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restrictions, including any modifications to them any time that you receive any information from OJSC “Kuzbasskaya Toplivnaya Company” (the “Company”) as a result of such access.
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This Management Presentation is an information document presenting information on the Company.
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ROUNDING AND ERRORS
Certain numerical figures included in this presentation have been subject to rounding adjustments. Accordingly, numerical figures shown as totals in certain tables may not be an arithmetic aggregation of
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2 / 38
3. TABLE OF CONTENTS
I. BUSINESS REVIEW 4
II. MARKETS 11
III. OPERATIONAL AND FINANCIAL HIGHLIGHTS 15
IV. CAPEX 26
V. WASHING PLANTS 30
CONTACTS 33
APPENDIX 34
Kuznetsk Coal Basin (Kuzbass)
Kemerovo
Moscow
200 km
Russia Vinogradovsky
Cheremshansky
Karakansky South
radius 5 km
Kuzbass
Headquarters
Open-pit mines
3 / 38
5. CORPORATE STRUCTURE
OJSC Kuzbasskaya Toplivnaya Company
CJSC Kaskad Management
LLC Meret Freight Forwarding
Vinogradovsky Open Pit 100% Company 100%
(Coal mining infrastructure division) (export sales)
Company
(railway freight company)
OJSC Kuzbasstoplivosbyt
100% (wholesale and retail coal sales in
Open-pit mine Kemerovo Region)
“Karakansky South” 100% OJSC Kaskad-Energo
(heat and energy producer)
LLC Transugol
Open-pit mine 52.04 % (wholesale and retail coal sales in Omsk
“Vinogradovsky” Region)
LLC Kusbass Transport
OJSC Altay Fuel Company 49.98 % Company
Open-pit mine 51% (wholesale and retail coal sales in Altay (associated railway freight company)
“Cheremshansky” Region)
Open-pit mine LLC Novosibirsk Fuel
“Briansky” 100% LLC Kaskad Geo
51% Corporation (land acquisition)
(wholesale and retail coal sales in
Novosibirsk Region)
100 % KTK Polska Sp. z. o. o.
(wholesale and retail coal sales in
Europe)
Production Retail and export sales Transportation, energy and real estate
5 / 38
6. KTK AT A GLANCE
One of the fastest-growing thermal coal producers in Russia Coal production history with open-pit mine breakdown
One of major suppliers of coal in Western Siberia 10
mln. tonnes
In 2011 the Company became 7th largest thermal coal producer in Russia(1) 8.73 8.80
9
Since its establishment in 2000, the Company has launched 3 open-pit mines 8
6.80
and developed an extensive production and distribution infrastructure and 7 6.15 3.76 3.93
the fourth one is now under construction: 6 5.48
2.55
8.74 mln. tonnes of thermal coal produced in 2011 5 4.33 4.29 4.10 0.98 2.06
4.08
100% high-quality grade “D” thermal coal under Russian classification 4 1.76 1.87
3.14 1.77 1.65 1.36 1.91 1.44 1.47
Developed railway network and facilities 3 0.41 1.98
2.29 2.38
Washing plant Kaskad with 2 mln. tonnes input capacity 2 0.65
1.30 2.38 2.73 2.56 2.64 2.74 2.59 2.65 2.78 3.23 3.00
1 2.29
1.30 1.47
3 existing open-pit mines Bryanskiy open-pit mine 0.37
0.37
0
Structural 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 IH 2012F
11 mln. tonnes 3-5 mln. tonnes 2012
capacity
Reserves 402 mln. tonnes of coal resources Karakansky South Vinogradovsky Cheremshansky
250 mln. tonnes according to
and 185 mln. tonnes of proven and
the C2 category
probable reserves(2) Key operating and financial indicators(1)
USD mln. 2009 2010 2011
Utilization of modern and high-performance equipment fleet supporting Coal sales, mln. tonnes 7.4 8.54 10.66
efficient low-cost production – USD 28 per tonne of coal in IH 2012 incl. purchased coal 1.4 2.16 2.08
Revenue 344 466 814
Diversified sales capabilities balanced between domestic market (4.21 mln.
