Consolidated IFRS

Notes 31 December 2017 31 December 2016
Assets
Current assets
Cash and cash equivalents 6 90,608 33,621
Short-term financial assets 7 10,449 42,113
Trade and other receivables 8 102,262 115,559
Inventories 9 118,322 100,701
Current income tax prepayments 2,540 10,353
Other taxes receivable 10 58,359 53,482
Other current assets 11 40,047 40,503
Total current assets 422,587 396,332
Non-current assets
Property, plant and equipment 12 2,052,275 1,726,345
Goodwill and other intangible assets 13 74,187 70,151
Investments in associates and joint ventures 14 256,758 201,548
Long-term trade and other receivables 901 5,129
Long-term financial assets 16 31,293 40,167
Deferred income tax assets 17 17,867 8,039
Other non-current assets 18 74,140 101,100
Total non-current assets 2,507,421 2,152,479
Total assets 2,930,008 2,548,811
Liabilities and shareholders’ equity
Current liabilities
Short-term debt and current portion of long-term debt 19 131,760 80,187
Current finance lease liabilities 25 1,397 –
Trade and other payables 20 194,438 95,624
Other current liabilities 21 32,500 28,680
Current income tax payable 4,534 2,296
Other taxes payable 22 84,833 67,259
Provisions and other accrued liabilities 23 29,873 15,406
Total current liabilities 479,335 289,452
Non-current liabilities
Long-term debt 24 548,654 596,221
Non-current finance lease liabilities 25 20,826 –
Other non-current financial liabilities 26 48,569 89,744
Deferred income tax liabilities 17 102,583 81,347
Provisions and other accrued liabilities 23 62,574 45,942
Other non-current liabilities 8,334 1,938
Total non-current liabilities 791,540 815,192
Equity
Share capital 27 98 98
Treasury shares 27 (1,170) (1,170)
Additional paid-in capital 62,256 51,047
Retained earnings 1,431,931 1,276,210
Other reserves 60,142 33,955
Equity attributable to Gazprom Neft shareholders 1,553,257 1,360,140
Non-controlling interest 38 105,876 84,027
Total equity 1,659,133 1,444,167
Total liabilities and equity 2,930,008 2,548,811
A. V. Dyukov Chief Executive Officer PJSC Gazprom Neft
A. V. Yankevich Chief Financial Officer PJSC Gazprom Neft

Consolidated Statement of Profit and Loss and Other Comprehensive Income

Notes Year ended 31 December 2017 Year ended 31 December 2016
Sales 2,003,575 1,695,764
Less export duties and sales related excise tax (145,644) (150,156)
Total revenue from sales 40 1,857,931 1,545,608
Costs and other deductions
Purchases of oil, gas and petroleum products (456,037) (351,294)
Production and manufacturing expenses (216,530) (201,862)
Selling, general and administrative expenses (106,629) (108,981)
Transportation expenses (141,982) (132,984)
Depreciation, depletion and amortisation (140,998) (129,845)
Taxes other than income tax 22 (492,269) (381,131)
Exploration expenses (963) (1,195)
Total operating expenses (1,555,408) (1,307,292)
Operating profit 302,523 238,316
Share of profit of associates and joint ventures 14 45,504 34,116
Net foreign exchange (loss) / gain 30 (241) 28,300
Finance income 31 10,098 11,071
Finance expense 32 (25,127) (34,282)
Other loss, net 29 (7,557) (17,982)
Total other income 22,677 21,223
Profit before income tax 325,200 259,539
Current income tax expense (43,695) (21,290)
Deferred income tax expense (11,827) (28,524)
Total income tax expense 33 (55,522) (49,814)
Profit for the period 269,678 209,725
Other comprehensive income / (loss)
Currency translation differences 15,603 (48,319)
Cash flow hedge, net of tax 34 18,434 31,501
Other comprehensive income / (loss) 28 (166)
Other comprehensive income / (loss) for the period 34,065 (16,984)
Total comprehensive income for the period 303,743 192,741
Profit attributable to:
Gazprom Neft shareholders 253,274 200,179
Non-controlling interest 16,404 9,546
Profit for the period 269,678 209,725
Total comprehensive income / (loss) attributable to:
Gazprom Neft shareholders 279,461 198,945
Non-controlling interest 24,282 (6,204)
Total comprehensive income for the period 303,743 192,741
Earnings per share attributable to Gazprom Neft shareholders
Basic earnings (RUB per share) 53.68 42.43
Diluted earnings (RUB per share) 53.68 42.43
Weighted-average number of common shares outstanding (millions) 4,718 4,718

