druŠtvo za istraŽivanje, proizvodnju, preradu, distribuciju i promet...

P R O S P E C T U S

of the Issuer

DRUŠTVO ZA ISTRAŽIVANJE, PROIZVODNJU, PRERADU, DISTRIBUCIJU I PROMET NAFTE I

NAFTNIH DERIVATA I ISTRAŽIVANJE I PROIZVODNJU PRIRODNOG GASA NAFTNA

INDUSTRIJA SRBIJE A.D. NOVI SAD

Novi Sad, September 2011

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А) PROSPECTUS INTRODUCTION

The Securities Commission shall neither be liable for accuracy and completeness of data stated in the Prospectus neither for issuing securities, nor for the ability of the securities issuer to fulfill the obligations arising from the securities it issues. 1. ISSUER

1.1. Name, Registered office, Company ID number, Tax ID number

DRUŠTVO ZA ISTRAŽIVANJE, PROIZVODNJU, PRERADU, DISTRIBUCIJU I PROMET NAFTE I NAFTNIH DERIVATA I ISTRAŽIVANJE I PROIZVODNJU PRIRODNOG GASA NAFTNA INDUSTRIJA SRBIJE A.D. NOVI SAD, NARODNOG FRONTA 12 COMPANY ID NUMBER. 20084693 TAX ID NUMBER. 104052135

1.2. Main activity

0610 – Extraction of crude petroleum

1.3. Amount of share capital presented in the last financial statement on 30 June 2011

RSD 87,128,024,000 REMARK: Basic capital in the amount of RSD 87,128,024,000.00 is comprised of the share and the other capital. The value of the registered share capital in the amount of RSD 81,530,220,000 registered with the Business Registeres Agency is based on the assessment of the value of in kind contribution on 31 May 2005, that was made for the purpose of preparation of division balance and establishment of NIS a.d. Novi Sad by decision of the Government of the Republic of Serbia. Auditor of the financial statements for 2005 has determined that in the accountancy records of NIS a.d. Novi Sad the value of the share capital is higher for the amount of RSD 5,597,804,000 when compared to the amount registered with the Business Registers Agency. Upon order of the auditor this difference is presented as the other capital. In 2009, the amount of RSD 20,000 is moved to the position Other capital in order to bring into line position between the value of the share capital registered with the Central Registry (RSD 81,530,200,000) and the value in the business records (RSD 81,530,220,000) which is shown in the statement for 2009 as the changes in the capital.

2. SHARES TO BE ISSUED

2.1. Type, class, issue number, CFI code and ISIN number of securities

3. VOLUME OF SHARE ISSUE

3.1. State the total par value of all securities to be issued in RSD

4. NUMBER OF SHARES AND THEIR PAR VALUE

4.1. Total number of securities to be issued

4.2. Par value of a security

5. SALE PRICE OF SHARES

5.1. State the price the securities will be offered at

5.2. Method of payment for securities

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6. RIGHTS AND OBLIGATIONS DERIVING FROM THE SHARES

6.1. State all rights and obligations deriving from the shares

6.2. Pre-emption rights 6.2.1. Persons with pre-emption rights, right to subscribe and acquire shares and grounds of such rights (holders of ordinary shares, warrant holders, holders of convertible bonds and convertible preference bonds)

6.2.2. Total number of securities based on which the pre-emption right if subscription is exercised

6.2.3. Number of newly issued shares with respect to which pre-emption rights of subscription can be exercised

6.3. Tax liabilities of share holders 6.3.1. Property tax, Sales tax, Profit tax, Tax relief, Tax incentives

6.4. Manner of settling potential disputes between the issuer and the holder of securities and

the name of the competent court

7. TIME, PLACE AND DEADLINE FOR SUBSCRIPTION OF SHARES

7.1. State the business name, registered office, address and working hours of BDC/bank and a period of time for subscription of shares (particularly state the deadline for subscription based on the pre-emption rights of subscription)

8. PLACE AND TERMS OF PAYMENT OF SHARES

8.1. State the business name, registered office, address, deadline for payment of the shares and the business hours of the bank with which the payment can be made

8.2. State the manner of distribution of excess subscribed and paid up securities to the persons that subscribed and paid the securities.

8.3. Consequences of non-payment or failure to meet payment deadline

8.4. Number of securities to be subscribed and paid up for the sale to be considered successful (success threshold)

8.5. Manner and deadline of repayment of paid up amounts in case of sale failure, including the interest rate and the manner of its calculation to the paid up amounts

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8.6. Name and the registered office of the person in charge for the register keeping and clearing and settling obligations deriving from the securities to be issued (Central Registry)

9. SECURITIES TRADING MARKET

9.1. Name and registered office of the organized market, date of admission of the same type of share to the organized market, transaction volume with that type of securities on the organized market in the past six months, stating the highest and the lowest price realized

10. BRIEF OVERVIEW OF THE SHARES ISSUER

10.1. Date of passing the decision on securities issuance and the name of the competent body passing of the issuer of such decision

10.2. Designation of proceeds collected from securities issuance; state the purpose of use of proceeds (for performing issuer’s activities or purchase of assets not intended for regular issuer’s activities, e.g. securities of other issuers)

10.3. State main data on issuer’s conduct of business and development plans

11. BROKER DEALER COMPANY AND/OR AUTHORIZED BANK PARTICIPATING IN

ORGANIZATION OF THE PUBLIC OFFER

11.1. State the business name and registered office of the agent, i.e. issue underwriter who participates in organization of securities issuing

11.2. State the business name and registered office of the main organizer of issuing, if more parties participate in organization of issuing

11.3. State the type of the contract on organization of issuing and the type of agent’s obligation, i.e. underwriter’s obligation

11.4. State the amount of fee charged to the issuer by the agent, i.e. underwriter, for services related to issue organization, i.e. state the price difference between the price at which the underwriter buys securities from the issuer and the price at which it sells those in the issue procedure

11.5. State whether the agent’s obligation, i.e. issue underwriter’s obligation, relates to all or any particular portion of securities to be issued

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B) BASIC PROSPECTUS

1) “Prospectus for issuing securities with supporting data, contains all necessary information enabling investors to make objective assessment of the financial and legal status of the securities issuer and assessment of rights and obligations related to such securities.” 2) “Prospectus for issuing securities does not contain data that can make investors have misconception about the issuer of the securities, securities to be issued and issuer’s securities already issued.” 1. DATA ON SHARES ISSUER 1.1. Main data 1.1.1. Name, registered office, address, company ID number and tax ID number:

DRUŠTVO ZA ISTRAŽIVANJE, PROIZVODNJU, PRERADU, DISTRIBUCIJU I PROMET NAFTE I NAFTNIH DERIVATA I ISTRAŽIVANJE I PROIZVODNJU PRIRODNOG GASA NAFTNA INDUSTRIJA SRBIJE A.D. NOVI SAD, NARODNOG FRONTA 12 COMPANY ID NUMBER. 20084693 TAX ID NUMBER. 104052135

1.1.2. Number and date of registration with the Business Registers Agency:

BD 92142 as of 29 September 2005

1.1.3. Date of incorporation:

NIS a.d. Novi Sad predecessor company was the Company for Crude Oil Exploration and Production, incorporated in 1949 by the Resolution of the Government of the Federal People's Republic of Yugoslavia, which in 1953 was named Naftagas. Naftagas was later transformed into the company incorporating refineries in Pancevo and Novi Sad, as well as Pancevo Azotara, a fertilizer plant. By the end of 1973 Naftagas integrated the retail companies Jugopetrol – Belgrade and Jugopetrol - Novi Sad (current NAP). Naftna industrija Srbije was established in 1991 as a public company for the exploration, production, refining and trade in crude oil, oil products and natural gas. At that time it was integrating the following companies: Naftagas, Gas, Energogas, Jugopetrol, Naftagas promet and Inzinjering as well as the production companies Pancevo Oil Refinery, Novi Said Oil Refinery, Belgrade Oil Refinery and Krusevac Lubricant Factory. In 2005, public company Naftna industrija Srbije ceased to exist and was deleted from the business entity register, and Javno preduzece Srbijagas Novi Sad, Javno preduzece Transnafta Belgrade, and Društvo za istraživanje, proizvodnju, preradu, distribuciju i promet nafte i naftnih derivata i istraživanje i proizvodnju prirodnog gasa Naftna industrija Srbije a.d. Novi Sad were registered as legal successors. On 1 October 2005 NIS a.d. Novi Sad is established in the form of closed joint stock company, while its business activities remained in the sphere of exploitation of oil and gas, refining of oil and sales of oil products, as well as production and sales of liquid oil gas. The Shareholders Assembly of NIS a.d. Novi Sad has on 21 June 2010 issued the decision on transformation on NIS into open joint stock company.

1.1.4. Position of the issuer within the group 1.1.4.1. Relation with other companies on 30 June 2011:

NIS a.d. Novi Sad is a subsidiary company of Gazprom Neft (Gazprom Neft owns 56.15% of ownership interest in NIS a.d. Novi Sad share capital)

NIS a.d. Novi Sad is the parent/controlling company of the following companies: - O Zone a.d. Belgrade, ownership interest in share capital 100% - NIS – OIL Trading GmbH Frankfurt am Main, ownership interest in share capital 100%

(on 19 July 2011 the liquidation procedure was completed on the basis of the founder’s decision issued in 2010)

- OOO “NIS Oversiz” Moscow, ownership interest in share capital 100% - „Jadran – Naftagas“ limited liability company Banja Luka, ownership interest in share

capital 66% - NIS – Svetlost d.o.o. Bujanovac, ownership interest in share capital 51.32%

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- JUBOS d.o.o. Bor, ownership interest in share capital 51% - OOO “SP Ranis”, Moscow area, Cernogolovka, Russian Federation, ownership

interest in share capital 51%

NIS a.d. Novi Sad has significant ownership interest in the following companies: - Eurol International (Bermuda) ltd, ownership interest in share capital 50% - MACO NAFTA d.o.o. Skopje, ownership interest in share capital 49% - PINKI-ZEMUN a.d. Beograd – Zemun, ownership interest in share capital 48.7% - Prokons d.o.o. Subotica, ownership interest in share capital 20.15%.

1.1.4.2. Relationship between the issuer and other legal entities:

NIS a.d. Novi Sad is affiliated with the other legal entities through the ownership relations.

1.1.4.3. Grounds for issuer’s engagement in managing other legal entities, i.e. grounds for other entities’ engagement in managing legal entity of the issuer:

NIS a.d. Novi Sad is engaged in management of other legal entities on the basis of the ownership interest in the share capital, while other legal entities are engaged in the management of the NIS a.d. Novi Sad depending on the number of the shares they hold.

1.1.5. Issuer’s bylaws, with reference to the location and time for insight issuer’s Incorporation Act or Statute as well as other by-laws, along with latest amendments and supplements:

The insight into the Incorporation Act, the Statute and the other bylaws can be made at the registered office of NIS a.d. Novi Sad, Narodnog fronta str. 12, from 8 a.m. until 4 p.m. each business day from Monday to Friday, in the minority shareholders office and on the web page of NIS a.d. Novi Sad

www.nis.rs.

1.2. ISSUER’S CAPITAL 1.2.1. Share capital on 30 June 2011 (thousand RSD)

DESCRIPTION AMOUNT

Share capital 81,530,200

Other capital 5,597,824

Subscribed Capital, Unpaid -

Share premium -

Reserves 889,424

Revaluation reserves 12

Unrealized gains from securities 46,690

Unrealized loss from securities 58,128

Retained earnings 37,897,225

Loss up to amount of equity 57,482,335

Purchased own shares and stakes -

Total capital 68,420,912

Loss exceeding equity -

1.2.2. Issued shares 1.2.2.1. Number of ordinary shares issued, CFI code and ISIN number:

Number of ordinary shares issued: 163,060,400 CFI code: ESVUFR ISIN number: RSNISHE79420

1.2.2.2. Number of preference shares issued by classes, CFI code and ISIN number:

/

http://www.nis.rs/

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1.2.2.3. Rights derived from shares by type and class:

Each ordinary share of NIS a.d. Novi Sad gives to its holder the same rights, in accordance with the Companies Law, that include in particular: - the right to access legal and other documents and information of the company; - the right to participate in the shareholders assembly; - the right to vote at the shareholders assembly based on the principle that one share gives the right to one vote; - the right to dividends payment, after full payment of dividends payable on preferential shares; - the right to receive a distribution on liquidation surplus deriving from liquidation of the company, after the claims of creditors and holders of any preferred shares have been satisfied; - pre-emptive rights to acquire newly-issued shares and convertible bonds; - the right to dispose of all types of shares in accordance with the Law.

1.2.2.4. Manner of shares issuing:

On the basis of the Resolution of the Government of the Republic of Serbia on establishment of the joint stock company for exploration, production, refining, distribution and trade in crude oil, oil products and exploration and production of natural gas as of 7 July 2005, 8,153,020 of shares with par value amounting to RSD 10,000 per share has been issued. On 17 August 2009, the Shareholders Assembly of NIS a.d. Novi Sad has issued the Decision on issuance of the second issue of the ordinary shares for the purpose of replacing existing shares due to their split, whereby 163,060,400 shares has been issued, with the par value of RSD 500.00 per share that had replaced the existing 8,153,020 shares with the par value of RSD 10,000.00 per share.

1.2.3. Changes in capital/equity 1.2.3.1. State the provisions of the issuer’s general regulation related to changes in capital

In accordance with the article 9 of the Incorporation Act of NIS a.d. Novi Sad, increase and decrease of the share capital is within the competence of the Shareholders Assembly. As long as the Republic of Serbia is the holder of at least 10% of the ownership interest in the share capital of NIS a.d. Novi Sad, affirmative vote of the Republic of Serbia is necessary for rendering Shareholders Assembly decisions on increase or decrease of the share capital.

1.2.3.2. Description of changes in share capital, revaluated and other reserves, subscribed and unpaid capital, purchased own shares, issue premium, own shares, total capital (data to be provided for the previous three years): Share capital (thousand RSD)

2008 2009 2010 30.06.2011

Opening balance 81,530,220 81,530,220 81,530,200 81,530,200

Correction of material errors in the current year

- - - -

Restated opening balance 81,530,220 81,530,220 81,530,200 81,530,200

Total increase in the current year - - - -

Total decrease in the current year - 20 - -

Closing balance 81,530,220 81,530,200 81,530,200 81,530,200

Other capital (thousand RSD)

2008 2009 2010 30.06.2011

Opening balance 5,597,804 5,597,804 5,597,824 5,597,824


- - - -


Total increase in the current year - 20 - -

Total decrease in the current year - - -

Closing balance 5,597,804 5,597,824 5,597,824 5,597,824

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Subscribed capital, Unpaid (thousand RSD)

2008 2009 2010 30.06.2011

Opening balance - - - -


- - - -

Restated opening balance - - - -


Total decrease in the current year - - - -

Closing balance - - - -

Share premium (thousand RSD)

2008 2009 2010 30.06.2011



- - - -





Reserves (thousand RSD)

2008 2009 2010 30.06.2011

Opening balance 484,601 889,424 889,424 889,424


- - - -

Restated opening balance 484,601 889,424 889,424 889,424

Total increase in the current year 404,823 - - -


Closing balance 889,424 889,424 889,424 889,424

Revaluation reserves (thousand RSD)

2008 2009 2010 30.06.2011

Opening balance 275,984 60,783 39 39


- - - -

Restated opening balance 275,984 60,783 39 39

Total increase in the current year 178,585 - - -

Total decrease in the current year 393,786 60,744 - 27

Closing balance 60,783 39 39 12

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Unrealized gains from securities (thousand RSD)

2008 2009 2010 30.06.2011

Opening balance - 136,760 130,243 48,417


- - - -

Restated opening balance - 136,760 130,243 48,417

Total increase in the current year 195,816 - -

Total decrease in the current year 59,056 6,517 81,826 1,727

Closing balance 136,760 130,243- 48,417 46,690

Unrealized loss from securities (thousand RSD)

2008 2009 2010 30.06.2011

Opening balance - 33,169 28,172 49,236


- - - -

Restated opening balance - 33,169 28,172 49,236

Total increase in the current year 33,169 - 21,064 8,892

Total decrease in the current year - 4,997 - -

Closing balance 33,169 28,172 49,236 58,128

Retained earnings (thousand RSD)

2008 2009 2010 30.06.2011

Opening balance 3,205,707 - - 16,484,381


- - - -

Restated opening balance 3,205,707 - - 16,484,381

Total increase in the current year 2,083,654 - 16,484,381 21,412,844

Total decrease in the current year 5,289,361 - - -

Closing balance - - 16,484,381 37,897,225

Loss up to amount of equity (thousand RSD)

2008 2009 2010 30.06.2011

Opening balance 9,926,271 18,200,280 55,836,391 57,482,335


- - - -


Total increase in the current year 10,121,645 37,636,111 1,645,944 -

Total decrease in the current year 1,847,636 - - -

Closing balance 18,200,280 55,836,391 57,482,335 57,482,335

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Purchased own shares and stakes (thousand RSD)

2008 2009 2010 30.06.2011



- - - -





Total capital (thousand RSD)

2008 2009 2010 30.06.2011

Opening balance 81,168,045 69,981,542 32,283,167 47,018,714


- - - -


Total increase in the current year 14,817,373 21,403,952

Total decrease in the current year 11,186,503 37,698,375 81,826 1,754

Closing balance 69,981,542 32,283,167 47,018,714 68,420,912

Loss exceeding equity (thousand RSD)

2008 2009 2010 30.06.2011



- - - -





1.2.3.3. Key elements of the issuer’s Incorporation Act related to the authorized capital, date of decision and the amount of capital increase.

Incorporation Act does not contain provisions on the approved capital.

