RPC UWC Investor Presentation
Moscow Exchange Forum 2015London Session
December 8-9, 2015
2UWC, the leader in innovative railcar manufacturing in the 1520 gauge area
Notes: (1) As at 31.10.2015; (2) according to 9M 2015 results, by ths t-km per 1 car
Service centers
Production of railcars and components
Operating lease
Engineering Cargo transportation
>50 service centers in the CIS
Maintenance services
Minimal idle time during repair
> 100 patents in the CIS
> 100 design engineers and technologists
Up to 60 railcar modifications by 2018
No.1 in railcar manufacturing
Annual production capacity: 22 thsrailcars and 90 thstonnes of railcar castings
Exclusive rights ofproduction of Barber and Motion Control bogies
TOP 3 in operating lease
Largest fleet ofinnovative railcars
RUB 18.5 bln leasing portfolio1
16.4 ths railcarsowned1
100% utilization ratio
Largest fleet of innovative railcars
13.8 ths railcars under operation1
Double efficiency compared to the other operators2
CLIENT
3UWC dynamic development
The company’s history began with railcar design.
Today UWC is the leading provider of integrated railcar solutions.
R&D Know-how Production Leasing Maintenance Transportation
In total railcars production
In innovative railcars production
0%
58%
86%
2012 2014 10M 2015
%
1%
15%
41%
2012 2014 10M 2015
%
Market share1 Operating results
Fleet owned and operated
1.3
9.59.6
2012 2014 10M 2015
ths
railcars
5.7
19.0
25.9
2012 2014 31.10.2015
ths
railcars
2.2
17.017.0
2012 2014 H1 2015
RU
B b
ln
0.8
2.8
2012 2014 H1 2015
RU
B b
ln
3.6
Production output (TVSZ)
Financial results
Revenue
EBITDA
Notes: (1) According to “Industrial cargoes”, among railcar manufacturers in the CIS; (2) 10M 2014 results; (3) H1 2014 results
7.82
2.13
0.93
UWC has maintained high growth rates since its launch in 2012. Based on 2014 results, UWC is ranked as the fastest-growing company by RAEX
4IPO on the Moscow Exchange, April 30, 2015
IssuerResearch and production corporation «United Wagon Company» PJSC
Incorporation Russian Federation
Type of shares Ordinary shares
Listing First (top) listing level on the Moscow Exchange
Date of listing April 30, 2015
Price range RUB 650 – 750 per share
IPO deal price RUB 700 per share
Offering sizeRUB 9 bln (US$175 mln1)/12.9 mln shares/12.2% of capital after IPO
Market capitalization RUB 73.9 bln (US$ 1.4 bln) at IPO deal price
Selling shareholder ICT Group
On April 30, 2015 UWC successfully completed its IPO on the Moscow Exchange, selling 12.2% of shares for a total of RUB 9 bln (US$ 175 mln1)
UWC’s IPO was a flagship transaction reinventing Russian equity market:
The first IPO of a railcar manufacturer in Russia
The first IPO in Russia since February 2014
The first IPO in transport and infrastructure sector after Global Ports’ IPO in 2011
Key details
Notes: (1) At the Central Bank of Russia rate as at April 30, 2015
61.7%
38.3%
Russian investors Foreign investors
70.6%
18.4%
11.0%
Other institutional investors
Retail and high net worth investors
Pension funds
Investors by geography
Investors by type
5UWC’s innovative railcars: excellent technical and economic characteristics
UWC’s innovative railcars equipped with Barber bogies have various operational advantages over their analogues which increase economic benefits derived by their owners and users
Technical characteristics Economic characteristics Cumulative effect
Axle load increasedfrom 23.5 to 25 t per axle (+6%)
Freight capacity increasedfrom 69-71 to 75-77 t (+8-10%)
15% less impact on the railway infrastructure
Standard service life increased to 32 years (by 1.5 times)
Standard intervals between repairs doubled
Service life of railcar components increased to
1,000,000 km
Tariff cost reduced by 10-15% per tonneof freight
Special empty run tariff system: savings up to 30%
Less frequentrenewal of fleet and rolling stock
Life-cycle costs cut by 50%
Breakdowns are 30 times less frequent
875 RUB/dayextra savings
(+180% premium to the current market rate)
New generation railcars earn their owners and lessees extra RUB 875
per day benefit compared to standard railcars
RUB 2.8 mlnextra savings made over a railcar’s lifecycle based on a discount rate of
12%
6Rail industry is the backbone of the Russian economy
