REG - Globaltrans Inv PLC - Interim 2022 Results
19/09/2022 07:00
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RNS Number : 8405Z Globaltrans Investment PLC 19 September 2022
For immediate release 19 September 2022
Globaltrans Investment PLC
Interim 2022 Results
and Market Update
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 six months ended 30
June 2022 along with the update on the recent developments.
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 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 under pressure with strong Q1
2022 followed by deceleration in bulk cargo market volumes and substantial
downward pressure in gondola market pricing.
· Tanker segment market volumes remained relatively stable with
continued robust market pricing.
· Globaltrans improved its operational efficiency with Service
Contracts intact.
· Strong financial results were delivered with growth achieved across
all key metrics.
· Robust financial profile maintained with further deleveraging.
· Expansion CAPEX remained on hold in H1 2022.
· Dividends remain suspended.
Commenting on Globaltrans' interim 2022 results, CEO Valery Shpakov said:
"Globaltrans again demonstrated the strength of its operating model by rapidly
adjusting its logistical footprint to respond to the current unprecedented
circumstances. We maintained our focus on efficiency and saw improvements both
at an operational level and in terms of our financial results.
Our strong performance and robust free cash flow generation supported further
strengthening of our balance sheet as we continued to deleverage. While market
visibility remains low, I have confidence that the model that has stood us in
good stead so far will continue to successfully underpin our business and our
ability to create value for shareholders."
FINANCIAL RESULTS
Strong financial performance, robust Free Cash Flow and further deleveraging with dividends remaining on hold
· Revenue rose to RUB 48.4 billion with Adjusted Revenue increasing
to RUB 42.6 billion (+26% compared to H2 2021) largely on the back of the
continued recovery in gondola market pricing from the depressed levels of H1
2021.
· Profit for the period increased 13% compared to H2 2021 rising to
RUB 12.3 billion.
· Adjusted EBITDA rose 45% compared to H2 2021 increasing to RUB
27.0 billion, supported by the Group's continued cost control (Total Operating
Cash Costs up 3% half on half).
· Robust Free Cash Flow of RUB 6.4 billion despite the acquisition
of the 40% outstanding stake in BaltTransServis 1 .
· RUB 3.7 billion of impairment of property, plant and equipment
reflecting the blocking of about 3.3k units of rolling stock (mostly gondolas)
in Ukraine.
· Dividend payments continue to be suspended due to the technical
limitations regarding upstreaming cash to the holding company incorporated in
Cyprus.
· Net Debt reduced 31% to RUB 12.8 billion compared to the end of
2021; further deleveraging with Net Debt to LTM Adjusted EBITDA 2 at 0.28x
compared to 0.62x at the end of 2021.
· All the Group's debt has fixed interest rates and is denominated
in RUB, the functional currency of the Group.
OPERATIONAL PERFORMANCE
Improved operational efficiency and rapid logistics readjustments supported by
the Group's best-in-class operational capabilities
· The Group successfully adjusted its logistics in the challenging
operational environment with Empty Run Ratio for gondola cars improving to 42%
(H1 2021: 46%). Total Empty Run Ratio (for all types of rolling stock)
improved to 50% (H1 2021: 52%).
· The Group's Freight Rail Turnover was 3% lower year on year in H1
2022 reflecting the reorientation of clients' cargo flows and overall
volatility in logistics.
· Average pricing remained strong for most of H1 2022 reflecting a
continued recovery in gondola market pricing from the depressed levels of H1
2021 with continued solid pricing in the oil products and oil segment.
However, from late Q2 2022, gondola market pricing substantially deteriorated.
· The Group maintained its focus on Service Contracts 3 and client
retention: Service Contracts remain intact contributing about 56% of the
Group's Net Revenue from Operation of Rolling Stock in H1 2022.
· Globaltrans successfully substituted units by expanding leased-in
fleet as well as adjusting its logistical footprint in order to manage the
blocking of about 3.3k units of the Group's rolling stock (mostly gondola
cars) in Ukraine.
MARKET REVIEW
Market under pressure due to the unprecedented environment
· Following a strong Q1 2022 with overall Russian freight rail turnover up 4.0% year on year, cargo volumes and freight rail turnover started to deteriorate largely on the back of the weakening bulk cargo segment.
· Overall Russia's freight rail turnover rose 0.7% year on year in January-August 2022 with volumes down 3.4% year on year over the same period. Looking ahead, visibility remains low.
· Ongoing transformation of logistics towards Russia's Far East increases the share of long-distance routes supporting overall freight rail turnover (measured in tonnes-km) thereby increasing demand for railcars.
