OREANDA-NEWS. Naftogaz of Ukraine has released its unaudited standalone (not consolidated) financial statements for the first half of 2016.

The main factors contributing to the positive performance results have been represented by the following profits in the total amount of UAH 34.3 billion:

· UAH 18.8 billion of gross profits from natural gas transit services

· UAH 12.9 billion of gross profits from wholesale trading in natural gas
· UAH 2.6 billion of other income reduced by other expenses (surplus from natural gas revaluation, reversal of allowance for doubtful debts, etc.)

The above income has been partially, in the amount of UAH 12.5 billion, decreased by:

· UAH 5.5 billion of VAT additionally charged on the cost of transit services for Gazprom. From 1 January 2016, in compliance with the Tax Code of Ukraine, Gazprom’s gas transit operations are subject to VAT. Such VAT amount is recognized as an expense because it is not reimbursed by the buyer. Naftogaz expects these VAT amounts to be paid back by Gazprom after so awarded by the Stockholm Arbitration.

· UAH 4.2 billion of financial expenses (loan interests, etc.)

· UAH 2.8 billion of currency exchange losses incurred by the company through hryvnia devaluation. Naftogaz’s debts under foreign currency loans at the beginning of 2016 amounted to approx. USD 2.8 billion. Hryvnia’s exchange rate to US dollar changed from UAH 24.00 per USD 1 early in the year, up to UAH 24.85 per USD 1 in June 2015, which caused the increased debts in the national currency’s equivalent and respective losses reflected in the financial performance report.

The amount of profit received by the company in HY1 2016 does not take into account expenses for increasing doubtful debt allowance of UAH 1.0 billion, since the CMU Resolution No. 899 dd. 3 October 2012 prohibits to accrue such allowance before the financial plan is approved as required by law. As soon as the financial plan is approved, the company will reflect the expenses for doubtful debts allowance increase among other operational expenses, which will impair the financial result.