2017 Annual Report G Georgian Railway A Message from the Chairman Chairman of Supervisory Board Konstantine Guntsadze I am proud to present the Annual Report for 2017, the sixth year in which I have had the privilege of being tasked with chairing the board of one of Georgia’s most strategically important companies. JSC Georgian Railway plays a significant role in the country’s economy and in maintaining strong economic relations between Georgia and its partner countries in the Caucasus and the Central Asia region. In the past two years, the Group has faced some difficulties in terms of its financial results due to downturns in cargo volumes, but it nevertheless maintains reasonable liquidity levels. The Management, along with its highly competent and dedicated team of about 13,000 people, is working hard in many areas to overcome the latest challenges. I believe that the development of infrastructure in the region through projects like the Baku-Tbilisi-Kars railway, Anaklia Deep-Sea Port and Shah Deniz gas field will have positive effects on the transported volumes by the Group and thus improve its operating results in the coming years. 2 A Message from the General Director CEO David Peradze I have been appointed as the General Director of JSC Georgian Railway in late 2017 and first of all, I want to admit that this is a great pleasure for me to lead one of the most successful companies in Georgia. I would also like to thank my predecessor, Mamuka Bakhtadze, for the taken by him efforts during years at the Company, which has led to transforming Georgian Railway into one of the most successful companies in Georgia. Positive effect has been achieved in various areas of activities of the group. Specifically in 2013, Georgian Railway entered the freight forwarding business resulting in additional value for the company. In 2015, the Group revived the Silk Road leading to the first Chinese train to arrive in Georgia and the Group also attained an international certificate of quality management (ISO 9001:2008). In 2016 and 2017, Georgian Railway purchased four new passenger trains for its passenger transportation unit from a Swiss manufacturer, increasing the number of customers of the Company and passenger kilometers by 17 percent in 2017, compared to 2016. 2017 has been a very challenging year for the Group. External factors, as mentioned above, resulted certain decrease of cargo volumes, what eventually caused changes to the credit ratings of the Group. Despite these setbacks, the Group has maintained solid financial figures. Its EBITDA margin and adjusted EBITDA margin are still on significant levels with 49 percent and 42 percent, respectively. The Group has also maintained strong liquidity, with its cash ratio fixed at 1.24 at the end of 2017. We are continuing to 3 invest in infrastructure development through the Modernization Project, which will guarantee more value and efficiency for the Group, TRACECA and the region as a whole. The Group is one of the main contributors to the Georgian economy. Its revenue contributed 1.1 percent of the country’s GDP in 2017. Successful years lie ahead for the country as a whole as the International Monetary Fund expects the GDP of the country to increase stably. I believe Georgian Railway will contribute significantly to the economy of the country. The Government of Georgia has a strong track record of supporting the Company and I believe that this will continue in the coming years. I look forward to confronting all the challenges of the Company during the following years. Hereby numerous current regional projects promise to enhance rail transportation profile in the medium and long term. The Company aims to develop by improving its efficiency in utilizing its available resources. This would be difficult to achieve without Georgian Railway’s competent human capital. I am confident that company’s staff is capable to handle every challenge successfully 4 Supervisory Board Members Konstantine Guntsadze Chairman of Supervisory Board | since 2012 Main field of competence | Jurisprudence Oleg Bichiashvili Supervisory Board member | since 2012 Main field of competence | Logistics Guram Gabunia Supervisory Board member; member of Remuneration and Nomination Committees | since 2012 Main field of competence | Audit/Risk management Levan Kifiani Supervisory Board member | since 2016 Main field of competence | Jurisprudence/Management Clifford Stanley Isaak Chairman of Audit Committee | since 2011 Main field of competence | Finance Michael Gogishvili Deputy Chairman of Supervisory Board; member of Audit Committee | since 2010 Main field of competence | Jurisprudence Levan Surguladze Chairman of Remuneration and Nomination Committees; member of Audit Committee | since 2011 Main field of competence | Finance Management Board Members David Peradze Chief Executive Officer | since 2017 Irakli Titvinidze Chief Financial Officer | since 2013 Guram Guramishvili Freight SBU Director | since 2017 Eldar Pertsuliani Passenger SBU Director | since 2017 Vasil Khorava Infrastructure SBU Director | since 2015 5 Forward-looking Statements This report contains