Non-oil (bulk) cargo volumes under pressure from Q2 2022
· Overall non-oil (bulk) cargo volumes decreased 4.2% year on year in January-August 2022 which was largely driven by the deterioration in coal (-5.8% year on year) and metallurgical cargoes (-3.9% year on year) volumes 4 . Gondola market pricing recovered from the depressed levels of H1 2021 but have substantially deteriorated since late Q2 2022 reflecting demand volatility.
Demand in oil products and oil segment stabilised
· Overall Russia's oil products and oil volumes increased 0.2% year on year in the January-August 2022 period overcoming volatility.
· Market pricing conditions in the oil products and oil segment remained robust.
RECENT DEVELOPMENTS AND MANAGEMENT FOCUS
Market volumes and gondola market pricing remain under pressure and visibility
is low
· Market volumes have been under pressure since Q2 2022 reflecting
the weakening bulk cargoes market, with overall Russian freight rail turnover
down 1.0% year on year and transportation volumes down 5.3% in July-August
2022.
· Gondola market pricing continues to be under downward pressure as
of today driven by weakening demand. Tanker market pricing remains robust.
· Logistics continues to be adapted to the new environment by
rerouting most of the cargo flows to Russia's Far East region.
· Cost pressures accelerated with regulated RZD tariffs for the
traction of empty railcars up 18.6% over the first half of 2022 following
increases on 1 January and 1 June 2022 5 .
Management focus
· Continued focus on flexibility of logistics and operational
efficiency in a volatile market as well as strict cost control in response to
accelerated inflationary pressures.
· Expansion CAPEX will be subject to identifying attractive
opportunities.
· Value accretive cancellation of treasury shares acquired under
the buyback programmes approved 6 .
· Dividend payments continue to be suspended due to the technical
limitations regarding upstreaming cash to the holding company incorporated in
Cyprus.
· Ongoing analysis of options to address limitations of corporate
structure and listing constraints.
DOWNLOADS
· The Group's condensed consolidated interim financial information
(unaudited) for the six months ended 30 June 2022 is available for viewing at
http://www.rns-pdf.londonstockexchange.com/rns/8405Z_1-2022-9-18.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/8405Z_1-2022-9-18.pdf) .
· The related Interim 2022 Results Presentation is available for
viewing at
http://www.rns-pdf.londonstockexchange.com/rns/8405Z_2-2022-9-18.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/8405Z_2-2022-9-18.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, 19 September 2022
Time: 13.00 London / 15.00 Moscow / 08.00 New York
Webcast: www.webcast-eqs.com/globaltrans20220919
(https://www.webcast-eqs.com/globaltrans20220919)
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 11:30 Moscow time on 19
September 2022 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.
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)
NOTES TO EDITORS
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, the CIS and the
Baltic 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 traded on the Main
Market of the London Stock Exchange (ticker symbol: GLTR) since May 2008 7
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 67 thousand units as of the end of the first
half of 2022, of which about 92% are owned by the Company. The core of the
fleet is universal gondola cars used for a broad range of bulk cargoes (68% of
total fleet) and tank cars for transporting oil products and oil (30% 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 six months ended 30 June 2022 and 2021.
EU IFRS financial information
H1 2021 H2 2021 H1 2022
RUB mln RUB mln RUB mln
Revenue 32,079 41,072 48,415
Total cost of sales, selling and marketing costs and administrative expenses (25,720) (26,910) (30,063)
Operating profit 6,603 15,025 18,370
Finance costs - net (1,088) (1,101) (1,561)
Profit before income tax 5,515 13,923 16,809
Income tax expense (1,352) (2,986) (4,469)
Profit for the period 4,162 10,937 12,341
Profit attributable to:
Owners of the Company 3,281 9,706 11,804
Non-controlling interests 881 1,231 536
Basic and diluted earnings per share for profit attributable to the equity 18.36 54.33 66.16
holders of the Company during the period (RUB per share)
H1 2021 H2 2021 H1 2022
RUB mln RUB mln RUB mln
Cash generated from operations (after changes in working capital) 10,463 19,594 26,006
Tax paid (827) (1,981) (4,399)
Net cash from operating activities 9,637 17,613 21,607
Net cash used in investing activities (3,835) (3,019) (12,464)
Net cash used in financing activities (6,398) (6,119) (9,548)
Non-IFRS financial information
H1 2021 H2 2021 H1 2022
RUB mln RUB mln RUB mln
Adjusted Revenue 24,785 33,707 42,627
Including
Net Revenue from Operation of Rolling Stock 22,635* 31,684* 40,263*
