Presentation for investors and shareholders for Q July, 29 th 2015 Belgrade Investor Relations

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Nora Robbins
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1 Presentation for investors and shareholders for Q July, 29 th 2015 Belgrade Investor Relations

2 Disclaimer This presentation has been prepared by NIS a.d. Novi Sad (the Company ), and comprises the slides for a presentation to investors concerning the Company. Presentation does not constitute or form part of any offer or invitation, or any solicitation of any offer to sell or purchase or subscribe for, any shares or other securities representing shares in the Company, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision. Any viewer of this presentation considering a purchase of such securities is hereby reminded that any such sale or purchase should be made solely on the basis of the information contained in other publicly available documents and will be subject to the restrictions set out therein. No reliance may be placed for any purposes whatsoever on the information contained in this presentation, or any other material discussed at any presentation or on its completeness, accuracy or fairness. The information in this presentation should not be treated as giving investment advice or recommendation. All reasonable measures are taken to ensure that the facts stated in this presentation are accurate, and that the opinions expressed are fair and reasonable. However, the contents of this presentation have not been adopted by the corporate body s of Company. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its members, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in or discussed at this presentation. None of the Company or any of their respective members, directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. The information in this presentation includes forward-looking statements. These forward-looking statements include all matters that are not historical facts, statements regarding the Company s intentions, beliefs or current expectations concerning, among other things, the Company s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forwardlooking statements involve risks and uncertainties, including, without limitation, the risks and uncertainties to be set in other publicly available documents, because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if the Company s results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. No person is under any obligation to update or keep current the information contained herein. By attending the presentation you confirm that you have read and understood foregoing limitations. 2

3 NIS in Q EXPLORATION AND PRODUCTION Three exploration wells drilled - Majd-X-1, Mi-X-1, Tdp-3; presence of hydrocarbon confirmed by well logging and DST results Test production started: RAG Kiha-003 on Kiskunhalas Block in Hungary and Obudovac-2 on the exploration block in Bosnia and Herzegovina 1st phase of seismic surveys completed on Blocks Ex-7 and Ex-8 (joint project with East West Petroleum). NIS STC started analyzing the material Horizontal well drilling applying the "multi-stage" fracturing method Amine unit pre-commissioning in Oil and Gas Preparation and Transport Unit in Elemir is underway Start of operations for connection of Majdan Gathering Station to Majdan Gathering and Dispatch Station (construction of a new pipeline and installation of the automatic measuring device) Bački vinogradi gas field has been activated REFINING Identifying bottlenecks in process equipment operation and their troubleshooting. Reconstruction of sealing system of the pumps S-2200 and completion of the project LDAR (leak detection and repair). 3 The development of the training centre and training on training grounds in fire protection, work at height, and work in confined spaces. The founding and development of a volunteer firefighter association. Implementing preparatory activities aimed to carry out the workover at the FCC complex in September Intensifying the Measures aimed to operational efficiency (energy efficiency, reliability, technological improvements)

4 NIS in Q SALES 2 reconstructed Gazprom brand PS in Belgrade have started operation Avalski Put and Žarkovo 1 and 1 PS (Vase Pelagića) reconstructed in NIS Petrol brand Another DODO PS in Serbia has been rebranded A loyalty programme for farmers (Agro and Golden cards) has been developed increasing the number of clients by 16% The NIS share in the jet fuel market in Serbia increased to 98%, with the start of sales of NIS jet fuel on the Bosnia-Herzegovina market The negotiations with Serbia s Government resulted in an agreement to reduce the fee for the compulsory stock of jet fuel from 2,6 din/kg to 0,1 din/kg as of TAG devices for electronic road toll collection started selling at 25 NIS PS in Serbia ENERGY Small-scale electricity generating plant Sirakovo 2 (2 MW) was put into commercial operation. A tender was announced for the procurement of main equipment for the small-scale electricity generating plant Majdan (2.65MW). Preparations started for the project of construction of the small-scale electricity generating plant Sirakovo 3 (4-5MW). The construction of a CNG filling post was completed at the FS Novi Sad 10; implementation started of the project of construction of a CNG filling post at the FS Čačak 1; the construction of a CNG filling station at the Ostrovo gas field was also contracted. 4

