KN Energies AB

Earnings Release • Apr 26, 2016

SC Klaipėdos nafta audited results for the year 2015

26 April 2016

Company name	• Stock Company Klaipedos nafta
Company code	• 110648893
1. Authorized share capital	3. 2. • EUR 110,231,170
Registered address	• Buriu str.19, P.O. Box 81, 91003 Klaipeda-C, Lithuania
Mailing address	• Baltijos ave. 40, LT-93239, Klaipeda, Lithuania
Telephone	• +370 46 391772
4. Fax	5. • +370 46 311399
E-mail	• info@oil.lt
Website	• www.oil.lt, www.sgd.lt
Legal – organisational form	• Stock company
Date and place of registration	• 27 September 1994, State Enterprise Centre of Registers

Mission, vision and values

General strategic objectives

General strategic objectives

Strategic objectives for Company's activities
LNG terminal	LNG small scale	Long term fuel storage facilities
Provide an alternative sourse for the supply of natural gas to Lithuania	Create small scale LNG infrastructure	Proper storage of national reserve of oil products
Assure minimal exploitation expence for the consumers of
Develop services related to the activities of LNG terminal	Dvelop regional LNG market	Increase long term storage capacity and volume of the activity
	natural gas

The significant events of the 4 th quarter of 2015

• 1. 2. 3. 18 November 2015. The Company and the port of Helsingborg (Helsingborg, Sweden) have signed partnership agreement regarding cooperation in the project HEKLA – Helsingborg & Klaipeda LNG Infrastructure Facility Deployment. According to this agreement the Company acquires the right to use the financial support of EUR 6 million of the Connecting Europe Facility (CEF, part of the EU financing program) approved by Coordination Committee for the construction of SC Klaipedos Nafta Liquefied natural gas onshore reloading station.

• 4. 5. 20 November 2015. The Board of AB Klaipėdos Nafta took a decision to perform activities of operating a liquefied natural gas bunkering carrier and to establish UAB SGD logistika, a wholly owned subsidiary of AB Klaipėdos Nafta, for performance of such activities.

• 24 November 2015. UAB "SGD logistika", which is a wholly-owned subsidiary of AB Klaipėdos Nafta, signed a joint venture agreement with partner Bomin Linde LNG GmbH & Co. KG on joint performance of the activities of operating the LNG bunkering carrier.

• 30 November 2015. The National Commission for Energy Control and Prices implementing the changes of the Liquified natural gas terminal law, made decisions on adjusting LNG terminal supplement tariff for 2016 comprising 510,16 Eur/(MWh/day/year), in which the regasification tarrif ceiling fixed part (used for the Companys' LNG terminal financing) comprise 259,84 Eur /(MWh/day/year).
• 9 December 2015. The Company has decreased the amount of the Credit Agreement which was signed on 27 November 2014 with the Nordic Investment Bank (hereinafter, the "NIB") from 34.8 EUR thousand to 22.0 EUR thousand and prolonged the availability period to use the credit until 31 December 2016.

Company's Oil terminal characteristics

Railway

2 tracks for light oil products - LFO (total 60 tank-cars)

2 tracks for heavy oil products - HFO (total 64 tank-cars)

One of the track is universal: can load both HFO and LFO

Two four-track railway trestles provide a possibility to discharge or load 124 tankcars simultaneously.

Storage tank farm

Total 28 tanks

450 cub. m thousand total volume (plus in Subacius FS 340 cub. m thousand )

Biological Waste Water Treatment Facilities

Waste water collected and treated annually up to 400 cub. m thousand (160 m³ /h)

2 Jetties

Depth: 14 m Length: 270 each Harbour entrance depth: 14.5 m Tanker batch: up to 100,000 t with 12.5 m allowable draught

Auto tankers loading system

Service to import gasoline and diesel by tankers for the Lithuanian market needs 4 loading points at the same time

Company's LNG terminal infrastructure

LNG terminal: the first LNG terminal in the Baltic states, which comprise of the LNG floating storage and regasification unit – FSRU (170,000 thousand m³ ), jetty (450 m length), pipeline (18 km) and gas metering station. LNG to the terminal are delivered by the vessels - LNG carriers.

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Oil terminal transhipment in 2013 – 2015 years

10

Key operating figures

In EUR thousand unless otherwise stated	2015	2014	Change, +/-	Change in per cent
Sales revenues	109,702	39,775	69,927	175.8%
Gross profit	29,123	13,150	15,973	121.5%
EBITDA	37,136	16,628	20,508	123.3%
EBIT	24,362	9,091	15,271	168.0%
EBITDA margin	33.9%	41.8%	-7.9%	-
EBIT margin	22.2%	22.9%	-0.7%	-
Financial and investment activities result	-482	-285	-197	69.1%
Profit before taxation	24,104	9,068	15,036	165.8%
Net profit	22,036	9,257	12,779	138.0%
Net profit margin	20.1%	23.3%	-3.2%	-13.7%
Transhipment of oil products by type (Oil terminal and Subacius fuel base), in thousand tones:	6,461	5,587	874	15.6%
HFO – heavy oil products, in thousand tones	3,175	3,335	-160	-4.8%
LFO – light oil products, in thousand tones	3,286	2,252	1,034	45.9%

The Company's sales revenues of 2015 has risen 2.8 times and comprised EUR 109,702 thousand.

