nis group’s performane presentation
TRANSCRIPT
NIS.EU
NIS GROUP’S PERFORMANCE PRESENTATIONfor 9M 2020
November, 4th 2020Anton CherepanovFinance, Economics, Planning and Accounting Function
Impact of COVID-19 pandemicMacroeconomic Indicators
2
USD/RSD rate -0.3% Brent oil price, $/bbl -37%
COVID-19 pandemic: effects and limitations: State of emergency in the Republic of Serbia to limit the spreading of the Covid-19 virus. Following the adoption
of the Decision on lifting the state of emergency in May, protection measures will be strengthened in June. After the measures were eased, consumption began to recover slightly.
Decrease in motor fuel consumption in Serbia by about 8% compared to the first 9M of the previous year.
Compared to the first nine months of the previous year, the price of Brent oil decreased by 37%.
The average USD/RSD exchange rate is almost at the same level as in the first nine months of last year, ie. it marks drop of 0.3%.
60
80
100
120
140
I II III IV V VI VII VIII IX
2019 Average 2019 2020 Average 2020
1020304050607080
I II III IV V VI VII VIII IX
2019 Average 2019 2020 Average 2020
3
COVID-19: Measures taken in NIS
3
Communication of changes during the stated of emergency
• Changes to working hours• Changes to workplace behaviour• Introduction of flexible work
arrangements
Work from home
• Work from home was enabled for about 3,000employees during the state of emergency
• Gradual return of administrative workers toworkplace by October 1 (return does not includeemployees older than 60 years, chronic patients,pregnant women)
Informing Employees
• Providing timely and transparent information to the public and employees about NIS's operations during the pandemic and oil market crisis
• Continuation of Integrated Campaign #NIStesami
• Communicating all new measures applicable to employees (installation of thermal imaging cameras, etc. )
• Regular reporting on the number of infected employees
Protection Measures
• Sufficient quantities of protectiveequipment and disinfectants have beenprovided
• Mandatory use of protective equipment• Installation of thermal imaging cameras• Compliance with the prescribed
protection measures during and after thestate of emergency
Protection of employees’ health
Health, safety and social security of employees
Rearrangement of communication channels andsorting out of databases to make their content morereadily available to employees in the field and moreeasily divided per organisation and location. Workingon the development of a mobile application allowingaccess to the portal for all employees.
4
NIS in Q3 2020
Exploration and production Block
In Q3 2020 NIS drilled
7 exploration well
in Serbia
In Q3 2020, the total productionwas 317 thousand tonnes of oilequivalent of oil and gas.
The main goal in the third quarter of 2020 in the Exploration and Production Block was to fulfill the planned production ofhydrocarbons, to realize projects of geological exploration works and to increase the efficiency of geological and technicalactivities.
Q3 2020 1:
CAPEX2: 3.8 bn RSD
EBITDA: 4.6 bn RSD
2 financing
1 Data for 9M 2020: CAPEX:13.0 bn RSD; EBITDA 12.6 bn RSD
5
NIS in Q3 2020
Downstream division - Refining
Q3 20201:
CAPEX2: 1.6 bn RSD
Functional testing of the DCU plant conducted
Hydromechanical cleaning of the coiled tubing of the furnace BA-2101
Delivery of the "Certificate of Approval for the DCU Plant TrialOperation" by the TechnicalInspection and AcceptanceCommitte.
The Refining block, in the third quarter, marked a gradual recovery of business after the fall in the price of oil onthe world market and the appearance of the COVID-19 virus, as well as functional testing of the DCU plant
1 Data for 9М 2020: CAPEX: 6.0 bn RSD2 financing
6
NIS in Q3 2020
Downstream division – Sales and distribution
In Bosnia and
Herzegovina, 5 PSswere commissioned andput into operation
Two petrol stations under the NIS brand have been reopened in Serbia after full reconstruction:- Bor 4 PS- Novi Sad 16 PS
Under conditions of the emergency state Lubricants Department successfully developed the recipe andembarked on production of a new product, NISOTEC Antisepsol disinfectant, to cover the needs of the wholecompany.