% of growth -2.3% 38.7% 74.7%
tonnes sold in 2011) and export markets (6.45 mln tonnes sold in 2011)
EBITDA 69 70 133
One of the largest retail coal distribution networks in Western Siberia % margin 20.1% 15.0% 16.3%
Net Income 21 27 69
Employing about 4,000 people
% margin 6.1% 5.8% 8.5%
KTK shares are quoted on RTS and MICEX (ticker: KBTK)
Source: audited IFRS FS for 2009-2010 in which all amounts are presented in RUB, Company
65.61% of share capital is owned by the management (I. Prokudin – (1) Metal Expert, January 2012
50,001%, V. Danilov – 15.61%), free-float – 34.39% is distributed between 25 (2) Run-of-mine coal, JORC classification;
(3) In the table USD are converted from RUB using average Central Bank of the Russian Federation
investment funds. Individuals own 0.31% exchange rates for each year (2011: 29.39 RUB/USD; 2010: 30.38 RUB/USD; 2009: 31.77 RUB/USD)
6 / 38
7. MINING OPERATIONS
Layout of open-pit mines and washing plants
142.6
mln. tonnes
1
Vinogradovsky open-pit mine
165.3
mln. tonnes
2
Cheremshansky open-pit mine
41.5
3 mln. tonnes
Karakansky South open-pit mine
5
+250.2 Kaskad washing plant
mln. tonnes
4
6 7
Bryanskiy open-pit mine Kaskad-2 washing plant Administration building 7 / 38
8. VINOGRADOVSKY OPEN-PIT MINE
142.6 Historical production volumes, mln. tonnes
mln. tonnes
1
Vinogradovsky open-pit mine IH 2012 0.65
Key operating data
Structural capacity 3 mln. tonnes per year 2011 1.76
Average striping ratio in 2011 7.57 m3 / 1 tonne
2010 1.47
Stripping technology
Transport 2009 2.06
Seam inclination 20°
Stripping removal distance 3.3 km 2008 1.91
Coal to storage distance 2.6 km
2007 1.36
Coal quality data
Ash content 14.5 – 18.2% 2006 1.65
Moisture content 13.9 – 17.0%
Sulphur content 0.27 – 0.30% 2005 1.77
Caloric value 4,900 – 5,500 kcal/kg
2004 0.41
Coal grade D
8 / 38
9. CHEREMSHANSKY OPEN-PIT MINE
165.3 Historical production volumes, mln. tonnes
mln. tonnes
2
Cheremshansky open-pit mine
IH 2012 1.98
Key operating data
Structural capacity 5 mln. tonnes per year
Average striping ratio in 2011 9.32 m3 / 1 tonne
2011 3.76
Stripping technology
Transport
Seam inclination 80 – 90°
Stripping removal distance 2.7 km 2010 2.55
Coal to storage distance 2.9 km
Coal quality data
2009 2.06
Ash content 17.2%
Moisture content 12.5 – 15.0%
Sulphur content 0.50 – 0.80%
Caloric value 5,100 – 6,000 kcal/kg 2008 0.98
Coal grade D
9 / 38
10. KARAKANSKY SOUTH OPEN-PIT MINE
41.5 Historical production volumes, mln. tonnes
3 mln. tonnes
Karakansky South open-pit mine IH 2012 1.47
Key operating data
2011 3.23
Structural capacity 3 mln. tonnes per year
2010 2.78
Average striping ratio in 2011 6.15 m3 / 1 tonne
2009 2.65
Stripping technology 2008 2.59
Combined
2007 2.74
(non-transport and transport)
Seam inclination 3 – 8° 2006 2.64
Stripping removal distance 1.7 km
2005 2.56
Coal to storage distance 4.6 km
2004 2.73
Coal quality data
Ash content 13.2 – 15.2% 2003 2.38
Moisture content 14.0 – 17.0%
2002 2.29
Sulphur content 0.27 – 0.30%
2001 1.30
Caloric value 4,900 – 5,300 kcal/kg
Coal grade D 2000 0.37 10 / 38
12. DOMESTIC MARKET
Consumption of thermal coal in Russia, mln. tonnes
190.2 189.6 190.4
168.0
2008 2009 2010 2011
Structure of consumption in 2011
2008 2009 2010 2011 66%
Power plants 130.4 112.6 124.7 126.0
Retail 25.8 24.3 25.2 23.8
Government bodies 3.6 3.9 2.6 3.1
Industrial and other 29.5 26.2 37.1 37.4 20%
Total: 190.2 168.0 189.6 190.4
2%
12%
Power plants Retail
