Interim report
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PJSC GAZPROM Consolidated Financial Statements prepared in accordance with IFRS ® Accounting Standards with Independent Auditor’s Report 31 December 2024 Moscow | 2025
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2 Contents Independent Auditor’s Report ............................................................................................................................. 3 Consolidated Balance Sheet ................................................................................................................................ 8 Consolidated Statement of Comprehensive Income ............................................................................................ 9 Consolidated Statement of Cash Flows ............................................................................................................. 10 Consolidated Statement of Changes in Equity .................................................................................................. 11 Notes to the Consolidated Financial Statements: 1 General Information ......................................................................................................................... 12 2 Economic Environment in the Russian Federation ........................................................................... 12 3 Basis of Presentation ........................................................................................................................ 12 4 Scope of Consolidation .................................................................................................................... 13 5 Material Accounting Policy Information .......................................................................................... 13 6 Critical Judgements and Estimates in Applying Accounting Policies ............................................... 21 7 Segment Information........................................................................................................................ 23 8 Cash and Cash Equivalents .............................................................................................................. 25 9 Financial Assets ............................................................................................................................... 26 10 Accounts Receivable and Prepayments ............................................................................................ 26 11 Inventories ....................................................................................................................................... 28 12 Other Current and Non-Current Assets ............................................................................................. 28 13 Property, Plant and Equipment ......................................................................................................... 29 14 Right-of-Use Assets ......................................................................................................................... 31 15 Goodwill .......................................................................................................................................... 31 16 Investments in Associates and Joint Ventures................................................................................... 32 17 Long-Term Accounts Receivable and Prepayments ......................................................................... 34 18 Accounts Payable, Provisions and Other Liabilities.......................................................................... 35 19 Taxes Other than on Profit and Fees Payable.................................................................................... 35 20 Short-Term Borrowings, Promissory Notes and Current Portion of Long-Term Borrowings ............ 35 21 Long-Term Borrowings, Promissory Notes ...................................................................................... 36 22 Profit Tax ......................................................................................................................................... 37 23 Provisions ........................................................................................................................................ 38 24 Equity .............................................................................................................................................. 40 25 Perpetual Notes ................................................................................................................................ 41 26 Revenue From Sales......................................................................................................................... 43 27 Operating Expenses.......................................................................................................................... 43 28 Finance Income and Expenses.......................................................................................................... 44 29 Basic and Diluted Earnings (Loss) per Share Attributable to the Owners of PJSC Gazprom ............ 44 30 Net Cash from Operating Activities ................................................................................................. 45 31 Subsidiaries ...................................................................................................................................... 45 32 Acquisition of a Subsidiary .............................................................................................................. 46 33 Related Parties ................................................................................................................................. 47 34 Commitments and Contingencies ..................................................................................................... 50 35 Operating Risks................................................................................................................................ 50 36 Financial Risk Factors ...................................................................................................................... 54 37 Fair Value of Financial Instruments ................................................................................................. 60 38 Events after the Reporting Period ..................................................................................................... 61
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3 Independent Auditor’s Report To the Shareholders of Public Joint Stock Company Gazprom Opinion We have audited the accompanying consolidated financial statements of Public Joint Stock Company Gazprom (“PJSC Gazprom”) and its subsidiaries (“the Group”), which comprise the consolidated balance sheet as at 31 December 2024, and the consolidated statement of comprehensive income, the consolidated statement of changes in equity and the consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, comprising material accounting policy information and other explanatory information. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2024, and its consolidated financial performance and consolid ated cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs). Basis for Opinion We conducted our audit in accordance with Intern ational 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 are independent of the Group in accordance with the Rules of Independence of Auditors and Audit Organisations and the Code of Professional Ethics for Auditors, as well as the International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants (including International Inde pendence Standards), and we have fulfilled our other ethical responsibilities in accordance with these ethics requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 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. Revenue estimation and recognition During the audit we specially focused on revenue recognition as the revenue amount was material and revenue streams were formed in different geographic regions with significantly different terms of revenue recognition including price determination and change, transfer of risks and rewards. In 202 4, export revenue continued to be significantly affected by the sanctions imposed since February 2022 by the US, the European Union and a number of other countries. Sanctions pressure continues to affect the development of relationships with foreign counterparties. In addition, on 10 January 2025, a number of the Group's companies were included in a new package of the US sanctions. The imposed restrictions may create a risk of a decrease in the volume of hydrocarbon
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4 sales for export, as well as affect payments for the supply of hydrocarbons, including the risk of a n increase in the timing of payments from foreign counterparties under existing contracts. Our audit procedures in respect of the risk of material misstatement of revenue included, in particular: assessment of the consistency in the application of the revenue recognition accounting policy applicable to various types of revenue and geographic regions; evaluation of the design of controls; assessment of the risk of material misstatement due to fraud or error; performance of substantive procedures in respect of the sales transactions. Information about the approaches to revenue recognition is disclosed in Note 5 “Material Accounting Policy Information” to the consolidated financial statements, information about sales, including information by geographic segments, is disclosed in Note 26 “Revenue from Sales” to the consolidated financial statements. Impairment of property, plant and equipment Due to the material carrying amount of property, plant and equipment, continued volatility of macroeconomic parameters, including the key rate of the Bank of Russia and inflation, aggravated by the fluctuating prices for energy resources, political instability, an increase in the income tax rate to 25 % from 1 January 2025 in the Russian Federation, we consider this area to be one of the most significant audit areas. Revenue forecasts were also significantly affected by the sanctions and restrictive measures imposed, including those infringing on the interests of PJSC Gazprom and its major subsidiaries. Additionally, we note that impairment models are highly sensitive to the assumptions applied by the Group’s management and require a significant level of subjectivity of the applied judgements and estimates of the Group’s management. As at 31 December 202 4 the Group’s management identified impairment indicators of property, plant and equipment related to certain cash-generating units and tested such property, plant and equipment for impairment in accordance with the requirements of IAS 36 Impairment of Assets. Our audit procedures in respect of this area included: analysis of the methodology used by the Group to test property, plant and equipment for impairment; testing of the principles used to forecast future cash flows; analysis of significant assumptions underlying the impairment test procedures in respect of various cash-generating units. The significant assumptions, in particular, included determining discount rates, forecasting prices for energy resources and exchange rates, as well as estimating volu mes of production and sales; a sensitivity analysis to determine whether the models used for testing were sensitive to changes in the significant assumptions; analysis and evaluation of the disclosure of information about the assets impairment testing for compliance with the requirements of IAS 36 Impairment of Assets. Information about the measurement methods and significant assumptions applied to test property, plant and equipment for impairment is disclosed in Note 5 “Material Accounting Policy Informati on” and in Note 6 “Critical Judgements and Estimates in Applying Accounting Policies” to the consolidated financial statements, information about property, plant and equipment and their impairment testing is disclosed in Note 13 “Property, Plant and Equipment” to the consolidated financial statements.
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5 Measurement of expected credit losses on trade receivables Estimating the allowance for expected credit losses on trade receivables was one of most significance in our audit because of the material balances of trade receivables and the material amount of the accumulated provision, and because the existing politica l and economic situation, which was caused, among other things, by the impact of the sanctions imposed in 2022 - 2024, affected the measurement of expected credit losses of both Russian and foreign customers. We also believe that the evaluation of the sufficiency of the allowance for expected credit losses on trade receivables is a higher risk area as it is based on management’s judgments on the possibility to recover that debt. Our audit procedures with respect to the measurement of expected credit losses on trade receivables by management included: checking of the methodology used to measure expected credit losses on trade receivables by the Group’s management; analysis of the assumptions and professional judgments applied by the Group’s management, including critical assessment of the information used to forecast the ability of its customers to repay their debts; sample checking of the models and calculations used to measure expected credit losses on trade receivables; analysis of external information, including legislative requirements and restrictive measures affecting the payment procedure of debts by foreign counterparties; sufficiency of the information disclosed as required by IFRS 7 Financial Instruments: Disclosures and IAS 1 Presentation of Financial Statements. Information about the measurement procedure and the key assumptions applied to estimate expected credit losses is disclosed in Note 5 “Material Accounting Policy Information” and Note 6 “ Critical Judgements and Estimates in Applying Accounting Policies” to the consolidated financial statements, information about accounts receivable and allowance for expected credit losses on trade receivables is disclosed in Notes 10 “Accounts Receivable and Prepayments”, 17 “Long -Term Accounts Receivable and Prepayments” and 36 “Financial Risk Factors” to the consolidated financial statements. Other Information Management is responsible for the other information. The other information comprises the information included in the Annual Report of PJSC Gazprom for 2024 and the Issuer’s Report of PJSC Gazprom for the 12 months of 202 4 but does not include the consolidated financial statements and our auditor’s report thereon. The Annual Report of PJSC Gazprom for 2024 and the Issuer’s Report of PJSC Gazprom for the 12 months of 2024 are expected to be made available to us after the date of this auditor’s report. Our opinion on the consolidated financial statements does not cover the other information and we do 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 when it becomes available 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. When we read the Annual Report of PJSC Gazprom for 2024 and the Issuer’s Report of PJSC Gazprom for the 12 months of 2024, if we conclude that there are material misstatements therein, we are required to communicate the matter to those charged with governance.
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6 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 s, 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 ability to continue as a going concern, disclosing, as applicable, m atters 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 t hese 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: a) identify and assess the risks of material misstatement of the cons olidated 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; b) 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; c) evaluate the appropriateness of accounting policies us ed and the reasonableness of accounting estimates and related disclosures made by the Group’s management; d) conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a m aterial 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 r eport to the related disclosure in the consolidated financial statements or, if such disclosu re is 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;
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 12 No tes to the C o ns o li da te d F in a nci a l Sta te m ents: 1 General Information Public Joint Stock Company Gazprom (PJSC Gazprom) and its subsidiaries (the “Group” or “Gazprom Group”) operate one of the largest gas pipeline systems in the world, and provide for the major part of natural gas production and its transportation by high -pressure pipel ines in the Russian Federation. The Group is engaged in oil production, oil refining, elect ric and heat energy generation, media business. The Russian Federation is the ultimate controlling party and has a controlling interest (including both direct and indirect ownership) of over 50 % in PJSC Gazprom. The Group is involved in the following activities: exploration and production of gas; transportation of gas; sales of gas within the Russian Federation and abroad; gas storage; production and sales of crude oil and gas condensate; processing of oil, gas condensate and other hydrocarbons and sales of refined products; electric and heat energy generation and sales; media business. 2 Economic Environment in the Russian Federation The economy of the Russian Federation displays certain characteristics of an emerging market. Tax, currency and customs legislation of the Russian Federation is subject to varying interpretations and causes additional challenges for companies operating in the Russian Federation. The political and economic instability, the situation in Ukraine, the current situation with sanctions, uncertainty and volatility of financial and trade markets and other risks have had and may continue to have effects on the Russian economy. The official Russian Ruble (“RUB”) to US Dollar (“USD”) exchange rate as determined by the Central Bank of the Russian Federation was as follows: as of 31 December 2024 – 101.6797; as of 31 December 2023 – 89.6883 (as of 31 December 2022 – 70.3375). The official RUB to Euro (“EUR”) exchange rate as determined by the Central Bank of the Russian Federation was as follows: as of 31 December 2024 – 106.1028; as of 31 December 2023 – 99.1919 (as of 31 December 2022 – 75.6553). The future economic development of the Russian Federation is dependent upon external factors and internal measures undertaken by the Government of the Russia n Federation to sustain growth and to change the tax, legal and regulatory frameworks. The management believes it is taking all necessary measures to support the sustainability and development of the Group’s business in the current business and economic environment. The future economic situation and the regulatory environmen t and their impact on the Group’s operations may differ from management’s current expectations. In 2022-2024, the United States of America, the European Union (the “EU”) and some other countries imposed additional sanctions against the Russian Federation (see Notes 35, 38). These circumstances have led to the volatility of financial markets, as well as significantly increased the level of economic uncertainty in the conditions of activity in the Russian Federation. The Group's management is analyzing the current economic conditions and their possible impact on the Group's activit ies. At the time of signing these consolidated financial statements, according to the estimates of the Group's management, the described circumstances do not call into question the continuity of the Group's activities. 3 Basis of Presentation These consolidated financial statements are prepared in accordance with, and comply with, IFRS® Accounting Standards, including all IFRS Accounting Standards and Interpretations of the International Accounting Standards Committee approved and effective in the reporting period. The consolidated financial statements of the Group are prepared under the historical cost convention except for certain financial assets and liabilities presented at the fair value (see Note 37).
