Annual Report and Accounts 2009 2009 Accounts and Report Annual Russia’s Leading Private Private Leading Russia’s Group Rail Freight Globaltrans Investment PLC Investment Globaltrans GLobaLtrans Investment PLC Annual RePoRt And Accounts 2009 c www.globaltrans.com © 2010 Globaltrans Investment PL © 2010 Globaltrans highlights shareholders’ information 1 d the largest private freight rail transportation group operating in russia, esigned and produced by www.wisetiger.co.uk Printed by DetaileD below are contacts anD the CIS countries and the baltics various addresses that shareholDers may finD useful. focused on servicing blue chip customers in key sectors of the economy More up-to-date investor information, including Company secretary (metals and mining, oil products, etc.) the Group’s current and historic GdR prices, Ms. elia nicolaou corporate news, latest operational and financial Maria House, 5th Floor 1 Avlonos street, results, presentations and other updates is available business model based on operation of a balanced fleet of gondola cars on the Globaltrans corporate website at cY-1075 nicosia, cyprus and rail tank cars www.globaltrans.com. An electronic copy of this Annual Report can be also viewed online or Depositary bank downloaded from Globaltrans’ corporate website. the Bank of new York Mellon robust customer value proposition built around deep understanding If you would like to receive the latest corporate news Investor services of customer needs and advanced destination management systems and updates by email, please register your email address P.o. Box 11258, church street station, at www.globaltrans.com or send a request to new York, nY 10286-1258, USA [email protected]. Phone for domestic callers: Experienced management team with proven track record +1 888 BnY AdRs (1 888 269 2377) Globaltrans Investment PLC Phone for international callers: +1 201 680 6825 s e-mail: [email protected] ussex Litho. Legal Address: listed on london stock exchange’s main market since may 2008 omirou 20, Agios nikolaos Website: www.bnymellon.com/shareowner cY-3095 Limassol, cyprus Postal Address: stock exchange city House, 3rd floor London stock exchange PLc 6 Karaiskakis street 10 Paternoster square, contents cY-3032 Limassol, cyprus London EC4M 7Ls, uK Phone: +357 25 503 153 Phone: +44 20 7797 1000 Fax: +357 25 503 155 Website: www.londonstockexchange.com Investor relations auditors 2009 at a glanCe Priit Pedaja, Head of Investor Relations Pricewaterhousecoopers Limited 2009 highlights 1 Definitions 40 Mikhail Perestyuk, Investor Relations Manager city House, 6 Karaiskakis street, Chairman’s statement 2 Presentation of financial and Phone: +357 25 503 153 cY-3032 Limassol, cyprus e-mail: [email protected] Phone: +357 25 555 000 CEO’s review 4 other information 41 Fax: +357 25 555 001 Delivering our strategy 6 media relations CorPorate GovernanCe Anna Vostrukhova, Head of Media Relations GrouP overvIew board of Directors and its performance 43 Phone: +357 25 503 153 Who we are 9 the board committees 47 email: [email protected] our business model 10 senior management 48 adding value to our customers 11 corporate social responsibilty 49 People are our key assets 12 corporate structure and ownership 14 aPPENDICES 1. Directors’ report and consolidated financial statements for the year PerformanCe In 2009 ended 31 December 2009 Key industry developments 17 operational performance 21 2. Directors’ report and parent company financial review 25 financial statements for the year Principal risks and uncertainties 35 ended 31 December 2009 selected operational information 36 1. By the size of owned Fleet. Based on the publicly available sources. Globaltrans Investment PLc 2009 Highlights 2009 at a Glance increased Freight rail turnover and market share FreigHt rail turnover grew by increased market sHare by +3% +21% whilst overall Freight rail turnover in russia dropped globaltrans’ market share of overall volume of freight by 12% year on year in 2009 transported by rail in russia increased from 3.9% in 2008 Group to 4.8% in 2009 Overview seized opportunities to expand the business total Fleet oF rolling stock increased by new gondola and rail tank cars contracted +38% +6,500 units Performance including the total Fleet of acquired with 1,775 units of rolling stock delivered in 2009 LLC balttransservis and rolling stock delivered in 2009 and the rest to be delivered in 2010 in 2009 maintained strong financial position maintained strong balance sHeet, adjusted EBITDA margin remained solid Providing Flexibility to Pursue growtH Corporate * * 42% 1.0x Governace down only by 2 percentage points net debt to adjusted EBITDA ratio compared to 2008 as of the end of 2009 SUMMARY OF PRESENTATION OF FINANCIAL AND