March 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.
REFINING INDUSTRY
Brent Crude Oil Prices ($/bbl) 75 65 7,7 65,8 PROS OPEC & Non OPEC Supply Cut Political Instabilities in Middle East Healthy PMI data in Developing Countries 55 Expectation of high global GDP 45 35 25 26, 4.1.216 13.1.216 22.1.216 2.2.216 11.2.216 22.2.216 2.3.216 11.3.216 22.3.216 4.4.216 13.4.216 22.4.216 4.5.216 13.5.216 24.5.216 3.6.216 14.6.216 23.6.216 4.7.216 13.7.216 22.7.216 2.8.216 11.8.216 22.8.216 1.9.216 12.9.216 21.9.216 3.9.216 11.1.216 2.1.216 31.1.216 9.11.216 18.11.216 29.11.216 8.12.216 19.12.216 3.12.216 11.1.217 2.1.217 31.1.217 9.2.217 2.2.217 1.3.217 1.3.217 21.3.217 3.3.217 1.4.217 19.4.217 27.4.217 9.5.217 9.5.217 18.5.217 29.5.217 7.6.217 16.6.217 27.6.217 6.7.217 17.7.217 26.7.217 4.8.217 15.8.217 24.8.217 5.9.217 14.9.217 25.9.217 4.1.217 13.1.217 24.1.217 2.11.217 13.11.217 22.11.217 1.12.217 12.12.217 21.12.217 4.1.218 15.1.218 24.1.218 2.2.218 13.2.218 22.2.218 CONS Increase in number of rigs & production in US Concerns about the impact of OPEC & Non OPEC production cuts Inventory Levels High crude exports of OPEC Source:Platts REFINING INDUSTRY 4
Refinery Capacity Change Thousand Barrels/Day 4 3 2 1-1 -2-3 18 135 9 45 46 7 244 27 52 53 16 334 81 1.79 1.678 12 3 526 25 15 64 58 156 417 51 4 181 34 16 Gross Capacity Additions 1.685 1.41 1.22 1.17 1.82 1.8 337 212 213 214 215 216 217 218 219 22 196 15 12 84 135 195-22 29 21 211 212 213 214 215 216 217 China India Middle East Other Asia Other Japan North America Europe 34 76 4 198 39 32 18 4 52-255 -145-24 -14-4,7-443 -13-143 -232 8 15 364 63 35 65-543 -486-19 -266-775 -421-546 -352-189 -268-57 Source:, Reuters, UEA, Tüpraş, sector reports and news REFINING INDUSTRY 5
Middle Distillate Cracks ($/bbl) 215 216 217 218 Diesel Jet Fuel 2 2 16 14,8 12 12,1 12,2 11,5 15,1 15 11,9 14,4 11,4 8 4 1,4 7,2 7,6 1, 1 11,9 6,6 5 9,1 8, Jan Feb Mar Apr May Jun Jul Agu Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Agu Sep Oct Nov Dec Source: Platts REFINING INDUSTRY 6
Light Distillate Cracks ($/bbl) 215 216 217 218 24 Gasoline 4 2 Naphta 2,4 2,7 18 13,5 18,6 15,7 -,5-1,5-2 -4-6 -7,3-8 Jan Feb Mar Apr May Jun Jul Agu Sep Oct Nov Dec -4,9-4,8-4, 12 9,8 1,2 6 1,6 11,9 9,7-2,2-1 -17,2-15,1-2 -3-21,5-22,3 LPG -4,7-16,2-2,6 Jan Feb Mar Apr May Jun Jul Agu Sep Oct Nov Dec Source: Platts REFINING INDUSTRY -4 Jan Feb Mar Apr May Jun Jul Agu Sep Oct Nov Dec 7
Quarterly Product Crack Margins in 215-217 ($/bbl) Source: Platts Diesel 1615,7 15,2 14,6 13,1 14 12,4 12 1,5 1,7 1,8 11,2 1 9,2 8 8,9 7,9 6 Q1 Q2 Q3 Q4 Gasoline 2 19,4 18,9 18 16 15, 14,3 13,3 15,2 14 13 14,5 13,5 12 1,9 12,8 1 1,9 Q1 Q2 Q3 Q4 215 216 217 16 14,4 14 12 9,5 1 11,2 9,9 Jet Fuel 12,4 12, 1,5 9,4 1,2 8 7,3 7,7 8 6 Q1 Q2 Q3 Q4 Fuel Oil (.1) -2-3,9-4 -5,3-5,8-6 -7,8-5,7-8-9,1-7,8-1,2-1 -12-12 -12,5-11,5-14 -12,6-16 Q1 Q2 Q3 Q4 REFINING INDUSTRY 8
Crude Price Differentials ($/bbl) Ural Differentials Price Differentials 1 Brent Brent -,58-1 -,35-1,3-3 -2-3 -2,6-6 -9-4 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 212-217 Differential Range 215 216 217 218-12 11Q1 11Q2 11Q3 11Q4 12Q4 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4 14Q1 14Q2 14Q3 14Q4 15Q1 15Q2 15Q3 15Q4 16Q1 16Q2 16Q3 16Q4 17Q1 17Q2 17Q3 17Q4 Iran Heavy Kirkuk Kuwait Basra Heavy Arab Heavy Ural Source: Platts REFINING INDUSTRY 9