Q3 20201:
CAPEX2 : 0.7 billion RSD
EBITDA: 6.1 billion RSD
1 Data for 9М 2020: CAPEX: 1.4 bn RSD; EBITDA: 12.8 bn RSD
2 financing
7
NIS in Q3 2020
Construction completed and mechanical readiness of the DCU complex achieved on 22 June, 2020.
Functional testing of the DCU and all ancillary facilities completed. During thetesting operations, the units were brought to a stable technological regime andthe first products were obtained.
Readiness for commercial operation of the DCU andthe entire complex was achieved.
Basic project parameters
Capacity, tons/day 2,000
Start of production 2020
Implementation of the Bottom of the Barrel Project in Q32020:
Bottom-of-the-Barrel Project
.
8
Project Bottom of the barrel
8
Substation
Bridge crane
Coker heater
Sphere tanks
First coke output
99
Bottom of the barrel project
Coke silos
Conveyor belt for coke
Petroleum coke
Gasoline
Light and heavy gasoil
10
NIS in Q3 2020
Basic project parameters
Expected total investments, mn. EUR up to 180
Nominal electric power of the power plant, МWt up to 200
Implementation of TE-TO Pančevo Project in Q3 2020:
Steam-turbine plant Gas turbine plant and waste heat boilers
The state of emergency caused by COVID-19 had a significant impact on thedynamics of the project implementation, and still does. For this reason, wehave faced the following problems:• Lack of workforce on the construction site – 233 workers less than planned.
Measures undertaken include:• Arrival of commissioning team members and representatives of
equipment manufacturers was organized• Engagement of local contractors for certain scope of work.
Analysis shows that the project implementation deadlines are expected toextend due to above-mentioned factors.
TE-TO Pančevo Project
Realization of contract with EPC contractor around EUR 110 mn, or 69% of the total projected amount
Commissioning activities started
Installation of electrical equipment for power supply for ownconsumption completed
The overall progress of the project (as of September 2020) at the level of 90%
HSE Indicators
11
Increasing transparency
LTIF RAR
9M 2020 9M 2019
41,066 47,070
732 1,051
46 62
1 0Majorevents
Medium events
Minorevents
HIPO
1.72(25 LTI)
1.70 (24 LTI)
9M 2019 9M 2020
9M 2019
9M 2020
1%
0.27(8 RAR)
0.15(4 RAR)
9M 2019 9M 2020
9M 2019
9M 2020
44%
RAR (Road Accident Rate) – ratio of road accidents LTIF (Lost Time Injury Frequency) – Ratio of employee injuries with sick leaves to the total number of working hours.
Key IndicatorsNIS Group
12
Q32020
Q32019
∆Key indicators UoM
9M2020
9M2019
∆
43.0 61.9 -31% Brent Dtd $/bbl 40.8 64.7 -37%
49.4 78.7 -37% Sales revenues bn RSD 135.3 196.2 -31%
8.0 15.3 -47% EBITDA bn RSD 10.4 31.2 -67%
1.9 7.5 -74% Net income bn RSD - 8.3 10.7 -178%
13.4 25.9 -48% OCF bn RSD 19.6 41.9 -53%
47.9 56.8 -16% Accrued liabilities based on public revenues bn RSD 131.8 136.6 -4%
317 324 -2% Oil and gas output thou. TOE 952 965 -1%
1,007 1,115 -10% Crude oil and semi-finished products output thou. tons 2,637 2,318 +14%
984 1,101 -11% Total petroleum products sales volumes thou. tons 2,540 2.621 -3%
6.3 10.6 -41% CAPEX bn RSD 20.7 29.0 -28%
636 574 +11%Total debt to banks(total debt to banks + letters of credits)
mn EUR 636 574 +11%
13
Motor Fuel Market Trends9M 2020/2019
Slovenia
-7.0%
Croatia
-8.0%
Bosnia andHerzegovina
-19.2%Bulgaria
-12.0%
Romania
-9.2%
Hungary
-6.7%
Serbia-7.5%
Serbia
• As in the region, after growth and a positive trend inthe first two months, the pandemic period started, bringing a significant decline in consumption in the period from March to May, followed by a gradualrecovery period.
