REG - Globaltrans Inv PLC - Interim 2023 Results
29/08/2023 07:00
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RNS Number : 5470K Globaltrans Investment PLC 29 August 2023
For immediate release 29 August 2023
Globaltrans Investment PLC 1 (#_ftn1)
Interim 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 six months ended 30
June 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
· Overall industry freight rail turnover rose 1.4% year on year.
Relatively stable pricing environment sustained in both gondola and tank car
segments.
· Globaltrans again demonstrated operational excellence with the
Empty Run Ratio for gondola cars reduced to 39%. Freight Rail Turnover
remained unchanged year on year and Average Price per Trip was up 3% year on
year.
· Robust financial results with an Adjusted Revenue increase of 2%
year on year to RUB 43.3 billion and an Adjusted EBITDA decline of 6% year on
year to RUB 25.4 billion reflecting ongoing cost pressures.
· Total CAPEX adjusted for M&A was RUB 6.1 billion.
· Strong Free Cash Flow of RUB 11.9 billion. Net cash position at
RUB 10.5 billion.
· Dividends remain suspended.
· Start of re-domiciliation to Abu Dhabi Global Market aimed at
corporate structure improvement along with the unblocking of certain
intra-group transactions, including the upstreaming of dividends, has been
approved by shareholders at an Extraordinary General Meeting.
Commenting on Globaltrans' interim 2023 results, CEO Valery Shpakov said:
"Globaltrans again delivered robust results despite the challenging
environment. In the first half, we were able to capitalise on our logistical
strengths and further improve our gondola Empty Run Ratio. Our Free Cash Flow
remained strong with robust cash generation and moderate expansion expenditure
allowing us to finish the first half with a solid net cash position.
Creating shareholder value remains a priority and we therefore initiated a
re-domiciliation of the holding company to the Abu Dhabi Global Market with
the aim of streamlining our corporate structure and unblocking certain
intra-group transactions. I would like to thank our shareholders for their
support of this initiative, demonstrated at the recent Extraordinary General
Meeting.
As you would expect, we continue to maintain our discipline and focus. We
entered the second half of the year as a strong, efficient, and well-managed
business, one that is well positioned to continue to deliver as we progress
towards our value creation goals."
FINANCIAL RESULTS
Robust financial results, strong Free Cash Flow and net cash position,
dividends on hold
· Revenue rose 7% year on year to RUB 52.0 billion with Adjusted
Revenue (a key component) increasing 2% year on year to RUB 43.3 billion in H1
2023 reflecting stable Freight Rail Turnover and solid average pricing.
· Robust Adjusted EBITDA at RUB 25.4 billion was 6% lower year on
year largely due to accelerated cost inflation despite careful control of
overall costs.
· Total CAPEX adjusted for M&A was RUB 6.1 billion (a decline
of 51% year on year).
· Strong Free Cash Flow of RUB 11.9 billion (H1 2022: RUB 6.4
billion).
· Profit for the period rose to RUB 20.9 billion (H1 2022: RUB 12.3
billion) reflecting the sizable impairment of rolling stock in the
year-earlier period and a profit on the sale of the Group's shareholding in
its leasing subsidiary Spacecom 2 (#_ftn2) in the current year.
· Net cash position was RUB 10.5 billion with Net Debt to LTM
Adjusted EBITDA at (0.2)x 3 (#_ftn3) .
· Dividend payments continue to be suspended due to the technical
limitations regarding upstreaming cash to the holding company incorporated in
Cyprus.
OPERATIONAL PERFORMANCE
Operational efficiency further improved, average pricing was solid, all
Service Contracts remain intact
· Continued operational excellence with the Empty Run Ratio for
gondola cars significantly improved to 39% in H1 2023 (H1 2022: 42%) driven by
logistics adjustments and Service Contracts. Total Empty Run Ratio (for all
types of rolling stock) stood at 48% (H1 2022: 50%).
· The Group's Freight Rail Turnover remained largely unchanged year
on year in H1 2023 (up 2% year on year including Engaged Fleet) with the
robust performance in the rail tank segment compensating for the volatility in
the gondola segment logistics.
· Solid average pricing with Average Price per Trip 3% higher year
on year reflecting relatively stable industry demand.
· The Group maintained its focus on Service Contracts(( 4 (#_ftn4)
)) and client retention. Service Contracts remain intact contributing about
61% of the Group's Net Revenue from Operation of Rolling Stock in H1 2023.
H1 2023 MARKET REVIEW
Relatively stable industry demand supported by logistics transformation
· Overall industry freight rail turnover (in tonnes-km) rose 1.4%
year on year with volumes (in tonnes) up 0.8% year on year.
· A moderate rise in the proportion of long-distance routes
supported increased demand for railcars.
Recovery in non-oil (bulk) cargo volumes
· Overall non-oil (bulk) cargo volumes rose 1.3% year on year in H1
2023 largely supported by 1.8% and 5.2% year-on-year increases in coal and
construction materials volumes respectively. In the metallurgical segment,
volumes continued to recover but still remained below levels in the
year-earlier period (down 1.4% year on year)(( 5 (#_ftn5) )).
· Gondola market rates recovered from the levels of the second half
of 2022 but were still below first half 2022 levels.
Demand in the oil products and oil segment was relatively steady
· Overall industry oil products and oil volumes slipped 1.5% year
on year in H1 2023.
· Market pricing remained robust.
RECENT UPDATE
Relatively stable industry demand and pricing continued so far in H2 2023 but
with low visibility
· Overall industry freight rail turnover rose 2.7% year on year in
July 2023. Visibility remains low.
· Solid market pricing prevails in both gondola and tank segments
but with the potential for volatility going forward.
