Company Presentation. March 2014

Transcription

1 Company Presentation March 2014

2 DISCLAIMER The information contained herein pertaining to SIBUR (the "Company") has been provided by the Company solely for use at this presentation. By attending this presentation, or by reading these presentation slides, you agree to be bound by the limitations set out below. This presentation does not constitute or form part of, and should not be construed as, an offer, solicitation or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company, nor shall any part of it nor the fact of its distribution form part of, or be relied on in connection with, any contract or investment decision relating thereto. No representation or warranty, either express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness, correctness or reliability of the information contained herein. It should not be regarded by recipients as a substitute for the exercise of their own judgment. The Company accepts no responsibility for any losses howsoever arising, directly or indirectly, from this presentation or its contents. The material contained in this presentation is presented solely for information purposes and is not to be construed as providing investment advice. As such, it has no regard to the specific investment objectives, financial situation or particular needs of any recipient. There may be material variances between estimated data set forth in this presentation and actual results, and between the data set forth in this presentation and corresponding data previously published by or on behalf of the Company. This presentation contains forward-looking statements, including (without limitation) statements containing the words "anticipates," "expects," "intends," "may," "plans," forecasts, "projects," "will," "would", "targets, believes and similar words. These statements are based on the current expectations and projections of the Company about future events and are subject to change without notice. All statements, other than statements of historical fact, contained herein are forward-looking statements. Forward-looking statements are subject to inherent risks and uncertainties, such that future events and actual results may differ materially from those set forth in, contemplated by or underlying such forward-looking statements. The Company may not actually achieve or realize its plans, intentions or expectations. There can be no assurance that the Company's actual results will not differ materially from the expectations set forth in such forward-looking statements. Factors that could cause actual results to differ from such expectations include, but are not limited to, the state of the global economy, the ability of the petrochemical sector to maintain levels of growth and development, risks related to petrochemical prices and regional political and security concerns. The above is not an exhaustive list of the factors that could cause actual results to differ materially from the expectations set forth in such forward-looking statements. The Company and its Affiliates are under no obligation to update the information, opinions or forward-looking statements in this presentation. 2

3 AGENDA 1. Business Overview 2. Investment Highlights 3. Strategy 4. Q3&9M 2013 Operational and Financial Results 5. Appendices 3

4 SIBUR AT A GLANCE Revenue, USD bln EBITDA, USD bln EBITDA margin Petchem (2) Net debt/ EBITDA 47 (2) (2) Other Financial Performance (1) % 1.6x SIBUR Revenue Breakdown (2012) By Product Energy products 31% 35% 30% 0.7x 0.8x By Region Other CIS Asia % 48 % Europe 1.0x Russia Unique integrated gas processing & petrochemicals company Leader in both gas processing and petrochemicals industries in Russia Diverse range of products sold to multiple geographies and customers Prudent and disciplined financial policy, sustained in the market downturn One of the highest rated private companies in the region Shareholders with established track record in international capital markets Key Facts 26 production sites in Russia Over 28,000 employees Russia s largest APG processor with a 56% (3) share of total processed volumes Russia s largest LPG producer with a 32% (4) share of total country s production Russia s largest MTBE producer with a 36% share of total country s production (4) Share of Russia s synthetic rubbers production: BR 33%, SBR 61%, SBS 100% (4) 37% (4),(5) of polypropylene and 41% (4) of Russia s total LDPE production Currently rated Ba1 (Moody s) / BB+ (Fitch) with no history of downgrades throughout 2008/09 crisis Notes: (1) All financial figures for SIBUR in this presentation for the years of are based on combined financial information, which excludes the results of the mineral fertilisers and tyres businesses, which were divested by SIBUR in December 2011, for all reporting periods. (2) SIBUR s reporting currency is Russian rouble. Figures have been translated from RR to USD at average FX rates for the respective periods. (3) Central Dispatch Department of the Fuel & Energy Complex, for FY (4) Petromarket, Kortes, Market Report, Alliance Analytics, Russian Association of Synthetic Rubbers Producers, company data, for FY (5) Including 100% of NPP Neftekhimia production. 4

5 SIBUR OPERATES A UNIQUE VALUE CHAIN Integrated Value Chain from Feedstock Sourcing to the Production of Petrochemicals Oil-based feedstock (APG) Gas-based feedstock (NGLs) FEEDSTOCK AND ENERGY Gas processing / Fractionation PETROCHEMICALS Intermediates Basic polymers Synthetic rubbers Plastics & organic synthesis products Oil-based feedstock (APG) By-product of oil production Sourced from oil companies Transported via pipelines Gas-based feedstock (NGLs) Sourced from gas and oil companies Transported via pipelines and rail Processing of APG into natural gas and NGLs Transportation of NGLs Fractionation of NGLs into marketable energy products Sale of energy products to external customers and SIBUR s petrochemicals segment Production and sale of four categories of petrochemical products Intermediates Basic polymers Synthetic rubbers Plastics and organic synthesis products 5