…and Russia has one of the largest rail systems in the world…
The importance of railway transport is determined by following factors:
Significant volume of bulk commodities transportation (coal, ore, broken stone)
Long transportation distances
Poor road infrastructure
Extreme weather conditions
Lack of appropriate water routes for cargo transportation
Railroad is the key element of Russia’s transport infrastructure…
…with a significant share in Russia’s freight turnover…
…and growing dynamics
Source: RZD, foreign statistics
Source: RZDSource: Rosstat, foreign statistics
Notes: (1) Excluding pipelines
Railway transport share in freight turnover1
Average distance(ths km)
Fleet(ths railcars)
Freight turnover (bln tonne-km)
Freight turnover in Russia (bln tonne-km)
120
140
160
180
200
янв фев мар апр май июн июл авг сен окт ноя дек
2003-2014
2014
2015
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
+0,4%86%
48%
20% 18%
Russia USA China EU
0.8
0.9
1.1
1.6
1.9
China
Kazakhstan
Canada
USA
Russia
159
248
673
1,219
1,336
Ukraine
India
China
Russia
USA
231
673
2,295
2,541
2,753
Kazakhstan
India
Russia
USA
China
7
0.1
0.1 0.1
0.0
0.2
0.1
0.3 0.3
0.4
0.5 0.7
0.3 0.5 0.7 0.9 1.1
1.0 1.3 1.4
0.9 1
.3 1.7
1.6 1.9
0.9 1
.3 1.5
1.0 1.1
1.1 1.2
0.6
1.1
1.1
2.5
2.3
2.0 2.4 2.3
1.8 1
.9 2.1 2
.2
1.9
2.3
2.4 2.2
1.7 1
.6
1.8
1.2 1
.3 1.5
1.7
1.5
1.1
0.7
0.3
0.3
0.1
0.5
0.1 0.1 0
.4
0.1
0.4
2.6
2.4
2.1
2.4
2.5
1.9 2
.1 2.4 2
.6
2.4
2.9
2.7
2.6
2.4 2.5
2.9
2.3
2.6 2
.9
2.6 2.8 2.9
2.4
2.1
1.2 1
.4
1.9
1.2
1.2
1.1
1.6
0.7
1.6
1.1
Jan-1
3
Feb-1
3
Mar-
13
Apr-
13
May-1
3
Jun-1
3
Jul-
13
Aug-1
3
Sep-1
3
Oct-
13
Nov-1
3
Dec-1
3
Jan-1
4
Feb-1
4
Mar-
14
Apr-
14
May-1
4
Jun-1
4
Jul-
14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan-1
5
Feb-1
5
Mar-
15
Apr-
15
May-1
5
Jun-1
5
Jul-
15
Aug-1
5
Sep-1
5
Oct-
15
Innovative railcars 18-100
Market switches to innovative railcars
Production structure: innovative railcars replacing old generation railcars
Comments
Market daily rate for Barber railcars exceeds the rate for old generation railcars by 50-75%
Gondola sales by Russian plants (ths units)
Source: Industrial Cargoes
4%
96%
100%
0%
Source: Industrial cargoes, Company’s data
In spite of overall railcar production slowdown, production of innovative railcars continues to grow,their share in the Russian plants’ output structure exceeded 80% in the third quarter and reached 100% in October 2015. The UWC’s share in production of innovative railcars in the first 10 months of 2015 approximated 86%
The strong demand is driven by high operational efficiency - two times higher cargo turnover in comparison with old generation railcars
Economic benefits and technological advantages of innovative railcars are highly appreciated in the market, as shown by higher lease rates offered by rolling stocks operators (and cargo owners)
550
850
1,050
-
200
400
600
800
1,000
1,200
1,400
1,600
Jan-1
4
Feb-1
4
Mar-
14
Apr-
14
May-1
4
Jun-1
4
Jul-
14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
Jan-1
5
Feb-1
5
Mar-
15
Apr-
15
May-1
5
Jun-1
5
Jul-
15
Aug-1
5
Sep-1
5
Oct-
15
Nov-1
5
Dec-1
5
Jan-1
6
Feb-1
6
Mar-
16
Apr-
16
May-1
6
Jun-1
6
Jul-
16
Aug-1
6
Sep-1
6
Oct-
16
Nov-1
6
Dec-1
6
Market lease rate
UWC lease rate
UWC operating rate
Lease rate for the innovative gondola carvs market rate
700-800
1,050-1,150
1,200-1,300
8Railway market turns around after 3-year decline
Gondola car market starts to recover after a 3-year fall due to 4 key factors:
Peak write-offs of old railcars – around 85 thsduring 10 months of 2015 (previously 30-40 thsper year)
Large number of non-repaired railcars on the railway network – about 120-130 ths units
Historically low railcar output – about 20 thsunits in 10 months of 2015 (annual production is expected at 25 ths units)
High coal suppliers’ margin due to ruble devaluation, which justifies the option to increase railcar component of the transportation price
According to industry experts (research agency INFOLine, the Institute of Natural Monopolies Research, investment banks) gondola daily rates are expected to recover going up to 700-800 RUB/day by the end of 2016
0
150
300
450
600
750
900
1,050
1,200
1,350
1,500
1,650
1,800
Mar-
08
Jun-0
8
Sep-0
8
Dec-0
8
Mar-
09
Jun-0
9
Sep-0
9
Dec-0
9
Mar-
10
Jun-1
0
Sep-1
0
Dec-1
0
Mar-
