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03.04.2014
NCSP Group Consolidated Financial Results for 2013
Novorossiysk Commercial Sea Port Group (“NCSP Group” or the “Group”) (LSE: NCSP, Moscow Exchange: NMTP) today reports its consolidated IFRS financial results for the year ending 31 December 2013. NCSP Group’s consolidated revenue comprised U$928.1 million in 2013 and EBITDA totaled US$510.4 million. Revenue decreased by US$105.6 million or by 10.2%; and EBITDA reduced by US$81.1 million or by 13.7% versus that of 2012, mostly driven by a drop in Group’s cargo traffic by 11.3% or 18 million tons, of which crude oil contributed 19 million tonnes decrease, and grain contributed 4 million tonnes decrease, while partially offset by 5 million tonnes hike in oil products transshipment. NCSP Group posted a net loss of US$104.7 million for 2013, primarily due to loss from impairment of goodwill in the amount of $259.9 million and exchange rate losses totaling $125.4 million. PJSC NCSP CEO Yuriy Matvienko commented on 2013 financial results: «Group‘s performance in 2013 was materially affected by factors beyond its control: rerouting of substantial crude oil export volumes to the East, as well as weakening of demand and export volumes of other commodities. This resulted in stiffening competition in the Black&Azov and in the Baltic seas both in cargo transshipment and in towing and bunkering services, creating a more balanced market split between players. Still the Group was able to consolidate certain cargo flows (oil products, metals, iron ore) and to maintain flat volumes or to increase handling despite zero growth or decrease in industry’s total volumes. This smoothed somewhat the effect of operational changes on Group’s financial performance, to prove that the Group demonstrates sufficient stamina in volatile markets and preserves its fundamentally strong ability to generate stable cash flows. Net loss from impairment of goodwill and exchange rate losses shall not materially affect Group’s ability to service its debt and to maintain dividend payments on a par with previous years. This loss also shall not affect Group’s service of the US$1.95 billion loans from Sberbank, including maintenance of Net Debt/EBITDA covenant. No covenants related to net profit apply to Group. As of 31 December 2013 all covenants were maintained with headroom». NCSP Group’s consolidated IFRS financial statements for the year ended 31 December 2013 are available for download at: http://nmtp.info/holding/investors/reporting/msfo/
Key operating and financial indicators for 2013
Revenue NCSP Group’s consolidated revenue decreased by US$105.6 million and totaled US$928.1 million in 2013, with revenue from stevedoring services dropping by US$92.8 million to US$735.1 million. Revenue from stevedoring services was most impacted by the decrease in transshipment of crude oil by 19 million tonnes and drop in grain volumes by 4 million tonnes compared to the previous year, which reduced revenue generated by these cargos by respectively US$52.2 million and US$63.1 million. Revenue from transshipment of oil products grew by US$26.9 million as volumes increased by 5 million tonnes compared to the previous year, and revenue from container cargo rose by 5.5% or US$2.9 million tonnes as container turnover grew at NLE. The acquisition of 0.9 million tonnes of new coal traffic added US$4 million to Group revenue. Mixed changes in revenue from other cargo and services resulted in revenue decreasing by US$11.3 million. Revenue generated by fleet services and additional port services fell by respectively US$10.2 million and US$3.5 million in proportion to the decrease in cargo turnover. Other revenue did not change significantly. The Group’s cost of sales decreased by US$11.2 million to US$424.5 million in 2013. This was, among other things, due to a decrease in expenditures on equipment repairs, which grew in 2012 due to extensive flood remediation work in Novorossiysk, as well as the weakening of the ruble against the U.S. dollar. The Group’s commercial, general business and administrative expenses decreased by US$10.6 million, including by US$3.1 million due to a decrease in payments to staff. These changes had a positive impact on the profitability of the Group’s business.