Consolidated Statement of Changes in Shareholders’ Equity

Attributable to Gazprom Neft shareholders Non-controlling interest Total equity
Share capital Treasury shares Additional paid-in capital Retained earnings Other reserves Total
Balance as of 1 January 2017 98 (1,170) 51,047 1,276,210 33,955 1,360,140 84,027 1,444,167
Profit for the period – – – 253,274 – 253,274 16,404 269,678
Other comprehensive income                
Currency translation differences – – – – 7,725 7,725 7,878 15,603
Cash flow hedge, net of tax – – – – 18,434 18,434 – 18,434
Other comprehensive income – – – – 28 28 – 28
Total comprehensive income for the period – – – 253,274 26,187 279,461 24,282 303,743
Transactions with shareholders, recorded in equity
Dividends declared to equity holders – – – (97,553) – (97,553) (2,433) (99,986)
Transaction under common control (Note 26) – – 11,209 – – 11,209 – 11,209
Total transactions with shareholders – – 11,209 (97,553) – (86,344) (2,433) (88,777)
Balance as of 31 December 2017 98 (1,170) 62,256 1,431,931 60,142 1,553,257 105,876 1,659,133
Attributable to Gazprom Neft shareholders Non-controlling interest Total equity
Share capital Treasury shares Additional paid-in capital Retained earnings Other reserves Total
Balance as of 1 January 2016 98 (1,170) 44,326 1,078,626 35,189 1,157,069 91,420 1,248,489
Profit for the period – – – 200,179 – 200,179 9,546 209,725
Other comprehensive (loss) / income
Currency translation differences – – – – (32,569) (32,569) (15,750) (48,319)
Cash flow hedge, net of tax – – – – 31,501 31,501 – 31,501
Other comprehensive loss – – – – (166) (166) – (166)
Total comprehensive income / (loss) for the period – – – 200,179 (1,234) 198,945 (6,204) 192,741
Transactions with shareholders, recorded in equity
Dividends declared to equity holders – – – (2,595) – (2,595) (1,273) (3,868)
Transaction under common control – – 6,835 – – 6,835 – 6,835
Acquisition through business combination – – (114) – – (114) 84 (30)
Total transactions with shareholders – – 6,721 (2,595) – 4,126 (1,189) 2,937
Balance as of 31 December 2016 98 (1,170) 51,047 1,276,210 33,955 1,360,140 84,027 1,444,167

Consolidated Statement of Cash Flows

Notes Year ended 31 December 2017 Year ended 31 December 2016
Cash flows from operating activities
Profit before income tax 325,200 259,539
Adjustments for:
Share of profit of associates and joint ventures 14 (45,504) (34,116)
Loss / (gain) on foreign exchange differences 30 241 (28,300)
Finance income 31 (10,098) (11,071)
Finance expense 32 25,127 34,282
Depreciation, depletion and amortisation 12,13 140,998 129,845
Net impairment of receivables and other assets – 7,587
Other non-cash items 3,355 3,801
Operating cash flow before changes in working capital 439,319 361,567
Changes in working capital:
Accounts receivable 13,655 (30,397)
Inventories (20,672) (3,462)
Taxes receivable (2,502) 4,218
Other assets (1,752) 8,999
Accounts payable 33,002 12,288
Taxes payable 15,600 19,729
Other liabilities 15,478 3,841
Total effect of working capital changes 52,809 15,216
Income taxes paid (36,530) (22,158)
Interest paid (39,449) (36,476)
Dividends received 5,551 3,148
Net cash provided by operating activities 421,700 321,297
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired – (1,040)
Acquisition of investments in joint ventures (8,345) (505)
Disposal of investments in joint ventures 476 (483)
Bank deposits placement (8,462) (1,425)
Repayment of bank deposits 2,529 49,942
Proceeds from sales of other investments 670 3,241
Short-term loans issued (200) (6,940)
Repayment of short-term loans issued 33,295 10,815
Long-term loans issued (1,875) (21,904)
Repayment of long-term loans issued 13,048 12,684
Purchases of property, plant and equipment and intangible assets (357,090) (384,817)
Proceeds from sale of property, plant and equipment, intangible assets 2,210 1,008
Proceeds from sale of other non-current assets 1,706 11,186
Interest received 9,149 4,384
Net cash used in investing activities (312,889) (323,854)
Cash flows from financing activities
Proceeds from short-term borrowings 2,210 81,319
Repayment of short-term borrowings (9,207) (95,656)
Proceeds from long-term borrowings 354,160 142,947
Repayment of long-term borrowings (343,607) (192,539)
Transaction costs directly attributable to the borrowings received (260) (649)
Dividends paid to Gazprom Neft shareholders (50,382) (2,598)
Dividends paid to non-controlling interest (2,542) (1,254)
Repayment of finance lease liabilities (893) –
Net cash used in financing activities (50,521) (68,430)
Increase / (decrease) in cash and cash equivalents 58,290 (70,987)
Effect of foreign exchange on cash and cash equivalents (1,303) (9,590)
Cash and cash equivalents as of the beginning of the period 33,621 114,198
Cash and cash equivalents as of the end of the period 90,608 33,621

Notes to the Consolidated Financial Statements As of and for the year ended 31 December 2017