Today, Bashneft Group, which comprises PJSOC Bashneft and its subsidiaries, has released its unaudited consolidated financial statements for the first quarter of 2015 prepared in accordance with International Financial Reporting Standards (IFRS).

1Q 2015 vs. 1Q 2014:

• The Group’s revenue from sales decreased by 2.5% to 142,930 million roubles.
• Adjusted EBITDA increased by 5.0% to 26,737 million roubles.
• Net income attributable to the shareholders of the parent company decreased by 18.4% to 11,390 million roubles.
• Capital expenditure grew by 34.3% to 12,161 million roubles.
• Adjusted net debt increased by 13.3% to 129,169 million roubles.
• Average daily oil production grew by 14.7% to 52.3 thousand tonnes.
• Oil refining declined by 11.3% to 4,715 thousand tonnes.

1Q 2015 vs. 4Q 2014:

• The Group’s revenue from sales decreased by 13.1%.
• Adjusted EBITDA increased by 55.1%
• Net income attributable to the shareholders of the parent company totalled 11,390 million roubles as against a loss of 2,279 million roubles in the fourth quarter of 2014.
• Capital expenditure declined by 27.2%.
• Adjusted net debt increased by 13.7%.
• Average daily oil production gained 1.9%.
• Oil refining fell by 11.7%.

Despite deterioration in market conditions and a negative impact of the tax manoeuvre, in the first quarter of 2015, the Company achieved strong financial results. They were largely due to a 14.4% year-on-year increase in oil production (to 4,709 thousand tonnes) and growth of oil sales, including a 15.9% increase in exports (to 1,669 thousand tonnes) and a 168.2% increase in domestic sales (to 397 thousand tonnes).

In addition, consistent refinery upgrades and a planned 11.3% reduction in refining in the first quarter of 2015 to 4,715 thousand tonnes (a level that is cost-effective under current macroeconomic conditions and the new tax regime) enabled the Company to improve the quality and maximize the value of its product mix.

As a result, in the first quarter of 2015, Bashneft increased the share of light products to 68.6% as against 58.6% in the first quarter of 2014; at the same time, the output of diesel fuel gained 5.5% (reaching 1,898 thousand tonnes), while gasoline output increased by 4.3% (to 1,211 thousand tonnes). At the same time, the output of low-margin heavy petroleum products was reduced considerably: the output of fuel oil declined by 18.8% (to 706 thousand tonnes), while the output of vacuum gas oil fell by 93.7% (to 27 thousand tonnes).

In the first quarter of 2015, a complete switchover to production of Euro 5 diesel fuel enabled Bashneft to boost export sales of this product by 24.9% year on year (to 1,482 thousand tonnes) and to achieve a 16.4% increase in revenue from its sales (to 42,038 million roubles) despite unfavourable market conditions.

In the first quarter of 2015, the Company also increased domestic sales of high-octane gasoline by 12.4% compared to the first quarter of 2014 and achieved a 14.0% increase in revenue from its sales (to 26,895 million roubles).

In the first quarter of 2015, retail sales of engine fuel (primarily Euro 5 fuel) increased by 7.5% year on year due to expansion and modernization of Bashneft’s network of filling stations; at the same time, revenue from retail sales grew by 15.0% to 12,814 million roubles.

In the first quarter of 2015, adjusted EBITDA grew by 5.0% year on year to 26,737 million roubles. Net income attributable to the shareholders of the parent company decreased by 18.4% to 11,390 million roubles.

The year-on-year decrease in net income in the first quarter of 2015 was caused mainly by an increase in foreign exchange losses and in the cost of debt servicing.

In the first quarter of 2015, capital expenditure added 34.3% compared to the first quarter of 2014, which was related primarily to development of the Sorovskoye field in Western Siberia and growth of capital expenditure on brownfields in the Republic of Bashkortostan.

In the first quarter of 2015, the Company reported a negative operating cash flow totalling 2,697 million roubles due to seasonal changes in working capital, including prepayment received in the fourth quarter of 2014 for supply of petroleum products in early 2015.

As of March 31, 2015, the Group’s total debt amounted to 158,583 million roubles, which is 9.0% higher than the level as of March 31, 2014 and 5.5% lower than the level as of December 31, 2014 (167,785 million roubles).

As of March 31, 2015, adjusted net debt totalled 129,169 million roubles, up by 13.3% compared to March 31, 2014 and up by 13.7% compared to December 31, 2014 (113,637 million roubles).

KEY FINANCIAL AND OPERATING RESULTS FOR THE FIRST QUARTER OF 2015

Documentation

Bashneft Group IFRS financial results for 1Q 2015 (MD&A)

Full text (PDF, 460 ÊÁ )

Bashneft Group IFRS financial results for 1Q 2015 (Presentation)

Full text (PDF, 463.31 ÊÁ)

Bashneft Group Consolidated Financial Statements for 1Q 2015

Full text (PDF, 536.57 ÊÁ