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NIS GROUP’S PERFORMANCE PRESENTATIONFor 2018
28th February, 2019Anton CherepanovFinance, Economics, Planning and Accounting Function
• 50 development wells and 10 exploratory wells were drilled in Serbia in 2018• In Serbia, 1,117 km2 of 3D seismic was recorded, and in Romania 223 km2
• The drilling of two contour-exploratory wells began in Romania• GTM successfully performed in Mokrin and Majdan fields• Transformation carried out in the Exploration and Production Block
2
NIS in 2018
Exploration and production Block
Division Downstream
• The highest monthly oil refining and finishing capacities in last ten years werereached in November
• The celebration of the 50th anniversary of the commencement of production inthe Pančevo Oil Refinery
• Obtained license and approval for usage of ionizing radiation sources in RNP• Preparatory activities were carried out for the execution of capital overhaul 2019• Activities on the projects within digital transformation - focus on the project
€kon$
Refinery
• Completed reconstruction of the PSs: “Subotica 1“, “Lazarevac Grad“, “Novi Sad“ and“Kovin“. 3 PSs rebranded and put into service: “Vojvode Misica“, “12 February“, and“Bagrdan“
• Further development of the loyalty program “On the Road with Us”
• Installation of the system for additizing on vehicles and beginning of supply and sales ofOPTI fuels at Gazprom PSs
• Rebranding of “Jazak” water and introduction of new packages
• Expansion of “reselling” activity in Jet Fuel sales channel
3
NIS in 2018
Division Downstream
Sales
Energy• TE-TO Pančevo - The Project Finance Agreement was signed and the building permit for
gas turbine unit was issued• Wind farm “Plandište” – negotiations have currently been under way with several EPC
contractors• CNG at PS Žarkovo 2 - the construction was finished and the plant was put into trial
operation• CNG at PS Blok 45 in New Belgrade - the main equipment was delivered• CNG at Palić - the supplier for the plant reconstruction was selected• The total contracted electric power trade scope is 1.25 TWh
4
USD/RSD rate -7% Brent crude price, $/bbl
+31%
Macroeconomic IndicatorsDinar strengthens, oil price rises
95
100
105
110
115
120
I II III IV V VI VII VIII IX X XI XII
2017 Average 2017 2018 Average 2018
45
55
65
75
85
I II III IV V VI VII VIII IX X XI XII
2017 Average 2017 2018 Average 2018
Increasing transparency
LTIF RAR
HSE Indicators
5
12M 2017 12M 2018
61,603 61,378
1,069 1,104
66 77
6 9Majorevents
Medium events
Minorevents
HIPO
0.200.17
0.25
12M 2017 12M 2018 Plan 2018
12M2018
Plan2018
12M2017
1.591.35
2.22
12M 2017 12M 2018 Plan 2018
12M2018
Plan2018
12M2017
25%64%
47%40%
We note an increase in LTI injuries in BlockServices and Sales and distribution Block
Of the total number of injuries, the largestnumber are mechanical injuries and injuriesdue to slippage and fall of employees.
4 of the 10 RAR events for 12M 2018 are dueto third party liability. The value of theindicator without the four listed events wouldbe 0.15 instead of 0.25.
6
Key IndicatorsNIS Group
Key indicators UoM 2018 2017 ∆
Brent Dtd $/bbl 71.03 54.3 +31%
Sales revenues bn RSD 281.0 234.7 +20%
EBITDA bn RSD 53.7 47.0 +14%
Net income bn RSD 25.1 27.0 -7%
OCF bn RSD 37.4 59.0 -37%
Accrued liabilities based on public revenues bn RSD 192.7 165.25 +17%
Oil and gas output thou. TOE 1,332 1,385 -4%
Crude oil and semi-finished products output thou. tons 3,836 3,605 +6%
Total petroleum products sales volumes thou. tons 3,748 3,491 +7%
CAPEX bn RSD 41.0 26.5 +55%
Total debt to banks(total debt to banks + letters of credits)
mn USD 659 661 -0.3%
7
Motor Fuel Market Trends2018/2017
Motor fuel consumption in the region rises:- Positive macroeconomic trends- Rise in fuel consumption in the transport,
processing industry, and construction sectors.
Serbia
• Positive impact on diesel consumption had: better agricultural season, infrastructure works and a very good construction season.
• A part of diesel fuel consumption from the gray zone returns to legal flows
• The decrease in consumption of LPG is the result of a reduction in the number of vehicles with this drive and high prices.
Slovenia
2.9%
Croatia
0.5%
Bosnia and Herzegovina
0.3%Bulgaria
1.5%
Romania
0.8%
Hungary
4.0%
Serbia4.4%
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Market Share – SerbiaPetroleum Products Market
• Total consumption of petroleum products has increased by 2.7%.
• The main consumption generators are:
‒ growth in bitumen and coke consumption
‒ growth of motor fuels, mainly diesel
‒ growth of air fuel consumption
2.7%Petroleum productsmarket volumes, thou. tons
Market share of NIS increases by 2.7 pp, partly as a result of higher share in the sale of motor fuels, as well as the increase in participation in primary fuel and LPG.
