AB KLAIPĖDOS NAFTA

UNAUDITED FINANCIAL RESULTS FOR 2019

31st January 2020

CONTENT

➢ About the Company
➢ Highlights
➢ Financial results
➢ Investment overview
➢ Other information

ABOUT THE COMPANY

Our mission	Ensure reliable and effective supply of LNG and transhipment of oil products.
Our vision	A reliable operator of oil and LNG terminals that adds value through implemented projects and balanced expansion.

Our values	The Company in its activities is being led by these values:

OIL TERMINALS LNG TERMINALS

HIGHLIGHTS

KN HIGHLIGHTS Q4 2019

1 st October

AB Klaipėdos nafta (Company) with BNK (UK) Limited, which belongs to the leading exporter of Belarusian oil products - ZAT "Belaruskaja neftenaja kampanija", has signed an agreement on extension of a long-term contract on oil products handling.

9 th October

The Company is currently under negotiation with UTE GNA I Geração de Energia S.A., for the Operations and Maintenance Services Agreement in connection to GNA's LNG Terminal, located in Porto do Açu, one of the main port complexes in Brazil, which offers series logistics solutions for Brazilian oil and gas markets.

31st October

Extraordinary General Meeting of Shareholders of the Company adopted the following resolutions: Upon establishment of Brazilian SPV, to give a guarantee or guarantees in the name of Company to secure the fulfilment of obligations of Brazilian SPV to GNA under the Agreement.

31st October

The Board of the Company decided to acquire the liquefied natural gas storage unit "Independence" currently leased by the Company or another floating liquefied natural gas storage unit no later than December 31, 2024.

5 th November

The Supervisory Board of AB Klaipėdos nafta in the accordance with the 30 October 2019 opinion of Audit Committee of the Company approved the transaction with the related party regarding the granting of the Company's guarantee to a subsidiary of UAB SGD logistika in Brazil.

7 th November

The Board of AB Klaipėdos nafta adopted the decision as of 11 November 2019 to elect Darius Šilenskis as CEO of AB Klaipėdos nafta.

27th November

Extraordinary General Meeting of Shareholders of the Company adopted the following resolutions:

to cancel the pledge of all current and future amounts receivable pledged to UAB Hoegh LNG Klaipeda and to pledge these current and future amounts receivable by a senior pledge to the Ministry of Finance of the Republic of Lithuania for the state guarantee issued by the Republic of Lithuania.
To make an agreement for granting of a loan with the Nordic Investment Bank (NIB) on behalf of the Company, borrowing from the NIB up to EUR 135.5 million for a period up to 26 years, for reduction of the LNG terminal Security Component price.

29th November

The Company and Polish state-owned oil and gas company Polskie Górnictwo Naftowe i Gazownictwo S.A. (hereinafter – PGNiG) entered into an agreement regarding booking of the capacities of LNG reloading station for a period of 5 years. It is expected that PGNiG will commence commercial operations from April 2020.

20th December

The Company has concluded with the Ministry of Finance agreements regarding the guarantee fee and mortgage of property as well as the maximum mortgage.

20th December

The Company has concluded the Loan Agreement with the NIB regarding granting a loan of 134 million euros with the purpose to finance the rent payable by Company, for reduction of the LNG terminal Security Component price.

27th December

The Ministry of Finance of the Republic of Lithuania granted a state guarantee, securing obligations of the Company to the NIB regarding a loan of EUR 134 million. The Loan will be used to finance the balancing of the LNG terminal security additional component to the natural gas transmission price.

FINANCIAL RESULTS

CHANGES IN INTERNATIONAL FINANCIAL REPORTING STANDARTS (IFRS 16) – APPLICABLE SINCE 1 JANUARY 2019

Implementation of the standard significantly increase KN's leased assets and financial liabilities;
IFRS 16 application mostly effects KN's financial statement information related to:
- Land lease;
- Jetty lease;
- FSRU lease.
KN's EBITDA (non-IFRS measure) increases because above mentioned expenses for the lease are excluded from the activity costs;
Instead of lease costs, depreciation expenses of capitalised lease and interest expenses are recognised in statement of comprehensive income;
Due to the fact that FSRU lease contract denominated in a foreign currency (USD), KN have to remeasure this liability using exchange rate at each reporting date;
Any changes to the lease liability due to exchange rate changes are recognised in a statement of comprehensive income as foreign currency exchange gain or losses.
As a result of IFRS 16 change the amount of expenses recorded in statement of comprehensive income differs from payments made for the rent, therefore adjusted result and ratios are recalculated in order to have comparable numbers with previous year.