1.2.3.4. Key elements of the issuer’s Incorporation Act, date of decision on contingent capital increase, number and type of issued shares, with detailed description of requirements for share issue

Incorporation Act does not contain provisions on contingent capital increase.

1.2.4. Own shares 1.2.4.1. Number and percentage of own shares by class

NIS a.d. Novi Sad does not hold own shares.

1.2.4.2. Time and reason of share acquisition

/

1.2.4.3. Data on portfolio of own shares

/

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1.3. Shares book value and trade with issuer’s securities 1.3.1. Book value of shares 1.3.1.1. State the last book value of shares calculated by class and date of computation, and if the last book value was computed on the basis of non-audited data, then state book value of shares based on adjusted data; provide a brief description of the method used for computation of shares book value

Shares book value is determined in the following manner: the amount of total assets is decreased with the amount of loss exceeding the equity and the amount of long term reserves and obligations, as well as the amount of deferred tax (if such amount is not contained in the amount of the long term reserves and obligations), and then divided with the total number of shares. On 30 June 2011 the book value of NIS a.d. Novi Sad shares amounts to RSD 419.60.

1.3.2. Trade in issuer’s securities 1.3.2.1. Organized market on which issuer’s shares are traded

Belgrade Stock Exchange a.d. Belgrade Omladinskih brigada str. 1 Novi Beograd

1.3.2.2. Time period set for trading in such shares

Shares of the NIS a.d. Novi Sad are traded on the stock exchange market – listing A - Prime Market, by continuous trading method, each business day from 10 a.m. until 1 p.m.

1.3.2.3. Graphic presentation of daily price and volume trade fluctuations in the past six months, where the x-axis presents the date, while y-axis presents the price, i.e. trade volume.

Belgrade Stock Exchange a.d. Belgrade has, on the basis of the Resolution issued by Listing and Quotation Committee, admitted NIS a.d, Novi Sad shares to listing А – Prime Market, wherein as the first trading day it has determined 30 August 2010. Until 30 June 2011 in total 11,222,318 shares are traded, or 6.88% of the total number of issued shares, while the total value of turnover amounted to RSD 5,771,969,512. The price has ranged from RSD 442 (14 September 2010) to RSD 850 (30 May 2011) per share.

400

450

500

550

600

650

700

750

800

850

900

0

50.000

100.000

150.000

200.000

250.000

300.000

350.000

400.000

450.000

500.000

Volume Price in RSD

Volume

ee

Price

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1.4. Shareholders

Name/Business name of the shareholder

Number and % of voting shares Number and % of the

preference shares

GAZPROM NEFT 91,565,887 shares, i.e. 56.15458% /

THE REPUBLIC OF SERBIA 48,715,379 shares, i.e. 29.87567% /

ERSTE BANK CASTODY ACCOUNT

697,856 shares, i.e. 0.42797% /

ZAGREBACKA BANKA D.D. 590,326 shares, i.e. 0.36203% /

THE ROYAL BANK OF SCOTLAND N.V

204,682 shares, i.e. 0.12553% /

CITIGROUP GLOBAL MARKET LTD 152,750 shares, i.e. 0.09368% /

JULIUS BAER MULTIPARTNER-BALKA

97,986 shares, i.e. 0.06009% /

HYPO KASTODI 76,706 shares, i.e. 0.04704% /

UNICREDIT BANK AUSTRIA AG 75,253 shares, i.e. 0.04615% /

EAST CAPITAL ASSET MANAG. 66,357 shares, i.e. 0.04069% /

OTHER SHAREHOLDERS 20,817,218 shares, i.e. 12.76657% /

Central Securities Depository and Clearing house data as of 30 June 2011. On 30 June 2011 NIS a.d. Novi Sad has 2,839,003 shareholders. The above table shows data about entities with more than 5% of voting shares or ten major shareholders with voting rights. Below the table is the date of receiving data from the Central Securities Depository and Clearing House.

Share capital structure on 30 June 2011

Gazprom Neft 56.15%

The Republic of Serbia 29.88%

Minority Shareholders

13.97%

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2. ISSUER’S CONDUCT OF BUSINESS, ASSETS AND LIABILITIES 2.1. Issuer’s business activity In addition to the data on the issuer, if the issuer is a parent company, the same data are to be provided about the subsidiaries (in which the issuer has 25% or more ownership interest in the share capital), as well as the business name, registered office, subsidiary ID number and percentage of the ownership interest in the share capital and decision-making of the subsidiary held by the parent company. 2.1.1. Core business activity 2.1.1.1. Name and code of the core business activity

0610 – Extraction of crude petroleum

2.1.2. Income from business activity 2.1.2.1. State the value of income from business activity based on which issuer generated its largest income in the past three years (thousand RSD)

DESCRIPTION 2008 2009 2010 01.01.-30.06.2011

Sales 168,458,472 118,375,584 161,148,850 83,057,785

2.1.3. Market position 2.1.3.1. Estimate of issuer’s percentage in market share at the goods and services market for each issuer’s activity; major competitors on such market and estimation of their market share

Under the conditions of slow commercial activities and increase of inflation, there was a drop in real earnings and decrease of the share of the transportation costs in the structure of the total consumption of the households. Total consumption of oil derivates in 2010 has dropped, from 3,448 thousands of tons in 2009 to 3,400 thousands of tons in 2010. Share of NIS a.d. Novi Sad at domestic market in 2010 has increased to 66.5% when compared to 2009 in which it was 65.2%, unlike other participants at domestic market, whose share has decreased. After the drop in consumption of oil products in the beginning of 2010,consumption of oil derivatives in Serbia in second half of 2010 has been increased, even though it did not reach last year level.

62.20% 66.50%

34.80% 33.50%

2009 2010

Share structure of Serbian market (in thousands of tons)

NIS Other market participants in Republic of Serbia

+1.3%

-1.3%

3,448 3,400 -1%

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First half of 2011 Increase in oil prices on world markets between January and April caused a significant increase in prices of petroleum products. Although in May and June there was a drop in oil prices, this did not cause a significant influence on the price of oil products, since in the same time, there was an increase in the eur/rsd and usd/rsd exchange rate, and in June there was a rise in the excise amount for BMB 95 and D2. Inflation was in the range from 11.2% in January to 14.7% in April. After this period there was a calm and the decline in inflation, and inflation in June of 12.7% even moved into deflation of 0.3% compared to May, as a realistic reflection of seasonal food price drop (not as a reflection of price stability). In the first quarter of 2011 negative macroeconomic trends have influenced the reduction in purchasing power, reducing fuel consumption and thus the reduction of the budget revenues from excise and VAT. In the last quarter of 2010 extremely large imports of diesel and LPG as well as and the stockpiling of importers and traders of oil derivatives, influenced the reduction in consumption of motor fuels in the first quarter of 2011 of 4.0% (Q1 2011/2010). In the second quarter of 2011 there was an increase in industrial production (in May as much as 6.8%, seasonally adjusted growth of 3.5%, and in June, slightly lower, 3.3%), and late agricultural activities in autumn, contributed that the decline in consumption of motor fuel from the first quarter is almost annulled, so that the consumption of motor fuels at approximately at the same level as in the first half of last year (only -0.1%). Growth of 3.8% was noted for diesel fuel (euro diesel even 7.3%, while the D2 had a dop of 2%), a decline in motor gasoline consumption is less than the decline in the first quarter (3.3% compared to 4.6 %). It should be noted that the drop in gasoline consumption in the first six months of this year is much smaller than the drop in the same period last year (2010 / 2009), when the drop was 11.3%. At gasoline stations of some companies, there was a new derivative, Evro BMB 98. Notwithstanding the rather high price, the consumption of this fuel is growing slowly. These factors have affected the total consumption of petroleum products which in the period January-June 2011 has risen (5.0%) from 1,492 thousand tons in 2010 to 1,568 thousand tons in 2011. year (growth in the first quarter was 1%). In the reporting period, the share of NIS Novi Sad on the domestic market increased in volume by 1.1% and in relative terms it decreased by 2.4% compared to the same period of the previous year. Reduced refining of oil and semi-finished goods and the liberalization of imports of petroleum products from the beginning of 2011,resulted to a slight increase in market share of other market participants. When the products which are not produced by NIS a.d. Novi Sad are excluded from the consumption of RS, as well as primary petrol, the participation of NIS Novi Sad has slightly decreased from 70.6% to 70.5%.).

H1 2010 H1 2011

Share structure of Serbian market participants (in thousands of tons)

NIS Other Market participants in the Republic of Serbia

385 (29.4%)

922 (70.6%)

389 (29.5%)

931 (70.5%)

1,307 1,320

+0.9%

+1.0%

+1.0%

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Oil and gas production In 2010 NIS a.d. Novi Sad has achieved the highest production of oil and gas in the past 10 years. In 2010, 864.9 thousands of tons of domestic oil has been produced (gas condensate excluded), which is 31% more than in 2009. The production of natural gas in 2010 has been for 41% higher than in 2009. The significant increase in production of oil and gas has been affected by introduction of new modern methods for exploitation as well as use of modern equipment for oil production. The significantly increased production of domestic oil in gas has in 2010 amounted to 1,229.40 thousands of conditional tons*, which is for 33% higher than when compared to the same period last year. In addition, resources base is increased in 2010 when compared to 2009. The activities that have led to better results are:

- instalation of ESP - undertaking hydraulic fracturing - gas bearing at Velebit field has been put into exploitation - the well at the gas bearing Mokrin-zapad has been overhauled - re-activation gas well in Srednji Banat - re-activation of significant number of wells that were out of production

First half of 2011 The improvement in production of oil and gas is continued in the first half of 2011. In this period NIS a.d. Novi Sad has produced 498 thousands of tons of domestic oil (gas condensate excluded), which is 25% more than in the same period 2010. Production of natural gas in the period January – June 2011 has been for 45% higher than in 2010. Production of domestic oil and gas in the period January – June 2011 has amounted to 750 thousands of conditional tons*, which is for 30% higher when compared to the same period of the previous year. Also, resources base has a tendency of growth. *1 conditional ton of oil = 1.256 m

3 of gas

Domestic oil and gas production (in thousands of conditional tons)

270 290

321

349 358 372

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

+8%

+11%

+9% +3% +4%

15

The position of the market of oil refining

Total amounts of refined oil in 2010 (third parties included) are at the refining level achieved in 2009. Share of the refining of domestic oil is increased in the structure of the total amounts that are refined. Total amounts of the refined oil of NIS a.d. Novi Sad (third parties excluded) is increased for 9% when compared to 2009, i.e. from 2,621 thousands of tons to 2,850 thousands of tons. During 2010, euro diesel production capacities are increased for 25%. In addition, the production of motor fuels, primary petrol, and jet fuel is increased, while there was decrease in production of diesel fuel and oil fuel. Production of lead fuels is discontinued, and production of the petrol of EURO 5 quality is commenced. Total refining in Pancevo Refinery (third parties included), when compared to 2009, has increased for 1.1%, while in Novi Sad refinery the refining in 2010 has decreased for 11% when compared to 2009. After completion of the refining of crude oil under the previous year agreement, as of February 2009 there was no refining of crude oil in refineries of NIS a.d. Novi Sad for third parties needs.

First half of 2011 In the period January – June 2011 oil refining in refineries has decreased for 14% when compared to the same period in 2010. Decrease of the refining volumes has been affected by repairs of the Pancevo Refinery (from 5 March until 8 April 2011). Total refining of crude oil and semi-finished goods in the Pancevo Refinery when compared to the same period in 2010 has decreased for 19%, while Refinery Novi Sad recorded an increase of 33%.

Crude oil refining (in thousands of tons)

During 2010 the production in refinery Novi Sad is commenced, in which 245 thousands of tons Velebit type oil is refined and 35 thousands of tons of euro diesel is produced. In the period January – June 2011 170 thousand tons of domestic oil has been refined in the Refinery Novi Sad, by which the share of Refinery Novi Sad has increased for 5% compared to the same period of the last year.

446 493 620

401 307

366

218 216

202

253

206

301

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Refining of imported oil Refining of proper oil Service refining for third parties

+6%

671 709

822

655

513

667

+16% -20%

-22% +30%

7 0

0

0

0

0

16

Crude oil refining per refinery

Trade with oil products

Trade of NIS a.d. Novi Sad at domestic market in 2010 Trade of NIS a.d. Novi Sad at domestic market in 2010 is at the level of trade with oil derivates in 2009 (2,248 thousands of tons) and has amounted to 2,261 thousands of tons. Due to drop of total consumption at the market, the sales volume of lead petrol MB-95 is decreased, while the sales of lead free petrol BMB-95 and euro diesel is increased. In January 2009, due to «gas crisis» extremely large sales of oil derivatives are achieved (larger when compared to 2010), while the sales of oil derivatives have been larger in 2010 than in 2009 if the period between February and December is observed. Wholesale in 2010 was at the level of 2009 , and direct deliveries from refineries increased for about 18% (in 2010 Agreement on supply of primary petrol with HIP Petrohemija was signed ). Exports have increased from 323 thousand tons in 2009 to 353 thousand tons in 2010.

First half of 2011 Total turnover of NIS a.d. Novi Sad, following the reduction in the first quarter of 2011 of 7% compared to the same period of the previous year, reached nearly the same level as in April - June 2010 (-0.2%) in the second quarter. Considering the period January - June 2011, total turnover has decreased by 3%, while turnover on the domestic market of oil products rose by 1% compared to the same period of the previous year.

8% 10% 5%

12% 14% 14%

92% 90% 95%

88% 86% 86%

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Refinery Novi Sad Pancevo Refinery

17

Turnover (in thousands of tons)

in the period January - March 2011 retail sales (including lubricants) has risen by 7.2%, while wholesale and export recorded a decrease (by 8.4% and 21% respectively). In the second quarter of 2011 wholesale rose by 10.6%, while retail sales (4.9%) and exports (30%) declined compared to the same period of the previous year. Considering the period January - June 2011 wholesale increased slightly for 1%, and retail trade for 1%, while exports declined by 24% compared to the same period of the previous year . In the structure of the sales per oil derivative there was an increase of the share of white derivatives in the total sales.

Sales structure per oil products (in thousand of tons)

76 126 113

38 60 92

369 358

499

472 338

396

108

143

158

153

117

136

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

Export Wholesale Retail sales

553

627

770

663

515

625

+13%

+23% -14% -22%

+21%

360 439

499 466

328 419

193

188

271

198

187

206

Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011

White derivatives Black and other derivatives

553

627

770

664

515

625

18

2.1.4. Activities performed outside of the registered seat 2.1.4.1. Name of the location, other than the issuer’s head office, on which issuer carries out its activity - organizational units and representative offices:

Name of location Organizational unit / Business unit /

Representative office

Novi Sad, the Republic of Serbia

Branch office NIS - NAFTAGAS ZA ISTRAŽIVANJE I PROIZVODNJU NAFTE I PRIRODNOG GASA, PODZEMNIH VODA I GEOTERMALNE ENERGIJE, INŽENJERING U OBLASTI NAFTNE INDUSTRIJE Activity: Crude oil extraction

Belgrade, the Republic of Serbia

Branch office NIS - PETROL ZA PRERADU I PROMET NAFTE I DERIVATA NAFTE Activity: wholesale trade of solid, liquid, gas fuels, and similar products.

Elemir, the Republic of Serbia

Branch office NIS – TNG ZA PROIZVODNJU I PROMET TEČNOG NAFTNOG GASA. Activity: wholesale trade of solid, liquid, gas fuels, and similar products.

Balkanbath, Turkmenistan

Branch office of NIS a.d. – NIS – Naftasgas in Turkmenistan represents and protects the interests of NIS a.d. Novi Sad in Turkmenistan. The branch office is engaged in negotiations, undertakes drilling works on oil and gas reservoirs, provides lab services and is engaged in exploration works. It also undertakes analysis of the raw materials and fluids. It is engaged in construction and servicing of the oil and gas facilities, and it is also engaged in activity and provision of services in the oil and gas industry.

Nojabrsk, Russian Federation

Branch office of NIS a.d. Novi Sad in Nojabrsk, the Russian Federation – established for the purpose of protection and representation of interests of the company in the relations with the Russian Federation authorities and the authorities of Nojabrsk city and Yamalo-Nenets Autonomous Region, local authorities, companies, organizations, institutions, other legal and physical persons, as well as conducting other special activities of the company.

Moscow, Russian Federation

The representative office of NIS a.d. Novi Sad, Moscow, Russian Federation represents and protects the interests of NIS a.d. Novi Sad and undertakes their realization in the procedure establishment, maintenance and development of the contacts with the companies and their association on the territory of the Russian Federation, that are engaged in exploration, production, refining and distribution of the crude oil and the natural gas and their final products, and is also intermediary between the said organizations and associations and NIS a.d. Novi Sad. The activity of the representative office is also establishment, maintenance, and development of the contacts with science-technical institutes and academies in the field of exploration, production

19

and refining of oil and gas on the territory of the Russian Federation and making the relation between such entities and NIS a.d. Novi Sad. Branch office also makes contacts with Ministries other state bodies of the Russian Federation that are of relevance for oil and gas industry and science.

Luanda, Angola

The representative office NIS a.d. Novi Sad – NIS - NAFTAGAS in Luanda, Angola is established for the purpose of undertaking the activity on the block Angola as well as representation and protection of interests of NIS a.d. Novi Sad.

Brussels, The Kingdom of Belgium

The representative office NIS a.d. Novi Sad, Brussels, The Kingdom of Belgium is established for the purpose of undertaking following activities: 1. represents and protects the interests of NIS

a.d. Novi Sad through the process of establishing, maintaining and developing of contacts with EU institutions;

2. establishing and developing contacts with institutions dealing with research and innovation in the field of exploitation and processing of oil and petroleum products;

3. regular monitoring of the acquisition and systematization of the entire European Union regulatiions - regulations, directives, recommendations, technical bulletins in the field of energy, ecology and infrastructure;

4. timely and permanent notification of NIS a.d. Novi Sad on all changes in EU regulations that would be relevant to the operations of NIS a.d. Novi Sad;

5. contribution to the general recognition of NIS a.d. Novi Sad in the European Union, thereby strengthening the positive image of NIS a.d. Novi Sad, through the activity of representative office.

