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

Size: px

Start display at page:

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

Beverley Collins
5 years ago
Views:

1 Presentation for Investors and Shareholders for Q /11/2014 Novi Sad 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

Q3 2014 3 Exploration and Production Consistent application of environmental drilling method by applying the principle of dry locations at all plants Approximately 1,594 km2 of 3D seismic data

About 3,624.5 m wells were drilled - Ki-Pz-1 (875 m), Ki-X-1 (62.5 m) in the production and in Kiz-1 (2,685.5 m) exploration in progress.

$wash. Production of a new type of polymer bitumen PMB 25/50, the production of additional quantities of diesel from heavy fractions of FCC gasoline.$ Activities on the preparation of the site for the project of Base Oils started.

Activities on the preparation of the site for the project of Base Oils started.

3 Q Exploration and Production Consistent application of environmental drilling method by applying the principle of dry locations at all plants Approximately 1,594 km2 of 3D seismic data recorded on exploration areas of Boka- Jermenovci, Martonos, Velebit (1,403 km2), Sirakovo (71 km2) and Kumane (120 km2). Recording completed. Processing/interpretation of the data underway. About 3,624.5 m wells were drilled - Ki-Pz-1 (875 m), Ki-X-1 (62.5 m) in the production and in Kiz-1 (2,685.5 m) exploration in progress. By the end of the year the plan is to start drilling a deep exploration well Majd-X -1. Foreign development: expanding the GIR on the projects in Romania, Hungary, B&H. Refining Sales Energy In September 2014, complete overhaul of the major refinery plants: atmospheric distillation, vacuum distillation, gasoline reforming, HDS pyro gasoline, gas processing and amine wash. Production of a new type of polymer bitumen PMB 25/50, the production of additional quantities of diesel from heavy fractions of FCC gasoline. Activities on the preparation of the site for the project of Base Oils started. Capacity increase at the bitumen facility from 1,150 tons/day to 1,300 tons/day and capacity reduction at the FCC facility with positive economic effect. 4 petrol stations commissioned in 3 countries (Serbia, Romania and Bulgaria); Serbia - the opening of the new BS "Sava"; Weekend Discounts Farmers Campaign; Launch of the Additized Fuel at NIS Petrol Ultra D; Super Card Program launched at Gazprom BS; Bosnia and Herzegovina - Promotion car wash on Gazprom BS; Romania Consumer Award Game; Bulgaria - campaigns for corporate clients; Happy Weekend rebate program for consumers; Happy Football Days award game; Beginning of the implementation of the "cross acceptance" cards for corporate clients in the region (Romania, Bulgaria, B&H) Construction of small power plants: Srbobran - commissioning on 06/ 10, and Turija commissioning on 17/10. Construction work on the plant Velebit 3 completed; Contracting the works for the plant Sirakovo 2 and respective implementation started Contracting the works for ME Ostrovo in progress Pancevo 208 MW thermal power plant - project in GPN approved, documentation for a new location under revision CNG station in Palic in the business Supplier for the construction of CNG at BS NS10 selected

9M 2014: HSE indicators All indicators are in line with the plan, except for LTIF where increase compared to plan is recorded Investment in environmental projects, mln.

4 9M 2014: HSE indicators All indicators are in line with the plan, except for LTIF where increase compared to plan is recorded Investment in environmental projects, mln. USD Transparency index increase Perforation coefficient Plan 9M % Major accidents Serious incidents 148 Plan 9M ,019 0% 9M Minor incidents 860 9M % Potentially hazardous 9M ,367 4,609 situations 5,343 9M ,019 0,029 9M M 2014 LTIF RAR Investigated cases -34% Plan 9M ,6 42% Plan 9M Plan 9M % -33% 6% 9M ,2 5,13 9M ,67 9M % 35% -64% 28% 9M ,23 3,81 9M ,8 9M % NIS with subsidiaries (OFS) 4 Perforation coefficient is relation between the number of perforations, multiplied by 1,000 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

