Tatneft Group
IFRS ® ACCOUNTING STANDARTS
CONSOLIDATED FINANCIAL STATEMENTS
AND INDEPENDEN T AUDITOR’S REPORT
31 DECEMBER 2023
IFRS ® ACCOUNTING STANDARTS
CONSOLIDATED FINANCIAL STATEMENTS
AND INDEPENDEN T AUDITOR’S REPORT
31 DECEMBER 2023
Contents
INDEPENDENT AUDITOR’S REPORT
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Financial Position ........................................................................................... 1
Consolidated Statement of Profit or Loss and Other Comprehensive Income .......................................... 2
Consolidated Statement of Changes in Equity .......................................................................................... 4
Consolidated Statement of Cash Flows ..................................................................................................... 5
Notes to the Consolidated Financial Statements
Note 1: Organisation ................................................................................................................................. 7
Note 2: Basis of preparation ...................................................................................................................... 7
Note 3: Cash and cash equivalents ............................................................................................................ 7
Note 4: Accounts receivable ...................................................................................................................... 8
Note 5: Financial services: Loans to customers ...................................................................................... 10
Note 6: Other financial assets .................................................................................................................. 11
Note 7: Inventories .................................................................................................................................. 12
Note 8: Prepaid expenses and other current assets .................................................................................. 12
Note 9: Property, plant and equipment .................................................................................................... 13
Note 10: Right-of-use assets and lease liabilities .................................................................................... 16
Note 11: Taxes......................................................................................................................................... 17
Note 12: Debt .......................................................................................................................................... 18
Note 13: Accounts payable and accrued liabilities .................................................................................. 19
Note 14: Financial services: Due to banks and CB RF............................................................................ 19
Note 15: Financial services: Customer accounts ..................................................................................... 20
Note 16: Other long-term liabilities......................................................................................................... 20
Note 17: Shareholders’ equity ................................................................................................................. 21
Note 18: Employee benefit expenses ....................................................................................................... 23
Note 19: Interest expense (excluding financial services) ........................................................................ 23
Note 20: Interest and commission income and expense from financial services .................................... 23
Note 21: Segment information ................................................................................................................ 24
Note 22: Related party transactions ......................................................................................................... 27
Note 23: Contingencies and commitments .............................................................................................. 29
Note 24: Business combinations.............................................................................................................. 31
Note 25: Other non-current assets ........................................................................................................... 32
Note 26: Discontinued operation ............................................................................................................. 34
Note 27: Financial risk management ....................................................................................................... 35
Note 28: Material accounting policy information ................................................................................... 51
Note 29: Critical accounting estimates and judgements in applying accounting policies ....................... 58
Note 30: Adoption of new or revised standards and interpretations ........................................................ 61
INDEPENDENT AUDITOR’S REPORT
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Statement of Financial Position ........................................................................................... 1
Consolidated Statement of Profit or Loss and Other Comprehensive Income .......................................... 2
Consolidated Statement of Changes in Equity .......................................................................................... 4
Consolidated Statement of Cash Flows ..................................................................................................... 5
Notes to the Consolidated Financial Statements
Note 1: Organisation ................................................................................................................................. 7
Note 2: Basis of preparation ...................................................................................................................... 7
Note 3: Cash and cash equivalents ............................................................................................................ 7
Note 4: Accounts receivable ...................................................................................................................... 8
Note 5: Financial services: Loans to customers ...................................................................................... 10
Note 6: Other financial assets .................................................................................................................. 11
Note 7: Inventories .................................................................................................................................. 12
Note 8: Prepaid expenses and other current assets .................................................................................. 12
Note 9: Property, plant and equipment .................................................................................................... 13
Note 10: Right-of-use assets and lease liabilities .................................................................................... 16
Note 11: Taxes......................................................................................................................................... 17
Note 12: Debt .......................................................................................................................................... 18
Note 13: Accounts payable and accrued liabilities .................................................................................. 19
Note 14: Financial services: Due to banks and CB RF............................................................................ 19
Note 15: Financial services: Customer accounts ..................................................................................... 20
Note 16: Other long-term liabilities......................................................................................................... 20
Note 17: Shareholders’ equity ................................................................................................................. 21
Note 18: Employee benefit expenses ....................................................................................................... 23
Note 19: Interest expense (excluding financial services) ........................................................................ 23
Note 20: Interest and commission income and expense from financial services .................................... 23
Note 21: Segment information ................................................................................................................ 24
Note 22: Related party transactions ......................................................................................................... 27
Note 23: Contingencies and commitments .............................................................................................. 29
Note 24: Business combinations.............................................................................................................. 31
Note 25: Other non-current assets ........................................................................................................... 32
Note 26: Discontinued operation ............................................................................................................. 34
Note 27: Financial risk management ....................................................................................................... 35
Note 28: Material accounting policy information ................................................................................... 51
Note 29: Critical accounting estimates and judgements in applying accounting policies ....................... 58
Note 30: Adoption of new or revised standards and interpretations ........................................................ 61
Joint-Stock Company
“Technologies of Trust – Audit”
(“Technologies of Trust – Audit” JSC)
Ferro-Plaza Business Centre,
14/3 Krzhizhanovsky street, bldg. 5/1,
Akademichesky municipal district,
Moscow, Russian Federation, 117218
T: +7 495 967 60 00 www.tedo.ru
Independent Auditor’s Report
To the Shareholders and Board of Directors of Public Joint Stock Company TATNEFT named after V.D. Shashin:
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated
financial position of Public Joint Stock Company TATNEFT named after V.D. Shashin and its subsidiaries
(together – the “Group”) as at 31 December 2023, and the Group’s consolidated financial performance and
consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards.
What we have audited
The Group’s consolidated financial statements comprise:
• the consolidated statement of financial position as at 31 December 2023;
• the consolidated statement of profit or loss and other comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated statement of cash flows for the year then ended; and
• the notes to the consolidated financial statements, which include material accounting policy information and
other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants
(including International Independence Standards) issued by the International Ethics Standards Board for
Accountants (IESBA Code) and the ethical requirements of the Auditor’s Professional Ethics Code and Auditor’s
Independence Rules that are relevant to our audit of the consolidated financial statements in the Russian
Federation. We have fulfilled our other ethical responsibilities in accordance with these requirements and the
IESBA Code.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
“Technologies of Trust – Audit”
(“Technologies of Trust – Audit” JSC)
Ferro-Plaza Business Centre,
14/3 Krzhizhanovsky street, bldg. 5/1,
Akademichesky municipal district,
Moscow, Russian Federation, 117218
T: +7 495 967 60 00 www.tedo.ru
Independent Auditor’s Report
To the Shareholders and Board of Directors of Public Joint Stock Company TATNEFT named after V.D. Shashin:
Opinion
In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated
financial position of Public Joint Stock Company TATNEFT named after V.D. Shashin and its subsidiaries
(together – the “Group”) as at 31 December 2023, and the Group’s consolidated financial performance and
consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards.
What we have audited
The Group’s consolidated financial statements comprise:
• the consolidated statement of financial position as at 31 December 2023;
• the consolidated statement of profit or loss and other comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated statement of cash flows for the year then ended; and
• the notes to the consolidated financial statements, which include material accounting policy information and
other explanatory information.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial
statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants
(including International Independence Standards) issued by the International Ethics Standards Board for
Accountants (IESBA Code) and the ethical requirements of the Auditor’s Professional Ethics Code and Auditor’s
Independence Rules that are relevant to our audit of the consolidated financial statements in the Russian
Federation. We have fulfilled our other ethical responsibilities in accordance with these requirements and the
IESBA Code.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit of
the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
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ii
Key audit matter How our audit addressed the key audit matter
Impairment of property, plant and
equipment
We focused on this matter due to
significance of the carrying amount of
property, plant and equipment,
significance of judgements and estimates
applied in analysis of impairment of these
assets, and the effect of the current
geopolitical environment and economic
situation on the recoverable amount of
these assets.
Information on property, plant and
equipment, analysis of impairment of
these assets and results of such analysis
is disclosed in Note 9 “Property, Plant
and Equipment” to the consolidated
financial statements.
The Group identified indications of impairment in respect of certain
cash-generating units and prepared calculations of recoverable
amount based on expected discounted cash flows.
Regarding calculations of recoverable amount we (on a sample basis,
where applicable):
• assessed appropriateness of the methodology and key
assumptions and estimates applied, including consistency of the
discount rates used with the range of acceptable values
considering current economic conditions and business of the
Group;
• tested input data, including consistency of the used information
about hydrocarbon reserves related to the upstream assets with
the assessment made by independent engineering firm;
• tested mathematical accuracy of the calculations;
• compared carrying amount of the assets with their recoverable
amount.
Acquisition of significant subsidiaries
We focused on this matter due to
complexity of these transactions and
accounting for them, and significance of
judgments and estimates applied in the
accounting.
Information on acquisition of significant
subsidiaries is disclosed in Note 24
“Business combination s ” to the
consolidated financial statements.
Regarding acquisition of significant subsidiaries, we (on a sample
basis, where applicable):
• analysed sale and purchase agreements and other documents to
obtain understanding of terms of individual deals;
• assessed conclusions of the Group regarding obtaining control
due to acquisition of interest in the subsidiaries;
• tested calculations prepared by the Group (in some cases with
involvement of external experts) of fair value of the consideration
transferred, as well as calculations for allocation of such value to
fair value of the acquired identifiable assets and liabilities.
Regarding these calculations our procedures included assessing
the appropriateness of the methodology and the key assumptions
and estimates applied, testing mathematical accuracy of the
calculations and other procedures;
• tested the accounting for acquisition of the subsidiaries and related
disclosures in the consolidated financial statements.
Other information
Management is responsible for the other information. The other information comprises Management’s discussion
and analysis of financial condition and results of operations for the years ended 31 December 2023 and 2022 (but
does not include the consolidated financial statements and our auditor’s report thereon) , which we obtained prior to
the date of this auditor’s report, and the Integrated Annual Report of PJSC TATNEFT n.a. V.D. Shashin for 2023
and Securities Issuer’s Report for the 12 months of 202 3, which are expected to be made available to us after that
date.
Our opinion on the consolidated financial statements does not cover the other information and we do not and will
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially inconsistent with
the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
ii
Key audit matter How our audit addressed the key audit matter
Impairment of property, plant and
equipment
We focused on this matter due to
significance of the carrying amount of
property, plant and equipment,
significance of judgements and estimates
applied in analysis of impairment of these
assets, and the effect of the current
geopolitical environment and economic
situation on the recoverable amount of
these assets.
Information on property, plant and
equipment, analysis of impairment of
these assets and results of such analysis
is disclosed in Note 9 “Property, Plant
and Equipment” to the consolidated
financial statements.
The Group identified indications of impairment in respect of certain
cash-generating units and prepared calculations of recoverable
amount based on expected discounted cash flows.
Regarding calculations of recoverable amount we (on a sample basis,
where applicable):
• assessed appropriateness of the methodology and key
assumptions and estimates applied, including consistency of the
discount rates used with the range of acceptable values
considering current economic conditions and business of the
Group;
• tested input data, including consistency of the used information
about hydrocarbon reserves related to the upstream assets with
the assessment made by independent engineering firm;
• tested mathematical accuracy of the calculations;
• compared carrying amount of the assets with their recoverable
amount.
Acquisition of significant subsidiaries
We focused on this matter due to
complexity of these transactions and
accounting for them, and significance of
judgments and estimates applied in the
accounting.
Information on acquisition of significant
subsidiaries is disclosed in Note 24
“Business combination s ” to the
consolidated financial statements.
Regarding acquisition of significant subsidiaries, we (on a sample
basis, where applicable):
• analysed sale and purchase agreements and other documents to
obtain understanding of terms of individual deals;
• assessed conclusions of the Group regarding obtaining control
due to acquisition of interest in the subsidiaries;
• tested calculations prepared by the Group (in some cases with
involvement of external experts) of fair value of the consideration
transferred, as well as calculations for allocation of such value to
fair value of the acquired identifiable assets and liabilities.
Regarding these calculations our procedures included assessing
the appropriateness of the methodology and the key assumptions
and estimates applied, testing mathematical accuracy of the
calculations and other procedures;
• tested the accounting for acquisition of the subsidiaries and related
disclosures in the consolidated financial statements.
Other information
Management is responsible for the other information. The other information comprises Management’s discussion
and analysis of financial condition and results of operations for the years ended 31 December 2023 and 2022 (but
does not include the consolidated financial statements and our auditor’s report thereon) , which we obtained prior to
the date of this auditor’s report, and the Integrated Annual Report of PJSC TATNEFT n.a. V.D. Shashin for 2023
and Securities Issuer’s Report for the 12 months of 202 3, which are expected to be made available to us after that
date.
Our opinion on the consolidated financial statements does not cover the other information and we do not and will
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially inconsistent with
the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
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iii
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s
report, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
When we read the Integrated Annual Report of PJSC TATNEFT n.a. V.D. Shashin for 2023 and Securities Issuer’s
Report for the 12 months of 2023, if we conclude that there is a material misstatement therein, we are required to
communicate the matter to those charged with governance.
Responsibilities of management and those charged with governance for the consolidated financial
statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with IFRS Accounting Standards, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s abil ity to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or
has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
iii
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s
report, we conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
When we read the Integrated Annual Report of PJSC TATNEFT n.a. V.D. Shashin for 2023 and Securities Issuer’s
Report for the 12 months of 2023, if we conclude that there is a material misstatement therein, we are required to
communicate the matter to those charged with governance.
Responsibilities of management and those charged with governance for the consolidated financial
statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with IFRS Accounting Standards, and for such internal control as management determines is
necessary to enable the preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s abil ity to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or
has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s responsibilities for the audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud
or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may
cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
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iv
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business units within the group as a basis for forming an opinion on the group
financial statements. We are responsible for the direction, supervision and review of the audit work performed
for purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
The certified auditor responsible for the audit resulting in this independent auditor’s report is Kriventsev Evgenii
Nikolaevich.
15 March 2024
Moscow, Russian Federation
Kriventsev Evgenii Nikolaevich is authorised to sign on behalf of the General Director of Joint-Stock Company
“Technologies of Trust – Audit” (Principal Registration Number of the Record in the Register of Auditors and Audit
Organizations (PRNR) – 12006020338), certified auditor (PRNR – 21906099944)
iv
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business units within the group as a basis for forming an opinion on the group
financial statements. We are responsible for the direction, supervision and review of the audit work performed
for purposes of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
The certified auditor responsible for the audit resulting in this independent auditor’s report is Kriventsev Evgenii
Nikolaevich.
15 March 2024
Moscow, Russian Federation
Kriventsev Evgenii Nikolaevich is authorised to sign on behalf of the General Director of Joint-Stock Company
“Technologies of Trust – Audit” (Principal Registration Number of the Record in the Register of Auditors and Audit
Organizations (PRNR) – 12006020338), certified auditor (PRNR – 21906099944)
TATNEFT
Consolidated Statement of Financial Position
(In million of Russian Rubles)
The accompanying notes are an integral part of these consolidated financial statements.
1
Approved for issue and signed on ________________________ 2024.
______________________________ _____________________________
CEO Maganov N.U. Chief Accountant Matveev O.M.
Consolidated Statement of Financial Position
(In million of Russian Rubles)
The accompanying notes are an integral part of these consolidated financial statements.
1
| Note | 31 December 2023 | 31 December 2022 | |
|---|---|---|---|
| Assets | |||
| Cash and cash equivalents | 3 |
|
|
| Financial services: Mandatory reserve deposits with the Bank of | |||
| Russia |
|
|
|
| Short-term accounts receivable, net | 4 |
|
|
| Financial services: Loans to customers | 5 |
|
|
| Other short-term financial assets | 6 |
|
|
| Inventories | 7 |
|
|
| Prepaid expenses and other current assets | 8 |
|
|
| Prepaid income tax |
|
|
|
| Non-current assets held for sale |
|
|
|
| Total current assets |
|
|
|
| Long-term accounts receivable, net | 4 |
|
|
| Financial services: Loans to customers | 5 |
|
|
| Other long-term financial assets | 6 |
|
|
| Investments in associates and joint ventures |
|
|
|
| Property, plant and equipment, net | 9 |
|
|
| Right-of-use assets | 10 |
|
|
| Deferred income tax assets | 11 |
|
|
| Other non-current assets | 25 |
|
|
| Total non-current assets |
|
|
|
| Total assets |
|
|
|
| Liabilities and equity | |||
| Short-term debt and current portion of long-term debt | 12 |
|
|
| Accounts payable and accrued liabilities | 13 |
|
|
| Dividends payable | 17 |
|
|
| Financial services: Due to banks and the Bank of Russia | 14 |
|
|
| Financial services: Customer accounts | 15 |
|
|
| Financial services: Other financial liabilities at fair value throughprofit or loss |
|
|
|
| Taxes payable, other than income tax | 11 |
|
|
| Income tax payable |
|
|
|
| Other short-term liabilities |
|
|
|
| Total current liabilities |
|
|
|
| Long-term debt, net of current portion | 12 |
|
|
| Financial services: Due to banks and the Bank of Russia | 14 |
|
|
| Financial services: Customer accounts | 15 |
|
|
| Decommissioning provision, net of current portion | 9 |
|
|
| Lease liabilities, net of current portion | 10 |
|
|
| Deferred income tax liability | 11 |
|
|
| Other long-term liabilities | 16 |
|
|
| Total non-current liabilities |
|
|
|
| Total liabilities |
|
|
|
| Equity | |||
| Preferred shares |
|
|
|
| Ordinary shares |
|
|
|
| Additional paid-in capital |
|
|
|
| Accumulated other comprehensive income/(loss) |
|
( |
|
| Retained earnings |
|
|
|
| Less: Ordinary shares held in treasury, at cost Total equity owned by shareholders of PJSC Tatneft |
( |
( |
|
| Non-controlling interest |
|
|
|
| Total equity Total liabilities and equity |
|
|
Approved for issue and signed on ________________________ 2024.
______________________________ _____________________________
CEO Maganov N.U. Chief Accountant Matveev O.M.
TATNEFT
Consolidated Statement of Profit or Loss and Other Comprehensive Income
(In million of Russian Rubles)
The accompanying notes are an integral part of these consolidated financial statements.
2
Year ended
31 December 2023
Year ended
31 December 2022
1,589,082
1,427,147
(200,228 )
(176,629 )
(306,393 )
(135,203 )
(3,001 )
(1,946 )
(71,901 )
(52,892 )
(97,632 )
(68,584 )
(60,647 )
(48,042 )
(566 )
2,165
(21,732 )
(30,230 )
(458,014 )
(464,819 )
(17,616 )
(44,527 )
(12,023 )
(9,496 )
(1,249,753 )
(1,030,203 )
(324 )
(96 )
356,643
400,390
28,294
25,804
(15,962 )
(14,522 )
(10,414 )
(1,501 )
(9,187 )
(8,930 )
477
3,301
(1,130 )
(1,922 )
(7,922 )
2,230
25,049
(24,999 )
10,367
7,756
(21,025 )
(5,697 )
2,395
288
16,786
(22,652 )
365,507
379,968
(73,172 )
(76,908 )
(6,072 )
(3,822 )
(79,244 )
(80,730 )
286,263
299,238
Loss from discontinued operation 26-
(14,335 )
Profit for the year286,263
284,903
Consolidated Statement of Profit or Loss and Other Comprehensive Income
(In million of Russian Rubles)
The accompanying notes are an integral part of these consolidated financial statements.
2
| Note | |||
|---|---|---|---|
| Continuing operations | |||
| Revenue (excluding financial services) | 21 | ||
| Costs and other expenses (excluding financial services) | |||
| Operating expenses | |||
| Purchased crude oil and refined products | |||
| Exploration | |||
| Transportation | |||
| Selling, general and administrative | |||
| Depreciation, depletion and amortization | 9,21 | ||
| Expected credit losses on financial assets net of reversal | 4,6 | ||
| Impairment losses on property, plant and equipment and other non-financial assets net of reversals | 9 | ||
| Taxes other than income taxes | 11 | ||
| Export duties | |||
| Maintenance of social infrastructure and transfer of social assets | |||
| Total costs and expenses (excluding financial services) | |||
| Loss on disposals of interests in subsidiaries and associates, net | |||
| Fair value gain from financial assets at fair value through profit or | |||
|
loss, net |
|||
| Operating profit (excluding financial services) | |||
| Net interest, fee and commission and other operatingincome/(expenses) and gains/(losses) from financial services | |||
| Interest, fee and commission income Interest, fee and commission expense | 20,21 20 | ||
| Net expense on creating provision for credit losses on debt financial | |||
| assets | 5,6 | ||
| Operating expenses | |||
| Gain arising from dealing in foreign currencies, net Other operating expenses, net | |||
| Total net interest, fee, commission and other operating | |||
| (expenses)/income and (losses)/gains from financial services | |||
| Other income/(expenses) | |||
| Foreign exchange gain/(loss), net Interest income (excluding financial services) | 27 | ||
| Interest expense, net of amounts capitalised (excluding financial | |||
| services) | 19 | ||
| Share of results of associates and joint ventures, net | |||
| Total other income/(expenses), net | |||
| Profit before income tax | |||
| Income tax | |||
| Current income tax expense | |||
| Deferred income tax expense | |||
| Total income tax expense | 11 | ||
| Profit from continuing operations | |||
Year ended
31 December 2023
Year ended
31 December 2022
(
(
(
(
(
(
(
(
(
(
(
(
(
(
(
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(
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(
Loss from discontinued operation 26
Profit for the year
TATNEFT
Consolidated Statement of Profit or Loss and Other Comprehensive Income
(In million of Russian Rubles)
The accompanying notes are an integral part of these consolidated financial statements.
3
Consolidated Statement of Profit or Loss and Other Comprehensive Income
(In million of Russian Rubles)
The accompanying notes are an integral part of these consolidated financial statements.
3
| Year ended | Year ended | ||
|---|---|---|---|
| Note | 31 December 2023 | 31 December 2022 | |
| Other comprehensive income/(loss) net of income tax: | |||
| Continuing operations | |||
| Items that may be reclassified subsequently to profit or loss: | |||
| Foreign currency translation adjustments |
|
( |
|
| Loss on debt financial assets at fair value through other comprehensiveincome, net |
( |
( |
|
| Items that will not be reclassified to profit or loss: | |||
| Gain/(loss) on equity financial assets at fair value through other | |||
| comprehensive income, net |
|
( |
|
| Actuarial gain/(loss) on employee benefit plans |
|
( |
|
| Other comprehensive income/(loss) from continuing operations |
|
( |
|
| Other comprehensive income from discontinued operation | 26 |
|
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| Total comprehensive income for the period |
|
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| Profit/(loss) attributable to: | |||
| - Shareholders of PJSC Tatneft |
|
|
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| - Non-controlling interest |
( |
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| Total comprehensive income/(loss) attributable to: | |||
| - Shareholders of PJSC Tatneft |
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| - Non-controlling interest |
( |
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| Total comprehensive income/(loss) attributable to shareholders ofPJSC Tatneft from: | |||
| - continuing operations |
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| - discontinued operation |
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( |
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||
| Basic and diluted earnings per share (RR) | |||
| Ordinary | 17 |
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| Preferred |
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| Basic and diluted earnings per share from continuingoperations (RR) | |||
| Ordinary | 17 |
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| Preferred |
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| Weighted average shares outstanding (millions of shares) | |||
| Ordinary | 17 |
|
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| Preferred |
|
|
TATNEFT
Consolidated Statement of Changes in Equity
(In million of Russian Rubles)
The accompanying notes are an integral part of these consolidated financial statements.
4
Consolidated Statement of Changes in Equity
(In million of Russian Rubles)
The accompanying notes are an integral part of these consolidated financial statements.
4
| Total equity owned by shareholders of PJSC Tatneft | Non-con-trollinginterest | Totalequity | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Number ofshares(thousands) | Sharecapital | Additionalpaid-incapital | Treasuryshares | Actuarial(loss)/gainon employeebenefitplans | Foreigncurrencytranslationadjustments | Gain/(loss) onfinancialassets at fairvalue throughother compre-hensiveincome, net | Retainedearnings | Total | |||
| Balance at 1 January 2022 |
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( |
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| Profit for the year |
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| Other comprehensive loss for the year |
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( |
( |
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( |
( |
( |
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| Total comprehensive (loss)/income forthe year |
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( |
( |
( |
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| Acquisition of non-controlling interest insubsidiaries |
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| Dividends declared (Note 17) |
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( |
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( |
( |
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| Disposal of equity financial assets at fairvalue through other comprehensiveincome |
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( |
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| Disposal of subsidiaries (Note 26) |
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| Other movements Balance at 31 December 2022 Balance at 1 January 2023 |
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( |
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| Profit/(loss) for the year |
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( |
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| Other comprehensive income/(loss) forthe year Total comprehensive income/(loss) forthe year |
|
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( |
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| Treasury shares |
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| -Disposal |
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| Acquisition of non-controlling interest insubsidiaries |
|
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| Disposal of non-controlling interest insubsidiaries |
|
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( |
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| Dividends declared (Note 17) Balance at 31 December 2023 |
|
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( |
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( |
( |
( |
( |
TATNEFT
Consolidated Statement of Cash Flows
(In million of Russian Rubles)
The accompanying notes are an integral part of these consolidated financial statements.
5
Consolidated Statement of Cash Flows
(In million of Russian Rubles)
The accompanying notes are an integral part of these consolidated financial statements.
5
| Year ended | Year ended | ||
|---|---|---|---|
| Note | 31 December 2023 | 31 December 2022 | |
| Operating activities | |||
| Profit for the year |
|
|
|
| Adjustments: | |||
| Net interest, fee and commission and other operatingexpenses/(income) and losses/(gains) from financialservices activities |
|
( |
|
| Depreciation, depletion and amortization | 9,21 |
|
|
| Income tax expense | 11 |
|
|
| Expected credit losses on financial assets net of reversal | 4,6 |
|
( |
| Impairment losses on property, plant and equipment andother non-financial assets net of reversal | 9 |
|
|
| Loss on disposals of interests in subsidiaries and associates,net | 26 |
|
|
| Income from changes in the fair value of financial assetsmeasured at fair value through profit or loss, net |
( |
( |
|
| Gain from purchase | 24 |
( |
|
| Effects of foreign exchange |
|
( |
|
| Share of results of associates and joint ventures, net |
( |
( |
|
| Interest income (excluding financial services) |
( |
( |
|
| Interest expense, net of amounts capitalised (excludingfinancial services) |
|
|
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| Other, net |
|
( |
|
| Changes in operational working capital related to operatingactivities, excluding cash: | |||
| Accounts receivable |
( |
( |
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| Inventories |
( |
( |
|
| Prepaid expenses and other current assets |
( |
( |
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| Securities at fair value through profit or loss |
|
|
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| Accounts payable and accrued liabilities |
|
|
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| Taxes payable, other than income tax |
|
( |
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| Net cash provided by operating activities before income taxand interest (excluding financial services) |
|
|
|
| Net interest, fee and commission and other operating(expenses)/income and (losses)/gains from financial services |
( |
|
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| Adjustments: | |||
| Net expense on creating of provision for credit losses on debtfinancial assets | 5,6 |
|
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| Provision for losses on credit related commitments |
|
|
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| Other |
|
( |
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| Changes in operational working capital related to financialservices, excluding cash: | |||
| Mandatory reserve deposits with the Bank of Russia |
( |
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| Due from banks |
( |
|
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| Loans to customers |
( |
( |
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| Due to banks and the Bank of Russia |
|
( |
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| Customer accounts |
( |
|
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| Promissory notes issued |
( |
( |
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| Securities at fair value through profit or loss |
|
( |
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| Other financial liabilities at fair value through profit or loss |
|
( |
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| Net cash (used in)/provided by operating activities fromfinancial services before income tax |
( |
|
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| Income taxes paid |
( |
( |
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| Interest paid (excluding financial services) |
( |
( |
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| Interest received (excluding financial services) |
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| Net cash provided by operating activities |
|
|
TATNEFT
Consolidated Statement of Cash Flows
(In million of Russian Rubles)
The accompanying notes are an integral part of these consolidated financial statements.
6
Consolidated Statement of Cash Flows
(In million of Russian Rubles)
The accompanying notes are an integral part of these consolidated financial statements.
