Annual Report
& Accounts
2023
& Accounts
2023
1
Sustainability Report
Governance
Financial Statements
Additional Information
Overview
Strategic Report
ANNUAL REPORT 2023 Overview
3
OVERVIEW
Highlights of 2023 4
At a Glance 6
Our Assets 10
Our History 12
Summary of 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 subsidiaries,
“Globaltrans” or the “Group”) and has 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 (“EU IFRS”). The Group’s
Consolidated Management Report and Consolidated
Financial Statements and the Parent Company Financial
Statements for the year ended 31 December 2023 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). 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. 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. However, these non-IFRS measures are unaudited and
have not been prepared in accordance with IFRS or any other
generally accepted accounting principles. As such, they have
limitations as analytical tools, and you should not consider them
in isolation or place undue reliance on them. Similarly titled
measures are used by other companies for a variety of purposes
and are often calculated in ways that reflect the circumstances
→ For a detailed description of the presentation of financial and
other information, please see the Presentation of Financial and
Other Information section at the end of this Annual Report.
Contents
of those companies. You should exercise caution in comparing
these measures as reported by us to the same or similar measures
as reported by other companies.
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.
15
STRATEGIC REPORT
Message from the Board 16
Message from the CEO 18
Our Strategy 22
Market Review 24
Financial and Operational
Review 26
Risk Management 48
63
SUSTAINABILITY REPORT
Sustainability 64
Climate-related Financial
Disclosure (TCFD) 92
99
GOVERNANCE
Board of Directors 100
Executive Management 112
Corporate Governance
Report 114
Share Capital 124
Corporate Structure 125
127
FINANCIAL
STATEMENTS
Consolidated Management
Report and Consolidated
Financial Statements
for the year ended
31 December 2023 128
Management Report
and Parent Company
Financial Statements
for the year ended
31 December 2023 242
319
ADDITIONAL
INFORMATION
Selected Operational
Information for the year
ended 31 December
2023 320
Definitions 323
Presentation of Financial
and Other Information 326
GRI Content Index 328
TCFD Index 335
Contacts 336
ANNUAL REPORT 2023 Overview
3
OVERVIEW
Highlights of 2023 4
At a Glance 6
Our Assets 10
Our History 12
Summary of 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 subsidiaries,
“Globaltrans” or the “Group”) and has 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 (“EU IFRS”). The Group’s
Consolidated Management Report and Consolidated
Financial Statements and the Parent Company Financial
Statements for the year ended 31 December 2023 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). 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. 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. However, these non-IFRS measures are unaudited and
have not been prepared in accordance with IFRS or any other
generally accepted accounting principles. As such, they have
limitations as analytical tools, and you should not consider them
in isolation or place undue reliance on them. Similarly titled
measures are used by other companies for a variety of purposes
and are often calculated in ways that reflect the circumstances
→ For a detailed description of the presentation of financial and
other information, please see the Presentation of Financial and
Other Information section at the end of this Annual Report.
Contents
of those companies. You should exercise caution in comparing
these measures as reported by us to the same or similar measures
as reported by other companies.
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.
15
STRATEGIC REPORT
Message from the Board 16
Message from the CEO 18
Our Strategy 22
Market Review 24
Financial and Operational
Review 26
Risk Management 48
63
SUSTAINABILITY REPORT
Sustainability 64
Climate-related Financial
Disclosure (TCFD) 92
99
GOVERNANCE
Board of Directors 100
Executive Management 112
Corporate Governance
Report 114
Share Capital 124
Corporate Structure 125
127
FINANCIAL
STATEMENTS
Consolidated Management
Report and Consolidated
Financial Statements
for the year ended
31 December 2023 128
Management Report
and Parent Company
Financial Statements
for the year ended
31 December 2023 242
319
ADDITIONAL
INFORMATION
Selected Operational
Information for the year
ended 31 December
2023 320
Definitions 323
Presentation of Financial
and Other Information 326
GRI Content Index 328
TCFD Index 335
Contacts 336
Overview
ANNUAL REPORT 2023 Overview 3 Strategic Report Sustainability Report Governance Financial Statements Additional Information
2
Overview
The summary information on pages 4 to 5 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. Non-IFRS measures are unaudited and
have not been prepared in accordance with IFRS or
any other generally accepted accounting principles,
and as such have limitations as analytical tools.
→ For further information, please see the Presentation of
Financial and Other Information section at the end of this
Annual Report.
p. 4
Highlights of 2023
Read more →
p. 10
Our Assets
Read more →
p. 6
At a Glance
Read more →
p. 12
Our History
Read more →
In this section
Strategic Report
ANNUAL REPORT 2023 Overview 3 Strategic Report Sustainability Report Governance Financial Statements Additional Information
2
Overview
The summary information on pages 4 to 5 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. Non-IFRS measures are unaudited and
have not been prepared in accordance with IFRS or
any other generally accepted accounting principles,
and as such have limitations as analytical tools.
→ For further information, please see the Presentation of
Financial and Other Information section at the end of this
Annual Report.
p. 4
Highlights of 2023
Read more →
p. 10
Our Assets
Read more →
p. 6
At a Glance
Read more →
p. 12
Our History
Read more →
In this section
Strategic Report
5
Sustainability Report
Governance
Financial Statements
Additional Information
4
Overview Strategic Report
ANNUAL REPORT 2023 Overview
87.4 RUB bln
Adjusted Revenue
25.8 RUB bln
Free Cash Flow
10.1 RUB bln
Total CAPEX adjusted for M&A
52.3 RUB bln
Adjusted EBITDA
(0.5) x
Net Debt to Adjusted
EBITDA
36 %
Empty Run Ratio
for gondola cars
(31.12.2022: 0.1x)
(2022: 41%)
+7% +74%
+6% -50%
1 The Group’s Freight Rail Turnover declined 4% year on year excluding Engaged Fleet.
2 As of the end of 2023 Globaltrans had six Service Contracts.
Both the economy and our industry faced
challenges in 2023. Yet despite this,
the overall performance of the freight
rail sector was relatively stable. In turn,
Globaltrans produced a strong performance
over the year, taking advantage of market
momentum to significantly improve
its fleet efficiency. Our 2023 financial
results reflected the underlying
strength of our business model
and our commitment to providing
the service levels our customers expect.
We delivered solid growth in Adjusted
Revenue, kept our Operational Cash Costs
under control, generated strong Free Cash
Flow and ended the year with a solid net
cash position.
Valery Shpakov
Chief Executive Officer
Strong operational efficiency,
robust average pricing,
all Service Contracts remain
intact
• Empty Run Ratio for gondola cars significantly
improved to its lowest level in more than ten
years at 36% (2022: 41%). Total Empty Run
Ratio (for all types of rolling stock) decreased
to 45% (2022: 50%).
• Freight Rail Turnover (including Engaged
Fleet) declined 2% year on year reflecting
volatility in logistics and continued rail
network infrastructure constraints 1 .
• Average Price per Trip increased 10% year
on year on the back of continued favourable
market pricing conditions in both bulk and
liquids segments, while the Average Number
of Loaded Trip per Railcar declined 5% year
on year.
• The Group maintained its focus on client
retention with all Service Contracts 2
due for renewal extended. Service Contracts
contributed about 61% of the Group’s Net
Revenue from Operation of Rolling Stock
in 2023.
Further strong financial results
with robust Free Cash Flow, stable
Adjusted EBITDA Margin and solid
net cash position
• Adjusted Revenue rose 7% year on year
to RUB 87.4 billion in 2023 largely reflecting
robust average pricing.
• Adjusted EBITDA increased 6% year on year
to RUB 52.3 billion with Adjusted EBITDA
Margin remaining stable year on year at 60%
despite ongoing cost pressures.
• Total CAPEX adjusted for M&A was RUB 10.1 billion
(2022: RUB 20.2 billion) on the back
of a conservative approach to investment given
elevated new rolling stock prices.
• Strong Free Cash Flow of RUB 25.8 billion
(2022: RUB 14.8 billion).
• Net cash position was RUB 27.4 billion with
negative Net Debt to Adjusted EBITDA at (0.5)x.
• Dividend payments are in focus but remain
suspended due to certain technical issues,
which are being addressed.
Highlights of 2023
4
Overview Strategic Report
ANNUAL REPORT 2023 Overview
87.4 RUB bln
Adjusted Revenue
25.8 RUB bln
Free Cash Flow
10.1 RUB bln
Total CAPEX adjusted for M&A
52.3 RUB bln
Adjusted EBITDA
(0.5) x
Net Debt to Adjusted
EBITDA
36 %
Empty Run Ratio
for gondola cars
(31.12.2022: 0.1x)
(2022: 41%)
+7% +74%
+6% -50%
1 The Group’s Freight Rail Turnover declined 4% year on year excluding Engaged Fleet.
2 As of the end of 2023 Globaltrans had six Service Contracts.
Both the economy and our industry faced
challenges in 2023. Yet despite this,
the overall performance of the freight
rail sector was relatively stable. In turn,
Globaltrans produced a strong performance
over the year, taking advantage of market
momentum to significantly improve
its fleet efficiency. Our 2023 financial
results reflected the underlying
strength of our business model
and our commitment to providing
the service levels our customers expect.
We delivered solid growth in Adjusted
Revenue, kept our Operational Cash Costs
under control, generated strong Free Cash
Flow and ended the year with a solid net
cash position.
Valery Shpakov
Chief Executive Officer
Strong operational efficiency,
robust average pricing,
all Service Contracts remain
intact
• Empty Run Ratio for gondola cars significantly
improved to its lowest level in more than ten
years at 36% (2022: 41%). Total Empty Run
Ratio (for all types of rolling stock) decreased
to 45% (2022: 50%).
• Freight Rail Turnover (including Engaged
Fleet) declined 2% year on year reflecting
volatility in logistics and continued rail
network infrastructure constraints 1 .
• Average Price per Trip increased 10% year
on year on the back of continued favourable
market pricing conditions in both bulk and
liquids segments, while the Average Number
of Loaded Trip per Railcar declined 5% year
on year.
• The Group maintained its focus on client
retention with all Service Contracts 2
due for renewal extended. Service Contracts
contributed about 61% of the Group’s Net
Revenue from Operation of Rolling Stock
in 2023.
Further strong financial results
with robust Free Cash Flow, stable
Adjusted EBITDA Margin and solid
net cash position
• Adjusted Revenue rose 7% year on year
to RUB 87.4 billion in 2023 largely reflecting
robust average pricing.
• Adjusted EBITDA increased 6% year on year
to RUB 52.3 billion with Adjusted EBITDA
Margin remaining stable year on year at 60%
despite ongoing cost pressures.
• Total CAPEX adjusted for M&A was RUB 10.1 billion
(2022: RUB 20.2 billion) on the back
of a conservative approach to investment given
elevated new rolling stock prices.
• Strong Free Cash Flow of RUB 25.8 billion
(2022: RUB 14.8 billion).
• Net cash position was RUB 27.4 billion with
negative Net Debt to Adjusted EBITDA at (0.5)x.
• Dividend payments are in focus but remain
suspended due to certain technical issues,
which are being addressed.
Highlights of 2023
7
Sustainability Report
Governance
Financial Statements
Additional Information
6
Overview Strategic Report
ANNUAL REPORT 2023 Overview
We are leaders in the provision of complex freight
rail logistics and transportation services. We have a
high-quality customer base, including large blue-chip
companies across our key segments. Customers benefit
from our state-of-the-art logistics, large fleet, customer-
focused approach and constant drive for innovation.
65,644 units
Total Fleet as of year-end 2023
138.8 bln tonnes-km
Freight Rail Turnover
(including Engaged Fleet), 2023
6.4 %
Market Share, 2023 2
36 %
Empty Run Ratio
for gondola cars, 2023
61 %
Share of Net Revenue from
Operation of Rolling Stock covered
by Service Contracts, 2023
1 Imposed suspension of Global Depositary Receipts (“GDRs”) trading on the LSE since 3 March 2022 continued as of the date of publication.
2 Market Share is calculated using the Group’s own information as the numerator and information published by the Federal State Statistics
Service (Rosstat) as the denominator. It is defined as a percentage of the overall industry freight rail transportation volume and includes
volumes transported by Engaged Fleet, unless otherwise stated.
Historical Empty Run Ratio,
2019–2023, %
WHO WE ARE
WHAT WE DO
Entrepreneurial culture
combined with strong
governance
• Led by entrepreneurs with
a focus on quality and innovation
• Experienced Board and
management team
• Aligned with best practice
governance standards
• Sustainable business with
a strong environmental, social
and governance (“ESG”) focus
• Dual-listed on the London Stock
Exchange 1 and the Moscow
Exchange
Financial stability
and strength
• High proportion of multi-year
Service Contracts
• Robust balance sheet
• Strong Free Cash Flow
generation
• Significant liquidity available
• Focus on long-term value
creation
• Opportunistic investments and
prudent capital allocation
• Transparent Dividend Policy
Robust business model
and efficient operations
• Strong market positions
• Diversified blue-chip customer
portfolio underpinned by multi-
year Service Contracts
• Industry-leading operational
efficiency
45
36
2023
2022
2021
2020
2019
Empty Run Ratio for gondola cars
Total Empty Run Ratio (for all types of railcars)
49
50
51
51
42
41
44
45
Source: Globaltrans.
At a Glance
6
Overview Strategic Report
ANNUAL REPORT 2023 Overview
We are leaders in the provision of complex freight
rail logistics and transportation services. We have a
high-quality customer base, including large blue-chip
companies across our key segments. Customers benefit
from our state-of-the-art logistics, large fleet, customer-
focused approach and constant drive for innovation.
65,644 units
Total Fleet as of year-end 2023
138.8 bln tonnes-km
Freight Rail Turnover
(including Engaged Fleet), 2023
6.4 %
Market Share, 2023 2
36 %
Empty Run Ratio
for gondola cars, 2023
61 %
Share of Net Revenue from
Operation of Rolling Stock covered
by Service Contracts, 2023
1 Imposed suspension of Global Depositary Receipts (“GDRs”) trading on the LSE since 3 March 2022 continued as of the date of publication.
2 Market Share is calculated using the Group’s own information as the numerator and information published by the Federal State Statistics
Service (Rosstat) as the denominator. It is defined as a percentage of the overall industry freight rail transportation volume and includes
volumes transported by Engaged Fleet, unless otherwise stated.
Historical Empty Run Ratio,
2019–2023, %
WHO WE ARE
WHAT WE DO
Entrepreneurial culture
combined with strong
governance
• Led by entrepreneurs with
a focus on quality and innovation
• Experienced Board and
management team
• Aligned with best practice
governance standards
• Sustainable business with
a strong environmental, social
and governance (“ESG”) focus
• Dual-listed on the London Stock
Exchange 1 and the Moscow
Exchange
Financial stability
and strength
• High proportion of multi-year
Service Contracts
• Robust balance sheet
• Strong Free Cash Flow
generation
• Significant liquidity available
• Focus on long-term value
creation
• Opportunistic investments and
prudent capital allocation
• Transparent Dividend Policy
Robust business model
and efficient operations
• Strong market positions
• Diversified blue-chip customer
portfolio underpinned by multi-
year Service Contracts
• Industry-leading operational
efficiency
45
36
2023
2022
2021
2020
2019
Empty Run Ratio for gondola cars
Total Empty Run Ratio (for all types of railcars)
49
50
51
51
42
41
44
45
Source: Globaltrans.
At a Glance
9
Sustainability Report
Governance
Financial Statements
Additional Information
8
Overview Strategic Report
ANNUAL REPORT 2023 Overview
OUR APPROACH TO ESG
At a Glance
→ For further information on the Group’s sustainability commitments and actions, please see our Sustainability Report.
We know it is important to both
measure and mitigate our impact on the
environment and our communities, and
so sustainability remains an integral part
of our business strategy. In 2023, we
made further progress by continuing to
fine-tune the internal mechanisms that
support our ESG strategy. This included
building greater employee engagement
and enhancing our oversight and
accountability processes. Externally, we
continued the work of integrating our
sustainability priorities into the business
and improving disclosure on those areas
that are important for both the business
and our stakeholders. We are pleased that
our efforts continue to be recognised by
various ESG ranking groups.
Valery Shpakov
Chief Executive Officer
HOW WE DELIVER VALUE
We consistently deliver value to our clients through our pursuit of operational
and service excellence. Our operating platform is fundamental to our success.
Sophisticated
logistics
We are experts in managing complex freight logistics
that improve our customers’ productivity, saving
them time and money.
Sector-leading
operational efficiency
Our centralised gondola dispatch hub is the nerve
centre of our railcar operations. Working around the
clock, it keeps our fleet running smoothly, maintains
high utilisation levels and low Empty Runs, delivering
efficiency which, in turn, drives profitability.
High-quality long-term
client base
We are trusted partners for our clients, ranging from
major industrial groups to smaller, more specialised
companies. We focus on long-term outsourcing
partnerships, whereby we manage most of a client’s
freight rail logistics. Our clients benefit from operational
scale, 24-hour services, advanced logistics, and access
to one of the industry’s largest fleets.
In-house locomotives
improve productivity
Our in-house locomotive fleet transports primarily
liquid cargoes in block trains where all the cargo is
bound for a single destination, obviating the need to
stop at multiple sorting stations, improving delivery
schedules and fleet utilisation.
Sustainable
business practices
• Embedding sustainability in our
way of working and business
mindset
• Minimising our impact on the
environment
• Improving our energy efficiency
• Reducing our carbon emissions
Positive social
impact
• Focusing on employee safety,
wellbeing and professional
development
• Providing long-term support
to our communities
Delivering sustainable
value through
• Oversight from the ESG Board
committee
• Clear ESG supervision at the
management level
• Transparent ESG reporting in
line with GRI standards and
TCFD recommendations
8
Overview Strategic Report
ANNUAL REPORT 2023 Overview
OUR APPROACH TO ESG
At a Glance
→ For further information on the Group’s sustainability commitments and actions, please see our Sustainability Report.
We know it is important to both
measure and mitigate our impact on the
environment and our communities, and
so sustainability remains an integral part
of our business strategy. In 2023, we
made further progress by continuing to
fine-tune the internal mechanisms that
support our ESG strategy. This included
building greater employee engagement
and enhancing our oversight and
accountability processes. Externally, we
continued the work of integrating our
sustainability priorities into the business
and improving disclosure on those areas
that are important for both the business
and our stakeholders. We are pleased that
our efforts continue to be recognised by
various ESG ranking groups.
Valery Shpakov
Chief Executive Officer
HOW WE DELIVER VALUE
We consistently deliver value to our clients through our pursuit of operational
and service excellence. Our operating platform is fundamental to our success.
Sophisticated
logistics
We are experts in managing complex freight logistics
that improve our customers’ productivity, saving
them time and money.
Sector-leading
operational efficiency
Our centralised gondola dispatch hub is the nerve
centre of our railcar operations. Working around the
clock, it keeps our fleet running smoothly, maintains
high utilisation levels and low Empty Runs, delivering
efficiency which, in turn, drives profitability.
High-quality long-term
client base
We are trusted partners for our clients, ranging from
major industrial groups to smaller, more specialised
companies. We focus on long-term outsourcing
partnerships, whereby we manage most of a client’s
freight rail logistics. Our clients benefit from operational
scale, 24-hour services, advanced logistics, and access
to one of the industry’s largest fleets.
In-house locomotives
improve productivity
Our in-house locomotive fleet transports primarily
liquid cargoes in block trains where all the cargo is
bound for a single destination, obviating the need to
stop at multiple sorting stations, improving delivery
schedules and fleet utilisation.
Sustainable
business practices
• Embedding sustainability in our
way of working and business
mindset
• Minimising our impact on the
environment
• Improving our energy efficiency
• Reducing our carbon emissions
Positive social
impact
• Focusing on employee safety,
wellbeing and professional
development
• Providing long-term support
to our communities
Delivering sustainable
value through
• Oversight from the ESG Board
committee
• Clear ESG supervision at the
management level
• Transparent ESG reporting in
line with GRI standards and
TCFD recommendations
Overview
ANNUAL REPORT 2023 Overview 11 Strategic Report Sustainability Report Governance Financial Statements Additional Information
10
Our Assets
LARGE FLEET
• Operational flexibility maintained by striking
appropriate balance between Owned Fleet
(94%) and Leased-in Fleet (6%).
• Fleet composition corresponds
to the industrial segments served: universal
gondola cars for bulk cargoes (70%); and
tank cars for liquid cargoes (28%).
• Current average age of the Group’s
Owned Fleet is 15 years which compares
with average useful life for gondola cars
of 22 years and for tank cars of 32 years.
• Exceptional fleet maintenance programme
maintains the focus on operational and
service excellence.
65,644 units
Total Fleet at year-end 2023
15 years
Average age of Owned Fleet
70 % 28 %
Gondola Cars
45,686 units
• Open-top, high-sided universal railcar.
• Backbone of Globaltrans’ fleet.
• Designed to carry various bulk cargoes.
• Able to be rapidly redeployed between
different bulk cargoes in response to changing
market demand.
2 %
Other Cars
1,508 units
Tank Cars
18,384 units
• Designed to carry various liquid cargoes.
0.1 %
Locomotives
66 units
• Globaltrans has its own fleet of mainline
locomotives, which haul block trains.
Source: Globaltrans.
Total Fleet composition at year-end 2023, %
6%
Leased-in
Fleet
70%
Gondola Cars
0.1%
Locomotives
94%
Owned Fleet
2%
Other Cars
28%
Tank Cars
ANNUAL REPORT 2023 Overview 11 Strategic Report Sustainability Report Governance Financial Statements Additional Information
10
Our Assets
LARGE FLEET
• Operational flexibility maintained by striking
appropriate balance between Owned Fleet
(94%) and Leased-in Fleet (6%).
• Fleet composition corresponds
to the industrial segments served: universal
gondola cars for bulk cargoes (70%); and
tank cars for liquid cargoes (28%).
• Current average age of the Group’s
Owned Fleet is 15 years which compares
with average useful life for gondola cars
of 22 years and for tank cars of 32 years.
• Exceptional fleet maintenance programme
maintains the focus on operational and
service excellence.
65,644 units
Total Fleet at year-end 2023
15 years
Average age of Owned Fleet
70 % 28 %
Gondola Cars
45,686 units
• Open-top, high-sided universal railcar.
• Backbone of Globaltrans’ fleet.
• Designed to carry various bulk cargoes.
• Able to be rapidly redeployed between
different bulk cargoes in response to changing
market demand.
2 %
Other Cars
1,508 units
Tank Cars
18,384 units
• Designed to carry various liquid cargoes.
0.1 %
Locomotives
66 units
• Globaltrans has its own fleet of mainline
locomotives, which haul block trains.
Source: Globaltrans.
Total Fleet composition at year-end 2023, %
6%
Leased-in
Fleet
70%
Gondola Cars
0.1%
Locomotives
94%
Owned Fleet
2%
Other Cars
28%
Tank Cars
13
Sustainability Report
Governance
Financial Statements
Additional Information
12
Overview Strategic Report
ANNUAL REPORT 2023 Overview
1 Commonwealth of Independent States (“CIS”).
2 Imposed suspension of GDRs trading on the LSE since 3 March 2022 continued as of the date of publication.
Globaltrans was formed in 2004 with the merger of two entrepreneur-led
companies and from these roots has grown to become one of the leading
freight rail transportation groups in the CIS countries 1 . Through organic
growth and the acquisition of both railcars and other freight rail businesses,
we have created a profitable company with market-leading capabilities.
Our commitment to transparency and good corporate governance helped
make us the first CIS-focused freight rail group to be listed on an international
stock exchange. Since the Initial Public Offering (“IPO”) on the London Stock
Exchange (“LSE”) 2 in 2008, we have had a consistent focus on value creation
and growth. Today, we operate a fleet that is almost three times larger
than at the time of our IPO. In 2020, we also listed our GDRs on the Moscow
Exchange (“MOEX”) in order to diversify our investor base.
Our History
19 years of growth
and leadership
2024
Globaltrans
Investment PLC,
the holding
company,
was successfully
re-domiciled from
Cyprus to the Abu
Dhabi Global
Market effective
26 February 2024.
2021
Established Board
ESG Committee.
Sold the Group’s
60% stake
in SyntezRail
(a small non-
core specialised
container operator).
2017
The enhanced
Dividend Policy
introduced
linking dividends
to Attributable
Free Cash Flow and
Leverage Ratio.
2013
Acquired the captive
freight rail operator
of one of the world’s
largest steel
producers. Signed
a long-term Service
Contract. Created
a single 24/7
gondola dispatching
centre.
2009
Secondary Public
Offering (“SPO”)
to fund further
business expansion.
2004
Established
as a merger of two
entrepreneur-led
companies.
2022
The Group took full control
of its key liquid cargo operating
subsidiary BaltTransServis,
increasing its stake to 100%.
2012
Acquired
the captive freight
rail operator of one
of the leading
producers of hot
briquetted iron,
iron ore products
and high-quality
steel. Signed
industry’s first ever
long-term Service
Contract.
2008
Successful IPO
on the LSE.
2018
The Group celebrated its 10th
anniversary of its Main
Market listing on the LSE.
Two new long-term Service
Contracts signed with leading
manufacturers of steel pipes
and pipe products.
2023
Intra-group consolidation
of rail tank fleet
in BaltTransServis, followed
by the sale of the Group’s
65.25% shareholding
in its leasing subsidiary
Spacecom.
The Group’s key gondola
operational subsidiary
New Forwarding Company
celebrated its 20th
anniversary.
2020
Globaltrans’ GDRs began
trading on MOEX and were
included in Level One, MOEX’s
highest quotation list.
2019
A new service for the steel
industry launched, transporting
high-quality rolled steel
in specialised containers.
BaltTransServis, the Group’s
key liquid cargo operating
subsidiary, celebrated its 20th
anniversary.
2016
The Group’s corporate
structure simplified to drive
efficiency and cut costs.
Formed a small non-core
specialised container
operator SyntezRail.
2010
Organic expansion
of the business —
purchases of new rolling
stock and the expansion
of the Leased-in Fleet.
2014
12
Overview Strategic Report
ANNUAL REPORT 2023 Overview
1 Commonwealth of Independent States (“CIS”).
2 Imposed suspension of GDRs trading on the LSE since 3 March 2022 continued as of the date of publication.
Globaltrans was formed in 2004 with the merger of two entrepreneur-led
companies and from these roots has grown to become one of the leading
freight rail transportation groups in the CIS countries 1 . Through organic
growth and the acquisition of both railcars and other freight rail businesses,
we have created a profitable company with market-leading capabilities.
Our commitment to transparency and good corporate governance helped
make us the first CIS-focused freight rail group to be listed on an international
stock exchange. Since the Initial Public Offering (“IPO”) on the London Stock
Exchange (“LSE”) 2 in 2008, we have had a consistent focus on value creation
and growth. Today, we operate a fleet that is almost three times larger
than at the time of our IPO. In 2020, we also listed our GDRs on the Moscow
Exchange (“MOEX”) in order to diversify our investor base.
Our History
19 years of growth
and leadership
2024
Globaltrans
Investment PLC,
the holding
company,
was successfully
re-domiciled from
Cyprus to the Abu
Dhabi Global
Market effective
26 February 2024.
2021
Established Board
ESG Committee.
Sold the Group’s
60% stake
in SyntezRail
(a small non-
core specialised
container operator).
2017
The enhanced
Dividend Policy
introduced
linking dividends
to Attributable
Free Cash Flow and
Leverage Ratio.
2013
Acquired the captive
freight rail operator
of one of the world’s
largest steel
producers. Signed
a long-term Service
Contract. Created
a single 24/7
gondola dispatching
centre.
2009
Secondary Public
Offering (“SPO”)
to fund further
business expansion.
2004
Established
as a merger of two
entrepreneur-led
companies.
2022
The Group took full control
of its key liquid cargo operating
subsidiary BaltTransServis,
increasing its stake to 100%.
2012
Acquired
the captive freight
rail operator of one
of the leading
producers of hot
briquetted iron,
iron ore products
and high-quality
steel. Signed
industry’s first ever
long-term Service
Contract.
2008
Successful IPO
on the LSE.
2018
The Group celebrated its 10th
anniversary of its Main
Market listing on the LSE.
Two new long-term Service
Contracts signed with leading
manufacturers of steel pipes
and pipe products.
2023
Intra-group consolidation
of rail tank fleet
in BaltTransServis, followed
by the sale of the Group’s
65.25% shareholding
in its leasing subsidiary
Spacecom.
The Group’s key gondola
operational subsidiary
New Forwarding Company
celebrated its 20th
anniversary.
2020
Globaltrans’ GDRs began
trading on MOEX and were
included in Level One, MOEX’s
highest quotation list.
2019
A new service for the steel
industry launched, transporting
high-quality rolled steel
in specialised containers.
BaltTransServis, the Group’s
key liquid cargo operating
subsidiary, celebrated its 20th
anniversary.
2016
The Group’s corporate
structure simplified to drive
efficiency and cut costs.
Formed a small non-core
specialised container
operator SyntezRail.
2010
Organic expansion
of the business —
purchases of new rolling
stock and the expansion
of the Leased-in Fleet.
2014
Strategic
Report
Each of the Directors confirms that, to
the best of his or her knowledge, the
Strategic Report presented on pages
14 to 61 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
Alexander Storozhev
Director
p. 16
Message from the Board
Read more →
p. 26
Financial and
Operational Review
Read more →
p. 48
Risk Management
Read more →
In this section
Sustainability Report 15 14 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Report
Each of the Directors confirms that, to
the best of his or her knowledge, the
Strategic Report presented on pages
14 to 61 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
Alexander Storozhev
Director
p. 16
Message from the Board
Read more →
p. 26
Financial and
Operational Review
Read more →
p. 48
Risk Management
Read more →
In this section
Sustainability Report 15 14 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
1
At the Extraordinary General Meeting on 26 August 2023 shareholders approved a Board of Directors which was effective from 26 February
2024 (the date of the Company’s re-domiciliation to ADGM) to 4 April 2024. For further information, please see the Governance section.
Message from the Board
The Group had a successful
year in 2023 despite ongoing
market volatility and macro-
economic pressures.
Globaltrans delivered further
strong financial results,
increased operational
efficiency and maintained
capital discipline. It also began
the process of re-domiciling
the Company to the Abu Dhabi
Global Market (“ADGM”)
to address certain limitations
of its corporate structure,
a process that is now complete.
The Board is very grateful to all our colleagues across
the Group for their contribution to the Company’s
performance over the past year. The loyalty shown
by our customers is a testament to the Company’s
success in delivering consistent, high-quality services
to the client base.
Performance
The freight rail industry performed solidly in 2023, and
overall freight rail turnover and volumes were broadly
static year on year, despite infrastructure constraints
and demand volatility.
Operationally, the Group focused on improving
the efficiency of its fleet operations, a cornerstone
of the business model. The result was a major
improvement in efficiency levels, with the gondola fleet
seeing its Empty Run Ratio fall to its lowest level in more
than a decade, further reinforcing Globaltrans’ status
as an industry leader.
The Group delivered strong financial results in 2023,
with Adjusted Revenue and Adjusted EBITDA both
growing year on year. The Free Cash Flow performance
was particularly strong and the Group ended the year
with a solid net cash position. By maintaining a strong
balance sheet, Globaltrans can invest in its business and
deliver for customers without compromising its financial
health and ability to generate returns for shareholders.
The business model relies on a disciplined approach
to capital allocation, which is an important value
driver. Consequently, the Group held off investment
in new rolling stock in 2023, as prices for new railcars
reached historically high levels. Moving forward,
the Group expects to have minimal scrappage
requirements in 2024 and to continue
to have the flexibility and financial strength
to invest when conditions are right.
Re-domiciliation
Operational matters aside, a key focus
for the Board in 2023 was analysing
how best to address the limitations of
Globaltrans’ corporate structure and
listings constraints. The Board’s view was that
re-domiciling the Company from Cyprus to the
Abu Dhabi Global Market would address some of
these limitations while we would also maintain our
stock exchange listings, depositary programme,
and international corporate governance and
transparency standards.
We unanimously recommended this course of
action and shareholders voted and approved the
proposal at the Extraordinary General Meeting held
in August 2023. The Group successfully completed
the re-domiciliation on 26 February 2024 within
the six-month timetable originally indicated. As a
Board, we congratulate the management team on
their tireless effort and exceptional execution in
making this a reality. We are also grateful to our
shareholders who supported our recommendation
at the General Meeting.
Changes to Shareholding Structure
and Governance
In early 2024, AQNIET Capital, an investment
company with major interests in Kazakhstan,
became a key shareholder in Globaltrans.
AQNIET Capital is owned by Mr. Kairat Itemgenov,
a prominent Kazakh businessman, who has
successfully developed sizeable businesses
across several sectors over the past 25 years.
Mr. Itemgenov shares the Board’s belief in
Globaltrans’ long-term future, and we are pleased
to welcome him as a shareholder and a member of
the new Board of Directors.
On 4 April 2024 at an Extraordinary General
Meeting, shareholders approved a new Board of
Directors 1 , which reflects our status as an ADGM
company, along with the recent changes to the
shareholder structure. We are grateful to those
members who have departed the Board following
the recent changes and thank them for their
dedication and service over many years.
Sustainability
The Board is committed to enhancing the sustainability
of the Group and, guided by the ESG Committee,
we continue to work with the management team to
integrate sustainable work practices into the Group’s
operations. In 2023 the Group made progress across a
range of activities that support our efforts to meet our
sustainability goals. And for the second consecutive
year the Group successfully reduced its overall levels
of carbon emissions. Sustainability is key to our long-
term success, and the Board is committed to driving its
sustainability agenda as we move forward. For further
information on our sustainability performance, please
see our ESG Report.
Listing and dividends
The Group’s GDRs are listed on both the London and
Moscow stock exchanges. Trading in Globaltrans
GDRs remains suspended on the London Stock
Exchange but trading volumes on the Moscow
Exchange remained solid as the Company continued
to attract significant interest from domestic investors.
Dividend payments are in focus but remain suspended
due to certain technical issues, which are being
addressed. The primary focus at this time is on putting
in place a fully operational financial framework for the
Group in Abu Dhabi.
Summary
Our strategy is well-defined, our management team
is excellent and our business model is proven. With
a new corporate structure in place, and the backing
of a new major shareholder, your Board is confident
that Globaltrans is ready for the next stage in its
development and well placed to deliver sustainable
growth over the long term.
The Board of Directors
17 16 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
2024 (the date of the Company’s re-domiciliation to ADGM) to 4 April 2024. For further information, please see the Governance section.
Message from the Board
The Group had a successful
year in 2023 despite ongoing
market volatility and macro-
economic pressures.
Globaltrans delivered further
strong financial results,
increased operational
efficiency and maintained
capital discipline. It also began
the process of re-domiciling
the Company to the Abu Dhabi
Global Market (“ADGM”)
to address certain limitations
of its corporate structure,
a process that is now complete.
The Board is very grateful to all our colleagues across
the Group for their contribution to the Company’s
performance over the past year. The loyalty shown
by our customers is a testament to the Company’s
success in delivering consistent, high-quality services
to the client base.
Performance
The freight rail industry performed solidly in 2023, and
overall freight rail turnover and volumes were broadly
static year on year, despite infrastructure constraints
and demand volatility.
Operationally, the Group focused on improving
the efficiency of its fleet operations, a cornerstone
of the business model. The result was a major
improvement in efficiency levels, with the gondola fleet
seeing its Empty Run Ratio fall to its lowest level in more
than a decade, further reinforcing Globaltrans’ status
as an industry leader.
The Group delivered strong financial results in 2023,
with Adjusted Revenue and Adjusted EBITDA both
growing year on year. The Free Cash Flow performance
was particularly strong and the Group ended the year
with a solid net cash position. By maintaining a strong
balance sheet, Globaltrans can invest in its business and
deliver for customers without compromising its financial
health and ability to generate returns for shareholders.
The business model relies on a disciplined approach
to capital allocation, which is an important value
driver. Consequently, the Group held off investment
in new rolling stock in 2023, as prices for new railcars
reached historically high levels. Moving forward,
the Group expects to have minimal scrappage
requirements in 2024 and to continue
to have the flexibility and financial strength
to invest when conditions are right.
Re-domiciliation
Operational matters aside, a key focus
for the Board in 2023 was analysing
how best to address the limitations of
Globaltrans’ corporate structure and
listings constraints. The Board’s view was that
re-domiciling the Company from Cyprus to the
Abu Dhabi Global Market would address some of
these limitations while we would also maintain our
stock exchange listings, depositary programme,
and international corporate governance and
transparency standards.
We unanimously recommended this course of
action and shareholders voted and approved the
proposal at the Extraordinary General Meeting held
in August 2023. The Group successfully completed
the re-domiciliation on 26 February 2024 within
the six-month timetable originally indicated. As a
Board, we congratulate the management team on
their tireless effort and exceptional execution in
making this a reality. We are also grateful to our
shareholders who supported our recommendation
at the General Meeting.
Changes to Shareholding Structure
and Governance
In early 2024, AQNIET Capital, an investment
company with major interests in Kazakhstan,
became a key shareholder in Globaltrans.
AQNIET Capital is owned by Mr. Kairat Itemgenov,
a prominent Kazakh businessman, who has
successfully developed sizeable businesses
across several sectors over the past 25 years.
Mr. Itemgenov shares the Board’s belief in
Globaltrans’ long-term future, and we are pleased
to welcome him as a shareholder and a member of
the new Board of Directors.
On 4 April 2024 at an Extraordinary General
Meeting, shareholders approved a new Board of
Directors 1 , which reflects our status as an ADGM
company, along with the recent changes to the
shareholder structure. We are grateful to those
members who have departed the Board following
the recent changes and thank them for their
dedication and service over many years.
Sustainability
The Board is committed to enhancing the sustainability
of the Group and, guided by the ESG Committee,
we continue to work with the management team to
integrate sustainable work practices into the Group’s
operations. In 2023 the Group made progress across a
range of activities that support our efforts to meet our
sustainability goals. And for the second consecutive
year the Group successfully reduced its overall levels
of carbon emissions. Sustainability is key to our long-
term success, and the Board is committed to driving its
sustainability agenda as we move forward. For further
information on our sustainability performance, please
see our ESG Report.
Listing and dividends
The Group’s GDRs are listed on both the London and
Moscow stock exchanges. Trading in Globaltrans
GDRs remains suspended on the London Stock
Exchange but trading volumes on the Moscow
Exchange remained solid as the Company continued
to attract significant interest from domestic investors.
Dividend payments are in focus but remain suspended
due to certain technical issues, which are being
addressed. The primary focus at this time is on putting
in place a fully operational financial framework for the
Group in Abu Dhabi.
Summary
Our strategy is well-defined, our management team
is excellent and our business model is proven. With
a new corporate structure in place, and the backing
of a new major shareholder, your Board is confident
that Globaltrans is ready for the next stage in its
development and well placed to deliver sustainable
growth over the long term.
