One size does not fit all
Laszlo Varro, MOL Group
Agenda
► MOL’s way to international expansion
► How we have been doing it
► Conclusions
2
3
MOL Group today
Slovnaft ( 98.4 %)
INA ( 25.0%+1 share)
TVK ( 94.9%)*
*direct and indirect influence
► One of the best performingintegrated energy companiesin the world
► Leader in core markets ofHungary, Slovakia and inCroatia via INA
► State of the art asset baseserving a high growthdownstream region
► Highly successfulregional partnerships:Slovnaft, TVK, INA
► Management withoutstanding track record inoperational integration andefficiency improvement
► Market cap as of 04/06/2007USD 14 000 million
UPSTREAM (E&P)Gas
TransmissionE&P
DOWNSTREAM (R&M)
PetrochemicalsR&M
MOL Plc.
Operational integration
36,6
10,0
5,5
6,7
5,5
8,4
8,3
9,2
10,0Foreign investors (mainly institutional)
MFB Invest ZrtOTP Bank Nyrt
BNP Paribas
MOL Plc (treasury shares)Magnolia
Domestic investors
OMVBank Austria AG
Shareholding structure (%)(approximate) (10.09.2007)
0
2 000
4 000
6 000
8 000
10 000
12 000
1991 1995 1999 2005 2010
m USD
Market capitalization
Expansion beyond regional
boundaries
Transformation to a regional leader
Stabilization after
privatisation
Prepare for privatization
Successful transformation from a state-owned conglomerate to a leading regional private oil company
4
Acquisition of
36.2% ofSlovnaft
Gain control over Slovnaft
(stake 70.0%)
Acquisition of Shell
Romanian Retail Sites
Acquisition of
25.0% in INA
Acquisition of 22.5% stake in
Kazakh exploration block (Federovsky)
Acquisition of
Austrian Roth
company
Closing ofShell
Romaniaacquisition
Sale of Gas
Distribution
Acquisition of 32.9% of TVK
Gain control over TVK
(stake 34.5%)
ZMB JV signed
Acquisition of Austrian
storage facility
98.4% stake in Slovnaft
through public offer
Increasing stake to 27.5% in
Kazakh Federovsky
Block
MOL & INA acquired 67.5% of
Energopetrol
Acquisition of BaiTex,
Surgut-7
2000 2001 2002 2003 2004 2005 2006
Way to inorganic growth
5
ALGLBA
EGY PAK
KAZ
OM
YEM
SYR
ANG
RUS
RO
PRODUCTION
EXPLORATION
INA
Potential newcore markets
MOL
CRH
I
H
CR
Truly international operation in Upstream (exploration and production)
6
We are stepping out of our conventional Downstream region
PL
D
A
CZ
RO
BIH
SLO
SCG
BG
UKR
TR
AL
I
MK
HR
SK
GR
H
+6.5%
+3.2%
+3.1%
+3.1%
+3.2%
+3.2%
+3.7%
+6.0%
+3.2%
+3.6%
+7.1%
+3.9%+6.5%
+5.0%
+4.0%
Conventional investment markets
New targets
7
Expected motor fuel demand CAGR 2006 - 2010
+2.0%
+2.0%
Agenda
8
► MOL’s way to international expansion
► How we have been doing it
► Conclusions
MENTALMENTALCHANGECHANGE
INTERNATIONALINTERNATIONALEXPANSIONEXPANSION
INTERNATIONALINTERNATIONALEXPANSIONEXPANSION
INTERNALINTERNALCAPABILITIESCAPABILITIES
ONE SIZE DOES NOT FIT ALLONE SIZE DOES NOT FIT ALL
Market oppotunintyMarket oppotuninty
9
Building blocks of international expansion strategy
STRONG STRONG DOMESTICDOMESTICPOSITIONPOSITION
Mental change: Talents are distributed equally on planet
10
Why others not us?Why others not us?
from OPPORTUNISTIC from OPPORTUNISTIC …….. …….. to SYSTEMATIC to SYSTEMATIC
Confident REGIONALLY
DISCIPLINED corporate operation
Concentrate on COST
Become truly INTERNATIONAL
Develop an INTEGRATIVE corporate structure
Nurture DIVERSITY
Emphasize superior internal and external CUSTOMER service
Change while keeping our existing strengths: effective, result-oriented, adaptive, aspirational
PEOPLEPEOPLE
ORGANIZATIONORGANIZATION
CULTURECULTURE
FOCUSFOCUS
Create value through HOMOGENITY
Executing mental change Develop new capabilities
11
► Favourable geographical position
► Sole refiner in Hungary with 3
operating refineries
► Pipeline based supply with alternative
route (Adria)
► Dominant player in wholesale (cca.
80% market share)
► Market leader in retail
(cca. 40% market share)
► Balanced portfolio of international
upstream assets
► New management focusing on value
creation and efficieny improvement
Leveraging strong domestic market position – MOL in ‘99
D
PL
A
CZ
RO
BIH
SLO
SCG
BG
UKR
AL
I
MK
H
MOL depots used MOL refineries
Friendship oil pipelines Adria oil pipeline Product pipeline
12
Capability Development to Ensure International Operational Excellence
13
OPERATIONAL CSF
1. Strengthen cooperation and integration with INA
2. Triple E&P production via international acquisitions
3. Double R&M production & sales4. Maintain quality leadership in
refining5. Develop central role in Gas
Transmission6. Diversify and sustain our crude oil
supply7. Establish a sustainable, scaleable
Retail operation and brand structure8. Achieve our efficiency improvement
targets
CAPABILITY CSF
9. Improve our ability to acquire new businesses & partners
10. Integrate new businesses quickly and efficiently
11. Become an international player
12. Develop change management and continuous improvement culture
INA ZMB Roth Slovnaft Shell Romania
Acquired ownership
25% 50% 75% 98.4% 100%
Business Downstream
& upstream
Upstream Downstream Downstream Downstream
Country Croatia +
subsidiaries
Russia Austria Slovakia + subsidiaries
Romania
Deal size Large Large Small Large Medium
FTE ~10 000 400 75 ~4 000 ~100
Assets Refineries, depos, FSs, upstream
assets
Oil field -production
Depo, FSs, tank cars
Refinery, depos, FSs
FSs, depo
Company acquisition
Strategic partnership
Joint-venture Yes Yes Yes
Partner Croatian government
Russneft Owner retained 25%
No, 1.6% free float No
Depth of integration
Close partnership, co-ordinated
actions
Joint-ventureOrganisational
structure remained intact
Integrated operation
Merged into MOL Romania
Keeping name / brand name
Yes n.a. Yes Yes No
„One size does not fit all” – adapting to local conditions is key for successful international expansion
14
Agenda
15
► MOL’s way to international expansion
► How we have been doing it
► Conclusions
„Must have”-s and „Can be”-s of becoming international
16
► Market opportunity is there
► We can have added value
► Synergy potential is important
► We have the capabilities (or
can build up) to capture value
creation opportunities
► Investment size
► Investment structure
► Rights
► Partners
► Ownership share
► Depth of integration
► Brand
We invest only if: We can be flexible at:We invest only if: We can be flexible at:
Why to doWhy to do How to doHow to do