HELLENiQ ENERGY S A : Annual Report 2023

2023 Annual Report

Empowering Tomorrow

2023

Annual Report

	HELLENiQ ENERGY
24/2024	Holdings S.A.

3

Table of Contents

Message to	06	Our	12	Business	26			74
Shareholders	Strategy	Environment		ESG
Business Environment	08	Our Strategy	14	Macro Landscape and			Double Materiality
					Petroleum Market	28		Analysis	76
Financial Results	08	Strategic Pillars	15
Greek Market	40		Sustainable
Implementation of "Vision		Digital Transformation	20					Development Goals	78
2025" Strategy	09				Geopolitical Events	40
2023 at a Glance	24		ESG Reported Standards,
Sustainable Development									Frameworks and Ratings	80
- ESG	10								Environment and
									Climate Change	83
									Health and Safety	87
									EU Taxonomy	90

HELLENiQ ENERGY
Holdings in the	158		Risk	168
Capital Markets		Management
Main Information	160		Main Risk Factors and
				Mitigating Measures	170
Share Price Development	160
	Overview of Internal
Dividend Policy	162		Control System and Risk
				Management	174
Eurobond Issue	164
Investor Relations Services	165
Information for				Financial	180
Shareholders and				Information
Investors	166
	Selected Financial Data	182

Business	42
Review
2023 Financial Review	44
Business Activities	48

Society110

Corporate

Governance120

Management148

Consolidated Financial
Statements	185
Segmental Information	187
Contact Information	189

4

5

Message to

Shareholders

Business	Sustainable
Environment	Development - ESG
08	10
Financial
Results
08
Implementation of
"Vision 2025" Strategy
09

2023 was yet another successful year for the Group, with the first phase of the Vision 2025 strategic plan completed and having a positive impact in terms of operational performance and profitability. At the same time, notable progress has been made in ESG matters, with increased participation and contribution to society's needs.

6

7

Message to	Our	Business	Business
Shareholders	Strategy	Environment	Review

Message to shareholders

	HELLENiQ ENERGY Holdings	Risk	Financial
ESG	in the Capital Markets	Management	Information

Dear shareholders,

2023 was yet another successful year for the Group, with the first phase of the Vision 2025 strategic plan completed and having a positive impact in terms of operational performance and profitability. At the same time, notable progress has been made in ESG matters, with increased participation and contribution to society's needs.

Business Environment

In 2023, the global economic growth continued to decelerate due to the impact of tight monetary policies implemented by central banks, high inflation and a slowdown in global trade activity. At the same time, the geopolitical environment remained volatile, primarily driven by tensions in the Middle East. The global economy expanded by 2.6% in 2023, a decrease from the previous year's growth rate of 3.0%. In 2024, it

is projected that global economic growth will further decelerate to 2.4%, reflecting the persistent tightness in financial conditions and the ongoing effects of strict monetary policies on global disposable income and trade.

In the oil market, global demand increased by 2.5 million bpd to 102.1 million bpd, while in 2024 it is expected

to increase further by 2.2 million bpd, reaching 104.4 million bpd. Crude oil prices fell in 2023, with Brent crude averaging $83/bbl, down 18% y-o-y.

Refining margins declined from the previous year's all-time highs, but remained strong compared to the

most recent five-year cycle (2015-2019), prior to the pandemic. They were primarily driven by demand for main products, as well as the sanctions imposed on Russia and the geopolitical tensions in the Middle East in 4Q23 which affected products supply and led to redirection of trade flows.

An important development was the recognition by energy companies and policy makers that fossil fuels are part of the solution and should contribute to the energy transition. Extreme and unfeasible solutions have a detrimental effect on the environment, while compromising energy costs and security.

Domestic demand for oil products amounted to 6.6 million MT in 2023, -3%y-o-y due to a drop in heating oil consumption. Excluding heating oil, demand increased by 4%. Aviation and marine fuel demand reached 1.45 million MT (+7%) and 2.7 million MT (+3%) respectively.

Financial Results

Having reported a record-high profitability in 2022, primarily driven by exceptionally high international refining margins, 2023 financial results were shaped at lower levels, but, still represented the second-best performance in the Group's history, with Adjusted EBITDA reaching €1,237 million and Adjusted Net Income amounting to €606 million.