Engine fuel consumption is still falling.- The negative effects of the pandemic have led
to a decline in motor fuel consumption. - After the easing of the measures,
consumption began to recover slightly, resulting in a slightly lower decline than in the first six months of this year.
Market Share – SerbiaMotor fuels Market
14
Motor fuels market volumes, thou. tons1 -8%
• The pandemic has had the same effect on motor fuels – in thefirst nine months, the market also declined, but the downwardtrend was slightly less sharp than in the first six months.
Speculative stocks made by certain companies during theperiod of low prices (predominantly in May and June) have aslightly higher share of imported goods in the structure,which led to a decrease in the share in motor fuels comparedto the 9 months of previous year.
468(25%)
458(27%)
1,372(75%)
1,243(73%)
1,8391,701
9M 2019 9М 2020
Others NIS
1Including CPG
Market Share – SerbiaMotor Fuel Retail Market
15
NIS' market share is growing, and this is contributed by thegrowth of its share in all three segments – diesel, petrol andLPG.
• Due to the pandemic, retail sales went down by 9% in thefirst nine months compared to the same period last year.
Retail market, thou. tons1
-9%
752(57%)
674(56%)
574(43%) 540
(44%)
1,3271,213
9M 2019 9М 2020
Others NIS
1including CNG
16
Market Share – Region9M 2020/2019
Bosnia and Herzegovina
No. of PSs** : 42% total market: 24.3%% retail market: 10.6%
Romania
No. of PSs: 19% total market: 1.1%% retail market: 1.3%
Bulgaria
No. of PSs: 34% total market: 4.6%% retail market: 4.2%
*BS Kalotina was closed**In Bosnia and Herzegovina, 5 PSs were commissioned and put into operation
Operating IndicatorsExploration and Production
17
• Planned volume of hydrocarbon productionachieved (4% higher than planned)
Oil and gas output,thou. TOE -1%
646 631
293 286
26 36
965 952
9M 2019 9M 2020
Domestic oil Domestic gas Foreign projects
Operating IndicatorsRefining
18
Refining of oil and semi- finished products, thou. tons
• Increase in the refining volume by 14%as a result of the capital turnaroundcarried out in the first half of 2019.
• Increase in volume of refining in Q3compared to the previous two quarters ofthis year is due to the result of animprovement in the market situation.
213 208 207
566 507727
81 55
73860770
1,007
Q1 2020 Q2 2020 Q3 2020
Domestic oil Imported oil Semifinished products
618 628
1,534 1,799
1662102,318
2,637
9M 2019 9М 2020
+14%+31%
Operating Indicators Sales and Distribution
19
− Retail in Serbia – deacrease 6% − Wholesale in Serbia – deacrease 6% − Export – increase 19%− Foreign assets – deacrease 9%
Sales volumes*, thou. tons-3%
*Without internal sales. The data doesn’t include the volume of sales of CNG to third parties of the Energy Directorate and contain the volume of sales for own consumption of road tanks of the Sales and distribution Block.
• Compared to the first nine months of theprevious year, we marked a drop of 3% in thetotal sales volume:
• Deacrease in sales volume in the first 9Mthis year compared to the same period in2019 is due to restrictions caused by theCOVID-19 virus.
572 532
311 283
1,392 1,309
345 410
2,621 2,540
9M 2019. 9М 2020
Retail-Serbia Foreign assets Wholesale - Serbia Export
171 162 20586 89 108
413 403493
108 123
178778 778
984
Q1 2020 Q2 2020 Q3 2020
+26%
20
Sales and DistributionDrive.Go - mobile app for paying for fuel at the petrol station
Drive.Go mobile app, facilitating payment of fuel at petrol stations without going to the cash register, was introduced in Serbia for the first time at NIS Petrol and Gazprom petrol stations.
The application was released for use in early April, at the time of the state of emergency due to Covid-19 pandemic.
