Presentation for investors and shareholders for Q1 2014

Presentation for investors and shareholders
for Q1 2014
23.04.2014.
Novi Sad
Investor Relations
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
body’s 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.
2
The information in this presentation includes forward-looking statements. These forward-looking statements include all
matters that are not historical facts, statements regarding the Company’s intentions, beliefs or current expectations
concerning, among other things, the Company’s 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 Company’s 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.
3
Q1 2014
Exploration and
Production
Refining
Sales and Distribution
• Additional 4 cogeneration
modules are ready for start-up,
and another 3 are in preparation
• BMB 100 gasoline
production and delivery
started
• Introduction of a new
environmentally friendly
drilling method based on the
dry location principle
• 1039 km2 of 3D seismic
surveys completed in BokaMartonoš, Velebit and
Kumane exploration areas
• Development abroad: GIR
program roll out to projects in
Romania, Hungary, Bosnia
and Herzegovina
• Key measures for gasoline
pool reduction have been
defined (change in the
operating schedule of
atmospheric distillation and
vacuum distillation,
hydrocracking, catalytic
cracking).
• Modernization of the control
system at the Polymer
bitumen unit completed
• Thermal power plant (capacity
up to 208 MW) in Pačevo engineering documents are in
preparation
• Three new petrol stations in
Romania
• 5 petrol stations in Bulgaria are
rebranded from white to
Gazprom brand
• Preparations for works
procurement for cogeneration
power plant in Novi Sad
Refinery (8MW)
• CNG projects (Palić and 3 PS)
• The first DODO (Dealer Owned • Construction works at Plandište
Wind Farm are in progress
Dealer Operated) petrol station
opened in Bač
• As of 1 February, the Fuel
Marking Decree is in force
• First bitumen delivered to
Slovak Republic and Turkey
• The agreement on annual fuel
supply signed with "Air Serbia„
4
Energy
Q1 2014: HSE Indicators
All indicator have positive trend compared to plan, except LTIF where we
have growth both compared to the same period last year and compared to
plan
Investment in environmental
projects, mln. USD
Plan
Q1 2014
Transparency index increase
114
1
Major accidents
43
Q1 2014
Serious incidents
117
Minor incidents
1.561
528
Potentially
hazardous
situations
Q1 2013
5
218
3.280
Plan
Q1 2014
4,4
5,1
0,005
Investigated cases
Plan
Q1 2014
1,21
100%
14%
16%
Q1 2014
5,6
Q1 2013
Q1 2014
114%
Q1 2014
1,02
41%
10%
Q1 2013
0,008
Q1 2014
RAR
27%
Q1 2014
48
59%
LTIF
Plan
Q1 2014
0,008
0%
173
67%
Q1 2013
Plan
Q1 2014
5
66%
Perforation coefficient
Q1 2013
1,73
56%
Q1 2013
58%
Perforation coefficient is relation between the number of perforations, multiplied by 1,000 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 1 million
RAR - Road Accident Rates - relation between the number of road accidents as opposed to mileage in km, multiplied by 1 million
Macroeconomic indicators
USD/RSD exchange rate
2013
Price of Urals crude oil, in $/bbl
Taxes and other duties*, in bln. RSD
2013
28%
2014
2014
87
114
86
112
85
25,86
110
84
20,21
108
83
106
I
II
III
• USD/RSD exchange rate in Q1
2014 went up by 0.9% or RSD
0.7573
(from 83.1282 on 01/01/2014 to
83.8855 on 31/03/2014)
I
III
• Average price of Urals crude
was 107.43 $/bbl in Q1 2014,
indicating a drop of -4%
compared to the average price
in the same period 2013.
• USD/RSD exchange rate in Q1
2013 went up by 1.45% or RSD
1.25
(from 86.1763 on 01/01/2013 to
87.4258 on 31/03/2013)
6
II
* Including subsidiaries outside Serbia and deferred tax assets.
The tax for Q1 2014 to be paid in Serbia amounted to RSD 24.2 billion (Q1 2013: 20.2).
