Released: 30/09/2009
*Company* Baltic Oil Terminals Plc
*TIDM* BTC
*Headline* Half Yearly Report
*Released* 07:00 30-Sep-2009
*Number* 9107Z07
RNS Number : 9107Z
Baltic Oil Terminals Plc
30 September 2009
Baltic Oil Terminals PLC
("Baltic" or "the Group")
Half Year Report for 6 months ended 30 June 2009
Baltic owns and operates oil product terminals in the strategically vital
Russian port of Baltysk, Kaliningrad on the Baltic Sea and through its
subsidiaries is engaged in matched refined oil product trading.
HIGHLIGHTS
* Group now entirely focused on terminal operation and product
trading:
* Official reclassification as a Transportation Services company
* Development of lower volume, higher margin trade business
* 5 7% reduction in administrative costs from £3.3m in H1
2008 to £1.4m in H1 2009
* Net loss for the period reduced to £1.1 million (net loss
of £5.1 million including write offs in H1 2008)
* Since period end, significant improvement in trading
conditions in Kaliningrad
* Agreement with Swiss trading company to ship over
100,000 tonnes of fuel oil in Far East
Simon Escott, Chief Executive of Baltic, commented:
"The first half of 2009 was tough for Baltic, as we expected. We spent the
period carefully managing our costs and reducing our cash burn. Since then,
however, the signs have been much more encouraging: various trading
contracts have been entered into and we are seeing more throughput at the
Rosbunker terminal.
"President Obama's decision to abandon plans for a missile shield
in Eastern Europe has had a noticeable and immediate impact in terms of
activity and sentiment in Kaliningrad. We are about to start the winter
season, which is when Kaliningrad enjoys a monopolistic position in terms of
Russian exports into the Baltic Sea. We therefore have good grounds for
optimism for the remainder of the year and are confident that the conditions
are right for a major breakthrough for the Company."
Enquiries:
Baltic Oil Terminals plc Tel: +44 (0)20 7034 7030
Simon Escott, Chief Executive
Arbuthnot Securities Limited Tel: +44 (0)20 7012 2000
Alastair Moreton, Corporate Finance
Pelham PR
Archie Berens Tel: +44 (0)20 7337 1509
Evgeniy Chuikov Tel: +44 (0)20 7337 1513
About Baltic Oil Terminals
Over the last four years, Baltic has built up a terminals business in the
Russian ports of Baltysk and Kaliningrad. A separate enclave located
between Poland and Lithuania, Kaliningrad is Russia's only year round
access to the Baltic Sea. Other ports in the region, such as St
Petersburg, are frozen for much of the winter, as are many rivers, including
the Volga River, one of the most significant commercial waterways in the
world. As Russia relies on year round export of its vast supplies of
petroleum products, Kaliningrad is thus a trading centre of major
strategic importance.
Baltic's key asset is a 50% interest in the Rosbunker terminal, which is
located at Baltysk, right on the Baltic Sea at the mouth of
the Pregol River leading into Kaliningrad. It is the only port in the
region at which all types of ship can take on cargo, as the channel
into Kaliningrad is too shallow for many vessels. Trains are able to
deliver products from all over Russia, the Former Soviet Union
and Asia directly to the terminal.
Since 2007, the Rosbunker terminal has been handling consignments of oil
refined products, specialising in fuel oil (mazut), a product that requires
heating and special equipment and as such is not handled by other terminals
in the area.
Baltic earns tolling fees for processing the unloading of cargo from trains
into storage tanks and then onto vessels. Baltic is also able to trade in
these products in its own right, taking advantage of local price
differences. Since the financial crisis in Russia , this market has become
increasingly interesting to Baltic. Baltic's transportation and trading
activities utilises its extensive network of industrial partners and
refineries.
In addition to Rosbunker, Baltic also has interests in several other oil
product assets in Kaliningrad, which derive revenues through processing and
distribution of oil products to domestic markets.
Baltic's executive management have a wealth of experience of the oil
services industry. The team has worked in the industry for more than 40
years, constructing and operating oil rigs, terminals and other
infrastructure in world wide locations, including the Former Soviet Union.
Baltic has been listed on AIM since May 2006. It is headquartered
in Kaliningrad, with a small representative office in London.
Baltic Oil Terminals plc
Half year report for 6 months ended 30 June 2009
Chairman's Statement
Introduction
As we reported in our year end announcement, the economic and political
climate at the end of 2008 and the start of 2009 made
operating conditions in Kaliningrad very difficult. This inevitably
affected Baltic's performance in a period that should have
been ideal for our terminal business.
