News and events

3 April 2015

Kuzbasskaya Toplivnaya Company OJSC Reports Full Year 2014 Financial Results under IFRS

KEMEROVO, Russian Federation—April 3, 2015 1:00 PM (UTC +7:00)—Kuzbasskaya Toplivnaya Company OJSC (KTK, MICEX: KBTK), one of the largest producers and exporters of thermal coal in Russia, today reported its consolidated audited financial results under IFRS for the full year ended December 31, 2014.

Financial highlights

in millions of RUB Q41
2014
Q31
2014
Chg 2014 2013 Chg
Revenue 7 730 5 799 33% 22 250 22 490 -1%
Cost of sales 6 027 5 241 15% 18 925 19 523 -3%
Production cash costs per tonne, RUB 530 554 -4% 577 611 -6%
Gross profit 1 703 558 205% 3 325 2 967 12%
Gross profit margin 22% 9,6% 12.4 ppts 14,9% 13,2% 1.7 ppts
Distribution, administrative
and other costs
655 477 37% 1 951 1 579 24%
Operating profit 1 048 81 1 194% 1 374 1 388 -1%
Operating profit margin 13,6% 1,4% 12.2 ppts 6,2% 6,2% -

EBITDA2

1 351 382 254% 2 518 2 422 4%
EBITDA margin 17,5% 6,6% 10,9 ppts 11,3% 10,8% 0.5 ppts
EBITDA per tonne, RUB 447 137 227% 237 239 -1%
Net profit 476 -393 n.a. 7 640 -99%
Net profit margin 6,2% - - - 2,8% -

Revenue

In 2014 the Company posted revenue of RUB 22,250 million, 1% lower than in 2013. Revenue from the sales of own coal in the domestic market rose by 22% to RUB 3,503 million while that from coal resale fell by 38% to RUB 1,618 million. Revenue in the fourth quarter rose by 33% to RUB 7,730 million. Under the influence of the seasonal growth in demand for coal, all of the Company’s business segments saw a quarterly revenue increase. Quarterly revenue increase in the sales of own coal in the domestic market segment amounted to 25%. Revenue from export sales grew by 27% compared with the previous quarter and stood at RUB 5,311 million. Coal resale segment revenue showed a considerable seasonal gain of 81% to RUB 840 million.

Operating profit and EBITDA

In 2014 operating income decreased by 1% compared to the year-ago results, to RUB 1,374 million. Gross profit for the full year 2014 rose by 12% to RUB 3,325 million. EBITDA showed a year-over-year growth of 4%, reaching RUB 2,518 million. Cost of sales in 2014 dropped by 3% to RUB 18,925 million. Production cash costs saw a 6% decline and stood at RUB 577 per tonne of coal. Level of commercial, administrative and other expenses for the full year rose by 24% to RUB 1,951 million.

The Company showed an operating income of RUB 1,048 million in the fourth quarter of 2014, almost 12 times increase over the third-quarter indicator. Gross profit rose by 205% to RUB 1,703 million. Quarterly EBITDA amounted to RUB 1,351 million showing a 254% quarterly increase. Cost of sales in the fourth quarter grew by 15% to RUB 6,027 million. Production cash costs fell by 4% to RUB 530 per tonne. Commercial, administrative and other expenses increased by 37% to RUB 655 million.

Net profit

The Company shows a nominal net profit for 2014, amounting to RUB 7 million. The main factors influencing the financial result were negative currency differences, increased provisions for non- performing loans and a price decline in the Asian markets. Positive dollar exchange rate dynamics in the second half of 2014 and increasing dollar component of the deposit portfolio have partly smoothed the effect from the debt portfolio revaluation. After a loss in the third quarter the Company a profit of RUB 476 million in the fourth quarter of 2014.

Debt portfolio management

?in millions of RUB 31.12.14 % of
total
30.09.14 Chg 31.12.13 Chg3
Long-term loans 9 145 68% 7 199 27% 5 987 53%
Short-term loans 4 288 32% 3 729 15% 640 570%
Total debt, incl.: 13 433   10 928 23% 6 627 103%
RUB loans 4 553 34% 4 591 -1% 3 044 50%
Average interest rate
for RUB loans
9,65%   10,96% -1.31 ppts 8,54% 1,11 ppts
USD loans 8 880 66% 6 338 40% 3 583 148%
Average interest for USD loans 4,35%   4,35% - 4,85% -0,50 ppts
Cash and cash equivalents 7 332   4 886 50% 2 710 171%
Net debt 6 101   6 042 1% 3 917 56%
Net debt / 12M EBITDA 2,42   3,29 -26% 1,62 49%

