REG - Globaltrans Inv PLC - Full-Year 2023 Results
08/04/2024 07:00
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RNS Number : 5611J Globaltrans Investment PLC 08 April 2024
For immediate release 8 April 2024
Globaltrans Investment PLC 1 (#_ftn1)
Full-Year 2023 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
2023.
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
· Steady industry performance with continued favourable market
pricing.
· Globaltrans significantly improved its operational efficiency
with the Empty Run Ratio for gondola cars declining to its lowest level in
more than ten years at 36%.
· Further strong financial results with Adjusted EBITDA up 6% year
on year to RUB 52.3 billion.
· Total CAPEX adjusted for M&A halved to RUB 10.1 billion
reflecting a conservative approach to investment given elevated new rolling
stock prices.
· Strong Free Cash Flow of RUB 25.8 billion and net cash position
of RUB 27.4 billion.
· Successful completion of the re-domiciliation to the Abu Dhabi
Global Market ("ADGM") effective 26 February 2024 achieved within a tight
schedule of about six months.
· Dividend payments are in focus but remain suspended due to
certain technical issues, which are being addressed. Following the successful
re-domiciliation to ADGM, the Company's priority is on putting in place a
fully operational financial framework for the Group in Abu Dhabi.
Commenting on Globaltrans' FY2023 results, CEO Valery Shpakov said:
"It is a testament to the adaptability of our operational model that we again
delivered market-leading efficiency in a volatile industry environment. Even
as logistics patterns changed and rail network constraints surfaced, we
achieved our best Empty Run Ratio for gondola cars in over a decade.
We again delivered a strong financial performance with our disciplined
approach to cost management enabling us to keep our Adjusted EBITDA Margin
stable despite inflationary pressures. We took the conservative decision to
substantially cut our fleet expansion in the face of elevated prices for new
railcars which led to particularly strong Free Cash Flow and a solid net cash
position by year end. We are therefore well positioned to make opportunistic
investments again when the time is right.
The important re-domiciliation of the holding company to the Abu Dhabi Global
Market has been recently completed and we are now focused on putting in place
the financial framework needed to operate in this new jurisdiction.
Our expertise, flexibility and experience ensure we have a strong competitive
position and are well-placed to deliver on our strategy. I remain confident in
our ability to make further progress as we move ahead."
FINANCIAL RESULTS
Further strong financial results with robust Free Cash Flow, stable Adjusted
EBITDA Margin and solid net cash position
· Revenue rose 11% year on year to RUB 104.7 billion with Adjusted
Revenue (a key component) increasing 7% year on year to RUB 87.4 billion in
2023 largely reflecting robust average pricing.
· Adjusted EBITDA increased 6% year on year to RUB 52.3 billion
with the Adjusted EBITDA Margin remaining stable year on year at 60% despite
ongoing cost pressures.
· Total CAPEX adjusted for M&A was RUB 10.1 billion (2022: RUB
20.2 billion) on the back of a conservative approach to investment given
elevated new rolling stock prices.
· Strong Free Cash Flow of RUB 25.8 billion (2022: RUB 14.8
billion).
· Profit for the year rose to RUB 38.6 billion (2022: RUB 24.9
billion) largely reflecting the Group's strong performance, a profit on the
sale of the Group's shareholding in its leasing subsidiary Spacecom 2
(#_ftn2) and a year-on-year rise in net foreign exchange transaction gains on
financing activities in 2023 along with the sizable impairment of rolling
stock in the year-earlier period.
· Net cash position was RUB 27.4 billion with Net Debt to Adjusted
EBITDA at (0.5)x.
OPERATIONAL PERFORMANCE
Strong operational efficiency, robust average pricing, all Service Contracts
remain intact
· Empty Run Ratio for gondola cars significantly improved to its
lowest level in more than ten years at 36% (2022: 41%). Total Empty Run Ratio
(for all types of rolling stock) decreased to 45% (2022: 50%).
· Freight Rail Turnover (including Engaged Fleet) declined 2% year
on year reflecting volatility in logistics and continued rail network
infrastructure constraints 3 (#_ftn3) .
· Average Price per Trip increased 10% year on year on the back of
continued favourable market pricing conditions in both bulk and liquids
segments, while the Average Number of Loaded Trips per Railcar declined 5%
year on year.
· The Group maintained its focus on client retention with all
Service Contracts(( 4 (#_ftn4) )) due for renewal extended. Service Contracts
contributed 61% of the Group's Net Revenue from Operation of Rolling Stock in
2023.
· Specialisation was enhanced across subsidiaries with liquid cargo
and locomotive expertise consolidated within BaltTransServis enabling
currently leased-out railcars to be gradually switched into operation. New
Forwarding Company is fully focused on the bulk cargo segment.
MARKET REVIEW
Relatively stable industry performance, continued favourable market pricing
· Overall industry freight rail turnover and transportation volumes
were broadly unchanged year on year in 2023 with a stronger first-half
performance followed by a weaker second half.
· Demand remained relatively solid with continued infrastructure
constraints impacting the rail network efficiency.
· Almost all key market segments experienced moderately weaker
volumes year on year.
· Favourable market pricing sustained in both bulk and liquids
segments.
· Producer prices of new railcars reached historically high levels.
RECENT UPDATE
Re-domiciliation to the Abu Dhabi Global Market ("ADGM") successfully
completed
· Re-domiciliation from Cyprus to the ADGM was completed effective
26 February 2024 within a tight schedule of about six months.
· The Group's commitment to international standards of corporate
governance and transparency practices are to be maintained.
