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MDA - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED 31 DECEMBER 2024 AND 2023

Company: Tatneft-3 Date: 2025-03-13 Language: English Register to download
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**MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED 31 DECEMBER 2024 AND 2023**

| Background3                                                                                                |          |
|------------------------------------------------------------------------------------------------------------|----------|
| Key financial and operational results<br>4                                                                 |          |
| Segment information<br>4                                                                                   |          |
| Exceptional items<br>5                                                                                     |          |
| Results of the Group operations for the year ended 31 December 2024 compared to the year ended 31<br>20236 | December |
| Revenues (excluding financial services)<br>7                                                               |          |
| Revenues breakdown (excluding financial services)7                                                         |          |
| Costs and other expenses (excluding financial services)7                                                   |          |
| Other (expenses)/income8                                                                                   |          |
| Income taxes8                                                                                              |          |
| EBITDA reconciliation<br>9                                                                                 |          |
| Financial Condition Summary Information9                                                                   |          |
| Liquidity and Capital Resources10                                                                          |          |
| Contractual obligations, other contingen and off-balance sheet obligations10                               |          |
| Key Accounting Policies and Estimates11                                                                    |          |
| Forward-looking statements11                                                                               |          |
| Statement regarding corporate governance and TCFD disclosures12                                            |          |

*The following discussion should be read in conjunction with the audited consolidated financial statements prepared in accordance with IFRS® Accounting Standards and the related notes, approved for issue and signed prior to publishing of this Management's Discussion and Analysis of financial condition and results of operations (MD&A). This report includes forward-looking statements that involve risks and uncertainties. Actual results could differ materially from those anticipated in the forward-looking statements as a result of numerous factors, including those discussed later in this MD&A. Words such as "believes", "anticipates", "expects", "estimates", "intends", "plans", etc. – that reflect management's current estimates and beliefs, but are not guarantees of future results. Please see "Forward-looking statements" for a discussion of some factors that could cause actual results to differ materially.* 

*For financial reporting purposes, Company converts metric tonnes of crude oil to barrels using a conversion factor of 7.123. This factor represents a blend of varying conversion factors specific to each of Group's fields. Because the proportion of actual production by field varies from period to period, total reserves and production volumes for the Group in barrels converted from tonnes using the blended rate may differ from total reserves and production calculated on a field-by-field basis. Translations of cubic meters to cubic feet were made at the rate of 35.31 cubic feet per cubic meter. Translations of barrels of crude oil into barrels of oil equivalent ("BOE") were made at the rate of 1 barrel per BOE and of cubic feet into BOE at the rate of 6 thousand cubic feet per BOE.*

# <span id="page-2-0"></span>**Background**

PJSC Tatneft n.a. V.D. Shashin (the "Company") and its subsidiaries (jointly referred to as the "Group" or "Tatneft") is one of the largest vertically integrated oil companies in Russia in terms of crude oil production, proved oil reserves, and refining capacity. The Company is a public joint-stock company organized under the laws of the Russian Federation with the headquarters located in City of Almetyevsk, Tatarstan. The principal business of the Group is to explore for, develop, produce, process, and market crude oil and refined products. The Group is also involved in gas treatment and refining, petrochemicals' production and marketing, production and sale of tires, manufacturing of equipment, engineering, procurement, and construction services for oil, gas and petrochemical projects, and in financial services.

As of 31 December 2024 and 31 December 2023, the Tatarstan Government controls approximately 36% of the Company's voting stock. Tatarstan also holds a "Golden Share", a special governmental right, in the Company. The exercise of its powers under the Golden Share enables the Tatarstan Government to appoint one representative to the Board of Directors and one representative to the Revision Committee of the Company as well as to veto certain major decisions, including those relating to changes in the share capital, amendments to the Charter, liquidation or reorganization of the Company and "major" and "interested party" transactions as defined under Russian law. The Golden Share currently has an indefinite term.

The majority of the Group's crude oil and gas production, refining capacity, and other operations are located in Tatarstan, a republic of the Russian Federation, situated between the Volga River and the Ural Mountains, with its capital city Kazan 797 kilometers southeast of Moscow.

The Group currently holds most of the exploration and production licenses and produces substantially all its crude oil in Tatarstan.

