Research and production corporation «United Wagon Company» Full-Year 2015 Financial Results 22 April 2016
ths railcars 5.00 4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00 ths railcars Key highlights and strategy implementation 2 UWC Revenue UWC EBITDA +147% +97% 42.1 7.0 17.1 3.6 Development of new products In December 2015 UWC launched CJSC «TikhvinСhemMash» (TikhvinСhemMash), a facility for production of new generation tank cars 6 railcar models were certified at UWC s production facilities in 2015. As at the end of the year 20 models were certified 2014 2015 2014 2015 Production Division Revenue Production Division EBITDA +38% +223% 32.1 23.2 4.2 1.3 Customer base diversification UWC signed new contracts with such major freighters as: Logistics 1520, Tehnotrans, Eurosib SPB- Transport systems, Metafrax, Uralkali, UGMK and others UWC and Wabtec Corporation (USA) signed an agreement for export of freight car castings Vostok1520 s client base grew 3 times bigger 2014 2015 2014 2015 Production volume Railcar fleet 1 +28% +43% 12.4 27.2 9.6 19.0 2014 2015 31.12.2014 31.12.2015 Operating efficiency increase TVSZ increased its production capacity to 16 ths railcars per year Production output increased by 28% Service centres network development UWC launched 19 service centres in 2015, their total number reaching 51 Source: Company`s data, Company`s IFRS statements Notes: (1) Fleet owned and operated
UWC Financial Results: Revenue 3 UWC Revenue Revenue grew by 147% year-over-year to RUB 42.1 bln +147% YOY 42.1 The positive dynamics was due to: Increasing production volume Larger share of sales to the market 17.1 Higher railcar prices 3.1 Significant growth of Vostok1520 s fleet which increased revenue from transportation services 2013 2014 2015 UWC Consolidated Revenue Reconciliation UWC Revenue Breakdown By Segment 32.1 4.3 6.2 3.3-3.8 42.1 1% 20% 7% 0.3% 8% 15% 72% 77% Production Distribution Operation Other Adjustments and eliminations UWC Revenue 2014 2015 Production Operation Distribution (Lease) Other Note: (1) The Distribution division deals with operating lease of railcars
UWC Financial Results: EBITDA 4 UWC EBITDA EBITDA amounted to RUB 7 bln an increase of 97% year-over-year +97% YOY 1.4 3.6 21% 7.0 17% The largest contribution to consolidated EBITDA has been made by the Production and Distribution divisions. The growth of EBITDA is attributable to higher revenues from railcar sales and increased Production EBITDA 2013 2014 2015 EBITDA EBITDA margin EBITDA margin dropped 4 pp to 17% due to a higher share of less profitable Production and Operation divisions UWC Consolidated EBITDA Reconciliation 2.8 0,2 7.0-0,03-0,04 4.2 Production Distribution Operation Other Adjustments and eliminations UWC EBITDA
5.00 4.00 3.00 2.00 1.00 0.00-1.00-2.00-3.00-4.00-5.00 Production Division Financial Results 5 Production Division Revenue +38% YOY 32.1 23.2 Production revenue demonstrated 38% growth reaching RUB 32.1 bln. The positive dynamics reflects: Higher production volume: in 2015 UWC produced 12.4 ths railcars, an increase of 28% year-overyear Higher railcar prices 7.1 2013 2014 2015 Production Division EBITDA +223% YOY 4.2 13% 1.3 6% Production EBITDA increased by 223% year-overyear to RUB 4.2 bln Division s EBITDA margin gained 7 pp to stand at 13% due to: Increase of production capacity Growth of production volumes Cost of sales reduction measures 2013 2014 2015-2.9 EBITDA EBITDA margin
4.000 3.500 3.000 2.500 2.000 1.500 1.000 0.500 0.000 Distribution Division Financial Results 6 Distribution Division Revenue -2% YOY 4.4 4.3 The revenue of the Distribution division engaged in operating lease declined 4% year-over-year to RUB 4.3 bln following a 4% reduction of the UWC's own fleet from 16.6 ths to 16 ths railcars 2.7 Division s EBITDA fell by 17% year-over-year to RUB 2.8 bln EBITDA margin went 11 pp down to 65% 2013 2014 2015 Distribution Division EBITDA -17% YOY The negative dynamics of EBITDA and EBITDA margin was driven by higher property tax costs: a new amendment to the Tax Code, effective from 1 January 2015, imposes a tax on property transferred between related parties 3.3 2.8 2.3 76% 65% 2013 2014 2015 EBITDA EBITDA margin
UWC Capital Expenditures 1 7 CAPEX Structure and Dynamics 2,3 7-9 7.1 0.3 3.6 4.2 0.04 2.0 1.8 0.2 2.7 1.8 1.8 2013 2014 2015 2016E Operational efficiency Product portfolio expansion Other projects Most of the costs incurred in 2012 were associated with finalizing construction of TVSZ plant and in 2013-2015 - with reduction of costs, optimization of processes and expansion of the product portfolio The management approved the capital expenditure program for 2016. 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 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 remaining 50% are the costs of construction and installation works denominated in rubles Source: Company s management accounts Notes: (1) Excluding investments in the acquisition of railcars by Distribution division; (2) Excluding VAT; (3) Excluding mergers and acquisitions