20

Business activities of NIS a.d. Novi Sad are organized within four blocks, partially decentralized functions/directions, and centralized functions. Block Upstream covers the field of exploration and production of oil and gas, including production, infrastructure and operational support, oil and gas reserves management, oil and gas fields’ development management, major projects in the field of exploration and production as well as scientific and technical centre processes control. NIS has three signed contracts for share of the Angola crude oil (PSA, Production Sharing Agreement): PSA, Block 3/05 PSA, Block 3/05А PSA, Block 3/85 and PSA, Block 3/91 The Block includes the Elemir natural gas refinery, designed for production of approximately 60.000 tons of liquid gas (propane, butane) and gasoline. Block Oilfield Services provides main support in exploration and production in all oil and gas upstream activities, from geophysical services, through drilling and overhaul of wells, to the transportation of the machinery and manpower, machinery maintenance as well as construction and maintenance of oil and gas systems and facilities. Block Refining deals with oil derivatives production at two separate locations in Pancevo and Novi Sad. They produce a whole range of oil derivatives – motor fuels, feedstock for petrochemical industry, motor oil, and other crude oil products. Average annual refining volume in the last several years was about 3 million tons of crude oil, while the maximum capacity of the refinery units in these two

NIS A.D.

Block

Upstream

Production, infrastructure and operations support

Oil and gas reserves

management

Oil and gas fields development management

Strategy and major products

Scientific and Tecnical processes

control center

Block

Oilfield Services

Oil services

Technical services

(maintenance)

Hydrothermal wells and manholes development

Transport of machinery and

manpower

Sales, marketing and development

of oil services

Block

Refining

Planning and raw material processing

Investment and construction

activities

Energy supply management

Storage and delivery of final

products

Block

Sales & Distribution

Reatail

Wholesale

Logistic

Foreign trade

Oils and lubes

Corporate Headquarters

Rep. offices

abroad

21

refineries is approximately 7 million tons of crude oil annually. Block Sales and Distribution covers foreign and domestic trade, wholesale of all oil derivatives, and the retail which includes the finished derivatives, liquid petroleum gas and accessory merchandise. NIS has 509 operating retail facilities (petrol stations, loading stations for LPG, LPG bottles sales points), 7 utility facilities, 31 storage facilities all over across the territory of Serbia and 6 tank farms.

2.1.5. Special circumstances 2.1.5.1. State other important facts and circumstances related to issuer’s operation that can affect data on issuer’s conduct of business

In February 2009, within Serbian-Russian international arrangement in the area of oil and gas industry, 51% of the shares of NIS a.d. Nis Sad were transferred in the ownership of the company Gazprom Neft, while the Republic of Serbia remained the owner of the remaining 49% of the shares. In accordance with the criteria that are defined in the Law on Right on Distribution of Free Shares and Monetary Compensation Exercised by Citizens in the Privatization Process (Official Gazette of RS, nos. 123/07 and 30/10) and the conducted procedure for collecting the applications for registration in the registry of right holders by the Privatization Agency of the Republic of Serbia, on the basis of the Decision of the Government of the Republic of Serbia, 19.08% of share capital of NIS a.d. Novi Sad was transferred to the citizens of the Republic of Serbia, as well as on NIS employees and ex-employees in NIS a.d. Novi Sad. After the issuance of the said Decision, the Republic of Serbia has successively transferred shares from its ownership account to the citizens, employees and ex-employees upon whose application there was no final decision on granting of the right to free shares and to whom on the basis of the respective Decision the shares have not been initially transferred, depending on the content of the final decision upon application. Gazprom Neft has, in accordance with the Agreement for Sale and Purchase of shares of NIS a.d. Novi Sad, on 31 January 2011 announced Takeover bid for NIS a.d. Novi Sad shares held by minority shareholders, i.e. 31,180,256 ordinary shares which in total amounts to 19,12% of the total number of ordinary shares. The bid was valid for 45 days, i.e. until 16 March 2011 And 8,405,087 shares is acquired, i.e. 5.15% of the total number of ordinary shares from the price of RSD 506.48 per share which is counter value of EUR 4.80996 per share on 13 January 2011. After the bid completion Gazprom Neft holds 91,565,887 ordinary shares, i.e. 56.15% share capital of NIS a.d. Novi Sad, while minority shareholders own 22,775,169 ordinary shares, i.e. 13.97% share capital of NIS a.d. Novi Sad, and the number of shares held by the Republic of Serbia remained unchanged. In accordance with the Agreement for Sale and Purchase of shares of NIS a.d. Novi Sad, Gazprom Neft has the commitment to provide to NIS a.d. the amount of EUR 500,000,000 by way of special purpose loans for purpose of implementing the program for reconstruction and modernization of the technological complex of NIS a.d. Novi Sad on the following terms:

Obligation to provide EUR 500,000,000 as the principle amount of the loan shall be fully performed in the period between the day the transfer closing and 31 December 2012;

The interest accruing the principal of the loan provided to the NIS shall accrue quarterly and for each quarter shall equal to 12 month EUR LIBOR + 2% (no further charges or commissions shall );

The term of the loan shall be 14 years as of the first disbursement date;

The grace period shall be the later of 31 December 2012 or the competition of the actual performance by Gazprom Neft of its obligation;

There shall be no collateral.

The report on sustainable development was made for 2010, according to the standards and quality in corporate reporting prescribed by the international organization Global Reporting Initiative and AccontAbility, and a review of the report was conducted by an independent auditing firm KPMG.

In July 2011 representative offices in Romania and Bulgaria were established.

2.1.6. Interruption of business operations 2.1.6.1. State interruptions in issuer’s business operation in the past three years and reasons of interruption

There has been no interruption in business activities in the past three years.

22

SUBSIDIARIES Joint stock company for hotels and tourism O ZONE ad Beograd

Head office Marsala Birjuzova 3-5, Belgrade, Serbia

ID number 20094630

% ownership interest in capital of the controlling company in the subsidiary

100%

% portion indecision making of the controlling company in the subsidiary

100%

Name and the code of the main activity

5510 – Hotels and similar accommodation

Income from the business activity (income from the sales in thousand RSD)

2008 2009 2010 01.01.-30.06.2011

381,641 263,915 254,475 56,191

Activities conducted outside the registered seat – organizational and business units and the representative offices

Branch offices: - FOLLOW ME Belgrade - *LCC FOLLOW ME Novi Sad - *LCC FOLLOW ME Nis

*On the basis of agreement on franchising these have become parts of the unique multinational network of the tourist agencies that conduct business under the name Lufthansa City Centar.

OOO “NIS OVERSIZ” Moscow, Russian Federation

Head office Baljsoj golovin perulok 12, Moscow, RF

ID number (ORGN – basic national registration number 5067746792306)


100%


100%


Crude oil and oil gas extraction


2008 2009 2010 01.01.-30.06.2011

- - - -

NIS-OIL Trading GmbH, Frankfurt am Main

Head office Mendelssohnstr. 59, Frankfurt am Main, Germany

ID number (Company number HRB 29577)


100%


100%


- wholesale and retail trade; - export and import of the crude oil, oil products, chemical and petrochemical goods etc.; - intermediation and representation in trade affairs from the range of the said products


2008 2009 2010 01.01.-30.06.2011

366 8,755 - -

*Remark: On 19 July 2011 the liquidation procedure was completed on the basis of the founder’s decision issued in 2010

23

“Jadran – Naftagas” Limited liability Company Banja Luka

Head office Ivana Franje Jukica street no.7, Banja Luka, Republika Srpska

ID number MBS: 57-01-0312-10


66%


66%


Exploration and production of oil and gas 11.101 crude oil extraction; 11.102 natural gas extraction; 11.200 servicing activities for oil and gas extraction, except exploration works; 45.110 demolition of objects; land works; 45.120 field exploration by drilling and sounding; 70.200 rent of real estate, for own account; 73.101 exploration and experimental development in natural sciences; 73.102 exploration and experimental development in technical and technological sciences; 73.140 business management and consulting.


01.01.-30.06.2011

-

Limited liability company NIS-SVETLOST BUJANOVAC

Head office Industrijska zona bb, Bujanovac, Srbija

ID number 20125535


51.32%


51.32%


4671 – Wholesale trade with solid, liquid and gas fuels and similar products


2008 2009 2010 01.01.-30.06.2011

208,738 296,595 572,557 362,487

Company for digging, transport and refining of melting slag and copper production JUBOS d.o.o. Bor

Head office Djordja Vajferta 29, Bor, Srbija

ID number 20133597


51%


51%


2444 – Copper production


2008 2009 2010 01.01.-30.06.2011

- - - -

24

OOO "Sovmestnoe predprijatie RANIS" Moscow area, Cernogolovka Russian Federation

Head office Cernogolovka, Moskovskaja oblast, RF

ID number (basic national registration number 1045006116198)


51%


51%


Scientific explorations and elaboration in the area of the natural and technical sciences


2008 2009 2010 01.01.-30.06.2011

- - - -

Eurol International (Bermuda) ltd

Head office Clarendon House, Church Street West, Hamilton HM 11, Bermuda

ID number (registration number ЕC-22435)


50%


50%


Oil trading activities encompassing the import and export of oil products, including but not limited to LPG, naphtha, gasoline, kerosene, jet, gasoil and fuel oil, and crude oil trading opportunities arising from Republic of Serbia / Jugopetrol interests in countries other than Yugoslavia


2008. 2009. 2010. 01.01. – 30.06.2011

- - - -

MACO NAFTA D.O.O. Skopje

Head office 15 korpus br.3, Skopje, Macedonia

ID number (EMBS – unique statistical number 04438701)


49%


49%


Wholesale trade with solid, liquid and gas fuels and similar products


2008. 2009. 2010. 01.01. – 30.06.2011

- - - -

Joint stock company cultural-sports centre PINKI – ZEMUN, Zemun

Head office Gradski park 2, Belgrade-Zemun, Serbia

ID number 07026781

% ownership interest in capital of the controlling

48.7%

25

company in the subsidiary


48.7%


9319 – Other sports activities


2008 2009 2010 01.01.-30.06.2011

22,757 19,143 18,398 26,276

2.2. Issuer’s assets and liabilities on 30 June 2011 (thousand RSD)

NON CUREENT ASSETS

Property, plant, equipment and biological assets 107,443,802

Property, plant, equipment 106,014,884

Investment properties 1,428,918

Intangible assets 4,779,504

Long-term investments 3,965,389

TOTAL FIXED ASSESTS 116,188,695

CURRENT ASSESTS

Inventories 42,180,126

Non current assets intended for sale and discontinued operations -

Short-term receivables, investments and cash 40,530,401

Receivables 21,866,939

Prepaid income tax -

Short-term financial investments 2,043,979

Cash and cash equivalents 13,230,463

VAT and accrued income 3,389,020

TOTAL CURRENT ASSETS 82,710,527

Deferred tax 4,804,904

TOTAL ASSETS 203,704,126

In addition to data on the issuer, if the issuer is controlling company, the same data are provided for subsidiaries in which controlling company holds 25% and more of ownership interest in share capital Assets of subsidiaries on 30 June 2011 (thousand RSD)

O ZONE NIS

Oversiz NIS Oil Trading

Jadran Naftagas

NIS

Svetlost JUBOS

SP

Ranis

Pinki

Zemun

NON-CURRENT

ASSETS

Subscribed

capital unpaid 21,391 - - - 7,396 - - -

Property, plant

equipment 3,330,900 - 126 - 34,107 - 137,955

Investment

properties 1,666,842 - - - - - - 72,706

Intangible assets 4,956 - - 99,138 - - - -

Long-term

investments 1,491 - 38 - - - -

Total fixed assets 5,025,580 - 164 99,138 41,503 - 210,661

26

CURRENT

ASSETS

Inventories 11,787 931 - - 6,767 5,027 2,123

Fixed assets

intended for sale

and assets from

discontinuing

operations

- - - - - - - -

Short-term

receivables,

investments and

cash

37,972 3,202 29,338 105 87,210 1,744 25,619 23,523

Accounts

receivable 28,698 1,235 2,647 - 25,423 - 24,777 14,668

Receivables for

overpaid income

tax

- - - - 569 - - 10

Short-term

investments 662 - - - 184 - - 8,144

Cash and cash

equivalents 6,369 1,776 26,691 105 42,217 1,744 21 701

Value added tax

and deferred

expenses and

prepayments

2,243 191 - 18,817 - 821

Deferred tax - - - - - - - -

Total current

assets 49,759 4,133 29,338 105 93,977 1,744 30,646 25,646

TOTAL ASSETS 5,075,339 4,133 29,502 99,243 135,480 1,744 30,646 236,307

2.2.1. Real estate, plants and equipment 2.2.1.1. Data on real estate, type, location, surface area, value, including rented or leased property on 30 June 2011

Type of object Quantity

Location

Basis for use* On the territory of

the Republic of Serbia

Outside the territory of


Land (constructed, non-constructed)

2,760 2,759 1

NIS ownership 492 NIS right of usage – ownership of the Republic of Serbia

2,023

NIS possession 14

Third parties’ rights 217

Not registered right 14

Petrol stations 536 511 25


160

NIS possession 7



Warehouses, Storage houses, depository

67 62 5


23

NIS possession 6


27


Buildings, business premises

(administrative buildings, production buildings, garages,

buildings, parts of the buildings, stores,

premises)

654 647 7


52

NIS possession 41



Reservoirs (-up to 150m

2;

- from 150m2 up to

1000m2;

- over 1000m2)

360 360 -


11

NIS possession 39



Roads (internal roads, external roads, railway, parking,

PP roads)

420 420 -


-

NIS possession -



Supply leads (gas pipelines, oil

pipelines, leads and drainage, drilling pipelines, other

pipelines)

1,191 1,191 -


1

NIS possession -


Not registered right 1,185

Complexes (geophysics institute, computation stations)

84 84 -


-

NIS possession -

Third parties’ rights -


Wells 1,303 1,303 -


-

NIS possession 1



Energetic objects (trafo stations,

transmission lines, aggregate stations)

217 217 -


4

NIS possession 17



Other objects (petrol stations,

awnings, cornerstones etc.)

794 794 -


128

NIS possession 37



IN TOTAL 8,386 8,348 38 NIS ownership 2,128 NIS right of usage – ownership of the Republic of Serbia

2,402

28

NIS possession 162



*REMARKS:

- All the objects on which rights of usage of NIS a.d. Novi Sad is registered are the ownership of the Republic of Serbia; - The procedure of registration of the ownership rights of NIS a.d. Novi Sad on the real property is ongoing, according to

dynamics determined by the Government of the Republic of Serbia and its competent bodies, which is the reason why registration of the ownership rights in favor of NIS a.d. Novi Sad is not completed;

- The objects on which the third parties have the rights are the objects on which ownership relations are not regulated in relation to the land (e.g. objects built on the public surface with the temporary license, objects built on third parties’ land for which no legal basis for purchase has been made i.e. the land itself has not been paid);

- Objects on which NIS a.d. Novi Sad has the possession rights are the objects for which e.g. no construction permit has been obtained, but that are recorded and inserted into the cadastral plans and public records on the real property. In the case of such objects, real property cadastres usually register the possession rights and in encumbrances sheet mark that these are the objects build without permit;

- Objects on which no right is registered are mostly objects for which legal issues related to the land are not solved, objects for which there is no usage permit and geodetic shot, objects undergoing legalization procedures, mining objects constructed in accordance with the mining law, pipelines etc.

The Value and the Surface of the Real Estate

Type of the object Book value on 30 June 2011

- thousand RSD- Surface

- m2 -

Land 10,534,591 64,269,488

Objects 39,451,741 2,141,729

IN TOTAL 49,986,332 66,411,217

Rented real estate

Type of the object Quantity

Land 7

Buildings, Business premises 80

Gasoline Stations 11

Warehouses, Storage houses, depository 3

Garages 7

IN TOTAL 108

PROPERTY OF SUSIDIARIES Joint stock company for hotel and tourism O ZONE Belgrade

Object type Quantity

Location

Basis for use On the

territory of the Republic

of Serbia

Outside of territory of


Land 10 7 3


3

NIS possession -


Not registered right -


10 7 3


-

NIS possession 1



IN TOTAL 20 14 6 NIS ownership 9

29

NIS right of usage – ownership of the Republic of Serbia

3

NIS possession 1


Not registered right _

Value and the surface

Type of the object Book value on 30. 06. 2011


- m2-

Land 321,321 90,347

Objects (property, investment property,

property in preparation) 4,645,579 82,354

IN TOTAL 4,966,900 172,701

Limited liability company NIS-SVETLOST Bujanovac

Object type Quantity Basis for use

Land 1

NIS ownership (mixed ownership) 1

NIS right of usage – ownership of the Republic of Serbia -

NIS possession -




9



NIS possession -



IN TOTAL 10



NIS possession -





-thousand RSD- Surface

- m2-

Land - 13,696

Objects 32,806 1,279

IN TOTAL 32,806 14,975

30


Object type Quantity Basis for use

Land

1

NIS ownership -


NIS possession -




1

NIS ownership -


NIS possession -


NIS ownership 1

IN TOTAL 2


NIS possession -



NIS ownership 1

*Remark: According to the confirmation from the Republic Direction for Property of the Republic of Serbia, 04 no: 46-732/2009

as of 14 December 2009, on the basis of the available documents, i.e. resolution of the Fourth Municipality Court in Belgrade, (business no. dl. I 3765/02 as of 22 September 2003), it is determined that the building KSC „Pinki-Zemun“ a.d. on the cadastral lot no.1153 Cadastral Municipality Zemun, is the ownership of the Republic of Serbia, with the right of usage in favor of Zemun Municipality. (taken from the Audit Report of Financial Statements of the company Pinki Zemun a.d. for 2009) The basis for use of the respective object is subject to ongoing legal dispute. The said object is registered in joint stock company Pinki Zemun accounting records.