Government bodies Industrial and other
12 / 38
Source: Company
13. EXPORT MARKETS
Export of Russian coal
European market, mln. tonnes Asian market, mln. tonnes
71% 79 2011 32 29%
50% 85 2030 85 50%
2012F: 74,4 mln. tonnes 2012F: 43.6 mln. tonnes
1.6 Italy India 1.8
4.0 Finland Taiwan 3.2
8.5 Poland KEY CONSUMERS OF THE South Korea 10.7
8.9 Turkey RUSSIAN COAL Japan 13.0
10.3 Ukraine China 14.9
12.0 Germany
13.9 UK
INCREASING DEMAND OF COAL ON EXPORT MARKETS
European market, mln. tonnes Asian market, mln. tonnes
339 343
1,112
257 890
659
2010 2015F 2020F 2010 2015F 2020F
13 / 38
Source: Company
14. COAL WASHING AND EXPORT MARKETS
Poland 5,300 kcal/kg South Korea (Premium segment) 5,500 – 5,700 kcal/kg
MARKETS
China 5,300 – 5,500 kcal/kg Taiwan (Premium segment) 5,500 – 5,700 kcal/kg
South Korea 5,500 kcal/kg Czech Republic 5,500 – 5,700 kcal/kg
Taiwan 5,300 – 5,500 kcal/kg Germany 5,700 – 6,000 kcal/kg
Japan 6,000 kcal/kg
«Kaskad- 2» «Kaskad»
Design capacity, Design capacity,
4 2
mln. tonnes per year mln. tonnes per year
Launch Q4 2012 Launch Q3 2010
WASHING
Caloric output, Caloric output,
5,500 - 5,750 5,300 - 5,750
kcal/kg kcal/kg
Sulfur content, % <0.40 Sulfur content, % <0.40
Ash content, % 11.5 Ash content, % 9.5 – 9.7
Moisture content, % 13.7 Moisture content, % 14.5
Sources of coal Sources of coal
Karakansky South Vinogradovsky Cheremshansky Bryansky
Design capacity, Design capacity, Design capacity, Design capacity,
MINING
3 3 5 3–5
mln. tonnes per year mln. tonnes per year mln. tonnes per year mln. tonnes per year
Caloric value, kcal/kg 4,900 – 5,300 Caloric value, kcal/kg 4,900 – 5,500 Caloric value, kcal/kg 5,100 – 6,000 Caloric value, kcal/kg n/a
Sulfur content, % 0.27 – 0.30 Sulfur content, % 0.27 – 0.30 Sulfur content, % 0.50 – 0.80 Sulfur content, % n/a
Ash content, % 13.2 – 15.2 Ash content, % 14.5 – 18.2 Ash content, % 17.2 Ash content, % n/a
Moisture content, % 14.0 – 17.0 Moisture content, % 13.9 – 17.0 Moisture content, % 12.5 – 15.0 Moisture content, % n/a
14 / 38
16. OPERATIONAL HIGHLIGHTS Q2 2012
Seasonal decrease in In the Q2 2012 the volume of coal production decreased by 13% Q-o-Q and amounted to 1.90
mln. tonnes (Q1 2012 2.18 mln. tonnes).
coal production In the IH 2012, the volume of production increased by 9% to 4.08 mln. tonnes, over the same
Q-o-Q period of the previous year (3.74 mln. tonnes).
Q-o-Q production of washed coal has increased by 5% to 0.21 mln. tonnes (Q1 2012: 0.20 mln.
Washing plant Kaskad
tonnes).
is working at close to For IH 2012 the volume of production at the washing plant "Kaskad" has increased by 17% to
full capacity level 0.41 mln. tonnes (IH 2011: 0.35 mln. tonnes).
Due to the traditional decline in trading activity in the domestic market of thermal coal,
Seasonal Q-o-Q observed in Q2, the Company reduced its sales compared to Q1 2012 to 27% by implementing
decrease in coal sales the 2.04 mln. tonnes (Q1 2012: 2.81 mln. tonnes).
volume The volume of coal sales for IH 2012 increased by 8% to 4.85 mln. tonnes (IH 2011: 4.51 mln.
tonnes).
The quarterly average stripping ratio increased by 15% QoQ to 10.21 (Q4 2012: 8.86) and by
18% YoY (Q2 2011: 8.67)
Key production cost The blasted rock mass decreased by 1% to 9.43 mln. cbm. QoQ (Q1 2012: 9.54 mln. cbm.) and
drivers growth increased by 29% YoY (Q2 2011: 7.33 mln. cbm.)
The average stripping transportation distance decreased by 9% QoQ to 3.04 km. (Q1 2012: 3.33
km.) and increased by 7% YoY (Q2 2011: 2.84 km.)