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 13 3 Basis of Presentation (continued) The material accounting policy information applied in the preparation of the consolidated financial statements is set out below. The accounting policy has been consistently applied to all the periods presented in these consolidated financial statements, unless otherwise stated. 4 Scope of Consolidation As described in Note 5, the consolidated financial statements include consolidated subsidiaries, associates, joint ventures and operations of the Group. Significant change in the Group’s structure in 2024 is described in the Note 32. During 2023 the Group acquired several subsidiaries and there were other changes. 5 Material Accounting Policy Information 5.1 Subsidiaries, Associates and Joint Ventures Subsidiaries Subsidiaries are all entities, including structured entities, that the Group controls. Subsidiaries are consolidated from the date on which control is gained by the Group and are deconsolidated from the date on which control ceases. Acquisition of Entities under Common Control Acquisitions of entities under common control are accounted for in accordance with the requirements of IFRS 3 Business Combinations. Associates and Joint Ventures Investments in associates and joint ventures are accounted for using the equity method. The carrying amount of investments in associates and joint ventures is increased or decreased by recognising the Group's share in profit or loss and othe r comprehensive income of the investee after the acquisition date. Furthermore, in case of a change that is recognised directly in equity of an associate or a joint venture, the Group records its share in such change within profit or loss or, when applicable, in equity. The accrual (reversal) of impairment loss on investments in associates and joint ventures is recognised within “Impairment Loss on Non -Financial Assets” as part of operating expenses in the consolidated statement of comprehensive income. 5.2 Financial Instruments 5.2.1 Classification and Measurement of Financial Assets The Group classifies financial assets into three measurement categories: those measured subsequently at amortised cost, those measured subsequently at fair value with changes recognised through other comprehensive income, and those measured subsequently at fair value with changes recognised through profit or loss. Financial Assets Measured Subsequently at Amortised Cost Such category of financial assets includes assets held to obtain contractual cash flows and it is expected that they will result in cash flows being solely payments of principal and interest. This category of financial assets of the Group mainly includes cash and cash equivalents, restricted cash, deposits, accounts receivable, including loans receivable. Cash and Cash Equivalents and Restricted Cash Cash comprises cash on hand and bank balances. Cash equivalents comprise short-term financial assets which are readily convertible to cash and have an original maturity of less than three months from the acquisition date. Restricted cash includes cash and cash equivalents which are not to be used for any purposes other than those specified in the terms of the financing and other agreements or under banking regulations. Restricted cash are excluded from cash and cash equivalents in the consolidated statement of cash flows.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 14 5 Material Accounting Policy Information (continued) Financial Assets Measured Subsequently at Fair Value with Changes Recognised Through Other Comprehensive Income Such category of financial assets includes assets held within business models whose objective is achieved by both collecting contractual cash flows and selling financial assets and it is expected that they will result in cash flows being solely payments of principal and interest. Gain or loss associated with this cat egory of financial assets are recognised in other comprehensive income, except for impairment gain or loss, interest income and foreign exchange gain and loss, which are recognised in profit or loss. When a financial asset is disposed of, cumulative gains or losses that have been previously recognised in other comprehensive income are reclassified from equity to profit or loss in the consolidated statement of comprehensive income. Interest income from these financial assets is calculated using the effective interest method and included in financial income. This category of financial assets of the Group mainly includes debt instruments held both for collecting contractual cash flows and for selling. The Group’s management can make an irrevocable decision to r ecognise changes in the fair value of equity instruments in other comprehensive income if the instrument is not held for trading. The Group’s management has made a decision to recognise changes in the fair value of the majority of equity instruments in oth er comprehensive income as such instruments are considered to be long-term strategic investments which are not expected to be sold in the short and medium term. Other comprehensive income or loss from changes in the fair value of such instruments shall not be subsequently reclassified to profit or loss in the consolidated statement of comprehensive income. Financial Assets Measured Subsequently at Fair Value with Changes Recognised Through Profit or Loss Financial assets that do not meet the criteria of rec ognition as financial assets measured at amortised cost or measured at fair value through other comprehensive income are measured at fair value through profit or loss. This category of financial assets of the Group mainly includes derivative financial ins truments and financial instruments held for trading, as well as some equity instruments for which the Group has not made a decision to recognise changes in their fair value in other comprehensive income. Impairment of Financial Assets For trade accounts receivable, lease receivables, whether they contain a significant financing component or not, the Group applies measurement based on lifetime expected credit losses. The accrual (reversal) of the allowance for expected credit losses for financial assets is recognised within impairment loss (reversal of impairment loss) on financial assets in the consolidated statement of comprehensive income. 5.2.2 Classification and Measurement of Financial Liabilities The Group classifies all financial liabilities as measured subsequently at amortised cost, except for: financial liabilities measured at fair value through profit or loss; financial guarantee contracts; contingent consideration recognised in a business combination for which IFRS 3 Business Combinations is applied. Such contingent consideration is measured subsequently at fair value with changes recognised in profit or loss. Financial liabilities of the Group measured at amortised cost mainly include borrowings and accounts payable. Financial liabilities of the Group measured at fair value through profit or loss mainly include derivative financial instruments not recognised as hedging instruments. The Group does not choose to classify any financial liabilities as measured at fair value through profit or loss.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 15 5 Material Accounting Policy Information (continued) Borrowings Borrowings received by the Group are recognised initially at fair value of the proceeds which is determined using the prevailing market rate of interest for a similar instrument in case of significant difference from the interest rate of the borrowing, net of transaction costs incurred. In subsequent periods, borrowings are recognised at amortised cost, using the effective interest method; the difference between the fair value of the proceeds (net of transaction costs) and the redemption amount is recognised as interest expense over the period of the borrowings. Financial Guarantee Contracts Financial guarantee contracts are initially recognised at fair value. After initial recognition financial guarantee contracts are measured at the higher of the allowance for expected credit losses and the amount initially recognised less, if applicable, total income recognised in accordance with IFRS 15 Revenue from Contracts with Customers. Financial guarantee contracts of the Group mainly include guarantees issued and independent guarantees provided. Liabilities under Supplier Finance Arrangements The Group’s liabilities under supplier finance arrangements are recognised as trade accounts payable if the liabilities initial maturity is within one year or in other non-current liabilities if the liabilities settlement period does not exceed the commissioning timeline of the field for which the materials and works were procured, and other terms of the liabilities remain unchanged as a result of the supplier finance arrangements, including the absence of any collateral for liabilities. Cash flows from the settlement of liabilities under supply financing agreements are recognised in the consolidated statement of cash flows within operating, investing or financing activities (depending on the nature of the liability). 5.2.3 Derivative Financial Instruments The Group uses a variety of derivative financial instruments, including forward and foreign currency, commodities and securities option contracts. The derivative financial instruments are measured at fair value, a gain or a loss occurred from a change in the fair value of the derivative financial instruments is recognised in profit or loss of the consolidated statement of comprehensive income in the period in which it occurred. The fair value of the d erivative financial instruments is determined using market information and valuation techniques based on prevailing market interest rates for similar financial instruments. 5.3 Fair Value The fair value of accounts receivable in the consolidated financial statements is measured by discounting future cash flows at the current market rate of interest used for similar instruments at the reporting date. The fair value of financial liabilities and other financial instruments (except for publicly quoted) in the consolidated financial statements is measured by discounting the future contractual cash flows at the current market interest rate available to the Group to make borrowings using similar financial instruments. The fair value of publicly quoted financial i nstruments in the consolidated financial statements is measured based on quoted market prices at the date nearest to the reporting date. 5.4 Taxes 5.4.1 Introduction of a Single Tax Account In accordance with the requirements of the Tax Code of the Russian Federation the Group applies a single tax account and pays taxes, including profit tax, in a single tax payment. The Group recognises the taxes payable and receivable on a gross basis unless it has a right (according to the provisions of the Russia n Tax Code) to offset recognised amounts and an intention to settle tax payables on a net basis. 5.4.2 Value Added Tax In the Russian Federation the value added tax (“VAT”) is payable on the difference between output VAT on sales of goods (works, services) and recoverable input VAT charged by suppliers of goods (works, services). The VAT rate is 20 %.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 16 5 Material Accounting Policy Information (continued) Export of goods and rendering certain services related to exported goods is subject to a 0 % VAT rate upon the submission of confirmation documents required by the current tax legislation to the tax authorities. Input VAT related to operations that are subject to a 0 % VAT rate is recoverable. Sales of a limited list of goods (works, services) are exempted from VAT. Input VAT related to purchases of goods (works, services), which are non- taxable by VAT, is not recoverable and is included in the value of acquired goods (works, services). Deductible VAT related to purchases of goods (works, services) and also VAT overpayments (recoverable VAT) are recognised in the consolidated balance sheet within other current assets, while VAT payable to the state budget is disclosed as a current liability. VAT presented within other non-current assets relates to assets under construction and is expected to be recovered more than 12 months after the balance sheet date. 5.4.3 Mineral Extraction Tax and Hydrocarbon Extraction Excess Profits Tax Mineral extraction tax (“MET”) applied to the extractio n of hydrocarbons, including natural fuel gas, gas condensate and oil, is accrued in proportion to the volume of extracted minerals. MET is recognised within “Taxes Other Than On Profit” as part of operating expenses in the consolidated statement of comprehensive income. Hydrocarbon extraction excess profits tax is classified in a similar manner as MET and is recognised within “Taxes Other Than On Profit” as part of operating expenses in the consolidated statement of comprehensive income. 5.4.4 Customs Duties Export of hydrocarbons, including natural gas and oil, outside the Customs Union countries is subject to export customs duties. Export of natural gas outside of the Customs Union is subject to a fixed 30 % export customs duty rate levied on the customs value of the exported natural gas. Pertaining to the sales of oil and oil products outside the Customs Union, the Government of the Russian Federation established the export customs duty calculation methodology for crude oil and certain categories of oil products based on which the Ministry of Economic Development of the Russian Federation determines export customs duty rates for the following calendar month. Revenue from sales is recognised net of the amount of customs duties in the consolidated statement of comprehensive income. 5.4.5 Excise Tax Excisable products include gasoline, motor oil, diesel fuel and natural gas. Unless otherwise provided for by international treaties of the Russian Federation, the tax rate on natural gas is 30 %. Excise taxes payable on the basis of the volume of products sold are deducted from revenue from sales. Within the Group’s activities, excise tax is imposed on the transfers of excisable refined oil products produced at the Group’s refineries from customer -supplied raw mat erials to the Group companies owning the raw materials. The Group recognises the excise tax on refined oil products produced from customer-supplied raw materials within “Taxes Other Than On Profit” as part of operating expenses in the consolidated statement of comprehensive income. Excise taxes deductions that provide economic benefits to the Group are recognised within other operating expenses in the consolidated statement of comprehensive income. 5.4.6 Profit Tax The corporate profit tax rate for Russian companies is 20 %. In some cases, the profit tax rate may be reduced in accordance with local legislation. Subsidiaries operating outside the Russian Federation are subject to the profit tax rates established by the legislation of the respective country. In July 2024, amendments were made to the Tax Code of the Russian Federation, which include an increase of the profit tax rate from 20% to 25% effective from 1 January 2025. The effect of revaluation of the carrying amount of deferred tax assets and l iabilities expected to be realis ed and settled after 1 January 2025 at 25% rate is recorded within “Deferred profit tax income (expenses)” in the consolidated statement of comprehensive income. 5.5 Inventories The cost of inventories is determined based on the weighted average cost method.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 17 5 Material Accounting Policy Information (continued) Write-downs of inventories to net reali sable value and reversals of such write -downs due to su bsequent increases in net realis able value are recognised as increases or de creases in mat erials and other inventories within operating expenses in the consolidated statement of comprehensive income. 5.6 Property, Plant and Equipment Property, plant and equipment are carried at historical cost of acquisition or construction after deduction of accumulated depreciation and impairment amounts. Gas and oil exploration and production activities are accounted for in accordance with the successful efforts method (“successful exploratory wells”). Under the successful efforts method, costs of successful development and exploratory wells are capitalised. Costs of unsuccessful exploratory wells are expensed as they are recognised unproductive. Other exploration costs are expensed as incurred. Exploration costs are recognised within other operating expenses in the consolidated statement of comprehensive income. Borrowing costs are capitalised as part of the cost of assets under construction during the period of time that is required to construct and prepare the asset for its intended use. To the extent that funds are borrowed for general purposes and used for obtaining a qualifying asset, the amount of borrowing costs eligible for capitalisation is determined by the Group by applying a capitalisation rate to the expenditures on that asset. The capitalisation rate is the weighted average of the borrowing costs appli cable to the borrowings of the Group that are outstanding during the period, other than borrowings made specifically for the purpose of obtaining a qualifying asset. Foreign exchange losses on foreign currency borrowings to the extent that they are regard ed as an adjustment to interest costs are included in the borrowing costs eligible for capitalisation. Adjustment of interest costs is determined individually for each quarter. Depreciation of acquired production licenses is calculated using the units-of-production method for each field based upon volumes of proved reserves. Depreciation of property, plant and equipment is calculated using the straight-line method over their remaining useful lives (other than production licenses and certain oil and gas assets where the units-of-production method is economically more justified). The useful lives applied by the Group for major property, plant and equipment categories are as follows: Years Pipelines 14-40 Wells 15-54 Machinery and equipment 1-40 Buildings and roads 4-100 Social assets 10-40 5.7 Intangible Assets Intangible assets are recognised at historical cost after deduction of accumulated amortisation and impairment amounts. Intangible assets include software and software media rights, licences (other than exploration and production licences), trademarks and other intellectual property rights. Intangible assets, other than goodwill, generally have finite u seful lives. Intangible assets are amortised on a straight-line basis over their useful lives, except for software media rights, which are amortised based on the expected inflows of economic benefits. Goodwill is measured at the business combination as the excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of any previously held interest over the fair value of the assets acquired less any liabilities assumed at the acquisition date. A negat ive amount (bargain purchase gain) is recognised in profit or loss, after the Group's management assesses whether all acquired assets and regular and contingent liabilities assumed are identified and verifies whether their measurement is correct. 5.8 Lease Contracts The Group does not recognise a right-of-use asset and a lease liability for short-term lease contracts that have a lease term of 12 months or less taking into account the probability of exercising the option to extend the lease contract (if any), and for low-value leased assets. The Group does not apply the requirements of IFRS 16 Leases to land leases pertaining to the exploration or use of natural gas, oil and similar non-renewable resources.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 18 5 Material Accounting Policy Information (continued) For other land leases, the Group recognises a right-of-use asset and a lease liability. The Group applies the practical expedient for fixed payment contracts that also include a service component, and accounts for each lease component and any associated non-lease components as a single lease component for all types of underlying assets other than vessels. For vessel leases, the Group recognises the service component within expenses for the period when the share of such payments can be reliably measured. A right-of-use asset is amortised on a straight-line basis as of the lease commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. A right -of-use asset is reduced by impairment losses, if applicable, and adjusted for certain remeasurements of the lease liability. 5.9 Impairment of Non-Financial Assets At the end of each reporting period, if there is any indication that assets may be impaired, the Group's management assesses the recoverable value of the assets. For the impairment test the Group's assets are grouped into cash -generating units (“CGU”) and their recoverable amount is based on their value in use. Value in use of assets in each unit is calculated as the present value of forecasted cash flows discounted using the rate derived from the weighted average cost of capital of the Group, as adjusted, where applicable, for any specific risks of business operations associated with the respective assets. The accrual (release) of impairment loss is recognised within “Impairment Loss on Non-Financial Assets” as part of operating expenses in the consolidated statement of comprehensive income. 5.10 Foreign Currency Transactions Items included in the financial statements of each of the Group’s subsidiary are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The consolidated financial statements are presented in the Russian Rubles, which are the presentation currency of the Group’s consolidated financial statements. The results and financial position of a foreign operation are translated into the presentation currency of the consolidated financial statements using the following procedures: assets and liabilities are translated at foreign exchange rates at the reporting date; income and expenses are translated at average foreign exchange rates for quarter; foreign exchange rate differences arising on the translation are recognised within other comprehensive income in the consolidated statement of comprehensive income and within retained earnings and other reserves in the consolidated balance sheet. 5.11 Equity Treasury Shares Ordinary shares of PJSC Gazprom owned by the Group at the reporting date are carried at cost, including transaction costs, and are recognised within “Treasury Shares” in the consolidated statement of changes in equity. Subsequent sales of shares are recorded at weighted average cost. Gain or loss arising from treasury shares transactions are record ed, net of profit tax, within retained earnings and other reserves in the consolidated statement of changes in equity. Dividends Dividends are recognised as liabilities and deducted from equity in the period when they are recommended by the Board of Directors and approved at the General Shareholders Meeting of PJSC Gazprom. Perpetual Notes Russian Ruble perpetual callable notes and foreign currency perpetual callable loan participation notes issued by the Group are reported as an equity instrument within equity provided that the notes have no stated maturity and the Group, acting in its sole discretion, may, at any time and on any number of occasions , decide to postpone interest payments or decide to refuse to pay interest. The par value of foreign currency perpetual notes is recognised in the consolidated statement of changes in equity at th e official exchange rate as at the date of initial recognition. The Group’s issuing entity (the “Issuer”) may decide to postpone interest payments on the foreign currency perpetual callable loan participation notes.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 19 5 Material Accounting Policy Information (continued) To reflect the best estimate of the rights of perpetual callable loan participation notes holders and a potential cash outflow, the Group accrues interest in the consolidated statement of changes in equity by decreasing the retained earnings and other reserves item and increasing the perpetual notes item at the interest rate effective for the current interest period until an interest payment liability arises. Interest on foreign currency perpetual callable loan participation notes is accrued in the consolidated statement of changes in equity at the official exchange rate as at the date of initial recognition. A liability to pay interest on foreign currency perpetual callable loan participation notes is recognised in the consolidated balance sheet at the official exchange rate as at the date when an interest payment obligation arises. To reflect the best estimate of the rights of foreign currency perpetual callable loan participation notes holders and a potential cash outflow, the par value of foreign currency perpetual notes and interest recognised in equity are translated into Russian Rubles as at the reporting date and as at the date of their transfer to liabilities at the official exchange rate. Gain or loss from translating the par value of foreign currency perpetual notes and interest into Russian Rubles is reported within perpetual notes and retained earnings and other reserves in the consolidated statement of changes in equity. The Issuer may decide to refuse to pay interest on the Russian Ruble perpetual callable notes. The Group accrues interest in the consolidated statement of changes in equity by decreasing the retained earnings and other reserves item as at the date when an interest payment obligation arises. Costs associated with the issuance of perpetual notes and the tax effect of transactions related to perpetual notes and recognised in equity (except for the tax effect of transactions related to interest) are reported within retained earnings and other reserves in the consolidated statement of changes in equity. The tax effect of interest accrual is reported within profit or loss in the consolidated statement of comprehensive income, as defined by IAS 12 Income Taxes. 