REG - Globaltrans Inv PLC - Full-Year 2022 Results
27/03/2023 07:00
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RNS Number : 2270U Globaltrans Investment PLC 27 March 2023
For immediate release 27 March 2023
Globaltrans Investment PLC 1 (#_ftn1)
Full-Year 2022 Results
Globaltrans Investment PLC (the "Company" and together with its consolidated
subsidiaries "Globaltrans" or the "Group"), (LSE/MOEX ticker: GLTR) today
announces its financial and operational results for the year ended 31 December
2022.
In this announcement, the Group has used certain measures not recognised by
International Financial Reporting Standards ("IFRS") or EU IFRS (referred to
as "non-IFRS measures") as supplemental measures of the Group's operating
performance. The management believes that these non-IFRS measures provide
valuable information to readers, because they enable them to focus more
directly on the underlying day-to-day performance of the Group's business.
However, these non-IFRS measures have limitations as analytical tools, and you
should not consider them in isolation or place undue reliance on them.
Similarly titled measures are used by other companies for a variety of
purposes and are often calculated in ways that reflect the circumstances of
those companies. You should exercise caution in comparing these measures as
reported by us to the same or similar measures as reported by other
companies. The Company also reports certain operational information to
illustrate the changes in the Group's operational and financial performance
during the reporting periods. Certain financial information which is derived
from the management accounts is marked in this announcement with an asterisk
{*}. Information (non-IFRS financial 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.
Reconciliations of the non-IFRS measures to the closest EU IFRS measures are
included in the body of this announcement. The presentational currency of the
Group's financial results is the Russian rouble ("RUB").
KEY HIGHLIGHTS
· Unprecedented environment kept market volumes under pressure. The
transformation of logistics with an increased proportion of longer-distance
routes supported overall Russian freight rail turnover which was broadly flat
year on year in 2022.
· Gondola market pricing recovered from the depressed levels of H1 2021
before declining in late H1 2022 with some stabilisation by the year end.
Market pricing was robust in the tanker segment.
· Globaltrans improved its operational efficiency with Service
Contracts remaining intact.
· Strong financial results were delivered with growth achieved across
all key metrics.
· Robust financial profile maintained with further deleveraging.
· 6x rise in expansion CAPEX and acquisition expenditure with selective
investments in new gondolas and rail tanks along with the acquisition of the
remaining 40% of BaltTransServis ("BTS") 2 (#_ftn2) .
· Consolidation of rail tank operating and leasing capabilities in BTS
to increase flexibility and streamline operations 3 (#_ftn3) .
· Dividends remain suspended. Ongoing analysis of options to address
limitations of corporate structure and listing constraints.
Commenting on Globaltrans' FY2022 results, CEO Valery Shpakov said:
"In difficult markets we have demonstrated our resilience as a business. We
have again delivered strong results and improved operational efficiency in
2022 by providing first-class services underpinned by strong logistical
expertise and excellent cost control. Against this backdrop, we have invested
significantly into the growth of the business, increasing our Total CAPEX
adjusted for M&A to over RUB 20 billion.
Our markets remain challenging. Nevertheless, Globaltrans enjoys a leading
competitive position in its sector, supported by our outstanding logistics
competences, strong service culture as well as a solid client base. Our
experienced team continues to pursue a clearly defined strategy which has
proven its effectiveness."
FINANCIAL RESULTS
Strong financial performance, robust Free Cash Flow and further deleveraging with dividends remaining on hold
· Revenue rose to RUB 94.5 billion with Adjusted Revenue (a key
component) increasing to RUB 81.6 billion (+40% year on year) in 2022
reflecting the recovery in both the gondola and tank car segments' revenue
streams largely supported by a recovery in gondola market pricing in H1 2022
from the depressed levels of H1 2021. A subsequent decline in gondola market
pricing over the second half of 2022 drove a 9% decrease in Adjusted Revenue
in H2 2022 compared to H1 2022.
· Adjusted EBITDA of RUB 49.2 billion in 2022 (+69% year on year),
although H2 2022 Adjusted EBITDA declined 18% compared to H1 2022.
· Expansion CAPEX and acquisition expenditure (including selective
investments in new gondolas and rail tanks along with the acquisition of the
remaining 40% of BTS) rose 6x driving the growth in Total CAPEX adjusted for
M&A to RUB 20.2 billion* in 2022.
· Robust Free Cash Flow of RUB 14.8 billion in 2022 (-8% year on
year).
· Profit for the year increased to RUB 24.9 billion (+65% year on
year).
· Net Debt reduced to RUB 4.6 billion at the end of 2022. Further
deleveraging with Net Debt to Adjusted EBITDA at 0.1x compared to 0.6x at the
end of 2021.
· All the Group's debt had fixed interest rates and was denominated
in RUB, the functional currency of the Group.
· Dividend payments continue to be suspended due to the technical
limitations regarding upstreaming cash to the holding company incorporated in
Cyprus.
OPERATIONAL PERFORMANCE
Operational efficiency significantly improved, service contracts performed
well, average pricing was robust
· Globaltrans successfully adjusted its logistics with the Empty
Run Ratio for gondola cars improving to 41% (2021: 44%). Total Empty Run Ratio
(for all types of rolling stock) improved to 50% (2021: 51%).
· The Group's Freight Rail Turnover declined 8% year on year in
2022 reflecting logistics readjustments and volatility in demand in the
gondola segment along with the decline in the average gondola fleet in
operation. In the tank segment, Freight Rail Turnover rose 7% year on year
supported primarily by changes in logistics with more longer-distance routes.
· Robust average pricing despite volatile gondola pricing where a
strong first half was followed by a decline in the second half of 2022. Rail
tank rates remained solid.
· The Group maintained its focus on Service Contracts 4 (#_ftn4)
and client retention. Service Contracts remain intact contributing about 59%
of the Group's Net Revenue from Operation of Rolling Stock in 2022.
MARKET REVIEW
Logistics transformation supporting demand for railcars even as market volumes
remain under pressure
· Following a robust Q1 2022, overall Russia's freight rail
turnover and volumes started to deteriorate, largely reflecting a weakening
bulk cargo segment.
· Overall Russia's freight volumes (measured in tonnes) fell 3.7%
year on year in 2022. The transformation of logistics with an increased
proportion of longer-distance routes supported overall Russia's freight rail
turnover (measured in tonnes-km) which was broadly flat (-0.1% year on year).
Non-oil (bulk) cargo volumes under pressure from Q2 2022
· Overall non-oil (bulk) cargo volumes decreased 4.3% year on year in 2022 which was largely driven by the deterioration in volumes for coal (-5.0% year on year) and metallurgical cargoes (-5.7% year on year). Volumes in the construction segment remained robust (+3.8% year on year)
5 (#_ftn5)
.
· Gondola market rates recovered from the depressed levels of H1 2021 but have deteriorated since late Q2 2022 with some stabilisation by the year end.
Demand in oil products and oil segment stabilised
· Overall Russia's oil products and oil volumes slipped 0.6% year on year in 2022.
· Market pricing conditions in the oil products and oil segment remained robust.
Market continues to adapt to the challenging environment in 2023
· In the January-February 2023 period, overall industry freight
rail turnover increased 3.5% year on year with volumes down 2.4% over the same
period. Visibility remains low.
· Robust market pricing prevails in both gondola and tanker
segments but with the potential for volatility going forward.
· Intensified cost inflation with regulated RZD tariffs for the
traction of empty railcars up about 18.6% during 2022 6 (#_ftn6) and by an
additional 10% from the beginning of 2023.
DOWNLOADS
· The Group's consolidated management report and consolidated
financial statements for the year ended 31 December 2022 are available for
viewing at
http://www.rns-pdf.londonstockexchange.com/rns/2270U_1-2023-3-25.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/2270U_1-2023-3-25.pdf)
· The related Full-Year 2022 Results Presentation is available for
viewing at
http://www.rns-pdf.londonstockexchange.com/rns/2270U_2-2023-3-25.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/2270U_2-2023-3-25.pdf)
All of the above materials along with a selection of historical operational
and financial information are available on Globaltrans' corporate website
(www.globaltrans.com).
