ANNUAL REPORT 2016 ART OF CONTAINER LOGISTICS Pages 2–13 14–23 24–35 36–79 80–147 Reporting period from 1 January 2016 to 31 December 2016. The report of the Public Joint Stock Company Center for Cargo Container Traffic TransContainer (TransContainer) for the year 2016 includes the results for TransContainer and its subsidiaries within the Group. The composition of the Group and its equity interest in TransContainer are shown in the Consolidated Financial Statements for 2016. The data in the 2016 Annual Report have been consolidated in accordance with Order No. 3533-U of the Bank of Russia, dated 15 January 2015, the MICEX Stock Exchange Procedure for Providing Information and Reports, dated 11 August 2015, the Corporate Governance Code, dated 23 December 2016, FRC UK Guidance and the GRI Standards Sustainability Reporting Guidelines. The information provided in the report has been subjected to an internal audit and preliminarily reviewed by the Audit Committee and the Nominations and ABOUT THE REPORT THE ABOUT Remuneration Committee of the Company’s Board of Directors. PROFILE COMPANY REPORT STRATEGIC OVERVIEWMARKET OVERVIEWBUSINESS GOVERNANCECORPORATE Disclaimer CONTENTS This annual report (the “Annual Report”) has been prepared using the information available to the Center for Cargo Container Traffic 1 COMPANY PROFILE 5 CORPORATE GOVERNANCE 6 FINANCIAL REPORT TransContainer (the “Company”) and its subsidiaries (the “Group”) at the time of its preparation, including information obtained from Business model 4 Message from the Chairman Directors’ responsibility statement 148 third parties. The Company reasonably believes that the information in the Annual Report was complete and accurate as of the time of its of the Board of Directors 82 publication. However, it does not represent or warrant that the information will not be further refined, revised or otherwise changed. This 2016 Year in Review — interview Consolidated financial statements 149 Annual Report may contain certain forward-looking statements regarding the operations, economic performance, financial condition and with Company CEO Petr Baskakov 6 Corporate governance practices 84 results of economic and industrial activities of the Company and the Group, its plans, projects and expected results, policies in respect of General meeting of shareholders 90 7 APPENDIX dividends and capital expenditure, as well as trends relating to prices, rates, transportation volumes, terminal processing volumes, production 2 STRATEGIC REPORT Report on compliance with the Corporate Board of Directors 91 and consumption volumes, costs, anticipated expenses, development prospects, the useful service life of assets and other similar factors, the Strategy 16 Governance Code 204 economic outlook for the industry and markets, dates for the beginning and end of individual projects, as well as the acquisition, closing, CEO and Management Board 116 System of key performance indicators 22 Major transactions and related conservation or disposal of certain entities (including related costs). The words “intends”, “strives”, “projects”, “expects”, “estimates”, Report on Remuneration party transactions 221 “plans”, “believes”, “anticipates”, “may”, “should”, “will” and “will continue”, as well as similar expressions, generally indicate forward- of the Board of Directors, Executive Bodies looking statements. Forward-looking statements, by their nature, involve inherent risks and uncertainties, both general and specific, and 3 MARKET OVERVIEW Number of cases concerning violations and the Management 120 there is a danger that assumptions, forecasts, projections and other forward-looking statements may prove unjustified. In light of these risks, Global container shipping market 26 of antimonopoly legislation uncertainties and assumptions, the Company warns that actual results may differ significantly from those expressed either directly or indirectly Control and monitoring 126 involving TransContainer and the outcomes Russian rail container transportation market 29 in such forward-looking statements, which are only valid as of the date that this Annual Report was drafted. The Company does not represent Risk management 133 of these cases 221 or warrant that the results indicated in the forward-looking statements will be achieved. The Company does not assume any liability for TransContainer’s position in the industry 35 Corporate risk map for 2016 223 damages that may be incurred by persons or legal entities acting on the basis of forward-looking statements. Such forward-looking statements Cooperation with shareholders and investors 137 in each case represent only one of many possible outcomes and should not be considered as the most probable outcomes. In particular, other 4 BUSINESS OVERVIEW Statement of the Audit Committee on evaluation Subsidiaries and joint ventures factors that could influence the financial and operational performance of the Company or the Group, its plans, projects, capital expenditure