Turkish Economy Strengths Population (mn) 12 GDP (%) 82 81 1.4% growth in last 5 yrs -4 yrs >65% 9 9,2 8,8 22-214 4.9% 21-214 5.4% 11,1 8 79 78 82 81 81 8 79 216 217 218 219 22 6 3 5, 5,1 4,2 4, 3, 2,9 2,1 21 211 212 213 214 215 216 217Q1 217Q2 217Q3 27 26 25 24 23 22 21 Source: EMRA, TSI Diesel Consumption (mn tons) 8.8% average growth in last 5 yrs 22,3 24,2 25,1 26,1 4% annual growth 27,7 216 217 218 219 22 REFINING INDUSTRY 22 165 Car ownership per thousand people 127 134 67% 11 55 214 215 216 217 176 213 1
Turkish Consumption (Million tons) 215-217 Diesel Jet Fuel 215 2,56 215 +8.3% 4,58 +2.7% 216 22,31 +8.5% 216 4,4-4% 217 24,17 217 4,52 1 14 17 21 24 1 2 3 4 5 Gasoline Fuel Oil* 215 216 217 2,1 2,23 2,3 215,6 +3.1% -15.7% 216,58 +6.5% -3.5% 217,49 Source: EMRA *Bunker excluded. 1 2 2 3 REFINING INDUSTRY 1 11
Turkish Petroleum Market - 12 Months 217, (Million tons) Diesel Jet Fuel 217 24,17 +8.3% 217 4,52 +2.7% 216 22,32 216 4,4 4 8 12 16 1 2 3 4 5 Gasoline Fuel Oil* 217 2,3 217 +3.1%,49-15.7% 216 2,23 216,58 Source: EMRA *Bunker excluded. 1 2 2 3 REFINING INDUSTRY 1 12
Turkey s Import / Export Balance (Net) (Million tons) 4 Export 2,1 2,8 3,2 1,5,3,7-4 -3-3,4-3,1-8 Import -1-12 211 212 213 214 215 216 217-13 -13,2-16 LPG Gasoline Diesel Fuel Source: EMRA REFINING INDUSTRY 13
COMPANY OVERVIEW
Tüpraş Shareholder Structure %77 %2 %3 Publicly Traded Energy Investments Inc. (SPV) *Distribution of Domestic/ Foreign Ownership of Tüpraş Shares %51 %17,5 %79,98 Free Float %4 %49 %82,5 %1 Foreign Ownership Domestic Ownership *As of December 31th, 217 COMPANY OVERVIEW 15
Tüpraş Refining Assets & Distribution Network Baku OPET Marmara Terminal 721, m3 İstanbul İzmit Ankara Kırıkkale OPET Giresun Terminal 43,13 m3 Turkey Storage Capacity İzmir Batman Tüpraş : 58% Opet : 9% Other Companies : 33% Total Capacity : 28.1 mn ton OPET Antalya Terminal OPET Mersin Terminal 19,392 m3 24, m3 Nelson Complexity : 9.5 Tüpraş Storage Cap. : 7.2 mn m 3 OPET Storage Cap. : 1.1 mn m3 Crude Pipeline Terminal Kirkuk Refinery 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 16
High Complexity (Nelson Complexity of Refinining Companies) İzmit After Rup 15 14,5 14,5 Tüpraş After Rup 1 5 13, 12,6 11,8 11,6 11,5 11, 1,4 9,9 9,8 9,6 9,5 9,5 9,4 9,2 9,2 9, 8,8 8,7 8,4 Tüpraş Before Rup 8, 7,3 7,3 7,1 7,1 7,1 7,1 6,8 6,5 5,9 5,8 5,8 İzmit Ref. Valero Reliance Essar Marathon Oil Holly-Frontier Neste BP Tesoro Thai Oil IOCL Tüpraş-215 Hellenic PKN MOL SHELL Petrom Galp Saras Petrobras Tüpraş Lukoil HPCL CPCL BCP Esso(Thai) S-Oil MRPL SK Energy BPCL COMPANY OVERVIEW 17
Crude Suppliers of TÜPRAŞ (Million Tons) Africa America Europe CIS Middle East 9 8 7 6 65 67 63 71 76 79 5 Crude Type 217 4 %5,3 3 %36 %58,8 >34 3> 3-4 2 1 6 17 15 12 13 13 14 14 1 11 1 1 1 6 3 2 3 2 1 7 212 213 214 215 216 217 COMPANY OVERVIEW 18
