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Результаты за три месяца закончившихся 31 марта 2014 г.

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angle-left null Результаты за три месяца закончившихся 31 марта 2014 г.

RNS Number : 5056I

OJSC Transcontainer

02 June 2014

 

FOR IMMEDIATE RELEASE    

2 June 2014

 

JSC TransContainer

 

Results for the three months ended 31 March 2014

 

JSC “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 2014. 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 of 31 March 2014, the Company accounted for approximately 45.3% of all rail container transportation in Russia. It owns and operates 26,302 flatcars and more than 64,808 containers. TransContainer also owns a network of rail-side container terminals located at 46 railway stations across Russia and operates one terminal in Slovakia under a long-term lease agreement. The Company’s joint venture JSC KedenTransService (“KedenTransService”) also operates 19 inland rail-side terminals in Kazakhstan via its subsidiary. The Company’s sales network is comprised of more than 130 sales outlets across Russia, along with a presence in the CIS, Europe and Asia.

 

During the first three months of 2014 the rail container transportation market demonstrated a 9.3% growth in volumes, which was to a significant extent attributable to the low base of the previous year. However, the pricing environment continued to be challenging amid the increased competition in the market. The Company’s rail container transportation volumes in Russia for the three months ended 31 March 2014 increased by 1.9% to 349 thousand twenty-foot equivalent units (“TEU”) compared to 342 thousand TEU in the corresponding period of 2013, whilst revenue-generating transportation  volumes grew by 5.1% year on year to 272 thousand TEU. Terminal handling volumes in Russia decreased by 0.2% year on year to 296 thousand TEU in the reporting period.

 

The Company’s results for the first three months ended 31 March 2014 were impacted by the deconsolidation of KedenTransService in December 2013 as a result of the disposal of a 17% stake in the entity. Following this transaction, KedenTransService’s assets, liabilities, operating results and cash flow statements are excluded from TransContainer’s consolidated results for the reporting period, while they were consolidated for the three month period ended 31 March 2013.

During the reporting period, the Company’s total revenue decreased by 1.1% year on year to RUB 8,460 million and adjusted revenue decreased by 13.3% year on year to RUB 4,884 million. However, EBITDA increased by 6.3% to RUB 2,264 million from RUB 2,129 million in the corresponding period of 2013. Profit for the period grew by 18.1% to RUB 1,309 million in the first quarter of 2014 from RUB 1,108 million in the corresponding period last year, while total comprehensive income for the period grew by 3.8% from RUB 1,164 million for the first three months of 2013 to RUB 1,208 million for the reporting period. 

 

In terms of profitability, EBITDA margin in the first quarter of 2014 reached the record level of 46.4% compared to 37.8% for the first quarter of 2013, while the net income margin grew frоm 19.7% to 26.8% respectively.

 

As of 31 March 2014, the Company’s total debt was RUB 8,361 million with net debt of only RUB 4,877 million, bringing the Net Debt/ LTM EBITDA ratio to a comfortable level of 48%.

 

Capital expenditure for three months ended 31 March 2014 decreased by 6.2% year on year to RUB 286 million. In accordance with the Company’s policy, all capital expenditure during the reporting period was financed by the Company’s own cash flow.

 

Recent developments and outlook

 

Following the 9.3% growth in Russia’s rail container transportation market recorded in the first quarter of 2014, it continued to demonstrate healthy dynamics in April and May, supporting the management’s view of the market’s prospects. The Company’s management expects the rail container market to demonstrate middle single-digit growth rates for the full year of 2014, subject to any external effects. 

 

However, since the Russian economy has demonstrated relatively weak performance in the first quarter of 2014 and the market is expecting further economic slowdown in the country, the Company’s management notes that the resumed growth trend in the Russian rail container market is still to prove its sustainability.

 

Increasing levels of competition in the container segment may continue to put operator tariffs under pressure. In addition to the Company’s continuous marketing efforts and improvements to the quality of service, TransContainer’s management will also review its pricing policy as costs are optimised and operating efficiency continues to improve further. 

