Transcontainer Annual Report 12821B.Pdf

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Transcontainer Annual Report 12821B.Pdf Annual report 2017 Just like sports, business is about building PRELIMINARILY APPROVED BY THE BOARD OF DIRECTORS teamwork, setting ambitious goals, and making OF TRANSCONTAINER them happen. In 2017, TransContainer overcame 6 April 2018 Meeting Minutes No. 11 a variety of challenges to achieve strong results. dated 6 April 2018 APPROVED BY THE ANNUAL For more information, see the report. GENERAL SHAREHOLDERS MEETING OF TRANSCONTAINER 15 May 2018 Meeting Minutes No. 37 1. COMPANY PROFILE 04 Target business model 06 2017 year in review 2. STRATEGIC REPORT 16 Strategy 30 System of key performance indicators 3. MARKET OVERVIEW 34 Global container 45 The Company’s position in the shipping market industry Dear shareholders and investors, 38 Russian rail container transportation market I am happy to present to you TransContainer’s annual report for 2017. 4. BUSINESS OVERVIEW We have left behind a truly record year. 48 Services 86 Environmental impact Thanks to a growing commercial freight management 55 Assets transportation market, the Company 89 Procurement significantly beat its net profit and 62 Client service and sales 91 Charity margin targets and boosted its operating 72 Human resources 95 Financial review performance. The impressive results were naturally priced in by the stock market, contributing to stronger total shareholder return. 5. CORPORATE GOVERNANCE 108 Corporate governance 145 Control and monitoring At the end of 2017, the Board of Directors system 152 Risk management updated the Company’s goals and 111 General meeting of shareholders objectives till 2025 in response to rapidly 157 Disclosure and shareholder 114 Board of Directors and investor relations changing market conditions, while also aligning the existing strategy with the 132 CEO and Executive Board developments in the domestic container 140 Report on remuneration of the market. In my view, we made a crucial Board of Directors, executive bodies and the management decision to focus on improving the efficiency of its key business processes, which is essential for the Company’s competitiveness 6. FINANCIAL REPORT and the entire container market, given the scale of our operations. 164 Statement of the Audit Committee 231 Opinion of the Revision Commission 165 Directors’ responsibility statement I am confident that our management and the Board of Directors will take every step to 166 Consolidated Financial Statements unlock this growth potential and achieve the goals set by the shareholders. 7. APPENDIX 232 Report on compliance with the 290 Global Sustainability Standards Corporate Governance Code (GRI) Sincerely yours, 263 Major transactions and related party 292 Subsidiaries and Joint Ventures transactions PJSC Transcontainer ANDREY STARKOV 264 TransContainer’s corporate risk 293 Administrative details Chairman of the Board of Directors iSales service TransContainer was one of the first rail cargo operators to launch online sales. In two years, the share of e-commerce orders soared from 10% to nearly 97% of domestic transportation volumes – almost a half of the total cargo transportation. In 2018, export, import and transit routes will be integrated into the e-commerce platform. IT Director ROMAN VESELOV see the Add container to basket section on p. 65 COMPANY PROFILE COMPANY Annual report TransContainer | 2017 TARGET BUSINESS MODEL A vertically integrated transport and logistics group, containerised cargo shipper and provider of logistics services in Eurasia. REVENUE BREAKDOWN 87.0% Integrated forwarding and logistics services 3.4% Rail container transportation 3.0% Third-party services relating to cargo transportation and handling TOTAL REVENUE 0.5% Other businesses 65.6BILLION RUB (+27.4%) 0.6% Road transportation 5.5% Terminal handling, bonded warehouse and agent services www.trcont.com NETWORKS PARTNER NETWORK OUR COMPETITIVE PRIORITY IN ADVANTAGES Trains DEVELOPING Vertically integrated THE business model Ships Integrating flatcars, containers SERVICES and terminal assets into a single PORTFOLIO IS platform enables us to deliver Partners’ quality execution in the key vehicles providing integrated elements of the logistics chain, “turnkey” intermodal boost asset performance, and transportation bring about a well-balanced mix Aircraft of own and third-party assets services by using our Terminal network serving as own and third-party a technological platform for assets intermodal transportation OPERATOR ASSET Network-scale operations NETWORK Optimised logistics, declining empty runs, presence in key transportation hubs and key Containers points where freight flows originate and terminate +15.2% Mature domestic and interna- Flatcars transportation using the tional sales and service network Company’s own