OREANDA-NEWS. On 06 July 2009 Novorossiysk Commercial Sea Port (LSE: NCSP, RTS and MICEX: NMTP) announced its non-audited consolidated financial results for the first quarter 2009 in accordance with International Financial Reporting Standards (IFRS).

The full Condensed Consolidated Interim Financial Statements For the three months ended 31 March 2009 of the NCSP Group are available on the Group’s website at: http://nmtp.info/ncsp/investors/

Key financial indicators of the Group (USD ‘000)

Indicator

First Quarter 2009

First Quarter 2008

Change, percent

Revenue

157,130

150,343

4.5%

Gross profit

112,625

76,545

47.1%

EBITDA*

64,085

95,669

-33.0%

Adjusted EBITDA*

116,152

74,955

55.0%

Operating profit (EBIT)

101,647

61,970

64.1%

Finance costs

8,970

8,247

8.8%

Net profit

33,732

56,296

-40.1%

Adjusted net profit*

75,386

40,553

85.9%

Investments*

3,744

23,594

-84.1%

Cargo turnover (thousand tonnes)

20,937.4

18,437.1

13.6%

Net debt*

277,738

464,416

-40.2%

Net debt / Adjusted EBITDA* (annualized)

0.60

1.55

-61.3%

* The data are hereinafter provided according to the management reporting

Commenting on the financial results for the first quarter 2009, NCSP Chairman Alexander Ponomarenko said: "Despite macroeconomic difficulties and high level of uncertainty, the NCSP Group managed to retain positive dynamics of major financial and operational indicators in the first quarter 2009. Due to the management’s efforts to attract extra cargo flows to compensate for general cargo reduction, total cargo turnover of the Group increased by 13.6 percent in the first quarter 2009. At the same time, the financial indicators also showed growth thus enabling the Group to form a certain margin of safety for 2009."

"The NCSP Group continues its staged and scalable long-term investment program. In 2009, we are going to finish another stage of the Sheskharis oil terminal reconstruction, continue developing our project of a new container terminal in the Port of Novorossiysk, and start designing works on the fuel oil terminal."

Revenue

The NCSP Group revenues increased by USD 6.8 million and reached USD 157.1 million in the first quarter 2009. The Group’s consolidated revenues grew by 4.5 percent against the first quarter 2008 due to the complex of different factors.

On one hand, the changes in cargo mix, including 25 percent increase in oil products handling and 3.5 times growth of grain handling as well as total cargo turnover increase, contributed to the revenues increase in the reporting period. In total, these factors enabled the Group to increase its revenues by USD 27.0 million* in the first quarter 2009 compared to the same period last year.

The increase in additional port services provided over the reporting period, including cargo storage and other services, secured additional USD 2.5 million* of revenues in the first quarter 2009.

On the other hand, optimization of the Group’s bunkerage business (reducing bunkerage fuel purchase and resale operations and substituting them by transshipment of third-party volumes) as well as general reduction in oil products prices resulted in absolute decrease of the segment’s revenues by USD 22.7 million* in the reporting period along with proportional decrease of the share of bunkerage costs in the total cost of production.

Cost of Production

According to the IFRS financial statements, the cost of production (cost of services + selling, general and administrative expenses) equaled USD 55.4 million in the first quarter 2009 (compared to USD 88.3 million in the same period of 2008).

As a result of decrease of bunkerage fuel purchase and resale operations and the fall of oil products prices cost of production dropped nominally by USD 21.3 million*.

Further decrease of the cost of production was conditioned by the devaluation of the Russian ruble (functional currency) against US dollar (presentation currency) and saving on certain cost items.

Adjusted EBITDA

In order to ensure the comparability of the data for 2008 and 2009, the calculations of EBITDA for both periods are adjusted to the exchange rate differences resulted from Russian ruble vs US dollar exchange fluctuations. Hence, the adjusted EBITDA for the first quarter 2009 equaled USD 116.2 million* against USD 75.0 million* in the first quarter 2008.

The largest contribution to the increase in the adjusted EBITDA over the reporting period came from the changes in volumes and cargo mix (first of all, due to growth in handling of grain and oil products). All together, these factors led to USD 21.1 million* increase in adjusted EBITDA in the first quarter 2009 compared to that of 2008.

Additional port services added another USD 1.7 million* to the adjusted EBITDA in the first quarter 2009. Substituting the bunkerage fuel purchase and sale operations for handling exerted limited influence on the EBITDA and resulted in its USD 1.6 million* decrease.

Optimization of operational costs, including cost of production control, and Russian ruble devaluation effect secured adjusted EBITDA growth by USD 20.0 million* in the first quarter 2009.

Adjusted Net Profit

According to the IFRS financial statements, the NCSP Group’s net profit for the first quarter 2009 equaled USD 33.7 million against USD 56.3 million in the first quarter 2008.

In order to ensure the comparability of the net profit of the first quarters of 2008 and 2009, some adjustments to the effect of profit (losses) from exchange rate differences and their influence on the profit tax should be made.

Under the given conditions, the NCSP Group’s adjusted net profit for the first quarter 2009 equaled USD 75.4 million* against USD 40.6 million* in the first quarter 2008.

Credit Burden and Net Debt

As of 31 March 2009, the NCSP Group’s loan debt amounted to USD 487.9 million, with the current portion of USD 33.4 million (6.8 percent).

To the reporting date, the net debt totaled USD 277.7 million which takes into account the company’s monetary resources:

§ cash and cash equivalents – USD 90.09 million;

§ deposits maturing in more than three months – USD 120.073 million;

Thus, the ratio of the net debt to the annualized adjusted EBITDA dropped to 0.6* in the first quarter 2009.

According to the data of the IFRS financial statements, the average effective rate for borrowings in the reporting period was 6.87 percent (against 7.02 percent in the first quarter 2008).