ANALYST AND INVESTOR EVENT
The release of the Group's financial and operational results will be
accompanied by an analyst and investor event hosted by Valery Shpakov, CEO,
and Alexander Shenets, CFO.
Date: Monday, 27 March 2023
Time: 13:00 London / 15:00 Moscow / 08:00 New York
Webcast: https://www.webcast-eqs.com/globaltrans20230327
Event language: There will be a simultaneous translation of the webcast with
both English and Russian available.
Q&A Session: Please note that this will be a listen-only session. Should
you have any questions, please submit them by 9:30 London / 11:30 Moscow /
05:00 New York on 27 March 2023 to irteam@globaltrans.com.
Replay: A replay of the webcast will be available on the Globaltrans website
(www.globaltrans.com) shortly after the end of the live event.
VIRTUAL NON-DEAL ROADSHOW
The results announcement will be followed by a virtual non-deal roadshow. If
you are interested in talking to the Company, please contact the IR Team;
details are below.
ENQUIRIES
For investors
Mikhail Perestyuk / Daria Plotnikova
+357 25 328 860
irteam@globaltrans.com (mailto:irteam@globaltrans.com)
For Russian media
Anna Vostrukhova
+357 25 328 863
media@globaltrans.com (mailto:media@globaltrans.com)
For international media
Laura Gilbert, Lightship Consulting
+44 7799 413351
Laura.Gilbert@lightshipconsulting.co.uk
(mailto:Laura.Gilbert@lightshipconsulting.co.uk)
ABOUT GLOBALTRANS
Globaltrans Investment PLC ("Company" and together with its consolidated
subsidiaries "Globaltrans" or the "Group") is a leading freight rail
transportation group with subsidiary operations across Russia and the CIS
countries.
The Company was founded in 2004 by a group of entrepreneurs who combined their
freight rail businesses under the single brand Globaltrans. These founders
remain key shareholders of the Group.
Throughout its years of operation, the Company has pursued a prudent approach
to investment, expanding its fleet both by means of organic growth and through
the acquisition of other rail operators. Globaltrans' total fleet is currently
almost three times larger than it was at the time of the Company's IPO in
2008.
The Group's dividend policy establishes a transparent and straightforward
approach to the payment of dividends and is supported by a long history of
delivering attractive shareholder remuneration.
Globaltrans global depositary receipts (GDRs) have been listed on the Main
Market of the London Stock Exchange (ticker symbol: GLTR) since May 2008 7
(#_ftn7) and on the Level One quotation list of the Moscow Exchange since
October 2020 (ticker symbol: GLTR).
Due to its vast logistics capabilities, the Group is able to efficiently
manage industrial cargo flows, transporting metallurgical cargoes, oil
products and oil, coal and construction materials. The Group serves a broad
range of clients in Russia and the CIS countries.
Globaltrans has a total fleet (including owned and leased in under finance and
operating leases) of more than 66 thousand units as of the end of 2022, of
which about 94% are owned by the Company. The core of the fleet is universal
gondola cars used for a broad range of bulk cargoes (69% of total fleet) and
tank cars for transporting oil products and oil (28% of total fleet).
Globaltrans also manages its own fleet of mainline locomotives with 71 units
that mostly provide traction for its block trains.
The Group's logistics management principally aims to provide reliable
services, responding promptly and flexibly to customer needs, while achieving
a good level of profitability for the business. The main component of the
Group's centralised logistics system is its single dispatching centre that
monitors every aspect of Globaltrans' fleet operation. By effectively managing
shipments and routes, Globaltrans ensures high utilisation of its fleet and
achieves maximum productivity and quality of service.
Additional information on Globaltrans is available at www.globaltrans.com.
(http://www.globaltrans.com/)
RESULTS IN DETAIL
The following tables provide the Group's key financial and operational
information for the years ended 31 December 2022 and 2021.
EU IFRS financial information
2021 2022 Change
RUB mln RUB mln %
Revenue 73,151 94,474 29%
Total cost of sales, selling and marketing costs and administrative expenses (52,630) (58,838) 12%
Other gains/ (losses) - net 796 (1,335) NM
Operating profit 21,627 34,302 59%
Finance costs - net (2,189) (1,150) -47%
Profit before income tax 19,438 33,152 71%
Income tax expense (4,338) (8,232) 90%
Profit for the year 15,100 24,920 65%
Profit attributable to:
Owners of the Company 12,987 25,193 94%
Non-controlling interests 2,113 (274) NM
Basic and diluted earnings per share for profit attributable to the equity 72.69 141.23 94%
holders of the Company during the year (RUB per share)
2021 2022 Change
RUB mln RUB mln %
Cash generated from operations (after changes in working capital) 30,058 48,631 62%
Tax paid (2,808) (8,455) 201%
Net cash from operating activities 27,250 40,176 47%
Net cash used in investing activities (7,154) (19,652) 175%
Net cash used in financing activities (12,217) (17,520) 43%
Non-IFRS financial information
2021 2022 Change
RUB mln RUB mln %
Adjusted Revenue 58,492 81,610 40%
Including
Net Revenue from Operation of Rolling Stock 54,319* 76,798* 41%
Operating leasing of rolling stock 1,832 3,372 84%
Total Operating Cash Costs 29,751 32,373 9%
Including
Empty Run Cost 15,429* 17,283* 12%
Employee benefit expense 5,491 6,781 23%
Repairs and maintenance 3,969 3,943 -1%
Fuel and spare parts - locomotives 1,972 2,017 2%
Adjusted EBITDA 29,044 49,216 69%
Adjusted EBITDA Margin, % 50% 60%
Total CAPEX (incl. maintenance CAPEX) 8,439 11,424 35%
Total CAPEX adjusted for M&A 7,629* 20,224* 165%
Free Cash Flow 16,131 14,825 -8%
Attributable Free Cash Flow 14,018 15,098 8%
Debt profile
As of As of
31 Dec
31 Dec
2021 2022
RUB mln RUB mln
Total debt 31,318 20,649
Cash and cash equivalents 12,855 16,052
Net Debt 18,464 4,596
Net Debt to Adjusted EBITDA (x) 0.6 0.1
Operational information
2021 2022
Freight Rail Turnover, billion tonnes-km (excluding Engaged Fleet) 146.8 134.9
Transportation Volume, million tonnes (excluding Engaged Fleet) 85.1 77.0
Average Price per Trip, RUB 41,075 64,553
Average Rolling Stock Operated, units 57,347 56,637
Average Distance of Loaded Trip, km 1,716 1,733
Average Number of Loaded Trips per Railcar 23.1 21.0
Total Empty Run Ratio (for all types of rolling stock), % 51% 50%
Empty Run Ratio for gondola cars, % 44% 41%
Share of Empty Run Kilometres paid by Globaltrans, % 99% 99%
Total Fleet, units (at year end), including: 69,106 66,115
Owned Fleet, units (at year end) 65,067 62,354
Leased-in Fleet, units (at year end) 4,039 3,761
Leased-out Fleet, units (at year end) 8,458 7,474
Average age of Owned Fleet, years (at year end) 13.8 14.5
Total number of employees (at year end) 1,777 1,768
Revenue
In 2022, the Group's Total revenue increased 29% year on year to RUB 94,474
million reflecting the combination of a 40% year-on-year rise in Adjusted
Revenue and a 12% year-on-year decrease in "pass through" items (a combination
of "Infrastructure and locomotive tariffs: loaded trips" and "Services
provided by other transportation organisations").
The following table provides details of Total revenue, broken down by
revenue-generating activity, for the years ended 31 December 2022 and 2021.