Operating lease of rolling stock 875 957 1,926
Total Operating Cash Costs 14,553 15,198 15,654
Including
Empty Run Cost 7,759* 7,670* 8,043*
Employee benefit expense 2,281 3,210 3,560
Repairs and maintenance 2,163 1,805 1,928
Fuel and spare parts - locomotives 911 1,061 994
Adjusted EBITDA 10,392 18,652 26,973
Adjusted EBITDA Margin, % 42% 55% 63%
Total CAPEX (incl. maintenance CAPEX) 3,966 4,473 3,697
Total CAPEX adjusted for M&A 3,966* 3,663* 12,497*
Free Cash Flow 4,159 11,972 6,356
Attributable Free Cash Flow 3,278 10,740 5,820
Debt profile
As of As of
31 Dec
30 June
2021 2022
RUB mln RUB mln
Total debt 31,318 24,711
Cash and cash equivalents 12,855 11,943
Net Debt 18,464 12,768
Net Debt to LTM Adjusted EBITDA (x) 8 0.62 0.28
Operational information
H1 2021 H1 2022
Freight Rail Turnover, billion tonnes-km (excluding Engaged Fleet) 70.7 68.3
Transportation Volume, million tonnes (excluding Engaged Fleet) 42.3 38.6
Average Price per Trip, RUB 34,506 67,510
Average Rolling Stock Operated, units 57,001 56,563
Average Distance of Loaded Trip, km 1,659 1,753
Average Number of Loaded Trips per Railcar 11.5 10.5
Total Empty Run Ratio (for all types of rolling stock), % 52% 50%
Empty Run Ratio for gondola cars, % 46% 42%
Share of Empty Run Kilometres paid by Globaltrans, % 100% 98%
Total Fleet, units (at period end), including: 72,045 67,346
Owned Fleet, units (at period end) 68,123 62,027
Leased-in Fleet, units (at period end) 3,922 5,319
Leased-out Fleet, units (at period end) 7,260 8,627
Average age of Owned Fleet, years (at period end) 12.8 14.2
Total number of employees (at period end) 1,777 1,816
Revenue
In the first six months of 2022, the Group's Total revenue increased 51% year
on year to RUB 48,415 million reflecting the combination of a 72% year-on-year
rise in Adjusted Revenue and a 28% year-on-year decrease in "pass through"
item "Infrastructure and locomotive tariffs: loaded trips".
The following table provides details of Total revenue, broken down by
revenue-generating activity, for the six months ended 30 June 2022 and 2021.
H1 2021 H1 2022 Change
RUB mln RUB mln %
Railway transportation - operators services (tariff borne by the Group) 9 15,242 13,959 -8%
Railway transportation - operators services (tariff borne by the client) 14,642 32,224 120%
Operating lease of rolling stock 875 1,926 120%
Revenue from specialised container transportation 1,042 - -100%
Other 277 306 10%
Total revenue 32,079 48,415 51%
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.
The Group's Adjusted Revenue was RUB 42,627 million in the first six months of
2022 up 72% 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 six months
ended 30 June 2022 and 2021 and its reconciliation to Total revenue.
H1 2021 H1 2022 Change
RUB mln RUB mln %
Total revenue 32,079 48,415 51%
Minus "pass through" items
Infrastructure and locomotive tariffs: loaded trips 6,442 4,662 -28%
Services provided by other transportation organisations 851 1,126 32%
Adjusted Revenue 24,785 42,627 72%
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 six months ended 30 June 2022 and 2021.
H1 2021 H1 2022 Change
RUB mln RUB mln %
Net Revenue from Operation of Rolling Stock 22,635* 40,263* 78%
Operating leasing of rolling stock 875 1,926 120%
Net Revenue from Specialised Container Transportation 938* - -100%
Net Revenue from Engaged Fleet 60* 132* 122%
Other 277 306 10%
Adjusted Revenue 24,785 42,627 72%
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 the first six months of 2022 increased
78% year on year to RUB 40,263 million* reflecting the recovery in both the
gondola and tank car segments' revenue streams. The gondola segment market
pricing recovered over the last twelve months from the depressed levels of the
first six months of 2021. The tanker segment market pricing remained robust
over the same period.
Revenue from operating leasing of rolling stock
Revenue from operating leasing of rolling stock contributed 5% of the Group's
Adjusted Revenue in the first half of 2022 and increased 120% year on year to
RUB 1,926 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 the
first six months of 2022 due to the deconsolidation of this business segment
reflecting the sale of SyntezRail (a subsidiary of Globaltrans) in October
2021. In the same period in 2021 the revenue from this segment amounted to RUB
938 million* and accounted for 4% 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 less than 1% of the Group's
Adjusted Revenue in the first six months of 2022, increased 122% year on year
in the first half of 2022 to RUB 132 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 the
first six months of 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 306 million in the first six months of 2022 due to higher revenues from
repair and maintenance services.
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 six months ended 30 June
2022 and 2021.
