REG - Globaltrans Inv PLC - Full-Year 2016 results & enhanced dividend policy <Origin Href="QuoteRef">GLTRq.L</Origin> - Part 2

Globaltrans InvestmentAnnouncement

03/04/2017 07:07

- Part 2: For the preceding part double click  ID:nRSC2714Ba 

7,240*   0%      
 
 
Capital expenditure 
 
The Group's capital expenditure for the acquisition of fleet (including
maintenance CAPEX) on an accrual basis 23  was RUB 4,808 million in 2016, an
increase of 157% compared to the previous year. 
 
This higher capital expenditure reflects selective acquisitions of gondola
cars and petrochemical tank containers, as well as the increased number of
capital repairs in the reporting year due to a large portion of the Group's
fleet reaching the age of requiring a first capital repair. In 2016 the Group
had acquired 665 gondola cars from secondary market and 550 new petrochemical
tank containers. 
 
Capital resources 
 
The Group continued deleveraging in 2016. Its financial indebtedness consisted
of bank borrowings for an aggregate principal amount of RUB 16,292 million
(including accrued interest of RUB 36 million*) as of the end of 2016, a
decrease of 20% compared to the end of the previous year. 
 
The Group's Net Debt was RUB 11,519 million* as of the end of 2016, a 29%
decrease from the level of Net Debt at the end of 2015. 
 
The Group's leverage further improved with a ratio of Net Debt to Adjusted
EBITDA of 0.7x* at the end of 2016, compared with 1.0x* at the end of 2015. 
 
The following table sets out details on the Group's total debt, Net Debt and
Net Debt to Adjusted EBITDA at the end of 2016 and 2015, and reconciliation of
Net Debt to total debt. 
 
                                  As of             As of             Change  
                                  31 December 2015  31 December 2016          
                                  RUB mln           RUB mln           %       
 Total debt                       20,359            16,292            -20%    
 Minus                                                                        
 Cash and cash equivalents        4,104             4,773             16%     
 Net Debt                         16,255*           11,519*           -29%    
 Net Debt to Adjusted EBITDA (x)  1.0*              0.7*              -       
 
 
RUB-denominated borrowings accounted for almost 100% of the Group's debt
portfolio as of the end of 2016. 
 
The weighted average effective interest rate further reduced to 11.0%* as of
the end of 2016 compared to 12.0%* as of the end of the previous year on the
back of improving conditions in the Russian financial market. The vast
majority of the Group's debt had fixed interest rates as of the end of 2016. 
 
The Group has a balanced maturity profile, supported by the Group's strong
cash flow generation, available cash and cash equivalents, as well as undrawn
credit facilities 24  in the amount of RUB 20,820 million as of the end of
2016. 
 
The following table gives the maturity profile of the Group's borrowings
(including accrued interest of
RUB 36 million*) as of the end of 2016. 
 
                              As of             
                              31 December 2016  
                              RUB mln           
 Q1 2017                      2,173*            
 Q2 2017                      1,420*            
 Q3 2017                      1,577*            
 Q4 2017                      1,428*            
 2018                         4,841*            
 2019                         3,868*            
 2020-2022                    985*              
 Total                        16,292            
 Free Cash Flow               8,882*            
 Cash and cash equivalents    4,773             
 Undrawn credit facilities24  20,820            
                                                  
 
 
PRESENTATION OF INFORMATION 
 
The financial information presented in this announcement is derived from the
consolidated Management report and consolidated financial statements (audited)
of Globaltrans Investment PLC ("the Company" or, together with its
subsidiaries, "Globaltrans" or "the Group") as at and for the year ended 31
December 2016 and 2015 and prepared in accordance with International
Accounting Standards as adopted by the European Union and the requirements of
Cyprus Companies Law, Cap. 113 ("EU IFRS"). 
 
The Group's consolidated Management report and consolidated financial
statements (audited) as at and for the year ended 31 December 2016 and 2015
along with selected historical financial and operational information are
available at Globaltrans' corporate website (www.globaltrans.com). 
 
The presentation currency of the Group's consolidated financial statements is
Russian rouble ("RUB"). 
 
The respective financial information for the first six months of 2015 and the
full year 2015 has been restated to reflect the harmonisation of the Group's
accounting policy in respect of capitalisation of capital repairs and
associated spare parts. Historically due to low number of these repairs, they
were expensed as incurred. 
 
Certain financial information which is derived from management accounts is
marked in this announcement with an asterisk {*}. 
 