UWC Debt Portfolio as at 31/12/2015 8 Debt Portfolio Structure Debt Optimisation 29% 2% 1% 2% RUB 99.1 bln 18% By lender 29% 19% Otkritie Sberbank VEB-EDB Gazprombank Rosnano Other borrowings Bonds 29% 7% By segment RUB 99.1 bln 32% 32% Production Distribution Other Bonds In the third quarter of 2015 UWC and Sberbank entered into agreement tо defer the H2 2015 and H1 2016 payments on RAIL1520 loans to later date periods In 2015 TikvinChemMash and TikhvinSpetsMash received concessional credit facilities for a total of RUB 8.7 billion at the rate of 10.5% for financing their production development under the program on support of investment projects in Russia through project financing Principal Repayment Schedule 1,2,3 23.3 21.9 On 11 April 2016 the general meeting of holders of UWC Finance s bonds resolved that the Series 01 bonds (worth of RUB 15 bln) redemption be shifted from 2016 to 2021 8.3 6.9 10.6 12.2 5.5 7.5 15.0 15.0 7.9 3.0 2016 2017 2018 2019 2020 2021 2022 2023 Bonds repayment Loans repayment Source: Company s management accounts Notes: (1) Excluding working capital loan in the amount of RUB 9 bln; (2) Subject to prolongation of Series 01 bonds; (3) Excluding bonds held by UWC s subsidiaries as at 31/12/2015
9 Attachment Financial Statements
UWC Profit Or Loss Statement 10 2014 2015 Revenue 17,057 42,088 Cost of sales, incl. (14,984) (37,865) Raw materials (8,745) (20,725) Depreciation (3,087) (5,305) Empty-run and costs (679) (5,065) Payroll and social funds (1,861) (3,916) Property tax (215) (628) Maintenance and repairs (125) (318) Other (272) (1,908) Gross profit 2,073 4,222 Selling, general and administrative expenses ( 1,645) (2,994) Share of profit / (loss) of associates and joint ventures (157) 189 Other operating income 153 265 Operating profit 424 1,682 Finance income 647 1,442 Finance costs (6,516) (10,091) Foreign exchange (loss)/income 4,605 (3,172) Loss before income tax (840) (10,140) Income tax benefit 1,389 463 Net profit/(loss) for the year 549 (9,676)
UWC Balance Sheet 1/2 11 31/12/2014 31/12/2015 ASSETS Non-current assets Property, plant and equipment 68,483 71,429 Prepayments for non-current assets 2,336 1,029 Intangible assets 2,839 13,993 Deferred tax assets 1,853 2,644 Investment in joint ventures 159 752 Loans receivable 1,659 1,354 Other receivables 30 - Finance lease receivables 261 244 Cash restricted - 1,782 Total non-current assets 77,619 93,226 Current assets Inventories 267 8,525 Trade and other accounts receivables 7,579 4,003 Finance lease receivables 9 17 Loans receivable 16,255 5,188 Prepayments for suppliers and other assets 705 1,566 VAT receivable 1,653 4,150 Cash and cash equivalents 2,387 3,207 Total current assets 28,855 26,657 TOTAL ASSETS 106,474 119,883
UWC Balance Sheet 2/2 12 31/12/2014 31/12/2015 EQUITY AND LIABILITIES Share capital issued 0,01 106 Share capital issued but not registered 100 - Additional paid-in capital 12,429 16,159 Accumulated loss (4,969) (14,645) Non-controlling interests 7,560 1,620 Total equity Non-current liabilities 44,493 55,835 Borrowings 27,892 15,000 Bonds non-current portion 1,201 916 Deferred tax liabilities 3 190 Other liabilities 73,588 71,942 Total non-current liabilities Current liabilities 16,954 15,286 Borrowings 6,358 12,697 Trade and other payables 1,396 4,232 Advances received and other current liabilities 19 3 Finance lease current portion 599 14,104 Bonds current portion 25,325 46,322 Total current liabilities 98,914 118,263 TOTAL LIABILITIES 106,474 119,883
UWC Cash Flow Statement 13 2014 2015 Operating activities Loss before tax (840) (10,140) Depreciation and amortization 3,120 5,321 Non-operating foreign exchange (gain)/loss, net (4,628) 3,172 Finance costs 6,516 10,091 Finance income (647) (1,442) Other 162 480 Working capital changes (6,109) 577 Cash from / (used in) operations (2,426) 8,061 Income tax paid (35) (370) Finance costs paid (4,947) (10,095) Net cash generated by operating activities (7,407) (2,405) Investing activities Payments for property, plant, equipment and intangible assets, net (15,894) (6,261) Loans granted (16,924) (14,782) Cash proceeds from redemption of loans granted 9,423 24,893 Interest received 111 1,301 Net cash outflow on acquisition of subsidiaries and joint ventures (500) (4,223) Net cash used in investing activities (23,784) 928 Financing activities Proceeds from borrowings and issuance of bonds 84,920 9,702 Repayment of borrowings (55,842) (5,895) Shareholder s capital contribution, net 3,866 3,735 Other (27) (4,546) Net cash used in financing activities 32,918 2,996 Net cash flow 1,726 1,520
Contacts 14 Investor Relations +7 (499) 999 15 20 IR@uniwagon.com http://www.uniwagon.com/ Research and Production Corporation United Wagon Company 7/11 bld. 1, Novokuznetskaya st., Moscow, Russia, 115184 Office: +7 (499) 999 15 20 Fax.: +7 (985) 999 15 21