H1 2021 H1 2022 Change
RUB mln RUB mln %
Cost of sales 23,886 27,452 15%
Selling and marketing costs 114 118 4%
Administrative expenses 1,720 2,493 45%
Total cost of sales, selling and marketing costs and administrative 25,720 30,063 17%
expenses
A 17% year-on-year rise in the Group's Total cost of sales, selling and
marketing costs and administrative expenses to RUB 30,063 million in the first
six months of 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 21% year on year to RUB 5,788 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 32% year
on year to RUB 24,275 million in the first six months of 2022, due to:
o An 8% year-on-year increase in Total Operating Cash Costs to RUB 15,654
million in the first six months of 2022, which largely reflected the rise in
Empty Run Costs and Employee benefit expense that were partially offset by the
decline in Repairs and maintenance costs.
o Total Operating Non-Cash Costs rose 123% year on year to RUB 8,622 million
largely reflecting the impairment of about 3.3k units of rolling stock (mostly
gondola cars) blocked in Ukraine along with a 259% year-on-year increase in
Depreciation of right-of-use assets as the Group sizably 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:
H1 2021 H1 2022 Change
RUB mln RUB mln %
"Pass through" cost items 7,293 5,788 -21%
Infrastructure and locomotive tariffs: loaded trips 6,442 4,662 -28%
Services provided by other transportation organisations 851 1,126 32%
Total cost of sales, selling and marketing costs and administrative 18,427 24,275 32%
expenses (adjusted for "pass through" cost items)
Total Operating Cash Costs 14,553 15,654 8%
Empty Run Costs 7,759* 8,043* 4%
Employee benefit expense 2,281 3,560 56%
Repairs and maintenance 2,163 1,928 -11%
Fuel and spare parts - locomotives 911 994 9%
Infrastructure and Locomotive Tariffs - Other Tariffs 548* 554* 1%
Engagement of locomotive crews 163 72 -56%
Expense relating to short-term leases (rolling stock) 209 27 -87%
Other Operating Cash Costs 518 475 -8%
Total Operating Non-Cash Costs 3,874 8,622 123%
Impairment of property, plant and equipment - 3,713 NM
Depreciation of property, plant and equipment 3,269 3,360 3%
Depreciation of right-of-use assets 376 1,349 259%
Loss on derecognition arising on capital repairs 283 190 -33%
Net (gain)/loss on sale of property, plant and equipment (52) 10 NM
Net impairment (gains)/losses on trade and other receivables (2) 1 NM
Amortisation of intangible assets 1 0.01 -99%
Total cost of sales, selling and marketing costs and administrative 25,720 30,063 17%
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(( 10 )) and is reflected in equal amounts in
both the Group's Total revenue and Cost of sales.
The 28% year-on-year decrease in this item in the first six months of 2022 to
RUB 4,662 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 32% year on year
to RUB 1,126 million in the first six months of 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 the first six months of 2022 of RUB 15,654
million were 8% higher compared to the same period of 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 six months ended 30 June 2022 and 2021.
H1 2022 H1 2021 H1 2022 Change
% of total RUB mln RUB mln %
Empty Run Costs 51% 7,759* 8,043* 4%
Employee benefit expense 23% 2,281 3,560 56%
Repairs and maintenance 12% 2,163 1,928 -11%
Fuel and spare parts - locomotives 6% 911 994 9%
Infrastructure and Locomotive Tariffs - Other Tariffs 4% 548* 554* 1%
Engagement of locomotive crews 0.5% 163 72 -56%
Expense relating to short-term leases (rolling stock) 0.2% 209 27 -87%
Other Operating Cash Costs 3% 518 475 -8%
Total Operating Cash Costs 100% 14,553 15,654 8%
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 51% of the Group's Total Operating Cash
Costs in the first six months of 2022, increased 4% year on year to RUB 8,043
million* due to:
· Regulated RZD tariffs for the traction of empty railcars which rose
6.8% from 1 January 2022 and additionally by 11% from 1 June 2022.
· A decline in the Group's Freight Rail Turnover of 3% year on year in
the first six months of 2022.
· An improved Total Empty Run Ratio (for all types of rolling stock) of
50% (H1 2021: 52%) with the Share of Empty Run Kilometers paid by Globaltrans
declining to 98% (H1 2021: 100%).
Employee benefit expense
Employee benefit expense, which represented 23% of the Group's Total Operating
Cash Costs in the first six months of 2022, increased 56% year on year to RUB
3,560 million. This resulted from:
· Inflation-driven growth in wages and salaries.
· A 4% 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 over the last twelve months period and successful M&A.
Repairs and maintenance
Repairs and maintenance costs, which comprised 12% of the Group's Total
Operating Cash Costs in the first six months of 2022, declined 11% year on
year to RUB 1,928 million as a decrease in the number of depot repairs and a
rise in proceeds from the disposal of second-hand spare parts were partially
offset by the inflation-driven rise in costs of certain repair works and spare
parts in the reporting period.