Net debt at December 31, 2014 stood at RUB 6,101 million, increasing by 1% compared to September 30, 2014. Year-over-year it grew by 56%. The net debt to 12-month EBITDA ratio, according to management expectations, showed a 26% quarterly drop and stood at 2.42. The year-over-year growth of this indicator by 49% is caused by a total debt growth of 103%. In agreements with banks the threshold level for this indicator is 4.00-5.20. The company is one of the most reliable and efficient borrowers in the sector, which is reflected by the current interest rates for loans and credits. As of December 31, 2014, the average effective rate was 9.65% for loans denominated in RUB and 4.35% for loans denominated in USD. The loan portfolio is distributed among 10 Russian and foreign banks.

Cash flow and investments

in millions of RUB Q4
2014
Q3
2014
Chg 2014 2013 Chg
Operating cash flow 1 481 783 89% 874 2 127 -59%
Investment cash flow -160 -198 -19% -614 -638 -4%
Acquisition of property, plant
and equipment
-191 -190 1% -759 -905 -16%
Financial cash flow -196 1 891 n.a. 2 670 -1 221 n.a.
Net increase / (decrease) in cash
and cash equivalents
1 125 2 476 -55% 2 930 268 993%

In 2014 operating cash flow amounted to RUB 874 million, falling by 59% year-over-year. Investment cash flow fell by 4% to RUB (614) million. Investment in fixed assets stood at RUB 759 million, most of which focused on the Kaskad 1 washing plant modernization and retail network development. Net cash flow from financial activities for 2014 amounted to RUB 2,670 million. Net increase in cash and cash equivalents stood at RUB 2,930 million.

In the fourth quarter of 2014 operating cash flow stood at RUB 1,481 million. Investment cash flow in this period was RUB (160) million, RUB 191 million were spent on investment in fixed assets. Net cash outflow from financial activities amounted to RUB 196 million. Net increase in cash and cash equivalents stood at RUB 1,125 million.

Key events after the reporting date

  • In March 2015 the Company signed a cooperation agreement for 2015 with the Kemerovo Region Administration. Tax payments to the consolidated regional budget will amount to RUB 1.047 billion. The parties have agreed to raise average employee salary by up to 10% as compared to 2014. Twenty five million roubles will be spent on work safety. The company will finance the region's social programs in the amount of RUB 26.6 million.
  • In March 2015 the Board of Directors recommended not to pay dividend for 2014 and approved a new dividend policy. It provides for a dividend payment of no less than 25% of profit after tax according to consolidated financial statements under IFRS.

Outlook for the first quarter and full year 2015

  • In accordance with the production plan, the volume of coal production in the first quarter of 2015 will fall by 5% quarter-over-quarter, to 2.87 million tonnes.
  • The management expects the stripping ratio in the first quarter to rise by 8% to 5.09.

FY 2014 IFRS Financial results conference call details

KTK’s management will host a conference call for investors and analysts followed by a Q&A session.

The Company will be represented by:
Eduard Alexeenko – First deputy CEO
Vasily Rumyantsev – Head of Moscow office, IRO

Friday, April 3, 2015
5:00 PM Moscow time (UTC +3:00)

We recommend that participants start dialing in 10 minutes before the indicated time to ensure a timely start to the conference call.

You can join the conference call by dial-in:
Russia: +7 (495) 705 94 72
Great Britain: +44 20 30 43 24 39
USA: +1 8669075925

Within two weeks the conference call record will be published on KTK website:
www.oaoktk.ru/investors/audio

Contacts for analysts and investors in Moscow:
Vasily Rumyantsev
Head of Moscow office, IRO
+7 (905) 526-41-71
vkr@oaoktk.ru

Contacts for press in Kemerovo:
Elena Sarycheva
Head of public affairs department
+7 (3842) 36-47-62
es@oaoktk.ru

KTK at a glance:

ОАО «Kuzbasskaya Toplivnaya Company OJSC (KTK, MICEX: KBTK) is one of the largest manufacturers4 and exporters of thermal coal in Russia. Production assets of the Company include three current and one projected opent-pit mines in Kemerovo region, two washing plants and own railroad infrastructure located in the same industrial cluster. The Company operates a retail network in four regions of Siberia, supplying over 400 thousand households and over one thousand of public and commercial boilers. The company employs over 4,400 people. Shares of KTK are traded on MICEX, the free float is 34.39%.

