Financial appendix

EBITDA reconciliation (RUB mn)
Indicator 2016 2017 ∆, %
Profit for the period 209,725 269,678 28.6
Total income tax benefit / (expense) 49,814 55,522 11.5
Finance expense 34,282 25,127 (26.7)
Finance income (11,071) (10,098) (8.8)
Depreciation, depletion and amortization 129,845 140,998 8.6
Net foreign exchange (loss) / gain (28,300) 241 -
Other (loss) / gain, net 17,982 7,557 (58.0)
EBITDA 402,277 489,025 21.6
Less: Share of profit of associates and joint ventures (34,116) (45,504) 33.4
Add: Share of EBITDA of equity accounted investments 88,037 107,446 22.0
Adjusted EBITDA 456,198 550,967 20.8
Profitability (%)
Indicator December 31, 2016 December 31, 2017 ∆, p. p.
Adjusted EBITDA margin 29.52 29.65 0.1
Net profit margin 13.57 14.51 0.9
Return on assets (ROA) 8.33 9.84 1.5
Return on equity (ROE) 15.58 17.38 1.8
Adjusted Return on average capital employed (ROACE) 11.77 13.9 1.9
Adjusted ROACE calculation (%)
Indicator December 31, 2016 December 31, 2017
Adjusted EBITDA 456,198 550,967
Depreciation, depletion and amortization (158,919) (178,449)
Effective income tax charge on EBIT (62,429) (71,605)
Adjusted EBIT Adjusted EBIT represents Group’s EBIT and its share in associates and joint ventures’ EBIT. 234,850 300,913
Average capital employed 1,994,626 2,164,614
Adjusted ROACE 11.77 13.9
Liquidity
Indicator December 31, 2016 December 31, 2017 ∆, %
Current ratio 1.37 0.90 (34.3)
Quick ratio 0.66 0.43 (34.8)
Cash ratio 0.26 0.21 (19.2)
Leverage
Indicator December 31, 2016 December 31, 2017 ∆, p. p.
Net debt/ Total Assets, % 25.18 19.93 (5.3)
Net debt/ Equity, % 44.45 35.20 (9.3)
Gearing, % 30.80 25.97 (4.8)
∆, %
Net debt/ Market Capitalization 0.64 0.51 (20.3)
Net debt/ EBITDA 1.60 1.19 (25.6)
Total debt/ EBITDA 1.68 1.39 (17.3)

Main macroeconomic factors affecting operational results

The main factors affecting the Group’s operational results include:

  • Changes in market prices for crude oil and petroleum products
  • Changes in the exchange rate between the Russian rouble and the US dollar, inflation
  • Taxation
  • Changes in transportation tariffs for crude oil and petroleum products.

Changes in market prices for crude oil and petroleum products

Prices for crude oil and petroleum products on international and Russian markets are the primary factor affecting the Group’s operational results.

Petroleum product prices on international markets are primarily determined by world prices for crude oil, petroleum product supply and demand, and competition on different markets. Petroleum product price trends on international markets in turn determine domestic prices. Price trends are different for different types of petroleum products.

The increase in crude oil and petroleum product prices on international markets in 12 months 2017 had a positive impact on the Group’s results.

Price dynamics of oil and petroleum products Sources: Platts (international), Kortes (domestic)
Types of fuel 2016 2017 ∆, %
International market (USD / barrel)
Brent 43.73 54.09 23.7
Urals Spot (average Med + NWE) 42.02 52.94 26.0
International market (USD / tonne)
Premium gasoline (average NWE) 467.05 557.58 19.4
Naphtha (average Med. + NWE) 377.85 477.10 26.3
Diesel fuel (average NWE) 398.58 493.65 23.9
Gasoil 0.1% (average Med.) 391.21 483.49 23.6
Fuel oil 3.5% (average NWE) 199.93 290.96 45.5
Domestic market (RUB/ tonne)
High-octane gasoline 34,574 36,820 6.5
Low-octane gasoline 29,858 31,931 6.9
Diesel fuel 27,965 32,619 16.6
Fuel oil 6,051 9,594 58.6

Rouble vs. US dollar exchange rate and inflation

The Group’s presentation currency is the Russian rouble. The functional currency of each of the Group’s consolidated entities is the currency of the primary economic environment in which the entity operates. For most entities, this is the Russian rouble.

Indicator 2016 2017
Change in Consumer Price Index (CPI), % 5.4 2.5
Average RUB / USD exchange rate for the period 67.03 58.35
USD / RUB exchange rate as of the beginning of the period 72.88 60.66
USD / RUB exchange rate as of the end of the period 60.66 57.60
Depreciation (appreciation) of Russian rouble to USD, % (17) (5)

Taxation

Average tax rates effective in the reporting periods for the taxation of oil and gas companies in Russia
Indicator 2016 2017 ∆, %
Export duty (USD / tonne)
Crude oil 75.61 86.74 14.7
Light petroleum products 30.21 25.99 (14)
Diesel 30.21 25.99 (14)
Gasoline 46.07 25.99 (43.6)
Naphtha 53.63 47.67 (11.1)
Heavy petroleum products 61.96 86.74 40
Mineral extraction tax (RUB/ tonne)
Crude oil (RUB/ tonne) 5,770 8,134 41