Neste Corporation Annual General Annual General Meeting 2019 Annual Meeting 2019 2 April 2019 Safety information If you need first aid, contact the staff. We have paramedics present. Fire alarms will be announced through the PA system. The staff will guide you outdoors through the nearest safe exits. The assembly point is the outdoor parking area. Follow the instructions from the staff. Neste’s Annual Report 2018 can be read online at the Corporation’s website at www.neste.com/annualreport. Financial Statements including notes, Corporate Governance Statement, and Neste Remuneration Statement are included in the Annual Report. 1 Agenda 1. Opening of the meeting 7. Adoption of the Financial Statements, including also the adoption of the Consolidated Financial Statements 2. Calling the meeting to order 8. Use of the profit shown in the Balance Sheet and deciding on the 3. Election of the examiners of the minutes and payment of dividend . 56 the supervisors for counting of votes 9. Discharging the members of the Board of Directors 4. Establishing the legality of the meeting and the President and CEO from liability 5. Recording the attendance at the meeting and the voting list 10. Deciding the remuneration of the members of the 6. Presentation of the Financial Statements for 2018, including also Board of Directors . 58 the Consolidated Financial Statements, the Review by the Board Deciding the number of members of the Board of Directors . 59 of Directors, and the Auditor’s Report . 2 11. Election of the Chair, the Vice Chair, and the members of the • Review by the President and CEO 12. Board of Directors . 59 • Review by the Board of Directors 2018 . 7 13. Deciding the remuneration of the Auditor . 62 • Financial Statements main tables . 27 14. Election of the Auditor . 62 • Auditor’s Report . 31 15. Share issue without payment (share split) . 63 • Summary of the Corporate Governance Statement 2018 . 37 16. Authorizing the Board of Directors to decide on the • Excerpts from the Neste Remuneration Statement 2018 . 49 conveyance of treasury shares . 64 1 7. Closing of the meeting . 64 Agenda / Annual General Meeting 2019 2 Point 6 on the agenda Presentation of the Financial Statements for 2018, including also the Consolidated Financial Statements, the Review by the Board of Directors, and the Auditor’s Report • Review by the President and CEO • Review by the Board of Directors 2018 . 7 • Financial Statements main tables . 27 • Auditor’s Report . 31 • Summary of the Corporate Governance Statement 2018 . 37 • Excerpts from the Neste Remuneration Statement 2018 . 49 Point 6 on the agenda / Annual General Meeting 2019 3 Year 2018 in brief 14,918 M€ Revenue Neste helps transport and cities, 1,422 M€ Comparable operating profit aviation, polymers and chemicals Our dividend proposal customers make their business more 2.28 € for 2018 per share sustainable. Return on average capital 21.1% employed after tax (ROACE) The year 2018 took us further on our 438 M€ Investments journey of creating a healthier planet for our children. We are one of the –1.5% Leverage ratio The approximate share global leaders in renewable products of waste and residues in 83% the renewable raw materials produced from waste and residues Our renewable products helped reduce and strengthen our position with new 7.9 Mt greenhouse gas emissions achievements, exciting announcements, and a major investment in Singapore. 314 Safe days 5,468 Average number of personnel Point 6 on the agenda / Year 2018 in brief / Annual General Meeting 2019 4 Neste’s strategy is guided by our purpose to create a healthier planet for our children and our vision of creating responsible choices every day. Neste is committed to combating climate change and driving circular economy . We are in the business of helping transport and cities, aviation, polymers and chemicals customers make their business more sustainable . With our renewable products and solutions, we help our customers to reducing their greenhouse gas emissions and replacing fossil crude oil with renewable and recycled raw materials . Read more about our strategy, revisited in February 2019, at www.neste.com Point 6 on the agenda / Strategy / Annual General Meeting 2019 5 Business areas Renewable Oil Products Marketing Products & Services Offers renewable diesel, renewable jet fuel, renewable Offers sustainable solutions that are based on high- Driven by the best customer experience, our Marketing propane, renewable solvents, and raw materials for quality oil products and related services . & Services business area offers sustainable solutions bioplastics . for the needs of consumers and a