· The revised Articles of Association took effect from the date of
the re-domiciliation 5 (#_ftn5) .
· The new Board of Directors including three independent directors
was approved by the Extraordinary General Meeting of shareholders on 4 April
2024.
· Listings on both the London Stock Exchange 6 (#_ftn6) and Moscow
Exchange along with the current depositary programme are to remain in place.
Listing of GDRs on any alternative stock exchanges is not being considered at
present.
· Re-domiciliation is expected to unblock the ability to carry out
certain intra-group transactions, including the upstreaming of dividends,
which were allowed only to a very limited extent prior to the
re-domiciliation. It will not, however, directly trigger the restoration of
dividend payments to shareholders.
· It is anticipated that the tax on the upstreaming of dividends to
ADGM will be 15%, the same level as for Cyprus following the recent tax
increase from 5% to 15% on dividends to Cypriot public companies 7 (#_ftn7) .
· The Company's shares will be dematerialised, which means there
will be no paper share certificates but instead they will be maintained
electronically in line with ADGM regulations.
· No actions are required from the Company's shareholders in
relation to the re-domiciliation.
Mixed industry environment in the beginning of 2024
· Industry continues to face challenges due to fluctuating demand,
logistics changes and rail network constraints.
· Extreme weather conditions and rail network constraints impacted
industry performance in Q1 2024 with overall industry freight rail turnover
down 7.2% year on year 8 (#_ftn8) .
· Favourable market pricing prevailed in both key segments in Q1
2024 but with the potential for volatility going forward.
· Cost pressures continue.
Globaltrans continues to target the acquisition and leasing of railcars
subject to industry conditions and fleet requirements
· The Group intends to take an opportunistic approach to the
purchase and lease of railcars in the near term as the retirement of owned
fleet is expected to be insignificant during 2024.
· Between 2025 - 2029 the Group expects its owned fleet retirements
to average about 3,500 units per year.
DOWNLOADS
· The Group's management report and consolidated financial
statements (audited) for the year ended 31 December 2023 are available for
viewing at
http://www.rns-pdf.londonstockexchange.com/rns/5611J_2-2024-4-5.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5611J_2-2024-4-5.pdf) .
· The related FY2023 Results Presentation is available for
viewing at
http://www.rns-pdf.londonstockexchange.com/rns/5611J_1-2024-4-5.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5611J_1-2024-4-5.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.
Date: Monday, 8 April 2024
Time: 13:00 London / 15:00 Moscow / 16:00 Abu Dhabi / 08:00 New York
Event language: There will be a simultaneous translation of the webcast with
both English and Russian available.
Webcast:
https://us06web.zoom.us/webinar/register/WN_OYQf9pu4SSWuQISuTn7K_Q#/registration
(https://us06web.zoom.us/webinar/register/WN_OYQf9pu4SSWuQISuTn7K_Q#/registration)
Q&A Session: Please note that this will be a listen-only session. Should
you have any questions, please submit them by 11:30 Moscow time on 8 April
2024 to irteam@globaltrans.com (mailto:irteam@globaltrans.com) .
Replay: A replay of the webcast will be available on the Globaltrans website
(www.globaltrans.com (http://www.globaltrans.com) ) shortly after the end of
the live event.
NON-DEAL ROADSHOW
The results announcement will be followed by a 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
+971 50 886 7452
irteam@globaltrans.com (mailto:irteam@globaltrans.com)
For media
Anna Vostrukhova
+971 50 886 7452
media@globaltrans.com (mailto:media@globaltrans.com)
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 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.
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.
Globaltrans Global Depositary Receipts (GDRs) have been listed on the Main
Market of the London Stock Exchange (ticker symbol: GLTR) since May 2008 9
(#_ftn9) 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 and serves a broad range of clients in the CIS
countries.
Globaltrans has a total fleet (including owned and leased in under finance and
operating leases) of about 66 thousand units as of the end of 2023, of which
about 94% are owned by the Company.
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.
RESULTS IN DETAIL
The following tables provide the Group's key financial and operational
information for the years ended 31 December 2023 and 2022.