rolling stock with international segments of end-to-end logistics services Company’s and containers vehicles Extensive and diversified client base Resilience to market shocks, low TERMINAL exposure to any individual client NETWORK or sector, quick adaptation to +5.2% turbulent market conditions Lifting Unique retail client base machines container handling volumes compared to other rail container at the Company’s terminals operators Rail in Russia terminals Mature e-commerce channels Modern, easy-to-use user CLIENT interface NETWORK 70% Accessible feedback system ISALES the share of e-commerce Competitive strength orders Our competitive strength is supported by the quality, Remote diverse structure and availability access suite of the entire portfolio of transportation services ranging from simple mass-market Sales offices services to complex intermodal 1520 mm gauge: status of the larg- transportation solutions. est flatcar and container owner and operator in the 1520 gauge market 1520 mm and a leader in the terminal ser- vices market; economies of scale, transportation availability across the entire 1520 gauge network, access to all client categories Annual report TransContainer | 2017 2017 YEAR IN REVIEW Year of records 2017 proved to be one of the most successful years in the recent history of the Russian container transportation. For more information We are delighted to present TransContainer’s annual report for 2017, which focuses on on the Russian railway our strategy. In this interview, TransContainer’s CEO Petr Baskakov speaks of the main network transportation, see “Market Review” challenges the Company faces and the ways of addressing them, its key objectives, on p. 34 mid-term prospects, and many other things. 2017 results – For TransContainer, the reporting year brought positive developments, with a surge in container transportation volumes driven by an overall expansion of the Russian railway container transportation market (up 19% against the projected 8%). Which of your business segments saw the strongest demand? +19% growth of the Russian – Indeed, the past year was one of the most successful in the recent history of the railway network Russian container transportation, both in terms of growth rates and in absolute terms, container transportation with the Russian railway network transporting a record high of nearly 3.9 mln TEUs. We also saw a change in transportation structure. Over the two previous years, the key market driver was domestic transportation, whereas in 2017, the market was close to its pre-crisis state, with international transportation showing the strongest growth of 31.1%, and domestic transportation lagging behind (up 7.6%). I believe this impressive growth in international transportation was The Company’s investments, RUB bn possible thanks in no small part to our contribution. Last year, we kept working to strengthen our foothold in China, while also launching new transit routes 2018E 12.3 across Mongolia. In the domestic market, the key growth driver was the launch of new 2017 8.1 CRM solutions. 2016 2.4 2015 2.9 In this context, increasing market demand turned out to be one of the toughest challenges 2014 4.5 that we effectively addressed by providing sufficient rolling stock and containers. Hence, despite higher than expected growth rates, we were able to fully meet the demand for container transportation. – How did you tackle the challenges? – First of all, we ensured utilisation of the existing rolling stock in the –10.4% most efficient way, cutting the flatcar turnover from 13.5 to 12.1 days and boosting their use of capacity from 79% to 86.5%. Empty run ratio and share of non-operational reduction of the flatcar fleet dropped from 22% and 3.0% to 19% and 2.4%, respectively, an absolute minimum turnover for the Company and the industry as a whole. Market pick-up urged us to consider expansion opportunities. Over the year, TransContainer implemented an extensive CAPEX programme by purchasing ~2,500 units of rolling stock and investing RUB 4.9 billion in new flatcars only. This is another record for us. 6 Company profile 01–13 Strategic report 14–31 Market overview 32–45 Business overview 46–105 Corporate governance 106–163 Financial report 164–231 Appendix 232–295 – There is a long-term global trend towards increasing use of information Share of online sales, % technologies in transportation and logistics. Is it relevant for TransContainer and how are you going to harness digital technologies? 100 – We are fully aware that a transportation company neglecting digital and information 75 technologies has no future. This is especially true for TransContainer as the largest network container operator. We serve tens of thousands of clients annually, offering millions of standard 50 transportation and logistics solutions
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