 

The Company’s management will continue to invest in rolling stock and terminal modernisation, as well as opportunistic M&A in line with its strategy, subject to changes in the economic environment. In the long term, we continue to believe that the Russian container transportation market is fundamentally attractive with significant growth potential, driven by Russia’s economic development, its further involvement in international trade, growth in consumer demand and containerisation.

 

Key operating results

 

Rail container transportation volumes in Russia

 

The Company’s rail container transportation volumes in Russia for the first quarter of 2014 increased by 1.9% to 349 thousand TEU, compared to 342 thousand TEU in the corresponding period of 2013. This was mainly due to a 41% growth in transit transportation volumes and a 10% increase in export transportation, which was largely offset by a 16.8% decrease in imports. A decrease in the Company’s import transportation was primarily affected by the negative impact of the weaker rouble on container imports.

 

Transportation of containers by TransContainer's fleet in 1Q 2014 (ISO Loaded + Empty), 000’ TEU

 

1Q 2014 1Q 2013 Change 

000’ TEU Percent

Domestic Routes 167.2 167.1 +0.1 0.0%

Export 99.8 90.7 +9.1 +10.1%

Import 53.5 64.4 -10.8 -16.8%

Transit 28.4 20.1 +8.3 +41.0%

All Routes 349.0 342.4 +6.6 +1.9%

 

The Company’s revenue-generating container transportation  volumes in Russia increased by 5.1% year on year to 272 thousand TEU in the first quarter of 2014. TransContainer’s estimated share of Russia’s rail container transportation in the first quarter of 2014 decreased to ca. 45.3% from ca. 48.5% in the corresponding period of 2013 and remained essentially flat compared to the fourth quarter of 2013. 

 

Terminal handling

 

Throughput of the Company’s rail container terminal network in Russia in the first quarter of 2014 decreased by 0.2% to 296 thousand TEU, compared to the fourth quarter of 2013. This decline was mainly due to an 83.1% year on year drop in medium-duty containers (MDC) handling volume, as a result of the continuing phasing out of the MDC fleet. 

 

Asset utilisation

 

In the first quarter of 2014, the container empty run ratio decreased due to management efforts to optimise the container fleet utilisation amid a challenging operating environment. This was partly offset by a moderate increase in the flatcar empty run ratio.

Growth in the container turnover period is mainly associated with the market environment, growing competition and increasing complexity of logistics chains in the first three months of 2014, while turnover of flatcars remained largely flat.

 

1Q 2014 1Q 2013

Turnover of containers, days 31.8  26.0

Turnover of flatcars, days 14.5 14.0

 

Empty run  for containers, % 27.6% 29.2%

Empty run for flatcars, % 6.7% 6.1%

__________

3   The Empty run ratio is calculated as an average empty run in kilometers divided by an average total run in kilometers

 

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 2014 and 2013. 

 

RUB million 1Q 2014 1Q 2013 Year on Year on year 

year change percent change

Revenue 8,460 8,558 -98 -1.1%

Other operating income 158 228 -70 -30.7%

Operating expenses -7,030 -7,191 161 -2.2%

Gain from early  16 - 16

termination of finance

lease

Interest expense -177 -208 31 -14.9%

Interest income 24 66 -42 -63.6%

Foreign exchange 145 - 145

gain, net

Share of result of  28 1 27 2700.0%

associates and joint 

ventures

Profit before  1,624 1,454 170 11.7%

income tax

Income tax expense -315 -346 31 -9.0%

Profit for the period 1,309 1,108 201 18.1%

Attributable to:

Equity holders of  1,309 1,099 210 19.1%

the parent

Non-controlling  - 9 -9

interest

 

Other comprehensive income 

 

Items that will not be reclassified to profit or loss:

Remeasurements of post 49 1 48 4800.0%

-employment benefit plans

Income tax effect -9 - -9

 

Items that may be reclassified subsequently to profit or loss:

Exchange differences  -141 55 -196 -356.4%

on translating 

foreign operations

Other comprehensive  -101 56 -157 -280.4%

income for the period

 

Total comprehensive  1,208 1,164 44 3.8%

income for the period

Attributable to:

Equity holders of  1,208 1,172 36 3.1%

the parent

Non-controlling  - -8

interest

 

The Company’s financial results for the three months ended 31 March 2014 reflect the Company’s efforts to improve operational efficiency and cost effectiveness amid the competitive market environment in Russia.

