Naftogaz of Ukraine Makes Public the Results of the Audit of its Financial Statements for 2005

Kyiv, September 14, 2006

Naftogaz of Ukraine NJSC is resuming the financial transparency policy. On September 13, 2006, the Company posted on its corporate website its consolidated financial statements for 2005

During 2005, the consolidated revenues of Naftogaz of Ukraine NJSC increased by 4.2 percent in comparison with 2004, and totaled UAH 36.959 billion. At the same time, the Company’s gross profit decreased to UAH 1.93 billion, as compared with UAH 2.858 billion in 2004. Last year’s consolidated loss amounted to UAH 1.842 billion whereas the Company finished 2004 with a profit totaling UAH 8 million.

The key factors responsible for the Company’s worsened indices in 2005 were insufficiently raised price for natural gas on Ukraine’s internal market (first of all, for households, budget-funded organizations and enterprises of the communal heat and power sector); lost profits from the Turkmen program, which envisaged supplies of goods to Turkmenistan as payment for natural gas, a substantial increase in tax pressure etc.

In order to cover the financial shortage in 2005, Naftogaz of Ukraine NJSC borrowed funds on foreign financial markets as bilateral unsecured loans. In 2005, the Company’s consolidated credit portfolio increased by UAH 4.391 billion and totaled UAH 9.186 billion as of December 31, 2005. Thus, as of the end of last year, the correlation between the consolidated accounts payable of the Company and its own capital increased to 26.8 percent (as of late 2004 – 13.3 percent), which was significantly below the same index shown by most oil and gas companies of the world.

The new management of the Company is developing a plan of enhancing the profitability and liquidity indices of Naftogaz of Ukraine in 2006. The plan, specifically, includes stabilization of the relationship with the Russian Federation to be able to negotiate mutually beneficial conditions for the import of and prices for natural gas, resumption of the natural gas export as well as bringing internal prices and tariffs for natural gas, as well as its transportation tariffs, to economically reasonable levels.

For the record: The practice of publication of audit results of financial activities of Naftogaz of Ukraine NJSC was introduced during the tenure of the incumbent Minister of Fuel and Power, Yuriy Boyko as the Company head. The audited financial statements for 2001-2003 were, for the first time, published on the Company’s corporate website in summer 2004. In 2005 and the first six months of 2006, the audited financial statements of Naftogaz of Ukraine were not published.

Press center
Naftogaz of Ukraine NJSC

Other news