11
Jun-1
1
Sep-1
1
Dec-1
1
Mar-
12
Jun-1
2
Sep-1
2
Dec-1
2
Mar-
13
Jun-1
3
Sep-1
3
Dec-1
3
Mar-
14
Jun-1
4
Sep-1
4
Dec-1
4
Mar-
15
Jun-1
5
Sep-1
5
Dec-1
5
Source: Industrial Cargoes, The Institute of Natural Monopolies Research (IPEM)
Source: INFOline
80.2 88.0 81.568.4
38.7
9.0 4.5 2.0 2.0 2.0 3.0 3.0 3.0 3.0 3.0
0.40.4
3.4
16.4
29.0 38.0 42.5 43.0 44.0 41.5 40.5 40.5 39.5 39.0
-45.9-25.0 -23.6 -27.4
-48.8
-106.1 -110.8
-72.7
-36.7 -29.4 -30.4 -25.0 -19.4 -26.0 -17.6
7.8 11.72.3
3.6
3.0 2.5 2.5 3.0 4.0 5.0 6.0 6.0 7.0 8.0
1.021.09
1.151.21 1.22
1.161.09 1.06 1.07 1.08 1.10 1.12 1.14 1.16 1.18
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
-150
-100
-50
0
50
100
150
2010
2011
2012
2013
2014
2015
*
2016
*
2017
*
2018
*
2019
*
2020
*
2021
*
2022
*
2023
*
2024
*
Production of standard railcars, ths unitsProduction of innovative railcars, ths unitsWrite-offs, ths unitsExport, ths unitsFleet, mln units (RHS)
Consensus forecast 700-800
RUB/day by Dec’16
Rapid recovery of daily rates due to fleet shortage
Gondola segment balance is changing
*forecast
Rate of return for gondola cars started growing
9
Tariff discount for empty run
Notes: (1) According to OJSC «VRK-3», excluding VAT
Development of heavy haulage traffic in the
Eastern Polygon
Subsidy for purchase of
innovative rolling stock
Limited railcar lifetime
prolongation
Lower empty run tariff for innovative railcars due to their reduced impact on railroad infrastructure
Specifically, empty run tariff for innovative gondolas by TVSZ is 10-30% lower vs old generation railcars
RZD implements a large-scale project aimed to increase the working capacity of the Baikal-Amur mainline and the Trans-Siberian Railway (RUB 560 bln investments)
The innovative railcar fleet required to arrange heavy-haulage transportation in the Eastern Polygon amounts to 175,000 railcars
The Russian Government provides a subsidy compensating the interest on the loans for purchase of innovative railcars in the amount of 90% of the refinancing rate
The subsidy currently amounts to RUB 200,000 approx. per railcar
Since August 2014, prolongation of railcar service life requires mandatory certification. The cost of the procedure approximates RUB 875,0001, which makes railcar service life prolongation economically inefficient
As a result, a greater number of old railcars were written off, which boosted demand for innovative rolling stock to replace the old railcars
Government support of innovative railcar production
Dmitry Medvedev’s visit to TVSZ
Vladimir Putin at launch of TVSZ
10UWC’s unique competitive advantages
Innovations and flexibility at every stage of business provide technical and economic base for UWC’s competitive advantages securing the company’s leadership in production and sales
Specializing in production of innovative railcars
In-house bogie
Diversified product portfolio
Own modern foundry
State-of-the-art and highly efficient production
In-house engineering bureau
Guaranteed distribution channel
Fleet growth potential
Focus on operational leasing
Diversified fleet
Wide network of innovative railcars service centers
Competitive advantages
Production advantages
Distribution advantages
UralVagonZavod
AltaiVagon
11Efficient strategy focused on growth
up to 60 railcar modifications by
2018
60,000 railcars – fleet owned
and operated in the mid-term
up to 22 thsrailcars per year –
production capacity by2016
55service centers by 2016
Main goals Key numbers
Development of new products with high-value-
added
Improving existing models
Increasing specialization of rolling stock
Expanding the range of railcar types manufactured
Customer base diversification
Focused work with “growth areas” in the market
Replacing inefficient railcars
Adding new routes
Customizing railcars
Operating efficiency increase
Increasing production flexibility
Increasing production capacity
Cost reduction projects
Initiatives
Service centers network development
Widening network of service centers and expanding their geography
Raising service centers’ competence
12Investment opportunities: key factors
Various technical and economic
benefits of innovative railcars
Market switches to innovative railcars
Government support of the innovative railcars production
Unique competitive advantages