# <span id="page-3-0"></span>**Key financial and operational results**

|                                                                 | 12 months ended |             | Chg.,  |
|-----------------------------------------------------------------|-----------------|-------------|--------|
|                                                                 | 31 December     | 31 December | %      |
|                                                                 | 2024            | 2023        |        |
|                                                                 |                 |             |        |
| Financial results                                               |                 |             |        |
| Revenue (excluding financial services), net (RR million)        | 2,030,371       | 1,589,082   | 27.8   |
| Profit attributable to shareholders of the Company (RR million) | 306,140         | 287,921     | 6.3    |
| EBITDA(1) (RR million)                                          | 478,372         | 391,730     | 22.1   |
| Adjusted EBITDA(1) (RR million)                                 | 484,189         | 414,028     | 16.9   |
| Additions to property, plant and equipment (2) (RR million)     | 170,967         | 223,599     | (23.5) |
| Free Cash Flow(3) (RR million)                                  | 254,162         | 103,033     | >100   |
| Net debt(3) (4) (RR million)                                    | (104,171)       | (61,258)    | 70.1   |
| Basic and Diluted earnings per share (RR)                       |                 |             |        |
| Ordinary                                                        | 136.03          | 127.93      | 6.3    |
| Preferred                                                       | 136.03          | 127.93      | 6.3    |
| Operational results                                             |                 |             |        |
| Crude oil production by the Group (th. tonnes)                  | 27,283          | 28,450      | (4.1)  |
| Crude oil production by the Group (th. barrels)                 | 194,337         | 202,649     | (4.1)  |
| Crude oil daily production (th. barrels per day)                | 531             | 555         | (4.3)  |
| Gas production by the Group (million cubic meters)              | 871             | 921         | (5.4)  |
| Gas daily production (th. boe per day)                          | 14              | 15          | (6.7)  |
| Refined products produced (th. tonnes)                          | 17,123          | 16,917      | 1.2    |
| Gas products produced (th. tonnes)                              | 955             | 1,096       | (12.9) |
| Refining throughput (th. barrels per day)                       | 341             | 342         | (0.3)  |

*(1) As calculated on page 9*

*(2) As in consolidated statement of cash flows*

*(3) As calculated on page 10*

*(4) At the end of the period*

The net profit of the Group (profit attributable to the Company shareholders) in the twelve months of 2024 compared to the same period of 2023 increased by 6.3%.

# <span id="page-3-1"></span>**Segment information**

Our operations are currently divided into the following main segments:

**• Exploration and Production** – consists of the Company's Oil and Gas Extraction and Production Division, as well as production subsidiaries. Most oil and gas exploration and production activities are concentrated within the Company and centrally managed by Tatneft-Upstream (*Tatneft-Dobycha*) Division.

**• Refining and Marketing** – consists of a refining and petrochemical complex in Nizhnekamsk, Tatarstan, operated by TANECO, Gas Collection, Transportation and Refining Division Tatneftegaspererabotka, which also operates a small refinery in Kichui, Tatarstan; the Company's Sales and Marketing Division (*URNiN*), Tatneft-AZS Center, Tatneft-AZS-Zapad, Tatneft-AZS-Severo-Zapad and other subsidiaries which manage the Tatneft branded gas stations network in Russia and abroad, and carry out refined products wholesale sales; as well as various ancillary companies.

**• Tires business** - includes the production and sale of tires by the enterprises Ikon Tyres/Shina, and BRZ acquired in 2023.

# **• Financial Services**.

These segments are determined by the way management recognizes the segments within the Group for making operating decisions and how they are evident from the Group structure.

#### *Intersegment sales*

Tatneft's two main business segments are interconnected and dependent on each other, and hence a portion of the revenues of one main segment are related to the expenses of the other. In particular, exploration and production Group companies supply part of crude oil for the processing at our own refineries, mainly TANECO, and the refined products are then sold by the Company in domestic or international markets, as well as to the Company's consumer marketing subsidiaries for subsequent distribution.

As a result of certain factors, benchmark crude oil market prices in Russia cannot be determined with certainty. Therefore, the prices set for inter-segment purchases of crude oil and other goods and services reflect a combination of market factors, primarily domestic crude oil market prices, transportation costs, regional market conditions, the cost of crude oil refining, and other factors. Accordingly, an analysis of either of these segments on a stand-alone basis could give a misleading perception of those segments' underlying financial position and results of operations. For this reason, we do not analyze either of our main segments separately in the discussion that follows. However, we present the financial data for each respective segment in Note 21 "Segment information" to our consolidated financial statements. All intercompany operations are eliminated on the consolidation level.