Profitability was driven by operational excellence and the implementation of our strategic plan, which are more controllable and predictable than a volatile

international commodity environment. Our initiatives include the strengthening of the International Marketing business, expansion into new markets for either fuels products or RES projects and a substantial renewal and development of our human capital, supporting an ongoing cultural shift across the organization.

Considering the strong performance and outlook, the Board of Directors will propose to the Annual General Meeting the distribution of a total dividend of €0.90 per share, the second highest in the Group's history.

Using the 2023 year-end share price, the total dividend represents a higher than 12% dividend yield.

Additionally, the successful completion of the transaction involving the placement of 11% of the share capital to both international and domestic investors by the Group's major shareholders in December 2023, represents a vote of confidence in our financial performance and prospects.

Implementation of "Vision 2025" strategy

During 2023, the Group recorded progress in all strategic areas and has implemented significant initiatives that will deliver value upon their completion in the coming years.

In our core business, our objective is to further enhance operational excellence and accelerate projects that profitably promote energy transition, through a series of initiatives that contribute to reducing the Group's carbon footprint. In this context, we are progressing

projects that improve energy efficiency and increase energy autonomy at the refinery facilities. In terms of sustainable fuels, we are implementing a Hydrotreated Vegetable Oil (HVO) co-processing unit, while investments are being considered for the first Greek Sustainable Aviation Fuel (SAF) production unit, the implementation of a CO2 capture project, as well as the production of green hydrogen and synthetic fuels. Furthermore, we are progressing the expansion of the polypropylene production plant, which, in addition to enhancing economic value, reduces our reliance on fuel sales and further improves the environmental impact of our business. In Fuels Marketing, we are focusing on improving the business in Greece and expanding the network internationally. At the same time, the development of electric chargers' network and e-mobility services is accelerating, both at our petrol stations and at other strategic locations, with the aim of providing enhanced services to end consumers.

In the RES business, HELLENiQ Renewables has significantly accelerated the expansion of its portfolio in 2023, positioning itself as a leading player in both the Greek market and selected international markets. Specifically, through the completion of a series of agreements in Greece, Cyprus and Romania, it had achieved an installed capacity of 356 MW by the end of 2023, along with projects under construction or in advanced stages of development with a total capacity of 0.7 GW. The current pipeline has increased further to

4.3 GW, with growing aspirations for our international footprint as well. The progress achieved to date credibly supports our claim of attaining an operational capacity

8

9

Message to	Our	Business	Business
Shareholders	Strategy	Environment	Review

	HELLENiQ ENERGY Holdings	Risk	Financial
ESG	in the Capital Markets	Management	Information

of over 1 GW by 2025 and more than 2 GW by 2030. It is important to note that these targets exclude our offshore wind parks business, for which we have entered into a strategic partnership agreement with RWE Renewables.

In the E&P business, the processing of 3D seismic data in offshore areas, specifically the "Ionian", "Block 2" and "Block 10" areas, has been successfully concluded. Additionally, the processing of 2D seismic data in two offshore areas in Crete has been completed, while their interpretation is in progress. In the "Southwest of Crete" offshore area, a 3D seismic acquisition has also been completed, followed by data processing and interpretation.

The implementation of our digital transformation program continued throughout 2023, with a total investment of €50 million to date. The program yielded an annual benefit of €44 million for 2023, which is projected to exceed €50 million by 2025. This program stands as one of our most efficient and essential investments, fundamentally transforming our operational practices.

Sustainable Development - ESG

approach across all dimensions (environmental, societal, and corporate governance), in accordance with the UN's Sustainable Development Goals.

One of our foremost priorities is to reduce the environmental footprint of the Group's activities, aiming to decrease the carbon footprint of both direct and indirect emissions (scope 1 and scope 2) by 30% by 2030, while developing options to mitigate indirect environmental emissions (scope 3). At the same time, given the nature of our activities, the health and safety of our employees and partners, is also a top priority. In 2023, we achieved a 7% reduction in the carbon intensity index compared to the previous year, improved safety indicators by 14%, and received higher ESG ratings from international organizations.

