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Global Reach
29 Mar 2017

Results for the full year ended 31 December 2016

RNS Number : 8203A

 

PJSC "TransContainer" ("TransContainer" or the "Company" together with its consolidated subsidiaries) today publishes its management report together with the audited consolidated financial statements for the full year ended 31 December 2016. 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 Transportation equipment for shipping cargo via various means of transport. Containers are durable enough for repeated use and can be stacked. Containers are divided into medium-duty (three- and five-tonne), which conform to former Soviet Union standards and are still used for shipments in Russia and the CIS, and ISO (20- and 40-foot) containers, which are used for Russian and international shipments. The universal standard unit TEU (twenty-foot equivalent unit) was introduced to measure transport flow volumes.
container
transportation company in Russia. As at 31 December 2016, the Company accounted for approximately 47.3% of Russia's rail container transportation market. As at 31 December 2016, it had 23,244 owned and leased flatcars and 67,337 ISO containers. TransContainer also owns a network of rail-side container terminals, located at 45 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 115 sales outlets in Russia, along with additional sales points across the CIS, Europe and Asia.

 

Following an 8.0% drop in transportation volumes in 2015, the Russian rail container transportation market fully recovered in 2016, amounting to a record high volume of 3,261 thousand TEU, up 10.2% year-on-year. This increase resulted mainly from a 12.0% year-on-year growth in domestic transportation volumes, while international transportation increased by 8.3% year-on-year.

 

Transportation volumes by the Company's A specialised type of rolling stock designed to carry ISO containers.
flatcar
and container fleet grew by 8.9% year-on-year to 1,543 thousand TEU, mainly as a result of an increase in domestic, export and Import-bound container traffic, as indicated in the respective waybill.
import transportation
. Revenue-generating1 transportation volumes were up 12.8% year-on-year to 1,193 thousand TEU. However, the competition in the Russian container market remained tough throughout the reporting year, having a negative impact on the Company's tariffs for rail transportation services.

 

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:

 

2016

2015

Year-on-year change

RUB mln

Percent

Total revenue

51,483

42,505

+8,978

+21.1%

Adjusted revenue

21,988

20,311

1,677

8.3%

Adjusted expenses

18,799

17,848

951

5.3%

EBITDA

7,099

6,526

573

8.8%

Adjusted EBITDA margin

32.3%

32.1%

Profit for the period

3,244

2,831

413

14.6%

Adjusted net profit margin

14.8%

13.9%

Total debt

9,137

5,780

+3,357

+58.1%

Net debt5

3,534

3,663

-129

-3.5%

Net debt / LTM EBITDA

0.50

0.57

 

In 2016, the Company's EBITDA increased by 8.8% to RUB 7,099 million from RUB 6,526 million in 2015, while net profit was up 14.6% year-on-year to RUB 3,244 million from RUB 2,831 million, respectively.

 

As at 31 December 2016, the Company's total debt was RUB 9,137 million with the net debt of only RUB 3,534 million, compared to RUB 5,780 million and RUB 3,663 million as at 31 December 2015, respectively. As a result, the Net Debt/LTM EBITDA ratio decreased to 50% as at 31 December 2016 from 57% as at 31 December 2015.

 

Capital expenditure for 2016 decreased moderately by 7.9% year-on-year to RUB 2,242 million from RUB 2,434 million in 2015, and were primarily spent for an acquisition of ISO containers and construction works on terminals. The Company didn't invest substantially in acquisition of Cars for carrying cargo or passengers designated for railway transportation.
rolling stock
in 2016 as the increased customer demand for rail container transportation was met by improved efficiency of existing rolling-stock and use of third-party flatcars for transportation of the Company's containers. 

 

As a result, the Company's cash flow before financing activities increased from RUB 1,904 million in 2015 to RUB 4,672 million in 2016, enabling the Company to pay record high dividends of RUB 4,830 million to its shareholders.

 

Recent developments and outlook

In the first quarter of 2017, the performance of the Russian rail container market exceeds the Company's expectations, and it is anticipated to grow by more than 20% year-on-year, partially due to a low base of the last year. Though the growth sustainability for the rest of the year is yet to be proved. The market performance in the beginning of the year creates upside risks for the Company's base-case scenario implying a mid- to upper single digit growth rate.

