NCSP Group Consolidated Financial Results 2009

NCSP announces consolidated financial results for 2009

22 April 2010

Novorossiysk Commercial Sea Port (LSE: NCSP, RTS and MICEX: NMTP) announced its audited consolidated financial results for the year ended 31 December 2009, in accordance with International Financial Reporting Standards (IFRS).

The consolidated financial statements of NCSP Group for the year ended 31 December 2009 are available on the Group's website at: http://www.nmtp.info/en/ncsp/investors/

2009 Highlights (USD '000)

Commenting on the publication of NCSP Group financial results for 2009, PJSC NCSP Chairman of the Board Alexander Ponomarenko said: "Adhering to the strategy we began implementing in 2006 enabled the Group to preserve financial stability and strengthen its position on the stevedoring and port services market during the past crisis-ridden year. NCSP Group completed the first stage of its investment program on schedule in 2008. The projects implemented by Group companies allowed us to achieve a more balanced cargo traffic structure, setting the stage for continued business growth in challenging market conditions."

"Last year the Group launched a new project to build a fuel oil transshipment terminal with annual capacity of 4 million tonnes. We are implementing this project with a partner who has guaranteed capacity utilization."

"Throughout 2009, we continued to develop the project to construct a new container terminal at the Port of Novorossiysk with capacity of 1.2 million TEU, which is one of the top priorities of the Group. This project will significantly increase NCSP Group's presence on the promising container shipping market and will enable us to fully capitalize on the growing use of containers in foreign trade to further improve our operating and financial results."

Revenue

In 2009 NCSP Group's revenue reached USD 675.06 million, or 3.3% more than in 2008.

Revenue from stevedoring services (transshipment of liquid, bulk, general and container cargo, including bunkering) grew by 6.6% (USD 33.2 million) in 2009. Two main factors came into play. On one hand, the growth of cargo turnover in 2009 (primarily grain, oil products and iron ore materials) increased revenue by USD 56.3* million. On the other hand, revenue from bunkering fuel sales dropped by USD 23.0* million in dollar terms because the ruble was weaker in 2009 than in 2008.

Revenue from additional port services (forwarding, storage, customs documentation, repacking, etc) dropped by 7.9% (USD 7.3 million) in 2009, which was due largely to shorter storage periods for cargo at the port.

Revenue from fleet services dropped by 7.1% (USD 3.6 million) in the period, due to exchange rate differences.

Revenue from ship repair services fell by -17.5% (USD 0.2 million). PJSC NSRZ repaired 27* ships in 2009 (11* ships in 2008), including 16* ships owned by PJSC NCSP Fleet (1* ship in 2008).

Revenue from other services (passenger transit, vessel rent and other services provided at the port) denominated in rubles dropped by 9.6% (USD 0.9 million) in dollar terms last year due to changes in the exchange rate of the presentation currency.

Cost of Production

The full cost of production (cost of services + selling, general and administrative expenses) totaled USD 305.0million in 2009 compared with USD 409.4 million in 2008.

The key factors contributing to a drop in the full cost of production for the Group were:

- A drop in depreciation charges by USD 58.4 million (including USD 40.6* million resulting from a reduction in the effect of an additional depreciation charge in 2008 following a reassessment of the useful life of certain property, plant and equipment due to the completion of significant investment programs; and USD 17.8* million is the translation effect from functional to presentation currencies);

- A reduction of USD 20.6* million in expenses on fuel purchases for the bunkering business, which was due largely to exchange rate differences (an increase in the dollar's average exchange rate against the ruble by 27.6% in 2009 compared with 2008);

- A reduction of other cost items by USD 25.3* million in presentation currency terms due to changes in the currency exchange rate.

EBITDA2 Adjusted

NCSP Group's EBITDA Adjusted grew by 14.6%* in 2009, to USD 431.0* million3 from USD 376* million4 in 2008.

The growth of cargo transshipment (primarily grain, oil products and iron ore materials) boosted EBITDA Adjusted by USD 48.0* million in 2009. Optimizing operating expenses and the depreciation of the ruble increased EBITDA Adjusted by USD 14.2* million.

However, the slump in additional port services reduced EBITDA Adjusted by USD 4.8* million. In 2009 the purchase prices of both fuel oil and diesel for bunkerage dropped in presentation currency terms as well as in ruble terms - by 29.7%* and 10.2% respectively. As a result, although the general profitability of bunkering fuel resale operations was sustained at the level of 2008, the absolute amount of profit in this business decreased in 2009, reducing EBITDA Adjusted by USD 2.4* million.

Net profit

Net profit totaled USD 252.2 million for the year ended December 31, 2009, compared with USD 95.8 million in 2008.

In order to compare net profit for 2009 with 2008 results, the following factors must be taken into consideration:

§ Reduction of the profit tax rate from 24% to 20% since January 1, 2009;

§ Exchange rate differences;

§ Change in depreciation charge following a reassessment of the useful life of certain property, plant and equipment due to the completion of significant investment programs in 2008;

§ Impairment of goodwill in 2008.

Taking into account the above-mentioned factors, adjusted net profit for 2009 totaled USD 282.4* million, compared with USD 220.8* million in 2008.

Credit burden and net debt

NCSP Group debt on loans and other borrowing totaled USD 454.8 million as of December 31, 2009, which was down by 10% from 2008. Total debt dropped as a result of payments on amortized loans provided by Sberbank and Unicredit Bank.

Loans and borrowing as of December 31, 2009 are to be repaid as follows:

The current portion of long-term loans, due within 12 months of the reporting date, totals USD 130.1 million (28.6%), of which USD 118* million is represented by a syndicated loan facility provided by Bayerische Hypo- und Vereinsbank AG that comes due in the third quarter of 2010 under the current loan facility agreement.

