Interim Results
Company OJSC Transcontainer
TIDM TRCN
Headline Interim Results
Released 07:00 27-Sep-2012
Number 2637N07
RNS Number : 2637N
OJSC Transcontainer
27 September 2012
OJSC TRANSCONTAINER
Interim Results for the Six Months Ended 30 June 2012
JSC "TransContainer" (the "Company" together with its consolidated subsidiaries) today announces its management report together with the unaudited interim condensed consolidated financial information for the six month period ended 30 June 2012. The Company's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).
Operating and financial review
Summary
TransContainer is the leading intermodal container transportation company in Russia. As of 30 June 2012, the Company is estimated to own approximately 58% of Russia's flatcar fleet and holds an estimated 50% of all rail container transportation in Russia. It owns and operates 24,440 flatcars and approximately 60,000 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 also operates 18 inland rail-side terminals in Kazakhstan via its subsidiary Kedentransservice. The Company's sales network is comprised of approximately 150 sales outlets across Russia and has a presence in the CIS, Europe and Asia.
The Company's financial results for the six months ended 30 June 2012 reflect the strong market growth in rail container transportation in Russia, as well as the Company's efforts aimed at improving efficiency.
The Company's rail container transportation volumes for the six months ended 30 June 2012 increased by 9.6% to 717 thousand TEU compared to 654 thousand TEU in the same period of 2011, whilst revenue-generating transportation1 volumes increased by 12.5% to 544 thousand TEU. Terminal handling volumes decreased for the reporting period by 12.0% to 690 thousand TEU, mainly due to a 42.9% decrease in handling of medium-duty containers.
During the reporting period the Company's total revenue increased by 27.3% to RUR 17,570 million, adjusted revenue increased by 25.6% to RUR 12,521 million, operating income increased by 67.7% to RUR 3,758 million, and EBITDA grew by 54.1% to RUR 5,311 million. Profit for the period almost doubled from RUR 1,417 million for the six months ended 30 June 2011 to RUR 2,744 million for the six months ended 30 June 2012. Total comprehensive income for the period grew by 107.5% from RUR 1,347 million for the six months ended 30 June 2011 to RUR 2,795 million for the six months ended 30 June 2012.
As of 30 June 2012, the Company's financial position remained strong with total debt of RUR 9,376 million and Net Debt only 4,682 million.
Capital expenditure for the six months ended 30 June 2012 increased by 5.0% year on year to RUR 1,615 million and was primarily focused on the modernization of the Company's flatcar fleet and improvement in the fleet structure through the purchase of new 80' flatcars. In accordance with the Company's policy, capital expenditures in 2012 were financed by internally generated cash flow.
1transportation of clients' containers and own loaded containers
Outlook
Though global economy prospects remain uncertain, the Russian container market continues to grow at healthy double-digit rates, and the Company's management expects the market growth to continue in the second half of 2012, subject to external economic factors. The Company's management pays special attention to lead economic indicators, such as rail freight turnover, and continues to focus on key financial and operational metrics. The Company will also pursue a flexible pricing and investment policy depending on the market situation.
The Company's management believes that in the long term the Russian container transportation market retains the potential for sustainable growth, driven by economic development, consumer demand and improving containerisation ratio.
Key operating results
The Company's rail container transportation volumes for the first six months of 2012 amounted to 717 thousand TEU, up 9.6% year on year. This growth was mainly driven by transit and export traffic, which grew by 335.0% and 12.2% respectively. Domestic transportation volumes were flat at 378 thousand TEU.
Transportation of containers by TransContainer's fleet in 1H 2012 (ISO Loaded + Empty), 000' TEU
1H 2012 |
1H 2011 |
Change |
||
000' TEU |
Percent |
|||
Domestic Routes |
377.8 |
379.1 |
(1.3) |
(0.3%) |
Export |
178.3 |
158.9 |
+19.4 |
+12.2% |
Import |
110.3 |
104.3 |
+6.0 |
+5.7% |
Transit |
50.4 |
11.6 |
+38.8 |
+335.0% |
All Routes |
716.8 |
653.9 |
+62.9 |
+9.6% |
Revenue-generating container transportation volumes for the reporting period were up 12.5% to 544 thousand TEU compared to 483 thousand TEU for the same period of 2011. TransContainer's estimated share of Russia's rail container transportation for the first six months of 2012 is 50%.