The Board of Directors
17 16 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Message from the CEO
Both the economy and our industry
faced challenges in 2023. Yet
despite this, the overall performance
of the freight rail sector was relatively
stable. In turn, Globaltrans produced
a strong performance over the year,
taking advantage of market momentum
to significantly improve its fleet efficiency.
Our 2023 financial results reflected
the underlying strength of our
business model and our commitment
to providing the service levels our
customers expect. We delivered
solid growth in Adjusted
Revenue, kept our Operational
Cash Costs under control,
generated strong Free Cash
Flow and ended the year
with a solid net cash
position.
Relatively stable industry performance
Demand for freight rail transportation was broadly
stable year on year in 2023. The industry had a
strong first half of the year, but this was followed by
a weaker second-half performance. Overall industry
freight turnover (measured in tonnes-km) remained
consistent with the previous year. Although the
overall industry transportation volumes (measured
in tonnes) were largely unchanged, almost all key
segments experienced a slightly weaker performance
than in 2022. The rail industry continued to face
challenges due to fluctuating demand, logistics
changes and rail network constraints. For both the
bulk and liquids segments, the overall market pricing
environment remained robust.
Building operational momentum
Operational efficiency has long been a key pillar of
the Group’s business model, with our Empty Run
Ratio for gondola cars consistently among the best
in the industry. In 2023, we successfully leveraged
our expertise in fleet management to significantly
improve this key Empty Run Ratio, reducing it from
41% in the prior year to an impressive 36%, the
lowest level for gondola cars in more than ten years.
This achievement was particularly notable in light of
the multiple and substantial increases in regulated
infrastructure and locomotive tariffs over the last
two years and was of critical importance for the
Group as Empty Run Costs account for more than half
of our Total Operating Cash Costs.
Our business model, which focuses on a smooth
integration into our clients’ logistics chains, has
historically proven to be effective and continued to
benefit us. The strong customer loyalty we achieve
through our operational excellence and high-quality
service offering underpins the Group’s ongoing
19 18 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Both the economy and our industry
faced challenges in 2023. Yet
despite this, the overall performance
of the freight rail sector was relatively
stable. In turn, Globaltrans produced
a strong performance over the year,
taking advantage of market momentum
to significantly improve its fleet efficiency.
Our 2023 financial results reflected
the underlying strength of our
business model and our commitment
to providing the service levels our
customers expect. We delivered
solid growth in Adjusted
Revenue, kept our Operational
Cash Costs under control,
generated strong Free Cash
Flow and ended the year
with a solid net cash
position.
Relatively stable industry performance
Demand for freight rail transportation was broadly
stable year on year in 2023. The industry had a
strong first half of the year, but this was followed by
a weaker second-half performance. Overall industry
freight turnover (measured in tonnes-km) remained
consistent with the previous year. Although the
overall industry transportation volumes (measured
in tonnes) were largely unchanged, almost all key
segments experienced a slightly weaker performance
than in 2022. The rail industry continued to face
challenges due to fluctuating demand, logistics
changes and rail network constraints. For both the
bulk and liquids segments, the overall market pricing
environment remained robust.
Building operational momentum
Operational efficiency has long been a key pillar of
the Group’s business model, with our Empty Run
Ratio for gondola cars consistently among the best
in the industry. In 2023, we successfully leveraged
our expertise in fleet management to significantly
improve this key Empty Run Ratio, reducing it from
41% in the prior year to an impressive 36%, the
lowest level for gondola cars in more than ten years.
This achievement was particularly notable in light of
the multiple and substantial increases in regulated
infrastructure and locomotive tariffs over the last
two years and was of critical importance for the
Group as Empty Run Costs account for more than half
of our Total Operating Cash Costs.
Our business model, which focuses on a smooth
integration into our clients’ logistics chains, has
historically proven to be effective and continued to
benefit us. The strong customer loyalty we achieve
through our operational excellence and high-quality
service offering underpins the Group’s ongoing
19 18 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Message from the CEO
an integral part of our business strategy. In
2023, we made further progress by continuing
to fine-tune the internal mechanisms that
support our ESG strategy. This included
building greater employee engagement and
enhancing our oversight and accountability
processes. Externally, we continued the work of
integrating our sustainability priorities into the
business, and improving disclosure on those
areas that are important for both the business
and our stakeholders. We are pleased that our
efforts continue to be recognised by various
ESG ranking groups.
Summary
Our expertise, flexibility, and experience put
us in a strong competitive position to execute
our strategy, as we did so successfully in 2023.
As a team, we remain focused on delivering
the best possible service, providing the right
opportunities for our people and producing a
result all our stakeholders can be proud of as we
move forward into 2024.
Valery Shpakov
CEO
Our financial profile remained strong. We closed
the year with a solid net cash position of RUB 27.4
billion, and a negative Net Debt to Adjusted EBITDA
ratio of (0.5) times. This strong capital position
was recognised by ExpertRA, the leading domestic
rating agency, which upgraded Globaltrans’ credit
rating, assigning the Group its highest domestic
grade of ruAAA with a stable outlook.
Dividends
We continued to work to resolve the limitations
of our corporate structure, but for the time being
dividends have remained suspended. In the
second half of the year, the process to re-domicile
the holding company to the ADGM got underway. I
am pleased to announce that this complex process
was successfully completed, effective 26 February
2024, within a tight schedule of about six months.
The next step for us is to put in place a fully
operational financial framework for the Group in
Abu Dhabi and we are bringing the same focus to
bear on this next stage.
Advancing our ESG strategy
We know it is important to both measure and
mitigate our impact on the environment and our
communities and so sustainability remains
success, and I am pleased to highlight that all
Service Contracts due for renewal in 2023 have been
extended. Service Contracts contributed more than
60% of the Group’s Net Revenue from Operation of
Rolling Stock in the reporting year.
The Group’s Freight Rail Turnover (including Engaged
Fleet) decreased by 2% year on year reflecting
volatility in logistics and persistent infrastructure
related constraints across the rail network. While the
Average Number of Loaded Trips per Railcar was 5%
lower primarily due to these constraints, favourable
market pricing conditions meant we still achieved a
10% year-on-year increase in Average Price per Trip
over the same period.
At year end, our Total Fleet consisted of 65,644
units, down 1% year on year largely reflecting the
sale of 680 railcars as part of Globaltrans’ disposal
of its shareholding in Spacecom, its leasing
subsidiary. The majority of the Total Fleet was
owned by Globaltrans (94%).
Over the last two years, we have simplified our
corporate structure through several transactions
and today all our subsidiaries are fully owned by
Globaltrans. In 2023, we consolidated all liquid cargo
operations under one subsidiary, BaltTransServis,
and our intention going forwards is to gradually
switch some of the currently leased-out rail tanks into
operation within the Group.
Delivering strong financial results
For the full year 2023, the Group achieved strong
results with Adjusted Revenue rising 7% year on
year to reach RUB 87.4 billion, primarily driven by
supportive pricing dynamics in our core freight
segments. We successfully controlled our cost base,
helping contribute to a 6% year-on-year increase in
Adjusted EBITDA, which reached RUB 52.3 billion.
Underlying profitability remained stable year on year
with the Adjusted EBITDA Margin at 60%.
The Group’s Free Cash Flow was again strong at
RUB 25.8 billion, up 74% year on year, reflecting a
combination of continued robust cash generation
from operations and lower levels of investment.
Our Total CAPEX adjusted for M&A halved to
RUB 10.1 billion due to our conservative approach to
investment given the quite elevated prices for new
rolling stock.
We opportunistically target the acquisition and
leasing of railcars given the robust demand for
our services and the need to offset the expected
retirement levels of our owned fleet over the coming
years, which we estimate at an average of about
3,500 units annually over the period 2025–2029.
We will still have some level of flexibility
over investments in 2024 and are
well positioned to make sensible
investments again when the
time is right.
25.8 RUB bln
The Group’s Free Cash Flow
21 20 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
an integral part of our business strategy. In
2023, we made further progress by continuing
to fine-tune the internal mechanisms that
support our ESG strategy. This included
building greater employee engagement and
enhancing our oversight and accountability
processes. Externally, we continued the work of
integrating our sustainability priorities into the
business, and improving disclosure on those
areas that are important for both the business
and our stakeholders. We are pleased that our
efforts continue to be recognised by various
ESG ranking groups.
Summary
Our expertise, flexibility, and experience put
us in a strong competitive position to execute
our strategy, as we did so successfully in 2023.
As a team, we remain focused on delivering
the best possible service, providing the right
opportunities for our people and producing a
result all our stakeholders can be proud of as we
move forward into 2024.
Valery Shpakov
CEO
Our financial profile remained strong. We closed
the year with a solid net cash position of RUB 27.4
billion, and a negative Net Debt to Adjusted EBITDA
ratio of (0.5) times. This strong capital position
was recognised by ExpertRA, the leading domestic
rating agency, which upgraded Globaltrans’ credit
rating, assigning the Group its highest domestic
grade of ruAAA with a stable outlook.
Dividends
We continued to work to resolve the limitations
of our corporate structure, but for the time being
dividends have remained suspended. In the
second half of the year, the process to re-domicile
the holding company to the ADGM got underway. I
am pleased to announce that this complex process
was successfully completed, effective 26 February
2024, within a tight schedule of about six months.
The next step for us is to put in place a fully
operational financial framework for the Group in
Abu Dhabi and we are bringing the same focus to
bear on this next stage.
Advancing our ESG strategy
We know it is important to both measure and
mitigate our impact on the environment and our
communities and so sustainability remains
success, and I am pleased to highlight that all
Service Contracts due for renewal in 2023 have been
extended. Service Contracts contributed more than
60% of the Group’s Net Revenue from Operation of
Rolling Stock in the reporting year.
The Group’s Freight Rail Turnover (including Engaged
Fleet) decreased by 2% year on year reflecting
volatility in logistics and persistent infrastructure
related constraints across the rail network. While the
Average Number of Loaded Trips per Railcar was 5%
lower primarily due to these constraints, favourable
market pricing conditions meant we still achieved a
10% year-on-year increase in Average Price per Trip
over the same period.
At year end, our Total Fleet consisted of 65,644
units, down 1% year on year largely reflecting the
sale of 680 railcars as part of Globaltrans’ disposal
of its shareholding in Spacecom, its leasing
subsidiary. The majority of the Total Fleet was
owned by Globaltrans (94%).
Over the last two years, we have simplified our
corporate structure through several transactions
and today all our subsidiaries are fully owned by
Globaltrans. In 2023, we consolidated all liquid cargo
operations under one subsidiary, BaltTransServis,
and our intention going forwards is to gradually
switch some of the currently leased-out rail tanks into
operation within the Group.
Delivering strong financial results
For the full year 2023, the Group achieved strong
results with Adjusted Revenue rising 7% year on
year to reach RUB 87.4 billion, primarily driven by
supportive pricing dynamics in our core freight
segments. We successfully controlled our cost base,
helping contribute to a 6% year-on-year increase in
Adjusted EBITDA, which reached RUB 52.3 billion.
Underlying profitability remained stable year on year
with the Adjusted EBITDA Margin at 60%.
The Group’s Free Cash Flow was again strong at
RUB 25.8 billion, up 74% year on year, reflecting a
combination of continued robust cash generation
from operations and lower levels of investment.
Our Total CAPEX adjusted for M&A halved to
RUB 10.1 billion due to our conservative approach to
investment given the quite elevated prices for new
rolling stock.
We opportunistically target the acquisition and
leasing of railcars given the robust demand for
our services and the need to offset the expected
retirement levels of our owned fleet over the coming
years, which we estimate at an average of about
3,500 units annually over the period 2025–2029.
We will still have some level of flexibility
over investments in 2024 and are
well positioned to make sensible
investments again when the
time is right.
25.8 RUB bln
The Group’s Free Cash Flow
21 20 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Overview
ANNUAL REPORT 2023 Strategic Report 23 Strategic Report Sustainability Report Governance Financial Statements Additional Information
22
Strategy
Our strategy is to offer our industrial
customers reliable and innovative
transportation solutions aimed
at ensuring the cost-effective and
timely management of their cargoes.
We invest opportunistically to grow
our business, subject to strict
returns criteria, and maintain
a prudent balance sheet. Together
these elements underpin our ability
to create lasting value for our
shareholders, employees and other
stakeholders.
Our entrepreneurial spirit,
disciplined approach, and focus
on efficiency and innovation
are at the heart of this strategy.
These, alongside our large fleet and
advanced logistics platform, form
our major competitive advantages.
By focusing on long-term
outsourcing partnerships, we can
use our deep understanding of our
clients’ needs to improve our
service quality while 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 no such opportunities
exist. We review organic and
nonorganic growth opportunities
subject to our strict returns
criteria. Maintaining a strong
balance sheet is critical as it allows
us to seize opportunities and
remain flexible in the face
of any change to the business
environment or market.
Historical key financials
Our Strategy
Our vision is to maintain our position as a leading freight
rail group and to be the partner of choice for blue-chip
industrial customers by continually developing our
business to ensure we meet customers’ changing needs. Adjusted Revenue,
RUB bln
2023
2022
2021
2020
2019
87.4
81.6
58.5
54.9
68.8
Adjusted EBITDA,
RUB bln
52.3
49.2
29.0
26.8
39.6
2023
2022
2021
2020
2019
60
60
50
49
57
2023
2022
2021
2020
2019
Adjusted EBITDA
Margin, %
Free Cash Flow,
RUB bln
25.8
14.8
16.1
15.1
13.3
2023
2022
2021
2020
2019
Net Debt to Adjusted
EBITDA, at year-end
(0.5)
0.1
0.6
1.0
0.6
2023
2022
2021
2020
2019
Total dividends 1
,
RUB per share/GDR
-
-
22.50 2
74.55
93.10
2023
2022
2021
2020
2019 Source: Globaltrans.
1 Total dividends (including interim, final and special) in respect of declared year.
2 Dividends were suspended in April 2022 due to the certain technical issues.
Value customers Respect people
Deliver excellence Uphold good governance
Prioritise safety Protect our environment
Our shared principles
They are at the heart of our business and
we work hard to exceed their expectations.
We respect the rights of all employees and
invest in their training and development.
We strive to achieve the highest standards
in everything we do.
We aim to pursue a course that benefits
all stakeholders.
Safety is our number one priority and we act
safely and responsibly at all times.
We value our communities and the world around us and treat
them with the respect and consideration they deserve.
Deliver excellence
and efficiency
in operations
Deliver value through
sustainable business
practices
Promote a strong
entrepreneurial and
governance culture
Focus on opportunistic
investments and pursue
prudent capital allocation
OUR
STRATEGIC
PRIORITIES
ANNUAL REPORT 2023 Strategic Report 23 Strategic Report Sustainability Report Governance Financial Statements Additional Information
22
Strategy
Our strategy is to offer our industrial
customers reliable and innovative
transportation solutions aimed
at ensuring the cost-effective and
timely management of their cargoes.
We invest opportunistically to grow
our business, subject to strict
returns criteria, and maintain
a prudent balance sheet. Together
these elements underpin our ability
to create lasting value for our
shareholders, employees and other
stakeholders.
Our entrepreneurial spirit,
disciplined approach, and focus
on efficiency and innovation
are at the heart of this strategy.
These, alongside our large fleet and
advanced logistics platform, form
our major competitive advantages.
By focusing on long-term
outsourcing partnerships, we can
use our deep understanding of our
clients’ needs to improve our
service quality while 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 no such opportunities
exist. We review organic and
nonorganic growth opportunities
subject to our strict returns
criteria. Maintaining a strong
balance sheet is critical as it allows
us to seize opportunities and
remain flexible in the face
of any change to the business
environment or market.
Historical key financials
Our Strategy
Our vision is to maintain our position as a leading freight
rail group and to be the partner of choice for blue-chip
industrial customers by continually developing our
business to ensure we meet customers’ changing needs. Adjusted Revenue,
RUB bln
2023
2022
2021
2020
2019
87.4
81.6
58.5
54.9
68.8
Adjusted EBITDA,
RUB bln
52.3
49.2
29.0
26.8
39.6
2023
2022
2021
2020
2019
60
60
50
49
57
2023
2022
2021
2020
2019
Adjusted EBITDA
Margin, %
Free Cash Flow,
RUB bln
25.8
14.8
16.1
15.1
13.3
2023
2022
2021
2020
2019
Net Debt to Adjusted
EBITDA, at year-end
(0.5)
0.1
0.6
1.0
0.6
2023
2022
2021
2020
2019
Total dividends 1
,
RUB per share/GDR
-
-
22.50 2
74.55
93.10
2023
2022
2021
2020
2019 Source: Globaltrans.
1 Total dividends (including interim, final and special) in respect of declared year.
2 Dividends were suspended in April 2022 due to the certain technical issues.
Value customers Respect people
Deliver excellence Uphold good governance
Prioritise safety Protect our environment
Our shared principles
They are at the heart of our business and
we work hard to exceed their expectations.
We respect the rights of all employees and
invest in their training and development.
We strive to achieve the highest standards
in everything we do.
We aim to pursue a course that benefits
all stakeholders.
Safety is our number one priority and we act
safely and responsibly at all times.
We value our communities and the world around us and treat
them with the respect and consideration they deserve.
Deliver excellence
and efficiency
in operations
Deliver value through
sustainable business
practices
Promote a strong
entrepreneurial and
governance culture
Focus on opportunistic
investments and pursue
prudent capital allocation
OUR
STRATEGIC
PRIORITIES
Market Review
The freight rail industry’s overall performance
was solid despite infrastructure constraints and
demand volatility. Overall freight rail turnover and
freight volumes remained relatively unchanged year
on year, with both the bulk and liquids segments
benefitting from favourable pricing dynamics.
Relatively stable industry performance, continued favourable market pricing
• Overall industry freight rail turnover and
transportation volumes were broadly unchanged
year on year in 2023 with a stronger first-half
performance followed by a weaker second half.
• Demand remained relatively solid with continued
infrastructure constraints impacting the rail
network efficiency.
Overall industry freight rail turnover,
bln tonnes-km
Source: Rosstat, Globaltrans.
Overall industry freight rail turnover,
year-on-year change, %
Source: Rosstat, Globaltrans.
Overall industry freight
rail volumes,
mln tonnes
Source: Rosstat, Globaltrans.
Overall industry freight rail
transportation volumes by key
freight, 2023, % 1
Source: Rosstat, Globaltrans.
• Almost all key market segments experienced
moderately weaker volume performance year
on year.
• Favourable market pricing sustained in both bulk
and liquids segments.
• Producer prices of new railcars reached historically
high levels.
1 Coal including coke; metallurgical cargoes including ferrous metals, scrap metal and ores; construction materials including cement.
Other including liquid cargoes.
2023
2022
2021
2020
2019
2,638
2,638
2,639
2,545
2,602
0.0%
-0.1%
+3.6%
-2.2%
+0.2%
1,235
1,236
1,284
1,245
1,279
2023
2022
2021
2020
2019
-0.1%
-3.7%
+3.2%
-2.7%
-0.9%
29%
Coal
41%
Other
12%
Construction
materials
17%
Metallurgical
cargoes
1,339
1,320
1,300
1,318
H1
H2
2023
2022
-1.4
+1.4
25 24 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
The freight rail industry’s overall performance
was solid despite infrastructure constraints and
demand volatility. Overall freight rail turnover and
freight volumes remained relatively unchanged year
on year, with both the bulk and liquids segments
benefitting from favourable pricing dynamics.
Relatively stable industry performance, continued favourable market pricing
• Overall industry freight rail turnover and
transportation volumes were broadly unchanged
year on year in 2023 with a stronger first-half
performance followed by a weaker second half.
• Demand remained relatively solid with continued
infrastructure constraints impacting the rail
network efficiency.
Overall industry freight rail turnover,
bln tonnes-km
Source: Rosstat, Globaltrans.
Overall industry freight rail turnover,
year-on-year change, %
Source: Rosstat, Globaltrans.
Overall industry freight
rail volumes,
mln tonnes
Source: Rosstat, Globaltrans.
Overall industry freight rail
transportation volumes by key
freight, 2023, % 1
Source: Rosstat, Globaltrans.
• Almost all key market segments experienced
moderately weaker volume performance year
on year.
• Favourable market pricing sustained in both bulk
and liquids segments.
• Producer prices of new railcars reached historically
high levels.
1 Coal including coke; metallurgical cargoes including ferrous metals, scrap metal and ores; construction materials including cement.
Other including liquid cargoes.
2023
2022
2021
2020
2019
2,638
2,638
2,639
2,545
2,602
0.0%
-0.1%
+3.6%
-2.2%
+0.2%
1,235
1,236
1,284
1,245
1,279
2023
2022
2021
2020
2019
-0.1%
-3.7%
+3.2%
-2.7%
-0.9%
29%
Coal
41%
Other
12%
Construction
materials
17%
Metallurgical
cargoes
1,339
1,320
1,300
1,318
H1
H2
2023
2022
-1.4
+1.4
25 24 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
1
In February 2023,
Globaltrans completed
the restructuring of its liquids
segment with the intra-
group acquisition of 5,800
railcars by BaltTransServis
from Spacecom (including
Spacecom Trans), a 65.25%
owned leasing subsidiary
of Globaltrans, and
the subsequent disposal
of Globaltrans’ shareholding
in Spacecom (including
680 units) to its minority
shareholder.
2 The Group’s Freight Rail
Turnover declined 4% year
on year excluding Engaged
Fleet.
3 As of the end of 2023,
Globaltrans had six Service
Contracts.
Financial results
Further strong financial
results with robust Free Cash
Flow, stable Adjusted EBITDA
Margin and solid net cash
position
• Revenue rose 11% year on year
to RUB 104.7 billion with Adjusted
Revenue (a key component) increasing
7% year on year to RUB 87.4 billion
in 2023 largely reflecting robust
average pricing.
• Adjusted EBITDA increased 6% year
on year to RUB 52.3 billion with
the Adjusted EBITDA Margin remaining
stable year on year at 60% despite
ongoing cost pressures.
• Total CAPEX adjusted for M&A was
RUB 10.1 billion (2022: RUB 20.2 billion)
on the back of a conservative approach
to investment given elevated new rolling
stock prices.
• Strong Free Cash Flow of RUB 25.8 billion
(2022: RUB 14.8 billion).
• Profit for the year rose to RUB 38.6 billion
(2022: RUB 24.9 billion) largely reflecting
the Group’s strong performance, a profit
on the sale of the Group’s shareholding
in its leasing subsidiary Spacecom 1
and a year-on-year rise in net foreign
exchange transaction gains on financing
activities in 2023 along with the sizable
impairment of rolling stock in the year-
earlier period.
• Net cash position was RUB 27.4 billion
with negative Net Debt to Adjusted
EBITDA at (0.5)x.
• Dividend payments are in focus but
remain suspended due to certain
technical issues, which
are being addressed.
Operational performance
Strong operational efficiency,
robust average pricing,
all Service Contracts
remain intact
• Empty Run Ratio for gondola cars
significantly improved to its lowest level
in more than ten years at 36% (2022:
41%). Total Empty Run Ratio (for all
types of rolling stock) decreased to 45%
(2022: 50%).
• Freight Rail Turnover (including
Engaged Fleet) declined 2%
year on year reflecting volatility
in logistics and continued rail network
infrastructure constraints 2 .
• Average Price per Trip increased 10%
year on year on the back of continued
favourable market pricing conditions
in both bulk and liquids segments, while
the Average Number of Loaded Trip per
Railcar declined 5% year on year.
• The Group maintained its focus
on client retention with all Service
Contracts 3 due for renewal extended.
Service Contracts contributed about
61% of the Group’s Net Revenue from
Operation of Rolling Stock in 2023.
• Specialisation was enhanced across
subsidiaries with liquid cargo and
locomotive expertise consolidated
within BaltTransServis enabling
currently leased-out railcars
to be gradually switched into operation.
New Forwarding Company is fully
focused on the bulk segment.
Adjusted Revenue, RUB mln Total CAPEX adjusted for M&A, RUB mln
Total Operating Cash Costs, RUB mln Free Cash Flow, RUB mln
Adjusted EBITDA, RUB mln Net Debt, RUB mln
Adjusted EBITDA Margin, % Net Debt to Adjusted EBITDA
Financial and
Operational Review
87,388
81,610
2023
2022
+7%
35,049
32,373
2023
2022
8%
52,289
49,216
2023
2022
6%
60
60
2023
2022
0
10,092
20,224
2023
2022
-50%
25,845
14,825
2023
2022
74%
(27,400)
4,596
31 Dec 2023
31 Dec 2022
(0.5)
0.1
31 Dec 2023
31 Dec 2022
Source: Globaltrans.
27 26 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Globaltrans completed
the restructuring of its liquids
segment with the intra-
group acquisition of 5,800
railcars by BaltTransServis
from Spacecom (including
Spacecom Trans), a 65.25%
owned leasing subsidiary
of Globaltrans, and
the subsequent disposal
of Globaltrans’ shareholding
in Spacecom (including
680 units) to its minority
shareholder.
2 The Group’s Freight Rail
Turnover declined 4% year
on year excluding Engaged
Fleet.
3 As of the end of 2023,
Globaltrans had six Service
Contracts.
Financial results
Further strong financial
results with robust Free Cash
Flow, stable Adjusted EBITDA
Margin and solid net cash
position
• Revenue rose 11% year on year
to RUB 104.7 billion with Adjusted
Revenue (a key component) increasing
7% year on year to RUB 87.4 billion
in 2023 largely reflecting robust
average pricing.
• Adjusted EBITDA increased 6% year
on year to RUB 52.3 billion with
the Adjusted EBITDA Margin remaining
stable year on year at 60% despite
ongoing cost pressures.
• Total CAPEX adjusted for M&A was
RUB 10.1 billion (2022: RUB 20.2 billion)
on the back of a conservative approach
to investment given elevated new rolling
stock prices.
• Strong Free Cash Flow of RUB 25.8 billion
(2022: RUB 14.8 billion).
• Profit for the year rose to RUB 38.6 billion
(2022: RUB 24.9 billion) largely reflecting
the Group’s strong performance, a profit
on the sale of the Group’s shareholding
in its leasing subsidiary Spacecom 1
and a year-on-year rise in net foreign
exchange transaction gains on financing
activities in 2023 along with the sizable
impairment of rolling stock in the year-
earlier period.
• Net cash position was RUB 27.4 billion
with negative Net Debt to Adjusted
EBITDA at (0.5)x.
• Dividend payments are in focus but
remain suspended due to certain
technical issues, which
are being addressed.
Operational performance
Strong operational efficiency,
robust average pricing,
all Service Contracts
remain intact
• Empty Run Ratio for gondola cars
significantly improved to its lowest level
in more than ten years at 36% (2022:
41%). Total Empty Run Ratio (for all
types of rolling stock) decreased to 45%
(2022: 50%).
• Freight Rail Turnover (including
Engaged Fleet) declined 2%
year on year reflecting volatility
in logistics and continued rail network
infrastructure constraints 2 .
• Average Price per Trip increased 10%
year on year on the back of continued
favourable market pricing conditions
in both bulk and liquids segments, while
the Average Number of Loaded Trip per
Railcar declined 5% year on year.
• The Group maintained its focus
on client retention with all Service
Contracts 3 due for renewal extended.
Service Contracts contributed about
61% of the Group’s Net Revenue from
Operation of Rolling Stock in 2023.
• Specialisation was enhanced across
subsidiaries with liquid cargo and
locomotive expertise consolidated
within BaltTransServis enabling
currently leased-out railcars
to be gradually switched into operation.
New Forwarding Company is fully
focused on the bulk segment.
Adjusted Revenue, RUB mln Total CAPEX adjusted for M&A, RUB mln
Total Operating Cash Costs, RUB mln Free Cash Flow, RUB mln
Adjusted EBITDA, RUB mln Net Debt, RUB mln
Adjusted EBITDA Margin, % Net Debt to Adjusted EBITDA
Financial and
Operational Review
87,388
81,610
2023
2022
+7%
35,049
32,373
2023
2022
8%
52,289
49,216
2023
2022
6%
60
60
2023
2022
0
10,092
20,224
2023
2022
-50%
25,845
14,825
2023
2022
74%
(27,400)
4,596
31 Dec 2023
31 Dec 2022
(0.5)
0.1
31 Dec 2023
31 Dec 2022
Source: Globaltrans.
27 26 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Results in detail
The following tables provide the Group’s key financial and operational information for the years
ended 31 December 2023 and 2022.
EU IFRS financial information
2022 2023 Change
RUB mln RUB mln %
Revenue 94,474 104,748 11%
Total cost of sales, selling and marketing costs and administrative expenses (58,838) (63,740) 8%
Profit from sale of subsidiary - 3,400 NM
Other losses – net (1,335) (283) -79%
Operating profit 34,302 44,125 29%
Finance (costs)/income – net (1,150) 2,962 NM
Profit before income tax 33,152 47,087 42%
Income tax expense (8,232) (8,469) 3%
Profit for the year 24,920 38,618 55%
Profit attributable to:
Owners of the Company 25,193 38,620 53%
Non-controlling interests (274) (3) -99%
Basic and diluted earnings per share for profit attributable to the equity
holders of the Company during the year (RUB per share)
141.23 216.58 53%
Non-IFRS financial information
Financial and Operational Review
Debt profile
29 28 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
The following tables provide the Group’s key financial and operational information for the years
ended 31 December 2023 and 2022.
EU IFRS financial information
2022 2023 Change
RUB mln RUB mln %
Revenue 94,474 104,748 11%
Total cost of sales, selling and marketing costs and administrative expenses (58,838) (63,740) 8%
Profit from sale of subsidiary - 3,400 NM
Other losses – net (1,335) (283) -79%
Operating profit 34,302 44,125 29%
Finance (costs)/income – net (1,150) 2,962 NM
Profit before income tax 33,152 47,087 42%
Income tax expense (8,232) (8,469) 3%
Profit for the year 24,920 38,618 55%
Profit attributable to:
Owners of the Company 25,193 38,620 53%
Non-controlling interests (274) (3) -99%
Basic and diluted earnings per share for profit attributable to the equity
holders of the Company during the year (RUB per share)
141.23 216.58 53%
| 2022 | 2023 | Change | |
| RUB mln | RUB mln | % | |
| Cash generated from operations (after changes in working capital) | 48,631 | 49,194 | 1% |
| Tax paid | (8,455) | (8,267) | -2% |
| Net cash from operating activities | 40,176 | 40,926 | 2% |
| Net cash used in investing activities | (19,652) | (6,851) | -65% |
| Net cash used in financing activities | (17,520) | (10,462) | -40% |
Non-IFRS financial information
| 2022 | 2023 | Change | |
| RUB mln | RUB mln | % | |
| Adjusted Revenue | 81,610 | 87,388 | 7% |
| Including | |||
| Net Revenue from Operation of Rolling Stock | 76,798 * | 81,102 * | 6% |
| Operating leasing of rolling stock | 3,372 | 4,538 | 35% |
| Total Operating Cash Costs | 32,373 | 35,049 | 8% |
| Including | |||
| Empty Run Cost | 17,283 * | 18,297* | 6% |
| Employee benefit expense | 6,781 | 8,174 | 21% |
| Repairs and maintenance | 3,943 | 4,274 | 8% |
| Fuel and spare parts – locomotives | 2,017 | 1,958 | -3% |
| Adjusted EBITDA | 49,216 | 52,289 | 6% |
| Adjusted EBITDA Margin, % | 60% | 60% | - |
| Total CAPEX (including maintenance CAPEX) | 11,424 | 8,261 | -28% |
| Total CAPEX adjusted for M&A | 20,224 | 10,092 | -50% |
| Free Cash Flow | 14,825 | 25,845 | 74% |
| Attributable Free Cash Flow | 15,098 | 25,848 | 71% |
Financial and Operational Review
Debt profile
| As of 31 Dec2022 | As of 31 Dec2023 | Change | |
| RUB mln | RUB mln | % | |
| Total debt | 20,649 | 15,377 | -26% |
| Cash and cash equivalents | 16,052 | 42,777 | 166% |
| Net Debt | 4,596 | (27,400) | NM |
| Net Debt to Adjusted EBITDA (x) | 0.1 | (0.5) | - |
29 28 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Revenue
In 2023, the Group’s Total revenue increased 11%
year on year to RUB 104,748 million reflecting
the combination of a 7% year-on-year rise in Adjusted
Revenue (a key component) and a 35% year-on-year
increase in “pass through” items (a combination
of “Infrastructure and locomotive tariffs: loaded
trips” and “Services provided by other transportation
organisations”).
Adjusted Revenue
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 the rail infrastructure provider, 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.
In 2023, the Group’s Adjusted Revenue was
RUB 87,388 million, up 7% year on year, largely
driven by the increase in Net Revenue from
Operation of Rolling Stock.
Operational information
2022 2023 Change
%
Freight Rail Turnover, billion tonnes-km (including Engaged Fleet) 141.4 138.8 -2%
Transportation Volume, million tonnes (including Engaged Fleet) 80.4 78.6 -2%
Freight Rail Turnover, billion tonnes-km (excluding Engaged Fleet) 134.9 129.0 -4%
Transportation Volume, million tonnes (excluding Engaged Fleet) 77.0 73.5 -5%
Average Price per Trip, RUB 64,553 71,125 10%
Average Rolling Stock Operated, units 56,637 57,153 1%
Average Distance of Loaded Trip, km 1,733 1,741 0%
Average Number of Loaded Trips per Railcar 21.0 20.0 -5%
Total Empty Run Ratio (for all types of rolling stock), % 50% 45% -
Empty Run Ratio for gondola cars, % 41% 36% -
Share of Empty Run Kilometres paid by Globaltrans, % 99% 99% -
Total Fleet, units (at period end), including: 66,115 65,644 -1%
Owned Fleet, units (at period end) 62,354 61,813 -1%
Leased-in Fleet, units (at period end) 3,761 3,831 2%
Leased-out Fleet, units (at period end) 7,474 6,164 -18%
Average age of Owned Fleet, years (at period end) 14.5 15.2 -
Total number of employees (at period end) 1,768 1,802 2%
Financial and Operational Review
1
The principal components of Adjusted Revenue
include: (i) Net Revenue from Operation of Rolling
Stock, (ii) Revenue from operating leasing of rolling
stock, (iii) Net Revenue from Engaged Fleet,
and (iv) 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 details of Adjusted Revenue for the year ended 31 December 2023 and 2022
and its reconciliation to Total revenue.
The following table provides details of Total revenue, broken down by revenue-generating activity,
for the years ended 31 December 2023 and 2022.
31 30 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
In 2023, the Group’s Total revenue increased 11%
year on year to RUB 104,748 million reflecting
the combination of a 7% year-on-year rise in Adjusted
Revenue (a key component) and a 35% year-on-year
increase in “pass through” items (a combination
of “Infrastructure and locomotive tariffs: loaded
trips” and “Services provided by other transportation
organisations”).
| 2022 | 2023 | Change | |
| RUB mln | RUB mln | % | |
| Railway transportation – operators services (tariff borne by the Group) 1 | 30,341 | 36,656 | 21% |
| Railway transportation – operators services (tariff borne by the client) | 60,197 | 62,930 | 5% |
| Operating leasing of rolling stock | 3,372 | 4,538 | 35% |
| Other | 564 | 624 | 11% |
| Total revenue | 94,474 | 104,748 | 11% |
| Includes “Infrastructure and locomotive tariffs: loaded trips” for 2023 of RUB 13,015 million (2022: RUB 10,465 million) and “Services | |||
| provided by other transportation organisations” of RUB 4,345 million (2022: RUB 2,399 million). | |||
Adjusted Revenue
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 the rail infrastructure provider, 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.
In 2023, the Group’s Adjusted Revenue was
RUB 87,388 million, up 7% year on year, largely
driven by the increase in Net Revenue from
Operation of Rolling Stock.
Operational information
2022 2023 Change
%
Freight Rail Turnover, billion tonnes-km (including Engaged Fleet) 141.4 138.8 -2%
Transportation Volume, million tonnes (including Engaged Fleet) 80.4 78.6 -2%
Freight Rail Turnover, billion tonnes-km (excluding Engaged Fleet) 134.9 129.0 -4%
Transportation Volume, million tonnes (excluding Engaged Fleet) 77.0 73.5 -5%
Average Price per Trip, RUB 64,553 71,125 10%
Average Rolling Stock Operated, units 56,637 57,153 1%
Average Distance of Loaded Trip, km 1,733 1,741 0%
Average Number of Loaded Trips per Railcar 21.0 20.0 -5%
Total Empty Run Ratio (for all types of rolling stock), % 50% 45% -
Empty Run Ratio for gondola cars, % 41% 36% -
Share of Empty Run Kilometres paid by Globaltrans, % 99% 99% -
Total Fleet, units (at period end), including: 66,115 65,644 -1%
Owned Fleet, units (at period end) 62,354 61,813 -1%
Leased-in Fleet, units (at period end) 3,761 3,831 2%
Leased-out Fleet, units (at period end) 7,474 6,164 -18%
Average age of Owned Fleet, years (at period end) 14.5 15.2 -
Total number of employees (at period end) 1,768 1,802 2%
Financial and Operational Review
1
The principal components of Adjusted Revenue
include: (i) Net Revenue from Operation of Rolling
Stock, (ii) Revenue from operating leasing of rolling
stock, (iii) Net Revenue from Engaged Fleet,
and (iv) other revenues generated by the Group’s
auxiliary business activities, including freight
forwarding, repair and maintenance services
provided to third parties, and other.
| 2022 | 2023 | Change | |
| RUB mln | RUB mln | % | |
| Total revenue | 94,474 | 104,748 | 11% |
| Minus “pass through” items | 12,864 | 17,360 | 35% |
| Infrastructure and locomotive tariffs: loaded trips | 10,465 | 13,015 | 24% |
| Services provided by other transportation organisations | 2,399 | 4,345 | 81% |
| Adjusted Revenue | 81,610 | 87,388 | 7% |
The following table provides details of Adjusted Revenue for the year ended 31 December 2023 and 2022
and its reconciliation to Total revenue.
The following table provides details of Total revenue, broken down by revenue-generating activity,
for the years ended 31 December 2023 and 2022.
31 30 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
| 2022 | 2023 | Change | |
| RUB mln | RUB mln | % | |
| Cost of sales | 53,929 | 57,899 | 7% |
| Selling and marketing costs | 282 | 347 | 23% |
| Administrative expenses | 4,626 | 5,494 | 19% |
| Total cost of sales, selling and marketing costs and administrative expenses | 58,838 | 63,740 | 8% |
The Group’s Total cost of sales, selling and marketing
costs and administrative expenses rose 8% year
on year to RUB 63,740 million in 2023 principally
due to the following factors:
• “Pass through” cost items (a combination
of “Infrastructure and locomotive tariffs:
loaded trips” and “Services provided by other
transportation organisations”) increased 35%
year on year to RUB 17,360 million primarily
due to an increase in the proportion of clients
that pay Infrastructure and locomotive tariffs:
loaded trips through the Group along with the rise
in regulated infrastructure and locomotive tariffs
and a higher number of Engaged Fleet operations.
