rpc uwc investor presentation...2015/06/30 · investor presentation moscow exchange forum 2015...

RPC UWC Investor Presentation

Moscow Exchange Forum 2015London Session

December 8-9, 2015

2UWC, the leader in innovative railcar manufacturing in the 1520 gauge area

Notes: (1) As at 31.10.2015; (2) according to 9M 2015 results, by ths t-km per 1 car

Service centers

Production of railcars and components

Operating lease

Engineering Cargo transportation

>50 service centers in the CIS

Maintenance services

Minimal idle time during repair

> 100 patents in the CIS

> 100 design engineers and technologists

Up to 60 railcar modifications by 2018

No.1 in railcar manufacturing

Annual production capacity: 22 thsrailcars and 90 thstonnes of railcar castings

Exclusive rights ofproduction of Barber and Motion Control bogies

TOP 3 in operating lease

Largest fleet ofinnovative railcars

RUB 18.5 bln leasing portfolio1

16.4 ths railcarsowned1

100% utilization ratio

Largest fleet of innovative railcars

13.8 ths railcars under operation1

Double efficiency compared to the other operators2

CLIENT

3UWC dynamic development

The company’s history began with railcar design.

Today UWC is the leading provider of integrated railcar solutions.

R&D Know-how Production Leasing Maintenance Transportation

In total railcars production

In innovative railcars production

0%

58%

86%

2012 2014 10M 2015

%

1%

15%

41%

2012 2014 10M 2015

%

Market share1 Operating results

Fleet owned and operated

1.3

9.59.6

2012 2014 10M 2015

ths

railcars

5.7

19.0

25.9

2012 2014 31.10.2015

ths

railcars

2.2

17.017.0

2012 2014 H1 2015

RU

B b

ln

0.8

2.8

2012 2014 H1 2015

RU

B b

ln

3.6

Production output (TVSZ)

Financial results

Revenue

EBITDA

Notes: (1) According to “Industrial cargoes”, among railcar manufacturers in the CIS; (2) 10M 2014 results; (3) H1 2014 results

7.82

2.13

0.93

UWC has maintained high growth rates since its launch in 2012. Based on 2014 results, UWC is ranked as the fastest-growing company by RAEX

4IPO on the Moscow Exchange, April 30, 2015

IssuerResearch and production corporation «United Wagon Company» PJSC

Incorporation Russian Federation

Type of shares Ordinary shares

Listing First (top) listing level on the Moscow Exchange

Date of listing April 30, 2015

Price range RUB 650 – 750 per share

IPO deal price RUB 700 per share

Offering sizeRUB 9 bln (US$175 mln1)/12.9 mln shares/12.2% of capital after IPO

Market capitalization RUB 73.9 bln (US$ 1.4 bln) at IPO deal price

Selling shareholder ICT Group

On April 30, 2015 UWC successfully completed its IPO on the Moscow Exchange, selling 12.2% of shares for a total of RUB 9 bln (US$ 175 mln1)

UWC’s IPO was a flagship transaction reinventing Russian equity market:

The first IPO of a railcar manufacturer in Russia

The first IPO in Russia since February 2014

The first IPO in transport and infrastructure sector after Global Ports’ IPO in 2011

Key details

Notes: (1) At the Central Bank of Russia rate as at April 30, 2015

61.7%

38.3%

Russian investors Foreign investors

70.6%

18.4%

11.0%

Other institutional investors

Retail and high net worth investors

Pension funds

Investors by geography

Investors by type

5UWC’s innovative railcars: excellent technical and economic characteristics

UWC’s innovative railcars equipped with Barber bogies have various operational advantages over their analogues which increase economic benefits derived by their owners and users

Technical characteristics Economic characteristics Cumulative effect

Axle load increasedfrom 23.5 to 25 t per axle (+6%)

Freight capacity increasedfrom 69-71 to 75-77 t (+8-10%)

15% less impact on the railway infrastructure

Standard service life increased to 32 years (by 1.5 times)

Standard intervals between repairs doubled

Service life of railcar components increased to

1,000,000 km

Tariff cost reduced by 10-15% per tonneof freight

Special empty run tariff system: savings up to 30%

Less frequentrenewal of fleet and rolling stock

Life-cycle costs cut by 50%

Breakdowns are 30 times less frequent

875 RUB/dayextra savings

(+180% premium to the current market rate)

New generation railcars earn their owners and lessees extra RUB 875

per day benefit compared to standard railcars

RUB 2.8 mlnextra savings made over a railcar’s lifecycle based on a discount rate of

