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

INA, D.D.

FY 2022

STATUS REPORT

Zagreb, March 2023

2022 REPORT

INA, D.D. NON-CONSOLIDATED

Content
Management discussion and analysis	3
INA, d.d. financial results	3
Financial and operational highlights	3
Condensed non-consolidated Statement of Profit or Loss	4
Condensed non-consolidated Statement of Financial Position	5
Condensed non-consolidated Cash Flow Statement	6
INA, d.d. Summary Segmental Results of Operations	7
Financial overview and notes	8
Special items	9
Changes in equity	10
Related party transactions	10
Management representation	12

2

2022 REPORT

INA, D.D. NON-CONSOLIDATED

Management discussion and analysis

INA, d.d. financial results (IFRS)

HRK mln	2021	2022	%
Net sales revenues*	21,691	34,349	58
EBITDA (1)	3,154	4,897	55
EBITDA excl. special items (2)	3,247	4,897	51
Profit/(loss) from operations	1,386	3,071	122
Profit/(loss) from operations excl. special items (2)	1,479	3,249	120
Net (loss)/income from financial activities	112	(35)	n.a.
Profit/(loss) for the period attributable to Owners of the Company	1,246	1,837	47
Profit/(loss) for the period excl. special items (2)	1,339	2,626	96
Net operating cash flow	3,194	3,366	5
Earnings per share
Basic and diluted earnings/(loss) per share (HRK per share)	124.6	183.7	47
Net debt	1,740	850	(51)
Net gearing (%)	12.8	6.2
CAPEX total	1,557	2,672	72
USD mln (4)	2021	2022	%
Net sales revenues*	3,405	4,770	40
EBITDA (1)	494	686	39
EBITDA excl. special items (2)	509	686	35
Profit/(loss) from operations	217	431	98
Profit/(loss) from operations excl. special items (2)	232	455	97
Net (loss)/income from financial activities	18	(5)	n.a.
Profit/(loss) for the period attributable to Owners of the Company	196	262	33
Profit/(loss) for the period excl. special items (2)	210	368	75
Net operating cash flow	497	450	(9)
Earnings per share
Basic and diluted earnings/(loss) per share (HRK per share)	19.6	26.2	33
Net debt	262	120	(54)
CAPEX total	243	375	54

* Related to Revenue from contracts with customers

1. EBITDA = EBIT + Depreciation, amortization and impairment (net)
2. In 2021 result was negatively impacted by HRK (93) 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. 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

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, d.d. EBITDA excl. special items in 2022 amounted to around HRK 4.9 billion with net profit of HRK 1.8 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 burdening cash generation.

Investment activities in 2022 were highest in the last ten years, with a 72% 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.

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2022 REPORT

INA, D.D. NON-CONSOLIDATED

Condensed non-consolidated Statement of Profit or Loss

For the period ended 31 December 2021 and 2022 (in HRK millions)

	2021		2022		%
Revenue from contracts with customers	21,691		34,349		58
Other operating income	261		336		29
Total operating income	21,952		34,685		58
Changes in inventories of finished products and work in progress	166		390		135
Costs of raw materials and consumables	(8,952)		(13,969)		56
Depreciation, amortisation and impairment (net)	(1,768)		(1,826)		3
Other material costs	(2,101)		(2,396)		14
Service costs	(767)		(827)		8
Staff costs	(825)		(831)		1
Costs of other goods sold	(6,005)		(11,694)		95
Impairment charges (net)	(36)		(99)		175
Provision for charges and risks (net)	(320)		(419)		31
Capitalised value of own performance	42		57		36
Operating expenses	(20,566)		(31,614)		54
Profit/(Loss) from operations	1,386		3,071		122
Finance income	354		319		(10)
Finance costs	(242)		(354)		46
Net gain/(loss) from financial activities	112		(35)		n.a.
Share of net profit/(loss) of joint ventures accounted for using	(9)		(38)		322
the equity method
Profit/(Loss) before tax	1,489		2,998		101
Income tax gain/(expense)	(243)		(1,161)		378
Profit/(Loss) for the period	1,246		1,837		47
Earnings per share
Basic and diluted earnings/(loss) per share (HRK per share)	124.6		183.7		47

Note: Restatement of comparable previous periods was made - see on page 9

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2022 REPORT

INA, D.D. NON-CONSOLIDATED

Condensed non-consolidated Statement of Financial Position

At 31 December 2021 and 2022 (in HRK millions)

	31 December 2021	31 December 2022	%
Assets
Non-current assets
Intangible assets	412	463	12
Property, plant and equipment	9,998	10,808	8
Investment property	76	73	(4)
Right-of-use assets	438	388	(11)
Investment in subsidiaries	1,826	1,828	0
Investments in associates and joint venture	245	18	(93)
Other investments	7	5	(29)
Deferred tax assets	797	831	4
Long-term marketable securities	43	17	(60)
Other non-current financial assets	1,176	1,436	22
Non-current financial assets	756	833	10
Other non-current assets	297	202	(32)
Total non-current assets	16,071	16,902	5
Current assets
Inventories	1,913	2,692	41
Intercompany receivables	229	301	31
Trade receivables, net	1,749	2,437	39
Other current financial assets	1,364	54	(96)
Other current assets	186	129	(31)
Derivative financial instruments	11	38	245
Marketable securities	17	122	618
Cash and cash equivalents	1,295	1,640	27
Current assets	6,764	7,413	10
Assets held for sale	-	334	n.a.
Total current assets	6,764	7,747	15
Total assets	22,835	24,649	8
Equity and liabilities
Capital and reserves
Share capital	9,000	9,000	(0)
Legal reserves	199	250	26
Fair value reserves	363	437	20
Other reserves	1,211	1,218	1
(Accumulated losses)/Retained earnings	1,053	1,858	76
Total equity	11,826	12,763	8
Non-current liabilities
Long-term debts	2,112	2,128	1
Long-term lease liabilities	344	301	(13)
Other non-current liabilities	28	24	(14)
Employee benefits obligation	21	13	(38)
Provisions	3,841	3,665	(5)
Total non-current liabilities	6,346	6,131	(3)
Current liabilities
Bank loans and current portion of long-term debts	940	484	(48)
Current portion of long-term lease liabilities	101	95	(6)
Intercompany payables	281	243	(14)
Other current financial liabilities	1	1	-
Trade payables	1,857	2,188	18
Taxes and contributions	809	671	(17)
Income tax payables	-	1,201	n.a.
Other current liabilities	366	328	(10)
Derivative financial instruments	64	21	(67)
Employee benefits obligation	1	3	200
Provisions	243	479	97
Current liabilities	4,663	5,714	23
Liabilities directly associated with assets classified held for sale	-	41	n.a.
Total current liabilities	4,663	5,755	23
Total liabilities	11,009	11,886	8
Total equity and liabilities	22,835	24,649	8

Note: Restatement of comparable previous periods was made - see on page 9

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