Quarterly report for the third quarter of 2021

QUARTERLY REPORT FOR THIRD QUARTER OF 2021

Quarterly Report for Third Quarter of 2021

The Quarterly Report for Third Quarter of 2021 presents a factual overview of NIS Group's activities, development and performance in third quarter of 2021. The Report covers and presents data for NIS Group, comprising NIS j.s.c. Novi Sad and its subsidiaries. If the data pertain only to certain individual subsidiaries or only NIS j.s.c. Novi Sad, it is so noted in the Report. The terms: 'NIS j.s.c. Novi Sad' and 'the Company' denote the parent company NIS j.s.c. Novi Sad, whereas the terms 'NIS' and 'NIS Group' pertain to NIS j.s.c. Novi Sad with its subsidiaries.

The Quarterly Report for Third Quarter of 2021 is compiled in Serbian, English and Russian. In case of any discrepancy, the Serbian version shall be given precedence.

The Quarterly Report for Third Quarter of 2021 is also available online on the corporate website. For any additional information on NIS Group, visit the corporate website www.nis.eu.

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NIS Group

Content

Foreword ........................................................................................................................................	4
Business report .......................................................................................................................................	5
Highlights........................................................................................................................................	5
NIS Group ......................................................................................................................................	6
Business activities ..........................................................................................................................	6
NIS worldwide ................................................................................................................................	9
NIS Group Business Structure .....................................................................................................	10
Risk Management ........................................................................................................................	10
Business environment ..................................................................................................................	19
Performance analyses..................................................................................................................	23
Key indicators ...............................................................................................................................	27
Operating indicators .................................................................................................................	28
Financial indicators ..................................................................................................................	39
Corporate Governance.................................................................................................................	50
Human resources .........................................................................................................................	61
Research and Development.........................................................................................................	64
Financial Statements .............................................................................................................................	65
Standalone financial statements ..................................................................................................	65
Consolidated financial statements ...............................................................................................	84
Statement of individuals responsible for the preparation of financial statements ...............................	106

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Quarterly Report for Third Quarter of 2021

Foreword

In Q3 2021, despite frequent oscillations on the global oil market, NIS Group pursued its effort to improve business and operational results. With regards to financial indicators, the positive trend was underpinned by the continued recovery in demand on the petroleum product market, higher oil prices and dedication to carry through efficiency measures across all levels of NIS Group. The average Brent price stood at 67.7 USD/bbl in first nine months this year, i.e. a 66-percent increase on the price in the same period last year.

NIS Group's net profit for 9M 2021 is equal to 13.3 bn dinars, a multifold improvement on last year when a loss of 8.3 bn dinars was recorded. At the same time, EBITDA at 38.2 bn dinars also saw a multiple increase over the same reporting period last year in the amount of 10.4 bn dinars. As far as operational cashflow is concerned, it is equal to 20.4 bn dinars, four times the result in the same reporting period 2020. Investments in January-September amounted to 13.1 bn dinars. At the same time, liabilities of NIS Group based on tax and other public revenues are equal to 155.7 bn dinars, i.e. 18% higher than in the same period last year.

Most operational indicators marked improvement, too; overall turnover of petroleum products for 9M 2021 stands at 2,901 thousand tons, which is an increase of 14% on the same period last year. Turnover of petroleum products saw a prominent rise in the foreign subsidiaries, with a 57% growth in the wholesale segment and a 10% growth in export compared with the same reporting period last year. Total oil and gas production reached 890 thousand tons of oil equivalent, refining of crude and semi-finished products was 2,867 thousand tons, i.e. an improvement of 9% over last year.

NIS Group has sustained its practice to pay out dividends, and in Q3 over a billion dinars was distributed (1,001,190,856 dinars) as dividends. It is the ninth consecutive year NIS has paid dividends to its shareholders, over 60 bn dinars have been paid out to this end since 2013. At the same time, we have continued our investments in business processes. In Q3 the Pancevo oil Refinery produced the first Euro diesel quantities with bio-component and supplied them to the Romanian market, while within the quality improvement program in our retail network NIS introduced the service of paying monthly utility bills with the help of IPS QR, a service brought to life as a joint effort of collaboration of the Postanska Stedionica bank and the National Bank of Serbia.

In this reporting period, NIS remained committed to investing in the community in which the company operates. Within "Together for the community" NIS will invest 107.5 mn dinars in projects in 12 local communities to support the environmental protection improvement.

Till year end, NIS will remain focused on further boosting its business indicators and will implement key investment projects that will bring the maximum benefit in the future and pave the way for further development of NIS Group.

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NIS Group

Business report

Highlights

July - September

• 13 exploration wells were drilled and 14 exploration wells were put into operation in Serbia
• Start of preparatory work for the 3D seismic project in Turkey
• Completed overhaul of Elemir Gas Refinery
• Workover operations under way on BVS-1000 well
• Drilling of the Teremija 1201 (ЕХ-8) well has started
• Interpretation of seismic data within the Obudovac project completed
• Start of production on a 3D seismic project in Turkey
• New confirmation of compliance of aviation fuel quality with the requirements of the EI / JIG 1530 standard by the certified body SGS from Belgrade, accompanied by the issuance of the Limited Assurance Statement
• The Pancevo Oil Refinery produced the first quantities of Eurodiesel with a biocomponent, which were shipped to the Romanian market
• Participation of the representatives of the Refining Block in the first expert workshop within the project "BIO4BLEND - Impact of legislation in the field of biofuels on the Serbian market"
• The continuation of activities on the project "The Reconstruction of the FCC Plant and the
  Construction of a new ETBE Pant", in accordance with the project stages.
• Activities on the opening of 3 new facilities (Petlovo Brdo, Zaječar 5, and Bački Petrovac)
• Support to digital projects: Virtual SNNP (On the Road with Us) Card, Drive GO and IPS payment on PSs
• Reconstruction of the PSs: Zmaj 1 and Novi Bečej; works on construction of new the new
  PS: Stara Pazova 3 and Zrenjanin center
• The applications "On The Road With Us " and "Drive.Go" of NIS were on the first and second place among the TOP 10 free business applications on the Google Play list
• NIS and Poštanska Štedionica Bank have enabled the service of paying bills at all NIS Petrol and GAZPROM petrol stations in Serbia, with the help of the IPS QR code, issued by the National Bank of Serbia
• In just over a year of operation of the innovative "Drive.Go" application, NIS has sold more than 4 million liters of fuel through that application
• The NISOTEC brand won the Grand Champion Cup, as well as 10 gold medals at the International Agricultural Fair in Novi Sad
• Based on the decision of the Shareholders Assembly, NIS paid 1,001,190,856 RS dinars in dividends to shareholders
• NIS and its employees continued their humanitarian activities with a donation to the Simo
  Milošević Health Center in Belgrade, as well as the purchase of school equipment and supplies for children from shelters and community centers in Belgrade
• The study of the auditing company KPMG on the economic impact of NIS in the Republic of Serbia in the period 2010-2020 was presented to the public. in which it is stated that the average direct annual contribution of NIS to domestic GDP is 5.1%
• In cooperation with the Coordination Body for Gender Equality of the Government of Serbia and the UN Agency for Gender Equality and Women's Empowerment (UN Women), NIS organized a conference entitled "Energy, Gender Equality and Sustainable Development", the aim of which was to highlight the importance of gender equality in energy sector
• NIS has announced the results of the competition of the "Together to the Communities" program for 2021, which will support 29 environmental projects in 12 local communities in the total value of 107.5 million RS dinars.

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