12%

6Rail industry is the backbone of the Russian economy

…and Russia has one of the largest rail systems in the world…

The importance of railway transport is determined by following factors:

Significant volume of bulk commodities transportation (coal, ore, broken stone)

Long transportation distances

Poor road infrastructure

Extreme weather conditions

Lack of appropriate water routes for cargo transportation

Railroad is the key element of Russia’s transport infrastructure…

…with a significant share in Russia’s freight turnover…

…and growing dynamics

Source: RZD, foreign statistics

Source: RZDSource: Rosstat, foreign statistics

Notes: (1) Excluding pipelines

Railway transport share in freight turnover1

Average distance(ths km)

Fleet(ths railcars)

Freight turnover (bln tonne-km)

Freight turnover in Russia (bln tonne-km)

120

140

160

180

200

янв фев мар апр май июн июл авг сен окт ноя дек

2003-2014

2014

2015

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

+0,4%86%

48%

20% 18%

Russia USA China EU

0.8

0.9

1.1

1.6

1.9

China

Kazakhstan

Canada

USA

Russia

159

248

673

1,219

1,336

Ukraine

India

China

Russia

USA

231

673

2,295

2,541

2,753

Kazakhstan

India

Russia

USA

China

7

0.1

0.1 0.1

0.0

0.2

0.1

0.3 0.3

0.4

0.5 0.7

0.3 0.5 0.7 0.9 1.1

1.0 1.3 1.4

0.9 1

.3 1.7

1.6 1.9

0.9 1

.3 1.5

1.0 1.1

1.1 1.2

0.6

1.1

1.1

2.5

2.3

2.0 2.4 2.3

1.8 1

.9 2.1 2

.2

1.9

2.3

2.4 2.2

1.7 1

.6

1.8

1.2 1

.3 1.5

1.7

1.5

1.1

0.7

0.3

0.3

0.1

0.5

0.1 0.1 0

.4

0.1

0.4

2.6

2.4

2.1

2.4

2.5

1.9 2

.1 2.4 2

.6

2.4

2.9

2.7

2.6

2.4 2.5

2.9

2.3

2.6 2

.9

2.6 2.8 2.9

2.4

2.1

1.2 1

.4

1.9

1.2

1.2

1.1

1.6

0.7

1.6

1.1

Jan-1

3

Feb-1

3

Mar-

13

Apr-

13

May-1

3

Jun-1

3

Jul-

13

Aug-1

3

Sep-1

3

Oct-

13

Nov-1

3

Dec-1

3

Jan-1

4

Feb-1

4

Mar-

14

Apr-

14

May-1

4

Jun-1

4

Jul-

14

Aug-1

4

Sep-1

4

Oct-

14

Nov-1

4

Dec-1

4

Jan-1

5

Feb-1

5

Mar-

15

Apr-

15

May-1

5

Jun-1

5

Jul-

15

Aug-1

5

Sep-1

5

Oct-

15

Innovative railcars 18-100

Market switches to innovative railcars

Production structure: innovative railcars replacing old generation railcars

Comments

Market daily rate for Barber railcars exceeds the rate for old generation railcars by 50-75%

Gondola sales by Russian plants (ths units)

Source: Industrial Cargoes

4%

96%

100%

0%

Source: Industrial cargoes, Company’s data

In spite of overall railcar production slowdown, production of innovative railcars continues to grow,their share in the Russian plants’ output structure exceeded 80% in the third quarter and reached 100% in October 2015. The UWC’s share in production of innovative railcars in the first 10 months of 2015 approximated 86%

The strong demand is driven by high operational efficiency - two times higher cargo turnover in comparison with old generation railcars

Economic benefits and technological advantages of innovative railcars are highly appreciated in the market, as shown by higher lease rates offered by rolling stocks operators (and cargo owners)

550

850

1,050

-

200

400

600

800

1,000

1,200

1,400

1,600

Jan-1

4

Feb-1

4

Mar-

14

Apr-

14

May-1

4

Jun-1

4

Jul-

14

Aug-1

4

Sep-1

4

Oct-

14

Nov-1

4

Dec-1

4

Jan-1

5

Feb-1

5

Mar-

15

Apr-

15

May-1

5

Jun-1

5

Jul-

15

Aug-1

5

Sep-1

5

Oct-

15

Nov-1

5

Dec-1

5

Jan-1

6

Feb-1

6

Mar-

16

Apr-

16

May-1

6

Jun-1

6

Jul-

16

Aug-1

6

Sep-1

6

Oct-

16

Nov-1

6

Dec-1

6

Market lease rate

UWC lease rate

UWC operating rate

Lease rate for the innovative gondola carvs market rate

700-800

1,050-1,150

1,200-1,300

8Railway market turns around after 3-year decline

Gondola car market starts to recover after a 3-year fall due to 4 key factors:

