Today, Bashneft Group, which comprises PJSOC Bashneft and its subsidiaries, has released its unaudited consolidated financial statements for the second quarter of 2016 and the six months ended June 30, 2016 prepared in accordance with International Financial Reporting Standards (IFRS).

2Q 2016 vs. 1Q 2016:

• The Group’s revenue from sales increased by 8.1% to 141,868 million roubles.
• EBITDA grew by 17.0% to 33,405 million roubles.
• Adjusted EBITDA increased by 17.7% to 33,161 million roubles.
• Net income attributable to the shareholders of the parent company increased by 2.8% to 14,833 million roubles.
• Operating cash flow fell by 62.1% to 22,506 million roubles.
• Adjusted operating cash flow* increased by 11.5% to 22,506 million roubles.
• Capital expenditure grew by 21.4% to 20,918 million roubles.
• Net debt increased by 16.4% to 84,594 million roubles.
• Adjusted net debt** decreased by 2.3% to 104,938 million roubles.

1H 2016 vs. 1H 2015:

• The Group’s revenue from sales decreased by 7.6% to 273,127 million roubles.
• EBITDA remained flat and totalled 61,950 million roubles.
• Adjusted EBITDA declined by 2.0% to 61,326 million roubles.
• Net income attributable to the shareholders of the parent company decreased by 0.1% to 29,267 million roubles.
• Operating cash flow soared by 134.6% to 81,928 million roubles.
• Adjusted operating cash flow* increased by 22.2% to 42,685 million roubles.
• Capital expenditure added 38.4% and reached 38,145 million roubles.
• Net debt decreased by 32.8%.
• Adjusted net debt** dropped by 15.0%.

* - adjusted operating cash flow does not include prepayment received in the first quarter of 2016 under the long-term contract for supply of oil and petroleum products and totalling 39,243 million roubles.

** - calculated as net debt increased by the amount of the long-term portion of prepayment under crude oil and petroleum product supply contracts and reduced by the amount of short-term financial investments.

Improvement in the Company’s financial performance in the second quarter of 2016 compared to the first quarter of 2016 (adjusted EBITDA gained 17.7%, while operating income increased by 23.5%) was achieved by redirecting the flow of light products to the domestic market and boosting retail sales of engine fuel amid challenging market conditions, as well as due to an increase in crude oil exports.

Thus, despite a 13.5% quarter-on-quarter reduction in refining volumes in the second quarter of 2016 due to a scheduled shutdown of the industrial site of Bashneft-UNPZ for major repairs, domestic sales of high-margin light products decreased only slightly (by 1.6% to 1,352 thousand tonnes). At the same time, in the second quarter of 2016, a seasonal rise in demand resulted in an 11.0% quarter-on-quarter increase in retail sales of engine fuel (to 404 thousand tonnes). Moreover, in the second quarter of 2016, export sales of crude oil grew by 4.0% quarter on quarter (to 2,115 thousand tonnes).

In the second quarter of 2016, Bashneft’s net income attributable to the shareholders of the parent company increased by 2.8% quarter on quarter, which was related to a high base in the first quarter of 2016 due to recovery of provisions for previously impaired financial assets.

In the second quarter of 2016, the Company’s operating cash flow fell by 62.1% quarter on quarter (to 22,506 million roubles); however, in the first half of 2016, it jumped by 134.6% year on year (to 81,928 million roubles). In the second quarter of 2016, adjusted operating cash flow, which does not include prepayment received in January 2016 under the long-term contract for supply of oil and petroleum products and totalling US$ 500 million (39,243 million roubles) gained 11.5% quarter on quarter (reaching 22,506 million roubles); in the first half of 2016, it increased by 22.2% year on year (to 42,685 million roubles).

In the second quarter of 2016, capital expenditure grew by 21.4% quarter on quarter (to 20,918 million roubles), which was caused mainly by an increase in investment in the development of the Sorovskoye field in Western Siberia combined with an increase in capital expenditure in the refining segment related to major repairs at Bashneft-UNPZ in May 2016.

During the six months of 2016, deterioration in market conditions resulted in a slight year-on-year decrease in the Company’s adjusted EBITDA (by 2.0%); however, net income attributable to the shareholders of the parent company remained unchanged year on year at 29,267 million roubles. These results were supported primarily by a 10.9% year-on-year increase in oil production (to 10,580 thousand tonnes) and growth of crude oil sales by 28.5% (to 5,493 thousand tonnes).

During the six months of 2016, capital expenditure added 38.4% year on year (reaching 38,145 million roubles), mainly due to an increase in investment in the development of the Sorovskoye field, the Trebs and Titov fields and mature fields in Bashkortostan.

As of June 30, 2016, net debt amounted to 84,594 million roubles, up by 16.4% compared to March 31, 2016 (72,673 million roubles) and down by 32.8% compared to June 30, 2015 (125,870 million roubles). As of June 30, 2016, adjusted net debt totalled 104,938 million roubles, down by 2.3% compared to March 31, 2016 (107,463 million roubles) and down by 15.0% compared to June 30, 2015 (123,388 million roubles).

KEY FINANCIAL AND OPERATING RESULTS

FOR THE SECOND QUARTER AND THE SIX MONTHS OF 2016

Documentation

Bashneft Group IFRS financial results for 2Q 2016 (MD&A)

Full text (PDF, 656 ÊÁ )

Bashneft Group IFRS financial results for 2Q 2016 (Presentation)

Full text (PDF, 950 ÊÁ)

Bashneft Group Consolidated Financial Statements for 2Q 2016

Full text (PDF, 660 ÊÁ)