6
| Year ended | Year ended | ||
|---|---|---|---|
| Note | 31 December 2023 | 31 December 2022 | |
| Investing activities | |||
| Additions to property, plant and equipment | 9 |
( |
( |
| Proceeds from disposal of property, plant and equipment |
|
|
|
| Sale/(acquisition) of interest in associate |
|
( |
|
| Net cash flow from acquisitions of subsidiaries | 24 |
( |
( |
| Net cash flow from disposal of subsidiaries | 26 |
|
( |
| Purchase of securities at fair value through other comprehensiveincome | 6 |
( |
( |
| Purchase of securities at amortised cost | 6 |
( |
( |
| Proceeds from disposal of securities at fair value through other | |||
| comprehensive income | 6 |
|
|
| Proceeds from redemption of securities at amortised cost | 6 |
|
|
| Proceeds from sale of non-current assets held for sale |
|
|
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| Proceeds from redemption of bank deposits measured at amortisedcost |
|
|
|
| Placement of bank deposits measured at amortised cost |
|
( |
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| Proceeds from redemption of bank deposits measured at fair value | |||
| through profit or loss |
|
|
|
| Placement of bank deposits measured at fair value through profitor loss |
( |
( |
|
| Proceeds from redemption of loans | 6 |
|
|
| Issuance of loans | 6 |
( |
( |
| Net cash flow from currency swaps |
|
|
|
| Advance payment for acquisition of other non-current assets |
( |
( |
|
| Advance repayment for acquisition of other non-current assets |
|
|
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| Acquisition of other non-current assets |
( |
( |
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| Proceeds from government grants | 16 |
|
|
| Net cash used in investing activities |
( |
( |
|
| Financing activities | |||
| Proceeds from issuance of debt (excluding financial services) | 27 |
|
|
| Repayment of debt (excluding financial services) | 27 |
( |
( |
| Repayment of principal portion of lease liabilities | 10,27 |
( |
( |
| Redemption of bonds | 27 |
( |
( |
| Promissory notes issued | 27 |
|
|
| Dividends paid to shareholders | 17 |
( |
( |
| Unclaimed dividends |
|
|
|
| Dividends paid to non-controlling shareholders |
( |
( |
|
| Proceeds from disposal of treasury shares |
|
|
|
| Net cash used in financing activities |
( |
( |
|
| Net change in cash and cash equivalents |
( |
|
|
| Effect of foreign exchange on cash and cash equivalents |
|
( |
|
| Cash and cash equivalents at the beginning of the year | 3 |
|
|
| Cash and cash equivalents at the end of the period | 3 |
|
|
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
7
Note 1:
Organisation
PJSC TATNEFT n.a. V.D. Shashin (the “Company” or PJSC Tatneft) and its controlled subsidiaries (jointly referred
to as the “Group”) are engaged in crude oil exploration, development and production principally in the Republic of
Tatarstan (“Tatarstan”), a republic within the Russian Federation . The Group also engages in refining of crude oil
and associated petroleum gas processing, marketing of crude oil and refined products, production and sale of tires,
financial services (Note 21,24).
The Company was incorporated as an open joint stock company (now referred to as a public joint stock company )
in January 1994 pursuant to the approval of the State Property Management Committee of the Republic of Tatarstan
in accordance with Decree of the President of the Russian Federation No. 1403 on Privatization and Restructuring
of Enterprises and Corporations into Joint-Stock Companies.
The Company does not have an ultimate controlling party.
As at 31 December 2023 and 31 December 2022 the government
of Tatarstan controls about 36% of the Company’s
voting stock. Tatarstan also holds a “Golden Share”, a special governmental right, in the Company (Note 17).
The Company is domiciled and primarily operates in the Russian Federation . The address of its registered office is
Lenina St., 75, Almetyevsk, Republic of Tatarstan, Russian Federation .
Note 2: Basis of preparation
The accompanying consolidated financial statements have been prepared in accordance with IFRS Accounting
Standards.
These consolidated financial statements have been prepared on a historical cost basis, except for initial recognition
of financial instruments and revaluation of financial instruments at fair value.
The entities of the Group maintain their accounting records and prepare their statutory financial statements
principally in accordance with the Regulations and Federal standards on Accounting and Reporting of the Russian
Federation (“RAR”), and applicable accounting and reporting standards of countries outside the Russian Federati
on.
A number of entities of the Group prepare their financial statements in accordance with IFRS Accounting Standards.
The accompanying consolidated financial statements have been prepared from these accounting records and adjusted
as necessary to comply with IFRS Accounting Standards.
The preparation of financial statements in conformity with IFRS Accounting Standards requires the use of certain
critical accounting estimates. It also requires management to exercise its judgement in the process of applying the
Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 29.
Note 3: Cash and cash equivalents
As at 31 December 2023 and 2022 reverse REPO agreements included in the line “Cash and cash equivalents” in
the amount of RR 17,638 million and RR 467 million, respectively, were secured by securities with a fair value of
RR 18,356 million and RR 526 million, respectively. The Group had the right to sell or repledge these securities.
Part of these securities as at 31 December 2023 was sold and obligations to return these securities in the amount of
RR 14,983 million (at 31 December 2022: RR 526 million) are reflected in the line “Financial services: Other
financial liabilities at fair value through profit or loss.”
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
7
| At 31 December2023 | At 31 December2022 | |
|---|---|---|
| Cash on hand and in banks | 48,326 | 86,582 |
| Term deposits with original maturity of less than three months | 35,789 | 81,282 |
| Total cash and cash equivalents | 84,115 | 167,864 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
8
Note 4: Accounts receivable
Short-term and long-term accounts receivable comprise the following:
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime
expected loss allowance for all trade receivables.
Expected credit loss allowance for trade receivables is determined according to provision matrix, which is based on
the number of days that an asset is past due, with a distribution to portfolios of receivables, homogeneous in terms
of credit risk. In addition to the number of days that an asset is past due, types of products sold, geographical
specificity of distributional channels and other factors were taken into account.
The following table explains the changes in the expected credit loss allowance for trade and other receivables
between the beginning and the end of the annual period, ended 31 December 2023 and 2022:
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
8
| At 31 December 2023 | At 31 December 2022 | |
|---|---|---|
| Short-term accounts receivable: | ||
| Trade receivables | 219,580 | 102,642 |
| Other financial receivables | 13,397 | 16,250 |
| Other non-financial receivables | 80 | 131 |
| Less expected credit loss allowance | (13,152) | (11,154) |
| Total short-term accounts receivable | 219,905 | 107,869 |
| Long-term accounts receivable: | ||
| Trade receivables | 308 | 431 |
| Other financial receivables | 9,449 | 12,848 |
| Less expected credit loss allowance | (238) | (456) |
| Total long-term accounts receivable | 9,519 | 12,823 |
| Total trade and other receivables | 229,424 | 120,692 |
| 2023 | 2022 | |||
|---|---|---|---|---|
| Trade receivables | Other receivables | Trade receivables | Other receivables | |
| Expected credit loss allowance at 1 | ||||
| January | (5,717) | (5,893) | (5,792) | (5,312) |
| New originated or purchased | (251) | (812) | (168) | (731) |
| Total credit loss allowance charge inprofit or loss for the period | (251) | (812) | (168) | (731) |
| Write-offs | - | 983 | - | 2 |
| Exchange differences Changes in provision as a result of | (180) | - | 95 | 1 |
| business acquisitions | (2,156) | - | - | - |
| Other changes | 311 | 325 | 148 | 147 |
| Expected credit loss allowance at31 December | (7,993) | (5,397) | (5,717) | (5,893) |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
9
Note 4: Accounts receivable (continued)
Analysis by credit quality of trade and other receivables is as follows:
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
9
| At 31 December 2023 | At 31 December 2022 | |||
|---|---|---|---|---|
| Tradereceivables | Otherreceivables | Tradereceivables | Otherreceivables | |
| Not past due | ||||
| - International traders of crude oil, oilproducts and petrochemicals | 55,301 | - | 26,235 | - |
| - Russian crude oil and oil productstraders | 5,661 | - | 617 | - |
| - Russian oil and petrochemicals refineries | 42,477 | - | 23,700 | - |
| - Foreign refineries | 67,660 | - | 30,056 | - |
| - Russian tire dealers and automotivemanufacturers | 14,155 | - | - | - |
| - Russian construction companies | 582 | - | 601 | - |
| - other | 25,034 | 17,430 | 15,823 | 23,034 |
| including related parties | 4,411 | 10,561 | 3,864 | 14,656 |
| Not past due | 210,870 | 17,430 | 97,032 | 23,034 |
| Expected credit loss allowance | (540) | (63) | (305) | (82) |
| Past due but not individually assessed forcredit loss allowance | ||||
| - less than 90 days overdue | 1,357 | 2 | 464 | 2 |
| - 91 to 180 days overdue | 157 | 5 | 164 | 29 |
| - over 180 days overdue Total past due but not individuallyassessed for credit loss allowance | - 1,514 | 6 13 | - 628 | 132 |
| Expected credit loss allowance | (26) | (3) | (15) | (18) |
| Individually assessed for credit lossallowance (gross) | ||||
| - less than 90 days overdue | 441 | - | - | - |
| - 91 to 180 days overdue | - | - | - | - |
| - over 180 days overdue | 7,063 | 5,403 | 5,413 | 6,032 |
| Total individually assessed for creditloss allowance | 7,504 | 5,403 | 5,413 | 6,032 |
| Expected credit loss allowance | (7,427) | (5,331) | (5,397) | (5,793) |
| Total | 211,895 | 17,449 | 97,356 | 23,205 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
10
Note 5: Financial services: Loans to customers
There is a certain concentration of loans issued to customers in the financial services segment of the Group. As at
31 December 2023 and 2022 the Group granted loans to 39 and 21 customers totalling RR 107,808 million and
RR 62,151 million respectively, which individually exceeded 5% of segment equity.
Movements in the expected credit loss allowance during the year ended at 31 December 2023 are as follows:
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
10
| At 31 December 2023 | At 31 December2022 | |
|---|---|---|
| Loans to legal entities | 68,333 | 49,335 |
| Loans to individuals | 2,542 | 2,552 |
| Short-term loans to customers measured at amortised cost beforeexpected credit loss allowance | 70,875 | 51,887 |
| Expected credit loss allowance | (8,293) | (7,043) |
| Total short-term loans to customers measured at amortised cost | 62,582 | 44,844 |
| Short-term loans to legal entities measured at fair value through profit orloss | - | 37 |
| Total short-term loans to customers | 62,582 | 44,881 |
| At 31 December 2023 | At 31 December 2022 | |
| Loans to legal entities Loans to individuals | 73,910 57,800 | 57,50959,769 |
| Long-term loans to customers measured at amortised cost beforeexpected credit loss allowance | 131,710 | 117,278 |
| Expected credit loss allowance | (3,899) | (4,753) |
| Total long-term loans to customers measured at amortised cost | 127,811 | 112,525 |
| Total long-term loans to customers | 127,811 | 112,525 |
| Loans to legalentities | Loans toindividuals | Total | |
|---|---|---|---|
| Expected credit loss allowance as at 1 January 2023 | (6,968) | (4,828) | (11,796) |
| Net provision for expected credit loss allowance duringthe period Other changes | (471) 325 | (629) 379 | (1,100)704 |
| Expected credit loss allowance as at 31 December2023 | (7,114) | (5,078) | (12,192) |
| Movements in the expected credit loss allowance during the year ended at 31 December 2022 are as follows: | |||
| Loans to legalentitiesLoans toindividualsTotal | |||
| Expected credit loss allowance as at 1 January 2022 | (7,859) | (3,630) | (11,489) |
| Net provision for expected credit loss allowance duringthe period Other changes | 87 804 | (1,588) 390 | (1,501)1,194 |
| Expected credit loss allowance as at 31 December2022 | (6,968) | (4,828) | (11,796) |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
11
Note 5: Financial services: Loans to customers (continued)
Risk concentrations by customer industry within the customer loan portfolio are as follows:
Note 6: Other financial assets
Other short-term financial assets comprise the following:
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
11
| At 31 December 2023 | At 31 December 2022 | |||
|---|---|---|---|---|
| Gross bookvalue | Share incustomer loanportfolio, % | Gross bookvalue | Share incustomer loanportfolio, % | |
| Trade | 23,885 | 11.79% | 21,678 | 12.81% |
| Manufacturing | 66,951 | 33.05% | 41,020 | 24.24% |
| Construction | 1,019 | 0.50% | 1,497 | 0.88% |
| Services | 19,566 | 9.66% | 21,531 | 12.73% |
| Food | 1,248 | 0.62% | 350 | 0.21% |
| Finance | 26,037 | 12.85% | 14,964 | 8.84% |
| Agriculture | 287 | 0.14% | 1,442 | 0.85% |
| Oil and gas | 2,861 | 1.41% | 3,105 | 1.84% |
| Individuals, including: | 60,342 | 29.79% | 62,321 | 36.84% |
| mortgage loans | 29,394 | 14.52% | 31,605 | 18.68% |
| consumer loans | 16,275 | 8.03% | 16,476 | 9.74% |
| car loans | 14,161 | 6.99% | 13,799 | 8.16% |
| plastic cards overdrafts | 512 | 0.25% | 423 | 0.25% |
| Other | - | 0.00% | 18 | 0.01% |
| Other | 389 | 0.19% | 1,294 | 0.76% |
| Total loans to customers before expected credit lossallowance | 202,585 | 100% | 169,202 | 100% |
| At 31 December 2023 | At 31 December 2022 | |
|---|---|---|
| Financial assets measured at amortised cost | ||
| Securities (net of expected credit loss allowance of RR 6 million andof RR 29 million as at 31 December 2023 and 31 December 2022respectively): | 7,274 | 12,034 |
| Russian government and municipal debt securities | 164 | 20 |
| Corporate debt securities | 7,110 | 12,014 |
| Loans (net of expected credit loss allowance of RR 170 million and ofRR 327 million as at 31 December 2023 and 31 December 2022respectively) | 18,286 | 3,485 |
| Other | - | 540 |
| Total | 25,560 | 16,059 |
| Financial assets measured at fair value through profit or loss | 3,138 | 5,998 |
| Financial assets measured at fair value through othercomprehensive income | ||
| Securities: | ||
| Corporate debt securities | 8,758 | 1,248 |
| Other | 412 | 459 |
| Total | 9,170 | 1,707 |
| Total short-term financial assets | 37,868 | 23,764 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
12
Note 6: Other financial assets (continued)
Other long-term financial assets comprise the following:
Investment fund units are mainly presented with investment in closed mutual investment fund (45.45% of the total
number of units), owner of investments in land plots located in Tatarstan Republic. The Group does not exercise
significant influence over this investment and therefore accounts for it as a financial asset measured at fair value
through other comprehensive income.
Note 7: Inventories
Note 8: Prepaid expenses and other current assets
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
12
| At 31 December2023 | At 31 December 2022 | |
|---|---|---|
| Financial assets measured at amortised cost | ||
| Loans (net of expected credit loss allowance of RR 17,012 million and ofRR 17,647 million as at 31 December 2023 and 31 December 2022respectively), including issued to associated companies in the amount ofRR 15,656 million and RR 7,866 million as at 31 December 2023 and 31December 2022. | 23,553 | 8,138 |
| Securities (net of expected credit loss allowance of RR 9 million and of RR39 million as at 31 December 2023 and 31 December 2022 respectively): | 15,609 | 15,323 |
| Russian government and municipal debt securities | 2,097 | 2,434 |
| Corporate debt securities | 13,512 | 12,889 |
| Other (net of expected credit loss allowance of RR 14,355 million and ofRR 4,659 million as at 31 December 2023 and 31 December 2022respectively) | 892 | 6,605 |
| Total | 40,054 | 30,066 |
| Financial assets measured at fair value through profit or loss | 2,134 | 2,331 |
| Financial assets measured at fair value through other comprehensiveincome | ||
| Securities: | 61,327 | 57,844 |
| Russian government and municipal debt securities | 13,649 | 14,208 |
| Corporate shares | 15,253 | 12,834 |
| Corporate debt securities | 19,466 | 19,503 |
| Foreign country’s debt securities | 851 | 636 |
| Investment fund units | 12,108 | 10,663 |
| Total | 61,327 | 57,844 |
| Total long-term financial assets | 103,515 | 90,241 |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Materials and supplies | 43,380 | 32,725 |
| Crude oil | 22,639 | 15,799 |
| Refined oil products | 39,310 | 21,657 |
| Supplies and finished products of tires business(Note 24) | 9,642 | - |
| Other finished products and goods Total inventories | 6,186 121,157 | 7,20177,382 |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Prepaid export duties | 2,194 | 1,569 |
| VAT recoverable | 9,469 | 6,130 |
| Advances | 9,706 | 7,983 |
| Prepaid transportation expenses | 5,892 | 2,923 |
| Excise | 25,152 | 12,323 |
| Other | 5,902 | 1,270 |
| Prepaid expenses and other current assets | 58,315 | 32,198 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
13
Note 9: Property, plant and equipment
Additions for 2023 and 2022 years include construction of TANECO refinery complex, wells, oil fields facilities
and petrochemical business development.
Within construction in progress there are advances for construction of RR 45,450 million and RR 26,166 million at
31 December 2023 and 2022, respectively.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
13
| Oil and gasproperties | Buildings andconstructions | Machineryandequipment | Construc-tion inprogress | Total | |
|---|---|---|---|---|---|
| Cost | |||||
| As at 31 December 2021 | 459,339 | 339,619 | 248,819 | 264,690 | 1,312,467 |
| Additions | - | - | - | 163,043 | 163,043 |
| Disposals | (3,453) | (1,073) | (4,186) | (914) | (9,626) |
| Changes in Group structure (Note24) | 13,228 | 1,986 | 9,590 | 109 | 24,913 |
| Changes in Group structure (Note26) | - | (8,843) | (29,933) | (23,917) | (62,693) |
| Transfers | 35,381 | 53,841 | 34,552 | (123,774) | - |
| Changes in decommissioningprovision | 12,370 | - | - | - | 12,370 |
| Currency translation effect | - | (230) | (174) | (783) | (1,187) |
| As at 31 December 2022 Depreciation, depletion,amortisation and impairment | 516,865 | 385,300 | 258,668 | 278,454 | 1,439,287 |
| As at 31 December 2021 | 228,448 | 75,224 | 99,546 | 29,467 | 432,685 |
| Depreciation, depletion andamortisation | 25,259 | 12,361 | 12,527 | - | 50,147 |
| Impairment | 14,541 | 463 | 459 | 5,717 | 21,180 |
| Disposals | (3,369) | (342) | (3,068) | - | (6,779) |
| Changes in Group structure (Note26) | - | (4,527) | (23,446) | (2,021) | (29,994) |
| Transfers | 554 | 143 | (697) | - | - |
| Currency translation effect | - | (81) | (81) | - | (162) |
| As at 31 December 2022 | 265,433 | 83,241 | 85,240 | 33,163 | 467,077 |
| Net book value | |||||
| As at 31 December 2021 | 230,891 | 264,395 | 149,273 | 235,223 | 879,782 |
| As at 31 December 2022 | 251,432 | 302,059 | 173,428 | 245,291 | 972,210 |
| Cost | |||||
| As at 31 December 2022 | 516,865 | 385,300 | 258,668 | 278,454 | 1,439,287 |
| Additions | - | - | - | 228,662 | 228,662 |
| Disposals | (2,105) | (705) | (5,089) | (1,286) | (9,185) |
| Changes in Group structure (Note24) | - | 15,691 | 21,602 | 699 | 37,992 |
| Transfers | 67,349 | 47,399 | 37,316 | (152,064) | - |
| Changes in decommissioningprovision | (27,876) | - | - | - | (27,876) |
| Currency translation effect | - | 818 | 1,539 | 343 | 2,700 |
| As at 31 December 2023 | 554,233 | 448,503 | 314,036 | 354,808 | 1,671,580 |
| Depreciation, depletion,amortisation and impairment | |||||
| As at 31 December 2022 | 265,433 | 83,241 | 85,240 | 33,163 | 467,077 |
| Depreciation, depletion andamortisation | 25,350 | 15,659 | 16,744 | - | 57,753 |
| Impairment | 6,689 | 2,434 | 4,803 | 5,126 | 19,052 |
| Disposals | (1,457) | (537) | (1,841) | - | (3,835) |
| Transfers | 179 | (269) | 279 | (189) | - |
| Currency translation effect | - | 36 | 16 | - | 52 |
| As at 31 December 2023 | 296,194 | 100,564 | 105,241 | 38,100 | 540,099 |
| Net book value | |||||
| As at 31 December 2022 | 251,432 | 302,059 | 173,428 | 245,291 | 972,210 |
| As at 31 December 2023 | 258,039 | 347,939 | 208,795 | 316,708 | 1,131,481 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
14
Note 9: Property, plant and equipment (continued)
As stated in Note 28, the Group calculates depreciation, depletion and amortization for oil and gas properties using
the units-of-production method over proved developed oil and gas reserves. The proved developed reserves used in
the units-of-
production method assume the extension of the Group’s production license beyond their current
expiration dates until the end of the economic lives of the fields as discussed below in further detail.
The Group’s oil and gas fields are located princ
ipally on the territory of Tatarstan. The Group obtains licenses from
the governmental authorities to explore and produce oil and gas from these fields. The Group’s existing production
licenses for its major fields expire, between 2038 and 2090, with other production licenses expiring between 2024
and 2109
. The economic lives of several of the Group’s licensed fields extend beyond the dates of licenses
expiration. Under Russian law, the Group is entitled to renew the licenses to the end of the economic lives of the
fields, provided certain conditions are met.
Management of the Group
is reasonably certain that the Group will be allowed to produce oil from the Group’s
reserves after the expiration of existing production licenses and until the end of the economic lives of the fields.
Changes in the net book value of exploration and evaluation assets are presented below:
As at 31 December 2023 due to indications of possible impairment the Group conducted impairment testing for the
separate groups of assets, whose current economic efficiency does not correspond to the forecast. Assets are grouped
for impairment purposes to the cash generating units (CGU) at the lowest level for which there are identifiable cash
flows that are largely independent of the cash flows of other groups of assets:
• field-by-field basis for exploration and production assets;
• separate complex level for refining assets;
• a separate tire producing plant;
• other assets were grouped depending on the nature of the generated cash flows.
The macroeconomic factors, including but not limited to the changes in oil production and crude oil and oil products
prices, the volatility of the Russian Ruble to the US dollar and a changes in the level of business activity were taken
into account when preparing models, which are the main source of information for measuring the value in use of
non-current assets, including forecasts of oil production volumes, oil and oil products price dynamics, petrochemical
production forecast, as well as when determining the discount rate.
In assessing impairment, the recorded value of assets was compared with the estimated value in use of the CGUs.
The value in use is determined as the discounted net cash flows based on the forecasts of revenue, production costs
and changes in working capital based on confirmed long-term strategic plans of the Group. The forecasting period
for determining the value in use is in line with the management of the Group assumptions used for long-term strategy
and does not exceed the useful life of assets included in the CGUs.
Key assumptions applied to the calculation of value in use are follows:
• oil prices and forecast US dollar/Russian ruble exchange rates are based on available forecasts from
globally recognised research institutions;
• estimated production volumes were based on detailed information for the production plans approved by
management as part of the long-term strategy, considering the estimates of proved oil reserves and the
current geopolitical situation.
The discount rate was calculated based on the Company’s weighted average cost of capital adjusted for asset specific
risks. The Group applied the following nominal pre-tax discount rates for impairment testing purposes:
• from 22.6% to 26.0% for oil and gas fields;
• from 17.5% to 19.85% for the production of tires.
The Group applied a real pre-tax discount rates from 11.6% to 13.5% for impairment testing of petrochemical
complexes.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
14
| At 1 January 2022 | 3,174 |
|---|---|
| Additions | 3,386 |
| Reclassification to development assets | (1) |
| Charged to expense | (3,401) |
| At 31 December 2022 | 3,158 |
| Additions | 2,881 |
| Reclassification to development assets | (88) |
| Charged to expense | (2,305) |
| At 31 December 2023 | 3,646 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
15
Note 9: Property, plant and equipment (continued)
For the purposes of impairment testing, the following Brent price assumptions have been used: $ 84.94 per barrel in
2024, $ 83.85 per barrel in 2025, $ 82.23 per barrel in 2026, $ 81.12 per barrel in 2027 and $ 82.90 per barrel in
2028 with further growth in subsequent years according to forecasts. A forecast discount was applied to Brent crude
prices to bring them to Urals crude prices.
A reasonably justified change in key assumptions, taken into account by management for the purpose of preparing
models as at the reporting date, does not necessitate the recognition of an additional impairment other than the below.
In 2023 the Group recognised an impairment loss on property, plant and equipment and other non-financial assets
in the amount of RR 21,732 million (in 2022: RR 30,230 million). These losses consist of impairment losses on
property, plant and equipment net of reversal in the amount of RR 19,052 million (in 2022 in the amount of RR
21,005 million excluding loss on discontinued operations), loss from impairment on other long-term assets in the
amount of RR 1,508 million (in 2022 in the amount of RR 8,161 million), income from the restoration of the value
of inventory in the amount of RR 462 million (in 2022, expenses from write-down of inventories to the net realizable
value in the amount of RR 814 million) and losses on disposal of property, plant and equipment in the amount of
RR 1,634 million (in 2022 in the amount of RR 250 million).
For the year ended 31 December 2023 the Group recognised an impairment of the following assets:
• tire business assets in the amount of RR 8,042 million;
• assets related to the superviscous oil fields in the amount of RR 7,242 million;
• assets related to the exploration and evaluation of oil reserves, in the amount of RR 2,024 million;
• other assets in the total amount of RR 1,744 million.
In 2022 the Group recognised an impairment on property, plant and equipment in relation to the following assets:
• assets related to discontinued operation (Note 26) in the amount of RR 175 million (loss recognised prior
to disposal date);
• exploration assets related to the superviscous oil fields, in the amounts of RR 13,638 million;
• oil development related to the oilfields located outside the Republic of Tatarstan in the amount of RR 4,680
million;
• other assets in the total amount of RR 2,687 million.
The recoverable amount of superviscous oil fields, which were impaired, was determined in the amount of
RR 18,014 million (at 31 December 2022: in the amount of RR 35,016 million).
The recoverable amount of tire producing assets, which were impaired, was determined in the amount of RR 6,916
million.
At 31 December 2023 and 2022 the Group held social assets with a net book value of RR 5,492 million and RR
4,552 million, respectively.
Decommissioning provisions
The following table summarizes changes in the Group’s decommissioning provision for the year :
In 2023, the decrease in estimate for oil and gas properties decommissioning was primarily due to an increase in
proven developed oil reserves and an increase in the production horizon, as well as changes in the discount rate (in
2022, the increase in the reserve due to the growth in estimated future costs of decommissioning and changes in
discount rate).
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
15
| 2023 | 2022 | |
|---|---|---|
| Balance at the beginning of period | 54,177 | 38,710 |
| Unwinding of discount | 4,813 | 3,103 |
| New obligations | 734 | 802 |
| Expenses on current obligations | (38) | (6) |
| Changes in estimates | (28,610) | 11,568 |
| Balance at the end of period | 31,076 | 54,177 |
| Less: current portion of decommissioning provisions (Note 13) | (305) | (183) |
| Long-term balance at the end of period | 30,771 | 53,994 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
16
Note 9: Property, plant and equipment (continued)
Key assumptions used for evaluation of decommissioning provision were as follows:
Note 10: Right-of-use assets and lease liabilities
Changes in the right-of-use assets are presented below:
The reconciliation between the undiscounted lease liabilities and present value are presented below:
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
16
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Discount rate | 11.87% | 10.06% |
| Discount rate for superviscous oil | 11.48% | 9.88% |
| Long-term inflation rate | 3.00% | 4.20% |
| 2023 | 2022 | |
|---|---|---|
| Balance at the beginning of period | 3,237 | 11,897 |
| Additions | 26,076 | 399 |
| Disposals | (247) | (7,465) |
| Depreciation | (2,896) | (1,361) |
| Revaluation and modification | 1,359 | (233) |
| Balance at the end of period | 27,529 | 3,237 |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Lease liabilities | ||
| Less than one year | 5,332 | 1,034 |
| Between one and five years | 15,359 | 2,497 |
| More than five years | 19,631 | 1,512 |
| Total lease liabilities excluding discounting | 40,322 | 5,043 |
| Discounting | (15,168) | (1,428) |
| Lease liabilities | 25,154 | 3,615 |
| Of which: | ||
| Current portion of lease liabilities presented in Accounts payable and accruedliabilities (Note 13) | 4,810 | 974 |
| Long-term portion of lease liabilities | 20,344 | 2,641 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
17
Note 11: Taxes
Presented below is reconciliation between the provision for income taxes and taxes determined by applying the
statutory tax rate 20% to income before income taxes:
At 31 December 2023 no deferred tax liabilities have been recognised for taxable temporary differences of
RR 84,575 million (2022: RR 31,366 million) on undistributed earnings of certain subsidiaries. These earnings have
been and will continue to be reinvested. These earnings, except for undistributed earnings of subsidiaries operating
in a tax free jurisdictions, could become subject to additional tax of approximately RR 5,382 million (2022: RR
2,058 million) if they were remitted as dividends.
Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities
recognised for consolidated financial reporting purposes and such amounts recognised for statutory tax purposes.
Deferred tax assets (liabilities) are comprised of the following:
Deferred income taxes are reflected in the consolidated statement of financial position as follows:
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
17
| Year ended | Year ended | |
|---|---|---|
| 31 December 2023 | 31 December 2022 | |
| Profit before income tax | 365,507 | 379,968 |
| Theoretical income tax expense at statutory rate | (73,101) | (75,994) |
| (Increase)/decrease due to: | ||
| Non-deductible expenses, net | (8,571) | (4,110) |
| Income tax withheld at source on dividends for treasury shares | (1,026) | (632) |
| Gain from purchase | 3,827 | - |
| Other | (373) | 6 |
| Income tax expense | (79,244) | (80,730) |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Tax loss carry forward | 859 | 5,026 |
| Decommissioning provision | 6,215 | 9,321 |
| Prepaid expenses and other current assets and liabilities | 4,884 | 235 |
| Long-term loans and certificates of deposits | 1,730 | 1,748 |
| Long-term investments | - | 266 |
| Other | 3,227 | 2,704 |
| Deferred income tax assets | 16,915 | 19,300 |
| Property, plant and equipment | (64,508) | (55,388) |
| Inventories | (1,232) | (3,153) |
| Prepaid expenses and other current assets | (3,271) | (4,513) |
| Debt | (1,792) | (1,429) |
| Other liabilities | (210) | (225) |
| Deferred income tax liabilities | (71,013) | (64,708) |
| Net deferred tax liability | (54,098) | (45,408) |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Deferred income tax asset | 7,332 | 5,504 |
| Deferred income tax liability | (61,430) | (50,912) |
| Net deferred tax liability | (54,098) | (45,408) |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
18
Note 11: Taxes (continued)
The Group is subject to a number of taxes other than income taxes, which are detailed as follows:
Taxes payable, other than income taxes were as follows:
Note 12: Debt
The increase in “Other debt” was primarily due to the acquisition of a business (Note 24).
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
18
Note 11: Taxes (continued)
| Year ended | Year ended | |
|---|---|---|
| 31 December 2023 | 31 December 2022 | |
| Mineral extraction tax | 494,071 | 511,993 |
| Tax on additional income from hydrocarbon extraction | 122,649 | 128,491 |
| Excise | (176,020) | (190,382) |
| incl. reverse excise | (279,004) | (278,583) |
| Property tax | 14,809 | 12,499 |
| Other | 2,505 | 2,218 |
| Total taxes, other than income taxes | 458,014 | 464,819 |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Mineral extraction tax | 54,952 | 21,650 |
| Tax on additional income from hydrocarbon extraction | 46,611 | 18,395 |
| Value Added Tax | 21,170 | 15,216 |
| Excise | 8,979 | 8,319 |
| Export duties | 311 | 672 |
| Property tax | 3,966 | 3,547 |
| Other | 5,885 | 4,419 |
| Total taxes payable, other than income taxes | 141,874 | 72,218 |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Short-term debt | ||
| Subordinated debt | 22 | 22 |
| Debt securities issued | 3,399 | 276 |
| Other debt | 447 | - |
| Total short-term debt | 3,868 | 298 |
| Сurrent portion of long-term debt | 941 | 2,367 |
| Total short-term debt, including current portion of long-term debt | 4,809 | 2,665 |
| Long-term debt | ||
| Bonds issued | 2 | 2,057 |
| Promissory notes issued | 9,391 | 11,621 |
| Other debt | 9,596 | 525 |
| Total long-term debt | 18,989 | 14,203 |
| Less: current portion of long-term debt | (941) | (2,367) |
| Total long-term debt, net of current portion | 18,048 | 11,836 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
19
Note 13: Accounts payable and accrued liabilities
In 2023 revenue of RR 21,118 million was recognised in respect of contract obligations as of 1 January 2023 related
to advances received.
In 2022 revenue of RR 25,340 million was recognised in respect of contract obligations as of 1 January 2022 related
to advances received.
Note 14: Financial services: Due to banks and the Bank of Russia
There is a certain concentration of sources of financing in the Group's financial services segment. As at 31 December
2023 within due to banks and the Bank of Russia there are RR 30,557 million of correspondent accounts and term
deposits borrowed from the Bank of Russia and three Russian banks which individually exceeded 5% of the segment
equity. As at 31 December 2022 within due to banks and the Bank of Russia there are RR 5,239 million of
correspondent accounts and term deposits, borrowed from the Bank of Russia which individually exceeded 5% of
the segment equity .
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
19
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Trade payables | 87,445 | 49,609 |
| Current portion of lease liabilities | 4,810 | 974 |
| Other payables (Note 24) | 6,344 | 481 |
| Total financial liabilities within trade and other payables | 98,599 | 51,064 |
| Salaries and wages payable | 16,725 | 13,051 |
| Current portion of long-term employee incentives program (Note | ||
| 16) | - | 80 |
| Advances received from customers | 31,779 | 21,118 |
| Current portion of decommissioning provisions (Note 9) | 305 | 183 |
| Other accounts payable and accrued liabilities (Note 24) | 12,437 | 7,440 |
| Total non-financial liabilities | 61,246 | 41,872 |
| Accounts payable and accrued liabilities | 159,845 | 92,936 |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Term deposits from banks | 3,506 | 1 |
| Term deposits from the Bank of Russia | 4,709 | 5,239 |
| REPO | 22,347 | - |
| Correspondent accounts and banks’ overnight deposits | 189 | 933 |
| Total due to banks and the Bank of Russia | 30,751 | 6,173 |
| Less: long term due to banks and the Bank of Russia | (3,737) | (2,883) |
| Total short term of due to banks and the Bank of Russia | 27,014 | 3,290 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
20
Note 15: Financial services: Customer accounts
There is a certain concentration of sources of financing in the Group's financial services segment. Within customer
accounts at 31 December 2023 and 2022 there are RR 78,275 million and RR 77,301 million of current/settlement
accounts and term deposits from 34 and 22 customers respectively, which individually exceeded 5% of the segment
equity.
Risk concentrations by customer industry within customer accounts are as follows:
Note 16: Other long-term liabilities
Other long-term liabilities are as follows:
Pension liabilities. The Group has various pension plans offered to all employees. The amount of contributions,
frequency of benefit payments and other conditions of these plans are regulated by the “Statement of Organization
of Corporate Non-Governmental Pension Benefits for P JSC Tatneft Employees”, similar provisions of controlled
subsidiaries and agreements arranged between the Company and the JSC “National Non -Governmental Pension
Fund”. In accordance with the terms of the agreements the Group is committed to make certain contributions on
favor of its employees, the aggregated amount of savings guarantees the payment of a non-state pension in an amount
not lower than the minimum amount provided by pension agreements. The amount of contributions and non-state
pensions depends on the amount of contributions chosen by the employee and the achievement of the target
indicators of the companies.
In accordance with the provisions of collective agreements concluded on an annual basis between the Company or
its subsidiaries and their employees, the Group is obliged to pay other certain post-employment benefits to
employees upon completion of their employment with the Company or its controlled subsidiaries.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
20
| At 31 December | At 31 December 2022 | |
|---|---|---|
| 2023 | ||
| State and public organizations | ||
| Current / settlement accounts | 2,464 | 1,333 |
| Term deposits | 709 | 327 |
| Other legal entities | ||
| Current / settlement accounts | 13,272 | 40,352 |
| Term deposits | 91,275 | 60,933 |
| Individuals | ||
| Current / settlement accounts Term deposits | 21,727 74,132 | 35,67674,011 |
| Total customer accounts | 203,579 | 212,632 |
| Less: long-term customer accounts | (1,531) | (713) |
| Total short-term customer accounts | 202,048 | 211,919 |
| At 31 December | At 31 December | |||
|---|---|---|---|---|
| 2023 | 2022 | |||
| Carrying value | Share in customerloan portfolio, % | Carryingvalue | Share in customerloan portfolio, % | |
| Individuals | 95,859 | 47.09% | 109,687 | 51.59% |
| Finance | 30,516 | 14.99% | 30,501 | 14.34% |
| Oil and gas | 16,887 | 8.30% | 4,740 | 2.23% |
| Trade | 20,993 | 10.31% | 28,487 | 13.40% |
| Services | 17,043 | 8.37% | 16,074 | 7.56% |
| Manufacturing | 14,634 | 7.19% | 13,368 | 6.29% |
| Construction | 3,501 | 1.72% | 3,295 | 1.55% |
| Other | 4,146 | 2.03% | 6,480 | 3.04% |
| Total customer accounts | 203,579 | 100% | 212,632 | 100% |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Pension and other long-term liabilities to employees and retirees | 3,037 | 3,745 |
| Government grants | 35,762 | 28,948 |
| Long-term employee incentives program, net of current portion (Note13, 18) | 444 | - |
| Other long-term liabilities | 987 | 667 |
| Total other long-term liabilities | 40,230 | 33,360 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
21
Note 16: Other long-term liabilities (continued)
Government grants. The Group received grants from the Republic of Tatarstan for the creation, modernization and
reconstruction of energy facilities, processing capacity and infrastructure.
Long-term employee incentives program. According to the Tatneft Group long-term employee incentives program
for key employees the benefits are based on the change in the Company share price during a five-year cycle. In
accordance with the terms of the program, 14 million shares are “conditionally” assigned to the management and
directors of the Company, based on which, at the end of the cycle, remuneration is paid on the amount of the positive
difference in the average annual price of an ordinary share of PJSC Tatneft for the fifth year of the five-year cycle
and the year adopted as a base. Payments are made in cash. Receipt of payouts is contingent upon meeting the
required service period, certain performance metrics and an increase in the value of shares.
The fair value of the Program was determined as RR 137.2 per share in accordance with the Black-Scholes option
pricing model. The fair value was calculated using the spot price of the Company's shares at the end of 2023 in the
amount of RR 706.6, the exercise price of the option in the amount of RR 493, an expected dividend yield of 14.6%
per annum, the risk-free interest rate equal to 11.2 % per annum, the term until the maturity of the program, and the
volatility of the return on the underlying asset equal to 33.7 %. The expected volatility was determined based on the
historical volatility of the Company's shares.
Note 17:
Shareholders’ equity
Authorised share capital. At 31 December 2023 and 2022 the authorised, issued and paid share capital of
PJSC Tatneft consists of 2,178,690,700 voting common shares and 147,508,500 non-voting preferred shares; both
classes of shares have a nominal value of RR 1.00 per share. The nominal value of authorised share capital differs
from its carrying value due to effect of the hyperinflation on capital contributions made before 2003.
At 31 December 2023 and 2022 treasury shares include 75.6 million ordinary shares of the Company owned by
wholly-owned subsidiaries of the Group.
Golden share.
Tatarstan holds a “Golden Share” –
a special governmental right
–
in the PJSC Tatneft company.
The exercise of its powers under the Golden Share enables the Tatarstan government to appoint one representative
to the Board of Directors and Revision Commission of the Company and to veto certain major decisions, including
those relating to changes in the share capital, amendments to the Charter, liquidation or reorganization and “major”
and “interested party” transactions as defined under Russian law. The Golden Share currently has an indefinite term.
Rights attributable to preferred shares. Unless a different amount is approved at the annual shareholders meeting,
preferred shares earn dividends equal to their nominal value. The amount of a dividend for a preferred share may
not be less than the amount of a dividend for a common share. Preferred shareholders may vote at meetings only on
the following decisions:
• the amendment of the dividends payable per preferred share;
• the issuance of additional shares with rights greater than the current rights of preferred shareholders; and
• the liquidation or reorganization of the Company.
The decisions listed above can be made only if approved by 75% of preferred shareholders.
Holders of preferred shares acquire the same voting rights as holders of common shares in the event that preferred
dividends are either not declared, or declared but not paid. On liquidation, the shareholders are entitled to receive a
distribution of net assets. Under Russian Joint Stock Companies Law and the Company’s charter in case of
liquidation, preferred shareholders have priority over shareholders holding common shares in respect of declared
but unpaid dividends on preferred shares and the liquidation value of preferred shares, if any.
Amounts available for distribution to shareholders. The source of payment of dividends is the Company's net
profit for the reporting period, determined based on the Company’s non -consolidated statutory accounts prepared in
accordance with RAR, which differ significantly from IFRS Accounting Standards financial statements.
When determining the dividend amount (per share) recommended to the General Meeting of Shareholders, the
decision of PJSC Tatneft ’s Board of Directors is based on the amount of net profit under RAR or IFRS Accounting
Standards, depending on the availability of published accounting and consolidated financial statements for the
relevant period, and assuming that the target level of the total funds allocated for dividends payment accounts for
least 50% of the net profit amount determined by RAR or IFRS Accounting Standards, whichever is greater.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
21
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
22
Note 17
: Shareholders’ equity (continued)
In December 2023, the shareholders of the Company approved the payment of interim dividends for the nine months
ended 30 September 2023, in the amount of RR 62.71 per preferred and ordinary share, including previously paid
interim dividends for the six months ended 30 June 2023, in the amount of RR 27.54 per preferred and ordinary
share.
In September 2023, the shareholders of the Company approved the payment of interim dividends for the six months
ended 30 June 2023 in the amount of RR 27.54 per preferred and ordinary share.
In June 2023, the shareholders of the Company approved dividends for the year ended 31 December 2022, in the
amount of RR 67.28 per preferred and ordinary share, including previously paid interim dividends for the six and
nine months of 2022, in the amount of RR 39.57 per preferred and ordinary share.
In December 2022, the shareholders of the Company approved the payment of interim dividends for the nine months
ended 30 September 2022, in the amount of RR 39.57 per preferred and ordinary share, including previously paid
interim dividends for the six months ended 30 June 2022, in the amount of RR 32.71 per preferred and ordinary
share.
In September 2022, the shareholders of the Company approved interim dividends for the six month ended 30 June
2022 in the amount of RR 3 2.71 per each preferred and ordinary share.
In June 2022, the shareholders of the Company approved dividends for the year ended 31 December 2021 in the
amount of RR 42.64 per each preferred and ordinary share, including the previously approved interim dividends for
the six and nine months of 2021 in the amount of RR 26.5 per each preferred and ordinary share.
Earnings per share. Preferred shares are not redeemable and are considered to be participating shares. Basic and
diluted earnings per share are calculated by dividing profit or loss attributable to ordinary and preferred shareholders
by the weighted average number of ordinary and preferred shares outstanding during the period. Profit or loss
attributed to equity holders is reduced by the amount of dividends declared in the current period for each class of
shares.
The remaining profit or loss is allocated ordinary and preferred shares to the extent that each class may have share
in earnings if all the earnings for the period had been distributed. Treasury shares are excluded from calculations.
The total earnings allocated to each class of shares are determined by adding together the amount allocated for
dividends and the amount unallocated for now.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
22
| Year ended | Year ended | |
|---|---|---|
| 31 December 2023 | 31 December 2022 | |
| Profit attributable to shareholders of PJSC Tatneft | 287,921 | 284,572 |
| Profit attributable to shareholders of PJSC Tatneft from continuingoperations | 287,921 | 298,668 |
| Ordinary share dividends | (190,159) | (117,161) |
| Preferred share dividends | (13,338) | (8,218) |
| Income available to shareholders of PJSC Tatneft, net of dividends | 84,424 | 159,193 |
| Basic and diluted: | ||
| Weighted average number of shares outstanding (millions of shares): | ||
| Ordinary | 2,103 | 2,103 |
| Preferred | 148 | 148 |
| Combined weighted average number of ordinary and preferred sharesoutstanding (millions of shares) | 2,251 | 2,251 |
| Basic and diluted earnings per share (RR) | ||
| Ordinary | 127.93 | 126.44 |
| Preferred | 127.93 | 126.44 |
| Basic and diluted earnings per share from continuing operations (RR) | ||
| Ordinary | 127.93 | 132.70 |
| Preferred | 127.93 | 132.70 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
23
Note 18: Employee benefit expenses
Employee benefit expenses are included in operating expenses, selling, general and administrative expenses and
maintenance of social infrastructure and transfer of social assets, other expenses and operating expenses from
financial services, as well as financial result from discontinued operations in the consolidated statement of profit or
loss and other comprehensive income.
Note 19: Interest expense (excluding financial services)
Note 20: Interest and commission income and expense from financial services
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
23
| Year ended | Year ended | |
|---|---|---|
| 31 December 2023 | 31 December 2022 | |
| Wages and salaries | 81,628 | 62,994 |
| Statutory insurance contributions | 23,310 | 17,861 |
| Provision/(reversal of provision) for long term employee incentives | ||
| program compensations (Note 16) | 444 | (1,106) |
| Pension costs – defined benefit plans | 338 | (364) |
| Other employee benefits | 3,242 | 2,566 |
| Total employee benefit expense | 108,962 | 81,951 |
| Year ended | Year ended | |
|---|---|---|
| 31 December 2023 | 31 December 2022 | |
| Loans and borrowings | 614 | 1,151 |
| Unwinding of discount of decommissioning provisions | 4,813 | 3,103 |
| Interest expenses on lease liabilities | 1,634 | 775 |
| Unwinding of discount on long-term financial liabilities | 688 | - |
| Discount on long-term financial assets | 13,276 | 559 |
| Other expenses | - | 109 |
| Total interest expense (excluding financial services) | 21,025 | 5,697 |
| Year ended | ||
|---|---|---|
| 31 December: | ||
| 2023 | 2022 | |
| Interest income | 24,593 | 21,795 |
| Loans to customers | 18,868 | 15,072 |
| Other | 5,725 | 6,723 |
| Fee and commission income | 3,701 | 4,009 |
| Settlement transactions | 2,211 | 1,790 |
| Other | 1,490 | 2,219 |
| Total interest and commission income from financial services | 28,294 | 25,804 |
| Interest expense | (14,308) | (13,324) |
| Term deposits | (11,448) | (11,330) |
| Other | (2,860) | (1,994) |
| Fee and commission expense | (1,654) | (1,198) |
| Settlement transactions | (1,554) | (1,094) |
| Other | (100) | (104) |
| Total interest and commission expense from financial services | (15,962) | (14,522) |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
24
Note 21: Segment information
Operating segments are components that engage in business activities that may earn revenues or incur expenses,
whose operating results are regularly reviewed by the Board of Directors and the Management Committee and for
which discrete financial information is available.
Segments whose revenue, result or assets are 10% or more of all the segments are reported separately.
The Group’s business activities are conducted predominantly through four main operating segments:
•
Exploration and production consists of exploration, development, extraction and sale of own crude oil.
Intersegment sales consist of transfer of crude oil to refinery and other goods and services provided to other
operating segments;
•
Refining and marketing comprises purchases and sales of crude oil and refined products from third parties,
own refining activities and retailing operations;
•
The tire business segment includes the production and sale of tires by companies acquired through business
combinations in the 1st quarter of 2023 (Note 24). Shares and interests in subsidiaries that constituted the
tire business segment in prior periods were sold in the 2nd quarter of 2022, accordingly classified as a
discontinued operation;
•
Financial services.
Other sales include revenues from ancillary services provided by the specialised subdivisions and subsidiaries of the
Group, such as sales of oilfield equipment, revenues from the sale of auxiliary petrochemical related services and
materials as well as other business activities, which do not constitute reportable business segments.
The Group evaluates performance of its reportable operating segments and allocates resources based on segment
earnings, defined as profit before income tax not including interest income and expense (excluding financial
services), gains from equity investments, other income (expenses). Intersegment sales are at prices that approximate
market. The Group uses an export netback calculated based on average Urals quotes less export duty, freight and
transportation costs to calculate the cost of its own oil for refining. The Group financing including interest expense
and interest income (excluding financial services) and income taxes are managed on a Group basis and are not
allocated to operating segments.
For the year ended 31 December 2023, revenues of RR 181,052
million or 11% of the Group’s total sales and
operating revenues are derived from one external customer.
For the year ended 31 December 2022, revenues of RR 163,802 million or 11
% of the Group’s total
sales and
operating revenues are derived from one external customer.
These revenues represent sales of crude oil and are attributable to the exploration and production segment.
Management does not believe the Group is dependent on any particular customer.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
24
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
25
Note 21: Segment information (continued)
Segment sales
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
25
| Year ended | Year ended | |
|---|---|---|
| 31 December 2023 | 31 December 2022 | |
| Exploration and production | ||
| Domestic sales of own crude oil | 239,377 | 195,422 |
| Own crude oil sales to far abroad countries | 338,062 | 335,794 |
| Other | 9,278 | 8,750 |
| Intersegment sales | 448,277 | 410,013 |
| Total exploration and production | 1,034,994 | 949,979 |
| Refining and marketing | ||
| Domestic sales | ||
| Refined products | 573,094 | 473,162 |
| Total Domestic sales | 573,094 | 473,162 |
| Near abroad countries sales | ||
| Refined products | 18,709 | 16,762 |
| Total near abroad countries sales | 18,709 | 16,762 |
| Far abroad countries sales | ||
| Crude oil purchased for resale | - | 1,833 |
| Refined products | 300,902 | 302,298 |
| Total far abroad countries sales | 300,902 | 304,131 |
| Other | 24,418 | 24,443 |
| Intersegment sales | 6,843 | 4,485 |
| Total refining and marketing | 923,966 | 822,983 |
| Tires business | ||
| Tires – domestic sales | 20,631 | - |
| Tires – near abroad countries sales | 1,684 | - |
| Other | 234 | - |
| Intersegment sales | 13 | - |
| Total tires business | 22,562 | - |
| Financial services | ||
| Interest income | 24,593 | 21,795 |
| Fee and commission income | 3,701 | 4,009 |
| Total financial services | 28,294 | 25,804 |
| Total segment sales | 2,009,816 | 1,798,766 |
| Corporate and other sales | 62,693 | 68,683 |
| Elimination of intersegment sales | (455,133) | (414,498) |
| Total sales | 1,617,376 | 1,452,951 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
26
Note 21: Segment information (continued)
Segments result
Segment result includes foreign exchange gain/(loss), net. "Corporate and other" line includes Head Office
administrative expenses, impairment losses on financial assets net of reversal, impairment losses and losses on
disposal on property, plant and equipment and other non-financial assets, profit/(loss) on exchange rate differences
at the Head Office, charity expenses, maintenance of social infrastructure and transfer of social assets, income from
changes in the fair value of financial assets measured at fair value through profit or loss. The result of the tire business
includes gain from purchase (Note 24).
Segment assets
As at 31 December 2023 corporate and other includes RR 137,400 million of property, plant and equipment,
RR 26,336 million of securities measured at fair value through other comprehensive income, RR 4,354 million loans
receivable, RR 32,489 million of bank deposits measured at amortised cost, RR 4,848 million of cash, RR 22,339
million of inventories.
As at 31 December 2022 corporate and other assets includes RR 100,371 million of property, plant and equipment,
RR 22,079 million of securities measured at fair value through other comprehensive income, RR 12,551 million
loans receivable, RR 75,080 million of bank deposits measured at amortised cost, RR 3,451 million of cash, 18,070
million of inventories.
The Group’s assets and operations are primarily located and conducted in the Russian Federation.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
26
| Year ended | Year ended | |
|---|---|---|
| 31 December 2023 | 31 December 2022 | |
| Segment earnings | ||
| Exploration and production | 219,453 | 101,774 |
| Refining and marketing | 170,589 | 307,410 |
| Tires business | 14,212 | - |
| Financial services | (6,076) | 1,083 |
| Segments result | 398,178 | 410,267 |
| Corporate and other | (24,408) | (32,646) |
| Other (expenses)/income, net (w/o foreign exchange differences) | (8,263) | 2,347 |
| Profit before income tax | 365,507 | 379,968 |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Assets | ||
| Exploration and production | 593,254 | 446,794 |
| Refining and marketing | 784,760 | 630,216 |
| Tires business | 82,421 | - |
| Financial services | 303,800 | 319,444 |
| Corporate and other | 280,938 | 279,383 |
| Total assets | 2,045,173 | 1,675,837 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
27
Note 21: Segment information (continued)
Segment depreciation, depletion and amortisation and additions to property, plant and equipment
Additions to property, plant and equipment of exploration and production segment are presented net of changes in
estimated decommissioning provisions (Note 9). For the years ended 31 December 2022 total additions from
property, plant and equipment is presented net of additions from discontinued operation (Note 26).
Note 22: Related party transactions
Parties are generally considered to be related if the parties are under common control or if one party has the ability
to control the other party or can exercise significant influence or joint control over the other party in making financial
and operational decisions. In considering each possible related party relationship, attention is directed to the
substance of the relationship, not merely the legal form.
Transactions are entered into in the normal course of business with associates, joint ventures, government related
companies, key management personnel and other related parties. These transactions include sales and purchases of
refined products, purchases of electricity, transportation services and financial services. The Group enters into
transactions with related parties based on market or regulated prices.
Associates, joint ventures and other related parties
The amounts of transactions for each period with associates, joint ventures and other
related parties are as follows:
The outstanding balances with associates, joint ventures and other related parties were as follows:
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
27
| Year ended | Year ended | |
|---|---|---|
| 31 December 2023 | 31 December 2022 | |
| Depreciation, depletion and amortization | ||
| Exploration and production | 30,669 | 26,527 |
| Refining and marketing | 22,782 | 17,332 |
| Tires business | 2,898 | - |
| Financial services | 564 | 500 |
| Corporate and other | 3,734 | 3,683 |
| Total depreciation, depletion and amortization | 60,647 | 48,042 |
| Additions to property, plant and equipment | ||
| Exploration and production | 107,686 | 93,277 |
| Refining and marketing | 90,318 | 62,027 |
| Tires business | 28,399 | - |
| Financial services | 348 | 57 |
| Corporate and other | 39,903 | 30,471 |
| Total additions to property, plant and equipment | 266,654 | 185,832 |
| Year ended | Year ended | |
|---|---|---|
| 31 December 2023 | 31 December 2022 | |
| Revenues and income | 457 | 708 |
| Costs and expenses | 1,363 | 980 |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Short-term assets | 19,065 | 2,279 |
| Loans | 17,414 | 1,581 |
| Other | 1,651 | 698 |
| Long-term assets | 24,633 | 12,157 |
| Loans | 15,656 | 7,866 |
| Other | 8,977 | 4,291 |
| Short-term liabilities | (2,659) | (2,076) |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
28
Note 22: Related party transactions (continued)
Government related companies
The amounts of transactions for each period with Government related companies are as follows:
Other sales include income from the assignment of rights of claim and the sale of interests in companies and shares.
The outstanding balances with Government related companies were as follows:
As at 31 December 2023 guarantees issued to government related parties amounted to RR 5,959 million (at 31
December 2022: RR 5,575 million).
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
28
| Year ended | Year ended | |
|---|---|---|
| 31 December 2023 | 31 December 2022 | |
| Sales of crude oil | 17,333 | 14,734 |
| Sales of refined products | 40,043 | 32,886 |
| Other sales | - | 14,915 |
| Other proceeds | 4,961 | 8,441 |
| Interest income | 11,037 | 7,470 |
| Income from changes in the fair value of financial assets | - | 1,407 |
| Interest expense | 5,399 | 596 |
| Purchases of crude oil | - | 1,346 |
| Purchases of refined products and natural gas | 18,436 | 16,465 |
| Purchases of electricity | 25,917 | 24,232 |
| Purchases of transportation and compounding services | 35,127 | 33,978 |
| Other purchases | 5,687 | 8,393 |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Assets | ||
| Cash and cash equivalents | 28,733 | 79,214 |
| Financial services: Mandatory reserve deposits with the Bank of | ||
| Russia | 903 | 378 |
| Accounts receivable | 4,312 | 5,733 |
| Financial services: Loans to customers | 3,192 | 251 |
| Other short-term financial assetsSecurities measured at amortised cost | 5,584 | 5,966 |
| Other | 4,256 | 2,069 |
| Prepaid expenses and other current assets | 4,852 | 3,290 |
| Total short-term assets | 51,832 | 96,901 |
| Financial services: Loans to customers | 3,281 | 7,436 |
| Accounts receivable | 8,841 | 12,060 |
| Other long-term financial assets | ||
| Securities measured at fair value through other comprehensive | ||
| income | 40,863 | 39,478 |
| Securities measured at amortised cost | 13,059 | 13,826 |
| Loans | - | 16 |
| Advances for the acquisition of non-current assets | 7,771 | 6,629 |
| Total long-term assets | 73,815 | 79,445 |
| Liabilities | ||
| Accounts payable and accrued liabilities | (5,531) | (4,536) |
| Financial services: Due to banks and the Bank of Russia | (1,014) | (2,356) |
| Financial services: Customer accounts | (2,062) | (1,097) |
| Financial services: Other financial liabilities at fair value through | ||
| profit or loss | - | (819) |
| Debt | (50) | (199) |
| Total short-term liabilities | (8,657) | (9,007) |
| Financial services: Due to banks and the Bank of Russia | (3,737) | (2,883) |
| Government grants (Note 16) | (35,762) | (28,948) |
| Other long-term liabilities | (373) | (365) |
| Total long-term liabilities | (39,872) | (32,196) |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
29
Note 22: Related party transactions (continued)
Key management personnel
The key management personnel of the Group include members of the Board of Directors and the Management Board
of PJSC Tatneft.