Terminal handling
Throughput of the Company's rail container terminal network in Russia for the first six months of 2012 amounted to 690 thousand TEU, representing a decrease of 12.0% year on year, mainly due to a decrease in MDC handling volumes, which dropped by 42.9% year on year for the same period.
Asset utilisation
In the six months ended 30 June 2012 container empty run ratio increased to 37.5% from 35.1% for six months ended 30 June 2011, mainly due to one-off fleet relocation in the first quarter of 2012 in anticipation of growth in demand for container transportation in the second quarter of 2012. The fllatcar empty run ratio decreased from 8.7% in the first half of 2011 to 7.9% in the first half of 2012. The flatcar and container turnover in 2012 remained approximately flat as compared to relevant metrics for 2011.
1H 2012 |
1H 2011 |
|
Turnover of containers, days |
22.8 |
21.9 |
Turnover of flatcars, days |
13.3 |
13.0 |
Empty run* for containers, % |
37.5% |
35.1% |
Empty run* for flatcars, % |
7.9% |
8.7% |
* 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 six months ended 30 June 2012 and 2011.
RUR million |
1H 2012 |
1H 2011 |
Period on period change |
Period on period percent change |
|
Revenue |
17,570 |
13,804 |
3,766 |
27.3% |
|
Other operating income |
183 |
159 |
24 |
15.1% |
|
Operating expenses |
(13,995) |
(11,722) |
(2,273) |
19.4% |
|
Operating income |
3,758 |
2,241 |
1,517 |
67.7% |
|
Interest expense |
(462) |
(379) |
(83) |
21.9% |
|
Interest income |
104 |
20 |
84 |
420.0% |
|
Foreign exchange gain, net |
44 |
0 |
44 |
||
Share of result of associates |
(22) |
(14) |
(8) |
57.1% |
|
Gain recognised on disposal of interest in former associate |
72 |
0 |
72 |
||
Profit before income tax |
3,494 |
1,868 |
1,626 |
87.0% |
|
Income tax expense |
(750) |
(451) |
(299) |
66.3% |
|
Profit for the period |
2,744 |
1,417 |
1,327 |
93.6% |
|
Attributable to: |
|||||
Equity holders of the parent |
2,727 |
1 394 |
1,333 |
95.6% |
|
Non-controlling interest |
17 |
23 |
(6) |
(26.1%) |
|
Other comprehensive income |
|||||
Exchange differences on translating foreign operations |
51 |
(70) |
121 |
(172.9%) |
|
Total comprehensive income for the period |
2,795 |
1,347 |
1,448 |
107.5% |
|
Attributable to: |
|||||
Equity holders of the parent |
2,766 |
1,346 |
1,420 |
105.5% |
|
Non-controlling interest |
29 |
1 |
28 |
2800.0% |
Non-IFRS financial information
Adjusted Revenue, Adjusted Operating Expenses, EBITDA, Adjusted EBITDA Margin and Adjusted Operating Margin are non-IFRS measures presented as supplemental measures 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.
RUR million |
1Н 2012 |
1Н 2011 |
Period on period change |
Period on period percent change |
|
Adjusted Revenue1 |
12 521 |
9 967 |
2 554 |
25.6% |
|
Adjusted operating expenses2 |
8 946 |
7 885 |
1 061 |
13.5% |
|
EBITDA3 |
5 311 |
3 447 |
1 864 |
54.1% |
|
Adjusted EBITDA margin4 |
42.4% |
34.6% |
|||
Total debt |
9 376 |
9 341 |
35 |
0.4% |
|
Net debt5 |
4 682 |
7 219 |
(2 537) |
(35.1%) |
1Adjusted Revenue is calculated as total revenue less cost of integrated freight forwarding and logistics services.
2 Adjusted Operating Expenses is 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 amortization.
4 Adjusted EBITDA Margin is defined as EBITDA divided by Adjusted Revenue.
5 Net Debt is calculated as long-term debt, finance lease obligations, sort-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 six months ended 30 June 2012 and 2011 respectively.
