Annual Report
& Accounts
Presentation of Financial
and Other Information
All financial information presented
in this Annual Report is derived
from the Consolidated Management
Report and Consolidated Financial
Statements of Globaltrans Investment
PLC (the “Company” and, together
with its consolidated subsidiaries,
“Globaltrans” or the “Group”) and has
been prepared in accordance
with International Financial
Reporting Standards as adopted
by the European Union and the
requirements of Cyprus Companies
Law, Cap. 113 (EU IFRS). The Group’s
Consolidated Management Report
and Consolidated Financial
Statements and the Parent Company
Financial Statements for the year
ended 31 December 2020 are
included in the Financial Statements
section of this Annual Report.
Financial statements for prior
years can be found on Globaltrans’
corporate website (www.globaltrans.
com). The presentational currency
of the Group’s financial results
is the Russian rouble (RUB), which
is the functional currency of the
Company as well as of its Cypriot
and Russian subsidiaries. Certain
financial information derived
from management accounts
is marked in this Annual Report with
an asterisk (*).
In this Annual Report, the Group
has used certain “non-IFRS financial
information” (i.e. measures not
recognised by EU IFRS or IFRS) as
supplementary explanations of the
Group’s operating performance.
Information (non-IFRS financial
and operating measures) requiring
additional explanation or defining
is marked with initial capital letters
and the explanations or definitions
are provided at the end of this
Annual Report. Reconciliations of the
non-IFRS measures to the closest
EU IFRS measures are included
in the body of this Annual Report.
Rounding adjustments have been
made in calculating some of the
financial and operational information
included in this Annual Report. As
a result, numerical figures shown
as totals in some tables may not be
exact arithmetical aggregations of the
figures that precede them.
This Annual Report, including its
appendices, may contain forward-
looking statements regarding
future events or the future financial
performance of the Group. Forward-
looking statements can be identified
by terms such as "expect," "believe,"
"estimate," "anticipate," "intend,"
"will," "could," "may" or "might,"
and the negative of such terms or
other similar expressions. By their
nature, forward-looking statements
involve risks and uncertainties,
because they relate to events
and depend on circumstances
that may or may not occur in the
future. The Group cautions that
forward-looking statements are not
guarantees of future performance
and that the Group’s actual
results of operations, financial
condition, liquidity, prospects,
growth and strategies, and the
development of the industry in which
the Group operates, may differ
materially from those described in or
suggested by the forward-looking
statements contained in this Annual
Report. For a detailed description
of the presentation of financial
and other information, please
see the Presentation of Financial
and Other Information section of this
Annual Report.
Contents
Overview
Corporate Governance
6
8
Highlights of 2020
86 Board of Directors
At a Glance
92 Executive Management
12 Our Assets
14 Our History
16 Our Industry
96 Corporate Governance Report
108 Share Capital
109 Corporate Structure
Strategic Report
Financial Statements
20 Chairman’s Statement
110 Consolidated Management Report
26 Our Strategy
28 CEO Review
32 Market Review
and Consolidated Financial Statements
256 Management Report and Parent Company
Financial Statements
36 Financial and Operational Review
56 Risk Management
66 Sustainability
Additional Information
358 Selected Operational Information
364 Definitions
368 Presentation of Financial and Other Information
370 GRI Content Index
374 Contacts
4
4
4
Globaltrans Investment PLC
Globaltrans Investment PLC
Annual Report & Accounts 2020
Annual Report & Accounts 2020
01
01
Overview
Overview
02
02
Strategic
Strategic
Report
Report
03
03
Governance
Governance
04
04
Financial
Financial
Statements
Statements
05
05
Additional
Additional
Information
Information
Globaltrans Investment PLC
Globaltrans Investment PLC
Annual Report & Accounts 2020
Annual Report & Accounts 2020
5
5
5
Overview
Overview
Highlights of 2020
At a Glance
Our Assets
Our History
Our Industry
6
8
12
14
16
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 6
6
Globaltrans Investment PLC
Annual Report & Accounts 2020
Annual Report & Accounts 2020
01
01
Overview
Overview
02
Strategic
Strategic
Report
Report
03
Governance
04
Financial
Statements
05
Additional
Information
7
Highlights
of 2020
Weathering the storm: industry outperformance,
increased Free Cash Flow, strong 2020 dividends
delivered as targeted
+2.2 %
year-on-year increase
in Freight Rail
Turnover
45 %
Gondola Empty
Run Ratio
(2019: 42%)
64 %
Share of Net Revenue
from Operation of Rolling
Stock contributed
by service contracts
RUB 26.8 bln
Adjusted EBITDA
(down 32% y-o-y)
RUB 15.1 bln
Free Cash Flow
(up 14% y-o-y)
1.01x
Net Debt
to Adjusted EBITDA
(2019 end: 0.60x)
RUB 74.55
per share/GDR1
Combined 2020 interim
and final dividends
1 Global Depositary Receipt ("GDR").
The spread of the COVID-19 virus
disrupted economic activity across
Russia. Our industry did not escape
the impact of this, although it was
very much a year of two halves
for freight rail transportation.
In the first half of 2020, demand
slumped as the sector suffered
the full economic impact
of COVID-19; in the second half,
our markets recovered and overall
freight rail turnover returned
to pre-COVID levels.
Globaltrans again delivered
a resilient business performance
even at this exceptionally
challenging time. We outperformed
the market in freight rail
turnover, secured further
new contracts and extensions
of existing contracts, and invested
in the growing specialised
container transportation segment.
Although our financial results
were inevitably impacted by the
weak market conditions, our
focus on cost control and CAPEX
flexibility resulted in the Group
delivering increased Free
Cash Flow and solid dividends
for shareholders as targeted
and announced beforehand.
I am very proud of the spirit,
commitment and agility shown
by our workforce in responding
to what has been a very demanding
environment over the past year.
Valery Shpakov
Chief Executive Officer
See more at CEO Review (p. 28)
Industry outperformance
and robust client retention
Strong 2020 dividends
delivered as targeted,
H1 2021 dividend target set
• As targeted, strong total 2020
dividends of RUB 13.3 billion
or RUB 74.55 per share/GDR
delivered (including interim
and final dividends). Total 2020
dividends equate to 99% of the
Group’s Attributable Free Cash Flow
for 2020.
Interim 2021 dividends of a minimum
of RUB 3.0 billion or about RUB 16.78
per share/GDR targeted reflecting
conservative financial policies
and ongoing pricing pressure
in gondola segment.
•
Consistent focus
on shareholder value creation
• Secondary listing on Moscow
Exchange undertaken in October
2020 driving almost three-fold rise
in combined liquidity
on London Stock Exchange
and Moscow Exchange3.
• Share buyback programme
(for up to 5% of the share capital)4
is on track providing ongoing
support during market volatility.
• Globaltrans’ Freight Rail Turnover
rose 2.2% year on year in contrast
to market decline, supported
by powerful operating model
enabling efficient switching
between cargo groups.
• Service contracts portfolio
successfully extended (Rosneft,
MMK, Metalloinvest), new one-year
contract concluded with EVRAZ.
• Gondola Empty Run Ratio
rose to 45% (2019: 42%) but
remained one of the lowest
in the Russian market despite
the substantial volatility in client
cargo flows and routes driven
by unprecedented COVID-19
lockdowns.
Efficient cost control,
increased Free Cash Flow
and continued low leverage
• Adjusted EBITDA at RUB 26.8 billion
(–32% year on year) largely driven
by weakness in gondola segment
pricing.
• Total Operating Cash Costs were
reduced 1% year on year due
to cost optimisation measures.
• 14% year-on-year increase
in Free Cash Flow to RUB 15.1 billion2
supported by flexible expansion
CAPEX (–83% year on year).
• Low leverage with Net Debt
to Adjusted EBITDA at 1.01x
(2019 end: 0.60x).
The summary information on pages 6 and 7 covers the Group’s key
financial and operating performance indicators. These include non-IFRS
measures that the Group believes are helpful to investors in analysing
the Group’s performance and well understood in the freight rail
transportation industry. The key non-IFRS financial metrics are not a substitute
for the IFRS financial information included and discussed in the Financial
and Operational Review section of this Annual Report.
2 Free Cash Flow is presented net of principal elements of lease payments for leases with financial institutions for both years (2019 and 2020).
During the first half of 2020 the entire financial lease portfolio was refinanced to bilateral loans, therefore principal elements of lease payments
were eliminated from both years for comparison purposes.
3 Calculated as combined Average Daily Traded Volumes in US dollar terms (ADTV) on MOEX and LSE since secondary listing at MOEX comparing
to ADTV at LSE for six months prior to secondary listing.
4 The Annual General Meeting of shareholders (AGM) approved on 29 April 2021 the renewal of the buyback programme (for up to 5% of the share
capital) for twelve months from the date of the respective AGM and authorised the means of disposition of the resulting treasury shares.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
8
8
Globaltrans Investment PLC
Annual Report & Accounts 2020
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
Globaltrans Investment PLC
Annual Report & Accounts 2020
9
9
At a Glance
Who we are
Robust business model and efficient operations
• Strong positions in key freight rail segments
of metals and oil products and oil
• Diversified blue-chip customer portfolio,
underpinned by long-term service agreements
Industry-leading operational efficiency
•
• Founded and led by entrepreneurs
with a focus on quality and innovation
• Well-invested, diversified fleet assets
Best-in-class governance
• Compliance with best-practice governance standards
• Dual-listed on LSE and MOEX
• Sustainable business with a strong ESG focus
• Experienced Board and management team
Strong Free Cash Flow generation
and robust financial profile
• Revenues underpinned by multi-year outsourcing
What we do
71.7 ths
Units
Total Fleet
contracts
• Efficient cost control
• Strong Free Cash Flow generation supported
We are leaders in the provision of complex freight rail
logistics and transport services to leading industrial
companies in the region in our targeted market
by fully discretionary expansion CAPEX
segments of metals and mining and oil products
and oil as well as in other segments.
• Conservative balance sheet
Attractive dividend returns to shareholders
• Track record of consistent dividends and
Our customers benefit from our state-of-the-art
logistics, large and modern fleet, customer focus
and innovation drive.
meeting dividend guidance
• Semi-annual dividend payments
• Clear dividend policy that distributes excess
cash not used for expansion as dividends,
subject to Leverage Ratio
What we do
MARKET SHARE1,
2020, %
NET REVENUE FROM OPERATION OF ROLLING STOCK
BY CARGO TYPE1, 2020, %
We are leaders in the provision of complex freight rail
logistics and transport services to leading industrial
companies in the region in our targeted market
segments of metals and mining and oil products
and oil as well as in other segments.
Our customers benefit from our state-of-the-art
logistics, large and modern fleet, customer focus
and innovation drive.
Russia's freight rail transportation volumes
7.6%
Metallurgical cargoes
19.7%
7%
4%
17%
Oil products and oil
8.9%
Coal
4.4%
Construction materials
6.6%
38%
34%
Metallurgical cargoes
Oil products and oil
Coal
Construction materials
Other
Source: Globaltrans
Source: Globaltrans
1 Metallurgical cargoes including ferrous metals, scrap metal and iron ore; coal including coke; construction materials including cement.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
10
10
Globaltrans Investment PLC
Annual Report & Accounts 2020
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
Globaltrans Investment PLC
Annual Report & Accounts 2020
11
11
At a Glance
We deliver a consistent flow of value to our clients
through our pursuit of operational and service excellence.
Our operating platform is fundamental to our success
How we deliver value
Sophisticated logistics
We are experts at managing complex cargo logistics that
improve our customers’ productivity, saving them time
and money.
Sector-leading operational efficiency
Our centralised gondola dispatching hub is the nerve centre
of our railcar operations. Working round-the-clock, it ensures
our fleet works efficiently, maintains high utilisation levels
and low Empty Runs, which in turn drives profitability.
High quality long-term client base
We are trusted partners for our clients, who range from large
industrial groups to smaller, more specialised companies.
We focus on long-term outsourcing partnerships, whereby
we handle most of a client’s freight rail logistics.
Our clients benefit from operational scale, round-the-clock
services, state-of-the-art logistics, and access to one
of the largest fleets in Russia.
Improved productivity due to in-house locomotives
Our in-house locomotive fleet transport oil products and oil
in block trains where all the cargo is bound for a single
destination, obviating the need to stop at multiple sorting
stations, which optimises delivery schedules and fleet
utilisation.
NET REVENUE FROM OPERATION
OF ROLLING STOCK BY LARGEST
CLIENTS (INCL. THEIR AFFILIATES
AND SUPPLIERS), 2020, %
28%
1%
1%
25%
GONDOLA LOGISTICS KEY ILLUSTRATIVE ROUTES
Kamennogorsk
Novy Port
Export
Khanty-Mansi AO
Yamalo-Nenets AO
Denisovsky
Cherepovets-2
Vorontskova
Lena
Vostochnaja
Berkakit
Moscow
Smychka
Yegozovo
Kiltchug
Zheleznogorsk
Pervouralsk
Polevskoy
Stoylenskaya
Trubnaya
Taganrog
Metallurgicheskaya
Yekaterinburg
Belovo
Kamensk-
Uralsky
Chelyabinsk
Yuzhny
Novokuznetsk
Mezhdurechensk
Novorossiysk
Export
Zhirnov
Magnitogorsk
Novotroitsk
HISTORICAL EMPTY RUN RATIO, 2016–2020, %
2020
2019
2018
2017
2016
45%
42%
38%
37%
38%
Bazaikha
Cargo routes:
Grodekovo
Export
Vladivostok
Export
Zabaykalsk
Export
Metals
Iron ore
Pipes
Scrap metal
Crushed stone
Coal
Empty Runs
45,647
Gondolas
64% of Total Fleet
Total Empty Run Ratio
(for all types of railcars)
Empty Run Ratio for gondola cars
14%
4%
7%
13%
3%
2%
2%
Rosneft
MMK
Metalloinvest
Gazprom Neft
TMK
EVRAZ
UGMK-Trans
TAIF
SDS-Ugol
ChelPipe
Other
(incl. small
and medium enterprises)
Source: Globaltrans
Source: Globaltrans
Source: Globaltrans
51% 49% 46% 45% 48%Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
12
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
13
Our Assets
71.7 ths
units
Total Fleet
12.4 years
Average age of Owned Fleet
One of the largest most modern railcar fleets in Russia
FLEET COMPOSITION
<1%
3%
5%
28%
64%
Gondola cars
Tank cars
Specialised containers
Other railcars
Locomotives
Operational flexibility maintained
by striking appropriate balance
between Owned Fleet (95%)
and Leased-in Fleet (5%).
Fleet composition matches serviced
industrial segments: 64% are universal
gondola cars for bulk cargoes,
28% are tank cars for liquid cargoes
and 8% are niche specialist units.
Average age of railcar fleet at 12
years is roughly 1/2 the useful life
of an average gondola car and 1/3
that of an average tank car.
Growing presence in high-value rail
transport niches: petrochemicals
and high-grade steel products.
Outstanding fleet maintenance
programme maintains our focus
on operational and service
excellence.
OPERATIONAL FLEXIBILITY
5%
95%
Owned Fleet
Leased-in Fleet
Source: Globaltrans
Source: Globaltrans
GONDOLA CARS
TANK CARS
• Open-top, high-sided universal
• Designed to carry liquid cargoes
railcar
• Backbone of Globaltrans’ fleet
• Designed to carry bulk
cargoes like metals, ores, coal,
construction materials, etc.
• Able to be redeployed quickly
between different bulk cargoes
in response to changes in market
demand
including oil and petroleum
products, chemicals, liquefied gas
and other liquid substances
• Principally used by Globaltrans
in the transportation of oil
products
SPECIALISED CONTAINERS
(INTERMODAL)
• Designed to be moved between
different modes of transport without
any handling of the freight itself
• Globaltrans operates mostly tank
containers used to transport
petrochemicals and specialised
containers to transport high-quality
steel products
45,647
units
64% of Total Fleet
20,417
units
28% of Total Fleet
3,334
units
5% of Total Fleet
OTHER RAILCARS
LOCOMOTIVES
• Globaltrans’ fleet largely
includes flat cars among
the other cars used to carry
specialised containers
• Globaltrans has its own
mainline locomotive fleet,
which hauls block trains
principally in the oil products
and oil segment
2,216
units
3% of Total Fleet
Source: Globaltrans
74
units
<1% of Total Fleet
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 14
14
Globaltrans Investment PLC
Annual Report & Accounts 2020
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
Over
70ths
units
Total Fleet
2019
Service contracts
extended with MMK
(to end Sep 2022)
and Metalloinvest
(to end 2020), in line
with the Group’s
strategy to develop
its outsourcing client
partnerships.
A new three-year service
contract (to end
June 2022) signed
with Gazprom Neft,
a long-standing client
of the Group.
A new service for the
steel industry launched,
transporting high-quality
rolled steel in specialised
containers.
Over
69ths
units
Total Fleet
2018
The Group celebrated its 10th
anniversary of its Main Market
listing on the London Stock
Exchange.
Partnership with MMK
extended to end Sep 2020.
Two new five-year service
contracts signed: with TMK,
a leading global manufacturer
and supplier of steel pipes
for the oil and gas industry
and with ChelPipe Group,
a leading Russian manufacturer
of pipe products and provider
of integrated solutions for fuel
and energy companies.
Over
66ths
units
Total Fleet
2017
The enhanced
Dividend Policy
introduced
linking dividends
to Attributable
Free Cash Flow
and Leverage
Ratio.
2016
Extended
long-term
partnerships
with Rosneft (five
years) and with
Metalloinvest
(three years).
Our History
Globaltrans was formed in 2004 as a merger of two
entrepreneur-led companies and from these roots has grown
to become one of the leading freight rail transportation
groups in Russia and the CIS. Through strong organic
growth and acquisition of both railcars and other freight rail
businesses, we have created a profitable company
with best-in-class capabilities.
Our commitment to transparency and corporate governance
helped us to become the first freight rail group focused
on Russia to list on an international stock exchange. Since
the Group's Initial Public Offering (IPO) on the London Stock
Exchange in 2008, we have continuously focused on value
creation and growth and today operate a fleet that is three
times larger than at the time of our IPO.
In 2020 we additionally listed our GDRs on the Moscow
Exchange to diversify our investor base.
Over
37ths
units
Total Fleet
2009
Secondary Public
Offering (SPO)
to fund further
business
expansion.
Over
26ths
units
Total Fleet
2008
Successful IPO
on the London
Stock Exchange.
Over
50ths
units
Total Fleet
2010
Organic
expansion of the
business —
purchases
of new rolling
stock and the
expansion of the
Leased-in Fleet.
Ukrainian
subsidiary created
and Estonian
tank car leasing
business
acquired.
Acquisition
of 50% stake
in BaltTransServis,
increasing the Group’s
presence in the oil
products and oil sector.
2014–
2015
The Group's
corporate
structure
simplified to drive
efficiency and cut
costs.
Formed
specialised
SyntezRail
subsidiary
with partners
to transport
petrochemicals
in tank containers.
2013
Acquired
MMK-Trans,
the captive freight
rail operator
of MMK Group,
one of the world’s
largest steel
producers.
Signed a long-
term outsourcing
contract with MMK.
Created a single
24/7 gondola
dispatching
centre.
2012
Acquired
Metalloinvesttrans,
the captive freight
rail operator
of Metalloinvest,
a leading producer
of hot briquetted
iron (HBI), iron ore
products and high-
quality steel.
Signed industry’s
first ever long-
term outsourcing
contract with
Metalloinvest.
2004
Established
as a merger
of two
entrepreneur-
led companies.
More than 16 years
of growth and leadership
Globaltrans Investment PLC
Annual Report & Accounts 2020
15
15
2021
The service
contract with
Rosneft extended
for a further five
years until end
Mar 2026.
Established ESG
Committee.
Over
71ths
units
Total Fleet
2020
Globaltrans' GDRs
began trading
on MOEX on 28 Oct
2020. The GDRs have
ticker symbol GLTR
and are included
in Level One, MOEX’s
highest quotation list.
The service contract
with MMK was
extended for a further
two years and is now
valid until the end
of Sep 2024.
The service contract
with Metalloinvest was
extended for a further
one-year period to the
end of 2021.
Globaltrans has
expanded its
cooperation with
EVRAZ signing
a one-year contract.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 16
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
17
Our Industry
Russia's rail network
at a glance
3 rd
largest rail network
links the world’s
largest country across
11 time zones
Vital
strategic asset
connecting Russia
to the global
economy
Freight rail powers
the economy
responsible for
87 %
of all Russian freight
turnover excluding
pipeline traffic
Globaltrans' operating subsidiaries,
their branches and representative
offices
Russia’s rail network’s
key illustrative routes
2.5 tn
overall freight rail
turnover in 2020
(tonnes-km)
Sustainable
choice: most eco-friendly means
of long-distance freight transportation
Vibrant deregulated
freight rail sector
~88 %
of total Russia's railcar fleet
is controled by private players
Long-term
structural
Growth
drivers backed by government
rail infrastructure investment into extension
of the Far East railway corridor
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 18
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
Strategic
Report
Chairman’s Statement
Our Strategy
CEO Review
Market Review
Financial and Operational Review
Risk Management
Sustainability
DIRECTORS’ RESPONSIBILITY
Each of the Directors confirms that, to the best
of his or her knowledge, the Strategic Report
presented on pages 18 to 83 of this Annual Report
includes a fair review of the development
and performance of the business and the position
of Globaltrans Investment PLC and its subsidiary
undertakings, included in the consolidation taken
as a whole, together with a description of the
principal risks and uncertainties they face.
By order of the Board,
Sergey Tolmachev
Director
19
20
26
28
32
36
56
66
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 20
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
21
Chairman’s
Statement
DEAR SHAREHOLDERS,
2020 was, by any definition,
an exceptionally challenging
year. We have long experience of
successfully navigating through
tough markets, and last year
was no exception.
Sergey Maltsev
Chairman
Chief Strategy Officer
Co-founder and shareholder
RUB 13.3 bln
Total 2020 dividends, including
interim, final and special
RUB 74.55
Total 2020 dividends
per share/GDR
We again outperformed the industry, extended
important service contracts, generated strong
Free Cash Flow, and despite the unprecedented
conditions delivered strong dividends
as targeted and previously announced.
Throughout this unprecedented period,
the Group was sustained by the quality of its
management, the resilience of its business
model, and the strength of its people.
Inevitably, the abrupt changes in the trading
environment as a result of the COVID-19
pandemic impacted our financial results.
Nevertheless, it is reassuring that the Group
was still able to deliver strong Free Cash Flow
(up 14% year on year) and dividends in line with
expectations by controlling costs and flexing
expansion CAPEX. The Group's performance
in a challenging year speaks to the underlying
robustness of the business.
Operationally, our performance was strong,
highlighting the professionalism of our team
and the effectiveness of our business model.
Once again outperforming the market in terms
of freight rail turnover, we also were able
to further develop our client partnerships.
We signed a new one-year contract with EVRAZ,
one of the leading steel and coal producers,
deepening that relationship, as well as agreeing
separate important contract extensions with
MMK and Metalloinvest, both longstanding
customers of the Group. In April 2021, we
were proud to extend our service contract
with Rosneft, another key client, which is a
testament to the high quality and reliability
of our service.
The year also marked another important
milestone in the Group’s corporate
development when Globaltrans became
the first company in the freight rail sector
to list its GDRs on the MOEX. The secondary
listing on MOEX has raised the Group’s profile
and increased the availability of its GDRs.
We expect the listing will further expand
the Group’s shareholder base, including among
the growing base of retail investors in Russia.
Since October’s listing on MOEX, the combined
average daily trading volumes in Globaltrans
GDRs on LSE and MOEX have increased almost
three-fold1.
1 Calculated as combined Average Daily Traded Volumes in US dollar terms (ADTV) on MOEX and LSE since secondary listing at MOEX
comparing to ADTV at LSE for six months prior to the secondary listing.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 22
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
23
Chairman’s
Statement
COVID-19 response
Board and governance
Sustainability
Our industry
Our response to the evolving
situation in 2020 as a result of the
COVID-19 pandemic was an excellent
demonstration of the Group’s can-
do culture. Despite the pandemic’s
disruptive impact on the economy,
our teams kept operations
running throughout, always with
an unwavering focus on our clients
and a commitment to supporting
each other.
At the onset of the COVID-19
pandemic in February 2019, our
priority was to protect the health
and wellbeing of our employees and
customers while seeking to ensure the
continuity of operations. We resisted
making COVID-related redundancies
as we believed that by remaining
fully staffed and operational we
could better support our customers
and communities through the period
of the pandemic.
I want to express my thanks to our
employees for their hard work,
resilience and focus. The Board is
very proud of how the whole team
pulled together to deliver what was,
in the circumstances, a positive set
of results in 2020.
Good governance underpins
successful business performance
and never has that been truer than
over the last twelve months. I am
fortunate to lead an experienced
and stable Board of Directors,
whose diverse skills and experience
complement the talents of the
executive team. While COVID-19 was
a true test of the Board’s oversight
skills, it also served to demonstrate
the quality of our Board and executive
team. Responding to the pandemic’s
spread, the Board moved quickly
and decisively to maintain business
operations, safeguard our employees
and support our customers. These
actions ensured that throughout the
year Globaltrans continued operating
and providing a full service to its
customers.
We focused on maintaining
transparency and keeping
communication channels open
during the pandemic. We successfully
launched a new bilingual corporate
website, containing a host of features,
including intuitive navigation,
increased functionality and an
interactive centre. Our investor
communications programme in 2020
was inevitably impacted by the
various travel bans and stay-at-home
orders. However, the team adapted
quickly, reverting to online meetings
with investors; in all, we conducted
almost the same number of meetings
with investors as the year before.
The COVID-19 pandemic has
highlighted the attractions of rail
as a sustainable, efficient mode
of transport. I believe that this
could spark a more permanent
shift in the fortunes of the freight
rail sector globally. Rail is a better,
greener alternative to other modes
of freight transport, especially road,
and will be a key agent in the drive
to decarbonise the global transport
industry. As a freight rail operator,
we recognise our responsibility
to manage the impact our business
has on the environment.
Companies increasingly need
to align their business standards,
culture and strategy with the social,
economic and environmental needs
of their stakeholders. As a responsible
business, the Board and executives
at Globaltrans are working to enshrine
sustainable, responsible and ethical
practices into everything we
do. The Board established the
ESG Committee in January 2021
to oversee the Group’s environmental,
social and governance strategy
and activities, which will ensure we
stay at the forefront of this important
area.
Further details of the Group’s
progress in sustainable
development are contained
in our Integrated Sustainability
Report.
The COVID-19 pandemic has served
to highlight some important trends
and features of the industry.
First, it has reinforced the systemic
importance of the freight rail
industry in Russia, and its role as
the logistical backbone of the
country. It has shown that running
trains efficiently and keeping supply
chains open through both domestic
and international corridors are
essential to the economy and for
the comfort of our society, especially
when travel is restricted. The fact that
the whole sector continued to operate
largely uninterrupted through
the crisis highlights the resilience
of rail as a key mode of transport.
Second, it has highlighted the long-
term growth trends in cross-border
transported volumes and traffic,
especially between Russia and Asian
countries. It is interesting to note that
despite the pandemic, freight rail
turnover bounced back in the second
half as the global economy began to
reopen, with freight turnover actually
surpassing the previous year’s result.
At present, the Far Eastern rail
infrastructure is operating right
on the limits in terms of carrying
capacity, which the government
and JSC Russian Railways ("RZD")
are racing to address with about
17% more throughput capacity
delivered in 2018–2020 and an
additional expansion of about 26%
targeted by the end of 2024.
These programmes provide a basis
for increasing overall cargo volumes
for the Russian freight rail sector, and,
as I stated last year, the companies
that will benefit most will be those
like us that have the specialist
expertise, customer relationships,
fleet and finances to manage greater
throughput volumes.
Third, it has underlined
the importance of innovation,
adaptability and customer focus,
features that have their origin
in the practices introduced
by entrepreneurial commercial
operators like Globaltrans when
the industry deregulated in the early
2000s. The rail freight industry has
demonstrated strong adaptation skills
with many tasks being performed
remotely, staff working from home,
and physical interaction reduced
to a minimum. Looking ahead,
I would expect that the COVID-19
pandemic will lead to further process
improvements and accelerate
digitalisation, which can only improve
the resilience and stability of the
sector.
Dividends and share buyback
Having been through several
economic cycles, we are determined
to maintain our cost and capital
discipline. In 2017, we reviewed
the Group’s capital allocation
to ensure that we struck the right
balance between supporting
growth, maintaining appropriate
leverage and returning excess capital
to shareholders. This formula has
served us well, providing a solid
cushion from which to pay robust
dividends. In a year that saw many
companies cancel dividend payments
to shareholders, Globaltrans once
again announced target dividends,
delivering on stated targets without
compromising its business in any way.
The total dividends payable
to shareholders in respect of 2020,
including interim, final and special,
amounted to RUB 13.3 billion
(RUB 8.3 billion in respect of the
first half 2020 and RUB 5.0 billion
in respect of the second half 2020),
or RUB 74.55 per share/GDR,
equivalent to 99% of the Group’s
Attributable Free Cash Flow for the
year.
Dividend distribution remains
a priority for the Company in 2021.
Our efficient business model, cost
discipline and opportunistic CAPEX
management are solid foundation
for ongoing dividend payments
throughout the cycle.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 24
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
25
Chairman’s
Statement
Summary
In 2020, the Group responded well
to the unprecedented circumstances
brought about by the COVID-19
pandemic. We ensured that our
employees, clients and communities
were properly supported without
compromising the health and safety
of our people. We acted quickly
to switch to less affected cargoes
and made a huge effort to ensure
that we kept our operations running
throughout the period. Our business
model again proved itself in difficult
markets, and we maintained our
reputation as one of the most efficient
rail operators in the industry, with
the result that we outperformed
the market and reinforced our market
positions.
In the short-term, the outlook
for markets is predicated on how
quickly economies can rebound from
COVID-19. As I said at the beginning,
Globaltrans has core strengths that
have enabled it to successfully
navigate challenges and we are
therefore well-placed to deliver another
year of progress on our plans.
Sergey Maltsev
Chairman
Chief Strategy Officer
Co-founder and shareholder
The Board is targeting a minimum
total interim dividend of RUB 3.0
billion (about RUB 16.78 per share/
GDR) in respect of the first half
of 2021 reflecting its conservative
financial policies along with ongoing
pricing pressure in the gondola
segment.
Our share buyback programme
for up to 5% of share capital which
commenced in May 2020 is on track.
As we made clear at that time, buying
back shares is a secondary avenue
for returning capital to shareholders
and one we access at times
of serious market dislocations,
provided there is available excess
liquidity. The Annual General
Meeting of shareholders in April
2021 approved the renewal of the
programme for an additional twelve
months.
Our Approach to Dividends
The Group’s Dividend Policy strikes a balance between investing in business
expansion and delivering returns to shareholders. This means:
• with a focus on maximising shareholder
value, the policy boosts pay-outs during
low investment cycles and limits them
in periods when sizeable expansion
opportunities meeting Globaltrans’ strict
return criteria are identified;
• having a clear formula linking dividends
to Attributable Free Cash Flow
and Leverage Ratio1 providing flexibility
and transparency in capital allocation.
Leverage Ratio
Dividends as a % of Attributable Free Cash Flow
Less than 1.0x
Not less than 50%
From 1.0x to 2.0x
Not less than 30%
2.0x or higher
0% or more
To view the Dividend Policy, please visit
our corporate website www.globaltrans.com
DIVIDEND HISTORY, RUB PER SHARE/GDR, IN RESPECT OF RELATED FINANCIAL YEAR/PERIOD2
89.65
44.80
44.85
92.40
93.10
74.55
45.90 46.50 46.55 46.55
46.55
39.20
28.00
22.20
22.28
18.86
12.41
10.34
4.42
2009 2010
2011
2012
2013 2014 –
20153
2016
H1
20174
H2
20174
H1
20184
H2
20184
H1
20194
H2
20194
H1
20204
H2
20204
Declared after approval of enchanced Dividend Policy
1 The Board of Directors of Globaltrans reserves the right to recommend to the General Meeting of shareholders dividends in the amount calculated
on a reasonable basis other than described in this Annual Report in its sole discretion. For more details please see the Dividend Policy as adopted
by the Board on 31 March 2017 and amended on 24 August 2018, which is available at www.globaltrans.com.
2 Prior to 2016, dividends on Globaltrans shares/GDRs were declared and paid in US dollars, thus the amounts in Russian roubles are presented
for information purposes only and calculated at the Central Bank of Russia’s official exchange rate for the Russian rouble as of the date of the General
Meeting that approved the respective dividend. From 2016, dividends on Globaltrans shares/GDRs are declared in Russian roubles and paid in US
dollars.
3 The dividend declared in 2016 related to both the 2014 and 2015 financial years.
4 Including regular and special dividends.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
26
26
Globaltrans Investment PLC
Annual Report & Accounts 2020
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
Globaltrans Investment PLC
Annual Report & Accounts 2020
27
27
Our Strategy
Vision
Our shared principles
Our vision is to maintain our position as a leading
freight rail group with operations in Russia, Belarus,
Ukraine, Kazakhstan and other countries and to
be the partner of choice for blue-chip industrial
customers by continually developing our service
offering to ensure we meet customers’ changing
needs.
Strategic priorities
Promote
a strong
entrepreneurial
and governance
culture
Strategic
priorities
Deliver
operational excellence
and efficiency
in operations
Focus
on opportunistic
investments and pursue
prudent capital allocation
Value customers:
they are at the heart
of our business and we
work hard to exceed their
expectations.
Deliver excellence:
we strive to excel
in everything that we do.
Prioritise safety:
safety is our number one
priority and we strive to act
safely and responsibly at all
times.
Respect people:
we respect the rights of all
employees and invest in their
training and development.
Uphold good governance:
we aim to pursue a course
that benefits all stakeholders.
Protect our environment:
we value our communities
and the world around
us and treat them with
the respect and consideration
they deserve.
Strategy
Historical key financial results
Our strategy is to offer our industrial
customers reliable and innovative
transportation solutions aimed
at achieving the cost-effective
and timely management of their
cargoes. We invest opportunistically
to grow our business, subject
to strict returns criteria,
and maintain a conservative balance
sheet. Together these underpin our
ability to create sustainable value
for our shareholders, employees
and other stakeholders.
Our entrepreneurial spirit,
disciplined approach and focus
on logistical efficiency
and innovation are central
to delivering this strategy. Along
with our sizeable modern fleet
and advanced logistical platform,
they form our key competitive
advantages. By focusing on long-
term outsourcing partnerships, we
can use our deep understanding
of our clients’ needs to improve our
service quality whilst increasing our
logistical efficiency.
We allocate our capital prudently,
investing in attractive growth
opportunities when they
arise and returning capital
to shareholders at times when
such opportunities do not exist.
We review both organic and non-
organic prospects subject
to our strict returns criteria.
Maintaining a strong balance sheet
is fundamental for us, ensuring we
can seize the right opportunities
and still remain flexible to any
changes in the business or market
environment.
ADJUSTED REVENUE, RUB BLN
ADJUSTED EBITDA, RUB BLN
44.2 52.1
60.9
68.8 54.9
17.7
25.8 33.1 39.6 26.8
2016 2017 2018 2019
2020
2016 2017 2018 2019
2020
ADJUSTED EBITDA MARGIN, %
FREE CASH FLOW1, RUB BLN
40
50
54
57
49
8.9
17.0 12.3 13.3 15.1
2016 2017 2018 2019
2020
2016 2017 2018 2019
2020
NET DEBT TO ADJUSTED EBITDA,
YEAR END
TOTAL DIVIDENDS2,
RUB PER SHARE/GDR
0.7
0.4
0.6
0.6
1.0
39.2 89.65 92.4 93.1 74.55
2016 2017 2018 2019
2020
2016 2017 2018 2019
2020
Source: Rosstat
1 Free Cash Flow is net of principal elements of lease payments for leases with financial
institutions presented for both periods (2019 and 2020). During H1 2020 the entire financial
lease portfolio was refinanced to bilateral loans, therefore principal elements of lease
payments were eliminated from both periods for comparison purposes.
2 Total dividends (including interim, final and special) in respect of declared year.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
28
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
29
CEO Review
DEAR SHAREHOLDERS,
The spread of the COVID-19 virus
disrupted economic activity across
Russia. Our industry did not escape
the impact of this although it was very
much a year of two halves for freight rail
transportation.
In the first half of 2020, demand slumped
as the sector suffered the full economic
impact of COVID-19; in the second half,
our markets recovered and overall freight
rail turnover returned to pre-COVID
levels.
Globaltrans again delivered a resilient
business performance even at this
exceptionally challenging time. We
outperformed the market in freight
rail turnover, secured further new
contracts and extensions of existing
contracts, and invested in the growing
specialised container transportation
segment. Although our financial results
were inevitably impacted by the weak
market conditions, our focus on cost
control and expansion CAPEX flexibility
resulted in the Group delivering
increased Free Cash Flow and solid
dividends for shareholders as targeted
and announced beforehand.
I am very proud of the spirit,
commitment and agility shown by our
workforce in responding to what has
been a very demanding environment
over the past year.
Valery Shpakov
Chief Executive Officer
Managing COVID-19 risks
Highlights
At the outset of the pandemic,
we identified the key priority areas
we needed to focus on: safeguarding
the health and safety of our
employees, supporting our customers,
and ensuring the business stayed
fully operational. All subsequent
management decisions were made
with these priorities firmly in mind.
In 2020, we once again outperformed
the market. By leveraging our
operating platform to efficiently
switch between cargoes depending
on demand, the Group’s Freight Rail
Turnover grew 2.2% year on year,
despite the market suffering a 2.2%
decline.
Safety is management’s top
priority and in the heightened risk
environment we were operating
in last year, it took on even greater
urgency. We quickly instituted
additional precautions to protect
the health and wellbeing of our
employees and engaged with them
to ensure appropriate measures
were being taken. We made sure
we were operating within the rules
and guidelines set out by the
government such as introducing
distance working where it was
feasible to do so. We also introduced
a raft of practical measures
to safeguard our employees
and customers, including:
• the transfer of a large
number of employees
to remote working;
• rigorous cleaning schedules
at all our workplaces;
• measures to minimise
contact between
staff and enforce social
distancing;
• additional protective
equipment and clothing
for those that needed it;
information on government
guidelines.
•
In the context of the challenging
economic climate stemming
from the COVID-19 pandemic, our
financial results were inevitably
impacted. The Group’s Adjusted
Revenue was down 20% year on
year to RUB 54.9 billion, largely
reflecting weaker pricing conditions
in the gondola segment. Adjusted
EBITDA at RUB 26.8 billion was down
32% compared to the record result
set in 2019 of RUB 39.6 billion. Our
Adjusted EBITDA Margin held up
well at a robust 49%, down from
57% in the prior year. Management’s
efforts to optimise costs proved
successful, and despite ongoing
inflationary pressures, we reduced
Total Operating Cash Costs by 1%
year on year. Excluding regulated
RZD Empty-Run regulatory tariffs
the year-on-year decline in Total
Operating Cash Costs was 9%.
The Group produced strong
Free Cash Flow1 generation
of RUB 15.1 billion, up 14% on the
previous year. The financial impact
of weaker markets on operating
activities was more than offset
by an 83% year-on-year targeted
cut in expansion CAPEX, the release
of working capital and a decline
in Tax paid.
The Group continued to benefit
from a strong balance sheet and low
leverage. The year-end Net Debt
to Adjusted EBITDA ratio stood
at 1.01 times up from 0.6 times
at the end of the prior year. We
managed to significantly improve
the financing terms with the average
weighted interest rate down to 6.9%
compared to 8.1% at the end of the
previous year.
Our markets
Market conditions for the freight rail
industry fluctuated considerably over
the course of 2020. In the first half
of the year, the industry suffered as
economies locked down as a result
of the COVID-19 pandemic before
staging a comeback in the second half
as economies began to reopen with
pent-up global demand for industrial
commodities driving a recovery
in cargo volume dynamics.
Overall freight rail turnover for the
industry in 2020 dropped 2.2% year on
year, although again with a very clear
split in performance between the two
halves of the year. Freight rail turnover
was down 5.3% year on year in the
first half as a result of the COVID-19
pandemic followed by a 1% year-
on-year increase in the second half
stimulated by greater export activity
and currency weakness.
Overall freight transportation volumes
for the year ended down 2.7% year on
year. The first half saw a fall in volumes
of 4.5% year on year, with downward
pressure experienced in all key cargo
segments, except construction
materials. Cargo volume dynamics
gradually improved over the second
half with overall freight volumes down
only 0.9% year on year.
1 Free Cash Flow is net of principal elements of lease payments for leases with financial institutions presented for both years (2019 and 2020).
During H1 2020 the entire financial lease portfolio was refinanced to bilateral loans, therefore principal elements of lease payments
were eliminated from both years for comparison purposes.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 30
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
31
CEO Review
The non-oil (bulk) cargo segment
fared better than the overall market
with the overall volumes in the
segment decreasing 1.1% year on year.
The performance was uneven across
the individual transport segments.
Weakness in coal and metallurgical
cargoes, down 4.8% and 3.5% year
on year respectively, was partially
offset by strength in construction
materials where volumes grew
by a healthy 4.2% year on year1.
The oil products and oil segment
was particularly affected by the
COVID-19 pandemic and the
resultant international and domestic
travel restrictions and lockdowns.
Due to these constraints, fuel
consumption fell significantly,
a situation further exacerbated by the
OPEC+ agreement on oil production
cuts. Overall freight rail volumes
in the segment fell 10% year on year.
Market pricing revealed a mixed
segmental picture. The pricing
pressure in the gondola segment we
experienced in the latter part of 2019
continued, the result of an ongoing
oversupply of gondolas combined
with lower demand. In contrast,
the rail tank segment experienced
relatively stable railcar operator rates
despite weak demand.
Operational performance
It was clear that the sector would not
be immune to the unprecedented
trading conditions of 2020, and so
management’s focus was on the
things we could control, namely
operational efficiency, superior
client service, and cost discipline.
In the rail logistics industry,
operational efficiency is a source
of competitive advantage, and even
more so in periods of market stress.
Globaltrans’ operating model gives
us an edge in such times as we
can adapt our logistics to respond
to rapid changes in routes and cargo
flows and flex our gondola fleet
to capture demand changes in freight
segments. We took full advantage
of this important capability in 2020.
As I mentioned earlier, despite
the volatile conditions, we delivered
2.2% year-on-year growth in Freight
Rail Turnover while the overall
market declined by that same
amount in 2020. In non-oil bulk
cargo operations, our Freight Rail
Turnover increased 4.9% year on
year, benefitting from the efficiency
with which we were able to migrate
railcars between different cargoes.
In the tank car segment, our
operations were affected by those
trends described above that
severely impacted demand across
the industry – global lockdowns,
reduced fuel consumption in Russia,
and the OPEC+ agreement on crude
oil productions cuts. This was
reflected in the 13.3% year-on-year
decline in the Group’s Freight Rail
Turnover in this segment.
The Group’s Average Price per Trip,
a key metric, suffered due to weak
pricing in the gondola segment,
partially offset by more stable pricing
dynamics for tank car operators
in the oil products and oil segment.
As a result, Average Price per Trip
declined 19% year on year.
In a challenging environment,
we managed the logistical test
of adapting to the changes in cargo
patterns. Whilst not immune from
the headwinds created by the volatile
conditions, we managed to restrict
the increase in our gondola Empty
Run Ratio, an important indicator
of our operating efficiency, which
rose to 45% from 42%. This remains
among the lowest in the industry.
The Total Empty Run Ratio for all
types of railcars also increased to 51%
compared to 49% in the previous
year.
2021 has started well helped
by a recovery in global demand
for both energy and basic materials,
which has driven increased freight
volumes. Recent rail freight statistics
support this view with average daily
overall Russian freight turnover in the
first quarter of 2021 ahead 3.1% year
on year3.
We have a flexible business model,
well-balanced portfolio of assets,
strong management, and a consistent
focus on efficiency and cost control.
These factors, together with almost
entirely discretionary expansion
CAPEX mid-term, are expected to
support our ability to deliver strong
dividends.
As is evident from our 2020
performance, Globaltrans
is well positioned to benefit from
a sustained recovery in our markets
and we remain cautiously optimistic
about our prospects for 2021.
Valery Shpakov
Chief Executive Officer
As one of the leaders in the provision
of freight logistics, we maintained
a high level of client retention
in 2020. We signed a new one-year
deal with EVRAZ, significantly
expanding our cooperation with
them. We also extended our service
contracts with MMK for a further two
years until September 2024, and with
Metalloinvest for an additional one
year until the end of December
2021. Our success in retaining key
clients continued into 2021 with
a new service contract signed with
Rosneft for five years until the end
of March 2026. Long-term service
contracts provide for better volume
visibility and lower pricing volatility
and enable logistical efficiencies. Our
strong portfolio of service contracts
with five leading businesses
accounted for about 64% of the
Group’s Net Revenue from Operation
of Rolling Stock in 2020, helping
to underpin the Group’s business
model.
Capital expenditure
Given the market volatility and pricing
pressures we observed coming into
2020, we had already signalled that
our plans envisaged only a modest
level of expansion CAPEX for the year.
Due to the specifics of our business
model, which includes ownership
of long-life assets, we have discretion
over our expansion CAPEX and can
adjust it in light of market conditions.
In light of the economic impact of
the COVID-19 pandemic, we confined
expansion CAPEX to targeted
investments into the growing niche
segment for the rail transportation
of petrochemicals and high-grade
steel in specialised containers.
To support our developing business
in this segment, we acquired
300 flat cars in 2020 taking our
expansion CAPEX for the year
to RUB 1.1 billion*, down 83% year
on year. Consequently, our Total
CAPEX fell 49% year on year to RUB
6.9 billion2 in 2020 and consisted
primarily of maintenance CAPEX.
Outlook
How the freight rail sector performs
over the next year will largely
depend on how quickly the economy
can recover from the pandemic.
The introduction of mass vaccination
programmes alongside the gradual
easing of lockdowns provide grounds
for optimism in this regard.
The pricing environment remains
mixed with some further weakness
in gondolas rates at the beginning
of the year compared to the second
half of 2020 and with the rail tank
segment experiencing relatively
steady pricing. The issue of gondola
oversupply is likely to continue
to weigh on the industry. In light
of this, we anticipate maintaining
our freeze on expansion investment
this year. Total CAPEX is expected
to mostly include maintenance
and to remain in the range
of RUB 6-7 billion in 2021, which will
support the Group’s Free Cash Flow
generation.
1 Metallurgical cargoes including ferrous metals, scrap metal and irone ore; coal including coke; construction materials including cement.
2 Total CAPEX is net of principal elements of lease payments for leases with financial institutions presented for both years (2019 and 2020).
During H1 2020 the entire financial lease portfolio was refinanced to bilateral loans, therefore principal elements of lease payments
were eliminated from both years for comparison purposes.
3 Estimated by the Company. Average daily overall freight rail turnover better illustrates the market trends taking into account higher base
in February 2020 due to a leap year.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 32
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
33
Market Review
Market rebound in the second half of 2020 after
spread of COVID-19 affected demand
in the first half of the year
BREAKDOWN OF RUSSIA’S FREIGHT
RAIL TRANSPORTATION VOLUMES
BY CARGO TYPE, 2020
RUSSIA’S FREIGHT RAIL TURNOVER,
2016–2020 (BLN TONNES-KM)
RUSSIA’S FREIGHT RAIL
TRANSPORTATION VOLUMES,
2016–2020 (MLN TONNES)
2,344 2,493 2,597 2,602 2,545
1,227 1,266 1,292 1,279 1,245
• Overall freight rail turnover and volumes in Russia decreased 2.2%
24%
29%
-2.2%
-2.7%
– 2.2 %
year-on-year decline
in overall freight
rail turnover in Russia
and 2.7% year on year in 2020 respectively.
• Noticeable split in freight rail turnover performance between
the two halves with a first-half decline of 5.3% year on year
followed by an export-driven recovery with second-half turnover
rising 1% year on year.
Non-oil (bulk) cargo volumes fared better
than the overall market
• Non-oil (bulk) cargo volumes fell 1.1% year on year in 2020
compared to an overall market decline of 2.7% year on year.
Decline in coal and metallurgical cargo volumes were partially
mitigated by a rise in construction cargo volumes.
• Gondola segment rates remained under pressure throughout
2020.
Oil products and oil segment under significant
pressure due to COVID-19 and OPEC+
• Overall freight rail volumes declined 10% year on year in 2020 as
lockdowns due to COVID-19 affected fuel consumption while
OPEC+ agreement cut crude oil production.
• Relatively stable railcar operator rates in the tank car segment.
2016 2017 2018 2019
2020
2016 2017 2018 2019
2020
13%
18%
17%
RUSSIA’S MONTHLY FREIGHT RAIL TURNOVER, 2019–2020 (BLN TONNES-KM)
Change in freight turnover 2020, month on month
-5.0%
-1.2%
-7.1%
-7.2%
-6.5%
-4.0%
-1.7%
1.5%
-0.3%
0.5%
2.1%
3.7%
221
209
200 198
232
215
225
225
208
210
206 198
213 210
214 217
213 212
222 224
213 218 218 226
Coal (incl. coke)
Oil products and oil
Metallurgical cargoes (incl.
ferrous metals, scrap metal, ores)
Construction materials
(incl. cement)
Other
Source: Rosstat
Source: Rosstat, Globaltrans
Jan
Feb
Mar
Apr
May
June
Jul
Aug
Sep
Oct
Nov
Dec
1.2 mln
units
railcar fleet in Russia
577ths
units
gondola cars in Russia
249 ths
units
tank cars in Russia
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
34
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
35
Market Review
The market in 2020
It was an unprecedented year with the impact of the COVID-19 pandemic triggering
the biggest global economic contraction in decades.
The Russian economy suffered its
largest decline since 2009, as gross
domestic product (GDP) shrank 3% year
on year in 2020. Industrial production
in Russia also declined with a decrease
of 2.9% year on year in 2020 following
year-on-year growth of 3.4% in 2019.
The fall in industrial output reflected
a steep drop in the performance of the
extractive industries, down 7%, which
was partially offset by a 0.3% year-on-
year rise in manufacturing output.
The underperformance of the extractive
industries sector was mostly attributable
to a drop in crude oil production as
a consequence of the OPEC+ decision
in 2020 to substantively curb output.
The quarterly rate of decline in industrial
production improved steadily as
the year progressed, having touched
a low point in 2Q 2020 when it dropped
6.7% year on year. In 3Q 2020, industrial
production was 4.8% lower year on year,
before ending the year down just 2.5%
year on year in 4Q 2020. In December,
industrial production rebounded
and was broadly in line with the level
achieved in the prior year period.
The freight rail sector in Russia tends
to track industrial production and the
performance of the sector shows
it was a year of two halves.
In the first six months of 2020,
Russia’s overall freight rail turnover
and volumes fell 5.3% and 4.5%
year on year respectively as the full
force of the measures to combat
the COVID-19 pandemic took effect.
As restrictions eased and global
industrial demand began to recover,
the freight rail sector experienced
a solid recovery with freight rail
turnover increasing 1% year on year
in the second half compared to the
same period the previous year.
Rail maintained its position as the main
mode of freight transport in Russia
carrying 87% of overall Russian freight
turnover (excluding pipeline traffic)
in 2020, the same level as in 2019.
Weak economic conditions led rail
companies to cut back investments
with Russia’s overall railcar fleet
growing just 3%, or 36 thousand units
to 1.2 million units by year end 2020.
Gondola cars accounted for 48%, tank
cars made up 21%, and other types,
including flat cars and hopper cars,
constituted 31% of the total fleet at the
end of 2020.
Net additions of gondola cars declined
significantly with 19 thousand
units or 3% added (about 40%
fewer than were added over 2019)
with the overall size of the gondola
fleet reaching 577 thousand units.
In the tank car segment, net additions
totalled 2 thousand units (or 0.8%
compared to the end of 2019), taking
the overall size of Russia’s tank car fleet
to 249 thousand units.
RUSSIA'S TOTAL RAILCAR FLEET
BY CAR TYPE, AT YEAR-END 2020,
THOUSAND UNITS
380 (31%)
577 (48%)
249 (21%)
Gondola cars
Tank cars
Other railcars
Source: Globaltrans
Bulk (non-oil) segment
This segment delivered a relatively
resilient performance given
the challenging market, with volumes
dipping 1.1% year on year in 2020.
They recovered from a year-on-
year 4% first-half decline to surpass
the level set in the second half of the
previous year by 1.7% with exports
being the principal driver behind the
recovery. The recovery was supported
by a global revival in demand for key
commodities, a weak Russian rouble
and the reopening of many economies
after lockdowns. Weak demand
for coal and metallurgical cargoes was
partially compensated by solid demand
for construction materials. There was
continued pressure in the pricing
environment in the gondola segment
in both leasing rates and operator
pricing throughout 2020 on the back
of an ongoing unfavourable supply
and demand balance.
Coal (including coke): As the largest
industrial cargo segment, coal
contributed 29% of Russia’s overall
freight volumes in 2020. Overall
coal volumes fell 4.8% year on year,
under pressure from a combination
of deteriorating demand and weak
pricing conditions for thermal coal.
In the first half, thermal coal volumes
slumped 10.1% before staging
a recovery in the second half on the
back of increasing export demand
and better pricing, with the result
that second-half volumes were at the
same level as for that period in 2019.
In the coking coal segment conditions
were less volatile with solid growth
in the second half putting total annual
volumes up 4% year on year in 2020.
Metallurgical cargoes (including
ferrous metals, scrap metal and ores):
This segment represented 18%
of Russian freight rail volumes in 2020.
Total volumes were affected by weak
economic activity across 2020, which
resulted in freight rail volumes falling
3.5% year on year. As in other areas,
this weakness peaked in the first half
with volumes falling 4.4% year on
year and while there was a modest
recovery in the second half with
volumes down 2.5% year on year it was
insufficient to match the performance
of the previous year. Volume trends
varied across the individual segments:
ferrous metals and scrap metal
volumes dropped 10% and 2.7%
respectively year on year, while in ores
volumes were broadly unchanged year
on year in 2020.
Construction materials (including
cement): The segment performed
strongly in 2020 supported by solid
levels of construction activity,
delivering a 4.2% year-on-year rise
in volumes. This segment contributed
13% of the overall Russian freight rail
volumes in 2020.
Oil products and oil segment
The oil products and oil transport
segment experienced particularly
difficult trading conditions, with
overall freight volume ending 2020
down 10% year on year. The market
came under significant pressure as
the impact of the COVID-19 pandemic
and the OPEC+ agreement combined
to reduce both fuel consumption
and output volumes. Despite weak
demand, the pricing environment was
generally supportive, and operators
pricing stood broadly unchanged year
on year although leasing rates did
exhibit some pricing pressures.
RUSSIA’S FREIGHT RAIL
TRANSPORTATION VOLUMES
BY CARGO, 2016–2020 (MLN TONNES)
Coal
343
373
386
383
364
-4.8%
2016 2017 2018 2019
2020
Oil products and oil
236
236
237
232
209
-10.0%
2016 2017 2018 2019
2020
Metallurgical cargoes
217
219
231
228
220
-3.5%
2016 2017 2018 2019
2020
Construction materials
168
160
149
150
157
+4.2%
2016 2017 2018 2019
2020
Source: Rosstat
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
36
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
37
Financial
and Operational Review
“Our financial performance highlights the strength of our operating
model. The Group continued to be highly cash generative and financially
robust. We delivered a double-digit increase in free cash flow, maintained
low leverage and as a result, we delivered strong cash dividends to our
shareholders, consistent with our focus on long-term value creation.”
Alexander Shenets
Chief Financial Officer
• Total CAPEX1 was down 49% to RUB 6.9 billion
and primarily consisted of maintenance expenses.
The Group currently expects its Total CAPEX
(including maintenance) to remain low in 2021
in the range of RUB 6–7 billion.
• Leverage continued to be held at a low level with a Net
Debt to Adjusted EBITDA ratio of 1.01x at year end 2020
(at year-end 2019: 0.60x).
DIVIDENDS
Continued robust dividend payments as targeted
and previously announced
• Strong total FY2020 dividends of RUB 13.3 billion
or RUB 74.55 per share/GDR delivered (including
interim and final dividends), reflecting strong Free
Cash Flow generation and low leverage. Total FY2020
dividends equate to 99% of the Group’s Attributable
Free Cash Flow for 2020.
FINANCIAL RESULTS
Efficient cost control, increased Free Cash Flow
and continued low leverage
• Total revenue was down 28% year on year
to RUB 68.4 billion. Adjusted Revenue declined 20%
year on year to RUB 54.9 billion with lower gondola
segment net revenues partially offset by a less
volatile tank car segment and growing revenues
from specialised containers and railcar leasing
businesses.
• Total Operating Cash Costs were reduced 1% year on
year due to cost optimisation measures.
• Operating profit decreased 41% year on year
to RUB 18.8 billion largely due to gondola segment
pricing weakness.
• Adjusted EBITDA was 32% lower year on year
at 26.8 billion while the Adjusted EBITDA Margin
narrowed to 49% (2019: 57%).
• Profit for the year declined 46% year on year
to RUB 12.2 billion.
• Free Cash Flow1 increased 14% year on year
to RUB 15.1 billion with the decline in Net cash from
operating activities more than offset by an 83% year-
on-year targeted cut in expansion CAPEX, release
of working capital and lower Tax paid.
ADJUSTED REVENUE (RUB MLN) /
TOTAL OPERATING COSTS (RUB MLN)
ADJUSTED EBITDA (RUB MLN) / ADJUSTED EBITDA MARGIN (%)
Adjusted Revenue
Adjusted EBITDA
9
1
0
2
0
2
0
2
68,840
54,934 -20%
9
1
0
2
0
2
0
2
39,552
26,807 -32%
Total Operating Cash Costs
Adjusted EBITDA Margin
9
1
0
2
0
2
0
2
29,409
29,121 -1%
9
1
0
2
0
2
0
2
57%
49%
NET CASH FROM OPERATING ACTIVITIES (RUB MLN) / TOTAL
CAPEX (RUB MLN) / FREE CASH FLOW (RUB MLN)
NET DEBT (RUB MLN) / NET DEBT TO ADJUSTED EBITDA
Net cash from operating activities2
Net Debt
9
1
0
2
0
2
0
2
29,404
25,226 -14%
9
1
0
2
0
2
0
2
Total CAPEX (incl. maintenance CAPEX)1
Net Debt to Adjusted EBITDA
9
1
0
2
0
2
0
2
Free Cash Flow1
9
1
0
2
0
2
0
2
Source: Globaltrans
6,941 -49%
13,517
9
1
0
2
0
2
0
2
13,251
15,103 +14%
23,574
27,037
+15%
0.60
1.01
1 Free Cash Flow and Total CAPEX are net of principal elements of lease payments for leases with financial institutions presented for both years (2019
and 2020). During H1 2020 the entire financial lease portfolio was refinanced to bilateral loans, therefore principal elements of lease payments were
eliminated from both years for comparison purposes.
2 After “Changes in working capital” and “Tax paid”.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
38
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
39
OPERATIONAL PERFORMANCE
Globaltrans outperformed the industry despite
weak markets
• Solid Freight Rail Turnover growth achieved in 2020
of 2.2% year on year even as the overall market
declined 2.2% year on year.
• Gondola operating model provides for flexibility
• Deepened relationships with other high-profile clients.
Significant increase in business volumes with EVRAZ
accompanied by parties entering into a one-year
contract. Expanded relationships with clients in coal
and construction segments including Kuzbasskaya
Toplivnaya Company and National Non-Metallic
Company.
Mixed pricing across segments
and responsiveness to market changes enabling a 4.9%
year-on-year rise in bulk cargoes Freight Rail Turnover
due to efficient contracting and migration between
freight segments.
• Balanced fleet composition helped partially offset
weak pricing in the gondola segment with solid pricing
in tank cars. Average Price per Trip declined 19% year
on year.
• Tank car segment business volumes under pressure
from unprecedented COVID-19 lockdowns reducing
fuel consumption in Russia along with impact of crude
oil production cuts agreed under OPEC+. Against this
backdrop, the Group’s Freight Rail Turnover in the oil
products and oil segment declined 13.3% year on year.
• Challenging operational conditions in the tank car
segment drove Average Number of Loaded Trips
per Railcar down 5% year on year along with a 6% year-
on-year rise in Average Distance of Loaded Trip.
Robust client retention, key service contracts
extended
• Strong portfolio of service contracts with superior
clients in metallurgical and oil products and oil
segments, which contributed 64% of Net Revenue
from Operation of Rolling Stock in 2020.
• Long-term service contracts provide for better volume
visibility and lower pricing volatility and enable
logistical efficiencies.
• Key service contracts successfully extended.
Flexible operating model enabled Group
to maintain one of the sector’s best
Empty Run Ratios
• Gondola Empty Run Ratio remained one of the
lowest in the Russian market despite the substantial
volatility in client cargo flows and routes driven
by unprecedented COVID-19 lockdowns. Empty Run
Ratio for gondola cars rose to 45%, compared to 42%
in 2019.
• Total Empty Run Ratio (for all types of rolling stock)
increased to 51%, compared to 49% in 2019.
• Share of Empty Run Kilometres paid by Globaltrans
rose to 99% (2019: 89%) due to changed cargo mix
and gondola segment headwinds.
Large diversified fleet with minimum scrappage
requirements
• Balanced fleet of 71,688 units2, primarily universal
gondola cars and tank cars strengthened by owned
fleet of mainline locomotives.
• Moderate average age of 12.4 years as of the end
– Rosneft — the service contract extended for a further
five years until the end of March 20261.
of 2020 with limited need for scrappage
in the mid-term.
– MMK — the service contract extended for a further
two years until the end of September 2024.
• The Group’s Average Rolling Stock Operated
was up 1% year on year.
– Metalloinvest — the service contract extended for one
year until the end of 2021.
1 As announced on 26 April 2021.
2 Total Fleet as of 31 December 2020.
FREIGHT RAIL TURNOVER (BLN TONNES-KM) /
TRANSPORTATION VOLUMES (MLN TONNES)
FREIGHT RAIL TURNOVER BY KEY CARGO (BLN TONNES-KM)3
Freight Rail Turnover
9
1
0
2
0
2
0
2
Transportation Volumes
9
1
0
2
0
2
0
2
Metallurgical cargoes
2019
2020
Oil products and oil
2019
2020
Coal
2019
2020
147.1
150.3
+2.2%
91.6
88.9
-3%
73.1
68.2
-6.8%
22.0
19.1
-13.3%
33.8
42.2
+24.8%
AVERAGE PRICE PER TRIP (RUB)
9
1
0
2
0
2
0
2
36,909
-19%
NET REVENUE FROM OPERATION OF ROLLING
STOCK BY KEY CONTRACT
36%
64%
Construction materials
2019
2020
6.3
9.7
+52.2%
11.8
11.2
-5.3%
45,807
Other
2019
2020
Total
2019
2020
147.1
150.3
+2.2%
KEY EMPTY RUN METRICS
2019 2020
Empty Run Ratio for gondola cars
42% 45%
Total Empty Run Ratio
(for all types of rolling stock)
49% 51%
Share of Empty Run Kilometres
paid by Globaltrans
89% 99%
Service contracts (Rosneft, MMK,
Metalloinvest, Gazprom Neft, TMK, ChelPipe)
Other contracts
Source: Globaltrans
3 Metallurgical cargoes including ferrous metals, scrap metal and iron ore; coal including coke; construction materials including cement.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 40
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
41
RESULTS IN DETAIL
The following tables provide the Group’s key financial and operational
information for the years ended 31 December 2020 and 2019.
EU IFRS financial information
Non-IFRS financial information
Revenue
Total cost of sales, selling and marketing costs and
administrative expenses
2019,
RUB mln
94,994
2020,
RUB mln
68,367
(62,908)
(50,664)
Operating profit
Finance costs - net
Profit before income tax
Income tax expense
Profit for the year
Profit attributable to:
Owners of the Company
Non-controlling interests
Basic and diluted earnings per share for profit attributable
to the equity holders of the Company during the year
(expressed in RUB per share)
Cash generated from operations (after changes in working
capital)
Tax paid
Net cash from operating activities
Net cash used in investing activities
Net cash used in financing activities
32,120
(2,375)
29,745
(7,091)
22,653
20,808
1,846
116.41
2019,
RUB mln
35,422
(6,018)
29,404
(12,765)
(16,939)
18,811
(2,100)
16,712
(4,525)
12,187
10,587
1,600
59.24
2020,
RUB mln
28,278
(3,052)
25,226
(6,528)
(20,357)
Change,
%
-28%
-19%
-41%
-12%
-44%
-36%
-46%
-49%
-13%
-49%
Change,
%
-20%
-49%
-14%
-49%
20%
Adjusted Revenue
Including
Net Revenue from Operation of Rolling Stock
Operating lease of rolling stock
Net Revenue from Specialised Container Transportation
Total Operating Cash Costs
Including
Empty Run Cost
Repairs and maintenance
Employee benefit expense
Fuel and spare parts - locomotives
Adjusted EBITDA
Adjusted EBITDA Margin, %
Total CAPEX (including maintenance CAPEX)1
Free Cash Flow1
Attributable Free Cash Flow1
2019,
RUB mln
68,840
64,994*
1,634
1,623*
29,409
14,752*
4,403
4,483
1,914
39,552
57%
13,517
13,251
11,405
2020,
RUB mln
54,934
Change,
%
-20%
50,527*
1,932
1,923*
29,121
15,799*
4,261
4,154
1,630
26,807
49%
6,941
15,103
13,503
-22%
18%
18%
-1%
7%
-3%
-7%
-15%
-32%
-
-49%
14%
18%
Debt profile
Total debt
Cash and cash equivalents
Net Debt
Net Debt to Adjusted EBITDA (x)
As of
31 December 2019,
RUB mln
As of
31 December 2020,
RUB mln
30,095
6,522
23,574
0.60
32,015
4,978
27,037
1,01
Change,
%
6%
-24%
15%
-
1 Free Cash Flow, Total CAPEX and Attributable Free Cash Flow are presented net of principal elements of lease payments for leases with financial
institutions for both years (2019 and 2020). During the first half of 2020 the entire financial lease portfolio was refinanced to bilateral loans,
therefore principal elements of lease payments were eliminated from both years for comparison purposes.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
42
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
43
Operational information
Adjusted Revenue
Freight Rail Turnover, billion tonnes-km (excluding Engaged Fleet)
Transportation Volume, million tonnes (excluding Engaged Fleet)
Average Price per Trip, RUB
Average Rolling Stock Operated, units
Average Distance of Loaded Trip, km
Average Number of Loaded Trips per Railcar
Total Empty Run Ratio (for all types of rolling stock), %
Empty Run Ratio for gondola cars, %
Share of Empty Run Kilometres paid by Globaltrans, %
Total Fleet, units (at year-end), including:
Owned Fleet, units (at year-end)
Leased-in Fleet, units (at year-end)
Leased-out Fleet, units (at year-end)
Average age of Owned Fleet, years (at year-end)
Total number of employees (at year-end)
2019
147.1
91.6
45,807
56,845
1,591
25.0
49%
42%
89%
70,720
67,669
3,051
6,842
11.5
1,640
2020
150.3
88.9
36,909
57,484
1,681
23.8
51%
45%
99%
71,688
67,762
3,926
7,032
12.4
1,697
Change, %
2.2%
-3.0%
-19%
1%
6%
-5%
-
-
-
1%
0%
29%
3%
-
3%
Revenue
The Group’s Total revenue was 28% lower year on year at RUB 68,367 million in 2020 reflecting a 20% year-on-year
decline in Adjusted Revenue and a 49% year-on-year decrease in the “pass through” cost items: “Infrastructure
and locomotive tariffs: loaded trips” and “Services provided by other transportation organisations”. Net Revenue
from Operation of Rolling Stock (a key component of Adjusted Revenue) declined 22% year on year and was
partially offset by higher revenues from niche segments for the rail transportation of specialised containers
and leasing of rolling stock.
The following table provides details of Total revenue, broken down by revenue-generating activity, for the years
ended 31 December 2020 and 2019.
Railway transportation – operators services
(tariff borne by the Group)1
Railway transportation – operators services
(tariff borne by the client)
Revenue from specialised container transportation
Operating lease of rolling stock
Other
Total revenue
2019,
RUB mln
2020,
RUB mln
Change,
%
49,141
42,018
1,815
1,634
386
27,197
36,671
2,168
1,932
400
94,994
68,367
-45%
-13%
19%
18%
4%
-28%
1 Includes “Infrastructure and locomotive tariffs: loaded trips” for 2020 of RUB 10,957 million (2019: RUB 22,020 million) and “Services provided
by other transportation organisations” of RUB 2,476 million (2019: RUB 4,134 million).
Adjusted Revenue is a non-IFRS financial measure defined as “Total revenue” adjusted for “pass through”
items: “Infrastructure and locomotive tariffs: loaded trips” and “Services provided by other transportation
organisations”. “Infrastructure and locomotive tariffs: loaded trips” comprises revenue resulting from tariffs
that customers pay to the Group and the Group pays on to RZD, which are reflected in equal amounts in both
the Group’s Total revenue and Cost of sales. “Services provided by other transportation organisations”
is revenue resulting from the tariffs that customers pay to the Group and the Group pays on to third-party rail
operators for subcontracting their rolling stock, which are reflected in equal amounts in both the Group’s Total
revenue and Cost of sales. The net result of Engaged Fleet operations is reflected as Net Revenue from Engaged
Fleet and is included in Adjusted Revenue.
The 20% year-on-year decline in the Group’s Adjusted Revenue to RUB 54,934 million in 2020 was primarily due
to the decrease in Net Revenue from Operation of Rolling Stock, down 22%, which was partially offset by an 18% year-
on-year increase in both Net Revenue from Specialised Container Transportation and Revenue from operating leasing
of rolling stock.
The following table provides details of Adjusted Revenue for the years ended 31 December 2020 and 2019 and its
reconciliation to Total revenue.
Total revenue
Minus “pass through” items
Infrastructure and locomotive tariffs: loaded trips
Services provided by other transportation organisations
Adjusted Revenue
2019,
RUB mln
94,994
22,020
4,134
68,840
2020,
RUB mln
68,367
10,957
2,476
54,934
Change,
%
-28%
-50%
-40%
-20%
The principal components of Adjusted Revenue include: (i) Net Revenue from Operation of Rolling Stock, (ii) Net
Revenue from Specialised Container Transportation, (iii) Revenue from operating leasing of rolling stock, (iv) Net
Revenue from Engaged Fleet, and (v) other revenues generated by the Group’s auxiliary business activities, including
freight forwarding, repair and maintenance services provided to third parties, and other.
The following table provides a breakdown of the components of Adjusted Revenue for the years ended
31 December 2020 and 2019.
Net Revenue from Operation of Rolling Stock
Operating leasing of rolling stock
Net Revenue from Specialised Container Transportation
Net Revenue from Engaged Fleet
Other
Adjusted Revenue
2019,
RUB mln
64,994*
1,634
1,623*
202*
386
2020,
RUB mln
50,527*
1,932
1,923*
152*
400
68,840
54,934
Change,
%
-22%
18%
18%
-25%
4%
-20%
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 44
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
45
Net Revenue from Operation of Rolling Stock
Other revenue
Net Revenue from Operation of Rolling Stock is a non-IFRS financial measure, derived from management accounts,
describing the net revenue generated from freight rail transportation services which is adjusted for respective “pass
through” loaded railway tariffs charged by RZD (included in the EU IFRS line item “Infrastructure and locomotive tariffs:
loaded trips”).
The Group’s Net Revenue from Operation of Rolling Stock contributed 92% of the Group’s Adjusted Revenue in 2020
and was 22% lower year on year at RUB 50,527 million* primarily reflecting weak pricing conditions in the gondola
segment.
Other revenue (1% of the Group’s Adjusted Revenue), which includes the revenues generated by the Group’s auxiliary
business activities such as freight forwarding, repair and maintenance services provided to third parties, and other,
increased 4% year on year to RUB 400 million in 2020.
• Average Price per Trip declined 19% year on year to RUB 36,909 with solid pricing in tank cars partially compensating
Cost of sales, selling and marketing costs and administrative expenses
for continued weak pricing in the gondola segment.
• Average Rolling Stock Operated increased 1% year on year to 57,484 units.
• Average Number of Loaded Trips per Railcar decreased 5% year on year mainly reflecting changed logistics
and volatility in demand for rail transportation specifically in the tank car segment.
Revenue from operating leasing of rolling stock
Revenue from operating leasing of rolling stock, which contributed 4% of the Group’s Adjusted Revenue in 2020,
increased 18% year on year to RUB 1,932 million as a result of the more favourable pricing terms achieved in the tank car
leasing segment compared to the previous year.
Net Revenue from Specialised Container Transportation
Net Revenue from Specialised Container Transportation is a non-IFRS financial measure, derived from management
accounts, that represents the revenue generated from the specialised container operations (included in the EU IFRS
line item: “Revenue from specialised container transportation”) less the respective “pass through” loaded railway tariffs
charged by RZD (included in the EU IFRS line item “Infrastructure and locomotive tariffs: loaded trips”).
Net Revenue from Specialised Container Transportation increased 18% year on year to RUB 1,923 million* in 2020
benefitting from fleet expansion, solid demand, stable pricing and the launch of high grade steel transportation. This
revenue contributed 4% of the Group’s Adjusted Revenue in the reporting year. The Group’s total fleet employed in this
segment was 5,046 units at 31 December 2020 including specialised containers and flat cars. This business segment
is mostly focused on the rail transportation of petrochemicals and high grade steel and has SayanskKhimPlast, NLMK,
EVRAZ, Bashkir Soda Company and KuibyshevAzot among its key clients.
Net Revenue from Engaged Fleet
Net Revenue from Engaged Fleet is a non-IFRS financial measure, derived from management accounts, that represents
the net sum of the price charged to clients for transportation by the Group utilising Engaged Fleet less the respective
“pass-through” loaded railway tariffs charged by RZD (included in the EU IFRS line item “Infrastructure and locomotive
tariffs: loaded trips”) and less the “pass-through” cost of engaging fleet from third-party rail operators (included in the
EU IFRS line item “Services provided by other transportation organisations”).
Net Revenue from Engaged Fleet, which comprised less than 1% of the Group’s Adjusted Revenue, declined 25% year
on year in 2020 to RUB 152 million*, largely reflecting a decline in the number of Engaged Fleet operations.
The following table provides a breakdown of Cost of sales, selling and marketing costs and administrative expenses
for the years ended 31 December 2020 and 2019.
