Kemerovo, Russian Federation – OJSC "Kuzbasskaya Toplivnaya Company" ("KTK"; RTS, MICEX: "KBTK"), one of the fastest-growing thermal coal producers in Russia, is pleased to announce the unaudited consolidated IFRS financial results for Q2 and 6 months ended 30 June 2011.
Financial highlights*
| RUR mln1 | Q2 2011 |
Q1 2011 |
Ch., % |
6M 2011 |
6M 2010 |
Ch., % |
| Revenue | 4 937 | 5 245 | -6% | 10 182 | 5 651 | 80% |
| EBITDA2 | 525 | 948 | -45% | 1 473 | 540 | 173% |
| EBITDA margin, % | 11% | 18% | - | 14% | 10% | - |
| Net profit | 200 | 593 | -66% | 793 | 4 | n.m. |
| Net profit margin, % | 4% | 11% | - | 8% | 0% | - |
| Net Debt3 | 2 012 | 1 600 | 26% | 2 012 | 2 613 | -23% |
| Net Debt / EBITDA4 | 0,7 | 0,7 | 0% | 0,7 | 1,5 | 25% |
*Hereinafter figures for Q1 2011, Q2 2011, 6 months 2010 and 6 months 2011 are presented as unaudited.
Operational highlights
| Mln tonnes | Q2 2011 |
Q1 2011 |
Ch., % |
6M 2011 |
6M 2010 |
Ch., % |
| Coal production | 1,91 | 1,83 | 4% | 3,73 | 2,72 | 37% |
| Coal sorting | 1,36 | 1,17 | 16% | 2,53 | 1,78 | 42% |
| Coal enrichment | 0,19 | 0,16 | 24% | 0,35 | - | - |
| Coal sales | 2,08 | 2,43 | -14% | 4,51 | 3,52 | 28% |
| Average price (RUR per tonne)5 | 1 175 | 1 155 | 2% | 1 165 | 907 | 28% |
Key events in Q2 2011
Events after 30 June 2011
On 13 July the Company opened a new station for purifying household and industrial water waste at its “Vinogradovsky” open-pit mine. The station is unique due to the set of treatment methods of industrial and domestic water waste, which help to purify water up to drinking quality level. The opened facility doesn’t have an analogue in Russia. Its construction has taken 6 months and cost about RUR 60 mln. The completion of the station allowed the Company to achieve full compliance with all ecological standards and legislative requirements for open pit mining of coal.
Igor Prokudin, CEO of the Company, commented:
"In Q2 2011 the Company continued the systematic development and execution of the strategy to increase output of high added value products. During the quarter we produced 1.91 mln tonnes of coal, 10% of which was coal produced by our "Kaskad" enrichment plant, and 61% from various coal sorting products, including high-marginal sorted coal types, which are popular among retail consumers in Russia and abroad.It is worthy of note, that Q2 2011 production volume in increased by 4% quarter-on-quarter, while in previous years there has always been a production decrease in Q2 due to the seasonality of thermal coal consumption in Russia. The increase in the volume of export sales, which are distributed more or less equally throughout the year, allowed us to avoid the reduction of production volumes and supported the Company’s margins. Quarterly EBITDA amounted to RUR 525 mln, net profit – RUR 200 mln. I would like to remind you, that during last several years Q2 has been loss-making for us.During the quarter we made a large volume of stripping work, part of which was made to extract coal only in the second half of the year, because we plan to increase production and sales volumes. In this context the quarterly stripping ratio increased from 8 to 8.7, and the total Q2 production cash cost per 1 tonne of coal increased by 9% to RUR 688, having reached an annual maximum. We expect a decrease in this cost during Q3-Q4, which, together with growth of production volumes, may positively impact on the Company’s basic profitability indicators.
Generally, Q2 results positively affected our financial indicators for 6M 2011. Compared to the same period last year, revenue increased by 80% to RUR 10.2 bln, EBITDA increased almost by 3 times to RUR 1.5 bln, and net profit reached about RUR 800 mln, whereas during the first half of 2010 only RUR 4 mln had been earned. The trend of these figures clearly supports the chosen Company’s development strategy, and we will do our best to continue its execution in the future".
Conference-call
KTK’s management will host a conference call for investors and analysts followed by a Q&A session on the day of the results.
