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NIS.EU
NIS GROUP’S PERFORMANCE PRESENTATIONfor first quarter of 2020
27th April, 2020Anton CherepanovFinance, Economics, Planning and Accounting Function
Impact of COVID-19 pandemicMacroeconomic Indicators
2
10
20
30
40
50
60
70
I II III
2019 Average 2019 2020 Average 2020
I II III
USD/RSD rate +2% Brent oil price, $/bbl -20%
100
102
104
106
108
110
I I III III2019 Average 2019 2020 Average 2020
I II III
COVID-19 pandemic: effects and limitations: State of emergency in the Republic of Serbia to limit the spreading of the Covid-19 virus Reduced fuel demand Average oil price will most likely remain under 40$ until the year end
Compared to the first quarter of the previous year, the price of Brent oil decreased by 20%.
The average USD/RSD exchange rate is almost at the same level as in the first quarter of last year.
3
NIS in Q1 2020
Exploration and production Block
NIS drilled
14 development wells and
1 exploration well in Serbia
Since March 31, NIS is a 100% owner of JadranNaftagas affiliated company.
Due to the global oil price reduction and the pandemics NIS is working on optimizing its capital and operating costs
The main goal in the first 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.
CAPEX1
4.7 bn RSD
EBITDA
5.3 bn RSD
1 financing
4
NIS in Q1 2020
Downstream division - Refining
Refining in the conditions of low oil prices and in line with the current health and safety situation, taking the necessary measures
CAPEX: 2.6 billion RSD
Planned repairs on units S-2400 and S-2450
Participation in the precommissioning of theDCU
The refinery completed the routine overhaul of the bitumen unit
CO boiler cleaning is in progress
The first quarter of 2020 in the Refining Block was marked by operations in an extremely volatile environment,as a result of the drastic fall of the world oil price and the emergence of the Corona virus.
5
NIS in Q1 2020
Downstream division – Sales and distribution
5 new products launched under the corporate trade mark
Two petrol stations under the NIS brand have been reopened in Serbia after full reconstruction:- Koceljeva 2 PS- Leskovac 6 PS
Due to the Covid-19 pandemics, the Lubricants Department successfully developed the formulation and beganproducing a new product, a disinfectant called NISOTEC Antisepsol, for the needs of the entire Company.
CAPEX
0.3 billion RSD
EBITDA
3,6 billion RSD
Otopeni petrol station opened in Romania
6
NIS in Q1 2020
Approximatelly EUR 298.5 million was invested in the project
The detailed design was completed and all licenses obtained
100% of equipment and material were delivered
The construction and installation works on the complex are at 98.62%
Basic project parameters
Investments, mn EUR 300
Start of production 2020
Coke furnaceCoke belt conveyer and
spherical tank
Implementation of the Bottom of the Barrel Project in Q1 2020:
Bottom-of-the-Barrel Project
Taking into account the restrictions caused by the outbreak ofthe COVID-19 pandemic (entry of foreign experts into thecountry - representatives of equipment suppliers, licenseesholders, delivery of spare materials, reduction of the number ofconstruction site workers), active measures are implemented toreduce delays in pre-commissioning and commissioningoperations of the Bottom-of-the-Barrel Project to a minimum.
7
NIS in Q1 2020
Realization of contract with EPC contractor around EUR 97mn., or 61% of the total projected amount
The engineering activities completed and building permits obtained for all construction stages of TE-TO Pančevo
Manufacturing of primary and auxiliary equipment completed. Complete equipment delivered to the site. Finishing of main equipment on foundations completed.
Basic project parameters
Expected total investments, mn. EUR up tp 180
Nominal electric power of the power plant, МWt up to 200
The overall progress of the project (as of March 2020) at the level of 85.4%.
Implementation of TE-TO Pančevo Project in Q1 2020:
Steam-turbine plant
Gas-turbine plant
The introduction of a state of emergency to prevent thespread of COVID-19 in Serbia has a significant impact on thedynamics of the implementation of the TE-TO Pančevo project(reduction of the number of local subcontractors andreduction of working hours, impossibility of the arrival ofcontrol representatives from China and Italy, limitation of thework of connecting the TE-TO with RNP…) and the deadlinefor the commissioning of the facility is expected.