wide variety of B2B Capacity 14 million tons per year . customers . Capacity 2 .9 million tons per year . We are known for our reliability and flexibility when Our station network of over 1,000 stations covers five Our renewable products help customers to reduce their it comes to the supply of fuel solutions . We are also countries in the Baltic Sea region: Finland, Estonia, Latvia, carbon footprint by up to 90% . exploring ways to introduce liquefied waste plastic as a Lithuania and Northwest Russia . future raw material for fossil refining . We utilize data, insight and digitalization to support growth, quality and efficiency . We seek to develop a diverse range of services as part of our offering and to be where the customers are – in the mobile sphere . MEUR 2018 2017 2016 MEUR 2018 2017 2016 MEUR 2018 2017 2016 Revenue 3,241 3,243 2,690 Revenue 10,105 8,490 7,395 Revenue 4,315 3,912 3,552 Comparable operating profit 983 561 469 Comparable operating profit 397 495 453 Comparable operating profit 77 68 90 Operating profit 899 476 518 Operating profit 170 650 563 Operating profit 77 69 89 Net assets 2,018 1,863 1,811 Net assets 2,257 2,497 2,424 Net assets 249 280 196 Comparable return on net Comparable return on net Comparable return on net assets (RONA) 52 4. 30 .2 25 .9 assets (RONA) 15 7. 19 .5 18 .7 assets (RONA) 29 .1 28 .5 47 .5 Capital expenditure and Capital expenditure and Capital expenditure and investments in shares 159 122 104 investments in shares 196 307 249 investments in shares 28 37 31 Point 6 on the agenda / Business areas in brief / Annual General Meeting 2019 6 2018 2017 Change, % Income statement Revenue, MEUR 14,918 13,217 13 Operating profit, MEUR 1,025 1,171 –12 Comparable operating profit, MEUR 1,422 1,101 29 Profit before income taxes, MEUR 951 1,094 –13 EBITDA, MEUR 1,639 1,542 6 Comparable net profit, MEUR 1,150 851 35 Profitability, % Return on equity (ROE), % 17 .3 22 .7 –24 Return on average capital employed, after tax (ROACE), % 21 1. 17 .5 21 Financial targets Financing and financial position Total equity, MEUR 4,630 4,338 7 Interest-bearing net debt, MEUR –70 412 –117 A leverage ratio of below Leverage ratio, % –1 5. 8 .7 –117 Gearing, % –1 5. 9 .5 –116 Equity-to-assets ratio, % 56 5. 55 .8 1 Net cash generated from operating activities, MEUR 1,452 1,094 33 40% Other indicators Capital employed, MEUR 5,770 5,533 4 ROACE of at least Capital expenditure and investment in shares, MEUR 438 536 –18 Research and development expenditure, MEUR 48 44 9 Average number of personnel 5,468 5,297 3 Total refining margin, USD/bbl 11 1. 8 11 .08 1 15% Total Recordable Injury Frequency per million hours worked (TRIF) 1 7. 2 .1 –19 annually over the long-term Share-related indicators Earnings per share (EPS), EUR 3 04. 3 .56 –15 Our dividend policy is to Comparable earnings per share, EUR 4 5. 0 3 .33 35 distribute at least Equity per share, EUR 18 0. 9 16 .96 7 Cash flow per share, EUR 5 68. 4 .28 33 Price/earnings ratio (P/E) 22 1. 5 14 .99 48 Dividend per share, EUR 2 .28 1) 1 .7 34 50% Dividend payout ratio, % 75 0. 1) 47 .8 57 of our comparable Dividend yield, % 3 4. 1) 3 .2 6 net profit as dividend Dividend per comparable earnings per share, % 50 6. 1) 51 .1 –1 Share price at the end of the period, EUR 67 .36 53 .35 26 Average share price, EUR 65 1. 7 38 .34 70 Lowest share price, EUR 52 1. 2 31 .15 67 Highest share price, EUR 76 .54 54 .05 42 Market capitalization at the end of the period, MEUR 17,271 13,679 26 1) Board of Directors’ proposal to the Annual General Meeting Point 6 on the agenda / Financial targets / Annual General Meeting 2019 7 Review by the Board of Directors Review by the Board of Directors 2018 . 8 Key figures . 23 Calculation of key figures . 25 Point 6 on the agenda / Review by the Board of Directors / Annual General Meeting 2019 8 Review by the Board of Directors 2018 Neste had a very strong year in 2018 . We posted a record-high comparable operating million (68 million) . The comparable operating profit of the Others segment totaled EUR –36 profit of EUR 1,422 million compared to EUR 1,101 million in the previous year . The million (–24 million); Nynas accounted for EUR –12 million (–2 million) of this figure . Group’s operating profit was EUR 1,025 million (1,171 million) . We generated a strong The Group’s operating profit was EUR 1,025 million (1,171 million), which was impacted cash flow and reached a low leverage ratio at the end of the year . The return on average by inventory valuation losses of EUR 269 million (gains of 31 million), and changes in the capital employed reached 21 .1%, which exceeds our long term target of 15% .