RUR million |
1H 2012 |
1H 2011 |
Period on period change |
Period on period percent change |
|
Integrated freight forwarding and logistics services |
9,131 |
6,783 |
2,348 |
34.6% |
|
Rail-based container shipping services |
5,042 |
4,052 |
990 |
24.4% |
|
Terminal services and agency fees |
1,950 |
1,463 |
487 |
33.3% |
|
Truck deliveries |
768 |
840 |
(72) |
(8.6%) |
|
Other freight forwarding services |
442 |
386 |
56 |
14.5% |
|
Bonded warehousing services |
190 |
197 |
(7) |
(3.6%) |
|
Other |
47 |
83 |
(36) |
(43.4%) |
|
Total revenue |
17,570 |
13,804 |
3,766 |
27.3% |
Total revenue increased by RUR 3,766 million, or 27.3%, from RUR 13,804 million for the six months ended 30 June 2011 to RUR 17,570 million for the six months ended 30 June 2012. This increase was primarily due to higher demand for the Company's key services on the back of continuing economic growth and strong consumer confidence, and hence increasing transportation volumes and creating a favourable pricing environment compared to the same period of 2011.
Adjusted Revenue
The following table sets forth Adjusted Revenue calculations for the six months ended 30 June 2012 and 2011 respectively.
RUR million |
1H 2012 |
1H 2011 |
Period on period change |
Period on period percent change |
||
|
Total revenue |
17,570 |
13,804 |
3,766 |
27.3% |
|
|
Cost of integrated freight forwarding and logistics services |
5,049 |
3,837 |
1,212 |
31.6% |
|
|
Adjusted Revenue |
12,521 |
9,967 |
2,554 |
25.6% |
|
Adjusted Revenue (as defined above) grew by 25.6% from RUR 9,967 million for the six months ended 30 June 2011 to RUR 12,521 million for the six months ended 30 June 2012. This was primarily due to a 12.5% increase in revenue-generating rail container transportation volumes by the Company's fleet to 544 thousand TEU in the first half of 2012 from 483 thousand TEU for the same period of 2011, as well as due to the Company's pricing policy and the effect of the consolidation of JSC Kedentransservice from 18 March 2011.
The following table sets out the components of relative contribution to Adjusted Revenue for the six months ended 30 June 2012 and 2011.
1H 2012 |
1H 2011 |
Period on period change |
|||||
RUR mln |
share, % |
RUR mln |
share, % |
RUR mln |
% |
||
|
Rail-based container shipping services |
5,042 |
40.3% |
4,052 |
40.7% |
990 |
24.4% |
|
Adjusted integrated freight forwarding and logistics services |
4,082 |
32.6% |
2,946 |
29.6% |
1,136 |
38.6% |
|
Terminal services and agency fees |
1,950 |
15.6% |
1,463 |
14.7% |
487 |
33.3% |
|
Truck deliveries |
768 |
6.1% |
840 |
8.4% |
(72) |
(8.6%) |
|
Other freight forwarding services |
442 |
3.5% |
386 |
3.9% |
56 |
14.5% |
|
Bonded warehousing services |
190 |
1.5% |
197 |
2.0% |
(7) |
(3.6%) |
|
Other |
47 |
0.4% |
83 |
0.8% |
(36) |
(43.4%) |
|
Total adjusted revenue |
12,521 |
100.0% |
9,967 |
100.0% |
2,554 |
25.6% |
In the six months ended 30 June 2012, rail-based container transportation services remained the biggest component of Adjusted Revenue, representing 40.3% of Adjusted Revenue as compared to 40.7% in the same period of 2011. The share of integrated freight forwarding and logistics services net of cost of integrated freight forwarding and logistics services increased to 32.6% from 29.6%, the share of terminal services and agency fees increased to 15.6% from 14.7% and the relative contribution of truck deliveries decreased from 8.4% to 6.1%, reflecting a decrease in terminal handling volumes in Russia.
Rail-based container transportation services
Revenue from rail-based container transportation increased by 24.4% to RUR 5,042 million for the reporting period from RUR 4,052 million for the same period of 2011 mainly due to an increase in revenue-generating transportation volumes (other than under integrated logistics contracts) in terms of TEU by 6.8%, as well as due to an accrued price increase undertaken by the Company in 2011.
Integrated freight forwarding and logistics services
The following table sets out Adjusted Integrated freight forwarding and logistics services calculation for the six months ended 30 June 2012 and 2011.