 

With that in mind, the Company's management resumes investments in rolling stock in 2017 to meet the customer demand and will continue to strengthen its focus on business optimisation, while further improving management efficiency and the quality of customer service.

 

The rail container market performance in 2016 and in the beginning of 2017 confirms the Company's view that the Russian container transportation market is fundamentally attractive with significant long-term growth prospects, driven by the scope for further growth in cargo The use of containers for cargo transportation, supply and storage.
containerisation
. The expected economic uplift in Russia will also be one of the key contributing factors to container transportation market growth in the medium term.

 

Key operating results

For the full year of 2016, the Russian rail container market grew by 10.2% year-on-year and amounted to a record high volume of 3,261 thousand TEU.

 

Russian Rail Container Transportation Market for the full year of 2016 (ISO Loaded + Empty), 000' TEU

 

FY 2016

FY  2015

Change

000' TEU

Percent

Domestic Routes

1,678

1,498

+180

+12.0%

Export

800

741

+59

+7.9%

Import

525

503

+22

+4.4%

Freight passing from one country to another through a third country. Whether cargo is permitted to transit a certain country and under what terms is subject to trade agreements and treaties between countries. Direct transit is when foreign goods are shipped under tariff protection, without holding at a customs warehouse; indirect transit is when goods arrive at customs warehouses and are then transported abroad.
Transit

258

217

+41

+18.8%

All Routes

3,261

2,959

+302

+10.2%

 

Container volumes transported by the Company's flatcar and container fleet grew by 8.9% year-on-year to 1,543 thousand TEU, mainly as a result of the increase in domestic, export and import transportation. Transit volumes were down 13.6% year-on-year due to a reduced number of auto vehicles produced in Uzbekistan and Kazakhstan in the first half of the reporting year.

 

Transportation of containers using TransContainer's assets in 2016 (ISO Loaded + Empty). 000' TEU

 

FY 2016

FY 2015

Change

000' TEU

Percent

Domestic Routes

867

790

77

+9.7%

Export

360

318

43

+13.4%

Import

242

223

19

+8.3%

Transit

74

86

-12

-13.6%

All Routes

1,543

1,417

126

+8.9%

 

Container volumes transported by the Company's flatcar fleet for the year of 2016 increased by 2.6% year-on-year to 1,426 thousand TEU from 1,390 thousand TEU in 2015. The Company's revenue-generating container transportation volumes in Russia amounted to 1,193 thousand TEU for the full year of 2016, up 12.8% year-on-year, reflecting an improved For containers - transporting an empty container on a flatcar, for flatcars – a flatcar run without container(s) or any non-container cargo.
empty run
management.

 

The Company's A place equipped for the trans-shipment and storage of containers. A container terminal
typically includes one or more container yards. Rail-based container terminals are equipped with spur tracks for loading and unloading containers to/from railroad platforms (cars).
container terminal
throughput in Russia increased by 0.9% year-on-year to 1,230 thousand TEU compared to 1,219 thousand TEU in 2015. This resulted from a decrease in unloading of containers, as well as higher cargo volumes processed at shippers' handling facilities, reflecting an increase in domestic and export transportation.

 

In 2016, flatcar turnover significantly improved on the back of the market recovery and growing fleet management efficiency, while turnover of containers remained broadly flat. Container empty runs increased insignificantly, while empty runs for flatcars remained flat.

 

2016

2015

Turnover of containers, days

36.4

35.4

Turnover of flatcars, days

13.7

14.9

Empty run[1] for containers, %

32.0%

31.2%

Empty run for flatcars, %

7.5%

7.4%

 

Description of Key Consolidated Statement of Comprehensive Income Items

 

The following table sets out the Company's results for the twelve months ended 31 December 2016 and 2015.