 

In the first quarter of 2014, the Company’s total revenue decreased by 1.1% year on year to RUB 8,460 million, while adjusted revenue decreased by 13.3% year on year to RUB 4,884 million. Nevertheless, EBITDA increased by 6.3% to RUB 2,264 million in the reporting quarter from RUB 2,129 million in the corresponding quarter of 2013, while profit for the period grew by 18.1% to RUB 1,309 million from RUB 1,108 million in the first quarter of 2013.

 

Additional financial information 

 

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.

 

RUB million 1Q 2014 1Q 2013 Year on  Year on year 

year change percent change

Adjusted Revenue1 4,884 5,633 -749 -13.3%

Adjusted operating  3,454 4,266 -812 -19.0%

expenses2

EBITDA3 2,264 2,129 135 6.3%

Adjusted EBITDA  46.4% 37.8%

margin4

Total debt 8,361 9,346 -985 -10.5%

Net debt5 4,877 5,112 -235 -4.6%

 

1 Adjusted Revenue is calculated as total revenue less cost of integrated freight forwarding and logistics services.

2 Adjusted Operating Expenses are calculated as operating expenses less cost of integrated freight forwarding and logistics services.

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 sets out the breakdown of total revenue for the three months ended 31 March 2014 and 2013 respectively.

 

RUB million 1Q 2014 1Q 2013 Year on  Year on year 

year change percent change

Integrated freight  6,355 5,011 1 344 26.8%

forwarding and 

logistics services

Rail-based container  1,270 1,979 -709 -35.8%

shipping services

Terminal services  466 968 -502 -51.9%

and agency fees

Truck deliveries 220 314 -94 -29.9%

Other freight  63 132 -69 -52.3%

forwarding services

Bonded warehousing  62 93 -31 -33.3%

services

Other 24 61 -37 -60.7%

Total revenue 8,460 8,558 -98 -1.1%

 

Total revenue decreased by RUB 98 million, or 1.1%, from RUB 8,558 million for the three months ended 31 March 2013 to RUB 8,460 million for the three months ended 31 March 2014. This decrease was primarily due to a deconsolidation of KedenTransService’s revenue. If KedenTransService’s contribution to the revenue for the first quarter of 2013 is eliminated, the Company’s total revenue would have increased by 14.7% year on year, driven by an increase in integrated freight and transportation services.

 

Adjusted Revenue

 

The following table sets out adjusted revenue calculations for the three months ended 31 March 2014 and 2013 respectively.

 

RUB million 1Q 2014 1Q 2013 Year on  Year on year 

year change percent change

Total revenue 8,460 8,558 -98 -1.1%

Cost of integrated  3,576 2,925 651 22.3%

freight forwarding 

and logistics services

Adjusted Revenue 4,884 5,633 -749 -13.3%

 

Adjusted revenue (as defined above) declined by 13.3% from RUB 5,633 million for the three months ended 31 March 2013 to RUB 4,884 million for the three months ended 31 March 2014. This was primarily due to a deconsolidation of KedenTransService’s costs and revenues. If KedenTransService’s contribution to the adjusted revenue for the first quarter of 2013 is eliminated, the Company’s adjusted revenue would have increased by RUB 20 million, driven by an increase in integrated freight and transportation services, which offset a decline in rail-based container transportation services, bonded warehousing and other freight forwarding and logistics services.

 

The following table sets out the components of relative contribution to adjusted revenue for the three months ended 31 March 2014 and 2013 respectively.