- m2-

Land - -

Objects (construction objects)

210,661 12,000

IN TOTAL 210,661 12,000

2.2.1.2. Value of the plants and the equipment thousand RSD

Book value of the plants and equipment on 30 June 2011 amounts to RSD 24,282,430.

2.2.2. Participation in the share capital of other legal entities on 30 June 2011

Name and head office of the legal entity

Participation of the investment in the assets of the

issuer on 30.06.2011

-in thousand RSD-

Ownership interest of the issuer in the

share capital of the legal entity

Voting right of the issuer in the legal

entity %

O ZONE a.d. Beograd 3,455,196 100% 100%

OOO "NIS OVERSIZ" Moscow, Russian Federation

9,856 100% 100%

NIS-OIL Trading Gmbh, Frankfurt am Main (the company is undergoing

liquidation procedures in accordance with

the founder’s decision issued in 2010)

24,147 100% 100%

31

„Jadran-Naftagas“ limited liability company Banja Luka

71 66% 66%

NIS-Svetlost d.о.о. Bujanovac 17,045 51.32% 51.32%

JUBOS d.о.о. Bor 904 51% 51%

OOO "Sovmestnoe predprijatie RANIS" Moscow area, Cernogolovka, Russian Federation

522 51% 51%

Eurol International Bermuda ltd 2,999 50% 50%

Maco nafta d.o.o. Skopje 4,269 49% 49%

PINKI-ZEMUN a.d. Beograd - Zemun

65,333 48.7% 48.7%

Prokons d.o.o. Subotica 174 20.15% 20.15%

Linde Gas Srbija a.d. Becej 112,376 12.44% 12.44%

RTV Politika d.o.o. Beograd in bankruptcy proceedings

23,685 13.07%* 13.07%*

HIP-PETROHEMIJA a.d. Pancevo – in restructuring

1,682,522 12.72% 12.72%

* REMARK: According to data published on the web page of Business Registers Agency, ownership interest of NIS a.d. Novi Sad in share capital of RTV Politika doo Beograd in bankruptcy proceedings amounts to 10.03%. According to the confirmation received in 2008 from RTV Politika doo Beograd in bankruptcy proceedings, ownership interest of NIS a.d. Novi Sad in share capital of RTV Politika doo Beograd in bankruptcy proceedings amounts to RSD 23,685,000, i.e. 13.07%, and according to the confirmation from 2009 the amount of the ownership interest in the share capital is RSD 23,685,000. NIS a.d. Novi Sad does not possess data that the ownership interest of NIS a.d. Novi Sad in RTV Politika doo Beograd in bankruptcy proceedings has been decreased.

The upper table shows data on issuer’s investments that involve ownership interest in the share capital of the other legal entities in the amount higher than 10%. If the issuer’s has the position of the controlling company, the table should also contain the following data for subsidiaries. Joint stock company for hotels and tourism O ZONE ad Beograd

Business activity 5510 – Hotels and similar accommodation

Members of the Management

Kirill Kravchenko, Chairman of BD Dmitry Fomenko, member of BD Sergey Fominykh, member of BD

2008 /

31.12.2008 2009 /

31.12.2009 2010 /

31.12.2010 01.01.-30.06.2011 /

30.06.2011

Net profits/loss (123,633) (915,084) (150,262) 39,563

Total share capital 2,974,270 2,226,692 2,271,521 2,250,968

Total assets 5,709,045 5,094,492 5,072,036 5,075,339

OOO "NIS OVERSIZ" Moscow, Russian Federation

Business activity Crude oil and oil gas extraction


Dmitry Fomenko, director

2008 /

31.12.2008 2009 /

31.12.2009 2010 /

31.12.2010 01.01.-30.06.2011 /

30.06.2011

Net profits/loss 4,768 64 - -

Total share capital 1,503 1,572 1,748 1,681

Total assets 2,548 2,399 2,783 4,133

http://www.nis.rs/index.php?option=com_content&view=article&id=112&Itemid=139&lang=en



32

NIS Oil Trading Gmbh, Frankfurt am Main*

Business activity

- wholesale and retail trade; - export and import of the crude oil, oil derivatives, chemical and

petrochemical goods etc.; - intermediation and representation in trade affairs from the range

of the said products


Dr. Hans-Peter Mechlem, liquidation manager

2008 / 31.12.2008

2009 / 31.12.2009

2010 / 31.12.2010

01.01.-30.06.2011 / 30.06.2011

Net profits/loss (16,964) (18,720) 17,330 -


Total assets 136,240 128,691 29,502 29,502 *REMARK: On 19 July 2011 the liquidation procedure was completed on the basis of the founder’s decision issued in 2010

Jadran – Naftagas limited liability company Banja Luka*

Activity Exploration and production of oil and gas


Predrag Radanovic, director

2008 /

31.12.2008 2009 /

31.12.2009 2010 /

31.12.2010 01.01.-30.06.2011 /

30.06.2011

Net profits/loss - - - -

Total share capital - - 108 105

Total assets - - 108 99,243 *REMARK: The company is established on 23 December 2010

Limited liability company NIS-SVETLOST Bujanovac

Business activity 4671 – Wholesale trade with solid, liquid and gas fuels and similar products


Dragan Stojanovic, director

2008 /

31.12.2008 2009 /

31.12.2009 2010 /

31.12.2010 01.01.-30.06.2011 /

30.06.2011

Net profits/loss 4,768 10,611 974 3,758

Total share capital i 42,941 53,552 54,526 54,526

Total assets 68,429 80,886 82,707 135,480

Company for digging, transport and refining of melting slag and copper production JUBOS d.o.o. Bor

Business activity 2444 – Copper production


Snezana Djukic, Chairman of BD Katarina Vukmirovic, member of BD Olivera Basta, member of BD Dragan Bojovic, member of BD Borivoje Stojadinovic, member of BD

2008 /

31.12.2008 2009 /

31.12.2009 2010 /

31.12.2010 01.01.-30.06.2011 /

30.06.2011



Total assets 1,744 1,744 1,744 1,744

33

OOO "Sovmestnoe predprijatie RANIS", Moscow area, Cernogolovka, Russian Federation

Business activity Scientific explorations and elaboration in the area of the natural and technical sciences


Bozidar Djukic, director

2008 /

31.12.2008 2009 /

31.12.2009 2010 /

31.12.2010 01.01.-30.06.2011 /

30.06.2011

Net profits/loss (49) - - -


Total assets 28,268 29,621 34,395 30,646

Eurol International Bermuda ltd

Business activity

Oil trading activities encompassing the import and export of oil products, including but not limited to LPG, naphtha, gasoline, kerosene, jet, gasoil and fuel oil, and crude oil trading opportunities arising from Republic of Serbia / Jugopetrol interests in countries other than Yugoslavia


“A” Directors: Robert P. Finch David P. Fransen Barbara E. West

2008 /

31.12.2008 2009 /

31.12.2009 2010 /

31.12.2010 01.01.-30.06.2011 /

30.06.2011


Total share capital - - - -

Total assets - - - -

MACO NAFTA D.O.O. Skopje

Business activity Wholesale trade with compact, liquid and gas fuels and similar products


Elena Lazarevska, director

2008 /

31.12.2008 2009 /

31.12.2009 2010 /

31.12.2010 01.01.-30.06.2011 /

30.06.2011


Total share capital - - - -

Total assets - - - -


Business activity 9319 – Other sports activities


Dmitry Fomenko, Chairman of BD Predrag Curcic, member of BD Vesna Ziric, member of BD Olivera Vujnovic, member of BD Sandra Barjaktarevic, member of BD Vladimir Gavric, member of BD Dragan Jovic, member of BD Eduard Skofenko, member of BD Miroslav Despotovic, member of BD Petar Djukic, member of BD Aleksandar Bozovic, member of BD

2008 /

31.12.2008 2009 /

31.12.2009 2010 /

31.12.2010 01.01.-30.06.2011 /

30.06.2011

Net profits/loss (543) 337 629 1,613


Total assets 221,991 228,315 234,943 236,307

34

2.2.3. Patents, concessions, special permits 2.2.3.1. State briefly conditions and expected duration of approved concessions, patents, important commercial contracts, and franchise agreements, special permits for import or export of goods or performing business activates, etc. LICENCES NIS A.D. NOVI SAD FOR UNDERTAKING ENERGY ACTIVITIES RESOLUTION ISSUED BY: Energy Agency of the Republic of Serbia

№ NAME OF THE LICENCE RESOLUTION № LICENCE № VALID AS OF VALIDITY TERM

1 License for conducting energy

activity: oil products production

311.02-335/2006-L-1 005/06-LN-11 21.07.2006 10 years

(21.07.2016)

2

License for conducting energy activity:

Sales of natural gas at the free market

311.01-340/2006-L-1 005/06-LG-24 18.08.2006 10 years

(18.08.2016)

3 License for conducting energy activity: storage of oil and oil

products 311.01.336/2006-L-1 119/07-LN-14 20.04.2007

10 years (24.04.2017)

4 License for conducting energy

activity: Sale of oil and oil products

311.01.-337/2006-L-1 120/07-LN-15 20.04.2007 10 years

(20.04.2017)

5

License for conducting energy activity:

Retail sale of oil products (petrol station for supply of vehicles with the motor fuel)

311.02.-338/2006-L-1 571/09-LN-15a 03.02.2009 10 years

(03.02.2019.)

LICENCES NIS A.D. NOVI SAD FOR EXPLORATION OF THE MINERALS OIL AND GAS

№ EXPLORATION AREA RESOLUTION № ISSUED BY VALID AS

OF VALIDITY

TERM

1

Istražni prostor 1915-„Teritorija republike

Srbije južno od Save i Dunava“

310-02-059/2010-06 The Republic of Serbia, Ministry for Mining and

Energy 01.04.2010 31.12.2019

2 Istražni prostor 5070-

„Južni Banat“ 115-310-00206/2004-02

The Republic of Serbia, AP Vojvodina, Regional Office

for Energy and Minerals 29.10.2004 31.12.2015


„Srednji Banat“ 115-310-00205/2004-02




„Severni Banat“ 115-310-00204/2004-02


for Energy and Minerals 29.10.2004 31.12.2015.


„Srem“ 115-310-00202/2004-02




„Južna Bačka“ 115-310-00207/2004-02




„Severna Bačka“ 115-310-00203/2004-02



LICENCES NIS A.D. NOVI SAD FOR OIL AND GAS EXPLOITATION (Issued for indefinite term, except Resolution no. 18 – Melenci duboko)

SREDNJI BANAT

№ EXPLOITATION APPROVAL RESOLUTION № ISSUED BY DATE OF

RESOLUTION ISSUANCE

1 Gasno polje

„Banatski dvor“ natural

gas

III-310-6/78

SFRJ, The Republic of Serbia, AP Vojvodina, Regional Office for

Economy 24.01.1978

2 Gasno polje

„Banatski dvor-zapad“ gas 310-15/85


Industry, Construction, and Tertiary Activities

06.03.1985

3 Naftno polje oil III-310-3/80 SFRJ, The Republic of Serbia, AP 05.02.1980

35

„Banatsko Karađorđevo“

Vojvodina, Regional Office for Industry, Construction, and Tertiary

Activities

4 Gasno nalazište

„Begejci“ gas 310-85/2-70


Economy 11.03.1970

5 Gasno polje „Begejci-

Novi“ gas 310-32/87



23.04.1987

6 Naftno polje „Boka“ oil and natural

gas 04-2319/61

FNRJ, The Republic of Serbia, Executive Committee Office for

Industry 28.01.1961

7 Naftno polje „Elemir“ oil and natural

gas 04-2319


Industry 30.01.1961

8 Gasno polje „Itebej“ land gas 310-42/82



06.10.1982

9 Gasno polje „Međa“ natural

gas 310-448/71


Economy 22.11.1971

10 Polje „Melenci“ gas 310-266/81



05.03.1981

11 Naftno polje „Mihajlovo“

oil III-310-97/91 SFRJ, The Republic of Serbia, AP

Vojvodina, Regional Office for Economy

18.07.1991

12 Naftno polje „Rusanda“

oil III-310-4/90 SFRJ, The Republic of Serbia, AP


20.02.1990

13 Gasno polje „Srpska

Crnja“ land gas 310-8/77


Economy 02.03.1977

14 Naftno polje

„Vojvoda Stepa“ oil III-310-3/90


Economy 05.02.1990

15 Gasno nalazište

„Žitište“ gas III-310-10/89



23.03.1989

16 Naftno nalazište

„Zrenjanin“ oil III-310-44/87



23.06.1987

17 Naftno polje

„Zrenjanin sever“ oil III-310-56/91


Economy 17.07.1991

18 Nalazište

„Melenci duboko“ oil

115-310-00267/2008-02

The Republic of Serbia, AP Vojvodina, Regional Office for

Energy and Minerals

15.12.2008 g. (duration 10,5

years)

BACKA


RESOLUTION ISSUANCE

19 Gasno polje

„Ada“ land gas 310-8/77


Economy 02.03.1977

20 Gasno polje

„Bačka Topola“ natural

gas III-310-111/79



16.08.1979

21 Gasno nalazište

„Bečej“ gas (CO2) 310-25/83



25.03.1983

36

22 Gasno polje „Čantavir“ land gas 310-42/2-76 SFRJ, The Republic of Serbia, AP


01.06.1976

23 Gasno polje

„Gornji breg“ land gas 310-43/76


Economy 01.06.1976

24 Gasno nalazište

„Gospođinci“ gas 18969


Economy 25.11.1968

25 Gasno nalazište

„Kelebija“ oil 310-448/3/71


Economy 22.11.1971

26 Gasno polje „Martonoš“

gas 310-1/86



13.02.1986

27 Gasno polje

„Novi Kneževac“ gas 310-32/85



21.05.1985

28 Naftno nalazište

„Palić“ oil 310-39/76


Economy 27.05.1976

29 Gasno polje

„Ruski Krstur“ gas 310-35/85



20.06.1985

30 Gasno polje „Srbobran“

gas 18967 SFRJ, The Republic of Serbia, Republic Office for Economy

25.11.1968

31 Naftno polje

„Velebit“ oil 18968

SFRJ, The Republic of Serbia, Republic Office for Economy

25.11.1968.

32 Gasno nalazište „Velebit-Jug I“

gas III-310-69/89



27.11.1989

33 „Turija – sever“ oil III-310-72/91 SFRJ, The Republic of Serbia, AP


23.07.1991

34 Naftno ležište

„Turija – Sever“

undertaking works under

additional mining project

310-02-356/97 SRJ, The Republic of Serbia,

Ministry for Mining and Energy 22.09.1997

JUZNI BANAT


RESOLUTION ISSUANCE

35 Gasno polje

„Banatsko Novo Selo“ natural

gas III-310-117/78

SFRJ, The Republic of Serbia, AP Vojvodina, Regional Office for Industry, Construction, and

Tertiary Activities

06.09.1978

36 Gasno polje

„Banatsko Novo Selo Jug“

gas III-310-26/92 SFRJ, The Republic of Serbia, AP Vojvodina, Regional Office

for Economy 05.11.1992

37 Gasno nalazište

„Banatsko Plandište “ gas 5370

SFRJ, The Republic of Serbia, AP Vojvodina, Regional Office


38 Naftno polje „Janošik „

oil 5369/1 SFRJ, The Republic of Serbia, AP Vojvodina, Regional Office


39 Naftno polje

„Janošik-zapad „ oil III-310-5/90



40 Naftno polje

„Jermenovci „ oil and

gas 04-2319


Industry 28.01.1961

41 Naftno polje

„Lokve„ oil and

gas 04-2319


Industry 28.01.1961

37

42 Gasno nalazište

„Mramorak“ gas 310-85/3-70



43 Gasno polje

„Mramorak selo“ natural

gas 310-116/78


Tertiary Activities

06.09.1978

44 Gasno nalazište

„Nikolinci“ natural

gas 310-448/2/71



45 Gasno nalazište

„Tilva“ gas 310-85/1/70



46 Gasno polje

„Velika Greda“ land gas 04-2319


Industry 30.01.1961

47 Naftno polje

„Velika Greda-Jug“ oil and

gas 310-17/85


Tertiary Activities

25.03.1985

SEVERNI BANAT


RESOLUTION ISSUANCE

48 Gasno polje

„Banatsko Miloševo“ natural

gas III-310-56/77



49 Naftno i gasno polje

„Čoka“ oil and

gas 310-8/77


for Economy

02.03.1977

50 Gasokondenzatno

polje „Kikinda B“

land gas 310-44/81


Tertiary Activities

03.11.1981

51 Polje

„Kikinda F2, F, D, E3 oil and

gas 5371/1


28.03.1968.

52 Polje

„Kikinda Varoš“ oil 5367/1-68


28.03.1968

53 Naftno polje

„Kikinda Varoš - jug“ oil III-310-16/90



54 Naftno polje

„Kikinda Varoš - sever“

oil III-310-74/89


Tertiary Activities

22.12.1989

55 Naftno polje

„Majdan“ oil 310-61/85


Tertiary Activities

01.11.1985

56 Polja

„Mokrin Škriljci i Mokrin I, II“

oil and gas

5368/1 SFRJ, The Republic of Serbia, Republic Office for Economy

28.03.1968

57 Gasokondenzatno

polje „Nakovo“

gas III-310-24/92 SFRJ, The Republic of Serbia, Republic Office for Economy

27.10.1992

58 „Mokrin-jug“ oil 310-11/85


Tertiary Activities

29.01.1985

38

PODUNAVLJE


RESOLUTION ISSUANCE

59 Naftno i gasno polje

„Sirakovo“ oil and

gas 310-392/89


11.11.1989

LICENCE NIS A.D. NOVI SAD FOR EXPLOTATION OF THE DRINKING AND TERMOMINERAL

WATER (Issued for indefinite term)


RESOLUTION ISSUANCE

1 „Jazak-Jazački“

Prnjavor drinking water

310-02-00091/2002-04

The Republic of Serbia, Ministry for Mining and Energy

22.05.2002

2 Banja Kanjiža termo-mineral

water 115-310-

00089/2005-02


Energy and Minerals 26.05.2005.