5.12 Revenue Recognition Revenue from sales of gas, refined produ cts, crude oil and gas condensate, electric and heat energy is recognised when products are delivered to customers and the title passes and is stated in the consolidated financial statements net of VAT and, where applicable, customs duties, excise tax, as well as payments due to the Russian Federation in accordance with the production sharing agreement (“PSA”) and other similar mandatory payments. Payments under the PSA are classified as revenue from contracts with customers received on behalf of third parties. PSA payments include a subsoil use fee (royalty), an allocation of available hydrocarbon production and additional revenue, as well as a compensation payment to the Russian Federation. The subsoil use fee (royalty) is 6% of the cost of hydrocarbons produced under the PSA. The allocation of available hydrocarbon production and additional revenue and compensation payment depend on the performance of the Group's subsidiary conducting production under the PSA, with the aim of providing that the Russian Federation's share of revenue from hydrocarbon sales under the PSA aligns with the PSA's target indicators. Revenue from sales of gas transportation services is recognised when gas transportation services are provided, as evidenced by delivery of gas in accordance with the contract. Prices for natural gas and tariffs for gas transportation to final consumers in the Russian Federation are regulated by the Federal Antimonopoly Service (“the FAS Russia”). Prices for gas sold to foreign countries are mainly calculated by formulas based on oil product prices, in accordance with the terms of long-term contracts. 5.13 Research and Development Research expenditures are recognised as other operating expenses in the consolidated statement of comprehensive income as incurred. Development expenditures are recognised as intangible assets if only future economic benefits are expected to flow from s uch expenditures. Other development expenditures are recognised as other operating expenses in the consolidated statement of comprehensive income as incurred. Development expenditures initially recognised as expenses are not capitalised in subsequent perio ds, even if the asset recognition criteria are subsequently met. 5.14 Employee Benefits Pension and Other Post-Employment Benefits The Group applies pension and other post-employment benefits system, which is recorded as defined benefit plan in the consolidated financial statements under IAS 19 Employee Benefits. Pension benefits are provided to the majority of the Group’s employees.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 20 5 Material Accounting Policy Information (continued) The costs of providing pension benefits are recognised using the projected unit credit method. The costs of providing pension benefits are accrued and recognised within staff costs as part of operating expenses in the consolidated statement of comprehensive income. The provision for post-employment benefits of the Group’s employees is measured at the present value of the projected cash outflows using interest rates applied to government securities, which have the term to maturity approximately corresponding to the term of maturity of the related provision. Actuarial gains and losses on pension plan assets and liabilities arising from experience adjustments and changes in actuarial assumptions a re recognised in other comprehensive income in the period in which they occur (see Note 23). Interest income or expense on the net liability (asset) of the pension plan and liability for other post - employment benefits is recognised on a net basis as financ e income or expense s in profit or loss of the consolidated statement of comprehensive income. Pension plan assets are measured at fair value and subject to certain limitations (see Note 2 3). Fair value of pension plan assets is based on market quotes. When no pension plan assets’ market price is available, the fair value of assets is estimated by different valuation techniques, including the use of discounted expected cash flows calculated using a discount rate that reflects both the risk associated with the pension plan assets and expected maturity or disposal date of these assets. In the normal course of business the Group pays contributions to the Pension and Social Insurance Fund of the Russian Federation on behalf of its employees. Mandatory pension insurance contributions to this fund, which are recorded as a pension defined contribution plan, are recognised within staff costs as part of operating expenses in the consolidated statement of comprehensive income as incurred. Social Expenses The Group incurs expenses for the social needs of employees, in particular, related to the provision of medical services and maintenance of social infrastructure facilities. These amounts represent inherent costs associated with the employment of staff and, accordingly, are recognised within staff costs as part of operating expenses in the consolidated statement of comprehensive income. 5.15 New Standards and Amendments to Standards Application of Amendments to Standards The following amendments to current standards became effective beginning on or after 1 January 2024: the amendments to IAS 1 Presentation of Financial Statements (issued in January 2020 and effective for annual reporting periods beginning on or after 1 January 2024). The amendments clarify the criteria for classifying liabilities as current or non-current; the amendments to IAS 1 Presentation of Financial Statements (issued in October 2022 and effective for annual reporting periods beginning on or after 1 January 2024). The amendments clarify the criteria for classifying liabilities with covenants as current or non -current and contain requirements for related financial statements disclosures. Related disclosures were included in the consolidated fin ancial statements (see Note 36); the amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures (issued in May 2023 and effective for annual reporting periods beginning on or after 1 January 2024). The amendments contain additional requirements for disclosures about supplier finance arrangements. Related disclosures were included in the consolidated financial statements (see Note 36); the amendments to IFRS 16 Leases (issued in September 2022 and effective for annual reporting periods beginning on or after 1 January 2024). The amendments clarify the procedure for the subsequent valuation of assets and liabilities for sale and leaseback transactions. The Group reviewed these amendments to standards while preparing the consolidated financial statements. The amendments to standards have had no significant impact on the Group’s consolidated financial statements, except for the inclusion of the relevant disclosures mentioned above.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 21 5 Material Accounting Policy Information (continued) The Standard and Amendments to Existing Standards That Are Not Yet Effective and Have Not Been Early Adopted by the Group The new standard and amendments to standards are mandatory for the annual periods beginning on or after 1 January 2025. In particular, the Group has not early adopted the following standard and amendments to standards: the amendments to IAS 21 The Effects of Changes in Foreig n Exchange Rates (issued in August 2023 and effective for annual reporting periods beginning on or after 1 January 2025). The amendments introduce the concept of an exchangeable currency and establish the procedure for det ermining the exchange rate to use if the c urrency cannot be exchanged into another currency, and also contain requirements for related financial statements disclosures; the amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures (issued in May 2024 and effe ctive for annual reporting periods beginning on or after 1 January 2026). The amendments clarify the procedure for classifying financial assets and derecognising financial liabilities settled using an electronic payment system, and also contain disclosure requirements relating to investments in equity instruments measured at fair value through other comprehensive income and financial instruments with contingent features; IFRS 18 Presentation and Disclosure in Financial Statements (issued in April 2024 and e ffective for annual reporting periods beginning on or after 1 January 2027) replaces IAS 1 Presentation of Financial Statements and establishes general requirements for the presentation and disclosures in financial statements. The Group is currently assessing the impact of the new standard and amendments to standards on its financial position and performance. 6 Critical Judgements and Estimates in Applying Accounting Policies The preparation of consolidated financial statements requires management to make different estimates and assumptions that may affect the valuation amount of assets and liabilities as well as information in notes to the consolidated financial statements. Management also makes certain judgements in the process of applying the accounting policies. These estimates and judgements are continually analysed based on historical experience and other information, including forecasts and expectations of future events that are believed to be reasonable under the current circumstances. Actual results may differ from specified estimates, and management’s estimates can be revised in the future, either positively or negatively, depending on their effect based on the facts associated with each estimate. Judgements that may have the most significant effect on the amounts recognised in the consolidated financial statements and estimates that can cause significant adjustments to the carrying amount of assets and liabilities within the next financial year are reported below. 6.1 Consolidation of Subsidiaries Management’s estimates are involved in the assessment of control and the method of accounting of investments in subsidiaries in the Group’s consolidated financial statements taking into account voting rights and contractual arrangements with other owners. 6.2 Tax Legislation Tax, currency and customs legislation of the Russian Federation is subject to varying interpretations (see Note 35). Profit tax liabilities are determined by management in accordance with the current legislation. Liabilities for penalties, fines and taxes other than profit tax are recognised based on management’s best estimate of the expenditure required to settle tax obligations at the balance sheet date. 6.3 Assumptions to Determine Amount of Allowances Allowance for Expected Credit Losses of Accounts Receivable An allowance for expected credit losses of accounts receivable is based on the Group’s management assessment of expected credit losses for the accounts receivable lifetime. Credit loss es are the difference between all contractual cash flows that are due to the Group in accordance with the contract and all cash flows tha t the Group expects to receive, i.e. all cash shortfalls , discounted at the original effective interest rate. If there is deterioration in any major customer’s creditworthiness or actual losses as a result of defaults by debtors are
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 22 6 Critical Judgements and Estimates in Applying Accounting Policies (continued) higher or lower than the Group’s estimates, the actual results could differ from these estimates. The change in allowance for expected credit losses of accounts receivable is disclosed in Notes 10, 17. Allowance for Impairment of Non-Financial Assets The estimation of forecasted cash flows for the purposes of impairment testing of property, plant and equipment, including assets under construction , intangible assets , including goodwill, right -of-use assets , advances for these assets involves the application of a number of significant judgements and estimates in relation to certain variables such as volumes of production and extraction, prices on natural gas, oil and refined products, electrical power, operating costs, capital expenditures, hy drocarbon reserves , and also macroeconomic factors such as inflation and discount rates. In addition, assumptions are applied in determining the cash-generating units assessed for impairment. The value in use of assets or cash -generating units related to gas and oil production is determined based on their expected production volumes, which include both proved and explored reserves as well as certain volumes of those that are expected to constitute proved and probable reserves in the future. Information regarding impairment allowance of property, plant and equipment , right -of-use assets and goodwill is disclosed in Notes 13, 14 and 15. 6.4 Decommissioning and Site Restoration Costs The Group recognises provisions for decommissioning and site restoration costs. Decommissioning and site restoration costs that may occur at the end of the operating life of certain Group’s production facilities are recognised when the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. Expected costs for decommissioning and site restoration are capitalised as part of the Group’s property, plant and equipment, with the simultaneous recognition of the corresponding provision. These costs are depreciated using the same method applied to the depreciation of the related property, plant and equipment through profit or loss of the consolidated statement of comprehensive income over the assets’ productive lives. Estimating the amounts and timing of those provisions requires significant judgement. Such estimation is based on an analysis of costs and technical solutions based on existing technologies and is made in accordance with current environmental legislation. Changes in the estimation of decommissioning and site restoration provision that result from changes in the estimated timing or amount of cash outflows, or from changes in the discount rate adjust the cost of the related asset in the current period. Provisions for decommissioning and site restoration costs are subject to change because of change in laws and regulations, and their interpretation. 6.5 Useful Lives of Property, Plant and Equipment The estimation of the useful life of an item of property, plant and equipment is a matter of the Group’s management judgement based upon experience in using of similar property, plant and equipment assets. In determining the useful life of an asset, management considers such factors as production volume, reserves, technical obsolescence rates, physical wear and tear and operating conditions. Changes in any of these factors may result in adjustments to future depreciation rates and have a significant effect on the carrying amount of property, plant and equipment and the amount of depreciation for the period. Based on the terms included in the licenses and past experience, management believes that hydrocarbon production licenses, which are expected to be productive after their expiration dates, will be extended at insignificant additional costs. Because of the anticipated license extensions, the operating assets are depreciated over their useful lives beyond the end of the current license term. 6.6 Estimation of the Fair Value of Financial Instruments Determination of the fair value of contracts for the purchase (sale) of energy carriers, commodity futures and swaps is based on market data received on measurement date (Level 1 in accordance with the fair value hierarchy). Customary valuation models are used to value financial instruments which are not traded in active market. The fair value is calculated based on inputs that are observable either directly or indirectly (Level 2 in accordance with the fair value hierarchy). Contracts not based on market or observable data belong to Level 3 in accordance with the fair value hierarchy. Management’s best estimates based on models internally developed by the Group are used for the valuation of these instruments fair value. Where the valuation technique employed incorporates significant volume of input data for which market information is not available, such as long-term price assumptions, contracts have been
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 23 6 Critical Judgements and Estimates in Applying Accounting Policies (continued) categorised as Level 3 in accordance with the fair value hierarchy (see Note 37). 6.7 Measurement of Assets and Liabilities in a Business Combination In accounting for business combinations, the purchase price paid is allocated to assets acquired and liabilities received based on their estimated fair value as of the date of acquisition. A significant amount of judgement is involved in estimating the individual fair value of property, plant and equipment and identifiable intangible assets acquired. The estimates used in determining fair value are based on assumptions believed to be reasonable but which are inherently uncertain. Accordingly, actual results may differ from the projected results used to determine fair value. 6.8 Accounting for Pension Plan Assets and Liabilities Pension plan liabilities are estimated using actuarial techniques and assumptions (see Note 23). Actual results may differ from the estimates, and the Group’s estimates may be adjusted in the future based on changes in economic and financial conditions. In addition, certain pension plan assets related to JSC NPF GAZFOND are recorded at fair value, determined using estimation techniques. Management makes judgement s with respect to the selected models, the amount of cash flows and their distribution over time, as well as othe r indicators including discount rate. The recognition of pension plan assets is limited to the estimated present value of future benefits available to the Group in relation to this plan. The value of future benefits is determined using actuarial techniques and assumptions. The impact of the limitation of the net pension plan asset in accordance with IAS 19 Employee Benefits is disclosed in Note 23. The value of pension plan assets and the limitations may be adjusted in the future. 6.9 Joint Arrangements In applying IFRS 11 Joint Arrangements the Group applies judgement whether its joint arrangements represent a joint operation or a joint venture. The Group determines the type of joint arrangement based on its rights and obligations arising from the arrangement including the assessment of the structure and legal form of the arrangement, the decision making terms agreed by the parties in the contractual arrangement and, when relevant, other factors and circumstances. 6.10 Accounting for Right-of-use Assets and Lease Liabilities When measuring the present value of lease payments, the Group applies professional judgement to determine the incremental borrowing rate if the discount rate is not implicit in the lease. When determining the incremental borrowing rate, the Group management analyses borrowings made over a similar term in a similar economic conditions. If there are no borrowings with similar characteristics, the discount rate is determined on the basis of the risk-free rate, adjusted for the credit risk of the Group’s entity or segment. Assessment of the non-cancellable lease period is subject to management judgement, which takes into account all relevant facts and circumstances that create an economic incentive for the Group to exercise or not to exercise an option to extend the lease. These facts and circumstances include the need to extend the lease to perform operations, the period of construction and exploitation of assets on leased lands, useful lives of leased assets, potential assets dismantling and relocation costs. 7 Segment Information The Board of Directors, the Chairman of the Management Committee and the Management Committee of PJSC Gazprom (the “Governing bodies”) make key decisions managing the Group’s activity, assess operating results and allocate resources using different internal financial information. Due to the acquisition of the control over JSC Gazprom-Media Holding in December 2023, the management of the Group decided to allocate the results of JSC Gazprom-Media Holding and its subsidiaries into a separate reportable segment – «Media business». Consequently, the following reportable segments were identified in the Group: Gas business – a type of the Group’s business mainly related to the exploration, production, processing, storage, transportation, distribution and sale of gas, gas and gas condensate processing products in the Russian Federation and abroad, and activities that enable these business processes; Oil business – a type of the Group’s business mainly related to the exploration, production, refining, storage, transportation and sale of oil and refined oil products in the Russian Federation and abroad;