 

  1Q 2014 1Q 2013 Year on year change

  RUB mln share, % RUB mln share, % RUB mln Percent

Adjusted Integrated  2,779 56.9% 2,086 37.0% 693 33.2%

freight forwarding 

and logistics services

Rail-based container  1 270 26.0% 1 979 35.1% -709 -35.8%

shipping services

Terminal services  466 9.5% 968 17.2% -502 -51.9%

and agency fees

Truck deliveries 220 4.5% 314 5.6% -94 -29.9%

Other freight forwarding 

services 63 1.3% 132 2.3% -69 -52.3%

Bonded warehousing 

services 62 1.3% 93 1.7% -31 -33.3%

Other 24 0.5% 61 1.1% -37 -60.7%

Total Adjusted Revenue 4,884 100% 5,633 100% -749 -13.3%

 

The structure of the Adjusted Revenue changed in the first quarter of 2014 compared to the corresponding period of 2013. The share of rail-based container transportation services in the Adjusted Revenue decreased from 35.1% for the first three months ended 31 March 2013 to 26.0% for the first three months ended 31 March 2014. The share of integrated freight forwarding and logistics services, net of cost of integrated freight forwarding and logistics services, increased to 56.9% from 37.1% as a result of the services mix shifting towards transportation under integrated logistics contracts. The share of terminal services and agency fees decreased from 17.2% to 9.5%, mainly due to a deconsolidation of KedenTransService’s results.  

 

Integrated freight forwarding and logistics services

 

Revenue from integrated freight forwarding and logistics services increased by 26.8% year on year to RUB 6,355 million for the three months ended 31 March 2014.

 

The following table sets out adjusted integrated freight forwarding and logistics services calculations for the three months ended 31 March 2014 and 2013 respectively.

 

 

RUB million 1Q 2014 1Q 2013 Year on  Year on year 

year change percent change

Integrated freight 

forwarding and 

logistics services 6,355 5,011 1,344 26.8%

Cost of integrated 

freight forwarding and 

logistics services 3,576 2,925 651 22.3%

Adjusted revenue from 

integrated freight 

forwarding and logistics 

services 2,779 2,086 693 33.2%

 

 

Adjusted revenue from integrated freight forwarding and logistics services grew by 33.2% year on year to RUB 2,779 million for the reporting period. This increase was primarily due to the Company’s business shifting towards providing integrated freight forwarding and logistics services, which was partly offset by the deconsolidation of KedenTransService’s transportation business.

 

Rail-based container transportation services

 

Revenue from rail-based container transportation fell by 35.8% to RUB 1,270 million for the reporting period from RUB 1,979 million for the same period of 2013, as a result of the mix of services shifting towards transportation as part of integrated logistics contracts.

 

Terminal services and agency fees 

 

Revenue from terminal services, including agency fees, decreased by 51.9% to RUB 466 million for the three months ended 31 March 2014 from RUB 968 million for the same period of 2013.

 

This decrease was primarily due to the deconsolidation of KedenTransService’s terminal business. On a stand-alone basis, the revenue from terminal services and agency fees would have remained flat year on year, reflecting the dynamics of the Company’s container terminal handling volumes in Russia.  

 

Agency fees, which are charged for services the Company renders as an agent of Russian Railways, decreased by 2.6% to RUB 370 million for the reporting period, compared to RUB 380 million for the same period of 2013, in line with container handling volumes at the Company’s terminals in Russia.

 

Truck deliveries 

 

Revenue from truck deliveries decreased by RUB 94 million, or 29.9%, to RUB 220 million for the three months ended 31 March 2014 from RUB 314 million for the same period of 2013. This was due to a 22.3% reduction in container transportation volumes by the Company’s own and outsourced truck fleet to 92 thousand TEU in the first quarter of 2014 from 118 thousand TEU in corresponding period of 2013, as well as due to the deconsolidation of KedenTransService’s trucking business. 

 

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, fell by 52.3% from RUB 132 million to RUB 63 million. This decrease was primarily due to the Company’s business shifting towards providing integrated freight forwarding and logistics services.