Q1 2013
Q1 2014
• Excise increase:
Unleaded gasoline
• from 49.6 to 50 RSD/l
Gas oil and biofuels
• from 42 to 46 RSD/l
LPG
• from 30 to 35 RSD/l
1%
10%
17%
Q1 2014: Key Indicators
NIS Group
Urals
Net profit
EBITDA2
Sales
OCF
$/bbl
bln. RSD
bln. RSD
bln. RSD
bln. RSD
107,4
8,6
15,5
56,6
2,2
111,3
7,3
11,8
49,5
10,2
.
.
1
(%)
-4%
19%
31%
14%
-79%
Accrued taxes and other fiscal obligations3
Domestic oil and gas production4
Crude oil and semi-finished products refining volume
Total sales of petroleum products
bln. RSD
t.o.e
thou. tons
thou. tons
25,9
406
724
643
20,2
411
591
566
28%
-1%
23%
14%
thou. tons
35
5
551%
thou. tons
thou. tons
thou. tons
bln. RSD
mln. USD
512
124
448
9,6
593
461
122
396
12,2
441
11%
2%
13%
-21%
34%
Key Indicators
Foreign assets sales
Petroleum products sales on domestic market
Retail
White products sales
CAPEX5
Total bank indebtedness6
[1]
Q1 2014.
Q1 2013.
Calculation of percentage values is based on values expressed in millions of RSD
EBITDA = Sales (without excise tax)– inventories ( of oil, oil products and other products) – operational expenditure (OPEX) – other costs, which management cannot affect
[3] Taxes and other fiscal obligations includes taxes, duties, fees and other public revenues for the period. The figure Includes subsidiaries outside Serbia and deferred tax assets. The tax for Q1 2014 to be paid in Serbia
amounted to RSD 24.2 billion (Q1 2013: 20.2).
[4] Due to change in methodology oil production includes gazoline and light condensate, and gas production takes into account commodity production of gas
[5] Financing, VAT excluded
[6] Total bank indebtedness = Total debt to banks + letters of credit. As of September 30th 2013 total debt to banks amounts 562 million USD
and letters of credit amount 31 million USD
[2]
7
Measurement unit
Motor Fuel Market Trends 2013/2012
There has been a decline in motor fuel markets in the region with the exception of
the Hungarian and Romanian markets, where a positive growth rate has been
registered as a result of the increased consumption of diesel fuel.
Hungary
Key reason for
the decline in the
Bulgarian,
Slovenian and
Croatian markets
– continuation of
crisis, reduced
purchasing power
of the population.
In Serbia, the
reduced
consumption of
diesel fuel has
mostly contributed
to the positive
growth rate at the
quarterly level.
+1.6%
-0.1%
0%
-10.1%
Serbia*
4.3%
Croatia
Bulgaria
-7.2%
+0.7%
-7.2%
-5.8%
Bosnia and
Herzegovina
n/a
+0.2%
8
Romania
Slovenia
Sources of information based on which the projections have been created:
*Serbia, Q1 2014/2013; Internal analyses and estimations of the Sales and
Distribution;
- Eurostat, 07/04/2014
- PFC for BiH, Oct.. 2013.;
-5.8%
Retail and motor-fuel markets’ trends* in the
region
Romania
Bosnia and Herzegovina
Bulgaria
• Motor-fuel market posts mild recovery due
to an increased Diesel consumption. This
trend was unequivocally affected by putting
off the introduction of additional 7 euro cent
excise duty per liter of Diesel and gasoline
until April 1, which will invariably have a
negative impact on consumption trends in
Q2.
• Motor-fuel market posts a moderate growth
driven by an increased Diesel consumption.
Outlook for this year’s market recovery is
quite plausible, hinging mostly on the
economic activity growth.
• Bulgaria’s motor-fuel market has greatly
shrunk since the outset of global economic
crisis. Its gradual recovery started last year
and has kept the pace throughout this year’s
Q1. The growth is primarily driven by an
increased Diesel consumption, which, in the
long run, is poised to be the pivotal growth
engine. The retail market is also moderately
growing.