16 / 38
Source: Company
17. IH 2012 COAL SALES BREAKDOWN
Coal resale
0.88
18%
4.85 mln.
tonnes
3.97
82%
{ Export market
3.06
63%
4.85 mln.
tonnes
1.79
37%
{
Own coal Domestic market
Domestic market Export market
Eastern Europe
Retail
customers
Public 1.40
utilities 0.46
46%
25%
1.79 mln. 3.06 mln.
1.00 tonnes tonnes
56% 0.34
1.65
19%
54%
Power generating Asia-Pacific Region
Source: Company
companies (TGK/OGK)
17 / 38
18. AVERAGE REALISED PRICES VS BENCHMARKS
KTK realized export prices(1) vs. international FOB and CIF benchmarks, USD/tonne KTK Asian export – USD 88.73
KTK European export – USD 79.92
USD / tonne
120
92.38 95.25
100 88.57 89.73 90.24
84.35
75.31 77.74
80
60
Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12
KTK - export price CIF ARA 6,000 kkal/kg FOB Indonesia 5,800 kkal/kg
KTK FCA prices vs. Russian EXW benchmark, USD/tonne
44.02
USD / tonne
45 42.31 41.87
40.39 41.06
40 38.15
35 32.29
30.61
30
25
Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12
KTK - domestic price, FCA Meret Average price EXW in Russia, based on 4,500-5,000 kkal/kg
Source: Company, Metal Expert for average EXW prices in Russia, Argus for FOB Indonesia and CIF ARA
(1) Net of VAT, average KTK export realized price incl. railway tariffs
18 / 38
19. KEY SALES DIRECTIONS
KTK’s transport flows
1.40 mln. tonnes
Eastern European Countries
(1)
North-West FD
Domestic market
Omsk region
Asia-Pacific
Domestic sales
Export sales
Moscow
0.07 1.79 Headquarters
mln. tonnes(1)
Railroad tariff to the mln. tonnes(1)
Polish border:
44.06 USD/tonne (2)
1.21
Volga FD
Tomsk Region
mln. tonnes(1) 1.65
0.06 Omsk Region
Siberian FD mln. tonnes(1)
mln. tonnes(1) Asia-Pacific region
Source: Company Kemerovo Region
(1) Sales volumes in IH 2012 (incl. purchased coal) Novosibirsk Region
(2) Average Q2 2012 KTK transportation cost is Railroad tariff to the station at
converted to USD using average Central Bank of the Nakhodka-East port :
Altay Region 43.70 USD/tonne (2)
Russian Federation exchange rate (Q2 2012: 31.10
RUB/USD)
Quarterly domestic and export sales, mln. tonnes Average quarterly domestic and export prices comparison (3)
4 -27% 1,440 RUB -6%; USD -9%
3.34 1,367 $48 1,352
3 2.81 2.81 % of total 1,280 $44 1,285 $45 1,302 1,271
1,233 $42 1,259 $41
1.77 $44 1,191 1,229 1,192 $41
2.04 $42 $41 $40
2 1.61 1.61 $41 $38
1.45
1 71%
1.20 1.57 1.21
0.59
0 29%
Q3 2011 Q4 2011 Q1 2012 Q2 2012
Q3 2011 Q4 2011 Q1 2012 Q2 2012
Domestic sales Export sales
Average domestic price Average export price Average blended price
Source: Company
(3) Prices are net of VAT and railroad tariffs; domestic prices include costs associated with retail distribution network; prices are converted to USD using average Central Bank of the
Russian Federation exchange rates for each quarter (Q2 2012: 31.10 RUB/USD; Q1 2012: 30.03 RUB/USD; Q4 2011: 31.24 RUB/USD; Q3 2011: 29.08 RUB/USD)
19 / 38
20. RETAIL NETWORK IN WESTERN SIBERIA
Since its establishment, the Company has been continuously IH 2012 retail sales breakdown (1), mln. tonnes
expanding and building its retail sale and storage network:
0.51
own 71 points of sale as at the end of Q2 2012; 30% 0.44 Kuzbasstoplyvosbit
26%
additional points of sale planned to be acquired or
established; Altay TK
Total sales in
6 Wide distribution network and strong regional presence Siberian FD
TransUgol
position the Company as one of the principal suppliers of 0.04 1.67 mln. tonnes
coal to retail costumers, municipalities, and public utilities 3%
Omsk Region Novosibirsk TK
in Western Siberia.
