GEORGIAN OIL AND GAS

CORPORATION
Financial performance analysis

We analyzing financial performance according to income statement of

Georgian oil and gas corporation and compare 2013 and 2012 3 rd quarter
results .

We constructed common sized income statements for analyses each item of

income statement. Revenue increased with sustainable growth rate from 113.117
million to 133.768 and changes equal 20.651 million USD. Growth rate of revenue
is 18%.
Most higher expenses at income statement of Georgian oil and gas corporation is
cost of gas and oil , which are 54% of sales. We constructed common sized
income statement , where each item of revenue and expenditure are divided
by revenue . Cost of gas and oil increase with increase income. Sustainable
growth rate are same 18 %. Cost of sales increase from 60.909 million to 71.959
million and changes equal 11.050 million USD.
We calculated gross profit , which remains after subtract cost of oil and
gas . 46% from revenue remains after subtract most higher expenditure cost of oil and gas . growth rate of gross profit are 18% , increase from
52.208 million to 9.601 million and changes equals 9.601 million.
Next section analyses general and administrative expenses. Personnel costs
decreed by 24%. Reason of the trends re manly two. Salary reduction or minimize
number of employers. at common sized income statements analysis portion
of personnel cost decrees from 3% to 2% and decree equals 927,000 USD.
Taxes other than on profit expense also decreased by 6% and changes equals 164,
000 USD.
Other expenses ,which includes various miscellaneous expenses , decree
strongly by 42% . From 3.847 million to 2.235 million and equals 1.612 million.
Other income increase by 16%.

To analyze financial performance , very important part is calculation of

EBITDA , which equals earnings from operations before depreciation and
amortization . depreciation and amortization are non-cash item which
affected on income statement and when we constructed cash flow statement
adjusted net income with deportation expenses . for these reason EBITDA is
one of the important section at financial performance analysis .EBITDA
margin equals 45 % , which remains from subtraction general and
administrative expenses. We detect form common sized financial statement
analysis that EBITDA margin increase from 41 % to 45 % and main reason
of these increasing tends is decrease amount of other expense , which totally
are approximately 1.612 million also decreasing amount of personnel
expenses. EBITDA increase from 46.483 million to 59.587 million , increased
with highest growth rate - 28% and changes equals 13.104 million.
Depreciation and amortization, which are non-cash items, decreased by 10% and
changes equals 670,000 USD.
EBIT are 40 % of total revenues and increase by 5 % in commons sized income
statements analysis from 35% to 40% . under comparison of previous year ,
increase by 34% from 40.059 to 53.833 million and equals 13.744 millions . if we
compares growth rates of EBITDA and EBIT , its obvious EBIT has slightly
higher growth rate 34%-28%=6% . reason of these changes are decreasing in
deportation expenses . By 10%.
Next section are finance income and finance cost . Georgian oil and gas
corporation earned higher finance income in 3 rd quarter of 2013 years than
in previous period . Finance income increase from 10.978 million to 18. 590
million and changes equals 7.612 million. Finance income increased by 69%. with
increasing finance income also increase finance cost , which are derived from
bonds issue on foreign capital market . finance cost approximately doubled ,
increase from 6.750 to 12.940 and changes equal 6.190 million USD.
Earnings before taxation is one of the important section in income statement items.
EBT margin equals 44% and if we compares these results with previous years ,
EBT margin increase by 5% .
Net profit is last section in income statements which equals difference of
revenues and all expenses . net profit margin in 39% ,which means that
from each dollar of revenue net profit left 39% of these revenue . Net profit
margin increased from 38.751 to 52.048 and increased by 34%.

Below are presented main sources of revenue divided by categories

We can analyses that most majority source of revenue for Georgian gas and
oil corporations are derived from sale of gas ,which are 73% of total
revenues . These portion decreased from 80% to 73%. Rent of pipelines and
crude oil sales are slightly difference 14% , 11% respectively. Oil and
transportation sector is only 4% of total revenues.
Income from oil and transportation increased by 2% ,which equals 90,000
USD. Sales of crude oils increased sharply from 1.750 million to 12.71
million and growth rate are 726%, which is abnormal growth rate . rent of
pipelines increased by 4% and sales of gas increased by 6 % ,which equals
5.390 millions .
Total revenues increased by 17%, changes equals 18.840 million. main reason of
increase total revenues by 17% is abnormal growth rate of sales of crude oils
,which are approximately 726% .