Sales By Customer (217) Customer Groups Sales to Distributors Bitumen %11 Military %1 LUKOIL %4 Other %13 OMV POAŞ %26 TP %3 Export %18 Distributors %45 BP %15 Other %6 Petkim %1 LPG %4 Jet %5 THY Opet %9 Shell %15 OPET %25 Total : 31.5 mn tons Distributors : 14.3 mn tons COMPANY OVERVIEW 19
Competitive Advantages of Tüpraş Added Value Created by Tüpraş Local Market Dynamics Cost Base of Tüpraş Best Fit for the Market with high diesel yield High Economic Growth Energy Efficient High Complexity of Tüpraş Short on Diesel Crude Oil & Feedstock Cost Advantage Presence in all over Turkey through refineries and terminals Import Parity Pricing (Freight advantage of Tüpraş) Economies of Scale COMPANY OVERVIEW 2
OPET- Tüpraş Share 4.% 1.56 Stations 1.1 Million M3 Storage # 1 Brand Royalty Award Jet Fuel Sales THY Opet- 5/5 joint venture with Turkish Airlines for air transport fuel sales in Turkey International Trading London Market positions: 17.8% in White product; 23% in black product Marmara, Aegean, Black Sea & Mediterranean 2nd Biggest Distribution Company by Volume Lubricants Opet Fuchs- 5/5 lubricant joint venture with Fuchs COMPANY OVERVIEW 21
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 13 tugboats 1 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 3 Crude Oil Product 25 2 15 1 5 21,9 23,3 3 18 6 19 3 15,2 15 11,8 6 17 9,6 8,4 5 3 4 9 7 6 5 211 212 213 214 215 216 217 253,7 mn $ Net Sales 49,6 mn $ Op. Profit COMPANY OVERVIEW 22
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 tons/year Target transport % 1 Market share COMPANY OVERVIEW 23
Margin Environment ($/bbl) Premium to the benchmark Mediterranean peers refining margin due to: 1 7,5 Med Complex Margin Month Annual 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 5 2,5-2,5 J-8 J-8 J-9 J-9 J-1 J-1 J-11 J-11 J-12 J-12 J-13 J-13 J-14 J-14 J-15 J-15 J-16 J-16 J-17 J-17 O 18 16 12,8 9,6 6,4 3,2 Tüpraş Brüt Marj Tüpraş Net Marj Akdeniz Marj 12,9 11,9 11,2 1,6 9,6 8,1 6,5 6, 4,8 5,3 3,2 2,5 4, 1,7 2, 213 214 215 216 217 COMPANY OVERVIEW 24
Capacity Utilization and Quarterly Production Volume Capacity Utilization* (%) Quarterly Production (Mil. Tons) 12 9 74,9 71,3 Full Year 15,3 12,5 1,9 98,1 18,1 11,4 Crude Oil 12 9 Other 81,9 78,9 Q4 111,6 11,6 16,3 17,5 94,6 89,7 9 8 7 7,1 214 215 216 217 7,8 7,7 7,3 6,9 7,2 7,4 7,4 6 6 6,6 6,7 6,3 6 5,6 3 3 5 5,4 5,5 214 215 216 217 *Nameplate capacity calculated by standard 33 days of operations. 214 215 216 217 4,5 4,6 4 Q1 Q2 Q3 Q4 COMPANY OVERVIEW 25
12M Product Yields 216 217 Bitumen %12 LPG %4 Bitumen %12 LPG %4 Coke %3 Other %2 Fuel Oil %7 Other %1,7 Black Prod. %22,3 Light Distil. %25,5 Gasoline %2 Naphtha %1 Coke %3 Other %2 Fuel Oil %7 Other %2,1 Black Prod. %22,6 Light Distil. %25, Gasoline %2 Naphtha %1 Mid. Distil. %5,4 Mid. Distil. %5,3 Jet %17 Jet %17 ULSD %33 White Product %76.56 ULSD %33 White Product %76.27 Production 27,93 mn tons Production 28,88 mn tons API 3,62 API 3,26 COMPANY OVERVIEW 26