EU IFRS financial information
2022 2023 Change
RUB mln RUB mln %
Revenue 94,474 104,748 11%
Total cost of sales, selling and marketing costs and administrative expenses (58,838) (63,740) 8%
Profit from sale of subsidiary - 3,400 NM
Other losses - net (1,335) (283) -79%
Operating profit 34,302 44,125 29%
Finance (costs)/gains - net (1,150) 2,962 NM
Profit before income tax 33,152 47,087 42%
Income tax expense (8,232) (8,469) 3%
Profit for the year 24,920 38,618 55%
Profit attributable to:
Owners of the Company 25,193 38,620 53%
Non-controlling interests (274) (3) -99%
Basic and diluted earnings per share for profit attributable to the equity 141.23 216.58 53%
holders of the Company during the year (RUB per share)
2022 2023 Change
RUB mln RUB mln %
Cash generated from operations (after changes in working capital) 48,631 49,194 1%
Tax paid (8,455) (8,267) -2%
Net cash from operating activities 40,176 40,926 2%
Net cash used in investing activities (19,652) (6,851) -65%
Net cash used in financing activities (17,520) (10,462) -40%
Non-IFRS financial information
2022 2023 Change
RUB mln RUB mln %
Adjusted Revenue 81,610 87,388 7%
Including
Net Revenue from Operation of Rolling Stock 76,798* 81,102* 6%
Operating leasing of rolling stock 3,372 4,538 35%
Total Operating Cash Costs 32,373 35,049 8%
Including
Empty Run Cost 17,283* 18,297* 6%
Employee benefit expense 6,781 8,174 21%
Repairs and maintenance 3,943 4,274 8%
Fuel and spare parts - locomotives 2,017 1,958 -3%
Adjusted EBITDA 49,216 52,289 6%
Adjusted EBITDA Margin, % 60% 60% -
Total CAPEX (including maintenance CAPEX) 11,424 8,261 -28%
Total CAPEX adjusted for M&A 20,224 10,092 -50%
Free Cash Flow 14,825 25,845 74%
Attributable Free Cash Flow 15,098 25,848 71%
Debt profile
As of As of Change
31 Dec 2022
31 Dec 2023
RUB mln RUB mln %
Total debt 20,649 15,377 -26%
Cash and cash equivalents 16,052 42,777 166%
Net Debt 4,596 (27,400) NM
Net Debt to Adjusted EBITDA (x) 0.1 (0.5) -
Operational information
2022 2023 Change
%
Freight Rail Turnover, billion tonnes-km (including Engaged Fleet) 141.4 138.8 -2%
Transportation Volume, million tonnes (including Engaged Fleet) 80.4 78.6 -2%
Freight Rail Turnover, billion tonnes-km (excluding Engaged Fleet) 134.9 129.0 -4%
Transportation Volume, million tonnes (excluding Engaged Fleet) 77.0 73.5 -5%
Average Price per Trip, RUB 64,553 71,125 10%
Average Rolling Stock Operated, units 56,637 57,153 1%
Average Distance of Loaded Trip, km 1,733 1,741 0%
Average Number of Loaded Trips per Railcar 21.0 20.0 -5%
Total Empty Run Ratio (for all types of rolling stock), % 50% 45% -
Empty Run Ratio for gondola cars, % 41% 36% -
Share of Empty Run Kilometres paid by Globaltrans, % 99% 99% -
Total Fleet, units (at year end), including: 66,115 65,644 -1%
Owned Fleet, units (at year end) 62,354 61,813 -1%
Leased-in Fleet, units (at year end) 3,761 3,831 2%
Leased-out Fleet, units (at year end) 7,474 6,164 -18%
Average age of Owned Fleet, years (at year end) 14.5 15.2 -
Total number of employees (at year end) 1,768 1,802 2%
Revenue
In 2023, the Group's Total revenue increased 11% year on year to RUB 104,748
million reflecting the combination of a 7% year-on-year rise in Adjusted
Revenue (a key component) and a 35% year-on-year increase 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 2023 and 2022.
2022 2023 Change
RUB mln RUB mln %
Railway transportation - operators services (tariff borne by the Group) 10 30,341 36,656 21%
(#_ftn10)
Railway transportation - operators services (tariff borne by the client) 60,197 62,930 5%
Operating leasing of rolling stock 3,372 4,538 35%
Other 564 624 11%
Total revenue 94,474 104,748 11%
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 the rail infrastructure provider, 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 2023, the Group's Adjusted Revenue was RUB 87,388 million up 7% 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 year ended 31
December 2023 and 2022 and its reconciliation to Total revenue.
2022 2023 Change
RUB mln RUB mln %
Total revenue 94,474 104,748 11%
Minus "pass through" items
Infrastructure and locomotive tariffs: loaded trips 10,465 13,015 24%
Services provided by other transportation organisations 2,399 4,345 81%
Adjusted Revenue 81,610 87,388 7%
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 Engaged Fleet, and (iv) 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 2023 and 2022.
2022 2023 Change
RUB mln RUB mln %
Net Revenue from Operation of Rolling Stock 76,798* 81,102* 6%
Operating leasing of rolling stock 3,372 4,538 35%
Net Revenue from Engaged Fleet 876* 1,124* 28%
Other 564 624 11%
Adjusted Revenue 81,610 87,388 7%
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 (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
93% of the Group's Adjusted Revenue in 2023, increased 6% year on year to RUB
81,102 million* largely reflecting robust average pricing.
Revenue from operating leasing of rolling stock
Revenue from operating leasing of rolling stock contributed 5% of the Group's
Adjusted Revenue in 2023 and increased 35% year on year to RUB 4,538 million.
This reflected a rise in the average leasing rates which was partially offset
by a decline in the average number of leased-out fleet during the reporting
year due to the sale of some railcars as part of the disposal of Globaltrans'
shareholding in Spacecom(( 11 (#_ftn11) )).
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 (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 about 1% of the Group's
Adjusted Revenue in 2023, increased 28% year on year to RUB 1,124 million*,
largely reflecting a rise in the number of Engaged Fleet operations.
Other revenue
Other revenue, comprising less than 1% of the Group's Adjusted Revenue in
2023, 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 11% year on year to RUB 624 million in 2023.
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
2023 and 2022.
2022 2023 Change
RUB mln RUB mln %
Cost of sales 53,929 57,899 7%
Selling and marketing costs 282 347 23%
Administrative expenses 4,626 5,494 19%
Total cost of sales, selling and marketing costs and administrative expenses 58,838 63,740 8%
The Group's Total cost of sales, selling and marketing costs and
administrative expenses rose 8% year on year to RUB 63,740 million in 2023
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") increased 35% year on year to RUB 17,360
million primarily due to an increase in the proportion of clients that pay
Infrastructure and locomotive tariffs: loaded trips through the Group along
with the rise in regulated infrastructure and locomotive tariffs and a higher
number of Engaged Fleet operations.