Moreover, our Group continuously contributes to society, through the implementation of corporate responsibility initiatives. In 2023, we implemented corporate responsibility actions totaling €20.8 million, benefiting 750,000 individuals in Greece and internationally. Moreover, in addition to the actions implemented as part of the Group's Corporate Responsibility program, the Board of Directors of HELLENiQ ENERGY approved the implementation

of Education, Religious Affairs and Sports, continued to reward academic excellence among high school graduates and awarded scholarships for postgraduate studies. Aiming at contributing to environmental preservation and sustainable urban development, we implemented targeted initiatives such as anti-erosion projects in affected areas and efforts to clean beaches and green spaces. Furthermore, we supported cultural and sporting initiatives, including sponsorships related to the "2023 Elefsis - Cultural Capital of Europe" program, as well as the EKO Acropolis Rally and national

basketball teams. Recognizing that our employees constitute the cornerstone of our Group, we actively engaged 1,092 employees in Greece in voluntary social solidarity activities in 2023.

On behalf of HELLENiQ ENERGY Group's employees and cognizant of our responsibility, we are committed to strengthening our resolve, with the objective of maximizing value creation for both our shareholders and society.

Against a backdrop of increasing challenges encountered by societies, individuals, and businesses, it is our responsibility to make a significant contribution through effective management in order to foster an environment that generates maximum value for all stakeholders. Within this framework, and building upon our ongoing and constructive engagement with all stakeholders, we have incorporated the principles of sustainable development into the Group's strategic

of a special action program of €10 million to revive economic and social activity in the Region of Thessaly. Through our commitment to supporting vulnerable social groups and promoting social well-being, the Group implemented the "Wave of Warmth" program for the 15th consecutive year, providing heating oil to 154 school units in neighboring municipalities and major public children hospitals in Attica. Moreover, the "Proud of Youth" program, under the auspices of the Ministry

Ioannis Papathanasiou	Andreas Shiamishis
Chairman of the BoD	Chief Executive Officer

10

11

Our

Strategy

Our Strategy

14

Strategic Pillars

15

Digital Transformation

20

2023

at a Glance

24

The implementation of our strategic plan leverages on major market trends and focuses on the improvement of our existing businesses, as well as the development of new activities.

12

13

Message to	Our	Business	Business
Shareholders	Strategy	Environment	Review

Our Strategy

The Group's strategy, in line with the «Vision 2025»	and create value for shareholders.
strategic plan, is focused on three key areas supported
by horizontal initiatives. The objective is to expand and
diversify the business portfolio, increase profitability	More specifically:

Strategic Pillars

Evolve refining through		Strengthen wholesale
decarbonization and		market reach and
operational excellence		performance, while
		growing position in
		regional retail markets
Grow conventional

01

Strengthen and decarbonize the downstream business: evolve

refining and petrochemicals through decarbonization and operational excellence, expand the international market reach and focus marketing efforts on customer needs, utilizing digital technologies.

Horizontal initiatives

02

Expand downstream value chain into adjacent areas: establish a significant presence in biofuels, enhance mobility offerings through e-mobilityservices and explore opportunities in the hydrogen economy, recycling and synthetic fuels.

03

Diversify and scale up into green

energy: grow and integrate renewables & storage solutions into our portfolio, increase geographical diversification, further develop energy management and trading capabilities, while improving the effectiveness of our utility position.

renewables portfolio
Diversify and	Strengthen and
expand international
decarbonize
footprint	downstream business
Diversify technology	1
base
Improve asset
utilization	Diversify and scale up into	Expand downstream
	green energy, integrating	value chain into
Streamline/integrate	with portfolio	adjacent areas
Power & Gas
business	3	2

Operating model and governance

Develop a meaningful presence in biofuels

Enhance services with e-mobility offering

Develop in hydrogen economy and synthetic fuels

The horizontal initiatives encompass a range of actions with the aim of attaining diverse objectives. These include the expansion of digital transformation, the increased focus on operational excellence, the implementation of re-organization and the investment in human capital, the integration of risk management best practices into the

business model, and the redefinition of the ESG strategy. The objective is to achieve a 30% improvement in our GHG footprint by 2030, along with a 20% additional emissions avoidance through the expansion of the RES portfolio and a commitment to achieving net zero emissions by 2050.

Maintain emphasis on	Integrate ESG	Embed risk management	Broaden digital
operational excellence	considerations in our	best practices	transformation
	business model

Our three-pillar strategy is supported by a constantly improving operating model and governance

14

15

Message to	Our	Business	Business
Shareholders	Strategy	Environment	Review

	HELLENiQ ENERGY Holdings	Risk	Financial
ESG	in the Capital Markets	Management	Information

Refining Supply & Trading and Petrochemicals

• Expanding the range of products and services (NFR,

EV charging, loyalty program).