Efficient strategy focused on growth
Leading positions and fast development
13Attachments
Attachment I. H1 2015 financial results review
Attachment II. 3Q and 9M 2015 operating results review
Attachment III. Company's assets and product portfolio
Attachment IV. Financial statements
14UWC financial results
1,403
2,767
2013 2014 H1 2015
RU
B m
ln
3,071
17,028
2013 2014 H1 2015
RU
B m
ln
UWC revenue dynamicsComments
Source: Company`s IFRS statements
UWC EBITDA dynamics
Revenue increased 8 times to reach RUB 17 bln in the first half of 2015
The positive dynamics was driven by higher production levels, increased share of railcar sales in the market with prices growing correspondingly. The significant expansion of UWC’s fleet was another contributing factor
Subject to the Company’s approved development plan, revenue is expected to grow in the upcoming years due to increasing production capacity and output
EBITDA amounted to RUB 2.8 bln in the first half of 2015. As expected, EBITDA margin decreased against 2014 due to the low-margin Production Division having a higher share of overall revenue and increasing direct sales in the market
Source: Company`s IFRS statements
8641
17,057
2,1291
3,572
Notes: (1) H1 2014 results
15Production Division financial results
Production Division revenue dynamics
Production Division EBITDA dynamics
Revenue grew 1.5 times year-on-year to reach RUB 15 bln in the first half of 2015
The Production Division achieved a profitable EBITDA level in the first half of 2014 which amounted to RUB 214 mln. In the H1 2015 EBITDA increased 6 times year-on-year to equalRUB 1.6 bln. EBITDA margin grew 5.4 times year-on-year to reach 11%
This was largely due to reaching planned production volumes and implementing cost reduction measures
The management estimates that EBITDA will reach up to 25% when production volume and cost targets are achieved
EBITDA margin target will be reached primarily due to:
Versatile production technology to facilitate the Company’s quick adaptation to changes in demand
Projects to increase production capacity
Cost reduction measures
7,103
15,015
2013 2014 H1 2015
RU
B m
ln
23,166
(2,941)
1,640
-3000
-2500
-2000
-1500
-1000
-500
0
500
1000
1500
2013 2014 H1 2015RU
B m
ln
1,293
Comments
10,5681
2141
Source: Company`s IFRS statements
Notes: (1) H1 2014 results
Source: Company`s IFRS statements
16Distribution Division financial results
Comments Distribution Division revenue dynamics
Distribution Division EBITDA dynamics
Revenue shows positive dynamics driven by fleet expansion
The Company plans to increase its fleet size to 60,000 railcars in the midterm
In the first half of 2015, EBITDA amounted to RUB 1.5 bln, with the EBITDA margin remaining high and stable at 71%
The Company aims at maintaining the average EBITDA margin of this segment at 80-85%
Maintaining the target EBITDA margin will primarily be achieved by increasing the number of innovative railcars with enhanced technical and economic characteristics in the overall fleet. This also includes modernizing UWC-owned railcars equipped with 18-100-bogies
2,689
2,194
2013 2014 H1 2015
RU
B m
ln
4,379
2,269
1,561
0
500
1000
1500
2000
2500
3000
3500
2013 2014 H1 2015
RU
B m
ln
3,349
1,9621
1,3941
Source: Company`s IFRS statements
Source: Company`s IFRS statements
Notes: (1) H1 2014 results
17
Historical CAPEX structure2
Planned CAPEX for 2015-20172,3
Historical investment costs of the Company for the last 3 years amounted to RUB 2-4 bln annually. Most of these costs incurred in 2012 were associated with finalizing construction of TVSZ plant and in 2013-2014 - with reduction of costs, optimization of processes and expansion of the product portfolio
The management approved the capital expenditure program for 2015-2017. The expenditures are primarily associated with implementation of strategies to expand the product portfolio, as well as to increase capacity, flexibility and operational efficiency of railcar production
UWC’s management believes that upon implementation of the 2015-2017 development program, no substantial capital expenditures will be incurred, only ongoing cost of production
The target proportion of costs in foreign currency is about 50% - a large part of these costs accounts for purchase of fixed assets abroad. The other 50% are construction and installation works denominated in rubles
