ENRU

Full-Year 2015 Results

31.03.2016

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 year ended 31 December 2015.

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”).

Financial highlights: Solid financial results in tough market, Net Debt significantly reduced

  • Net Revenue from Operation of Rolling Stock recovered 5% year-on-year to RUB 38,568 million*, demonstrating a solid performance. The Group’s Adjusted Revenue increased 1% year on year to RUB 42,176 million* in 2015, with the improvement in Net Revenue from Operation of Rolling Stock partially offset by decline in revenues from auxiliary operations.
  • The increase in the regulated RZD tariffs[1], general inflationary pressures, as well as increased business volumes contributed to the 11% year on year growth in Total Operating Cash Costs.
  • Adjusted EBITDA was RUB 15,538 million* with intensified cost inflation driving the 12% year on year decline. The Adjusted EBITDA Margin was 37%* (2014: 42%*).
  • Good level of Free Cash Flow of RUB 9,614 million*, albeit down 19% compared to the previous year.
  • Adjusted profit attributable to owners of the Company[2] was RUB 2,979 million*, down 32% year on year.
  • Accelerated deleveraging with Net Debt down 31% to RUB 16,255 million* as of the end of 2015. The Net Debt to Adjusted EBITDA ratio further improved to 1.0x* (1.3x* as of the end of 2014). The percentage of RUB denominated debt increased to almost 100%.

Dividends: Substantial FY 2015 dividend proposed

  • The Board of Directors proposed a full-year dividend of a total amount of RUB 2,218 million, RUB 12.41 per ordinary share/global depositary receipt[3].
  • Proposed dividend consists of 30% of Adjusted profit attributable to owners of the Company for 2014 and 30% for 2015. This equates to a dividend pay-out ratio of 74%[4].
  • Track record re-established for dividend payments in relation to every financial year since 2009.

Operational highlights: Continued market outperformance, solid average pricing

  • Continued market outperformance and business volumes growth with the Group’s Freight Rail Turnover (including Engaged Fleet) up 6% to 168.5 billion tonnes-km (+8% excluding Engaged Fleet) while overall Russian freight rail turnover remained relatively unchanged year on year.
  • Market Share of overall Russian freight rail volumes remained stable at 8.3%.
  • Solid average pricing with Average Price per Trip up 2% year on year. Average Distance of Loaded Trip increased 5% year on year.
  • Continued high operational efficiency with Empty Run Ratio for gondola cars at 39% (2014: 38%). Total Empty Run Ratio was stable year on year at 51%. Improved railcar turnover with Average Number of Loaded Trips per railcar up 2% year on year.
  • Total Fleet up 2% to 67,349 units largely reflecting an increase in Leased-in Fleet.
  • Long-term contracts with largest three clients (Rosneft, MMK and Metalloinvest) contributed 63% of the Group’s Net Revenue from Operation of Rolling Stock in 2015. The service contract with Rosneft was renewed for a further five years[5].

Outlook

  • In 2016 the management team will continue its strong focus on operational efficiencies given the low visibility in the Russian economy, mixed pricing environment and cost pressures primarily reflecting increases in the regulated RZD tariffs[6].
  • Ongoing industry-wide scrappage of old railcars providing for stronger pricing in the gondola segment, while in the oil products and oil sector, decline in volumes is putting pressure on the pricing environment.
  • While large-scale CAPEX remains on hold, the Group will proceed with selective acquisition of limited numbers of rolling stock to support business development.
  • Maintenance CAPEX is expected to increase for 2016, reflecting increased number of capital repairs in the year as a large portion of the Group’s fleet reaches the age of requiring a first capital repair, contributing between RUB 500-600 million to maintenance CAPEX.
  • Maintaining comfortable leverage will remain among the Group’s top priorities.

Comments

Valery Shpakov, CEO of Globaltrans Investment PLC, said:
“In 2015 we delivered another year of solid operational performance despite the unfavorable market backdrop. We have again outperformed the market and increased business volumes, demonstrating our ability to effectively manage operations while delivering the highest standards of client service. The recent renewal of the service contract with Rosneft for the next five years is a testament to this.

Our financial results were solid despite tough markets and intensified cost pressure. Continuous prudent capital allocation has allowed us to further deleverage, achieving a Net Debt to Adjusted EBITDA ratio of just 1.0x* at year end, which means that we now have one of the strongest balance sheets in the industry. This, combined with our good level of Free Cash Flow, enabled us to propose a substantial dividend for full-year 2015 that rewards shareholders for both the 2014 and 2015 financial years, confirming the importance we place on appropriate shareholder remuneration.

As we move into 2016, the outlook remains challenging particularly with regards to the ongoing inflationary pressures on costs. However, we are seeing a positive impact from the recent regulatory initiatives regarding the scrappage of old railcars. Within this context, Globaltrans continues to perform well with a strong market position, solid balance sheet and sustainable customer base. We are therefore confident that our Group is uniquely positioned to successfully weather the current economic environment and capitalize on market opportunities as they arise.”

Downloads

Pursuant to Article 2.1(i) (ii) of the Transparency Directive (2004/109/EC) and Rule 6.4.2 of the Disclosure and Transparency Rules of the UK Financial Services Authority, the Company confirms that it has chosen the United Kingdom as its Home State.

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, Chief Executive Officer and Alexander Shenets, Chief Financial Officer.

Date: Thursday, 31 March 2016
Time: 13.00 London / 8.00 New York (EDT) / 15.00 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 (0) 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@globaltrans.com

For international media
Lightship Consulting
Laura Gilbert
+44 7799 413351
Laura.Gilbert@lightshipconsulting.co.uk

NOTES TO EDITORS
Globaltrans is a leading private 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 of rolling stock with an average age of 9.5 years[7]. Universal gondola cars and rail tank cars constitute the backbone of the Group’s fleet. About 89% of the Total Fleet is owned by the Group. In 2015, the Group’s Freight Rail Turnover (including Engaged Fleet) was 168.5 billion tonnes-km. The Group’s Market Share was 8.3% of overall Russian freight rail transportation volumes.

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

LEGAL DISCLAIMER
Some of the information in this announcement may contain projections or other 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', 'anticipate', 'estimate', 'intend', 'will', 'could', 'may' or 'might', the negative of such terms or other similar expressions. Globaltrans wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Globaltrans does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Globaltrans, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries Globaltrans operates in, as well as many other risks specifically related to Globaltrans and its operations.

[1] The regulated JSC Russian Railways (“RZD”) tariffs (including for the traction of empty railcars) increased 10% year on year from January 2015.

[2] Adjusted profit attributable to owners of the Company for 2015 excludes the impact of the impairment of customer relationships related to the service contract with MMK in the amount of RUB 996 million. For 2014 it excludes the impact of the impairment of goodwill in the amount of RUB 5,828 million related to the acquisition of captive rail operators completed in 2012 and 2013.

[3] Subject to shareholders’ approval, dividends will be paid in US Dollars with conversion from Russian roubles to be executed at the official exchange rate for Russian rouble of the Central Bank of Russia as of the date of the Annual General Meeting, which was called for April 28, 2016.

[4] The dividend pay-out ratio is calculated as a proportion of Adjusted profit attributable to owners of the Company for 2015, which was RUB 2,979 million* and excludes the impact of the impairment of customer relationships related to the service contract with MMK of RUB 996 million).

[5] As announced on February 25, 2016.

[6] The regulated RZD tariffs (including for the traction of empty railcars) increased 9% year on year from January 2016.

[7] Average age of the Group’s Owned Fleet as of 31 December 2015.

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