The Company's net profit of 2015 has increased 2.4 times and comprised EUR 22,104 thousand.

The revenues and profit of the Company has significantly increased because of:

• LNG terminal results (the activity started in the end of 2014);
• The increased transhipment volume and profitability of oil terminal activity.

Sales revenues

Total 2015 sales revenue of the Company increased by 175.8% to EUR 109.7 million.

• LNG terminal 2015 sales revenue comprise EUR 69.9 million or 63.7% of total sales revenue of the Company.
• Oil terminal sales revenue increased by 17.1% or EUR 5.4 million in relation with the increased transhipment volume (+13.3%).

Key financial ratios

Assets, thousand EUR

Other non-current and current liabilities

Financial liabilities

Total equity

Equity and liabilities, thousand EUR

• times) as the Security Supplement (to the gas transmission price) receivable (total EUR 24.8 million) has inceased significantly.
• Assets turnover ratio - 0.48 (31-12-2014 0.19).
• Total assets has increased by 7.6% and comprise EUR 238,787 thousand.
• Total equity amounted to 82.4 % of total assets (31-12-2015).
• Non-current liabilities amounted EUR 31.4 million, including European Investment Bank loan comprising EUR 29.69 million.
• Debt to assets ratio 0.19 (31-12-2014 0.19).
• Gross liquidity ratio 3.45.
• Other liabilities comprise trade payables EUR 7.0 million, staff related payables comprise EUR 2.1 million.

	2015 2014		Change, +/-	Change in per cent
Average number of employees in categories	367	374	-7	-1.9%
Managers 1)	36	34	2	5.9%
Specialists	140	130	10	7.7%
Worker	191	210	-19	-9.1%
Average gross monthly salary	1,332	1,250	82	6.6%
Managers 1)	3,513	3,423	90	2.6%
Specialists	1,611	1,587	24	1.5%
Worker	1,127	1,041	86	8.3%

1) The Company's managers include: General Manager, Deputy Manager, Heads of Departments and their deputies, Heads of Divisions.

The main directions of the investments of the Company:

• To increase the oil terminal's flexibility in accepting different types of oil products;
• To ensure the compliance with environmental and fire safety requirements;
• The implementation of the LNGT Project and assurance of the smooth activity of the terminal.
• Construction of the onshore LNG reloading station

Total investments into the noncurrent assets in 2015 comprise EUR 6.8 million. The major part of investments were allocated to the finalizing works of the construction of the LNG terminal infrastructure.

In 2015 approved the most significant investment projects

• In the extraordinary shareholders meeting held on the 25th of August, 2015 the decisions regarding new investments approval were adopted:
• A. To implement the LNG on-shore reloading station project which value is Eur 27.17 million; for more information about the project see below;
• B. To implement the light petroleum products reservoirs expansion project with a value of Eur 9.55 million. This project include construction of the additional reservoirs with the total capacity of 20.6 thousand m3 and technological expansion of the auto tankers loading system. This investments shall give a competitive advantage for the oil terminal of the Company.

LNG onshore reloading station project

Upon evaluating the market changes, relating to the LNG consumption possibilities and having in mind the necessity to utilize the LNG terminal's potential, SC Klaipėdos Nafta commenced the development of a new infrastructure project – an LNG distribution station, which is planned to be constructed on the territory of the Company's oil terminal. The planned maximum capacity of the LNG distribution station is about 5,000 m³ .

On 12 February 2016 the EPC contract was signed with the consortium, consisting of Lithuanian – German company PPS Pipeline Systems GmbH and Czech company Chart Ferox, a.s. The EPC contact will enter into effect after approval by the Board and the General Meeting of Shareholders of the Company.

It is planned that the partial operation of the distribution station will commence in 15 months after the date of entering into effect of the contract and all the works will be completed in autumn of 2017. The contract foresees the possibility to extend it for the time period up to 14 months (up to 12 months due to the territorial planning procedures, which are likely to protract and 2 months – due to other reasons).

Achievements and awards

On the 22th of the January 2015 in the annual Baltic Market Awards (BMA), organized by the Nasdaq, Klaipėdos nafta became the winner in the category "The Most Visible Improvement over the Year" and was invited to ring the Opening Bell at Nasdaq Market Site in Times Square, New York by Bob Greifeld, CEO of Nasdaq.