Cost of sales
Selling and marketing costs
Administrative expenses
Total cost of sales, selling and marketing costs and
administrative expenses
2019,
RUB mln
58,833
216
3,859
62,908
2020,
RUB mln
47,066
205
3,394
50,664
Change,
%
-20%
-5%
-12%
-19%
In 2020, the Group’s Total cost of sales, selling and marketing costs and administrative expenses were reduced 19%
year on year to RUB 50,664 million, primarily due to the factors described below.
• “Pass through” cost items (a combination of “Infrastructure and locomotive tariffs: loaded trips” and “Services
provided by other transportation organisations”) were 49% lower year on year at RUB 13,434 million mainly as a result
of changes in the proportion of clients that pay Infrastructure and locomotive tariffs: loaded trips through the Group.
• The Group’s Total cost of sales, selling and marketing costs and administrative expenses adjusted for “pass-through”
cost items increased 1% year on year to RUB 37,231 million in 2020, which reflected:
– A 1% year-on-year decline in the Group’s Total Operating Cash Costs to RUB 29,121 million in 2020.
— Efficient cost optimisation measures that enabled the Group to achieve a 9% year-on-year reduction
in Total Operating Cash Costs excluding Empty Run Costs.
— An increase in the regulated RZD infrastructure and locomotive traction tariffs for empty trips, higher Group’s
Freight Rail Turnover and a rise in Empty Runs on the back of the challenging industry environment drove a 7%
year-on-year increase in Empty Run Costs.
– A 10% year-on-year rise in Total Operating Non-Cash Costs to RUB 8,109 million, due in large part to an increase
in the Depreciation of property, plant and equipment on the back of asset expansion, principally in 2019.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
46
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
47
In order to show the dynamics and nature of the Group’s cost base, individual items of Total cost of sales, selling
and marketing costs and administrative expenses have been regrouped as shown below:
Total Operating Cash Costs
“Pass through” cost items
Infrastructure and locomotive tariffs: loaded trips
Services provided by other transportation organisations
Total cost of sales, selling and marketing costs and administrative
expenses (adjusted for “pass through” cost items)
Total Operating Cash Costs
Empty Run Costs
Repairs and maintenance
Employee benefit expense
Fuel and spare parts – locomotives
Infrastructure and Locomotive Tariffs - Other Tariffs
Expense relating to short-term leases - rolling stock
Engagement of locomotive crews
Other Operating Cash Costs
Total Operating Non-Cash Costs
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Loss on derecognition arising on capital repairs
Amortisation of intangible assets
Net impairment losses on trade and other receivables
Net loss on sale of property, plant and equipment
Reversal of impairment of property, plant and equipment
2019
26,154
22,020
4,134
36,754
29,409
14,752*
4,403
4,483
1,914
987*
722
775
1,372
7,345
5,795
424
472
697
13
10
(65)
2020
13,434
10,957
2,476
37,231
29,121
15,799*
4,261
4,154
1,630
998*
824
421
1,034
8,109
6,969
655
420
60
6
0.3
-
Total cost of sales, selling and marketing costs and administrative
expenses
62,908
50,664
Change, %
-49%
-50%
-40%
1%
-1%
7%
-3%
-7%
-15%
1%
14%
-46%
-25%
10%
20%
54%
-11%
-91%
-57%
-97%
NM
-19%
“Pass through” cost items
Infrastructure and locomotive tariffs: loaded trips
Infrastructure and locomotive tariffs: loaded trips is in principle a “pass through” cost item for the Group1 and is
reflected in equal amounts in both the Group’s Total revenue and Cost of sales. In 2020, this cost item fell 50% year
on year to RUB 10,957 million primarily reflecting the change in the proportion of clients that pay infrastructure
and locomotive tariffs: loaded trips through the Group.
Services provided by other transportation organisations
Services provided by other transportation organisations is in principle a “pass through” cost item for the Group
and is reflected in equal amounts in both the Group’s Total revenue and Cost of sales and includes tariffs that
the Group pays to third-party rail operators for subcontracting their rolling stock (Engaged Fleet).
Services provided by other transportation organisations fell 40% year on year to RUB 2,476 million in 2020 principally
due to the decreased costs associated with the engagement of third-party fleet.
1 Under contracts where the RZD tariff is borne by the Group, the Group has a contractual relationship with the client. The Group sets the terms
of the transactions, such as selling and payment terms and, in some cases, bears credit risk and controls the flow of receipts and payments.
Total Operating Cash Costs (a non-IFRS financial measure) represents operating cost items payable in cash and calculated
as “Total cost of sales, selling and marketing costs and administrative expenses” less the “pass through” cost items
and non-cash cost items.
Efficient cost optimisation measures facilitated a 1% year-on-year reduction in the Group’s Total Operating Cash Costs
to RUB 29,121 million in 2020 due to a combination of the factors described below.
The following table provides a breakdown of the Total Operating Cash Costs for the year ended 31 December 2020
and 2019.
Empty Run Costs
Repairs and maintenance
Employee benefit expense
Fuel and spare parts - locomotives
Infrastructure and Locomotive Tariffs - Other Tariffs
Expense relating to short-term leases - rolling stock
Engagement of locomotive crews
Empty Run Costs
2020,
% of total
2019,
RUB mln
54%
15%
14%
6%
3%
3%
1%
14,752*
4,403
4,483
1,914
987*
722
775
2020,
RUB mln
15,799*
4,261
4,154
1,630
998*
824
421
Change,
%
7%
-3%
-7%
-15%
1%
14%
-46%
Empty Run Costs (a non-IFRS financial measure meaning costs payable to RZD for forwarding empty railcars) is derived
from management accounts and presented as part of the “Infrastructure and locomotive tariffs: empty run trips and other
tariffs” component of “Cost of sales” reported under EU IFRS.
Empty Run Costs accounted for 54% of the Group’s Total Operating Cash Costs in 2020. This cost item rose 7% year on year
to RUB 15,799 million* in 2020 due to a combination of the following factors:
• A 2.2% year-on-year increase in the Group’s Freight Rail Turnover.
• A 3.5% year-on-year rise in regulated RZD tariffs for the traction of empty railcars.
• A higher Total Empty Run Ratio (for all types of rolling stock) at 51% (2019: 49%) on the back of substantial volatility
in client cargo flows and routes due to the unprecedented COVID-19 lockdowns.
• A rise in Share of Empty Run Kilometers paid by Globaltrans to 99% (2019: 89%) largely due to changes in the cargo
mix and gondola segment headwinds.
Repairs and maintenance
Repairs and maintenance costs, which comprised 15% of the Group’s Total Operating Cash Costs in 2020, decreased 3%
year on year to RUB 4,261 million largely reflecting the decrease in the number of depot, wheel pairs and locomotive repairs
and prices for certain spare parts and repair works.
Employee benefit expense
Employee benefit expense, comprising 14% of the Group’s Total Operating Cash Costs, fell 7% year on year
to RUB 4,154 million in 2020. A 6% year-on-year increase in average headcount due to the move to utilising in-house
locomotive crews and inflation-driven growth in wages and salaries were more than offset by a reduction in bonuses.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
48
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
49
Fuel and spare parts - locomotives
Other Operating Cash Costs, which comprised 4% of the Group’s Total Operating Cash Costs, dropped 25%
to RUB 1,034 million in 2020 compared to the previous year, primarily as a result of cost optimisation measures.
Fuel and spare parts - locomotives expenses, which accounted for 6% of the Group’s Total Operating Cash Costs,
were down 15% year on year at RUB 1,630 million in 2020 reflecting lower fuel consumption as a result of volume volatility
in the oil products and oil segment.
Total Operating Non-Cash Costs
Infrastructure and Locomotive Tariffs - Other Tariffs
Infrastructure and Locomotive Tariffs - Other Tariffs (a non-IFRS financial measure, derived from management accounts),
which is presented as part of the ”Infrastructure and locomotive tariffs: empty run trips and other tariffs” component
of cost of sales reported under EU IFRS. This cost item includes the costs of the relocation of rolling stock to and from
maintenance, the transition of purchased rolling stock to its first place of commercial utilisation, and the relocation
of rolling stock in and from lease operations as well as other expenses including empty run costs attributable to the
specialised container transportation business.
Infrastructure and Locomotive Tariffs - Other Tariffs, representing 3% of the Group’s Total Operating Cash Costs, were
RUB 998 million* in 2020, up 1% year on year, impacted by the increase in regulated RZD tariffs and the higher costs
of relocating rolling stock due to volatility in client demands and logistics.
Expense relating to short-term leases - rolling stock
In 2020, Expense relating to short-term leases - rolling stock, representing 3% of the Group’s Total Operating Cash Costs,
increased 14% year on year to RUB 824 million, largely reflecting the rise in the tank car leasing rates.
Engagement of locomotive crews
Costs related to the engagement of locomotive crews from RZD in 2020 (1% of the Group’s Total Operating Cash Costs)
were 46% lower year on year at RUB 421 million following the decline in outsourcing hours for locomotive crews as
the Group increased its usage of in-house crews.
Other Operating Cash Costs
Other Operating Cash Costs (a non-IFRS financial measure) include the following cost items: “Advertising and promotion”,
“Auditors’ remuneration”, “Communication costs”, “Information services”, “Legal, consulting and other professional fees”,
“Expense relating to short-term leases - tank containers”, Expense relating to short-term leases - office”, “Taxes (other than
income tax and value added taxes)” and “Other expenses”.
Total Operating Non-Cash Costs (a non-IFRS financial measure) include the following cost items: “Depreciation
of property, plant and equipment”, “Amortisation of intangible assets”, “Loss on derecognition arising on capital
repairs”, “Depreciation of right-of-use assets”, “Net impairment losses on trade and other receivables”,
“Impairment/(reversal of impairment) of property, plant and equipment” and “Net (gain)/loss on sale of property,
plant and equipment”.
The following table provides a breakdown of the Total Operating Non-Cash Costs for the year ended 31 December
2020 and 2019.
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Loss on derecognition arising on capital repairs1
Amortisation of intangible assets
Net impairment losses on trade and other receivables
Net loss on sale of property, plant and equipment
Reversal of impairment of property, plant and equipment
Total Operating Non-Cash Costs
2019,
RUB mln
5,795
2020,
RUB mln
6,969
424
472
697
13
10
(65)
7,345
655
420
60
6
0.3
-
8,109
Change,
%
20%
54%
-11%
-91%
-57%
-97%
NM
10%
Total Operating Non-Cash Costs increased 10% year on year to RUB 8,109 million in 2020, largely due to the following
factors:
• A 20% year-on-year rise in Depreciation of property, plant and equipment on the back of asset expansion primarily
during 2019.
• A 54% year-on-year rise in Depreciation of right-of-use assets on the back of a rise in the average number of rolling
stock leased-in under contracts exceeding a twelve-month period.
The following table provides a breakdown of the Other Operating Cash Costs for the years ended 31 December 2020
and 2019.
• These were partially offset by a 91% year-on-year decline in Amortisation of intangible assets reflecting full
amortisation of intangible assets linked to the service contract with MMK.
Expense relating to short-term leases - office
Legal, consulting and other professional fees
Auditors' remuneration
Advertising and promotion
Communication costs
Taxes (other than on income and value added taxes)
Expense relating to short-term leases - tank containers
Information services
Other expenses
Other Operating Cash Costs
2019,
RUB mln
139
48
55
39
35
(9)
-
19
1,046
1,372
2020,
RUB mln
109
69
55
35
26
25
24
16
675
1,034
Change,
%
-21%
42%
1%
-11%
-24%
NM
NM
-17%
-35%
-25%
1 The cost of each major periodic capital repair (including the replacement of significant components) is recognised in the carrying amount
of the relevant item of rolling stock repaired and separately depreciated. Simultaneously, the carrying amount of the repaired rolling stock
that is attributable to the previous periodic capital repair and/or significant component replacement, if any, is derecognised and debited
in “Cost of sales” in the income statement as “Loss on derecognition arising on capital repairs” for the period during which the repair was carried out.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 50
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
51
Adjusted EBITDA (non-IFRS financial measure)
Finance income and costs
EBITDA (a non-IFRS financial measure) represents “Profit for the period” before “Income tax expense”, “Finance
costs - net” (excluding “Net foreign exchange transaction (gains)/losses on financing activities”), “Depreciation
of property, plant and equipment”, “Amortisation of intangible assets” and “Depreciation of right-of-use assets”.
Adjusted EBITDA (a non-IFRS financial measure) represents EBITDA excluding “Net foreign exchange transaction
(gains)/losses on financing activities”, “Share of profit/(loss) of associate”, “Other losses/(gains) - net”, “Net
(gain)/loss on sale of property, plant and equipment”, “Impairment/(reversal of impairment) of property, plant
and equipment”, “Impairment of intangible assets”, “Loss on derecognition arising on capital repairs” and “Reversal
of impairment of intangible assets”.
The Group’s Adjusted EBITDA fell 32% in 2020 to RUB 26,807 million from the previous year. The Adjusted EBITDA
Margin narrowed to 49% in 2020 from 57% in 2019 following a 20% year-on-year decline in Adjusted Revenue partially
offset by a 1% year-on-year decline in Total Operating Cash Costs.
Total interest expense calculated using the effective interest
rate method
Leases with financial institutions
The following table provides details on Adjusted EBITDA for the years ended 31 December 2020 and 2019,
and its reconciliation to EBITDA and Profit for the year.
The following table provides a breakdown of Finance income and costs for the year ended 31 December 2020 and 2019.
2019,
RUB mln
2020,
RUB mln
Change,
%
Interest expense:
Bank borrowings
Non-convertible bonds
Interest expenses on loans
Other interest expense
Other lease liabilities
Total interest expense
Other finance costs
Total finance costs
Interest income:
Bank balances
Short term deposits
Loans to third parties
Total interest income calculated using the effective interest
rate method
Finance leases-third parties
Total finance income
Net foreign exchange transaction gains/(losses) on
borrowings and other liabilities
Net foreign exchange transaction (losses)/gains on cash and
cash equivalents and other monetary assets
Net foreign exchange transaction (losses)/gains on financing
activities
Net finance costs
Finance costs
(1,456)
(743)
(5)
(9)
(2,214)
(165)
(118)
(2,497)
(32)
(2,529)
122
374
0.6
497
37
534
207
(587)
(380)
(2,375)
(1,482)
(808)
(5)
(2)
(2,298)
(74)
(113)
(2,485)
(25)
(2,510)
190
27
0.1
217
47
264
(6)
153
147
(2,100)
2%
9%
0%
-79%
4%
-55%
-4%
0%
-22%
-1%
55%
-93%
-81%
-56%
29%
-51%
NM
NM
NM
-12%
Total finance costs remained stable, declining 1% year on year to RUB 2,510 million in 2020 with an increase in the Group’s
average level of total borrowings over the year offset by the significant improvement in the average weighted interest rate.
Finance income
In 2020, the Group’s Total finance income fell 51% year on year to RUB 264 million, primarily due to the decline in short
term deposits which was partially offset by an increase in bank balances.
Net foreign exchange transaction gains/(losses) on financing activities
In 2020 the Group had Net foreign exchange transaction gains on financing activities of RUB 147 million compared to Net
foreign exchange transaction losses on financing activities of RUB 380 million in the previous year. This resulted from
foreign exchange volatility on the available cash and cash equivalents denominated in foreign currency.
Profit for the year
Plus (Minus)
Income tax expense
Finance costs - net
Net foreign exchange transaction (losses)/gains on
financing activities
Amortisation of intangible assets
Depreciation of right-of-use assets
Depreciation of property, plant and equipment
EBITDA
Minus (Plus)
Loss on derecognition arising on capital repairs1
Net foreign exchange transaction (losses)/gains on
financing activities
Other (losses)/gains - net
Net loss on sale of property, plant and equipment
Reversal of impairment of property, plant and equipment
2019,
RUB mln
22,653
2020,
RUB mln
12,187
Change,
%
-46%
7,091
2,375
(380)
697
424
5,795
38,656
(472)
(380)
(99)
(10)
65
4,525
2,100
147
60
655
6,969
26,642
(420)
147
108
(0.3)
-
-36%
-12%
NM
-91%
54%
20%
-31%
-11%
NM
NM
-97%
NM
-32%
Adjusted EBITDA
39,552
26,807
1 The cost of each major periodic capital repair (including the replacement of significant components) is recognised in the carrying amount
of the relevant item of rolling stock repaired and separately depreciated. Simultaneously, the carrying amount of the repaired rolling stock
that is attributable to the previous periodic capital repair and/or significant component replacement, if any, is derecognised and debited
in “Cost of sales” in the income statement as “Loss on derecognition arising on capital repairs” for the period during which the repair was carried out.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 52
Profit
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
53
Profit before income tax
The Group reported Profit before income tax of RUB 16,712 million in 2020, down 44% compared to the previous
year, reflecting a 41% year-on-year decrease in the Group’s Operating profit to RUB 18,811 million, primarily due
to the factors described above, which was partially offset by a 12% year-on-year decrease in Net finance costs
to RUB 2,100 million.
Income tax expense
Income tax expense declined 36% year on year to RUB 4,525 million in 2020 following a 44% year-on-year decrease
in Profit before income tax.
The weighted average annual income tax rate for 2020 rose to 27.1% compared to 23.8% for 2019, which mainly
reflects the increase in Estonian tax incurred due to a dividend payment by one of the Estonian subsidiaries of the
Company in 2020 and a higher dividend withholding tax provision in relation to the intended dividend distribution
of subsidiaries, including Estonian subsidiaries.
Profit for the year
Cash flows from operating activities
Changes in working capital:
Inventories
Trade receivables
Other assets
Other receivables
Trade and other payables
Contract liabilities
Cash generated from operations
Tax paid
Net cash from operating activities
Cash flows from investing activities
2019,
RUB mln
39,506
(4,084)
(394)
(713)
(1,299)
10
(270)
(1,418)
35,422
(6,018)
29,404
2020,
RUB mln
26,932
1,346
816
(427)
1,439
10
(208)
(283)
28,278
(3,052)
25,226
Purchases of property, plant and equipment
(13,516)
(6,941)
Purchases of intangible assets
Proceeds from sale of property plant and equipment
Loan repayments received from third parties
The Group’s Profit for the year was 46% lower year on year at RUB 12,187 million reflecting the factors described above.
Interest received
Profit for the year attributable to the owners of the Company was down 49% year on year to RUB 10,587 million
reflecting the factors described above.
Liquidity and capital resources
In 2020, the Group’s capital expenditure consisted primarily of maintenance CAPEX (including capital repairs)
and the selective acquisition of rolling stock.
The Group was able to meet its liquidity and capital expenditure needs comfortably through operating cash flow,
available cash and cash equivalents and proceeds from borrowings.
The Group manages its liquidity based on expected cash flows. As at 31 December 2020, the Group had Net Working
Capital of RUB 3,810 million*. Given its anticipated operating cash flow and borrowings, the Group believes that it has
sufficient working capital to operate successfully.
Cash flows
The following table sets out the principal components of the Group’s consolidated cash flow statement for the years
ended 31 December 2020 and 2019.
Receipts from finance lease receivable
Net cash used in investing activities
Cash flows from financing activities
Net cash inflows from borrowings and financial leases:
Proceeds from bank borrowings
Proceeds from issue of non-convertible unsecured bonds
Repayments of borrowings
Principal elements of lease payments for leases with financial institutions
Purchase of treasury shares
Principal elements of lease payments for other lease liabilities
Interest paid on bank borrowings and non-convertible unsecured bonds
Interest paid on leases with financial institutions
Interest paid on other lease liabilities
Dividends paid to non-controlling interests in subsidiaries
Dividends paid to owners of the Company
Payments from non-controlling interests for share capital increase of subsidiary
Payments to non-controlling interest
Net cash used in financing activities
Net decrease in cash and cash equivalents
Exchange losses on cash and cash equivalents
Cash and cash equivalents at beginning of the year
Cash and cash equivalents at year end
(1)
92
3
534
124
-
67
4
264
78
(12,765)
(6,528)
4,183
10,408
5,000
(10,737)
(489)
-
(340)
(2,018)
(167)
(112)
(1,602)
(16,632)
200
(451)
(16,939)
(300)
(308)
7,130
6,522
1,946
23,265
-
(19,603)
(1,716)
(31)
(672)
(2,315)
(81)
(114)
(2,272)
(16,637)
-
(180)
(20,357)
(1,659)
116
6,522
4,978
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 54
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
55
Net cash from operating activities
Free Cash Flow
A 14% year-on-year decline in Net cash from operating activities which fell to RUB 25,226 million was due to the
following factors:
• Cash generated from operations (after “Changes in working capital”) decreased 20% year on year
to RUB 28,278 million with a 32% year-on-year decline in Cash flows from operating activities partially offset
by a release of working capital largely due to lower inventory levels and pre-payments for wheel pairs compared
to the end of 2019.
• Tax paid was 49% lower year on year at RUB 3,052 million mainly as a result of the year-on-year decrease in taxable
profits.
Net cash used in investing activities
Net cash used in investing activities declined 49% year on year to RUB 6,528 million reflecting a targeted decrease
in the Group’s capital expenditure for expansion in 2020. Purchases of property, plant and equipment (on a cash basis;
including maintenance CAPEX) were down 49% year on year to RUB 6,941 million resulting largely from an 83% year-on-
year decline in expansion CAPEX.
Net cash used in financing activities
Net cash used in financing activities rose 20% year on year to RUB 20,357 million in 2020. This was due
to a combination of the following factors:
Free Cash Flow (a non-IFRS financial measure) is calculated as “Cash generated from operations” (after “Changes
in working capital”) less “Tax paid”, “Purchases of property, plant and equipment” (including maintenance CAPEX),
“Purchases of intangible assets”, “Acquisition of subsidiary undertakings - net of cash acquired”, “Principal elements
of lease payments for leases with financial institutions”, “Principal elements of lease payments for other lease liabilities”,
“Interest paid on other lease liabilities”, “Interest paid on bank borrowings and non-convertible unsecured bonds”
and “Interest paid on leases with financial institutions”.
The Group’s Free Cash Flow2 increased 14% year on year to RUB 15,103 million in 2020, primarily as a result of the
following factors:
• Cash generated from operations (after “Changes in working capital”) declined 20% or RUB 7,144 million year on year
to RUB 28,278 million, which was more than offset by:
• a 49% or RUB 6,576 million year-on-year targeted reduction in Total CAPEX (including maintenance CAPEX)2
to RUB 6,941 million; and a 49% or RUB 2,966 million year-on-year decrease in Tax paid to RUB 3,052 million as
described above.
The following table sets out details on Free Cash Flow and Attributable Free Cash Flow for the years ended
31 December 2020 and 2019, and its reconciliation to Cash generated from operations.
• The Group completed a sizeable refinancing of its debt portfolio in 2020 in order to improve the average weighted
Cash generated from operations
(after “Changes in working capital”)
interest rate which was brought down to 6.9% as of 31 December 2020 from 8.1% as of 31 December 2019.
Total CAPEX (including maintenance CAPEX)2
• Net cash inflows from borrowings and finance leases1 declined 53% year on year to RUB 1,946 million in 2020.
•
Interest paid (including “Interest paid on bank borrowings and non-convertible unsecured bonds” and “Interest paid
on leases with financial institutions”) rose 10% year-on-year to RUB 2,396 million in 2020 with the rise in the average
level of the Group’s total borrowings over the year partially offset by the significant improvement in the average
weighted interest rate.
• The amount of dividends paid to owners of the Company in 2020 (including combined fin al dividends
for second half of 2019 and interim dividends for first half of 2020) remained stable year on year and amounted
to RUB 16,637 million.
• Dividends paid to non-controlling interests in subsidiaries increased 42% year on year to RUB 2,272 million in 2020.
Tax paid
Interest paid on bank borrowings and non-convertible
unsecured bonds
Principal elements of lease payments for other lease
liabilities
Interest paid on leases with financial institutions
Interest paid on other lease liabilities
Free Cash Flow2
Minus
Adjusted Profit Attributable to Non-controlling Interests
Attributable Free Cash Flow2
2019,
RUB mln
2020,
RUB mln
Change,
%
35,422
(13,517)
(6,018)
(2,018)
(340)
(167)
(112)
13,251
1,846
11,405
28,278
(6,941)
(3,052)
(2,315)
(672)
(81)
(114)
15,103
1,600
13,503
-20%
-49%
-49%
15%
98%
-52%
2%
14%
-13%
18%
1 Net cash inflows (outflows) from borrowings and financial leases (a non-IFRS financial measure) defined as the balance between the following line
items: “Proceeds from bank borrowings”, “Proceeds from issue of non-convertible unsecured bonds”, “Repayments of borrowings” and “Principal
elements of lease payments for leases with financial institutions”.
2 Free Cash Flow, Attributable Free Cash Flow and Total CAPEX are presented net of principal elements of lease payments for leases with financial
institutions for both years (2019 and 2020). During the first six months of 2020 the entire financial lease portfolio was refinanced to bilateral loans,
therefore principal elements of lease payments were eliminated from both years for comparison purposes.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
56
Capital expenditure
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
57
Total CAPEX (a non-IFRS financial measure) calculated on a cash basis as the sum of “Purchases of property, plant
and equipment” (which includes maintenance CAPEX), “Purchases of intangible assets”, “Acquisition of subsidiary
undertakings - net of cash acquired” and “Principal elements of lease payments for leases with financial institutions”
(as part of the capital expenditures was financed with a finance lease).
In 2020, the Group’s Total CAPEX (on a cash basis, including maintenance CAPEX)1 decreased 49% to RUB 6,941
million2 compared to 2019. The decline in capital expenditures was primarily due to the following factors:
• An 83% year-on-year targeted cut in expansion CAPEX3 to RUB 1,139 million* on a cash basis, despite the delivery
of 300 flat cars to support the growing niche business of freight rail transportation of specialised containers
(for petrochemicals and high grade steel)4.
• Maintenance CAPEX that was 16% lower year on year at RUB 5,803 million* reflecting the usage of wheel pairs
stockpiled in 2019 at an advantageous price and a decline in the market cost of wheel pairs throughout 2020.
The following table sets out the principal components of the Group’s Total CAPEX for the year ended 31 December
2020 and 2019.
Purchase of property, plant and equipment
Purchase of intangible assets
Total CAPEX1
Not included
2019,
RUB mln
2020,
RUB mln
Change,
%
13,516
0.8
13,517
6,941
-
6,941
-49%
-100%
-49%
Principal elements of lease payments for leases with
financial institutions
489
1,716
251%
The following table sets out details on the Group’s total debt, Net Debt and Net Debt to Adjusted EBITDA
at 31 December 2020 and 31 December 2019, and the reconciliation of Net Debt to Total debt.
Total debt
Minus
Cash and cash equivalents
Net Debt
Net Debt to Adjusted EBITDA
As of
31 December 2019,
RUB mln
As of
31 December 2020,
RUB mln
Change,
%
30,095
6,522
23,574
0.60
32,015
4,978
27,037
1.01
6%
-24%
15%
-
Rouble-denominated borrowings accounted for 100% of the Group’s debt portfolio as of 31 December 2020.
The Russian rouble is the functional currency of the Company.
The weighted average effective interest rate improved to 6.9% as of 31 December 2020 compared to 8.1% as of the end
of 2019. The vast majority of the Group’s debt had fixed interest rates as of the end of the reporting year.
The Group has a balanced maturity profile supported by the Group’s robust cash flow generation, available cash
and cash equivalents, as well as undrawn borrowing facilities of RUB 29,449 million as of 31 December 2020.
The following table gives the maturity profile of the Group’s borrowings (including accrued interest
of RUB 353 million*) as of 31 December 2020.
As of
31 December 2020,
RUB mln
2,458*
2,525*
4,002*
1,946*
11,555*
6,732*
2,797*
32,015
Capital resources
As of 31 December 2020, the Group’s financial indebtedness consisted of borrowings and non-convertible
unsecured bonds for an aggregate principal amount of RUB 32,015 million (including accrued interest
of RUB 353 million*).
Under IFRS 16, Other lease liabilities of RUB 1,405 million was recognised on the balance sheet
as of 31 December 20205 which primarily related to the long-term leasing of offices and certain rolling stock.
The Group’s Net Debt was RUB 27,037 million as of 31 December 2020, a 15% increase as compared
to 31 December 2019.
Q1 2021
Q2 2021
Q3 2021
Q4 2021
2022
2023
2024-25
Total
1 Total CAPEX is net of principal elements of lease payments for leases with financial institutions presented for both periods (2019 and 2020). During H1
2020 the entire financial lease portfolio was refinanced to bilateral loans, therefore principal elements of lease payments were eliminated from both
periods for comparison purposes.
2 The Group’s capital expenditure (including maintenance CAPEX) on an accrual basis was RUB 8,626 million in 2020 (2019: RUB 14,136 million).
The difference between capital expenditure given on a cash basis and on an accrual basis is principally because of a time lag between prepayments
for and delivery of rolling stock.
3 Including “Purchases of intangible assets”.
4 In 2019 the Group took delivery of 2,502 units (including 1,154 specialised containers, 700 flat cars, 638 gondola cars and 10 locomotives).
5 Not included in Total debt.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 58
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
59
Related party transactions
For the purposes of financial statements, parties are considered to be related if one party has the ability to control
the other party or exercise significant influence over the other party in making financial and operational decisions
as defined by IAS 24 “Related Party Disclosures”. In considering each possible related party relationship, attention
is directed to the substance of the relationship, not merely the legal form. Related parties may enter into transactions,
which unrelated parties might not, and transactions between related parties may not be effected on the same terms,
conditions and amounts as transactions between unrelated parties.
Litten Investments Ltd, controlled by a Director of the Company!, has a shareholding in the Company of 5.1%
as at 31 December 2020 (31 December 2019: 5.1%).
Goldriver Resources Ltd, controlled by a member of key management personnel of the Group2, has a shareholding
in the Company of 4.0% as at 31 December 2020 (31 December 2019: 4.0%).
As at 31 December 2020, another 0.2% (2019: 0.2%) of the shares of the Company is controlled by Directors
and key management of the Company.
The following transactions were carried out with related parties:
Key management compensation
Key management salaries and other short-term employee benefits
Share based compensation
Total
2019,
RUB mln
2020,
RUB mln
1,418
83
1,501
1,139
29
1,168
The key management compensation above includes directors’ remuneration paid to the directors of the
Company both by the Company and by subsidiaries of the Company in respect of services provided to such
subsidiaries amounting to RUB 433 million (2019: RUB 508 million) and analysed as follows:
Non-executive directors’ fees
Emoluments in their executive capacity
Share based compensation in their executive capacity
Total
Year-end balances arising from sale of shares/purchases of services
Accrued key management remuneration – current:
Accrued salaries and other short-term employee benefits
Share based payment liability
Total
Accrued key management remuneration – non-current:
Share based payment liability
Total
2019,
RUB mln
2020,
RUB mln
21
475
12
508
26
406
1
433
2019,
RUB mln
2020,
RUB mln
416
123
539
255
104
359
2019,
RUB mln
2020,
RUB mln
82
82
-
-
More information is available in Note 35 to the Group’s Consolidated Management Report
and Consolidated Financial Statements included into the Financial Statements section
of this Annual Report.
1 Beneficially owned by Alexander Eliseev, Non-executive Director and co-founder of Globaltrans.
2 Beneficially owned by Sergey Maltsev, Chairman of the Board of Directors, Chief Strategy Officer and co-founder of Globaltrans.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 56
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
57
Risk
Management
Globaltrans faces a wide range of potential and current
risks to its business. To identify, evaluate and mitigate
these risks, the Group has established a system for
monitoring and controlling uncertainties and risks that
it faces. This system is overseen by a dedicated risk
management function. The Board of Directors has overall
responsibility for the Group’s risk management.
The Board, as part of its role in providing strategic
oversight and stewardship of the Company, is
responsible for maintaining a sound risk management
and internal control system. As part of that system, the
Board determines principal risks and sets respective
risk tolerance levels. Globaltrans has adopted a risk
management policy that provides a consistent
framework for the identification, assessment and
management and, where possible, mitigation of risks.
The oversight of risk management is delegated to
the Audit Committee. In January 2021, the Board
established the ESG Committee to analyse and
oversee risks related to environmental, social and
governance issues. In addition, the Board has delegated
to the CEO the responsibility for the effective and
efficient implementation and maintenance of the risk
management system.
The Directors, through the Audit Committee, review the
systems that have been established for this purpose and
regularly review their effectiveness. Appropriate actions
are then taken to manage the risk to an acceptable level
as defined by the Board.
Ultimately, risk management aims to establish and
maintain a holistic view of risks across the enterprise, so
capabilities and performance objectives are achieved via
risk-informed resources and investment decisions.
Globaltrans bases its risk management activity on
a series of well-defined risk management principles,
derived from experience, best practice and in
accordance with corporate governance principles.
The Group’s risk management principles consist of nine
interdependent and interconnected components that
aim to provide a holistic view of risk across the whole
organisation.
Risk management principles
Enterprise-wide
Systematic
and structured
Based on top-down
and bottom-up approach
1
Risks that the Group faces should
be managed on an enterprise-
wide basis as a continuous and
developing process that runs
throughout the Group’s strategy and
the implementation of that strategy.
2
Risk management should
involve recognised processes
and activities in a systematic,
methodical way that ensures
the results of risk management
activities are reliable, robust
and comparable.
3
Risk management should evaluate
the potential upside and downside
of all risks that could affect the
Group. It should increase the
probability of success and reduce
both the probability of failure and the
uncertainty of achieving the Group’s
overall objectives. Risk management
activity should include the
development and implementation
of risk response actions to remove
or mitigate all risks the Group faces,
transfer them to a third party or
accept them.
Forward-thinking
approach
Aligned with
the Group’s objectives
Integrated into
the Group’s business
Risk management should be forward-
thinking. It should involve identifying
and preparing for what might
happen rather than always managing
retrospectively. Risk management
should encourage the Group to
manage proactively rather than
reactively.
Risk management should be aligned
with the Group’s objectives and
provide reasonable assurance
regarding the achievement of those
objectives.
Risk management should be
embedded in all the Group’s
practices and business processes
(including business and strategic
planning, budgeting and decision-
making) so that it is relevant,
effective, efficient and sustained.
All Group staff should be responsible
and accountable for managing the
risks in their activities.
Integrated
into corporate culture
Clear
and understandable
Evolving
Risk management should be a part
of the Group’s corporate culture.
All employees should be aware of the
relevance of risk to the achievement
of their objectives.
Risk management principles,
methods and tools should be
clear and easily understood by
the Group’s employees.
The Group’s risk management
system should be continually
evolving. The management of risk
is an ongoing process and it is
recognised that the level and extent
of the risk management system will
evolve as the Group evolves.
4
7
5
8
6
9
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
58
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
59
PRINCIPAL RISKS AND UNCERTAINTIES
STRATEGIC: RISKS THAT INFLUENCE THE GROUP’S ABILITY TO ACHIEVE ITS STRATEGY
Risk
Description
Controls and mitigating factors
Globaltrans has grouped risks that it considers
significant into key categories – strategic, operational,
compliance and financial.
This list is not exhaustive and the order of information
does not reflect the probability of occurrence or the
magnitude of any potential effect. Additional risks
not currently known or that are currently considered
immaterial could also have an impact on the Group’s
business, financial condition, operational results and
prospects, as well as on the trading price of its Global
Depositary Receipts ("GDRs"). We monitor and assess
risks on an ongoing basis and we make efforts to control
and mitigate such risks.
Regulatory risk
and relations
with government
authorities and
state-owned
enterprises
STRATEGIC: RISKS THAT INFLUENCE THE GROUP’S ABILITY TO ACHIEVE ITS STRATEGY
Risk
Description
Controls and mitigating factors
The Group is subject to regulatory risks relating to the operation
of the Russian railway transportation market and railway industry
reform. Any changes to the regulatory environment of the Russian
railway transportation market or in other markets where the Group
operates, including, but not limited to, railway tariff regulations
and technical requirements for fleet operation and maintenance,
could negatively impact the Group’s business, its profitability and
prospects for further business growth. Government authorities have
significant influence over the functioning of the Russian railway
transportation market. Any deterioration in the Group’s direct or
indirect relationship with government authorities at either the local
or federal level could result in greater government scrutiny of the
Group’s business and how it conducts its operations or less effective
access to services dependent upon government authorities.
In addition, the Group relies on its relationship with and the services
(including maintenance and repairs), infrastructure and information
provided by RZD, an entity controlled by the state. While the Group
has enjoyed a good relationship with RZD, there is no assurance
it will always continue to do so in the future or that RZD will not
increase its charges for such service provision and infrastructure
use. Railway transportation regulations in countries bordering Russia
may change, limiting the access of the Group’s rolling stock to
certain territories.
Growth strategies
Business growth can be constrained by an increase in prices for
new rolling stock and spare parts, overproduction of rolling stock,
partial scrappage of Group’s rolling stock due to expiration of its
useful life, a limited supply of long-term funding, an increase in the
cost of borrowing and/or adverse market conditions that can have
a negative impact on the return on any investments. Although the
Group takes a conservative approach to investments, any
deterioration in the market environment may negatively impact the
profitability and payback period of investments in rolling stock, thus
limiting the Group’s return on its investments and ability to expand
its business. Alongside pursuing organic growth strategies, the
Group has expanded its operations through acquisitions in the past
and may pursue more in the future if appropriate opportunities arise.
The pursuit of an acquisition strategy entails certain risks, including
problems with integrating and managing such new acquisitions.
The expiry of long-term service contracts with its key customers
may also limit the Group’s growth opportunities as these may result
in volatility in logistics, a reduction in the Group’s business volumes
and/or profitability of its operations.
The management of the Group regularly
monitors changes to the regulatory
regime of the railway transportation
market in the countries in which it
operates. The Group has a diversified
portfolio of service providers (e.g. for
rolling stock repair services), which allows
it to use private repair depots (including
three in-house repair facilities) to ensure
less dependence on RZD-owned depots,
obtain higher-quality service and minimise
the costs of that service.
RZD remains the only provider of
infrastructure and locomotive traction
services, although the Group does
operate its own locomotives in the form
of block trains (cargo or client specific
Group-operated block trains all going in
the same direction) on some routes.
The Group also continues to monitor
market liberalisation reforms to ensure
that it can take advantage of any
opportunities when they arise. The Group
monitors Federal Antimonopoly Service
(“FAS”) initiatives regarding railway tariff
regulation and also seeks to minimise
its exposure to adverse changes in
RZD’s regulated tariffs for the usage of
infrastructure and locomotive traction
by providing that these changes are
adequately passed on to the Group’s
customers where possible.
Any acquisition of rolling stock is matched
against projected demand for railway
transportation and the economically
viable expected payback period for such
investments. The Group cooperates with
numerous rolling stock producers in
Russia and other CIS countries without
placing too much reliance on any
particular supplier.
The Group is also focused on the
diversification of its business, including
by developing transportation of
petrochemicals and other niche projects.
Any valuation of an acquisition target is
subject to review by external advisers, and
fairness opinions are normally provided
by reputable appraisal companies to
the Group’s Board of Directors when
a transaction is considered.
General economic
situation and
operating
environment
The Group and its subsidiaries operate mainly in Russia and other
emerging markets. Emerging markets, such as Russia, Kazakhstan
and Ukraine, are subject to greater risks than more developed
markets, including significant economic, political, social, legal and
legislative uncertainties. Moreover, the Group’s business depends
on demand in the Russian freight rail transportation market, which in
turn depends on certain key commodity sectors and, accordingly, on
economic conditions in Russia, Europe and elsewhere. A decrease
in production and demand for key commodities in Russia, or in
adjacent countries where the commodities of the Group’s key
customers are shipped by rail, as a result of a technological shift,
economic downturn, political crisis or another event in Russia or
another relevant country, negatively impacts the Group’s business
and growth prospects.
In addition to the human impact, the spread of Coronavirus
(COVID-19) continues to affect global businesses and may lead to
further and/or continued lockdowns, trade wars and turbulence in
different currencies. The Group’s outlook for 2021 may be further
impacted by the Coronavirus outbreak, which continues to cause
uncertainty. The freight rail market may experience reduced demand
stemming from the effects of COVID-19. The Group cannot predict
the full impact of COVID-19 on its markets, business or prospects
although they may be materially adversely impacted by the rapidly
evolving situation. Also, the appearance of new pandemics or other
dangerous illnesses could seriously affect the global and local
business environment and lead to negative consequences for the
Group’s business. Significant levels of COVID-19 illness in the Group
or its key clients could interfere with the stability of the Group’s
operations.
The political turmoil experienced within Ukraine and sanctions
imposed by the United States and the European Union on Russia,
and by Russia on other countries, have had a negative impact
on the Russian economy. The potential decrease in demand for
Russian commodities or change in directions of supply for Russian
commodities may have a negative impact on the freight rail
transportation market and the Group’s business.
The threat of sanctions against the Group’s existing customers,
any deterioration in or threat to their financial condition and/or the
temporary closure of certain markets may decrease demand for
the Group’s services and/or negatively impact the Group’s logistics.
In addition, the political instability in Ukraine could have a negative
impact on the Group’s business and assets in Ukraine and/or on the
ability of the Group’s customers to carry on business in Ukraine.
Mitigation methodology involves
understanding the political and
economic uncertainties of the operating
environment and the risks faced in
our business operations. The Group’s
compliance and legal teams constantly
monitor changes in legislation and
report them to the Group’s management
and Board of Directors while the
finance and business teams monitor
economic developments and do the
same. The counterparties, banks and
transactions of the Group are constantly
reviewed by the Group’s compliance and
legal teams to ensure full compliance with
all applicable legislation. Risk managers
have direct access to the Group’s key
management.
The Group maintains a balanced fleet as
one of the cornerstones of its business
model. A balanced fleet (between
universal gondola cars, adaptable to the
demand for the transportation of various
bulk cargoes, and tank cars, which are
used for the transportation of oil products
and oil) enables the Group to adapt
to market conditions and reduces its
dependence on any one cargo flow.
In addition, the Group has entered into
long-term service contracts with several
large clients. Management assesses
the possible impairment of the
Group’s tangible and intangible
assets by considering the current
economic environment and outlook.
Management believes that it is taking
all necessary measures to support the
sustainability and development of the
Group’s business in the current business
and economic environment.
Management is closely monitoring the
implications of the global outbreak of
COVID-19 and acts depending on the
development of the situation. The Group
constantly evaluates and implements
options for distant work for its workforce
to mitigate risks of spreading and catching
COVID-19 illness.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 60
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
61
STRATEGIC: RISKS THAT INFLUENCE THE GROUP’S ABILITY TO ACHIEVE ITS STRATEGY
OPERATIONAL: RISKS THAT INFLUENCE THE GROUP’S OPERATIONAL EFFICIENCY
Risk
Description
Controls and mitigating factors
Risk
Description
Controls and mitigating factors
Competition
and customer
concentration
The Russian freight rail transportation market is highly competitive
in terms of unregulated operators’ services tariffs. The ongoing
market consolidation may lead to greater price competition. The risk
of an irrational supply of railcars on the market by railcar producers
and/or irrational behaviour of competitors (including new market
entrants) may place additional pressure on the profitability of railcar
operations and thus negatively impact the Group. Competition
between railway transportation and other means of transportation,
including, but not limited to, oil product and oil transportation
by pipeline, river and road, may negatively impact the Group’s
business volumes and profitability. The Group’s customer base is
characterised by significant concentration: the business is heavily
dependent on a few large industrial groups and their suppliers, with
its top 10 customers and their suppliers accounting for around 72%
of the Group’s Net Revenue from Operation of Rolling Stock in 2020.
While the Group has long-term service contracts with several key
customers, failure to extend and/or maintain the current service
contracts or for such customers to no longer have the volume
requirements they have had in the past may have a negative impact
on the Group’s operational results and financial performance.
Locomotive
traction
The Group is dependent on RZD to issue permits allowing it to
operate locomotives and to approve its use of locomotives for
particular routes. If those routes are not in demand by the Group’s
clients, their utilisation could be lower. Furthermore, there is
uncertainty about the prospects for, and the timing of, further
deregulation of locomotive traction.
Shareholder
activism
Global depositary receipts of Globaltrans have been listed on the
Main Market of the London Stock Exchange since May 2008 and on
the Moscow Exchange since October 2020 with a free float of over
50%. Publicly traded companies are often subject to shareholder
activism, and the Company’s shareholders may seek to advocate
for changes to corporate governance practices, social issues, or for
certain corporate actions or reorganisations via media campaigns
or other activities. Responding to these campaigns can be costly
and time consuming and may have an adverse effect on the Group’s
reputation or ability to execute its business plan.
Globaltrans has significant competitive
advantages that mitigate some of the risks
of competition. These advantages include
its strong reputation for high-quality
service and reliability; its independent
status; its long-term partnership with
customers; its sophisticated operating
capabilities; and its modern fleet.
The Group has long-term, established
relationships with its key customers and
their affiliates and suppliers. In most cases,
Globaltrans has become an integrated
part of their operations. Around 64% of
the Group’s Net Revenue from Operation
of Rolling Stock in 2020 was covered by
long-term service contracts with several
large clients. Such contracts provide
additional stability and greater certainty
regarding transport volumes for the
Group. Globaltrans continues its focus
on expanding business with small and
medium companies to further diversify
its customer base. In 2020, the share of
small and medium companies amounted
to 28% of Net Revenue from Operation of
Rolling Stock (2019: 26%). Furthermore,
the Group’s marketing function regularly
monitors competitors’ business strategies,
their use of technology, their price
strategies and industry trends.
The Group has a competitive advantage
in providing freight rail transportation
services to some clients, as it operates
its own locomotives for the traction of
block trains dedicated to particular routes.
By assembling full trains composed only
of its own railcars, the Group increases
the speed and reliability of transportation
for its clients. The Group has established
controls to obtain the timely renewal of
locomotive operation licenses and the
respective permits from RZD. The Group
regularly monitors the progress of the
reform relating to continued deregulation
of locomotive traction. In addition, the
Group’s management actively participates
in the development of the required
regulation through various dedicated
industrial organisations and partnerships.
The Group has an active shareholder
engagement programme and seeks to
maintain a constructive dialogue with the
Company’s major shareholders. Feedback
from shareholders is provided to the
Company’s Board of Directors.
Infrastructure
The rail network and physical infrastructure in Russia, owned and
operated by RZD, as well as the networks and infrastructure of other
countries on which the Group depends to operate its rolling stock,
like Kazakhstan, Ukraine and other neighbouring countries, largely
date back to the Soviet era. In some cases, these rail networks have
not been adequately maintained, which could negatively affect the
condition of the Group’s rolling stock, performance and business.
In addition, the oversupply of rolling stock, inefficient logistics at
local destinations as well as maintenance and modernisation of rail
infrastructure undertaken from time to time by RZD could negatively
impact the average speed of transportation and therefore affect
the operational performance of railcars. RZD tariffs for the use of
the railway network and the provision of locomotive services are
regulated by the FAS and are in principle “pass-through” items for
the Group and other private freight rail operators. Meanwhile, RZD
tariffs for the traction of empty railcars are in most cases a direct
cost to the Group and other private freight rail operators. Significant
upward changes in the regulated tariffs, whether as a result of annual
indexation or changes in the tariff-setting methodology, could have
an adverse effect on the Group’s business.
With immaterial exceptions, all of the
Group’s rolling stock is insured against
damage. Moreover, as a freight carrier
on the railway network, RZD bears full
responsibility for third-party losses caused
by accidents on the network. The Group
monitors its rolling stock through its
dispatch centre on a 24/7 basis and plans
its routes accordingly to optimise logistics
and minimise the risks of disruption.
The Group monitors FAS initiatives to
detect possible changes in tariff-setting
methodology and tries to reflect relevant
changes in contracts with customers.
Operational
performance
Rising inflation in Russia and an increase in prices for spare parts and
railcar repair works may increase the Group’s costs and maintenance
CAPEX, while the Group may have limited opportunities to increase
tariffs to customers.
Employees
Customer
satisfaction
The Group’s future success will partly depend on its ability to
continue to attract, retain and motivate key employees and qualified
personnel, in particular an experienced management team and
logistics and railway experts. Competition in Russia for such
personnel with relevant expertise is intense due to the small number
of qualified individuals with suitable practical experience in the rail
industry.
Customers rely on the Group for the provision of high-quality freight
rail transportation and other related services and expect the Group
to be commercially responsive to their needs. These include the
timely collection and delivery of cargo and availability of rolling
stock, which is not always within the direct control of the Group
because it is dependent upon RZD for locomotive traction and
maintenance of infrastructure. Accordingly, timely delivery of cargo
is highly dependent on a third party whose performance could be
unsatisfactory to the Group’s customers.
Among the Group’s key objectives are
to increase operational efficiency and
to focus on controlling and reducing
costs. The Group seeks to diversify and
control its supply chain to maintain cost
efficiency.
Adequate remuneration packages, which
are in line with or above market levels,
are offered to all employees and key
managers and the remuneration of key
managers is linked to the Group’s financial
results. The human resources function
regularly monitors salary levels and other
benefits offered by competitors to ensure
that the Group’s remuneration packages
are appropriate.
The Group has a strong reputation for
delivering good quality, reliable and
flexible freight rail transportation services
to its customers. Customer satisfaction
is one of the key metrics that the Group’s
management monitors. Each customer is
assigned an account manager responsible
for the day-to-day relationship with that
customer. Customer feedback is analysed
and appropriate follow-up actions are
taken. The Group has a track record of
high customer retention and the majority
of key customers stay with the Group for
many years. In addition, the Group serves
several key clients on a long-term basis
and has recently added new contracts
and extended others.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 62
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
63
OPERATIONAL: RISKS THAT INFLUENCE THE GROUP’S OPERATIONAL EFFICIENCY
COMPLIANCE: RISKS THAT INFLUENCE THE GROUP’S ADHERENCE TO RELEVANT LAWS AND REGULATIONS
Risk
Description
Controls and mitigating factors
Risk
Description
Controls and mitigating factors
IT availability/
continuity
The Group uses specialised rail transport and logistics software to
ensure the efficiency and effectiveness of its logistics, dispatching
and rolling stock tracking services. These systems are either licensed
to the Group and then customised to the Group’s needs or delivered
to the Group and maintained for its needs by third parties under
service agreements. The Group may potentially face risks related to
access privileges, audit trails, authentication, authorisation, backup
procedures, business continuation, change management (software
and hardware), data integrity, disaster recovery, infrastructure,
information/data security and cyber-attacks. The Group may
lose access to IT products if third party providers do not renew
commitments under existing or expiring service agreements.
Further, as a result of technological change systems and products
that the Group uses could cease to be maintained by third party
service providers, requiring the Group to adopt new systems or
products.
Local IT specialists have introduced
solutions to maintain the availability and
proper licensing of IT services and ensure
their recovery in case of disruption.
The IT function and internal audit
function monitor all IT-related activities
and performance for compliance with IT
policies and procedures.
Risks of terrorist
attacks, natural
disasters or other
catastrophic
events beyond the
Group’s control
The Group’s business operations could be adversely affected or
disrupted by terrorist attacks, natural disasters (such as earthquakes,
floods, tsunamis, hurricanes, fires or typhoons) or other catastrophic
or otherwise disruptive events – including changes to predominant
natural weather, sea and climatic patterns, piracy, sabotage,
insurrection, military conflict or war, riots or civil disturbance,
radioactive or other material environmental contamination,
an outbreak of a contagious disease or changes to sea levels – which
may adversely affect global or regional trade volumes or customer
demand for cargo transported to or from affected areas, or lead to
denial of the use of any railway, port, airport, shipping service or
other means of transport and disrupt customers’ logistics chains. In
addition, the Group may be exposed to extreme weather conditions
such as severe cold periods and icy conditions that disrupt
activities in ports that are destination points for customer cargoes.
Furthermore, many of these events may not be covered by the
Group’s insurance or any applicable insurance may not adequately
cover any resulting losses.
The Group’s rolling stock is insured
against damage, and the responsibility
for third-party losses caused by accidents
on the network lies with RZD. The Group
consistently monitors any disruptive
events and applies a business continuity
policy to:
• Ensure the safety of employees and
human life;
• Maintain continuity of time-critical
services;
• Minimise disruptions to clients and
partners;
• Minimise the operational, financial and
reputational impact.
The Group’s rolling stock could be adversely affected by unlawful
acts in Russia or neighbouring countries. The occurrence of any
such events may reduce the Group’s business volumes, cause idle
time for its rolling stock or disruptions to its operations in part or
whole, subject the Group to liability, impact its brand and reputation
and otherwise hinder normal operations. This could have a material
adverse effect on the Group’s business, results of operations or
financial condition.
Pending and
potential legal
actions
The Group is involved in legal actions from time to time.
Such actions may have an adverse effect on the Group.
The ambiguity of the law in Russia and CIS countries creates
regulatory uncertainty and could result in claims from government
authorities not expected by the Group.
ESG risks
Environmental, social and governance (ESG) risks include those
related to climate change impacts mitigation and adaptation,
environmental management practices, environmental protection
and duty of care, working and safety conditions, respect for human
rights, gender equality, supporting a culture in which all relevant
stakeholders are valued and respected, compliance with relevant
laws and regulations and ensuring compliance with regulations
governing the protection of human rights, operational and
occupational health and safety, and ESG practices in the jurisdictions
in which we operate.
Compliance with
regulations and
sanctions
The Group functions in several jurisdictions, including Cyprus,
Russia, Estonia, Finland and Ukraine. In addition, the Group has
its GDRs listed on the London Stock Exchange and the Moscow
Exchange. Thus, the Group is subject to the laws and regulations
of those countries in which it is active, the regulations of stock
exchanges on which its securities are traded and any applicable
sanctions legislation, all of which may change from time to time.
The Group runs its operations in
compliance with tax, currency, labour,
customs, antimonopoly and other
applicable legislation and constantly
monitors any changes in the regulatory
environment. The Group monitors
its compliance with the terms of
its agreements. Standard forms of
agreements are used for transportation
services, and various controls are in place
to ensure that the terms of agreements
are adhered to. All contracts are subject
to rigorous review by all of the Group
functions concerned and to a formal
approval process prior to execution.
Although rail is one of the greenest
modes of transport, the Group is
committed to the protection of the
environment by seeking to reduce the
environmental footprint of its business
and develop a sustainable supply chain.
The Group aims to ensure compliance
with regulations governing the protection
of human rights, operational and
occupational health and safety, and ESG
practices in the jurisdictions in which the
Group operates. The Group promotes high
ethical standards and respect for human
rights.
In January 2021, the Group formally
adopted an ESG policy and also
established the ESG Committee of the
Board of Directors. The main purpose
of ESG Committee is to oversee the
development and implementation of
the corporate environmental and social
responsibility initiatives of the Group,
monitor and review activities, and make
recommendations to the Board of
Directors of the Company on actions
needed to address any issues identified or
to make improvements where desirable.
The legal and compliance teams of the
Group together with the external lawyers
monitor the applicable requirements in
each of jurisdiction in which it is active and
stock exchange on which its securities are
trading, including monitoring US personal
and sectoral sanctions (SDN OFAC, SSI
OFAC and CAATSA), and the appropriate
controls are in place to ensure that all
subsidiaries of the Group comply with
applicable regulations.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 64
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
65
COMPLIANCE: RISKS THAT INFLUENCE THE GROUP’S ADHERENCE TO RELEVANT LAWS AND REGULATIONS
FINANCIAL: RISKS THAT INFLUENCE THE GROUP’S FINANCIAL PERFORMANCE
Risk
Description
Controls and mitigating factors
Risk
Description
Controls and mitigating factors
Fiscal risk
Impact of Brexit
and Takeover
regulations
Local tax, currency and customs legislation, especially in Russia,
other emerging markets and Cyprus, may be subject to varying
interpretations, inconsistencies between federal laws, regional and
local laws, rules and regulations, frequent changes and a lack of
judicial and administrative guidance on interpreting legislation.
Any increase in applicable tax rates, as well as introduction of new
taxes in the countries where the Group is active, may reduce the
profitability of the Group.
The Group has controls in place, including
highly qualified and experienced
personnel, to monitor changes in
legislation and determine the appropriate
action needed to minimise the risk of
a challenge to such treatments by the
authorities. For complex matters, the
Group engages and cooperates with
external consultants and law firms.
From 1 January 2021, as a result of the end of the transitional period
following the United Kingdom’s exit from the European Union, as
a company organised under the laws of Cyprus, the Takeover Panel
will no longer exercise shared jurisdiction over transactions involving
the Company which would otherwise be subject to the Takeover
Code, including takeover bids, merger transactions, or schemes
of arrangement resulting the change or consolidation of control
over the Company. In addition, from 1 January 2021, the London
Stock Exchange (where the Company’s Global Depositary Receipts
are admitted to trading) will no longer be a regulated market as
defined in Directive 2014/65/EU of the European Parliament and
of the Council on markets in financial instruments; as a result, the
legislation in Cyprus regulating takeovers, including those requiring
mandatory takeover offers in certain situations, will no longer apply
to the Company.
The absence of Takeover regulations
applicable to the Company will allow
existing significant shareholders, or
persons acting in concert, to increase
their holdings (or new significant
shareholders, or persons acting in
concert, to acquire more than 30% of
the outstanding share capital of the
Company) without being obliged to
make a mandatory tender offer to other
shareholders. The Group monitors
developments in applicable regulations,
making appropriate disclosures of any
relevant new regulations and will make
all required notifications of significant
shareholdings (or changes in respect of
such shareholdings) in the Company.
FINANCIAL: RISKS THAT INFLUENCE THE GROUP’S FINANCIAL PERFORMANCE
Currency risks
Currently, the Group has neither borrowings nor lease liabilities
denominated in US dollars and therefore does not have formal
arrangements for hedging foreign exchange risk with the exception
of hedging foreign currency risk associated with dividend payments
that are considered highly probable and the associated dividend
payable until their settlement. The Group may however keep bank
balances in US dollars and other currencies. The Group therefore
has limited exposure to the effects of currency fluctuations on bank
balances between the US dollar and the Russian rouble.
A large proportion of the Group’s revenues
and expenses are denominated and
settled in Russian roubles. At present, the
risks related to liabilities denominated
in foreign currency are not material and
are partly compensated for by assets
and income denominated in foreign
currency. The Group has refinanced all
of its liabilities denominated in US dollars
with long-term debt denominated in
Russian roubles. Since 2008, the Group
has taken action to mitigate currency
risks and adjusted the profile of the
borrowings in its credit portfolio. As of
31 December 2020, all the Group’s debt
was denominated in Russian roubles.
Interest-rate risks
The Group’s income and operating cash flows are exposed to
changes in market interest rates. These arise mainly from floating
rate lease liabilities and borrowings. An increase in market interest
rates in Russia may negatively influence the Group’s profits.
The Group enters into long-term
borrowing and leases with financial
institutions to finance purchases of rolling
stock and acquisitions of subsidiaries.
The Group borrows at current market
interest rates and does not use any
hedging instruments to manage interest-
rate risk. Management monitors changes
in interest rates and takes steps to mitigate
these risks as far as practicable by
ensuring that the Group has financial
liabilities with both floating and fixed
interest rates as appropriate. As of 31
December 2020, all of the Group’s debt
was at fixed interest rates. Management
also considers alternative means
of financing.
Credit risk
Liquidity risk
Financial assets that potentially subject the Group to credit risk
consist principally of trade receivables, cash and cash equivalents.
Furthermore, the Group’s business is substantially dependent on a
few large key customers, including their affiliates and suppliers. Its
top 10 clients accounted for around 70% of the Group’s trade and
other receivables as of 31 December 2020 and around 72% of the
Group’s Net Revenue from Operation of Rolling Stock in 2020.
The Group has policies in place to ensure
that sales of goods and services are made
to customers with an appropriate credit
history. Substantially all of the Group’s
bank balances are held with reputable
banks.
The Group’s business is capital-intensive. The political turmoil
experienced within Ukraine and sanctions imposed by the United
States and the European Union on Russia have had a negative
impact on the Russian financial markets and have limited the Group’s
access to international sources of funding. Any lack of available
funding and potential increases in market interest rates could have
a negative impact on the Group’s ability to obtain financing for the
settlement of its liabilities or cash to meet its financial obligations.
The Group has a budgeting policy in place
that allows the management to control
current liquidity based on expected cash
flows. These include, among other things,
operating cash flows, capital expenditure
needs, funds borrowed from financial
institutions and funds raised from listed
debt instruments.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 66
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
67
Sustainability
OUR APPROACH
The Sustainability Report which is integrated into the
2020 Annual Report has been prepared in accordance
with the sustainability reporting guidelines of the Global
Reporting Initiative (GRI) and in line with the non-
financial and diversity disclosure information contained
in the EU’s 2014/95/EU Directive.
The overall aim is to achieve high standards in the
areas of balance, comparability, accuracy, timeliness,
clarity and reliability, as defined by the GRI Standards.
The structure and content of this Sustainability Report
reflects the relevant GRI Reporting Principles.
The details within this Sustainability Report cover the key
results and activities of Globaltrans Investment PLC and
its subsidiaries in the field of sustainable development
for the year ended 31 December 2020.
How it works:
Materiality matrix
Step 1. Identification of material topics
We identified material topics relevant to the Group’s
business operation by carefully reviewing and
analysing global sustainability trends, our sustainability
performance, internal regulations and non-financial
reports issued by peers.
Step 2. Prioritisation of material topics
To develop a broader, deeper understanding of the
materiality of the sustainability issues the Group
faces, we sought input from a range of stakeholders
(employees, shareholders, investors, clients, regulators
and other authorities) on what mattered to them.
Step 3. Preparation of materiality matrix
We developed a materiality matrix to identify those
topics that are deemed most important/significant
to the Group’s system of sustainability reporting.
A validity check was also conducted on identified
material topics to ensure that all of them are disclosed
in the Annual Report.
l
r
e
d
o
h
e
k
a
t
s
r
o
f
y
t
i
l
a
i
r
e
t
a
M
y
l
e
m
e
r
t
x
E
t
n
a
t
r
o
p
m
I
t
n
a
t
r
o
p
m
I
3
4
10
12
1
9
8
6
2 5
7
11
Important
Materiality for business
Extremely
Important
Economic impact
Social impact
1 Economic performance
2 Socioeconomic development of regions
3 Business ethics, risk management and anti-corruption
4 Customer satisfaction
9 Employee education and development
10 Employee motivation
11 Diversity and equal opportunity
12 Occupational health and safety
Environmental impact
5 Risks and opportunities posed by climate change
6 Responsible water use and reduction of water consumption
7 Reduction of energy consumption
8 Non-compliance with environmental laws and regulations
HIGHLIGHTS OF 2020
Successful protection of employee health & safety while
ensuring business continuity and a high level of client service
• Effective digital transformation to remote working model
• Ensured continued motivation and positive engagement of staff
throughout the pandemic
• No COVID-related redundancies
ESG management strengthened
including the introduction of new policies
Improved
ESG disclosure
• An ESG Board Committee created
• Diversity and Inclusion, Freedom of Association,
Human Rights, Supplier Code of Conduct,
Environmental and Energy and ESG policies
adopted
• First-time disclosure of Group-wide water
•
consumption1
Introduction of Group-wide LTIFR measure
of employee health & safety
• Website relaunched with a separate
Sustainability section
1 This excludes data from AS Spacecom and BaltTransServis (except for data from the BTS railcar repair depot in Ivanovo which is included).
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
68
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
69
STAKEHOLDER ENGAGEMENT
Effective stakeholder engagement is critical to the long-
term success and sustained growth of any business.
Globaltrans has always valued regular and high quality
engagement with its stakeholders and is committed to
engaging with them in an open and transparent manner in
order to build strong and trusted relationships. Our goal is
to keep our stakeholders up-to-date on developments and
create a better understanding of our business, our strategy
and our performance.
As part of our daily operations, we regularly engage
with employees, customers, government and regulators
and with our local communities while at Group level
the emphasis is on maintaining an open dialogue with
investors, shareholders, credit rating agencies, financial
institutions and the media.
Although 2020 was an extremely difficult and unusual year,
we were able to maintain a high degree of engagement
with our stakeholders.
Although much of our communications became virtual as
a result of the COVID-19 pandemic, it was more important
than ever to keep these channels open. Globaltrans
intensified its efforts to enhance communication around
the impact of, and our response to, the COVID-19 pandemic
that including with regard to the safety of our people, our
business continuity and other ESG (environmental, social,
and governance) issues. As is the case for many companies,
business interactions, especially at Group level, have
essentially become digital, including client communication,
investor roadshows and conferences.
The corporate website remains the main source of
information on the Company: results presentations,
webcasts, current and historical financial information, news
releases, market statistics, and other important data can be
found there. Due to its importance to our communications
strategy, the Globaltrans’ website was revamped and
relaunched in early 2020 to provide visitors with a better
online experience. We have added a separate section on
sustainability given our increasing commitment to this
important issue.
Stakeholder engagement mechanisms
EMPLOYEES
SHAREHOLDERS
AND INVESTORS
CUSTOMERS
AND BUSINESS PARTNERS
Mechanisms of stakeholder
engagement
•
Intranet
• Labour-management
consultations
• Staff surveys
• Corporate booklets, information
boards
• Regular, direct communication
between managers, teams and
individuals
• Career development, training and
performance reviews
Outcomes in 2020
• No COVID-related redundancies
• COVID-19 related measures to
protect health and safety of
employees implemented
• Employee development
maintained at a high level with
21,226 hours of training
• Senior management and our
HR team maintained close
communications with employees
throughout lockdown
• Provision of social benefits and
guarantees, including medical
insurance
Mechanisms of stakeholder
engagement
• Open, effective and transparent
Mechanisms of stakeholder
engagement
• Regular meetings, presentations
communication
Investor Relations website
•
• Dedicated Investor Relations team
• Annual General Meetings
• Corporate reporting, webcasts
• Broker-hosted investor events and
roadshows, conference calls and
Company-initiated roadshows
Outcomes in 2020
•
Information disclosure on a semi-
annual basis
• Analyst and investor conference
calls and webcasts
and formal consultations
• Customer analytics, customer
evaluation system
Industry conferences and forums
•
• Customer satisfaction surveys
• Transparent supply chain
Outcomes in 2020
• Strong portfolio of service contracts
with superior clients in metallurgical
and oil products and oil segments
maintained contributing 64% of
Net Revenue from Operation of
Rolling Stock in 2020
• Virtual non-deal roadshows:
• Successful service contract
around 260 meetings held with
international investors in 2020
• Series of investor webinars with
Russian retail investors following
secondary-listing on the Moscow
Exchange on 28 October 2020
• Share buyback programme
extensions with three major long-
term customers: MMK, Metalloinvest
and Rosneft2
• Deepening relationships with other
high-profile clients — significantly
increased business volumes with
EVRAZ
launched
• Regular dividend payments1
• Publication of the Annual Report
and the integrated Sustainability
Report
1 Total dividends in respect of 2020 amounted
to RUB 13.3 billion (including interim, final and
special dividends).
2 As announced on 26 April 2021.
GOVERNMENT, REGULATORS AND
LOCAL COMMUNITIES
MEDIA
PROFESSIONAL AUTHORITIES
Mechanisms of stakeholder
engagement
• Regular communication with
regulators/policy makers on
issues affecting the freight rail
transportation industry
Industry and regulatory forums
•
Outcomes in 2020
• Participation in industry
associations including the
Council of Railway Operators and
the Russian Union of Transport
Workers
• All applicable guidelines to
manage the impact of COVID-19
implemented
Mechanisms of stakeholder
engagement
• Corporate philanthropy and
charitable contributions
• Community investment
Outcomes in 2020
• Assistance given to support
socioeconomic development of
our communities
• Regular contributions to aid
various charitable projects
Mechanisms of stakeholder
engagement
• Communication with media
representatives
• Transparent disclosure through
various channels
• Dedicated Media section on
corporate website
• Dedicated media relations
contacts
• Press conferences and exhibitions
Outcomes in 2020
• Distribution of news and
information announcements
• Providing access to results calls
with CEO and CFO
• Responding to media queries
•
Interviews with the top
management, ad hoc comments
on various industry issues and
answers to journalists’ questions
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 70
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
71
ETHICS AND BEHAVIOUR
OUR RESPONSE TO THE COVID-19 PANDEMIC
At Globaltrans, we understand that our good name and reputation are of paramount
importance, and could easily be lost by actual or suspected unethical behaviour. This
is why we are committed to ensuring that in our business dealings, we behave openly
and honestly and operate to the highest ethical and professional standards.
The way we conduct our business is guided by the
Group’s core values and principles that are formally
enshrined in our Code of Ethics and Conduct. It sets
out our ethical standards as an organisation and explains
how we expect our people to act. The Code helps our
employees to understand what is expected of them and our
requirements regarding compliance withthe Group's
policies and all relevant laws and regulations. The Code
also describes the Group’s principles with respect
to confidential information, anti-bribery, conflicts of interest
and reporting concerns.
All our employees are required to read and fully understand
the Code and must sign an acknowledgement to this effect.
We do not tolerate any violations of the Code.
Tolerance
Understanding and respecting diverse cultures
and people with different views
Impartiality
Acting objectively and professionally
Respect
Acknowledging people’s abilities, qualities
and achievements and complying with all applicable
labour laws
Equality for all
Creating opportunities and a working environment
that excludes any form of discrimination
Safety
Complying with required rules to create a safe
and healthy workplace
Globaltrans works closely with its suppliers and partners
who play an integral part in delivering value-added
solutions to its clients. The Group chooses to work with
those who share its values and adhere to the same ethical
standards.
In 2020 the Group formally adopted a Supplier Code
of Conduct, based on the principles set out in the UN
Global Compact, which describes what Globaltrans
expects from its suppliers with regards to business ethics,
human and labour rights, employee relations, health
and safety and other related topics.
Globaltrans has consistently sought to deliver sustainable
value to its stakeholders and embrace responsible
business practices. With regard to managing ESG issues,
we are continually improving our sustainability-related
practices and policies and increasing transparency,
recognising its long-term importance to our business.
To strengthen this ongoing commitment, in January 2021
we established the ESG Committee that assists the Board
in considering and overseeing environmental, social
and governance issues relevant to the Group’s business.
The ESG Committee also oversees the development
of the Group’s sustainability approach and reviews
and recommends ESG disclosures for Board approval.
The ESG Committee consists of two Board members:
Elia Nicolaou, Non-executive Director, who serves as
the Chair, and John Carroll Colley, Independent Non-
executive Director. This commitment at the highest
level of the Group is further reinforced by the active
participation of Valery Shpakov, CEO of Globaltrans, in all
ESG-related processes and evaluations.
Supporting our people
Business continuity
Globaltrans rose to the challenges presented by the
COVID-19 pandemic, changing the way we carried out
our daily work in order to keep our employees and other
stakeholders safe while continuing to deliver best-in-
class services for our customers.
As COVID-19 pandemic has shown us, businesses need
to be well-prepared and willing to take swift, deliberate,
and proactive measures to navigate successfully in the
face of unprecedented change. As the safety of our
people is a top priority, we moved swiftly to put in place
measures to help minimise the risk from COVID-19
to our employees and their families. We shifted almost
our entire office workforce to remote working, while
those few office-based employees whose presence
was deemed essential were allowed into the workplace
and proper safety precautions were taken to protect
them.
While the nature of the job meant that staff at our
depots were required to be on-site more often, we tried
to minimise their presence as much as possible and put
in place safety protocols to protect them.
We understood that switching to remote working could
affect the Group’s operations, internal processes, and,
above all, our people and clients. One of the key reasons
that enabled us to transition smoothly and maintain
service continuity was our state of readiness for digital
transformation. As a result, we were able to move
efficiently to remote working while ensuring that all
our regular business processes were unaffected.
Simultaneously, Globaltrans moved quickly to equip
its employees with the right hardware and software
and provide its customers with effective remote tools so
that everyone stayed connected and engaged.
Maintaining clear communication is another critical
element of successful remote working. We all had
to find new ways to work together and each department
within the Group had its own specific requirements.
Our ability to keep in touch and respond quickly to the
immediate needs of our employees and clients enabled us
to remain fully operational during this challenging period.
We provided daily communications with regular updates
on the evolving COVID-19 pandemic, its impact on our
business and our response.
The Group formally reinforced its ESG approach
in January 2021 with the adoption of a specific ESG
Policy. This policy defines the significance of ESG factors
for the Group’s business as well as our commitments
to employees, investors and other stakeholders.
It also clarifies the lines of responsibility
and accountability for achieving these policy
commitments.
Globaltrans has adopted a number of formal Group-
wide policies which address Human Rights, Freedom
of Association, Data protection, Diversity and Inclusion,
and Supplier Conduct. These documents are continually
reviewed and monitored to ensure their relevance
and compliance with legal requirements.
The Group requires that all employees acknowledge their
understanding and acceptance of the relevant policies.
All the documents are publicly available and can be
viewed on the Company’s website.
We value people and respect their fundamental rights
and freedoms. As an employer, business partner
and member of the wider community, we have the power
to do good. We are committed to supporting and abiding
by human rights and labour practices throughout our
business. In 2020, we introduced our Human Rights
Policy, which sets out minimum requirements that
all those working for and with Globaltrans must meet
on all human rights issues. Our approach conforms
to international human rights standards such as the UN
Guiding Principles on Business and Human Rights.
Our commitment to human rights is further made clear
in our Code of Ethics and Conduct and our Supplier
Code of Conduct and in our Diversity and Inclusion
Policy. To promote acceptance of our human rights
policies internally, in line with our values, and to ensure
compliance, we regularly review human rights issues,
conduct any required training, and integrate the results
into our operations.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 72
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
73
Key ESG activities:
Globaltrans aspires to be a diverse and inclusive work
environment in which our people can be themselves
and feel at ease. Our Diversity and Inclusion Policy
commits us to treating everyone with dignity and respect
and to providing our people with equal opportunities
regardless of ethnicity, gender, religious beliefs, nationality,
age or any physical disability. Diversity and inclusion are
prioritised and applied at the highest levels of the Group,
including at Board level. The Board recognises that
diversity can strengthen its performance and takes into
account these aspects when making new appointments
and considering the composition of the Board.
Globaltrans strives to promote a positive employment
environment and ensure compliance with all applicable
labour laws and regulations. We recognise the fundamental
rights of Globaltrans employees to form and join workers’
organisations and to engage in collective bargaining.
Our formal Freedom of Association Policy, adopted
in 2020, strengthens the Group’s commitment. We respect
the choices made by our employees in the matter and are
committed to maintaining a regular and constructive
dialogue with them and their designated representatives.
At Globaltrans, we have a zero-tolerance approach
to bribery and corruption in all its forms and we are
committed to acting ethically and with professionalism,
fairness and integrity in all our business activities
and relationships. Our Anti-fraud Policy is consistent
with all applicable legislation, and defines the standards
of acceptable behaviours to which all employees must
adhere. It also provides guidance on how to avoid,
recognise and tackle any such issues.
We have established rules and procedures for handling
alleged violations, supervised by an internal team
responsible for internal controls and investigations. Each
employee is required to understand the types of violations
that may occur within their area of responsibility and to
closely monitor for any signs of potential non-compliance.