# <span id="page-4-0"></span>**Exceptional items**

The Group's results for the respective reporting periods of 2024 and 2023 were impacted by certain exceptional items, including impairment loss on assets not providing direct future economic benefits, as well as the loss from impairment of other assets due to the current macroeconomic situation. These losses were reflected in the lines "Impairment losses on property, plant and equipment and other non-financial assets net of reversals" and "Expected credit losses on financial assets net of reversals" in the Consolidated Statement of Profit or Loss and other Comprehensive Income of the Group (see page 9):

|                                                                                   | 12 months ended |             |
|-----------------------------------------------------------------------------------|-----------------|-------------|
|                                                                                   | 31 December     | 31 December |
| (RR million)                                                                      | 2024            | 2023        |
| Expected credit losses on financial assets net of reversals                       | (759)           | 566         |
| Impairment losses on property, plant and equipment and other non-financial assets |                 |             |
| net of reversals                                                                  | 6,576           | 21,732      |
| Total exceptional items                                                           | 5,817           | 22,298      |

# <span id="page-5-0"></span>**Results of the Group operations for the year ended 31 December 2024 compared to the year ended 31 December 2023**

The following table sets forth the consolidated statement of profit or loss both in absolute values and respective changes (where relevant) over the analyzed periods:

|                                                                               | 12 months ended |             | Chg.,  |
|-------------------------------------------------------------------------------|-----------------|-------------|--------|
|                                                                               | 31 December     | 31 December | %      |
| (RR million)                                                                  | 2024            | 2023        |        |
| Revenue (excluding financial services), net                                   | 2,030,371       | 1,589,082   | 27.8   |
| Costs and other expenses (excluding financial services)                       |                 |             |        |
| Operating expenses                                                            | (279,350)       | (200,228)   | 39.5   |
| Purchased oil and refined products                                            | (444,536)       | (306,393)   | 45.1   |
| Exploration                                                                   | (4,019)         | (3,001)     | 33.9   |
| Transportation                                                                | (93,932)        | (71,901)    | 30.6   |
| Selling, general and administrative expenses                                  | (114,552)       | (97,632)    | 17.3   |
| Depreciation, depletion and amortization                                      | (62,238)        | (60,647)    | 2.6    |
| Expected credit losses on financial assets net of reversals                   | 759             | (566)       | n/a    |
| Impairment losses on property, plant and equipment and other non-financial    |                 |             |        |
| assets net of reversals                                                       | (6,576)         | (21,732)    | (69.7) |
| Taxes other than income taxes                                                 | (602,091)       | (458,014)   | 31.5   |
| Export duties                                                                 | (888)           | (17,616)    | (95.0) |
| Maintenance of social infrastructure and transfer of social assets            | (16,811)        | (12,023)    | 39.8   |
| Total costs and expenses (excluding financial services)                       | (1,624,234)     | (1,249,753) | 30.0   |
| Other operating (expenses)/income, net                                        | (3,130)         | 17,314      | n/a    |
| Operating profit (excluding financial services)                               | 403,007         | 356,643     | 13.0   |
| Net interest, fee and commission and other operating income/(expenses) and    |                 |             |        |
| gains/(losses) from financial services                                        |                 |             |        |
| Interest, fee and commission income                                           | 46,108          | 28,294      | 63.0   |
| Interest, fee and commission expense                                          | (34,178)        | (15,962)    | >100   |
| Net income/(expense) on recovery/creating provision for credit losses on debt |                 |             |        |
| financial assets                                                              | 8,503           | (10,414)    | n/a    |
| Operating expenses                                                            | (8,475)         | (9,187)     | (7.8)  |
| Gain arising from dealing in foreign currencies, net                          | 377             | 477         | (21.0) |
| Other operating expences, net                                                 | (2,282)         | (1,130)     | >100   |
| Total net interest, fee, commission and other operating income/(expenses)     |                 |             |        |
| and gains/(losses) from financial services                                    | 10,053          | (7,922)     | n/a    |
| Other income/(expenses)                                                       |                 |             |        |
| Foreign exchange gain, net                                                    | 12,121          | 25,049      | (51.6) |
| Interest income (excluding financial services)                                | 18,982          | 10,367      | 83.1   |
| Interest expense (excluding financial services)                               | (20,052)        | (21,025)    | (4.6)  |
| Share of results of associates and joint ventures, net                        | (2,963)         | 2,395       | n/a    |
| Total other income, net                                                       | 8,088           | 16,786      | (51.8) |
| Profit before income tax                                                      | 421,148         | 365,507     | 15.2   |
| Current income tax expense                                                    | (79,871)        | (73,172)    | 9.2    |
| Deferred income tax expense                                                   | (32,348)        | (6,072)     | >100   |
| Total income tax expense                                                      | (112,219)       | (79,244)    | 41.6   |
| Profit for the year                                                           | 308,929         | 286,263     | 7.9    |
| Less: profit attributable to non-controlling interest                         | (2,789)         | 1,658       | n/a    |
| Profit attributable to shareholders of PJSC Tatneft n.a. V.D. Shashin         | 306,140         | 287,921     | 6.3    |

