NIS Publishes Unrevised Results of the Company’s Business Operations for the First Quarter of 2013

April 25, 2013

NIS has published unrevised financial statement data for the first quarter of 2013, prepared in accordance with the International Financial Reporting Standards (IFRS). Based on the results of the first quarter of 2013, the net income of NIS j.s.c. amounted to 8.3 billion dinars, which is equal to the level of this indicator for the same period last year. Negative macroeconomic factors had an aggravating effect on the Company's financial results: the decline in hydrocarbon prices - oil and natural gas, the increase in VAT and income tax, the decline in consumption in the domestic market (by approx. 8% as compared to the first quarter of 2012) which decline, among other things, results from an increase of excise taxes on petroleum products. Operating income before interest payments, income taxes and depreciation, or EBITDA, totals in 12.1 billion dinars, which corresponds to the level defined in the Company’s Business Plan, but is 22% lower than the same indicator for the first quarter of the last year. Thanks to a stricter policy of charging of receivables, the operating cash flow (OCF) for the reporting period is 9.8 billion dinars, which exceeds last year's figures by more than five times. Taxes and other spending for the budget of the Republic of Serbia, in the first quarter of 2013 are calculated at the sum of 19.9 billion dinars. NIS will pay 27% more than it was volume of payments made to the budget in the first quarter of 2012. NIS’ investment in developing the manufacturing base and in environmental projects in the first quarter of 2013 amounted to 12.19 billion dinars, or 59% more than the last year’s indicators. Thanks to the introduction of new technology solutions and implementation of additional geological and technical measures, the volume of NIS’ production of hydrocarbons is higher by 5% as compared to the first quarter of 2012 year and it totals in 411 thousand tonnes of oil equivalent. In the first quarter of 2013, 523 thousand tons of oil was processed in the Company’s refineries or 27% more than in the same period last year. Growth in processing is a result of commissioning of the new light hydrocracking / hydrotreatment (MHC / DHT) complex, whose construction was completed in October 2012. NIS’ sales of petroleum products in the first quarter of 2013 amounted to 566 thousand tons, which shows a 12% increase over the last year’s indicators. Implementation of the program of increase of efficiency of corporate network traffic, enhancing policies with wholesale buyers, the opening of the retail network outside of Serbia, as well as a number of marketing programs have all had a positive effect on the increase in the volume of sales. Thus, the volume of retail sales in the domestic market exceeded the level of the first quarter of 2012 by 6%, of wholesale - 5%.. Compared to the first quarter of 2012, the Company has increased its exports of petroleum products by 9%. NIS’ total exposure to the banks based on the results from the first quarter of 2013, amount to 441 million dollars. Commenting on the NIS’ results for the first quarter of 2013, CEO Kiril Kravchenko stated: "We are extremely cautious in our assessment of the results achieved in the first three months of this year. Unfortunately, negative external factors have had a serious impact on NIS’ business performance. As of today, we realize that maintaining the financial results of the Company from the previous year will be a very challenging task. Thus, our priorities are to continue with the introduction of new technologies and innovations throughout the year, an even higher efficiency of production and management processes, implementation of the investment program, despite the heavier external burden, as well as the development of client programs in sales of petroleum products and a bigger market share.