UWC capital expenditures1
Source: Company`s management accounts
Source: Company`s data
Notes: (1) Excluding investments in the acquisition of railcars by «Distribution» division; (2) Excluding VAT; (3) The capital expenditure program is nominated in 2015 prices
2.8 3.22.0
4.6 3.8
0.2
0.30.4
0.1
2015 2016 2017
RU
B b
ln
Other projects
Product portfolio
expanding
Operational efficiency
7.77.4
2.4
4.2
1.8 1.8
0.2
1.8
0.3
0.30.04
2012 2013 2014
RU
B b
ln
Other projects
Assets purchasing
Product portfolio
expanding
Operational efficiency
Plant building
4.2
2.3
3.9
Comments
18UWC working capital
8,293
2,430
(7,753)
(10,409)
267
6,924
2014 H1 2015
RU
B m
ln
Accounts receivable Accounts payable
Inventories
*
(*) The sharp growth in Inventories was due to changes in tangible goods accounting methodology after shifting from sales within the company to direct sales in the market
Since 2014 there has been a significant need for working capital due to increasing production of railcars and castings. With the company planning to expand production, the need for working capital will continue to rise as is common for large production companies
Accounts payable mostly include advances from customers and deferred payments on deliveries of inventory and equipment for investment projects
Accounts receivable mostly include advance payments to certain suppliers, as well as deferred payments from clients for delivered railcars
As expected, accounts receivable decreased due debt recoveries from railcar purchasers as at 31/12/2014
Accounts payable slightly grew owing to increased railcar production
Inventories 30-45 days
Accounts receivable up to 30 days
Accounts payable 60-90 days
807
Target turnover
(1 055)
Working capital
Source: Company`s data
Working capital structure
Source: Company`s IFRS statements
Comments
19UWC debt portfolio as at 31/12/2014
93.7%
6.3%
RUB EUR and USD
21.9%
19.9%
19.5%
3.3%2.5%1.1%
31.7%
Sberbank
VEB-EDB
Otkritie
EDB
Gazprombank
Rosnano
Bonds
By lenders By currency
RUB 89.9 bln
Principal repayment schedule1 Interest repayment schedule1,2
Notes: (1) Excluding working capital loan in the amount of RUB 9 bln; (2) Including subsidy compensation of interest on loans under the RF Government Decree of 30.09.2009 №262
Source: Company`s management accounts
RUB 89.9 bln
Debt portfolio structure
15,000 15,000
4,550
4,403
5,0148,217
5,285
6,961 6,298 7,275
2,791
4,550
19,403
5,014
8,217
20,285
6,961 6,2987,275
2,791
2015 2016 2017 2018 2019 2020 2021 2022 2023
Bonds repayment, RUB mln. Loans repayment, RUB mln.
5,291
3,5361,870 1,870 1,870
4,256
3,884
3,470 2,9442,171
1,685 1,059 537
9,547
7,420
5,3404,814
4,041
1,6851,059
53796
2015 2016 2017 2018 2019 2020 2021 2022 2023
Bonds interest payments, RUB mln. Loans interest payments, RUB mln.
Total debt amounted to RUB 89.9 bln at the end of 2014, the share of foreign currency debt equal to 6.3%
The leverage of the Company depends on market conditions and the number of railcars sold to third parties or the Distribution Division
Diverse financing options including borrowed funds will be involved for implementing the Company’s fleet development program
The management estimates that the comfortable debt level will not exceed 3.0x net debt/EBITDA
Source: Company`s management accounts Source: Company`s management accounts
Comments
20UWC debt portfolio as at 30/06/2015
94.1%
5.9%
RUB EUR and USD
22.0%
21.9%
21.0%
2.7%1.9%1.1%
29.4%
Otkritie
Sberbank
VEB-EDB
Gazprombank
EDB
Rosnano
Bonds
RUB 85.5 bln
Principal repayment schedule1,3 Interest repayment schedule1,2,3
At the end of H1 2015 total debt amounted to RUB 85.5 bln, the share of debt in foreign currency –5.9%
The debt portfolio structure remains stable
In the third quarter of 2015 UWC and Sberbankentered into agreement tо defer the H2 2015 and H1 2016 payments on RAIL1520 loans to later date periods
The company continues working on debt load optimization
RUB 85.5 bln
Debt portfolio structure
15,000 15,000
2,248
3,943
5,9538,362
5,911
9,4056,726 7,492
3,028
2,248
18,943
5,953
8,362
20,911
9,405
6,7267,492
3,028
H2 2015 2016 2017 2018 2019 2020 2021 2022 2023
Bonds repayment, RUB mln. Loans repayment, RUB mln.
