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Presentation for investors and shareholders for Q3 2013 31.10.2013. Novi Sad Investor Relations.

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Presentation on theme: "Presentation for investors and shareholders for Q3 2013 31.10.2013. Novi Sad Investor Relations."— Presentation transcript:

1 Presentation for investors and shareholders for Q Novi Sad Investor Relations

2 2 Disclaimer This presentation has been prepared by NIS a.d. Novi Sad (the Company), and comprises the slides for a presentation to investors concerning the Company. Presentation does not constitute or form part of any offer or invitation, or any solicitation of any offer to sell or purchase or subscribe for, any shares or other securities representing shares in the Company, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision. Any viewer of this presentation considering a purchase of such securities is hereby reminded that any such sale or purchase should be made solely on the basis of the information contained in other publicly available documents and will be subject to the restrictions set out therein. No reliance may be placed for any purposes whatsoever on the information contained in this presentation, or any other material discussed at any presentation or on its completeness, accuracy or fairness. The information in this presentation should not be treated as giving investment advice or recommendation. All reasonable measures are taken to ensure that the facts stated in this presentation are accurate, and that the opinions expressed are fair and reasonable. However, the contents of this presentation have not been adopted by the corporate bodys of Company. Accordingly, no representation or warranty, express or implied, is made or given by or on behalf of the Company or any of its members, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in or discussed at this presentation. None of the Company or any of their respective members, directors, officers or employees nor any other person accepts any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith.

3 3 The information in this presentation includes forward-looking statements. These forward-looking statements include all matters that are not historical facts, statements regarding the Companys intentions, beliefs or current expectations concerning, among other things, the Companys results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forward-looking statements involve risks and uncertainties, including, without limitation, the risks and uncertainties to be set in other publicly available documents, because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if the Companys results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. No person is under any obligation to update or keep current the information contained herein. By attending the presentation you confirm that you have read and understood foregoing limitations.

4 4 Mission, vision and values of the company VALUES OF THE COMPANY MISSION To give the people of the Balkans energy to move towards betterment by responsible use of natural resources and modern technologies VISION NIS is to become a recognised leader among energy companies in the Balkans, by demonstrating high social and ecological responsibility and by providing its clients with modern services EXPERTISE gaining up-to-date knowledge for the goal of constant professional development, and the ability to implement it in an actual business processes. POSITIVISM AND COOPERATION readiness to participate in multifunctional groups and projects, eagerness to meet demands of colleagues from other units of the company, willingness to exchange information, ability to work in a team. INITIATIVE AND RESPONSIBILITY finding and suggesting new solutions both in the working environment, and in the sphere of company interests. COLLECTIVE RESULTS collective effort in achieving a visible and meaningful result, a desire to succeed and provide each other with needed assistance.

5 NIS in Q D seismic survey in the area and Itebej Kikinda completed; ongoing work in the area of Čoka and Miloševo; the initial work in Martonoš, Boka and Jermenovci. Gas discoveries in Vojvodina as a result of the application of new drilling technology Drilling of the first exploration well in the Republic of Srpska coming to an end NIS and Falcon's explorational drilling in Hungary has been completed, testing in progress Drilling of well Jimbolia in Romania completed (testing) Second phase of reconstruction of FCC completed Completion of the project of site preparation in Refinery Novi Sad for construction-assembly works on the base oils project. In the course of the tender procedure for selection ERCM contractor for the base oils project. Opening of the first petrol station under the brand GAZPROM in Bulgaria Gazprom network of petrol stations began operations in Bosnia and Herzegovina Agreement with McDonald's to open first restaurant concluded NIS is chosen to be the authorized distributor for the sale of subsidized fuel NIS and GSP "Beograd" signed a contract for the supply. Over the next three years, NIS will deliver more than 100 million liters of diesel euro to GSP. First cogeneration modules, in Sirakovo were put to operations. Preparations for commissioning of small power SOS Kikinda and SS1 Velebit in progress. The factory testing of equipment for the remaining 5 plants was performed. Memorandum on the implementation of the construction of steam-gas power plant, with the electric capacity of 208 MW in Pancevo. Works on construction of WPP Plandište Sales of gas to Pannonian Power Plants Exploration and production Refining Sales Energy 5

