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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
16
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
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• 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
20
• 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
23
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
24
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
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,