When export prices are high, the Company uses lower quality
5 0.20
12% 0.49 KTK
third-party coal to satisfy domestic demand, while shifting its points 29%
own higher quality coal to export markets. of sale
0.04 mln. tonnes (1)
Omsk
26 Headquarters
points
of sale
0.51 mln. tonnes (1)
Novosibirsk Kemerovo
Novosibirsk Kemerovo Region
Region
Retail Subsidiary
Company’s
Type of activity 13 27
ownership Barnaul points
points of sale
OJSC “Kuzbasstoplyvosbit” 100% Wholesale & retail sales in Kemerovo Region
of sale 0.44 mln.
LLC “TransUgol” 51% Wholesale & retail sales in Omsk Region 0.20 mln. Altay Region tonnes (1)
tonnes (1)
LLC “Novosibirsk TK” 51% Wholesale & retail sales in Novosibirsk Region
OJSC “Altay TK” 51% Wholesale & retail sales in Altay Region
Source: Company
(1) Including coal resale
20 / 38
21. REVENUE
Key financial indicators(1) IH 2012 Revenue breakdown by segments(1)
USD mln. Q2 2012 Q1 2012 IH 2012 IH 2011 8% 3%
Revenue 156 222 376 357 15%
Cost of sales (143) (178) (321) (295)
Own coal, export
Gross profit 13 43 55 62
Own coal, Russia
Gross profit margin 8.3% 19.5% 14.7% 17.3% USD 376 mln.
Coal resale, Russia
SG&A and other expenses (13) (15) (28) (27)
Other revenue
EBITDA(2) 8 37 45 52
EBITDA margin 5.3% 16.8% 12.0% 14.5% 73%
Operating profit (EBIT) 0 28 27 35
Operating margin - 12.7% 7.2% 9.7%
Net income -13 30 17 28 Segment revenue dynamics(1) Y-o-Y
Net income margin - 13.5% 4.4% 7.8%
Gross debt3 206 179 206 79 400 376 5%
357
Net debt 3
156 114 156 72 12 22%
USD mln.
10 31 30%
24
300 49 58 18%
(1) Figures were converted to USD using the average exchange rates of the Central Bank of the Russian
Federation for each period (Q2 2012:31.10 RUB/USD; Q1 2012: 30.03 RUB/USD; Q4 2011: 31.24 RUB/USD; 188
Q1 2011: 29.16 RUB/USD; IH 2012: 30.59 RUB/USD; IH 2011: 28.56 RUB/USD; IH 2010: 30.05) 200
10
(2) EBITDA for each period is defined as results from operating activities, adjusted for amortization and 29
depreciation, impairment loss and loss on disposal of property, plant and equipment 40 274 275 1%
(3) Figures were converted to USD using the exchange rates of the Central Bank of the Russian Federation 100
for the end of each period (30.06.12: 32.82 RUB/USD; 31.03.12: 29.33 RUB/USD; 30.06.11: 28.08 RUB/USD) 109
0
IH 2010 IH 2011 IH 2012
Own coal, export Own coal, Russia Coal resale, Russia Other revenue
21 / 38
22. COST OF SALES AND EBITDA
Cost of sales breakdown and dynamics(1) Production cash costs dynamics(1)
37%
51%
USD 143 mln.
250 Q-o-Q 9%
8% 6% 70 40
USD per 1 tonne
USD mln.
USD mln.
200 193 Q-o-Q 58 56
170 178 60
54 35
58 50
150 56 143 -20% 50
50
24 54 30
25 9 24 -5% 40
100 9
9 11 28
8-53%
-4% 30 26
50 86 102 90 25
72
-20% 22
20
0
20 20
Q3 2011 Q4 2011 Q1 2012 Q2 2012 10
2.44 2.56 2.18 1.90
Transportation costs Depreciation 0 15
Coal purchased Production cash costs Q3 2011 Q4 2011 Q1 2012 Q2 2012
Production volume Production cash costs
EBITDA calculation(1) in USD, Q2 2012 Cash costs per 1 tonne, USD
(54)
(11)
156
(72)
(5) (8) 8
Revenue Production cash costs Coal for re-sale Transportation costs Distribution expenses Administrative expenses EBITDA
Source: unaudited IH, Q1 2012 and Q4, Q3 2011 IFRS FS in which all amounts are presented in RUB
(1) Figures were converted to USD using the average exchange rates of the Central Bank of the Russian Federation for each period (Q2 2012: 31.10 RUB/USD; Q1 2012: 30.03 RUB/USD;
Q42011: 31.24 RUB/USD; Q3 2011: 29.08 RUB/USD).
