1 Jul 2008 07:25
30 June 2008
Moscow
Gazprom reports its consolidated financial results under international financial reporting standards (IFRS) for 2007.
On 30 June 2008 OAO Gazprom issued its audited consolidated financial statements prepared in accordance with International Accounting Standards for 2007.
Certain transactions, such as NPF Gazfund deconsolidation, changing in fair value of option for acquiring Gazpromneft shares and the asset exchange with BASF AG significantly impacted the consolidated financial statements of OAO Gazprom for 2007.
In connection with the latest developments in the legislation regulating investment of pension reserves, the Group made a decision to terminate consolidation of NPF Gazfund as a subsidiary in the consolidated financial statements starting from the first quarter of 2007. As a result of the change in the accounting treatment, investment assets of the fund are recorded by the Group as pension plan assets in accordance with IAS 19 'Employee Benefits'. Primarily the change has impacted the following items: short-term financial assets, other non-current assets, provisions for liabilities and charges, minority interest and treasury shares.
The aggregate effect of NPF Gazfund deconsolidation results in recognition of income of RR 44,692 million in the line "Deconsolidation of NPF Gazfund" in the consolidated statement of income and an increase in equity of RR 111,015 million in the line "Deconsolidation of NPF Gazfund". This increase was included in the consolidated statement of changes in equity.
In April 2007, ENI S.P.a. (Eni) offered to the Group an option to acquire a 20% interest in OAO Gazprom Neft by April 2009, at a price of USD 3.7 billion plus certain financial expenses. From the date of the signing of the agreement until 31 December 2007, the change of the option's fair value amounted to RR 50,738 million. In accordance with IAS 39, the related financial asset is recorded in other current assets and recognized as income in the consolidated income statement.
According to the asset exchange agreement between the Group and BASF AG on 17 December 2007 Gazprom received 15% less one share of Charter Capital in Wingaz, thus increasing its interest in it from 35% to 50% less one share and also received 49% interest in Charter Capital of Wintershall AG, the license holder for the development of certain Libyan oil concessions (C96 and C97). Furthermore, the Group also received Euro 598 million in cash. BASF AG received 25% less one ordinary share and one non voting share, which is equal to 10% of income from the project, in OAO Severneftegazprom. Income obtained from this transaction was shown in separate line in the consolidated statement of income in the amount of RR 50,853 million.
The table below presents the audited consolidated interim statement of income for 2007 and 2006. All amounts are presented in millions of Russian Roubles.
| | | |||
| | | |||
| 2007 | | 2006 | ||
| | | | | |
| Sales (net of excise tax, VAT and customs duties) | 2,390,467 | | 2,152,111 | |
| Operating expenses | (1,688,689) | | (1,363,923) | |
| Operating profit | 701,778 | | 788,188 | |
| | | | | |
| Income from sale of interest in subsidiary | 50,853 | | - | |
| Gain from change in fair value of call option | 50,738 | | - | |
| Deconsolidation of NPF Gazfund | 44,692 | | - | |
| Finance income | 159,380 | | 97,923 | |
| Finance expenses | (132,573) | | (65,220) | |
| Share of net income of associated undertakings and jointly controlled entities | 24,234 | | 26,363 | |
| Gain on disposal of available-for-sale financial assets | 25,102 | | 8,811 | |
| Profit before profit tax | 924,204 | | 856,065 | |
| | | | | |
| Current profit tax expense | (218,266) | | (213,844) | |
| Deferred profit tax expense | (10,953) | | (5,760) | |
| Profit tax | (229,219) | | (219,064) | |
| Profit for the period | 694,985 | | 636,461 | |
| | | | | |
| Profit for the period attributable to: | | | | |
| Equity holders of OAO Gazprom | 658,038 | | 613,345 | |
| Minority interest | 36,947 | | 23,116 | |
| | 694,985 | | 636,461 | |
Sales (net of excise tax, VAT and customs duties) increased by RR 238,356 million or 11%, to RR 2,390,467 million in 2007 compared to 2006. More detailed information on our sales for 2007 and 2006 is presented in the table below.