Peak write-offs of old railcars – around 85 thsduring 10 months of 2015 (previously 30-40 thsper year)

Large number of non-repaired railcars on the railway network – about 120-130 ths units

Historically low railcar output – about 20 thsunits in 10 months of 2015 (annual production is expected at 25 ths units)

High coal suppliers’ margin due to ruble devaluation, which justifies the option to increase railcar component of the transportation price

According to industry experts (research agency INFOLine, the Institute of Natural Monopolies Research, investment banks) gondola daily rates are expected to recover going up to 700-800 RUB/day by the end of 2016

0

150

300

450

600

750

900

1,050

1,200

1,350

1,500

1,650

1,800

Mar-

08

Jun-0

8

Sep-0

8

Dec-0

8

Mar-

09

Jun-0

9

Sep-0

9

Dec-0

9

Mar-

10

Jun-1

0

Sep-1

0

Dec-1

0

Mar-

11

Jun-1

1

Sep-1

1

Dec-1

1

Mar-

12

Jun-1

2

Sep-1

2

Dec-1

2

Mar-

13

Jun-1

3

Sep-1

3

Dec-1

3

Mar-

14

Jun-1

4

Sep-1

4

Dec-1

4

Mar-

15

Jun-1

5

Sep-1

5

Dec-1

5

Source: Industrial Cargoes, The Institute of Natural Monopolies Research (IPEM)

Source: INFOline

80.2 88.0 81.568.4

38.7

9.0 4.5 2.0 2.0 2.0 3.0 3.0 3.0 3.0 3.0

0.40.4

3.4

16.4

29.0 38.0 42.5 43.0 44.0 41.5 40.5 40.5 39.5 39.0

-45.9-25.0 -23.6 -27.4

-48.8

-106.1 -110.8

-72.7

-36.7 -29.4 -30.4 -25.0 -19.4 -26.0 -17.6

7.8 11.72.3

3.6

3.0 2.5 2.5 3.0 4.0 5.0 6.0 6.0 7.0 8.0

1.021.09

1.151.21 1.22

1.161.09 1.06 1.07 1.08 1.10 1.12 1.14 1.16 1.18

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

-150

-100

-50

0

50

100

150

2010

2011

2012

2013

2014

2015

*

2016

*

2017

*

2018

*

2019

*

2020

*

2021

*

2022

*

2023

*

2024

*

Production of standard railcars, ths unitsProduction of innovative railcars, ths unitsWrite-offs, ths unitsExport, ths unitsFleet, mln units (RHS)

Consensus forecast 700-800

RUB/day by Dec’16

Rapid recovery of daily rates due to fleet shortage

Gondola segment balance is changing

*forecast

Rate of return for gondola cars started growing

9

Tariff discount for empty run

Notes: (1) According to OJSC «VRK-3», excluding VAT

Development of heavy haulage traffic in the

Eastern Polygon

Subsidy for purchase of

innovative rolling stock

Limited railcar lifetime

prolongation

Lower empty run tariff for innovative railcars due to their reduced impact on railroad infrastructure

Specifically, empty run tariff for innovative gondolas by TVSZ is 10-30% lower vs old generation railcars

RZD implements a large-scale project aimed to increase the working capacity of the Baikal-Amur mainline and the Trans-Siberian Railway (RUB 560 bln investments)

The innovative railcar fleet required to arrange heavy-haulage transportation in the Eastern Polygon amounts to 175,000 railcars

The Russian Government provides a subsidy compensating the interest on the loans for purchase of innovative railcars in the amount of 90% of the refinancing rate

The subsidy currently amounts to RUB 200,000 approx. per railcar

Since August 2014, prolongation of railcar service life requires mandatory certification. The cost of the procedure approximates RUB 875,0001, which makes railcar service life prolongation economically inefficient

As a result, a greater number of old railcars were written off, which boosted demand for innovative rolling stock to replace the old railcars

Government support of innovative railcar production

Dmitry Medvedev’s visit to TVSZ

Vladimir Putin at launch of TVSZ

10UWC’s unique competitive advantages

Innovations and flexibility at every stage of business provide technical and economic base for UWC’s competitive advantages securing the company’s leadership in production and sales