3,243 3,536
1,870 1,870 1,870
2,204
4,544
4,0793,406
2,748
2,0011,251
656
5,447
8,080
5,949
5,2764,618
2,001
1,251656
166
H2 2015 2016 2017 2018 2019 2020 2021 2022 2023
Bonds interest payments, RUB mln. Loans interest payments, RUB mln.
Notes: (1) Excluding working capital loan in the amount of RUB 9 bln; (2) Including subsidy compensation of interest on loans under the RF Government Decree of 30.09.2009 №262; (3) Including Sberbank loans restructuring.
By lenders By currency
Source: Company`s management accounts
Comments
Source: Company`s management accounts Source: Company`s management accounts
21Attachments
Attachment I. H1 2015 financial results review
Attachment II. 3Q and 9M 2015 operating results review
Attachment III. Company's assets and product portfolio
Attachment IV. Financial statements
22
The Tikhvin Freight Car Building Plant (TVSZ) produced 2.6 ths railcars in the third quarter of 2015, a quarter-on-quarter decline of 650 railcars which was due to the planned shut-down in August
In the nine months of 2015, production volumes increased by 1.6 ths railcars year-on-year to 8.5 ths. UWC’s share in total railcar production in the CIS amounted to 41%
The average selling price of a railcar increased to RUB 2.5 million. Its stable positive dynamic was a result of increased demand for innovative rolling stock and the start of the recovery in leasing rates and the market as a whole
TVSZ signed a contract with Wabtec Corporation to supply large railcar castings starting from 2016
TVSZ received a certificate of compliance for a solid-bottom gondola car with increased body volume of up to 98 m3. Full-scale production is planned for the beginning of 2016 with a production capacity of up to 540 units per month
A total of 11 models have been certified. In the nine months of 2015, the Company manufactured 17 prototype models
Production results
2.53.3
2.6
6.9
8.5
3Q 2014 2Q 2015 3Q 2015 9M 2014 9M 2015
ths
railcars
Railcar production volume
23.4 ths Total number of railcars produced since 2012
100%Number of railcars sold to third parties in the third quarter of 2015
1,700
1,900
2,100
2,300
2,500
1Q 2014 2Q 2014 3Q 2014 4Q 2014 1Q 2015 2Q 2015 3Q 2015
RU
B t
hs
Average selling price (excluding VAT)
23
UWC’s owned and operated fleet amounted to 25.3 ths railcars at the end of the third quarter of 2015, that is 1.3 ths increase compared to the previous reporting period
There has been a planned increase in the number of innovative railcars in the fleet structure. By the end of the third quarter, innovative railcars made up 67% of the fleet
The increase in the UWC’s owned and operated fleet was the result of the significant expansion of Vostok1520’s operated fleet. Vostok1520’s fleet has increased by 3.3 ths railcars quarter-on-quarter to 13.1 ths units, in line with the company’s strategy
The fleet owned by RAIL1520’s reduced after selling 1,000 railcars to the third parties due to the increased market demand for innovative railcars
UWC signed an agreement with EurosibSPb-TS to supply up to 700 railcars during 2016-2017
Distribution results: railcar fleet
24.025.3
30.06.2015 30.09.2015
ths
railcars
17.416.4
30.06.2015 30.09.2015
ths
railcars
9.8
13.1
30.06.2015 30.09.2015
ths
railcars
Fleet owned and operated1
56%
11%0.02%
33%
Barber
gondolas
Barber
hoppers
Barber flat
cars
Standard
railcars
Fleet owned and operated by type of railcar
Fleet owned by RAIL1520’scompanies2
RAIL1520’s2 owned fleet by lessee and type of railcar
30%
44%
26%
Barber railcars
leased by third
parties
Standard railcars
leased by third
parties
Railcars leased
by Vostok1520
Fleet operated by Vostok1520’s
Fleet owned and operated by clients3
Footnotes:
1) Including the railcar fleet operated by Vostok1520 (13.1 thsrailcars) and the fleet owned by RAIL1520’s companies but leased out to third parties (12.1 ths railcars);