5 Macroeconomic Indicators USD/RSD exchange rate EUR/RSD exchange rate Price of Urals crude oil, in $/bbl I II III IV V VI VII VIII IX 110 I II III IV V VI VII VIII IX 95 I II III IV V VI VII VIII IX USD/RSD exchange rate in first 9M 2014 increased by 12.6% or RSD 10.5 (from on January 1 st 2014 to on September 30 th 2014) EUR/RSD exchange rate in first 6M 2014 increased by 3.7% or RSD 4.2 (from on January 1 st 2014 to on September 30 th 2014) The average price of Urals crude oil in the first 9M of 2014 was $/bbl, which is a 2% decreased compared to the average price in the same period in USD/RSD exchange rate in first 6M 2013 decreased by 1.5% or RSD 1.29 (from on January 1 st 2013 to on September 30 th 2013) EUR/RSD exchange rate in first 6M 2013 increased by 0.8% or RSD 0.89 (from on January 1 st 2013 to on September 30 th 2013)

6 Q3 2014: Key Performance Indicators NIS Group Q Q Q Q (%) 1 Key Indicators Measurement unit 9M M M M (%) % Urals $/bbl % % Net profit bln. RSD % % EBITDA 2 bln. RSD % % Sales bln. RSD % % OCF bln. RSD % % Accrued taxes and other fiscal obligations 3 bln. RSD % % Domestic oil and gas production 4 t.o.e 1,209 1,227-1% % Crude oil and semi-finished products refining volume thou. tons 2,252 2,204 2% % Total sales of petroleum products thou. tons 2,253 2,183 3% % Foreign assets sales thou. tons % % Petroleum products sales on domestic market 5 thou. tons 1,786 1,812-1% % Retail 6 thou. tons % % CAPEX 7 bln. RSD % % Total bank indebtedness 8 mln. USD % [1] Calculation of percentage values is based on values expressed in millions of RSD [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 and other fiscal obligations include taxes, duties, fees and other public revenues for the period. The figure Includes subsidiaries outside Serbia and deferred tax assets. The tax for Q to be paid in Serbia amounted to RSD 33,3 billion (Q3 2013: 34). in first 9M the taxes and other public revenues amounted to 92,3 billion RSD (9М ,4) [4] Due to change in methodology oil production includes gazoline and light condensate, and gas production takes into account commodity production of gas [5] Petroleum products sales on domestic market includes sales to clients from Serbia in Serbia [6] Besides motor fuels retail includes other petroleum products. [7] Financing, VAT excluded [8] Total bank indebtedness = Total debt to banks + letters of credit. As of September 30th 2014 total debt to banks amounts million USD and letters of credit amount 59.6 million USD 6

Motor Fuel Market Trends I-IX 2014/2013 Regional Motor fuels market slowly recovering Key

gradual economic recovery mainly in countries members of EU.

negative trends of consumption of gasoline and LPG, mainly related to slow economy, low

Slow increase in diesel consumption is mainly caused by reconstruction projects after floods

Croatia +3% Bosnia and Herzegovina -2% Serbia* 0% Bulgaria +2% 7 Information sources used to

7 Motor Fuel Market Trends I-IX 2014/2013 Regional Motor fuels market slowly recovering Key driver for motor fuel demand recovery of the regional market is diesel as a result of the gradual economic recovery mainly in countries members of EU. Slovenia +6% Hungary +4% Romania -3% In Serbia, demand of motor fuel is stagnating with negative trends of consumption of gasoline and LPG, mainly related to slow economy, low purchasing power of the population and impact of floods. Slow increase in diesel consumption is mainly caused by reconstruction projects after floods and positive effects of fuel marking that is decreasing grey market. Croatia +3% Bosnia and Herzegovina -2% Serbia* 0% Bulgaria +2% 7 Information sources used to create the projections : *Serbia Sales and Distribution s internal analyses and estimates; - PFC estimated consumption per quarters in Bulgaria and Romania in 2014; Eurostat, - PFC, internal estimates for BIH, September 2014.