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 24 7 Segment Information (сontinued) Electric power business – a type of the Group’s business mainly related to electricity and heat generation and sale in the Russian Federation and abroad; Media business - a type of the Group’s business mainly r elated to television and radio broadcasting, advertising, publishing, film production and content distribution primarily in the Russian Federation. The Governing bodies of the Group assess the performance, assets and liabilities of the reportable segments on the basis of the d ata generated following measurement principles that correspond to the prin ciples used to measure items in the consolidated financial statements. Revenue from inter-segment sales are calculated based on market prices. Revenue from sales and profit (loss) of the reportable segments, as well as depreciation and share in profit of associates and joint ventures are presented below. Finance income and expenses, profit tax expenses are considered by the Governing bodies of the Group for the Group as a whole without distribution by reportable segments. Gas business Oil business Electric power business Media business Total Year ended 31 December 2024 Revenue from sales of segments 6,299,064 4,542,587 659,819 163,483 11,664,953 Revenue from inter-segment sales 460,429 462,449 11,237 16,152 950,267 Revenue from external sales 5,838,635 4,080,138 648,582 147,331 10,714,686 Profit (loss) of segments 756,062 649,439 51,136 (247) 1,456,390 Depreciation 772,133 471,837 63,152 70,652 1,377,774 Share of profit of associates and joint ventures 180,351 59,443 105 2,109 242,008 Year ended 31 December 2023 Revenue from sales of segments 4,879,194 3,879,198 616,914 - 9,375,306 Revenue from inter-segment sales 467,523 354,940 11,025 - 833,488 Revenue from external sales 4,411,671 3,524,258 605,889 - 8,541,818 (Loss) profit of segments (1,179,402) 764,952 50,761 - (363,689) Depreciation 645,085 276,286 60,687 - 982,058 Share of profit of associates and joint ventures 273,006 81,289 69 - 354,364 The revenue from external sales of segments by type of revenue is provided below. Gas business Oil business Electric power business Media business Total Year ended 31 December 2024 Revenue from gas sales 4,103,475 25,161 - - 4,128,636 Revenue from sales of crude oil, gas condensate and refined products 1,236,447 3,871,896 - - 5,108,343 Revenue from electric and heat energy sales 46,141 1,446 625,088 - 672,675 Revenue from other sales 452,572 181,635 23,494 147,331 805,032 Total revenue from external sales of segments 5,838,635 4,080,138 648,582 147,331 10,714,686 Year ended 31 December 2023 Revenue from gas sales 3,078,554 46,222 - - 3,124,776 Revenue from sales of crude oil, gas condensate and refined products 788,676 3,322,905 - - 4,111,581 Revenue from electric and heat energy sales 45,415 12,694 586,535 - 644,644 Revenue from other sales 499,026 142,437 19,354 - 660,817 Total revenue from external sales of segments 4,411,671 3,524,258 605,889 - 8,541,818 The reconciliation of segments profit (loss) to profit (loss) before profit tax in the consolidated statement of comprehensive income is provided below.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 25 7 Segment Information (continued) Year ended 31 December Notes 2024 2023 Profit (loss) of segments 1,456,390 (363,689) 28 Finance income 1,002,183 659,464 28 Finance expenses (1,037,645) (1,309,209) 16 Share of profit of associates and joint ventures 242,008 354,364 Total profit (loss) before profit tax in the consolidated statement of comprehensive income 1,662,936 (659,070) The Group's assets are primarily located in the Russian Federation. Information on non -current assets by geographic regions is not disclosed due to the fact that the carrying value of non-current assets located outside the Russian Federation is insignificant. Gas business Oil business Electric power business Media business Total As of 31 December 2024 Assets of segments 23,285,929 6,475,380 1,009,334 249,792 31,020,435 Investments in associates and joint ventures 671,072 529,993 649 13,811 1,215,525 Capital expenditures1 2,390,485 913,887 111,069 12,029 3,427,470 Liabilities of segments 9,785,216 3,169,282 275,279 129,696 13,359,473 As of 31 December 2023 Assets of segments 21,767,890 6,415,261 980,508 230,850 29,394,509 Investments in associates and joint ventures 1,027,779 492,635 544 15,893 1,536,851 Capital expenditures2 2,245,495 747,844 125,304 - 3,118,643 Liabilities of segments 9,250,742 3,247,585 299,763 143,705 12,941,795 1 Capital expenditures for the year ended 31 December 202 4. 2 Capital expenditures for the year ended 31 December 20 23. The reconciliation of reportable segments assets to total assets in the consolidated balance sheet is provided below. 31 December 2024 2023 Assets of reportable segments 31,020,435 29,394,509 Inter-segment assets (322,180) (680,761) Total assets in the consolidated balance sheet 30,698,255 28,713,748 The reconciliation of reportable segments liabilities to total liabilities in the consolidated balance sheet is provided below. 31 December 2024 2023 Liabilities of reportable segments 13,359,473 12,941,795 Inter-segment liabilities (322,180) (680,761) Total liabilities in the consolidated balance sheet 13,037,293 12,261,034 8 Cash and Cash Equivalents Cash and cash equivalents include cash on hand, balances with banks, term deposits with the original maturity of three months or less and other cash equivalents. 31 December 2024 2023 Cash on hand and bank balances payable on demand 782,919 867,649 Term deposits with original maturity of three months or less and other cash equivalents 208,970 559,131 Total cash and cash equivalents 991,889 1,426,780
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 26 8 Cash and Cash Equivalents (continued) The fair value of cash and cash equivalents approximates their carrying value. As of 31 December 2024 and as of 31 December 2023 cash and cash equivalents are mainly held in accounts with Russian banks whose credit rating according to the national scale of JSC Expert RA is ruAA+ or higher. 9 Financial Assets Short-term financial assets are provided in the table below. 31 December 2024 2023 Debt securities measured at fair value with changes recognised through other comprehensive income 60 4,703 Equity securities measured at fair value with changes recognised through profit or loss 24 1,288 Debt securities measured at fair value with changes recognised through profit or loss - 11,951 Debt securities measured at amortised cost - 159 Total short-term financial assets 84 18,101 Long-term financial assets are provided in the table below. 31 December 2024 2023 Equity securities measured at fair value with changes recognised through other comprehensive income1 308,496 512,130 Debt securities measured at fair value with changes recognised through other comprehensive income 159,102 156,607 Equity securities measured at fair value with changes recognised through profit or loss 972 931 Debt securities measured at amortised cost 1 323 Total long-term financial assets 468,571 669,991 1 Equity securities measured at fair value with changes recognised through other comprehensive inc ome include PJSC NOVATEK shares (see Note 37). As of 31 December 2024 and 31 December 2023 debt securities measured at fair value primarily relate to issuers whose сredit rating according to the national scale of JSC Expert RA is ruAA+. 10 Accounts Receivable and Prepayments 31 December 2024 2023 Financial assets Trade accounts receivable 1,161,561 933,396 Loans receivable 51,354 60,260 Other accounts receivable 121,450 117,398 1,334,365 1,111,054 Non-financial assets Advances paid and prepayments 153,820 150,639 Total accounts receivable and prepayments 1,488,185 1,261,693 The estimated fair value of short-term accounts receivable approximates their carrying value. Trade accounts receivable are presented net of allowance for expected credit losses in the amount of RUB 2,374,731 million and RUB 2,015,061 million as of 31 December 2024 and 31 December 2023, respectively. Loans receivable are presented net of allowance for expected credit losses in the amount of RUB 4,381 million and RUB 9,955 million as of 31 December 2024 and 31 December 2023, respectively. Other accounts receivable are presented net of allowance for expected credit losses in the amount of RUB 75,680 million and RUB 64,080 million as of 31 December 2024 and 31 December 2023, respectively. Advances paid and prepayments are presented net of impairment allowance in the amount of RUB 8,657 million and RUB 9,599 million as of 31 December 2024 and 31 December 2023, respectively.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 27 10 Accounts Receivable and Prepayments (continued) Other accounts receivable are mainly represented by accounts receivable from Russian customers for various types of goods, works and services. Trade accounts receivable Other accounts receivable and loans receivable 31 December 31 December 2024 2023 2024 2023 Short-term accounts receivable neither past due nor credit-impaired 1,057,318 819,074 128,541 139,659 Short-term accounts receivable past due or credit-impaired 2,478,974 2,129,383 124,324 112,034 Amount of allowance for expected credit losses of accounts receivable (2,374,731) (2,015,061) (80,061) (74,035) Total short-term accounts receivable 1,161,561 933,396 172,804 177,658 Management’s experience indicates customer payment histories in respect of trade accounts receivable neither past due nor credit-impaired vary by geography. Analysis of credit quality of trade and other receivable, loans receivable is provided below. 31 December 2024 2023 Outside the Russian Federation countries gas, crude oil, gas condensate and refined products trade accounts receivable 588,625 358,900 The Russian Federation gas, crude oil, gas condensate and refined products trade accounts receivable 349,639 322,787 Electricity and heat trade accounts receivable 42,216 42,108 Other trade accounts receivable 76,838 95,279 Other accounts receivable 77,187 79,399 Loans receivable 51,354 60,260 Total accounts receivable neither past due nor credit-impaired 1,185,859 958,733 As of 31 December 2024 and 31 December 2023 credit-impaired receivables mainly relate to trade receivables. In management’s view the accounts receivable will be settled. The ageing analysis of overdue or credit - impaired receivables is presented below: Ageing from the due date Gross book value Allowance for expected credit losses Net book value 31 December 31 December 31 December 2024 2023 2024 2023 2024 2023 up to 6 months 251,897 195,618 (206,156) (150,303) 45,741 45,315 from 6 to 12 months 47,620 176,304 (28,470) (148,230) 19,150 28,074 from 1 to 3 years 1,076,411 857,455 (1,033,475) (782,543) 42,936 74,912 more than 3 years 1,227,370 1,012,040 (1,186,691) (1,008,020) 40,679 4,020 2,603,298 2,241,417 (2,454,792) (2,089,096) 148,506 152,321 Change in the Group’s allowance for expected credit losses of trade and other accounts receivable is provided in the table below. Trade receivables Other receivables and loans receivable Year ended 31 December Year ended 31 December 2024 2023 2024 2023 Allowance for expected credit losses of accounts receivable at the beginning of the year 2,015,061 1,457,501 74,035 59,381 Changing the perimeter of the Group (387) 1,329 8,015 488 Accrual of allowance for expected credit losses of accounts receivable1 208,546 306,248 8,144 6,257 Write-off of accounts receivable during the year2 (4,343) (6,695) (2,010) (1,744) Reversal of previously accrued allowance for expected credit losses of accounts receivable1 (12,805) (11,714) (7,650) (3,049) Reclassification to other lines (5,305) (10,647) (4,916) 6,609 Foreign exchange rate differences 173,964 279,039 4,443 6,093 Allowance for expected credit losses of accounts receivable at the end of the year 2,374,731 2,015,061 80,061 74,035 1 The accrual and release of allowance for expected credit losses of accounts receivable have been included in the line “Impairmеnt loss on finаnсial assеts” in the consolidated statement of comprehensive income. 2 If there is no probability of cash receipt for the credit-impaired accounts receivable which were previously provided for, the amount of respective accounts receivable is written-off by means of that allowance.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 28 11 Inventories 31 December 2024 2023 Gas in pipelines and storages 581,966 556,050 Materials and supplies 374,959 292,846 Crude oil and refined products 314,989 331,637 Goods for resale 33,645 21,377 Total inventories 1,305,559 1,201,910 The amount of inventories write -down to the net realisable value was RUB 50,126 million and RUB 9,488 million for the years ended 31 December 2024 and 31 December 2023, respectively. 12 Other Current and Non-Current Assets Other current assets are provided in the table below. 31 December 2024 2023 Financial assets Short-term deposits 3,122 171,277 3,122 171,277 Non-financial assets Prepaid VAT 248,519 188,164 VAT recoverable 112,763 63,655 Prepaid other taxes 109,683 108,827 Assets held for sale 60,053 271,258 Prepaid profit tax 36,584 54,081 Other 12,015 15,123 579,617 701,108 Total other current assets 582,739 872,385 Other non-current assets are provided in the table below. 31 December Notes 2024 2023 Financial assets Long-term deposits 38,979 41,909 38,979 41,909 Non-financial assets Intangible assets 270,994 247,135 23 Net pension plan assets 61,010 57,091 VAT related to assets under construction 9,382 17,133 Other 371,541 328,344 712,927 649,703 Total other non-current assets 751,906 691,612 The estimated fair value of short-term and long-term deposits approximates their carrying value.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 29 13 Property, Plant and Equipment Pipelines Wells Machinery and equipment Buildings and roads Produc- tion licenses Social assets Assets under construction Total As of 31 December 2022 Cost 5,351,153 2,692,034 7,254,778 5,961,577 534,714 92,573 6,203,498 28,090,327 Accumulated depreciation (2,008,276) (905,314) (3,778,916) (2,077,957) (242,740) (52,377) - (9,065,580) Impairment allowance (829) (225,639) (218,737) (189,704) (6,908) (2,851) (961,019) (1,605,687) Net book value as of 31 December 2022 3,342,048 1,561,081 3,257,125 3,693,916 285,066 37,345 5,242,479 17,419,060 Cost Additions1 505 2,361 73,393 36,411 4,345 4 3,054,230 3,171,249 Transfers 134,893 355,421 677,987 696,264 411 24 (1,865,000) - Disposals2 (23,189) (33,852) (215,988) (159,111) (496) (511) (139,504) (572,651) Translation differences 173,758 113,557 60,910 46,532 2,363 975 236,844 634,939 Accumulated depreciation and impairment allowance Depreciation (127,119) (127,141) (442,939) (214,186) (6,300) (2,125) - (919,810) Disposals2 15,521 6,052 67,023 26,044 26 404 6,178 121,248 Translation differences (24,675) (74,809) (37,074) (12,342) (2,060) (910) (233,593) (385,463) Change in impairment allowance: (994) (60,702) (44,667) (60,703) (75,690) - (789,609) (1,032,365) allowance accrual (1,001) (60,703) (48,876) (61,133) (75,690) - (801,063) (1,048,466) allowance release 7 1 4,209 430 - - 11,454 16,101 As of 31 December 2023 Cost 5,640,518 3,129,522 7,940,702 6,672,910 541,337 93,065 7,305,810 31,323,864 Accumulated depreciation (2,144,703) (1,080,625) (4,196,452) (2,278,856) (249,221) (54,130) - (10,003,987) Impairment allowance (5,067) (306,929) (348,480) (341,229) (84,451) (3,729) (1,793,785) (2,883,670) Net book value as of 31 December 2023 3,490,748 1,741,968 3,395,770 4,052,825 207,665 35,206 5,512,025 18,436,207 Cost Additions1 103,066 145,641 101,179 205,466 2,366 4,483 3,504,000 4,066,201 Transfers 709,427 414,957 1,002,354 692,124 286 7,887 (2,827,035) - Disposals3 (5,171) (51,880) (106,244) (123,154) (669) (3,054) (230,532) (520,704) Translation differences 58,325 58,083 29,262 16,665 1,391 281 70,912 234,919 Accumulated depreciation and impairment allowance Depreciation (149,739) (263,739) (527,057) (305,922) (6,387) (3,273) - (1,256,117) Disposals3 2,961 7,951 72,335 23,336 116 1,357 13,900 121,956 Translation differences (14,586) (44,902) (19,694) (3,959) (1,435) (250) (67,761) (152,587) Change in impairment allowance: (25) (40,687) (42,646) (14,653) (2,440) - (49,474) (149,925) allowance accrual (25) (40,687) (42,668) (14,774) (2,440) - (53,790) (154,384) allowance release - - 22 121 - - 4,316 4,459 As of 31 December 2024 Cost 6,506,643 3,696,323 8,984,914 7,476,780 544,711 102,662 7,792,247 35,104,280 Accumulated depreciation (2,306,067) (1,367,565) (4,679,793) (2,566,831) (255,633) (56,036) - (11,231,925) Impairment allowance (5,570) (361,366) (399,862) (367,221) (88,185) (3,989) (1,866,212) (3,092,405) Net book value as of 31 December 2024 4,195,006 1,967,392 3,905,259 4,542,728 200,893 42,637 5,926,035 20,779,950 1 Including a result of the acquisition of subsidiaries. 2 Including a result of the disposal of subsidiaries and joint operations. 3 Including a result of the disposal of subsidiaries. At each reporting date management assesses whether there is any indication that th e recoverable amount of assets has declined below their carrying value. Based on the results of this assessment, the Group tested assets for impairment as at 31 December 2024 and 31 December 2023.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 30 13 Property, Plant and Equipment (continued) The Group applied discount rates ranging from 9. 10 % to 21.96 % and from 9.98 % to 19.20 % as of 31 December 2024 and 31 December 2023, respectively. Cash flows were forecasted based on actual operating results, budgets and other corporate documents containing forward-looking data. The cash flow forecast covered the period commensurate with the expected useful life of the respective assets. To extrapolate cash flows beyond the periods which are not included in the corporate documents containing forecast data, estimated growth rates were used. The most significant CGU is the group of assets that constitute the Unified Gas Supply System and assets for production, transportation and refining of gas in the Eastern Siberia and the Far East (gas business segment). As of 31 December 2024 and 31 December 2023 the test did not reveal impairment of assets in this CGU. Based on the result of the test for impairment of other CGUs and testing of certain assets for impairment on an individual basis, the Group recognised an asset impairment loss , associated with the following reportable segments: Gas business; Oil business; Electric power business. For the year ended 31 December 2024 the impairment loss on property, plant and equipment and assets under construction relates primarily to a certain oil assets. For the year ended 31 December 2023 the impairment loss on assets under construction relates primarily to a certain gas processing assets. Included in additions above are capitalised borrowing costs of RUB 673,888 million and RUB 435,573 million for the years ended 31 December 2024 and 31 December 2023, respectively. Capitalisation rates of 9.35 % and 7.78 % were used representing the weighted average borrowing cost including exchange differences on foreign currency bo rrowings for the years ended 31 December 2024 and 31 December 2023, respectively. Capitalisation rate excluding exchange losses on foreign currency borrowings were 8.39 % and 5.62 % for the years ended 31 December 2024 and 31 December 2023, respectively. Separate items of property, plant and equipment (including assets under construction) have been pledged as security for liabilities (see Note 21). The information regarding the Group’s exploration and evaluation assets (included within production licenses and assets under construction) is presented below: Year ended 31 December 2024 2023 Exploration and evaluation assets at the beginning of the year 375,275 399,650 Additions 78,302 76,976 Translation differences 354 1,353 Reclassification (455) (78,972) Disposals (34,548)1 (23,732)2 Exploration and evaluation assets at the end of the year 418,928 375,275 1 Including impairment loss in the amount of RUB 23,527 million. 2 Including impairment loss in the amount of RUB 555 million.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 31 14 Right-of-Use Assets Year ended 31 December 2024 2023 Right-of-Use Assets at the beginning of the year Cost 491,361 334,230 Accumulated depreciation and impairment allowance (123,330) (73,742) Net book value 368,031 260,488 Cost Additions as a result of new leases1 145,083 193,022 Disposals (57,572) (17,535) Effect of modification and changes of estimates in lease contracts (6,619) (19,681) Translation differences 511 1,325 Accumulated depreciation and impairment allowance Depreciation (73,172) (61,396) Disposals 20,294 8,319 Impairment allowance accrual (261) (367) Effect of modification and changes of estimates in lease contracts 3,447 4,402 Translation differences (227) (546) Right-of-Use Assets at the end of the year Cost 572,764 491,361 Accumulated depreciation and impairment allowance (173,249) (123,330) Net book value 399,515 368,031 1 Including a result of the acquisition of subsidiaries. Right-of-use assets are mainly represented by leases of ships, used for transportation of liquefied natural ga s and refined products, and leases of properties and land occupied by operating assets. The total cash outflow under lease agreements amounted to RUB 144,072 million and RUB 103,802 million for the years ended 31 December 2024 and 31 December 2023, respectively. 15 Goodwill Change in goodwill occurred as a result of subsidiaries acquisition is presented in the table below. Year ended 31 December 2024 2023 Goodwill at the beginning of the year 147,273 130,585 Additions - 16,680 Translation differences (1) 17 Disposals (8,852) (9) Goodwill at the end of the year 138,420 147,273 Goodwill acquired through business combinations has been allocated to the related cash-generating units and segments within the following operations: 31 December 2024 2023 Gas business 53,445 62,230 Oil business 39,969 40,037 Electric power business 28,326 28,326 Media business 16,680 16,680 Total goodwill 138,420 147,273 Management has assessed the existence of indications of goodwill impairment. The procedure of calculating of the recoverable amount of a group of cash-generating units is described in Note 13. As a result of this assessment no impairment loss on goodwill were recognized by the Group for the years ended 31 December 2024 and 31 December 2023.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 32 16 Investments in Associates and Joint Ventures Carrying value as of 31 December Share of profit (loss) for the year ended 31 December Notes 2024 2023 2024 2023 23, 33, 35 Gazprombank (Joint Stock Company) and its subsidiaries 284,642 213,517 91,592 83,404 PJSC NGK Slavneft and its subsidiaries 171,040 176,915 (5,917) 3,213 32 LLC Sakhalin Energy1 - 397,366 46,432 161,536 Other associates 350,207 333,642 41,057 15,214 Joint ventures 409,636 415,411 68,844 90,997 Total investments in associates and joint ventures 1,215,525 1,536,851 242,008 354,364 1 In March 2024 the G roup acquired an additional 27. 50 % interest in LLC Sakhalin Energy, as a result the Group obtained control over the activities of LLC Sakhalin Energy (see Note 32 ). Investments in associates and joint ventures are accounted net of allowance for investments impairment in the amount of RUB 387,552 million and RUB 284,936 million as of 31 December 2024 and 31 December 2023, respectively. The Group recognised the impairment loss on investments in associates and joint ventures in the amount of RUB 102,631 million and RUB 113,631 million for the years ended 31 December 2024 and 31 December 2023, respectively. Material Associates and Joint Ventures Nature of relationship Country of primary operations Nature of operations Ownership interest (%)1 as of 31 December 2024 2023 Gazprombank (Joint Stock Company)2 Associate Russia Banking 49.88 49.88 PJSC NGK Slavneft Joint venture Russia Production, processing and sales of oil 49.88 49.88 LLC Sakhalin Energy Associate Russia Production of oil, LNG - 50 1 Cumulative share of the Group in share capital of investees. 2 Share in voting shares. Investments in the Group’s material associates and joint ventures are accounted for using the equity method. Summarised financial information on the Group’s material associates and its reconciliation to the carrying amount of its ownership interests is presented below. The disclosed values of assets, liabilities, revenues, profit (loss) of the Group’s material associates represent total values and not the Group’s share of them. This financial information may differ from the financial statements of an associate prepared and presented in accordance with IFRS Accounting Standards due to adjustments required in application of the equity method, such as fair value adjustments to identifiable assets and liabilities at the date of acquisition and adjustments for differences in accounting policies. Gazprombank (Joint Stock Company) and its subsidiaries1 PJSC NGK Slavneft and its subsidiaries LLC Sakhalin Energy2 As of 31 December 2024 and for the year ended 31 December 2024 Current assets 6,151,448 92,686 - Non-current assets 11,463,877 697,182 - Total assets 17,615,325 789,868 - Current liabilities 12,647,912 248,370 - Non-current liabilities 3,805,561 188,326 - Total liabilities 16,453,473 436,696 -