Specializing in production of innovative railcars

In-house bogie

Diversified product portfolio

Own modern foundry

State-of-the-art and highly efficient production

In-house engineering bureau

Guaranteed distribution channel

Fleet growth potential

Focus on operational leasing

Diversified fleet

Wide network of innovative railcars service centers

Competitive advantages

Production advantages

Distribution advantages

UralVagonZavod

AltaiVagon

11Efficient strategy focused on growth

up to 60 railcar modifications by

2018

60,000 railcars – fleet owned

and operated in the mid-term

up to 22 thsrailcars per year –

production capacity by2016

55service centers by 2016

Main goals Key numbers

Development of new products with high-value-

added

Improving existing models

Increasing specialization of rolling stock

Expanding the range of railcar types manufactured

Customer base diversification

Focused work with “growth areas” in the market

Replacing inefficient railcars

Adding new routes

Customizing railcars

Operating efficiency increase

Increasing production flexibility

Increasing production capacity

Cost reduction projects

Initiatives

Service centers network development

Widening network of service centers and expanding their geography

Raising service centers’ competence

12Investment opportunities: key factors

Various technical and economic

benefits of innovative railcars

Market switches to innovative railcars

Government support of the innovative railcars production

Unique competitive advantages

Efficient strategy focused on growth

Leading positions and fast development

13Attachments

Attachment I. H1 2015 financial results review

Attachment II. 3Q and 9M 2015 operating results review

Attachment III. Company's assets and product portfolio

Attachment IV. Financial statements

14UWC financial results

1,403

2,767

2013 2014 H1 2015

RU

B m

ln

3,071

17,028

2013 2014 H1 2015

RU

B m

ln

UWC revenue dynamicsComments

Source: Company`s IFRS statements

UWC EBITDA dynamics

Revenue increased 8 times to reach RUB 17 bln in the first half of 2015

The positive dynamics was driven by higher production levels, increased share of railcar sales in the market with prices growing correspondingly. The significant expansion of UWC’s fleet was another contributing factor

Subject to the Company’s approved development plan, revenue is expected to grow in the upcoming years due to increasing production capacity and output

EBITDA amounted to RUB 2.8 bln in the first half of 2015. As expected, EBITDA margin decreased against 2014 due to the low-margin Production Division having a higher share of overall revenue and increasing direct sales in the market


8641

17,057

2,1291

3,572

Notes: (1) H1 2014 results

15Production Division financial results

Production Division revenue dynamics

Production Division EBITDA dynamics

Revenue grew 1.5 times year-on-year to reach RUB 15 bln in the first half of 2015

The Production Division achieved a profitable EBITDA level in the first half of 2014 which amounted to RUB 214 mln. In the H1 2015 EBITDA increased 6 times year-on-year to equalRUB 1.6 bln. EBITDA margin grew 5.4 times year-on-year to reach 11%

This was largely due to reaching planned production volumes and implementing cost reduction measures

The management estimates that EBITDA will reach up to 25% when production volume and cost targets are achieved

EBITDA margin target will be reached primarily due to:

Versatile production technology to facilitate the Company’s quick adaptation to changes in demand

Projects to increase production capacity

Cost reduction measures

7,103

15,015

2013 2014 H1 2015

RU

B m

ln

23,166

(2,941)

1,640

-3000

-2500

-2000

-1500

-1000

-500

0

500

1000

1500

2013 2014 H1 2015RU

B m

ln

1,293

Comments

10,5681

2141




16Distribution Division financial results

Comments Distribution Division revenue dynamics

Distribution Division EBITDA dynamics

Revenue shows positive dynamics driven by fleet expansion

The Company plans to increase its fleet size to 60,000 railcars in the midterm

In the first half of 2015, EBITDA amounted to RUB 1.5 bln, with the EBITDA margin remaining high and stable at 71%

The Company aims at maintaining the average EBITDA margin of this segment at 80-85%

Maintaining the target EBITDA margin will primarily be achieved by increasing the number of innovative railcars with enhanced technical and economic characteristics in the overall fleet. This also includes modernizing UWC-owned railcars equipped with 18-100-bogies

2,689

2,194

2013 2014 H1 2015

RU

B m

ln

4,379

2,269

1,561

0

500

1000

1500

2000

2500

3000

3500

2013 2014 H1 2015

RU

B m

ln

3,349

1,9621

1,3941




17

Historical CAPEX structure2

Planned CAPEX for 2015-20172,3

Historical investment costs of the Company for the last 3 years amounted to RUB 2-4 bln annually. Most of these costs incurred in 2012 were associated with finalizing construction of TVSZ plant and in 2013-2014 - with reduction of costs, optimization of processes and expansion of the product portfolio