• The Group’s Total cost of sales, selling and
marketing costs and administrative expenses
adjusted for “pass-through” cost items rose 1%
year on year to RUB 46,380 million in 2023, due to:
– An 8% year-on-year increase in Total Operating
Cash Costs to RUB 35,049 million which
largely reflected accelerated cost inflation,
primarily in the regulated tariffs for the traction
of empty railcars, along with an increase
in employee benefit expense and repairs and
maintenance costs.
– Total Operating Non-Cash Costs decreased
17% year on year to RUB 11,331 million largely
due to the fact that there was no significant
impairment of rolling stock in 2023 compared
to the RUB 3,933 million impairment in 2022
related to rolling stock blocked in Ukraine.
This was partially offset by a 31% increase
in Depreciation of property, plant and
equipment largely due to both the addition
as well as the higher depreciation of acquired
rolling stock 2 along with a decrease in the scrap
value of rolling stock.
1 In February 2023, Globaltrans completed the restructuring of its liquids segment with the intra-group acquisition of 5,800 railcars
by BaltTransServis from Spacecom (including Spacecom Trans), a 65.25% owned leasing subsidiary of Globaltrans, and the subsequent
disposal of Globaltrans’ shareholding in Spacecom (including 680 units) to its minority shareholder. 2 Including wheel pairs.
Financial and Operational Review
Net Revenue from Operation of Rolling Stock
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
(included in the EU IFRS line item “Infrastructure and
locomotive tariffs: loaded trips”).
The Group’s Net Revenue from Operation of Rolling Stock,
which accounted for 93% of the Group’s Adjusted Revenue
in 2023, increased 6% year on year to RUB 81,102 million*
largely reflecting robust average pricing.
Revenue from operating leasing of rolling stock
Revenue from operating leasing of rolling
stock contributed 5% of the Group’s Adjusted
Revenue in 2023 and increased 35% year on year
to RUB 4,538 million. This reflected a rise
in the average leasing rates which was partially
offset by a decline in the average number of leased-
out fleet during the reporting year due to the sale
of some railcars as part of the disposal of Globaltrans’
shareholding in Spacecom 1 .
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
(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 contributed
about 1% of the Group’s Adjusted Revenue in 2023,
increased 28% year on year to RUB 1,124 million*,
largely reflecting a rise in the number of Engaged Fleet
operations.
Other revenue
Other revenue, comprising less than 1% of the Group’s
Adjusted Revenue in 2023, includes revenues generated
by the Group’s auxiliary business activities such as freight
forwarding, repair and maintenance services provided
to third parties, and other. It increased 11% year on year
to RUB 624 million in 2023.
Cost of sales, selling and marketing costs and administrative expenses
The following table provides a breakdown of Cost of sales, selling and marketing costs and administrative
| 2022 | 2023 | Change | |
| RUB mln | RUB mln | % | |
| Net Revenue from Operation of Rolling Stock | 76,798 * | 81,102 * | 6% |
| Operating leasing of rolling stock | 3,372 | 4,538 | 35% |
| Net Revenue from Engaged Fleet | 876 * | 1,124 * | 28% |
| Other | 564 | 624 | 11% |
| Adjusted Revenue | 81,610 | 87,388 | 7% |
The following table provides a breakdown of the components of Adjusted Revenue for the years ended
31 December 2023 and 2022.
33 32 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
1
Under contracts where the infrastructure 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.
“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 Group 1
and is reflected in equal amounts in both the Group’s
Total revenue and Cost of sales.
The 24% year-on-year increase in this item in 2023
to RUB 13,015 million primarily reflected the higher
proportion of clients that pay infrastructure and
locomotive tariffs: loaded trips through the Group
along with higher regulated infrastructure and
locomotive tariffs.
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).
2022 2023 Change
RUB mln RUB mln %
“Pass through” cost items 12,864 17,360 35%
Infrastructure and locomotive tariffs: loaded trips 10,465 13,015 24%
Services provided by other transportation organisations 2,399 4,345 81%
Total cost of sales, selling and marketing costs and administrative expenses
45,973 46,380 1%
32,373 35,049 8%
17,283* 18,297* 6%
6,781 8,174 21%
3,943 4,274 8%
2,017 1,958 -3%
1,258* 1,193* -5%
116 94 -19%
35 59 69%
941 1,001 6%
13,600 11,331 -17%
6,753 8,853 31%
3,933 (22) NM
2,597 2,446 -6%
310 284 -8%
(13) (280) 2120%
21 50 145%
0.3 0.4 32%
58,838 63,740 8%
Financial and Operational Review
Services provided by other transportation
organisations rose 81% year on year
to RUB 4,345 million in 2023 primarily due to a higher
number of Engaged Fleet operations along with
the increased cost of fleet engagement.
Total Operating Cash Costs
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.
Total Operating Cash Costs for 2023
of RUB 35,049 million were 8% higher compared
to the previous year due to a combination
of the factors described below.
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:
The following table provides a breakdown of the Total Operating Cash Costs for the years
ended 31 December 2023 and 2022.
35 34 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
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.
“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 Group 1
and is reflected in equal amounts in both the Group’s
Total revenue and Cost of sales.
The 24% year-on-year increase in this item in 2023
to RUB 13,015 million primarily reflected the higher
proportion of clients that pay infrastructure and
locomotive tariffs: loaded trips through the Group
along with higher regulated infrastructure and
locomotive tariffs.
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).
| 2023 | 2022 | 2023 | Change | |
| % of total | RUB mln | RUB mln | % | |
| Empty Run Costs | 52% | 17,283 * | 18,297* | 6% |
| Employee benefit expense | 23% | 6,781 | 8,174 | 21% |
| Repairs and maintenance | 12% | 3,943 | 4,274 | 8% |
| Fuel and spare parts – locomotives | 6% | 2,017 | 1,958 | -3% |
| Infrastructure and Locomotive Tariffs – Other Tariffs | 3% | 1,258 * | 1,193 * | -5% |
| Engagement of locomotive crews | 0.3% | 116 | 94 | -19% |
| Expense relating to short-term leases (rolling stock) | 0.2% | 35 | 59 | 69% |
| Other Operating Cash Costs | 3% | 941 | 1,001 | 6% |
| Total Operating Cash Costs | 100% | 32,373 | 35,049 | 8% |
2022 2023 Change
RUB mln RUB mln %
“Pass through” cost items 12,864 17,360 35%
Infrastructure and locomotive tariffs: loaded trips 10,465 13,015 24%
Services provided by other transportation organisations 2,399 4,345 81%
Total cost of sales, selling and marketing costs and administrative expenses
| Total Operating Cash Costs | (adjusted for “pass through” cost items) | ||
| Empty Run Costs | |||
| Employee benefit expense | |||
| Repairs and maintenance | |||
| Fuel and spare parts – locomotives | |||
| Infrastructure and Locomotive Tariffs – Other Tariffs | |||
| Engagement of locomotive crews | |||
| Expense relating to short-term leases (rolling stock) | |||
| Other Operating Cash Costs | |||
| Total Operating Non-Cash Costs | |||
| Depreciation of property, plant and equipment | |||
| Impairment/(reversal of impairment) of property, plant and equipment | |||
| Depreciation of right-of-use assets | |||
| Loss on derecognition arising on capital repairs | |||
| Gain on sale of property, plant and equipment | |||
| Net impairment losses on trade and other receivables | |||
| Amortisation of intangible assets | |||
| Total cost of sales, selling and marketing costs and administrative expenses | |||
45,973 46,380 1%
32,373 35,049 8%
17,283* 18,297* 6%
6,781 8,174 21%
3,943 4,274 8%
2,017 1,958 -3%
1,258* 1,193* -5%
116 94 -19%
35 59 69%
941 1,001 6%
13,600 11,331 -17%
6,753 8,853 31%
3,933 (22) NM
2,597 2,446 -6%
310 284 -8%
(13) (280) 2120%
21 50 145%
0.3 0.4 32%
58,838 63,740 8%
Financial and Operational Review
Services provided by other transportation
organisations rose 81% year on year
to RUB 4,345 million in 2023 primarily due to a higher
number of Engaged Fleet operations along with
the increased cost of fleet engagement.
Total Operating Cash Costs
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.
Total Operating Cash Costs for 2023
of RUB 35,049 million were 8% higher compared
to the previous year due to a combination
of the factors described below.
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:
The following table provides a breakdown of the Total Operating Cash Costs for the years
ended 31 December 2023 and 2022.
35 34 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Other Operating Cash Costs, which comprised 3%
of the Group’s Total Operating Cash Costs, increased
6% year on year to RUB 1,001 million in 2023.
Total Operating Non-Cash Costs
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 (gains)/losses on trade and other
receivables”, “Impairment/(reversal of impairment)
of property, plant and equipment” and “(Gain)/loss
on sale of property, plant and equipment”.
Empty Run Costs
Empty Run Costs (a non-IFRS financial measure
meaning costs payable to the rail infrastructure
provider 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, which accounted for 52% of the Group’s
Total Operating Cash Costs in 2023, increased 6% year
on year to RUB 18,297 million* due to:
• A rise in regulated tariffs for the traction
of empty railcars of 10% from January 2023 and
by an additional 10.75% from December 2023, which
was partially offset by:
• A significant improvement in the Empty Run Ratio
for gondola cars to 36% (2022: 41%) along with
a small year-on-year decline in the Group’s Freight
Rail Turnover.
Employee benefit expense
Employee benefit expense, which represented 23%
of the Group’s Total Operating Cash Costs in 2023,
increased 21% year on year to RUB 8,174 million. This
resulted from inflation-driven growth in wages and
salaries along with performance-driven increases
in bonuses. The average headcount was little changed
(down 1% year on year).
Repairs and maintenance
Repairs and maintenance costs, which comprised 12%
of the Group’s Total Operating Cash Costs in 2023,
increased 8% year on year to RUB 4,274 million, largely
resulting from:
• An inflation-driven rise in the cost of certain repairs,
services and spare parts;
• An increase in the cost of locomotive repairs;
• A decline in the number of scheduled depot repairs.
Fuel and spare parts – locomotives
Fuel and spare parts – locomotives expenses, which
accounted for 6% of the Group’s Total Operating
Cash Costs in 2023, declined 3% year on year
to RUB 1,958 million largely reflecting lower fuel expenses.
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 Сost 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.
Infrastructure and Locomotive Tariffs – Other Tariffs
represented 3% of the Group’s Total Operating
Cash Costs in 2023 and decreased 5% year on year
to RUB 1,193 million* with the rise in the regulated
infrastructure and locomotive tariffs more than offset
by the continued cost optimisation measures.
Engagement of locomotive crews
Costs related to the engagement of locomotive crews
from the rail infrastructure provider in 2023 (less than
1% of the Group’s Total Operating Cash Costs) declined
19% year on year to RUB 94 million due to the reduction
in the amount of outsourcing of locomotive crews
as the Group largely used its in-house crews.
Expense relating to short-term leases (rolling stock)
In 2023, Expense relating to short-term leases (rolling
stock), representing less than 1% of the Group’s
Total Operating Cash Costs, rose 69% year on year
to RUB 59 million primarily due to an increase
in the average number of fleet leased-in under short-
term operating leases along with the rise in average
leasing rates.
Financial and Operational Review
The following table provides a breakdown of the Other Operating Cash Costs for the years ended
31 December 2023 and 2022.
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 (office)”,
“Taxes (other than income tax and value added
taxes)” and “Other expenses”.
37 36 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
of the Group’s Total Operating Cash Costs, increased
6% year on year to RUB 1,001 million in 2023.
Total Operating Non-Cash Costs
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 (gains)/losses on trade and other
receivables”, “Impairment/(reversal of impairment)
of property, plant and equipment” and “(Gain)/loss
on sale of property, plant and equipment”.
Empty Run Costs
Empty Run Costs (a non-IFRS financial measure
meaning costs payable to the rail infrastructure
provider 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, which accounted for 52% of the Group’s
Total Operating Cash Costs in 2023, increased 6% year
on year to RUB 18,297 million* due to:
• A rise in regulated tariffs for the traction
of empty railcars of 10% from January 2023 and
by an additional 10.75% from December 2023, which
was partially offset by:
• A significant improvement in the Empty Run Ratio
for gondola cars to 36% (2022: 41%) along with
a small year-on-year decline in the Group’s Freight
Rail Turnover.
Employee benefit expense
Employee benefit expense, which represented 23%
of the Group’s Total Operating Cash Costs in 2023,
increased 21% year on year to RUB 8,174 million. This
resulted from inflation-driven growth in wages and
salaries along with performance-driven increases
in bonuses. The average headcount was little changed
(down 1% year on year).
Repairs and maintenance
Repairs and maintenance costs, which comprised 12%
of the Group’s Total Operating Cash Costs in 2023,
increased 8% year on year to RUB 4,274 million, largely
resulting from:
• An inflation-driven rise in the cost of certain repairs,
services and spare parts;
• An increase in the cost of locomotive repairs;
• A decline in the number of scheduled depot repairs.
Fuel and spare parts – locomotives
Fuel and spare parts – locomotives expenses, which
accounted for 6% of the Group’s Total Operating
Cash Costs in 2023, declined 3% year on year
to RUB 1,958 million largely reflecting lower fuel expenses.
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 Сost 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.
Infrastructure and Locomotive Tariffs – Other Tariffs
represented 3% of the Group’s Total Operating
Cash Costs in 2023 and decreased 5% year on year
to RUB 1,193 million* with the rise in the regulated
infrastructure and locomotive tariffs more than offset
by the continued cost optimisation measures.
Engagement of locomotive crews
Costs related to the engagement of locomotive crews
from the rail infrastructure provider in 2023 (less than
1% of the Group’s Total Operating Cash Costs) declined
19% year on year to RUB 94 million due to the reduction
in the amount of outsourcing of locomotive crews
as the Group largely used its in-house crews.
Expense relating to short-term leases (rolling stock)
In 2023, Expense relating to short-term leases (rolling
stock), representing less than 1% of the Group’s
Total Operating Cash Costs, rose 69% year on year
to RUB 59 million primarily due to an increase
in the average number of fleet leased-in under short-
term operating leases along with the rise in average
leasing rates.
| 2022 | 2023 | Change | |
| RUB mln | RUB mln | % | |
| Legal, consulting and other professional fees | 94 | 114 | 21% |
| Expense relating to short-term leases (office) | 93 | 94 | 1% |
| Advertising and promotion | 41 | 57 | 39% |
| Auditors’ remuneration | 46 | 50 | 8% |
| Communication costs | 25 | 25 | 3% |
| Information services | 15 | 19 | 22% |
| Taxes (other than on income and value added taxes) | 24 | 14 | -43% |
| Other expenses | 603 | 628 | 4% |
| Other Operating Cash Costs | 941 | 1,001 | 6% |
Financial and Operational Review
The following table provides a breakdown of the Other Operating Cash Costs for the years ended
31 December 2023 and 2022.
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 (office)”,
“Taxes (other than income tax and value added
taxes)” and “Other expenses”.
37 36 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
A 17% year-on-year decrease in Total Operating Non-
Cash Costs to RUB 11,331 million in 2023 stemmed
primarily from:
• No large impairment of property, plant and
equipment in 2023 compared to RUB 3,933 million
in 2022 related to the impairment of rolling stock
blocked in Ukraine.
• A 31% year-on-year rise in Depreciation of property,
plant and equipment largely due to both the addition
as well as the higher depreciation of acquired rolling
stock 2 along with a decrease in the scrap value
of rolling stock.
Adjusted EBITDA (non-IFRS financial measure)
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”,
“Other gains/(losses) – 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”, “Reversal
of impairment of intangible assets” and “Profit from sale
of subsidiary”.
The Group’s Adjusted EBITDA increased 6% year on year
to RUB 52,289 million in 2023. The Adjusted EBITDA
Margin remained stable year on year at 60% on the back
of the 7% year-on-year increase in Adjusted Revenue and
an 8% year-on-year rise in Total Operating Cash Costs.
Financial and Operational Review
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.
2 Including wheel pairs.
The following table provides details on Adjusted EBITDA for the years ended 31 December 2023 and 2022,
and its reconciliation to EBITDA and Profit for the year.
2022 2023 Change
RUB mln RUB mln %
6,753 8,853 31%
2,597 2,446 -6%
310 284 -8%
21 50 145%
0.3 0.4 32%
(13) (280) 2120%
3,933 (22) NM
13,600 11,331 -17%
The following table provides a breakdown of the Total Operating Non-Cash Costs for the years ended 31 December
2023 and 2022.
39 38 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Cash Costs to RUB 11,331 million in 2023 stemmed
primarily from:
• No large impairment of property, plant and
equipment in 2023 compared to RUB 3,933 million
in 2022 related to the impairment of rolling stock
blocked in Ukraine.
• A 31% year-on-year rise in Depreciation of property,
plant and equipment largely due to both the addition
as well as the higher depreciation of acquired rolling
stock 2 along with a decrease in the scrap value
of rolling stock.
Adjusted EBITDA (non-IFRS financial measure)
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”,
“Other gains/(losses) – 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”, “Reversal
of impairment of intangible assets” and “Profit from sale
of subsidiary”.
The Group’s Adjusted EBITDA increased 6% year on year
to RUB 52,289 million in 2023. The Adjusted EBITDA
Margin remained stable year on year at 60% on the back
of the 7% year-on-year increase in Adjusted Revenue and
an 8% year-on-year rise in Total Operating Cash Costs.
Financial and Operational Review
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.
2 Including wheel pairs.
| 2022 | 2023 | Change | |
| RUB mln | RUB mln | % | |
| Profit for the year | 24,920 | 38,618 | 55% |
| Plus (Minus) | |||
| Income tax expense | 8,232 | 8,469 | 3% |
| Finance costs/(income) – net | 1,150 | (2,962) | NM |
| Net foreign exchange transaction gains on financing activities | 641 | 3,194 | 398% |
| Amortisation of intangible assets | 0.3 | 0.4 | 32% |
| Depreciation of right-of-use assets | 2,597 | 2,446 | -6% |
| Depreciation of property, plant and equipment | 6,753 | 8,853 | 31% |
| EBITDA | 44,293 | 58,618 | 32% |
| Minus (Plus) | |||
| Loss on derecognition arising on capital repairs | (310) | (284) | -8% |
| Net foreign exchange transaction gains on financing activities | 641 | 3,194 | 398% |
| Other losses – net | (1,335) | (283) | -79% |
| Profit from sale of subsidiary | - | 3,400 | NM |
| Gain on sale of property, plant and equipment | 13 | 280 | 2120% |
| (Impairment)/reversal of impairment of property, plant and equipment | (3,933) | 22 | NM |
| Adjusted EBITDA | 49,216 | 52,289 | 6% |
The following table provides details on Adjusted EBITDA for the years ended 31 December 2023 and 2022,
and its reconciliation to EBITDA and Profit for the year.
2022 2023 Change
RUB mln RUB mln %
| Depreciation of property, plant and equipment | |||
| Depreciation of right-of-use assets | |||
| Loss on derecognition arising on capital repairs | 1 | ||
| Net impairment losses on trade and other receivables | |||
| Amortisation of intangible assets | |||
| Gain on sale of property, plant and equipment | |||
| Impairment/(reversal of impairment) of property, plant and equipment | |||
| Total Operating Non-Cash Costs |
6,753 8,853 31%
2,597 2,446 -6%
310 284 -8%
21 50 145%
0.3 0.4 32%
(13) (280) 2120%
3,933 (22) NM
13,600 11,331 -17%
The following table provides a breakdown of the Total Operating Non-Cash Costs for the years ended 31 December
2023 and 2022.
39 38 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Finance costs
Total finance costs for 2023 decreased 8% year
on year to RUB 2,405 million. A 7% year-on-
year rise in Total interest expense calculated
using the effective interest rate method (related
to bank borrowings and non-convertible bonds)
to RUB 1,939 million was more than offset
by the 40% year-on-year decline in Other lease
liabilities to RUB 465 million as the Group decreased
the number of fleet leased-in under long-term
operating leases.
Finance income
In 2023, the Group’s Total finance income increased
168% year on year to RUB 2,173 million primarily
due to increased bank balances along with
a rise in the interest rates on deposits compared
to the previous year.
Net foreign exchange transaction gains/(losses)
on financing activities
The Group had Net foreign exchange transaction
gains on financing activities of RUB 3,194 million
in 2023 compared to RUB 641 million in the previous
year. This resulted from foreign exchange volatility
on the available cash and cash equivalents
denominated in foreign currency.
Profit from sale of subsidiary
The Group had a Profit from sale of subsidiary
in the amount of RUB 3,400 million in 2023 (2022:
nil) which reflected the disposal of the Company’s
shareholding in Spacecom 1 .
Profit before income tax
The Group reported a year-on-year increase of 42%
in Profit before income tax to RUB 47,087 million
in 2023, reflecting a 29% year-on-year increase
in the Group’s Operating profit to RUB 44,125 million,
which was largely linked to the factors described
above, including:
• No large impairment of property, plant and
equipment in 2023 compared to RUB 3,933 million
the previous year related to the impairment
of rolling stock blocked in Ukraine.
• RUB 3,400 million of Profit from sale of subsidiary
related to the disposal of the Company’s
shareholding in Spacecom.
• RUB 3,194 million of Net foreign exchange
transaction gains on financing activities in 2023
compared to RUB 641 million in the previous year.
Income tax expense
Income tax expense was up 3% year on year
to RUB 8,469 million in 2023.
Profit for the year
The Group’s Profit for the year increased 55% year
on year to RUB 38,618 million reflecting the factors
described above.
Profit for the year attributable to the owners
of the Company increased 53% year on year
to RUB 38,620 million reflecting the factors
described above.
Financial and Operational Review
1 In February 2023, Globaltrans completed the restructuring of its liquids segment with the intra-group acquisition of 5,800 railcars
by BaltTransServis from Spacecom (including Spacecom Trans), a 65.25% owned leasing subsidiary of Globaltrans, and the subsequent
disposal of Globaltrans’ shareholding in Spacecom (including 680 units) to its minority shareholder.
Finance income and costs
The following table provides a breakdown of Finance income and costs for the years ended
31 December 2023 and 2022.
41 40 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Total finance costs for 2023 decreased 8% year
on year to RUB 2,405 million. A 7% year-on-
year rise in Total interest expense calculated
using the effective interest rate method (related
to bank borrowings and non-convertible bonds)
to RUB 1,939 million was more than offset
by the 40% year-on-year decline in Other lease
liabilities to RUB 465 million as the Group decreased
the number of fleet leased-in under long-term
operating leases.
Finance income
In 2023, the Group’s Total finance income increased
168% year on year to RUB 2,173 million primarily
due to increased bank balances along with
a rise in the interest rates on deposits compared
to the previous year.
Net foreign exchange transaction gains/(losses)
on financing activities
The Group had Net foreign exchange transaction
gains on financing activities of RUB 3,194 million
in 2023 compared to RUB 641 million in the previous
year. This resulted from foreign exchange volatility
on the available cash and cash equivalents
denominated in foreign currency.
Profit from sale of subsidiary
The Group had a Profit from sale of subsidiary
in the amount of RUB 3,400 million in 2023 (2022:
nil) which reflected the disposal of the Company’s
shareholding in Spacecom 1 .
Profit before income tax
The Group reported a year-on-year increase of 42%
in Profit before income tax to RUB 47,087 million
in 2023, reflecting a 29% year-on-year increase
in the Group’s Operating profit to RUB 44,125 million,
which was largely linked to the factors described
above, including:
• No large impairment of property, plant and
equipment in 2023 compared to RUB 3,933 million
the previous year related to the impairment
of rolling stock blocked in Ukraine.
• RUB 3,400 million of Profit from sale of subsidiary
related to the disposal of the Company’s
shareholding in Spacecom.
• RUB 3,194 million of Net foreign exchange
transaction gains on financing activities in 2023
compared to RUB 641 million in the previous year.
Income tax expense
Income tax expense was up 3% year on year
to RUB 8,469 million in 2023.
Profit for the year
The Group’s Profit for the year increased 55% year
on year to RUB 38,618 million reflecting the factors
described above.
Profit for the year attributable to the owners
of the Company increased 53% year on year
to RUB 38,620 million reflecting the factors
described above.
Financial and Operational Review
1 In February 2023, Globaltrans completed the restructuring of its liquids segment with the intra-group acquisition of 5,800 railcars
by BaltTransServis from Spacecom (including Spacecom Trans), a 65.25% owned leasing subsidiary of Globaltrans, and the subsequent
disposal of Globaltrans’ shareholding in Spacecom (including 680 units) to its minority shareholder.
Finance income and costs
The following table provides a breakdown of Finance income and costs for the years ended
31 December 2023 and 2022.
| 2022 | 2023 | Change | |
| RUB mln | RUB mln | % | |
| Interest expense: | |||
| Bank borrowings | (1,258) | (1,734) | 38% |
| Non-convertible bonds | (561) | (205) | -64% |
| Total interest expense calculated using the effective interest rate method | (1,820) | (1,939) | 7% |
| Other lease liabilities | (781) | (465) | -40% |
| Total interest expense | (2,600) | (2,403) | -8% |
| Other finance costs | (2) | (2) | 2% |
| Total finance costs | (2,602) | (2,405) | -8% |
| Interest income: | |||
| Bank balances | 521 | 1,654 | 218% |
| Short term deposits | 222 | 493 | 122% |
| Loans to related parties | 18 | 10 | -46% |
| Loans to third parties | - | 3 | NM |
| Total interest income calculated using the effective interest rate method | 761 | 2,159 | 184% |
| Finance leases – related parties | 2 | 1 | -62% |
| Finance leases – third parties | 17 | 13 | -18% |
| Total interest income | 779 | 2,173 | 179% |
| Other finance income | 32 | - | -100% |
| Total finance income | 812 | 2,173 | 168% |
| Net foreign exchange transaction losses on borrowings and other liabilities | - | (71) | NM |
| Net foreign exchange transaction gains on cash and cash equivalents and othermonetary assets | 641 | 3,265 | 409% |
| Net foreign exchange transaction gains on financing activities | 641 | 3,194 | 398% |
| Net finance (costs)/income | (1,150) | 2,962 | NM |
41 40 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
| Financial and Operational Review | ||
| The Group manages its liquidity based on expected | ||
| cash flows. As at 31 December 2023, the Group | Cash flows from financing activities | |
| had Net Working Capital of RUB 6,048 million *. | Net cash outflows from borrowings and financial leases | |
| Given its anticipated operating cash flow and | Proceeds from bank borrowings | |
| borrowings, the Group believes that it has sufficientworking capital to operate successfully. | Repayments of borrowings | |
| Repayments of non-convertible unsecured bonds | ||
| Purchase of treasury shares | ||
| Principal elements of lease payments for other lease liabilities | ||
| Interest paid on bank borrowings and non-convertible unsecured bonds | ||
| The following table sets out the principal components of the Group’s consolidated cash flow statement | Interest paid on other lease liabilities | |
| Dividends paid to non-controlling interests in subsidiaries | ||
| 2022 2023 | Net cash used in financing activities | |
| RUB mln RUB mln | Net increase in cash and cash equivalents | |
| 47,963 52,042 | Exchange gains on cash and cash equivalents | |
| 668 (2,848) | Cash and cash equivalents at beginning of the year | |
| 548 442 | Cash and cash equivalents at the end of the year | |
| (86) (2,424) | ||
| (1,285) 1,892 | Net cash from operating activities | |
| 389 (260) | ||
| 1,660 (2,489) | In 2023, Net cash from operating activities increased2% year on year to RUB 40,926 million primarily | |
| (557) (10) | due to the following factors: | |
| 48,631 49,194• | Cash generated from operations (after “Changes | |
| (8,455) (8,267) | in working capital”) rose 1% year on yearto RUB 49,194 million. |
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 40,176 40,926
Cash flows from investing activities
Payment for acquisition of non-controlling interest (8,800) -
Proceeds from sale of subsidiaries – net of cash disposed of - 4,772
Payment for rolling stock to disposed subsidiary - (6,603)
Purchases of property, plant and equipment (11,422) (8,260)
Purchases of intangible assets (2) (1)
Proceeds from sale of property, plant and equipment 238 627
Loans granted to third parties - (885)
Loans granted to related parties (800) -
Loan repayments received from third parties - 885
Loan repayments received from related parties 400 400
Interest received 761 2,161
Receipts from finance lease receivable – third parties 28 43
Receipts from finance lease receivable – related parties 9 11
Other (65) -
Net cash used in investing activities (19,652) (6,851)
Cash flows
for the years ended 31 December 2023 and 2022.
1 Net cash inflows (outflows) from borrowings and financial leases (a non-IFRS financial measure) is 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 In February 2023, Globaltrans completed the restructuring of its liquids segment with the intra-group acquisition of 5,800 railcars
by BaltTransServis from Spacecom (including Spacecom Trans), a 65.25% owned leasing subsidiary of Globaltrans, and the subsequent disposal
of Globaltrans’ shareholding in Spacecom (including 680 units) to its minority shareholder. Deferred payments for the purchased railcars were
executed after the disposal of Spacecom, thus as per IFRS requirements these payments have been reflected in the cash flow statement for 2023.
| 2022 | 2023 | |
| RUB mln | RUB mln | |
| 1 : | (10,549) | (5,138) |
| 2,750 | 8,800 | |
| (9,549) | (10,188) | |
| (3,750) | (3,750) | |
| (114) | - | |
| (2,403) | (2,478) | |
| (1,939) | (2,051) | |
| (786) | (460) | |
| (1,728) | (334) | |
| (17,520) | (10,462) | |
| 3,005 | 23,614 | |
| 193 | 3,111 | |
| 12,855 | 16,052 |
16,052 42,777
Liquidity and capital resources
In 2023, the Group’s capital expenditure consisted
principally 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 through operating cash flow and
available cash and cash equivalents.
• Tax paid was 2% lower year on year
at RUB 8,267 million.
Net cash used in investing activities
Net cash used in investing activities decreased
65% (or RUB 12,801 million) year on year
to RUB 6,851 million largely reflecting:
• A 28% or RUB 3,162 million year-on-year decrease
in Purchases of property, plant and equipment
(on a cash basis; including maintenance CAPEX)
to RUB 8,260 million on the back of significantly lower
investments given elevated new rolling stock prices.
• A RUB 6,603 million Payment for rolling stock
to a disposed subsidiary in 2023 related
to the completion of the intra-group acquisition
of railcars by BaltTransServis from Spacecom
(a leasing subsidiary disposed of in February 2023) 2 .
• A RUB 4,772 million Proceeds from sale
of subsidiaries – net of cash disposed of in 2023
related to the disposal of the Group’s shareholding
in Spacecom after acquiring the majority
of its railcars compared to a RUB 8,800 million
Payment for acquisition of non-controlling interest
(the remaining 40% shareholding in BaltTransServis)
that was carried out in the first half of 2022.
43 42 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Net cash used in financing activities
Net cash used in financing activities decreased 40% year
on year to RUB 10,462 million in 2023, due to the factors
described below:
• The Group continued to repay its debt in 2023 with
Net cash outflow from borrowings and financial
leases amounting to RUB 5,138 million compared
to RUB 10,549 million in the previous year.
• Interest paid on bank borrowings and non-convertible
unsecured bonds increased 6% year on year
to RUB 2,051 million in 2023.
• Interest paid on other lease liabilities declined
41% year on year to RUB 460 million on the back
of a decrease in the number of rolling stock
leased-in under long-term operating leases.
• Dividends paid to non-controlling interests
in subsidiaries decreased 81% year on year
to RUB 334 million in 2023 1 .
Capital expenditure (including M&A)
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” and “Principal
elements of lease payments for leases with financial
institutions”.
Total CAPEX adjusted for M&A (a non-IFRS financial
measure) calculated as a combination of Total CAPEX
(which includes maintenance CAPEX) and cash inflows
and outflows from acquisitions and disposals.
The Group’s Total CAPEX adjusted for M&A
(on a cash basis, including maintenance CAPEX)
was RUB 10,092 million, a decrease of 50% compared
to 2022 reflecting the following factors:
• Total CAPEX (including maintenance CAPEX) down
28% year on year to RUB 8,261 million in 2023:
– Maintenance CAPEX increased 4% year on year
to RUB 6,637 million*.
– Expansion CAPEX decreased 68%
to RUB 1,623 million 2 reflecting the Group’s
conservative approach to investment given elevated
new rolling stock prices.
• A RUB 6,603 million Payment for rolling stock
to a disposed subsidiary in 2023 related
to the completion of the intra-group acquisition of tank
cars by BaltTransServis from Spacecom (a leasing
subsidiary disposed of in February 2023).
• A RUB 4,772 million Proceeds from sale
of subsidiaries – net of cash disposed of in 2023
related to the disposal of the Group’s shareholding
in Spacecom after acquiring the majority
of its railcars compared to a RUB 8,800 million
Payment for acquisition of non-controlling interest
(the remaining 40% shareholding in BaltTransServis)
that was carried out in the first half of 2022.
1 Effective from February 2023, Globaltrans owns 100% shareholdings in all its subsidiaries.
2 Including Purchases of intangible assets.
Financial and Operational Review
The following table sets out the principal components of the Group’s Total CAPEX and Total CAPEX adjusted
for M&A for the years ended 31 December 2023 and 2022.
The Group’s capital expenditure (including maintenance
CAPEX) on an accrual basis was RUB 9,070 million
in 2023 (2022: RUB 11,186 million). The difference
between capital expenditure given on a cash basis
and on an accrual basis is principally because
of a time lag between the prepayments for and
the delivery of rolling stock.
Free Cash Flow
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”, “Interest
paid on leases with financial institutions”, “Payment
for acquisition of non-controlling interest”, “Payment
for rolling stock to disposed subsidiary” plus
“Proceeds from sale of subsidiaries – net of cash
disposed of”.
Free Cash Flow increased 74% or RUB 11,021 million
year on year to RUB 25,845 million in 2023, primarily
due to:
• A 1% year-on-year increase in Cash generated from
operations (after “Changes in working capital”)
to RUB 49,194 million.
• Tax paid which decreased 2% year on year
to RUB 8,267 million.
• An 8% year-on-year decrease in the combined
“Principal elements of lease payments for other
lease liabilities” and “Interest paid on other lease
liabilities” which was down to RUB 2,938 million
as the Group decreased the number of rolling
stock leased-in under long-term operating leases.
• The Group’s Total CAPEX adjusted
for M&A decreased 50% year on year
to RUB 10,092 million reflecting the factors
described above.
The following table sets out details on Free Cash Flow and Attributable Free Cash Flow for the years ended
31 December 2023 and 2022, and its reconciliation to Cash generated from operations.
45 44 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Net cash used in financing activities decreased 40% year
on year to RUB 10,462 million in 2023, due to the factors
described below:
• The Group continued to repay its debt in 2023 with
Net cash outflow from borrowings and financial
leases amounting to RUB 5,138 million compared
to RUB 10,549 million in the previous year.
• Interest paid on bank borrowings and non-convertible
unsecured bonds increased 6% year on year
to RUB 2,051 million in 2023.
• Interest paid on other lease liabilities declined
41% year on year to RUB 460 million on the back
of a decrease in the number of rolling stock
leased-in under long-term operating leases.
• Dividends paid to non-controlling interests
in subsidiaries decreased 81% year on year
to RUB 334 million in 2023 1 .
Capital expenditure (including M&A)
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” and “Principal
elements of lease payments for leases with financial
institutions”.
Total CAPEX adjusted for M&A (a non-IFRS financial
measure) calculated as a combination of Total CAPEX
(which includes maintenance CAPEX) and cash inflows
and outflows from acquisitions and disposals.
The Group’s Total CAPEX adjusted for M&A
(on a cash basis, including maintenance CAPEX)
was RUB 10,092 million, a decrease of 50% compared
to 2022 reflecting the following factors:
• Total CAPEX (including maintenance CAPEX) down
28% year on year to RUB 8,261 million in 2023:
– Maintenance CAPEX increased 4% year on year
to RUB 6,637 million*.
– Expansion CAPEX decreased 68%
to RUB 1,623 million 2 reflecting the Group’s
conservative approach to investment given elevated
new rolling stock prices.
• A RUB 6,603 million Payment for rolling stock
to a disposed subsidiary in 2023 related
to the completion of the intra-group acquisition of tank
cars by BaltTransServis from Spacecom (a leasing
subsidiary disposed of in February 2023).
• A RUB 4,772 million Proceeds from sale
of subsidiaries – net of cash disposed of in 2023
related to the disposal of the Group’s shareholding
in Spacecom after acquiring the majority
of its railcars compared to a RUB 8,800 million
Payment for acquisition of non-controlling interest
(the remaining 40% shareholding in BaltTransServis)
that was carried out in the first half of 2022.
1 Effective from February 2023, Globaltrans owns 100% shareholdings in all its subsidiaries.
2 Including Purchases of intangible assets.
Financial and Operational Review
| 2022 | 2023 | Change | |
| RUB mln | RUB mln | % | |
| Purchase of property, plant and equipment | 11,422 | 8,260 | -28% |
| Purchase of intangible assets | 2 | 1 | -63% |
| Total CAPEX (including maintenance CAPEX) | 11,424 | 8,261 | -28% |
| Proceeds from sale of subsidiaries – net of cash disposed of | - | (4,772) | NM |
| Payment for rolling stock to disposed subsidiary | - | 6,603 | NM |
| Payment for acquisition of non-controlling interest | 8,800 | - | -100% |
| Total CAPEX adjusted for M&A | 20,224 | 10,092 | -50% |
The following table sets out the principal components of the Group’s Total CAPEX and Total CAPEX adjusted
for M&A for the years ended 31 December 2023 and 2022.
The Group’s capital expenditure (including maintenance
CAPEX) on an accrual basis was RUB 9,070 million
in 2023 (2022: RUB 11,186 million). The difference
between capital expenditure given on a cash basis
and on an accrual basis is principally because
of a time lag between the prepayments for and
the delivery of rolling stock.
Free Cash Flow
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”, “Interest
paid on leases with financial institutions”, “Payment
for acquisition of non-controlling interest”, “Payment
for rolling stock to disposed subsidiary” plus
“Proceeds from sale of subsidiaries – net of cash
disposed of”.
Free Cash Flow increased 74% or RUB 11,021 million
year on year to RUB 25,845 million in 2023, primarily
due to:
• A 1% year-on-year increase in Cash generated from
operations (after “Changes in working capital”)
to RUB 49,194 million.
• Tax paid which decreased 2% year on year
to RUB 8,267 million.
• An 8% year-on-year decrease in the combined
“Principal elements of lease payments for other
lease liabilities” and “Interest paid on other lease
liabilities” which was down to RUB 2,938 million
as the Group decreased the number of rolling
stock leased-in under long-term operating leases.