 

Bonded warehousing services

 

Revenue from bonded warehousing services decreased by RUB 31 million, or 33.3%, to RUB 62 million for the three months ended 31 March 2014 from RUB 93 million for the same period of 2013, primarily due to the deconsolidation of the KedenTransService bonded warehousing business.

 

Operating expenses 

 

The following table sets out a breakdown of the Company’s operating expenses for the three months ended 31 March 2014 and 2013 respectively.

 

RUB million 1Q 2014 1Q 2013 Year on  Year on year 

year change percent change

Cost of integrated 

freight forwarding and 

logistics services 3 576 2 925 651 22.3%

Freight and transpor

tation services 1 087 1 111 -24 -2.2%

Payroll and related 

charges 954 1 143 -189 -16.5%

Depreciation and 

amortisation 463 467 -4 -0.9%

Materials, repair 

and maintenance 417 610 -193 -31.6%

Taxes other than 

income tax 146 200 -54 -27.0%

Rent 96 283 -187 -66.1%

Other operating 

expenses 291 452 -161 -35.6%

Total operating 

expenses 7,030 7,191 -161 -2.2%

 

TransContainer’s total operating expenses decreased by RUB 161 million, or 2.2%, to RUB 7,030 million for the three months ended 31 March 2014 from RUB 7,191 million for the three months ended 31 March 2013, as a significant increase in the cost of integrated freight forwarding and logistics services offset the deconsolidation of the KedenTransService’s business.

 

Cost of integrated freight forwarding and logistics services 

 

Costs of integrated freight forwarding and logistics services increased by 22.3% to RUB 3,576 million for the three months ended 31 March 2014 from RUB 2,925 million for the same period of 2013, driven predominantly by an increase in transportation volume under integrated logistics contracts and volume of outsourced transportation services involved in TransContainer’s integrated logistics solutions.

 

Adjusted operating expenses 

 

The following table sets out adjusted operating expenses for the three months ended 31 March 2014 and 2013 respectively.

 

RUB million 1Q 2014 1Q 2013 Year on year  Year on year 

change percent change

Total operating 

expenses 7,030 7,191 -1613 -2.2%

Cost of integrated 

freight forwarding and 

logistics services 3 576 2 925 651 22.3%

Adjusted operating 

expenses 3,454 4,266 -812 -19.0%

 

Adjusted operating expenses, as defined above, decreased by 19.0% to RUB 3,454 million for the three months 31 March 2014 from RUB 4,266 million for the same period of 2013, primarily as a result of the deconsolidation of KedenTransService’s business, as well as due to an improvement in the Company’s operational efficiency.

 

The following table sets out a breakdown of the Company’s adjusted operating expenses, as defined above, for the three months ended 31 March 2014 and 2013 respectively.

 

  1Q 2014 1Q 2013 Year on year change

  RUB mln Percent of  RUB mln Percent of  RUB mln Percent change

adjusted  adjusted

operating  operating 

expenses expenses

Freight and transpor

tation services 1,087 31.5% 1,111 26.0% -24 -2.2%

Payroll and related 

charges 954 27.6% 1,143 26.8% -189 -16.5%

Depreciation and 

amortisation 463 13.4% 467 10.9% -4 -0.9%

Materials, repair and 

maintenance 417 12.1% 610 14.3% -193 -31.6%

Taxes other than 

income tax 146 4.2% 200 4.7% -54 -27.0%

Rent 96 2.8% 283 6.6% -187 -66.1%

Other expenses 291 8.4% 452 10.6% -161 -35.6%

Adjusted operating 

expenses 3,454 100.0% 4,266 100.0% -812 -19.0%

 

Freight and transportation services 

 

Expenses relating to freight and transportation services decreased by RUB 24 million, or 2.2%, to RUB 1,087 million for the three months ended 31 March 2014. The decrease was due to the deconsolidation of KedenTransService’s transportation business. If the deconsolidation effect is eliminated, costs related to freight and transportation services would have increased by 2.8% year on year, due to a rise in empty run costs incurred from container transportation in the CIS countries, partially offset by a decrease in container empty run ratio in Russia from 29.2% to 27.6%.   