Tüpraş Sales (Million Tons) All Time High Total Sales 4 3 2 1 22,2 16,9 Full Year Total Sales (mt) 28,7 3,3 22,2 24,8 31,5 25,7 8 6 4 2 6,1 4,3 Total Sales in Q4 (mt) 7,9 7,7 6,2 6,4 7,3 6,4 Export Domestic Sales 214 215 216 217 214 Q4 215 Q4 216 Q4 217 Q4 Full Year Domestic Sales of Key Products (mt) Domestic Sales of Key Products in Q4 (mt) 3 6 2 1 3,4 3,5 2,9 2,2 2, 2,2 1,9 1,8 4,3 4,4 4,5 3,6 1,6 11,1 9, 6,5 4 2,9,9 1,,5,5,5,5,4 1,1 1, 1,,9 2,6 2,9 2,9 1,7 214 215 216 217 214 Q4 215 Q4 216 Q4 217 Q4 COMPANY OVERVIEW Diesel Jet Fuel Gasoline Bitumen 27
Investments (mn $) 9.5 Nelson complexity High white product yield Process more heavier and sour crudes Run all refineries with 1% capacity utilization Avg. 278 mn$ Avg. 943 mn$ 1.213 974 959 628 Avg. 247 mn$ 4 355 344 274 25 213 186 177 185 26 27 28 29 21 211 212 213 214 215 216 217 218 E Ongoing Projects New Power Plant Revamp of Crude Unit FCC Modernization New Sulphur Units Energy Saving Projects Optimization of conversion units COMPANY OVERVIEW 28
217 Expectations vs 12 Months Results Brent Price ($/bbl) Capacity Utiliation (%) 7 65 6 55 5 45 4 54,7 J-17 55,1 F-17 51,6 M-17 52,5 A-17 5,4 M-17 46,5 J-17 48,6 J-17 51,6 A-17 56 S-17 57,4 O-17 62,6 N-17 64,2 D-17 14 12 1 8 6 4 2 68 14'Q1 CPU 74,9 8,7 69 14'Q2 14'Q3 Average 81,9 84,1 14'Q4 15'Q1 12,5 15,3 18,1 19 11,5 116,5 16,4 114,8 14 11,3 111,6 99,7 12 15'Q2 15'Q3 15'Q4 16'Q1 16'Q2 16'Q3 16'Q4 17'Q1 17'Q2 17'Q3 94,6 17'Q4 Our expectation was 5-55 $/bbl; 217 average was 54.3 $/bbl. Expected Full Capacity Utilization in 217; achieved 18.1% capacity utilization. Margins ($/bbl) Capex (mn $) 1 8 6 4 2 8,7 5, 8,2 5,4 8,9 6,5 Tüpraş Net Margin Med Margin 6,7 4,1 4 32 24 16 8 344, Tüpraş 213, Ditaş 117,6 185,4 17 Q1 17 Q2 17 Q3 17 Q4 215 216 217 Net Tüpraş refinery margin for 12M was 8,1 $/bbl above target of 7,5-8, $/bbl. Tüpraş core refining business capex guidance for 217 was 2 Million dollars. COMPANY OVERVIEW 29
KEY FINANCIALS
217 Key Highlights 31.5 Million tons of Sales 11.4 % Crude Capacity Utilization 3.4 Million tons Processed (Total) 8.1 $/bbl Net Refining Margin 5.9 Billion TL EBITDA 4.5 Billion TL Profit Before Tax KEY FINANCIALS 31
Financial Highlights (mn $) EBITDA Net Income 175 145 115 85 55 25-5 USD 715 16 361 153 95 56 89 315 78 79 338 226 15-27 -11 1.397 422 41 415 15 1.125 48 294 237 114 1.614 321 435 431 427 212 213 214 215 216 217 4th Q 3rd Q 2nd Q 1st Q 175 145 115 85 55 25-5 USD 1.46 817 938 123 629 667 285 283 271 594 47 91 268 39 435 175 256 45 171 75 273 197 75 161 72 231 112 113 27 235 212 213 214 215 216 217 Net Debt- *Debt/Rolling EBITDA Return of Average Equity 3. 6 2.5 5 2. 4 1.5 3 2 1.,8 1 5 3,5 3,6 2,4 551 1.34 1.869 1.598 212-R 213 214 H1 214 9M Net Debt/Rolling EBITDA was calculated with USD figures 4,9 1.663 214 3,3 2,8 2.577 2.748 215 H1 215 9M Net Debt Net Debt/*R. EBITDA 1,7 2, 1,6 1,5 1,1 1, 1,1,7 2.37 2.391 1.751 1.729 1.555 1.68 1.24 1.729 215 216 H1 219 9M 216 217 Q1 217 H1 217 9M 217 1,3 211,32 212,24 213,26 214,35 215,4 216 Q1,11 216 H1,16 216 9M,22 216,45 217 Q1,55 217 H1,49 217 9M,41 217 KEY FINANCIALS 32