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 33 16 Investments in Associates and Joint Ventures (continued) 1 The amount of r evenue of Gazprombank (Joint S tock Company) and its subsidiaries includes revenue of media business (for the year ended 31 December 2023 less the discontinued operations), machinery business and other non -banking entities. 2 Information on the financial results of LLC Sakhalin Energy is presented for the three months ended 31 March 2024, before the Group obtained control over the activities of LLC Sakhalin Energy. Gazprombank (Joint Stock Company) and its subsidiaries1 PJSC NGK Slavneft and its subsidiaries LLC Sakhalin Energy2 Net assets 1,161,852 353,172 - Net assets (excluding non-controlling interests) 1,144,384 206,818 - Ownership interest 49.88 % 49.88 % - Group’s share of net assets (excluding non-controlling interests) 570,871 103,159 - Impairment and other effects (286,229) 67,881 - Carrying value of investment 284,642 171,040 - Revenue from sales 141,244 456,592 173,340 Profit (loss) for the year 195,189 (11,866) 92,864 Profit (loss) for the year (excluding non-controlling interests) 191,865 (13,107) 92,864 Other comprehensive income for the year 1,546 - - Comprehensive income (expenses) for the year 196,735 (11,866) 92,864 Comprehensive income (expenses) for the year (excluding non-controlling interests) 193,411 (13,107) 92,864 Dividends received from associates and joint ventures (11,553) - - As of 31 December 2023 and for the year ended 31 December 2023 Current assets 5,043,492 164,021 661,918 Non-current assets 10,624,858 636,909 628,596 Total assets 15,668,350 800,930 1,290,514 Current liabilities 11,021,141 171,673 100,947 Non-current liabilities 3,704,341 264,238 371,485 Total liabilities 14,725,482 435,911 472,432 Net assets 942,868 365,019 818,082 Net assets (excluding non-controlling interests) 926,806 216,493 818,082 Ownership interest 49.88 % 49.88 % 50 % Group’s share of net assets (excluding non-controlling interests) 462,333 107,985 409,041 Impairment and other effects (248,816) 68,930 (11,675) Carrying value of investment 213,517 176,915 397,366 Revenue from sales 124,208 394,649 629,349 Profit for the year 182,757 6,441 315,285 Profit for the year (excluding non-controlling interests) 180,364 3,631 315,285 Other comprehensive income for the year 14,794 - - Comprehensive income for the year 197,551 6,441 315,285 Comprehensive income for the year (excluding non-controlling interests) 195,158 3,631 315,285 Dividends received from associates and joint ventures - (1) (42,456)
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 34 17 Long-Term Accounts Receivable and Prepayments 31 December 2024 2023 Financial assets Long-term trade accounts receivable 69,859 78,617 Long-term loans receivable 738,530 487,142 Long-term other accounts receivable 135,723 84,352 944,112 650,111 Non-financial assets Long-term prepayments 24,498 15,987 Advances for assets under construction 916,395 935,791 940,893 951,778 Total long-term accounts receivable and prepayments 1,885,005 1,601,889 Long-term accounts receivable are presented net of allowance for expected credit losses in the amount of RUB 67,049 million and RUB 45,872 million as of 31 December 2024 and 31 December 2023, respectively. Prepayments and advances paid for assets under construction are presented net of impairment allowance in the amount of RUB 23,880 million and RUB 12,799 million as of 31 December 2024 and 31 December 2023, respectively. As of 31 December 2024 and 31 December 2023 long-term accounts receivable with carrying value RUB 944,112 million and RUB 650,111 million have an estimated fair value RUB 803,552 million and RUB 591,437 million, respectively. Trade accounts receivable Other accounts receivable and loans receivable 31 December 31 December 2024 2023 2024 2023 Long-term accounts receivable neither past due nor credit-impaired 69,847 78,606 874,113 571,494 Long-term accounts receivable past due or credit- impaired 11,769 11,286 55,432 34,597 Allowance for expected credit losses of long-term accounts receivable (11,757) (11,275) (55,292) (34,597) Total long-term accounts receivable 69,859 78,617 874,253 571,494 Management experience indicates that long-term loans to other entities granted mainly for capital construction purposes are of strong credit quality. Movement of the Group’s allowance for expected credit losses of long-term accounts receivable is presented in the table below. Trade accounts receivable Other accounts receivable and loans receivable Year ended 31 December Year ended 31 December 2024 2023 2024 2023 Allowance for expected credit losses of accounts receivable at the beginning of the year 11,275 465 34,597 55,375 Changing the perimeter of the Group - - - (37,793) Accrual of allowance for expected credit losses of accounts receivable1 111 243 15,739 24,680 Reversal of previously accrued allowance for expected credit losses of accounts receivable1 (5,378) (582) (174) (778) Reclassification to other line of assets 5,230 11,151 5,142 (7,113) Foreign exchange rate differences 519 (2) (12) 226 Allowance for expected credit losses of accounts receivable at the end of the year 11,757 11,275 55,292 34,597 1 The accrual and release of allowance for expected credit losses of long-term accounts receivable have been included in the line “Impairmеnt loss on finаnсial assеts” in the consolidated statement of comprehensive income.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 35 18 Accounts Payable, Provisions and Other Liabilities 31 December 2024 2023 Financial liabilities Trade accounts payable 869,222 777,387 Accounts payable for acquisition of property, plant and equipment 723,442 520,223 Provisions 416,570 316,841 Lease liabilities 101,202 84,146 Liabilities towards employees 93,917 85,555 Derivative financial instruments 16,181 13,654 Other accounts payable 348,169 240,082 2,568,703 2,037,888 Non-financial liabilities Advances received 246,148 465,232 Accruals and deferred income 8,444 4,674 254,592 469,906 Total accounts payable, provisions and other liabilities 2,823,295 2,507,794 The fair value of these liabilities approximates their carrying value. 19 Taxes Other than on Profit and Fees Payable 31 December 2024 2023 MET 279,124 250,410 VAT 252,721 234,609 Property tax 55,762 56,144 Excise tax 51,001 103,968 Other taxes 66,313 62,619 Total taxes other than on profit and fees payable 704,921 707,750 20 Short-Term Borrowings, Promissory Notes and Current Portion of Long-Term Borrowings 31 December 2024 2023 Short-term borrowings and promissory notes: Borrowings and promissory notes denominated in Russian Rubles 313,345 339,312 Foreign currency denominated borrowings - 30,702 313,345 370,014 Current portion of long-term borrowings (see Note 21) 1,108,711 925,349 Total short-term borrowings, promissory notes and current portion of long-term borrowings 1,422,056 1,295,363 The weighted average interest rates on short-term borrowings were 17.8 % and 9.2 % as of 31 December 2024 and 31 December 2023, respectively. The fair value of these liabilities approximates their carrying value.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 36 21 Long-Term Borrowings, Promissory Notes 31 December 2024 2023 Long-term borrowings, promissory notes: Bank borrowings 3,143,411 3,145,477 Loan participation notes 1,608,713 1,733,009 Russian bonds 1,011,014 826,244 Loans 587,589 533,950 Other bonds 42,273 40,905 Promissory notes 8,465 7,881 Total long-term borrowings, promissory notes 6,401,465 6,287,466 Less current portion of long-term borrowings (1,108,711) (925,349) 5,292,754 5,362,117 31 December 2024 2023 Long-term borrowings and promissory notes denominated in Russian Rubles (including current portion of RUB 585,360 million and RUB 441,744 million as of 31 December 2024 and 31 December 2023, respectively) 2,969,852 2,737,239 denominated in foreign currency (including current portion of RUB 523,351 million and RUB 483,605 million as of 31 December 2024 and 31 December 2023, respectively) 3,431,613 3,550,227 6,401,465 6,287,466 The maturity analysis of long-term borrowings and promissory notes is presented in the table below. Long-term borrowings include fixed interest rate borrowings with a carrying value of RUB 2,706,768 million and RUB 2,945,351 million and fair value of RUB 2,376,990 million and RUB 2,863,282 million as of 31 December 2024 and 31 December 2023, respectively. All other long-term borrowings have variable interest rates generally linked EURIBOR and the key rate of the Bank of Russia. Their carrying value is RUB 3,694,697 million and RUB 3,342,115 million and fair value is RUB 3,767,313 million and RUB 3,602,384 million as of 3 1 December 2024 and 31 December 2023, respectively. The weighted average interest rates on long-term borrowings were 12.4 % and 9.6 % as of 31 December 2024 and 31 December 2023, respectively. As of 31 December 2024 and 31 December 2023 according to the agreements signed within the framework of financing the Nord Stream 2 project, 100 % of shares of Nord Stream 2 AG were pledged until a full settlement of the secured obligations. As of 31 December 2024 and 31 December 2023 according to the agreements signed in December 2019 within the framework of financing the construction of the Amur gas processing plant, interest in the charter capital of LLC Gazprom pererabotka Blagoveshchensk (a subsidiary) was pledged until a full settlement of the secured obligations. In addition, obligations to agent banks are secured by the assets, which include cash, property, plant and equipment (including assets under construction) and advances paid for assets under construction. As of 3 1 December 202 4 and 31 December 202 3 the secured obligations to agent banks amounted to RUB 758,238 million and RUB 777,672 million, respectively. The Group has no subordinated borrowings and no debt obligations that may be converted into shares of the Group (see Note 29). 31 December Maturity of long-term borrowings, promissory notes 2024 2023 between one and two years 860,640 992,598 between two and five years 2,536,823 2,540,109 after five years 1,895,291 1,829,410 5,292,754 5,362,117
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 37 22 Profit Tax Profit before profit tax for financial reporting purposes is reconciled to profit tax expense as follows: For the year ended 31 December Notes 2024 2023 Profit (loss) before profit tax 1,662,936 (659,070) Theoretical tax charge calculated at applicable tax rates (332,587) 131,814 Tax effect of items which are not deductible or assessable for taxation purposes: Non-deductible expenses (99,573) (180,354) 16 Non-taxable share of profit of associates and joint ventures 31,080 70,873 The effect of applying different income tax rates (5,542) (2,767) Change in tax rate (162,820) - Other non-taxable income 225,216 56,428 Profit tax (expenses) income (344,226) 75,994 Differences between the recognition criteria of assets and liabilities reflected in the consolidated financial statements and for the purposes of taxation give rise to certain temporary differences. The tax effect of the movement in these temporary differences is reported at the rates set forth by the applicable legislation of the Russian Federation. Certain entities of the Gazprom Group enjoy preferential tax treatment, which allows them to pay profit tax at a reduced rate. Deferred tax assets and liabilities recognised in the c onsolidated financial statements are attributable to the following: Deferred tax assets Deferred tax liabilities Net As of 31 December 2024 Property, plant and equipment 372,616 (1,974,370) (1,601,754) Right-of-use assets - (101,576) (101,576) Financial assets 31,774 (3,911) 27,863 Account receivables 396,690 (2,560) 394,130 Inventories 70,830 (71,323) (493) Tax losses carry forward 171,600 - 171,600 Lease liabilities 121,344 - 121,344 Other temporary differences 929,540 (854,001) 75,539 Netting (1,403,487) 1,403,487 - Total deferred tax assets (liabilities) 690,907 (1,604,254) (913,347) As of 31 December 2023 Property, plant and equipment 297,456 (1,469,418) (1,171,962) Right-of-use assets - (76,696) (76,696) Financial assets 17,774 (29,982) (12,208) Account receivables 233,586 (23,133) 210,453 Inventories 41,097 (57,227) (16,130) Tax losses carry forward 111,404 - 111,404 Lease liabilities 78,336 - 78,336 Other temporary differences 532,481 (469,452) 63,029 Netting (831,109) 831,109 - Total deferred tax assets (liabilities) 481,025 (1,294,799) (813,774) Due to changes in the law from 1 January 2022 foreign exchange gains are not taxable until assets and liabilities are paid. Due to changes in the law from 1 January 2023 foreign exchange losses are not deductible until assets and liabilities are paid. Other temporary differences related to deferred tax assets include amounts of RUB 652,371 million and RUB 385,153 million of foreign exchange losses non -deductible until assets and liabilities are paid as of 31 December 2024 and as of 31 December 2023, respectively. Other temporary differences related to deferred tax liabilities include amounts of RUB 688,656 million and RUB 407,654 million of foreign exchange gains non -taxable until assets and liabilities are paid as of 31 December 2024 and as of 31 December 2023, respectively. The taxable effect of taxable and deductible temporary differences for the twelve months ended 31 December 2024 and 31 December 2023 is presented in the table below:
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 38 22 Profit Tax (continued) 31 December 2022 Temporary differences recognition and reversals 31 December 2023 Temporary differences recognition and reversals Changing the perimeter of the Group The effect of changes in the profit tax rate in profit or loss in other comprehen- sive income in profit or loss in other comprehen- sive income 31 December 2024 Property, plant and equipment (1,224,749) 56,046 (3,259) (1,171,962) (148,829) - (3,562) (277,401) (1,601,754) Right-of-use assets (49,676) (27,020) - (76,696) 57,181 - - (82,061) (101,576) Financial assets 18,808 (7,431) (23,585) (12,208) 6,459 30,087 - 3,525 27,863 Account receivables 132,889 77,564 - 210,453 106,331 - - 77,346 394,130 Inventories (31,485) 15,355 - (16,130) 16,842 - - (1,205) (493) Tax losses carry forward 63,199 48,205 - 111,404 31,253 - - 28,943 171,600 Lease liabilities 36,902 41,434 - 78,336 (55,065) - - 98,073 121,344 Other deductible temporary differences (66,194) 133,725 (4,502) 63,029 73,303 - (49,209) (11,584) 75,539 Total net deferred tax liabilities (1,120,306) 337,878 (31,346) (813,774) 87,475 30,087 (52,771) (164,364) (913,347) In July 2024, amendments were made to the Tax Code of the Russian Federation, which, among other things, include an increase in the profit tax rate from 20 % to 25 % from 1 January 2025. 23 Provisions 31 December 2024 2023 Provision for decommissioning and site restoration costs 325,504 258,081 Provision for post-employment benefits 256,022 304,949 Other 11,835 6,234 Total provisions 593,361 569,264 The Group applies pension and other post-employment benefits system, which is recorded as defined benefit plan in the consolidated financial statements under IAS 19 Employee Benefits. Pension benefits are provided to the majority of the Group’s employees. Pension benefits include non -governmental pension benefits provided by JSC NPF GAZFOND, and lump-sum payments provided by the Group upon retirement. The amount of benefits provided depends on the time of service rendered by employees (length of service), salary in the last years preceding retirement, a predetermined fixed amount or a combination of these factors. The principal actuarial assumptions used: 31 December 2024 2023 Discount rate (nominal) 15.2 % 11.9 % Future salary and pension increase (nominal) 8.0 % 6.0 % Future pensioners’ benefits increase (nominal) 4.0 % - Average expected retirement age, years women 58, men 63 women 58, men 62 Employee turnover ratio age-related probability of resignation curve, 3.8 % on average The weighted average term of obligations to maturity is 10.0 years.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 39 23 Provisions (continued) The assumptions related to the remaining life expectancy of employees at ex pected retirement age were 15.6 years for 63 year old men and 25.8 years for 58 year old women in 2024 (16.3 years for 62 year old men and 25.8 years for 58 year old women in 2023). Net post-employment benefits liabilities or assets recorded in the consolidated balance sheet are presented below. 31 December 2024 31 December 2023 Pension plan provided through JSC NPF GAZFOND Other post- employment benefits Pension plan provided through JSC NPF GAZFOND Other post- employment benefits Present value of obligations (428,006) (256,022) (418,753) (304,949) Fair value of plan assets 489,016 - 475,844 - Total net assets (liabilities) 61,010 (256,022) 57,091 (304,949) The net pension plan assets related to benefits provided through JSC NPF GAZFOND in the amount of RUB 61,010 million and RUB 57,091 million as of 31 December 2024 and 31 December 2023, respectively, are included within other non-current assets in the consolidated balance sheet (see Note 12). Changes in the present value of the defined benefit plan obligations and in the fair value of pension plan assets for the years ended 31 December 2024 and 31 December 2023 are presented below. Pension plan provided through JSC NPF GAZFOND Provision for other post- employment benefits Provision Fair value of assets Net (assets) liabilities As of 31 December 2023 418,753 (475,844) (57,091) 304,949 Current service cost 10,149 - 10,149 10,603 Past service cost - - - 2,948 Interest expense (income) (see Note 28) 49,788 (56,612) (6,824) 36,154 Total included in profit or loss 59,937 (56,612) 3,325 49,705 Remeasurement of provision for post-employment benefits: Actuarial gains – changes in financial assumptions (25,997) - (25,997) (63,815) Actuarial gains – changes in demographic assumptions (5) - (5) (13) Actuarial gains – experience adjustments (1,142) - (1,142) (4,769) Expense on plan assets excluding amounts included in interest expense - 43,207 43,207 - Translation differences - - - 147 Total included in other comprehensive income (27,144) 43,207 16,063 (68,450) Benefits paid (23,540) 23,540 - (30,182) Employer’s contributions - (23,307) (23,307) - As of 31 December 2024 428,006 (489,016) (61,010) 256,022 As of 31 December 2022 411,978 (443,795) (31,817) 314,870 Current service cost 10,633 - 10,633 12,090 Past service cost 38 - 38 (541) Interest expense (income) (see Note 28) 42,408 (45,416) (3,008) 32,339 Changing the perimeter of the Group - - - 606 Total included in profit or loss 53,079 (45,416) 7,663 44,494 Remeasurement of provision for post-employment benefits: Actuarial gains – changes in financial assumptions (38,932) - (38,932) (41,861) Actuarial gains – changes in demographic assumptions - - - (40) Actuarial losses – experience adjustments 13,729 - 13,729 10,171 Expense on plan assets excluding amounts included in interest expense - 7,632 7,632 - Translation differences - - - (8) Total included in other comprehensive income (25,203) 7,632 (17,571) (31,738) Benefits paid (21,101) 21,101 - (22,677) Employer’s contributions - (15,366) (15,366) - As of 31 December 2023 418,753 (475,844) (57,091) 304,949