6 EXTENSIVE ASSET BASE THROUGHOUT RUSSIA Ust-Luga Transshipment Facility SIBUR-PETF BIAXPLEN (Moscow region) Headquarters (Moscow) Plastic-Geosintetika BIAXPLEN (Kursk) Voronezhsintezkauchuk RusVinyl (2)(3) SIBUR-Neftekhim (4) NPP Neftekhimia (1) Yuzhno-Priobskiy GPP (1)(2) SIBUR GEOSINT (Surgut) BIAXPLEN (Nizhniy Novgorod region) Nyagan GPP SIBUR-Khimprom Uralorgsintez SIBUR- Kstovo BIAXPLEN (Samara region) Polief Togliattikauchuk Tobolsk-Polymer Tobolsk-Neftekhim BIAXPLEN (Tomsk) Tomskneftekhim Gubkinskiy GPP Vyngapurovskiy GPP Muravlenkovskiy GPP Belozerniy GPP Nizhnevartovskiy GPP Yuzhno-Balykskiy GPP Krasnoyarskiy ZSK (5) SIBUR GEOSINT (Kemerovo) Western Siberia 48 bln bbl Proven oil reserves Proven gas reserves Largest oil & gas reserves region in Russia Source: IEA 22 tcm as of March 2014 Notes: (1) JV with Gazprom Neft Group. (2) Investment project. (3) JV with SolVin Holding Nederland B.V. (4) Including three production sites. (5) Under JV with SINOPEC. Feedstock & Energy segment Petrochemicals segment Production sites with joint operations of Feedstock & Energy and Petrochemicals segments Non-consolidated JVs 6

7 AGENDA 1. Business Overview 2. Investment Highlights 3. Strategy 4. Q3&9M 2013 Operational and Financial Results 5. Appendices 7

8 INVESTMENT HIGHLIGHTS Advantageous access to feedstock and high barriers to entry Vertically integrated business model supporting earnings sustainability Leading market position in the attractive Russian petrochemicals market Highly diversified product portfolio Unique growth opportunities Strong management team and supportive shareholders 8

9 Advantageous access to feedstock and high barriers to entry UNIQUE LARGE-SCALE GAS PROCESSING INFRASTRUCTURE IN WESTERN SIBERIA Gas condensate pipeline Urengoy - Surgut (Gazprom) Purovskiy GCP Gubkinskiy PUROVSK GPP SIBUR owns and operates the largest and most extensive infrastructure for processing and transportation of feedstock in Western Siberia: Urengoy Center I, II gas pipeline (Gazprom) Nyagan GPP Yuzhno-Balykskiy GPP Urengoy - Chelyabinsk gas pipeline (Gazprom) Muravlenkovskiy GPP Kholmogorskaya CS Yuzhny CTF NOYABRSK Zapadno-Lovinskaya Surgutskiy GPP Surgutskiy ZSK CS Surgutskaya Power Severo-Danilovskaya Station CS NEFTEYUGANSK Pravdinskaya CTF PYT-YAKH Vyngapurovskiy CGTU GPP Bakhilovskaya Tyumen CS-3 CS CS MEGION Lokosovskiy GPP Vyngayakhinskaya CS Belozerniy GPP Nizhnevartovskiy GPP Nizhnevartovskaya Power Station Nizhnevartovsk Parabel Kuzbass gas pipeline (Gazprom) 7 out of 9 gas processing plants (GPP) APG processing capacity of 23 bln cubic metres p.a. Raw NGL processing capacity of 3.8 mln tonnes p.a. at flagship gas fractionation unit (GFU) in Tobolsk (out of 5.2 mln tonnes p.a. of the Company s total capacity) Pipeline network of 2,433 km (1) 4 railway loading racks (out of 6 operated by Feedstock & Energy segment) TOBOLSK Tobolsk production site (SIBUR flagship GFU) SIBUR NGL pipelines Gazprom condensate pipeline Gazprom UGSS SIBUR NGL pipelines under construction SIBUR APG pipelines SIBUR natural gas pipelines Third-party APG pipelines SIBUR compressor stations Third-party compressor stations SIBUR GPPs Third-party processing facilities SIBUR railway loading racks Truck transportation Tobolsk production site (SIBUR flagship GFU) Third-party power stations Economies of scale High barriers to entry Notes: (1) Including APG, raw NGL and natural gas pipelines. 9

10 Advantageous access to feedstock and high barriers to entry FEEDSTOCK TRENDS SIBUR s Sourced Volumes Contract / Spot Split as of 30 September 2013 Outlook for Feedstock- Rich Gas Production in Russia (2) APG bcm (1) c.74% of APG supplies for 2013 guaranteed under multiyear contracts WA maturity of supply contracts years (3) Associated Petroleum Gas bcm (1) 2012 APG flaring c.24% (4) of produced volumes NGLs mln tonnes c.80% of NGLs supplies for 2013 guaranteed under multiyear contracts Unstable Gas Condensate mln tonnes WA maturity of supply contracts years (3) Notes: (1) Billion cubic metres. (2) IHS CERA. (3) Including all APG and NGL supplies from RN Holding under JV arrangements (OOO Yugragazpererabotka). In March 2014, SIBUR gained full control over OOO Yugragazpererabotka. (4) RUPEC. 10

11 Vertically integrated business model supporting earnings sustainability VERTICALLY INTEGRATED MODEL WITH MULTIPLE EMBEDDED EARNINGS SUSTAINABILITY DRIVERS (1) Oil producers Oil & Gas producers X% External sales represent c. 80% of Feedstock & Energy segment gross revenue Oil-based feedstock (APG) Gas-based feedstock (NGLs) - Share of available for sale volumes Feedstock & Energy segment 9 production sites Gross sales: RR bln EBITDA margin: 44.5% Methanol NGLs 33% 100% 67% 100% Natural gas NGLs MTBE Dominant share of feedstock for petrochemicals segment is sourced internally Petrochemicals segment 17 production sites Gross sales: RR bln EBITDA margin: 11.9% Other third-party feedstock Basic polymers (PP, PE) Synthetic rubbers Plastics and organic synthesis Intermediates and other chemicals Earnings Sustainability Drivers Deep discount between natural gas selling price and APG purchasing price hedges economics of APG processing Economics of NGL fractionation limits exposure to oil & oil derivative price volatility Net seller position of energy products hedges against increases in prices for petrochemical feedstock Prices for petrochemical products are only partially correlated with oil & oil derivative prices Notes: (1) All figures based on FY 2012 financials. 11

