News and events

KEMEROVO, Russian Federation—April28, 20182:00 PM(UTC +7:00)—Kuzbasskaya Toplivnaya Company PJSC (KTK, MICEX: KBTK), one of the largest producers and exporters of thermal coal in Russia, today announced operating and unaudited interim consolidated financial results under IFRS for the first quarter ended March 31,2018.

First Quarter 2018 Key Production Results

	Q1 2018	% of total	Q4 2017	Chg.	Q1 2017	Chg.
Coal production[1], in millions of tonnes, incl.:	3.85		3.80	1%	3.32	16%
Karakansky South open-pit mine	0.59	15%	0.84	(30%)	0.96	(39%)
Vinogradovsky open-pit mine	1.49	39%	1.38	8%	1.14	31%
Cheremshansky open-pit mine	0.87	23%	0.74	18%	0.89	(2%)
Bryansky open-pit mine	0.89	23%	0.84	6%	0.33	170%
Commercial products[2], in millions of tonnes	3.35		3.27	2%	2.91	15%
Coal processing[3], in millions of tonnes, incl.:	2.74		2.68	2%	2.45	12%
Sorted coal	1.58	58%	1.69	(7%)	1.33	19%
Washed coal	1.16	42%	0.99	17%	1.12	4%
Kaskad 1 washing plant	0.35	30%	0.22	59%	0.28	25%
Kaskad 2 washing plant	0.81	70%	0.77	5%	0.84	(4%)
Blasted rock mass[4], in millions of cbm	10.94		11.15	(2%)	8.60	27%
Average stripping transportation distance, km	2.78		2.67	4%	2.71	3%

 

• In the first quarter of 2018 the Company produced 3.85 million tonnes of coal.
• Coal production rose by 1% quarter-over-quarter and by 16% in yearly terms.
• The volume of commercial products went up by 2%, to 3.35 million tonnes, compared to the fourth quarter of last year, and by 15% compared to the year-ago quarter.
• Coal processing amounted to 2.74 million tonnes, which is 2% more than in the previous quarterand12% more than in the first quarter of 2017.
• First-quarter total coal washing grew by 17%, to 1.16million tonnes, of which 70% belongs to the Kaskad2 washing plant.
• Coal-sorting volume went down by 7% compared to the fourth quarter of 2017 due to the coal processing growth and up by 19% compared to the year-ago corresponding period.
• The volume of blasted rock mass was 10.94 million cbm, a2% decrease for the quarter and a 27% increase for the year.
• First-quarter average stripping transportation distance stood at 2.78 km, 4% more than in the previous quarter and 3% more than in the first quarter a year ago.

 

First Quarter 2018 Key Commercial Results

	Q1 2018	% of total	Q4 2017	Chg.	Q1 2017	Chg.[5]
Sales volume[6], in millions of tonnes, incl.:	3.59	-	3.73	(4%)	3.06	17%
Export sales volume	2.62	73%	2.47	6%	2.22	18%
Domestic sales volume	0.97	27%	1.26	(23%)	0.84	15%
Own coal	3.11	87%	3.32	(6%)	2.92	7%
Coal resale	0.48	13%	0.42	14%	0.14	243%

• In the first quarter sales stood at 3.59 million tonnes of coal, agrowthof17% in yearly terms. Domestic sales fell versus the volume of the previous quarter.
• First-quarter export sales went up by 6%, to 2.62 million tonnes. Compared to the year-ago quarter, exports rose by 18%.
• For the quarter, the share of exports in total sales was73%.

First Quarter 2018Financial highlights

in millions of RUB	Q1 2018	Q4 2017	Chg.	Q1 2017	Chg.
Revenue	13,497	13,233	2%	8,586	57%
Cost of sales	10,733	10,024	7%	7,355	46%
Gross profit	2,764	3,209	(14%)	1,231	125%
Gross profit margin	20.5%	24.2%	(3.7 ppts)	14.3%	6.2 ppts
Selling, general and administrative expenses	816	953	(14%)	608	34%
Operating profit	1,948	2,256	(14%)	623	213%
Operating profit margin	14.4%	17.0%	(2.6 ppts)	7.3%	7.1 ppts
EBITDA[7]	2,489	2,740	(9%)	1,027	142%
EBITDA margin	18.4%	20.7%	(2.3ppts)	12.0%	6.4ppts
EBITDA per tonne, RUB	647	721	(10%)	309	109%
Net profit	1,359	1,564	(13%)	613	122%
Net profit margin	10.1%	11.8%	(1.7ppts)	7.1%	3.0ppts

• In the first quarter of 2018 revenue went upby 2% compared to the year-end level, to RUB 13,497 million, and up by 57% compared to the results of the first quarter of last year.
• Cost of sales in the first quarter showed a7% growth to RUB 10,733 million, while in yearly terms this was a 46% increase.
• Selling, general and administrative expenses amounted to RUB 816 million, down by 14% quarter-over-quarter and up by 34% year-over-year.
• In the first quarter of 2018 the Company showed an operating income of RUB 1.948 million, two times higher than in the first quarter of 2017.
• Quarterly gross profit fell by 14% compared to the fourth quarter of 2017, to RUB 2,764 million. Compared to the first quarter of 2017, it grew by 125%.
• Quarterly EBITDA reached RUB 2,489 million, showing a quarterly decline by 9% and a 142% growth in yearly terms.
• The Company shows a net profit of RUB 1.359 million in the first quarter of 2018, 122% more than a year ago and 13% lower than in the fourth quarter of 2017.