The Company will be represented by:
Eduard Alexeenko – first deputy CEO
Anton Rumyantsev – investor relations manager
The dial-in details are:
Date Wednesday, August 24
Time: 09.00 New York / 14.00 London / 17.00 Moscow
Title: 6 Months 2011 IFRS Statements Conference Call of KBTK
You can join the conference call by registering on-line
http://webeventservices.reg.meeting-stream.com/20112408
Or dial-in:
International/UK Dial in: +44 (0) 20 7162 0025
USA Dial in: +1 334 323 6201
Conference ID: 901536
A live webcast of the presentation will be available at:
http://webeventservices.reg.meeting-stream.com/20112408
The conference call replay will be available through
August 31 2011:
International Replay Number: +44 (0)20 7031 4064
US Toll Replay Number: +1-888-365-0240
Replay Access Code: 901536
For more information please contact:
OJSC "Kuzbasskaya Toplivnaya Company" Kemerovo
Elena Sarycheva, Head of public relations department
+7 384 236 47 62
For investor enquiries please contact:
OJSC "Kuzbasskaya Toplivnaya Company" Moscow
Anton Rumyantsev, Investor relations manager
+7 495 787 68 05
Financial overview
| RUR Mln7 | Q2 2011 |
Q1 2011 |
Ch., % |
6M 2011 |
6M 2010 |
Ch., % |
| Revenue | 4 937 | 5 245 | -6% | 10 182 | 5 651 | 80% |
| Cost of sales | -4 284 | -4 135 | 4% | -8 419 | -4 817 | 75% |
| Gross profit | 653 | 1 110 | -41% | 1 763 | 834 | 111% |
| Commercial, administrative and other costs |
-369 | -402 | -8% | -771 | -627 | 23% |
| Operating profit | 284 | 708 | -60% | 992 | 207 | 379% |
| EBITDA | 525 | 948 | -45% | 1 473 | 540 | 173% |
| Net profit | 200 | 593 | -66% | 793 | 4 | n.m. |
Revenue
In Q2 2011 the Company’s consolidated revenue decreased from the previous quarter by 6% to RUR 4,937 mln (Q1 2011: RUR 5,245 mln). Revenue net of rail road costs decreased by 16% quarter-on-quarter. A result of the decrease was the seasonally low demand for thermal coal in Russia, which has been noticed during Q2 every year. The seasonality in coal consumption is caused by the decrease in thermal power generation and corresponding cut of fuel purchase with the advent of spring. In addition, in Q2 customers try to run down coal stocks to prepare them for the new heating season restocking which typically starts in the end of summer.
The decrease in coal sale volumes resulted in the reduction of revenue from the own coal sales on domestic market, which decreased by 67% to RUR 347 mln (Q1 2011: RUR 1,053 mln). This factor also led to a 30% reduction in coal resale revenue, which amounted to RUR 284 mln (Q1 2011: RUR 404 mln).
The total quarterly domestic coal sales revenue decreased by 57% to RUR 631 mln (Q1 2011: RUR: 1,457 mln), while physical sale volumes decreased by 60%. The revenue net of rail road costs8 decreased by 56%. Despite the seasonal decrease in trading activity in Q2, the average net realized domestic price continued to grow and made the decrease in revenue a little smoother. The price increased by 9% quarter-on-quarter to RUR 1,185 per tonne.
In the past quarter export coal sales revenue increased by 17% quarter-on-quarter to RUR 4,206 mln (Q1 2011: RUR 3,607 mln) as a result of the continued growth in export shipment volumes, which increased by 20% to 1.67 mln tonnes. During the quarter there was a moderate decrease in the Company’s average export coal price due to a higher volume of shipments under the contracts concluded in the end of 2010 and priced lower, than 2011 contracts. The average export price net of railroad tariffs decreased by 3% quarter-on-quarter to RUR 1,173 per tonne. In Q2 export transportation costs remained virtually stable on the level of Q1, and the quarter-on-quarter increase in export revenue net of transportation costs8 was also 17%.