• The Group’s Total CAPEX adjusted
for M&A decreased 50% year on year
to RUB 10,092 million reflecting the factors
described above.
| 2022 | 2023 | Change | |
| RUB mln | RUB mln | % | |
| Cash generated from operations (after “Changes in working capital”) | 48,631 | 49,194 | 1% |
| Total CAPEX adjusted for M&A | (20,224) | (10,092) | -50% |
| Purchases of property, plant and equipment | (11,422) | (8,260) | -28% |
| Purchases of intangible assets | (2) | (1) | -63% |
| Proceeds from sale of subsidiaries – net of cash disposed of | - | 4,772 | NM |
| Payment for rolling stock to disposed subsidiary | - | (6,603) | NM |
| Payment for acquisition of non-controlling interest | (8,800) | - | -100% |
| Tax paid | (8,455) | (8,267) | -2% |
| Interest paid on bank borrowings and non-convertible unsecured bonds | (1,939) | (2,051) | 6% |
| Principal elements of lease payments for other lease liabilities | (2,403) | (2,478) | 3% |
| Interest paid on other lease liabilities | (786) | (460) | -41% |
| Free Cash Flow | 14,825 | 25,845 | 74% |
| Minus | |||
| Adjusted Profit Attributable to Non-controlling Interests | (274) | (3) | -99% |
| Attributable Free Cash Flow | 15,098 | 25,848 | 71% |
The following table sets out details on Free Cash Flow and Attributable Free Cash Flow for the years ended
31 December 2023 and 2022, and its reconciliation to Cash generated from operations.
45 44 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Related party transactions
For the purposes of this Annual Report and
the Group’s Consolidated Management Report
and Consolidated 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 2023 (31 December
2022: 5.1%) 1 . Goldriver Resources Ltd, controlled
by a Director of the Company, has a shareholding
in the Company of 3.1% as at 31 December 2023
(31 December 2022: 3.1%) 2 . As at 31 December
2023, another 0.1% (2022: 0.1%) of the shares
of the Company is controlled by Directors and key
management of the Company. For further information
on the shareholder structure, please see the Share
Capital section of this Annual Report.
→ For further information on the transactions carried out with
the above related parties, please see Note 35 of the Group’s
Consolidated Management Report and Consolidated Financial
Statements which is included in the Financial Statements
section of this Annual Report.
Except as set out in this section and Note 35
of the Group’s Consolidated Management Report
and Consolidated Financial Statements, during
the period 1 January to 31 December 2023, there were
no transactions or proposed transactions that were
material to either the Company or any related party
nor were there any transactions with any related
party that were unusual in their nature or conditions.
As of
31 Dec 2023
RUB mln
Q1 2024 3,419*
Q2 2024 1,785*
Q3 2024 1,363*
Q4 2024 1,147*
2025 3,560*
2026 2,114*
2027 1,918*
2028 72*
Total 15,377
Financial and Operational Review
1 Litten Investments Ltd is beneficially owned by Alexander Eliseev, Non-executive Director (effective to 26 February 2024). This
shareholding is subject to the signed binding agreement to sell to AQNIET Capital. The completion of the transaction is expected not
later than second half of 2024.
2 Goldriver Resources Ltd was beneficially owned by Sergey V. Maltsev, Chairman of the Board (effective to 26 February 2024), and was
sold to AQNIET Capital in January 2024.
The following table gives the maturity profile of the Group’s borrowings (including accrued interest
of RUB 121 million*) as of 31 December 2023.
As of
31 Dec 2022
As of
31 Dec 2023
Change
RUB mln RUB mln %
Total debt 20,649 15,377 -26%
Minus
Cash and cash equivalents 16,052 42,777 166%
Net Debt 4,596 (27,400) NM
Net Debt to Adjusted EBITDA 0.1x (0.5)x -
Rouble-denominated borrowings accounted for 100%
of the Group’s debt portfolio as of 31 December
2023. The Russian rouble is the functional currency
of the Company.
The weighted average effective interest rate stood
at 10.0% as of 31 December 2023 (31 December 2022:
8.1%) reflecting the rise in interest rates on new
borrowings. All of the Group’s debt had fixed interest
rates as of 31 December 2023.
The Group has a balanced debt maturity profile
supported by the Group’s solid cash flow
generation, available cash and cash equivalents,
as well as undrawn borrowing facilities
of RUB 29,000 million as of 31 December 2023.
The following table sets out details on the Group’s Total debt, Net Debt and Net Debt to Adjusted EBITDA
at 31 December 2023 and 31 December 2022, and the reconciliation of Net Debt to Total debt.
Capital resources
The Group had a Net cash position
of RUB 27,400 million as of the end of 2023 compared
to Net Debt of RUB 4,596 million as of the end of 2022.
• Total debt (consisting of borrowings and non-
convertible unsecured bonds) amounted
to RUB 15,377 million as of the end of 2023
(including accrued interest of RUB 121 million*),
a decrease of 26% compared to the end of 2022.
• Cash and cash equivalents amounted
to RUB 42,777 million, an increase of 166% compared
to the end of 2022 with about 98%* denominated
in Russian roubles.
The Net Debt to Adjusted EBITDA ratio was (0.5)x
as of 31 December 2023 (31 December 2022: 0.1x).
Under IFRS 16, Other lease liabilities (not included
in Total debt) of RUB 3,096 million were recognised
on the balance sheet as of 31 December 2023
(31 December 2022: RUB 4,195 million) which
was primarily related to the long-term leasing
of certain fleet and offices.
47 46 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
For the purposes of this Annual Report and
the Group’s Consolidated Management Report
and Consolidated 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 2023 (31 December
2022: 5.1%) 1 . Goldriver Resources Ltd, controlled
by a Director of the Company, has a shareholding
in the Company of 3.1% as at 31 December 2023
(31 December 2022: 3.1%) 2 . As at 31 December
2023, another 0.1% (2022: 0.1%) of the shares
of the Company is controlled by Directors and key
management of the Company. For further information
on the shareholder structure, please see the Share
Capital section of this Annual Report.
→ For further information on the transactions carried out with
the above related parties, please see Note 35 of the Group’s
Consolidated Management Report and Consolidated Financial
Statements which is included in the Financial Statements
section of this Annual Report.
Except as set out in this section and Note 35
of the Group’s Consolidated Management Report
and Consolidated Financial Statements, during
the period 1 January to 31 December 2023, there were
no transactions or proposed transactions that were
material to either the Company or any related party
nor were there any transactions with any related
party that were unusual in their nature or conditions.
As of
31 Dec 2023
RUB mln
Q1 2024 3,419*
Q2 2024 1,785*
Q3 2024 1,363*
Q4 2024 1,147*
2025 3,560*
2026 2,114*
2027 1,918*
2028 72*
Total 15,377
Financial and Operational Review
1 Litten Investments Ltd is beneficially owned by Alexander Eliseev, Non-executive Director (effective to 26 February 2024). This
shareholding is subject to the signed binding agreement to sell to AQNIET Capital. The completion of the transaction is expected not
later than second half of 2024.
2 Goldriver Resources Ltd was beneficially owned by Sergey V. Maltsev, Chairman of the Board (effective to 26 February 2024), and was
sold to AQNIET Capital in January 2024.
The following table gives the maturity profile of the Group’s borrowings (including accrued interest
of RUB 121 million*) as of 31 December 2023.
As of
31 Dec 2022
As of
31 Dec 2023
Change
RUB mln RUB mln %
Total debt 20,649 15,377 -26%
Minus
Cash and cash equivalents 16,052 42,777 166%
Net Debt 4,596 (27,400) NM
Net Debt to Adjusted EBITDA 0.1x (0.5)x -
Rouble-denominated borrowings accounted for 100%
of the Group’s debt portfolio as of 31 December
2023. The Russian rouble is the functional currency
of the Company.
The weighted average effective interest rate stood
at 10.0% as of 31 December 2023 (31 December 2022:
8.1%) reflecting the rise in interest rates on new
borrowings. All of the Group’s debt had fixed interest
rates as of 31 December 2023.
The Group has a balanced debt maturity profile
supported by the Group’s solid cash flow
generation, available cash and cash equivalents,
as well as undrawn borrowing facilities
of RUB 29,000 million as of 31 December 2023.
The following table sets out details on the Group’s Total debt, Net Debt and Net Debt to Adjusted EBITDA
at 31 December 2023 and 31 December 2022, and the reconciliation of Net Debt to Total debt.
Capital resources
The Group had a Net cash position
of RUB 27,400 million as of the end of 2023 compared
to Net Debt of RUB 4,596 million as of the end of 2022.
• Total debt (consisting of borrowings and non-
convertible unsecured bonds) amounted
to RUB 15,377 million as of the end of 2023
(including accrued interest of RUB 121 million*),
a decrease of 26% compared to the end of 2022.
• Cash and cash equivalents amounted
to RUB 42,777 million, an increase of 166% compared
to the end of 2022 with about 98%* denominated
in Russian roubles.
The Net Debt to Adjusted EBITDA ratio was (0.5)x
as of 31 December 2023 (31 December 2022: 0.1x).
Under IFRS 16, Other lease liabilities (not included
in Total debt) of RUB 3,096 million were recognised
on the balance sheet as of 31 December 2023
(31 December 2022: RUB 4,195 million) which
was primarily related to the long-term leasing
of certain fleet and offices.
47 46 ANNUAL REPORT 2023 Strategic Report
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
Overview
ANNUAL REPORT 2023 Strategic Report 49 Strategic Report Sustainability Report Governance Financial Statements Additional Information
48
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, management and,
where possible, mitigation of risks.
The oversight of risk
management is delegated
to the Audit Committee.
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 evaluate
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.
In addition, the oversight
and analysis of risks related
to environmental, social and
governance issues is delegated
to the ESG Committee.
Risk management principles
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.
Enterprise-wide
Integrated into the
Group’s business
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.
Evolving
The Group’s risk management
system should be continually
evolving. The management
of risks is an ongoing process
and it is recognised that the
level and extent of the risk
management system will evolve
as the Group evolves.
Integrated into
corporate culture
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.
Clear and
understandable
Risk management principles,
methods and tools should be
clear and easily understood by the
Group’s employees.
Aligned with the
Group’s objectives
Risk management should
be aligned with the Group’s
objectives and provide reasonable
assurance regarding the
achievement of those objectives.
Systematic and
structured
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.
Risk management should be
embedded in all of 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.
Forward-thinking
approach
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.
Based on top-down
and bottom-up
approach
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.
ANNUAL REPORT 2023 Strategic Report 49 Strategic Report Sustainability Report Governance Financial Statements Additional Information
48
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, management and,
where possible, mitigation of risks.
The oversight of risk
management is delegated
to the Audit Committee.
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 evaluate
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.
In addition, the oversight
and analysis of risks related
to environmental, social and
governance issues is delegated
to the ESG Committee.
Risk management principles
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.
Enterprise-wide
Integrated into the
Group’s business
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.
Evolving
The Group’s risk management
system should be continually
evolving. The management
of risks is an ongoing process
and it is recognised that the
level and extent of the risk
management system will evolve
as the Group evolves.
Integrated into
corporate culture
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.
Clear and
understandable
Risk management principles,
methods and tools should be
clear and easily understood by the
Group’s employees.
Aligned with the
Group’s objectives
Risk management should
be aligned with the Group’s
objectives and provide reasonable
assurance regarding the
achievement of those objectives.
Systematic and
structured
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.
Risk management should be
embedded in all of 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.
Forward-thinking
approach
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.
Based on top-down
and bottom-up
approach
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.
Overview
ANNUAL REPORT 2023 Strategic Report 51 Strategic Report Sustainability Report Governance Financial Statements Additional Information
50
General Economic Situation and
Operating Environment
Description
The Group and its subsidiaries operate
mainly in Russia and other emerging markets.
Emerging markets, such as Russia and
Kazakhstan, 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 (such as the recent
conflict between Russia and Ukraine), may
negatively impact the Group’s business and
growth prospects.
Although the coronavirus (“COVID-19”) has
become seasonal and does not currently
demonstrate a significant risk to human life and
health, there is still a risk of new strains emerging
that could impact the Group’s business and lead
to lockdowns, trade wars and currency volatility.
The freight rail market may experience reduced
demand stemming from the effects of COVID-19
and/or a new coronavirus outbreak/mutation.
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.
Also, the emergence 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 sanctions imposed on the Bank
of Russia and a number of commercial banks,
the restrictions for payments with Russian-
sources funds as well as restrictions for capital
movements outside the Russian Federation,
sanctions imposed by the United States (“US”),
the European Union, the United Kingdom and
a number of other countries on the biggest
Russian industrial groups and other institutions,
companies and individuals may adversely affect
the business environment in which the Group
operates and the prospects of the Group and
may result in long-term disruption and economic
downturn in Russia and/or the other countries
to which the Group is directly or indirectly
exposed. The restrictions on the export
of certain 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,
the Group’s existing customers and the existing
sanctions imposed, any deterioration
in or threat to their financial condition and/
or the temporary closure of certain markets
(whether as a result of the current situation
in Ukraine or otherwise) may decrease demand
for the Group’s services and/or negatively
impact the Group’s logistics. Moreover, many
businesses are taking a cautious approach
to sanctions and export compliance matters and
have adopted internal policies more restrictive
than are strictly required by the applicable rules
which may adversely affect the willingness
of counterparties to deal with the Group.
The restrictions on Russian-based companies’
ability to transfer capital outside the Russian
Federation currently impacts and may
further impact the ability of the Company’s
subsidiaries to make payments to the Company
or to make payments between the Company’s
bank accounts in Russia and abroad. Further,
the weakening of the Russian rouble against
the US dollar and Euro and the accelerated
inflation in Russia may have a negative
impact on the Group’s operating costs and
costs of repairs. In addition, the Group may
experience difficulties in making the payments
due to potential refusal of certain banks
to maintain the Group’s bank accounts
or to make payments from these accounts.
The situation in Russia and Ukraine and
the resulting sanctions imposed on Russia and
other persons connected to Russia by various
countries around the world as well as sanctions
and restrictive measures imposed by Russia
may have unforeseen, long-term and far-
reaching consequences for the global economy,
the Russian economy and the freight rail
transportation industry in Russia.
These consequences, including restrictions and
limitations on the business activity of Russian
companies (including access to funds located
outside of Russia) and widespread and/
or localised economic downturn and/or volatility,
could have an adverse and unforeseen impact
on the Group’s business, operational results and
financial effect on the Group’s performance.
Controls and mitigating factors
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
Risk Management
Principal Risks and Uncertainties
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. The current geopolitical
situation and conflict surrounding Russia
and Ukraine creates additional risks, which
may have significant impacts on the business
of the Group and its business environment.
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, decisions of regulatory authorities
in the United Arab Emirates (“UAE”),
the European Union (“EU”), the United
Kingdom (“UK”), Russia and other jurisdictions,
including the suspension of trading of its GDRs
on the LSE may affect the price of GDRs.
We monitor and assess risks on an ongoing
basis and we make efforts to control and
mitigate such risks to the extent possible.
Strategic: risks that influence our ability to achieve our strategy
ANNUAL REPORT 2023 Strategic Report 51 Strategic Report Sustainability Report Governance Financial Statements Additional Information
50
General Economic Situation and
Operating Environment
Description
The Group and its subsidiaries operate
mainly in Russia and other emerging markets.
Emerging markets, such as Russia and
Kazakhstan, 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 (such as the recent
conflict between Russia and Ukraine), may
negatively impact the Group’s business and
growth prospects.
Although the coronavirus (“COVID-19”) has
become seasonal and does not currently
demonstrate a significant risk to human life and
health, there is still a risk of new strains emerging
that could impact the Group’s business and lead
to lockdowns, trade wars and currency volatility.
The freight rail market may experience reduced
demand stemming from the effects of COVID-19
and/or a new coronavirus outbreak/mutation.
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.
Also, the emergence 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 sanctions imposed on the Bank
of Russia and a number of commercial banks,
the restrictions for payments with Russian-
sources funds as well as restrictions for capital
movements outside the Russian Federation,
sanctions imposed by the United States (“US”),
the European Union, the United Kingdom and
a number of other countries on the biggest
Russian industrial groups and other institutions,
companies and individuals may adversely affect
the business environment in which the Group
operates and the prospects of the Group and
may result in long-term disruption and economic
downturn in Russia and/or the other countries
to which the Group is directly or indirectly
exposed. The restrictions on the export
of certain 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,
the Group’s existing customers and the existing
sanctions imposed, any deterioration
in or threat to their financial condition and/
or the temporary closure of certain markets
(whether as a result of the current situation
in Ukraine or otherwise) may decrease demand
for the Group’s services and/or negatively
impact the Group’s logistics. Moreover, many
businesses are taking a cautious approach
to sanctions and export compliance matters and
have adopted internal policies more restrictive
than are strictly required by the applicable rules
which may adversely affect the willingness
of counterparties to deal with the Group.
The restrictions on Russian-based companies’
ability to transfer capital outside the Russian
Federation currently impacts and may
further impact the ability of the Company’s
subsidiaries to make payments to the Company
or to make payments between the Company’s
bank accounts in Russia and abroad. Further,
the weakening of the Russian rouble against
the US dollar and Euro and the accelerated
inflation in Russia may have a negative
impact on the Group’s operating costs and
costs of repairs. In addition, the Group may
experience difficulties in making the payments
due to potential refusal of certain banks
to maintain the Group’s bank accounts
or to make payments from these accounts.
The situation in Russia and Ukraine and
the resulting sanctions imposed on Russia and
other persons connected to Russia by various
countries around the world as well as sanctions
and restrictive measures imposed by Russia
may have unforeseen, long-term and far-
reaching consequences for the global economy,
the Russian economy and the freight rail
transportation industry in Russia.
These consequences, including restrictions and
limitations on the business activity of Russian
companies (including access to funds located
outside of Russia) and widespread and/
or localised economic downturn and/or volatility,
could have an adverse and unforeseen impact
on the Group’s business, operational results and
financial effect on the Group’s performance.
Controls and mitigating factors
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
Risk Management
Principal Risks and Uncertainties
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. The current geopolitical
situation and conflict surrounding Russia
and Ukraine creates additional risks, which
may have significant impacts on the business
of the Group and its business environment.
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, decisions of regulatory authorities
in the United Arab Emirates (“UAE”),
the European Union (“EU”), the United
Kingdom (“UK”), Russia and other jurisdictions,
including the suspension of trading of its GDRs
on the LSE may affect the price of GDRs.
We monitor and assess risks on an ongoing
basis and we make efforts to control and
mitigate such risks to the extent possible.
Strategic: risks that influence our ability to achieve our strategy
Overview
ANNUAL REPORT 2023 Strategic Report 53 Strategic Report Sustainability Report Governance Financial Statements Additional Information
52
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 between
universal gondola cars and rail tank cars as one
of the cornerstones of its business model.
A balanced fleet 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 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 impact of sanctions imposed on Russian
commercial banks, various Russian businesses
and individuals, as well as the global outbreak
of the COVID-19 and acts as the situation evolves.
Regulatory Risk and Relations with
Government Authorities and State-
owned Enterprises
Description
The Group is subject to regulatory risks relating
to the operation of the local railway transportation
market and railway industry reform. Any changes
to the regulatory environment of the local 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 local 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 an entity controlled by the state. Railway
transportation regulations in other bordering
countries may change, limiting the access
of the Group’s rolling stock to certain territories.
Controls and mitigating factors
Management of the Group regularly monitors
changes to the regulatory regime of the railway
transportation market in the countries in which
it operates. The state-owned entity remains
the only provider of infrastructure and locomotive
traction services (“the rail infrastructure
provider”), 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 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 the rail
infrastructure provider owned depots, obtain
higher-quality service and minimise the costs
of that service. 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 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.
Regulatory Risk, Risks of Banking
System and Risks of Listing
of the Company’s GDRs and Admission
to Trading on the London Stock
Exchange (“LSE”) and Moscow
Exchange (“MOEX”), Sanctions
Description
Since late February 2022, the Russian economy
and the Group’s operating environment have been
negatively impacted by the escalated military and
political conflict between Russia and Ukraine and
the associated international sanctions against
a number of Russian institutions, companies, banks
and individuals. These events have drastically
changed the business environment of the Group
and changed the regulation of business processes
in a number of European countries, the US, Russian
Federation and Ukraine. On 3 March 2022, the LSE
suspended the trading of the Company’s GDRs and
as at the date of publication of this Annual Report
this suspension is still in place. There is a risk
that the admission of Company’s GDRs to trading
on the LSE will be cancelled due to a potential
change in the listing rules of the LSE. In this case,
the Company’s GDRs may be converted into ordinary
shares of the Company. The major clearing systems,
Euroclear and Clearstream, have, as at the date
of publication of this Annual Report, suspended
the instructions for transfers and settlements
of accounts connected to the Russian Federation.
In addition, an increasing number of Russian banks
have been banned from SWIFT, the global messaging
system for financial transactions. The conversion
between the Russian rouble and other currencies is,
as at the date of publication of this Annual Report, not
possible in most cases.
The Company’s GDRs are also admitted to public
trading on MOEX in the Russian Federation
on the basis of approvals of both MOEX and the Bank
of Russia which allow foreign listed securities
to be admitted for public trading without requiring
a securities registration prospectus in Russia.
The listing level of the Company’s GDRs on MOEX
may be downgraded as a result of a potential
change in the listing rules of MOEX which may result
in smaller trading volumes and greater fluctuation
in the Company’s GDRs.
On 11 September 2023, the Bank of Russia registered
the Company’s prospectus for its GDRs which, if
approved by MOEX, will enable the Company’s GDRs
to be admitted to public trading on MOEX without
reference to its international listing. Following
the sanctions, imposed by the EU on National
Settlement Depositary (“NSD”), the major clearing
systems Euroclear and Clearstream block the amounts
payable through NSD, thus holders of GDRs traded
on the Moscow Exchange may have difficulties with
receiving dividends, if such dividends are paid through
Euroclear and Clearstream clearing systems, and with
the execution of other corporate actions, including
but not limited to voting at the general meetings
of shareholders.
Controls and mitigating factors
Management is closely monitoring the situation
with the assistance of legal and tax consultants
and is ready to act depending on the developments.
In addition, management will seek to maintain
an open and constructive dialogue with any regulators
to discuss any developments as they arise.
Constraints and Risks to Growth
Strategies
Description
Business growth can be constrained by an increase
in prices for new rolling stock and spare parts,
underproduction of rolling stock, partial scrappage
of the Group’s rolling stock due to expiration
of its useful life, sanctions imposed on Russian
Federation and some Russian industrial groups,
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.
Risk Management
ANNUAL REPORT 2023 Strategic Report 53 Strategic Report Sustainability Report Governance Financial Statements Additional Information
52
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 between
universal gondola cars and rail tank cars as one
of the cornerstones of its business model.
A balanced fleet 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 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 impact of sanctions imposed on Russian
commercial banks, various Russian businesses
and individuals, as well as the global outbreak
of the COVID-19 and acts as the situation evolves.
Regulatory Risk and Relations with
Government Authorities and State-
owned Enterprises
Description
The Group is subject to regulatory risks relating
to the operation of the local railway transportation
market and railway industry reform. Any changes
to the regulatory environment of the local 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 local 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 an entity controlled by the state. Railway
transportation regulations in other bordering
countries may change, limiting the access
of the Group’s rolling stock to certain territories.
Controls and mitigating factors
Management of the Group regularly monitors
changes to the regulatory regime of the railway
transportation market in the countries in which
it operates. The state-owned entity remains
the only provider of infrastructure and locomotive
traction services (“the rail infrastructure
provider”), 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 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 the rail
infrastructure provider owned depots, obtain
higher-quality service and minimise the costs
of that service. 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 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.
Regulatory Risk, Risks of Banking
System and Risks of Listing
of the Company’s GDRs and Admission
to Trading on the London Stock
Exchange (“LSE”) and Moscow
Exchange (“MOEX”), Sanctions
Description
Since late February 2022, the Russian economy
and the Group’s operating environment have been
negatively impacted by the escalated military and
political conflict between Russia and Ukraine and
the associated international sanctions against
a number of Russian institutions, companies, banks
and individuals. These events have drastically
changed the business environment of the Group
and changed the regulation of business processes
in a number of European countries, the US, Russian
Federation and Ukraine. On 3 March 2022, the LSE
suspended the trading of the Company’s GDRs and
as at the date of publication of this Annual Report
this suspension is still in place. There is a risk
that the admission of Company’s GDRs to trading
on the LSE will be cancelled due to a potential
change in the listing rules of the LSE. In this case,
the Company’s GDRs may be converted into ordinary
shares of the Company. The major clearing systems,
Euroclear and Clearstream, have, as at the date
of publication of this Annual Report, suspended
the instructions for transfers and settlements
of accounts connected to the Russian Federation.
In addition, an increasing number of Russian banks
have been banned from SWIFT, the global messaging
system for financial transactions. The conversion
between the Russian rouble and other currencies is,
as at the date of publication of this Annual Report, not
possible in most cases.
The Company’s GDRs are also admitted to public
trading on MOEX in the Russian Federation
on the basis of approvals of both MOEX and the Bank
of Russia which allow foreign listed securities
to be admitted for public trading without requiring
a securities registration prospectus in Russia.
The listing level of the Company’s GDRs on MOEX
may be downgraded as a result of a potential
change in the listing rules of MOEX which may result
in smaller trading volumes and greater fluctuation
in the Company’s GDRs.
On 11 September 2023, the Bank of Russia registered
the Company’s prospectus for its GDRs which, if
approved by MOEX, will enable the Company’s GDRs
to be admitted to public trading on MOEX without
reference to its international listing. Following
the sanctions, imposed by the EU on National
Settlement Depositary (“NSD”), the major clearing
systems Euroclear and Clearstream block the amounts
payable through NSD, thus holders of GDRs traded
on the Moscow Exchange may have difficulties with
receiving dividends, if such dividends are paid through
Euroclear and Clearstream clearing systems, and with
the execution of other corporate actions, including
but not limited to voting at the general meetings
of shareholders.
Controls and mitigating factors
Management is closely monitoring the situation
with the assistance of legal and tax consultants
and is ready to act depending on the developments.
In addition, management will seek to maintain
an open and constructive dialogue with any regulators
to discuss any developments as they arise.
Constraints and Risks to Growth
Strategies
Description
Business growth can be constrained by an increase
in prices for new rolling stock and spare parts,
underproduction of rolling stock, partial scrappage
of the Group’s rolling stock due to expiration
of its useful life, sanctions imposed on Russian
Federation and some Russian industrial groups,
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.
Risk Management
Overview
ANNUAL REPORT 2023 Strategic Report 55 Strategic Report Sustainability Report Governance Financial Statements Additional Information
54
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.
Controls and mitigating factors
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.
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.
Competition and Customer
Concentration
Description
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 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 about
68% of the Group’s Net Revenue from Operation
of Rolling Stock in 2023. 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.
Controls and mitigating factors
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.
About 61% of the Group’s Net Revenue from
Operation of Rolling Stock in 2023 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 2023, the share of small
and medium companies amounted to about 32%
of Net Revenue from Operation of Rolling Stock
(2022: 33%). Furthermore, the Group’s marketing
function regularly monitors competitors’ business
strategies, their use of technology, their price
strategies and industry trends.
Locomotive Traction and
Authorisations
Description
The Group is dependent on the state-owned
entity 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.
Controls and mitigating factors
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 licences and
the respective permits. 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.
Heightened Risk of Shareholder
Activism
Description
GDRs of Globaltrans have been listed
on the Main Market of the LSE since May
2008 (although trading has been suspended
by the LSE since 3 March 2022) 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.
In addition, the current geopolitical environment
surrounding Ukraine and Russia may heighten
the likelihood of these risks.
Controls and mitigating factors
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.
Risk Management
ANNUAL REPORT 2023 Strategic Report 55 Strategic Report Sustainability Report Governance Financial Statements Additional Information
54
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.
Controls and mitigating factors
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.
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.
Competition and Customer
Concentration
Description
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 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 about
68% of the Group’s Net Revenue from Operation
of Rolling Stock in 2023. 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.
Controls and mitigating factors
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.
About 61% of the Group’s Net Revenue from
Operation of Rolling Stock in 2023 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 2023, the share of small
and medium companies amounted to about 32%
of Net Revenue from Operation of Rolling Stock
(2022: 33%). Furthermore, the Group’s marketing
function regularly monitors competitors’ business
strategies, their use of technology, their price
strategies and industry trends.
Locomotive Traction and
Authorisations
Description
The Group is dependent on the state-owned
entity 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.
Controls and mitigating factors
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 licences and
the respective permits. 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.
Heightened Risk of Shareholder
Activism
Description
GDRs of Globaltrans have been listed
on the Main Market of the LSE since May
2008 (although trading has been suspended
by the LSE since 3 March 2022) 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.
In addition, the current geopolitical environment
surrounding Ukraine and Russia may heighten
the likelihood of these risks.
Controls and mitigating factors
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.
Risk Management
Overview
ANNUAL REPORT 2023 Strategic Report 57 Strategic Report Sustainability Report Governance Financial Statements Additional Information
56
Current State and Quality
of Infrastructure
Description
The rail network and physical infrastructure
in Russia, owned and operated by the state-owned
entity, as well as the networks and infrastructure
of other countries on which the Group depends
to operate its rolling stock, like Kazakhstan
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 could negatively impact the average
speed of transportation and therefore affect
the operational performance of railcars. 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,
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.
Controls and mitigating factors
With immaterial exceptions, all of the Group’s
rolling stock is insured against damage. Moreover,
a state-owned freight carrier on the railway
network 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.
Risks to Operational Performance,
Including Inflationary Pressures
Description
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.
Controls and mitigating factors
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.
Employees
Description
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.
Operational: risks that influence the Group’s operational efficiency
Risk Management
Controls and mitigating factors
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.
Customer Satisfaction
Description
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
the rail infrastructure provider 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.
Controls and mitigating factors
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. The Group will also continue
to monitor its third-party service providers
to ensure satisfactory performance standards
are being met.
IT Availability/Continuity
Description
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.
Due to sanctions imposed by the US, the EU,
the UK and a number of other countries,
a number of IT solutions used by the Group will
no longer be maintained by American, British
and EU suppliers.
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 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.
ANNUAL REPORT 2023 Strategic Report 57 Strategic Report Sustainability Report Governance Financial Statements Additional Information
56
Current State and Quality
of Infrastructure
Description
The rail network and physical infrastructure
in Russia, owned and operated by the state-owned
entity, as well as the networks and infrastructure
of other countries on which the Group depends
to operate its rolling stock, like Kazakhstan
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 could negatively impact the average
speed of transportation and therefore affect
the operational performance of railcars. 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,
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.
Controls and mitigating factors
With immaterial exceptions, all of the Group’s
rolling stock is insured against damage. Moreover,
a state-owned freight carrier on the railway
network 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.
Risks to Operational Performance,
Including Inflationary Pressures
Description
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.
Controls and mitigating factors
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.
Employees
Description
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.
Operational: risks that influence the Group’s operational efficiency
Risk Management
Controls and mitigating factors
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.
Customer Satisfaction
Description
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
the rail infrastructure provider 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.
Controls and mitigating factors
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. The Group will also continue
to monitor its third-party service providers
to ensure satisfactory performance standards
are being met.
IT Availability/Continuity
Description
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.
Due to sanctions imposed by the US, the EU,
the UK and a number of other countries,
a number of IT solutions used by the Group will
no longer be maintained by American, British
and EU suppliers.
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 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.
Overview
ANNUAL REPORT 2023 Strategic Report 59 Strategic Report Sustainability Report Governance Financial Statements Additional Information
58
Pending and Potential Legal Actions
Description
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.
Controls and mitigating factors
The Group runs its operations in compliance
with tax, currency, sanctions, 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.
ESG Risks
Description
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.
Controls and mitigating factors
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. 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.
→ For further information on climate-related risks,
please see the Sustainability Report.
Compliance with Regulations and
Sanctions
Description
The Group functions in several jurisdictions,
including UAE and Russia. In addition, the Group
has its GDRs listed on the LSE (although
on 3 March 2022, the LSE suspended the trading
of the Company’s GDRs and as at the date
of publication of this Annual Report this
suspension is still in place) 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
Controls and mitigating factors
Local IT specialists have introduced solutions
to maintain the availability and proper licensing
of IT services and ensure their recovery in case
of disruption. Where applicable, the Group
is working to identify and engage alternative
suppliers of IT solutions. The IT function and
internal audit function monitor all IT-related
activities and performance for compliance with
IT policies and procedures as well as regularly
reviewing and maintaining business continuity
plans and procedures.
Risks of Terrorist Attacks, Natural
Disasters or Other Catastrophic
Events Beyond the Group’s Control
Description
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 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.
Controls and mitigating factors
The Group’s rolling stock is insured against
damage, and the responsibility for third-party
losses caused by accidents on the network lies
with the a state-owned freight carrier. 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.
Risk Management
Compliance: risks that influence the Group’s adherence to relevant laws
and regulations
ANNUAL REPORT 2023 Strategic Report 59 Strategic Report Sustainability Report Governance Financial Statements Additional Information
58
Pending and Potential Legal Actions
Description
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.
Controls and mitigating factors
The Group runs its operations in compliance
with tax, currency, sanctions, 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.
ESG Risks
Description
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.
Controls and mitigating factors
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. 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.
→ For further information on climate-related risks,
please see the Sustainability Report.
Compliance with Regulations and
Sanctions
Description
The Group functions in several jurisdictions,
including UAE and Russia. In addition, the Group
has its GDRs listed on the LSE (although
on 3 March 2022, the LSE suspended the trading
of the Company’s GDRs and as at the date
of publication of this Annual Report this
suspension is still in place) 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
Controls and mitigating factors
Local IT specialists have introduced solutions
to maintain the availability and proper licensing
of IT services and ensure their recovery in case
of disruption. Where applicable, the Group
is working to identify and engage alternative
suppliers of IT solutions. The IT function and
internal audit function monitor all IT-related
activities and performance for compliance with
IT policies and procedures as well as regularly
reviewing and maintaining business continuity
plans and procedures.
Risks of Terrorist Attacks, Natural
Disasters or Other Catastrophic
Events Beyond the Group’s Control
Description
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 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.
Controls and mitigating factors
The Group’s rolling stock is insured against
damage, and the responsibility for third-party
losses caused by accidents on the network lies
with the a state-owned freight carrier. 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.
Risk Management
Compliance: risks that influence the Group’s adherence to relevant laws
and regulations
Overview
ANNUAL REPORT 2023 Strategic Report 61 Strategic Report Sustainability Report Governance Financial Statements Additional Information
60
Currency Risks
Description
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 and the associated dividends
payable that are declared in Russian roubles and
paid in US dollars 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.
Controls and mitigating factors
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
exchanges on which its securities are traded
and any applicable sanctions legislation,
all of which may change from time to time.
As a result of the situation in Ukraine, the US,
the EU, Ukraine, the UK and a number of other
countries have imposed heightened sanctions
and restrictions on numerous Russian businesses,
banks and individuals.
Controls and mitigating factors
The legal and compliance teams of the Group
together with the external lawyers engaged
by the Group monitor the applicable requirements
in each of jurisdiction in which it is active
and stock exchanges on which its securities
are trading, including monitoring US personal
and sectoral sanctions (SDN OFAC, SSI OFAC
and CAATSA), EU and UK sanctions lists, special
regulations imposed by the Russian authorities
and the appropriate controls are in place to ensure
that all subsidiaries of the Group comply with
applicable regulations.
Fiscal Risk from Evolving Legal and
Tax Regimes
Description
Local tax, currency and customs legislation,
especially in Russia, other emerging markets and
the UAE, 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.
Controls and mitigating factors
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.
Risk Management
Financial: risks that influence our financial performance
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 2023,
all of the Group’s debt was denominated
in Russian roubles.
Interest-rate Risks
Description
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.
Controls and mitigating factors
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 the 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 2023, all of the Group’s debt
was at fixed interest rates. Management also
considers alternative means of financing.
Credit Risk
Description
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 about 79% of the Group’s
trade and other receivables as of 31 December
2023 and about 68% of the Group’s Net Revenue
from Operation of Rolling Stock in 2023.
Controls and mitigating factors
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 also
continues to explore opportunities to diversify
its customer and supplier base.
Liquidity Risk
Description
The Group’s business is capital-intensive.
The current situation in Ukraine and
the resulting increased and intensified
sanctions imposed by the US, the EU, the UK
and numerous other countries 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.
Controls and mitigating factors
The Group has a budgeting policy in place that
allows 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. Management
continues to monitor the current environment
and its potential impact on liquidity.
ANNUAL REPORT 2023 Strategic Report 61 Strategic Report Sustainability Report Governance Financial Statements Additional Information
60
Currency Risks
Description
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 and the associated dividends
payable that are declared in Russian roubles and
paid in US dollars 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.
Controls and mitigating factors
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
exchanges on which its securities are traded
and any applicable sanctions legislation,
all of which may change from time to time.
As a result of the situation in Ukraine, the US,
the EU, Ukraine, the UK and a number of other
countries have imposed heightened sanctions
and restrictions on numerous Russian businesses,
banks and individuals.
Controls and mitigating factors
The legal and compliance teams of the Group
together with the external lawyers engaged
by the Group monitor the applicable requirements
in each of jurisdiction in which it is active
and stock exchanges on which its securities
are trading, including monitoring US personal
and sectoral sanctions (SDN OFAC, SSI OFAC
and CAATSA), EU and UK sanctions lists, special
regulations imposed by the Russian authorities
and the appropriate controls are in place to ensure
that all subsidiaries of the Group comply with
applicable regulations.
Fiscal Risk from Evolving Legal and
Tax Regimes
Description
Local tax, currency and customs legislation,
especially in Russia, other emerging markets and
the UAE, 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.
Controls and mitigating factors
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.
Risk Management
Financial: risks that influence our financial performance
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 2023,
all of the Group’s debt was denominated
in Russian roubles.
Interest-rate Risks
Description
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.
Controls and mitigating factors
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 the 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 2023, all of the Group’s debt
was at fixed interest rates. Management also
considers alternative means of financing.
Credit Risk
Description
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 about 79% of the Group’s
trade and other receivables as of 31 December
2023 and about 68% of the Group’s Net Revenue
from Operation of Rolling Stock in 2023.
Controls and mitigating factors
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 also
continues to explore opportunities to diversify
its customer and supplier base.
Liquidity Risk
Description
The Group’s business is capital-intensive.
The current situation in Ukraine and
the resulting increased and intensified
sanctions imposed by the US, the EU, the UK
and numerous other countries 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.
Controls and mitigating factors
The Group has a budgeting policy in place that
allows 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. Management
continues to monitor the current environment
and its potential impact on liquidity.
Governance
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
63 62
Sustainability
Report
Additional Information
p. 74
Employees
Read more →
p. 86
Environment
Read more →
p. 92
Climate-Related Financial
Disclosure
Read more →
In this section
We are delighted to share our 6th
annual Sustainability Report, which
showcases our ongoing commitment to
ESG initiatives throughout the Group.
The Report covers the progress we
have made in those focus areas that
are not only critical to our business but
also of interest to our stakeholders.
The reporting format aligns with GRI
standards and TCFD recommendations,
underlining our commitment to
transparency and accountability.
