OAO AK Transneft 2004 Financial results. Transneft 2004 Financial results 2 Disclaimer All information herein is based on Transneft IFRS consolidated.

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Presentation transcript:

OAO AK Transneft 2004 Financial results

Transneft 2004 Financial results 2 Disclaimer All information herein is based on Transneft IFRS consolidated financial statements for the year ending Dec 31, 2004 audited by KPMG Limited, and on Transneft`s management data. Unless otherwise noted all values are in million Russian rubles. More information available at

Transneft 2004 Financial results 3 Sales Up by 32% Transneft achieved astonishing 32% sales growth in the year 2004 with revenues growing from R114.2B to R150.4B Increases in both transportation volumes (by 8% to 447MM tons) and tariffs contributed to the sales growth Dynamics of tariff growth – Jan ,62% – Sep ,2% (dollar depreciation compensation)

Transneft 2004 Financial results 4 Sales structure generally unchanged

Transneft 2004 Financial results 5 Sales structure Sales of export transportation services in 2004 have grown faster than of domestic transportation; export tariff revenues have grown by +31% (domestic +19%); Transportation towards domestic refineries has grown 1% while export routes carried 14% more crude than a year before; as a result, the gap between export (R78.1B) and domestic transportation revenue(R55.8B) has increased Jump in “other” revenues has been resulted by larger amount of crude sold and increase in compounding services sales While tariff for compounding services has stayed unchanged during 2004 the volume of compounded crude transportation increased 17.5% (to 19.9MM tons in 2004)

Transneft 2004 Financial results 6 Income growth, consistent margins change Operating Income60,804 46,344+31% Operating Margin 40% 41% EBITDA77,892 60,703+28% Net Income41,155 30,561+35%

Transneft 2004 Financial results 7 Operating expenses structure Operating expenses had been growing at a slower pace than Company’s revenues with overall increase of 28.3% during the year ended Dec 31, % of Transneft OPEX are explained with 7 broad cost categories: Depreciation19%21% Salary16% Electricity15% Maintenance, repairs and minor renewals10%11% Materials7%11% Insurance expense7% Cost of goods for resale5%1%

Transneft 2004 Financial results 8 Operating expenses – important facts Depreciation, the largest cost item, have grown by 14% due to R46.9BB addition to the fixed assets, resulted mostly by further BPS extension Salary also quickly increased by +27% driven mostly by increase in average pay (by 21%) and headcount (by 5%) to 73,200 employees Electricity costs continue to be one of the Company’s largest expense growing by the 27% to the level of R13.3B or 15% of total OPEX; this growth can be partly explained by the increasing of transportation volumes but largely is resulted by increase in electricity tariffs Maintenance & repair expenses per kilometer of the pipeline network have reached R180K per annum, 17% over 2003 level Materials costs has been reduced by 13% in 2004

Transneft 2004 Financial results 9 Continuous upgrade of fixed assets Additions to Transneft`s PP&E account: – almost R52B in the year ended Dec 31, 2004 – exceeding depreciation by a factor of 3.2 – equaled to 20% of net book value of Transneft`s fixed assets as of Dec 31, 2003 thus highlighting rapid extension and modernization of Transneft's asset base New additions are mostly attributed to BPS and capital improvements of pipeline infrastructure within Transneft’s modernization program Linefill represents 27,276 thousand tones of crude oil, is valued at R53B and contributes to 18% of group’s fixed assets

Transneft 2004 Financial results 10 Debt – switching to unsecured Transneft generally substituted its secured borrowings with unsecured 31 December December 2003 Secured borrowings37018,169 Unsecured borrowings17, Total borrowings decreased from R18.4B to R17.5B The share of borrowings that have maturity over 2 years decreased from 65.8% to 21.6% of total borrowings while share of borrowings with maturity between one and two years increased from 18.1% to 63.9% Transneft`s Debt to EBITDA ratio equaled to 0,23 as of Dec 31, 2004 shows that Transneft almost unlevered firm

Transneft 2004 Financial results 11 Key ratios Current ratio2,011,89 Cash ratio0,570,62 EBITDA Margin52%53% Debt to EBITDA0,220,30 Debt to Equity ratio0,300,35