this presentation.
Content Refining Market Slides 4-1 Turkish Market Slides 11-15 Company Overview Slides 16-26 Operations Slides 27-33 Key Financials Slides 34-46 Outlook Slides 47-52 Appendix Slides 53-6 CONTENT 3
REFINING MARKET
Brent Crude Oil Prices ($/bbl) 1 Brent 9 8 7 6 5 58.2 PROS OPEC & non OPEC supply cut through 217 mid 218 Political instabilities in Middle East Future of nuclear agreement Healthy PMI data in developing countries Expectation of high global GDP Potential impact of sanctions 4 36.5 3 2 1 CONS Increase in number of rigs & production in US OPEC production increase announced in Summer 218 Inventory Levels Impact of trade tariff negotiations Source : Platts As of December 17th REFINING INDUSTRY 5
Refinery Capacity Change Thousand Barrels/Day 3 185 7-45 -16-275 2,3 1,8 1,4,9,5, 2 42 33 7 244 156 27 417 343 76 46 12 52 36 51 198 4 3 2 39 244 53 526 4 15 32 12-116 -14-5 -22-443 -13-143 -91 Net Capacity Additions (mb/d) 1,7 1,8 1,8 1,5 1,5 1,3 1,3 1, 1,1,3,6,6 212 213 214 215 216 217 218 219 22 221 222 223 218 217 216 215 214 213 212 16 15 364 63 35 2-546 -775-352 -189-57 -268 China India Middle East Other Asia Other Japan North America Europe Source:, Reuters, International Energy Agency, Tüpraş, sector reports and news REFINING INDUSTRY 6
Middle Distillate Cracks ($/bbl) 215 216 217 218 2 Diesel 19,5 2 Jet Fuel 18,1 16 14,8 12 1,4 8 7,2 12,1 12,2 12,6 13,6 14,3 13,7 13,6 15,9 14,1 15,5 15, 11,5 1, 7,6 16 15,1 12 9,5 8 6,6 11,9 14,4 13,7 14,4 13,9 13,2 13,3 14,4 12,5 14,3 15, 11,4 9,1 8, 4 4 Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Source : Platts As of December 17th REFINING INDUSTRY 7
Gasoline and High Sulphur Fuel Oil Cracks ($/bbl) 24 Gasoline 215 216 217 218 High Sulphur Fuel Oil -4-3,7 18,6 18 1,4 12 9,8 1,2 1,6 12, 12,1 13, 13,1 13,4 14,4 9,6 15,7 11,9 9,7-7 -1-14 -8,7 1,9-12,5-11,9-12,7-13,2-13, -9,1-8,3-8,5-13,2-1,9-6, -1,2-12,2 6 5,5 5, -17-15,2-16,7 3,1 Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec -2 Jan Feb Mar Apr May Jun July Aug Sep Oct Nov Dec Source : Platts As of December 17th REFINING INDUSTRY 8
Quarterly Product Crack Margins ($/bbl) Diesel and jet fuel cracks increased by 11% and 9% respectively; while gasoline and fuel oil cracks were weaker compared to 217 Q3. 16 15 12,3 13,9 11 11 Diesel 215 216 217 218 16 15 14 14,5 12 12 13 11 1 11 8 9 9 8 6 Q1 Q2 Q3 Q4 16 14 12 14 13,8 13,4 13,3 9,5 7 Jet Fuel 11 12,4 9,9 11 8 8 12, 9 1 1 8 6 Q1 Q2 Q3 Q4 2 18 16 14 12 1 15 13, 13,3 1,9 Gasoline 19,4 18,9 15 15, 14,3 13,5 12,5 13 12,7 11 1,9 Q1 Q2 Q3 Q4-4 -8-12 -16-9,1-12 -12-12,6-12,4-13 -15 High Sulphur Fuel Oil -7, -6,9-1,2-1, -11-9 -13-16 -2 Q1 Q2 Q3 Q4 REFINING INDUSTRY 9
15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 18Q1 18Q2 18Q3 Crude Price Differentials ($/bbl) Ural differentials narrowed with higher Chinese demand while Heavy Crude differentials narrowed with lower Venezuelan and Iranian crude availability. Ural Differentials Heavy Crude Price Differentials 1 Brent Brent -1-2 -,6-1,2-1,6-2,1-2,3-2,4-1,7 -,9-1,4-1,1 -,5-1,1 -,2, -,3-1,3-2 -4 Kirkuk -6 Kuwait Iran Heavy -3-8 Arab Heavy -4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -1 Basra Heavy 212-217 Min. 215 216 217 218 Chinese demand towards Ural crude narrowed differentials in Q3 Iran Heavy Kirkuk Kuwait Basra Heavy Arab Heavy Following decrease in Iranian exports, alternate heavy crude differentials narrowed in Q3 Source : Platts As of December 17th 1
TURKISH MARKET
