NIS GROUP’S PERFORMANCE PRESENTATIONfor 9M 2018
14th November, 2018Anton FedorovFinance. Economics, Planning and Accounting Function
2
• During the first 9 months, 42 development wells and7 exploratory wells were drilled in Serbia (39development wells and 8 exploratory wells were putinto operation)
• Over 9 months 829 km2 of 3D seismic surveys weredone in Serbia
• The drilling of two contour-exploratory wells wasinitiated in Romania (Beba Veche Sud-1000 andTeremia-1001)
• GTM was successfully performed in the Mokrin andMajdan fields
• The Energy Plant was formed by transformationswithin the Exploration and Production Block
• The competition “Object of High-Production Culture”was held at the Exploration and Production Block
NIS in Q3 2018Exploration and Production
3
• Revamp of Klaus (S-2450) and Visbreaking (S-200and ) and Diesel Dewaxing (S-2400) units
• Merox unit (S-2550) handed over for reconstructionas part of activities under the DCU Project
• In August, a record production and transport ofbitumen (51,000 tons)
• Works on horizontal and vertical signaling in frontof Pančevo Oil Refinery completed
• Definition of technological requirements forconnection of CCPP Pančevo to the existing lines inPančevo Oil Refinery
• Extension of the certification scope to include newroad bitumen „EB 35/50“
NIS in Q3 2018Refining
4
• Completed reconstructions of ‘Subotica 1’ and‘Lazarevac Grad’ petrol stations
• Two new products of own trademark launched: G-Driveisotonic by Aqua Viva and Drive Cafe bamboo glasses
• New marketing campaign G-Drive Instant Win initiated
• Media campaign: “On the Road with Us – fuel today. paynext month!”
• Contract signed on performing port and harboroperations in Veliko Gradiste
• Production and introduction of new packaging for Jazakwater
NIS in Q3 2018Sales and Distribution
5
• TE-TO Pančevo d.o.o. Pančevo, the project funding agreementsigned, the implementation of the project continues
• “Plandište” Wind Farm – revised offers submitted by equipmentmanufacturers; commercial negotiations concluded. Preparation ofthe EPC Contract is underway
• CNG at Žarkovo 2 PS – the construction permit has been obtainedand the works commenced
• CNG at Blok 45 Novi Beograd – the equipment manufacturer hasbeen selected and drafting of engineering documents is in progress
• The total contracted electricity sales volume amounts to 1.19 TWh
• CNG at Palić field – the unit reconstruction service providerselected
• Decentralisation of the thermal source within the perimeter of theformer Novi Sad Refinery – in the final phase of works executionfor the installation of the steam boiler and the steam boiler for thewastewater treatment plant
NIS in Q3 2018Energy
USD/RSD rate -10% Urals RCMB crude price, $/bbl
+39%
6
Macroeconomic IndicatorsDinar strengthens. oil price rises
90
100
110
120
I II III IV V VI VII VIII IX
2017. Average 2017
2018 Average 2018
40
50
60
70
80
I II III IV V VI VII VIII IX
2017 Average 2017
2018 Average 2018
HSE Indicators
7
Increasing transparency
LTIF RAR
9M 2017 9M 2018
41,719 43,476
757 835
50 55
6 8Majorevents
Medium events
Minorevents
HIPO
1.651.35
2.10
9M 2017 9M 2018 Plan2018
9M2018
Plan2018
9M2017
0.10
0.17
0.28
9M 2017 9M 2018 Plan2018
9M2018
Plan2018
9M2017
180%
56%65%
27%
Key IndicatorsNIS Group
8
Q3
2018
Q32017
∆ Key indicators UoM 9M2018
9M2017
∆
74.3 51.4 +45% Urals $/bbl 70.7 50.8 +39%
86.3 60.4 +43% Sales revenues bn RSD 206.8 167.8 +23%
18.1 11.7 +54% EBITDA bn RSD 42.0 34.3 +23%
10.2 7.7 +33% Net income bn RSD 21.7 20.1 +8%
23.3 20.0 +16% OCF bn RSD 32.7 38.9 -16%
51.31 44.45 +15% Accrued liabilities based on public revenues bn RSD 142.26 122.38 +16%
338 352 -4% Oil and gas output thou. TOE 999 1.044 -4%
1,073 968 +11% Crude oil and semi-finished products output thou. tons 2,769 2.613 +6%
1,076 958 +12% Total petroleum products sales volumes thou. tons 2,741 2.503 +10%
10.1 6.7 +51% CAPEX bn RSD 27.3 16.6 +64%
657.7 671 -2%Total debt to banks(total debt to banks + letters of credits)
mn USD 657.7 671 -2%
9
Motor Fuel Market Trends9M 2018/2017
Consumption of motor fuels shows growth that is primarily generated by the growth of diesel fuel.
Serbia
• The following had a positive impact on dieselconsumption: significantly more successfulagricultural season, infrastructure andconstruction works.
• LPG consumption is decreasing due to highprices and changing the structure of the vehiclefleet. The rise in gasoline is lower thanexpected due to high prices.
Slovenia
2.6%
Croatia
0.4%
Bosnia and Herzegovina
0.2%Bulgaria
1.2%
Romania
-0.6%
Hungary
3.0%
Serbia+3.4%
10
Market Share – SerbiaPetroleum Products Market
Total consumption of petroleum products has a positive growth trend. The following contributed to the aforementioned:
• growth in consumption of bitumen and coke
• construction and road industry as the main driver of diesel consumption
• good agricultural season
2.7%Petroleum productsmarket volumes, thou. tons
The share of NIS on the total market for petroleumproducts was increased due to the rise in the share ofprimary gasoline, diesel, liquid gas and bitumen sales.
