Pjsc Novor. S Regulatory News (NCSP)

Press release

NCSP Group Financial Results for 9M 2013

28.11.2013

Novorossiysk Commercial Sea Port Group ("NCSP Group" or the "Group") (LSE: NCSP, Moscow Exchange: NMTP) today reports its interim condensed consolidated IFRS financial results for the nine months ending 30 September 2013.

Operational highlights for 9M 2013

* Management accounts

NCSP Group's condensed consolidated IFRS financial information for the nine months ended 30 September 2013 are available for download at: http://nmtp.info/holding/investors/reporting/msfo/

Operational highlights for 9M 2013

Total cargo turnover for the first nine months 2013 was 106.5 mln tonnes, down 12.2% in comparison with 121.3 mln tonnes for the first nine months of 2012.

Crude oil remained the primary factor contributing to the decline in cargo turnover, with volumes decreasing by 16 mln tonnes, or 18.7% year-on-year. Volumes for oil products, however, increased by 36.3%, or 5 mln tonnes, year-on-year.

During the reporting period grain volumes amounted to 2.3 mln tonnes, a decline of 64.2% year-on-year. The start of exports of the new grain harvest in the third quarter has restored monthly volumes to 2012 levels. From July to September 2013 grain volumes reached 1,815 thousand tonnes, four times that of 1H 2013.

Iron ore volumes for the first nine months of 2013 reached 1,493 thousand tonnes, up 10.6% on the same period in 2012.

NCSP Group financial results for 9M 2013

Consolidated revenue in the reporting period was US$ 691.4 mln, compared with US$ 785.9 mln in the first nine months of 2012. Stevedoring was the Group's main source of revenue, amounting to US$ 546 mln in the first three quarters of 2013, compared with US$ 630.2 mln a year earlier.

The main factor influencing the change in stevedoring revenue was the reduction in crude oil volumes and the fall in grain volumes compared to 9M 2012, which led to year-on-year declines in revenue for these cargoes of US$ 42.6 mln and US$ 65.6 mln, respectively.

With the recovery in monthly grain volumes following the start of exports of the new grain harvest in August-September of this year, the year-on-year decline in grain revenue increased only slightly from the US$ 61.8 mln shortfall for the first six months of 2013.

The 5 mln tonnes year-on-year increase in oil products volumes was reflected in a US$ 26 mln increase in revenue from this cargo. At the same time, revenue growth rates were higher than volume growth rates, at 38.9% and 36.3%, respectively.

Revenue from container handling for the reporting period increased by 5.5%, or US$ 2.2 mln compared to 9M 2012.

Changes in revenues for other cargoes and services led to a US$ 4.2 mln year-on-year decline in stevedoring revenue.

Revenue from additional port services and fleet services declined by US$ 5 mln and US$ 6.2 mln year-on-year, respectively, in line with the Group's lower cargo turnover.

There was no significant year-on-year change in cost of sales and SG&A for the reporting period, which had a positive impact on the profitability of the Group's business against the recovery in grain volumes.

The Group's EBITDA for the first nine months of 2013 was US$ 379.7 mln, compared with US$ 468.8 mln in 9M 2012. The main contributor to the year-on-year decline in EBITDA was the decrease in stevedoring revenue, as a result of which EBITDA fell by US$ 68.4 mln; Net changes to cost of services (excluding bunkering) caused a reduction in EBITDA of US$ 10.6 mln; and the negative effect of a decline in revenue from additional port services and fleet services amounted to US$ 10.1mln.

The Group's net profit for the first nine months of 2013 was US$ 101.8 mln.

Net profit was supported by factors like a year-on-year decrease in finance costs and an increase in interest income of US$ 12.4 mln and US$ 11.2 mln, respectively, as well as deferred tax revenues of US$ 7.5 mln, resulting primarily from the allocation of foreign exchange tax losses to future reporting periods.

The effect of the weakening of the Russian rouble against the US dollar from 30.3727 roubles on 31 December 2012 to 32.3451 roubles on 30 September 2013 on the Group's assets and liabilities denominated in foreign currency was the main cause of the foreign exchange loss of US$ 108.1 mln.

The strengthening of the rouble in 3Q 2013 resulted in a lower foreign exchange loss than in 1Q 2013, when it reached US$ 129.2 mln.

Debt

The Group's total debt as of 30 September 2013 stood at US$ 2,182 mln; net debt was US$ 1,808 mln.

After the reporting period, NCSP Group on 25 November 2013 completed the important process of signing an additional agreement with Sberbank to change certain conditions of the Group's US$ 1,950 mln loan. The agreement significantly improves loan conditions:

· From 19 January 2014 the interest rate will be reduced to a floating rate of LIBOR 3M + 5.0% instead of the originally agreed fixed rate of 7.48%; 

· The loan repayment schedule has been restructured: the loan will be repaid in regular installments every six month starting in June 2014;  

· The amount of the repayments in 2014-2017 was reduced compared to the previous schedule.

· Installment payments will increase towards the end of the loan period, with a final balloon payment equivalent to 40% of the total indebtedness to be made on the last day of the agreement - 18 January 2018. 

· The parties also agreed more comfortable loan covenants, including a significantly higher net debt/EBITDA threshold and the removal of EBITDA/interest payments testing.

Development strategy

On 7 November 2013 the NCSP Group Board of Directors approved the development strategy for NCSP Group to 2018.

As part of this plan NCSP Group has set the following objectives: to updated the investment programme; to create a system of long-term planning and financial modelling based on potential costs and long-term liabilities; to implement a programme of increased operational efficiency; and to establish an effective reporting and control system.

The Group's development strategy to 2018 is based around the Group's major investment projects:

· modernisation of PJSC NCSP, OJSC NovorosLesExport and LLC Baltic Stevedoring Company container terminals ;

· comprehensive reconstruction of the Sheskharis oil terminal;

· construction of a mineral fertiliser transhipment terminal;

· reconstruction of OJSC Novorossiysk Shipyard and PJSC NCSP terminals;

· development of existing operations.

Investment in the new development strategy is estimated at up to RUB 21.8 billion (including VAT) for the period 2014-2016. Decisions on the basis for investments and budgets, as well as implementation plans, will be made by the Board of Directors of PJSC NCSP and its subsidiaries in due course.

Conference call and webcast

NCSP Group will host a conference call and webcast for investors & analysts at 15.00 Moscow time (11:00 London / 6:00 New York).

The call will be hosted by:

· CEO Yuriy Matvienko;

· Deputy CEO for Finance and Economics German Kachan;

· Advisor for the Director of the Moscow Representative Office Evgeniya Tyrikova;

· Investor Relations Director Mikhail Shchur.

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

Webcast link: https://engage.vevent.com/rt/nmtp~ncsp_9M

Conference call dial-ins:

+7499 922 8667 Russia

+44 (0) 1452 555 566 UK

+1 631 510 7498 USA

Toll-free:

8108 002 097 2044 Russia

0800 (694) 0257 UK

1 866 966 9439 USA

Conference call PIN in Russian: 14213126

Conference call PIN in English: 14344019

About NCSP Group

NCSP Group is the largest port operator in Russia 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 2012 totalled 159 mln tonnes. Consolidated revenue according to IFRS totalled US$ 1,034 mln and EBITDA was US$ 591.5 mln in 2012. 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", LLC "Baltic Stevedore Company" and CJSC "SFP".

Contacts:

Kristina Senko, Public Relations KSenko@ncsp.com;

Mikhail Shchur, Investor Relations MShchur@ncsp.com