On 7 July 2006 OAO Gazprom issued its audited consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS).
During the period from December 2003 to June 2006, the International Accounting Standards Board (“IASB”) revised 17 of its standards and issued 7 new standards. The financial statements were prepared in accordance with the new and revised IFRS standards which were effective from 1 January 2005 and are relevant to operations of the Group. Moreover, the Gazprom Group early adopted IFRS 6 Exploration and Evaluation of Mineral Resources (from 1 January 2005).
A significant factor affecting the consolidated financial statements prepared in accordance with International Financial Reporting Standards for the year ended 31 December 2005 is the acquisition of OAO Sibneft, recently renamed OAO Gazprom Neft, in October 2005. The operational results of OAO Sibneft and its subsidiaries were included in the Group’s consolidated financial statements from the date when control over OAO Sibneft was established.
The table below presents the audited consolidated statement of income for the year ended 31 December 2005 and 2004. All amounts are presented in million Russian Roubles, unless otherwise stated.
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The year ended |
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31 December |
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2005 |
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2004 |
|
|
Sales (net of excise tax, VAT and customs duties) |
1 383 545 |
|
976 776 |
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Operating expenses |
(929 561) |
|
(714 165) |
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Operating profit |
453 984 |
|
262 611 |
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|
|
|
|
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Finance income |
53 890 |
|
69 332 |
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Finance expenses |
(69 926) |
|
(53 482) |
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Share of net income of associated undertakings and jointly controlled entities |
11 782 |
|
8 151 |
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Gains on available for sale investments |
385 |
|
5 018 |
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Profit before profit tax |
450 115 |
|
291 630 |
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|
|
|
|
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Current profit tax expense |
(118 028) |
|
(57 949) |
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Deferred profit tax expense |
(16 156) |
|
(21 939) |
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Profit tax expense |
(134 184) |
|
(79 888) |
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Profit for the period |
315 931 |
|
211 742 |
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|
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Profit for the period attributable to: |
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|
|
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Equity holders of OAO Gazprom |
311 125 |
|
209 449 |
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Minority interest |
4 806 |
|
2 293 |
|
315 931 |
|
211 742 |
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Sales (net of excise, VAT and customs duties) increased by RR406 769 million, or 42%, to RR1 383 545 million in the year ended 31 December 2005 compared to the year ended 31 December 2004. The consolidation of Sibneft resulted in growth in sales by RR 90 989 million. More detailed information on our sales for the year ended 31 December 2005 and 2004 is presented in the table below.
|
in million RR (unless otherwise stated) |
The year ended 31 December |
|
|
Sale of gas |
2005 |
2004 |
|
Europe |
|
|
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Net sales (net of excise tax and customs duties) |
619 099 |
448 250 |
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Volumes in bcm |
156,1 |
153,2 |
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Average price, RR/mcm (including excise tax and customs duties) |
5443,6 |
3 967,4 |
|
FSU |
|
|
|
Net sales (net of excise tax, VAT and customs duties) |
108 391 |
68 763 |
|
Volumes in bcm |
76,6 |
65,7 |
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Average price, RR/mcm (including excise tax, customs duties and net of VAT) |
1716,1 |
1345,81 |
|
Russia |
|
|
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Net sales (net of excise tax and VAT) |
309 985 |
250 445 |
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Volumes in bcm |
307,0 |
305,7 |
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Average price, RR/mcm (including excise tax and net of VAT) |
1014,1 |
826,2 |
|
Total sales of gas |
|
|
|
Net sales (net of excise tax, VAT and customs duties) |
1 037 475 |
767 458 |
|
Volumes in bcm |
539,7 |
524,6 |
|
|
|
|
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Sales of gas condensate and other oil and gas products (net of excise tax, VAT and customs duties) |
213 445 |
122 248 |
|
Net sales of crude oil (net of VAT and customs duties) |
38 591 |
- |
|
Gas transportation sales (net of excise tax and VAT) |
25 050 |
29 027 |
|
Other sales (net of VAT) |
68 984 |
58 043 |
|
Total sales (net of excise tax, VAT and customs duties) |
1 383 545 |
976 776 |
Net sales of natural gas increased by RR270 017 million, or 35%, to RR1 037 475 million in the year ended 31 December 2005 compared to the year ended 31 December 2004.
Net sales of natural gas to Europe increased by RR170 849million, or 38%, to RR 619 099million in the year ended 31 December 2005 compared to the year ended 31 December 2004. This was primarily due to higher average prices for gas sold to European customers and the 2% increase in the volume of gas sold.
Net sales of natural gas to FSU countries increased by RR39 628 million, or 58%, to RR108 391million in the year ended 31 December 2005 compared to the year ended 31 December 2004. This is explained the 17% increase in the volume of gas sold and higher prices. Sales of natural gas to FSU include sale of gas from the Ukrainian underground gas storage.
Net sales of natural gas in the domestic market increased by RR 59 540 million, or 24%, to RR 309 985 million in the year ended 31 December 2005 compared to the year ended 31 December 2004. This is explained primarily by increased average domestic price for gas set by the Federal Tariff Service.
In the year ended 31 December 2005 sales of gas condensate and oil and gas products increased by RR 91 197 million, or 75%, primarily due to increased market prices for oil and gas products in 2005 compared to 2004.
Net sales of crude oil amounted to RR 38 591 million as a result of the consolidation of Sibneft during the year ended 31 December 2005.
Operating expenses increased by RR215 396 million, or 30%, to RR 929 561 million in the year ended 31 December 2005 compared to the year ended 31 December 2004. An increase in operating expenses of RR 73 560 million related to Sibneft.
This increase in operating expenses was primarily due to higher taxes other than on income (RR 41 686 million, including Sibneft RR 18 080 million), higher staff costs (RR 36 623 million), increase in charge (release) for impairment provisions (RR 31 325 million), higher cost of purchased oil and gas (RR 21 177 million, including Sibneft RR 10 286 million), repairs and maintenance expense (RR 14 604 million) and higher depreciation (RR14 519 million). The increase in taxes other than on income was primarily due to changes in tax legislation related to natural resources production tax beginning 1 January 2005. The increase in the staff costs resulted from the increase in average base salaries and other payments and the increase in the average number of employees. Charge for impairment provisions was RR 8 774 million in 2005 compared to a release of impairment provisions in amount of RR 22 551 million in 2004. The change primarily is attributed to reassessment of accounts receivable of NAK Naftogaz Ukraine in 2004 resulting in a significant release of provision amounted RR 19 312 million. The increase in expenses on repairs and maintenance can be explained by increased work by external service companies primarily in the transportation segment. The increase in the cost of purchased oil and gas was primarily related to higher volumes of gas purchases in Central Asia and Europe for resale to customers in Western Europe and FSU.
The profit tax increased by RR54 296 million, or 68%, to RR134 184 million in the year ended 31 December 2005 compared to RR79 888 million for the year ended 31 December 2004. Our effective current profit tax rate for the year ended 31 December 2005 was 29,8% compared to 27,4% for the year ended 31 December 2004.
In the year ended 31 December 2005 our profit for the period attributable to equity holders of OAO Gazprom totaled RR 311 125 million which is RR 101 676million, or 49%, higher compared to the year ended 31 December 2004.
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 297 610million, or 60%, from RR 499 855million as of 31 December 2004 to RR 797 465million as of 31 December 2005. This is primarily due to increased borrowings obtained to finance the purchase of Sibneft.
More detailed information on the IFRS consolidated financial statements for the year ended 31 December 2005 can be found here.