FESCO Transportation Group operational and financial results for FY2013
Investor conference call – March 31, 2014
2
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Ruslan Alikhanov President and
Chief Executive Officer
Today’s Presenters
Elena Shmatova Chief Financial Officer
3
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153 1. Key Highlights
2. Divisional Performance Overview
A. Port Division
B. Rail Division
C. Liner and Logistics Division
D. Shipping Division
3. Financial Overview
Table of Contents
1. Key Highlights
5
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Executive Summary
Operational Performance
Financial Results
Outlook & Strategy
New CEO since June, streamlining of the senior management structure, new CFO since September, new CEO of Port since September
Long term strategy intact but strategic initiatives and operational restructuring to address market headwinds with the impact expected in 2014
Group performance in 2013 was affected by mixed results of Group' business divisions. Improvement in Port performance was offset by weak results of Rail division driven by overall weakness of general cargo rail market and the sharp decrease in gondola rates.
• Port division revenue increased by 12.5% YoY to $200m and EBITDA growth of 4.3% YoY to $89m driven by container throughput growth and port consolidation
• Rail division revenue decreased by 28% YoY to $251m and EBITDA decreased by 46% YoY to $90m driven by decrease in non- container cargo transportation volumes and deep decline in gondola rates
• Liner and logistics division demonstrated 7.8% growth in divisional revenue, however divisional EBITDA decreased to $35.8m driven by increasing competition in the market with rates remaining under pressure
• Bunkering division revenue reached $84m and EBITDA amounted to $3.2m for the year
Top line divisional performance resulting in 2013 consolidated revenue of $1,140m, 5% decrease from prior year and EBITDA down 25% to $186m, Group EBITDA excluding one-off expenses amounted to $197m
No maintenance covenants or sizeable near term maturities and solid liquidity cushion
Solid progress towards its strategic objectives, strong volume growth in its strategic markets:
• Container handling volumes at VMTP increased in 4Q2013 by 9% YoY to 127 thousand TEU, driven by 13% increase in import. On annual basis container handling at Port increased by 5% YoY to 477 thousand TEU
• In 2013, Port of Vladivostok proved again its leadership in the Russian Far East container handling with 31% market share
• Intermodal transportation volumes increased by 12% in 4Q2013 YoY up to 64 thousand TEU. On annual basis the growth was 16.9% to 244 thousand TEU YoY
• FESCO retained its leadership positions on all container transportation service lines where the Group operates
• Rail containers transportation volumes grew by 15% in 4Q2013 YoY up to 76 thousand TEU and 8% YoY up to 286 thousand TEU, significantly outperforming the market. The growth was driven by solid demand for block train services provided by FESCO and by the increase in fitting platforms fleet
6
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Comments
Group Performance
Source: Company info
• Strong container transportation and container handling growth across Group's divisions and service lines. Group's container business continue to demonstrate expansion with intermodal transportation volumes up 16.9% YoY
• The share of container business in Group consolidated revenue amounted to 66% and in Group consolidated EBITDA amounted to 69%
• Top line performance of the Group and Group EBITDA were negatively affected by the inherent volatility of rail transportation market. Group EBITDA declined by 25% to $186m due to dramatic drop in Rail Division's EBITDA
• Group EBITDA excluding one-off expenses*amounted to $197m
• Non-container business remained under pressure and was negatively impacted by the overall weakness of rail market and decreasing metallurgical export from Russia
• Bunkering business launched in 2Q2013 generated $84m of revenue and $3m of EBITDA
Revenue and EBITDA Development, ‘000 USD
