Kuzbasskaya Toplivnaya CompanyPJSC Reports Full Year2015Financial Results
KEMEROVO, Russian Federation—April4, 20161:00 PM(UTC +7:00)—Kuzbasskaya Toplivnaya Company PJSC (KTK, MICEX: KBTK), one of the largest thermal coal producers and exporters in Russia, today announced audited consolidated financial results under IFRS for the fourth quarter and full year ended December31,2015.
Financial highlights
| in millions of RUB | Q420151 2015 | Q320151 2015 | Chg. |
FY 20151 2015 | FY20141 2014 | Chg. |
| Revenue | 7 318 | 6 369 | 15% | 24 994 | 22 250 | 12% |
| Cost of sales | 6 197 | 5 491 | 13% | 20 932 | 18 925 | 11% |
| Gross profit | 1 121 | 878 | 28% | 4 062 | 3 325 | 22% |
| Gross profit margin | 15% | 13,8% | 1,5 п.п. | 16% | 14,9% | 1,3 п.п. |
| Selling, general and administrative expenses | 683 | 714 | -4% | 2 508 | 1 951 | 29% |
| Operating profit | 438 | 154 | 184% | 1 554 | 1 374 | 13% |
| Operating profit margin | 6% | 2,4% | 3.4 п.п. | 6% | 6,2% | - |
EBITDA2 |
702 | 494 | 42% | 2 697 | 2 518 | 7% |
| EBITDA margin | 10% | 7,8% | 1,8 п.п. | 11% | 11% | -0,5 п.п. |
| EBITDA per tonne, RUB | 233 | 189 | 23% | 245 | 237 | 3% |
| Net profit | -97 | -169 | -43% | 37 | 7 | 429% |
| Net profit margin | - | - | - | - | - | - |
Revenue for 2015 was RUB 24,994 million, 12% higher than for 2014. In the fourth quarter of 2015 revenue went up by 15% to RUB 7,318 million.
Full-year gross profit rose by 22% to RUB 4,062 million
Operating profit increased by 13% compared to the results of 2014 and amounted to RUB 1,554 million.
EBITDA showed a 7% increase compared to 2014, reaching RUB 2,697 million.
Cost of sales for 2015 grew by 11% to RUB 20,932 million. The main reasons for this increase were the growth of railway tariffs, cost of fuel, and cost of equipment repair and maintenance.
Selling, general and administrative expenses for the full year were up by 29% to RUB 2,508 million.
In the fourth quarter of 2015, all the indicators showed growth, except for net profit, which went down by 43%, and selling, general and administrative expenses fell by 4% to RUB 683 million.
Revenue grew by 15% compared to the third quarter.
Operating profit rose to RUB 438 million, which is almost triple the amount reached in the previous quarter.
Gross profit grew by 28% to RUB 1,121 million.
Quarterly EBITDA reached RUB 702 million, showing a quarterly growth by 42%.
Cost of sales for the quarter increased by 13% to RUB 6,197 million.
Despite showing quarterly losses, the Company slightly increased its net profit by the end of 2015 compared with 2014, and it amounted to RUB 37 million. The main factors that influenced the financial result were the increase in doubtful debts provisions and difficult market conditions throughout the year.
Debt portfolio management
| in millions of RUB | 31.12.15 | % total | 30.09.15 | Chg. | 31.12.14 | Chg.3 |
| Long-term loans | 7 379 | 82% | 8 754 | -16% | 9 145 | -19% |
| Short-term loans | 1 653 | 18% | 2 854 | -42% | 4 288 | -61% |
| Total debt, incl.: | 9 032 | 11 608 | -22% | 13 433 | -33% | |
| RUB loans | 2 651 | 29% | 4 008 | -34% | 4 553 | -41% |
| Average interest rate for RUB loans | 9,25% | 10,55% | -2,30 n/a | 9,65% | 0,40 n/a | |
| USD loans | 6 071 | 67% | 7 601 | -20% | 8 880 | -32% |
| Average interest rate for USD loans | 4,13% | 4,27% | 0,05 n/a | 4,35% | -0,22 n/a | |
| PLN loans | 310 | 4% | - | - | ||
| Average interest rate for PLN loans | 2,87% | - | - | |||
| Cash and cash equivalents | 3 390 | 5 922 | -43% | 7 332 | -54% | |
| Net debt | 5 642 | 5 686 | -0,8% | 6 101 | -7,5% | |
| Net debt / 12M EBITDA | 2,09 | 1,7 | 23% | 2,42 | -14% |
Net debt at December 31, 2015stood at RUB 5,642 million, showing a quarterly decline by 0.8% and down 7.5% year-over-year. The net debt-to-12-month EBITDA ratioshowed a 14% yearly drop and stood at 2.09. In the agreements with banks, the threshold value for this indicator is 4.00.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 December31, 2015, the average effective rate was 9.25% for loans denominated in RUB and 4.13% for USD-denominated loans. The loan portfolio is distributed among 11 Russian and foreign banks. Quarterly decline in interest rates on RUB loans by 1.25 ppts is due to the repayment in the fourth quarter of 2015 of a significant share of short-term RUB loans obtained in 2015 at rates that exceed rates on long-term loans obtained in 2013 and that are currently in force.
Cash flow and investments
| in millions of RUB | Q42015 | Q32015 | Chg. | FY 2015 | FY 2014 | Chg. |
| Operating cash flow | 1 203 | 1 104 | 9% | 2 318 | 874 | 165% |
| Investment cash flow | -360 | -214 | 68% | -849 | -614 | 38% |
| Acquisition of property, plant and equipment | -470 | -196 | 140% | -971 | -759 | 28% |
| Financial cash flow | -4 428 | -2 455 | 80% | -6 506 | 2 570 | n/a |
| Net increase / (decrease) in cash and cash equivalents | -2 955 | -3 559 | -17% | -5 037 | 2 930 | n/a |
In 2015 operating cash flow amounted to RUB 2,318 million, growing several times compared to the previous year.