The share of secured debt in 2009 dropped to 1.0% (USD 4.7 million) from 9.4 % in 2008 (USD 47.8 million).

Net debt as of the reporting date totaled USD 127.9* million, taking into account the monetary resources at the company's disposal:

§ Cash and cash equivalents - USD 159.1 million;

§ Deposits maturing in more than three but less than 12 months - USD 159.7 million;

§ Short-term promissory notes of Sberbank of Russia - USD 8.1 million.

The net debt to EBITDA Adjusted ratio due to the above-mentioned reasons dropped to 0.3* at the end of 2009 from 1.01* a year earlier.

As at 31 December 2009, the average effective interest rate on loans and borrowing was 6.67% per annum (7.02% per annum as at 31 December 2008). A majority of the Group's debts have interest rates that are fixed at the contract date.

Investments

In 2008 NCSP Group completed the first stage of a major investment program to upgrade existing facilities and build new state-of-the-art transshipment terminals to meet growing demand for port services. The completion of the first stage of the program expanded the Group's ability to diversify cargo flows and increased its flexibility in attracting additional cargo.

In 2009 NCSP Group launched the second stage of the investment program, which includes the following key projects:

1) Construction of container terminal with capacity of 1.2 million TEU per annum. The project will be carried out in several independent stages, providing the necessary flexibility in implementation. In 2009 the company carried out design work and mapped out the project stages.

2) Construction of fuel oil transshipment terminal with capacity of 4 million tonnes per year. The project is being implemented by a 50:50 joint venture with a major international oil trader. In addition to investments to be carried out by the joint venture partners on a parity basis, the Group is investing in the reconstruction of Pier 4 which is to be used for fuel oil handling.

3) Construction of the second stage of container terminal at LLC BSC with throughput capacity of up to 400,000 TEU per annum. Design work for this project was carried out in 2009.

4) Reconstruction of Sheskharis Oil Terminal. A new oil and oil products control and metering system was commissioned under the project in 2009. Work also began last year to build a new "A" loading platform at Berth No. 1.

5) Expansion of throughput capacity of the PJSC NZT grain terminal by 2 million tonnes per annum. The project is scheduled to begin in 2010.

6) Expansion of tug and towing business. In 2009 NCSP Group signed contracts for delivery of several new deep-sea tugs that have already been built or are in the final stages of completion.

As at 31 December 2009, the investments in new projects (not including maintenance capex) since the start of the investment program totaled USD 389.2* million, including USD 47.9*million invested in 2009.

Alongside the investment program to build new stevedoring capacity, NCSP Group is continuing to update and modernize equipment at existing facilities, spending USD 25.0* million for these purposes in 2009.

Consolidation of subsidiaries

During 2009, NCSP Group acquired an additional 2.41% of interest in PJSC IPP and 9.51% interest in PJSC NCSP Fleet for a cash consideration of USD 27.2 million, increasing its ownership interest to 99.97% and 95.19%, respectively.

* The amount is either a non-IFRS measure or according to management reporting data

1 The calculating method of this non-IFRS measure is described in the relevant section of this press release.

2 EBITDA is calculated by adding up Profit Before Income Tax, Finance Costs, Depreciation and Amortisation.

3 The EBITDA Adjusted in 2009 includes the following adjustments to EBITDA: Foreign exchange loss and Interest income on deposits

4 The EBITDA Adjusted in 2008 includes the following adjustments to EBITDA: Foreign exchange loss; Impairment of goodwill; Loss on disposal of property, plant and equipment and non- capitalized expenses related to the implementation of the investment program.

 CONFERENCE CALL FOR INVESTORS

The conference call for investors on NCSP Group consolidated financial results under IFRS for the year ended 31 December 2009 will be held on April 22, 2010 at 5:00 pm Moscow time (2:00 pm GMT, 9:00 am EDT).

Conference name / Participant Code: NSCP Financial Results 2009

Participants:

Mr. Igor Vilinov, CEO

Mr. Vladimir Kayashev, Vice-President for Strategy;

Ms. Tatiana Chibinyaeva, Senior Vice-President for Finance (CFO);

Mr. Roman Zinovyev, Vice-President for Corporate Finance and IR.

Webcast link:

http://wcc.webeventservices.com/r.htm?e=206310&s=1&k=04463E37BDD88F17A0CA5C422D52CCDE&cb=blank

Conference call Pre-registration link: https://eventreg1.conferencing.com/webportal3/reg.html?Acc=277759&Conf=172446

Use this link to register in advance and receive your personal User PIN, Conference PIN, dial in number and instructions.

For security purposes please do not give out your conference details for others to use, all participants must register individually if they wish to join the call.

Media representatives are invited to participate as listeners.

A recording of the conference call will be made available on the NCSP website (www.nmtp.info) in the Press Center/News and Investors section.

 About NCSP Group

Novorossiysk Commercial Sea Port is the largest Russian port operator in terms of cargo turnover. Group's consolidated cargo turnover in 2009 totaled 86.5 million tons. Consolidated revenue to IFRS for the 9 months of 2009 totaled $508.238 million.

NCSP shares are traded on Russia's RTS and MICEX exchanges (NMTP) and on the London Stock Exchange (NCSP) in the form of GDRs (1 GDR representing 75 shares).

NCSP Group includes the following stevedore companies: PJSC NCSP, PJSC Novorossiysk Grain Terminal, OJSC Novorossiysk Shipyard, PJSC NCSP Fleet, OJSC Novoroslesexport, OJSC IPP, and Baltic Stevedoring Company Ltd.

http://www.rns-pdf.londonstockexchange.com/rns/6042K_-2010-4-22.pdf

For more information please contact:

Tel.: +7 (495) 783-5434; [email protected]