Fuel and spare parts - locomotives
Fuel and spare parts - locomotives expenses, which accounted for 6% of the
Group's Total Operating Cash Costs in the first six months of 2022, rose 9%
year on year to RUB 994 million reflecting an inflation-driven rise in the
cost of fuel and certain spare parts.
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 the first six months of 2022 and rose 1%
year on year to RUB 554 million*, impacted by higher regulated RZD tariffs and
an increased number of fleet relocated in and from lease operations.
Engagement of locomotive crews
Costs related to the engagement of locomotive crews from RZD in the first six
months of 2022 (less than 1% of the Group's Total Operating Cash Costs)
declined 56% year on year to RUB 72 million due to the 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 the first six months of 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 27 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 six months ended 30 June 2022 and 2021.
H1 2021 H1 2022 Change
RUB mln RUB mln %
Legal, consulting and other professional fees 37 47 27%
Expense relating to short-term leases (office) 50 46 -8%
Auditors' remuneration 15 22 45%
Advertising and promotion 21 18 -13%
Taxes (other than on income and value added taxes) 14 13 -4%
Communication costs 12 12 -5%
Information services 8 8 9%
Expense relating to short-term leases (tank containers) 14 - -100%
Other expenses 347 308 -11%
Other Operating Cash Costs 518 475 -8%
Other Operating Cash Costs, which comprised 3% of the Group's Total Operating
Cash Costs, fell 8% year on year to RUB 475 million in the first six months of
2022.
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 "Net (gain)/loss on sale of
property, plant and equipment".
The following table provides a breakdown of the Total Operating Non-Cash Costs
for the six months ended 30 June 2022 and 2021.
H1 2021 H1 2022 Change
RUB mln RUB mln %
Impairment of property, plant and equipment - 3,713 NM
Depreciation of property, plant and equipment 3,269 3,360 3%
Depreciation of right-of-use assets 376 1,349 259%
Loss on derecognition arising on capital repairs 11 283 190 -33%
Net (gain)/loss on sale of property, plant and equipment (52) 10 NM
Net impairment (gains)/ losses on trade and other receivables (2) 1 NM
Amortisation of intangible assets 1 0.01 -99%
Total Operating Non-Cash Costs 3,874 8,622 123%
A 123% year-on-year increase in Total Operating Non-Cash Costs to RUB 8,622
million in the first six months of 2022 stemmed primarily from:
· Impairment of property, plant and equipment in the amount of RUB
3,713 million related to the impairment of about 3.3k units of rolling stock
(mostly gondola cars) blocked in Ukraine.
· A 259% year-on-year rise in Depreciation of right-of-use assets as
the Group sizably 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", "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 160% year on year to RUB 26,973 million in
the first six months 2022. The Adjusted EBITDA Margin increased to 63% in the
first six months of 2022 from 42% in the same period in 2021 reflecting the
72% year-on-year increase in Adjusted Revenue while Total Operating Cash Costs
rose 8% year on year.
The following table provides details on Adjusted EBITDA for the six months
ended 30 June 2022 and 2021, and its reconciliation to EBITDA and Profit for
the period.
H1 2021 H1 2022 Change
RUB mln RUB mln %
Profit for the period 4,162 12,341 196%
Plus (Minus)
Income tax expense 1,352 4,469 230%
Finance costs - net 1,088 1,561 43%
Net foreign exchange transaction losses on financing activities (12) (473) 3901%
Amortisation of intangible assets 1 0.01 -99%
Depreciation of right-of-use assets 376 1,349 259%
Depreciation of property, plant and equipment 3,269 3,360 3%
EBITDA 10,236 22,606 121%
Minus (Plus)
Loss on derecognition arising on capital repairs (283) (190) -33%
Net foreign exchange transaction losses on financing activities (12) (473) 3901%
Other gains - net 87 19 -79%
Net gain/(loss) on sale of property, plant and equipment 52 (10) NM
Impairment of property, plant and equipment - (3,713) NM
Adjusted EBITDA 10,392 26,973 160%
Finance income and costs
The following table provides a breakdown of Finance income and costs for the
six months ended 30 June 2022 and 2021.