· Accelerated cost pressures with regulated RZD tariffs for the
traction of empty railcars (a key driver of the largest Operating Cash Cost
component) up about 23% in total over H2 2022 and H1 2023(( 6 (#_ftn6) )).
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 over the coming 18 months.
· Between 2025 - 2029 the Group expects its owned fleet retirements
to average about 3,500 units per year.
Re-domiciliation is in progress
· Re-domiciliation to the Abu Dhabi Global Market (ADGM) was
approved at the Extraordinary General Meeting (EGM) on 16 August 2023.
· Expected to unblock the ability to carry out certain intra-group
transactions, including the upstreaming of dividends, which are currently
allowed only to a very limited extent. It will not however directly trigger
restoration of dividend payments to shareholders.
· Expected that listings on both the London Stock Exchange and
Moscow Exchange along with the current depositary programme could be
maintained post re-domiciliation. Listing of GDRs on any alternative stock
exchanges is not being considered at present.
· The current international standard of corporate governance,
including the number of independent directors, as well as transparency
practices will be maintained.
· It is anticipated that the tax on the upstreaming of dividends
upon re-domiciliation to ADGM will be 15%, the same level as currently
following the recent increase from 5 to 15% on dividends to Cypriot public
companies 7 (#_ftn7) .
· The fundamental rights of shareholders will not be affected by
the re-domiciliation, in part due to the fact that the legislation in Cyprus
and the applicable ADGM regulations are both grounded in English law.
· The process is expected to take about six months 8 (#_ftn8) .
DOWNLOADS
· The Group's condensed consolidated interim financial
information (unaudited) for the six months ended 30 June 2023 is available for
viewing
at http://www.rns-pdf.londonstockexchange.com/rns/5470K_1-2023-8-28.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5470K_1-2023-8-28.pdf)
· The related Interim 2023 Results Presentation is available for
viewing at
http://www.rns-pdf.londonstockexchange.com/rns/5470K_2-2023-8-28.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/5470K_2-2023-8-28.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 (http://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: Tuesday, 29 August 2023
Time: 13:00 London / 15:00 Moscow / 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_Vozf9gbHSiKNpRQ-__Tiwg#/registration
(https://us06web.zoom.us/webinar/register/WN_Vozf9gbHSiKNpRQ-__Tiwg#/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 29 August
2023 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)
ABOUT GLOBALTRANS
Globaltrans Investment PLC ("Company" and together with its consolidated
subsidiaries "Globaltrans" or the "Group") is a leading freight rail
transportation group with subsidiary operations across Russia and the CIS
countries.
The Company was founded in 2004 by a group of entrepreneurs who combined their
freight rail businesses under the single brand Globaltrans. These founders
remain key shareholders of the Group.
Throughout its years of operation, the Company has pursued a prudent approach
to investment, expanding its fleet both by means of organic growth and through
the acquisition of other rail operators. Globaltrans' total fleet is currently
almost three times larger than it was at the time of the Company's IPO in
2008.
The Group's dividend policy establishes a transparent and straightforward
approach to the payment of dividends and is supported by a long history of
delivering attractive shareholder remuneration.
Globaltrans global depositary receipts (GDRs) have been listed on the Main
Market of the London Stock Exchange (ticker symbol: GLTR) since May 2008 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, 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 about 66 thousand units as of the end of June 2023, of
which about 94% are owned by the Company. The core of the fleet is universal
gondola cars used for a broad range of bulk cargoes (70% of total fleet) and
tank cars for transporting oil products and oil (28% of total fleet).
Globaltrans also manages its own fleet of mainline locomotives with 66 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 2023 and 2022.
EU IFRS financial information
H1 2022 H1 2023 Change
RUB mln RUB mln %
Revenue 48,415 51,972 7%
Total cost of sales, selling and marketing costs and administrative expenses (30,063) (32,277) 7%
Profit on sale of subsidiary - 3,400 NM
Other gains/(losses) - net 19 (86) NM
Operating profit 18,370 23,009 25%
Finance (costs)/gains - net (1,561) 1,705 NM
Profit before income tax 16,809 24,714 47%
Income tax expense (4,469) (3,811) -15%
Profit for the period 12,341 20,903 69%
Profit attributable to:
Owners of the Company 11,804 20,906 77%
Non-controlling interests 536 (3) NM
Basic and diluted earnings per share for profit attributable to the equity 66.07 117.24 77%
holders of the Company during the period (RUB per share)
H1 2022 H1 2023 Change
RUB mln RUB mln %
Cash generated from operations (after changes in working capital) 26,006 24,169 -7%
Tax paid (4,399) (3,664) -17%
Net cash from operating activities 21,607 20,505 -5%
Net cash used in investing activities (12,464) (5,077) -59%
Net cash used in financing activities (9,548) (3,009) -68%
Non-IFRS financial information
H1 2022 H1 2023 Change
RUB mln RUB mln %
Adjusted Revenue 42,627 43,323 2%
Including
Net Revenue from Operation of Rolling Stock 40,263* 40,584* 1%
Operating leasing of rolling stock 1,926 2,074 8%
