nis group’s performance presentation
TRANSCRIPT
NIS.EU
NIS GROUP’S PERFORMANCE PRESENTATIONfor first quarter of 2021
11th May, 2021Anton CherepanovFinance, Economics, Planning and Accounting Function
Disclaimer
This presentation has been prepared by NIS j.s.c. Novi Sad ("Company") and consists of a slide show that contain information pertaining to the NIS Group intended to investors. Thispresentation is not any offer or invitation to tender, or any information on the approval of the offer for sale or purchase or registration of shares or other securities of Company;neither this presentation, nor any of its part, as well as the fact that this presentation is made available or distributed, can be a ground for any contract or investment decision and itmay not be relied upon for this purpose.
All visitors of this presentation who consider purchase or sale of securities are hereby warned that any purchase or sale should be undertaken on the basis of the informationcontained in other publicly available documents, which should be used in accordance with the restrictions contained in these documents. There should be no reliance, for whateverpurpose, on the information contained in this presentation, or any content that has been mention when it was made public, or on its completeness, accuracy or veracity. Theinformation specified in this presentation should not be treated as giving investment advice or recommendations. All reasonable measures were taken with a view to ensure that thefacts contained in this presentation are accurate and that the opinions expressed are correct and reasonable. This presentation is not adopted by Company’s bodies. Consequently, nostatement or guarantees, explicit or implicit, in connection with the accuracy, completeness or veracity of information or opinions which are contained or considered in thispresentation was not given by or in the name of the Company or any of its shareholders, directors, agents, employees or any other person. Neither the Company nor any of itsshareholders, directors, agents or employees or any other person do not accept any responsibility for any loss that may arise on the basis of or in connection with the use of thispresentation or its content or in any other way connected with this presentation.
Information in this presentation contains a statements on uncertain future events. The statements about uncertain future events include statements that are not historical facts,statements in connection with the intent of the Company and NIS Group, beliefs or current expectations in connection with, among other things, performance results of the NISGroup, the financial situation and their liquidity management, prospects, growth, strategies and industrial branches in which the NIS Group operates. For the reasons which arerelated to the events and depend on circumstances that may but are not certain to take place in the future, the statements about uncertain future events by their nature involve risksand uncertainty, including but not limited to the risks and uncertainties that the Company and NIS Group have identified in other publicly available documents. The Company warnsthat there is no guarantee that the statements on uncertain future events will come true in the future and that the actual business results, the financial situation and the liquidity, aswell as the development of the industrial branch in which the Company and NIS Group operate, may significantly differ from those presented or reckoned by the statements aboutuncertain future events which are contained in this presentation. Additionally, and if the results of the business of the NIS Group, its financial condition and liquidity, as well as thedevelopment of industrial branch in which the Company and NIS Group operate are in accordance with the statements herein contained about uncertain future events, such resultsand the development are not indicative of the results and the development in the coming periods. The information contained in this presentation is given on the date of thispresentation and their changes are possible without prior notice.
No person shall be under any obligation to update and keep current the data herein contained.
Once you have visited or read this presentation you shall be considered familiar with the above mentioned constraints.
Macroeconomic Indicators
3
USD/RSD rate -9% Brent oil price, $/bbl +21%
COVID-19 pandemic - effects and limitations during 2021:
In Q1 2021, an increase in the number of people infected with COVID-19 resulted in imposing more stringent measures to prevent the spreading of the virus, which was reflected on the negative consumption trends in the first two months. In March,there was a growth in consumption resulting in a slight consumption increase on a quarterly level.
Q1 2021 saw a growth in motor fuel consumption in Serbia by approximately 2% compared to the same period in 2020.
Compared to the same quarter of the previous year, the price of Brent oil increased by 21%.
The average USD/RSD exchange rate was lower by 9% compared to the same period last year.
90
100
110
I II III
2020 Average 2020 2021 Average 2021
15
35
55
75
I II III2020 Average 2020 2021 Average 2021
I II III
4
Drilling of 12 development wells in Serbia
The total production output reached in Q1
2021 is 292 thousand tonnes of oil equivalent
4
NIS in Q1 2021
Exploration and production Block
The main goal of the Exploration and Production in first quarter 2021 was to reach hydrocarbon output,implement the projects concerning geological and exploration operations and increase the GTA efficiency.