The Group’s Whistleblowing Policy fosters a culture
of honest behaviour and encourages the investigation
and reporting of improper activities, including non-
compliance with our Code of Ethics and Conduct.
Employees are actively encouraged to speak up and to
report any concerns that they may have with workplace
issues. We provide confidential, safe and secure
mechanisms for anonymous reporting of suspected
violations of Group standards. And importantly, we ensure
that whoever reports suspected breaches is protected
and supported.
Executive management meets regularly to discuss, inter
alia, anti-fraud and anti-corruption measures. During 2020,
no instances of alleged fraud, bribery or corruption were
reported within the Group.
We respect and protect the confidentiality and security
of our stakeholders’ personal information. We comply
with the EU General Data Protection Regulation (GDPR)
which was adopted in April 2016. Data privacy and security
are of the utmost importance to the Group and we have
a dedicated Privacy Policy which can be accessed on the
Group’s website.
Corporate governance
Employees
1
The objective of corporate
governance is to support the Board
in its efforts to ensure effective,
transparent and ethical oversight
of the Group. Our governance
framework is in line with the highest
international standards supporting
the Board to take decisions that
are in the best long-term interests
of the Group and its communities
and that will create value for all its
stakeholders.
3
Focusing on employing more
energy-efficient practices,
reducing our carbon emissions
and emphasising the importance
of recycling are some of the ways
in which we work to minimise the
adverse impact of Globaltrans’
activities on the environment.
2
Creating and sustaining a safe
workplace is the key role of
a responsible employer. Our goal is
to enable people to work with dignity
and respect, to provide opportunities
for growth and development and
to create a just and rewarding work
culture. We also ensure that we
operate in full compliance with all
relevant employment legislation.
4
We are very conscious of the role
we can play in supporting our
communities. We do this through
the interactions of our employees,
the opportunities our businesses
create and the economic value
generated by our Company. We also
actively participate in community
initiatives and provide direct support
to important community causes
through charitable giving.
Environment
Communities
Globaltrans continuously strives to improve the way it controls, manages and mitigates
the impact of non-financial risks, which include strategic, operational and compliance
risks. This is not just to satisfy regulatory obligations but also to meet the expectations
of our stakeholders.
Further details on Globaltrans’
Risk Management are set out
on pages 56 to 65.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 74
EMPLOYEES
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
75
The wellbeing, respect and commitment of our people
are what define us. At Globaltrans, we do our utmost
to be the type of company that people want to work
for, where people know they can grow professionally
and personally. We strive for an environment in which
our employees are safe, healthy, engaged, valued and
rewarded. As an employer, we have a responsibility to
offer fair remuneration, to provide training opportunities
for career development and to create a supportive and
respectful workplace and culture.
We do our utmost to ensure the safety and well-being of
all our employees wherever they work. The extraordinary
challenges of the pandemic have reinforced our
commitment to employee health and safety. We maintain
well-run and safe workplaces and apply a zero-tolerance
approach to all forms of hostility, harassment or
unprofessional behaviour.
We want our people to feel supported and connected to
our values and principles through the implementation of
clear human resources policies and guidelines regarding
human rights, health and safety, workplace relations,
performance and development processes and non-
discrimination. Our core policies and guidance include:
• Anti-fraud Policy;
• Code of Ethics and Conduct;
• Compensation and Benefits Policy;
• Diversity and Inclusion Policy;
• Freedom of Association Policy;
• Human Rights Policy;
•
• Job Descriptions;
• Regulations on Business Trips;
• Regulations on Contractual Work;
• Regulations on Protection of Personal Data
Internal Code of Labour Conduct;
of Employees.
Average employee headcount in 2020 increased
6% year on year to 1,664 (2019: 1,569) employees.
Overall headcount at the end of the year rose 3%
compared to 2019 to 1,6971 (2019: 1,640). The increase
in the headcount was mostly attributable to the shift to
the in-house locomotive crews. BaltTransServis and New
Forwarding Company continued to employ the most
people within the Group.
Diversity
We value and appreciate the individuality of our
employees and respect them for their performance, skills
and contributions regardless of age, disability, ethnicity,
nationality, gender, race, colour, religion or sexual
orientation. We ensure that our employees are treated
fairly and equally, creating a supportive and engaging
work environment where people at all levels enjoy
respect and have dignity. The Group has zero tolerance
for any form of discrimination. Our approach to diversity
is outlined in our Diversity and Inclusion Policy, the
breaches of which are grounds for disciplinary action.
Globaltrans’ commitment to diversity extends to all our
business activities including hiring, employee retention,
promotions, compensation and benefits, career
development and training, work arrangements and
Board appointments. The Group aims to offer equal pay
opportunities for both women and men.
The freight rail transportation industry has traditionally
been a male-dominated environment. We are gradually
and successfully addressing this gender imbalance
within our Group by focusing on attracting more
women into the workforce. As at year-end 2020, women
comprised 33% of our workforce. At Board level,
women represented 13% of the Board of Directors
(two Board members).
1 The difference between the headcount and the average headcount is due to different calculation techniques. The headcount is presented as at the
end of 2020, while the average headcount is calculated by summing up the number of employees on the list in each month of the reporting period
and dividing this sum by the number of months.
HEADCOUNT BY SUBSIDIARY, 2019–2020 (AT YEAR-END)
555
551
659
567
393
359
2019
2020
New
Forwarding
Company
BaltTransServis
Ural Wagonrepair
Company
GTI Management
Other subsidiaries
50
49
75
79
HEADCOUNT BY GENDER IN 2020
(AT YEAR-END)
HEADCOUNT BY AGE IN 2020
(AT YEAR-END)
PERMANENT CONTRACT
41%
59%
33%
67%
24%
11%
Part time
Full time
67%
33%
TEMPORARY CONTRACT
25%
75%
Full time
Men
Women
65%
< 30 years
30–50 years
> 50 years
Men
Women
EMPLOYEE TURNOVER RATE BASED ON GENDER AND AGE, 2019–2020
2019
2020
14%
14%
11%
10%
4%
3%
5%
3%
3% 3%
8%
7%
Total
Men
Women
< 30 years
30–50 years
> 50 years
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
76
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
77
Training and education
Motivation
We are committed to investing in talent development
and education to sustain the success of our people and
business. Providing opportunities for our employees to
grow and remain competitive and effective in a rapidly-
changing world is essential. At Globaltrans, we provide
a range of learning and development programmes
including training, workshops and seminars that are
tailored to individual work requirements and current
needs. In 2020, due to the coronavirus pandemic, we
rapidly shifted to offering our employees more digital
learning programmes. As a result, 71% of all training
and development was carried out via distance learning
compared to 25% in the previous year. Technology is
a vital element in so many processes, and understanding
it is arguably now a necessity, not an option. That is why
we have been focusing on improving the digital literacy
of all our employees. Along with equipping employees
with the equipment and software tools needed to
do their jobs efficiently, we have provided them with
a variety of online resources including webinars, to
support their development.
We recognise that one of our major strengths is our
people and that nothing can be achieved without
engaging them. Their success is our success.
Therefore it is our responsibility to keep our people
motivated about what they do and what they can
achieve. We are committed to actively engaging with our
colleagues and responding to their needs. We can best
serve our people by listening carefully and being adaptive.
Our support for our employees is ongoing and essential,
even more so during times of crisis. Through the COVID-19
pandemic, Globaltrans kept all its people employed and,
importantly, maintained salaries at the pre-COVID level.
While managing a remote workforce, it is important
to keep communication channels open. For this reason,
throughout last year we focused on maintaining frequent
dialogue with our workforce, providing regular updates
and check-ins to ensure they had the right level of
advice and support needed to adjust to the new working
environment and to perform at the highest levels.
During 2020, 336 employees attended training
programmes and despite the disruption caused
by COVID-19 the Group still delivered a total
of 21,226 hours of training and development
(2019: 28,447). During the year, training was provided
in various areas including accounting, business
administration, environmental safety, information
security, health and safety, financial management
and marketing.
We strive to continuously improve working conditions for
our people. We want them to work in a supportive and
considerate environment, enjoy opportunities for career
progression and receive competitive reward packages
and benefits. Our staff reward packages include health
insurance, childcare support, additional holidays as well
as other benefits. Eligible employees can participate in the
various incentive schemes that the Group operates. We
are committed to maintaining a motivated and productive
workforce that values being part of Globaltrans. We
believe that our low staff turnover rate (14% overall:
10% for men and 4% for women) reflects this and is an
important indicator of workforce stability and satisfaction.
AVERAGE TRAINING HOURS
BY GENDER, 2019-2020
84
80
DISTRIBUTION OF TRAINING AMONG
EMPLOYEES BY EMPLOYEE CATEGORY
IN 2020
MAIN TYPES OF TRAINING FORMATS
IN 2020
2019
2020
51
73
Men
Women
84%
16%
71%
29%
Employees
Managers
Distance learning
On-site learning
Corporate culture and internal
communications
Interaction, collaboration and teamwork are essential
parts of the Globaltrans culture. We strongly believe that
they improve productivity, lead to proper and prudent
business decisions, underpin a trusting and supportive
work environment and enable us to deliver a better result
in everything we do. We want every employee’s voice to be
heard and every idea to be shared openly. All employees
are encouraged to raise any issues and concerns and
to provide suggestions and feedback for improving the
business. Our communication channels enable everyone
to learn more about our performance, important events
and projects and connect with senior management.
To understand our employees’ needs and improve their
experience, we conduct various surveys and some Group
subsidiaries have employee helplines.
To encourage a sense of community and promote better
teamwork, we also regularly host sports, cultural and
recreational events for our employees and their families.
We understand that with so many people working virtually,
it takes extra effort to keep everyone feeling cared for,
connected and engaged. To provide a platform for healthy
debate and interaction, we communicate regularly with our
employees via reports and updates, management calls,
webinars, and formal and informal virtual meetings.
Health and safety
The safety and wellbeing of our people has always been
Globaltrans’ number one priority. It is paramount to our
corporate culture and ultimately to the success of our
business. The extraordinary events of 2020 with the spread
of the COVID-19 pandemic, have resulted in a whole new
level of concern for employee wellbeing in companies
around the world. Globaltrans acted quickly to protect its
employees, taking immediate action to improve health and
safety measures throughout the Group. We swiftly adapted
to the new work environment, strictly following the advice
of government and medical organisations, and moving
our office-based staff to remote working. For our on-site
(repair depot) employees, we revised our work procedures
to ensure their safety, implementing various precautions
including workplace disinfection, shift rotations, social
distancing and the use of masks, temperature scans and
hand sanitisers.
As set out in our Code of Conduct and Human Rights
Policy, we are committed to acting in a socially responsible
manner that protects our people, suppliers and partners,
all of whom we expect to share that commitment.
Globaltrans has health and safety procedures, practices
and policies that comply with all applicable regulations,
laws and other requirements. We strive to ensure that
all levels of the Group conform to the rules. Our Group
companies are implementing the following policies:
Instruction for Carrying Out Health and Safety Briefings;
Instruction on Pre-medical First Aid;
• Fire-safety Instructions;
•
•
• Occupational Safety Regulations;
• Workplace Safety Guidance for PC Users.
In our efforts to maintain a safe workplace, we actively
promote a culture of a zero-harm and risk awareness among
our people, and provide appropriate health and safety
education, training, instruction and supervision. Safety
is always a team effort. We encourage our employees to
adopt good health and safety practices and to make the
right decisions about their wellbeing on a daily basis.
We also perform regular spot-checks at our operations to
ensure that they continue to meet high safety standards.
In 2020, because of the pandemic and the move to remote
working, we reduced the number of workplace safety
checks to 341 visits (2019: 769 visits), focusing on providing
online occupational health and safety training instead.
Our occupational health and safety performance has
always been positive. The nature of our business means that
our employees typically work in a low-risk environment. So
it is with deep sadness and regret that the Group recorded
its first-ever workforce fatality at one of its repair depots in
2020. The Group immediately investigated the incident and
took corrective action, putting in place preventive training
for its depot personnel. We investigate and analyse each
incident and share the findings across the Group in order to
prevent similar incidents at other locations. All incidents are
reported and discussed at the Board level.
The Group remains committed to ensuring such incidents
are eliminated and do not reoccur. To make our reporting
processes more transparent, from now on we will implement
the Lost Time Injury Frequency Rate (LTIFR), a leading
benchmark for measuring safety and health performance.
In 2020, the LTIFR1 (per million hours worked) performance
of the Group stood at 0.66.
In 2021, we will continue to put greater emphasis on safety,
risk awareness and accountability in order to strengthen
the safety culture of the Group.
1 LTIFR (Lost-Time Injury Frequency Rate) is the number of lost time injuries
multiplied by 1,000,000, divided by the employee total hours worked in
the reporting period.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 78
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
79
ENVIRONMENT
Rail is considered to be one of the
greenest modes of transport,
with its limited impact on the
natural world, mainly linked to
lower greenhouse gas emissions.
The Group is nonetheless committed
to minimising its environmental
footprint, recognising the
importance that our stakeholders
and the wider community attach
to this issue as well as the Group’s
own responsibility to protect the
environment for the benefit of
everyone. To this end, we focus
not only on controlling emissions
but also on other areas such as
energy efficiency, optimising water
management and reducing paper
consumption.
factors is reinforced through the
Group’s formal ESG Policy and
Environmental and Energy Policy,
which set out our commitment
to carry out our activities in
an environmentally responsible
way. We make sure that all of our
employees understand and act in
a manner that is consistent with our
policies.
Guided by these policies, we are
constantly monitoring and finding
ways to improve our subsidiaries
environmental management and
reporting systems in order to better
monitor, measure and assess the
environmental aspects of our
activities.
Globaltrans is fully compliant
with all applicable environmental
laws, industry regulations and
requirements and we strive
to continually improve our
environmental performance over
time to stay compliant. Our approach
to the management of environmental
We also focus on raising our
employees’ and suppliers’ awareness
of the environment and improving
transparency for our investors.
To support this, we report the
Group’s performance on a number
of environmental metrics consistent
with external reporting frameworks
such as the Global Reporting
Initiative (GRI). Annual data and
information on monitoring and
progress are contained in our
integrated sustainability reports that
are publicly available on the Group’s
website.
The results for 2020 are set out
below. There were no instances of
non-compliance with environmental
laws and regulations during the
reporting period.
Energy usage
At Globaltrans, we are determined
to use energy prudently and to be
climate neutral. It is something that
we are working towards promoting
and improving at all levels of the
Group. The Group’s operations
consume various forms of energy,
including electricity, oil and gas,
and we are constantly working on
ways to improve the Group’s energy
efficiency and reduce our carbon
footprint.
PETROL AND DIESEL CONSUMPTION
PER EMPLOYEE, 2019–2020, LITRES
PETROL
2019
2020
134
95
–
29 %
DIESEL
2019
2020
33,895
27,394
–
19 %
In 2020, we again decreased
our energy consumption in
three key areas as shown below.
Various factors contributed to this,
including the consolidation of
a number of offices to a single office
location, the impact of COVID-19
lockdowns on our operations and the
move to remote working.
While clearly the incidence of remote
working due to the pandemic had
a positive impact on the Group’s
annual water consumption,
Globaltrans continues to seek
opportunities to improve water use
and adopt practices that would help
its employees to manage and use
water efficiently.
Use of water
Paper recycling
As part of our commitment to
conserve resources, we monitor
water usage in an effort to
optimise its use and consumption.
While Globaltrans is not a significant
water user, we recognise that it is
a vital resource for society and are
committed to acting responsibly.
Our internal management systems
and practices ensure transparency
and effective governance of
water use in our day-to-day
work. Since 2018, we have been
developing and improving our
monitoring, collection and
processing of water usage data
across the Group’s subsidiaries.
We are now in a position to release
our first annual figures for water
consumption, which in 2020 totalled
16,627 m3 1.
The issue of office waste is
something we are very familiar
with since the Group consumes
relatively large amounts of paper.
Consequently, we actively promote
the merits of a green workplace and
encourage employees to reduce
the frequency and volume of
printing. We have been focused on
digitising business processes and
using electronic documentation for
a number of years, but the events
of 2020 have accelerated these
trends. In 2020, we registered 42%
reduction in paper consumption
by employees, as the Group’s office
activities went essentially ‘virtual’.
We will continue to develop office
waste recycling initiatives as we
revert to a more normal working
environment.
TOTAL CONSUMPTION OF ENERGY RESOURCES BY TYPE,
2019–2020
PAPER CONSUMPTION
(KG PER EMPLOYEE), 2019–2020
Energy type
Electricity (KWh)
Diesel (litres)
Petroleum (litres)
2019
2020
Change
2019
12
4,795,686
4,182,373
53,184,738
45,584,067
210,715
158,816
–13%
–14%
–25%
2020
7
1 This excludes data from AS Spacecom and BaltTransServis (except for data from the BTS railcar
repair depot in Ivanovo which is included).
–
42 %
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 80
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
81
ENVIRONMENT
Greenhouse gas management
Globaltrans operates in one of the greenest and most
eco-friendly industries based on its relatively low
greenhouse gas (GHG) emissions. Rail remains the
most fuel-efficient mode of transport, as just one litre
of fuel is sufficient to transport one tonne of freight
over a distance of approximately 200 kilometres.
Nevertheless, we recognise that we can contribute
to minimising emissions through efficient logistics
and careful management of our assets. Since its
creation, Globaltrans has focused on operational
efficiency, in particular on reducing the number of
empty railcars transported as part of the Group’s
logistics movements. This not only helps us achieve
solid financial and business results but also helps
improve our environmental performance. We have
led the industry for many years in terms of efficiency,
and we consistently deliver one of the lowest gondola
Empty Run ratios in the sector, which speaks to our
commitment.
In the freight rail transportation sector locomotives
are the biggest contributors to GHG emissions.
In Russia the vast majority of locomotive traction for
loaded and empty trips, as well as the ownership of
railway infrastructure itself belongs to RZD. Due to
industry regulations, freight rail operators including
Globaltrans have to outsource locomotive traction and
infrastructure services from this provider.
Nevertheless, the Group has a competitive advantage,
as it runs one of the largest privately-owned
locomotive fleets in Russia and provides a unique
service solution for its clients in the oil products
and oil segment. We therefore measure, report
and account for only those emissions (Scope 1) that
are directly attributable to our fleet of 74 locomotives.
Operating a modern, well-maintained fleet also
contributes to minimising our environmental footprint.
In 2019, we further improved fleet efficiency with
the purchase of 10 new, more energy-efficient and
cleaner diesel locomotives. Since 2018 we have
made significant progress in measuring, managing
and disclosing GHG emission information in our
operations, and this process is still ongoing. In 2020,
due to a combination of reduced fuel consumption
resulting from the impact of the COVID-19 pandemic
and sustainability measures taken by the Group
including the use of the new, cleaner locomotives,
GHG emissions from the Group’s locomotive fleet
across all its subsidiaries were 138,198 tonnes
of CO2 equivalent1, 14% lower than in 2019
(2019: 161,299 tonnes of CO2 equivalent).
While we continue to promote the environmental
benefits of rail, we are committed to continuously
improving our energy efficiency and exploring
appropriate options and proposals to reduce our GHG
emissions.
1 The Group’s greenhouse gas emissions were calculated per IPCC Guidelines for National Greenhouse Gas Inventories (2006).
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
82
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
83
COMMUNITIES
Since its founding, Globaltrans has recognised the
importance of having a direct positive impact on the
communities where it operates. We strive to serve our
communities responsibly as an organisation, an employer
and a business partner. This sense of responsibility to
our communities can also be seen in our legislative
compliance, the transparency of our financial and non-
financial reporting and our commitment to improving our
environmental footprint.
Our solid financial performance, essential to our
long-term business success and sustainability
strategy, enables us to benefit society in a variety of
ways. We contribute to Russia’s economic and social
development and add value through our business
operations, direct and indirect employment, tax
payments, social activities and charitable contributions.
The Group works closely with its communities, through
its support for community groups and charities, the
work of its volunteer staff, and through the provision of
internships and educational support. We work with our
local communities to identify how best to contribute
whether through contributions of time, skills or financial
assistance. By establishing internships and pro bono
social programmes, we can help our employees add
to their capabilities and contribute more to society.
Our business success not only creates opportunities for
current and prospective employees, but it also means we
are making a direct financial contribution to the broader
economy through local and national taxes, the payment
of license and other fees and the use of third party
services and suppliers.
We recognise the value that diversity and respect bring
to any environment. We have created a fair, safe and
respectful work environment so that our employees
and those we work with can prosper. To contribute fully
to the success of Globaltrans and society as a whole,
people need to feel valued and supported. To that end,
we provide health insurance, childcare support and
part-time job options to improve the quality of life for
our employees and their families. We encourage our
businesses and people to extend their support beyond
our operations by participating in community initiatives,
charities and sports activities. We believe that this
strengthens their sense of well-being while helping
to instil our values of respect and cooperation more
broadly. By improving the lives of those living in the
communities where we operate and creating valuable
opportunities, Globaltrans is making a positive difference
to society as a whole. Also, we contribute directly to
charitable efforts in our communities in the areas of
health and well-being, sports, culture, education and
in support for vulnerable groups like the disabled and
elderly. Despite challenging economic environment
in 2020, we ensured continued support for those
organisations we have been working with for many years.
One such example is the Life Line Fund which provides
vital assistance to children facing life-threatening
illnesses and which Globaltrans has supported since
2011.
We fundamentally believe that having valued, healthy,
prosperous employees, families and communities sets
the strongest foundations for their success, our success
and that of our stakeholders.
The following table illustrates how our company creates financial value for its stakeholders.
DIRECT ECONOMIC VALUE GENERATED, DISTRIBUTED AND RETAINED1
Direct economic value generated2
Economic value distributed
Total cost of sales (excluding Employee benefit expense)
Total selling, marketing and administrative expenses (Community investments and
excluding Employee benefit expense and Taxes (other than income tax and value
added tax)
Employee benefit expense
Payments to the providers of capital3
Payments to the government4
Economic value retained
2020,
RUB mln
68,367
75,136
45,548
938
4,154
21,419
3,077
(6,769)
1 Information in the table is derived from the Consolidated Management Report and Consolidated Financial Statements for the year ended
31 December 2020.
2 Direct economic value generated includes “Revenue”.
3 Payments to providers of capital include “Interest paid”, “Dividends paid to owners of the Company” and “Dividends paid to non-controlling interests
in subsidiaries”.
4 Payments to the government include “Tax paid” and “Taxes (other than income tax and value added taxes)”. The Company also pays Russian Value
Added Tax (“VAT”). VAT related to sales and purchases is recognised in the balance sheet on a gross basis and disclosed separately as an asset and
liability. Purchases of property, plant and equipment are shown net of VAT. Related input VAT is included in movement in changes of working capital,
within trade and other receivables.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 84
84
Globaltrans Investment PLC
Annual Report & Accounts 2020
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
Globaltrans Investment PLC
Annual Report & Accounts 2020
85
85
Corporate
Governance
Board of Directors
Executive Management
Corporate Governance Report
Share Capital
Corporate Structure
86
92
96
108
109
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 86
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
87
Board
of Directors
The Board of Globaltrans
is responsible for providing
effective leadership for the
Group, establishing its values
and culture, overseeing its
governance, and promoting
the success of the Group
for the benefit of all stakeholders.
The Board is composed
of highly experienced directors,
equipped with the diverse
skills, expertise and commercial
experience required to lead
the Group effectively
and provide support for
the executive management.
Board
of Directors
15
Members
4Independent
Non-executive
Directors
Sergey Maltsev
John Carroll Colley
Dr. Johann Franz Durrer
Vasilis Hadjivassiliou
Chairman of the Board, Executive Director,
Independent Non-executive Director,
Senior Independent Non-executive
Independent Non-executive Director
Chief Strategy Officer, Сo-founder
and shareholder of Globaltrans
Chairman of the Audit Committee
Director, Chairman of the Remuneration
and Nomination committees
Appointment: Mr. Maltsev was elected
Chairman of the Board of Directors in April
Appointment: Mr. Colley was appointed
to the Board as an Independent
Appointment: Dr. Durrer was appointed
to the Board as an Independent
Appointment: Mr. Hadjivassiliou was
appointed to the Board as an Independent
2018 and has served as Chief Strategy Officer
Non-executive Director in April 2013.
Non-executive Director in March 2008.
Non-executive Director in September 2019.
since August 2017.
Skills and experience: Mr. Maltsev was
instrumental in the development of the
freight rail market in Russia and has
worked in the industry for over 30 years.
He co-founded Globaltrans and served
as Chief Executive Officer from 2008
until 2015 when he left the Group. At that
point he served as Senior Vice President
for strategy and corporate governance
at JSC Russian Railways until his return
to Globaltrans as Chief Strategy Officer
in 2017.
Committee membership: Mr. Colley
is Chairman of the Audit Committee
Committee membership: Dr. Durrer
is Chairman of the Remuneration
Committee membership: In 2021
Mr. Hadjivassiliou became a member
and a member of the Nomination
and Nomination committees.
of the Audit Committee.
and Remuneration committees. In 2021
Mr. Colley became a member of the ESG
Committee.
Skills and experience: Mr. Colley has
extensive experience in international trade
and risk management both in the public
Skills and experience: Dr. Durrer began
his career at Union Bank of Switzerland
Skills and experience: Mr. Hadjivassiliou
was a partner in Assurance and Advisory
and in 1970 founded Fidura Treuhand AG,
services in PricewaterhouseCoopers (PwC),
which provides bookkeeping, auditing
Cyprus, from 1990 until 2018 when he retired.
and financial services.
During this time he held various leadership
positions with PwC, including as an elected
and private sectors. From 2007 to 2010,
Dr. Durrer graduated from the University
member of the Executive Board, Head of the
Mr. Colley served as country manager
of Zurich with a doctorate in Economics
Limassol office as well as a number of other
for Russia at Noble Resources SA. Prior
and is a member of the Swiss Fiduciary
offices in Cyprus and was a leading figure
Mr. Maltsev was a founding member
to that, he held a variety of positions
Association.
and Chairman of the non-profit partnership
in the public sector, including at the office
“Council of Railway Operators”. In recognition
of the US Trade Representative and the US
of his services to the rail industry,
Mr. Maltsev received the “Honoured
Railwayman of Russia” award. He has
a degree in railway engineering.
Department of Commerce in Washington,
DC. He worked for Linkful Ltd and Noble
Resources SA in Moscow from 1992 to 1999.
Mr. Colley, a fluent Russian speaker, holds
an MA in History and a BA in International
Affairs and Russian Studies from
the University of Virginia.
Other appointments: Mr. Colley is currently
the principal of Highgate Consulting LLC,
a global advisory consulting company.
in business development. He has extensive
experience in auditing, International
Financial Reporting Standards and business
advisory services having advised major
local and international groups including
companies publicly listed on the London
Stock Exchange as well as in Cyprus.
Mr. Hadjivassiliou is a graduate of the
University of Manchester and a Fellow
of the Institute of Chartered Accountants
of England and Wales.
Other appointments: Mr. Hadjivassiliou holds
directorships in several companies affiliated
with his family and is also a Board member
in a number of other private companies.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
88
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
89
George Papaioannou
Alexander Eliseev
Andrey Gomon
Elia Nicolaou
Melina Pyrgou
Konstantin Shirokov
Independent Non-executive Director
Non-executive Director, Сo-founder
Non-executive Director
Non-executive Director, Company
Non-executive Director
Executive Director, Head of Internal Audit
of Globaltrans
Secretary, Secretary to the Board
Appointment: Mr. Papaioannou joined
the Board as an Independent Non-executive
Appointment: Mr. Eliseev joined the Board
in March 2008.
Appointment: Mr. Gomon served as
a member of the Board of the Company
Appointment: Ms. Nicolaou joined
the Board as a Non-executive Director
Appointment: Ms. Pyrgou was appointed
to the Board as a Non-executive Director
Appointment: Mr. Shirokov was appointed
to the Board as an Executive Director
Director in April 2013.
from 2013 to 2016 and rejoined the Board
in March 2008. She is the Company
in April 2013.
in March 2008 and heads Globaltrans’
in April 2017.
Secretary.
internal audit function.
Committee membership: Mr. Papaioannou
is a member of the Audit Committee.
Skills and experience: Mr. Eliseev
co-founded Globaltrans in 2004 and has
Skills and experience: Mr. Gomon has over
13 years management experience in the
Committee membership: Ms. Nicolaou
was a member of the Audit Committee
Skills and experience: Ms. Pyrgou
is a barrister and registered insolvency
Skills and experience: Mr. Shirokov
has over 12 years’senior international
Skills and experience: Mr. Papaioannou
has an experience of more than 20 years
played a leading role in introducing
railway industry. From 2006 to 2012 he was
in 2020. In 2021, Ms. Nicolaou stepped
practitioner and has practised corporate law
management experience. Prior to joining
market-based reforms to the Russian freight
CEO of Transoil, one of the largest oil rail
down as a member of the Audit Committee
for over 25 years. She is currently Managing
Globaltrans, he worked in senior finance
rail transportation market. He has spent
transportation companies in Russia, having
and became a member and Chair of the
Director of Pyrgou Vakis Law Firm, a Cyprus-
roles at Mechel and as an economist
in financial reporting, risk management,
more than 17 years in senior management
previously served as CFO between 2003
ESG Committee.
based corporate and commercial law
at Glencore International. He served as
auditing, financial performance analysis
positions, mostly within the rail sector,
and 2006. He sits on the boards of two
and taxation. In 2004, he founded G.
and sits on the boards of two Globaltrans
Globaltrans subsidiaries, New Forwarding
Papaioannou Auditors Ltd, which provides
subsidiaries, New Forwarding Company
Company and BaltTransServis.
accounting, audit, tax and consulting
and BaltTransServis.
Skills and experience: Ms. Nicolaou has
extensive experience in commercial,
practice. Previously she was Director of Legal
a non-executive member on the board
Services at PricewaterhouseCoopers
of Global Ports Investments PLC between
in Cyprus. Ms. Pyrgou served as
2008 and April 2018 where he was
corporate and funds law. She is currently
the Chairman of EuropeFides Association,
a member of the Audit and Risk committee.
services. From 2002 to 2004, he worked
Mr. Gomon studied economics at St
the Managing Director of Amicorp (Cyprus)
a European network of accounting, audit,
at Grant Thornton in Cyprus and before that
Mr. Eliseev is a graduate of the Russian
Petersburg State University and holds
for PricewaterhouseCoopers in Cyprus.
State Medical University, where he studied
an MBA from INSEAD.
Mr. Papaioannou holds a degree
biophysics.
in Accounting and Financial Management
from the University of Essex. He is a
Other appointments: Mr. Eliseev
is Chairman of the Board of Globaltruck,
qualified chartered accountant and a Fellow
a leading freight trucking operator in Russia,
of the Institute of Chartered Accountants
listed on the Moscow Exchange.
in England and Wales.
Ltd. Previously, she was head of the
Corporate Legal department at Polakis
tax and legal firms, from 2015 to 2016 and is
a member of various business associations.
Mr. Shirokov graduated from the Finance
Academy under the Russian government
Sarris LLC and also worked at C. Patsalides
and studied business management
LLC. Ms. Nicolaou participates in various
Ms. Pyrgou graduated from the University
at Oxford Brookes University.
associations of the Cyprus Chamber
of Keele with a degree in Law and Sociology
of Commerce and sits on the boards
and holds a diploma in Environmental Law
of other listed and private companies.
from the University of Geneva. She was
called to the bar in Cyprus in 1992 and in
Ms. Nicolaou graduated with an LLB
London (Grays Inn) in 1995.
in Law from the University of Nottingham
and holds an LLM in Commercial
and Corporate Law from University College
Other appointments: Ms. Pyrgou currently
serves as a member of the Cyprus
London. She has an advanced diploma
Investments Promotion Agency (CIPA). She
in Business Administration from the Cyprus
also sits on the Disciplinary Committee of
International Institute of Management.
the Institute of Certified Public Accountants
of Cyprus (ICPAC). Ms. Pyrgou is also a
Board member of the Health Insurance
Organisation.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
90
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
91
Alexander Storozhev
Alexander Tarasov
Michael Thomaides
Marios Tofaros
Sergey Tolmachev
Executive Director,
Chief Procurement Officer
Non-executive Director
Non-executive Director
Non-executive Director
Executive Director, Managing Director
Appointment: Mr. Storozhev joined
the Board as an Executive Director in April
Appointment: Alexander Tarasov joined
the Board in April 2013.
Appointment: Mr. Thomaides was
appointed to the Board as a Non-executive
Appointment: Mr. Tofaros was appointed
to the Board as a Non-executive Director
Appointment: Mr. Tolmachev was
appointed to the Board as a Non-executive
2013.
Director in April 2014.
in April 2013.
Director in April 2013 and as an Executive
Skills and experience: Mr. Storozhev has
held senior management roles throughout
Skills and experience: Mr. Tarasov
served as a deputy director general
in Sevtekhnotrans, a Globaltrans subsidiary
Skills and experience: Mr. Thomaides
served as a director at Globaltrans from
a 20-year career in the rail industry
that subsequently merged with Ferrotrans.
2004 to 2008 and sat on the Board
Skills and experience: Mr. Tofaros
is a director of the Client Accounting
department at Amicorp (Cyprus) Ltd.
Director in October 2013.
Skills and experience: Mr. Tolmachev
became the Group’s Managing Director
and has been with Globaltrans since
He has held management positions at a
of Global Ports Investments PLC, Russia’s
He was a financial accountant at Depfa
in October 2013. He joined N-Trans Group
it was established. He is chairman of a
number of leading Russian companies
leading container port operator. He has
Investment Bank Ltd from 2004 to 2008
in 2001 and has held various management
number of Globaltrans subsidiary boards,
across different sectors, with a focus
been a director at Leverret Holding Ltd
and a finance officer at Louis Catering Ltd
positions focused on corporate finance
including AS Spacecom, AS Spacecom
on financial management and analysis.
(Cyprus) since 2007.
Trans, GTI Management and BaltTransServis
from 2003 to 2004. He has held various
and treasury. He also serves on Globaltrans
positions in the Audit department at KPMG
subsidiary boards, including AS Spacecom
and serves on the boards of other
Mr. Tarasov graduated from the Bauman
Mr. Thomaides graduated from London
Cyprus.
Globaltrans’ subsidiaries including New
Moscow State Technical University with
Southbank University with a BSc degree
and AS Spacecom Trans. He has
extensive experience in financial analysis
Forwarding Company and Ural Wagonrepair
a degree in Engineering and holds a degree
in Consumer Product Management.
Mr. Tofaros has a degree in Accounting,
and modelling.
Company. Since February 2015, he has
in Economics from the Moscow State
been Director of Investments and Business
University of Commerce.
Development at New Forwarding Company.
Mr. Storozhev is a recipient of the
“Honoured Transport Worker of CIS” Award.
Mr. Storozhev graduated from
the Kiev Military Academy of Aviation
and Engineering in 1990 with a degree
in Engineering. He holds a diploma from
the Mirbis Business School in Moscow and a
Master’s degree in Business Administration
and Finance.
Finance and Economics and a master’s
degree in Business Studies, both from
Mr. Tolmachev graduated from Lomonosov
the University of Kent. He holds a chartered
Moscow State University with a degree
certified accountant (FCCA) diploma and is
in Mechanics and Applied Mathematics.
a member of the Institute of Certified Public
Accountants of Cyprus.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
92
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
93
Executive
Management
The executive leadership has
responsibility for managing
the Group’s day-to-day
business operations
and support functions.
The senior management
team comprises the executive
directors along with individuals
responsible for the key
subsidiaries and Group
functions. Senior management
is in turn supported by a team
of highly skilled and competent
line managers.
Valery Shpakov
Sergey Maltsev
Alexander Shenets
Vyacheslav Stanislavsky
Chief Executive Officer
Chief Strategy Officer, Chairman of the
Chief Financial Officer
Deputy Chief Executive Officer,
Board, Executive Director, Co-founder
and shareholder
Head of Operations
Mr. Shpakov became CEO in March
2016, having served as interim CEO since
November 2015. He joined New Forwarding
Company, a Globaltrans subsidiary, in 2003
and has been its CEO since 2007.
Mr. Maltsev has served as Chief Strategy
Mr. Shenets has been CFO of Globaltrans
Mr. Stanislavsky joined New Forwarding
Officer of the Group since August 2017
since the Group’s establishment and has
Company, a Globaltrans subsidiary, as
and was elected as Chairman of the Board
more than 15 years of experience in senior
Deputy General Director for Operations
of Directors of Globaltrans in April 2018.
finance positions, mostly in the rail sector.
and Commerce in March 2010 and became
He is a member of the boards of GTI
First Deputy General Director in April 2011.
Mr. Maltsev has worked in the rail sector
Management, New Forwarding Company,
He is an experienced manager with a track
for more than 30 years and was instrumental
BaltTransServis, AS Spacecom, AS
He has more than 30 years of experience
record of over 30 years in the rail industry.
He began his career in the private sector
in 1999 and has held managerial positions
at various companies in the transport
sector. He is a recipient of the “Honoured
Railwayman of Russia” award.
in the development of the private freight rail
Spacecom Trans and Ural Wagonrepair
in the rail industry and is a recipient of the
market in Russia. Mr. Maltsev was a founding
Company, all Globaltrans subsidiaries.
“Honoured Railwayman of Russia” award.
member and Chairman of the non-profit
partnership “Council of Railway Operators”.
He holds an MBA from Lomonosov Moscow
Having co-founded Globaltrans, he served
State University.
as the Company’s CEO and member of the
Board for over a decade before stepping
down in 2015. Subsequently, he worked
as the Senior Vice President for strategy
and corporate governance at JSC Russian
Railways. He is a recipient of the “Honoured
Railwayman of Russia” award.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
94
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
95
Alexander Storozhev
Kirill Prokofiev
Roman Goncharov
Sergey Avseykov
Svetlana Brokar
Artem Gabestro
Chief Procurement Officer, member
CEO of BaltTransServis
Head of Treasury
Business Development Officer
Government Relations Officer
General Counsel, Corporate Governance
of the Board, Executive Director
Advisor to CEO
Mr. Storozhev joined the Board as
Mr. Prokofiev was appointed CEO
Mr. Goncharov has served as CFO of New
Mr. Avseykov is in charge of business
Ms. Brokar joined as Government Relations
Artem Gabestro joined the Group in 2007
an Executive Director in April 2013. He
of BaltTransServis, a Globaltrans subsidiary,
Forwarding Company, a Globaltrans
development for the Group. He joined
Officer in December 2018. She is an
as a lawyer before becoming general
has held a series of senior management
in February 2017. Prior to his appointment,
subsidiary, since 2005 and has over 15 years
New Forwarding Company, a Globaltrans
attorney with significant expertise in civil,
counsel of Globaltrans two years later.
roles over a 20-year career in the rail
he spent more than seven years working
of management experience.
subsidiary, in 2011 as Head of the Marketing
tax, commercial, corporate, finance
He is a member of the Audit Committee
industry. He has been with Globaltrans
in senior executive roles in the rail sector.
and Development Division. Between 2017
and railway transport matters. She has
of Globaltrans’ subsidiary New Forwarding
since the company was established and is
He has an MBA from the Moscow
and 2018, Mr. Avseykov served as acting
worked with government departments
Company and in January 2020 was
Chairman of a number of Globaltrans
He graduated from Saint Petersburg State
International School of Business.
Head of Business Project Management
including the Russian Transport, Finance
appointed as an advisor to Globaltrans’ CEO
subsidiary boards, including AS Spacecom,
University of Economics, where he majored
AS Spacecom Trans, GTI Management
in economics. He also holds an MBA
and BaltTransServis. He also serves on the
in Strategic Management from Moscow’s
boards of New Forwarding Company
Higher School of Economics.
and Ural Wagonrepair Company, both
Globaltrans subsidiaries. Mr. Storozhev
is a recipient of the “Honoured Transport
Worker of CIS” award.
He graduated from the Kiev Military
Academy of Aviation and Engineering
in 1990 with a degree in Engineering.
He also holds a diploma from the Mirbis
Business School in Moscow and a Master’s
degree in Business Administration
and Finance.
at JSC Russian Railways before rejoining
and Railway Ministries. From 2009 to 2013,
on issues of corporate governance.
Globaltrans in 2018.
Ms. Brokar was a member of the Board
Mr. Avseykov graduated from Tomsk State
subsidiary, and since 2014 has acted as its
University of International Affairs and holds
University and holds a PhD in political
in-house legal counsel or provided it with
a Master’s degree in law.
of New Forwarding Company, a Globaltrans
Mr. Gabestro is a graduate of Moscow State
science from the Russian Presidential
legal services. She also previously worked
Academy of National Economics.
with the non-profit partnership “Council
of Railway Operators”.
Ms. Brokar graduated with a law degree
from Kaliningrad State University.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
96
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
97
Corporate Governance
Report
Dear shareholders,
On behalf of the Board,
I am pleased to introduce
the Group’s Governance Report
for 2020, which provides
an overview of how the Board
maintained its governance focus
in the challenging circumstances
we faced last year due to
the COVID-19 pandemic.
The Board views good governance, transparency
and accountability as essential building blocks
in supporting Globaltrans' long-term success
and sustainability. In this context, the impact
of the COVID-19 pandemic was not only
an examination of our strategy and business
model, but it was also a real-life test of the
Group’s governance and in particular
the Board’s ability to exercise effective
leadership and governance oversight
during a period when the business
was under extreme stress. It is
very gratifying to report that
the Board of Directors rose to the
challenge of leading the Group
with great pragmatism, urgency,
and commitment.
I would like to thank all of the
directors for their input, commitment,
and unwavering support during this
unprecedented period.
As a result, the Board was able
to continue to engage with and
to provide constructive feedback
to the executive team without our
governance oversight suffering.
The Board, working closely with the
management, took decisive action
to mitigate the impact of COVID-19
and to ensure that the business
continued to remain fully operational.
This included the introduction
of measures to protect the health
and safety of our employees,
to improve costs, to optimise
capital allocation (for instance
by cancelling all non-essential
expansion CAPEX) to protect free
cash flows, to safeguard dividend
payments, and to maintain a dialogue
with the stakeholders. Board
and Committee meetings continued
as scheduled but as virtual meetings,
with all directors participating via
remote meeting technology.
Whilst responding to the impact
of the pandemic inevitably took up
a lot of the Board’s time last year,
we nonetheless continued to make
progress against our strategic
governance priorities. In recognition
of stakeholders’ growing focus
on environmental and social issues,
the Board announced in January
2021 the formation of the ESG
Committee to oversee the Group’s
integration of ESG into our strategy
and business processes and ensure
that our governance continues
to evolve in line with international
best practice.
The secondary listing of the Company's
GDRs on the Moscow Exchange was
another important step in increasing
the Group’s profile with Russian
investors, especially with the growing
retail base of investors, illustrating
again our firm commitment to open
and proactive engagement with our
stakeholders.
2020 was a very challenging period
and I would like to thank the Board
and the executive team for their
commitment and enthusiasm during
this time.
Sergey Maltsev
Chairman
Chief Strategy Officer
Co-founder and shareholder
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
98
98
Globaltrans Investment PLC
Annual Report & Accounts 2020
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
Globaltrans Investment PLC
Annual Report & Accounts 2020
99
99
Corporate Governance
Report
Corporate governance framework
Corporate governance policies
Globaltrans’ corporate governance policies and practices are designed
to ensure that the Group upholds its responsibilities to shareholders
and other stakeholders. This key principle is promoted and applied
across all levels of the Group in order to establish effective
and transparent corporate governance. To that end, Globaltrans’
Board of Directors has adopted the Company’s Code of Corporate
Governance (based on the principles of the UK Corporate Governance
Code), guaranteeing that the interests of all shareholders are given
due consideration.
Globatrans’ policies include, inter alia:
Corporate documents
and policies
Business ethics
Disclosure, transparency
and market abuse regulation
• Articles of Association
• Appointment Policy for the Board
of Directors and its committees
• Audit Committee — terms
• Anti-Fraud Policy
• Business Continuity Policy
• Code of Ethics and Conduct
• Corporate Diversity and Inclusion
of reference
Policy
• Board of Directors — terms
of reference
• Dividend Policy
• ESG (Environmental, Social
and Governance) Committee —
terms of reference
• Nomination Committee — terms
of reference
• Policy on assessment
of independence and objectivity
of external auditor
• Remuneration Committee — terms
of reference
• Environmental and Energy Policy
• ESG Policy
• Freedom of Association Policy
• Human Rights Policy
• Policy on reporting
and investigating allegations
of suspected improper activities
(Whistleblowing Policy)
• Supplier Code of Conduct
• Continuing Obligations Policy
• Corporate policy on the
treatment of the rights of minority
shareholders
• Disclosure Policy
•
Internal control rules for insider
information
• List of insider information
• Securities Dealing Code and the
PDMR Securities Dealing Code
Privacy
• Privacy Policy
For the Group’s corporate governance documents and policies, please visit
our corporate website at: https://globaltrans.com/governance/corporate-
documents.
The Board responsibilities and activities
Globaltrans’ Board of Directors is accountable to the
Company’s shareholders for standards of governance
across the Group’s activities. The Board is committed
to providing effective, transparent and ethical oversight
of the Group so that the Board can take decisions which
it believes benefit all its stakeholders and communities
and create value for the Group.
Responsibilities
• Providing leadership, setting
the overall strategy and ensuring
that the necessary components
are in place for the Group to meet
its objectives.
• Setting Group values
and standards, and ensuring that
obligations to all stakeholders are
understood and met.
• Monitoring and reviewing
the performance of the Group
and its management.
• Maintaining an effective system
of internal control and risk
management to safeguard
shareholders’ rights and interests
and the Group’s assets.
• Ensuring an effective governance
framework and compliance with
relevant regulations.
• Assessing from time to time
whether the Independent Non-
executive Directors continue
to demonstrate independence.
Membership
The process for Board appointments
is led by the Nomination Committee
and members of the Board are
elected at the General Meeting.
Board members are nominated
based on their industry knowledge,
expertise and experience in areas
such as accounting, finance, business
management and strategic planning.
In selecting candidates for the Board,
the Group seeks to create an effective
and complementary Board whose
capability is appropriate for the scale,
complexity and strategic positioning
of the business. Non-executive
Directors are drawn from a wide
range of industries and backgrounds
including infrastructure, transport
audit and financial services, and have
appropriate experience working
with and for large international
organisations. In addition, the Group
selects Independent Directors
intending to ensure that the views
of the free-float shareholders are
represented and that the interests
of all stakeholders are taken into
account.
The Board comprises 15 members,
eleven of whom are Non-executive
Directors. Four of the Non-executive
Directors are independent.
Globaltrans separates the positions
of Chairperson and CEO to ensure
appropriate segregation of roles
and a clear division of responsibilities.
In 2020, members of the Board
of Directors held 16,326,121 shares
and GDRs in Globaltrans.
Diversity
The Board does not operate
a formal diversity policy concerning
age, gender or educational
and professional backgrounds.
However, in line with best practice,
the Board does take into account
these aspects when making new
Board appointments and considering
the composition of the Board.
There are 2 female members on the
Board, equivalent to about 13%
of the Board. The Board ranges
in age from 40 to over 70 years
old, with the average age being
52.5 years. Board members have
experience across the following
areas: the transportation and port
industry, audit, accounting,
economics and finance,
the banking sector and legal,
engineering and mechanics,
biophysics and mathematics,
history, international affairs and risk
management.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
100
100
Globaltrans Investment PLC
Annual Report & Accounts 2020
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
Globaltrans Investment PLC
Annual Report & Accounts 2020
101
101
Corporate Governance
Report
Induction and professional
development
Activities
The Chairman is responsible
for ensuring that there is a properly
constructed and timely induction
for new directors upon joining
the Board. Directors have full access
to a regular supply of financial,
operational, strategic and regulatory
information to help them discharge
their responsibilities.
Performance evaluation
The Board’s performance is assessed
annually and the evaluation process
is conducted through a combination
of self-assessment and annual
appraisals. The Chairman’s
performance is evaluated by the
Non-executive Directors.
The Board meets at least four times a year. Fixed meetings are scheduled
at the end of each quarter, while ad hoc meetings are called when there
are pressing matters requiring the Board’s consideration in between
the scheduled meetings.
The Board met
18 times
Regular meetings
during 2020 and considered 79 items including the following:
Ad hoc meetings
• Review of the Group’s financial
and operational performance.
• Approval of the annual budget.
• Review of the Group’s
performance against the approved
annual budget.
• Approval of change of the GDR
depositary bank and transfer
of GDR Programme.
• Approval of material borrowings
and pledges by subsidiaries.
• Approval of the contracts of the
• Approval of the annual and semi-
Company.
annual financial statements
and the respective regulatory
announcements.
• Review of the results of risk
assessments.
• Approval of the Annual General
Meeting agenda, including
dividend proposals and Board
reappointments.
• Approval of Company policies.
• Approval of the remuneration
of key management and executive
directors.
• Appointment of the key
management of the Group.
• Approval of dividend distribution
by subsidiaries.
• Review and consideration
• Approval of appointments to the
Board of Directors of subsidiaries.
• Approval of the interim dividend
of various business development
opportunities and major
transactions.
of the Company.
• Approval of the buyback of the
Company’s GDRs from the market.
• Approval for the listing of the
Company’s GDRs on MOEX.
• Changes in the responsibilities
of Board members and other
matters.
THE BOARD AND THE BOARD COMMITTEES MEETINGS IN 2020 AND THE ATTENDANCE OF DIRECTORS
Board
of Directors
Nomination
Committee
Remuneration
Committee
Audit
Committee
E
1
1
A
1
1
E
3
3
A
3
3
E
4
4
4
A
4
4
4
Sergey Maltsev (Chairman)
John Carroll Colley
Dr. Johann Franz Durrer
Alexander Eliseev
Andrey Gomon
Vasilis Hadjivassiliou
Elia Nicolaou
George Papaioannou
Melina Pyrgou
Konstantin Shirokov
Alexander Storozhev
Alexander Tarasov
Michael Thomaides
Marios Tofaros
Sergey Tolmachev
E
A
Eligible
Attended
E
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
A
18
18
18
17
18
18
18
18
18
18
18
18
17
18
18
The total gross remuneration of the
members of the Board of Directors
paid by the Group in 2020 amounted
to RUB 433 mln.
Remuneration of the Board
and the management
Directors serve on the Board under
letters of appointment which
specify their terms of appointment
and remuneration. Appointments are
effective until the following Annual
General Meeting. Remuneration
levels for Non-executive Directors
reflect their expertise, time
commitment, responsibilities
and membership of any Board
Committees. Directors are also
reimbursed for expenses associated
with the discharge of their duties.
Non-executive Directors are not
eligible for bonuses, retirement
benefits or participation in any
incentive plans operated by the
Group. The Group’s shareholders
approved the remuneration
of Board members for 2020
at the Annual General Meeting
held on 30 April 2020. For details
of the remuneration paid to the
Board and key executives in 2020,
please refer to Note 35a of the
Group’s Consolidated Management
Report and Consolidated Financial
Statements included in the Financial
Statements section of this Annual
Report.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
102
102
Globaltrans Investment PLC
Annual Report & Accounts 2020
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
Globaltrans Investment PLC
Annual Report & Accounts 2020
103
103
Corporate Governance
Report
Board committees
In 2020, in order to assist
the Board and ensure transparency
and impartiality in specific areas,
Globaltrans had 3 Board committees:
the Audit Committee, the Nomination
Сommittee and the Remuneration
Сommittee. The Chairperson of each
committee is an Independent
Director. In January 2021, the Group
also established the ESG Committee.
All committees are advisory
bodies. While these committees
have the authority to examine
particular issues and report back
with recommendations, the ultimate
decision-making responsibility for all
matters lies with the full Board.
Each committee has written terms
of reference, approved by the Board,
that summarise the committee’s role
and responsibilities.
4Board
committees1
Audit Committee
The role of the Audit Committee is to ensure the integrity of the
Group’s published financial information and the effectiveness
of the internal audit function and the systems for internal control
and risk management, as well as the external audit process.
Members
and meetings
Responsibilities
Issues
considered
in 2020
Number
of members
Members as at
31 December 2020
Minimum
meetings a year
Number
of meetings in 2020
4
John Carroll Colley,
Independent
Non-executive Director
(Chairman)
Elia Nicolaou,
Non-executive Director
George Papaioannou,
Independent
Non-executive Director
4
3 members
2 independent
Integrity of the Group’s financial statements.
•
• Effectiveness of the Group’s internal control and risk management systems.
• Relationship with the Group’s external auditors, including the audit process and reports.
• Terms of the auditor’s appointment and remuneration.
•
• Assessment of the Chairman of the Board’s performance.
Implementation of codes of conduct.
• Review of the Group’s Consolidated Financial Statements for 2019 and interim financial results
for the six months ended 30 June 2020.
• Review of the external auditor’s report to the Audit Committee following its full-year audit for 2019
and review for the six months ended 30 June 2020.
• Review of the Group’s external auditor and terms of reappointment for 2020. The Committee
recommended reappointment of the external auditors to the Board which, in turn, proposed their
reappointment at the Annual General Meeting of the Group held on 30 April 2020.
• Review of the report of the external auditor on the audit strategy for 2020.
• Review of regulatory announcements by the Group.
• Review of internal controls and risk management processes.
• Approval of non-audit services to be provided to the Group by the external auditor.
• Review of the internal audit function and reports on its activities, and on the internal audit model
and plan.
THE AUDIT COMMITTEE MEETINGS IN 2020
John Carroll Colley
Elia Nicolaou
George Papaioannou
Eligible Attended
4
4
4
4
4
4
1 Including an ESG Committee established in January 2021.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 104
104
Globaltrans Investment PLC
Annual Report & Accounts 2020
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
Globaltrans Investment PLC
Annual Report & Accounts 2020
105
105
Corporate Governance
Report
Nomination Committee
Remuneration Committee
The role of the Nomination Committee is to monitor and review
the composition and balance of the Board and its committees
to ensure Globaltrans has the right structure, skills and diversity
for the effective management of the Group.
The role of the Remuneration Committee is to ensure that
executive remuneration aligns appropriately with the business
strategy and that the Remuneration Policy remains appropriate.
Number
of members
Members as at
31 December 2020
Minimum
meetings a year
Number
of meetings in 2020
Number
of members
Members as at
31 December 2020
Minimum
meetings a year
Number
of meetings in 2020
Members
and meetings
2 members
2 independent
Johann Franz Durrer,
Senior Independent
Non-executive Director
(Chairman)
John Carroll Colley,
Independent
Non-executive Director
1
1
Responsibilities
• Preparation of selection criteria and appointment procedures for Board members.
• Regular review of the Board’s structure, size and composition.
• Future Board appointments.
• Recommendations regarding the membership of the Audit and Remuneration Committees.
Members
and meetings
2 members
2 independent
Johann Franz Durrer,
Senior Independent
Non-executive Director
(Chairman)
John Carroll Colley,
Independent
Non-executive Director
1
3
Responsibilities
• Remuneration of Executive Directors (Chairman and Executive Directors determine
the remuneration for independent members).
• Review of the Group’s Remuneration Policy.
Issues
considered
in 2020
• Advice to the Annual General Meeting on the appointment of Board members.
• Recommendation on appointment of a Director to the Board of the Company.
Issues
considered
in 2020
• Approval of bonuses to the Chief Strategy Officer and the Chief Financial Officer.
THE NOMINATION COMMITTEE MEETINGS IN 2020
THE REMUNERATION COMMITTEE MEETINGS IN 2020
Dr. Johann Franz Durrer
John Carroll Colley
Eligible Attended
1
1
1
1
Dr. Johann Franz Durrer
John Carroll Colley
Eligible Attended
3
3
3
3
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 106
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
107
Corporate Governance
Report
Establishment of the ESG Committee
The Board’s strategy and business model aims to deliver
sustainable growth for all stakeholders and the
consideration of environmental, social and governance
(ESG) issues has a central role to play. Companies
increasingly are expected by stakeholders to explain
how their business impacts on the environment, society
and the people in it. The coronavirus pandemic has
only served to intensify debate around sustainability
and increase calls for greater transparency.
The Group takes its ESG responsibilities seriously and in
January 2021 the Board established an ESG Committee
to lead its thinking on ESG matters and ensure that ESG
issues are integrated into the Group’s long-term strategy.
The ESG Committee will also monitor the development
of the Group’s sustainability strategy, review
and recommend ESG disclosures for Board approval
and approve the Group’s sustainability reports.
The ESG Committee is comprised of 2 Board
members: Elia Nicolaou, Non-executive Director,
who will serve as the Chair, and John Carroll Colley,
Independent Non-executive Director.
The ESG Committee will meet at least 2 times a year.
As the Committee was established at the start of 2021,
further information about its activities will be published
in the Group’s Annual Report for 2021.
Shareholder engagement
The Board places great
importance on its relationships
with the Company’s shareholders.
It continually strives to provide high
levels of transparency and build
trust, recognising that engaging
with shareholders is key to creating
long-term, sustainable shareholder
value. The Board engages with
shareholders in a variety of ways.
The CEO and CFO meet regularly
with the Group’s institutional
investors to hear their views
and provide updates on the Group’s
strategy and business performance.
The Group has a dedicated
Investor Relations team that acts
as the primary point of contact
with the investor community.
Management undertakes a regular
schedule of meetings, presentations,
conference calls and webcasts with
institutional investors and sell-side
analysts.
The Group’s commitment to open
and constructive communication
has been particularly important
in the last year in light of the
coronavirus pandemic. The Board
and management worked hard
to maintain open channels
of communications, maintaining a full
investor relations contact programme
using remote communications
tools to interact with investors.
The Group’s new website was also
launched in 2020, providing easy-
to-navigate access and an enhanced
investor relations experience.
In connection with the Group’s
secondary listing on MOEX,
the Company arranged
7 interactive events and seminars
for Russian retail investors to introduce
them to the Company, and set out
the investment case. These events were
well supported by retail investors in Russia.
There are currently 11 sell-side analysts
who monitor Globaltrans. Corporate
information, including annual reports,
Company announcements
and presentations is available
on the corporate website at
www.globaltrans.com/investors.
Internal control and audit
The Board is primarily responsible
for establishing a framework
of prudent and effective internal
controls and risk management
in relation to the financial reporting
process for the undertakings
included in the Group consolidation
that enables risks to be assessed
and managed and financial reports
to be prepared.
The Audit Committee reviews
and assesses the Group’s internal
control and risk management
processes. The system of controls
is designed to manage rather than
eliminate the risks relevant to the
In 2020, Globaltrans' Investor
Relations team held
260 meetings
with investors
and shareholders,
participated in
arranged
conferences,
7 investor
3 roadshows
Group’s operations and, therefore,
can only provide reasonable, and not
absolute, assurance against material
errors, losses, fraud or breaches
of laws and regulations.
At Globaltrans, the body responsible
for internal audit is the Internal Audit
Service (IAS). It tests the Group’s
systems of risk management, internal
control and corporate governance
to obtain reasonable assurance that:
• the risk management system
functions efficiently;
• material financial, management
and operating information
is accurate, reliable and up-to-date;
• the actions of employees
and management bodies comply
with the Group’s policies, standards
and procedures and applicable
laws;
• resources are procured reasonably
and used efficiently and their
safekeeping is fully guaranteed;
• Group companies conduct
their business in compliance
with applicable laws.
Every year the Audit Committee
approves an internal audit plan,
which is developed by identifying
the audit universe, performing
a risk analysis and obtaining input
from management relative to risks,
controls and governance processes.
The internal auditor regularly
reports to the Audit Committee
on the progress of planned audits.
If any material internal control
deficiencies are identified, they are
immediately communicated to the
Audit Committee and consequently
to the Board.
External auditor
The Audit Committee manages
the relationship with the external
auditor on behalf of the Board.
Each year it considers
the reappointment of the external
auditor, reviews requirements of the
rotation of the audit partner and the
audit firm when applicable, as
well as its remuneration and other
terms of engagement, and makes
a recommendation to the Board.
Shareholders are then asked
to approve the appointment
at the Annual General Meeting.
The Group has a formal policy
on assessing the independence
and objectivity of the external auditor.
It regulates the terms of appointment
of the external auditor and the
nature of audit and permitted non-
audit services provided to the
Group. External auditors periodically
(at least annually) provide written
confirmation to the Committee that,
in their professional judgement,
they are independent of the Group.
The Committee is satisfied that
the independence and objectivity
of the external auditors is not
impaired and that the external audit
process remains effective.
The Audit Committee
recommended the reappointment
of PricewaterhouseCoopers as
the Group’s external auditor for 2020
and 2021. The appointment for 2020
was approved by the Group’s
shareholders at the Annual General
Meeting on 30 April 2020.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
108
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
109
Share
Capital
Corporate
Structure
OWNERSHIP STRUCTURE,
AS OF 30 MARCH 2021
10.8%
11.5%
11.5%
56.9%
Globaltrans was formed in 2004 when a group
of like-minded entrepreneurs brought their freight rail
businesses together to form the Company, giving it
the scale, governance and focus to become one
of the leading players in the region.
Globaltrans provides freight rail transportation, railcar
leasing and other ancillary services to clients in Russia,
the CIS and Baltic countries through its subsidiaries —
New Forwarding Company, BaltTransServis, GTI
Management, SyntezRail, Spacecom, Spacecom Trans
and Ukrainian New Forwarding Company.
The Group’s corporate structure
ensures efficient asset management
and operational control while
creating logical business segments.
Those founders continue to be
shareholders today with a combined
stake of about 43% in total
and their entrepreneurial spirit
remains at the heart of the Group's
culture and approach. In addition,
other directors and management
of Globaltrans are shareholders in the
Company representing about 0.2%
of the issued share capital.
In 2008, Globaltrans’ founders
recognised the benefits of an
international listing and undertook
an Initial Public Offering on the
London Stock Exchange, becoming
the first freight rail company serving
Russian cargo flows to be listed
internationally. In October 2020
Globaltrans' GDRs were admitted
to trading on the Moscow Exchange.
Today, the majority of the Company’s
shares are in the hands of the public
with Globaltrans’ free float amounting
to approximately 56.9%1 of the issued
share capital.
The issued share capital
of Globaltrans consists of 178,740,916
ordinary shares with a nominal
value of USD 0.10 each, a certain
portion of which is held in the
form of Global Depositary Receipts
("GDRs"). The GDRs represent one
ordinary share each and have been
traded on the Main Market of LSE
(ticker symbol: GLTR) since May
2008 and on the Level One quotation
list of MOEX since October 2020
(ticker symbol: GLTR). Citibank N.A.
is the depositary bank for the GDR
programme of Globaltrans.
5
founders
0.2%
0.9%
3.1%
5.1%
Marigold Investments Ltd 2
Onyx Investments Ltd 2
Maple Valley Investments Ltd 2
Litten Investments Ltd 3
Goldriver Resources Ltd 4
Transportation Investments
Management Ltd 5
Directors and management
Treasury shares
Free float 1
1 For these purposes, the free float consists of the ordinary shares and GDRs held by investors not affiliated or associated with Globaltrans.
2 A. Filatov, N. Mishin and K. Nikolaev are co-founders of Globaltrans and are beneficiaries with regard to 11.5%, 11.5%, 10.8% respectively of Globaltrans’
ordinary share capital each through their respective SPVs (Marigold Investments Ltd, Onyx Investments Ltd and Maple Valley Investments Ltd).
3 Beneficially owned by Alexander Eliseev, Non-executive Director and co-founder of Globaltrans.
4 Beneficially owned by Sergey Maltsev, Chairman of the Board of Directors, Chief Strategy Officer and co-founder of Globaltrans.
5 Beneficially owned by Andrey Filatov, Nikita Mishin and Konstantin Nikolaev, co-founders of Globaltrans.
CORPORATE STRUCTURE, AS OF 31 DECEMBER 2020
Globaltrans Investment PLC
New Forwarding Company,
AO (Russia)
100%
BaltTransServis,
OOO (Russia)
60%
GTI Management,
OOO (Russia)
100%
Ural Wagonrepair Company,
AO (Russia)
100%
Ukrainian New Forwarding
Company, LLC (Ukraine)
100%
Source:
Globaltrans
AS Spacecom,
(Estonia)
65.25%
SyntezRail
Limited (Cyprus)
60%
BTS-Locomotive solutions,
OOO (Russia)
100%
RemTransServis,
OOO (Russia)
100%
AS Spacecom Trans,
(Estonia)
100%
Ekolinja Oy,
(Finland)
100%
SyntezRail,
ООО (Russia)
100%
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
110
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
111
Consolidated Management
Report and Consolidated
Financial Statements
for the Year Ended
31 December 2020
Board of Directors and other officers ........................................................ 112
Consolidated Management Report ...........................................................114
Directors’ responsibility ........................................................................... 136
Independent Auditor’s Report .................................................................. 138
Consolidated cash flow statement........................................................... 152
Notes to the consolidated financial statements ...................................... 154
1. General information ......................................................................................................154
2. Basis of preparation .....................................................................................................154
3. Adoption of new or revised standards and interpretations ............................155
4. Summary of significant accounting policies .......................................................155
5. New accounting pronouncements ......................................................................... 175
6. Financial risk management ......................................................................................... 176
7. Critical accounting estimates and judgements .................................................. 189
8. Segmental information ................................................................................................ 191
9. Non-IFRS financial information................................................................................. 198
10. Revenue........................................................................................................................... 204
11. Expenses by nature ..................................................................................................... 206
12. Other gains/(losses) — net ........................................................................................ 210
13. Employee benefit expense ........................................................................................ 210
14. Finance income and costs ...........................................................................................211
15.
Income tax expense ......................................................................................................212
16. Net foreign exchange losses .....................................................................................214
17. Property, plant and equipment .................................................................................215
18. Right-of-use assets .......................................................................................................220
19.
Intangible assets ........................................................................................................... 223
20. Principal subsidiaries ................................................................................................... 224
21. Share-based payments ...............................................................................................230
22. Financial assets ..............................................................................................................231
23. Other assets ...................................................................................................................234
24. Inventories ......................................................................................................................236
25. Cash and cash equivalents ........................................................................................236
26. Share capital, share premium and treasury shares ...........................................238
27. Dividends ........................................................................................................................239
28. Borrowings ......................................................................................................................240
29. Other lease liabilities ...................................................................................................245
30. Deferred income tax ...................................................................................................246
31. Trade and other payables ...........................................................................................248
32. Earnings per share ........................................................................................................248
33. Contingencies ...............................................................................................................249
34. Commitments ................................................................................................................ 253
35. Related party transactions ........................................................................................254
36. Events after the balance sheet date ....................................................................... 255
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 112
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
113
Board of Directors
and other officers
Mr. Sergey Maltsev
Chairman of the Board of Directors
Executive Director
Alternate director: Mr. Yuri Isaev
Mr. Sergey Tolmachev
Executive Director
Mr. Alexander Storozhev
Executive Director
Alternate Director: Ms. Elia Nicolaou
Mr. Konstantin Shirokov
Executive Director
Mr. Alexander Eliseev
Non-executive Director
Alternate Director: Ms Ekaterina Golubeva
Mr. Andrey Gomon
Non-executive Director
Alternate Director: Ms. Melina Pyrgou
Mr. Alexander Tarasov
Non-executive Director
Board of Directors
Dr. Johann Franz Durrer
Senior Independent Non-Executive Director
Chairman of the Remuneration Committee
Chairman of the Nomination Committee
Mr. Vasilis Hadjivassiliou
Independent Non-Executive Director
Member of the Audit Committee (since January 2021)
Mr. John Carroll Colley
Independent Non-Executive Director
Chairman of the Audit Committee
Member of Remuneration Committee
Member of Nomination Committee
Member of ESG Committee (since January 2021)
Mr. George Papaioannou
Independent Non-Executive Director
Member of the Audit Committee
Ms. Elia Nicolaou
Non-executive Director
Chairwoman of the ESG Committee (since January 2021)
Member of the Audit Committee (until January 2021)
Company Secretary
Secretary of the Board
Alternate Director: Mr. Marios Tofaros
Mr. Michalakis Thomaides
Non-Executive Director
Ms. Melina Pyrgou
Non-executive Director
Mr. Marios Tofaros
Non-executive Director
Board support
The Company Secretary is available to advise all Directors to ensure compliance with the Board procedures. Also a
procedure is in place to enable Directors, if they so wish, to seek independent professional advice at the Company’s
expense.
Company Secretary
Ms. Elia Nicolaou
Dimitriou Karatasou, 15
Anastasio Building, 6th floor, Office 601
Strovolos, 2024, Nicosia, Cyprus
Assistant secretary: Mr. Marios Tofaros
Registered office
20 Omirou Street
Agios Nicolaos
CY-3095 Limassol, Cyprus
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 114
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
115
Consolidated
Management Report
The Board of Directors presents its report together with the audited consolidated
financial statements for the year ended 31 December 2020. The Group’s financial
statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union and the requirements of Cyprus
Companies Law, Cap. 113.
Principal activities
The principal activities of the Group, which are unchanged from last year, are the provision of railway transportation
services, using own and leased rolling stock and fleet engaged from third party rail operators, as well as the operating
lease of rolling stock.
Review of developments, position and performance of the Group’s business
Although the Group’s financial results were inevitably impacted by the weak markets and the unprecedented trading
conditions of 2020, the Group was nonetheless able to deliver a solid performance in 2020. The weak pricing
conditions in the gondola segment were partially offset by a less volatile Russian tank car segment and growing
revenues from specialised containers and the railcar leasing businesses resulting in the Group delivering increased
free cash flow and solid dividends for the Company’s shareholders.
IFRS financial information
Management considers amongst others the following IFRS measures in analysing the performance of the Group.
The Group’s Total revenue decreased 28% year on year to RUB 68,367,404 thousand in 2020 (2019: RUB 94,993,874
thousand). Operating profit decreased 41% year on year to RUB 18,811,071 thousand in 2020 (2019: RUB 32,119,830
thousand). The Profit for the year ended 31 December 2020 decreased 46% year on year to RUB 12,186,847 thousand
(2019: RUB 22,653,332 thousand).
On 31 December 2020 the total assets of the Group were RUB 98,327,207 thousand (2019: RUB 99,574,549 thousand)
and net assets were RUB 52,773,813 thousand (2019: RUB 56,526,065 thousand).
On 31 December 2020 the total debt of the Group was RUB 32,015,239 thousand and increased by 6% as compared
to end of 2019 which amounted to RUB 30,095,218 thousand. Total cash and cash equivalents on 31 December 2020
decreased by 24% and amounted to RUB 4,978,322 thousand (31 December 2019: 6,521,543 thousand).
Non-IFRS financial information
Amongst others, management analyses the following key non-IFRS measures. These non-IFRS measures are marked
with capital letters and their definitions are provided at the end of this section in alphabetical order.
Adjusted Revenue decreased 20% year on year to RUB 54,933,713 thousand (2019: RUB 68,839,669 thousand) primarily
reflecting weak pricing conditions in the gondola segment and partially offset by a less volatile tank car segment and
growing revenues from specialised containers and railcar leasing businesses. Total Operating Cash Costs were down
1% year on year to RUB 29,121,210 thousand (2019: RUB 29,408,565 thousand).
Adjusted EBITDA decreased 32% year on year to RUB 26,807,224 thousand (2019: RUB 39,551,913 thousand) with the
Adjusted EBITDA Margin reduced to 49% (2019: 57%), mainly impacted by weak pricing conditions in the gondola
segment. The Group’ Free Cash Flow was RUB 15,103,243 thousand, a 14% increase compared RUB 13,250,559
thousand in 2019.
The Group had a strong balance sheet with Net Debt to Adjusted EBITDA increasing to 1.01x (2019 end: 0.60x).
Net Debt rose by 15% to RUB 27,036,917 thousand (2019 end: RUB 23,573,675 thousand). As at 31 December 2020 and
31 December 2019 100% of the Group’s debt was denominated in Russian roubles.
In 2020, management continued to make disciplined decisions on capital allocation whilst pursuing cost improvement
and productivity measures. The Total Capex decreased 49% year on year to RUB 6,941,159 thousand (2019: RUB
13,516,817 thousand). This lower capital expenditure was largely due to the decrease in expansion CAPEX, reflecting
moderate investments together with lower maintenance CAPEX, largely reflecting decrease in the number of depot
repairs, wheel pairs and locomotive repairs and prices for certain spare parts and repair works. In 2020, the Group
acquired 300 flat cars to support the growing niche business of freight rail transportation of specialised containers
(for petrochemicals and high grade steel compared to 2,502 units (including 1,154 specialised containers, 700 flat
cars, 638 gondola cars and 10 locomotives in the previous year).
Operational information
In 2020, Freight Rail Turnover (excluding Engaged Fleet) increased 2.2% year on year and the Group’s Transportation
Volume (excluding Engaged Fleet) decreased 3%. The Freight Rail Turnover amounted to 150.3 billion tonnes-km (2019:
147.1 billion tonnes-km) and the Group’s Transportation Volume was 88.9 million tones in 2020 (2019: 91.6 million
tones).
The Average Number of Loaded Trips per Railcar decreased by 5% year on year and the Average Distance of Loaded
Trips increased by 6% year on year, mainly reflecting changed logistics and volatility in demand for rail transportation
specifically in the tank car segment.
Average Price per Trip reduced 19% year on year to RUB 36,909 (2019: RUB 45,807), with solid pricing in tank cars
partially compensating for continued weak pricing in the gondola segment.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 116
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
117
Consolidated
Management Report
The increase in the Empty Run Ratio for gondola cars to 45% (2019: 42%) on the back of substantial volatility in client
cargo flows and routes due to the unprecedented COVID-19 lockdowns resulting in increase in the Total Empty Run
Ratio to 51% (2019: 49%).
Total Fleet increased by 1% to 71,688 units (2019 end: 70,720 units) primarily reflecting the increase in number of
leased-in fleet.
The financial position, development and performance of the Group as presented in the financial statements is
considered satisfactory.
Definitions to Non-IFRS financial measures
Adjusted EBITDA represents EBITDA excluding “Net foreign exchange transaction losses from financing activities”,
“Share of loss of associate”, “Other losses/(gains) - net”, “Net loss/(gain) on sale of property, plant and equipment”,
“Reversal of impairment/(impairment) of property, plant and equipment”, “Loss on derecognition arising on capital
repairs” and “Reversal of impairment of intangible assets”.
Adjusted EBITDA Margin is calculated as Adjusted EBITDA divided by Adjusted Revenue.
Adjusted Revenue is calculated as “Total revenue” less the following “pass through” items “Infrastructure and
locomotive tariffs: loaded trips” and “Services provided by other transportation organisations”.
Average Distance of Loaded Trip is calculated as the sum of the distances of all loaded trips for a period divided by the
number of loaded trips for the same period.
Average Number of Loaded Trips per Railcar is calculated as total number of loaded trips in the relevant period
divided by Average Rolling Stock Operated.
