NIS.EU

NIS GROUP’S PERFORMANCE PRESENTATIONfor 6M of 2019

29th July, 2019Anton CherepanovFinance, Economics, Planning and Accounting Function

NIS in Q2 2019

2

Exploration and production Block

• 23 development wells and 3 exploratory wells were drilled in Serbia

• In Serbia, 654 km2 of 3D seismics performed at the exploratory area of Ada

• Drilling of two wells completed in Romania

• Construction of the compound from oil and gas preparation for trial testing isunderway on Teremia North and Jimbolia fields, beginning of which is planned forthe third quarter of 2019.

Division Downstream

Refinery

• Implementation of capital overhaul in Pančevo Oil Refinery• Staff training to operate DCU complex• Realization of projects of digital transformation• Performance testing following the completed project IM1 (in Atmospheric

Distillation Unit)

1 Investment maintance

3

Capital overhaul of Pancevo Oil Refinery

During the planned suspension of POR operation, the following activities have been completed:

• Capital workover of “Gasoline pool“

• Workover activities of “Diesel pool“

• Activities related to ’’Bottom of the Barrel Project“ – Reconstruction of MHC/DHТ hydrocracking unit. Connections in other facilities and in handling unit

• This has been the biggest capital workover in Refinery so far judging by the scope of works executed. Works have been completed on 14 ovens, 13 reactors, 53 columns, 51 containers, 210 exchangers, 209 coolers, 40 elements of rotary equipment, 195 electric engines, 6,010 pieces of instrumental equipment. The previous overhaul took place in 2016

• For the purpose of increasing the reliability and efficiency of the unit’s operation, 13 investment projects and 31 projects of investment maintenance have been realized

Execution of all additional works thatderived from the completed check anddetermined state of equipment, resultedin increased reliability of the equipmentand reduced possibility of equipmentsuspension.

The plants were shut down for overhaul activities as of 23rdFebruary, while the overhaul itself commenced on 28thFebruary.The plants overhaul succession was being carried out in theperiod between 22nd March and 30th March.The commercial operation commenced also in a succession in theperiod between 19th April and 5th May, once the reconstructionS-4300 was complete.

NIS in Q2 2019

4

Division Downstream

Sales• After major reconstruction works had been finished, PS “Velika Plana”, Autoput

Desna, was introduced to exploitation as the first PS in the form M-highway inSerbia (Gazprom brand)

• Major reconstruction of PS “Stari Banovci” (Gazprom brand) is under way• Introduction of a new service to PS’s: GIFT CARDS available at specific NIS Petrol

and Gazprom PS’s for the purchase of fuel and all other products (card value of1,000 RSD, 3,000 RSD and 5,000 RSD).

EnergyCCPP Pančevo

• Completed works regarding construction of the foundation of the GT unit facility. Ongoing construction of the foundation of the administration building, thermal and compressor station, boilers, and chimneys. Initiated construction of the foundation of the ST facility and control room. Initiated construction and installation of the GT facility steel construction.

• Completed PCP and tender documentation for the procurement of equipment and works for a 220kV distribution station.

• The МЕТ Renewables Company and NIS have commenced a joint delivery of the wind farm project in Serbia

• Negotiations with EPC contractors are drawing to a close

Project windpark Plandište

GT – gas turbine unit; ST – steam turbine unit; PCP – project for construction permit

5

Velika Plana BS

• Customers can always enjoy fast and efficient service, diverse culinary delights and a carefully selected range of non-fuel products available in the Drive Café restaurant.

• New features of our network include a specially developed smoking space and a unique sound-proof garden with an electric awning.

• The standard offer of high-quality fuels has been expanded to include a premium range of G-Drive petroleum products, as well as enhanced OPTI LPG from the Pančevo Oil Refinery.

• Velika Plana BS is the first petrol station in both Gazprom and NIS Petrol with an electric vehicle (EV) charging point.

• All designs and construction works are fully in compliance with the legislation of the Republic of Serbia within the construction industry and environmental protection.

• Built in line with the latest technological, safety and environmental standards, the newly-opened petrol station boasts modern equipment and double-sided multiplex fuel dispensers.