6 First Serbian Wind Farm Construction of the first Serbian wind farm was launched in the Plandište municipality on 18 September wind generators will be constructed Total capacity megawatt. Project capital investments, including the preparation of base documents and obtaining the required permits, will amount to nearly 160 million euros. Funds invested by NIS j.s.c. will not exceed 23 million euros. Remaining funds will be provided through the project partnership investments and loans. Wind farm construction is expected to take 12 months maximum Plandište

7 Additional Modernization of Pančevo Refinery App. 40 small-scale technical-technological projects and improvements in the Refinery will be completed by the end of the year 7 The Danube Port Modernization Thermal Insulation of 24 ReservoirsFCC Complex Reconstruction Refinery Loading Terminal Modernization

8 8 9М 2013: HSE indices significantly improved (except for the perforation coefficient), but still lower than world's best practice Investment into environmental projects, mln. USD 36%36% Transparency index increase Perforation coefficient * 43% RAR Investigated cases LTIF -24% -12% -3% -19% -41% 89%89% 22% 13%13% Perforation coefficient is relation between the number of perforations, multiplied by 100 based on the total oil pipeline length in km LTIF - Lost time injury frequency rates (relation between the number of injured during accidents at work and the total working hours, multiplied by 100 thousand RAR - Road Accident Rates - relation between the number of road accidents as opposed to mileage in km, multiplied by 1 million major accidents serious incidents minor incidents potentially hazardous situations.

9 Macroeconomic indicators % -3%-3% Decline of USD/RSD rate in first 9M of 2013 was -1,5% or -1,29 RSD (USD/RSD rate changed from RSD as of January 1 st 2013; to 84,8859 RSD as of September 30 th 2013) Incline of EUR/RSD rate in first 9M of 2013 was 0.78% or RSD (EUR/RSD rate changed from RSD as of January 1 st 2013; to RSD as of September 30 th 2013) Incline of USD/RSD rate in the first 9 months of 2012 was 9,98 % or 8,07 RSD (USD/RSD rate changed from RSD as of January 1 st 2012; to 88,9377 RSD as of September 30 th 2012.) Incline of EUR/RSD rate in the first 9 months of 2012 was 9,93% or 10,39 RSD (EUR/RSD rate changed from RSD as of January 1 st 2012.; to RSD as of September 30 th 2012.) Average price of Urals crude oil in first 9 months of 2013 was app. 108,06 USD/bbl USD/RSD Urals, $/bbl

10 Representative offices and Branches Turkmenistan branch, Representative Office in the Russian Federation, Representative Office in Angola, Representative Office in Belgium, Representative Office in Bulgaria, Representative Office in Hungary, Representative Office in Croatia NIS Group Starting from Q NIS reporting will be on consolidated basis NIS Group Parent Company – NIS a.d. Novi Sad Upstream Block, Refining Block, Sales&Distribution Block, Oilfield Services Block, Energy Block and Corporate Headquarters Subsidiary companies in the country (originating from NIS` organizational structure) Naftagas – Naftni servisi, Naftagas – Tehnički servisi, Naftagas – Transport and NTC NIS Naftagas Subsidiary companies abroad NIS Petrol (Bulgaria), NIS Petrol (Romania), NIS Petrol (BiH), Jadran Naftagas (BiH) and Pannon Naftagas (Hungary) Subsidiary companies – granddaugthers G Petrol (B&H) NIS Petrol (B&H) and Adria O Zone (MNE) O Zone Other subsidiary companies JUBOS Bor, O Zone Belgrade, NIS Oversees St Petersburg, SP Ranis Černoglavka (in liquidation), NIS-SVETLOST Bujanovac and NIS Energowind (in FS shown as JV) 10