Container Transportation Volumes, ‘000 TEU
208 265
456
342
244 286
477
367
Intermodaltransportation
Rail containertransportation
Containerthroughput at VMTP
Export/Import seacontainer
transportation
2012 2013
+16.9% +8.0%
+4.5%
+7.5%
Revenue structure by cargo type, 2013
EBITDA structure by cargo type, 2013
Container business
66%
Non-container business
34%
Container business
69%
Non-container business
31%
* One-off expenses include acquisition-related consulting and compensation expenses and marketing expenses
1029 1197 1140
210
186
247
197
0
50
100
150
200
250
300
900
950
1000
1050
1100
1150
1200
1250
2011 2012 2013Revenue EBITDA
7
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Historical EBITDA Evolution
186
(77,5)
(7,6)
+1,1 +14,4
+3,2
+3,7
(0,1)
247
EBITDA 2012 PD RD LLD MD CD FESCO-Bunker Usady EBITDA 2013
8
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Divisional Performance
Source: Company info
Note: (1) Figures do not include inter-company and Corporate Division revenue and EBITDA
Revenue Development by Division 2011-2013
EBITDA Development by Division 2011-2013
77
308
567
159 178
347
623
141 200
251
672
65 84
Port Division Rail Division LLD Shipping Division Bunkering
49
133
51
6
86
168
43
-7
89 90
36
-6 3
Port Division Rail Division LLD Shipping Division Bunkering
20
11
20
12
20
13
64% 48% 45% 43% 48% 36% 9% 7% 5% 4% 4% EBITDA margin
• This slide outlines revenue and EBITDA development for the historical period 2011-2013
• Growth of Port Division revenue in 2011-2013 . In 2013, Port EBITDA excluding one-off expenses amounted to $94m
• Weak Rail division performance in 2013 due to sharp decrease in rates
• LLD Revenue continued to be the major contributor to Group' s revenue with the single digit growth during 2011-2013
• Shipping Division revenue decreased in 2013 to $65m due to disposal of vessels at the end of 2012 . In 2013 Shipping Division EBITDA was $6m negative compared to $7m negative in 2012.
• Bunkering is the new business launched in 2013. During 2013 Bunkering Division generated $84m revenue and $3m EBITDA
Comments
20
11
20
12
20
13
20
11
20
12
20
13
20
11
20
12
20
13
20
11
20
12
20
13
20
11
20
12
20
13
20
11
20
12
20
13
20
11
20
12
20
13
20
11
20
12
20
13
20
11
20
12
20
13
A. Port Division
10
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
1,454 1,448
459 526
341 378
2012 2013
3,055 3,032
1,350 1,565
691 752
2012 2013
1,460 … 1,506 … 628 … 717 … 358 … 404 … 2 446 2 628 6m 2012 6m 2013
Baltic and Arctic Seas Far East Black and Caspian Seas
Overall Market
• Total throughput of Russian ports increased by 3.9% in 2013, with Far East ports showing the highest growth of 7.8% supported by strong trade flows between Russia and Asian countries
• Ports of Baltic and Arctic Seas demonstrated the 2nd fastest growth of 6.5% in 2013
• Throughput of Black and Caspian Sea ports decreased by 2.4% as a result of weak grain exports
• Vladivostok port cargo throughput grew by 10% y-o-y
Container Segment
• Total container throughput in Russian ports increased by 5.0% in 2013 driven by import of consumer and industrial cargo
• Far East container terminals demonstrated the fastest growth rate of c. 16% in 2013 compared to 9% growth rates in Black and Caspian seas and 1% decline in Baltic and Arctic seas
• In 2013, FESCO was the leader in Far East container handling with market share of 31%
Source: Morcentre-TEK, Company info
10.9%
15.9%
(0.4)%
Total Containers ‘000 TEU Import Containers ‘000 TEU
6.5%
7.8%
(2.4)%
8.8%
3.9%
4.3%
14.6%
(0.8)%
5.0% 2,254 2,352
Russian Port Market Update
30.5%
30.3% 9.6%
29.6%
VMTP VSKVladivostok Fishing Others
5,350 5,097
246 262
134 145
185 182
2012 2013
Black and Caspian Seas
Far East
Baltic and Arctic Seas
565 589
Comments Container Throughput in Russian Ports, 2013
Total Cargo Throughput of Russian Ports, million tons
Shares of Major Container Operators in Far East, 2013
11
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Port Division: Key Operational and Financial Metrics
Source: Company info
• In 2013, VMTP container handling increased by 5% YoY to 477 thousand TEU with import up 10% YoY to 204 thousand TEU.
