Interim Results

5 Dec 2007 11:56

Oao Gazprom05 December 2007 Press Release 05.12.2007 Moscow GAZPROM REPORTS ITS CONSOLIDATED INTERIM CONDENSED FINANCIAL RESULTS UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS) FOR THE SIX MONTHS ENDED 30 JUNE 2007 On 5 December 2007 OAO Gazprom issued its unaudited consolidated interimcondensed financial information prepared in accordance with InternationalAccounting Standard 34 "Interim Financial Reporting" (IAS 34) for the six monthsended 30 June 2007. Changes in the accounting treatment of NPF Gazfund significantly impacted theconsolidated financial information of OAO Gazprom for the six months ended 30June 2007. In connection with the latest developments in the legislationregulating investment of pension reserves, the Group took a decision toterminate consolidation of NPF Gazfund as a subsidiary in the consolidatedfinancial statements starting from the first quarter of 2007. As a result of thechange in the accounting treatment, investment assets of the fund are recordedby the Group as pension plan assets in accordance with IAS 19 'EmployeeBenefits'. Primarily the change has impacted the following items: short-termfinancial assets, other non-current assets, provisions for liabilities andcharges, minority interest and treasury shares. Subsidiaries of OAO Gazpromwhere NPF Gazfund holds an interest (such as AB Gazprombank (ZAO), OAO SiburHolding and their subsidiaries) continue to be consolidated by the Group. The aggregate effect of NPF Gazfund deconsolidation results in recognition ofincome of RR 44,692 million in the line "Deconsolidation of NPF Gazfund" in theconsolidated interim condensed statement of income and the increase in equity ofRR 111,015 million in the line "Deconsolidation of NPF Gazfund". The table below presents the unaudited consolidated interim condensed statementof income for the six months ended 30 June 2007 and 2006. All amounts arepresented in millions of Russian Roubles, unless otherwise stated. Six months ended 30 June 2007 2006 Sales (net of excise tax, VAT and customs duties) 1,143,894 1,091,424Operating expenses (792,215) (686,425)Operating profit 351,679 404,999 Deconsolidation of NPF Gazfund 44,692 -Finance income 63,229 61,845Finance expenses (51,128) (39,354)Share of net income of associated undertakings and jointly controlled entities 15,194 16,968Gains on disposal of available-for-sale financial assets 18,447 3,144Profit before profit tax 442,113 447,602 Current profit tax expense (105,834) (112,355)Deferred profit tax expense (6,229) (3,011)Profit tax (112,063) (115,366)Profit for the period 330,050 332,236 Profit for the period attributable to:Equity holders of OAO Gazprom 313,180 321,491Minority interest 16,870 10,745 330,050 332,236 Sales (net of excise tax, VAT and customs duties) increased by RR 52,470million, or 5%, to RR 1,143,894 million in the six months ended 30 June 2007compared to the six months ended 30 June 2006. More detailed information on oursales for the six months ended 30 June 2007 and 2006 is presented in the tablebelow. in millions of RR (unless otherwise stated) Six months ended 30 JuneSales of gas 2007 2006Far Abroad Net sales (net of excise tax and customs duties) 410,206 428,262Volumes in bcm 79.4 84.9Average price, RR/mcm (including excise tax and customs duties) 6,721.7 6,944.2FSU Net sales (net of excise tax, VAT and customs duties) 133,787 102,559Volumes in bcm 50.4 51.1Average price, RR/mcm (including excise tax, customs duties and net of VAT) 2,884.6 2,312.4Russia Net sales (net of excise tax and VAT) 214,300 191,064Volumes in bcm 165.1 170.8Average price, RR/mcm (including excise tax and net of VAT) 1,298.1 1,123.5Total sales of gas Net sales (net of excise tax, VAT and customs duties) 758,293 721,885Volumes in bcm 294.9 306.8 Net sales of refined products (net of excise tax, VAT and customs duties) 221,784 209,737Net sales of crude oil and gas condensate (net of excise tax, VAT and customs duties) 74,994 95,470Gas transportation sales (net of VAT) 21,059 16,976Other revenues (net of VAT) 67,764 