Retail and Motor-fuel Markets Trends* in the Region NIS foreign sales EBITDA for the first time positive in Q3 2014 EBITDA of foreign sales BOSNIA & HERZEGOVINA BULGARIA ROMANIA Q3 2014 Q2 2014 35 7%

Due to local legislation change additivated fuels were banned from sales in retail network of Bosnia and Herzegovina that effected mainly international retail chains including NIS.

A slight increase in the motor fuels market comes mainly from an increased consumption of diesel, which should be a key driver of further growth also in the long run.

8 Retail and Motor-fuel Markets Trends* in the Region NIS foreign sales EBITDA for the first time positive in Q EBITDA of foreign sales BOSNIA & HERZEGOVINA BULGARIA ROMANIA Q Q % 8% 35 2,9% 2,8% 18 0,3% 0,5% Q Q Q Q Q Motor fuel market is decreasing due to slow economy and negative impact of May floods that hit North and East part of the country. Due to local legislation change additivated fuels were banned from sales in retail network of Bosnia and Herzegovina that effected mainly international retail chains including NIS. The gradual market recovery continued in 2014 in Bulgaria. A slight increase in the motor fuels market comes mainly from an increased consumption of diesel, which should be a key driver of further growth also in the long run. There was increase in the consumption of LPG while consumption of motor gasoline has decreased. Motor fuel market continued to shrink in third quarter due to impact of higher excise tax implemented from April 1st MOL increased their network in Romania through acquisition of additional 42 stations from ENI, creating total network of 189 stations on this market. Number of PS NIS share on overall motor fuel market NIS share on retail market 8 Information sources used to create the projections : - PFC estimated consumption per quarters in Bulgaria and Romania in 2014; Eurostat,. - Data for B&H: PFC, internal analysis and estimates of the Sales and Distribution; *Motor fuels market: motor gasoline, diesel fuels and LPG;

9 Market Share in RS Consumption of petroleum products is decreasing RS's Petroleum Products Market Volume in thousand tons Republic of Serbia's Retail Market** in thousand tons 9M '14* 1,778 (77%) 518 (23%) 2,296-1,9% 9M '14* 459 (40%) 689 (60%) 1,148-0,8% 1,799 (77%) 541 (23%) 2,341 NIS Others 481 (42%) 677 (58%) 1,158 NIS Others The consumption of petroleum products is decreasing. Largest drop has been recorded in the consumption of Naphtha and LPG, while diesel pool showed modest growth. JET fuel consumption is boosted by increased number of flights of "Air Serbia carrier and other companies. Increased consumption of bitumen is result of the continuation of the corridor construction in Serbia and reconstruction after floods. NIS market share remained stable due to active sales, effective price policy and widespread logistics network Retail market is almost unchanged and small overall decrease accrued due to significant drop in auto gas demand. There is also effect of different dynamic of agricultural program that is running continually from April 15-November 15th in 2014, instead of two seasons (spring and autumn) in previous years. A slight decline in NIS retail market share is related to change in agriculture program mechanics that introduced distribution on all filling stations in the country, unlike one sole distributer system that was applied in previous years. 9 * Information for June 2014 presented on the basis of an estimate. ** The sales of NIS and other competitors includes motor fuels (gas, motor gasoline, diesels and EL heating oil used as a motor fuel ).

10 Financial Indicators EBITDA, in billion RSD Net profit, in billion RSD 9M ' % 9M ' % Q3 ' % Q3 ' % Q2 ' Q2 ' Q1 ' Q1 ' Q4 ' Q4 ' Q3 ' Q3 ' EBITDA in first nine months of 2014 is at the same level as same period previous year: Crude oil prices Decrease in domastic oil and gas production Increased sales volume Net profit decreased by -33% in first nine months of 2014 compared to first nine months of 2013: Negative net FX differences (for 9M 2013 net FX differences were positive) Increased depreciation 10 All possible discrepancies in percentage values and total values are due to rounding errors