# <span id="page-6-0"></span>Revenues (excluding financial services)

A breakdown of Revenues (excluding financial services) by product type is provided in the following table:

|                                              | 12 months ended |             | Chg., |
|----------------------------------------------|-----------------|-------------|-------|
|                                              | 31 December     | 31 December | %     |
| (RR million)                                 | 2024            | 2023        |       |
| Crude oil                                    | 672,631         | 577,439     | 16.5  |
| Refined products                             | 1,185,212       | 892,705     | 32.8  |
| Tires                                        | 52,061          | 22,315      | >100  |
| Other sales                                  | 120,467         | 96,623      | 24.7  |
| Total Revenue (excluding financial services) | 2,030,371       | 1,589,082   | 27.8  |

Increase in revenues (excluding financial services) in the twelve months of 2024 in comparison to the same period of 2023 was primarily due to increased sales volumes of refined products, as well as higher oil prices.

# <span id="page-6-1"></span>Revenues breakdown (excluding financial services)

*Revenues (including purchased oil and refined products)*

|                             | 12 months ended |             | Chg., |
|-----------------------------|-----------------|-------------|-------|
|                             | 31 December     | 31 December | %     |
| (RR million)                | 2024            | 2023        |       |
| Crude oil                   |                 |             |       |
| Far abroad countries sales  | 382,658         | 338,062     | 13.2  |
| Domestic sales              | 289,973         | 239,377     | 21.1  |
|                             | 672,631         | 577,439     | 16.5  |
| Refined products            |                 |             |       |
| Far abroad countries sales  | 509,641         | 300,902     | 69.4  |
| Near abroad countries sales | 27,843          | 18,709      | 48.8  |
| Domestic sales              | 647,728         | 573,094     | 13.0  |
|                             | 1,185,212       | 892,705     | 32.8  |
| Tires                       | 52,061          | 22,315      | >100  |
| Other sales                 | 120,467         | 96,623      | 24.7  |

# *Sales of crude oil*

In the twelve months of 2024, revenue from oil sales amounted to RR 672,631 million, which is higher by 16.5% compared to the same period of 2023 and is associated with an increase in crude oil sales prices in the reporting period.

# *Sales of refined products*

Revenue from the sale of refined products in the twelve months of 2024 increased by 32.8% compared to the same period of 2023 and amounted to RR 1,185,212 million, which is associated with an increase in the sales prices the sales volumes.

# *Other sales*

Other sales primarily represent sales of materials and equipment, some types of petrochemical products, various oilfield services and sales of energy, water, and steam by the Group entities to third parties.

In the twelve months of 2024, other sales amounted to RR 120,467 million, increasing by 24.7% in comparison to the twelve months of 2023. The changes occurred mainly due to an increase in sales of other goods produced at the Group's petrochemical businesses.

#### <span id="page-6-2"></span>Costs and other expenses (excluding financial services)

**Operating expenses.** Operating expenses in the twelve months of 2024 amounted to RR 279,350 million, increasing by 39.5% in comparison to 2023. Operating expenses include crude oil extraction expenses, refining expenses, employee benefit expenses, as well as cost of other sales.

**Cost of purchased crude oil and refined products** in 2024 and 2023 amounted to RR 444,536 million and RR 306,393 million, respectively.

