6. Acquisition of Subsidiaries and Non-controlling Interest
Acquisition of LLC Gazprom neft shelf
On May 22, 2014 the Group acquired 100% share of LLC Gazprom neft shelf from JSC Gazprom for RUB 2.7 billion. The acquired company holds exploration and production licenses for Prirazlomnoye oil field. As of the acquisition date LLC Gazprom neft shelf had 18.31% share in joint operation with JSC Gazprom. The arrangement was designed for joint exploration and production on Prirazlomnoye oil field located in the Russian Federation. According to the agreement each partner was assigned for the respective share in profit. The share of the Group in joint arrangement with Gazprom was considered to be joint operation under IFRS 11 Joint Arrangements as decisions abount relevant activities required the unanimous consent of both participants. The joint operation was not structured as a separate legal entity.
After acquisition of share in LLC Gazprom neft shelf the Group made additional contribution to joint operation with JSC Gazprom of RUB 4.9 billion that increased the Group’s share up to 21.64%.
On October 31, 2014 JSC Gazprom made a decision to fully withdraw from the joint operation. All assets owned by the joint operation were transferred to LLC Gazprom neft shelf while JSC Gazprom will be compensated for its share in assets.
Transactions occurring on May 22, 2014 and October 31, 2014 were treated as common control transactions and accounted for using predecessor accounting method. The difference between net assets acquired on October 31, 2014 of RUB 86.9 billion and the consideration being the discounted value of the obligation of RUB 53.7 billion (included in Other non-current financial liabilities) was accounted for as increase in additional-paid-in-capital for the period ended December 31, 2014.
The following table presents information of LLC Gazprom neft shelf as of acquisition date (including share in assets and liabilities of joint operation) and information of acquired share of 78.36% in joint operation as of the date of JSC Gazprom withdrawal:
|As of May 22, 2014||As of October 31, 2014|
|Cash and cash equivalents||109||1,072|
|Trade and other receivables||768||465|
|Other current assets||2,448||2,936|
|Property, plant and equipment||23,007||81,035|
|Other non-current assets||986||1,276|
|Total assets acquired||28,929||89,279|
|Liabilities and shareholders’ equity|
|Short-term debt and current portion of long-term debt||(15,297)||(115)|
|Trade and other payables||(2,973)||(589)|
|Deferred income tax liabilities||(746)||(451)|
|Provisions for liabilities and charges||(939)|
|Total liabilities assumed||(24,939)||(2,405)|
|Net assets acquired||3,990||86,874|
Acquisition of Gazpromneft-Aero Sheremetyevo
In March 2014 the Group acquired 100% share in LLC Aero TO the only asset of which is 50% share in LLC Gazpromneft-Aero Sheremetyevo (Aero Sheremetyevo). This acquisition provided the Group with effective control over Aero Sheremetyevo having increased its effective interest from 50% to 100%. The main businesses of Aero Sheremetyevo are retail jet fuel and integrated services for aircraft fuel and lubricant supply. The Group remeasured its previously held interest in Aero-Sheremetyevo to fair value resulting in a gain of RUB 3.4 billion recognised under Other loss, net line in the Consolidated Statement of Profit and Loss and Other Comprehensive Income.
The following table summarises fair value of the assets and liabilities acquired:
|As of the acquisition date|
|Cash and cash equivalents||189|
|Trade and other receivables||669|
|Other current assets||528|
|Property, plant and equipment||1,882|
|Other non-current assets||46|
|Total assets acquired||11,110|
|Liabilities and shareholders’ equity|
|Trade and other payables||(654)|
|Other current liabilities||(147)|
|Deferred income tax liabilities||(1,552)|
|Total liabilities assumed||(3,385)|
|Total identifiable assets acquired and liabilities assumed||7,725|
|Fair value of the Group's investment in Aero-Sheremetyevo held before the business combination||4,110|
Acquisition of Non-controlling Interest in Subsidiaries
In 2014 the Group has accounted for the acquisition of the additional interest in several subsidiaries in the amount of RUB 4.1 billion. As a result of these transactions the Group decreased additional paid-in-capital by RUB 2.9 billion for the period ended December 31, 2014. This amount represents the excess of consideration paid over the carrying value of the non-controlling interests acquired of RUB 1.2 billion.
In 2013 the Group has accounted for the acquisition of the additional interest in several subsidiaries in the amount of RUB 1.2 billion. As a result of these transactions the Group increased additional paid-in-capital by RUB 3.2 billion for the period ended December 31, 2013. This amount represents the excess of the carrying value of the non-controlling interests acquired of RUB 4.4 billion over the consideration paid.