H1 2021 H1 2022 Change
RUB mln RUB mln %
Interest expense:
Bank borrowings (700) (710) 1%
Non-convertible bond (400) (321) -20%
Total interest expense calculated using the effective interest rate method (1,099) (1,031) -6%
Other lease liabilities (53) (484) 820%
Total interest expense (1,152) (1,515) 31%
Other finance costs (16) (0.05) -100%
Total finance costs (1,168) (1,515) 30%
Interest income:
Bank balances 62 238 286%
Short term deposits 5 167 2994%
Loans to related parties - 10 NM
Loans to third parties 1 - -100%
Total interest income calculated using the effective interest rate method 68 415 512%
Finance leases - related parties - 1 NM
Finance leases - third parties 24 9 -64%
Total interest income 92 425 361%
Other finance income - 2 NM
Total finance income 92 427 363%
Net foreign exchange transaction gains/(losses) on borrowings and other 1 (2) NM
liabilities
Net foreign exchange transaction losses on cash and cash equivalents and other (13) (472) 3544%
monetary assets
Net foreign exchange transaction losses on financing activities (12) (473) 3901%
Net finance costs (1,088) (1,561) 43%
Finance costs
Total finance costs for the first six months of 2022 increased 30% year on
year to RUB 1,515 million largely due to the rise in Other lease liabilities
to RUB 484 million from RUB 53 million in the first six months of 2021 as the
Group increased the number of gondola cars leased-in under long-term operating
leases.
Finance income
In the first six months of 2022, the Group's Total finance income increased
363% year on year to RUB 427 million primarily due to increases in short-term
deposits and bank balances along with the rise in deposit rates compared to
the same period the previous year.
Net foreign exchange transaction losses on financing activities
The Group had Net foreign exchange transaction losses on financing activities
of RUB 473 million in the first six months of 2022 compared to RUB 12 million
in the same period in 2021. This resulted from foreign exchange volatility on
the available cash and cash equivalents denominated in foreign currency.
Profit before income tax
The Group reported a year-on-year increase of 205% in Profit before income tax
to RUB 16,809 million in the first six months of 2022, reflecting a 178%
year-on-year increase in the Group's Operating profit to RUB 18,370 million,
which was largely linked to the factors described above.
Income tax expense
Income tax expense rose 230% year on year to RUB 4,469 million in the first
six months of 2022 largely due to the rise in taxable profits and an increase
in the estimated average interim tax rate used for the first half of 2022 to
26.6% (H1 2021: 24.5%).
Profit for the period
The Group's Profit for the period increased 196% year on year to RUB 12,341
million reflecting the factors described above.
Profit for the period attributable to the owners of the Company increased 260%
year on year to RUB 11,804 million reflecting the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
In the first six months of 2022, the Group's capital expenditure consisted
principally of maintenance CAPEX (including capital repairs) and the selective
acquisition of fleet. In addition, the Group acquired a 40% stake in its
subsidiary BaltTransServis 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 30 June
2022, the Group had Net Working Capital of RUB 4,218 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 six months ended 30 June 2022 and
2021.
H1 2021 H1 2022
RUB mln RUB mln
Cash flows from operating activities 10,482 26,997
Changes in working capital: (19) (991)
Inventories 317 219
Trade receivables (537) (1,478)
Other assets 374 675
Other receivables (172) 283
Trade and other payables (231) 355
Contract liabilities 231 (1,044)
Cash generated from operations 10,463 26,006
Tax paid (827) (4,399)
Net cash from operating activities 9,637 21,607
Cash flows from investing activities
Payment for acquisition of non-controlling interest - (8,800)
Purchases of property, plant and equipment (3,966) (3,697)
Proceeds from disposal of property plant and equipment 70 12
Loans granted to third parties (75) -
Loans granted to related parties - (400)
Loan repayments received from third parties 4 -
Interest received 92 430
Receipts from finance lease receivable 60 23
Other (20) (31)
Net cash used in investing activities (3,835) (12,464)
Cash flows from financing activities
Net cash inflows/(outflows) from borrowings and financial leases 12 : 256 (6,569)
Proceeds from bank borrowings 9,990 -
Repayments of borrowings (9,734) (6,569)
Principal elements of lease payments for other lease liabilities (403) (1,200)
Interest paid on bank borrowings and non-convertible unsecured bonds (1,059) (1,074)
Interest paid on lease liabilities (49) (479)
Dividends paid to non-controlling interests in subsidiaries (140) (111)
Dividends paid to owners of the Company (5,003) -
Purchase of treasury shares - (114)
Net cash used in financing activities (6,398) (9,548)
Net decrease in cash and cash equivalents (596) (405)
Effect of exchange rate changes on cash and cash equivalents (9) (507)
Cash and cash equivalents at beginning of the period 4,978 12,855
Cash and cash equivalents at the end of the period 4,373 11,943
Net cash from operating activities
In the first six months of 2022 Net cash from operating activities rose 124%
year on year to RUB 21,607 million largely reflecting the following factors:
· The increase in Cash generated from operations (after "Changes in
working capital") which rose 149% year on year to RUB 26,006 million
principally due to the 158% year-on-year increase in Cash flows from operating
activities.