Average Price per Trip is calculated as Net Revenue from Operation of Rolling Stock divided by the total number
of loaded trips during the relevant period in the respective currency. Net Revenue from Operation of Rolling Stock
is defined as the sum of “Revenue from railway transportation - operators services (tariff borne by the Group)”
and “Revenue from railway transportation - operators services (tariff borne by the client)” less “Infrastructure and
locomotive tariffs: loaded trips”, “Services provided by other transportation organisation” and net revenue from
engaged fleet.
Average Rolling Stock Operated is calculated as the average weighted (by days) number of rolling stock available for
operator services (not including rolling stock in maintenance, purchased rolling stock in transition to its first place of
commercial utilisation, rolling stock leased out, Engaged Fleet, flat cars and tank containers used in petrochemical
business).
EBITDA represents “Profit for the year” before “Income tax expense”, “Finance costs - net” (excluding “Net foreign
exchange transaction gains/(losses) on financing activities”), “Depreciation of property, plant and equipment”,
“Amortisation of intangible assets” and “Depreciation of right-of-use assets”.
Empty Run Ratio is calculated as the total of empty trips in kilometres by respective rolling stock type divided by total
loaded trips in kilometres of such rolling stock type. Empty trips are only applicable to rolling stock operated (not
including rolling stock in maintenance, purchased rolling stock in transition to its first place of commercial utilisation,
rolling stock leased out, engaged fleet, platforms and tank containers used in petrochemical business).
Engaged Fleet is defined as rolling stock subcontracted or otherwise engaged from a third-party rail operator for a
loaded trip from the point of origination to the cargo’s destination, at which point the railcar is then released to such
third-party.
Free Cash Flow is calculated as “Cash generated from operations” (after “Changes in working capital”) less “Tax
paid”, “Purchases of property, plant and equipment”, “Purchases of intangible assets”, “Acquisition of subsidiary
undertakings - net of cash acquired”, “Interest paid on lease liabilities”, “Interest paid on bank borrowings and
non-convertible unsecured bonds” and “Interest paid on leases with financial institutions”.
Freight Rail Turnover is a measure of freight carriage activity over a particular period calculated as the sum of tonnage
of each loaded trip multiplied by the distance of each loaded trip, expressed in tonnes-km. It includes volumes
transported by the engaged fleet and excludes performance of petrochemical tank container segment.
Net Debt is defined as the sum of total borrowings (including interest accrued) less “Cash and cash equivalents”.
Net revenue from engaged fleet represents the net sum of the price charged for transportation to clients by the Group
utilising Engaged Fleet less the loaded railway tariff charged by OAO “Russian Railways” (included in “Infrastructure
and locomotive tariffs: loaded trips”) less the cost of attracting fleet from third-party operators (included in “Services
provided by other transportation organisations”).
Owned Fleet is defined as the fleet owned and leased in under finance lease as at the end of the reporting period. It
includes railcars, locomotives and containers, unless otherwise stated, and excludes Engaged Fleet.
Total CAPEX calculated on a cash basis as the sum of “Purchases of property, plant and equipment”, “Purchases of
intangible assets”, “Acquisition of subsidiary undertakings — net of cash acquired”.
Total Empty Run Ratio is calculated as total kilometres travelled empty divided by the total kilometres travelled
loaded by the rolling stock fleet operated by Globaltrans (not including the relocation of rolling stock to and from
maintenance, purchased rolling stock in transition to its first place of commercial utilisation, or rolling stock leased
out, Engaged Fleet, platforms and tank containers used in petrochemical business) in the relevant period.
Total Fleet is defined as the fleet owned and leased in under finance and operating leases as at the end of reporting
period. It includes railcars, locomotives and petrochemical tank containers, unless otherwise stated, and excludes
engaged fleet.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 118
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
119
Consolidated
Management Report
Total Operating Cash Costs represent operating cost items payable in cash and calculated as “Total cost of sales,
selling and marketing costs and administrative expenses” less the “pass through” items: “Infrastructure and
locomotive tariffs: loaded trips” and “Services provided by other transportation organisations” and non-cash items:
“Depreciation of property, plant and equipment”, “Amortisation of intangible assets”, “Depreciation of right-of-use
assets”, “Loss on derecognition arising on capital repairs”, “Net impairment losses on trade and other receivables”,
“Reversal of impairment/(impairment) of property, plant and equipment” and “Net loss/(gain) on sale of property, plant
and equipment”.
Transportation Volume is a measure of freight carriage activity over a particular period, measuring weight of cargo
carried in million tonnes. It excludes volumes transported by Engaged Fleet and the performance of petrochemical
tank container segment.
Changes in group structure
There were no changes in the Group structure of the Company during the year ended 31 December 2020. For the
principal subsidiaries of the Company, refer to Note 20 of the consolidated financial statements.
Human resources
Globaltrans considers the wellbeing of employees central to its success and strives to maintain exemplary working
standards, ensure job satisfaction and create opportunities for professional growth. The Group’s personnel policy
focuses on creating a positive atmosphere at all offices and facilities to maximise productivity. As part of this, it offers
medical insurance, support for education, opportunities to obtain additional qualifications and training, and financial
aid in particularly difficult times.
The Group’s future success will partly depend on its ability to continue to attract, retain and motivate key employees
and qualified personnel, in particular an experienced management team. Competition in Russia for such personnel
with relevant expertise is intense due to the small number of qualified individuals with suitable practical experience in
the rail industry.
Adequate remuneration packages, which are in line with or in excess of market levels, are offered to all employees
and key managers and remuneration is linked to the Group’s financial results. The Human Resource function regularly
monitors salary levels and other benefits offered by competitors to ensure that the Group’s remuneration packages are
adequate.
Non-Financial Information and Diversity Statement
Principal risks and uncertainties
The Group will be publishing its Non-Financial Information and Diversity Statement within its Annual report that
will be issued within four months after the balance sheet date and will be available on the Company’s website,
www.globaltrans.com
Environmental matters
Rail is one of the most environmentally friendly modes of transport. Nonetheless, any commercial activity has an
environmental impact and Globaltrans strives to minimise those from its operations where possible. To this end, the
Group ensures that its activities fully comply with local environmental regulations. It also aims to help business and
nature co-exist by focusing on applying modern technology in its operations and using natural resources rationally.
In January 2021, the Board established the ESG Committee to analyse and oversee risks related to the environmental,
social and governance issues.
The Group faces a number of diverse potential and actual risks to its business. The Board has adopted a formal
process to identify, evaluate and manage principal risks and uncertainties faced by the Group.
To identify, evaluate and mitigate these, the Group has established an in-house system to monitor and control
uncertainties and threats throughout its activities. This is overseen by a dedicated Risk Management function, which
works directly with the Board of Directors in this area.
The Group has grouped the risks that it considers to be significant into key categories — strategic, operational,
compliance and financial — and they are presented below.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 120
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
121
Consolidated
Management Report
Strategic risks
Operational risks
The strategic risks faced by the Group that pose risks that influence the Group’s ability to achieve its strategy include
the general economic situation and operating environment in Russia, Kazakhstan, Ukraine, CIS and Baltic countries in
which the Group operates; the regulatory risk relating to the operation of the Russian railway transportation market,
including railway tariff regulation and technical requirements for fleet maintenance; the highly competitive Russian
rail transportation market with unregulated operator’s services tariffs; the significant concentration of the Group’s
customer base with the top 10 customers (including their affiliates and suppliers) accounting for around 72% of the
Group’s Net Revenue from the operation of rolling stock in 2020; cost of borrowing and/or deterioration in market
conditions with potential impacts on the profitability and recoverability of investments; and reliance on RZD for issuing
permits allowing the Group to operate locomotives.
The Group operates mainly in Russia and other emerging markets. Emerging markets, such as Russia, Kazakhstan and Ukraine,
are subject to greater risks than more developed markets, including significant economic, political, social, legal and legislative
uncertainties. Moreover, the Group’s business depends on the demand in the Russian freight rail transportation market, which
in turn depends on certain key commodity sectors and, accordingly, on economic conditions in Russia, Europe and elsewhere.
A decrease in production and demand for key commodities in Russia, or in adjacent countries where the commodities of the
Group’s key customers are shipped by rail, as a result of a technological shift, economic downturn, political crisis or other
event in Russia or another relevant country, negatively impacts the Group’s business and growth prospects.
The management of the Group constantly monitors the developments in the operating environment and regulatory regime
of the railway transportation market in the countries in which the Group operates. The Group’s business model is to maintain
a balanced fleet between universal gondola cars, adaptable to the demand for transportation of various bulk cargoes and
rail tank cars, which are used for the transportation of oil products and oil. Further, the Group has long-term, established
relationships with its key customers and their affiliates and suppliers and in some cases, the Group becomes an integrated
part of its customers’ operations. Around 64% of the Group’s Net Revenue from the Operation of Rolling Stock in 2020
was covered by long-term service contracts with several large clients. Such contracts provide additional stability and
greater certainty regarding transport volumes for the Group. In addition, the Group’s marketing function regularly monitors
competitors’ strategies, their use of technology, their price strategies and industry trends.
In addition to the human impact, the spread of Coronavirus (COVID-19) continues to affect global businesses and may
lead to further and/or continued lockdowns, trade wars and turbulence in different currencies. The Group’s outlook
for 2021 may be further impacted by the Coronavirus outbreak, which continues to cause uncertainty. The freight rail
market may experience reduced demand stemming from the effects of COVID-19. The Company cannot predict the full
impact of COVID-19 on its markets, business or prospects although they may be materially adversely impacted by the
rapidly evolving situation. In addition, the appearance of new pandemics or other dangerous illnesses could seriously
affect the global and local business environment and lead to negative consequences for Group’s business. Significant
levels of COVID-19 illness in the Group or its key clients could interfere with stability of Group’s operations.
Management is closely monitoring the implications of the global outbreak of COVID-19 and acts depending on
the development of the situation. The Group constantly evaluates and implements options for distant work for its
workforce to mitigate risks of spreading and catching COVID-19 illness.
The operational risks faced by the Group that could influence the Group’s operational efficiency include the physical
state of the Russian, Ukrainian, CIS and Baltic countries railway infrastructure which may negatively impact the
condition of the Group’s rolling stock and the performance of the Group; the impact of inflation in Russia on the
Group’s costs with limited opportunities to increase tariffs to customers; the competition for personnel with relevant
expertise and experience in Russia and the impact on the Group’s ability to continue to attract, retain and motivate key
employees and qualified personnel; reliance on RZD for locomotive traction and infrastructure usage and the impact
of this on the quality of the Group’s freight transportation services and therefore customer satisfaction; IT availability
and continuity considerations due to reliance on specialised trail transport and logistics software for ensuring efficient
and effective logistics, dispatching and rolling stock tracking services; and risks of terrorist attacks, natural disasters
or other catastrophic events beyond the Group’s control.
The Group is managing operational risk by ensuring that practically all of the Group’s rolling stock is insured against
damage. Further, the Group monitors its rolling stock through the Group’s dispatch centre on a 24/7 basis and plans
routes accordingly to minimise the risks of disruption. The Group monitors FAS initiatives with the aim of detecting
possible changes in tariff-setting methodology and tries to reflect respective changes in contracts with customers.
Among the Group’s key objectives are to increase operational efficiency and to focus on control and reduction of
costs. The Group continuously monitors its costs to maintain efficiency. The Human Resource function regularly
monitors salary levels and other benefits offered by competitors to ensure that the Group’s remuneration packages
are adequate. Customer satisfaction is one of the key metrics that the Group’s management monitors, with customer
feedback being analysed and appropriate follow-up actions being taken. Local IT specialists have introduced solutions
to maintain the availability of IT services and ensure their recovery in case of disruption. The IT function and Internal
Audit function monitor all IT-related activities and performance for compliance with IT policies and procedures.
Further the Group permanently monitors any disruptive events and applies a Business Continuity Policy to ensure the
safety of employees and human life; maintain continuity of time-critical services; minimise disruptions to clients and
partners; and minimise operational, financial and reputational impact.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 122
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
123
Consolidated
Management Report
Compliance risks
The Group is also subject to compliance risk, being the risks that influence the Group’s adherence to relevant laws
and regulations, including the regulations of the London Stock Exchange (“LSE”) and the Moscow Exchange (“MOEX”),
where Company’s GDR are admitted to trading. The Group is involved in legal actions from time to time. Some of it
may have an adverse effect on the Group. The ambiguity of the law in Russia and CIS countries creates regulatory
uncertainty and might result in claims from different government authorities. Local tax, currency and customs
legislation, especially in Russia, other emerging markets and Cyprus, may be subject to varying interpretations,
inconsistencies between federal laws, regional and local laws, rules and regulations, frequent changes and a lack of
judicial and administrative guidance on interpreting legislation.
The Group runs its operations in compliance with tax, currency, labour, customs, antimonopoly and other applicable
legislation and constantly monitors any changes in the regulatory environment as well as compliance with the terms of
its agreements. Standard forms of agreements are used for transportation services, and various controls are in place
to ensure that the terms of agreements are adhered to. All contracts are subject to rigorous review by all of the Group
functions concerned and a formal approval process prior to execution. The Group has controls in place, including
highly qualified and experienced personnel, to monitor changes in legislation and determine the appropriate action
needed to minimise the risk of a challenge to such treatments by the authorities. For complex matters, the Group
retains external consultants.
Financial risks
Cash flow and fair value interest rate risk
The Group’s income and operating cash flows are exposed to changes in market interest rates. The Group obtains
borrowings at current market interest rates and does not use any hedging instruments to manage interest rate risk.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to
meet an obligation. Credit risk arises from cash and cash equivalents, trade receivables, loans and other receivables as
well as finance lease receivables.
Liquidity risk
The Group has an excess of current liabilities over current assets of RUB 2,842,697 thousand as at 31 December 2020.
Due to availability of committed credit lines amounting to, together with long-term borrowings (Note 28) the Group
has the ability to meet its liabilities as they fall due and mitigate risks of adverse changes in the financial markets
environment.
Management controls current liquidity based on expected cash flows and expected revenue receipts. In the long-term
perspective, the liquidity risk is determined by forecasting future cash flows at the moment of signing new credit, loan
or lease agreements and by budgeting procedures.
Further details on the Group’s exposure to financial risks are presented in Note 6 to the consolidated financial
statements.
The Group’s activities exposed it to a variety of financial risks: market risk (including foreign exchange risk, cash flow
and fair value interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial results.
Contingencies
The Group’s contingencies are disclosed in Note 33 to the consolidated financial statements.
Foreign exchange risk
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated
in the currency different from the functional currency of each of the entities of the Group.
Future developments
The Group is exposed to the effects of currency fluctuations between (i) the Russian Rouble and the US Dollars in
relation to US Dollar denominated balances held in the Company and the Cypriot and Russian subsidiaries of the
Group having the Russian Rouble as their functional currency; (ii) the Euro and the US Dollar for US Dollar denominated
balances held in the Estonian subsidiaries of the Group which have the Euro as their functional currency and (iii) the
Ukrainian Hryvnia and the US Dollar for the US Dollar denominated balances held in the Ukrainian subsidiary of the
Group which has the Ukrainian Hryvnia as its functional currency.
The Group does not have formal arrangements for hedging foreign exchange risk, with the exception of application of
hedge accounting to hedge foreign currency risk associated with highly probable dividend payments and associated
dividend payable until their settlement, as set out in the accounting policy for hedging activities in Note 4 to these
financial statements.
The Board of Directors does not expect any significant changes in the activities of the Group for the foreseeable
future.
The Group’s strategic objective is to strengthen its position as a leading private freight rail group in Russia.
Results
The Group’s results for the year are set out on pages 146 and 147. The Board of Directors recommends the payment
of a dividend as detailed below and the remaining net profit for the year is retained.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 124
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
125
Consolidated
Management Report
Dividends
Treasury shares
Pursuant to its Articles of Association, the Company may pay dividends out of its profits. To the extent that the
Company declares and pays dividends, owners of Global Depositary Receipts (GDRs) on the relevant record date
will be entitled to receive dividends payable in respect of Ordinary Shares underlying the GDRs, subject to the terms
of the Deposit Agreement. The Company expects to declare dividends in Russian Roubles and pay such dividends
in US Dollars. If dividends are not paid in US Dollars, except as otherwise described under “Terms and Conditions
of the Global Depositary Receipts — Conversion of Foreign Currency”, they will be converted into US Dollars by the
Depositary and paid to holders of GDRs net of currency conversion expenses.
In accordance with the decision of the Extraordinary General Meeting which took place on 12 May 2020, the Company
started a GDRs buyback program. The buyback programme is for the Company’s GDRs, each representing one
ordinary share of the Company with a par value of US$0.10 per share, and will run till the earlier of the close of the
Annual General Meeting of the Company to be held in 2021 and May 2021. The total number of purchased GDRs
shall not exceed 5% of the Company’s share capital (equivalent to 8,937,046 shares, with each GDR representing one
ordinary share). The buyback programme allows the Company to take advantage of opportunities, if any, when its
return criteria are better met by way of a GDR buyback than through investment in fleet expansion.
The Company is a holding company and thus its ability to pay dividends depends on the ability of its subsidiaries to
pay dividends to the Company in accordance with relevant legislation and contractual restrictions. The payment of
such dividends by its subsidiaries is contingent upon the sufficiency of their earnings, cash flows and distributable
reserves. The maximum dividend payable by the Company’s subsidiaries is restricted to the total accumulated
retained earnings of the relevant subsidiary, determined according to the law.
In April 2020, the shareholders of the Company approved the payment of a dividend for the financial year ended 31
December 2019 in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of
RUB 8,320,390 thousand, including final dividend for 2019 in the amount of RUB 1,903,591 thousand or RUB 10.65 per
ordinary share/GDR and a special final dividend in the amount of RUB 6,416,799 thousand or RUB 35.90 per ordinary
share/GDR (US Dollar equivalent of US$ 110,787 thousand).
In August 2020, the Board of Directors of the Company approved payment of total dividend in the amount of 46.55
Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including interim
dividend in the amount of RUB 3,083,281 thousand or RUB 17.25 per ordinary share/GDR and a special interim dividend
in the amount of RUB 5,237,109 thousand or RUB 29.30 per ordinary share/GDR (US Dollar equivalent US$ 111,293
thousand).
On the date of this report, the Board of Directors of the Company, having considered the profitability and liquidity
position of the Group, recommends a payment of dividend for the year 2020 in the amount of 28.0 Russian Roubles
per ordinary share/GDR, amounting to a total dividend of RUB 5,004,746 thousand, including final dividend for 2020
in the amount of RUB 2,931,351 thousand or RUB 16.4 per ordinary share/GDR and a special final dividend in the
amount of RUB 2,073,395 thousand or RUB 11.60 per ordinary share/GDR. Such dividends subject to the approval of
the shareholders at the Annual General Meeting on 29 April 2021 and shall be paid in US Dollars at the average of the
official exchange rates of the Russian Central Bank for five business days in Russia from 22 April 2021 to 28 April 2021
inclusive.
Share capital
As at 31 December 2020 the issued share capital of the Company which remains unchanged from the prior year,
comprised 178,740,916 ordinary shares with a par value of US$0.10 per share.
As at 31 December 2020 the Company has purchased a total of 76,877 GDRs, which are held in treasury for a total
consideration of 422 thousand US Dollars (equivalent to RUB 31,496 thousand).
In line with relevant legislation, GDRs repurchased by the Company may be held in treasury for up to two years.
Research and development activities
The Group has not undertaken any research and development activities during the year ended 31 December 2020.
Events after the balance sheet date
The events after the balance sheet date are disclosed in Note 36 to the consolidated financial statements.
Branches
The Group operates through branches and representative offices, maintaining eight branches and eight representative
offices during 2020 (eight branches and eight representative offices during 2019).
Going concern
Directors have access to all information necessary to exercise their duties. The Directors continue to adopt the going
concern basis in preparing the consolidated financial statements based on the fact that, after making enquiries and
following a review of the Group’s budget for 2021, including cash flows and borrowing facilities, the Directors consider
that the Group has adequate resources to continue in operation for the foreseeable future.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 126
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
127
Consolidated
Management Report
Auditors
Members of the Board of Directors
The Independent Auditor, PricewaterhouseCoopers Limited, has expressed their willingness to continue in office. A
resolution giving authority to the Board of Directors to fix their remuneration will be proposed at the Annual General
Meeting.
Corporate governance
As at 31 December 2020 and at the date of this report, the Board comprises 15 members (2019: 15 members),11 (2019:
11 members) of whom are non-executive directors. Four (2019: four) of the non-executive directors are independent,
they have no relationship with the Company, its related companies or their officers that could interfere, or be
reasonably perceived to interfere, with the exercise of the director’s independent business judgment with a view to the
best interests of the Company, and they are able to exercise objective judgment on corporate affairs independently
from management.
Globaltrans’ Board of Directors adopted the Company’s Code of Corporate Governance (the “Code”), guaranteeing
that the interests of all shareholders are given due consideration. Although the Code is based on principles
recommended by the UK Corporate Governance Code (formerly the Combined Code), this does not constitute
voluntary compliance with such governance code.
The members of the Board of Directors at 31 December 2020 and at the date of this report are shown on page 112.
All of them were members of the Board throughout the year 2020.
There were no significant changes in the assignment of responsibilities of the Board of Directors.
Globaltrans’ corporate governance policies and practices are designed to ensure that the Group upholds its
responsibilities to shareholders. As such, all employees are required to comply with these guidelines and the Group’s
management team takes responsibility for ensuring that all departments adhere to these standards. These key
principles are promoted and applied across all levels of the Group in order to establish effective and transparent
corporate governance. In January 2010, the Board supplemented its Code of Corporate Governance with a corporate
policy on the treatment of the rights of its non-controlling shareholders; this aims to ensure fair treatment of the rights
of non-controlling shareholders of the Company.
Full details of our governance policies can be found at https://globaltrans.com/governance/corporate-documents.
The role of the Board of Directors
The Group is managed by the Board of Directors which is collectively responsible to the shareholders for the success
of the Group.
The Board sets the strategic objectives and ensures that the necessary resources are in place to enable these
objectives to be met. The Board is fully involved in decision making in the most important areas of business and
conducts regular reviews of the Group’s operational and financial performance. One of the Board’s key responsibilities
is to ensure that there is in place a system of prudent and effective risk controls that enable risks to be identified,
assessed and managed appropriately.
There is no provision in the Company’s Articles of Association for retirement of Directors by rotation; however, in
accordance with the Terms of reference of the Board of Directors all board members are required to submit for
re-election at least once every three years. Should a non-executive Director serve any term beyond six years, his/her
re-election would be subject to particularly rigorous review. In practice, all current appointments are for one year and
all directors will stand for re-election at the forthcoming Annual General Meeting of shareholders of the Company.
The total gross remuneration of the members of the Board of Directors incurred by the Group in 2020 amounted to
RUB 433,063 thousand (2019: RUB 507,802 thousand).
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
128
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
129
Consolidated
Management Report
Board performance
The Board Committees
The Board held 18 meetings in 2020. The Directors’ attendance is presented in the table below.
Eligible
Attended
Sergey Maltsev (Chairman)
John Carroll Colley
Dr. Johann Franz Durrer
Alexander Eliseev
Andrey Gomon
Vasilis Hadjivassiliou
Elia Nicolaou
George Papaioannou
Melina Pyrgou
Konstantin Shirokov
Alexander Storozhev
Alexander Tarasov
Michael Thomaides
Marios Tofaros
Sergey Tolmachev
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
17
18
18
18
18
18
18
18
18
17
18
18
During 2020 the Board had three committees: the Audit Committee, the Nomination Committee and the Remuneration
Committee. In January 2021 the Board has established the ESG Committee. A brief description of the terms of
reference of the committees is set out below.
Audit Committee
The Audit Committee comprises of three Directors and meets at least four times each year. As of 31 December
2020 two members Audit Committee were independent and the Audit Committee was chaired by Mr. J. Carroll
Colley and was also attended by Mr. Papaioannou and Ms. Nicolaou. In January 2021 Mr. Vasilis Hadjivassiliou became
a member of the Audit Committee and Ms. Nicolaou resigned from the Audit Committee and was appointed to the
ESG Committee, as a result since January 2021 the Audit Committee comprises of three independent Directors.
The Audit Committee is responsible for considering, among other matters: the integrity of the Company’s financial
statements, including its annual and interim accounts, and the effectiveness of the Company’s internal controls and
risk management systems; auditors’ reports and the terms of appointment and remuneration of the auditor.
The Committee supervises, monitors and advises the Board on risk management and control systems and the
implementation of codes of conduct. In addition, the Audit Committee supervises the submission by the Company of
financial information and a number of other audit-related issues. The Audit Committee is also responsible for assessing
the efficiency of the performance of the Chairman of the Board.
The Audit Committee manages the relationship with the external auditor on behalf of the Board. It considers the
reappointment of the external auditor each year, as well as remuneration and other terms of engagement, and makes
a recommendation to the Board. Shareholders are asked to approve the reappointment of the auditor each year at the
Annual General Meeting.
The Internal Audit function is carried out internally by the Group’s Internal Audit Service (“IAS”). IAS is responsible for
testing the systems of risk management, internal control and corporate governance of the Group.
Nomination Committee
The Nomination Committee comprises of two Independent Directors and meets at least once a year. The Nomination
Committee is chaired by Dr. Durrer and Carroll Colley is the other member. The Committee’s remit is to prepare
selection criteria and appointment procedures for members of the Board and to review on a regular basis the
structure, size and composition of the Board. In undertaking this role, the Committee refers to the skills, knowledge
and experience required of the Board, given the Company’s stage of development, and makes recommendations to
the Board as to any changes. The Committee also considers future appointments in respect of the Board’s composition
and makes recommendations regarding the membership of the Audit and Remuneration Committees.
Remuneration Committee
The Remuneration Committee comprises of two Independent Directors and meets at least once a year. The
Remuneration Committee is chaired by Dr. Durrer and Carroll Colley is the other member. The Committee’s
responsibility is the determination and review of, among other matters, the remuneration of Executive Directors, and
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
130
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
131
Consolidated
Management Report
the review of the Company’s remuneration policies. The remuneration of Independent Directors is a matter for the
Chairman of the Board and the Executive Directors. No Director or manager may be involved in any decisions as to his/
her own remuneration.
ESG Committee
In January 2021 the Board of Directors established an ESG Committee to lead its thinking on ESG matters and
ensure that ESG issues are integrated into the Group’s long-term strategy. The ESG Committee will also monitor the
development of the Group’s sustainability strategy, review and recommend ESG disclosures for Board approval and
approve the Group’s sustainability reports. The ESG Committee is comprised of two Board members: Elia Nicolaou,
Non-executive Director, who serves as the Chair, and John Carroll Colley, Independent Non-executive Director. The
ESG Committee will meet at least two times a year.
Board and Management Remuneration
Non-executive directors serve on the Board pursuant to the letters of appointment which are subject to approval by
the shareholders at the Annual General Meeting. Such letters of appointment specify the terms of appointment and
the remuneration of non-executive directors. Appointments are for one year.
Levels of remuneration for Non-Executive Directors reflect the time commitment, responsibilities of the role and
membership of the respective committees of the Board. Directors are also reimbursed for expenses associated with
discharge of their duties.
The shareholders of the Company approved the remuneration of the members of the Board of Directors at the Annual
General Meeting of shareholders held on 30 April 2020.
Refer to Note 35 of the consolidated financial statements for details of remuneration of directors and other key
management personnel.
Diversity policy
The Company does not have a formal Board diversity policy to aspects such as age, gender or educational and
professional backgrounds, but, following best practice, while making the new appointments and considering the
current composition of the Board of Directors, these aspects are taken into account.
As of the date of publication of these financial statements the Board has 2 females representing approximately 13.3%
from the total number of directors. The age of the members of the Board of Directors starts from over 40 years,
with the average age of directors being 52 years. The Board members have the following educational backgrounds:
transportation and ports industry, accounting, economics and financial, banking sector and legal, engineering
and mechanics, biophysics and mathematics, history, international affairs and risk management. The Board has a
necessary balance of skills and expertise to run the Company and the Group.
Further details of the corporate governance regime of the Company can be found on the website:
https://globaltrans.com/governance/corporate-documents.
Regulations with regards to the amendment of the article of association
The Articles of Association of the Company may be amended from time to time by special resolution at the General
Meeting of the Shareholders.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 132
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
133
Consolidated
Management Report
Company’s internal control and risk management systems
in relation to the financial reporting process
Significant direct or indirect holdings
(including indirect shareholding though structures or cross shareholdings)
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true
and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and
the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
The Board is primarily responsible for establishing a framework of prudent and effective controls that enables risks to
be assessed and managed.
The Audit Committee assists the Board in this task by reviewing and assessing the Group’s internal control and risk
management processes in relation to Group’s financial reporting process.
The issued share capital of the Company consists of 178,740,916 ordinary shares with a nominal value of USD 0.10
each, a certain portion of which is held in the form of Global Depositary Receipts (GDRs). The GDRs represent one
ordinary share each and are listed and traded on the Main Market of the London Stock Exchange and, from October
2020, in the Moscow Exchange, under the ticker GLTR. The free float of Globaltrans amounts to approximately 56.9%1
of the issued share capital. In June 2020 the Company changed the depositary bank for the GDR programme of the
Company from the Bank of New York Mellon to Citibank N.A.
The shareholder structure of the Company as at 31 December 2020 was as follows:
Onyx Investments Ltd2
Marigold Investments Ltd2
Maple Valley Investments Ltd2
Litten Investments Ltd3
Goldriver Resources Ltd4
Controlled by Directors and management of Globaltrans
11.5%
11.5%
10.8%
5.1%
4.0%
0.2%
56.9%
The system of controls is designed to manage rather than eliminate the risks relevant to the Group’s operations and,
therefore, can only provide reasonable, and not absolute, assurance against material errors, losses, fraud or breaches
of laws and regulations.
Free float1
At Globaltrans, the body responsible for internal audit is the Internal Audit Service (IAS). It tests the Group’s systems of
risk management, internal control and corporate governance to obtain a reasonable assurance that:
•
•
•
•
•
The risk management system functions efficiently;
Material financial, management and operating information is accurate, reliable and up-to-date;
The actions of employees and management bodies are in compliance with the Group’s policies, standards and
procedures and the applicable laws;
Resources are procured reasonably and used efficiently and their safekeeping is fully guaranteed; and
Group companies conduct their business in compliance with applicable laws.
Each year, the Audit Committee approves an internal audit plan, which is developed by identifying the audit universe,
performing a risk analysis and obtaining input from management relative to risks, controls and governance processes.
The internal auditor regularly reports to the Audit Committee on the progress of planned audits. If any material internal
control deficiencies are identified, they are communicated to the Audit Committee, and consequently to the Board,
at once.
1 For these purposes, the free float consists of the ordinary shares and GDRs held by investors not affiliated or associated with the Company.
2 Nikita Mishin, Andrey Filatov and Konstantin Nikolaev are co-founders of the Company and beneficiaries with regard to 11.5%, 11.5% and 10.8%
respectively of Globaltrans’ ordinary share capital each through their respective SPVs (Onyx Investments Ltd, Marigold Investments Ltd and Maple
Valley Investments Ltd).
3 Beneficially owned by Alexander Eliseev, Non-Executive Director and co-founder of the Company.
4 Beneficially owned by Sergey Maltsev, Chairman of the Board, Executive Director, Chief strategy officer and co-founder of the Company.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 134
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
135
Consolidated
Management Report
Directors’ interests
The holders of special titles that provide special control rights and description
of such rights
The interests in the share capital of Globaltrans Investment PLC and its Group companies, both direct and indirect, of
those who were Directors of the Company as at 31 December 2020 and 31 December 2019 are shown below:
The Company does not have any titles with special rights.
Name
Type of holding
2020
2019
Any restrictions in exercising of voting rights of shares
Alexander Eliseev
Indirect holding of ordinary shares and GDRs
9,065,790
9,065,790
Sergey Maltsev
Indirect holding of ordinary shares and GDRs
7,099,725
7,099,725
Johann Franz Durrer
Holding of GDRs
160,606
160,606
There are no restrictions in the exercising of voting rights of shares issued by the Company.
By Order of the Board
..................................................
Sergey Tolmachev
Director
Limassol, 26 March 2021
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 136
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
137
Directors’
responsibility
The Company’s Board of Directors is responsible for the preparation of consolidated
financial statements that give a true and fair view in accordance with International
Financial Reporting Standards as adopted by the European Union and the
requirements of the Cyprus Companies Law, Cap.113, and for such internal control
as the Board of Directors determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether
due to fraud or error.
This responsibility includes selecting appropriate accounting policies and applying them consistently; and making
accounting estimates and judgements that are reasonable in the circumstances.
In preparing the consolidated financial statements, the Board of Directors is also responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Directors’ confirmations
Each of the directors, whose names and functions are listed in page 112 confirms that, to the best of his or her
knowledge:
(a)
the consolidated financial statements, which are presented on pages 146 to 255, which have been prepared
in accordance with International Financial Reporting Standards as adopted by the European Union and the
requirements of the Cyprus Companies Law, Cap.113, give a true and fair view of the assets, liabilities, financial
position and profit or loss of the Company and the undertakings included in the consolidation take as a whole;
and
(b) the Consolidated Management Report includes a fair review of the development and performance of the
business and the position of the Company and the undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and uncertainties that it faces/they face.
Further, each of the Directors confirms that, to the best of their knowledge:
(i)
adequate accounting records have been maintained which disclose with reasonable accuracy the financial
position of the Group and explain its transactions;
(ii) all information of which they are aware that is relevant to the preparation of the consolidated financial
statements, such as accounting records and all other relevant records and documentation, has been made
available to the Company’s auditors;
(iii) the consolidated financial statements disclose the information required by the Cyprus Companies Law, Cap.113 in
the manner so required;
(v)
(iv) the Consolidated Management Report has been prepared in accordance with the requirements of the Cyprus
Companies Law, Cap.113, and the information given therein is consistent with the consolidated financial
statements;
the information included in the corporate governance statement in accordance with the requirements of
subparagraphs (iv) and (v) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113, and which
is included as a specific section of the Consolidated Management Report, have been prepared in accordance
with the requirements of the Cyprus Companies Law, Cap, 113, and is consistent with the consolidated financial
statements; and
(vi) the corporate governance statement includes all information referred to in subparagraphs (i), (ii), (iii), (vi) and (vii)
of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113.
By order of the Board
..............................................
Sergey Tolmachev
Director
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
138
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
139
Independent Auditor’s
Report
To the Members of Globaltrans Investment PLC
Report on the Audit of the Consolidated Financial Statements
Our audit approach
Our opinion
In our opinion, the accompanying consolidated financial statements of Globaltrans Investment PLC (the “Company”)
and its subsidiaries (together the “Group”) give a true and fair view of the consolidated financial position of the Group
as at 31 December 2020, and of its consolidated financial performance and its consolidated cash flows for the year
then ended in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union
and the requirements of the Cyprus Companies Law, Cap. 113.
What we have audited
We have audited the consolidated financial statements which are presented in pages 146 to 255 and comprise:
• the consolidated balance sheet as at 31 December 2020;
• the consolidated income statement for the year then ended;
• the consolidated statement of comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated cash flow statement for the year then ended; and
• the notes to the consolidated financial statements, which include a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the consolidated financial statements
is International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus
Companies Law, Cap. 113.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group throughout the period of our appointment in accordance with the
International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code) together with the ethical requirements that are
relevant to our audit of the consolidated financial statements in Cyprus and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code.
Overview
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
consolidated financial statements. In particular, we considered where the Board of Directors made subjective
judgements; for example, in respect of significant accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of
management override of internal controls, including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
Overall group materiality: RUB 800,300 thousand, which represents 5% of profit before tax
as adjusted for non-recurring items (rounded).
We conducted full scope audit for the parent entity, all the significant components and the
group consolidation.
For the non-significant components, we performed a full scope audit or specified
procedures over specific financial statement lines and/or analytical procedures.
We have determined the assessment of impairment of rolling stock of the Estonian rail tank
cars/operating leasing CGU as the key audit matter.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable
assurance whether the consolidated financial statements are free from material misstatement. Misstatements may
arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the
overall group materiality for the consolidated financial statements as a whole as set out in the table below. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the
consolidated financial statements as a whole.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
140
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
141
Independent Auditor’s
Report
Overall group materiality
RUB 800,300 thousand
Key Audit Matter
How our audit addressed the Key Audit Matter
How we determined it
5% of profit before tax as adjusted for non-recurring items (rounded)
Rationale for the materiality
benchmark applied
We chose the adjusted profit before tax as the benchmark, because in our view, it
is the benchmark against which the performance of the Group is most commonly
measured by the users of the consolidated financial statements and is a generally
accepted benchmark. We chose 5% which is within the range of acceptable
quantitative materiality thresholds in auditing standards.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit
above RUB 40,000 thousand as well as misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
We focused our audit effort on the Board of Directors’
impairment assessment for the Estonian rail tank cars/
operating leasing CGU, due to:
We also compared the prices included in the model
to publicly available quoted prices.
• the size of the CGU’s rolling stock balance of
RUB12,786,087 thousand as at 31 December 2020; and
We lastly evaluated the fair presentation of the
disclosures made in Note 17 of the consolidated
financial statements.
• the fact that the Board of Director’s impairment
assessment indicated a narrow headroom between the
recoverable amount and the carrying amount of the said
CGU.
Based on the evidence obtained, we found that
the methodology and inputs used and the related
disclosures included in the consolidated financial
statements are appropriate.
Key audit matters incorporating the most significant risks of material misstatements,
including assessed risk of material misstatements due to fraud
Reporting on other information
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the
consolidated financial statements of the current period. These matters were addressed in the context of our audit
of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key Audit Matter
How our audit addressed the Key Audit Matter
The Board of Directors is responsible for the other information. The other information comprises the information
included in the Consolidated Management Report, including the Corporate Governance Statement, and the Directors’
responsibility, which we obtained prior to the date of this auditor’s report, and the Company’s complete Annual
Report, including the Non-Financial Information and Diversity Statement, which is expected to be made available to
us after that date. Other information does not include the consolidated financial statements and our auditor’s report
thereon.
Assessment of impairment of rolling stock of the Estonian rail
tank cars/operating leasing CGU
Our opinion on the consolidated financial statements does not cover the other information and we do not and will not
express any form of assurance conclusion thereon.
Based on the requirements of the applicable accounting
standards and in line with the Group’s accounting policy for
impairment of non-financial assets, as set out in Note 4 to
the consolidated financial statements, the Board of Directors
assessed whether there were any indications of impairment
of the Group’s rolling stock as of 31 December 2020.
The Company’s Board of Directors considered the deterioration
of the economic environment, the prevailing industry conditions
and the COVID-19 pandemic related uncertainties, as these are
set out in Note 33 to the consolidated financial statements, as
indications of impairment of the Group’s cash generating units
(“CGUs”) and proceeded to perform impairment assessments
to determine if there is an impairment loss.
For the Estonian rail tank cars/operating leasing CGU,
we obtained and evaluated the analysis of indications
of impairment performed by the Board of Directors.
We further evaluated the valuation methodology
and calculations used by the Board of Directors
in determining the CGU’s recoverable amount,
including the underlying inputs used.
In particular, we examined the valuation technique
applied by the Board of Directors as to whether
this incorporated all factors and inputs that market
participants would consider in setting a price for the
specific rolling stock in the CGU.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially inconsistent with
the consolidated financial statements or our knowledge obtained in the audit, or otherwise appears to be materially
misstated. If, based on the work we have performed on the other information that we obtained prior to the date of this
auditor’s report, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
When we read the Company’s complete Annual Report, including the Non-Financial Information and Diversity
Statement, if we conclude that there is a material misstatement therein, we are required to communicate the matter to
those charged with governance and if not corrected, we will bring the matter to the attention of the members of the
Company at the Company’s Annual General Meeting and we will take such other action as may be required.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
142
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
143
Independent Auditor’s
Report
Responsibilities of the Board of Directors and those charged with governance for the
Consolidated Financial Statements
The Board of Directors is responsible for the preparation of the consolidated financial statements that give a true
and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and
the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors
determines is necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Board of Directors is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the Board of Directors either intends to liquidate the Group or to cease operations,
or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the Board of Directors.
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the
consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events
in a manner that achieves a true and fair view.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control that we identify
during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or
safeguards applied.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters.
Report on Other Legal and Regulatory Requirements
Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following information in
our Independent Auditor’s Report, which is required in addition to the requirements of International Standards on
Auditing.
Appointment of the Auditor and Period of Engagement
We were first appointed as auditors of the Company in 2005 by shareholders’ resolution for the audit of the financial
statements for the year ended 31 December 2004. Our appointment has been renewed annually since then, by
shareholders’ resolution. In 2008 the Company was listed in the Main Market of the London Stock Exchange and
accordingly the first financial year that the Company qualified as a European Union Public Interest Entity was the year
ended 31 December 2008. Since then, the total period of uninterrupted engagement appointment was 13 years.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
144
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
145
Independent Auditor’s
Report
Consistency of the Additional Report to the Audit Committee
We confirm that our audit opinion on the consolidated financial statements expressed in this report is consistent with
the additional report to the Audit Committee of the Company, which we issued on 25 March 2021 in accordance with
Article 11 of the EU Regulation 537/2014.
Provision of Non-audit Services
We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section 72
of the Auditors Law of 2017 were provided. In addition, there are no non-audit services which were provided by
us to the Group and which have not been disclosed in the consolidated financial statements or the consolidated
management report.
Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
•
•
•
•
•
In our opinion, based on the work undertaken in the course of our audit, the consolidated management report has
been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information
given is consistent with the consolidated financial statements.
In light of the knowledge and understanding of the Group and its environment obtained in the course of the audit,
we are required to report if we have identified material misstatements in the consolidated management report.
We have nothing to report in this respect.
In our opinion, based on the work undertaken in the course of our audit, the information included in the corporate
governance statement in accordance with the requirements of subparagraphs (iv) and (v) of paragraph 2(a) of
Article 151 of the Cyprus Companies Law, Cap. 113, and which is included as a specific section of the consolidated
management report, have been prepared in accordance with the requirements of the Cyprus Companies Law,
Cap. 113, and is consistent with the consolidated financial statements.
In our opinion, based on the work undertaken in the course of our audit, the corporate governance statement
includes all information referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of paragraph 2(a) of Article 151 of the
Cyprus Companies Law, Cap. 113.
In light of the knowledge and understanding of the Group and its environment obtained in the course of the audit,
we are required to report if we have identified material misstatements in the corporate governance statement
in relation to the information disclosed for items (iv) and (v) of subparagraph 2(a) of Article 151 of the Cyprus
Companies Law, Cap. 113. We have nothing to report in this respect.
Other Matter
This report, including the opinion, has been prepared for and only for the Company’s members as a body in
accordance with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 and for no
other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other
person to whose knowledge this report may come to.
The engagement partner on the audit resulting in this independent auditor’s report is Tasos Nolas.
Tasos Nolas
Certified Public Accountant and Registered Auditor
for and on behalf of
PricewaterhouseCoopers Limited
Certified Public Accountants and Registered Auditors
City House, 6 Karaiskakis Street,
CY-3032 Limassol, Cyprus
26 March 2021
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 146
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
147
Consolidated income statement
Consolidated statement of comprehensive income
FOR THE YEAR ENDED 31 DECEMBER 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
Revenue
Cost of sales
Gross profit
Selling and marketing costs
Administrative expenses
Other income
Other gains/(losses) — net
Finance income
Finance costs
Net foreign exchange transaction gains/(losses) on financing activities
Finance costs — net
Profit before income tax
Income tax expense
Profit for the year
Profit attributable to:
Owners of the Company
Non-controlling interest
Note
2020
2019
10
11
11
11
12
14
14
14
14
15
RUB’000
RUB’000
68,367,404
94,993,874
(47,065,999)
(58,833,383)
21,301,405
36,160,491
(204,666)
(216,298)
(3,393,665)
(3,858,549)
1,000,232
107,765
133,508
(99,322)
18,811,071
32,119,830
263,968
533,857
(2,510,495)
(2,529,098)
147,008
(379,824)
(2,099,519)
(2,375,065)
16,711,552
29,744,765
(4,524,705)
(7,091,433)
12,186,847
22,653,332
10,586,535
20,807,651
1,600,312
1,845,681
12,186,847
22,653,332
Weighted average number of ordinary shares in issue (thousand)
Basic and diluted earnings per share for profit attributable to the equity
holders of the Company during the year (expressed in RUB per share)1
32
32
178,705
59.24
178,741
116.41
Profit for the year
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss
Currency translation differences
Losses on cash flow hedge reserve
Reclassification to the income statement
Items that will not be reclassified to profit or loss
2020
2019
RUB’000
RUB’000
12,186,847
22,653,332
2,050,512
(925,000)
(475,042)
475,042
—
—
Currency translation differences attributable to non-controlling interest
1,066,715
(493,622)
Other comprehensive income for the year, net of tax
3,117,227
(1,418,622)
Total comprehensive income for the year
15,304,074
21,234,710
Total comprehensive income for the year attributable to:
— owners of the Company
— non-controlling interest
12,637,047
19,882,651
2,667,027
1,352,059
15,304,074
21,234,710
Items in the statement above are disclosed net of tax. There is no income tax relating to the components of other
comprehensive income above.
1 Basic and diluted earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average
number of ordinary shares in issue during the year.
!
The notes on pages 154 to 255 of these consolidated financial statements are an integral part of these
consolidated financial statements.
!
The notes on pages 154 to 255 of these consolidated financial statements are an integral part of these
consolidated financial statements.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
148
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
149
Consolidated balance sheet
AT 31 DECEMBER 2020
ASSETS
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Other assets
Trade receivables
Loans and other receivables
Total non-current assets
Current assets
Inventories
Other assets
Loans and other receivables
Trade receivables
Current income tax assets
Cash and cash equivalents
Assets classified as held for sale
Total current assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Equity attributable to the owners of the Company
Share capital
Share premium
Treasury shares
17
18
19
23
22
22
24
23
22
22
25
26
26
Note 31 December 2020,
RUB’000
31 December 2019,
RUB’000
84,420,941
1,080,415
1,460
549,493
236,165
3,887
80,532,645
1,410,448
61,316
336,416
197,284
10,374
86,292,361
82,548,483
691,033
2,586,593
47,483
3,465,381
266,024
4,978,322
12,034,836
10
12,034,846
98,327,207
1,722,781
5,190,504
37,645
3,012,282
501,087
6,521,543
16,985,842
40,224
17,026,066
99,574,549
Non-current liabilities
Borrowings
Other lease liabilities
Trade and other payables
Contract liabilities
Deferred tax liabilities
Total non-current liabilities
Current liabilities
Borrowings
Other lease liabilities
Trade and other payables
Contract liabilities
Current tax liabilities
Total current liabilities
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES
Note 31 December 2020,
RUB’000
31 December 2019,
RUB’000
28
29
31
10
30
28
29
31
10
21,084,067
720,487
—
8,710
8,862,587
30,675,851
10,931,172
684,109
2,197,994
964,042
100,226
14,877,543
45,553,394
98,327,207
22,294,914
881,706
90,742
11,191
7,592,182
30,870,735
7,800,304
649,177
2,355,872
1,244,702
127,694
12,177,749
43,048,484
99,574,549
!
The notes on pages 154 to 255 of these consolidated financial statements are an integral part of these
consolidated financial statements.
On 26 March 2021, the Board of Directors of Globaltrans Investment PLC authorised these financial statements for
issue.
516,957
27,929,478
(31,496)
516,957
27,929,478
—
By order of the Board
Common control transaction reserve
(10,429,876)
(10,429,876)
Translation reserve
Capital contribution
Retained earnings
Total equity attributable to the owners of the Company
Non-controlling interest
Total equity
5,443,187
2,694,851
20,724,107
46,847,208
5,926,605
52,773,813
3,392,675
2,694,851
26,774,750
50,878,835
5,647,230
56,526,065
............................................
.............................................
Sergey Tolmachev
Director
Konstantin Shirokov
Director
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
150
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
151
Consolidated statement of changes in equity
FOR THE YEAR ENDED 31 DECEMBER 2019
Balance at 1 January 2019
Comprehensive income
Profit for the year
Other comprehensive income
Currency translation differences
Total comprehensive income for 2019
Transactions with owners
Dividends to owners of the Company
Dividends to non-controlling interest
Total transactions with owners
Balance at 31 December 2019
Attributable to the owners of the Company
Note
Share capital,
RUB’000
Share premium,
RUB’000
Common control
transaction reserve,
RUB’000
Translation
reserve,
RUB’000
Capital
contribution,
RUB’000
Retained
earnings,
RUB’000
Total,
RUB’000
Non-controlling
interest,
RUB’000
Total,
RUB’000
516,957
27,929,478
(10,429,876)
4,317,675
2,694,851
22,598,941
47,628,026
5,897,408
53,525,434
—
—
—
—
—
—
—
—
—
—
—
—
27
27
—
—
—
—
—
—
—
(925,000)
(925,000)
—
—
—
—
—
—
—
—
—
20,807,651
20,807,651
1,845,681
22,653,332
—
20,807,651
(925,000)
19,882,651
(493,622)
1,352,059
(1,418,622)
21,234,710
(16,631,842)
(16,631,842)
—
(16,631,842)
—
—
(1,602,237)
(1,602,237)
(16,631,842)
(16,631,842)
(1,602,237)
(18,234,079)
516,957
27,929,478
(10,429,876)
3,392,675
2,694,851
26,774,750
50,878,835
5,647,230
56,526,065
FOR THE YEAR ENDED 31 DECEMBER 2020
Attributable to the owners of the Company
Share
capital,
RUB’000
Share
premium,
RUB’000
Treasury
shares,
RUB’000
Common control
transaction reserve,
RUB’000
Note
Cash flow
hedge reserve,
RUB’000
Translation
reserve,
RUB’000
Capital
contribution,
RUB’000
Retained
earnings,
RUB’000
Total,
RUB’000
Non-controlling
interest,
RUB’000
Total,
RUB’000
Balance at 1 January 2020
516,957
27,929,478
Comprehensive income
Profit for the year
Other comprehensive income
Currency translation differences
Losses on cash flow hedge reserve
Reclassification to the income statement
Total comprehensive income for 2020
Transactions with owners
Dividends to owners of the Company
Dividends to non-controlling interest
Purchase of treasury shares
Total transactions with owners
27
27
26
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Balance at 31 December 2020
516,957
27,929,478
—
—
—
—
—
—
—
—
(31,496)
(31,496)
(31,496)
(10,429,876)
—
—
—
—
—
—
—
—
—
(10,429,876)
!
The notes on pages 154 to 255 of these consolidated financial statements are an integral part of these
consolidated financial statements.
—
—
—
(475,042)
475,042
—
—
—
—
—
—
3,392,675
2,694,851
26,774,750
50,878,835
5,647,230
56,526,065
—
2,050,512
—
—
2,050,512
—
—
—
—
—
—
—
—
—
—
—
—
—
10,586,535
10,586,535
1,600,312
12,186,847
—
—
—
2,050,512
(475,042)
475,042
1,066,715
—
—
3,117,227
(475,042)
475,042
10,586,535
12,637,047
2,667,027
15,304,074
(16,637,178)
(16,637,178)
—
(16,637,178)
—
—
(2,387,652)
(2,387,652)
(31,496)
—
(31,496)
(16,637,178)
(16,668,674)
(2,387,652)
(19,056,326)
5,443,187
2,694,851
20,724,107
46,847,208
5,926,605
52,773,813
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
152
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
153
Consolidated
cash flow statement
FOR THE YEAR ENDED 31 DECEMBER 2020
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Net loss on sale of property, plant and equipment
Loss on derecognition arising on capital repairs
Reversal of impairment of property, plant and equipment
Net impairment losses on trade and other receivables
Interest income
Interest expense and other finance costs
Net foreign exchange transaction (gains)/losses on financing activities
Other losses
Changes in working capital:
Inventories
Trade receivables
Other assets
Other receivables
Trade and other payables
Contract liabilities
Cash generated from operations
Tax paid
Net cash from operating activities
Cash flows from investing activities
Loans repayments received from third parties
Purchases of property, plant and equipment
Note
2020
2019
RUB’000
RUB’000
17
18
19
17
17
17
11
14
14
14
16,711,552
29,744,765
6,968,694
5,794,912
655,070
59,856
316
419,982
—
5,511
424,220
696,725
10,047
471,746
(64,889)
12,699
(263,968)
(533,857)
2,510,495
2,529,098
(147,008)
11,496
379,824
41,197
26,931,996
39,506,487
816,127
(427,317)
(394,213)
(712,934)
1,438,733
(1,299,140)
9,979
(208,134)
(283,141)
9,816
(270,224)
(1,417,574)
28,278,243
35,422,218
(3,051,888)
(6,018,371)
25,226,355
29,403,847
4,301
2,728
(6,941,159)
(13,515,985)
Purchases of intangible assets
Proceeds from sale of property, plant and equipment
Interest received
Receipts from finance lease receivable
Net cash used in investing activities
Cash flows from financing activities
Proceeds from bank borrowings
Proceeds from issue of non-convertible unsecured bonds
Repayments of borrowings
Principal elements of lease payments for leases with financial
institutions
Principal elements of lease payments for other lease liabilities
Interest paid on bank borrowings and non-convertible unsecured bonds
Interest paid on leases with financial institutions
Interest paid on other lease liabilities
Dividends paid to owners of the Company
Dividends paid to non-controlling interests in subsidiaries
Payments from non-controlling interest for share capital increase of
subsidiary
Purchase of treasury shares
Payments to non-controlling interest
Net cash used in financing activities
Net decrease in cash and cash equivalents
Exchange losses on cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
17
28
28
28
28
28
28
28
28
27
27
—
66,765
263,968
77,870
(832)
91,649
533,857
123,598
(6,528,255)
(12,764,985)
23,265,000
10,408,000
—
5,000,000
(19,603,415)
(10,736,723)
(1,715,794)
(488,723)
(672,432)
(339,597)
(2,314,937)
(2,017,915)
(80,813)
(113,771)
(167,048)
(111,911)
(16,637,178)
(16,631,842)
(2,271,815)
(1,602,237)
—
200,060
(31,496)
—
20
(180,281)
(450,934)
(20,356,932)
(16,938,870)
(1,658,832)
(300,008)
115,611
6,521,543
4,978,322
25
25
(308,367)
7,129,918
6,521,543
Principal non-cash investing and financing transactions
The principal non-cash investing and financing transactions consist of finance leases with the Group acting as a
lessor (Note 23) and leases with the Group acting as the lessee (Notes 28 and 29).
!
The notes on pages 154 to 255 of these consolidated financial statements are an integral part of these
consolidated financial statements.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
154
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
155
Notes to the consolidated
financial statements
1. General information
3. Adoption of new or revised standards and interpretations
Country of incorporation
Globaltrans Investment Plc (“the Company”) is incorporated and domiciled in Cyprus as a limited liability company
in accordance with the provisions of the Cyprus Companies Law, Cap. 113 and converted into a public company
on 15 April 2008. The address of its registered office is 20 Omirou Street, CY-3095 Limassol, Cyprus. The Group’s
principal place of business is at Nizhnyayа Krasnoselskaya st. 39, bld. 1, Moscow, Russia.
Approval of the consolidated financial statements
These consolidated financial statements were authorised for issue by the Board of Directors on 26 March 2021.
Global Depositary Receipts
Global Depositary Receipts, each representing one ordinary share of the Company, are listed on the London Stock
Exchange International Main Market and, since October 2020, on the Moscow Exchange. Furthermore, Russian
Rouble denominated bonds, issued by the Company’s subsidiary New Forwarding Company, АО, for a total amount
of RUB 10 billion, out of a RUB 100 billion registered program, are listed on the Moscow Exchange.
Principal activities
The principal activities of the Group, which are unchanged from last year, are the provision of railway transportation
services, using own and leased rolling stock and fleet engaged from third party rail operators, as well as the
operating lease of rolling stock.
2. Basis of preparation
The consolidated financial statements of Globaltrans Investment PLC have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the requirements of
the Cyprus Companies Law Cap. 113.
As of the date of the authorization of these financial statements, all International Financial Reporting Standards
issued by the International Accounting Standards Board (IASB) that are relevant to the Group’s operations and are
effective as at 1 January 2020 have been adopted by the EU through the endorsement procedure established by the
European Commission.
The financial statements have been prepared under the historical cost convention.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates and requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements are disclosed in Note 7.
During the current year the Group adopted all the new and amended standards that are relevant to its operations
and are effective for accounting periods beginning on 1 January 2020. None of these had a significant impact on
these financial statements.
4. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these consolidated financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Basis of consolidation
(a) Subsidiaries
Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an
entity when the Group is exposed to, or has the rights to, variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are
de-consolidated from the date that control ceases.
Business combinations involving entities under common control (ultimately controlled by the same party, before
and after the business combination, and that control is not transitory) are accounted using the predecessor basis of
accounting. Under this method, the financial statements of the acquiree are included in the consolidated financial
statements using pre-acquisition IFRS carrying amounts using uniform accounting policies, on the assumption that
the Group was in existence for all periods presented. The excess of the cost of acquisition over the carrying amount
of the Group’s share of identifiable net assets is recorded in equity, as “common control transaction reserve”.
The acquisition method of accounting is used for the acquisitions of subsidiaries that do not involve entities or
businesses under common control by the Group. The consideration transferred for the acquisition of a subsidiary is
the fair value of the assets transferred, equity instruments issued by the Group and liabilities incurred to the former
owners of the acquiree. The consideration transferred includes the fair value of any asset or liability resulting from
a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date.
Goodwill is initially measured as the excess of the aggregate of the consideration transferred and the fair value of
non-controlling interest or the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets
over the net identifiable assets acquired and liabilities assumed. If this consideration is lower than the fair value of
the net assets of the subsidiary acquired, the difference is recognised in the income statement.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 156
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
157
Notes to the consolidated
financial statements
Indemnification assets recognised at the acquisition date continue to be measured on the same basis as the related
indemnified item subject to collectability and contractual terms until they are collected, sold, cancelled or expire in
the post-combination period. The entity measures the indemnification asset on the same basis as the related item,
subject to any restrictions in the contractual terms such as a ceiling on the amount payable and any adjustment for the
seller creditworthiness. Measurement on the same basis includes recognising any gains or losses appropriately.
On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree either at the
fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date.
Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is
recognised in accordance with IFRS 9 in the income statement. Contingent consideration that is classified as equity is
not re-measured, and its subsequent settlement is accounted for within equity.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies
into compliance with those used by the Group.
All inter-company transactions, balances, income, expenses and unrealised gains and losses are eliminated on
consolidation. Profits and losses from intra-group transactions that are recognised in assets are also eliminated.
Unrealised losses are also eliminated but considered as an impairment indicator of the asset transferred.
(b) Transactions with non-controlling interests
The Group treats transactions with non-controlling interests that do not result in loss of control as transactions with
equity owners in their capacity as equity owners of the Group. For purchases from non-controlling interests, the
difference between the fair value of any consideration paid and the relevant share acquired of the carrying value of net
assets of the subsidiary is recorded in equity attributable to owners of the Company. Gains or losses on disposals to
non-controlling interests are also recorded in equity attributable to the owners of the Company.
(c) Disposal of subsidiaries
When the Group ceases to have control, any retained interest in the entity is re-measured to its fair value at the date
when control is lost, with the change in carrying amount recognised in the income statement. The fair value is the
initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint
venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect
of that entity are accounted for as if the Group had directly disposed of the related assets and liabilities. This may
mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.
Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Board of Directors of the Company that makes
strategic decisions.
Revenue recognition
Recognition and measurement. Revenue represents the amount of consideration to which the Group expects to be
entitled in exchange for transferring the promised goods or services to the customer, excluding amounts collected on
behalf of third parties (for example, value-added taxes); the transaction price. Revenue is recognised net off discounts
and estimates for rebates that are in accordance with the contracts entered into with the customers. The Group
includes in the transaction price an amount of variable consideration only to the extent that it is highly probable that
a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated
with the variable consideration is subsequently resolved. Estimations for rebates and discounts are based on the
Group’s experience with similar contracts and forecasted sales to the customer.
The Group recognises revenue when the parties have approved the contract (in writing, orally or in accordance
with other customary business practices) and are committed to perform their respective obligations, the Group
can identify each party’s rights and the payment terms for the goods or services to be transferred, the contract
has commercial substance (i.e. the risk, timing or amount of the Group’s future cash flows is expected to change
as a result of the contract), it is probable that the Group will collect the consideration to which it will be entitled in
exchange for the goods or services that will be transferred to the customer and when specific criteria have been met
for each of the Group’s contracts with customers, as described below.
The Group bases its estimates on historical results, taking into consideration the type of customer, the type of
transaction and the specifics of each arrangement. In evaluating whether collectability of an amount of consideration
is probable, the Group considers only the customer’s ability and intention to pay that amount of consideration when it
is due.
Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any
resulting increases or decreases in estimates are reflected in the income statement in the period in which the
circumstances that give rise to the revision become known by management.
Revenues earned by the Group are recognised on the following bases:
Revenue from railway transportation services — using own, leased or engaged rolling stock
(i) Operator’s services
The Group organises transportation services for clients using its own, leased or engaged rolling stock. There are four
types of operator’s services contracts:
•
•
The Group has a contractual relationship with the client and sets the terms of the transactions, such as selling
and payment terms, bears credit risk and controls the flow of receipts and payments. The OAO “Russian
Railways” tariff is borne by the Group. Total proceeds from clients are included in the Group’s revenue.
The Group has a contractual relationship with the client and sets the terms of the transactions, such as selling
and payment terms, bears credit risk and controls the flow of receipts and payments. The OAO “Russian
Railways” tariff is borne by the Group and recharged to the customer as a reimbursement but the Group bears
the variability in tariffs. Total proceeds from clients are included in the Group’s revenue.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 158
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
159
Notes to the consolidated
financial statements
•
•
The Group has a contractual relationship with the client and sets the terms of the transaction, excluding the OAO
“Russian Railways” tariff, such as selling and payment terms, bears credit risk and controls the flow of receipts
and payments. The OAO “Russian Railways” tariff is paid by the Group and recharged to the customer as a
reimbursement. Under these arrangements the Group recognises revenue net of OAO “Russian Railways” tariff.
The Group has a contractual relationship with the customer and sets the terms of the transaction, excluding
the OAO “Russian Railways” tariff, such as selling and payment terms, bears credit risk and controls the flow
of receipts and payments. The tariff is paid directly by the customer to OAO “Russian Railways”. Under these
arrangements the Group recognises revenue net of OAO “Russian railways” tariff.
(ii) Freight rail transportation services using specialised tank containers
The Group provides freight rail transportation services using specialised tank containers for clients using its own,
leased or engaged rolling stock (platforms).
Revenue for all of the above types of contracts is recognised over time while the Group satisfies its performance
obligation by transferring control over the promised services to the customer in the accounting period in which
the services are rendered. In particular, revenue is recognised in accordance with the stage of completion of the
transaction, determined based on the actual trip days lapsed against the total estimated number of trip days for the
entire trip, since the customer receives and consumes the benefits from the services simultaneously.
Customers are invoiced on a regular basis and in accordance with pre-agreed payment terms with credit periods
not exceeding one year. If the services rendered by the Group exceed the payment and the Group does not have the
unconditional right to consideration for the services rendered, a contract asset is recognised. If the payments exceed
the services rendered, a contract liability is recognised.
Identification of performance obligations. The Group assesses whether contracts that involve the provision of a range
of goods and/or services contain one or more performance obligations (that is, distinct promises to provide a good or
service) and allocates the transaction price to each performance obligation identified on the basis of its stand-alone
selling price. A good or service that is promised to a customer is distinct if the customer can benefit from the good
or service, either on its own or together with other resources that are readily available to the customer (that is, the
good or service is capable of being distinct) and the Group’s promise to transfer the good or service to the customer
is separately identifiable from other promises in the contract (that is, the promise to transfer the good or service is
distinct within the context of the contract).
In assessing whether two or more promises to transfer goods and/or services to a customer are separate performance
obligations, the Group considers, amongst others, whether it provides a significant service of integrating the good
or services with other goods or services promised in the contract into a bundle of goods or services that represent
the combined output or outputs for which the customer has contracted (that is, the Group is using the goods or
services as inputs to produce or deliver the combined output or outputs specified by the customer), whether one or
more of the goods and/or services significantly modifies or customises, or is significantly modified or customised
by, one or more of the other goods or services promised in the contract or whether the good or services are highly
interdependent or highly interrelated. The Group considers that all of the above operator’s services contracts contain
a single performance obligation.
Financing component. In determining the transaction price, the Group adjusts the promised amount of consideration
for the effects of the time value of money if the timing of payments agreed to (either explicitly or implicitly) provides
the customer or the Group with a significant benefit of financing. In these circumstances, the contract contains a
significant financing element.
The Group does not have any material contracts where the period between the transfer of the promised goods or
services to the customer and payment by the customer exceeds one year. Consequently, the Group elected to use the
practical expedient provided by IFRS 15 and does not adjust any of the transaction prices for the effect of the financing
component for the time value of money.
Contract assets and contract liabilities. In case the goods transferred or services rendered by the Group as of
the reporting date exceed the payments made by the customer as of that date and the Group does not have the
unconditional right to charge the client for the goods transferred or services rendered, a contract asset is recognised.
If the payments made by a customer exceed the goods transferred or services rendered under the relevant contract,
a contract liability is recognised. The Group recognises any unconditional rights to consideration separately from
contract assets as a trade receivable because only the passage of time is required before the payment is due.
The Group assesses a contract asset for impairment in accordance with IFRS 9 using the simplified approach
permitted by IFRS 9 which requires lifetime expected credit losses to be recognised from initial recognition of the
contract asset. Impairments of contract assets are measured, presented and disclosed on the same basis as as for
trade receivables. Contract assets are written off when there is no reasonable expectation of recovery. Indicators
that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a
repayment plan with the Group and a failure to make contractual payments for a period of greater than 180 days past
due.
Costs to obtain or fulfil contracts with customers. To the extent that these are recoverable, incremental costs incurred
by the Group to obtain a contract and incremental costs incurred to fulfil a contract are capitalised and amortised on a
straight-line basis over the term of the specific contract — consistent with the pattern of the transfer of the goods and/
or services to which they relate to — and assessed for impairment. Incremental costs of obtaining contracts are those
costs that the Group incurs to obtain a contract with a customer that would not have been incurred if the contract had
not been obtained.
The Group does not have any contracts where the period of transfer of the goods and/or provision of the services (that
is, the period between the start and completion of a trip) exceeds one year. Accordingly, the Group recognises the
incremental costs of obtaining a contract as an expense when incurred since the amortization period of the asset that
it would otherwise have recognised is less than one year.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 160
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
161
Notes to the consolidated
financial statements
Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each entity of the Group are measured using the currency of the primary
economic environment in which the entity operates (“the functional currency”). The functional currency of the
Company and of the majority of its subsidiaries is the Russian Rouble (RUB). The consolidated financial statements are
presented in Russian Roubles (RUB) (“the presentation currency”) because this is the currency better understood by
the principal users of the financial statements.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
dates of the transactions or valuations where items are re-measured. Foreign exchange gains and losses resulting
from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the income statement, with the exception of foreign
exchange differences that relate to qualifying cash flow hedges which are deferred in equity.
Net foreign exchange differences arising from borrowings and other liabilities and from cash and cash equivalents and
other monetary assets are presented on the face of the income statement in the line “net foreign transaction gains/
(losses) on financing activities”, with the appropriate disclosure of the split between the two in the note “Finance
income and costs”.
All other foreign exchange gains and losses are presented in the income statement within “Other gains/(losses) — net”.
(c) Group companies
The results and financial position of all the Group entities (none of which has the currency of a hyper-inflationary
economy) that have a functional currency different from the presentation currency are translated into the presentation
currency as follows:
•
•
•
Assets and liabilities are translated at the closing rate existing at the date of the balance sheet presented;
Income and expense items at the average yearly rate (unless this average is not a reasonable approximation of
the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are
translated at the rate on the dates of the transactions); and
Share capital, share premium and all other reserves are translated using the historic rate.
All exchange differences resulting from the above translation are recognised in other comprehensive income.
On consolidation, exchange differences arising from the translation of the net investment in foreign operations,
including foreign exchange differences on long-term loans receivable designated as part of the net investment in
foreign operations, are recognised in other comprehensive income. When a foreign operation is disposed of or sold
and control or significant influence is lost, exchange differences that were recorded in equity are recognised in the
income statement as part of the gain or loss on disposal. On a partial disposal of a foreign operation, the proportionate
share of the cumulative amount of the exchange differences recorded in equity relating to the amount disposed is
reclassified in the income statement. The Group assesses whether there is a partial disposal of a foreign operation on
the basis of the change in the Group’s proportionate ownership interest in the foreign operation.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities
of the foreign entity and translated at the closing rate. Exchange differences arising are recognised in other
comprehensive income.
Hedging activities
The Group is exposed to foreign exchange risk arising from dividends declared in Russian Roubles and paid in US
Dollar at the rate set at the date of the declaration. The Group uses foreign currency cash deposits denominated in US
Dollars to hedge this foreign exchange risk exposure.
In particular, the US Dollar denominated cash deposits are designated by the Group as hedging instruments in
hedging the foreign exchange risk associated with the highly probable dividend payment and the resulting payable.
At inception of the hedge relationship, the Group documents, amongst others, the economic relationship between
the hedging instrument and hedged item, including whether changes in the cash flows of the hedging instrument are
expected to offset changes in the cash flows of the hedged item. The Group documents its risk management objective
and strategy for undertaking its hedge transactions.
As a result of the application of hedge accounting for the first time within the year 2020, the foreign exchange
difference on the hedging instrument is recognised in other comprehensive income in the “Cash flow hedge reserve”
within equity. Amounts recognised in equity are reclassified to the income statement, within “Finance income and
costs”, in the same period or periods during which the hedged item impacts the income statement, being once
foreign exchange differences are recognised on the hedged item.
Accordingly, in the cash flow statement “Dividends paid to the owners of the Company” are disclosed net-off foreign
exchange differences on the relevant cash deposits (i.e. at the amounts declared) and the “Exchange gains/(losses) on
cash and cash equivalents” do not include the impact from the relevant cash deposits used for hedging. In the income
statement the amounts included in “Finance income and costs” (Note 14) within “Net foreign exchange transaction
gains/(losses) on cash and cash equivalents and other monetary assets” and “Net foreign exchange transaction gains
on borrowings and other liabilities” are disclosed after application of hedge accounting (i.e. excluding the foreign
currency gains/losses arising for the hedging).
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 162
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
163
Notes to the consolidated
financial statements
Property, plant and equipment
Property, plant and equipment are recorded at purchase or construction cost less depreciation. Historical cost
includes expenditure that is directly attributable to the acquisition or construction of the items.
Land is not depreciated.
Expenditure for repairs and maintenance of property, plant and equipment is charged to the income statement of the
year in which they are incurred. The cost of major renovations and other subsequent expenditure are included in the
carrying amount of the asset or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
The carrying amount of the replaced cost is derecognised.
Depreciation on property, plant and equipment begins when it is available for use and is calculated using the straight-
line method to allocate their cost, less residual value, over their estimated useful lives, as follows:
Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds with
carrying amount and these are included within operating profit as part of operating expenses.
Buildings
Rolling stock: (except locomotives)
Gondola cars
Rail tank cars
Rail tank cars (specialised types)
Hoppers
Flat cars
Tank containers
Locomotives
Mounted wheels
Motor vehicles and other property, plant and equipment
Number of years, range
30
22
32
30–40
15–26
20–32
20
9–45
7
3 to 10
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting
period.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Assets under construction are not depreciated until they are completed and brought into use, at which time they are
reclassified in the relevant class of property, plant and equipment and depreciated accordingly.
Borrowing costs to finance the construction of property, plant and equipment are capitalised, during the period of
time that is required to complete and prepare the asset for its intended use. All other borrowing costs are expensed.
Rolling stock repair and maintenance costs
Repair and maintenance costs relating to periodical capital repairs of locomotives and other rolling stock and
periodical middle repairs of locomotives constitute major repairs that result in enhancement of the economic benefits
of the rolling stock and as such are capitalised by the Group.
In particular, the cost of each major periodic capital repair is recognised in the carrying amount of the relevant item
of rolling stock repaired and separately depreciated over the expected period until the next periodic capital repair
or until the end of the useful economic life of the item of rolling stock, if earlier. Significant components replaced
as part of periodic major capital repairs are capitalised and depreciated separately over their useful economic life.
Simultaneously with the capitalisation of the costs of the new periodic major capital repair, the carrying amount of
the repaired rolling stock that is attributable to the previous periodic capital repair and/or significant component
replaced, if any, is derecognised and debited in ‘cost of sales’ in the income statement as ‘loss on derecognition
arising on capital repairs’.
If it is not practicable for the Group to determine the carrying amount of the repaired rolling stock that is attributable
to the previous periodic capital repair and/or significant component replaced to be derecognised, the Group uses the
cost of the current periodic major capital repair or replaced part as an indication of what the cost of the replaced part
was at the time the rolling stock was acquired.
Other types of repairs of rolling stock, such as current repairs and depot repairs, are viewed by the Group as routine
repairs and maintenance and thus their cost is charged in the Group’s income statement as and when incurred.
Upon initial recognition of rolling stock, the Group’s accounting policy is not to separately identify and depreciate the
element of its cost that is reflecting the maintenance element of the periodic major capital repair of the rolling stock
on initial recognition. The cost attributed to significant components, such as wheel pairs, is separately identified and
depreciated over their useful economic life.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 164
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
165
Notes to the consolidated
financial statements
Intangible assets
(a) Customer relationships
Customer relationships acquired in a business combination are recognised at fair value at the acquisition date.
Customer relationships relate to a transportation services contract with MMK Group. Customer relationships have a
finite useful life and are carried at cost less accumulated amortisation. Customer relationships are being amortised
using the straight-line method over an estimated useful life from five to seven years from the date of their acquisition.
The useful lives of the customer relationships are reviewed, and adjusted if appropriate, at the end of each reporting
period.
(b) Computer software
The costs of acquiring computer software for internal use are capitalised as intangible assets where the software
supports a significant business system and the expenditure leads to the creation of a durable asset. Computer
software is capitalised at cost and amortised over three years, which reflects its estimated useful life, using straight-
line method commencing when the asset is available for its intended use. Costs associated with maintaining computer
software programmes are recognised as an expense as incurred.
Impairment of non-financial assets
Assets that have indefinite useful life and goodwill are not subject to amortisation and are tested annually for
impairment. Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-
generating units). Non-financial assets, other than goodwill, that have suffered impairment are reviewed for possible
reversal of impairment whenever there is an indication that an impairment recognised in prior periods may no longer
exist or may have decreased.
