31 May 2017 07:00
FOR IMMEDIATE RELEASE
31 May 2017
PJSC TransContainer
Results for the three months ended 31 March 2017
PJSC "TransContainer" ("TransContainer" or the "Company" together with its consolidated subsidiaries) today publishes its management report together with the unaudited interim condensed financial statements for the three months ended 31 March 2017. The financial statements presented in this announcement have been prepared in accordance with the International Financial Reporting Standards ("IFRS").
Operating and financial review
Summary
TransContainer is the leading intermodal container transportation company in Russia. As at 31 March 2017, the Company accounted for approximately 47.4% of Russia's rail container transportation market. It had 23,432 owned and leased flatcars and 68,453 ISO containers as at the end of the first quarter. TransContainer also owns a network of rail-side container terminals, located at 44 railway stations across Russia, and operates one terminal in Slovakia under a long-term lease agreement. The Company's joint venture JSC KedenTransService ("KedenTransService", or "KDTS") also operates 19 inland rail-side terminals in Kazakhstan. TransContainer's sales network comprises 111 sales outlets in Russia, along with additional sales points across the CIS, Europe and Asia.
Following a 10.2% growth in transportation volumes in 2017, the Russian rail container transportation market continued to demonstrate strong performance in the first quarter of 2017, amounting to a record high quarterly volume of 894 thousand TEU, up 22.4% year-on-year. Domestic transportation increased by 12.0% year-on-year, while growth in international transportation was up 33.4% year-on-year and transit volumes almost doubled.
Transportation volumes by the Company's flatcar and container fleet grew by 23.7% year-on-year to 424 thousand TEU, mainly as a result of an increase in international transportation. Revenue-generating transportation volumes amounted to 331 thousand TEU in the first quarter of 2017, up 26.4% year-on-year.
The continuing market recovery along with the Company's business optimisation measures were the key factors contributing to the improvements of TransContainer's financial performance during the reporting period, as presented in the table below:
1Q 2017 | 1Q 2016 | Year-on-year change | |||
RUB mln | Percent | ||||
Revenue | 14,062 | 11,059 | +3,003 | +27.2% | |
Adjusted Revenue¹ | 6,016 | 4,597 | +1,419 | +30.9% | |
Adjusted operating expenses² | 4,719 | 4,049 | +670 | +16.5% | |
EBITDA³ | 2,142 | 1,307 | +835 | +63.9% | |
Adjusted EBITDA margin⁴ | 35.6% | 28.4% | |||
Profit for the period | 1,066 | 447 | +619 | +138.5% | |
Net Income Margin | 17.7% | 9.7% | |||
Total debt | 7,671 | 5,674 | +1,997 | +35.2% | |
Net debt⁵ | 2,245 | 2,703 | -458 | -16.9% | |
LTM EBITDA⁶ | 7,934 | 6,114 | |||
Net debt / LTM EBITDA | 0.28 | 0.44 | |||
1 Adjusted Revenue is calculated as total revenue less the third-party charges related to principal activities.
2 Adjusted Operating Expenses are calculated as operating expenses less the third-party charges related to principal activities.
3 EBITDA is defined as profit for the period before income tax, interest expense and depreciation and amortisation.
4 Adjusted EBITDA Margin is defined as EBITDA divided by Adjusted Revenue.
5 Net Debt is calculated as long-term debt, finance lease obligations, short-term debt and current portion of long-term debt less cash and cash equivalents and short-term investments.
6 LTM EBITDA is calculated as EBITDA for the last twelve month period
In the reporting quarter, the Company's EBITDA increased by 63.9% to RUB 2,142 million from RUB 1,037 million in the first quarter of 2016, while net profit was up almost 2.4 times year-on-year to RUB 1,066 million from RUB 447 million, respectively. In terms of margins, adjusted EBITDA margin improved from 28.4% in the first quarter of 2016 to 35.6% in the first quarter of 2017, and net profit margin increased from 9.7% to 17.7%, respectively.
As at 31 March 2017, the Company's total debt was RUB 7,671 million with the net debt of only RUB 2,245 million, compared to RUB 9,137 million and RUB 3,534 million as at 31 December 2016, respectively. As a result, the Net Debt/LTM EBITDA ratio decreased to 28% as at 31 March 2017 from 57% as at 31 December 2016.