3 Banja Junaković termo-mineral

water 115-310-

00182/2004-02


Energy and Minerals 19.01.2005.

4 Palic jezero 1/Н termo-mineral

water 310-18/83

SFRJ, Republic of Serbia, AP Vojvodina, Regional Office for

industry, construction and tercial activities

22.02.1983.

5 Вc-2/Н Becej termo-mineral

water III-310-19/88

SFRJ, Republic of Serbia, AP Vojvodina, Regional Office for

industry, construction and tercial activities

26.05.1988.

PARTICIPATION OF NIS A.D. NOVI SAD IN AGREEMENTS FOR PRODUCTION ALLOCATION IN

ANGOLA

AGREEMENT ON PRODUCTION ALLOCATION

BLOCK BLOCK 3 BLOCK 3/05 BLOCK 3/05А

SIGNED 11 July 1980 4 October 2005 4 October 2005

ENTERING INTO FORCE OF THE AGREEMENT

1 August 1980 1 July 2005 1 November 2005

NIS PARTICIPATION 5% 4% 4%

OPERATOR Sonangol P&P, Angola Sonangol P&P, Angola Sonangol P&P, Angola

PHASE production production Exploration and

development

PURPOSE OF THE AGREEMENT

Oil exploration and production allocation in shore areas of Angola between the

parties, Sonangol on one side, and other contracting

group of the other side (Operator)

Contractual relation in the form of the agreement on

production allocation between the parties,

Sonangol on one side, and other contracting group of the other side (Operator) with the

purpose of performing oil operations

Contractual relation in the form of the agreement on

production allocation between the parties,

Sonangol on one side, and other contracting

group of the other side (Operator) with the

purpose of performing oil operations

LICENCE TERMINATION 11 December 2012 30 June 2025 2030

39

2.2.4. Major capital investments 2.2.4.1.Description of major investments and withdrawal of funds invested in the above mentioned properties in the previous three years and description of method of financing each of such investments; description of other important investments and withdrawal of invested funds and method of financing such investments.

MAJOR CAPITAL INVESTMENTS IN 2008 NIS a.d. Novi Sad has invested RSD 8.0 billion in total for investment activities in 2008. When compared to total planed development and investment activity for 2008 (RSD 22.1 billion) realization of 36.3% has been fulfilled, that was larger for 17% when compared to realization in 2007. The amount of the funds spent in the respective period per branch office and fractions of the branch offices is presented in the following order

In RSD million Branch offices and

fractions of the branch offices NIS

a.d. Novi Sad

Realized investments in

2007

Plan for 2008

Realized investments in 2008

Ind 4:2

Ind 4:3

1 2 3 4 5 6

NIS-Naftagas 1,150.6 4,637.9 1,378.6 119.8 29.7

NIS-Petrol RNP 2,256.2 9,120.0 2,038.1 90.3 22.3

NIS-Petrol RNS 492.2 2,544.0 351.9 71.5 13.8

NIS-Petrol Jugopetrol

790,7 2.528,0 892.9 112.9 35.3

NIS-Petrol NAP 101.3 832.0 356.1 351.5 42.8

NIS-Petrol Professional services

32.0 2.9 9.1

NIS-TNG 326.3 680.0 160.8 49.3 23.7

NIS-Professional services

1,741.1 1,689.8 2,846.9 163.5 168.5

IN TOTAL: 6,858.4 22,063.7 8,027.6 117.0 36.4

Total realized investments NIS a.d. Novi Sad in the respective period are funded from the own funds (amortization and profits). Branch office NIS-Naftagas has realized total investments in the amount of RSD 1.4 billion, whereas for the investment of domestic needs RSD 0.7 billion has been spent (50% of the funds spent), and the foreign investments (Angola) RSD 707.9 million (50% of the funds spent). Realized investments present only 29.7% of the funds planned in 2008. Branch office NIS-Petrol has invested in total RSD 3.6 billion, which is 24.2% of the funds planned. Different levels of preparedness of the investment-technical documentation, as well as complex procedure for making investment decisions have affected the level of investments realization. In refineries it has been invested RSD 2.4 billion (66% of the total investments), in most part in ecological projects for environment protection and investment maintenance. In trade fraction was invested RSD 1.2 billion (34%) in the largest part for construction of the petrol stations (NIS-NAP), for reconstruction and revitalization of the petrol stations, realization of the project for environment protection on the petrol stations in Belgrade and reconstruction of the reservoirs. Branch office NIS-TNG, within the plan of the investment activities, has envisaged the funds in the amount of RSD 680 million that are dedicated for partial overcome of the problem of obsolete equipment and technology. From the moment of establishment of the branch office there have been efforts to replace obsolete equipment and in 2008 total investment were RSD 160.8 million, which is only 23.6% of the funds planned. Professional services of NIS a.d. Novi Sad invested in 2008 funds in the amount of RSD 1.69 billion. These investment are related to introduction of the information system SAP (license and implementation) and other intangible investments (Enhancement of Business Program Shell GS).

40

MAJOR CAPITAL INVESTMENTS IN 2009 Originally adopted plan of capital investments for 2009 amounted EUR 423 million i.e. RSD 34.3 billion at the exchange rate of RSD 80 effective at that time. After change in ownership structure, the plan for 2009 was reviewed and in April a new investment plan was defined, in the amount of EUR 91.2 million i.e. RSD 9.1 billion at the planned exchange rate at the time. Larger volume of project realization with economic effect when compared to 2008 is caused by the

partial advanced payment for the projects MHC/DHT+H2, the most significant NIS planned investment

in the following three years. It is also worth mentioning that the agreements in the value over EUR 160 million were signed for MHC/DHT+H2. In addition to the above-mentioned project, it should be noted that the works on the following facilities in the trade area were completed:

Reconstruction of three petrol stations (Sabac, Pozarevac, Adasevci Sever)

Construction of one new petrol station (Krusevac 5)

Fitting and installations for LPG at 8 petrol station. Significant investments were also made in NIS-Naftagas on projects for increase in oil and gas production:

Fracturing

ESP pumps (electric submersible pumps);

New drillings in the area of Kikinda municipality;

Angola. The most significant capital investments related to ecology were made in Pancevo Refinery, where RSD 0.8 billion was invested with the key projects such as:

Reconstruction of jetty

FCC (fluid catalytic cracking)

Reconstruction of tank truck loading facility

Projects Paid

- In billion RSD- Financed

MHC+H2 4.69 GPN

Ecology 1.06 GPN

Processing 0.42 OCF

Trade 0.50 OCF

NGS 1.28 OCF

STS 1.12 OCF

IN TOTAL 9.06 OCF Payments for capital investments in 2009

The budget structure of capital investments was improved - RSD 6 billion of total investments are investments with economic effect (positive net present value).

Budget structure of capital investments in RSD billion

41

Investments in information technologies:

SAP (payments in the amount of RSD 0.64 billion) - Successful completion of the system and the existing modules upgrading - organizational preparations and training for introduction of the Bulk logistics were

conducted.

IT equipment (realization 0.2 billion) - Purchase of computer equipment and software (workstations, servers for connecting

of petrol stations, new licenses for upgrading work platforms with Windows XP and Office 2003 on Windows 7 and MS Office 2007).

Sources of financing in 2009

Financing from Gazprom Neft funds RSD 5.75 billion

Financing from company’s funds RSD 3.32 billion

1.69

6.04 2.30

1.05

1.20

1.05

2.84

0.92

Paid in 2008. Paid in 2009.

Project with economy effect Ecology

PPOF/support to business Consultancy services

257%

-54%

-13%

-68%

8.03

9.06

Gazprom Neft; 63.4%

Company's funds; 36.6%

Sources of financing

42

MAJOR CAPITAL INVESTMENTS IN 2010 On the Investment Committee meeting a medium-term investment program has been adopted (further on ICM), where an investment plan for CAPEX was foreseen for the period of 2010 – 2012. According to ICM main investments in 2010 were addressed to the realization of the following groups of the project - MHC/DHT+H2, ecological projects, processing projects, sales, oil and gas production, and a number of projects implemented in the services of the corporate headquarter. In 2010 RSD 16,96 billion were spent for investments. At the same time, investments were increased to 87% in comparison with the previous year. The increase of investments per investment projects is as follows:

- MHC/DHT project – more of investments into MHC/DHT project in 2010 due to the on-site work execution commence and further purchase of the equipment (in accordance with the project realization trend), in contrast to 2009, when only advance payments for the equipment and design expenditures were made.

- Ecology – larger investments in 2010 mainly due to the start of investing into construction of a new unit for the regeneration of spent sulfur acid, and larger investments into such projects as FCC, reconstruction and modernization of the jetty on the Danube river at Pancevo Oil Refinery, reconstruction of railway loading/unloading facilities and reconstruction of HPV unit

- Angola – investments in 2010 are larger than it was planned - Projects with direct economic effect – larger investments in 2010 were caused by a large

number of the approved, commenced and finished projects in Oil and Gas Production and Sales

- Projects without direct economic effect – in 2010 a slight decline in contrast to 2009 was recorded.

The most significant investments in the oil and gas production in 2010 were for the following projects:

drilling of the development wells

Hydraulic fracturing

Installation of ESP pumps (electric submersible pumps)

Geological research works

Angola The most significant capital investment concerning ecology issues was implemented in Pancevo Oil Refinery through the following projects:

FCC unit reconstruction

construction of a new unit for the regeneration of spent sulfur acid

Reconstruction and modernization of jetty at Pancevo Oil Refinery at the Danube River

Reconstruction of railway loading/unloading facilities

Reconstruction of HPV unit – sludge treatment unit

Projects Paid

- In billion RSD- Financed

MHC+H2 10.29 GPN

Ecology 1.57 GPN

MHC+H2 0.04 OCF

Ecology 0.04 OCF

Angola 0.64 OCF

Projects with direct economic effect 2.44 OCF

Projects without direct economic effect 1.56 OCF

Other 0.39 OCF

Total 16.96 OCF

Sources of investment financing in 2010

The structure of the capital investments budget is improved – RSD 13.40 billion of total investments are investments with the economic effect.

43

Structure of capital investments in RSD billion (VAT excluded)

Besides the investments in operating capacities in 2010, NIS made significant investments in developing and upgrading of the information system. The largest investments amounting to RSD 0.49 billion were made in SAP software, which included the upgrading of the system and the existing modules and implementation of new logistic modules „Bulk” and „DAS”.

11.86

5.10

CAPEX from Gazprom neft loan CAPEX from OCF

CAPEX from Gazprom neft loan and CAPEX from OCF in bilion RSD ( VAT excluded)

4.69

10.33 1.06

1.61

0.89

0.64

0.46

2.44

1.62

1.56

0.36

0.39

2009 2010

MHC/DHTEcologyAngolaProject with direct economy effectProject without direct economy effectOther

9.06

16,96

+120%

-28%

+10%

+53%

x4

-4%

44

RSD 0.14 billion Investment was made for the purchase of computer equipment and software (workstations, upgrading of server infrastructure, new licenses for upgrading work platforms with Windows XP and Office 2003 on Windows 7 and MS Office 2007). Retail station Krnjaca was purchased for RSD 0,225 billion.

Sources of financing in 2010

Financing from Gazprom Neft funds RSD 11.86 billion

Financing from company’s funds RSD 5.10 billion

MAJOR CAPITAL INVESTMENTS IN THE FIRST HALF OF 2011 In the first six months of 2011, 8.62 billion of investments has been realized, which is 90.55% more compared to the same period of 2010. The most significant investments in the production of oil and gas in the first half of 2011 were at the following projects:

Angola; Geological exploration on the territory of Vojvodina; Projects of automation and reconstruction of the infrastructure on the oil and gas fields; Hydraulic fracturing; Reconstruction of system BOKA; Installation of ESP pumps (electric submersible pumps); Extracting of СО2 from natural gas.

The most significant capital investments in the first six months 2011 concerning ecology issues were implemented in Pancevo Oil Refinery through the following projects:

Construction of a new unit for the regeneration of spent sulphur acid; Reconstruction and modernization of jetty at Pancevo Oil Refinery at the Danube River; Reconstruction of railway loading/unloading facilities.

Sources of finances for investments H1 ʼ10 H1 ʼ11

CAPEX from GPN loan (letter of credit excluded) 2.96 5.68

Ecology 0.91 0.86

MHC/DHT 2.05 4.82

CAPEX from OCF (NIS funds) 1.56 2.94

MHC/DHT 0.00 0.02

Ecology 0.00 0.13

Angola 0.26 0.17

Gazprom Neft; 70,0%

Company's funds; 30.0%

Sources of financing

45

Projects with direct economic effect 0.50 1.58

Projects without direct economic effect 0.79 1.03

TOTAL: 4.52 8.62 *In RSD bn VAT excluded

Graphical representation of the realized investments from GPN loan and OCF (in RSD bn, letter of credit and VAT excluded)

Investments in human resources NIS a.d. Novi Sad is committed to continuous professional development of employees, as one of the Company’s most important resource. During 2010, NIS a.d. Novi Sad rationalized the existing professional development programs and earmarked about RSD 81.2 million for these purposes. Costs of employees’ training in RSD million

Training costs 2008 2009 2010 01.01.-30.06.2011

Costs of professional education 130.1 44.6 71.8 25.4

Costs of consultancy 34.8 4.5 8.8 4.7

Costs of business association membership fees

1.1 1.0 0.6 0.3

Total 166 50.1 81.2 30.4

2.05

4.84 0.91

0.99

0.26

0.17

0.50

1.58

0.79

1.03

H1 '10 H1 '11

MHC/DHT Ecology

Angola Projects with direct economic effect

Projects without direct economic effect

4.52

8.62

+136%

+9%

-35%

+216%

+30%

+91%

46

Costs of employees training in million RSD

2.2.5. Liens 2.2.5.1. Main data on issuer’s assets pledged as collateral: type of lien, value of pledged asset and liability, validity of lien, business name of the lien creditor

Type of lien Value of pledged assets and the secured claim

Validity of lien Name of the lien

creditor

Lien on real estate (lots 11178/1 and 11179/1 in real estate sheet

539 Cadastral Municipality Srbobran - Amar) no. 323/70 as

of 8 April 1970

Value of pledged assets RSD 461,635.02

secured claim RSD 1,500.00

Not defined

Srbobran Municipality, Srbobran,

Trg slobode 2

2.2.6. Litigations and other proceedings 2.2.6.1. Data are provided only for the key proceedings before the court or administrative body: number of proceedings with the issuer as a defendant and the total value of all disputes; number of proceedings with the issuer as a plaintiff and the total value of all disputes; proceedings related to industrial property rights and abuse of monopoly position should be stated separately

Analysis of the court disputes shows the tendency in growth of the court disputes in the period of the past few years of the business activity of NIS a.d. Novi Sad. On 30 June 2011, 2,663 court disputes were registered, whereof NIS a.d. Novi Sad is a plaintiff in 1,688 disputes, while it is a defendant in 975 disputes. Subject of the most disputes is debt collection, damage compensation and the labor disputes. NIS a.d. Novi Sad makes regular analysis of the possibility of the negative outcome and the amount of certain or reasonable dispute expenses.

130.1

44.6

71.8

25.4

34.8

4.5 8.8

4.7 1.1 1.0 0.6 0.3

2008 2009 2010 01.01. - 30. 06. 2011

Costs of professional education

Costs of consultancy

Costs of business association membership fees

47

Disputes structure on 30 June 2011

High value disputes

PLAINTIFF DEFENDANT VALUE

Copechim Trading Uni Credit bank,

HypoAlpeAdria Bank, Trizon, NIS a.d. Novi Sad

EUR 6,300,000

Unipress NIS a.d. Novi Sad EUR 3,000,000**

IBA UNITED NIS a.d. Novi Sad USD 25,000,000***

Stambena zadruga Refinery

NIS a.d. Novi Sad EUR 630,000,000*

Energoprojekt Visokogradnja

NIS a.d. Novi Sad, O Zone a.d. Belgrade

EUR 8,500,000

*REMARK: The dispute upon the legal suit of the Stambena zadruga Rafinerija vs. NIS a.d. Novi Sad, Javno preduzece

Srbijagas, Javno preduzece Transnafta and the Republic of Serbia The cause of the dispute is non-performance of the obligation of NIS a.d. Novi Sad on the basis of the 11 agreements on assumption of debt, entered between JP NIS (new debtor) and the Ministry of the Internal Affairs (initial debtor). The debt is based on the agreement on franchising in apartments construction that were entered between MUP RS and Stambena zadruga Rafinerija. In 2005 The Commercial Court in Novi Sad has issued judgment whereby JP NIS was obliged to pay to the plaintiff the amount of RSD 2,954,000,000 with the daily interest of 0.2% as of 1 March 2005 until the payment. By application of this interest rate NIS a.d. Novi Sad would be obliged to pay approximately EUR 630,000,000. Higher Commercial Court has repealed the judgment and returned the dispute for new trial. In the repeated procedure the Commercial court in Belgrade has on 29 April 2010 issued first instance judgment no. 7.P. 4996/2010 wherewith it has rejected in total the claim of Stambena zadruga against NIS a.d. Novi Sad, JP Srbijagas and JP Transnafta due to lack of the passive legitimating of the defendants. Appellation proceeding are ongoing. ** Dispute upon legal suit of Unipress vs. NIS a.d. Novi Sad is terminated by means of final court decision no.4407/10 as of 03 December 2010 in favor of NIS a.d. Novi Sad. Revision proceedings are ongoing. ***IBA UNITED Commercial Appellation Court has by means of the decision no Pz. 4427/10 as of 16 December 2010 issued Resolution whereby it has annulled first degree judgment that denied the legal suit of IBA UNITED, and has returned the case for repeated proceedings.