RUR million |
1H 2012 |
1H 2011 |
Period on period change |
Period on period percent change |
||
|
Integrated freight forwarding and logistics services |
9,131 |
6,783 |
2,348 |
34.6% |
|
|
Cost of integrated freight forwarding and logistics services |
5,049 |
3,837 |
1,212 |
31.6% |
|
|
Adjusted revenue from integrated freight forwarding and logistic services |
4,082 |
2,946 |
1,136 |
38.6% |
|
Revenue from Adjusted Integrated freight forwarding and logistics services grew by 38.6% to RUR 4,082 million for the six months ended 30 June 2012. This increase was primarily due to a 21.3% growth in container transportation volumes under integrated logistics contracts from 193 thousand TEU in the first six months of 2011 to 234 thousand TEU in the first six months of 2012, as well as an increase in average prices driven by higher customer demand and the consolidation of JSC Kedentransservice, which started to perform these kind of services during the second half of 2011.
Terminal services and agency fees
Revenue from terminal services, including agency fees, increased by 33,3% to RUR 1,950 million for the six months ended 30 June 2012 from RUR 1,463 million for the same period of 2011.
This increase was primarily due to the consolidation of JSC Kedentransservice, a leading operator of rail terminals in Kazakhstan, from 18 March 2011, as well as due to an increase in prices, partly offset by a 12.0% decrease of TransContainer's terminal throughput in Russia.
Agency fees, which are charged for services the Company renders as an agent of Russian Railways, decreased by 0.8% to RUR 895 million for the six months ended 30 June 2012 from RUR 902 million for the same period of 2011. This decrease was primarily driven by a 12.0% decrease in TransContainer's terminal network throughput in Russia, partially offset by tariff indexing.
Truck deliveries
Revenue from truck deliveries decreased by RUR 72 million, or by 8.6%, to RUR 768 million for the six months ended 30 June 2012, due to a 11.2% reduction in container transportation volumes by our own and outsourced truck fleet from 325 thousand TEU in the first half of 2011 to 289 thousand TEU in the first half of 2012, which is in line with the decrease in the Company's terminal throughput, and partly compensated for by price increases.
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, grew 14.5% to RUR 442 million for the six months ended 30 June 2012. This increase was primarily due to the growth in transportation volumes and tariffs, growing demand for value-added services and the effect of the consolidation of JSC Kedentransservice from 18 March 2011.
Bonded warehousing services
Revenue from bonded warehousing services decreased by RUR 7 million, or 3.6%, to RUR 190 million for the six months ended 30 June 2012 from RUR 197 million in the same period of 2011, primarily due to a decrease in average storage time driven by an improvement in customs clearance procedures.
Operating expenses
The following table sets out a breakdown of the Company's operating expenses for the six month periods ended 30 June 2012 and 2011.
RUR million |
1H 2012 |
1H 2011 |
Period on period change |
Period on period percent change |
|
Cost of integrated freight forwarding and logistics services |
5,049 |
3,837 |
1,212 |
31.6% |
|
Freight and transportation services |
2,486 |
2,255 |
231 |
10.2% |
|
Payroll and related charges |
2,472 |
2,137 |
335 |
15.7% |
|
Depreciation and amortisation |
1,355 |
1,200 |
155 |
12.9% |
|
Materials, repair and maintenance |
1,226 |
987 |
239 |
24.2% |
|
Taxes other than income tax |
283 |
294 |
(11) |
(3.7%) |
|
Rent |
280 |
173 |
107 |
61.8% |
|
Other expenses |
844 |
839 |
5 |
0.6% |
|
Total operating expenses |
13,995 |
11,722 |
2,273 |
19.4% |
TransContainer's total operating expenses grew by RUR 2,273 million, or 19.4%, to RUR 13,995 million for the six months ended 30 June 2012 from RUR 11,722 million for the same period of 2011, primarily due to an increase in cost of integrated freight forwarding and logistics services, as well as payroll and related charges and materials, repair and maintenance.
The following table sets out a breakdown of the Company's largest operating expenses for the six month periods ended 30 June 2012 and 2011.