2) The following companies are united under the RAIL1520 brand: RAIL1520, RAIL1520 Service, RAIL1520 Leasing, MRK1520;
3) By number of railcars
4) Including: “Promugolservice”, “Nizhegorodskiy express”, “ZapsibTrans”, “Logistics 1520”, “Acron-Trans”, “Bashkhim”, “RusVynil”, “SIBUR-Trans”, “Uralkali”
34%
19%6%
6%
5%3%
3%
25%
Kuzbassrazrezugol
SUEK
KuzbTC
Neftetransservice
Indutrial-
transportation groupEn+ Logistics
Uralchem
Others4
24Distribution results: key figures
Leasing Transportation
Top 3 on the operating leasing market
100% utilisation rate
1.9 years average age of railcars
RUB 18.7 billion
leasing portfolio as at 30.09.2015
852 852
2Q 2015 3Q 2015
RU
B/d
ay
717 724
2Q 2015 3Q 2015
RU
B/d
ay
Average lease rate for innovative railcars1
Average lease rate for old-generation railcars
13.5 thstkm per
railcar/day
The performance of operated railcars in the nine months of 2015 was 2 times higher than on the rest of the network2
4 ths kmThe average length of haul in the nine months of 2015
Notes: (1) The average lease rate for a railcar equipped with a Barber bogie with a 25 t axle load; (2) Company’s estimates
2.3
3.5
2Q 2015 3Q 2015
mln
tonnes
Cargoes transported
8.7
14.1
2Q 2015 3Q 2015
bln
tkm
Cargo turnover
In the third quarter of 2015, the average lease rate for innovative railcars remained at the same level as in the previous quarter and amounted to RUB 852/day
The lease rate for an old-generation railcars increased by RUB 7 quarter-on-quarter to RUB 724/day. This was due to an increase in rates provided by a number of contracts
There has been a significant improvement in the performance of the rolling stock in the UWC’s Distribution Division. In the third quarter of 2015, the volume of cargo transported and the freight turnover grew by more than 1.5 times quarter-on-quarter to 3.5 mln tonnes and 14.1 mln t-km, respectively. In the nine months of 2015, the transportation volume amounted to 7.3 mln tonnes with freight turnover of 28.8 mln t-km. This dynamic was largely due to the growth in the operated innovative fleet and the use of railcars mainly for long export routes
25Development of maintenance services
Current uncoupling repair statistics1 UWC’s maintenance network
Map of service centres
0.11Number of repairs for a TVSZ’s innovative car
1.64Number of repairs for an old-generation gondola car
50
6
Service centres
Training centres
For innovative railcars, the frequency of current uncoupling repairs is 15 times lower than for the rest of the network. This is due to the high levels of reliability of TVSZ’s innovative railcars.
UWC’s maintenance activity is carried out at railcar repair centres located across Russia, Kazakhstan and Belarus. In the reporting period, the 50th maintenance centre was launched at the Khilok station on the Trans-Baikal railway. The Company plans to increase its number of maintenance centres to 55 by 2016
Notes: (1) Current uncoupling repair according to the results of the 9 months of 2015 in annual terms
26Attachments
Attachment I. H1 2015 financial results review
Attachment II. 3Q and 9M 2015 operating results review
Attachment III. Company's assets and product portfolio
Attachment IV. Financial statements
27Company’s production assets
Moscow
Izhevsk(1 200 km away from Moscow)
Tikhvin(650 km away from
Moscow)
The Company’s production facilities include:
Tikhvin Freight Car Building Plant (TVSZ), TikhvinChemMash(TChM) and production joint ventures, located at Tikhvin, Leningrad region
NPC Springs located at Izhevsk
TVSZ became a second-ranked Russian railcar builder after UVZ in 2014
The Company’s Production Division focuses on production of innovative railcars with advanced technical and economical features.