• The increased Diesel consumption is the
pivotal driver of mild retail market growth.
The motor gasoline consumption from one
year to another is also on the increase,
while LPG consumption is unchanged since
last year.
• NIS owns 36 petrol stations, 28 out of
them under Gazprom brand, while 8 petrol
stations are under NIS brand.
• Estimated NIS share in the motor-fuel
market in Q1 2014 accounts for 5,4%, with
retail market share of 7,3%
• NIS retail network includes 30 petrol
stations – 23 under Gazprom brand and 7
petrol stations under white brand. NIS also
owns a storage facility in Kostin Brod.
• NIS retail network includes 17 petrol
stations under Gazprom brand.
• Estimated NIS share in the motor-fuel
market in Q1 2014 accounts for 0,5%, with
retail market share of 0,6%
9
• Estimated NIS share in the motor-fuel
market (gasoline and Diesel) in Q1 2014
accounts for 3,9%, with retail market share
of (gasoline and Diesel) 2,2%.
Market Share in RS
Increase in naphtha and coke consumption proved to be the main
consumption growth drivers in the oil products market
RS's Petroleum Products Market Volume
in thousand tons
Republic of Serbia's Retail Market**
in thousand tons
1%
10%
Q1 '14*
Q1 '13
10
522
(76%)
470
(75%)
163
(24%)
686
155
625
(25%)
NIS
Others
Q1 '14*
124
(41%)
177
(59%)
301
Q1 '13
121
(41%)
177
(59%)
298
NIS
Others
• The main reason for growing consumption in the overall oil
products market in Serbia is the increased consumption of
naphtha and coke. Jet fuel consumption exceeds the last
year’s due to more „Air Serbia“ and other airlines flights, with
increased refueling of some other carriers at the Nikola Tesla
Airport. Mild winter reduced the fuel oil consumption along
with an interannual increase in bitumen consumption.
• Fuel’s improved quality and assortment resulted in a
stepped-up retail market competition. Increasing numbers of
players in addition to traditional products offers improved
fuels with additives as well. NIS included EBMB 98 in its
offer, which is currently sold in around 150 petrol stations,
with 100 Octane premium gasoline sales launch under
consideration.
• NIS market share is based on the fact that the revamped
Pančevo Refinery partially supplanted imported goods by its
domestic products, along with an efficient pricing policy and a
sprawling logistics network.
• NIS market share emerges in the wake of modernized petrol
stations, which now offer better service, sell more vibrantly
and benefit from positive effects of rebranding and marketing
activities.
* Data for March2014 is an estimate
** NIS sales include motor fuels, heating oil EL, while other retailers include: motor fuels, heating oil EL and Euro EL .
Financial Indicators
EBITDA,
in bilion RSD
Q1 '14
Net profit,
in bilion RSD
Q4 '13
21,2
Q3 '13
Q2 '13
Q1 '13
11
31%
15,5
19,6
16,3
11,8
Q1 '14
19%
8,6
Q4 '13
16,6
Q3 '13
Q2 '13
Q1 '13
14,0
10,5
7,3
EBITDA increased by 31% in Q1 2014 compared to
same period in 2013:
In Q1 2014 compered to Q1 2013 net profit increased
by 19%:
• MHC/DHT put in operation
• MHC/DHT put in operation
• Increased volumes of refining and sales
• Increased volumes of refining and sales
• Increased business efficiency
• Increased business efficiency
All possible discrepancies in percentage values and total values are due to rounding errors
Financial Indicators
Sales,
in bilion RSD
Q1 '14
OCF,
in bilion RSD
14%
56,6
Q4 '13
74,5
Q4 '13
Q3 '13
71,7
Q3 '13
Q2 '13
Q1 '13
Q2 '13
63,8
Q1 '13
49,5
Incline of retail prices of petroleum products in Q1
2014 is app. 0.9% compared to Q1 2013:
Changes in retail prices
Europremium BMB 95
Eurodiesel
∆
.
