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02.04.2015 NCSP Group 2014 Consolidated Financial Results

Novorossiysk Commercial Sea Port Group (“NCSP Group” or the Group) (LSE: NCSP, Moscow Exchange: NMTP) today announces its consolidated financial results for the year ended 31 December 2014 prepared according to International financial reporting standards (IFRS).


NCSP Group’s consolidated financial statements under IFRS are available at the Groups website at http://nmtp.info/en/holding/investors/reporting/msfo/

Conference call for investors will be held today at 16:00 am Moscow time (14:00 GMT). See end of announcement for details. Press welcome to participate in listen only mode.


NCSP Groups revenue grew by 3.0% or $27.6 million year-on-year reaching $955.6 million in 2014.

Cost of sales decreased by 12.2% or $51.7 million, and SG&A by 6.9% year-on-year.

Groups EBITDA grew by 11.5%* or $58.7 million* over the previous year up to $569.1 million*. EBITDA margin rose by 4.6* percentage points to 59.6%.*


Commenting on the years results CEO of PJSC NCSP Sultan Batov said:

«Despite Groups cargo traffic shrinking by 7.0%* in 2014 we managed to achieve 3.0% increase in revenue thanks to a prudent tariff approach to tariffs and positive changes in our cargo mix, which translated into even stronger EBITDA growth of 11.5%*.

The situation changed dramatically from 2013 when cargo volumes and revenue were both decreasing.

Increase in grain volumes and growth in additional port service contributed the most to revenue increase – $49.7* million and $20.5* million respectively. Thus slump in crude oil revenues was fully offset by extra revenue from grain handling.

Revenue from additional services was growing on the back of higher volumes of ferrous metals, timber, and containers, also supported by growing share of loading containers in total traffic.

NCSP pursued a balanced tariff policy in 2014. Since the beginning of the year we increased handling rates for crude oil and oil products at PJSC NCSP to $3.2 and $3.0 per tonne respectively versus previously applied $2.6 and $2.7.

We have been developing coal handling since 2013, and in 2014 we increased revenue on this cargo from $5.8* to $8.4 per tonne. Average revenue per 1 TEU of container cargoes in 2014 comprised $102* versus $90.9* in 2013.

Since September 2014 we have introduced an adjustment ratio to Novorossiysk Grain Terminal tariffs, denominated in rubles, which helped to mitigate the negative effect of the sharp rubles depreciation in the last quarter of 2014».


Key operating and financial metrics for 2014 (in thousands of U.S. dollars, unless otherwise indicated)

2014

2013

Revenue

955 645

928 090

stevedoring services

752 499

735 076

additional port services

106 896

86 424

fleet services

81 553

90 681

other

14 697

15 909

Cost of sales

(372709)

(424456)

SG&A

(71598)

(76 942)

Foreign exchange loss

(789115)

(125353)

EBITDA*

569 122

510 449

EBITDA Margin (%)*

59.6%

55.0%

Loss for the year

(414663)

(104706)

31.12.2014

31.12.2013

Debt (including financial lease obligations)

1741 365

2186 014

Cash and cash equivalents

310 723

420 966

Net debt *

1430 642

1765 048

Net debt/EBITDA*

2.51

3.46

2014

2013

Cargo turnover (million tones)*

131.1

141.0


Revenue

NCSP Groups consolidated revenue in 2014 grew by 3.0% or $27.6 million compared to the previous year, up to $955.6 million.

Revenue from stevedoring services increased by 2.4% or $17.4 million to $752.5 million. Growth of selected cargoes volumes contributed $41.5 million* to the increase in stevedoring revenue and changes in some handling tariffs contributed $11.6 million.*

Revenue breakdown by cargo follows:

- A decrease in crude oil volumes by 19.0 million tonnes* or 20.7%* year-on-year led to a proportional decrease in revenue by $46.5 million* or 20.1%.*

However, at the Port of Novorossiysk the decrease in crude oil handling by 18.2%* or 6.8 million* tonnes was offset in revenue by an increase of the tariff from $2.60 per tonne in 2013 to $3.20 in 2014.

Revenue from handling crude oil at the Port of Primorsk in rubles decreased by 22.3%* year-on-year as cargo turnover fell by 12.2 million tonnes, but due to the rubles depreciation against the U.S. dollar the final decrease in revenue was 34.9%.

- Growth in oil products handling by 3.6 million tonnes* or 14.8%*, combined with rate increase at PJSC NCSP increased revenue from this cargo by $15.0 million* or 12.6%* year-on-year.

- Growth of grain handling by 3.4 million tonnes or 82.9%* compared to the previous year increased grain revenue by $49.7 million* or 89.8%.*

- Revenue from handling ferrous metals and pig iron, rose by $9.9 million* or 13.5%* as handling volume increased by 1 million tonnes or 11.6%.*

- Revenue from coal and timber grew by $4.8 million* and $3.6 million,* respectively.

- Growth of container turnover by 4.8%* in TEU* and 13.1%* in tonnes increased revenue by $9.8 million* or 17.6%,* partly due to a higher rate for loaded containers, which share in total traffic increased from 60.6%* in 2013 to 62.7%* in 2014.