Balance Sheet Analysis Cash & Cash Equivalents (Billion $) Receivables (Billion $) 3, 2,4 1,8 1,2,6, 1,7 Mar.14 1,3 Jun.14 1,6 Sep.14 1,7 Dec.14 1,2 Mar.15 1, Jun.15,8 Sep.15 1, Dec.15 1,6 Mar.16 1,6 Jun.16 2,5 Sep.16 1,7 Dec.16 2, Mar.17 1,6 Jun.17 2,2 Sep.17 2,3 2,3 Dec.17 2, 1,6 1,2,8,4,71 Mar.14,52 Jun.14,51 Sep.14,9 Dec.14,2 Mar.15,66 Jun.15 1,7 Sep.15,88 Dec.15,7 Mar.16,91 Jun.16,75 Sep.16,91 Dec.16 1,9 Mar.17 1,15 Jun.17 1,57 Sep.17 1,36 1,36 Dec.17 Financial Loans (Billion $) Payables (Billion $) 5, 4,3 3,6 2,9 2,1 1,4,7, LT Loans ST Loans 3,7 3,7 3,6 3,6 3,2 3,2 3,3,4,3,5,3,3,6,9 3, 3,3 2,8 2,9 2,9 3,1 3, Mar.14 214 1h 214 9M Dec 14 Mar.15 Jun.15 Sep.15 3,4,6 2,8 Dec.15 3,9 4, 1, 1,2 2,9 2,8 Mar-16 Jun-16 4,2 1,1 3,1 Sep-16 3,4,6 2,9 Dec.16 3,6,6 3, Mar.17 3,2 1,1 2,1 Jun.17 3,4 1,3 2,1 Sep.17 4, 1,4 2,6 Dec.17 4 3 2 1 3,1 Mar.14 3,28 Jun.14 3,4 Sep.14 2,46 Dec.14 1,74 Mar.15 1,7 Jun.15 1,59 Sep.15 1,36 Dec.15 1,23 Mar-16 1,69 Jun-16 1,98 Sep-16 2,2 Dec.16 2,62 Mar.17 2,19 Jun.17 2,71 Sep.17 2,22 2,22 Dec.17 KEY FINANCIALS 33
Tüpraş Balance Sheet Million USD 31.12.217 31.12.216 Difference % Difference Current Assets 5.399 3.884 1.516 39 Cash & C. Equivalents 2.334 1.719 614 36 Receivables 1.355 911 444 49 Derivatives 92 1 82 832 Inventories 1.43 1.25 377 37 Pre-paid expenses 17 28-11 -41 Other Current Assets 199 19 9 5 Long Term Assets 4.718 4.987-269 -5 Financial Assets & Subsidiaries 33 264 39 15 Fixed Assets 3.263 3.338-75 -2 Derivatives 27 15-78 -75 Pre-paid expenses 26 68-41 -61 Deferred Tax 813 917-14 -11 Other Long Term Assets 286 296-11 -4 Total Assets 1.118 8.871 1.247 14 Short Term Liabilities 4.686 3.597 1.89 3 Financial Loans 1.398 556 842 151 Payables 2.219 2.2 199 1 Derivatives 47 8 39 461 Deferred Incomes 5 4 1 24 Provisions 24 18 5 29 Other ST Liabilities 993 99 3 Long Term Liabilities 2.654 2.953-299 -1 Financial Loans 2.592 2.892-3 -1 Payables & Provisions 59 59 1 Derivatives 1 1 76 Other LT Liabilities 1 2-8 Equity 2.75 2.298 452 2 Minority Interests 28 22 5 24 Total Liabilities 1.118 8.871 1.247 14 KEY FINANCIALS 34
Dividend In principle; as far as the related regulations, investment needs and financial situation allow, the entire amount of the net distributable profit for the period, calculated within the frame of the Capital Markets Regulations, is distributed in cash taking into consideration the market expectations, long term company strategies, investment and financing policies, profitability and cash position as long as it is covered from the existing resources in our legal records. 12 One of the highest dividend yield in BİST 1.628 1.557 1 8 985 964 746 6 579 626 4 396 2 28 29 21 211 212 213 214 215 216 212/213 EPS includes the tax incentive Earnings per Share Gross Dividend Total Payout (Mn. TL) KEY FINANCIALS 35
Creating Competitive & Sustainable Shareholder Value Tüpraş has one of the highest Corporate Governance Ratings Foreign Currency Long Term Tüpraş BBB-(IG) Ba1 (Pos.) Board Stakeholders Transparency 92,9 94, 98,6 Turkey BB+ (stable) Ba1 (Neg.) BB Koç Holding Baa3- (IG) BBB (IG) Analyst Recommendations Shareholders Overall 95,5 94,7 %38 %62 Buy Hold 25 5 75 1 KEY FINANCIALS 36
Financial Policy Financial Discipline: Risk management policies focusing on areas such as leverage, liquidity, counterparty 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 Counterparty risk limits Counterp arty 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 37