Number of petrol stations: 150 Total sales volume, April-
September: 612.057 L
Fuel sales:
Development of additionalfeatures
Prepaid payment model Cooperation with partners Use of Agro and Taxi cards in
Drive.Go application
App
Available at Google Play, AppStore, AppGalery
Number of registered users: 27,194 Average rating: 4/Google Play Store
Payment by application, payment cards Collection of SNNP bonus points Map of petrol stations, info about petrol
stations, filte option per service and petroleumproduct, navigation
Features
21
Sales and DistributionCash withdrawal at checkout - Dina Card
In 2019, the cash withdrawal service was introduced in Serbia for the first time, in cooperation with Mastercard.In 2020, the cash withdrawal feature was upgraded to allow payment for purchased products or services with Dina Payment Card.
Having in mind that this service is available across the entire network of NIS stations, it has been credited as very important, because of the national importance of Dina Card. According to regulations, Dina Card may be issued to all citizens with a bank account.
Service deployment was enabled in cooperation with Postanska stedionica and with the support of the National Bank of Serbia.
Dina Card users in Serbia – 2,000,000
Feature
Dina Card users will be able to withdraw cash up to RSD 5,000.00when paying for fuel or another product purchased.
Service deployment promotion
Service deployment promotion is implemented through cooperation between NIS, Postanskastedionica and the National Bank of Serbia.
Communication channels: digital campaign, CRM direct marketing, internal campaign. PR event was organized on 15 October at the Dayton petrol station, where the first transaction was
completed.
Financial IndicatorsEBITDA
22
-67%
• The deacrese in EBITDA indicatorreflects the drastic fall of oil pricesand petroleum products in theglobal market and effects of thehigher feedstock prices on refining
EBITDA 9M 2019
Other factors EBITDA 9M2020
Price and exchange rateimpact*
*the impact of price and exchange rate includes the impact of inventory prices
31.2
10.4
-27.7
+6.9
EBITDA, bn RSD
Financial IndicatorsNet income (loss)
23
Net loss (income), bn RSD
10.7
-8.3
9M 2019 9М 2020
-2x • Lowеr EBITDA
• Greater amortization costs
-1.1
-9.2
1.9
Q1 2020 Q2 2020 Q3 2020
Financial IndicatorsOCF
24
• Lower inflow
• Higher payments arising from liabilitiestowards the state
OCF, bn RSD
-53%
41.9
19.6
9М 2019 9М 2020
Deterioration of macroeconomic factors affected the realization of CF
25
19.6 -21.2
-1.5-0.5+1
OCF Free Cash Flow Net loansInvestments Net CF
Realization of CF for 9M 2020
Financial IndicatorsCAPEX
26
CAPEX, bn RSD-28%
CAPEX by segments
63%
23%
7%
7%
0% 2%Exploration and productionBlock
Bottom-of-the-barrel Project
DWS Refining
DWS Sales and production
The rest of DownstreamDivision
Corporate centre
29.0
20.7
9М 2019 9М 2020
Operational Efficiency Improvement MeasuresEffect on EBITDA, bn RSD
27
• The overall effect of operational efficiency improvement measures in 9М 2020 on EBITDA is RSD 1.0 billion.
1.0
1.00.4
0.20.08
0.200.1
0.7 0.7
Exploration andproduction
Refining Sales anddistribution
Rest of DWS Corporatecentre
NIS 9М 2020 Preventeddamage
Total NIS9M 2020
Measures Prevented damage
28
Debt to BanksMaturity and Currency Structure of Credit Portfolio
Debt to banks, mn EURBank indebtedness, mn EUR
Debt structure:USD 0.2% EUR 99.5% Other 0.3%
10
11
25
23
11
3
3
2
000
0
345
306
330
492
607
628
549
575
590
619
616
636
355
316
355
515
617
631
552
577
590
619
616
636
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
31.03.'20
30.06.'20
30.09.'20
Letter to credits Debt to the banks
22
36
197
75
140
176
33
3291…
11
323
270
133
417
467
453
547
572
587
591
605
625
345
305
330
492
607
629
549
575
590
619
616
636
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
31.03.'20
30.06.'20
30.09.'20.