Investment cash flow went down by 38% to RUB (849) million.
Acquisition of property, plant and equipment amounted to RUB (971) million, a growth of 28% year-on-year. New equipment acquisitions were the most important part of these investments.
Net decrease in cash and cash equivalents for the full year stood at RUB (5,037) million due to the spending of these resources to repay short-term bank loan liabilities. This measure has allowed the Company to reduce the average interest rate on RUB-denominated borrowings.
In the fourth quarter of 2015 operating cash flow stood at RUB 1,203 million.
Quarterly investment cash flow reached RUB (360) million.
Acquisition of property, plant and equipment went down almost twice compared to the third-quarter level.
Quarterly net decrease in cash and cash equivalents amounted to 17%.
Key events after the reporting date
Kuzbasskaya Toplivnaya Company PJSC has gained certification for its occupational health and safety management systems (OHSAS 18001:2007).KTK has undergone inspection audit procedures for compliance with ISO 9001:2008 and ISO 14001:2004 (the Company received certification for these standards earlier in 2015) and certification audit for OHSAS 18001:2007.OHSAS 18001:2007 management system certification describes the basic capabilities and competence of the personnel and technology processes in the issues of KTK’s production safety. Certification under this standard confirms the fact that KTK’s enterprises give high priority to production safety, and all processes in this system are built at the level of world standards.
Outlook for the first quarter of 2016
In accordance with the production plan, coal production volume and stripping in the first quarter of 2016 are expected to be at the level of the first quarter of 2015, at 2.8 million tonnes and 15, 2 million tonnes, respectively. ? Commenting on the Company’s financial results, Eduard Alexeenko, KTK’s General Director, said, Evaluating the Company’s performance for the year, I can say that they can be called expected. We had already predicted that 2015 would be difficult in terms of the economy, especially for coal business, so we had prepared ourselves ahead of time and created a “safety cushion”, assessing risks in all areas of the Company’s business. Despite a steady deterioration in the market indicators, the Company managed to increase sales volumes last year, which allowed us to finish the year without losses, even with a profit, albeit small, which is higher than last year. Throughout the year we carried out planned works at the Bryansky mine, and we continued exploration, under the license, at the Listvyanichny mine. In addition, last year we began optimisation our corporate structure, which will continue this year. This will result in the creation of an optimal system of management and communications within the Company that would reduce costs and administrative expenses, and form an optimal model of interaction and distribution of competences between the Company’s units. We are optimistic about the future and are planning to continue KTK’s stable development and increase its presence both within the country and in Eastern Europe.
Contacts for analysts, investors, and press:
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 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%.
News and announcements (Russian only) www.facebook.com/oaoktk
Presentations www.slideshare.net/oaoktk
Video www.youtube.com/oaoktkru
Financial highlights under IFRS:
| in millions of RUB
| 2015 | 2014 | 2013 |
Revenue |
24 994
|
22 250
|
22 490
|
Cost of sales | 20 932 | 18 925 | 19 523 |
| Production cash costs per tonne, RUB | | 577 | 611 |
EBITDA | 2 697 | 2 518 | 2 422 |
| EBITDA margin | 10,8% | 11% | 11% |
| EBITDA per tonne, RUB | 245 | 237 | 239 |
Net profit | 37 | 7 | 640 |
| Net profit margin | - | - | 3% |
Net debt | 5 642 | 6 101 | 3 917 |
| Net debt / EBITDA | 2,09 | 2,42 | 1,62 |
Additional information about the Company and investor calendar: www.oaoktk.ru/en/investors
Rounding and errors:
Certain financial and production indicators, as well as calculated ratios 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 them to pr@oaoktk.ru.
Appendix
Production
| Q4 2015 | Q3 кв. 2015 | Chg. | FY 2015 | 2014 | Chg. | |
| Coal production, in millions of tonnes, incl.: | 3,01 | 2,62 | 15% | 11,00 | 10,61 | 4% |
| Karakansky South | 1,19 | 0,92 | 29% | 3,96 | 3,40 | 16% |
| Vinogradovsky | 1,07 | 1,03 | 4% | 4,47 | 4,17 | 7% |
| Cheremshansky 5 | 0,76 | 0,67 | 13% | 2,57 | 3,04 | -15% |
| Coal processing , in millions of tonnes, incl.: | 2,16 | 2,05 | 5% | 8,32 | 8,70 | -4% |
| Sorted coal | 1,23 | 1,09 | -13% | 4,59 | 5,54 | -17% |
| Washed coal | 0,96 | 0,96 | - | 2,80 | 2,32 | 21% |
| Stripping, in millions ofcbm, incl.: | 14,28 | 14,55 | -2% | 59,02 | 59,38 | -1% |
| Blasted rock mass , in millions of cbm. | 9,60 | 8,07 | 19% | 35,45 | 35,55 | 0% |
| Average stripping ratio 7 | 4,70 | 5,60 | -16% | 5,40 | 5,60 | -4% |
Sales
| 4 кв. 2015 | 3 кв. 2015 | Изм. | 2015 | 2014 | Изм. | |
| Sales volume ,8 , in millions of tonnes, incl.: | 3,15 | 2,58 | 22% | 10,69 | 10,32 | 3% |
| Export sales volume | 1,78 | 2,00 | -11% | 6,90 | 7,20 | -4% |
| Domestic sales volume | 1,36 | 0,89 | 52% | 3,78 | 3,12 | 21% |
| Average sale price, RUB/tonne9 | 1 352 | 1 461 | -7% | 1 320 | 1 157 | 14% |
