NIS GROUP’S PERFORMANCE PRESENTATIONir.nis.eu/fileadmin/template/nis/pdf/Reporting/... · • Export –24% increase • Foreign assets –12% increase Operating Indicators Sales

NIS GROUP’S PERFORMANCE PRESENTATIONfor 6M of 2018

July 27th, 2018Anton FederovFinance, Economics, Planning and Accounting Function

2

• In Serbia, 28 development and 6 explorations wells were drilled in first 6M

• GTM (geological and technical measuring) on Mokrin, Elemir and Bradarac-Maljurevac fields were performed successfully

• Test run of the new compression unit on CS Mokrinjug is in progress, the second faze of the compression unit replacement on this facility was approved,

• Reconstruction work on the fire suppression systems at PS-1 Velebit and SS Boka facilities are in their completion stage (followed by the Inspection and Test Plan and the Ministry of Interior survey).

NIS in Q2 2018Exploration and Production

3

• Repair and start of S-100 small atmospheric distillation

• Refining of the new “Iran Heavy” oil

• Creating of work decomposition for the capital repair in 2019

• Repair of the reservoir zones

• 90% of 3D model for the work package 2 has been designed for the “Bottom of Barrel” facility

• The constructor for performing the work on furnace and electrical and instrumental equipment installation was selected.

NIS in Q2 2018Refining

4

REBAR AND FORMWORKS FOR COKE PIT STRUCTURE

5

HEATER ASSEMBLY ACTIVITIES

6

STEEL ERECTION OF COMPRESSOR HOUSE, WET GAS COMPRESSOR INSTALLED

7

INSTALLED VESSEL AND EXCHANGERS ON STRUCTURE “C”

8

INSTALLATION OF HVAC SYSTEM ON SUBSTATION

9

• Installation of the system for use of fuel with additives on vehicles and commencement of provision and sale of OPTI fuel at PS Gazprom;

• Implementation of the new ORFEJ BOS system on all PS in Serbia;

• Mobile application for co-brand “On the Road with Us” card was issued on App store;

• Representation of NIS on the Agricultural Fair of Novi Sad;

• Preparing and implementing of seasonal offer on PS (FIFA World Cup, summer tourist season);

• Project task for the new format of M-rout, planned to be used on state roads of class I, was coordinated and contracted, developed on its own resources for the retail network requirements;

• Broadening of reselling activities in the Aviation fuel sales

NIS in Q2 2018Sales and Distribution

10

• Realization of the Pančevo d,o,o, plant project for the Pančevo Refinery is in progress, and the exploitation is expected to begin in Q3 2020

• CNG on PS Žarkovo 2 - the coordinating and contract signing procedure is put into motion,

• CNG on PS Blok 45 in Novi Beograd - the tender procedure is completed,

• The total contracted electric power trade is 1,16 TWh,• CNG on Palić field - the reconstruction service

procurement procedure was implemented• Decentralization of thermal source on former RNS -

steam boiler installation

NIS in Q2 2018Energy

The “Plandište” Wind Farm – project delivery plan activities are due to be complete and attracting projectfinancing with new strategic partner, with whom project completion agreement has been signed

USD/RSD rate -14% Urals RCMB crude price, $/bbl

+36%

11

Macroeconomic IndicatorsDinar strengthens, oil price rises

90

100

110

120

I II III IV V VI

2017 Average 2017

2018 Average 2018

40

50

60

70

80

I II III IV V VI

2017 Average 2017

2018 Average 2018

HSE Indicators

12

Increasing transparency

LTIF RAR

6M 2017 6M 2018

28,491 31,290

446 553

35 43

3 4Majorevents

Medium events

Minorevents

HIPO

1.621.35

2.32

6M 2017 6M 2018 Plan2018

6M2018

Plan2018

6M2017

0.16 0.17

0.37

6M 2017 6M 2018 Plan2018

6M2018

Plan2018

6M2017

131%

72%

118%

43%

Key IndicatorsNIS Group

13

Q22018

Q2 2017

∆ Key indicators UoM 6M2018

6M2017

∆

72.7 48.7 +49% Urals $/bbl 68.9 50.5 +36%

67.9 57.1 +19% Sales revenues bn RSD 120.4 107.4 +12%

15.0 11.3 +33% EBITDA bn RSD 24.0 22.5 +6%

7.8 7.0 +10% Net income bn RSD 11.5 12.4 -7%

4.8 14.4 -67% OCF bn RSD 9.4 18.9 -50%

47.8 42.4 +13% Accrued liabilities based on public revenues bn RSD 90.9 7.9 +17%

332 349 -5% Oil and gas output thou, TOE 661 692 -4%

909 879 +3% Crude oil and semi-finished products output thou, tons 1,696 1,645 +3%

