Market and business update

Globaltrans Investment PLC

20 November 2024

 

For immediate release

20 November 2024

Globaltrans Investment PLC[1]

Market and business update

Globaltrans Investment PLC (the "Company" and together with its consolidated subsidiaries "Globaltrans" or the "Group") today provides a market and business update[2].

Market update

·      The freight rail transportation market continues to face pressures from rail infrastructure constraints, operational challenges, and demand volatility.

·      In July-October 2024, overall industry freight rail turnover and transportation volumes decreased 5.6% and 6.1% year on year, respectively. Between January and October 2024, overall industry freight rail turnover decreased 5.6% year on year, while transportation volumes declined 4.2%. A persistent downward trend was observed throughout the entire range of bulk cargoes transported in gondola cars.

·      The average industry railcar turnaround (measured in days) in the January-October 2024 period increased c.11% year on year reflecting continued deterioration in freight railcar efficiency.

·      Continued inflationary pressures: the regulated tariff for the transportation of empty gondola cars is expected to be increased by c.25% from January 2025, which will include a planned 13.8% increase in the regulated infrastructure tariff in December 2024 and an additional 10% increase in the regulated tariff for the transportation of empty gondola cars from January 2025.

Globaltrans' operational performance

·      Globaltrans also continues to face pressure from the negative market environment and ongoing operational challenges: the Group's Freight Rail Turnover decreased c.10% year on year between January and October 2024 largely reflecting a 10% year-on-year decline in the Average Number of Loaded Trips per Railcar.

·      The Company's Empty Run Ratio for gondola cars stood at 32% in January-October 2024 compared to 36% in the same period the previous year.

·      The Company expects the challenging operational conditions in the market to persist, with continuing pressure on its operational performance and ongoing cost inflation over the medium term.

Recent corporate developments

·      The Company is finalising the restructuring of its listing, which will make the Astana International Exchange (AIX) the sole organised trading venue for the Company's global depositary receipts (GDRs).

·      The Company's indirect subsidiary completed a voluntary tender offer with respect to certain GDRs of Globaltrans and purchased GDRs accounting for c.14% of the Company's share capital for a total of approximately RUB 12.9 billion. Following the completion of the tender offer, the Company's free float is about 42%. The completion of the tender offer has not resulted in a change of the Company's share capital or a reduction in the number of the Company's issued and outstanding shares.

·      The Group's dividend policy was terminated by the Board of Directors on 29 August 2024. Due to the continued technical limitations and various constraints on financial infrastructure, the Company does not see the possibility of resuming regular dividend payments in the foreseeable future.

Investments

·      Investments remained suspended in 2024 reflecting the substantial rise in new railcar prices and increasing uncertainty in the freight rail transportation market.

·      From 2020, the Company's approach to investments has been opportunistic with selective acquisitions of new rolling stock. In the medium term, the Company will require considerable investments to sustain its current business volumes given that between 2025-2029 its Owned Fleet retirements are expected to average c.3,500 units per year. At the end of first half of 2024, the average age of the Group's Owned Fleet was 15.7 years.

ENQUIRIES

For investors

Mikhail Perestyuk / Daria Plotnikova

[phone]

[e-mail]

For media

Anna Vostrukhova

[phone]

[e-mail]

EM

[e-mail]

DEFINITIONS

Terms used but not defined in this announcement shall have the following meanings:

Average Number of Loaded Trips per Railcar is calculated as total number of loaded trips in the relevant period divided by average rolling stock operated.

Empty Run Ratio is calculated as the total of empty trips in kilometres by respective rolling stock type divided by total loaded trips in kilometres of such rolling stock type. Empty trips are only applicable to rolling stock operated (not including rolling stock in maintenance, purchased rolling stock in transition to its first place of commercial utilisation, rolling stock leased out and Engaged Fleet).

Engaged Fleet is defined as rolling stock subcontracted or otherwise engaged from a third-party rail operator for a loaded trip from the point of origination to the cargo's destination, at which point the railcar is then released to such third-party.

Freight Rail Turnover is a measure of freight carriage activity over a particular period calculated as the sum of tonnage of each loaded trip multiplied by the distance of each loaded trip, expressed in tonnes-km. It includes volumes transported by Engaged Fleet (unless otherwise stated).

Owned Fleet is defined as the fleet owned and leased in under finance lease as at the end of the reporting period. It includes railcars and locomotives, and excludes Engaged Fleet.

Transportation Volume is a measure of freight carriage activity over a particular period, measuring weight of cargo carried in tonnes. It includes volumes transported by Engaged Fleet (unless otherwise stated).

LEGAL DISCLAIMER

Information contained in this announcement concerning Globaltrans Investment PLC, a company organised and existing under the laws of the Abu Dhabi Global Market (the "Company" and together with its consolidated subsidiaries "Globaltrans" or the "Group") is for general information purposes only. The statements and any opinions presented herein are based on general information gathered at the time of writing and are subject to change without notice.

None of the Company nor any of its shareholders, directors, officers or any other person accepts any liability whatsoever for any loss howsoever arising from any use of the contents of this announcement or otherwise arising in connection therewith. This announcement does not constitute an offer or an advertisement of any securities in any jurisdiction. The distribution of this announcement in other jurisdictions may be restricted by law and any such restrictions should be observed.

This announcement may contain forward-looking statements regarding future events. You can identify forward looking statements by terms such as "expect", "believe", "estimate", "anticipate", "intend", "will", "could", "may", or "might", the negative of such terms or other similar expressions. These forward-looking statements include matters that are not historical facts and statements regarding the Company's intentions, beliefs or current expectations. By their nature, forward looking statements involve risks and uncertainties, because they relate to events and depend on circumstances that may or may not occur in the future. The Company cautions you that forward-looking statements are not guarantees of future performance and that Globaltrans' actual results of operations, financial condition, liquidity, prospects, growth, strategies and the development of the industry in which Globaltrans operates may differ materially from those described in or suggested by the forward-looking statements contained in this announcement.

In addition, even if Globaltrans' results of operations, financial condition, liquidity, prospects, growth strategies and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in future periods. Unless otherwise set out herein, the Company does not intend to update this announcement or reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause actual results to differ materially from those contained in forward-looking statements of Globaltrans, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, market changes in the Russian freight rail market, as well as many of the risks specifically related to Globaltrans and its operations. No reliance may be placed for any purposes whatsoever on the forward-looking statements contained in this announcement.

 

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[1] The suspension of trading in the Company's global depositary receipts (GDRs) on the London Stock Exchange remained in place as of the date of publication.

[2] The operational information provided in this announcement is derived from the Group's management accounts; the market information presented herein is based on the Company's estimations.

 

END