Revenue from other activities decreased by 45% and amounted to RUR 100 mln (Q1 2011: RUR 181 mln). The Company’s revenue from other activities is also strongly affected by the seasonality, because its major part comes from the heat power generation by Anzhero-Sudzhensk power plant9, owned by KTK, and rendering services for the 3rd party coal storage in the facilities of the Company’s retail chain. The demand for these services traditionally increases with the start of the heating season.
During 6M 2011 consolidated revenue increased by 80% and accounted for RUR 10,182 mln (6M 2011: RUR 5,651 mln). Export revenue increased by 139% whereas revenue from domestic market sales remained virtually stable year-on-year. The increase in revenue net of railroad costs was 73%, while its structure changed with the growth in export revenue share from 46% to 64%.
Cost of sales
| RUR Mln11 | Q2 2011 |
Q1 2011 |
Ch., % |
6M 2011 |
6M 2010 |
Ch., % |
| Rail road tariff and transportation |
2 407 | 2 254 | 7% | 4 661 | 2 161 | 116% |
| Purchased coal | 372 | 492 | -24% | 864 | 647 | 34% |
| Employee costs and social payments |
295 | 292 | 1% | 587 | 446 | 32% |
| Extraction, processing and sorting of coal |
359 | 260 | 38% | 619 | 332 | 86% |
| Fuel | 317 | 305 | 4% | 622 | 371 | 68% |
| Depreciation | 227 | 220 | 3% | 447 | 332 | 35% |
| Spare parts | 165 | 112 | 47% | 277 | 233 | 19% |
| Extraction tax and environment payments |
55 | 82 | -33% | 137 | 92 | 49% |
| Repair and maintenance | 100 | 67 | 49% | 167 | 95 | 76% |
| Other costs | 115 | 117 | -2% | 232 | 174 | 33% |
| Change in coal stock | -128 | -66 | 94% | -194 | -66 | 194% |
| Cost of sales | 4 284 | 4 135 | 4% | 8 419 | 4 817 | 75% |
In Q2 2011 cost of sales increased by 4% quarter-on-quarter and reached RUR 4,284 mln (Q1 2011: RUR 4,135 mln). The growth was caused by the increased volumes of stripping processing, which were partly made in advance to prepare the coal for extraction and sale in the second half of the year when its demand peaks. Thus, the quarterly cost of sales was mainly driven by production expenses related to stripping processing and transport costs, which followed the increase in export volumes.
During the quarter transportation costs increased by 7% to RUR 2,407 mln (Q1 2011: RUR 2,254 mln) due to 20% export sales volumes growth. At the same time, the average cost of export coal transportation per 1 tonne decreased by 3% due to growth of shipments to the Russian Far East ports, delivery to which costs cheaper than transporting coal to clients in Eastern Europe. In addition to this, the growth in transportation costs was suppressed by transporting of part of volumes by the associated "Kuzbass Transport Company"12 railroad car fleet, which railroad cars are rented exclusively by the Company at long-term fixed rates. In the past quarter the cost of purchased coal amounted to RUR 372 mln, decreasing by 24% quarter-on-quarter (Q1 2011: RUR 492 mln). The decrease in costs followed the decline in 3rd party coal purchases for resale to the Company’s retail chain clients.
The key coal production indicators, which affected the Company’s production costs, are presented in the table:
Key coal production indicators
| Q2 2011 |
Q1 2011 |
Ch., % |
6M 2011 |
6M 2010 |
Ch., % |
|
| Coal production (mln tonnes) | 1,90 | 1,83 | 4% | 3,73 | 2,72 | 37% |
| Stripping, (mln cub. m) | 16,59 | 14,69 | 13% | 31,28 | 22,57 | 39% |
| Exploded rock13 | 7,33 | 7,21 | 2% | 14,54 | 13,81 | 5% |
| Stripping ratio14 (t. / cub. m.) | 8,7 | 8,0 | 8% | 8,4 | 8,3 | 1% |
| Average stripping transportation distance (km) | 2,8 | 2,6 | 9% | 2,7 | 2,8 | -2% |
In Q2 production costs15 increased by 19% to RUR 1,236 mln (Q1 2011: RUR 1,036 mln). The main categories of production costs changed in the following manner:
During the quarter production cash costs16 per 1 tonne of coal increased by 9% to RUR 688 (Q1 2011: RUR 631). In addition to the growth in the main production cost items, discussed above, cash costs were driven by an increase in the stripping ratio from 8.0 to 8.7 cub. m. per tonne. According to the Company’s view, the stripping ratio has reached its peak in Q2 and in Q3-Q4 it will decrease.