In this announcement the Group has used certain non-GAAP financial information
(not recognised by EU IFRS or IFRS) as supplemental measures of the Group's
operating performance. 
 
Information (non-GAAP and operating measures) requiring additional explanation
or defining is marked with initial capital letters and the explanations or
definitions are provided at the end of this announcement. 
 
Rounding adjustments have been made in calculating some of the financial and
operational information included in this announcement. As a result, numerical
figures shown as totals in some tables may not be exact arithmetic
aggregations of the figures that precede them. 
 
The Group has obtained certain statistical, market and pricing information
that is presented in this announcement on such topics as the Russian freight
rail transportation market and related subjects from the following third-party
sources: Federal State Statistics Service of Russian Federation ("Rosstat"),
JSC Russian Railways ("RZD"), the Federal Antimonopoly Service ("FAS") and the
Council of Rail Operators ("Railsovet"). The Group has accurately reproduced
such information and, as far as it is aware and is able to ascertain from
information published by such third-party sources, no facts have been omitted
that would render the reproduced information inaccurate or misleading. The
Group has not independently verified this third-party information. In
addition, the official data published by Russian governmental agencies may be
substantially less complete or researched than that of more developed
countries. 
 
All non-GAAP financial and operational information presented in this
announcement should be used only as an analytical tool, and investors should
not consider such information in isolation or in any combination as a
substitute for analysis of the Group's consolidated financial statements and
condensed interim financial information reported under EU IFRS, which are
available the Globaltrans' corporate website www.globaltrans.com. 
 
DEFINITIONS 
 
Terms that require definitions are marked with capital letters in this
announcement and their definitions are provided below in alphabetical order: 
 
Adjusted EBITDA (a non-GAAP financial measure) represents EBITDA excluding
"Net foreign exchange transaction gains/(losses) on borrowings and other
liabilities", "Net foreign exchange transaction gains/(losses) on cash and
cash equivalents and other monetary assets", "Share of profit/(loss) of
associate", "Other gains - net", "Net profit/(loss) on sale of property, plant
and equipment", "Impairment of property, plant and equipment", "Impairment of
intangible assets" and "Loss on derecognition arising on capital repairs". 
 
Adjusted EBITDA Margin (a non-GAAP financial measure) is calculated as
Adjusted EBITDA divided by Adjusted Revenue. 
 
Adjusted Profit Attributable to Non-controlling Interests (a non-GAAP
financial measure) is calculated as "Profit attributable to non-controlling
interests" less share of "Impairment of property, plant and equipment" and
"Impairment of intangible assets" attributable to non-controlling interests. 
 
Adjusted Revenue (a non-GAAP financial measure) is calculated as "Total
revenue" less the following "pass through" items "Infrastructure and
locomotive tariffs: loaded trips" and "Services provided by other
transportation organisations". 
 
Attributable Free Cash Flow (a non-GAAP financial measure) means Free Cash
Flow less Adjusted Profit Attributable to Non-controlling Interests. 
 
Average Distance of Loaded Trip is calculated as the sum of the distances of
all loaded trips for a period divided by the number of loaded trips for the
same period. 
 
Average Number of Loaded Trips per Railcar is calculated as total number of
loaded trips in the relevant period divided by Average Rolling Stock
Operated. 
 
Average Price per Trip is calculated as Net Revenue from Operation of Rolling
Stock divided by the total number of loaded trips during the relevant period
in the respective currency. 
 
Average Rolling Stock Operated is calculated as the average weighted (by days)
number of rolling stock available for operator services (not including rolling
stock in maintenance, purchased rolling stock in transition to its first place
of commercial utilisation, rolling stock leased out, Engaged Fleet, platforms
and tank containers used in petrochemical business). 
 
EBITDA (a non-GAAP financial measure) represents "Profit for the period"
before "Income tax expense", "Finance costs - net" (excluding "Net foreign
exchange transaction gains/(losses) on borrowings and other liabilities" and
"Net foreign exchange transaction gains/(losses) on cash and cash equivalents
and other monetary assets"), "Depreciation of property, plant and equipment"
and "Amortisation of intangible assets". 
 
Engaged Fleet is defined as rolling stock subcontracted or otherwise engaged
from a third-party rail operator for a loaded trip from the point of
origination to the cargo's destination, at which point the railcar is then
released to such third-party. 
 
Empty Run or Empty Runs means movement of railcars without cargo for the whole
or a substantial part of the journey. 
 
