NEWS RELEASE For Immediate Release - April 30, 2014 Chelyabinsk Zinc Plant Announces 2013 Audited Financial Results
Chelyabinsk, Russia- April 30, 2014- Chelyabinsk Zinc Plant(LSE, MICEX: CHZN), Russia's largest producer of zinc and zinc alloys, is pleased to announce its audited consolidated IFRS financial results for year ended December 31, 2013. 2013 HIGHLIGHTS * Chelyabinsk Zinc Plant's (CZP) revenue totaled RUB 13,062 mln. * EBITDA amounted to RUB 1,077 mlnor 8% of revenue. * Impairment loss of Nova Zinc's fixed assets totaled RUB 387 mln. * Net loss was RUB 208 mln. Consolidated financial results (in millions of Russian Roubles) 2013 2012 Change, % Revenue 13,062 13,077 0% Gross profit 1,972 2,311 (15%) Gross margin, % 15% 18% EBITDA (1) 1,077 1,644 (34%) EBITDA margin, % 8% 13% (Loss) / Profit before income tax (214) 801 n/a (Net loss) / Net profit (208) 646 n/a Net margin, % n/a 5% (1) EBITDA, for any relevant period, represents operating profit before interest, income tax, depreciation and amortization. EBITDA is not a measurement of CZP's operating performance presented in the financial information, prepared in accordance with IFRS, and should not be considered as an alternative to operating profit or any other performance measure derived in accordance with IFRS or other relevant financial framework. Revenue 2013 consolidated revenue amounted to RUB 13,062 mlnthat equals the level of 2012. The average LME zinc price in 2013 decreased by 2% as compared to the relevant period of the previous year and amounted to US$ 1,909/tonne. The average LME lead quotes increased by 4% to US$ 2,141/tonne. The negative effect of the LME zinc prices falldown was compensated by the 2.4% growth of US Dollar/Russian Rouble average exchange rate. Revenue structure (in millions of Russian Roubles) 2013 2012 Change, % Zinc and zinc alloys 9,468 9,428 0% CZP 7,572 7,590 0% Brock Metal 1,896 1,838 3% Zinc tolling 1,502 1,298 16% Lead concentrate 549 591 (7%) CZP 84 174 (52%) Nova Zinc 465 417 11% Other products 1,543 1,760 (12%) Total revenue 13,062 13,077 0% In 2013, CZP's revenue from sale of zinc and zinc alloys stayed at the level of 2012 and amounted to RUB 7,572 mln. The sales on the domestic market totaled: 2013: 110.0 thousand tonnes; 2012: 111.1 thousand tonnes. Revenue of The Brock Metal Company Limitedfor 2013 amounted to RUB 1,896 mln, 3% higher than in 2012. This increase was due to 3% growth of zinc alloys sales (2013: 25.4 thousand tonnes; 2012: 24.7 thousand tonnes). CZP received revenue of RUB 1,502 mlnunder tolling agreement in 2013, which is 16% higher compared to 2012, that was due to 16% increase of tolling's volume (2013: 55.6 thousand tonnes of zinc; 2012: 48.1 thousand tonnes). Fixed processing fee amounted to RUB 27,000/tonne. Revenue from lead concentrate sales for 2013 amounted to RUB 549 mln(2012: RUB 591 mln). In 2013, revenue from CZP's other products decreased by 12% to RUB 1,543 mlnas compared to 2012. The main reasons of revenue decrease were the falldown of average sulphuric acid prices by 30% and also decrease of precious metals prices (average official prices for gold in 2013: RUB 1,441/gram, in 2012: RUB 1,661/gram; silver in 2013: RUB 24/gram, in 2012: RUB 31/gram). Cost of Sales (in millions of Russian Roubles) 2013 2012 Change, % Raw materials and consumables used 5,818 6,124 (5%) in production Utilities and fuel 2,326 2,016 15% Depreciation of property, plant and 909 927 (2%) equipment and amortization of intangible assets Staff cost 901 815 11% Repairs and maintenance 768 652 18% Mineral extraction tax 197 186 6% Other taxes 130 130 0% Production overheads 96 89 8% Change in work-in-progress 67 (311) n/a Inventory provision (21) 1 n/a Change in finished goods (287) 1 n/a Other costs 186 118 58% Cost of sales 11,090 10,765 3% Cost of materials and consumables used primarily comprises of the cost of zinc