11 Financial Indicators Sales, in billion RSD 9M ' % OCF, in billion RSD 9M ' % Q3 ' % Q3 ' % Q2 ' Q2 ' Q1 ' Q1 ' Q4 ' Q4 ' Q3 ' Q3 ' Incline of retail prices of petroleum products in 9М 2014 is app. 1.4% compared to 6М 2013: Changes in retail prices 9M M Europremium BMB % Eurodiesel 2.33% Decline in the average price of Urals RCMB crude oil in 9M 2014 (in $/bbl), compared to the average price in 9M 2013 is around -2%. All possible discrepancies in percentage values and total values are due to rounding errors Decrease in operating cash flow: Increase in payments for the procurement of crude oil and petroleum products Increase in the levies paid to the state (taxes, customs duties, etc.) Advance payment of gas oil excise tax and delayed return of paid excise tax

12 Exploration and Production Domestic oil and gas production, In thousands conditional tons Domestic oil production, in thousand tons Angola production, in thousand tons 9M '14 1,209-1% 9M ' % 9M ' % 1, Q3 ' % Q3 ' % Q3 ' % Q2 ' Q2 ' Q2 '14 15 Q1 ' Q1 ' Q1 '14 13 Q4 ' Q4 ' Q4 '13 15 Q3 ' Q3 ' Q3 '13 10 In first nine months of 2014 domestic oil and gas production was 1,209 thousand of tons of oil equivalent, which is a - 1% decrease compared to same period in Drop in base production Smaller increment from drilling 12 All possible discrepancies in percentage values and total values are due to rounding errors

13 Refining Refining volume, in thousand tons 2% -15% Q3 ' M '14 1, ,252 Q2 ' Q1 ' , ,204 Q4 ' Q3 ' Imported crude oil Domestic crude oil Semi-finished products Imported crude oil Domestic crude oil Semi-finished products In 9М 2014, oil refining and semi-finished product reprocessing volumes grew by 2% compared to the same period last year: Increase of crude oil refining volumes and increase in volume of reprocessing of semi-finished products Oil refining and semi-finished products reprocessing within the operational plans developed to meet market requirements Due to overhaul of Refinery in Pančevo in September 2014 refining volumes in Q are lower than in Q All possible discrepancies in percentage values and total values are due to rounding errors

14 Sales and Distribution Sales volume, in thousand tons Sales structure, in thousand tons 9M ' ,326 1, , ,183 3% Retail Wholesale Sales - abroad Export 9M ' ,377 1,308 2,253 2,183 3% Black and other products White products Q3 ' % Q3 ' % Q2 ' Q2 ' Q1 '14 Q4 '13 Q3 ' Retail 5% sales dеcrease: Change of terms of implementation of the program for farmers in Serbia Sales in foreign assets 2x increase Increased number of active PS Activated PS are reaching their full capacity Retail Wholesale Sales - abroad Export Q1 '14 Q4 '13 Q3 '13 Wholesale at the same level: Change of terms of implementation of the program for farmers in Serbia Decreased sales volumes for naphtha Increased sales volumes of jet fuel on domestic market (AC Air Serbia ) Export- 9% increase: Increased export of bitumen All possible discrepancies in percentage values and total values are due to rounding errors Foreign assets sale is the sale of NIS subsidiaries in the region. NIS supplied its subsidiaries with 83 thousand tons of products in 9M 2014 (Q3 2014: 28) and the rest was bought from other suppliers Black and other products White products

15 Structure of Bank Indebtedness Due to the significant decline in OCF bank debt rose above the planned level. Notice of sanctions caused the premature withdrawal of 115 million USD in September, which will be used for repayment of the loan in December (without this total debt to banks on would amount to 570 million USD). Total debt to banks in millions of USD GPN Loan in millions of EUR ' ' ' ' ' ' ' ' Short-term Mid-term Long-term ' ' ' ' ' Total bank indebtedness in millions of USD Structure of total debt to banks per currency in % ' ' ' ' ' ' ' ' Letters of credit Debt to banks 1, ' ' ' ' ' ' ' '09 86% 72% 80% 69% 56% 70% 74% 67% 14% 1% 15% 13% 18% 1% 24% 7% 26% 18% 25% 5% 21% 5% 32% 1% USD EUR Other 15 All possible discrepancies in percentage values and total values are due to rounding errors *Term structure of the debt to banks is shown according to Contract terms and not by maturity of the debt as of June 30 th 2014