As of the date of taking over the controlling package of shares by the company Gazprom Neft, one of the main goals of the management of NIS a.d. Novi Sad is decrease in number of the court disputes, and establishment of control and risk management.

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2.2.7 Total amount of issuer’s liabilities not mature on the application day (on the day of 30 June 2011) 2.2.7.1. Amount of issuer’s liabilities for bank loans (thousand RSD)

Long-term 23,243,814

Shorter 17,341,195

IN TOTAL 40,585,009

2.2.7.2. Amount of issuer’s liabilities for issued debentures

/

2.2.7.3. Оther issuer’s liabilities (on 30 June 2011) (thousand RSD)

Liabilities to suppliers and other liabilities from business operations 31,550,256

Other long term liabilities – liabilities to parent company 26,131,794

2.2.8. Total amount of issuer’s liabilities not settled within the maturity period by the application date (on the day of 30 June 2011) 2.2.8.1. Amount of issuer’s liabilities for bank loans

/

2.2.8.2. Amount of issuer’s liabilities for issued debentures

/

2.2.8.3. Other issuer’s liabilities (thousand RSD)

Obligations towards suppliers and other business operation obligationson on 30 June 2011 amount to RSD 1,111,171.

2.2.9. Employees 2.2.9.1. Total number of employees employed with the issuer, their qualification level and the average number of employees in the previous three years:

Qualification level 2008 2009 2010 01.01. - 30.06.2011

Phd 18 14 12 14

Master 106 109 126 134

VSS 2,042 1,992 2,054 2,078

VS 886 765 710 692

SS 4,826 4,322 3,990 3,849

VK 1,298 1,217 1,110 1,076

KV 2,460 2,244 1,881 1,750

NS 526 431 158 138

In total* 12,162 11,094 10,041 9,731

Average number of employees 11,099

REMARK: Employees engaged through agencies not included. On the basis of the Agreement for Sale and Purchase of shares of NIS a.d. Novi Sad and the social program, NIS a.d. Novi Sad can make a proposal for termination of employment, provided that the employee is paid one-off redundancy in the amount of EUR 750 for each completed year of the employment engagement as well as four average salaries at the employer. Realization of the program for voluntary leave is undertaken by strictly obeying obligations of NIS a.d. Novi Sad after arrival of new majority shareholder. Decision of employee to leave in accordance with the program can be made only on the basis of the mutual decision of the employee and the company. Total number of employees who left the company by stimulative programs in the first half of 2011 is 337.

2.2.9.2. Total amount owed to employees: (thousand RSD)

Total amount of obligations towards the employees on 30 June 2011 is 776,320.

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2.3. Financial data 2.3.1. Data from issuer’s non-consolidated financial statements for the previous three years 2.3.1.1. Balance sheet (thousand RSD)

ASSETS AND LIABILITIES 2008 2009

(adjusted) 2010 30.06.2011

TOTAL ASSETS 160,606,975 144,051,315 177,12,.001 203,704,126

Non-current assets 112,752,770 95,734,160 108,326,343 116,188,695

Subscribed capital, unpaid - - - -

Goodwill - - - -

Intangible assets 5,453,480 4,792,744 4,835,761 4,779,504

Property, plant, equipment, and natural assets

96,938,045 84,632,483 99,407,561 107,443,802

Long-term financial investments 10,361,245 6,308,933 4,083,021 3,965,389

- Equity investments 4,063,090 2,918,864 2,578,753 2,583,240

- Other long-term financial investments

6,298,155 3,390,069 1,504,268 1,382,149

Current assets 47,854,205 48,317,155 63,995,754 82,710,527

Inventories 24,525,882 23,056,296 33,999,967 42,180,126

Non-current assets held for sale and discontinued operations

- 135.649 - -

Short-term receivables, investments and cash

23,328,323 25,125,210 29,995,787 40,530,401

Deferred tax assets - - 4,804,904 4,804,904

Operating assets 160,606,975 144,051,315 177,127,001 203,704,126

Loss over capital - - - -

Off-balance sheet assets 106,528,611 151,211,899 88,793,346 84,597,244

TOTAL LIABILITIES 160,606,975 144,051,315 177,127,001 203,704,126

Equity 69,981,542 32,283,167 47,018,714 68,420,912

Capital* 87,128,024 87,128,024 87,128,024 87,128,024


Reserves 889,424 889,424 889,424 889,424

Revaluation reserves 60,783 39 39 12

Unrealized gains on securities 136,760 130,243 48,417 46,690

Unrealized losses on securities 33,169 28,172 49,236 58,128

Retained earnings - - 16,484,381 37,897,225

Loss 18,200,280 55,836,391 57,482,335 57,482,335

Purchased own shares - - - -

Long-term provisions and liabilities

86,810,052 109,836,132 128,649,752 133,418,731

Long-term provisions 7,846,215 16,040,464 18,501,540 18,422,144

Long-term liabilities 12,340,006 40,653,678 48,927,154 49,444,398

-Long-term loans 12,248,861 34,733,451 26,645,540 23,243,814

-Other long-term liabilities 91,145 5,920,227 22,281,614 26,200,584

Short-term liabilities 66,623,831 53,141,990 61,221,058 65,552,189

-Short-term financial liabilities 47,407,595 18,566,832 21,805,638 17,341,195

- Liabilities regarding assets held for sale and discontinued operations

- - - -

50

- Liabilities from business operations

11,655,148 23,367,446 24,944,688 34,433,473

- Other short-term liabilities 4,031,732 3,884,567 6,394,456 6,034,532

- Liabilities for VAT and other taxes and deffered income

3,369,927 7,323,145 7,456,869 7,234,379

- Liabilities for income tax 159,429 - 619,407 508,610

- Deferred tax liabilities 3,815,381 1,932,016 1,458,535 1,864,483

Off-balance sheet liabilities 106,528,611 151,211,899 88,793,346 84,597,244 *REMARK: Basic capital in the amount of RSD 87,128,024,000.00 is comprised of the share and the other capital. The value of the registered share capital in the amount of RSD 81,530,220,000 registered with the Business Registeres Agency is based on the assessment of the value of in kind contribution on 31 May 2005, that was made for the purpose of preparation of division balance and establishment of NIS a.d. Novi Sad by decision of the Government of the Republic of Serbia. Auditor of the financial statements for 2005 has determined that in the accountancy records of NIS a.d. Novi Sad the value of the share capital is higher for the amount of RSD 5,597,804,000 when compared to the amount registered with the Business Registers Agency. Upon order of the auditor, this difference is presented as the other capital. In 2009, the amount of RSD 20,000 is moved to the position Other capital in order to bring into line position between the value of the share capital registered with the Central Registry (RSD 81,530,200,000) and the value in the business records (RSD 81,530,220,000) which is shown in the statement for 2009 as the changes in the capital.

2.3.1.2. Income statement (thousand RSD)

INCOME AND EXPENSES 2008 2009 2010 01.01. -

30.06.2011

Operating income 169,223,773 118,275,185 169,539,523 87,529,759

Sales 168,458,472 118,375,584 161,148,850 83,057,785

Revenue from activation of own products and goods

694,168 724,015 2,906,606 1,356,198

Increase in value of finished goods and work-in-progress

- - 5,357,982 2,983,189

Decrease in value of finished goods and work-in-progress

225,751 1.195.209 - -

Other operating revenues 296,884 370,795 126,085 132,587

Financial income 8,524,544 11,121,612 6,311,641 7,999,286

Other income 8,525,742 5,858,173 5,204,757 2,323,248

Operating expenses 164,244,154 120,375,891 143,349,664 70,756,394

Cost of goods sold 39,400,747 6,008,675 5,384,481 5,933,319

Cost of materials 93,188,785 68,609,999 95,345,034 44,592,864

Salaries and other employee benefits

14,087,407 19,834,025 21,269,895 10,026,035

Depreciation and provision expenses 6,914,861 13,951,527 8,383,146 3,757,377

Other operating expenses 10,652,354 11,971,665 12,967,108 6,446,799

Financial expenses 18,927,262 15,878,008 19,112,780 2,261,011

Other expenses 11,013,671 38,520,547 6,555,506 1,994,762

PROFIT(LOSS) from business operations before tax

(7,911,028) (39,519,476) 12,037,971 22,840,126

Net income(loss) from discontinued operations

- - - -

PROFIT (LOSS) before tax (7,911,028) (39,519,476) 12,037,971 22,840,126

Income tax - - - 1,427,282

Income tax for the period (111,587) - (831,975) 1,021,333

Deferred tax expenses for the period - - - 405,949

Deferred tax income for the period - 1,883,365 5,278,385 -

Personal income paid to employer - - - -

NET PROFIT (LOSS) (8,022,615) (37,636,111) 16,484,381 21,412,844

51

Net profit belonging to minority shareholders

- - - -

Earnings per share - - -

Basic earnings per share - - 0.1 0,13

Diluted earnings per share - - - -

2.3.1.3. Cash flow statement: (thousand RSD)

CASH FLOWS 2008 2009 2010 01.01.-

30.06.2011

Cash inflow from operating activities 175,316,997 185,017,980 254,607,167 123,131,751

Cash inflow from investing activities 1,104,131 6,953 45.850 7,303

Cash inflow from financing activities 26,102,453 82,002,205 27,471,347 7,606,080

CASH OUTFLOWS

Cash outflows from operating activities

187,097,944 167,399,487 236,816,567 110,217,167

Cash outflow from investing activities 11,548,881 9,469,672 17,913,248 10,742,040

Cash outflows from financing activities

858,918 85,522,238 25,529,860 6,611,112

TOTAL CASH INFLOWS 202,523,581 267,027,138 282,124,364 130,745,134

TOTAL CASH OUTFLOWS 199,505,743 262,391,397 280,259,675 127,570,319

NET CASH INFLOW 3,017,838 4,635,741 1,864,689 3,174,815

NET CASH OUTFLOW - - -

Cash at the beginning of the accounting period

1,784,304 3,989,794 8,671,501 10,595,830

Positive foreign exchange differences on cash

1,173,780 143,915 880,359 417,981

Negative foreign exchange differences on cash

1,986,128 97,949 820,719 958,163

Cash at the end of accounting period 3,989,794 8,671,501 10,595,830 13,230,463

2.3.1.4. Statement of changes in equity: (thousand RSD)

DESCRIPTION 31.12.2008 31.12.2009 31.12.2010 30.06.2011

Share capital 81,530,220 81,530,200 81,530,200 81.530.200

Other capital 5,597,804 5,597,824 5,597,824 5.597.824

Subscribed capital unpaid - -

Share premium - - - -

Reserves 889,424 889,424 889,424 889.424

Revaluation reserves 60,783 39 39 12

Unrealized gains from Securities 136,760 130,243 48,417 46.690

Unrealized losses from Securities 33,169 28,172 49,236. 58.128

Retained earnings - - 16,484,381 37.897.225

Loss to over of equity 18,200,280 55,836,391 57,482,335 57.482.335

Purchased own shares and stakes - - - -

Total 69,981,542 32,283,167 47,018,714 68.420.912

2.3.1.5. Important explanations of specific items from financial statements contained in notes to financial statements

In compliance with International Accounting Standards - notes to financial statements for the period ending on 30 June 2011 contain all significant disclosures.

52

2.3.1.6. Final auditor’s opinion (last three years)

Auditor's opinion for 2010 – the Company for Auditing, Accountancy, Financial and Consulting Services PricewaterhouseCoopers d.o.o. Belgrade To the Shareholders and Board of Directors of Naftna industrija Srbije a.d. Novi Sad We have audited the accompanying financial statements of Naftna industrija Srbije a.d., Novi Sad (the „Company“) which comprise the balance sheet as of 31 December 2010 and the income statement, statement of changes in shareholder's equity and cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes. The statistical annex is an integral part of these financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the requirements of the Law on Accounting and Auditing of the Republic of Serbia. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the as of 31 December 2010, and of its financial performance and its cash flows, in accordance with the Law on Accounting and Auditing of the Republic of Serbia. *REMARK: Auditors opinion is acknowledged by Board of Directors of NIS a.d. Novi Sad and it is subject to approval at the annual NIS a.d. Novi Sad Shareholders Assembly meeting.

Auditor's opinion for 2009 – the Company for Auditing, Accountancy, Financial and Consulting Services PricewaterhouseCoopers d.o.o. Belgrade To the Shareholders and Board of Directors of Naftna industrija Srbije a.d. Novi Sad We have audited the accompanying financial statements of Naftna industrija Srbije a.d., Novi Sad (the „Company“) which comprise the balance sheet as of 31 December 2009 and the income statement, statement of changes in shareholder's equity and cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes. The statistical annex is an integral part of these financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the requirements of the Law on Accounting and Auditing of the Republic of Serbia. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable

53

assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company as of 31 December 2009, and of its financial performance and its cash flows for the year then ended in accordance with the Law on Accounting and Auditing of the Republic of Serbia and disclosures in the Note 2 to the financial statements. Emphasis of Matter Without qualifying our opinion, we draw attention to the following matters: (a) The Company incurred a net loss of RSD 37,636,111 thousand during the year ended 31 December 2009 (31 December 2008 – RSD 8,022,615 thousand) and, as of that date the Company’s net assets are RSD 32,283,167 thousand (net assets as of 31 December 2008 – RSD 69,981,542) and the share capital amounts to RSD 87,128,024 thousand (31 December 2008 – RSD 87,128,024 thousand). In accordance with the Company Law of the Republic of Serbia, if the Company has incurred losses higher than 50% of its registered share capital, shareholders of the Company must be informed of this event in order to take the actions mandated by law. Furthermore, if the net asset value of the Company is below the minimum share capital required by the Company Law for that form of company, and remains in that manner for a period of six months from the moment it becomes first apparent, adverse consequence may follow. The ultimate outcome of this matter cannot presently be determined and, consequently, the financial statements do not include adjustments or disclosures to reflect these issues. b) In accordance with the Agreement of Sale and Purchase of Share of Naftna Industrija Srbije a.d., Republic of Serbia, as a Seller, is obliged to give written official consent for Naftna industrija Srbije a.d. to register its title or right of use to all immovable properties recorded in Fixed Assets Register as at 31 December 2007. Until 31 December 2009, such a written consent was not issued and transfer of ownership of properties on the Company’s name is still in progress. c) In accordance with Agreement of Sale and Purchase of Share of Naftna Industrija Srbije a.d., Republic of Serbia, as a Seller, is obliged to ensure that if operations of the Company’s equipment that existed at the date of the Agreement result in violations of environmental requirements due to obsolescence or physical wear, no sanctions are applied against Naftna industrija Srbije a.d. with respect to such non-compliance until such equipment is modernized or replaced. The Company has engaged independent consultant to assess exposure of the Company to environmental requirements of Republic of Serbia as of the date of the Agreement. The consultant’s report is pending and as such the total environmental exposure of the Company is still under evaluation. Auditor's opinion for 2008 (on adjusted financial statements) – KPMG d.o.o. Belgrade: Report on the Adjusted Financial Statements We have audited the accompanying separate adjusted financial statements of NIS a.d. - Naftna Industrija Srbije, Novi Sad (hereinafter: “the Company”) which comprise the separate adjusted balance sheet as at 31 December 2008 and the related separate adjusted statement of income, separate adjusted cash flow statement and separate adjusted changes in shareholders equity for the year then ended. Audit of the Company’s financial statements for 2007 was performed by another auditor who expressed a qualified opinion in his report dated 9 May 2008 in respect of recording of effects of error adjustments, non-compliance with IAS 19 – Employee Benefits, intangible assets, nature and measurement of inventories of investment materials, long-term investments, obsolete inventories and slow moving inventories, provisions for re-cultivation of environmental degradation, unreconciled receivables and payables, calculation and presentation of taxes in accordance with IAS 12 and cash flow statement.