**Exploration expenses.** Exploration expenses consist primarily of geological and geophysical costs, and the costs of carrying and retaining undeveloped properties.

**Transportation expenses**. Transportation of the Group's crude oil and refined products, including purchased crude oil and refined products, are mostly carried out using the Transneft trunk pipeline system and the railway.

In the twelve months of 2024, transportation costs amounted to RR 93,932 million, which is 30.6% higher than in the twelve months of 2023. The increase was mainly due to higher volumes of refined products deliveries.

**Selling, general and administrative expenses.** These expenses are not directly related to production and include salary expenses, general business costs, insurance, advertising, legal fees, consulting and audit services, charity and sponsorship expenses and other expenses.

Information about other expenses is presented on page 6.

**Taxes.** Effective tax burden (taxes other than income tax as well as export duties to the revenue (excluding financial services)) of the Group in the twelve months of 2024 and 2023 was 30%.

Taxes other than income taxes include the following:

|                                                                    |             | 12 months ended |
|--------------------------------------------------------------------|-------------|-----------------|
|                                                                    | 31 December | 31 December     |
| (RR million)                                                       | 2024        | 2023            |
| Mineral extraction tax                                             | 583,082     | 494,071         |
| Tax on additional income from the extraction of hydrocarbons (AIT) | 163,393     | 122,649         |
| Excise                                                             | (162,451)   | (176,020)       |
| Property tax                                                       | 15,731      | 14,809          |
| Other                                                              | 2,336       | 2,505           |
| Total taxes other than income taxes                                | 602,091     | 458,014         |

Changes in taxes other than income taxes in the twelve months of 2024 compared to the same period of 2023 were mainly due to higher oil prices and the US dollar exchange rate taken into account in the mineral extraction tax rate, the application of the AIT regime in a number of fields in the Republic of Tatarstan, as well as the impact of the "reverse excise tax" mechanism.

**Maintenance of social infrastructure and transfer of social assets.** In the twelve months of 2024, maintenance of social infrastructure expenses and transfer of social assets amounted to RR 16,811 million compared to RR 12,023 million in the same period of 2023. These social infrastructure expenses relate primarily to housing, educational facilities, and cultural buildings in Tatarstan.

#### <span id="page-7-0"></span>Other (expenses)/income

**Foreign exchange gain, net.** In the twelve months of 2024, the Group recorded a RR 12,121 million gain compared to RR 25,049 million gain in the twelve months of 2023, which were due to volatility of Ruble to US Dollar exchange rate in the reporting periods, resulting in the corresponding revaluation of monetary assets and liabilities of the Group.

**Interest income (excluding financial services).** In the twelve months of 2024 amounted to RR 18,982 million and increased by 83.1% compared to the same period of 2023, mainly due to an increase in average interest rates and balances on bank deposits.

**Interest expense (excluding financial services)**, includes, among other things, an unwinding of the present value discount of decommissioning provision on oil and gas assets, an interest expense on lease obligations in accordance with IFRS 16 "Leases", as well as discount on long-term financial assets.

In the twelve months of 2024, interest expenses amounted to RR 20,052 million, a decrease of 4.6% compared to the twelve months of 2023.

#### <span id="page-7-1"></span>Income taxes

The Group's effective income tax rate in the twelve months of 2024 was 26.6% compared to the statutory tax rate of 20% in the Russian Federation.

On 12 July 2024, Federal Law No. 176-FZ "On Amendments to Parts One and Two of the Tax Code of the Russian Federation, Certain Legislative Acts of the Russian Federation and Recognizing Certain Provisions of Legislative Acts of the Russian Federation as Invalid" was adopted (hereinafter referred to as the "Law"). In accordance with the provisions of the Law, the corporate income tax rate was increased from 20% to 25% from 1 January 2025. In accordance with the requirements of IAS 12, deferred tax assets and liabilities at 31 December 2024 were revalued using the new rate.