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
63 62
Sustainability
Report
Additional Information
p. 74
Employees
Read more →
p. 86
Environment
Read more →
p. 92
Climate-Related Financial
Disclosure
Read more →
In this section
We are delighted to share our 6th
annual Sustainability Report, which
showcases our ongoing commitment to
ESG initiatives throughout the Group.
The Report covers the progress we
have made in those focus areas that
are not only critical to our business but
also of interest to our stakeholders.
The reporting format aligns with GRI
standards and TCFD recommendations,
underlining our commitment to
transparency and accountability.
65
64
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
ANNUAL REPORT 2023 Sustainability Report
Our approach
The Sustainability Report, which is integrated
into the 2023 Annual Report, has been prepared
in accordance with the sustainability reporting
guidelines of the Global Reporting Initiative (“GRI”)
and Task Force on Climate-Related Financial
Disclosures (“TCFD”) recommendations.
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 Standards 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 2023.
ESG Strategy
Globaltrans’ sustainability strategy is based on a set
of key environmental, social and governance (“ESG”)
priorities that serve as the guiding principles for all
its operations and decisions. They are deeply
embedded in the Group’s culture and values,
shaping its actions and driving its impact on society
and the environment. These ESG priorities include:
• delivering business efficiency and best-in-class
services;
• creating long-term value and serving the needs
of a vast group of stakeholders;
• keeping our employees safe, engaged, motivated
and empowered;
• minimising our environmental footprint
and promoting sustainability;
• making positive contributions to the communities
where we operate.
ESG Oversight
Sustainable development has always been one of our
top priorities, and we take it very seriously. Since 2018,
the Group has made significant strides in integrating
ESG factors into our daily business operations
and developed a comprehensive ESG monitoring,
management, and reporting programme. Leadership
on ESG issues has always started with the Group’s CEO.
Over the past few years, we have enhanced our ESG
governance structure – from proactively implementing
sustainability commitments, policies and practices
to hiring additional expertise and creating a new Board
Committee.
The ESG Committee has overall responsibility
for the Group’s sustainability strategy
and is the Company’s top unit in charge
of sustainable development issues. The Committee
was established in January 2021 to support and direct
the Group towards improving its sustainability-
related practices and policies, and its reporting
and transparency. Its creation reflects the Group’s
conviction that behaving responsibly underpins
our ability to deliver sustainable value for all our
stakeholders. By assisting the Board with the oversight
of ESG-related issues, the Committee supports
the development of a practical Group-wide approach
to sustainability and disclosure. The Committee’s
efforts were bolstered by the adoption of a formal
ESG policy in January 2021 that sets out formal ESG
commitments and established lines of responsibility
and accountability.
Materiality
Globaltrans identifies its material
sustainability issues through a materiality
analysis. Materiality plays a significant
role in the management of our sustainable
development, making it possible to identify
the Group’s key ESG issues.
In 2023, we conducted a double
materiality assessment to identify
and prioritise our sustainability topics,
and applied the principles of double
materiality from a business and social
impact perspective. The most important
sustainability topics were employee safety,
economic performance, business ethics
and compliance as well as the minimisation
of environmental footprint. While these
topics have helped us to determine our
strategic priorities, they do not limit the scope
of our ESG efforts. We intend to repeat this
assessment periodically and collect feedback
from our stakeholders on a regular basis.
Sustainability
Materiality matrix
How it works:
We identify 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.
Identification
of material
topics
Step 1
To develop a broader, deeper understanding
of the materiality of the sustainability issues
the Group faces, we seek input from a range
of stakeholders (employees, shareholders,
investors, clients, regulators and other
authorities) on what matters to them.
Prioritisation
of material
topics
Step 2
We develop a materiality matrix
to identify those topics that are deemed
most important to the Group’s system
of sustainability reporting.
Preparation
of materiality
matrix
Step 3
Important
Important
Materiality for business Extremely important
Extremely
important
Materiality for stakeholder
2 5
7 11
10
12
9
8 6
3 4 1
Economic impact
1. Economic performance
2. Socioeconomic development of regions
3. Business ethics, risk management and
anti-corruption
4. Customer satisfaction
Environmental impact
5. Risks and opportunities posed by climate
change
6. Management of carbon footprint
7. Reduction of energy consumption
8. Compliance with environmental laws
and regulations
Social impact
9. Employee education and development
10. Employee motivation
11. Diversity and equal opportunity
12. Occupational health and safety
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
ANNUAL REPORT 2023 Sustainability Report
Our approach
The Sustainability Report, which is integrated
into the 2023 Annual Report, has been prepared
in accordance with the sustainability reporting
guidelines of the Global Reporting Initiative (“GRI”)
and Task Force on Climate-Related Financial
Disclosures (“TCFD”) recommendations.
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 Standards 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 2023.
ESG Strategy
Globaltrans’ sustainability strategy is based on a set
of key environmental, social and governance (“ESG”)
priorities that serve as the guiding principles for all
its operations and decisions. They are deeply
embedded in the Group’s culture and values,
shaping its actions and driving its impact on society
and the environment. These ESG priorities include:
• delivering business efficiency and best-in-class
services;
• creating long-term value and serving the needs
of a vast group of stakeholders;
• keeping our employees safe, engaged, motivated
and empowered;
• minimising our environmental footprint
and promoting sustainability;
• making positive contributions to the communities
where we operate.
ESG Oversight
Sustainable development has always been one of our
top priorities, and we take it very seriously. Since 2018,
the Group has made significant strides in integrating
ESG factors into our daily business operations
and developed a comprehensive ESG monitoring,
management, and reporting programme. Leadership
on ESG issues has always started with the Group’s CEO.
Over the past few years, we have enhanced our ESG
governance structure – from proactively implementing
sustainability commitments, policies and practices
to hiring additional expertise and creating a new Board
Committee.
The ESG Committee has overall responsibility
for the Group’s sustainability strategy
and is the Company’s top unit in charge
of sustainable development issues. The Committee
was established in January 2021 to support and direct
the Group towards improving its sustainability-
related practices and policies, and its reporting
and transparency. Its creation reflects the Group’s
conviction that behaving responsibly underpins
our ability to deliver sustainable value for all our
stakeholders. By assisting the Board with the oversight
of ESG-related issues, the Committee supports
the development of a practical Group-wide approach
to sustainability and disclosure. The Committee’s
efforts were bolstered by the adoption of a formal
ESG policy in January 2021 that sets out formal ESG
commitments and established lines of responsibility
and accountability.
Materiality
Globaltrans identifies its material
sustainability issues through a materiality
analysis. Materiality plays a significant
role in the management of our sustainable
development, making it possible to identify
the Group’s key ESG issues.
In 2023, we conducted a double
materiality assessment to identify
and prioritise our sustainability topics,
and applied the principles of double
materiality from a business and social
impact perspective. The most important
sustainability topics were employee safety,
economic performance, business ethics
and compliance as well as the minimisation
of environmental footprint. While these
topics have helped us to determine our
strategic priorities, they do not limit the scope
of our ESG efforts. We intend to repeat this
assessment periodically and collect feedback
from our stakeholders on a regular basis.
Sustainability
Materiality matrix
How it works:
We identify 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.
Identification
of material
topics
Step 1
To develop a broader, deeper understanding
of the materiality of the sustainability issues
the Group faces, we seek input from a range
of stakeholders (employees, shareholders,
investors, clients, regulators and other
authorities) on what matters to them.
Prioritisation
of material
topics
Step 2
We develop a materiality matrix
to identify those topics that are deemed
most important to the Group’s system
of sustainability reporting.
Preparation
of materiality
matrix
Step 3
Important
Important
Materiality for business Extremely important
Extremely
important
Materiality for stakeholder
2 5
7 11
10
12
9
8 6
3 4 1
Economic impact
1. Economic performance
2. Socioeconomic development of regions
3. Business ethics, risk management and
anti-corruption
4. Customer satisfaction
Environmental impact
5. Risks and opportunities posed by climate
change
6. Management of carbon footprint
7. Reduction of energy consumption
8. Compliance with environmental laws
and regulations
Social impact
9. Employee education and development
10. Employee motivation
11. Diversity and equal opportunity
12. Occupational health and safety
1
LTIFR is the number of lost time injuries multiplied by 1,000,000, divided by the employee total hours worked in the reporting period.
Highlights of 2023
First-time disclosure of waste
management data
Ongoing analysis of climate-related risks
and opportunities
Overall staff turnover improved to
16 %
(2022: 19%)
52,184 total training hours
recorded across the Group companies
Gender pay gap at the non-managerial
level stood at 1%, reflecting higher
proportion of male employees
Despite stringent safety regime Loss Time Injury
Frequency Rate 1 (LTIFR) increased to
0.90
Continued external recognition through
various ESG rankings
ESG Executive Summary
In 2023, despite the challenging global context,
we remained committed to our purpose and values.
We maintained our focus on operational efficiency
while staying true to our principles of reliability, safety,
ethics, and transparency. At Globaltrans, we recognise
that sustainability is a journey that requires
continual improvement. There is always more to do,
and we constantly strive to improve our performance
in order to drive positive change and foster long-term
value creation.
We are delighted to share our 6th annual Sustainability
Report, which showcases our ongoing commitment
to ESG initiatives throughout the Group. The Report
covers the progress we have made in those focus
areas that are not only critical to our business but
also of interest to our stakeholders. The reporting
format aligns with GRI standards and TCFD
recommendations, underlining our commitment
to transparency and accountability.
We have observed a growing shift towards more
stringent ESG disclosure expectations in recent times.
In response, we are concentrating on strengthening
our governance practices, improving our risk
management framework and providing effective
oversight of sustainability matters. And we are pleased
with the way we have managed to instill a culture
of accountability and responsibility across all
levels of the Group, from the Board to the executive
management and down to our operations.
As a responsible business, we remain committed
to our environmental initiatives and have continued
our efforts to limit our impact on the environment.
As you may know, the Group has always emphasised
the importance of efficient resource use. In 2022,
we introduced the Green Office Initiative enabling
us to collect, analyse and report data on our waste
management practices annually. It is important
to highlight that Globaltrans operates in a relatively
“green” industry, and therefore, we do not generate
significant amounts of waste. In fact, 99% of our waste
is categorised as low-hazardous, and in circumstances
where waste is unavoidable, we strive to reduce,
recover, or reuse it.
We understand the importance of monitoring our
carbon footprint, which is why we keep a close eye
on our emissions. In 2023, we are pleased to report
that the Group’s total emissions (Scope 1 and Scope 2)
decreased for the second consecutive year, with a 2%
reduction year on year.
The people who work at the Group play a crucial role
in our success and sustainable growth, and that is why
taking care of them is our top priority. The Group
is committed to providing equal opportunities
to its employees, supporting their professional
development and ensuring a safe and positive working
environment. We continue to invest in developing
an active learning culture across the Group, which
resulted in over 50,000 training hours being logged
across the Group’s companies in 2023. We are also
proud to report that our HR strategy has proved
to be highly effective in reducing staff turnover
at the Group, which stood at 16% in 2023 (2022: 19%).
On a separate note, we should point out that even
though our Group companies adhere to a stringent
health and safety regime, we did see a rise in our
LTIFR in 2023, which increased from 0 (zero)
to 0.90. The increase in our LTIFR was due to work-
related injuries sustained by three of the Group’s
depot workers, but none of these involved fatalities
or serious injury. It is worth noting that while
disappointing, such occurrences are infrequent
at Globaltrans, a business with a strong track
record in Health and Safety. However, they do serve
as a reminder that we must be even more proactive
in anticipating future risks.
As part of its commitment to making a positive impact
on society, the Group continued to support vulnerable
groups in 2023 through its long-standing partnerships
with various charitable organisations.
In 2023, Globaltrans was again recognised by various
external ESG agencies for its sustainability practices,
as reflected in various rankings. This recognition
indicates that we are heading in the right direction
and motivates us to keep pushing ahead. Moving
forward, we will keep striving to bring about positive
change and contribute to a better future.
Sustainability
2 %
year-on-year
decrease in the Group’s total emissions
(Scope 1 and Scope 2)
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
67 66
Highlights of 2023
First-time disclosure of waste
management data
Ongoing analysis of climate-related risks
and opportunities
Overall staff turnover improved to
16 %
(2022: 19%)
52,184 total training hours
recorded across the Group companies
Gender pay gap at the non-managerial
level stood at 1%, reflecting higher
proportion of male employees
Despite stringent safety regime Loss Time Injury
Frequency Rate 1 (LTIFR) increased to
0.90
Continued external recognition through
various ESG rankings
ESG Executive Summary
In 2023, despite the challenging global context,
we remained committed to our purpose and values.
We maintained our focus on operational efficiency
while staying true to our principles of reliability, safety,
ethics, and transparency. At Globaltrans, we recognise
that sustainability is a journey that requires
continual improvement. There is always more to do,
and we constantly strive to improve our performance
in order to drive positive change and foster long-term
value creation.
We are delighted to share our 6th annual Sustainability
Report, which showcases our ongoing commitment
to ESG initiatives throughout the Group. The Report
covers the progress we have made in those focus
areas that are not only critical to our business but
also of interest to our stakeholders. The reporting
format aligns with GRI standards and TCFD
recommendations, underlining our commitment
to transparency and accountability.
We have observed a growing shift towards more
stringent ESG disclosure expectations in recent times.
In response, we are concentrating on strengthening
our governance practices, improving our risk
management framework and providing effective
oversight of sustainability matters. And we are pleased
with the way we have managed to instill a culture
of accountability and responsibility across all
levels of the Group, from the Board to the executive
management and down to our operations.
As a responsible business, we remain committed
to our environmental initiatives and have continued
our efforts to limit our impact on the environment.
As you may know, the Group has always emphasised
the importance of efficient resource use. In 2022,
we introduced the Green Office Initiative enabling
us to collect, analyse and report data on our waste
management practices annually. It is important
to highlight that Globaltrans operates in a relatively
“green” industry, and therefore, we do not generate
significant amounts of waste. In fact, 99% of our waste
is categorised as low-hazardous, and in circumstances
where waste is unavoidable, we strive to reduce,
recover, or reuse it.
We understand the importance of monitoring our
carbon footprint, which is why we keep a close eye
on our emissions. In 2023, we are pleased to report
that the Group’s total emissions (Scope 1 and Scope 2)
decreased for the second consecutive year, with a 2%
reduction year on year.
The people who work at the Group play a crucial role
in our success and sustainable growth, and that is why
taking care of them is our top priority. The Group
is committed to providing equal opportunities
to its employees, supporting their professional
development and ensuring a safe and positive working
environment. We continue to invest in developing
an active learning culture across the Group, which
resulted in over 50,000 training hours being logged
across the Group’s companies in 2023. We are also
proud to report that our HR strategy has proved
to be highly effective in reducing staff turnover
at the Group, which stood at 16% in 2023 (2022: 19%).
On a separate note, we should point out that even
though our Group companies adhere to a stringent
health and safety regime, we did see a rise in our
LTIFR in 2023, which increased from 0 (zero)
to 0.90. The increase in our LTIFR was due to work-
related injuries sustained by three of the Group’s
depot workers, but none of these involved fatalities
or serious injury. It is worth noting that while
disappointing, such occurrences are infrequent
at Globaltrans, a business with a strong track
record in Health and Safety. However, they do serve
as a reminder that we must be even more proactive
in anticipating future risks.
As part of its commitment to making a positive impact
on society, the Group continued to support vulnerable
groups in 2023 through its long-standing partnerships
with various charitable organisations.
In 2023, Globaltrans was again recognised by various
external ESG agencies for its sustainability practices,
as reflected in various rankings. This recognition
indicates that we are heading in the right direction
and motivates us to keep pushing ahead. Moving
forward, we will keep striving to bring about positive
change and contribute to a better future.
Sustainability
2 %
year-on-year
decrease in the Group’s total emissions
(Scope 1 and Scope 2)
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
67 66
2018
• Publication of our first Sustainability
Report in accordance with GRI
standards
• First time reporting Scope 1 emissions
• Privacy Policy introduced
2020
• Introduction of various social policies such
as Human Rights, Diversity and Inclusion,
and Freedom of Association Policies
• Environmental & Energy Policy adopted
• Suppliers’ Code of Conduct introduced
• Introduction of Group-wide LTIFR measure
of employee health & safety
• Website relaunched with a separate
sustainability section
2021
• ESG Committee formed
• ESG Policy adopted
• First time reporting Scope 2 emissions
• Publication of first climate-related report
in accordance with TCFD recommendations
• Improvement in ESG ratings and ranking
positions (Sustainalytics, Expert RA)
2022
• Health and Safety Policy adopted with LTIFR
maintained at 0.
• Strengthening of HR practices. Employee
engagement survey held
• Green Office Initiative introduced
• Further enhancement of climate-related
disclosure: analysis of climate-related risks
and opportunities
Key ESG activities
The timeline shows some key highlights and the progress we have made to date.
Our ESG journey
Sustainability
Corporate governance
The objective of corporate
governance is to support the Board
in its efforts to provide effective,
transparent and ethical oversight
of the Group. Our governance
framework is in line with the highest
international standards supporting
the Board to make decisions that
are in the best long-term interests
of the Group and its communities
that will create value for all
its stakeholders.
Employees
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 applicable
employment legislation.
KEY
ESG
ACTIVITIES
2023 • First time reporting waste management
data with 99% of waste categorised
as low-hazardous
• Further external recognition through various
ESG rankings
Communities
We are very conscious of the role
we play in supporting our communities.
We do this through our employees’
interactions, the opportunities our
businesses create, and the economic
value that our Company generates.
We also actively contribute
to community initiatives and provide
direct support to important community
causes through charitable giving.
Environment
Employing more energy-
efficient practices, reducing
carbon emissions and promoting
recycling are the means by which
we work to minimise the adverse
impact of Globaltrans’ activities
on the environment.
фото → 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 simply to satisfy regulatory obligations but also to meet the expectations of our
stakeholders. For further information, please see the Risk Management section of this Annual Report.
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
69 68
• Publication of our first Sustainability
Report in accordance with GRI
standards
• First time reporting Scope 1 emissions
• Privacy Policy introduced
2020
• Introduction of various social policies such
as Human Rights, Diversity and Inclusion,
and Freedom of Association Policies
• Environmental & Energy Policy adopted
• Suppliers’ Code of Conduct introduced
• Introduction of Group-wide LTIFR measure
of employee health & safety
• Website relaunched with a separate
sustainability section
2021
• ESG Committee formed
• ESG Policy adopted
• First time reporting Scope 2 emissions
• Publication of first climate-related report
in accordance with TCFD recommendations
• Improvement in ESG ratings and ranking
positions (Sustainalytics, Expert RA)
2022
• Health and Safety Policy adopted with LTIFR
maintained at 0.
• Strengthening of HR practices. Employee
engagement survey held
• Green Office Initiative introduced
• Further enhancement of climate-related
disclosure: analysis of climate-related risks
and opportunities
Key ESG activities
The timeline shows some key highlights and the progress we have made to date.
Our ESG journey
Sustainability
Corporate governance
The objective of corporate
governance is to support the Board
in its efforts to provide effective,
transparent and ethical oversight
of the Group. Our governance
framework is in line with the highest
international standards supporting
the Board to make decisions that
are in the best long-term interests
of the Group and its communities
that will create value for all
its stakeholders.
Employees
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 applicable
employment legislation.
KEY
ESG
ACTIVITIES
2023 • First time reporting waste management
data with 99% of waste categorised
as low-hazardous
• Further external recognition through various
ESG rankings
Communities
We are very conscious of the role
we play in supporting our communities.
We do this through our employees’
interactions, the opportunities our
businesses create, and the economic
value that our Company generates.
We also actively contribute
to community initiatives and provide
direct support to important community
causes through charitable giving.
Environment
Employing more energy-
efficient practices, reducing
carbon emissions and promoting
recycling are the means by which
we work to minimise the adverse
impact of Globaltrans’ activities
on the environment.
фото → 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 simply to satisfy regulatory obligations but also to meet the expectations of our
stakeholders. For further information, please see the Risk Management section of this Annual Report.
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
69 68
Stakeholder engagement mechanisms
Stakeholder group Mechanisms of stakeholder engagement Outcomes in 2023
Employees
• Intranet
• Labour-management consultations
• Staff surveys
• Corporate booklets, information boards
• Regular, direct communication between
managers, teams and individuals
• Career development, training
and performance reviews
• Improvement in overall staff turnover
• Over 50,000 training hours provided
to support the employee development
• Provision of social benefits and guarantees,
including medical insurance
• Improvement in employee benefit packages
• Improved colleague awareness of health
and safety along with other ESG issues
• Diversity and equality issues in focus – number
of employees with disabilities increased to 30
• Enhancement of corporate culture by hosting
various events
Shareholders
and investors
• Open, effective and transparent
communication
• Investor Relations website
• Dedicated Investor Relations team
• Annual/Extraordinary General Meetings
• Corporate reporting, webcasts
• Conference calls, investor events
and roadshows
• Social media channels
• Information disclosure on a semi-annual basis
• Analyst and investor events and webcasts
• Non-deal roadshows with institutional
investors
• Series of investor meetings with retail
investors
• Publication of Annual Report
and Sustainability Report along
with the climate-related disclosure
• Completion of numerous ESG questionnaires
received from investors, financial institutions
and rating agencies
• Interaction with credit rating agencies
Customers
and business
partners
• Regular meetings, presentations, and formal
consultations
• Customer analytics, customer evaluation
system
• Industry conferences and forums
• Customer satisfaction surveys
• Transparent supply chain
• Maintenance of robust portfolio of Service
Contracts contributing 61% of Net Revenue
from Operation of Rolling Stock in 2023
Government,
regulators
and professional
authorities
• Regular communication with regulators/
policy makers on industry issues
• Industry and regulatory forums
• Participation in industry associations
including the Council of Railway Operators
and the Union of Transport Workers
Local communities
• Corporate philanthropy and charitable
contributions
• Community investment
• Assistance to socioeconomic development
of our communities
• Regular contributions to aid charitable
projects (In 2023 the Group supported
the Life Line Charity Fund, Road of Mercy
Charity foundation and other organisations)
Media
• Communication with media representatives
• Transparent disclosure through various
channels
• Dedicated media section on corporate
website
• Dedicated media relations contacts
• Press conferences and exhibitions
• Distribution of news and information
announcements
• Access to results webcasts
with the management
• Responding to media queries
• Interviews with senior management,
ad hoc commentary on industry issues,
and responding to journalists’ questions
Sustainability
Contributing to the Sustainable
Development Goals
This year’s Sustainability Report also referenced
the United Nations Sustainability Development
Goals (“SDGs”) framework, as Globaltrans directly
or indirectly contributes to some of the UN’s 17
SDGs. These goals provide a roadmap for societies
and businesses around the world to end poverty,
protect the planet and achieve a better future
for everyone by 2030.
We focus on prioritising
the wellbeing of our people
and cultivating a zero-harm culture
We aspire to increase female
representation at all levels within
the Group
We focus on providing our
employees with equal employment
opportunities
We invest in learning and skill
development of our staff
to provide a safe and inclusive work
environment
We constantly search
for opportunities to optimise the use
of resources and minimise waste
We are committed to minimising our
carbon footprint
Stakeholder engagement
Effective stakeholder engagement is crucial
for sustainable success and long-term value
creation. Globaltrans recognises the significance
of collaboration and actively promotes regular
and transparent stakeholder engagement. Open
and effective dialogue with our stakeholders allows
us to be kept informed of their needs, expectations
and concerns and enables us to receive valuable
insights and create better outcomes for the business.
It also helps us to identify and manage material issues
as well as potential risks and opportunities.
We actively engage with our stakeholders throughout
the year using various channels and processes
to ensure accountability for our activities and deepen
their understanding of our strategy, performance
and initiatives.
In terms of our day-to-day operations, Globaltrans’
stakeholders include employees, customers, investors,
government and regulators, and local communities.
At the Group level, we regularly engage with investors,
shareholders, credit rating agencies, financial
institutions and the media. The type of engagement
varies depending on the stakeholder group.
In 2023, despite the challenging macro environment,
the Group’s stakeholder interactions have been
maintained at the same level as previous years.
We devoted considerable time and effort to address
the concerns of our stakeholders and respond quickly
to information requests. During the year, we maintained
our use of digital communication for a large number
of client engagements, investor meetings and events.
The corporate website is the main source
of information on the Company: news releases, results
presentations, webcasts, current and historical
financial information, market statistics, and other
important data can be found there. We have a separate
section on sustainability, in light of our increased
commitment and reporting on this important issue.
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
71 70
Stakeholder group Mechanisms of stakeholder engagement Outcomes in 2023
Employees
• Intranet
• Labour-management consultations
• Staff surveys
• Corporate booklets, information boards
• Regular, direct communication between
managers, teams and individuals
• Career development, training
and performance reviews
• Improvement in overall staff turnover
• Over 50,000 training hours provided
to support the employee development
• Provision of social benefits and guarantees,
including medical insurance
• Improvement in employee benefit packages
• Improved colleague awareness of health
and safety along with other ESG issues
• Diversity and equality issues in focus – number
of employees with disabilities increased to 30
• Enhancement of corporate culture by hosting
various events
Shareholders
and investors
• Open, effective and transparent
communication
• Investor Relations website
• Dedicated Investor Relations team
• Annual/Extraordinary General Meetings
• Corporate reporting, webcasts
• Conference calls, investor events
and roadshows
• Social media channels
• Information disclosure on a semi-annual basis
• Analyst and investor events and webcasts
• Non-deal roadshows with institutional
investors
• Series of investor meetings with retail
investors
• Publication of Annual Report
and Sustainability Report along
with the climate-related disclosure
• Completion of numerous ESG questionnaires
received from investors, financial institutions
and rating agencies
• Interaction with credit rating agencies
Customers
and business
partners
• Regular meetings, presentations, and formal
consultations
• Customer analytics, customer evaluation
system
• Industry conferences and forums
• Customer satisfaction surveys
• Transparent supply chain
• Maintenance of robust portfolio of Service
Contracts contributing 61% of Net Revenue
from Operation of Rolling Stock in 2023
Government,
regulators
and professional
authorities
• Regular communication with regulators/
policy makers on industry issues
• Industry and regulatory forums
• Participation in industry associations
including the Council of Railway Operators
and the Union of Transport Workers
Local communities
• Corporate philanthropy and charitable
contributions
• Community investment
• Assistance to socioeconomic development
of our communities
• Regular contributions to aid charitable
projects (In 2023 the Group supported
the Life Line Charity Fund, Road of Mercy
Charity foundation and other organisations)
Media
• Communication with media representatives
• Transparent disclosure through various
channels
• Dedicated media section on corporate
website
• Dedicated media relations contacts
• Press conferences and exhibitions
• Distribution of news and information
announcements
• Access to results webcasts
with the management
• Responding to media queries
• Interviews with senior management,
ad hoc commentary on industry issues,
and responding to journalists’ questions
Sustainability
Contributing to the Sustainable
Development Goals
This year’s Sustainability Report also referenced
the United Nations Sustainability Development
Goals (“SDGs”) framework, as Globaltrans directly
or indirectly contributes to some of the UN’s 17
SDGs. These goals provide a roadmap for societies
and businesses around the world to end poverty,
protect the planet and achieve a better future
for everyone by 2030.
We focus on prioritising
the wellbeing of our people
and cultivating a zero-harm culture
We aspire to increase female
representation at all levels within
the Group
We focus on providing our
employees with equal employment
opportunities
We invest in learning and skill
development of our staff
to provide a safe and inclusive work
environment
We constantly search
for opportunities to optimise the use
of resources and minimise waste
We are committed to minimising our
carbon footprint
Stakeholder engagement
Effective stakeholder engagement is crucial
for sustainable success and long-term value
creation. Globaltrans recognises the significance
of collaboration and actively promotes regular
and transparent stakeholder engagement. Open
and effective dialogue with our stakeholders allows
us to be kept informed of their needs, expectations
and concerns and enables us to receive valuable
insights and create better outcomes for the business.
It also helps us to identify and manage material issues
as well as potential risks and opportunities.
We actively engage with our stakeholders throughout
the year using various channels and processes
to ensure accountability for our activities and deepen
their understanding of our strategy, performance
and initiatives.
In terms of our day-to-day operations, Globaltrans’
stakeholders include employees, customers, investors,
government and regulators, and local communities.
At the Group level, we regularly engage with investors,
shareholders, credit rating agencies, financial
institutions and the media. The type of engagement
varies depending on the stakeholder group.
In 2023, despite the challenging macro environment,
the Group’s stakeholder interactions have been
maintained at the same level as previous years.
We devoted considerable time and effort to address
the concerns of our stakeholders and respond quickly
to information requests. During the year, we maintained
our use of digital communication for a large number
of client engagements, investor meetings and events.
The corporate website is the main source
of information on the Company: news releases, results
presentations, webcasts, current and historical
financial information, market statistics, and other
important data can be found there. We have a separate
section on sustainability, in light of our increased
commitment and reporting on this important issue.
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
71 70
1
In 2023, there were no employees covered by collective bargaining agreements.
Compliance and integrity are critical assets
for any business, as they shape how a company
is perceived by stakeholders and can have a significant
impact on its long-term success. Globaltrans
recognises the importance of upholding our values
and ethics and is committed to doing the right
thing and operating our business responsibly
and with the highest levels of integrity. By acting
with integrity, we gain the confidence and trust
of our clients, investors and other stakeholders
and create a positive societal impact. Our commitment
is demonstrated through the Group’s adherence
to legal and regulatory requirements, continuous
improvement of the governance framework
and constant focus on risk management. Our
values and principles are clearly communicated
through a wide range of Group policies, which serve
as the foundation of all our business activities. Each
policy has been endorsed by the Board.
Our Code of Ethics and Conduct defines the corporate
values, the basic principles of business conduct,
and the ethical commitments that the Group
and its employees must put into practice on a daily
basis. It describes the Group’s principles with respect
to confidential information, anti-bribery, conflicts
of interest and reporting concerns. The Code
is intended to help our employees become aware
of the responsibilities that each one of them has and
to understand what is expected of them to ensure
compliance with our policies and all relevant laws
and regulations.
We do not tolerate any violations of the Code. All
employees are required to read and fully understand
the Code and sign an acknowledgement to this effect.
We strongly believe that sustainability is about
cooperation. Our partners are an integral part
of our business, and how they behave also reflects
on us. Therefore, they must understand and commit
to upholding the same ethical standards as we set
for ourselves. Accordingly, 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. By building
on our shared values, Globaltrans and its suppliers
can create stronger and more successful businesses.
We are glad that nearly all our business partners
adhere to the highest ESG standards, comply with all
the environmental and social regulations and provide
voluntary disclosures on sustainability matters.
Globaltrans has adopted formal Group-wide policies
that address human rights, freedom of association,
data protection, diversity and inclusion, and supplier
conduct. These policies are subject to ongoing
review and monitoring to ensure their relevance
and compliance with legal requirements. The Group
requires all employees to acknowledge that they
understand and accept the relevant policies. All policy
documents are publicly available and can be viewed
on the Company’s website.
The fundamental rights and freedoms of individuals
are an important concern for Globaltrans in its relations
with employees and partners. We are committed
to maintaining strong human rights and labour practices
not just in our own operations and business network,
but within the broader community as well. We act
to create a fair, equal, healthy, safe, and engaging
work environment for all employees. That also
means a commitment to respecting human rights.
Tolerance Impartiality Respect Equality for all Safety
Understanding
and respecting diverse
cultures and people
with different views
Acting objectively
and professionally
Acknowledging people’s
abilities, qualities
and achievements
and complying with all
applicable labour laws
Creating opportunities
and a working
environment that
excludes any form
of discrimination
Complying
with required rules
to create a safe
and healthy
workplace
Our Human Rights Policy , introduced in 2020,
sets out the minimum human rights standards that
everyone who works for, and with, Globaltrans must
meet. To ensure that we are continually progressing
on this front, we regularly review our conduct,
policies and training and incorporate any required
changes or learnings into our operations. Our
approach is consistent with international human
rights standards such as the UN Guiding Principles
on Business and Human Rights. Our commitment
to human rights is also clearly stated in our Code
of Ethics and Conduct, Supplier Code of Conduct, and
in our Diversity and Inclusion Policy.
A diverse and inclusive work environment is rewarding
for our people and ultimately for our business.
By treating everyone with dignity and respect,
by providing equal opportunities regardless
of ethnicity, gender, religious beliefs, nationality,
age or any physical disability, we can create
an environment where people can be themselves
and excel in what they do. Our Diversity and Inclusion
Policy details our commitment to creating an inclusive
and welcoming environment. That commitment
is supported at the highest levels within the Group
and is reflected in our approach to new appointments
and Board membership.
Alongside our commitment to inclusivity is our
respect for all applicable labour laws and regulations
and our recognition that it is a fundamental right
of Globaltrans employees to form and join workers’
organisations and to engage in collective bargaining 1
This is enshrined in our Freedom of Association
Policy, adopted in 2020, which reflects the Group’s
commitment to respecting employees’ choices
and maintaining a regular and constructive dialogue
with them and their designated representatives.
Globaltrans has a zero-tolerance approach to bribery
and corruption in all its forms. While this is detailed
in our Anti-fraud Policy , we have always endeavoured
to act ethically, professionally, fairly and with integrity
in all our business activities and relationships.
We are very clear on the standards of conduct
that all employees must adhere to, and we provide
guidance on how to avoid and recognise unacceptable
behaviour. Our approach is consistent with all
applicable regulations and we have established rules
and procedures to deal with any alleged violations.
We ensure that each employee understands
the types of violations that can occur within their area
of responsibility and closely monitor for any signs
of potential non-compliance.
To support this, the Group maintains a Whistleblowing
Policy which encourages the investigation
and reporting of improper activities, including non-
compliance with our Code of Ethics and Conduct,
and helps fosters a culture based on honesty
and good behaviour. We encourage employees
to speak up and report any concerns that they may
have. We provide confidential, safe and secure
mechanisms for anonymous reporting of suspected
violations, as well as safeguards and support for those
who report such breaches.
Senior management meets regularly to discuss,
inter alia, anti-fraud and anti-corruption measures.
During 2023, no instances of alleged fraud, bribery
or corruption were reported within the Group.
We are committed to protecting the personal data
and respecting the privacy of our stakeholders.
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
that can be accessed on the Group’s website.
Sustainability
Ethics and behaviour
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
73 72
Compliance and integrity are critical assets
for any business, as they shape how a company
is perceived by stakeholders and can have a significant
impact on its long-term success. Globaltrans
recognises the importance of upholding our values
and ethics and is committed to doing the right
thing and operating our business responsibly
and with the highest levels of integrity. By acting
with integrity, we gain the confidence and trust
of our clients, investors and other stakeholders
and create a positive societal impact. Our commitment
is demonstrated through the Group’s adherence
to legal and regulatory requirements, continuous
improvement of the governance framework
and constant focus on risk management. Our
values and principles are clearly communicated
through a wide range of Group policies, which serve
as the foundation of all our business activities. Each
policy has been endorsed by the Board.
Our Code of Ethics and Conduct defines the corporate
values, the basic principles of business conduct,
and the ethical commitments that the Group
and its employees must put into practice on a daily
basis. It describes the Group’s principles with respect
to confidential information, anti-bribery, conflicts
of interest and reporting concerns. The Code
is intended to help our employees become aware
of the responsibilities that each one of them has and
to understand what is expected of them to ensure
compliance with our policies and all relevant laws
and regulations.
We do not tolerate any violations of the Code. All
employees are required to read and fully understand
the Code and sign an acknowledgement to this effect.
We strongly believe that sustainability is about
cooperation. Our partners are an integral part
of our business, and how they behave also reflects
on us. Therefore, they must understand and commit
to upholding the same ethical standards as we set
for ourselves. Accordingly, 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. By building
on our shared values, Globaltrans and its suppliers
can create stronger and more successful businesses.
We are glad that nearly all our business partners
adhere to the highest ESG standards, comply with all
the environmental and social regulations and provide
voluntary disclosures on sustainability matters.
Globaltrans has adopted formal Group-wide policies
that address human rights, freedom of association,
data protection, diversity and inclusion, and supplier
conduct. These policies are subject to ongoing
review and monitoring to ensure their relevance
and compliance with legal requirements. The Group
requires all employees to acknowledge that they
understand and accept the relevant policies. All policy
documents are publicly available and can be viewed
on the Company’s website.
The fundamental rights and freedoms of individuals
are an important concern for Globaltrans in its relations
with employees and partners. We are committed
to maintaining strong human rights and labour practices
not just in our own operations and business network,
but within the broader community as well. We act
to create a fair, equal, healthy, safe, and engaging
work environment for all employees. That also
means a commitment to respecting human rights.
Tolerance Impartiality Respect Equality for all Safety
Understanding
and respecting diverse
cultures and people
with different views
Acting objectively
and professionally
Acknowledging people’s
abilities, qualities
and achievements
and complying with all
applicable labour laws
Creating opportunities
and a working
environment that
excludes any form
of discrimination
Complying
with required rules
to create a safe
and healthy
workplace
Our Human Rights Policy , introduced in 2020,
sets out the minimum human rights standards that
everyone who works for, and with, Globaltrans must
meet. To ensure that we are continually progressing
on this front, we regularly review our conduct,
policies and training and incorporate any required
changes or learnings into our operations. Our
approach is consistent with international human
rights standards such as the UN Guiding Principles
on Business and Human Rights. Our commitment
to human rights is also clearly stated in our Code
of Ethics and Conduct, Supplier Code of Conduct, and
in our Diversity and Inclusion Policy.
A diverse and inclusive work environment is rewarding
for our people and ultimately for our business.
By treating everyone with dignity and respect,
by providing equal opportunities regardless
of ethnicity, gender, religious beliefs, nationality,
age or any physical disability, we can create
an environment where people can be themselves
and excel in what they do. Our Diversity and Inclusion
Policy details our commitment to creating an inclusive
and welcoming environment. That commitment
is supported at the highest levels within the Group
and is reflected in our approach to new appointments
and Board membership.
Alongside our commitment to inclusivity is our
respect for all applicable labour laws and regulations
and our recognition that it is a fundamental right
of Globaltrans employees to form and join workers’
organisations and to engage in collective bargaining 1
This is enshrined in our Freedom of Association
Policy, adopted in 2020, which reflects the Group’s
commitment to respecting employees’ choices
and maintaining a regular and constructive dialogue
with them and their designated representatives.
Globaltrans has a zero-tolerance approach to bribery
and corruption in all its forms. While this is detailed
in our Anti-fraud Policy , we have always endeavoured
to act ethically, professionally, fairly and with integrity
in all our business activities and relationships.
We are very clear on the standards of conduct
that all employees must adhere to, and we provide
guidance on how to avoid and recognise unacceptable
behaviour. Our approach is consistent with all
applicable regulations and we have established rules
and procedures to deal with any alleged violations.
We ensure that each employee understands
the types of violations that can occur within their area
of responsibility and closely monitor for any signs
of potential non-compliance.
