Tatneft-3

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Tatneft Group IFRS ® ACCOUNTING STANDARTS CONSOLIDATED FINANCIAL STATEMENTS AND INDEPENDENT AUDITOR’S REPORT 31 DECEMBER 2024 Contents INDEPENDENT AUDITOR’S REPORT CONSOLIDATED FINANCIAL STATEMENTS Consolidated Statement of Financial Position at 31 December 2024 ........................................................ 1 Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2024 ....................................................................................................... 2 Consolidated Statement of Changes in Equity for the year ended 31 December 2024 ............................. 4 Consolidated Statement of Cash Flows for the year ended 31 December 2024 ........................................ 5 Notes to the Consolidated Financial Statements Note 1: Organisation ................................................................................................................................. 7 Note 2: Basis of preparation ...................................................................................................................... 7 Note 3: Cash and cash equivalents ............................................................................................................ 7 Note 4: Accounts receivable ...................................................................................................................... 8 Note 5: Financial services: Loans to customers ...................................................................................... 10 Note 6: Other financial assets .................................................................................................................. 11 Note 7: Inventories .................................................................................................................................. 12 Note 8: Prepaid expenses and other current assets .................................................................................. 12 Note 9: Property, plant and equipment .................................................................................................... 13 Note 10: Right-of-use assets and lease liabilities .................................................................................... 16 Note 11: Taxes......................................................................................................................................... 17 Note 12: Debt .......................................................................................................................................... 18 Note 13: Accounts payable and accrued liabilities .................................................................................. 19 Note 14: Financial services: Due to banks and the Bank of Russia ......................................................... 19 Note 15: Financial services: Customer accounts ..................................................................................... 20 Note 16: Other long-term liabilities......................................................................................................... 20 Note 17: Shareholders’ equity ................................................................................................................. 21 Note 18: Employee benefit expenses....................................................................................................... 23 Note 19: Interest expense (excluding financial services) ........................................................................ 23 Note 20: Interest and commission income and expense from financial services .................................... 23 Note 21: Segment information ................................................................................................................ 24 Note 22: Related party transactions ......................................................................................................... 27 Note 23: Contingencies and commitments .............................................................................................. 29 Note 24: Business combinations.............................................................................................................. 31 Note 25: Intangible assets ........................................................................................................................ 32 Note 26: Other non-current assets ........................................................................................................... 32 Note 27: Financial risk management ....................................................................................................... 33 Note 28: Material accounting policy information ................................................................................... 48 Note 29: Critical accounting estimates and judgements in applying accounting policies ....................... 56 Note 30: Adoption of new or revised standards and interpretations ........................................................ 59 Joint-Stock Company “Technologies of Trust – Audit” (“Technologies of Trust – Audit” JSC) Ferro-Plaza Business Centre, 14/3 Krzhizhanovsky street, bldg. 5/1, Akademichesky municipal district, Moscow, Russian Federation, 117218 T: +7 495 967 60 00 www.tedo.ru Independent Auditor’s Report To the Shareholders and Board of Directors of Public Joint Stock Company TATNEFT named after V.D. Shashin: Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Public Joint Stock Company TATNEFT named after V.D. Shashin and its subsidiaries (together – the “Group”) at 31 December 2024, and the Group’s consolidated financial performance and consolidated cash flows for the year then ended in accordance with IFRS Accounting Standards. What we have audited The Group’s consolidated financial statements comprise: • the consolidated statement of financial position at 31 December 2024; • the consolidated statement of profit or loss and other comprehensive income for the year then ended; • the consolidated statement of changes in equity for the year then ended; • the consolidated statement of cash flows for the year then ended; and • the notes to the consolidated financial statements, which include material accounting policy information and other explanatory information. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the consolidated financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and the ethical requirements of the Auditor’s Professional Ethics Code and Auditor’s Independence Rules that are relevant to our audit of the consolidated financial statements in the Russian Federation. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. Key audit matters Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. www.tedo.ru ii Key audit matter How our audit addressed the key audit matter Estimation of oil and gas reserves We focused on this matter due to significant impact of the estimate of oil and gas reserves on the results of impairment testing, depreciation, depletion and amortisation of property, plant and equipment related to the oil and gas exploration and production, and the amount of decommissioning provisions. Also, the estimate of oil and gas reserves is an area of significant judgement due to geological, technical and commercial uncertainties. Information about the estimation of oil and gas reserves is provided in Note 29 “Critical accounting estimates and judgements in applying accounting policies” to the consolidated financial statements. Regarding the update of the estimate of oil and gas reserves performed during 2024 we (on a sample basis, where applicable): • assessed appropriateness of the items selected for the 2024 update based on the current production information and remaining production periods; • assessed the competence, capabilities and objectivity of the internal experts performing the estimation; • assessed appropriateness of the methodology and key assumptions and estimates applied, among other things, in the context of the current production information and macroeconomic forecasts; • obtained an understanding of reasons for the changes in the estimate of oil and gas reserves compared to the previous estimate. Impairment of property, plant and equipment We focused on this matter due to significance of the carrying amount of property, plant and equipment, significance of judgements and estimates applied in analysis of impairment of these assets, and the effect of the current geopolitical environment and economic situation on the recoverable amount of these assets. Information on property, plant and equipment, analysis of impairment of these assets and results of such analysis is disclosed in Note 9 “Property, Plant and Equipment” to the consolidated financial statements. In respect of certain cash-generating units the Group identified indications of impairment (reversal of impairment) and prepared calculations of recoverable amount based on expected discounted cash flows. Regarding these calculations we (on a sample basis, where applicable): • assessed appropriateness of the methodology and key assumptions and estimates applied, including consistency of the discount rates used with the range of acceptable values considering current economic conditions and the business of the Group; • tested input data, including consistency of the used information about oil and gas reserves related to the upstream assets with the estimates of the Group; • tested mathematical accuracy of the calculations; • compared carrying amount of the assets with their recoverable amount. Other information Management is responsible for the other information. The other information comprises Management’s discussion and analysis of financial condition and results of operations for the years ended 31 December 2024 and 2023 (but does not include the consolidated financial statements and our auditor’s report thereon) , which we obtained prior to the date of this auditor’s report, and the Integrated Annual Report for 2024 and Securities Issuer’s Report for the 12 months of 2024, which are expected to be made available to us after that date. Our opinion on the consolidated financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. www.tedo.ru iii If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. When we read the Integrated Annual Report for 2024 and Securities Issuer’s Report for the 12 months of 2024, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance. Responsibilities of management and those charged with governance for the consolidated financial statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseein g the Group’s financial reporting process. Auditor’s responsibilities for the audit of the consolidated financial statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in t he consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions an d events in a manner that achieves fair presentation. www.tedo.ru iv • Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the group as a basis for forming an opinion on the group financial statements. We are responsible for the direction, supervision and review of the audit work performed for purposes of the group audit. We remain solely responsible for our audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. The certified auditor responsible for the audit resulting in this independent auditor’s report is Kriventsev Evgenii Nikolaevich. 12 March 2025 Moscow, Russian Federation Kriventsev Evgenii Nikolaevich is authorised to sign on behalf of the General Director of Joint-Stock Company “Technologies of Trust – Audit” (Principal Registration Number of the Record in the Register of Auditors and Audit Organizations (PRNR) – 12006020338), certified auditor (PRNR – 21906099944) TATNEFT Consolidated Statement of Financial Position at 31 December 2024 (In million of Russian Rubles) The accompanying notes are an integral part of these consolidated financial statements. 1 Note 31 December 2024 31 December 2023 Assets Cash and cash equivalents 3 117,454 84,115 Financial services: Mandatory reserve deposits with the Bank of Russia 997 903 Short-term accounts receivable, net 4 215,500 219,905 Financial services: Loans to customers 5 79,781 62,582 Other short-term financial assets 6 31,622 37,868 Inventories 7 125,826 121,157 Prepaid expenses and other current assets 8 62,879 58,315 Prepaid income tax 924 4,034 Non-current assets held for sale 6,939 744 Total current assets 641,922 589,623 Long-term accounts receivable, net 4 10,839 9,519 Financial services: Loans to customers 5 116,771 127,811 Other long-term financial assets 6 102,835 103,515 Investments in associates and joint ventures 3,639 5,018 Property, plant and equipment, net 9 1,238,124 1,131,481 Right-of-use assets 10 23,417 27,529 Deferred income tax assets 11 18,778 7,332 Intangible assets 25 27,366 21,020 Other non-current assets 26 21,218 22,325 Total non-current assets 1,562,987 1,455,550 Total assets 2,204,909 2,045,173 Liabilities and equity Short-term debt and current portion of long-term debt 12 3,199 4,809 Accounts payable and accrued liabilities 13 163,202 160,532 Dividends payable 17 104,851 119,137 Financial services: Due to banks and the Bank of Russia 14 36,938 27,014 Financial services: Customer accounts 15 205,127 202,048 Financial services: Other financial liabilities at fair value throughprofit or loss 3 19,197 14,983 Taxes payable, other than income tax 11 129,035 141,874 Income tax payable 3,291 1,515 Total current liabilities 664,840 671,912 Long-term debt, net of current portion 12 10,084 18,048 Financial services: Due to banks and the Bank of Russia 14 1,184 3,737 Financial services: Customer accounts 15 1,127 1,531 Decommissioning provision, net of current portion 9 28,742 30,771 Lease liabilities, net of current portion 10 18,130 20,344 Deferred income tax liability 11 105,659 61,430 Other long-term liabilities 16 44,899 40,230 Total non-current liabilities 209,825 176,091 Total liabilities 874,665 848,003 Equity Preferred shares 746 746 Ordinary shares 11,021 11,021 Additional paid-in capital 84,437 84,437 Accumulated other comprehensive income 17,076 10,533 Retained earnings 1,218,834 1,094,451 Less: Ordinary shares held in treasury, at cost (10,345) (10,345) Total equity owned by shareholders of PJSC Tatneft 1,321,769 1,190,843 Non-controlling interest 8,475 6,327 Total equity 1,330,244 1,197,170 Total liabilities and equity 2,204,909 2,045,173 Approved for issue and signed on ___ 2025. _____ _________ CEO Maganov N.U. Deputy Chief Accountant Gaysin A.I. TATNEFT Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2024 (In million of Russian Rubles) The accompanying notes are an integral part of these consolidated financial statements. 2 Note Year ended31 December 2024 Year ended31 December 2023 Revenue (excluding financial services) 21 2,030,371 1,589,082 Costs and other expenses (excluding financial services) Operating expenses (279,350) (200,228) Purchased crude oil and refined products (444,536) (306,393) Exploration (4,019) (3,001) Transportation (93,932) (71,901) Selling, general and administrative expenses (114,552) (97,632) Depreciation, depletion and amortization 9,21 (62,238) (60,647) Expected credit losses on financial assets net of reversals 4,6 759 (566) Impairment losses on property, plant and equipment and other non-financial assets net of reversals 9 (6,576) (21,732) Taxes other than income taxes 11 (602,091) (458,014) Export duties (888) (17,616) Maintenance of social infrastructure and transfer of social assets (16,811) (12,023) Total costs and expenses (excluding financial services) (1,624,234) (1,249,753) Other operating (expenses)/income, net 24 (3,130) 17,314 Operating profit (excluding financial services) 403,007 356,643 Net interest, fee and commission and other operatingincome/(expenses) and gains/(losses) from financial services Interest, fee and commission income 20,21 46,108 28,294 Interest, fee and commission expense 20 (34,178) (15,962) Net income/(expense) on recovery/creating provision for credit losseson debt financial assets 5,6 8,503 (10,414) Operating expenses (8,475) (9,187) Gain arising from dealing in foreign currencies, net 377 477 Other operating expenses, net (2,282) (1,130) Total net interest, fee, commission and other operatingincome/(expenses) and gains/(losses) from financial services 10,053 (7,922) Other income/(expenses) Foreign exchange gain, net 27 12,121 25,049 Interest income (excluding financial services) 18,982 10,367 Interest expense (excluding financial services) 19 (20,052) (21,025) Share of results of associates and joint ventures, net (2,963) 2,395 Total other income, net 8,088 16,786 Profit before income tax 421,148 365,507 Income tax Current income tax expense (79,871) (73,172) Deferred income tax expense (32,348) (6,072) Total income tax expense 11 (112,219) (79,244) Profit for the year 308,929 286,263 TATNEFT Consolidated Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2024 (In million of Russian Rubles) The accompanying notes are an integral part of these consolidated financial statements. 3 Note Year ended31 December 2024 Year ended31 December 2023 Other comprehensive income/(loss) net of income tax: Items that may be reclassified subsequently to profit or loss: Foreign currency translation adjustments 8,022 7,848 Loss on debt financial assets at fair value through other comprehensiveincome, net (2,243) (209) Items that will not be reclassified to profit or loss: Gain on equity financial assets at fair value through othercomprehensive income, net 192 2,251 Actuarial (loss)/gain on employee benefit plans (77) 832 Other comprehensive income 5,894 10,722 Total comprehensive income for the period 314,823 296,985 Profit/(loss) attributable to:- Shareholders of PJSC Tatneft 306,140 287,921 - Non-controlling interest 2,789 (1,658) 308,929 286,263 Total comprehensive income/(loss) attributable to:- Shareholders of PJSC Tatneft 312,683 298,703 - Non-controlling interest 2,140 (1,718) 314,823 296,985 Basic and diluted earnings per share (RR) Ordinary 17 136.03 127.93 Preferred 136.03 127.93 Weighted average shares outstanding (millions of shares) Ordinary 17 2,103 2,103 Preferred 148 148 TATNEFT Consolidated Statement of Changes in Equity for the year ended 31 December 2024 (In million of Russian Rubles) The accompanying notes are an integral part of these consolidated financial statements. 4 Total equity owned by shareholders of PJSC Tatneft Non-con-trollinginterest Totalequity Sharecapital Additionalpaid-incapital Treasuryshares Actuarial(loss)/gainon employeebenefitplans Foreigncurrencytranslationadjustments (Loss)/gain onfinancialassets at fairvalue throughother compre-hensiveincome, net Retainedearnings Total Balance at 1 January 2023 11,767 84,437 (10,359) (1,150) 1,090 (189) 1,010,027 1,095,623 8,821 1,104,444 Profit/(loss) for the year - - - - - - 287,921 287,921 (1,658) 286,263 Other comprehensive income/(loss) forthe year - - - 832 7,848 2,102 - 10,782 (60) 10,722 Total comprehensive income/(loss) forthe year - - - 832 7,848 2,102 287,921 298,703 (1,718) 296,985 Other movements - - 14 - - - - 14 (676) (662) Dividends declared (Note 17) - - - - - - (203,497) (203,497) (100) (203,597) Balance at 31 December 2023 11,767 84,437 (10,345) (318) 8,938 1,913 1,094,451 1,190,843 6,327 1,197,170 Balance at 1 January 2024 11,767 84,437 (10,345) (318) 8,938 1,913 1,094,451 1,190,843 6,327 1,197,170 Profit for the year - - - - - - 306,140 306,140 2,789 308,929 Other comprehensive (loss)/income forthe year - - - (77) 8,022 (1,402) - 6,543 (649) 5,894 Total comprehensive (loss)/income forthe year - - - (77) 8,022 (1,402) 306,140 312,683 2,140 314,823 Other movements - - - - - - - - 135 135 Dividends declared (Note 17) - - - - - - (181,757) (181,757) (127) (181,884) Balance at 31 December 2024 11,767 84,437 (10,345) (395) 16,960 511 1,218,834 1,321,769 8,475 1,330,244 TATNEFT Consolidated Statement of Cash Flows for the year ended 31 December 2024 (In million of Russian Rubles) The accompanying notes are an integral part of these consolidated financial statements. 5 Note Year ended31 December 2024 Year ended31 December 2023 Operating activities Profit for the year 308,929 286,263 Adjustments: Net interest, fee and commission and other operating(income)/expenses and (gains)/losses from financialservices activities (10,053) 7,922 Depreciation, depletion and amortization 9,21 62,238 60,647 Income tax expense 11 112,219 79,244 Expected credit losses on financial assets net of reversals 4,6 (759) 566 Impairment losses on property, plant and equipment andother non-financial assets net of reversals 9 6,576 21,732 Loss on disposals of interests in subsidiaries and associates,net 56 324 Income from changes in the fair value of financial assetsmeasured at fair value through profit or loss, net - (158) Gain from purchase 24 - (19,111) Effects of foreign exchange 2,790 2,264 Share of results of associates and joint ventures, net 2,963 (2,395) Interest income (excluding financial services) (18,982) (10,367) Interest expense (excluding financial services) 20,052 21,025 Other, net (2,681) 613 Changes in operational working capital related to operatingactivities, excluding cash: Accounts receivable 5,739 (91,661) Inventories (7,586) (30,396) Prepaid expenses and other current assets (4,549) (25,204) Securities at fair value through profit or loss (423) 167 Accounts payable and accrued liabilities 6,631 37,787 Taxes payable, other than income tax (12,843) 68,859 Net cash provided by operating activities before income taxand interest (excluding financial services) 470,317 408,121 Net interest, fee and commission and other income/(expenses)and gains/(losses) from financial services 10,053 (7,922) Adjustments: Net (income)/expense on reversal/creating of provision forcredit losses on debt financial assets 5,6 (8,503) 10,414 Provision for losses on credit related commitments 5 21 Changes in operational working capital related to financialservices, excluding cash: Mandatory reserve deposits with the Bank of Russia (94) (525) Due from banks 6,767 (1,548) Loans to customers (5,500) (27,558) Due to banks and the Bank of Russia 8,526 24,562 Customer accounts (255) (24,012) Promissory notes issued 8 (66) Securities at fair value through profit or loss 822 3,083 Other financial liabilities at fair value through profit or loss 5,192 14,049 Net cash provided/(used in) by operating activities fromfinancial services before income tax 17,021 (9,502) Income taxes paid (74,985) (78,939) Interest paid (excluding financial services) (3,865) (2,077) Interest received (excluding financial services) 16,641 9,029 Net cash provided by operating activities 425,129 326,632 TATNEFT Consolidated Statement of Cash Flows for the year ended 31 December 2024 (In million of Russian Rubles) The accompanying notes are an integral part of these consolidated financial statements. 