 

Payroll and related charges 

 

Payroll and related charges decreased by RUB 189 million, or 16.5%, to RUB 954 million for the three months ended 31 March 2014 from RUB 1,143 million for the same period of 2013, primarily due to the deconsolidation of KedenTransService. However, even if the deconsolidation effect is eliminated, payroll and related charges would have decreased by 2.5% year on year, mainly due to an 11.6% decrease in TransContainer’s average headcount from 4,734 to 4,185 employees, partially offset by base salary indexing and payments of performance-linked bonuses in the first quarter of 2014.

 

Depreciation and amortisation

 

Depreciation and amortisation decreased by 0.9% to RUB 463 million in the first quarter of 2014 from RUB 467 million for the same period of 2013, as the deconsolidation of KedenTransService offset an increase in depreciation and amortisation charges resulting from acquiring fixed assets between 31 March 2013 and 31 March 2014. 

 

Materials, repair and maintenance 

 

Expenses related to materials, repair and maintenance fell by 31.6% to RUB 417 million for the first three months of 2014 from RUB 610 million for the same period of 2013, due to the deconsolidation of KedenTransService as well as a decrease in the number of flatcar repairs, especially in the number of the most expensive overhaul repairs.

 

Тахes other than income tax 

 

Taxes other than income tax decreased by 27.0% to RUB 146 million for the three months ended 31 March 2014 from RUB 200 million for the same period of 2013, primarily due to the deconsolidation of KedenTransService. Excluding the deconsolidation effect, taxes other than income tax would have decreased by 6.9% year on year due to VAT settlements.

 

Rent 

 

Rent expenses fell by RUB 187 million, or by 66.1%, to RUB 96 million in the reporting period from RUB 283 million in the same period of 2013, as a result of the deconsolidation of KedenTransService. On a stand-alone basis, the Company’s rent expenses would have increased by RUB 29 million, or 43.4%, primarily due to an increase in a number of flatcars rented under operating lease contracts from 70 units in the first quarter 2013 to 200 units in the first quarter of 2014.   

 

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 services, loss of sale of fixed assets, etc. Other expenses fell by 35.6% to RUB 291 million in the first quarter of 2014 from RUB 425 million in the first quarter of 2013, primarily due to the deconsolidation of KedenTransService. Excluding the deconsolidation effect, other operating expenses would have decreased by 18.9% year on year, as a result of improved cost control.  

 

Interest expense

 

Interest expenses decreased by RUB 31 million, or 14.9%, to RUB 177 million for the first three months of 2014 from RUB 208 million for the same period of 2013, due to a refinancing of maturing RUB-denominated bonds series 01 and loans obtained from OJSC Alfa Bank by newly issued RUB-denominated bonds series 04 in February 2013, as well as due to the scheduled amortisation of RUB 750 million bonds series 02 in December 2013.

 

Interest income

 

Interest income decreased to RUB 24 million in the first quarter of 2014 from RUB 66 million for the same period of 2013, due to a decrease in cash balances in deposit accounts compared to the first quarter of 2013. 

 

Profit before income tax 

 

Profit before income tax increased by RUB 170 million, or by 11.7%, from RUB 1,454 million for the three months ended 31 March 2013 to RUB 1,624 million for the three months ended 31 March 2014. This increase was due to the factors discussed above. 

 

Income tax expenses 

 

Income tax expenses decreased by RUB 31 million, or 9.0%, to RUB 315 million in the first three months of 2014 from RUB 346 million for the same period of 2013, primarily due to the deconsolidation of KedenTransService, as well as a decrease in non-deductible tax expenses. For the same reason, the effective tax rate for the reporting quarter decreased to 19.4% compared to 23.8% in the same quarter of 2013. 

 

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 2014 increased by RUB 201 million, or 18.1%, to RUB 1,309 million compared to RUB 1,108 million for the same period of 2013. Taking into account the exchange differences relating to foreign operations and other effects, the total comprehensive income for the reporting period was up 3.8% and totalled RUB 1,208 million, compared to RUB 1.164 million for the first three months of 2013 

 

Liquidity and Capital Resources 

 

As of 31 March 2014, the Company’s net cash and cash equivalents amounted to RUB 2,726 million and the Company’s current assets exceeded current liabilities by RUB 2,248 million.