The Group is the lessee
Leases
(a)
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is
available for use by the Group, with limited exceptions as set out below. Each lease payment is allocated between the
liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce
a constant periodic rate of interest on the remaining balance of the liability for each period.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the
net present value of the following lease payments:
•
•
•
•
•
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payments that are based on an index or a rate;
amounts expected to be payable by the Group under residual value guarantees;
the exercise price of a purchase option, if the Group is reasonably certain to exercise that option; and
payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Contracts may contain both lease and non-lease components. The Group accounts for each lease component within
such contracts as a lease separately from the non-lease components. The consideration in the contract is allocated
to each lease component on the basis of the relative standalone price of the lease component and the aggregate
standalone price of the non-lease components. The consideration for non-lease components relating to services is
recognised as an expense in the income statement.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined,
the Group’s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the
funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with
similar terms and conditions. To determine the incremental borrowing rate, the Group, where possible, uses recent
third-party financing received by the individual lessee as a starting point, adjusted to reflect changes in financing
conditions since third party financing was received.
The Group is exposed to potential future increases in variable lease payments based on an index or a rate, which are
not included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate
take effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Right-of-use assets are measured at cost comprising the following:
•
•
•
•
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date less any lease incentives received;
any initial direct costs; and
restoration costs.
Any remeasurement of the lease liability arising if the cash flows change based on the original terms and conditions of
the lease results in a corresponding adjustment to the right-of-use asset. The adjustment can be positive or negative.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-
line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over
the underlying asset’s useful life.
In determining the lease term, the Group considers all facts and circumstances that create an economic incentive
to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination
options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
Right-of-use assets are reviewed for impairment in accordance with the Group’s accounting policy for impairment of
non-financial assets.
As an exception to the above, the Group accounts for short-term leases and leases of low value assets by recognising
the lease payments as an expense on a straight-line basis in the income statement. Short-term leases are leases with a
lease term of 12 months or less.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
166
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
167
Notes to the consolidated
financial statements
Right-of-use assets and associated lease liabilities are presented as separate lines on the face of the balance sheet,
except for right-of-use assets and associated lease liabilities arising from leases with financial institutions that include
purchase options that are reasonably certain to be exercised due to the exercise price being a nominal amount
compared to the fair value of the leased asset on the exercise date. The latter are presented within the same line item
as the corresponding underlying assets would be presented if they were owned and within borrowings, respectively.
Management believes that this presentation best reflects the substance of the leases with financial institutions, being
similar to that of purchases via collateralised borrowings.
Impairment of lease receivables
The Group recognises credit loss allowance on lease receivables in accordance with IFRS 9 using the simplified
approach permitted by the standard, which requires expected credit losses to be recognised from initial recognition
of the lease receivable at an amount equal to lifetime ECL. The ECL is determined in the same way as for trade
receivables and is recognised through an allowance account to write down the lease receivables’ net carrying amount
to the present value of expected cash flows discounted at the interest rates implicit in the leases. The estimated future
cash flows reflect the cash flows that may result from obtaining and selling the assets subject to the lease.
Sale and leaseback
A sale and leaseback transaction involves the sale of an asset and the leasing back of the same asset.
The accounting of a sale and leaseback transaction depends on whether the transfer of the asset qualifies as a sale. In
making this assessment, the Group assesses whether the buyer-lessor obtained control of the underlying asset.
If the transfer qualifies as a sale of the asset, the Group measures the right-of-use asset arising from the leaseback
at the proportion of the previous carrying amount of the asset that relates to the right of use retained by the Group.
Accordingly, the Group recognises only the amount of any gain or loss that relates to the rights transferred to
the buyer-lessor. If the fair value of the consideration for the sale of the asset does not equal the fair value of the
asset, or if the payments for the lease are not at market rates, the Group accounts for any below-market terms as a
prepayment of lease payments; and any above-market terms as additional financing provided by the buyer-lessor to
the Group. This is measured on the basis of the more readily determinable of the difference between the fair value
of the consideration for the sale and the fair value of the asset; and the difference between the present value of the
contractual payments for the lease and the present value of payments for the lease at market rates.
If the transfer does not qualify as a sale, the Group continues to recognise the transferred asset and recognises a
financial liability equal to the transfer proceeds.
The Group is the lessor
(b)
Finance leases
Where the Group is a lessor in a lease which transfers substantially all the risks and rewards incidental to ownership
to the lessee, the assets leased out are presented as a finance lease receivable and carried at the present value of
the future lease payments. Finance lease receivables are initially recognised at commencement (when the lease term
begins) using a discount rate determined at inception (the earlier of the date of the lease agreement and the date of
commitment by the parties to the principal provisions of the lease).
The difference between the gross receivable and the present value represents unearned finance income. The income
is recognised over the term of the lease using the net investment method (before income tax and other taxes) which
reflects a constant periodic rate of return. Incremental costs directly attributable to negotiating and arranging the
lease are included in the initial measurement of the finance lease receivable and reduce the amount of income
recognised over the lease term. Finance income from leases is recorded within interest income in the income
statement.
Operating leases
Assets leased out under operating leases are included in property, plant and equipment in the balance sheet based on
the nature of the asset. They are depreciated over their expected useful lives on a basis consistent with similar owned
property, plant and equipment.
Revenues from operating leasing
Rental income (net of any incentives given to lessees) is recognised on a straight-line basis over the lease term.
Financial assets
Financial instruments
(a)
Recognition and derecognition. All purchases and sales of financial assets that require delivery within the time frame
established by regulation or market convention (“regular way” purchases and sales) are recorded at trade-date; being
the date on which the Group commits to purchase or sell the asset. All other purchases and sales are recognised when
the entity becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have
been transferred and the Group has transferred substantially all the risks and rewards of ownership. Any gain or loss
arising upon their derecognition is recognised directly in the income statement.
Classification. The classification depends on the Group’s business model for managing the financial assets and the
contractual cash flow characteristics of the assets. Management determines the classification of financial assets at
initial recognition.
The Group classifies its financial assets at amortised cost. Financial assets at amortised cost are held for collection
of contractual cash flows and their cash flows represent solely payments of principal and interest. They are included
in current assets, except for maturities greater than twelve months after the balance sheet date. These are classified
as non-current assets. The Group’s financial assets at amortised cost comprise of trade receivables, loans and other
receivables and cash and cash equivalents on the balance sheet.
Reclassification. Financial instruments are reclassified only when the business model for managing those assets
changes. The reclassification has a prospective effect and takes place from the start of the first reporting period
following the change.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 168
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
169
Notes to the consolidated
financial statements
Measurement. At initial recognition, the Group measures financial assets classified at amortised cost at their fair value
plus incremental transaction costs that are directly attributable to the acquisition of the financial assets. Subsequently,
these are measured at amortised cost.
Interest income. Interest income on financial assets at amortised cost is recognised using the effective interest rate
method and is included within “finance income” in the income statement. In particular, interest income is calculated
by applying the effective interest rate to the gross carrying amount of a financial asset except for financial assets that
subsequently become credit-impaired. For credit-impaired financial assets, the effective interest rate is applied to
the net carrying amount of the financial asset; that is after deduction of the loss allowance. The Group’s definition of
credit-impaired assets is explained in Note 6, Credit risk section.
Impairment. The Group assesses on each reporting date and on a forward looking basis the expected credit losses
(“ECL”) associated with its debt financial assets carried at amortised cost. The measurement of ECL reflects: (i) an
unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time
value of money, and (iii) all reasonable and supportable information that is available without undue cost and effort at
the end of each reporting period about past events, current conditions and forecasts of future conditions.
The carrying amount of the financial assets is reduced through the use of an allowance account, and the amount
of the loss is recognised in the income statement within “selling and marketing costs”. Subsequent recoveries of
amounts for which loss allowance was previously recognised are credited against the same line item.
The impairment methodology applied by the Group for calculating expected credit losses depends on the type of
financial asset assessed for impairment. Specifically:
•
•
For trade receivables the Group applies the simplified approach permitted by IFRS 9 for calculating expected
credit losses, which requires lifetime expected losses to be recognised from initial recognition of the financial
assets. The assessment is done on an individual basis.
For all its other debt financial assets carried at amortised cost, the Group applies the general approach.
In particular, the Group applies the three stage model for calculating impairment, which is based on changes in
the credit quality of the financial asset since initial recognition. A financial instrument that is not credit -impaired
on initial recognition is classified in Stage 1. The ECL of financial assets in Stage 1 is measured at an amount
equal to the portion of lifetime ECL that results from default events possible within the next 12 months or until
contractual maturity, if shorter. If the Group identifies a significant increase in credit risk (“SICR”) since initial
recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that
is, up until its contractual maturity but considering expected prepayments, if any. Refer to Note 6, Credit risk
section for a description of how the Group determines when a SICR has occurred. If the Group determines that
a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL.
The Group’s definition of credit impaired assets and definition of default is explained in Note 6, Credit risk
section.
Write-off. Financial assets are written-off, in whole or in part, when the Group has concluded that there is no
reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst
others, the failure of a debtor to engage in a repayment plan with the Group and a failure to make contractual
payments for a period of greater than 180 days past due. The Group may write-off financial assets that are still subject
to enforcement activity when the Group seeks to recover amounts that are contractually due, however, there is no
reasonable expectation of recovery. Subsequent recoveries of amounts previously written off are credited against
‘selling and marketing costs’ in the income statement.
Classification as trade receivables. Trade receivables are amounts due from customers for services performed in
the ordinary course of business. If collection is expected in one year or less (or in a normal operating cycle of the
business, if longer than one year) they are classified as current assets, if not, they are presented as non-current
assets. Trade receivables are recognised initially at the amount of consideration that is unconditional unless they
contain significant financing components, in which case they are recognised at fair value. The Group holds its trade
receivables with the objective to collect the contractual cash flows and their contractual cash flows represent solely
payments of principal and interest and therefore measures them subsequently at amortised cost using the effective
interest method, less provision for impairment.
Classification as loans and other receivables. These amounts generally arise from transactions outside the usual
operating activities of the Group. These are held with the objective to collect their contractual cash flows and their
contractual cash flows represent solely payments of principal and interest. Accordingly, these are measured at
amortised cost using the effective interest method, less provision for impairment. Loans and other receivables are
classified as current assets if they are due within one year or less (or in the normal operating cycle of the business if
longer). If not, they are presented as non-current assets.
Classification as cash and cash equivalents. In the cash flow statement, cash and cash equivalents include cash
in hand and deposits held at call with banks with original maturity of three months or less, less bank overdrafts, if
any. Cash and cash equivalents are carried at amortised cost using the effective interest method, less provision for
impairment. Bank overdrafts are shown within borrowings in the current liabilities on the balance sheet.
Financial liabilities
(b)
Classification. The Group’s financial liabilities are initially recognised at fair value and classified as subsequently
measured at amortised cost.
Derecognition of financial liabilities. A financial liability is derecognised when the obligation under the liability is
discharged or cancelled or expires. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognised in income statement as other income or finance costs. When an existing financial
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability, and the difference in the respective carrying amounts, including costs or
fees incurred for the modification, is recognised in profit or loss within finance costs. When the terms of the existing
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
170
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
171
Notes to the consolidated
financial statements
financial liability are not substantially modified, the existing liability is not derecognised and the gain/loss arising on
the modification, including costs or fees incurred for the modification, is recognised in the income statement within
finance costs.
Borrowing costs. Borrowing costs incurred for the construction of any qualifying asset are capitalised during the
period of time that is required to complete and prepare the asset for its intended use. Other borrowing costs are
expensed in the period in which they are incurred.
Modifications. An exchange between the Group and its original lenders of debt instruments with substantially different
terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted
for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are
substantially different if the discounted present value of the cash flows under the new terms, including any fees paid
net of any fees received and discounted using the original effective interest rate, is at least 10% different from the
discounted present value of the remaining cash flows of the original financial liability. In addition, other qualitative
factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new
conversion features attached to the instrument and change in loan covenants are also considered.
If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or
fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not
accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are
amortised over the remaining term of the modified liability.
Modifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a
cumulative catch up method, with any gain or loss recognised in profit or loss, unless the economic substance of the
difference in carrying values is attributed to a capital transaction with owners.
Borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the
redemption value is recognised over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until draw down occurs.
To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is
capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the
liability for at least twelve months after the balance sheet date.
Borrowings are removed from the balance sheet when the obligation specified in the contract is extinguished (i.e.
when the obligation specified in the contract is discharged, cancelled or expires). The difference between the carrying
amount of a financial liability that has been extinguished or transferred to another party and the consideration paid,
including any non-cash assets transferred or liabilities assumed, is recognised in the income statement as other
income or finance costs.
Trade and other payables. Trade payables are obligations to pay for goods or services that have been acquired in the
ordinary course of business from suppliers. Trade and other payable are classified as current liabilities if payment is
due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as
non-current liabilities. Trade and other payables are recognised initially at fair value and subsequently measured at
amortised cost using the effective interest method.
Inventories
Group entities usually maintain a store of spare parts and servicing equipment. These are carried as inventory and
recognised in the income statement as consumed, unless they meet the definition of property, plant and equipment
in which case they are classified as such. Major spare parts are also recognised within property, plant and equipment
when they meet the definition of property, plant and equipment. Spare parts in inventory as well as other inventories
are stated at the lower of cost and net realisable value. Cost is determined using the weighted average cost method.
Net realisable value is the estimated selling price in the ordinary course of business less the cost of completion and
applicable variable selling expenses and takes into account, amongst others, evidence of damage or obsolescence.
Cash flow statement
Cash flow statement is prepared under the indirect method. Purchases of property, plant and equipment, including
prepayments for property, plant and equipment, are included within cash flows from investing activities and finance
lease payments are included within cash flows from financing activities and are shown net of VAT. Related input VAT is
included in movement in changes of working capital, within trade and other receivables.
When the Group enters into a sale and lease back arrangement which constitutes collateralised borrowing, the
proceeds received are included within cash flows from financing activities. Receipts from finance lease receivables
are included within cash flows from investing activities.
Share capital, share premium and treasury shares
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from
the proceeds.
Any excess of the fair value of consideration received over the par value of shares issued is recognised as share
premium. Share premium is the difference between the fair value of the consideration receivable for the issue of
shares and the nominal value of the shares. Share premium account can only be resorted to for limited purposes,
which do not include the distribution of dividends, and is otherwise subject to the provisions of the Cyprus Companies
Law on reduction of share capital.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 172
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
173
Notes to the consolidated
financial statements
Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid,
including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to
the Company’s equity holders within a separate reserve ‘treasury shares’ until the shares are cancelled or re-issued.
Where such ordinary shares are subsequently re-issued, any consideration received, net of any directly attributable
incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s
equity holders within retained earnings. The consideration initially paid for treasury shares which are subsequently
re-issued is transferred from “treasury shares” to retained earnings.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the
tax bases of assets and liabilities and their carrying amounts in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. Deferred income tax
is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business
combination that at the time of the transaction affects neither accounting nor taxable profit or loss. In accounting for
the tax effects of on-balance sheet leases, the Group considers the right-of-use asset and lease liability separately and
recognises deferred tax on the net temporary difference.
Capital contribution
Capital contribution constitutes contributions made by the Company’s shareholders other than for the issue of
shares by the Company in their capacity as equity owners of the Company for which the Company has no contractual
obligation to repay them. Such contributions are recognised directly in equity as they constitute transactions with
equity owners in their capacity as equity owners of the Company.
Provisions and contingent liabilities
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it
is more likely than not that an outflow of resources will be required to settle the obligation, and the amount has been
reliably estimated. Provisions are not recognised for future operating losses.
Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditure expected to be required to settle the obligation
using a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the
obligation. The increase in the provision due to passage of time is recognised as interest expense.
Provisions are only used to cover those expenses which they had been set up for. Other possible or present
obligations that arise from past events but it is not probable that an outflow of resources embodying economic benefit
will be required to settle the obligations, or the amount cannot be measured with sufficient reliability, are disclosed in
the notes to the financial statements as contingent liabilities.
Current and deferred income tax
The tax expense for the period comprises of current and deferred tax. Tax is recognised in the income statement,
except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive income or directly in equity respectively.
Current income tax liabilities and assets for the current and prior periods are measured at the amount expected to be
paid to or recovered from the taxation authorities using the tax rates and laws that have been enacted or substantively
enacted by the balance sheet date. Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulations are subject to interpretations and establishes provisions where
appropriate on the basis of amounts expected to be paid to tax authorities.
Deferred tax is determined using tax rates and laws that have been enacted or substantially enacted by the balance
sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is
settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates except
where the Group can control the timing of the reversal and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities, when the income tax assets and liabilities relate to income taxes levied by the
same taxation authority on either the taxable entity or different taxable entities when there is an intention to settle the
balances on a net basis.
Russian Value Added Tax (VAT)
Russian output value added tax related to sales is payable to tax authorities on the earlier of (a) collection of
receivables from customers or (b) delivery of goods or services to customers. Input VAT is generally recoverable
against output VAT upon receipt of the VAT invoice. The tax authorities permit the settlement of VAT on a net basis.
VAT related to sales and purchases is recognised in the balance sheet on a gross basis and disclosed separately as an
asset and liability. Where provision has been made for the impairment of receivables, the impairment loss is recorded
for the gross amount of the debtor, including VAT.
Employee benefits
Wages, salaries, contributions to the state pension and social insurance funds, paid annual leave and sick leave,
bonuses and other benefits (such as health services) are accrued in the year in which the associated services are
rendered by the employees of the Group. These are included in staff costs and the Group has no further obligations
once the contributions have been paid.
The Group recognises a liability and an expense for bonuses where contractually obliged or where there is a past
practice that has created a constructive obligation.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 174
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
175
Notes to the consolidated
financial statements
Termination benefits
Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or
when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination
benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits;
and (b) when the Group recognises costs for a restructuring that is within the scope of IAS 37 and involves the
payment of terminations benefits. In the case of an offer made to encourage voluntary redundancy, the termination
benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than
12 months after the end of the reporting period are discounted to present value.
Share based payment transactions
The Group operates a cash-settled share-based compensation plan. In accordance with compensation plan, key
management personnel and selected employees of the Group are entitled to receive cash compensations based on
the weighted average market quotations of the fixed number of global depository receipts (“GDR”) of the Company.
The fair value of the employee services received in exchange for the grant of the equivalent GDR instruments is
recognised as an expense over the vesting period.
At each balance sheet date, if required by the terms of the compensation plan, the Group revises its estimates of the
monetary equivalent of GDRs that are expected to vest. It recognises the impact of the revision of original estimates,
including number of instruments expected to vest and fair values, in profit or loss, with a corresponding adjustment to
share-based payment liability.
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements in
the period in which the dividends are approved and are no longer at the discretion of the Company. More specifically,
interim dividends are recognised when approved by the Board of Directors whereas in case of final dividends, these
are recognised at the time when they are approved by the Company’s shareholders.
Prepayments
Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the
goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment
relates to an asset which will itself be classified as non-current upon initial recognition. Prepayments to acquire assets
are transferred to the carrying amount of the asset once the Group has obtained control of the asset and it is probable
that future economic benefits associated with the asset will flow to the Group. Other prepayments are written off to
profit or loss when the goods or services relating to the prepayments are received. If there is an indication that the
assets, goods or services relating to a prepayment will not be received, the carrying value of the prepayment is written
down accordingly and a corresponding impairment loss is recognised in the income statement.
Other income
Other income generally represents amounts received from transactions that are outside the Group’s principal
activities. This is recognised in the income statement over the period it relates to, based on the terms of the
arrangement. Other income that it is not linked to the Group’s future performance and/or satisfaction of any future
obligations is recognised in the period in which the Group is entitled to receive it.
5. New accounting pronouncements
Certain new standards, amendments to existing standards and interpretations have been issued that are mandatory
for annual periods beginning on or after 1 January 2020. Items marked with * have not been endorsed by the
European Union (EU). The Group will only be able to apply the new standards, amendments to existing standards or
interpretations when these are endorsed by the EU.
•
•
•
•
•
Classification of liabilities as current or non-current — Amendments to IAS 1 (issued on 23 January 2020 and
effective for annual periods beginning on or after 1 January 2022)*. These narrow scope amendments clarify
that liabilities are classified as either current or non-current, depending on the rights that exist at the end of
the reporting period. In addition, the amendments clarify the classification requirements for debt a company
might settle by converting it into equity. “Settlement” is defined as the extinguishment of a liability with cash,
other resources embodying economic benefits or an entity’s own equity instruments. There is an exception for
convertible instruments that might be converted into equity, but only for those instruments where the conversion
option is classified as an equity instrument as a separate component of a compound financial instrument.
Classification of liabilities as current or non-current, deferral of effective date — Amendments to IAS 1 (issued
on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023)*. The amendment to IAS 1
on classification of liabilities as current or non-current was issued in January 2020 with an original effective date
1 January 2022. However, in response to the Covid-19 pandemic, the effective date was deferred by one year to
provide companies with more time to implement classification changes resulting from the amended guidance.
Proceeds before intended use, Onerous contracts — cost of fulfilling a contract, Reference to the Conceptual
Framework — narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual Improvements to IFRSs
2018–2020 — amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 (issued on 14 May 2020 and effective for annual
periods beginning on or after 1 January 2022).* The amendment to IAS 16 prohibits an entity from deducting from
the cost of an item of PPE any proceeds received from selling items produced while the entity is preparing the
asset for its intended use. The amendment also clarifies that an entity is “testing whether the asset is functioning
properly” when it assesses the technical and physical performance of the asset. The amendment to IAS 37 clarifies
the meaning of “costs to fulfil a contract”. IFRS 3 was amended to refer to the 2018 Conceptual Framework for
Financial Reporting, in order to determine what constitutes an asset or a liability in a business combination. The
amendment to IFRS 9 addresses which fees should be included in the 10% test for derecognition of financial
liabilities. Costs or fees could be paid to either third parties or the lender. Illustrative Example 13 that accompanies
IFRS 16 was amended to remove the illustration of payments from the lessor relating to leasehold improvements.
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting
policies (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023).* IAS 1
was amended to require companies to disclose their material accounting policy information rather than their
significant accounting policies. The amendment provided the definition of material accounting policy information.
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates
(issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023).* The amendment to IAS 8
clarified how companies should distinguish changes in accounting policies from changes in accounting estimates.
None of the new standards, amendments to existing standards or interpretations is expected to have a significant
effect on the consolidated financial statements.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 176
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
177
Notes to the consolidated
financial statements
6. Financial risk management
Financial risks factors
The Group’s activities exposed it to a variety of financial risks: market risk (including foreign exchange risk, cash flow
and fair value interest rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial
results.
Market risk
(a) Foreign exchange risk
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated
in the currency different from the functional currency of each of the entities of the Group.
As of 31 December 2020, 100% of the Group’s long-term borrowings are denominated in Russian Rouble. Further, a
large proportion of the Group’s expenses and revenues are denominated and settled in Russian Roubles. Risks related
to liabilities denominated in foreign currency are partly compensated by assets and income denominated in foreign
currency.
During the year 2020 there was increased volatility in currency markets and the Russian Rouble has depreciated
against some major currencies. As of the end of December 2020 the Russian Rouble has decreased against the US
Dollar from 61.9057 as of 31 December 2019 to 73.8757 Russian Roubles (19.3% revaluation) and against the Euro from
69.377 as of 31 December 2019 to 90.6824 Russia Roubles (30.7% revaluation).
The Group is exposed to the effects of currency fluctuations between (i) the Russian Rouble and the US Dollars in
relation to US Dollar denominated balances held in the Company and the Cypriot and Russian subsidiaries of the
Group having the Russian Rouble as their functional currency; (ii) the Euro and the US Dollar for US Dollar denominated
balances held in the Estonian subsidiaries of the Group which have the Euro as their functional currency and (iii) the
Ukrainian Hryvnia and the US Dollar for the US Dollar denominated balances held in the Ukrainian subsidiary of the
Group which has the Ukrainian Hryvnia as its functional currency.
The carrying amounts of monetary assets and liabilities denominated in US Dollars as at 31 December 2020 and
31 December 2019 are as follows:
Assets
Liabilities
2020
2019
RUB’000
RUB’000
922,145
468,321
142,777
9,038
Had US Dollar exchange rate strengthened/weakened by 20% against the Russian Rouble and all other variables
remained unchanged, the post-tax profit of the Group for the year ended 31 December 2020, would have increased/
decreased by RUB 84,057 thousand (2019: 10% change, effect RUB 21,831 thousand) and equity would have increased/
decreased by RUB 503,185 thousand (2019: 10% change, effect RUB 210,073 thousand). This is mainly due to foreign
exchange gains and losses arising upon retranslation of cash and cash equivalents and accounts payable denominated
in US Dollars for the Group entities with Russian Rouble being their functional currency. The impact on equity is mainly
due to foreign exchange gains and losses arising upon retranslation of intercompany loans being recognised as part of
net investment in the foreign operation denominated in US Dollars for the Ukrainian subsidiary of the Group.
Had Euro exchange rate strengthened/weakened by 30% against the US Dollar and all other variables remained
unchanged, the post-tax profit of the Group for the year ended 31 December 2020, would have increased /decreased
by RUB 86,122 thousand (2019: 10% change, effect RUB 20,698 thousand). This is mainly due to foreign exchange gains
and losses arising upon retranslation of payable balances and cash and cash equivalents and accounts receivable
denominated in US Dollars for the Estonian subsidiaries of the Group.
Had US Dollar exchange rate strengthened/weakened by 20% against the Ukrainian Hryvnia and all other variables
remained unchanged, the post-tax profit of the Group would have remained unchanged (2019: 10% change, no
effect on post-tax profit) and the equity of the Group for the year ended 31 December 2020, would have decreased/
increased by RUB 503,185 thousand (2019: 10% change, effect RUB 210,073 thousand). This is mainly due to foreign
exchange gains and losses arising upon retranslation of intercompany loans being recognised as part of net
investment in the foreign operation denominated in US Dollars for the Ukrainian subsidiary of the Group.
The Group does not have formal arrangements for hedging foreign exchange risk, with the exception of application of
hedge accounting to hedge foreign currency risk associated with highly probable dividend payments and associated
dividend payable until their settlement, as set out in the accounting policy for hedging activities in Note 4 to these
financial statements.
The impact of application of hedge accounting has been to disclose in the cash flow statement “Dividends paid to the
owners of the Company” net-off RUB 475,042 thousand foreign exchange losses and the “Exchange gains/(losses) on
cash and cash equivalents” does not include the equivalent impact from the relevant cash deposits used for hedging.
Furthermore, in the income statement the amounts included in “Finance income and costs” within “Net foreign
exchange transaction gains/(losses) on cash and cash equivalents and other monetary assets” and “Net foreign
exchange transaction gains on borrowings and other liabilities” are disclosed after application of hedge accounting
(i.e. excluding the foreign currency gains/losses arising for the hedging of RUB 475,042 thousand).
(b) Cash flow and fair value interest rate risk
The Group’s income and operating cash flows are exposed to changes in market interest rates arising mainly from
floating rate borrowings. In addition, the Group is exposed to fair value interest rate risk through market value
fluctuations of borrowings and bank deposits with fixed interest rates. However, any potential change in the market
rates of interest will not have an impact on the carrying amount of the fixed rate financial instruments and hence on
the Group’s post tax profit or equity as these instruments are carried at amortised cost.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 178
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
179
Notes to the consolidated
financial statements
Long-term borrowing contracts of the Group are concluded to finance the purchase of rolling stock. While analysing
new investment projects and concluding credit facility agreements, loan agreements and lease contracts, issues of
bonds and various scenarios are developed taking into account terms of refinancing and alternative financing sources.
Based on these scenarios the Group measures the impact of a definite change in interest rate on profit or loss and
selects the financing model that allows maximizing the estimated future profit.
As at 31 December 2020 and 31 December 2019, the Group did not have any Russian Rouble or US Dollar credit
facilities at floating interest rates, therefore any reasonably possible change in market interest rates would not have
any significant impact on the post-tax profit or equity of the Group.
The Group obtains borrowings at current market interest rates and does not use any hedging instruments to manage
interest rate risk. Management monitors changes in interest rates and takes steps to mitigate these risks as far as
practicable.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to
meet an obligation. Credit risk arises from cash and cash equivalents, trade receivables, loans and other receivables as
well as finance lease receivables.
(i) Risk management
The Group has policies in place to ensure that sales of goods and services are made to customers with an appropriate
credit history. Management assesses the credit quality of the Group’s customers, taking into account their financial
position, past experience and other factors. These policies allow the Group to reduce its credit risk. However, the
Group’s business is heavily dependent on a few large key customers, with the top ten customers accounting for
70.95% of the Group’s trade receivables as at 31 December 2020 (2019: 70.71%).
For banks and financial institutions, the Group has established policies whereby the majority of bank balances are held
with independently rated parties with a minimum rating of ‘Ba2’. These policies enable the Group to reduce its credit
risk significantly.
(ii) Impairment of financial assets
The Group has four types of assets that are subject to the expected credit loss model:
•
•
•
•
trade receivables;
finance lease receivables;
loans and other receivables; and
cash and cash equivalents.
The impairment methodology applied by the Group for calculating expected credit losses depends on the type of
assets assessed for impairment. All assets are assessed for impairment on an individual basis. Specifically:
•
•
For trade receivables and finance lease receivables the Group applies the simplified approach permitted by IFRS
9 for calculating expected credit losses, which requires lifetime expected credit losses to be recognised from
initial recognition of the financial assets.
For loans and other receivables and cash and cash equivalents, the Group applies the general approach.
In particular, the Group applies the three-stage model for calculating impairment, which is based on changes
in the credit quality of the financial asset since initial recognition. A financial instrument that is not credit-
impaired on initial recognition is classified in Stage 1. The ECL of financial assets in Stage 1 is measured at an
amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months
or until contractual maturity, if shorter. If the Group identifies a significant increase in credit risk since initial
recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is,
up until its contractual maturity but considering expected prepayments, if any. If the Group determines that a
financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL.
Significant increase in credit risk. The Group considers the probability of default upon initial recognition of an asset
and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period.
To assess whether there is a significant increase in credit risk the Group compares the risk of a default occurring on
the asset as at the reporting date with the risk of default as at the date of initial recognition. In making this assessment,
the Group considers available reasonable and supportive forwarding-looking information.
Especially the following indicators are incorporated:
•
•
•
•
•
•
•
internal credit rating
external credit rating (as far as available)
actual or expected significant adverse changes in business, financial or economic conditions that are expected
to cause a significant change to the borrower’s/counterparty’s ability to meet its obligations
actual or expected significant changes in the operating results of the borrower/counterparty
significant increases in credit risk on other financial instruments of the same borrower/counterparty
significant changes in the value of the collateral supporting the obligation or in the quality of third-party
guarantees or credit enhancements
significant changes in the expected performance and behaviour of the borrower/counterparty, including changes
in the payment status of counterparty in the group and changes in the operating results of the borrower.
Macroeconomic information (such as market interest rates or growth rates) is incorporated as part of the
internal rating model. The historical loss rates are adjusted to reflect current and forward-looking information on
macroeconomic factors affecting the ability of the customers to settle the receivable balances. Regardless of the
analysis above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making
a contractual payment.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
180
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
181
Notes to the consolidated
financial statements
Default and credit-impaired. A default on a financial asset is when the financial asset meets one or more of the
following criteria: (i) the borrower is more than 90 days past due on its contractual payments, (ii) the borrower is
assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of
any past-due amount or of the number of days past due, (iii) the Group, for economic or contractual reasons relating
to the borrower’s financial difficulty, granted to the borrower a concession(s) that it would not otherwise consider. The
Company considers defaulted assets to be credit-impaired so that Stage 3 represents all debt financial assets which
are considered defaulted.
Write-off. Assets are written-off, in whole or in part, when the Group has concluded that there is no reasonable
expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the
failure of a debtor to engage in a repayment plan with the Group and a failure to make contractual payments for a
period of greater than 180 days past due. The Group may write-off financial assets that are still subject to enforcement
activity when the Group seeks to recover amounts that are contractually due, however, there is no reasonable
expectation of recovery. Subsequent recoveries of amounts previously written off are credited against ‘selling and
marketing costs’ in the income statement.
The Group does not have any material debt financial assets that are subject to the impairment requirements of IFRS 9
and their contractual cash flows have been modified.
The Group’s exposure to credit risk for each class of asset subject to the expected credit loss model is set out below:
Trade receivables and finance lease receivables
The Group assesses, on an individual basis, its exposure to credit risk arising from trade receivables and finance lease
receivables. This assessment is based on the credit history of the customers with the Group as well as the period the
trade receivable or finance lease receivable is past due (in days).
The following table contains an analysis of the gross carrying amount of the Group’s trade receivables and finance
lease receivables by reference to the days past due. This basis is aligned with the Group’s internal credit risk grades for
these assets.
As at 31 December 2020
Current (not past due)
1–30 days past due
31–90 days past due
more than 90 days past due
Total
As at 31 December 2019
Current (not past due)
1–30 days past due
31–90 days past due
more than 90 days past due
Total
Trade
receivables
Finance lease
receivables
RUB’000
RUB’000
2,444,086
422,972
693,461
304,793
394,330
—
—
—
3,836,670
422,972
2,184,210
741,905
76,027
346,339
3,348,481
279,070
—
-
-
279,070
The gross carrying amounts, as per above, represent the Group’s maximum exposure to credit risk on these assets as
at 31 December 2020 and as at 31 December 2019 without taking into account any collateral held. The Group does not
hold any collateral as security for any trade receivable balances. Finance lease receivables are effectively secured as
the rights to the leased asset revert to the Group in the event of default.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
182
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
183
Notes to the consolidated
financial statements
The movement in the credit loss allowance for trade receivables during the years 2020 and 2019 is presented in the
table below:
The following table contains an analysis of the credit risk exposure other receivables on the basis of the Group’s
internal credit risk rating grades. The gross carrying amounts below represent the Group’s maximum exposure to
credit risk on these assets as at 31 December 2020 and 2019:
Opening balance as at 1 January
New assets originated or purchased
Net loss allowance of financial assets at the start of the year
Receivables modified during the year
Assets written off during the year as uncollectible
Recoveries
Other
Trade receivables
2020
2019
RUB’000
RUB’000
(138,915)
(146,042)
(11,643)
(4,739)
(1,625)
18,583
9,510
(6,295)
(4,461)
(5,269)
(9,300)
13,791
9,196
3,170
Closing balance as at 31 December
(135,124)
(138,915)
The estimated expected credit loss allowance on finance lease receivables as at 31 December 2020 and as at 31
December 2019 was immaterial. This assessment takes into consideration the presence of the leased asset, which acts
as a collateral for the finance lease receivable.
Loans and other receivables
The Group assesses, on an individual basis, its exposure to credit risk arising from loans and other receivables.
This assessment takes into account, amongst others, the period the loan receivable or other receivable balance is past
due (in days) and history of defaults in the past, adjusted for forward looking information.
Internal credit risk
rating grade
Company definition of category
Performing
Stage 1 — Counterparties have a low risk of default and a
strong capacity to meet contractual cash flows
Under-performing
Stage 2 — Customers for which there is a significant increase
in credit risk; as significant increase in credit risk is presumed if
interest and/or principal repayments are 30 days past due
2020
2019
RUB’000
RUB’000
32,612
20,071
14,872
20,107
Non-performing or
Credit-impaired
Stage 3 — Interest and/or principal repayments are more than
90 days past due
20,194
29,341
The gross carrying amounts, as per above, represent the Group’s maximum exposure to credit risk on these assets as
at 31 December 2020 and as at 31 December 2019 without taking into account any collateral held. The Group does not
hold any collateral as security for any loans receivable or other receivable balances.
The movement in the credit loss allowance for other receivables during the years 2020 and 2019 is presented in the
table below:
Opening balance as at 1 January
Assets written off during the year as uncollectible
Other
Closing balance as at 31 December
Non-performing
2020
2019
RUB’000
RUB’000
(29,341)
(49,652)
6,195
2,951
13,358
6,953
(20,195)
(29,341)
The estimated expected credit loss allowance on loans receivable as at 31 December 2020 and as at 31
December 2019 was immaterial.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
184
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
185
Notes to the consolidated
financial statements
Cash and cash equivalents
The Group assesses, on an individual basis, its exposure to credit risk arising from cash at bank based on ratings from
external credit rating institutions and internal ratings if external are not available.
Liquidity risk
The Group has an excess of current liabilities over current assets of RUB 2,842,697 thousand as at 31 December 2020
(2019: excess of current assets over current liabilities RUB 4,848,317 thousand).
The following table contains an analysis of the gross carrying amount of the Group’s cash at bank by reference to
the credit risk ratings assigned by external credit rating agencies. The gross carrying amounts below represent the
Group’s maximum exposure to credit risk on these assets as at 31 December 2020 and 2019:
Moody’s1
Moody’s1
Moody’s1
Moody’s1
Standard & Poor’s2
Fitch3
Other external non-rated banks — satisfactory credit quality
(performing)
Rating
2020
2019
RUB’000
RUB’000
A3 – Aaa
1,225,758
1,021,969
Ba1 – Baa1
3,704,823
5,462,852
B1
16,204
Caa1 - Caa3
—
—
—
B - BB+
30,831
31,373
BBB- BBB+
37
295
619
4,628
Total cash at bank and bank deposits4
4,977,948
6,521,441
1 International rating agency Moody’s Investors Service
2 International rating agency Standard & Poor’s
3 International rating agency Fitch Rating
4 The rest of the balance sheet item ‘cash and cash equivalents’ is cash on hand.
The Group does not hold any collateral as security for any of the above balances.
The estimated expected credit loss allowance on cash and cash equivalents as at 31 December 2020 and as at
31 December 2019 based on the general approach of IFRS 9, was immaterial. All cash and cash equivalents were
performing (Stage 1) as at 31 December 2020 and as at 31 December 2019.
The Group has predictable cash flows which allow the Group to repay its liabilities when they fall due. The Group also
has successful credit and refinancing history and maintains enough flexibility ensuring the ability to attract necessary
funds through committed credit facilities. Due to availability of committed credit lines amounting to RUB 29,449,091
thousand as of 31 December 2020 (2019: RUB 4,665,000 thousand), together with long-term borrowings (Note 28)
the Group has the ability to meet its liabilities as they fall due and mitigate risks of adverse changes in the financial
markets environment.
Management controls current liquidity based on expected cash flows and expected revenue receipts. In the long-term
perspective, the liquidity risk is determined by forecasting future cash flows at the moment of signing new credit, loan
or lease agreements and by budgeting procedures.
The table below summarises the analysis of financial liabilities of the Group by maturity as of 31 December 2020 and
31 December 2019. The amounts in the table are contractual undiscounted cash flows. Trade and other payables
balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
Less
than one
month
Between
one month
and three
months
Between
three and
six months
Between
6 months
and less
than one
year
Between
1 and 2
years
Between
2 and 5
years
Total
RUB’000
RUB’000
RUB’000
RUB’000
RUB’000
RUB’000
RUB’000
31 December 2020
Borrowings
628,404
2,197,010
2,831,036
6,836,340
12,720,064
10,163,762 35,376,616
Trade and other
payables
Lease liabilities with
financial institutions
989,317
41,546
78,802
—
—
—
—
—
—
—
—
1,109,665
—
—
Other lease liabilities
71,618
116,864
186,957
376,826
508,047
248,577
1,508,889
1,689,339
2,355,420
3,096,795
7,213,166
13,228,111
10,412,339 37,995,170
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
186
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
187
Notes to the consolidated
financial statements
Less
than one
month
Between
one month
and three
months
Between
three and
six months
Between
6 months
and less
than one
year
Between
1 and 2
years
Between
2 and 5
years
Total
RUB’000
RUB’000
RUB’000
RUB’000
RUB’000
RUB’000
RUB’000
31 December 2019
Borrowings
360,617
1,691,040
2,280,662
4,605,615
9,955,939
13,748,473 32,642,346
Trade and other
payables
Lease liabilities with
financial institutions
849,725
29,986
28,251
78,922
—
—
986,884
59,219
104,168
154,532
302,194
573,499
781,441
1,975,053
Other lease liabilities
63,280
130,273
213,761
346,615
409,252
578,619
1,741,800
1,332,841
1,955,467
2,677,206
5,333,346
10,938,690
15,108,533
37,346,083
Note: statutory liabilities are excluded as the analysis is provided for financial liabilities only.
(a) Capital risk management
The Group’s main objective when managing capital is to maintain the ability to continue as a going concern in order to
ensure the required profitability of the Group, maintain optimum equity structure and reduce its cost of capital.
Defining capital, the Group uses the amount of net assets attributable to the Company’s equity owners and the Group’s
borrowings.
The Group manages the capital based on borrowings to total capitalisation ratio. Borrowings include loan liabilities.
To maintain or change its equity structure, the Company may vary the amount of dividend paid or sell assets in order
to reduce debts.
Total capitalisation is calculated as the sum of the total Group borrowings and total equity attributable to the equity
owners of the Company. The management does not currently have any specific target for the rate of borrowings to
total capitalisation.
The rate of borrowings to total capitalisation as at 31 December 2020 and 31 December 2019 are as follows:
Total borrowings
Total capitalisation
2020
2019
RUB’000
RUB’000
32,015,239
30,095,218
78,862,447
80,974,053
Total borrowings to total capitalisation ratio (percentage)
40.60%
37.17%
External requirements are imposed on the capital of the Group as defined by management in relation to long-
term loans provided by financial institutions to the Company and certain subsidiaries of the Company. The Group
analyses compliance with external requirements to the capital at each reporting date and when entering into new
loan agreements and lease contracts. There were no instances of non-compliance with externally imposed capital
requirements during 2020 and 2019. Management believes that the Group will be able to comply with its external
requirements to the capital during the whole term of agreements.
Fair value estimation
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The best evidence of fair value is price in an active market.
An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume
to provide pricing information on an ongoing basis.
The estimated fair values of financial instruments have been determined by the Group, using available market
information, where it exists, appropriate valuation methodologies and assistance of experts. However, judgement is
necessarily required to interpret market data to determine the estimated fair value. The Russian Federation continues
to display some characteristics of an emerging market and economic conditions continue to limit the volume of
activity in the financial markets. Market quotations may be outdated or reflect distress sale transactions and therefore
do not always represent the fair values of financial instruments. The Group has used all available market information in
estimating the fair value of financial instruments.
Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements
at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements are
valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices)
or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not based on observable
market data (that is, unobservable inputs). Management applies judgement in categorising financial instruments
using the fair value hierarchy. If a fair value measurement uses observable inputs that require significant adjustment,
that measurement is a Level 3 measurement. The significance of a valuation input is assessed against the fair value
measurement in its entirety.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
188
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
189
Notes to the consolidated
financial statements
The fair values in level 2 and level 3 of fair value hierarchy were estimated using discounted cash flows valuation
techniques. The fair value of unquoted fixed and floating interest rate instruments which are not quoted in an active
market was estimated based on estimated future cash flows expected to be received discounted at current interest
rates for new instruments with similar credit risk and remaining maturity.
Financial assets at amortised cost. The fair value of floating rate instruments is normally their carrying amount. The
estimated fair value of fixed interest rate instruments is based on estimated future cash flows expected to be received,
discounted at current interest rates for new instruments with similar credit risk and remaining maturity. Discount rates
used depend on credit risk of the counterparty.
The fair values of financial assets do not materially differ from their carrying amounts as the impact of discounting is
not significant.
Financial liabilities carried at amortised cost. Fair values of borrowings and other liabilities were determined using
valuation techniques.
As at 31 December 2020 and 31 December 2019 there were no fixed or floating interest rate instruments with stated
maturity denominated in a currency other than the Russian Rouble.
The fair value as at 31 December 2020 and 31 December 2019 of fixed interest rate instruments with stated
maturity denominated in Russian Rouble was estimated based on expected cash flows discounted using the rate
of similar Russian Rouble denominated instruments entered into by the Group close to 31 December 2020 and 31
December 2019, respectively. The discount rate used was 6.3% p.a. (2019: 7.5% p.a.) (Note 28). The fair value as at 31
December 2020 and 31 December 2019 of the fixed interest rate non-convertible bonds was equal to their quoted
price and the resulting fair value measurement is within level 1.
The fair value of liabilities repayable on demand or after a notice period (“demandable liabilities”) is estimated as the
amount payable on demand, discounted from the first date on which the amount could be required to be paid.
7. Critical accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
(a) Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below:
Tax legislation
i)
Russian tax, currency and customs legislation is subject to varying interpretations (Note 33).
(b) Critical judgements in applying in Group’s accounting policies
The Group also makes certain judgements, apart from those involving estimations, in the process of applying the
accounting policies. Judgements that have the most significant effect on the amounts recognised in the financial
statements and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities
within the next financial year are discussed below:
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 190
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
191
Notes to the consolidated
financial statements
Revenue recognition
The assessment of the accounting treatment of certain of the Group’s revenue contracts requires management to
make certain critical judgments. The judgments that had the most significant effect on management’s conclusion are
the following:
•
•
Identification of performance obligations
Operator’s services contracts involve the provision by the Group of a wide range of services. Management
believes that, although some of these services can be obtained by the clients from the market separately and
different combinations of services can be provided to different customers, in the context of each individual
contract with a customer, the services provided by the Group are highly dependent and interrelated with each
other and, therefore, are not distinct. In making this assessment, management noted that, despite the fact that
the Group’s contracts contain a promise to deliver multiple services, the nature of the promise within the context
of the contracts and the economic substance of the transaction is that the customers are purchasing integrated
operator’s services to which the individual services promised are inputs rather than separate services and
consequently this is considered to constitute a single performance obligation.
Assessment as to whether the Group is acting as an agent or principal for certain operator’s services contracts
Operator’s services are rendered using own or leased rolling stock. In those cases when the Group’s customers
do not interact with OAO “Russian Railways”, a full service is charged by the Group to its customers and the
OAO “Russian Railways” tariff is borne by the Group with or without further recharge to its customers. There are
certain characteristics indicating that the Group is acting as an agent in these arrangements, particularly the fact
that OAO “Russian Railways” tariffs are available to the public and therefore are known to the customer. However,
the services are rendered with the use of own or leased rolling stock and the Group bears the OAO “Russian
Railways” tariff to bring the rolling stock back or to the next destination. The Group is independent in its pricing
policy and considers its potential loss for empty run tariff.
Management’s position is that the Group acts as a principal in these arrangements and the Group accounts for
full receipts from customers as sales revenue and the OAO “Russian Railways” tariff is also included in cost of
sales. Management believes that the Group is acting as a principal in these arrangements as it is the party that
controls the services prior these are transferred to the customers and, through separate arrangements with OAO
“Russian Railways”, obtains the right to direct them to provide services on its behalf.
Had OAO “Russian Railways” tariff directly attributable to such services been excluded from revenues and cost of
sales for the year ended 31 December 2020 both would have decreased by RUB 10,957,305 thousand (2019: RUB
22,019,963 thousand).
8. Segmental information
The chief operating decision-maker has been identified as the Board of Directors of the Company. The Board reviews
the Group’s internal reporting in order to assess performance and allocate resources. Management has determined
the operating segments based on these reports.
The Board considers the business from two perspectives: by type of activity and by type of rolling stock used. From a
type of activity perspective, the Board reviews revenues with no further analysis of the underlying cost components.
From the type of rolling stock used perspective, the Board assesses the performance of each type of rolling stock at
the level of adjusted revenue. In particular, the Board reviews discrete financial information for gondola cars and rail
tank cars, whereas all other types of rolling stock (such as hopper cars and platforms) are reviewed together.
Adjusted revenue for reportable segments is the measure of profit looked at by the chief operating decision-maker
and this includes the revenues derived from the relating type of rolling stock used less infrastructure tariff paid for
the loaded trips of the relevant rolling stock and services provided by other transportation organisations. Further,
the Board receives information in respect of depreciation charges for rolling stock and right-of-use assets relating to
rolling stock, amortisation charges for customer relationships, impairment charges/reversals of impairment in respect
of rolling stock, right-of-use assets relating to rolling stock and customer relationships and loss on derecognition
arising on capital repairs. All other information provided to the Board is measured in a manner consistent with that in
the financial statements.
The Board also reviews additions to segment assets. Segment assets consist of rolling stock, right-of-assets relating
to rolling stock and customer relationships. Unallocated assets comprise all the assets of the Group except for rolling
stock, right-of-assets relating to rolling stock and customer relationships, as included within segment assets. Liabilities
are not segmented since they are not reviewed from that perspective by the chief operating decision maker. Capital
expenditure comprises additions of rolling stock to property, plant and equipment and additions of right-of-use assets
relating to rolling stock.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 192
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
193
Notes to the consolidated
financial statements
The Group does not have transactions between different business segments.
Gondola cars
Rail tank
cars
Other
railcars
Total
RUB’000
RUB’000
RUB’000
RUB’000
Gondola
cars
Rail tank
cars
Other
railcars
Total
RUB’000
RUB’000
RUB’000
RUB’000
Year ended 31 December 2020
Year ended 31 December 2019
Total revenue — operator’s services
39,043,539
24,050,218
774,017
63,867,774
Total revenue — operator’s services
62,009,387
27,955,714
1,194,311
91,159,412
Total revenue — operating lease
28,857
1,747,274
156,136
1,932,267
Total revenue — operating lease
148,207
1,434,219
51,340
1,633,766
Inter-segment revenue
—
—
—
—
Inter-segment revenue
—
—
—
—
Revenue (from external customers)
39,072,396
25,797,492
930,153
65,800,041
Revenue (from external customers)
62,157,594
29,389,933
1,245,651
92,793,178
less Infrastructure and locomotive tariffs — loaded trips
(5,757,613)
(4,789,170)
(177,087)
(10,723,870)
less Infrastructure and locomotive tariffs — loaded trips
(14,596,983)
(6,856,635)
(566,345)
(22,019,963)
less Services provided by other transportation
organisations
(2,460,601)
(4,373)
— (2,464,974)
less Services provided by other transportation
organisations
(4,046,206)
(85,793)
(2,243)
(4,134,242)
Adjusted revenue for reportable segments
30,854,182
21,003,949
753,066
52,611,197
Adjusted revenue for reportable segments
43,514,405
22,447,505
677,063
66,638,973
Depreciation and amortisation
(5,114,046)
(1,644,343)
(421,989)
(7,180,378)
Depreciation and amortisation
(4,958,834)
(1,259,444)
(302,671)
(6,520,949)
Loss on derecognition arising on capital repairs
(135,742)
(284,224)
(16)
(419,982)
Impairment of property, plant and equipment
—
—
64,889
64,889
Additions to non-current assets
(included in reportable segment assets)
6,177,481
1,676,870
835,829
8,690,180
Loss on derecognition arising on capital repairs
(133,987)
(336,103)
(1,656)
(471,746)
Reportable segment assets
53,059,2761
24,740,326
4,072,741
81,872,343
1 Includes RUB Nil thousand of intangible assets representing customer relationships.
Additions to non-current assets
(included in reportable segment assets)
6,720,628
4,760,126
2,215,587
13,696,341
Reportable segment assets
52,534,3591
21,925,369
3,769,887
78,229,615
1 Includes RUB 57,903 thousand of intangible assets representing customer relationships.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 194
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
195
Notes to the consolidated
financial statements
A reconciliation of total adjusted revenue to total profit before income tax is provided as follows:
Segment assets and liabilities are reconciled to the Group assets and liabilities as follows:
Adjusted revenue for reportable segments
Other adjusted revenues
Total adjusted revenue
Cost of sales (excl. Infrastructure and locomotive tariffs — loaded trips,
services provided by other transportation organisations, reversal of
impairment of property, plant and equipment, depreciation of property,
plant and equipment and right-of-use assets, amortisation of intangible
assets and loss on derecognition arising on capital repairs)
Selling, marketing and administrative expenses (excl. depreciation,
amortisation and impairments)
Depreciation and amortisation
Net impairment losses on trade and other receivables
Reversal of impairment of property, plant and equipment
Loss on derecognition arising on capital repairs
Other income
Other gains/(losses) — net
Finance income
Finance costs
(3,365,169)
(3,894,885)
(7,683,620)
(6,915,857)
(5,511)
—
(12,699)
64,889
(419,982)
(471,746)
1,000,232
107,765
133,508
(99,322)
18,811,071
32,119,830
263,968
533,857
(2,510,495)
(2,529,098)
Net foreign exchange transaction gains/(losses) on financing activities
147,008
(379,824)
Profit before income tax
16,711,552
29,744,765
2020
2019
RUB’000
RUB’000
52,611,197
66,638,973
2020
2019
Assets
Liabilities
Assets
Liabilities
RUB’000
RUB’000
RUB’000
RUB’000
2,322,516
2,200,696
Segment assets/ liabilities
81,872,343
—
78,229,615
—
54,933,713
68,839,669
Unallocated:
(25,756,357)
(25,523,727)
Deferred tax liabilities
—
8,862,587
—
7,592,182
Current income tax assets/liabilities
266,024
100,226
501,087
127,694
Property, plant and equipment
Right-of-use assets
Intangible assets
Assets classified as held for sale
Other assets
Trade receivables
Loans and other receivables
Inventories
Cash and cash equivalents
Borrowings
Other lease liabilities
Trade and other payables
Contract liabilities
3,078,585
550,428
1,460
10
3,136,086
3,701,546
51,370
691,033
4,978,322
—
—
—
—
—
—
—
—
—
3,187,618
583,763
3,413
40,224
5,526,920
3,209,566
48,019
1,722,781
6,521,543
—
—
—
—
—
—
—
—
—
— 32,015,239
—
—
—
1,404,596
2,197,994
972,752
—
—
—
—
30,095,218
1,530,883
2,446,614
1,255,893
Total
98,327,207
45,553,394
99,574,549
43,048,484
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 196
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
197
Notes to the consolidated
financial statements
Geographic information
Revenues from external customers
The revenue information above is based on the location where the sale has originated, i.e. on the location of the
respective subsidiary of the Group.
Revenue
Russia
Estonia
Ukraine
2020
2019
RUB’000
RUB’000
66,460,662
93,365,285
1,732,640
1,288,712
174,102
339,877
68,367,404
94,993,874
Non-current assets
Russia
Estonia
Ukraine
Cyprus
In the periods set out below, certain customers, included within the revenue generated in Russia, accounted for
greater than 10% of the Group’s total revenues:
Revenue
Customer A — rail tank cars segment
Customer B — gondola cars segment
Customer C — gondola cars segment
2020
2019
RUB’000
% revenue
RUB’000
% revenue
15,073,614
12,582,629
8,730,718
22
18
13
17,913,115
11,684,413
28,837,359
19
12
30
The table below presents the Group’s non-current assets, other than financial instruments, deferred tax assets, post-
employment benefit assets, and rights arising under insurance contracts:
2020
2019
RUB’000
RUB’000
72,389,098
71,440,343
12,822,936
10,163,687
530,449
524,024
13,311
11,716
85,755,794
82,139,770
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 198
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
199
Notes to the consolidated
financial statements
9. Non-IFRS financial information
In addition to financial information under IFRS, the Group also use certain measures not recognised by EU IFRS or IFRS
(referred to as “non-IFRS measures”) as supplemental measures of the Group’s operating and financial performance.
The management believes that these non-IFRS measures provide valuable information to readers, because they enable
them to focus more directly on the underlying day-to-day performance of the Group’s business. These might not be
consistent with measures (of similar description) used by other entities.
Adjusted Revenue
Adjusted Revenue is defined as “Total revenue” adjusted for “pass through” items: “Infrastructure and locomotive
tariffs: loaded trips” and “Services provided by other transportation organisations”. “Infrastructure and locomotive
tariffs: loaded trips” comprises revenue resulting from tariffs that customers pay to the Group and the Group pays
on to OAO “Russian Railways”, which are reflected in equal amounts in both the Group’s Total revenue and Cost of
sales. “Services provided by other transportation organisations” is revenue resulting from the tariffs that customers
pay to the Group and the Group pays on to third-party rail operators for subcontracting their rolling stock, which are
reflected in equal amounts in both the Group’s Total revenue and Cost of sales.
The following table provides details of Adjusted revenue for 2020 and 2019 and its reconciliation to Total revenue.
Total revenue
Minus “pass through” items
2020
2019
RUB’000
RUB’000
68,367,404
94,993,874
Total Operating Cash Costs and Non-cash Costs
In order to show the dynamics and nature of the Group’s cost base, individual items of Total cost of sales, selling and
marketing costs and administrative expenses have been regrouped into Operating cash costs and Operating non-cash
costs.
Total Operating Cash Costs represent operating cost items payable in cash and calculated as “Total cost of sales,
selling and marketing costs and administrative expenses” less the “pass through” items: “Infrastructure and
locomotive tariffs: loaded trips” and “Services provided by other transportation organisations” and non-cash items:
“Depreciation of property, plant and equipment”, “Depreciation of right-of-use assets”, “Amortisation of intangible
assets”, “Net impairment losses on trade and other receivables”, “Reversal of impairment/(impairment) of property,
plant and equipment”, “Net loss/(gain) on sale of property, plant and equipment” and “Loss on derecognition arising
on capital repairs”.
Total Operating Non-cash Costs include cost items such as “Depreciation of property, plant and equipment”,
“Depreciation of right-of-use assets”, “Amortisation of intangible assets”, “Loss on derecognition arising on capital
repairs”, “Net impairment losses on trade and other receivables” “Reversal of impairment/(impairment) of property,
plant and equipment” and “Net loss/(gain) on sale of property, plant and equipment”.
Other Operating Cash Costs include cost items such as “Advertising and promotion”, “Auditors’ remuneration”,
“Communication costs”, “Information services”, “Legal, consulting and other professional fees”, “Expense relating to
short-term leases — office”, “Expense relating to short-term leases — tank containers”, “Taxes (other than income tax
and value added taxes)” and “Other expenses”.
Infrastructure and locomotive tariffs: loaded trips
(10,957,305)
(22,019,963)
Services provided by other transportation organisations
(2,476,386)
(4,134,242)
“Pass through” cost items
Adjusted Revenue
54,933,713
68,839,669
Infrastructure and locomotive tariffs: loaded trips
(10,957,305)
(22,019,963)
Services provided by other transportation organisations
(2,476,386)
(4,134,242)
Total cost of sales, selling and marketing costs and administrative expenses
(adjusted for “pass through” cost items)
(37,230,639)
(36,754,025)
Total Operating Cash Costs
(29,121,210)
(29,408,565)
Infrastructure and locomotive tariffs — empty runs and other tariffs
(16,797,608)
(15,739,194)
Repairs and maintenance
Employee benefit expense
(4,261,067)
(4,403,342)
(4,153,507)
(4,483,225)
2020
2019
RUB’000
RUB’000
(13,433,691)
(26,154,205)
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 200
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
201
Notes to the consolidated
financial statements
Expense relating to short-term leases — rolling stock
(824,487)
(721,529)
Fuel and spare parts — locomotives
Engagement of locomotive crews
Other Operating Cash Costs
Advertising and promotion
Auditors’ remuneration
Communication costs
Information services
Legal, consulting and other professional fees
Expense relating to short-term leases — tank containers
Expense relating to short-term leases — office
Taxes (other than on income and value added taxes)
Other expenses
Total Operating Non-Cash Costs
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Loss on derecognition arising on capital repairs
Net impairment losses on trade and other receivables
Reversal of impairment of property, plant and equipment
Net loss on sale of property, plant and equipment
(1,629,874)
(1,914,447)
(420,905)
(774,990)
(1,033,762)
(1,371,838)
(34,814)
(55,262)
(26,375)
(15,506)
(38,992)
(54,780)
(34,776)
(18,666)
(69,055)
(48,469)
(23,572)
—
(109,482)
(139,214)
(24,687)
9,031
(675,009)
(1,045,972)
(8,109,429)
(7,345,460)
(6,968,694)
(5,794,912)
(655,070)
(424,220)
(59,856)
(696,725)
(419,982)
(471,746)
(5,511)
—
(316)
(12,699)
64,889
(10,047)
Adjusted EBITDA
Adjusted EBITDA represents EBITDA excluding “Net foreign exchange transaction gains/(losses) from financing
activities”, “Share of loss of associate”, “Other gains/(losses) - net”, “Net loss/(gain) on sale of property, plant and
equipment”, “Reversal of impairment/(impairment) of property, plant and equipment”, “Loss on derecognition arising
on capital repairs” and “Reversal of impairment of intangible assets”.
EBITDA represents “Profit for the period” before “Income tax expense”, “Finance costs - net” (excluding “Net foreign
exchange transaction gains/(losses) on financing activities), “Depreciation of property, plant and equipment”,
“Depreciation of right-of-use assets” and “Amortisation of intangible assets”.
The following table provides details on Adjusted EBITDA for 2020 and 2019 and its reconciliation to EBITDA and Profit
for the year:
Profit for the year
Plus (Minus)
Income tax expense
Finance costs — net
2020
2019
RUB‘000
RUB‘000
12,186,847
22,653,332
4,524,705
7,091,433
2,099,519
2,375,065
Net foreign exchange transaction gains/(losses) on financing activities
147,008
(379,824)
Amortisation of intangible assets
Depreciation of right-of-use assets
Depreciation of property, plant and equipment
EBITDA
Plus (Minus)
59,856
696,725
655,070
424,220
6,968,694
5,794,912
26,641,699
38,655,863
Loss on derecognition arising on capital repairs
419,982
471,746
Total cost of sales, selling and marketing costs and administrative expenses
(50,664,330)
(62,908,230)
Net foreign exchange transaction gains/(losses) on financing activities
(147,008)
379,824
Other gains/(losses) — net
Net loss on sale of property, plant and equipment
Reversal of impairment of property, plant and equipment
Adjusted EBITDA
(107,765)
316
—
99,322
10,047
(64,889)
26,807,224
39,551,913
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 202
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
203
Notes to the consolidated
financial statements
Free Cash Flow
Free Cash Flow is calculated as “Cash generated from operations” (after “Changes in working capital”) less “Tax paid”,
“Interest paid on bank borrowings and non-convertible unsecured bonds”, “Interest paid on leases with financial
institutions”, “Interest paid on other lease liabilities”, “Purchases of property, plant and equipment”, “Purchases of
intangible assets”, “Acquisition of subsidiary undertakings - net of cash acquired” and “Principal elements of lease
payments for other lease payments”.
Total CAPEX calculated on a cash basis as the sum of “Purchases of property, plant and equipment”, “Purchases of
intangible assets” and “Acquisition of subsidiary undertakings - net of cash acquired”.
The Attributable Free Cash Flow means Free Cash Flow less Adjusted profit attributable to non-controlling interests.
Adjusted Profit Attributable to Non-controlling Interests is calculated as “Profit attributable to non-controlling
interests” less share of “Impairment of property, plant and equipment” and “Impairment of intangible assets”
attributable to non-controlling interests.
The following table sets out details on Free Cash Flow and Attributable Free Cash Flow for 2020 and 2019, and its
reconciliation to Cash generated from operations.
Cash generated from operations
Tax paid
2020
2019
RUB’000
RUB’000
28,644,415
35,422,218
(3,051,888)
(6,018,371)
Interest paid on bank borrowings and non-convertible unsecured bonds
(2,314,937)
(2,017,915)
Interest paid on leases with financial institutions
Interest paid on other lease liabilities
Purchases of property, plant and equipment
Principal elements of other lease payments
Purchases of intangible assets
Total CAPEX
Free Cash Flow
Attributable Free Cash Flow
(80,813)
(167,048)
(113,771)
(111,911)
(6,941,159)
(13,515,985)
(672,432)
(339,597)
—
(832)
6,941,159
13,516,817
15,103,243
13,250,559
13,502,931
11,404,878
Net Debt and Net Debt to Adjusted EBITDA
Net Debt is defined as the sum of total borrowings (including interest accrued) less “Cash and cash equivalents”.
Total Debt is defined as total borrowings (including interest accrued)
The following table sets out the details on the Group’s Net Debt and Net Debt to Adjusted EBITDA at 31 December 2020
and 2019, and reconciliation of Net Debt to Total Debt.
Total debt
Minus
Cash and cash equivalents
Net Debt
Net Debt to Adjusted EBITDA
2020
2019
RUB’000
RUB’000
32,015,239
30,095,218
4,978,322
6,521,543
27,036,917
23,573,675
1.01x
0.60x
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 204
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
205
Notes to the consolidated
financial statements
10. Revenue
(a) Disaggregation of revenue
(b) Liabilities related to contracts with customers
The Group has recognised the following liabilities related to contracts with customers as of 31 December 2019 and 31
December 2020:
Railway transportation — operator’s services (tariff borne by the Group)
27,197,234
49,141,357
Railway transportation — operator’s services (tariff borne by the client)
36,670,540
42,018,055
Revenue from specialised container transportation
2,167,613
1,814,551
Contract liabilities relating to railway transportation
contracts (current)
Contract liabilities relating to railway transportation
contracts (non-current)
2020
2019
RUB’000
RUB’000
31 December 2020 31 December 2019
1 January 2019
RUB’000
964,042
RUB’000
RUB’000
1,244,702
2,673,467
8,710
11,191
—
Other
399,750
386,145
Total contract liabilities
972,752
1,255,893
2,673,467
Total revenue from contracts with customers recognised over time
66,435,137
93,360,108
Operating lease of rolling stock
Total revenue
1,932,267
1,633,766
68,367,404
94,993,874
Note: Revenue from railway transportation — operators services (tariff borne by the Group) includes infrastructure and
locomotive tariffs for loaded trips for the year ended 31 December 2020 amounting to RUB 10,957,305 thousand (for
the year ended 31 December 2019: RUB 22,019,963 thousand) and the cost of engaging the fleet from third parties
recharged to clients of the Group amounting to RUB 2,476,386 thousand (2019: RUB 4,134,242 thousand).
Contract liabilities represent advances from customers for transportation services.
(c) Revenue recognised in relation to contract liabilities
The Group’s revenue for the year ended 31 December 2020 includes the entire contract liability balance of RUB
1,230,616 thousand as of 1 January 2020 (year ended 31 December 2019: RUB 2,673,467 as of 1 January 2019).
The Group does not have any contracts where the period of provision of the services (that is, the period between
the start and completion of a trip) exceeds one year. As permitted under IFRS 15, the transaction price allocated to
unsatisfied (or partially unsatisfied) performance obligations as of the balance sheet date is not disclosed.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 206
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
207
Notes to the consolidated
financial statements
11. Expenses by nature
2020
2019
RUB’000
RUB’000
Cost of sales
Selling, marketing and administrative expenses
Infrastructure and locomotive tariffs: loaded trips
10,957,305
22,019,963
Depreciation of property, plant and equipment
Infrastructure and locomotive tariffs: empty run trips and other tariffs
16,797,608
15,739,194
Depreciation of right-of-use assets
Services provided by other transportation organisations
2,476,386
4,134,242
Amortisation of intangible assets
Expense relating to short-term leases (rolling stock)
824,487
721,529
Gain on sale of property, plant and equipment
Expense relating to short-term leases — tank containers
23,572
—
Employee benefit expense
Employee benefit expense
Repairs and maintenance
1,517,573
1,511,766
Net impairment losses on trade and other receivables
4,261,067
4,403,342
Expense relating to short-term leases (office)
Depreciation of property, plant and equipment
6,888,459
5,735,069
Auditors’ remuneration
Depreciation of right-of-use assets
Loss on derecognition arising on capital repairs
Amortisation of intangible assets
Fuel and spare parts — locomotives
Engagement of locomotive crews
507,671
419,982
316,818
471,746
Legal, consulting and other professional fees
Advertising and promotion
59,839
696,707
Communication costs
1,629,874
1,914,447
Information services
420,905
774,990
Taxes (other than income tax and value added taxes)
Loss/(gain) on sale of property, plant and equipment
6,585
11,495
Other expenses
(Reversal of impairment)/impairment of property, plant and equipment
—
(64,889)
Total selling, marketing and administrative expenses
Other expenses
Total cost of sales
274,686
446,964
47,065,999
58,833,383
2020
2019
RUB’000
RUB’000
80,235
147,399
17
59,843
107,402
18
(6,269)
(1,448)
2,635,934
2,971,459
5,511
109,482
55,262
69,055
34,814
26,375
15,506
24,687
12,699
139,214
54,780
48,469
38,992
34,776
18,666
(9,031)
400,323
599,008
3,598,331
4,074,847
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 208
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
209
Notes to the consolidated
financial statements
2020
2019
Services provided by other transportation organisations
2,476,386
4,134,242
Total expenses
Auditors’ remuneration
Depreciation of property, plant and equipment (Note 17)
6,968,694
5,794,912
Legal, consulting and other professional fees
RUB’000
RUB’000
Expense relating to short-term leases — tank containers
Depreciation of right-of-use assets (Note 18)
Loss on derecognition arising on capital repairs (Note 17)
Amortisation of intangible assets (Note 19)
Reversal of impairment of property, plant and equipment (Note 17)
Net loss on sale of property, plant and equipment (Note 17)
Employee benefit expense (Note 13)
Net impairment losses on trade and other receivables
Expense relating to short-term leases (rolling stock)
Expense relating to short-term leases (office)
Repairs and maintenance
Fuel and spare parts — locomotives
Engagement of locomotive crews
655,070
424,220
419,982
471,746
59,856
696,725
—
316
(64,889)
10,047
4,153,507
4,483,225
5,511
824,487
109,482
12,699
721,529
139,214
4,261,067
4,403,342
1,629,874
1,914,447
420,905
774,990
23,572
55,262
69,055
34,814
26,375
15,506
24,687
—
54,780
48,469
38,992
34,776
18,666
(9,031)
Advertising and promotion
Communication costs
Information services
Taxes (other than income tax and value added taxes)
Other expenses
675,009
1,045,972
Total cost of sales, selling and marketing costs and administrative expenses
50,664,330
62,908,230
1 Depreciation of property, plant and equipment for the year ended 31 December 2020 includes RUB 90,047 thousand (2019: RUB 216,114 thousand)
relating to depreciation of right-of-use assets presented within property, plant and equipment (Note 17). The entire amount is recognised within
‘Cost of sales’.
Note: The auditors’ remuneration stated above includes fees of RUB 18,486 thousand (2019: RUB 16,398 thousand)
for statutory audit services and RUB 5,139 thousand (2019: RUB 4,762 thousand) for other assurance services charged
by the Company’s statutory audit firm. The rest of the auditors’ remuneration relates to fees for audit services
charged by the auditors of the subsidiaries of the Company.
Infrastructure and locomotive tariffs: loaded trips
10,957,305
22,019,963
Infrastructure and locomotive tariffs: empty run trips and other tariffs
16,797,608
15,739,194
Legal, consulting and other professional fees include RUB 737 thousand for the year 2020 (RUB 502 thousand for the
year 2019) in relation to fees paid to the Company’s statutory audit firm for tax consultancy services.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 210
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
211
Notes to the consolidated
financial statements
12. Other gains/(losses) — net
14. Finance income and costs
Other gains
Other losses
Net foreign exchange gains (Note 16)
Total other gains/(losses) — net
2020
2019
RUB’000
RUB’000
350,475
37,245
Interest expense:
(323,683)
(217,289)
Bank borrowings
80,973
80,722
Non-convertible bonds
107,765
(99,322)
Interest expenses on loans
Other interest expense
2020
2019
RUB’000
RUB’000
(1,482,228)
(1,456,246)
(808,258)
(743,298)
(5,193)
(1,887)
(5,207)
(9,039)
Total interest expense calculated using the effective interest rate method
(2,297,566)
(2,213,790)
13. Employee benefit expense
Leases with financial institutions
Wages and salaries
Termination benefits
Bonuses
Share based payment expense (Note 21)
Social insurance costs
Total employee benefit expense
2020
2019
RUB’000
RUB’000
2,392,160
2,199,520
7,238
5,212
998,505
1,454,292
28,931
83,319
726,673
740,882
4,153,507
4,483,225
Other lease liabilities
Total interest expense
Other finance costs
Total finance costs
Interest income:
Bank balances
Short term deposits
Loans to third parties
(74,468)
(165,242)
(113,099)
(117,589)
(2,485,133)
(2,496,621)
(25,362)
(32,477)
(2,510,495)
(2,529,098)
189,505
122,278
27,083
374,302
120
616
Average number of employees during the year
1,664
1,569
Total interest income calculated using the effective interest rate method
216,708
497,196
Finance leases — third parties
Total finance income
47,260
36,661
263,968
533,857
Net foreign exchange transaction (losses)/gains on borrowings and other liabilities
(5,509)
206,966
Net foreign exchange transaction gains/(losses) on cash and cash equivalents and
other monetary assets
152,517
(586,790)
Net foreign exchange transaction gains/(losses) on financing activities (Note 16)
147,008
(379,824)
Net finance costs — net
(2,099,519)
(2,375,065)
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
212
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
213
Notes to the consolidated
financial statements
15. Income tax expense
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the applicable tax
rates as follows:
Current tax:
Corporation tax
Withholding tax on dividends
Defence contribution
Total current tax
Deferred tax (Note 30):
Origination and reversal of temporary differences
Total deferred tax
Income tax expense
2020
2019
RUB’000
RUB’000
2,185,948
4,767,114
1,073,231
1,017,005
2
—
3,259,181
5,784,119
1,265,524
1,307,314
1,265,524
1,307,314
4,524,705
7,091,433
Profit before tax
Tax calculated at domestic tax rates applicable to profits in the respective
countries
Tax effects of:
Expenses not deductible for tax purposes
Allowances and income not subject to tax
2020
2019
RUB’000
RUB’000
16,711,552
29,744,765
3,599,477
6,484,368
63,554
234,253
(120,269)
(3,476)
Tax effect of tax losses for which no deferred tax asset was recognised
(84,724)
(14,427)
Defence contribution
Withholding taxes:
Estonian income tax arising on distribution1
Dividend withholding tax provision in relation to intended dividend distribution
of subsidiaries
Tax charge
2
—
260,929
23,656
805,736
367,059
4,524,705
7,091,433
(1) Estonian tax law calls for profits to be taxed at the time of distribution and not during the year in which they arise. During the years 2020 and 2019,
the Group incurred taxes on distributions from Estonian subsidiaries.
The Company is subject to income tax on taxable profits at the rate 12.5%. Brought forward losses of the Company of
only five years may be utilised.
Under certain conditions, interest may be exempt from income tax and be subject only to special contribution for
defence at the rate of 30%. In certain cases dividends received from abroad may be subject to special contribution for
defence at the rate of 17%. Further, in certain cases dividends received by the Company from other Cyprus tax resident
companies may also be subject to special contribution for defence. Gains on disposal of qualifying titles (including
shares, bonds, debentures, rights thereon etc.) are exempt from Cyprus income tax.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 214
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
215
Notes to the consolidated
financial statements
For Russian subsidiaries, the annual profit is taxed at 20%. Withholding tax is applied to dividends distributed to the
Company by its Russian subsidiaries at the rate of 5% on gross dividends declared; such tax is withheld at source by
the respective subsidiary and is paid to the Russian tax authorities at the same time when the payment of dividend
is effected. Dividend withholding tax provision is recognised in the respective periods for the withholding taxes that
would be payable by subsidiaries where there is an intention that earnings will be distributed to the Company in the
form of dividends.