 

Summary of the Company's key results for the full year ended 31 December 2016 and 31 December 2015

RUB million

2016

2015

Year-on-year change

Year-on-year percent change

Revenue

51,483

42,505

+8,978

+21.1%

Other operating income

660

811

-151

-18.6%

Operating expenses

-48,294

-40,042

-8,252

+20.6%

Operating profit

3,849

3,274

+575

+17.6%

Interest expense

-492

-508

+16

-3.1%

Interest income

276

152

+124

+81.6%

Foreign exchange gain, net

-223

0

-223

Share of result of associates and JVs

669

612

+57

+9.3%

Other financial results, net

0

18

-18

Profit before income tax

4,079

3,548

+531

+15.0%

Income tax expense

-835

-717

-118

+16.5%

Profit for the period

3,244

2,831

+413

+14.6%

Other comprehensive income (net of income tax)

-670

-914

+244

-26.7%

Total comprehensive income for the period

2,574

1,917

+657

+34.3%

 

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 A form of payment for sea transportation of cargo, or the use of a ship for a certain period of time. Freight payment is determined by the volume of cargo delivered to the destination
or by the volume of cargo loaded onto the ship.
freight
forwarding and The process of organising a chain of delivery, and managing that chain in the broadest sense. This chain may encompass both deliveries of raw materials needed for production and management of material resources at an enterprise, delivery to warehouses and distribution centres, sorting, handling, and final distribution at the points of consumption. In the context of transportation services, the main service is that of delivering cargo across a delivery route.
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

2016

2015

Year-on-year change

RUB mln             %

 

3rd-party charges related to integrated freight forwarding and logistics

24,641

19,090

+5,551

+29.1%

 

3rd-party charges related to cargo transportation and handling services

4,854

3,104

1,750

+56.4%

 

Third-party charges related to principal activities

29,495

22,194

+7,301

+32.9%

 

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

2016

2015

Year-on-year change

RUB mln            %

Total revenue

51,483

42,505

+8,978

+21.1%

Third-party charges related to principal activities

-29,495

-22,194

-7,301

+32.9%

Adjusted Revenue

21,988

20,311

+1,677

+8.3%

 

Integrated freight forwarding and logistics services revenue adjustment

Item

2016

2015

Year-on-year change

RUB mln            %

Integrated freight forwarding and logistics services

38,767

31,608

+7,159

+22.6%

3rd-party charges related to integrated freight forwarding and logistics

-24,641

-19,090

-5,551

+29.1%

Adjusted integrated freight forwarding and logistics services

14,126

12,518

+1,608

+12.8%

 

Operating expenses adjustment

Item

2016

2015

Year-on-year change

RUB mln            %

Total operating expenses

48,294

40,042

+8,252

+20.6%

Third-party charges related to principal activities

-29,495

-22,194

-7,301

+32.9%

Adjusted operating expenses

18,799

17,848

+951

+5.3%

 

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

2016

2015

Year-on-year change

RUB mln            %

Adjusted Revenue1

21,988

20,311

+1,677

+8.3%

Adjusted operating expenses2

18,799

17,848

+951

+5.3%

EBITDA3

7,099

6,526

+573

+8.8%

Adjusted EBITDA margin4

32.3%

32.1%

Total debt

9,137

5,780

+3,357

+58.1%

Net debt5

3,534

3,663

-129

-3.5%

Net debt / LTM EBITDA

0.50

0.57

-

-

 

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.

 

Revenue

The following table breaks down total revenue for the full year ended 31 December 2016 and 2015, respectively.

 

Revenue breakdown

RUB million

2016

2015

Year-on-year change

RUB mln            %

Integrated freight forwarding and logistics services

38,767

31,608

+7,159

+22.6%

Rail-based container shipping services

4,061

4,390

-329

-7.5%

Cargo transportation and handling services with involvement of third parties

4,854

3,104

+1,750

+56.4%

Terminal services and agency fees

2,393

2,130

+263

+12.3%

Truck deliveries

875

848

+27

+3.2%

Other freight forwarding services

226

134

+92

+68.7%

Bonded warehousing services

203

194

+9

+4.6%

Other

104

97

+7

+7.2%

Total revenue

51,483

42,505

+8,978

+21.1%

 

Total revenue increased by RUB 8,978 million, or 21.1% year-on-year, to RUB 51,483 million for the full year of 2016, from RUB 42,505 million in 2015. This increase was primarily due to the growth of third-party charges accounted as Cargo transportation and handling services with involvement of third parties being a part of the Company's total revenue.

