Jugopetrol Podgorica : Proposal of Resolution on Adoption of Company Annual Report 2023

JUGOPETROL AD

BOARD OF DIRECTORS

Ref. No. 32230

Podgorica, 24 April 2024

Pursuant to Article 161 paragraph 1 item 8 in relation to Article 162 of the Companies Law (Official Gazette of Montenegro No. 65/2020, 146/21, and 4/24) and Article 41 paragraph 2 item 1 of the Articles of Association of JUGOPETROL AD, the Board of Directors on 24 April 2024 passed

PROPOSAL RESOLUTION

on the Adoption of the Annual Report of JUGOPETROL AD for 2023

1. The Annual Report of JUGOPETROL AD for the year 2023, including the statement of the Board of Directors on related parties' transactions is hereby adopted.
2. The Annual Business Report from item 1 hereof constitutes integral part of this Resolution.
3. This Resolution comes into force on the day it is adopted by the General Meeting.

_________________________

Panagiotis Loukas

President of the Board of Directors

Rationale

Article 133 paragraph 1 item 6 of the Companies Law stipulates that the General Meeting adopts reports on the company's business operations. Article 133, paras. 2 and 3 of the Law stipulates that an integral part of the report is the report on relations with the parent company and companies in which its parent company has the status of parent or subsidiary including the statement of the Board of Directors thereof, while Article 162 stipulates the reports which the Board of Directors submits to the Annual General meeting.

Accordingly, it has been proposed as stated in the enacting terms hereof.

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CompanyAnnual Report 2023

with reports pursuant to Article 162 of the Companies Law

JUGOPETROL AD

Podgorica, March 2024

Table of Contents
1. IDENTITY OF JUGOPETROL AD	3
	1.1.	General information	3
	1.2.	Mission and strategic vision	3
	1.3.	Core Principles	4
	1.4.	Jugopetrol AD History	4
	1.5.	Scope of operations	5
2.	JUGOPETROL AD SHAREHOLDING	6
	2.1	Share Capital - Shareholders	6
	2.2	Jugopetrol AD as part of HELLENiQ ENERGY	7
	2.3	Market data	8
	2.4	Acquisition of shares	9
3.	CORPORATE GOVERNANCE	10
	3.1	General Meeting of Shareholders	10
	3.2	Board of Directors	10
	3.3	Audit Committee	14
	3.4	Internal Audit	15

3.5 Qualifications and independence of the company's auditor in relation to the company 15

4. ORGANIZATIONAL STRUCTURE OF JUGOPETROL AD	16
4.1	Executive Director and Senior Management	16

4.2 Contracts concluded by and between the Company and directors and their related

persons		16
4.3	Administrative organization of the Company - organizational chart	17
4.4	Personnel	17
5. MAJOR FIXED ASSETS OF JUGOPETROL AD	19
5.1	Bar Terminal	19
5.2	Air services	20
5.3	Fuels transport unit	22
5.4	HQ Building	23
5.5	Petrol Stations	24
6. BUSINESS ENVIRONMENT	27
6.1	Global economic data	27
6.2	Montenegro macro environment	28
6.3	General description of the fuel market in Montenegro	29
6.4	Legislative framework	30
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	COMPANY ANNUAL REPORT JUGOPETROL AD 2023

7. BUSINESS ACTIVITIES OF JUGOPETROL AD	31
7.1	Fuel quality assurance	31
7.2	Fuels supplied by the Company to the domestic market	33
7.3	Retail fuel sales	33
7.4	Wholesale fuel sales	34
7.5	Non-fuel Retail, NFR	36
7.6	Commercial Pricing Policy	36
7.7	Suppliers of Petroleum products - Supply Chain	38
8. JUGOPETROL AD SALES QUANTITIES	40
8.1	Total fuel sales	40
8.2	Retail Sales	41
8.3	Wholesale Market	42
9. FINANCIAL STATEMENTS AND KEY RATIOS	43
9.1	Profit & Loss Statement	43
9.2	Balance Sheet	44
9.3	Events after the balance sheet date	45
9.4	Financial Ratios	45
9.5	Tax contributions	47
9.6	Business achievements in 2022	47
10. FUTURE PLANS AND PROJECTS	48
10.1	Overview of Business Strategy	48
10.2	Project Elephant	49
11. RESEARCH AND DEVELOPMENT	49
11.1	Operations and efficiency improvements	49
11.2	Learning and growth	53
12. RISK MANAGEMENT	54
12.1	Main risk factors and mitigating measures	54
12.2	Overview of Internal Audit System and Risk Management	55
12.3	Legal risks	57
13. RELATED PARTY TRANSACTIONS	58
14. FOCUS ON THE ENVIRONMENT	60
15. CORPORATE SOCIAL RESPONSIBILITY	63

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COMPANY ANNUAL REPORT JUGOPETROL AD 2023

1. IDENTITY OF JUGOPETROL AD

1.1. General information

Jugopetrol AD is a petroleum company operating in Montenegro. It's ultimate beneficial owner is HELLENiQ ENERGY Holdings S.A., one of the largest oil companies in the Balkans.