For subsidiaries in Estonia, the annual profit earned by enterprises is not taxed and thus no income tax arise. Instead of
taxing the net profit, the distribution of statutory retained earnings is subject to a tax rate of 20% of net dividend paid
which, under certain conditions, can decrease to 14%.
For the subsidiary in Ukraine the annual profit was taxed at a tax rate of 18%.
The Group has not recognised any tax in relation to other comprehensive income as all elements of other
comprehensive income are not subject to tax.
16. Net foreign exchange losses
The exchange differences credited to the income statement are included as follows:
Finance income and costs (Note 14)
Other gains/(losses) — net (Note 12)
2020
2019
RUB’000
RUB’000
147,008
(379,824)
80,973
80,722
227,981
(299,102)
17. Property, plant and equipment
At 1 January 2019
Cost
Rolling
stock
Land and
buildings
Motor
vehicles
Other
Total
RUB’000
RUB’000
RUB’000
RUB’000
RUB’000
107,436,162
347,949
201,242
2,662,667
110,648,020
Accumulated depreciation
(35,169,174)
(91,009)
(103,276)
(519,658)
(35,883,117)
Net book amount
72,266,988
256,940
97,966
2,143,009
74,764,903
Year ended 31 December 2019
Opening net book amount
72,266,988
256,940
97,966
2,143,009
74,764,903
Additions
Disposals
Assets classified as held for sale
13,179,785
4,133
59,192
892,686
14,135,796
(92,175)
(40,224)
—
—
(3,025)
(6,496)
(101,696)
—
—
(40,224)
Depreciation charge (Note 11)
(5,546,150)
(12,446)
(34,022)
(202,294)
(5,794,912)
Transfers
Reversal of impairment charge (Note 11)
Transfer to inventories
4,526
64,889
(523,000)
Derecognition arising on capital repairs
(471,746)
103
(2,704)
(1,925)
—
—
—
—
—
(432)
—
—
(87)
—
64,889
(523,519)
(471,746)
Currency translation differences
(1,497,866)
(1,652)
(1,062)
(266)
(1,500,846)
Closing net book amount
77,345,027
247,078
115,913
2,824,627
80,532,645
At 31 December 2019
Cost
113,371,461
349,562
218,066
3,491,879
117,430,968
Accumulated depreciation
(36,026,434)
(102,484)
(102,153)
(667,252)
(36,898,323)
Net book amount
77,345,027
247,078
115,913
2,824,627
80,532,645
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
216
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
217
Notes to the consolidated
financial statements
At 1 January 2020
Cost
Rolling
stock
Land and
buildings
Motor
vehicles
Other
Total
RUB’000
RUB’000
RUB’000
RUB’000
RUB’000
113,371,461
349,562
218,066
3,491,879
117,430,968
Accumulated depreciation
(36,026,434)
(102,484)
(102,153)
(667,252)
(36,898,323)
Net book amount
77,345,027
247,078
115,913
2,824,627
80,532,645
Year ended 31 December 2020
Opening net book amount
77,345,027
247,078
115,913
2,824,627
80,532,645
Additions
Disposals
Assets classified as held for sale
8,389,050
19,375
53,531
163,834
8,625,790
(63,288)
40,214
—
—
(18,927)
—
(916)
—
(83,131)
40,214
Depreciation charge (Note 11)
(6,652,230)
(14,683)
(37,204)
(264,577)
(6,968,694)
Transfers
Transfer to inventories
10,391
(381,070)
Derecognition arising on capital repairs
(419,982)
—
—
—
—
(10,391)
—
(5,150)
(96)
(386,316)
Currency translation differences
3,074,244
3,484
2,070
The table below shows the movement in the said right-of-use assets within the years 2020 and 2019:
Opening net book amount
Transfer to owned rolling stock
Depreciation charge (Note 11)
Closing net book amount
2020
2019
RUB’000
RUB’000
3,198,262
3,414,376
(3,108,215)
—
(90,047)
(216,114)
—
3,198,262
Useful lives of rolling stock
The estimation of the useful lives of items of rolling stock is a matter of judgment based on the experience with
similar assets. The future economic benefits embodied in the assets are consumed principally through use. However,
other factors, such as technical or commercial obsolescence and wear and tear, often result in the diminution of
the economic benefits embodied in the assets. The Group assesses the remaining useful lives of its rolling stock as
of each balance sheet date taking into account the current technical conditions of the assets and estimated period
during which the assets are expected to earn benefits for the Group. The following primary factors are considered:
(a) the expected usage of the assets; (b) the expected physical wear and tear, which depends on operational factors
and maintenance programme; and (c) the technical or commercial obsolescence arising from changes in market
conditions.
—
—
617
(419,982)
3,080,415
Based on management’s assessment, the useful economic life of the Group’s rolling stock as of 31 December 2020 is
considered appropriate.
Closing net book amount
81,342,356
255,254
110,233
2,713,098
84,420,941
At 31 December 2020
Cost
123,222,340
374,471
207,796
3,642,951
127,447,558
Accumulated depreciation
(41,879,984)
(119,217)
(97,563)
(929,853)
(43,026,617)
Net book amount
81,342,356
255,254
110,233
2,713,098
84,420,941
The net carrying amount of rolling stock as at 1 January 2020 and for the year ended 31 December 2020 includes right-
of-use assets relating to rolling stock held under leases with financial institutions that include purchase options that
are reasonably certain to be exercised, in accordance with the Group’s accounting policy for leases, as disclosed in
Note 4.
Impairment assessment of rolling stock as of 31 December 2020
The Group assesses at each balance sheet date whether there are indications for impairment of the Group’s property,
plant and equipment, in accordance with its accounting policy for impairment of non-financial assets, as set out in
Note 4.
As of 31 December 2020, the management considered the deterioration of the economic environment, the weak
prevailing industry conditions and the COVID-19 pandemic related uncertainties, as these are set out in Note 33,
as indications of impairment of the Group’s cash generating units (“CGUs”) and proceeded to perform impairment
assessments to determine if there is an impairment loss.
As a result of the impairment assessment, no impairment losses were noted. The impairment testing for all the CGUs,
other than the Estonian rail tank cars/operating leasing CGU, indicated a significant headroom in the recoverable
amount over the carrying amount of these CGUs.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
218
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
219
Notes to the consolidated
financial statements
Estonian rail tank cars/operating leasing CGU
The recoverable amount of the Estonian rail tank cars/operating leasing CGU amounting to RUB 12,786,087 million was
determined based on market approach using level 2 inputs.
The fair value less cost to sell was determined based on the prices quoted in RUB by major retailers of rail cars dealing
in the second hand market of the specific rolling stock held by the CGU in the Russian Federation (being the primary
market for these assets), adjusted to take into account the age of each specific asset in the possession of the CGU
and expenses necessary to bring the assets to the location and condition that enables their current use, assessed by
management as being their highest and best use.
If the selling price of the rolling stock had been 10% lower the recoverable amount would decrease resulting into an
impairment loss of RUB 259 million to be recognised in respect of the rolling stock of this CGU.
If the year end exchange rate between RUB and EUR had devalued by 20%, the recoverable amount would decrease
resulting into an impairment loss of RUB 1,175 million to be recognised in respect of the rolling stock of this CGU.
In the cash flow statement, proceeds from sale of property, plant and equipment comprise:
Net book amount
Loss on sale of property, plant and equipment (Note 11)
Consideration from sale of property, plant and equipment
The consideration from sale of property, plant and equipment is further analysed as follows:
Cash consideration received within year
Amount receivable
Movement in advances received for sales of property, plant and equipment
2020
2019
RUB’000
RUB’000
83,131
101,696
(316)
(10,047)
82,815
91,649
2020
2019
RUB’000
RUB’000
66,765
91,649
1,300
14,750
82,815
—
—
91,649
The total net book value of pledged property, plant and equipment (included above) which are held as collateral for
the borrowings and loans are as follows (Note 28):
Rolling stock
Other (tank-containers)
2020
2019
RUB’000
RUB’000
8,084,292
15,190,536
1,387,955
1,516,212
9,472,247
16,706,748
Depreciation expense of RUB 6,888,459 thousand in 2020 (2019: RUB 5,735,069 thousand) has been charged to “cost
of sales” and RUB 80,235 thousand in 2020 (2019: RUB 59,843 thousand) has been charged to “selling, marketing and
administrative expenses”. Reversal of impairment charge of RUB 64,889 thousand in 2019 has been charged to “cost
of sales”.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
220
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
221
Notes to the consolidated
financial statements
18. Right-of-use assets
Rolling stock
Land and
buildings
Other
Total
RUB’000
RUB’000
RUB’000
RUB’000
Year ended 31 December 2019
Opening net book amount
590,656
27,421
102,803
720,880
Additions
Disposals through subleases
516,556
685,589
—
(85,474)
—
—
1,202,145
(85,474)
Depreciation charge (Note 11)
(279,984)
(107,939)
(36,297)
(424,220)
Currency translation differences
Other
—
(543)
(2,340)
—
—
—
(2,340)
(543)
Summarised information for the Group’s right-of-use assets
In accordance with the Group’s accounting policy for leases as disclosed in Note 4, right-of-use assets and associated
lease liabilities are presented as separate lines on the face of the balance sheet, except for right-of-use assets and
associated lease liabilities arising from leases with financial institutions that that include purchase options that are
reasonably certain to be exercised due to the exercise price being a nominal amount compared to the fair value of the
leased asset on the exercise date. The latter are presented within the same line item as the corresponding underlying
assets would be presented if they were owned and within borrowings, respectively. Management believes that this
presentation best reflects the substance of the leases with financial institutions, being similar to that of purchases via
collateralised borrowings.
The net carrying amount of the Group’s right-of-use assets as at 31 December 2019 and 31 December 2020 is as
follows:
Rolling stock
Land and
buildings
Other
Total
RUB’000
RUB’000
RUB’000
RUB’000
As at 31 December 2019
826,685
517,257
66,506
1,410,448
31 December 2019
Rolling stock
Land and
buildings
Other
Total
RUB’000
RUB’000
RUB’000
RUB’000
Net book amount
31 December 2020
Year ended 31 December 2020
Opening net book amount
Additions
Disposals
826,685
301,130
(30,996)
517,257
66,506
1,410,448
Net book amount
— recognised on the face of the balance sheet
99,050
303,152
703,332
(30,996)
4,024,947
517,257
66,506
4,608,710
529,987
529,987
480,306
70,122
1,080,415
480,306
70,122
1,080,415
— recognised on the face of the balance sheet
826,685
517,257
66,506
1,410,448
— included within property, plant and equipment
3,198,262
—
—
3,198,262
Disposals through subleases
—
(255,447)
(255,447)
Change of terms of leases
(96,587)
9,195
(7,737)
(95,129)
Depreciation charge (Note 11)
(470,245)
(148,473)
(36,352)
(655,070)
Currency translation differences
—
3,277
—
3,277
As at 31 December 2020
529,987
480,306
70,122
1,080,415
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
222
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
223
Notes to the consolidated
financial statements
The additions to the Group’s right-of-use assets and depreciation charge during the year ended 31 December 2019 and
31 December 2020 are as follows:
19. Intangible assets
Year ended 31 December 2019
Additions
— recognised on the face of the balance sheet
Total
Depreciation charge
Rolling stock
Land and
buildings
Other
Total
RUB’000
RUB’000
RUB’000
RUB’000
516,556
516,556
685,589
685,589
—
—
1,202,145
1,202,145
— recognised on the face of the balance sheet
(279,984)
(107,939)
(36,297)
(424,220)
— included within property, plant and equipment
(216,114)
—
—
(216,114)
Total
(496,098)
(107,939)
(36,297)
(640,334)
Year ended 31 December 2020
Additions
— recognised on the face of the balance sheet
Total
Depreciation charge
301,130
301,130
99,050
99,050
303,152
703,332
303,152
703,332
— recognised on the face of the balance sheet
(470,245)
(148,473)
(36,352)
(655,070)
— included within property, plant and equipment
(90,047)
—
—
(90,047)
Total
(560,292)
(148,473)
(36,352)
(745,117)
The total cash outflow for leases in 2020 was RUB 2,897,814 thousand (2019: RUB 2,110,197 thousand).
At 1 January 2019
Cost
Accumulated amortisation
Net book amount
Year ended 31 December 2019
Opening net book amount
Amortisation charge (Note 11)
Additions
Closing net book amount
At 31 December 2019
Cost
Accumulated amortisation
Net book amount
Year ended 31 December 2020
Opening net book amount
Amortisation charge (Note 11)
Closing net book amount
At 31 December 2020
Cost
Accumulated amortisation
Net book amount
Computer
software
Customer
relationships
Total
RUB’000
RUB’000
RUB’000
10,934
(6,443)
4,491
4,491
(1,910)
832
3,413
4,863,734
4,874,668
(4,111,016)
(4,117,459)
752,718
757,209
752,718
757,209
(694,815)
(696,725)
—
832
57,903
61,316
11,766
4,863,734
4,875,500
(8,353)
(4,805,831)
(4,814,184)
3,413
57,903
61,316
3,413
(1,953)
1,460
11,766
(10,306)
1,460
57,903
61,316
(57,903)
(59,856)
—
—
—
—
1,460
11,766
(10,306)
1,460
Amortisation of RUB 59,839 thousand (2019: RUB 696,707 thousand) has been charged to cost of sales’ in the income
statement and RUB 17 thousand (2019: RUB 18 thousand) to ‘administrative expenses’.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
224
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
225
Notes to the consolidated
financial statements
20. Principal subsidiaries
The Group had the following subsidiaries at 31 December 2020 and 31 December 2019:
Name
Place of
business/
country of
incorporation
Principal
activities
Proportion of
ordinary shares
held by the
Company (%)
Proportion of
ordinary shares
held by the
Group (%)
Proportion of
ordinary shares
held by non-
controlling
interest (%)
New Forwarding
Company, АО
Russia
GTI Management,
OOO
Russia
Ural Wagonrepair
Company, AO
Russia
Ukrainian New
Forwarding
Company OOO
Ukraine
Railway
transportation
Railway
transportation
Repair and
maintenance of
rolling stock
Railway
transportation
2020
2019
2020
2019
2020
2019
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
—
—
—
—
—
—
—
—
BaltTransServis,
OOO
Russia
Railway
transportation
60
60
60
60
40
40
BTS-Locomotive
Solutions OOO1
Russia
RemTransServis,
OOO2
Russia
SyntezRail LLC3
Russia
SyntezRail Ltd
Cyprus
Spacecom AS
Estonia
Ekolinja Oy4
Finland
Support activities
for locomotive
traction
Repair and
maintenance of
rolling stock
Railway
transportation
Intermediary
holding company
Operating lease
of rolling stock
and provision
of forwarding
services
Operating
sub-lease of
rolling stock
—
—
—
60
—
60
60
40
40
—
59.4
59.4
40.6
40.6
—
60
60
60
60
60
40
40
40
40
65.25
65.25
65.25
65.25
34.75
34.75
—
—
—
65.25
65.25
34.75
34.75
—
65.25
65.25
34.75
34.75
Spacecom Trans
AS4
Estonia
Operating lease
of rolling stock
1 BTS-Locomotive Solutions, OOO is a 100% subsidiary of BaltTransServis.
2 RemTransServis, OOO is a 99% subsidiary of BaltTransServis, OOO.
3 SyntezRail LLC is a 100% subsidiary of SyntezRail Ltd.
4 Ekolinja Oy and Spacecom Trans AS are 100% subsidiaries of Spacecom AS.
All subsidiary undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary
undertakings held directly by the parent company do not differ from the proportion of ordinary shares held.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 226
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
227
Notes to the consolidated
financial statements
The accumulated non-controlling interest as of 31 December 2020 and 31 December 2019 comprised the following:
BaltTransServis, OOO (including RemTransservis, OOO and BTS-Locomotive
Solutions, OOO)
2020
2019
RUB’000
RUB’000
1,289,933
1,931,282
Spacecom AS (including Spacecom Trans AS and Ekolinja Oy)
4,422,878
3,544,360
SyntezRail, OOO; SyntezRail Limited
Total
213,794
171,588
5,926,605
5,647,230
Transactions with non-controlling interests
During the year 2018, Spacecom AS acquired 100% of the shares of Spacecom Trans AS from the Company and the
non-controlling shareholders, for a total consideration of Eur 30,100 thousand (equivalent to RUB 2,391,761 thousand),
out of which RUB 837,116 thousand were attributed to the non-controlling interest. An amount of RUB 180,281 thousand
was paid within 2020 (2019: RUB 450,934 thousand), which includes interest accrued on the balance payable,
resulting in the full settlement of the amount due.
Significant restrictions
There are no significant restrictions, statutory, contractual, regulatory, or arising from protective rights of
non-controlling interests, on the ability of the Group to access or use the assets and settle the liabilities of the Group.
Summarised financial information of subsidiaries with material non-controlling interests
Set out below are the summarised financial information for each subsidiary that has non-controlling interests that are
material to the Group. The financial information of Spacecom AS includes Spacecom Trans AS and Ekolinja Oy the
financial information of BaltTransServis, OOO includes RemTransServis, OOO. No summarised financial information is
presented for SyntezRail, OOO and SyntezRail Limited as their operations and financial position are not material to the
Group.
SUMMARISED BALANCE SHEET
Current
Assets
Liabilities
BaltTransServis OOO
Spacecom AS
2020
2019
2020
2019
RUB’000
RUB’000
RUB’000
RUB’000
2,619,117
4,015,712
282,965
261,333
5,187,101
3,130,804
557,944
483,347
Total current net assets
(2,567,984)
884,908
(274,979)
(222,014)
Non-current
Assets
Liabilities
8,682,673
8,345,817
13,006,551
10,368,791
2,889,856
4,402,519
60,302
7,879
Total non-current net assets
5,792,817
3,943,298
12,946,249
10,360,912
Net assets
3,224,833
4,828,206
12,671,270
10,138,898
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
228
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
229
Notes to the consolidated
financial statements
SUMMARISED INCOME STATEMENT
SUMMARISED CASH FLOW STATEMENTS
BaltTransServis OOO
Spacecom AS
2020
2019
2020
2019
RUB’000
RUB’000
RUB’000
RUB’000
BaltTransServis OOO
Spacecom AS
2020
2019
2020
2019
RUB’000
RUB’000
RUB’000
RUB’000
Revenue
23,841,123
27,994,828
1,732,640
1,288,712
Cash flows from operating activities
Profit before income tax
4,169,195
5,170,098
959,753
578,549
Cash generated from operations
6,119,365
6,194,775
1,594,194
1,007,302
Income tax expense
(832,568)
(1,063,438)
(312,459)
(23,656)
Income tax paid
(830,980)
(810,307)
(174,215)
Post-tax profit from continuing operations
3,336,627
4,106,660
647,294
554,893
Net cash generated from operating activities
5,288,385
5,384,468
1,419,979
(18,592)
988,710
Other comprehensive income
-
-
3,099,987
(1,278,787)
Total comprehensive income
3,336,627
4,106,660
3,747,281
(723,894)
Total comprehensive income allocated to
non-controlling interests
1,334,651
1,642,664
224,935
192,825
Net cash generated from/(used in) investing
activities
(1,085,015)
(3,324,236)
(539,000)
(982,034)
Dividends paid to non-controlling interest
(1,976,000)
(1,560,000)
(411,652)
(42,237)
Net cash used in financing activities
(5,256,854)
(1,163,927)
(837,055)
(145,235)
Net increase/(decrease) in cash and cash
equivalents
(1,053,484)
896,305
43,924
(138,559)
Cash and cash equivalents at beginning of year
1,891,351
995,046
Exchange differences on cash and cash
equivalents
-
-
38,288
12,656
195,513
(18,666)
Cash and cash equivalents at end of year
837,867
1,891,351
94,868
38,288
The information above includes the amounts before inter-company eliminations.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
230
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
231
Notes to the consolidated
financial statements
21. Share-based payments
The Group maintains a remuneration program for some of the members of management, including members of key
management of the Group. This includes, amongst other things, a three-year compensation scheme in accordance
to which, members of management receive a yearly cash compensation calculated based on the weighted average
market quotations of the GDRs of the Company. This compensation is set for a three-year period that matured by 31
December 2020 and is divided on three instalments to be paid after the end of each assessment period which equals
to one year. The award is conditional on the performance of the participants and on meeting certain key performance
indicators (“KPIs”) each year during the three years vesting period.
22. Financial assets
(a) Trade receivables
Trade receivables — third parties
Less: Provision for impairment of trade receivables
The scheme falls within the scope of IFRS 2 “Share-based payment” and has therefore been classified as a cash-settled
share-based payment arrangement.
Trade receivables — net
In accordance with the terms of the remuneration program, the compensation is calculated based on the weighted
average fair value of the Company’s GDRs, quoted in US Dollar multiplied by the weighted average RUB/USD exchange
rate for each period.
The Group recognised an employee benefit expense of RUB 28,931 thousand in this respect for the year ended 31
December 2020 (2019: RUB 83,319 thousand) and the Group’s liability in respect of this amounted to RUB 104,366
thousand as of 31 December 2020 (2019: RUB 205,604 thousand).
The share-based payment liability as of 31 December 2020 and 31 December 2019 was determined based on the
assumption that all participants will remain with the Group and all KPIs will be met and that there will be no significant
fluctuation in the value of the Company’s GDRs during the vesting period. The significant inputs into the valuation
were the weighted average fair value of the Company’s GDRs and the weighted average USD/RUB exchange.
Less non-current portion:
Trade receivables — third parties
Less: Provision for impairment of trade receivables
Total non-current portion
Current portion
2020
2019
RUB’000
RUB’000
3,836,670
3,348,481
(135,124)
(138,915)
3,701,546
3,209,566
261,437
218,392
(25,272)
(21,108)
236,165
197,284
3,465,381
3,012,282
Trade receivables amounting to RUB 261,437 thousand as of 31 December 2020 (2019: RUB 218,392 thousand) related
to a receivable from Georgian Railways for services rendered by the Group prior to 1 April 2015. The amount receivable
is under dispute and the Group initiated a claim to the Georgian Court demanding the repayment of the entire balance
due. Based on assessment performed as at 31 December 2020, the Group recognised a provision for impairment
of RUB 25,272 thousand (2019: RUB 21,108 thousand) in order to account for the expected time until receipt of the
amount due (Note 33).
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 232
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
233
Notes to the consolidated
financial statements
The carrying amounts of the Group’s trade receivables are denominated in the following currencies:
The carrying amounts of the Group’s loans and other receivables are denominated in the following currencies:
Currency:
US Dollar
Russian Roubles
Euro
Ukrainian Hryvnia
2020
2019
RUB’000
RUB’000
248,633
209,094
3,306,199
2,820,759
138,184
177,080
8,530
2,633
3,701,546
3,209,566
Currency:
US Dollar
Russian Roubles
Ukrainian Hryvnia
Euro
Other
2020
2019
RUB’000
RUB’000
440
—
46,451
39,760
591
1
3,887
416
2
7,841
51,370
48,019
According to the management’s estimates, the fair values of trade receivables do not materially differ from their
carrying amounts as the impact of discounting is not significant.
(b) Loans and other receivables
According to the management’s estimates, the fair values of loans and other receivables do not materially differ from
their carrying amounts as the impact of discounting is not significant.
Loans receivables — third parties
Other receivables
Less: Provision for impairment of other receivables
Loans and other receivables — net
Less non-current portion:
Loans receivables — third parties
Other receivables — third parties
Total non-current portion
Current portion
2020
2019
RUB’000
RUB’000
3,887
67,678
7,841
69,519
(20,195)
(29,341)
51,370
48,019
3,887
—
3,887
47,483
7,820
2,554
10,374
37,645
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
234
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
235
Notes to the consolidated
financial statements
23. Other assets
Prepayments — third parties
Finance leases to third parties
VAT recoverable
Other assets
Less non-current portion:
Finance leases to third parties
Prepayments for property, plant and equipment
Total non-current portion
Current portion
2020
2019
RUB’000
RUB’000
1,760,966
3,805,346
422,972
279,070
952,148
1,442,504
3,136,086
5,526,920
296,525
252,968
549,493
241,279
95,137
336,416
2,586,593
5,190,504
The Group’s finance leases as at 31 December 2020 and 31 December 2019 are denominated in Russian Roubles. The
finance lease receivables are scheduled as follows:
Less than
one year
Between
1 to 5 years
Over 5 years
Total
RUB’000
RUB’000
RUB’000
RUB’000
At 31 December 2020
Minimum lease receivable
146,532
327,222
Less: Unearned finance income
(20,085)
(30,697)
Present value of minimum lease receivables
126,447
296,525
At 31 December 2019
Minimum lease receivable
64,499
297,795
Less: Unearned finance income
(26,708)
(56,516)
Present value of minimum lease receivables
37,791
241,279
—
—
—
—
—
—
473,754
(50,782)
422,972
362,294
(83,224)
279,070
According to the management’s estimates, the fair values of finance lease receivables do not materially differ from
their carrying amounts as the impact of discounting is not significant.
The effective interest rates on finance lease receivables at the balance sheet were as follows:
Finance leases to third parties
2020
2019
%
12.61
%
10.4
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
236
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
237
Notes to the consolidated
financial statements
24. Inventories
Cash and cash equivalents are denominated in the following currencies:
Russian Rouble
US Dollar
Euro
Ukrainian Hryvnia
Total cash and cash equivalents
The carrying value of cash and cash equivalents approximates their fair value.
2020
2019
RUB’000
RUB’000
3,615,107
5,884,983
673,073
257,799
650,786
338,802
39,356
39,959
4,978,322
6,521,543
Raw materials, spare parts and consumables
All inventories are stated at cost.
25. Cash and cash equivalents
Cash at bank and in hand
Short term bank deposits
Total cash and cash equivalents
2020
2019
RUB’000
RUB’000
691,033
1,722,781
691,033
1,722,781
2020
2019
RUB’000
RUB’000
4,898,862
4,333,201
79,460
2,188,342
4,978,322
6,521,543
The weighted average effective interest rate on short-term deposits was 2.27-4.85% in 2020 (2019: 4.20-5.80%) and
these deposits have a maturity of 1 to 21 days (2019: 1 to 30 days).
Cash and cash equivalents include the following for the purposes of the cash flow statement:
Cash and cash equivalents
Total cash and cash equivalents
2020
2019
RUB’000
RUB’000
4,978,322
6,521,543
4,978,322
6,521,543
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 238
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
239
Notes to the consolidated
financial statements
26. Share capital, share premium and treasury shares
27. Dividends
At 1 January 2019 /31 December 2019 /
1 January 2020 / 31 December 2020
Number of
shares
Share capital
Share premium
Total
USD’000
USD’000
USD’000
178,740,916
17,875
949,471
967,346
In April 2019, the shareholders of the Company approved the payment of a dividend for the financial year ended 31
December 2018 in the amount of 46.50 Russian Roubles per ordinary share/GDR, amounting to a total dividend of
RUB 8,311,453 thousand, including final dividend for 2018 in the amount of RUB 1,429,927 thousand or RUB 8.00 per
ordinary share/GDR and a special final dividend in the amount of RUB 6,881,526 thousand or RUB 38.50 per ordinary
share/GDR (US Dollar equivalent of US$ 129,727 thousand).
At 1 January 2019 /31 December 2019 /
1 January 2020 / 31 December 2020
Number of
shares
Share capital
Share premium
Total
RUB’000
RUB’000
RUB’000
178,740,916
516,957
27,929,478
28,446,435
The total authorised number of ordinary shares at 31 December 2020 was 233,918,128 shares with a par value of
US$0.10 per share (31 December 2019: 233,918,128 shares with a par value of US$0.10 per share). All issued shares are
fully paid.
In accordance with the decision of the Extraordinary General Meeting which took place on 12 May 2020, the Company
started a GDRs buyback program. The buyback programme is for the Company’s Global Depositary Receipts (“GDRs)
and will run till the earlier of the close of the Annual General Meeting of the Company to be held in 2021 and May 2021.
The total number of purchased GDRs shall not exceed 5% of the Company’s share capital (equivalent to 8,937,046
shares, with each GDR representing oxne ordinary share).
As at 31 December 2020 the Company has purchased a total of 76,877 GDRs, which are held in treasury for a total
consideration of 422 thousand US Dollars (equivalent to RUB 31,496 thousand).
In line with relevant legislation, GDRs repurchased by the Company may be held in treasury for up to two years.
In August 2019, the Board of Directors of the Company approved payment of total dividend in the amount of 46.55 Russian
Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including interim dividend in
the amount of RUB 3,548,007 thousand or RUB 19.85 per ordinary share/GDR and a special interim dividend in the amount
of RUB 4,772,382 thousand or RUB 26.70 per ordinary share/GDR (US Dollar equivalent of US$ 124,655 thousand).
In April 2020, the shareholders of the Company approved the payment of a dividend for the financial year ended 31
December 2019 in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of
RUB 8,320,390 thousand, including final dividend for 2019 in the amount of RUB 1,903,591 thousand or RUB 10.65 per
ordinary share/GDR and a special final dividend in the amount of RUB 6,416,799 thousand or RUB 35.90 per ordinary
share/GDR (US Dollar equivalent of US$ 110,787 thousand).
In August 2020, the Board of Directors of the Company approved payment of total dividend in the amount of 46.55 Russian
Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including interim dividend in
the amount of RUB 3,083,281 thousand or RUB 17.25 per ordinary share/GDR and a special interim dividend in the amount of
RUB 5,327,109 thousand or RUB 29.30 per ordinary share/GDR (US Dollar equivalent US$ 111,293 thousand).
During the years ended 31 December 2020 and 2019, the Group declared and paid dividends in favour of the equity
holders of the Company and the non-controlling interests as detailed in the table below.
Dividends declared to equity holders of the Company1
Dividends paid to equity holders of the Company1
Dividends declared to non-controlling interest
Dividends paid to non-controlling interest
2020
2019
RUB’000
RUB’000
16,637,178
16,631,842
16,637,178
16,631,842
2,387,652
1,602,237
2,271,815
1,602,237
1 Dividends declared and paid to the equity holders of the Company within the year 2020 as per the table above excludes RUB 3,601 thousand relating
to dividend declared and paid on the treasury shares.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 240
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
241
Notes to the consolidated
financial statements
28. Borrowings
Current
Bank borrowings
Non-convertible unsecured bonds
Loans from third parties
Lease liabilities with financial institutions
Total current borrowings
Non-current
Bank borrowings
Non-convertible unsecured bonds
Loans from third parties
Lease liabilities with financial institutions
Total non-current borrowings
Total borrowings
Maturity of non-current borrowings (excluding lease liabilities with financial institutions)
Between 1 and 2 years
Between 2 and 5 years
2020
2019
RUB’000
RUB’000
9,388,591
7,013,856
1,542,581
290,000
—
—
355
496,093
10,931,172
7,800,304
12,339,674
10,959,851
8,744,393
9,989,017
—
—
120,000
1,226,046
21,084,067
22,294,914
32,015,239
30,095,218
11,554,709
8,528,123
9,529,358
12,540,745
21,084,067
21,068,868
Bank borrowings
Bank borrowings mature by 2025 (2019: by 2024) and bear average interest of 6.25% per annum (2019: 8.07% per
annum).
There were no defaults or breaches of loan terms during the years ended 31 December 2020 and 31 December 2019.
The current and non-current bank borrowings amounting to RUB 4,522,381 thousand and RUB 4,916,838 thousand
respectively (2019: RUB 5,501,805 thousand and RUB 8,797,604 thousand respectively) are secured by pledge of
rolling stock and tank-containers with a total carrying net book value of RUB 9,472,247 thousand (2019: RUB 16,706,748
thousand) (Note 17).
Non-convertible bonds
New Forwarding Company AO issued non-convertible Russian Rouble denominated bonds for amount of RUB 5 billion
in 2018, priced at a coupon rate of 7.25% p.a. and with maturity in 2023 and for amount of RUB 5 billion in 2019, priced
at a coupon rate of 8.8% p.a. and with maturity in 2024 out of a total RUB 100 billion registered program.
The Company acts as the guarantor for the bond issue.
The exposure of the Group’s borrowings to interest rate changes and the contractual re-pricing dates at the balance
sheet dates are as follows:
6 months or less
6 to 12 months
1 to 5 years
2020
2019
RUB’000
RUB’000
4,983,084
3,917,181
5,948,087
3,875,216
21,084,068
22,302,821
32,015,239
30,095,218
Note: The amounts above are based on the earliest of their contractual re-pricing dates and maturity dates
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
242
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
243
Notes to the consolidated
financial statements
Movements in borrowings are analysed as follows:
Bank
borrowings
and loans
(excl.
overdrafts)
Lease
liabilities
with financial
institutions
Other
lease
liabilities
Non-
convertible
unsecured
bonds
Total
RUB’000
RUB’000
RUB’000
RUB’000
RUB’000
Interest charged
1,487,421
74,468
113,099
808,258
2,483,246
Net foreign exchange
Other lease liability
Other
—
—
(167)
—
—
—
9,716
668,622
(131,521)
—
—
—
9,716
668,622
(131,688)
Closing amount as at 31 December 2020
21,728,265
— 1,404,596
10,286,974
33,419,835
Year ended 31 December 2019
The carrying amount and fair value of current and non-current borrowings are as follows:
Opening amount as at 1 January 2019
18,399,624
2,212,668
678,695
5,116,619
26,407,606
Cash flows:
Amounts advanced
10,408,000
—
—
5,000,000
15,408,000
Repayments of borrowings
(10,736,723)
(488,723)
(339,597)
— (11,565,043)
(1,437,015)
(167,048)
(111,911)
(580,900)
(2,296,874)
Carrying amount
Fair value
2020
2019
2020
2019
RUB’000
RUB’000
RUB’000
RUB’000
Interest paid
Non-cash changes:
Interest charged
Net foreign exchange
Other lease liability
Other
1,461,453
165,242
117,589
743,298
2,487,582
Non-convertible unsecured bonds
10,286,974
10,279,017
10,440,500
10,317,500
(394)
—
(883)
(10,956)
1,197,063
—
—
—
—
—
—
(11,350)
1,197,063
(883)
Loans from third parties
Lease liabilities with financial institutions
—
—
120,355
1,722,139
—
125,833
1,635,779
32,015,239
30,095,218
32,224,511
28,615,619
Bank borrowings
21,728,265
17,973,707
21,784,011
16,536,507
Closing amount as at 31 December 2019
18,094,062
1,722,139
1,530,883
10,279,017
31,626,101
Year ended 31 December 2020
Opening amount as at 1 January 2020
18,094,062
1,722,139
1,530,883
10,279,017
31,626,101
Cash flows:
The fair value as at 31 December 2020 and 31 December 2019 of fixed interest rate instruments with stated
maturity denominated in Russian Rouble was estimated based on expected cash flows discounted using the rate
of similar Russian Rouble denominated instruments entered into by the Group close to 31 December 2020 and 31
December 2019. The discount rate was 6.3% p.a. (2019: 7.5% p.a.). The fair value measurements are within level 2
of the fair value hierarchy (2019: level 2). The fair value as at 31 December 2020 and 31 December 2019 of the fixed
interest rate non-convertible bonds was equal to their quoted price and the resulting fair value measurement is
within level 1.
Amounts advanced
23,265,000
—
—
— 23,265,000
Repayments of borrowings
(19,603,415)
(1,715,794)
(672,432)
— (21,991,641)
The fair value of liabilities repayable on demand or after a notice period (“demandable liabilities”) is estimated as
the amount payable on demand, discounted from the first date on which the amount could be required to be paid.
Interest paid
Non-cash changes:
(1,514,636)
(80,813)
(113,771)
(800,301)
(2,509,521)
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
244
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
245
Notes to the consolidated
financial statements
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
29. Other lease liabilities
Russian Rouble
The Group has the following undrawn borrowing facilities:
Fixed rate:
Expiring within one year
Expiring beyond one year
The weighted average effective interest rates at the balance sheet were as follows:
Bank borrowings
Non-convertible unsecured bonds
Loans from third parties
Lease liabilities with financial institutions
2020
2019
RUB’000
RUB’000
32,015,239
30,095,218
32,015,239
30,095,218
2020
2019
RUB’000
RUB’000
7,609,091
2,320,000
21,840,000
2,345,000
29,449,091
4,665,000
2020
2019
%
6.3
8.1
—
—
%
8.1
8.1
9.0
8.4
Other lease liabilities
Current lease liabilities
Non-current lease liabilities
Total lease liabilities
Maturity of other lease liabilities
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
2020
2019
RUB’000
RUB’000
684,109
649,177
720,487
881,706
1,404,596
1,530,883
2020
2019
RUB’000
RUB’000
475,112
340,021
239,943
535,144
5,432
6,541
720,487
881,706
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
246
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
247
Notes to the consolidated
financial statements
30. Deferred income tax
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred taxes relate to the same taxable entity and fiscal authority.
The gross movement on the deferred income tax account is as follows:
Beginning of year
Income statement charge (Note 15)
Exchange differences
End of year
2020
2019
RUB’000
RUB’000
7,592,182
6,284,868
1,265,524
1,307,314
4,881
—
8,862,587
7,592,182
The movement on the deferred tax assets and liabilities during the year, without taking into consideration the
offsetting of balances within the same tax jurisdiction, is as follows:
Deferred tax liabilities
At 1 January 2019
Charged/(credited) to:
Income statement (Note 15)
At 31 December 2019
Charged/(credited) to:
Property, plant and
equipment1
Withholding tax
provision
Intangible
assets
Total
RUB’000
RUB’000
RUB’000
RUB’000
6,865,556
485,136
150,326
7,501,018
1,156,002
8,021,558
30,308
(138,958)
1,047,352
515,444
11,368
8,548,370
Income statement (Note 15)
445,194
153,433
(11,578)
587,049
Translation differences
At 31 December 2020
—
4,881
—
4,881
8,466,752
673,758
(210)
9,140,300
1 The deferred tax liability arising from property, plant and equipment as at 31 December 2019 includes RUB 639 652 thousand relating to temporary
differences arising from right-of-use assets recognised within property, plant and equipment (Note 17).
Tax losses
Trade
and other
payables
Lease liabilities
with financial
institutions
Other
assets/
liabilities
Total
Deferred tax assets
RUB’000
RUB’000
RUB’000
RUB’000
RUB’000
At 1 January 2019
(59,012)
(186,470)
(823,341)
(147,327)
(1,216,150)
Charged/(credited) to:
Income statement (Note 15)
10
(119,591)
108,990
270,553
259,962
At 31 December 2019
(59,002)
(306,061)
(714,351)
123,226
(956,188)
Charged/(credited) to:
Income statement (Note 15)
5,586
108,696
593,783
(29,590)
678,475
At 31 December 2020
(53,416)
(197,365)
(120,568)
93,636
(277,713)
Deferred tax assets are recognised for tax losses carried forward to the extent that the realization of the related tax
benefit through future taxable profits is probable. The Group has not recognised deferred tax assets in the amount
of RUB 272,614 thousand (2019: RUB 312,221 thousand) for tax losses amounting to RUB 1,543,418 thousand (2019:
RUB 1,668,111 thousand) available to be carried forward as it is not probable that future taxable profits will be available
against which these tax losses can be utilised.
Withholding tax at the rate of 5% is applied to the dividends distributed by the Russian subsidiaries of the Group
to the Company. In case the dividends are distributed by the Estonian subsidiaries the tax of 20% or, under certain
conditions, 14% will be applied to gross amount of such distributions. The Group recognises provisions for such taxes
based on management’s estimates and intention for future dividend distribution by each respective subsidiary out of
profits of subsidiaries as of 31 December 2020.
Deferred income tax liabilities of RUB 1,446,802 thousand (2019: RUB 2,575,594 thousand) have not been recognised
for the withholding taxes that would be payable in case unremitted earnings of certain subsidiaries are distributed to
the Company in the form of dividends as it is the current intention of the management of the Group that such amounts
are reinvested. Unremitted earnings on which no deferred tax liability was recognised totalled to RUB 13,093,858
thousand as at 31 December 2020 (2019: RUB 22,679,368 thousand).
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
248
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
249
Notes to the consolidated
financial statements
31. Trade and other payables
33. Contingencies
Current
Trade payables to third parties
Other payables to third parties
VAT payable and other taxes
Accrued expenses
2020
2019
RUB’000
RUB’000
843,703
659,891
380,438
462,021
534,738
561,393
79,680
133,482
Accrued key management compensation, including share-based payment (Note 35)
359,435
539,085
Non-current
Accrued key management compensation, including share-based payment (Note 35)
Accrued expenses
2,197,994
2,355,872
—
—
—
82,256
8,486
90,742
The fair value of trade and other payables approximates their carrying amount at the balance sheet date.
32. Earnings per share
Basic and diluted
Basic and diluted earnings per share is calculated by dividing the profit attributable to equity holders of the Company
by the weighted average number of ordinary shares in issue during the year, excluding treasury shares.
Profit attributable to equity holders of the company (RUB thousand)
10,586,535
20,807,651
Weighted average number of ordinary shares in issue (thousand)
Basic and diluted earnings per share (expressed in RUB per share) attributable to the
equity holders of the Company during the year
178,705
59.24
178,741
116.41
2020
2019
Operating environment
The year 2020 was marked by the COVID-19 pandemic, widespread national lockdowns and sharp decline in economic
conditions across the globe. Measures taken by various governments to contain the virus have severely impacted and
could continue to negatively impact economic activity and supply chains, both globally and in the Russian Federation
and the other territories in which the Group operates for an unknown period of time. Management has taken and
continues to take necessary measures to ensure minimum disruption to and sustainability of the Group’s operations
and support the Group’s employees, customers and suppliers.
The overall economic weakness and the spread of COVID-19 impacted the Russian freight rail transportation market
which experienced weak and volatile demand along with weak pricing conditions especially in the gondola segment.
Although the Group’s operations and financial results were inevitably impacted by these unprecedented economic
conditions, the Group was able to swiftly navigate the challenges and responded quickly to the market volatility by
migrating between different cargoes, increasing the Group’s freight rail turnover and focusing on cost optimisation
measures.
The future effects of the COVID-19 pandemic and of the above measures on businesses, market participants, clients
of the Group, as well as global economy and the Group’s operating environment are difficult to predict. Consequently,
the future financial performance, cash flows and financial position of the Group, are difficult to predict and
management’s current expectations and estimates could differ from actual results. The Group’s management believes
that it is taking all the necessary measures to maintain the viability of the Group and the development of its business in
the current economic environment.
The management has analysed these economic conditions and concluded that these represent indications of
impairment of the Group’s cash generating units and proceeded to perform impairment assessments to determine if
there is an impairment loss, as further set out in Note 17.
The Group and its subsidiaries mainly operate in the Russian Federation, Estonia, Finland and Ukraine.
Russian Federation. The Russian Federation displays certain characteristics of an emerging market. Its economy is
particularly sensitive to oil and gas prices. The legal, tax and regulatory frameworks continue to develop and are
subject to frequent changes and varying interpretations. The Russian economy continues to be negatively impacted
by ongoing political tension in the region and international sanctions against certain Russian companies and
individuals. The operating environment has a significant impact on the Group’s operations and financial position.
Management is taking necessary measures to ensure sustainability of the Group’s operations. However, the future
effects of the current economic situation are difficult to predict and management’s current expectations and estimates
could differ from actual results.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
250
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
251
Notes to the consolidated
financial statements
Tax contingencies. Russian tax and customs legislation which was enacted or substantively enacted at the end of the
reporting period, is subject to varying interpretations when being applied to the transactions and activities of the
Group. Consequently, tax positions taken by management and the formal documentation supporting the tax positions
may be challenged tax authorities. Russian tax administration is gradually strengthening, including the fact that there
is a higher risk of review of tax transactions without a clear business purpose or with tax incompliant counterparties.
Fiscal periods remain open to review by the authorities in respect of taxes for three calendar years preceding the year
when decisions about the review was made. Under certain circumstances reviews may cover longer periods..
The Russian transfer pricing legislation is generally aligned with the international transfer pricing principles developed
by the Organisation for Economic Cooperation and Development (OECD) but has specific characteristics. This
legislation provides the possibility for tax authorities to make transfer pricing adjustments and impose additional tax
liabilities in respect of controlled transactions (transactions with related parties and some types of transactions with
unrelated parties), provided that the transaction price is not arm’s length. Management has implemented internal
controls to be in compliance with this transfer pricing legislation. Management believes that its pricing policy used in
2020 and 2019 and preceding years is arm’s length and it has implemented internal controls to be in compliance with
this transfer pricing legislation.
Tax liabilities arising from transactions between companies within the Group are determined using actual transaction
prices. It is possible, with the evolution of the interpretation of the transfer pricing rules, that such transfer prices
could be challenged. The impact of any such challenge cannot be reliably estimated; however, it may be significant to
the financial position and/or the overall operations of the Group.
The Group includes companies incorporated in Cyprus, Russia, Ukraine, Estonia and Finland. The tax liabilities of
the Group are determined on the assumption that these companies are tax residents in the countries where they
are incorporated and are not subject to profits tax of other tax jurisdictions, because they do not have permanent
establishments in other jurisdictions. The Company and the non-controlling shareholding companies holding interests
in the Company’s Russian subsidiaries are the only and full beneficial owners of the equity interests held directly and
indirectly in these subsidiaries. This interpretation of relevant legislation may be challenged but the impact of any
such challenge cannot be reliably estimated currently; however, it may be significant to the financial position and/or
the overall operations of the Group.
As Russian tax legislation does not provide definitive guidance in certain areas, the Group adopts, from time to time,
interpretations of such uncertain areas that reduce the overall tax rate of the Group. While management currently
estimates that the tax positions and interpretations that it has taken can probably be sustained, there is a possible
risk that an outflow of resources will be required should such tax positions and interpretations be challenged by the
tax authorities. Management will vigorously defend the positions and interpretations applied in determining taxes
recognised in these financial statements if these are challenged by the authorities. The impact of any such challenge
cannot be reliably estimated; however, it may be significant to the financial position and/or the overall operations of
the Group.
Estonia and Finland. Estonia and Finland represent well-developed markets and economies with stable political
systems and developed legislation based on EU requirements and regulations.
Ukraine. Starting in 2013, the political situation in Ukraine has experienced instability with numerous protests and
continued political uncertainty that has led to deterioration of the state’s finances, volatility of financial markets and
sharp depreciation of the national currency against major foreign currencies. The ratings of Ukrainian sovereign debt
were downgraded by international rating agencies with negative outlooks for the future. The central bank of Ukraine,
among other measures, imposed certain restrictions on processing of client payments by banks and on the purchase
of foreign currency on the inter-bank market.
Despite certain improvements in recent years, the final resolution and the ongoing effects of the political and
economic situation are difficult to predict, but they may have further severe effects on the Ukrainian economy and the
Group’s business.
Compliance with covenants
The Group is subject to certain covenants related primarily to its borrowings. Non-compliance with such covenants
may result in negative consequences for the Group including claims for early repayment. The Group is in compliance
with covenants as of 31 December 2020 and 31 December 2019 (Note 28).
Insurance policies
The Group holds insurance policies in relation to all vehicles (rolling stock and motor vehicles) and in respect of public
third-party liability. The Group does not have full insurance for business interruption or third-party liability in respect of
environmental damage.
Environmental matters
The enforcement of environmental regulation in the countries in which the Group operates is evolving and the
enforcement posture of government authorities is continually being reconsidered. The Group periodically evaluates
its obligations under environmental regulations. As obligations are determined, they are recognised immediately.
Potential liabilities, which might arise as a result of changes in existing regulations, civil litigation or legislation, cannot
be estimated but could be material. In the current enforcement climate under existing legislation, management
believes that there are no significant liabilities for environmental damage.
Legal proceedings
During the years ended 31 December 2020 and 31 December 2019, the Company’s subsidiaries were involved as a
claimants and defendants in a number of court proceedings.
Georgian Railways case
In March 2016, Georgian Railways initiated a claim of approximately GEL 16,122 thousand against a subsidiary of
the Company claiming compensation for storage costs incurred for wagons leased out to Georgian Railways that
remained in Georgia for a period after 1 April 2015.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
252
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
253
Notes to the consolidated
financial statements
As explained in Note 22, as at 31 December 2020 the Group has an outstanding receivable amounting to EUR 2,883
thousand/RUB 261,437 thousand (2019: EUR 3,150 thousand/RUB 218,392 thousand) from Georgian Railways relating
to invoices issued for services rendered prior to 1 April 2015. The Group also issued invoices of EUR 1,555 thousand to
Georgian Railways; the revenue of which has not been recognised as it was not assessed as probable at that time that
future economic benefits would flow to the Group.
The Georgian Railways dispute the tariffs applied in computing the outstanding balance and thus have not proceeded
with the repayment of the amount which remains outstanding.
The Group has initiated a claim to the Georgian Court demanding the repayment of the entire balance. Based on
assessment performed as at 31 December 2020, management recognised a loss allowance of EUR 279 thousand/ RUB
25,272 thousand (2019: EUR 304 thousand/ RUB 21,108 thousand).
In March 2018, the Georgian Court ruled in favor of the Group an amount of US$10 million. Both parties have appealed
this decision. The Group has not recognised a receivable for the amount awarded as this might not constitute a final
decision on the matter.
Claim in relation to sale of rolling of stock
In February 2018, the Group received a claim from a third party in relation to a sale of rolling stock. In March 2018,
the third party initiated legal action claiming from the Group an amount of RUB 996 million. In May 2018, there
was a court decision against the Group for an amount of RUB 684 million. Both parties appealed this decision
and on 27 September 2018 the 2nd instance court cancelled the penalty in full amount. On 15 February 2019 the
Moscow Arbitrary court cancelled all court decisions made and announced a new court hearing in September 2019.
The amount of claim was decreased to RUB 727 million. Based on the results of the re-examination of the case in
September 2019, the court of 1st instance ruled to partially satisfy the requirements of the third party in the amount of
RUB 554 million, plus penalties in amount of RUB 27 million. Both parties appealed this decision and on 12 March 2019
the court appointed an independent expert to determine the current value of the disputed rolling stock. No provision
was recognised in respect of this claim as the Group has received an unconditional irrevocable guarantee for the
entire amount of this claim.
In September 2020, both parties agreed to voluntarily settle the dispute. This was approved by the Court within the
year 2020 and as a result all legal proceedings were terminated. The Group did not suffer any loss as the Group had
received an unconditional irrevocable guarantee for the entire amount of this claim.
In the opinion of management, there are no other legal proceedings or other claims outstanding, as of 31
December 2020 and 2019 which could have a material effect on the results of operations or financial position of the
Group and which have not been accrued or disclosed in these financial statements.
34. Commitments
(a) Capital commitments
Capital expenditure contracted for at the balance sheet date but not yet incurred is as follows:
Property, plant and equipment
2020
2019
RUB’000
RUB’000
308,173
21,419
(b) Operating lease commitments — Group as lessor
The Group leases out rolling stock and locomotives under cancellable and non-cancellable operating lease
agreements. The future aggregate minimum lease payments receivable under non-cancellable operating leases in
which the Group is acting as the lessor are as follows:
Not later than 1 year
Later than 1 year not later than 5 years
2020
2019
RUB’000
RUB’000
402,676
368,888
156,395
—
559,071
368,888
There were no contingent-based rents to be recognised in the income statement for the year ended 31
December 2020 and 31 December 2019.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
254
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
255
Notes to the consolidated
financial statements
35. Related party transactions
(b) Year-end balances arising from sale of shares/purchases of services
Litten Investments Ltd, controlled by a Director of the Company, has a shareholding in the Company of 5.1% as at 31
December 2020 (31 December 2019: 5.1%).
Goldriver Resources Ltd, controlled by a member of key management personnel of the Group, has a shareholding in
the Company of 4.0% as at 31 December 2020 (31 December 2019: 4.0%).
As at 31 December 2020, another 0.2% (2019: 0.2%) of the shares of the Company is controlled by Directors and key
management of the Company.
For the purposes of these financial statements, parties are considered to be related if one party has the ability to
control the other party or exercise significant influence over the other party in making financial and operational
decisions as defined by IAS 24 “Related Party Disclosures”. In considering each possible related party relationship,
attention is directed to the substance of the relationship, not merely the legal form. Related parties may enter into
transactions, which unrelated parties might not, and transactions between related parties may not be effected on the
same terms, conditions and amounts as transactions between unrelated parties.
The following transactions were carried out with related parties:
(a) Key management compensation
Key management salaries and other short-term employee benefits
Share based compensation (Note 21)
2020
RUB’000
1,139,297
28,931
2019
RUB’000
1,417,535
83,319
1,168,228
1,500,854
The key management compensation above includes directors’ remuneration paid to the directors of the Company
both by the Company and by subsidiaries of the Company in respect of services provided to such subsidiaries
amounting to RUB 433,063 thousand (2019: RUB 507,802 thousand) and analysed as follows:
Non-executive directors’ fees
Emoluments in their executive capacity
Share based compensation in their executive capacity
2020
2019
RUB’000
RUB’000
25,535
406,144
1,384
433,063
20,868
474,950
11,984
507,802
Accrued key management remuneration — current (Note 31):
Accrued salaries and other short-term employee benefits
Share based payment liability (Note 21)
Accrued key management remuneration — non-current (Note 31):
Share based payment liability (Note 21)
2020
2019
RUB’000
RUB’000
255,069
104,366
359,435
415,737
123,348
539,085
2020
2019
RUB’000
RUB’000
—
—
82,256
82,256
36. Events after the balance sheet date
On the date of this report, the Board of Directors of the Company, having considered the profitability and liquidity
position of the Group, recommends a payment of dividend for the year 2020 in the amount of 28.0 Russian Roubles
per ordinary share/GDR, amounting to a total dividend of RUB 5,004,746 thousand, including final dividend for 2020
in the amount of RUB 2,931,351 thousand or RUB 16.4 per ordinary share/GDR and a special final dividend in the
amount of RUB 2,073,395 thousand or RUB 11.60 per ordinary share/GDR. Such dividends subject to the approval of
the shareholders at the Annual General Meeting on 29 April 2021 and shall be paid in US Dollars at the average of the
official exchange rates of the Russian Central Bank for five business days in Russia from 22 April 2021 to 28 April 2021
inclusive.
There were no other material post balance sheet events which have a bearing on the understanding of these
consolidated financial statements.
Independent Auditor’s Report on pages 138 to 145.
Consolidated Management Report and Consolidated Financial Statements for the Year Ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
256
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
257
Management report
and parent company
financial statements
for the year ended
31 December 2020
Board of Directors and other officers ...................................................... 258
Management Report ................................................................................ 260
Directors’ responsibility ...........................................................................278
Independent Auditor’s Report ................................................................. 280
Income statement ................................................................................... 286
Statement of comprehensive income .....................................................287
Balance sheet .......................................................................................... 288
Statement of changes in equity .............................................................. 290
Cash flow statement .................................................................................292
Notes to the parent company financial statements ................................ 294
1. General information .....................................................................................................294
2. Basis of preparation ....................................................................................................295
3. Adoption of new or revised standards and interpretations ...........................295
4. Summary of significant accounting policies ......................................................296
5. New accounting pronouncements ....................................................................... 309
6. Financial risk management ........................................................................................ 310
7. Critical accounting estimate and judgements .................................................... 325
8. Revenue .......................................................................................................................... 325
9. Other gains — net .........................................................................................................326
10. Expenses by nature ......................................................................................................326
11. Employee benefit expense ........................................................................................ 327
12. Finance costs — net .....................................................................................................328
Income tax expense .....................................................................................................329
13.
14. Net foreign exchange gains/(losses) ..................................................................... 330
15. Dividends ..........................................................................................................................331
16. Property, plant and equipment ................................................................................332
17. Right-of-use assets .......................................................................................................333
18.
Investments in subsidiary undertakings................................................................334
19. Loans and other receivables ..................................................................................... 337
20. Other assets ...................................................................................................................339
21. Cash and cash equivalents ....................................................................................... 340
22. Share capital, share premium and treasury shares ............................................341
23. Borrowings ......................................................................................................................342
24. Other lease liabilities ....................................................................................................345
25. Payables and accrued expenses .............................................................................346
26. Related party transactions ........................................................................................ 347
27. Contingencies ................................................................................................................353
28. Events after the balance sheet date .......................................................................355
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 258
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
259
Board of Directors
and other officers
Mr. Sergey Maltsev
Chairman of the Board of Directors
Executive Director
Alternate director: Mr. Yuri Isaev
Mr. Sergey Tolmachev
Executive Director
Mr. Alexander Storozhev
Executive Director
Alternate Director: Ms. Elia Nicolaou
Mr. Konstantin Shirokov
Executive Director
Mr. Alexander Eliseev
Non-executive Director
Alternate Director: Ms Ekaterina Golubeva
Mr. Andrey Gomon
Non-executive Director
Alternate Director: Ms. Melina Pyrgou
Mr. Alexander Tarasov
Non-executive Director
Board of Directors
Dr. Johann Franz Durrer
Senior Independent Non-Executive Director
Chairman of the Remuneration Committee
Chairman of the Nomination Committee
Mr. Vasilis Hadjivassiliou
Independent Non-Executive Director
Member of the Audit Committee (since January 2021)
Mr. John Carroll Colley
Independent Non-Executive Director
Chairman of the Audit Committee
Member of Remuneration Committee
Member of Nomination Committee
Member of ESG Committee (since January 2021)
Mr. George Papaioannou
Independent Non-Executive Director
Member of the Audit Committee
Ms. Elia Nicolaou
Non-executive Director
Chairwoman of the ESG Committee (since January 2021)
Member of the Audit Committee (until January 2021)
Company Secretary
Secretary of the Board
Alternate Director: Mr. Marios Tofaros
Mr. Michalakis Thomaides
Non-Executive Director
Ms. Melina Pyrgou
Non-executive Director
Mr. Marios Tofaros
Non-executive Director
Board support
The Company Secretary is available to advise all Directors to ensure compliance with the Board procedures. Also a
procedure is in place to enable Directors, if they so wish, to seek independent professional advice at the Company’s
expense.
Company Secretary
Ms. Elia Nicolaou
Dimitriou Karatasou, 15
Anastasio Building, 6th floor, Office 601
Strovolos, 2024, Nicosia, Cyprus
Assistant secretary: Mr. Marios Tofaros
Registered office
20 Omirou Street
Agios Nicolaos
CY-3095 Limassol, Cyprus
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 260
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
261
Management
Report
The Board of Directors presents its report together with the audited parent company
financial statements for the year ended 31 December 2020. The parent company’s
financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union and the requirements
of Cyprus Companies Law, Cap. 113.
Principal activities
Environmental matters
Rail is one of the most environmentally friendly modes of transport. Nonetheless, any commercial activity has an
environmental impact and Globaltrans strives to minimise those from its operations where possible. To this end, the
Group ensures that its activities fully comply with local environmental regulations. It also aims to help business and
nature co-exist by focusing on applying modern technology in its operations and using natural resources rationally.
In January 2021, the Board established the ESG Committee to analyse and oversee risks related to the environmental,
social and governance issues.
The principal activities of the Company, which are unchanged from last year, are the holding of investments and
provision of financing to other Group companies.
Human resources
Review of developments, position and performance of the Company’s business
The Company’s profit for the year increased to RUB 21,883,710 thousand compared to RUB 18,773,265 thousand for
the year ended 31 December 2019. This was mainly the result of the increase in the dividend income earned from the
subsidiaries from RUB 20,417,895 thousand during the year ended 31 December 2019 to RUB 22,283,992 thousand in
the current year.
The net asset position of the Company has increased as of 31 December 2020 compared to 31 December 2019, with
net assets as of 31 December 2020 amounting to RUB 48,194,373 thousand compared to RUB 42,979,337 thousand as
of 31 December 2019.
The financial position, development and performance of the Company as presented in the financial statements is
considered satisfactory.
Changes in group structure
There were no changes in the group structure of the Company during the year ended 31 December 2020. For the
principal subsidiaries of the Company, refer to Note 18 of the financial statements.
Non-Financial Information and Diversity Statement
The Group will be publishing its Non-Financial Information and Diversity Statement within its Annual report that
will be issued within four months after the balance sheet date and will be available on the Company’s website,
www.globaltrans.com
Globaltrans considers the wellbeing of employees central to its success and strives to maintain exemplary working
standards, ensure job satisfaction and create opportunities for professional growth. The Group’s personnel policy
focuses on creating a positive atmosphere at all offices and facilities to maximise productivity. As part of this, it offers
medical insurance, support for education, opportunities to obtain additional qualifications and training, and financial
aid in particularly difficult times.
The Group’s future success will partly depend on its ability to continue to attract, retain and motivate key employees
and qualified personnel, in particular an experienced management team. Competition in Russia for such personnel
with relevant expertise is intense due to the small number of qualified individuals with suitable practical experience in
the rail industry.
Adequate remuneration packages, which are in line with or in excess of market levels, are offered to all employees
and key managers and remuneration is linked to the Group’s financial results. The Human Resource function regularly
monitors salary levels and other benefits offered by competitors to ensure that the Group’s remuneration packages are
adequate.
Principal risks and uncertainties
The Company faces a number of diverse potential and actual risks to its business. The Board has adopted a formal
process to identify, evaluate and manage principal risks and uncertainties faced by the Company and its subsidiaries.
To identify, evaluate and mitigate these, the Company has established an in-house system to monitor and control
uncertainties and threats throughout its activities. This is overseen by a dedicated Risk Management function, which
works directly with the Board of Directors in this area.
The Company has grouped the risks that it considers to be significant into key categories — strategic, operational,
compliance and financial — and they are presented below.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
262
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
263
Management
Report
Strategic risks
The strategic risks faced by the Company and its subsidiaries, together referred to as “Group”, that pose risks that
influence the Group’s ability to achieve its strategy include the general economic situation and operating environment
in Russia, Kazakhstan, Ukraine, CIS and Baltic countries in which the Group operates; the regulatory risk relating to the
operation of the Russian railway transportation market including railway tariff regulation and technical requirements
for fleet maintenance; the highly competitive Russian rail transportation market with unregulated operators’ services
tariffs; the significant concentration of the Group’s customer base with the top 10 customers (including their affiliates
and suppliers) accounting for around 72% of the Group’s Net Revenue from the operation of rolling stock in 2020; cost
of borrowing and/or deterioration in market conditions with potential impacts on the profitability and recoverability of
investments; and reliance on RZD for issuing permits allowing the Group to operate locomotives.
The Group operates mainly in Russia, other emerging markets and Estonia. Emerging markets, such as Russia,
Kazakhstan and Ukraine, are subject to greater risks than more developed markets, including significant economic,
political, social, legal and legislative uncertainties. Moreover, the Group’s business depends on the demand in the
Russian freight rail transportation market, which in turn depends on certain key commodity sectors and, accordingly,
on economic conditions in Russia, Europe and elsewhere. A decrease in production and demand for key commodities
in Russia, or in adjacent countries where the commodities of the Group’s key customers are shipped by rail, as a result
of a technological shift, economic downturn, political crisis or other event in Russia or another relevant country,
negatively impacts the Group’s business and growth prospects.
The management of the Group constantly monitors the developments in the operating environment and regulatory
regime of the railway transportation market in the countries in which the Group operates. The Group’s business model
is to maintain a balanced fleet between universal gondola cars, adaptable to the demand for transportation of various
bulk cargoes and rail tank cars, which are used for the transportation of oil products and oil. Further, the Group
has long-term, established relationships with its key customers and their affiliates and suppliers and in some cases,
the Group becomes an integrated part of its customers’ operations. Around 64% of the Group’s Net Revenue from
the Operation of Rolling Stock in 2020 was covered by long-term service contracts with several large clients. Such
contracts provide additional stability and greater certainty regarding transport volumes for the Group. In addition, the
Group’s marketing function regularly monitors competitors’ strategies, their use of technology, their price strategies
and industry trends.
In addition to the human impact, the spread of Coronavirus (COVID-19) continues to affect global businesses and may
lead to further and/or continued lockdowns, trade wars and turbulence in different currencies. The Group’s outlook
for 2021 may be further impacted by the Coronavirus outbreak, which continues to cause uncertainty. The freight rail
market may experience reduced demand stemming from the effects of COVID-19. The Company cannot predict the full
impact of COVID-19 on its markets, business or prospects although they may be materially adversely impacted by the
rapidly evolving situation. In addition, the appearance of new pandemics or other dangerous illnesses could seriously
affect the global and local business environment and lead to negative consequences for Group’s business. Significant
levels of COVID-19 illness in the Group or its key clients could interfere with stability of Group’s operations.
Management is closely monitoring the implications of the global outbreak of COVID-19 and acts depending on
the development of the situation. The Group constantly evaluates and implements options for distant work for its
workforce to mitigate risks of spreading and catching COVID-19 illness.
Operational risks
The operational risks faced by the Group that could influence the Group’s operational efficiency include the physical
state of the Russian, Ukrainian, CIS and Baltic countries railway infrastructure which may negatively impact the
condition of the Group’s rolling stock and the performance of the Group; the impact of inflation in Russia on the
Group’s costs with limited opportunities to increase tariffs to customers; the competition for personnel with relevant
expertise and experience in Russia and the impact on the Group’s ability to continue to attract, retain and motivate key
employees and qualified personnel; reliance on RZD for locomotive traction and infrastructure usage and the impact
of this on the quality of the Group’s freight transportation services and therefore customer satisfaction; IT availability
and continuity considerations due to reliance on specialised trail transport and logistics software for ensuring efficient
and effective logistics, dispatching and rolling stock tracking services; and risks of terrorist attacks, natural disasters
or other catastrophic events beyond the Group’s control.
The Group is managing operational risk by ensuring that practically all of the Group’s rolling stock is insured against
damage. Further, the Group monitors its rolling stock through the Group’s dispatch centre on a 24/7 basis and plans
routes accordingly to minimise the risks of disruption. The Group monitors FAS initiatives with the aim of detecting
possible changes in tariff-setting methodology and tries to reflect respective changes in contracts with customers.
Among the Group’s key objectives are to increase operational efficiency and to focus on control and reduction of
costs. The Group continuously monitors its costs to maintain efficiency.
The Human Resource function regularly monitors salary levels and other benefits offered by competitors to ensure
that the Group’s remuneration packages are adequate. Customer satisfaction is one of the key metrics that the Group’s
management monitors, with customer feedback being analysed and appropriate follow-up actions being taken. Local
IT specialists have introduced solutions to maintain the availability of IT services and ensure their recovery in case of
disruption. The IT function and Internal Audit function monitor all IT-related activities and performance for compliance
with IT policies and procedures.
Further the Group permanently monitors any disruptive events and applies a Business Continuity Policy to ensure the
safety of employees and human life; maintain continuity of time-critical services; minimise disruptions to clients and
partners; and minimise operational, financial and reputational impact.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 264
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
265
Management
Report
Compliance risks
The Group is also subject to compliance risk, being the risks that influence the Group’s adherence to relevant laws
and regulations, including the regulations of the London Stock Exchange (“LSE”) and the Moscow Exchange (“MOEX”),
where Company’s GDR are admitted to trading. The Group is involved in legal actions from time to time. Some of it
may have an adverse effect on the Group. The ambiguity of the law in Russia and CIS countries creates regulatory
uncertainty and might result in claims from different government authorities. Local tax, currency and customs
legislation, especially in Russia, other emerging markets and Cyprus, may be subject to varying interpretations,
inconsistencies between federal laws, regional and local laws, rules and regulations, frequent changes and a lack of
judicial and administrative guidance on interpreting legislation.
The Group runs its operations in compliance with tax, currency, labour, customs, antimonopoly and other applicable
legislation and constantly monitors any changes in the regulatory environment as well as compliance with the terms of
its agreements. Standard forms of agreements are used for transportation services, and various controls are in place
to ensure that the terms of agreements are adhered to. All contracts are subject to rigorous review by all of the Group
functions concerned and a formal approval process prior to execution. The Group has controls in place, including
highly qualified and experienced personnel, to monitor changes in legislation and determine the appropriate action
needed to minimise the risk of a challenge to such treatments by the authorities. For complex matters, the Group
retains external consultants.
Financial risks
The Company’s activities exposed it to a variety of financial risks: market risk (including foreign exchange risk, cash
flow and fair value interest rate risk), credit risk and liquidity risk. The Company’s overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s
financial results.
Foreign exchange risk
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated
in a currency different from the functional currency of the Company. The fluctuations in the exchange rate between
(i) US Dollar and Russian Rouble and (ii) Euro and Russian Rouble expose the Company to foreign exchange risk.
The Company’s current policy is not to hedge foreign exchange risk, with the exception of application of hedge
accounting to hedge foreign currency risk associated with highly probable dividend payments and associated
dividend payable until their settlement, as set out in the accounting policy for hedging activities in Note 4 to these
financial statements.
Cash flow and fair value interest rate risk
The Company holds interest bearing financial instruments at fixed interest rates. Financial assets and liabilities issued
at fixed rates expose the Company to fair value interest rate risk. The Company’s current policy is not to hedge interest
rate risk.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing
to meet an obligation. Credit risk arises from cash and cash equivalents, loans and other receivables and financial
guarantees issued by the Company for borrowings of subsidiaries.
Liquidity risk
As at 31 December 2020, the Company has an excess of current assets over current liabilities of RUB 2,485,452
thousand. Management believes that the Company will be able to meet its obligations as they fall due.
Management controls current liquidity based on expected cash flows, expected dividend and interest income
receipts, expected dividend payments and advancements under borrowings from subsidiaries. In the long-term
perspective, the liquidity risk is determined by forecasting future cash flows at the moment of signing new loans and
by budgeting procedures.
Further details on the Company’s exposure to financial risks are presented in Note 6 to the financial statements.
Contingencies
The Company’s contingencies are disclosed in Note 27 to the financial statements.
Future developments
The Board of Directors does not expect any significant changes in the activities of the Company in the foreseeable
future.
The Company’s strategic objective is to strengthen the position of the Group as a leading private freight rail group in
Russia.
Results
The Company’s results for the year are set out on pages 286 and 287. The Board of Directors recommends the payment
of a dividend as detailed below and the remaining net profit for the year is retained.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 266
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
267
Management
Report
Dividends
Treasury shares
Pursuant to its Articles of Association the Company may pay dividends out of its profits. To the extent that the
Company declares and pays dividends, owners of Global Depositary Receipts (GDRs) on the relevant record date
will be entitled to receive dividends payable in respect of Ordinary Shares underlying the GDRs, subject to the terms
of the Deposit Agreement. The Company expects to declare dividends in Russian Roubles and pay such dividends
in US Dollars. If dividends are not paid in US Dollars, except as otherwise described under “Terms and Conditions
of the Global Depositary Receipts — Conversion of Foreign Currency”, they will be converted into US Dollars by the
Depositary and paid to holders of GDRs net of currency conversion expenses.
In accordance with the decision of the Extraordinary General Meeting which took place on 12 May 2020, the Company
started a GDRs buyback program. The buyback programme is for the Company’s GDRs, each representing one
ordinary share of the Company with a par value of US$0.10 per share, and will run till the earlier of the close of the
Annual General Meeting of the Company to be held in 2021 and May 2021. The total number of purchased GDRs
shall not exceed 5% of the Company’s share capital (equivalent to 8,937,046 shares, with each GDR representing one
ordinary share). The buyback programme allows the Company to take advantage of opportunities, if any, when its
return criteria are better met by way of a GDR buyback than through investment in fleet expansion.
The Company is a holding company and thus its ability to pay dividends depends on the ability of its subsidiaries to
pay dividends to the Company in accordance with relevant legislation and contractual restrictions. The payment of
such dividends by its subsidiaries is contingent upon the sufficiency of their earnings, cash flows and distributable
reserves. The maximum dividend payable by the Company’s subsidiaries is restricted to the total accumulated
retained earnings of the relevant subsidiary, determined according to the law.
In April 2020, the shareholders of the Company approved the payment of a dividend for the financial year ended 31
December 2019 in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of
RUB 8,320,390 thousand, including final dividend for 2019 in the amount of RUB 1,903,591 thousand or RUB 10.65 per
ordinary share/GDR and a special final dividend in the amount of RUB 6,416,799 thousand or RUB 35.90 per ordinary
share/GDR (US Dollar equivalent of US$ 110,787 thousand).
In August 2020, the Board of Directors of the Company approved payment of total dividend in the amount of 46.55
Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including interim
dividend in the amount of RUB 3,083,281 thousand or RUB 17.25 per ordinary share/GDR and a special interim dividend
in the amount of RUB 5,237,109 thousand or RUB 29.30 per ordinary share/GDR (US Dollar equivalent US$ 111,293
thousand).
On the date of this report, the Board of Directors of the Company, having considered the profitability and liquidity
position of the Group, recommends a payment of dividend for the year 2020 in the amount of 28.0 Russian Roubles
per ordinary share/GDR, amounting to a total dividend of RUB 5,004,746 thousand, including final dividend for 2020
in the amount of RUB 2,931,351 thousand or RUB 16.4 per ordinary share/GDR and a special final dividend in the
amount of RUB 2,073,395 thousand or RUB 11.60 per ordinary share/GDR. Such dividends subject to the approval of
the shareholders at the Annual General Meeting on 29 April 2021 and shall be paid in US Dollars at the average of the
official exchange rates of the Russian Central Bank for five business days in Russia from 22 April 2021 to 28 April 2021
inclusive.
Share capital
As at 31 December 2020 the issued share capital of the Company, which remains unchanged from the prior year,
comprised 178,740,916 ordinary shares with a par value of US$0.10 per share.
As at 31 December 2020 the Company has purchased a total of 76,877 GDRs, which are held in treasury for a total
consideration of 422 thousand US Dollars (equivalent to RUB 31,496 thousand).
In line with relevant legislation, GDRs repurchased by the Company may be held in treasury for up to two years.
Research and development activities
The Company has not undertaken any research and development activities during the year ended 31 December 2020.
Events after the balance sheet date
The events after the balance sheet date are disclosed in Note 28 to the financial statements.
Branches
The Company does not operate through any branches.
Going concern
Directors have access to all information necessary to exercise their duties. The Directors continue to adopt the going
concern basis in preparing the financial statements based on the fact that, after making enquiries and following a
review of the Group’s budget for 2020, including cash flows and borrowing facilities, the Directors consider that the
Company has adequate resources to continue in operation for the foreseeable future.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 268
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
269
Management
Report
Auditors
Members of the Board of Directors
The Independent Auditor, PricewaterhouseCoopers Limited, has expressed their willingness to continue in office. A
resolution giving authority to the Board of Directors to fix their remuneration will be proposed at the Annual General
Meeting.