EBITDA The Group’s EBITDA reduced by US$81.1 million or 13.7% and totaled US$510.4 million in 2013, primarily because of the decline in revenue from stevedoring services, which reduced EBITDA by US$78.0 million. The net change in costs (not including bunkering operations) had a positive impact on EBITDA in the amount of US$9.0 million, while the negative impact of the decline in revenue from additional port services and fleet services amounted to US$12.1 million. Net (loss)/profit NCSP Group posted a net loss of US$104.7 million for 2013, primarily due to loss from impairment of goodwill in the amount of $259.9 million and exchange rate losses totaling $125.4 million. Loss from impairment of goodwill was recognized for PTP and SFP following an annual impairment test based on updated forecasts for future crude oil and oil product transshipment volumes and for provision of services. The Group management engaged a licensed, independent appraiser for the impairment test. The main reason for the reassessment of the Group’s projections for the future results of PTP and SFP was the delay in the construction of a railway to the Port of Primorsk, caused by factors beyond the Group’s control and resulting in the postponement of the anticipated start of transshipment of additional crude oil and oil product volume from 2015 until 2017. Accordingly, management reduced the forecasts for transshipment of crude oil and oil products and provision of services used in the Group’s business plan. The foreign exchange loss on the Group’s foreign currency assets and liabilities was incurred because the ruble depreciated against the U.S. dollar to 32.7292 rubles as of December 31, 2013 from 30.3727 rubles as of December 31, 2012. Debt The Group's total debt as of 31 December 2013 stood at US$ 2,156 mln.
On 25 November 2013 NCSP Group signed an additional agreement with Sberbank to change certain conditions of the Group’s US$ 1,950 mln loan.
· From 19 January 2014 the interest rate will be reduced to a floating rate of LIBOR 3M + 5.0% instead of the originally agreed fixed rate of 7.48%; · The loan repayment schedule has been restructured: the loan will be repaid in regular installments every six month starting in June 2014; · The amount of the repayments in 2014–2017 was reduced compared to the previous schedule. · Installment payments will increase towards the end of the loan period, with a final balloon payment equivalent to 40% of the total indebtedness to be made on the last day of the agreement – 18 January 2018. · The parties also agreed more comfortable loan covenants, including a significantly higher net debt/EBITDA threshold and the removal of EBITDA/interest payments testing.
Conference call & webcast The conference call and webcast for investors & analysts will be held at 17:15 Moscow time (14:15 London / 09:15 New York). The call will be hosted by:
The call will be held in Russian, with simultaneous translation into English on a separate line. Webcast link (English only): https://engage.vevent.com/rt/nmtp~2013_financial_results Conference call dial-ins: +7 499 6771036 Russia +44 (0) 0844 4933800 UK +1 631 510 7498 USA +44 (0) 1452 555566 International access Toll Free: 8108 002 097 2044 Russia (Moscow only) 0800 694 0257 UK 1 866 966 9439 USA Russian call conference ID 22961353 English call conference ID 23001289 About NCSP Group
NCSP Group is the largest port operator in Russia and the third-largest in Europe, in terms of cargo turnover. NCSP shares are traded on Russia's Moscow Exchange (ticker: NMTP) and on the London Stock Exchange in the form of GDRs (ticker: NCSP). NCSP Group cargo turnover in 2013 totalled 141 million tonnes. Consolidated revenue according to IFRS in 2012 totalled USD 1,034 million and EBITDA was USD 591.5 million. NCSP Group consolidates the following companies: PJSC “Novorossiysk Commercial Sea Port”, LLC “Primorsk Trade Port”, PJSC “Novorossiysk Grain Terminal”, OJSC “Novorossiysk Ship Repair Yard”, OJSC “NCSP Fleet”, OJSC “NLE”, OJSC “IPP”, CJSC “Baltic Stevedore Company”, and CJSC “SFP”.
Contacts
Kristina Senko, Public Relations: KSenko@ncsp.com
Mikhail Shchur, Investor Relations: MShchur@ncsp.com
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