22 / 38
23. REVENUE AND NET DEBT
250 4
USD mln.
222
200 186
170 3
150 154 156 156
150
124 123
114 2
100
72
56
1
50 88% 79%
67% 69%
0 0
Q1 2011 Q2 2011 Q1 2012 Q2 2012
Total revenue Revenue from export in USD Net debt Share of USD revenue
23 / 38
24. INDEBTEDNESS
During Q2 2012 the total net debt increased by 53% Q-o-Q compared to Q1 2011 Debt structure(1) by currency as of Dec 2011
Net Debt to EBITDA ratio increased from 0.82 to 1.35
USD loans
36%
RUB loans USD 206 mln.
64%
Net Debt to EBITDA(1)
180 4
USD mln.
156
160 149
133 137
140 3
120 114
97
100
83 2
80 71
60
1.05 1
40 0.84
0.73 0.62
20
0 0
Q3 2011 Q4 2011 Q1 2012 Q2 2012
Net debt EBITDA (12M) Net debt/EBITDA (12M)
Source: unaudited Q1 2012 and Q1, Q4 2011 IFRS FS in which all amounts are presented in RUB
(1) Annualized EBITDA
(2) Figures were converted to USD using exchange rates of the Central Bank of the Russian Federation for each date (30.06.12: 32.82 RUB/USD; 31.03.12: 29.33 RUB/USD;
31.12.11: 32.20 RUB/USD; 30.09.11: 31.88 RUB/USD).
(3) Net debt/EBITDA is calculated in USD. Ratio for Q2 2012 in RUB is 1.35 24 / 38
25. INTEREST RATES
12%
11%
10%
9%
8%
7%
6%
5%
4%
3%
Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12
Refinancing rate of CBR Deposit rate (RUB) Loans rate (USD) Loans rate (RUB)
33 7.50 0.30
33 0.29
7.00
32
0.28
32 6.50
31 0.27
6.00
31 0.26
30 5.50 0.25
30 5.00 0.24
29
29 4.50 0.23
28 4.00 0.22
Dec Jan Feb Mar Apr May Jun Dec Jan Feb Mar Apr May Jun Dec Jan Feb Mar Apr May Jun
11 12 12 12 12 12 12 11 12 12 12 12 12 12 11 12 12 12 12 12 12
USD/RUB MosPrim 1m MosPrim On Libor 1м
25 / 38
27. INVESTMENT PROGRAM
Investment program(1) in 2011 composed USD 88 mln. net of VAT. The largest Equipment procurement plan
investment items included:
CAPEX Dec 31, CAPEX
Acquisition of large mining and transport equipment 2011 2011 2012-2016
The construction of the second enrichment plant with 4 mln. tonnes
annual capacity Shovels
2 22 15 (3 P&H)
(P&H, Komatsu, EO)
The completion of construction fuel and lubricants dump
Trucks
In 2012-2016 there will be 5 major investment categories: 22 88 64
(BelAZ)
Development of Bryanskiy open-pit mine to start coal production in 2015
Construction of 3 new coal processing and enrichment facilities to improve Dozers
6 20 9
coal quality and raise production efficiency (Komatsu)
Continued procurement of mining equipment to increase production at Loaders
the existing open-pit mines 2 34 3
(Komatsu)
Construction of own railway infrastructure to increase capacity from 12
Graders
to 16 tonnes per year 1 4 2
(Komatsu, CAT)
Development of company retail network
Drill Rigs
1 4 3
(Ingersoll Rand)
CAPEX breakdown(2), USD mln.
160 7% 4% Retail network infrastructure
2 9 4%
128 7 2 7%
Railway infrastructure
122 USD 521
8 37
6 7 3 5 mln.