The Company is the main supplier of oil products in Montenegro. Its main activities include:

• wholesale of oil products through the operation of storage facilities in Bar and two aircraft supply facilities located at airports Tivat and Podgorica,
• retail and distribution of oil products through the operation of 46 petrol stations 3 yachting petrol stations.

The infrastructure of Jugopetrol AD consists of:

• a retail network of 46 petrol stations and 2 internal petrol stations;
• 3 yacht service stations in Kotor, Budva and Herceg Novi;
• petroleum installation in Bar, with 20 fuel tanks with the total storage capacity of 110,100 m3;
• 2 aviation fuel terminals in Podgorica with 3 fuel tanks and capacity of 300 m3 and Tivat with 4 fuel tanks and capacity of 7,825 m3;
• a fleet of 20 tank trucks for supply of petrol stations and industrial customers, and 6 refuellers for supply of aircrafts at airports Tivat and Podgorica.

The Company uses the commercial brand "EKO", which is well-known and associated to high quality in the South East Europe region. It is the leading petroleum company in Montenegro.

1.2. Mission and strategic vision

Strategic Vision of Jugopetrol AD is to be "the leading petroleum company in Montenegro ensuring the fuel supply of the country while being a responsible corporate citizen".

Its mission is to supply, reliably and effectively, the Montenegrin market, offering top quality products and services, serving its customers with efficiency and innovation, while respecting the environment and achieving the best possible financial results for its shareholders.

The cornerstones of this vision and the means to achieve it are:

• our people
• our product offering
• • highest quality fuel
  • full coverage of the country
  • full range of NFR
• our service
• being socially responsible

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COMPANY ANNUAL REPORT JUGOPETROL AD 2023

1.3. Core Principles

Jugopetrols AD core principles are in line with those of the HELLENiQ ENERGY Holdings S.A., as follows:

1.4. Jugopetrol AD History

1947 Jugopetrol AD was established on April 12, 1947 with its headquarters in Kotor, as a company for production and trade of oil and oil products. It started operating with very modest assets and resources at the earliest beginnings of oil industry in the former Yugoslavia.

1947-1957 This period is distinguished by a beginning of construction of building the facilities - primarily the warehouses and then the petrol stations. The construction of warehouses at Ljuta (near Kotor), Titograd (now Podgorica) and Nikšić started. Within this period the first electricity-powered petrol station was built in Titograd in 1954, and then the petrol stations in Kotor, Bar, Cetinje, Kolasin and Andrijevica.

1957-1967 Beginning of rapid growth of oil consumption due to the development of all business activities in Montenegro. The first consumption of heating oil occurred in 1964.

1964 The first phase of construction works of petroleum installation Bar started. This petroleum installation was the most modern facility in the Balkan area.

1970 Since 1970 Jugopetrol AD has the rights for hydrocarbons exploration in the territory of Montenegro and, for many years since, it has collaborated with foreign and domestic partners in this field. Within the period from 1976 to 1981 drilling of 3 exploration wells was done. The drilling of exploration well UK-1 near Ulcinj started in 1989. This well with the depth of 5,309 m was the deepest well drilled in Former Yugoslavia.

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COMPANY ANNUAL REPORT JUGOPETROL AD 2023

1992-1996 Jugopetrol AD managed its affairs as a Public Interest Company for exploration, exploitation and sales of oil and oil products. In December 1996 the Company was transformed into a Shareholding Company.

2002 Jugopetrol AD became the member of the Hellenic Petroleum Group. Following the privatization of the company, Hellenic Petroleum, a highly renowned and well-known Greek oil Company, became the majority shareholder of Jugopetrol AD Kotor. Since then, the retail network of the Company is operating under the commercial brand "EKO", well- known and respected in countries of the South East Europe region.

2014 Jugopetrol AD moved its headquarters from Kotor to Podgorica, the capital of Montenegro and administrative and business center of the country. Relocation acted as a catalyst to further structural reorganization of the company and improved efficiency. Following this move, the company changed its name from Jugopetrol Kotor AD to Jugopetrol AD.