In Q2 depreciation included in the cost of sales increased by 3% quarter-on-quarter to RUR 227 mln. Extraction tax and environment payments decreased by 33% to RUR 55 mln due to the change of mining tax calculation method17 since April 2011. All other costs, including operating leases, electric power and others, decreased by 2% to RUR 115 mln The Company’s coal stocks increased by RUR 128 mln due to preparation of KTK retail chain stores to the growth in demand among the customers in Q3.
Reflecting the fact, that during the quarter the decrease in revenue faced the growth in cost of sales, gross profit decreased by 41% and amounted to RUR 653 mln (Q1 2011: RUR 1,110 mln).
6M 2011 cost of sales increased by 75% year-on-year to RUR 4,661 mln (6M 2010: RUR 2,161 mln). The cost of coal transportation increased by 116% due to 28% growth in sales volumes by, increase of export share in the total coal sales structure, rise in railroad cars renting rates and Russian Railroads transportation tariffs. The cost of coal purchased from the 3rd parties increased by 34% year-on-year due to an increase in coal purchase volume in its prices. Also there was a growth in production cash costs, which increased by 12% from RUR 590 per tonne in 6M 2010 to RUR 660 per tonne in 6M 2011.
6M 2011 gross profit increased by 111% year-on-year to RUR 1,763 mln (6M 2010: RUR 834 mln), because during the reported period the growth in revenue was higher than cost of sales increase. The gross margin increased from 15% to 17%.
Distribution, administrative and other operation costsQ2 distribution, administrative and other costs decreased by 8% to RUR 369 mln (Q1 2011: RUR 402 mln) due to smaller expenses on administrative and commercial personnel, which reduced by 18%. The decrease was caused by the reduction in coal sales volumes which was followed by the decrease in the Company’s retail chain personnel piecework wages amount. Personnel costs also decreased due to the start of the summer holidays season and the related recovery of unused holiday provision. In addition, there was a decrease in administrative personnel social payments because the income limit for such payments calculation was reached.
As for 6M 2011 results, distribution, administrative and other costs increased by 23% year-on-year to RUR 771 mln (6M 2010: RUR 627 mln) due to the growth in coal production by 37% and sales volumes by 28%. Their ratio to revenue decreased from 11% in 6M 2010 to 8% in 6M 2011.
Distribution, administrative and other operation costs
Q2 distribution, administrative and other costs decreased by 8% to RUR 369 mln (Q1 2011: RUR 402 mln) due to smaller expenses on administrative and commercial personnel, which reduced by 18%. The decrease was caused by the reduction in coal sales volumes which was followed by the decrease in the Company’s retail chain personnel piecework wages amount. Personnel costs also decreased due to the start of the summer holidays season and the related recovery of unused holiday provision. In addition, there was a decrease in administrative personnel social payments because the income limit for such payments calculation was reached.
As for 6M 2011 results, distribution, administrative and other costs increased by 23% year-on-year to RUR 771 mln (6M 2010: RUR 627 mln) due to the growth in coal production by 37% and sales volumes by 28%. Their ratio to revenue decreased from 11% in 6M 2010 to 8% in 6M 2011.
Operating profit, EBITDA and net profit
In Q2 the Company’s operational profit decreased by 60% to RUR 653 mln (Q1 2011: RUR 1,110 mln). EBITDA decreased by 45% to RUR 525 mln (Q1 2011: RUR 948 mln), whereas its margin decreased from 18% to 11% due to the seasonal reduction in sales and expenses growth per tonne of coal sold.
6M 2011 operational profit increased year-on-year by 4.8 times to RUR 992 mln (6M 2010: RUR 207 mln). EBITDA increased by 2.7 times and reached RUR1,473 mln (6M 2010: 540 mln) due to the increase in coal sales volumes and the growth in coal prices on all markets.
During Q2 the net profit decreased by 66% to RUR 200 mln (Q1 2011: RUR 593 mln). The net profit for 6M 2011 amounted to RUR 793 mln, compared to RUR 4 mln earned during 6M 2010. Besides the growth in profit from continuous operations, net profit was positively affected by a foreign exchange gain and the reduction in interest expenses.