6

Project status:

Key Project parameters:

Bottom of the Barrel Project

236 mn EUR invested in the project

The Detailed Design completed and all permits obtained

99.8% of equipment and material delivered

Completed installation of: foundations, basic steel structure of the complex, oversized equipment, coke oven, silos and coke conveyor belt. Pre-startup activities in the complex initiated. Construction and installation works related to construction of the complex completed 81.1%

3,640,814 man/hours to date, 13 contractor companies in the field, 850 field workers per day on average

Pre-startup activities are completed on 10 sistems of 148

Current contractor structure

Indicator Value

Investment, mn EUR 300

Capacity, ton/day 2 000

Unit start-up date Q4 2019

20%

80%

Foreign contractors

Serbian contractors

7

Bottom of the Barrel Project

Installed silos and coke conveyor system Insulation works at the coke oven

Construction and installation works at the spherical tank farm

Installation of measurement and control equipment and pipeline connection

8

Bottom of the Barrel project

Installation of the steel structure and pipeline in the coke pit zone

Electrical and instrumentation works

Laying of cables in the pipe rack

Insulation works at the columns

Macroeconomic IndicatorsWeakening of the dinar compared the dollar, oil price drop

9

USD/RSD rate +7% Brent crude price, $/bbl

-6%

90

100

110

I II III IV V VI

2018. Average 2018.

2019. Average 2019.

55

60

65

70

75

80

I II III IV V VI

2018. Average 2018.

2019. Average 2019.

HSE Indicators

10

Increasing transparency

LTIF RAR

Majorevents

Medium events

Minorevents

HIPO

2.32

1.76

6M 2018 6M 2019

6M 2019

6M 2018

0.32

0.21

6M 2018 6M 2019

6M 2019

6M 2018

6M 2018 6M 2019

31,290 34,610

553 713

42 32

4 0 24%

34%

Key IndicatorsNIS Group

11

Q22019

Q2 2018

∆ Key indicators UoM 6M2019

6M2018

∆

68.82 74.35 -7% Brent Dtd $/bbl 66.01 70.55 -6%

63.9 68.0 -6% Sales revenues bn RSD 117.4 120.4 -2%

9.6 15.0 -36% EBITDA bn RSD 15.9 24.0 -34%

3.1 7.8 -61% Net income bn RSD 3.2 11.5 -72%

4.7 4.8 -3% OCF bn RSD 16.0 9.4 +70%

3.-8 47.8 -17% Accrued liabilities based on public revenues bn RSD 79.8 90.95 -12%

320 332 -4% Oil and gas output thou. TOE 641 661 -3%

604 909 -34% Crude oil and semi-finished products output thou. tons 1,204 1,696 -29%

793 900 -12% Total petroleum products sales volumes thou. tons 1,519 1,665 -9%

10.1 9.4 +7% CAPEX bn RSD 18.4 17.2 +7%

592 536 +10%Total debt to banks(total debt to banks + letters of credits)

mn USD 592 536 +10%

12

Motor Fuel Market Trends6M 2019/2018

Motor fuel consumption in the region is on the rise: positive macroeconomic trends rise in the number of diesel-powered

vehicles rise in transit traffic rise in agriculture and infrastructure works

Serbia

• Main generators of consumptions in Serbia arethe growth of diesel and coke consumption.While in the first quarter, works on infrastructurewere main cause of increased consumption, inthe second quarter it was civil engineering andgrowth of transport, as well as intensivebeginning of agricultural works.

Slovenia

2.0%

Croatia

3.6%

Bosnia and Herzegovina

1.2%Bulgaria

1.4%

Romania

2.3%

Hungary

5.2%

Serbia4.3%

Market Share – SerbiaPetroleum Products Market

13

Petroleum productsmarket volumes, thou. tons

0.1%

• Total consumption of petroleum products isalmost at the same level:

• The main consumption generators are:

- Rise in diesel and coke consumption

- Infrastructure works, agriculture, transport

• The negative consumption trend was recordedwith primary petrol (Petrohemija’s overhaul)and heavy fuel oil.

NIS market share was slightly lower in the first half ofthe year, as a result of a significant rise in coke import(not in the NIS product range) and reducedconsumption of primary petrol and heavy fuel oil,where NIS’ share is traditionally very high.

476(28%)

493(29%)

1,243(72%)

1,228(71%)

1,719 1,721

6M 2018 6M 2019

NIS

Others

Market Share – SerbiaMotor Fuel Retail Market

14

NIS’ sales is growing in the segment of diesel andpetrol, while in the LPG segment, it falls, in linewith the market trend. Modernised stations,improved fuel product range and numerousmarketing projects make a significantcontribution to the share preservation.

• Rise in retail market by 4.5%

• The most important growth factor is the rise in consumption in the diesel fuel segment, primarily generated by the growing number of diesel-powered vehicles.

• The downward trend in LPG consumption continues, primarily due to a reduced number of LPG-powered vehicles, but also relatively high prices due to high charges.

