1.4. Letter from the Chairman

Dear shareholders,

NCSP Group is a unique example of successful integration of a broad portfolio of different cargoes into a single business, and this represents the Group’s strongest competitive advantage. Combined with the Group’s geographical diversification across the Black and Baltic seas, this creates a great potential for development.

In 2012, the Group overcame challenging market conditions to once again demonstrate the strengths of its business model, with growth in EBITDA and net profit and an improved EBITDA margin.

NCSP Group has a clear strategic direction and understanding of how to achieve its goals. The Group’s development strategy is updated on an on-going basis and management continually seeks out new market opportunities.

Today the core of NCSP Group’s cargo turnover is liquid cargoes, including crude oil and oil products, which are one of the Group’s areas of growth as well as a sustainable source of revenue.

It is on this foundation that the Group is building its strategy of further diversification of its cargo base and range of additional services. The Group’s development programme features a consistent balance between projects in liquid, bulk, general and container cargo.

Of particular importance to NCSP Group was the agreement signed with FGUP Rosmorport on the reconstruction and modernisation of Novorossiysk Sea Port. Today large-scale infrastructure projects cannot be implemented without an effective public-private partnership, and this agreement may well open a whole new page in the history of NCSP Group and the Russian port industry.

Yours sincerely,
Maxim Grishanin
Chairman of the Board of Directors of PJSC NCSP

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