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CONTENTS ANNUAL REPORT 2013 NEW HORIZONS CONTENTS ADDRESS BY KEY COMPANY GENERATING NEW THE CHAIRMAN PERFORMANCE PROFILE SOURCES OF BUSINESS OF THE BOARD INDICATORS Key events 2013 ...................................................8 GROWTH OF DIRECTORS Company mission ................................................12 SEE PAGE 34 FOR Company history .................................................14 MORE DETAILS PAGE 4 PAGE 2 Business structure ..............................................16 Business model ...................................................18 ADDRESS BY COMPANY Operating geography ..........................................24 THE CHAIRMAN STRATEGY Competitive position ...........................................26 OF THE MANAGEMENT BOARD PAGE 6 PAGE 28 OPERATING FINANCIAL SUSTAINABLE CORPORATE In.addition.to.the.usual.navigation.tools. in.printed.reports,.this.Annual.Report.contains. HOW TO USE THIS REPORT ACTIVITIES RESULTS DEVELOPMENT GOVERNANCE a.set.of.hyperlinks.and.interactive.tools..This. year.a.new.interactive.tool.is.provided.to.help. Exploration & production Review of financial results Industrial, environmental, Corporate governance .................... 152 The report contains several unique links The report contains several unique links to more of crude oil & gas ...............................52 of operations .................................... 121 and occupational health create.an.augmented.reality:.by.revealing. that will enable you to obtain more detailed information that can only be accessed by using Geological.surveying.. and safety (HSE)...............................132 General meeting Results of operations ......................122 of shareholders ................................154 further.information.from.the.pages.you. information: the interactive Annual Report application : for.exploration.purposes.................54 are.looking.at..To.access.these,.you.will. Licensing...........................................56 Energy consumption Liquidity and capital resources ......126 and efficiency.................................... 136 Board of directors ............................155 need.an.iOS.or.Android.mobile.device.with. Hydrocarbon.production.................58 3 D 65 Financial appendix ...........................128 Management board ......................... 161 a.camera.function..You.will.also.need.to.install. Hyperlink.to.this.report.page. 3D.diagram.of.the.Prirazlomnaya.Platform Projects.in.Russia............................ Human resource development .......138 International.projects....................... 76 the.application.developed.specifically.for. Financial data ...................................128 Internal communications ................142 Total compensation this.Annual.Report.by.downloading.it.from. Oil refining ...........................................80 to Members of the Board Hyperlink.to.online.materials Interactive.diagram.of.the.Group.structure Omsk.refinery...................................82 Regional policy and local of Directors and Members the.QR-link.below..After.that,.open.or.log.in. Moscow.refinery..............................84 community development ................. 144 of the Management Board ..............165 in.the.application.installed.and.point.your. NIS.refining.facility...........................86 Home towns program ......................146 Internal audit department ...............166 mobile.device.at.the.Report.cover.page. Hyperlink.to.online.video.materials Oil.refining.assets.charts Oil.refining.at.third-party.. refineries...........................................88 Charitable activities Compliance with the corporate and volunteer programs ..................148 code of conduct ................................168 Hyperlink.to.interactive.application. Sales of petroleum products ............90 Retail.sales........................................92 Public and Government Interaction with investors Commodity.exchange.sales............96 relations (PR and GR).......................149 and equity capital .............................170 Exports.of.crude.oil.&.. petroleum.products.........................98 Debt portfolio management & Premium.business.segments.......102 credit ratings..................................... 