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Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with the Law on Accounting and Auditing of the Republic of Serbia (as published in the “Official Gazette of the Republic of Serbia” no. 46/2006). This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We have conducted our audit in accordance with the Law on Accounting and Auditing of the Republic of Serbia (as published in the “Official Gazette of the Republic of Serbia” no. 46/2006) and International Standards on Auditing as issued by the International Federation of Accountants. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion: In our opinion, the separate adjusted financial statements give a true and fair view of the financial position of the Company as at 31 December 2008, and the results of its operations and cash flows for the year then ended, in accordance with the Law on Accounting and Auditing of the Republic of Serbia (as published in the „Official Gazette of the Republic of Serbia“ no. 46/2006). Emphasis of Matter Without qualifying our opinion, we draw attention to the following issues: As at 18 April 2008 the Shareholders’ Assembly of the Company adopted the Decision on profit distribution for 2007, whereby a liability was created toward its founder at the time in the amount of RSD 4,048,227 thousand. Out of this amount RSD 2,347,514 thousand was settled through compensation with JP Srbijagas and JP Železnice Srbije, while the amount of RSD 263,582 thousand was returned to the Company, whereby the Company’s liability to its founder at the time as at 31 December 2008 amounts to RSD 2,126,363 thousand. Given that the Company’s Share Purchase Agreement includes a statement and guarantee from the seller that after 25 January 2008 no dividends have been paid, we are unable to confirm the validity of the Decision on distribution of dividends for 2007 and related postings. Also, the Decision dated 29 January 2009 on covering losses from earlier years and distribution of retained earnings from previous years to the founder, liability toward the founder has been established for the remainder of profits after covering of losses in the amount of RSD 7,171,908 thousand. This Decision by the Shareholders’ Assembly was not carried out in the Company’s accounting records. In March 2009 the Board of Directors initiated court proceedings to cancel the decision on profit distribution. In accordance with information received from the Company’s management, the validity of both decisions on profit distribution will be the subject of negotiation of interested parties. The Company reported an equity investment in HIP Petrohemija a.d. Pancevo in the net amount of RSD 487,986 thousand, as well as long-term financial investments and current receivables from HIP Petrohemija a.d. Pančevo as at 31 December 2008 in the amount of RSD 6.576.116 thousand (2007 – RSD 2,107,655 thousand). In view of the weak financial position of HIP Petrohemija a.d. Pančevo and its reported losses, Company management is considering ways to collect and the amount of potential impairment of investment and receivables from HIP Petrohemija. The Company does not have complete documentation as proof of ownership or right of use over all of its assets and property, nor has it made full separation with respect to former members of NIS. Company management believes that issues of ownership over property, separation with respect to

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former members of NIS and settling of relations with state authorities will be concluded successfully, and that there will not be any significant difficulties in defining ownership. The Company currently lacks documentation on ownership (detailed property list) for all of its properties, but relies on the obligation of the Government of the Republic of Serbia, arising from the Sale Purchase Agreement, to provide the appropriate documents. Due to the existence of aged equipment and the fact that particular production processes in the Company are outdated, it is possible that the Company might have breached and will be in breach of environmental laws of the Republic of Serbia, As a result, the Company is a potential environmental pollutant and it is reasonable to expect environmental claims and litigation against the Company in future. The Company did not make provisions for the costs of rectifying the consequences of environmental pollution that occurred prior to and after the preparation of the financial statements for 2008, given that management is relying on obligation of the Government of the Republic of Serbia to indemnify the Company from any such claims and litigation expect for industrial disasters until such time when the Programme for Reconstruction and Modernization of assets of the Company is completed in accordance with the Sale Purchase Agreement. Calculation of deferred tax liabilities was made based on the tax values of fixed assets and intangible assets that are assessed by the Tax Authorities, and which are the subject of an administrative dispute. Upon conclusion of this administrative dispute, with its ultimate outcome being difficult to estimate at this time, the value of deferred tax liabilities could be adjusted. * REMARK: All the quoted opinions of the auditor (original) can be downloaded on NIS a.d. Novi Sad web site www.nis.rs 2.3.2. Data from issuer’s consolidated financial statements from the past three years 2.3.2.1. Legal entities included in the consolidated statement

Business name % participation in share capital

O Zone a.d. Belgrade 100.00

NIS-OIL Trading Gmbh, Frankfurt am Main 100.00

NIS Overseas, Moscow, Russian Federation 100.00

Svetlost d.o.o., Bujanovac 51.32

Ranis, Moscow area, Cernogolovka, Russian Federation

51.00

Jubos d.o.o., Bor 51.00

2.3.2.2. Consolidated balance sheet (in thousands RSD)

АSSETS AND LIABILITIES 31.12.2008 31.12.2009 (corrected)

31.12.2010 30.06.2011

TOTAL ASSETS 161,193,607 144,701,351 178,107,989 204,755,330

Non-current assets 113,524,879 96,356,741 108,928,259 116,847,158


Goodwill - - - -

Intangible assets 5,462,308 4,800,245 4,841,418 4,883,128

Property, plant, equipment and biological assets

100,884,366 87,798,991 102,317,854 110,331,686

Long-term financial investments

7,178,205 3,757,505 1,768,987 1,632,344

Investment in capital 880,049 366,114 263,229 248,705

Other long-term financial investments

6,298,156 3,391,391 1,505,758 1,383,639

Current assets 47.668.452 48.344.610 64.374.826 83,103,226

Inventories 24,423,527 23,031,345 34,016,869 42,194,256

Non-current assets held for sale and assets from discontinuing operations

- 135,649 262,431 16,238

http://www.nis.rs/

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Short-term receivables, investment and cash

23,244,925 25,177,616 30,095,526 40,892,732

Deferred tax assets 276 - 4,804,904 4,804,946

Operating assets 161,193,607 144,701,351 178,107,989 83,103,226

Loss exceeding equity - - - -

Off-balance sheet assets 106,528,611 151,211,899 88,793,346 84,597,244

TOTAL LIABILITIES 161,193,607 144,701,351 178,107,989 204,755,330

Equity 69,633,845 32,019,877 47,032,740 68,399,986

Basic capital 87,151,650 87,148,593 87,148,630 87,148,630


Reserves 889,211 889,171 889,672 889,366

Revaluation reserves 61.362 - - -

Unrealized gains on securities

136,760 130,243 48,417 46,690

Unrealized losses on securities

33,169 28,172 49,236 58,128


Loss 18,571,969 56,119,958 57,740,646 57,743,853

Purchased own shares - - - -

Long-term provisions and liabilities

87,677,795 110,749,419 129,616,714 134,490,816

Long-term provisions 7,878,920 16,111,675 18,574,652 18,494,717

Long-term liabilities 13,127,820 41,369,977 49,642,245 50,198,725

Long-term loans 12,245,150 34,733,451 26,645,540 23,243,814

Other long-term liabilities 882,670 6,636,526 22,996,705 26,954,911

Short-term liabilities 66,671,055 53,267,767 61,399,817 65,797,374

Short-term financial liabilities 47,409,746 18,567,835 21,805,638 17,341,774

Liabilities in respect of assets held for sale and assets from discontinuing operations

- - - -

Trade and other payables 11,508,677 23,336,687 24,964,034 34,510,915

Other short-term liabilities 4,217,632 4,047,008 6,552,062 6,197,249

Liabilities for VAT and other public income

3,374,049 7,314,806 7,457,457 7,238,176

Liabilities for income tax 160,951 1,431 620,626 509,260

Deferred tax liabilities 3,881,967 1,932,055 1,458,535 1,864,528

Off-balance sheet liabilities 106,528,611 151,211,899 88,793,346 84,597,244

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2.3.2.3. Consolidated income statement (in thousands RSD)

INCOME AND EXPENSES 2008 2009

(corrected) 2010 30.06.2011

Operating income 169,607,132 118,701,874 169,778,652 87,627,170

Sales revenue 168,903,199 118,578,202 161,379,929 83,134,711

Revenue from consumption of own products

697.090 724,653 2,908,291 1,375,317

Increase in inventories - - 5,357,982 2,983,189

Decrease in inventories 225,751 981,362 - -

Other operating revenues 232,594 380,381 132,450 133,953

Financial income 8,505,247 11,124,507 6,320,537 8,000,132

Other income 8,552,811 5,880,260 5,177,533 2,381,180

Operating expenses 164,812,386 121,009,774 143,752,598 70,947,158

Cost of goods sold 39,582,455 6,186,024 5,384,484 5,933,319

Cost of materials 93,033,146 68,676,064 95,394,332 44,609,341

Cost of salaries, salaries compensations and other employee benefits

14,170,110 19,983,605 21,346,120 10,111,816

Depreciation and provisions 6,975,591 13,996,119 8,414,138 3,768,627

Other operating expenses 11,051,084 12,167,962 13,213,524 6,524,055

Financial expenses 18,907,824 15,884,833 19,116,265 2,262,876

Other expenses 11.021.776 38,527,706 6,117,785 1,989,697

PROFIT(LOSS) from regular operations before taxation

(8,076,796) (39,715,672) 12,290,074 22,808,751

Net gains(loss) from discontinued operation

- - - -

PROFIT (LOSS) before taxation

(8,076,796) (39,715,672) 12,290,074 22,808,751

Income tax - - - -

Current income tax (111,629) (212) (832,556) 1,021,424

Deferred tax expense for the period

(2,065) - - 405,949

Deferred tax income for the period

- 1,949,912 5,278,385 -

Personal earnings/salaries paid to employer

- - -

NET PROFIT (LOSS) (8,190,490) (37,765,972) 16,735,903 21,381,378

Net profit belonging to minority shareholders

- - 268 574

Net profit belonging to parent company

- - 16,735,635 21,380,804

Earnings per share - - - -

Basic earnings per share - - - 0,13

Diluted earnings per share - - - -

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2.3.2.4. Consolidated cash flow statement (in thousands RSD)

CASH FLOWS 2008 2009 2010 30.06.2011

Cash inflow from operating activities

174,873,512 185,401,228 254,422,420 123,228,517

Cash inflow from investing activities

1,029,606 8,911 45,850 321,148

Cash inflow from financing activities

26,102,453 82,002,205 27,471,384 7,606,080

CASH OUTFLOWS

Cash outflows from operating activities

186,979,539 167,901,422 236,816,567 110,331,840

Cash outflows from investing activities

11,579,840 9,371,622 17,739,476 10,723,029

Cash outflows from financing activities

435,703 85,522,238 25,529,860 6,611,112

TOTAL CASH INFLOWS 202,005,571 267,412,344 281,939,654 131,155,745

TOTAL CASH OUTFLOWS 198,995,082 262,795,282 280,085,903 127,665,981

NET CASH INFLOW 3.010,489 4,617,062 1,853,751 3,489,764

NET CASH OUTFLOW - - - -

Cash at the beginning of the accounting period

1,862,109 4,060,250 8,723,278 10,636,669

Foreign currency gains on translation of cash

1,173,780 143,915 880,359 417,982

Foreign currency losses on translation of cash

1,986,128 97,949 820,719 958,163

Cash at the end of accounting period

4,060,250 8,723,278 10,636,669 13,586,252

2.3.2.5. Consolidated statement of changes in equity (in thousands RSD)

31.12.2008

31.12.2009 (corrected)

31.12.2010 30.06.2011

Share capital 81,530,220 81,550,720 81,550,757 81,550,757

Other capital 5,621,430 5,597,873 5,597,873 5,597,873

Subscribed capital, Unpaid - - -

Share premium - - -

Reserve 889,211 889,171 889,672 889,366

Revaluation reserves 61,362 - - -

Unrealized gains on securities 136,760 130,243 48,417 46,69

Unrealized losses on securities

33,169 28,172 49,236 58,128


Loss to amount of equity 18,571,969 56,119,958 57,740,646 57,743,852

Purchased own shares and stakes

- - - -

Total 69,633,845 32,019,877 47,032,740 68,399,986

Loss above the equity - - -

2.3.2.6. Important explanations on certain items in the financial statements contained in notes to financial statements

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2.3.2.7. Final auditor’s opinion (previous three years)

Auditor's opinion for 2010. – the Company for Auditing, Accountancy, Financial and Consulting Services PricewaterhouseCoopers d.o.o. Belgrade To the Shareholders and Board of Directors of Naftna industrija Srbije a.d. Novi Sad We have audited the accompanying consolidated financial statements of Naftna Industrija Srbije a.d., Novi Sad (the „Parent“) and its subsidiaries (the „Group“) which comprise the consolidated balance sheet as of 31 December 2010 and the consolidated income statement, consolidated statement of changes in shareholder’s equity and consolidated cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes. The statistical annex is an integral part of these consolidated financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the requirements of the Law on Accounting and Auditing of the Republic of Serbia. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as of 31 December 2010, and of its financial performance and its cash flows for the year then ended in accordance with the Law on Accounting and Auditing of the Republic of Serbia. *REMARK: Auditors opinion is acknowledged by Board of Directors of NIS a.d. Novi Sad and it is subject to approval at the annual NIS a.d. Novi Sad Shareholders Assembly meeting.

Auditor's opinion for 2009. – the Company for Auditing, Accountancy, Financial and Consulting Services PricewaterhouseCoopers d.o.o. Belgrade To the Shareholders and Board of Directors of Naftna industrija Srbije a.d. Novi Sad We have audited the accompanying consolidated financial statements of Naftna Industrija Srbije a.d., Novi Sad (the „Parent“) and its subsidiaries (the „Group“) which comprise the consolidated balance sheet as of 31 December 2009 and the consolidated income statement, consolidated statement of changes in shareholder’s equity and consolidated cash flow statement for the year then ended and a summary of significant accounting policies and other explanatory notes. The statistical annex is an integral part of these consolidated financial statements. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with the requirements of the Law on Accounting and Auditing of the Republic of Serbia. This responsibility includes: designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of financial statements that are free from

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material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Group as of 31 December 2009, and of its financial performance and its cash flows for the year then ended in accordance with the Law on Accounting and Auditing of the Republic of Serbia and disclosures in the Note 2 to the consolidated financial statements. Emphasis of Matter Without qualifying our opinion, we draw attention to the following matters: a) The Parent incurred a net loss of RSD 37,636,111 thousand during the year ended 31 December 2009 (31 December 2008 – RSD 8,022,615 thousand) and, as of that date the Parent’s net assets are RSD 32,283,167 thousand (net assets as of 31 December 2008 – RSD 69,981,542) and the share capital amounts to RSD 87,128,024 thousand (31 December 2008 – RSD 87,128,024 thousand). Subsidiary O Zone a.d. has also incurred losses in excess of 50% of its share capital. In accordance with the Company Law of the Republic of Serbia, if the company has incurred losses higher than 50% of its registered share capital, shareholders must be informed of this event in order to take the actions mandated by law. Furthermore, if the net asset value of the company is below the minimum share capital required by the Company Law for that form of company, and remains in that manner for a period of six months from the moment it becomes first apparent, adverse consequence may follow. The ultimate outcome of this matter cannot presently be determined and, consequently, the financial statements do not include adjustments or disclosures to reflect these issues. b) In accordance with the Agreement of Sale and Purchase of Share of Parent, Republic of Serbia, as a Seller, is obliged to give written official consent for Parent to register its title or right of use to all immovable properties recorded in Fixed Assets Register as at 31 December 2007. Until 31 December 2009, such a written consent was not issued and transfer of ownership of properties on the Parent's name is still in progress. c) In accordance with the Agreement of Sale and Purchase of Share of Parent, Republic of Serbia, as a Seller, is obliged to ensure that if operations of the Parent's equipment that existed at the date of the Agreement result in violations of environmental requirements due to obsolescence or physical wear, no sanctions are applied against Parent with respect to such non-compliance until such equipment is modernized or replaced. The Parent has engaged independent consultant to assess exposure of the Parent to environmental requirements of Republic of Serbia as of the date of the Agreement. The consultant's report is pending and as such the total environmental exposure of the Parent is still under evaluation. Auditor's opinion for 2008 (on the adjusted consolidated financial statements) – KPMG d.o.o. Belgrade Report on the Adjusted Consolidated Financial Statements We have audited the accompanying adjusted consolidated financial statements of NIS a.d. - Naftna

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industrija Srbije, Novi Sad (hereinafter: “the Company”) which comprise the adjusted consolidated balance sheet as at 31 December 2008 and the related adjusted consolidated statement of income, adjusted consolidated cash flow statement and adjusted consolidated changes in shareholders equity for the year then ended. Audit of the Company’s consolidated financial statements for 2007 was performed by another auditor who expressed a qualified opinion in his report dated 9 May 2008 in respect of recording of effects of error adjustments, non-compliance with IAS 19 – Employee Benefits, intangible assets, nature and measurement of inventories of investment materials, long-term investments, obsolete inventories, slow moving inventories and inventories with internal profits, provisions for re-cultivation of environmental degradation, unreconciled receivables and payables, calculation and presentation of taxes in accordance with IAS 12 and cash flow statement. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these adjusted consolidated financial statements in accordance with the Law on Accounting and Auditing of the Republic of Serbia (as published in the “Official Gazette of the Republic of Serbia“ no. 46/2006). This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of adjusted consolidated financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor's Responsibility Our responsibility is to express an opinion on these adjusted consolidated financial statements based on our audit. We have conducted our audit in accordance with the Law on Accounting and Auditing of the Republic of Serbia (as published in the “Official Gazette of the Republic of Serbia” no. 46/2006) and International Standards on Auditing as issued by the International Federation of Accountants. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance whether the adjusted consolidated financial statements are free of material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the adjusted consolidated financial statements. The procedures selected depend on our judgment, including the assessment of the risks of material misstatement of the adjusted consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation and fair presentation of the adjusted consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting principles used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the adjusted consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Opinion In our opinion, the adjusted consolidated financial statements give a true and fair view of the consolidated financial position of the Company as at 31 December 2008, and the consolidated results of its operations and consolidated cash flows for the year then ended, in accordance with the Law on Accounting and Auditing of the Republic of Serbia (as published in the “Official Gazette of the Republic of Serbia” 46/2006). Emphasis of Matter Without qualifying our opinion, we draw attention to the following issues: As at 18 April 2008 the Shareholders' Assembly of the Company adopted the Decision on profit distribution for 2007 reported in the separate financial statements, whereby a liability was created toward its founder at the time in the amount of RSD 4,048,227 thousand. Out of this amount RSD 2,347,514 thousand was settled through compensation with JP Srbijagas and JP Železnice Srbije, while the amount of RSD 263,582 thousand was returned to the Company, whereby the Company’s liability to its founder at that time as at 31 December 2008 amounts to RSD 2,126,363 thousand. Given that the Company’s Share Purchase Agreement includes a statement and guarantee from the seller that after 25 January 2008 no dividends have been paid, we are unable to confirm the validity of the Decision on distribution of dividends for 2007 and related postings. Also, the Decision dated 29 January 2009 on covering losses from earlier years and distribution of retained earnings from previous years to the founder, liability toward the founder has been established for the remainder of profits after covering of losses in the amount of RSD 7,171,908 thousand. This Decision by the Shareholders’

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Assembly was not carried out in the Company’s accounting records. In March 2009 the Board of Directors initiated court proceedings to cancel the decision on profit distribution. In accordance with information received from the Company’s management, the validity of both decisions on profit distribution will be the subject of negotiation of interested parties. The Company reported an equity investment in HIP Petrohemija a.d. Pančevo in the net amount of RSD 487,986 thousand, as well as long-term financial investments and current receivables from HIP Petrohemija a.d. Pančevo as at 31 December 2008 in the amount of RSD 6,576,116 thousand (2007 – RSD 2,107,655 thousand). In view of the weak financial position of HIP Petrohemija a.d. Pančevo and its reported losses, Company management is considering ways to collect and the amount of potential impairment of investment and receivables from HIP Petrohemija. The Company does not have complete documentation as proof of ownership or right of use over all of its assets and property, nor has it made full separation with respect to former members of NIS. Company management believes that issues of ownership over property, separation with respect to former members of NIS and settling of relations with state authorities will be concluded successfully, and that there will not be any significant difficulties in defining ownership. The Company currently lacks documentation on ownership (detailed property list) for all of its properties, but relies on obligation of the Government of the Republic of Serbia, arising from the Sale Purchase Agreement, to provide the appropriate documents. Due to existence of aged equipment and the fact that particular production processes in the Company are outdated, it is possible that the Company might have breached and will be in breach of environmental laws of the Republic of Serbia. As a result, the Company is a potential environmental pollutant and it is reasonable to expect environmental claims and litigation against the Company in future. The Company did not make provisions for the costs of rectifying the consequences of environmental pollution that occurred prior to and after the preparation of the financial statements for 2008, given that management is relying on obligation of the Government of the Republic of Serbia to indemnify the Company from any such claims and litigation except for industrial disasters until such time when the Programme for Reconstruction and Modernization of assets of the Company is completed in accordance with the Sale Purchase Agreement. Calculation of deferred tax liabilities was made based on the tax values of fixed assets and intangible assets that are assessed by the Tax Authorities, and which are the subject of an administrative dispute. Upon conclusion of this administrative dispute, with its ultimate outcome being difficult to estimate at this time, the value of deferred tax liabilities could be adjusted. Within investments under construction, the Company reported investments in the Crni Vrh hotel complex in the amount of RSD 2,850,035 thousand as at 31 December 2008. Following the last appraisal performed on 1 January 2007 no new investments were made in this hotel complex. Management did not reach a decision on future status of this investment in the hotel complex.