Capital expenditure in the first quarter of 2017 more than doubled on the year-on-year basis and amounted to RUB 536 million compared to RUB 245 million a year earlier. The majority of investments were spent on an acquisition of flatcars and ISO containers on the back of strong market growth.
Recent developments and outlook
In April and May of 2017, the Russian rail container market continues to demonstrate robust performance with a growth rate exceeding 15% year-on-year, therefore, the Company is likely to revise its base-case scenario upon getting half-year operating results.
With that in mind, the Company's management will continue to focus on implementation of its expansion investment programme and strengthening its efforts on business optimisation, while further improving management efficiency and the quality of customer service.
The rail container market performance in 2017 confirms the Company's view that the Russian container transportation market is fundamentally attractive with significant long-term growth prospects, driven by the growth in cargo containerisation and the expected economic uplift in Russia in the medium term.
Key operating results
In the reporting quarter, container volumes transported by the Company's flatcars and containers (including provision of the Company's containers to the third-party flatcars) grew by 23.7% year-on-year to 424 thousand TEU. The fastest growing segments were transit and import transportation, which grew by 55.1% and 39.8%, respectively.
Transportation of containers using TransContainer's assets in 1Q 2017 (ISO Loaded + Empty), 000' TEU
1Q 2017 | 1Q 2016 | Change | ||
000' TEU | Percent | |||
Domestic Routes | 213.7 | 187.7 | +26.0 | +13.9% |
Export | 112.8 | 87.0 | +25.8 | +29.6% |
Import | 73.9 | 52.9 | +21.1 | +39.8% |
Transit | 23.1 | 14.9 | +8.2 | +55.1% |
All Routes | 423.6 | 342.5 | +81.1 | +23.7% |
Container volumes transported by the Company's flatcar fleet in the first quarter of 2017 increased by 24.2% year-on-year to 394 thousand TEU from 317 thousand TEU a year earlier. The Company's revenue-generating1 container transportation volumes in Russia amounted to 331 thousand TEU in the first quarter of 2017, up 26.4% year-on-year.
In the first quarter of 2017, the Company's throughput in the Russian rail container terminal network amounted to 290 thousand TEU, up 8.9% year-on-year, as the key beneficiaries from the continuing market growth in the reporting period were shippers' handling facilities (+22.6%) and ports (+27.9%) servicing international transportation volumes.
In the reporting period, flatcar and container turnover significantly improved on the back of the fast market recovery and the Company's efforts to boost the fleet management efficiency.
1Q 2017 | 1Q 2016 | |
Turnover of containers, days | 41.2 | 42.5 |
Turnover of flatcars, days | 12.1 | 15.7 |
Empty run2 for containers, % | 31.8% | 29.3% |
Empty run for flatcars, % | 8.2% | 7.7% |
Empty run ratios increased insignificantly both for flatcars and containers due to rebalancing of cargo flows towards the Far East of Russia.
Description of Key Consolidated Statement of Comprehensive Income Items
The following table sets out the Company's results for the three months ended 31 March 2017 and 2016.
Summary of key Company's results for the three months ended 31 March 2017 and 2016
RUB million | 1Q 2017 | 1Q 2016 | Year-on-year change | Year-on-year percent change | |
Revenue | 14,062 | 11,059 | +3,003 | +27.2% | |
Other operating income | 79 | 145 | -66 | -45.5% | |
Operating expenses | -12,765 | -10,511 | -2,254 | +21.4% | |
Operating profit | 1,376 | 693 | +683 | +98.6% | |
Interest expense | -178 | -118 | -60 | +50.8% | |
Interest income | 89 | 42 | +47 | +111.9% | |
Foreign exchange gain, net | -69 | -100 | +31 | -31.0% | |
Share of result of associates and JVs | 106 | 57 | +49 | +86.0% | |
Other financial results, net | 0 | 0 | 0 | ||
Profit before income tax | 1,324 | 574 | +750 | +130.7% | |
Income tax expense | -258 | -127 | -131 | +103.1% | |
Profit for the period | 1,066 | 447 | +619 | +138.5% | |
Other comprehensive income (net of income tax) | -77 | -272 | +195 | -71.7% | |
Total comprehensive income for the period | 989 | 175 | +814 | +465.1% |
Adjustments and additional financial information
The majority of the Company's services are provided with the use of third-party services. Accordingly, third-party charges for such services are presented within the Company's revenues and expenses. Such third-party charges include the value of rail infrastructure tariffs and the charges of the Company's other subcontractors and contracted partners involved in the process of providing the Company's services.