United Wagon Company holds title to all intellectual property rights for railcar designs and engineering including exclusive rights for production of innovative bogies
NPC Springs created in 2011 with support of ROSNANO is a manufacturer of supreme quality nanostructured springs having no Russian analogues
NPC Springs provides TVSZ with quality components and exclusive rights for their use in production
United Wagon Company cooperates with the world’s leading railcars manufacturers; it created joint ventures with Wabtec and Timken for the purposes of localized production, and received intellectual property rights for Motion Control bogies from Amsted Rail
28Product portfolio
Gondola with hatchers
Grain/Mineral hopper
Container flat car
Solid bottom gondola
2013 2014-2015 2016
Oil tank car
LPG tank car
Chemical tank car
Grain hopper
Box car
Timber flatcar
29Attachments
Attachment I. Financial results review
Attachment II. Operating results review
Attachment III. Company's assets and product portfolio
Attachment IV. Financial statements
30Income Statement
Source: Company`s IFRS statements
RUB mln H1 2014 2014 H1 2015
REVENUE 2,129 17,057 17,028
Cost of Sales (1,438) (14,984) (15,456)
Depreciation and Amortization (698) (3,087) (2,414)
Property tax (109) (215) (322)
Raw and other materials (308) (8,745) (8,473)
Salaries and social security contributions (68) (1,861) (1,665)
Repair and maintenance costs (157) (804) (1,069)
Rent of rolling stock - - (651)
Insurance (3) (8) (5)
Other expenses (95) (264) (857)
GROSS PROFIT 691 2,073 1,572
Selling, general and administrative expenses (SG&A) (568) ( 1,645) (1,271)
Impairment loss (27)
Other operating income/expenses 19 23 29
OPERATING PROFIT 142 424 330
Financial income 157 647 586
Financial expenses (2,595) (6,516) (4,626)
Profit/loss from foreign exchange and revaluations 6 4,605 (1,585)
PROFIT/ (LOSS) BEFORE INCOME TAX (2,290) (840) (5,295)
Income tax expense 355 1,389 151
NET PROFIT/ (LOSS) (1,935) 549 (5,144)
31Balance Sheet 1/2
RUB mln 2014 June 30, 2015
ASSETS
NON-CURRENT ASSETS
Machinery and equipment 70,819 67,178
Long term deferred tax assets 1,852 2,080
Intangible assets 2,839 3,023
Investments in joint ventures 159 360
Long term loans issued 1,659 793
Finance lease receivables 261 252
Other accounts receivable 30 -
TOTAL NON-CURRENT ASSETS 77,619 73,686
CURRENT ASSETS
Cash and cash equivalents 2,387 3,134
Accounts receivable 7,579 1,276
Reserves 267 6,924
Other accounts receivable 714 1,154
Short term loans issued 16,255 15,989
VAT recoverable 1,653 2,108
TOTAL CURRENT ASSETS 28,855 30,585
TOTAL ASSETS 106,474 104,271
32Balance Sheet 2/2
RUB mln 2014 June 30, 2015
EQUITY
Authorised share capital 0 106
Unissued share capital 100 -
Additional paid-in capital 12,429 16,159
Non-controlling interests 1 1
Retained earnings/ losses (4,969) (10,113)
Reserves from foreign exchange revaluation - -
Effect of acquiring a related entity - -
Total equity 7,560 6,153
Long term liabilities
Long term loans 72,385 68,556
Other long term liabilities 1,204 1,233
Total long term liabilities 73,588 69,789
Current liabilities
Short term accounts payable 7,753 10,409
Short term loans 17,553 17,910
Advances received and other liabilities 19 10
Total current liabilities 25,325 28,329
TOTAL LIABILITIES 98,914 98,118
TOTAL LIABILITIES AND EQUITY 106,474 104,271
Source: Company`s IFRS statements
33Cash Flow Statement
RUB mln June 30, 2014 June 30, 2015
Operating cash flow (1,949) 5,106
Profit/loss before tax (2,290) (5,295)
Depreciation and amortization 698 2,521
Profit/loss from foreign exchange and revaluations (6) 1,585
Financial expenses 2,595 4,640
Financial income (157) (585)
Increase/(decrease) in working capital (896) 6,576
Income tax paid (10) (40)
Financial expenses paid (1,901) (4,294)
Other 18 (2)
Cash flow from investing activities (18,451) (4,199)
Investment in fixed and intangible assets (12,584) (4,234)
Loans issued (6,136) 13,768
Other 269 (13,733)
Cash flow from financing activities 21,145 (158)
Increase in borrowings 24,404 4,030
Payments on borrowings (6,748) (7,923)
Proceeds from shareholders 3,489 3,735
TOTAL CASH FLOW 745 749
Source: Company`s IFRS statements
34
Научно-производственная корпорация
«Объединенная Вагонная Компания»
115184, Россия, г. Москва,
ул. Новокузнецкая, д. 7/11, стр. 1
Тел./факс: +7 (499) 999 15 20
Investor Relations
+7 (499) 999 15 20
http://www.uniwagon.com/
Contacts
Research and Production Company “United Wagon Company”
Russia, 115184, Moscow,
ul.Novokuznetskaya, d. 7/11, str. 1
Phone: +7 (499) 999 15 20
Fax: +7 (499) 999 15 21