· The Group's Total cost of sales, selling and marketing costs and
administrative expenses adjusted for "pass- through" cost items rose 1% year
on year to RUB 46,380 million in 2023, due to:
o An 8% year-on-year increase in Total Operating Cash Costs to RUB 35,049
million which largely reflected accelerated cost inflation, primarily in the
regulated tariffs for the traction of empty railcars, along with an increase
in employee benefit expense and repairs and maintenance costs.
o Total Operating Non-Cash Costs decreased 17% year on year to RUB 11,331
million largely due to the fact that there was no significant impairment of
rolling stock in 2023 compared to the RUB 3,933 million impairment in 2022
related to rolling stock blocked in Ukraine. This was partially offset by a
31% increase in Depreciation of property, plant and equipment largely due to
both the addition, as well as the higher depreciation of acquired rolling
stock 12 (#_ftn12) along with a decrease in the scrap value of rolling stock.
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:
2022 2023 Change
RUB mln RUB mln %
"Pass through" cost items 12,864 17,360 35%
Infrastructure and locomotive tariffs: loaded trips 10,465 13,015 24%
Services provided by other transportation organisations 2,399 4,345 81%
Total cost of sales, selling and marketing costs and administrative 45,973 46,380 1%
expenses (adjusted for "pass through" cost items)
Total Operating Cash Costs 32,373 35,049 8%
Empty Run Costs 17,283* 18,297* 6%
Employee benefit expense 6,781 8,174 21%
Repairs and maintenance 3,943 4,274 8%
Fuel and spare parts - locomotives 2,017 1,958 -3%
Infrastructure and Locomotive Tariffs - Other Tariffs 1,258* 1,193* -5%
Engagement of locomotive crews 116 94 -19%
Expense relating to short-term leases (rolling stock) 35 59 69%
Other Operating Cash Costs 941 1,001 6%
Total Operating Non-Cash Costs 13,600 11,331 -17%
Depreciation of property, plant and equipment 6,753 8,853 31%
Impairment/(reversal of impairment) of property, plant and equipment 3,933 (22) NM
Depreciation of right-of-use assets 2,597 2,446 -6%
Loss on derecognition arising on capital repairs 310 284 -8%
Gain on sale of property, plant and equipment (13) (280) 2120%
Net impairment losses on trade and other receivables 21 50 145%
Amortisation of intangible assets 0.3 0.4 32%
Total cost of sales, selling and marketing costs and administrative 58,838 63,740 8%
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(( 13 (#_ftn13) )) and is reflected in equal
amounts in both the Group's Total revenue and Cost of sales.
The 24% year-on-year increase in this item in 2023 to RUB 13,015 million
primarily reflected the higher proportion of clients that pay infrastructure
and locomotive tariffs: loaded trips through the Group along with higher
regulated infrastructure and locomotive tariffs.
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 81% year on year
to RUB 4,345 million in 2023 primarily due to a higher number of Engaged Fleet
operations along with the increased 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 2023 of RUB 35,049 million were 8% 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 2023 and 2022.
2023 2022 2023 Change
% of total RUB mln RUB mln %
Empty Run Costs 52% 17,283* 18,297* 6%
Employee benefit expense 23% 6,781 8,174 21%
Repairs and maintenance 12% 3,943 4,274 8%
Fuel and spare parts - locomotives 6% 2,017 1,958 -3%
Infrastructure and Locomotive Tariffs - Other Tariffs 3% 1,258* 1,193* -5%
Engagement of locomotive crews 0.3% 116 94 -19%
Expense relating to short-term leases (rolling stock) 0.2% 35 59 69%
Other Operating Cash Costs 3% 941 1,001 6%
Total Operating Cash Costs 100% 32,373 35,049 8%
Empty Run Costs
Empty Run Costs (a non-IFRS financial measure meaning costs payable to the
rail infrastructure provider 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 52% of the Group's Total Operating Cash
Costs in 2023, increased 6% year on year to RUB 18,297 million* due to:
· A rise in regulated tariffs for the traction of empty railcars of 10%
from January 2023 and an additional 10.75% from December 2023, which was
partially offset by:
· A significant improvement in the Empty Run Ratio for gondola cars to
36% (2022: 41%) along with a small year-on-year decline in the Group's Freight
Rail Turnover.
Employee benefit expense
Employee benefit expense, which represented 23% of the Group's Total Operating
Cash Costs in 2023, increased 21% year on year to RUB 8,174 million. This
resulted from inflation-driven growth in wages and salaries along with
performance-driven increases in bonuses. The average headcount was little
changed (down 1% year on year).
Repairs and maintenance
Repairs and maintenance costs, which comprised 12% of the Group's Total
Operating Cash Costs in 2023, increased 8% year on year to RUB 4,274 million,
largely resulting from:
· An inflation-driven rise in the cost of certain repairs, services and
spare parts;
· An increase in the cost of locomotive repairs;
· A decline in the number of scheduled depot repairs.
Fuel and spare parts - locomotives
Fuel and spare parts - locomotives expenses, which accounted for 6% of the
Group's Total Operating Cash Costs in 2023, declined 3% year on year to RUB
1,958 million largely reflecting lower fuel expenses.
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 3% of the
Group's Total Operating Cash Costs in 2023 and decreased 5% year on year to
RUB 1,193 million* with the rise in the regulated infrastructure and
locomotive tariffs more than offset by the continued cost optimisation
measures.