5 TE-TO Pancevo Construction of the first power-plant in Serbia after 20 years. Installed power 140 MW, with possibility of extension to 208 MW. 20 June, 2015 Signed agreement on founding the company Serbskaya Generaciya LLC Novi Sad, which will implement the project of the TE construction in Pancevo 25 September2013, signed the Memorandum on Implementation of the Project of constructing the steam-gas TE plant in Pancevo Characteristics of the TE-TO: Installed power Annualproductionofelectricity Annualproductionofheatenergy Annualproduction of gas 140 MW (208 MW) 0.91 TWh ( in the system) 0.84 TWh 247 mil. m3 Plannedbeginningof works: 2018 ТЕ-ТО Pancevo will generate energy for the market and electricity and heat energy for the Oil Refinery Pancevo. Equipment: 2 (3) gas turbines of 50.5 MW of power; 2 (3) boilers - recuperators; 1 steam turbine of 40 MW of power. 5

6 Macroeconomic indicators USD/RSD Exchange rate trends +28% Crude oil Brent* type trends, in $/bbl -47% Аverage USD/RSD exchange rate is by RSD i.e. 28% higher in 6M 2015 than the average rate in 6M 2014 Average USD/RSD exchange rate increased by RSD i.e. 8% in 6M 2015 Average USD/RSD exchange rate increased by RSD i.e. 2% in 6M 2014 Average price of Brent crude oil is by 51,04 $/bbl i.e. -47% lower in 6M 2015 than the average price in 6M 2014 Average price of Brent crude oil increased by - 4,93 $/bbl i.e. 9% in 6M 2015 Average price of Brent crude oil increased by $/bbl i.e. 3% in 6M Data for Europe Brent Spot Price FOB;Sourceр: U.S. Energy Information Administration (

6М 2015: HSE indicators Most of the HSE indicators show a positive trend or unsiginficant deviations; Investments in enviromental projects are considerably under the plan Investment into

7 6М 2015: HSE indicators Most of the HSE indicators show a positive trend or unsiginficant deviations; Investments in enviromental projects are considerably under the plan Investment into environmental projects, mln. USD Transparency index increase Perforation coefficient -44% -25% 12 7 Major accidents Serious incidents 57% 57% M M 2015 Plan 6M Minor incidents Potentionally 3,182 hazardous 8,659 situations 6M M M M 2015 Plan 6M 2015 Ve-172 pipeline perforation. Repair underway LTIF RAR Investigated cases -44% -41% 17% 34% -14% 3% % 83% 100% 6M M 2015 Plan 6M M M 2015 Plan 6M M M 2015 Plan 6M *Perforation coefficient is relation between the number of perforations based on the total oil pipeline length in km LTIF - Lost time injury frequency rates (relation between the number of injured during accidents at work and the total working hours, multiplied by 1 million RAR - Road Accident Rates - relation between the number of road accidents as opposed to mileage in km, multiplied by 1 million

8 Q2 2015: Key indicators NIS Group Q Q Q Q Key indicators Measurement unit 6M M M M (%) 1 (%) % Urals $/bbl % % Net (loss) profit bn RSD % % EBITDA 2 bn RSD % % Sales bn RSD % x OCF bn RSD x % Taxes and other fiscal obligations3 bn RSD % % Domestic oil and gas production 4 thou. t.o.e % % Oil and semi-finalized products refining volume thou. tons 1,512 1,574-4% % Total sales of oil products thou. tons 1,463 1,425 +3% % Foreign assets thou. tons % % Oil products local market sales 5 thou. tons 1,160 1,100 +5% % Motor fuel thou. tons % % Retail thou. tons % Market share on retail market in the Republic of Serbia % За 2% % CAPEX 6 bn RSD % % Total bank indebtedness (total indebtedness) 7 m USD % 8 [1] All possible discrepancies in percentage values and total values are due to rounding errors [2] EBITDA = Sales (without excise tax) inventories ( of oil, oil products and other products) operational expenditure (OPEX) other costs, which management cannot affect [3] Taxes, duties, fees and other public revenues calculated for the relevant period. The overview includes NIS' tax obligations and other public revenues in Serbia and in other countries in which it operates [4] Gasolene and light condensate were included in the production of oil, and commodity production of gas was included in the gas production [5] Apart from motor fuels, production of other petroleum products was included as well.. [6] Financing, without VAT [7] Total bank indebtedness = Total indebtedness to banks + letters of credit. As at 30/06/2015. it amounts to 557 million USD total debt + 14 million USD letters of credit..

Shareholders Assembly issued the decision on payment of dividends Continuity in payment of dividends maintained - 25% of the net profit in billion RSD Net loss Net profit 2009. 16.5 40.6 49.5 52.