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 40 23 Provisions (continued) The major categories of pension plan assets allocation broken down by fair value and percentage of total plan assets are presented below. 31 December 2024 31 December 2023 Fair value Percentage of plan assets Fair value Percentage of plan assets Quoted plan assets, including: 337,515 69.0 % 350,749 73.7 % Bonds 230,098 47.0 % 215,042 45.2 % Mutual funds 68,462 14.0 % 88,466 18.6 % Shares 38,955 8.0 % 47,241 9.9 % Unquoted plan assets, including: 151,501 31.0 % 125,095 26.3 % Equities 93,596 19.1 % 83,507 17.6 % Mutual funds 31,012 6.4 % 24,491 5.1 % Other assets 26,893 5.5 % 17,097 3.6 % Total plan assets 489,016 100 % 475,844 100 % Unquoted equities within the pension plan assets are represented by equity stake in Gazprombank (Joint Stock Company), which is measured at fair value (Level 2 in accordance with the fair value hierarchy) using market approach valuation techniques based on available market data. For the years ended 31 December 2024 and 31 December 2023 the actual return on pension plan assets was a gain in the amount of RUB 13,405 million and in the amount of RUB 37,784 million, respectively, primarily caused by the change in the fair value of assets. The sensitivity analysis of the present value of defined benefit pension plan obligations to changes in the principal actuarial assumptions as of 31 December 2024 is presented in the table below. Increase (decrease) of obligation Increase (decrease) of obligation, % Mortality rate lower by 20 % 15,921 2.4 % Mortality rate higher by 20 % (13,924) (2.1) % Discount rate lower by 1 pp 37,004 5.6 % Discount rate higher by 1 pp (32,776) (4.9) % Pension and other benefits growth rate lower by 1 pp (35,365) (5.3) % Pension and other benefits growth rate higher by 1 pp 39,546 5.9 % Staff turnover lower by 1 pp for all ages 28,752 4.3 % Staff turnover higher by 1 pp for all ages (25,447) (3.8) % Retirement age lower by 1 year 34,777 5.2 % Retirement age higher by 1 year (33,679) (5.1) % The Group expects to contribute in the amount of RUB 40,600 million to the defined benefit pension plan in 2025. Pension Plan Parameters and Related Risks As a rule, the above benefits are indexed in line with inflation or salary growth for salary-dependent benefits and are exposed to inflation risk. In addition to the inflation risk, the pension plan s of the Group are exposed to mortality risk s and longevity risks. 24 Equity Share Capital The s hare capital authorised, issued and paid totals RUB 325,194 million as of 31 December 2024 and 31 December 2023 and consists of 23,674 million ordinary shares, each with a par value of 5 Russian Rubles. Dividends The Annual General Meeting of Shareholders decided not to declare and pay dividends based on the results of PJSC Gazprom's operations for 2023. According to the decision of the Annual General Meeting of Shareholders regarding the results of PJSC Gazprom's operations for 2022, dividends were neither declared nor paid. For the half -year 2022 interim dividends were accrued and paid in the amount of 51.03 Russian Rubles per ordinary share.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 41 24 Equity (continued) Treasury Shares As of 31 December 2024 and 31 December 2023 the Group holds 29 million PJSC Gazprom’s ordinary shares, which are accounted for as treasury shares. The management of the Group controls the voting rights of treasury shares. Retained Earnings and Other Reserves Retained earnings and other reserves include the effect of the consolidated financial statements restatement to the Russian Ruble purchasing power equivalent as of 31 December 2002, when the economy of the Russian Federation ceased to be hyperinflationary under IAS 29 Financial Reporting in Hyperinflationary Economies. Also, retained earnings and other reserves include translation differences arising on the translation of the net assets of foreign subsidiaries, associates and joint arrangements in the amount of RUB 408,401 million and RUB 508,643 million as of 31 December 2024 and 31 December 2023, respectively. Retained earnings and other reserves include a statutory fund for social assets, created in accordance with Russian legislation at the time of privatisation. From time to time, the Group negotiates to return certain of social assets to the balance of local governmental authorities and this process may be continued in the future. Number of Shares Outstanding The number of PJSC Gazprom shares outstanding (the number of issued ordinary shares less treasury shares) amounted to 23,645 million shares as of 31 December 2024 and 31 December 2023. Perpetual Notes Information about perpetual notes is disclosed in Note 25. 25 Perpetual Notes Perpetual notes of the Group are represented by: issued in 2020 in the international market perpetual callable loan participation notes with a par value of USD 1,400 million and EUR 1,000 million, which were partly replaced by issued in 2023 Russian perpetual callable notes as a replacement for foreign currency perpetual loan participation notes the rights to which were recorded in Russian depositories for the total amount of USD 1,069 million and EUR 716 million with conditions similar to the replaced foreign currency perpetual loan participation notes, except for the change of the settlement currency to Russian rubles; issued in 20 21-2023 in the Russian market perpetual callable notes with a par value of RUB 504,200 million. Under the terms of the foreign currency perpetual loan participation notes, the Group, acting in its sole discretion, may refuse to redeem the notes and may, at any time and on any number of occasions, decide to postpone interest payments. Conditions which give rise to an interest payment liability are under the control of PJSC Gazprom. In particular, an interest payment liability arises when PJSC Gazprom decides to pay or declare dividends. Interest of the foreign currency perpetual loan participation notes is cumulative. Under the terms of the ruble perpetual notes, the Group may, on a unilateral basis, decide to refuse to pay interest. Interest of the ruble per petual notes is not cumulative. In case the Group decides to refuse to pay interest, Resolution of the Government of the Russian Federation No.2337 dated 29 December 2020 provides for the reimbursement for the investors’ lost income for certain series of Russian Ruble perpetual notes. Transactions related to perpet ual notes for the year s ended 31 December 2024 and 31 December 2023 are presented below.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 42 25 Perpetual Notes (continued) 1 Including replacement perpetual notes issued to replace foreign currency perpetual loan participation notes. 2 Interest was paid in the amount of RUB 55,587 million. As of 31 December 2024 cumulative translation loss arising on the translation of the par value of perpetual notes amounted to RUB 50,986 million, and cumulative interest taking into account translation differences arising on its translation amounted to RUB 4,904 million. 1 Including replacement perpetual notes issued to replace foreign currency perpetual loan participation notes. 2 Interest was paid in the amount of RUB 20,003 million. As of 31 December 2023 cumulative translation loss arising on the translation of the par value of perpetual notes amounted to RUB 27,287 million, and cumulative interest taking into account translation differences arising on its translation amounted to RUB 3,943 million. Ruble perpetual notes Foreign currency perpetual loan participation notes1 Retained earnings and other reserves Total Balance as of 31 December 2023 504,200 228,698 (77,340) 655,558 Costs related to issuance of perpetual notes - - (396) (396) Translation differences arising on the translation of the par value of perpetual notes - 23,699 (23,699) - Accrued interest - 10,415 (10,415) - Recognition of an interest payment liability2 - (9,558) (45,947) (55,505) Translation differences arising on the translation of accrued interest - 104 (104) - Cumulative tax effect of transactions related to perpetual notes - - 4,819 4,819 Balance as of 31 December 2024 504,200 253,358 (153,082) 604,476 Ruble perpetual notes Foreign currency perpetual loan participation notes1 Retained earnings and other reserves Total Balance as of 31 December 2022 120,000 178,824 (13,764) 285,060 Issuance of perpetual notes 384,200 - - 384,200 Costs related to issuance of perpetual notes - - (184) (184) Translation differences arising on the translation of the par value of perpetual notes - 50,627 (50,627) - Accrued interest - 12,429 (12,429) - Recognition of an interest payment liability2 - (13,478) (10,202) (23,680) Translation differences arising on the translation of accrued interest - 296 (296) - Cumulative tax effect of transactions related to perpetual notes - - 10,162 10,162 Balance as of 31 December 2023 504,200 228,698 (77,340) 655,558
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 43 26 Revenue From Sales Year ended 31 December 2024 2023 Revenue from gas sales gross of excise tax, customs duties and payments due to the Russian Federation in accordance with production sharing agreement: the Russian Federation 1,319,456 1,242,052 Outside the Russian Federation 3,562,971 2,860,577 4,882,427 4,102,629 Customs duties (681,643) (593,997) Excise tax (129,133) (131,350) Payments due to the Russian Federation in accordance with production sharing agreements (52,240) - Changes in transaction price, related to the previous periods1 109,225 (252,506) Total revenue from gas sales 4,128,636 3,124,776 Revenue from sales of crude oil, gas condensate and refined products: the Russian Federation 2,735,154 2,139,430 Outside the Russian Federation 2,373,189 1,972,151 Total revenue from sales of crude oil, gas condensate and refined products 5,108,343 4,111,581 Revenue from electric and heat energy sales: the Russian Federation 666,714 628,549 Outside the Russian Federation 5,961 16,095 Total revenue from electric and heat energy sales 672,675 644,644 Revenue from other sales: the Russian Federation 756,938 602,095 Outside the Russian Federation 48,094 58,722 Total revenue from other sales 805,032 660,817 Total revenue from sales 10,714,686 8,541,818 1Changes in transaction price , related to the previous periods, mainly consists of effect of changes in gas price related to the deliveries in the previous years, which have been agreed or are in the process of negotiation. Changes in transaction price, including relevant impact on profit tax, are recorded in the consolidated financial statements when they become highly probable and a sufficiently reli able estimate of the amounts can be made. Revenue from sales ratio includes revenue from sales to the customers of Gazprom Group’s entities from the People's Republic of China in the amount of RUB 1,389,635 million and RUB 1,076,447 million for the years ended 31 December 2024 and 31 December 2023, respectively Prepayments received from customers as of the beginning of the corresponding period were recognised within revenue from sales in the amount of RUB 135,893 million and RUB 95,298 million for the years ended 31 December 2024 and 31 December 2023, respectively. 27 Operating Expenses Year ended 31 December 2024 2023 Taxes other than on profit 3,716,070 3,072,606 Depreciation 1,377,774 982,058 Staff costs 1,191,959 1,096,702 Purchased gas and oil 911,956 747,903 Transit of gas, oil and refined products 626,872 528,958 Materials 563,665 524,851 Goods for resale, including refined products 333,338 260,894 Impairment loss on non-financial assets 286,286 1,145,993 Repairs and maintenance 232,524 219,040 Foreign exchange differences on operating items 8,925 (191,441) Other (108,786) 374,432 9,140,583 8,761,996 Change in balances of finished goods, work in progress and other effects (88,820) (177,794) Total operating expenses 9,051,763 8,584,202 Gas purchase expenses included within purchased gas and oil amounted to RUB 143,054 million and RUB 253,363 million for the years ended 31 December 2024 and 31 December 2023, respectively. Line item «Other» includes RUB 936,202 million and RUB 716,712 million of income received in the form of deductions for excise taxes for the years ended 31 December 2024 and 31 December 2023, respectively.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 44 27 Operating Expenses (continued) Taxes other than on profit consist of: Year ended 31 December 2024 2023 MET 3,057,259 2,457,465 Excise tax 303,838 265,999 Property tax 235,518 242,909 Other 119,455 106,233 Total taxes other than on profit 3,716,070 3,072,606 The impairment loss on non-financial assets is mainly comprises of i mpairment loss on property, plant and equipment and assets under construction and impairment loss on investments in associates and joint ventures (see Note 13 and Note 16, respectively). 28 Finance Income and Expenses Year ended 31 December 2024 2023 Foreign exchange gain 641,355 479,570 Interest income 360,828 179,894 Total finance income 1,002,183 659,464 Foreign exchange loss 768,213 1,131,186 Interest expense 269,432 178,023 Total finance expenses 1,037,645 1,309,209 Total interest paid amounted to RUB 715,359 million and RUB 396,884 million for the years ended 31 December 2024 and 31 December 2023, respectively. Interest expense includes interest expense on provision for post-employment benefits and interest expense on lease liabilities under IFRS 16 Leases (see Note 23 and Note 36, respectively). 29 Basic and Diluted Earnings (Loss) per Share Attributable to the Owners of PJSC Gazprom Basic earnings (loss) per share attributable to the owners of PJSC Gazprom is shown in the table below. The Group has no dilutive financial instruments. Year ended 31 December Notes 2024 2023 Profit (loss) for the year attributable to the owners of PJSC Gazprom 1,218,543 (629,085) 25 Interest accrued on perpetual notes (56,362) (22,631) 25 Translation differences arising on the translation of interest accrued on perpetual notes (104) (296) Profit (loss) for the year attributable to the ordinary shareholders of PJSC Gazprom 1,162,077 (652,012) Weighted average number of ordinary shares outstanding (millions of shares) 23,645 23,645 Basic and diluted earnings (loss) per share attributable to the owners of PJSC Gazprom (in Russian Rubles) 49.15 (27.58)
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 45 30 Net Cash from Operating Activities Year ended 31 December Notes 2024 2023 Profit (loss) before tax 1,662,936 (659,070) Adjustments to profit (loss) before tax 27 Depreciation 1,377,774 982,058 28 Net finance expense 35,462 649,745 16 Share of profit of associates and joint ventures (242,008) (354,364) Impairment loss on assets and change in provision for post-employment benefits 516,519 1,490,124 Derivative financial instruments loss 9,046 30,330 32 Gain from bargain purchase of a subsidiary (191,507) - Other (117,677) 61,783 Total effect of adjustments 1,387,609 2,859,676 Cash flows from operating activities before working capital changes 3,050,545 2,200,606 Decrease (increase) in non-current assets 15,700 (44,331) Increase in non-current liabilities 42,937 37,168 3,109,182 2,193,443 Changes in working capital: (Increase) decrease in accounts receivable and prepayments (366,541) 302,888 Increase in inventories (160,980) (151,941) Decrease (increase) in other current assets 63,584 (150,062) Increase in accounts payable, excluding interest, dividends and capital construction 104,026 145,496 Settlements on taxes and fees payable (other than profit tax) 51,695 277,490 Decrease in financial assets 19 5,003 Total effect of working capital changes (308,197) 428,874 Profit tax paid (305,297) (326,094) Net cash from operating activities 2,495,688 2,296,223 31 Subsidiaries About 400 subsidiaries are included in the scope of consolidation of the Group in these consolidated financial statements. The Group’s business is divided into four operating segments: – Gas business (includes all entities of the Group excluding entities from Oil business, Electric power business and Media business); – Oil business (mainly includes PJSC Gazprom Neft and its subsidiaries); – Electric power business (includes PJSC MIPC, PJSC Mosenergo, PJSC OGK-2, PJSC TGC-1 and their subsidiaries); – Media business (includes JSC Gazprom-Media Holding and its subsidiaries). Financial information by segment is presented in Note 7. The Group’s Gas and Oil business subsidiaries are engaged in the exploration and development of oil and gas deposits mostly located in the Russian Federation. In addition, the Group’s subsidiaries implement gas and oil production projects in countries of the Middle East and other countries. The majority of the Group’s oil and gas refining capacities are located in Blagoveshchensk, Moscow, Salavat, Omsk, Tomsk and Yaroslavl. The Group sells products in the Russian Federation, as well as to neighbouring and other countries. Petroleum products are sold in the Russian Federation in particular via a network of over two thousand filling stations. The Group also owns large electric power assets in the Russian Federation. In 2023 the Group became the owner of JSC Gazprom-Media Holding assets. The Group's subsidiaries are mainly registered in the Russian Federation. The Group’s ownership interest in the majority of subsidiaries that are significant for the Group is 100 %. The Group does not have material non‑controlling interests. As of 31 December 2024 and 31 December 2023 the Group does not have significant restrictions on its ability to access or use the Group’s assets and settle the Group’s liabilities, including restrictions to transfer cash and other assets between entities within the Group, to pay dividends.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 46 32 Acquisition of a Subsidiary In March 2024 the Group acquired 27.50 % of interest in LLC Sakhalin Energy for RUB 94,800 million. The payment was settled in cash. The transaction was made in accordance with Decree of the Government of the Russian Federation No. 701-p dated 23 March 2024. Prior to the acquisition of the above interest, the investment in LLC Sakhalin Energy was accounted for as an in vestment in the associate using the equity method. As a result of this transaction, the Group's interest in the charter capital of LLC Sakhalin Energy increased to 77.50 % and the Group obtained control over the activities of LLC Sakhalin Energy. The principal activities of LLC Sakhalin Energy are crude oil and associated gas production, as well as liquefied natural gas production under the terms and conditions of the Production Sharing Agreement with the Russian Federation. LLC Sakhalin Energy operates in the Russian Federation. As a result of the transaction, gain from a bargain purchase was recogni sed in the amount of RUB 191,507 million in the line “Other” of operating expenses of the consolidated statement of comprehensive income. The fair value of the consideration transferred at the acquisition date is presented below. Cost of acquisition 94,800 Cost of share in capital of LLC Sakhalin Energy at the acquisition date 443,798 Pre-existing relationships (99,803) Fair value of the consideration transferred 438,795 In accordance with IFRS 3 Business Combinations, the Group recognised the acquired assets and liabilities based upon their fair value. The fair value of the acquired assets and liabilities is presented below. Fair value Current assets Cash and cash equivalents 597,519 Accounts receivable and prepayments 45,323 Inventories 26,989 Other current assets 4,457 674,288 Non-current assets Property, plant and equipment 526,103 Right-of-use assets 37,281 Investments in associates and joint ventures 5 Long-term accounts receivable and prepayments 5,295 Deferred tax assets 107,235 Other non-current assets 3,392 679,311 Total assets 1,353,599 Current liabilities Accounts payable, provisions and other liabilities 86,667 Current profit tax payable 2,917 Taxes other than on profit and fees payable 1,348 90,932 Non-current liabilities Provisions 182,161 Deferred tax liabilities 172,571 Long-term lease liabilities 65,623 Other non-current liabilities 44 420,399 Total liabilities 511,331 Non-controlling interest at the acquisition date (211,966) Net assets at the acquisition date 630,302
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 47 32 Acquisition of a Subsidiary (continued) The result of the acquisition of LLC Sakhalin Energy is presented below. Fair value of the consideration transferred 438,795 Fair value of the net assets purchased 630,302 Gain from the bargain purchase 191,507 If the acquisition had occurred on 1 January 202 4, the Group’s revenue from sales for the year ended 31 December 2024 would have increased by RUB 167,781 million and the Group's profit before tax for the year ended 31 December 2024 would have increased by RUB 119,735 million. The fair value o f the accounts receivable resultin g from the transaction is RUB 34,972 million as of the acquisition date. The gross accounts receivable at the acquisition date is RUB 42,979 million. The best estimate of cash flows that are not expected to be recovered is RUB 8,007 million as of the acquisition date. 33 Related Parties Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making operational and financial decisions as defined by IAS 24 Related Party Disclosures. Related parties may enter into transactions , which unrelated parties would not, and transactions between related parties may not be effected on the same terms, conditions and amounts as transactions between unrelated parties. The nature of relationships with those related parties with whom the Group entered into significant transactions or had significant balances outstanding is detailed below. Government (the Russian Federation) The Russian Federation is the ultimate controlling party of PJSC Gazprom and has a controlling interest (including both direct and indirect ownership) of over 50 % in PJSC Gazprom. As of 31 December 2024 the Government directly owns 38.373 % of PJSC Gazprom’s issued shares. JSC ROSNEFTEGAZ and JSC Rosgazifikatsiya controlled by the Government own 11.859 % of PJSC Gazprom’s issued shares. The Government does not prepare consolidated financial statements for public use. The Governmental economic and social policies affect the Group’s financial position, performance and cash flows. As a condition of privatisation in 1992, the Government of the Russian Federation imposed an obligation on the Group to provide an uninterrupted supply of gas to customers in the Russian Federation at government- controlled prices. Government-Related Entities The Group applied an exception from IAS 24 Related Party Disclosures permitting not to disclose all transactions with government -related entities due to the fact that the R ussian Federation, as the ultimate controlling party, has a controlling interest (including both direct and indirect ownership) of over 50 % in PJSC Gazprom. In the normal course of business the Group enters into transactions with other entities under the Government control. Prices of natural gas and gas transportation, electricity tariffs in the Russian Federation are regulated by the FAS Russia. Bank borrowings are provided on the basis of market interest rates. As of 31 December 2024 and 31 December 2023 borrowings in banks influenced by the Government accounted for about 25 % (see Notes 20, 21). Taxes are accrued and paid in accordance with the applicable current legislation. Balances and transactions are presented in Notes 12, 19, 26 and 27. As of 31 December 2024 and 31 December 2023 balances of cash and cash equivalents on accounts in banks influenced by the Government accounted for about 17 % and 35 %, respectively (see Note 8). The share of the Group's operations with state -controlled entities in revenue from sale of electric and heat energy amounted to about 35 % and 36 % for the years ended 31 December 2024 and 31 December 2023, respectively (see Note 26).