Third-party charges other than ones related to integrated freight forwarding and logistics services are presented within revenues as a separate line item "Cargo transportation and handling services with involvement of third parties".
All third-party charges, including ones related to integrated freight forwarding and logistics services, are presented within the list of expenses as "Third-party charges related to principal activities".
Summary of 3rd-party charges involved in TransContainer's revenues
Item | 1Q 2017 | 1Q 2016 | Year-on-year change RUB mln % |
| ||
3rd-party charges related to integrated freight forwarding and logistics | 7,085 | 5,395 | +1,690 | +31.3% |
| |
Cargo transportation and handling services with involvement of third parties | 961 | 1,067 | -106 | -9.9% |
| |
Third-party charges related to principal activities | 8,046 | 6,462 | +1,584 | +24.5% |
In order to enhance analysis, we apply adjustments to the components of the Company's revenues and expenses to derive the values that are net of the charges of third parties involved in the Company's services.
Total revenue adjustment
Item | 1Q 2017 | 1Q 2016 | Year-on-year change RUB mln % | |
Total revenue | 14,062 | 11,059 | +3,003 | +27.2% |
Third-party charges related to principal activities | -8,046 | -6,462 | -1,584 | +24.5% |
Adjusted Revenue | 6,016 | 4,597 | +1,419 | +30.9% |
Integrated freight forwarding and logistics services revenue adjustment
Item | 1Q 2017 | 1Q 2016 | Year-on-year change RUB mln % | |
Integrated freight forwarding and logistics services | 11,203 | 8,236 | +2,967 | +36.0% |
3rd-party charges related to integrated freight forwarding and logistics | -7,085 | -5,395 | -1,690 | +31.3% |
Adjusted integrated freight forwarding and logistics services | 4,118 | 2,841 | +1,277 | +44.9% |
Operating expenses adjustment
Item | 1Q 2017 | 1Q 2016 | Year-on-year change RUB mln % | |
Total operating expenses | 12,765 | 10,511 | +2,254 | +21.4% |
Third-party charges related to principal activities | -8,046 | -6,462 | -1,584 | +24.5% |
Adjusted operating expenses | 4,719 | 4,049 | +670 | +16.5% |
Adjusted Revenue, Adjusted Operating Expenses, EBITDA, Adjusted EBITDA Margin and Adjusted Operating Margin are not recognised under IFRS as measures of financial performance, but are calculated on the basis of IFRS figures and are presented as supplemental indicators of the Company's operating performance. These supplemental measures have limitations as analytical tools, and investors should not consider any of them in isolation, or any combination of them, as a substitute for analysis of our results as reported under IFRS.
Non-IFRS metrics used in the analysis
RUB million | 1Q 2017 | 1Q 2016 | Year-on-year change RUB mln % | |
Adjusted Revenue | 6,016 | 4,597 | +1,419 | +30.9% |
Adjusted operating expenses | 4,719 | 4,049 | +670 | +16.5% |
EBITDA | 2,142 | 1,307 | +835 | +63.9% |
Adjusted EBITDA margin | 35.6% | 28.4% | ||
Total debt | 7,671 | 5,674 | +1,997 | +35.2% |
Net debt | 2,245 | 2,703 | -458 | -16.9% |
LTM EBITDA | 7,934 | 6,114 | +1,820 | +29.8% |
Net debt / LTM EBITDA | 0.28 | 0.44 | - | - |
Revenue
The following table breaks down total revenue for the three months ended 31 March 2017 and 2016, respectively.