9 Shareholders Assembly issued the decision on payment of dividends Continuity in payment of dividends maintained - 25% of the net profit in billion RSD Net loss Net profit % 25% % There was no payment of dividends - net profit was used for covering the accumulated loss Payment of dividends in total amount of 25% of the net profit generated in NIS j.s.c. Novi Sad Dividend for the year 2014 It is being paid to shareholders as at dividend day (13 June 2015) Total amount of dividends is RSD 7.6 billion - i.e. RSD 46.85/stock, gross Further steps: Board of Directors' decision regarding time and procedure of payment, CEO's decision on exact date of the payment, Notification to shareholders about payment of dividends and the payment of dividends itself 9

Market of motor fuels trends 6М 2015/2014 The recovering regional Motor Fuel Markets.

last year. Slovenia 4.3% Hungary 7.8% Romania 1.

The growing Diesel fuel consumption is linked to the lower price, increased stock, early start of agricultural works in Q1 and intensified works within

10 Market of motor fuels trends 6М 2015/2014 The recovering regional Motor Fuel Markets. The key factor for the recovery of demand for motor fuels in the regional market are the significantly lower prices in the first 6M compared to the same period last year. Slovenia 4.3% Hungary 7.8% Romania 1.5% The growing motor fuels consumption in Serbia is primarily influenced by the growing Diesel fuel consumption, as well as by a mild recovery of gasoline. The growing Diesel fuel consumption is linked to the lower price, increased stock, early start of agricultural works in Q1 and intensified works within infrastructure projects in Q2. Croatia 3.0% Bosnia and Herzegovina Serbia * 6.4% Bulgaria 1.6% 0.8% 10 Sources of information used as a basis for the projections designed: * Serbia, internal analyses and assessments conducted by the Sales and Distribution; - PFC estimated consumptionеin Bulgaria and Romania; Eurostat - PFC and internal estimates by B-H

11 Regional Retail Market and Motor Fuel Market* Trends Increase of market share in regional markets Bosnia and Herzegovina % 9.6% Motor Fuel Market has been recovering slowlier than the overall region due to the low economic activities. Retail operators have been conspicuously consolidating with expanding local oil products distributing chains (HIFA, Nešković), and NESTRO Group optimising its network. Bulgaria % 4.1% The gradual recovery of the Motor Fuel Market continues in 2015 due to the greater consumption of diesel, which ought to be a key factor of a contunued long-term growth A Lukoil-owned refinery in Burgas launched a new facility in May. This hydrocracking unit is expected to increase the refining capacity by around a million tons of oil products intended for both domestic market and export, predominantly to Turkey. Romania % 0.6% Motor Fuel Market has posted a recovery primarily due to lower prices. Romania s market is still attractive for investors, which is why the investments have been growing into the automatic unmanned stations (Smart Diesel), with announcements of launching new networks, such as Tiriac. Following ENI s activisation, MOL operates a network larger than 200 stations in Romania, making it the third largest operator in Romania. Number of FSs NIS market share in the total motor fuel market NIS market share in the retail market 11 Sources of information used for forecast processing: - PFC - estimated consumption per quarter in Bulgaria and Romania, 2014; Eurostat, - Data for B&H: PFC "internal analyses and assessments conducted by the Sales and Distribution; * Motor Fuel Market: Motor gasoline (mogas), diesel fuels and LPG;

12 The Market of the Republic of Serbia The total consumption of petroleum products is dropping The market scope of the Republic of Serbia, in thou. tons 6.3% 1, (23%) 1,120 (77%) 1, (23%) 1,182 (77%) In the first 6M of 2015, the total petroleum products consumption in Serbia grows primarily due to the significant growth of consumption of fuel oil, bitumen and Diesel fuel, which is mainly conditioned by lower petroleum products prices. The consumption of the liquefied petroleum gas, straight-run petrol, coke and jet fuel is somewhat lower than in the same period previous year. NIS market share maintains extremely high level as it operates in a flexible way and is capable to adjust its offer to clients to the vibrant market changes. 6M M 2015* NIS Other Retail market in Republic of Serbia**, in thou. tons 5.2% (60%) 284 (40%) 434 (58%) 312 (42%) 6M M 2015* NIS Other In the first 6M of 2015, the retail market increased in total by 5.2% on the same period 2014, though its structure changed. NIS increased its overall market share in the retail market of Serbia, along the growth in gasoline, primarily ЕMBМ 98 and Diesel, while autogas is insignificantly fallling. The plunging autogas demand is compensated by a significant growth in consumption of Diesel pool, due to the replenishment of operational reserves in retail at the beginning of the year, early start of placement of the agricultural Dieselа due to good price and weather conditions, as well as the end of sales of the heating oil in retail, which was during 2014 used as a motor fuel substitute. 12 All possible discrepancies in percentage values and total values are due to rounding errors * Data for 2015 is an estimate ** NIS and other competitors' sales include motor fuels (gas, motor fuels, diesel and EL fuel oil used as motor fuel). LPG bottles excluded.