Turkish Economy Strengths Population (mn) 1 GDP (%) 83 82 81 8 79 78 77 1.4% growth in last 5 yrs -4 yrs >65% 82 81 81 8 79 216 217 218 219 22 7,5 5 2,5 9,2 8,8 2,1 4,2 21 211 212 213 214 215 216 217 3, 22-214 4.9% 21-214 5.4% 4, 2,9 7,4 27 26 Diesel Consumption (mn ton) 8.8% average growth in last 5 yrs 4% annual growth 25 2 Car ownership per thousand people 67% 25 24 23 22 21 Source: EMRA, TSI 28 26 25 24 22 216 217 218 219 22 15 1 5 127 134 213 176 214 215 216 217 REFINING INDUSTRY 12
Turkish Consumption (Million tons) 215-217 Diesel Jet Fuel 217 24,17 217 4,52 +2.7% 216 22,31 +8.3% 216 4,4-4% 215 2,56 +8.5% 215 4,58 1 14 17 21 24 Gasoline Fuel Oil* 217 2,3 +3.1% 217,49-15.7% 216 2,23 216,58-3.5% 215 2,1 +6.5% 215,6 Source: EMRA *Bunker excluded. 1 1 REFINING INDUSTRY 13
Strong Turkish Market, 9M 218 (Million tons) Tüpraş is well positioned in a growing, short market. Diesel and jet fuel consumption in Turkey grew significantly the first 9 months of 218 driven by infrastructure projects and aviation growth. Diesel Jet Fuel 218 18,99 +6.7% 218 3,85 +9.9% 217 17,79 217 3,5 14 17 2 1 1 2 2 3 3 4 4 5 5 Gasoline Fuel Oil* 218 1,8 +2.6% 218,27-21.7% 217 1,75 217,34 *Bunker excluded Source: EMRA REFINING INDUSTRY 14
Turkey s Import / Export Balance (Net) (Million Tons) 4 Export 2,4 3 1, 1, -4-3,1-3 -8 Import -12-12, -13-16 213 214 215 216 217 LPG Gasoline Diesel Fuel Oil Jet Source EMRA REFINING INDUSTRY 15
COMPANY OVERVIEW
Tüpraş Shareholder Structure Energy Investments Inc. (SPV) *Distribution of Domestic/ Foreign Ownership of Tüpraş Shares 16% Domestic Ownership Free Float Foreign Ownership 84% *As of December 31th, 217 COMPANY OVERVIEW 17
Tüpraş Refining Assets & Distribution Network Turkey Storage Capacity Tüpraş : 58% Opet : 9% Other Companies : 33% Total Capacity : 28.1 mn ton Nelson Complexity : 9.5 Tüpraş Storage Cap. : 7.2 mn m 3 OPET Storage Cap. : 1.1 mn m3 İzmit 11. MT Capacity NC: 14.5 Storage Capacity: 3.3 mn m 3 İzmir 11. MT Capacity NC: 7.66 Storage Capacity:2.51 mn m 3 Base oil 4 k tons Kırıkkale 5. MT Capacity NC: 6.32 Storage Capacity: 1.41 mn m 3 Batman 1.1 MT Capacity NC: 1.83 Storage Capacity:.25 mn m 3 COMPANY OVERVIEW 18
İzmit Ref. Valero Reliance Essar Marathon Oil Holly-Frontier Neste BP Tesoro Thai Oil IOCL Hellenic PKN MOL SHELL Petrom Galp Saras Petrobras İzmir Ref. Lukoil HPCL CPCL BCP Esso(Thai) S-Oil Kırıkkale Ref. MRPL SK Energy BPCL Batman Ref. High Complexity (Nelson Complexity of Refining Companies) İzmit After RUP 2 14,5 15 14,5 13, 12,6 11,8 11,6 11,5 Tüpraş After RUP 9,5 Tüpraş Before RUP 1 11, 1,4 9,9 9,8 9,6 9,4 9,2 9,2 9, 8,8 8,7 7,3 8,4 8, 7,7 7,1 7,1 7,1 7,1 5 6,8 6,5 6,3 5,9 5,8 5,8 1,3 COMPANY OVERVIEW 19
Crude Suppliers of TÜPRAŞ (Million Tons) In 217, Tüpraş purchased 25 different types of crude oil from 14 countries, with gravities ranging between 18-47 API. 9 Africa America Europe CIS Middle East 8 7 6 65 67 63 71 76 79 5 Crude Type 217 36% 5,3% 58,8 % >34 3> 3-4 4 3 2 1 17 1 6 12 6 13 15 13 14 14 3 11 2 3 1 1 2 1 1 7 212 213 214 215 216 217 COMPANY OVERVIEW 2
Sales By Customer (9M 218) Customer Groups Sales to Distributors Bitumen; 11% Military; 1% TP 1% AKPET 4% OTHER 8% POAŞ 26% Export; 13% BP 13% Dist.; 5% Other; 6% LPG; 3% Jet; 6% SHELL 17% THY Opet; 11% OPET 31% Total : 22.3 mn tons Distributors : 11.1 mn tons COMPANY OVERVIEW 21
Competitive Advantages of Tüpraş COMPANY OVERVIEW 22
OPET Opet expanded its retail footprint from 1.56 stations in December 217 to 1.65 stations in September 218. 18 Opet Sunpet 16 14 12 1 1.279 394 1.325 394 1.325 1.356 41 418 1.393 427 1.444 435 1.54 431 1.56 434 1.65 455 Market share as of August 218 17.85% 32.26% 8 White Black 6 4 83 885 915 938 966 1.9 1.73 1.126 1.15 Product Product 2 21 211 212 213 214 215 216 217 9M 218 COMPANY OVERVIEW 23