1H 2012 |
1H 2011 |
|||||
RUR mln |
Percent of operating expenses |
Percent of total revenue |
RUR mln |
Percent of operating expenses |
Percent of total revenue |
|
Cost of integrated freight forwarding and logistics services |
5,049 |
36.1% |
28.7% |
3,837 |
32.7% |
27.8% |
Freight and transportation services |
2,486 |
17.8% |
14.1% |
2,255 |
19.2% |
16.3% |
Payroll and related charges |
2,472 |
17.7% |
14.1% |
2,137 |
18.2% |
15.5% |
Depreciation and amortisation |
1,355 |
9.7% |
7.7% |
1,200 |
10.2% |
8.7% |
Materials repair and maintenance |
1,226 |
8.8% |
7.0% |
987 |
8.4% |
7.2% |
Taxes other than income tax |
283 |
2.0% |
1.6% |
294 |
2.5% |
2.1% |
Rent |
280 |
2.0% |
1.6% |
173 |
1.5% |
1.3% |
Other expenses |
844 |
6.0% |
4.8% |
839 |
7.2% |
6.1% |
Total operating expenses |
13,995 |
100.0% |
79.7% |
11,722 |
100.0% |
84.9% |
As a percentage of the total revenue, total operating expenses decreased from 84.9% for the six months ended 30 June 2011 to 79.7% for the six months ended 30 June 2012, primarily due to an increase in total revenue exceeding an increase in operating expenses. As a percentage of total revenue, costs related to freight and transportation services decreased from 16.3% for the six months ended 30 June 2011 to 14.1% for the six months ended 30 June 2012, whilst payroll and related charges decreased from 15.5% in the six months ended 30 June 2011 to 14.1% in six months ended 30 June 2012. Other components of operating expenses as a percentage of the total revenue changed insignificantly.
Cost of integrated freight forwarding and logistics services
Costs of integrated freight forwarding and logistics services increased by 31.6%, to RUR 5,049 million for the six months ended 30 June 2012 from RUR 3,837 million for the same period of 2011, driven by a 21.3% increase in container transportation volumes under integrated logistics contracts as well as the consolidation of JSC Kedentransservice, which started to implement these kind of services during the second half of 2011.
Adjusted operating expenses
The following table sets out Adjusted operating expenses for the six month periods ended 30 June 2012 and 2011.
RUR million |
1H 2012 |
1H 2011 |
Period on period change |
Period on period percent change |
||
|
Total operating expenses |
13,995 |
11,722 |
2,273 |
19.4% |
|
|
Cost of integrated freight forwarding and logistics services |
5,049 |
3,837 |
1,212 |
31.6% |
|
|
Adjusted operating expenses |
8,946 |
7,885 |
1,061 |
13.5% |
|
Adjusted Operating Expenses, as defined above, increased by 13.5% to RUR 8,946 million for the six months ended 30 June 2012 from RUR 7,885 million for the same period of 2011, primarily due to increases in Freight and transportation services expenses; Payroll and related charges; Materials, repair and maintenance, and Depreciation and amortisation. This increase was partially offset by a decrease in Taxes other than income tax.
The following table sets out a breakdown of the Company's largest Adjusted operating expenses, as defined above, for the six month periods ended 30 June 2012 and 2011.
1H 2012 |
1H 2011 |
Period on period change |
||||
RUR mln |
Percent of Adjusted operating expenses |
RUR mln |
Percent of Adjusted operating expenses |
RUR mln |
Percent change |
|
Freight and transportation services |
2,486 |
27.8% |
2,255 |
28.6% |
231 |
10.2% |
Payroll and related charges |
2,472 |
27.6% |
2,137 |
27.1% |
335 |
15.7% |
Depreciation and amortisation |
1,355 |
15.1% |
1,200 |
15.2% |
155 |
12.9% |
Materials repair and maintenance |
1,226 |
13.7% |
987 |
12.5% |
239 |
24.2% |
Taxes other than income tax |
283 |
3.2% |
294 |
3.7% |
(11) |
(3.7%) |
Rent |
280 |
3.1% |
173 |
2.2% |
107 |
61.8% |
Other expenses |
844 |
9.4% |
839 |
10.6% |
5 |
0.6% |
Adjusted operating expenses |
8,946 |
100.0% |
7,885 |
100.0% |
1,061 |
13.5% |
The proportion of Freight and transportation services in Adjusted operating expenses decreased to 27.8% for the six months ended 30 June 2012 from 28.6% for the same period of 2011; whilst Materials, Repair and Maintenance increased from 12.5% to 13.7%; Rent increased from 2.2% to 3.1% and Other expenses decreased from 10.6% to 9.4% as a result of the factors described below.