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 48 33 Related Parties (continued) The share of the Group's operations with state -controlled entities in expenses of transit of oil and refined products amounted to about 44 % and 45 % for the years ended 31 December 2024 and 31 December 2023, respectively (see Note 27). The other transactions and balances are insignificant individually and in aggregate and mainly performed using market or regulated prices. Transactions with JSC FSC Some of the transactions on the wholesale electricity and capacity market are conducted through commission agreements with JSC FSC. The current financial settling system of JSC FSC does not provide the ultimate counterparties with automatically generated information about transactions and outstanding balances with the participants of the wholesale electricity and capacity market. Revenue from sale of electric and heat energy through JSC FSC accounted for about 37 % and 34 % of total revenue from sale of electric and heat energy for the years ended 31 December 2024 and 31 December 2023. Compensation for Key Management Personnel Key management personnel (the members of the Board of Directors and the Management Committee of PJSC Gazprom) receive short-term compensation, including salary, bonuses and remuneration for serving on the management bodies of the Group’s entities, amounted to RUB 4,759 million and RUB 3,945 million for the years ended 31 December 2024 and 31 December 2023, respectively. The members of the Board of Directors, who are government officials, do not receive compensation from the Group. The compensation of the members of the Board of Directors is approved by the annual general meetings of shareholders of the Group’s entities. The compensation of key management personnel (other than compensation of the members of the Board of Directors) is determined by the terms of the employment contracts. Short-term compensation of key management personnel also includes benefits related to healthcare. According to the Russian legislation, the Group makes contributions to the Pension Fund of the Russian Federation for all of its employees including key management personnel. Key management personnel are also entitled to long-term post-employment benefits. These benefits include non-governmental pension benefits provided by JSC NPF GAZFOND and lump-sum payments provided by the Group’s entities upon retirement (see Note 23). The Group also provides key management personnel with medical insurance and liability insurance. Associates and Joint Ventures For the years ended 31 December 2024 and 31 December 2023 and also as of 31 December 2024 and 31 December 2023 the Group’s significant transactions and balances with associates and joint ventures are presented below. Year ended 31 December 2024 2023 Income Revenue from gas sales Joint ventures 48,770 89,914 Revenue from crude oil, gas condensate and refined products sales Joint ventures 44,680 37,728 Revenue from other sales Joint ventures 54,399 27,974 Interest income Associates 131,118 17,215
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 49 33 Related Parties (continued) Year ended 31 December 2024 2023 Expenses Purchased gas Joint ventures 52,010 48,684 Purchased crude oil and refined products Joint ventures 480,129 412,433 Processing services Joint ventures 23,450 20,699 Interest expense Associates 68,553 35,772 Gas is sold to and purchased from the Group’s associates and joint ventures in the Russian Federation mainly at the rates established by the FAS Russia. Gas is sold and purchased outside the Russian Federation generally on a long-term basis at prices based on world prices of oil products. Crude oil is sold to and purchased from the Group’s associates and joint ventures in the ordinary course of business at prices not significantly different from average market prices. As of 31 December 2024 As of 31 December 2023 Assets Liabilities Assets Liabilities Short-term accounts receivable and prepayments Associates 117,451 - 67,204 - Joint ventures 34,235 - 34,630 - Cash and cash equivalents Associates 438,298 - 691,488 - Other current assets Associates 525 - 12,756 - Other non-current assets Associates 38,848 - 41,760 - Long-term accounts receivable and prepayments Associates 208,100 - 260,445 - Joint ventures 720,347 - 378,622 - Long-term financial assets Associates 148,027 - 150,128 - Short-term accounts payable Associates - 265,265 - 188,837 Joint ventures - 191,775 - 484,173 Other non-current liabilities Associates - 46,435 - 5,818 Short-term borrowings (including current portion of long-term borrowings) Associates - 52,377 - 92,166 Joint ventures - 20,379 - 52,972 Long-term borrowings Associates - 311,043 - 288,744 Allowance for expected credit losses for a ccounts receivable due from associates and joint ventures were RUB 1,156,636 million and RUB 958,825 million as of 31 December 2024 and 31 December 2023, respectively.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 50 33 Related Parties (continued) Borrowings from Gazprombank (Joint Stock Company) were obtained on terms not substantially different from those on financial instruments with similar characteristics and equally exposed to influence of changes in economic or other factors. Under the loan facility agreements concluded in 2019–2024 the Group has commitments to provide loans to the Group’s associate and joint ventures to repay its loan liabilities and borrowings towards in case of late payment. As of 3 1 December 2024 and 31 December 2023 the limit of l oan facilities according to the concluded agreements amounted to RUB 386,585 million and RUB 199,602 million, respectively. The loan facilities are mainly valid until 31 December 2027 and 29 June 2039. The Group did not provide loans during the term of the loan facility agreements. The loan commitments of the Group are limited by the loan liabilities and borrowings of the associate and joint ventures. Information on investments in associates and joint ventures is disclosed in Note 16. Information on transactions performed by the Group with JSC NPF GAZFOND is disclosed in Note 23. Information on financial guarantees issued by the Group for associates and joint ventures is disclosed in Note 36. The Group's ownership interests in some associates and joint ventures were pledged as collateral under loan agreements of associates and joint ventures. 34 Commitments and Contingencies Capital Commitments The total investment utilisation in accordance with the investment programme of the Group for 2025 (for gas, oil, electricity, heat generating and other assets) is RUB 2,833,426 million. Supply Commitments The Group has entered into long -term supply contracts with various entities operating outside Russian Federation. The volumes and prices in these contracts are subject to change due to various contractually defined factors. As of 31 December 2024 and 31 December 2023 these agreements are not expected to be onerous for the Group. 35 Operating Risks Taxation Russian tax, currency and customs legislation is subject to varying interpretations and frequent changes. Tax authorities may be taking a more assertive position in their interpretation of the legislation and assessments. Management believes that its interpretation of the relevant legislation as of 31 December 2024 is appropriate and the Group’s position in terms of tax, currency and customs legislation will remain stable. Legal Proceedings The Group is involved in a number of legal and arbitration proceedings concerning terms and conditions of long-term natural gas supply contracts and long-term gas transportation capacity booking agreements, and concerning their termination. As at 31 December 2024 and 31 December 2023 a provision for these proceedings was recognised. The Group continues to assess the effect of these legal and arbitration proceedings on its operations, and at the moment the Group’s management does not expect that they can hav e a material adverse effect on the Group’s financial position. The Group is also a party to certain other legal and arbitration proceedings arising in the ordinary course of business and subject to various regulations of environmental protection issued by various governmental authorities regarding handling, storage and disposal of certain products. The Group continues to assess the effect of these legal and arbitration proceedings and claims on its operations, and at the moment the Group’s management does not expect that they can have a material adverse effect on the Group’s financial position.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 51 35 Operating Risks (continued) On 10 May 2022 the Swiss court rendered a decision to grant a provisional bankruptcy moratorium to Nord Stream 2 AG with Transliq AG (Switzerland) being appointed as an administrative receiver. Later, the provisional bankruptcy moratorium was extended several times (until 10 January 2023). On 27 December 2022 the Swiss court rendered a decision to introduce a definitive moratorium for six months from the expiration date of the provisional moratorium. Later, the final bankruptcy moratorium was extended sever al times (currently valid until 9 May 2025). Sanctions Starting from 2014 the EU, the United States (the “U.S.”) and some other countries introduced, for the first time, a series of sanctions against the Russian Federation and some Russian legal entities. Starting from February 2022, western countries significantly expanded existing sanctions and started to impose new packages of sanctions against Russian entities and various sectors of the Russian economy. Some of these sanctions are aimed directly against PJSC Gazprom, PJSC Gazprom Neft and their subsidiaries and other companies, including Gazprombank (Joint Stock Company), and some of them include general restrictions of economic activity in certain sectors of the Russian Federation economy. The U.S. sanctions prohibit any U.S. citizen and legal entity incorporated in the U.S. (including their foreign branches) and any person or entity in the U.S. or related to the territory of the U.S. from: 1) transactions in new debt and new equity of PJSC Gazprom issued after 26 March 2022 of longer than 14 days maturity. The respective restrictions also apply to entities owned 50 % or more, directly or indirectly, by PJSC Gazprom. Any transactions that have the purpose of evading those restrictions are also prohibited. Apart from PJSC Gazprom, those restrictions were imposed on PJSC Gazprom Neft, a subsidiary of the Gazprom Group, and Gazprombank (Joint Stock Company), an associate of the Gazprom Group. The ability of PJSC Gazprom and the Gazprom Group’s entities to raise debt financing from U.S. persons is thus restricted. 2) providing, exporting, or reexporting, directly or indirectly, goods, services (except for financial services), or technology in support of potential exploration and production of oil in deep water, Arctic offshore, or shale formations in the Russian Federation, inland or in territorial waters claimed by the Russian Federation with participation of Russian companies, including PJSC Gazprom and PJSC Gazprom Neft. Since 7 August 2015 the restriction ha s included the Yuzhno -Kirinskoye field located in the Sea of Okhotsk. According to the changes of 31 October 2017 the scope of the stated restriction was extended for projects that meet three criteria at the same time: the start date of projects – after 29 January 2018; projects relate to oil production around the world; Russian companies included in the Sectoral Sanctions Identifications List, including PJSC Gazprom and PJSC Gazprom Neft and their subsidiaries, own a share of 33 % and more in such project or control the majority of voting rights. On 23 February 2022 the U.S. imposed blocking sanctions on Nord Stream 2 AG. The blocking sanctions mean that assets located in the U.S. are frozen (including when they are transferred to third parties) and U.S. persons are prohibited from dealings with such sanctioned persons. In addition, there is a risk of secondary sanctions being imposed on any foreign person for significant transactions and dealings with a person subject to the U.S. blocking sanctions. On 8 March 2022 the U.S. President signed Executive Order No. 14066, which prohibited the importation into the U.S. from the Russian Federation of crude oil and refined oil products, liquefied natural gas, coal and coal products, and prohibited new investment in the energy sector in the Russian Federation by U.S. persons and any approval, financing, facilitation or guarantee by U.S. persons of the respective prohibited transactions by foreign persons. The U.S. Ending Importation of Russian Oil Act became effective on 8 April 2022 and prohibited the importation into the U.S. of Russian energy products, including oil and gas, in a manner consistent with actions issued under the U.S. President’s Executive Order No. 14066 of 8 March 2022. However, the U.S. President is authorised to terminate that prohibition on importation of energy products from the Russian Federation in certain circumstances.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 52 35 Operating Risks (continued) On 22 November 2022 the U.S. Department of the Treasury’s Office of Fore ign Assets Control published a determination that imposed from 5 December 2022 the prohibition on the following services related to the maritime transport of crude oil of Russian origin sold at a price above the certain price cap: trading brokering, financing, shipping, insurance, flagging and customs brokering. On 5 December 2022 the U.S. Department of the Treasury’s Office of Foreign Assets Control published a determination that set a price cap for Russian oil at USD 60 per barrel from 5 December 2022. On 3 February 2023 the U.S. Department of the Treasury’s Office of Foreign Assets Control published a determination pursuant to the U.S. President’s Executive Order of 6 April 2022 No. 14071 (“Executive Order No. 14071”) that set from 5 February 2023 a price cap for Russian petroleum products at USD 45 per barrel of petroleum products traded at a discount to crude oil and at USD 100 per barrel of petroleum products traded at a premium to crude oil. In addition, on 3 February 2023 the U.S. Department of the Tr easury’s Office of Foreign Assets Control published a determination pursuant to Executive Order No. 14071 that introduced the prohibition for U.S. persons to provide to Russian persons certain services related to the maritime transport of petroleum products of Russian origin, such as trading brokering, financing, shipping, insurance, flagging and customs brokering if the price of the petroleum products exceeds the above price cap. On 19 May 2023 the U.S. Department of the Treasury’s Office of Foreign Assets Control pursuant to the U.S. President’s Executive Order of 15 April 2021 No. 14024 included in the list of blocked persons over 20 entities specialised in services and research for oil and gas and chemical entities of the Russian Federation, including LLC Gazprom VNIIGAZ and LLC Gazpromneft-NNGGF, on 20 July 2023 – LLC CHOO Gazpromneft okhrana, on 14 September 2023 – LLC Gazprom Nedra, on 2 November 2023 – LLC Gazpromneft CS and LLC Gazpromneft STC, on 23 February 2024 – JSC Gazprom Space Systems and LLC RusChemAlliance (joint arrangements), and on 12 June 2024 – LLC Gazprom invest. On 21 November 2024 the U.S. Department of the Treasury’s Office of Foreign Assets Control pursuant to the U.S. President’s Executive Order of 15 April 2021 No. 14024 included about 50 Russian banks and 40 Russian securities registrars in the list of blocked persons. In particular, Gazprombank (Joint Stock Company) and six of its foreign subsidiaries, a s well as the registrar JSC DRAGA were included in the list of newly blocked persons. At the same time, the U.S. Department of the Treasury’s Office of Foreign Assets Control issued a number of licenses (authorisations) providing for certain exemptions from the restrictive measures imposed on sanctioned banks, including Gazprombank (Joint Stock Company) and its subsidiaries. On 18 December 2024 pursuant to the U.S. President’s Executive Order of 15 April 2021 No. 14024 the U.S. Department of the Treasury’s Office of Foreign Assets Control re-imposed bl ocking sanctions on Nord Stream 2 AG previously included in the U.S. blocking sanctions list under a different legal authority. U.S. sanctions apply to any entity, in the capital of which the persons from the s anctions list directly or indirectly, individually or in the aggregate, own 50 % or more equity interest. The sanctions imposed by the EU, with amendments made on 15 March 2022 to EU Council Regulation No. 833/2014 of 31 July 2014 (“EU Council Regulation No. 833/2014”), prohibit all citizens of the EU member countries, as well as all legal persons, entities and bodies incorporated or established under the laws of an EU member country (both within the EU and abroad), as well as all legal persons, entities and bodies in connection with any economic activities carried out in whole or in part within the EU to: 1) provide drilling, well testing, logging and completion services, supply specialised floating vessels necessary for deep water oil exploration and pro duction, and (or) Arctic oil exploration and production, and shale oil projects in the Russian Federation, as well as provide direct or indirect financing, financial assistance, technical and brokerage services in relation to these activities; 2) acquire any new or extend any existing participation in any legal person, entity or body incorporated or constituted under the law of the Russian Federation or any other third country and operating in the energy sector in the Russian Federation; 3) grant or be part of any arrangement to grant any new loan or credit or otherwise provide financing (including equity capital) to any legal person, entity or body incorporated or constituted under the law of the Russian Federation or any other third country and operating in the energy sector in the Russian Federation or for the documented purpose of financing such a legal person, entity or body; 4) create any new joint venture with any legal person, entity or body incorporated or constituted under the law of the Russian Fe deration or any other third country and operating in the energy sector in the Russian Federation;
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 53 35 Operating Risks (continued) 5) provide investment services related to the activities referred to points 1)-3) above. On 3 June 2022 the EU adopted another package of sanctions against the Russian Federation, including the following measures: a) The prohibition on the purchase, import or transfer of crude oil and petroleum products, as listed in Annex XXV to EU Council Regulation No. 833/2014, originating in, or being exported from, the Russian Federation, as well as the provision, directly or indirectly, of technical or financial assistance or other services related to that prohibition. That prohibition has some exemptions, including on import of oil and petr oleum products from Annex XXV that are seaborne, originate in third countries and are exported through the Russian Federation, provided that the seller is non-Russian, and on import of crude oil which is delivered by pipelines from the Russian Federation, except for oil supplies through the northern section of the Druzhba oil pipeline to Germany and Poland, which are prohibited from 23 June 2022. b) It is prohibited to provide, directly or indirectly, technical assistance, brokering services, financing and financial assistance, related to the transport, including through ship-to-ship transfers, to third countries of crude oil or petroleum products as listed in Annex XXV which originate in, or which have been exported from the Russian Federation. On 18 December 2023 the EU Council extended the lists of goods from the Russian Federation (or of Russian origin) prohibited for import to the EU. The updated lists include, among other things, certain liquefied petroleum gases (in particular, liquefied propane and butane). On 6 October 2022 the EU Council approved another package of sanctions against the Russian Federation changing the earlier introduced prohibition on crude oil transport services, including by vessels, to third countries. Thus, the prohibition on t ransport and services related to transport of crude oil from 5 December 2022 and petroleum products from 5 February 2023 is applied if the price per barrel of transported crude oil or petroleum products exceeds the price set by a separate decision of the E U Council. In December 2022 and February 2023 the following price caps were set: for Russian oil at USD 60 per barrel, from 5 December 2022; for petroleum products traded at a discount to crude oil at USD 45 per barrel, for petroleum products traded at a p remium to crude oil at USD 100 per barrel, from 5 February 2023. The prohibition is not applied to transport of crude oil and petroleum products originating outside the Russian Federation and only transiting through the Russian Federation, and not applied to crude oil supplied to Japan from the Sakhalin -2 project. In addition, the EU Council prohibited the provision of architectural and engineering services, legal advisory services and IT consultancy services. On 18 December 2023 the EU Council introduced new measures to more closely monitor compliance with the previously introduced price cap on the seaborne transportation of crude oil and petroleum products within the Russian oil supply chain. In particular, service providers that do not have access to the purchase price per barrel for such products must gather detailed information about the price of ancillary services provided by operators further down the supply chain of Russian crude oil or petroleum products. Such detailed price information should be ma de available to counterparties and competent authorities upon request in order to verify compliance with the price cap imposed by the EU. In addition, on 18 December 2023 a ban on all EU persons was imposed prohibiting the sale or transfer of ownership, directly or indirectly, of tankers for the transport of crude oil or petroleum products listed in Annex XXV to EU Council Regulation No. 833/2014, to Russian person or entity, organisation or institution or for use in Russia. Also on 24 June 2024, the EU Council extended the previously introduced crude oil price cap exemption for the supplies of crude oil mixed with condensate produced within the Sakhalin-2 project until 28 June 2025. The EU sanctions prohibit from 16 January 2023 persons from the EU from holding any posts in the governing bodies of Russian majority state-owned entities, their Russian subsidiaries (with an interest of over 50 %) and any Russian entities acting on their behalf or at their direction. On 22 December 2022 the EU Council decided to introduce a temporary mechanism to limit the gas price in excess of certain caps. The resolution entered into force from 1 February 2023, while the gas price limiting mechanism entered into force from 15 February 2023. Under the EU sanctions it is prohibited from 27 March 2023 to allow nationals of the Russian Federation (and persons permanently residing in the Russian Federation) to hold any posts in the governing bodies of the owners or operators of critical infrastructures and critical entities of the EU.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 54 35 Operating Risks (continued) From 25 February 2023 under the EU sanctions it is prohibited to provide gas storage capacities / facilities (except for liquefied natural gas storage capacities) to nationals and entities from the Russian Federation, as well as persons that are owned for more than 50 % by them and persons acting on their behalf or at their direction. On 24 June 2024, the EU Council adopted a new (fourteenth) package of sanctions against Russia, which introduced new restrictions affecting the energy sector from 25 June 2024. In particular, the following restrictions were introduced: A ban on the transshipment of Russian liquefied natural gas (LNG) via EU ports for the purpose of its further re-export to third countries; A ban on the acquisition or increase of EU persons’ interest in Russian LNG-related projects; A ban for all EU persons to provide, directly or indirectly, goods, technology or services to an entity or individual, organisation or institution based in Russi a to complete LNG -related projects under construction. This ban also applies to the provision of financing and technical support for the supply of such goods, technology and services. Furthermore, the new package of sanctions introduces a mechanism enabling EU persons to recover damages, including legal costs, incurred as part of litigation initiated by Russian persons in third countries for breach of obligations under contracts made with Russian persons, fulfilment of which was affected by the EU sanctions imposed. A similar mechanism is also introduced for the recovery of damages incurred by EU persons due to actions by Russian persons as a result of rulings in favour of such Russian persons under Decree of the President of the Russian Federation No. 302 d ated 25 April 2023 On Temporary Management of Certain Property (or other similar Russian regulations), provided that such rulings are deemed unlawful under customary international law or a bilateral investment treaty between Russia and an EU member state. The blocking EU sanctions apply to any person in which sanctioned entities, directly or indirectly, individually or in the aggregate, own 50 % or more equity interest. A number of other countries have recently imposed sanctions on the Russian Federation. Those sanctions are generally similar to the U.S. and EU sanctions. At the same time, certain countries have imposed extended sanction restrictions. Blocking sanctions against PJSC Gazprom were imposed by Canada (24 February 2022), Australia (13 April 2022) and New Zealand (7 June 2022). On 29 September 2022 Poland imposed blocking sanctions against LLC Gazprom export. A number of foreign states imposed sanctions on Alexey Miller, the Chairman of the Management Committee of PJSC Gazprom, and individual members of the governing bodies of PJSC Gazprom and also officials from subsidiaries of the Gazprom Group but those sanctions do not apply to PJSC Gazprom and subsidiaries of the Gazprom Group. The Group is currently assessing an influence of adopted economic measures on its financial position and financial performance. 36 Financial Risk Factors The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme considers the low level of predictability of financial markets and seeks to reduce potential adverse effects on the financial performance of the Group. Risks are managed centrally and to some extent at the level of subsidiaries in accordance with adopted local acts of PJSC Gazprom and its subsidiaries. Market Risk Market risk is a risk that changes in market prices, such as foreign currency exchange rat es, interest rates, commodity prices and prices of marketable securities, will affect the Group’s financial results or the value of its holdings of financial instruments.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 55 36 Financial Risk Factors (сontinued) (a) Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures primarily with respect to the US dollar and the Euro. Foreign exchange risk arises from financial assets and liabilities denominated in foreign currencies other than the functional currency of a Group entity. The carrying amounts of the Group’s financial instruments are denominated in the following currencies. Russian Ruble US dollar Euro Other Total As of 31 December 2024 Financial assets Current 1,464,412 506,406 207,566 151,052 2,329,436 Non-current 1,089,605 8,016 43,677 896 1,142,194 Total financial assets 2,554,017 514,422 251,243 151,948 3,471,630 Financial liabilities Current 2,647,326 170,504 482,530 179,912 3,480,272 Non-current 2,729,694 1,342,785 1,422,216 337,417 5,832,112 Total financial liabilities 5,377,020 1,513,289 1,904,746 517,329 9,312,384 Financial assets less financial liabilities exposed to currency risk 88,357 (1,003,659) (1,177,148) (433,247) (2,525,697) As of 31 December 2023 Financial assets Current 1,865,534 351,339 397,904 111,147 2,725,924 Non-current 787,716 1,594 58,339 1,301 848,950 Total financial assets 2,653,250 352,933 456,243 112,448 3,574,874 Financial liabilities Current 2,280,066 105,108 326,580 219,101 2,930,855 Non-current 2,602,193 1,164,013 1,620,841 429,962 5,817,009 Total financial liabilities 4,882,259 1,269,121 1,947,421 649,063 8,747,864 Financial assets less financial liabilities exposed to currency risk 81,105 (928,852) (981,697) (560,000) (2,389,444) The Group manages its net exposure to foreign exchange risk by balancing both financial assets and financial liabilities comparable in selected foreign currencies. As of 31 December 2024, if the Russian Ruble had weakened by 30 % against the US dollar with all other variables held constant, profit before profit tax would have been lower by RUB 301,098 million, mainly as a result of foreign exchange loss on translation of US dollar-denominated borrowings partially offset by foreign exchange gain on translation of US dollar-denominated trade receivables. As of 31 December 2023, if the Russian Ruble had weakened by 30 % against the US dollar with all other variables held constant, profit before profit tax would have been lower by RUB 279,576 million, mainly as a result of foreign exchange loss on translation of US dollar-denominated borrowings partially offset by foreign exchange gain on translation of US dollar-denominated trade receivables. The effect of related Russian Ruble strengthening against the US dollar would have been approximately the same amount with opposite impact. As of 31 December 2024, if the Russian Ruble had weakened by 30 % against the Euro with all other variables held constant, profit before profit tax would have been lower by RUB 353,144 million, mainly as a result of foreign exchange loss on translation of Euro-denominated borrowings partially offset by foreign exchange gain on translation of Euro-denominated trade receivables. As of 31 December 2023, if the Russian Ruble had weakened by 30 % against the Euro with all other variables held constant, profit before profit tax would have been lower by RUB 294,509 million, mainly as a result of foreign exchange loss on translation of Euro- denominated borrowings partially offset by foreign exchange gain on translation of Euro-denominated trade receivables. The effect of related Russian Ruble strengthening against the Euro would have been approximately the same amount with opposite impact.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 56 36 Financial Risk Factors (сontinued) (b) Cash flow and fair value interest rate risk The Group is exposed to the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. Interest rate risk arises from loans issued, borrowings, lease liabilities and other interest-bearing financial instruments. The Group’s interest rate risk primarily arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The table below summarises the balance between long-term borrowings at fixed and variable interest rates. Notes Long-term borrowings and promissory notes 31 December 2024 2023 21 At fixed rate 2,706,768 2,945,351 21 At variable rate 3,694,697 3,342,115 6,401,465 6,287,466 The Group performs analysis of the current interest rate environment and depending on that analysis at the time of raising new debts management makes decisions whether obtaining financing on fixed-rate or variable-rate basis would be more beneficial to the Group over the expected period until maturity. In 2023-2024 the Group’s borrowings at variable rates were mainly denominated in Russian Rubles. As of 31 December 2024, if benchmark interest rates on borrowings had been 100 basis points higher with all other variables held constant, profit before profit tax would have been lower by RUB 35,184 million for 2024, mainly as a result of higher interest expense on variable interest rate long-term borrowings. As of 31 December 2023, if benchmark interest rates on borrowings had been 100 basis points higher with all other variables held constant, profit before profit tax would have been lower by RUB 30,320 million for 2023, mainly as a result of higher interest expense on variable interest rate long-term borrowings. The effect of a corresponding decrease in benchmark interest rates is approximately equal and opposite. (c) Commodity price risk Commodity price risk - possible change in prices for natural gas, crude oil and their refined products, and its impact on the Group’s future performance and results of the Group’s operations. A decline in the prices could result in a decrease in net profit and cash flows. The Group’s overall strategy in production and sales of natural gas, crude oil and their refined products is centrally managed. Natural gas export prices to foreign countries are generally based on a formula linked to refined products prices, which in turn are linked to crude oil prices. The Group’s exposure to the commodity price risk is related essentia lly to the export market. As of 31 December 2024, if the average gas export prices had decreased by 30 % with all other variables held constant, profit before tax would have been lower by RUB 843,711 million for 2024. As of 31 December 2023, if the average gas export prices had decreased by 30 % with all other variables held constant, loss before tax would have been higher by RUB 564,817 million for 2023. Gas prices in the Russian Federation are regulated by the FAS Russia and are as such less subject to significant fluctuations. The Group assesses on regular basis the potential scenarios of future fluctuation in commodity prices and their impact on operational and investment decisions. However, in the current economic environment management estimates may significantly differ from actual impact of change in commodity prices on the Group’s financial position. (d) Securities price risk The Group is exposed to movements in the value of equity securities included in financial assets held by the Group and classified in the consolidated balance sheet either as financial assets measured at fair value with changes recognised through profit or loss or other comprehensive income (see Note 9). As of 31 December 2024 and 31 December 2023, if Moscow Exchange equity index, which primarily affects the major part of the Group’s equity securities, had decreased by 20 % with all other variables held constant, assuming high correlation of the value of these securities with the index , the Group’s comprehensive income for the period would have been RUB 61,898 million and RUB 102,870 million lower, respectively. The Group is also exposed to movements in the value of securities held by JSC NPF GAZFOND and used for fair value estimation of the Group’s pension plan assets (see Note 23).