- Revenue from handling of other cargo grew by $6.8 million.

- Revenue from bunkering as part of stevedoring revenue decreased by $35.7 million.

Revenue generated by additional port services grew by 23.7% or $20.5 million, as handling of ferrous metals and timber increased by respectively 11.6%* and 36.7%,* and container turnover and the share of loaded containers rose.

Revenue from fleet services decreased by 10.1% or $9.1 million, and revenue from other services reduced by 7.6% or $1.3 million.

Though most NCSP Groups tariffs are denominated in U.S. dollars, ruble revenue amounts to some 30%* of Groups consolidated revenue in 2014. The substantial depreciation of the ruble against the U.S. dollar in the reporting period, particularly in Q4 of 2014, negatively impacted Group revenue in the amount of $57.6 million.*


Costs

The Groups cost of sales decreased by 12.2% or $51.7 million in 2014, and selling, general business and administrative expenses fell by 6.9% or $5.3 million versus 2013.


EBITDA

Groups EBITDA grew by 11.5%* or $58.7 million* over the previous year up to $569.1 million*. EBITDA margin rose by 4.6* percentage points to 59.6%.*

EBITDA rose by $61.5 million* compared to the previous year on the back of the increase in stevedoring revenue due to the growth of handling volume and share of higher-margin cargo in cargo turnover, as well as an increase in some tariffs.

The growth of additional port services revenue by $20.5 million on one hand, and the decrease in revenue from fleet services on the other increased EBITDA by $6.1 million.*

A loss of $7.1 million on interest in Novorossiysk Fuel Oil Terminal in 2014 compared to a profit of $1.8 million in 2013 reduced EBITDA by $8.9 million.


Loss for the year

NCSP Group posted $414.7 million net loss in 2014 versus $104.7 million loss in 2013.

This loss was incurred due to noncash expense on foreign exchange loss in the amount of $789.1 million in 2014 and $125.4 million in 2013. Foreign exchange losses are charged on Groups financial liabilities and assets in foreign currency due to their revaluation at the ruble exchange rate at the beginning and end of the reporting period.

In 2014 the rubles exchange rate against the U.S. dollar fell from 32.7 rubles as of 31.12.2013 to 39.4 rubles as of 30.09.2014 and to 56.3 rubles as of 31.12.2014.


Debt and events after the reporting date

NCSP Groups debt, including financial lease obligations, stood at $1 741.4 million on December 31, 2014, which is $444.6 million less than that on December 31, 2013.

The Group repaid $300 million of principal debt on a loan of $1.95 billion from Sberbank according to repayment schedule in 2014, and completely repaid ruble loans from Sberbank in the amount of $72.8 million.

PJSC NCSP signed an additional agreement with Sberbank on March 18, 2015 to amend covenants on the Sberbank loan of $1.95 billion. The changes include determining the share price on the basis of the independent appraisers report once a year by June 30 instead of the exchanges closing price criteria used previously.

The outstanding debt on the Sberbank loan is $1.65 billion, and the annual interest rate is LIBOR 3M +5%; the due date is January 18, 2018.

The average annual effective interest rate of NCSP Group borrowing was 5.4% as of December 31, 2014.


About NCSP Group

NCSP Group is the largest port operator in Russia and the third-largest in Europe, in terms of cargo turnover. NCSP shares are traded on Russia's Moscow Exchange (ticker: NMTP) and on the London Stock Exchange in the form of GDRs (ticker: NCSP). NCSP Group cargo turnover in 2014 totalled 131 million tonnes. Consolidated revenue to IFRS in 2014 totalled USD 956 million and EBITDA was USD 569 million. NCSP Group consolidates the following companies: PJSC Novorossiysk Commercial Sea Port, LLC Primorsk Trade Port, PJSC Novorossiysk Grain Terminal, OJSC Novorossiysk Ship Repair Yard, OJSC NCSP Fleet, OJSC NLE, OJSC IPP, CJSC Baltic Stevedore Company, and CJSC SFP.


Contacts

Kristina Senko, Public Relations; KSenko@ncsp.com

Mikhail Shchur, Investor Relations; MShchur@ncsp.com


Conference call and webcast

Conference call and webcast for investors & analysts will be held on 2 April 2015 at 16:00 Moscow time (14:00 GMT / 9:00 am New York).

Media are welcome to participate in listen only mode.

The call will be hosted by:

· Sultan Batov, CEO of PJSC NCSP

German Kachan, Chief Accountant of PJSC NCSP

Mikhail Shchur, Investor Relations Director, PJSC NCSP

The call will be in Russian, with simultaneous English translation on a separate line.


Name of call: NCSP Group 2014 Financial Results

Webcast & registration link, English only: https://engage.vevent.com/rt/nmtp/index.jsp?seid=50

Russian call conference ID: 17399393

English call conference ID: 17420321

Conference call dial-ins:

Russia +7 499 6771036

UK +44 (0) 0844 4933800

US +1 631 510 7498

International +44 (0) 1452 555566


*Management accounts

 

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