Debt portfolio management

in millions of RUB	31.03.18	% of total	31.12.17	Chg.	31.03.17	Chg.
Long-term loans	5,723	54%	7,211	(21%)	5,660	1%
Short-term loans	4,789	46%	2,507	91%	2,710	77%
Total debt, incl.:	10,512	100%	9,718	8%	8,370	26%
RUB loans	4,192	40%	3,173	32%	3,113	35%
Average interest rate for RUB loans	9.54%		10.81%	(1.27ppts)	11.79%	(2.25ppts)
USD loans	3,134	30%	3,435	(9%)	4,789	(35%)
Average interest for USD loans	4.22%		4.28%	(0.06ppts)	4.73%	(0.51ppts)
EUR loans	3,187	30%	3,110	2%	469	580%
Average interest for USD loans	2.26%		2.26%	0ppts	2.32%	(0.06ppts)
Cash and cash equivalents	6,596		5,430	21%	3,515	88%
Net debt	3,916	100%	4,288	(9%)	4,855	(19%)
Net debt / 12M EBITDA	0.60		0.84	(29%)	1.62	(63%)
EBITDA (12months)	6,542		5,080	29%	3,006	118%

• Net debt at March 31, 2018 stood at RUB 3.916 million, decreasing by 9% compared to December 31, 2017. Year-over-year it went down by 19%.
• The net debt to 12-month EBITDA ratioshowed a 29% quarterly decline and stood at 0.60. To the level of the first quarter of last year, this figure dropped by 63%.
• As of March 31, 2018, the average effective rate was 9.54% for loans denominated in RUB and 4.22% for loans denominated in USD.
• The loan portfolio is distributed among 12 Russian and foreign banks.

Cash flow and investments

in millions of RUB	Q12018	Q42017	Chg	Q1 2017	Chg
Operating cash flow	2,112	1,928	10%	1,149	84%
Investment cash flow	(1,721)	(734)	134%	(777)	121%
Acquisition of property, plant and equipment	(1,728)	(746)	132%	(797)	117%
Financial cash flow	729	(974)	n/a	(505)	n/a
Net increase / (decrease) in cash and cash equivalents	1,120	220	409%	(133)	n/a

• In the first quarter of 2018 operating cash flow amounted to RUB 2.112 million.
• Investment cash flow stood at RUB (1.721) million.
• Investment in property, plant and equipment amounted to RUB (1.728) million, 132% more than in the previous quarter.
• Net cash flow from financial activities was RUB 729 million.
• Net increase in cash and cash equivalents stood at RUB 1.120 million, 409% more than in the fourth quarter of 2017.

 

Outlook for the second quarter of 2018

• In accordance with the production plan, the volume of coal production in the second quarter of 2018 will traditionally decrease compared to the first quarter and amount to 3.740 million tonnes.

 

Contacts for analysts, investors, and media:

Elena Sarycheva, head of strategic communications department

+7 (3842) 77-18-80

es@oaoktk.ru

 

KTK at a glance:

Kuzbasskaya Toplivnaya Company PJSC (KTK, MICEX: KBTK) is one of the largest manufacturers and exporters of thermal coal in Russia. Production assets of the Company include three current plots and two projected plots at the Vinogradovsky mine in Kemerovo region, as well as two washing plants and own railroad infrastructure located in the same industrial cluster with the production assets. The Company operates retail networks in four regions of Western Siberia and a wholesale network in Poland. The company employs over 4,400 people. KTK’s shares are traded on MICEX, the free float is 33.15%.

 

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Financial highlights under IFRS:

in millions of RUB	2017	2016	2015
Revenue	38,662	26,863	24,994
Cost of sales	32,570	23,220	20,932
Production cash costs per tonne, RUB	871	612	676
EBITDA	5,080	2,628	2,697
EBITDA margin	13.1%	9.8%	10.8%
EBITDA per tonne, RUB	384	225	245
Net profit	2,104	647	37
Net profit margin	5.4%	2.4%	-
Net debt	4,288	5,487	5,642
Net debt / EBITDA	0.84	2.09	2.09

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

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 pr@oaoktk.ru.

 

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[1]IncludingKaskad1washingplant

[2]Volume of salableoutputaftersorting and washing of produced coal

[3] Coal washing and sorting

[4]Includedinstripping

[5]Change Q1 2018/Q1 2017

[6]Sales for the group of companies, including third parties coal resale

[7] EBITDA for each period is defined as results from operating activities, adjusted for amortization and depreciation, impairment loss and profit or loss on disposal of property, plant and equipment. EBITDA is not a measurement of Company’s operating performance under IFRS and should not be considered as an alternative to net income, operating income or any other performance measures derived in accordance with IFRS or as an alternative to cash flow from operating activities or as measure of the Company’s liquidity.