GAZPROM: 2Q 2020 IFRS RESULTS AUGUST 31, 2020 1 2Q2020 IFRS - - PowerPoint PPT Presentation

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2Q2020 IFRS RESULTS

GAZPROM: 2Q 2020 IFRS RESULTS

AUGUST 31, 2020

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2Q2020 IFRS RESULTS

Alexan ander der Ivannik nikov

Head of Departm tment nt

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2Q2020 IFRS RESULTS

DISCLAIMER

This presentation has been prepared by PJSC Gazprom (the “Company”), and comprises the slides for a presentation to investors concerning the Company. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or other securities representing shares in the Company, nor shall it or any part of it nor the fact of its presentation or distribution form the basis of, or be relied on in connection with, any contract or investment decision. Any viewer of this presentation considering a purchase of such securities is hereby reminded that any such purchase should be made solely on the basis of the information contained in the prospectus or other offering document prepared in relation thereto and will be subject to the selling restrictions set out therein. The information in this presentation should not be treated as investment advice. Care has been taken to ensure that the facts stated in this presentation are accurate, and that the opinions expressed are fair and

• reasonable. However, the contents of this presentation have not been verified by the Company. Accordingly, no representation or

warranty, express or implied, is made or given by or on behalf of the Company or any of its members, directors, officers or employees or any other person as to the accuracy, completeness or fairness of the information or opinions contained in or discussed at this

• presentation. None of the Company or any of their respective members, directors, officers or employees nor any other person accepts

any liability whatsoever for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection therewith. The information in this presentation includes forward-looking statements, such statements may also occur during the Q&A session. These forward-looking statements include all matters that are not historical facts, statements regarding the Company’s intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, prospects, growth, strategies, and the industry in which the Company operates. By their nature, forward-looking statements involve risks and uncertainties, including, without limitation, the risks and uncertainties to be set forth in the prospectus, because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward- looking statements contained in this presentation. In addition, even if the Company’s results of operations, financial condition and liquidity and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. No person is under any obligation to update or keep current the information contained herein. By attending the presentation you agree to be bound by the foregoing limitations.

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2Q2020 IFRS RESULTS

MARKET ENVIRONMENT: 2Q 2020 VS 2Q 2019

2Q 2020 HIGHLIG LIGHTS OIL AND GAS S PRICES WEATHE HER R INDEX EX1 IN EURO ROPE PE USD/RUB EXCHA HANGE E RATE

20 40 60 50 100 150

TTF 1 1 month th ahead Brent

USD/mmcm USD/bbl

1 Index is calculated as the sum of degree days for the respective month in European countries 2 HDD (heating degree days) – a degree day of the heating season CDD (cooling degree days) – a degree day of the cooling season 60 65 70 75 80 85

• AVERAGE OIL PRICES WERE AT THEIR LOWEST SINCE 2005
• TTF GAS PRICES HIT AN ALL-TIME LOW SINCE THE START OF

HUB TRADING IN EUROPE

• GAS SPOT PRICES WENT BELOW THE MARGINAL COSTS OF

MOST PRODUCERS

• LOW PRICES TO PROVIDE COMPETITIVENESS VS. OTHER

ENERGY SOURCES

• IN 3Q 2020 GAS MARKET STARTED TO REBOUND.
• TEMPORARY FACTORS: LESS FAVORABLE WEATHER

CONDITIONS Y/Y AND THE LOCKDOWN LED TO THE SIGNIFICANT CONTRACTION OF GAS CONSUMPTION IN EUROPE IN 2Q 2020

• AVERAGE RUBLE RATE IN 2Q 2020 WAS 12% WEAKER THAN

IN 2Q 2019, BUT…

• …IN 2Q 2020 RUBLE APPRECIATED BY 10%, WHICH

RESULTED IN FX GAINS

1Q2020 2020 2Q2020 2020 1Q2020 2020 2Q2020 2020

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2Q2020 IFRS RESULTS 1,163 94 94 149 149 301 301

• 18

18

• 319

19 3,271

• 300

700 1,700 2,700

Sales EBITDA Net profit CAPEX Operating CF adj. FCF adj. Net debt adj.