12 Plastics and organic synthesis Basic polymers Synthetic rubbers Leading position in the attractive Russian petrochemicals market LEADING PLAYER IN THE HIGH-GROWTH DOMESTIC MARKET SIBUR s Share in Russia s Production Capacity LDPE Polypropylene % % Growth Fundamentals Kg per Capita Consumption of Basic Polymers Polypropylene Polyethylene (LDPE) Western Europe 18 Western Europe 9 Central Europe 13 Eastern Europe 6 BR SBR SBS 2012 China Russia 6 12 China Russia % % % % 100 Russia Consumption Growth Outlook CAGR, SBS (TEP) 10.0% MEG 10.0% MEG PET Expandable polystyrene 2012 LLDPE PET 4.5% 8.8% 66 % SIBUR s share % 54 Others 87 % 13 EPS PP HDPE IIR LDPE PVC 4.4% 4.2% 3.0% 2.8% 2.5% 2.4% Source: Petromarket, Kortes, Market Report, IHS Chemical, Nexant, Alliance Analytics, company data. 12

13 Highly diversified product portfolio MULTIPLE PRODUCTS, GEOGRAPHIES AND CUSTOMER GROUPS Total Group Sales Breakdown Intermediates and other chemicals Basic polymers Plastics and organic synthesis products Synthetic rubbers By product Processing services and other sales LPG % 10 Naphtha 9 Natural gas 7 1 MTBE and other fuels Raw NGL Europe Asia 29 By region CIS 9 Other 6 1 % 55 Russia 2012 Over 1,500 large customers from 60 countries representing diverse range of end-customer industries Customer Concentration Energy products Synthetic rubbers Intermediates and other chemicals Plastics and organic synthesis products Basic polymers 5% 4% 9% 12% Top-10 11% 30% 26% 38% 43% % Largest customer Contract / Spot Structure of Sales 31% 69% Energy 65% 35% Basic polymers Spot 40% 60% Synthetic rubbers Contract % 41% Plastics and organic synthesis with low customer concentration and balanced contract / spot sales structure 13

14 Highly diversified product portfolio DIVERSE DRIVERS AND END-MARKETS 2012 revenue (1), RR bln LPG, naphtha, raw NGL Natural gas MTBE and other fuel additives Basic polymers Synthetic rubbers Plastics and OS products Intermediates and other Domestic 2012 revenue structure 81% 19% 100% 21% 79% 29% 71% 59% 41% 25% 75% 20% 80% Export Key drivers Commodity cycle, global oil prices Transportation costs and export duties Increase of regulated gas tariffs by Russia s Federal Tariff Service Domestic fuel additives market (refineries upgrade, introduction of Euro standards, car fleet) Import substitution Demand/supply in multiple endcustomer industries Development of tyre & vehicle manufacturing Natural rubber prices Demand/supply in multiple endcustomer industries Commodity cycle, demand/supply balance in respective petrochemical products Correlation with oil prices S Key endmarkets Petrochemicals Refining Power & Utilities Power & Utilities Mineral fertilisers Gasoline production FMCG Construction Chemicals Automotive Construction Chemicals FMCG Construction Chemicals Notes: (1) External sales. 14

15 Western Europe Tobolsk Unique growth opportunities PP price in Western Europe EFFICIENT MONETISATION OF STRANDED FEEDSTOCK FEEDSTOCK Significant export duties for naphtha and LPG in Russia Ample feedstock base Illustrative PP price build-up, as of September 2013 Propane price (1) Propane feedstock cost (2) PP production cost (3) Total cost for producers (3) 1,622 (1) Western Europe >4,000 km PETROCHEMICALS SIBUR s petrochemical hub in Tobolsk FEEDSTOCK Propane price in Europe (1) Transport & export duties (1) Propane price (1) Propane feedstock cost (2) PP production cost (3) Transportation to W.Europe (3) Total cost for producers (3) >6,000 km Long distances with infrastructural SIBUR s production assets constraints Notes: (1) USD per tonne. (2) USD per tonne of polypropylene, assuming LPG consumption ratio of 1.2x. (3) USD per tonne of polypropylene. PETROCHEMICALS AND END-PRODUCTS China and Northeast Asia 15

16 Unique growth opportunities STRONG POSITION ON THE GLOBAL PE AND PP COST CURVES Global Polyethylene Cost Curve Global Polypropylene Cost Curve bcm LDPE Delivered to Western European Customers (2013) (USD per tonne) Source: IHS Chemical ME avg. NA avg. SIBUR Russia avg. WE avg. NEA avg Cumulative capacity ( 000 tonnes) (USD per tonne) LDPE Delivered to China Port (2013) NA avg. SIBUR ME avg. Russia avg. ME Middle East, NA North America, NEA Northeast Asia, WE Western Europe ME Middle East, NA North America, NEA Northeast Asia, WE Western Europe NEA avg. WE avg Cumulative capacity ( 000 tonnes) (USD per tonne) PP Delivered to Western European Customers (2013) ME avg. SIBUR = Russia avg. WE avg. NEA avg. NA avg Cumulative capacity ( 000 tonnes) (USD per tonne) ME avg. SIBUR = Russia avg. ME Middle East, NA North America, NEA Northeast Asia, WE Western Europe PP Delivered to China Port (2013) ME Middle East, NA North America, NEA Northeast Asia, WE Western Europe NEA avg. NA avg. WE avg Cumulative capacity ( 000 tonnes) 16