Additional information about the Company and investor calendar: www.oaoktk.ru/investors

News and announcements (Russian only) www.facebook.com/oaoktk

Presentationswww.slideshare.net/oaoktk

Video www.youtube.com/oaoktkru

Financial highlights under IFRS:

 in millions of RUB
2014
2013
2012

Revenue

22 250
22 490
23 104

Cost of sales

18 925
19 523
18 982
Production cash costs per tonne, RUB
577
611
690

EBITDA

2 518
2 422
3 479
EBITDA margin
11%
11%
15%
EBITDA per tonne, RUB
237
239
399

Net profit

7
640
1 810
Net profit margin
-
3%
8%

Net debt

6 101
3 917
4 681
Net debt / EBITDA
2,42
1,62
1,35

Rounding and errors:

Certain numerical figures included in this press release have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that preceded them. Calculations of change in % are made after rounding of figures.

We make every effort to check and verify the materials, but if you find any errors or inaccuracies please report it to vkr@oaoktk.ru.

 

Appendix

Segments

in millions of RUB Q4
2014
Q3
2014
Chg 2014 2013 Chg
Revenue 7 730 5 799 33% 22 250 22 490 -1%
Domestic sales
of coal produced
1 281 1 026 25% 3 503 2 880 22%
Export sales
of coal produced
5 311 4 179 27% 16 351 16 196 1%
Resale of coal purchased 840 464 81% 1 618 2 623 -38%
Other operations 298 130 129% 778 791 -2%
Cost of sales 6 027 5 241 15% 18 925 19 523 -3%
Domestic sales
of coal produced
941 713 32% 2 423 1 973 23%
Export sales
of coal produced
4 218 4 052 4% 14 630 14 686 -
Resale of coal purchased 715 367 95% 1 323 2 232 -41%
Other operations 153 109 40% 549 632 -13%
Gross profit 1 703 558 205% 3 325 2 967 12%
Domestic sales of coal produced 340 313 9% 1 080 907 19%
xport sales of coal produced 1 093 127 761% 1 721 1 510 14%
Resale of coal purchased 125 97 29% 295 391 -25%
Other operations 145 21 590% 229 159 44%
Gross profit margin 22% 10% 12 ppts 15% 13% 2 ppts
Domestic sales of coal produced 27% 31% -4 ppts 31% 31% -
Export sales of coal produced 21% 3% 18 ppts 11% 9% 2 ppts
Resale of coal purchased 15% 21% 6 ppts 18% 15% 3 ppts
Other operations 49% 16% 33 ppts 29% 20% 9 ppts

Production

  Q4
2014
Q3
2014
Chg 2014 2013 Chg
Coal production,
in millions of tonnes, incl.:
3,02 2,79 8% 10,61 10,15 5%
Karakansky South 1,05 0,88 19% 3,40 3,22 6%
Vinogradovsky 1,27 1,19 7% 4,17 3,41 22%
Cheremshansky5 0,71 0,72 -1% 3,04 3,51 -13%
Coal processing6,
in millions of tonnes, incl.:
2,42 2,51 -4% 8,70 8,24 6%
Sorted coal 1,58 1,72 -8% 5,54 5,56 -
Washed coal 0,84 0,79 6% 3,16 2,68 18%
Stripping, in millions of cbm, incl.: 14,34 14,54 -1% 59,38 59,40 -
Blasted rock mass7 ,
in millions of cbm
8,70 9,15 -5% 35,55 28,92 23%
Average stripping transportation
distance, km
2,50 2,80 -11% 2,70 2,70 -
Average stripping ratio 8 4,70 5,20 -10% 5,60 5,90 -5%

Sales

  Q4
2014
Q3
2014
Chg 2014 2013 Chg
Sales volume9 ,
in millions of tonnes, incl.:
3,43 2,89 19% 10,32 10,60 -3%
Export sales volume 2,13 2 6% 7,20 6,93 4%
Domestic sales volume 1,30 0,89 46% 3,12 3,67 -15%
Own coal 2,91 2,61 11% 9,34 8,82 6%
Coal re-sale 0,52 0,28 86% 0,98 1,78 -45%
Average selling price,
RUB/tonne
10
1 391 1 059 31% 1 157 1 100 5%

 

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