One of the main problems was the slowness of the Russian authorities to
lower the export tax on refined products. This continued further into 2009
than had been expected by anybody in the industry. This reluctance to make a
decision cost the country billions of dollars and affected all export
terminals, the Russian railways and, most of all, the Russian refineries.
By the middle of the summer, however, the operating environment
in Russia and the FSU had improved, following an eventual relaxing of
export taxes. Due to the efforts of our operational and sales
teams, real progress is being made in the second half of the year, with
significant throughput through both terminals and a very large increase in
trading revenues for the third quarter.
As part of the ongoing transformation of Baltic into a fully
fledged infrastructure and terminals business,
Baltic has now been reclassified by the FTSE Actuaries
Committee under Transportation Services. The Company's shares will be
listed in the Financial Times under Industrial Transportation.
Financial Results
In a very difficult trading period, Baltic was able to reduce its net
loss for the first six months to £1.1 million, compared with a net loss of
£5.1 million for the corresponding period in 2008 (£1.7 million before
write-offs). A change in the accounting treatment of trading revenue
reflects the move away from our original volume driven business model.
Because of the way we trade product, there is an apparent fall in revenues
in absolute terms, although considerably higher margins are achievable.
The comprehensive cost cutting that was carried out at the end of 2008 was
increased further during the beginning of 2009, with a 56.9 % reduction
in administrative costs from £3.3 million in the first of
2008 to £1.4 million. Our cash burn has significantly reduced again,
with no impact on efficiency in our terminals, although some extra
operators will be hired during October to cope with the recent increase in
throughput.
As at 30 June 2009, the Group's bank balances amounted to £327,000.
Given the change in the trading model and the reduction in cash burn,
this was felt to be more than sufficient. Since that date, steps have been
taken to bolster the cash position of the company and levels of available
cash, should it be needed.
Baltic has no external bank debt, nor any other type of debt repayment
mechanisms in place. It is also pleasing to note that since the period
end, cash balances have risen to £465,000.
Legal Action by former director
The company announced on 1 June 2009 that Mr Vladimir Gavrilov, a former
director of the company whose employment had been terminated in January
2009, had commenced legal action against the company for repayment of a
purported trading loan.
The company has robustly denied that any liability exists and has made a
vigorous defence against this action. At the same time the Company
has commenced a counter claim for a sum far exceeding that claimed to be
owed to Mr Gavrilov and is confident of the merit of this claim.
Review of Operations
Rosbunker
Due to the factors described above, performance in the first half of 2009
was disappointing. However, since then, conditions have improved rapidly and
the outlook for October onwards is very bright. Pre-booked throughput for
October stands at around 35,000 tons of client product,
plus between 10,000 and 20,000 tons of Baltic sourced products
to be shipped though the terminal.
With the onset of winter and the closure of the Volga River, we see no
reason why throughput should not increase further, with the terminal capable
of shipping significant quantities of product through into 2010.
Baltic Top
Although trading conditions have remained very tough in Kaliningrad region,
with most service station sales down by around 40%, we have continued to
remain profitable and the terminal is full on a constant basis. Baltic Top
has no external debt. It has a small loan to the Baltic Group and this is
being paid off on a regular basis out of operating cash flows.
Management is studying plans to increase the volume through the terminal by
night deliveries, a plan that was already in place but was shelved because
of the economic crisis.
Baltic Hydrocarbons
The contracts already announced have been augmented by a further important
joint venture contract recently signed by Baltic Hydrocarbons and a
Swiss trading group. This contract is for Fuel Oil and Diesel and will
allow BHL to trade at least 100.000 tons over the next ten to fifteen days,
and then on a regular month to month basis. This represents a major
milestone for our trading team.
As the Volga River closes, supplies of Fuel Oil originating in Russia will
become easier to source and ship through the Rosbunker terminal and although
quantities are still not as high as we would like, a significant improvement
is being seen in late September through October contracts.
Current Trading and Outlook
The economic and political outlook that was so bleak at the end of 2008
and which continued into 2009 has taken a significant turn for the
better in the third quarter of 2009.
The export tax regime has been modified to allow export of refined product,
especially fuel oil, at a profit and this has resulted in an immediate
increase in business through the Rosbunker terminal, as reported above.
The Company has recently signed a significant Joint Venture agreement with a
Swiss Trading company the result of which will be over 100,000 tons of fuel
oil and diesel being shipped over the next ten days. This represents
a major milestone for the trading group.
The decision by President Obama to cancel the missile shield program in
Eastern Europe has already resulted in a real and positive improvement in
the relations with the Navy in Baltysk and the authorities in
Kaliningrad. This will be of considerable assistance in increasing
throughput and trading in the remainder of the year.