Revenue breakdown
RUB million | 1Q 2017 | 1Q 2016 | Year-on-year change RUB mln % | |
Integrated freight forwarding and logistics services | 11,203 | 8,236 | +2,967 | +36.0% |
Rail-based container shipping services | 868 | 943 | -75 | -8.0% |
Cargo transportation and handling services with involvement of third parties | 961 | 1,067 | -106 | -9.9% |
Terminal services and agency fees | 683 | 508 | +175 | +34.4% |
Truck deliveries | 177 | 182 | -5 | -2.7% |
Other freight forwarding services | 66 | 44 | +22 | +50.0% |
Bonded warehousing services | 72 | 49 | +23 | +46.9% |
Other | 32 | 30 | +2 | +6.7% |
Total revenue | 14,062 | 11,059 | +3,003 | +27.2% |
Total revenue increased by RUB 3,003 million, or 27.2% year-on-year, to RUB 14,062 million for the three months of 2017, from RUB 11,059 million in the corresponding period of 2016. This increase was primarily due to the growth of integrated freight forwarding and logistics services, as well as terminal services.
The following table sets out the components of adjusted revenue (as described in Adjustments and additional financial information above) and their relative contribution to adjusted revenue for the three months ended 31 March 2017 and 2016, respectively.
Adjusted revenue breakdown
1Q 2017 | 1Q 2016 | Year-on-year change | ||||
RUB mln | share, % | RUB mln | share, % | RUB mln | Percent | |
Adjusted integrated freight forwarding and logistics services | 4,118 | 68.5% | 2,841 | 61.8% | +1,277 | +44.9% |
Rail-based container shipping services | 868 | 14.4% | 943 | 20.5% | -75 | -8.0% |
Terminal services and agency fees | 683 | 11.4% | 508 | 11.1% | +175 | +34.4% |
Truck deliveries | 177 | 2.9% | 182 | 4.0% | -5 | -2.7% |
Other freight forwarding services | 66 | 1.1% | 44 | 1.0% | +22 | +50.0% |
Bonded warehousing services | 72 | 1.2% | 49 | 1.1% | +23 | +46.9% |
Other - | 32 | 0.5% | 30 | 0.7% | +2 | +6.7% |
Total adjusted revenue | 6,016 | 100% | 4,597 | 100% | +1,419 | +30.9% |
Adjusted revenue (as defined above) increased by 30.9% year-on-year to RUB 6,016 million for the three months ended 31 March 2017, from RUB 4,597 million in the corresponding period of 2016. This was driven by an increase in revenue from integrated freight forwarding and logistics services, terminal services, bonded warehousing services and ancillary businesses, which was partially offset by a decrease in rail-based container shipping services and truck deliveries.
Integrated freight forwarding and logistics services
Revenue from integrated freight forwarding and logistics services increased by 36.0% year-on-year to RUB 11,203 million for the three months ended 31 March 2017, from RUB 8,236 million for the corresponding period of 2016.
Adjusted revenue from integrated freight forwarding and logistics services was up 44.9% year-on-year to RUB 4,118 million for the three months ended 31 March 2017, from RUB 2,841 million in the first quarter of 2016. This increase resulted from growing revenue-generating transportation volumes and changes in transportation services structure. The continuing shift in clients' preferences in favour of integrated freight forwarding and logistics solutions also contributed to the growth of this revenue item. In the reporting quarter, the share of integrated freight forwarding and logistic services in the adjusted revenue increased to 68.5% from 61.8% a year earlier.
Rail-based container transportation services
Revenue from rail-based container transportation was down 8.0% year-on-year to RUB 868 million for the three months ended 31 March 2017, from RUB 943 million a year earlier, reflecting the continuing shift of customers' preferences towards integrated logistics services.
Terminal services and agency fees
Revenue from terminal services and agency fees increased by 34.4% year-on-year to RUB 683 million for the three months ended 31 March 2017, from RUB 508 million in the first quarter of 2016, as a result of an increase in terminal handling volumes by 8.9% year-on-year, an indexing of infrastructure tariff and an increase in provision of ancillary value-added services at Company's terminals.
Truck deliveries
Revenue from truck deliveries decreased by RUB 5 million, or 2.7% year-on-year, to RUB 177 million for the three months ended 31 March 2017, from RUB 182 million a year earlier. The continuing shift in clients' preferences in favour of integrated freight forwarding and logistics solutions was the prime reason for this revenue item to decline.