Corporate governance
Globaltrans’ Board of Directors adopted the Company’s Code of Corporate Governance (the “Code”), guaranteeing
that the interests of all shareholders are given due consideration. Although the Code is based on principles
recommended by the UK Corporate Governance Code (formerly the Combined Code), this does not constitute
voluntary compliance with such governance code.
Globaltrans’ corporate governance policies and practices are designed to ensure that the Group upholds its
responsibilities to shareholders. As such, all employees are required to comply with these guidelines and the Group’s
management team takes responsibility for ensuring that all departments adhere to these standards. These key
principles are promoted and applied across all levels of the Group in order to establish effective and transparent
corporate governance. In January 2010, the Board supplemented its Code of Corporate Governance with a corporate
policy on the treatment of the rights of its non-controlling shareholders; this aims to ensure fair treatment of the rights
of non-controlling shareholders of the Company.
Full details of our governance policies can be found at https://globaltrans.com/governance/corporate-documents.
The role of the Board of Directors
The Company is managed by the Board of Directors which is collectively responsible to the shareholders for the
success of the Group. The Board sets the strategic objectives and ensures that the necessary resources are in place
to enable these objectives to be met. The Board is fully involved in decision making in the most important areas of
business and conducts regular reviews of the Group’s operational and financial performance. One of the Board’s key
responsibilities is to ensure that there is in place a system of prudent and effective risk controls that enable risks to be
identified, assessed and managed appropriately.
As at 31 December 2020 and at the date of this report, the Board comprises 15 members (2019: 15 members), 11 (2019:
11 members) of whom are non-executive directors. Four (2019: four) of the non-executive directors are independent,
they have no relationship with the Company, its related companies or their officers that could interfere, or be
reasonably perceived to interfere, with the exercise of the director’s independent business judgment with a view to the
best interests of the Company, and they are able to exercise objective judgment on corporate affairs independently
from management.
The members of the Board of Directors at 31 December 2020 and at the date of this report are shown on page 258.
All of them were members of the Board throughout the year 2020.
There were no significant changes in the assignment of responsibilities of the Board of Directors during the year 2020.
There is no provision in the Company’s Articles of Association for retirement of Directors by rotation; however, in
accordance with the Terms of reference of the Board of Directors all board members are required to submit for
re-election at least once every three years. Should a non-executive Director serve any term beyond six years, his/her
re-election would be subject to particularly rigorous review. In practice, all current appointments are for one year and
all directors will stand for re-election at the forthcoming Annual General Meeting of shareholders of the Company.
The total gross remuneration of the members of the Board of Directors incurred by the Company in 2020 amounted to
RUB 310,758 thousand (2019: RUB 352,881 thousand).
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 270
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
271
Management
Report
Board performance
The Board Committees
The Board held 18 meetings in 2020. The Directors’ attendance is presented in the table below.
Eligible
Attended
Johann Franz Durrer
Carroll Colley
George Papaioannou
Alexander Eliseev
Melina Pyrgou
Konstantin Shirokov
Alexander Storozhev
Marios Tofaros
Elia Nicolaou
Sergey Tolmachev
Sergey Maltsev (Chairman)
Andrey Gomon
Alexander Tarasov
Vasilis P. Hadjivassiliou
Michael Thomaides
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
18
17
18
18
18
18
18
18
18
18
18
18
17
During 2020 the Board had three committees: the Audit Committee, the Nomination Committee and the Remuneration
Committee. In January 2021 the Board has established the ESG Committee. A brief description of the terms of
reference of the committees is set out below.
Audit Committee
The Audit Committee comprises of three Directors and meets at least four times each year. As of 31 December
2020 two members Audit Committee were independent and the Audit Committee was chaired by Mr. J. Carroll
Colley and was also attended by Mr. Papaioannou and Ms. Nicolaou. In January 2021 Mr. Vasilis Hadjivassiliou became
a member of the Audit Committee and Ms. Nicolaou resigned from the Audit Committee and was appointed to the
ESG Committee, as a result since January 2021 the Audit Committee comprises of three independent Directors.
The Audit Committee is responsible for considering, among other matters: the integrity of the Company’s financial
statements, including its annual and interim accounts, and the effectiveness of the Company’s internal controls and
risk management systems; auditors’ reports and the terms of appointment and remuneration of the auditor.
The Committee supervises, monitors and advises the Board on risk management and control systems and the
implementation of codes of conduct. In addition, the Audit Committee supervises the submission by the Company of
financial information and a number of other audit-related issues. The Audit Committee is also responsible for assessing
the efficiency of the performance of the Chairman of the Board.
The Audit Committee manages the relationship with the external auditor on behalf of the Board. It considers the
reappointment of the external auditor each year, as well as remuneration and other terms of engagement, and makes
a recommendation to the Board. Shareholders are asked to approve the reappointment of the auditor each year at the
Annual General Meeting.
The Internal Audit function is carried out internally by the Group’s Internal Audit Service (“IAS”). IAS is responsible for
testing the systems of risk management, internal control and corporate governance of the Group.
Nomination Committee
The Nomination Committee comprises of two Independent Directors and meets at least once a year. The Nomination
Committee is chaired by Dr. Durrer and Caroll Colley is the other member. The Committee’s remit is to prepare
selection criteria and appointment procedures for members of the Board and to review on a regular basis the
structure, size and composition of the Board. In undertaking this role, the Committee refers to the skills, knowledge
and experience required of the Board, given the Company’s stage of development, and makes recommendations to
the Board as to any changes. The Committee also considers future appointments in respect of the Board’s composition
and makes recommendations regarding the membership of the Audit and Remuneration Committees.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
272
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
273
Management
Report
Remuneration Committee
The Remuneration Committee comprises of two Independent Directors and meets at least once a year. The
Remuneration Committee is chaired by Dr. Durrer and Caroll Colley is the other member. The Committee’s
responsibility is the determination and review of, among other matters, the remuneration of Executive Directors, and
the review of the Company’s remuneration policies. The remuneration of Independent Directors is a matter for the
Chairman of the Board and the Executive Directors. No Director or manager may be involved in any decisions as to his/
her own remuneration.
ESG Committee
In January 2021 the Board of Directors established an ESG Committee to lead its thinking on ESG matters and
ensure that ESG issues are integrated into the Group’s long-term strategy. The ESG Committee will also monitor the
development of the Group’s sustainability strategy, review and recommend ESG disclosures for Board approval and
approve the Group’s sustainability reports. The ESG Committee is comprised of two Board members: Elia Nicolaou,
Non-executive Director, who serves as the Chair, and John Carroll Colley, Independent Non-executive Director. The
ESG Committee will meet at least two times a year.
Diversity policy
The Company does not have a formal Board diversity policy to aspects such as age, gender or educational and
professional backgrounds, but following best practice, while making the new appointments and considering the
current composition of the Board of Directors, these aspects are taken into account.
As of the date of publication of these financial statements the Board has 2 females representing approximately
13% from the total number of directors. The age of the members of the Board of Directors starts from over 40 with
the average age of directors being 52.5 years. The Board members have the following educational backgrounds:
transportation and ports industry, accounting, economics and financial, banking sector and legal, engineering
and mechanics, biophysics and mathematics, history, international affairs and risk management. The Board has a
necessary balance of skills and expertise to run the Company and the Group.
Further details of the corporate governance regime of the Company can be found on the website:
https://globaltrans.com/governance/corporate-documents
Board and Management Remuneration
Regulations with regards to the amendment of the article of association
Non-executive directors serve on the Board pursuant to the letters of appointment which are subject to approval by
the shareholders at the Annual General Meeting. Such letters of appointment specify the terms of appointment and
the remuneration of non-executive directors. Appointments are for one year.
Levels of remuneration for Non-Executive Directors reflect the time commitment, responsibilities of the role and
membership of the respective committees of the Board. Directors are also reimbursed for expenses associated with
discharge of their duties.
The shareholders of the Company approved the remuneration of the members of the Board of Directors at the Annual
General Meeting of shareholders held on 30 April 2020.
Refer to Note 26 of the financial statements for details of remuneration of directors and other key management
personnel.
The Articles of Association of the Company may be amended from time to time by special resolution at the General
Meeting of the Shareholders.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 274
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
275
Management
Report
Company’s internal control and risk management systems in relation to the financial
reporting process
Significant direct or indirect holdings (including indirect shareholding though
structures or cross shareholdings)
The Board of Directors is responsible for the preparation of the financial statements that give a true and fair view in
accordance with International Financial Reporting Standards as adopted by the European Union and the requirements
of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors determines is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the financial statements, the Board of Directors is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations,
or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
The Board is primarily responsible for establishing a framework of prudent and effective controls that enables risks to
be assessed and managed.
The Audit Committee assists the Board in this task by reviewing and assessing the Group’s internal control and risk
management processes in relation to Group’s financial reporting process.
The issued share capital of the Company consists of 178,740,916 ordinary shares with a nominal value of USD 0.10
each, a certain portion of which is held in the form of Global Depositary Receipts (GDRs). The GDRs represent one
ordinary share each and are listed and traded on the Main Market of the London Stock Exchange and, from October
2020, in the Moscow Exchange, under the ticker GLTR. The free float of Globaltrans amounts to approximately 56.9%1
of the issued share capital. In June 2020 the Company changed the depositary bank for the GDR programme of the
Company from the Bank of New York Mellon to Citibank N.A..
The shareholder structure of the Company as at 31 December 2020 was follows:
Onyx Investments Ltd2
Marigold Investments Ltd2
Maple Valley Investments Ltd2
Litten Investments Ltd3
Goldriver Resources Ltd4
Controlled by Directors and management of Globaltrans
11.5%
11.5%
10.8%
5.1%
4.0%
0.2%
56.9%
The system of controls is designed to manage rather than eliminate the risks relevant to the Group’s operations and,
therefore, can only provide reasonable, and not absolute, assurance against material errors, losses, fraud or breaches
of laws and regulations.
Free float1
At Globaltrans, the body responsible for internal audit is the Internal Audit Service (IAS). It tests the Group’s systems of
risk management, internal control and corporate governance to obtain a reasonable assurance that:
The risk management system functions efficiently;
•
• Material financial, management and operating information is accurate, reliable and up-to-date;
•
The actions of employees and management bodies are in compliance with the Group’s policies, standards and
procedures and the applicable laws;
Resources are procured reasonably and used efficiently and their safekeeping is fully guaranteed; and
•
• Group companies conduct their business in compliance with applicable laws.
Each year, the Audit Committee approves an internal audit plan, which is developed by identifying the audit universe,
performing a risk analysis and obtaining input from management relative to risks, controls and governance processes.
The internal auditor regularly reports to the Audit Committee on the progress of planned audits. If any material internal
control deficiencies are identified, they are communicated to the Audit Committee, and consequently to the Board,
at once.
1 For these purposes, the free float consists of the ordinary shares and GDRs held by investors not affiliated or associated with the Company.
2 Nikita Mishin, Andrey Filatov and Konstantin Nikolaev are co-founders of the Company and beneficiaries with regard to 11.5%, 11.5% and 10.8%
respectively of Globaltrans’ ordinary share capital each through their respective SPVs (Onyx Investments Ltd, Marigold Investments Ltd and Maple
Valley Investments Ltd).
3 Beneficially owned by Alexander Eliseev, Non-executive Director and co-founder of the Company.
4 Beneficially owned by Sergey Maltsev, Chairman of the Board, Executive Director, Chief strategy officer and co-founder of the Company.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
276
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
277
Management
Report
Directors’ interests
The holders of special titles that provide special control rights and description
of such rights
The interests in the share capital of Globaltrans Investment PLC, both direct and indirect, of those who were Directors
of the Company as at 31 December 2020 and 31 December 2019 are shown below:
The Company does not have any titles with special rights.
Name
Type of holding
2020
2019
Any restrictions in exercising of voting rights of shares
Alexander Eliseev
Indirect holding of ordinary shares and GDRs
9,065,790
9,065,790
Sergey Maltsev
Indirect holding of ordinary shares and GDRs
7,099,725
7,099,725
Johann Franz Durrer
Holding of GDRs
160,606
160,606
There are no restrictions in the exercising of voting rights of shares issued by the Company.
By Order of the Board
..................................................
Sergey Tolmachev
Director
Limassol, 26 March 2021
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 278
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
279
Directors’
responsibility
The Company’s Board of Directors is responsible for the preparation of financial
statements that give a true and fair view in accordance with International Financial
Reporting Standards as adopted by the European Union and the requirements of the
Cyprus Companies Law, Cap.113, and for such internal control as the Board of Directors
determines is necessary to enable the preparation of financial statements that are free
from material misstatement, whether due to fraud or error.
This responsibility includes selecting appropriate accounting policies and applying them consistently; and making
accounting estimates and judgements that are reasonable in the circumstances.
In preparing the financial statements, the Board of Directors is also responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the Board of Directors either intends to liquidate the Company or to cease operations, or
has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Further, each of the Directors confirms that, to the best of their knowledge:
(i)
adequate accounting records have been maintained which disclose with reasonable accuracy the financial
position of the Company and explain its transactions;
(ii) all information of which they are aware that is relevant to the preparation of the financial statements, such
as accounting records and all other relevant records and documentation, has been made available to the
Company’s auditors;
(iii) the financial statements disclose the information required by the Cyprus Companies Law, Cap.113 in the manner
so required;
(iv) the Management Report has been prepared in accordance with the requirements of the Cyprus Companies Law,
(v)
Cap.113, and the information given therein is consistent with the financial statements;
the information included in the corporate governance statement in accordance with the requirements of
subparagraphs (iv) and (v) of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113, and which
is included as a specific section of the Management Report, have been prepared in accordance with the
requirements of the Cyprus Companies Law, Cap, 113, and is consistent with the financial statements; and
(vi) the corporate governance statement includes all information referred to in subparagraphs (i), (ii), (iii), (vi) and (vii)
of paragraph 2(a) of Article 151 of the Cyprus Companies Law, Cap. 113.
Directors’ confirmations
Each of the directors, whose names and functions are listed in page 258 confirms that, to the best of his or her
knowledge:
By order of the Board
(a)
the financial statements, which are presented on pages 286 and 355, which have been prepared in accordance
with International Financial Reporting Standards as adopted by the European Union and the requirements of the
Cyprus Companies Law, Cap.113, give a true and fair view of the assets, liabilities, financial position and profit or
loss of the Company; and
(b) the Management Report includes a fair review of the development and performance of the business and the
position of the Company, together with a description of the principal risks and uncertainties that it faces.
..............................................
Sergey Tolmachev
Director
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 280
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
281
Independent Auditor’s
Report
To the Members of Globaltrans Investment PLC
Report on the Audit of the Parent Company Financial Statements
Our audit approach
Our opinion
In our opinion, the accompanying parent company financial statements give a true and fair view of the financial
position of parent company Globaltrans Investment PLC (the “Company”) as at 31 December 2020, and of its financial
performance and its cash flows for the year then ended in accordance with International Financial Reporting
Standards (IFRSs) as adopted by the European Union and the requirements of the Cyprus Companies Law, Cap. 113.
Overview
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
parent company financial statements. In particular, we considered where the Board of Directors made subjective
judgements; for example, in respect of significant accounting estimates that involved making assumptions and
considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of
management override of internal controls, including among other matters, consideration of whether there was
evidence of bias that represented a risk of material misstatement due to fraud.
What we have audited
We have audited the parent company financial statements which are presented in pages 286 and 355 and comprise:
Materiality
• the balance sheet as at 31 December 2020;
• the income statement for the year then ended;
• the statement of comprehensive income for the year then ended;
• the statement of changes in equity for the year then ended;
• the cash flow statement for the year then ended; and
• the notes to the parent company financial statements, which include a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the parent company financial statements
is International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus
Companies Law, Cap. 113.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Parent Company Financial
Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Company throughout the period of our appointment in accordance with the
International Ethics Standards Board for Accountants’ International Code of Ethics for Professional Accountants
(including International Independence Standards) (IESBA Code) together with the ethical requirements that are
relevant to our audit of the parent company financial statements in Cyprus and we have fulfilled our other ethical
responsibilities in accordance with these requirements and the IESBA Code.
Overall materiality: RUB 800,300 thousand, which represents 5% of profit before tax as
adjusted for non-recurring items and limited to the overall group materiality determined
for the purposes of the audit of the Company’s consolidated financial statements for the
year ended 31 December 2020 (rounded).
Key audit matters
We have determined that there are no key audit matters to communicate in our report.
Materiality
The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable
assurance whether the parent company financial statements are free from material misstatement. Misstatements
may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of the parent company financial statements.
Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the
overall materiality for the parent company financial statements as a whole as set out in the table below. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and
extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the
parent company financial statements as a whole.
Overall materiality
RUB 800,300 thousand
How we determined it
5% of profit before tax as adjusted for non-recurring items and limited to the overall
group materiality determined for the purposes of the audit of the Company’s
consolidated financial statements for the year ended 31 December 2020 (rounded)
Rationale for the materiality
benchmark applied
We chose adjusted profit before tax as the benchmark, because in our view, it is
the benchmark against which the performance of the Company is most commonly
measured by the users of the parent company financial statements and is a generally
accepted benchmark. We chose 5% which is within the range of acceptable
quantitative materiality thresholds in auditing standards.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 282
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
283
Independent Auditor’s
Report
We agreed with the Audit Committee that we would report to them misstatements identified during our audit
above RUB 40,000 thousand as well as misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
In preparing the parent company financial statements, the Board of Directors is responsible for assessing the
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Board of Directors either intends to liquidate the Company or
to cease operations, or has no realistic alternative but to do so.
Key audit matters incorporating the most significant risks of material misstatements, including assessed risk of
material misstatements due to fraud
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
We have determined that there are no Key Audit Matters to communicate in our report.
Reporting on other information
The Board of Directors is responsible for the other information. The other information comprises the information
included in the Management Report, including the Corporate Governance Statement, and the Directors’ responsibility,
which we obtained prior to the date of this auditor’s report, and the Company’s complete Annual Report, including the
Non-Financial Information and Diversity Statement, which is expected to be made available to us after that date. Other
information does not include the parent company financial statements and our auditor’s report thereon.
Our opinion on the parent company financial statements does not cover the other information and we do not and will
not express any form of assurance conclusion thereon.
In connection with our audit of the parent company financial statements, our responsibility is to read the other
information identified above and, in doing so, consider whether the other information is materially inconsistent
with the parent company financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If, based on the work we have performed on the other information that we obtained prior to
the date of this auditor’s report, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
When we read the Company’s complete Annual Report, including the Non-Financial Information and Diversity
Statement, if we conclude that there is a material misstatement therein, we are required to communicate the matter to
those charged with governance and, if not corrected, we will bring the matter to the attention of the members of the
Company at the Company’s Annual General Meeting and we will take such other action as may be required.
Responsibilities of the Board of Directors and those charged with governance for the
Parent Company Financial Statements
The Board of Directors is responsible for the preparation of the parent company financial statements that give a true
and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and
the requirements of the Cyprus Companies Law, Cap. 113, and for such internal control as the Board of Directors
determines is necessary to enable the preparation of parent company financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor’s Responsibilities for the Audit of the Parent Company Financial Statements
Our objectives are to obtain reasonable assurance about whether the parent company financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these parent company financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional scepticism
throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the parent company financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the Board of Directors.
• Conclude on the appropriateness of the Board of Directors’ use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the parent
company financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions
may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the parent company financial statements, including
the disclosures, and whether the parent company financial statements represent the underlying transactions and
events in a manner that achieves a true and fair view.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the
audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 284
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
285
Independent Auditor’s
Report
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the parent company financial statements of the current period and are therefore the key
audit matters.
Report on Other Legal and Regulatory Requirements
Pursuant to the requirements of Article 10(2) of the EU Regulation 537/2014 we provide the following information in
our Independent Auditor’s Report, which is required in addition to the requirements of International Standards on
Auditing.
Appointment of the Auditor and Period of Engagement
We were first appointed as auditors of the Company in 2005 by shareholders’ resolution for the audit of the financial
statements for the year ended 31 December 2004. Our appointment has been renewed annually, since then, by
shareholders’ resolution. In 2008 the Company was listed in the Main Market of the London Stock Exchange and
accordingly the first financial year that the Company qualified as a European Union Public Interest Entity was the year
ended 31 December 2008. Since then, the total period of uninterrupted engagement appointment was 13 years.
Consistency of the Additional Report to the Audit Committee
We confirm that our audit opinion on the parent company financial statements expressed in this report is consistent
with the additional report to the Audit Committee of the Company, which we issued on 25 March 2021 in accordance
with Article 11 of the EU Regulation 537/2014.
Provision of Non-audit Services
We declare that no prohibited non-audit services referred to in Article 5 of the EU Regulation 537/2014 and Section
72 of the Auditors Law of 2017 were provided. In addition, there are no non-audit services which were provided by us
to the Company and which have not been disclosed in the parent company financial statements or the management
report.
Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
•
•
In our opinion, based on the work undertaken in the course of our audit, the management report has been
prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and the information given
is consistent with the parent company financial statements.
In light of the knowledge and understanding of the Company and its environment obtained in the course of the
audit, we are required to report if we have identified material misstatements in the management report. We have
nothing to report in this respect.
•
•
•
In our opinion, based on the work undertaken in the course of our audit, the information included in the corporate
governance statement in accordance with the requirements of subparagraphs (iv) and (v) of paragraph 2(a) of
Article 151 of the Cyprus Companies Law, Cap. 113, and which is included as a specific section of the management
report, have been prepared in accordance with the requirements of the Cyprus Companies Law, Cap. 113, and is
consistent with the parent company financial statements.
In our opinion, based on the work undertaken in the course of our audit, the corporate governance statement
includes all information referred to in subparagraphs (i), (ii), (iii), (vi) and (vii) of paragraph 2(a) of Article 151 of the
Cyprus Companies Law, Cap. 113.
In light of the knowledge and understanding of the Company and its environment obtained in the course of
the audit, we are required to report if we have identified material misstatements in the corporate governance
statement in relation to the information disclosed for items (iv) and (v) of subparagraph 2(a) of Article 151 of the
Cyprus Companies Law, Cap. 113. We have nothing to report in this respect.
Other Matter
This report, including the opinion, has been prepared for and only for the Company’s members as a body in
accordance with Article 10(1) of the EU Regulation 537/2014 and Section 69 of the Auditors Law of 2017 and for no
other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other
person to whose knowledge this report may come to.
We have reported separately on the consolidated financial statements of the Company and its subsidiaries for the year
ended 31 December 2020.
The engagement partner on the audit resulting in this independent auditor’s report is Tasos Nolas.
Tasos Nolas
Certified Public Accountant and Registered Auditor
for and on behalf of
PricewaterhouseCoopers Limited
Certified Public Accountants and Registered Auditors
City House, 6 Karaiskakis Street,
CY-3032 Limassol, Cyprus
26 March 2021
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
286
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
287
Income
statement
Statement of
comprehensive income
FOR THE YEAR ENDED 31 DECEMBER 2020
FOR THE YEAR ENDED 31 DECEMBER 2020
Note
2020
2019
RUB’000
RUB’000
8
22,327,855
20,470,164
Profit for the year
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Losses on cash flow hedging instrument
Reclassification adjustment to the income statement
22,862,263
20,444,029
Total items that may be reclassified subsequently to profit or loss
2020
2019
RUB’000
RUB’000
21,883,710
18,773,265
(475,042)
475,042
—
—
—
—
—
—
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
21,883,710
18,773,265
!
The notes on pages 294 to 355 are an integral part of these financial statements.
Revenue
Marketing costs
Administrative expenses
Reversal of impairment losses on loans receivable
26
51,713
Other income
Other gains — net
Operating profit
Finance income
Finance costs
Net foreign exchange transaction gains/(losses) on financing activities
Finance costs — net
Profit before tax
Income tax expense
Profit for the year
9
12
12
12
12
!
The notes on pages 294 to 355 are an integral part of these financial statements.
(2,144)
(3,771)
(565,127)
(473,657)
1,000,232
49,734
312,980
133,508
4,805
42,311
63,630
(216,510)
(462,562)
268,879
(244,426)
94,680
(643,358)
22,956,943
19,800,671
13
(1,073,233)
(1,027,406)
21,883,710
18,773,265
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 288
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
289
Balance
sheet
AT 31 DECEMBER 2020
ASSETS
Non-current assets
Investments in subsidiary undertakings
Property, plant and equipment
Right-of-use assets
Loans and other receivables
Total non-current assets
Current assets
Loans and other receivables
Other assets
Cash and cash equivalents
Total current assets
TOTAL ASSETS
EQUITY AND LIABILITIES
Capital and reserves
Share capital
Share premium
Capital contribution
Treasury shares
Retained earnings
Total equity
Note
31 December 2020
31 December 2019
Non-current liabilities
18
16
17
19
19
20
21
22
22
RUB’000
RUB’000
45,151,248
45,151,248
10,678
2,633
6,652
5,064
544,362
696,548
45,708,921
45,859,512
380,674
6,588
2,225,518
2,612,780
508,281
848
982,797
1,491,926
48,321,701
47,351,438
516,957
516,957
27,929,478
27,929,478
2,694,851
(31,496)
2,694,851
—
17,084,583
11,838,051
48,194,373
42,979,337
Borrowings
Lease liabilities
Total non-current liabilities
Current liabilities
Borrowings
Lease liabilities
Payables and accrued expenses
Total current liabilities
23
24
23
24
25
—
—
—
—
3,220
124,108
127,328
2,086,465
2,359
2,088,824
2,175,477
2,054
105,746
2,283,277
TOTAL LIABILITIES
127,328
4,372,101
TOTAL EQUITY AND LIABILITIES
48,321,701
47,351,438
On 26 March 2021 the Board of Directors of Globaltrans Investment PLC authorised these financial statements for
issue.
..............................................
..............................................
Sergey Tolmachev
Director
Konstantin Shirokov
Director
!
The notes on pages 294 to 355 are an integral part of these financial statements.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
290
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
291
Statement
of changes in equity
Note
Share capital
Share premium
Capital contribution
Treasury shares
Cash flow hedge
reserve
Retained earnings
Total
FOR THE YEAR ENDED 31 DECEMBER 2020
Balance at 1 January 2019
Comprehensive income
Profit for the year
Total comprehensive income for 2019
Transactions with owners
Dividend to owners of the Company
15
Total distributions to owners of the Company
Total transactions with owners
RUB’000
516,957
RUB’000
27,929,478
RUB’000
2,694,851
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Balance at 31 December 2019/1 January 2020
516,957
27,929,478
2,694,851
Comprehensive income
Profit for the year
Other comprehensive income
Losses on cash flow hedging instrument
Reclassification adjustment to the income statement
Total comprehensive income for 2020
Transactions with owners
Dividend to owners of the Company
Total distributions to owners of the Company
Purchase of treasury shares
Total transactions with owners
Balance at 31 December 2020
15
22
! The notes on pages 294 to 355 are an integral part of these financial statements.
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
516,957
27,929,478
2,694,851
RUB’000
RUB’000
—
—
—
—
—
—
—
—
—
—
—
—
—
(31,496)
(31,496)
(31,496)
—
—
—
—
—
—
—
(475,042)
475,042
—
—
—
—
—
—
RUB’000
9,696,628
18,773,265
18,773,265
RUB’000
40,837,914
18,773,265
18,773,265
(16,631,842)
(16,631,842)
(16,631,842)
(16,631,842)
(16,631,842)
(16,631,842)
11,838,051
42,979,337
21,883,710
21,883,710
—
—
(475,042)
475,042
21,883,710
21,883,710
(16,637,178)
(16,637,178)
(16,637,178)
(16,637,178)
—
(31,496)
(16,637,178)
(16,668,674)
17,084,583
48,194,373
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 292
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
293
Cash flow
statement
FOR THE YEAR ENDED 31 DECEMBER 2020
Cash flows from operating activities
Profit before tax
Adjustments for:
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Interest on loans to related parties
Bank interest income
Interest income on other receivables from related parties
Interest expense
Reversal of impairment losses on loans receivable
Profit from sale of property, plant and equipment
Net foreign exchange transaction (gains)/losses on financing
activities
Note
2020
RUB’000
2019
RUB’000
Cash flows from investing activities
Proceeds from sale of subsidiary
Contribution into the capital of subsidiary
Purchases of property, plant and equipment
22,956,943
19,800,671
Proceeds from sale of property plant and equipment
16
17
8
12
12
12
26
10
12
1,768
2,431
(43,863)
(39,048)
(3,263)
216,510
(51,713)
(1,029)
(268,879)
2,586
2,228
(52,269)
(46,696)
(16,934)
462,562
(312,980)
(1,028)
244,426
Loans granted to related parties
Loan repayments received from related parties
Bank interest received
Net cash generated from investing activities
Cash flows from financing activities
Repayments of bank borrowings
Principal elements of lease payments
Interest paid on bank borrowings
Interest paid on lease liabilities
Purchase of treasury shares
Dividends paid to the Company’s shareholders
Net cash used in financing activities
18
18
16
26
26
23
23
23
23
22
15
315,967
528,127
—
(300,089)
(6,528)
1,763
—
400,299
39,048
750,549
(6,666)
—
(180,000)
779,817
46,696
867,885
(4,242,424)
(3,199,576)
(2,358)
(2,031)
(235,720)
(473,296)
(308)
(31,496)
(265)
—
(16,637,178)
(16,631,842)
(21,149,484)
(20,307,010)
Net increase/(decrease) in cash and cash equivalents
Exchange gains/(losses) on cash and cash equivalents
Cash and cash equivalents at beginning of year
1,093,697
149,024
982,797
Cash and cash equivalents at end of year
21
2,225,518
(170,705)
(114,547)
1,268,049
982,797
! The notes on pages 294 to 355 are an integral part of these financial statements.
Operating cash flows before working capital changes
22,769,857
20,082,566
Changes in working capital:
Dividend income not received
Other assets
Payables and accrued expenses
(251,377)
(5,740)
18,749
—
(6,088)
33,126
Net cash generated from operations
22,531,489
20,109,604
Interest received from loans from related parties
34,374
175,821
Tax paid
(1,073,231)
(1,017,005)
Net cash generated from operating activities
21,492,632
19,268,420
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 294
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
295
Notes to the parent company
financial statements
1. General information
2. Basis of preparation
Country of incorporation
Globaltrans Investment Plc (“the Company”) is incorporated and domiciled in Cyprus as a limited liability company in
accordance with the provisions of the Cyprus Companies Law, Cap. 113 and converted into a public company on 15
April 2008. The address of its registered office is 20 Omirou Street, Limassol, Cyprus.
Approval of the parent company financial statements
These parent company financial statements were authorised for issue by the Board of Directors of the Company on 26
March 2021.
The parent company financial statements of Globaltrans Investment PLC have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by the European Union (EU) and the requirements of
the Cyprus Companies Law, Cap. 113.
As of the date of the authorization of the financial statements, all International Financial Reporting Standards issued
by International Accounting Standards Board (IASB) that are relevant to the Company’s operations and are effective
as at 1 January 2020 have been adopted by the EU through the endorsement procedure established by the European
Commission.
Global Depositary Receipts
Global Depositary Receipts, each representing one ordinary share of the Company, are listed on the London Stock
Exchange International Main Market and, since October 2020, on the Moscow Exchange.
Principal activities
The principal activities of the Company, which are unchanged from last year, are the holding of investments and
provision of financing to other Group companies.
Consolidated financial statements
The Company has also prepared consolidated financial statements in accordance with International Financial
Reporting Standards as adopted by the European Union (EU) and the requirements of the Cyprus Companies Law,
Cap. 113 for the Company and its subsidiaries (“the Group”). These consolidated financial statements can be obtained
from the Company’s website at www.globaltrans.com.
The financial statements have been prepared under the historical cost convention.
The Company has prepared these parent company financial statements for compliance with the requirements of
the Cyprus Companies Law, Cap. 113 and disclosure rules as issued by the Financial Conduct Authority of the United
Kingdom.
Users of these parent company financial statements should read them together with the Company’s consolidated
financial statements as at and for the year ended 31 December 2020 in order to obtain a proper understanding of the
financial position, the financial performance and cash flows of the Company and the Group.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting
estimates and requires management to exercise its judgement in the process of applying the Company’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements are disclosed in Note 7.
3. Adoption of new or revised standards and interpretations
During the current year the Company adopted all the new and amended International Financial Reporting Standards
(IFRS) that are relevant to its operations and are effective for accounting periods beginning on 1 January 2020. None of
these had a significant impact on these financial statements.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 296
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
297
Notes to the parent company
financial statements
4. Summary of significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below. These
policies have been consistently applied to all the years presented, unless otherwise stated.
Foreign currency translation
(a) Functional and presentation currency
Items included in the Company’s financial statements are measured using the currency of the primary economic
environment in which the entity operates (“the functional currency”). The Company’s functional currency is the
Russian Rouble. The financial statements are also presented in Russian Roubles (“the presentation currency”)
because this is the currency better understood by the principal users of the financial statements.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates prevailing
at the dates of the transactions or valuations where items are re-measured. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, with
the exception of foreign exchange differences that relate to qualifying cash flow hedges which are deferred in
equity.
Net foreign exchange differences arising from borrowings and other liabilities and from cash and cash equivalents
and other monetary assets are presented on the face of the income statement in the line “net foreign transaction
gains/(losses) on financing activities”, with the appropriate disclosure of the split between the two in the note
“Finance costs — net”.
All other foreign exchange gains and losses are presented in the income statement within “Other gains — net”.
Hedging activities
The Company is exposed to foreign exchange risk arising from dividends declared in Russian Roubles and paid in US
Dollar at the rate set at the date of the declaration. The Company uses foreign currency cash deposits denominated in
US Dollars to hedge this foreign exchange risk exposure.
In particular, the US Dollar denominated cash deposits are designated by the Company as hedging instruments in
hedging the foreign exchange risk associated with the highly probable dividend payment and the resulting payable.
At inception of the hedge relationship, the Company documents, amongst others, the economic relationship between
the hedging instrument and hedged item, including whether changes in the cash flows of the hedging instrument
are expected to offset changes in the cash flows of the hedged item. The Company documents its risk management
objective and strategy for undertaking its hedge transactions.
As a result of the application of hedge accounting for the first time within the year 2020, the foreign exchange
difference on the hedging instrument is recognised in other comprehensive income in the “Cash flow hedge reserve”
within equity. Amounts recognised in equity are reclassified to the income statement, within “Finance income and
costs”, in the same period or periods during which the hedged item impacts the income statement, being once
foreign exchange differences are recognised on the hedged item.
Accordingly, in the cash flow statement “Dividends paid to the Company’s shareholders” are disclosed net-off foreign
exchange differences on the relevant cash deposits (i.e. at the amounts declared) and the “Exchange gains/(losses) on
cash and cash equivalents” do not include the impact from the relevant cash deposits used for hedging. In the income
statement the amounts included in “Finance income and costs” (Note 12) within “Net foreign exchange transaction
gains/(losses) on cash and cash equivalents, loans and other receivables and dividends receivable” and “Net foreign
exchange transaction gains on other liabilities” are disclosed after application of hedge accounting (i.e. excluding the
foreign currency gains/losses arising for the hedging).
Dividend income
Dividend income is recognised when the right to receive payment is established.
Employee benefits
Wages, salaries, contributions to the state pension, the national health system and social insurance funds, paid
annual leave and sick leave, bonuses and other benefits (such as health services) are accrued in the year in which
the associated services are rendered by the employees of the Company. These are included in staff costs and the
Company has no further obligations once the contributions have been paid.
The Company recognises a liability and an expense for bonuses where contractually obliged or where there is a past
practice that has created a constructive obligation.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 298
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
299
Notes to the parent company
financial statements
Share based payment transactions
The Company operates a cash-settled share-based compensation plan. In accordance with compensation plan, key
management personnel of the Company are entitled to receive cash compensations based on the weighted average
market quotations of the fixed number of global depository receipts (“GDR”) of the Company. The fair value of the
employee services received in exchange for the grant of the equivalent GDR instruments is recognised as an expense
over the vesting period.
At each balance sheet date, if required by the terms of the compensation plan, the Company revises its estimates
of the monetary equivalent of GDRs that are expected to vest. It recognises the impact of the revision of original
estimates, including number of instruments expected to vest and fair value in the income statement with a
corresponding adjustment to share-based payment liability.
Current and deferred income tax
The tax expense for the period comprises of current and deferred tax. Tax is recognised in the income statement,
except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive income or directly in equity respectively.
Current income tax liabilities and assets for the current and prior periods are measured at the amount expected to be
paid to or recovered from the taxation authorities using the tax rates and laws that have been enacted or substantively
enacted by the balance sheet date. Management periodically evaluates positions taken in tax returns with respect
to situations in which applicable tax regulations is subject to interpretations and establishes provisions where
appropriate on the basis of amounts expected to be paid to tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using
tax rates and laws that have been enacted or substantially enacted by the balance sheet date and are expected to
apply when the related deferred tax asset is realised or the deferred tax liability is settled.
Deferred income tax assets are recognised only to the extent that it is probable that future taxable profit will be
available against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries except where the
Company can control the timing of the reversal and it is probable that the temporary difference will not reverse in the
foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax
assets against current tax liabilities, when the income tax assets and liabilities relate to income taxes levied by the
same taxation authority on either the taxable entity or different taxable entities when there is an intention to settle the
balances on a net basis.
Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the Company’s financial statements
in the period in which the dividends are approved and are no longer at the discretion of the Company. More
specifically, interim dividends are recognised when approved by the Board of Directors whereas in case of final
dividends, these are recognised at the time when they are approved by the Company’s shareholders.
Leases
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is
available for use by the Company, with limited exceptions as set out below. Assets and liabilities arising from a lease
are initially measured on a present value basis. The lease payments are discounted using the interest rate implicit in
the lease. If that rate cannot be determined, the Company’s incremental borrowing rate is used, being the rate that the
Company would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic
environment with similar terms and conditions.
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income
statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the
liability for each period.
Right-of-use assets are measured at cost. Any remeasurement of the lease liability arising if the cash flows change
based on the original terms and conditions of the lease results in a corresponding adjustment to the right-of-use asset.
The adjustment can be positive or negative. Right-of-use assets are reviewed for impairment in accordance with the
Company’s accounting policy for impairment of non-financial assets.
Right-of-use assets are generally depreciated over the shorter of the asset’s useful life and the lease term on a straight-
line basis. In determining the lease term, the Company considers all facts and circumstances that create an economic
incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after
termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not
terminated).
As an exception to the above, the Company accounts for short-term leases and leases of low value assets by
recognising the lease payments as an expense on a straight-line basis in the interim income statement. Short-term
leases are leases with a lease term of 12 months or less.
Right-of-use assets and associated lease liabilities are presented as separate lines on the face of the balance sheet.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 300
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
301
Notes to the parent company
financial statements
Property, plant and equipment
Property, plant and equipment are recorded at purchase cost less depreciation. Historical cost includes expenditure
that is directly attributable to the acquisition of the items. Depreciation on property, plant and equipment is calculated
using the straight-line method to allocate their cost, less residual value, over their estimated useful lives, as follows:
Investments in subsidiary undertakings
Subsidiaries are all entities (including structured entities) over which the Company has control. The Company controls
an entity when the Company is exposed to, or has rights to variable returns from its involvement with the entity and
has the ability to affect those returns through its power over the entity.
Motor vehicles
Number of years
3–5
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.
Expenditure for repairs and maintenance of property, plant and equipment is charged to the income statement of
the year in which they are incurred. The cost of major renovations and other subsequent expenditure are included
in the carrying amount of the asset or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Company and the cost of the item can be measured
reliably.
Gains and losses on disposal of property, plant and equipment are determined by comparing the proceeds with
carrying amount and these are included within operating profit as part of administrative expenses.
The Company carries the investments in subsidiaries at cost less any impairment in its separate financial statements.
Investments in subsidiaries are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised through income statement for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs to sell and value in use. An impairment loss recognised in prior years is reversed
where appropriate if there has been a change in the estimates used to determine the recoverable amount.
The cost of investments in subsidiaries includes the fair value of any asset or liability arising from a contingent
consideration arrangement. The subsequent remeasurement of any asset/liability arising from a contingent
consideration arrangement is adjusted against the cost of the investment in subsidiary.
In cases of acquisitions of subsidiaries from entities under common control or subsidiaries of the Company, the cost
of acquisition is determined to be the fair value of the investment acquired as opposed to the transaction price. Any
differences between the transaction price and the fair value of the investment acquired reflect notional contributions/
distributions from entities under common control or subsidiaries and are recognised as such, i.e. directly in equity
in cases of transactions with common control entities and as an additional contribution to or distribution from the
subsidiary transferring the investment to the Company.
Group reorganisations resulting into an exchange of non-financial assets and where the future cash inflows before and
after the reorganisation do not change as a result of the reorganisation are considered to lack commercial substance
and no gains or losses are recognised relating to such restructurings.
Indemnification assets received for contingent liabilities of the investments in subsidiaries that existed at the time of
acquisition of such subsidiaries are recognised against the cost of the relevant investment.
Deferred consideration
Deferred consideration arises when settlement of all or any part of the cost of an acquisition is deferred. Deferred
consideration is stated at fair value at the date of acquisition, which is determined by discounting the amounts due
to present value using market interest rates at the date of initial recognition. Interest is accrued on the fair value of
deferred consideration at the original effective interest rate and is recognised in finance costs.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 302
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
303
Notes to the parent company
financial statements
Impairment of non-financial assets
Assets that have indefinite useful life and goodwill are not subject to amortisation and are tested annually for
impairment.
Assets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher
of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-financial assets,
other than goodwill, that have suffered impairment are reviewed for possible reversal of impairment whenever there is
an indication that an impairment recognised in prior periods may no longer exist or may have decreased.
Financial assets
Recognition and derecognition. All purchases and sales of financial assets that require delivery within the time frame
established by regulation or market convention (“regular way” purchases and sales) are recorded at trade-date; being
the date on which the Company commits to purchase or sell the asset. All other purchases and sales are recognised
when the entity becomes a party to the contractual provisions of the instrument.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have
been transferred and the Company has transferred substantially all the risks and rewards of ownership. Any gain or
loss arising upon their derecognition is recognised directly in the income statement.
Classification. The Company classifies its financial assets at amortised cost. The classification depends on the
Company’s business model for managing the financial assets and the contractual cash flow characteristics of the
assets. Management determines the classification of financial assets at initial recognition.
Financial assets at amortised cost are held for collection of contractual cash flows and their cash flows represent
solely payments of principal and interest. They are included in current assets, except for maturities greater than twelve
months after the balance sheet date. These are classified as non-current assets. The Company’s financial assets at
amortised cost comprise of loans and other receivables and cash and cash equivalents on the balance sheet.
Interest income. Interest income on financial assets at amortised cost is recognised using the effective interest rate
method. Interest income on loans granted to related parties is recognised within “Revenue” in the income statement.
All other interest income recognised on debt financial assets carried at amortised cost is included within “finance
income” in the income statement. Interest income is calculated by applying the effective interest rate to the gross
carrying amount of a financial asset except for financial assets that subsequently become credit-impaired. For credit-
impaired financial assets, the effective interest rate is applied to the net carrying amount of the financial asset; that is
after deduction of the loss allowance. The Company’s definition of credit-impaired assets is explained in Note 6, Credit
risk section.
Impairment. The Company assesses on each reporting date, and on a forward-looking basis, the expected credit losses
(“ECL”) associated with its debt financial assets carried at amortised cost. The measurement of ECL reflects: (i) an
unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time
value of money, and (iii) all reasonable and supportable information that is available without undue cost and effort at
the end of each reporting period about past events, current conditions and forecasts of future conditions.
The carrying amount of the financial assets is reduced through the use of an allowance account, and the amount
of the loss is recognised on the face of the income statement. Subsequent recoveries of amounts for which loss
allowance was previously recognised are credited against the same line item.
For all its debt financial assets carried at amortised cost, the Company applies the general approach. In particular, the
Company applies the three stage model for calculating impairment, which is based on changes in the credit quality
of the financial asset since initial recognition. A financial instrument that is not credit-impaired on initial recognition
is classified in Stage 1. The ECL of financial assets in Stage 1 is measured at an amount equal to the portion of lifetime
ECL that results from default events possible within the next 12 months or until contractual maturity, if shorter. If
the Company identifies a significant increase in credit risk since initial recognition (“SICR”), the asset is transferred
to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until its contractual maturity but
considering expected prepayments, if any. Refer to Note 6, Credit risk section for a description of how the Company
determines when a SICR has occurred. If the Company determines that a financial asset is credit-impaired, the asset
is transferred to Stage 3 and its ECL is measured as a Lifetime ECL. The Company’s definition of credit impaired assets
and definition of default is explained in Note 6, Credit risk section.
Reclassification. Financial instruments are reclassified only when the business model for managing those assets
changes. The reclassification has a prospective effect and takes place from the start of the first reporting period
following the change.
Measurement. At initial recognition, the Company measures financial assets classified at amortised cost at their
fair value plus incremental transaction costs that are directly attributable to the acquisition of the financial assets.
Subsequently, these are measured at amortised cost.
Write-off. Financial assets are written-off, in whole or in part, when the Company has concluded that there is no
reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst
others, the failure of a debtor to engage in a repayment plan with the Company and a failure to make contractual
payments for a period of greater than 180 days past due. The Company may write-off financial assets that are still
subject to enforcement activity when the Company seeks to recover amounts that are contractually due, however,
there is no reasonable expectation of recovery. Subsequent recoveries of amounts previously written off are
recognised directly on the face of the income statement.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 304
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
305
Notes to the parent company
financial statements
Modification. The Company sometimes renegotiates or otherwise modifies the contractual terms of its financial assets,
The Company assesses whether the modification of the contractual cash flows is substantial considering, among
other, the following factors: any new contractual terms that substantially affect the risk profile of the asset (e.g. profit
share or equity-based return), significant change in interest rate, change in the currency denomination, new collateral
or credit enhancement that significantly affects the credit risk associated with the asset or a significant extension of a
loan when the borrower is not in financial difficulties.
If the modified terms are substantially different, the rights to cash flows from the original asset expire and the
Company derecognises the original financial asset and recognises a new asset at its fair value. The date of
renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes,
including determining whether a SICR has occurred. The Company also assesses whether the new loan or debt
instrument meets the SPPI criterion.
Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially
modified asset is recognised in the income statement, unless the substance of the difference is attributed to a capital
transaction with owners.
In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the
originally agreed payments, the Company compares the original and revised expected cash flows to assess whether
the risks and rewards of the asset are substantially different because of the contractual modification. If the risks and
rewards do not change, the modified asset is not substantially different from the original asset and the modification
does not result in derecognition. The Company recalculates the gross carrying amount by discounting the modified
contractual cash flows by the original effective interest rate (or credit-adjusted effective interest rate for purchased or
originated credit-impaired financial assets) and recognises a modification gain or loss in the income statement.
Following a renegotiation or otherwise modification of the contractual cash flows of a financial asset, the Company
assesses whether the financial asset ceased to meet the definition of credit-impaired and, in such case, should
be transferred out of Stage 3. In a situation where the modification involved only the deferral of the contractual
payments (rather than waiver) and interest accrues on the unpaid deferred amounts, with the result that there is not
a detrimental impact on the estimated future cash flows of the loan, the borrower has demonstrated consistently
good payment behaviour over a period of time and there are no significant concerns regarding the repayment of the
exposure, the Company considers that the financial asset is not credit-impaired.
At the time the financial asset exits Stage 3, the Company compares the risk of default occurring on the asset to that
at origination. If the risk of default is lower than or equal to the risk of default as at the date of initial recognition it is
transferred to Stage 1, otherwise it is transferred to Stage 2.
Classification as loans and other receivables. These amounts are held with the objective to collect their contractual
cash flows and their contractual cash flows represent solely payments of principal and interest. Accordingly, these
are measured at amortised cost using the effective interest method, less provision for impairment. Loans and other
receivables are classified as current assets if they are due within one year or less (or in the normal operating cycle of
the business if longer). If not, they are presented as non-current assets.
Classification as cash and cash equivalents. In the cash flow statement, cash and cash equivalents include cash in
hand and deposits held at call with banks or with original maturity of three months or less, less bank overdrafts, if
any. Cash and cash equivalents are carried at amortised cost using the effective interest method, less provision for
impairment. Bank overdrafts are shown within borrowings in the current liabilities on the balance sheet.
Financial liabilities
Classification. The Company’s financial liabilities are initially recognised at fair value and classified as subsequently
measured at amortised cost.
Derecognition of financial liabilities. A financial liability is derecognised when the obligation under the liability is
discharged or cancelled or expires. The difference between the carrying amount of a financial liability that has been
extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or
liabilities assumed, is recognised in income statement as other income or finance costs. When an existing financial
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing
liability are substantially modified, such an exchange or modification is treated as a derecognition of the original
liability and the recognition of a new liability, and the difference in the respective carrying amounts, including costs or
fees incurred for the modification, is recognised in profit or loss within finance costs. When the terms of the existing
financial liability are not substantially modified, the existing liability is not derecognised and the gain/loss arising on
the modification, including costs or fees incurred for the modification, is recognised in the income statement within
finance costs.
Modifications of financial liabilities. An exchange between the Company and its original lenders of debt instruments
with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial
liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new
financial liability. The terms are substantially different if the discounted present value of the cash flows under the new
terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at
least 10% different from the discounted present value of the remaining cash flows of the original financial liability. In
addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of
interest rate, new conversion features attached to the instrument and change in loan covenants are also considered.
If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or
fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not
accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are
amortised over the remaining term of the modified liability.
Modifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using
a cumulative catch up method, with any gain or loss recognised in the income statement, unless the economic
substance of the difference in carrying values is attributed to a capital transaction with owners and is recognised
directly to equity.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 306
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
307
Notes to the parent company
financial statements
Borrowings. Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are
subsequently stated at amortised cost. Any difference between the proceeds (net of transaction costs) and the
redemption value is recognised over the period of the borrowings using the effective interest method.
Share capital, share premium and treasury shares
Ordinary shares are classified as equity.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is
probable that some or all of the facility will be drawn down. In this case, the fee is deferred until draw down occurs.
To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is
capitalised as a pre-payment for liquidity services and amortised over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of
the liability for at least twelve months after the balance sheet date.
Borrowings are removed from the balance sheet when the obligation specified in the contract is extinguished (i.e.
when the obligation specified in the contract is discharged, cancelled or expires). The difference between the carrying
amount of a financial liability that has been extinguished or transferred to another party and the consideration paid,
including any non-cash assets transferred or liabilities assumed, is recognised in the income statement within “finance
costs-net”.
Other payables. Other payables are classified as current liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are presented as non-current liabilities. Other payables
are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.
Financial guarantees. Financial guarantee contracts are contracts that require the Company to make specified
payments to reimburse the holder of the guarantee for a loss it incurs because a specified debtor fails to make
payment when due in accordance with the terms of debt instrument. Financial guarantees are recognised, when
material, as a financial liability at the time the guarantee is issued. Financial guarantees are initially recognised at their
fair value, which is normally evidenced by the amount of fees received. This amount is amortised on a straight line
basis over the life of the guarantee in “other gains — net” in the income statement.
At the end of each reporting period, the guarantee is measured at the higher of (i) the amount of the loss allowance
determined in accordance with the expected credit loss model under IFRS 9 and (ii) the amount initially recognised
less, where appropriate, the cumulative amount of income recognised in accordance with the principles of IFRS 15
“Revenue from Contracts with Customers”.
The fair values of financial guarantees issued in relation to obligations of subsidiaries, where such guarantees are
provided for no compensation, are accounted for as contributions and are recognised as part of the cost of the
investment in the respective subsidiary in the financial statements of the Company.
Incremental costs directly related to the issue of new shares are shown as a deduction, net of tax, from the proceeds.
Any excess of the fair value of consideration received over the par value of shares issued is recognised as share
premium. Share premium is the difference between the fair value of the consideration receivable for the issue of
shares and the nominal value of the shares. Share premium account can only be resorted to for limited purposes,
which do not include the distribution of dividends, and is otherwise subject to the provisions of the Cyprus Companies
Law on reduction of share capital.
Where the Company purchases its own equity share capital (treasury shares), the consideration paid, including
any directly attributable incremental costs (net of income taxes) is deducted from equity within a separate reserve
“treasury shares” until the shares are cancelled or re-issued. Where such ordinary shares are subsequently re-issued,
any consideration received, net of any directly attributable incremental transaction costs and the related income tax
effects, is included in equity within retained earnings. The consideration initially paid for treasury shares which are
subsequently re-issued is transferred from “treasury shares” to retained earnings.
Capital contribution
Capital contribution constitutes contributions made by the Company’s shareholders other than for the issue of
shares by the Company in their capacity as equity owners of the Company for which the Company has no contractual
obligation to repay them. Such contributions are recognised directly in equity as they constitute transactions with
equity owners in their capacity as equity owners of the Company.
Provisions and contingent liabilities
Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events,
it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount has been
reliably estimated. Provisions are not recognised for future operating losses.
Where there are number of similar obligations, the likelihood that an outflow will be required in settlement is
determined by considering the class of obligation as a whole. A provision is recognised even if the likelihood of an
outflow with respect to any one item included in the same class of obligations may be small.
Provisions are measured at the present value of the expenditures to be required to settle the obligation using a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the obligation. The
increase in the provision due to passage of time is recognised as interest expense.
Provisions are only used to cover those expenses which they had been set up for. Other possible or present
obligations that arise from past events but it is not probable that an outflow of resources embodying economic benefit
will be required to settle the obligations; or the amount cannot be measured with sufficient reliability are disclosed in
the notes to the financial statements as contingent liabilities.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 308
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
309
Notes to the parent company
financial statements
Transactions with equity owners/subsidiaries
The Company enters into transactions with its shareholders and subsidiaries. When consistent with the nature
of the transaction, the Company’s accounting policy is to recognise (a) any gains or losses with equity holders,
directly through equity and consider these transactions as the receipt of additional capital contribution or the
payment of dividends; and (b) any losses with subsidiaries as cost of investment in subsidiaries. Similar transactions
with non-equity holders, or subsidiaries, are recognised through the income statement in accordance with IFRS 9
“Financial Instruments”.
Prepayments
Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the
goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment
relates to an asset which will itself be classified as non-current upon initial recognition. Prepayments to acquire assets
are transferred to the carrying amount of the asset once the Company has obtained control of the asset and it is
probable that future economic benefits associated with the asset will flow to the Company. Other prepayments are
written off to the income statement when the goods or services relating to the prepayments are received. If there is
an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the
prepayment is written down accordingly and a corresponding impairment loss is recognised in the income statement.
Other income
Other income generally represents amounts received from transactions that are outside the Company’s principal
activities. This is recognised in the income statement over the period it relates to, based on the terms of the
arrangement. Other income that it is not linked to the Company’s future performance and/or satisfaction of any future
obligations is recognised in the period in which the Company is entitled to receive it.
Cash flow statement
Cash flows arising from dividend income and interest income on loans granted to related parties, which form part of
the revenue of the Company, are reported as part of operating activities in the cash flow statement. Interest income
received on other balances, which form part of the Company’s finance income, are reported within cash flows from
investing activities in the cash flow statement. Interest expense arising from deferred consideration for acquisition of
subsidiaries is recognised within financing activities. Principal payments of deferred consideration are recognised as
acquisition of subsidiaries within cash flows from investing activities.
5. New accounting pronouncements
Certain new standards, amendments to existing standards and interpretations have been issued that are mandatory
for annual periods beginning on or after 1 January 2021. Items marked with * have not been endorsed by the European
Union (EU). The Company will only be able to apply the new standards, amendments to existing standards or
interpretations when these are endorsed by the EU.
•
•
•
•
•
Classification of liabilities as current or non-current — Amendments to IAS 1 (issued on 23 January 2020 and
effective for annual periods beginning on or after 1 January 2022)*. These narrow scope amendments clarify
that liabilities are classified as either current or non-current, depending on the rights that exist at the end of
the reporting period. In addition, the amendments clarify the classification requirements for debt a company
might settle by converting it into equity. “Settlement” is defined as the extinguishment of a liability with cash,
other resources embodying economic benefits or an entity’s own equity instruments. There is an exception for
convertible instruments that might be converted into equity, but only for those instruments where the conversion
option is classified as an equity instrument as a separate component of a compound financial instrument.
Classification of liabilities as current or non-current, deferral of effective date — Amendments to IAS 1 (issued
on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023)*. The amendment to IAS 1
on classification of liabilities as current or non-current was issued in January 2020 with an original effective date
1 January 2022. However, in response to the Covid-19 pandemic, the effective date was deferred by one year to
provide companies with more time to implement classification changes resulting from the amended guidance.
Proceeds before intended use, Onerous contracts — cost of fulfilling a contract, Reference to the Conceptual
Framework — narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual Improvements to IFRSs 2018-
2020 — amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 (issued on 14 May 2020 and effective for annual periods
beginning on or after 1 January 2022).* The amendment to IAS 16 prohibits an entity from deducting from the cost
of an item of PPE any proceeds received from selling items produced while the entity is preparing the asset for its
intended use. The amendment also clarifies that an entity is “testing whether the asset is functioning properly” when
it assesses the technical and physical performance of the asset. The amendment to IAS 37 clarifies the meaning of
“costs to fulfil a contract”. IFRS 3 was amended to refer to the 2018 Conceptual Framework for Financial Reporting,
in order to determine what constitutes an asset or a liability in a business combination. The amendment to IFRS
9 addresses which fees should be included in the 10% test for derecognition of financial liabilities. Costs or fees
could be paid to either third parties or the lender. Illustrative Example 13 that accompanies IFRS 16 was amended to
remove the illustration of payments from the lessor relating to leasehold improvements.
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting
policies (issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023).* IAS 1
was amended to require companies to disclose their material accounting policy information rather than their
significant accounting policies. The amendment provided the definition of material accounting policy information.
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates
(issued on 12 February 2021 and effective for annual periods beginning on or after 1 January 2023).* The amendment to IAS 8
clarified how companies should distinguish changes in accounting policies from changes in accounting estimates.
None of the new standards, amendments to existing standards or interpretations is expected to have a significant
effect on the parent company financial statements.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
310
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
311
Notes to the parent company
financial statements
6. Financial risk management
Financial risk factors
The Company’s activities exposed it to a variety of financial risks: market risk (including foreign exchange risk, cash
flow and fair value interest rate risk), credit risk and liquidity risk. The Company’s overall risk management programme
focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s
financial results.
Market risk
(a) Foreign exchange risk
Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated
in a currency different from the functional currency of the Company.
During the year 2020 there was increased volatility in currency markets and the Russian Rouble has depreciated
against some major currencies. As of the end of December 2020 the Russian Rouble has decreased against the US
Dollar from 61.9057 as of 31 December 2019 to 73.8757 Russian Roubles (19.3% revaluation) and against the Euro from
69.377 as of 31 December 2019 to 90.6824 Russia Roubles (30.7% revaluation).
The fluctuations in the exchange rate between (i) US Dollar and Russian Rouble and (ii) between Euro and Russian
Rouble expose the Company to foreign exchange risk.
The carrying amounts of monetary assets denominated in US dollars as at 31 December 2020 and 31 December 2019
are as follows:
Assets
Liabilities
2020
2019
RUB’000
RUB’000
812,110
581,734
15,647
7,429
The carrying amounts of monetary assets and liabilities denominated in Euro as at 31 December 2020 and 31
December 2019 are as follows:
Assets
Liabilities
2020
2019
RUB’000
RUB’000
873,485
583,204
75,460
72,598
Had US Dollar exchange rate strengthened/weakened by 20% (2019: 10% change) against the Russian Rouble and
all other variables remained unchanged, the post-tax profit of the Company for the year ended 31 December 2020
would have increased/decreased by RUB 139,381 thousand (2019: RUB 50,252 thousand). This is mainly due to foreign
exchange gains and losses arising upon retranslation of US Dollar denominated loans receivable and cash and cash
equivalents as of 31 December 2020 and as of 31 December 2019.
Had Euro exchange rate strengthened/weakened by 30% (2019: 10% change) against the Russian Rouble and all
other variables remained unchanged, the post-tax profit of the Company for the year ended 31 December 2020
would have increased/decreased by RUB 209,482 thousand (2019: by RUB 44,678 thousand). This is mainly due to
foreign exchange gains and losses arising upon retranslation of Euro denominated other receivables, cash and cash
equivalents and payables as of 31 December 2020 and as of 31 December 2019.
The Company’s current policy is not to hedge foreign exchange risk, with the exception of application of hedge
accounting to hedge foreign currency risk associated with highly probable dividend payments and associated
dividend payable until their settlement, as set out in the accounting policy for hedging activities in Note 4 to these
financial statements.
The impact of application of hedge accounting has been to disclose in the cash flow statement “Dividends paid
to the Company’s shareholders” net-off RUB 475,042 thousand foreign exchange losses and the “Exchange gains/
(losses) on cash and cash equivalents” does not include the equivalent impact from the relevant cash deposits used
for hedging. Furthermore, in the income statement the amounts included in “Finance income and costs” within “Net
foreign exchange transaction gains/(losses) on cash and cash equivalents, loans and other receivables and dividends
receivable” and “Net foreign exchange transaction gains on other liabilities” are disclosed after application of hedge
accounting (i.e. excluding the foreign currency gains/losses arising for the hedging of RUB 475,042 thousand).
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 312
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
313
Notes to the parent company
financial statements
(b) Cash flow and fair value interest rate risk
The Company holds interest bearing financial instruments at fixed interest rates.
Financial assets and liabilities issued at fixed rates expose the Company to fair value interest rate risk. However, as
all of the Company’s fixed interest rate financial instruments are carried at amortised cost, any reasonably possible
change in the interest rates as of 31 December 2020 and 31 December 2019 would not have any impact on the
Company’s post tax profit or equity.
Financial assets and liabilities issued at floating rate expose the Company to cash flow interest rate risk. As of 31
December 2020 and 31 December 2019 the Company did not have any material floating interest rate financial
instruments, therefore was not exposed to significant cash flow interest rate risk.
The Company’s current policy is not to hedge interest rate risk.
Credit risk
Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing
to meet an obligation. Credit risk arises from cash and cash equivalents, loans and other receivables and financial
guarantees issued by the Company for borrowings of subsidiaries.
(i) Risk management
For banks and financial institutions, the Company has established policies whereby the majority of bank balances are
held with independently rated parties with a minimum rating of ‘Ba2’. These policies enable the Company to reduce its
credit risk significantly.
(ii) Impairment of financial assets
The Company has three types of financial instruments that are subject to the expected credit loss model:
•
•
•
loans and other receivables;
cash and cash equivalents; and
financial guarantees.
The Company applies the general approach, prescribed in IFRS 9, for assessing expected credit losses on all its
debt financial assets and financial guarantees issued. In particular, the Company applies the three stage model
for calculating impairment, which is based on changes in the credit quality of the financial instrument since initial
recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1. The
ECL of financial assets in Stage 1 is measured at an amount equal to the portion of lifetime ECL that results from
default events possible within the next 12 months or until contractual maturity, if shorter. If the Company identifies a
significant increase in credit risk since initial recognition, the asset is transferred to Stage 2 and its ECL is measured
based on ECL on a lifetime basis, that is, up until its contractual maturity but considering expected prepayments, if
any. If the Company determines that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL
is measured as a Lifetime ECL.
Significant increase in credit risk. The Company considers the probability of default upon initial recognition of an asset
and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period.
To assess whether there is a significant increase in credit risk the Company compares the risk of a default occurring
on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available
reasonable and supportive forwarding-looking information.
Especially the following indicators are incorporated:
•
•
•
•
•
•
•
internal credit rating
external credit rating (as far as available)
actual or expected significant adverse changes in business, financial or economic conditions that are expected
to cause a significant change to the borrower’s/counterparty’s ability to meet its obligations
actual or expected significant changes in the operating results of the borrower/counterparty
significant increases in credit risk on other financial instruments of the same borrower/counterparty
significant changes in the value of the collateral supporting the obligation or in the quality of third-party
guarantees or credit enhancements
significant changes in the expected performance and behaviour of the borrower/counterparty, including changes
in the payment status of counterparty in the group and changes in the operating results of the borrower.
Macroeconomic information (such as market interest rates or growth rates) is incorporated as part of the
internal rating model. The historical loss rates are adjusted to reflect current and forward-looking information
on macroeconomic factors affecting the ability of the counterparties to settle the receivables. Regardless of the
analysis above, a significant increase in credit risk is presumed if a debtor is more than 30 days past due in making a
contractual payment.
Default and credit-impaired. A default on a financial asset is when the financial asset meets one or more of the following
criteria: (i) the borrower is more than 90 days past due on its contractual payments, (ii) the borrower is assessed as
unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past-due
amount or of the number of days past due, (iii) the Company, for economic or contractual reasons relating to the
borrower’s financial difficulty, granted to the borrower a concession(s) that it would not otherwise consider. The
Company considers defaulted assets to be credit-impaired so that Stage 3 represents all debt financial assets which
are considered defaulted.
Write-off. Assets are written-off, in whole or in part, when the Company has concluded that there is no reasonable
expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others,
the failure of a debtor to engage in a repayment plan with the Company and a failure to make contractual payments
for a period of greater than 180 days past due. The Company may write-off financial assets that are still subject to
enforcement activity when the Company seeks to recover amounts that are contractually due, however, there is no
reasonable expectation of recovery. Subsequent recoveries of amounts previously written off are recognised directly
on the face of the income statement.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
314
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
315
Notes to the parent company
financial statements
The Company calculates expected credit losses based on a probability-weighted estimate of the present value of
future cash shortfalls (i.e., the weighted average of credit losses, with the respective risks of default occurring in a
given time period used as weights). An ECL measurement is unbiased and is determined by evaluating a range of
possible outcomes.
The Company calculates ECL using the following three components: exposure at default (EAD), probability of
default (PD) and loss given default (LGD). EAD is an estimate of exposure at a future default date, taking into account
expected changes in the exposure after the reporting period, including repayments of principal and interest, and
expected drawdowns on committed facilities. PD is an estimate of the likelihood of default to occur over a given time
period and LGD is an estimate of the loss arising on default.
The Company’s exposure to credit risk for each class of financial instruments subject to the expected credit loss
model is set out below:
Loans receivable and other receivables
The Company assesses, on an individual basis, its exposure to credit risk arising from loans and other receivables.
This assessment takes into account, amongst others, the period the loan receivable or other receivable balance is
past due (in days), expectations around changes in business, financial or economic conditions as well as expectations
around the performance of the counterparty.
The following table contains an analysis of the credit risk exposure for loans receivable and other receivables by
reference to the Company’s internal credit risk rating grades.
The gross carrying amounts below represent the Company’s maximum exposure to credit risk on these assets as at 31
December 2019:
Internal credit risk
rating grade
Company definition of category
Gross carrying amount
The gross carrying amounts below represent the Company’s maximum exposure to credit risk on these assets as at 31
December 2020:
Internal credit risk
rating grade
Company definition of category
Performing
Stage 1 — Counterparties have a low risk of default and a strong
capacity to meet contractual cash flows
Gross carrying amount
Loans
receivable
Other
receivables
RUB’000
RUB’000
—
266,307
Underperforming
Stage 2 — Counterparties for which there is a significant increase
in credit risk; as significant increase in credit risk is presumed if
interest and/or principal repayments are 30 days past due
212,185
Non-performing or
Credit-impaired
Stage 3 — Interest and/or principal repayments are 90 days
past due
2,048,016
—
—
The gross carrying amounts, as per above, represent the Company’s maximum exposure to credit risk on these assets
as at 31 December 2020 and 31 December 2019, without taking account of any collateral held. The Company does not
hold any collateral as security for any loans receivable or other receivable balances.
The movement in the credit loss allowance for loans receivable during the years 2020 and 2019 is presented in the
table below:
Performing
Stage 1 — Counterparties have a low risk of default and a strong
capacity to meet contractual cash flows
Underperforming
Stage 2 — Counterparties for which there is a significant increase
in credit risk; as significant increase in credit risk is presumed if
interest and/or principal repayments are 30 days past due
Non-performing or
Credit-impaired
Stage 3 — Interest and/or principal repayments are 90 days
past due
Loans
receivable
Other
receivables
RUB’000
RUB’000
180,533
277,246
382,384
1,749,986
—
—
Opening balance
Recoveries
Foreign exchange difference
Closing balance
Loans Receivable
Non-performing
2020
2019
RUB’000
RUB’000
(1,385,320)
(1,901,961)
51,713
312,980
(267,865)
203,661
(1,601,472)
(1,385,320)
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
316
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
317
Notes to the parent company
financial statements
During the year 2020, the only movement in the gross carrying amount of the credit impaired loans receivable were
recoveries and foreign exchange differences. The impact of these on the credit loss allowance is reflected in the table above.
The estimated credit loss allowance on the performing and underperforming loans receivable and other receivable
balances as at 31 December 2020 and 31 December 2019 was not material.
During the years 2020 and 2019, the contractual cash flows of the Company’s credit-impaired loans receivable
as at 1 January 2020 and 1 January 2019, respectively, were modified so as to extend the maturity of the loans. No
other changes to the terms of the loans were made. As the modification was driven by financial difficulties of the
counterparties and inability to make the originally agreed payments and the risks and rewards of the loans did not
change, the modification did not result in derecognition of the said loans. In addition, these modifications did not
significantly impact the ECL on these loans.
On 31 December 2019, the Company transferred a modified credit-impaired loan receivable with a carrying amount
of RUB 212,185 thousand out of Stage 3 to Stage 2 as this ceased to meet the definition of credit-impaired since the
modification involved only the deferral of the contractual payments (rather than waiver) and interest accrues on the
unpaid deferred amounts, with the result that there is not a detrimental impact on the estimated future cash flows of
the loan, the borrower has demonstrated consistently good payment behaviour over a period of time and there are no
significant concerns regarding the repayment of the exposure. During the year 2020, the maturity of the said loan was
further extended and the contractual interest rate was decreased. The impact of these modifications was not material.
Cash and cash equivalents
The Company assesses, on an individual basis, its exposure to credit risk arising from cash at bank based on ratings
from external credit rating institutions and internal reviews, if external are not available.
The following table contains an analysis of the gross carrying amount of the Company’s cash at bank by reference to
the credit risk ratings assigned by external credit rating agencies. The gross carrying amounts below represent the
Company’s maximum exposure to credit risk on these assets as at 31 December 2020 and 31 December 2019:
Gross carrying amount
Rating
2020
2019
Moody’s1
Moody’s1
Moody’s1
Moody’s1
Moody’s1
Total
A3
Aa2
B3
Ba1
RUB’000
RUB’000
881,308
886,446
233,924
94,662
8,969
1,100,000
Baa3
1,317
937
—
752
2,225,518
982,797
1 International rating agency Moody’s Investors Service
The Company does not hold any collateral as security for any of the above balances.
The estimated expected credit loss allowance on cash and cash equivalents as at 31 December 2020 and 31
December 2019, based on the general approach of IFRS 9, was immaterial. All cash and cash equivalents were
performing (Stage 1) as at 31 December 2020 and 31 December 2019.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 318
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
319
Notes to the parent company
financial statements
Financial Guarantees
The primary purpose of these instruments is to ensure that funds are available to a borrower, as required. Guarantees,
which represent irrevocable assurances that the Company will make payments in the event that a counterparty cannot
meet its obligations to third parties, carry the same credit risk as loans receivable.
The Company has issued financial guarantees on the borrowings of its subsidiaries and quoted bonds issued by
its subsidiaries (Note 26). As a result, the Company is exposed to credit risk arising from potential risk of default
of the Company’s subsidiaries on their external debt. As of 31 December 2020 and 31 December 2019, none of the
Company’s subsidiaries had defaulted on or breached any covenants on their borrowings/bonds.
The following table contains an analysis of the exposure to credit risk on financial guarantees by reference to the
Company’s internal credit risk rating grades. The amounts below represent the Company’s maximum exposure to
credit risk on these financial instruments as at 31 December 2020 and 31 December 2019.
— Performing
— Underperforming
— Non-performing
Stage 1
2020
2019
RUB’000
RUB’000
23,584,105
18,966,840
—
—
—
—
Total unrecognised gross amount
23,584,105
18,966,840
The amounts, as per above, represent the Company’s maximum exposure to credit risk on these financial instruments
as at 31 December 2020 and 31 December 2019, without taking account of any collateral held. The Company does not
hold any collateral as security for any guarantees issued to its subsidiaries.
The estimated provision as at 31 December 2020 and 31 December 2019 for free of charge financial guarantees
issued by the Company for obligations of its subsidiaries in accordance with loan agreements with financial
institutions where such obligations are also secured by a pledge of property, plant and equipment and the distressed
sale value of such pledge exceeds the amount of the obligation of the respective subsidiary was estimated at RUB
Nil, since, in case of default, the Company will be able to recover its losses under the issued guarantees from the
respective subsidiaries in full.
The estimated provision as at 31 December 2020 and 31 December 2019 for free of charge financial guarantees
issued by the Company for unsecured or underpledged obligations of its subsidiaries in accordance with loan
agreements with financial institutions and quoted bonds issued by subsidiaries was estimated using a probability
adjusted discounted cash flow analysis, using probability of default, as implied by the market rate of the borrowings
obtained by the subsidiaries, and loss given default, as estimated by considering the distressed value of the net
assets of the subsidiaries which are not pledged at the time of the assessment. This was assessed as RUB Nil, since,
in case of default, the Company will be able to recover its losses under the issued guarantees from the respective
subsidiaries in full.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 320
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
321
Notes to the parent company
financial statements
Liquidity risk
As at 31 December 2020, the Company has an excess of current assets over current liabilities of RUB 2,485,452
thousand (2019: excess of current liabilities over current assets of RUB 791,351 thousand). Management believes that
the Company will be able to meet its obligations as they fall due.
Management controls current liquidity based on expected cash flows, expected dividend and interest income
receipts, expected dividend payments and advancements under borrowings from subsidiaries. In the long-term
perspective, the liquidity risk is determined by forecasting future cash flows at the moment of signing new loans and
by budgeting procedures.
The table below summarizes the analysis of financial liabilities of the Company by maturity as of 31 December 2020
and 31 December 2019. The amounts in the table are contractual undiscounted cash flows. Non-interest bearing trade
and other payables balances due within 12 months equal their carrying balances as the impact of discounting is not
significant.
Less than
one month
Between
one month
and three
months
Between
three and
six months
Between
6 months
to 1 year
Between
1 and 2
years
Between
2 and 5
years
Total
RUB’000
RUB’000
RUB’000
RUB’000
RUB’000
RUB’000
RUB’000
31 December 2020
Payables and accrued
expenses1
—
20,479
Other lease liabilities
268
537
Financial guarantee
contracts2
11,776,425
11,807,680
—
805
—
—
1,610
—
11,776,693
11,828,696
805
1,610
31 December 2019
Payables and accrued
expenses1
Borrowings
Other lease liabilities
Financial guarantee
contracts2
—
—
171
15,408
—
—
398,726
677,453
1,342,418
2,159,476
342
1,027
2,359
514
—
7,299,169
11,667,671
—
—
— 18,966,840
7,299,340
12,082,147
677,967
1,343,445
2,161,835
— 23,564,734
1 Payables and accrued expenses exclude statutory liabilities as the analysis is provided for financial liabilities only.