 

The Company’s business is asset and capital-intensive and requires substantial capital expenditure for, the purchase of flatcars and containers, the development of rail-side terminals and investment in the expansion and modernisation of its lifting equipment and truck fleet, amongst other things. 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 three months ended 31 March 2014 and 2013 respectively. 

 

1Q 2014 1Q 2013

Net cash provided by operating activities 1,714 1,715

Net cash used in investing activities -982 -1,110

Net cash used in/ provided by financing activities  -5 106

Net increase in cash and cash equivalents  727 711

Net cash and cash equivalents at the end of the period 2,726 2,037

 

Cash flow generated by operating activities

 

Cash flow generated by operating activities decreased by RUB 1 million to RUB 1,714 million for the three months ended 31 March 2014 from RUB 1,715 million for the same period of 2013. This was primarily due to a RUB 181 million, or 8.4%, decrease in operating profit before working capital changes from RUB 2,162 million for the first three months of 2013 to RUB 1,981 million in 2014. This decrease was almost fully offset by changes in working capital. 

Cash flow used in investing activities 

 

Cash flow used in investing activities decreased by RUB 128 million, or 11.5%, to RUB 982 million for the three months ended 31 March 2014 from RUB 1,110 million for the same period of 2013. This was primarily due to a net result of short-term investments, represented by bank deposits, in the amount of RUB 101 million. 

 

Cash flow used in financing activities 

 

Cash flow generated by financing activities turned to negative RUB 5 million in the first quarter of 2014 from positive RUB 106 million for the same period of 2013, primarily due redemptions of finance lease obligations and long-term loans.

 

Capital Expenditure

 

Capital expenditure decreased by RUB 19 million, or 6.2%, to RUB 286 million in the first quarter of 2014 from RUB 305 million in the first quarter of 2013. The majority of the capital expenditure was a result of the acquisition of flatcars, ISO containers, construction and other investments. During the reporting period, the Company acquired 2,915 units of ISO containers and 219 units of 80 foot flatcars.

 

Planned capital expenditure for 2014 

 

The Company’s capital expenditure programme is aimed at maintaining TransContainer’s position as a market leader in the Russian container sector, improving its position in the foreign market, as well as optimising its asset structure and key operational metrics.

 

The total capital expenditure in 2014 is budgeted at RUB 5.3 billion (excluding VAT), subject to market conditions, of which up to RUB 2.9 billion may be spent on the acquisition of new flatcars; up to RUB 0.95 billion on the upgrade and modernisation of the Company’s key rail-side terminals; up to RUB 0.5 billion on the acquisition of containers; up to RUB 0.5 billion on the acquisition of new cranes and other lifting equipment and up to RUB 0.45 billion on other capital expenditure items such as trucks, IT and other equipment. The actual capital expenditure amount is subject to the market environment and Company’s financial conditions. 

 

Capital resources 

 

The Company’s operations and capital expenditures have historically been financed from internally generated cash flow and proceeds from issuing domestic debt. As of 31 March 2014, the Company’s financial indebtedness consisted of two outstanding bond issues, financial lease obligations and other borrowings in an aggregate amount of RUB 8,361 million, compared to RUB 8,438 million as of 31 December 2013. As of 31 March 2013, the Company’s net debt was RUB 4,877 million.

 

As of 31 March 2014, 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 fixed interest rate.

 

RUB-denominated bonds series 2

 

On 10 June 2010, the Company issued non-convertible five-year amortising bonds for a total amount of RUB 3,000 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 2,975 million. The annual coupon on the bonds for five years is 8.8% with interest paid semi-annually. The series 2 bonds will be redeemed in four equal semi-annual installments during the fourth and fifth year. The Company made the first principal repayment in December 2013 in the amount of RUB 750 million. As at 31 March 2014, the carrying value of the bonds amounted to RUB 2,240 million (RUB 2,236 million as at 31 December 2013).