2021 2022 Change
RUB mln RUB mln %
Railway transportation - operators services (tariff borne by the Group) 8 31,744 30,341 -4%
(#_ftn8)
Railway transportation - operators services (tariff borne by the client) 37,238 60,197 62%
Operating leasing of rolling stock 1,832 3,372 84%
Revenue from specialised container transportation 1,824 - -100%
Other 514 564 10%
Total revenue 73,151 94,474 29%
Adjusted Revenue
Adjusted Revenue is a non-IFRS financial measure defined as "Total revenue"
adjusted for "pass through" items: "Infrastructure and locomotive tariffs:
loaded trips" and "Services provided by other transportation organisations".
"Infrastructure and locomotive tariffs: loaded trips" comprises revenue
resulting from tariffs that customers pay to the Group and the Group pays on
to RZD, which are reflected in equal amounts in both the Group's Total revenue
and Cost of sales. "Services provided by other transportation organisations"
is revenue resulting from the tariffs that customers pay to the Group and the
Group pays on to third-party rail operators for subcontracting their rolling
stock, which are reflected in equal amounts in both the Group's Total revenue
and Cost of sales. The net result of Engaged Fleet operations is reflected as
Net Revenue from Engaged Fleet and is included in Adjusted Revenue.
In 2022, the Group's Adjusted Revenue was RUB 81,610 million up 40% year on
year largely driven by the increase in Net Revenue from Operation of Rolling
Stock.
The following table provides details of Adjusted Revenue for the years ended
31 December 2022 and 2021 and its reconciliation to Total revenue.
2021 2022 Change
RUB mln RUB mln %
Total revenue 73,151 94,474 29%
Minus "pass through" items
Infrastructure and locomotive tariffs: loaded trips 12,964 10,465 -19%
Services provided by other transportation organisations 1,695 2,399 42%
Adjusted Revenue 58,492 81,610 40%
The principal components of Adjusted Revenue include: (i) Net Revenue from
Operation of Rolling Stock, (ii) Revenue from operating leasing of rolling
stock, (iii) Net Revenue from Specialised Container Transportation, (iv) Net
Revenue from Engaged Fleet, and (v) other revenues generated by the Group's
auxiliary business activities, including freight forwarding, repair and
maintenance services provided to third parties, and other.
The following table provides a breakdown of the components of Adjusted Revenue
for the years ended 31 December 2022 and 2021.
2021 2022 Change
RUB mln RUB mln %
Net Revenue from Operation of Rolling Stock 54,319* 76,798* 41%
Operating leasing of rolling stock 1,832 3,372 84%
Net Revenue from Specialised Container Transportation 1,643* - -100%
Net Revenue from Engaged Fleet 184* 876* 375%
Other 514 564 10%
Adjusted Revenue 58,492 81,610 40%
Net Revenue from Operation of Rolling Stock
Net Revenue from Operation of Rolling Stock is a non-IFRS financial measure,
derived from management accounts, describing the net revenue generated from
freight rail transportation services which is adjusted for respective "pass
through" loaded railway tariffs charged by RZD (included in the EU IFRS line
item "Infrastructure and locomotive tariffs: loaded trips").
The Group's Net Revenue from Operation of Rolling Stock, which accounted for
94% of the Group's Adjusted Revenue in 2022, increased 41% year on year to RUB
76,798 million* reflecting the recovery in both the gondola and tank car
segments' revenue streams which was largely aided by the market pricing
recovery in the gondola segment in the first half of 2022 albeit with a
subsequent decline in the second half.
Revenue from operating leasing of rolling stock
Revenue from operating leasing of rolling stock contributed 4% of the Group's
Adjusted Revenue in 2022 and increased 84% year on year to RUB 3,372 million
reflecting the increase in the average number of leased-out fleet along with a
rise in average leasing rates.
Net Revenue from Specialised Container Transportation
Net Revenue from Specialised Container Transportation is a non-IFRS financial
measure, derived from management accounts, that represents the revenue
generated from the specialised container operations (included in the EU IFRS
line item: "Revenue from specialised container transportation") less the
respective "pass through" loaded railway tariffs charged by RZD (included in
the EU IFRS line item "Infrastructure and locomotive tariffs: loaded trips").
Net Revenue from Specialised Container Transportation was eliminated in 2022
due to the deconsolidation of this business segment reflecting the sale of
SyntezRail (a subsidiary of Globaltrans) in October 2021. In 2021 the revenue
from this segment amounted to RUB 1,643 million* and accounted for 3% of the
Group's Adjusted Revenue.
Net Revenue from Engaged Fleet
Net Revenue from Engaged Fleet is a non-IFRS financial measure, derived from
management accounts, that represents the net sum of the price charged to
clients for transportation by the Group utilising Engaged Fleet less the
respective "pass-through" loaded railway tariffs charged by RZD (included in
the EU IFRS line item "Infrastructure and locomotive tariffs: loaded trips")
and less the "pass-through" cost of engaging fleet from third- party rail
operators (included in the EU IFRS line item "Services provided by other
transportation organisations").
Net Revenue from Engaged Fleet, which contributed 1% of the Group's Adjusted
Revenue in 2022, increased 375% year on year in 2022 to RUB 876 million*,
largely reflecting a rise in the number of Engaged Fleet operations in the oil
products and oil segment.
Other revenue
Other revenue, comprising less than 1% of the Group's Adjusted Revenue in
2022, includes revenues generated by the Group's auxiliary business activities
such as freight forwarding, repair and maintenance services provided to third
parties, and other. It increased 10% year on year to RUB 564 million in 2022.
Cost of sales, selling and marketing costs and administrative expenses
The following table provides a breakdown of Cost of sales, selling and
marketing costs and administrative expenses for the years ended 31 December
2022 and 2021.
2021 2022 Change
RUB mln RUB mln %
Cost of sales 48,334 53,929 12%
Selling and marketing costs 249 282 13%
Administrative expenses 4,046 4,626 14%
Total cost of sales, selling and marketing costs and administrative expenses 52,630 58,838 12%
A 12% year-on-year rise in the Group's Total cost of sales, selling and
marketing costs and administrative expenses to RUB 58,838 million in 2022 was
principally due to the following factors:
· "Pass through" cost items (a combination of "Infrastructure and
locomotive tariffs: loaded trips" and "Services provided by other
transportation organisations") decreased 12% year on year to RUB 12,864
million primarily due to a decrease in the proportion of clients that pay
Infrastructure and locomotive tariffs: loaded trips through the Group.
· The Group's Total cost of sales, selling and marketing costs and
administrative expenses adjusted for "pass- through" cost items rose 21% year
on year to RUB 45,973 million in 2022, due to:
o An 9% year-on-year increase in Total Operating Cash Costs to RUB 32,373
million in 2022, which largely reflected the rise in Empty Run Costs and
Employee benefit expense with Repairs and maintenance costs relatively
unchanged (-1% year on year).
o Total Operating Non-Cash Costs rose 65% year on year to RUB 13,600 million
principally due to the impairment of about 3.8k units of rolling stock (mostly
gondola cars) blocked in Ukraine along with a 130% year-on-year increase in
Depreciation of right-of-use assets as the Group substantially increased the
number of gondola cars leased-in under long-term operating leases.