5 Other
10 11 3 2%
30% 47%
29 72 Bryanskiy coal deposit
5 37
7 10
6 6 99 39 Equipment
16 2 2 3
62 1 56
32 Other infrastructure
28
Processing and washing plants
2012 2013 2014 2015 2016
(1) - Figures were converted to USD using the average exchange rate of the Central Bank of the Russian Federation (2011: 29.39 RUB/USD)
(2) – Net of VAT, USD figures were converted from RUB using 30.00 RUB/USD exchange rate
27 / 38
28. PLAN OF PROGRAM IMPLEMENTATION
Bryanskiy open-pit mine USD 10 mln. USD 6 mln. USD 11 mln. USD 7 mln. Structural capacity
Reserves: 250 mln. tonnes 3 – 5 mln. tonnes
Launch: 2015
Investment in infrastructure Coal production
0.5 mln. 1 mln.
tonnes tonnes
Washing plant Washing plant Washing plant Washing plant
«Kaskad» «Kaskad- 2» for oxidized coal «Vinograndskaya»
Launch: Q3 2010 Launch: Q4 2012 Launch: 2014 Launch: 2016
Capacity: 2 mln. tonnes Capacity: 4 mln. tonnes Capacity: 1 mln. tonnes Capacity: 7 - 8 mln. tonnes
Caloric output: 5,300 - 5,750 Caloric output: 5,500 - 5,750 Caloric output: 5,500 Caloric output: 5,500 – 6,000
Cost: USD 27 mln. Cost: USD 81 mln. Cost: USD 28 mln. Cost: USD 155 mln.
Technology: steeply-inclined separation Technology: steeply-inclined separation; Technology: reduction of moisture Technology: steeply-inclined separation;
dense medium separation dense medium separation
2010 2011 2012 2013 2014 2015 2016
• Technology for
washing plant for
10 8.73 8.70 15 oxidized coal is
14
5.48 13 not completely
12 ready, so project
11 can be moved and
5 10 changed
9
8
7.10 7.27 7
6.21 6
0 5
2010 2011 2012F
Production Average stripping ratio
mln. tonnes 28 / 38
29. KEY RISKS
COUNTRY AND REGIONAL
RISKS
LEGAL RISKS SECTOR RISKS FINANCIAL RISKS
• Changes in currency regulation • Decline in coal prices on world • Changes in interest rates
• Changes in tax legislation and domestic markets • Changes in the exchange rate
• Changes in customs regulations • Government constraints on • Inflation risks
and duties prices of products of coal
• Changes in requirements for consumers
licensing • Decrease in prices for natural gas
• Changes in antimonopoly as an alternative fuel for power
legislation generation
• Slowdown of economic growth
in China and other Asian
countries
• Steep increase in the transport
component of costs
• Lack of transport infrastructure
capacity used in shipping coal to
customers
• Dramatic increase in competition
29 / 38
31. ADDED VALUE
Price of coal EXW in Russia1, USD
60
55
50
45
40
35
30
25
Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12
6,000 kkal/kg 5,200-5,400 kkal/kg 4,500-5,000 kkal/kg
Key benefits:
Higher cost of coal
New export markets
Lower transportation costs
Stable quality of coal
Source: MetallExpert
(1) – Net of VAT and railroad tariff
31 / 38
32. ENVIRONMENT
Oncreasing caloric value of coal
The decline in mining for a similar heating value of produced fuel, efficiency subsoil
Reducing energy costs for shipping and handling of coal
Reduction of ash content of coal
Reducing the volume of waste material in commodity coal, reduce emissions and ash disposal from coal combustion at
power plant
Closed loop water use and recharge of washing plants from sewage treatment plants
KTK is one of the few companies with a closed-cycle water use in mining. The company operates on modern world class
treatment plants. Washing plants carry recharge by recycling water
Use of coal loading bunkers
Excludes using diesel loaders (reducing the use of diesel fuel and emissions CO2) and significantly reduces the dustiness of
works
Use of larger mining equipment
Increases the efficiency of mining, reduces expenses for diesel fuel
32 / 38
33. CONTACTS
OJSC “Kuzbasskaya toplivnaya company”
www.oaoktk.ru/en
News and announcements (Russian only)
Head office in Kemerovo: www.facebook.com/oaoktk
4, 50 let Oktyabrya street, Kemerovo, 650991, Russia
Presentations
Representative office in Moscow: www.slideshare.net/oaoktk
29, Serebryanicheskaya embankment, Moscow, 109028, Russia
Video
Investor calendar: www.oaoktk.ru/en/investors www.youtube.com/oaoktkru
To subscribe for news please request: vkr@oaoktk.ru
Igor Prokudin
Chief Executive Officer
T: +7 (3842) 58-58-60 (Kemerovo)
E-mail: company@oaoktk.ru
Andrey Magaev
Deputy Chief Executive Officer, Finance
T: +7 (3842) 58-58-60 (Kemerovo)
E-mail: company@oaoktk.ru
Vasily Rumyantsev
Investor Relations Manager
Т: +7 (495) 787-68-05 (Moscow)
E-mail: vkr@oaoktk.ru
Skype: vasily.rumyantsev
33 / 38
34. INCOME STATEMENT IH 2012
USD1 mln. IH 2012 IH 2011
Revenue 376 357
Cost of sales (321) (295)
Gross profit 55 62
Distribution expenses (11) (10)
Administrative expenses (18) (17)
Operating profit 27 35
Finance income 2 5
Finance costs (8) (4)
Profit / (loss) before income tax 22 36
Income tax expense (5) (8)
Profit / (loss) for the period 17 28
Profit / (loss) for the period margin 4.4% 7.8%
EBITDA2 45 52
EBITDA margin 12.0% 14.5%
Source: unaudited IH 2012 and IH 2011 IFRS FS in which all amounts are presented in RUB
(1) Figures were converted to USD using the average exchange rates of the Central Bank of the Russian Federation for each period (IH 2012: 30.59 RUB/USD; IH 2011: 28.56 RUB/USD).
