NIS.EU NIS GROUP’S PERFORMANCE PRESENTATION for 9M of 2019 2019, November 8th Anton Cherepanov Finance, Economics, Planning and Accounting Function
NIS.EU
NIS GROUP’S PERFORMANCE PRESENTATIONfor 9M of 2019
2019, November 8th Anton CherepanovFinance, Economics, Planning and Accounting Function
NIS in Q3 2019
2
Exploration and production Block
• 32 development and 9 exploration wells drilled in Serbia (9M 2019)• 700 km2 covered with 3D seismic surveys on Ada exploration area, Serbia, and
170 km2 covered with 3D in Romania on block Ex-2. (9M 2019)• Drilling of three wells completed in Romania• In the third quarter, the preparations for start-up of the gas conditioning
complex on ’Teremija Sever’ and ’Jimbolia’ fields completed, the documentationfor starting commercial operation submitted to the government authorities.
Division Downstream
Refinery• Continuous employee training on the
DCU complex and OTS1
• Preparation of the units for operation inwinter conditions
• In July, maximum bitumen output(56,435 tons) for the last 10 years wasrecorded
• Refining of Romanian oil began1OTS - operating training system
• 260 mn EUR invested in the project
• The Detailed Design completed and allpermits obtained
• 99.9% of equipment and material delivered
• Construction and installation works relatedto construction of the complex completed91.41%.
Status of ‘Bottom of the Barrel’ Project
NIS in Q3 2019
3
Division Downstream
Sales• Following the completion of the works on its total reconstruction, Stari Banovci PS
was commissioned in the L format (GAZPROM brand);• The works on the total reconstruction of Barajevo PS (NIS brand), Krnješevci PS
(GAZPROM brand) and Ivanjica PS (NIS brand) have commenced;• The construction of Otopeni PS in Romania has begun (GAZPROM brand);• In July, NIS sold record volumes of bitumen – 55,912 tonnes, which is the best
figure the company so far;• A new payment service, “purchase with cash back”, was introduced on petrol
stations.EnergyCCPP Pančevo • The building permit for the 220 kV switchgear were obtained.
• Gas turbines and gas turbine generators have been installed.• The contract on monitoring the construction of the connection with the Electric Power Network of Serbia has
been signed.
• МЕТ Renewables and NIS commenced joint operations on their wind farm project in Serbia• Negotiations with EPC contractors are close to conclusion• As a precondition for the implementation of this project, it is necessary to renew the status of a temporary privileged electricity
supplier. The request was submitted in August, and we are waiting for a response of the Ministry of Mining and Energy.
Project windpark Plandište
Macroeconomic IndicatorsWeakening of the dinar compared the dollar, oil price drop
4
USD/RSD rate +6% Brent crude price, $/bbl
-10%
90
100
110
I II III IV V VI VII VIII IX
2018 Average 2018
2019 Average 2019
55
60
65
70
75
80
I II III IV V VI VII VIII IX
2018. Просек 2018.
2019. Просек 2019.Average 2019
Average 2018
HSE Indicators
5
Increasing transparency
LTIF RAR
Majorevents
Medium events
Minorevents
HIPO
2.101.72
9M 2018 9M 2019
9M 2019
9M 2018
0.28 0.27
9M 2018 9M 2019
9M 2019
9M 2018
9M 2018 9M 2019
43,476 47,070
835 1,051
54 62
8 0 18%4%
Key IndicatorsNIS Group
6
Q32019
Q32018
∆ Key indicators UoM 9M2019
9M2018
∆
61.94 75.27 -18% Brent Dtd $/bbl 64.7 72.1 -10%
78.7 86.3 -9% Sales revenues bn RSD 196.2 206.8 -5%
15.3 18.1 -16% EBITDA bn RSD 31.2 42.0 -26%
7.5 10.2 -27% Net income bn RSD 10.7 21.7 -51%
25.9 23.3 +11% OCF bn RSD 41.9 32.7 +28%
56.8 51.3 +10% Accrued liabilities based on public revenues bn RSD 136.6 140.3 -3%
324 338 -4% Oil and gas output thou. TOE 965 999 -3%
1,115 1,073 +4% Crude oil and semi-finished products output thou. tons 2,318 2,769 -16%
1,102 1,076 +2% Total petroleum products sales volumes thou. tons 2,621 2,741 -4%
10.6 10.1 +5% CAPEX bn RSD 29.0 27.3 +6%
574 565 +2%Total debt to banks(total debt to banks + letters of credits)
mn EUR 574 565 +2%
7
Motor Fuel Market Trends9M 2019/2018
• The consumption of motor fuels is rising inthe entire region, in line with the positivemacroeconomic indicators.