• Vehicle volumes were up by 9% to 93 thousand units
• Bulk and general cargo volumes were impacted by weak throughput of ferrous metals and metallurgical coal and declined by 33% to 2.0m tons
• In 2013, revenue of Port Division increased by 12.5% due to container handling growth and consolidation of port and reached $200m
• EBITDA increased by 4% from $86m to $89m over the same period
• EBITDA margin decreased from 48% 2012 to 45% in 2013
• In 2013, Port EBITDA excluding one-off expenses amounted to $94m, EBITDA margin excluding one-off expenses amounted to 47%
• Container business generated 61% of revenue and 73% of EBITDA
Port Division (VMTP+VCT), ($m) 2012 2013 Dynamics
Total Container Volumes (TEU) 456 146 476 758 4.5%
Import Container Volumes 185 721 204 397 10.1%
Export Container Volumes 158 391 163 004 2.9%
Cabotage Container Volumes 112 034 109 357 (2.4)%
Vehicle Volumes (units) 85 107 92 939 9.2%
General Cargo Volumes ('000 tons) 2,953 1,968 (33.3)%
Revenue 177.9 200.1 12.5%
Operating Expenses (76.5) (88.6) 15.8%
Gross Profit 101.4 111.4 9.9%
Administrative Expenses (13.3) (20.2) 51.9%
Other Operating Income/(Expenses) (2.3) (1.9) (17.4)%
EBITDA 85.7 89.4 4.3%
EBITDA Margin (%) 48.2% 44.7% (3.5)pt
FESCO Bunker, ($m) 2012 2013 Revenue - 83.6
Operating Expenses - (79.4)
Gross Profit - 4.1
Administrative Expenses - (0.9)
EBITDA - 3.2
EBITDA Margin (%) - 3.8%
Container business
61%
Non-container business
39%
Revenue structure by cargo type (2013, excluding Bunkering)
EBITDA structure by cargo type (2013, excluding Bunkering)
Container business
73%
Non-container business
27%
12
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Port division: 2012-2013 quarterly performance
2012-2013 revenue by quarter
2012-2013 EBITDA by quarter
($m) Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013
Total Container Volumes (TEU) 98,666 121,253 118,849 117,378 106,745 117,057 125,507 127,449
Vehicle Volumes (units) 16,638 22,176 25,234 21,059 21,543 26,379 22,347 22,670
Non-container Cargo Volumes ('000 tons)
883 914 634 522 611 450 461 446
• Container handling volumes at Port Division demonstrated continuous growth on annual basis with seasonality trends of 2Q and 3Q being high and 1Q and 4Q being low within each year.
• The quarterly financial performance of Port Division reflects the seasonality trends in container business . The charts outline Port Division revenue and EBITDA for the last 8 quarters with 1Q2012 revenue and EBITDA adjusted for port consolidation amounting to $48m and $23m respectively
• 4Q2013 revenue increased by 4%YoY to $50m.
• 4Q2013 EBITDA decreased by 16% YoY mainly due to certain one off expenses not related to Port core business. Excluding one-off expenses(1), 4Q2013 EBITDA amounted to $20m
20
60 50 48 47 52 51 50
28
1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013
Revenue of VMTP (not consolidated in 1Q2012)
10
29 27
19 18
26 30
16
13 1 4
1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013
EBITDA of VMTP (not consolidated in 1Q2012)
Expenses related to non-core business
(1) One-off expenses include specific compensations and marketing expenses
B. Rail Division
14
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
• Challenging Rail Market Environment: In 2013, freight volumes demonstrated 2.8% yoy decline mainly driven by low industrial production in Russia and weak demand for Russian commodities in the global markets
• Continued Growth in Container Rail Volumes: In 2013, containerised cargo volumes increased by 4.8% Y-o-Y supported by domestic consumer and industrial demand
• Gondola Railcars
– Gondola surplus continue to create pressure on daily freight rates, which are about 2 times down in 2013, compared to 2012
• Increased Volatility of Regulatory Environment
– Russian Government initiatives aimed at reducing excess of railcars are being considered
– Russian Railways is still developing the model for liberalization of locomotive services
– Russian Government initiative aimed to freeze the rail Infrastructure tariffs could result in reduction of investments rail infrastructure, however investments in TransSiberian Railway and Baikal-Amur Mainline stay intact
Source: Rosstat, Russian Railways
Russian Rail Market Update
90
95
100
105
110
115
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
December 2013 103.3 vs December 2012 1.8 % vs November 2013 (0.1)% 12m2013 vs 12m2012 (2.8)%