Q1 2021:
CAPEX1: 2.6 bln RSD
EBITDA: 6.0 bln RSD
1 financing
Number of wells: Oil and gas output: Financial indicators:
55
NIS in Q1 2021
Downstream Division - Refining
Planned overhaul stoppage of the plant carried out, iimplementation of 12 investment maintenance projects during the planned stoppage
CAPEX2: 1.0 bln RSD
EBITDA: 3.5 bln RSD
Continuity in the use of the "CE" marking for polymer modified bitumen is ensured, thus enabling the continued marketing of this product in the European Union
Contract was signed with the renowned company "AmecFoster Wheeler Italiana Srl" (Wood Group) on the preparation of the FEED1
documentation for the purposes of the FCC reconstruction project and the construction of a new ETBE plant
During Q1 2021, oil refining and production of petroleum products were provided in accordance with the plansand requirements of the market, as well as the implementation of the planned turnaround during March. Thepriority during January and February was to increase the volume of production and provide the necessary stocks,in order to ensure uninterrupted shipment and orderly supply of the market with all types of oil products duringthe shutdown of the plant in March this year.
1Front End Engineering Design2financing
Поверљиво/Confidential
66
NIS in Q1 2021
Downstream Division – Sales and distribution
In Q1 2021, the modernization of retail network continued.
CAPEX 1
0.4 bln RSD
EBITDA
3.5 bln RSD
1Financing
The company started construction of new highway petrol station, Sokolici 1, under the GAZPROM brand, the firstone on the newly openedpart of Koridor 11.Start of the comprehensive reconstruction of the Mionica petrol station (under the NIS brand).
Retail volume:The volume of retail for Q1 2021 is 239thousand tons
NIS share in the Serbian retail market:
The share of NIS for Q1 2021 is 45%
Wholesale volume:The volume of wholesale for Q1 2021 is 330 thousand tons
Within the development of the project of wholesale in Bosnia, 58 thousand tons were sold
Map of new construction and reconstruction projects in Serbia in 2021
7new construction projects in progress
projects in NIS Petrol brand in progress
Q1 2021: Projects in progress
New construction Format Reconstruction Format
PS Sokolici 1 М PS Mionica А
The plan is to build 4 new PSs in 2021, and toreconstruct 6 PSs.
8
Realization of the project of combined cycle plant TE-TO Pancevo in the first quarter of 2021:
CCPP Pancevo project
Realization of the contract with the ERS contractor on the project
approximately EUR 130 million (80% of the total expected amount)
The level of realization of construction works is 97% The level of realization of works on the preparation of project
documentation is 94% The degree of realization of equipment procurement and transport is
99% The level of realization of the works of putting the plant into operation
is 82% The overall progress of the project (March 2021) is at the level of 97%
Steam-turbine plant Gas turbine plant
Main project parameters
Expected total investments, million EUR about 180
Nominal electric power of the power plant, Мwt up to 200
The situation caused by the COVID-19 virus significantly affected and still affects the dynamics of project implementation.
Consequences of the negative impact of the state of emergency:1) The process of handover-takeover of the GMS facility (gas
metering station) between Shanghai Electric Group Co. Ltd. andSrbijagas is in the final phase. By the end of the month, it isplanned to complete and submit the documentation to thecompetent authorities in order to obtain the exploitation permit.In parallel, the Record on the Handover of the Facility is beingprepared
2) Delays in the preparation and submission of construction project.An analysis was conducted and it was determined that due to thelisted factors, the deadline for the Project completion is expectedto be extended.