Empty Run Costs (a non-GAAP financial measure meaning costs payable to RZD for
forwarding empty railcars) is derived from management accounts and presented
as part of the "Infrastructure and locomotive tariffs: empty run trips and
other tariffs" component of "Cost of sales" reported under EU IFRS. Empty Run
Costs do not include costs of relocation of rolling stock to and from
maintenance, purchased rolling stock in transition to its first place of
commercial utilisation, rolling stock leased in or leased out, Engaged Fleet,
platforms and tank containers used in petrochemical business. 
 
Empty Run Ratio is calculated as the total of empty trips in kilometres by
respective rolling stock type divided by total loaded trips in kilometres of
such rolling stock type. Empty trips are only applicable to rolling stock
operated (not including rolling stock in maintenance, purchased rolling stock
in transition to its first place of commercial utilisation, rolling stock
leased out, Engaged Fleet, platforms and tank containers used in petrochemical
business). 
 
Free Cash Flow (a non-GAAP financial measure) is calculated as "Cash generated
from operations" (after "Changes in working capital") less "Tax paid",
"Interest paid", "Purchases of property, plant and equipment" (which includes
maintenance CAPEX), "Purchases of intangible assets" and "Acquisition of
subsidiary undertakings - net of cash acquired". 
 
Freight Rail Turnover is a measure of freight carriage activity over a
particular period calculated as the sum of tonnage of each loaded trip
multiplied by the distance of each loaded trip, expressed in tonnes-km. It
includes volumes transported by the Engaged Fleet and excludes performance of
petrochemical tank container segment, unless otherwise stated. 
 
Infrastructure and Locomotive Tariffs - Other Tariffs (a non-GAAP financial
measure) is presented as part of the ''Infrastructure and locomotive tariffs:
empty run trips and other tariffs'' component of "Cost of sales" reported
under EU IFRS. This cost item includes the costs of relocation of rolling
stock to and from maintenance, transition of purchased rolling stock to its
first place of commercial utilisation, and relocation of rolling stock in and
from lease operations as well as other expenses including the empty run costs
attributable to the petrochemical tank container business. 
 
Leased-in Fleet is defined as fleet leased-in under operating leases,
including railcars, locomotives and petrochemical tank containers. 
 
Leased-out Fleet is defined as fleet leased out to third parties under
operating leases (excluding platforms and tank containers used in
petrochemical business). 
 
Leverage Ratio (a non-GAAP financial measure) means the ratio of Net Debt on
the last day of a particular financial year to Adjusted EBITDA in respect of
that financial year. 
 
Net Debt (a non-GAAP financial measure) is defined as the sum of total
borrowings (including interest accrued) less "Cash and cash equivalents". 
 
Net Revenue from Engaged Fleet (a non-GAAP financial measure) represents the
net sum of the price charged for transportation to clients by the Group
utilising Engaged Fleet less the loaded railway tariff charged by RZD
(included in the EU IFRS line item "Infrastructure and locomotive tariffs:
loaded trips") less the cost of attracting fleet from third-party operators
(included in the EU IFRS line item "Services provided by other transportation
organisations"). 
 
Net Revenue from Operation of Rolling Stock (a non-GAAP financial measure) is
defined as the sum of "Revenue from railway transportation - operators
services (tariff borne by the Group)" and "Revenue from railway transportation
- operators services (tariff borne by the client)" less "Infrastructure and
locomotive tariffs: loaded trips", "Services provided by other transportation
organisation" and Net Revenue from Engaged Fleet. 
 
Net Working Capital (a non-GAAP financial measure) is calculated as the sum of
the current portions of "Inventories", "Current income tax assets", "Trade
receivables - net", "Prepayments - third parties", "Prepayments - related
parties", "Other receivables - net", and "VAT and other taxes recoverable",
less the sum of the current portions of "Trade payables to third parties",
"Trade payables to related parties", "Advances from third parties", "Advances
from related parties for sale of railcars", "Accrued expenses", "Other
payables to third parties", "Other payables to related parties" and "Current
tax liabilities". 
 
Total Operating Cash Costs (a non-GAAP financial measure) represent operating
cost items payable in cash and calculated as "Total cost of sales, selling and
marketing costs and administrative expenses" less the "pass through" items:
"Infrastructure and locomotive tariffs: loaded trips" and "Services provided
by other transportation organisations" and non-cash items: "Depreciation of
property, plant and equipment", "Amortisation of intangible assets",
"Impairment of receivables", "Impairment of property, plant and equipment",
"Net profit/(loss) on sale of property, plant and equipment" and "Loss on
derecognition arising on capital repairs". 
 