17 Unique growth opportunities TOBOLSK-POLYMER POLYPROPYLENE PLANT Project Description Design capacity: Propane dehydrogenation: 510,000 tonnes p.a. of propylene Polypropylene (PP) production: 500,000 tonnes p.a. Leading global players involved: Licensors: UOP, INEOS EPC contactors: Tecnimont, LINDE CapEx: ~RR 60 bln (excl. VAT) Construction completed, production capacity at ramp-up stage Production Scheme Strategic Importance for SIBUR Advantageous feedstock access Growing supplies of raw NGL virtually stranded in the region Efficient feedstock delivery via own raw NGL pipeline Monetisation of stranded feedstock through petrochemicals production Infrastructural synergies Infrastructure shared with existing production site (Tobolsk-Neftekhim) Close proximity to Tobolsk GFU SIBUR`s main feedstock processing facility Market potential PP demand growth in Russia and CIS; import substitution Access to key export markets: Europe and Asia Strategic Importance for Russia Raw NGL 3.8 mtpa (6.6 mtpa after 2014 ) GFU Propane 612 ktpa Dehydrogenation Propylene 510 ktpa PP-500 Contribution to the development of Russian economy, inter alia through production of high-quality materials needed to upgrade and modernise the country s infrastructure Contribution to the development of the region`s economy, including creation of approximately 1,000 new jobs (incl. vendors and contractors) TOBOLSK-POLYMER Tobolsk-Polymer is on the government s top-priority project list in the region Part of the government s APG utilisation programme 17

18 Unique growth opportunities UST-LUGA LPG AND LIGHT OILS TRANSSHIPMENT FACILITY Project Description LPG and light oils transshipment facility at Ust-Luga sea port in the Leningrad region Estimated storage and loading capacity: LPG: 1.5 mln tonnes p.a. Light oils: 2.5 mln tonnes p.a. The project is aimed to support growth in LPG exports to premium W. European markets Launched in the end of

19 Unique growth opportunities NEW GAS FRACTIONATION UNIT (GFU) AT TOBOLSK-NEFTEKHIM Gas fractionation unit (GFU-1): Processing capacity of 3.8 mtpa of raw NGL Commissioned in 1984 Latest modernisation in 2011 Feedstock supplies via Purovsk Pyt-Yakh Tobolsk raw NGL pipeline, inter alia from Yuzhno-Balykskiy GPP MTBE production unit Capacity of 150 ktpa Commissioned in 1997 Key Existing Facilities Latest modernisation in 2011 Production of intermediate chemicals: Butadiene production capacity of 207 ktpa Isobutylene production capacity of 83 ktpa Isobutane-isobutylene fraction (IIF) production capacity of 185 ktpa Construction of a second GFU Expansion & New Construction Expansion of raw NGL fractionation capacity to 6.6 mtpa Support growing volumes of raw NGL supplies through the new pipeline CapEx: ~ RR 14 bln (excl. VAT) (RR 9.7 bln spent (1) ) Expected launch: 2014 Propane purification facility construction Railway infrastructure expansion Design Equipment & Procurement Construction Second GFU Completion Stage 30 September 2013 Overall status: 83% completed 79% 100% 93% ktpa, as of 31 Dec 12 Raw NGL 3.8 mtpa (6.6 mtpa after 2014) GFU Isobutane Butane Production Scheme Methanol Dehydrogenation Dehydrogenation MTBE MTBE Production 150 IIF 185 Isobutylene 83 Butadiene 207 (1) As of 30 September 2013 LPG, naphtha 19

20 Unique growth opportunities PUROVSK PYT-YAKH TOBOLSK PIPELINE FOR RAW NGL TRANSPORTATION Project Description Construction of a new 1,100 km raw NGL pipeline between Purovskiy gas condensate plant, Yuzhno-Balykskiy GPP (near Pyt- Yakh) and Tobolsk GFU Estimated throughput capacity: c.4 mtpa (Purovskiy GCP Noyabrsk loading rack) c.5.5 mtpa (Noyabrsk loading rack Yuzhno-Balykskiy GPP) c.8.0 mtpa (Yuzhno-Balykskiy GPP Tobolsk GFU) Section between Purovskiy GCP and Yuzhno-Balykskiy GPP: Construction completed and commissioning works started Launch of the section is scheduled for 2014 Estimated launch of the entire pipeline: 2015 Gas condensate pipeline Urengoy - Surgut (Gazprom) Purovskiy GCP Gubkinskiy PUROVSK GPP Completion Stage 30 September 2013 Overall status: 57% completed Design Equipment & Procurement Construction 51% 80% 100% Urengoy Center I, II gas pipeline (Gazprom) Nyagan GPP Yuzhno-Balykskiy GPP Urengoy - Chelyabinsk gas pipeline (Gazprom) Muravlenkovskiy GPP Kholmogorskaya CS Yuzhny CTF NOYABRSK Surgutskiy GPP Zapadno-Lovinskaya Surgutskiy ZSK CS Surgutskaya Power Severo-Danilovskaya Station CS NEFTEYUGANSK Pravdinskaya CTF PYT-YAKH TOBOLSK Vyngapurovskiy CGTU GPP Bakhilovskaya Tyumen CS-3 CS CS MEGION Lokosovskiy GPP Vyngayakhinskaya CS Belozerniy GPP Nizhnevartovskiy GPP Nizhnevartovskaya Power Station Nizhnevartovsk Parabel Kuzbass gas pipeline (Gazprom) Tobolsk production site (SIBUR flagship GFU) 20