certain forward-looking statements with respect to the business, financial conditions and results of the operations of the Group and certain plans, intentions, expectations, assumptions, goals and beliefs of the Group in this regard. These statements include matters that are not factual and generally, but not always, may be identified by the use of words or expressions such as “believes”, “expects”, “are expected to”, “anticipates”, “intends”, “estimates”, “should”, “will”, “will continue”, “may”, “is likely to”, or “plans” among others. The forward-looking statements in this report are based upon various assumptions, many of which are based upon further assumptions, including, without limitation, the Management’s examination of historical operating trends, data contained in the Group’s records and other data available from third parties. Although the Group believes that these assumptions were reasonable when made, they are subject to significant uncertainties and contingencies, which are difficult or impossible to predict and which are beyond the Group’s control. Accordingly, the Group may not actually achieve such expectations, beliefs or projections. When reading forward-looking statements, the reader should carefully consider the foregoing factors and other uncertainties and events, especially in light of the political, economic, social and legal environment in which the Group operates. Such forward-looking statements are valid only on the date on which they are made. Neither the Group nor any of its agents, employees or advisers intend, or have any obligation, to supplement, amend, update or revise any of the forward-looking statements given in this report. The reader should be aware that forward-looking statements are not guarantees of future performance and that the Group’s actual business, financial conditions and results of operations and prospects, as well as the development of the industry in which it operates, may differ significantly from what is stated in the forward-looking statements given in this report. In addition, even if the Group’s business, financial conditions and results of operations and prospects, as well as the development of the industry in which it operates, are consistent with the forward-looking statements given in this report, those results or developments may not necessarily be indicative of results or developments in subsequent periods. The facts contained in this report refer to the period under review. The Group does not undertake any obligation to update any fact or forward-looking statement to reflect events or circumstances that may occur after the period under review. Assumptions EBITDA is calculated by adding back depreciation and amortization as well as impairment loss to the results from operating activities. Adjusted EBITDA is adjusted for significant non-cash and one-off items. Financial result variances at constant currency are obtained by translating the comparable period of the current-year results denominated in Georgian Lari at the average foreign exchange rates of the prior period. 6 Financial and non-Financial Highlights For the year (in GEL '000) 2017 2016 2015 Revenues 434,534 439,922 574,773 EBITDA 211,851 281,755 322,787 Adjusted EBITDA 181,425 195,149 307,828 EBIT 102,148 175,488 218,371 Net loss/income -354,100 65,126 -65,497 Cash provided by operating activities 176,232 187,411 299,496 Acquisition of Property, plant and equipment (PPE) 165,265 200,274 156,993 At year end (in GEL '000) Total assets 2,862,237 3,225,683 3,093,917 Total liabilities 1,617,389 1,626,407 1,622,707 Total equity 1,244,848 1,599,276 1,471,210 Financial ratios Revenue growth -1.22% -23.46% 12.35% EBITDA margin 48.75% 64.05% 56.16% Adjusted EBITDA margin 41.75% 44.36% 53.56% Operating ratio 85.46% 82.71% 67.36% Dividend payout ratio 0% 0% 0% Interest coverage ratio 0.99 1.91 2.55 Net debt/EBITDA 4.87 3.48 2.79 Debt/Equity 1.30 1.02 1.10 Statistical data (in ‘000) Tons 10,673 11,882 14,143 Ton-km 2,929,793 3,390,880 4,222,061 Number of passengers 2,684 2,463 2,397 Passenger-km 596,727 508,586 467,178 Average number of employees 13 13 13 Key operating measures Total freight revenue per ton-km (in Tetri) 13.2 11.7 12.5 Passenger revenue per passenger-km (in Tetri) 3.8 3.5 3.3 Revenue per average number of employees (in GEL '000) 33.91 33.98 44.37 Operating expenses per ton-km (in GEL) 0.13 0.11 0.09 Ton-km per average number of Freight SBU employees in '000 524.44 606.92 758.82 Passenger -km per average number of Passenger SBU employees in '000 461.15 366.42 322.41 Safety indicators Accident rate per million ton-km 0.04 0.02 0.02 Injury per '000 number of average employees 0.00 5.72 5.87 Death per '000 number of average employees 0.00 0.54 0.39 Credit Ratings by the End of 2017 First issued LT Outlook ST Last issued LT Outlook ST Standard & Poor's 2010 B+ Stable B 2017 B+ Negative B Fitch Ratings 2010 B+ Stable B 2017 B+ Stable B 7 Table of Contents Overview of the Group Management Discussion and Analyses 1.
Details
-
File Typepdf
-
Upload Time-
-
Content LanguagesEnglish
-
Upload UserAnonymous/Not logged-in
-
File Pages134 Page
-
File Size-