TE-TO Pančevo Project
HSE Indicators
8
Increasing transparency
LTIF RAR
Q1 2019 Q1 2020
16,607 12,809
353 243
15 20
0 0Majorevents
Medium events
Minorevents
HIPO
1.42(7 LTI)
1.68(8 LTI)
Q1 2019 Q1 2020
Q1 2019
Q1 2020
18%
0.32(3 RAR)
0.12(1 RAR)
Q1 2019 Q1 2020
Q1 2019
Q1 2020
63%
Key IndicatorsNIS Group
9
Key indicators UoM Q1 2020 Q1 2019 ∆ (%)
Brent Dtd $/bbl 50.3 63.2 -20%
Sales revenues bn RSD 52.6 53.5 -2%
EBITDA bn RSD 5.2 6.3 -18%
Net income bn RSD -1.1 0.2 -8x
OCF bn RSD -1.6 11.3 -114%
Accrued liabilities based on public revenues bn RSD 39.9 40.0 -0.2%
Oil and gas output thou. TOE 319 321 -0.7%
Crude oil and semi-finished products output thou. tons 860 599 +44%
Total petroleum products sales volumes thou. tons 778 726 +7%
CAPEX bn RSD 7.7 8.3 -7%
Total debt to banks(total debt to banks + letters of credits)
mn EUR 619 575 +8%
10
Motor Fuel Market TrendsQ1 2020/2019
Slovenia
-1%
Croatia
-0.8%
Bosnia andHerzegovina
-3%Bulgaria
-1.5%
Romania
-1.1%
Hungary
0.9%
Serbia-0.9%
Serbia
• Motor fuel consumption trend was compliant with the regional developments; the decline of 0.9% was recorded in Serbia in Q1 this year.
• A more accurate estimate of consequences of the crisis will be available after first 6M 2020.
Consumption of motor fuels in the regionexperienced a changing trend in Q1. Untill the start ofMarch, the whole region saw a distinct growth trendthat resulted both from the low base in the previousyear and transport growth; in March, however, due tothe pandemic (Covid-19), the trend changed towardsthe dramatic decline in consumption that followedthe virtually simultaneous introduction of measuresacross the region, which influenced the decreasedconsumption of petroleum products.
Market Share – SerbiaPetroleum Products Market
11
Petroleum products market volumes, thou. tons1 -6% • Total consumption of petroleum products in Q1
experienced a changing trend. The growth of the firsttwo months was followed by a sharp decline in Marchcaused by the outbreak of the pandemic (Covid-19).
NIS market share is growing, which is primarily linked to thesignificantly increased share of bitumen (in the same periodlast year we had a turnaround of the refinery). At the sametime, imports of products that NIS does not sell (coke) werealso reduced, which had a positive impact.
245(29%)
188(24%)
597(71%) 603
(76%)
841791
Q1 2019 Q1 2020
Others NIS
1Including CPG
Market Share – SerbiaMotor Fuel Retail Market
12
NIS market share is growing, the growing share in all threesegments – diesel, gasoline and LPG – contributes to that.
• The same situation is observed in the retail segment.Following the changing trend and sharp decline in March,Q1 fell by -1%.
Retail market, thou. tons1
-1%
213(56%)
207(55%)
169(44%)
172(45%)
382 379
Q1 2019 Q1 2020
Others NIS
1including CNG
13
Market Share – RegionQ1 2020/2019
Bosnia and Herzegovina
No. of PSs : 37% total market: 19.5%% retail market: 9.0%
Romania
No. of PSs: 19% total market: 1.2%% retail market: 1.6%
Bulgaria
No. of PSs: 35% total market: 5.0%% retail market: 4.5%
Operating IndicatorsExploration and Production
14
• Planned volume of hydrocarbonproduction achieved (3% higher thanplanned)
Oil and gas output,thou. TOE -0.7%
214 210
99 96
7 12
321 319
Q1 2019 Q1 2020
Domestic oil Domestic gas Foreign projects
Operating IndicatorsRefining
15
Refining of oil and semi-finished products, thou. tons
+44%• Increase in refining volume by
+44% as a result of a capitaloverhaul carried out in the firsthalf of 2019.