(2) EBITDA for each period is defined as results from operating activities, adjusted for amortization and depreciation, impairment loss and loss on disposal of property, plant and
equipment 34 / 38
35. BALANCE SHEET AS AT 30 JUNE 2012
USD1 mln. 30.06.12 31.03.12 30.06.11 USD1 mln. 30.06.12 31.03.12 30.06.11
ASSETS EQUITY AND LIABILITIES
Equity
Non-current assets
Share capital 1 1 1
Property, plant and equipment 365 376 328
Retained earnings 171 224 160
Goodwill and intangible assets 1 1 Additional paid-in capital 86 96 101
Investments in equity accounted investees 1 1 1 Total attributable to equity holders of the company 257 321 262
Deferred tax assets 1 1 1 Total equity 258 321 262
Total non-current assets 368 379 331
Non-current liabilities
Loans and borrowings 165 136 67
Current assets Deferred income 7 8
Inventories 49 48 36 Net assets attributable to minority participants in LLC
2 3 2
entities
Other invetsments 15 12 1
Provisions 8 9 10
Trade and other receivables 53 81 42
Retirement benefit liability 1 1 1
Prepayments and deferred expenses 17 15 19 Deferred tax liabilities 15 16 17
Cash and cash equivalents 35 54 8 Total non-current liabilities 198 173 97
Total current assets 173 211 106
Current liabilities
TOTAL ASSETS 541 590 437 Loans and borrowings 41 42 12
Trade and other payables 45 53 66
Total current liabilities 86 96 78
Total liabilities 284 269 175
TOTAL EQUITY AND LIABILITIES 541 590 437
Source: unaudited HI, Q1 2012 and HI 2011 IFRS FS in which all amounts are presented in RUB
(1) Figures were converted to USD using exchange rates of the Central Bank of the Russian Federation for each date (30.06.12: 32.82 RUB/USD; 31.03.12: 29.33 RUB/USD;
30.06.11: 28.08 RUB/USD;). 35 / 38
36. CASH FLOW STATEMENT IH 2012
USD1 mln. IH 2012 IH 2011 USD1 mln. IH 2012 IH 2011
OPERATING ACTIVITIES INVESTING ACTIVITIES
Profit / (loss) for the period 17 28
Loans issued (16) (25)
Adjustments for:
Depreciation and amortization 18 17 Acquisition of property, plant and equipment (73) (31)
Net finance expense 6 (1)
Cash flow used in investing activities (88) (31)
Income tax expense 5 8
Operating result before change in working capital 45 52
FINANCING ACTIVITIES
Proceeds from borrowings 186 149
Change in inventories (11) (9)
Repayment of borrowings (117) (142)
Change in trade and other receivables (4) (4)
Change in prepayments for current assets 11 (3) Cash flow from financing activities 49 (1)
Change in trate and other payables (13) (1)
Cash flow from operations before income tax and interest 27 35 Net increase / (decrease) in cash and cash equivalents
Income taxes and penalties paid (8) (8)
Interest paid (5) (3)
Cash flows from operating activities 14 25
Source: unaudited Q1 2012 and Q1 2011 IFRS FS in which all amounts are presented in RUB
(1) Figures were converted to USD using the average exchange rates of the Central Bank of the Russian Federation for each period (IH 2012: 30.59 RUB/USD; IH 2011: 28.56 RUB/USD). 36 / 38