11 Q3 2013: Key indicators Q Q Key indicatorsMeasurement unit 9M M ,7 109,3 1% Urals $/bbl 108,1111,1 -3% 14,0 9,6 46% Net profitbillion of RSD 31,7 30,8 3% 19,6 10,9 79% EBITDA*billion of RSD 47,7 47,3 1% 71,7 62,4 15% Sales (without excise tax) billion of RSD ,3 14% 27,5 8,4 228% OCFbillion of RSD 49,627,7 79% 24,9 33,7 35% Taxes and other fiscal obligations (Serbia)**billion of RSD 86,4 63,3 37% % Domestic oil and gas production*** thou. c. tons % % Domestic oil production*** (with gazolin and TNG) thousand tons % % Oil and semifinalized products refining volume thousand tons % % Total sales of oil products**** thousand tons % 24 1,7 1312% Abroad sales thousand tons 49 2, % % Oil products local market sales thousand tons % % Retail thousand tons % % Light oil products sales thousand tons % % CAPEX from GPN loan**** million of EUR 012,1 -100% 13,8 9,2 50% CAPEX from OCF (NIS projects)billion of RSD 37,818,3 107% % Total bank indebtedness******million of USD % Calculation of percentage values is based on values expressed in millions of RSD All possible discrepancies in percentage values and total values are due to rounding errors *EBITDA = Sales (without excise tax)– inventories ( of oil, oil products and other products) – operational expenditure (OPEX) – other costs, which management cannot affect ** Taxes and other fiscal obligations includes taxes, duties, fees and other public revenues. Data includes NIS a.d. Novi Sad and subsidiaries: NTC NIS Naftagas d.o.o., Naftagas – Transport d.o.o., Naftagas – tehnicki servisi d.o.o. and Naftagas – Naftni servisi d.o.o.. *** Due to change in methodology oil production includes gazoline and LPG **** Under the Agreement of sale and purchase of shares of NIS a.d Novi Sad, clause 8.1.2, JSC Gazprom Neft (GPN) has an obligation to provide EUR 500 million to NIS a.d. Novi Sad by way of special purpose loans in order to implement NIS Novi Sad technological complex reconstruction and modernization program. CAPEX from GPN loan does not include letters of credit. All obligations of Gazprom Neft under the acquisition agreement were fully met in April 2012 and in the second half of 2012 NIS started with loan repayment. Values for CAPEX from GPN loan and CAPEX from OCF are without VAT ****** Total bank indebtedness = Total debt to banks + letters of credit. As of September 30 th 2013 total debt to banks amounts 471 million USD and letters of credit amount 14 million USD. 11

12 The current negative macroeconomic trends in all countries in the region, significantly affect the fall of the oil and oil derivatives' market Market of motor fuels trends All regional markets except Hungarian are falling in the first nine months of 2013 X%X% 12 Sources based on which forecasts are made -Eustat ( ) -PFC: Downstream Monitoring Service – Europe (June 2013) -Serbia: internal forecasts and analysis -Bulgaria: NIS Petrol, Bulgaria The market consists of motor and aviation fuels, and fuel oil. Market growth rates are for 9M2013/9M2012 Romania Bulgaria Serbia* Croatia Bosnia and Herzegovina -7,8% +2,5% -10,2% -3% n/a -14,8% Slovenia Hungary NIS Forecast based on available statistical estimates

13 The Market of the Republic of Serbia Foreign direct investment are much lower than expected while insufficiently fast recovery of economic activities and delays in the implementation of investment projects affect lower consumption of motor fuels.* The market scope of the Republic of Serbia in thousands of tons -8% Although the real annual growth in GDP and industrial production for first 8 months of 2013 was 0.2% and 5.7%, respectively, motor fuel market is still falling. Purchasing power of the population is still very low and the rate of unemployment level is over 24%, and these two indicators, besides aforementioned, influence motor fuel consumption. The reason behind the increase of the NIS share in the market lies in the substitution of imported fuel oil, naphtha and euro diesel with domestic products from Pancevo Refinery, and in more active sales, more effective price policy, offering products through a network of warehouses, etc. The retail market has seen a moderate decline in the market of motor fuels due to relocation of part of the scope of the wholesale channel to the retail channel in the segment of corporate clients. The reasons for the constant increase of the market share lie in a continuous process of petrol stations modernization, improvement of the service as well as in positive effects of the rebranding and marketing activities. Seasonal increase in sales of subsidized fuels to farmers is also notable, although program for the fall is going on slower pace than expected. -2%-2% The Retail sale Market of the Republic of Serbia in thousands of tons 13 Other* NIS* Other* NIS* * NIS includes motor fuels, heating oil EL and LPG cylinders and others include motor fuels, heating oil EL and EL euro.