176 Innovation ..........................................114 Key risk factors ................................179 ON-LINE Investment activities ........................119 ANNUAL REPORT 2013 iOS Android GAZPROM NEFT 2013.ANNUAL.REPORT www.gazprom-neft.com 1 CONTENTS NEXT CHAPTER KEY PERFORMANCE INDICATORS KEY PERFORMANCE INDICATORS 1 Sales revenue, mn RUB Adjusted EBITDA, mn RUB Net income relating to Gazprom Neft, mn RUB +2.8 % +4.2 % +0.9 % 1,267,603 336,752 177,917 2013 1,267,603 2013 336,752 2013 177,917 2012 1,232,649 2012 323,106 2012 176,296 2011 1,029,803 2011 300,077 2011 160,362 2010 793,871 2010 220,812 2010 95,692 2009 641,378 2009 191,512 2009 95,994 Net cash from operations, mn RUB Capital investments4, mn RUB Hydrocarbon reserves (PRMS-SPE), mn TOE +11.7 % +23.3 % +11.9 % 276,736 208,611 1,343 2013 276,736 2013 208,611 2013 1,343 2012 247,695 2012 169,213 2012 1,200 2011 180,871 2011 130,788 2011 1,130 2010 163,718 2010 100,247 2010 1,023 2009 110,999 2009 83,590 2009 1,018 Hydrocarbon production, mn TOE Oil refining at own refineries, mn t Sales of petroleum products, mn t +4.3 % +0.9 % +3.9 % 62.26 34.06 45.74 2013 62.26 2013 34.06 2013 45.74 2012 59.71 2012 33.76 2012 44.03 2011 57.25 2011 33.10 2011 41.50 2010 52.81 2010 30.75 2010 37.10 2009 50.17 2009 26.61 2009 33.00 2 GAZPROM NEFT 2013 ANNUAL REPORT CONTENTS NEXT CHAPTER Key Financial Indicators Change 20132 20122 20112 20103 20093 2013/2012 Sales.revenue,.mn.RUB 1,267,603 1,232,649 1,029,803 793,871 641,378 2.8% Adjusted.EBITDA,.mn.RUB 336,752 323,106 300,077 220,812 191,512 4.2% Net.income.relating.to.Gazprom.Neft,.mn.RUB 177,917 176,296 160,362 95,692 95,994 0.9% Net.cash.from.operations,.mn.RUB 276,736 247,695 180,871 163,718 110,999 11.7% Capital.investments4,.mn.RUB 208,611 169,213 130,788 100,247 83,590 23.3% Key Financial Ratios Change 2013 2012 2011 2010 2009 2013/2012 Base.and.diluted.income.per.common.share,.RUB.per.share .37.71. .37.37. .33.99. .20.35. .20.30. 0.9% Dividend.per.share,.RUB . .9.30. .7.30. .4.44. .3.57. Adjusted.EBITDA.margin,.% .26.57. .26.21. .29.14. .27.81. .29.86. 1.3.p.p. Adjusted.EBITDA.per.barrel.produced,.RUB/BOE .736.20. .735.97. .711.69. .566.99. .520.58. 0% Net.profit.margin,.% .14.73. .14.94. .16.28. .12.05. .14.97. –1.4.p.p. Net.profit..per.barrel.produced,.RUB/BOE .388.96. .401.57. .397.66. .268.16. .267.43. –3.1% Return.on.equity.(ROE),.%. .19.99. .23.03. .24.99. .17.91. .19.84. –13.2.p.p. Gearing,.% .18.25. .15.90. .20.76. .20.48. .22.31. 14.8.p.p. Current.ratio .2.08. .1.75. .1.98. .1.44. .1.15. 19.p.p. Key Operating Indicators Change 2013 2012 2011 2010 2009 2013/2012 Hydrocarbon.reserves.(PRMS-SPE),.mn.TOE .1,343. .1,200. .1,130. .1,023. .1,018. 11.9% Hydrocarbon.production.mn.TOE .62.26 59.71 57.25 52.81 50.17 +4.3% Oil.refining,.including: .42.63. .43.34. .40.49. .37.90. .33.43. –1.6% at.contracted.refineries,.mn.t .8.57. .9.58. .7.39. .7.15. .6.83. –10.5% at.own.refineries,.mn.t 34.06 33.76 33.10 30.75 26.61 0.9% Oil.export,.mn.t .12.39. .16.69. .16.10. .18.90. .18.90. –25.8% Sales.of.petroleum.products,.mn.t 45.74 44.03 41.50 37.10 33.00 3.9% Export.of.petroleum.products,.mn.t .19.90. .18.88. .17.20. .16.60. .15.60. 5.4% Number.of.operating.filling.stations.(own,.leased.and.franchised) .1,747. .1,609. .1,670. .1,596. .1,546. 8.6% Average.sales.of.petroleum.products.per.filling.station.(RF),.tonnes.per.day .19.0. .17.60. .14.23. .10.30. .9.13. 7.8% Key Operating Ratios Change 2013 2012 2011 2010 2009 2013/2012 Reserve.replacement.ratio,.% 367 219 286 110 271 52.p.p.. Refining/production.ratio,.% 84 85 81 76 70 –1.2.p.p. 1. Since.January.01,.2013,.Gazprom.Neft.has.been.applying.a.number.of.new.IFRS.standards,.such.as:.IFRS.10.“Consolidated.Financial.Statements”,.IFRS.11.“Joint.Arrangements”,.and.IFRS.12. “Disclosure.of.Interests.in.Other.Entities”..As.a.result.of.the.application.of.these.standards,.particularly.IFRS.11.“Joint.Arrangements”,.the.Group.replaced.the.method.of.equity.share.in.Tomskneft. and.SPD.by.the.proportional.consolidation.of.assets.and.liabilities.with.respect.to.these.companies..The.operational.information.was.restated.(including.previous.periods).so.that.it.can.be.com- pared.with.the.financial.information..Detailed.information.on.the.application.of.IFRS.11.is.available.in.Note.2.to.the.consolidated.financial.statements.for.the.year.ended.December.31,.2013. 2. IFRS.financial.indicators.(RUB.statements). 3. US.GAAP.financial.indicators.(USD.statements)..Yearly.indicators.are.expressed.in.RUB.at.an.average.annual.exchange.rate..Year-end.indicators.are.expressed.in.RUB.at.the.exchange.rate.as.of. the.date. 4. The.Capital.Investment.figure.is.subject.to.changes.in.the.advance.paid.out.and.capital.project.materials. The.Report.can.contain.inaccuracies.relating.to.share,.percentage,.and.amounts.calculation.due.to.rounding.estimate.values.. The.data.presented.in.the.Annual.Report.can.insignificantly.deviate.from.the.previously.published.data.due.to.rounding.differences.of.the.values. www.gazprom-neft.com 3 PREVIOUS CHAPTER CONTENTS NEXT CHAPTER ADDRESSES A YEAR OF NEW OPPORTUNITIES ADDRESS BY THE CHAIRMAN OF THE BOARD OF DIRECTORS Dear shareholders and investors The.Board.of.Directors.of.Gazprom.Neft.is.pleased.to. announce.another.year.of.steady.financial.and.operating. growth.for.the.Company.in.2013..These.results.