145
150
155
160
165
170
175
180
185
190
195
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
December 2013 199.1
vs December 2012 6.7 % vs November 2013 5.1 % 12m2013 vs 12m2012 (1.1)%
160
180
200
220
240
260
280
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2011 2012 2013
December 2013 252.6 vs December 2012 11.5 % vs November 2013 (2.7 )% 12m2013 vs 12m2012 4.8%
Comments Freight Transportation Volume (m tons)
Freight Transportation Turnover (bn tons-km)
Containerised Cargo Transportation Volume (‘000 TEU)
15
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Rail Division: Key Operational and Financial Metrics
• In 2013, FESCO Rail Division outperformed the market due to high demand for block train services. Rail container transportation volumes were up by 8% and reached 286 thousand TEU
• Rail non-containerised volumes were negatively impacted by overall weakness of rail market environment and decreased by 14% to 20m tons
• Total and operated fleet remained flat. As of 31-Dec-2013, the number of fitting platforms operated by Transgarant and Russkaya Troyka increased by 9% YoY in line with the Group’s strategy to shift the focus in rail business towards fitting platforms
• Revenue was down from $347m in 2012 to $251m in 2013 following drop in marginal profitability for gondolas and decreasing cargo load
• EBITDA deceased by 46% to $90m as result of significant decrease in rates
• In 2013, the share of container business in the division’s revenue and EBITDA was 17% and 35% correspondingly
Comments
Source: Company info
Note (1): Container volumes include cargo transported by Transgarant and Russkaya Troika
Note (2): Fleet volumes include Transgarant only
Revenue structure by cargo type EBITDA structure by cargo type
Container business
17%
Non-container business
83%
Container business
35%
Non-container business
65%
($m) 2012 2013 Dynamics
Container Transportation (TEU)¹ 264 725 285 932 8.0%
Rail Cargo Load (m tons) 23.6 20.3 (14.0)%
Avg. Total Fleet (Railcars)² 16 301 16 109 (1.2)%
Avg. Operated Fleet (Railcars)² 12 039 12 210 1.4%
Revenue 347 250.7 (27.8)%
Operating Expenses (137.9) (122.9) (10.9)%
Gross Profit 208.8 127.8 (38.8)%
Gross Margin (%) 60.2% 51% (9.2)pt
Administrative Expenses (37) (31.1) (15.9)%
Other Operating Income/(Expenses) (4.0) (6.4) 60.0%
EBITDA 167.8 90.3 (46.2)%
EBITDA Margin (%) 48.1% 36.0% (12.1)pt
16
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Rail division: 2012-2013 quarterly performance
1) Including Russian Troyka and Transgarant
2012-2013 revenue by quarter
2012-2013 EBITDA by quarter
96 90
83 78 75 66
57 52
1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013
44 50
40 34
28 25
20 17
1Q20122Q20123Q20124Q20121Q20132Q20133Q20134Q2013
1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013
Container Transportation (TEU)¹ 60,895 68,575 69,072 66,183 64,139 72,230 73,420 76,143
Rail Cargo Load (m tons) 6,48 6,12 5,84 5,12 5,1 5,1 5,1 5,0
Rail Cargo Turnover (bln t-km) 7,2 7,6 7,5 7,4 7,7 8,4 8,4 7,8
• Container transportation volumes continued to grow on annual basis demonstrating some seasonality trends with 3Q and 4Q high and 1Q and 2Q low within a given year
• Container transportation volumes grew in 4Q2013 by 15% to 76,143 TEU due to solid demand for block train services provided by FESCO and the increase in fitting platforms fleet. However the growth in container rail transportation volumes on quarterly basis was not enough to offset the dramatic decline in gondola rates and the overall weakness of general cargo rail market
• Rail Division revenue declined from $96m in 1Q2012 to $52m in 4Q2013
• Divisional EBITDA declined from $44 m in 1Q2012 to $17m in 4Q2013
C. Liner and Logistics Division
18
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Freight Rates Dynamics (USD per TEU)
Deep Sea Rates vs. Intermodal Transportation Rates
$5 050
$3 765
$5 205 $5 140
$6 820 $6 305
$0
$1 000
$2 000
$3 000
$4 000
$5 000
$6 000
$7 000
$8 000
Deep Sea Service (Shanghai – St. Petersburg – Moscow)
FESCO Service (Shanghai – Vladivostok – Moscow)
Shanghai Containerized Freight Index
• FESCO intermodal service via Vladivostok and the Trans-Siberian Railway is competing with deep sea route between Asia and European Russia
• Increase in deep see freight rates improves the competitiveness of FESCO’s offering