 

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 twelve months ended 31 December 2016 and 2015, respectively.

 

Adjusted revenue breakdown

2016

2015

Year-on-year change

RUB mln

share, %

RUB mln

share, %

RUB mln

Percent

Adjusted integrated freight forwarding and logistics services

14,126

64.2%

12,518

61.6%

+1,608

+12.8%

Rail-based container shipping services

4,061

18.5%

4,390

21.6%

-329

-7.5%

Terminal services and agency fees

2,393

10.9%

2,130

10.5%

+263

+12.3%

Truck deliveries

875

4.0%

848

4.2%

+27

+3.2%

Other freight forwarding services

226

1.0%

134

0.7%

+92

+68.7%

Bonded warehousing services

203

0.9%

194

1.0%

+9

+4.6%

Other -

104

0.5%

97

0.5%

+7

+7.2%

Total adjusted revenue

21,988

100%

20,311

100%

+1,677

+8.3%

 

Adjusted revenue (as defined above) increased by 8.3% year-on-year to RUB 21,988 million for the full year ended 31 December 2016, from RUB 20,311 million in 2015. This was driven by an increase in revenue from integrated freight forwarding and logistics services, terminal services and ancillary businesses, which was partially offset by a decrease in rail-based container shipping services.

 

In 2016, the share of integrated freight forwarding and logistics services has been continuing its growth.

 

Integrated freight forwarding and logistics services

Revenue from integrated freight forwarding and logistics services increased by 22.6% year-on-year to RUB 38,767 million for the full year ended 31 December 2016 from RUB 31,608 million in 2015.

 

Adjusted revenue from integrated freight forwarding and logistics services was up 12.8% year-on-year to RUB 14,126 million for the full year ended 31 December 2016 from RUB 12,518 million in 2015. 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 2016, the share of integrated freight forwarding and logistic services in the adjusted revenue increased to 64.2% from 61.6% a year earlier.

 

Rail-based container transportation services

Revenue from rail-based container transportation was down 7.5% year-on-year to RUB 4,061 million for the full year ended 31 December 2016, from RUB 4,390 million in 2015. These figures reflect the continuing shift of customers' preferences towards integrated logistics services.

 

Terminal services and agency fees

Revenue from terminal services and agency fees increased by 12.3% year-on-year to RUB 2,393 million for the full year ended 31 December 2016 from RUB 2,130 million for the previous year. This was primarily driven by an increase in average tariffs for terminal services and agency fees, while handling volumes being broadly flat.

 

Truck deliveries

Revenue from truck deliveries increased by RUB 27 million, or 3.2% year-on-year, to RUB 875 million for the full year ended 31 December 2016, from RUB 848 million for the previous year. This was mainly due to a 1.5% year-on-year increase in container transportation volumes by the Company's own and outsourced truck fleet to 388 thousand TEU for the full year ended 31 December 2016 from 382 thousand TEU for the previous year, reflecting the dynamics of terminal handling volumes.

 

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 68.7% year-on-year to RUB 226 million for the full year ended 31 December 2016, from RUB 134 million in 2015 on the back of market recovery and resumed customer demand for added-value services.

 

Bonded warehousing services

Revenue from bonded warehousing services increased by RUB 9 million, or 4.6% year-on-year, to RUB 203 million for the full year ended 31 December 2016, from RUB 194 million for the previous year, in  line with dynamics of import volumes.

 

Operating expenses

The following table provides a breakdown of the Company's operating expenses for the full year ended 31 December 2016 and 2015, respectively.