13 Increased operational efficiency measures effect Estimated measures effect for entire 2015 is 9.24 BLN RSD, while for 6М 2015 is accomplished 2.76 BLN RSD (+41% of BP) Prevented damage (FCS) Additional measures - potential Additional measures Measures BP , * 0.2 Additional potential measures recognised by Block/FIS by end All additional measures included in EBITDA forecast Total planned measures per BP 2015 current estimate 2 BLN RSD % 58% Exploration and production Services Refining Sales Energy Functions NIS 2015 Estimate Achievement in % 6M *including and additional effect from 226,7 million RSD reflected in Upstream

14 Total effect of CAPEX reducing measures in 2015 is estimated to RSD 5.97 billion -5, ,45 Exploration and Production: Services Sales and Distribution Functions 2.51 bilion 1.22 bilion 0.14 bilion 0.08 bilion Exploration and Production : 0.32 bilion Exploration and Production : 0.55 bilion Energy: 0.56 bilion Functions: 0.16 bilion Exploration and production Exploration and Production: Services Services: Refining Refining: Sales and distribution Sales and Distribution: Energy: Energy Functions: Functions 0.22 bilion 0.02 bilion 0.05 bilion 0.06 bilion 0.03 bilion 0.06 bilion Plan Price optimization Project effectiven. Project revision Savings in contracting (MTSP and CC) Moving and cancelling projects Transfer from 2014 and additional projects (scopes) Assessment for

15 Financial Indicators Net (Loss) Profit, bn RSD -71% M '14 6M '15 +15% Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 ' Net Profit fall in 6М 2015 compared to 6М 2014 is 71%: Price of crude oil and petroleum products Negative exch. rate difference comprising 5.6 bn RSD EBITDA, bn RSD -32% EBITDA in 6М 2015 posts the fall of 32% compared to 6М 2014: Fluctuation of prices of crude oil and petroleum products In Q EBITDA is almost twice as high than in Q (in 2014, EBITDA in Q1 and Q2 were almost equal) 6M '14 6M '15 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 15 Any possible deviations in percentage points and aggregate values are due to rounding

16 Financial Indicators Sales, bn RSD -15% M '14 6M ' Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Drop in retail price* of petroleum products in the first 6M of 2015 is by approx. 8% on the same period last year: Changes in retail prices 6M (%) 6M Euro premium BMB % Euro diesel -5.88% Excise tax on euro diesel was raised from 46 RSD/l to 50 RSD/l as of 1 January OCF, bn RSD M '14 6M '15 15 пута Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Operating Cash Flow increased due to: Lower payments for procurement crude oil and semi-products Lower OPEX 16 All possible discrepancies in percentage values and total values are due to rounding errors *prices are calculated as the average of all daily prices in 6M2015. and 6M 2014.

17 Exploration and production Production of oil and gas is as planned Oil and gas production, thousand t.o.e. -5% +1% compared to plan % Compared to Business Plan the production of crude oil and gas is as planned. Total production of crude oil and gas in the first 6M of 2015 is 795 thousand t.o.e., which is by 5% less on the same period M '14 6M '15 Plan 6М '15 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Serbia Serbia - gas Angolа Estimate of HC reserves increment in % Estimate of hydrocarbon reserves increment for 2015 is 5,4% HC Production Reserves Increment 31 Dec '15 Estimate Any possible deviations in percentage points and aggregate values are due to rounding *commercial-grade gas

18 Refining Refining volume, thousand tons -4% 1,574 1, The first 6M of 2015 saw a drop in crude refining volumes and finishing the semiproducts by 4% on the same period previous year: Adjusted refining volumes pursuant to market requirements and optimized crude oil refining. The natural gas for own consumption was substituted by the fuel oil produced in 6М 2015, which reduced the purchase of natural gas 6M '14 6M '15 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Domestic crude oil Imported crude oil Semi-finished products Decreased refining of gas oil by 1,1%Ѕ and pyro gasoline, with the increased refining of imported VGO. 18 All possible discrepancies in percentage values and total values are due to rounding errors