accountingpolicies,ontheassumptionthattheGroup(insuchacomposition) OTHER INFORMATION wasinexistenceforallperiodspresented(2008and2009).Thereforealsoall operationalinformationreportedforyearsended31December2009and AllfinancialinformationpresentedinthisAnnualReportisderivedfromthe 2008includesoperationalinformationforBTS. consolidatedfinancialstatementsofGlobaltransInvestmentPLC(“the DuetodepreciationofUSD/RURexchangeratecertain financial Company”or,togetherwithitssubsidiaries,“Globaltrans”or“theGroup”) fortheyearended31December2009andpreparedinaccordancewith figures derived from management accounts are presented in russian InternationalFinancialReportingStandardsasadoptedbytheEuropeanUnion roublestobetterillustratetheunderlyingdynamicsofthebusiness. andtherequirementsofCyprusCompaniesLaw,Cap.113(“EUIFRS”). InthisAnnualReporttheGrouphasusedthecertainnon-GAAP measures(notrecognisedbyEUIFRSorIFRS)assupplementalmeasuresof Certainfinancialinformationwhichisderivedfromthemanagementaccounts Appendices ismarkedinthisAnnualReportwithanasterisk{*}. theGroup’soperatingperformance. InaccordancewiththeGroup’saccountingpolicies,the acquisition of Information(non-GAAPmeasures,operationalstatistics)requiring LLC balttransservis (“BTS”) has been accounted for as a common additionalexplanationordefiningismarkedwithcapitalletterswith control transactionusingthepredecessorbasisofaccounting.Underthis definitionsprovidedonpage40ofthisAnnualReport. methodfinancialstatementsoftheacquireeareincludedintheconsolidated Foradetaileddescriptionofpresentationoffinancialandother financialstatementsusingpre-acquisitionIFRScarryingamountsanduniform informationpleaseseepage41ofthisAnnualReport. AnnualReportandAccounts2009 1 chairman’s statement he past year was a testing period for Globaltrans and the whole freight railway industry in Russia T as the economy grappled with the effects of major economic downturn. Global end user demand for Russian industrial commodities as well as internal demand evaporated rapidly during the early part of the year, forcing many industrial producers to cut back production drastically. Although, as the year progressed, key sectors of the Russian economy showed signs of steady improvement, last year was the most challenging trading environment that many of us have witnessed. WhatispleasingtoreportisthatGlobaltransoutperformedthe marketin2009,bothinthedepthsofthedownturnandasmarkets recovered.WhilstoverallFreightRailTurnoverinRussiafellby12%, theGroupgrewitsturnoverby3%.Moreover,weincreasedour Alexander Eliseev TotalFleetby38%to37,217units2in2009,throughacombination Chairman of the Board of Directors oforganicgrowthandacquisitions.ThefactthatGlobaltrans producedsucharesilientperformancedemonstratesthesoundness ofourbusinessmodel,andshowsthatourstrategyofbuildinga balanceduniversalfleetandprovidingourcustomerswitharobust valuepropositionworks. new gondola and rail tank cars Wewerequicktorecognisethemagnitudeofthedownturnand contracted respondedaccordingly,initiatingaseriesofmeasurestosafeguard thebusiness.Theseincludedrelocationofrailcars,reconfiguration ofroutesandtheimpositionofstringentcreditcontrolsalongwith othercostsavinginitiatives.Takentogether,theseactionshelped Globaltranswithstandtheworstoftherecessionandcomethrough + 2009relativelywell.TheGroup’sAdjustedEBITDAinRoubleterms 6,500 units increasedby5%whilstdecreasingby18%inUSDollarstermsto USD284.5*million.Thelatterwasdrivenbythedepreciationofthe with 1,775 units of rolling stock delivered in 2009 Rouble,ourfunctionalcurrency,againsttheUSDollar.Iconsiderit and the rest to be delivered in 2010 asanexcellentresult,giventhechallengingoperatingandmarket environment. Globaltransiscommittedtoastrategyofopportunisticgrowth, andin2009wecontinuedtopursueopportunitiestoexpandthe business.Asdemandbegantostabiliseduringthesecondquarter andFreightRailTurnoverpickedup,wefeltconfidentenoughto total Fleet oF rolling stock resumeourcapitalexpenditureprogramme.Ourstrongfinancial increased by positionenabledustotakeadvantageofamarketwherepricesfor newrailcarshaddroppedmorethan40%fromthepeaklevelsseen in2008.Asaresult,wewereabletocontract6,000newgondola carsand500newrailtankcarsinthesecondhalfoftheyearatvery attractiverates.Thefirsttransactionwillincreaseourowned + gondolafleetbymorethan40%,reinforcingourmarketpositionin 38% thetransportationofvariousbulkcargoesandensuringthatthe Groupiswellpositionedtocapitaliseonanysustainedmarket including the total Fleet of acquired LLC balttransservis recovery. and rolling stock delivered in 2009 Inlinewithourcommitmenttomaintainabalancedfleet, wecompletedthepurchaseofoneofRussia’sleadingprivatefreight 2.IncludingtheTotalFleetofBTSacquiredinDecember2009androllingstockdeliveredin2009. 2 GlobaltransInvestmentPLC 2009 at a Glance railcompanies,inDecember2009acquiringacontrollingstake3in