DİTAŞ, Marine Transport -Tüpraş Share 79.98% 3 Crude Oil Tanker :479.765 DWT 1 Crude Oil - Product Tanker : 51.532 DWT 7 Product Tanker : 9.534 DWT 11 tugboats 8 mooring boats 2 service boats 1 pilot boat One of the biggest Turkish marine transportation companies of crude oil and petroleum products Carries mainly Tüpraş crude oil purchases and makes the transfer operations of product and semi-products 25 Product Crude Oil 2 15 3, 19, 3, 15, 6, 6, 17, 253,7 mn $ Net Sales 1 5 5, 3, 4, 9, 6, 7, 5, 211 212 213 214 215 216 217 49,6 mn $ Op. Profit COMPANY OVERVIEW 24
Körfez Ulaştırma A.Ş.- Tüpraş Share 1% Körfez Ulaştırma A.Ş. Turkey's First Private Railway Operator On June 16th, Freight Train Operator Certificate, On September 2th, Safety Management Certificate received Operates with 491 cistern wagons and 5 diesel locomotives 2,5 mn 218 Target tons/year tran sport % 1 Market share COMPANY OVERVIEW 25
Enhancing our Trading Capabilities We are opening a trading office in London to Closely monitor international market opportunities, Support import and export operations, Create additional value from supply chain and sales activities. London office is planned to be opened until the end of the year COMPANY OVERVIEW 26
Capacity Utilization and Quarterly Production Volume on Track in Q3 Capacity utilization reached 115% in Q3. Quarterly Production (Million Tons) Capacity Utilization* (%) 9 214 215 216 217 218 Crude Oil Semi Product Feedstock 9M 218 CUR: 95% 8 7,1 7 6,6 6 5,6 7,8 6,9 6,7 6,2 7,7 7,3 7,2 7,7 7,4 7,4 6,3 75 3,6 71,3 13 15 18 4,4 4,4 6,7 98,1 1,9 11,4 78 1,7 67,3 93 7,1 85,4 115 7,3 17,2 5 5,2 5,4 5,5 4,5 4,6 4 Q1 Q2 Q3 Q4 *Nameplate capacity calculated by standard 33 days of operations. 214 215 216 217 Q1 218 Q2 218 Q3 218 OPERATIONS 28
Q3 218 Product Yields 217 218 Bitumen 15% LPG 3% Gasoline 19% Bitumen 13% LPG 4% Gasoline 19% Fuel Oil 5% Coke 3% Other 2% Black Prod. 23,2 Other % 1,7% Mid. Distil. 5,8 % Light Distil. 24,2 % Jet 19% Naphtha 2% Fuel Oil 7% Coke 3% Other 2% Black Prod. 23,1 Other % 1,9% Mid. Distil. 5,8 % Light Distil. 24,2 % Jet 19% Naphtha 1% ULSD 32% ULSD 32% White Products %75.7 White Products %75.75 Production 7.6 mn tons Production 7.7 mn tons API 29.6 API 3.7 OPERATIONS 29
9M 218 Product Yields 217 218 Bitumen 11% LPG 4% Bitumen 13% LPG 4% Fuel Oil 8% Gasoline 2% Fuel Oil 6% Gasoline 2% Coke 3% Other 2% Black Prod. 21,9 Other % 1,9% Light Distil. 25, % Naphtha 1% Coke 3% Other 2% Black Prod. 21,6 Other % 1,8% Light Distil. 24,5 % Naphtha 1% Mid. Distil. 51,2 % Jet 17% Mid. Distil. 52, % Jet 19% ULSD 34% ULSD 33% White Products %77 White Products %77 Production 22.5 mn tons Production 18.9 mn tons API 3.3 API 31. OPERATIONS 3
Domestic Sales (Million Tons) We generated 22.3 million tons of total sales in 9M 218. Jet fuel and diesel sales increased by 8.5% and 6.7% compared to last 9M 217 respectively. Total Sales in 9M Domestic Sales of Key Products in 9M 16,1 3,5 12,6 Domestic Sales 22,6 2,9 4,2 4,8 18,4 16, Export 24,2 22,3 4,9 2,7 19,3 19,5 11 1,4 Diesel Jet Fuel Gasoline Bitumen 14 2, 2 1 3,6 16 2,5 16 2,6 17 2,4 2 2 2 3,8 3,5 3,5 2,9 5 7 8 8 9 9M 214 9M 215 9M 216 9M 217 9M 218 9M 214 9M 215 9M 216 9M 217 9M 218 OPERATIONS 31
Investments (Million $) 9.5 Nelson complexity High white product yield Process more heavier and sour crudes Run all refineries with 1% capacity utilization Avg. 943 mn$ Ongoing Projects 1.213 Avg. 278 mn$ 628 974 959 Avg. 247 mn$ Revamp of Crude Unit FCC Modernization New Sulphur Units Energy Saving Projects Optimization of conversion units 274 355 4 186 177 344 213 185 97 26 27 28 29 21 211 212 213 214 215 216 217 9M 218 OPERATIONS 32