Other freight forwarding and logistics services
Revenue from other freight forwarding and logistics services, which are freight forwarding and logistics services of a non-integrated nature, increased by 50.0% year-on-year to RUB 66 million for the three months ended 31 March 2017, from RUB 44 million a year earlier, on the back of the market recovery and resumed customer demand for value-added-services.
Bonded warehousing services
Revenue from bonded warehousing services increased by RUB 23 million, or 46.9% year-on-year, to RUB 72 million for the three months ended 31 March 2017, from RUB 49 million a year earlier, in line with dynamics of import volumes.
Operating expenses
The following table provides a breakdown of the Company's operating expenses for three months ended 31 March 2017 and 2016, respectively.
Operating expenses structure
1Q 2017 | 1Q 2016 | |||||
RUB mln | % of operating expenses | % of total revenue | RUB mln | % of operating expenses | % of total revenue | |
Third-party charges related to principal activities | 8,046 | 63.0% | 57.2% | 6,462 | 61.5% | 58.4% |
Freight and transportation services | 1,610 | 12.6% | 11.4% | 1,259 | 12.0% | 11.4% |
Payroll and related charges | 1,328 | 10.4% | 9.4% | 1,104 | 10.5% | 10.0% |
Depreciation and amortisation | 640 | 5.0% | 4.6% | 615 | 5.9% | 5.6% |
Materials, repair and maintenance | 580 | 4.5% | 4.1% | 430 | 4.1% | 3.9% |
Taxes other than income tax | 131 | 1.0% | 0.9% | 164 | 1.6% | 1.5% |
Rent | 67 | 0.5% | 0.5% | 89 | 0.8% | 0.8% |
Other expenses | 363 | 2.8% | 2.6% | 388 | 3.7% | 3.5% |
Total operating expenses | 12,765 | 100.0% | 90.8% | 10,511 | 100.0% | 95.0% |
TransContainer's total operating expenses increased by RUB 2,254 million, or 21.4% year-on-year, to RUB 12,765 million for three months ended 31 March 2017, from RUB 10,511 million a year earlier. This was primarily due to a significant increase in the cost of third-party charges related to principal activities.
Cost of third-party charges related to principal activities
The cost of third-party charges related to principal activities increased by 24.5% year-on-year to RUB 8,046 million for the three months ended 31 March 2017, from RUB 6,462 million in the corresponding period of 2016. This was predominantly driven by a higher volume of outsourced transportation services involved in TransContainer's principal activities, particularly in respect of integrated logistics solutions (see also section Adjustments and additional financial information above).
Adjusted operating expenses
Adjusted operating expenses, as defined in the Adjustments and additional financial information section above, increased by 16.5% year-on-year to RUB 4,719 million for the three months ended 31 March 2017, from RUB 4,049 million a year earlier. This was primarily due to an increase in freight and transportation services, payrolls and materials, repair and maintenance costs. This, in turn, was partially offset by a decrease in tax other than income tax, rent expenses and other expenses.
Adjusted operating expenses structure and dynamics
1Q 2017 1Q 2016 | Period on period change | |||||
RUB mln | % | RUB mln | % | RUB mln | Percent change | |
Freight and transportation services | 1,610 | 34.1% | 1,259 | 31.1% | +351 | +27.9% |
Payroll and related charges | 1,328 | 28.1% | 1,104 | 27.3% | +224 | +20.3% |
Depreciation and amortisation | 640 | 13.6% | 615 | 15.2% | +25 | +4.1% |
Materials, repair and maintenance | 580 | 12.3% | 430 | 10.6% | +150 | +34.9% |
Taxes other than income tax | 131 | 2.8% | 164 | 4.1% | -33 | -20.1% |
Rent | 67 | 1.4% | 89 | 2.2% | -22 | -24.7% |
Other expenses | 363 | 7.7% | 388 | 9.6% | -25 | -6.4% |
Adjusted operating expenses | 4,719 | 100.0% | 4,049 | 100.0% | +670 | +16.5% |
Freight and transportation services
Expenses related to freight and transportation services increased by RUB 351 million, or 27.9% year-on-year, to RUB 1,610 million for the three months ended 31 March 2017, from RUB 1,259 million a year earlier. This was driven by an increase in container transportation volumes in the first quarter of 2017, as well as by a 10.2% year-on-year RZD tariff indexing.