For the years ended 31 December 2023 and 2022 total remuneration, including pension cost, for key management
personnel was RR 1,826 million and RR 1,605 million, respectively.
At 31 December 2023 and 2022 the Group’s key management personnel accounts in the customer accounts
amounted to RR 19,068 million and RR 33,079 million, respectively.
As at 31 December 2023 and 2022 the liability for the services provided by the key management personnel of the
Group in accordance with the long-term incentive program for executive employees amounted to RR 120 million
and RR 30 million respectively. Information about the program is presented in Note 16. In addition, in 2023, a
provision for short-term remuneration under the incentive program for executive employees in the amount of RR
330 million was accrued for key management personnel (in 2022: RR 153 million).
Note 23: Contingencies and commitments
Operating Environment of the Group
The economy of the Russian Federation displays certain characteristics of an emerging market. It is particularly
sensitive to oil and gas prices. The legal, tax and regulatory frameworks continue to develop and are subject to
frequent changes and varying interpretations. Continued political tension in the region, as well as sanctions imposed
by a number of countries against certain sectors of the Russian economy, Russian companies and citizens, have a
negative impact on the Russian economy.
Ban imposed in 2022 by a number of countries on new investments by citizens and legal entities of such countries
in the energy industry of Russia, as well as on the supply of certain nomenclatures of goods, equipment and a number
of technologies continues. Since December 2022, some countries, including EU countries, have banned their citizens
and legal entities from importing Russian oil, as well as from providing brokerage, transport, insurance and other
services in relation to Russian oil transported by tankers and sold at a price above the price threshold set by these
countries. In February 2023, similar restrictive measures came into force for Russian oil products.
Further restrictions on the business activities of organizations operating in the Russian Federation, as well as further
negative consequences for the Russian economy as a whole, cannot be ruled out, but it is not possible to fully assess
the duration, extent and scale of possible consequences.
The Group is characterized by a low level of debt and, although the current uncertainty may affect the Group's future
profitability and cash flows in the near future, management believes this will not affect the Group's ability to continue
as a going concern and meet its obligations for the foreseeable future.
The Group's management takes the necessary measures to ensure its sustainable operation. However, the future
impact of the current economic and geopolitical situation is difficult to predict and the Group's management's current
expectations and estimates may differ from actual results.
Capital commitments. As at 31 December 2023 and 2022 the Group has approximate outstanding capital
commitments of RR 112,886 million and RR 72,681 million, respectively, mainly for the construction of the
TANECO refinery complex, construction of wells and oil fields facilities construction and development of
petrochemical business. These commitments are expected to be paid between 2024 and 2030.
Management believes the Group’s current and long -term capital expenditures program can be funded through cash
flows generated from existing operations as well as lines of credit available to the Company or issuance of debt
instruments.
Management believes the Group has the ability to obtain financings as needed to continue funding the own projects,
refinance any maturing debts as well as finance business acquisitions and other transactions that may arise in the
future.
Credit related commitments. The credit related commitments comprise loan commitments, letters of credit and
guarantees. The contractual commitments represent the value at risk should the contract be fully drawn upon, the
client defaults, and the value of any existing collateral becomes worthless. In general, certain part of Group's letters
of credit are collateralised with cash deposits or collateral pledged to the Group and accordingly the Group normally
assumes minimal risk.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
29
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
30
Note 23: Contingencies and commitments (continued)
Outstanding credit related commitments are as follows:
Taxation. The Russian tax legislation is subject to varying interpretations and changes which can occur frequently.
Management’s interpretation of the legislation, as applied to the transactions and activities, may be challenged by
the tax authorities.
The tax authorities may take a different position in their interpretation of the legislation, and it is possible that
transactions and activities that have not been challenged in the past may be challenged.
The Russian transfer pricing legislation is generally aligned with the international transfer pricing principles
developed by the Organisation for Economic Cooperation and Development (OECD), with certain specific features.
This legislation allows tax authorities to assess additional taxes for controllable transactions (transactions between
related parties and certain transactions between unrelated parties) if such transactions are not on an arm's length
basis.
Tax liabilities arising from intercompany transactions are determined using actual transaction prices. It is possible,
with the evolution of the interpretation of the transfer pricing rules, that such prices could be challenged.
Management believes that its pricing policy is arm’s length and it has implemented internal processes to be in
compliance with the new transfer pricing legislation. The Group believes that its interpretation of the new legislation
is appropriate and the Group’s tax position will be sustained.
Environmental contingencies. The Group, through its predecessor entities, has operated in Tatarstan for many
years without developed environmental laws, regulations and the Group’s policies. Environmental regulations and
their enforcement are currently being considered in the Russian Federation and the Group is monitoring its potential
obligations related thereto. The outcome of environmental liabilities under proposed or any future environmental
legislation cannot reasonably be estimated at present, but could be material. The Group has analysed its exposure to
climatic and other emerging business risks, but has not identified any risks that could affect the financial results or
the position of the Group at the reporting date. Under existing legislation, however, management believes that there
are no probable liabilities, which would have a material adverse effect on the operating results or financial position
of the Group. In addition, the Group is introducing and applying best health, safety and environmental protection
practices and standards which might go beyond any existing and potential legal requirements in the Russian
Federation.
Legal contingencies. The Group is subject to various lawsuits and claims arising in the ordinary course of business.
The outcomes of such contingencies, lawsuits or other proceedings cannot be determined at present. In the case of
all known contingencies the Group accrues a liability when the loss is probable and the amount is reasonably
estimable. Based on currently available information, management believes that it is remote that future costs related
to known contingent liability exposures would have a material adverse impact on the Group’s consolidated financial
statements.
Social commitments. The Group contributes significantly to the maintenance of local infrastructure and the welfare
of its employees within Tatarstan, which includes contributions towards the construction, development and
maintenance of housing, hospitals and transport services, recreation and other social needs. Such funding is
periodically determined by the Board of Directors after consultation with governmental authorities and recorded as
expenditures when incurred.
Transportation of crude oil. The Group transports substantially all of the crude oil that it sells in export and local
markets through trunk pipelines in Russia that are controlled by PJSC Transneft, the state-owned monopoly owner
and operator of Russia’s trunk crude oil pipelines. The Group’s crude oil is blended in the Transneft pipeline system
with other crude oil of varying qualities to produce an export blend commonly referred to as Urals. There is currently
no equalization scheme for differences in crude oil quality within the Transneft pipeline system and the
implementation of any such scheme or the impact of it on the Group’s business is not currently determinable.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
30
| At 31 December 2023 | At 31 December 2022 | |
|---|---|---|
| Undrawn credit lines that are irrevocable or are revocable | ||
| only in response to a material adverse change | 47,823 | 39,781 |
| Unused limits on the issuance of guarantees | 28,742 | 21,461 |
| Guarantees issued | 45,887 | 35,062 |
| Letters of credit | 58 | 557 |
| Less: allowance for credit related commitment | (431) | (409) |
| Less: commitments collateralised by cash deposits under | ||
| guarantees issued | (63) | (70) |
| Less: commitments collateralised by cash deposits under | ||
| Letters of credit | (58) | (557) |
| Total credit related commitments | 121,958 | 95,825 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
31
Note 24: Business combinations
In 2-3 quarter of 2022 as part of the development of the own oilfield service function the Group acquired shares in
charter capital and the movable and immovable property.
The purchase price amounted RR 25,633 million and the cash consideration was fully paid in 2-3 quarter 2022. The
consideration paid by the Group was based on the results of the evaluation of the business value of the acquired
entities as a whole.
Details of assessment of the fair value of acquired assets and liabilities performed by the Group are as follows:
For the period from the acquisition date to 31 December 2022 the acquired business accounted for RR 4,689 million
in the Group's revenue, share of the profits is insignificant.
In 1st quarter of 2023, the Group acquired the Russian tire business of the Finnish company Nokian Tyres plc,
including a plant in the city of Vsevolozhsk, Leningrad Region, by purchasing shares in Nokian Tyres LLC, Nokian
Shina LLC, Hakka Invest LLC (renamed to Ikon Tyres LLC, Ikon Shina LLC, Ikon Invest LLC in
2nd quarter 2023)
and obtained control becoming the sole participant of these entities.
The purchase price amounted RR 23,050 million and the cash consideration was fully paid in 1st quarter 2023. The
consideration paid by the Group was based on the results of the evaluation of the business value of the acquired
entities, taking into account the total allowable transaction price determined by the Government Commission of the
Russian Federation for the Control of Foreign Investments.
Details of assessment of the fair value of acquired assets and liabilities performed by the Group are as follows:
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
31
| Fair value | |
|---|---|
| Cash and cash equivalents | 1,178 |
| Property, plant and equipment | 21,958 |
| Inventories | 1,950 |
| Accounts receivable and advances issued | 4,212 |
| Deferred tax assets | 777 |
| Other assets | 202 |
| Debt | (1,427) |
| Trade and other payables | (3,344) |
| Deferred tax liabilities | (1,364) |
| Other liabilities | (1,471) |
| Fair value of identifiable net assets of subsidiaries | 22,671 |
| Goodwill | 2,962 |
| Total purchase consideration | 25,633 |
| Сash and cash equivalents of subsidiaries acquired | (1,178) |
| Net cash flow from acquisition of subsidiaries | 24,455 |
| Fair value | |
|---|---|
| Cash and cash equivalents | 6,998 |
| Property, plant and equipment | 13,632 |
| Inventories | 8,387 |
| Accounts receivable and advances issued | 17,461 |
| Deferred tax assets | 978 |
| Other assets | 581 |
| Trade and other payables | (3,677) |
| Deferred tax liabilities | (62) |
| Other liabilities | (2,137) |
| Fair value of identifiable net assets of subsidiaries | 42,161 |
| Gain from purchase | (19,111) |
| Total purchase consideration | 23,050 |
| Сash and cash equivalents of subsidiaries acquired | (6,998) |
| Net cash flow from acquisition of subsidiaries | 16,052 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
32
Note 24: Business combinations
(continued)
For the period from the acquisition date to reporting date the acquired business accounted for RR 20,836 million in
the Group's revenue and RR 4,559 million in profit.
Gain from purchase is presented in other operating income/(expenses), net of the consolidated statement of profit or
loss and other comprehensive income.
In 2nd quarter 2023, as part of expanding sales markets, the Group acquired shares of the Turkish company Aytemiz
Akaryakıt Dağıtım A.Ş. and obtained control becoming the sole participant of this entity.
The purchase price amounted RR 27,326 million and the cash consideration was fully paid in 2nd quarter 2023. The
consideration paid by the Group was based on the results of the evaluation of the business value of the acquired
entity.
Details of assessment of the fair value of acquired assets and liabilities performed by the Group are as follows:
For the period from the acquisition date to reporting date the acquired business accounted for RR 137,846 million
in the Group's revenue and RR 1,597 million in profit.
In addition, in the 1st quarter of 2023, the Group acquired the tire business in the Republic of Uzbekistan by
purchasing a share in Birinchi Rezinotexnika Zavodi LLC from third parties and obtained control becoming the sole
participant of this entity.
Note 25: Other non-current assets
Other non-current assets are presented below:
Intangible assets include a trademark of a subsidiary with an indefinite useful life in amount of RR 6,359 million
and contracts with customers in amount of RR 3,653 million identified as part of the assessment of the fair value of
acquired assets and liabilities. The trademark allocated to the Aytemiz Akaryakıt Dağıtım A.Ş. CGU to which
goodwill was allocated, information on testing of goodwill is presented below. The contracts expire primarily in the
period 2025-2028.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
32
| Fair value | |
|---|---|
| Cash and cash equivalents | 6,739 |
| Property, plant and equipment | 10,144 |
| Intangible assets | 10,013 |
| Right-of-use assets | 2,877 |
| Inventories | 3,980 |
| Accounts receivable and advances issued | 4,370 |
| Deferred tax assets | 779 |
| Other assets | 2,264 |
| Debt | (5,163) |
| Trade and other payables | (8,529) |
| Deferred tax liabilities | (3,731) |
| Other liabilities | (1,510) |
| Fair value of identifiable net assets of subsidiary | 22,233 |
| Goodwill related to the acquisition | 5,093 |
| Total purchase consideration | 27,326 |
| Сash and cash equivalents of subsidiary acquired | (6,739) |
| Net cash flow from acquisition of subsidiary | 20,587 |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Intangible assets (Note 24) | 21,020 | 5,210 |
| Goodwill | 9,992 | 4,504 |
| Advances for the acquisition of non-current assets | 7,731 | 6,621 |
| Other | 4,602 | 4,001 |
| Total other non-current assets | 43,345 | 20,336 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
33
Note 25: Other non-current assets (continued)
Movements in goodwill resulting from the acquisition of subsidiaries are as follows:
Goodwill is allocated to cash-generating units (CGUs), which represent the lowest level within the Group at which
the goodwill is monitored by management and which are not larger than a segment) as follows:
In assessing impairment, the recoverable amount of each CGU was determined based on value-in-use calculations.
These calculations use cash flow projections based on financial budgets approved by management covering a five-
year period. Cash flows beyond the five-year period are extrapolated using the estimated growth rates. The growth
rates do not exceed the long-term average growth rate for the business sector of the economy and jurisdiction in
which the CGU operates. The discount rate was determined based on the weighted average cost of capital taking
into account specific risks.
Due to the excess of the recoverable amount of the CGU over the carrying amount of assets and liabilities, no
impairment loss was recognised.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
33
| 2023 | 2022 | |
|---|---|---|
| Gross book value at 1 January | 4,504 | 1,542 |
| Accumulated impairment losses as at 1 January | - | - |
| Carrying amount at 1 January | 4,504 | 1,542 |
| Acquisition of subsidiaries (Note 24) | 5,298 | 2,962 |
| Result of hyperinflation and translation to presentation currency for foreignsubsidiaries | 190 | - |
| Gross book value at 31 December | 9,992 | 4,504 |
| Accumulated impairment losses as at 31 December | - | - |
| Carrying amount at 31 December | 9,992 | 4,504 |
| At 31 December | At 31 December | |
|---|---|---|
| 2023 | 2022 | |
| Aytemiz Akaryakıt Dağıtım A.Ş. | 5,283 | - |
| Other | 4,709 | 4,504 |
| Total carrying amount of goodwill | 9,992 | 4,504 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
34
Note 26: Discontinued operation
In the 2nd quarter of 2022, the Group sold its interests in subsidiaries of the tire business segment to a state-controlled
company for RR 37,476 million payable by instalment. Fair value of consideration determined based on discounted
cash flows amounted to RR 12,115 million.
С
arrying amount of the disposed assets and liabilities at the date of disposal are as follows:
The impact of disposal of the tire business on the Group's financial results for the year ended 31 December 2022
was the following:
The cash flow analysis of discontinued operation is as follows:
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
34
| Carrying amount atthe date of disposal | |
|---|---|
| Cash and cash equivalents | 3,747 |
| Property, plant and equipment | 32,245 |
| Right-of-use assets | 986 |
| Inventories | 15,483 |
| Accounts receivable and advances issued | 12,525 |
| Other assets | 2,741 |
| Debt (including loans received from the Group) | (17,211) |
| Trade and other payables | (10,678) |
| Other liabilities | (9,163) |
| Net assets of subsidiaries | 30,675 |
| Less non-controlling interest | 356 |
| Carrying amount of disposed net assets | 31,031 |
| Carrying amount of disposed net assets | (31,031) |
| Reclassification to loss of accumulated other comprehensive loss | (98) |
| Discounted value of the consideration | 12,115 |
| Loss on disposal of tire business | (19,014) |
| The result of the tire business before the date of disposal | |
| Revenue | 28,683 |
| Cost | (23,843) |
| Other income, net | 1,383 |
| Income tax expense | (1,544) |
| Profit before the date of disposal | 4,679 |
| Loss from discontinued operation | (14,335) |
| Year ended | |
|---|---|
| 31 December 2022 | |
| Cash flows from operating activities | (5,983) |
| Cash flows from investing activities | (3,296) |
| Cash flows from financing activities | 1,037 |
| Total cash flow from discontinued operation | (8,242) |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
35
Note 27: Financial risk management
Financial risk management objectives and policies.
The Group
’
s activities expose it to a variety of financial risks: market risk (including foreign currency risk, interest
rate
risk),
credit
risk
and
liquidity
risk.
The
Group’
s
overall
risk
management
program
focuses
on
the
unpredictability of financial markets and seeks to minimize potential adverse effects on the Group
’
s financial
performance. The Group has introduced a risk management system and developed a number of procedures to
measure, assess and monitor risks and select the relevant risk management techniques.
Market risk
Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future
performance of a business.
The Group takes on exposure to market risks. Market risks arise from open positions in (a) foreign currencies,
(b) interest rate risk and (c) financial instruments price risk.
a) Currency risk
The Group operates internationally and is exposed to currency risk due to fluctuations in exchange rates. Foreign
exchange risk arises from assets, liabilities, commercial transactions and financing denominated in foreign
currencies.
The table below summarises the Group’s exposure to foreign currency exchange rate risk as at 31 December 2023 :
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
35
| Russian Ruble | US Dollar | Chinese yuan | Other currencies | |
|---|---|---|---|---|
| Financial assets | ||||
| Cash and cash equivalents | 52,656 | 1,410 | 16,497 | 13,552 |
| Financial services: Mandatory | ||||
| reserves with the Bank of Russia | 903 | - | - | - |
| Accounts receivable | 90,319 | 128,847 | - | 10,178 |
| Financial services: Loans to | ||||
| customers | 177,996 | 1,320 | 8,136 | 2,941 |
| Other financial assets | 111,926 | 11,970 | 14,501 | 2,986 |
| Total financial assets | 433,800 | 143,547 | 39,134 | 29,657 |
| Financial liabilities | ||||
| Trade and other financial payables | 78,259 | 9,525 | 2,897 | 7,918 |
| Dividends payable | 119,137 | - | - | - |
| Lease obligations, net of current | ||||
| portion | 7,461 | 12,154 | - | 729 |
| Financial services: Other financialliabilities at FVTPL | 14,983 | - | - | - |
| Debt | 12,981 | 9,010 | - | 866 |
| Financial services: Due to banks andthe Bank of Russia | 25,429 | 2 | 5,307 | 13 |
| Financial services: Customer accounts | 182,950 | 8,807 | 8,842 | 2,980 |
| Total financial liabilities | 441,200 | 39,498 | 17,046 | 12,506 |
| Net balance sheet position | (7,400) | 104,049 | 22,088 | 17,151 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
36
Note 27: Financial risk management (continued)
The table below summarises the Group’s exposure to foreign currency exchange rate risk as at 31 December 2022.
For the year ended 31 December 2023 the Group recognised foreign exchange gain of RR 74,206 million and a
foreign exchange loss of RR 49,157 million in the consolidated interim condensed statement of profit or loss and
other comprehensive income on a net basis (for the year ended 31 December 2022: RR 133,692 million and RR
158,691 respectively). Gain and loss on foreign exchange differences were received mainly on receivables from
operating activities from the sale of crude oil and refining products for export, as well as from the revaluation of
cash in foreign currencies.
Below is data on the sensitivity of the Group to an increase or decrease in the exchange rate of the US dollar and the
Chinese yuan against the Russian Ruble:
a) Interest rate risk.
The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on its
financial position and cash flows. Interest margins may increase as a result of such changes, but may reduce or create
losses in the event that unexpected movements arise. Management monitors on a daily basis and sets limits on the
level of mismatch of interest rate repricing that may be undertaken.
Operations interest rate risk management (excluding financial services)
The majority of the Group’s borrowings is at fixed interest rates. The Group’s treasury function performs periodic
analysis of the interest rate environment. The Group does not have a formal policy of determining how much of the
Group’s exposure should be to fixed or variable rates. However, the Group performs periodic analysis of the current
interest rate environment and depending on that analysis at the time of raising new debts management makes
decisions whether to obtain financing on fixed-rate or variable-rate basis would be more beneficial to the Group
over the expected period until maturity.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
36
| Russian Ruble | US Dollar | Chinese yuan | Other currencies | |
|---|---|---|---|---|
| Financial assets | ||||
| Cash and cash equivalents | 84,027 | 10,067 | 56,065 | 17,705 |
| Financial services: Mandatory | ||||
| reserves with the Bank of Russia | 378 | - | - | - |
| Accounts receivable | 57,964 | 59,620 | - | 2,977 |
| Financial services: Loans to | ||||
| customers | 128,531 | 19,173 | 6,293 | 3,409 |
| Other financial assets | 80,311 | 18,999 | 13,383 | 1,312 |
| Total financial assets | 351,211 | 107,859 | 75,741 | 25,403 |
| Financial liabilities | ||||
| Trade and other financial payables | 50,397 | 449 | 10 | 208 |
| Dividends payable | 26,025 | - | - | - |
| Lease obligations, net of currentportion | 2,641 | - | - | - |
| Financial services: Other financialliabilities at FVTPL | 1,433 | - | - | - |
| Debt | 14,185 | 316 | - | - |
| Financial services: Due to banks and | ||||
| the Bank of Russia | 5,728 | 3 | 348 | 94 |
| Financial services: Customer accounts | 171,852 | 11,938 | 17,322 | 11,520 |
| Total financial liabilities | 272,261 | 12,706 | 17,680 | 11,822 |
| Net balance sheet position | 78,950 | 95,153 | 58,061 | 13,581 |
| Year ended | Year ended | |||
|---|---|---|---|---|
| 31 December 2023 | 31 December 2022 | |||
| Impact on profitbefore tax | Impact onequity | Impact onprofit beforetax | Impact onequity | |
| US Dollar strengthening by 20% US Dollar weakening by 20% | 20,810 (20,810) | 16,648 (16,648) | 19,031 (19,031) | 15,224(15,224) |
| Chinese yuan strengthening by 20% Chinese yuan weakening by 20% | 4,418 (4,418) | 3,534 (3,534) | 11,612 (11,612) | 9,290(9,290) |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
37
Note 27: Financial risk management (continued)
Operations interest rate risk management from financial services
Management of interest rate risk is performed through analysis of the structure of assets and liabilities by repricing
dates. Interest rates that are contractually fixed on both assets and liabilities may be renegotiated before any new
credit tranche is issued to reflect current market conditions. All new credit products and transactions are assessed in
respect of interest rate risk upfront, prior to starting these transactions.
Interest rate risk analysis on assets and liabilities of the Group
The table below summarises the Group’s exposure to interes t rate risks. The table presents the aggregated amounts
of the Group’s financial assets and liabilities at carrying amounts, categorised by the earlier of contractual interest
repricing or maturity dates:
The following table presents a sensitivity analysis of interest rate risk on financial assets and liabilities:
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
37
Note 27: Financial risk management (continued)
| Demand and | From 1 to | From 6 to | From 1 to 5 | More than | Non-sensitive | Total |
|---|---|---|---|---|---|---|
| less than1 month | 6 months | 12 months | years | 5 years | ||
| 31 December2023 | ||||||
| Total financialassets 56,310 | 70,279 | 50,808 | 116,855 | 73,855 | 278,031 | 646,138 |
| Total financialliabilities 113,236 | 105,933 | 18,292 | 46,911 | 12,887 | 212,991 | 510,250 |
| Net interestsensitivitygap (56,926) | (35,654) | 32,516 | 69,944 | 60,968 | 65,040 | 135,888 |
| 31 December2022 | ||||||
| Total financialassets 153,214 | 32,979 | 29,628 | 102,088 | 67,861 | 174,444 | 560,214 |
| Total financialliabilities 59,600 | 77,327 | 38,605 | 61,167 | 695 | 77,075 | 314,469 |
| Net interestsensitivitygap 93,614 | (44,348) | (8,977) | 40,921 | 67,166 | 97,369 | 245,745 |
| Year ended | Year ended | |||
|---|---|---|---|---|
| 31 December 2023 | 31 December 2022 | |||
| Impact on profitbefore tax | Impact onequity | Impact onprofit beforetax | Impact onequity | |
| Increase by 200 basis points | 1,417 | 1,134 | 2,968 | 2,374 |
| Decrease by 200 basis points | (1,417) | (1,134) | (2,968) | (2,374) |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
38
Note 27: Financial risk management (continued)
c) Financial instruments price risk
Financial instruments price risk is the risk that movements in market prices resulting from factors associated with
an issuer of financial instruments (specific risk) and general changes in the market prices of financial instruments
(general risk) will affect the fair value or future cash flows of a financial instrument and, as a result, the Group’s
profitability.
Financial instruments price risk for financial instruments held within the Group’s financial assets at fair value
through profit or loss is managed: (a) through maintaining a diversified structure of portfolios; and (b) by setting
position limits (i.e. limits restricting the total amount of an investment or maximum mismatch between respective
assets and liabilities) as loss limits, sensitivity limits and potential losses under stress. In addition to these, the Group
sets limits on the structure of securities portfolio, their liquidity, credit quality, and on a maximum duration of debt
financial instruments. When necessary the Group establishes margin and collateral requirements.
Financial instruments price risk is managed primarily through daily mark-to-market procedures, sensitivity analysis
and control of limits established for various types of financial instruments. The Group assesses the price risk of
equity instruments through sensitivity to a change in their fair value by 10%. For debt instruments, the Group
assesses price risk by assessing the change in their fair value if interest rates increase by 100 bps. The assessment is
made using the modified duration method taking into account convexity.
According to the results of the assessment for financial assets at fair value through profit or loss and available-for-
sale financial assets the price risk does not exceed RR 1 billion.
Credit risk
The Group exposes itself to credit risk, which is the risk that one party to a financial instrument will cause a financial
loss for the other party by failing to meet an obligation.
Exposure to credit risk arises as a result of the Group’s lending and other transactions with counterparties, giving
rise to financial assets and off-balance sheet credit-related commitments.
The Group’s maximum exposure to credit risk is reflected in the carrying amounts of financial assets in the
consolidated statement of financial position. For financial guarantees issued, commitments to extend credit, undrawn
credit lines and export/import letters of credit, the maximum exposure to credit risk is the amount of the commitment
(Note 23).
The estimation of credit risk for risk management purposes is complex and involves the use of models, as the risk
varies depending on market conditions, expected cash flows and the passage of time. The assessment of credit risk
for a portfolio of assets entails further estimations of the likelihood of defaults occurring, the associated loss ratios
and default correlations between counterparties.
Expected credit loss (ECL) measurement. ECL is a probability-weighted estimate of the present value of future cash
shortfalls (i.e., the weighted average of credit losses, with the respective risks of default occurring in a given time
period used as weights). An ECL measurement is unbiased and is determined by evaluating a range of possible
outcomes. ECL measurement is based on four components used by the Group: Probability of Default, Exposure at
Default, Loss Given Default and Discount Rate.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
38
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
39
Note 27: Financial risk management (continued)
Credit risk management. Management carefully manages its exposure to credit risk.
An assessment is performed at each reporting date to identify a significant increase in credit risk since initial recognition
of a financial instrument. Such assessment is performed on the basis of qualitative and quantitative information:
• Quantitative assessment is performed on the basis of a change in risk of default arising over the expected
lifetime of a financial asset.
• Qualitative assessment implies that a number of factors are important for assessing significant increase in
credit risk (restructuring indicative of problems, establishing favourable schedule for repaying loan interest
and principal, significant changes in expected results of operations and behaviour of a borrower and other
material changes).
Financial assets move from Stage 1 to Stage 2 if there is one or a combination of the following factors:
• financial assets are over 30 days overdue;
• credit rating deteriorates;
• there are early warning indicators of an increase in credit risk; a need to change previously agreed on terms
of the agreement to create more favourable environment for a customer due to his inability to meet current
liabilities because of the customer’s financial position; full or partial refinancing of the current debt which
would not be required if the client did not experience financial difficulties;
• information on future changes in assets that may result in credit losses not considered in the rating systems
is identified (e.g. military conflicts in the region that may have a significant impact on future credit quality).
A default is recognised if one or a combination of the following events occur:
• financial assets are over 90 days overdue (a rebuttable presumption);
• a default rating is assigned;
• restructuring indicative of problems is undertaken;
• a favourable schedule for repaying interest and principal with payments to be made at the end of the term
is granted.
Credit risk management (excluding financial services)
Credit risk (excluding financial services) arises from cash and cash equivalents, bank deposits, loans and notes
receivables, as well as credit exposures to customers including outstanding trade and other receivables.