2 The maximum possible amount of obligation under financial guarantee contracts is disclosed at the earliest time it may be called.
—
—
—
—
—
—
—
20,479
3,220
— 23,584,105
— 23,607,804
—
—
—
15,408
4,578,073
4,413
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
322
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
323
Notes to the parent company
financial statements
Capital risk management
The Company’s main objective when managing capital is to maintain the ability to continue as a going concern in
order to ensure the required profitability of the Company, maintain optimum equity structure and reduce its cost of
capital.
For defining capital, the Company uses the amount of net assets attributable to the Company’s shareholders and
the Company’s borrowings. The Company manages the capital based on borrowings to total capitalization ratio.
Borrowings include loan liabilities.
To maintain or change capital structure the Company may vary the amount of dividend paid in order to reduce debts.
Management believes that the current equity is sufficient to fund current projects and further development of the
Company.
Total capitalisation is calculated as the sum of the total borrowings and net assets at the date of calculation. The
management does not currently have any specific target on the rate of borrowings to total capitalization.
The rate of borrowings to total capitalisation as at 31 December 2020 and 31 December 2019 are as follows:
Total borrowings
Total capitalisation
2020
2019
RUB’000
RUB’000
—
4,261,942
48,194,373
47,241,279
Total borrowings to total capitalisation ratio (percentage)
0.00%
9.02%
External requirements are imposed on the capital of the Company as defined by management in relation to long-
term loans provided by financial institutions to the Company. The Company analyses compliance with external
requirements to the capital at each reporting date and when entering into new loan agreements. There were no
instances of non-compliance with externally imposed capital requirements during 2020 and 2019. Management
believes that the Company will be able to comply with its external requirements to the capital during the whole term
of agreements.
Fair value estimation
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The best evidence of fair value is price in an active market.
An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume
to provide pricing information on an ongoing basis.
The estimated fair values of financial instruments have been determined by the Company, using available market
information, where it exists, appropriate valuation methodologies and assistance of experts, where relevant. However,
judgement is necessarily required to interpret market data to determine the estimated fair value. The Russian
Federation continues to display some characteristics of an emerging market and economic conditions continue
to limit the volume of activity in the financial markets. Market quotations may be outdated or reflect distress sale
transactions and therefore do not always represent the fair values of financial instruments. The Company has used all
available market information in estimating the fair value of financial instruments.
Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one measurements
are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two
measurements are valuations techniques with all material inputs observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not
based on observable market data (that is, unobservable inputs). Management applies judgement in categorising
financial instruments using the fair value hierarchy.
If a fair value measurement uses observable inputs that require significant adjustment, that measurement is a Level 3
measurement. The significance of a valuation input is assessed against the fair value measurement in its entirety.
The fair values in level 2 and level 3 of fair value hierarchy were estimated using discounted cash flows valuation
techniques. The fair value of unquoted fixed interest rate instruments was estimated based on estimated future cash
flows expected to be received/paid discounted at current interest rates for new instruments with similar credit risk and
remaining maturity.
Financial assets carried at amortised cost. The estimated fair value of fixed interest rate instruments is based on
estimated future cash flows expected to be received discounted at current interest rates for new instruments with
similar credit risk and remaining maturity. Discount rates used depend on credit risk of the counterparty. Refer to
Note 19.
The fair value as at 31 December 2020 and 31 December 2019 of fixed interest rate instruments with stated maturity
with subsidiary entities was estimated based on expected cash flows discounted using the rate of similar instruments,
denominated in the same currency, entered into by the subsidiaries of the Company on their bank borrowings close
to the year-end. In the absence of similar instruments entered into by a subsidiary of the Company with non-related
parties close to the year-end the estimated fair value was estimated based on expected cash flows discounted at an
estimated rate that reflects management’s best estimate of the current interest rate of new instruments, denominated
in a similar currency and with similar credit risk and remaining maturity.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 324
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
325
Notes to the parent company
financial statements
The discount rate used for US Dollar denominated loans to related parties as at 31 December 2020 was 8% (31
December 2019: 8%) and for Russian Rouble denominated loans to related parties as at 31 December 2020 was 17.7%
(31 December 2019: 9% and 17.7%). The discount rate used for other receivables from related parties as at 31 December
2019 was 3%. The fair value measurements of loans to related parties and other receivables from related parties as at
31 December 2020 and 31 December 2019 are within level 3 of the fair value hierarchy. Refer to Note 19.
The fair value of financial assets receivable on demand approximates their carrying amount. The fair value of current
other receivables from related parties as at 31 December 2020 approximates their carrying amount.
Liabilities carried at amortised cost. Fair values of borrowings and other liabilities were determined using valuation
techniques.
As at 31 December 2019, the fair value of fixed interest rate instruments with stated maturity denominated in Russian
Rouble was estimated based on expected cash flows discounted using the rate of similar Russian Rouble denominated
instruments entered into by the Company or the subsidiaries of the Company on their bank borrowings close to 31
December 2019.
The discount rate used for Russian Rouble denominated bank borrowings as at 31 December 2019 was 7.5% (Note
23). There were no US Dollar denominated borrowings as at 31 December 2020 and 31 December 2019. The fair value
measurements of liabilities as at 31 December 2019 were within level 2 of the fair value hierarchy.
The fair value of liabilities repayable on demand or after a notice period (“demandable liabilities”) is estimated as the
amount payable on demand, discounted from the first date on which the amount could be required to be paid.
7. Critical accounting estimate and judgements
Estimates and judgements are continually evaluated and are based on management’s experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances.
Critical accounting estimates
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will,
by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk
of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
discussed below:
•
Income taxes
Significant judgment is required in determining the provision for income taxes. There are transactions and
calculations for which the ultimate tax determination is uncertain. The Company recognises liabilities for
anticipated tax audit issues based on estimates of whether additional taxes will be due. Where the final tax
outcome of these matters is different from the amounts that were initially recorded, such differences will impact
the current and deferred income tax assets and liabilities in the period in which such determination is made. Refer
to Note 28.
8. Revenue
Interest on loans to related parties calculated using the effective interest rate method
(Note 26)
Dividend income (Note 26)
Total
2020
2019
RUB’000
RUB’000
43,863
52,269
22,283,992
20,417,895
22,327,855
20,470,164
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 326
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
327
Notes to the parent company
financial statements
9. Other gains — net
11. Employee benefit expense
Salaries
Bonuses
Share based compensation
Social security costs
Total employee benefit expense
2020
2019
RUB’000
RUB’000
227,855
160,035
149,291
188,705
19,309
—
11,977
9,535
408,431
358,275
Average number of staff employed during the year
8
7
Net foreign exchange transaction gains/(losses) on non-financing activities (Note 14)
Other gains — net
10.
Expenses by nature
Statutory auditor’s remuneration for statutory audit services
Statutory auditor’s remuneration for other assurance services
Advertising and marketing expenses
Expenses relating to short-term leases
Depreciation of property, plant and equipment (Note 16)
Depreciation of right-of-use assets (Note 17)
Profit on sale of property, plant and equipment
Employee benefit expense (Note 11)
Legal, consulting and other professional services1
Bank charges
Non-executive directors’ fees (Note 26)
Travel expenses
Stock exchange and financial regulator fees
Taxes other than on income
Other expenses
2020
2019
RUB’000
RUB’000
49,734
49,734
4,805
4,805
2020
2019
RUB’000
RUB’000
18,053
16,026
5,139
2,144
272
1,768
2,431
(1,029)
4,762
3,771
325
2,586
2,228
—
408,431
358,275
55,349
10,540
25,441
2,019
25,535
20,868
1,043
6,743
10,531
20,321
15,163
4,054
8,173
13,737
Total marketing costs and administrative expenses
567,271
477,428
1 Includes RUB 638 thousand for the year 2020 (RUB 502 thousand for the year 2019) in fees paid to the Company’s statutory audit firm for tax
consultancy services.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 328
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
329
Notes to the parent company
financial statements
12. Finance costs — net
13. Income tax expense
2020
2019
RUB’000
RUB’000
Included in finance costs:
Interest expense on bank borrowings (Note 23)
(216,202)
(462,297)
Current tax:
Corporation tax
Total interest expense calculated using the effective interest rate method
(216,202)
(462,297)
Withholding tax on dividends receivable
Interest expense on other lease liabilities (Note 23)
(308)
(265)
Defence contribution
Total finance costs
(216,510)
(462,562)
Total tax expense
2020
2019
RUB’000
RUB’000
—
10,401
1,073,231
1,017,005
2
1,073,233
1,027,406
Included in finance income:
Interest income on bank balances
Interest income on other receivables from related parties (Note 26)
39,048
46,696
3,263
16,934
Total interest income calculated using the effective interest rate method
42,311
63,630
Total finance income
42,311
63,630
Profit before tax
Net foreign exchange transaction gains/(losses) on cash and cash equivalents, loans
and other receivables and dividends receivable
268,879
(442,416)
Net foreign exchange transaction gains on other financial liabilities
—
197,990
Net foreign exchange transactions gains/(losses) from financing activities (Note 14)
268,879
(244,426)
Finance costs — net
94,680
(643,358)
The tax on the Company’s results before tax differs from the theoretical amount that would arise using the applicable
tax rates as follows:
2020
2019
RUB’000
RUB’000
22,956,943
19,800,671
2,869,618
2,475,084
90,549
152,154
Tax calculated at the applicable tax rate
Tax effect of expenses not deductible for tax purposes
Tax effect of allowances and income not subject to tax
(2,960,167)
(2,616,837)
Defence contribution
Foreign withholding tax on dividends receivable
Tax charge
2
—
1,073,231
1,017,005
1,073,233
1,027,406
The Company is subject to income tax on taxable profits at the rate of 12.5%.
Brought forward losses of only five years may be utilised.
Under certain conditions, interest may be exempt from income tax and be subject only to special contribution for
defence at the rate of 30%. In certain cases dividends received from abroad may be subject to special contribution for
defence at the rate of 17%. Further, in certain cases dividends received from other Cyprus tax resident companies may
also be subject to special contribution for defence.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 330
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
331
Notes to the parent company
financial statements
Gains on disposal of qualifying titles (including shares, bonds, debentures, rights thereon etc) are exempt from Cyprus
income tax.
15. Dividends
Withholding tax is applied to dividends distributed to the Company by its Russian subsidiaries at the rate of 5% on
gross dividends declared; such tax is withheld at source by the respective subsidiary and is paid to the Russian tax
authorities at the same time when the payment of dividend is effected.
14. Net foreign exchange gains/(losses)
Finance costs — net (Note 12)
Other gains — net (Note 9)
Total foreign exchange gains/(losses)
2020
2019
RUB’000
RUB’000
268,879
(244,426)
49,734
4,805
318,613
(239,621)
In April 2019, the shareholders of the Company approved the payment of a dividend for the financial year ended 31
December 2018 in the amount of 46.50 Russian Roubles per ordinary share/GDR, amounting to a total dividend of
RUB 8,311,453 thousand, including final dividend for 2018 in the amount of RUB 1,429,927 thousand or RUB 8.00 per
ordinary share/GDR and a special final dividend in the amount of RUB 6,881,526 thousand or RUB 38.50 per ordinary
share/GDR (US Dollar equivalent of US$ 129,727 thousand).
In August 2019, the Board of Directors of the Company approved payment of total dividend in the amount of 46.55
Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including
interim dividend in the amount of RUB 3,548,007 thousand or RUB 19.85 per ordinary share/GDR and a special interim
dividend in the amount of RUB 4,772,382 thousand or RUB 26.70 per ordinary share/GDR (US Dollar equivalent of US$
124,655 thousand).
In April 2020, the shareholders of the Company approved the payment of a dividend for the financial year ended 31
December 2019 in the amount of 46.55 Russian Roubles per ordinary share/GDR, amounting to a total dividend of
RUB 8,320,390 thousand, including final dividend for 2019 in the amount of RUB 1,903,591 thousand or RUB 10.65 per
ordinary share/GDR and a special final dividend in the amount of RUB 6,416,799 thousand or RUB 35.90 per ordinary
share/GDR (US Dollar equivalent of US$ 110,787 thousand).
In August 2020, the Board of Directors of the Company approved payment of total dividend in the amount of 46.55
Russian Roubles per ordinary share/GDR, amounting to a total dividend of RUB 8,320,390 thousand, including interim
dividend in the amount of RUB 3,083,281 thousand or RUB 17.25 per ordinary share/GDR and a special interim dividend
in the amount of RUB 5,327,109 thousand or RUB 29.30 per ordinary share/GDR (US Dollar equivalent US$ 111,293
thousand).
During the years ended 31 December 2020 and 31 December 2019, the Company declared and paid as detailed in the
table below.
Dividends declared1
Dividends paid1
2020
2019
RUB’000
RUB’000
16,637,178
16,631,842
16,637,178
16,631,842
1 Dividends declared and paid within the year 2020 as per the table above excludes RUB 3,601 thousand relating to dividend declared and paid on the
treasury shares.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 332
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
333
Notes to the parent company
financial statements
16. Property, plant and equipment
17. Right-of-use assets
At 1 January 2019
Cost
Accumulated depreciation
Net book amount
Year ended 31 December 2019
Additions
Depreciation charge (Note 10)
Closing net book amount
At 31 December 2019 / 1 January 2020
Cost
Accumulated depreciation
Net book amount
Year ended 31 December 2020
Additions
Disposals
Depreciation charge (Note 10)
Closing net book amount
At 31 December 2020
Cost
Accumulated depreciation
Net book amount
Motor
vehicles
Total
RUB’000
RUB’000
11,470
11,470
(8,898)
(8,898)
2,572
2,572
6,666
6,666
(2,586)
(2,586)
6,652
6,652
15,475
15,475
(8,823)
(8,823)
6,652
6,652
6,528
(734)
(1,768)
10,678
6,528
(734)
(1,768)
10,678
13,193
13,193
(2,515)
(2,515)
10,678
10,678
At 1 December 2019
Cost
Accumulated depreciation
Net book amount
Year ended 31 December 2019
Depreciation charge (Note 10)
Closing net book amount
At 31 December 2019 / 1 January 2020
Cost
Accumulated depreciation
Net book amount
Year ended 31 December 2020
Depreciation charge (Note 10)
At 31 December 2020
Cost
Accumulated depreciation
Net book amount
Offices
Total
RUB’000
RUB’000
7,292
7,292
—
—
7,292
7,292
(2,228)
(2,228)
5,064
5,064
7,292
7,292
(2,228)
(2,228)
5,064
5,064
(2,431)
(2,431)
7,292
7,292
(4,659)
(4,659)
2,633
2,633
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
334
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
335
Notes to the parent company
financial statements
18. Investments in subsidiary undertakings
At beginning of year
At end of year
2020
2019
RUB’000
RUB’000
45,151,248
45,151,248
45,151,248
45,151,248
Details of the direct and indirect investments in the subsidiary undertakings are as follows:
Name
Country of
incorporation
Principal
activities
New Forwarding
Company, АО
GTI Management,
OOO
Ural Wagonrepair
Company, AO
Russia
Russia
Russia
Ukrainian New
Forwarding Company
OOO
Ukraine
BaltTransServis, OOO Russia
RemTransServis, OOO1 Russia
Railway
transportation
Railway
transportation
Repair and
maintenance
of rolling stock
Railway
transportation
Railway
transportation
Repair and
maintenance
of rolling stock
Proportion of
ordinary shares
held by the
Company
Proportion of
ordinary shares
held by the
Group
(%)
(%)
Proportion of
ordinary shares
held by non-
controlling
interest
(%)
2020
2019
2020
2019
2020
2019
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
—
—
—
—
—
—
—
—
60
—
60
60
60
40
40
—
59.4
59.4
40.6
40.6
BTS-Locomotive
Solutions OOO2
Russia
SyntezRail Ltd
Cyprus
SyntezRail LLC3
Russia
Spacecom AS
Estonia
Ekolinja Oy4
Finland
Spacecom Trans AS4
Estonia
Support
activities for
locomotive
traction
Intermediary
holding
company
Railway
transportation
Operating
lease of rolling
stock and
provision of
forwarding
services
Operating
sub-lease of
rolling stock
Operating
lease of rolling
stock
—
—
60
60
40
40
60
60
60
60
40
40
—
—
60
60
40
40
65.25
65.25
65.25
65.25
34.75
34.75
—
—
—
65.25
65.25
34.75
34.75
—
65.25
65.25
34.75
34.75
1. RemTransServis, OOO is a 99% subsidiary of BaltTransServis, OOO.
2. BTS-Locomotive Solutions, OOO is a 100% subsidiary of BaltTransServis, OOO.
3. SyntezRail LLC is a 100% subsidiary of SyntezRail Ltd.
4. Ekolinja Oy and Spacecom Trans AS are 100% subsidiaries of Spacecom AS.
Contribution to subsidiary during the year 2018
During the year 2018, the Company subscribed to newly issued share capital of SyntezRail Ltd for an amount of RUB
300,090 thousand. The amount remained payable to the subsidiary as of 31 December 2018 and was settled within the
year 2019.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
336
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
337
Notes to the parent company
financial statements
Disposal of subsidiary during the year 2018
During the year 2018, Spacecom AS acquired 100% of the shares of Spacecom Trans AS from the Company and the
non-controlling shareholders. Out of the total consideration payable by Spacecom AS for this transaction, Eur 19,565
thousand (equivalent of RUB 1,536,316 thousand) was payable to the Company, of which of Eur 8,450 thousand
(equivalent to RUB 671,441 thousand) was received by the Company within the year 2018. The receivable balance
carried contractual interest of 3% per annum and was payable by the subsidiary in instalments.
During the year 2019, interest of Eur 233 thousand (equivalent to RUB 16,934 thousand) was accrued on the balance
receivable (Note 12) and an amount of Eur 7,350 thousand (equivalent to RUB 528,127 thousand) was received by the
subsidiary. The balance receivable as at 31 December 2019 equaled to Eur 3,998 thousand (equivalent to RUB 277,246
thousand) (Note 19).
During the year 2020, interest of Eur 43 thousand (equivalent to RUB 3,263 thousand) was accrued on the balance
receivable (Note 12) and an amount of Eur 4,041 thousand (equivalent to RUB 315,967 thousand) was received by the
subsidiary resulting into the full settlement of the receivable.
The following amounts are included in the statement of cash flows in relation to acquisitions and disposals of
subsidiaries:
Contribution to the share capital of SyntezRail Ltd
Proceeds from sale of Spacecom Trans AS
Total cash inflow
2020
2019
RUB’000
RUB’000
—
(300,089)
315,967
528,127
315,967
228,038
Assessment of impairment of the investments in the subsidiary undertakings
The Company assesses at each balance sheet date whether there are indicators for impairment of its subsidiary
undertakings in accordance with its accounting policy for impairment of non-financial assets, as set out in Note 4.
As of 31 December 2020, the management considered the deterioration of the economic environment, the weak
prevailing industry conditions and the COVID-19 pandemic related uncertainties, as these are set out in Note 27,
as indicators of impairment of the Company’s investments in subsidiary undertakings and performed impairment
assessments to determine if there is an impairment loss
As a result of the impairment assessment, no impairment losses were noted. The impairment testing for all the
subsidiary undertakings indicated a significant headroom in the recoverable amount over the carrying amount.
19. Loans and other receivables
Loans to related parties
Less: Provision for impairment of loans to related parties
Loans to related parties — net (Note 26)
Other receivables — related party (Note 26)
Total loans and other receivables — net
Less non-current portion:
Loans to related parties (Note 26)
Total non-current portion
2020
2019
RUB’000
RUB’000
2,260,201
2,312,903
(1,601,472)
(1,385,320)
658,729
927,583
266,307
277,246
925,036
1,204,829
544,362
696,548
544,362
696,548
Current portion
380,674
508,281
The weighted average contractual interest rate on loans receivable from related parties was 5.1% at 31 December 2020
(31 December 2019: 6.8%). The weighted average effective interest rate on loans receivables from related parties was
11.1% at the 31 December 2020 (31 December 2019: 12.19%).
The contractual interest rate and effective interest rate on other receivables from related parties at 31 December 2019
was 3%. The other receivables from related parties at 31 December 2020 carry no contractual interest.
The carrying value of loans and other receivables at the reporting date approximates their fair value. As at 31
December 2020, the fair values of US Dollar denominated loans to related parties are based on cash flows discounted
using a rate of 8% (31 December 2019: 8%). The discount rate used for Russian Rouble denominated loans to related
parties as at 31 December 2020 was 17.7% (31 December 2019: 6.5% and 17.7%). The fair value measurements of loans
to related parties and other receivables from related parties as at 31 December 2020 and 31 December 2019 are within
level 3 of the fair value hierarchy.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 338
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
339
Notes to the parent company
financial statements
The carrying amounts of the Company’s loans and other receivables are denominated in the following currencies:
20. Other assets
US Dollars
Russian Roubles
Euro
Total loans and other receivables
2020
2019
RUB’000
RUB’000
446,544
364,665
212,185
562,918
266,307
277,246
925,036
1,204,829
Prepayments — third parties
VAT recoverable
Total other assets
Current portion
2020
2019
RUB’000
RUB’000
6,588
—
6,588
846
2
848
6,588
848
Assessment of credit losses on loans receivable from subsidiaries
At 31 December 2020 and 31 December 2019, the Company assessed, on a forward-looking basis, the expected
credit losses associated with its loans receivable from subsidiaries carried at amortised cost, in accordance with the
accounting policy stated in Note 4. The assessment performed resulted in the recognition of reversal of impairment
losses of RUB 51,713 thousand as at 31 December 2020 (31 December 2019: RUB 312,980 thousand).
The assessment of expected credit losses on the loans receivable from Ukrainian New Forwarding Company, AO, with
a carrying amount of RUB 446,544 thousand as at 31 December 2020 (31 December 2019: RUB 364,665 thousand),
classified as credit-impaired (Stage 3) as of that date, required management to use estimates and projections of future
cash flows. The expected credit losses were determined based on multiple forward-looking recovery scenarios to
measure the expected cash shortfalls, discounted using the loans’ original effective interest rate method, weighted
based on the probability of each scenario occurring.
In making this assessment, the Company considered all reasonable and supportable forward-looking information
available without undue cost and effort. The cash flow projections were determined by reference to management’s
cash flow estimates, which were based on historical financial performance of the subsidiary, as adjusted to take into
consideration the impact of forecasted industry and market conditions.
As with any forecast, the projections and likelihoods of occurrence are subject to a high degree of inherent
uncertainty, and therefore the actual outcomes may be significantly different to those projected. The Company
considered these forecasts to represent its best estimate of the possible outcomes and that the chosen scenarios are
appropriately representative of the range of possible scenarios. The key input in this assessment were the recovery
rates assigned to each scenario. Any reasonable change in these would not result in a material increase/decrease in
the reversal of impairment losses recognised in the income statement for the years ended 31 December 2019 and 31
December 2020.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 340
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
341
Notes to the parent company
financial statements
21. Cash and cash equivalents
22. Share capital, share premium and treasury shares
Cash at bank
Total cash and cash equivalents
2020
2019
RUB’000
RUB’000
2,225,518
982,797
2,225,518
982,797
At 1 January 2019 /31 December 2019 /
1 January 2020 / 31 December 2020
Number of
shares
Share capital
Share premium
Total
USD’000
USD’000
USD’000
178,740,916
17,875
949,471
967,346
Cash and cash equivalents include the following for the purposes of the cash flow statement:
Cash and cash equivalents
Cash and cash equivalents are denominated in the following currencies:
US Dollars
Russian Roubles
Euro
Total cash and cash equivalents
The carrying value of cash and cash equivalents approximates their fair value.
2020
2019
RUB’000
RUB’000
2,225,518
982,797
2,225,518
982,797
2020
2019
RUB’000
RUB’000
365,566
217,069
1,252,774
459,770
607,178
305,958
2,225,518
982,797
At 1 January 2019 /31 December 2019 /
1 January 2020 / 31 December 2020
Number of
shares
Share capital
Share premium
Total
RUB’000
RUB’000
RUB’000
178,740,916
516,957
27,929,478
28,446,435
The total authorised number of ordinary shares at 31 December 2020 was 233,918,128 shares with a par value of
US$0.10 per share (31 December 2019: 233,918,128 shares with a par value of US$0.10 per share). All issued shares are
fully paid.
In accordance with the decision of the Extraordinary General Meeting which took place on 12 May 2020, the Company
started a GDRs buyback program. The buyback programme is for the Company’s Global Depositary Receipts (“GDRs)
and will run till the earlier of the close of the Annual General Meeting of the Company to be held in 2021 and May 2021.
The total number of purchased GDRs shall not exceed 5% of the Company’s share capital (equivalent to 8,937,046
shares, with each GDR representing one ordinary share).
As at 31 December 2020 the Company has purchased a total of 76,877 GDRs, which are held in treasury for a total
consideration of 422 thousand US Dollars (equivalent to RUB 31,496 thousand).
In line with relevant legislation, GDRs repurchased by the Company may be held in treasury for up to two years.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 342
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
343
Notes to the parent company
financial statements
23. Borrowings
Current
Bank borrowings
Total current borrowings
Non-current
Bank borrowings
Total non-current borrowings
Total borrowings
Maturity of non-current borrowings
Between 1 and 2 years
2020
2019
RUB’000
RUB’000
—
—
—
—
—
—
—
2,175,477
2,175,477
2,086,465
2,086,465
4,261,942
2,086,465
2,086,465
The exposure of the Company’s borrowings to interest rate changes and the contractual re-pricing dates at the
balance sheet dates are as follows:
6 months or less
6 to 12 months
1 to 5 years
2020
2019
RUB’000
RUB’000
—
—
—
—
966,689
1,208,788
2,086,465
4,261,942
Note: The amounts disclosed are based on the earliest of the contractual re-pricing dates and the maturity date.
The Company’s borrowings as of 31 December 2019 were secured by pledge of rolling stock held by its subsidiaries
New Forwarding Company, AO and GTI Management, OOO with a market value of not less than RUB 4,133,290
thousand and RUB 3,300,075, respectively.
The weighted average effective interest rates at the balance sheet are as follows:
Bank borrowings
The carrying amount and fair value of current and non-current borrowings are as follows:
2020
%
—
2019
%
7.31
Bank borrowings
Carrying amount
Fair value
2020
2019
2020
2019
RUB’000
RUB’000
RUB’000
RUB’000
—
—
4,261,942
4,261,942
—
—
4,267,653
4,267,653
The fair value of borrowings and other liabilities were determined using valuation techniques.
As at 31 December 2019, the fair value of fixed interest rate instruments with stated maturity denominated in Russian
Rouble was estimated based on expected cash flows discounted using the rate of similar Russian Rouble denominated
instruments entered into by the Company or its subsidiaries on their bank borrowings close to 31 December 2019. The
discount rate used was a level 2 discount rate of 7.50% as at 31 December 2019.
The carrying amounts of the borrowings are denominated in the following currencies:
Russian Roubles
Total borrowings
2020
2019
RUB’000
RUB’000
—
—
4,261,942
4,261,942
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
344
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
345
Notes to the parent company
financial statements
The Company has the following undrawn borrowing facilities:
Fixed rate:
Expiring within one year
Expiring beyond one year
Reconciliation of liabilities arising from financing activities:
2020
2019
RUB’000
RUB’000
3,000,000
9,000,000
12,000,000
—
—
—
Opening balance 1 January 2020
4,261,942
4,413
4,266,355
Bank
borrowings
Other lease
liabilities
Total liabilities
from financing
activities
RUB’000
RUB’000
RUB’000
Cash flows:
Repayment of principal
Interest paid
Non-cash changes:
Interest expense
Foreign exchange losses
At end of year 2020
(4,242,424)
(2,358)
(4,244,782)
(235,720)
(308)
(236,028)
Current lease liabilities
216,202
—
—
308
1,165
3,220
216,510
1,165
3,220
Non-current lease liabilities
Total lease liabilities
Maturity of other lease liabilities
Between 1 and 2 years
Opening balance 1 January 2019
7,472,517
7,292
7,479,809
Bank
borrowings
Other lease
liabilities
Total liabilities
from financing
activities
RUB’000
RUB’000
RUB’000
Cash flows:
Repayment of principal
Interest paid
Non-cash changes:
Interest expense
Foreign exchange gains
At end of year
24. Other lease liabilities
(3,199,576)
(2,031)
(3,201,607)
(473,296)
(265)
(473,561)
462,297
—
4,261,942
265
(848)
4,413
462,562
(848)
4,266,355
2020
2019
RUB’000
RUB’000
3,220
—
3,220
2,054
2,359
4,413
2020
2019
RUB’000
RUB’000
—
—
2,359
2,359
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
346
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
347
Notes to the parent company
financial statements
25. Payables and accrued expenses
26. Related party transactions
2020
2019
RUB’000
RUB’000
Current
Accrued key management personnel compensation, including share based payment
(Note 26)
103,629
90,338
Accrued expenses
Other payables to third parties
Total current trade and other payables
10,877
13,863
9,602
1,545
124,108
105,746
The fair value of payables, which are due within one year approximates, their carrying amount at the balance sheet
date.
The carrying amounts of the Company’s payables and accrued expenses are denominated in the following currencies:
Litten Investments Ltd, controlled by a Director of the Company, has a shareholding in the Company of 5.1% as at 31
December 2020 (31 December 2019: 5.1%).
Goldriver Resources Ltd, which has a shareholding in the Company of 4.0% as at 31 December 2020 (2019: 4.0%), is
controlled by a member of key management personnel of the Company.
As at 31 December 2020, another 0.2% (2019: 0.2%) of the shares of the Company is controlled by Directors and key
management of the Company.
For the purposes of these financial statements, parties are considered to be related if one party has the ability to
control the other party or exercise significant influence over the other party in making financial and operational
decisions as defined by IAS 24 “Related Party Disclosures”. In considering each possible related party relationship,
attention is directed to the substance of the relationship, not merely the legal form. Related parties may enter into
transactions, which unrelated parties might not, and transactions between related parties may not be effected on the
same terms, conditions and amounts as transactions between unrelated parties.
Euro
Russian Roubles
US dollar
Other
2020
2019
RUB’000
RUB’000
75,460
33,000
15,647
1
72,598
25,698
7,429
21
Total payables and accrued expenses
124,108
105,746
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 348
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
349
Notes to the parent company
financial statements
The following transactions were carried out with related parties:
(b) Other receivables from related parties
(a) Loans to related parties
Loans to subsidiaries:
At beginning of year
Loan advances
Interest charged (Note 8)
Loan repaid during the year
Interest repaid during the year
Reversal of impairment
Net foreign exchange
At end of year
Consists of:
Non-current portion
Current portion
At end of year
2020
2019
RUB’000
RUB’000
927,583
1,372,547
—
180,000
43,863
52,269
(400,299)
(779,817)
(34,374)
(175,821)
51,713
312,980
70,243
(34,575)
658,729
927,583
544,362
696,548
114,367
231,035
658,729
927,583
Loans to related parties — gross amount
2,260,201
2,312,903
Less: Provision for impairment of loans to related parties
(1,601,472)
(1,385,320)
Loans to related parties — net
658,729
927,583
The balances at the 31 December 2020 carry a weighted average contractual interest rate of 5.1% (2019: 6.8%) per
annum. The weighted average effective interest rate at the 31 December 2020 was 11.1% (2019: 12.19%).
Other receivables for the sale of shares
Subsidiaries
At end of year
Consists of:
Non-current portion
Current portion
At end of year
2020
2019
RUB’000
RUB’000
266,307
266,307
277,246
277,246
—
270,449
270,449
—
277,246
277,246
The balance at 31 December 2019 carried a contractual interest rate of 3% per annum. The weighted average effective
interest rate at the 31 December 2019 was 3%. The balance at 31 December 2020 carries no interest and is repayable
by August 2021.
(c) Dividend income from related parties
Dividend income from related parties:
Subsidiaries (Note 8)
Total
2020
2019
RUB’000
RUB’000
22,283,992
20,417,895
22,283,992
20,417,895
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 350
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
351
Notes to the parent company
financial statements
(d) Interest income
Interest income:
Interest on loans to subsidiaries (Note 8)
Interest on other receivables from subsidiary (Note 12)
2020
2019
RUB’000
RUB’000
43,863
52,269
3,263
16,934
Total interest income calculated using the effective interest rate method
47,126
69,203
(e) Guarantees in favour of subsidiaries
Guarantees are irrevocable assurances that the Company will make payments in the event that another party cannot
meet its obligations. The Company has guaranteed the following obligations:
Subsidiaries1
Total guaranteed obligations
2020
2019
RUB’000
RUB’000
23,584,105
18,966,840
23,584,105
18,966,840
1 Represents the maximum amount of obligation under each contract, being the contractual undiscounted cash flows under the loan agreements as at
31 December 2020 and 2019.
During the years ended 31 December 2020 and 31 December 2019 the Company has acted as the guarantor for the
obligation of its subsidiaries for loan agreements entered into with financial institutions and quoted bonds issued by
subsidiaries. The fair values of such guarantees are amortised through the income statement. Management assessed
that as at 31 December 2020 and 31 December 2019 no need for provision arises in relation to any of the guarantees
issued by the Company.
Management estimated the fair value of the free of charge guarantees issued by the Company to secure the liabilities
of its subsidiaries based on the best estimate of expenditure required to settle the obligation. Specifically, the fair
values on initial recognition and the expected credit losses as at 31 December 2020 of guarantees issued by the
Company for obligations of its subsidiaries in accordance with loan agreements with financial institutions and quoted
bonds issued by subsidiaries were estimated using a probability adjusted discounted cash flow analysis, using
probability of default, as implied by the market rate of the borrowings obtained by the subsidiaries and loss given
default.
The loss given default for the financial guarantees issued by the Company for the obligations of its subsidiaries in
accordance with loan agreements with financial institutions where such obligations are also secured by a pledge of
property, plant and equipment and the distressed sale value of such pledge exceeds the amount of the obligation of
the respective subsidiary has been estimated at RUB Nil, since, in case of default, the Company will be able to recover
its losses under the issued guarantees from respective subsidiaries in full.
The loss given default for guarantees issued by the Company for unsecured or underpledged obligations of its
subsidiaries in accordance with loan agreements with financial institutions and quoted bonds issued by subsidiaries
was estimated by considering the distressed value of the net assets of the subsidiaries which were not pledged at the
time of the assessment. The loss given default as estimated at RUB Nil, since, in case of default, the Company will be
able to recover its losses under the issued guarantees from respective subsidiaries in full.
At 31 December 2020 and 31 December 2019, the Company assessed whether any ECL provision is needed for the
guarantees in issue as of each reporting date. Management assessed that no need for provision arises in relation to
any of the guarantees issued by the Company on the basis that, in case of default, the Company will be able to recover
its losses under the issued guarantees from respective subsidiaries in full.
(f)
Impairment losses
Reversal of impairment losses of loans to subsidiaries (Note 19)
51,713
312,980
2020
2019
RUB’000
RUB’000
(g) Key management personnel compensation
2020
2019
RUB’000
RUB’000
Key management salaries and other short-term employee benefits1
384,200
352,881
Share based compensation2
19,309
—
403,509
352,881
1 ‘key management salaries and other short term employee benefits’ include directors’ remuneration amounting to RUB 310,758 thousand (2019: RUB
352,881 thousand)
2 the Company’s share based compensation plan matured by 31 December 2020
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
352
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
353
Notes to the parent company
financial statements
(h) Directors’ remuneration
27. Contingencies
Directors’ fees (Note 10)
Emoluments in their executive capacity
Total directors’ remuneration
(i) Year-end balances arising from payables to key management
Accrued key management remuneration (Note 25):
Accrued salaries and other short-term employee benefits
Share based payment liability
2020
2019
RUB’000
RUB’000
25,535
20,868
285,223
332,013
310,758
352,881
2020
2019
RUB’000
RUB’000
84,320
90,338
19,309
—
103,629
90,338
Operating environment of the Company
The year 2020 was marked by the COVID-19 pandemic, widespread national lockdowns and sharp decline in economic
conditions across the globe. Measures taken by various governments to contain the virus have severely impacted and
could continue to negatively impact economic activity and supply chains, both globally and in the Russian Federation
and the other territories in which the Company’s subsidiaries operate for an unknown period of time. Management has
taken and continues to take necessary measures to ensure minimum disruption to and sustainability of the operations
of the Company and its subsidiaries and support their employees, customers and suppliers.
The overall economic weakness and the spread of COVID-19 impacted the Russian freight rail transportation
market which experienced weak and volatile demand along with weak pricing conditions especially in the gondola
segment. Although the operations and financial results of the Company’s subsidiaries for the year 2020 were
inevitably impacted by these unprecedented economic conditions, the Company’s profit for the year increased to
RUB 21,883,710 thousand compared to RUB 18,773,265 thousand for the year ended 31 December 2019 and the net
cash generated from operations increased to RUB 21,492,632 thousand compared to RUB 19,268,420 thousand for
the year ended 31 December 2019. This was mainly the result of the increase in the dividend income earned from the
subsidiaries from RUB 20,417,895 thousand during the year ended 31 December 2019 to RUB 22,283,992 thousand in
the current year as part of the dividend income related to profits of year 2019.
The future effects of the COVID-19 pandemic and of the above measures on businesses, market participants, clients
of the Company’s subsidiaries, as well as global economy and the operating environment of the Company and its
subsidiaries are difficult to predict. Consequently, the future financial performance, cash flows and financial position
of the Company, are difficult to predict and management’s current expectations and estimates could differ from actual
results. The Company’s management believes that it is taking all the necessary measures to maintain the viability of
the Company and the development of its business and that of its subsidiaries in the current economic environment.
The management has analysed these economic conditions and concluded that these represent indications of
impairment of the Company’s subsidiaries and proceeded to perform impairment assessments to determine if there is
an impairment loss, as further set out in Note 18.
The Company’s subsidiaries operate in the Russian Federation, Estonia, Ukraine and Finland.
Russian Federation. The Russian Federation displays certain characteristics of an emerging market. Its economy is
particularly sensitive to oil and gas prices. The legal, tax and regulatory frameworks continue to develop and are
subject to frequent changes and varying interpretations.The Russian economy continues to be negatively impacted by
ongoing political tension in the region and international sanctions against certain Russian companies and individuals.
The operating environment has a significant impact on the operations and financial position of the Company and its
subsdiaries operating in the Russian Federation. Management is taking necessary measures to ensure sustainability
of the operations of the Company and its subsdiaries operating in the Russian Federation. However, the future effects
of the current economic situation are difficult to predict and management’s current expectations and estimates could
differ from actual results.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 354
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
355
Notes to the parent company
financial statements
Estonia and Finland. Estonia and Finland represent well-developed markets and economies with stable political
systems and developed legislation based on EU requirements and regulations.
28. Events after the balance sheet date
Ukraine. Starting in 2013, the political situation in Ukraine has experienced instability with numerous protests and
continued political uncertainty that has led to deterioration of the state’s finances, volatility of financial markets and
sharp depreciation of the national currency against major foreign currencies. The ratings of Ukrainian sovereign debt
were downgraded by international rating agencies with negative outlooks for the future. The central bank of Ukraine,
among other measures, imposed certain restrictions on processing of client payments by banks and on the purchase
of foreign currency on the inter-bank market.
The Company’s exposure to Ukraine comprises loans receivable of RUB 446,544 thousand (2019: RUB 364,665
thousand) from Ukrainian New Forwarding Company, AO (Note 19). The final resolution and the ongoing effects of
the political and economic situation are difficult to predict but they may have further severe effects on the Ukrainian
economy and the business of the Company’s subsidiary.
Tax contingencies. Cypriot tax legislation is subject to varying interpretations. There are transactions and calculations
for which the ultimate tax determination is uncertain. The Company recognises liabilities for anticipated tax audit
issues based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters is
different from the amounts that were initially recorded, such differences will impact the current and deferred income
tax assets and liabilities in the period in which such determination is made.
The Company is incorporated outside Russia. Tax liabilities of the Company are determined on the assumption that
it is not subject to Russian profits tax because it does not have a permanent establishment in Russia. The Company
is a tax resident of Cyprus only and full beneficial owner of the equity interest held directly and indirectly in its
subsidiaries. This interpretation of relevant legislation may be challenged but the impact of any such challenge cannot
be reliably estimated currently; however, it may be significant to the financial position and/or the overall operations of
the Company.
On the date of this report, the Board of Directors of the Company, having considered the profitability and liquidity
position of the Group, recommends a payment of dividend for the year 2020 in the amount of 28.0 Russian Roubles
per ordinary share/GDR, amounting to a total dividend of RUB 5,004,746 thousand, including final dividend for 2020
in the amount of RUB 2,931,351 thousand or RUB 16.4 per ordinary share/GDR and a special final dividend in the
amount of RUB 2,073,395 thousand or RUB 11.60 per ordinary share/GDR. Such dividends subject to the approval of
the shareholders at the Annual General Meeting on 29 April 2021 and shall be paid in US Dollars at the average of the
official exchange rates of the Russian Central Bank for five business days in Russia from 22 April 2021 to 28 April 2021
inclusive.
There were no other material events after the balance sheet date that which have a bearing on the understanding
of these financial statements.
Independent Auditor’s Report on pages 280 to 285.
Management report and parent company financial statements for the year ended 31 December 2020Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 356
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
357
Additional
Information
Selected Operational Information
Definitions
Presentation of Financial and Other Information
GRI Content Index
Contacts
358
364
368
370
374
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 358
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
359
Selected Operational
Information for the year ended 31 December 2020
Fleet (incl. rolling stock and specialised containers)
31 December
2020
31 December
2019
Change
Change, %
31 December
2020
31 December
2019
Change
Change, %
Owned Fleet
Gondola cars
Tank cars
Locomotives
Flat cars
Other railcars (incl. hopper cars, etc)
Specialised containers
(incl. petrochemical and other)
Total
Owned Fleet as % of Total Fleet
Leased-in Fleet
Gondola cars
Tank cars
Flat cars
Other railcars (incl. hopper cars, etc)
Specialised containers
(incl. petrochemical and other)
Total
Leased-in Fleet as % of Total Fleet
Total Fleet (Owned Fleet and Leased-in Fleet)
Gondola cars
Tank cars
Locomotives
Flat cars
Other railcars (incl. hopper cars, etc)
Specialised containers
(incl. petrochemical and other)
Total
45,483
17,697
74
1,604
90
2,814
67,762
95%
164
2,720
443
79
520
3,926
5%
45,647
20,417
74
2,047
169
3,334
71,688
45,516
17,767
75
1,407
90
2,814
67,669
96%
104
1,969
466
132
380
3,051
4%
45,620
19,736
75
1,873
222
3,194
70,720
(33)
(70)
(1)
197
0
0
93
-
60
751
(23)
(53)
140
875
-
27
681
(1)
174
(53)
140
968
0%
0%
-1%
14%
0%
0%
0%
-
58%
38%
-5%
-40%
37%
29%
-
0%
3%
-1%
9%
-24%
4%
1%
Total Fleet by type, %
Gondola cars
Tank cars
Locomotives
Flat cars
Other railcars (incl. hopper cars, etc)
Specialised containers
(incl. petrochemical and other)
64%
28%
0.1%
3%
0.2%
5%
65%
28%
0.1%
3%
0.3%
5%
Total
100%
100%
Average age of Owned Fleet
Gondola cars
Tank cars
Locomotives
Flat cars
Other railcars (incl. hopper cars, etc)
Specialised containers
(incl. petrochemical and other)
11.9
15.9
13.2
3.0
13.4
2.9
10.9
14.9
12.2
5.1
12.4
1.9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
360
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
361
Operation of rolling stock (excl. Engaged Fleet)1
2020
2019
Change
Change, %
2020
2019
Change
Change, %
Freight Rail Turnover, billion tonnes-km
Metallurgical cargoes
Ferrous metals
Scrap metal
Iron ore
Oil products and oil
Coal (incl. coke)
Construction materials
Crushed stone
Cement
Other construction materials
Other
Total
Freight Rail Turnover by cargo type, %
Metallurgical cargoes (incl. ferrous metal,
scrap metal and iron ore)
Oil products and oil
Coal (incl. coke)
Construction materials (incl. cement)
Other
Total
Transportation Volume, million tones
Metallurgical cargoes
Ferrous metals
Scrap metal
Iron ore
Oil products and oil
Coal (incl. coke)
Construction materials
Crushed stone
Cement
Other construction materials
Other
Total
68.2
29.7
2.9
35.5
19.1
42.2
9.7
7.9
0.3
1.4
11.2
150.3
45%
13%
28%
6%
7%
73.1
28.0
3.3
41.8
22.0
33.8
6.3
5.3
0.2
0.9
11.8
147.1
50%
15%
23%
4%
8%
100%
100%
39.0
13.8
3.0
22.2
18.6
14.5
10.2
9.0
0.2
1.0
6.6
88.9
43.9
14.9
2.9
26.0
21.9
11.4
7.1
6.3
0.1
0.6
7.3
91.6
(5.0)
1.8
(0.4)
(6.3)
(2.9)
8.4
3.3
2.7
0.1
0.5
(0.6)
3.2
-
-
-
-
-
-
(4.9)
(1.1)
0.1
(3.8)
(3.3)
3.1
3.1
2.7
0.1
0.3
(0.7)
(2.7)
-7%
6%
-12%
-15%
-13%
25%
52%
51%
75%
54%
-5%
2%
-
-
-
-
-
-
-11%
-8%
2%
-15%
-15%
27%
44%
42%
53%
54%
-10%
-3%
1 Excluding operational and financial information of the specialised container transportation business.
Average Rolling Stock Operated, units
Gondola cars
Rail tank cars
Locomotives
Other railcars
Total
Average Number of Loaded Trips per Railcar
Gondola cars
Rail tank cars
Other railcars
Total
Average Distance of Loaded Trip, km
Gondola cars
Rail tank cars
Other railcars
Total
43,669
13,550
55
210
43,486
12,968
51
340
57,484
56,845
23.9
22.7
82.3
23.8
1,898
1,025
269
1,681
23.6
27.8
87.0
25.0
1,834
993
502
1,591
183
583
3
(130)
639
0.3
(5.1)
(4.7)
(1.1)
64
33
(233)
90
0%
4%
7%
-38%
1%
1%
-18%
-5%
-5%
4%
3%
-46%
6%
Average Price per Trip, RUB
36,909*
45,807*
(8,898)
-19%
Net Revenue from Operation of Rolling Stock by cargo type, RUB million
Metallurgical cargoes
Ferrous metals
Scrap metal
Iron ore
Oil products and oil
Coal (incl. coke)
Construction materials (incl. cement)
Other
Total
17,124*
8,908*
1,398*
6,818*
19,257*
8,834*
1,973*
3,338*
26,467*
11,141*
1,901*
13,425*
21,009*
9,380*
3,105*
5,034*
(9,343)
(2,233)
(502)
(6,607)
(1,752)
(546)
(1,132)
(1,695)
50,527*
64,994*
(14,467)
Net Revenue from Operation of Rolling Stock by cargo type, %
Metallurgical cargoes (incl. ferrous metal,
scrap metal and iron ore)
Oil products and oil
Coal (incl. coke)
Construction materials (incl. cement)
Other
Total
34%
38%
17%
4%
7%
41%
32%
14%
5%
8%
100%
100%
-
-
-
-
-
-
-35%
-20%
-26%
-49%
-8%
-6%
-36%
-34%
-22%
-
-
-
-
-
-
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
362
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
363
Net Revenue from Operation of Rolling Stock by largest clients (incl. their affiliates and suppliers), %
Transportation Volume, million tones
2020
2019
Change
Change, %
2020
2019
Change
Change, %
Rosneft
MMK
Metalloinvest
Gazprom Neft
TMK
EVRAZ
UGMK-Trans
TAIF
SDS-Ugol
ChelPipe
Other (incl. small and medium enterprises)
Empty Run Ratio, %
Gondola cars
Rail tank cars and other railcars
Total Empty Run Ratio, %
25%
14%
13%
7%
4%
3%
2%
2%
1%
1%
28%
45%
89%
51%
23%
12%
21%
5%
3%
2%
2%
3%
0.5%
1%
26%
42%
90%
49%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Empty Run Costs, RUB million
15,799*
14,752*
1,047
Share of Empty Run Kilometres Paid by
Globaltrans, %
99%
89%
-
Operation of rolling stock (incl. Engaged Fleet)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7%
-
Metallurgical cargoes
Ferrous metals
Scrap metal
Iron ore
Oil products and oil
Coal (incl. coke)
Construction materials
Crushed stone
Cement
Other construction materials
Other
Total
Specialised container segment
Net Revenue from Specialised Container
Segment, RUB million
Engaged Fleet
Net Revenue from Engaged Fleet,
RUB million
43.4
15.2
3.3
24.9
18.6
16.1
10.3
9.1
0.2
1.0
6.8
95.2
2020
1,923*
2020
152*
50.3
16.5
3.0
30.8
22.1
12.3
7.1
6.4
0.1
0.6
7.5
99.4
(6.9)
(1.4)
0.3
(5.9)
(3.4)
3.8
3.1
2.7
0.1
0.3
(0.8)
(4.2)
-14%
-8%
10%
-19%
-16%
31%
44%
43%
53%
54%
-10%
-4%
2019
1,623*
Change
Change, %
299.4
18%
2019
202*
Change
Change, %
(50)
-25%
Freight Rail Turnover, billion tonnes-km
Metallurgical cargoes
Ferrous metals
Scrap metal
Iron ore
Oil products and oil
Coal (incl. coke)
Construction materials
Crushed stone
Cement
Other construction materials
Other
Total
2020
2019
Change
Change, %
Operating leasing of rolling stock
76.7
32.9
3.3
40.5
19.1
45.2
9.8
8.1
0.3
1.4
11.4
162.1
85.2
30.7
3.4
51.2
22.2
35.9
6.4
5.3
0.2
0.9
11.9
161.5
(8.5)
2.2
(0.1)
(10.6)
(3.0)
9.3
3.4
2.8
0.1
0.5
(0.6)
0.6
-10%
7%
-3%
-21%
-14%
26%
53%
52%
75%
54%
-5%
0%
Leased-out Fleet
Gondola cars
Tank cars
Locomotives
Other railcars (incl. flat, hopper cars, etc)
Total
Leased-out Fleet as % of Total Fleet
Employees
31 December
2020
31 December
2019
Change
Change, %
68
6,597
0
367
7,032
10%
152
6,568
0
122
6,842
10%
(84)
29
0
245
190
-
-55%
0%
0%
201%
3%
-
Total
1,697
1,640
57
3%
31 December
2020
31 December
2019
Change
Change, %
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
364
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
365
Definitions
Terms that require definitions are marked with capital letters in this Annual Report
and their definitions are provided below in alphabetical order:
Adjusted EBITDA (a non-IFRS financial measure) represents EBITDA excluding “Net foreign exchange transaction (gains)/
losses on financing activities”, “Share of profit/(loss) of associate”, “Other losses/(gains) - net”, “Net (gain)/loss on sale
of property, plant and equipment”, “Impairment/(reversal of impairment) of property, plant and equipment”, “Impairment
of intangible assets”, “Loss on derecognition arising on capital repairs” and “Reversal of impairment of intangible
assets”.
Adjusted EBITDA Margin (a non-IFRS financial measure) is calculated as Adjusted EBITDA divided by Adjusted Revenue.
Adjusted Profit Attributable to Non-controlling Interests (a non-IFRS financial measure) is calculated as “Profit
attributable to non-controlling interests” less share of “Impairment of property, plant and equipment” and “Impairment
of intangible assets” attributable to non-controlling interests.
Adjusted Revenue (a non-IFRS financial measure) is calculated as “Total revenue” less the following “pass through” items
“Infrastructure and locomotive tariffs: loaded trips” and “Services provided by other transportation organisations”.
Attributable Free Cash Flow (a non-IFRS financial measure) means Free Cash Flow less Adjusted Profit Attributable
to Non-controlling Interests.
Average Distance of Loaded Trip is calculated as the sum of the distances of all loaded trips for a period divided by the
number of loaded trips for the same period.
Average Number of Loaded Trips per Railcar is calculated as total number of loaded trips in the relevant period divided
by Average Rolling Stock Operated.
Average Price per Trip is calculated as Net Revenue from Operation of Rolling Stock divided by the total number
of loaded trips during the relevant period in the respective currency.
Average Rolling Stock Operated is calculated as the average weighted (by days) number of rolling stock available
for operator services (not including rolling stock in maintenance, purchased rolling stock in transition to its first place
of commercial utilisation, rolling stock leased out, Engaged Fleet, flat cars and containers used in specialised container
transportation).
EBITDA (a non-IFRS financial measure) represents “Profit for the period” before “Income tax expense”, “Finance costs
- net” (excluding “Net foreign exchange transaction (gains)/losses on financing activities”), “Depreciation of property,
plant and equipment”, “Amortisation of intangible assets” and “Depreciation of right-of-use assets”.
Empty Run or Empty Runs means the movement of railcars without cargo for the whole or a substantial part of the
journey.
Empty Run Costs (a non-IFRS financial measure meaning costs payable to RZD for forwarding empty railcars)
is derived from management accounts and presented as part of the “Infrastructure and locomotive tariffs: empty
run trips and other tariffs” component of “Cost of sales” reported under EU IFRS. Empty Run Costs do not include
costs of relocation of rolling stock to and from maintenance, purchased rolling stock in transition to its first place
of commercial utilisation, rolling stock leased in or leased out, Engaged Fleet, flat cars and containers used in specialised
container transportation.
Empty Run Ratio is calculated as the total of empty trips in kilometres by respective rolling stock type divided by total
loaded trips in kilometres of such rolling stock type. Empty trips are only applicable to rolling stock operated (not
including rolling stock in maintenance, purchased rolling stock in transition to its first place of commercial utilisation,
rolling stock leased out, Engaged Fleet, flat cars and containers used in specialised container transportation).
Engaged Fleet is defined as rolling stock subcontracted or otherwise engaged from a third-party rail operator for a
loaded trip from the point of origination to the cargo’s destination, at which point the railcar is then released to such
third-party.
Free Cash Flow (a non-IFRS financial measure) is calculated as “Cash generated from operations” (after “Changes
in working capital”) less “Tax paid”, “Purchases of property, plant and equipment” (which includes maintenance CAPEX),
“Purchases of intangible assets”, “Acquisition of subsidiary undertakings - net of cash acquired”, “Principal elements
of lease payments for leases with financial institutions”, “Principal elements of lease payments for other lease liabilities”,
“Interest paid on other lease liabilities”, “Interest paid on bank borrowings and non-convertible unsecured bonds”
and “Interest paid on leases with financial institutions”.
Freight Rail Turnover is a measure of freight carriage activity over a particular period calculated as the sum of tonnage
of each loaded trip multiplied by the distance of each loaded trip, expressed in tonnes-km. It excludes volumes
transported by Engaged Fleet (unless otherwise stated) and the performance of the specialised container transportation
business.
Infrastructure and Locomotive Tariffs – Other Tariffs (a non-IFRS financial measure, derived from management accounts)
is presented as part of the ‘‘Infrastructure and locomotive tariffs: empty run trips and other tariffs’’ component
of “Cost of sales” reported under EU IFRS. This cost item includes the costs of relocation of rolling stock to and from
maintenance, transition of purchased rolling stock to its first place of commercial utilisation, and relocation of rolling
stock in and from lease operations as well as other expenses including the empty run costs attributable to the
specialised container transportation business.
Leased-in Fleet is defined as fleet leased in under operating leases, including railcars, locomotives and specialised
containers.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
366
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
367
Definitions
Leased-out Fleet is defined as fleet leased out to third parties under operating leases (excluding flat cars and containers
used in specialised container transportation).
Owned Fleet is defined as the fleet owned and leased in under finance lease as at the end of the reporting period.
It includes railcars, locomotives and specialised containers, unless otherwise stated, and excludes Engaged Fleet.
Leverage Ratio or Net Debt to Adjusted EBITDA (a non-IFRS financial measure) is the ratio of Net Debt on the last day of a
particular financial period to Adjusted EBITDA in respect of the twelve months to the end of that same period.
Market Share is calculated using the Group’s own information as the numerator and information published by the Federal
State Statistics Service of Russia ("Rosstat") as the denominator. It is defined as a percentage of the overall Russian
freight rail transportation volume and includes volumes transported by Engaged Fleet, unless otherwise stated.
Net Debt (a non-IFRS financial measure) is defined as the sum of total borrowings (including interest accrued) less “Cash
and cash equivalents”.
Net Revenue from Engaged Fleet (a non-IFRS financial measure, derived from management accounts) represents the net
sum of the price charged for transportation to clients by the Group utilising Engaged Fleet less the loaded railway tariffs
charged by RZD (included in the EU IFRS line item “Infrastructure and locomotive tariffs: loaded trips”) less the cost
of attracting fleet from third-party operators (included in the EU IFRS line item “Services provided by other transportation
organisations”).
Net Revenue from Operation of Rolling Stock is a non-IFRS financial measure, derived from management accounts,
describing the net revenue generated from freight rail transportation services which is adjusted for respective “pass
through” loaded railway tariffs charged by RZD (included in the EU IFRS line item “Infrastructure and locomotive tariffs:
loaded trips”).
Net Revenue from Specialised Container Transportation is a non-IFRS financial measure, derived from management
accounts, that represents the revenue generated from the specialised container operations (included in the EU IFRS
line item: “Revenue from specialised container transportation”) less the respective “pass through” loaded railway tariffs
charged by RZD (included in the EU IFRS line item “Infrastructure and locomotive tariffs: loaded trips”).
Net Working Capital (a non-IFRS financial measure) is calculated as the sum of the current portions of “Inventories”,
“Current income tax assets”, “Trade receivables - net”, “Other receivables - net” (“Other receivables - third parties”
and “Other receivables - related parties” net of “Provision for impairment of other receivables”), “Prepayments - third
parties”, “Prepayments - related parties” and “VAT recoverable”, less the sum of the current portions of “Trade payables
to third parties”, “Trade payables to related parties”, “Other payables to third parties”, “Other payables to related
parties”, "Accrued expenses", “Accrued key management compensation, including share based payment”, “VAT payable
and other taxes”, “Contract liabilities” and “Current tax liabilities”.
Other Operating Cash Costs (a non-IFRS financial measure) include the following cost items: “Advertising
and promotion”, “Auditors’ remuneration”, “Communication costs”, “Information services”, “Legal, consulting and other
professional fees”, “Expense relating to short-term leases - tank containers”, “Expense relating to short-term leases -
office”, “Taxes (other than income tax and value added taxes)” and “Other expenses”.
Share of Empty Run Kilometres paid by Globaltrans is defined as the percentage of empty run kilometres paid
by Globaltrans divided by the total amount of empty run kilometres incurred by the fleet operated by Globaltrans (not
including relocation of rolling stock to and from maintenance, purchased rolling stock in transition to its first place
of commercial utilisation, and rolling stock leased-out, Engaged Fleet, flat cars and containers used in specialised
container transportation) in the relevant period.
Total CAPEX (a non-IFRS financial measure) calculated on a cash basis as the sum of “Purchases of property, plant
and equipment” (which includes maintenance CAPEX), “Purchases of intangible assets”, “Acquisition of subsidiary
undertakings - net of cash acquired” and “Principal elements of lease payments for leases with financial institutions” (as
part of the capital expenditures was financed with a finance lease).
Total Empty Run Ratio is calculated as total kilometres travelled empty divided by the total kilometres travelled loaded
by the rolling stock fleet operated by Globaltrans (not including the relocation of rolling stock to and from maintenance,
purchased rolling stock in transition to its first place of commercial utilisation, or rolling stock leased out, Engaged Fleet,
flat cars and containers used in specialised container transportation) in the relevant period.
Total Fleet is defined as the fleet owned and leased in under finance and operating leases as at the end of reporting
period. It includes railcars, locomotives and specialised containers, unless otherwise stated, and excludes Engaged
Fleet.
Total Operating Cash Costs (a non-IFRS financial measure) represent operating cost items payable in cash and calculated
as “Total cost of sales, selling and marketing costs and administrative expenses” less the “pass through” items:
“Infrastructure and locomotive tariffs: loaded trips” and “Services provided by other transportation organisations”
and non-cash items: “Depreciation of property, plant and equipment”, “Amortisation of intangible assets”, “Depreciation
of right-of-use assets”, “Loss on derecognition arising on capital repairs”, “Net impairment losses on trade and other
receivables”, “Impairment/(reversal of impairment) of property, plant and equipment” and “Net (gain)/loss on sale
of property, plant and equipment”.
Total Operating Non-Cash Costs (a non-IFRS financial measure) include the following cost items: “Depreciation
of property, plant and equipment”, “Amortisation of intangible assets”, “Depreciation of right-of-use assets”, “Loss
on derecognition arising on capital repairs”, “Net impairment losses on trade and other receivables”, “Impairment/
(reversal of impairment) of property, plant and equipment ” and “Net (gain)/loss on sale of property, plant
and equipment”.
Transportation Volume is a measure of freight carriage activity over a particular period, measuring weight of cargo
carried in tonnes. It excludes volumes transported by Engaged Fleet (unless otherwise stated) and volumes related to the
specialised container transportation business.
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 368
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
369
Presentation of Financial
and Other Information
Financial information
Non-IFRS financial
information
All financial information presented
in this Annual Report is derived
from the Consolidated Management
Report and Consolidated Financial
Statements of Globaltrans Investment
PLC (the “Company” and, together
with its consolidated subsidiaries,
“Globaltrans” or the “Group”)
and prepared in accordance
with International Financial
Reporting Standards as adopted
by the European Union and the
requirements of Cyprus Companies
Law, Cap. 113 (EU IFRS). The Group’s
Consolidated Management Report
and Consolidated Financial
Statements and the parent
company financial statements
for the year ended 31 December
2020 are included in the Financial
Statements section of this Annual
Report. Financial statements
for prior years can be found
on Globaltrans corporate website
(www.globaltrans.com). Certain
financial information derived from
the management accounts is marked
in this Annual Report with an asterisk
(*). The presentational currency of the
Group’s financial results is Russian
roubles (RUB), which is the functional
currency of the Company as well as
of its Cypriot and Russian subsidiaries.
In this Annual Report, the Group
has used certain measures not
recognised by EU IFRS or IFRS
(referred to as “non-IFRS measures”).
The management believes that
these non-IFRS measures provide
valuable information to readers
because they enable them to focus
more directly on the underlying
day-to-day performance of the
Group’s business and are frequently
used by securities analysts, investors
and other interested parties in the
evaluation of companies in the
freight rail transportation sector.
Further explanations of the reasons
for presenting such measures are
included in the Financial Review
section of this Annual Report.
The non-IFRS measures that have
been used in this Annual Report as
supplemental measures of the Group’s
operating performance. All non-IFRS
financial information is calculated
on the basis of EU IFRS financial
statements and/or management
accounts. Reconciliations to the
closest IFRS measures are included
in the Financial Review section of this
Annual Report. Non-IFRS measures
requiring additional explanation
or definitions appear with initial
capital letters and the definitions
and explanations are provided
in the Definitions section of this
Annual Report.
Other companies in the freight
rail transportation sector may
calculate the above non-IFRS
measures differently or may use each
of them for different purposes than
the Group, limiting their usefulness as
comparative measures. All non-IFRS
financial information presented in this
Annual Report should be used only
as an analytical tool and investors
should not consider such information,
in isolation or in any combination, as
a substitute for analysis of the Group’s
Consolidated Financial Statements
reported under EU IFRS and included
in the Financial Statements section
of this Annual Report.
Operational
and market information
Globaltrans reports certain
operational information to illustrate
the changes in the Group’s
operational and financial performance
during the reporting periods.
This operational information is derived
from management accounts.
The Group’s selected operational
information for the year ended
31 December 2020 is provided in the
Additional Information section of this
Annual Report. Selected operational
information for prior years can be
found on Globaltrans’ corporate
website (www.globaltrans.com).
Terms referring to such operational
information appear with initial capital
letters with definitions or explanations
provided in the Definitions section
of this Annual Report.
occurring after the date hereof
or to reflect the occurrence
of unanticipated events. Many factors
could cause the actual results to differ
materially from those contained
in forward-looking statements of the
Group. Among others, these include
general economic conditions,
the competitive environment, risks
associated with operating in Russia,
market change in the Russian
freight rail market and many other
risks specifically related to the
Group and its operations. This
Annual Report has been prepared
to assist shareholders to assess
the Group’s financial condition, results
of operations, business, strategies
and prospects and for no other
purpose. The Group, its Directors,
employees, agents and advisers do
not accept or assume responsibility
for any other purpose or to any other
person to whom this Annual Report
is shown or who may have access
to it, and any such responsibility
or liability is expressly disclaimed.
The Group has obtained certain
statistical, market and pricing
information that is presented in this
announcement on such topics as
the Russian freight rail transportation
market and related subjects from
the following third-party sources:
Federal State Statistics Service
of Russian Federation (“Rosstat”),
JSC Russian Railways (“RZD”) and the
Federal Antimonopoly Service
(“FAS”). The Group has accurately
reproduced such information
and, as far as it is aware and can
ascertain from information published
by such third-party sources, no
facts have been omitted that would
render the reproduced information
inaccurate or misleading. The Group
has not independently verified this
third-party information. In addition,
the official data published by Russian
governmental agencies may be
substantially less complete or
researched than that of more
developed countries.
Cautionary note
This Annual Report, including its
appendices, may contain forward-
looking statements regarding
future events or the future financial
performance of the Group. You
can identify forward-looking
statements by terms such as expect,
believe, estimate, anticipate,
intend, will, could, may or might,
the negative of such terms or
other similar expressions. These
forward-looking statements include
matters that are not historical
facts and statements regarding
the Group’s intentions, beliefs or
current expectations concerning,
among other things, the Group’s
results of operations, financial
condition, liquidity, prospects,
growth, strategies and the industry
in which the Group operates. By their
nature, forward-looking statements
involve risks and uncertainties
because they relate to events
and depend on circumstances
that may or may not occur in the
future. The Group cautions that
forward-looking statements are not
guarantees of future performance
and that the Group’s actual results
of operations, financial condition,
liquidity, prospects, growth
and strategies, and the development
of the industry in which the Group
operates, may differ materially from
those described in or suggested
by the forward-looking statements
contained in this Annual Report.
In addition, even if the Group’s
results of operations, financial
condition, liquidity, prospects,
growth and strategies and the
development of the industry in which
the Group operates are consistent
with the forward-looking statements
contained in these materials, those
results or developments may not be
indicative of results or developments
in future periods. The Group does not
intend to update these statements
to reflect events and circumstances
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
370
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
371
GRI Content Index
Indicator
Definition
General disclosures
Report section / Notes
Annual
Report page
102-1
102-2
102-3
102-4
102-5
102-6
102-7
102-8
102-9
102-10
Name of the organisation
Corporate Structure
Activities, brands, products,
and services
At a Glance
Financial and Operational Review
Location of headquarters
Key Contacts
Location of operations
Corporate Structure
Number of countries where
the organisation operates
Market Review
Our Industry
Ownership and legal form
Corporate Structure
Markets served
Our Industry
Scale of the organisation
Financial and Operational Review
Information on employees and other
workers
Sustainability Report
Supply chain
Financial and Operational Review
Significant changes to the organisation
and its supply chain
No significant changes in the supply chain.
p. 109
p. 8
p. 38-39
p. 374
p. 109
p. 32-35
p. 16-17
p. 109
p. 16-17
p. 36-39
p. 74-77
p. 36-39
102-11
Precautionary Principle or approach
102-12
External initiatives.
A list of externally developed economic,
environmental and social charters,
principles, or other initiatives to which
the organisation subscribes or which
it endorses
The Group does not explicitly use
the precautionary principle.
The Group does not have membership
in external initiatives.
102-13
Membership of associations.
Sustainability Report
p. 66-83
A list of the main memberships
of industry or other associations,
and national or international advocacy
organisations
Union of Railway Transport Operators - SOZHT
(AO New Forwarding Company)
Council of Russian Transport Workers – STR
(AO New Forwarding Company)
Railway Engineering Association – OPZHT
(AO Ural Wagonrepair Company)
Estonian Chamber of Commerce and Industry
(AS Spacecom (Estonia) and AS Spacecom
Trans (Estonia)
Indicator
Definition
Report section / Notes
102-14
Statement from senior decision-maker
Chairman’s Statement
CEO Review
102-15
Key impacts, risks opportunities
Risk Management
102-16
Values, principles, standards, and norms
of behaviour
Sustainability Report
Sustainability Report
102-18
Governance structure
Corporate Governance Report
102-35
Remuneration policies
Corporate Governance Report - Remuneration
of the Board of Directors and Management
102-40
List of stakeholder groups
Sustainability Report
102-41
Collective bargaining agreements
As at 31.12.2020, 39% of total employees
in OOO BaltTransServis were covered
by collective bargaining agreements. In other
Group subsidiaries there were no collective
bargaining agreements.
Identifying and selecting stakeholders
with whom to engage
Sustainability Report
The organisation’s approach
to stakeholder engagement
Sustainability Report
Key topics and concerns that have been
raised through stakeholder engagement
Sustainability Report
102-42
102-43
102-44
102-45
102-46
Defining report content and topic
boundaries
Sustainability Report
102-47
List of the material topics
Sustainability Report
102-48
102-49
Restatements of information given
in previous reports
No restatements of information given in the
previous report were made.
Significant changes from previous
reporting periods in the list of material
topics and topic boundaries
No significant changes.
102-50
Reporting period
Calendar year 2020
102-51
Date of most recent report
102-52
Reporting cycle
April 2020
Annual
Annual
Report page
p. 20
p. 28
p. 56
p. 66
p. 70-73
p. 85
p. 101
p. 68-69
p. 68-69
p. 68-69
p. 68-69
p. 66
p. 67
Entities included in the consolidated
financial statements
Notes to the Consolidated Financial Statements p. 224-225
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020
372
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
373
GRI Content Index
Indicator
Definition
102-53
Contact point for questions regarding
the report
Report section / Notes
Investor Relations
Phone: +357 25 328 860
Email: irteam@globaltrans.com
Annual
Report page
102-54
Claims of reporting in accordance with
the GRI standards
The Report was prepared in accordance with
the GRI Standards – Core option.
102-55
GRI content index
GRI Content Index
p. 370
102-56
External assurance
Management
External assurance for the Group’s
Sustainability Report was not conducted in the
reporting period.
103-1
103-2
Explanation of the material topic and its
boundary
Sustainability Report
The management approach and its
components
Sustainability Report
103-3
Evaluation of the management approach Sustainability Report
Economic impact
Economic performance
201-1
Direct economic value generated
and distributed
Financial and Operational Review
Sustainability Report
Indirect economic impacts
203-2
Significant indirect economic impacts
Sustainability Report
Anti-corruption
p. 66-83
p. 66-83
p. 66-83
p. 36-37
p. 83
p. 66-83
205-3
Confirmed incidents of corruption
and actions taken
Sustainability Report
p. 72
Environmental impact
Materials
301-1
301-2
Energy
302-1
Materials used by weigh or volume
Sustainability Report
Recycled input materials used
Sustainability Report
Energy consumption within
the organisation
Sustainability Report
Water and effluents1
303-5
Water consumption
Sustainability Report
Emissions
305-2
Direct (Scope 1) GHG emissions
Sustainability Report
p. 78
p. 79
p. 79
p. 79
p. 81
1 This excludes data from AS Spacecom and BaltTransServis (except for data from the BTS railcar repair depot in Ivanovo which is included).
Indicator
Definition
Environmental compliance
307-1
Non-compliance with environmental
laws and regulations
Report section / Notes
Annual
Report page
Sustainability Report
p. 78
No incidents of non-compliance with
environmental laws and regulations occurred
in the reporting period
Social impact
Employment
p. 75
p. 76
401-1
401-2
New employee hires and employee
turnover
Sustainability Report
Benefits provided to full-time employees
that are not provided to temporary or
part-time employees
Sustainability Report
Notes to the Consolidated Financial Statement
p. 210
Occupational health and safety
403-1
403-5
Occupational health and safety
management system
Sustainability Report
Worker training on occupational health
and safety
Sustainability Report
403-9
Work-related injuries
Sustainability Report
Training and education
404-1
Average hours of training per year per
employee by gender and employee
category
Sustainability Report
Diversity and equal opportunity
405-1
Diversity of governance bodies
and employees
Sustainability Report
Corporate Governance Report
Consolidated Management Report
Management Report
p. 77
p. 77
p. 77
p. 76
p. 74
p. 99
p. 130
p. 273
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020 374
01
Overview
02
Strategic
Report
03
Governance
04
Financial
Statements
05
Additional
Information
375
Contacts
General contacts
Globaltrans Investment PLC
Depositary Bank
Citibank, N.A.
Legal address
Omirou 20, Agios Nikolaos, CY-3095 Limassol, Cyprus
Postal address
Office 201, 4 Profiti Ilia Street, Germasogeias, CY-4046
Limassol, Cyprus
Phone: +357 25 212 382
Fax: +357 25 503 155
Website: www.globaltrans.com
For investors and shareholders
Investor Relations
Mikhail Perestyuk
Phone: +357 25 328 860
Mobile: +7 985 998 3009
E-mail: irteam@globaltrans.com
Daria Plotnikova
Phone: +357 25 328 860
E-mail: irteam@globaltrans.com
Company Secretary
Elia Nicolaou
Anastasio Building, 6th Floor, 15 Dimitriou Karatasou
Street, CY-2024 Strovolos, Nicosia, Cyprus
Phone: +1 212 723 5435 / +44 207 500 2030
Email: citiadr@citi.com
Website: www.citi.com/adr
Stock Exchange
London Stock Exchange plc
10 Paternoster Square, London EC4M 7LS, UK
Phone: +44 20 7797 1000
Website: www.londonstockexchange.com
Moscow Exchange
125009 Moscow, Vozdvizhenka Str, 4/7, Bld 1
Phone: +7 (495) 363-3232, +7 (495) 232-3363
Website: www.moex.com
Auditors
PricewaterhouseCoopers Limited
City House, 6 Karaiskakis Street, CY-3032
Limassol, Cyprus
Phone: +357 25 555 000
Fax: +357 25 555 001
For media
Russian Media
Anna Vostrukhova
Head of Media Relations
Phone: +357 25 328 863
Email: media@globaltrans.com
International Media
Laura Gilbert
Lightship Consulting
Phone: +44 7799 413351
Email: laura.gilbert@lightshipconsulting.co.uk
www.globaltrans.com
Globaltrans Investment PLC Annual Report & Accounts 2020Globaltrans Investment PLC Annual Report & Accounts 2020