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 Margin Hedging Policy Crack margins: Gasoline, Diesel and Jet Fuel Cracks 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 38
FX Risk Exposure (31 December 217) Consolidated Consolidated 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. Assets Cash 1.996 Million $ Liabilities Payables 1,935 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. Receivables & other assets 35 Stock ST Financial 1.199 RUP : 34 Eurobond : 7 Other : 195 Cash flow Hedge: RUP Facility financing loans designated as hedging instruments of highly probable export revenues. 1,341 Forward & CFH 2,41 LT Financial 2,51 RUP Loans : 964 Eurobond 7 Other Credits : 846 As a general Koç Holding financial policy, Group companies are allowed to keep foreign exchange positions within certain limits. 139 mn $ Cash flow hedge accounting : 1,254 mn $ KEY FINANCIALS 39
OUTLOOK
218 Refinery Maintenance Schedule & Capacity Utilization Even after the 218 maintenance schedule, we aim to exceed our full total capacity utilization target and reach 14.6%. Unit Quarter Duration (weeks) Reason Plt 7 Crude Oil Unit Q4 17- Q1 18 11-13 in 218 Revamp İzmir İzmit Hydrocracker, DHP & Platformer Q1 5-6 Plt 4 FCC Q2 5-6 Plt 2 Crude Oil & Vacuum Unit Q4 5-6 Plt 5 Crude Oil & Vacuum Unit Q2 5-6 Plt 25 Crude Oil & Vacuum Unit Q4 5-6 Plt 47 Hydrocracker Complex Q2 4-5 Plt 63 CCR & DHP Q4 5-6 Periodic Maintenance Periodic Maintenance Kırıkkale All Units Q1 6-7 Battery Shutdown Batman Plt. 1/Crude Oil & Vacuum Q1 4-5 Periodic Maintenance 218 Crude Capacity Utilization 26.8 mn tons (95.4%) 218 Total Capacity Utilization 29.4 mn tons (14.6%) OUTLOOK FOR 218 41
218 Expectations Brent Price Estimation The average Brent crude oil price in 218 is expected to be 55-6 dollars per barrel. Med Complex Margin We expect Med Complex margins to be between 4.75 5. dollars per barrel band in 218. Tüpraş Net Margin Net Tüpraş refinery margin is expected to be in the region of 7,5-8, dollars per barrel Operations Full Total Capacity Utilization using imported semi-products such as ASRFO and HVGO Production: approximately 28.3 million tons Total sales: 31. million tons Investment Refining investments is expected to be around 25 Million dollars. OUTLOOK FOR 218 42
Competition # 1 (SOCAR-STAR Refinery) 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. : 3.3 Billion $ Credit : 2.4 Billion $ Equity Total Investment : 5.7 Billion $ Production (K Ton) Diesel Jet Fuel Sulphur Petrocoke Fuels Petrochemical Feedstock LPG Naptha Mixed xylene Reformate OUTLOOK FOR 218 4.8 1.6 158 698 26 1.6 46 524 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 planned to be commissioned in 218. STAR Refinery (Total Cap. 1 mn ton) 219, mn ton LPG Petchem Feeds Gasoline Jet Fuel Diesel Coke Fuel Oil Bitumen Tüpraş 1,2,3 5,8 5,4 1,2,8 1,5 3,1 Production Star,3 2,6 1,6 4,8,7 Total 1,5 2,9 5,8 7, 15 1,5 1,5 3,1 Turkish Demand 4,2 Balance -2,8 2,4 5, 26,1 4,6 3,4 2, -11,1-3,1 1,3 3,3,2 -,2 43
