NIS GROUP’S PERFORMANCE PRESENTATIONfor 9M 2018

14th November, 2018Anton FedorovFinance. Economics, Planning and Accounting Function

2

• During the first 9 months, 42 development wells and7 exploratory wells were drilled in Serbia (39development wells and 8 exploratory wells were putinto operation)

• Over 9 months 829 km2 of 3D seismic surveys weredone in Serbia

• The drilling of two contour-exploratory wells wasinitiated in Romania (Beba Veche Sud-1000 andTeremia-1001)

• GTM was successfully performed in the Mokrin andMajdan fields

• The Energy Plant was formed by transformationswithin the Exploration and Production Block

• The competition “Object of High-Production Culture”was held at the Exploration and Production Block

NIS in Q3 2018Exploration and Production

3

• Revamp of Klaus (S-2450) and Visbreaking (S-200and ) and Diesel Dewaxing (S-2400) units

• Merox unit (S-2550) handed over for reconstructionas part of activities under the DCU Project

• In August, a record production and transport ofbitumen (51,000 tons)

• Works on horizontal and vertical signaling in frontof Pančevo Oil Refinery completed

• Definition of technological requirements forconnection of CCPP Pančevo to the existing lines inPančevo Oil Refinery

• Extension of the certification scope to include newroad bitumen „EB 35/50“

NIS in Q3 2018Refining

4

• Completed reconstructions of ‘Subotica 1’ and‘Lazarevac Grad’ petrol stations

• Two new products of own trademark launched: G-Driveisotonic by Aqua Viva and Drive Cafe bamboo glasses

• New marketing campaign G-Drive Instant Win initiated

• Media campaign: “On the Road with Us – fuel today. paynext month!”

• Contract signed on performing port and harboroperations in Veliko Gradiste

• Production and introduction of new packaging for Jazakwater

NIS in Q3 2018Sales and Distribution

5

• TE-TO Pančevo d.o.o. Pančevo, the project funding agreementsigned, the implementation of the project continues

• “Plandište” Wind Farm – revised offers submitted by equipmentmanufacturers; commercial negotiations concluded. Preparation ofthe EPC Contract is underway

• CNG at Žarkovo 2 PS – the construction permit has been obtainedand the works commenced

• CNG at Blok 45 Novi Beograd – the equipment manufacturer hasbeen selected and drafting of engineering documents is in progress

• The total contracted electricity sales volume amounts to 1.19 TWh

• CNG at Palić field – the unit reconstruction service providerselected

• Decentralisation of the thermal source within the perimeter of theformer Novi Sad Refinery – in the final phase of works executionfor the installation of the steam boiler and the steam boiler for thewastewater treatment plant

NIS in Q3 2018Energy

USD/RSD rate -10% Urals RCMB crude price, $/bbl

+39%

6

Macroeconomic IndicatorsDinar strengthens. oil price rises

90

100

110

120

I II III IV V VI VII VIII IX

2017. Average 2017

2018 Average 2018

40

50

60

70

80

I II III IV V VI VII VIII IX

2017 Average 2017

2018 Average 2018

HSE Indicators

7

Increasing transparency

LTIF RAR

9M 2017 9M 2018

41,719 43,476

757 835

50 55

6 8Majorevents

Medium events

Minorevents

HIPO

1.651.35

2.10

9M 2017 9M 2018 Plan2018

9M2018

Plan2018

9M2017

0.10

0.17

0.28

9M 2017 9M 2018 Plan2018

9M2018

Plan2018

9M2017

180%

56%65%

27%

Key IndicatorsNIS Group

8

Q3

2018

Q32017

∆ Key indicators UoM 9M2018

9M2017

∆

74.3 51.4 +45% Urals $/bbl 70.7 50.8 +39%

86.3 60.4 +43% Sales revenues bn RSD 206.8 167.8 +23%

18.1 11.7 +54% EBITDA bn RSD 42.0 34.3 +23%

10.2 7.7 +33% Net income bn RSD 21.7 20.1 +8%

23.3 20.0 +16% OCF bn RSD 32.7 38.9 -16%

51.31 44.45 +15% Accrued liabilities based on public revenues bn RSD 142.26 122.38 +16%

338 352 -4% Oil and gas output thou. TOE 999 1.044 -4%

1,073 968 +11% Crude oil and semi-finished products output thou. tons 2,769 2.613 +6%

1,076 958 +12% Total petroleum products sales volumes thou. tons 2,741 2.503 +10%

10.1 6.7 +51% CAPEX bn RSD 27.3 16.6 +64%

657.7 671 -2%Total debt to banks(total debt to banks + letters of credits)

mn USD 657.7 671 -2%

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Motor Fuel Market Trends9M 2018/2017

Consumption of motor fuels shows growth that is primarily generated by the growth of diesel fuel.

Serbia

• The following had a positive impact on dieselconsumption: significantly more successfulagricultural season, infrastructure andconstruction works.

• LPG consumption is decreasing due to highprices and changing the structure of the vehiclefleet. The rise in gasoline is lower thanexpected due to high prices.

Slovenia

2.6%

Croatia

0.4%

Bosnia and Herzegovina

0.2%Bulgaria

1.2%

Romania

-0.6%

Hungary

3.0%

Serbia+3.4%

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Market Share – SerbiaPetroleum Products Market

Total consumption of petroleum products has a positive growth trend. The following contributed to the aforementioned:

• growth in consumption of bitumen and coke

• construction and road industry as the main driver of diesel consumption

• good agricultural season

2.7%Petroleum productsmarket volumes, thou. tons

The share of NIS on the total market for petroleumproducts was increased due to the rise in the share ofprimary gasoline, diesel, liquid gas and bitumen sales.