Indebtedness*
| RUR Mln 18 | 30 Jun. 2011 |
31 Mar. 2011 |
Ch.,, % |
30 Jun. 2010 |
Ch.,19 % |
| Long term loans and credits | 1 894 | 1 921 | -1% | 2 331 | -19% |
| Short term loans and credits | 334 | 146 | 129% | 537 | -38% |
| Total debt, including: | 2 228 | 2 067 | 8% | 2 868 | -22% |
| Rouble-denominated | 635 | 216 | 194% | 840 | -24% |
| Foreign currency-denominated | 1 593 | 1 851 | -14% | 2 028 | -21% |
| Cash and cash equivalents | 216 | 467 | -54% | 255 | -15% |
| Net debt | 2 012 | 1 600 | 26% | 2 613 | -23% |
| Net Debt / EBITDA20 | 0,7 | 0,7 | 26% | 1,5 | 25% |
* Hereinafter amounts for 30 June 2010, 31 March 2011 and 30 June 2011 are presented as unaudited.
In Q2 total debt of the Company increased by 8% to RUR 2,228 mln due to attraction of additional short-term loans for working capital financing. As of 30 June 2011, 72% of the credit portfolio of the Company was denominated in USD, and the remaining 28% was denominated in rubles. Long-term loans decreased by 1%, and short-term loans amount increased by 129%, but their share composed only 15% of the total credit portfolio. The level of net debt increased by 26% to RUR 2,012 mln, but Net debt to EBITDA ratio remained at 0.7. The quarterly interest expense increased by 15% to RUR 45 mln (Q1 2011: RUR 39 mln), but the average interest rate reduced from 7.4% to 5.8% owing to a restructuring of the foreign currency part of the Company’s indebtedness.
Compared to the first half of 2010 Net Debt reduced by 23% (6M 2010: RUR 2,613 mln). The interest expense for 6M 2011 amounted to RUR 84 mln, a decrease of 12% year-on-year (6M 2010: RUR 95 mln).
Cash flow
| RUR Mln21 | Q2 2011 |
Q1 2011 |
Ch., % |
6M 2011 |
6M 2010 |
Ch., % |
| Cash flows from operations before income tax and interest paid |
438 | 573 | -24% | 1 011 | 134 | 654% |
| Cash flows from operating activities | 321 | 390 | -18% | 711 | 3 | n.m. |
| Cash flows used in investing activities | -524 | -368 | 42% | -892 | -1 338 | -33% |
| Cash flows from financing activities | -39 | -1 | n.m. | -40 | 1 504 | n.m. |
| Net increase / (decrease) in cash and cash equivalents |
-242 | 21 | n.m. | -221 | 169 | n.m. |
Cash flow from operations in Q2 reduced by 18% from RUR 390 mln to RUR 321 mln. Operational Cash flow was generally affected by:
In Q2 the Company invested RUR 513 mln, which is 37% more than in the previous quarter. The increased volume of fixed assets purchased became the main driver of cash outflow from investing activities, which increased by 42% quarter-on-quarter to RUR 524 mln (Q1 2011: RUR 368 mln).
During the quarter the volume of attracted loans exceeded the volume of loans repaid by RUR 190 mln. In addition, the Company distributed among its shareholders RUR 229 mln as dividends for 2010 financial year. Thus, cash flow from financing activities became negative for the difference of these two figures – RUR 40 mln.
From all mentioned above, net decrease in cash and cash equivalents composed RUR 242 mln (Q1 2011: RUR 21 mln). In the first six months of 2011 healthy growth of operational profit helped the Company to receive RUR 711 mln of net operational cash flow, compared to RUR 3 mln earned in the same period last year. Conversely, Net cash flow from investing activities accounted for RUR 892 mln, having decreased due to lower amount of investments in fixed assets, compared to the first half 2010, when the Company was actively building its first enrichment plant "Kaskad", consuming the major part of the general investment budget. During 6M 2011 net financial cash outflow equaled RUR 40 mln. It was mainly driven by 2010 dividend distribution, whereas in the same period last year the Company received RUR 1,504 mln of net financial inflow, having received proceedings from the IPO madе in April 2010.