Total Operating Non-Cash Costs (a non-GAAP financial measure) include cost
items such as "Depreciation of property, plant and equipment", "Amortisation
of intangible assets", "Loss on derecognition arising on capital repairs",
"Impairment of receivables", "Impairment of property, plant and equipment" and
"Net profit/(loss) on sale of property, plant and equipment". 
 
Other Operating Cash Costs (a non-GAAP financial measure) include cost items
such as "Rental of tank containers", "Legal, consulting and other professional
fees", "Operating lease rentals - office", "Auditors' remuneration",
"Advertising and promotion", "Communication costs", "Information services",
"Taxes (other than income tax and value added taxes)" and "Other expenses". 
 
Owned Fleet is defined as the fleet owned and leased in under finance lease as
at the end of the reporting period. It includes railcars, locomotives and
petrochemical tank containers, unless otherwise stated, and excludes Engaged
Fleet. 
 
Share of Empty Run Kilometres paid by Globaltrans is defined as the percentage
of empty run kilometres paid by Globaltrans divided by the total amount of
empty run kilometres incurred by the fleet operated by Globaltrans (not
including relocation of rolling stock to and from maintenance, purchased
rolling stock in transition to its first place of commercial utilisation, and
rolling stock leased out, Engaged Fleet, platforms and tank containers used in
petrochemical business) in the relevant period. 
 
Total Empty Run Ratio is calculated as total kilometres travelled empty
divided by the total kilometres travelled loaded by the rolling stock fleet
operated by Globaltrans (not including the relocation of rolling stock to and
from maintenance, purchased rolling stock in transition to its first place of
commercial utilisation, or rolling stock leased out, Engaged Fleet, platforms
and tank containers used in petrochemical business) in the relevant period. 
 
Total Fleet is defined as the fleet owned and leased in under finance and
operating leases as at the end of reporting period. It includes railcars,
locomotives and petrochemical tank containers, unless otherwise stated, and
excludes Engaged Fleet. 
 
Transportation Volume is a measure of freight carriage activity over a
particular period, measuring weight of cargo carried in million tonnes. It
includes volumes transported by the Engaged Fleet and excludes the performance
of petrochemical tank container segment, unless otherwise stated. 
 
LEGAL DISCLAIMER 
 
Some of the information in this announcement may contain projections or other
forward-looking statements regarding future events or the future financial
performance of Globaltrans. You can identify forward-looking statements by
terms such as 'expect', 'believe', 'anticipate', 'estimate', 'intend', 'will',
'could', 'may' or 'might', the negative of such terms or other similar
expressions. Globaltrans wishes to caution you that these statements are only
predictions and that actual events or results may differ materially.
Globaltrans does not intend to update these statements to reflect events and
circumstances occurring after the date hereof or to reflect the occurrence of
unanticipated events. Many factors could cause the actual results to differ
materially from those contained in projections or forward-looking statements
of Globaltrans, including, among others, general economic conditions, the
competitive environment, risks associated with operating in Russia, rapid
technological and market change in the industries Globaltrans operates in, as
well as many other risks specifically related to Globaltrans and its
operations. 
 
 1  The Group's Freight Rail Turnover (excluding Engaged Fleet) increased 10%
year on year in 2016. The RZD regulated infrastructure and locomotive tariffs
(including for the traction of empty railcars) increased 9% year on year from
January 2016. Empty Run Costs is the largest component of the Group's Total
Operating Cash Costs. 
 
 2  The Group's CAPEX on a cash basis (including "Purchases of property, plant
and equipment" (which includes maintenance CAPEX), "Purchases of intangible
assets" and "Acquisition of subsidiary undertakings - net of cash acquired"). 
 
 3  Adjusted profit attributable to owners of the Company rose 44% year on
year. For 2015, it was adjusted to exclude the impact of the impairment of
customer relationships related to the service contracts with MMK in the amount
of RUB 996 million. For 2016, no adjustments were made. 
 
 4  Leverage Ratio (a non-GAAP financial measure) means the ratio of Net Debt
on the last day of a particular financial year to Adjusted EBITDA in respect
of that financial year. 
 
 5 The Board reserves the right to recommend to the general shareholder
meeting the dividend in the amount calculated on a reasonable basis other than
that described in this announcement at its sole discretion. The factors that
the Board should consider include but are not limited to: (i) the Group's
needs for business development and strategy implementation purposes; (ii)
financial resources for business expansion; (iii) any adverse changes in
regulatory, economic and market environment; (iv) the ability of the Company
and its subsidiaries to meet their obligations as they fall due; (v) the
availability of distributable reserves at the Company and subsidiaries level
and (vi) other factors considered by the Board of Directors as important in
light of the current circumstances, including maintenance of the Company's
credit ratings. 
 