221 130 213
485429
566
81
40
81786
599
860
Q1 2018 Q1 2019 Q1 2020
Domestic oil Import oil Semifinished products
Operating Indicators Sales and Distribution
16
• Retail in Serbia – increase 2%
• Wholesale in Serbia – increase 1%
• Export – increase 63%
• Foreign assets – increase 1%
Sales volumes*, thou. tons +7%
*Without internal sales
155 168 171
79 85 86
429 407 413
102 66 108
765 726778
Q1 2018 Q1 2019 Q1 2020
Retail-Serbia Foreign assets
Wholesale - Serbia Export
Compared to the first quarter of the previous year, we marked a growth of 7% in the total sales volume:
Financial IndicatorsEBITDA
17
-18%EBITDA, bn RSD
• The fall of oil prices had the impact on theprice of petroleum products, which isdisproportionately lower than the price atwhich oil was purchased and inventoryreserves
• In the second half of March, sales volumedropped due to the Covid-19 lockdown
6.35.2
Q1 2019 Q1 2020
Financial IndicatorsNet Income
18
Net income, bn RSD
• Lower EBITDA
• Higher amortization costs
• Higher negative exchange differences
0.2
-1.1
Q1 2019 Q1 2020
Financial IndicatorsOCF
19
• Higher payments on the basis of liabilitiesfor the import of crude oil (total value ofpaid oil in Q1 2020 is higher 84% comparingto Q1 2019)
• Higher payments toward state liabilities
OCF, bn RSD -114%
11.3
-1.6
Q1 2019 Q1 2020
Financial IndicatorsCAPEX
20
CAPEX, bn RSD -7% CAPEX by segments
8.3 7.7
Q1 2019 Q1 2020
61%
26%
8%4%
0% 1% Exploration andproduction Block
Bottom-of-the-barrelProject
DWS Refining
DWS Sales andproduction
The rest of DownstreamDivision
Corporate centre
Operational Efficiency Improvement MeasuresEffect on EBITDA, bn RSD
21
0.3
0.30.1
0.1
0.010.06
0.5 0.5
Exploration andproduction
Refining Sales anddistribution
DWS Others NIS Q1 2020 Prevented damage Total NIS Q1 2020
Measures Prevented damage
• The overall effect of operational efficiency improvement measures in Q1 2020 on EBITDA is RSD 0.3 billion.
22
Debt to BanksMaturity and Currency Structure of Credit Portfolio
Debt to banks, mn EURBank indebtedness, mn EUR
Debt structure:USD 0.3% EUR 95.3% Other 4.46%
16225
101125231133
2
00
552459
345306330
492607628
549575590619
714484
355316
355515
617631
552577590
619
31.12.'0931.12.'1031.12.'1131.12.'1231.12.'1331.12.'1431.12.'1531.12.'1631.12.'1731.12.'1831.12.'1931.03.'20
Letter tocredits
Debt to thebanks
193
207
22
36
197
75
140
176
33
329
359
252
323
270
133
417
467
453
547
572
587
591
553
459
345
305
330
492
607
629
549
575
590
619
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
31.12.'19
31.03.'20
up to 1 year
over 1 year
23
Benchmarking
23
EBITDA margin (%) EBITDA/FTE (thou. USD)* Daily volume (t/day)
Share of light products (%) OPEX ($/boe)
31.5
25.5
13.5
12.8
9.8
18.6
337.3
153.5
93.7
69.3
41.3
139.09.9
8.6
6.9
6.7
6.0
5.8
7.3
10.9
8.3
6.6
6.4
N/D
8.0
Data obtained from 12M 2019 reports. except for NIS (3M 2020)*All data for 12M 2019
83.4
80.9
80.6
78.2
73.5
79.3
24
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 pandemicsMain goal by the end of the year:
• Liquidity increase- CAPEX reduction of at least 30%- OPEX reduction of at least 10%
Steps taken
1. Ensure positive moneyincome
2. Ensure stability on the market
3. Maintaining social stability of employees
• Agility• Flexible response to the changing environment
Preparation of crisis scenarios, long-term and short-term plans
Conclusion
25
Decrease in oil price and petroleum products compared to Q1 2019
Global Covid-19 pandemics
Deacrese in demand for petroleum products
Increase in refining volume
Increase in sales volume
Reducing costs in new circumstances 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.
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.