As previously stated, recent trading results give the management
team strong grounds for optimism for the remainder of the year
and confidence in the group's prospects.
Richard Healey Simon Escott
Chairman Chief Executive
30 September 2009 30 September 2009
Baltic Oil Terminals plc
Half year report for 6 months ended 30 June 2009
Financial Overview
Overview
Baltic has worked hard to reduce costs in the face of a recessionary
economy. During 2009, the Company has adapted its approach to trading in
order to better support the Company and the results are reflected in the
2009 interim financials.
In 2008, the Company was focused on high volume, low margin trades in order
to supply product to the Rosbunker terminal.
For 2009, the Company has been concentrating on developing a lower volume,
higher margin trade business. Revenues for the current year reflect the
change in focus as revenues through June are £6.2 million, compared with
£25.9 million for the same period in 2008. As a result, Baltic has also
been able to reduce the loss before tax for the 6 month period to
£1.2 million in 2009, compared to the £1.7 million loss (before write-off
of exploration costs) in 2008.
A substantial benefit of the change in approach has allowed the Company to
substantially lower administrative costs during the 6 month period for June
2009 to £1.4 million in 2009 as compared to £3.3 million through June
2008, a reduction of 56.9%.
The Company has also been less reliant on operating cash. The reduction
in operating cash has been used to reduce the number of outstanding
creditors.
Currency
The majority of the underlying costs and revenues are in US Dollars, but
with some elements being exposed to local currencies. Where possible, risks
relating to local currencies are mitigated contractually by tying cost to
the US Dollar, or offset with local assets/liabilities.
The fluctuation in currencies for the 6 months ended June 2009 has caused a
reduction in the recorded valuation in fixed assets of £2.4 million.
Baltic Oil Terminals plc
Condensed consolidated statement of financial position
As at 30 June 2009
Unaudited Unaudited
30 June 30 June Restated - Audited
2009 2008 31 December 2008
£'000 £'000 £'000
Non current assets
Intangible assets 2 - 3
Property, plant and equipment 13,877 16,302 16,561
Investments in associates 1,189 1,189 1,189
Goodwill 2,671 2,599 2,680
17,739 20,090 20,433
Current assets
Inventories 858 1,024 1,019
Prepayments and other current
assets 2,030 1,951 2,471
Trade and other receivables 1,480 3,924 1,681
Cash and cash equivalents 327 3,477 1,106
4,695 10,376 6,277
TOTAL ASSETS 22,434 30,466 26,710
Share capital 571 558 558
Share premium 40,559 40,539 40,559
Other reserves - Equity - share
options 2,459 2,806 2,459
Other reserves - Equity - foreign
exchange reserves (965) (223) 671
Retained losses (27,595) (25,619) (26,472)
Total equity 15,029 18,061 17,775
Non current liabilities
Deferred tax liability 1,079 2,306 1,407
1,079 2,306 1,407
Current liabilities
Trade and other payables 2,440 4,397 3,152
Borrowings 3,886 5,702 4,376
6,326 10,099 7,528
Total liabilities 7,405 12,405 8,935
TOTAL EQUITY AND LIABILITIES 22,434 30,466 26,710
Baltic Oil Terminals plc
Condensed consolidated income statement
For the 6 months ended 30 June 2009
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2009 2008 2008
£'000 £'000 £'000
Revenue 6,162 25,923 46,858
Cost of sales (5,916) (24,302) (45,396)
Gross profit 246 1,621 1,462
Exploration and evaluation costs - (3,627) (3,637)
Administrative expenses (1,442) (3,344) (5,009)
(1,196) (5,350) (7,184)
Finance income - 51 66
Finance costs (32) (37) (212)
Loss before taxation (1,228) (5,336) (7,330)
Tax credit 105 240 1,381
Share of result of associate - - -
Loss for the period (1,123) (5,096) (5,949)
Attributable to:
Equity shareholders of the Company (1,123) (5,096) (5,949)
Minority interests - - -
(1,123) (5,096) (5,949)
Loss per share attributable to
equity shareholders of the Company
Basic and diluted (pence per
share) (2.0) (9.3) (10.7)
Baltic Oil Terminals plc
Consolidated cash flow statement
For the 6 months ended 30 June 2009
Unaudited Unaudited
6 months 6 months Audited
ended ended 12 months
30 June 30 June ended
2009 2008 31 December 2008
£'000 £'000 £'000
Cash flows from operating
activities
Group operating loss before
taxation (1,228) (5,336) (7,330)
Adjustments to reconcile group
operating loss
to net cash ouflows from
operating activities
Finance costs/(income) net 32 (51) 146
Foreign exchange gains - (70) (139)
Share based payment - 171 (176)
Derivative financial instruments - (17) -
Depreciation and impairment of
property, plant and equipment 389 141 1,204
Amortisation and impairment of
intangible assets - 3,409 3,574
Loss on disposal of property, plant
and equipment - - 257
Fair value gains on derivative
financial instruments - - (17)
(Increase)/Decrease in inventories 51 (802) (794)
(Increase)/Decrease in trade and
other receivables (65) 405 1,887
Increase/(Decrease) in trade and
other payables (296) (1,569) (524)
Cash generated from operations (1,117) (3,719) (1,912)
Income taxes paid - (47) (32)
Interest paid (32) - (212)
Net cash outflows from operating
activities (1,149) (3,766) (2,156)
Cash flows from investing
activities
Interest received - 51 66
Purchase of property, plant and
equipment (97) (444) (792)
Proceeds from sale of property,
plant and equipment - - 82
Purchase of intangible assets - - (71)
Purchase of joint venture interest,
net of cash acquired - (2,577) (2,578)
Repayment of loans issued - - 151
Loans issued - (430) -
Net cash outflows from investing
activities (97) (3,400) (3,142)
Baltic Oil Terminals plc
Consolidated cash flow statement (cont.)