21 Strong management team and supportive shareholders ESTABLISHED GOVERNANCE PRACTICES AND BALANCED BOARD STRUCTURE Highest Corporate Governance Standards SIBUR s Board of Directors includes high profile independent members Institutionalized board committees in alignment with global best practices Internal processes are largely governed by specific and formalized regulation IFRS financial reporting since 2003 Shareholder Structure (3) Current & former senior SIBUR managers 17.5 % 82.5 Leonid Mikhelson & Gennady Timchenko Leonid Mikhelson Member of the BOD, Chairman of the Management Board of OAO NOVATEK Gennady Timchenko Co-founder of Gunvor Alexander Dyukov CEO of OAO Gazprom Neft Board of Directors (4) Board Committees (4) Vladimir Razumov Member of the Management Board, Deputy Chairman of the Management Board - Executive Director of OOO SIBUR Oleg Golounin Managing Director of OOO LEVIT Dmitry Konov Chairman of the Management Board, OAO SIBUR Holding, CEO of OOO SIBUR Ruben Vardanian (1) Managing Director and Chairman of the Board of Directors of ZAO Sberbank CIB Seppo Remes (1) General Director of KIURU OOO Ilya Tafintsev Director, Strategic Projects, OAO NOVATEK Audit Committee Human Resources & Remuneration Committee Strategy and Investments Committee Seppo Remes (1)(2) Oleg Golounin Ilya Tafintsev Ruben Vardanian (1)(2) Oleg Golounin Seppo Remes (1) Alexander Dyukov (2) Vladimir Razumov Ilya Tafintsev Gennady Timchenko Notes: (1) Independent Directors. (2) Chairmen of the Board Committees. (3) As of 5 July (4) As of 25 April

22 Strong management team and supportive shareholders HIGHLY EXPERIENCED MANAGEMNT TEAM WITH EXTENSIVE TRACK RECORD Dmitry Konov CEO Chairman of the Management Board Pavel Malyi CFO Deputy Chairman of the Management Board Vladimir Razumov Deputy Chairman of the Management Board Mikhail Karisalov Deputy Chairman of the Management Board Kirill Shamalov Deputy Chairman of the Management Board EXPERIENCE HIGHLIGHTS IMD MBA degree 10 years at SIBUR Former Managing Director at AKB Trust and Investment Bank MS from Chicago Law School 3 years at SIBUR Former Head of UBS Investment Bank, Russia and CIS Over 40 years in petrochemical industry 12 years at SIBUR Former USSR Deputy Minister of the Oil Refining and Petrochemicals Industry 10 years at SIBUR Former Head of Feedstock & Energy Division at SIBUR 5 years at SIBUR Former advisor to the Russian Government Former Chief Legal counsel for Foreign Economic Activity at OAO Gazprom 22

23 Strong management team and supportive shareholders SIBUR S EVOLUTION AS INDUSTRY LEADING PLAYER present Consistent strategy implementation Creating fundamentals for growth Feb-2003: Mr. Dyukov appointed CEO Core management team formed Production flow streamlined Number of efficiency initiatives realised (sales, procurement, operations) Development and implementation of centralised SCM system Organisational restructuring: creation of business units Asset consolidation Debt restructuring Emerging as industry-leading player Dec-2006: Mr. Konov appointed CEO Long-term development strategy formulated Formalized investment procedures and processes in place Development of capex execution capabilities Headcount optimization Successful navigation through global economic crisis Modernization and expansion of Feedstock & Energy segment assets JVs with TNK-BP (1) and SolVin created Selective M&A Mr. Mikhelson becomes controlling shareholder Substantial increase of organic investment activity in both segments in line with strategy Disposal of non-core assets (fertilizers and tyres businesses) Upgrade of SCM system Operational improvements Development and implementation of SIBUR production system ERP implementation and IT upgrade Establishment of international JVs (Reliance, Sinopec) Selective M&A Completion of 5 investment projects, including large-scale petrochemical project in Tobolsk In March 2014, SIBUR gained full control over Yugragazpererabotka, previously JV with Rosneft Notes: (1) On 30 July 2013, TNK- BP was renamed to RN Holding following the acquisition by Rosneft. 23

24 AGENDA 1. Business Overview 2. Investment Highlights 3. Strategy 4. Q3&9M 2013 Operational and Financial Results 5. Appendices 24

25 STRATEGIC OBJECTIVES Cement longterm access to feedstock Strengthen cooperation with oil and gas companies by offering efficient by-product utilisation services through JVs and multi-year contracts Expand APG and NGLs processing capacity and infrastructure in Western Siberia Monetize stranded feedstock through petrochemicals Capture domestic growth opportunities Pursue operational excellence Develop large-scale petrochemicals production capacity close to feedstock base in Western Siberia to capitalise on strong cost advantage for basic polymers Achieve more balanced business model through reduction of exposure to volatile global energy markets Enhance position on the domestic petrochemicals market to benefit from Growth in per-capita consumption Replacement of conventional materials by petrochemical products Import substitution Cost control Streamline and integrate asset base Enhance business processes and functions, upgrade IT infrastructure Prioritisation of investment opportunities and focus on projects with best strategic fit and industryleading returns 25

26 Feedstock processing capacity Transportation infrastructure Petrochemicals Other TOTAL Feedstock processing capacity Transportation infrastructure Petrochemicals Other TOTAL INVESTMENT PROGRAMME DESIGNED TO MEET STRATEGIC GOALS A E (1) RR bln (excl. VAT) RR bln (excl. VAT) Construction and expansion of GPPs (Vyngapurovskiy, Yuzhno-Balykskiy) 22 Tobolsk-Polymer and multiple smaller scale projects Ust-Luga transshipment facility, railway loading racks, raw NGL pipelines Maintenance, R&D, IT, and other Second GFU at Tobolsk Purovsk-Pyt-Yakh- Tobolsk raw NGL pipeline 14 Tobolsk-Polymer, ZapSib-2 (2) FEED and other 60 Maintenance, R&D, IT and other Source: Company data Notes: (1) Includes only investment projects approved by the Group s Investment Committee. In addition, SIBUR is evaluating a number of projects which are at various stages of review. Therefore, the actual amount of capital expenditure that the Group may incur may exceed the amounts that have been formally approved. (2) Decision on the ZapSib-2 project is expected no earlier than the first half of