In order to show the dynamics and nature of the Group's cost base, individual
items of Total cost of sales, selling and marketing costs and administrative
expenses have been regrouped as shown below:
2021 2022 Change
RUB mln RUB mln %
"Pass through" cost items 14,659 12,864 -12%
Infrastructure and locomotive tariffs: loaded trips 12,964 10,465 -19%
Services provided by other transportation organisations 1,695 2,399 42%
Total cost of sales, selling and marketing costs and administrative 37,971 45,973 21%
expenses (adjusted for "pass through" cost items)
Total Operating Cash Costs 29,751 32,373 9%
Empty Run Costs 15,429* 17,283* 12%
Employee benefit expense 5,491 6,781 23%
Repairs and maintenance 3,969 3,943 -1%
Fuel and spare parts - locomotives 1,972 2,017 2%
Infrastructure and Locomotive Tariffs - Other Tariffs 1,219* 1,258* 3%
Engagement of locomotive crews 294 116 -61%
Expense relating to short-term leases (rolling stock) 274 35 -87%
Other Operating Cash Costs 1,103 941 -15%
Total Operating Non-Cash Costs 8,221 13,600 65%
Depreciation of property, plant and equipment 6,643 6,753 2%
Impairment of property, plant and equipment - 3,933 NM
Depreciation of right-of-use assets 1127 2,597 130%
Loss on derecognition arising on capital repairs 484 310 -36%
Gain on sale of property, plant and equipment (42) (13) -70%
Net impairment losses on trade and other receivables 8 21 165%
Amortisation of intangible assets 0.7 0.3 -52%
Total cost of sales, selling and marketing costs and administrative 52,630 58,838 12%
expenses
"Pass through" cost items
Infrastructure and locomotive tariffs: loaded trips
Infrastructure and locomotive tariffs: loaded trips is in principle a "pass
through" cost item for the Group(( 9 (#_ftn9) )) and is reflected in equal
amounts in both the Group's Total revenue and Cost of sales.
The 19% year-on-year decrease in this item in 2022 to RUB 10,465 million
primarily reflected the lower proportion of clients that pay infrastructure
and locomotive tariffs: loaded trips through the Group.
Services provided by other transportation organisations
Services provided by other transportation organisations is in principle a
"pass through" cost item for the Group and is reflected in equal amounts in
both the Group's Total revenue and Cost of sales and includes tariffs that the
Group pays to third-party rail operators for subcontracting their rolling
stock (Engaged Fleet).
Services provided by other transportation organisations rose 42% year on year
to RUB 2,399 million in 2022 primarily due to a higher number of Engaged Fleet
operations in the oil products and oil segment along with the rise in the cost
of fleet engagement.
Total Operating Cash Costs
Total Operating Cash Costs (a non-IFRS financial measure) represents operating
cost items payable in cash and calculated as "Total cost of sales, selling and
marketing costs and administrative expenses" less the "pass through" cost
items and non-cash cost items.
Total Operating Cash Costs for 2022 of RUB 32,373 million were 9% higher
compared to the previous year due to a combination of the factors described
below.
The following table provides a breakdown of the Total Operating Cash Costs for
the years ended 31 December 2022 and 2021.
2022 2021 2022 Change
% of total RUB mln RUB mln %
Empty Run Costs 53% 15,429* 17,283* 12%
Employee benefit expense 21% 5,491 6,781 23%
Repairs and maintenance 12% 3,969 3,943 -1%
Fuel and spare parts - locomotives 6% 1,972 2,017 2%
Infrastructure and Locomotive Tariffs - Other Tariffs 4% 1,219* 1,258* 3%
Engagement of locomotive crews 0.4% 294 116 -61%
Expense relating to short-term leases (rolling stock) 0.1% 274 35 -87%
Other Operating Cash Costs 3% 1,103 941 -15%
Total Operating Cash Costs 100% 29,751 32,373 9%
Empty Run Costs
Empty Run Costs (a non-IFRS 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, which accounted for 53% of the Group's Total Operating Cash
Costs in 2022, increased 12% year on year to RUB 17,283 million* due to:
· Regulated RZD tariffs for the traction of empty railcars which rose
about 18.6% over 2022 (an increase of 6.8% from 1 January 2022 and an
additional increase of 11% from 1 June 2022).
· A decline in the Group's Freight Rail Turnover of 8% year on year in
2022.
· An improved Total Empty Run Ratio (for all types of rolling stock) of
50% (2021: 51%) with the Share of Empty Run Kilometers paid by Globaltrans
remaining stable year on year at 99%.
Employee benefit expense
Employee benefit expense, which represented 21% of the Group's Total Operating
Cash Costs in 2022, increased 23% year on year to RUB 6,781 million. This
resulted from:
· Inflation-driven growth in wages and salaries.
· A 2% year-on-year increase in the average headcount due to the
continued shift to in-house locomotive crews.
· Increases in bonuses largely reflecting the Group's strong business
performance in 2022 and successful M&A.
Repairs and maintenance
Repairs and maintenance costs, which comprised 12% of the Group's Total
Operating Cash Costs in 2022, declined 1% year on year to RUB 3,943 million as
a decrease in the number of depot repairs was partially offset by the
inflation-driven rise in costs of certain repair works and spare parts in the
reporting year.
Fuel and spare parts - locomotives
Fuel and spare parts - locomotives expenses, which accounted for 6% of the
Group's Total Operating Cash Costs in 2022, rose 2% year on year to RUB 2,017
million reflecting an inflation-driven rise in the cost of fuel and engine
oil.
Infrastructure and Locomotive Tariffs - Other Tariffs
Infrastructure and Locomotive Tariffs - Other Tariffs (a non-IFRS financial
measure, derived from management accounts), which 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 the relocation of rolling stock to and from maintenance, the
transition of purchased rolling stock to its first place of commercial
utilisation, and the relocation of rolling stock in and from lease operations,
as well as other expenses.
Infrastructure and Locomotive Tariffs - Other Tariffs represented 4% of the
Group's Total Operating Cash Costs in 2022 and rose 3% year on year to RUB
1,258 million*, impacted largely by the changed logistics in the oil products
and oil segment.
Engagement of locomotive crews
Costs related to the engagement of locomotive crews from RZD in 2022 (less
than 1% of the Group's Total Operating Cash Costs) declined 61% year on year
to RUB 116 million due to a reduction in the amount of outsourcing of
locomotive crews as the Group continued to increase its use of in-house crews.
Expense relating to short-term leases (rolling stock)
In 2022, Expense relating to short-term leases (rolling stock), representing
less than 1% of the Group's Total Operating Cash Costs, fell 87% year on year
to RUB 35 million primarily due to the intentional decrease in the average
number of fleet leased-in under short-term operating leases.
Other Operating Cash Costs
Other Operating Cash Costs (a non-IFRS financial measure) include the
following cost items: "Advertising and promotion", "Auditors' remuneration",
"Communication costs", "Information services", "Legal, consulting and other
professional fees", "Expense relating to short-term leases (tank containers)",
Expense relating to short-term leases (office)", "Taxes (other than income tax
and value added taxes)" and "Other expenses".
The following table provides a breakdown of the Other Operating Cash Costs for
the years ended 31 December 2022 and 2021.
2021 2022 Change
RUB mln RUB mln %
Expense relating to short-term leases (office) 99 93 -6%
Auditors' remuneration 57 46 -19%
Legal, consulting and other professional fees 74 94 27%
Advertising and promotion 46 41 -10%
Communication costs 25 25 -3%
Information services 16 15 -7%
Expense relating to short-term leases (tank containers) 23 - -100%
Taxes (other than on income and value added taxes) 27 24 -13%
Other expenses 735 603 -18%
Other Operating Cash Costs 1,103 941 -15%
Other Operating Cash Costs, which comprised 3% of the Group's Total Operating
Cash Costs, fell 15% year on year to RUB 941 million in 2022 reflecting cost
optimisation efforts.
Total Operating Non-Cash Costs
Total Operating Non-Cash Costs (a non-IFRS financial measure) include the
following cost items: "Depreciation of property, plant and equipment",
"Amortisation of intangible assets", "Loss on derecognition arising on capital
repairs", "Depreciation of right-of-use assets", "Net impairment
(gains)/losses on trade and other receivables", "Impairment/(reversal of
impairment) of property, plant and equipment" and "(Gain)/loss on sale of
property, plant and equipment".
The following table provides a breakdown of the Total Operating Non-Cash Costs
for the years ended 31 December 2022 and 2021.
