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February 2020
Boosting Performance February 2020 in a Changing Environment 1 - - PowerPoint PPT Presentation
Boosting Performance February 2020 in a Changing Environment 1 Disclaimer This presentation and its contents are confidential and may not be reproduced, redistributed, from official or third party sources. Third party industry publications,
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February 2020
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This presentation and its contents are confidential and may not be reproduced, redistributed, published or passed on to any person, directly or indirectly, in whole or in part, for any purpose. If this presentation has been received in error, it must be returned immediately to NJSC Naftogaz. (the “Company”). This presentation does not constitute or form part of any advertisement of securities, any offer or invitation to sell or issue or any solicitation of any offer to purchase or subscribe for, any securities
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1933. This presentation is directed solely at persons outside the United Kingdom, or within the United Kingdom, to (i) persons with professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 as amended (the “Order”), (ii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order and (iii) persons to whom an invitation or inducement to engage in investment activity (within the meaning of section 21 of the Financial Services and Markets Act 2000) in connection with the issue or sale of any securities of the Company or any member of its group may otherwise lawfully be communicated
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The presentation has been prepared using information available to the Company at the time of preparation of the presentation. External or other factors may have impacted on the business of the Company and the content of this presentation, since its preparation. In addition all relevant information about the Company may not be included in this presentation. The information in this presentation has not been independently verified. This presentation contains forward-looking statements, which include all statements other than statements of historical facts, including, without limitation, any statements preceded by, followed by or including the words “targets”, “believes”, “expects”, “aims”, “intends”, “may”, “anticipates”, “would”, “could” or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company’s control that could cause the Company’s actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company’s present and future business strategies and the environment in which it will operate in the future. These forward-looking statements speak only as at the date
disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any of such statements are based. Individual figures (including percentages) appearing in this presentation have been rounded according to standard business practice. Figures rounded in this manner may not necessarily add up to the totals contained in a given table. However, actual values, and not the figures rounded according to standard business practice, were used in calculating the percentages indicated in the text. Manufacturer target market (MIFID II product governance) is eligible counterparties and professional clients only (all distribution channels). No PRIIPs key information document (KID) has been prepared as not available to retail in EEA
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resolved in a positive way: the Big Achievements
projects to take advantage of new
management Well-positioned to benefit from changing environment Pulling levers to manage through gas price downturn Balancing act between growth and profitability
expenditure
activities
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share in total gas production in Ukraine
gas transit via Ukrainian GTS Gas imports by the group
contribution to Ukraine’s GDP Royalty paid by the group
UAH 32.2 bn
employees
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Macroeconomic stabilization supports Ukraine’s growth
Key macroeconomic indices in Ukraine
131 87.5 92.3 113 131 150 24.9 43.3 12.4 13.7 9.8 4.1 15.8 24.0 27.1 28.2 27.7 23.7
Inflation, % GDP growth, USD bn UAH/USD exchange rate
2019 2014 2015 2016 2017 2018 2019E 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018
NBU interest rate, %
2019 2016 2017 2018
22.0 15.5 12.5 16.0 18.0 18.0 16.5 11.0
Sources: Ukrstat, NBU, IMF
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Financial Highlights, UAH (mln) FY 2017 FY 2018 FY 2019 (1) Revenues
227,478 256,312 218,545
Operating profit
60,545 26,397 86,044
Adjusted EBITDA(2)
83,945 87,497 62,261
CAPEX
16,995 30,595 33,565
Total Assets
723,124 603,712 598,048
Cash position
23,093 14,224 78,016
Net Debt/Adjusted EBITDA
0.43 0.48 0.68 (3)
bcm
15.5 14.9 1.1 1.2 16.6 16.1 2018 2019 Ukrnafta Ukrgasvydobuvannya
Total
Gross Gas Production Volumes
(1) These are preliminary unaudited results of the Group’s operations for 2019. These results include Gas Transit and Gas Transmission results that will be shown as discontinued operations. Final audited results could differ significantly from the figures stated above. (2) Adjusted EBITDA is net profit/(loss) for the period, adjusted to exclude the effects of income tax expense/(benefit), finance costs, finance income, share of after-tax results of associates and joint- ventures, net foreign exchange loss, depreciation, depletion, and amortization, impairment of property, plant and equipment, provisions, and non-refundable VAT, arbitration income, and arbitration expense recognised as a result of the Gas Transit and Sales Arbitration (3) Net Debt/Adjusted EBITDA for 2019 is calculated as Total Debt less Cash (adjusted for cash received in December 2019 per results of transit arbitration).
