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Interim 2017 Results and Approval of Interim and Special Interim Dividends

29.08.17

Globaltrans Investment PLC (the “Company” and together with its consolidated subsidiaries “Globaltrans” or the “Group”), (LSE ticker: GLTR) today announces its financial and operational results for the six months ended 30 June 2017 along with approval of an interim and a special interim dividend.

In this announcement, the Group has used certain measures not recognised by EU IFRS or IFRS (referred to as “non-GAAP measures”) as supplemental measures of the Group’s operating performance. The management believes that these non-GAAP 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-GAAP and operational measures) requiring additional explanation or defining is marked with initial capital letters and the explanations or definitions thereto are provided at the end of this announcement. The presentational currency of the Group’s financial results is Russian rouble (“RUB”).

Strong financial results and low leverage

  • Total revenue increased 17% year on year to RUB 38.2 billion.
  • Adjusted Revenue up 23% year on year to RUB 25.4 billion* supported by stronger pricing and high fleet efficiency.
  • Excellent cost control maintained with Total Operating Cash Costs up just 3% year on year.
  • Operating profit reached RUB 9.6 billion, up 115% year on year.
  • Continued recovery in Adjusted EBITDA which rose 58% year on year to RUB 12.1 billion* with the Adjusted EBITDA Margin expanding to 48%*.
  • Very strong Free Cash Flow of RUB 8.1 billion*, an increase of 140% year on year driven by good cash generation from operations. Attributable Free Cash Flow rose 178% year on year to RUB 7.2 billion*.
  • Profit for the period up 186% year on year to RUB 6.7 billion.
  • Low leverage maintained with Net Debt to Adjusted EBITDA for the twelve months ended 30 June 2017 improved to 0.5x* (2016 end: 0.7x*) due to increased Adjusted EBITDA.
  • Net Debt held relatively steady at RUB 11.7 billion* compared to the end of 2016. 100% of debt denominated in RUB, the functional currency of the Company.

Interim 2017 and special interim dividend approved

  • The Board approved the first ever interim dividend in the amount of RUB 3.6 billion or RUB 20.16 per ordinary share/Global Depositary Receipt (“GDR”) which is in line with the Group’s dividend policy and equates to 50% of the Group’s Attributable Free Cash Flow for the first six months of 2017.
  • The Board also approved a special interim dividend in the amount of RUB 4.4 billion or RUB 24.64 per ordinary share/GDR to reflect the moderate CAPEX in the reporting period relative to very strong cash flow generation and the desire to optimise the Group’s capital structure by bringing leverage to a more efficient level. The approval of a special interim dividend aligns with the Group’s overriding principle of paying out cash that is not used or needed for business expansion, subject to maintaining conservative leverage.
  • The total payment to shareholders therefore amounts to RUB 8.0 billion or RUB 44.80 per share/GDR.
  • The shareholder dividend record date is set as 5 September 2017. The GDRs will be marked as ex-dividend on 4 September 2017.
  • The dividends will be paid in US dollars not later than 30 September 2017 with conversion from Russian roubles to be executed at the Central Bank of Russia’s official exchange rate for the Russian rouble as of 25 August 2017. Holders of GDRs will receive the dividends approximately three business days after the payment date.

Operational excellence and continued pricing recovery

  • Increasingly robust and balanced market environment.

    • Overall Russian freight rail turnover rose 7% year on year with transportation volumes up 4% year on year in the first six months of 2017 on the back of increasing demand for rail transportation of bulk cargoes and steady volumes in oil products and oil segment.

  • Globaltrans increased Transportation Volumes and continued to benefit from recovering pricing environment in gondola segment.

    • 5% year-on-year increase in Transportation Volumes (excluding Engaged Fleet).
    • Strong performance in the key segments with Transportation Volumes (excluding Engaged Fleet) up 9% year on year in metallurgical cargoes and up 8% year on year in oil products and oil[1].
    • Changed client logistics with shorter distances resulted in the Group’s Freight Rail Turnover (excluding Engaged Fleet) declining 3% year on year.
    • Solid pricing with Average Price per Trip up 19% year on year to RUB 33,335.

  • Continued efficient fleet management.

    • Empty Run Ratio for gondola cars improved to 38% (H1 2016: 39%) and the Total Empty Run Ratio (for all types of rolling stock) dropped to 47% (H1 2016: 48%).
    • The Average Number of Loaded Trips per Railcar rose 8% year on year.
    • Changes in client logistics led to an 8% year-on-year decline in the Average Distance of Loaded Trip.
    • The Average Rolling Stock Operated decreased 3% year on year reflecting the reduction in the number of leased-in rail tank cars.

