For reference


EBITDA analysis (₽ m)
Item 2014 2015 2016 2017 2018 ∆ 2018/2017 (%)
Profit for the period 126,656 116,198 209,725 269,678 400,993 48.7
Total income tax expense 19,214 29,252 49,814 55,522 79,129 42.5
Finance expense 15,279 33,943 34,282 25,127 21,476 (14.5)
Finance income (7,075) (14,732) (11,071) (10,098) (7,506) (25.7)
Depreciation, depletion and amortisation 85,951 114,083 129,845 140,998 175,451 24.4
Net foreign exchange gain / (loss) 52,265 67,910 (28,300) 241 33,558 >200
Other income / (expenses) (net) 8,471 (1,494) 17,982 7,557 19,796 162.0
EBITDA 300,761 345,160 402,277 489,025 722,897 47.8
Less: share of profit of associates and joint ventures 6,306 (24,956) (34,116) (45,504) (90,704) 99.3
Plus: the share of EBITDA of equity accounted investments and joint ventures 35,547 84,607 88,037 107,446 167,313 55.7
Total adjusted EBITDA 342,614 404,811 456,198 550,967 799,506 45.1

Profitability (%)
Item as at 31.12.2014 as at 31.12.2015 as at 31.12.2016 as at 31.12.2017 as at 31.12.2018 ∆ 2018/2017 (pp)
Adjusted EBITDA margin 24.33 27.58 29.52 28.48 32.12 3.6
Net profit margin 8.99 7.92 13.57 13.94 16.11 2.2
Return on assets (ROA) 6.92 5.07 8.33 9.84 12.43 2.6
Return on equity (ROE) 11.90 9.77 15.58 17.38 21.97 4.6
Adjusted return on average capital employed (adjusted ROACE) 13.07 12.15 11.77 13.90 19.66 5.8

Adjusted ROACE Return on average capital employed. (%)
Item as at 31.12.2015 as at 31.12.2016 as at 31.12.2017 as at 31.12.2018
Adjusted EBITDA 404,811 456,198 550,967 799,506
Depreciation, depletion and amortisation (140,659) (158,919) (178,449) (216,480)
Effective income tax charge on EBIT (53,501) (62,429) (71,605) (114,725)
Adjusted EBIT Adjusted EBIT represents the Group’s EBIT and its share of EBIT of associates and joint ventures. 210,651 234,850 300,913 468,301
Average capital employed 1,733,285 1,994,626 2,164,614 2,381,424
Adjusted ROACE 12.15 11.77 13.90 19.66

Liquidity
Item as at 31.12.2014 as at 31.12.2015 as at 31.12.2016 as at 31.12.2017 as at 31.12.2018 ∆ 2018/2017 (%)
Current liquidity ratio 1.88 1.46 1.37 0.88 1.18 34.1
Quick liquidity ratio 0.94 0.79 0.66 0.42 0.67 59.5
Cash ratio 0.53 0.51 0.26 0.21 0.44 109.5

Leverage
Item as at 31.12.2014 as at 31.12.2015 as at 31.12.2016 as at 31.12.2017 as at 31.12.2018 ∆ 2018/2017 (%)
Net debt / total assets (%) 20.67 26.34 25.18 19.93 14.99 (4.9)
Net debt / equity (%) 38.38 52.44 44.45 35.20 26.50 (8.7)
Leverage (%) 31.11 36.05 30.80 25.97 20.74 (5.2)
∆ 2018/2017 (%)
Net debt / market capitalisation 0.64 0.90 0.64 0.51 0.32 (37.3)
Net debt / EBITDA 1.44 1.90 1.60 1.19 0.73 (38.7)
Total debt / EBITDA 1.87 2.37 1.68 1.39 1.07 (23.0)

The main macroeconomic factors affecting the Company’s performance

The main factors affecting the Group’s performance include:

  • changes in market prices for crude oil and petroleum products;
  • changes in RUB/USD exchange rate and inflation;
  • taxation;
  • changes in transportation tariffs for crude oil and petroleum products.

Changes in market prices for crude oil and petroleum products

Crude oil and petroleum products prices on the international and Russian markets are the main factor affecting the Group’s performance.

Prices for petroleum products on the international market are determined by the global oil prices, petroleum products demand and supply, and competition in different markets. In turn, prices in the international market affect those in the domestic market. Price trends for different types of petroleum products differ.

The increase in crude oil and petroleum product prices on the international markets in 2018 had a positive impact on the Group’s results.


Crude oil and petroleum product prices
Fuels 2014 2015 2016 2017 2018 ∆ 2018/2017 (%)
International market ($/bbl)
Brent 98.95 52.46 43.73 54.09 71.16 31.6
Urals Spot (average Med + NWE) 96.94 51.49 42.02 52.94 69.86 32.0
International market ($/t)
Premium gasoline (average NWE) 918.72 569.96 467.05 557.58 674.67 21.0
Naphtha (average Med + NWE) 825.28 450.05 377.85 477.10 595.99 24.9
Diesel fuel (average NWE) 854.41 500.70 398.58 493.65 641.23 29.9
Gasoil 0.1% (average Med) 837.77 486.26 391.21 483.49 632.07 30.7
Fuel oil 3.5% (average NWE) 518.48 247.49 199.93 290.96 387.07 33.0
Domestic market (₽/t)
High-octane gasoline 31,948 32,488 34,574 36,820 41,724 13.3
Low-octane gasoline 28,071 28,435 29,858 31,931 37,249 16.7
Diesel 27,764 28,944 27,965 32,619 41,070 25.9
Fuel oil 9,014 7,202 6,051 9,594 14,319 49.2

Sources: Platts (international market), Thomson Reuters Kortes (domestic market)

Change in RUB/USD exchange rate and inflation

The Group’s management has determined that the reporting currency is the Russian rouble. The functional currency of each of the Group’s subsidiary is the currency of the economic environment where the entity operates. For most entities, this is the Russian rouble.


Item 2014 2015 2016 2017 2018
Change in Consumer Price Index (CPI) (%) 11.4 12.9 5.4 2.5 4.30
Average RUB/USD exchange rate for the period (₽) 38.42 60.96 67.03 58.35 62.71
USD/RUB exchange rate as at the beginning of the period (₽) 32.73 56.26 72.88 60.66 57.60
USD/RUB exchange rate as at the end of the period (₽) 56.26 72.88 60.66 57.60 69.47
Change in RUB/USD exchange rate for the period (%) 72 30 (17) (5) 21

Taxation


Average tax rates for Russia’s oil and gas companies in the reporting periods
Item 2014 2015 2016 2017 2018 ∆ 2018/2017 (%)
Export duty ($/t)
Crude oil 366.14 120.25 75.61 86.74 128.48 48.1
Light petroleum products 241.63 57.67 30.21 25.99 38.52 48.2
Diesel 237.93 57.67 30.21 25.99 38.52 48.2
Gasoline 329.48 93.75 46.07 25.99 38.52 48.2
Naphtha 329.48 102.17 53.63 47.67 70.63 48.1
Heavy petroleum products 241.63 91.34 61.96 86.74 128.48 48.1
Mineral extraction tax (₽/t)
Crude oil 5,831 6,326 5,770 8,134 12,455 53.1