Following the results of the first half 2011, the Company recorded RUR 221 mln as a net cash outflow, compared to RUR 169 mln of net cash inflow received in the first half 2010.
Capital expenditures
In Q2 2011 the volume of investments in fixed assets increased by 52% quarter-on-quarter and composed RUR 542 mln (Q1 2011: RUR 346 mln). During the quarter the Company has been constructing foundation for the second enrichment plant and water purifying complex. In addition, the fleet of production machinery has been expanded with 5 BELAZ trucks, 2 dozers, a drill rig and a shovel.
Current trading and outlook for Q3 2011
Due to the increase in trading activity on the Russian thermal coal market, which starts in the end of summer, the Company has already increased coal production and sale volumes on the domestic market. According to management’s forecast, the general growth in production may be in the range of 25-27% quarter-on-quarter and 28-30% year-on-year. The Company expects that the growth of production will be followed by a decrease in production cash costs per 1 tonne of coal, which is expected to have peaked in Q2 2011. This trend may positively affect the Company’s operational profit.
During Q3 the Company will continue the execution of its investment program, including purchasing rock transportation machinery and construction of the new enrichment plant at the "Vinogradovsky" open pit mine.
Based on the expected decrease in stripping ratio and reduction in production cash costs, management of the Company expects a quarter-on-quarter and year-on-year increase in Q3 EBITDA. The Company retains its expectations of the main profit indicators growth in the second half 2011 due to the increase in production and sales and decrease in production cash costs per tonne of coal, compared to the level of the first half 2011.
Forward–Looking Statements
This press release might contain forward-looking statements that refer to future events or forecast financial indicators for OJSC "Kuzbasskaya Toplivnaya Company". Such statements do not guarantee that these are actions to be taken by OJSC "Kuzbasskaya Toplivnaya Company" in the future, and estimates can be inaccurate and uncertain. Actual final indicators and results can considerably differ from those declared in any forward-looking statements. "OJSC "Kuzbasskaya Toplivnaya Company" does not intend to change these statements to reflect actual results.
Appendix
1. 1. Calculation of EBITDA21
| RUR Mln | Q2 2011 |
Q1 2011 |
6M 2011 |
6M 2010 |
| Operating profit | 284 | 708 | 992 | 207 |
| Depreciation charge | 243 | 241 | 485 | 368 |
| Impairment loss (gain) | 0 | 0 | 0 | 0 |
| Loss (profit) from disposals of property, plant and equipment |
-2 | -2 | -4 | -35 |
| EBITDA | 525 | 948 | 1 473 | 540 |
*Hereinafter figures for Q1 2011, Q2 2011, 6 months 2010 and 6 months 2011 are presented as unaudited
2. 2. Calculation of production cash costs
| RUR Mln | Q2 2011 |
Q1 2011 |
6M 2011 |
6M 2010 |
| Consolidated cost of sales | 4 284 | 4 135 | 8 419 | 4 817 |
| Excluding cost of sales of subsidiaries | -276 | -432 | -708 | -1 129 |
| OJSC КТК cost of sales | 4 008 | 3 703 | 7 711 | 3 689 |
| Excluding: | ||||
| Depreciation (in cost of sales) | -209 | -203 | -412 | -300 |
| Purchased coal | -166 | -220 | -385 | -231 |
| Change of inventory balances | 102 | 31 | 133 | 95 |
| Railroad tariffs and transportation costs | -2 424 | -2 158 | -4 582 | -1 647 |
| Total cash costs | 1 311 | 1 154 | 2 464 | 1 606 |
| Coal production, mln Tonnes | 1,90 | 1,83 | 3,73 | 2,72 |