Total Operating Cash Costs 15,654 17,861 14%
Including
Empty Run Cost 8,043* 9,748* 21%
Employee benefit expense 3,560 3,874 9%
Repairs and maintenance 1,928 2,134 11%
Fuel and spare parts - locomotives 994 934 -6%
Adjusted EBITDA 26,973 25,427 -6%
Adjusted EBITDA Margin, % 63% 59% -
Total CAPEX (incl. maintenance CAPEX) 3,697 4,272 16%
Total CAPEX adjusted for M&A 12,497 6,103 -51%
Free Cash Flow 6,356 11,866 87%
Attributable Free Cash Flow 5,820 11,869 104%
Debt profile
As of As of Change
31 Dec 2022
30 June 2023
RUB mln RUB mln %
Total debt 20,649 20,424 -1%
Cash and cash equivalents 16,052 30,951 93%
Net Debt 4,596 (10,527) NM
Net Debt to LTM Adjusted EBITDA (x) 10 (#_ftn10) 0.1 (0.2) -
Operational information
H1 2022 H1 2023 Change
%
Freight Rail Turnover, billion tonnes-km (excl. Engaged Fleet) 68.3 68.2 0%
Transportation Volume, million tonnes (excl. Engaged Fleet) 38.6 37.8 -2%
Average Price per Trip, RUB 67,510 69,485 3%
Average Rolling Stock Operated, units 56,563 57,220 1%
Average Distance of Loaded Trip, km 1,753 1,794 2%
Average Number of Loaded Trips per Railcar 10.5 10.2 -3%
Total Empty Run Ratio (for all types of rolling stock), % 50% 48% -
Empty Run Ratio for gondola cars, % 42% 39% -
Share of Empty Run Kilometres paid by Globaltrans, % 98% 99% -
Total Fleet, units (at period end), including: 67,346 65,915 -2%
Owned Fleet, units (at period end) 62,027 62,020 0%
Leased-in Fleet, units (at period end) 5,319 3,895 -27%
Leased-out Fleet, units (at period end) 8,627 6,997 -19%
Average age of Owned Fleet, years (at period end) 14.2 14.7 -
Total number of employees (at period end) 1,816 1,803 -1%
Revenue
In the first six months of 2023, the Group's Total revenue increased 7% year
on year to RUB 51,972 million reflecting the combination of a 2% year-on-year
rise in Adjusted Revenue (a key component) and a 49% 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 six months ended 30 June 2023 and 2022.
H1 2022 H1 2023 Change
RUB mln RUB mln %
Railway transportation - operators services (tariff borne by the Group) 11 13,959 19,019 36%
(#_ftn11)
Railway transportation - operators services (tariff borne by the client) 32,224 30,590 -5%
Operating leasing of rolling stock 1,926 2,074 8%
Other 306 289 -6%
Total revenue 48,415 51,972 7%
Adjusted Revenue
Adjusted Revenue is a non-IFRS financial measure defined as "Total revenue"
adjusted for "pass through" items: "Infrastructure and locomotive tariffs:
loaded trips" and "Services provided by other transportation organisations".
"Infrastructure and locomotive tariffs: loaded trips" comprises revenue
resulting from tariffs that customers pay to the Group and the Group pays on
to RZD, which are reflected in equal amounts in both the Group's Total revenue
and Cost of sales. "Services provided by other transportation organisations"
is revenue resulting from the tariffs that customers pay to the Group and the
Group pays on to third-party rail operators for subcontracting their rolling
stock, which are reflected in equal amounts in both the Group's Total revenue
and Cost of sales. The net result of Engaged Fleet operations is reflected as
Net Revenue from Engaged Fleet and is included in Adjusted Revenue.
In the first six months of 2023, the Group's Adjusted Revenue was RUB 43,323
million up 2% 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 2023 and 2022 and its reconciliation to Total revenue.
H1 2022 H1 2023 Change
RUB mln RUB mln %
Total revenue 48,415 51,972 7%
Minus "pass through" items
Infrastructure and locomotive tariffs: loaded trips 4,662 6,805 46%
Services provided by other transportation organisations 1,126 1,845 64%
Adjusted Revenue 42,627 43,323 2%
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 six months ended 30 June 2023 and 2022.
H1 2022 H1 2023 Change
RUB mln RUB mln %
Net Revenue from Operation of Rolling Stock 40,263* 40,584* 1%
Operating leasing of rolling stock 1,926 2,074 8%
Net Revenue from Engaged Fleet 132* 375* 184%
Other 306 289 -6%
Adjusted Revenue 42,627 43,323 2%
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 2023, increased
1% year on year to RUB 40,584 million* reflecting solid average pricing and
stable Freight Rail Turnover.
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 2023 and increased 8% year on year to
RUB 2,074 million. This reflected the rise in average leasing rates which was
partially offset by the decline in the average number of leased-out fleet
during the reporting period due to the sale of some rail tank cars as part of
the disposal of Globaltrans' shareholding in Spacecom(( 12 (#_ftn12) )).
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 half of 2023, increased 184% year on year in the
first six months of 2023 to RUB 375 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 half of 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 decreased 6% year on year to
RUB 289 million in the first six months of 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 six months ended 30 June
2023 and 2022.
H1 2022 H1 2023 Change
RUB mln RUB mln %
Cost of sales 27,452 29,563 8%
Selling and marketing costs 118 165 40%
Administrative expenses 2,493 2,549 2%
Total cost of sales, selling and marketing costs and administrative expenses 30,063 32,277 7%
A 7% year-on-year rise in the Group's Total cost of sales, selling and
marketing costs and administrative expenses to RUB 32,277 million in the first
six months of 2023 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") increased 49% year on year to RUB 8,649 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 RZD infrastructure and locomotive tariffs.
