Naftogaz reports 2011 net profit on one-off income

Naftogaz of Ukraine (NAFTO) reported USD 1.32 bln profit for 2011, according to consolidated audited accounts that became public on Dec. 21. The company’s profit was generated mainly by USD 1.9 bln written off as tax obligations. Naftogaz increased revenue 16% yoy in 2011 to USD 13.1 bln, and improved operating cash flow to USD -0.02 bln for the year vs. USD -1.24 bln in 2010. Naftogaz’s EBITDA adjusted for the one-off tax gain amounted to USD 1.48 bln, implying a margin of 11%. The company’s USD 1.55 bln net investment into PP&E was financed by USD 1.06 bln sales of T-bills that contributed to its share capital and new borrowings.

The Ukrainian government’s total contribution into Naftogaz’s registered capital via T-bills in 2011 amounted to USD 1.55 bln, total equity increased USD 3.28 bln (on both share capital growth and some revaluations) to USD 13.45 bln. The company’s net debt increased 27% yoy to USD 6.6 bln and total debt amounted USD 6.8 bln, with D/E falling slightly to 0.5x.

Naftogaz’s financials appear to be increasingly removed from IFRS standards:  this time 4 items in Naftogaz’ financials drew an auditor’s emphasis of matter (vs. 4 in 2010 and 3 in 2009) and 4 items received the qualified opinion of an auditor vs. 3 items in previous  years. The new item in qualified opinion was dedicated to Naftogaz’s failure to evaluate its largest hydrocarbon-bearing fields in 2011.