| in millions of RR | |||
| Sales of gas | 2007 | 2006 | |
| Far Abroad | |||
| Net sales (net of excise tax and customs duties) | 873,410 | 845,867 | |
| Volumes in bcm | 168.6 | 161.5 | |
| Average price, RR/mcm (including excise tax and customs duties) | 6,891.4 | 7,119.4 | |
| FSU | |||
| Net sales (net of excise tax, VAT and customs duties) | 254,841 | 209,719 | |
| Volumes in bcm | 96.5 | 101.0 | |
| Average price, RR/mcm (including excise tax, customs duties and net of VAT) | 2,835.3 | 2,408.4 | |
| Russia | |||
| Net sales (net of excise tax and VAT) | 399,452 | 356,033 | |
| Volumes in bcm | 307.0 | 316,3 | |
| Average price, RR/mcm (including excise tax and net of VAT) | 1,301,1 | 1,129.4 | |
| Total sales of gas | |||
| Net sales (net of excise tax, VAT and customs duties) | 1,527,703 | 1,411,619 | |
| Volumes in bcm | 572.0 | 578,8 | |
| Net sales of refined products (net of excise tax, VAT and customs duties) | 492,438 | 434,985 | |
| Net sales of crude oil and gas condensate (net of excise tax, VAT and customs duties) | 167,758 | 171,709 | |
| Gas transportation sales (net of VAT) | 41,740 | 34,500 | |
| Other revenues (net of VAT) | 160,828 | 99,298 | |
| Total sales (net of excise tax, VAT and customs duties) | 2,390,467 | 2,152,111 | |
Net sales of gas increased by RR 116,084 million, or 8%, to RR 1,527,703 million in 2007 compared to 2006. This increase was primarily due to higher FSU and domestic prices for gas.
Net sales of natural gas to the Far Abroad increased by RR 27,543 million, or 3%, to RR 873,410 million in 2007 compared to 2006. This is explained primarily by the fact that the volume of gas sales increased by 4% or 7.0 bcm.
Net sales of natural gas to FSU countries increased by RR 45,122 million, or 22%, to RR 245,841 million in 2007 compared to 2006. It is explained by a 27% increase in average realized prices (net of excise tax, VAT and customs duties) which was partially offset by the fact that the volume of gas sales decreased by 4% or 4.5 bcm.
Net sales of natural gas in the domestic market increased by RR 43,419 million, or 12%, to RR 399,452 million in 2007 compared to 2006. It is explained primarily by 15% rise of average domestic price for gas established by the Federal Tariffs Service, which was partially offset by a 3% or 9.3 bcm reduction in the volume of sold gas.
In 2007 net sales of refined products increased by RR 57,453 million or 13%.
The increase was primarily price driven.
In 2007 net sales of crude oil and gas condensate decreased by RR 3,951 million, or 2% compared to 2006. The decrease in the sales of crude oil and gas condensate is due to Gazprom Neft's activities: in 2007 net sales of crude oil decreased by RR 4,060 million, or 3%, to RR 147,419 million compared to the same period of 2006. The decrease was caused by the fact, that more oil was used to produce refined products.
Operating expenses increased by RR 324,766 million, or 24%, to RR 1,688,689 million in 2007 compared to 2006.
The main components which accounted for the major part of the increase in operating expenses were purchased oil and gas (RR 101,992 million), payroll expenses (RR 49,306 million), repairs and maintenance expenses (RR 22,868 million), depreciation (RR 16,131 million) This increase is primarily related to the increase of prices for gas purchased in Middle Asia, mainly for further reselling. Increase in payroll expense is due to rise in average salary rate and other payments to employees and also increase of average numbers of employees.
Profit attributable to equity holders of OAO Gazprom increased by RR 44,693 million or 7% to RR 658,038 million in 2007 compared to 2006.
In 2007 the Group acquired 50% share of Sakhalin Energy Investment Company Ltd. for RR 192,330 million (USD 7,450 million) and increased shareholding in OAO Mosenergo to controlling interest. These transactions had no material effect on the consolidated statement of income for 2007.
Our net debt balance (defined as the sum of short-term borrowings, current portion of long-term borrowings, short-term promissory notes payable, long-term borrowings, long-term promissory notes payable and restructured tax liabilities, net of cash and cash equivalents and balances of cash and cash equivalents restricted as to withdrawal under the terms of certain borrowings and other contractual obligations) increased by RR 420,769 million, or 52%, from RR 807,814 million as of 31 December 2006 to RR 1,228,583 million as of 31 December 2007. This increase can be explained by a significant increase of loans and borrowings.
More detailed information on the IFRS consolidated financial information for 2007 can be found on OAO Gazprom web site (www.gazprom.ru).
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