• The largest contributors to the increase inconsumption are transport, agriculture,construction and processing industries.
Serbia
The increase in the consumption of motor fuelsis primarily due to the increase in consumptionof diesel.The main growth factors are the constructionand road industries, increase of transit traffic,increase in exports of agricultural products andproducts of the processing industry.
Slovenia
3.1%
Croatia
5.8%
Bosnia and Herzegovina
0.6%Bulgaria
1.3%
Romania
2.1%
Hungary
4.0%
Serbia+5.0%
Market Share – SerbiaPetroleum Products Market
8
Petroleum productsmarket volumes, thou. tons +2%
• The total consumption of petroleum products shows apositive growth trend. This was a result of the followingfactors:• growth in consumption of diesel, bitumen and coke;• construction and road industries are the main drivers
of diesel consumption;• good agricultural season.
• Primary gasoline (turnaround of Petrohemija) and heavyfuel oil show a downward consumption trend.
NIS has preserved its market share, whichtraditionally quite substantial. The largest marketshare jumps were in the petrol, diesel and heavyfuel oil segments, respectively.
698(26%)
724(26%)
2,014(74%)
2,040(74%)
2,713 2,764
9M 2018 9M 2019
NIS
Others
Market Share – SerbiaMotor Fuel Retail Market
9
NIS’ sales are following the market trends and arerising in the diesel and petrol segments, whereasLPG sales are falling. Its modernised petrolstations, range of additive-enriched fuels andcarefully designed loyalty programmes ensurethat the high market share is preserved.
• Growth of retail market by 4%
• The main growth factors are an increase in purchasingpower, increase in the number of vehicles, increase oftransit traffic, and the fact that a number of transportand distribution companies have started supplying atpetrol stations.
Retail market, thou. tons+4%
725(57%)
752(57%)
545(43%)
574(43%)
1,2701,327
9M 2018 9M 2019
NIS
Others
10
Market Share – Region9M 2019/2018
Bosnia and Herzegovina
No. of PSs : 37% total market: 21.8%% retail market: 10.2%
Romania
No. of PSs: 18% total market: 0.9%% retail market: 1.3%
Bulgaria
No. of PSs: 35% total market: 4.9%% retail market: 4.4%
Operating IndicatorsExploration and Production
11
• The planned hydrocarbon output achieved (1.7% over the plan)
Oil and gas output,thou. TOE -3%
663 646
313 293
24 26
999 965
9M 2018 9M 2019
Foreignprojects
Domesticgas
Domesticoil
Operating IndicatorsRefining
12
Refining of oil and semi-finished products, thou. tons
-16%
659 618
1,9011,534
209
166
2,769
2,318
9M 2018 9M 2019
Semifinishedproducts
Import oil
Domestic oil
• Reduction of the volume of refining by -16% dueto the turnaround in Pančevo Oil Refinery
• As opposed to the third quarter last year, thisyear recorded a 4% increase in the volume ofrefining.