• Major shipping companies announced GRI in December 2013
19
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Comments
Liner and Logistics Division: Key Operational and Financial Metrics
Source: Company info
• In 2013, intermodal freight transportation volumes increased by 17% to 244 thousand TEU driven by high demand for FESCO services
• Export-import volumes were up 8% YoY, cabotage volumes decreased by 6% due to strengthening competition
• Revenue increased by 8% and reached $672m
• EBITDA was down by 17.5% and reached $36m due to decrease in freight rates
• In 2013, the share of container business in the division’s revenue and EBITDA was 96% and 89% correspondingly
($m) 2012 2013 Dynamics
Intermodal Volumes (TEU) 208 294 243 564 16.9%
Export-Import Volumes (TEU) 341 685 367 251 7.5%
Cabotage Volumes (TEU) 67 994 63 953 (5.9)%
Revenue 623 671.8 7.8%
Operating Expenses (528.9) (587.9) 11.2%
Gross Profit 94.1 83.9 (10.8)%
Gross margin, % 15.1% 12.5% (17.2)%
Administrative Expenses (51.3) (51.7) 0.8%
Other Operating Income/(Expenses) 0.6 3.6 500%
EBITDA 43.4 35.8 (17.5)%
EBITDA margin, % 6.9% 5.3% (1.6)pt
Revenue structure by cargo type EBITDA structure by cargo type
Container business
96%
Non-container business
4%
Container business
89%
Non-container business
11%
20
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Liner and Logistics Division: 2012-2013 quarterly performance
2012-2013 revenue by quarter
2012-2013 EBITDA by quarter
129
155 169 170
158 169 169 176
1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013
0
13
20
10 9 9 9 9
1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013
• Intermodal container transportation volumes continued to grow on annual basis demonstrating some seasonality trends within a given year with 1Q usually being low and 2Q and 3Q being high
• LLD revenue increased in 4Q2013 by 4% YoY reaching $176m
• EBITDA decreased in 4Q2013 vs. 4Q2012 due to continued decrease in freight rates
TEU 1Q 2012 2Q 2012 3Q 2012 4Q 2012 1Q 2013 2Q 2013 3Q 2013 4Q 2013
Intermodal Volumes (TEU)
47,995 50,404 52,963 56,932 57,195 59,992 62,399 63,978
Export-Import Volumes (TEU)
72,077 94,384 89,453 85,771 85,318 95,885 93,327 92,721
Cabotage Volumes (TEU)
15,072 17,358 18,766 16,798 12,861 16,010 17,393 17,689
D. Shipping Division
22
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Source: Company info
Comments
Shipping Division: Key Operational and Financial Metrics
• Fleet decreased by 2 vessels and 7% in DWT terms as part of the fleet optimization program
• 2 fuel-inefficient vessels scrapped and replaced with 2 ice-class universal vessels with lower fuel cost base with positive EBITDA
• In addition, 2 new vessels were chartered in Q3 2013 and were deployed on FESCO domestic sea line service lines
• In 2013, divisional revenue decreased by 54% YoY and reached $65m due to disposal of vessels at the end of 2012
• EBITDA remained negative at $5.6m in 2013. Positive EBITDA trend from 2Q2013 to 4Q2013 with EBITDA growth from negative $4m to $0m. EBITDA growth in 4Q2013 vs. 4Q2012 ($0m vs. negative $2m)
• Administrative expenses decreased by 30% YoY
2012-2013 revenue by quarter 2012-2013 EBITDA by quarter
42
33 35 31
18
11 15
22
1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013
5
-8
-2 -2
0
-4
-2
0
1Q2012 2Q2012 3Q2012 4Q2012 1Q2013 2Q2013 3Q2013 4Q2013
($m) 2012 2013 Dynamics
No. of Vessels (EoP) 30 28 (6.7)%
Fleet Deadweight, '000 tons (EoP)
324 305 (5.9)%
Revenue 141.0 65.3 (53.7)%
Operating Expenses (131.5) (64.3) (51.1)%
Gross Profit 9.5 1.0 (89.5)%
Gross margin (%) 7% 2% (5)Pt
Administrative Expenses (18.5) (12.9) (30.3)%
Other Operating Income/(Expenses)
2.3 6.3 (173.9)%
EBITDA (6.7) (5.6) -
EBITDA margin (%) n.m. n.m. -
3. 2013 Financial Overview
24
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
• Significantly reduced capital expenditures in order to focus on cash from operations serving the debt. Low CAPEX level intact through 2013
• Port Division: purchase of cargo handling equipment and trucks, improvement of power substation
• Rail Division:
• Majority of investment in maintaining of existing fleet (modernisation, repairs and replacement of wheel sets)
• Investments in Khabarovsk inland terminal capacity expansion
• Shipping Division:
• Acquisition of two ice-class general cargo vessels
• Disposal of four vessels, including two cost inefficient ones.