Payroll and related charges
Payroll and related charges increased by RUB 224 million, or 20.3% year-on-year, to RUB 1,328 million for the three months ended 31 March 2017, from RUB 1,104 million a year earlier. This was primarily due to base salary indexing and higher performance-linked payments in the reporting quarter compared to the low base of the same period of 2016. The increase, however, was partially offset by a 2.6% year-on-year decrease in TransContainer's average headcount from 3,660 to 3,567.
Depreciation and amortisation
Depreciation and amortisation increased by RUB 25 million, or 4.1% year-on-year, to RUB 640 million for the three months ended 31 March 2017, compared to RUB 615 million a year earlier, reflecting the year-on-year growth in value of property, plant and equipment other than construction in-progress.
Materials, repair and maintenance
Expenses related to materials, repair and maintenance increased by 34.9% year-on-year to RUB 580 million for the three months ended 31 March 2017, compared to RUB 430 million a year earlier. This was mainly due to a 22.5% year-on-year increase in a number of flatcar repairs on the back of higher transportation volumes and improved flatcar turnover, as well as higher average repair costs resulted from an increase in prices for spare parts.
Тахes other than income tax
Taxes other than income tax were down 20.1% year-on-year to RUB 131 million for the three months ended 31 March 2017, from RUB 164 million a year earlier, primarily due to changes in VAT settlements.
Rent
Rent expenses fell by RUB 22 million, or by 24.7% year-on-year, to RUB 67 million for the three months ended 31 March 2017, from RUB 89 million in the corresponding period of the previous year, largely due to the optimisation of use of the Company's property.
Other operating expenses
Other operating expenses are an aggregate of various expense items such as security, consulting expenses, fuel and energy, licences and software, communication service and loss of sale of fixed assets. In the reporting period, other expenses were down by 6.4% year-on-year to RUB 363 million, from RUB 388 million a year earlier, reflecting the Company's continuous efforts to improve cost control for general and administrative expenses.
Interest expense
Interest expenses increased by RUB 60 million, or 50.8% year-on-year, to RUB 178 million for the three months ended 31 March 2017, from RUB 118 million a year earlier, mainly due to an increase in the total debt compared to the same period of 2016.
Interest income
Interest income increased by RUB 47 million, or 111.9% year-on-year, to RUB 89 million in the reporting period from RUB 42 million a year earlier, on the back of an increase in the Company's cash balances.
Profit before income tax
As a result of the reasons described above, as well as due to an increased contribution of the financial result of KedenTransService to the Company's profit and decreased foreign exchange loss, profit before income tax increased by RUB 750 million, or by 130.7% year-on-year, to RUB 1,324 million for the three months ended 31 March 2017, from RUB 574 million in the corresponding quarter of 2016.
Income tax expenses
Income tax expenses increased by RUB 131 million, or 103.1% year-on-year, to RUB 258 million for the three months ended 31 March 2017, from RUB 127 million a year earlier, mainly as a result of an increase in taxable profit.
The effective tax rate for the three months ended 31 March 2017 decreased to 19.5% from 22.1% a year earlier.
Total profit and comprehensive income for the period
As a result of the factors discussed above, the profit for the three months ended 31 March 2017 increased by RUB 619 million, or 138.5% year-on-year, to RUB 1,066 million compared to RUB 447 million for the three months ended 31 March 2016. Taking into account the exchange differences relating to foreign operations and other effects, the total comprehensive income for the reporting period was up 465.1% year-on-year and amounted to RUB 989 million, compared to RUB 175 million a year earlier.
Liquidity and Capital Resources
As of 31 March 2017, the Company's net cash and cash equivalents amounted to RUB 4,500 million, while its current assets exceeded current liabilities by RUB 2,366 million.
The Company's business is asset and capital-intensive and requires substantial capital expenditure for a variety of purposes, including the purchase of flatcars and containers, the development of rail-side terminals and investment in expanding and modernising its lifting equipment and truck fleet. The Company's operations and its capital expenditures are financed from both internally generated cash flows and RUB-denominated borrowings.
