On April, 18, 2013 Transneft, JSC, hosted the meeting where it reported its IFRS-based performance for 2012. The meeting was held with participation of representatives of a number of Russian and foreign investment companies and banks. The meeting was chaired by Transneft First Vice President M. Grishanin who answered a number of questions asked by analysts regarding the financial performance of the Company.
Among other things he informed that the management of Transneft, JSC, was going to offer an increase in dividends for 2012 up to 46% of the net profit of the holding company.“In 2013 we will offer an increase in the dividend payments from 25% of the net profit of the holding company to 46%,” he said. M. Grishanin noted that the Company was not planning any changes in the dividend policy till 2017. “The dividend policy will be changed only in 2017 when our major projects are completed,” M. Grishanin said. The First Vice President also informed that the state may reduce its stake in Transneft, JSC, to 75% as early as in 2014. He noted that the Federal Agency for State Property Management (Rosimushchestvo) and Transneft, JSC, had prepared a “roadmap” of the process. “We hope that in the next 3 months the Government will issue the directives, and after that we will be working with Rosimushchestvo on reduction of the RF stake in the authorized capital of the Company to 75%, in accordance with the applicable laws,” he said. – If everything works out as planned, the reduction will take effect in 2014,” M. Grishanin said.
Based on the documents submitted by the Company, the Transneft, JSC net profit calculated in accordance with IFRS, taking into account the minority interest, was 184.4 bn rubles in 2012, which is by 3.6% less as compared to the net profit in 2011. Over the reporting period, the revenue increased by 9.3% – to 732.4 bn rubles; EBITDA increased by 11.3% – to 324 bn rubles. The profit attributable to shareholders of the Company amounted to 180 bn rubles, thus being by 4% lower than the level of 2011. The operating expenses, including depreciation and cost of oil and oil products sold, went up by 7.6% and totaled 492.6 bn rubles; the operating profit increased by 12.9% to 239.8 bn rubles; earnings before tax decreased by 0.4% to 234.6 bn rubles. The accounts payable amount to 126.4 bn rubles as compared to 124.4 bn rubles as of December 31, 2011. The revenue from provision of services in oil transportation increased by 8.5% to 494.5 bn rubles due to increased rates for oil transportation and a 1.1% increase in the cargo turnover. The revenue from provision of services in oil products transportation increased by 7.4%. The financing of the Transneft, JSC investment program for 2014–2015 is planned in the amount of 325.3 bn rubles. In 2012 the amount earmarked for financing was 109 bn rubles, while in 2013 the earmarked amount was 161.4 bn rubles. Transneft, JSC, notes that after the completion if the comprehensive project for construction of the Eastern Siberia-Pacific Ocean Pipeline System (ESPO) in 2012 under the investment program the savings on the above project totaled 87.1 bn rubles or 11% of the cost estimated with reference to the expert review report issued by General State Authority for Appraisal. Based on the Company’s data, the cost of the commissioned investment projects amounted to: ESPO-1 – 380.6 bn rubles, ESPO-2 – 275.5 bn rubles, BPS -2 – 107.4 bn rubles, the extension of ESPO-1 to 50 mln tons – 49.7 bn rubles, Purpe - Samotlor – 45.1 bn rubles, Skovorodino – PRC border – 12 bn rubles. The Company’s statements also show that Transneft, JSC, was able to achieve an 15% reduction in the prices for pipes supplied for the programs of 2013. In 2012, after the completion of the tendering procedures the Company achieved savings on supplies for the facilities planned under the programs of 2013. The decrease in the prices for supply of large-diameter pipes for trunk pipelines, pipe fittings, structural elements of tanks averaged 15.3% of the initial price. In 2012, the price for materials and equipment supplied for the program of 2013 totaled 6.5 bn rubles. The actual cost reduction was 13.4%. M. Grishanin informed that “due to this, the Company was able to replace 40 km of the operating pipelines in 2013”. “We keep on working (on reduction of the cost of purchases) in 2013,” he said. As M. Grishanin informed, Transneft, JSC, revised and made upward adjustment in the cost of the Zapolyarye - Purpe pipeline construction project from 120 billion to 199.2 billion rubles. “By today we have obtained the approval from the General State Authority for Appraisal regarding the provisional cost of the Zapolyarye – Purpe project in the amount of 199.2 billion rubles,” he said. The reasons for the revision were the expected increase of the length of the entire route (approximately to 520 km against the previously planned 490 km) and the expected increase of the length of the above-the-ground sections that were expected to become longer by 170 km (from 140 km to 310 km), as the construction of such sections is more costly than pipe laying under the ground. In addition, the revised estimation was made, taking into account the prices for 2014 and the compensation for the climatic conditions of the polar areas was estimated to be applied to the wages paid to employees engaged in construction. By today, both stages of the Zapolyarye – Purpe PS have been approved by the General State Authority for Appraisal. At the moment, construction and assembly work on the liner section of the first stage is in progress, according to the data of Transneft, JSC.
The First Vice President also informed that Transneft, JSC is thinking over the construction of 5 oil pump stations for the planned increase in the oil supplies to China. “We are getting ready for construction of new 5 oil pump stations at Espo-1 for the further increase in the amounts of oil transported to China,” he said. M. Grishanin stated that the increase in the amount of oil supplied by the branch pipe from ESPO to China may reach 15 mln tons of oil. Besides, M. Grishanin informed that at the beginning of 2014 Transneft, JSC, will start construction of the Kuyumba - Taishet oil pipeline. According to him, at the moment the Company is completing the survey.