719.4(27%)
682(25%)
1,911.2(73%)
2,018(75%)
2,631 2,701
9M 2017 9M 2018
NIS
Others
11
Market Share – SerbiaMotor Fuel Retail Market
• The retail market has grown slightly
• Consumption of diesel is on the rise, whilethe reduction in LPG and gasolineconsumption is related to price growth andthe change in the structure of the fleet ofthe Republic of Serbia.
Retail market, thou. tonsNIS's participation in the retail market is stable.Numerous marketing projects, the expansion offuel portfolios and the improvement of theconcept of loyalty have contributed to thepreservation of high participation.
+2.7%
703(57%)
718(57%)
527(43%)
545(43%)
1,230 1,263
9M 2017 9M 2018
NIS
Others
12
Market Share – Region9M 2018/2017
Bosnia and Herzegovina
No. of PSs : 37% total market: 14.4%% retail market: 10.0%
Romania
No. of PSs: 18% total market: 0.8%% retail market: 1.2%
Bulgaria
No. of PSs : 35% total market : 6.0%% retail market : 4.6%
13
• The planned production scope forhydrocarbons was realized
• Implementation of geological-technicalmeasures
• Forty-seven wells were put into operation
Operating IndicatorsExploration and Production
-4%
Oil and gas output,Thou. TOE
675 662.7
337313
3223.6
1,044999
9M 2017 9M 2018
Angola
Domestic gas
Domestic oil
I Increase of hydrocarbon reserves in 2018 is about 1%.
Oil and gas production is aboveBusiness plan.
14
• А 6% growth of refining and finishingvolume
• Refining volume meets market demands
• The schedule of the DCU Project is gettingbusier. especially regarding construction.concrete and mechanical works, implyingan increased number of employees at theconstruction site
Operating IndicatorsRefining
+6%Refining of oil and semi-finished products, thou. tons
652 659
1,768 1,901
192209
2,613 2,769
9M 2017 9M 2018
Semi-finishedproducts
Imported oil
Domestic oil
15
• Retail in Serbia – increment of 3%
• Wholesale in Serbia – increment of 8%
• Export – increment of 20%
• Foreign assets – increment of 14%
Operating Indicators Sales and Distribution
+10%Sales volumes*, thou. tons
*Excluding internal sales
526 543
233 266
1,385 1,501
359431
2,5032,741
9M 2017 9M 2018
Export
Wholesale -Serbia
Foreign assets
Retail - Serbia
16
• Impact of oil prices
• Sales volume increase
Financial IndicatorsEBITDA
EBITDA, bn RSD+23%
34.3
;42.0
9M 2017 9M 2018
17
Financial IndicatorsNet Income
• Higher EBITDA
• Higher depreciation costs
• Lower financial expenses
• Lower positive exchange rate differences
• Lower income tax
Net income, bn RSD +8%
20.121.7
9M 2017 9M 2018
18
Financial IndicatorsOCF
• Higher liabilities for the import of crudeoil
• Higher liabilities towards the state (taxes,excise duties)
• Higher customs duties
• Hihgher derivatives duties
-16%OCF, bn RSD
38.9
32.7
9M 2017 9M 2018
19
Financial IndicatorsCAPEX
+64%
CAPEX, bn RSD CAPEX by segments
48%
2%
4%
38%
11%
1% 0.34% Exploration andProductionServices
Refining
«Bottom ofBarrel»Sales andDistributionEnergy
16.6
27.3 26.5
43.2
9M 2017 9M 2018 2017 Actual Forecast2018
+63%
278
275
28
47
271
91
153
186
36
129
516
336
418
356
184
507
511
477
653
623
613
646
793
611
446
403
455
598
664
662
657
629
625
654.5
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
31.3.'18
30.6.'18
30.9.'18
up to 1 year
over 1 year
233
33
13
14
34
28
12
3
4
20
3
793
611
446
403
455
598
664
662
657
629
625
654.5
1.026
644
458
418
489
626
675
666
661
631
625
658
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
31.3.'18
30.6.'18
30.9.'18
Letters of credit
Debt to banks
20
Debt to BanksMaturity and Currency Structure of Credit Portfolio
-0.4%
Debt to banks, mn USD
-0.5%
Debt to banks, mn USD
Debt structure:USD 1% EUR 99% Other 0%
GPN loan -14%221 mn EUR
21
Operational Efficiency Improvement MeasuresEffect on EBITDA, bn RSD
2.0
0.7
0.9
0.40.3 0.1 4.3
0.8
3.7
5.1
Explorationand
Production
Services Refining Sales andDistribution
Energy CorporateCentre
NIS 2018 Plan Perventeddamage
Total NIS2018 Plan
9M2018
Measures Pervented damage
Comparative analysis
22
EBITDA margin (%) 3. EBITDA/FTE (thou. USD)* 4. Daily volume (t/day) 5.&3.
Share of light products (%) 4. OPEX ($/boe) 3.
34.4
22.8
20.3
14.4
14.0
21.2144.5
65.8
49.4
41.9
19.8
64.3
8.98.2
7.26.46.1
5.4
7.0
11.8
8.8
7.5
6.1
Н/Д
8.6
Data obtained from 6M 2018 reports. except for NIS (9M 2018)*All data for 6M 2018
84.7
83.7
79.4
76.7
74.1
79.7
Conclusion
23
Limited possibility of long-term borrowing
Negative trend of HSE indicators continues in the third quarter
Growth of EBIDA and Net profit
The production of oil and gas over the plan
Sales volume increase
Realization of the DCU project in accordance with the plan
Positive effects of restructuring a loan portfolio – reducing borrowing costs,extending loan maturity dates and secured sources of financing investments in 2018 and 2019.
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.
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