· The Group's Total cost of sales, selling and marketing costs and
administrative expenses adjusted for "pass- through" cost items declined 3%
year on year to RUB 23,628 million in the first half of 2023, due to:
o A 14% year-on-year increase in Total Operating Cash Costs to RUB 17,861
million in the first six months of 2023, which largely reflected accelerated
cost inflation primarily in the regulated RZD tariffs for the traction of
empty railcars, along with the rise in employee benefit expense and repairs
and maintenance costs. Total Operating Cash Costs (excluding Empty Run Costs)
rose only 7% year on year.
o Total Operating Non-Cash Costs decreased 33% year on year to RUB 5,767
million primarily due to the fact that there was no significant impairment of
rolling stock in the first half of 2023 compared to RUB 3,713 million
impairment related to the rolling stock blocked in Ukraine in the first half
of 2022. This was partially offset by a 35% increase in Depreciation of
property, plant and equipment largely due to both the addition as well as the
higher depreciation of acquired rolling stock 13 (#_ftn13) 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:
H1 2022 H1 2023 Change
RUB mln RUB mln %
"Pass through" cost items 5,788 8,649 49%
Infrastructure and locomotive tariffs: loaded trips 4,662 6,805 46%
Services provided by other transportation organisations 1,126 1,845 64%
Total cost of sales, selling and marketing costs and administrative 24,275 23,628 -3%
expenses (adjusted for "pass through" cost items)
Total Operating Cash Costs 15,654 17,861 14%
Empty Run Costs 8,043* 9,748* 21%
Employee benefit expense 3,560 3,874 9%
Repairs and maintenance 1,928 2,134 11%
Fuel and spare parts - locomotives 994 934 -6%
Infrastructure and Locomotive Tariffs - Other Tariffs 554* 639* 15%
Engagement of locomotive crews 72 48 -34%
Expense relating to short-term leases (rolling stock) 27 13 -53%
Other Operating Cash Costs 475 472 -1%
Total Operating Non-Cash Costs 8,622 5,767 -33%
Depreciation of property, plant and equipment 3,360 4,525 35%
Depreciation of right-of-use assets 1,349 1,158 -14%
Loss on derecognition arising on capital repairs 190 144 -24%
Net impairment losses on trade and other receivables 1 34 4644%
Impairment/(reversal of) charge on property, plant and equipment 3,713 (24) NM
Loss/(gain) on sale of property, plant and equipment 10 (71) NM
Amortisation of intangible assets 0.01 0.2 2588%
Total cost of sales, selling and marketing costs and administrative 30,063 32,277 7%
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(( 14 (#_ftn14) )) and is reflected in equal
amounts in both the Group's Total revenue and Cost of sales.
The 46% year-on-year increase in this item in the first six months of 2023 to
RUB 6,805 million primarily reflected the higher proportion of clients that
pay infrastructure and locomotive tariffs: loaded trips through the Group
along with the rise in regulated RZD 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 64% year on year
to RUB 1,845 million in the first half of 2023 primarily due to a higher
number of Engaged Fleet operations along with a 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 2023 of RUB 17,861
million were 14% 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 2023 and 2022.
H1 2023 H1 2022 H1 2023 Change
% of total RUB mln RUB mln %
Empty Run Costs 55% 8,043* 9,748* 21%
Employee benefit expense 22% 3,560 3,874 9%
Repairs and maintenance 12% 1,928 2,134 11%
Fuel and spare parts - locomotives 5% 994 934 -6%
Infrastructure and Locomotive Tariffs - Other Tariffs 4% 554* 639* 15%
Engagement of locomotive crews 0.3% 72 48 -34%
Expense relating to short-term leases (rolling stock) 0.1% 27 13 -53%
Other Operating Cash Costs 3% 475 472 -1%
Total Operating Cash Costs 100% 15,654 17,861 14%
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 55% of the Group's Total Operating Cash
Costs in the first half of 2023, increased 21% year on year to RUB 9,748
million* due to:
· A rise in regulated RZD tariffs for the traction of empty railcars of
about 23% in total over H2 2022 and H1 2023 15 (#_ftn15) which was partially
offset by:
· A significant improvement in the Empty Run Ratio for gondola cars to
39% (H1 2022: 42%) with the Share of Empty Run Kilometers paid by Globaltrans
remaining stable at 99% (H1 2022: 98%).
Employee benefit expense
Employee benefit expense, which represented 22% of the Group's Total Operating
Cash Costs in the first six months of 2023, increased 9% year on year to RUB
3,874 million. This resulted from the inflation-driven growth in wages,
salaries and bonuses. The average headcount was little changed (down 2% year
on year).
Repairs and maintenance
Repairs and maintenance costs, which comprised 12% of the Group's Total
Operating Cash Costs in the first half of 2023, increased 11% year on year to
RUB 2,134 million, resulting largely 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 5% of the
Group's Total Operating Cash Costs in the first six months of 2023, declined
6% year on year to RUB 934 million largely reflecting lower fuel costs.
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 half of 2023 and rose 15% year
on year to RUB 639 million*, impacted largely by the rise in the regulated RZD
infrastructure and locomotive tariffs.
Engagement of locomotive crews
Costs related to the engagement of locomotive crews from RZD in the first six
months of 2023 (less than 1% of the Group's Total Operating Cash Costs)
declined 34% year on year to RUB 48 million due to a 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 the first six months of 2023, Expense relating to short-term leases
(rolling stock), representing less than 1% of the Group's Total Operating Cash
Costs, fell 53% year on year to RUB 13 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 (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 2023 and 2022.
H1 2022 H1 2023 Change
RUB mln RUB mln %
Legal, consulting and other professional fees 47 62 33%
Expense relating to short-term leases (office) 46 48 3%
Advertising and promotion 18 23 23%
Auditors' remuneration 22 22 -2%
Communication costs 12 13 8%
Information services 8 10 15%
Taxes (other than on income and value added taxes) 13 7 -50%
Other expenses 308 289 -6%
Other Operating Cash Costs 475 472 -1%
Other Operating Cash Costs, which comprised 3% of the Group's Total Operating
Cash Costs, fell 1% year on year to RUB 472 million in the first half of 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)
charge on 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 six months ended 30 June 2023 and 2022.