The management approved the capital expenditure program for 2015-2017. The expenditures are primarily associated with implementation of strategies to expand the product portfolio, as well as to increase capacity, flexibility and operational efficiency of railcar production

UWC’s management believes that upon implementation of the 2015-2017 development program, no substantial capital expenditures will be incurred, only ongoing cost of production

The target proportion of costs in foreign currency is about 50% - a large part of these costs accounts for purchase of fixed assets abroad. The other 50% are construction and installation works denominated in rubles

UWC capital expenditures1

Source: Company`s management accounts

Source: Company`s data

Notes: (1) Excluding investments in the acquisition of railcars by «Distribution» division; (2) Excluding VAT; (3) The capital expenditure program is nominated in 2015 prices

2.8 3.22.0

4.6 3.8

0.2

0.30.4

0.1

2015 2016 2017

RU

B b

ln

Other projects

Product portfolio

expanding

Operational efficiency

7.77.4

2.4

4.2

1.8 1.8

0.2

1.8

0.3

0.30.04

2012 2013 2014

RU

B b

ln

Other projects

Assets purchasing

Product portfolio

expanding

Operational efficiency

Plant building

4.2

2.3

3.9

Comments

18UWC working capital

8,293

2,430

(7,753)

(10,409)

267

6,924

2014 H1 2015

RU

B m

ln

Accounts receivable Accounts payable

Inventories

*

(*) The sharp growth in Inventories was due to changes in tangible goods accounting methodology after shifting from sales within the company to direct sales in the market

Since 2014 there has been a significant need for working capital due to increasing production of railcars and castings. With the company planning to expand production, the need for working capital will continue to rise as is common for large production companies

Accounts payable mostly include advances from customers and deferred payments on deliveries of inventory and equipment for investment projects

Accounts receivable mostly include advance payments to certain suppliers, as well as deferred payments from clients for delivered railcars

As expected, accounts receivable decreased due debt recoveries from railcar purchasers as at 31/12/2014

Accounts payable slightly grew owing to increased railcar production

Inventories 30-45 days

Accounts receivable up to 30 days

Accounts payable 60-90 days

807

Target turnover

(1 055)

Working capital

Source: Company`s data

Working capital structure


Comments

19UWC debt portfolio as at 31/12/2014

93.7%

6.3%

RUB EUR and USD

21.9%

19.9%

19.5%

3.3%2.5%1.1%

31.7%

Sberbank

VEB-EDB

Otkritie

EDB

Gazprombank

Rosnano

Bonds

By lenders By currency

RUB 89.9 bln

Principal repayment schedule1 Interest repayment schedule1,2

Notes: (1) Excluding working capital loan in the amount of RUB 9 bln; (2) Including subsidy compensation of interest on loans under the RF Government Decree of 30.09.2009 №262


RUB 89.9 bln

Debt portfolio structure

15,000 15,000

4,550

4,403

5,0148,217

5,285

6,961 6,298 7,275

2,791

4,550

19,403

5,014

8,217

20,285

6,961 6,2987,275

2,791

2015 2016 2017 2018 2019 2020 2021 2022 2023

Bonds repayment, RUB mln. Loans repayment, RUB mln.

5,291

3,5361,870 1,870 1,870

4,256

3,884

3,470 2,9442,171

1,685 1,059 537

9,547

7,420

5,3404,814

4,041

1,6851,059

53796

2015 2016 2017 2018 2019 2020 2021 2022 2023

Bonds interest payments, RUB mln. Loans interest payments, RUB mln.

Total debt amounted to RUB 89.9 bln at the end of 2014, the share of foreign currency debt equal to 6.3%

The leverage of the Company depends on market conditions and the number of railcars sold to third parties or the Distribution Division

Diverse financing options including borrowed funds will be involved for implementing the Company’s fleet development program

The management estimates that the comfortable debt level will not exceed 3.0x net debt/EBITDA

Source: Company`s management accounts Source: Company`s management accounts

Comments

20UWC debt portfolio as at 30/06/2015

94.1%

5.9%

RUB EUR and USD

22.0%

21.9%

21.0%

2.7%1.9%1.1%

29.4%

Otkritie

Sberbank

VEB-EDB

Gazprombank

EDB

Rosnano

Bonds

RUB 85.5 bln

Principal repayment schedule1,3 Interest repayment schedule1,2,3

At the end of H1 2015 total debt amounted to RUB 85.5 bln, the share of debt in foreign currency –5.9%