6 Note Year ended31 December 2024 Year ended31 December 2023 Investing activities Additions to property, plant and equipment 9 (170,967) (223,599) Proceeds from disposal of property, plant and equipment 498 317 (Acquisition)/sale of interest in associate (1,664) 80 Net cash flow from acquisitions of subsidiaries 24 (4,068) (39,684) Purchase of securities at fair value through other comprehensiveincome 6 (9,170) (17,535) Purchase of securities at amortised cost 6 (441) (4,664) Proceeds from disposal of securities at fair value through othercomprehensive income 6 10,506 8,876 Proceeds from redemption of securities at amortised cost 6 10,169 13,750 Proceeds from sale of non-current assets held for sale 338 871 Proceeds from redemption of bank deposits measured at amortisedcost 21,386 - Placement of bank deposits measured at amortised cost (21,560) - Proceeds from redemption of bank deposits measured at fair valuethrough profit or loss - 1,687 Placement of bank deposits measured at fair value through profitor loss - (483) Redemption of loans 6 6,374 5,038 Issuance of loans 6 (23,064) (43,047) Advance payment for acquisition of other non-current assets - (8,203) Advance repayment for acquisition of other non-current assets - 5,607 Acquisition of intangible assets (3,725) (3,496) (Acquisition)/disposal of other non-current assets (701) 88 Proceeds from government grants 16 4,452 7,489 Net cash used in investing activities (181,637) (296,908) Financing activities Proceeds from issuance of debt (excluding financial services) 27 112,958 57,373 Repayment of debt (excluding financial services) 27 (114,965) (61,933) Repayment of principal portion of lease liabilities 10,27 (3,405) (4,563) Redemption of bonds 27 (1) (2,008) Promissory notes redemption 27 (11,400) - Dividends paid to shareholders 17 (222,590) (141,304) Unclaimed dividends 26,547 30,956 Dividends paid to non-controlling shareholders (127) (100) Proceeds from disposal of treasury shares - 11 Net cash used in financing activities (212,983) (121,568) Net change in cash and cash equivalents 30,509 (91,844) Effect of foreign exchange on cash and cash equivalents 2,830 8,095 Cash and cash equivalents at the beginning of the year 3 84,115 167,864 Cash and cash equivalents at the end of the year 3 117,454 84,115 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 7 Note 1: Organisation PJSC TATNEFT n.a. V.D. Shashin (the “Company” or PJSC Tatneft) and its controlled subsidiaries (jointly referred to as the “Group”) are engaged in crude oil exploration, development and production principally in the Republic of Tatarstan (“Tatarstan”), a republic within the Russian Federation. The Group also engages in refining of crude oil and associated petroleum gas processing, marketing of crude oil and refined products, production and sale of tires, financial services (Note 21,24). The Company was incorporated as an open joint stock company (now referred to as a public joint stock company) in January 1994 pursuant to the approval of the State Property Management Committee of the Republic of Tatarstan in accordance with Decree of the President of the Russian Federation No. 1403 on Privatization and Restructuring of Enterprises and Corporations into Joint-Stock Companies. The Company does not have an ultimate controlling party. As at 31 December 2024 and 31 December 2023 the government of Tatarstan controls about 36% of the Company’s voting stock. Tatarstan also holds a “Golden Share”, a special governmental right, in the Company (Note 17). The Company is domiciled and primarily operates in the Russian Federation. The address of its registered office is Lenina St., 75, Almetyevsk, Republic of Tatarstan, Russian Federation. Note 2: Basis of preparation The accompanying consolidated financial statements have been prepared in accordance with IFRS Accounting Standards. These consolidated financial statements have been prepared on a historical cost basis, except for initial recognition of financial instruments and revaluation of financial instruments at fair value. The entities of the Group maintain their accounting records and prepare their statutory financial statements principally in accordance with the Regulations and Federal standards on Accounting and Reporting of the Russian Federation (“RAR”), and applicable accounting and reporting standards of countries outside the Russian Federati on. A number of entities of the Group prepare their financial statements in accordance with IFRS Accounting Standards. The accompanying consolidated financial statements have been prepared from these accounting records and adjusted as necessary to comply with IFRS Accounting Standards. The preparation of financial statements in conformity with IFRS Accounting Standards requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 29. Note 3: Cash and cash equivalents At 31 December 2024 At 31 December 2023 Cash on hand and in banks 46,939 48,326 Term deposits with original maturity of less than three months 70,515 35,789 Total cash and cash equivalents 117,454 84,115 As at 31 December 2024 and 2023 reverse REPO agreements included in the line “Cash and cash equivalents” in the amount of RR 19,641 million and RR 17,638 million, respectively, were secured by securities with a fair value of RR 20,332 million and RR 18,356 million, respectively. The Group had the right to sell or repledge these securities. Part of these securities as at 31 December 2024 was sold and obligations to return these securities in the amount of RR 19,197 million (at 31 December 2023: RR 14,983 million) are reflected in the line “Financial services: Other financial liabilities at fair value through profit or loss.” TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 8 Note 4: Accounts receivable Short-term and long-term accounts receivable comprise the following: At 31 December 2024 At 31 December 2023 Short-term accounts receivable: Trade receivables 211,732 219,580 Other financial receivables 18,147 13,397 Other non-financial receivables 53 80 Less expected credit loss allowance (14,432) (13,152) Total short-term accounts receivable 215,500 219,905 Long-term accounts receivable: Trade receivables 333 308 Other financial receivables 12,651 9,449 Less expected credit loss allowance (2,145) (238) Total long-term accounts receivable 10,839 9,519 Total trade and other receivables 226,339 229,424 The following table explains the changes in the expected credit loss allowance for trade and other receivables: 2024 2023 Trade receivables Other receivables Trade receivables Other receivables Expected credit loss allowance at 1 January (7,993) (5,397) (5,717) (5,893) Reversal of provision/(provision) 368 722 (251) (812) Write-offs - 200 - 983 Exchange differences (35) - (180) - Changes in provision as a result of business acquisitions - - (2,156) - Receivables purchased credit impaired - (1,276) - - Reclassification from advances due to expected repayment in cash - (3,199) - - Other changes - 33 311 325 Expected credit loss allowance at 31 December (7,660) (8,917) (7,993) (5,397) TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 9 Note 4: Accounts receivable (continued) Analysis by credit quality of trade and other receivables is as follows: At 31 December 2024 At 31 December 2023 Trade receivables Other receivables Trade receivables Other receivables Not past due - international traders of crude oil, oil products and petrochemicals 48,682 - 55,301 - - russian crude oil and oil products traders 14,518 - 5,661 - - russian oil and petrochemicals refineries 39,670 - 42,477 - - foreign refineries 27,277 - 67,660 - - tire dealers and automotive manufacturers 27,845 - 14,155 - - other 44,192 18,300 25,616 17,430 including related parties 12,711 10,589 4,411 10,561 Not past due 202,184 18,300 210,870 17,430 Expected credit loss allowance (550) (146) (540) (63) Past due but not individually assessed for credit loss allowance - less than 90 days overdue 1,983 305 1,357 2 - 91 to 180 days overdue 282 205 157 5 - over 180 days overdue - - - 6 Total past due but not individually assessed for credit loss allowance 2,265 510 1,514 13 Expected credit loss allowance (31) (5) (26) (3) Individually assessed for credit loss allowance (gross) - not past due - 3,059 - - - less than 90 days overdue - - 441 - - 91 to 180 days overdue 481 - - - - over 180 days overdue 7,135 8,929 7,063 5,403 Total individually assessed for credit loss allowance 7,616 11,988 7,504 5,403 Expected credit loss allowance (7,079) (8,766) (7,427) (5,331) Total 204,405 21,881 211,895 17,449 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 10 Note 5: Financial services: Loans to customers At 31 December 2024 At 31 December 2023 Loans to legal entities 83,740 68,333 Loans to individuals 2,638 2,542 Short-term loans to customers measured at amortised cost before expected credit loss allowance 86,378 70,875 Expected credit loss allowance (6,597) (8,293) Total short-term loans to customers measured at amortised cost 79,781 62,582 Total short-term loans to customers 79,781 62,582 At 31 December 2024 At 31 December 2023 Loans to legal entities 63,416 73,910 Loans to individuals 56,735 57,800 Long-term loans to customers measured at amortised cost before expected credit loss allowance 120,151 131,710 Expected credit loss allowance (3,380) (3,899) Total long-term loans to customers measured at amortised cost 116,771 127,811 Total long-term loans to customers 116,771 127,811 There is a certain concentration of loans issued to customers in the financial services segment of the Group. As at 31 December 2024 and 2023 the Group granted loans to 33 and 39 customers totalling RR 106,460 million and RR 107,808 million respectively, which individually exceeded 5% of segment equity. Movements in the expected credit loss allowance during the year ended at 31 December 2024 are as follows: Loans to legal entities Loans to individuals Total Expected credit loss allowance as at 1 January 2024 (7,114) (5,078) (12,192) Net reversal of provision/(provision) for expected credit loss allowance during the period 731 (478) 253 Other changes 844 1,118 1,962 Expected credit loss allowance as at 31 December 2024 (5,539) (4,438) (9,977) Movements in the expected credit loss allowance during the year ended at 31 December 2023 are as follows: Loans to legal entities Loans to individuals Total Expected credit loss allowance as at 1 January 2023 (6,968) (4,828) (11,796) Net provision for expected credit loss allowance during the period (471) (629) (1,100) Other changes 325 379 704 Expected credit loss allowance as at 31 December 2023 (7,114) (5,078) (12,192) TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 11 Note 5: Financial services: Loans to customers (continued) Risk concentrations by customer industry within the customer loan portfolio are as follows: At 31 December 2024 At 31 December 2023 Gross book value Share in customer loan portfolio, % Gross book value Share in customer loan portfolio, % Trade 26,809 12.98% 23,885 11.79% Manufacturing 75,913 36.76% 66,951 33.05% Construction 837 0.41% 1,019 0.50% Services 10,280 4.98% 19,566 9.66% Food 4,855 2.35% 1,248 0.62% Finance 16,392 7.94% 26,037 12.85% Agriculture 1,761 0.85% 287 0.14% Oil and gas 7,079 3.43% 2,861 1.41% Individuals, including: 59,373 28.75% 60,342 29.79% mortgage loans 26,341 12.75% 29,394 14.52% consumer loans 15,335 7.43% 16,275 8.03% car loans 17,043 8.25% 14,161 6.99% plastic cards overdrafts 654 0.32% 512 0.25% Other 3,230 1.55% 389 0.19% Total loans to customers before expected credit loss allowance 206,529 100% 202,585 100% Note 6: Other financial assets Other short-term financial assets comprise the following: At 31 December 2024 At 31 December 2023 Financial assets measured at amortised cost Securities (net of expected credit loss allowance of RR 857 million and of RR 6 million as at 31 December 2024 and 31 December 2023 respectively): 4,973 7,274 Russian government and municipal debt securities 1,220 164 Corporate debt securities 3,753 7,110 Loans (net of expected credit loss allowance of RR 318 million and of RR 170 million as at 31 December 2024 and 31 December 2023 respectively) 18,484 18,286 Other 503 - Total 23,960 25,560 Financial assets measured at fair value through profit or loss 4,058 3,138 Financial assets measured at fair value through other comprehensive income Securities: Corporate debt securities 2,403 8,758 Other 1,201 412 Total 3,604 9,170 Total short-term financial assets 31,622 37,868 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 12 Note 6: Other financial assets (continued) Other long-term financial assets comprise the following: At 31 December 2024 At 31 December 2023 Financial assets measured at amortised cost Loans (net of expected credit loss allowance of RR 15,579 million and of RR 17,012 million as at 31 December 2024 and 31 December 2023 respectively), including issued to associated companies and joint ventures in the amount of RR 19,934 million and RR 15,656 million as at 31 December 2024 and 31 December 2023. 29,257 23,553 Securities (net of expected credit loss allowance of RR 12 million and of RR 9 million as at 31 December 2024 and 31 December 2023 respectively): 11,231 15,609 Russian government and municipal debt securities 207 2,097 Corporate debt securities 11,024 13,512 Other (net of expected credit loss allowance of RR 5,553 million and of RR 14,355 million as at 31 December 2024 and 31 December 2023 respectively) 793 892 Total 41,281 40,054 Financial assets measured at fair value through profit or loss 138 2,134 Financial assets measured at fair value through other comprehensive income Securities: 61,416 61,327 Russian government and municipal debt securities 11,899 13,649 Corporate shares 16,091 15,253 Corporate debt securities 21,836 19,466 Foreign country’s debt securities - 851 Investment fund units 11,590 12,108 Total 61,416 61,327 Total long-term financial assets 102,835 103,515 Investment fund units are mainly presented with investment in closed mutual investment fund (45.45% of the total number of units), owner of investments in land plots located in Tatarstan Republic. The Group does not exercise significant influence over this investment and therefore accounts for it as a financial asset measured at fair value through other comprehensive income. Note 7: Inventories At 31 December 2024 At 31 December 2023 Materials and supplies 44,752 43,380 Crude oil 19,770 22,639 Refined oil products 39,024 39,310 S upplies and finished products of tires business 13,805 9,642 Other finished products and goods 8,475 6,186 Total inventories 125,826 121,157 Note 8: Prepaid expenses and other current assets At 31 December 2024 At 31 December 2023 Settlements with customs authorities 1,060 2,194 VAT recoverable 11,389 9,469 Advances 13,773 9,706 Prepaid transportation expenses 6,800 5,892 Excise 27,533 25,152 Other 2,324 5,902 Prepaid expenses and other current assets 62,879 58,315 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 13 Note 9: Property, plant and equipment Oil and gas properties Buildings and constructions Machinery and equipment Construc- tion in progress Total Cost As at 31 December 2022 516,865 385,300 258,668 278,454 1,439,287 Additions - - - 228,662 228,662 Disposals (2,105) (705) (5,089) (1,286) (9,185) Changes in Group structure (Note 24) - 15,691 21,602 699 37,992 Transfers 67,349 47,399 37,316 (152,064) - Changes in decommissioning provision (27,876) - - - (27,876) Currency translation effect - 818 1,539 343 2,700 As at 31 December 2023 554,233 448,503 314,036 354,808 1,671,580 Depreciation, depletion,amortisation and impairment As at 31 December 2022 265,433 83,241 85,240 33,163 467,077 Depreciation, depletion and amortisation 25,350 15,659 16,744 - 57,753 Impairment 6,689 2,434 4,803 5,126 19,052 Disposals (1,457) (537) (1,841) - (3,835) Transfers 179 (269) 279 (189) - Currency translation effect - 36 16 - 52 As at 31 December 2023 296,194 100,564 105,241 38,100 540,099 Net book value As at 31 December 2022 251,432 302,059 173,428 245,291 972,210 As at 31 December 2023 258,039 347,939 208,795 316,708 1,131,481 Cost As at 31 December 2023 554,233 448,503 314,036 354,808 1,671,580 Additions - - - 173,074 173,074 Disposals (2,504) (8,576) (2,540) (2,392) (16,012) Changes in Group structure - 473 482 110 1,065 Transfers 72,083 46,710 16,614 (135,407) - Changes in decommissioning provision (2,501) - - - (2,501) Currency translation effect - 1,875 3,289 4,555 9,719 As at 31 December 2024 621,311 488,985 331,881 394,748 1,836,925 Depreciation, depletion,amortisation and impairment As at 31 December 2023 296,194 100,564 105,241 38,100 540,099 Depreciation, depletion and amortisation 17,940 17,398 22,146 - 57,484 Impairment (12,633) 9,887 7,486 (819) 3,921 Disposals (1,608) (399) (1,591) - (3,598) Transfers (59) 1,415 (1,378) 22 - Currency translation effect - 375 485 35 895 As at 31 December 2024 299,834 129,240 132,389 37,338 598,801 Net book value As at 31 December 2023 258,039 347,939 208,795 316,708 1,131,481 As at 31 December 2024 321,477 359,745 199,492 357,410 1,238,124 Additions for 2024 and 2023 years include construction of TANECO refinery complex, wells, oil fields facilities and petrochemical business development. Advances for construction within construction in progress amounted to RR 25,358 million and RR 45,450 million at 31 December 2024 and 2023, respectively. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 14 Note 9: Property, plant and equipment (continued) Changes in the net book value of exploration and evaluation assets are presented below: At 1 January 2023 3,158 Additions 2,881 Reclassification to development assets (88) Charged to expense (2,305) At 31 December 2023 3,646 Additions 1,891 Charged to expense (265) At 31 December 2024 5,272 As at 31 December 2024 due to indications of possible impairment the Group conducted impairment testing for the separate groups of assets, whose current economic efficiency does not correspond to the forecast. The Group also assessed indications whether impairment losses recognised in prior periods had decreased and tested the recoverable amount of assets related to the development of superviscous oi fields for which oil and gas reserves increased compared with the results of the previous assessment. Assets are grouped for impairment purposes to the cash generating units (CGU) at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets: • field-by-field basis for exploration and production assets; • separate complex level for refining assets; • a separate tire producing plant; • other assets were grouped depending on the nature of the generated cash flows. The macroeconomic factors, including but not limited to the changes in oil production and crude oil and oil products prices, the volatility of the Russian Ruble to the US dollar and a changes in the level of business activity were taken into account when preparing models, which are the main source of information for measuring the value in use of non-current assets, including forecasts of oil production volumes, oil and oil products price dynamics, petrochemical production forecast, as well as when determining the discount rate. In assessing impairment, the recorded value of assets was compared with the estimated value in use of the CGUs. The value in use is determined as the discounted net cash flows based on the forecasts of revenue, production costs and changes in working capital based on confirmed long-term strategic plans of the Group. The forecasting period for determining the value in use is in line with the management of the Group assumptions used for long-term strategy and does not exceed the useful life of assets included in the CGUs. Key assumptions applied to the calculation of value in use are follows: • oil prices and forecast US dollar/Russian ruble exchange rates are based on available forecasts from globally recognised research institutions; • estimated production volumes were based on detailed information of the production plans approved by management as part of the long-term strategy, considering the estimates of proved oil reserves and the current geopolitical situation. The discount rate was calculated based on the Company’s weighted average cost of capital adjusted for asset specific risks. The Group applied the following nominal pre-tax discount rates for impairment testing purposes: • 34.3% for oil and gas fields; • 23.16% for the production of tires. The Group applied a real pre-tax discount rates from 12.21% to 14.25% for impairment testing of petrochemical complexes. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 15 Note 9: Property, plant and equipment (continued) For the purposes of impairment testing, the following Brent price assumptions have been used: $ 72.24 per barrel in 2025, $ 71.03 per barrel in 2026, $ 72.10 per barrel in 2027, $ 72.93 per barrel in 2028 and $ 76.13 per barrel in 2029 with further growth in subsequent years according to forecasts. A forecast discount was applied to Brent crude prices to bring them to Urals crude prices. A reasonably justified change in key assumptions, taken into account by management for the purpose of preparing models as at the reporting date, does not necessitate the recognition of an additional impairment other than the below. In 2024 the Group recognised an impairment loss on property, plant and equipment and other non-financial assets in the amount of RR 6,576 million (in 2023: RR 21,732 million) . These losses consist of impairment losses on property, plant and equipment in the amount of RR 18,419 million less of reversal in the amount of RR 14,498 (in 2023 in the amount of RR 19,052 million), loss from impairment of goodwill and other long-term assets in the amount of RR 1,971 million (in 2023 impairment loss in the amount of RR 1,508 million) , expense from the writing down the value of inventory to the net realizable value in the amount of RR 82 million (in 2023 income from restoration of the value of inventories in the amount of RR 462 million) and losses on disposal of property, plant and equipment in the amount of RR 602 million (in 2023 in the amount of RR 1,634 million) . For the year ended 31 December 2024 the Group recognised an impairment of the following assets: • refining and petrochemical assets in the amount of RR 10,070 million; • tire business assets in the amount of RR 5,363 million; • assets related to the sale of oil and gas products, in the amount of RR 1,617 million; • assets related to the exploration and evaluation of oil reserves, in the amount of RR 1,369 million; • and also reversed losses from impairment of assets related to the development of superviscous oil in the amount of RR 14,461 million and other assets in the amount of RR 37 million. For the year ended 31 December 2023 the Group recognised an impairment of the following assets: • tire business assets in the amount of RR 8,042 million; • assets related to the superviscous oil fields in the amount of RR 7,242 million; • assets related to the exploration and evaluation of oil reserves, in the amount of RR 2,024 million; • other assets in the total amount of RR 1,744 million. The recoverable amount of superviscous oil fields, for which impairment were recovered (recorded in 2023) , was determined in the amount of RR 29,362 million (at 31 December 2023: in the amount of RR 18,014 million) . The recoverable amount of tire producing assets, which were impaired, was determined in the amount of RR 1,333 million (at 31 December 2023: in the amount of RR 6,916 million) . The recoverable amount of the petrochemical complex, for which impairment was recorded, was determined in the amount of RR 27,597 million. The recoverable amount of this CGU is particularly sensitive to changes in the discount rate. In case of increasing range of rate by 50 bp, the additional impairment loss might be determined in the amount RR 11,728 million. At 31 December 2024 and 2023 the Group held social assets with a net book value of RR 5,665 million and RR 5,492 million, respectively. Decommissioning provisions The following table summarizes changes in the Group’s decommissioning provision for the year : 2024 2023 Balance at the beginning of period 31,076 54,177 Unwinding of discount 3,505 4,813 New obligations 323 734 Expenses on current obligations (58) (38) Changes in estimates with impact on assets (2,824) (28,610) Changes in estimates with impact on financial result (3,187) - Balance at the end of period 28,835 31,076 Less: current portion of decommissioning provisions (Note 13) (93) (305) Long-term balance at the end of period 28,742 30,771 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 16 Note 9: Property, plant and equipment (continued) In 2024, the decrease in estimate for oil and gas properties decommissioning was primarily due to an increase in the discount rate (in 2023, the decrease in estimate for oil and gas properties decommissioning was primarily due to an increase in proven developed oil reserves and an increase in the production horizon, as well as changes in the discount rate). The gain from a decrease in the provision as a result of changes in accounting estimates with an impact on the financial results is reflected in other operating (expenses)/income, net consolidated statement of profit or loss and other comprehensive income. Key assumptions used for evaluation of decommissioning provision were as follows: At 31 December 2024 At 31 December 2023 Discount rate 14.58% 11.87% Discount rate for superviscous oil 14.58% 11.48% Long-term inflation rate 3.91% 3.00% Note 10: Right-of-use assets and lease liabilities Changes in the right-of-use assets are presented below: 2024 2023 Balance at the beginning of period 27,529 3,237 Additions 825 26,076 Disposals (59) (247) Depreciation (4,191) (2,896) Revaluation and modification (687) 1,359 Balance at the end of period 23,417 27,529 The reconciliation between the undiscounted lease liabilities and present value are presented below: At 31 December 2024 At 31 December 2023 Lease liabilities Less than one year 4,730 5,332 Between one and five years 15,638 15,359 More than five years 17,814 19,631 Total lease liabilities excluding discounting 38,182 40,322 Discounting (16,055) (15,168) Lease liabilities 22,127 25,154 Of which: Current portion of lease liabilities presented in Accounts payable and accrued liabilities (Note 13) 3,997 4,810 Long-term portion of lease liabilities 18,130 20,344 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 17 Note 11: Taxes Presented below is reconciliation between the provision for income taxes and taxes determined by applying the statutory tax rate 20% to income before income taxes: Year ended 31 December 2024 Year ended 31 December 2023 Profit before income tax 421,148 365,507 Theoretical income tax expense at statutory rate (84,230) (73,101) (Increase)/decrease due to: Non-deductible expenses, net (9,300) (8,571) Income tax withheld at source on dividends for treasury shares (916) (1,026) Gain from purchase - 3,827 Deferred income tax expense as a result of change in tax rate (16,873) - Other (900) (373) Income tax expense (112,219) (79,244) 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. At 31 December 2024 no deferred tax liabilities have been recognised for taxable temporary differences of RR 93,004 million (2023: RR 84,575 million) on undistributed earnings of certain subsidiaries. These earnings have been and will continue to be reinvested. The Group falls within the scope of the Pillar Two model rules published by the OECD. Legislation implemen ting the Pillar Two model rules has been enacted in the jurisdictions in which certain subsidiaries are registered and operate. The Group estimates that the impact of the Pillar Two legislation will not have a material impact on the Group's income tax expense, as the effective tax rates for these subsidiaries are mostly in excess of 15%. Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities recognised for consolidated financial reporting purposes and such amounts recognised for statutory tax purposes. Deferred tax assets/(liabilities) are comprised of the following: At 31 December 2024 At 31 December 2023 Tax loss carry forward 1,984 859 Decommissioning provision 7,209 6,215 Lease liabilities 5,532 5,031 Prepaid expenses and other current assets and liabilities 7,472 4,884 Long-term loans and certificates of deposits 7,030 1,730 Other 1,644 3,227 Deferred income tax assets 30,871 21,946 Property, plant and equipment (96,220) (64,033) Right-of-use assets (5,747) (5,506) Inventories (3,702) (1,232) Prepaid expenses and other current assets (5,115) (3,271) Debt (2,149) (1,792) Other liabilities (4,819) (210) Deferred income tax liabilities (117,752) (76,044) Net deferred tax liability (86,881) (54,098) Deferred income taxes are reflected in the consolidated statement of financial position as follows: At 31 December 2024 At 31 December 2023 Deferred income tax asset 18,778 7,332 Deferred income tax liability (105,659) (61,430) Net deferred tax liability (86,881) (54,098) TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 18 Note 11: Taxes (continued) The Group is subject to a number of taxes other than income taxes, which are detailed as follows: Year ended 31 December 2024 Year ended 31 December 2023 Mineral extraction tax 583,082 494,071 Tax on additional income from hydrocarbon extraction 163,393 122,649 Excise (162,451) (176,020) incl. reverse excise (318,501) (279,004) Property tax 15,731 14,809 Other 2,336 2,505 Total taxes, other than income taxes 602,091 458,014 Taxes payable, other than income taxes were as follows: At 31 December 2024 At 31 December 2023 Mineral extraction tax 49,583 54,952 Tax on additional income from hydrocarbon extraction 28,470 46,611 Value Added Tax 29,117 21,170 Excise 12,321 8,979 Export duties - 311 Property tax 4,225 3,966 Other 5,319 5,885 Total taxes payable, other than income taxes 129,035 141,874 Note 12: Debt At 31 December 2024 At 31 December 2023 Short-term debt Subordinated debt 23 22 Debt securities issued 1,869 3,399 Other debt 224 447 Total short-term debt 2,116 3,868 Сurrent portion of long-term debt 1,083 941 Total short-term debt, including current portion of long- term debt 3,199 4,809 Long-term debt Promissory notes issued 5 9,391 Other debt 11,162 9,598 Total long-term debt 11,167 18,989 Less: current portion of long-term debt (1,083) (941) Total long-term debt, net of current portion 10,084 18,048 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 19 Note 13: Accounts payable and accrued liabilities At 31 December 2024 At 31 December 2023 Trade payables 102,090 87,445 Current portion of lease liabilities 3,997 4,810 Other payables 636 6,344 Total financial liabilities within trade and other payables 106,723 98,599 Salaries and wages payable 13,696 16,725 Advances received from customers 29,432 31,779 Current portion of decommissioning provisions (Note 9) 93 305 Other accounts payable and accrued liabilities 13,258 13,124 Total non-financial liabilities 56,479 61,933 Accounts payable and accrued liabilities 163,202 160,532 In 2024, revenue in the amount of RR 31,779 million was recognised in relation to contractual obligations as of 1 January 2024, which related to advances received. In 2023, revenue in the amount of RR 21,118 million was recognised in relation to contractual obligations as of 1 January 2023, which related to advances received. Note 14: Financial services: Due to banks and the Bank of Russia At 31 December 2024 At 31 December 2023 Term deposits from banks 12,087 3,506 Term deposits from the Bank of Russia 12,825 4,709 REPO 12,831 22,347 Correspondent accounts and banks’ overnight deposits 379 189 Total due to banks and the Bank of Russia 38,122 30,751 Less: long term due to banks and the Bank of Russia (1,184) (3,737) Total short term of due to banks and the Bank of Russia 36,938 27,014 There is a certain concentration of sources of financing in the Group's financial services segment. As at 31 December 2024 within due to banks and the Bank of Russia there are RR 38,122 million of correspondent accounts and term deposits borrowed from the Bank of Russia and 5 Russian banks which individually exceeded 5% of the segment equity. As at 31 December 2023 within due to banks and the Bank of Russia there are RR 30,557 million of correspondent accounts and term deposits, borrowed from the Bank of Russia and 3 Russian banks which individually exceeded 5% of the segment equity. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 20 Note 15: Financial services: Customer accounts At 31 December 2024 At 31 December 2023 State and public organizations Current / settlement accounts 2,373 2,464 Term deposits 1,074 709 Other legal entities Current / settlement accounts 14,039 13,272 Term deposits 81,867 91,275 Individuals Current / settlement accounts 21,127 21,727 Term deposits 85,774 74,132 Total customer accounts 206,254 203,579 Less: long-term customer accounts (1,127) (1,531) Total short-term customer accounts 205,127 202,048 There is a certain concentration of sources of financing in the Group's financial services segment. Within customer accounts at 31 December 2024 and 2023 there are RR 69,091 million and RR 78,275 million of current/settlement accounts and term deposits from 25 and 34 customers respectively, which individually exceeded 5% of the segment equity. Risk concentrations by customer industry within customer accounts are as follows: At 31 December 2024 At 31 December 2023 Carrying value Share in customer loan portfolio, % Carrying value Share in customer loan portfolio, % Individuals 106,901 51.83% 95,859 47.09% Finance 31,522 15.28% 30,516 14.99% Oil and gas 3,243 1.57% 16,887 8.30% Trade 18,890 9.16% 20,993 10.31% Services 16,603 8.05% 17,043 8.37% Manufacturing 21,637 10.49% 14,634 7.19% Construction 4,626 2.24% 3,501 1.72% Other 2,832 1.38% 4,146 2.03% Total customer accounts 206,254 100% 203,579 100% Note 16: Other long-term liabilities Other long-term liabilities are as follows: At 31 December 2024 At 31 December 2023 Pension and other long-term liabilities to employees and retirees 3,066 3,037 Government grants 38,361 35,762 Long-term employee incentives program (Note 18) 1,622 444 Other long-term liabilities 1,850 987 Total other long-term liabilities 44,899 40,230 Pension liabilities. The Group has various pension plans offered to all employees. The amount of contributions, frequency of benefit payments and other conditions of these plans are regulated by the “Statement of Organization of Corporate Non-Governmental Pension Benefits for PJSC Tatneft Employees”, similar provisions of controlled subsidiaries and agreements arranged between the Company and the JSC “National Non-Governmental Pension Fund”. In accordance with the terms of the agreements the Group is committed to make certain contributions on favor of its employees, the aggregated amount of savings guarantees the payment of a non-state pension in an amount not lower than the minimum amount provided by pension agreements. The amount of contributions and non -state pensions depends on the amount of contributions chosen by the employee and the achievement of the target indicators of the companies. In accordance with the provisions of collective agreements concluded on an annual basis between the Company or its subsidiaries and their employees, the Group is obliged to pay other certain post-employment benefits to employees upon completion of their employment with the Company or its controlled subsidiaries. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 21 Note 16: Other long-term liabilities (continued) Government grants. The Group received grants from the Republic of Tatarstan for the creation, modernization and reconstruction of energy facilities, processing capacity and infrastructure. Long-term employee incentives program. According to the Tatneft Group long-term employee incentives program for key employees the benefits are based on the change in the Company share price during a five-year cycle. In accordance with the terms of the program, 14 million shares are “conditionally” assigned to the management and directors of the Company, based on which, at the end of the cycle, remuneration is paid on the amount of the positive difference in the average annual price of an ordinary share of PJSC Tatneft for the fifth year of the five-year cycle and the year adopted as a base. Payments are made in cash. Receipt of payouts is contingent upon meeting the required service period, certain performance metrics and an increase in the value of shares. The fair value of the Program was determined as RR 250.2 per share in accordance with the Black-Scholes option pricing model. The fair value was calculated using the spot price of the Company's shares at the end of 202 4 in the amount of RR 682, the exercise price of the option in the amount of RR 405.68, an expected dividend yield of 11.4% per annum, the risk-free interest rate equal to 17.5% per annum, the term until the maturity of the program, and the volatility of the return on the underlying asset equal to 28.0%. The expected volatility was determined based on the historical volatility of the Company's shares. Note 17: Shareholders’ equity Authorised share capital. As at 31 December 2024 and 2023 the authorised, issued and paid share capital of PJSC Tatneft consists of 2,178,690,700 voting common shares and 147,508,500 non-voting preferred shares; both classes of shares have a nominal value of RR 1.00 per share. The nominal value of authorised share capital differs from it carrying value due to effect of the hyperinflation on capital contributions made before 2003. As at 31 December 2024 and 2023 treasury shares include 75.6 million ordinary shares of the Company owned by wholly-owned subsidiaries of the Group. Golden share. Republic of Tatarstan holds a “Golden Share” – a special governmental right – in the PJSC Tatneft company. The exercise of its powers under the Golden Share enables the Tatarstan government to appoint one representative to the Board of Directors and Revision Commission of the Company and to veto certain major decisions, including those relating to changes in the share capital, amendments to the Charter, liquidation or reorganization and “major” and “interested party” transactions as defined un der Russian law. The Golden Share currently has an indefinite term. Rights attributable to preferred shares. Unless a different amount is approved at the annual shareholders meeting, preferred shares earn dividends equal to their nominal value. The amount of a dividend for a preferred share may not be less than the amount of a dividend for a common share. Preferred shareholders may vote at meetings only on the following decisions: • the amendment of the dividends payable per preferred share; • the issuance of additional shares with rights greater than the current rights of preferred shareholders; and • the liquidation or reorganization of the Company. The decisions listed above can be made only if approved by 75% of preferred shareholders. Holders of preferred shares acquire the same voting rights as holders of common shares in the event that preferred dividends are either not declared, or declared but not paid. On liquidation, the shareholders are entitled to receive a distribution of net assets. Under Russian Joint Stock Companies Law and the Company’s charter in case of liquidation, preferred shareholders have priority over shareholders holding common shares in respect of declared but unpaid dividends on preferred shares and the liquidation value of preferred shares, if any. Amounts available for distribution to shareholders. The source of payment of dividends is the Company's net profit for the reporting period, determined based on the Company’s non -consolidated statutory accounts prepared in accordance with RAR, which differ significantly from IFRS Accounting Standards financial statements. When determining the dividend amount (per share) recommended to the General Meeting of Shareholders, the decision of PJSC Tatneft’s Board of Directors is based on the amount of net profit under RAR or IFRS Accounting Standards, depending on the availability of published accounting and consolidated financial statements for the relevant period, and assuming that the target level of the total funds allocated for dividends payment accounts for least 50% of the net profit amount determined by RAR or IFRS Accounting Standards, whichever is greater. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 22 Note 17: Shareholders’ equity (continued) In December 2024, the shareholders of the Company approved the payment of interim dividends for the nine months ended 30 September 2024, in the amount of RR 55.59 per preferred and ordinary share, including previously paid interim dividends for the six months ended 30 June 2024, in the amount of RR 38.2 per preferred and ordinary share. In September 2024, the shareholders of the Company approved the payment of interim dividends for the six month ended 30 June 2024 in the amount of RR 38.2 per each preferred and ordinary share. In June 2024, the shareholders of the Company approved the payment of dividends for the year ended 31 December 2023 in the amount of RR 87.88 per each preferred and ordinary share, including the previously approved interim dividends for the six and nine months of 2023 in the amount of RR 62.71 per each preferred and ordinary share. In December 2023, the shareholders of the Company approved the payment of interim dividends for the nine months ended 30 September 2023, in the amount of RR 62.71 per preferred and ordinary share, including previously paid interim dividends for the six months ended 30 June 2023, in the amount of RR 27.54 per preferred and ordinary share. In September 2023, the shareholders of the Company approved the payment of interim dividends for the six months ended 30 June 2023 in the amount of RR 27.54 per preferred and ordinary share. In June 2023, the shareholders of the Company approved dividends for the year ended 31 December 2022, in the amount of RR 67.28 per preferred and ordinary share, including previously paid interim dividends for the six and nine months of 2022, in the amount of RR 39.57 per preferred and ordinary share. Earnings per share. Preferred shares are not redeemable and are considered to be participating shares. Basic and diluted earnings per share are calculated by dividing profit or loss attributable to ordinary and preferred shareholders by the weighted average number of ordinary and preferred shares outstanding during the period. Profit or loss attributed to equity holders is reduced by the amount of dividends declared in the current period for each class of shares. The remaining profit or loss is allocated ordinary and preferred shares to the extent that each class may have share in earnings if all the earnings for the period had been distributed. Treasury shares are excluded from calculations. The total earnings allocated to each class of shares are determined by adding together the amount allocated for dividends and the amount unallocated for now. Year ended 31 December 2024 Year ended 31 December 2023 Profit attributable to shareholders of PJSC Tatneft 306,140 287,921 Ordinary share dividends (169,844) (190,159) Preferred share dividends (11,913) (13,338) Income available to shareholders of PJSC Tatneft, net of dividends 124,383 84,424 Basic and diluted: Weighted average number of shares outstanding (millions of shares): Ordinary 2,103 2,103 Preferred 148 148 Combined weighted average number of ordinary and preferred shares outstanding (millions of shares) 2,251 2,251 Basic and diluted earnings per share (RR) Ordinary 136.03 127.93 Preferred 136.03 127.93 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 23 Note 18: Employee benefit expenses Year ended 31 December 2024 Year ended 31 December 2023 Wages and salaries 94,025 81,628 Statutory insurance contributions 27,188 23,310 Provision for long term employee incentives program compensations (Note 16) 1,178 444 Pension costs – defined benefit plans 416 338 Other employee benefits 3,437 3,242 Total employee benefit expense 126,244 108,962 Employee benefit expenses are included in operating expenses, selling, general and administrative expenses and maintenance of social infrastructure and transfer of social assets, other expenses, operating expenses from financial services. Note 19: Interest expense (excluding financial services) Year ended 31 December 2024 Year ended 31 December 2023 Loans and borrowings 1,368 614 Unwinding of discount of decommissioning provisions 3,505 4,813 Interest expenses on lease liabilities 2,488 1,634 Unwinding of discount on long-term financial liabilities 749 688 Discount on long-term financial assets 11,942 13,276 Total interest expense (excluding financial services) 20,052 21,025 Note 20: Interest and commission income and expense from financial services Year ended 31 December: 2024 2023 Interest income 42,422 24,593 Loans to customers 33,199 18,868 Other 9,223 5,725 Fee and commission income 3,686 3,701 Settlement transactions 2,178 2,211 Other 1,508 1,490 Total interest and commission income from financial services 46,108 28,294 Interest expense (32,104) (14,308) Term deposits (25,514) (11,448) Other (6,590) (2,860) Fee and commission expense (2,074) (1,654) Settlement transactions (1,890) (1,554) Other (184) (100) Total interest and commission expense from financial services (34,178) (15,962) TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 24 Note 21: Segment information Operating segments are components that engage in business activities that may earn revenues or incur expenses, whose operating results are regularly reviewed by the Board of Directors and the Management Committee and for which discrete financial information is available. Segments whose revenue, result or assets are 10% or more of all the segments are reported separately. The Group’s business activities are conducted predominantly through four main operating segments: • Exploration and production consists of exploration, development, extraction and sale of own crude oil. Intersegment sales consist of transfer of crude oil to refinery and other goods and services provided to other operating segments; • Refining and marketing comprises purchases and sales of crude oil and refined products from third parties, own refining activities and retailing operations; • The tire business segment includes the production and sale of tires by companies acquired through business combinations in the 1st quarter of 2023 (Note 24) ; • Financial services. The Group evaluates performance of its reportable operating segments and allocates resources based on segment earnings, defined as profit before income tax not including interest income and expense (excluding financial services), gains from equity investments, other income (expenses). Intersegment sales are at prices that approximate market. The Group uses an export netback calculated based on average Urals quotes less freight and transportation costs to calculate the cost of its own oil for refining. The Group financing including interest expense and interest income (excluding financial services) and income taxes are managed on a Group basis and are not allocated to operating segments. For the year ended 31 December 2024, revenues of RR 255,912 million or 12% of the Group’s total revenues are derived from one external customer. For the year ended 31 December 2023, revenues of RR 181,052 million or 11% of the Group’s total revenues are derived from one external customer. These revenues represent sales of crude oil and are attributable to the exploration and production segment. Management does not believe the Group is dependent on any particular customer. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 25 Note 21: Segment information (continued) Revenue Year ended 31 December 2024 Year ended 31 December 2023 Exploration and production Domestic sales of own crude oil 289,973 239,377 Own crude oil sales to far abroad countries 382,192 338,062 Other 9,117 9,278 Intersegment sales 538,037 448,277 Total exploration and production 1,219,319 1,034,994 Refining and marketing Domestic sales Refined products 647,728 573,094 Total Domestic sales 647,728 573,094 Near abroad countries sales Refined products 27,843 18,709 Total near abroad countries sales 27,843 18,709 Far abroad countries sales Crude oil purchased for resale 466 - Refined products 509,641 300,902 Total far abroad countries sales 510,107 300,902 Other 32,567 24,418 Intersegment sales 6,759 6,843 Total refining and marketing 1,225,004 923,966 Tires business Tires – domestic sales 49,108 20,631 Tires – near abroad countries sales 2,953 1,684 Other 1,458 234 Intersegment sales 20 13 Total tires business 53,539 22,562 Financial services Interest income 42,422 24,593 Fee and commission income 3,686 3,701 Total financial services 46,108 28,294 Total segment revenue 2,543,970 2,009,816 Sales of segments that are not reportable 77,325 62,693 Elimination of intersegment sales (544,816) (455,133) Total revenue 2,076,479 1,617,376 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 26 Note 21: Segment information (continued) Segments result Year ended 31 December 2024 Year ended 31 December 2023 Exploration and production 310,243 219,453 Refining and marketing 139,148 170,589 Tires business 10,192 14,212 Financial services 9,743 (6,076) Segments result 469,326 398,178 Segments that are not reportable (44,145) (24,408) Other expenses, net (w/o foreign exchange differences) (4,033) (8,263) Profit before income tax 421,148 365,507 "Segments that are not reportable" line includes impairment losses on financial assets net of reversal, impairment losses and losses on disposal on property, plant and equipment and other non-financial assets, profit/(loss) on exchange rate differences at the Head Office, charity expenses, maintenance of social infrastructure and transfer of social assets, Head Office administrative expenses. The result of the tire business for the year ended 31 December 2023 includes gain from purchase (Note 24). Segment assets At 31 December 2024 At 31 December 2023 Exploration and production 602,924 593,254 Refining and marketing 843,912 784,760 Tires business 94,255 82,421 Financial services 302,749 303,800 Segments that are not reportable 361,069 280,938 Total assets 2,204,909 2,045,173 As at 31 December 2024 assets of segments that are not reportable include RR 175,881 million of property, plant and equipment, RR 26,053 million of securities, RR 4,782 million loans receivable, RR 60,669 million of bank deposits, RR 3,206 million of cash, RR 26,781 million of inventories. As at 31 December 2023 assets of segments that are not reportable include RR 137,400 million of property, plant and equipment, RR 26,336 million of securities, RR 4,354 million loans receivable, RR 32,489 million of bank deposits, RR 4,848 million of cash, RR 22,339 million of inventories. The Group’s assets and operations are primarily located and conducted in the Russian Federation. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 27 Note 21: Segment information (continued) Segment depreciation, depletion and amortisation and additions to property, plant and equipment Year ended 31 December 2024 Year ended 31 December 2023 Depreciation, depletion and amortization Exploration and production 25,512 30,669 Refining and marketing 29,484 22,782 Tires business 3,052 2,898 Financial services 386 564 Segments that are not reportable 3,804 3,734 Total depreciation, depletion and amortization 62,238 60,647 Additions to property, plant and equipment Exploration and production 78,325 107,686 Refining and marketing 53,582 90,318 Tires business 3,308 28,399 Financial services 112 348 Segments that are not reportable 38,812 39,903 Total additions to property, plant and equipment 174,139 266,654 Additions to property, plant and equipment of tires business for the year ended 31 December 2023 resulted from the acquisition of the business (Note 24). Note 22: Related party transactions Parties are generally considered to be related if the parties are under common control or if one party has the ability to control the other party or can exercise significant influence or joint control over the other party in making financial and operational decisions. In considering each possible related party relationship, attention is directed to the substance of the relationship, not merely the legal form. In the normal course of business Group enters into operations with associates, joint ventures, government related companies, key management personnel and other related parties. These transactions include sales and purchases of refined products, purchases of electricity, transportation services and financial services. The Group enters into transactions with related parties based on market or regulated prices, except for loans to associates, the rates of which may be determined taking into account the agreements of the shareholders of the relevant companies. Associates, joint ventures and other related parties The amounts of transactions for each period with associates, joint ventures and other related parties are as follows: Year ended 31 December 2024 Year ended 31 December 2023 Revenues and income 699 457 Costs and expenses 1,349 1,363 Interest expenses (Note 19,20) 14,653 3,233 The outstanding balances with associates, joint ventures and other related parties were as follows: At 31 December 2024 At 31 December 2023 Short-term assets 19,188 19,065 Loans 18,128 17,414 Other 1,060 1,651 Long-term assets 31,203 24,633 Loans 19,934 15,656 Other 11,269 8,977 Short-term liabilities (3,816) (2,659) TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 28 Note 22: Related party transactions (continued) Government related companies The amounts of transactions for each period with Government related companies are as follows: Year ended 31 December 2024 Year ended 31 December 2023 Sales of crude oil - 17,333 Sales of refined products 48,836 40,043 Other sales 14,064 4,961 Interest income 15,612 11,037 Interest expense 2,410 5,399 Purchases of refined products and natural gas 14,515 18,436 Purchases of electricity 26,753 25,917 Purchases of transportation and compounding services 40,535 35,127 Other purchases 11,688 5,687 The outstanding balances with Government related companies were as follows: At 31 December 2024 At 31 December 2023 Assets Cash and cash equivalents 47,435 28,733 Financial services: Mandatory reserve deposits with the Bank of Russia 997 903 Accounts receivable 15,488 4,312 Financial services: Loans to customers 3,887 3,192 Other short-term financial assets Securities measured at amortised cost 3,717 5,584 Other 3,528 4,256 Prepaid expenses and other current assets 6,506 4,852 Total short-term assets 81,558 51,832 Financial services: Loans to customers 2,813 3,281 Accounts receivable 9,362 8,841 Other long-term financial assets Securities measured at fair value through other comprehensive income 39,527 40,863 Securities measured at amortised cost 8,422 13,059 Advances for the acquisition of non-current assets 5,588 7,771 Total long-term assets 65,712 73,815 Liabilities Accounts payable and accrued liabilities (4,259) (5,531) Financial services: Due to banks and the Bank of Russia (19,655) (1,014) Financial services: Customer accounts (6,610) (2,062) Debt (13) (50) Total short-term liabilities (30,537) (8,657) Financial services: Due to banks and the Bank of Russia (1,184) (3,737) Government grants (Note 16) (38,361) (35,762) Other long-term liabilities (478) (373) Total long-term liabilities (40,023) (39,872) As at 31 December 2024 guarantees issued to government related parties amounted to RR 5,461 million (at 31 December 2023: RR 5,959 million). TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 29 Note 22: Related party transactions (continued) Key management personnel The key management personnel of the Group include members of the Board of Directors and the Management Board of PJSC Tatneft. For the years ended 31 December 2024 and 2023 total remuneration, including pension cost, for key management personnel was RR 2,040 million and RR 1,826 million, respectively. At 31 December 2024 and 2023 the Group’s key management personnel accounts in the customer accounts amounted to RR 19,370 million and RR 19,068 million, respectively. At 31 December 2024 and 2023 the liability was recognized for the services provided by the key management personnel of the Group in accordance with the long-term incentive program for executive employees, long-term in the amount of RR 554 million and RR 120 million respectively (Note 16) , short-term in the amount of RR 156 million and RR 330 million respectively. Note 23: Contingencies and commitments Operating Environment of the Group The economy of the Russian Federation displays certain characteristics of an emerging market. It is particularly sensitive to oil and gas prices. The legal, tax and regulatory frameworks continue to develop and are subject to frequent changes and varying interpretations. Continued political tension in the region, as well as sanctions imposed by a number of countries against certain sectors of the Russian economy, Russian companies and citizens, continue to have a negative impact on the Russian economy. Ban imposed in 2022 by a number of countries on new investments by citizens and legal entities of such countries in the energy industry of Russia, as well as on the supply of certain nomenclatures of goods, equipment and a number of technologies continues. Since December 2022, some countries, including EU countries, have banned their citizens and legal entities from importing Russian oil, as well as from providing brokerage, transport, insurance and other services in relation to Russian oil transported by tankers and sold at a price above the price threshold set by these countries. In February 2023, similar restrictive measures came into force for Russian oil products. In June 2024, the United States imposed sanctions on the Moscow Exchange, as well as the National Clearing Center and the National Settlement Depository that are part of its group. In this regard, from June 2024, trading in dollars and euro s, as well as instruments that involve the use of these currencies in settlements, were suspended on the Moscow Exchange. At the same time, transactions with the US dollar and euro continue to be conducted on the over-the-counter market. In January 2025, the United States imposed new large-scale sanctions against the Russian energy sector. Further restrictions on the foreign business activities of Russian organizations, as well as further negative consequences for the Russian economy as a whole, cannot be ruled out, but it is not possible to fully assess the duration, extent and scale of possible consequences. The Group is characterized by a low level of debt and, although the current uncertainty may affect the Group's future profitability and cash flows in the near future, management believes this will not affect the Group's ability to continue as a going concern and meet its obligations for the foreseeable future. The Group's management takes the necessary measures to ensure its sustainable operation. However, the future impact of the current economic and geopolitical situation is difficult to predict and the Group's management's current expectations and estimates may differ from actual results. Capital commitments. As at 31 December 2024 and 2023 the Group has approximate outstanding capital commitments of RR 125,812 million and RR 112,886 million, respectively, mainly for the construction of the TANECO refinery complex, construction of wells and oil fields facilities, replacement of pipelines, construction and development of petrochemical business. These commitments are expected to be paid between 2025 and 2027. Management believes the Group’s current and long -term capital expenditures program can be funded through cash flows generated from existing operations as well as lines of credit available to the Company or issuance of debt instruments. Management believes the Group has the ability to obtain financings as needed to continue funding the own projects, refinance any maturing debts as well as finance business acquisitions and other transactions that may arise in the future. Credit related commitments. The credit related commitments comprise loan commitments, letters of credit and guarantees. The contractual commitments represent the value at risk should the contract be fully drawn upon, the client defaults, and the value of any existing collateral becomes worthless. In general, certain part of Group's letters of credit are collateralised with cash deposits or collateral pledged to the Group and accordingly the Group normally assumes minimal risk. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 30 Note 23: Contingencies and commitments (continued) Outstanding credit related commitments are as follows: At 31 December 2024 At 31 December 2023 Undrawn credit lines that are irrevocable or are revocable only in response to a material adverse change 56,947 47,823 Unused limits on the issuance of guarantees 43,252 28,742 Guarantees issued 48,884 36,822 Letters of credit 2,065 58 Less: allowance for credit related commitment (397) (431) Less: commitments collateralised by cash deposits under guarantees issued (43) (63) Less: commitments collateralised by cash deposits under Letters of credit (2,065) (58) Total credit related commitments 148,643 112,893 Taxation. The Russian tax legislation is subject to varying interpretations and changes which can occur frequently. Management’s interpretation of the legislation, as applied to the transactions and activities, may be challenged by the tax authorities. The tax authorities may take a different position in their interpretation of the legislation, and it is possible that transactions and activities that have not been challenged in the past may be challenged. This legislation allows tax authorities to assess additional taxes for controllable transactions (transactions between related parties and certain transactions between unrelated parties) if such transactions are not on an arm's length basis and this leads to decrease of the amount of tax payable to the Russian budget, or increase of the amount of loss determined in accordance with Chapter 25 of the Russian Tax Code, unless otherwise is provided by the mutual agreement procedures in accordance with the international taxation treaty concluded by the Russian Federation. The Management has implemented internal controls to comply with current TP legislation. Tax liabilities arising from intercompany transactions are determined using actual transaction prices. It is possible, with the evolution of the interpretation of the transfer pricing rules, that such prices could be challenged. The impact of any such challenge cannot be reliably estimated; however, it may be significant to the financial position and/or the Company's operations. Management believes that its pricing policy is arm’s length and it has implemented internal processes to be in compliance with the new transfer pricing legislation. Environmental contingencies. The Group, through its predecessor entities, has operated in Tatarstan for many years without developed environmental laws, regulations and the Group’s policies. Environmental regulations and their enforcement are currently being considered in the Russian Federation and the Group is monitoring its potential obligations related thereto. The outcome of environmental liabilities under proposed or any future environmental legislation cannot reasonably be estimated at present, but could be material. The Group has analysed its exposure to climatic and other emerging business risks, but has not identified any risks that could affect the financial results or the position of the Group at the reporting date. Under existing legislation, however, management believes that there are no probable liabilities, which would have a material adverse effect on the operating results or financial position of the Group. In addition, the Group is introducing and applying best health, safety and environmental protection practices and standards which might go beyond any existing and potential legal requirements in the Russian Federation. Legal contingencies. The Group is subject to various lawsuits and claims arising in the ordinary course of business. The outcomes of such contingencies, lawsuits or other proceedings cannot be determined at present. In the case of all known contingencies the Group accrues a liability when the loss is probable and the amount is reasonably estimable. Based on currently available information, management believes that it is remote that future costs related to known contingent liability exposures would have a material adverse impact on the Group’s consolidated financial statements. Social commitments. The Group contributes significantly to the maintenance of local infrastructure and the welfare of its employees within Tatarstan, which includes contributions towards the construction, development and maintenance of housing, hospitals and transport services, recreation and other social needs. Such funding is periodically determined by the Board of Directors after consultation with governmental authorities and recorded as expenditures when incurred. Transportation of crude oil. The Group transports substantially all of the crude oil that it sells in export and local markets through trunk pipelines in Russia that are controlled by PJSC Transneft, the state-owned monopoly owner and operator of Russia’s trunk crude oil pipelines. The Group’s crude oil is blended in the Transneft pipeline system with other crude oil of varying qualities to produce an export blend commonly referred to as Urals. There is currently no equalization scheme for differences in crude oil quality within the Transneft pipeline system and the implementation of any such scheme or the impact of it on the Group’s business is not currently determinable. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 31 Note 24: Business combinations In 1st quarter of 2023, the Group acquired the Russian tire business of the Finnish company Nokian Tyres plc, including a plant in the city of Vsevolozhsk, Leningrad Region, by purchasing shares in Nokian Tyres LLC, Nokian Shina LLC, Hakka Invest LLC (renamed to Ikon Tyres LLC, Ikon Shina LLC, Ikon Invest LLC in 2nd quarter 2023) and obtained control becoming the sole participant of these entities. The purchase price amounted RR 23,050 million and the cash consideration was fully paid in 1st quarter 2023. The consideration paid by the Group was based on the results of the evaluation of the business value of the acquired entities, taking into account the total allowable transaction price determined by the Government Commission of the Russian Federation for the Control of Foreign Investments. Details of assessment of the fair value of acquired assets and liabilities performed by the Group are as follows: Fair value Cash and cash equivalents 6,998 Property, plant and equipment 13,632 Inventories 8,387 Accounts receivable and advances issued 17,461 Deferred tax assets 978 Other assets 581 Trade and other payables (3,677) Deferred tax liabilities (62) Other liabilities (2,137) Fair value of identifiable net assets of subsidiaries 42,161 Gain from purchase (19,111) Total purchase consideration 23,050 Сash and cash equivalents of subsidiaries acquired (6,998) Net cash flow from acquisition of subsidiaries 16,052 For the period from the acquisition date to 31 December 2023 the acquired business accounted for RR 20,836 million in the Group's revenue and RR 4,559 million in profit. Gain from purchase is presented in other operating (expenses) /income, net of the consolidated statement of profit or loss and other comprehensive income. In 2nd quarter 2023, as part of expanding sales markets, the Group acquired shares of the Turkish company Aytemiz Akaryakıt Dağıtım A.Ş. and obtained control becoming the sole participant of this entity. The purchase price amounted RR 27,326 million and the cash consideration was fully paid in 2nd quarter 2023. The consideration paid by the Group was based on the results of the evaluation of the business value of the acquired entity. Details of assessment of the fair value of acquired assets and liabilities performed by the Group are as follows: Fair value Cash and cash equivalents 6,739 Property, plant and equipment 10,144 Intangible assets 10,013 Right-of-use assets 2,877 Inventories 3,980 Accounts receivable and advances issued 4,370 Deferred tax assets 779 Other assets 2,264 Debt (5,163) Trade and other payables (8,529) Deferred tax liabilities (3,731) Other liabilities (1,510) Fair value of identifiable net assets of subsidiary 22,233 Goodwill related to the acquisition 5,093 Total purchase consideration 27,326 Сash and cash equivalents of subsidiary acquired (6,739) Net cash flow from acquisition of subsidiary 20,587 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 32 Note 24: Business combinations (continued) For the period from the acquisition date to 31 December 2023 the acquired business accounted for RR 137,846 million in the Group's revenue and RR 1,597 million in profit. In addition, in the 1st quarter of 2023, the Group acquired the tire business in the Republic of Uzbekistan by purchasing a share in Birinchi Rezinotexnika Zavodi LLC from third parties and obtained control becoming the sole participant of this entity. Note 25: Intangible assets Intangible assets include a subsidiary's trademark with an indefinite useful life of RR 8,709 million, as well as contracts with customers of RR 4,293 million, the term of which expires primarily in the period 2025-2028. The trademark relates to a CGU to which goodwill has been allocated, information on impairment testing is presented in Note 26 (no impairment to a CGU was identified) . Note 26: Other non-current assets Other non-current assets are presented below: At 31 December 2024 At 31 December 2023 Goodwill 11,943 9,992 Advances for the acquisition of non-current assets 5,322 7,731 Other 3,953 4,602 Total other non-current assets 21,218 22,325 Movements in goodwill are as follows: 2024 2023 Gross book value at 1 January 9,992 4,504 Accumulated impairment losses as at 1 January - - Carrying amount at 1 January 9,992 4,504 Change 1,951 5,488 Gross book value at 31 December 13,863 9,992 Accumulated impairment losses as at 31 December (1,920) - Carrying amount at 31 December 11,943 9,992 For the purposes of impairment testing of goodwill allocated to a foreign subsidiary, the recoverable amount of the CGU was determined based on a value in use calculation. These calculations used cash flow projections based on financial budgets approved by management for a five-year period. Cash flows beyond the five-year period were extrapolated using projected growth rates. The growth rates do not exceed the long-term average growth rates projected for the industry and jurisdiction in which the CGU operates. The discount rate was determined based on the weighted average cost of capital, taking into account the inherent risks, and amounted to 31.4% for the projection period (21.4% for the terminal period). TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 33 Note 27: Financial risk management Financial risk management objectives and policies. The Group’s activities expose it to a variety of financial risks: market risk (including foreign currency risk, interest rate risk), credit risk and liquidity risk. The Group ’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group ’s financial performance. The Group has introduced a risk management system and developed a number of procedures to measure, assess and monitor risks and select the relevant risk management techniques. Market risk Market risk is the risk or uncertainty arising from possible market price movements and their impact on the future performance of a business. The Group takes on exposure to market risks. Market risks arise from open positions in (a) foreign currencies, (b) interest rate risk and (c) financial instruments price risk. a) Currency risk The Group operates internationally and is exposed to currency risk due to fluctuations in exchange rates. Foreign exchange risk arises from assets, liabilities, commercial transactions and financing denominated in foreign currencies. The