Freight and transportation services
Expenses relating to freight and transportation services increased by 10.2%, to RUR 2,486 million for the six months ended 30 June 2012. This increase was mainly due to an increase in empty run costs driven by (i) rail-based transportation by the Company's own containers from 451 thousand TEU to 468 thousand TEU, or by 3,8%, (ii) a growth in container empty run ratio from 35.1% to 37.5% and (iii) a 6% increase in tariffs charged for empty runs by Russian Railways. This increase was partially offset by a decrease in flatcar empty run ratio from 8.7% for the first six months ended 30 June 2011 to 7.9% in the six months ended 30 June 2012 as well as due to some reduction in outsourced trucking costs.
Payroll and related charges
Payroll and related charges increased by RUR 335 million, or 15.7%, to RUR 2,472 million for the six months ended 30 June 2012 from RUR 2,137 million for the same period of 2011. This increase primarily resulted from an effect of the consolidation of JSC Kedentransservice from 18 March 2011, as well as wage indexing and an increase in performance-linked payments to employees, partly offset by a decrease in average headcount at TransContainer of 3.7%.
Depreciation and amortisation
Depreciation and amortization increased by 12.9% to RUR 1,355 million in the six months ended 30 June 2012 from RUR 1,200 million in the same period of 2011. The increase was primarily due to the consolidation of JSC Kedentransservice, as well as acquisitions of new rolling stock and lifting equipment.
Materials, repair and maintenance
Expenses related to materials, repair and maintenance increased by 24.2%, to RUR 1,226 million in the six months ended 30 June 2012 from RUR 987 million in the same period of 2011. The increase resulted from an increase in railcar average repair price and the effect of the consolidation of JSC Kedentransservice, partially offset by a reduction in the number of railcar repairs.
Тахes other than income tax
Taxes other than income tax reduced by 3.7% to RUR 283 million in the six months ended 30 June 2012 from RUR 294 million in the same period of 2011, primarily due to the effect of VAT settlements.
Rent
Rent expenses grew by RUR 107 million, or by 61.8% to RUR 280 million in the reporting period from RUR 173 million in the same period of 2011, primarily due to the effect of the consolidation of JSC Kedentransservice.
Other expenses
Other expenses are an aggregate of expense items such as consulting expenses, fuel and energy, communication services, charity, provisions for impairment. Other expenses increased by 0.6% to RUR 844 million in the six months ended 30 June 2012 from RUR 839 million in the same period of 2011, primarily due to a growth in payments for license and software and other expenses, partly offset by consulting services and a change in provision for impairment of receivables.
Operating income
Operating income increased by RUR 1,517 million, or 67.7%, to RUR 3,758 million in the six months ended 30 June 2012 from RUR 2,241 million in the same period of 2011, as a result of the factors discussed above.
Interest expense
Interest expenses increased by RUR 83 million, or 21.9%, to RUR 462 million in the six months ended 30 June 2012 from RUR 379 million in the same period of 2011 due to growth in total debt in 2011 when the Company obtained loans from OJSC Alfa Bank for the total amount of RUR 1,822 million to finance the acquisition of JSC Kedentransservice and from LLC Trust Union Asset Management for the total amount of RUR 501 million to finance the Company's management stock option programme.
Interest income
Interest income increased by RUR 84 million, or 5.2 times to RUR 104 million in the six months ended 30 June 2012 from RUR 20 million in the same period of 2011 due to an increase in cash balances on deposits resulting from an increase in cash inflows from operating activities in the first half of 2012.
Profit before income tax
Profit before income tax increased by RUR 1,626 million, or by 87.0%, from RUR 1,868 million for the six months ended 30 June 2011 to RUR 3,494 million for the six months ended 30 June 2012. The increase was due to the factors discussed above.
Income tax expense
Income tax expenses increased by RUR 299 million, or 6.3%, to RUR 750 million in the from RUR 451 million in the same period of 2011, primarily due to an increase in profit before income tax. The effective tax rate in the first half of 2012 decreased to 21.5% from 24.1% for the same period of 2011 due to a lower proportion of non-deductible expenses attributed to the profit before income tax.