Engagement of locomotive crews
Costs related to the engagement of locomotive crews from the rail
infrastructure provider in 2023 (less than 1% of the Group's Total Operating
Cash Costs) declined 19% year on year to RUB 94 million due to the reduction
in the amount of outsourcing of locomotive crews as the Group largely used its
in-house crews.
Expense relating to short-term leases (rolling stock)
In 2023, Expense relating to short-term leases (rolling stock), representing
less than 1% of the Group's Total Operating Cash Costs, rose 69% year on year
to RUB 59 million primarily due to an increase in the average number of fleet
leased-in under short-term operating leases along with the rise in average
leasing rates.
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 (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 2023 and 2022.
2022 2023 Change
RUB mln RUB mln %
Legal, consulting and other professional fees 94 114 21%
Expense relating to short-term leases (office) 93 94 1%
Advertising and promotion 41 57 39%
Auditors' remuneration 46 50 8%
Communication costs 25 25 3%
Information services 15 19 22%
Taxes (other than on income and value added taxes) 24 14 -43%
Other expenses 603 628 4%
Other Operating Cash Costs 941 1,001 6%
Other Operating Cash Costs, which comprised 3% of the Group's Total Operating
Cash Costs, increased 6% year on year to RUB 1,001 million in 2023.
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 2023 and 2022.
2022 2023 Change
RUB mln RUB mln %
Depreciation of property, plant and equipment 6,753 8,853 31%
Depreciation of right-of-use assets 2,597 2,446 -6%
Loss on derecognition arising on capital repairs(( 14 (#_ftn14) )) 310 284 -8%
Net impairment losses on trade and other receivables 21 50 145%
Amortisation of intangible assets 0.3 0.4 32%
Gain on sale of property, plant and equipment (13) (280) 2120%
Impairment/(reversal of impairment) of property, plant and equipment 3,933 (22) NM
Total Operating Non-Cash Costs 13,600 11,331 -17%
A 17% year-on-year decrease in Total Operating Non-Cash Costs to RUB 11,331
million in 2023 stemmed primarily from:
· No large impairment of property, plant and equipment in 2023 compared
to RUB 3,933 million in 2022 related to the impairment of rolling stock
blocked in Ukraine.
· A 31% year-on-year rise in Depreciation of property, plant and
equipment largely due to both the addition as well as the higher depreciation
of acquired rolling stock 15 (#_ftn15) along with a decrease in the scrap
value of rolling stock.
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",
"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", "Reversal of impairment of intangible assets" and "Profit
from sale of subsidiary".
The Group's Adjusted EBITDA increased 6% year on year to RUB 52,289 million in
2023. The Adjusted EBITDA Margin remained stable year on year at 60% on the
back of the 7% year-on-year increase in Adjusted Revenue and an 8%
year-on-year rise in Total Operating Cash Costs.
The following table provides details on Adjusted EBITDA for the years ended 31
December 2023 and 2022, and its reconciliation to EBITDA and Profit for the
year.
2022 2023 Change
RUB mln RUB mln %
Profit for the year 24,920 38,618 55%
Plus (Minus)
Income tax expense 8,232 8,469 3%
Finance costs/(income) - net 1,150 (2,962) NM
Net foreign exchange transaction gains on financing activities 641 3,194 398%
Amortisation of intangible assets 0.3 0.4 32%
Depreciation of right-of-use assets 2,597 2,446 -6%
Depreciation of property, plant and equipment 6,753 8,853 31%
EBITDA 44,293 58,618 32%
Minus (Plus)
Loss on derecognition arising on capital repairs (310) (284) -8%
Net foreign exchange transaction gains on financing activities 641 3,194 398%
Other losses - net (1,335) (283) -79%
Profit from sale of subsidiary - 3,400 NM
Gain on sale of property, plant and equipment 13 280 2120%
(Impairment)/reversal of impairment of property, plant and equipment (3,933) 22 NM
Adjusted EBITDA 49,216 52,289 6%
Finance income and costs
The following table provides a breakdown of Finance income and costs for the
years ended 31 December 2023 and 2022.
2022 2023 Change
RUB mln RUB mln %
Interest expense:
Bank borrowings (1,258) (1,734) 38%
Non-convertible bonds (561) (205) -64%
Total interest expense calculated using the effective interest rate method (1,820) (1,939) 7%
Other lease liabilities (781) (465) -40%
Total interest expense (2,600) (2,403) -8%
Other finance costs (2) (2) 2%
Total finance costs (2,602) (2,405) -8%
Interest income:
Bank balances 521 1,654 218%
Short term deposits 222 493 122%
Loans to related parties 18 10 -46%
Loans to third parties - 3 NM
Total interest income calculated using the effective interest rate method 761 2,159 184%
Finance leases - related parties 2 1 -62%
Finance leases - third parties 17 13 -18%
Total interest income 779 2,173 179%
Other finance income 32 - -100%
Total finance income 812 2,173 168%
Net foreign exchange transaction losses on borrowings and other liabilities - (71) NM
Net foreign exchange transaction gains on cash and cash equivalents and other 641 3,265 409%
monetary assets
Net foreign exchange transaction gains on financing activities 641 3,194 398%
Net finance (costs)/income (1,150) 2,962 NM
Finance costs
Total finance costs for 2023 decreased 8% year on year to RUB 2,405 million. A
7% year-on-year rise in Total interest expense calculated using the effective
interest rate method (related to bank borrowings and non-convertible bonds) to
RUB 1,939 million was more than offset by the 40% year-on-year decline in
Other lease liabilities to RUB 465 million as the Group decreased the number
of fleet leased-in under long-term operating leases.