COVID-19: impact and limitations
HSE Indicators
9
Number of eventsin NIS
LTIF RAR
Q1 2020 Q1 2021
243 203
20 12
0 0MajorEvents
Medium events
Minorevents
1.68(8 LTI) 1.25
(6 LTI)
Q1 2020 Q1 2021
Q1 2020
Q1 2021
26%
0.12(1 RAR)
0.23(2 RAR)
Q1 2020 Q1 2021
Q1 2020
Q1 2021
RAR (Road Accident Rate) - Indicator of the number of traffic accidentsLTIF (Lost Time Injury Frequency) – Ratio of employee injuries with sick leaves
10
Key IndicatorsNIS Group
10
Key indicators Unit of measure Q1 2021 Q1 2020 ∆ (%)
Brent Dtd $/bbl 60.9 50.3 +21%
Sales revenues bn RSD 48.2 52.6 -8%
EBITDA bn RSD 9.4 5.2 +81%
Net profit (loss) bn RSD 1.5 -1.1 +244%
OCF bn RSD -0.5 -1.6 +71%
Accrued liabilities based on public revenues bn RSD 44.6 39.9 +12%
Oil and gas output thou. TOE 292 319 -8%
Crude oil and semi-finished products output thou. tons 752 860 -13%
Total petroleum products sales volume thou. tons 781.8 779.1 +0,3%
CAPEX bn RSD 4.1 7.7 -47%
Total debt to banks(total debt to banks + letters of credits)
mn EUR 641 619 +4%
Motor Fuel Market TrendsQ1 2021/Q1 2020
11
Different trends are evident in fuel consumption in the countries inthe region, the main cause being the different measures thesecountries introduced in the first quarter of 2021.
More rigorous and long-lasting measures in effect in Bulgariaand Romania have had a negative impact on consumption, whileit is recovering somewhat in other countries, mostly because ofthe very low level it hit in the last two weeks of March 2020 (thebeginning of the the pandemic).
SerbiaA mild increase in the motor fuel consumption has been recorded in Serbia. Having dropped in the first two months, the fuel consumptionmade a recovery in March resulting in a mild overall increase in theentire quarter. The mild winter had a positive effect, as it providedfor the continuity of works in the construction industry andaccelerated the beginning of agricultural.
Sloveniа
2.0%
Croatia
1.5%
Bosnia andHerzegovina
3.7%Bulgaria
-10.2%
Romania
-4.3%
Hungary
2.1%
Serbia1.8%
Market Share – SerbiaPetroleum Products Market
12
Motor fuels marketvolumes, thou. tons1
• A slight recovery of the motor fuel market - mainly under the impact of the construction industry and agriculture.
1Including CPG. Data for Q1 2021 are given on the basis of estimates.
146(28%)
160(30%)
380(72%)
376(70%)
527 536
Q1 2020 Q1 2021
Others NIS
+1.8%
The change in the consumption noted in the second half of Marchlast year had an adverse effect on the entire first quarter of 2020.Thus, a moderate growth in the first quarter of 2021 indicates thatthe consumption of motor fuels is on the path of slight recovery.Agricultural works have started a little earlier, while major export ofcereals from last year's harvest and the uninterrupted works in theconstruction industry because of the mild winter additionallycontributed to higher consumption.
Market Share – SerbiaMotor Fuel Retail Market
13
Retail market,thou. tons1 +0.7%
1The sales of NIS and other competitors include motor fuels (auto-gas, CNG – motor fuel, motor gasoline and diesel). LPG cylinders are not ncluded. Retail of other market participants is supplied from the wholesale of NIS and other participants of the Serbian wholesale market. Data for 2021 are given on the basis of estimates. Any deviations in percentages and aggregate values result from rounding.2315 public PSs + 10 internal PSs
• The same trend is visible in retail - there is a slight recovery compared to the first quarter of last year.
NIS's market share remained at the level of the first quarter oflast year.The seasonality of demand, modernization of the network,innovative marketing solutions and improved assortmentcontributed to that.