H1 2022 H1 2023 Change
RUB mln RUB mln %
Depreciation of property, plant and equipment 3,360 4,525 35%
Depreciation of right-of-use assets 1,349 1,158 -14%
Loss on derecognition arising on capital repairs 16 (#_ftn16) 190 144 -24%
Net impairment losses on trade and other receivables 1 34 4644%
Amortisation of intangible assets 0.01 0.2 2588%
Impairment/(reversal of) charge on property, plant and equipment 3,713 (24) NM
Loss/(gain) on sale of property, plant and equipment 10 (71) NM
Total Operating Non-Cash Costs 8,622 5,767 -33%
A 33% year-on-year decrease in Total Operating Non-Cash Costs to RUB 5,767
million in the first six months of 2023 stemmed primarily from:
· No large impairment of property, plant and equipment in the first
half of 2023 compared to RUB 3,713 million related to the impairment of
rolling stock blocked in Ukraine in the same period in the previous year.
· A 35% 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 17 (#_ftn17) 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) charge on property, plant and
equipment", "Impairment of intangible assets", "Loss on derecognition arising
on capital repairs", "Reversal of impairment of intangible assets" and "Profit
on sale of subsidiary".
The Group's Adjusted EBITDA declined 6% year on year to RUB 25,427 million in
the first six months of 2023. The Adjusted EBITDA Margin narrowed to 59% in
the first half of 2023 from 63% in the same period in 2022 reflecting the 2%
year-on-year increase in Adjusted Revenue and a 14% year-on-year rise in Total
Operating Cash Costs.
The following table provides details on Adjusted EBITDA for the six months
ended 30 June 2023 and 2022, and its reconciliation to EBITDA and Profit for
the period.
H1 2022 H1 2023 Change
RUB mln RUB mln %
Profit for the period 12,341 20,903 69%
Plus (Minus)
Income tax expense 4,469 3,811 -15%
Finance costs/(gains) - net 1,561 (1,705) NM
Net foreign exchange transaction (losses)/gains on financing activities (473) 2,501 NM
Amortisation of intangible assets 0.01 0.2 2588%
Depreciation of right-of-use assets 1,349 1,158 -14%
Depreciation of property, plant and equipment 3,360 4,525 35%
EBITDA 22,606 31,194 38%
Minus (Plus)
Loss on derecognition arising on capital repairs (190) (144) -24%
Profit on sale of subsidiary - 3,400 NM
Net foreign exchange transaction (losses)/gains on financing activities (473) 2,501 NM
Other gains/(losses) - net 19 (86) NM
(Loss)/gain on sale of property, plant and equipment (10) 71 NM
(Impairment)/reversal of charge on property, plant and equipment (3,713) 24 NM
Adjusted EBITDA 26,973 25,427 -6%
Finance income and costs
The following table provides a breakdown of Finance income and costs for the
six months ended 30 June 2023 and 2022.
H1 2022 H1 2023 Change
RUB mln RUB mln %
Interest expense:
Bank borrowings (710) (945) 33%
Non-convertible bonds (321) (135) -58%
Total interest expense calculated using the effective interest rate method (1,031) (1,079) 5%
Other lease liabilities (484) (214) -56%
Total interest expense (1,515) (1,294) -15%
Other finance costs (0.05) (0.1) 17%
Total finance costs (1,515) (1,294) -15%
Interest income:
Bank balances 238 453 90%
Short term deposits 167 24 -86%
Loans to related parties 10 10 -2%
Loans to third parties - 2 NM
Total interest income calculated using the effective interest rate method 415 490 18%
Finance leases - related parties 1 0.4 -52%
Finance leases - third parties 9 7 -23%
Total interest income 425 497 17%
Other finance income 2 - -100%
Total finance income 427 497 16%
Net foreign exchange transaction losses on borrowings and other liabilities (2) - -100%
Net foreign exchange transaction (losses)/gains on cash and cash equivalents (472) 2,501 NM
and other monetary assets
Net foreign exchange transaction (losses)/gains on financing activities (473) 2,501 NM
Net finance (costs)/gains (1,561) 1,705 NM
Finance costs
Total finance costs for the first half of 2023 decreased 15% year on year to
RUB 1,294 million. A 5% 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 1,079 million was more than offset by the 56%
year-on-year decline in Other lease liabilities to RUB 214 million as the
Group decreased the number of fleet leased-in under long-term operating
leases.
Finance income
In the first half of 2023, the Group's Total finance income increased 16% year
on year to RUB 497 million primarily due to increases in bank balances along
with a rise in deposit rates compared to the same period of 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 2,501 million in the first half of 2023 compared to RUB 473 million of
Net foreign expense losses on financing activities in the same period in 2022.
This resulted from foreign exchange volatility on the available cash and cash
equivalents denominated in foreign currency.
Profit on sale of subsidiary
The Group had a Profit on sale of subsidiary in the amount of RUB 3,400
million in the first six months of 2023 (H1 2022: nil) which reflected the
disposal of the Company's shareholding in Spacecom 18 (#_ftn18) .
Profit before income tax
The Group reported a year-on-year increase of 47% in Profit before income tax
to RUB 24,714 million in the first six months of 2023, reflecting a 25%
year-on-year increase in the Group's Operating profit to RUB 23,009 million,
which was largely linked to the factors described above, including:
· No large impairment of property, plant and equipment in the first
half of 2023 compared to RUB 3,713 million related to the impairment of
rolling stock blocked in Ukraine in the same period the previous year.
