Novorossiysk Commercial Sea Port Group (“NCSP Group” or the “Group”) (LSE: NCSP, MICEX: NMTP) announces its unaudited consolidated financial results for the first six months ended 30 June 2011 in accordance with International Financial Reporting Standards (IFRS).
The complete report “Interim Condensed Consolidated Financial Statements for the First Six Months ended 30 June 2011” is available on the Group’s website (nmtp.info) at INVESTOR RELATIONS/REPORTING/Consolidated Financials under IFRS
Key performance indicators of the Group (USD ‘000s)
* Here and below – based on management accounts data
** Calculated as operating profit, increased by the amount of depreciation charges and other income/expense
*** Including VAT and financing of NMT
NCSP Group consolidated revenue in the first six months of 2011 totaled $494.1 million, compared with $348.3 million in the same period of 2010.
Not accounting for PTP consolidation, absence of revenue from grain handling and increase of revenue from bunkering services, the Group’s revenue in the first six months of 2011 increased by 1.4% versus the corresponding period of 2010. This is due to the increase in handling volumes across a number of cargoes, changing cargo-mix as well as increasing effectiveness of technology.
With the acquisition of LLP Primorsk Trade Port (“PTP”), the Group increased the geography diversification of its operations. Therefore the Group has presented the breakdown of sales by geography:
PTP acquisition led to an increase in revenue for the first half of 2011 by $122.9 million versus the same period of last year.
Revenues from stevedoring services in Baltiysk in the first six months of 2011 increased by 55.4% (to $6.8 million in the reporting period).
Despite almost absent grain handling volumes during the first six months of 2011, NCSP Group’s revenue in the port of Novorossiysk increased by $19.3 million in the reporting period due to the increased revenues from bunkering services and to the growth of other cargoes including, iron ore, containers, mineral fertilizers and others. Starting from July 1st 2011, handling of grain resumed following the lift of the grain export ban.
Cost of Services
NCSP Group’s cost of services according to IFRS totaled $254.9 million in the first six months of 2011 versus $118.2 million in the same period of 2010.
The main factors contributing to the growth in cost of services in the first half of 2011 versus the same period of 2010 included:
· consolidation of PTP (+$43* million in the reporting period);
· increase in bunkering services provided by NCSP, which led to an increase of purchased fuel for the Group, including bunker fuel, from $34.4 million in the first six months of 2010 to $116.1 million in the first half of 2011;
· increase in personnel costs (including taxes directly attributable to salaries) by $11.3 million due to consolidation of PTP ($5.2* million) as well as to the new collective employment agreement with NCSP employees.
NCSP Group’s selling, general and administrative expenses in the reporting period totaled $37.7 million versus $17.2 million in the same period of last year. The increase is largely due to the growth in wages and salaries associated with the PTP consolidation, inflation, as well as a reverse in 2010 of a previously recorded loss.
In order to ensure comparability of data for the first six months of 2011 with the same period of 2010, EBITDA for both periods is adjusted for exchange rate differences, resulting from fluctuations in the Russian Ruble exchange rate against the US dollar, on Group’s assets and liabilities in foreign currency. As such, adjusted EBITDA in the first half of 2011 totaled $243.1* million versus $245.4* million in the same period of 2010.
Changes in Adjusted EBITDA in the reporting period were driven by the following key factors:
· PTP consolidation led to an increase of Adjusted EBITDA by $75.9* million;
· decrease in Adjusted EBITDA by $57.1* million in the reporting period due to the grain export ban.
The Group’s Net Income for the period totaled $308.0 million, which is $180.1 million (+140.8%) above the Net Income for the first half of 2010. This increase incorporates $160.0 million of positive change in FX gain/loss, as well as $113.2 million of positive change from translation into presentation currency.
Leverage and Net Debt
NCSP Group’s total debt as of June 30th 2011 totaled $2 595.1 million. Adjusted for cash and equivalents, the Group’s net debt totaled $2 546.8 million as of June 30th 2011.
On January 21st 2011 to finance acquisition of PTP the Group raised a loan from Sberbank in the amount of $1 950.0 million. The Group also consolidated PTP’s existing debt as of the date of the acquisition in the amount of $368.4 million. The Group’s Net Debt at the balance sheet date totaled $2 546.8 million.
Weighted average interest rate on the Group’s loans and borrowings as of June 30th 2011 totaled 5.8% (accounting for 3-month Libor rate of 0.255% as of June 30th 2011).
The maturity schedule of the Group’s liabilities as of June 30th was as follows:
In the reporting period NCSP Group continued implementation of its investment program, aimed at construction of new and reconstruction of existing stevedoring capacities.
During the first six months of 2011, according to the Group’s management accounts, capital expenditure totaled $59.3* million (including VAT and investments in NMT) versus $44* million in the same period of 2010.
Slight reduction versus previously stated schedule is explained by deferral of investments across several projects, including later than expected receipt of a land plot, necessary for realization of the second stage of BSK development, as well as alignment of the expenditure schedule for Shesharis oil terminal reconstruction with the disposable cash flows of the Group.
About NCSP Group
Novorossiysk Commercial Sea Port is the largest Russian port operator and the 3rd operator in Europe in terms of cargo turnover. NCSP shares are traded on Russia's MICEX (NMTP) and on the London Stock Exchange in the form of GDRs (NCSP). NCSP Group consolidated cargo turnover in 2010 totaled 81.6 million tons (excluding Primorsk Trade Port), and consolidated revenue to IFRS for 2010 totaled $635.3 million and net profit of $258.0 million. NCSP Group combines the following stevedore companies: OJSC Novorossiysk Commercial Sea Port, PJSC Primorsk Trade Port (since 2011), PJSC Novorossiysk Grain Terminal, OJSC Novorossiysk Shipyard, PJSC Fleet of NCSP, OJSC Novoroslesexport, OJSC IPP, and Baltic Stevedoring Company Ltd.
Document: NCSP Group First Half 2011 IFRS Results
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