News and events

KEMEROVO, Russian Federation—August 27, 2015 2:00 PM — Kuzbasskaya Toplivnaya Company PJSC (KTK, MICEX: KBTK), one of the largest producers and exporters of thermal coal in Russia, today announced unaudited interim consolidated financial results under IFRS for the second quarter and six months ended June 30, 2015.

Financial highlights

Revenue

Revenue for the six months of 2015 was RUB 11,307 million, 30% higher than for the six months of 2014. The revenue growth was due to the segments of domestic market own coal sales and export sales. In the second quarter of 2015 revenue went down by 12% to RUB 5,294 million because of the diminished sales of own coal in the domestic market.

Operating profit and EBITDA

For the six months operating profit rose significantly, by 293%, compared to results for the same period of 2014, and amounted to RUB 962 million. Gross profit in the first half of 2015 grew by 94% to RUB 2,063 million. EBITDA showed a 91% increase compared to the six months of 2014, reaching RUB 1,501 million. Cost of sales for the first six months of 2015 decreased by 21% to RUB 9,244 million. Commercial, administrative and other expenses were up by 34% to RUB 1,101 million.

In the second quarter of 2015 the Company showed an operating income of RUB 250 million, 65% lower than in the previous quarter. Gross profit fell by 45% to RUB 735 million. Quarterly EBITDA reached RUB 549 million, showing a quarterly decline by 42%. Cost of sales in the second quarter dropped by 3% to RUB 4,559 million. Commercial, administrative and other expenses went down by 21% to RUB 485 million.

Net profit

The Company shows a net profit of RUB 303 million in the first six months of 2015. After four losses obtained by the Company in the second quarter in the past three years, in the second quarter of 2015 net income was RUB 45 million.

Debt portfolio management

Net debt at June 30, 2015 stood at RUB 5,643 million, decreasing by 13% compared to March 31, 2015, down 8% year over year. The net debt to 12-month EBITDA ratio showed a 23% quarterly drop and stood at 1.74. 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 June 30, 2015, the average effective rate was 10.36% 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 the six months of 2015 operating cash flow amounted to RUB 11 million. Investment cash flow went down by 7% to RUB (275) million. Investment in fixed assets amounted to RUB 305 million, a decrease of 19% year on year. Net cash outflow from financial activities for the six months was RUB 3,893 million. Net decrease in cash and cash equivalents stood at RUB 4,157 million.

In the second quarter of 2015 operating cash flow stood at RUB 406 million. Investment cash flow reached RUB 124 million, while RUB 142 million were invested in fixed assets. Net cash outflow from financial activities for the quarter was RUB 2,232 million. Net decrease in cash and cash equivalents amounted to RUB 1,925 million.

Key events after the reporting date

• On July 3, 2015 the Extraordinary General meeting of shareholders approved the new composition of the Board of Directors, which now includes three independent ones. By a vote of shareholders, it included: Vladimir Baskakov (independent Director); Vadim Danilov; Igor Prokudin; Alexander Arthur John Williams (independent Director); Yuri Friedman (independent Director). The elected Board of Directors supported the decision on early termination of powers of CEO Igor Prokudin, who will continue working in the company as President, focusing on strategic development of the enterprise. Eduard Alekseenko was appointed new CEO. He previously held the post of First Deputy CEO.
• On June 30, 2015 the Extraordinary General meeting of shareholders approved the payment of interim dividends for the first quarter of 2015 in the amount of RUB 2.50 per one ordinary registered share. A total of RUB 248 million were paid as dividend.

Outlook for the third quarter and full year 2015

• In accordance with the production plan, the volume of coal production in the third quarter of 2015 will rise by 9% quarter over quarter, to 2.71 million tonnes.
• The management expects the stripping ratio in the third quarter to fall by 7% to 5.67.

6M 2015 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 – CEO
Vasily Rumyantsev – Head of Moscow office, IRO

Thursday, August 27, 2015
12:00 Noon 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

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:

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 one projected plot 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 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%.

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

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Presentationswww.slideshare.net/oaoktk

Video www.youtube.com/oaoktkru

Financial highlights under IFRS:

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

Production

Sales