2021 2022 Change
RUB mln RUB mln %
Depreciation of property, plant and equipment 6,643 6,753 2%
Depreciation of right-of-use assets 1,127 2,597 130%
Loss on derecognition arising on capital repairs 10 (#_ftn10) 484 310 -36%
Net impairment gains on trade and other receivables 8 21 165%
Amortisation of intangible assets 0.7 0.3 -52%
Gain on sale of property, plant and equipment (42) (13) -70%
Impairment of property, plant and equipment - 3,933 NM
Total Operating Non-Cash Costs 8,221 13,600 65%
A 65% year-on-year increase in Total Operating Non-Cash Costs to RUB 13,600
million in 2022 which stemmed primarily from:
· Impairment of property, plant and equipment in the amount of RUB
3,933 million related to the impairment of about 3.8k units of rolling stock
(mostly gondola cars) blocked in Ukraine.
· A 130% year-on-year rise in Depreciation of right-of-use assets as
the Group substantially increased the number of gondola cars leased-in under
long-term operating leases.
Adjusted EBITDA (non-IFRS financial measure)
EBITDA (a non-IFRS financial measure) represents "Profit for the period"
before "Income tax expense", "Finance costs - net" (excluding "Net foreign
exchange transaction (gains)/losses on financing activities"), "Depreciation
of property, plant and equipment", "Amortisation of intangible assets" and
"Depreciation of right-of-use assets".
Adjusted EBITDA (a non-IFRS financial measure) represents EBITDA excluding
"Net foreign exchange transaction (gains)/losses on financing activities",
"Share of profit/(loss) of associate", "Other gains/(losses) - net",
"Gain/(loss) on sale of property, plant and equipment", "Impairment/(reversal
of impairment) of property, plant and equipment", "Impairment of intangible
assets", "Loss on derecognition arising on capital repairs" and "Reversal of
impairment of intangible assets".
The Group's Adjusted EBITDA rose 69% year on year to RUB 49,216 million in
2022. The Adjusted EBITDA Margin increased to 60% in 2022 from 50% in 2021
reflecting the 40% year-on-year increase in Adjusted Revenue while Total
Operating Cash Costs rose 9% year on year.
The following table provides details on Adjusted EBITDA for the years ended 31
December 2022 and 2021, and its reconciliation to EBITDA and Profit for the
year.
2021 2022 Change
RUB mln RUB mln %
Profit for the year 15,100 24,920 65%
Plus (Minus)
Income tax expense 4,338 8,232 90%
Finance costs - net 2,189 1,150 -47%
Net foreign exchange transaction (losses)/ gains on financing activities (10) 641 NM
Amortisation of intangible assets 0.7 0.3 -52%
Depreciation of right-of-use assets 1,127 2,597 130%
Depreciation of property, plant and equipment 6,643 6,753 2%
EBITDA 29,388 44,293 51%
Minus (Plus)
Loss on derecognition arising on capital repairs (484) (310) -36%
Net foreign exchange transaction (losses)/ gains on financing activities (10) 641 NM
Other gains/ (losses) - net 796 (1,335) NM
Gain on sale of property, plant and equipment 42 13 -70%
Impairment of property, plant and equipment - (3,933) NM
Adjusted EBITDA 29,044 49,216 69%
Finance income and costs
The following table provides a breakdown of Finance income and costs for the
years ended 31 December 2022 and 2021.
2021 2022 Change
RUB mln RUB mln %
Interest expense:
Bank borrowings (1,483) (1,258) -15%
Non-convertible bonds (772) (561) -27%
Total interest expense calculated using the effective interest rate method (2,255) (1,820) -19%
Other lease liabilities (202) (781) 287%
Total interest expense (2,457) (2,600) 6%
Other finance costs (50) (2) -96%
Total finance costs (2,507) (2,602) 4%
Interest income:
Bank balances 209 521 149%
Short term deposits 72 222 208%
Loans to related parties - 18 NM
Loans to third parties 3 - -100%
Total interest income calculated using the effective interest rate method 284 761 168%
Finance leases - related parties 0.4 2 351%
Finance leases - third parties 42 17 -60%
Total interest income 326 779 139%
Other finance income 0.8 32 3832%
Total finance income 327 812 148%
Net foreign exchange transaction gains on borrowings and other liabilities 3 - -100%
Net foreign exchange transaction (losses)/ gains on cash and cash equivalents (12) 641 NM
and other monetary assets
Net foreign exchange transaction (losses)/ gains on financing activities (10) 641 NM
Net finance costs (2,189) (1,150) -47%
Finance costs
Total finance costs for 2022 increased 4% year on year to RUB 2,602 million. A
deleveraging driven 19% year-on-year decrease in Total interest expense
calculated using the effective interest rate method (related to bank
borrowings and non-convertible bonds) to RUB 1,820 million was more than
offset by the rise in Other lease liabilities to RUB 781 million from RUB 202
million in 2021 as the Group increased the number of gondola cars leased-in
under long-term operating leases.
Finance income
In 2022, the Group's Total finance income increased 148% year on year to RUB
812 million primarily due to increases in short-term deposits and bank
balances along with a rise in deposit rates compared to the previous year.
Net foreign exchange transaction gains/ (losses) on financing activities
The Group had Net foreign exchange transaction gains on financing activities
of RUB 641 million in 2022 compared to RUB 10 million of Net foreign expense
losses on financing activities in 2021. This resulted from foreign exchange
volatility on the available cash and cash equivalents denominated in foreign
currency.
Other gains/ (losses) - net
The Group had Other losses - net of RUB 1,335 million in 2022 that largely
reflected the foreign exchange volatility impact on the intragroup acquisition
of rail tanks by BTS from Spacecom and the subsequent sale of the Company's
shareholding in Spacecom. In 2021 the Group reported RUB 796 million of Other
gains - net.
Profit before income tax
The Group reported a year-on-year increase of 71% in Profit before income tax
to RUB 33,152 million in 2022, reflecting a 59% year-on-year increase in the
Group's Operating profit to RUB 34,302 million, which was largely linked to
the factors described above.
Income tax expense
Income tax expense rose 90% year on year to RUB 8,232 million in 2022
primarily due to a rise in taxable profits and an increase in the average tax
rate used for 2022 to 24.8% (2021: 22.3%).
Profit for the year
The Group's Profit for the year increased 65% year on year to RUB 24,920
million reflecting the factors described above.
Profit for the year attributable to the owners of the Company increased 94%
year on year to RUB 25,193 million reflecting the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
In 2022, the Group's capital expenditure consisted principally of maintenance
CAPEX (including capital repairs) and the selective acquisition of rolling
stock. In addition, the Group acquired a 40% stake in its subsidiary BTS
bringing its shareholding to 100%.
The Group was able to meet its liquidity and capital expenditure needs through
operating cash flow and available cash and cash equivalents.
The Group manages its liquidity based on expected cash flows. As at 31
December 2022, the Group had Net Working Capital of RUB 3,630 million*. Given
its anticipated operating cash flow and borrowings, the Group believes that it
has sufficient working capital to operate successfully.
Cash flows
The following table sets out the principal components of the Group's
consolidated cash flow statement for the years ended 31 December 2022 and
2021.