19 Sales and distribution Sales volume, thousand tons 3% 1,425 1, In 6М 2015 the sales grew by 3% compared to 6М 2014, the total sales reaching 1,463 thousand tons Retail a 10% growth: growing sales of Diesel fuel by 15%, as well as motor gasoline by 4% M '14 6M '15 Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Retail Serbia Wholesale Serbia Foreign assets Export Sales structure, thousand tons 1,425 1,463, , M '14 6M '15 Black and other products White products and LPG Q2 '14 Q3 '14 Q4 '14 Q1 '15 Q2 '15 Foreign assets growth by 22% growing sales of motor fuels by 23%, out of them Diesel sales grew by 75% and gasoline sales dropped (32%) Wholesale growth by 4%: growing sales of motor fuels by 6% (gasoline 6%, Diesel 5%) 35% growth of fuel oil sales 38% growth of bitumen sales Drop in LPG sales (15%) as well as the sales of virgin naphtha (5%) Export 15% drop: Drop in fuel oil sales (75%) and bitumen (13%) motor fuel sales grew by 47%. 19 All possible discrepancies in percentage values and total values are due to rounding errors Foreign sales is the sales made by NIS subsidiaries.

20 Indebtedness The total debt to banks is less by 7% compared to the end of previous year and by 13% compared to the end of Q Total debt to banks, million USD 1 GPN loan, million EUR ' ' ' ' ' ' Short-term Mid-term Long-term ' ' Total bank indebtedness 2, million USD Structure of total debt to banks, by currency, in % ' '15 86% 13% 1% ' ' ' ' ' ' Letters of credit Total debt ' ' ' ' '10 81% 85% 56% 70% 74% 26% 25% 21% 18% 14% 18% 5% 5% 1% 1% USD EUR Other ' '09 67% 32% 1% 20 1 Term structure of the debt to banks is shown according to Contract terms and not by maturity of the debt as of 31 March In addition to the debt to the banks and Letters of Credit, as at 30 June 2015, NIS j.s.c. Novi Sad also holds issued bank guarantees in the amount of USD 35,7 million, corporate guarantees in the amount of USD 67,8 million and signed Letters of Intent in the amount of USD 0,12 million

21 Investments In first 6M 2015, 12,5 billion RSD was allocated for investment funding Investment funding by type of project 6М М Estimate Ecology Angola Projects with direct economic effects Projects without direct economic effects Design and research work TOTAL: *in RSD billion VAT exclusive CAPEX by investment projects, funding in RSD billion VAT exclusive Investments by segments, in billions of RSD % -24% -62% % M % 6M % Ecology Angola PSA Projects with direct economic effects Projects with out direct economic effects Design and research work All possible discrepancies in percentage values and total values are due to rounding errors *PSA - Production Sharing Agreement; NIS j.s.c. Novi Sad with subsidiary companies, excluding Jubos d.o.o. Bor, NIS Overseas o.o.o. Saint Petersburg, and NIS Svetlost d.o.o. Bujanovac 9% 2% 1% 5% 4% 79% Exploration and production Refining Sale and distribution Services Energy Corporate Centre

22 Comparative analysis (benchmarking) of basic indicators with competitors (NIS* 6М 2015, other Q1 2015) EBITDA margin (in %) EBITDA/FTE** (in thousands USD) Daily sales rate (in ton/day) / ,3 t/дан Ratio of other products (in %) OPEX ($/boe) Lifting costs REVEX Н/Д 22 иsources: NIS, Companies reports *Data EBITDA / FTE presented for Q * * Without leasing employees

23 Positive net result Fulfillment of the crude oil and gas production plan with +1% output, despite decreased investment scope Operational efficiency improvement programme continues Price of crude oil Impact of negative exchange rate differences on the net profit (in 6М 2015: -5.6 bn RSD) Negative impact of sanctions Sales volumes growth

24 NIS a.d. Novi Sad Investor Relations Narodnog fronta Novi Sad, Serbia

Presentation for Investors and Shareholders for Q /11/2014 Novi Sad Investor Relations

Presentation for Investors and Shareholders for Q3 2014 05/11/2014 Novi Sad Investor Relations Disclaimer This presentation has been prepared by NIS a.d. Novi Sad (the Company ), and comprises the slides