Extract from ZARUBEZHNEFT GROUP’s consolidated financial statements and information about the auditor for the reporting year

Zarubezhneft annually engages external auditors to audit its consolidated financial statements prepared in accordance with IFRS. The audit organization was selected to audit ZARUBEZHNEFT GROUP’s consolidated financial statements for 2019–2020 by conducting an open request for proposals in accordance with the requirements of Federal Law No. 223-FZ dated July 18, 2011 “On the Procurement of Goods, Work, and Services by Separate Types of Legal Entities”.

Deloitte & Touche CIS won the tender and was hired as the auditor of ZARUBEZHNEFT GROUP’s consolidated financial statements for 2019–2020. Deloitte & Touche CIS conducts quality control of audit assignments as of the date of issuance of the audit opinion and prior to this, and also verifies and monitors the quality of audit documentation on audits that have been completed. The cost of services of Deloitte & Touche CIS for the audit of the consolidated financial statements for 2020 amounted to RUB 11,159,000.

The Federal Treasury and the Self-Regulatory Organization of Auditors, in which the auditor is a member, regularly confirm the auditor’s independence.

Consolidated profit and loss statement and other total income for the year ended on december 31, 2020

EXTRACT FROM ZARUBEZHNEFT GROUP’S CONSOLIDATED IFRS FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2020, RUB MLN

RUB MLN 2020 2019
Sales revenue and income from joint operations
Sales of oil, gas, and petroleum products 60,696 65,300
Ancillary services and other sales 12,495 9,521
Revenues from joint ventures 9,742 18,068
Total sales revenue and income from joint operations 82,933 92,889
Costs and expenses
Cost of purchased oil, gas, and petroleum products (41,560) (40,637),
Production and operating costs (16,621) (16,302),
Commercial, general, and administrative expenses (5,825) (6,331)
Taxes, except income tax (4,649) (5,543)
Export, depletion, and depreciation (6,599) (4,606)
Transportation costs (1,981) (1,715)
Geological survey costs (274) (211)
Export duty (306) (342)
Other income/(expenses), net 908 2,395
Profit from operating activities 6,026 19,597
Expenses on devaluation of assets, net (1,110) (413)
Income (expenses) from revaluation of foreign currency derivative financial instruments at fair value (896) (186)
Financial income 1,549 999
Financial expenses (721) (806)
Exchange rate differences, net 5,025 (2,918)
Profit before income tax 9,873 16,273
Current income tax (2,329) (1,888)
Deferred income tax 1,689 (932)
NET PROFIT FOR THE YEAR 9,233 13,453
Net profit/(loss) for the year, belonging to:
The shareholder of the parent company 9,940 13,310
Non-controlling interests (707) 143
NET PROFIT FOR THE YEAR 9,233 13,453
OTHER TOTAL INCOME/(EXPENSE)
Items to be reclassified as profit or loss
The effect of conversion into the presentation currency 13,755 (7,257)
Other aggregate income/(expense) for the year excluding income tax 13,755 (7,257)
TOTAL AGGREGATE INCOME FOR THE YEAR 22,988 6,196
Total aggregate income/(expenditure) for the year belonging to:
The shareholder of the parent company 24,099 5,426
Non-controlling interests (1,111) 770
22,988 6,196

Consolidated statement of financial position as of december 31, 2020

RUB MLN
ASSETS December 31, 2020 December 31, 2019
Non-current assets
Fixed assets 55,450 40,924
Investments in joint ventures 88,382 74,822
Debt securities 6,352 4,230
Deferred tax assets 3,004 835
Contributions to the liquidation fund 2,012 1,511
Other non-current assets 2,810 1,517
158,010 123,839
Current assets
Stocks 4,046 4,427
Trade and other receivables 8,052 5,396
Dividend debt 3,312 5,162
Refundable taxes and prepayment of taxes 1,374 1,510
Loans issued 5,175 4,160
Debt securities 9,720 6,861
Deposits, cash, and cash equivalents 29,843 35,387
Other current assets 1,321 1,146
62,843 64,049
TOTAL ASSETS 220,853 187,888
OWN CAPITAL AND LIABILITIES
Capital and reserves
Charter capital 50,729 50,729
Other reserves 15,439 14,310
Reserve of conversion to the presentation currency 36,443 22,284
Retained earnings 59,840 57,684
Share capital of the parent company 162,451 145,007
Non-controlling shares (8,339) (8,207)
TOTAL CAPITAL AND RESERVES 154,112 136,800
Long-term liabilities
Long-term loan liabilities 16,795 14,743
Long-term valuation liabilities 15,917 10,988
Deferred tax liabilities 6,119 5,447
38,831 31,178
Short-term liabilities
Short-term loan liabilities 11,845 6,441
Trade and other accounts payable 12,542 9,859
Short-term valuation liabilities 1,784 1,424
Tax liabilities 1,366 1,457
Other short-term liabilities 373 729
27,910 19,910
TOTAL OBLIGATIONS 66,741 51,088
TOTAL CAPITAL AND LIABILITIES 220,853 187,888