# <span id="page-8-0"></span>**EBITDA reconciliation**

|                                                                  |             | 12 months ended |
|------------------------------------------------------------------|-------------|-----------------|
|                                                                  | 31 December | 31 December     |
| (RR million)                                                     | 2024        | 2023            |
| Revenues (excluding financial services)                          | 2,030,371   | 1,589,082       |
| Costs and other expense (excluding financial services)           | (1,624,234) | (1,249,753)     |
| Loss on disposal of interest in subsidiaries and associates, net | (56)        | (324)           |
| Operating results from financial services, net                   | 10,053      | (7,922)         |
| Depreciation, depletion and amortization                         | 62,238      | 60,647          |
| EBITDA                                                           | 478,372     | 391,730         |
| Add back Exceptional items*                                      | 5,817       | 22,298          |
| EBITDA adjusted for Exceptional items*                           | 484,189     | 414,028         |

*\*See section Exceptional items (p.5)*

EBITDA (earnings before interest taxes depreciation and amortization) is financial measure not provided by IFRS Accounting Standards. Herewith, its calculation methodology is not standardized, therefore above presented calculations of this indicator do not reflect unified approaches. EBITDA provides useful information to investors being the indicator of the strength and performance of our business operations. EBITDA also shows our ability to finance capital expenditures, acquisitions, and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs under IFRS Accounting Standards, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods.

EBITDA is commonly used as a basis by some investors, analysts, and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies in the oil and gas industry. This indicator should not be considered in isolation as an alternative to net profit, operating income, or any other measure of performance under IFRS Accounting Standards. EBITDA does not consider our need to replace our capital equipment over time.

# <span id="page-8-1"></span>**Financial Condition Summary Information**

The following table shows certain key financial indicators based on the Consolidated Statement of Financial Position:

|                                                                   | At 31 December | At 31 December |
|-------------------------------------------------------------------|----------------|----------------|
| (RR million)                                                      | 2024           | 2023           |
| Current assets                                                    | 641,922        | 589,623        |
| Non-current assets                                                | 1,562,987      | 1,455,550      |
| Total assets                                                      | 2,204,909      | 2,045,173      |
| Current liabilities                                               | 664,840        | 671,912        |
| Non-current liabilities                                           | 209,825        | 176,091        |
| Total liabilities                                                 | 874,665        | 848,003        |
| Total equity                                                      | 1,330,244      | 1,197,170      |
| Working capital (current assets, incl. cash and cash equivalents, |                |                |
| less current liabilities)                                         | (22,918)       | (82,289)       |

# Working capital position

The change in working capital in 2024 is due to an increase in current assets and decrease in current liabilities. At the same time, in assets there was an increase mainly in cash and inventory, and in liabilities there was a decrease in dividends payable and taxes payable, other than income tax.

# <span id="page-9-0"></span>**Liquidity and Capital Resources**

The following table shows a summary from the Consolidated Statement of Cash Flows:

|                                                                          |                  | 12 months ended  |
|--------------------------------------------------------------------------|------------------|------------------|
| (RR million)                                                             | 31 December 2024 | 31 December 2023 |
| Net cash provided by operating activities                                | 425,129          | 326,632          |
| including:                                                               |                  |                  |
| Net cash provided by operating activities before income tax and interest |                  |                  |
| (excluding financial services)                                           | 470,317          | 408,121          |
| Net cash provided/(used) by operating activities from financial services |                  |                  |
| before income tax                                                        | 17,021           | (9,502)          |
| Net cash used in investing activities                                    | (181,637)        | (296,908)        |
| Net cash used in financing activities                                    | (212,983)        | (121,568)        |
| Net change in cash and cash equivalents                                  | 30,509           | (91,844)         |

# Additions to property, plant and equipment

The following additions to property, plant and equipment (by segment, excluding non-cash additions) were made in the respective periods of 2024 and 2023:

|                                                  |                  | 12 months ended  |
|--------------------------------------------------|------------------|------------------|
| (RR million)                                     | 31 December 2024 | 31 December 2023 |
| Exploration and production                       | 78,325           | 107,686          |
| Refining and marketing                           | 53,704           | 74,722           |
| Tires business                                   | 3,308            | 941              |
| Financial services                               | 98               | 348              |
| Segments that are not reportable                 | 35,532           | 39,902           |
| Total additions to property, plant and equipment | 170,967          | 223,599          |

# Calculation of Free Cash Flow

|                                            |                  | 12 months ended  |
|--------------------------------------------|------------------|------------------|
| (RR million)                               | 31 December 2024 | 31 December 2023 |
| Net cash provided by operating activities  | 425,129          | 326,632          |
| Additions to property, plant and equipment | (170,967)        | (223,599)        |
| Free Cash Flow                             | 254,162          | 103,033          |

