36. SEGMENT INFORMATION

Presented below is information about the Group’s operating segments for the years ended December 31, 2013 and 2012. Operating segments are components that engage in business activities that may earn revenues or incur expenses, whose operating results are regularly reviewed by the chief operating decision maker (CODM), and for which discrete financial information is available.

The Group manages its operations in 2 operating segments: Upstream and Downstream.

Upstream segment (exploration and production) includes the following Group operations: exploration, development and production of crude oil and natural gas (including joint ventures results), oil field services. Downstream segment (refining and marketing) processes crude into refined products and purchases, sells and transports crude and refined petroleum products (refining and marketing). Corporate centre expenses are presented within the Downstream segment.

Eliminations and other adjustments section encompasses elimination of inter-segment sales and related unrealised profits, mainly from the sale of crude oil and products, and other adjustments.

Intersegment revenues are based upon estimated market prices.

Adjusted EBITDA represents the Group’s EBITDA and its share in equity accounted investments’ EBITDA. Management believes that adjusted EBITDA represents useful means of assessing the performance of the Group’s ongoing operating activities, as it reflects the Group’s earnings trends without showing the impact of certain charges. EBITDA is defined as earnings before interest, income tax expense, depreciation, depletion and amortisation, foreign exchange gain (loss), other non-operating expenses and includes the Group’s share of profit of equity accounted investments. EBITDA is a supplemental non-IFRS financial measure used by Management to evaluate operations.

RUB millions

Year ended December 31, 2013

Upstream

Downstream

Eliminations

Total

SEGMENT REVENUES

Refined products, oil and gas sales and other revenues:

External customers

24,284

1,243,319

1,267,603

Inter-segment

445,356

7,287

(452,643)

TOTAL REVENUES

469,640

1,250,606

(452,643)

1,267,603

SEGMENT RESULTS

Adjusted EBITDA

175,474

161,278

336,752

Depreciation, depletion and amortisation

59,095

17,690

76,785

CAPITAL EXPENDITURE

154,489

54,122

208,611

Примечания к консолидированной финансовой отчетности

за год, закончившийся 31 декабря 2013 года (продолжение)

RUB millions

Year ended December 31, 2012

Upstream

Downstream

Eliminations

Total

SEGMENT REVENUES

Refined products, oil and gas sales and other revenues:

External customers

20,729

1,211,920

1,232,649

Inter-segment

438,201

4,139

(442,340)

TOTAL REVENUES

458,930

1,216,059

(442,340)

1,232,649

SEGMENT RESULTS

Adjusted EBITDA

188,891

134,215

323,106

Depreciation, depletion and amortisation

54,233

14,930

69,163

CAPITAL EXPENDITURE

101,913

67,300

169,213

The geographical segmentation of the Group’s revenue and capital expenditures for the for the years ended December 31, 2013 and 2012 is presented below:

RUB millions

Year ended December 31, 2013

Russian Federation

CIS

Export and international sales

Total

Sales of crude oil

19,257

48,620

209,449

277,326

Sales of petroleum products

630,359

58,309

477,365

1,166,033

Sales of gas

23,926

1,461

25,387

Other sales

31,266

1,065

2,960

35,291

Less custom duties and sales related excises

(3,355)

(233,079)

(236,434)

REVENUES FROM EXTERNAL CUSTOMERS, NET

704,808

104,639

458,156

1,267,603

RUB millions

Year ended December 31, 2012

Russian Federation

CIS

Export and international sales

Total

Sales of crude oil

13,241

29,783

347,953

390,977

Sales of petroleum products

572,082

59,177

441,774

1,073,033

Sales of gas

17,729

6,281

24,010

Other sales

28,382

625

2,423

31,430

Less custom duties and sales related excises

(4,647)

(282,154)

(286,801)

REVENUES FROM EXTERNAL CUSTOMERS, NET

631,434

84,938

516,277

1,232,649

The Group has no customer which accounted for more than 10% of the Group’s sales.

RUB millions

Russian Federation

CIS

Export and international sales

Total

Non-current assets as of December 31, 2013

935,843

10,233

143,572

1,089,648

Capital expenditures for year ended December 31, 2013

168,085

2,783

37,743

208,611

Non-current assets as of December 31, 2012

820,217

7,442

94,061

921,720

Capital expenditures for year ended December 31, 2012

138,264

2,192

28,757

169,213

Adjusted EBITDA for the years ended December 31, 2013 and 2012 is reconciled below:

RUB millions

Year ended December 31, 2013

Year ended December 31, 2012

Profit for the period

186,720

184,152

Total income tax expense

39,260

39,769

Finance expense

11,233

11,089

Finance income

(6,011)

(3,275)

Depreciation, depletion and amortization

76,785

69,163

Net foreign exchange (loss) / gain

2,166

(1,042)

Other loss, net

6,310

5,268

EBITDA

316,463

305,124

Less share of profit of associates and joint ventures

(11,251)

(12,767)

add Share of EBITDA of associates and joint ventures

31,540

30,749

TOTAL ADJUSTED EBITDA

336,752

323,106

Notes in Consolidated Statements:

Consolidated Statement of Profit and Loss and Other Comprehensive Income