Net profit of Rosneft under IFRS in the I half grew by 4.1 times


MOSCOW, 7 Aug. / Rosneft increased net profit in the first half of 2018 by the international financial reporting standards 4.1 times compared to the same period last year to 309 billion rubles, stated in the financial statements of the company.

“Net profit attributable to shareholders of the company (net profit after deduction of non-controlling interests), for the half year amounted to 309 billion rubles, having increased by 4.1 times year-on-year (in dollars – $5.1 billion with growth of 3.9 times)”, – stated in the message.

It is reported that second-quarter net profit rose 2.8% in ruble terms up to 228 billion rubles, 2.4 times in dollar – up to $3.6 billion. “This became possible due to the growth in operating profit impact of exchange rate differences and recognized one-time revenue from the acquisition of shares in JV to develop deposits with a foreign partner”, – explained in the materials of “Rosneft”.

The company notes that it has revised these interim consolidated statement of income for the three and six months due to finalization of purchase price allocation 57,66% of actions of “Bashneft” in the third quarter of 2017. So, at the end of the first half of 2017, the company reported a net profit of 81 billion rubles, in the current report the adjusted figure to 75 billion rubles.

Revenue for the six months of 2018 grew by 34.8% to 3,787 trillion rubles. EBITDA growth amounted to 48.7%, the rate reached 950 billion rubles. For the first half of free cash flow (PSD) increased two times and amounted to 363 billion roubles ($6.1 billion) compared to the PSD for the first half of 2017. In the second quarter free cash flow amounted to 221 billion rubles ($3.6 billion), an increase in the quarterly rate of 1.6 times.

The company also said that because of a change in dividend policy in late August of last year, resulting in payments will amount to at least 50% of IFRS net income with a frequency of at least two times a year, for the first half of 2018, the dividend can be higher than for all of last year.

JV with ExxonMobil

“Rosneft” in the second quarter and bought shares of ExxonMobil in joint projects, the report says Russian companies according to international standards (IFRS).

“In the second quarter of 2018, within the framework of the exit of ExxonMobil from a number of joint projects, the company completed the acquisition of various shares in joint ventures with ExxonMobil. As at 30 June 2018 the fair value of assets and liabilities in joint ventures has not been completed”, – stated in the document.

Earlier it was reported that ExxonMobil due to sanctions on Russia 2018 plans to begin the process of exiting joint projects with Rosneft in the sphere of exploration of oil.

The company took the decision to withdraw from joint projects with Rosneft at the end of 2017 after the second half of 2017, States have legislated and expanded sanctions against Russia.

In the annual report, which was sent to the American company with the Commission on securities and exchange Commission (SEC), said that in 2013 and 2014, Exxon Mobil and Rosneft have set up structures to implement the operations in the field of oil exploration. In particular, during this period, agreements were reached on joint work on the shelf of the Kara sea, Chukchi sea, Laptev sea, Black sea. From the report it does not follow that the company intends to withdraw from other joint with “Rosneft” projects, agreements for which were concluded before the designated time.

In July 2017, it became known that the U.S. Treasury Department accrued ExxonMobil a penalty of $2 million under the pretext of violation of previously entered Washington’s anti-Russian sanctions. The company management then expressed disagreement with this decision and announced its intention to challenge it.

Capex Of Rosneft

“Rosneft” has increased capital expenditures in the first six months by 11.1%, to 452 billion.

“Capital expenditures in the second quarter of 2018 amounted to 229 billion rubles ($3.7 billion) and 452 billion ($7.6 billion) in the first half of 2018”, – stated in the message.
The company attributed the growth capex with the development of Russian and international projects.

The company attributed the growth capex with the development of Russian and international projects.

“To date, key strategic acquisitions, made during periods of low oil prices, was completed. The company is focused on organic growth and monetizing synergies from acquired assets,” – said CEO of “Rosneft” Igor Sechin.

Earlier it was reported that the company is under the strategy of “Rosneft-2022” plans in 2018 to reduce capital expenditure by 20% from the earlier approved level, to 800 billion with the goal of achieving positive, sustainable impact on the level of cash flow.

In 2017 capex of Rosneft amounted to 922 billion in 2018, the company originally planned to keep them at this level.

Short term filobasidiella

Short-term financial obligations “Rosneft” have decreased in January-June 2018 2.7 times to $14.5 billion reported by the company.

“Current portion of financial liabilities have decreased in the first half of 2018 2.7 times, mainly due to their planned partial repayment and refinancing of long-term debt instruments”, – is spoken in company materials.

The level of net financial debt in the second quarter of 2018 decreased by 12% in dollar terms.

It is noted that the value of net debt/EBITDA decreased by 26% since the beginning of the year to 1.5 x at the end of the II quarter of 2018.

Earlier, the head of “Rosneft” Igor Sechin noted that the debt burden of “Rosneft”, despite the company under sanctions, is at a comfortable level.

In may 2018 “Rosneft” reported that according to the strategy of “Rosneft-2022” to increase investment attractiveness of the set minimum target level of reduction of the total debt and trade liabilities of the company not less than 500 billion rubles in 2018.

It is planned that this will be achieved through “improving the investment process, accelerating the development of advanced project management methods and optimization of the service supply with a corresponding decrease in the target level of capital investment in 2018 to 800 billion rubles.”

The supply of oil

“Rosneft” in the first half of 2018 put oil in prepayment for long-term contracts to 94 billion rubles ($2.74 billion) against 126 billion rubles for the same period last year, follows from the statements of the company.

“Offset of advance payment on these contracts amounted to 94 billion and 126 billion roubles ($2.74 billion and $3.81 billion at the exchange rate at the date the prepayments are not subject to revaluation at current exchange rates) for the six months ended 30 June 2018 and 2017, respectively,” the document reads.

The remainder of the debt of “Rosneft” on such contracts as at 30 June 2018 is 1,264 trillion

During 2013-2014, Rosneft signed a number of long-term contracts for the supply of oil and petroleum products, providing for the receipt of prepayment. The total minimum amount of future supply under these agreements amounts to approximately 400 million t. the Price of oil and oil products is determined on the basis of current market quotations. Prepayment is settled through physical deliveries of oil and oil products.

Rosneft has long-term liabilities on advances received under agreements on long-term oil supplies from the world’s largest oil trade companies China National United Oil Corporation, Glencore, Vitol and Trafigura.

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