900 831 +8% Total petroleum products sales volumes thou, tons 1,665 1,544 8%

9.4 5.3 +77% CAPEX bn RSD 17.2 10.0 72%

625 636 -2%Total debt to banks(total debt to banks + letters of credits)

mn USD 625 636 -2%

14

Motor Fuel Market Trends6M 2018/2017

Consumption of motor fuels recorded an upward trend, primarily due to the increase in diesel fuel consumption

Serbia

• The cold April postponed the start of agricultural activities, partly affecting the normal seasonality in consumption,

• The restricted grey market and infrastructural works have positively impacted on diesel consumption, while a high gasoline price is the most influential negative factor in theconsumption of this petroleum product

Slovenia

2.2%

Croatia

0.4%

Bosnia and Herzegovina

0.1%Bulgaria

1.2%

Romania

1.1%

Hungary

2.5%

Serbia+3.0%

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Market Share – SerbiaPetroleum Products Market

• Petroleum product consumption follows an overall positive growing trend. This is primarily due to:

‒ The increased consumption of bitumen and coke owing to the favourable weather conditions in January and February

‒ The construction industry and road construction industry as the main drivers in Diesel consumption

‒ A good agricultural season which, due to the cold spell in April, shifted slightly towards the summer

2.1%Petroleum productsmarket volumes, thou. tons

The NIS’ share in the overall petroleum product market hasincreased resulting from a bigger share in the sales ofvirgin naphtha, diesel, liquid petroleum gas and lubricants

466(28%)

461(27%)

1,209(72%)

1,250(73%)

1,675 1,711

6M 2017 6M 2018

NIS

Others

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Market Share – SerbiaMotor Fuel Retail Market

• Retail market slightly increased

• The reduction in the consumption of autogas and gasoline has to do with the rise in prices and the change in the structure of the fleet Republic Serbia

Retail market, thou. tonsNIS's participation in the retail market is stable,Significant contribution to the preservation ofthe participation is given by numerousmarketing projects and improvement of theconcept of loyalty

+1.6%

443(57%)

450(57%)

337(43%)

343(43%)

780 793

6M 2017 6M 2018

NIS

Others

17

Market Share – Region6M 2018/2017

Bosnia and Herzegovina

No. of PSs : 37% total market: 13.2%% retail market: 9.6%

Romania

No. of PSs: 18% total market: 0.8%% retail market: 1.1%

Bulgaria

No. of PSs : 35% total market : 6.1%% retail market : 4.6%

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• The planned volume of hydrocarbon production has been realized

• Implementation of the geological and technical measuring

• 32 wells were put in motion

In 2018, hydrocarbon reserves increase

0.6%

Operating IndicatorsExploration and Production

-4%Oil and gas output, Thou. TOE

446 438

225 208

22 16

692661

6M 2017 6M 2018

Angola

Domestic gas

Domestic oil

19

• Processing volumes increase by 3%

• Processing volumes aligned with the market demand and refining optimisation

Operating IndicatorsRefining

+3%Refining of oil and semi-finished products, thou. tons

434 432

1,092 1,113

119 1511,645 1,696

6M 2017 6M 2018

Semi-finishedproducts

Imported oil

Domestic oil

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• Retail in Serbia – 2% increase

• Wholesale in Serbia – 6% increase

• Export – 24% increase

• Foreign assets – 12% increase

Operating Indicators Sales and Distribution

+8%Sales volumes*, thou. tons

*Excluding internal sales

336 342

145 162

865 916

198246

1,5441,665

6M 2017 6M 2018

Export

Wholesale -Serbia

Foreign assets

Retail - Serbia

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• Impact of oil price

• Increase of efficienty due to cost savings

Financial IndicatorsEBITDA

EBITDA, bn RSD+6%

22.524.0

6M 2017 6M 2018

22

Financial IndicatorsNet Income

• Less positive exchange rate differences

• Higher depreciation costs

Net income, bn RSD -7%

12.4

11.5

6M 2017 6M 2018

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Financial IndicatorsOCF

• Higher obligations toward state

• Higher obligations for customs

• Higher obligations for derivates

• Higher obligations for crude oil import

-50%OCF, bn RSD

18.9

9.4

6M 2017 6M 2018

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Financial IndicatorsCAPEX

+72%CAPEX, bn RSD CAPEX by segments

10.0

17.2

6M 2017 6M 2018

49%

2%

4%

34%

11%

1% 0.3% Exploration andProductionServices

Refining

«Bottom ofBarrel»Sales andDistributionEnergy

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Operational Efficiency Improvement MeasuresEffect on EBITDA, bn RSD