Credit risks related to accounts receivable are systematically monitored taking into account the customer’s financial
position, past experience and other factors. Management systematically reviews ageing analysis of receivables and
uses this information for calculation of expected credit losses. A significant portion of th e Group’s accounts
receivable is due from domestic and export trading companies. The Group does not always require collateral to limit
the exposure to loss. The Group operates with various customers but a substantial part of its sales relate to major
customers.
Although collection of accounts receivable could be influenced by economic factors affecting these customers,
management believes there is no significant risk of loss to the Group beyond the provisions already recorded. Credit
quality analysis for accounts receivable is presented in Note 4.
The Group performs an ongoing assessment and monitoring of the risk of default. In addition, as part of its cash
management and credit risk function, the Group regularly evaluates the creditworthiness of financial and banking
institutions where it deposits cash.
The Group deposits available cash mostly with financial institutions in the Russian Federation. To manage this credit
risk, the Group allocates its available cash to a variety of Russian banks.
For measuring credit risk and grading financial instruments by the amount of credit risk, the Group applies an
approach based on risk grades estimated by internal ratings. Internal ratings are mapped to external credit rating
provided by agencies (Expert RA JSC, ACRA JSC) on an internally defined master scale with a specified range of
probabilities of default.
Credit risk management in financial services
The Group’s credit risk policies prescribe its acceptance only through formalized procedures and only based on
decisions of the authorized collegial body. The Group has a system of credit committees responsible for making
credit decisions, the main objective of which is to create a high-quality loan portfolio that ensures the implementation
of the strategy, credit policies and risk management policies. Collegial authorities, authorized to make credit
decisions, have a clear segmentation according to business lines, lending segments and the amount of authority.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
39
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
40
Note 27: Financial risk management (continued)
The Group structures the level of credit risk it undertakes by placing the appropriate limits. Limits are set by the
Group on an individual (for example, for specific customers and counterparties), group and portfolio basis (for
example, industry and regional limits, limits on types of operations, etc.).
Internal regulations on financial analysis and risk assessment are created and applied to each segment of the lending
activity, including lending to legal entities, individuals, financial institutions and other categories of borrowers.
To reduce the level of risk, the Group accepts collateral in the form of pledges, sureties and guarantees. In case of
acceptance of a surety, the Group performs a financial analysis of the guarantor. The assessment of collateral is
performed internally by special division responsible for collateral assessment and control. They use several
methodologies developed for each type of collateral.
Valuations performed by third parties, including independent appraisal firms authorized by the Group, may serve as
additional data for such assessment. The Group usually requires collateral to be insured by insurance companies
authorized by the Group.
Credit risk for off-balance sheet financial instruments is defined as the possibility of sustaining a loss as the result
of another party to a financial instrument failing to perform in accordance with the terms of the contract. The Group
uses the same credit policies in assuming conditional obligations as it does for on balance sheet financial instruments,
through established credit approvals, risk control limits and monitoring procedures.
The Group regularly analyzes and monitors the impact on borrowers' performance indicators of the expected
macroeconomic situation and changes in the economy caused by the introduction of restrictive measures, changes
in the key rate, exchange rate volatility and other factors. Taking into account the current economic situation in
2023, increased attention was paid to the risk of non-payment to fulfill obligations, as well as the risks of capital
outflow, concentration, logistics and infrastructure risks, and the risk of non-fulfillment of obligations.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
40
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
41
Note 27: Financial risk management (continued)
Credit risk analysis of the Group
To quantify the credit risk, the Group uses internal models (rating systems). The Group uses the following rating
categories for the analysis of credit quality of assets other than loans to customers and accounts receivable:
• investment grade ratings referred to classification in the range from AAA (RU) to BBB- (RU) of the
agencies of Expert RA JSC, ACRA JSC. The probability of default for assets of this category ranges from
0% to 1.51%;
• non-investment grade ratings referred to classification referred from BB+ (RU) to D (RU) of the agencies
of Expert RA JSC, ACRA JSC. The probability of default for assets of this category ranges from 1.51% to
100%. On average, the risk for this category is about 21.55% (in 2022: 11.05%).
The following table contains an analysis of the credit risk exposure of cash and cash equivalents including mandatory
reserve deposits with the Bank of Russia. Cash and cash equivalents are classified as Stage 1. As at 31 December
2023 and 31 December 2022 there is no cash classified as Stage 2, Stage 3, or acquired or originated impaired. The
carrying amount also represents the Group's maximum exposure to credit risk on these financial assets.
The following table contains an analysis of the credit risk exposure of other financial assets measured at amortised
cost and measured at fair value through other comprehensive income for which ECL allowance is recognised other
than cash and cash equivalents including mandatory reserve deposits with the Bank of Russia, loans to customers
and accounts receivable. The carrying amount also represents the Group’s maximum exposure to credit risk on these
financial assets.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
41
| At 31 December2023 | At 31 December2022 | |
|---|---|---|
| Stage 1(12-months ECL) | Stage 1(12-months ECL) | |
| Cash on hand and cash in banks | ||
| - Investment grade rating | 41,432 | 70,321 |
| - Non-investment grade rating | 6,894 | 16,261 |
| - No ratings | - | - |
| Gross carrying amount | 48,326 | 86,582 |
| Credit loss allowance | - | - |
| Carrying amount | 48,326 | 86,582 |
| Term deposits | ||
| - Investment grade rating | 30,829 | 79,637 |
| - Non-investment grade rating | 3,166 | 1,645 |
| - No ratings | 1,803 | - |
| Gross carrying amount | 35,798 | 81,282 |
| Credit loss allowance | (9) | - |
| Carrying amount | 35,789 | 81,282 |
| Financial services: Mandatory reserve deposits with the Bank of Russia | ||
| - Investment grade rating | 903 | 378 |
| - Non-investment grade rating | - | - |
| - No ratings | - | - |
| Gross carrying amount | 903 | 378 |
| Credit loss allowance | - | - |
| Carrying amount | 903 | 378 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
42
Note 27: Financial risk management (continued)
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
42
| At 31 December 2023 | |||||
|---|---|---|---|---|---|
| Stage 1(12-monthsECL) | Stage 2(lifetimeECL forSICR) | Stage 3(lifetimeECL forcredit im-paired) | POCI | Total | |
| Loans | |||||
| - Investment grade rating | - | 812 | - | - | 812 |
| - Non-investment grade rating | 16,478 | 24,530 | 385 | - | 41,393 |
| - No ratings | - | - | 16,816 | - | 16,816 |
| Gross carrying amount | 16,478 | 25,342 | 17,201 | - | 59,021 |
| Credit loss allowance | - | (91) | (17,091) | - | (17,182) |
| Carrying amount | 16,478 | 25,251 | 110 | - | 41,839 |
| Bank deposits | |||||
| - Investment grade rating | - | - | - | - | - |
| - Non-investment grade rating | - | - | 2,989 | - | 2,989 |
| - No ratings | - | - | - | - | - |
| Gross carrying amount | - | - | 2,989 | - | 2,989 |
| Credit loss allowance | - | - | (2,989) | - | (2,989) |
| Carrying amount | - | - | - | - | - |
| Other | |||||
| - Investment grade rating | - | - | - | - | - |
| - Non-investment grade rating | - | - | 11,584 | - | 11,584 |
| - No ratings | - | - | 3,663 | - | 3,663 |
| Gross carrying amount | - | - | 15,247 | - | 15,247 |
| Credit loss allowance | - | - | (14,355) | - | (14,355) |
| Carrying amount | - | - | 892 | - | 892 |
| Debt securities measured at amortised cost | |||||
| - Investment grade rating | 22,898 | - | - | - | 22,898 |
| - Non-investment grade rating | - | - | - | - | - |
| - No ratings | - | - | - | - | - |
| Gross carrying amount | 22,898 | - | - | - | 22,898 |
| Credit loss allowance | (15) | - | - | - | (15) |
| Carrying amount | 22,883 | - | - | - | 22,883 |
| Debt securities measured at fair value throughother comprehensive income | |||||
| - Investment grade rating | 42,053 | - | - | - | 42,053 |
| - Non-investment grade rating | 1,757 | - | - | - | 1,757 |
| - No ratings | 139 | - | - | - | 139 |
| Gross carrying amount | 43,949 | - | - | - | 43,949 |
| Credit loss allowance | (921) | - | - | - | (921) |
| Carrying amount | 43,028 | - | - | - | 43,028 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
43
Note 27: Financial risk management (continued)
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
43
| At 31 December 2022 | |||||
|---|---|---|---|---|---|
| Stage 1(12-monthsECL) | Stage 2(lifetimeECL forSICR) | Stage 3(lifetimeECL forcredit im-paired) | POCI | Total | |
| Loans | |||||
| - Investment grade rating | - | 601 | - | - | 601 |
| - Non-investment grade rating | - | 10,581 | 2,511 | - | 13,092 |
| - No ratings | - | - | 15,902 | - | 15,902 |
| Gross carrying amount | - | 11,182 | 18,413 | - | 29,595 |
| Credit loss allowance | - | (93) | (17,880) | - | (17,973) |
| Carrying amount | - | 11,089 | 533 | - | 11,622 |
| Bank deposits | |||||
| - Investment grade rating | - | - | - | - | - |
| - Non-investment grade rating | - | - | 2,972 | - | 2,972 |
| - No ratings | - | - | - | - | - |
| Gross carrying amount | - | - | 2,972 | - | 2,972 |
| Credit loss allowance | - | - | (2,972) | - | (2,972) |
| Carrying amount | - | - | - | - | - |
| Other | |||||
| - Investment grade rating | 1 | - | - | - | 1 |
| - Non-investment grade rating | 540 | - | 8,270 | - | 8,810 |
| - No ratings | - | - | 2,995 | - | 2,995 |
| Gross carrying amount | 541 | - | 11,265 | - | 11,806 |
| Credit loss allowance | (1) | - | (4,659) | - | (4,660) |
| Carrying amount | 540 | - | 6,606 | - | 7,146 |
| Debt securities measured at amortised cost | |||||
| - Investment grade rating | 25,893 | - | - | - | 25,893 |
| - Non-investment grade rating | 1,532 | - | - | - | 1,532 |
| - No ratings | - | - | - | - | - |
| Gross carrying amount | 27,425 | - | - | - | 27,425 |
| Credit loss allowance | (68) | - | - | - | (68) |
| Carrying amount | 27,357 | - | - | - | 27,357 |
| Debt securities measured at fair value throughother comprehensive income | |||||
| - Investment grade rating | 32,378 | - | - | - | 32,378 |
| - Non-investment grade rating | 3,640 | - | - | - | 3,640 |
| - No ratings | - | - | - | - | - |
| Gross carrying amount | 36,018 | - | - | - | 36,018 |
| Credit loss allowance | (116) | - | - | - | (116) |
| Carrying amount | 35,902 | - | - | - | 35,902 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
44
Note 27: Financial risk management (continued)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due.
Liquidity risk management (excluding financial services)
The Group’s approach to managing liquidity is to ensure that it will always have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Group’ s reputation. In managing its liquidity risk, the Group maintains adequate cash reserves and
debt facilities, continuously monitors forecast and actual cash flows and matches the maturity profiles of financial
assets and liabilities.
The Group prepares various financial plans (monthly, quarterly and annually) which ensures that the Group has
sufficient cash on demand to meet expected operational expenses, financial obligations and investing activities for
a period of 30 days or more. To fund cash requirements of a more permanent nature, the Group will normally raise
long-term debt in available international and domestic markets.
Liquidity risk management in financial services
The objective of liquidity risk management is to ensure the stable operations of the Group, the possibility of
uninterrupted operations in accordance with the Group's business plans, including the timely fulfilment of all
obligations to customers and counterparties related to making payments, as well as minimising the negative impact
on financial results, own funds (capital), the Group's reputation for a possible liquidity deficit. Also, the priority
objective of liquidity risk management is to ensure that the Group comply with the mandatory liquidity ratios
established by the Central Bank of Russia.
The Group’s approach to financial services liquidity management is to ensure, a s far as possible, that it will have
sufficient liquidity to meet its liabilities when due under both ordinary and stressed conditions, without incurring
unacceptable losses or damaging the Group’s reputation.
In respect to the financial services segment The Group endeavors to maintain a stable and diversified funding base
including core corporate and individual customer accounts; short-, medium- and long-term loans from other banks;
promissory notes and bonds issued. On the other hand, the Group tends to keep diversified portfolios of liquid and
highly liquid assets in order to be able to settle unforeseen liquidity requirements in an efficient and timely manner.
Key parameters in liquidity risk management such as the structure of assets and liabilities, composition of liquid
assets and acceptable liquidity risks are established by Assets and Liabilities Management Committee (ALCO).
ALCO sets and reviews limits on liquidity gaps which are assessed on the basis of liquidity stress-tests in regard to
medium- and long-term liquidity. These tests are performed using the following information:
• current structure of assets and liabilities including any known renewal arrangements as at the date of the
respective test;
• amounts, maturity and liquidity profiles of transactions projected by business units;
• current and projected characteristics of liquid assets which include, apart from cash and cash equivalents,
amounts due from other banks and certain financial assets held-for-trading; and
• relevant external factors.
The resulting models allow for the assessment of future expected cash flows due to projected future business and
different crisis scenarios.
While managing liquidity risk distinguish liquidity required within a current business day and term liquidity.
For managing current liquidity (with a 1-day horizon) the following methods are used:
• reallocation of cash between accounts with banks;
• collection of information from business and other supporting units on large transactions (both proprietary
and customer based);
• purchase and sale of certain financial assets in liquid portfolios;
• accelerating closure of trade positions;
• estimation of minimum expected cash inflow during a business day; and
• daily control over the balance of cash and estimated liabilities to be settled on demand.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
44
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
45
Note 27: Financial risk management (continued)
The monitoring of the current and forecasted state of urgent liquidity is carried out daily on the basis of calculating
the sufficiency of highly liquid assets to cover planned and unplanned outflows and meeting resource requirements
for a period of up to 30 days.
The share of liquid assets is maintained at a level sufficient to meet obligations to customers and counterparties of
the Group, which can significantly reduce liquidity risks and non-market funding rates.
To maintain instant liquidity, limits are opened by a significant number of Russian banks. In addition, the liquidity
risk is minimized by the Group’s ability to raise funds from the Bank of Russia within the framework of the
refinancing system and state support for the financial sector, as well as established liquidity management policies
and technologies that provide for stress approaches in estimating future cash flows.
In accordance with the Group's Liquidity Management Policy, the basic principle of liquidity management is risk
limiting, in particular, using the required liquid assets limit. If necessary (changing the financial situation in the
markets or at Group), other limits (for counterparties, financial instruments, etc.) can be used to manage liquidity.
Liquidity risk analysis of the Group
The following tables summarise the maturity profile of the Group’s financial liabilities based on contractual
undiscounted payments, including interest payments:
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
45
| At 31 December 2023 | ||||
|---|---|---|---|---|
| Less than 1 year | Between 1and 5 years | Over5 years | Total | |
| Financial liabilities | ||||
| Trade and other financial payables | 99,121 | - | - | 99,121 |
| Dividend payable | 119,137 | - | - | 119,137 |
| Lease obligations, net of current portion | - | 15,359 | 19,631 | 34,990 |
| Financial services: Other financial liabilities at | ||||
| fair value through profit or loss | 14,983 | - | - | 14,983 |
| Debt | 5,406 | 16,979 | 7,133 | 29,518 |
| Financial services: Due to banks and the Bankof Russia | 27,568 | 4,021 | - | 31,589 |
| Financial services: Customer accounts | 203,200 | 4,637 | 10 | 207,847 |
| Credit related commitments (Note 23) | 70,298 | 46,537 | 5,676 | 122,511 |
| Total | 539,713 | 87,533 | 32,450 | 659,696 |
| At 31 December 2022 | ||||
| Less than 1 year | Between 1and 5 years | Over5 years | Total | |
| Financial liabilities | ||||
| Trade and other financial payables | 50,981 | 204 | 2 | 51,187 |
| Dividend payable | 26,025 | - | - | 26,025 |
| Lease obligations, net of current portion | - | 2,553 | 1,394 | 3,947 |
| Financial services: Other financial liabilities at | ||||
| fair value through profit or loss | 1,433 | - | - | 1,433 |
| Debt | 2,711 | 15,057 | 19 | 17,787 |
| Financial services: Due to banks and the Bankof Russia | 3,590 | 2,903 | - | 6,493 |
| Financial services: Customer accounts | 212,919 | 2,791 | 12 | 215,722 |
| Credit related commitments (Note 23) | 54,031 | 42,453 | 377 | 96,861 |
| Total | 351,690 | 65,961 | 1,804 | 419,455 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
46
Note 27: Financial risk management (continued)
Fair values
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction
between market participants at the measurement date. The estimated fair values of financial instruments are
determined with reference to various market information and other valuation techniques as considered appropriate.
The different levels of fair value hierarchy have been defined as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities that Group has the ability to assess at the
measurement date.
Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly.
Level 3 – Unobservable inputs for the asset or liability. These inputs reflect the Group ’ s own assumptions about the
assumptions a market participant would use in pricing the asset or liability.
Recurring fair value measurements
The levels in the fair value hierarchy into which the recurring fair value measurements are categorised are as follows:
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
46
| At 31 December 2023 | ||||
|---|---|---|---|---|
| Fair value | ||||
| Level 1 | Level 2 | Level 3 | Carrying value | |
| Securities measured at fair valuethrough profit or loss | 2,903 | 152 | 177 | 3,232 |
| Derivatives measured at fair valuethrough profit or loss | - | 19 | - | 19 |
| Other loans measured at fair valuethrough profit or loss | - | - | 2,021 | 2,021 |
| Securities measured through othercomprehensive income | 36,262 | 12,525 | 21,710 | 70,497 |
| Investment property Financial services: Other financial | - | - | 827 | 827 |
| liabilities measured at fair valuethrough profit or loss | (14,983) | - | - | (14,983) |
| Total | 24,182 | 12,696 | 24,735 | 61,613 |
| At 31 December 2022 | ||||
| Fair value | ||||
| Level 1 | Level 2 | Level 3 | Carrying value | |
| Financial services: Loans tocustomers measured at fair valuethrough profit or loss | - | - | 37 | 37 |
| Securities measured at fair valuethrough profit or loss | 4,438 | 479 | 690 | 5,607 |
| Derivatives measured at fair valuethrough profit or loss | - | 562 | - | 562 |
| Loans measured at fair value throughprofit or loss | - | - | 2,160 | 2,160 |
| Securities measured through othercomprehensive income | 31,570 | 7,334 | 20,647 | 59,551 |
| Investment property | - | - | 786 | 786 |
| Financial services: Other financialliabilities measured at fair valuethrough profit or loss | (526) | (907) | - | (1,433) |
| Total | 35,482 | 7,468 | 24,320 | 67,270 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
47
Note 27: Financial risk management (continued)
The description of valuation technique and description of inputs used in the fair value measurement for Level 2 and
Level 3 measurements at 31 December 2023 и 2022:
There were no changes in valuation technique for Level 2 and Level 3 recurring fair value measurements during the
years ended 31 December 2023 and 2022.There have been no transfers between Level 1, Level 2 and Level 3 during
these periods.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
47
| Fair value hierarchy | Valuation technique and key input data | |
|---|---|---|
| Financial services: Loans to customers atFVTPL | Level 3 | Discounted cash flow models adjusted atcredit risk |
| Securities at FVTPL | Level 2, Level 3 | Quoted prices for similar investments inactive markets, net assets valuation, |
| comparative (market) approach /Publicly available information,comparable market prices/ discountedcash flow models adjusted at credit risk | ||
| Loans measured at FVTPL | Level 3 | Discounted cash flow models adjusted atcredit risk |
| Deposits measured at FVTPL | Level 2 | Discounted cash flow models adjusted atmarket risk at floating rates |
| Securities at FVOCI | Level 2, Level 3 | Quoted prices for similar investments inactive markets, net assets valuation,comparative (market) approach /Publicly available information,comparable market prices / discountedcash flow models adjusted at credit risk |
| Investment property | Level 3 | Market data on comparable objectsadjusted in case of differences from |
| Financial services: Other financialliabilities at FVTPL | Level 2 | similar objectsDiscounted cash flow models adjusted atcredit risk |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
48
Note 27: Financial risk management (continued)
Assets and liabilities not measured at fair value but for which fair value is disclosed
Fair values analysed by level in the fair value hierarchy and carrying value of assets and liabilities not measured at
fair value are as follows:
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
48
| At 31 December 2023 | At 31 December 2022 | |||||||
|---|---|---|---|---|---|---|---|---|
| Fair value | Fair value | |||||||
| Level 1 | Level 2 | Level 3 | Carryingvalue | Level 1 | Level 2 | Level 3 | Carryingvalue | |
| Assets | ||||||||
| Cash and cash equivalents | ||||||||
| Cash on hand and inbanks | 3,775 | 44,551 | - | 48,326 | 3,599 | 82,983 | - | 86,582 |
| Term deposits | - | 35,789 | - | 35,789 | - | 81,282 | - | 81,282 |
| Financial services: | ||||||||
| Mandatory reservedeposits with the Bank ofRussia | - | 903 | - | 903 | 378 | - | - | 378 |
| Accounts receivable | ||||||||
| Trade receivables | - | - | 211,895 | 211,895 | - | - | 97,356 | 97,356 |
| Other financialreceivables | - | 1,265 | 16,184 | 17,449 | - | 1,229 | 21,976 | 23,205 |
| Financial services: Loansto customers measured atamortised cost | - | - | 193,751 | 190,393 | - | - | 161,065 | 157,369 |
| Other financial assets | ||||||||
| Loans measured atamortised cost | - | - | 41,839 | 41,839 | - | - | 11,622 | 11,622 |
| Securities measured atamortised cost | 14,885 | 5,244 | 1,942 | 22,883 | 15,761 | 4,952 | 6,240 | 27,357 |
| Other | - | - | 892 | 892 | - | 543 | 6,606 | 7,146 |
| Total | 18,660 | 87,752 | 466,503 | 570,369 | 19,738 | 170,989 | 304,865 | 492,297 |
| Liabilities | ||||||||
| Trade and other financialpayables | ||||||||
| Trade payables | - | - | 87,445 | 87,445 | - | - | 49,609 | 49,609 |
| Current portion of lease | ||||||||
| liabilities | - | - | 4,810 | 4,810 | - | - | 974 | 974 |
| Other payables | - | - | 6,344 | 6,344 | - | - | 481 | 481 |
| Dividend payable | - | - | 119,137 | 119,137 | - | - | 26,025 | 26,025 |
| Non-current leaseliabilities | - | - | 20,344 | 20,344 | - | - | 2,641 | 2,641 |
| Debt | ||||||||
| Bonds issued | - | 2 | - | 2 | - | 2,052 | - | 2,057 |
| Subordinated debt | - | 22 | - | 22 | - | 22 | - | 22 |
| Promissory notes issued | - | 11,341 | - | 12,790 | - | 11,666 | - | 11,897 |
| Other debt | - | - | 10,043 | 10,043 | - | - | 525 | 525 |
| Financial services: Due tobanks and the Bank ofRussia | 186 | 30,251 | - | 30,751 | 921 | 5,240 | - | 6,173 |
| Financial services: | ||||||||
| Customer accounts | - | 36,953 | 163,088 | 203,579 | - | 76,333 | 133,868 | 212,632 |
| Total | 186 | 78,569 | 411,211 | 495,267 | 921 | 95,313 | 214,123 | 313,036 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
49
Note 27: Financial risk management (continued)
The fair values in Level 2 and Level 3 fair value hierarchy were estimated using the model of discounted cash flows.
The fair value of instruments that do not have a quoted market price in an active market was estimated based on
estimated future cash flows, discounted using prevailing market interest rates for new instruments with similar credit
risk and maturity.
Reconciliation of liabilities arising from financing activities
The table below sets out an analysis of the movements in the Group’s liabilities from financing activities for each
of the periods presented. The items of these liabilities are those that are reported as financing in the statement of
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
49
| cash flows: | Liabilities arising as a result of financing activities | |||||
|---|---|---|---|---|---|---|
| Creditsand loans | Bondsissued | Subordinated debt | Leaseliabilities | Promissorynotes | Total | |
| At 31 December 2021 | 11,171 | 20,412 | 21 | 13,162 | 568 | 45,334 |
| Cash flow movement,including: | ||||||
| Proceeds fromissuance of debt | 1,488 | - | - | - | - | 1,488 |
| Repayment of debt | (3,091) | - | - | - | - | (3,091) |
| Issuance of bonds | - | - | - | - | 11,400 | 11,400 |
| Redemption ofbonds | - | (18,318) | - | - | - | (18,318) |
| Repayment ofprincipal portionof lease liabilities | - | - | - | (1,125) | - | (1,125) |
| Interest paid | (542) | (1,341) | (99) | (817) | - | (2,799) |
| Foreign exchangeadjustments | (1,269) | - | - | - | - | (1,269) |
| Interest accrual | 428 | 1,277 | 100 | 817 | - | 2,622 |
| Disposal of liabilitiesas result ofdiscontinuedoperations (Note 26) | (7,110) | - | - | (1,078) | - | (8,188) |
| Disposal of liabilitiesas a result of thetermination of leaseagreements | - | - | - | (7,220) | - | (7,220) |
| Other non-cash flows | (550) | 27 | - | (124) | (71) | (718) |
| At 31 December 2022 | 525 | 2,057 | 22 | 3,615 | 11,897 | 18,116 |
| Cash flow movement,including: | ||||||
| Proceeds fromissuance of debt | 57,373 | - | - | - | - | 57,373 |
| Repayment of debt | (61,933) | - | - | - | - | (61,933) |
| Redemption ofbonds | - | (2,008) | - | - | - | (2,008) |
| Repayment ofprincipal portionof lease liabilities Interest paid | - (443) | - (69) | - (118) | (4,563) (1,634) | - - | (4,563)(2,264) |
| Foreign exchangeadjustments | 1,342 | - | - | 1,234 | - | 2,576 |
| Interest accrual | 614 | 21 | 118 | 1,634 | 957 | 3,344 |
| Change in liabilities asa result of acquisitionof businesses (Note24) | 12,434 | - | - | 1,262 | - | 13,696 |
| Change in liabilities asa result of acquisitionof right-of-use assets Other non-cash flows | - 131 | - 1 | - - | 23,150 456 | - (64) | 23,150524 |
| At 31 December 2023 | 10,043 | 2 | 22 | 25,154 | 12,790 | 48,011 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
50
Note 27: Financial risk management (continued)
Management of Capital
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and
healthy capital ratios in order to support its business and increase shareholder value. The Group manages its capital
structure and makes adjustments to it, in light of changes in economic conditions.
The Group defines capital under management as the “Total equity owned by shareholders of PJSC Tatneft” as shown
in the consolidated statement of financial position. The amount of capital that the Group managed as at 31 December
2023 was RR 1,190,843 million (2022: RR 1,095,623 million).
The Group considers equity and debt to be the principal elements of capital management. In order to maintain or
adjust the capital structure, the Group may adjust the dividend payment to shareholders, revise its investment
program, attract new or settle existing debt or sell certain non-core assets. The Group monitors capital on the basis
of its gearing ratio.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
50
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
51
Note 28: Material accounting policy information
Material accounting policy information used in preparing these consolidated financial statements are presented
below. These principles have been applied consistently to all periods presented in the statements.
Functional and presentation currency. The presentation currency of the Group is the Russian Ruble.
Management has determined the functional currency for the Company and each consolidated subsidiary of the
Group, except for subsidiaries located outside of the Russian Federation, is the Russian Ruble because the majority
of Group revenues, costs, property and equipment purchased, debt and trade liabilities are either priced, incurred,
payable or otherwise measured in Russian Rubles. Accordingly, transactions and balances not measured in Russian
Rubles (primarily US Dollars) have been re-measured into Russian Rubles in accordance with the relevant
provisions of IAS 21 “The Effects of Changes in Foreign Exchange Rates” . Foreign exchange gains and losses
resulting from the settlement of the transactions and from the translation of monetary assets and liabilities into
functional currency at year-end official exchange rates of the Central Bank of the Russian Federation (the “Bank of
Russia”) at the end of the year are reflected in profit or loss for the year as other income /(expenses) within “ Foreign
exchange gain/(loss), net.”
For operations of major subsidiaries located outside of the Russian Federation, that primarily use US Dollar as the
functional currency, adjustments resulting from translating foreign functional currency assets and liabilities into
Russian Rubles are recorded in other comprehensive income. Revenues, expenses and cash flows are translated at
average exchange rates of the relevant period (unless this average is not a reasonable approximation of the
cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated
at the rate on the dates of the transactions).
