Key financial results
In 2014, Russian Railways operated under the government’s decision not to index tariffs for railway transportation as well as the deteriorating macroeconomic environment.
Income from all types of activities in 2014 totalled RUB 1,401.7 bln An increase of 1.8% compared with 2013
Expenses on all types of activities in 2014 totalled RUB 1,343.2 bln An increase of 1.9% compared with 2013
Income from the sale of shares by Russian Railways S&A in 2014 totalled RUB 11.3 bln
Dividends from Russian Railways S&A in 2014 totalled RUB 16.7 bln
Sales profit in 2014 totalled RUB 58.5 bln
In 2014, the Company operated under challenging macroeconomic conditions attributable to the lack of tariff indexation, sanctions imposed against Russia, volatility on raw commodities markets and the devaluation of the rouble, all of which could not help but affect the transportation industry. However, it was only the freezing of tariffs that resulted in an income shortfall of RUB 67 bln. In addition to non-operating factors, the Company’s financial results were also negatively impacted in 2014 by the continued decline in the country’s economic growth rates, which led to a 0.8% decrease in handling volumes compared with 2013.
In this regard, Russian Railways and the relevant executive authorities held several meetings in the first half of last year about how to ensure the Company’s financial sustainability in 2014. A meeting chaired by Russian President Vladimir Putin and attended by members of the Russian Government was held in June 2014 at which the Russian Government approved an action plan to prevent the losses projected for Russian Railways in
This action plan served as a basis for establishing the target development parameters of Russian Railways not only for 2014, but the following year as well and served as a qualitatively new example of interaction between the federal executive authorities and the Company.
As a result, despite the challenging situation caused by the significant weakening of the national currency, the Company was able to balance its budget and partially compensate for the negative effect of the volatile changes, including through work to improve the internal efficiency of Russian Railways’ activities, implement anti-crisis measures that aim to cut costs (transportation costs fell 2.7% in 2014 compared with 2013) and also improve the efficiency of operating activities, in particular due to an increase in the share of higher margin freight in the transportation structure. The Company also increased other income through structural reforms and reinforced this with efficient liquidity management, interest income and effective risk management.
All of these factors resulted in the generation of RUB 58.5 bln in sales profit in 2014, or virtually the same level seen in 2013.
In addition, interaction with the federal executive authorities resulted in the settlement of debt from previous years owed by suburban passenger companies and the Federal Railway Transportation Agency for infrastructure and rolling stock lease services from suburban passenger transportation.
Other factors that had a positive influence on the Company’s financial results include transactions to contribute stakes of 50% plus two shares in TransContainer and 100% minus one share in Russian Railways Logistics to the charter capital of UTLC, an additional share issue by Railcar Repair Company 1 and Russian Railways Health and the conversion of shares in KIT Finance Investment Bank into shares of Absolut Bank, which increased the positive financial result by RUB 18.7 bln compared with the previous year. Profit from such transactions totalled RUB 31.4 bln in 2014.
In addition, dividends from S&A amounted to RUB 16.7 bln in 2014, while shares by S&A generated profit of RUB 1.4 bln.
As a result, net profit totalled RUB 69.9 bln excluding the effect of exchange rate differences, an increase of RUB 54.4 bln from 2013.
However, due to the recalculation of foreign exchange liabilities resulting from the depreciation of the national currency (negative exchange rate differences amounted to RUB 142.5 bln), the Company actually posted a loss of RUB 44.1 bln in 2014.
Despite the challenging economic environment in which the Company operated, the investment programme was executed in the amount of RUB 396.0 bln (the planned level for 2014).