· Tax paid which was 432% higher year on year at RUB 4,399 million
primarily reflecting the increase in taxable profits.
Net cash used in investing activities
Net cash used in investing activities increased 225% (or RUB 8,629 million)
year on year to RUB 12,464 million largely reflecting the following factors:
· A 7% or RUB 269 million year-on-year decrease in Purchases of
property, plant and equipment (on a cash basis; including maintenance CAPEX)
to RUB 3,697 million.
· RUB 8,800 million payment for the acquisition of the 40% shareholding
in BaltTransServis bringing the Group's shareholding to 100% (RUB 300 million
was prepaid in the H2 2021).
Net cash used in financing activities
The 49% year-on-year rise in Net cash used in financing activities which
increased to RUB 9,548 million in the first six months of 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 the first six months of 2022
with Net cash outflow from borrowings and financial leases amounting to RUB
6,569 million compared to Net cash inflow from borrowings and financial leases
of RUB 256 million in the same period the previous year.
· Interest paid on bank borrowings and non-convertible unsecured bonds
remained stable year on year (up 1%) at RUB 1,074 million in the first six
months of 2022.
· Interest paid on lease liabilities rose to RUB 479 million from RUB
49 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
both technical limitations regarding upstreaming cash to the Cyprus holding
company and the objective of establishing liquidity buffers. As a result no
dividends were paid to the owners of the Company in the first six months of
2022 comparing to RUB 5,003 million paid in the same period the previous year.
· Dividends paid to non-controlling interests in subsidiaries decreased
20% year on year to RUB 111 million in the first six months of 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" (as part of the capital
expenditures was financed with a finance lease).
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 the first six months of 2022 the Group's Total CAPEX (on a cash basis,
including maintenance CAPEX) was 7% lower year on year at RUB 3,697 million,
reflecting:
· Maintenance CAPEX which decreased 5% year on year to RUB 3,275
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 declined 19% year on year to RUB 422 million*
and includes cash outflow for the purchase of tank cars contracted in 2021.
The Group's capital expenditure (including maintenance CAPEX) on an accrual
basis was RUB 4,311 million in the first six months of 2022 (H1 2021: RUB
4,035 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.
In March 2022 Globaltrans completed the acquisition of the remaining 40%
shareholding in BaltTransServis 13 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 H2 2021). As a result of this transaction, the Group's Total
CAPEX adjusted for M&A increased 215% year on year to RUB 12,497 million*
in the first six months 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 six months ended 30 June
2022 and 2021.
H1 2021 H1 2022 Change
RUB mln RUB mln %
Purchase of property, plant and equipment 3,966 3,697 -7%
Total CAPEX 3,966 3,697 -7%
Payment for acquisition of non-controlling interest - 8,800 NM
Total CAPEX adjusted for M&A 3,966* 12,497* 215%
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",
"Payment for acquisition of non-controlling interest" plus "Cash inflow from
disposal of subsidiary undertakings - net of cash disposed of".
Free Cash Flow increased 53% or RUB 2,197 million year on year to RUB 6,356
million in the first six months of 2022, primarily due to:
· A 149% or RUB 15,542 million year-on-year increase in Cash generated
from operations (after "Changes in working capital") to RUB 26,006 million.
· Total CAPEX (including maintenance CAPEX) of RUB 3,697 million which
was 7% or RUB 269 million lower year on year.
· Tax paid which increased 432% or RUB 3,572 million year on year to
RUB 4,399 million.
· A 272% or RUB 1,227 million year-on-year rise in a combined
"Principal elements of lease payments for other lease liabilities" and
"Interest paid on lease liabilities" which rose to RUB 1,679 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 six months ended 30 June 2022 and 2021, and its
reconciliation to Cash generated from operations.
H1 2021 H1 2022 Change
RUB mln RUB mln %
Cash generated from operations (after "Changes in working capital") 10,463 26,006 149%
Total CAPEX (including maintenance CAPEX) (3,966) (3,697) -7%
Tax paid (827) (4,399) 432%
Interest paid on bank borrowings and non-convertible unsecured bonds (1,059) (1,074) 1%
Principal elements of lease payments for other lease liabilities (403) (1,200) 198%
Interest paid on other lease liabilities (49) (479) 874%
Payment for acquisition of non-controlling interest - (8,800) NM
Free Cash Flow 4,159 6,356 53%
Minus
Adjusted Profit Attributable to Non-controlling Interests 881 536 -39%
Attributable Free Cash Flow 3,278 5,820 78%
Capital resources
As of 30 June 2022, the Group's financial indebtedness consisted of borrowings
and non-convertible unsecured bonds for an aggregate principal amount of RUB
24,711 million (including accrued interest of RUB 344 million*), a decrease of
21% compared to the end of 2021.