 

As at 31 March 2014, the short-term portion of long-term bonds equals RUB 1,500 million (RUB 1,500 million as at 31 December 2013) and this amount was included as a short-term debt in the interim condensed consolidated statement of financial position. As at 31 March 2014, the accrued interest amounted at RUB 63 million (RUB 18 million as at 31 December 2013) and was included as a short-term debt in the interim condensed consolidated statement of financial position.

 

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 installments 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 2014, the carrying value of the bonds amounted to RUB 4,989 million (RUB 4,988 million as at 31 December 2013). The amount of accrued interest as at the reporting date was RUB 68 million (RUB 175 million as at 31 December 2013) and has been included as short-term debt in the interim condensed consolidated statement of financial position.

 

Other borrowings

 

On 23 May 2011, the Company borrowed funds from LLC TrustUnion AM for the principal amount of RUB 514 million at an interest rate of 9.5% per annum with a five year maturity to finance the acquisition of the Company’s ordinary shares for a share option plan for the Company’s management. The outstanding debt was RUB 469 million as at 31 March 2014. 

 

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 2014.

 

  31 March 2014 31 December 2013

Current assets

Inventory ` 355 358

Trade and other receivables 1,500 1,621

Prepayments and other current 

assets 3,007 3,435

Prepaid income tax 86 114

Short-term investments 758 1

Cash and cash equivalents 2, 726 1,883

Total current assets 8,432 7,412

 

Current liabilities

Trade and other payables 3,038 3,216

Short-term debt and current 

portion of long-term debt 1,631 1,693

Income tax payable 161 77

Taxes other than income 

tax payable 255 372

Provisions 18 19

Finance lease obligations, 

current maturities 170 66

Accrued and other current 

liabilities 911 834

Total current liabilities 6,184 6,277

 

Working capital 2,248 1,135

 

Working capital increased by RUB 1,113 million to RUB 2,248 million at the end of the reporting period from RUB 1,135 million as at 31 December 2013. This was primarily due to a RUB 757 million increase in short-term investments and a RUB 843 million cash and cash equivalents, partially offset by a decrease in prepayments and other current assets by RUB 428 million. 

 

Downloads

 

The consolidated financial statements for the three months ended 31 March 2014 are available via the National Storage Mechanism at: www.hemscott.com/nsm.do  or at the Company’s website: www.trcont.ru   

 

Conference call

TransContainer will host an analyst conference call on Monday 2 June 2014 at 13:00 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 52729179

 

 

A replay of the call will be available until Wednesday 2 July 2014 using the following details:

 

UK Free Call Dial In  0800 953 1533

Russia Dial In 8 499 677 1064 

Replay Access Code 52729179#

 

Enquiries:

 

TransContainer

Andrey Zhemchugov, Director, 

Capital Markets and Investor Relations  +7 495 637 9178

+7 495 609 6062

E-mail ir@trcont.ru

Website www.trcont.ru

 

Instinctif Partners

Tony Friend / Galyna Kulachek +44 (0)20 7457 2020

 

About TransContainer

 

TransContainer (LSE ticker: TRCN) is the leading intermodal container transportation company in Russia. It is the market leader in Russia by flatcar fleet size, container transportation by rail and rail-side container terminal throughput. As of 31 December 2013, it operated 26,305 flatcars and 62,367 containers. It owns a network of 46 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 more than 130 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 is JSC Russian Railways with 50%+2 shares.

 

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. JSC “TransContainer” wishes to caution you that these statements are only predictions and that actual events or results may differ materially. JSC “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 JSC “TransContainer”, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries JSC “TransContainer” operates in, as well as many other risks specifically related to JSC “TransContainer” and its operations

 

[1]Transportation of clients' containers and own loaded containers

[2] Transportation of clients' containers and own loaded containers

[3] The Empty run ratio is calculated as an average empty run in kilometers divided by an average total  run in kilometers

 

This information is provided by RNS

The company news service from the London Stock Exchange

END