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, 3 in testing, 1 in stage of drilling, 1 preparation for start drilling, 1 start of drilling before year-end, for 1 well before year-end in plan hydro-fracturing, in 1 high % non-hydrocarbon gases in deposit 3D survey: data acquisition complete (Južni Banat I, Turija III and Morović), interpretation (Južni Banat I), processing (Turija III and Morović), data acquisition started (Južni Banat II) Gravity survey and magnetism u/w to the south of Sava and Danube Licence Obligation; Testing of all 8 интервала well intervals Тeremia- 1000 is completed at Ex-7 block, wells conservation completed. 2
NIS in Q3 2017 Refining Refining of a new grade of crude oil - Novy Port Repaired plants for Alkylation, SARU, Visbreaking, Deparaffination Obtained construction permit and construction works commenced within Work Package 1 of the Bottom-of-the-Barrel project EPCm contract signed for the Work Package 2 with selected contractor Obtained IPPC permit for integrated environment pollution prevention and control 3
NIS in Q3 2017 Sales and Distribution Start of G-Drive premium fuel sales at NIS Petrol refuelling stations (84 refuelling stations) Loyalty programme Together on the Road introduced in Bulgaria and Bosnia-Herzegovina Implementation of new organisation chart - wholesale channel Start of implementation of Orfeus software in Romania Start of sale of new products in non-fuel goods: bitumen strips and bitumen mass A total reconstruction of 2 PS completed, start of total reconstruction of 5 PS and construction of 1 new PS A refuelling station was purchased in Bagrdan 4
NIS in Q3 2017 Energy EPC contractor selected for construction of CCPP Pančevо project Invitation to bid started concerning МЕ Velebit 3 to procure the service of reconstruction of a power plant, construction of a heat sub-station and connection to the field heat system and delivery of heat accumulators Main equipment delivered for CNG dispensing point construction project at PS Žarkovo 2 (Belgrade) Approved construction of а compressed natural gas plant at future Block 45 PS at Novi Beograd Contracted electricity trading volume 2.51 TWh 5
Macroeconomic indicators Stable exchange rate, higher oil price Exchange rate USD/RSD 120 0% Price of crude oil type Urals RCMB, $/bbl 60 +27% 115 50 110 105 2016 Average 2016 2017 40 2016 Average 2016 2017 100 Average 2017 30 Average 2017 95 I II III IV V VI VII VIII IX 20 I II III IV V VI VII VIII IX 6
HSE indicators HSE indicators have a positive trend, except big accidents indicators Increased transparency LTIF RAR 5 Big 7 accidents Medium accidents 75 63 6% 27% 67% 66% Small 691 accidents 812 Near-miss accidents 35,881 41,719 1,76 1,65 1,30 2017 Plan 2017 2016 0,31 0,30 0,1 2017 Plan 2017 2016 9M 2016 9M 2017 9M 2016 9M 2017 Plan 2017 9M 2016 9M 2017 Plan 2017 7
Key indicators NIS Group Q3 2017 8 Q3 2016 Key indicators Unit of measurement 51.4 44.1 +16% Urals $/bbl 50.8 40.1 +27% 60.4 52.7 +15% Sales Revenues bn RSD 167.8 134.1 +25% 7.7 4.5 +70% Net profit bn RSD 20.1 7.7 +2,6x 11.7 9.3 +26% EBITDA bn RSD 34.3 22.5 +53% 20.0 9.6 +109% OCF bn RSD 38.9 18.2 +114% 45.8 41.2 +11% Calculated obligations on the basis of public revenues 9М 2017 9М 2016 bn RSD 126.0 117.5 +7% 352 365-4% Production of oil and gas thous t.o.e 1,044 1,108-6% 968 626 +55% Refining of crude oil and semi-products thous tons 2,613 2,376 +10% 962 861 +12% Total sales volume of petroleum products thous tons 2,514 2,414 +4% 6.7 5.3 +25% CAPEX bn RSD 16.6 14,4 +15% 671 708-5% Total indebtedness to banks (Total debt to banks+ LCs) mn USD 671 708-5%
Trends in the motor fuel market 9M 2017/9M 2016 Region's motor fuel consumption is growing: - Macroeconomic trends, - Fuel consumption is growing in segment of transport, construction and processing industry. 3.2% Slovenia 3.0% Hungary 2.1% Romania Serbia Growing diesel consumption: good results in infrastructure projects and construction development, growing processing industry and transport. Diesel fuel consumption is partly returning to legal course in the wake of emergency control of sales of base oils 1.9% Croatia 1.7% Bosnia- Herzegovina 0.4% Serbia 2.6% Bulgaria 9
Market share Serbia Petroleum products market Volume of petroleum products market, thousand tons 2,540 2,631 1,875 (74%) 665 (26%) 1,912 (73%) 719 (27%) 9M 2016 9M 2017 estimate 3.6% NIS Others Total consumption of petroleum products is growing Growing consumption of coke, jet fuel, straightrun and motor petrol and diesel fuel Growing of construction and road-building industry Lower consumption of LPG NIS sales has a growing trend, however its growth is a bit slower than the market growth. 10