To support this, the Group maintains a Whistleblowing
Policy which encourages the investigation
and reporting of improper activities, including non-
compliance with our Code of Ethics and Conduct,
and helps fosters a culture based on honesty
and good behaviour. We encourage employees
to speak up and report any concerns that they may
have. We provide confidential, safe and secure
mechanisms for anonymous reporting of suspected
violations, as well as safeguards and support for those
who report such breaches.
Senior management meets regularly to discuss,
inter alia, anti-fraud and anti-corruption measures.
During 2023, no instances of alleged fraud, bribery
or corruption were reported within the Group.
We are committed to protecting the personal data
and respecting the privacy of our stakeholders.
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
that can be accessed on the Group’s website.
Sustainability
Ethics and behaviour
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
73 72
75
74
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
ANNUAL REPORT 2023 Sustainability Report
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 2023, 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.
1,802 Total headcount
29 %
Share of women in the workforce
52,184 Total training hours
16 %
Employee turnover rate
1 %
Gender pay gap (GPG)
at non-managerial level
It is our people that play the greatest role
in moving us forward. Our progress primarily
relies on the contribution of our people. Their
skills, knowledge and dedication are fundamental
to our long-term success and sustainable growth.
As a responsible employer, we are committed
to prioritising the interests of our employees
and taking good care of them through solid human
resources practices. This people-centred approach
is in line with our culture and the fundamental
values of the commitments, policies, and initiatives
of the Group. To retain the best professionals
in our industry, Globaltrans must be a workplace
where people choose to join and stay. Hence,
we are dedicated to establishing the right conditions
in which employees can work effectively and advance
their careers. We also strive to maintain a positive,
inclusive, and inspiring work environment in which
everyone feels valued, respected, and supported.
Globaltrans has always valued its employees
as individuals. We embrace diversity and inclusivity,
recognising that each person brings unique
perspectives and strengths to our team. We strive
to ensure that all our employees have equal
opportunities in their daily work. At Globaltrans,
we offer fair remuneration that recognises individual
performance. In doing so, we strive to encourage our
people to realise their full potential by providing them
with expertise, education and training opportunities.
We apply a zero-tolerance approach to all
forms of discrimination, hostility, harassment
or unprofessional behaviour.
Sustainability
Employees
We continue to prioritise our employees’
wellbeing and safety and we are fully committed
to fostering a culture of health and safety at both
the individual and group levels. In recent years,
we have made a stronger commitment to addressing
health and safety issues and have developed robust
policies and strategies to achieve this.
To maintain a positive and healthy work environment,
clear communication, regular performance reviews,
employee engagement surveys, and recognition
programmes are essential. These initiatives help
foster strong relationships between employees
and employers, contributing to a positive work
culture.
Our Company is committed to managing people
issues effectively through a robust HR strategy
and policies that define our philosophy and values.
These policies cover areas such as 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
• Health and Safety Policy
• Human Rights Policy
• Internal Code of Labour Conduct
• Regulations on Contractual Work
• Regulations on Business Trips
• Regulations on Protection of Personal Data
of Employees
All these policies are intended to ensure compliance
with the appropriate labour and social standards
as well as all local laws and regulations relating
to compensation and benefits, recruitment,
working practices, equal opportunities, diversity
and discrimination. Should we become aware
of any suspected violations or issues, we take
immediate action to investigate and address them.
In 2023, we continued to improve our HR
management procedures and activities at both
the Group and subsidiary levels.
Workforce size and mix
In 2023, our average employee headcount decreased
1% year on year to 1,771 employees (2022: 1,781).
Overall headcount, as at the year end, increased 2%
compared to 2022 to 1,802 employees 1 (2022: 1,768).
BaltTransServis (“BTS”) continued to be the largest
employer within the Group as a result
of the continuing shift to employing in-house
locomotive crews. Our workforce is predominantly
male, with 71% male employees and 29% female
employees. We have a young talent pool, with 64%
of our employees aged between 30 and 50 years.
Almost all our employees (99%) hold regular, full-
time positions.
Overview Strategic Report Sustainability Report Governance Financial Statements Additional Information
ANNUAL REPORT 2023 Sustainability Report
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 2023, 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.
1,802 Total headcount
29 %
Share of women in the workforce
52,184 Total training hours
16 %
Employee turnover rate
1 %
Gender pay gap (GPG)
at non-managerial level
It is our people that play the greatest role
in moving us forward. Our progress primarily
relies on the contribution of our people. Their
skills, knowledge and dedication are fundamental
to our long-term success and sustainable growth.
As a responsible employer, we are committed
to prioritising the interests of our employees
and taking good care of them through solid human
resources practices. This people-centred approach
is in line with our culture and the fundamental
values of the commitments, policies, and initiatives
of the Group. To retain the best professionals
in our industry, Globaltrans must be a workplace
where people choose to join and stay. Hence,
we are dedicated to establishing the right conditions
in which employees can work effectively and advance
their careers. We also strive to maintain a positive,
inclusive, and inspiring work environment in which
everyone feels valued, respected, and supported.
Globaltrans has always valued its employees
as individuals. We embrace diversity and inclusivity,
recognising that each person brings unique
perspectives and strengths to our team. We strive
to ensure that all our employees have equal
opportunities in their daily work. At Globaltrans,
we offer fair remuneration that recognises individual
performance. In doing so, we strive to encourage our
people to realise their full potential by providing them
with expertise, education and training opportunities.
We apply a zero-tolerance approach to all
forms of discrimination, hostility, harassment
or unprofessional behaviour.
Sustainability
Employees
We continue to prioritise our employees’
wellbeing and safety and we are fully committed
to fostering a culture of health and safety at both
the individual and group levels. In recent years,
we have made a stronger commitment to addressing
health and safety issues and have developed robust
policies and strategies to achieve this.
To maintain a positive and healthy work environment,
clear communication, regular performance reviews,
employee engagement surveys, and recognition
programmes are essential. These initiatives help
foster strong relationships between employees
and employers, contributing to a positive work
culture.
Our Company is committed to managing people
issues effectively through a robust HR strategy
and policies that define our philosophy and values.
These policies cover areas such as 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
• Health and Safety Policy
• Human Rights Policy
• Internal Code of Labour Conduct
• Regulations on Contractual Work
• Regulations on Business Trips
• Regulations on Protection of Personal Data
of Employees
All these policies are intended to ensure compliance
with the appropriate labour and social standards
as well as all local laws and regulations relating
to compensation and benefits, recruitment,
working practices, equal opportunities, diversity
and discrimination. Should we become aware
of any suspected violations or issues, we take
immediate action to investigate and address them.
In 2023, we continued to improve our HR
management procedures and activities at both
the Group and subsidiary levels.
Workforce size and mix
In 2023, our average employee headcount decreased
1% year on year to 1,771 employees (2022: 1,781).
Overall headcount, as at the year end, increased 2%
compared to 2022 to 1,802 employees 1 (2022: 1,768).
BaltTransServis (“BTS”) continued to be the largest
employer within the Group as a result
of the continuing shift to employing in-house
locomotive crews. Our workforce is predominantly
male, with 71% male employees and 29% female
employees. We have a young talent pool, with 64%
of our employees aged between 30 and 50 years.
Almost all our employees (99%) hold regular, full-
time positions.
Diversity
We strongly believe that embracing diversity
and inclusion within a company contributes to better
business performance, decision-making processes
and outcomes. At Globaltrans, we have always
considered diversity as our strength and a competitive
advantage and we strive to integrate it into our corporate
culture and business strategy. Furthermore, prioritising
diverse and unique perspectives, backgrounds
and experiences translates into higher levels
of employee satisfaction, retention, and performance.
As a result, we can create a better work environment.
Therefore, diversity and inclusion issues
are an important focus area for the Group’s HR function.
At Globaltrans, we are committed to creating
an inclusive work culture where everyone is treated fairly
and with respect, regardless of their gender, nationality,
religion, sexual orientation, or physical ability. We value
and celebrate our employees’ individuality recognising
their unique talents, contributions, and performance.
Our commitment to equal opportunities and rights for all
is at the core of our Company’s philosophy.
We strive to eliminate all forms of discrimination
by offering equitable employment to all our employees.
The Group’s approach to diversity issues is set
out in the Diversity and Inclusion Policy adopted
in 2020 and exists at all levels of the Group, including
the Board of Directors and all subcommittees
of the Board. The Diversity and Inclusion Policy covers
all forms of diversity and inclusion, including without
limitation aspects such as age, gender, education,
professional background, ethnicity, sexual orientation,
disability and socio-economic background. In line
with the best practice and the Group’s commitment
to diversity, the Board does take into account DE&I
aspects when making new Board appointments
and considering the composition of the Board.
Headcount by Group subsidiaries
in 2023 and 2022, at year-end
BaltTransServis (incl. its subsidiaries)
New Forwarding Company
Ural Wagonrepair Company
GTI Management
Other subsidiaries
Source: Globaltrans.
Headcount by gender in 2023,
at year-end
Sustainability
Headcount by age in 2023,
at year-end
Permanent contract in 2023,
at year-end, %
Temporary contract in 2023,
at year-end
Source: Globaltrans.
1 The gender pay gap at non-managerial level is the difference between the average hourly earnings of a company’s male and female
employees who are below management level. Calculating the mean gender pay gap involves adding the hourly rates for all male
employees and then for all female employees in two groups and then dividing these totals by the number of male or female employees
in each list. Then one needs to subtract the female hourly rate from the male hourly rate, divide the total by the male hourly rate, and
multiply the figure by 100. This will give a percentage difference in pay.
71%
Men
29%
Women
11%
<30 years
25%
>50 years
64%
30-50
40
Part time
Full time
Women
Men
60
29 71
73%
Men
27%
Women
During the reporting period no incidence
of discrimination was reported.
Globaltrans is committed to upholding the principles
of diversity, equal opportunities and anti-discrimination
in all of our activities. This commitment applies
to recruitment, employee retention, promotions,
compensation and benefits, career development
and training, working conditions, and Board
appointments.
The Group is actively working to promote greater
fairness and equality within the organisation
by ensuring equal compensation opportunities for both
men and women. By conducting a comprehensive
analysis and publishing our gender pay gap data 1 ,
we aim to increase transparency and understanding
of the challenges and opportunities for achieving gender
equality in our workforce.
The gender pay gap relates to differences in average
pay between men and women within an organisation;
it does not compare the wages paid to men and women
for doing identical or similar jobs (known as equal
pay). In 2023, the average gender pay gap in our
non-managerial workforce was 1%, indicating that
the average hourly wage of male employees is higher
than that of female employees. This gap reflects the fact
that there are proportionally more men at the non-
managerial level. Prior to that, for the previous three
years, the Group has had a gender pay gap in favour
of women.
We will continue to work on closing our gender
pay gap and increasing the female representation
in the Company.
869
826
2023
2022
530
533
2023
2022
346
326
2023
2022
46
47
2023
2022
11
36
2023
2022
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
77 76
We strongly believe that embracing diversity
and inclusion within a company contributes to better
business performance, decision-making processes
and outcomes. At Globaltrans, we have always
considered diversity as our strength and a competitive
advantage and we strive to integrate it into our corporate
culture and business strategy. Furthermore, prioritising
diverse and unique perspectives, backgrounds
and experiences translates into higher levels
of employee satisfaction, retention, and performance.
As a result, we can create a better work environment.
Therefore, diversity and inclusion issues
are an important focus area for the Group’s HR function.
At Globaltrans, we are committed to creating
an inclusive work culture where everyone is treated fairly
and with respect, regardless of their gender, nationality,
religion, sexual orientation, or physical ability. We value
and celebrate our employees’ individuality recognising
their unique talents, contributions, and performance.
Our commitment to equal opportunities and rights for all
is at the core of our Company’s philosophy.
We strive to eliminate all forms of discrimination
by offering equitable employment to all our employees.
The Group’s approach to diversity issues is set
out in the Diversity and Inclusion Policy adopted
in 2020 and exists at all levels of the Group, including
the Board of Directors and all subcommittees
of the Board. The Diversity and Inclusion Policy covers
all forms of diversity and inclusion, including without
limitation aspects such as age, gender, education,
professional background, ethnicity, sexual orientation,
disability and socio-economic background. In line
with the best practice and the Group’s commitment
to diversity, the Board does take into account DE&I
aspects when making new Board appointments
and considering the composition of the Board.
Headcount by Group subsidiaries
in 2023 and 2022, at year-end
BaltTransServis (incl. its subsidiaries)
New Forwarding Company
Ural Wagonrepair Company
GTI Management
Other subsidiaries
Source: Globaltrans.
Headcount by gender in 2023,
at year-end
Sustainability
Headcount by age in 2023,
at year-end
Permanent contract in 2023,
at year-end, %
Temporary contract in 2023,
at year-end
Source: Globaltrans.
1 The gender pay gap at non-managerial level is the difference between the average hourly earnings of a company’s male and female
employees who are below management level. Calculating the mean gender pay gap involves adding the hourly rates for all male
employees and then for all female employees in two groups and then dividing these totals by the number of male or female employees
in each list. Then one needs to subtract the female hourly rate from the male hourly rate, divide the total by the male hourly rate, and
multiply the figure by 100. This will give a percentage difference in pay.
71%
Men
29%
Women
11%
<30 years
25%
>50 years
64%
30-50
40
Part time
Full time
Women
Men
60
29 71
73%
Men
27%
Women
During the reporting period no incidence
of discrimination was reported.
Globaltrans is committed to upholding the principles
of diversity, equal opportunities and anti-discrimination
in all of our activities. This commitment applies
to recruitment, employee retention, promotions,
compensation and benefits, career development
and training, working conditions, and Board
appointments.
The Group is actively working to promote greater
fairness and equality within the organisation
by ensuring equal compensation opportunities for both
men and women. By conducting a comprehensive
analysis and publishing our gender pay gap data 1 ,
we aim to increase transparency and understanding
of the challenges and opportunities for achieving gender
equality in our workforce.
The gender pay gap relates to differences in average
pay between men and women within an organisation;
it does not compare the wages paid to men and women
for doing identical or similar jobs (known as equal
pay). In 2023, the average gender pay gap in our
non-managerial workforce was 1%, indicating that
the average hourly wage of male employees is higher
than that of female employees. This gap reflects the fact
that there are proportionally more men at the non-
managerial level. Prior to that, for the previous three
years, the Group has had a gender pay gap in favour
of women.
We will continue to work on closing our gender
pay gap and increasing the female representation
in the Company.
869
826
2023
2022
530
533
2023
2022
346
326
2023
2022
46
47
2023
2022
11
36
2023
2022
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
77 76
We are committed to building a more diverse
workforce and a more inclusive workplace where
everyone feels accepted, respected and empowered.
Historically, the freight rail transportation has
been an industry where women are under-
represented. By concentrating on attracting more
women into the workforce, we are progressively
and successfully addressing the gender imbalance
within our Group. As at year-end 2023, women
comprised 29% of our workforce. At the Board level,
women comprised 14% of the Board of Directors (two
Board members).
Our second priority for managing diversity is to ensure
the inclusion of employees with disabilities.
We believe it is important not only to hire people
with disabilities but also create an environment
where they can easily work and build successful
careers, regardless of any disabilities they may have.
Diversity matrix in 2023 (at year-end) – Ethnicity
Number
of Board
members
Percentage
of Board
members
Number of senior
positions on the Board
(Senior Independent
Directors and Chair)
Number
in Executive
management
Percentage
of Executive
management
White British or other White
(including minority-white
groups)
14 100 2 9 100
Mixed / Multiple Ethnic
Groups
- - - - -
Asian / Asian British - - - - -
Black / African / Caribbean /
Black British
- - - - -
Other ethnic group,
including Arab
- - - - -
Not specified / prefer not
to say
- - - - -
Sustainability
All the data in the tables was gathered voluntarily
via self-reporting through questionnaires given
to the relevant participants based on the criteria
set out in the above tables. Although diversity,
equality, and inclusion are important principles held
throughout the Group, in 2023 we did not manage
to meet the Board diversity targets in having at least
40% of the Board comprised of women, a director
from a minority ethnic background or a woman
in the role of chair, chief executive, senior
independent director or chief financial officer.
In this regard, Globaltrans recognises that freight
rail transportation industry historically has been
male dominated and that in the regions where
we operate and work, there are more limited
opportunities for inclusion of numerous ethnic
groups. Nevertheless, we consider that positive
progress has been made to date in achieving
greater diversity at all levels of the Group (including
the Board) and we will continue to address these
issues in the future and seek further opportunities
to improve our diversity and achieve these targets.
Mean (average) gender pay gap, %
at non-managerial level
Source: Globaltrans.
Diversity matrix in 2023 (at year-end) – Gender
Number of Board members Number in Executive management
Number of senior positions on the Board
(Senior Independent Directors and Chair)
12 (86%)
Men
2 (14%)
Women
8 (89%)
Men
1 (11%)
Women
2
Men
0
Women
There are currently 30 employees with disabilities
(1.7% of the total workforce) whose daily
contributions are helping the Group meet its business
goals and achieve success.
1
-1
-3
-5
2023
2022
2021
2020
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
79 78
workforce and a more inclusive workplace where
everyone feels accepted, respected and empowered.
Historically, the freight rail transportation has
been an industry where women are under-
represented. By concentrating on attracting more
women into the workforce, we are progressively
and successfully addressing the gender imbalance
within our Group. As at year-end 2023, women
comprised 29% of our workforce. At the Board level,
women comprised 14% of the Board of Directors (two
Board members).
Our second priority for managing diversity is to ensure
the inclusion of employees with disabilities.
We believe it is important not only to hire people
with disabilities but also create an environment
where they can easily work and build successful
careers, regardless of any disabilities they may have.
Diversity matrix in 2023 (at year-end) – Ethnicity
Number
of Board
members
Percentage
of Board
members
Number of senior
positions on the Board
(Senior Independent
Directors and Chair)
Number
in Executive
management
Percentage
of Executive
management
White British or other White
(including minority-white
groups)
14 100 2 9 100
Mixed / Multiple Ethnic
Groups
- - - - -
Asian / Asian British - - - - -
Black / African / Caribbean /
Black British
- - - - -
Other ethnic group,
including Arab
- - - - -
Not specified / prefer not
to say
- - - - -
Sustainability
All the data in the tables was gathered voluntarily
via self-reporting through questionnaires given
to the relevant participants based on the criteria
set out in the above tables. Although diversity,
equality, and inclusion are important principles held
throughout the Group, in 2023 we did not manage
to meet the Board diversity targets in having at least
40% of the Board comprised of women, a director
from a minority ethnic background or a woman
in the role of chair, chief executive, senior
independent director or chief financial officer.
In this regard, Globaltrans recognises that freight
rail transportation industry historically has been
male dominated and that in the regions where
we operate and work, there are more limited
opportunities for inclusion of numerous ethnic
groups. Nevertheless, we consider that positive
progress has been made to date in achieving
greater diversity at all levels of the Group (including
the Board) and we will continue to address these
issues in the future and seek further opportunities
to improve our diversity and achieve these targets.
Mean (average) gender pay gap, %
at non-managerial level
Source: Globaltrans.
Diversity matrix in 2023 (at year-end) – Gender
Number of Board members Number in Executive management
Number of senior positions on the Board
(Senior Independent Directors and Chair)
12 (86%)
Men
2 (14%)
Women
8 (89%)
Men
1 (11%)
Women
2
Men
0
Women
There are currently 30 employees with disabilities
(1.7% of the total workforce) whose daily
contributions are helping the Group meet its business
goals and achieve success.
1
-1
-3
-5
2023
2022
2021
2020
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
79 78
Motivation
Passionate, engaged and motivated employees
are an important part of what makes any business
successful and efficient. As an employer, we strive
to be an employer of choice, by demonstrating
that we care about our people’s quality of life
and are committed to fostering a culture
of appreciation. At Globaltrans, we are constantly
improving our human resources practices
to try to provide the best possible employee
experience. Our goal is to inspire and motivate
our people by providing them with a safe, creative
and collaborative workplace. We keep in close
touch with our colleagues, we listen to their
needs and we work together to adapt to changing
circumstances. We provide ongoing feedback to help
them monitor their performance and achievements.
We are committed to maintaining a motivated
and productive workforce that values being
part of Globaltrans. To retain talent within
the organisation, we must continually improve
working conditions, provide career development
opportunities, offer attractive compensation
and benefits, and provide rewarding work
and opportunities for learning and development. Our
staff reward packages can vary for every subsidiary
and include but are not limited to:
• Social insurance (compensation and paid leave
in case of pregnancy, childbirth, and childcare);
• Medical coverage for employees and their families;
• Reimbursement of home-to-work transportation
costs and fuel expenses;
• Gym membership;
• Education of employees’ children
and grandchildren.
In addition, the Group reviews different types
of requests and provides financial assistance
in challenging circumstances and on special
occasions. Eligible employees can participate
in various incentive schemes operated by the Group.
Training and education
Continuous learning and professional development
are as essential to the personal growth of our
employees as they are to our business’ sustained
success and competitiveness. A learning culture
is an integral part of our people strategy as it enables
our team members to better tackle complex problems,
be more adaptive to change and improve their skills.
Thus, the Group actively invests in the progress
and skill enhancement of its employees by providing
them with appropriate opportunities and experiences
that are tailored to meet their professional needs
and career goals.
To help our people enhance their knowledge
and performance, and become more future-ready,
we regularly host training events, seminars and skills
workshops tailored to individual work requirements.
Many of the training and development courses
we offer, including those that cover sustainability,
social, strategic and personal development issues
are available online through our intranet. By offering
an array of training and development tools,
we keep our employees engaged in their jobs and
with the Company.
In 2023, we provided a total of 52,184 hours of training
for our employees, which is lower than the previous
year’s figure (2022: 78,106). It was due to a decline
in the amount of mandatory safety training required
in the year. The learning and development activities
focused on such areas as health and safety,
accounting, business administration, environmental
safety, information technology, financial management,
and marketing. We also worked on the development
of technical and soft skills. In 2023, the majority
of learning activities remained digital, with 82% of all
training and development happening online.
Sustainability
Number of employees participating
in training
Average training hours per employee
(participating in training)
Average training hours by gender
Source: Globaltrans.
Distribution of training among
employees by employee categories
in 2023
1 781
1,024
2023
2022
67
76
2023
2022
68
2023
2022
Men
Women
65
78 71
13%
Managers
87%
Employees
Main types of training formats in 2023
Source: Globaltrans.
82%
Distance
learning
18%
On-site
learning
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
81 80
Passionate, engaged and motivated employees
are an important part of what makes any business
successful and efficient. As an employer, we strive
to be an employer of choice, by demonstrating
that we care about our people’s quality of life
and are committed to fostering a culture
of appreciation. At Globaltrans, we are constantly
improving our human resources practices
to try to provide the best possible employee
experience. Our goal is to inspire and motivate
our people by providing them with a safe, creative
and collaborative workplace. We keep in close
touch with our colleagues, we listen to their
needs and we work together to adapt to changing
circumstances. We provide ongoing feedback to help
them monitor their performance and achievements.
We are committed to maintaining a motivated
and productive workforce that values being
part of Globaltrans. To retain talent within
the organisation, we must continually improve
working conditions, provide career development
opportunities, offer attractive compensation
and benefits, and provide rewarding work
and opportunities for learning and development. Our
staff reward packages can vary for every subsidiary
and include but are not limited to:
• Social insurance (compensation and paid leave
in case of pregnancy, childbirth, and childcare);
• Medical coverage for employees and their families;
• Reimbursement of home-to-work transportation
costs and fuel expenses;
• Gym membership;
• Education of employees’ children
and grandchildren.
In addition, the Group reviews different types
of requests and provides financial assistance
in challenging circumstances and on special
occasions. Eligible employees can participate
in various incentive schemes operated by the Group.
Training and education
Continuous learning and professional development
are as essential to the personal growth of our
employees as they are to our business’ sustained
success and competitiveness. A learning culture
is an integral part of our people strategy as it enables
our team members to better tackle complex problems,
be more adaptive to change and improve their skills.
Thus, the Group actively invests in the progress
and skill enhancement of its employees by providing
them with appropriate opportunities and experiences
that are tailored to meet their professional needs
and career goals.
To help our people enhance their knowledge
and performance, and become more future-ready,
we regularly host training events, seminars and skills
workshops tailored to individual work requirements.
Many of the training and development courses
we offer, including those that cover sustainability,
social, strategic and personal development issues
are available online through our intranet. By offering
an array of training and development tools,
we keep our employees engaged in their jobs and
with the Company.
In 2023, we provided a total of 52,184 hours of training
for our employees, which is lower than the previous
year’s figure (2022: 78,106). It was due to a decline
in the amount of mandatory safety training required
in the year. The learning and development activities
focused on such areas as health and safety,
accounting, business administration, environmental
safety, information technology, financial management,
and marketing. We also worked on the development
of technical and soft skills. In 2023, the majority
of learning activities remained digital, with 82% of all
training and development happening online.
Sustainability
Number of employees participating
in training
Average training hours per employee
(participating in training)
Average training hours by gender
Source: Globaltrans.
Distribution of training among
employees by employee categories
in 2023
1 781
1,024
2023
2022
67
76
2023
2022
68
2023
2022
Men
Women
65
78 71
13%
Managers
87%
Employees
Main types of training formats in 2023
Source: Globaltrans.
82%
Distance
learning
18%
On-site
learning
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
81 80
Loss Time Injury Frequency Rate
(LTIFR), 2020–2023
Retaining our people is one of our top priorities.
We have consistently tracked staff turnover
historically, as it provides valuable insights into areas
for improvement and helps us better understand
our employees’ needs and engagement levels.
In 2023, through our sustainable HR practices we have
managed to improve our overall employee turnover
rate to 16% (13% for men and 3% for women) (2022:
19%). This is a good achievement that reflects well
on our efforts to create a positive and supportive work
environment for all our employees.
Sustainability
Employee Turnover Rate based
on gender and age, 2022–2023, %
Source: Globaltrans.
Corporate culture and internal
communications
We place a high priority on our corporate culture
at Globaltrans. We recognise that our people
dedicate a substantial portion of their time to their
job responsibilities. As such, we are committed
to cultivating an environment that prioritises the well-
being and satisfaction of our employees. Our Company’s
culture is built on respect, openness, and collaboration.
We strive to uphold these values and create a thriving
workplace that benefits both our employees and our
organisation as a whole.
We listen to every employee’s voice at Globaltrans
because we believe that it is a powerful way to help our
business grow and progress. That is why we prioritise,
promote and practise open communication with our
people. All employees are encouraged to raise any issues
and concerns and provide feedback to improve
the business. Our communication channels enable
everyone to learn more about our performance, major
events, and projects, and to connect with senior
management. To understand our employees’ needs
and improve their experience, we conduct various
surveys. Some of our Group subsidiaries also have
employee intranet and helplines available.
Every two years we conduct a staff engagement survey
to evaluate the effectiveness of our HR practices
and policies, and to improve our approach to key issues
like compensation, professional development, and staff
communications. Our first staff engagement survey
was conducted in 2022 and demonstrated an impressive
88% engagement score. Through this survey, we learned
that our people positively evaluate their experience
working at Globaltrans, support the Company’s
objectives and have confidence in the Group’s future
success. The next survey will be conducted in 2024.
To enhance our culture and boost employee engagement,
we regularly host sports, cultural and recreational
events for our employees and their families. In 2023,
our employees actively participated in the tree planting
trips and other ESG initiatives aimed at minimising our
environmental footprint.
We will continue to look for ways to improve our
engagement mechanisms and seek feedback
from employees more frequently to keep our
people engaged.
Health and safety
Ensuring that our people are safe and well is our
highest priority and responsibility as an employer.
It is also our duty to create a work environment
that is free from incidents and safety hazards.
The Group is committed to maintaining high standards
of occupational safety and to complying with all health
and safety regulations and legislation. Solid health
and safety management is the basis of our culture.
Our Code of Ethics and Conduct and Human Rights Policy
sets out our commitment to act in a socially responsible
manner that protects our people, suppliers and partners,
all of whom we expect to share that commitment.
Globaltrans continuously reviews its health and safety
procedures, practices and policies to ensure that all levels
of the Group conform to the rules. Our Group companies
are implementing the following policies:
• Fire-safety instructions;
• Instruction for carrying out health and safety briefings;
• Instruction on pre-medical first aid;
• Occupational safety regulations;
• Workplace safety guidance for PC users.
In response to the challenges brought about
by the COVID-19 pandemic and a tragic event in 2020 that
resulted in the loss of a colleague, the Group decided
to re-evaluate and enhance its safety protocols
and practices to achieve a higher standard of health
and safety. Our primary goal was to implement
stringent measures that would allow us to mitigate all
potential risks. In 2022, the Group adopted its Health
and Safety Policy that outlines our aim of achieving
zero harm in occupational health and safety
by eliminating any unsafe or unacceptable behaviour
in the workplace. It also stresses the Group’s dedication
to cultivating a culture of zero harm and increasing
risks awareness among employees through ongoing
improvements to workplace safety programmes.
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 everyday
wellbeing. As a responsible employer, we provide
appropriate information and training opportunities
to all employees to prevent future workplace incidents.
We ensure that all employees undergo general safety
awareness and training. Additionally, we provide job-
specific training applicable to the area of work. Over
the last few years, the number of training sessions
on safety has increased significantly.
Our HR department and safety experts collaborate
closely with our employees, employing a systematic
approach to managing the work environment that
involves analysing work-related risks, evaluating
how applicable rules and policies are implemented,
and identifying where there is scope for further
optimisation. We conduct regular safety spot-checks
to ensure that we continue to meet high standards.
In 2023, the number of workplace safety audits decreased
to 172 visits (2022: 526 visits) due to the fact that
the results of such audits are usually valid for the 5-year
period, which is in line with the local labour legislation
of the Group’s subsidiaries.
Most of our employees work in a low-risk environment.
However, in recent years, some of our subsidiaries have
hired more technical staff who are at higher risk of work-
related incidents than office workers. Unfortunately,
in 2023, despite our stringent safety measures,
three minor work-related incidents (involving minor
and moderate injuries) occurred in two of the Group
subsidiaries. These incidents resulted in an increase
in our Lost Time Injury Frequency Rate (“LTIFR”),
an indicator used to assess safety performance within
the organisation. In 2023, the Group’s LTIFR stood at 0.90.
It is important to note that all the incidents were assessed
and thoroughly investigated on the days they occurred.
We were able to determine the causes and develop
remedial measures. Moving forward, we will continue
to be proactive and work to restore our positive safety
performance in future periods by learning from past
mistakes, increasing the number of safety training
sessions and implementing an incident prevention
programme. There were no incidents that led to a fatal
outcome in the reporting period.
13
2023
2022
Men
Women
3
14 4
0.90
0
0
0.66
2023
2022
2021
2020
3
2023
2022
< 30 years
30-50 years
> 50 years
9 4
3 10 5
2023
2022 19
16
Total
Gender
Age
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
83 82
(LTIFR), 2020–2023
Retaining our people is one of our top priorities.
We have consistently tracked staff turnover
historically, as it provides valuable insights into areas
for improvement and helps us better understand
our employees’ needs and engagement levels.
In 2023, through our sustainable HR practices we have
managed to improve our overall employee turnover
rate to 16% (13% for men and 3% for women) (2022:
19%). This is a good achievement that reflects well
on our efforts to create a positive and supportive work
environment for all our employees.
Sustainability
Employee Turnover Rate based
on gender and age, 2022–2023, %
Source: Globaltrans.
Corporate culture and internal
communications
We place a high priority on our corporate culture
at Globaltrans. We recognise that our people
dedicate a substantial portion of their time to their
job responsibilities. As such, we are committed
to cultivating an environment that prioritises the well-
being and satisfaction of our employees. Our Company’s
culture is built on respect, openness, and collaboration.
We strive to uphold these values and create a thriving
workplace that benefits both our employees and our
organisation as a whole.
We listen to every employee’s voice at Globaltrans
because we believe that it is a powerful way to help our
business grow and progress. That is why we prioritise,
promote and practise open communication with our
people. All employees are encouraged to raise any issues
and concerns and provide feedback to improve
the business. Our communication channels enable
everyone to learn more about our performance, major
events, and projects, and to connect with senior
management. To understand our employees’ needs
and improve their experience, we conduct various
surveys. Some of our Group subsidiaries also have
employee intranet and helplines available.
Every two years we conduct a staff engagement survey
to evaluate the effectiveness of our HR practices
and policies, and to improve our approach to key issues
like compensation, professional development, and staff
communications. Our first staff engagement survey
was conducted in 2022 and demonstrated an impressive
88% engagement score. Through this survey, we learned
that our people positively evaluate their experience
working at Globaltrans, support the Company’s
objectives and have confidence in the Group’s future
success. The next survey will be conducted in 2024.
To enhance our culture and boost employee engagement,
we regularly host sports, cultural and recreational
events for our employees and their families. In 2023,
our employees actively participated in the tree planting
trips and other ESG initiatives aimed at minimising our
environmental footprint.
We will continue to look for ways to improve our
engagement mechanisms and seek feedback
from employees more frequently to keep our
people engaged.
Health and safety
Ensuring that our people are safe and well is our
highest priority and responsibility as an employer.
It is also our duty to create a work environment
that is free from incidents and safety hazards.
The Group is committed to maintaining high standards
of occupational safety and to complying with all health
and safety regulations and legislation. Solid health
and safety management is the basis of our culture.
Our Code of Ethics and Conduct and Human Rights Policy
sets out our commitment to act in a socially responsible
manner that protects our people, suppliers and partners,
all of whom we expect to share that commitment.
Globaltrans continuously reviews its health and safety
procedures, practices and policies to ensure that all levels
of the Group conform to the rules. Our Group companies
are implementing the following policies:
• Fire-safety instructions;
• Instruction for carrying out health and safety briefings;
• Instruction on pre-medical first aid;
• Occupational safety regulations;
• Workplace safety guidance for PC users.
In response to the challenges brought about
by the COVID-19 pandemic and a tragic event in 2020 that
resulted in the loss of a colleague, the Group decided
to re-evaluate and enhance its safety protocols
and practices to achieve a higher standard of health
and safety. Our primary goal was to implement
stringent measures that would allow us to mitigate all
potential risks. In 2022, the Group adopted its Health
and Safety Policy that outlines our aim of achieving
zero harm in occupational health and safety
by eliminating any unsafe or unacceptable behaviour
in the workplace. It also stresses the Group’s dedication
to cultivating a culture of zero harm and increasing
risks awareness among employees through ongoing
improvements to workplace safety programmes.
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 everyday
wellbeing. As a responsible employer, we provide
appropriate information and training opportunities
to all employees to prevent future workplace incidents.
We ensure that all employees undergo general safety
awareness and training. Additionally, we provide job-
specific training applicable to the area of work. Over
the last few years, the number of training sessions
on safety has increased significantly.
Our HR department and safety experts collaborate
closely with our employees, employing a systematic
approach to managing the work environment that
involves analysing work-related risks, evaluating
how applicable rules and policies are implemented,
and identifying where there is scope for further
optimisation. We conduct regular safety spot-checks
to ensure that we continue to meet high standards.
In 2023, the number of workplace safety audits decreased
to 172 visits (2022: 526 visits) due to the fact that
the results of such audits are usually valid for the 5-year
period, which is in line with the local labour legislation
of the Group’s subsidiaries.
Most of our employees work in a low-risk environment.
However, in recent years, some of our subsidiaries have
hired more technical staff who are at higher risk of work-
related incidents than office workers. Unfortunately,
in 2023, despite our stringent safety measures,
three minor work-related incidents (involving minor
and moderate injuries) occurred in two of the Group
subsidiaries. These incidents resulted in an increase
in our Lost Time Injury Frequency Rate (“LTIFR”),
an indicator used to assess safety performance within
the organisation. In 2023, the Group’s LTIFR stood at 0.90.
It is important to note that all the incidents were assessed
and thoroughly investigated on the days they occurred.
We were able to determine the causes and develop
remedial measures. Moving forward, we will continue
to be proactive and work to restore our positive safety
performance in future periods by learning from past
mistakes, increasing the number of safety training
sessions and implementing an incident prevention
programme. There were no incidents that led to a fatal
outcome in the reporting period.
13
2023
2022
Men
Women
3
14 4
0.90
0
0
0.66
2023
2022
2021
2020
3
2023
2022
< 30 years
30-50 years
> 50 years
9 4
3 10 5
2023
2022 19
16
Total
Gender
Age
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
83 82
Sustainability
1 Information in the table
is derived from
the Consolidated
Management Report and
Consolidated Financial
Statements for the year ended
31 December 2023.
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 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.
Rail transportation is essential in today’s
society as it promotes economic growth,
helps lower greenhouse gas emissions
and generates employment opportunities.
Globaltrans understands its socio-
economic and environmental impact,
and is committed to being a responsible
corporate citizen that makes a meaningful
impact on society. We recognise that our
business can contribute to a sustainable
future for our Company, our employees
and our planet by investing in social
interests, minimising its carbon
footprint and acting with integrity
and transparency.
As an employer and business
partner, we have a responsibility
to the communities where we operate
and the people around us. We work hard
to be a positive influence on society
by creating shared value for all our
stakeholders through our continued
commitment to sustainability.
Our social commitments are embedded
in our culture, business operations, client
relationships, community involvement
and charitable efforts.
Our business operations add value
to society in various ways, including
through direct and indirect employment,
tax payments social activities,
internships, and educational support.
Our employees welcome the opportunity
to engage with interns or take part in our
pro bono social programmes to develop
their capabilities and contribute
more to society. By maintaining close
links with our local communities,
we can determine how best to provide
the support – whether it be skills, time
or financial assistance – that will deliver
the best outcomes.
It is through our business success
that we can provide this support
and create opportunities for both
current and future employees.
Additionally, we are contributing directly
to the broader economy through local
and national taxes, licence payments
and other fees and by using third-party
services and suppliers.
The following table illustrates how
our Company creates financial value
for its stakeholders.
Direct economic value generated, distributed and retained 1
Communities
We want our employees and those
we work with to feel valued
and supported. We want them to know
we provide a safe, fair and respectful
work environment where diversity
is valued, and where everyone can
prosper, and contribute to the success
of their communities and Globaltrans.
By providing childcare support, health
insurance, and offering part-time
work options, we show our employees
that they are valued and we improve
the quality of life for them and their
families.
Our long-term goal of giving back
to communities through a range
of social initiatives is a priority
for the Group. In the past, we have
invested in good causes that align
with our own culture and values.
We contribute directly to charitable
organisations in the areas of health,
welfare, culture and education. Our
focus on diversity and inclusion
demonstrates the Group’s commitment
to support the vulnerable – children,
seniors, disadvantaged families
and the disabled.
In 2023, we continued to support our
long-standing partner, the Life Line
Fund, which provides vital assistance
to children with life-threatening
conditions. Additionally, the Group
started working with the Road of Mercy
Charity foundation, which helps
children with autism.