Under IFRS 16, Other lease liabilities (not included in Total debt) of RUB
6,928 million were recognised on the balance sheet as of 30 June 2022 (31
December 2021: RUB 5,842 million) which was primarily related to the long-term
leasing of certain fleet and offices.
As of 30 June 2022, the Group's Net Debt decreased 31% to RUB 12,768 million
compared to 31 December 2021 with the Net Debt to LTM Adjusted EBITDA
ratio 14 improving to 0.28x compared to 0.62x at the end of 2021.
The following table sets out details on the Group's total debt, Net Debt and
Net Debt to LTM Adjusted EBITDA at 30 June 2022 and 2021, and the
reconciliation of Net Debt to Total debt.
As of As of Change
31 Dec 30 June
2021 2022
RUB mln RUB mln %
Total debt 31,318 24,711 -21%
Minus
Cash and cash equivalents 12,855 11,943 -7%
Net Debt 18,464 12,768 -31%
Net Debt to LTM Adjusted EBITDA 0.62x 0.28x -
Rouble-denominated borrowings accounted for 100% of the Group's debt portfolio
as of 30 June 2022. The Russian rouble is the functional currency of the
Company.
The weighted average effective interest remained unchanged at 7.5% as of 30
June 2022 compared to the end of 2021 despite significant market interest rate
volatility over the first half of 2022. All of the Group's debt had fixed
interest rates as of 30 June 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 36,730 million as of 30 June 2022.
The following table gives the maturity profile of the Group's borrowings
(including accrued interest of RUB 344 million*) as of 30 June 2022.
As of
30 June
2022
RUB mln
Q3 2022 4,811*
Q4 2022 2,246*
Q1 2023 4,504*
Q2 2023 1,926*
H2 2023 4,764*
2024 5,431*
2025 1,029*
Total 24,711
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 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 financial information contained in this announcement is derived from the
condensed consolidated interim financial information (unaudited) of
Globaltrans Investment PLC ("the Company" and together with its consolidated
subsidiaries "Globaltrans" or "the Group") as at and for the six months ended
30 June 2022 and 2021 and prepared in accordance with International Accounting
Standard 34 "Interim Financial Reporting" as adopted by the European Union.
The condensed consolidated interim financial information should be read in
conjunction with the consolidated Management report and consolidated financial
statements for the year ended 31 December 2021, which have been prepared in
accordance with International Financial Reporting Standards as adopted by the
European Union and the Cyprus Companies Law, Cap. 113.
The Group's condensed consolidated interim financial information (unaudited),
selected operational information as at and for the six months ended 30 June
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.
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", "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", "Acquisition of non-controlling interest" and
"Payment for acquisition of non-controlling interest" plus "Cash inflow from
disposal of subsidiary undertakings - net of cash disposed of".
Freight Rail Turnoveris 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 with 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" (as part of the capital
expenditures was financed with a finance lease).
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 Ratiois 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 "Net (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 "Net (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.
LEGAL DISCLAIMER
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 whatsoever for any loss
howsoever arising from any use of the contents of this announcement or
otherwise arising in connection therewith.
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 BaltTransServis 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 (including 5.5k units leased in from other Group
subsidiaries and 1.7k units leased in from third parties).
2 For the last twelve months period.
3 Service Contracts represent contracts with an initial term greater than
one-year that stipulates an obligation to transport a specified amount of
cargoes with the client. As of the end of H1 2022 Globaltrans had six service
contracts.
4 Coal including coke; metallurgical cargoes including ferrous metals, scrap
metal and ores.
5 An increase of 6.8% from 1 January 2022 and an additional increase of 11%
from 1 June 2022 (compared to the level of the January-May 2022 period).
6 The cancellation of 422,657 shares (representing 0.24% of the Company's
share capital) purchased in the form of GDRs under the buyback programmes and
held in treasury was approved by the Board of Directors. Following the
cancellation of these shares the total number of shares of the Company in
issue (including GDRs) will be 178,318,259 with no shares/GDRs held in
treasury. The respective announcement will be released once the cancellation
is completed.
7 Imposed suspension of GDRs trading on the London Stock Exchange continued
as of the date of publication.
8 For the last twelve months period.
9 Includes "Infrastructure and locomotive tariffs: loaded trips" for H1 2022
of RUB 4,662 million (H1 2021: RUB 6,442 million) and "Services provided by
other transportation organisations" of RUB 1,126 million (H1 2021: RUB 851
million).
10 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.
11 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.
12 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".
13 BaltTransServis 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 (including 5.5k units leased in from other Group
subsidiaries and 1.7k units leased in from third parties).
14 For the last twelve months period.
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