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 57 36 Financial Risk Factors (сontinued) Credit Risk Credit risk refers to the risk exposure that a potential financial loss to the Group may occur if a counterparty defaults on its contractual obligations. The maximum exposure to credit risk is the value of the assets which might be lost. Credit risk arises from cash and cash equivalents, deposits, debt financial instruments, derivative financial instruments, accounts receivable, loan commitments and financial guarantee contracts. Financial instruments, which potentially subject the Group to concentrations of credit risk, primarily consist of accounts receivable. Credit risks related to accounts receivable are systematically monitored, taking into account customer’s financial position, past experience and other factors. Management systematically reviews ageing analysis of receivables and uses this information for calculation of allowance for expected credit losses (see Note s 10 and 17). Credit risk exposure mainly depends on the individual characteristics of customers, more particularly customers default risk and country risk. Group operates with various customers and substantial part of sales relates 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 allowance for expected credit losses already recorded. Cash and cash equivalents are deposited only with banks that are considered by the Group to have a minimal risk of default. The Group’s maximum exposure to credit risk is presented in the table below. Notes 31 December 2024 2023 8 Cash and cash equivalents 991,889 1,426,780 12 Deposits 42,101 213,186 9 Debt securities 159,163 173,743 10, 17 Accounts receivable 2,278,477 1,761,165 36 Financial guarantee contracts 715,983 408,281 33 Loan commitments 522,679 201,702 Total maximum exposure to credit risk 4,710,292 4,184,857 Financial Guarantee Contracts In accordance with the agreements, the Group provided financial guarantees in the total amount of RUB 715,983 million and RUB 408,281 million as of 31 December 2024 and 31 December 2023, respectively. The total amount of financial guarantee contracts issued to the Group's associates and joint ventures as of 31 December 2024 and 31 December 2023 was RUB 633,058 million and RUB 326,867 million, respectively. In 2024 and 2023 the counterparties fulfilled their contractual obligations. Financial guarantee contracts include financial guarantees denominated in Euros of EUR 271 million and EUR 288 million as of 31 December 2024 and 31 December 2023, respectively. 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 implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities. The Group liquidity is managed centrally. The management of the Group monitors the planned cash inflow and outflow. Important factor in the Group’s liquidity risk management is an access to a wide range of funding through capital markets and banks. Due to the dynamic nature of the Group 's activities, management maintains flexibility in financing sources by having committed credit facilities available. The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Financial liabilities due within 12 months (except lease liabilities and derivative financial instruments ) equal their carrying bala nces as the impact of discounting is not significant.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 58 36 Financial Risk Factors (сontinued) Less than 6 months Between 6 and 12 months Between 1 and 2 years Between 2 and 5 years Over 5 years As of 31 December 2024 Short-term and long-term loans and borrowings and promissory notes 974,203 1,077,202 1,431,437 3,494,497 3,453,901 Accounts payable 1,909,948 30,885 - - - Lease liabilities 83,585 90,661 150,221 274,650 351,482 Other non-current liabilities (excluding derivative financial instruments) - - 93,434 82,835 52,247 Derivative financial instruments - 19,380 6,826 163 - As of 31 December 2023 Short-term and long-term loans and borrowings and promissory notes 941,175 855,128 1,456,118 3,338,174 2,902,067 Accounts payable 1,411,015 126,677 - - - Lease liabilities 61,203 68,825 125,199 225,847 251,237 Other non-current liabilities (excluding derivative financial instruments) - - 44,774 60,137 35,251 Derivative financial instruments - 16,119 16,074 7,914 - Loan commitments and financial guarantee contracts can be demanded within six months, however the Group considers that cash outflow under these liabilities is not probable. Restrictive conditions (covenants) on long-term financial liabilities In accordance with the terms of certain loan agreements, loan participation notes and lease agreements, the carrying value of liabilities of which is RUB 3,015,090 million and RUB 3,250,795 million as of 31 December 2024 and 31 December 2023, respectively, individual entities of the Group are required to comply with certain financial and non -financial covenants at each test date until the relevant debt is fully repaid, including the following: • maximum debt or net debt to EBITDA ratio; • proper fulfillment of payment and other obligations under agreements with creditors; • restrictions on significant asset disposals, pledge of property; • loss of ultimate control over a subsidiary; • absence of significant legal claims. In the event of a breach of covenants , the creditor, among other things, has the right to demand immediate repayment of all or part of the debt. The Group entities were in compliance with all covenants as of 31 December 2024 and 31 December 2023 and for the years ended 31 December 2024 and 31 December 2023. There is no indication that Group entities will have significant difficulties in complying with the covenants when they are tested during 2025, which could result in the creditor having the right to demand immediate repayment of material amounts of the obligations. Liabilities under supplier finance arrangements In accordance with the terms concluded agency contracts the finance providers pay of Group’s account payable for materials and works including those related to construction of infrastructure at new fields at dates set by the Group’s contracts with suppliers (15 -60 days). The Group settles its liabilities to the finance providers within a year from the date of the Group’s liability to suppliers and within a period till putting the fields into operation which comprise up to three years in respect of materials and works related to construction of infrastructure at new fields. Also, some Group’s contracts with suppli ers include deferred payment terms up to 180 days with regard to supplier arrangements with finance providers. The standard deferral period for such contracts is 30 days. These Group’s arrangements with finance providers and suppliers (supplier finance arr angements) do not include any guarantees or collaterals. The information about carrying amounts of liabilities under supplier finance arrangements is presented in the table below.
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 59 36 Financial Risk Factors (сontinued) Сarrying amounts of liabilities including amounts received by suppliers as of 31 December 2024 as of 31 December 2024 2023 Included in accounts payable, provisions and other liabilities 469,327 326,308 469,327 Under agency contracts with initial maturity: up to 180 days - 86,074 - up to a year 220,146 5,991 220,146 Under supply contracts with payment deferral up to 180 days 249,181 234,243 249,181 Included in other non-current liabilities 49,724 16,278 49,724 Under agency contracts with initial maturity up to putting the filed into operation 49,724 16,278 49,724 Total liabilities under supplier finance arrangements 519,051 342,586 519,051 Interest expense under supplier finance arrangements equals RUB 27,778 million for the year ended 31 December 2024. Reconciliation of liabilities arising from financing activities Borrowings Transactions with owners including non- controlling interest Lease liabilities Other liabilities Total As of 31 December 2023 6,657,480 143,736 392,268 163 7,193,647 Cash flows, including: Proceeds from borrowings (net of costs directly related to the receipt) 1,011,658 - - - 1,011,658 Additions as a result of new leases and modifications to existing leases - - 175,965 - 175,965 Repayment of borrowings (1,127,832) - (99,209) - (1,227,041) Interest capitalised and paid (518,437) - - - (518,437) Interest paid (in financing activities) (151,924) - (44,863) (135) (196,922) Dividends paid - (223,576) - - (223,576) Finance expense 107,435 - 44,863 135 152,433 Interest capitalised 548,858 - - - 548,858 Dividends declared - 207,798 - - 207,798 Translation differences 295,087 - 24,543 - 319,630 Other movements (107,515) (2,319) (25,692) - (135,526) As of 31 December 2024 6,714,810 125,639 467,875 163 7,308,487 Information about perpetual notes is disclosed in Note 25. Borrowings Transactions with owners including non- controlling interest Lease liabilities Other liabilities Total As of 31 December 2022 5,065,861 107,737 271,111 2,172 5,446,881 Cash flows, including: Proceeds from borrowings (net of costs directly related to the receipt) 1,601,834 - - - 1,601,834 Additions as a result of new leases and modifications to existing leases - - 163,636 - 163,636 Repayment of borrowings (941,031) - (76,493) - (1,017,524) Interest capitalised and paid (304,827) - - - (304,827) Interest paid (in financing activities) (64,738) - (27,309) (10) (92,057) Dividends paid - (30,761) - - (30,761) Finance expense 88,392 - 27,309 10 115,711 Interest capitalised 313,891 - - - 313,891 Dividends declared - 32,751 - - 32,751 Change in fair value of hedging operations - - - (4,664) (4,664) Translation differences 908,228 - 28,384 - 936,612 Other movements (10,130) 34,009 5,630 2,655 32,164 As of 31 December 2023 6,657,480 143,736 392,268 163 7,193,647
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 60 36 Financial Risk Factors (сontinued) Capital Risk Management The Group considers equity and debt to be the principal elements of capital management. The Group’s objectives when managing capital risk are to safeguard the Group’s position as a leading global energy company by further increasing the reliability of natural gas supplies and diversifying activities in the energy sector, both in the domestic and foreign markets. In order to maintain and to adjust the capital structure, the Group may revise its investment programme, attract new or repay existing loans and borrowings or sell certain non-core assets. The Group considers its target debt to equity ratio at the level of not more than 40 %. On the Group level capital is monitored on the basis of the net debt to adjusted EBITDA ratio. This ratio is calculated as net debt divided by adjusted EBITDA. Net debt is calculated as total debt (short-term borrowings and current portion of long -term borrowings, short -term promissory notes payable, long -term borrowings, long-term promissory notes payable) less cash and cash equivalents. Adjusted EBITDA is calculated as the sum of operating profit, depreciation, impairment loss or reversal of impairment loss on financial assets and non -financial assets, less changes of allowance for expected credit losses on accounts receivable and impairment allowance on advances paid and prepayments. The net debt to adjusted EBITDA ratio as of 31 December 2024 and 31 December 2023 is presented in the table below. 31 December 2024 2023 Total debt 6,714,810 6,657,480 Less: cash and cash equivalents (991,889) (1,426,780) Net debt 5,722,921 5,230,700 Adjusted EBITDA 3,107,875 1,764,554 Net debt / Adjusted EBITDA 1.84 2.96 37 Fair Value of Financial Instruments The fair value of financial assets and liabilities is determined as follows: a) Financial instruments included in Level 1 The fair value of financial instruments traded in active markets is based on market quotes at the date nearest to the reporting date (see Note 9). b) Financial instruments included in Level 2 The fair value of financial instruments that are not traded in active markets is determined according to various valuation techniques, primarily based on the market or income approach, particularly the discounted cash flows valuation method. These valuation techniques maximise use at most the observable inputs where they are available and rely as little as possible on the Group’s specific assumptions. If all significant inputs required to measure a financial instrument at fair value are based on observable data, such an instrument is included in Level 2. c) Financial instruments included in Level 3 If one or more of the significant inputs used to measure the fair value of an instrument are not based on observable data, such an instrument is included in Level 3. The fair value of long-term accounts receivable is classified as Level 3 (see Note 17), long-term borrowings – Level 2 (see Note 21). As of 31 December 2024 and 31 December 2023 long-term financial assets measured at fair value with changes recognised through other comprehensive income mainly include shares of PJSC NOVATEK in the amount of RUB 297,503 million and RUB 444,374 million, respectively, and are classified as Level 1 and debt securities that are classified as Level 2 (see Note 9).
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PJSC Gazprom Notes to the Consolidated Financial Statements 31 December 2024 (in millions of Russian Rubles) 61 38 Events after the Reporting Period Borrowings In January-April 2025 the Group obtained long-term borrowings in the total amount of RUB 94,577 million. In March-April 2025 the Group issued Russian bonds in the amount of CNY 1,500 million, USD 350 million and EUR 350 million. Sanctions On 10 January 2025 the U.S. Department of the Treasury’s Office of Foreign Assets Control pursuant to the U.S. President’s Executive Order No 14024 of 15 April 2021 and Executive Order No. 13662 of 20 March 2014 added subsidiaries of the Gazprom Group to t he list of blocked entities (PJSC Gazprom Neft and its subsidiaries, Naftna Industrija Srbije (Oil Industry of Serbia), LLC Achimgaz), joint arrangements JSC Gazprom Shelf Project, LLC RusGazAlliance, LLC Gazprom LNG Portovaya and LLC Layavozhneftegaz, as well as Alexander Dyukov, the Chairman of t he Management Committee of PJSC Gazprom Neft. On 10 January 2025 the U.S. Department of the Treasury’s Office of Foreign Assets Control issued a determination under section 1(a)(ii) of the U.S. President’s Executi ve Order No. 14071 of 6 April 2022, prohibiting U.S. persons from providing petroleum services to Russian entities effective 27 February 2025. The prohibition excludes the provision of restricted services until 28 June 2025 for certain projects, including Sakhalin-2. On 10 January 2025 the U.S. Department of the Treasury’s Office of Foreign Assets Control also issued a determination under section 1(a)(i) of the U.S. President’s Executive Order No. 14024 of 15 April 2021, designating operations in the Russian energy sector as an independent basis for the possible imposition of U.S. blocking sanctions. On 10 January 2025 the UK Office of Financial Sanctions Implementation imposed blocking sanctions on PJSC Gazprom Neft. On 24 February 2025 the EU Council adopted the sixteenth package of sanctions against the Russian Federation. These measures include a prohibition on any transactions with OJSC Belgazprombank, an associate of the Gazprom Group, subject to specified exemption s. The new sanctions also ban the supply of goods, technology and services for the completion of Russian oil production projects. Additionally, the package prohibits the temporary storage or placement of Russian crude oil or petroleum products within EU free zone procedures. Expanding on the earlier mechanism, the new sanctions broaden the scope of entities from which direct or indirect damages – including legal costs incurred by EU persons as a result of claims lodged by Russian entities with the courts in the third country (including Russia) – may be recovered. This applies to cases involving breaches of obligations under contracts made with Russian persons, fulfilment of which was affected by the EU sanctions imposed, as well as actions by Russian entitie s that have benefited from or are responsible for rulings made under Decree of the President of the Russian Federation No. 302 dated 25 April 2023 On Temporary Management of Certain Property (or other similar Russian regulations) or under Federal Law No. 4 70-FZ dated 4 August 2023 On the Specifics of Regulation of Corporate Relations of Economically Significant Organisations, provided that such rulings are deemed unlawful under international law or a bilateral investment treaty between Russia and an EU member state. Such damages may be recovered from Russian persons, entities or authorities that lodged claims against EU entities in third-country courts, or entities that have benefited from the adoption of the stated Russian regulations, as well as persons, entities or authorities that control or own such Russian entities or companies.
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PJSC Gazprom Investors Relations Contact Details PJSC Gazprom 2/3, Lakhtinsky Avenue, Bldg. 1, St. Petersburg, 197229, Russian Federation Telephone: +7 (812) 729-60-14 www.gazprom.ru (in Russian) www.gazprom.com (in English)