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 Moldova Ukraine France Croatia Spain Portugal Italy Albania Greece Romania Russia Turkey Bulgaria Syria Tunisia Israel Morocco Algeria Libya 54 Refineries 7.8mn bpd OUTLOOK FOR 218 Georgia Turkey Egypt 17 Refineries 1.8mn bpd 44
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. HS FO Scrubbed LS FO 2,1 LS Fuel Gap 1,8 LS Fuel Gap %19 switch to LNG %5 %2 Other Diesel Install Scrubber Mn b/d HS Fuel Oil %74 Buy Low Sulphur Fuel 216 22 222 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 Ship Owners Intention Survey 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. Source: IEA, Oil Sector Report, 217 OUTLOOK FOR 218 Source: UBS, 217 45
Appendix
Q4 Product Yields 216 217 Coke %3 Other %1 Fuel Oil %5 Bitumen %13 LPG %3 Other %1,2 Black Prod. %21,2 Mid. Distil. %52,8 Light Distil. %24,8 Gasoline %2 Naphtha %1 Jet %14 Coke %3 Fuel Oil %6 Other %3 Bitumen %16 LPG %3 Other %2,9 Black Prod. %25,2 Mid. Distil. %47, Light Distil. %24,9 Gasoline %21 Naphtha %1 Jet %16 ULSD %39 White Products %77.57 ULSD %31 White Products %73.74 Production 7,3 mn tons Production 6,3 mn tons API 3,1 API 3, APPENDIX 47
12M Product Yields 216 217 Bitumen %12 LPG %4 Bitumen %12 LPG %4 Coke %3 Other %2 Fuel Oil %7 Other %1,7 Black Prod. %22,3 Light Distil. %25,5 Gasoline %2 Naphtha %1 Coke %3 Other %2 Fuel Oil %7 Other %2,1 Black Prod. %22,6 Light Distil. %25, Gasoline %2 Naphtha %1 Mid. Distil. %5,4 Mid. Distil. %5,3 Jet %17 Jet %17 ULSD %33 White Product %76.56 ULSD %33 White Product %76.27 Production 27,93 mn tons Production 28,88 mn tons API 3,62 API 3,26 COMPANY OVERVIEW 48
Income Statement (In USD) Million USD FY 216 FY 217 % Diff. 4Q 216 4Q 217 % Diff. Net Sales 11.547 14.81 28 3.332 3.855 16 Gross Profit 1.29 1.75 41 51 366-28 Operating Expenses -33-316 4-91 -95-5 Income/Loss from other operations -98-57 42-16 -73 31 Operating Profit 781 1.333 71 314 198-37 Income/Loss from equity investment 53 64 22 8 16 93 Operating Profit Before Fin. Income/Loss 834 1.397 68 322 214-34 Net Financial Income /Expense -19-17 11-35 -21 4 Profit Before Tax & Minorities 644 1.227 91 287 192-33 Net Profit 594 1.46 76 256 123-52 * EBITDA (mn.$) 1.125 1.614 43 48 321-33 * EBITDA (mn.$) CCS 972 1.453 5 418 235-44 For P&L, USD/TL rates: 217 12M 3,645, 216 12M 3,186 *According to international standards, in our EBITDA calculation, FX related items are not included. APPENDIX 49
Crack Margin Effect on Tüpraş in 12M (FOB Italy Prices) Higher product cracks in 217 over 216 indicates a +1.9 $/bbl margin difference, yielding a 1.4 billion TL contribution to Tüpraş Financials. Product Price, $/ton Tüpraş Crack Margin, $/bbl 217 216 216 Yield 217 216 LPG 435,2 38,3 %3,3-15,5-16,2 Gasoline 549, 462,3 %19,5 13,4 13,3 Naptha 467,2 366,6 %1, -1,5-2,3 Jet Fuel 512,7 48,9 %15,4 1,9 8,3 Diesel 491, 394,6 %3,4 11,7 9,3 Diesel 1 478, 384,9 %1,2 9,9 8, Fuel Oil 1% 315, 222,3 %,9-5,7-9,4 Fuel Oil 3,5% 298,5 25,2 %5,7-8,2-12,1 Diğer 276,3 2,3 %16,8-8,5-1,5 Total Crack Margin,$/bbl 5,5 3,7 Dated Brent Avg. $/Bbl 54,3 43,7 Margin Differences, $/bbl +1,86 Total Processed, mn bbl 213.29 Total Effect, mn $ 383.6 Total Effect, mn TL 1.398,1 94,4 APPENDIX 5