9M 218 Results Brent Price ($/bbl) Brent ($/bbl) Tüpraş Expectation Min Tüpraş Expectation Max Capacity Utilisation (%) Axis Title 215 9M 99 8 72.1 $/bbl Brent Price average in 9M 216 9M 14 95% Total Capacity Utilization in 9M 75 217 9M 113 7 65 6 69 65 66 72 77 74 74 73 79 218 9M 95 55 J-18 F-18 M-18 A-18 M-18 J-18 J-18 A-18 S-18 218 Operational (mn ton) Refining Margins ($/bbl) Production Sales 18,9 22,3 22.3 mn tons of sales 18.9 m tons of production in 9M Tüpraş Net Margin Med Margin 1 8 Capex (mn $) 6 1,7 216 213, 4 2 4,5 217 9M 218 97, 185, 97 mn $ CAPEX in 9M OPERATIONS 33
Margin Environment ($/bbl) Tüpraş 13.5 $/bbl Net Refining Margin in Q3 218 was higher than 8.4 $/bbl Med Complex margin. Premium to the benchmark Mediterranean peers refining margin due to: Refined products deficit characteristic to the Turkish market Access to cheaper sources of crude oil Ability to use heavier and sour crudes Proximity to major suppliers Reduces transport costs Implemented cost reduction measures Energy efficiency programs Capacity to produce higher value added range of refined products Direct pipeline connections with domestic clients High export capability 12 1 8 6 4 2-2 Oca-8 May-9 Eyl-1 Oca-12 May-13 Eyl-14 Oca-16 May-17 Eyl-18 18 16 14 12 1 8 6 4 2 5,54 9,6 2,5 1,95 2,89 1,6 1,17 Med Complex 4,21 11,9 1,67 Tüpraş Gross Margin Tüpraş Net Margin Mediterranean 3,2 1,7 2, 6,5 4,8 213 214 215 216 217 9M 218 11,2 1,95 6, 4, 4,83 12,9 8,1 3,97 5,3 16, 5,3 1,7 Month Annual 4,5 4,57 KEY FINANCIALS 35
Income Statement Strong EBITDA generation continued in Q3 218 Million TL Q3 218 Q3 217 % 9M 218 9M 217 % Net Sales 3.247 14.344 111 63.749 39.344 62 Million $ Q3 218 Q3 217 % 9M 218 9M 217 % Net Sales 5,672 4,68 39 13,868 1,946 27 Gross Profit 3.91 1.61 143 7.2 4.813 5 Gross Profit 761 458 66 1,566 1,339 17 Operating Expenses -324-296 9-87 -793 1 Operating Expenses -56-84 -34-189 -221-14 Income/Loss from other operations -2.783-24 -3.771 59 Income/Loss from other operations -579-6 -82 16 Operating Profit 82 1.29-38 2.559 4.79-37 Operating Profit 127 367-65 557 1,135-51 Income/Loss from equity investment 47 67-3 185 173 6 Income/Loss from equity investment 6 19-66 4 48-17 Operating Profit Before Fin. Income/Loss 849 1.356-37 2.743 4.253-35 Operating Profit Before Fin. Income/Loss 133 386-65 597 1,183-5 Net Financial Income /Expense -171-123 39-668 -533 25 Net Financial Income /Expense -24-35 -33-145 -148-2 Profit Before Tax 678 1.234-45 2.75 3.72-44 Net Profit (including minority interest) 551 1. -45 1.973 3.339-41 Profit Before Tax 11 351-69 451 1,35-56 Net Profit (including minority interest) 81 285-72 429 929-54 EBITDA *(mn.tl) 3.778 1.528 147 7.21 4.645 51 EBITDA* (mn. TL) CCS 1.745 1.29 35 3.463 4.284-19 EBITDA* (mn.$) 734 435 69 1,527 1,292 18 EBITDA* (mn.$) CCS 333 368-1 753 1,192-37 * On CMB reports, EBIT includes extra items such as FX impacts of trade receivables and payables. In our EBITDA calculation, FX related items are excluded from EBIT as customary in international practices. KEY FINANCIALS 36