We also encourage our
employees to take an active role
in the communities where they work,
for example by participating in local
volunteering activities. In 2023,
Globaltrans further contributed
to society by continuing its small
environmental project aimed
at minimising our carbon footprint
by planting trees. We believe that this
initiative benefits not only the local
ecology, but also helps restore
biodiversity.
Going forward, the Group will
continue to increase its positive
social impact and improve the daily
lives of its people and broader
communities through sustainable,
inclusive and responsible practices
and initiatives.
Source: Globaltrans.
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
85 84
1 Information in the table
is derived from
the Consolidated
Management Report and
Consolidated Financial
Statements for the year ended
31 December 2023.
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 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.
Rail transportation is essential in today’s
society as it promotes economic growth,
helps lower greenhouse gas emissions
and generates employment opportunities.
Globaltrans understands its socio-
economic and environmental impact,
and is committed to being a responsible
corporate citizen that makes a meaningful
impact on society. We recognise that our
business can contribute to a sustainable
future for our Company, our employees
and our planet by investing in social
interests, minimising its carbon
footprint and acting with integrity
and transparency.
As an employer and business
partner, we have a responsibility
to the communities where we operate
and the people around us. We work hard
to be a positive influence on society
by creating shared value for all our
stakeholders through our continued
commitment to sustainability.
Our social commitments are embedded
in our culture, business operations, client
relationships, community involvement
and charitable efforts.
Our business operations add value
to society in various ways, including
through direct and indirect employment,
tax payments social activities,
internships, and educational support.
Our employees welcome the opportunity
to engage with interns or take part in our
pro bono social programmes to develop
their capabilities and contribute
more to society. By maintaining close
links with our local communities,
we can determine how best to provide
the support – whether it be skills, time
or financial assistance – that will deliver
the best outcomes.
It is through our business success
that we can provide this support
and create opportunities for both
current and future employees.
Additionally, we are contributing directly
to the broader economy through local
and national taxes, licence payments
and other fees and by using third-party
services and suppliers.
The following table illustrates how
our Company creates financial value
for its stakeholders.
Direct economic value generated, distributed and retained 1
| 2023 | |
| Direct economic value generated 2 | RUB mln104,748 |
| Economic value distributed | 74,853 |
| Total cost of sales (excluding employee benefit expense) Total selling, marketing and administrative expenses (Community investments and excludingemployee benefit expense and taxes (other than income tax and value added tax) | 54,5181,035 |
| Employee benefit expense | 8,174 |
| Payments to the providers of capital 3 Tax payments 4 | 2,8468,281 |
| Economic value retained | 29,895 |
Communities
We want our employees and those
we work with to feel valued
and supported. We want them to know
we provide a safe, fair and respectful
work environment where diversity
is valued, and where everyone can
prosper, and contribute to the success
of their communities and Globaltrans.
By providing childcare support, health
insurance, and offering part-time
work options, we show our employees
that they are valued and we improve
the quality of life for them and their
families.
Our long-term goal of giving back
to communities through a range
of social initiatives is a priority
for the Group. In the past, we have
invested in good causes that align
with our own culture and values.
We contribute directly to charitable
organisations in the areas of health,
welfare, culture and education. Our
focus on diversity and inclusion
demonstrates the Group’s commitment
to support the vulnerable – children,
seniors, disadvantaged families
and the disabled.
In 2023, we continued to support our
long-standing partner, the Life Line
Fund, which provides vital assistance
to children with life-threatening
conditions. Additionally, the Group
started working with the Road of Mercy
Charity foundation, which helps
children with autism.
We also encourage our
employees to take an active role
in the communities where they work,
for example by participating in local
volunteering activities. In 2023,
Globaltrans further contributed
to society by continuing its small
environmental project aimed
at minimising our carbon footprint
by planting trees. We believe that this
initiative benefits not only the local
ecology, but also helps restore
biodiversity.
Going forward, the Group will
continue to increase its positive
social impact and improve the daily
lives of its people and broader
communities through sustainable,
inclusive and responsible practices
and initiatives.
Source: Globaltrans.
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
85 84
Sustainability
Environment
No recorded violations
of environmental legislation
-2 %
decrease in total
GHG emissions
1.6 carbon intensity
First-time reporting waste
management data
Climate change is one of the greatest challenges
of our time. Being a responsible environmental
citizen has become an essential obligation
for businesses all around the world. The freight
rail industry plays a crucial role in contributing
to a low carbon economy by providing a sustainable
and environmentally friendly mode of transportation.
Rail is known for its efficiency, reliability, and reduced
greenhouse gas emissions compared to other modes
of transport on land.
At Globaltrans, we have always taken our global
environmental responsibilities very seriously.
We recognise that our operations can impact
the environment, particularly in the form of greenhouse
gas emissions. As a responsible business,
we are committed to minimising the environmental
Energy usage
Energy consumption is a significant environmental
concern for Globaltrans. The Group is committed
to using resources prudently and exploring
opportunities for further optimisation of its energy
consumption. We believe that energy efficiency is one
of the most cost-effective ways to combat climate
change.
By managing our energy consumption efficiently,
we are in a position to reduce our greenhouse
gas (“GHG”) emissions. This goal is something
that we are working to promote and improve
at all levels of the organisation. The Group’s
operations use different forms of energy, including
diesel and electricity. Most of the energy we use
is electricity in our offices, which is needed
for lighting, air conditioning and powering computers
and communications devices.
In 2023, the Group was successful in reducing
its overall energy consumption due to a number
of factors. There was a 1% year-on-year decrease
in electricity usage, primarily attributable
to the implementation of the Green Office Initiative
and efficient energy-saving measures in the offices
of the Group companies. Additionally, diesel
consumption was down 2% year on year, partially
attributable to the changes in logistics. A decrease
in the use of the Group’s vehicles contributed to a 13%
year-on-year decrease in petrol consumption.
Energy consumption is regularly monitored,
and, together with our environmental experts,
we are constantly looking for ways to improve energy
efficiency and reduce our carbon footprint.
Total consumption of energy
resources by type, 2022–2023
Source: Globaltrans.
Petrol and diesel consumption per
employee, 2022–2023
Source: Globaltrans.
impact of our activities, and protecting
the environment for the communities we serve, our
stakeholders and society as a whole. To this end,
we focus not just on controlling emissions but also
on energy efficiency, waste recycling, and water
management.
The Group strictly adheres to the applicable
environmental laws and industry regulations of all
the markets where we operate. We continually seek
to improve our environmental performance to stay
compliant and reduce our environmental footprint.
Our overall environmental management approach
is underpinned by the Group’s formal ESG
and Environmental and Energy Policies and Green
Office Initiative. These policies define our commitment
to conduct our activities in an environmentally
responsible way. We ensure that all of our employees
understand and act in a manner consistent with our
policies. We are constantly exploring ways to improve our
subsidiaries’ environmental management and reporting
systems, so that we can better monitor, measure
and assess the environmental aspects of our activities.
To achieve our environmental objectives, we need
the support of all our employees and suppliers.
Therefore, we are actively promoting environmental
awareness in the workplace and improving
transparency for all our stakeholders. To this end,
we disclose the Group’s environmental performance
on a number of metrics consistent with external
reporting frameworks like the Global Reporting
Initiative (GRI). We include annual data and information
on monitoring and progress in our integrated
sustainability reports, which are publicly available
on the Group’s website.
Our 2023 results are set out below. There were no
recorded violations of environmental legislation
or regulations during the reporting period.
4,369,124
4,426,367
2023
2022
-1%
45,184,013
46,325,429
2023
2022
-2%
105,429
120,938
2023
2022
-13%
60
68
2023
2022
-12%
25,513
26,011
2023
2022
-2%
Electricity (KWh)
Diesel (litres)
Petroleum (litres)
Petrol
Diesel
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
87 86
Environment
No recorded violations
of environmental legislation
-2 %
decrease in total
GHG emissions
1.6 carbon intensity
First-time reporting waste
management data
Climate change is one of the greatest challenges
of our time. Being a responsible environmental
citizen has become an essential obligation
for businesses all around the world. The freight
rail industry plays a crucial role in contributing
to a low carbon economy by providing a sustainable
and environmentally friendly mode of transportation.
Rail is known for its efficiency, reliability, and reduced
greenhouse gas emissions compared to other modes
of transport on land.
At Globaltrans, we have always taken our global
environmental responsibilities very seriously.
We recognise that our operations can impact
the environment, particularly in the form of greenhouse
gas emissions. As a responsible business,
we are committed to minimising the environmental
Energy usage
Energy consumption is a significant environmental
concern for Globaltrans. The Group is committed
to using resources prudently and exploring
opportunities for further optimisation of its energy
consumption. We believe that energy efficiency is one
of the most cost-effective ways to combat climate
change.
By managing our energy consumption efficiently,
we are in a position to reduce our greenhouse
gas (“GHG”) emissions. This goal is something
that we are working to promote and improve
at all levels of the organisation. The Group’s
operations use different forms of energy, including
diesel and electricity. Most of the energy we use
is electricity in our offices, which is needed
for lighting, air conditioning and powering computers
and communications devices.
In 2023, the Group was successful in reducing
its overall energy consumption due to a number
of factors. There was a 1% year-on-year decrease
in electricity usage, primarily attributable
to the implementation of the Green Office Initiative
and efficient energy-saving measures in the offices
of the Group companies. Additionally, diesel
consumption was down 2% year on year, partially
attributable to the changes in logistics. A decrease
in the use of the Group’s vehicles contributed to a 13%
year-on-year decrease in petrol consumption.
Energy consumption is regularly monitored,
and, together with our environmental experts,
we are constantly looking for ways to improve energy
efficiency and reduce our carbon footprint.
Total consumption of energy
resources by type, 2022–2023
Source: Globaltrans.
Petrol and diesel consumption per
employee, 2022–2023
Source: Globaltrans.
impact of our activities, and protecting
the environment for the communities we serve, our
stakeholders and society as a whole. To this end,
we focus not just on controlling emissions but also
on energy efficiency, waste recycling, and water
management.
The Group strictly adheres to the applicable
environmental laws and industry regulations of all
the markets where we operate. We continually seek
to improve our environmental performance to stay
compliant and reduce our environmental footprint.
Our overall environmental management approach
is underpinned by the Group’s formal ESG
and Environmental and Energy Policies and Green
Office Initiative. These policies define our commitment
to conduct our activities in an environmentally
responsible way. We ensure that all of our employees
understand and act in a manner consistent with our
policies. We are constantly exploring ways to improve our
subsidiaries’ environmental management and reporting
systems, so that we can better monitor, measure
and assess the environmental aspects of our activities.
To achieve our environmental objectives, we need
the support of all our employees and suppliers.
Therefore, we are actively promoting environmental
awareness in the workplace and improving
transparency for all our stakeholders. To this end,
we disclose the Group’s environmental performance
on a number of metrics consistent with external
reporting frameworks like the Global Reporting
Initiative (GRI). We include annual data and information
on monitoring and progress in our integrated
sustainability reports, which are publicly available
on the Group’s website.
Our 2023 results are set out below. There were no
recorded violations of environmental legislation
or regulations during the reporting period.
4,369,124
4,426,367
2023
2022
-1%
45,184,013
46,325,429
2023
2022
-2%
105,429
120,938
2023
2022
-13%
60
68
2023
2022
-12%
25,513
26,011
2023
2022
-2%
Electricity (KWh)
Diesel (litres)
Petroleum (litres)
Petrol
Diesel
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
87 86
Paper consumption,
kg per
employee, 2022–2023
Source: Globaltrans.
Total waste volume, 2023
Waste type Amount of generated
and transferred waste, tonnes
Treatment Method
Hazard class I
(extremely
dangerous)
Mercury lamps, mercury-quartz, fluorescent
lamps
0.13 Neutralisation /
Disposal
Hazard class II
(extremely
dangerous)
Single galvanic cells (batteries) 0.02 Neutralisation /
Disposal
Hazard class III
(moderately
hazardous)
Waste mineral motor oils,
waste lubricating oil
185 Neutralisation /
Disposal/ Burial
Hazard class IV
(low hazard)
Office and household waste, waste
(sediment) from cleaning operations
containing petroleum, used tires, cartridges,
computer and household appliances
420 Neutralisation /
Disposal/ Burial
Hazard class V
(practically
non-hazardous)
Scrap metals and waste of steel products,
ferrous metal shavings, paper and cardboard
waste
13,398 Disposal/ Burial/
Processing/ Burial
at a special landfill
Total 14,003
1 This excludes data from Spacecom (Globaltrans sold its shareholding in Spacecom in February 2023) and BTS (except for data from the BTS
railcar repair depot in Ivanovo which is included).
Sustainability
Use of water
Water is an essential natural resource for society
and even though it is not an area where Globaltrans
can make a meaningful impact, we are determined
to use water responsibly as part of our commitment
to environmental protection and resource conservation.
All of our Group companies have managerial oversight
on environmental matters that involve water use in our
daily operations.
Since 2018, we have been steadily improving
the monitoring, collection and processing of water
usage data across the Group’s subsidiaries. In 2020,
we published our first annual water consumption
results. In 2023, our water consumption increased
6% year on year to 17,603 m 3 (2022: 16,654 m 3
) 1
due to the resumption of office-working for many
employees. At Globaltrans, we are continually looking
for ways to improve our water use and adopt practices
that help our employees manage and use water more
efficiently.
Paper Recycling
Paper has a significant environmental impact,
due to the energy and raw materials required
for its production, use and disposal. Therefore,
we actively promote the importance of a green work
environment and encourage our employees to reduce
the frequency and volume of printing. In recent
years, our focus has been on digitising business
processes and employing electronic documentation.
The COVID-19 pandemic has served to accelerate
these trends.
In 2023, thanks to the effective implementation
of the Green Office Initiative, the Group managed to lower
its paper consumption per employee by 18% year on year.
Waste management
As stated in our Environmental and Energy Policy
and Green Office Initiative, we strive to use resources
and materials efficiently and to increase their
reuse and recycling. We believe this approach
not only benefits the environment but also
encourages a sense of responsibility among our
employees. Over the last few years, we have been
working on collecting and harmonising waste
management data from across all Group companies.
As a result, in 2023 we were able to finally report
on this important issue.
Green Office Initiative
Besides minimising our environmental footprint through
various different corporate sustainability initiatives,
Globaltrans also takes proactive measures in daily
office life to improve the efficiency of our processes
and day-to-day activities. In 2022, we introduced our
Green Office Initiative, which was designed to promote
the adoption of the green office best practices across
the Group and educate our staff to be more climate-
aware. We believe our staff have a contribution to make
in helping us transition to a greener world. We also
strongly believe that our focus on environmental best
practice is not only the right thing to do, but it can also
deliver cost savings and help build strong stakeholder
relationships.
Our goal is to improve the environmental efficiency
of our offices by reducing our energy and natural
resource consumption and waste generation.
To save energy, we have begun replacing mercury-
based lighting with energy-efficient LED lighting
and have a plan to enhance the efficiency of our
facilities’ heating and cooling systems. Our waste
management measures include using paperless
communication methods, reducing the use of plastic,
and opting for environmentally friendly waste
collection and recycling. Wherever possible, our focus
is on reducing, reusing and recycling.
As part of our Green Office Initiative, we encourage
employees to participate and take responsibility for their
day-to-day actions, as these will significantly influence
the success of the project.
In 2023, the Group’s generated 14,003 tonnes of waste.
The largest portion of the waste generated in daily
operations is classed as low-hazard waste (class IV
and class V). Globaltrans is committed to managing
these effectively to prevent and minimise adverse
environmental impacts. Most of our waste is neutralised,
disposed of and, where possible, recycled. These
processes are handled by specialised waste processing
professionals in compliance with environmental
safety standards and legislation. We will continue
to investigate ways to improve our waste management
system and lower our impact on the environment.
-18%
5
6
2023
2022
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
89 88
employee, 2022–2023
Source: Globaltrans.
Total waste volume, 2023
Waste type Amount of generated
and transferred waste, tonnes
Treatment Method
Hazard class I
(extremely
dangerous)
Mercury lamps, mercury-quartz, fluorescent
lamps
0.13 Neutralisation /
Disposal
Hazard class II
(extremely
dangerous)
Single galvanic cells (batteries) 0.02 Neutralisation /
Disposal
Hazard class III
(moderately
hazardous)
Waste mineral motor oils,
waste lubricating oil
185 Neutralisation /
Disposal/ Burial
Hazard class IV
(low hazard)
Office and household waste, waste
(sediment) from cleaning operations
containing petroleum, used tires, cartridges,
computer and household appliances
420 Neutralisation /
Disposal/ Burial
Hazard class V
(practically
non-hazardous)
Scrap metals and waste of steel products,
ferrous metal shavings, paper and cardboard
waste
13,398 Disposal/ Burial/
Processing/ Burial
at a special landfill
Total 14,003
1 This excludes data from Spacecom (Globaltrans sold its shareholding in Spacecom in February 2023) and BTS (except for data from the BTS
railcar repair depot in Ivanovo which is included).
Sustainability
Use of water
Water is an essential natural resource for society
and even though it is not an area where Globaltrans
can make a meaningful impact, we are determined
to use water responsibly as part of our commitment
to environmental protection and resource conservation.
All of our Group companies have managerial oversight
on environmental matters that involve water use in our
daily operations.
Since 2018, we have been steadily improving
the monitoring, collection and processing of water
usage data across the Group’s subsidiaries. In 2020,
we published our first annual water consumption
results. In 2023, our water consumption increased
6% year on year to 17,603 m 3 (2022: 16,654 m 3
) 1
due to the resumption of office-working for many
employees. At Globaltrans, we are continually looking
for ways to improve our water use and adopt practices
that help our employees manage and use water more
efficiently.
Paper Recycling
Paper has a significant environmental impact,
due to the energy and raw materials required
for its production, use and disposal. Therefore,
we actively promote the importance of a green work
environment and encourage our employees to reduce
the frequency and volume of printing. In recent
years, our focus has been on digitising business
processes and employing electronic documentation.
The COVID-19 pandemic has served to accelerate
these trends.
In 2023, thanks to the effective implementation
of the Green Office Initiative, the Group managed to lower
its paper consumption per employee by 18% year on year.
Waste management
As stated in our Environmental and Energy Policy
and Green Office Initiative, we strive to use resources
and materials efficiently and to increase their
reuse and recycling. We believe this approach
not only benefits the environment but also
encourages a sense of responsibility among our
employees. Over the last few years, we have been
working on collecting and harmonising waste
management data from across all Group companies.
As a result, in 2023 we were able to finally report
on this important issue.
Green Office Initiative
Besides minimising our environmental footprint through
various different corporate sustainability initiatives,
Globaltrans also takes proactive measures in daily
office life to improve the efficiency of our processes
and day-to-day activities. In 2022, we introduced our
Green Office Initiative, which was designed to promote
the adoption of the green office best practices across
the Group and educate our staff to be more climate-
aware. We believe our staff have a contribution to make
in helping us transition to a greener world. We also
strongly believe that our focus on environmental best
practice is not only the right thing to do, but it can also
deliver cost savings and help build strong stakeholder
relationships.
Our goal is to improve the environmental efficiency
of our offices by reducing our energy and natural
resource consumption and waste generation.
To save energy, we have begun replacing mercury-
based lighting with energy-efficient LED lighting
and have a plan to enhance the efficiency of our
facilities’ heating and cooling systems. Our waste
management measures include using paperless
communication methods, reducing the use of plastic,
and opting for environmentally friendly waste
collection and recycling. Wherever possible, our focus
is on reducing, reusing and recycling.
As part of our Green Office Initiative, we encourage
employees to participate and take responsibility for their
day-to-day actions, as these will significantly influence
the success of the project.
In 2023, the Group’s generated 14,003 tonnes of waste.
The largest portion of the waste generated in daily
operations is classed as low-hazard waste (class IV
and class V). Globaltrans is committed to managing
these effectively to prevent and minimise adverse
environmental impacts. Most of our waste is neutralised,
disposed of and, where possible, recycled. These
processes are handled by specialised waste processing
professionals in compliance with environmental
safety standards and legislation. We will continue
to investigate ways to improve our waste management
system and lower our impact on the environment.
-18%
5
6
2023
2022
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
89 88
2
The data for Scope 1 emissions in 2021 was restated.
3 The data for Scope 2 emissions in 2021 was restated.
GHG Emissions, 2018–2023
Greenhouse gas management
We fully acknowledge the importance of climate
change mitigation. Rail transportation is widely
considered as the most efficient, safe,
and environmentally-friendly modes of moving
cargoes over land. Our industry is among the greenest
and least-polluting from an energy and emissions
perspective. Being the lowest contributor to overall
transport carbon emissions, rail can play a significant
role in addressing the global challenge of climate
change.
Nevertheless, we recognise that our business activities
do generate greenhouse gases, and their reduction
is a priority for Globaltrans as we seek to minimise
our environmental impact and mitigate the effects
of climate change.
From a strategic perspective, Globaltrans’
main operational and environmental objectives
align perfectly: delivering efficient logistics
and carefully managing assets are our top priorities.
Since its inception, Globaltrans has focused
on operational efficiency, specifically reducing
the number of empty railcars transported as part
of the Group’s logistics movements. Not only does
this help us achieve solid financial and business
results, but it also helps us improve our environmental
performance. For many years, we have led
Sustainability
Understanding and reducing our carbon footprint
is a significant step towards environmental
sustainability. In recent years, we are constantly
working to improve the quality and consistency
of our data so that we learn more about our carbon
footprint. In 2021 for the first time, we calculated
the indirect GHG emissions generated by our
energy purchases (Scope 2) using Scope 2
GHG Protocol guidelines. In 2023, the Group’s
indirect emissions were down 1% year on year
and totalled 1,540 tonnes of CO 2 equivalent
(2022: 1,560 tonnes of CO 2 equivalent). In total,
the Group was responsible for 138,405 tonnes
of CO 2 equivalent, 2% less than in 2022.
In 2023, the Group registered its lowest total
GHG emissions since 2018. Furthermore, our carbon
intensity indicator further declined to 1.6.
We believe that this is proof that our approach
is working and we are moving in the right direction
towards minimising our carbon footprint.
As a part of the Group’s environmental response,
BTS, which operates the bulk of our locomotive fleet,
continued to invest in and develop its small tree-
planting project in 2023. This initiative helps to offset
part of our carbon footprint and make a positive
impact on our communities and biodiversity.
Going forward, to ensure the business’s resiliency
against climate risks and their impact, we must
continue to increase our energy efficiency, minimise
our environmental impact and enhance transparency
for both our internal and external shareholders.
the industry in operational efficiency, consistently
delivering one of the sector’s lowest gondola Empty
Run Ratios, which speaks to our commitment.
In 2023, the Group continued its efforts to improve
its operational efficiency and achieved a significant
improvement in its Empty Run Ratio for gondola cars,
reaching a more than 10-year low of 36%.
In the freight rail industry, GHG emissions
are directly linked to fuel consumption and, as such,
locomotives are the primary source of emissions.
Most locomotive traction is handled by the state-
owned rail infrastructure provider. Globaltrans runs
one of region’s largest privately-owned locomotive
fleets, providing a specialised service for its clients,
primarily in the liquids segment. Consequently, we only
measure, report and record emissions (Scope 1) that
are directly attributable to our fleet of 66 mainline
locomotives. Operating a modern and well-maintained
fleet also helps reduce our environmental footprint.
Of our locomotive fleet, 15% are fuel-efficient
and cleaner diesel locomotives.
Since 2018, we have made substantial progress
in measuring, managing and disclosing direct
GHG emissions information in our operations, and this
process is ongoing. In 2023, our direct GHG emissions
decreased 2% to 136,865 tonnes of CO 2 equivalent 1
partially due to the changes in logistics (2022:
140,352 tonnes of CO 2 equivalent).
1 The Group’s greenhouse gas emissions were calculated per IPCC Guidelines for National Greenhouse Gas Inventories (2006).
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3 The data for Scope 2 emissions in 2021 was restated.
GHG Emissions, 2018–2023
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | |
| Direct GHG emissions (Scope 1, tonnesof CO 2 equivalent) | 166,129 | 161,299 | 138,198 | 153,871 2 | 140,352 | 136,865 |
| Indirect GHG emissions from purchasedelectricity (Scope 2, tonnesof CO 2 equivalent) | 2,589 | 1,690 | 1,474 | 1,551 3 | 1,560 | 1,540 |
| Total GHG emissions (Scope 1 + Scope 2) | 168,718 | 162,989 | 139,672 | 155,422 | 141,912 | 138,405 |
Greenhouse gas management
We fully acknowledge the importance of climate
change mitigation. Rail transportation is widely
considered as the most efficient, safe,
and environmentally-friendly modes of moving
cargoes over land. Our industry is among the greenest
and least-polluting from an energy and emissions
perspective. Being the lowest contributor to overall
transport carbon emissions, rail can play a significant
role in addressing the global challenge of climate
change.
Nevertheless, we recognise that our business activities
do generate greenhouse gases, and their reduction
is a priority for Globaltrans as we seek to minimise
our environmental impact and mitigate the effects
of climate change.
From a strategic perspective, Globaltrans’
main operational and environmental objectives
align perfectly: delivering efficient logistics
and carefully managing assets are our top priorities.
Since its inception, Globaltrans has focused
on operational efficiency, specifically reducing
the number of empty railcars transported as part
of the Group’s logistics movements. Not only does
this help us achieve solid financial and business
results, but it also helps us improve our environmental
performance. For many years, we have led
Sustainability
Understanding and reducing our carbon footprint
is a significant step towards environmental
sustainability. In recent years, we are constantly
working to improve the quality and consistency
of our data so that we learn more about our carbon
footprint. In 2021 for the first time, we calculated
the indirect GHG emissions generated by our
energy purchases (Scope 2) using Scope 2
GHG Protocol guidelines. In 2023, the Group’s
indirect emissions were down 1% year on year
and totalled 1,540 tonnes of CO 2 equivalent
(2022: 1,560 tonnes of CO 2 equivalent). In total,
the Group was responsible for 138,405 tonnes
of CO 2 equivalent, 2% less than in 2022.
In 2023, the Group registered its lowest total
GHG emissions since 2018. Furthermore, our carbon
intensity indicator further declined to 1.6.
We believe that this is proof that our approach
is working and we are moving in the right direction
towards minimising our carbon footprint.
As a part of the Group’s environmental response,
BTS, which operates the bulk of our locomotive fleet,
continued to invest in and develop its small tree-
planting project in 2023. This initiative helps to offset
part of our carbon footprint and make a positive
impact on our communities and biodiversity.
Going forward, to ensure the business’s resiliency
against climate risks and their impact, we must
continue to increase our energy efficiency, minimise
our environmental impact and enhance transparency
for both our internal and external shareholders.
the industry in operational efficiency, consistently
delivering one of the sector’s lowest gondola Empty
Run Ratios, which speaks to our commitment.
In 2023, the Group continued its efforts to improve
its operational efficiency and achieved a significant
improvement in its Empty Run Ratio for gondola cars,
reaching a more than 10-year low of 36%.
In the freight rail industry, GHG emissions
are directly linked to fuel consumption and, as such,
locomotives are the primary source of emissions.
Most locomotive traction is handled by the state-
owned rail infrastructure provider. Globaltrans runs
one of region’s largest privately-owned locomotive
fleets, providing a specialised service for its clients,
primarily in the liquids segment. Consequently, we only
measure, report and record emissions (Scope 1) that
are directly attributable to our fleet of 66 mainline
locomotives. Operating a modern and well-maintained
fleet also helps reduce our environmental footprint.
Of our locomotive fleet, 15% are fuel-efficient
and cleaner diesel locomotives.
Since 2018, we have made substantial progress
in measuring, managing and disclosing direct
GHG emissions information in our operations, and this
process is ongoing. In 2023, our direct GHG emissions
decreased 2% to 136,865 tonnes of CO 2 equivalent 1
partially due to the changes in logistics (2022:
140,352 tonnes of CO 2 equivalent).
1 The Group’s greenhouse gas emissions were calculated per IPCC Guidelines for National Greenhouse Gas Inventories (2006).
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Core Elements of Recommended Climate-Related
Financial Disclosures
Governance
The organisation’s governance around
climaterelated risks and opportunities
Strategy
The actual and potential impacts
of climate-related risks and opportunities
on the organisation’s businesses, strategy,
and financial planning
Risk Management
The processes used by the organisation to identify,
assess, and manage climate-related risks
Metrics and Targets
The metrics and targets used to assess and manage
relevant climate-related risks and opportunities
Governance
The Board of Directors, through the work of its Audit
and ESG committees, is accountable for the overall
management of all risks, including climate-
related risks. The ESG Committee ensures that all
appropriate policies, mechanisms and processes
are in place to allow the Board to effectively manage
sustainability matters and address stakeholder
needs. In turn, the Board has delegated responsibility
for the efficient implementation and maintenance
of the risk management system to the Group’s CEO.
The CEO is actively involved in all sustainability-
related matters, including climate change,
and closely monitors the Group’s overall ecological
performance. He receives updates from the Group’s
subsidiaries on their performance and planned
initiatives. This careful monitoring of the Group’s
environmental activities allows the CEO to set
the right tone and guide the development
of Globaltrans’ sustainability strategy.
The Group’s efforts to respond to climate change – implementing
the recommendations of the TCFD
Globaltrans has long identified climate change
as a material issue, and we incorporate the most
relevant climate-related risks into the Group’s risk
management process. However, we understand
that companies are increasingly expected to take
more proactive measures to combat climate change.
Therefore, in 2021 Globaltrans voluntarily committed
to aligning its climate disclosure with the Taskforce
on Climate-related Financial Disclosures (“TCFD”)
framework in order to ensure consistency, relevance
and comparability for all our stakeholders within
and outside our industry.
We believe that assessing climate risks
and opportunities is an evolving process. As disclosure
of climate-related information is now mandatory,
we continue to deepen our understanding of potential
climate-related risks and opportunities, embed
responses to them into our strategy, planning
and internal processes, and increase the level
of climate-related disclosure. In line with the TCFD
recommendations, this report addresses the four
key areas: governance, strategy, risk management
and metrics & targets.
As we move forward, we will continue to develop our
climate analytics capabilities, further strengthen
our climate resilience and be transparent about our
progress on climate change issues. In the future,
we intend to cooperate with industry experts
on a high-level quantitative scenario analysis that
will provide stakeholders with a better understanding
of the potential financial impacts of climate change
on our business and rail infrastructure in general.
Climate-related Financial
Disclosure (TCFD)
Management of climate-related issues
Responsibilities of the Board include:
• Overseeing the management of climate-related
issues, risks and opportunities;
• Monitoring and reviewing the effectiveness
of the management approach (review
of the policies, initiatives, metrics and action plans);
• Overseeing the climate-related disclosures.
Responsibilities of the management team include:
• Monitoring, managing and assessing climate-
related issues, risks and opportunities;
• Providing analyses, recommendations
and updates for the Board or Board committees;
• Maintaining effective data collection, including
environmental and climate-related data;
• Determining the allocation of costs and resources,
such as personnel, and coordinating within
the Group to identify, manage and mitigate
environmental and climate-related issues.
Governance
Risk
Management
Metrics
and Targets
Strategy
Overview
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93 92
Financial Disclosures
Governance
The organisation’s governance around
climaterelated risks and opportunities
Strategy
The actual and potential impacts
of climate-related risks and opportunities
on the organisation’s businesses, strategy,
and financial planning
Risk Management
The processes used by the organisation to identify,
assess, and manage climate-related risks
Metrics and Targets
The metrics and targets used to assess and manage
relevant climate-related risks and opportunities
Governance
The Board of Directors, through the work of its Audit
and ESG committees, is accountable for the overall
management of all risks, including climate-
related risks. The ESG Committee ensures that all
appropriate policies, mechanisms and processes
are in place to allow the Board to effectively manage
sustainability matters and address stakeholder
needs. In turn, the Board has delegated responsibility
for the efficient implementation and maintenance
of the risk management system to the Group’s CEO.
The CEO is actively involved in all sustainability-
related matters, including climate change,
and closely monitors the Group’s overall ecological
performance. He receives updates from the Group’s
subsidiaries on their performance and planned
initiatives. This careful monitoring of the Group’s
environmental activities allows the CEO to set
the right tone and guide the development
of Globaltrans’ sustainability strategy.
The Group’s efforts to respond to climate change – implementing
the recommendations of the TCFD
Globaltrans has long identified climate change
as a material issue, and we incorporate the most
relevant climate-related risks into the Group’s risk
management process. However, we understand
that companies are increasingly expected to take
more proactive measures to combat climate change.
Therefore, in 2021 Globaltrans voluntarily committed
to aligning its climate disclosure with the Taskforce
on Climate-related Financial Disclosures (“TCFD”)
framework in order to ensure consistency, relevance
and comparability for all our stakeholders within
and outside our industry.
We believe that assessing climate risks
and opportunities is an evolving process. As disclosure
of climate-related information is now mandatory,
we continue to deepen our understanding of potential
climate-related risks and opportunities, embed
responses to them into our strategy, planning
and internal processes, and increase the level
of climate-related disclosure. In line with the TCFD
recommendations, this report addresses the four
key areas: governance, strategy, risk management
and metrics & targets.
As we move forward, we will continue to develop our
climate analytics capabilities, further strengthen
our climate resilience and be transparent about our
progress on climate change issues. In the future,
we intend to cooperate with industry experts
on a high-level quantitative scenario analysis that
will provide stakeholders with a better understanding
of the potential financial impacts of climate change
on our business and rail infrastructure in general.
Climate-related Financial
Disclosure (TCFD)
Management of climate-related issues
Responsibilities of the Board include:
• Overseeing the management of climate-related
issues, risks and opportunities;
• Monitoring and reviewing the effectiveness
of the management approach (review
of the policies, initiatives, metrics and action plans);
• Overseeing the climate-related disclosures.
Responsibilities of the management team include:
• Monitoring, managing and assessing climate-
related issues, risks and opportunities;
• Providing analyses, recommendations
and updates for the Board or Board committees;
• Maintaining effective data collection, including
environmental and climate-related data;
• Determining the allocation of costs and resources,
such as personnel, and coordinating within
the Group to identify, manage and mitigate
environmental and climate-related issues.
Governance
Risk
Management
Metrics
and Targets
Strategy
Overview
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Climate-related Financial Disclosure (TCFD)
Material climate-related risks
Globaltrans’ fleet, operations and financial results could
be adversely affected by climate change and regulatory
and legislative responses to climate change. Following
the TCFD’s methodology, we identify and consider both
the transitional risks (those associated with the transition
to a low-carbon society) and the physical risks of climate
change. It is expected that the most significant effects
of climate change are likely to emerge over the long term.
Nevertheless, we consider the short, medium and long-
term time horizons when assessing climate-related risks
(short-term: 0–5 years, medium-term: 5–10 years, long-
term: 10 years and above).
Physical
Acute and chronic physical risks
Time horizon: long-term
Description
Natural disasters, severe weather events and extreme
temperatures pose a material risk to rail infrastructure
in the regions where the Group operates and, therefore,
to the Group’s operations and rolling stock.
Delays, disruptions, derailments, infrastructure damage
and other events may result in significant interruption
to, or disruption of, the Group’s business operations
and damage to its rolling stock, which may negatively
affect the Group’s operations and performance.
Moreover, disruptions to our clients’ operations may
also impact demand for the Group’s services and affect
its business and performance. Although the Group’s
rolling stock is fully insured, replacing damaged rolling
stock may take a considerable amount of time.
Controls and mitigating factors
In addition to implementing its business continuity policy,
the Group plans to refine its analysis of potential physical
risks and mitigation plans. The Group intends to conduct
Strategy
future climate assessments with potential involvement
of external industry experts and adopt strategies
to enhance its business resilience.
Transition
Policy/regulation
Time horizon: medium to long-term
Description
As a fuel-intensive industry, the rail freight sector
is exposed to the risk of increased regulation related
to carbon emissions and the use of fossil fuels (higher
carbon prices) which may lead to:
• Increased fuel and energy costs, as well as spare
parts and rolling stock due higher prices for iron
and steel;
• Problems operating diesel locomotives if one
is unable to address increased regulations;
• Increases in the cost of cleaner, more fuel-efficient
locomotives;
• Higher costs related to the introduction of carbon
taxes, increased carbon offset costs and carbon
footprint reduction solutions;
• Early asset write-downs/impairment due to new
and stricter energy standards.
Controls and mitigating factors
In response to these types of transitional risks,
the Group will continue to improve its operational
efficiency and reduce its energy consumption
and environmental footprint. Furthermore, Globaltrans
will continue to proactively monitor the carbon
emissions associated with the operation of the Group’s
locomotive fleet to identify and evaluate operational
improvements and technological advances in fuel
efficiency. We believe that annual emissions testing
will help us better prepare for any future changes
to the regulatory environment.
Market
Time horizon: medium to long-term
Description
Market risks include potential declines in demand
for certain types of freight transported by rail
due to increased climate change regulations
and shifts in consumer preferences (for example,
coal demand is affected by energy policy
and GHG emission regulations). This may negatively
impact demand for the Group’s services, cause
increased competition and affect the Group’s
operations and performance.
Controls and mitigating factors
The Group has always focused
on maintaining a balanced fleet that better
positions its operations to face the consequences
of increased regulation and evolving market demand.
By operating a fleet balanced between universal
gondola cars that can carry a variety of bulk cargoes,
and tank cars that just transport liquid cargoes,
the Group reduces its dependence on any one cargo
flow. It also means it can adjust quickly to changing
market conditions.
Reputation
Time horizon: short to long-term
Description
Increased expectations among stakeholders of more
aggressive environmental measures and climate
change actions may lead to greater scrutiny
from investors and other stakeholders. If this happens
and the Group fails to meet these expectations and/
or it fails to mitigate changes in climate change
regulations, it may lead to a drop in investment, rising
funding costs and a potential loss of clients.
Controls and mitigating factors
The Group will continue to engage with stakeholders
and improve transparency around all ESG topics
material to our business, including climate change,
to meet stakeholder expectations.
Climate-related opportunities
The TCFD framework recognises that climate
change, and the transition to a net zero economy
may also present opportunities for businesses.
Due to the nature of our business, Globaltrans
considers the following climate-related
opportunities:
Market
Time horizon: medium to long-term
Globaltrans regards transition climate risks, together
with increased environmental awareness and further
decarbonisation of the economy, as an opportunity
to further promote the environmental benefits
of freight rail transportation. As carbon pricing
regulation becomes ever more likely and demand
for lower carbon transport continues to grow, we may
face a potential increase in our business operations,
improved financial results and expansion of our client
base over the medium and long term.
Resource efficiency
Time horizon: medium to long-term
Transition risks can also be regarded
as an opportunity to promote and improve
the Group’s energy efficiency and enhance
its environmental performance. Thus, efficient
use of resources (energy, water) may reduce
the Group’s environmental footprint and operating
costs. The Group will also continue to investigate
and implement fuel-saving measures.