Key priorities include:

In the area of refining supply and trading, as well as petrochemicals, our main priorities revolve around ensuring safety, decarbonisation of processes, operational excellence, energy efficiency and autonomy, digital transformation, expansion of the petrochemicals' production capacity and investment in cleaner fuels.

Key strategic initiatives include:

• Prioritizing safety through training, implementing

standards and enhancing procedures.

• Implementing energy efficiency and energy

autonomy projects across all refineries.

• Developing carbon capture storage (CCS) at the

Elefsina refinery.

• Establishing an international trading platform.

• Investing in the production of biofuels.

− A UCO co-processing unit (45 ktpa) at the

Thessaloniki refinery is in progress for the

production of HVO.

− Development of a new stand-alone SAF production

unit at the Aspropyrgos refinery.

• Exploring opportunities in the hydrogen economy,

recycling and synthetic fuels.

− Production of e-methanol and e-jet fuels from

green hydrogen and the captured CO2 from the CCS

unit, as well as production of e-ammonia from green

hydrogen.

• Implementing a «net-zero energy» approach at COMO

stations.

• Developing a commercial strategy for industrial

clients.

International Marketing

The strategic objective for the Group is to grow its position in the Southeast European markets where it already operates.

• maintaining a leading position and increasing market share in Cyprus, Montenegro and the Republic of North Macedonia,
• improving the profitability of OKTA,
• continuing expansion in Bulgaria and Serbia through targeted network growth and optimization of the supply chain.

• Facilitating digital transformation: Optimizing our

supply chain through mass balance and load point

management, predictive maintenance and process

safety management systems.

• Investing in the production of high value-added

petrochemical products.

− Increase polypropylene capacity in the Thessaloniki

refinery to 300 ktpa.

Exploration & Production

Focus on specific offshore blocks in Crete and the Ionian Sea.

• The acquisition of 2D seismic data in the Cretan blocks has been completed and the current focus is on processing the data. Furthermore, ongoing 3D seismic surveys are anticipated to enhance the evaluation process and inform the final decisions regarding future actions.

• The interpretation of 3D seismic data is being conducted in three offshore regions, namely «Ionian», «Block 2» and «Block 10».

Marketing

Domestic Marketing

The EKO Excellence strategic transformation program progressed in 2023 with its second and third phases, with the objective of strengthening the business' position in the fuel and energy market, considerably enhancing profitability and expanding into new fuels and services.

The primary initiatives of the transformation program include:

• Rationalizing and expanding the network.
• Increasing the market share of COMO service stations and premium products.

E-mobility

The Group aims to grow its position in the EV charging market and expand its range of mobility products and services. This will be achieved through collaboration with the fuels marketing business to further develop customer e-mobility solutions, expand the DC charging

network at petrol stations and other points of interest while developing an AC charging network at public, semi-public and private locations of interest.

16

17

Message to	Our	Business	Business
Shareholders	Strategy	Environment	Review

Renewable Energy Sources

	HELLENiQ ENERGY Holdings	Risk	Financial
ESG	in the Capital Markets	Management	Information

The Group aims to establish a leading position in the Greek market through:

• developing a portfolio of over 1 GW of operational capacity by the end of 2025, consisting of PV, wind and storage projects and over 2 GW of operational capacity by 2030
• developing offshore wind projects
• expanding internationally

Developing a material pillar in RES (target >2 GW by 2030)

• strengthening energy management capabilities

By 2023, the Group had already positioned itself as a leading player in both the Greek market and selected international markets, with a portfolio under development exceeding 4.3 GW. The total installed capacity in 2023 has reached 356 MW, with presence in Greece, Cyprus and Romania and 0.7 GW of projects are currently being constructed or are in advanced stages of development with a regional footprint.

3,600

	•700 ΜW							>2,000
	Operating
	Under construction
	RTB1
			•370
	•260	•90
356
Operating	Under construction	RTB	Advanced Stage	Operating by 2025	Additional pipeline	2030 Target
Wind	Solar	Storage

• RTB: Ready-To-Build

Power Generation & Natural Gas

In the power generation and natural gas sectors, the Group is focused on enhancing its effectiveness through its affiliates ELPEDISON and DEPA Commercial. The aim

is to maximize synergies with its refining, marketing and renewable energy businesses.

18

19