The official rates of exchange, as published by the Bank of Russia, of the Russian Ruble (“RR”) to the US Dollar
(“US $”) at 31 December 2023 and 2022 were RR 89.69 and RR 70.34 to US $, respectively. Average rates of
exchange for the years ended 31 December 2023 and 31 December 2022 were RR 85.25 and RR 68.55 per US $,
respectively.
Consolidation. Subsidiaries are all entities over which the Group has control. The Group controls an entity when
the Group has the power to direct relevant activities of the investee that significantly affect their returns, exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns
through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred
to the Group. They are deconsolidated from the date that control ceases.
The Group uses the acquisition method of accounting to account for business combinations
Goodwill. Goodwill is allocated to cash-generating units or groups of cash-generating units that are expected to
benefit from synergies as a result of the combination. These units or groups of units represent the lowest level at
which the Group monitors goodwill and are not larger in size than an operating segment.
The Group tests goodwill for impairment at least once a year and whenever there is an indication that it may be
impaired. The impairment is recognised immediately as an expense and is not subsequently reversed.
Associates and joint ventures. Associates and joint ventures are entities over which the Group has significant
influence (directly or indirectly), but not control, generally accompanying a shareholding of between 20 and 50
percent of the voting rights. Investments in associates and joint ventures are accounted for using the equity method
of accounting and are initially recognised at cost. Dividends received from associates and joint ventures reduce the
carrying value of the investment in associates and joint ventures. Other post- acquisition changes in Group’s share
of net assets of an associate and joint ventures are recognised as follows: (i) the Group’s share of profits or losses of
associates or joint ventures is recorded in the consolidated profit or loss for the year as share of result of associates
or joint ventures, (ii) the Group’s share of other comprehensive income is recognised in other comprehensive income
and presented separately, (iii) all othe r changes in the Group’s share of the carrying value of net assets of associates
or joint ventures are recognised in profit or loss within the share of result of associates or joint ventures.
Financial instruments – key measurement terms. Fair value is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the measurement date. The best
evidence of fair value is the price in an active market. An active market is one in which transactions for the asset or
liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Fair
value of financial instruments traded in an active market is measured as the product of the quoted price for the
individual asset or liability and the number of instruments held by the Group. This is the case even if a market’s
normal daily trading volume is not sufficient to absorb the quantity held and placing orders to sell the position in a
single transaction might affect the quoted price.
Valuation techniques such as discounted cash flow models or models based on recent arm’s length transactions or
consideration of financial data of the investees are used to measure fair value of certain financial instruments for
which external market pricing information is not available.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
51
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
52
Note 28: Material accounting policy information (continued)
Amortised cost (“AC”) is the amount at which the financial instrument was recognised at initial recognition less any
principal repayments, plus accrued interest, and for financial assets less any allowance for expected credit losses
(“ECL”).
Financial instruments – initial recognition. Financial instruments at FVTPL are initially recorded at fair value.
All other financial instruments are initially recorded at fair value adjusted for transaction costs. Fair value at initial
recognition is best evidenced by the transaction price.
Financial assets impairment – credit loss allowance for ECL. The Group assesses, on a forward-looking basis,
the ECL for debt instruments measured at AC and FVOCI and for the exposures arising from loan commitments
and financial guarantee contracts, for contract assets. The Group measures ECL and recognises Net impairment
losses on financial and contract assets at each reporting date. The measurement of ECL reflects: (i) an unbiased and
probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money
and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each
reporting period about past events, current conditions and forecasts of future conditions.
Debt instruments measured at AC and contract assets are presented in the consolidated statement of financial position
net of the allowance for ECL. For loan commitments and financial guarantees, a separate provision for ECL is
recognised as a liability in the consolidated statement of financial position. For debt instruments at FVOCI, changes
in amortised cost, net of allowance for ECL, are recognised in profit or loss and other changes in carrying value are
recognised in OCI as gains (losses) on debt financial assets at FVOCI.
The Group applies a three stage model for impairment, based on changes in credit quality since initial recognition.
Note 27 provides information about inputs, assumptions and estimation techniques used in measuring ECL.
The Group applies the IFRS 9 simplified approach for measuring expected credit losses which uses a lifetime
expected loss allowance for all trade and other receivables. To measure the expected credit losses, trade and other
receivables have been grouped based on shared credit risk characteristics and the days past due. The Group calculates
expected credit losses on trade receivables based on historical data assuming reasonable approximation of current
losses rates adjusted on forward-looking information.
Financial assets – write-off. Financial assets are written-off, in whole or in part, when the Group exhausted all
practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off
represents a derecognition event. The Group may write-off financial assets that are still subject to enforcement
activity when the Group seeks to recover amounts that are contractually due, however, there is no reasonable
expectation of recovery.
Financial assets – derecognition, excluding write-off. The Group derecognises financial assets when (a) the assets
are redeemed or the rights to cash flows from the assets otherwise expire or (b) the Group has transferred the rights
to the cash flows from the financial assets or entered into a qualifying pass-through arrangement whilst (i) also
transferring substantially all the risks and rewards of ownership of the assets or (ii) neither transferring nor retaining
substantially all the risks and rewards of ownership but not retaining control.
Control is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated
third party without needing to impose additional restrictions on the sale.
Financial assets – modification. The Group sometimes renegotiates or otherwise modifies the contractual terms of
the financial assets. The Group assesses whether the modification of contractual cash flows is substantial
considering, among other, the following factors: any new contractual terms that substantially affect the risk profile
of the asset (e.g. profit share or equity-based return), significant change in interest rate, change in the currency, new
collateral or credit enhancement that significantly affects the credit risk associated with the asset or a significant
extension of a loan when the borrower is not in financial difficulties.
Presentation of cash flows on deposits at fair value through profit or loss in the consolidated statement of cash
flows. Placements and proceeds from redemption of bank deposits at fair value through profit or loss mature less
than three months are presented in the consolidated statement of cash flows on a net basis. Placements and proceeds
from redemption of bank deposits at fair value through profit or loss mature more than three months are presented
in the consolidated statement of cash flows separately in gross amounts.
Financial liabilities designated at FVTPL. The Group may designate certain liabilities at FVTPL at initial
recognition. Gains and losses on such liabilities are presented in profit or loss except for the amount of change in
the fair value that is attributable to changes in the credit risk of that liability (determined as the amount that is not
attributable to changes in market conditions that give rise to market risk), which is recorded in OCI and is not
subsequently reclassified to profit or loss. This is unless such a presentation would create, or enlarge, an accounting
mismatch, in which case the gains and losses attributable to changes in credit risk of the liability are also presented
in profit or loss.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
52
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
53
Note 28: Material accounting policy information (continued)
Cash and cash equivalents. Cash represents cash on hand and in bank accounts and the Bank of Russia, other than
mandatory reserves deposits with the Bank of Russia, which can be effectively withdrawn at any time without prior
notice. Cash equivalents include highly liquid short-term investments that can be converted to a certain cash amount
and mature within three months or less from the date of purchase.
Mandatory reserve deposits with the Bank of Russia. Mandatory cash balances with the Bank of Russia are
carried at AC and represent non-interest bearing mandatory reserve deposits, which are not available to finance the
Group’s day to day operations, and hence are not considered as part of cash and cash equivalents for the purposes
of the consolidated statement of cash flows.
Due from banks. Amounts due from banks are recorded when the Group advances money to counterparty banks
due on fixed or determinable dates. Amounts due from banks are carried at AC when: (i) they are held for the
purposes of collecting contractual cash flows and those cash flows represent SPPI, and (ii) they are not designated
at FVTPL. Due from banks that mature within three months or less from the date of placement are included in cash
and cash equivalents.
Loans to customers. Loans to customers are recorded when the Group advances money to purchase or originate a
loan due from a customer. Note 27 provides information about inputs, assumptions and estimation techniques used
in measuring ECL.
Trade and other receivables. Trade and other receivables are recognised initially at fair value and are subsequently
carried at AC using the effective interest method.
Trade and other payables. Trade payables are accrued when the counterparty performs its obligations under the
contract and are recognised initially at fair value and subsequently carried at AC using the effective interest method.
Due to banks and the Bank of Russia. Amounts due to banks and the Bank of Russia are recorded when money or
other assets are advanced to the Group by counterparty banks. The non-derivative liability is carried at AC.
Customer accounts. Customer accounts are non-derivative liabilities to individuals, state or corporate customers
and are carried at AC.
Debt securities and bonds issued . Debt securities issued include promissory notes issued by the Group to its
customers in the course of its financial services. Bonds issued represent securities issued by the Bank that are traded
and quoted in the open market. Promissory notes carry a fixed date of repayment. These may be issued against cash
deposits or as a payment instrument, which the customer can sell at a discount in the over-the-counter market.
Non-current assets classified as held for sale. Non-current assets are classified in the consolidated statement of
financial position as “Long term assets held for sale” if their carrying amount will be recovered principally through
a sale transaction within twelve months after the end of the reporting period.
I nventories . Inventories of crude oil, refined oil products, materials and supplies, finished goods and other
inventories are valued at the lower of cost or net realizable value. Net realisable value is the estimated selling price
in the ordinary course of business, less the estimated cost of completion and selling expenses. The Group uses the
weighted-average-cost method. Costs include both direct and indirect expenditures incurred in bringing an item or
product to its existing condition and location.
Prepaid expenses and other current assets. Prepaid expenses and other current assets include advances for
purchases of products and services, insurance fees, excise tax refundable, prepayments for export duties, VAT and
other taxes. Prepayments are carried at cost less provision for impairment.
Prepayments to acquire assets are transferred to the carrying amount of the asset once the Group has obtained control
of the asset and it is probable that future economic benefits associated with the asset will flow to the Group.
Tax on additional income from hydrocarbon extraction. AIT is levied at the rate of 50% on additional income
from oil production, calculated as the difference between the estimated revenue from the sale of hydrocarbons and
the actual and estimated costs of its production, including capital costs. This tax regime includes MET, but with a
reduced rate. This regime covers depleted oil fields in Republic of Tatarstan, as well as the Group's license areas in
the Nenets Autonomous District. AIT is included in taxes other than income tax in the consolidated statements of
profit or loss and other comprehensive income.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
53
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
54
Note 28: Material accounting policy information (continued)
Reverse excise on crude oil refined and negative excise on gasoline and diesel fuel. In the consolidated statement
of profit or loss and other comprehensive income reverse (“negative”) excise on crude oil refined and negative excise
on gasoline and diesel fuel is recognised as a reduction (additional expense, if reverse excise payable) in excise tax
expense included in taxes other than income tax (Note 29) and is presented in prepaid expenses and other current
assets line in the statement of consolidated financial position. The investment premium for refineries Kinv is also
included in reverse (negative) excise of the period.
Value added tax. Value added tax (VAT) at a standard rate of 20% is payable on the difference between output
VAT on sales of goods and services and recoverable input VAT charged by suppliers. Output VAT is charged on
the earliest of the dates: either the date of the shipment of goods (works, services) or the date of advance payment
by the buyer. Input VAT can be recovered when purchased goods (works, services) are accounted for and other
necessary requirements provided by the tax legislation are met. Where provision has been made for the ECL of
receivables, the impairment loss is recorded for the gross amount of the debtor, including VAT.
Export of goods and rendering certain services related to exported goods are subject to 0% VAT rate upon the
submission of confirmation documents to the tax authorities.
VAT related to sales and purchases is recognised in the Consolidated Statement of Financial Position on a gross
basis and disclosed separately within Prepaid expenses and other current assets and Taxes payable.
Oil and gas exploration and development cost. Oil and gas exploration and development activities are accounted
for using the successful efforts method whereby costs of acquiring unproved and proved oil and gas property as well
as costs of drilling and equipping productive wells and related production facilities are capitalised.
Other exploration expenses, including geological and geophysical expenses and the costs of carrying and retaining
undeveloped properties, are expensed as incurred. The costs of exploratory wells that find oil and gas reserves are
capitalised as exploration and evaluation assets on a “field by field” basis pending determination of whether proved
reserves have been found. Exploration and evaluation assets are subject to technical, commercial and management
review as well as review for impairment at least once a year to confirm the continued intent to develop or otherwise
extract value from the discovery. When indicators of impairment are present, resulting impairment loss is measured.
If subsequently commercial reserves are discovered, the carrying value, less losses from impairment of respective
exploration and evaluation assets, is classified as development assets. However, if no commercial reserves are
discovered, such costs are expensed after exploration and evaluation activities have been completed.
Property, plant and equipment. Property, plant and equipment are carried at historical cost of acquisition or
construction less accumulated depreciation, depletion, amortization and impairment.
Proved oil and gas properties include the initial estimate of the costs of dismantling and removing the item and
restoring the site on which it is located. T he cost of maintenance, repairs and replacement of minor items of property
are expensed when incurred within operating expenses; renewals and improvements of assets are capitalised and
depreciated during the remaining useful life. Cost of replacing major parts or components of property, plant and
equipment items are capitalised and the replaced part is retired.
Advances made on construction of property, plant and equipment are accounted for within Construction in progress.
Non-current assets, including proved oil and gas properties at a field level, are assessed for possible impairment in
accordance with IAS 36 Impairment of assets. Individual assets are grouped for impairment purposes at the lowest
level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of
assets - generally on a field-by-field basis for exploration and production assets, at an entire complex level for
refining assets or at a site level for petrol stations. Impairment losses are recognised in the profit or loss for the year.
The Group calculates depreciation expense for oil and gas proved properties using the units-of-production method
for each field based upon proved developed oil and gas reserves, except in the case of significant asset components
whose useful life differs from the lifetime of the field, in which case the straight-line method is applied.
Oil and gas licenses for exploration of unproved reserves are capitalised within property, plant and equipment; they
are depreciated on the straight-line basis over the period of each license validity.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
54
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
55
Note 28: Material accounting policy information (continued)
Depreciation of all other property, plant and equipment is determined on the straight-line method based on estimated
useful lives which are as follows:
Gains and losses on disposals of property, plant and equipment are determined by comparing proceeds, if any, with
the carrying amount. Gains and losses are recorded in impairment losses on property, plant and equipment and other
non-financial assets net of reversal in the consolidated statement of profit or loss and other comprehensive income.
Leases. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration. An asset is identified by being explicitly specified in a contract, or implicitly specified
at the time that the asset is made available for use by the customer. The Group does not have the right to use an
identified asset if the supplier has the substantive right to substitute the asset throughout the period of use.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the
net present value of the lease payments that are not paid at the commencement date, discounted using the interest
rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used. Generally,
the Group determines its incremental borrowing rate as possible borrowing rate offered by banks for the funds,
necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.
The rate is determined based on indicative rates of banks or indicative yield to maturity of bonds of oil and gas
industry companies.
The term used to measure a liability and an asset in the form of a right of use is defined as the period during which
the Group has sufficient confidence that it will lease the asset. Any option for renewal or termination is taken into
account when estimating the term. Extension options are included in a number of equipment leases across the Group.
For a number of other assets that have a buyout option, the depreciation period is determined based on the useful
life of the underlying asset.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as
an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
Debt. Debt is recognised initially at fair value, net of transaction costs incurred and is subsequently carried at AC
using the effective interest method.
Interest income (excluding financial services). Interest income (excluding financial services) is recognised on a
time-proportion basis using the effective interest method. This method defers, as part of interest income, all fee
received between the parties to the contract that are an integral part of the effective interest rate, all other premiums.
Employee benefits, post-employment and other long-term benefits. Wages, salaries, contributions to the social
insurance funds, paid annual leave and sick leave, bonuses, and non-monetary benefits (such as health services and
kindergarten services) are accrued in the year in which the associated services are rendered by the employees of the
Group. The Group has various pension plans covering substantially all eligible employees and members of
management. The pension liabilities are measured at the present value of the estimated future cash outflows using
interest rates of government securities, which have the same currency and terms to maturity approximating the terms
of the related liability. Pension costs are recognised using the projected unit credit method.
The cost of providing pensions is accrued and charged to staff expense within operating expenses in the Consolidated
Statement of Profit or Loss and Other Comprehensive Income reflecting the cost of benefits as they are earned over
the service lives of employees.
Remeasurements of the net defined benefit liability arising as the actuarial gains or losses from changes in
assumptions and from experience adjustments with regard to post employment benefit plans are recognised
immediately in other comprehensive income. Actuarial gains and losses related to other long-term benefits are
recognised immediately in the profit or loss for the year.
Past service costs are recognised as an expense for the year immediately.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
55
| Years | |
|---|---|
| Buildings and constructions | 20-50 |
| Machinery and equipment | 5-30 |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
56
Note 28: Material accounting policy information (continued)
Plan assets are measured at fair value and are subject to certain limitations. Fair value of plan assets is based on
market prices. When no market price is available the fair value of plan assets is estimated by different valuation
techniques, including discounted expected future cash flow using a discount rate that reflects both the risk associated
with the plan assets and maturity or expected disposal date of these assets.
Mandatory contributions to the Fund, which from 1 January 2023 are part of contributions to the Social Fund of
Russia, are expensed when incurred and are included within staff costs in operating expenses.
Long-term employee incentives program. The Group operates a cash-settled share-based compensation plan.
The terms of share-based compensation plan, initial data, assumptions and models used in measurement of cash-
settled share-based compensation plan are presented in Note 16.
Decommissioning provisions. The Group recognises a liability for the present value of legally required or
constructive decommissioning provisions associated with non-current assets in the period in which the retirement
obligations are incurred. The Group has numerous asset removal obligations that it is required to perform under law
or contract once an asset is permanently taken out of service. The Group’s field exploration, development, and
production activities include assets related to: well bores and related equipment and operating sites, gathering and
oil processing systems, oil storage facilities and gathering pipelines.
Generally, the Group’s licenses and other operating permits require certain actions to be taken by the Group in the
abandonment of these operations. Such actions include well abandonment activities, equipment dismantlement and
other reclamation activities. The Group’s estimates of future abandonment costs consider present regulatory or
license requirements, as well as actual dismantling and other related costs. These liabilities are measured by the
Group using the present value of the estimated future costs of decommissioning of these assets. The discount rate is
reviewed at each reporting date and reflects current market assessments of the time value of money and the risks
specific to the liability. Most of these costs are not expected to be incurred until several years, or decades, in the
future and will be funded from general Group resources at the time of removal.
The Group capitalises the associated decommissioning costs as part of the carrying amount of the non-current assets.
Changes in obligation, reassessed regularly, related to new circumstances or changes in law or technology, or in the
estimated amount of the obligation, or in the pre-tax discount rates, are recognised as an increase or decrease of the
cost of the relevant asset. If a decrease in the liability exceeds the carrying amount of the asset, the excess shall be
recognised immediately in profit or loss.
The Group’s petrochemical, refining and marketing and distribution operations are carried out at large
manufacturing facilities and fuel outlets. The nature of these operations is such that the ultimate date of
decommissioning of any sites or facilities is unclear. Current regulatory and licensing rules do not provide for
liabilities related to the liquidation of such manufacturing facilities or of retail fuel outlets. Management therefore
believes that there are no legal or contractual obligations related to decommissioning or other disposal of these
assets.
Income Taxes. Effective 1 January 2012, the Company has established the Consolidated Taxpayer Group, which
included four, and since 2016, five enterprises of the Group. From 1 January 2023, the institution of a consolidated
group of taxpayers ceased to operate. Income taxes have been provided for in the consolidated financial statements
in accordance with legislation enacted or substantively enacted by the end of the reporting period. The income tax
charge comprises current tax and deferred tax and is recognised in profit or loss for the year, except if it is recognised
in other comprehensive income or directly in equity because it relates to transactions that are also recognised, in the
same or a different period, in other comprehensive income or directly in equity.
Current tax is the amount expected to be paid to, or recovered from, the taxation authorities in respect of taxable
profits or losses for the current and prior periods.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
56
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
57
Note 28: Material accounting policy information (continued)
Deferred tax balances are measured at tax rates enacted or substantively enacted at the end of the reporting period,
which are expected to apply to the period when the temporary differences will reverse or the tax loss carry forwards
will be utilised. Deferred tax assets and liabilities are netted only within the Consolidated Taxpayer Group or
individual companies of the Group outside the Consolidated Taxpayer Group.
Income tax penalties expense and income tax penalties payable are included in Taxes other than income tax in the
consolidated statement of profit or loss and other comprehensive income and taxes payable in the consolidated
statement of financial position, respectively. Income tax interest expense and payable are included in interest
expense in the consolidated statements of profit or loss and other comprehensive income and other accounts payable
and accrued expenses in the consolidated statement of financial position, respectively.
Share capital. Ordinary shares and non-redeemable preferred shares with discretionary dividends are both classified
as equity.
Dividends paid to shareholders are determined by the Board of directors and approved at the annual or extraordinary
shareholders’ meeting. Dividends are recorded as a liability and deducted from equity in the period in which they
are declared and approved.
Treasury shares . Common shares of the Company owned by the Group at the reporting date are designated as
treasury shares and are recorded at cost using the weighted-average method. Gains on resale of treasury shares are
credited to additional paid-in capital whereas losses are charged to additional paid-in capital to the extent that
previous net gains from resale are included therein or otherwise to retained earnings.
Earnings per share. Preferred shares are not redeemable and are considered to be participating shares.
Basic and diluted earnings per share are calculated by dividing profit or loss attributable to ordinary and preferred
shareholders by the weighted average number of ordinary and preferred shares outstanding during the period. Profit
or loss attributed to equity holders is reduced by the amount of dividends declared in the current period for each
class of shares. The remaining profit or loss is allocated to ordinary and preferred shares to the extent that each class
may share in earnings if all the earnings for the period had been distributed. Treasury shares are excluded from
calculations. The total earnings allocated to each class of shares are determined by adding together the amount
allocated for dividends and the amount allocated for a participation feature.
Revenue from Contracts with Customers. Revenue is income arising in the course of the Group’s ordinary
activities. Revenue is recognised in the amount of transaction price. Transaction price is the amount of consideration
to which the Group expects to be entitled in exchange for transferring control over promised goods or services to a
customer, excluding the amounts collected on behalf of third parties. Revenue is recognised net of discounts, value
added taxes.
The Group’s business activities include sales of crude oil and refined products, petrochemical raw materials.
Revenues are recognised at a point in time when control over such products has transferred to a customer, which
refers to ability to direct the use of, and obtain substantially all of the remaining benefits from the products. Transfer
occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been
transferred to the customer, and either the customer has accepted the products in accordance with the sales contract,
the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been
satisfied.
The Group operates a chain of own petrol (gas) stations selling refined products. Revenue from the sale of products
is recognised when a group entity sells a product to the customer. Payment of the transaction price is due immediately
when the customer purchases the fuel. Since no right of return, no refund liability is recognised.
A receivable is recognised when the goods are delivered as this is the point in time that the consideration is
unconditional because only the passage of time is required before the payment is due. No significant element of
financing is deemed present as the sales are made with short-term credit terms consistent with market practice. As a
consequence, the Group does not adjust any of the transaction prices for the time value of money.
Recognition of interest, fee and commission income and expense from financial services . Interest income and
expense are recognised on an accrual basis calculated using the effective interest method. Fee and commission
income are recognised over time on a straight line basis as the services are rendered, when the customer
simultaneously receives and consumes the benefits provided by the Group’s performance. Such income includes
recurring fees for account maintenance, account servicing fees, account subscription fees, premium service package
fees, portfolio and other asset management advisory and service fees, wealth management and financial planning
services, or fees for servicing loans on behalf of third parties, etc.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
57
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
58
Note 28: Material accounting policy information (continued)
Transportation expenses. Transportation expenses recognised in the consolidated statements of profit or loss and
other comprehensive income represent all expenses incurred by the Group to transport crude oil and refined products
to end customers (they may include pipeline tariffs and any additional railroad costs, handling costs, port fees, sea
freight and other costs). Compounding fees are included in selling, general and administrative expenses.
Government grants. Grants from the government are recognised at their fair value where there is reasonable
assurance that the grant will be received and the Group will comply with all attached conditions. Government grants
relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income
and are credited to profit or loss on a straight line basis over the expected lives of the related assets.
Discontinued operation. A discontinued operation is a component of the Group that has been disposed of and
represents a separate major line of business; is part of a single co-ordinated plan to dispose of a separate major line
of business or geographical area of operations. Earnings of discontinued operation are disclosed separately from
continuing operations with comparatives being re-presented. In the second quarter of 2022, the Group disposed of
its share and interests in subsidiaries that comprised the tire business segment (Note 26) .
Note 29: Critical accounting estimates and judgements in applying accounting policies
The Group makes estimates and assumptions that affect the amounts recognised in the consolidated financial
statements and the carrying amounts of assets and liabilities within the next financial year. Estimates and judgements
are continually evaluated and are based on management’s experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
Management of the Group also makes certain judgements, apart from those involving estimations, in the process of
applying the accounting policies. Judgements that have the most significant effect on the amounts recognised in the
consolidated financial statements and estimates that can cause a significant adjustment to the carrying amount of
assets and liabilities within the next financial year include:
• Estimation of oil and gas reserves;
• Useful life of property, plant and equipment;
• Decommissioning provisions;
• Impairment of property, plant and equipment;
• Ac counting of investments in JSC “National Non - State Pension Fund”;
• Sale and purchase of oil under contracts for counter oil deliveries;
• Financial assets impairment;
• Financial instruments fair value estimation;
• Presentation of excise tax, including reverse excise and export duties.
• Determining the absence of control as a result of transactions for the sale of shares and interests in
enterprises.
Estimation of oil and gas reserves. Oil and gas development and production assets are depreciated on a unit-of-
production (UOP) basis for each field or group of fields with similar characteristics at a rate calculated by reference
of proved developed reserves. Estimates of proved reserves are also used in the determination of whether
impairments have arisen or should be reversed. Also, exploration drilling costs are capitalised pending the results of
further exploration or appraisal activity, which may take several years to complete and before any related proved
reserves can be booked.
Proved reserves are estimated by reference to available geological and engineering data and only include volumes
for which access to market is assured with reasonable certainty. Estimates of oil and gas reserves are inherently
imprecise, require the application of judgment and are subject to regular revision, either upward or downward, based
on new information such as from the drilling of additional wells, observation of long-term reservoir performance
under producing conditions and changes in economic factors, including product prices, contract terms or
development plans. The Group estimates its oil and gas reserves in accordance with rules approved by the Oil and
Gas Reserves Committee of the Society of Petroleum Engineers (SPE) for proved reserves.
Changes to the Group’s estim ates of proved developed reserves affect prospectively the amounts of depreciation,
depletion and amortization charged and, consequently, the carrying amounts of oil and gas properties. It is expected,
however, that in the normal course of business the diversity of the Group’s portfolio will limit the effect of such
revisions. The outcome of, or assessment of plans for, exploration or appraisal activity may result in the related
capitalised exploration drilling costs being written off in the profit or loss for the year.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
58
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
59
Note 29: Critical accounting estimates and judgements in applying accounting policies (continued)
Useful life of property, plant and equipment. Based on the terms included in the licenses and past experience,
management believes hydrocarbon production licenses will be extended past their current expiration dates at
insignificant additional costs. As a result of the anticipated license extensions, the assets are depreciated over their
useful lives beyond the end of the current license term.
Management assesses the useful life of an asset by considering the expected usage, estimated technical obsolescence,
residual value, physical wear and tear and the operating environment in which the asset is located. Differences
between such estimates and actual results may have a material impact on the amount of the carrying values of the
property, plant and equipment and may result in adjustments to future depreciation expenses for the period.
Management reviews the appropriateness of the assets’ useful economic lives and residual values at the end of each
reporting period. The review is based on the current condition of the assets, the estimated period during which they
will continue to bring economic benefit to the Group and the estimated residual value.
Decommissioning provisions. Management makes provision for the future costs of decommissioning oil and gas
production facilities, wells, pipelines, and related support equipment and for site restoration based on the best
estimates of future costs and economic lives of the oil and gas assets. Estimating future decommissioning provisions
is complex and requires management to make estimates and judgments with respect to removal obligations that will
occur many years in the future.
Changes in the measurement of existing obligations can result from changes in estimated timing, future costs or
discount rates used in valuation.
The amount recognised as a provision is the best estimate of the expenditures required to settle the present obligation
at the reporting date based on current legislation in each jurisdiction where the Group ’ s operating assets are located,
and is also subject to change because of revisions and changes in laws and regulations and their interpretation. As a
result of the subjectivity of these provisions there is uncertainty regarding both the amount and estimated timing of
such costs.
Sensitivity analysis for changes in discount rate:
Information about decommissioning provision is presented in Note 9.
Impairment of property, plant and equipment. Information is presented in Note 9.