 

Operating expenses structure

2016

2015

RUB mln

% of operating expenses

% of total revenue

 RUB mln

% of operating expenses

% of total revenue

Third-party charges related to principal activities

29,495

61.1%

57.3%

22,194

55.4%

52.2%

Freight and transportation services

5,972

12.4%

11.6%

5,858

14.6%

13.8%

Payroll and related charges

5,244

10.9%

10.2%

4,507

11.3%

10.6%

Depreciation and amortisation

2,528

5.2%

4.9%

2,470

6.2%

5.8%

Materials, repair and maintenance

2,605

5.4%

5.1%

2,275

5.7%

5.4%

Taxes other than income tax

543

1.1%

1.1%

521

1.3%

1.2%

Rent

311

0.6%

0.6%

638

1.6%

1.5%

Other expenses

1,596

3.3%

3.1%

1,579

3.9%

3.7%

Total operating expenses

48,294

100.0%

93.9%

40,042

100.0%

94.2%

 

TransContainer's total operating expenses increased by RUB 8,252 million, or 20.6% year-on-year, to RUB 48,294 million for the full year ended 31 December 2016, from RUB 40,042 million for the previous year. 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 32.9% year-on-year to RUB 29,465 million for the full year ended 31 December 2016, from RUB 22,194 million during the previous year. 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 5.3% year-on-year to RUB 18,799 million for the full year ended 31 December 2016, from RUB 17,848 million in 2015. This was primarily due to an increase in materials, repair and maintenance costs and payrolls. This, in turn, was partially offset by a decrease in rent expenses.

 

Adjusted operating expenses structure and dynamics for full year ended 31 December 2016 and 2015

2016                            2015

Period on period change

RUB mln

%

RUB mln

%

RUB mln

Percent change

Freight and transportation services

5,972

31.8%

5,858

32.8%

+114

+1.9%

Payroll and related charges

5,244

27.9%

4,507

25.3%

+737

+16.4%

Depreciation and amortisation

2,528

13.4%

2,470

13.8%

+58

+2.3%

Materials, repair and maintenance

2,605

13.9%

2,275

12.7%

+330

+14.5%

Taxes other than income tax

543

2.9%

521

2.9%

+22

+4.2%

Rent

311

1.7%

638

3.6%

-327

-51.3%

Other expenses

1,596

8.5%

1,579

8.8%

+17

+1.1%

Adjusted operating expenses

18,799

100.0%

17,848

100.0%

+951

+5.3%

 

Freight and transportation services

Expenses related to freight and transportation services increased by RUB 114 million, or 1.9% year-on-year, to RUB 5,972 million for the full year ended 31 December 2016 from RUB 4,507 million in 2015. This was driven by a 9.0% year-on-year RZD tariff indexing, which was partially offset by a 2.4% decrease in the transportation volumes of the Company's empty containers, as well as a decline in the average number of idle Company's flatcars resulted from improved empty run management, better fleet utilisation and overall market recovery.  

 

Payroll and related charges

Payroll and related charges increased by RUB 737 million, or 16.4% year-on-year, to RUB 5,244 million for the full year ended 31 December 2016, from RUB 4,507 million for the previous year. This was primarily due to base salary indexing and performance-linked payments. This increase was partially offset by a 4.9% year-on-year decrease in TransContainer's average headcount from 3,816 to 3,628. 

 

Depreciation and amortisation

Depreciation and amortisation increased by RUB 58 million, or 2.3% year-on-year, to RUB 2,528 million for the full year ended 31 December 2016, compared to RUB 2,470 million in 2015, reflecting the growth in value of property, plant and equipment other than construction in-progress in 2016.

 

Materials, repair and maintenance

Expenses related to materials, repair and maintenance increased by 14.5% year-on-year to RUB 2,605 million for the full year ended 31 December 2016 compared to RUB 2,275 million in 2015. This was mainly due to an 6.9% year-on-year increase in a number of flatcar repairs, as well as higher average repair price. This expense item was also affected by maintenance and repair works on the Company's terminals.

 

Тахes other than income tax

Taxes other than income tax were up 4.2% year-on-year to RUB 543 million for the full year ended 31 December 2016, from RUB 521 million in the previous year, primarily due to changes in VAT settlements.