| Total cash cost per 1 tonne of coal, RUR | 688 | 631 | 660 | 590 |
3. Segment reporting
Domestic sales of coal produced
| RUR Mln | Q2 2011 |
Q1 2011 |
6M 2011 |
6M 2010 |
| Revenue | 347 | 1 053 | 1 400 | 1 212 |
| Cost of sales | -315 | -734 | -1 049 | -968 |
| Gross profit | 32 | 319 | 351 | 243 |
| Gross margin,% | 9% | 30% | 25% | 20% |
Export sales of coal produced
| RUR Mln | Q2 2011 |
Q1 2011 |
6M 2011 |
6M 2010 |
| Revenue | 4 206 | 3 607 | 7 813 | 3 273 |
| Cost of sales | -3 668 | -2 969 | -6 637 | -2 925 |
| Gross profit | 538 | 638 | 1 176 | 348 |
| Gross margin,% | 13% | 18% | 15% | 11% |
Resale of coal purchased22
| RUR Mln | Q2 2011 |
Q1 2011 |
6M 2011 |
6M 2010 |
| Revenue | 284 | 404 | 688 | 865 |
| Cost of sales | -223 | -322 | -545 | -734 |
| Gross profit | 61 | 82 | 143 | 132 |
| Gross margin,% | 21% | 20% | 21% | 15% |
Other operations
| RUR Mln | Q2 2011 |
Q1 2011 |
6M 2011 |
6M 2010 |
| Revenue | 100 | 181 | 281 | 300 |
| Cost of sales | -77 | -111 | -188 | -190 |
| Gross profit | 23 | 70 | 93 | 111 |
| Gross margin,% | 23% | 39% | 33% | 37% |
4. Financial highlights converted to USD
Comprehensive income statement highlights
| USD Mln* | Q2 2011 |
Q1 2011 |
Ch., % |
6M 2011 |
6M 2010 |
Ch., % |
| Revenue | 176 | 180 | -2% | 356 | 188 | 89% |
| Cost of sales | -153 | -142 | 8% | -295 | -160 | 84% |
| Gross profit | 23 | 38 | -39% | 61 | 28 | 121% |
| Commercial, administrative and other costs |
-13 | -14 | -4% | -27 | -21 | 29% |
| Operating profit | 10 | 24 | -58% | 34 | 7 | 400% |
| EBITDA | 19 | 33 | -42% | 51 | 18 | 186% |
| Net profit (loss) | 7 | 20 | -65% | 27 | 0,1 | n.m. |
* In the table figures are converted to USD using average Central Bank of the Russian Federation exchange rates for each quarter (Q1 2011: 29.16 RUR/USD; Q2 2011: 28.01 RUR/USD; 6M 2011: 30.06 RUR/USD; 6M 2011: 28.56 RUR/USD)
Cost of sales
| USD Mln* | Q2 2011 |
Q1 2011 |
Ch., % |
6M 2011 |
6M 2010 |
Ch., % |
| Rail road tariff and transportation | 86 | 77 | 11% | 163 | 72 | 127% |
| Purchased coal | 13 | 17 | -21% | 30 | 22 | 40% |
| Employee costs and social payments | 11 | 10 | 5% | 21 | 15 | 38% |
| Extraction, processing and sorting of coal |
13 | 9 | 44% | 22 | 11 | 97% |
| Fuel | 11 | 10 | 8% | 22 | 12 | 76% |
| Depreciation | 8 | 8 | 7% | 16 | 11 | 42% |
| Spare parts | 6 | 4 | 53% | 10 | 8 | 26% |
| Extraction tax and environment payments |
2 | 3 | -30% | 5 | 3 | 56% |
| Repair and maintenance | 4 | 2 | 55% | 6 | 3 | 86% |
| Other costs | 4 | 4 | 2% | 8 | 6 | 40% |
| Change in coal stock | -5 | -2 | 102% | -7 | -2 | 211% |
| Cost of sales | 153 | 142 | 8% | 295 | 160 | 84% |
| Production cash costs per 1 tonne, USD | 25 | 22 | 14% | 23 | 20 | 18% |
* In the table figures are converted to USD using average Central Bank of the Russian Federation exchange rates for each quarter (Q1 2011: 29.16 RUR/USD; Q2 2011: 28.01 RUR/USD; 6M 2011: 30.06 RUR/USD; 6M 2011: 28.56 RUR/USD)
Cash flows
| USD Mln* | Q2 2011 |
Q1 2011 |
Ch., % |
6M 2011 |
6M 2010 |
Ch., % |
| Cash flows from operations before income tax and interest paid |
16 | 20 | -20% | 35 | 4 | 694% |
| Cash flows from operating activities | 11 | 13 | -14% | 25 | 0 | n.m. |
| Cash flows used in investing activities | -19 | -13 | 48% | -31 | -45 | -30% |
| Cash flows from financing activities | -1 | 0 | n.m. | -1 | 50 | n.m. |
| Net increase / (decrease) in cash and cash equivalents | -9 | 1 | n.m. | -8 | 6 | n.m. |
* In the table figures are converted to USD using average Central Bank of the Russian Federation exchange rates for each quarter (Q1 2011: 29.16 RUR/USD; Q2 2011: 28.01 RUR/USD; 6M 2011: 30.06 RUR/USD; 6M 2011: 28.56 RUR/USD)