Market share Serbia Retail market NIS has a steady retail market share. Retail market, thousand tons 1.1% Retail market growth for 1.1% Fuel consumption is growing due to: Transport growth car fleet boost transit traffic boost diesel consumption partially returns in legal channels 1,217 1.230 520 (43%) 697 (57%) 527 (43%) 703 (57%) 9M 2016 9M 2017 estimate NIS Others 11
Market share region Q3 2017/Q3 2016 Romania Number of PS: 18 Total market %: 0.9% Retail market %: 1.3% Bosnia and Herzegovina Number of PS: 35* Total market %: 12.2% Retail market %: 10.9% *and two petrol stations in DODO operating model Bulgaria Number of PS: 35 Total market %: 5.2% Retail market %: 4.4% 12
Operational indicators Exploration and Production Oil and gas production, thous. t.o.e. -6% 1,108 40 335 1,044 32 316 Angola Oil and gas output volume in first 9 M 2017 is 6% less on the same period previous year. 47 wells drilled through and put on-stream. 733 696 Domestic gas Domestic Crude 9M 2016 9M 2017 13
Operational indicators Refining Increased volume of refining +10% Volume of refining is a result of meeting the market demand, available stock and optimised raw material pool Refining of crude oil and semifinished products, thousand tons 2,376 146 1,618 2,613 192 1,768 Semi-Finished Products Imported Crude +10 % Domestic Crude 612 652 9M 2016 9M 2017 14
Operational indicators Sales and Distribution Sales volume, thousand tons 15 2,414 2,514 338 359 1,363 1,393 191 233 522 529 9M 2016 9M 2017 *Including the internal sales volume +4% Export Wholesale - Serbia Foregin assets Retail - Serbia Retail in Serbia increase 1% Wholesale in Serbia increase 2% Export increase 6% Foreign Assets increase 22%
Financial indicators Net profit Increase in price of crude oil and petroleum products Measures to boost operational efficiency and reduce cost Positive foreign exchange difference Net profit, bn RSD 2.6x 20.1 7.7 9M 2016 9M 2017 16
Financial indicators EBITDA EBITDA, bn RSD +53% Increase in price of crude oil and petroleum products Measures to boost operational efficiency and reduce cost 22.5 34.3 9M 2016 9M 2017 17
Financial indicators OCF Higher funds inflow due to higher prices of oil products EBITDA growth OCF, bln. RSD +114% 38.9 18.2 9M 2016 9M 2017 18
Financial indicators CAPEX CAPEX, bn RSD +15% CAPEX by segment 5% 1% 2% Exploration and production Services 14.4 16.6 21% Refining Sales and Distribution 2% 69% Energy 9M 2016 9M 2017 Corporate centre 19
Measures to increase operational efficiency Effect on EBITDA in 9M 2017 is 5.1 bn RSD 1.0 6.7 0.6 0.4 2.0 0.8 7.6 0.8 5.1 1.5 1.2 6.7 Exploration and Production Services Refining Sales and Distribution Energy Measures Corporate Centre NIS 2017 Damage prevented Damage prevented Total NIS 2017 9M 2017 20
Bank indebtedness Maturity and currency structure of credit portfolio Bank indebtedness, mn USD 9/30/'17 6/30/'17 3/31/'17 12/31/'16 12/31/'15 12/31/'14 12/31/'13 12/31/'12 12/31/'11 12/31/'10 12/31/'09 2 2 4 3 12 28 34 14 13 33 233 669 634 659 662 664 598 455 403 446 611 671 636 664 666 675 626 489 418 458 644 793 1,026 0.8% Letters of credit Debt to banks Debt to banks, mn USD 9/30/'17 6/30/'17 3/31/'17 12/31/'16 12/31/'15 12/31/'14 12/31/'13 12/31/'12 12/31/'11 12/31/'10 12/31/'09 29 53 116 186 153 91 271 47 356 28 418 275 278 640 581 543 477 511 507 184 455 403 446 336 516 669 634 659 662 664 598 611 793 1% up to 1 year over 1 year Debt structure: USD 38% EUR 62% Other 0.5% GPN Loan -11% 267 mn EUR 21 *all changes shown in respect to 31.12.2016.
Benchmarking EBITDA margin (%) 3. EBITDA/FTE* (thous USD) 4. Daily Sales (t/day) 4.&2. 16.4 18.6 20.4 22.6 34.3 22.5 18.4 34.3 45.8 52.9 123.4 55.0 5.3 6.0 6.1 7.2 7.5 8.9 6.8 Light Products Share (%) 4. OPEX ($/boe) 2. 72.5 N/A 75.4 6.0 75.7 6.0 1.2 7.1 84.9 86.8 Data from report for 6M 2017, except for NIS (9М 2017) *Data for 6M 2017 79.1 8.8 10.5 8.1 22
Wrap up Limited opportunities for long-term borrowing Increased activity of competitors in Serbia's market Positive trend of macroeconomic indicators Domestic crude oil and gas production exceeds plan Increased volume of refining and sales Growth of finance indices 23
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