2021 2022
RUB mln RUB mln
Cash flows from operating activities 29,104 47,963
Changes in working capital: 954 668
Inventories 620 548
Trade receivables (139) (86)
Other assets (488) (1,285)
Other receivables 23 389
Trade and other payables 524 1,660
Contract liabilities 414 (557)
Cash generated from operations 30,058 48,631
Tax paid (2,808) (8,455)
Net cash from operating activities 27,250 40,176
Cash flows from investing activities
Acquisition of non-controlling interest (300) (8,800)
Cash inflow from disposal of subsidiary undertakings - net of cash disposed 1,110 -
of
Purchases of property, plant and equipment (8,439) (11,422)
Purchases of intangible assets - (2)
Loans granted to third parties (75) -
Loans granted to related parties - (800)
Proceeds from sale of property plant and equipment 78 238
Loan repayments received from third parties 79 -
Loan repayments received from related parties - 400
Interest received 326 761
Receipts from finance lease - related parties - 9
Receipts from finance lease - third parties 108 28
Other (41) (65)
Net cash used in investing activities (7,154) (19,652)
Cash flows from financing activities
Net cash inflows/(outflows) from borrowings and financial leases 11 1,521 (10,549)
(#_ftn11) :
Proceeds from bank borrowings 18,058 2,750
Repayments of borrowings (15,287) (9,549)
Repayments of non-convertible unsecured bonds (1,250) (3,750)
Purchase of treasury shares - (114)
Principal elements of lease payments for other lease liabilities (1,068) (2,403)
Interest paid on bank borrowings and non-convertible unsecured bonds (2,239) (1,939)
Interest paid on other lease liabilities (183) (786)
Dividends paid to non-controlling interests in subsidiaries (1,225) (1,728)
Dividends paid to the owners of the Company (9,023) -
Net cash used in financing activities (12,217) (17,520)
Net increase in cash and cash equivalents 7,879 3,005
Exchange (losses)/ gains on cash and cash equivalents (3) 193
Cash and cash equivalents at beginning of the year 4,978 12,855
Cash and cash equivalents at the end of the year 12,855 16,052
Net cash from operating activities
In 2022, Net cash from operating activities rose 47% year on year to RUB
40,176 million primarily due to the following factors:
· The increase in Cash generated from operations (after "Changes in
working capital") which rose 62% year on year to RUB 48,631 million, supported
by growth in average pricing combined with the Group's best-in-class
operational capabilities.
· Tax paid which was 201% higher year on year at RUB 8,455 million
primarily reflecting the increase in taxable profits.
Net cash used in investing activities
Net cash used in investing activities increased 175% (or RUB 12,497 million)
year on year to RUB 19,652 million largely reflecting:
· A 35% or RUB 2,983 million year-on-year increase in Purchases of
property, plant and equipment (on a cash basis; including maintenance CAPEX)
to RUB 11,422 million.
· RUB 8,800 million payment for the acquisition of the 40% shareholding
in BTS bringing the Group's shareholding to 100% (RUB 300 million was prepaid
in the second half of 2021).
Net cash used in financing activities
The 43% year-on-year rise in Net cash used in financing activities which
increased to RUB 17,520 million in 2022, was due to the factors described
below:
· The Group continued to repay its debt out of its operational cash
flow and available cash and cash equivalents in 2022 with Net cash outflow
from borrowings and financial leases amounting to RUB 10,549 million compared
to Net cash inflow from borrowings and financial leases of RUB 1,521 million
in the previous year.
· Interest paid on bank borrowings and non-convertible unsecured bonds
decreased 13% year on year to RUB 1,939 million in 2022.
· Interest paid on other lease liabilities rose to RUB 786 million from
RUB 183 million on the back of an increase in the number of gondola cars
leased-in under long-term operational leases.
· As previously announced, the Group suspended dividend payments due to
technical limitations regarding upstreaming cash to the Cyprus holding
company. As a result, no dividends were paid to the owners of the Company in
2022 compared to the RUB 9,023 million paid in the previous year.
· Dividends paid to non-controlling interests in subsidiaries increased
41% year on year to RUB 1,728 million in 2022.
Capital expenditure (including M&A)
Total CAPEX (a non-IFRS financial measure) calculated on a cash basis as the
sum of "Purchases of property, plant and equipment" (which includes
maintenance CAPEX), "Purchases of intangible assets", "Acquisition of
subsidiary undertakings - net of cash acquired" and "Principal elements of
lease payments for leases with financial institutions".
Total CAPEX adjusted for M&A (a non-IFRS financial measure) calculated as
a combination of Total CAPEX (which includes maintenance CAPEX) and cash
inflows and outflows from acquisitions and disposals.
In 2022 the Group's Total CAPEX (on a cash basis, including maintenance CAPEX)
was 35% higher year on year at RUB 11,424 million, reflecting:
· Maintenance CAPEX which decreased 3% year on year to RUB 6,411
million* with an inflationary rise in the cost of certain spare parts more
than offset by the decline in the number of respective repairs.
· Expansion CAPEX which rose 174% year on year to RUB 5,013 million*
and includes cash outflow for the purchase of 1,341 units of rolling stock
(composed of 541 rail tank cars and 800 gondola cars) 12 (#_ftn12) .
The Group's capital expenditure (including maintenance CAPEX) on an accrual
basis was RUB 11,186 million in 2022 (2021: RUB 7,994 million). The difference
between capital expenditure given on a cash basis and on an accrual basis is
principally because of a time lag between the prepayments for and the delivery
of rolling stock.
The Group's Total CAPEX adjusted for M&A increased 165% year on year to
RUB 20,224 million* in 2022:
· In October 2021 Globaltrans sold its 60% shareholding in the small
non-core container operator SyntezRail for RUB 1.1 billion in cash.
· In March 2022 Globaltrans completed the acquisition of the remaining
40% shareholding in BTS 13 (#_ftn13) bringing the Group's shareholding to
100%. The respective payment for the acquisition of the non-controlling
interest amounted to RUB 8,800 million in the first six months of 2022 (RUB
300 million was prepaid in the second half of 2021).
The following table sets out the principal components of the Group's Total
CAPEX and Total CAPEX adjusted for M&A for the years ended 31 December
2022 and 2021.
2021 2022 Change
RUB mln RUB mln %
Purchase of property, plant and equipment 8,439 11,422 35%
Purchases of intangible assets - 2 NM
Total CAPEX 8,439 11,424 35%
Acquisition of non-controlling interest 300 8,800 2833%
Cash inflow from disposal of subsidiary undertakings - net of cash disposed of (1,110) - NM
Total CAPEX adjusted for M&A 7,629* 20,224* 165%
Free Cash Flow
Free Cash Flow (a non-IFRS financial measure) is calculated as "Cash generated
from operations" (after "Changes in working capital") less "Tax paid",
"Purchases of property, plant and equipment" (including maintenance CAPEX),
"Purchases of intangible assets", "Acquisition of subsidiary undertakings -
net of cash acquired", "Principal elements of lease payments for leases with
financial institutions", "Principal elements of lease payments for other lease
liabilities", "Interest paid on other lease liabilities", "Interest paid on
bank borrowings and non-convertible unsecured bonds", "Interest paid on leases
with financial institutions" and "Acquisition of non-controlling interest"
plus "Cash inflow from disposal of subsidiary undertakings - net of cash
disposed of".
Free Cash Flow decreased 8% or RUB 1,306 million year on year to RUB 14,825
million in 2022, primarily due to:
· A 62% or RUB 18,573 million year-on-year increase in Cash generated
from operations (after "Changes in working capital") to RUB 48,631 million.
· Total CAPEX (including maintenance CAPEX) of RUB 11,424 million which
was 35% or RUB 2,985 million higher year on year.
· Tax paid which increased 201% or RUB 5,647 million year on year to
RUB 8,455 million.
· Payment of RUB 8,800 million for the acquisition of a non-controlling
interest reflecting the acquisition of the remaining stake in BTS.
· A 155% or RUB 1,938 million year-on-year rise in a combined
"Principal elements of lease payments for other lease liabilities" and
"Interest paid on other lease liabilities" which rose to RUB 3,189 million as
the Group substantially increased the number of gondola cars leased-in under
long-term operating leases.
The following table sets out details on Free Cash Flow and Attributable Free
Cash Flow for the years ended 31 December 2022 and 2021, and its
reconciliation to Cash generated from operations.
