INA Industrija nafte d d : 08.05.2023. – Status report INA Group 2022

INA GROUP

FY 2022

STATUS REPORT

Zagreb, March 2023

FY 2022 REPORT
INA GROUP CONSOLIDATED
Contents
Management discussion and analysis: INA Group financial results	3
2022 financial and operational highlights	3
Exploration and Production	4
Refining and Marketing, including Consumer Services and Retail	5
Main external parameters	6
Condensed Consolidated Statement of Profit or Loss	7
Condensed Consolidated Statement of Financial Position	8
Condensed Consolidated Cash Flow Statement (Indirect method)	9
INA Group Summary Segmental Results of Operations	10
Financial overview and notes	11
Special items	13
Financial instruments and risk management	13
Changes in equity	14
Related party transactions	14
Management representation	15

2

FY 2022 REPORT

INA GROUP CONSOLIDATED

Management discussion and analysis: INA Group financial results (IFRS)

HRK mln	2021	2022	%
Net sales revenues*	22,400	35,114	57
EBITDA (1)	3,315	5,068	53
EBITDA excl. special items (2)	3,403	5,068	49
CCS EBITDA excl. special items	3,029	5,481	81
Profit/(loss) from operations	1,469	3,230	120
Profit/(loss) from operations excl. special items (2)	1,557	3,408	119
CCS Profit/(loss) from operations excl. special items	1,183	3,821	223
Net (loss)/income from financial activities	94	(124)	n.a.
Profit/(loss) for the period attributable to Owners of the Company	1,285	1,895	47
Profit/(loss) for the period excl. special items (2)	1,373	2,684	96
Simplified Free Cash Flow (3)	1,431	2,753	92
Net operating cash flow	3,454	3,433	(1)
Earnings per share
Basic and diluted earnings/(loss) per share (HRK per share)	128.5	189.5	47
Net debt	1,759	683	(61)
Net gearing (%)	13.9	5.4
CAPEX total	1,598	2,728	71
Domestic	1,384	2,583	87
International	214	145	(32)
USD mln (4)	2021	2022	%
Net sales revenues*	3,522	4,904	39
EBITDA (1)	521	708	36
EBITDA excl. special items (2)	535	708	32
CCS EBITDA excl. special items	476	766	61
Profit/(loss) from operations	231	451	95
Profit/(loss) from operations excl. special items (2)	245	476	94
CCS Profit/(loss) from operations excl. special items	186	534	187
Net (loss)/income from financial activities	15	(17)	n.a.
Profit/(loss) for the period attributable to Owners of the Company	202	265	31
Profit/(loss) for the period excl. special items (2)	216	375	74
Simplified Free Cash Flow (3)	225	384	71
Net operating cash flow	543	479	(12)
Earnings per share
Basic and diluted earnings/(loss) per share (HRK per share)	20.3	26.9	33
Net debt	265	97	(63)
CAPEX total	251	381	52
Domestic	218	361	66
International	34	20	(40)

* Related to Revenue from contracts with customers

1. EBITDA = EBIT + Depreciation, amortization and impairment (net)
2. In 2021 result was negatively impacted by HRK (88) million of cost of provisions for Ivana D decommissioning, while in 2022 operating result was negatively impacted by impairment and reversal of impairment of asset in the amount of HRK (178) million and additionally net profit was impacted by extra profit tax in the amount of HRK (611) million
3. Simplified free cash flow = CCS EBITDA excluding special items - CAPEX
4. In converting HRK figures into US Dollars, the following average CNB (HNB) rates were used: as at 31 December 2021 - 6.6435 HRK/USD; as at 31 December 2022 - 7.0640 HRK/USD; for Q1 2021 - 6.2739 HRK/USD; for Q1 2022 - 6.7147 HRK/USD; for Q2 2021 - 6.2464 HRK/USD; for Q2 2022 - 7.0649 HRK/USD; for Q3 2021 - 6.3528 HRK/USD; for Q3 2022 - 7.4560 HRK/USD; for Q4 2021 - 6.5673 HRK/USD; for Q4 2022 - 7.4034 HRK/USD

2022 financial and operational highlights

Year 2022 was marked by the high economic uncertainty and large changes on the commodity market caused by war in Ukraine, that impacted the entire economy. Oil and gas industry throughout the world recorded strong results in such times, but also faced a variety of regulatory pressures, ranging from regulated prices in various business areas to extra taxes imposed.