PJSC TransContainer 239 Assets 38 of the performance of the Company’s and other aspects of its operations include changes to macroeconomic or market conditions, the actions of the state bodies of the Russian auditor and the conclusions drawn Global Sustainability Standards Board Services 42 Federation and other jurisdictions where the Group studies, develops or uses assets, including changes to tax, environmental and other laws from the audits of financial (GSSB/GRI) 240 and regulations. This list of material factors is not exhaustive. When taking into account the forward-looking statements, the above factors, Client service and sales organisation 47 (accounting) statements 147 and in particular the economic, social, and legal environment in which the Company or the Group operates, should be carefully considered. Administrative details 242 Except as explicitly required by applicable law, the Company assumes no obligation to publish updates or changes to forward-looking Corporate culture 53 statements based on any new information or subsequent events. Financial results 70 2 3 TRCONT.RU/EN/ ФИНАНСОВЫЙОТЧЕТ УПРАВЛЕНИЕ КОРПОРАТИВНОЕ КОРПОРАТИВНОЕ UNIFIED VALUE COMPANY PROFILE COMPANY PROFILE P L A T F O R M ОБЗОР РЕЗУЛЬТАТОВ ОБЗОР he Company asserts its market ОБЗОР РЫНКА ОБЗОР T leadership by creating additional value for all stakeholders Shared values are rooted in a culture of benevolent, open, honest and trustful relations with employees, clients, partners, shareholders and investors A strong sense of responsibility for СТРАТЕГИЧЕСКИЙОТЧЕТ the performance we deliver ensures our successful development regardless of external factors ПРОФИЛЬСООБЩЕСТВА ГОДОВОЙ ОТЧЕТ 2017 4 BUSINESS MODEL ADVANTAGES OF NETWORK ASSET MANAGEMENT 1 Resilience to external 3 Unlimited geographical coverage of services TRCONT.RU/EN/ A vertically integrated transport and logistics group, containerised cargo shocks shipper and provider of logistics services in Eurasia. 2 Broad client base 4 Ability to quickly integrate partner programmes FINANCIALREPORT orders are top 10 clients’ share placed online in total revenue Focused on the use of own operating assets in low / limited The business model is optimised for a broad client base and an 50% 24% ASSET BASE competition market niches and outsourcing in high competition extensive geographical footprint, offering a full range of services segments along the logistics chain. for all client categories – from equipment supplies to complex 31 AUG 2016 CORPORATE CORPORATE multimodal transportation. GOVERNANCE domestic +9.7% transportation 10,000,000th container transportation order received. A 50% discount given to the client. international +7.9% transportation 20 APR 2016 67,338 HIGH-CAPACITY Range of operator services extended by providing own containers to CONTAINERS be transported on third-party rolling stock. C L I RUB 51.5 bn +21.1% E N T N E T 12 APR 2016 W O Total revenue R K 4.0 1.0 0.9 0.5 SERVICES Cargo tracking on the map enabled in TransContainer’s online store. 23,244 BUSINESS OVERVIEW BUSINESS FLATCARS M R O F T 10.9 A L P MANAGEMENT RUB bn +14.6% 3.2 T M –7.9% I LIS A RESPONSIB reduction in 04 OCT 2016 E N ILI Profit for the period L IO TY rolling stock G S 514 S N E turnover TransContainer started transporting pipes for Nord Stream-2. I F TRUCKS S O R NT P E 20 APR 2016 M RUST P T O E MARKET OVERVIEW MARKET L N TransContainer and Rusal signed a long-term agreement. E G V E A G D –2.4% E optimisation of 22.0 VALUES M E empty runs 65 N RAIL CONTAINER TERMINALS T 18.5 RUB bn K R Adjusted revenue O W T 01 SEP 2016 64.2 E N +8.3% +12.8% TransContainer and Lorus SCM signed an agreement for cooperation. T E STRATEGIC REPORT STRATEGIC increase in revenue S 214 25 NOV 2016 S from integrated LIFTING MACHINES A logistics R TransContainer and Dalian Port signed a memorandum of cooperation. O T A 30 NOV 2016 R RUB 7.1 bn +8.8% E P O TransContainer and Latvian Railways signed a memorandum of EBITDA T P cooperation. E R I M H iSales I N S ONLINE STORE +12.8% Integrated forwarding and A L R 25 NOV 2016 A D % N E E J U , logistics services T W N S T W N O R K T TransContainer and Azerbaijan Railways signed a memorandum of COMPANY PROFILE COMPANY E D K D O R R E V E N U E B R E A A P cooperation. 32.3% +0.2 p.p. –7.5% Rail container transportation +12.3% Terminal handling and agent EBITDA margin services REMOTE ACCESS SUITE +3.2% Road transportation 17 NOV 2016 +68.7% Other forwarding services TransContainer opened a modernised container terminal in Krasnoyarsk. RUB 3.5 bn –3.5% 0.50 RUB 2.2 bn –7.9% +4.6% Bonded warehouse services market 144 +7.2% Other handled share ANNUAL REPORT 2016 Net debt Net debt / EBITDA CAPEX 1.23 mln TEUs 21% SALES OFFICES 4 5 BUSINESS MODEL ADVANTAGES OF NETWORK ASSET MANAGEMENT 1 Resilience to external 3 Unlimited geographical coverage of services TRCONT.RU/EN/ A vertically integrated transport and logistics group, containerised cargo shocks shipper and provider of logistics services in Eurasia.