OREANDA-NEWS. April 04, 2012. OJSC "Kuzbasskaya Toplivnaya Company" (RTS/MICEX: "KBTK"), one of the fastest-growing thermal coal producers in Russia, is pleased to announce the audited consolidated IFRS financial results for the year ended December 31, 2011.

Revenue for Q4 2011 increased by 21.7% to RUB 7,551 mln. quarter-on-quarter (Q3 2011: RUB 6,207 mln.). Revenue for 12M 2011 gained 69.1% year-on-year up to RUB 23,939 mln. (2010: RUB 14,160 mln.).

Growth of production volumes resulted in a quarter-on-quarter increase of Q4 2011 EBITDA by 26.2% to RUB 1,360 mln. (Q3 2011: RUB 1,078 mln.). 12M 2011 EBITDA increased by 83.3% year-on-year to RUB 3,911 mln. (2010: RUB 2,134 mln.). USD equivalent of 2011 EBITDA is 90,0 % higher than in 2010 and reached USD 133 mln. (2010: 70 mln.).

In Q4 2011 net profit increased by 72.8% to RUB 776 mln. (Q3 2011: RUB 449 mln). As for the full year, net profit amounted to RUB 2,018 mln., 145.2% higher than the result of 2010 (RUB 823 mln.). A positive effect on net profit has resulted from the growth in sales volume as well as the rise in the price of coal, net of VAT and net of rail road tariffs.

As at December 31, 2011 net debt amounted to RUB 2,663 mln. It has increased by 17.4% quarter-on-quarter (Q3 2011: RUB 2,268 mln.), and by 51.8% year-on-year (2010: RUB 1,754 mln.). At the reporting date the net debt to EBITDA ratio was 0.68.

During Q4 2011 the Company produced 2.57 mln. tonnes of coal, which exceeded Q3 volume by 5.3% (2.44 mln. tonnes). As for 2011, the Company increased total coal production volume by 28.5% year-on-year to 8.74 mln. tonnes (2010: 6.8 mln. tonnes).

In Q4 the volume of coal sorted by coal-crushing and screening units remained at the level of Q3 at 1.51 mln. tonnes. In 2011 the volume of coal sorted by coal-crushing and screening units increased by 35.6% year-on-year to 5.56 mln. tonnes (2010: 4.10 mln. tonnes).

Coal enrichment plant “Kaskad” continued to run at close to full capacity production level. Volume of quarterly production of enriched coal fell slightly to 186 thousand tonnes (Q3 2011: 199 th. tonnes), due to the scheduled maintenance of the plant in the winter. As a result, the coal enrichment plant produced 736 tonnes of export quality coal in 2011.

The volume of coal sales in Q4 2011 increased by 18.9% quarter-on-quarter to 3.34 mln. tonnes (Q3 2011: 2.81 mln. tonnes). The Company exported 1.77 mln. tonnes of coal, and the remaining 1.57 mln tonnes were sold on domestic market. During the quarter coal resale volume increased by 57.4% - from 0.47 to 0.74 mln. tonnes.

In 2011 coal sales volume increased by 24.8% year-on-year and reached 10.66 mln. tonnes (2010: 8.54 mln. tonnes). Export sales volume increased by 72.0% to 6.45 mln. tonnes (2010: 3.75 mln. tonnes), whereas domestic sales volume decreased by 12.1% to 4.21 mln tonnes (2010: 4.79 mln. tonnes).

In the past quarter the average coal price net of VAT and railroad tariffs increased by 4.6% quarter-on-quarter to RUB 1,285 per tonne (Q3 2011: RUB 1,229 per tonne). The average domestic price decreased by 6.9% quarter-on-quarter to RUB 1,192 per tonne (Q3 2011: RUB 1,280 per tonne). The export price continued to increase in the fourth quarter and reached RUB 1,367 per tonne, being 14.8% higher than the price in the third quarter (RUB 1,191 per tonne).