Outlook

  • Pricing environment in gondola segment continues to be favourable subject to economic conditions and supply-demand balance.
  • Challenging market environment in the oil products and oil segment is expected to continue.
  • Group expects ongoing overall cost pressures.
  • Operational efficiencies and cost discipline will continue to dominate the management team’s focus.
  • Investigating accretive consolidation and expansion opportunities remains a priority. The Group plans to continue selective demand-based investments and expects to purchase about 2,000 units (about 3% of the Group’s Owned Fleet) in 2017 (including second-hand gondola cars, new petrochemical tank containers and flat cars).
  • The management team will continue to monitor the regulatory environment including initiatives in respect of the supervision of price increases for rail operators’ services.

 

Commenting on Globaltrans’ interim 2017 results, CEO Valery Shpakov, said:

“I am proud to report the Group’s very strong performance for the first half of 2017. While market conditions are improving, it was the team’s proven ability to respond quickly to the changing market environment that has reaped rewards. Our best-in-class service and operational excellence set the foundations for Globaltrans to truly capitalise on the continued recovery in the gondola segment. The Group has focused its efforts on the best routes and best cargoes, delivering a strong performance in the key segments for freight rail transportation of metallurgical cargoes and oil products and oil. At the same time, we have strengthened our financial performance even further. In particular we more than doubled our Free Cash Flow and demonstrated the continued efficient cost control we are known for.

In addition to introducing an interim dividend, our limited CAPEX requirements relative to cash generation and decreasing leverage were the main drivers for the Board’s approval of a special interim dividend. The special interim dividend will enable an increase in the overall efficiency of the capital structure and is very much in line with Globaltrans’ commitment to maximise payments to shareholders during low investment cycles when the capital is not needed to grow the Company.

Accretive business expansion remains our priority, but we will continue to take a very sensible approach and only invest when opportunities meet our strict return criteria. With the industry in reasonably good shape, and our Group performing well, we are looking forward to the second half of the year with confidence.”

DOWNLOADS

All of the above materials along with the selection of historical operational and financial information are available on Globaltrans’ corporate website (www.globaltrans.com).

ANALYST AND INVESTOR CONFERENCE CALL

The release of the Group’s financial and operational results will be accompanied by an analyst and investor conference call hosted by Valery Shpakov, CEO and Alexander Shenets, CFO.

Date: Tuesday, 29 August 2017

Time: 12.00 London / 07.00 New York (EDT) / 14.00 Moscow

To participate in the conference call please dial one of the following numbers and ask to be put through to the "Globaltrans" call:

UK toll free:      0808 109 0700

International:    +44 20 3003 2666

As there will be simultaneous translation for the first part of the call (slide presentation), you should state whether you prefer to listen in English or Russian. During the Q&A session, all participants will hear both languages. There will also be a webcast of the call available through the Globaltrans website (www.globaltrans.com). Please note that this will be a listen-only facility.

 

ENQUIRIES

Globaltrans Investor Relations

Mikhail Perestyuk / Daria Plotnikova

+357 25 328 860

irteam(at)remove-this.globaltrans.com

 

For international media

Teneo Blue Rubicon

Laura Gilbert / Sabine Pirone

+44 20 7260 2700

globaltrans(at)remove-this.teneobluerubicon.com

 

NOTES TO EDITORS

Globaltrans is a leading freight rail transportation group with operations in Russia, the CIS and the Baltic countries. The Group’s main business is the provision of freight rail transportation services. Globaltrans provides services to more than 500 customers and its key customers include a number of large Russian industrial groups in the metals and mining and the oil products and oil sectors.

The Group has a Total Fleet of about 67 thousand units as of 30 June 2017. Universal gondola cars and rail tank cars constitute the backbone of the Group’s fleet. About 91% of the Total Fleet is owned by the Group with an average age of 11 years.

In 2016, the Group’s Freight Rail Turnover (including Engaged Fleet) was 182 billion tonnes-km. The total revenue of Globaltrans amounted to RUB 69.5 billion in 2016.

Globaltrans' global depositary receipts (ticker symbol: GLTR) have been listed on the Main Market of the London Stock Exchange since May 2008. Globaltrans was the first freight rail transportation group with operations in Russia to have an international listing.

To learn more about Globaltrans, please visit www.globaltrans.com

 


[1] Transportation Volumes of respective cargoes excluding Engaged Fleet. Metallurgical cargoes including ferrous metals, scrap metal and ores. 

Last updated: 01.11.2017