· RUB 3,400 million of Profit on sale of subsidiary related to the
disposal of the Company's shareholding in Spacecom.
Income tax expense
Income tax expense was down 15% year on year to RUB 3,811 million in the first
half of 2023 largely reflecting the year-on-year decline in the estimated
average interim tax rate. This was due to the reduction of intra-group
dividends and the realisation of profits from the sale of a subsidiary as well
as foreign exchange differences which are exempt from tax at the level of the
parent company.
Profit for the period
The Group's Profit for the period increased 69% year on year to RUB 20,903
million reflecting the factors described above.
Profit for the period attributable to the owners of the Company increased 77%
year on year to RUB 20,906 million reflecting the factors described above.
LIQUIDITY AND CAPITAL RESOURCES
In the first six months of 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 30 June
2023, the Group had Net Working Capital of RUB 3,864 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 condensed
consolidated interim cash flow statement for the six months ended 30 June 2023
and 2022.
H1 2022 H1 2023
RUB mln RUB mln
Cash flows from operating activities 26,997 25,345
Changes in working capital: (991) (1,176)
Inventories 219 224
Trade receivables (1,478) (1,644)
Other assets 675 2,495
Other receivables 283 (25)
Trade and other payables 355 (2,143)
Contract liabilities (1,044) (84)
Cash generated from operations 26,006 24,169
Tax paid (4,399) (3,664)
Net cash from operating activities 21,607 20,505
Cash flows from investing activities
Payment for acquisition of non-controlling interest (8,800) -
Proceeds from sale of subsidiaries (net of cash disposed) - 4,772
Purchases of property, plant and equipment (3,697) (4,272)
Proceeds from disposal of property plant and equipment 12 135
Payment for rolling stock to disposed subsidiary - (6,603)
Loans granted to third parties - (859)
Loans granted to related parties (400) -
Loan repayments received from third parties - 856
Loan repayments received from related parties - 400
Interest received 430 468
Receipts from finance lease receivable 23 26
Other (31) -
Net cash used in investing activities (12,464) (5,077)
Cash flows from financing activities
Net cash outflows from borrowings and financial leases 19 (#_ftn19) : (6,569) (139)
Proceeds from bank borrowings - 8,800
Repayments of borrowings (6,569) (8,939)
Principal elements of lease payments for other lease liabilities (1,200) (1,152)
Interest paid on bank borrowings and non-convertible unsecured bonds (1,074) (1,165)
Interest paid on other lease liabilities (479) (219)
Dividends paid to non-controlling interests in subsidiaries (111) (334)
Purchase of treasury shares (114) -
Net cash used in financing activities (9,548) (3,009)
Net (decrease)/increase in cash and cash equivalents (405) 12,419
Effect of exchange rate changes on cash and cash equivalents (507) 2,479
Cash and cash equivalents at beginning of the period 12,855 16,052
Cash and cash equivalents at the end of the period 11,943 30,951
Net cash from operating activities
In the first half of 2023, Net cash from operating activities decreased 5%
year on year to RUB 20,505 million primarily due to the following factors:
· Cash generated from operations (after "Changes in working capital")
decreased 7% year on year to RUB 24,169 million.
· Tax paid was 17% lower year on year at RUB 3,664 million.
Net cash used in investing activities
Net cash used in investing activities decreased 59% (or RUB 7,387 million)
year on year to RUB 5,077 million largely reflecting:
· A 16% or RUB 575 million year-on-year increase in Purchases of
property, plant and equipment (on a cash basis; including maintenance CAPEX)
to RUB 4,272 million principally due to the purchase of 200 gondola cars in
the reporting period.
· A RUB 6,603 million Payment for rolling stock to a disposed
subsidiary in the first six months of 2023 related to the completion of the
intra-group acquisition of tank cars by BaltTransServis from Spacecom (a
leasing subsidiary disposed of in February 2023) 20 (#_ftn20) .
· A RUB 4,772 million Proceeds from sale of subsidiaries (net of cash
disposed) in the first six months of 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 68% year on year to RUB 3,009
million in the first half of 2023, due to the factors described below:
· Proceeds from borrowings almost matched repayments in the first half
of 2023 resulting in a Net cash outflow from borrowings and financial leases
amounting to RUB 139 million compared to RUB 6,569 million in same period the
previous year.
· Interest paid on bank borrowings and non-convertible unsecured bonds
increased 8% year on year to RUB 1,165 million in the first half of 2023.
· Interest paid on other lease liabilities declined to RUB 219 million
from RUB 479 million on the back of a decrease in the number of rolling stock
leased-in under long-term operating leases.
· As previously announced, the Company suspended dividend payments due
to technical limitations regarding upstreaming cash to the Cyprus holding
company. As a result, no dividends were paid to the owners of the Company in
the first six months of 2023 as well as in the same period the previous year.
· Dividends paid to non-controlling interests in subsidiaries increased
200% year on year to RUB 334 million in the first half of 2023.
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 6,103 million, a decrease of 51% or RUB 6,394
million compared to the same period the previous year reflecting the following
factors:
· Total CAPEX (including maintenance CAPEX) rose 16% or RUB 575 million
year on year to RUB 4,272 million in the first half of 2023:
o Maintenance CAPEX remained relatively unchanged at RUB 3,305 million*
(up 1% year on year).
o Expansion CAPEX increased to RUB 967 million* compared to RUB 422
million* in the same period the previous year largely reflecting the purchase
of 200 new gondola cars.
· A RUB 6,603 million Payment for rolling stock to a disposed
subsidiary in the first half of 2023 related to the completion of the
intra-group acquisition of tank cars 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) in the first six months of 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 six months ended 30 June
2023 and 2022.