.
(%)
-1,15%
1,34%
• Decline in the average price of Urals RCMB crude oil in
Q1 2014 (in $/bbl), compared to the average price in Q1
2013 is around 4%.
12
All possible discrepancies in percentage values and total values are due to rounding errors
79%
Q1 '14 2,2
25,7
27,5
11,8
10,2
Decrease in operating cash flow:
• Poor collection
companies
of
receivables
from state
owned
• The increase in payments for the purchase of crude oil
Exploration and Production
Domestic oil and gas production
in thousand conditional tons
Q1 '14
406
Domestic oil production
in thousand tons
-1%
Q1 '14
295
Q4 '13
415
Q4 '13
303
Q3 '13
409
Q3 '13
303
Q2 '13
407
Q2 '13
293
Q1 '13
411
Q1 '13
300
-2%
Total domestic oil and gas production in Q1 2014 amounted to 406 thousand conditional tons, which is by 1% less
than in the same period in 2013.
13
All possible discrepancies in percentage values and total values are due to rounding errors
Refining
Refining volume,
in thousand tons
Q1 '14
348
Conversion of MHC/DHT ,
у%
23%
99 724
277
Q4 '13
458
Q3 '13
429
305
67 801
Q2 '13
393
344
75 812
Q1 '13
287
296
235
68 591
Achieved in 2013
108 862
Projected
58%
за 18%
40%
Imported crude oil
Domestic crude oil
Semi-finished products
In Q1 2014, oil refining and semi-finished product reprocessing volumes grew by 23% compared to the same period
last year:
• Increase in crude refining volume
• Continuous operation of MHC/DHT unit (in Q1 2013, there was a short downtime in the operation of this unit)
• Higher refining volume in line with market demand.
14
All possible discrepancies in percentage values and total values are due to rounding errors
Sales and Distribution
Sales volume,
in thousand tons
Q1 '14 124
Sales structure
in thousand tons
35
388
Q4 '13
190
Q3 '13
167
526
Q2 '13
196
432
Q1 '13 122
526
338
14%
96 643
36144 896
24116 833
19137 784
100 566
Retail
Wholesale
Foreign assets sale
Export
Q1 '14 129
Q4 '13
202
Q3 '13
185
Q2 '13
171
Q1 '13 108
694
896
833
648
784
614
458
14%
643
514
566
Black and other products
White products
5
15
• Retail – 2% sales increase:
• Higher gasoline and diesel sales volume
•
Wholesale – 15% increase:
• Higher diesel sales volumes
• Sales in foreign assets – 7x increase
• Increased number of active petrol stations
• Export: – 4% decrease:
• Lower gasoline components export volumes
All possible discrepancies in percentage values and total values are due to rounding errors
Foreign assets sale is the sale of NIS subsidiaries in the region. NIS supplied its subsidiaries with 27 thousand tons of products in Q1 2014 and the
rest was bought from other suppliers.
Structure of bank indebtedness
Total debt to banks
in millions of USD
31.03.'14
25
31.12.'13
4
358
31.12.'12 41
264
31.12.'11
330
31.12.'10
25
31.12.'09
201
GPN Loan
in millions of EUR
443
93 562
466
488
210
116 446
430
155
392
611
200
Short-term
Mid-term
Long-term
61
793
31.12.'10
31.12.'11
31.12.'12
Structure of total debt to banks
per currency in %
31.03.'14 31
31.03.'14
31.12.'12 14
31.12.'11 13
31.12.'10 33
31.12.'09
233
562
455
403
593
489
31.03.'13
418
446
611
430
99 403
Total bank indebtedness
in millions of USD
31.12.'13 34
442
94 455
31.12.'09
16
500
31.12.'12
458
644
793
Letters of credit
Debt to banks
1.026
31.12.'11
31.12.'10
31.12.'09
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 March 31st 2014
80%
18% 1%
69%
56%
70%
74%
67%
31.12.'13
24%
26%
7%
18%
25%
5%
21% 5%
32%
1%
USD
EUR
Other
CAPEX
In the first quarter of 2014 9.6 billion RSD was allocated to finance the
CAPEX program; optional CAPEX scenario was not realized due to poor
collection of outstanding receivables from state owned companies
CAPEX financing by type of project
Ecology
Angola PSA*
Projects with direct economic effect
Projects without direct economic effects
Project-researching activities
Q1 2014.