Accounting of investments in JSC “National Non-State Pension Fund”
As at 31 December 2023 and 2022 the Group has 88.39% and 74.46% of shares of JSC “National Non -Governmental
Pension Fund”, respectively. The Group does not exercise either control or significant influence over JSC “National
Non- Governmental Pension Fund” based on corporate governance and pension legislation. These investments are
presented within financial assets carried at FVOCI as at 31 December 2023 and 2022 (Note 6).
Operations for the sale and purchase of oil under contracts for counter oil deliveries. During the years ended
31 December 2023 and 2022 sales of crude oil under counter-delivery contracts in the amount of RR 305,492 million
and RR 283,886 million respectively are presented net in the consolidated statement of profit or loss and other
comprehensive income of the Group in accordance with the IFRS 15 requirements for exchange of products of
similar quality.
Financial assets impairment. Detailed information is presented in Note 27.
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
59
| Impact on decommissioning provision | |||
|---|---|---|---|
| Change in | At 31 December2023 | At 31 December2022 | |
| Discount rate | 100 bp increase | (4,365) | (8,869) |
| 100 bp decrease | 5,521 | 10,830 | |
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
60
Note 29: Critical accounting estimates and judgements in applying accounting policies (continued)
Financial instruments fair value estimation. Financial instruments carried at FVTPL or FVOCI are stated at fair
value. If a quoted market price is available for an instrument, the fair value is calculated based on the quoted market
price. When valuation parameters are not observable in the market or cannot be derived from quoted market prices,
the fair value is derived through analysis of other observable market data appropriate for each product and pricing
models which use a mathematical methodology based on accepted financial theories. Pricing models take into
account the contract terms of the financial instruments as well as market-based valuation parameters, such as interest
rates, volatility, exchange rates and the credit rating of the counterparty. Where market-based valuation parameters
are missed, management makes a judgment as to its best estimate of that parameter in order to determine a reasonable
reflection of how the market would be expected to price the instrument, in exercising this judgment, a variety of
tools are used including proxy observable data, historical data, and extrapolation techniques. The best evidence of
fair value of a financial instrument at initial recognition is the transaction price unless the instrument is evidenced
by comparison with data from observable markets.
Any difference between the transaction price and the value based on a valuation technique is not recognised in the
consolidated statement of profit or loss and other comprehensive income on initial recognition unless the value is
based on valuation technique that uses only data from observable markets. Subsequent gains or losses are only
recognised to the extent that they arise from a change in a factor that market participants would consider in setting
a price.
Information on fair value of financial instruments where estimate is based on assumptions that do not utilize
observable market prices is presented in Note 27.
Presentation of excise tax, including reverse excise and export duties Excise taxes, including reverse (negative)
excise tax on crude oil, motor gasoline and diesel fuel, are presented in the Group's consolidated statement of profit
or loss and other comprehensive income as part of the line “Taxes other than income tax” (Note 11). Export duties
are presented in the Group's consolidated statement of profit or loss and other comprehensive income as a separate
line in the section “Costs and expenses (excluding financial services)”. Recognition in this section provides more
comprehensive presentation of overall tax maneuver effect for the financial results of the Group in comparison with
presentation in Revenue (excluding financial services).
Determining the absence of control as a result of transactions for the sale of shares and interests in enterprises.
In the 2nd quarter of 2022, the Group disposed of shares and interests in entities that constituted a separate segment.
The Company analysed the terms of the agreements and existing relationships. Given the absence of ownership
interests and other factors, the Group does not have any mechanisms to manage the significant activities of the
disposed entities, and, therefore, the Group does not control them as at 31 December 2023 and 2022 (Note 26).
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
60
TATNEFT
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
61
Note 30: Adoption of new or revised standards and interpretations
The following amended standards became mandatory for the consolidated financial statements of 2023, but did not
have any material impact on the Group:
• IFRS 17 "Insurance Contracts"(issued on 18 May 2017 and effective for annual periods beginning on or
after 1 January 2021, the effective date subsequently modified to 1 January 2023 by amendments to IFRS
17 as below).
• Amendments to IFRS 17 and an amendment to IFRS 4 (issued on 25 June 2020 and effective for annual
periods beginning on or after 1 January 2023).
• Amendments to IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12
February 2021 and effective for annual periods beginning on or after 1 January 2023).
• Amendments to IAS 8: Definition of Accounting Estimates (issued on 12 February 2021 and effective for
annual periods beginning on or after 1 January 2023).
• Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single transaction (issued
on May 7, 2021 and effective for annual periods beginning on or after January 1, 2023).
• Transition option to insurers applying IFRS 17 – Amendments to IFRS 17 (issued on 9 December 2021 and
effective for annual periods beginning on or after 1 January 2023).
• International Tax Reform – Pillar Two Model Rules – Narrow-scope amendments to IAS 12 (issued on 23
May 2023 and effective for annual periods beginning on or after 1 January 2023).
The following published new standards and interpretations mandatory for annual periods beginning on 1 January
2024 or after, ar e not expected to have any material impact on the Group’s consolidated financial statements when
adopted:
• Classification of liabilities as current or non-current – Amendments to IAS 1 (issued on 23 January 2020
and effective for annual periods beginning on or after 1 January 2022, deferred to 1 January 2024 by
amendments to IAS 1 as below).
• Classification of liabilities as current or non-current, deferral of effective date – Amendments to IAS 1
(issued on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023, deferred to
1 January 2024).
• Non-current Liabilities with Covenants – Amendments to IAS 1 (issued on 31 October 2022 and effective
for annual periods beginning on or after 1 January 2024).
• Lease Liability in a Sale and Leaseback Amendments to IFRS 16 – Amendments to IFRS 16 (issued on 22
September 2022 and effective for annual periods beginning on or after 1 January 2024).
• Supplier Finance Arrangements (Reverse Factoring) – Amendments to IAS 7 and IFRS 7 (issued on 25
May 2023 and effective for annual periods beginning on or after 1 January 2024).
• Lack of Exchangeability – Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates
(issued on 15 August 2023 and effective for annual periods beginning on or after 1 January 2025).
• Amendments to IFRS 10 and IAS 28 - Sale or Contribution of Assets between an Investor and its Associate
or Joint Venture (issued on 11 September 2014 and effective for annual periods beginning on or after a date
to be determined by the IASB).
Notes to the Consolidated Financial Statements
(In million of Russian Rubles)
61
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE YEARS ENDED 31 DECEMBER 2023 AND 2022
PJSC TATNEFT n.a. V.D. Shashin
MD&A for the year ended 31 December 2023
2
Content
Background.............................................................................................................................................................. 3
Key financial and operational results ...................................................................................................................... 4
Segment information ............................................................................................................................................... 4
Exceptional items .................................................................................................................................................... 5
Results of the Group operations for the year ended 31 December 2023 compared to the year ended 31 December
2022 ......................................................................................................................................................................... 6
Revenues (excluding financial services) ............................................................................................................ 7
Revenues breakdown (excluding financial services).......................................................................................... 7
Costs and other expenses (excluding financial services).................................................................................... 8
Other (expenses)/income ..................................................................................................................................... 8
Income taxes........................................................................................................................................................ 9
EBITDA reconciliation ........................................................................................................................................... 9
Financial Condition Summary Information ............................................................................................................. 9
Liquidity and Capital Resources............................................................................................................................ 10
Contractual obligations, other contingen and off-balance sheet obligations ......................................................... 10
Key Accounting Policies and Estimates ................................................................................................................ 11
Forward-looking statements .................................................................................................................................. 11
Statement regarding corporate governance and TCFD disclosures ....................................................................... 12
MD&A for the year ended 31 December 2023
2
Content
Background.............................................................................................................................................................. 3
Key financial and operational results ...................................................................................................................... 4
Segment information ............................................................................................................................................... 4
Exceptional items .................................................................................................................................................... 5
Results of the Group operations for the year ended 31 December 2023 compared to the year ended 31 December
2022 ......................................................................................................................................................................... 6
Revenues (excluding financial services) ............................................................................................................ 7
Revenues breakdown (excluding financial services).......................................................................................... 7
Costs and other expenses (excluding financial services).................................................................................... 8
Other (expenses)/income ..................................................................................................................................... 8
Income taxes........................................................................................................................................................ 9
EBITDA reconciliation ........................................................................................................................................... 9
Financial Condition Summary Information ............................................................................................................. 9
Liquidity and Capital Resources............................................................................................................................ 10
Contractual obligations, other contingen and off-balance sheet obligations ......................................................... 10
Key Accounting Policies and Estimates ................................................................................................................ 11
Forward-looking statements .................................................................................................................................. 11
Statement regarding corporate governance and TCFD disclosures ....................................................................... 12
PJSC TATNEFT n.a. V.D. Shashin
MD&A for the year ended 31 December 2023
3
The following discussion should be read in conjunction with the audited consolidated financial statements in accordance
with IFRS ® Accounting Standards and the related notes, approved for issue and signed prior to publishing of this
Management’s Discussion and Analysis of financial condition and results of operations (MD&A). This report includes
forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated
in the forward-looking statements as a result of numerous factors, including those discussed later in this MD&A. Words such
as “believes,” “anticipates,” “expects,” “estimates,” “intends,” “plans,” etc. – that reflect management’s current estimates
and beliefs, but are not guarantees of future results. Please see “Forward- looking statements” for a discussion of some
factors that could cause actual results to differ materially.
For financial reporting purposes, Company converts metric tonnes of crude oil to barrels using a conversion factor of 7.123.
This factor represents a blend of varying conversion factors specific to each of Group’s fields. Because the proportion of
actual production by field varies from period to period, total reserves and production volumes for the Group in barrels
converted from tonnes using the blended rate may differ from total reserves and production calculated on a field-by-field
basis. Translations of cubic meters to cubic feet were made at the rate of 35.31 cubic feet per cubic meter. Translations of
barrels of crude oil into barrels of oil equivalent (“BOE”) were made at the rate of 1 ba rrel per BOE and of cubic feet into
BOE at the rate of 6 thousand cubic feet per BOE.
Background
PJSC Tatneft n.a. V.D. Shashin (the “Company”) and its subsidiaries (jointly referred to as the “Group” or “Tatneft”) is one
of the largest vertically integrated oil companies in Russia in terms of crude oil production, proved oil reserves, and refining
capacity. The Company is a public joint-stock company organized under the laws of the Russian Federation with the
headquarters located in City of Almetyevsk, Tatarstan. The principal business of the Group is to explore for, develop, produce,
process, and market crude oil and refined products. The Group is also involved in gas treatment and refining, petrochemicals’
production and marketing, production and sale of tires, manufacturing of equipment, engineering, procurement, and
construction services for oil, gas and petrochemical projects, and in financial services.
As of 31 December 2023 and 31 December 2022, the Tatarstan Government controls approximately 36% of the Company’s
voting stock. Tatarstan also holds a “Golden Share”, a special governmental right, in the Company. The exercise of its powers
under the Golden Share enables the Tatarstan Government to appoint one representative to the Board of Directors and one
representative to the Revision Committee of the Company as well as to veto certain major decisions, including those relating
to changes in the share capital, amendments to the Charter, liquidation or reorganization of the Company and “major” and
“interested party” transactions as defined under Russian law. The Golden Share currently has an indefinite term.
The majority of the Group’s crude oil and gas production , refining capacity, and other operations are located in Tatarstan, a
republic of the Russian Federation, situated between the Volga River and the Ural Mountains, with its capital city Kazan 797
kilometers southeast of Moscow.
The Group currently holds most of the exploration and production licenses and produces substantially all its crude oil in
Tatarstan.
MD&A for the year ended 31 December 2023
3
The following discussion should be read in conjunction with the audited consolidated financial statements in accordance
with IFRS ® Accounting Standards and the related notes, approved for issue and signed prior to publishing of this
Management’s Discussion and Analysis of financial condition and results of operations (MD&A). This report includes
forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated
in the forward-looking statements as a result of numerous factors, including those discussed later in this MD&A. Words such
as “believes,” “anticipates,” “expects,” “estimates,” “intends,” “plans,” etc. – that reflect management’s current estimates
and beliefs, but are not guarantees of future results. Please see “Forward- looking statements” for a discussion of some
factors that could cause actual results to differ materially.
For financial reporting purposes, Company converts metric tonnes of crude oil to barrels using a conversion factor of 7.123.
This factor represents a blend of varying conversion factors specific to each of Group’s fields. Because the proportion of
actual production by field varies from period to period, total reserves and production volumes for the Group in barrels
converted from tonnes using the blended rate may differ from total reserves and production calculated on a field-by-field
basis. Translations of cubic meters to cubic feet were made at the rate of 35.31 cubic feet per cubic meter. Translations of
barrels of crude oil into barrels of oil equivalent (“BOE”) were made at the rate of 1 ba rrel per BOE and of cubic feet into
BOE at the rate of 6 thousand cubic feet per BOE.
Background
PJSC Tatneft n.a. V.D. Shashin (the “Company”) and its subsidiaries (jointly referred to as the “Group” or “Tatneft”) is one
of the largest vertically integrated oil companies in Russia in terms of crude oil production, proved oil reserves, and refining
capacity. The Company is a public joint-stock company organized under the laws of the Russian Federation with the
headquarters located in City of Almetyevsk, Tatarstan. The principal business of the Group is to explore for, develop, produce,
process, and market crude oil and refined products. The Group is also involved in gas treatment and refining, petrochemicals’
production and marketing, production and sale of tires, manufacturing of equipment, engineering, procurement, and
construction services for oil, gas and petrochemical projects, and in financial services.
As of 31 December 2023 and 31 December 2022, the Tatarstan Government controls approximately 36% of the Company’s
voting stock. Tatarstan also holds a “Golden Share”, a special governmental right, in the Company. The exercise of its powers
under the Golden Share enables the Tatarstan Government to appoint one representative to the Board of Directors and one
representative to the Revision Committee of the Company as well as to veto certain major decisions, including those relating
to changes in the share capital, amendments to the Charter, liquidation or reorganization of the Company and “major” and
“interested party” transactions as defined under Russian law. The Golden Share currently has an indefinite term.
The majority of the Group’s crude oil and gas production , refining capacity, and other operations are located in Tatarstan, a
republic of the Russian Federation, situated between the Volga River and the Ural Mountains, with its capital city Kazan 797
kilometers southeast of Moscow.
The Group currently holds most of the exploration and production licenses and produces substantially all its crude oil in
Tatarstan.
PJSC TATNEFT n.a. V.D. Shashin
MD&A for the year ended 31 December 2023
4
Key financial and operational results
12 months ended Chg.,
31 December
2023
31 December
2022
%
Financial results
Revenue (excluding financial services), net (RR million) 1,589,082 1,427,147 11.3
Profit attributable to shareholders of the Company (RR million) 287,921 284,572 1.2
EBITDA (1) (RR million) 391,730 447,120 (12.4)
Adjusted EBITDA (1) (RR million) 414,028 475,185 (12.9)
Additions to property, plant and equipment (2) (RR million) 223,599 160,895 39.0
Free Cash Flow (3) (RR million) 103,033 196,803 (47.6)
Net debt (3) (4) (RR million) (61,258) (153,363) (60.1)
Basic and Diluted profit per share (RR)
Common 127.93 126.44 1.2
Preferred 127.93 126.44 1.2
Operational results
Crude oil production by the Group (th. tonnes) 28,450 29,114 (2.3)
Crude oil production by the Group (th. barrels) 202,649 207,379 (2.3)
Crude oil daily production (th. barrels per day) 555 568 (2.3)
Gas production by the Group (million cubic meters) 921 935 (1.5)
Gas daily production (th. boe per day) 15 15 -
Refined products produced (th. tonnes) 16,917 15,988 5.8
Gas products produced (th. tonnes) 1,096 1,042 5.2
Refining throughput (th. barrels per day) 342 324 5.6
(1) As calculated on page 9
(2) As in consolidated statement of cash flows
(3) As calculated on page 10
(4) At the end of the period
The net profit of the Group (profit attributable to the Company shareholders) in the twelve months of 2023 compared to the
same period of 2022 increased by 1.2%.
Segment information
Our operations are currently divided into the following main segments:
• Exploration and Production – consists of the Company’s Oil and Gas Extraction and Production Division, as well
as production subsidiaries. Most oil and gas exploration and production activities are concentrated within the Company
and centrally managed by Tatneft-Upstream ( Tatneft-Dobycha ) Division.
• Refining and Marketing – consists of a refining and petrochemical complex in Nizhnekamsk, Tatarstan, operated
by TANECO, Gas Collection, Transportation and Refining Division Tatneftegaspererabotka, which also operates a
small refinery in Kichui, Tatarstan; the Company’s Sales and Marketing Division ( URNiN ), Tatneft-AZS Center,
Tatneft-AZS-Zapad, Tatneft-AZS-Severo-Zapad and other subsidiaries which manage the Tatneft branded gas stations
network in Russia and abroad, and carry out refined products wholesale sales; as well as various ancillary companies.
• Tires business - includes the production and sale of tires by the enterprises Ikon Tyres/Shina, and BRZ acquired in
2023.
• Financial Services .
These segments are determined by the way management recognizes the segments within the Group for making operating
decisions and how they are evident from the Group structure.
MD&A for the year ended 31 December 2023
4
Key financial and operational results
12 months ended Chg.,
31 December
2023
31 December
2022
%
Financial results
Revenue (excluding financial services), net (RR million) 1,589,082 1,427,147 11.3
Profit attributable to shareholders of the Company (RR million) 287,921 284,572 1.2
EBITDA (1) (RR million) 391,730 447,120 (12.4)
Adjusted EBITDA (1) (RR million) 414,028 475,185 (12.9)
Additions to property, plant and equipment (2) (RR million) 223,599 160,895 39.0
Free Cash Flow (3) (RR million) 103,033 196,803 (47.6)
Net debt (3) (4) (RR million) (61,258) (153,363) (60.1)
Basic and Diluted profit per share (RR)
Common 127.93 126.44 1.2
Preferred 127.93 126.44 1.2
Operational results
Crude oil production by the Group (th. tonnes) 28,450 29,114 (2.3)
Crude oil production by the Group (th. barrels) 202,649 207,379 (2.3)
Crude oil daily production (th. barrels per day) 555 568 (2.3)
Gas production by the Group (million cubic meters) 921 935 (1.5)
Gas daily production (th. boe per day) 15 15 -
Refined products produced (th. tonnes) 16,917 15,988 5.8
Gas products produced (th. tonnes) 1,096 1,042 5.2
Refining throughput (th. barrels per day) 342 324 5.6
(1) As calculated on page 9
(2) As in consolidated statement of cash flows
(3) As calculated on page 10
(4) At the end of the period
The net profit of the Group (profit attributable to the Company shareholders) in the twelve months of 2023 compared to the
same period of 2022 increased by 1.2%.
Segment information
Our operations are currently divided into the following main segments:
• Exploration and Production – consists of the Company’s Oil and Gas Extraction and Production Division, as well
as production subsidiaries. Most oil and gas exploration and production activities are concentrated within the Company
and centrally managed by Tatneft-Upstream ( Tatneft-Dobycha ) Division.
• Refining and Marketing – consists of a refining and petrochemical complex in Nizhnekamsk, Tatarstan, operated
by TANECO, Gas Collection, Transportation and Refining Division Tatneftegaspererabotka, which also operates a
small refinery in Kichui, Tatarstan; the Company’s Sales and Marketing Division ( URNiN ), Tatneft-AZS Center,
Tatneft-AZS-Zapad, Tatneft-AZS-Severo-Zapad and other subsidiaries which manage the Tatneft branded gas stations
network in Russia and abroad, and carry out refined products wholesale sales; as well as various ancillary companies.
• Tires business - includes the production and sale of tires by the enterprises Ikon Tyres/Shina, and BRZ acquired in
2023.
• Financial Services .
These segments are determined by the way management recognizes the segments within the Group for making operating
decisions and how they are evident from the Group structure.
PJSC TATNEFT n.a. V.D. Shashin
MD&A for the year ended 31 December 2023
5
Intersegment sales
T atneft’s two main business segments are interconnected and dependent on each other, and hence a portion of the revenues
of one main segment are related to the expenses of the other. In particular, exploration and production Group companies
supply part of crude oil for the processing at our own refineries, mainly TANECO, and the refined products are then sold by
the Company in domestic or international markets, as well as to the Company’s consumer marketing subsidiaries for
subsequent distribution.
As a result of certain factors, benchmark crude oil market prices in Russia cannot be determined with certainty. Therefore,
the prices set for inter-segment purchases of crude oil and other goods and services reflect a combination of market factors,
primarily domestic crude oil market prices, transportation costs, regional market conditions, the cost of crude oil refining,
and other factors. Accordingly, an analysis of either of these segments on a stand-alone basis could give a misleading
perception of those segments’ underlying financial position and results of operations. For this reason, we do not analyze
either of our main segments separately in the discussion that follows. However, we present the financial data for each
respective segment in Note 22 “Segment information” to our consolidated financial statements. All intercompany operations
are eliminated on the consolidation level.
Exceptional items
The Group's results for the respective reporting periods of 2023 and 2022 were impacted by certain exceptional items,
including impairment loss on assets related to exploration and production of superviscous oil, exploration assets, related
mainly to the oilfields located outside the Republic of Tatarstan, and an impairment provision loss on certain social assets
not providing direct future economic benefits, as well as the loss from impairment of other assets due to the current
macroeconomic situation. These losses were reflected in the lines “Impairment losses on property, pla nt and equipment and
other non- financial assets net of reversal” and “Expected credit losses on financial assets net of reversal” in the Consolidated
Statement of Profit or Loss and other Comprehensive Income of the Group (see page 9):
12 months ended
(RR million)
31 December
2023
31 December
2022
Expected credit losses on financial assets net of reversal 566 (2,165)
Impairment losses on property, plant and equipment and other non-financial assets
net of reversal 21,732 30,230
Total exceptional items 22,298 28,065
MD&A for the year ended 31 December 2023
5
Intersegment sales
T atneft’s two main business segments are interconnected and dependent on each other, and hence a portion of the revenues
of one main segment are related to the expenses of the other. In particular, exploration and production Group companies
supply part of crude oil for the processing at our own refineries, mainly TANECO, and the refined products are then sold by
the Company in domestic or international markets, as well as to the Company’s consumer marketing subsidiaries for
subsequent distribution.
As a result of certain factors, benchmark crude oil market prices in Russia cannot be determined with certainty. Therefore,
the prices set for inter-segment purchases of crude oil and other goods and services reflect a combination of market factors,
primarily domestic crude oil market prices, transportation costs, regional market conditions, the cost of crude oil refining,
and other factors. Accordingly, an analysis of either of these segments on a stand-alone basis could give a misleading
perception of those segments’ underlying financial position and results of operations. For this reason, we do not analyze
either of our main segments separately in the discussion that follows. However, we present the financial data for each
respective segment in Note 22 “Segment information” to our consolidated financial statements. All intercompany operations
are eliminated on the consolidation level.
Exceptional items
The Group's results for the respective reporting periods of 2023 and 2022 were impacted by certain exceptional items,
including impairment loss on assets related to exploration and production of superviscous oil, exploration assets, related
mainly to the oilfields located outside the Republic of Tatarstan, and an impairment provision loss on certain social assets
not providing direct future economic benefits, as well as the loss from impairment of other assets due to the current
macroeconomic situation. These losses were reflected in the lines “Impairment losses on property, pla nt and equipment and
other non- financial assets net of reversal” and “Expected credit losses on financial assets net of reversal” in the Consolidated
Statement of Profit or Loss and other Comprehensive Income of the Group (see page 9):
12 months ended
(RR million)
31 December
2023
31 December
2022
Expected credit losses on financial assets net of reversal 566 (2,165)
Impairment losses on property, plant and equipment and other non-financial assets
net of reversal 21,732 30,230
Total exceptional items 22,298 28,065
PJSC TATNEFT n.a. V.D. Shashin
MD&A for the year ended 31 December 2023
6
Results of the Group operations for the year ended 31 December 2023 compared to the year ended
31 December 2022
The following table sets forth the consolidated statement of profit or loss both in absolute values and respective changes
(where relevant) over the analyzed periods:
12 months ended Chg.,
(RR million)
31 December
2023
31 December
2022
%
Continuing operations
Revenue (excluding financial services), net 1,589,082 1,427,147 11.3
Costs and other expenses (excluding financial services)
Operating expenses (200,228) (176,629) 13.4
Purchased oil and refined products (306,393) (135,203) >100
Exploration (3,001) (1,946) 54.2
Transportation (71,901) (52,892) 35.9
Selling, general and administrative (97,632) (68,584) 42.4
Depreciation, depletion and amortization (60,647) (48,042) 26.2
Expected credit losses on financial assets net of reversal (566) 2,165 n/a
Impairments loss on property, plant and equipment and other non-financial assets, net of
reversal (21,732) (30,230) (28.1)
Taxes other than income taxes (458,014) (464,819) (1.5)
Export duties (17,616) (44,527) (60.4)
Maintenance of social infrastructure and transfer of social assets (12,023) (9,496) 26.6
Total costs and expenses (excluding financial services) (1,249,753) (1,030,203) 21.3
Loss on disposals of interests in subsidiaries and associates, net (324) (96) >100
Fair value gains from financial assets at fair value through profit or loss, net 158 897 (82.4)
Other operating income, net 17,480 2,645 >100
Operating profit (excluding financial services) 356,643 400,390 (10.9)
Net interest, fee and commission and other operating income/(expenses) and
gains/(losses) from financial services
Interest, fee and commission income 28,294 25,804 9.6
Interest, fee and commission expense (15,962) (14,522) 9.9
Net expense on creating provision for credit losses on debt financial assets (10,414) (1,501) >100
Operating expenses (9,187) (8,930) 2.9
Gain arising from dealing in foreign currencies, net 477 3,301 (85.5)
Other operating expences, net (1,130) (1,922) (41.2)
Total net interest, fee and commission and other operating income and gains from
financial services (7,922) 2,230 n/a
Other income/(expenses)
Foreign exchange gain/(loss), net 25,049 (24,999) n/a
Interest income (excluding financial services) 10,367 7,756 33.7
Interest expense, net of amounts capitalized (excluding financial services) (21,025) (5,697) >100
Share of results of associates and joint ventures, net 2,395 288 >100
Total other income/(expenses), net 16,786 (22,652) n/a
Profit before income tax 365,507 379,968 (3.8)
Current income tax expense (73,172) (76,908) (4.9)
Deferred income tax expense (6,072) (3,822) 58.9
Total income tax expense (79,244) (80,730) (1.8)
Profit from continuing operations 286,263 299,238 (4.3)
Loss from discontinued activity - (14,335) (100.0)
Profit for the year 286,263 284,903 0.5
Less: profit attributable to non-controlling interest 1,658 (331) n/a
Profit attributable to shareholders of PJSC Tatneft n.a. V.D. Shashin 287,921 284,572 1.2
MD&A for the year ended 31 December 2023
6
Results of the Group operations for the year ended 31 December 2023 compared to the year ended
31 December 2022
The following table sets forth the consolidated statement of profit or loss both in absolute values and respective changes
(where relevant) over the analyzed periods:
12 months ended Chg.,
(RR million)
31 December
2023
31 December
2022
%
Continuing operations
Revenue (excluding financial services), net 1,589,082 1,427,147 11.3
Costs and other expenses (excluding financial services)
Operating expenses (200,228) (176,629) 13.4
Purchased oil and refined products (306,393) (135,203) >100
Exploration (3,001) (1,946) 54.2
Transportation (71,901) (52,892) 35.9
Selling, general and administrative (97,632) (68,584) 42.4
Depreciation, depletion and amortization (60,647) (48,042) 26.2
Expected credit losses on financial assets net of reversal (566) 2,165 n/a
Impairments loss on property, plant and equipment and other non-financial assets, net of
reversal (21,732) (30,230) (28.1)
Taxes other than income taxes (458,014) (464,819) (1.5)
Export duties (17,616) (44,527) (60.4)
Maintenance of social infrastructure and transfer of social assets (12,023) (9,496) 26.6
Total costs and expenses (excluding financial services) (1,249,753) (1,030,203) 21.3
Loss on disposals of interests in subsidiaries and associates, net (324) (96) >100
Fair value gains from financial assets at fair value through profit or loss, net 158 897 (82.4)
Other operating income, net 17,480 2,645 >100
Operating profit (excluding financial services) 356,643 400,390 (10.9)
Net interest, fee and commission and other operating income/(expenses) and
gains/(losses) from financial services
Interest, fee and commission income 28,294 25,804 9.6
Interest, fee and commission expense (15,962) (14,522) 9.9
Net expense on creating provision for credit losses on debt financial assets (10,414) (1,501) >100
Operating expenses (9,187) (8,930) 2.9
Gain arising from dealing in foreign currencies, net 477 3,301 (85.5)
Other operating expences, net (1,130) (1,922) (41.2)
Total net interest, fee and commission and other operating income and gains from
financial services (7,922) 2,230 n/a
Other income/(expenses)
Foreign exchange gain/(loss), net 25,049 (24,999) n/a
Interest income (excluding financial services) 10,367 7,756 33.7
Interest expense, net of amounts capitalized (excluding financial services) (21,025) (5,697) >100
Share of results of associates and joint ventures, net 2,395 288 >100
Total other income/(expenses), net 16,786 (22,652) n/a
Profit before income tax 365,507 379,968 (3.8)
Current income tax expense (73,172) (76,908) (4.9)
Deferred income tax expense (6,072) (3,822) 58.9
Total income tax expense (79,244) (80,730) (1.8)
Profit from continuing operations 286,263 299,238 (4.3)
Loss from discontinued activity - (14,335) (100.0)
Profit for the year 286,263 284,903 0.5
Less: profit attributable to non-controlling interest 1,658 (331) n/a
Profit attributable to shareholders of PJSC Tatneft n.a. V.D. Shashin 287,921 284,572 1.2
PJSC TATNEFT n.a. V.D. Shashin
MD&A for the year ended 31 December 2023
7
Revenues (excluding financial services)
A breakdown of Revenues (excluding financial services) by product type is provided in the following table:
12 months ended Chg.,
(RR million)
31 December
2023
31 December
2022
%
Crude oil 577,439 533,049 8.3
Refined products 892,705 792,222 12.7
Tires 22,315 - -
Corporate and other sales 96,623 101,876 (5.2)
Total Revenue (excluding financial services) 1,589,082 1,427,147 11.3
Increase in revenues (excluding financial services) in the twelve months of 2023 in comparison to the same period of 2022
was primarily due to increased sales volumes of refined products, as well as higher oil prices.