concentrate, zinc containing raw materials, materials for alloys production and auxiliary materials used in the production process. The decrease of cost of materials and consumables used was due to changes in structure of raw materials input into production. In 2013, costs of utilities and fuel increased by 15% to RUB 2,326 mln. This increase was mainly due to the growth of electricity tariffs for CZP by 14% (2013: RUB 2.38per kWh: 2012: RUB 2.09per kWh) and growth of diesel prices in Kazakhstanby 9% (2013: 107.0 tenge/l; 2012: 98 tenge/l). Staff costs increased by 11% as compared to the relevant period of the previous year, to RUB 901 mln. The increase was due to the growth of average salaries. Distribution, General and Administrative Expenses In 2013, distribution costs increased by 27% and amounted to RUB 716 mln. The main reason was the cost increase of sulphuric acid transportation due to market expansion. General and administrative expenses amounted to RUB 1,014 mlnthat equals the level of 2012 (RUB 1,019 mln). Other operating expenses, net In 2013 other operating expenses (net) totaled RUB 526 mlnagainst RUB 75 mlnin 2012. The main reasons of costs increase - the impairment of fixed assets of Nova Zinc and expenses for rectification of the consequences from meteorite explosion on February 15, 2013. As of 31 December 2013the management performed the analysis of carrying value and the recoverable amount of Nova Zinc's fixed assets to identify possible impairment of property, plant and equipment. Under the result of performed test the management recognized the impairment loss at the amount of RUB 387 mln. The expenses for rectification of the consequences from meteorite explosion in 2013 amounted to RUB 51 mln(2012: RUB 0 mln). Net loss Net loss for 2013 totalled RUB 208 mlncompared to net profit amounted to RUB 646 mlnfor 2012. The main reasons of net loss are the increase in cost of sales while maintaining the level of revenue, the impairment of Nova Zinc's fixed assets and expenses for rectification of the consequences from meteorite explosion. Correction of financial results for 2012 There were changes in the consolidated financial results for the 2012 due to changes in the accounting policy regarding to the application of IFRIC 20 "Stripping Costs in the Production Phase of a Surface Mine". (in millions of Russian Roubles) Amount The effect Amount before the of changes after the change in in change in accounting accounting accounting policy policy policy Gross profit 2,291 145 2,436 EBITDA 1,499 145 1,644 Net income 529 117 646 About Chelyabinsk Zinc Plant Chelyabinsk Zinc Plantis the leading Russian zinc producer. In 2013 the plant produced 166,357 tonnes of saleable SHG zinc. According to consolidated IFRS accounts, revenue in 2013 was RUB 13,062 mlnand EBITDA was RUB 1,077 mln. Ordinary shares of CZP are traded on the Moscow exchange MICEX-RTS under ticker CHZN and Global Depository Receipts (GDR) are traded on the London Stock Exchangeunder ticker CHZN. Investor and Media Contacts: Natalya Vasilieva, PR, firstname.lastname@example.org Tel: +7 (351) 799-01-52 Evgeny Ponomarev, IR, email@example.com Tel: +7 963 998-55-58 This announcement may include forward-looking statements. CZP's actual results may differ materially from those made in or suggested by the forward-looking statements contained in this announcement. By their nature, forwarding-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Forward-looking statements are not guarantees of future performance. Even if the actual results are consistent with the forward-looking statements contained in this announcement, those results may not be indicative of results or developments in future periods. CZP does not undertake any obligation to update any forward-looking statements to reflect events that occur or circumstances that arise after the date of this announcement.