During the year the average price of coal increased by 25.7% year-on-year to RUB 1,228 per tonne net of VAT and railroad tariffs (2010: RUB 977 per tonne). The average export price reached RUB 1,237 per tonne, exceeding the 2010 price by 21.2% (RUB 1,021 per tonne) due to recovery of global demand for coal. The average domestic price increased by 28.6% year-on-year from RUB 943 to RUB 1,213 per tonne. The major reason was the increased share of high-grade coal sales.

4th Quarter 2011 overview

The Company fulfilled the 2011 production plan of 8.74 mln tonnes and approved a plan for 2012, stating the total production volume and enrichment plant output at 9.30 mln. tonnes of coal.

The enrichment plant "Kaskad" continued to run at close to full capacity level of production and produced 736 thousand tonnes of export quality coal in 2011.

The Company won an auction for a license to mine Bryanskiy-1 coal deposit, adding an additional 250 mln. tonnes of C2 category coal reserves in close proximity to existing infrastructure. In the fourth quarter the Company made a deposit payment of RUB 171 mln.

Four BelAz-units of mining-transport equipment have been commissioned with a total capacity over 463 tonnes.

The completion of construction fuel and lubricants dump.

A new unheated warehouse has been commissioned in the industrial area of "Karakansky-South"
 
Igor Prokudin, CEO of the Company, commented:

“Summarizing the results of 2011, I should note a significant increase in coal production – 8.74 mln. tonnes (an increase of 1.94 mln. Tonnes to 2010). These dynamics allowed KTK to become one of the top-10 largest Russian companies by volume of thermal coal production, and enter the 5th place among the Russian exporters of coal, shipping 6.45 mln. tonnes for export. This is the highest level of sales of coal for export in the Company’s history.

At the end of December 2011 the Company won an auction for a license to mine Bryansk-1, getting an additional 250 mln. tonnes of coal reserves in close proximity to existing infrastructure. We have already started geological investigations explored the area and plan to start developing the fourth section in the future. The new field will subsequently increase the production of the Company. A significant event in 2011 for the KTK was also the start of construction of the second enrichment plant, which is expected to be finished in Q4 2012. The plant will be a unique innovative project for the Russian and possibly international practice. The investment program, which was announced to the participants of IPO in 2010, included the construction of an enrichment plant with capacity of 2 mln. tonnes. As a result the capacity of the second enrichment plant was increased to 4 mln. tonnes.

In addition, we have conducted a large reconstruction of our sorting station Uba: we have built 5 additional railway tracks with contact network, an administrative building, which housed employees of TEK "Meret" and OJSC ”RZD”. This allowed us to meet the technical conditions of OJSC ”RZD” and increase the capacity to 16.7 mln. tonnes of coal per year through this transport corridor. An important strategic direction of the Company's development is to ensure the transportation independence of KTK. Therefore, to purchase additional railroad cars for KTK, “Kuzbasskaya Transportation Company”, an associate of KTK opened a credit line with Gazprombank amounting to RUR 10 bln. for a period of 10 years.

At the beginning of 2012 “Kuzbasskaya Transportation Company”7 had 2,628 high-sided railroad cars at its disposal. Earlier this year additional 500 high-sided rail cars were purchased. It is planned that the needs of KTK in the railroad cars for transportation of coal will be fully met with this additional credit facility.

Reviewing the results of 2011, I believe that management has successfully fulfilled al the tasks. Based on the financial results for 2011 under IFRS, the company's revenue has grown in the rouble equivalent by 69.1%, net profit increased by 145.2% and earnings per share – at 122.2%. EBITDA amounted to USD 133 mln., which meets our internal forecasts. Net debt to EBITDA remains at a low level of 0.68. We met and even exceeded all financial and operational targets of the 2011 plan.

We believe that the execution of commitments, which we made to the investors during the IPO, financial transparency, high standards of corporate governance and systematic work to improve business efficiency, will lead to long-term increase in shareholder value of the Company. Management thanks all KTK’s staff for their united work and support of the management’s initiatives which ensured sustainable development of the Company during the past year.“