Export duties and excise taxes
12 months ended Chg .,
(RR million)
31 December
2023
31 December
2022
%
Export duties on crude oil 13,716 33,977 (59,6)
Export duties on refined products 3,900 10,550 (63,0)
Excise taxes on refined products (176,020) (190,382) (7,5)
incl. “reverse excise tax” (279,004) (278,583) 0,2
Total export duties and excise taxes (158,404) (145,855) 8,6
The negative amount of excise tax on refined products is associated with the effect of the “reverse excise” mechanism based
on differences between domestic refined products prices and respective export netbacks, as well as an increase in the
correction factor (Kadj) from 0.677 to 0.833 in 2023. In addition, since 2021 an investment premium K INV has been introduced
for certain refineries, including the Company’s TANECO refinery, which increases the amount of reverse excise tax.
Revenues breakdown (excluding financial services)
Revenues (including purchased oil and refined products)
12 months ended Chg.,
(RR million)
31 December
2023
31 December
2022
%
Crude oil
Far abroad countries sales 338,062 337,627 0.1
Domestic sales 239,377 195,422 22.5
577,439 533,049 8.3
Refined products
Far abroad countries sales 300,902 302,298 (0.5)
Near abroad countries sales 18,709 16,762 11.6
Domestic sales 573,094 473,162 21.1
892,705 792,222 12.7
Tires 22,315 - -
Other sales 96,623 101,876 (5.2)
Sales of crude oil
In the twelve months of 2023, revenue from oil sales amounted to RR 577,439 million, which is higher by 8.3% compared
to the same period of 2022 and is associated with an increase in crude oil sales prices in the reporting period.
Sales of refined products
Revenue from the sale of refined products in the twelve months of 2023 increased by 12.7% compared to the same period of
2022 and amounted to RR 892,705 million, which is associated with an increase in the sales volumes.
MD&A for the year ended 31 December 2023
7
Revenues (excluding financial services)
A breakdown of Revenues (excluding financial services) by product type is provided in the following table:
12 months ended Chg.,
(RR million)
31 December
2023
31 December
2022
%
Crude oil 577,439 533,049 8.3
Refined products 892,705 792,222 12.7
Tires 22,315 - -
Corporate and other sales 96,623 101,876 (5.2)
Total Revenue (excluding financial services) 1,589,082 1,427,147 11.3
Increase in revenues (excluding financial services) in the twelve months of 2023 in comparison to the same period of 2022
was primarily due to increased sales volumes of refined products, as well as higher oil prices.
Export duties and excise taxes
12 months ended Chg .,
(RR million)
31 December
2023
31 December
2022
%
Export duties on crude oil 13,716 33,977 (59,6)
Export duties on refined products 3,900 10,550 (63,0)
Excise taxes on refined products (176,020) (190,382) (7,5)
incl. “reverse excise tax” (279,004) (278,583) 0,2
Total export duties and excise taxes (158,404) (145,855) 8,6
The negative amount of excise tax on refined products is associated with the effect of the “reverse excise” mechanism based
on differences between domestic refined products prices and respective export netbacks, as well as an increase in the
correction factor (Kadj) from 0.677 to 0.833 in 2023. In addition, since 2021 an investment premium K INV has been introduced
for certain refineries, including the Company’s TANECO refinery, which increases the amount of reverse excise tax.
Revenues breakdown (excluding financial services)
Revenues (including purchased oil and refined products)
12 months ended Chg.,
(RR million)
31 December
2023
31 December
2022
%
Crude oil
Far abroad countries sales 338,062 337,627 0.1
Domestic sales 239,377 195,422 22.5
577,439 533,049 8.3
Refined products
Far abroad countries sales 300,902 302,298 (0.5)
Near abroad countries sales 18,709 16,762 11.6
Domestic sales 573,094 473,162 21.1
892,705 792,222 12.7
Tires 22,315 - -
Other sales 96,623 101,876 (5.2)
Sales of crude oil
In the twelve months of 2023, revenue from oil sales amounted to RR 577,439 million, which is higher by 8.3% compared
to the same period of 2022 and is associated with an increase in crude oil sales prices in the reporting period.
Sales of refined products
Revenue from the sale of refined products in the twelve months of 2023 increased by 12.7% compared to the same period of
2022 and amounted to RR 892,705 million, which is associated with an increase in the sales volumes.
PJSC TATNEFT n.a. V.D. Shashin
MD&A for the year ended 31 December 2023
8
Other sales
Other sales primarily represent sales of materials and equipment, some types of petrochemical products, various oilfield
services and sales of energy, water, and steam by the Group entities to third parties.
In the twelve months of 2023, other sales amounted to RR 96,623 million, decreasing by 5.2% in comparison to the twelve
months of 2022. The changes occurred mainly due to a decrease in sales of other goods produced at the Group's petrochemical
businesses.
Costs and other expenses (excluding financial services)
Operating expenses. Operating expenses in the twelve months of 2023 amounted to RR 200,228 million, increasing by
13.4% in comparison to 2022. Operating expenses include crude oil extraction expenses, refining expenses, employee benefit
expenses, as well as cost of other sales.
Cost of purchased crude oil and refined products in 2023 and 2022 amounted to RR 306,393 million and RR 135,203
million, respectively.
Exploration expenses. Exploration expenses consist primarily of geological and geophysical costs, and the costs of carrying
and retaining undeveloped properties.
Transportation expenses . Transportation of the Group’s crude oil and refined products , including purchased crude oil and
refined products, are mostly carried out using the Transneft trunk pipeline system and the railway.
In the twelve months of 2023, transportation costs amounted to RR 71,901 million, which is 35.9% higher than in the twelve
months of 2022. The increase was mainly due to higher volumes of refined products deliveries.
Selling, general and administrative expenses. These expenses are not directly related to production and include salary
expenses, general business costs, insurance, advertising, legal fees, consulting and audit services, charity and sponsorship
expenses and other expenses.
Information about other expenses is presented on page 6.
Taxes. Effective tax burden (taxes other than income tax as well as export duties to the revenue (excluding financial services))
of the Group in the twelve months of 2023 and 2022 was 30% and 36%, respectively.
Taxes other than income taxes include the following:
12 months ended
(RR million)
31 December
2023
31 December
2022
Mineral extraction tax 494,071 511,993
Tax on additional income from the extraction of hydrocarbons (AIT) 122,649 128,491
Excise (176,020) (190,382)
Property tax 14,809 12,499
Other 2,505 2,218
Total taxes other than income taxes 458,014 464,819
Changes in taxes other than income taxes in the twelve months of 2023 compared to the same period of 2022 were mainly
due to lower oil prices taken into account in the mineral extraction tax rate, the application of the AIT regime in a number of
fields in the Republic of Tatarstan, as well as the impact of the “reverse excise tax” mechanism.
Maintenance of social infrastructure and transfer of social assets. In the twelve months of 2023, maintenance of social
infrastructure expenses and transfer of social assets amounted to RR 12,023 million compared to RR 9,496 million in the
same period of 2022. These social infrastructure expenses relate primarily to housing, educational facilities, and cultural
buildings in Tatarstan.
Other (expenses)/income
Foreign exchange gain/(loss), net. In the twelve months of 2023, the Group recorded a RR 25,049 million gain compared
to RR 24,999 million loss in the twelve months of 2021, which were due to volatility of Ruble to US Dollar exchange rate in
the reporting periods, resulting in the corresponding revaluation of monetary assets and liabilities of the Group.
Interest income (excluding financial services). In the twelve months of 2023 amounted to RR 10,367 million and increased
by 33.7% compared to the same period of 2022, mainly due to an increase in average interest rates and balances on bank
deposits.
MD&A for the year ended 31 December 2023
8
Other sales
Other sales primarily represent sales of materials and equipment, some types of petrochemical products, various oilfield
services and sales of energy, water, and steam by the Group entities to third parties.
In the twelve months of 2023, other sales amounted to RR 96,623 million, decreasing by 5.2% in comparison to the twelve
months of 2022. The changes occurred mainly due to a decrease in sales of other goods produced at the Group's petrochemical
businesses.
Costs and other expenses (excluding financial services)
Operating expenses. Operating expenses in the twelve months of 2023 amounted to RR 200,228 million, increasing by
13.4% in comparison to 2022. Operating expenses include crude oil extraction expenses, refining expenses, employee benefit
expenses, as well as cost of other sales.
Cost of purchased crude oil and refined products in 2023 and 2022 amounted to RR 306,393 million and RR 135,203
million, respectively.
Exploration expenses. Exploration expenses consist primarily of geological and geophysical costs, and the costs of carrying
and retaining undeveloped properties.
Transportation expenses . Transportation of the Group’s crude oil and refined products , including purchased crude oil and
refined products, are mostly carried out using the Transneft trunk pipeline system and the railway.
In the twelve months of 2023, transportation costs amounted to RR 71,901 million, which is 35.9% higher than in the twelve
months of 2022. The increase was mainly due to higher volumes of refined products deliveries.
Selling, general and administrative expenses. These expenses are not directly related to production and include salary
expenses, general business costs, insurance, advertising, legal fees, consulting and audit services, charity and sponsorship
expenses and other expenses.
Information about other expenses is presented on page 6.
Taxes. Effective tax burden (taxes other than income tax as well as export duties to the revenue (excluding financial services))
of the Group in the twelve months of 2023 and 2022 was 30% and 36%, respectively.
Taxes other than income taxes include the following:
12 months ended
(RR million)
31 December
2023
31 December
2022
Mineral extraction tax 494,071 511,993
Tax on additional income from the extraction of hydrocarbons (AIT) 122,649 128,491
Excise (176,020) (190,382)
Property tax 14,809 12,499
Other 2,505 2,218
Total taxes other than income taxes 458,014 464,819
Changes in taxes other than income taxes in the twelve months of 2023 compared to the same period of 2022 were mainly
due to lower oil prices taken into account in the mineral extraction tax rate, the application of the AIT regime in a number of
fields in the Republic of Tatarstan, as well as the impact of the “reverse excise tax” mechanism.
Maintenance of social infrastructure and transfer of social assets. In the twelve months of 2023, maintenance of social
infrastructure expenses and transfer of social assets amounted to RR 12,023 million compared to RR 9,496 million in the
same period of 2022. These social infrastructure expenses relate primarily to housing, educational facilities, and cultural
buildings in Tatarstan.
Other (expenses)/income
Foreign exchange gain/(loss), net. In the twelve months of 2023, the Group recorded a RR 25,049 million gain compared
to RR 24,999 million loss in the twelve months of 2021, which were due to volatility of Ruble to US Dollar exchange rate in
the reporting periods, resulting in the corresponding revaluation of monetary assets and liabilities of the Group.
Interest income (excluding financial services). In the twelve months of 2023 amounted to RR 10,367 million and increased
by 33.7% compared to the same period of 2022, mainly due to an increase in average interest rates and balances on bank
deposits.
PJSC TATNEFT n.a. V.D. Shashin
MD&A for the year ended 31 December 2023
9
Interest expense, net of amounts capitalized (excluding financial services) , includes, among other things, an unwinding
of the present value discount of decommissioning provision on oil and gas assets, an interest expense on lease obligations in
accordance with IFRS 16 “Leases” , as well as discount on long-term financial assets.
In the twelve months of 2023, interest expenses, net of capitalized, amounted to RR 21,025 million, an increase of more than
100% compared to the twelve months of 2022.
Income taxes
The Group’s effective income tax rate in the twelve months of 2023 was 21.7% compared to the statutory tax rate of 20% in
the Russian Federation.
EBITDA reconciliation
12 months ended
(RR million)
31 December
2023
31 December
2022
Revenues (excluding financial services) 1,589,082 1,427,147
Costs and other expense (excluding financial services) (1,249,753) (1,030,203)
Loss on disposal of interest in subsidiaries and associates, net (324) (96)
Operating results from financial services, net (7,922) 2,230
Depreciation, depletion and amortization 60,647 48,042
EBITDA 391,730 447,120
Add back Exceptional items* 22,298 28,065
EBITDA adjusted for Exceptional items* 414,028 475,185
*See section Exceptional items (p.5)
EBITDA (earnings before interest taxes depreciation and amortization) is financial measure not provided by IFRS
Accounting Standards. Herewith, its calculation methodology is not standardized, therefore above presented calculations of
this indicator do not reflect unified approaches. EBITDA provides useful information to investors being the indicator of the
strength and performance of our business operations. EBITDA also shows our ability to finance capital expenditures,
acquisitions, and other investments and our ability to incur and service debt. While depreciation and amortization are
considered operating costs under IFRS Accounting Standards, these expenses primarily represent the non-cash current period
allocation of costs associated with long-lived assets acquired or constructed in prior periods.
EBITDA is commonly used as a basis by some investors, analysts, and credit rating agencies to evaluate and compare the
periodic and future operating performance and value of companies in the oil and gas industry. This indicator should not be
considered in isolation as an alternative to net profit, operating income, or any other measure of performance under IFRS
Accounting Standards. EBITDA does not consider our need to replace our capital equipment over time.
Financial Condition Summary Information
The following table shows certain key financial indicators based on the Consolidated Statement of Financial Position :
(RR million)
At 31 December
2022
At 31 December
2022
Current assets 589,623 456,426
Non-current assets 1,455,550 1,219,411
Total assets 2,045,173 1,675,837
Current liabilities 671,912 415,054
Non-current liabilities 176,091 156,339
Total liabilities 848,003 571,393
Total equity 1,197,170 1,104,444
Working capital (current assets, incl. cash and cash equivalents,
less current liabilities) (82,289) 41,372
MD&A for the year ended 31 December 2023
9
Interest expense, net of amounts capitalized (excluding financial services) , includes, among other things, an unwinding
of the present value discount of decommissioning provision on oil and gas assets, an interest expense on lease obligations in
accordance with IFRS 16 “Leases” , as well as discount on long-term financial assets.
In the twelve months of 2023, interest expenses, net of capitalized, amounted to RR 21,025 million, an increase of more than
100% compared to the twelve months of 2022.
Income taxes
The Group’s effective income tax rate in the twelve months of 2023 was 21.7% compared to the statutory tax rate of 20% in
the Russian Federation.
EBITDA reconciliation
12 months ended
(RR million)
31 December
2023
31 December
2022
Revenues (excluding financial services) 1,589,082 1,427,147
Costs and other expense (excluding financial services) (1,249,753) (1,030,203)
Loss on disposal of interest in subsidiaries and associates, net (324) (96)
Operating results from financial services, net (7,922) 2,230
Depreciation, depletion and amortization 60,647 48,042
EBITDA 391,730 447,120
Add back Exceptional items* 22,298 28,065
EBITDA adjusted for Exceptional items* 414,028 475,185
*See section Exceptional items (p.5)
EBITDA (earnings before interest taxes depreciation and amortization) is financial measure not provided by IFRS
Accounting Standards. Herewith, its calculation methodology is not standardized, therefore above presented calculations of
this indicator do not reflect unified approaches. EBITDA provides useful information to investors being the indicator of the
strength and performance of our business operations. EBITDA also shows our ability to finance capital expenditures,
acquisitions, and other investments and our ability to incur and service debt. While depreciation and amortization are
considered operating costs under IFRS Accounting Standards, these expenses primarily represent the non-cash current period
allocation of costs associated with long-lived assets acquired or constructed in prior periods.
EBITDA is commonly used as a basis by some investors, analysts, and credit rating agencies to evaluate and compare the
periodic and future operating performance and value of companies in the oil and gas industry. This indicator should not be
considered in isolation as an alternative to net profit, operating income, or any other measure of performance under IFRS
Accounting Standards. EBITDA does not consider our need to replace our capital equipment over time.
Financial Condition Summary Information
The following table shows certain key financial indicators based on the Consolidated Statement of Financial Position :
(RR million)
At 31 December
2022
At 31 December
2022
Current assets 589,623 456,426
Non-current assets 1,455,550 1,219,411
Total assets 2,045,173 1,675,837
Current liabilities 671,912 415,054
Non-current liabilities 176,091 156,339
Total liabilities 848,003 571,393
Total equity 1,197,170 1,104,444
Working capital (current assets, incl. cash and cash equivalents,
less current liabilities) (82,289) 41,372
PJSC TATNEFT n.a. V.D. Shashin
MD&A for the year ended 31 December 2023
10
Working capital position
The change in working capital in 2023 is due to an increase in both current assets and current liabilities. At the same time, in
assets there was an increase mainly in accounts receivable and inventory, and in liabilities there was an increase in accounts
payable and taxes payable, other than income tax.
Liquidity and Capital Resources
The following table shows a summary from the Consolidated Statement of Cash Flows:
12 months ended
(RR million) 31 December 2023 31 December 2022
Net cash provided by operating activities 326,632 357,698
including:
Net cash provided by operating activities before income tax and interest
(excluding financial services) 408,121 397,410
Net cash provided/(used) by operating activities from financial services
before income tax (9,502) 34,693
Net cash used in investing activities (296,908) (117,054)
Net cash used in financing activities (121,568) (132,014)
Net change in cash and cash equivalents (91,844) 108,630
Additions to property, plant and equipment
The following additions to property, plant and equipment (by segment, excluding non-cash additions) were made in the
respective periods of 2023 and 2022:
12 months ended
(RR million) 31 December 2023 31 December 2022
Exploration and production 107,686 64,318
Refining and marketing 74,722 60,489
Tires business 941 -
Financial services 348 57
Corporate and other 39,902 30,945
Total additions to property, plant and equipment 223,599 155,809
Total additions from property, plant and equipment is presented net of additions from discontinued operation
Calculation of Free Cash Flow
12 months ended
(RR million) 31 December 2023 31 December 2022
Net cash provided by operating activities 326,632 357,698
Additions to property, plant and equipment (223,599) (160,895)
Free Cash Flow 103,033 196,803
Calculation of Net Debt
(RR million)
At 31 December
2023
At 31 December
2022
Short-term debt and current portion of long-term debt 4,809 2,665
Long-term debt, net of current portion 18,048 11,836
Total debt 22,857 14,501
Cash and cash equivalents 84,115 167,864
Net Debt (61,258) (153,363)
Contractual obligations, other contingen and off-balance sheet obligations
Guarantees
The Group has guarantees issued related mainly to financial services at 31 December 2023 and at 31 December 2022.
MD&A for the year ended 31 December 2023
10
Working capital position
The change in working capital in 2023 is due to an increase in both current assets and current liabilities. At the same time, in
assets there was an increase mainly in accounts receivable and inventory, and in liabilities there was an increase in accounts
payable and taxes payable, other than income tax.
Liquidity and Capital Resources
The following table shows a summary from the Consolidated Statement of Cash Flows:
12 months ended
(RR million) 31 December 2023 31 December 2022
Net cash provided by operating activities 326,632 357,698
including:
Net cash provided by operating activities before income tax and interest
(excluding financial services) 408,121 397,410
Net cash provided/(used) by operating activities from financial services
before income tax (9,502) 34,693
Net cash used in investing activities (296,908) (117,054)
Net cash used in financing activities (121,568) (132,014)
Net change in cash and cash equivalents (91,844) 108,630
Additions to property, plant and equipment
The following additions to property, plant and equipment (by segment, excluding non-cash additions) were made in the
respective periods of 2023 and 2022:
12 months ended
(RR million) 31 December 2023 31 December 2022
Exploration and production 107,686 64,318
Refining and marketing 74,722 60,489
Tires business 941 -
Financial services 348 57
Corporate and other 39,902 30,945
Total additions to property, plant and equipment 223,599 155,809
Total additions from property, plant and equipment is presented net of additions from discontinued operation
Calculation of Free Cash Flow
12 months ended
(RR million) 31 December 2023 31 December 2022
Net cash provided by operating activities 326,632 357,698
Additions to property, plant and equipment (223,599) (160,895)
Free Cash Flow 103,033 196,803
Calculation of Net Debt
(RR million)
At 31 December
2023
At 31 December
2022
Short-term debt and current portion of long-term debt 4,809 2,665
Long-term debt, net of current portion 18,048 11,836
Total debt 22,857 14,501
Cash and cash equivalents 84,115 167,864
Net Debt (61,258) (153,363)
Contractual obligations, other contingen and off-balance sheet obligations
Guarantees
The Group has guarantees issued related mainly to financial services at 31 December 2023 and at 31 December 2022.
PJSC TATNEFT n.a. V.D. Shashin
MD&A for the year ended 31 December 2023
11
Legal contingencies
The Group is subject to various lawsuits and claims arising in the ordinary course of business. The outcomes of such
contingencies, lawsuits, or other proceedings cannot be determined at present. In the case of all known contingencies the
Group accrues a liability when the loss is probable, and the amount is reasonably estimable. Based on currently available
information, management believes that it is remote that future costs related to known contingent liability exposures would
have a material adverse impact on the Group’s consolidated financial statements.
Social commitments
The Group contributes significantly to the maintenance of local infrastructure and the welfare of its employees in Tatarstan,
which includes contributions towards the construction, development, and maintenance of housing, hospitals and transport
services, recreation and other social needs. Such funding is periodically determined by the Board of Directors after
consultation with governmental authorities and recorded as expenditures when incurred or capitalized to the extent that the
Group will receive economic benefits from their use in the future.
Key Accounting Policies and Estimates
The preparation of consolidated financial statements in conformity with IFRS Accounting Standards requires management
to select appropriate accounting policies and to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. For a full description of our significant
accounting policies, please refer to Note 28 of consolidated financial statements of the Group.
Forward-looking statements
Certain statements in this document are not historical facts and are ‘‘forward - looking’’ (as such term is def ined in the US
Private Securities Litigation Reform Act of 1995). We may from time to time make written or oral forward-looking statements
in reports to shareholders and in other communications. Examples of such forward-looking statements include, but are not
limited to:
• projections of revenues , income (or loss), earnings (or loss) per share, dividends, capital structure, or other financial
items or ratios;
• statements of our plans , objectives or goals, including those related to products or services;
• statements of future economic performance; and
• statements of assumptions underlying such statements.
Words such as "believes", "anticipates", "expects", "intends" and "plans" and similar expressions are intended to identify
forward-looking statements but are not the exclusive means of identifying such statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks
exist that the predictions, forecasts, projections, and other forward-looking statements will not be achieved. We caution
readers that a number of important factors could cause actual results to differ materially from the plans, objectives,
expectations, estimates, and intentions expressed in such forward-looking statements.
These factors include:
• inflation , interest rate and exchange rate fluctuations;
• the price of oil;
• the effect of, and changes in, Russian or Tatarstan government policy;
• the effect of terrorist attack or other geopolitical instability, either within Russia or elsewhere;
• the effects of competition in the geographic and business areas in which we conduct operations;
• the effects of changes in laws, regulations, taxation or accounting standards or practices;
• our ability to increase market share and control expenses;
• acquisitions or divestitures;
• technological changes.
This list of important factors is not exhaustive; when relying on forward-looking statements to make decisions with respect
to our shares, American Depositary Shares (ADSs), or other securities, investors and others should carefully consider the
foregoing factors and other uncertainties and events, especially in light of the difficult political, economic, social and legal
environment in which we operate. Such forward-looking statements speak only at the date on which they are made, and we
do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or
otherwise. We do not make any representation, warranty or prediction that the results anticipated by such forward-looking
statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios
and should not be viewed as the most likely or standard scenario.
MD&A for the year ended 31 December 2023
11
Legal contingencies
The Group is subject to various lawsuits and claims arising in the ordinary course of business. The outcomes of such
contingencies, lawsuits, or other proceedings cannot be determined at present. In the case of all known contingencies the
Group accrues a liability when the loss is probable, and the amount is reasonably estimable. Based on currently available
information, management believes that it is remote that future costs related to known contingent liability exposures would
have a material adverse impact on the Group’s consolidated financial statements.
Social commitments
The Group contributes significantly to the maintenance of local infrastructure and the welfare of its employees in Tatarstan,
which includes contributions towards the construction, development, and maintenance of housing, hospitals and transport
services, recreation and other social needs. Such funding is periodically determined by the Board of Directors after
consultation with governmental authorities and recorded as expenditures when incurred or capitalized to the extent that the
Group will receive economic benefits from their use in the future.
Key Accounting Policies and Estimates
The preparation of consolidated financial statements in conformity with IFRS Accounting Standards requires management
to select appropriate accounting policies and to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. For a full description of our significant
accounting policies, please refer to Note 28 of consolidated financial statements of the Group.
Forward-looking statements
Certain statements in this document are not historical facts and are ‘‘forward - looking’’ (as such term is def ined in the US
Private Securities Litigation Reform Act of 1995). We may from time to time make written or oral forward-looking statements
in reports to shareholders and in other communications. Examples of such forward-looking statements include, but are not
limited to:
• projections of revenues , income (or loss), earnings (or loss) per share, dividends, capital structure, or other financial
items or ratios;
• statements of our plans , objectives or goals, including those related to products or services;
• statements of future economic performance; and
• statements of assumptions underlying such statements.
Words such as "believes", "anticipates", "expects", "intends" and "plans" and similar expressions are intended to identify
forward-looking statements but are not the exclusive means of identifying such statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks
exist that the predictions, forecasts, projections, and other forward-looking statements will not be achieved. We caution
readers that a number of important factors could cause actual results to differ materially from the plans, objectives,
expectations, estimates, and intentions expressed in such forward-looking statements.
These factors include:
• inflation , interest rate and exchange rate fluctuations;
• the price of oil;
• the effect of, and changes in, Russian or Tatarstan government policy;
• the effect of terrorist attack or other geopolitical instability, either within Russia or elsewhere;
• the effects of competition in the geographic and business areas in which we conduct operations;
• the effects of changes in laws, regulations, taxation or accounting standards or practices;
• our ability to increase market share and control expenses;
• acquisitions or divestitures;
• technological changes.
This list of important factors is not exhaustive; when relying on forward-looking statements to make decisions with respect
to our shares, American Depositary Shares (ADSs), or other securities, investors and others should carefully consider the
foregoing factors and other uncertainties and events, especially in light of the difficult political, economic, social and legal
environment in which we operate. Such forward-looking statements speak only at the date on which they are made, and we
do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or
otherwise. We do not make any representation, warranty or prediction that the results anticipated by such forward-looking
statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios
and should not be viewed as the most likely or standard scenario.
PJSC TATNEFT n.a. V.D. Shashin
Additional information
12
Statement regarding corporate governance and TCFD disclosures
This report does not contain corporate governance statement and climate-related financial disclosures consistent with the
TCFD recommendations. The Company intends to include respective disclosures in its integrated annual report for 2023 (the
Annual report) to be released for the approval by the Company’s annual shareholders meeting in the second quarter of 202 4.
As of the date of this report the information required for the corporate governance statement and the TCFD disclosures is still
being collected and analysed for the purposes of being included in the Annual report.
Additional information
12
Statement regarding corporate governance and TCFD disclosures
This report does not contain corporate governance statement and climate-related financial disclosures consistent with the
TCFD recommendations. The Company intends to include respective disclosures in its integrated annual report for 2023 (the
Annual report) to be released for the approval by the Company’s annual shareholders meeting in the second quarter of 202 4.
As of the date of this report the information required for the corporate governance statement and the TCFD disclosures is still
being collected and analysed for the purposes of being included in the Annual report.