27 AGENDA 1. Business Overview 2. Investment Highlights 3. Strategy 4. Q3&9M 2013 Operational and Financial Results 5. Appendices 27

28 9M 2013 PERFORMANCE SUMMARY EXTERNAL ENVIRONMENT Macro and market turbulence prevailed in 9M 13 Slow-down in GDP growth in Russia; stable GDP growth in China; EU GDP continued to shrink Lower oil and naphtha prices and even weaker LPG prices Strong headwinds in synthetic rubbers Indexation of natural gas prices Growth in average 9M 13 price of 13.5% y-o-y Depreciation of RR against USD by approx. 2% SIBUR: KEY DEVELOPMENTS IN Q Thermoplastic elastomers production facility in Voronezh launched JV with SINOPEC for NBR production in Krasnoyarsk established Controlling shareholders granted an additional 12% stake in the Company to the Group s directors and key managers Equity-settled share-based payments recorded as a non-cash charge in SIBUR s P&L Change in scope: ONE-OFF FACTORS Deconsolidation of Yugragazpererabotka from Q2 13 Consolidation of BIAXPLEN from Q2 12 Change in natural gas delivery basis to ex-field from 1 Jan 13 High base effect: trading activities in favour of the divested mineral fertilisers business continued in Q1 12 and were terminated from Q2 12 Caprolactam decommissioning completed in Q2 13 SIBUR: KEY DEVELOPMENTS IN Q Significant progress on multi-year investment programme Ust-Luga LPG and light oils transshipment facility launched Butyl rubber production capacity in Togliatti expanded BOPP-films production facility in Tomsk launched Tobolsk-Polymer polypropylene plant launched, currently at ramp-up stage Divestment of OJSC Plastik (production of styrene, EPS and ABS plastics) Agreement between SIBUR and Gazprom Neft under the JV to build Yuzhno-Priobskiy GPP, a new gas processing plant on the basis of existing assets in Khanty-Mansi Autonomous Area Memorandum of understanding between SIBUR and Rail Garant on the sale of LPG rail cars with the fleet to be made available to SIBUR under 6-year contracts. Deal closing expected in

29 MACRO ENVIRONMENT Russian GDP Growth (1) Consumer Price Index (y-o-y) (1) Railway Tariffs Indexation (2) 4.0% 6.6% 6.1% 6.0% 7.0% 1.3% Average Exchange Rate (3) Exchange Rate (3) RR / USD RR / USD % 31.6 (4.0%) % Effective Average Electricity Tariffs RR per kw / hour % 31 Dec`11 30 Sep`12 31 Dec`12 30 Sep`13 Source: (1) Russian Federal State Statistics Service (2) Federal Tariff Service (3) CBR 29

30 MARKET ENVIRONMENT (1) Energy Products Basic Polymers 000 USD per tonne except as stated (avg. for the period) 000 USD per tonne (avg. for the period) (3.3%) (4.3%) % +9.8% (7.6%) (7.6%) (13.7%) Naphtha LPG DAF Brest LPG Sonatrach LPG CIF ARA (large) Brent, USD per bbl (RHS) PP LDPE Synthetic Rubbers Plastics & Organic Synthesis 000 USD per tonne (avg. for the period) 000 USD per tonne (avg. for the period) % % +15.5% +3.1% (20.6%) (32.6%) +0.8% (34.7%) +4.4% 1.0 Natural rubber Butadiene Styrene-butadiene rubber Butyl rubber ethylhexanol MEG PET Source: Argus, Bloomberg, ICIS, Chemease, Malaysian Rubber Board Notes: (1) For detailed market data statistics please refer to Appendix. Prices quoted in EUR are converted to USD at average EUR / USD FX rates for the respective periods. Expandable polystyrene Butyl acrylate 30

31 SIBUR Q3 & 9M 2013 FINANCIAL SUMMARY Revenue EBITDA RR bln RR bln EBITDA margin, % (0.7%) % 27.9% 30.3% 28.8% +8.9% % (5.4%) Q Q Q Q Net Profit OCF RR bln Net margin, % RR bln 25.0% 13.1% 22.7% 17.4% 15.5 (23.8%) +4.2% (42.9%) % Q Q Q Q

32 REVENUE STRUCTURE AND DYNAMICS Total Revenue Energy Products Petrochemical Products Other Revenue RR bln RR bln RR bln RR bln (0.7%) % (7.5%) (42.1%) Basic polymers Synthetic rubbers Plastics & organic synthesis products Revenue Split by Product Intermediates & other chemicals Raw NGL % 8 10 MTBE & other fuels Revenue By region Split by Region 9M M 2013 Processing services, trading & other sales Asia CIS Other Naphtha LPG Natural gas Europe % 58 Russia 32

33 PERFORMANCE BY PRODUCT GROUP LPG Natural gas Naphtha MTBE Raw NGL RR bln % 42.1 RR bln RR bln RR bln RR bln +10.0% % % % Basic Polymers Synthetic Rubbers Plastics & Organic Synthesis Intermediates & Other Other Revenue RR bln RR bln RR bln RR bln RR bln 17.1 (3.1%) (20.1%) % (15.8%) Trading and other sales Sales of processing services 12.0 (42.1%)