2021 2022 Change
RUB mln RUB mln %
Cash generated from operations (after "Changes in working capital") 30,058 48,631 62%
Total CAPEX (including maintenance CAPEX) (8,439) (11,424) 35%
Tax paid (2,808) (8,455) 201%
Interest paid on bank borrowings and non-convertible unsecured bonds (2,239) (1,939) -13%
Principal elements of lease payments for other lease liabilities (1,068) (2,403) 125%
Interest paid on other lease liabilities (183) (786) 330%
Cash inflow from disposal of subsidiary undertakings - net of cash disposed of 1,110 - NM
Acquisition of non-controlling interest (300) (8,800) 2833%
Free Cash Flow 16,131 14,825 -8%
Minus
Adjusted Profit Attributable to Non-controlling Interests 2,113 (274) NM
Attributable Free Cash Flow 14,018 15,098 8%
Capital resources
As of 31 December 2022, the Group's financial indebtedness consisted of
borrowings and non-convertible unsecured bonds for an aggregate principal
amount of RUB 20,649 million (including accrued interest of RUB 260 million*),
a decrease of 34% compared to the end of 2021.
Under IFRS 16, Other lease liabilities (not included in Total debt) of RUB
4,195 million were recognised on the balance sheet as of 31 December 2022 (31
December 2021: RUB 5,842 million) which was primarily related to the long-term
leasing of certain fleet and offices.
As of 31 December 2022, the Group's Net Debt decreased 75% to RUB 4,596
million compared to 31 December 2021 with the Net Debt to Adjusted EBITDA
ratio improving to 0.1x compared to 0.6x at the end of 2021.
The following table sets out details on the Group's total debt, Net Debt and
Net Debt to Adjusted EBITDA at 31 December 2022 and 2021, and the
reconciliation of Net Debt to Total debt.
As of As of Change
31 Dec 31 Dec
2021 2022
RUB mln RUB mln %
Total debt 31,318 20,649 -34%
Minus
Cash and cash equivalents 12,855 16,052 25%
Net Debt 18,464 4,596 -75%
Net Debt to Adjusted EBITDA 0.6x 0.1x
Rouble-denominated borrowings accounted for 100% of the Group's debt portfolio
as of 31 December 2022. The Russian rouble is the functional currency of the
Company.
The weighted average effective interest remained favourable at 8.1% as of 31
December 2022 (31 December 2021: 7.5%) despite significant market interest
rate volatility over the first half of 2022. All of the Group's debt had fixed
interest rates as of 31 December 2022.
The Group has a balanced maturity profile supported by the Group's cash flow
generation, available cash and cash equivalents, as well as undrawn borrowing
facilities of RUB 42,783 million as of 31 December 2022.
The following table gives the maturity profile of the Group's borrowings
(including accrued interest of RUB 260 million*) as of 31 December 2022.
As of
31 Dec
2022
RUB mln
Q1 2023 4,758*
Q2 2023 1,940*
Q3 2023 3,209*
Q4 2023 1,689*
2024 6,167*
2025 1,764*
2026 561*
2027 561*
Total 20,649
PRESENTATION OF INFORMATION
The information in this announcement is subject to verification, completion
and change. Accordingly, no representation or warranty, express or implied, is
made or given by or on behalf of the Company or any of its shareholders,
directors, officers or employees or any other person as to the accuracy,
completeness or fairness of the information or opinions contained in this
announcement. None of the Company nor any of its shareholders, directors,
officers or any other person accepts any liability (including, without
limitation, any liability for negligence) whatsoever for any loss howsoever
arising from any use of the contents of this announcement or otherwise arising
in connection therewith. This announcement does not constitute an offer or an
advertisement of any securities in any jurisdiction. The distribution of this
announcement in other jurisdictions may be restricted by law and any such
restrictions should be observed.
The financial information contained in this announcement is derived from the
consolidated management report and consolidated financial statements (audited)
of the Company and has been prepared in accordance with International
Financial Reporting Standards ("IFRS") 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, selected
operational information as at and for the years ended 31 December 2022 and
2021 along with 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
the Russian rouble ("RUB"). In this announcement, the Group has used certain
measures not recognised by EU IFRS or IFRS (referred to as "non-IFRS
measures") as supplemental measures of the Group's operating performance. The
management believes that these non-IFRS measures provide valuable information
to readers, because they enable them to focus more directly on the underlying
day-to-day performance of the Group's business.
The Company also reports certain operational information to illustrate the
changes in the Group's operational and financial performance during the
reporting periods.
Certain financial information which is derived from management accounts is
marked in this announcement with an asterisk {*}.
Information (non-IFRS financial 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.
Reconciliations of the non-IFRS measures to the closest EU IFRS measures are
included in the body of this announcement. These non-IFRS financial measures
have limitations as analytical tools, and you should not consider them in
isolation or place undue reliance on them. Similarly, titled measures are used
by other companies for a variety of purposes and are often calculated in ways
that reflect the circumstances of those companies. You should exercise caution
in comparing these measures as reported by us to the same or similar measures
as reported by other companies.
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") and the Federal Antimonopoly Service ("FAS"). 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-IFRS 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 consolidated 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-IFRS financial measure) represents EBITDA excluding
"Net foreign exchange transaction (gains)/losses on financing activities",
"Share of profit/(loss) of associate", "Other gains/(losses) - net",
"Gain/(loss) on sale of property, plant and equipment", "Impairment/(reversal
of impairment) of property, plant and equipment", "Impairment of intangible
assets", "Loss on derecognition arising on capital repairs" and "Reversal of
impairment of intangible assets".
Adjusted EBITDA Margin (a non-IFRS financial measure) is calculated as
Adjusted EBITDA divided by Adjusted Revenue.
Adjusted Profit Attributable to Non-controlling Interests (a non-IFRS
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-IFRS 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-IFRS 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, flat cars
and containers used in specialised container transportation).
EBITDA (a non-IFRS financial measure) represents "Profit for the period"
before "Income tax expense", "Finance costs - net" (excluding "Net foreign
exchange transaction (gains)/losses on financing activities"), "Depreciation
of property, plant and equipment", "Amortisation of intangible assets" and
"Depreciation of right- of-use assets".
Empty Run or Empty Runs means the movement of railcars without cargo for the
whole or a substantial part of the journey.
Empty Run Costs (a non-IFRS 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,
flat cars and containers used in specialised container transportation.
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, flat cars and containers used in specialised
container transportation).
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.
Free Cash Flow (a non-IFRS financial measure) is calculated as "Cash generated
from operations" (after "Changes in working capital") less "Tax paid",
"Purchases of property, plant and equipment" (including maintenance CAPEX),
"Purchases of intangible assets", "Acquisition of subsidiary undertakings -
net of cash acquired", "Principal elements of lease payments for leases with
financial institutions", "Principal elements of lease payments for other lease
liabilities", "Interest paid on other lease liabilities", "Interest paid on
bank borrowings and non-convertible unsecured bonds", "Interest paid on leases
with financial institutions" and "Acquisition of non-controlling interest"
plus "Cash inflow from disposal of subsidiary undertakings - net of cash
disposed of".
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
excludes volumes transported by Engaged Fleet (unless otherwise stated) and
the performance of the specialised container transportation business.
Infrastructure and Locomotive Tariffs - Other Tariffs (a non-IFRS financial
measure, derived from management accounts) 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.
Leased-in Fleet is defined as fleet leased in under operating leases,
including railcars, locomotives and specialised containers.
Leased-out Fleet is defined as fleet leased out to third parties under
operating leases (excluding flat cars and containers used in specialised
container transportation).
Leverage Ratio or Net Debt to Adjusted EBITDA (a non-IFRS financial measure)
is the ratio of Net Debt on the last day of a particular financial period to
Adjusted EBITDA in respect of the twelve months to the end of that same
period.