16 CAPEX In the first nine months of 2014, RSD 26.9 billion was allocated to CAPEX projects Q Q CAPEX financing by type of project 9M M ,64 0,30 Ecology 0,76 1,37 0,19 0,07 Angola PSA* 0,16 0,53 9,16 5,83 Projects with direct economic effect 18,25 28,09 3,70 2,65 Projects without direct economic effects 6,72 7,24 0,14 0,31 Project-researching activities 1,05 0,65 13,84 9,15 TOTAL: 26,94 37,89 *in bilion RSD (VAT excluded) CAPEX by project types, in bilion RSD CAPEX by segments, in bilion RSD 16 37,88 0,65 7,24 28,09 62% -7% -35% 26,94 1,05 6,72 18,25 0,53-70% 0,16 1,37 0,76-45% 9M M % All possible discrepancies in percentage values and total values are due to rounding errors *PSA - Production Sharing Agreement; Data for NIS Group (NIS j.s.c. Novi Sad and subsidiaries formed in 2012.) Ecology Angola Projects with DEE Projects without DEE Project-research activities Exploration and Production Refining Sales and Distribution Services Energy Corporate headquarters

The Major Investments in Exploration and Production, Refining, and Sales and Distribution

Refining Base oil production Sales and Distribution Regional retail network development

RSD 3D seismic surveys and exploratory well drilling in the Republic of Serbia Well

RSD Base oil production Reconstruction of oil transportation tanks in Novi Sad Refinery

17 The Major Investments in Exploration and Production, Refining, and Sales and Distribution 9М 2014 Exploration and Production Seismic surveys Oil and gas production increase Refining Base oil production Sales and Distribution Regional retail network development 17.4 bln. RSD 3D seismic surveys and exploratory well drilling in the Republic of Serbia Well drilling Concession rights 5.7 bln. RSD Base oil production Reconstruction of oil transportation tanks in Novi Sad Refinery Stationary system for vibration measuring at rotating equipment in Pančevo Oil Refinery 2.7 bln. RSD Regional sales development in Bulgaria and Romania Purchase of Sava centar petrol Station Reconstruction of petrol stations in Serbia 17

Comparative Analysis (Benchmarking) of Key

EBITDA margin (%) EBITDA/FTE* (USD 000) Daily

5,1 17,3 60,9 5,5 24,6 67,8 6,1 39,6 110,2 7,8

($/boe) Lifting costs REVEX 71,3 72,4 5,2 1,6 6,8

Company reports * Except for EBITDA/FTE parameters

18 Comparative Analysis (Benchmarking) of Key Indicators (NIS I-IX* 2014, others I-VI 2014) EBITDA margin (%) EBITDA/FTE* (USD 000) Daily throughput per PS (t/d) 11,3 12,5 20,0 33,7 4,8 5,1 17,3 60,9 5,5 24,6 67,8 6,1 39,6 110,2 7,8 21,0 58,5 5,9 White products yield (%) OPEX ($/boe) Lifting costs REVEX 71,3 72,4 5,2 1,6 6,8 8,3 73,9 17,0 75,7 18,7 78,8 Н/Д 18 Sources: NIS, Company reports * Except for EBITDA/FTE parameters where H1 is shown ** Without the employees hired via leasing companies 74,4 12,7

19 + Economic indicators are still on satisfactory level + Refining and sales volumes increase + Introducing new products 19 Decrease in domestic oil and gas production Decrease in retail Lower OCF and, by extension, increase in the total indebtedness to banks

20 NIS a.d. Novi Sad Investor Relations Narodnog fronta Novi Sad, Serbia 20

NIS GROUP S PERFORMANCE PRESENTATION

NIS GROUP S PERFORMANCE PRESENTATION For 9M 2017 November 06 th, 2017 Anton Federov Finance, Economics, Planning and Accounting Function NIS in Q3 2017 Exploration and Production Wells: 3 wells in production,