 

Rent

Rent expenses fell by RUB 327 million, or by 51.3% year-on-year, to RUB 311 million for the full year ended 31 December 2016 from RUB 638 million in the previous year, largely due to the flatcar operating lease contracts being terminated in the third quarter of 2015.

 

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 year, other expenses were up by 1.1% year-on-year to RUB 1,596 million, from RUB 1,579 million in the previous year. An increase in charity amount was offset by a decrease in costs related to consulting services and other expenses.  

 

Interest expense

Interest expenses decreased by RUB 16 million, or 3.1% year-on-year, to RUB 492 million for the full year ended 31 December 2016 from RUB 508 million in the previous year, mainly due to a redemption of borrowings and amortisation of bonds throughout 2016. This effect was partially offset by interest expenses associated with a bond issue series BO2 in September 2016.

 

Interest income

 

Interest income increased by RUB 124 million, or 81.6% year-on-year, to RUB 276 million in the reporting year from RUB 152 million in 2015, mainly as a result 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, profit before income tax increased by RUB 531 million, or by 15.0% year-on-year, to RUB 4,079 million for the full year ended 31 December 2016 from RUB 3,548 million for the previous year.

 

Income tax expenses

Income tax expenses increased by RUB 118 million, or 16.5% year-on-year, to RUB 835 million for the full year ended 31 December 2016, from RUB 717 million in 2015, mainly as a result of an increase in taxable profit.

 

The effective tax rate for the full year ended 31 December 2016 remained flat at 20.5%.

 

Total profit and comprehensive income for the period

As a result of the factors discussed above, the profit for the full year ended 31 December 2016 increased by RUB 413 million, or 14.6% year-on-year, to RUB 3,244 million compared to RUB 2,831 million in 2015. Taking into account the exchange differences relating to foreign operations and other effects, the total comprehensive income for the reporting year was up 34.3% and amounted to RUB 2,574 million, compared to RUB 1,917 million in 2015.

 

Liquidity and Capital Resources

As of 31 December 2016, the Company's net cash and cash equivalents amounted to RUB 5,525 million, while its current assets exceeded current liabilities by RUB 2,347 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. During the reporting period, the Company's operations and its capital expenditures were financed from internally generated cash flows.

 

Cash flows

The following table sets out the principal components of the Company's consolidated cash flows for the full year ended 31 December 2016 and 2015, respectively.

 

 RUB million

2016

2015

Change

Net cash provided by operating activities

6,236

4,201

2,035

Net cash used in investing activities

-1,564

-2,297

733

Net cash provided by financing activities

-976

-1,956

980

Net change in cash and cash equivalents

3,696

-52

3,748

Foreign exchange effect on cash and cash equivalents

-281

258

-539

Net cash and cash equivalents at the end of the period

5,525

2,110

3,415

 

Cash flow generated by operating activities

Cash flow generated by operating activities increased by RUB 2,035 million, or 48.4% year-on-year, to RUB 6,236 million for the full year ended 31 December 2016 from RUB 4,201 million in the previous year, mainly due to a 17.6% year-on-year decrease in operating profit and changes in working capital.

 

Cash flow used in investing activities

Cash flow used in investing activities decreased by RUB 733 million, or 31.9% year-on-year, to RUB 1,564 million for the full year ended 31 December 2016 from RUB 2,297 million for the previous year. This decrease was primarily due to an increase in positive flow of KedenTransService's dividends amounted to RUB 517 million. 

 

Cash flow used in financing activities

Cash flow used by financing activities decreased by RUB 980 million or by 50.1% to negative RUB 976 million for the full year ended 31 December 2016, compared to negative RUB 1,956 million in 2015. The cash outflow associated with repayments of borrowings, bond amortisation and dividend payments was partially compensated by the new BO-02 RUB 5,000 million bond issue.

 

Capital Expenditure

Capital expenditure decreased by RUB 192 million, or 7.9% year-on-year, to RUB 2,242 million for the full year ended 31 December 2016 from RUB 2,434 million in the previous year. The majority of the capital expenditure was incurred for the reconstruction and expansion of container terminals in Krasnoyarsk, Yekaterinburg, Irkutsk and Moscow, as well as for the acquisition of ISO containers.