207(55%)
210(55%)
172(45%)
171(45%)
379 381
Q1 2020 Q1 2021
Others NIS
The total number of PS’s in Serbia on March 31, 2021 3252
14
Autoput Desna
Сербия
Market Share – RegionQ1 2021/2020
14
Bosnia and Herzegovina
No. of PSs**: 42% total market: 31.6%% retail market: 9.3%
Romania
No. of PSs: 19% total market: 1.4%% retail market: 1.6%
Bulgaria
No. Of PSs*: 34% total market: 4.8%% retail market: 4.5%
*PS Kalotina closed in Bulgaria**leased 5 PS in B&H: Prnjavor, Grude, Veljaci, Gabela, Doljani
Operating IndicatorsExploration and Production
15
• Planned volume of hydrocarbonproduction achieved (+0.3% higher thanplanned)
Oil and gas output,thou. TOE -8%
210 198
96 85
128
319 292
Q1 2020 Q1 2021
Domestic oil Domestic gas Foreign projects
Operating IndicatorsDownstream Refining
16
Refining of oil and semi-finished products, thou. tons
-13%• Reduction of refining volume by 13%
compared to the same period in 2020 as aresult of the planned turnaround in March thisyear
• During the fourth quarter of the previous yearand in the first quarter of this year, therequired amount of petroleum products wasprovided to supply the market.
216 175
563512
8165
860752
Q1 2020 Q1 2021
Domestic oil Import oil Semifinished products
Operating Indicators Downstream Sales and Distribution
17
Sales volumes, thou. tons +0.3%
257 239
306 330
216 213
779 782
Q1 2020 Q1 2021
.
Retail - Serbia and foreign assets
Wholesale - Serbia and foreign assets
Export, transit and BU
There is a sales growth by 0.3% compared the volume of sales in Q1 last year:• Decrease in retail by 1% due to the negative impacts of
the pandemic is mostly related to foreign sales.• Sales growth in wholesale and introduction of the new
product, “petroleum coke”, compensated for the decline in sales of aviation fuel (due to the COVID-19 pandemic) and exports (due to production optimisation and Pancevo Refinery overhaul).
*It includes the sale of KPG of the Energy Block and the sale of oils and lubricants to the lubricant production plant.**Business unit includes the sale of canal bitumen, bunker and aviation fuel.
Financial IndicatorsEBITDA
18
+81%EBITDA, bn RSD
5.2
9.4
+4.8
-0.6
EBITDA Q1 2020 Other factors EBITDA Q1 2021Impact of priceand exchange rate*
• Cheaper inventory in the refiningsector in the previous periods, aswell as the positive effect of rising oilprices compared to the first quarterof the previous year
• Cost optimization and measuresimplemented by the management
*the impact of price and exchange rate includes the impact of inventory prices. Cost optimization measures had a positive effect, but due to the negative impact of the decline in the volume of production and refining, the total amount of other factors is negative and amounts to -0.6 billion RSD.
Financial IndicatorsNet Income (loss)
19
-1.1
1.5
Q1 2020 Q1 2021
+244%
Net income (loss), bn RSD
• Growth of EBITDA
Financial IndicatorsOCF
20
OCF, bn RSD
+71%
-1.6
-0.5
Q1 2020 Q1 2021
• lower operating costs (oil, OPEX, customs), but also lower inflows from customers due to payment dynamics
21
Realization of CF in Q1 2021, bn RSD
21
-0.5
-5.0
-0.5
-4.5 4.5
OCF Free Cash Flow Net borrowingsInvestments Net CF
Financial IndicatorsCAPEX
22
CAPEX, bn RSD -47% CAPEX by segments
63%
17%
8%
9%
1% 2% Exploration andproduction Block
Bottom-of-the-barrelProject
DWS Refining
DWS Sales andproduction
The rest of DownstreamDivision
Corporate centre
7.7
4.1
Q1 2020 Q1 2021
Operational Efficiency Improvement MeasuresEffect on EBITDA, bn RSD
23
• The overall effect of operational efficiency improvement measures in the first quarter of 2021 on EBITDA indicator is RSD 0.2 billion.