For the 6 months ended 30 June 2009
Unaudited Audited
6 months 12 months
Unaudited
6 months
ended ended
ended
30 June 30 June 31 December
2009 2008 2008
£'000 £'000 £'000
Cash flows from financing activities
Proceeds from shares issued 13 3,341 3,361
Proceeds from borrowings 132 4,230 -
Repayment of borrowings - - (475)
Net cash inflows from financing
activities 145 7,571 2,886
Increase/(decrease) in cash and cash
equivalents (1,101) 405 (2,412)
Cash and cash equivalents at beginning
of period 1,106 2,953 2,953
Effect of exchange rate on cash and cash
equivalents 322 119 565
Cash and cash equivalents at end of
period 327 3,477 1,106
Baltic Oil Terminals plc
Condensed consolidated statement of comprehensive income
For the 6 months ended 30 June 2009
Unaudited
6 months
ended Audited
30 June 12 months ended
Unaudited
6 months ended
30 June
2009 2008 31 December 2008
£'000 £'000 £'000
Loss after tax attributable
to the equity share owners
for the financial period (1,123) (5,096) (5,949)
Other comprehensive income
Exchange differences on
translating foreign
operations (1,636) 346 (94)
Other comprehensive income
for the period, net of tax (1,636) 346 (94)
Total comprehensive income
for the period attributable
to equity shareholders (2,759) (4,750) (6,043)
Baltic Oil Terminals plc
Condensed consolidated statement of changes in equity
For the period ended 30 June 2009
Attributable to equity shareholders of
the parent
Share Foreign
based currency
Share Share payment translation Retained Minority Total
capital premium reserve adjustment losses Total interests equity
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 Janaury
2008 476 33,195 2,635 (569) (20,515) 15,222 (8) 15,214
Loss for the
period - - - - (5,104) (5,104) 8 (5,096)
Total
comprehensive
income for
the period - - - - (5,104) (5,104) 8 (5,096)
Shares issued
during the
period 82 7,344 - - - 7,426 - 7,426
Share based
payment
reserve - - 171 - - 171 - 171
Foreign
exchange
reserves - - - 346 - 346 - 346
Transaction
with owners 82 7,344 171 346 - 7,943 - 7,943
At 30 June
2008 and 1
July 2008 558 40,539 2,806 (223) (25,619) 18,061 - 18,061
Loss for the
period - - - - (853) (853) - (853)
Total
comprehensive
income for
the period - - - - (853) (853) - (853)
Shares issued
during the
year - 20 - - - 20 - 20
Share based
payment
reserve - - (347) - - (347) - (347)
Foreign
exchange
reserves - - - 894 - 894 - 894
Transaction
with owners - 20 (347) 894 - 567 - 567
At 31
December 2008 558 40,559 2,459 671 (26,472) 17,775 - 17,775
Loss for the
period - - - - (1,123) (1,123) - (1,123)
Total
comprehenisve
income for
the period - - - - (1,123) (1,123) - (1,123)
Shares issued
during the
year 13 - - - - 13 - 13
Foreign
exchange
reserves - - - (1,636) - (1,636) - (1,636)
Transaction
with owners 13 - - (1,636) - (1,623) - (1,623)
At 30 June
2009 571 40,559 2,459 (965) (27,595) 15,029 - 15,029
This information is provided by RNS
The company news service from the London Stock Exchange
END