On the 28th of January, 2015 At the 8th annual European Gas Conference 2015, in Vienna, Klaipedos nafta won the Project of the Year award for the implementation of the Liquefied Natural Gas (LNG) Terminal project. Company was one of four nominees among such well-known companies like Shell and Total Gas & Power.

• During the Transport Week, one of the most important transport events in Central and Eastern Europe, took place on March 17-19th 2015 in Gdańsk, Poland, the Company was awarded the Baltic Trendsetters Club Certificate for developing the floating LNG terminal Independence and rearranging the Baltic's gas market through one ship call.
• On the 6 th of November 2015 Klaipedos nafta received a sign of the Lithuanian Police Commissioner General for the active activity in prevention of the crimes and cooperation implementing preventive projects.
• Klaipedos nafta oil terminal at the 10th crude oil, LPG and petroleum product congress held in the end of November 2015, in St. Petersburg, Russia, was awarded the Grand Prix 2015, meaning that Company's terminal acts as the industry's model in terms of overall performance.

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 2015 all the shares of the Company were owned by 1,847 shareholders (on 31 December 2014 – 1,871)

Shareholder's name (company's name, address, company code of		31 December 2015		31 December 2014
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 (Gediminas Ave. 38/2, Vilnius, 302308327)		275,241,290	72.32	275,241,290	72.32
Concern SC Achemos grupe (Jonalaukis village, Jonava district, 156673480)		38,975,150	10.24	38,975,150	10.24
Other (each owning less than 5%		66,389,744	17.44	66,389,744	17.44
Total		380,606,184	100.00	380,606,184	100.00

Dynamics of the share price at NASDAQ OMX Vilnius in 2015-2011

	2015	2014	2013	2012	2011
Highest share price in EUR	0.419	0.325	0.381	0.430	0.537
Lowest share price in EUR	0.315	0.280	0.289	0.359	0.360
Price per share at the end of the period in EUR	0.369	0.311	0.292	0.369	0.390
Average share price in EUR	0.373	0.295	0.344	0.387	0.449
Traded volume, pcs.	5,257,607	14,454,031	3,644,550	4,061,889	5,022,637
Turnover in EUR thousand	1,955	4,320	1,249	1,588	2,242
Capitalisation in EUR thousand	140,444	118,369	111,137	133,282	133,380

Trading in KNF1L shares on Nasdaq Vilnius stock exchange in 2011-2015

KNF1L share price and Nasdaq Vilnius indexes comparison in 2011- 2015

Dividends

On 30th of April, 2015 the general meeting of shareholders distributed the Company's profit of 2014 in the total sum - EUR 9,257 thousand, available for appropriation and approved the payment of dividends for the shareholders amounting EUR 0.0002432210 per share (total amount allocated for the dividends comprise EUR 92.6 thousand).

On 25th January, 2016 the Board of the Company has approved the has approved the corporate strategy of the Company for the year 2016 -2020 and Dividend Policy which defines dividend calculation, payment and declaration processes.

Dividend policy objectives

According to the strategy the plan is to distribute 50% of Company's net profit as dividends to shareholders

Rytis Ambrazevičius

Independent Member of the Board of the Company. Elected as the Board member by the Supervisory Board on 24 October 2011. The Supervisory renewed the mandate on 29 April 2014 for 4 years or until the time, when the new Board is elected ant starts acting.

Mindaugas Jusius

Independent Member of the Board of the Company. Elected as the Board member by the Supervisory Board on 24 October 2011. The Supervisory renewed the mandate on 29 April 2014 for 4 years or until the time, when the new Board is elected ant starts acting.

Dainius Bražiūnas

Member of the Board of the Company. Elected as the Board member by the Supervisory Board on 25 August 2014 until the term of office of the acting Board of Company.

Mantas Bartuška

Member of the Board of the Company, General Manager. Elected as the Board member by the Supervisory Board on 25 September 2014 until the term of office of the acting Board of Company.

There is no permanent Chairman of the Board elected, therefore, the Chairman of the Board is elected from the Board members every meeting by ad hoc principle.

The Directors of the Company

Mantas Bartuška General Manager

Osvaldas Sabaliauskas Deputy General Manager

Marius Pulkauninkas Director of Finance and Administration Department

Genadijus Andrejevas Director of Technical Department (since 1 October 2015)

Gediminas Vitkauskas Director of the Oil terminal department

Tadas Matulionis Director of the LNG terminal department (since the 17 February 2015)

Darius Šilenskis Director of Oil Commerce department (since 28 September 2015)

THANK YOU FOR YOUR ATTENTION!

Stock company Klaipedos nafta

Company code 1106488893

VAT payer code LT06488917

Registered address - Buriu str. 19, P.O. Box 81, 91003 Klaipeda-C, Republic of Lithuania

Mailing address - Baltijos ave. 40, LT-93239, Klaipeda, Lithuania

Tel. +370 46 391772

Fax +370 46 311399

info@oil.lt

www.oil.lt, www.sgd.lt

Results for the 9 months period of 2015