Sales revenues Net profit Net profit (adjusted) EBITDA EBITDA (adjusted)

FINANCIAL HIGHLIGHTS (UNAUDITED) BY QUARTERS, MEUR

Sales revenues Net profit Net profit (adjusted) EBITDA EBITDA (adjusted)

Revenues for Y 2018, tEUR

Total

* Adjusted result

Total

Revenues for Y 2019, tEUR

EBITDA for Y 2019, tEUR

Transshipment quantities in oil terminals, kt

MEUR	Y 2019	Y 2019*	Y 2018
Revenues	32.1	32.1	35.2
Net profit	10.4	10.2	9.9
EBITDA	18.0	17.3	18.5
	* Adjusted result

BUSINESS FACTORS:

During Y 2019 oil terminals reloaded 14.1% less oil products and generated 7 % less EBITDA compared to the same period in Y2018 mainly due to the following reasons:

Decrease in transshipment quantities due to incidents at the factories of Company's main clients, which resulted in lower production volumes in the Q1 of Y 2019, as well as Orlen Lietuva continuing to divert oil products via railroad to neighboring markets.
Contaminated oil incident in Druzhba pipeline in Q2 of Y 2019 that influenced the significant decrease of oil products handling.
Additional revenues have been generated from other activities, such as storage of oil products, loading and discharge of trucks.

LNG TERMINALS' RESULTS FOR Y 2019

Regasification and reloading in LNG terminals, tMWh

ASPECTS OF REGULATION:

The activity of LNG terminal is regulated and has the set price cap. The revenue and profit of LNG activity does not depend on re-gasification volume, therefore, there are differences between financial and regulated profit and revenues.

MEUR	Y 2019	Y 2019*	Y 2018
Revenues	71.1	71.1	64.5
Net profit	-1.7	3.7	2.5
EBITDA	48.8	9.5	9.3
	* Adjusted result

BUSINESS FACTORS:

The favorable situation in international gas markets and attracted 3 new commercial users of FSRU resulted in the increase of regasification and reloading volumes by 119.7%:

over 60 ship-to-ship operations done in 2019 (more than during entire period 2014-2018), from which 51 LNG carriers (Y 2018 – 10 LNG carriers) have been accepted;
2019 was a record year in terms of LNG imported through the FSRU: 19,6TWH (~2bcm) while in Y 2018 8,8 TWH. ~6 TWH (0,6 bcm) were transported towards LV border.
94.5 thousand MWh of LNG was reloaded to small-scale LNG carriers (64 thousand MWh in Y 2018).

During Y 2019 in the LNG small-scale terminal:

▪ 11 LNG carriers (in Y 2018 – 5 LNG carriers) have been accepted.

FINANCIAL FIGURES (UNAUDITED)

MEUR	Y 2019	Y 2019 (adjusted)	Y 2018	Change, MEUR	Change, %
Sales Revenues	104.1	104.1	100.0	4.1	4 %
Gross profit	20.1	17.9	17.3	0.6	3 %
EBITDA	66.2	26.2	26.9	-0.7	-3 %

Profit before taxation (EBIT)	6.6	12.4	12.1	0.3	3%
Net profit	8.1	13.2	11.6	1.6	14 %

Gross profit margin	19.3 %	17.2 %	17.3 %	-	-0.1 p.p.
EBIT margin	6.3 %	11.9 %	12.1 %	-	-0.2 p.p.
Net profit margin	7.8 %	12.7 %	11.6 %	-	1.1 p.p.

Return on equity (ROE)*	4.2 %	6.8 %	5.8 %	-	1.0 p.p.
Return on assets (ROA)*	2.0 %	4.5 %	3.9 %	-	0.6 p.p.
Profit per share (EPS), EUR/share	0.021	0.034	0.030	0.004	13 %
Average weighted number of shares	380,842,063	380,842,063	380,606,184	235,879	0.99 %

* The return on equity (ROE) and return on assets (ROA) were calculated by dividing the net profit (losses) of the last twelve months by the average of equity or asset values at the beginning and the end of the reference year.

BALANCE SHEET (UNAUDITED)

Assets, MEUR Equity and liabilities, MEUR

INVESTMENTS OVERVIEW

OTHER INFORMATION

SHAREHOLDERS AND SHARES

Since 2003 the shares of the Company are listed on NASDAQ OMX Vilnius stock exchange:

➢ ISIN code LT0000111650
➢ Abbreviation KNF1L

As at 31 December 2019, all the shares of the Company were owned by 2 646 shareholders (as at 31 December 2018 – 2 191).

	31 December	2019	31 December 2018
Shareholder's name (company's name, address, company code of registration)	Number owned shares (unit)	Part of authorized capital (%)	Number owned shares (unit)	Part of authorized capital (%)
The Republic of Lithuania, represented by the Ministry of Energy of the Republic of Lithuania	275,587,444	72.34	275,241,290	72.32
Concern AB Achemos grupe	39,650,338	10.41	39,605,234	10.41
Other (each owning less than 5%)	65,714,611	17.25	65,759,660	17.27
Total	380,952,393	100.00	380,606,184	100.00