Profit and Total comprehensive income for the period
As a result of the factors discussed above the profit for the six months ended 30 June 2012 increased by RUR 1,327 million, or 93.6% and reached RUR 2,744 million as compared with RUR 1,417 million for the six months ended 30 June 2011. Taking into account the differences on translating foreign operations, the total comprehensive income for the six months ended 30 June 2012 increased by RUR 1,448 million, or 107.5% and totaled RUR 2,795 million as compared with RUR 1,347 million for the six months ended 30 June 2011.
Liquidity and Capital Resources
As of 30 June 2012 the Company's cash and cash equivalents amounted to RUR 3,824 million and the Company's current liabilities exceeded current assets by RUR 9 million.
The Company's business is asset and capital-intensive and requires substantial capital expenditure for, amongst other things, 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. For the six months ended 30 June 2012 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 six months ended 30 June 2012 and 2011:
1H 2012 |
1H 2011 |
|
Net cash provided by operating activities |
3,709 |
2,433 |
Net cash used in investing activities |
1,551 |
3,139 |
Net cash provided by financing activities |
(640) |
1,487 |
Net increase in cash and cash equivalents |
1,518 |
781 |
Cash and cash equivalents at the end of the period |
3,824 |
2,064 |
Cash flow provided by operating activities
Cash flow provided by operating activities increased by RUR 1,276 million, or 52.4%, to RUR 3,709 million in the six months ended 30 June 2012 from RUR 2,433 million in the same period of 2011. This was primarily due to a 42.5% increase in operating profit before working capital changes to RUR 5,158 million in the six months ended 30 June 2012 from RUR 3,620 million in the same period of 2011, resulting from the improving operational and price environment. The cash flow provided by operating activities was negatively affected by a decrease in trade and other payables, an increase in trade and other receivables for the reporting period and an increase in income tax payments.
Cash flow used in investing activities
Cash outflow used in investing activities decreased by RUR 1,588 million, or 50.6% to RUR 1,551 million in the six months ended 30 June 2012 from RUR 3,139 million in the same period of 2011. This decrease was primarily due to the one-off acquisition of a stake in JSC Kedentransservice for RUR 1,536 million in 1Q 2011 (net of cash acquired of RUR 304 million), as well as due to the net effect of the sale and purchase of short term investments in the six months ended 30 June 2012 which resulted in cash inflow of RUR 941 million.
Cash flow provided by financing activities
Cash flow provided by financing activities decreased to negative RUR 640 million in the six months ended 30 June 2012 from positive RUR 1,487 million in the same period of 2011, primarily due to repayments of financial lease and other borrowings.
Capital Expenditure
Capital expenditures increased by RUR 77 million, or 5.0%, to RUR 1,615 million in the six months ended 30 June 2012 from RUR 1,538 million in the same period of 2011. The majority of the capital expenditure was a result of the acquisition of 536 units of 80' flatcars and the construction of buildings and terminal infrastructure in the pursuit of modernisating terminal facilities. Capital expenditure items also included the purchase of lifting equipment and trucks.
Planned capital expenditures for 2012
The Company's capital expenditure programme is aimed at maintaining TransContainer's position as market leader in the container market, improving its position in the foreign market and optimising its asset structure and key operational metrics.
The total capital expenditure budget for 2012 is up to RUR 7.1 billion (excluding VAT), of which up to RUR 5.1 billion may be spent on the acquisition of new flatcars and containers (including purchases resulting from the termination of financial lease contracts); up to RUR 1.2 billion may be invested to upgrade and modernise the Company's key rail-side terminals and up to RUR 365 million may be spent on the acquisition of lifting equipment.
Capital resources
The Company's operations and capital expenditures have historically been financed primarily from internally generated cash flow and proceeds from issuing domestic debt. As of 30 June 2012, the Company's financial indebtedness consisted of outstanding bonds, bank loans, financial lease obligations and other borrowings in an aggregate amount of RUR 9,376 million compared with RUR 9,348 million as of 31 December 2011. As of 30 June 2012, the Company's net debt was RUR 4,682 million.
As of 30 June 2012, 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 vast majority of the Company's indebtedness is denominated in Russian Roubles, except for the small portion of indebtedness of JSC Kedentransservice under finance lease obligations which is denominated in Kazakh Tenge. The vast majority of the Company's indebtedness bears a fixed interest rate.