47,356Total sales (net of excise tax, VAT and customs duties) 1,143,894 1,091,424 Net sales of natural gas increased by RR 36,408 million, or 5%, to RR 758,293million in the six months ended 30 June 2007 compared to the six months ended 30June 2006. This increase was primarily due to higher FSU and domestic pricesfor gas. Net sales of natural gas to the Far Abroad decreased by RR 18,056 million, or4%, to RR 410,206 million in the six months ended 30 June 2007 compared to thesix months ended 30 June 2006. This is explained primarily by the fact that thevolume of sold gas decreased by 6% or 5.5 bcm and net average prices (net ofexcise tax, VAT and customs duties) increased by 2%. Net sales of natural gas to FSU countries increased by RR 31,228 million, or30%, to RR 133,787 million in the six months ended 30 June 2007 compared to thesix months ended 30 June 2006. The increase of sales in this area is explainedby higher average prices. Net sales of natural gas in the domestic market increased by RR 23,236 million,or 12%, to RR 214,300 million in the six months ended 30 June 2007 compared tothe six months ended 30 June 2006. This is explained primarily by the increasedaverage domestic price for gas established by the Federal Tariffs Service, whichwas partially offset by a 3% reduction in the volume of sold gas. In the six months ended 30 June 2007 net sales of crude oil and gas condensatedecreased by RR 20,476 million, or 21%. This decrease in the sales of crude oiland gas condensate is due to Gazprom Neft's activities: in the six months ended30 June 2007 net sales of crude oil decreased by RR 20,628 million, or 24%, toRR 64,804 million compared to the six months ended 30 June 2006. The decreasewas caused by the fact, that more oil was used to produce refined products. Operating expenses increased by RR 105,790 million, or 15%, to RR 792,215million in the six months ended 30 June 2007 compared to the six months ended 30 June 2006. The component which accounted for the major part (or 54%) of the increase inoperating expenses was purchased oil and gas. The increase primarily related tothe increase in prices of gas purchased in Middle Asia for further reselling. In the six months ended 30 June 2007 the profit for the period attributable toequity holders of OAO Gazprom totaled RR 313,180 million which is RR 8,311million, or 3%, less compared to the six months ended 30 June 2006. In the six months ended 30 June 2007, the Group acquired a 50% plus one share ofSakhalin Energy Investment Company Ltd. for RR 192,330 (USD 7,450 million). Inaddition, the Group obtained a controlling interest in OAO Mosenergo. Thesetransactions did not have a material impact on the results of operations for thesix month period ended 30 June 2007. Our net debt balance (defined as the sum of short-term borrowings, currentportion of long-term borrowings, short-term promissory notes payable, long-termborrowings, long-term promissory notes payable and restructured tax liabilities,net of cash and cash equivalents and balances of cash and cash equivalentsrestricted as to withdrawal under the terms of certain borrowings and othercontractual obligations) decreased by RR 229,576 million, or 28%, from RR807,814 million as of 31 December 2006 to RR 578,238 million as of 30 June 2007.This decrease can be explained by a significant increase of our cash and cashequivalents in bank accounts primarily due to temporary placement of funds in ABGazprombank (ZAO) from third parties. More detailed information on the IFRS consolidated interim condensed financialinformation for the six months ended 30 June 2007 can be found on OAO Gazpromweb site (www.gazprom.com). INFORMATION DIVISION www.gazprom.com ________________________________________________________________________________ Contacts for Press Investor Relations +7 (495) 719-10-77 +7 (495) 719-10-97+7 (495) 719-49-37 +7 (495) 719-10-36+7 (495) 719-47-36 +7 (495) 719-10-27+7 (495) 719-28-01pr@gazprom.ru ir@gazprom.ru This information is provided by RNS The company news service from the London Stock Exchange