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2017 2018 2019F 2017 2018 2019F 2017 2018 2019F
227.6
2017
Revenues 256.4
2018
218.5
2019F
83.9
2017
87.5
2018
62.3
2019F
Adjusted EBITDA CAPEX 17.0
2017
30.6
2018
33.6
2019F
Integrated gas
89.1 108.5 90.2 39.1 43.9 33.4 13.7 24.7 26.9
Gas transit and gas domestic transmission
Other segments and unallocated items
2017 2018 2019F 2017 2018 2019F 2017 2018 2019F 2017 2018 2019F 2017 2018 2019F 2017 2018 2019F
98.7 97.2 87.0 39.8 50.7 41.3 41.4 36.3 26.8 3.4 7.3 2.1 1.8 2.8 2.2 1.5 3.1 4.5
UAH bn
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billion cubic meters (bcm)
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Sources: Naftogaz and Ukrtransgaz
billion cubic meters (bcm)
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Gazprom’s gas exports, mcm/d
Sources: pipeline operators; TurkStream – estimated; eegas.com, Powernext
delivered just 9.72 bcm in January Gas price at TTF, EUR/Mwh
delivered 1 bcm+ to Turkey and Bulgaria
due to warm weather and withdrawals from UGS instead of pipeline exports
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Gas stocks in Ukraine’s UGS facilities, bcm
2 4 6 8 10 12 14 16 18 20 21
13.8 14.7
16.2
19.02.20
21.9
01.11.19
10.2
19.02.19
17.2
01.11.18
Oct Nov Dec Jan Feb Jan Feb Mar Apr May Jun Jul Aug Sep
utg.ua
Historic low Heating s season 2 2018/ 18/201 2019 Heating s season 2 2019/ 19/202 2020
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Compensation from Gazprom, incl. interest ─ compensation received through offset in February 2018 +over $80 bn of Gazprom’s claims to Naftogaz fully dismissed ─ compensation received in cash in December 2019 following attachment of Gazprom’s assets in EU
13 2020 2021 2022 2023 2024
65 40 40 40
bcm bcm bcm bcm bcm
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Transit deal: stable revenues, cost reduction, more security
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Pulling levers to manage through gas price downturn Lower operating expenditure Capital discipline Transformation activities
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(*) Total pledge of assets (gas in storage) and proceeds from future sales – USD 2.2 bln
Weighted Average Interest Rate Total Debt, $bn Debt Structure, February 2020
8% 7% 17%
0% 5% 10% 15% 20%
USD EUR UAH
Eurobonds
300 199 469 65 1041 500 300 199 134 65 371 1069 335 669 500 1504
2020 2021 2022 2023 2024 2025 2026
Debt Repayment 2020-26
State-owned banks Total, in $mn 1 2 3 FY 2016 FY 2017 FY 2018 FY 2019
Unsecured $1.5bn 60% Secured $1.0bn 40% 2.6 2.1 2.0 2.5
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Brownfield redevelopment Unconventional resources New exploration effort Naftogaz objectives Partnership considerations
brownfield reserves
profitability
efficiency and brownfield performance
record, operational efficiency, excellence, willingness to invest
Enhancement (PEC)
Ukraine's tight gas resources
track record, technological excellence, readiness and ability to scale in Ukraine
Risk Service Contracts (RSC)
development
increase through greenfield development
track record, significant capital exposure, readiness to scale up in Ukraine
Sharing Agreement (PSA) 1 2 3
Status
competition for two UGV deposit clusters in the Western region; participant qualification stage
greenfield sites, 2 of which will be developed by Vermilion (Canada); draft agreements submitted to CMU
documentation; looking for partners
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principles
Board Members are independent directors
corruption
Environmental Social Governance
resource management
reduction
& renewables
and reporting
procurement
environmental and health safety
maintenance
budgets through royalty
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Supervisory Board with a majority of independent members in place is yet to be fully empowered with authority to:
Clare Spottiswoode Chair, Independent director Bruno Lescoeur Independent director Amos Hochstein Independent director Ludo Van der Heyden Independent director Yuliia Kovaliv State representative Nataliya Boyko State representative
Supervisory Board Members
2/3 of the Board are independent members
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UAH bn
2019
14%
2014
74
41
110
57
139
82
121
69
48
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20 2015 2016 2017 2018 2019
+163
From the ‘black hole’ to the biggest payer of taxes and dividends for the state as the sole shareholder
POSITIVE EFFECT ON THE STATE BUDGET, UAH bn
state budget in 2019
Every seventh hryvnia was contributed by Naftogaz Taxes and dividends paid to the state budget by Naftogaz Direct subsidies provided by the government to low-income consumers Recapitalization of Naftogaz from the state budget
20 NAFTOGAZ GROUP ir@naftogaz.com +380 44 586 3537 www.naftogaz.com @NaftogazUkraine