table below summarises the Group’s exposure to foreign currency exchange rate risk as at 31 December 2024: Russian Ruble US Dollar Chinese yuan Other currencies Financial assets Cash and cash equivalents 68,423 1,664 27,878 19,489 Financial services: Mandatory reserves with the Bank of Russia 997 - - - Accounts receivable 125,557 80,068 - 20,661 Financial services: Loans to customers 186,327 930 9,290 5 Other financial assets 109,537 14,408 3,969 6,543 Total financial assets 490,841 97,070 41,137 46,698 Financial liabilities Trade and other financial payables 87,170 5,520 1,351 12,682 Dividends payable 104,851 - - - Lease obligations, net of current portion 6,363 10,946 - 821 Financial services: Other financial liabilities at FVTPL 19,197 - - - Debt 1,552 11,126 - 605 Financial services: Due to banks and the Bank of Russia 34,919 73 3,118 12 Financial services: Customer accounts 190,266 6,763 6,537 2,688 Total financial liabilities 444,318 34,428 11,006 16,808 Net balance sheet position 46,523 62,642 30,131 29,890 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 34 Note 27: Financial risk management (continued) The table below summarises the Group’s exposure to foreign currency exchange rate risk as at 31 December 2023. Russian Ruble US Dollar Chinese yuan Other currencies Financial assets Cash and cash equivalents 52,656 1,410 16,497 13,552 Financial services: Mandatory reserves with the Bank of Russia 903 - - - Accounts receivable 90,319 128,847 - 10,178 Financial services: Loans to customers 177,996 1,320 8,136 2,941 Other financial assets 111,926 11,970 14,501 2,986 Total financial assets 433,800 143,547 39,134 29,657 Financial liabilities Trade and other financial payables 78,259 9,525 2,897 7,918 Dividends payable 119,137 - - - Lease obligations, net of current portion 7,461 12,154 - 729 Financial services: Other financial liabilities at FVTPL 14,983 - - - Debt 12,981 9,010 - 866 Financial services: Due to banks and the Bank of Russia 25,429 2 5,307 13 Financial services: Customer accounts 182,950 8,807 8,842 2,980 Total financial liabilities 441,200 39,498 17,046 12,506 Net balance sheet position (7,400) 104,049 22,088 17,151 For the year ended 31 December 2024 the Group recognised foreign exchange gain of RR 64,813 million and a foreign exchange loss of RR 52,692 million in the consolidated interim condensed statement of profit or loss and other comprehensive income on a net basis (for the year ended 31 December 2023: RR 74,206 million and RR 49,157 respectively). Gain and loss on foreign exchange differences were received mainly on receivables from operating activities from the sale of crude oil and refining products for export, as well as from the revaluation of cash in foreign currencies. Below is data on the sensitivity of the Group to an increase or decrease in the exchange rate of the US dollar and the Chinese yuan against the Russian Ruble: Year ended 31 December 2024 Year ended 31 December 2023 Impact on profit before tax Impact on equity Impact on profit before tax Impact on equity US Dollar strengthening by 20% 12,528 10,023 20,810 16,648 US Dollar weakening by 20% (12,528) (10,023) (20,810) (16,648) Chinese yuan strengthening by 20% 6,026 4,821 4,418 3,534 Chinese yuan weakening by 20% (6,026) (4,821) (4,418) (3,534) b) Interest rate risk. The Group takes on exposure to the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. Interest margins may increase as a result of such changes, but may reduce or create losses in the event that unexpected movements arise. Management monitors on a daily basis and sets limits on the level of mismatch of interest rate repricing that may be undertaken. Operations interest rate risk management (excluding financial services) The majority of the Group’s borrowings is at fixed interest rates. The Group’s treasury function performs periodic analysis of the interest rate environment. The Group does not have a formal policy of determining how much of the Group’s exposure should be to fixed or variable rates. However, the Group performs periodic analysis of the current interest rate environment and depending on that analysis at the time of raising new debts management makes decisions whether to obtain financing on fixed-rate or variable-rate basis would be more beneficial to the Group over the expected period until maturity. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 35 Note 27: Financial risk management (continued) Operations interest rate risk management from financial services Management of interest rate risk is performed through analysis of the structure of assets and liabilities by repricing dates. Interest rates that are contractually fixed on both assets and liabilities may be renegotiated before any new credit tranche is issued to reflect current market conditions. All new credit products and transactions are assessed in respect of interest rate risk upfront, prior to starting these transactions. Interest rate risk analysis on assets and liabilities of the Group The table below summarises the Group’s exposure to interest rate risks. The table presents the aggregated amounts of the Group’s financial assets and liabilities at carrying amounts, categorised by the earlier of contractual interest repricing or maturity dates: Demand and less than 1 month From 1 to 6 months From 6 to 12 months From 1 to 5 years More than 5 years Non-sensitive Total 31 December 2024 Total financial assets 168,445 41,816 67,037 86,681 43,987 267,780 675,746 Total financial liabilities 126,963 106,573 22,837 31,309 11,110 207,768 506,560 Net interest sensitivity gap 41,482 (64,757) 44,200 55,372 32,877 60,012 169,186 31 December 2023 Total financial assets 56,310 70,279 50,808 116,855 73,855 278,031 646,138 Total financial liabilities 113,236 105,933 18,292 46,911 12,887 212,991 510,250 Net interest sensitivity gap (56,926) (35,654) 32,516 69,944 60,968 65,040 135,888 The following table presents a sensitivity analysis of interest rate risk on financial assets and liabilities: Year ended 31 December 2024 Year ended 31 December 2023 Impact on profit before tax Impact on equity Impact on profit before tax Impact on equity Increase by 200 basis points 2,183 1,747 1,417 1,134 Decrease by 200 basis points (2,183) (1,747) (1,417) (1,134) TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 36 Note 27: Financial risk management (continued) c) Financial instruments price risk Financial instruments price risk is the risk that movements in market prices resulting from factors associated with an issuer of financial instruments (specific risk) and general changes in the market prices of financial instruments (general risk) will affect the fair value or future cash flows of a finan cial instrument and, as a result, the Group’s profitability. Financial instruments price risk for financial instruments held within the Group’s financial assets at fair value through profit or loss is managed: (a) through maintaining a diversified structure of portfolios; and (b) by setting position limits (i.e. limits restricting the total amount of an investment or maximum mismatch between respective assets and liabilities) as loss limits, sensitivity limits and potential losses under stress. In addition to these, the Group sets limits on the structure of securities portfolio, their liquidity, credit quality, and on a maximum duration of debt financial instruments. When necessary the Group establishes margin and collateral requirements. Financial instruments price risk is managed primarily through daily mark-to-market procedures, sensitivity analysis and control of limits established for various types of financial instruments. The Group assesses the price risk of equity instruments through sensitivity to a change in their fair value by 10%. For debt instruments, the Group assesses price risk by assessing the change in their fair value if interest rates increase by 100 bps. The assessment is made using the modified duration method taking into account convexity. According to the results of the assessment for financial assets at fair value through profit or loss and available -for- sale financial assets the price risk does not exceed RR 1 billion. Credit risk The Group exposes itself to credit risk, which is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to meet an obligation. Exposure to credit risk arises as a result of the Group’s lending and other transactions with counterparties, giving rise to financial assets and off-balance sheet credit-related commitments. The Group’s maximum exposure to credit risk is reflected in the carrying amounts of financial assets in the consolidated statement of financial position. For financial guarantees issued, commitments to extend credit, undrawn credit lines and export/import letters of credit, the maximum exposure to credit risk is the amount of the commitment (Note 23). The estimation of credit risk for risk management purposes is complex and involves the use of models, as the risk varies depending on market conditions, expected cash flows and the passage of time. The assessment of credit risk for a portfolio of assets entails further estimations of the likelihood of defaults occurring, the associated loss ratios and default correlations between counterparties. Expected credit loss (ECL) measurement. ECL is a probability-weighted estimate of the present value of future cash shortfalls (i.e., the weighted average of credit losses, with the respective risks of default occurring in a given time period used as weights). An ECL measurement is unbiased and is determined by evaluating a range of possible outcomes. ECL measurement is based on four components used by the Group: Probability of Default, Exposure at Default, Loss Given Default and Discount Rate. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 37 Note 27: Financial risk management (continued) Credit risk management. Management carefully manages its exposure to credit risk. An assessment is performed at each reporting date to identify a significant increase in credit risk since initial recognition of a financial instrument. Such assessment is performed on the basis of qualitative and quantitative information: • Quantitative assessment is performed on the basis of a change in risk of default arising over the expected lifetime of a financial asset. • Qualitative assessment implies that a number of factors are important for assessing significant increase in credit risk (restructuring indicative of problems, establishing favourable schedule for repaying loan interest and principal, significant changes in expected results of operations and behaviour of a borrower and other material changes). Financial assets move from Stage 1 to Stage 2 if there is one or a combination of the following factors: • financial assets are over 30 days overdue; • credit rating deteriorates; • there are early warning indicators of an increase in credit risk; a need to change previously agreed on terms of the agreement to create more favourable environment for a customer due to his inability to meet current liabilities because of the customer’s financial position; full or partial refinancing of the curren t debt which would not be required if the client did not experience financial difficulties; • information on future changes in assets that may result in credit losses not considered in the rating systems is identified (e.g. military conflicts in the region that may have a significant impact on future credit quality). A default is recognised if one or a combination of the following events occur: • financial assets are over 90 days overdue (a rebuttable presumption); • a default rating is assigned; • restructuring indicative of problems is undertaken; • a favourable schedule for repaying interest and principal with payments to be made at the end of the term is granted. Credit risk management (excluding financial services) Credit risk (excluding financial services) arises from cash and cash equivalents, bank deposits, loans and notes receivables, as well as credit exposures to customers including outstanding trade and other receivables. Credit risks related to accounts receivable are systematically monitored taking into account the customer’s financial position, past experience and other factors. Management systematically reviews ageing analysis of receivables and uses this information for calculation of expected credit losses. A significant portion of the Group’s accounts receivable is due from domestic and export trading companies. The Group does not always require collateral to limit the exposure to loss. The Group operates with various customers but a substantial part of its sales relate s to major customers. Although collection of accounts receivable could be influenced by economic factors affecting these customers, management believes there is no significant risk of loss to the Group beyond the provisions already recorded. Credit quality analysis for accounts receivable is presented in Note 4. The Group performs an ongoing assessment and monitoring of the risk of default. In addition, as part of its cash management and credit risk function, the Group regularly evaluates the creditworthiness of financial and banking institutions where it deposits cash. The Group deposits available cash mostly with financial institutions in the Russian Federation. To manage this credit risk, the Group allocates its available cash to a variety of Russian banks. For measuring credit risk and grading financial instruments by the amount of credit risk, the Group applies an approach based on risk grades estimated by internal ratings. Internal ratings are mapped to external credit rating provided by agencies (Expert RA JSC, ACRA JSC) on an internally defined master scale with a specified range of probabilities of default. Credit risk management in financial services The Group’s credit risk policies prescribe its acceptance only through formalized procedures and on ly based on decisions of the authorized collegial body. The Group has a system of credit committees responsible for making credit decisions, the main objective of which is to create a high-quality loan portfolio that ensures the implementation of the strategy, credit policies and risk management policies. Collegial authorities, authorized to make credit decisions, have a clear segmentation according to business lines, lending segments and the amount of authority. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 38 Note 27: Financial risk management (continued) The Group structures the level of credit risk it undertakes by placing the appropriate limits. Limits are set by the Group on an individual (for example, for specific customers and counterparties), group and portfolio basis (for example, industry and regional limits, limits on types of operations, etc.). Internal regulations on financial analysis and risk assessment are created and applied to each segment of the lending activity, including lending to legal entities, individuals, financial institutions and other categories of borrowers. To reduce the level of risk, the Group accepts collateral in the form of pledges, sureties and guarantees. In case of acceptance of a surety, the Group performs a financial analysis of the guarantor. The assessment of collateral is performed internally by special division responsible for collateral assessment and control. They use several methodologies developed for each type of collateral. Valuations performed by third parties, including independent appraisal firms authorized by the Group, may serve as additional data for such assessment. The Group usually requires collateral to be insured by insurance companies authorized by the Group. Credit risk for off-balance sheet financial instruments is defined as the possibility of sustaining a loss as the result of another party to a financial instrument failing to perform in accordance with the terms of the contract. The Group uses the same credit policies in assuming conditional obligations as it does for on balance sheet financial instruments, through established credit approvals, risk control limits and monitoring procedures. The Group regularly analyzes and monitors the impact on borrowers' performance indicators of the expected macroeconomic situation and changes in the economy caused by the introduction of restrictive measures, changes in the key rate, exchange rate volatility and other factors. Taking into account the current economic situation in 2023-2024, increased attention was paid to the risk of non-payment to fulfill obligations, as well as the risks of capital outflow, concentration, logistics and infrastructure risks, and the risk of non-fulfillment of obligations. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 39 Note 27: Financial risk management (continued) Credit risk analysis of the Group To quantify the credit risk, the Group uses internal models (rating systems). The Group uses the following rating categories for the analysis of credit quality of assets other than loans to customers and accounts receivable: • investment grade ratings referred to classification in the range from AAA (RU) to BBB- (RU) of the agencies of Expert RA JSC, ACRA JSC. The probability of default for assets of this category ranges from 0% to 1.51%; • non-investment grade ratings referred to classification referred from BB+ (RU) to D (RU) of the agencies of Expert RA JSC, ACRA JSC. The probability of default for assets of this category ranges from 1.51% to 100%. On average, the risk for this category is about 9.3% (in 2023: 21.55%). The following table contains an analysis of the credit risk exposure of cash and cash equivalents including mandatory reserve deposits with the Bank of Russia. Cash and cash equivalents are classified as Stage 1. As at 31 December 2024 and 31 December 2023 there is no cash classified as Stage 2, Stage 3, or acquired or originated impaired. The carrying amount also represents the Group's maximum exposure to credit risk on these financial assets. At 31 December 2024 At 31 December 2023 Stage 1 (12-months ECL) Stage 1 (12-months ECL) Cash on hand and cash in banks - Investment grade rating 42,984 41,432 - Non-investment grade rating 3,955 6,894 Gross carrying amount 46,939 48,326 Credit loss allowance - - Carrying amount 46,939 48,326 Term deposits - Investment grade rating 59,028 30,829 - Non-investment grade rating 11,487 3,166 - No ratings - 1,803 Gross carrying amount 70,515 35,798 Credit loss allowance - (9) Carrying amount 70,515 35,789 Financial services: Mandatory reserve deposits with the Bank of Russia - Investment grade rating 997 903 Gross carrying amount 997 903 Credit loss allowance - - Carrying amount 997 903 The following table contains an analysis of the credit risk exposure of other financial assets measured at amortised cost and measured at fair value through other comprehensive income for which ECL allowance is recognised other than cash and cash equivalents including mandatory reserve deposits with the Bank of Russia, loans to customers and accounts receivable. The carrying amount also represents the Group’s maximum exposure to credit risk on these financial assets. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 40 Note 27: Financial risk management (continued) At 31 December 2024 Stage 1 (12-months Stage 2 (lifetime Stage 3 (lifetime POCI Total ECL) ECL for SICR) ECL for credit im- paired) Loans - Investment grade rating - 2,067 - - 2,067 - Non-investment grade rating 13,502 30,943 886 - 45,331 - No ratings - - 16,240 - 16,240 Gross carrying amount 13,502 33,010 17,126 - 63,638 Credit loss allowance - - (15,897) - (15,897) Carrying amount 13,502 33,010 1,229 - 47,741 Bank deposits - Investment grade rating 8 - - - 8 - Non-investment grade rating - - 2,989 - 2,989 Gross carrying amount 8 - 2,989 - 2,997 Credit loss allowance - - (2,989) - (2,989) Carrying amount 8 - - - 8 Other - Non-investment grade rating 501 - 3,344 - 3,845 - No ratings - - 3,041 - 3,041 Gross carrying amount 501 - 6,385 - 6,886 Credit loss allowance (6) - (5,592) - (5,598) Carrying amount 495 - 793 - 1,288 Debt securities measured at amortised cost - Investment grade rating 16,217 - - - 16,217 - Non-investment grade rating 856 - - - 856 Gross carrying amount 17,073 - - - 17,073 Credit loss allowance (869) - - - (869) Carrying amount 16,204 - - - 16,204 Debt securities measured at fair value through other comprehensive income - Investment grade rating 37,240 - - - 37,240 - Non-investment grade rating 128 - - - 128 Gross carrying amount 37,368 - - - 37,368 Credit loss allowance (29) - - - (29) Carrying amount 37,339 - - - 37,339 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 41 Note 27: Financial risk management (continued) At 31 December 2023 Stage 1 (12-months ECL) Stage 2 (lifetime ECL for SICR) Stage 3 (lifetime ECL for credit im- paired) POCI Total Loans - Investment grade rating - 812 - - 812 - Non-investment grade rating 16,478 24,530 385 - 41,393 - No ratings - - 16,816 - 16,816 Gross carrying amount 16,478 25,342 17,201 - 59,021 Credit loss allowance - (91) (17,091) - (17,182) Carrying amount 16,478 25,251 110 - 41,839 Bank deposits - Non-investment grade rating - - 2,989 - 2,989 Gross carrying amount - - 2,989 - 2,989 Credit loss allowance - - (2,989) - (2,989) Carrying amount - - - - - Other - Non-investment grade rating - - 11,584 - 11,584 - No ratings - - 3,663 - 3,663 Gross carrying amount - - 15,247 - 15,247 Credit loss allowance - - (14,355) - (14,355) Carrying amount - - 892 - 892 Debt securities measured at amortised cost - Investment grade rating 22,898 - - - 22,898 Gross carrying amount 22,898 - - - 22,898 Credit loss allowance (15) - - - (15) Carrying amount 22,883 - - - 22,883 Debt securities measured at fair value through other comprehensive income - Investment grade rating 42,053 - - - 42,053 - Non-investment grade rating 1,757 - - - 1,757 - No ratings 139 - - - 139 Gross carrying amount 43,949 - - - 43,949 Credit loss allowance (921) - - - (921) Carrying amount 43,028 - - - 43,028 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 42 Note 27: Financial risk management (continued) Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Liquidity risk management (excluding financial services) The Group’s approach to managing liquidity is to ensure that it will always have suff icient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. In managing its liquidity risk, the Group maintains adequate cash reserves and debt facilities, continuously monitors forecast and actual cash flows and matches the maturity profiles of financial assets and liabilities. The Group prepares various financial plans (monthly, quarterly and annually) which ensures that the Group has sufficient cash on demand to meet expected operational expenses, financial obligations and investing activities for a period of 30 days or more. To fund cash requirements of a more permanent nature, the Group will normally raise long-term debt. Liquidity risk management in financial services The objective of liquidity risk management is to ensure the stable operations of the Group, the possibility of uninterrupted operations in accordance with the Group's business plans, including the timely fulfilment of all obligations to customers and counterparties related to making payments, as well as minimising the negative impact on financial results, own funds (capital), the Group's reputation for a possible liquidity deficit. Also, the priority objective of liquidity risk management is to ensure that the Group comply with the mandatory liquidity ratios established by the Central Bank of Russia. The Group’s approach to financial services liquidity management is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when due under both ordinary and stressed conditions, without incurring unacceptable losses or damaging the Group’s reputation. In respect to the financial services segment The Group endeavors to maintain a stable and diversified funding base including core corporate and individual customer accounts; short-, medium- and long-term loans from other banks; promissory notes and bonds issued. On the other hand, the Group tends to keep diversified portfolios of liquid and highly liquid assets in order to be able to settle unforeseen liquidity requirements in an efficient and timely manner. Key parameters in liquidity risk management such as the structure of assets and liabilities, composition of liquid assets and acceptable liquidity risks are established by Assets and Liabilities Management Committee (ALCO). ALCO sets and reviews limits on liquidity gaps which are assessed on the basis of liquidity stress-tests in regard to medium- and long-term liquidity. These tests are performed using the following information: • current structure of assets and liabilities including any known renewal arrangements as at the date of the respective test; • amounts, maturity and liquidity profiles of transactions projected by business units; • current and projected characteristics of liquid assets which include, apart from cash and cash equivalents, amounts due from other banks and certain financial assets held-for-trading; and • relevant external factors. The resulting models allow for the assessment of future expected cash flows due to projected future business and different crisis scenarios. While managing liquidity risk distinguish liquidity required within a current business day and term liquidity. For managing current liquidity (with a 1-day horizon) the following methods are used: • reallocation of cash between accounts with banks; • collection of information from business and other supporting units on large transactions (both proprietary and customer based); • purchase and sale of certain financial assets in liquid portfolios; • accelerating closure of trade positions; • estimation of minimum expected cash inflow during a business day; and • daily control over the balance of cash and estimated liabilities to be settled on demand. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 43 Note 27: Financial risk management (continued) The monitoring of the current and forecasted state of urgent liquidity is carried out daily on the basis of calculating the sufficiency of highly liquid assets to cover planned and unplanned outflows and meeting resource requirements for a period of up to 30 days. The share of liquid assets is maintained at a level sufficient to meet obligations to customers and counterparties of the Group, which can significantly reduce liquidity risks and non-market funding rates. To maintain instant liquidity, limits are opened by a significant number of Russian banks. In addition, the liquidity risk is minimized by the Group’s ability to raise funds from the Bank of Russia within the framework of the refinancing system and state support for the financial sector, as well as established liquidity management policies and technologies that provide for stress approaches in estimating future cash flows. In accordance with the Group's Liquidity Management Policy, the basic principle of liquidity management is risk limiting, in particular, using the required liquid assets limit. If necessary (changing the financial situation in the markets or at Group), other limits (for counterparties, financial instruments, etc.) can be used to manage liquidity. Liquidity risk analysis of the Group The following tables summarise the maturity profile of the Group’s financial liabilities based on contractual undiscounted payments, including interest payments: At 31 December 2024 Less than 1 year Between 1 and 5 years Over 5 years Total Financial liabilities Trade and other financial payables 107,456 - - 107,456 Dividend payable 104,851 - - 104,851 Lease obligations, net of current portion - 15,638 17,814 33,452 Financial services: Other financial liabilities at fair value through profit or loss 19,197 - - 19,197 Debt 3,625 6,926 6,857 17,408 Financial services: Due to banks and the Bank of Russia 37,633 1,207 - 38,840 Financial services: Customer accounts 211,601 1,850 8 213,459 Credit related commitments (Note 23) 95,736 46,602 8,811 151,149 Total 580,099 72,223 33,490 685,812 At 31 December 2023 Less than 1 year Between 1 and 5 years Over 5 years Total Financial liabilities Trade and other financial payables 99,121 - - 99,121 Dividend payable 119,137 - - 119,137 Lease obligations, net of current portion - 15,359 19,631 34,990 Financial services: Other financial liabilities at fair value through profit or loss 14,983 - - 14,983 Debt 5,406 16,979 7,133 29,518 Financial services: Due to banks and the Bank of Russia 27,568 4,021 - 31,589 Financial services: Customer accounts 203,200 4,637 10 207,847 Credit related commitments (Note 23) 60,917 46,537 5,676 113,130 Total 530,332 87,533 32,450 650,315 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 44 Note 27: Financial risk management (continued) Fair values Fair value is the price that would be received to sell an asset or paid to transfer a liability in an ordinary transaction between market participants at the measurement date. The estimated fair values of financial instruments are determined with reference to various market information and other valuation techniques as considered appropriate. The different levels of fair value hierarchy have been defined as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities that Group has the ability to assess at the measurement date. Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 – Unobservable inputs for the asset or liability. These inputs reflect the Group’s own assumptions about the assumptions a market participant would use in pricing the asset or liability. Recurring fair value measurements The levels in the fair value hierarchy into which the recurring fair value measurements are categorised are as follows: At 31 December 2024 Fair value Level 1 Level 2 Level 3 Carrying value Investment property - - 1,431 1,431 Other financial assets Securities measured at fair value through profit or loss 1,327 158 - 1,485 Loans measured at fair value through profit or loss - - 1,758 1,758 Securities measured through other comprehensive income 36,116 8,791 20,113 65,020 Money market funds, measured at fair value through profit or loss - 953 - 953 Financial services: Other financial liabilities measured at fair value through profit or loss (19,196) (1) - (19,197) Total 18,247 9,901 23,302 51,450 At 31 December 2023 Fair value Level 1 Level 2 Level 3 Carrying value Investment property - - 827 827 Other financial assets Securities measured at fair value through profit or loss 2,903 152 177 3,232 Derivatives measured at fair value through profit or loss - 19 - 19 Loans measured at fair value through profit or loss - - 2,021 2,021 Securities measured through other comprehensive income 36,262 12,525 21,710 70,497 Financial services: Other financial liabilities measured at fair value through profit or loss (14,983) - - (14,983) Total 24,182 12,696 24,735 61,613 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 45 Note 27: Financial risk management (continued) The description of valuation technique and description of inputs used in the fair value measurement for Level 2 and Level 3 measurements at 31 December 2024 и 2023: Fair value hierarchy Valuation technique and key input data Investment property Level 3 Market data on comparable objects, adjusted in case of differences from similar objects Securities at FVTPL Level 2, Level 3 Quoted prices for similar investments in active markets, net assets valuation, comparative (market) approach / Publicly available information, comparable market prices/ discounted cash flow models adjusted at credit risk Loans measured at FVTPL Level 3 Discounted cash flow models adjusted at credit risk Securities at FVOCI Level 2, Level 3 Quoted prices for similar investments in active markets, net assets valuation, comparative (market) approach / Publicly available information, comparable market prices / discounted cash flow models adjusted at credit risk Money market funds, measured at fair value through profit or loss Level 2, Level 3 Quoted prices for similar investments in active markets, net assets valuation, comparative (market) approach / Publicly available information, comparable market prices / discounted cash flow models adjusted at credit risk Financial services: Other financial liabilities at FVTPL Level 2 Discounted cash flow models adjusted at credit risk There were no significant changes in valuation technique for Level 2 and Level 3 recurring fair value measurements during the years ended 31 December 2024 and 2023.There have been no significant transfers between Level 1, Level 2 and Level 3 during these periods. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 46 Note 27: Financial risk management (continued) Assets and liabilities not measured at fair value but for which fair value is disclosed The carrying value of cash and cash equivalents, accounts receivable and accounts payable approximate their fair values at 31 December 2024 and 2023, with the Group primarily classifying cash as Level 2 of the hierarchy and accounts receivable and accounts payable as Level 3. The fair values in Level 2 and Level 3 fair value hierarchy were estimated using the model of discounted cash flows. The fair value of instruments that do not have a quoted market price in an active market was estimated based on estimated future cash flows, discounted using prevailing market interest rates for new instruments with similar credit risk and maturity. Management of Capital The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital ratios in order to support its business and increase shareholder value. The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. The Group defines capital under management as the “Total equity owned by shareholders of PJSC Tatneft” as shown in the consolidated statement of financial position. The amount of capital that the Group managed as at 31 December 2024 was RR 1,321,769 million (2023: RR 1,190,843 million). The Group considers equity and debt to be the principal elements of capital management. In order to maintain or adjust the capital structure, the Group may adjust the dividend payment to shareholders, revise its investment program, attract new or settle existing debt or sell certain non-core assets. The Group monitors capital on the basis of its gearing ratio. Reconciliation of liabilities arising from financing activities The table below sets out an analysis of the movements in the Group’s liabilities from financing activities (excluding financial services) for each of the periods presented. The items of these liabilities are those that are reported as financing in the statement of cash flows: At 31 December 2024 At 31 December 2023 Fair value Fair value Level 1 Level 2 Level 3 Carrying value Level 1 Level 2 Level 3 Carrying value Assets Financial services: Loans to customers measured at amortised cost - - 195,511 196,552 - - 193,751 190,393 Other financial assets Loans measured at amortised cost - - 38,052 47,741 - - 41,839 41,839 Securities measured at amortised cost 9,454 5,318 - 16,204 14,885 5,244 1,942 22,883 Other - 516 793 1,296 - - 892 892 Total 9,454 5,834 234,356 261,793 14,885 5,244 238,424 256,007 Liabilities Debt Bonds issued - 1 - 1 - 2 - 2 Subordinated debt - 22 - 23 - 22 - 22 Promissory notes issued - 251 1,607 1,874 - 11,341 - 12,790 Other debt - - 11,385 11,385 - - 10,043 10,043 Financial services: Due to banks and the Bank of Russia 374 37,425 - 38,122 186 30,251 - 30,751 Financial services: Customer accounts - 37,040 166,230 206,254 - 36,953 163,088 203,579 Total 374 74,739 179,222 257,659 186 78,569 173,131 257,187 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 47 Note 27: Financial risk management (continued) Liabilities arising as a result of financing activities Credits and loans Bonds issued Subordinated debt Lease liabilities Dividend payable Promissory notes Total At 31 December 2022 525 2,057 22 3,615 26,025 11,897 44,141 Cash flow movement,including: Proceeds from issuance of debt 57,373 - - - - - 57,373 Repayment of debt (61,933) - - - - - (61,933) Redemption of bonds - (2,008) - - - - (2,008) Repayment of principal portion of lease liabilities - - - (4,563) - - (4,563) Interest paid (443) (69) (118) (1,634) - - (2,264) Dividends paid to shareholders - - - - (141,304) - (141,304) Unclaimed dividends - - - - 30,956 - 30,956 Foreign exchange adjustments 1,342 - - 1,234 - - 2,576 Interest accrual 614 21 118 1,634 957 3,344 Dividends declared - - - - 203,497 - 203,497 Change in liabilities as a result of acquisition of businesses (Note 24) 12,434 - - 1,262 - - 13,696 Change in liabilities as a result of acquisition of right- of-use assets - - - 23,150 - - 23,150 Other non-cash flows 131 1 - 456 (37) (64) 487 At 31 December 2023 10,043 2 22 25,154 119,137 12,790 167,148 Cash flow movement,including: Proceeds from issuance of debt 112,958 - - - - - 112,958 Repayment of debt (114,965) - - - - - (114,965) Redemption of promissory notes - - - - - (11,400) (11,400) Redemption of bonds - (1) - - - - (1) Repayment of principal portion of lease liabilities - - - (3,405) - - (3,405) Interest paid (1,377) - (99) (2,488) - (1,832) (5,796) Dividends paid to shareholders - - - - (222,590) - (222,590) Unclaimed dividends - - - - 26,547 - 26,547 Foreign exchange adjustments 1,121 - - 1,392 - 1 2,514 Interest accrual 1,368 - 99 2,488 - 700 4,655 Dividends declared - - - - 181,757 - 181,757 Change in liabilities as a result of acquisition of businesses 1,503 - - - - 1,607 3,110 Change in liabilities as a result of acquisition of right- of-use assets - - - 1,299 - - 1,299 Other non-cash flows 734 - 1 (2,313) - 8 (1,570) At 31 December 2024 11,385 1 23 22,127 104,851 1,874 140,261 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 48 Note 28: Material accounting policy information Material accounting policy information used in preparing these consolidated financial statements are presented below. This accounting policy have been applied consistently to all periods presented in the statements. Functional and presentation currency. The presentation currency of the Group is the Russian Ruble. Management has determined the functional currency for the Company and each consolidated subsidiary of the Group, except for subsidiaries located outside of the Russian Federation, is the Russian Ruble because the majority of Group revenues, costs, property and equipment purchased, debt and trade liabilities are either priced, incurred, payable or otherwise measured in Russian Rubles. Accordingly, transactions and balances not measured in Russian Rubles (primarily US Dollars) have been re-measured into Russian Rubles in accordance with the relevant provisions of IAS 21 “The Effects of Changes in Foreign Exchange Rates” . Foreign exchange gains and losses resulting from the settlement of the transactions and from the translation of monetary assets and liabilities into functional currency at year-end official exchange rates of the Central Bank of the Russian Federation (the “Bank of Russia”) at the end of the year are reflected in profit or loss for the year as other income /(expenses) within “Foreign exchange gain, net.” For operations of major subsidiaries located outside of the Russian Federation, that primarily use US Dollar as the functional currency, adjustments resulting from translating foreign functional currency assets and liabil ities into Russian Rubles are recorded in other comprehensive income. Revenues, expenses and cash flows are translated at average exchange rates of the relevant period (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions). The official rates of exchange, as published by the Bank of Russia, of the Russian Ruble (“RR”) to the US Dollar (“US $”) at 31 December 2024 and 2023 were RR 101.68 and RR 89.69 to US $, respectively. Average rates of exchange for the years ended 31 December 2024 and 2023 were RR 92.57 and RR 85.25 per US $, respectively. Consolidation. Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group has the power to direct relevant activities of the investee that significantly affect their returns, exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The Group uses the acquisition method of accounting to account for business combinations Goodwill. Goodwill is allocated to cash-generating units or groups of cash-generating units that are expected to benefit from synergies as a result of the combination. These units or groups of units represent the lowest level at which the Group monitors goodwill and are not larger in size than an operating segment. The Group tests goodwill for impairment at least once a year and whenever there is an indication that it may be impaired. The impairment is recognised immediately as an expense and is not subsequently reversed. Associates and joint ventures. Associates and joint ventures are entities over which the Group has significant influence (directly or indirectly), but not control, generally accompanying a shareholding of between 20 and 50 percent of the voting rights. The Group classifies investments in its joint ventures as joint ventures based on the nature of the venture and the contractual rights and obligations of each investor. Joint venture is a joint arrangement that involves the Group and the other parties to the joint venture having joint control over the activity having rights to the net assets of the activity. Investments in associates and joint ventures are accounted for using the equity method of accounting and are initially recognised at cost. Dividends received from associates and joint ventures reduce the carrying value of the investment in associates and joint ventures. Other post-acquisition changes in Group’s share of net assets of an associate and joint ventures are recognised as follows: (i) the Group’s share of profits or losses of associates or joint ventures is recorded in the consolidated profit or loss for the year as share of result of associates or joint ventures, (ii) the Group’s share of other comprehensive income is recognised in other comprehensive income and presented separately, (iii) all other changes in the Group’s share of the carrying value of net assets of associates or joint ventures are recognised in profit or loss within the share of result of associates or joint ventures. Financial instruments – key measurement terms. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The best evidence of fair value is the price in an active market. An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. Fair value of financial instruments traded in an active market is measured as the product of the quoted price for the individual asset or liability and the number of instruments held by the Group. This is the case even if a market’s normal daily trading volume is not sufficient to absorb the quantity held and placing orders to sell the position i n a single transaction might affect the quoted price. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 49 Note 28: Material accounting policy information (continued) Valuation techniques such as discounted cash flow models or models based on recent arm’s length transactions or consideration of financial data of the investees are used to measure fair value of certain financial instruments for which external market pricing information is not available. Amortised cost (“AC”) is the amount at which the financial instrument was recognised at initial recognition less any principal repayments, plus accrued interest, and for financial assets less any allowance for expected cre dit losses (“ECL”). Financial instruments – initial recognition. Financial instruments at FVTPL are initially recorded at fair value. All other financial instruments are initially recorded at fair value adjusted for transaction costs. Fair value at initia l recognition is best evidenced by the transaction price. Financial assets impairment – credit loss allowance for ECL. The Group assesses, on a forward-looking basis, the ECL for debt instruments measured at AC and FVOCI and for the exposures arising from loan commitments and financial guarantee contracts, for contract assets. The Group measures ECL and recognises Net impairment losses on financial and contract assets at each reporting date. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions. Debt instruments measured at AC and contract assets are presented in the consolidated statement of financial position net of the allowance for ECL. For loan commitments and financial guarantees, a separate provision for ECL is recognised as a liability in the consolidated statement of financial position. For debt instruments at FVOCI, changes in amortised cost, net of allowance for ECL, are recognised in profit or loss and other changes in carrying value are recognised in OCI as gains (losses) on debt financial assets at FVOCI. The Group applies a three-stage model for impairment, based on changes in credit quality since initial recognition. Note 27 provides information about inputs, assumptions and estimation techniques used in measuring ECL. The Group applies the IFRS 9 simplified approach for measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables. To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics, type of product or service, geography of sales and the days past due. The Group calculates expected credit losses on trade receivables based on historical data assuming reasonable approximation of current losses rates adjusted on forward-looking information. Financial assets – write-off. Financial assets are written-off, in whole or in part, when the Group exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. The Group may write-off financial assets that are still subject to enforcement activity when the Group seeks to recover amounts that are contractually due, however, there is no reasonable expectation of recovery. Financial assets – derecognition, excluding write-off. The Group derecognises financial assets when (a) the assets are redeemed or the rights to cash flows from the assets otherwise expire or (b) the Group has transferred the rights to the cash flows from the financial assets or entered into a qualifying pass-through arrangement whilst (i) also transferring substantially all the risks and rewards of ownership of the assets or (ii) neither transferring nor retaining substantially all the risks and rewards of ownership but not retaining control. Control is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated third party without needing to impose additional restrictions on the sale. Financial assets – modification. The Group sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Group assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors: any new contractual terms that substantially affect the risk profile of the asset (e.g. profit share or equity-based return), significant change in interest rate, change in the currency, new collateral or credit enhancement that significantly affects the credit risk associated with the asset or a significant extension of a loan when the borrower is not in financial difficulties. Financial liabilities designated at FVTPL. The Group may designate certain liabilities at FVTPL at initial recognition. Gains and losses on such liabilities are presented in profit or loss except for the amount of change in the fair value that is attributable to changes in the credit risk of that liability (determined as the amount that is not attributable to changes in market conditions that give rise to market risk), which is recorded in OCI and is not subsequently reclassified to profit or loss. This is unless such a presentation would create, or enlarge, an accounting mismatch, in which case the gains and losses attributable to changes in credit risk of the liability are also presented in profit or loss. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 50 Note 28: Material accounting policy information (continued) Cash and cash equivalents. Cash represents cash on hand and in bank accounts and the Bank of Russia, other than mandatory reserves deposits with the Bank of Russia, which can be effectively withdrawn at any time without prior notice. Cash equivalents include highly liquid short-term investments that can be converted to a certain cash amount and mature within three months or less from the date of purchase. Mandatory reserve deposits with the Bank of Russia. Mandatory cash balances with the Bank of Russia are carried at AC and represent non-interest bearing mandatory reserve deposits, which are not available to finance the Group’s day to day operations, and hence are not considered as part of cash and cash eq uivalents for the purposes of the consolidated statement of cash flows. Due from banks. Amounts due from banks are recorded when the Group advances money to counterparty banks due on fixed or determinable dates. Amounts due from banks are carried at AC when: (i) they are held for the purposes of collecting contractual cash flows and those cash flows represent SPPI, and (ii) they are not designated at FVTPL. Due from banks that mature within three months or less from the date of placement are included in ca sh and cash equivalents. Loans to customers. Loans to customers are recorded when the Group advances money to purchase or originate a loan due from a customer. Note 27 provides information about inputs, assumptions and estimation techniques used in measuring ECL. Trade and other receivables. Trade and other receivables are recognised initially at fair value and are subsequently carried at AC using the effective interest method. Trade and other payables. Trade payables are accrued when the counterparty performs its obligations under the contract and are recognised initially at fair value and subsequently carried at AC using the effective interest method. Due to banks and the Bank of Russia. Amounts due to banks and the Bank of Russia are recorded when money or other assets are advanced to the Group by counterparty banks. The non-derivative liability is carried at AC. Customer accounts. Customer accounts are non-derivative liabilities to individuals, state or corporate customers and are carried at AC. Debt securities and bonds issued. Debt securities issued include promissory notes issued by the Group to its customers in the course of its financial services. Bonds issued represent securities issued by the Bank that are traded and quoted in the open market. Promissory notes carry a fixed date of repayment. These may be issued against cash deposits or as a payment instrument, which the customer can sell at a discount in the over-the-counter market. Non-current assets classified as held for sale. Non-current assets are classified in the consolidated statement of financial position as “Long term assets held for sale” if their carrying amount will be recovered principally through a sale transaction within twelve months after the end of the reporting period. Inventories. Inventories of crude oil, refined oil products, materials and supplies, finished goods and other inventories are valued at the lower of cost or net realizable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and selling expenses. The Group uses the weighted-average-cost method. Costs include both direct and indirect expenditures incurred in bringing an item or product to its existing condition and location. Prepaid expenses and other current assets. Prepaid expenses and other current assets include advances for purchases of products and services, insurance fees, excise tax refundable, prepayments for export duties, VAT and other taxes. Prepayments are carried at cost less provision for impairment. Prepayments to acquire assets are transferred to the carrying amount of the asset once the Group has obtained control of the asset and it is probable that future economic benefits associated with the asset will flow to the Group. Tax on additional income from hydrocarbon extraction. AIT is levied at the rate of 50% on additional income from oil production, calculated as the difference between the estimated revenue from the sale of hydrocarbons and the actual and estimated costs of its production, including capital costs. This tax regime includes MET, but with a reduced rate. This regime covers depleted oil fields in Republic of Tatarstan, as well as the Group's license areas in the Nenets Autonomous District. AIT is included in taxes other than income tax in the consolidated statements of profit or loss and other comprehensive income. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 51 Note 28: Material accounting policy information (continued) Reverse excise on crude oil refined and negative excise on gasoline and diesel fuel. In the consolidated statement of profit or loss and other comprehensive income reverse (“negative”) excise on crude oil refined and negative excise on gasoline and diesel fuel is recognised as a reduction (additional expense, if reverse excise payable) in excise tax expense included in taxes other than income tax (Note 29) and is presented in prepaid expenses and other current assets line in the statement of consolidated financial position. The investment premium for refineries Kinv is also included in reverse (negative) excise of the period. Value added tax. Value added tax (VAT) at a standard rate of 20% is payable on the difference between output VAT on sales of goods and services and recoverable input VAT charged by suppliers. Output VAT is charged on the earliest of the dates: either the date of the shipment of goods (works, services) or the date of advance payment by the buyer. Input VAT can be recovered when purchased goods (works, services) are accounted for and other necessary requirements provided by the tax legislation are met. Where provision has been made for the ECL of receivables, the impairment loss is recorded for the gross amount of the debtor, including VAT. Export of goods and rendering certain services related to exported goods are subject to 0% VAT rate upon the submission of confirmation documents to the tax authorities. VAT advance payment, VAT refundable and VAT payable are recognised in the Consolidated Statement of Financial Position on a gross basis and disclosed separately within Prepaid expenses and other current assets and tax liabilities other than on income taxes. Oil and gas exploration and development cost. Oil and gas exploration and development activities are accounted for using the successful efforts method whereby costs of acquiring unproved and proved oil and gas property as well as costs of drilling and equipping productive wells and related production facilities are capitalised. Other exploration expenses, including geological and geophysical expenses and the costs of carrying and retaining undeveloped properties, are expensed as incurred. The costs of exploratory wells that find oil and gas reserves are capitalised as exploration and evaluation assets on a “field by field” basis pending determination of whether proved reserves have been found. Exploration and evaluation assets are subject to technical, commercial and management review as well as review for impairment at least once a year to confirm the continued intent to develop or otherwise extract value from the discovery. When indicators of impairment are present, resulting impairment loss is measured. If subsequently commercial reserves are discovered, the carrying value, less losses from impairment of respective exploration and evaluation assets, is classified as development assets. However, if no commercial reserves are discovered, such costs are expensed after exploration and evaluation activities have been completed. Property, plant and equipment. Property, plant and equipment are carried at historical cost of acquisition or construction less accumulated depreciation, depletion, amortization and impairment. Proved oil and gas properties include the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located. The cost of maintenance, repairs and replacement of minor items of property are expensed when incurred within operating expenses; renewals and improvements of assets ar e capitalised and depreciated during the remaining useful life. Cost of replacing major parts or components of property, plant and equipment items are capitalised and the replaced part is retired. Advances made on construction of property, plant and equipment are accounted for within Construction in progress. Non-current assets, including proved oil and gas properties at a field level, are assessed for possible impairment in accordance with IAS 36 Impairment of assets. Individual assets are grouped for impairment purposes at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets - generally on a field-by-field basis for exploration and production assets, at an entire complex level for refining assets or at a site level for petrol stations. Impairment losses are recognised in the profit or loss for the year. The Group calculates depreciation expense for oil and gas proved properties using the units-of-production method for each field based upon proved developed oil and gas reserves, except in the case of significant asset components whose useful life differs from the lifetime of the field, in which case the straight-line method is applied. Oil and gas licenses for exploration of unproved reserves are capitalised within property, plant and equipment; they are depreciated on the straight-line basis over the period of each license validity. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 52 Note 28: Material accounting policy information (continued) Depreciation of all other property, plant and equipment is determined on the straight-line method based on estimated useful lives which are as follows: Years Buildings and constructions 20-50 Machinery and equipment 5-30 Gains and losses on disposals of property, plant and equipment are determined by comparing proceeds, if any, with the carrying amount. Gains and losses are recorded in impairment losses on property, plant and equipment and other non-financial assets net of reversal in the consolidated statement of profit or loss and other comprehensive income. Leases. At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. An asset is identified by being explicitly specified in a contract, or implicitly specified at the time that the asset is made available for use by the Group. The Group does not have the right to use an identified asset if the supplier has the substantive right to substitute the asset throughout the period of use. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing rate is used. Generally, the Group determines its incremental borrowing rate as possible borrowing rate offered by banks for the funds, necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions . The rate is determined based on indicative rates of banks or indicative yield to maturity of bonds of oil and gas industry companies. The term used to measure a liability and an asset in the form of a right of use is defined as the period during which the Group has sufficient confidence that it will lease the asset. Any option for renewal or termination is taken into account when estimating the term. Extension options are included in a number of equipment leases across the Group. For a number of other assets that have a buyout option, the depreciation period is deter mined based on the useful life of the underlying asset. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Debt. Debt is recognised initially at fair value, net of transaction costs incurred and is subsequently carried at AC using the effective interest method. Interest income (excluding financial services). Interest income (excluding financial services) is recognised on a time-proportion basis using the effective interest method. This method defers, as part of interest income, all fee received between the parties to the contract that are an integral part of the effective interest rate, all other premiums. Employee benefits, post-employment and other long-term benefits. Wages, salaries, contributions to the social insurance funds, paid annual leave and sick leave, bonuses, and non-monetary benefits (such as health services and kindergarten services) are accrued in the year in which the associated services are rendered by the employees of the Group. The Group has various pension plans covering substantially all eligible employees and members of management. The pension liabilities are measured at the present value of the estimated future cash outflows using interest rates of government securities, which have the same currency and terms to maturity approximating the terms of the related liability. Pension costs are recognised using the projected unit credit method. The cost of providing pensions is accrued and charged to staff expense within operating expenses in the Consolidated Statement of Profit or Loss and Other Comprehensive Income reflecting the cost of benefits as they are earned over the service lives of employees. Remeasurements of the net defined benefit liability arising as the actuarial gains or losses from changes in assumptions and from experience adjustments with regard to post employment benefit plans are recognised immediately in other comprehensive income. Actuarial gains and losses related to other long-term benefits are recognised immediately in the profit or loss for the year. Past service costs are recognised as an expense for the year immediately . TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 53 Note 28: Material accounting policy information (continued) Plan assets are measured at fair value and are subject to certain limitations. Fair value of plan assets is based on market prices. When no market price is available the fair value of plan assets is estimated by different valuation techniques, including discounted expected future cash flow using a discount rate that reflects both the risk associated with the plan assets and maturity or expected disposal date of these assets. Long-term employee incentives program. The Group operates a cash-settled share-based compensation plan. The terms of share-based compensation plan, initial data, assumptions and models used in measurement of cash- settled share-based compensation plan are presented in Note 16. Decommissioning provisions. The Group recognises a liability for the present value of legally required or constructive decommissioning provisions associated with non-current assets in the period in which the retirement obligations are incurred. The Group has numerous asset removal obligations that it is required to perform under law or contract once an asset is permanently taken out of service. The Group’s field exploration, development, and production activities include assets related to: well bores and related equipment and operating sites, gathering and oil processing systems, oil storage facilities and gathering pipelines. Generally, the Group’s licenses and other operating permits require certain actions to be taken by the Group in the abandonment of these operations. Such actions include well abandonment activities, equipment dismantlement and other reclamation activities. The Group’s estimates of future abandonment costs consider present regulatory or license requirements, as well as actual dismantling and other related costs. These liabilities are measured by the Group using the present value of the estimated future costs of decommissioning of these assets. The discount rate is reviewed at each reporting date and reflects current market assessments of the time value of money and the risks specific to the liability. Most of these costs are not expected to be incurred until several years, or decades, in the future and will be funded from general Group resources at the time of removal. The Group capitalises the associated decommissioning costs as part of the carrying amount of the non-current assets. Changes in obligation, reassessed regularly, related to new circumstances or changes in law or technology, or in the estimated amount of the obligation, or in the pre-tax discount rates, are recognised as an increase or decrease of the cost of the relevant asset. If a decrease in the liability exceeds the carrying amount of the asset, the excess shall be recognised immediately in profit or loss. The Group’s petrochemical, refining and marketing and distribution operations are carried out at large manufacturing facilities and fuel outlets. The nature of these operations is such that the ultimate date of decommissioning of any sites or facilities is unclear. Current regulatory and licensing rules do not provide for liabilities related to the liquidation of such manufacturing facilities or of retail fuel outlets. Management therefore believes that there are no legal or contractual obligations related to decommissioning or other disposal of these assets. Income Taxes. Income taxes have been provided for in the consolidated financial statements in accordance with legislation enacted or substantively enacted by the end of the reporting period. The income tax charge comprises current tax and deferred tax and is recognised in profit or loss for the year, except if it is recognised in other comprehensive income or directly in equity because it relates to transactions that are also recognised, in the same or a different period, in other comprehensive income or directly in equity. Current tax is the amount expected to be paid to, or recovered from, the taxation authorities in respect of taxable profits or losses for the current and prior periods. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 54 Note 28: Material accounting policy information (continued) Deferred tax balances are measured at tax rates enacted or substantively enacted at the end of the reporting period, which are expected to apply to the period when the temporary differences will reverse or the tax loss carry forwards will be utilised. Deferred tax assets and liabilities are netted only within the individual companies of the Group. Income tax penalties expense and income tax penalties payable are included in Taxes other than income tax in the consolidated statement of profit or loss and other comprehensive income and taxes payable in the consolidated statement of financial position, respectively. Income tax interest expense and payable are included in interest expense in the consolidated statements of profit or loss and other comprehensive income and other accounts payable and accrued expenses in the consolidated statement of financial position, respectively. Share capital. Ordinary shares and non-redeemable preferred shares with discretionary dividends are both classified as equity. Dividends paid to shareholders are determined by the Board of directors and approved at the annual or extraordinary shareholders’ meeting. Dividends are recorded as a liability and deducted from equity in the period in which they are declared and approved. Treasury shares. Common shares of the Company owned by the Group at the reporting date are designated as treasury shares and are recorded at cost using the weighted-average method. Gains on resale of treasury shares are entered in additional paid-in capital whereas losses reduce additional paid-in capital to the extent that previous net gains from resale are included therein or otherwise to retained earnings. Earnings per share. Preferred shares are not redeemable and are considered to be participating shares. Basic and diluted earnings per share are calculated by dividing profit or loss attributable to ordinary and preferred shareholders by the weighted average number of ordinary and preferred shares outstanding during the period. Profit or loss attributed to equity holders is reduced by the amount of dividends declared in the current period for each class of shares. The remaining profit or loss is allocated to ordinary and preferred shares to the extent that each class may share in earnings if all the earnings for the period had been distributed. Treasury shares are excluded from calculations. The total earnings allocated to each class of shares are determined by adding together the amount allocated for dividends and the amount allocated for a participation feature. Revenue from Contracts with Customers. Revenue is income arising in the course of the Group’s ordinary activities. Revenue is recognised in the amount of transaction price. Transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring control over promised goods or services to a customer, excluding the amounts collected on behalf of third parties. Revenue is recognised net of discounts, value added taxes. The Group’s business activities include sales of crude oil and refined products, petrochemical raw materials. Revenues are recognised at a point in time when control over such products has transferred to a customer, which refers to ability to direct the use of, and obtain substantially all of the remaining benefits from the products. Transfer occurs when the products have been shipped to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the products in accordance with the sales contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied. The Group operates a chain of own petrol (gas) stations selling refined products. Revenue from the sale of products is recognised when a group entity sells a product to the customer. Payment of the transaction price is due immediately when the customer purchases the fuel. Since no right of return, no refund liability is recognised. Receivables are recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due. No significant element of financing is deemed present as the sales are made with short-term credit terms consistent with market practice. As a consequence, the Group does not adjust any of the transaction prices for the time value of money. If the amount of payments exceeds the cost of the transferred products, a liability under the contract with the buyer is recognised and reflected in the item "Accounts payable and accrued liabilities" as "Advances received from buyers and customers". Recognition of interest, fee and commission income and expense from financial services. Interest income and expense are recognised on an accrual basis calculated using the effective interest method. Fee and commission income are recognised over time on a straight line basis as the services are rendered, when the customer simultaneously receives and consumes the benefits provided by the Group’s performance. Such income includes recurring fees for account maintenance, account servicing fees, account subscription fees, premium service package fees, portfolio and other asset management advisory and service fees, wealth management and financial planning services, or fees for servicing loans on behalf of third parties, etc. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 55 Note 28: Material accounting policy information (continued) Transportation expenses. Transportation expenses recognised in the consolidated statements of profit or loss and other comprehensive income represent all expenses incurred by the Group to transport crude oil and refined products to end customers (they may include pipeline tariffs and any additional railroad costs, handling costs, port fees, sea freight and other costs). Compounding fees are included in selling, general and administrative ex penses. Government grants. Grants from the government are recognised at their fair value where there is reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to the purchase of property, plant and equipment are included in non-current liabilities as deferred income and are credited to other operating income on a straight line basis over the expected lives of the related assets. Translation of results and financial position of a subsidiary whose functional currency is the currency of a hyperinflationary economy. The Group considers the effect of translation of changes in the general price index (inflation) for a subsidiary whose functional currency is the currency of a hyperinflationary economy as part of the Foreign currency translation adjustment in the other comprehensive income. The effect on the subsidiary's monetary assets and liabilities is reflected in the "Foreign exchange gain, net". Elimination of intercompany transactions with a subsidiary operating in a hyperinflationary economy. IFRS and the interpretations to IFRS do not provide detailed guidance on accounting for the elimination of intercompany income and expenses in a situation where a parent operating in a stable economy records inventory sales at the exchange rate at the date of the transaction, and the subsidiary has related expenses (the cost of inventory purchased from the parent company and sold to final consumers) is recalculated using the general price index (inflation) and converted into the presentation currency of the consolidated financial statements at the exchange rate at the reporting date. Considering the impact of moving inventory to a hyperinflationary economy, the rate of exch ange at the date of the transaction is used for the purpose of eliminating this intercompany income and expenses in the consolidated financial statements. Changes in consolidated financial statement presentation. During the year ended 31 December 2024, the Group changed the presentation of intangible assets in the consolidated statement of financial position. Before the change, the Group's intangible assets were presented within the line "Other non-current assets". After the change, intangible assets are presented in a separate line. The Group's management believes that this change allows for a better assessment of the Group's asset structure and provides more relevant information about the financial position of the Group. The figures for the previous period have been adjusted to match the current year's presentation. Impact of the changes in presentation for the year ended 31 December 2023 in the table below: Items before changes Changes Items after changes Other non-current assets 43,345 (21,020) 22,325 Intangible assets х + 21,020 21,020 TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 56 Note 29: Critical accounting estimates and judgements in applying accounting policies The Group makes estimates and assumptions that affect the amounts recognised in the consolidated financial statements and the carrying amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management of the Group also makes certain judgements, apart from those involving estimations, in the process of applying the accounting policies. Judgements that have the most significant effect on the amounts recognised in the consolidated financial statements and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities within the next financial year include: • Estimation of oil and gas reserves; • Useful life of property, plant and equipment; • Decommissioning provisions; • Impairment of property, plant and equipment; • Accounting of investments in JSC “National Non-State Pension Fund”; • Sale and purchase of oil under contracts for counter oil deliveries; • Financial assets impairment; • Financial instruments fair value estimation; • Presentation of excise tax, including reverse excise. Estimation of oil and gas reserves. Oil and gas development and production assets are depreciated on a unit-of- production (UOP) basis for each field or group of fields with similar characteristics at a rate calculated by reference of proved developed reserves. Estimates of proved reserves are also used in the determination of whether impairments have arisen or should be reversed. Also, exploration drilling costs are capitalised pending the results of further exploration or appraisal activity, which may take several years to complete and before any related proved reserves can be booked. Proved reserves are estimated by reference to available geological and engineering data and only include volumes for which access to market is assured with reasonable certainty. Estimates of oil and gas reserves are inherently uncertain, require the application of judgment and are subject to regular revision, either upward or downward, based on new information such as from the drilling of additional wells, observation of long-term reservoir performance under producing conditions and changes in economic factors, including product prices, contract terms or development plans. In 2024, internal experts, in accordance with the regular review procedure, updated the estimates of the Group’s oil and gas reserves most susceptible to the factors listed above in accordance with rules approved by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers (SPE) for proved reserves . Changes to the Group’s estimates of proved developed reserves affect prospectively the amounts of depreciation, depletion and amortization charged and, consequently, the carrying amounts of oil and gas properties. It is expected, however, that in the normal course of business the diversity of the Group’s po rtfolio will limit the effect of such revisions. The outcome of, or assessment of plans for, exploration or appraisal activity may result in the related capitalised exploration drilling costs being written off in the profit or loss for the year. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 57 Note 29: Critical accounting estimates and judgements in applying accounting policies (continued) Useful life of property, plant and equipment. Based on the terms included in the licenses and past experience, management believes hydrocarbon production licenses will be extended past their current expiration dates at insignificant additional costs. As a result of the anticipated license extensions, the assets are depreciated over their useful lives beyond the end of the current license term. Management assesses the useful life of an asset by considering the expected usage, estimated technical obsolescence, residual value, physical wear and tear and the operating environment in which the asset is located. Differences between such estimates and actual results may have a material impact on the amount of the carrying values of the property, plant and equipment and may result in adjustments to future depreciation expenses for the period. Management reviews the appropriateness of the assets’ useful economic liv es and residual values at the end of each reporting period. The review is based on the current condition of the assets, the estimated period during which they will continue to bring economic benefit to the Group and the estimated residual value. Decommissioning provisions. Management makes provision for the future costs of decommissioning oil and gas production facilities, wells, pipelines, and related support equipment and for site restoration based on the best estimates of future costs and economic lives of the oil and gas assets. Estimating future decommissioning provisions is complex and requires management to make estimates and judgments with respect to removal obligations that will occur many years in the future. Changes in the measurement of existing obligations can result from changes in estimated timing, future costs or discount rates used in valuation. The amount recognised as a provision is the best estimate of the expenditures required to settle the present obligation at the reporting date based on current legislation in each jurisdiction where the Group ’s operating assets are located, and is also subject to change because of revisions and changes in laws and regulations and their interpretation. As a result of the subjectivity of these provisions there is uncertainty regarding both the amount and estimated timing of such costs. Sensitivity analysis for changes in discount rate: Impact on decommissioning provision Change in At 31 December 2024 At 31 December 2023 Discount rate 100 bp increase (3,361) (4,365) 100 bp decrease 4,010 5,521 Information about decommissioning provision is presented in Note 9. Impairment of property, plant and equipment. Information is presented in Note 9. Accounting of investments in JSC “National Non-State Pension Fund” As at 31 December 2024 and 2023 the Group has 88.39% of shares of JSC “National Non-Governmental Pension Fund”. The Group does not exercise either control or significant influence over JSC “National Non-Governmental Pension Fund” based on corporate governance and pension legislation. These investments are presented within financial assets carried at FVOCI as at 31 December 2024 and 2023 (Note 6). Operations for the sale and purchase of oil under contracts for counter oil deliveries. During the years ended 31 December 2024 and 2023 sales of crude oil under counter-delivery contracts in the amount of RR 486,086 million and RR 305,492 million respectively are presented net in the consolidated statement of profit or loss and other comprehensive income of the Group in accordance with the IFRS 15 requirements for exchange of products of similar quality. Financial assets impairment. Detailed information is presented in Note 27. TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 58 Note 29: Critical accounting estimates and judgements in applying accounting policies (continued) Financial instruments fair value estimation. Financial instruments carried at FVTPL or FVOCI are stated at fair value. If a quoted market price is available for an instrument, the fair value is calculated based on the quoted market price. When valuation parameters are not observable in the market or cannot be derived from quoted market prices, the fair value is derived through analysis of other observable market data appropriate for each product and pricing models which use a mathematical methodology based on accepted financial theories. Pricing models take into account the contract terms of the financial instruments as well as market-based valuation parameters, such as interest rates, volatility, exchange rates and the credit rating of the counterparty. Where market-based valuation parameters are missed, management makes a judgment as to its best estimate of that parameter in order to determine a reasonable reflection of how the market would be expected to price the instrument, in exercising this judgment, a variety of tools are used including proxy observable data, historical data, and extrapolation techniques. The best evidence of fair value of a financial instrument at initial recognition is the transaction price unless the instrument is evidenced by comparison with data from observable markets. Any difference between the transaction price and the value based on a valuation technique is not recognised in the consolidated statement of profit or loss and other comprehensive income on initial recognition unless the value is based on valuation technique that uses only data from observable markets. Subsequent gains or losses are only recognised to the extent that they arise from a change in a factor that market participants would consider in setting a price. Information on fair value of financial instruments where estimate is based on assumptions that do not utilize observable market prices is presented in Note 27. Presentation of excise tax, including reverse excise. Excise taxes, including reverse (negative) excise tax on crude oil, motor gasoline and diesel fuel, are presented in the Group's consolidated statement of profit or loss and other comprehensive income as part of the line “Taxes other than income tax” (Note 11). TATNEFT Notes to the Consolidated Financial Statements (In million of Russian Rubles) 59 Note 30: Adoption of new or revised standards and interpretations The following amended standards became mandatory for the consolidated financial statements of 202 4, but did not have any material impact on the Group: • Classification of liabilities as current or non-current – Amendments to IAS 1 (issued on 23 January 2020 and effective for annual periods beginning on or after 1 January 2022, deferred to 1 January 2024 by amendments to IAS 1 as below). • Classification of liabilities as current or non-current, deferral of effective date – Amendments to IAS 1 (issued on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023, deferred to 1 January 2024). • Non-current Liabilities with Covenants – Amendments to IAS 1 (issued on 31 October 2022 and effective for annual periods beginning on or after 1 January 2024). • Lease Liability in a Sale and Leaseback Amendments to IFRS 16 – Amendments to IFRS 16 (issued on 22 September 2022 and effective for annual periods beginning on or after 1 January 2024). • Supplier Finance Arrangements – Amendments to IAS 7 and IFRS 7 (issued on 25 May 2023 and effective for annual periods beginning on or after 1 January 2024). The Group early adopted Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates – No Currency Convertibility (issued on 15 August 2023 and effective for annual periods beginning on or after 1 January 2025) for the purposes of preparing its consolidated financial statements for 2024, and the application of the standard did not have a material impact on the Group. With respect to IFRS 18 Presentation and Disclosures in Financial Statements (issued on 9 April 2024 and effective for annual periods beginning on or after 1 January 2027), the Group is assessing the impact of this standard on its consolidated financial statements. The following published new standards and interpretations mandatory for annual periods beginning on 1 January 2025 or after, are not expected to have any material impact on the Group’s consolidated financial statements when adopted: • IFRS 19 Subsidiaries Not Obligated to Report Publicly: Disclosures (issued on 9 May 2024 and effective for annual periods beginning on or after 1 January 2027). • Amendments to the Classification and Measurement of Financial Instruments – Amendments to IFRS 9 and IFRS 7 (issued on 30 May 2024 and effective for annual periods beginning on or after 1 January 2026). • Annual Improvements to IFRSs – Amendments to IFRS 1, IFRS 7, IFRS 9, IFRS 10 and IAS 7 (issued on 18 July 2024 and effective for annual periods beginning on or after 1 January 2026). • Amendments to IFRS 10 and IAS 28 – Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (issued on 11 September 2014 and effective for annual periods beginning on or after a date to be determined by the IASB) . MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE YEARS ENDED 31 DECEMBER 2024 AND 2023 PJSC TATNEFT n.a. V.D. Shashin MD&A for the year ended 31 December 2024 2 Content Background.............................................................................................................................................................. 3 Key financial and operational results ...................................................................................................................... 4 Segment information ............................................................................................................................................... 4 Exceptional items .................................................................................................................................................... 5 Results of the Group operations for the year ended 31 December 2024 compared to the year ended 31 December 2023 ......................................................................................................................................................................... 6 Revenues (excluding financial services) ............................................................................................................ 7 Revenues breakdown (excluding financial services) .......................................................................................... 7 Costs and other expenses (excluding financial services) .................................................................................... 7 Other (expenses)/income ..................................................................................................................................... 8 Income taxes........................................................................................................................................................ 8 EBITDA reconciliation ........................................................................................................................................... 9 Financial Condition Summary Information ............................................................................................................. 9 Liquidity and Capital Resources............................................................................................................................ 10 Contractual obligations, other contingen and off-balance sheet obligations ......................................................... 10 Key Accounting Policies and Estimates ................................................................................................................ 11 Forward-looking statements .................................................................................................................................. 11 Statement regarding corporate governance and TCFD disclosures ....................................................................... 12 PJSC TATNEFT n.a. V.D. Shashin MD&A for the year ended 31 December 2024 3 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. 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. PJSC TATNEFT n.a. V.D. Shashin MD&A for the year ended 31 December 2024 4 Key financial and operational results 12 months ended Chg., 31 December2024 31 December2023 % 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%. Segment information Our operations are currently divided into the following main segments: • Exploration and Production – consists of the Company’s Oil and Gas Extraction and Production Division, as well as production subsidiaries. Most oil and gas exploration and production activities are concentrated within the Company and centrally managed by Tatneft-Upstream (Tatneft-Dobycha) Division. • Refining and Marketing – consists of a refining and petrochemical complex in Nizhnekamsk, Tatarstan, operated by TANECO, Gas Collection, Transportation and Refining Division Tatneftegaspererabotka, which also operates a small refinery in Kichui, Tatarstan; the Company’s Sales and Marketing Division (URNiN), Tatneft-AZS Center, Tatneft-AZS-Zapad, Tatneft-AZS-Severo-Zapad and other subsidiaries which manage the Tatneft branded gas stations network in Russia and abroad, and carry out refined products wholesale sales; as well as various ancillary companies. • Tires business - includes the production and sale of tires by the enterprises Ikon Tyres/Shina, and BRZ acquired in 2023. • Financial Services. These segments are determined by the way management recognizes the segments within the Group for making operating decisions and how they are evident from the Group structure. PJSC TATNEFT n.a. V.D. Shashin MD&A for the year ended 31 December 2024 5 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. 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 (RR million) 31 December2024 31 December2023 Expected credit losses on financial assets net of reversals (759) 566 Impairment losses on property, plant and equipment and other non-financial assetsnet of reversals 6,576 21,732 Total exceptional items 5,817 22,298 PJSC TATNEFT n.a. V.D. Shashin MD&A for the year ended 31 December 2024 6 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., (RR million) 31 December2024 31 December2023 % 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-financialassets 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) andgains/(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 debtfinancial 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 PJSC TATNEFT n.a. V.D. Shashin MD&A for the year ended 31 December 2024 7 Revenues (excluding financial services) A breakdown of Revenues (excluding financial services) by product type is provided in the following table: 12 months ended Chg., (RR million) 31 December2024 31 December2023 % 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. Revenues breakdown (excluding financial services) Revenues (including purchased oil and refined products) 12 months ended Chg., (RR million) 31 December2024 31 December2023 % 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. 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. PJSC TATNEFT n.a. V.D. Shashin MD&A for the year ended 31 December 2024 8 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 (RR million) 31 December2024 31 December2023 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. 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. 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. PJSC TATNEFT n.a. V.D. Shashin MD&A for the year ended 31 December 2024 9 EBITDA reconciliation 12 months ended (RR million) 31 December2024 31 December2023 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. Financial Condition Summary Information The following table shows certain key financial indicators based on the Consolidated Statement of Financial Position : (RR million) At 31 December2024 At 31 December2023 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. PJSC TATNEFT n.a. V.D. Shashin MD&A for the year ended 31 December 2024 10 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 servicesbefore 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 (RR million) At 31 December2024 At 31 December2023 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) 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. PJSC TATNEFT n.a. V.D. Shashin MD&A for the year ended 31 December 2024 11 Social commitments The Group contributes significantly to the maintenance of local infrastructure and the welfare of its employees in Tatarstan, which includes contributions towards the construction, development, and maintenance of housing, hospitals and transport services, recreation and other social needs. Such funding is periodically determined by the Board of Directors after consultation with governmental authorities and recorded as expenditures when incurred or capitalized to the extent that the Group will receive economic benefits from their use in the future. Key Accounting Policies and Estimates The preparation of consolidated financial statements in conformity with IFRS Accounting Standards requires management to select appropriate accounting policies and to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. For a full description of our significant accounting policies, please refer to Note 28 of consolidated financial statements of the Group. Forward-looking statements Certain statements in this document are not historical facts and are ‘‘forward -looking’’ (as such term is 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 12 Statement regarding corporate governance and TCFD disclosures This report does not contain corporate governance statement and climate-related financial disclosures consistent with the TCFD recommendations. The Company intends to include respective disclosures in its integrated annual report for 2024 (the Annual report) to be released for the approval by the Company’s annual shareholders meeting in the second quarter of 202 5. 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.

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