Comments
Capital Investments
Source: Company info
($m) 2012 2013
Shipping Division 16,6 10,7
Acquisition of fleet - 9,3
Expenditure on vessels under construction 8,7 -
Dry-dock repairs and modernization of fleet 7,3 1,3
Other 0,6 0,1
Liner & Logistic Division 2,2 1,6
Rail Division 33,2 24,9 Investments in Khabarovsk inland terminal 1,3 3,6
Acquisition of rolling stock 26,6 -
Acquisition of railcar wheel sets - 12,2
Modernisation and repairs of railcar fleet 1,4 8,1
Other 3,9 1,0
Port Division 11,7 9,1
Corporate Division 2,1 1,2
Total Capex 65,8 47,5
25
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153 • $875m of the acquisition financing and part of pre-existing loans refinanced by issuing Senior Secured Notes due 2018 and 2020
• RUB 5bn bond due 2016 issues to refinance the remaining OpCo facility and pre-existing loans
• Improved debt maturity profile with majority of debt to be repaid after 2016. Majority of debt in dollars to be repaid after 2017
• No maintenance covenants
• Significant liquidity buffer available
Comments
Debt Maturity Profile1 ($m) LTM Adj. EBITDA²/ Net Interest Expense
Net Debt¹ / LTM Adjusted EBITDA²
Leverage Overview
Source: Company info
Note (1): Excluding non-recourse REPO Loan of $150m on TransContainer stake
Note (2): For the year ended 31 December 2013, Adjusted EBITDA represent EBITDA assuming the exclusion of compensation and severance payments to personnel in relation to restructurings and closing of businesses as well as non-recurring consulting expenses relating to acquisitions, as these were one-time fees and expenses that we do not expect will affect results in the future..
3,0
4,7 5,2
2,3
2010 2011 2012 2013
20 25
208
2
876
2014 2015 2016 2017 After 2017
(0,8)
2,2
3,5
4,7
2010 2011 2012 2013
26
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Debt Structure
Source: Company info
Note (1): Excluding non-recourse REPO Loan of $150m on TransContainer stake
.
Debt breakdown by currency Debt structure
As of 31-December 2013, total debt(1) amounted to $1,118m
79%
0%
21%
USD EUR RUR
77%
14%
7%
3%
Senior Secured Notes due 2018 and 2020 Rouble bonds due 2016
Finance lease Bilateral Loan Facilities
27
218/160/74
182/124/37
102/157/195
167/199/221
204/102/1
107/116/153
158/164/188
0/101/153
Free Cash Flow
Source: Company data
2011 2012 2013
Operating cashflow 161 183 134
CAPEX -129 -66 -48
Free cash flow before acquisitions 32 117 86
Interests 43 52 79
Pro-forma debt 697 1 179 1 118
Cash 232 232 191
Pro-forma net debt 466 947 927
Adjusted EBITDA 210 279 197
Net Debt / LTM adjusted EBITDA 2.2 3.4 4.7
Key Cash Flow Indicators ($m)
161 183
134
-129 -66 -48
32
117 86 (43)
(52) (79)
-150
-100
-50
0
50
100
150
200
2011 2012 2013
Operating cashflow CAPEX Free cash flow before acquisitions Interests