212_R 213 214 H1 214 9M 214 215 H1 215 9M 215 216 H1 216 9M 216 217Q1 217 H1 2179M 217 218Q1 218 H1 218 9M 211 212 213 214 215 216 Q1 216 H1 216 9M 216 217 Q1 217 H1 217 9M 217 218 Q1 218 H1 218 9M Financial Highlights (Million $) Tüpraş achieved 734 mn USD EBITDA in Q3 218 with high capacity utilization and inventory gain. EBITDA Net Income 148 1117 825 533 242-5 715 56 1.397 422 41 1.125 48 16 361 294 89 338 415 315 226 237 153 95 78 15-27 -11 15 79 114 1.614 321 1.527 435 431 522 427 271 212 213 214 215 216 217 218 734 4th Q 3rd Q 2nd Q 1st Q 12 95 7 45 2-5 817 271 39 435 47 91 268 175 75 629 667 75 938 285 594 171 273 197 161 72 231 112 27 235 99 212 213 214 215 216 217 218 256 113 1.46 123 283 45 423 81 244 Net Debt- Net Debt/ Rolling EBITDA* Return of Average Equity 3. 2.5 2. 1.5 1. 5 551,8 1.34 2,4 1.869 3,5 3,6 4,9 1.598 1.663 2.577 2.748 2.37 2.391 3,3 2,8 Net Debt/R. EBITDA Net Debt 2.331 1.957 1.751 1.729 1.68 1.657 1.555 1.613 1.24 1,7 2, 1,6 1,5 1,6 1,5 1,1 1, 1, 1,2,7 1.613 1 1 3% 32% 24% 26% 35% 4% 11% 16% 22% 45% 55% 49% 41% 17% 29% 31% 29% *Rolling EBITDA is calculated with dollar terms KEY FINANCIALS 37
Mar.14 214 1h 214 9M Dec 14 Mar.15 Jun.15 Sep.15 Dec.15 Mar-16 Jun-16 Sep-16 Dec.16 Mar.17 Jun.17 Sep.17 Dec.17 Mar.18 Jun.18 Sep.18 Mar.14 Jun.14 Sep.14 Dec.14 Mar.15 Jun.15 Sep.15 Dec.15 Mar-16 Jun-16 Sep- 16 Dec.16 Mar.17 Jun.17 Sep.17 Dec.17 Mar.18 Jun.18 Sep.18 Mar.14 Jun.14 Sep.14 Dec.14 Mar.15 Jun.15 Sep.15 Dec.15 Mar.16 Jun.16 Sep.16 Dec.16 Mar.17 Jun.17 Sep.17 Dec.17 Mar.18 Jun.18 Sep.18 Mar.14 Jun.14 Sep.14 Dec.14 Mar.15 Jun.15 Sep.15 Dec.15 Mar.16 Jun.16 Sep.16 Dec.16 Mar.17 Jun.17 Sep.17 Dec.17 Mar.18 Jun.18 Sep.18 Balance Sheet Analysis (Billion $) Strong operational FCF generation and tight working capital management led to an increase in our cash position. 3, 2,4 1,8 1,2,6, Cash & Cash Equivalents Trade Receivables 2,5 2,3 2,2 2, 1,7 1,6 1,7 1,6 1,7 1,7 1,6 1,6 1,3 1,2 1,3 1, 1,,8 1.6 1,7 2, 1,5 1,,5, 1,57 1,36 1,7 1,9 1,15,88,91,91,71,66,7,75,52,51,9,2 1.57 1,42 1,52 1,57 Financial Loans Trade Payables 5, 4,3 3,6 2,9 2,1 1,4,7, ST Loans LT Loans 3,9 4, 3,7 3,7 3,6 3,6 3,2 3,2 3,3,4 3,4,9,3,3,3,5,6,6 1, 1,2 2,8 2,9 2,9 3, 3,3 3,1 3, 2,8 2,9 2,8 4,2 1,1 3,4 3,5 3,3 3,4,6,6 1,1 1,3 3,1 2,9 3, 2,1 2,1 4, 4, 3,2 3.3 1,4 1,6,8,9 2,6 2,4 2,5 2,4 4 3 2 1 2,91 3,26 3,3 2,42 1,72 1,69 1,58 1,33 1,21 1,67 1,96 1,99 2,18 2,17 2,68 2,18 2,19 2.8 2,75 2,8 KEY FINANCIALS 38
Q3 Profit Before Tax Bridge (217-218) Decline in profit before tax was mostly driven by FX loss, partially offset by inventory gain. Million TL KEY FINANCIALS 39
Dividend (TL) 16 Earings per Share Gross Dividend Total Payout 4 14 12 One of the highest dividend yield in BIST 15,22 13,6 3 1 1,18 8 2 6 4 2 7,16 6,5 6,2 5,83 4,96 4,78 3,93 3,85 3,24 2,94 2,98 2,31 2,5 1,73 1,58,, 28 29 21 211 212 213 214 215 216 217 1 212/213 EPS includes the tax incentive KEY FINANCIALS 4
Tüpraş Balance Sheet Million $ 31.12.217 3.9.218 Difference % Current Assets 5,399 5,5-349 49 Cash & C. Equivalents 2,334 1,662-671 -29 Receivables 1,333 1,556 223 17 Derivatives 92 79-13 -14 Inventories 1,43 1,418 15 1 Pre-paid expenses 17 22 5 33 Other Current Assets 222 313 91 41 Long Term Assets 4,718 3,141-1,577 4 Financial Assets & Subsidiaries 34 27-97 -32 Fixed Assets 3,279 2,59-1,221-37 Derivatives 27 44 17 64 Pre-paid expenses 26 53 27 12 Deferred Tax 813 587-226 -28 Other Long Term Assets 268 191-77 -29 Total Assets 1,118 8,191-1,927 89 Short Term Liabilities 4,686 4,523-163 211 Financial Loans 1,398 97-491 -35 Payables 2,219 2,796 577 26 Derivatives 47 155 19 231 Deferred Incomes 5 6 6 Provisions 24 28 5 19 Other ST Liabilities 993 63-363 -37 Long Term Liabilities 5,432 3,668-1,763 16 Financial Loans 2,592 2,368-224 -9 Payables & Provisions 59 4-19 -32 Derivatives 1 4 3 31 Other LT Liabilities 1 1-1 -49 Equity 2,75 1,241-1,59-55 Minority Interests 28 14-14 -51 Total Liabilities 1,118 8,191-1,927 316 Million TL 31.12.217 3.9.218 Difference % Current Assets 2,366 3,25 