1.5. Letter from the CEO

Dear shareholders,

NCSP Group the leading ports and logistics company in Russia. Yet leadership comes with great responsibility, and in 2012 we did well to pass the leadership test.

Neither prolonged storms early in the year, nor flooding in mid-summer, not the collapse of the grain market and harsher competition for oil and iron ore cargo could not undermine the positive trend in NCSP Group development. Amid challenging market conditions, the Group delivered cargo volume growth of 1.9 million tonnes, helping us to record a good financial result. While revenue was almost flat, coming in at $ 1,034 million, the Group achieved EBITDA growth of 7.4%, to $ 591.5 million, and an improved EBITDA margin up to 57.2%

Though the year we paid great attention implementing Group's medium- and long-term development program. Our spending on the investment program implementation in 2012 totalled $89.3 million.

In 2012 we brought online the LLC PTP bunkering facility and new capacity at LLC Novorossiysk Fuel Oil Terminal, while progressing with the reconstruction of OJSC IPP bunkering facility and tank farm. We also started handling new cargoes including coal and low-sulphur fuel.

PJSC NCSP and OJSC NLE developed and implemented a suite of measures to increase operating efficiency, with core operational functions including project management, budgeting and financial reporting, HR, legal and corporate governance all centralised at Group level.

NCSP Group’s 2012 results once again confirm the Company’s ability not only to maintain but also develop its leadership of the sector across the board, including level of service, advanced technologies and social responsibility.

Yours sincerely,
Yuriy Matvienko
Acting CEO, PJSC NCSP

  © PJSC «Novorossiysk Commercial Sea port» 2013