Cash flows
The following table sets out the principal components of the Company's consolidated cash flows for the three months ended 31 March 2017 and 2016, respectively.
RUB million | 1Q 2017 | 1Q 2016 | Change | |
Net cash provided by operating activities | 1,622 | 959 | 663 | |
Net cash used in investing activities | -1,306 | -198 | -1,108 | |
Net cash used in financing activities | -1,252 | -2 | -1,250 | |
Net change in cash and cash equivalents | -936 | 759 | -1,695 | |
Foreign exchange effect on cash and cash equivalents | -89 | -101 | 12 | |
Net cash and cash equivalents at the end of the period | 4,500 | 2,768 | 1,732 |
Cash flow generated by operating activities
Cash flow generated by operating activities increased by RUB 663 million, or 69.1% year-on-year, to RUB 1,622 million for the three months ended 31 March 2017, from RUB 959 million in the previous year, mainly due to a 65.6% year-on-year increase in operating profit before changes in working capital.
Cash flow used in investing activities
Cash flow used in investing activities increased by RUB 1,108 million, or by more than 6x times year-on-year, to RUB 1,306 million for the three months ended 31 March 2017, from RUB 198 million in the corresponding period of 2016. This was primarily due to RUB 921 million of short term investments and an increase in the Company's capital expenditures by RUB 291 million.
Cash flow used in financing activities
Cash outflow from financing activities increased considerably from almost zero in the three months ended 31 March 2016 to RUB 1,252 million for the three months ended 31 March 2017, due to the amortisation of series 4 bonds issue.
Capital Expenditure
Capital expenditure increased by RUB 291 million, or 118.8% year-on-year, to RUB 536 million for three months ended 31 March 2017, from RUB 245 million a year earlier. The majority of the capital expenditure was incurred for the acquisition of ISO containers and flatcars.
Planned capital expenditure for 2017
The Company's capital expenditure programme is aimed at maintaining TransContainer's position as a market leader in the Russian container sector, strengthening its competitive advantages, as well as optimising its asset structure and key operational metrics.
The total capital expenditure for 2017 is budgeted at RUB 7.9 billion (excluding VAT), however, the actual amount of capital expenditure is subject to the market conditions. The 2017 CAPEX programme is focused on the acquisition of flatcars and ISO containers and further improvement of terminal infrastructure.
Capital resources
The Company's operations and capital expenditure have historically been financed from internally generated cash flow and proceeds from issuing domestic debt. As of 31 March 2017, the Company's financial indebtedness consisted of two outstanding bond issues and financial lease obligations in an aggregate amount of RUB 7,671 million, compared to RUB 5,674 million as of 31 March 2016. The Company's net debt at the end of the reporting period was RUB 2,245 million, down 16.9%.
As of 31 March 2017, the major portion of the Company's financial indebtedness was unsecured, except for the obligations under finance leases, which were secured by the lessors' title to the lease assets. The Company's debt is rouble-denominated and has a fixed interest rate.
RUB-denominated bonds series 4
On 1 February 2013, the Company issued non-convertible five-year bonds for a total amount of RUB 5,000 million at a par value of RUB 1,000 each. Net proceeds from the issuance after the deduction of related offering costs amounted to RUB 4,988 million. The annual coupon rate of the bonds for five years is 8.35% with interest paid semi-annually.
The series 4 bonds is to be redeemed in four equal semi-annual instalments within the fourth and fifth years, the first and second instalments being made in July 2016 and January 2017 respectively. As a result, these bonds debt are classified as the short-term portion of the long-term bond issue with the carrying value amounted to RUB 2,536 million including the accrued interest in amount of RUB 36 million.
RUB-denominated bonds series BO-02
On 22 September 2016, the Company issued non-convertible five-year bonds for a total amount of RUB 5,000 million at a par value of RUB 1,000 each. Net proceeds from the issuance after deduction of related offering costs amounted to RUR 4,987 million. The annual coupon rate of the bonds for five years is 9.4% with interest paid semi-annually.
The series BO-02 bonds will be redeemed in four equal semi-annual instalments within the fourth and fifth years. As a result, these bonds are classified as long-term borrowings as at the reporting date.