9,884 43 Cash & C. Equivalents 8,82 9,958 1,156 13 Receivables 5,27 9,319 4,292 85 Derivatives 347 474 127 37 Inventories 5,291 8,495 3,24 61 Pre-paid expenses 62 131 69 111 Other Current Assets 837 1,872 1,36 124 Long Term Assets 17,797 18,816 1,19 417 Financial Assets & Subsidiaries 1,148 1,239 91 8 Fixed Assets 12,369 12,332-37 Derivatives 11 262 162 161 Pre-paid expenses 99 318 219 22 Deferred Tax 3,68 3,519 451 15 Other Long Term Assets 1,13 1,146 134 13 Total Assets 38,163 49,66 1,93 847 Short Term Liabilities 17,676 27,93 9,417 688 Financial Loans 5,274 5,434 16 3 Payables 8,37 16,749 8,379 1 Derivatives 177 931 754 426 Deferred Incomes 2 34 14 68 Provisions 9 17 81 9 Other ST Liabilities 3,745 3,774 3 1 Long Term Liabilities 2,487 21,973 1,486 52 Financial Loans 9,777 14,188 4,411 45 Payables & Provisions 224 242 18 8 Derivatives 3 21 18 537 Other LT Liabilities 5 4-1 -2 Equity 1,373 7,437-2,937-28 Minority Interests 14 81-23 -22 Total Liabilities 38,163 49,66 1,93 1,28 KEY FINANCIALS 41
Creating Competitive & Sustainable Shareholder Value Tüpraş has one of the highest Corporate Governance Ratings Board 92,9 Foreign Currency Long Term Tüpraş BB+(Neg.) Ba2 (Negative) Stakeholders 99,5 Türkiye BB (Neg.) Ba3 (Negative) B+ (Stable) Koç Holding Ba2 (Negative) BB- (Stable) Transparency 94, Analyst Recommendations Shareholders 95,5 25% Overall 94,8 Buy Hold 25 5 75 1 75% KEY FINANCIALS 42
Financial Policy Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counter party risk, interest rate, commodity and currency exposure Threshold and limits Net financial debt/ebitda Net foreign currency position/shareholders' equity Inventory and crack margin exposure Current ratio The fixed/floating profile of financial debt Liquidity: share of long term debt Counter party risk limits Counter party Risk Policy Deposit is kept, within certain limits, by banks that comply with the criteria determined in our policy Credit rating and strong capital base Cap on the maximum deposit allocated to a single bank Threshold for deposits subject to banks shareholders equity KEY FINANCIALS 43
Inventory & Crack Margin Hedge Inventory Hedging Policy Operational Hedge: Maintaining minimum amount of stock required for the refining activities Forward Pricing: Purchasing crude oil through forward-priced contracts Financial Hedge: Proxy Hedging (both crude oil and refined product inventories) Expected inventory exposure for the year end is hedged Derivative transactions: Asian swap, Zero Cost Collar Hedging ratio increasing throughout the year Crack margins: Gasoline, Diesel, Jet Fuel and Fuel Oil Cracks Margin Hedging Policy Derivative transactions: Asian Swaps Hedging Parameters: Budget figures, historical average prices of the cracks + standard deviations, market expectations Maximum hedge ratio: 5%, Tenor: up to next 4 quarters KEY FINANCIALS 44
FX Exposure Management (3 September 218) Active management of FX exposure kept the risk level within our limits. A significant portion of the Group's crude oil and refined product purchases are denominated in US Dollars. In addition, the Group finances its capital expenditures mostly through borrowings denominated in US Dollars. Natural Hedge: The Group is able to mitigate some of the impact of volatility in exchange rates through natural hedges: crude oil and refined product inventories are US Dollar denominated assets. Cash flow Hedge: RUP Facility financing loans designated as hedging instruments of highly probable export revenues. Consolidated Assets Cash 1,41 Receivables & other assets 53 Stock 1,412 Forward & CFH 2,414 Million $ Consolidated Liabilities Payables 2,539 ST Financial 717 RUP : 263 Other: 454 LT Financial 2,97 RUP : 859 Eurobond 7 Other Loans : 538 As a general Koç Holding financial policy, Group companies are allowed to keep foreign exchange positions within certain limits. -64 mn $ * Cash flow hedge accounting : 928 mn $ KEY FINANCIALS 45