The debt portfolio structure remains stable

In the third quarter of 2015 UWC and Sberbankentered into agreement tо defer the H2 2015 and H1 2016 payments on RAIL1520 loans to later date periods

The company continues working on debt load optimization

RUB 85.5 bln

Debt portfolio structure

15,000 15,000

2,248

3,943

5,9538,362

5,911

9,4056,726 7,492

3,028

2,248

18,943

5,953

8,362

20,911

9,405

6,7267,492

3,028

H2 2015 2016 2017 2018 2019 2020 2021 2022 2023

Bonds repayment, RUB mln. Loans repayment, RUB mln.

3,243 3,536

1,870 1,870 1,870

2,204

4,544

4,0793,406

2,748

2,0011,251

656

5,447

8,080

5,949

5,2764,618

2,001

1,251656

166

H2 2015 2016 2017 2018 2019 2020 2021 2022 2023

Bonds interest payments, RUB mln. Loans interest payments, RUB mln.

Notes: (1) Excluding working capital loan in the amount of RUB 9 bln; (2) Including subsidy compensation of interest on loans under the RF Government Decree of 30.09.2009 №262; (3) Including Sberbank loans restructuring.

By lenders By currency


Comments

Source: Company`s management accounts Source: Company`s management accounts

21Attachments





22

The Tikhvin Freight Car Building Plant (TVSZ) produced 2.6 ths railcars in the third quarter of 2015, a quarter-on-quarter decline of 650 railcars which was due to the planned shut-down in August

In the nine months of 2015, production volumes increased by 1.6 ths railcars year-on-year to 8.5 ths. UWC’s share in total railcar production in the CIS amounted to 41%

The average selling price of a railcar increased to RUB 2.5 million. Its stable positive dynamic was a result of increased demand for innovative rolling stock and the start of the recovery in leasing rates and the market as a whole

TVSZ signed a contract with Wabtec Corporation to supply large railcar castings starting from 2016

TVSZ received a certificate of compliance for a solid-bottom gondola car with increased body volume of up to 98 m3. Full-scale production is planned for the beginning of 2016 with a production capacity of up to 540 units per month

A total of 11 models have been certified. In the nine months of 2015, the Company manufactured 17 prototype models

Production results

2.53.3

2.6

6.9

8.5

3Q 2014 2Q 2015 3Q 2015 9M 2014 9M 2015

ths

railcars

Railcar production volume

23.4 ths Total number of railcars produced since 2012

100%Number of railcars sold to third parties in the third quarter of 2015

1,700

1,900

2,100

2,300

2,500

1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015

RU

B t

hs

Average selling price (excluding VAT)

23

UWC’s owned and operated fleet amounted to 25.3 ths railcars at the end of the third quarter of 2015, that is 1.3 ths increase compared to the previous reporting period

There has been a planned increase in the number of innovative railcars in the fleet structure. By the end of the third quarter, innovative railcars made up 67% of the fleet

The increase in the UWC’s owned and operated fleet was the result of the significant expansion of Vostok1520’s operated fleet. Vostok1520’s fleet has increased by 3.3 ths railcars quarter-on-quarter to 13.1 ths units, in line with the company’s strategy

The fleet owned by RAIL1520’s reduced after selling 1,000 railcars to the third parties due to the increased market demand for innovative railcars

UWC signed an agreement with EurosibSPb-TS to supply up to 700 railcars during 2016-2017

Distribution results: railcar fleet

24.025.3

30.06.2015 30.09.2015

ths

railcars

17.416.4

30.06.2015 30.09.2015

ths

railcars

9.8

13.1

30.06.2015 30.09.2015

ths

railcars

Fleet owned and operated1

56%

11%0.02%

33%

Barber

gondolas

Barber

hoppers

Barber flat

cars

Standard

railcars

Fleet owned and operated by type of railcar

Fleet owned by RAIL1520’scompanies2

RAIL1520’s2 owned fleet by lessee and type of railcar

30%

44%

26%

Barber railcars

leased by third

parties

Standard railcars

leased by third

parties

Railcars leased

by Vostok1520

Fleet operated by Vostok1520’s

Fleet owned and operated by clients3

Footnotes:

1) Including the railcar fleet operated by Vostok1520 (13.1 thsrailcars) and the fleet owned by RAIL1520’s companies but leased out to third parties (12.1 ths railcars);