H1 2022 H1 2023 Change
RUB mln RUB mln %
Purchase of property, plant and equipment (3,697) (4,272) 16%
Total CAPEX (incl. maintenance CAPEX) (3,697) (4,272) 16%
Proceeds from sale of subsidiaries (net of cash disposed) - 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 (12,497) (6,103) -51%
The Group's capital expenditure (including maintenance CAPEX) on an accrual
basis was RUB 5,091 millionin the first six months of 2023 (H1 2022: RUB 4,311
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)".
Free Cash Flow increased 87% or RUB 5,510 million year on year to RUB 11,866
million in the first half of 2023, primarily due to:
· A 7% or RUB 1,836 million year-on-year decrease in Cash generated
from operations (after "Changes in working capital") to RUB 24,169 million.
· Tax paid which decreased 17% or RUB 735 million year on year to RUB
3,664 million.
· A 18% or RUB 308 million 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 1,371 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 51% or RUB
6,394 million year on year to RUB 6,103 million reflecting the factors
described above.
The following table sets out details on Free Cash Flow and Attributable Free
Cash Flow for the six months ended 30 June 2023 and 2022, and its
reconciliation to Cash generated from operations.
H1 2022 H1 2023 Change
RUB mln RUB mln %
Cash generated from operations (after "Changes in working capital") 26,006 24,169 -7%
Total CAPEX adjusted for M&A (12,497) (6,103) -51%
Purchases of property, plant and equipment (3,697) (4,272) 16%
Payment for rolling stock to disposed subsidiary - (6,603) NM
Payment for acquisition of non-controlling interest (8,800) - -100%
Proceeds from sale of subsidiaries (net of cash disposed) - 4,772 NM
Tax paid (4,399) (3,664) -17%
Interest paid on bank borrowings and non-convertible unsecured bonds (1,074) (1,165) 8%
Principal elements of lease payments for other lease liabilities (1,200) (1,152) -4%
Interest paid on other lease liabilities (479) (219) -54%
Free Cash Flow 6,356 11,866 87%
Minus
Adjusted Profit Attributable to Non-controlling Interests 536 (3) -100%
Attributable Free Cash Flow 5,820 11,869 104%
Capital resources
The Group had a Net cash position of RUB 10,527 million as of 30 June 2023
compared to Net Debt of RUB 4,596 million as of 31 December 2022.
· Total debt (consisting of borrowings and non-convertible unsecured
bonds) amounted to RUB 20,424 million as of 30 June 2023 (including accrued
interest of RUB 182 million*), a decrease of 1% compared to the end of 2022.
· Cash and cash equivalents amounted to RUB 30,951 million, an increase
of 93% compared to the end of 2022 with about 40%* denominated in foreign
currency.
The Net Debt to LTM Adjusted EBITDA ratio was (0.2)x as of 30 June 2023 21
(#_ftn21) (31 December 2022: 0.1x).
Under IFRS 16, Other lease liabilities (not included in Total debt) of RUB
3,196 million were recognised on the balance sheet as of 30 June 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 LTM Adjusted EBITDA at 30 June 2023 and 31 December 2022, and the
reconciliation of Net Debt to Total debt.
As of As of Change
31 Dec 2022 30 June 2023
RUB mln RUB mln %
Total debt 20,649 20,424 -1%
Minus
Cash and cash equivalents 16,052 30,951 93%
Net Debt 4,596 (10,527) NM
Net Debt to LTM Adjusted EBITDA 0.1x (0.2)x -
Rouble-denominated borrowings accounted for 100% of the Group's debt portfolio
as of 30 June 2023. The Russian rouble is the functional currency of the
Company.
The weighted average effective interest stood at 9.6% as of 30 June 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 30 June 2023.
The Group has a balanced maturity profile supported by the Group's solid cash
flow generation, available cash and cash equivalents, as well as undrawn
borrowing facilities of RUB 32,150 million as of 30 June 2023.
The following table gives the maturity profile of the Group's borrowings
(including accrued interest of RUB 182 million*) as of 30 June 2023.
As of
30 June 2023
RUB mln
Q3 2023 3,361*
Q4 2023 1,809*
Q1 2024 3,297*
Q2 2024 1,785*
H2 2024 2,510*
2025 3,560*
2026 2,114*
2027 1,918*
2028 72*
Total 20,424
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
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 2023 and 2022 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 2022, 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
2023 and 2022 along with historical financial and operational information are
available at Globaltrans' corporate website (www.globaltrans.com
(http://www.globaltrans.com) ).
The presentation currency of the Group's consolidated financial statements is
the Russian rouble ("RUB"). In this announcement, the Group has used certain
measures not recognised by EU IFRS or IFRS (referred to as "non-IFRS
measures") as supplemental measures of the Group's operating performance. The
management believes that these non-IFRS measures provide valuable information
to readers, because they enable them to focus more directly on the underlying
day-to-day performance of the Group's business.
The Company also reports certain operational information to illustrate the
changes in the Group's operational and financial performance during the
reporting periods.
Certain financial information which is derived from management accounts is
marked in this announcement with an asterisk {*}.
Information (non-IFRS financial and operating measures) requiring additional
explanation or defining is marked with initial capital letters and the
explanations or definitions are provided at the end of this announcement.
Reconciliations of the non-IFRS measures to the closest EU IFRS measures are
included in the body of this announcement. These non-IFRS financial measures
have limitations as analytical tools, and you should not consider them in
isolation or place undue reliance on them. Similarly, titled measures are used
by other companies for a variety of purposes and are often calculated in ways
that reflect the circumstances of those companies. You should exercise caution
in comparing these measures as reported by us to the same or similar measures
as reported by other companies.