Finance income
In 2023, the Group's Total finance income increased 168% year on year to RUB
2,173 million primarily due to increased bank balances along with a rise in
the interest rates on deposits 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 3,194 million in 2023 compared to RUB 641 million in the previous year.
This resulted from foreign exchange volatility on the available cash and cash
equivalents denominated in foreign currency.
Profit from sale of subsidiary
The Group had a Profit from sale of subsidiary in the amount of RUB 3,400
million in 2023 (2022: nil) which reflected the disposal of the Company's
shareholding in Spacecom 16 (#_ftn16) .
Profit before income tax
The Group reported a year-on-year increase of 42% in Profit before income tax
to RUB 47,087 million in 2023, reflecting a 29% year-on-year increase in the
Group's Operating profit to RUB 44,125 million, which was largely linked to
the factors described above, including:
· RUB 3,400 million of Profit from sale of subsidiary related to the
disposal of the Company's shareholding in Spacecom.
· RUB 3,194 million of Net foreign exchange transaction gains on
financing activities in 2023 compared to RUB 641 million in the previous year.
· No large impairment of property, plant and equipment in 2023 compared
to RUB 3,933 million the previous year related to the impairment of rolling
stock blocked in Ukraine.
Income tax expense
Income tax expense was up 3% year on year to RUB 8,469 million in 2023.
Profit for the year
The Group's Profit for the year increased 55% year on year to RUB 38,618
million reflecting the factors described above.
Profit for the year attributable to the owners of the Company increased 53%
year on year to RUB 38,620 million reflecting the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
In 2023, the Group's capital expenditure consisted principally of maintenance
CAPEX (including capital repairs) and the selective acquisition of rolling
stock.
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 2023, the Group had Net Working Capital of RUB 6,048 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 2023 and
2022.
2022 2023
RUB mln RUB mln
Cash flows from operating activities 47,963 52,042
Changes in working capital: 668 (2,848)
Inventories 548 442
Trade receivables (86) (2,424)
Other assets (1,285) 1,892
Other receivables 389 (260)
Trade and other payables 1,660 (2,489)
Contract liabilities (557) (10)
Cash generated from operations 48,631 49,194
Tax paid (8,455) (8,267)
Net cash from operating activities 40,176 40,926
Cash flows from investing activities
Payment for acquisition of non-controlling interest (8,800) -
Proceeds from sale of subsidiaries - net of cash disposed of - 4,772
Payment for rolling stock to disposed subsidiary - (6,603)
Purchases of property, plant and equipment (11,422) (8,260)
Purchases of intangible assets (2) (1)
Proceeds from sale of property, plant and equipment 238 627
Loans granted to third parties - (885)
Loans granted to related parties (800) -
Loan repayments received from third parties - 885
Loan repayments received from related parties 400 400
Interest received 761 2,161
Receipts from finance lease receivable - third parties 28 43
Receipts from finance lease receivable - related parties 9 11
Other (65) -
Net cash used in investing activities (19,652) (6,851)
Cash flows from financing activities
Net cash outflows from borrowings and financial leases 17 (#_ftn17) : (10,549) (5,138)
Proceeds from bank borrowings 2,750 8,800
Repayments of borrowings (9,549) (10,188)
Repayments of non-convertible unsecured bonds (3,750) (3,750)
Purchase of treasury shares (114) -
Principal elements of lease payments for other lease liabilities (2,403) (2,478)
Interest paid on bank borrowings and non-convertible unsecured bonds (1,939) (2,051)
Interest paid on other lease liabilities (786) (460)
Dividends paid to non-controlling interests in subsidiaries (1,728) (334)
Net cash used in financing activities (17,520) (10,462)
Net increase in cash and cash equivalents 3,005 23,614
Exchange gains on cash and cash equivalents 193 3,111
Cash and cash equivalents at beginning of the year 12,855 16,052
Cash and cash equivalents at the end of the year 16,052 42,777
Net cash from operating activities
In 2023, Net cash from operating activities increased 2% year on year to RUB
40,926 million primarily due to the following factors:
· Cash generated from operations (after "Changes in working capital")
rose 1% year on year to RUB 49,194 million.
· Tax paid was 2% lower year on year at RUB 8,267 million.
Net cash used in investing activities
Net cash used in investing activities decreased 65% (or RUB 12,801 million)
year on year to RUB 6,851 million largely reflecting:
· A 28% or RUB 3,162 million year-on-year decrease in Purchases of
property, plant and equipment (on a cash basis; including maintenance CAPEX)
to RUB 8,260 million on the back of significantly lower investments given
elevated new rolling stock prices.
· A RUB 6,603 million Payment for rolling stock to a disposed
subsidiary in 2023 related to the completion of the intra-group acquisition of
railcars by BaltTransServis from Spacecom (a leasing subsidiary disposed of in
February 2023) 18 (#_ftn18) .
· A RUB 4,772 million Proceeds from sale of subsidiaries - net of cash
disposed of in 2023 related to the disposal of the Group's shareholding in
Spacecom after acquiring the majority of its railcars compared to a RUB 8,800
million Payment for acquisition of non-controlling interest (the remaining 40%
shareholding in BaltTransServis) that was carried out in the first half of
2022.
Net cash used in financing activities
Net cash used in financing activities decreased 40% year on year to RUB 10,462
million in 2023, due to the factors described below:
· The Group continued to repay its debt in 2023 with Net cash outflow
from borrowings and financial leases amounting to RUB 5,138 million compared
to RUB 10,549 million in the previous year.
