The Supervisory Board Discussed the Report on the Operations of the Petrol Group and Petrol d.d., Ljubljana in the first six months of 2020

Ljubljana, 27th August 2020 – At its 47th meeting held today, the Supervisory Board of Petrol d.d., Ljubljana was briefed on the Report on the operations of the Petrol Group and Petrol d.d., Ljubljana in the first six months of 2020.

In January and February 2020, the operations in all of the Petrol Group's markets continued without disruption and according to plan. In March 2020, however, the business environment deteriorated considerably with the start of the pandemic. In order to contain the pandemic, countries imposed restrictions on movement between countries, as well as local communities, which led to significant declines in sales of petroleum products due to traffic restrictions. Since the beginning of the outbreak, the companies within the Petrol Group have been monitoring the situation and implementing appropriate measures to curb the spread of the virus and ensure an uninterrupted supply of energy products. The Petrol Group strictly follows government instructions in preparing and implementing measures in all its markets. The primary concern is oriented towards measures to protect the health of Petrol's customers and employees. Energy product supply is carried out smoothly; all points of sale are operating.

In the first half of 2020, the Petrol Group realized an adjusted gross profit of EUR 178.8 million, which is 18% less than in the same period in 2019 due to lower sales of petroleum products, resulting from measures taken to restrict movement adopted by countries in order to curb the pandemic and the decline in economic activity caused by the pandemic. The EBITDA amounted to EUR 64.3 million, which is 22% less than in the first half of 2019 and comparatively better than the main competitors in the region. The Petrol Group generated 36% of the EBITDA from the sale of petroleum products, 20% from the sale of merchandise and related services, 21% from the sale of energy and environmental solutions, 19% through the sale of other energy products (natural gas, electricity, LPG), and 4% from the production of electricity from renewable sources. The Petrol Group generated a net profit of EUR 20.6 million, which is 49% less than in the same period in 2019.

In the first half of 2020, the Petrol Group sold 1.5 million tonnes of petroleum products, which is 18% less than in the first half of 2019 (mainly due to lower retail sales resulting from the pandemic).The sales of liquefied petroleum gas amounted to 76.6 thousand tonnes, which is 15% less than in the same period in 2019. In the first half of 2020, the sales of electricity amounted to 10.8 TWh and the sales of natural gas amounted to 12.3 TWh. In the first half of 2020, the Petrol Group generated revenue of EUR 230.5 million from the sale of merchandise, which is 3% less than in the same period in 2019. At the end of June 2020, the Petrol Group managed over 510 service stations, of which 318 were in Slovenia, 110 in Croatia, 42 in Bosnia and Herzegovina, 15 in Serbia, 15 in Montenegro, and 10 in Kosovo.

The Petrol Group responded to the crisis caused by the epidemic in a comprehensive manner. Initially, activities were focused on ensuring the continuity of operations in the changed circumstances and on identifying and managing risks. Further activities, however, have a long-term focus so that the Petrol Group can operate without interruption in a very different business environment.

Because a natural disaster of such magnitude and the resulting economic crisis could not have been predicted, the Petrol Group will not meet its planned operating targets for the current year. In June 2020, the Petrol Group set out to develop a new operating strategy of the Petrol Group for the 2021-2025 period, which is expected to be adopted in the last quarter of 2020.

The measures aimed at curbing the epidemic taken by the countries in which the Petrol Group operates, resulted in a significant downturn in economic activity and limited movement, which has a highly negative impact on the Petrol Group's sales. Because it is uncertain how the situation will develop, the Petrol Group prepared different scenarios for operations in 2020. Considering the results achieved so far and current developments, the 2020 operating performance is expected to correspond to the scenarios developed at the onset of the pandemic. The scenarios considered various cases ranging from the possibility that restrictions on movement within countries would be lifted in May, but certain restrictions on transit traffic and tourism still remain and have a major impact especially on operations in the summer months, to the possibility that the last quarter of 2020 will again see major restrictions on movement and further deterioration in business conditions as a result of this. We thus expected that the volume of petroleum products sold in 2020 could reach between 83 and 86 percent of the 2019 figure (without the sales to the Agency of the Republic of Slovenia for Commodity Reserves). Given the estimated decrease in sales in the coming months, the streamlining of costs and the adjusted volume of investments, the Petrol Group's EBITDA for 2020 could amount to between 73 and 79 percent of the 2019 EBITDA, or to between 77 and 84 percent of the 2019 EBITDA if one-off events are not taken into account (the 2019 EBITDA does not include the reversal of provisions for lawsuits and penalties relating to procedures that ended in 2019, the cumulative effect of which totals EUR 11.1 million).

The Supervisory Board of Petrol d.d., Ljubljana, is of the opinion that the Management Board of Petrol d.d., Ljubljana, has responded appropriately to the pandemic and has control of the situation under the given circumstances as the company performed more successfully than its main competitors in the region in terms of the dynamics of the EBITDA indicator, while maintaining the BBB- rating with a stable outlook.

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mag. Barbara Jama Živalič

Head of Investor Relations