1 2 3 4 4

• THE SIGNIFICANT SHARE OF FIXED COSTS LED TO A DROP IN EBITDA MARGIN
• NET INCOME REMAINED POSITIVE THANKS TO FX GAINS AGAINST A BACKDROP OF RUBLE APPRECIATION IN 2Q 2020
• 2Q CAPEX CONTRACTED TO THE LOWEST LEVEL SINCE 2016
• 2% GROWTH OF NET DEBT IN RUBLES

2Q 2020 IFRS RESULTS

1 EBITDA adjusted for changes in impairment provisions 2 Profit attributable to PJSC Gazprom’s shareholders for the period 3 Cash capital expenditures 4 Adusted for changes in ST bank deposits 5 Compared to net debt as of March 31, 2020

• 1,0x

0x +2% +2%

• 50%

50%

• 13%

13%

Adjusted for analytical purposes*

*In order to reflect the effects of the decrease in bank deposits (reported as a part of other current assets and other non-current assets)

• 35%

35%

RUB bn

• 4,7x

7x

• 81

81%

2Q2019 vs 2Q2020 5

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2Q2020 IFRS RESULTS 38% 38% 54% 54% 8% 8% 41% 41% 53% 53% 6% 6%

OIL AND D GAS S CONDEN DENSA SATE, E, REFINED INED PRODU DUCT CTS

OIL AND ENERGY BUSINESS

Calculations may differ due to rounding. 1 Net of value added tax (VAT), excise tax and custom duties.

REVENUE E BY SEGMEN MENT1

729 729 739 739 699 699 594 594 439 439

200 400 600 800 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020

RUB bn

2Q2019 2Q2020 020 ELECTRICIT RICITY Y AND HEAT

104 104 95 95 145 145 158 158 94 94

100 200 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020

RUB bn

• 40%

40%

• 10%

10%

GAS S BUSIN INES ESS, S, TRANSP SPOR ORTATION ION AND OTHER

951 951 787 787 1,117 988 988 630 630

400 800 1,200 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020

• 34%

34%

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2Q2020 IFRS RESULTS

596 450 606 459 297 200 400 600 2Q19 3Q19 4Q19 1Q20 2Q20 NET SALES TO EUROPE & OC 42 37 73 77 40 4,020 4,051 4,182 4,181 4,111 1000 2000 3000 4000 25 50 75 100 2Q19 3Q19 4Q19 1Q20 2Q20 VOLUMES AVERAGE PRICE IN RUSSIA 169 148 305 323 166 100 200 300 400 2Q19 3Q19 4Q19 1Q20 2Q20 NET SALES TO RUSSIA 62 71 105 87 52 50 100 2Q19 3Q19 4Q19 1Q20 2Q20 NET SALES TO FSU

GAS BUSINESS

RUB/mcm bcm RUB bn

Calculations may differ due to rounding. 1 Net of value added tax (VAT) 2 OC — other countries, including LNG sales 3 VAT is not charged on export sales 4 Net of custom duties and excise tax on gas exports

bcm USD/mcm

1 3.4

RU RUSSIA IA EURO ROPE E & OC 2 FSU

USD/mcm bcm RUB bn RUB bn

3.4

• 2%

2%

• 50%

50%

• 16%

16% 56 54 61 52 47 208 170 198 162 110 50 100 150 200 250 20 40 60 80 100 2Q19 3Q19 4Q19 1Q20 2Q20 VOLUMES AVERAGE PRICE IN EUROPE & OC 7 8 12 9 6 155 150 153 146 137 50 100 150 200 5 10 15 2Q19 3Q19 4Q19 1Q20 2Q20 VOLUMES AVERAGE PRICE IN FSU

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2Q2020 IFRS RESULTS

• CHANGES IN WORKING CAPITAL (PART OF OPERATING CASH

FLOW) INCLUDE CHANGES IN ST BANK DEPOSITS

• OPERATING CASH FLOW AND FREE CASH FLOW NEED TO BE

ADJUSTED FOR CHANGES IN ST BANK DEPOSITS FOR ANALYTICAL PURPOSES

IMPACT OF BANK DEPOSITS

• BANK DEPOSITS ARE NOT INCLUDED IN СASH AND

CASH EQUIVALENTS

• NET DEBT AND NET DEBT/EBITDA NEED TO BE

ADJUSTED FOR BANK DEPOSITS FOR ANALYTICAL PURPOSES ST & LT BANK K DEPOSIT SITS APPL PLYIN ING LT AND ST BANK DEPOSIT SITS IS AIMED MED AT IMPRO ROVIN ING THE EFFICIEN ICIENCY CY OF LIQUID IDIT ITY Y MANAGEME EMENT