Tüpraş: Growing, Resilient, Profitable Tüpraş is a compelling investment case with strong sales growth, resilient and profitable operational and financial structure. Growing Resilient Profitable Operating in a diesel short market (supplies 45% of the market), along with strong jet growth Well poised to capture future opportunities including IMO 22 with its output complexity Continuous investment in logistics, infrastructure and trading capabilities Strong balance sheet with no immediate rollover requirement for the rest of the year Secure receivables portfolio, tight working capital management Pricing mechanism in place to address commodity and FX fluctuations Benefits from full system optimization given high complexity, procurement and logistics flexibility Prudent hedging practices to ensure stable earnings outlook High dividend pay-out ratio annually KEY FINANCIALS 46
OUTLOOK
218 Refinery Maintenance Schedule & Capacity Utilization We are completing our 218 maintenance schedule with only two remaining maintenances in Q4 We are planning maintenance in RUP unit in the 1H 219. We will provide more details in the beginning of 219. Unit Quarter Duration (weeks) Reason *Plt 7 Crude Oil Unit Q4 17 - Q2 18 17 in 218 Revamp İzmir İzmit *Hydrocracker Q1 3 *Plt 4 FCC Q2 7 *Plt 5 Crude Oil & Vacuum Unit Q2 8,5 Plt 25 Crude Oil & Vacuum Unit Q4 8-9** *Plt 47 Hydrocracker Complex Q3 11 Plt 63 CCR & DHP Q4 6-7** Periodic Maintenance Periodic Maintenance Kırıkkale *All Units Q1- Q2 1 Battery Shutdown Batman *Plt. 1/Crude Oil & Vacuum Q1 4-5 Periodic Maintenance 218 Crude Capacity Utilization ~25 mn tons 88%** 218 Total Capacity Utilization 95-1%** * Completed Maintenances ** Revised OUTLOOK 48
Future Expectations Slight revision to our 218 targets. Brent Price Estimation Average Brent price expectation in 218 is unchanged at 7-75 $/bbl Med Complex Margin Med Complex margin expectation is revised to 4.25 4.75 $/bbl in 218 Tüpraş Net Margin Net Tüpraş refinery margin expectation is revised to 9.5 1.5 $/bbl Capacity utilization target is revised to 95-1% Operations Production: ~27 million tons Total sales: ~3 million tons Investment Refining investments expectation is revised to 15 Million $ OUTLOOK 49
Competition # 1 (SOCAR-STAR Refinery) STAR Refinery (Total Cap. 1 mn ton) Goldman Sachs has acquired a 13 percent stake in SOCAR Turkey for $1.3 billion. Goldman Sachs has the right to resell 1 percent of its stakes to Socar, and the remaining 3 percent to Sermaye Investments Limited owned by SOCAR within 6 year at the same price. 219 mn ton Production Tüpraş Star Total Turkish Demand Balance LPG 1,1,3 1,4 4,1-2,7 Petchem Feeds,2 2,6 2,8 Credit : 3.3 Billion $ Equity : 2.4 Billion $ Total Investment : 6.3 Billion $ 3,3 billion dollar credit agreement. First 4 year grace period total 15-18 year term. Project finance is supplied to company (US$ 1.5 billion) It is operational as of October 218 Gasoline 6,1 6,1 2,4 3,7 Jet Fuel 5,2 1,6 6,8 5,2 1,6 Diesel 1,7 4,5 15,2 26,5-11,3 Coke,8,7 1,5 4,6-3,1 Star Refinery Production Numbers (K Ton) Fuel Oil 1,8 1,8 1,3,5 Bitumen 3,1 3,1 3,1 Fuels Diesel 4.5 Jet Fuel 1.6 Sulphur 158 Petrocoke 698 Petrochemical Feedstock LPG 26 Naptha 1.6 Mixed xylene 46 Reformate 524 OUTLOOK 5
