KN Energies AB

Earnings Release • Jan 31, 2018

AB KLAIPĖDOS NAFTA UNAUDITED FINANCIAL RESULTS OF 2017

31st January 2018

CONTENT

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

ABOUT THE COMPANY

MISSION, VISION, VALUES

HIGHLIGHTS

Loading of 1st LNG truck

•17 October. During LNG reloading station commissioning works, the first LNG truck has been successfully loaded. The first truck of DUON LNG was accepted and filled with LNG.

Approved reconstruction of jetties

•6 December. An extraordinary general meeting of shareholders of the Company approved the investment project of No.1 and No.2 jetties reconstructrion with budget of EUR 16.5 mln.

Court decision for a favor of KN

•27 December. Klaipėda Regional Court has passed a conviction in a criminal case, according to which the civil claim of AB Klaipėdos nafta is satisfied with EUR 20.9 mln. The adjudged amount is not reflected in the financial statements.

7

FINANCIAL RESULTS

37.1

22.0 13.8

Revenue Net profit EBITDA

17.0

28.4 31.3

STRUCTURE OF SALES REVENUE AND EBITDA BASED ON OPERATING SEGMENTS (UNAUDITED)

Revenue of 2016, MEUR

EBITDA of 2016, MEUR

Revenue of 2017, MEUR

18.9

12.6

Total 31.3

1.4 -1.6

KLAIPĖDA OIL TERMINAL RESULTS OF 2017

Transhipment, thousand tons

Tank trucks loading

Transit (Russia, Belorussia oil products)

Export (Orlen Lietuva, AB)

MEUR	2016	2017
Revenue	34.0	35.5
Net profit	9.9	11.6
EBITDA	17.4	18.9

BUSINESS FACTORS:

In 2017 transhipment volumes remained similar, however in this year the Company has faced with challenges:

• Due to geopolitical reasons in the beginning of the year Belorussia refineries suffered reduction of crude oil supply and subsequently delivered less fuel oil cargos. However, in the middle of the year transhipment flows had recovered and the total transhipment of the last quarter of 2017 was 27.3% higher compared to the same period of 2016.
• AB ORLEN Lietuva quantities slightly decreased in connection with refinery maintenance performed in March-May 2017;
• Transhipment into the tank trucks increased even by 61%. The increase was enabled after modernization of the Company's tank truck loading system finished in the beginning of the year.

SUBAČIUS OIL TERMINAL RESULTS OF 2017

Average storage volume, thousand tons

MEUR	2016	2017
Revenue	2.8	2.4
Net profit	0.8	0.5
EBITDA	1.8	1.4

BUSINESS FACTORS:

The storage quantities of oil products has reduced by 10.5% in 2017 (comparing to 2016) that accordingly affected revenues and net profit. Storage volumes were affected by the decreased long term storage demand in commercial oil products markets.

Transhipment volume amounted to 98.9 thousand tons in 2017 (2016 – 93.9 thousand tons).

LNG TERMINAL RESULTS OF 2017

Regasification and reloading, thousand MWh

In 2017 almost half of the total amount of Lithuanian gas consumption was regasified through the KN LNG terminal.

*Regulated preliminary LNG profit is estimated to EUR 3.2 million. The additionally received amount of revenue (or lack of income) will be dedicated for compensation of the LNG terminal necessarily expenses for the coming financial periods.

MEUR	2016	2017
Revenue	67.0	68.2
Net profit	3.5	6.5
EBITDA	9.7	12.6

BUSINESS FACTORS:

During 2017 fifteen LNG carriers have been accepted, which have delivered 839.8 thousand tons in total of LNG. The gas was supplied to Lithuania from 4 countries.

In 2017 LNG reloading service from FSRU was held for the first time. In 2017 total 6 reloading operations (285 thousand MWh of LNG) were made.

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.

Equity and liabilities, MEUR

Total equity Financial liabilities Other non-current and current liabilities

FINANCIAL FIGURES (UNAUDITED)

MEUR	2016	2017	Change, %
Sales Revenue	103.8	106.5	2.6%
Gross profit	20.8	23.7	14.0%
EBITDA	28.4	31.3	10.3%
Profit before taxation (EBIT)	15.3	17.5	14.4%
Net profit	13.8	17.0	23.2%
Gross profit margin	20.0%	22.3%
EBITDA margin	27.4%	29.4%
Net profit margin	13.3%	16.0%
Return on equity (ROE)*	7.1%	8.7%
Return on assets (ROA)*	5.7%	6.3%
Profit per share (EPS), EUR/share	0.037	0.045
Average number of shares	380,606,184	380,606,184	-

* 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.

INVESTMENT OVERVIEW

* LFO – Light Oil Products

JANUARY,

2017

This project is partly financed by EU funds.

DECEMBER, 2017

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 31th December 2017, all the shares of the Company were owned by 2,178 shareholders (as at 31st December 2016 – 1,993).

Shareholder's name (company's name, address, company code of registration)	31th	of December 2017		31st of December 2016
	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	275,241,290	72.32	275,241,290	72.32
Concern AB Achemos grupe	39,113,150	10.28	38,975,150	10.24
Other (each owning less than 5%)	66,251,744	17.40	66,389,744	17.44
Total	380,606,184	100.00	380,606,184	100.00

25 October, 2017. Selection of two independent members of the Supervisory Board was announced. Looking for one independent member from financial sector and one from strategic planning and management.

MANAGEMENT OF THE COMPANY

Mindaugas Jusius Chief Executive Officer

Marius Pulkauninkas Chief Financial Officer

Genadijus Andrejevas Technical Director

Darius Šilenskis Oil Business Director

Rytis Valūnas Chief Administrative Officer and General Counsel

Tadas Matulionis LNG Business Director

THANK YOU

AB Klaipėdos nafta

Registered address - Burių str. 19, LT-91003; Klaipėda Lithuania

Tel. +370 46 391772

Fax +370 46 311399

www.kn.lt