328 328 796 796 673 673 522 522 412 412 2 1 3 1 1

200 400 600 800 2017 2018 2019 1Q2020 2Q2020 ST DEPOSITS LT DEPOSITS

243 243 510 510

• 123

123

• 152

152

• 188

188

• 200

200 400 600 2017 2018 2019 1Q2020 2Q2020 RUB bn RUB bn  EARLY WITHDRAWAL CLAUSE  DEPOSIT TERM OF OVER 3 MONTHS

KEY FEA EATURES RES OF BANK K DEPOSIT SITS: S: ST BANK K DEPOS OSIT IT CHANGES ES

1 Reported as a part of other current assets and other non-current assets Source: Gazprom 2Q 2020 IFRS report, note 13

676 676 798 798 330 330

IMPACT CT OF BANK K DEPOS OSIT ITS S ON NET DEBT: IMPACT CT OF CHANGES ES IN ST DEPOS OSIT ITS ON CASH H FLOWS:

523 523

1

413 413

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2Q2020 IFRS RESULTS 115 115 188 188

• 19

19 170 170

• 18

18

• 319

319

• 301

301

• 400
• 300
• 200
• 100

100 200

REPORTED AS A PART OF CHANGES IN WORKING CAPITAL

2Q2020 ADJUSTED FREE CASH FLOW

RUB bn

CHAN ANGES GES IN BANK NK DEPO POSITS SITS FCF ADJUS JUSTED ED FOR R CHAN ANGES GES IN ST BANK NK DEPO POSIT SITS TURNED RNED NEGAT GATIVE IVE DUE E TO AN EXTREM EMEL ELY Y CHAL ALLEN ENGIN GING MARKE KET ENVIRO VIRONM NMENT ENT

OCF before working ing capit ital l chang anges Chang anges es in net working ing capit ital al and

• perating

ing items Chang anges es in ST deposit its Tax paid OCF reported Adjus ustment nt for a decreas ease in ST deposit its OCF adjus justed ed CAPEX FCF adjus justed ed

• 188

88

• 115

15

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2Q2020 IFRS RESULTS 299 347 436 551 419 301 200 300 400 500 600 17% 17% 30% 30% 27% 27% 28% 28% 15% 15% 14% 14% 30% 30% 17% 17% 5% 5% 5% 5% 6% 6% 6% 6% 0% 20% 40% 60% 80% 100% 2Q2019 2Q2020 Other Electric and heat energy generation and sales Transportation Production of gas Refining Production of crude

• il and gas

condensate

CAPITAL EXPENDITURES

RUB bn

CASH H CAPIT ITAL L EXPEN ENDIT ITURES ES SEGMEN MENT CAPEX EX

• 13%

13%

• 2Q 2020 CAPEX AT THE LOWEST LEVEL SINCE 4Q2016
• OPTIMIZATION MEASURES ALREADY REFLECTED AND

WILL INFLUENCE THE FY 2020 RESULT

• OIL PRODUCTION AND REFINING SEGMENTS

CONTRIBUTED SIGNIFICANTLY TO THE OVERALL CAPEX FIGURE FOR THE GROUP

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2Q2020 IFRS RESULTS 63.2 11 11 52.7 6 46.8 2.6 2.3

0.0 0.5 1.0 1.5 2.0 2.5 3.0 10 20 30 40 50 60 70 Total Debt Cash & equivalents Net Debt reported ST deposits LT deposits Net Debt adjusted Net Debt/EBITDA

KEY DEBT METRICS

NET DEBT IN 2Q 20201 TOTAL L DEBT CASH&EQU H&EQUIV IVALEN LENTS S (INCL.

• CL. DEPOSIT

SITS) S)

1 Net Debt adjusted for the bank deposits reported as a part of Other current assets and Other non-current assets (see Slide 8 for details). Based on calculations in USD.