INA Group CCS EBITDA excl. special items in 2022 amounted to around HRK 5.5 billion with net profit of HRK 1.9 billion. Net profit was impacted by one-off items in the total amount of HRK 789 million. Refining and Marketing incl. Consumer services and Retail segment result was highly impacted by regulatory limitations which, combined with the intensive investment cycle in the Rijeka Refinery Upgrade Project, resulted in around one billion HRK negative cash flow of the segment. Exploration and Production returned to the position of the main cash generator, reflecting improved price environment. EBITDA of Exploration and Production amounted to HRK 4.9 billion, limited from Q4 2022 by the regulated gas prices at 41 EUR/MWh, which is to stay in force until Q1 2024. Natural decline of production is moderated through increased production optimization activities, amounting to -4% on yearly level. Offshore drilling campaign continued throughout the year with results already visible in 6% higher production volumes offshore. 2022 was additionally marked by various price and margin regulations impacting operational result of both segments, with newly imposed extra profit tax burdeining cash generation.

Investment activities in 2022 were highest in the last ten years, with a 71% increase compared to 2021, total of HRK 2.7 billion, out of which 95% invested in Croatia. Rijeka Refinery Upgrade Project and the Offshore drilling campaign remain the biggest investments. Operating cash flow of the company remains stable on year level, despite the strong investment cycle and working capital needs consumes the improved results from operations.

3

FY 2022 REPORT

INA GROUP CONSOLIDATED

Exploration and Production*

Segment IFRS results (HRK mln)	2021	2022	%
Net sales revenues	3,877	6,725	73
EBITDA	2,427	4,892	102
EBITDA excl. special items **	2,515	4,892	95
Profit from operations	1,535	3,893	154
Profit from operations excl. special items **	1,623	4,071	151
Simplified Free Cash Flow***	1,907	4,097	115
CAPEX	608	795	31

• Exploration and Production refers to the Upstream of INA, d.d. and following subsidiary: Adriagas S.r.I. Milano
• In 2021, result was negatively impacted by HRK (88) million of cost of provisions for Ivana D decommissioning, while in 2022, operating result was negatively impacted by impairment and reversal of impairment of asset in the amount of HRK (178) million
• Simplified free cash flow = EBITDA excluding special items - CAPEX

Hydrocarbon production (boe/d)	2021	2022	%
Crude oil production (boe/d)	12,643	12,282	(3)
Croatia	10,390	10,108	(3)
Egypt	1,737	1,610	(7)
Angola	516	564	9
Natural gas production (boe/d)	13,503	12,859	(5)
Croatia - offshore	3,229	3,436	6
Croatia - onshore	10,274	9,423	(8)
Condensate (boe/d)	977	912	(7)
Total hydrocarbon production	27,123	26,053	(4)
Total average realized hydrocarbon price	2021	2022	%
Total average realized hydrocarbon price (USD/boe)*	64	103	60

* Calculated based on total sales revenue including natural gas internal selling price as well

2022 vs. 2021

Key drivers

• Higher prices impacted sales revenues positively since the strong effect of gas price regulation is visible only as of Q4 2022. Revenues are higher by HRK 2,605 million, overall gas sales revenue added HRK 1,670 million of positive effect, while 43% higher Brent price brought an additional HRK 780 million crude oil and condensate sales revenues with other products positive impact on revenues in the amount of HRK 155 million
• Production decreased by only 4%, compared to 8% decrease 2021 vs. 2020, which is a strong improvement considering the maturity of INA oil and gas fields. This is mainly an impact of an intensive investment campaign:
  o Successfully performed actions in the scope of Production optimization project and
  o Positive effect of putting into production two new Offshore wells (Ika B & Marica D) which almost offset o Natural decline and higher water cut on major gas fields on Deep Podravina area
• International crude oil production:

1. Egypt: natural decline and lower well performance at all concessions o Angola: better well performance on Block 3/05

Capital expenditures

2022 (HRK mln)	Croatia	Egypt	Angola
Exploration	1	16	-
Development	560	90	15
Other	113	-	-
TOTAL	674	106	15

Higher CAPEX level mainly as a result of Croatia Offshore drilling campaign and onshore development activities. Main activities during 2022 were related to:

Croatia Exploration:

1. Drava-03:Permitting and documentation preparation for drilling finished; exploration drilling postponed to 2023 o SZH-01: Attribute analysis, geochronological study and economic evaluation finished

Croatia Development Offshore:

1. Ika B-1 R and Marica D Dir well production started, authority technical inspection finished and use permit obtained

1. Drilling and well testing of wells Ilena-2, Ida D-1 ver, Ira-1 dir and Ida D-2 ver finished, economic evaluation underway Croatia Development Onshore:
   o In total 62 workovers were performed
   o Zalata-Dravica:Dravica-3 well is negative. Preparation of PreFEED study, settlement of property legal relations on gas pipeline route and issuance of location permits ongoing
   Egypt
   o East Damanhur: ED-2X exploration well was drilled as gas discovery
   o Egypt, North Bahariya concession: 9 development wells drilled (5 producers put in production and 4 water injectors)
   o East Yidma: Divestment process for East Yidma has been finalized
   Angola:
   o Divestment of Angolan assets: SPA with Afentra Angola, Ltd. was signed; in December 2022 transfer of INA`s Participating Interest (PI) on blocks 3/05 and 3/05a has been approved by the Minister of Mineral resources

4

FY 2022 REPORT

INA GROUP CONSOLIDATED

Refining and Marketing, including Consumer Services and Retail*

Segment IFRS results (HRK mln)	2021	2022	%
Net sales revenues	21,912	34,419	57
EBITDA	1,253	360	(71)
EBITDA excl. special items**	1,253	360	(71)
CCS EBITDA excl. special items**	879	773	(12)
Profit/(loss) from operations	523	(331)	n.a.
Profit/(loss) from operations excl. special items**	523	(331)	n.a.
CCS Profit/(loss) from operations	149	82	(45)
Simplified Free Cash Flow***	(25)	(986)	3,831
CAPEX	904	1,759	95

• Refers to Refining and Marketing including Consumer Services and Retail INA d.d. and the following subsidiaries: INA Maziva d.o.o., INA Slovenija d.o.o., HoldINA d.o.o. Sarajevo, INA Crna Gora d.o.o., INA d.o.o. Beograd, INA Kosovo d.o.o., Energopetrol d.d., INA MALOPRODAJNI SERVISI d.o.o., Croplin d.o.o.
• In 2021 and 2022 the result was not impacted by special items
• Simplified free cash flow = CCS EBITDA excluding special items - CAPEX

Refining processing (kt)	2021	2022	%
Domestic crude oil	95	288	203
Imported crude oil	1,761	1,474	(16)
Other feedstock	732	603	(18)
Total refining throughput	2,588	2,365	(9)
Refining production (kt)
LPG*	153	128	(16)
Naphtha	63	90	43
Gasoline	601	503	(16)
Kerosene	80	151	89
Diesel	1,032	939	(9)
Heating oil	70	19	(72)
Fuel oil	267	236	(12)
Other products**	74	66	(12)
Total	2,340	2,132	(9)
Refining loss	27	31	15
Own consumption	221	201	(9)
Total refining production	2,588	2,365	(9)
Refined product sales by country (kt)
Croatia	2,009	2,295	14
B&H	587	595	1
Slovenia	61	52	(14)
Italy	66	17	(74)
Other markets	1,468	769	(48)
Total	4,191	3,729	(11)
Refined product sales by product (kt)
LPG*	237	220	(7)
Naphtha	63	91	44
Gasoline	724	642	(11)
Kerosene	102	186	83
Diesel	1,808	1,904	5
Heating oil	113	157	39
Fuel oil	267	217	(19)
Bitumen	70	69	(2)
Other ***	807	244	(70)
Total	4,191	3,729	(11)
o/w Consumer services and Retail segment sales	1,060	1,173	11
Total natural gas sales (mln m3)	590	745	26
Total number of service stations	504	506	0

Note: Refined product sales by country and product were adjusted for 2021, as previously announced wholesale quantities also partially included retail values. In addition, adjustment was made by product group for the purpose of identical classification with refinery processing.

*LPG+propylene

**Other products = Benzene concentrate, liquid sulphur, coke, motor oils, industrial lubricants, other intermediates

***Other = Benzene concentrate, vacuum gas oil, liquid sulphur, coke, crude oil, motor oils, industrial lubricants

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