High Complexity (Resid Upgrading Units Production-(Thousand Tons) (kton) Raw Materials Products Natural Gas 246 Vacuum Resid 1,214 Diesel 2.883 Gasoline 522 LPG 69 Total Production Atm. Straight Run Fuel Oil 3,36 PetroCoke Sulphur 4,25 69 86 Total Feed 4,496 APPENDIX 51
High Complexity (Tüpraş Total Production Change After RUP) mn tons Gasoline&Naptha 4,7 1,7 %35 Jet Fuel 3,6,9 %25 Diesel 5,6 5,5 Others 1,4,3 %19 Fuel Oil Coke,35 2,7 %-87,7 RUP production + 4 Refineries Capacities increase 9,1 mn tons, instead of 4,2 mn ton Bitumen 2,9 Before RUP After RUP APPENDIX 52
Flexibility & Reliability; Multiple routes to maksimum capacity Key units Number of units Capacity (m3/d) CRUDE OIL 8 97 LPG MEROX Flow Diagram LPG Yields (%) 3.5% Increased conversion capacity Strong integration among refineries VACUUM 8 4232 HYDROCRACKER ISOMERISATION 3 64 4 182 NAFTA SPLITTER CRUDE OIL ISOMER. UNIFINER REFORMER KERO / DIESEL HDS Benzen Saturation GASOLINE NAPHTHA JET FUELOİL 22.% 16.5% UNIFINER REFORMER 7 169 KERO/DIES EL (HDS) 1 373 FCC 2 47 COKER 82 1 NAPHTHA SPLITTER 8 VACUUM VACUMM DİST. More than one distillation and production units MHC 2 FCC HYDROC. COKER FCC Benzin HDS Lube Oil Bitumen DIESEL LUBE OIL BITUMEN & FUEL OİL 33.9%.5% 19.9% LPG MEROX 6 OTHER 3.8% APPENDIX 53
Competition (European Pump Price Comparison) Gasoline (Krş / Lt) Diesel 1 (Krş / Lt) 8 6 553 322 Pump No Tax Distr. Marg. Tax 691 663 634 642 439 419 413 584 48 317 725 735 473 473 7 525 496 255 Pump No Tax Distr. Marg. Tax 54 266 552 38 596 337 62 394 65 317 66 416 675 411 4 35 2 51 18 267 26 23 52 174 244 62 191 252 72 19 175 55 186 274 6 184 259 58 199 33 26 218 64 21 TR Spa. UK Ger Eu19 Fra. Gre. Ita. TR Spa. Ger. EU19 Fra. Gre. UK Ita. Not: Prices valid on 12 Feb 218-Turkey Gasoline pirice as of 14th of February 218 APPENDIX 54
Tüpraş HSE KPI: Loss Time Incident Frequency and Severity Frequency Ratios 8 6 7,1 7,1 6,9 Incident Frequency 6,1 Including contractors Tüpraş Contractor Total 4 2 4,8 5, 3,6 3,4 3,5 3,6 2,5 3,2 3,4 2,5 3,1 1,7 2,2 2,6 2,8 1,9 1,5 2,4 1,6 1,9 1,8 1,9 1,1 2, 1,7 1,7 1,4 1,3,8,9 2 21 22 23 25 26 27 28 29 21 211 212 213 214 215 216 Loss Time Severity Frequency Rate 28 29 21 211 212 213 214 215 216 Tüpraş 92 44 4 53 65 61 59 719 11 Contractor 116 11 81 118 424 17 378 51 551 Total 15 73 57 83 29 26 38 315 354 loss time incident freaquency rate =number of incident *1/man hours loss severity frequency rate = loss time*1/man hours APPENDIX 55
Energy Saving Projects (mn$) 5 375 345 376 398 47 416 424 25 24 125 135 73 42 28 29 21 211 212 213 214 215 216 217 28 29 21 211 212 213 214 215 216 217 Total Tüpraş Energy consumption (TJ) 76.653 65.265 67.1 7.792 71.86 69.147 67.34 9.796 12.156 15.851 785.79 Energy-saving(TJ) 978 1.891 3.155 3.53 5.255 2.841 1.772 1.31 1.54 83 386 Energy Efficiency Project 36 52 65 92 97 4 22 21 18 15 458 Savings (mn $) 42 32 62 15 16 31 22 1 9 5 424 APPENDIX 56
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 caputalization Turkey s Leading Investment Holding Company The only Turkish company in Fortune 5 1 16% CARG in consolidated profit 2 in 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 APPENDIX 57
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