RUB 22% USD 24% EUR 47% Other 7% RUB 71% USD 10% EUR 17% Other 2%

USD bn

CREDIT RATINGS Fitch h BBB / stable Moody dy's 's Baa2 / stable S&P BBB– / stable Dagong

• ng

AAA / stable ACRA RA AAA (RU) / stable DEBT MATURITY PROFILE IN 2Q 2020

9.5 7.1 9.3 7.8 6.1 11.3 12.2 0.0 2.0 4.0 6.0 8.0 10.0 12.0 2q2020

0-1 2-3 3-4 4-5 5-6 6 – 10 10+ USD bn

Years to maturity

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2Q2020 IFRS RESULTS 33 33 285 285 63 63 14 14 53 53 216 216 50 100 150 200 250 300 350 Net Income Financial FX Loss Operational FX Gain FA impairment Associated

• Comp. and JVs

Adjusted NI

RUB bn 1

NEW DIVIDEND POLICY

CALCU CULA LATION ION OF ADJUS JUSTE TED D NET T INCOM OME E FOR 1H 2020

DIVID IDEN END PAYMEN YMENT AS PER THE APPROVED ED POLICY Y IS GAZPR ZPROM'S OM'S PRIORIT ITY

1 – The difference between the share in the profit of affiliated entities and JVs and proceeds from affiliated entities and JVs

OUTL TLOO OOK

• TARGET DIVIDEND PAYOUT FOR

2020 — 40% OF ADJUSTED IFRS NET INCOME

• 40% OF 1H 2020 ADJUSTED IFRS

NET INCOME PER SHARE – 3.65 RUB/SHARE

• TARGET PAYOUT RATIO — 50% OF

NET INCOME FOR 2021 AND BEYOND

• CONSERVATIVE FINANCIAL POLICY

AIMED AT SECURING DIVIDEND PAYOUTS OUT OF FREE CASH FLOW

• COMMITMENT TO THE NEW

DIVIDEND POLICY DESPITE CHALLENGING MARKETS

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2Q2020 IFRS RESULTS

RESILIENCE TO EXTERNAL CHALLENGES

• THE INDUSTRY IS FACING THE MOST DIFFICULT SITUATION OVER A LONG PERIOD OF TIME
• ALL GLOBAL OIL AND GAS PLAYERS HAVE BEEN SEVERELY AFFECTED BY A UNIQUE COMBINATION OF HEADWINDS
• GAZPROM MAINTAINS ITS STRONG POSITION THANKS TO A NUMBER OF LONG-TERM FACTORS AND RESPONSE

MEASURES

FUNDAMENT AMENTAL AL ADVANT ANTAGE GES

 Low cash cost of gas production  Leadership in the European gas market  Increase of diversification of the gas export

portfolio (due to ramp-up of supplies to China)

 Balanced portfolio of long-term gas contracts  Diversified business structure: strong oil and

low-risk utilities segments

1

ROBUS UST FINAN ANCIAL IAL POSITION ITION

 Leverage control  Large short-term liquidity buffer  Conservative financial policy  FCF upside through the launch of key

projects

 Favorable FX breakdown of cash flows

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FCF SUPPOR PORT EFFORTS TS

 OPEX optimization  CAPEX optimization  Additional sources of FCF optimization

3

FOCUS ON DIVIDE IDEND ND PAYOU OUTS TS AND SUSTAINA INABLE DEVELOPME OPMENT NT

 Commitment to the Dividend Policy  Initiatives in sustainable development,

including ESG

 Focus on transparency and investor

relations

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2Q2020 IFRS RESULTS

ADDITIONAL INFORMATION

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2Q2020 IFRS RESULTS

122.3 109.4 132.5 123.5 98.1 50 100 150 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 12.2 12.5 11.7 11.6 11.1 5 10 15 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 4.1 3.7 4.5 4.5 3.5 1 2 3 4 5 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 18.8 11.6 40.8 45.1 20.9 10 20 30 40 50 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020 34.6 30.4 39.9 40.2 27.6 10 20 30 40 50 2Q2019 3Q2019 4Q2019 1Q2020 2Q2020

• 9%

9%

• 16%

16%

Natur ural al gas Crude e oil Gas condens nsat ate

Gazprom Group’s volumes produced in Russia Calculations may diverge due to rounding.

OPERATING METRICS

bcm mln ton mln ton

• 20%

20%

Electric icit ity Heat

bn kWh mln Gcal

• 20

20% +11%

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2Q2020 IFRS RESULTS

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