| Indicator | Meas. unit | 2010 | 2011 | 2012 | 2013 | 2014 | Change: actual vs. plan in 2014 | Change: 2014 vs. 2013 | |||
|---|---|---|---|---|---|---|---|---|---|---|---|
| target | actual | +/— | % | +/— | % | ||||||
| Total income | RUB bln | 1,195.1 | 1,288.3 | 1,366.0 | 1,376.6 | 1,378.7 | 1,401.7 | 23 | 101.7 | 25.1 | 101.8 |
| Income from transportation, infrastructure services and locomotive traction | RUB bln | 1,079.3 | 1,109.1 | 1,206.5 | 1,209.5 | 1,213.3 | 1,225 | 11.7 | 101.0 | 15.5 | 101.3 |
| freight transportation | RUB bln | 936.23 | 1 003.1 | 1,089.3 | 1,088.2 | 1,095.6 | 1,105.7 | 10.1 | 100.9 | 17.5 | 101.6 |
| provision of infrastructure services | RUB bln | 88.4 | 87.2 | 96.7 | 101.7 | 98.5 | 99 | 0.5 | 100.5 | –2.7 | 97.3 |
| provision of locomotive traction services | RUB bln | 11.8 | 11.4 | 12.4 | 11 | 9.9 | 10.3 | 0.4 | 104.0 | –0.7 | 93.6 |
| passenger transportation | RUB bln | 42.9 | 7.4 | 8.1 | 8.6 | 9.3 | 10 | 0.7 | 107.5 | 1.4 | 116.3 |
| Income from other types of activities | RUB bln | 115.8 | 179.2 | 159.5 | 167 | 165.3 | 176.7 | 11.4 | 106.9 | 9.7 | 105.8 |
| Total expenses | RUB bln | 1,084.2 | 1,215.6 | 1,298.6 | 1,317.8 | 1,354.1 | 1,343.2 | –10.9 | 99.2 | 25.4 | 101.9 |
| Expenses on transportation, infrastructure services and locomotive traction | RUB bln | 986.4 | 1,050.8 | 1,151.5 | 1,165.9 | 1,202 | 1,185.6 | –16.4 | 98.6 | 19.7 | 101.7 |
| freight transportation | RUB bln | 796.1 | 933.3 | 1,017.4 | 1,027.6 | 1,064.2 | 1,048.1 | –16.1 | 98.5 | 20.5 | 102.0 |
| provision of infrastructure services | RUB bln | 86.2 | 102.2 | 118.8 | 122.3 | 120.5 | 119.4 | –1.1 | 99.1 | –2.9 | 97.6 |
| provision of locomotive traction services | RUB bln | 8.8 | 8.4 | 9.2 | 8.2 | 7.4 | 7.6 | 0.2 | 102.7 | –0.6 | 92.7 |
| passenger transportation | RUB bln | 95.3 | 7.0 | 6.2 | 7.8 | 10 | 10.6 | 0.6 | 106.0 | 2.8 | 135.9 |
| Expenses on other types of activities | RUB bln | 97.9 | 164.7 | 147.1 | 151.9 | 152 | 157.6 | 5.6 | 103.7 | 5.7 | 103.8 |
| Total sales profit | RUB bln | 110.9 | 72.8 | 67.4 | 58.8 | 24.6 | 58.5 | 33.9 | 237.8 | –0.3 | 99.5 |
| Profit from transportation, infrastructure services and locomotive traction | RUB bln | 92.9 | 58.3 | 54.9 | 43.6 | 11.3 | 39.4 | 28.1 | 348.7 | –4.2 | 90.4 |
| freight transportation | RUB bln | 140.1 | 69.9 | 71.9 | 60.6 | 31.4 | 57.6 | 26.2 | 183.4 | –3 | 95.0 |
| provision of infrastructure services | RUB bln | 2.2 | –15.0 | –22.1 | –20.6 | –22 | –20.3 | 1.7 | 108.4 | 0.3 | 101.5 |
| provision of locomotive traction services | RUB bln | 3.0 | 3.0 | 3.2 | 2.9 | 2.6 | 2.7 | 0.1 | 103.8 | –0.2 | 93.1 |
| passenger transportation | RUB bln | –52.4 | 0.4 | 1.9 | 0.8 | –0.6 | –0.5 | 0.1 | 120 | –1.3 | — |
| Profit from other types of activities | RUB bln | 18.0 | 14.5 | 12.5 | 15.1 | 13.3 | 19.1 | 5.8 | 143.6 | 4 | 126.5 |
| Result from other types of income and expenses | RUB bln | 14.9 | 3.8 | –1.3 | –39.4 | 3.6 | –97.7 | –101.3 | — | –58.3 | 40.3 |
| Result from the sale of shares in S&A | RUB bln | 6.9 | 66.3 | 33.9 | 1.4 | 1.4 | 1.4 | 0 | 100 | 0 | 100 |
| Budget allocations | RUB bln | 52.2 | 1.8 | 23.2 | 0.9 | 26.7 | 27.6 | 0.9 | 103.4 | 26.7 | — |