RUR bonds series 1
On 4 March 2008, the Company issued non-convertible five-year bonds for a total amount of RUR 3,000 million at a par value of RUR 1,000 each. The coupon rate for the period ended 30 June 2012 is 9.5% per annum (9.5% per annum for the year ended 31 December 2011). As these bonds will mature in February 2013 they are classified as short-term debt as at 30 June 2012.
The carrying value of the bonds as at 30 June 2012 amounted to RUR 3,000 million (RUR 3,000 million at 31 December 2011). The amount of accrued interest is RUR 96 million (RUR 96 million at 31 December 2011), and has been included as short-term debt in the consolidated statement of financial position.
RUR bonds series 2
On 10 June 2010, the Company issued non-convertible five-year bonds for a total amount of RUR 3,000 million at a par value of RUR 1,000 each. Net proceeds from the issuance after deduction of related offering costs amounted to RUR 2,975 million. The annual coupon rate of 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 years. As a result, these bonds are classified as long-term borrowings as at the reporting date.
The carrying value of the bonds as at 30 June 2012 amounted to RUR 2,982 million (RUR 2,978 million at 31 December 2011). The amount of accrued interest is RUR 19 million (RUR 21 million at 31 December 2011), and has been included as short-term debt in the interim condensed consolidated statement of financial position.
Bank loans and other borrowings
The Group obtained loans from OJSC Alfa Bank for the total amount of RUR 1,822 million during the year ended 31 December 2011 to finance the acquisition of JSC Kedentransservice. The amount of accrued interest is RUR 3 million, and has been included as short-term debt in the interim condensed consolidated statement of financial position. The loans mature in seven years. As at 30 June 2012 the total amount of the long-term part of the loans was RUR 1,664 million.
As in February and May 2013 the part of the loan of OJSC Alfa Bank will be repaid in a total amount of RUR 142 million, this amount has been included as short-term debt in the interim condensed consolidated statement of financial position as at 30 June 2012.
Also in May 2013 the part of the second part of the loan of OJSC Alfa Bank will be repaid in a total amount of RUR 16 million, this amount has been included as short-term debt in the interim condensed consolidated statement of financial position as at 30 June 2012.
During the year ended 31 December 2011 the Group obtained borrowed funds from LLC TrustUnion Asset Management for the amount of RUR 501 million to finance the acquisition of ordinary nominal shares in OJSC TransContainer in order to carry out a Share Option Plan for the Company's management. The loan matures in five years. As at 30 June 2012 the amount of loan was RUR 499 million.
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 six months ended 30 June 2012.
30 June 2012 |
31 December 2011 |
|
CURRENT ASSETS |
||
Inventory |
281 |
278 |
Trade and other receivables |
1,768 |
1,152 |
Prepayments and other current assets |
3,561 |
3,702 |
Prepaid income tax |
131 |
193 |
Short-term investments |
870 |
941 |
Cash and cash equivalents |
3,824 |
2,300 |
Total current assets |
10,435 |
8,566 |
CURRENT LIABILITIES |
||
Trade and other payables |
4,468 |
4,593 |
Short-term debt |
3,276 |
553 |
Income tax payable |
273 |
134 |
Taxes other than income tax payable |
302 |
303 |
Provisions |
5 |
5 |
Finance lease obligations current maturities |
274 |
479 |
Dividends payable |
1,228 |
- |
Accrued and other current liabilities |
615 |
689 |
Deferred income |
3 |
13 |
Total current liabilities |
10,444 |
6,769 |
WORKING CAPITAL |
(9) |
1,797 |
Working capital decreased by RUR 1,806 million to RUR negative 9 million in the six months ended 30 June 2012 from RUR 1,797 million at the end of 2011. This decrease was primarily due to an increase in the current portion of long-term debt to the amount of RUR 3,276 million as the Series 1 bond and a portion of bank loans were recognised as a short term debt, partly offset by changes in other components of working capital.
Downloads
The Company's Management Report and consolidated financial statements for the six month period ended 30 June 2012 are available via the National Storage Mechanism at:
http://www.hemscott.com/nsm.do or at the Company's website: http://www.trcont.ru
27 September 2012
Enquiries:
TransContainer |
|
Andrey Zhemchugov, Director, Capital Markets and Investor Relations |
+7 495 637 9178 |
|
ir@trcont.ru |
Website |
College Hill |
|
Tony Friend / Alexandra Roper |
+44 (0)20 7457 2020 |
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
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