More then 75 years have passed from the establishment of the Company and Jugopetrol AD has been and still is part of the identity of Montenegro. The Company has passed through various phases of transformation and has been growing and developing together with the growth and the development of the country's economy, road network, tourism and other industries. It has grown into a large and powerful company passing through many organizational and operational transformations.

1.5. Scope of operations

Jugopetrol AD, member of HELLENiQ ENERGY Holdings S.A., is the leading oil company in Montenegro.

Main business activities of the Company include:

• retail trade through the largest network of petrol stations in Montenegro,
• wholesale business including bunkering, aviation, other retail networks and commercial & industrial companies,
• storage and distribution of petroleum products.

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COMPANY ANNUAL REPORT JUGOPETROL AD 2023

2. JUGOPETROL AD SHAREHOLDING

1. 2.1 Share Capital - Shareholders

2. Share capital

Jugopetrol AD has a share capital of EUR 67,986,605 divided into 4,653,971 shares with a nominal value of EUR 14.61 each.

The Company has not done any share buybacks and the total number of shares remained constant since privatization, while the share price has fluctuated as following:

Share Capital evolution Jugopetrol AD

b) Shareholders

Jugopetrol AD has more than 3,000 shareholders. The majority shareholder is HELLENiQ ENERGY International GmbH with 54.35% of total shares.

	Small holders -
	22%	HELLENiQ
Other institutional
	ENERGY
and custody
	International
accounts- 11%
	GmbH - 54%

EK - Custody

account 1 - 4%

EK - NLB

Ljubljana for clients 2 - 9%

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COMPANY ANNUAL REPORT JUGOPETROL AD 2023

2.2 Jugopetrol AD as part of HELLENiQ ENERGY

Jugopetrol AD is a subsidiary of HELLENiQ ENERGY Holdings S.A., one of the largest oil companies in the Balkans. HELLENiQ ENERGY Holdings owns a controlling stake of 54% of Jugopetrol's AD share capital through Hellenic Petroleum International GmbH (from 17th of March 2023 renamed to HELLENiQ ENERGY International GmbH), a company incorporated in Austria.

Corporate structure of HELLENiQ ENERGY is shown in the illustration below:

GROUP CORPORATE STRUCTURE

Parent Company	HELLENiQ ENERGY Holdings S.A.
Refining	HELLENIC PETROLEUM R.S.S.O.P.P. S.A.
Fuels Marketing	HELLENIC FUELS AND LUBRICANTS INDUSTRIAL AND COMMERCIAL S.A.
	CALYPSO LTD
Chemicals	HELLENIC PETROLEUM R.S.S.O.P.P. S.A.
	DIAXON Α.Β.Ε.Ε.
International	ΟΚΤΑ ΑD SKOPJE
Activities	HELLENIC PETROLEUM CYPRUS LTD
	RAMOIL CYPRUS LTD
	EKO BULGARIA EAD
	EKO SERBIA AD
	JUGOPETROL AD
Oil & Gas
Exploration &	HELPE UPSTREAM S.A.
Production
Power
Generation &	ELPEDISON BV
Trading
Renewable	HELLENIC PETROLEUM - RENEWABLE ENERGY SOURCES S.A.
Energy Sources
Engineering	ASPROFOS S.A.
Crude/Products
Transportation &	A.A.F.P.C. S.A.
Pipeline	VARDAX S.A.
Networks
Natural Gas	DEPA Commercial S.A.
	DEPA International S.A.
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	COMPANY ANNUAL REPORT JUGOPETROL AD 2023

At the beginning of 2022 the corporate structure of Hellenic Petroleum S.A. has changed due to the demerger of the refining, supply and trading of oil products and petrochemicals sectors.

2.3 Market data

During 2023 the average share price increased by 10% compared to 2022.

Share price 2023

13,00

12,00

11,00

10,00

9,00

8,00

7,00

	2020	2021	2022	2023
Average share price (€)	9.35	9.87	11.21	12.22
Dividend paid (€)	2,326,986	3,257,782	4,514,352	6,515,559
Dividend per share (€)	0.50	0.70	0.97	1.40
Dividend yield	5.35%	7.09%	8.65%	11.46%
EPS (€)	0.56	1.19	2.59	1.51
Average market cap (€ m)	43.51	45.93	52.17	56.87
Average P/E	16.61	8.26	4.33	8.08

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COMPANY ANNUAL REPORT JUGOPETROL AD 2023