# Calculation of Net Debt

|                                                       | At 31 December | At 31 December |
|-------------------------------------------------------|----------------|----------------|
| (RR million)                                          | 2024           | 2023           |
| Short-term debt and current portion of long-term debt | 3,199          | 4,809          |
| Long-term debt, net of current portion                | 10,084         | 18,048         |
| Total debt                                            | 13,283         | 22,857         |
| Cash and cash equivalents                             | 117,454        | 84,115         |
| Net Debt                                              | (104,171)      | (61,258)       |

# <span id="page-9-1"></span>**Contractual obligations, other contingent and off-balance sheet obligations**

# Guarantees

The Group has guarantees issued related mainly to financial services at 31 December 2024 and at 31 December 2023.

# Legal contingencies

The Group is subject to various lawsuits and claims arising in the ordinary course of business. The outcomes of such contingencies, lawsuits, or other proceedings cannot be determined at present. In the case of all known contingencies the Group accrues a liability when the loss is probable, and the amount is reasonably estimable. Based on currently available information, management believes that it is remote that future costs related to known contingent liability exposures would have a material adverse impact on the Group's consolidated financial statements.

# Social commitments

The Group contributes significantly to the maintenance of local infrastructure and the welfare of its employees in Tatarstan, which includes contributions towards the construction, development, and maintenance of housing, hospitals and transport services, recreation and other social needs. Such funding is periodically determined by the Board of Directors after consultation with governmental authorities and recorded as expenditures when incurred or capitalized to the extent that the Group will receive economic benefits from their use in the future.

# <span id="page-10-0"></span>**Key Accounting Policies and Estimates**

The preparation of consolidated financial statements in conformity with IFRS Accounting Standards requires management to select appropriate accounting policies and to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. For a full description of our significant accounting policies, please refer to Note 28 of consolidated financial statements of the Group.

# <span id="page-10-1"></span>**Forward-looking statements**

Certain statements in this document are not historical facts and are ''forward-looking'' (as such term is defined in the US Private Securities Litigation Reform Act of 1995). We may from time to time make written or oral forward-looking statements in reports to shareholders and in other communications. Examples of such forward-looking statements include, but are not limited to:

- projections of revenues, income (or loss), earnings (or loss) per share, dividends, capital structure, or other financial items or ratios;
- statements of our plans, objectives or goals, including those related to products or services;
- statements of future economic performance; and
- statements of assumptions underlying such statements.

Words such as "believes", "anticipates", "expects", "intends" and "plans" and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts, projections, and other forward-looking statements will not be achieved. We caution readers that a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates, and intentions expressed in such forward-looking statements.

These factors include:

- inflation, interest rate and exchange rate fluctuations;
- the price of oil;
- the effect of, and changes in, Russian or Tatarstan government policy;
- the effect of terrorist attack or other geopolitical instability, either within Russia or elsewhere;
- the effects of competition in the geographic and business areas in which we conduct operations;
- the effects of changes in laws, regulations, taxation or accounting standards or practices;
- our ability to increase market share and control expenses;
- acquisitions or divestitures;
- technological changes.

This list of important factors is not exhaustive; when relying on forward-looking statements to make decisions with respect to our shares, American Depositary Shares (ADSs), or other securities, investors and others should carefully consider the foregoing factors and other uncertainties and events, especially in light of the difficult political, economic, social and legal environment in which we operate. Such forward-looking statements speak only at the date on which they are made, and we do not undertake any obligation to update or revise any of them, whether as a result of new information, future events or otherwise. We do not make any representation, warranty or prediction that the results anticipated by such forward-looking statements will be achieved, and such forward-looking statements represent, in each case, only one of many possible scenarios and should not be viewed as the most likely or standard scenario.

# **PJSC TATNEFT n.a. V.D. Shashin Additional information**

# <span id="page-11-0"></span>**Statement regarding corporate governance and TCFD disclosures**

This report does not contain corporate governance statement and climate-related financial disclosures consistent with the TCFD recommendations. The Company intends to include respective disclosures in its integrated annual report for 2024 (the Annual report) to be released for the approval by the Company's annual shareholders meeting in the second quarter of 2025. As of the date of this report the information required for the corporate governance statement and the TCFD disclosures is still being collected and analysed for the purposes of being included in the Annual report.