34 ENERGY PRODUCTS: SALES VOLUMES AND PRICE DYNAMICS LPG Sales volumes, 000 tonnes Change in effective avg. selling price, % Natural Gas Sales volumes, mln cubic metres Change in effective avg. selling price, % Naphtha Sales volumes, 000 tonnes Change in effective avg. selling price, % (0.6%) +10.0% 1,968 2,165 7,665 (5.6%) +16.5% 8,929 (1.9%) % MTBE Sales volumes, 000 tonnes Change in effective avg. selling price, % (6.4%) +14.6% Raw NGL Sales volumes, 000 tonnes Change in effective avg. selling price, % (14.4%) % 515 Key Factors Higher sales volumes in majority of the products Production growth Growth in raw NGL production on higher capacity utilisation; higher purchases from 3 rd parties Increase in natural gas sales volumes on inventory sales Lower selling prices across the product range largely following international market prices Decline in LPG export prices partially compensated by lower export duties and change in export geography in Q3 13 Lower raw NGL selling prices reflect increased supply in Russia, particularly in Western Siberia Natural gas selling price affected by a one-off change in the delivery basis to ex-field Net of this effect selling price for natural gas increased by 12.0% y-o-y 34

35 PETROCHEMICALS: SALES VOLUMES AND PRICE DYNAMICS Basic Polymers Synthetic Rubbers Key Factors Sales volumes, 000 tonnes Change in effective avg. selling price, % (0.6%) (2.5%) Plastics & Organic Synthesis Sales volumes, 000 tonnes Change in effective avg. selling price, % +7.3% % Sales volumes, 000 tonnes Change in effective avg. selling price, % +0.9% Intermediates & Other 454 (20.9%) Sales volumes, 000 tonnes Change in effective avg. selling price, % +3.6% (18.7%) 369 Basic polymers: Lower sales volumes as a result of a decrease in production due to a biennial maintenance shutdown in Tomsk partially compensated by expanded PP trading activities Largely flat prices Synthetic rubbers: Largely flat sales volumes on focused inventory sales started in Q2 13 and continued in Q3 13, largely offset by lower 3 rd -party purchases Continuous downward pricing trend for all rubber grades but butyl rubber Plastics & organic synthesis: Higher sales volumes due to launch of the second EPS production line in Q3 12 and consolidation of BIAXPLEN from Q2 12 Largely resilient demand and prices Intermediates & other chemicals: Lower sales volumes due to Caprolactam decommissioning 35

36 NET OPERATING EXPENSES STRUCTURE AND DYNAMICS Net Operating Expenses (1) Feedstock & Materials Processing Services Y-o-Y dynamics RR bln 73% 75% +2.1% Structure Repairs & maintenance Goods for resale Depreciation & amortisation Staff costs Other Energy & utilities % 9M 2013 Feedstock & materials Transportation & logistics RR bln 21% 24% RR 5.0 bln % RR bln 0% 2% RR 2.8 bln % Growth Factors Transportation & Rent (2) Depreciation & Amortisation The increase attributable to Higher feedstock and materials on higher hydrocarbon feedstock purchasing volumes and APG purchase price Growth in processing services due to Yugragazpererabotka deconsolidation Higher D&A expenses due to commissioning of new production facilities, as well as consolidation of BIAXPLEN from Q2 12 Higher rent expenses on increase of leased rolling stock due to Russian Railways bottlenecks Increase in transportation & logistics costs on higher average railway tariff, longer delivery distances and higher transported volumes largely compensated by decline in natural gas transportation costs Note: (1) Operating expenses before equity-settled share-based payment plans. (2) Transportation and logistics, rent expenses. x% RR bln 16% 16% RR 1.7 bln % 32.6 Transportation & logistics Rent expenses % of revenue RR bln 4% 4% RR 1.3 bln %

37 NET OPERATING EXPENSES STRUCTURE AND DYNAMICS (CONT D) Y-o-Y dynamics RR bln 73% 75% +2.1% Net Operating Expenses (1) Structure Repairs & maintenance Goods for resale Depreciation & amortisation Staff costs Other Energy & utilities Feedstock & materials % 9M Transportation & logistics Energy & Utilities RR bln 11% 10% ( RR 2.9 bln) 22.1 (13.1%) 19.2 Goods for Resale RR bln 4% 3% ( RR 2.3 bln) 7.8 (30.3%) 5.5 Compensating Factors Staff Costs Other Items The increase in net OpEx partially compensated by: Lower energy and utilities costs primarily due to Yugragazpererabotka deconsolidation Lower purchases of goods for resale on discontinuation in Q2 12 of trading activities in favour of mineral fertilisers business divested in 2011 lower purchases of synthetic rubbers under 3 rd -party processing arrangements PP reclass Lower staff costs due to one-off charge in Q2 12 Net effect of Yugragazpererabotka deconsolidation, since higher third-party processing services offset by deconsolidation of energy & utilities, staff costs, repairs & maintenance, etc. Note: (1) Operating expenses before equity-settled share-based payment plans. x% RR bln 10% 10% ( RR 1.4 bln) 20.6 (6.7%) 19.2 % of revenue RR bln 7% 7% 14.6 ( RR 1.1 bln) 13.5 (7.5%) 37

38 CASH FLOW STATEMENT HIGHLIGHTS Key Developments Net cash from operating activities increased by 4.1% y-o-y primarily due to positive impact from WC changes partially offset by decline in EBITDA Net cash used in investing activities increased by 87.3% y-o-y on low base effect due to proceeds from disposals of non-core businesses in 2012 CapEx growth of 9.2% y-o-y low base effect due to switch from project to equity financing of RusVinyl Net cash used in financing activities decreased by 69.9% y-o-y due to semi-annual dividend in H1 13 vs. FY 11 dividend in H1 12 lower net debt repayment RR mln, except as stated Nine months ended 30 September Change % Net cash from operating activities 57,175 54, % Changes in working capital 8,930 1, % Net cash used in investing activities, including (55,642) (29,707) 87.3% PPE (52,605) (48,165) 9.2% Additional contribution to the share capital of joint ventures (3,200) - n/m Proceeds from disposal of non-core businesses (1) - 14,335 (100.0%) Net cash used in financing activities, including (9,194) (30,586) (69.9%) Dividends (7,625) (21,785) (65.0%) Effect of exchange rate changes on cash and cash equivalents Key Highlights (63) (398) (84.2%) Net decrease in cash and cash equivalents (7,724) (5,795) 33.3% Notes: (1) Includes proceeds from disposal of the mineral fertilisers business net of related income tax of RR 900 mln, as well as proceeds from the disposal of Voronezh Tyre Plant and Kirov Tyre Plant. 38