719.4(27%)

682(25%)

1,911.2(73%)

2,018(75%)

2,631 2,701

9M 2017 9M 2018

NIS

Others

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Market Share – SerbiaMotor Fuel Retail Market

• The retail market has grown slightly

• Consumption of diesel is on the rise, whilethe reduction in LPG and gasolineconsumption is related to price growth andthe change in the structure of the fleet ofthe Republic of Serbia.

Retail market, thou. tonsNIS's participation in the retail market is stable.Numerous marketing projects, the expansion offuel portfolios and the improvement of theconcept of loyalty have contributed to thepreservation of high participation.

+2.7%

703(57%)

718(57%)

527(43%)

545(43%)

1,230 1,263

9M 2017 9M 2018

NIS

Others

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Market Share – Region9M 2018/2017

Bosnia and Herzegovina

No. of PSs : 37% total market: 14.4%% retail market: 10.0%

Romania

No. of PSs: 18% total market: 0.8%% retail market: 1.2%

Bulgaria

No. of PSs : 35% total market : 6.0%% retail market : 4.6%

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• The planned production scope forhydrocarbons was realized

• Implementation of geological-technicalmeasures

• Forty-seven wells were put into operation

Operating IndicatorsExploration and Production

-4%

Oil and gas output,Thou. TOE

675 662.7

337313

3223.6

1,044999

9M 2017 9M 2018

Angola

Domestic gas

Domestic oil

I Increase of hydrocarbon reserves in 2018 is about 1%.

Oil and gas production is aboveBusiness plan.

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• А 6% growth of refining and finishingvolume

• Refining volume meets market demands

• The schedule of the DCU Project is gettingbusier. especially regarding construction.concrete and mechanical works, implyingan increased number of employees at theconstruction site

Operating IndicatorsRefining

+6%Refining of oil and semi-finished products, thou. tons

652 659

1,768 1,901

192209

2,613 2,769

9M 2017 9M 2018

Semi-finishedproducts

Imported oil

Domestic oil

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• Retail in Serbia – increment of 3%

• Wholesale in Serbia – increment of 8%

• Export – increment of 20%

• Foreign assets – increment of 14%

Operating Indicators Sales and Distribution

+10%Sales volumes*, thou. tons

*Excluding internal sales

526 543

233 266

1,385 1,501

359431

2,5032,741

9M 2017 9M 2018

Export

Wholesale -Serbia

Foreign assets

Retail - Serbia

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• Impact of oil prices

• Sales volume increase

Financial IndicatorsEBITDA

EBITDA, bn RSD+23%

34.3

;42.0

9M 2017 9M 2018

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Financial IndicatorsNet Income

• Higher EBITDA

• Higher depreciation costs

• Lower financial expenses

• Lower positive exchange rate differences

• Lower income tax

Net income, bn RSD +8%

20.121.7

9M 2017 9M 2018

18

Financial IndicatorsOCF

• Higher liabilities for the import of crudeoil

• Higher liabilities towards the state (taxes,excise duties)

• Higher customs duties

• Hihgher derivatives duties

-16%OCF, bn RSD

38.9

32.7

9M 2017 9M 2018

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Financial IndicatorsCAPEX

+64%

CAPEX, bn RSD CAPEX by segments

48%

2%

4%

38%

11%

1% 0.34% Exploration andProductionServices

Refining

«Bottom ofBarrel»Sales andDistributionEnergy

16.6

27.3 26.5

43.2

9M 2017 9M 2018 2017 Actual Forecast2018

+63%

278

275

28

47

271

91

153

186

36

129

516

336

418

356

184

507

511

477

653

623

613

646

793

611

446

403

455

598

664

662

657

629

625

654.5

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

30.9.'18

up to 1 year

over 1 year

233

33

13

14

34

28

12

3

4

20

3

793

611

446

403

455

598

664

662

657

629

625

654.5

1.026

644

458

418

489

626

675

666

661

631

625

658

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

30.9.'18

Letters of credit

Debt to banks

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Debt to BanksMaturity and Currency Structure of Credit Portfolio

-0.4%

Debt to banks, mn USD

-0.5%

Debt to banks, mn USD

Debt structure:USD 1% EUR 99% Other 0%

GPN loan -14%221 mn EUR

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Operational Efficiency Improvement MeasuresEffect on EBITDA, bn RSD

2.0

0.7

0.9

0.40.3 0.1 4.3

0.8

3.7

5.1

Explorationand

Production

Services Refining Sales andDistribution

Energy CorporateCentre

NIS 2018 Plan Perventeddamage

Total NIS2018 Plan

9M2018

Measures Pervented damage

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.

34.4

22.8

20.3

14.4

14.0

21.2144.5

65.8

49.4

41.9

19.8

64.3

8.98.2

7.26.46.1

5.4

7.0

11.8

8.8

7.5

6.1

Н/Д

8.6

Data obtained from 6M 2018 reports. except for NIS (9M 2018)*All data for 6M 2018

84.7

83.7

79.4

76.7

74.1

79.7

Conclusion

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Limited possibility of long-term borrowing

Negative trend of HSE indicators continues in the third quarter

Growth of EBIDA and Net profit

The production of oil and gas over the plan

Sales volume increase

Realization of the DCU project in accordance with the plan

Positive effects of restructuring a loan portfolio – reducing borrowing costs,extending loan maturity dates and secured sources of financing investments in 2018 and 2019.

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THANK YOU FOR YOUR ATTENTION!Investor.Relations@nis.eu

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