ENRU

Full-Year 2017 Results, Final and Special Final Dividends proposed

26.03.2018

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 2017 along with proposed final and special final dividends.

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”).

Continued strong financial performance and further strengthened balance sheet

  • Total revenue rose 12% year on year to RUB 78.1 billion.
  • Adjusted Revenue increased 18% year on year to RUB 52.1 billion.
  • Total Operating Cash Costs reduced by 1% year on year, driven by efficient fleet management and thorough cost control.
  • Operating profit rose 86% year on year to RUB 20.2 billion.
  • Adjusted EBITDA increased 46% to RUB 25.8 billion, with Adjusted EBITDA Margin expanding to 50%.
  • Free Cash Flow up 92% year on year to RUB 17.0 billion due to a strong increase in cash generated from operations. Attributable Free Cash Flow increased 114% year on year to RUB 15.5 billion.
  • Profit for the year was up 126% year on year to RUB 13.8 billion.
  • Leverage further improved with Net Debt to Adjusted EBITDA at 0.4x (2016 end: 0.7x)
  • Net Debt declined 1% to RUB 11.4 billion compared to the end of 2016. 100% of debt denominated in RUB, the Company’s functional currency.

Final and special final dividends proposed in respect of 2017

  • The Board has proposed a final dividend of RUB 4.2 billion or RUB 23.25 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 second half of 2017.
  • The Board has also proposed a special final dividend of RUB 3.9 billion or RUB 21.60 per ordinary share/GDR to maintain the Group’s efficient capital structure.
  • The proposed total final payment to shareholders therefore amounts to RUB 8.0 billion or RUB 44.85 per share/GDR.
  • Dividend payments are subject to shareholders’ approval at the Annual General Meeting, which will take place on 23 April 2018[1].

High fleet efficiency and further successful development of client partnerships

  •  The Group’s Freight Rail Turnover and Transportation Volumes stood broadly flat year on year[2].
    • Strong volume growth in priority bulk cargoes segments: metallurgical cargoes[3] (up 6% year on year) and coal[4] (up 4% year on year). Volumes in oil products and oil segment down 3% year on year reflecting a 13% decline in average number of rail tank cars in operation.
    • Average Number of Loaded Trips per Railcar up 2% y-o-y while Average Distance of Loaded Trip remained stable.
    • Average Rolling Stock Operated reduced by 3% reflecting an intended decrease in the number of leased-in rail tanks.
  • High fleet efficiency with further improved Empty Run Ratio resulting in reduced Empty Run Costs.
    • Empty Run Ratio for gondola cars improved to 37% (2016: 38%).
    • Total Empty Run Ratio (for all types of railcars) down to 45% (2016: 48%).
    • Share of Empty Run Kilometers paid by Globaltrans declined to 86% (2016: 88%).
  • Successful development of client relationships – long-term partnership with MMK extended for a further 18 months until the end of September 2020[5].
  • Average Price per Trip up 20% year on year to RUB 34,790, reflecting the steady recovery in the gondola segment.

Market environment in the gondola segment remains robust 

  • Continued robust demand with 6% year on year increase in overall Russian freight rail turnover and overall transportation volumes up 3% in 2017.
  • Bulk cargo segment performed strongly as non-oil cargo market volumes increased 4% year on year driving further recovery in pricing conditions.
  • The oil products and oil segment stabilised with market volumes unchanged at the low levels of 2016 and the pricing environment remaining relatively stable.

Outlook 

  • Pricing environment in the gondola segment remains favourable subject to economic conditions and supply-demand balance.
  • Weak market environment in the oil products and oil segment is likely to continue.
  • Ongoing overall cost pressures are expected to continue, specifically for Empty Runs reflecting a 5.3% year on year rise in regulated RZD tariffs (including for the traction of empty railcars), as well as cost inflation in repair and maintenance.
  • The management team will continue to focus on:
    • Achieving operational efficiencies and cost discipline;
    • Considering selective, demand-based investments, the acquisition of up to 1,500 units[6] targeted for 2018 (about 2.5% of the Group’s Owned Fleet);
    • Investigating accretive consolidation opportunities and attractive niche projects in the freight rail transportation market.

Commenting on Globaltrans’ results for 2017, CEO Valery Shpakov, said:
“In 2017, Globaltrans delivered a strong financial performance, capitalising on the continued growth of the freight rail transportation market, and in particular the gondola segment. Our excellent operating and financial performance has demonstrated the benefits of our consistent strategy and effective business model. Over the year, the Group delivered a strong increase across all key financial metrics. Our high fleet efficiency and the professionalism of our management team enabled us to further optimise costs and improve our margins.

We continued to place great emphasis on capital discipline and focused only on selective investments, as some opportunities did not meet our strict return criteria. We have one of the best-invested large fleets in the industry and we see further scope for selective expansion in the Russian freight rail sector, including accretive opportunities in niche markets.

We have an excellent platform from which to deliver further growth in the coming years. 2018 has started well, market conditions remain favourable and current trading is in line with our expectations”.

Commenting on returns to shareholders, Chairman Michael Zampelas, said:
“2017 was an outstanding year for Globaltrans. A robust Russian economy and favourable market conditions helped the Group to deliver a great result and reconfirm its status as one of Russia’s most dynamic and well-managed freight rail companies.

We reported a strong financial performance and our consistently robust cash flows combined with low leverage and moderate capital expenditure enabled us to deliver attractive returns to our shareholders.

Including the interim and special interim dividends paid in September 2017 as well as proposed final and special final dividends, total dividends to be paid to shareholders for 2017 will reach RUB 16.0 billion or RUB 89.65 per share/GDR[7], equivalent to over 100% of the Group’s Attributable Free Cash Flow for the year. This includes RUB 7.8 billion of regular dividend payments consistent with our policy to pay out 50% of the Group’s Attributable Free Cash Flow as well as special dividend payments of RUB 8.3 billion to maintain an efficient capital structure.

We remain focused on taking a disciplined approach to capital allocation and will continue to return excess capital not required by the business to shareholders in the form of special dividends whilst ensuring we maintain a strong balance sheet.”

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: Monday, 26 March 2018
Time: 13.00 London / 08.00 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 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 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 prominent Russian industrial groups in the metals and mining and the oil products and oil sectors.

The Group had a Total Fleet of about 67 thousand units at the end of 2017. Universal gondola cars and rail tank cars constitute the backbone of the Group’s fleet. About 92% of the Total Fleet is owned by the Group with an average age of 11 years.

In 2017, the Group’s Freight Rail Turnover (including Engaged Fleet) was 178.2 billion tonnes-km with the total  revenue amounted to RUB 78.1 billion.

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] Subject to shareholders’ approval, dividends will be paid in USD with conversion from RUB to be executed at the official exchange rate for RUB of the Central Bank of Russia as of the date of the Annual General Meeting. The shareholder dividend record date is set as 23 April 2018. The GDRs will be marked as ex-dividend on 20 April 2018.

[2] The Group’s Freight Rail Turnover (excl. Engaged Fleet) stood broadly unchanged year on year at 160.1 billion tonnes-km in 2017; Transportation Volumes (excl. Engaged Fleet) declined 1% year on year to 91.9 million tonnes in 2017.

[3] Metallurgical cargoes including ferrous metals, scrap metal and iron ore.

[4] Coal including coke.

[5] Partnership with MMK was extended at the beginning of 2018.

[6] Including various types of rolling stock and tank containers.

[7] Subject to shareholders’ approval of proposed final and special final dividends.

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