 

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 December 2016, the Company's financial indebtedness consisted of two outstanding bond issues and financial lease obligations in an aggregate amount of RUB 9,137 million, compared to RUB 5,780 million as of 31 December 2015. As of 31 December 2016, the Company's net debt was RUB 3,534 million.

 

As of 31 December 2016, 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 will be redeemed in four equal semi-annual instalments within the fourth and fifth years. As a result, these bonds are classified as of two portions: the long-term one with the carrying value amounted to RUB 1,249 million, and the short-term one with the carrying value amounted to RUB 2,633 million.  

 

The amount of accrued interest is RUB 133 million and has been included as short-term debt in the interim condensed consolidated statement of financial position.

 

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 4,987m. 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 December 2016, the carrying value of the bonds amounted to RUB 4,987 million. The amount of accrued interest is RUB 129 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 twelve months ended 31 December 2016.

 

 RUB million

31 December 2016

31 December 2015

Current assets

Inventory

209

315

Trade and other receivables

1,335

1,392

Prepayments and other current assets

3,567

3,527

Prepaid income tax

5

84

Short-term investments

78

7

Cash and cash equivalents

5,525

2,110

Non-current Assets classified as held for sale

0

0

Total current assets

10,719

7,435

Current liabilities

Trade and other payables

4,279

3,405

Short-term debt and current portion of long-term debt

2,762

1,893

Income tax payable

21

99

Taxes other than income tax payable

378

634

Provisions

38

12

Finance lease obligations, current maturities

18

18

Dividends payable

0

0

Accrued and other current liabilities

876

686

Deferred income

0

0

Total current liabilities

8,372

6,747

Working capital

2,347

688

Working capital increased by RUB 1,659 million to RUB 2,347 million at the end of the reporting period from RUB 688 million as at 31 December 2015.

 

Downloads

The consolidated financial statements for the full year ended 31 December 2016 are available via the National Storage Mechanism at: 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 Monday, 3 April 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

89451608#

A replay of the call will be available until 3 May 2017 using the following details:

UK Free Call Dial In

0800 953 1533

Russia Dial In

8 499 677 1064

Replay Access Code

89451608#

 

 

Enquiries:

 

TransContainer

Andrey Zhemchugov

First Deputy Chief Financial Officer

+7 495 637 9178
+7 495 609 6062

 

E-mail

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 Transportation equipment for shipping cargo via various means of transport. Containers are durable enough for repeated use and can be stacked. Containers are divided into medium-duty (three- and five-tonne), which conform to former Soviet Union standards and are still used for shipments in Russia and the CIS, and ISO (20- and 40-foot) containers, which are used for Russian and international shipments. The universal standard unit TEU (twenty-foot equivalent unit) was introduced to measure transport flow volumes.
container
transportation company in Russia. It is the market leader in Russia by A specialised type of rolling stock designed to carry ISO containers.
flatcar
fleet size, container transportation by rail and rail-side A place equipped for the trans-shipment and storage of containers. A container terminal
typically includes one or more container yards. Rail-based container terminals are equipped with spur tracks for loading and unloading containers to/from railroad platforms (cars).
container terminal
throughput. As of 31 December 2016, it owns a network of 45 rail-side container terminals in Russia, 19 rail-side terminals in Kazakhstan (through its joint venture company KedenTransService) and operates one terminal in Slovakia. Company's sales network comprises 115 sales offices across Russia as well as presence in 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 The process of organising a chain of delivery, and managing that chain in the broadest sense. This chain may encompass both deliveries of raw materials needed for production and management of material resources at an enterprise, delivery to warehouses and distribution centres, sorting, handling, and final distribution at the points of consumption. In the context of transportation services, the main service is that of delivering cargo across a delivery route.
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] The For containers - transporting an empty container on a flatcar, for flatcars – a flatcar run without container(s) or any non-container cargo.
empty run
ratio is calculated as an average empty run in kilometres divided by an average total run in kilometres

This information is provided by RNSThe company news service from the London Stock Exchange 

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