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FESCO Transportation Group announces its consolidated financial results for 2012 in accordance with IFRS

8 April 2013
Far-Eastern Shipping Company plc («FESCO» or the «Group»), one of the largest Russian port owners and operators of integrated rail and logistics businesses, announces today its audited financial results for the year ended 31 December 2012.

Group Highlights

  • Consolidated revenue totalled $1,197m in 2012, up 16% from 2011;
  • Adjusted Revenue1 totalled $1,172m in 2012 and was flat compared to the previous year;
    • Higher revenues of the Rail and Liner & Logistics Divisions was offset by lower revenue from the Shipping Division (as adjusted for the disposal of vessels in 2012);
  • Adjusted EBITDA1 of $279m in 2012, 14% increase compared to the previous year, and adjusted EBITDA margin of 24% in 2012, up 3pp from 21% in 2011;
  • li>Capex decreased by 54% year-on-year to $66m mostly due to decrease in expansion capex in Rail division. Trade working capital decreased by 8% year-on-year to $69m;
  • Strong liquidity position of $232m as of 31 December 2012;
  • Net debt increased to $688m2 as of 31 December 2012 after raising loans in the course of Group’s indirect acquisition by Summa Group, GHP Group and TPG.

1 Adjusted revenue and EBITDA to reflect the acquisition of VMTP, as if it had occurred with effect from 1-Jan-2011, impact from disposal of 21 vessels in 2012, one-off transaction related expenses and compensation of insurance claims.

2 Total borrowings exclude the $400m guarantee provided by certain subsidiaries of FESCO to its principal shareholders in respect of acquisition financing; include a $140m REPO loan against the shares of TransContainer.

Divisional Highlights

  • Port Division generated Adjusted Revenue of $206m (6% year-on-year decline) and Adjusted EBITDA of $98m (17% year-on-year increase) resulting in an EBITDA margin of 48%;
    • The increase in the Port Division’s EBITDA was driven by improving container cargo throughput and also supported by the positive effect of operational synergies arising from the ongoing merger of the Commercial Port of Vladivostok («VMTP») and Vladivostok Container Terminal («VCT»), following our acquisition of control over VMTP in March 2012;
  • The Rail Division generated revenue of $347m (13% year-on-year increase) and EBITDA of $167m (25% year-on-year increase) resulting in an EBITDA margin of 48%;
    • Rail Division EBITDA was supported by increased volumes in container transportation by block trains and growth in marginal income per railcar per day;
  • The Liner & Logistics Division generated revenue of $623m (10% year-on-year increase) and EBITDA of $43m (16% year-on-year decline) resulting in an EBITDA margin of 7%;
    • The positive effect on EBITDA from the growth in transportation volumes was largely offset by increasing fuel and stevedoring services costs;
  • Shipping Division went through a significant downsizing of operations as the Group disposed 21 vessels in 2012. The division generated Adjusted Revenue of $87m (45% year-on-year decline) and negative EBITDA of $3m;
    • Following the significant reduction of our fleet, the division’s business model has evolved from ship ownership and ship management to support centre for the Liner & Logistics Division.

Yuriy Gilts, President of FESCO, commented: «It was another successful year for the company. The company proceeded with its strategy of growing its container business, the most promising segment of the Russian transportation market, while strengthening competitive positioning in the niches outside the container transportation. We completed the consolidation of the Commercial Port of Vladivostok and deepened the integration of our businesses in order to provide a one stop solution to our customers leveraging our strengths to meet our customers’ needs. FESCO’s Shipping Division completed the evolution of its business model from ship ownership and ship management to a support function for our Liner and Logistics Division. We are confident that these changes created a solid foundation for future growth. Our strong annual results and the momentum generated in the reporting year allow FESCO to look into the next financial year with confidence and enthusiasm.»

Downloads

Full text of FESCO Consolidated Financial Statements for the year ended December 31, 2012 is available on the FESCO Web site: http://www.fesco.ru/en/investor/documents/reports/

These materials are not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any State of the United States and the District of Columbia). These materials are not an offer or solicitation to purchase or subscribe for securities in the United States. Securities may not be offered or sold in the United States absent registration with the United States Securities and Exchange Commission or an exemption from registration under the U. S. Securities Act of 1933, as amended. FESCO has not registered and does not intend to register any securities in the United States or to conduct a public offering of securities in the United States.

This document is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the «Order») or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2)(a) to (d) of the Order (all such persons in (i), (ii) and (iii) above together being referred to as «relevant persons»). Any securities described herein are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such securities will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

Information contained in this document is not an offer, or an invitation to make offers, sell, purchase, exchange or transfer any securities in Russia or to or for the benefit of any Russian person, and does not constitute an advertisement of any securities in Russia. Any securities referred to herein have not been and will not be registered in Russia or admitted to «placement» and/or «public circulation» in Russia. Such securities are not intended for «placement» or «circulation» in Russia except and to the extent permitted by Russian law.

This press release may include «forward-looking statements». Such statements contain the words «anticipate», «believe», «intend», «estimate», «expect», «will», «may», «project», «plan» and words of similar meaning. All statements included in this press release other than statements of historical facts, including, without limitation, those regarding financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives) are forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding present and future business strategies and the relevant future business environment. These forward-looking statements speak only as of the date of this press release, and the Group expressly disclaims to the fullest extent permitted by law any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

About FESCO

FESCO is one of the largest Russian port owners and operators with integrated rail and logistics businesses and primarily focused on intermodal deliveries of containerized cargo. The Group owns port, rail and shipping assets, which allow it to provide door-to-door logistics solutions and control almost all steps of the intermodal transportation value chain. The majority of FESCO’s operations are located in the Russian Far East and the Group benefits from growing trade volumes between Russia and Asian countries.

FESCO controls the Commercial Port of Vladivostok, which has throughput capacity of 3.9 million tons for general cargo and oil products, 150,000 vehicles and over 600,000 TEUs in containers. FESCO is one of Russia’s top 10 private railcar operators providing services under the Transgarant (100%) and Russkaya Troyka (50% JV with Russian Railways) brands. Transgarant has approximately 16,200 units of rolling stock comprising of 12 different types of railcars, and Russkaya Troyka has approximately 1,570 fitting platforms. FESCO operates a container park of over 35,000 containers with total capacity of over 56,000 TEUs. FESCO also has 26 ships mostly deployed through own line and logistics operations.

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