up to 1 year over 1 year
Поверљиво/Confidential
29
Benchmarking
29
EBITDA margin (%) EBITDA/FTE (хиљ. USD)* Daily volume (t/day)
Share of light products (%) UPS OPEX ($/boe)
26.3
17.7
12.7
7.7
-0.8
12.7
79.3
50.8
31.0
2.4
-0.8
32.58.0
7.1
6.6
5.9
5.8
4.6
6.3
10.5
9.0
6.3
6.1
N/D
8.0
Data obtained from 6M 2020 reports. except for NIS (9M 2020)*All data for 6M 2020
81.2
78.2
78.1
77.3
73.5
77.7
Contribution of the Company and Its Employees Combating the Spread of Covid-19
30
Donations in products
• 20,000 liters of "Jazak“ water – NIS has donated non-carbonated "Jazak” water to the following clinical centers: "Zvezdara", "Bezanijska Kosa", to the hospital "Dr Dragisa Misovic“, and the Special Hospital for Lung Diseases "Dr. Vasa Savic" Zrenjanin, as an aid to their patients and healthcare workers
• 50 oxygen flowmeters to hospitals in Serbia - in cooperation with UNICEF, NIS has donated the total of 50 oxygen flowmeters, namely 20 to the Infective Clinique, 10 to "Dr. Dragisa Misovic" hospital, 10 to Pulmonology Clinique, and 10 to Clinical Center of Serbia
• Ceding the passenger vehicle – NIS has extended the right of use of the vehicle given to the Clinical Center "Vojvodina" byadditional 2 months
• 33,00 liters of "Jazak“ water – NIS has donatedits "Jazak" water to the municipalities of Blace and Ivanjice as an aid tocitizens in municipalities that ware affected by heavy floods in June 2020.
Donation of services
Members of NIS Firefighting Brigade from Kikinda joint the campaign for disinfection of public space in this city
The volunteering of the employees
• 306 NIS's volunteers have realized over 840 volunteering hours through the following activities:
• Packing and delivery of JAZAK water as an aid to Invanjica and Blace municipalities, which were affected by floods;
• Packing and delivery of JAZAK water as an aid to hospitals in Belgrade and Zrenjani;
• Landscaping and arranging the sports court in the vicinity of the PS Leskovac 4 (cleaining the field, painting the insignia onthe court, painting the benches and basketball net structures...)
• Participation in the Caravan: Together to the Community – through "Together to the Community 2019“ program, we havesupported healthcare institutions in 12 cities and municipаlities. Within the volunteering caravan, NIS volunteers have visitedthese institutions and embellished them (painted fences and handrails, painted walls in the premises, applied decorativegraphics on the walls, landscaped green areas)
• Envisaging and realizing (recording the video and audio material) the Hymn of NIS Volunteers
*The donation of "Jazak" water to Blace and Ivanjica municipalities and the donation of passenger vehicle to the Clinical Cener of Vojvodina was out of the program of combatting the Covid-19.
31
Plans and expectations for the rest of the year
• Oil and fuel price drop• State of emergency in Serbia• Reduced demand for petroleum products• Reduced sales (both retail and wholesale)
Impact of the COVID-19 pandemics
Main goal by the end of the year:
• Liquidity increase- CAPEX reduction of at least 30%- OPEX reduction of at least 10%
Steps taken
• Agility• Flexible response to the changing environment
Preparation of crisis scenarios, long-term and short-term plans
4. Preserving the health of employees
1. Ensuring positive cash flow
2. Ensure stability on the market
3. Maintaining social stability of employees
Conclusion
32
Decrease in oil price and petroleum products compared to 9M 2019
Global Covid-19 pandemics
Deacrese in demand for petroleum products
Increase in refining volume
Increase in refining volume and turnover in Q3 compared to Q2 this year
Achieved a positive net result in the third quarter of this year
Reducing costs in the new conditions and maintaining social stability of employees
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.
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