*All the quoted Audit Reports (original) can be downloaded on NIS a.d. Novi Sad web site www.nis.rs 2.3.3. Key performance and success indicators 2.3.3.1. State key performance indicators including indicators of liquidity, solvency, net working capital, profitability and other indicators, relevant to the issuer’s core activity

DESCRIPTION 2008 2009 2010 01.01.-

30.06.2011

Liquidity of 1st degree (cash and cash equivalents) 6.0% 16.3% 17% 20%

Liquidity of 2nd degree (current assets-inventory/current liabilities)

35% 48% 57% 62%

Net working capital ratio( current assets- current liabilities/current assets)

-39% -10% 11% 21%

Indicator of financial stability (own capital/operating liabilities)

48% 34% 49% 43%

Indebtedness ratio (current liabilities long-term liabilities/operating liabilities)

49% 65% 62% 56%

Debt-to-equity ratio ( current liabilities + long-term liabilities/ equity)

101% 194% 126% 132%

Profitability (net profit/average operating liabilities) -3% -16% 10% 11%

Profitability (net profit/average shareholders’ equity) -7% -37% 19% 25%

http://www.nis.rs/

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2.3.4. Salary costs 2.3.4.1. State costs of salaries for the previous three months separately, both gross and net (thousand RSD)

Costs of salaries Gross Net

April 2011 1,244,342 761,988

May 2011 1,513,159 930,159

June 2011 1,384,822 848,526

2.3.5. Gain/loss per share 2.3.5.1. State previous three business years: (RSD)

31.12.2008 31.12.2009 31.12.2010 30.06.2011

Net gain or loss per share according to the non-consolidated financial statements

(984.01) (230.81) 101.09 131.32

Net gain or loss per share according to the consolidated financial statements

(1004.60) (231.61) 102.60 131.12

Number of shares 8,153,020 163,060,400 163,060,400 163,060,400

(If the number of shares has changed in the past three years, provide the new data that reflect such changes and method applied for replaced share valuation.) 2.3.6. Dividends paid 2.3.6.1. State the following: - date of dividends payment, for the previous three years; - the amount of dividends paid per share, separately for each class; - ex-dividend day – certain date before the dividend payment date on which the persons that are registered as the share holders are entitled to receive the dividend, regardless of the fact that on the dividend payment date the holder of the share can be other person

2008: The company has conducted business with losses in the amount of RSD 8,022,615,000.

2009: The company has conducted business with losses in the amount of RSD 37,636,111,000.

2010: The company has conducted business with profit of RSD 16,484,381,000 that is not distributed.*

*REMARK: Board of Directors has adopted the Decision on allocation of profit for 2010, according to which the profit is allocated to cover losses carried forward from previous years.

2.3.7. Off-balance items 2.3.7.1. Provide description on key off-balance items Off balance sheet assets and liabilities.

31.12.2008 31.12.2009 31.12.2010 30.06.2011

Issued warranties and bills of exchange

91,582,736 131,982,082 66,564,991 61,561,496

Received warranties and bills of exchange

1,233,001 5,684,192 7,304,718 8,576,340

Properties (in ex-republics) 5,421,435 5,421,435 5,463,024 5,463,074

Claims (from companies from ex-republics)

3,861,809 4,096,875 4,867,507 4,337,021

Third party merchandise and other third party goods

3,910,925 3,436,067 4,035,255 4,094,482

Assets for oil fields liquidation in Angola

518,705 591,248 557,851 564,831

106,528,611 151,211,899 88,793,346 84,597,244

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2.4. Other important facts 2.4.1. Other important facts that may be significant for investor’s decision on business operations, activities and financial position of the issuer

Gazprom Neft has, in accordance with the Agreement for Sale and Purchase of shares of NIS a.d. Novi Sad, on 31 January 2011 announced Takeover bid for NIS a.d. Novi Sad shares held by minority shareholders, i.e. 31,180,256 ordinary shares which in total amounts to 19,12% of the total number of ordinary shares. The bid was valid for 45 days, i.e. until 16 March 2011 And 8,405,087 shares is acquired, i.e. 5.15% of the total number of ordinary shares from the price of RSD 506.48 per share which is counter value of EUR 4.80996 per share on 13 January 2011. After the bid completion Gazprom Neft holds 91,565,887 ordinary shares, i.e. 56.15% share capital of NIS a.d. Novi Sad, while minority shareholders own 22,775,169 ordinary shares, i.e. 13.97% share capital of NIS a.d. Novi Sad, and the number of shares held by the Republic of Serbia remained unchanged. In accordance with the Agreement for Sale and Purchase of shares of NIS a.d. Novi Sad, Gazprom Neft has the commitment to provide to NIS a.d. the amount of EUR 500,000,000 by way of special purpose loans for purpose of implementing the program for reconstruction and modernization of the technological complex of NIS a.d. Novi Sad on the following terms:

Obligation to provide EUR 500,000,000 as the principle amount of the loan shall be fully performed in the period between the day the transfer closing and 31 December 2012;

The interest accruing the principal of the loan provided to the NIS shall accrue quarterly and for each quarter shall equal to 12 month EUR LIBOR + 2% (no further charges or commissions shall);

The term of the loan shall be 14 years as of the first disbursement date;

The grace period shall be the later of 31 December 2012 or the competition of the actual performance by Gazprom Neft of its obligation;

There shall be no collateral. The report on sustainable development was made for 2010, according to the standards and quality in corporate reporting prescribed by the international organization Global Reporting Initiative and AccontAbility, and a review of the report was conducted by an independent auditing firm KPMG In July 2011 representative offices in Romania and Bulgaria were established.

3. ISSUER’S DEVELOPMENT POLICY 3.1. Planned issuer’s development activities 3.1.1. Planned capital increase 3.1.1.1. Specify issuer’s capital increase plans and methods, as well as planned time line for such plan implementation

/

3.1.2. Planned expansion of business activities 3.1.2.1. Introduction of new types of activities, higher scope of business operations within the existing activities

NIS a.d. Novi Sad plans to become vertically integrated company with the fastest development in the area of production of oil and gas and production and sales of oil products. By investing in development and enhancement of the activities, long-term development and rise of the business operations of the regional range will be achieved. Until 2014 NIS a.d. Novi Sad should achieve the rise of the value, increase its efficiency and financial stability, decrease of the amount of debt in comparison to operational income up to the level of the best models of the European practice. Per business segments, NIS a.d. Novi Sad plant to achieve until 2014 the following:

In Block Services (OFS) - Structural transformation and establishment of the controlled subsidiaries - Increase of the level of the capacities usage - Increase of the efficiency and quality of the services - Modernization of the equipment - Strategic partnership with the companies that are well ranked

In Block Exploration and Production (UPS)

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- 40% increase of exploitation volume and increase in volume of oil and gas reserves for 20% - The lowest expenses of the production in the region and high level of work productivity - Application of the modern technologies and methods for production of oil and gas - Dominant role in production of oil and gas and widening of the concession activities to the

level of at least 30% of total production - Increase of the investment efficiency and resources base

In Block Refining (REF) - Realization of the reconstruction and modernization of the refineries and in that manner

increase of the refining volumes for over 50% - Decrease of the technical losses and own consumption - Increase of refining margin - Improvement of the products quality (larger percent of the white derivatives, larger level of

refining) - Operational enhancement

In Block Sales (PRO) - Development of the petrol stations network in accordance capital construction and regional

development and increase in the volume of motor fuels retail - Increase of the share in sales of derivatives, as well as achievement of stable and significant

participation on the market of the Republic of Serbia - Development of the privileged sales - Diversification of the offer and increase of the income for ancillary assortment - Economic efficiency and development of the competition advantages, with the essential

enhancement of the sales organization - Development of the powerful brand(s) - Increase of the export volume - Widening in the target markets – the Republic of Serbia and the Balkans.

The total volume of the capital investments projected for the period as of 2011 until 2013 will amount to RSD 90 billion. Almost half of this sum will be spent on realization of the modernization project of the refining capacities, as well as on ecological projects. The realization of the NIS a.d. Novi Sad strategy necessitates gradual increase of the export since the refining potentials of NIS a.d. Novi Sad on the Serbian market are higher than demand.

3.1.3. Planned investments 3.1.3.1. Planned capital investments, as well as expected effects with regard to property and other legal entities, planned amount of funds for such investments and manner of their financing

In 2010, The Medium-term investment plan (MIP) for the period 2011-2013 was accepted by the Investment Committee on the meeting held on 8 November 2010. The following investments objectives are determined in the plan (per area): ECOLOGY - Reduction in the solid particles emissions into the atmosphere - Construction of the spent sulphuric acid regeneration unit - Jetty reconstruction in the Pancevo Oil Refinery - Reconstruction of the road tanks loading/unloading facilities - Remedy of the historical pollution PRODUCTION - Geological exploration for finding new oil and gas deposits - Activating of oil-wells that are temporarily out of production - Drilling of new oil-wells REFINING - Construction of the new hydrogen generation unit - Construction of MHC/DHT complex with supporting units TRADE - Construction of the new gasoline stations on the strategic locations - Reconstruction of the existing gasoline stations

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- Sales of LPG on the gasoline filling stations Investments plan in the period as of 2011 until 2013 in RSD billion

MIDTERM INVESMENT PLAN

Project 2011 2012 2013

MHC + H2 30.6 9.5 0.0

Ecology 3.6 0.5 0.5

Refining 1.5 1.4 0.7

Trade 3.8 4.7 3.9

Block for production of oil and gas

5.1 7.4 10.5

Oil services 0.4 0.3 0.3

Professional services 1.2 0.0 0.0

Investment reserves 0.9 0.0 0.0

In total 47.1 23.8 15.9

Capital investment plan in the period as of 2011 until 2013

3.1.4. Business trends 3.1.4.1. Issuer’s expectations with regard to business expansion, service and /or goods price trend

Within investments in exploitation of crude oil and gas deposits and with the purpose of growth in the volume of production and usage coefficient of the oil and gas deposits of NIS a.d. Novi Sad in Serbia, the drilling of five new holes in the Kikindska Varos field is commenced. Total estimated value of this project exceeds five million Euros. During the next 15 years, the projected production in the Kikindska Varos field is 260 thousand mt of crude oil and 34 milion m3 of natural gas. In 2009 construction of the MHC/DHT Complex (facility for increase of production of the light oil products and decrease of the sulfur level) has commenced, which will enable that all the quantities of the motor fuels produced are in accordance with the European standards of quality. The finalization is planned for last quarter of 2012. The Complex shall include five new production facilities. In addition, within the project of the construction of the Complex, 19 more objects of the industrial infrastructure shall be reconstructed, modernized, and constructed 19, which are necessary for operation of new facilities. The purpose of the project is to make NIS a.d. Novi Sad competitive on the liberalized Serbian market

47.1

23.8

15.9

2011 2012 2013

Mid-term Investment Programme

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of crude oil products and insure maximum compliance with the domestic and EU environmental standards. New ways of energy supply of the refinery facilities will have effects on lowering of the prices of the oil products (thanks to the reduced consumption of electric energy), and on the environment in the operation of the refineries owing to the installation of the additional treatment devices which will contribute significantly to the decrease in the air pollution in Pancevo and its surrounding area. Besides, the project envisaged establishment of the industrial waste system, which will reduce air, ground and surface water, and soil pollution to minimal levels. Business trends: – increasing production and low oil production costs - efficiency increase in oil production, refining and trade with oil products at the Balkans.

3.1.5. Position of the company in the sector 3.1.5.1. Issuer’s assessment of its position within its sector

NIS a.d. Novi Sad is the largest oil company in the Southeastern Europe and the only company in Serbia that has integrated and balanced system of exploitation, refining and sales of oil and oil products and exploitation of natural gas, and that plays important role in maintenance of the energy stability and the stability of the country.

4. MANAGEMENT AND SUPERVISORY BOARD MEMEBERS DATA 4.1. Management and Supervisory Board members 4.1.1. Specify the following: - name of the General Manager:

Kirill Kravchenko

- name and position of the member of the Board of Directors

Name of the Board of Director Members Position of the Board of Director Members

Vadim Yakovljev Chairman

Kirill Kravchenko Member

Alexandar Krilov Member

Vladislav Barisnjikov Member

Аnatoly Cherner Member

Igor Antonov Member

Slobodan Milosavljevic Member

Danica Draskovic Independent member

Stanislav Seksnja Independent member

- name and position of the member of the Supervisory Board

Name of the Supervisory Members Position of the Supervisory Board Members

Milivoje Cvetanovic Chairman

Bozo Stanisic Member

Maxim Shahov Member

4.2. Fees and other benefits paid by the issuer 4.2.1. Fees paid to members of the management (provide data for the previous three years separately, net amounts, for the General Manager and members of the Board of Directors): - total amount of salaries and other benefits to members of the management in RSD

2008 2009 2010 01.01.-30.06.2011

General Manager 11,110,030.41 3,505,139.56 11,179,883.56 6,905,234.75

Board of Directors 34,944,057.77 14,415,357.96 9,955,684.15 8,150,270.73

in RSD







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- total amount of borrowings or loans granted to members of the management

2008 2009 2010 01.01.-30.06.2011

General Manager 68,130,00 - - -

Board of Directors 339,621,00 - -

- total amount of other granting made to members of management in RSD

2008 2009 2010 01.01.-30.06.2011

- - - -

4.2.2. Fees paid to members of the Supervisory board (provide data for the previous three years separately, net amount): - Total amount of fees to Supervisory Board members in RSD

2008 2009 2010 01.01.-30.06.2011

- 1,121,900 7,403,110.40 3,678,745.00

- Total amount of other granting made to Supervisory Board members in RSD

2008 2009 2010 01.01.-30.06.2011

- - - -

4.2.3. Special rights and benefits exercised by the management and Supervisory Board members State other cash earnings, other benefits or other rights granted by issuer to the management and Supervisory Board members:

/

4.2.4. Business transactions between the issuer and management and Supervisory Board members State significant business transactions between the issuer and management and Supervisory Board members or the issuer and persons affiliated to management and Supervisory Board members in the past year

/

4.3. Management and employees’ ownership interest in the issuer’s share capital 4.3.1. State the following: - management and Supervisory Board members ownership interest in the share capital

Name Position of member of

BoD/SB Number of shares % interest

Nikola Martinovic Board of Directors

member 224 0.0001

- other issuer’s employees ownership interest in issuer’s share capital

In accordance with the Decision of the Government of the Republic of Serbia on transfer of shares without consideration to citizens – holders of the rights and employees and ex-employees of Naftna industrija Srbije a.d. Novi Sad, the right to transfer of shares without consideration had 21,737 employees and ex-employees in NIS a.d. Novi Sad, to which 7,076,821 of shares has been transferred, which represents 4.34% of the share capital.

- issuer’s policy regarding employees interest in issuer’s core capital

They have the same rights as the other shareholders on the basis of the ownership over shares.

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5. RESPONSIBLE PERSONS

5.1. Name of the person responsible for this prospectus content

_______________________ Sergey Fominykh, Deputy CEO, Director of Function for Legal and Corporate Affairs ________________________ Aleksej Urusov, Deputy CEO, Head of Function for Economics, Finance and Accounting

5.2. Person responsible for prospectus content signs the following statement: “I hereby declare that this Prospectus includes true, correct, complete and the entire important data on the issuer and securities relevant for investors’ decision making”. In Novi Sad, 27 September 2011 _________________________

Kirill Kravchenko, the General Manager Prospectus shall be signed and certified by the person representing the issuer. Prospectus may be additionally signed by persons participating in the prospectus preparation. 6. COMMISSION’S DECISION 6.1. Number and date of Commission’s Decision on approval of Prospectus for share issuing.



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