2) The following companies are united under the RAIL1520 brand: RAIL1520, RAIL1520 Service, RAIL1520 Leasing, MRK1520;

3) By number of railcars

4) Including: “Promugolservice”, “Nizhegorodskiy express”, “ZapsibTrans”, “Logistics 1520”, “Acron-Trans”, “Bashkhim”, “RusVynil”, “SIBUR-Trans”, “Uralkali”

34%

19%6%

6%

5%3%

3%

25%

Kuzbassrazrezugol

SUEK

KuzbTC

Neftetransservice

Indutrial-

transportation groupEn+ Logistics

Uralchem

Others4

24Distribution results: key figures

Leasing Transportation

Top 3 on the operating leasing market

100% utilisation rate

1.9 years average age of railcars

RUB 18.7 billion

leasing portfolio as at 30.09.2015

852 852

2Q 2015 3Q 2015

RU

B/d

ay

717 724

2Q 2015 3Q 2015

RU

B/d

ay

Average lease rate for innovative railcars1

Average lease rate for old-generation railcars

13.5 thstkm per

railcar/day

The performance of operated railcars in the nine months of 2015 was 2 times higher than on the rest of the network2

4 ths kmThe average length of haul in the nine months of 2015

Notes: (1) The average lease rate for a railcar equipped with a Barber bogie with a 25 t axle load; (2) Company’s estimates

2.3

3.5

2Q 2015 3Q 2015

mln

tonnes

Cargoes transported

8.7

14.1

2Q 2015 3Q 2015

bln

tkm

Cargo turnover

In the third quarter of 2015, the average lease rate for innovative railcars remained at the same level as in the previous quarter and amounted to RUB 852/day

The lease rate for an old-generation railcars increased by RUB 7 quarter-on-quarter to RUB 724/day. This was due to an increase in rates provided by a number of contracts

There has been a significant improvement in the performance of the rolling stock in the UWC’s Distribution Division. In the third quarter of 2015, the volume of cargo transported and the freight turnover grew by more than 1.5 times quarter-on-quarter to 3.5 mln tonnes and 14.1 mln t-km, respectively. In the nine months of 2015, the transportation volume amounted to 7.3 mln tonnes with freight turnover of 28.8 mln t-km. This dynamic was largely due to the growth in the operated innovative fleet and the use of railcars mainly for long export routes

25Development of maintenance services

Current uncoupling repair statistics1 UWC’s maintenance network

Map of service centres

0.11Number of repairs for a TVSZ’s innovative car

1.64Number of repairs for an old-generation gondola car

50

6

Service centres

Training centres

For innovative railcars, the frequency of current uncoupling repairs is 15 times lower than for the rest of the network. This is due to the high levels of reliability of TVSZ’s innovative railcars.

UWC’s maintenance activity is carried out at railcar repair centres located across Russia, Kazakhstan and Belarus. In the reporting period, the 50th maintenance centre was launched at the Khilok station on the Trans-Baikal railway. The Company plans to increase its number of maintenance centres to 55 by 2016

Notes: (1) Current uncoupling repair according to the results of the 9 months of 2015 in annual terms

26Attachments





27Company’s production assets

Moscow

Izhevsk(1 200 km away from Moscow)

Tikhvin(650 km away from

Moscow)

The Company’s production facilities include:

Tikhvin Freight Car Building Plant (TVSZ), TikhvinChemMash(TChM) and production joint ventures, located at Tikhvin, Leningrad region

NPC Springs located at Izhevsk

TVSZ became a second-ranked Russian railcar builder after UVZ in 2014

The Company’s Production Division focuses on production of innovative railcars with advanced technical and economical features.

United Wagon Company holds title to all intellectual property rights for railcar designs and engineering including exclusive rights for production of innovative bogies

NPC Springs created in 2011 with support of ROSNANO is a manufacturer of supreme quality nanostructured springs having no Russian analogues

NPC Springs provides TVSZ with quality components and exclusive rights for their use in production

United Wagon Company cooperates with the world’s leading railcars manufacturers; it created joint ventures with Wabtec and Timken for the purposes of localized production, and received intellectual property rights for Motion Control bogies from Amsted Rail

28Product portfolio

Gondola with hatchers

Grain/Mineral hopper

Container flat car

Solid bottom gondola

2013 2014-2015 2016

Oil tank car

LPG tank car

Chemical tank car

Grain hopper

Box car

Timber flatcar

29Attachments

Attachment I. Financial results review

Attachment II. Operating results review



30Income Statement


RUB mln H1 2014 2014 H1 2015

REVENUE 2,129 17,057 17,028

Cost of Sales (1,438) (14,984) (15,456)