 6  Attributable Free Cash Flow (a non-GAAP financial measure) means Free Cash
Flow less Adjusted Profit Attributable to Non-controlling Interests. Adjusted
Profit Attributable to Non-controlling Interests (a non-GAAP financial
measure) is calculated as "Profit attributable to non-controlling interests"
less share of "Impairment of property, plant and equipment" and "Impairment of
intangible assets" attributable to non-controlling interests. 
 
 7  Subject to shareholders' approval, dividends will be paid in USD with
conversion from RUB to be executed at the official RUB exchange rate of the
Central Bank of Russia as of the date of the Annual General Meeting, which was
called for 24 April 2017. 
 
 8  Globaltrans' Freight Rail Turnover (excluding Engaged Fleet) increased 10%
year on year in 2016. 
 
 9  For the purpose of this announcement the Group's market share is
calculated as a percentage of the overall Russian freight rail turnover. It
includes the freight turnover generated by the Engaged Fleet. The Group's
market share of overall Russian transportation volumes was 8.4% in 2016 (2015:
8.3%). 
 
 10  In 2016 the Group acquired 665 gondola cars from the secondary market and
550 new petrochemical tank containers; 278 railcars having reached the end of
useful life were scrapped and 422 specialised railcars were sold. The Group's
Total Fleet as of the end of 2015 was restated to include 380 petrochemical
tank containers leased-in from third parties. 
 
 11  Overall Russian fleet of respective type as of the end of 2016. Estimated
by the Company. 
 
 12  In the 12 months to the end of 2017. Estimated by the Company. Based on
the number of railcars of respective type reaching the end of useful life (or
extended useful life). 
 
 13  For 2015, it was adjusted to exclude the impact of the impairment of
customer relationships related to the service contracts with MMK in the amount
of RUB 996 million. For 2016, no adjustments were made. 
 
 14  Includes "Infrastructure and locomotive tariffs: loaded trips" for 2016
of RUB 22,251 million (2015: RUB 23,326 million) and "Services provided by
other transportation organisations" of RUB 2,988 million (2015: RUB 2,698
million). 
 
 15  Defined as the sum of the following EU IFRS line items: "Railway
transportation - operator's services (tariff borne by the Group)" and "Railway
transportation - operator's services (tariff borne by the client)". 
 
 16  Following the harmonisation of the Group's accounting policy, the cost of
each major periodic capital repair (including the replacement of significant
components) is recognised in the carrying amount of the relevant item of
rolling stock repaired and separately depreciated. Simultaneously, the
carrying amount of the repaired rolling stock that is attributable to the
previous periodic capital repair and/or significant component replacement, if
any, is derecognised and debited in "Cost of sales" in the income statement as
"Loss on derecognition arising on capital repairs" for the period during which
the repair was carried out. 
 
 17  Under contracts where the RZD tariff is borne by the Group, the Group has
a contractual relationship with the client. The Group sets the terms of the
transactions, such as selling and payment terms and in some cases, bears
credit risk and controls the flow of receipts and payments. 
 
 18  A block train consists of Group-operated rolling stock bound for one
destination. 
 
 19  Following the harmonisation of the Group's accounting policy, the cost of
each major periodic capital repair (including the replacement of significant
components) is recognised in the carrying amount of the relevant item of
rolling stock repaired and separately depreciated. Simultaneously, the
carrying amount of the repaired rolling stock that is attributable to the
previous periodic capital repair and/or significant component replacement, if
any, is derecognised and debited in "Cost of sales" in the income statement as
"Loss on derecognition arising on capital repairs" for the period during which
the repair was carried out. 
 
 20  Net Cash inflows (outflows) from borrowings and financial leases defined
as the balance between the following line items: "Proceeds from borrowings",
"Repayments of borrowings" and "Finance lease principal payments". 
 
 21  Before changes in working capital. 
 
 22  For 2015 and 2016 there was no "Impairment of property, plant and
equipment" nor "Impairment of intangible assets" attributable to
non-controlling interests. 
 
 23  Including assets under construction. 
 
 24  Including the unissued registered RUB denominated exchange-traded bonds
in the amount of RUB 15,000 million. 
 
This information is provided by RNS
The company news service from the London Stock Exchange