Rounding adjustments have been made in calculating some of the financial and
operational information included in this announcement. As a result, numerical
figures shown as totals in some tables may not be exact arithmetic
aggregations of the figures that precede them.
The Group has obtained certain statistical, market and pricing information
that is presented in this announcement on such topics as the Russian freight
rail transportation market and related subjects from the following third-party
sources: Federal State Statistics Service of Russian Federation ("Rosstat"),
JSC Russian Railways ("RZD") and the Federal Antimonopoly Service ("FAS"). The
Group has accurately reproduced such information and, as far as it is aware
and is able to ascertain from information published by such third-party
sources, no facts have been omitted that would render the reproduced
information inaccurate or misleading. The Group has not independently verified
this third-party information. In addition, the official data published by
Russian governmental agencies may be substantially less complete or researched
than that of more developed countries.
All non-IFRS financial and operational information presented in this
announcement should be used only as an analytical tool, and investors should
not consider such information in isolation or in any combination as a
substitute for analysis of the Group's consolidated financial statements and
condensed consolidated interim financial information reported under EU IFRS,
which are available the Globaltrans' corporate website www.globaltrans.com.
DEFINITIONS
Terms that require definitions are marked with capital letters in this
announcement and their definitions are provided below in alphabetical order:
Adjusted EBITDA (a non-IFRS financial measure) represents EBITDA excluding
"Net foreign exchange transaction (gains)/losses on financing activities",
"Other gains/(losses) - net", "Gain/(loss) on sale of property, plant and
equipment", "Impairment/(reversal of) charge on property, plant and
equipment", "Impairment of intangible assets", "Loss on derecognition arising
on capital repairs", "Reversal of impairment of intangible assets" and "Profit
on 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) charge on 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 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 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)".
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 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 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,
locomotives 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) charge on 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) charge on 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 rail tank segment with the intra-group acquisition of 5,800 rail tanks by
BaltTransServis from Spacecom (incl. Spacecom Trans), a 65.25% owned leasing
subsidiary of Globaltrans and the subsequent disposal of Globaltrans'
shareholding in Spacecom (incl. 680 units) to its minority shareholder.
3 (#_ftnref3) For the last twelve months ended 30 June 2023.
4 (#_ftnref4) As of the end of H1 2023 Globaltrans had six Service
Contracts.
5 (#_ftnref5) Coal including coke; metallurgical cargoes including ferrous
metals, scrap metal and ores; construction materials including cement.
6 (#_ftnref6) Regulated RZD tariffs for the traction of empty railcars rose
11% from 1 June 2022 and 10% from 1 January 2023.
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) The completion of the re-domiciliation to Abu Dhabi Global
Market ("Re-domiciliation") is subject to certain regulatory approvals and
other consents and there can be no guarantee that these will be granted.
Furthermore, potential legislative or regulatory changes and/or other external
factors may impact the Re-domiciliation and the Company's ability to achieve
its intended objectives.
9 (#_ftnref9) Imposed suspension of GDRs trading on the London Stock
Exchange continued as of the date of publication.
10 (#_ftnref10) For the last twelve months.
11 (#_ftnref11) Includes "Infrastructure and locomotive tariffs: loaded
trips" for H1 2023 of RUB 6,805 million (H1 2022: RUB 4,662 million) and
"Services provided by other transportation organisations" of RUB 1,845 million
(H1 2022: RUB 1,126 million).
(( 12 (#_ftnref12) )) In February 2023 Globaltrans completed the
restructuring of its rail tank segment with the intra-group acquisition of
5,800 rail tanks by BaltTransServis from Spacecom (incl. Spacecom Trans), a
65.25% owned leasing subsidiary of Globaltrans and the subsequent disposal of
Globaltrans' shareholding in Spacecom (incl. 680 units) to its minority
shareholder.
13 (#_ftnref13) Including wheel pairs.
14 (#_ftnref14) 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.
15 (#_ftnref15) Regulated RZD tariffs for the traction of empty railcars
rose 11% from 1 June 2022 and 10% from 1 January 2023.
16 (#_ftnref16) The cost of each major periodic capital repair (incl. the
replacement of significant components) is recognised in the carrying amount of
the relevant item of rolling stock repaired and separately depreciated.
Simultaneously, the carrying amount of the repaired rolling stock that is
attributable to the previous periodic capital repair and/or significant
component replacement, if any, is derecognised and debited in "Cost of sales"
in the income statement as "Loss on derecognition arising on capital repairs"
for the period during which the repair was carried out.
17 (#_ftnref17) Including wheel pairs.
18 (#_ftnref18) In February 2023 Globaltrans completed the restructuring of
its rail tank segment with the intra-group acquisition of 5,800 rail tanks by
BaltTransServis from Spacecom (incl. Spacecom Trans), a 65.25% owned leasing
subsidiary of Globaltrans and the subsequent disposal of Globaltrans'
shareholding in Spacecom (incl. 680 units) to its minority shareholder.
19 (#_ftnref19) 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".
20 (#_ftnref20) In February 2023 Globaltrans completed the restructuring of
its rail tank segment with the intra-group acquisition of 5,800 rail tanks by
BaltTransServis from Spacecom (incl. Spacecom Trans), a 65.25% owned leasing
subsidiary of Globaltrans and the subsequent disposal of Globaltrans'
shareholding in Spacecom (incl. 680 units) to its minority shareholder.
Deferred payments for the purchased tank cars were executed after the disposal
of Spacecom, thus as per IFRS requirements these payments have been reflected
in the cash flow statement for the first six months of 2023.
21 (#_ftnref21) For the last twelve months period.
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