· Interest paid on bank borrowings and non-convertible unsecured bonds
increased 6% year on year to RUB 2,051 million in 2023.
· Interest paid on other lease liabilities declined 41% year on year to
RUB 460 million on the back of a decrease in the number of rolling stock
leased-in under long-term operating leases.
· Dividends paid to non-controlling interests in subsidiaries decreased
81% year on year to RUB 334 million in 2023 19 (#_ftn19) .
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" 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.
The Group's Total CAPEX adjusted for M&A (on a cash basis, including
maintenance CAPEX) was RUB 10,092 million, a decrease of 50% compared to 2022
reflecting the following factors:
· Total CAPEX (including maintenance CAPEX) down 28% year on year to
RUB 8,261 million in 2023:
o Maintenance CAPEX increased 4% year on year to RUB 6,637 million*.
o Expansion CAPEX decreased 68% to RUB 1,623 million* 20 (#_ftn20)
reflecting the Group's conservative approach to investment given elevated new
rolling stock prices.
· A RUB 6,603 million Payment for rolling stock to a disposed
subsidiary in 2023 related to the completion of the intra-group acquisition of
railcars by BaltTransServis from Spacecom (a leasing subsidiary disposed of in
February 2023).
· A RUB 4,772 million Proceeds from sale of subsidiaries net of cash
disposed of in 2023 related to the disposal of the Group's shareholding in
Spacecom after acquiring the majority of its railcars compared to a RUB 8,800
million Payment for acquisition of non-controlling interest (the remaining 40%
shareholding in BaltTransServis) that was carried out in the first half of
2022.
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
2023 and 2022.
2022 2023 Change
RUB mln RUB mln %
Purchase of property, plant and equipment 11,422 8,260 -28%
Purchase of intangible assets 2 1 -63%
Total CAPEX (including maintenance CAPEX) 11,424 8,261 -28%
Proceeds from sale of subsidiaries - net of cash disposed of - (4,772) NM
Payment for rolling stock to disposed subsidiary - 6,603 NM
Payment for acquisition of non-controlling interest 8,800 - -100%
Total CAPEX adjusted for M&A 20,224 10,092 -50%
The Group's capital expenditure (including maintenance CAPEX) on an accrual
basis was RUB 9,070 millionin 2023 (2022: RUB 11,186 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.
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", "Payment for acquisition of non-controlling
interest", "Payment for rolling stock to disposed subsidiary" plus "Proceeds
from sale of subsidiaries - net of cash disposed of".
Free Cash Flow increased 74% or RUB 11,021 million year on year to RUB 25,845
million in 2023, primarily due to:
· A 1% year-on-year increase in Cash generated from operations (after
"Changes in working capital") to RUB 49,194 million.
· Tax paid which decreased 2% year on year to RUB 8,267 million.
· An 8% year-on-year decrease in the combined "Principal elements of
lease payments for other lease liabilities" and "Interest paid on other lease
liabilities" which was down to RUB 2,938 million as the Group decreased the
number of rolling stock leased-in under long-term operating leases.
· The Group's Total CAPEX adjusted for M&A decreased 50% year on
year to RUB 10,092 million reflecting the factors described above.
The following table sets out details on Free Cash Flow and Attributable Free
Cash Flow for the years ended 31 December 2023 and 2022, and its
reconciliation to Cash generated from operations.
2022 2023 Change
RUB mln RUB mln %
Cash generated from operations (after "Changes in working capital") 48,631 49,194 1%
Total CAPEX adjusted for M&A (20,224) (10,092) -50%
Purchases of property, plant and equipment (11,422) (8,260) -28%
Purchases of intangible assets (2) (1) -63%
Proceeds from sale of subsidiaries - net of cash disposed of - 4,772 NM
Payment for rolling stock to disposed subsidiary - (6,603) NM
Payment for acquisition of non-controlling interest (8,800) - -100%
Tax paid (8,455) (8,267) -2%
Interest paid on bank borrowings and non-convertible unsecured bonds (1,939) (2,051) 6%
Principal elements of lease payments for other lease liabilities (2,403) (2,478) 3%
Interest paid on other lease liabilities (786) (460) -41%
Free Cash Flow 14,825 25,845 74%
Minus
Adjusted Profit Attributable to Non-controlling Interests (274) (3) -99%
Attributable Free Cash Flow 15,098 25,848 71%
Capital resources
The Group had a Net cash position of RUB 27,400 million as of the end of 2023
compared to Net Debt of RUB 4,596 million as of the end of 2022.
· Total debt (consisting of borrowings and non-convertible unsecured
bonds) amounted to RUB 15,377 million as of the end of 2023 (including accrued
interest of RUB 121 million*), a decrease of 26% compared to the end of 2022.
· Cash and cash equivalents amounted to RUB 42,777 million, an increase
of 166% compared to the end of 2022 with about 98%* denominated in Russian
roubles.
The Net Debt to Adjusted EBITDA ratio was (0.5)x as of 31 December 2023 (31
December 2022: 0.1x).
Under IFRS 16, Other lease liabilities (not included in Total debt) of RUB
3,096 million were recognised on the balance sheet as of 31 December 2023 (31
December 2022: RUB 4,195 million) which was primarily related to the long-term
leasing of certain fleet and offices.
The following table sets out details on the Group's Total debt, Net Debt and
Net Debt to Adjusted EBITDA at 31 December 2023 and 2022, and the
reconciliation of Net Debt to Total debt.