| Exchange rate differences | RUB bln | 0.9 | –6.4 | 4.5 | –18.4 | –37.3 | –142.5 | –105.2 | 26.2 | –124.1 | 12.9 |
| Changes in provisions and other estimated liabilities | RUB bln | –17.3 | –51.8 | –18.2 | –1.7 | 37.2 | 38.7 | 1.5 | 104.0 | 40.4 | — |
| Income from participation in other organisations, including dividends | RUB bln | 2.1 | 21.3 | 9.8 | 23 | 15.9 | 16.7 | 0.8 | 105.0 | –6.3 | 72.6 |
| Expenses on loans and borrowings | RUB bln | –20.6 | –19.6 | –19.3 | –26.8 | –35 | –35.5 | –0.5 | 98.6 | –8.7 | 75.5 |
| Profit before tax | RUB bln | 125.9 | 76.6 | 66.2 | 19.4 | 28.2 | –39.2 | –67.4 | –139.0 | –58.6 | –202.1 |
| Profit tax and other similar obligations | RUB bln | 51.1 | 59.8 | 52.0 | 18.7 | –28 | –4.9 | 23.1 | — | –23.6 | — |
| Net profit | RUB bln | 74.8 | 16.8 | 14.1 | 0.7 | 0.2 | –44.1 | –44.3 | — | –44.8 | — |
| Investment activity expenses excluding capitalised interest (excluding VAT) | RUB bln | 317.4 | 395.4 | 480.1 | 467.2 | 396.8 | 396 | –0.8 | 99.8 | –71.2 | 84.8 |
| Government support, including | RUB bln | 163.2 | 119.7 | 152.7 | 87.1 | 160.7 | 112.2 | –48.5 | 69.8 | 25.1 | 128.8 |
| Subsidies and other compensation from the federal budget, regional budgets and extra-budgetary funds | RUB bln | 59.6 | 31.2 | 51.7 | 27.6 | 80.9 | 82.4 | 1.5 | 101.9 | 54.8 | 298.6 |
| Charter capital contributions | RUB bln | 103.6 | 88.6 | 101.0 | 59.5 | 79.8 | 29.8 | –50 | 37.3 | –29.7 | 50.1 |
| Transportation costs | kop./ 10 virtual tkm | 372.2 | 369.4 | 393.4 | 395 | 392.3 | 384.5 | –7.8 | 98.0 | –10.5 | 97.3 |
| EBITDAEBITDA calculated taking into account exclusion of expenses associated with servicing of financial debt (expenses on payable interest, leasing payments and the result of recalculating foreign currency obligations (exchange rate differences). | RUB bln | 343.7 | 295.3 | 279.8 | 268 | 320 | 356 | 36 | 111.3 | 88 | 132.8 |
| Financial debt (Loan debt + leasing) | RUB bln | 332.5 | 390.1 | 429.2 | 643.2 | 798.7 | 898.5 | 99.8 | 112.5 | 255.3 | 139.7 |
| Financial debt / EBITDA | x | 1.0 | 1.3 | 1.5 | 2.4 | 2.5 | 2.5 | 0 | 100.0 | 0.1 | 104.2 |
| Net debt (Financial debt — cash balance)/EBITDA | x | 0.8 | 0.7 | 1.1 | 2.1 | 2.2 | 2.3 | 0.1 | 104.5 | 0.2 | 109.5 |
| Change in loans and borrowings received (principal of the debt) | RUB bln | –23.7 | 74.7 | 38.3 | 175.4 | 98 | 96.8 | –1.2 | 98.8 | –78.6 | 55.2 |
| Net change in loan portfolio including exchange rate differences and loan interest | RUB bln | –23.3 | 79.8 | 35.7 | 196.5 | 138.7 | 240.1 | 101.4 | 173.1 | 43.6 | 122.2 |
| Loan debt including accrued interest | RUB bln | 304.1 | 383.9 | 419.6 | 616.1 | 754.8 | 856.2 | 101.4 | 113.4 | 240.1 | 139.0 |
| Meas. unit | 2013 | 2014 | 2014/2013, % | |
|---|---|---|---|---|
| Balance sheet total | RUB bln | 4,587.2 | 4,846.7 | 5.7% |
| Non-current assets | RUB bln | 4,332.6 | 4,457.3 | 2.9% |
| Current assets | RUB bln | 254.6 | 389.5 | 53.0% |
| Capital and reserves | RUB bln | 3,540.3 | 3,516.2 | –0.7% |
| Long-term liabilities | RUB bln | 666.4 | 805.7 | 20.9% |
| Short-term liabilities | RUB bln | 380.5 | 524.8 | 37.9% |
| Net asset value | RUB bln | 3,547.60 | 3,553.4 | 0.2% |