937(26%)
865(24%)
2,631(74%)
2,800(76%)
3,568 3,665
2017 2018
NIS
Others
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Market Share – SerbiaMotor Fuel Retail Market
• Retail market growth by 3.5%
• Mainly due to the growth in the diesel segment.
• Positive growth trends in transport, agriculture and transit traffic segments 938
(57%)
964(56%)
712(43%)
744(44%)
1,650 1,708
2017 2018
NIS
Others
+3.5%Retail market, thou. tonsNIS has increased its market share in
retail.
10
Market Share – Region2018/2017
Bosnia and Herzegovina
No. of PSs : 37% total market: 15.1%% retail market: 9.8%
Romania
No. of PSs: 18% total market: 0.8%% retail market: 1.1%
Bulgaria
No. of PSs: 35% total market: 5.9%% retail market: 4.5%
11
• The planned volume of hydrocarbonproduction has been realized
• Implementation of geological and technicalmeasures
• 61 wells were put into operation
Operating IndicatorsExploration and Production
900 886
446 416
40 30
1,385 1,332
2017 2018
Angola
Domesticgas
Domesticoil
-4%Oil and gas output,thou. TOE
Increase in hydrocarbon reserves in 2018 is about 1%.
12
• Processing volumes increase by 6%
• Processing volumes aligned with the market demand and refining optimization
• Improvement of product portfolio
Operating IndicatorsRefining
879 881
2,460 2,675
266280
3,6053,836
2017 2018
Semi-finishedproducts
Import oil
Domestic oil
+6%Refining of oil and semi-finished products, thou. tons
13
• Retail in Serbia – 5% increase
• Wholesale in Serbia – 7% increase
• Export – 14% increase
• Foreign assets – 6% increase
Operating Indicators Sales and Distribution
710 742
338 359
1,932 2,065
511582
3,4913,748
2017 2018
Export
Wholesale -Serbia
Foreign assets
Retail - Serbia
+7%Sales volumes*, thou. tons
*Without internal sales
14
• Increase in prices of oil and petroleum products
• Measures to increase operational efficiency and reduce costs
• Growth of sales and distribution volume
Financial IndicatorsEBITDA
+14%EBITDA, bn RSD
47.053.7
2017 2018
15
Financial IndicatorsNet Income
• Depreciation (transition to the functional method)
• Differences in exchange rate
• Change in EBITDA
• Lower interest costs 27.025.1
2017 2018
-7%Net income, bn RSD
16
Financial IndicatorsOCF
• In 2017, receivables from HIP and Srbijagas were collected
• Increased inflow due to higher petroleum product prices
• Increase in liabilities for crude oil and petroleum product import
• Increase in liabilities paid to government
• Increase in liabilities for customs duties
59.0
37.4
2017 2018
-37%OCF, bn RSD
Financial IndicatorsCAPEX
17
26.5
41.0
2017 2018
+55%CAPEX, bn RSD CAPEX by segments
48%
2%
35%
5%8%
1% 1% Exploration andproductionServices
Bottom of barrel
Refining
Sales and distribution
Energy
Corporate center
Operational Efficiency Improvement MeasuresEffect on EBITDA, bn RSD
18
4.6
0.8
0.9
0.4 0.4 0.11.6
2.1
6.2
Exploration andproduction
Services Refining Sales anddistribution
DepartmentEnergy
Corporate center NIS 2018 Perventeddamage
Total NIS 2018
Measures Pervented damage
19
278
275
28
47
271
91
153
186
3
3
516
336
418
356
184
507
511
477
653
653
793
611
446
403
455
598
664
662
657
657
31.12.'09
31.12.'10
31.12.'11
31.12.'12
31.12.'13
31.12.'14
31.12.'15
31.12.'16
30.12.'17
31.12.'18
up to 1 year
over 1 year
Debt to BanksMaturity and Currency Structure of Credit Portfolio
Debt to banks, mn USD
233
33
13
14
34
28
12
3
4
2
793
611
446
403
455
598
664
662
657
657
1.026
644
458
418
489
626
675
666
661
659
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
31.12.'18
Letters of credit
Debt to banks
-0.3%
Bank indebtedness, mn USD
Debt structure:USD 0.5% EUR 99% Other 0.4%
Comparative analysis
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EBITDA margin (%) EBITDA/FTE (thou. USD)* Daily volume (t/day)
Share of light products (%) OPEX ($/boe)
36.5
24.1
19.1
14.1
13.7
21.5235.1
113.9
75.7
72.4
32.5
105.99.6
8.67.36.8
6.26.1
7.4
11.3
9.0
7.3
6.1
N/A
8.4
Data obtained from 9M 2018 reports. except for NIS (12M 2018)*All data for 9M 2018
84.7
83.7
78.0
76.4
72.7
79.1
21
Conclusion
Limited possibilities of long-term borrowing
Negative trend of HSE indicators compared to the same period of the previous year
Increase of EBITDA
Production of oil and gas is above the plan
Growth of sales and distribution volume
Realization of “Bottom of the Barrel” project according to the plan
Positive effects of restructuring of the credit portfolio
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.