0.2
0.2
0.1
0.1
0.02 0.1 0.002 0.2
0.2
0.3
Exploration andproduction
Refining Sales anddistribution
Others DWS Corporate centre NIS 3М 2021 Preventeddamage
One-offmeasures
Total NIS3M 2021
Measures Prevented damage and one-off measures
24
Debt to BanksMaturity and Currency Structure of Credit Portfolio
Debt to banks, mn EURBank indebtedness, mn EUR
Debt structure:USD 0.2% EUR 99.6% Other 0.2%
207
22
36
197
75
140
176
33
353
42
252
323
270
133
417
467
453
547
572
587
537
599
459
345
305
330
492
607
629
549
575
590
590
641
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
31.12.'19
31.12.'20
31.03.'21
up to 1 year
over 1 year
25101125231133
2
000
459345
306330
492607628
549575590590641
484355
316355
515618631
552577590590
641
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Letter to credits
Debt to the banks
25
185.1
112.7
75.4
15.7
13.4
80.59.1
7.76.46.2
5.75.1
10.9
9.5
6.6
5.8
N/D
8.2
Data obtained from 12M 2020 reports, . except for NIS (3M 2021)*All data for 12M 2020
83.9
80.8
78,278.2
77.3
73.5
78.7
6,7
26.1
24.8
19.5
14.4
6.7
18,3
Benchmarking
EBITDA margin (%) EBITDA/FTE (thou. USD)* Daily volume (t/day)
Share of light products (%) OPEX ($/boe)
2626
Digital transformation projects are realized throughout the entire value chain
UV SEARCH DRILLINGEXPLORATION
AND PRODUCTION ENERGETICS REFINING LOGISTICSSALED AND
DISTRIBUTION CHANNELS
• Integration of geological data on GIR platform
• Implementation of Big Data and Data Science tools for oil and gas exploration, optimization of current deposits
• Drones for monitoring seismic works
• Production management center based on a unique digital environment, real-time data collection and analysis, application of advanced analytics
• Implementation of mobile devices andIoT at oil and gas production and preparation facilities
• Digital Sand Layer Fund Management Platform
UPSTREAM DOWNSTREAM
• Digital Electricity Trade Platform
• AR for maintenance and overhaul
• Digital Energy Efficiency Management Platform
• Predictive analytics of equipment failures and repairs
• Real-time integrated refinery process planning and management system
• Digital simulators and VR for training technical personnel
• Digital Logistics Management Platform
• B2B and B2Cdigital platforms
• Introduction of new business models based on digital solutions
• Data Science Tools for Client Preferences Analysis
Integrated Financial and Material Flow Management System
Asset Management (CMMS)
Employee Management (SAP Success Factors)
SAP ERPMass Balance
MAXIMOSAP SF
ELEMENTS OF NIS DIGITAL TRANSFORMATION SUPPORT
OFFICE CDO AND DIT
DIGITAL INNOVATION
PARTNERSHIPS AND COOPERATION
IT INFRASTRUCTURE
Documentation ManagementE-DocumentData and Analytics Management PlatformData Platform
Projects and initiatives in the
DT portfolio (2020)
118
1.1
budget for digital
initiatives until 2023.
in RSD billion
27
Examples of digital initiatives implemented in NIS
DRIVE.GO
Mobile app for paying for fuel at petrol stations at SSG NIS Petrol and Gazprom (contactless payment, as an alternative to buying products and services at SSG)
App running on 170 SSG
App downloaded more than 55,000 times
10,000 l is the average daily fuel sales through the application
ECONS
Management system of key efficiency indicators of refinery plants
2 Continents (Europe and Africa)
5 countries (Serbia, Romania, Hungary, Bosnia and Herzegovina, Angola)
30,000 wells and 11,000 km2 of 3D seismics
up to15% reduction in the realization time of GIR projectsEX
PLO
RA
TIO
N A
ND
PR
OD
UC
TIO
NR
EFIN
ING
SALE
S A
ND
DIS
TRIB
UTI
ON
GIR PLATFORM
Unique regional geoinformation system for working with geological-geophysical data, including analytical and predictive models
Interactive panels (Dashboards) for 18technological plants
Monitoring key 230 KPIs (technological and energy efficiency)
Economic effect realized in the amount
of EUR 800 k/year
Conclusion
28
Global Covid-19 pandemics
Decrease in consumption in the first twomonths this year
Increase in oil price and oil derivatescompared to the first quarter of the previousyear
Increase of EBITDA indicator, Net profit, OCF compared to the first quarter of last year
Slight increase of turnover in the first quarterof this year compared t the same period last year
Increase in consumption during March thisyear