Indebtedness
| USD Mln* | 30 Jun. 2011 |
31 Mar. 2011 |
Ch., % |
30 Jun. 2010 |
Ch., % |
| Long term loans and credits | 67 | 68 | 0% | 75 | -10% |
| Short term loans and credits | 12 | 5 | 132% | 17 | -31% |
| Total debt, including: | 79 | 73 | 9% | 92 | -14% |
| Rouble-denominated | 23 | 8 | 198% | 27 | -16% |
| Foreign currency-denominated | 57 | 65 | -13% | 65 | -13% |
| Cash and cash equivalents | 8 | 16 | -53% | 8 | -6% |
| Net debt | 72 | 56 | 27% | 84 | -14% |
* In the table figures are converted to USD using average Central Bank of the Russian Federation exchange rates for each accounting date (30 June 2010: 31.20 RUR/USD; 31 March 2011: 28.43 RUR/USD; 30 June 2011: 28.43 RUR/USD).
5. Consolidated Interim Financial Statements for 6 months ended 30 June 2011.
1 Figures converted to USD are shown in Appendix 4.
2 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 the 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 a measure of the Company’s liquidity.
3 Net debt calculated on page 10.
4 For the purpose of Q1 2011 ratio calculation the aggregate of EBITDA for Q1 2011 and Q2-Q4 2010 was used. For the purpose of Q2 2011 ratio calculation the aggregate of EBITDA for Q1-Q2 2011 and Q3-Q4 2010 was used. For the purpose of 6M 2010 ratio calculation the aggregate of EBITDA for Q1-Q2 2010 and Q3-Q4 2009 was used.
5 Net of VAT and rail road tariffs.
6 We recommend that participants start dialing in 5-10 minutes prior to ensure a timely start to the conference call.
7 Figures converted to USD are shown in Appendix 4.
8 Railroad transportation costs included in coal price for customers, only.
9 OJSC "Kaskad-Energo".
10 Railroad transportation costs included in coal price for customers, only.
11 Figures converted to USD are shown in Appendix 4.
12 As at 30 June 2011 the Company owned 50% share in "Kuzbass Transport Company" LLC.
13 Included in stripping volume.
14 of a volume of coal produced to a volume stripping volume processed.
15 Production costs include production personnel salaries, fuel, extraction and sorting costs, spare parts purchasing costs, repair and maintenance costs.
16 Production cash costs calculated in Appendix, Table 2.
17 Russian Federal Law №259042-5.
18 Figures converted to USD are shown in Appendix 4.
19 Change of figures as of 30 June 2011 compared to 30 June 2010.
20 For the purpose of the ratio calculation as of 31 March 2011 the aggregate of EBITDA for Q1 2011 and Q2-Q4 2010 was used. For the purpose of the ratio calculation as of 30 June 2011 the aggregate of EBITDA for Q1-Q2 2011 and Q3-Q4 2010 was used. For the purpose of the ratio calculation as of 30 June 2010 the aggregate of EBITDA for Q1-Q2 2010 and Q3-Q4 2009 was used.
21 EBITDA for each period is defined as results from operating activities, adjusted for amortization and depreciation, impairment loss and loss on disposal of property, plant and equipment. EBITDA is not a measurement of the 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 a measure of the Company’s liquidity.
22 Management has reconsidered the approach on inclusion in «Resale of coal purchased» segment volumes of the coal bought from neighboring enterprises on EX-works terms and delivered to coal storages on the Company’s open pit mines for processing and sorting. The cost of such coal purchase is included in production costs and revenue from its sale is distributed between "Domestic sales of coal produced" and "Export sales of coal produced" segment. Volumes of such coal amounted to: 6M 2010: 0; 6M 2011: 0.39 mln tonnes.
