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
Outlook for the first quarter and full year 2015
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:
Great Britain:
USA:
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% |