14 14 Financial Indicators All possible discrepancies in percentage values and total values are due to rounding errors. MHC/DHT put in operation Increased volumes of refining and sales Increased business efficiency MHC/DHT put in operation Increased volumes of refining and sales Increased business efficiency Net profit in Q is by 46% higher than net profit in Q3 2012, while the growth of net profit for first 9 months of 2013 compared to same period last year is 3% EBITDA 79%79% Net profit 46% 3%3% 1%1% The increase in EBITDA of 79% in Q compared to Q caused that EBITDA for the first 9M 2013 is at the same level as the same period last year: Starting from Q NIS reporting will be on consolidated basis i.e. for NIS Group

15 15 Increase of OCF: Increase in Sales: Decrease in retail prices in Q by app. -2,1% compared to Q3 2012, while in first 9М 2013 retail prices increased by +2,5% compared to first 9М Incline of average oil price for Urals RCMB in Q ($/bbl), compared to Q amounts to 1,2%, while decrease of avegage oil price in first 9М 2013 compared to first 9М 2012 was -2.7%. Sales OCF 15% Increase of cash inflow from buyers Changes in retail pricesQ3Q39M9M BMB 95-3,90%+1,78% Europremium BMB 95-6,32%-0,56% D2D2+3,21%+6,84% Eurodiesel-0,75%+2,31% 14% All possible discrepancies in percentage values and total values are due to rounding errors *EBITDA = Sales (without excise tax) – inventories (oil, oil products and other products) – operational expenditure (OPEX) – other costs, which management cannot affect 228% 79% Financial Indicators Starting from Q NIS reporting will be on consolidated basis i.e. for NIS Group

16 16 Increase of the domestic oil and gas production in Q in comparison to the Q3 of 2012 is 1%, and for first 9M 2013 compared to first 9M 2012 it amounts to 3% Increase in domestic oil production 4% as a result of additional geological and technical activities implementation Gas production is -0,2% in comparison to the first 9 months of 2012 due to duration of the repair of compressor stations, as well as the higher pressure in the main pipeline Change in the methodology for oil and gas production calculation - gasoil and LPG is included, and as for gas production, data on gas refining has been taken into account Exploration and production 1%1% 3% Domestic oil and gas production (in thousand conditional tons)* Domestic oil production (in thousand tons) 3%3% 4% м 3 of = 1 tone equivalent of oil All possible discrepancies in percentage values and total values are due to rounding errors Due to change in methodology oil production includes gazoline and LPG

17 17 Refining per Refineries Refining Imported oil Domestic oil Novi Sad Refinery Pancevo Refinery All possible discrepancies in percentage values and total values are due to rounding errors Volume of refining of oil and semi- finaliyed products is increased by 45% comparing to 9M 2012: Increased refining of crude oil MHC/DHТ plant operation in 2013 Increased the volume of refining according to market demands. Refining volume for oil and semi-finalized products (in thousand tons) Semi-finalized products 45% 125%

18 Sales increased by 28% compared to first 9 months of 2012: 18 Sales 30%30% Oil derivatives sales (in thousand tons) Sales structure per oil derivatives (in thousand tons) Black and other products White products Export Wholesale Retail Abroad sales* 28%28% Retail – increase by 15%: Increase of euro quality petrol products sale Abroad assets – increase by 24x In 9M 2012 there was no significant sale on abroad assets Wholesale – increase by 18%: Increase in the sale of diesel fuel due to the increased placement of euro diesel from domestic production Decrease in the sale of heavy fuel oil due to warm weather Decrease in the sales of gasoline due reduced demand Export – increase by 93%: Increase in the sale of heavy fuel oil and gasoline components Increase in the sale of white oil products share All possible discrepancies in percentage values and total values are due to rounding errors **Abroad sales are quantities sold by NIS' subsidiaries. In Q3 and 9M 2013 the quantities of products delivered by NIS to its subsidiaries were 16 thousand tons for Q3 and 28 thousand tons for 9M, other quantities were delivered by other suppliers