Retail market, thou. tons+4.5%

455(57%)

473(57%)

343(43%)

361(43%)

798 834

6M 2018 6M 2019

NIS

Others

15

Market Share – RegionQ1 2019/2018

Bosnia and Herzegovina

No. of PSs : 37% total market: 17.9%% retail market: 9.7%

Romania

No. of PSs: 18% total market: 0.9%% retail market: 1.3%

Bulgaria

No. of PSs: 35% total market: 5.0%% retail market: 4.4%

Operating IndicatorsExploration and Production

16

• The planned production scope for hydrocarbons in first six months was +1.5%

• 20 wells were put into operation

Oil and gas output,thou. TOE -3.1%

438 429

208 195

16 16

661 641

6M 2018 6M 2019

Foreignprojects

Domesticgas

Domesticoil

Operating IndicatorsRefining

17

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

-29%

432 342

1,113

767

151

94

1,696

1,204

6M 2018 6M 2019

Semifinishedproducts

Import oil

Domestic oil

• The production of petroleum productsdecreased by -29% due to capital overhaul inPančevo Oil Refinery.

Operating Indicators Sales and Distribution

18

• Retail in Serbia – increase 5%

• Wholesale in Serbia – decrease -11%

• Export – decrease -34%

• Foreign assets – increase 9%

Sales volumes*, thou. tons -9%

342 360

162 177

916 819

246163

1,6651,519

6M 2018 6M 2019

Export

Wholesale -Serbia

Foreign assets

Retail - Serbia

*Without internal sales

• Capital overhaul in Pancevo Oil Refinery

• Total volume of sales for 6M 2019 is higher than refining volume (in the same period of the previous year volume of sales and refining volume are at the same level)

Financial IndicatorsEBITDA

19

-34%EBITDA, bn RSD

24.0

15.9

6M 2018 6M2019

• Lower refining volume due to capitaloverhaul in Pancevo Oil Refinery

• The fall of oil prices on the world market

• The fall of oil production

Financial IndicatorsNet Income

20

Net income, bn RSD -72%

11.5

3.2

6M 2018 6M 2019

• Lower EBITDA

• Greater amortization

• Negative exchange differences

Financial IndicatorsOCF

21

• Lower liabilities for the import of crude oil

• Lower liabilities towards the state

• Higher customs duties

• Higher derivatives duties

OCF, bn RSD+70%

9.4

16.0

6M 2018 6M 2019

Financial IndicatorsCAPEX

22

CAPEX, bn RSD +7%

17.2 18.4

6M 2018 6M 2019

CAPEX by segments

51%

34%

9%5%

0% 1%Exploration and productionBlock

Bottom of barrel Project

DWS Refining

DWS Sales and distribution

The rest of the Downstreamdivision

Corporate Centre

Operational Efficiency Improvement MeasuresEffect on EBITDA, bn RSD

23

1.7

0.5

0.3

0.4

0.50.01 0.1

0.7

2.4

0.9

Exploration andproduction

Services Refining Sales anddistribution

Technicalservices

Corporatecentre

NIS 2019 Perventeddamage

Total NIS 2019 Total NIS 6M2019

Measures Pervented damage

162

25

10

11

25

23

11

3

3

2

2

2

552

459

345

306

330

492

607

628

549

575

573

590

714

484

355

316

355

515

618

631

553

577

575

592

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

31.12.'18

31.03.'19

30.06.'19

Letter of credit

Debt to banks

24

Debt to BanksMaturity and Currency Structure of Credit Portfolio

Debt to banks, mn EUR

+3%

Bank indebtedness, mn EUR

Debt structure:USD 0.5% EUR 99.1% Other 0.4%

193

207

22

36

197

75

140

176

33

36

359

252

323

270

133

417

467

453

547

572

570

584

553

459

345

305

330

492

607

629

549

575

573

590

31.12.'09

31.12.'10

31.12.'11

31.12.'12

31.12.'13

31.12.'14

31.12.'15

31.12.'16

30.12.'17

31.12.'18

31.03.'19

30.06.'19

up to 1 year

over 1 year

Comparative analyses

25

EBITDA margin (%) EBITDA/FTE (thou. USD)* Daily volume (t/day)

Share of light products (%) UPS OPEX ($/boe)

37.8

24.4

13.5

12.6

11.8

20.0

74.1

38.2

19.5

10.1

7.2

29.88.7

7.8

6.9

6.2

6.1

5.0

6.8

11.7

8.5

6.8

5.8

Н/Д

8.2

Data obtained from 3m 2019 reports, except for NIS (6M 2019)*All data for 3M 2019

83.4

80.6

77.6

76.9

75.5

81.5

Conclusion

26

Deacreased refining volume due to capital overhaul

The fall of oil price comparing to the firstsix months of 2018

Growth of Operating cash flow

Improvement of HSE indicators

NIS.EU

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mailto:Investor.Relations@nis.eu

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