Depreciation and Amortization (698) (3,087) (2,414)

Property tax (109) (215) (322)

Raw and other materials (308) (8,745) (8,473)

Salaries and social security contributions (68) (1,861) (1,665)

Repair and maintenance costs (157) (804) (1,069)

Rent of rolling stock - - (651)

Insurance (3) (8) (5)

Other expenses (95) (264) (857)

GROSS PROFIT 691 2,073 1,572

Selling, general and administrative expenses (SG&A) (568) ( 1,645) (1,271)

Impairment loss (27)

Other operating income/expenses 19 23 29

OPERATING PROFIT 142 424 330

Financial income 157 647 586

Financial expenses (2,595) (6,516) (4,626)

Profit/loss from foreign exchange and revaluations 6 4,605 (1,585)

PROFIT/ (LOSS) BEFORE INCOME TAX (2,290) (840) (5,295)

Income tax expense 355 1,389 151

NET PROFIT/ (LOSS) (1,935) 549 (5,144)

31Balance Sheet 1/2

RUB mln 2014 June 30, 2015

ASSETS

NON-CURRENT ASSETS

Machinery and equipment 70,819 67,178

Long term deferred tax assets 1,852 2,080

Intangible assets 2,839 3,023

Investments in joint ventures 159 360

Long term loans issued 1,659 793

Finance lease receivables 261 252

Other accounts receivable 30 -

TOTAL NON-CURRENT ASSETS 77,619 73,686

CURRENT ASSETS

Cash and cash equivalents 2,387 3,134

Accounts receivable 7,579 1,276

Reserves 267 6,924

Other accounts receivable 714 1,154

Short term loans issued 16,255 15,989

VAT recoverable 1,653 2,108

TOTAL CURRENT ASSETS 28,855 30,585

TOTAL ASSETS 106,474 104,271

32Balance Sheet 2/2

RUB mln 2014 June 30, 2015

EQUITY

Authorised share capital 0 106

Unissued share capital 100 -

Additional paid-in capital 12,429 16,159

Non-controlling interests 1 1

Retained earnings/ losses (4,969) (10,113)

Reserves from foreign exchange revaluation - -

Effect of acquiring a related entity - -

Total equity 7,560 6,153

Long term liabilities

Long term loans 72,385 68,556

Other long term liabilities 1,204 1,233

Total long term liabilities 73,588 69,789

Current liabilities

Short term accounts payable 7,753 10,409

Short term loans 17,553 17,910

Advances received and other liabilities 19 10

Total current liabilities 25,325 28,329

TOTAL LIABILITIES 98,914 98,118

TOTAL LIABILITIES AND EQUITY 106,474 104,271


33Cash Flow Statement

RUB mln June 30, 2014 June 30, 2015

Operating cash flow (1,949) 5,106

Profit/loss before tax (2,290) (5,295)

Depreciation and amortization 698 2,521

Profit/loss from foreign exchange and revaluations (6) 1,585

Financial expenses 2,595 4,640

Financial income (157) (585)

Increase/(decrease) in working capital (896) 6,576

Income tax paid (10) (40)

Financial expenses paid (1,901) (4,294)

Other 18 (2)

Cash flow from investing activities (18,451) (4,199)

Investment in fixed and intangible assets (12,584) (4,234)

Loans issued (6,136) 13,768

Other 269 (13,733)

Cash flow from financing activities 21,145 (158)

Increase in borrowings 24,404 4,030

Payments on borrowings (6,748) (7,923)

Proceeds from shareholders 3,489 3,735

TOTAL CASH FLOW 745 749


34

Научно-производственная корпорация

«Объединенная Вагонная Компания»

115184, Россия, г. Москва,

ул. Новокузнецкая, д. 7/11, стр. 1

Тел./факс: +7 (499) 999 15 20

Investor Relations

+7 (499) 999 15 20

[email protected]

http://www.uniwagon.com/

Contacts

Research and Production Company “United Wagon Company”

Russia, 115184, Moscow,

ul.Novokuznetskaya, d. 7/11, str. 1

Phone: +7 (499) 999 15 20

Fax: +7 (499) 999 15 21

mailto:[email protected]

http://www.uniwagon.com/

rpc uwc investor presentation...2015/06/30 · investor presentation moscow exchange forum 2015...

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