0,18
0,06
6,51
2,25
0,63
9,62
TOTAL:
Q1 2013.
0,37
0,21
9,88
1,42
0,29
12,16
*in bilion RSD (VAT excluded)
CAPEX by project types,
in bilion RSD
CAPEX by segments,
in bilion RSD
12,16
0,29
1,42
-21%
2џ
58%
-34%
9,62
0,63
2,25
9,88
6,51
0,21
0,37
Q1 2013
17
-71%
-51%
0,06
0,18
Q1 2014
Екологија
Ангола
Пројекти са ДЕФ
Пројекти без ДЕФ
Пројектно
истраживачки
радови
All possible discrepancies in percentage values and total values are due to rounding errors
*PSA - Production Sharing Agreement;
Data for NIS Group (NIS j.s.c. Novi Sad and subsidiaries formed in 2012.)
Exploration and
production
Refining
Sales and Distribution
Services
Energy
Corporate headquarters
The Major Investments in Exploration and
Production, Refining, and Sales and Distribution
6 bln. RSD
Exploration and Production

• Seismic surveys
• Oil and gas production increase 


2.6 bln. RSD
Refining


• Base oil production


Sales and Distribution
• Regional retail network
development
5
3D seismic surveys and exploratory well drilling in the
Republic of Serbia
Geological research of non-conventional gas
Well drilling
CO2 removal from natural gas
Base oil production
Reconstruction of oil transportation tanks in Novi Sad
Refinery
Stationary system for vibration measuring at rotating
equipment in Pančevo Oil Refinery
Production automation and management
0.6 bln. RSD



Regional sales development in Bulgaria and Romania
Reconstruction of petrol stations in Serbia
Rebranding of petrol stations in Serbia
Comparative analysis (benchmarking) of key indicators
NIS Q1 - 2013, others 2013
EBITDA margin (%)
EBITDA/FTE* (USD 000)
Daily throughput per
retail station (t/d/s)
4,0
47,8
9,6
81,6
11,7
13,4
5,6
121,3
6,4
142,6
27,6
6,6
241,8
38,5
20,2
7,3
127,0
White products yield (%)
6,0
OPEX ($/boe)
Lifting costs
REVEX
4,8
72,4
1,6
6,5
8,3
73,1
14,0
78,8
15,5
80,0
87,0
78,3
19
Sources: НИС, Companies reports for 2013
* Without leased employees
N/A
11,0
+
Increase in EBITDA and net profit
+
Refining and sales volumes increase
+
20
Total debt to banks is below the defined
limit
–
Poor collection of outstanding
receivables and unresolved issue of
state owned companies’ debts
–
Decrease in domestic oil and gas
production
2014 projects
Project "Base Oils in Pančevo Oil Refinery"
2014
• Geotechnical exploration
• Extended Basic Engineering (FEED)
• Start of construction works
• Detailed design
Project "Bottom of the Barrel in Pančevo Oil
Refinery"
2014
• Tender for BDP and FEED design
Construction of the Thermal Power and Heating Plant in Pančevo
(NIS share 49%);
• Base design for new energy block in Pančevo is in the completion phase, for
thermal energy and power generation for own purposes and power generation for
the market.
• Block power will be 140MW including possible capacity upgrade up to 208MW, for
the annual power generation of 910 GWh (or 1,350 GWh with the upgrade).
NIS a.d. Novi Sad
Investor Relations Sector
Narodnog fronta 12
21000 Novi Sad, Serbia
e-mail: [email protected]
22

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