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Transneft Publishes Consolidated Financial Statements for 2019

Date of publication: 27 March 2020

Transneft, the world's largest oil pipeline company, has published consolidated financial results under IFRS for 2019 in the For Investors and Shareholders section of its official website.

Crude oil transportation grew by 5.0 mln tonnes, or 1.0%, amounting to 485.0 mln tonnes.

Petroleum products transportation in 2019 amounted to 37.9 mln tonnes, lower y-o-y by 1.3 mln tonnes, or 3.3%.

The key financial performance indicators of Transneft Group in 2019 were largely influenced by the inclusion of NCSP Group’s performance results, including NCSP subsidiaries, in the consolidated data of Transneft Group in view of Transneft having acquired a majority interest in this company in September 2018.

The revenue of Transneft Group exceeded, for the first time, the threshold of RUB 1 trillion, amounting to RUB 1 064 billion in 2019. The y-o-y increase by RUB 84 bln, or 9%, was mainly due to the inclusion of NCSP Group’s performance indicators and growing revenues from oil transportation services.

Transneft Group's EBITDA in 2019 amounted to RUB 486 billion, up RUB 53 billion or 12% year-on-year.

The revenue for 2019 before the deduction of the share of non-controlling shareholders was RUB 197 bln, down by RUB 28 bln, or 13%, y-o-y, mainly due to the following one-time events included in the reporting:

  • included for 2018 was the revenue from reappraising the already existing stake in NCSP to the fair value, as of the date of acquiring the majority interest, to the tune of RUB 25 billion;
  • included for 2019 was the profit from NGT sale to the tune of RUB 16 billion;
  • in 2019, a reserve to indemnify shippers for property damages caused by the incident of off-spec crude fed to the Druzhba oil trunk pipeline system in April 2019 was established and relevant expenses acknowledged to the tune of RUB 26 billion (under the existing contracts on the provision of oil transportation services in 2019 subject to documentary evidence of the shippers’ losses or actual negative consequences and their value).

The free cash flow in 2019 amounted to RUB 93 bln, up 19% y-o-y, mainly due to the inclusion of NCSP Group’s results.

The total debt by the end of 2019 was RUB 637, or 5% lower y-o-y, mainly due to the planned repayment of Transneft's corporate bonds.

The most significant investment projects of Transneft Group completed in 2019 were:

  • ESPO expansion at the Tayshet IPS – Skovorodino PS section up to 80 million tonnes per year;
  • ESPO expansion at the Skovorodino PS – Kozmino SSOP section up to 50 million tonnes per year.

In November 2019, the ESPO pipeline system reached its maximum capacity after the expansion, 80 mln tonnes per year at the Tayshet IPS – Skovorodino PS section, and 50 mln tonnes per year at the Skovorodino PS – Kozmino SSOP section.

In 2019, a plant for drag reducing agents was commissioned in the Alabuga special economic zone (the Republic of Tatarstan), with a capacity sufficient to fully cover Transneft’s needs in drag reducing agents.

For more detailed analysis of the Group’s financial standing and performance as well as its consolidated financial statements in accordance with IFRS for the reporting year ending on the 31st of December 2019, see here and here.

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