1.9

0.7

1.0

0.30.4 0.04 4,3

0.04

4.3

2.7

4.7

Explorationand

Production

Services Refining Sales andDistribution

Energy CorporateCentre

NIS 2018 Perventeddamage

Total NIS2018

6M2018

Measures Pervented damage

278

275

28

47

271

91

153

186

3

6

12

516

336

418

356

184

507

511

477

653

623

613

793

611

446

403

455

598

664

662

657

629

625

31.12.'09

31.12.'10

31.12.'11

31.12.'12

31.12.'13

31.12.'14

31.12.'15

31.12.'16

31.12.'17

31.3.'18

30.6.'18.

up to 1 year

over 1 year

233

33

13

14

34

28

12

3

4

2

0

793

611

446

403

455

598

664

662

657

629

625

1,026

644

458

418

489

626

675

666

661

631

625

31.12.'09

31.12.'10

31.12.'11

31.12.'12

31.12.'13

31.12.'14

31.12.'15

31.12.'16

31.12.'17

31.3.'18

30.6.'18

Letters of credit

Debt to banks

26

Debt to BanksMaturity and Currency Structure of Credit Portfolio

-5%

Debt to banks, mn USD

-6%

Debt to banks, mn USD

Debt structure:USD 10% EUR 89% Other 0.5%

GPN loan -9%233 mn EUR

Comparative analysis

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EBITDA margin (%) 3. EBITDA/FTE (thou, USD)* 4. Daily volume (t/day) 5.&3.

Share of light products (%) 4. OPEX ($/boe) 3.

38.2

25.5

19.9

15.8

13.0

22.575.7

36.1

19.5

15.9

7.4

30.9

8.27.7

6.85.95.8

4.7

6.5

11.9

9.0

7.4

6.2

Н/Д

8.6

Data obtained from 3M 2018 reports, except for NIS (6M 2018)*All data for 3M 2018

86.8

84.9

78.1

76.6

75.2

80.3

Conclusion

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Limited possibilities of long-term borrowing

Negative trend of HSE indicators

Great impact of competition on the market and weather conditions

Increase in EBITDA index

Trade bulk increase

Good macroeconomic estimates

Realization of project «Bottom of Barrel» in accordance with the plan

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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,

All visitors of this presentation who consider purchase or sale of securities are hereby warned that any purchase or sale should be undertaken on the basis of the informationcontained in other publicly available documents, which should be used in accordance with the restrictions contained in these documents, There should be no reliance, for whateverpurpose, on the information contained in this presentation, or any content that has been mention when it was made public, or on its completeness, accuracy or veracity, Theinformation specified in this presentation should not be treated as giving investment advice or recommendations, All reasonable measures were taken with a view to ensure that thefacts contained in this presentation are accurate and that the opinions expressed are correct and reasonable, This presentation is not adopted by Company’s bodies, Consequently, nostatement or guarantees, explicit or implicit, in connection with the accuracy, completeness or veracity of information or opinions which are contained or considered in thispresentation was not given by or in the name of the Company or any of its shareholders, directors, agents, employees or any other person, Neither the Company nor any of itsshareholders, directors, agents or employees or any other person do not accept any responsibility for any loss that may arise on the basis of or in connection with the use of thispresentation or its content or in any other way connected with this presentation,

Information in this presentation contains a statements on uncertain future events, The statements about uncertain future events include statements that are not historical facts,statements in connection with the intent of the Company and NIS Group, beliefs or current expectations in connection with, among other things, performance results of the NISGroup, the financial situation and their liquidity management, prospects, growth, strategies and industrial branches in which the NIS Group operates, For the reasons which arerelated to the events and depend on circumstances that may but are not certain to take place in the future, the statements about uncertain future events by their nature involve risksand uncertainty, including but not limited to the risks and uncertainties that the Company and NIS Group have identified in other publicly available documents, The Company warnsthat there is no guarantee that the statements on uncertain future events will come true in the future and that the actual business results, the financial situation and the liquidity, aswell as the development of the industrial branch in which the Company and NIS Group operate, may significantly differ from those presented or reckoned by the statements aboutuncertain future events which are contained in this presentation, Additionally, and if the results of the business of the NIS Group, its financial condition and liquidity, as well as thedevelopment of industrial branch in which the Company and NIS Group operate are in accordance with the statements herein contained about uncertain future events, such resultsand the development are not indicative of the results and the development in the coming periods, The information contained in this presentation is given on the date of thispresentation and their changes are possible without prior notice,

No person shall be under any obligation to update and keep current the data herein contained,

Once you have visited or read this presentation you shall be considered familiar with the above mentioned constraints,