Net Debt (a non-IFRS 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-IFRS financial measure, derived from
management accounts) represents the net sum of the price charged for
transportation to clients by the Group utilising Engaged Fleet less the loaded
railway tariffs 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-IFRS financial measure,
derived from management accounts) describes the net revenue generated from
freight rail transportation services which is adjusted for respective "pass
through" loaded railway tariffs charged by RZD (included in the EU IFRS line
item "Infrastructure and locomotive tariffs: loaded trips").
Net Revenue from Specialised Container Transportation (a non-IFRS financial
measure, derived from management accounts) represents the revenue generated
from the specialised container operations (included in the EU IFRS line item:
"Revenue from specialised container transportation") less the respective "pass
through" loaded railway tariffs charged by RZD (included in the EU IFRS line
item "Infrastructure and locomotive tariffs: loaded trips").
Net Working Capital (a non-IFRS financial measure) is calculated as the sum of
the current portions of "Inventories", "Current income tax assets", "Trade
receivables - net", "Other receivables - net" ("Other receivables - third
parties" and "Other receivables - related parties" net of "Provision for
impairment of other receivables"), "Prepayments - third parties", "Prepayments
- related parties" and "VAT recoverable", less the sum of the current portions
of "Trade payables - third parties", "Trade payables - related parties",
"Other payables - third parties", "Other payables - related parties", "Accrued
expenses", "Accrued key management compensation, including share-based
payment", "Contract liabilities" and "Current tax liabilities".
Other Operating Cash Costs (a non-IFRS financial measure) include the
following cost items: "Advertising and promotion", "Auditors' remuneration",
"Communication costs", "Information services", "Legal, consulting and other
professional fees", "Expense relating to short-term leases (tank containers)",
"Expense relating to short- term leases (office)", "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
specialised containers, unless otherwise stated, and excludes Engaged Fleet.
Service Contracts represent contracts with an initial term greater than
one-year that stipulates an obligation to transport a specified amount of
cargoes for the client.
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, flat cars and containers used in
specialised container transportation) in the relevant period.
Total CAPEX (a non-IFRS financial measure) is calculated on a cash basis as
the sum of "Purchases of property, plant and equipment" (which includes
maintenance CAPEX), "Purchases of intangible assets", "Acquisition of
subsidiary undertakings - net of cash acquired" and "Principal elements of
lease payments for leases with financial institutions".
Total CAPEX adjusted for M&A (a non-IFRS financial measure) is calculated
as a combination of Total CAPEX (which includes maintenance CAPEX) and cash
inflows and outflows from acquisitions and disposals.
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, flat cars
and containers used in specialised container transportation) 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 specialised containers, unless otherwise stated, and excludes
Engaged Fleet.
Total Operating Cash Costs (a non-IFRS 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",
"Depreciation of right-of-use assets", "Loss on derecognition arising on
capital repairs", "Net impairment losses/(gains) on trade and other
receivables", "Impairment/(reversal of impairment) of property, plant and
equipment" and "(Gain)/loss on sale of property, plant and equipment".
Total Operating Non-Cash Costs (a non-IFRS financial measure) include the
following cost items: "Depreciation of property, plant and equipment",
"Amortisation of intangible assets", "Depreciation of right-of- use assets",
"Loss on derecognition arising on capital repairs", "Net impairment losses on
trade and other receivables", "Impairment/(reversal of impairment) of
property, plant and equipment " and "(Gain)/loss on sale of property, plant
and equipment".
Transportation Volume is a measure of freight carriage activity over a
particular period, measuring weight of cargo carried in tonnes. It excludes
volumes transported by Engaged Fleet (unless otherwise stated) and volumes
related to the specialised container transportation business.
FORWARDING LOOKING INFORMATION
This announcement may contain 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", "estimate",
"anticipate", "intend", "will", "could", "may", or "might", the negative of
such terms or other similar expressions. These forward-looking statements
include matters that are not historical facts and statements regarding the
Company's intentions, beliefs or current expectations concerning, among other
things, Globaltrans' results of operations, financial condition, liquidity,
prospects, growth, strategies, and the industry in which the Company operates.
By their nature, forward looking statements involve risks and uncertainties,
because they relate to events and depend on circumstances that may or may not
occur in the future. The Company cautions you that forward-looking statements
are not guarantees of future performance and that Globaltrans' actual results
of operations, financial condition, liquidity, prospects, growth, strategies
and the development of the industry in which Globaltrans operates may differ
materially from those described in or suggested by the forward-looking
statements contained in this announcement. In addition, even if Globaltrans'
results of operations, financial condition, liquidity, prospects, growth
strategies and the development of the industry in which the Company operates
are consistent with the forward-looking statements contained in this
announcement, those results or developments may not be indicative of results
or developments in future periods. The Company does not intend to update this
announcement or reflect events and circumstances occurring after the date
hereof or to reflect the occurrence of unanticipated events. Many factors
could cause actual results to differ materially from those contained in
forward-looking statements of Globaltrans, including, among others, general
economic conditions, the competitive environment, risks associated with
operating in Russia, market changes in the Russian freight rail market, as
well as many of the risks specifically related to Globaltrans and its
operations. No reliance may be placed for any purposes whatsoever on the
information contained in this announcement or on its completeness, accuracy or
fairness.
1 (#_ftnref1) Imposed suspension of Global Depositary Receipts (GDRs)
trading on the London Stock Exchange continued as of the date of publication.
2 (#_ftnref2) In March 2022 Globaltrans completed the acquisition of the
outstanding 40% shareholding in BTS bringing its shareholding to 100% for RUB
9.1 bln in cash (RUB 0.3 bln was prepaid in 2021 and RUB 8.8 bln was paid in
2022). BTS is one of the leading Russian freight rail operators of tank cars,
with a strong market position, long-term service contracts and unique
competencies in operating its own locomotives; total fleet of 13.1k units as
of the end of 2021.
(( 3 (#_ftnref3) )) In February 2023 Globaltrans completed the restructuring
of its rail tank segment with the intragroup acquisition of 5.8k tanks by BTS
from Spacecom (incl. Spacecom Trans), a 65.25% owned leasing subsidiary of
Globaltrans, and the subsequent sale of Globaltrans' shareholding in Spacecom
(including 680 units) to its minority shareholder. The cash outflow at the
Group level related to the above transactions amounted to EUR 65 million.
4 (#_ftnref4) Service Contracts represent contracts with an initial term
greater than one-year that stipulates an obligation to transport a specified
amount of cargoes for the client. As of the end of 2022 Globaltrans had six
service contracts.
5 (#_ftnref5) Coal including coke; metallurgical cargoes including ferrous
metals, scrap metal and ores; construction materials including cement.
6 (#_ftnref6) Regulated RZD tariffs for the traction of empty railcars rose
6.8% from 1 January 2022 and by a further 11% from 1 June 2022.
7 (#_ftnref7) Imposed suspension of GDRs trading on the London Stock
Exchange continued as of the date of publication.
8 (#_ftnref8) Includes "Infrastructure and locomotive tariffs: loaded trips"
for 2022 of RUB 10,465 million (2021: RUB 12,964 million) and "Services
provided by other transportation organisations" of RUB 2,399 million (2021:
RUB 1,695 million).
9 (#_ftnref9) 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.
10 (#_ftnref10) 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.
11 (#_ftnref11) Net cash inflows (outflows) from borrowings and financial
leases (a non-IFRS financial measure) is defined as the balance between the
following line items: "Proceeds from bank borrowings", "Proceeds from issue of
non-convertible unsecured bonds", "Repayments of borrowings" and "Principal
elements of lease payments for leases with financial institutions".
12 (#_ftnref12) Expansion CAPEX includes Purchases of intangible assets in
the amount of RUB 2 mln in 2022 (2021: nil).
13 (#_ftnref13) BTS is one of the leading Russian freight rail operators of
tank cars, with a strong market position, long-term service contracts and
unique competencies in operating its own locomotives; total fleet of 13.1k
units as of end of 2021.
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