As at 31 March 2017, the carrying value of the bonds amounted to RUB 4,997 million. The amount of accrued interest is RUB 10 million and has been included as short-term debt in the consolidated statement of financial position.
Working Capital
The Company's working capital is defined as the difference between its current assets and current liabilities. The table below sets out the key components of TransContainer's working capital for the three months ended 31 March 2017 and 2016, respectively.
RUB million | 31 March 2017 | 31 March 2016 |
Current assets | ||
Inventory | 260 | 299 |
Trade and other receivables | 1,860 | 1,463 |
Prepayments and other current assets | 3,687 | 3,188 |
Prepaid income tax | 27 | 43 |
Short-term investments | 926 | 203 |
Cash and cash equivalents | 4,500 | 2,768 |
Non-current Assets classified as held for sale | 0 | 0 |
Total current assets | 11,260 | 7,964 |
Current liabilities | ||
Trade and other payables | 4,884 | 3,648 |
Short-term debt and current portion of long-term debt | 2,546 | 3,039 |
Income tax payable | 33 | 66 |
Taxes other than income tax payable | 439 | 332 |
Provisions | 38 | 12 |
Finance lease obligations, current maturities | 18 | 18 |
Dividends payable | 0 | 0 |
Accrued and other current liabilities | 936 | 645 |
Deferred income | 0 | 0 |
Total current liabilities | 8,894 | 7,760 |
Working capital | 2,366 | 204 |
Working capital increased by RUB 2,162 million to RUB 2,366 million at the end of the reporting period from RUB 204 million a year earlier.
Downloads
The consolidated financial statements for the three months ended 31 March 2017 are available via the National Storage Mechanism at: http://www.hemscott.com/nsm.do or at the Company's website http://www.trcont.ru.
Conference call
TransContainer will host an analyst conference call on Wednesday, 31 May 2017, at 14:00 UK time / 16:00 Moscow time. Dial in details are as follows:
UK Free Call Dial In | 0800 694 0257 |
Russia Dial In (from a landline) | 810 8 002 097 2044 |
Conference ID | 28636464# |
A replay of the call will be available until 29 June 2017 using the following details:
UK Free Call Dial In | 0800 953 1533 | ||
Russia Dial In | 8 499 677 1064 | ||
Replay Access Code | 28636464# |
Enquiries:
TransContainer | |||
Andrey Zhemchugov First Deputy Chief Financial Officer | +7 495 637 9178+7 495 609 6062 |
| |
ir@trcont.ru |
| ||
Website | www.trcont.ru |
| |
Instinctif Partners | |||
Galyna Kulachek/ Dinara Shikhametova | +44 (0) 20 7457 2020 |
| |
About TransContainer
TransContainer (LSE ticker: TRCN) is the leading intermodal container transportation company in Russia with a market share of approximately 47%. It is the market leader in Russia by flatcar fleet size, container transportation by rail and rail-side container terminal throughput. As at 31 March 2017, it owned and leased 23,432 flatcars and 68,453 ISO containers. TransContainer also owns a network of rail-side container terminals, located at 44 railway stations across Russia and operates one terminal in Slovakia under a long-term lease agreement. The Company's joint venture JSC Kedentransservice ("Kedentransservice", or "KDTS") also operates 19 inland rail-side terminals in Kazakhstan. The Company's sales network comprises of 111 sales outlets in Russia, along with additional outlets across the CIS, Europe and Asia. TransContainer is listed at Moscow Exchange and LSE. Company's major shareholder with 50% +2 shares is United Transportation and Logistics Company, established by Russian Railways, Belorussian Railway and Kazakhstan Temir Zholy.
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 the Company. 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. PJSC "TransContainer" wishes to caution you that these statements are only predictions and that actual events or results may differ materially. PJSC "TransContainer" 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 PJSC "TransContainer", including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries PJSC "TransContainer" operates in, as well as many other risks specifically related to PJSC "TransContainer" and its operations
1 Transportation of clients' containers by the Company's rolling stock and own loaded containers by its own and third-party flatcars
2 The empty run ratio is calculated as an average empty run in kilometers divided by an average total run in kilometers