19 Super Kartica loyalty program was launched on May 5 th 2013 Only 5 months after the launch of Super kartica : 1 million unique cards used (app personalized and registered in database) Increased number of transactions Average daily fuel bill amongst Super Kartica users, is by +34% higher vs. average bill of regular (non SK) NIS user Non-fuel bill amongst Super Kartica users, is by +38% higher vs. average bill of regular NIS users Super kartica loyalty program Sales, market share and transaction trend among natural persons 19 NIS sales to natural persons Total sales Market share 6% 20% Average daily number of transactions 9% 16% Source: Orfey – internal reports of Sales & Distribution Block, September 2013

20 Structure of bank indebtedness 20 Total debt to banks (in millions of USD) Total bank indebtedness (in millions of USD) Structure of total debt to banks per currency in % Other EUR USD All possible discrepancies in percentage values and total values are due to rounding errors *Term structure of the debt to banks is shown according to Contract terms and not by maturity of the debt as of Septemberr 30th 2013 GPN loan (in millions of EUR) Long-term* Medium-term*Short-term* Total debt Letters of credit GPN Loan (in millions of EUR) Total bank indebtedness is lower than the limit defined by Board of Directors Decision

21 Investments Total amount of 37,8 billions RSD was invested in first 9M of 2013 Q3 2013Q Sources of investment funding 9M 20139M CAPEX from GPN loan Ecology MHC/DHT CAPEX from NIS funds Ecology MHC/DHT Angola PSA Projects with direct economic effect Projects without direct economic effects Project-researching activities TOTAL: * in billions of RSD (VAT excluded) OMV retail sale network purchase Reconstruction and rebranding of the retail sale facilities Drilling of development wells Concessions Geological survey in Vojvodina Projects for increasing of efficiency and reliability of Pancevo Refinery CAPEX per investment projects (in billions of RSD) All possible discrepancies in percentage values and total values are due to rounding errors *PSA - Production Sharing Agreement; **Including letters of credit for drilling facility of 9 million USD 25% increase of CAPEX in 9M 2013, in comparison to the same period in ,78 13,19 Projects without direct economic effect Angola PSA* Ecology MHC/DHT Projects with direct economic effect Project-research works 5%5% 25% 30,35 37,86

22 The most important investments in Exploration and Production, Refining and Sales and Distribution for the first 9M of the 2013 Increase of oil and gas production Increase of reserves Reconstruction and modernization Ecological Projects Retail sale network development 11.1 bn RSD Geological exploration in Vojvodina region Investments in concession rights Additional geological and technological measures Drilling new development wells Production automatization Reconstruction of the infrastructure Construction of MHC/DHT plant In-line blending of gasoline Industrial base oil production from the Velebit oil type Reconstruction of Pancevo docks Lower NOx emission in smoke gases from the Energy plant Rebranding of 33 PS Construction of 1 PS in Serbia Reconstruction of 5 PS in Serbia Regional business development in Bosnia, Bulgaria and Romania Exploration and production Refining Sale and distribution bn RSD 15.7 bn RSD

23 Comparative analysis (benchmarking) of basic indicators with competitors NIS* 9M 2013, other 6M EBITDA margin (%) EBITDA/FTE** (in thousands USD) Daily sales rate (in ton/day) Ratio of other products (in %) OPEX ($/boe) Sources: Companies reports for Q *NIS group (NIS with subsidiaries) data for 9M Other companies data for Q ** NIS data without leasing employees and including first chance program , , Lifing costs REVEX N/A

24 Increase of EBITDA and Net Profit Strong OCF Total bank indebtedness below defined limit (Debt/EBITDA by 25% lower than planned) Significant increase of Refining Increase of motor fuels sales and retail on domestic market Increase of export, sales on abroad assets Expansion of the GAZPROM brand in the region – Outstanding receivables – Higher tax burdens – Subsidiaries in phase of growth 24

25 25 NIS a.d. Novi Sad Investor Relations Sector Narodnog fronta Novi Sad, Serbia


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