CEO's Foreword

Kiril Tjurdenjev, NIS CEO, about Sustainable development

Dear friends, We live in a time of constant and rapid changes. The energy industry is no exception. On the contrary, we face many challenges – new technology, increasingly complex market demands and increased competition – are just a few of them.

NIS is determined to face contemporary challenges. In addition to internal organizational transformation that aims to make our business blocks even more efficient, we are determined to implement many other changes – from the introduction of new technology and innovative products to a new HR strategy that will allow our employees to be leaders in their areas of expertise, while being motivated and satisfied in the workplace.

Despite the dynamic transformation we have been implementing in recent years, there is a constant in our business that we will not give up on. It is a commitment to the principles of sustainable development, and we will follow this idea at moments when we face a situation unprecedented in recent history. The dramatic fall in oil prices coupled with the sharp slowdown in the global economy due to efforts to halt the spread of the new virus will surely have significant consequences not only for the energy industry but also for the global economy. In these circumstances, maintaining the health of our employees, external associates and customers, as well as maintaining the steady petroleum products market in Serbia and the countries in the region where NIS operates, remain our priorities. Also, we remain committed to maximizing business efficiency to maintain financial and operational performance at a level that will allow us to continue developing our company.

This year we are presenting the tenth NIS Sustainable Development Report, which continues to set and improve reporting standards in this realm in our country. Each year, we strive to make our business as transparent as possible and our economic progress and efforts to facilitate human resources development clear to all stakeholders, while at the same time being committed to protecting the environment, occupational safety and health and contributing to the development of the social community in Serbia.

Sustainable development for NIS means, above all, progress and responsibility. When we talk about progress, we mean ambitious investment that, in line with our 2025 Strategy, will lay the foundations for further company development and provide new values for our shareholders, employees and the communities in which we operate. In 2019 alone, our investment portKirill Tyurdenev Chief Executive Officer of NIS j.s.c. Novi Sad folio was 42.2 billion dinars worth, which is the largest investment volume of NIS since 2013. At the same time, we remain among the leading domestic investors and one of the drivers of the Serbian economy.

For us, progress also means continuing to carry out the company’s digital transformation with the goal of strengthening our competitiveness, improving communication with customers, doing our job more efficiently and safely, and improving employee training. In 2020, NIS will continue the digitalization at all levels and invest in the portfolio of digital projects, thus expecting long-term positive effects on EBITDA margin. An important stage of progress for us is to strengthen the competencies of our employees, because people at NIS they are at the heart of every long-term process, as the pillars of our future development. In 2019, in collaboration with external providers, 2,180 training courses were organized, attended by more than 4,000 employees. We allocated 257 million dinars for these purposes. The goal of NIS is to contribute simultaneously to the development of professional training of the wider community. That is why we have opened the doors of our Training Center in Elemir, one of the most up-to-date petroleum training institutions in the region, for high school students who can do hands-on learning there. We have also allowed 60 students of the final years of basic and master studies to spend 320 hours of professional practice in our company.

When it comes to responsibility, we first express it through a commitment that, in addition to economic viability, all of our business projects bring longterm environmental benefits and benefits for a wider community. In this way, the Bottom-of-the-Barrel project, which is being implemented at the Pančevo Oil Refinery, will provide larger quantities of the most valuable petroleum products and expand the product range, as well as improve the environmental protection, first of all, through the cessation of production of high-sulphur fuel oil. When we finish the construction of the thermal power plant in Pančevo, we will start generating electricity in a more environmentally friendly way – from gas.

In addition, we carry out a significant number of environmental projects each year. In 2019, we allocated 534 million dinars for them, and among the realized projects is the installation of Low NOx burners on process furnaces of unit series at the Pančevo refinery in order to contribute to the reduction of air emissions. We have continued to improve occupational safety of our employees and external contractors. Our efforts to improve HSE culture at all levels have yielded remarkable results, reducing the LTIF (Lost Time Injury Frequency) ratio by as much as 25 percent compared to 2018. In order to use resources rationally, we have implemented a program of measures to reduce energy consumption and increase energy efficiency in NIS, which resulted in savings in energy of 7,997 toe in 2019, and the value of savings is 336 million dinars.

We have also remained a trusted partner with the community and continued to make a strong contribution to its development. We have invested over 371 million dinars in socially responsible projects in 2019. We are especially proud of our project of cooperation with the local communities “Together for the Community”, where through our joint efforts we have contributed to the procurement of modern equipment and devices for 20 healthcare institutions across Serbia. Knowing that the future of each community is based on children, the focus of our social responsibility will continue to be on contributing to the development of young people and encouraging them to engage themselves in creating positive change and the overall well-being of the country in which we live.

The principles of sustainable development will continue to underpin all NIS business processes. Ten sustainable development reports that lie behind are not only a significant success of our company, but also an obligation to persist and further raise our standards in this area. Only in this way can we ensure the continued advancement of NIS, with a responsible attitude towards our shareholders, employees, the environment and the community whose development we want to make a decisive contribution to.