Quarterly Report For The Financial Period Ended 30 September 2018

Financials Archive

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Condensed Consolidated Statement Of Profit Or Loss And Other Comprehensive Income For The Third Quarter Ended 30 September 2018

Condensed Consolidated Statement Of Financial Position As At 30 September 2018

Financial review for current quarter and financial year-to-date

The results of the current quarter and cumulative period ended 30 September 2018 reflect the scheduled production downtime and operating expenditure to deliver the Major Turnaround 2018 (MTA 2018), which commenced on 6 August and was completed on 21 October.

As a direct result of the planned shutdown due to MTA 2018, the refinery recorded a reduced sales volume of 5.9 million barrels and 26.9 million barrels respectively for the current quarter and cumulative period ended 30 September 2018, compared to the 10.9 million barrels and 30.7 million barrels recorded in the corresponding comparative periods. Market quoted product prices in the current quarter and 9-month period averaged at USD84 per barrel and USD81 per barrel respectively, higher than the average price of USD64 per barrel in both comparative periods.

Gross profit margin for the current quarter includes the settlement of crude price swaps, amounting to RM88.9 million (previously recognised within other comprehensive income/expense). The crude swaps minimised the margin exposure to stockholding gains/losses. Accordingly, the swap settlements offset the stockholding gains recognised in the previous quarter, with cumulative 9-month net stockholding gains at USD0.97 per barrel. FIFO margin for the same period was USD5.04 per barrel. Margins for the comparative periods of 2017 were significantly higher as market refining margins were influenced by unplanned production outages caused by hurricanes in the Gulf of Mexico and a fire incident reported in a world-scale European refinery in the third quarter of 2017.

Operating expenditure for the current quarter and cumulative period includes RM28.2 million of planned maintenance activities carried out to coincide with MTA 2018, minimising disruptions to production. The Company recognised a loss on foreign currency exchange as RM continued to weaken against the US Dollar in the current quarter while lower finance costs resulted from the full repayment of revolving credit facilities in the current quarter and lower borrowing rates applicable on the new term loans and revolving credit facilities.

Current Year Prospects

The Company successfully and safely completed MTA 2018 below the approved budget by USD1.5 million or RM6.2 million. The scope of work conducted during the 11-week turnaround has been the largest since its incorporation based on the scope as approved by the Department of Occupational Safety and Health (DOSH), which is expected to shorten future turnarounds. Significant projects were also completed as planned to reduce production downtime when commissioning and starting up the new production units under regulatory compliance projects.

In addition to completing MTA 2018, the Company simultaneously completed the ATLAS II infrastructure project, installing a new 420-tonne top dome and cyclones in the Long Residue Catalytic Cracking Unit (LRCCU). The new dome is expected to extend the LRCCU’s operating life for another 20 years, enabling the refinery to continue efficient and profitable operations.

Refining margins are expected to remain volatile in the near term based on published forward market prices and refining margins. Operational efficiency, safety performance, product quality, hydrocarbon hedging and financial risk management continue to remain as key areas of focus in optimising the Company’s performance.