Competition # 2 (Regional Competition) Tüpraş is competing with 71 refineries in the Mediterranean and Black Sea markets. Mediterranean regional product balance is also affected from Middle East, North West Europe and Asia. Mediterranean Black Sea 54 Refineries 7.8mn bpd 17 Refineries 1.8mn bpd OUTLOOK 51
Marine Bunker Specification Changes and Its Effects IMO, at the meeting held in October 216, lowered the sulphur emission cap from marine bunkers from 3.5% to.5% (5ppm): effective from 1 January 22. %2 switch %5 Other to LNG %19 Install Scrubber %74 Buy Low Sulphur Fuel 216 22 222 Ship Owners Intention Survey Requirements of spec change can be achieved through; Use of lower sulphur blend stocks like ULSD (Diesel) Low Sulfur Fuel Oil production with light crudes Sulphur Fuel Reduction Systems (Scrubber) LNG 8% of global trade is done via marine transportation. 5. vessels are in operation. Bunker fuels account for; ~5% of global oil demand 4% of oil related sulphur emissions. OUTLOOK 52
Appendix
Crack Margin Effect on Tüpraş in Q3 (FOB Italy Prices) Weighted average of crack margin difference in Q3 218 over Q3 217 indicates a -1.3 $/bbl, yielding - 425.2 million TL crack margin impact. Product Price, $/ton Tüpraş Crack Margin, $/bbl 218 217 218 Production Yields 218 217 LPG 567 399 3.4-24.8-16.6 Gasoline 712 544 18.3 12.5 15. Naphtha 638 447 1.2-3.3-1.6 Jet Fuel 697 57 17.7 13.4 12.4 Diesel 669 485 29.4 14.5 13.1 Diesel 1 658 467 1.2 13.1 1.7 Fuel Oil 1% 433 3.2-8.5-5.8 Fuel Oil 3.5% 422 293 5. -1.1-6.9 Others 376 27 19. -12.5-7.1 Dated Brent,$/bbl 75.27 52.8 95.6 Total Crack Margin,$/bbl 5.3 6.6 Margin Difference, $/bbl -1.3 Total Processed, mn bbl 57.6 Total Effect, mn $ -75.7 Total Effect, mn TL -425.2 APPENDIX 54
High Complexity (Resid Upgrading Units Production-(Thousand Tons) Raw Materials Products Doğal Gaz 246 Vakum Resid 1,214 Total Production 4,25 Atm. Dip 3,36 Total Feed 4,496 APPENDIX 55
Flexibility & Reliability; Multiple routes to maksimum capacity Increased conversion capacity Strong integration among refineries APPENDIX 56
Competition (European Pump Price Comparison) Gasoline (Krş / Lt) Diesel 1 (Krş / Lt) Pump No Tax Distr. Marg. Tax 125 14 12 12 1 924 1. 1.3 1.51 1.77 1.134 1.145 12 11 1 9 854 897 942 984 1.8 1.34 1.48 1 1 8 8 75 686 484 627 623 637 663 715 729 8 7 6 623 43 468 59 494 585 633 621 6 5 34 6 5 231 53 54 76 75 71 4 4 3 53 91 81 73 65 4 25 329 44 319 331 414 339 348 416 2 2 1 339 451 338 433 49 342 328 362 2 TR Spa. UK Ger Eu19 Fra. Ita. Gre. TR Spa. Ger. EU19 Gre. Fra. UK Ita. Not: Prices valid on 13 Aug 218 - Turkey price as of Aug 16th 218 APPENDİX 57
Tüpraş HSE KPI: Loss Time Incident Frequency and Severity Frequency Ratios loss time incident freaquency rate =number of incident *1/man hours loss severity frequency rate = loss time*1/man hours APPENDİX 58
Koç Holding Turkey s Leading Investment Holding Company Turkey s largest industrial and services group in terms of revenues, exports, employees, taxes paid and market capitalization. Turkey s Leading Investment Holding Company The only Turkish company in Fortuna 5 1 16% CARG in consolidated profit 2 the last five years Pioneer in its Sectors Leading positions with clear competitive advantages in sectors with long-term growth potential such as energy, automotive, consumer durables and finance. Combined Revenues / GDP Total Exports / Turkey s Exports Total MCap on Borsa İstanbul 7% 1% 19% Notes : Data as of YE17, 217 GDP reflects the projection of Turkish government s Medium Term Program (1)217 Report (2)In TL terms between APPENDİX 59