39 DEBT STRUCTURE AND MATURITY PROFILE Key Highlights Total debt remained largely flat Net debt increased by 7.3% y-o-y due to lower cash and cash equivalents on CapEx financing and semi-annual dividend payment, primarily in Q2 13 RR 4.5 bln (1) in debt to RN Holding deconsolidated due to change in accounting treatment of Yugragazpererabotka As of 30 Sep 13, all of the debt was unsecured, except for RR 15.4 bln outstanding under the Tobolsk-Polymer project finance facility RR bln, except as stated Key Figures 30 Sep Jun Dec 2012 Change, % vs 31 Dec 2012 Debt (1.8%) Cash & cash equivalents (56.9%) Net debt % Average loan tenor (years) Available credit lines 71.8 (2) (3.1%) Debt / EBITDA 1.19x 1.21x 1.17x Net debt / EBITDA 1.12x 1.16x 1.00x EBITDA / Interest (3) 16x 16x 22x Debt Maturity Profile Debt Currency Split RR bln 30 Sep 13 RR 30 Sep EUR USD % <1y 1-2y 2-5y >5y 83 Notes: (1) Includes principal amounts of debt owed by SIBUR to RN Holding and debt owed by Yugragazpererabotka to RN Holding. Excludes accrued interest. (2) Of which an equivalent of RR 21,156 mln was committed. (3) Interest represents accrued interest, i.e. includes interest expense and capitalised interest. 39

40 FINANCIAL CALENDAR 2014 Event Date FY 2013 Operational and Financial Results 18 March 2014 Q Operational and Financial Results Week of 16 June 2014 MAR 2014 M T W T F S S JUN 2014 M T W T F S S Q2 and H Operational and Financial Results Week of 8 September 2014 Q3 and 9M 2014 Operational and Financial Results Week of 8 December 2014 SEP 2014 M T W T F S S DEC 2014 M T W T F S S

41 AGENDA 1. Business Overview 2. Investment Highlights 3. Strategy 4. Q3&9M 2013 Operational and Financial Results 5. Appendices 41

42 MARKET PRICES Energy Products Basic Polymers Rebased to 100 Rebased to % 9M M M M % 100% 80% 100% 60% 40% Brent LPG DAF Brest LPG CIF ARA (large) Naphtha CIF NWE LPG Sonatrach 80% LDPE CFR China film, Spot PP rafia China Main Port, Spot Synthetic Rubbers Plastics & Organic Synthesis Products Rebased to % 9M 2012 Rebased to 100 9M % 9M M % 110% 100% 80% 60% 40% Styrene butadiene rubber, ESBR 1500 Spot, FD NWE Natural Rubber, NR SMR 20 Butadiene Contract, FD NWE Butyl rubber, IIR 1751 (Yanshan) 90% 70% 50% Polystyrene, EPS block FOB Korea 2-ethylhexanol Spot, FD NWE PET FOB China, Spot MEG Contract, FD NWE T2 Butyl acrylate Spot, FD NWE Source: Argus, Bloomberg, ICIS, Malaysian Rubber Board, Chemease 42

43 MARKET PRICES (CONT D) PRODUCT QUOTE SOURCE ENERGY PRODUCTS Oil Brent (USD per bbl) Bloomberg Naphtha Naphtha CIF NWE Argus LPG LPG DAF Brest LPG Sonatrach LPG CIF ARA (large) Argus Argus Argus BASIC POLYMERS LDPE LDPE CFR China film, Spot ICIS PP PP rafia China Main Port, Spot ICIS SYNTHETIC RUBBERS Natural rubber NR SMR 20 Malaysian Rubber Board Butyl rubber IIR 1751 (yanshan) Chemease Butadiene Butadiene Contract, FD NWE ICIS Styrene-butadiene rubber ESBR 1500 Spot, FD NWE ICIS PLASTICS & ORGANIC SYNTHESIS PRODUCTS PET PET FOB China, Spot ICIS Monoethylene glycol (MEG) MEG Contract, FD NWE T2 ICIS 2-ethylhexanol (alcohol) 2-ethylhexanol Spot, FD NWE ICIS Butyl acrylate Butyl acrylate Spot, FD NWE ICIS Expandable polystyrene Polystyrene, EPS block FOB Korea ICIS 43

44 ENVIRONMENT, HEALTH AND SAFETY 1.22 (34%) % LTIFR (1) Corporate Programme for Development of Safety Culture and IS (2) and OHS (3) Management Systems: Develop and introduce: safety standards OHS management system accident prevention system internal investigations system 000 tonnes (3%) +15% Air Pollution Air Resource Protection Programme ( ): Decrease emission of the pollutants Reduce SIBUR s industrial impact mln cubic metres 73.0 (4) 69.1 (5%) Wastewater Discharge 000 tonnes Water Resource Protection Programme ( ): (5%) (22%) +79% Build, renovate and reconstruct: treatment facilities water intake facilities disposal sewers for treated outflows 89.0 Sanitary Waste Generation Waste Management Programme ( ): Construct new waste storage facilities Decrease waste output Upgrade waste processing and utilisation equipment Notes: (1) Lost Time Injury Frequency Rate number of injured employees per million working hours. (2) Industrial Safety. (3) Occupational Health & Safety. (4) Calculation adjusted for new methodology