1,696
1,204
6M 2018 6M 2019
1,073 1,115
Q3 2018 Q3 2019
+4%
-29%
Operating Indicators Sales and Distribution
13
• Retail in Serbia – increase 5%
• Wholesale in Serbia – decrease -7%
• Export – decrease -20%
• Foreign assets – increase 17%
Sales volumes*, thou. tons -4%
543 572
266 311
1,501 1,392
431 345
2,7412,621
9M 2018 9M 2019
Export
Wholesale -Serbia
Foreign assets
Retail - Serbia
*Without internal sales
• Increase of the sales volume in Q3 2019by 2% compared to the same period lastyear
• In the first 9 months of 2019, the totalsales volume surpassed the volume ofrefining
Financial IndicatorsEBITDA
14
-26%EBITDA, bn RSD
42.0
31.2
9M 2018 9M 2019
• The fall of oil prices on the world market
• Capital overhaul in Pancevo Oil Refineryand turnaround costs
• The fall of oil production
Financial IndicatorsNet Income
15
Net income, bn RSD -51%
21.7
10.7
9M 2018 9M 2019
• Lower EBITDA
• Greater amortization (0.8 bn RSD)
Financial IndicatorsOCF
16
• Lower liabilities for the import of crude oil
• Lower liabilities towards the state
• Higher customs duties
• Higher derivatives duties
OCF, bn RSD+28.3%
32.7
41.9
9M 2018 9M 2019
Financial IndicatorsCAPEX
17
CAPEX, bn RSD +6%
27.3 29.0
9M 2018 9M 2019
CAPEX by segments
52%
32%
9%6%
0% 1%Exploration and productionBlock
Bottom of barrel Project
DWS Refining
DWS Sales and distribution
The rest of the Downstreamdivision
Corporate Centre
Operational Efficiency Improvement MeasuresEffect on EBITDA, bn RSD
18
The overall effect of the operational efficiency improvement measures on the EBITDA indicator in the first nine
months of 2019 amounted to 1.4 billion RSD.
1.4
1.40.5
0.3
0.2 0.3 0.01 0.11.0
2.4
Exploration andproduction
Services Refining Sales anddistribution
Technicalservices
Corporate centre NIS 2019 Perventeddamage
Total NIS 9M 2019
Measures Pervented damage
16225
101125231133
22
20
552459
345306330
492607628
549575573590574
714484
355316355
515618631
553577575592574
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Letter of credit
Debt to banks
19
Debt to BanksMaturity and Currency Structure of Credit Portfolio
Debt to banks, mn EUR
-0.4%
Bank indebtedness, mn EUR
Debt structure:USD 0.3% EUR 99.3% Other 0.4%
1932072236197
751401763
3
363
359252
323270
133417
467453
547572570584571
553459
345305330
492607629
549575573590574
31.12.'0931.12.'1031.12.'1131.12.'1231.12.'1331.12.'1431.12.'1531.12.'1630.12.'1731.12.'1831.03.'1930.06.'1930.09.'19
up to 1 year
over 1 year
Comparative analyses
20
EBITDA margin (%) EBITDA/FTE (thou. USD)* Daily volume (t/day)
Share of light products (%) UPS OPEX ($/boe)
34.2
26.1
15.9
13.1
12.0
20.3
166.9
72.3
43.6
25.3
16.6
64.9
9.38.3
7.66.66.5
5.5
7.3
11.4
8.6
6.9
6.1
Н/Д
8.2
83.4
80.6
77.6
77.1
75.5
78.8
Data obtained from 6M 2019 reports, except for NIS (9M 2019)*All data for 6M 2019
Conclusion
21
Deacreased refining volume due to capital overhaul
The fall of oil price comparing to the firstnine months of 2018
Growth of Operating cash flow
Improvement of HSE indicators
In the third quarter of 2019 we mark anincrease in refining volume (+4%) and anincrease in sales volume (+2%) comparedto the same period of the previous year
Disclaimer
This presentation has been prepared by NIS j.s.c. Novi Sad ("Company") and consists of a slide show that contain information pertaining to the NIS Group intended to investors. Thispresentation is not any offer or invitation to tender. or any information on the approval of the offer for sale or purchase or registration of shares or other securities of Company;neither this presentation. nor any of its part. as well as the fact that this presentation is made available or distributed. can be a ground for any contract or investment decision. and itmay not be relied upon for this purpose.
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