As of As of Change
31 Dec 2022 31 Dec 2023
RUB mln RUB mln %
Total debt 20,649 15,377 -26%
Minus
Cash and cash equivalents 16,052 42,777 166%
Net Debt 4,596 (27,400) NM
Net Debt to Adjusted EBITDA 0.1x (0.5)x -
Rouble-denominated borrowings accounted for 100% of the Group's debt portfolio
as of 31 December 2023. The Russian rouble is the functional currency of the
Company.
The weighted average effective interest rate stood at 10.0% as of 31 December
2023 (31 December 2022: 8.1%) reflecting the rise in interest rates on new
borrowings. All of the Group's debt had fixed interest rates as of 31 December
2023.
The Group has a balanced debt maturity profile supported by the Group's solid
cash flow generation, available cash and cash equivalents, as well as undrawn
borrowing facilities of RUB 29,000 million as of 31 December 2023.
The following table gives the maturity profile of the Group's borrowings
(including accrued interest of RUB 121 million*) as of 31 December 2023.
As of
31 Dec 2023
RUB mln
Q1 2024 3,419*
Q2 2024 1,785*
Q3 2024 1,363*
Q4 2024 1,147*
2025 3,560*
2026 2,114*
2027 1,918*
2028 72*
Total 15,377
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
Group's 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 2023 and 2022 along with historical financial and operational
information are available at Globaltrans' corporate website
(www.globaltrans.com).
The presentational 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 and market information that is
presented in this announcement from third-party sources. 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.
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",
"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", "Reversal of impairment of intangible assets" and "Profit
from sale of subsidiary".
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/(reversal 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 and Engaged Fleet).
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 the
rail infrastructure provider 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 and Engaged Fleet.
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 and Engaged Fleet).
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", "Payment for acquisition of non-controlling
interest", "Payment for rolling stock to disposed subsidiary" plus "Proceeds
from sale of subsidiaries - 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).
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 and locomotives.
Leased-out Fleet is defined as fleet leased out to third parties under
operating leases.
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 (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 (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 (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 and locomotives, and
excludes Engaged Fleet.
Service Contracts are 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 and Engaged Fleet 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" 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 and Engaged Fleet 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 and
locomotives, 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).
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 February 2023 Globaltrans completed the restructuring of
its liquid cargo segment with the intra-group acquisition of 5,800 railcars by
BaltTransServis from Spacecom (including Spacecom Trans), a 65.25% owned
leasing subsidiary of Globaltrans and the subsequent disposal of Globaltrans'
shareholding in Spacecom (including 680 units) to its minority shareholder.
3 (#_ftnref3) The Group's Freight Rail Turnover declined 4% year on year
excluding Engaged Fleet.
4 (#_ftnref4) As of the end of 2023 Globaltrans had six Service Contracts.
(( 5 (#_ftnref5) )) The revised Articles of Association was approved by
shareholders at the Extraordinary General Meeting ("EGM") held on 16 August
2023 and is available at www.globaltrans.com.
(( 6 (#_ftnref6) )) Imposed suspension of GDRs trading on the London Stock
Exchange continued as of the date of publication.
(( 7 (#_ftnref7) )) The withholding tax on upstreaming dividends from Russia
to Cyprus increased from 5% to 15% for public companies which meet certain
criteria as Russia suspended the double taxation treaty with Cyprus in August
2023.
(( 8 (#_ftnref8) )) Overall industry freight rail transportation volumes
declined 3.1% year on year in Q1 2024.
9 (#_ftnref9) Imposed suspension of GDRs trading on the London Stock
Exchange continued as of the date of publication.
10 (#_ftnref10) Includes "Infrastructure and locomotive tariffs: loaded
trips" for 2023 of RUB 13,015 million (2022: RUB 10,465 million) and "Services
provided by other transportation organisations" of RUB 4,345 million (2022:
RUB 2,399 million).
(( 11 (#_ftnref11) )) In February 2023 Globaltrans completed the
restructuring of its liquid cargo segment with the intra-group acquisition of
5,800 railcars by BaltTransServis from Spacecom (including Spacecom Trans), a
65.25% owned leasing subsidiary of Globaltrans and the subsequent disposal of
Globaltrans' shareholding in Spacecom (including 680 units) to its minority
shareholder.
12 (#_ftnref12) Including wheel pairs.
13 (#_ftnref13) Under contracts where the infrastructure 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.
14 (#_ftnref14) 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.
15 (#_ftnref15) Including wheel pairs.
16 (#_ftnref16) In February 2023 Globaltrans completed the restructuring of
its liquid cargo segment with the intra-group acquisition of 5,800 railcars by
BaltTransServis from Spacecom (including Spacecom Trans), a 65.25% owned
leasing subsidiary of Globaltrans and the subsequent disposal of Globaltrans'
shareholding in Spacecom (including 680 units) to its minority shareholder.
17 (#_ftnref17) 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".
(( 18 (#_ftnref18) )) In February 2023 Globaltrans completed the
restructuring of its liquid cargo segment with the intra-group acquisition of
5,800 railcars by BaltTransServis from Spacecom (including Spacecom Trans), a
65.25% owned leasing subsidiary of Globaltrans and the subsequent disposal of
Globaltrans' shareholding in Spacecom (including 680 units) to its minority
shareholder. Deferred payments for the purchased railcars were executed after
the disposal of Spacecom, thus as per IFRS requirements these payments have
been reflected in the cash flow statement for 2023.
(( 19 (#_ftnref19) )) Effective from February 2023 Globaltrans has 100%
shareholdings in all its subsidiaries.
(( 20 (#_ftnref20) )) Including Purchases of intangible assets.
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