Reputation
Time horizon: short to long-term
Overview
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95 94
Material climate-related risks
Globaltrans’ fleet, operations and financial results could
be adversely affected by climate change and regulatory
and legislative responses to climate change. Following
the TCFD’s methodology, we identify and consider both
the transitional risks (those associated with the transition
to a low-carbon society) and the physical risks of climate
change. It is expected that the most significant effects
of climate change are likely to emerge over the long term.
Nevertheless, we consider the short, medium and long-
term time horizons when assessing climate-related risks
(short-term: 0–5 years, medium-term: 5–10 years, long-
term: 10 years and above).
Physical
Acute and chronic physical risks
Time horizon: long-term
Description
Natural disasters, severe weather events and extreme
temperatures pose a material risk to rail infrastructure
in the regions where the Group operates and, therefore,
to the Group’s operations and rolling stock.
Delays, disruptions, derailments, infrastructure damage
and other events may result in significant interruption
to, or disruption of, the Group’s business operations
and damage to its rolling stock, which may negatively
affect the Group’s operations and performance.
Moreover, disruptions to our clients’ operations may
also impact demand for the Group’s services and affect
its business and performance. Although the Group’s
rolling stock is fully insured, replacing damaged rolling
stock may take a considerable amount of time.
Controls and mitigating factors
In addition to implementing its business continuity policy,
the Group plans to refine its analysis of potential physical
risks and mitigation plans. The Group intends to conduct
Strategy
future climate assessments with potential involvement
of external industry experts and adopt strategies
to enhance its business resilience.
Transition
Policy/regulation
Time horizon: medium to long-term
Description
As a fuel-intensive industry, the rail freight sector
is exposed to the risk of increased regulation related
to carbon emissions and the use of fossil fuels (higher
carbon prices) which may lead to:
• Increased fuel and energy costs, as well as spare
parts and rolling stock due higher prices for iron
and steel;
• Problems operating diesel locomotives if one
is unable to address increased regulations;
• Increases in the cost of cleaner, more fuel-efficient
locomotives;
• Higher costs related to the introduction of carbon
taxes, increased carbon offset costs and carbon
footprint reduction solutions;
• Early asset write-downs/impairment due to new
and stricter energy standards.
Controls and mitigating factors
In response to these types of transitional risks,
the Group will continue to improve its operational
efficiency and reduce its energy consumption
and environmental footprint. Furthermore, Globaltrans
will continue to proactively monitor the carbon
emissions associated with the operation of the Group’s
locomotive fleet to identify and evaluate operational
improvements and technological advances in fuel
efficiency. We believe that annual emissions testing
will help us better prepare for any future changes
to the regulatory environment.
Market
Time horizon: medium to long-term
Description
Market risks include potential declines in demand
for certain types of freight transported by rail
due to increased climate change regulations
and shifts in consumer preferences (for example,
coal demand is affected by energy policy
and GHG emission regulations). This may negatively
impact demand for the Group’s services, cause
increased competition and affect the Group’s
operations and performance.
Controls and mitigating factors
The Group has always focused
on maintaining a balanced fleet that better
positions its operations to face the consequences
of increased regulation and evolving market demand.
By operating a fleet balanced between universal
gondola cars that can carry a variety of bulk cargoes,
and tank cars that just transport liquid cargoes,
the Group reduces its dependence on any one cargo
flow. It also means it can adjust quickly to changing
market conditions.
Reputation
Time horizon: short to long-term
Description
Increased expectations among stakeholders of more
aggressive environmental measures and climate
change actions may lead to greater scrutiny
from investors and other stakeholders. If this happens
and the Group fails to meet these expectations and/
or it fails to mitigate changes in climate change
regulations, it may lead to a drop in investment, rising
funding costs and a potential loss of clients.
Controls and mitigating factors
The Group will continue to engage with stakeholders
and improve transparency around all ESG topics
material to our business, including climate change,
to meet stakeholder expectations.
Climate-related opportunities
The TCFD framework recognises that climate
change, and the transition to a net zero economy
may also present opportunities for businesses.
Due to the nature of our business, Globaltrans
considers the following climate-related
opportunities:
Market
Time horizon: medium to long-term
Globaltrans regards transition climate risks, together
with increased environmental awareness and further
decarbonisation of the economy, as an opportunity
to further promote the environmental benefits
of freight rail transportation. As carbon pricing
regulation becomes ever more likely and demand
for lower carbon transport continues to grow, we may
face a potential increase in our business operations,
improved financial results and expansion of our client
base over the medium and long term.
Resource efficiency
Time horizon: medium to long-term
Transition risks can also be regarded
as an opportunity to promote and improve
the Group’s energy efficiency and enhance
its environmental performance. Thus, efficient
use of resources (energy, water) may reduce
the Group’s environmental footprint and operating
costs. The Group will also continue to investigate
and implement fuel-saving measures.
Reputation
Time horizon: short to long-term
Overview
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95 94
Risk management
1 Carbon intensity is calculated as the sum of Scope 1 and Scope 2 emissions for the current baseline year, expressed in tonnes
of CO 2 equivalent per Adjusted Revenue for the same baseline year.
Climate-related Financial Disclosure (TCFD)
Globaltrans believes there is a potential opportunity
to enhance its competitiveness and reputation
by improving its environmental performance, further
developing our climate awareness and resilience
and ensuring high quality climate reporting for all
stakeholders.
The resilience of Globaltrans’ strategy, taking
into consideration different climate-related scenarios
As stated earlier, at this stage the Group is not yet
prepared to provide detailed information on climate-
related scenario analysis and calculate the projected
financial impact from climate change. Nevertheless,
we believe that our strategy is designed to be resilient
and that the 1.5–2 degree scenario would result
in minimal business impact on the Company’s
operations.
In the 2 degree scenario, we expect there would
be an increase in carbon taxes and energy costs
(which would adversely affect the Group’s financial
position) as well as a shift of clients from other
means of transportation (which would be beneficial
for the Group’s revenue). We anticipate that under
the 4 degree scenario, there could be more frequent
natural disasters brought on by climate change,
which could potentially cause damage to the Group’s
assets and railway infrastructure. We also anticipate
that there would be higher maintenance costs
and a decline in revenue due to the potential
disruption of the Group’s operations.
Responsible decision-making, risk management
and early action have always been part of what
we do as they ensure the successful longevity
of our business. From the outset, Globaltrans
established a system to monitor and control
the uncertainties and risks it faces. This system
is overseen by a dedicated risk management
function responsible for systematically identifying,
assessing and managing opportunities and risks,
including those related to climate change. Many
elements, such as extreme weather, have long been
recognised as a material issue and are captured
within the Group’s existing risk framework. However,
the TCFD recommendations and our willingness
to contribute to positive climate action have led us
to add both physical and transition risks to our risk
watchlist. We also recognise that climate-related risks
are interconnected and can trigger other types of risks
(operational, financial and reputational). Nevertheless,
each group of risks requires a tailored management
approach.
With regard to climate risk management,
we are continuously building up our expertise
and enhancing the methodology and tools to better
assess climate-related risks and opportunities.
At some point Globaltrans intends to conduct climate
scenario analyses in collaboration with industry
experts to help quantify the potential financial impacts
and assess the resilience of the business.
To mitigate the effects of climate change, the Group
is committed to a variety of environmentally
responsible practices. We constantly monitor
changes in the external environment and review
laws and regulations. We also prepare
and conduct a detailed analysis of the Group’s energy
consumption and emissions on a semi-annual basis.
Metrics & Targets
Globaltrans is committed to openness
and transparency. Since 2018, we have reported
annually on our key environmental performance
metrics. We measure, monitor and report on our
carbon emissions relating to the operations
of our locomotive fleet, energy usage, and water
consumption. We have for some time disclosed
our Scope 1 GHG emissions that the Group makes
directly. In 2021, for the first time we also provided
data on our Scope 2 GHG indirect emissions. These
metrics are further detailed in earlier section of this
Sustainability Report.
At this stage, Globaltrans is not yet ready to set time-
bound emission reduction targets. Nevertheless,
over the recent years we have focused on driving
our carbon reduction initiatives and enhancing our
operational efficiency. As a result, our Empty Run
Ratio for gondola cars has improved significantly
despite the challenging operational context
and remains one of the lowest in the industry.
A few years ago, we purchased 10 new, cleaner
and more fuel-efficient locomotives. In 2022,
Globaltrans launched a small environmental project
that is gradually expanding. We also aim to offset
the Group’s environmental footprint through tree-
planting. In 2022, we also took steps to further
increase environmental awareness among our
employees and promote green policies in our day-
to-day office activities by introducing the Green
Office Initiative in all Group companies. As a result,
in 2023 we managed to quantify, harmonise
and disclose our waste management data.
Going forward, the Group will work to demonstrate
its progress in addressing climate change through
our sustainability reports. We will continue
to identify mitigation measures to minimise climate-
related risks and improve reporting transparency.
Scope 1 GHG emissions, tonnes
of CO 2 equivalent
136,865
140,352
153,871
2023
2022
2021
Scope 2 GHG emissions, tonnes
of CO 2 equivalent
1,540
1,560
1,551
2023
2022
2021
Total GHG emissions (Scope 1 +
Scope 2), tonnes of CO 2 equivalent
138,405
141,912
155,422
2023
2022
2021
Carbon intensity 1
1.6
1.7
2.7
2023
2022
2021
→ For further information on our processes for identifying
and assessing risks and opportunities, please see the Risk
management section of this Annual Report.
Overview
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97 96
1 Carbon intensity is calculated as the sum of Scope 1 and Scope 2 emissions for the current baseline year, expressed in tonnes
of CO 2 equivalent per Adjusted Revenue for the same baseline year.
Climate-related Financial Disclosure (TCFD)
Globaltrans believes there is a potential opportunity
to enhance its competitiveness and reputation
by improving its environmental performance, further
developing our climate awareness and resilience
and ensuring high quality climate reporting for all
stakeholders.
The resilience of Globaltrans’ strategy, taking
into consideration different climate-related scenarios
As stated earlier, at this stage the Group is not yet
prepared to provide detailed information on climate-
related scenario analysis and calculate the projected
financial impact from climate change. Nevertheless,
we believe that our strategy is designed to be resilient
and that the 1.5–2 degree scenario would result
in minimal business impact on the Company’s
operations.
In the 2 degree scenario, we expect there would
be an increase in carbon taxes and energy costs
(which would adversely affect the Group’s financial
position) as well as a shift of clients from other
means of transportation (which would be beneficial
for the Group’s revenue). We anticipate that under
the 4 degree scenario, there could be more frequent
natural disasters brought on by climate change,
which could potentially cause damage to the Group’s
assets and railway infrastructure. We also anticipate
that there would be higher maintenance costs
and a decline in revenue due to the potential
disruption of the Group’s operations.
Responsible decision-making, risk management
and early action have always been part of what
we do as they ensure the successful longevity
of our business. From the outset, Globaltrans
established a system to monitor and control
the uncertainties and risks it faces. This system
is overseen by a dedicated risk management
function responsible for systematically identifying,
assessing and managing opportunities and risks,
including those related to climate change. Many
elements, such as extreme weather, have long been
recognised as a material issue and are captured
within the Group’s existing risk framework. However,
the TCFD recommendations and our willingness
to contribute to positive climate action have led us
to add both physical and transition risks to our risk
watchlist. We also recognise that climate-related risks
are interconnected and can trigger other types of risks
(operational, financial and reputational). Nevertheless,
each group of risks requires a tailored management
approach.
With regard to climate risk management,
we are continuously building up our expertise
and enhancing the methodology and tools to better
assess climate-related risks and opportunities.
At some point Globaltrans intends to conduct climate
scenario analyses in collaboration with industry
experts to help quantify the potential financial impacts
and assess the resilience of the business.
To mitigate the effects of climate change, the Group
is committed to a variety of environmentally
responsible practices. We constantly monitor
changes in the external environment and review
laws and regulations. We also prepare
and conduct a detailed analysis of the Group’s energy
consumption and emissions on a semi-annual basis.
Metrics & Targets
Globaltrans is committed to openness
and transparency. Since 2018, we have reported
annually on our key environmental performance
metrics. We measure, monitor and report on our
carbon emissions relating to the operations
of our locomotive fleet, energy usage, and water
consumption. We have for some time disclosed
our Scope 1 GHG emissions that the Group makes
directly. In 2021, for the first time we also provided
data on our Scope 2 GHG indirect emissions. These
metrics are further detailed in earlier section of this
Sustainability Report.
At this stage, Globaltrans is not yet ready to set time-
bound emission reduction targets. Nevertheless,
over the recent years we have focused on driving
our carbon reduction initiatives and enhancing our
operational efficiency. As a result, our Empty Run
Ratio for gondola cars has improved significantly
despite the challenging operational context
and remains one of the lowest in the industry.
A few years ago, we purchased 10 new, cleaner
and more fuel-efficient locomotives. In 2022,
Globaltrans launched a small environmental project
that is gradually expanding. We also aim to offset
the Group’s environmental footprint through tree-
planting. In 2022, we also took steps to further
increase environmental awareness among our
employees and promote green policies in our day-
to-day office activities by introducing the Green
Office Initiative in all Group companies. As a result,
in 2023 we managed to quantify, harmonise
and disclose our waste management data.
Going forward, the Group will work to demonstrate
its progress in addressing climate change through
our sustainability reports. We will continue
to identify mitigation measures to minimise climate-
related risks and improve reporting transparency.
Scope 1 GHG emissions, tonnes
of CO 2 equivalent
136,865
140,352
153,871
2023
2022
2021
Scope 2 GHG emissions, tonnes
of CO 2 equivalent
1,540
1,560
1,551
2023
2022
2021
Total GHG emissions (Scope 1 +
Scope 2), tonnes of CO 2 equivalent
138,405
141,912
155,422
2023
2022
2021
Carbon intensity 1
1.6
1.7
2.7
2023
2022
2021
→ For further information on our processes for identifying
and assessing risks and opportunities, please see the Risk
management section of this Annual Report.
Overview
ANNUAL REPORT 2023 Sustainability Report
Strategic Report Sustainability Report Governance Financial Statements Additional Information
97 96
Overview
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
99 98
Governance
During 2023, Globaltrans’ corporate affairs were
governed by the memorandum and articles of
association of the Company and the provisions of
applicable Cyprus law. Although the Company was
not subject to any mandatory corporate governance
code in its home jurisdiction of Cyprus, nor required
to observe the UK Corporate Governance Code
(formerly the Combined Code), it has implemented
various corporate governance measures and
practices. Globaltrans’ Board of Directors has
adopted and updated the Company’s Code of
Corporate Governance (the “Code”), guaranteeing
that the interests of all shareholders are given due
consideration. The Code comprises the various
policies in relation to corporate governance which
have been adopted by the Company.
p. 100
Board of Directors
Read more →
p. 114
Corporate Governance Report
Read more →
p. 125
Corporate Structure
Read more →
In this section
Financial Statements
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
99 98
Governance
During 2023, Globaltrans’ corporate affairs were
governed by the memorandum and articles of
association of the Company and the provisions of
applicable Cyprus law. Although the Company was
not subject to any mandatory corporate governance
code in its home jurisdiction of Cyprus, nor required
to observe the UK Corporate Governance Code
(formerly the Combined Code), it has implemented
various corporate governance measures and
practices. Globaltrans’ Board of Directors has
adopted and updated the Company’s Code of
Corporate Governance (the “Code”), guaranteeing
that the interests of all shareholders are given due
consideration. The Code comprises the various
policies in relation to corporate governance which
have been adopted by the Company.
p. 100
Board of Directors
Read more →
p. 114
Corporate Governance Report
Read more →
p. 125
Corporate Structure
Read more →
In this section
Financial Statements
Overview
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
101 100
Vasilis Hadjivassiliou
Independent Non-executive Director
Appointed: September 2019
Committee Memberships: Audit Committee
Skills and experience: Mr. Hadjivassiliou
was a partner in Assurance and Advisory services
at PricewaterhouseCoopers (PwC), Cyprus, from 1990 until
2018 when he retired. During this time, he held various
leadership positions with PwC including as an elected
member of the Executive Board, Head of the Limassol
office as well as a number of other offices in Cyprus and
was a leading figure 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 a number of companies affiliated with his family and is also
a Board member of a number of other private companies.
George Papaioannou
Independent Non-executive Director
Appointed: April 2013
Committee Memberships: Audit Committee, Nomination
Committee, Remuneration Committee
Skills and experience: Mr. Papaioannou has more than 20
years in financial reporting, risk management, auditing,
financial performance analysis and taxation. In 2004, he
founded G. Papaioannou Auditors Ltd, which provides
accounting, audit, tax and consulting services. From
2002 to 2004, he worked at Grant Thornton in Cyprus
and before that for PricewaterhouseCoopers in Cyprus.
Mr. Papaioannou holds a degree in Accounting and Financial
Management from the University of Essex. He is a qualified
chartered accountant and a Fellow of the Institute
of Chartered Accountants in England and Wales.
Other appointments: Mr. Papaioannou holds directorships
in several family-owned companies and other
private companies.
Alexander Eliseev
Non-executive Director
Appointed: March 2008
Skills and experience: Mr. Eliseev co-founded Globaltrans
in 2004 and has played a leading role in introducing market-
based reforms to the freight rail transportation market.
He has spent more than 20 years in senior management
positions, mostly within the rail sector. Mr. Eliseev
is a graduate of the Russian State Medical University where
he studied biophysics.
Sergey Foliforov
Non-executive Director
Appointed: June 2022
Skills and experience: Mr. Foliforov has served
on the several Globaltrans’ subsidiary boards since 2018.
Sergey Foliforov has more than 18 years of management
experience working at different companies focusing
on financial management and analysis. He graduated from
Lomonosov Moscow State University and has a Master
of Science degree in Physics. He also holds an MBA from
the MIRBIS Business School in Moscow.
Board of Directors
Effective to 26 February 2024
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 comprised of highly
experienced directors with the diverse skills, expertise
and commercial experience required to lead the Group
effectively and provide support for, and constructive
challenge to, the executive management.
The composition of the Board of Directors presented
below was approved by shareholders at the Annual
General Meeting on 21 April 2023 and continued
to perform its function until 26 February 2024, being
the effective date of the Company’s re-domiciliation
from Cyprus to the Abu Dhabi Global Market, when
the new composition of the Board of Directors, which
was approved by shareholders at the Extraordinary
General Meeting held on 16 August 2023, took effect.
Sergey V. Maltsev
Chairman of the Board, Executive Director
Appointed: April 2018, Chairman
Mr. Maltsev was instrumental in the development
of the freight rail market and has worked in the industry
for over 30 years. He co-founded Globaltrans and served
as Chief Executive Officer from 2008 until 2015, as Chairman
of the Board from 2018 to the beginning of 2024 and as Chief
Strategy Officer from 2017 until the beginning of 2024.
Mr. Maltsev was a founding member and Chairman of the non-
profit partnership “Council of Railway Operators”. He has
a degree in railway engineering.
John Carroll Colley
Senior Independent Non-executive Director
Appointed: April 2013
Committee Memberships: Audit Committee (Chairman),
Nomination Committee (Chairman), Remuneration Committee
(Chairman), ESG Committee
Skills and experience: Mr. Colley has extensive experience
in international trade and risk management both in the public
and private sectors. From 2007 to 2010, Mr. Colley served
as country manager for Russia at Noble Resources SA.
Prior to that, he held various positions in the public sector,
including at the office of the US Trade Representative
and the US 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.
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
101 100
Vasilis Hadjivassiliou
Independent Non-executive Director
Appointed: September 2019
Committee Memberships: Audit Committee
Skills and experience: Mr. Hadjivassiliou
was a partner in Assurance and Advisory services
at PricewaterhouseCoopers (PwC), Cyprus, from 1990 until
2018 when he retired. During this time, he held various
leadership positions with PwC including as an elected
member of the Executive Board, Head of the Limassol
office as well as a number of other offices in Cyprus and
was a leading figure 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 a number of companies affiliated with his family and is also
a Board member of a number of other private companies.
George Papaioannou
Independent Non-executive Director
Appointed: April 2013
Committee Memberships: Audit Committee, Nomination
Committee, Remuneration Committee
Skills and experience: Mr. Papaioannou has more than 20
years in financial reporting, risk management, auditing,
financial performance analysis and taxation. In 2004, he
founded G. Papaioannou Auditors Ltd, which provides
accounting, audit, tax and consulting services. From
2002 to 2004, he worked at Grant Thornton in Cyprus
and before that for PricewaterhouseCoopers in Cyprus.
Mr. Papaioannou holds a degree in Accounting and Financial
Management from the University of Essex. He is a qualified
chartered accountant and a Fellow of the Institute
of Chartered Accountants in England and Wales.
Other appointments: Mr. Papaioannou holds directorships
in several family-owned companies and other
private companies.
Alexander Eliseev
Non-executive Director
Appointed: March 2008
Skills and experience: Mr. Eliseev co-founded Globaltrans
in 2004 and has played a leading role in introducing market-
based reforms to the freight rail transportation market.
He has spent more than 20 years in senior management
positions, mostly within the rail sector. Mr. Eliseev
is a graduate of the Russian State Medical University where
he studied biophysics.
Sergey Foliforov
Non-executive Director
Appointed: June 2022
Skills and experience: Mr. Foliforov has served
on the several Globaltrans’ subsidiary boards since 2018.
Sergey Foliforov has more than 18 years of management
experience working at different companies focusing
on financial management and analysis. He graduated from
Lomonosov Moscow State University and has a Master
of Science degree in Physics. He also holds an MBA from
the MIRBIS Business School in Moscow.
Board of Directors
Effective to 26 February 2024
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 comprised of highly
experienced directors with the diverse skills, expertise
and commercial experience required to lead the Group
effectively and provide support for, and constructive
challenge to, the executive management.
The composition of the Board of Directors presented
below was approved by shareholders at the Annual
General Meeting on 21 April 2023 and continued
to perform its function until 26 February 2024, being
the effective date of the Company’s re-domiciliation
from Cyprus to the Abu Dhabi Global Market, when
the new composition of the Board of Directors, which
was approved by shareholders at the Extraordinary
General Meeting held on 16 August 2023, took effect.
Sergey V. Maltsev
Chairman of the Board, Executive Director
Appointed: April 2018, Chairman
Mr. Maltsev was instrumental in the development
of the freight rail market and has worked in the industry
for over 30 years. He co-founded Globaltrans and served
as Chief Executive Officer from 2008 until 2015, as Chairman
of the Board from 2018 to the beginning of 2024 and as Chief
Strategy Officer from 2017 until the beginning of 2024.
Mr. Maltsev was a founding member and Chairman of the non-
profit partnership “Council of Railway Operators”. He has
a degree in railway engineering.
John Carroll Colley
Senior Independent Non-executive Director
Appointed: April 2013
Committee Memberships: Audit Committee (Chairman),
Nomination Committee (Chairman), Remuneration Committee
(Chairman), ESG Committee
Skills and experience: Mr. Colley has extensive experience
in international trade and risk management both in the public
and private sectors. From 2007 to 2010, Mr. Colley served
as country manager for Russia at Noble Resources SA.
Prior to that, he held various positions in the public sector,
including at the office of the US Trade Representative
and the US 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.
Overview
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
103 102
Michael Thomaides
Non-executive Director
Appointed: April 2014
Skills and experience: Mr. Thomaides served as a director
at Globaltrans from 2004 to 2008 and sat on the Board
of Global Ports Investments PLC, Russia’s leading container
port operator. He has been a director at Leverret Holding Ltd
(Cyprus) since 2007. Mr. Thomaides graduated from London
Southbank University with a BSc degree in Consumer Product
Management.
Marios Tofaros
Non-executive Director
Appointed: April 2013
Skills and experience: Mr. Tofaros is a director of the Client
Accounting department at Amicorp (Cyprus) Ltd. He
was a financial accountant at Depfa Investment Bank Ltd
from 2004 to 2008 and a finance officer at Louis Catering
Ltd from 2003 to 2004. He has held various positions
in the Audit department at KPMG Cyprus. Mr. Tofaros
has a degree in Accounting, Finance and Economics
and a Master’s degree in Business Studies, both from
the University of Kent. He holds a chartered certified
accountant (FCCA) diploma and is a member of the Institute
of Certified Public Accountants of Cyprus.
Konstantin Shirokov
Executive Director, Head of Internal Audit
Appointed: March 2008
Skills and experience: Mr. Shirokov has over 12 years
of senior international management experience. Prior
to joining Globaltrans, he worked in senior finance roles
at Mechel and as an economist at Glencore International. He
served as a non-executive member on the Board of Global
Ports Investments PLC between 2008 and April 2018,
where he was a member of the Audit and Risk committee.
Mr. Shirokov graduated from the Financial University under
the Government of the Russian Federation and studied
business management at Oxford Brookes University.
Alexander Storozhev
Executive Director, Chief Procurement Officer
Appointed: April 2013
Mr. Storozhev has held senior management roles
throughout a 20-year career in the rail industry and has
been with Globaltrans since it was established. He sits
on the boards of all Group subsidiaries. He 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.
Sergey V. Tolmachev
Executive Director, Managing Director
Appointed: Non-executive Director in April 2013 and
Executive Director in October 2013
Skills and experience: Mr. Tolmachev became the Group’s
Managing Director in October 2013. He joined N-Trans
Group in 2001 and has held various management positions
focused on corporate finance and treasury. He has
extensive experience in financial analysis and modelling.
Mr. Tolmachev graduated from Lomonosov Moscow
State University with a degree in Mechanics and Applied
Mathematics.
Andrey Gomon
Non-executive Director
Appointed: From 2013 to 2016 and rejoined in April 2017
Skills and experience: Mr. Gomon has over 13 years
of management experience in the railway industry. From
2006 to 2012 he was CEO of Transoil, one of Russia’s largest
rail transportation companies, having previously served
as CFO between 2003 and 2006. He sits on the boards of two
Globaltrans subsidiaries. Mr. Gomon studied economics
at St. Petersburg State University and holds an MBA
from INSEAD.
Elia Nicolaou
Non-executive Director, Company Secretary,
Secretary to the Board
Appointed: March 2008
Committee Memberships: ESG Committee (Chair)
Skills and experience: Ms. Nicolaou has extensive experience
in commercial, corporate and funds law. She is currently
the Managing Director of Amicorp (Cyprus) Ltd. Previously,
she was head of the Corporate Legal department at Polakis
Sarris LLC and also worked at C. Patsalides LLC. Ms. Nicolaou
is a member of the Board of CIFA and WICCI, the Chair
of Cyprus South East Asia Business Association, participates
in various associations of the Cyprus Chamber of Commerce
and sits on the boards of a number of listed and private
companies. Ms. Nicolaou graduated with an LLB in Law from
the University of Nottingham and holds an LLM in Commercial
and Corporate Law from University College London. She
has an advanced diploma in Business Administration from
the Cyprus International Institute of Management. She
was admitted to the Bar in Cyprus in 2003.
Melina Pyrgou
Non-executive Director
Appointed: April 2013
Skills and experience: Ms. Pyrgou is a barrister and registered
insolvency practitioner and has practised corporate law
for over 25 years. She is Managing Director of Pyrgou Vakis
Law Firm, a Cyprus-based corporate and commercial law
practice. Previously, she was Director of Legal Services
at PricewaterhouseCoopers in Cyprus. Ms. Pyrgou served
as the Chairman of EuropeFides Association, a European
network of accounting, audit, tax and legal firms, from 2015
to 2016 and is a member of various business associations.
Ms. Pyrgou graduated from the University of Keele with
a degree in Law and Sociology and holds a diploma
in Environmental Law from the University of Geneva. She
was called to the bar in Cyprus in 1992 and in London (Grays
Inn) in 1995.
Other appointments: Ms. Pyrgou currently serves
as a member of the Cyprus Investments Promotion Agency
(CIPA). She also sits on the Disciplinary Committee
of the Institute of Certified Public Accountants of Cyprus
(ICPAC). Ms. Pyrgou is also a Board member of the Health
Insurance Organisation.
Board of Directors
Effective to 26 February 2024
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
103 102
Michael Thomaides
Non-executive Director
Appointed: April 2014
Skills and experience: Mr. Thomaides served as a director
at Globaltrans from 2004 to 2008 and sat on the Board
of Global Ports Investments PLC, Russia’s leading container
port operator. He has been a director at Leverret Holding Ltd
(Cyprus) since 2007. Mr. Thomaides graduated from London
Southbank University with a BSc degree in Consumer Product
Management.
Marios Tofaros
Non-executive Director
Appointed: April 2013
Skills and experience: Mr. Tofaros is a director of the Client
Accounting department at Amicorp (Cyprus) Ltd. He
was a financial accountant at Depfa Investment Bank Ltd
from 2004 to 2008 and a finance officer at Louis Catering
Ltd from 2003 to 2004. He has held various positions
in the Audit department at KPMG Cyprus. Mr. Tofaros
has a degree in Accounting, Finance and Economics
and a Master’s degree in Business Studies, both from
the University of Kent. He holds a chartered certified
accountant (FCCA) diploma and is a member of the Institute
of Certified Public Accountants of Cyprus.
Konstantin Shirokov
Executive Director, Head of Internal Audit
Appointed: March 2008
Skills and experience: Mr. Shirokov has over 12 years
of senior international management experience. Prior
to joining Globaltrans, he worked in senior finance roles
at Mechel and as an economist at Glencore International. He
served as a non-executive member on the Board of Global
Ports Investments PLC between 2008 and April 2018,
where he was a member of the Audit and Risk committee.
Mr. Shirokov graduated from the Financial University under
the Government of the Russian Federation and studied
business management at Oxford Brookes University.
Alexander Storozhev
Executive Director, Chief Procurement Officer
Appointed: April 2013
Mr. Storozhev has held senior management roles
throughout a 20-year career in the rail industry and has
been with Globaltrans since it was established. He sits
on the boards of all Group subsidiaries. He 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.
Sergey V. Tolmachev
Executive Director, Managing Director
Appointed: Non-executive Director in April 2013 and
Executive Director in October 2013
Skills and experience: Mr. Tolmachev became the Group’s
Managing Director in October 2013. He joined N-Trans
Group in 2001 and has held various management positions
focused on corporate finance and treasury. He has
extensive experience in financial analysis and modelling.
Mr. Tolmachev graduated from Lomonosov Moscow
State University with a degree in Mechanics and Applied
Mathematics.
Andrey Gomon
Non-executive Director
Appointed: From 2013 to 2016 and rejoined in April 2017
Skills and experience: Mr. Gomon has over 13 years
of management experience in the railway industry. From
2006 to 2012 he was CEO of Transoil, one of Russia’s largest
rail transportation companies, having previously served
as CFO between 2003 and 2006. He sits on the boards of two
Globaltrans subsidiaries. Mr. Gomon studied economics
at St. Petersburg State University and holds an MBA
from INSEAD.
Elia Nicolaou
Non-executive Director, Company Secretary,
Secretary to the Board
Appointed: March 2008
Committee Memberships: ESG Committee (Chair)
Skills and experience: Ms. Nicolaou has extensive experience
in commercial, corporate and funds law. She is currently
the Managing Director of Amicorp (Cyprus) Ltd. Previously,
she was head of the Corporate Legal department at Polakis
Sarris LLC and also worked at C. Patsalides LLC. Ms. Nicolaou
is a member of the Board of CIFA and WICCI, the Chair
of Cyprus South East Asia Business Association, participates
in various associations of the Cyprus Chamber of Commerce
and sits on the boards of a number of listed and private
companies. Ms. Nicolaou graduated with an LLB in Law from
the University of Nottingham and holds an LLM in Commercial
and Corporate Law from University College London. She
has an advanced diploma in Business Administration from
the Cyprus International Institute of Management. She
was admitted to the Bar in Cyprus in 2003.
Melina Pyrgou
Non-executive Director
Appointed: April 2013
Skills and experience: Ms. Pyrgou is a barrister and registered
insolvency practitioner and has practised corporate law
for over 25 years. She is Managing Director of Pyrgou Vakis
Law Firm, a Cyprus-based corporate and commercial law
practice. Previously, she was Director of Legal Services
at PricewaterhouseCoopers in Cyprus. Ms. Pyrgou served
as the Chairman of EuropeFides Association, a European
network of accounting, audit, tax and legal firms, from 2015
to 2016 and is a member of various business associations.
Ms. Pyrgou graduated from the University of Keele with
a degree in Law and Sociology and holds a diploma
in Environmental Law from the University of Geneva. She
was called to the bar in Cyprus in 1992 and in London (Grays
Inn) in 1995.
Other appointments: Ms. Pyrgou currently serves
as a member of the Cyprus Investments Promotion Agency
(CIPA). She also sits on the Disciplinary Committee
of the Institute of Certified Public Accountants of Cyprus
(ICPAC). Ms. Pyrgou is also a Board member of the Health
Insurance Organisation.
Board of Directors
Effective to 26 February 2024
Overview
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
105 104
The composition of the Board of Directors presented
below was approved by shareholders at the Extraordinary
General Meeting held on 16 August 2023 and become
effective on 26 February 2024 being the effective date
of the Company’s re-domiciliation from Cyprus to the Abu
Dhabi Global Market.
On 4 April 2024 shareholders at the Extraordinary General
Meeting approved the new composition of the Board (which
is presented on pages 108 to 111 of this Annual Report).
Michael Thomaides
Chairman of the Board, Non-executive Director
Appointed: April 2014; Chairman from February 2024
Skills and experience: Mr. Thomaides served as a director
at Globaltrans from 2004 to 2008 and sat on the Board
of Global Ports Investments PLC, Russia’s leading container
port operator. He has been a director at Leverret Holding Ltd
(Cyprus) since 2007.
Mr. Thomaides graduated from London Southbank University
with a BSc degree in Consumer Product Management.
John Carroll Colley
Senior Independent Non-executive Director
Appointed: April 2013
Committee Memberships: Audit Committee (Chairman),
Nomination Committee (Chairman), Remuneration Committee
(Chairman), ESG Committee.
Skills and experience: Mr. Colley has extensive experience
in international trade and risk management both in the public and
private sectors. From 2007 to 2010, Mr. Colley served as country
manager for Russia at Noble Resources SA. Prior to that, he
held various positions in the public sector, including at the office
of the US Trade Representative and the US 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.
Thomas Karsten Beute
Non-executive Director
Appointed: February 2024
Thomas Karsten Beute has a Master’s degree
in International Tax Law and has provided legal and
financial services solutions to clients for over 15 years.
He started his career at PricewaterhouseCoopers and
Ernst & Young, focused on tax advising principally related
to international real estate products. Mr. Beute then
went on to work extensively in the areas of investment,
asset management, consultancy and financing across
international markets for businesses such as global
management and financial services provider Amicorp and
private Swiss bank Julius Baer. He is Director and Owner
of both KCT Capital Ltd, which provides licensed asset
management and fund services, and Doral Group LLC,
an independent private financial services and investment
firm, both based in Dubai.
Stefan Henrich
Non-executive Director
Appointed: February 2024
Stefan Henrich has more than 20 years’ experience
in finance and business law with top tier financial
institutions across Europe, the Middle East and Asia.
In his role as a senior investment professional, multi-
jurisdictional transaction and asset management lawyer
and general counsel, he obtained a deep understanding
of asset and fund management, M&A, FinTech, trade
finance, venture capital and capital markets across
the global financial services industry.
As such, Mr. Henrich serves on a number of advisory,
supervisory and company boards and is approved
by the Dubai Financial Services Authority (DFSA),
the Financial Conduct Authority, UK (FCA) and
the Monetary Authority of Singapore (MAS). He is a Member
of the Bar Associations in the UK and Germany and holds
a Master of Laws (LL.M.) in International Business and
Finance Law from Queen Mary University of London.
Alexander Lemzakov
Non-executive Director
Appointed: February 2024
Alexander Lemzakov has a proven track record
in the IT industry, specialising in automotive, mobility and
AI. Based in Dubai, over the past decade he has developed
expertise in successfully identifying and developing market
opportunities, delivering innovative approaches to drive
business growth and creating important relationships
with strategic partners, governments and regulators, and
industry bodies.
Currently, he is Co-founder and Chief Executive Officer
of Wize, an IT platform company targeting the automotive
sector. As well as previous experience as an Executive Board
Member and Strategic Officer at car-sharing company Green
Crab, Mr. Lemzakov has held senior management positions
in a number of technology focused businesses. He holds
a Master’s degree in Information Technology.
Board of Directors
Effective from 26 February 2024 to 4 April 2024
George Papaioannou
Independent Non-executive Director
Appointed: April 2013
Committee Memberships: Audit Committee, Nomination
Committee, Remuneration Committee.
Skills and experience: Mr. Papaioannou has more than 20
years in financial reporting, risk management, auditing,
financial performance analysis and taxation. In 2004, he
founded G. Papaioannou Auditors Ltd, which provides
accounting, audit, tax and consulting services. From 2002
to 2004, he worked at Grant Thornton in Cyprus and before
that for PricewaterhouseCoopers in Cyprus. Mr. Papaioannou
holds a degree in Accounting and Financial Management from
the University of Essex. He is a qualified chartered accountant
and a Fellow of the Institute of Chartered Accountants
in England and Wales.
Other appointments: Mr. Papaioannou holds directorships
in several family-owned companies and in a very limited
number of other private companies.
Yousef Abu Laban
Non-executive Director
Appointed: February 2024
Yousef Abu Laban is Co-founder and Managing Partner
of Synergate LLC, a boutique financial services company
principally focused on countries in the Gulf Cooperation Council.
He has over 10 years’ experience in company formation, business
development and start-up advisory services.
A specialist in Computer Science and Information
Technology, Mr. Abu Laban graduated from the World Islamic
Sciences & Education University (W.I.S.E) where he majored
in Computer Network Systems.
Mikhail Loganov
Non-executive Director
Appointed: February 2024
Mikhail Loganov has extensive experience in corporate
finance, risk management, audit and business
administration. Throughout his career he has held
senior positions in the transportation and logistics
industry including as Chief Financial Officer and
then Chief Executive Officer at London-listed Global
Ports Investments PLC from 2013 until 2018, having
been on the Board since 2008. Mr. Loganov served
as Managing Director and Executive member of the Board
of Directors of Globaltrans Investment PLC for the five
years following its listing on the London Stock Exchange
in 2008 with responsibility for financial and reporting
activities as well as having oversight of capital markets
and M&A transactions. Currently he is based in Dubai
and acts as Chief Operating Officer and Head of Finance
at HeadOffice, a global multi family office firm.
Mr. Loganov started his career as a Financial Analyst
at American Express (Europe) having graduated with
honours from the UK’s University of Brighton with a degree
in Business Administration with Finance.
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
105 104
The composition of the Board of Directors presented
below was approved by shareholders at the Extraordinary
General Meeting held on 16 August 2023 and become
effective on 26 February 2024 being the effective date
of the Company’s re-domiciliation from Cyprus to the Abu
Dhabi Global Market.
On 4 April 2024 shareholders at the Extraordinary General
Meeting approved the new composition of the Board (which
is presented on pages 108 to 111 of this Annual Report).
Michael Thomaides
Chairman of the Board, Non-executive Director
Appointed: April 2014; Chairman from February 2024
Skills and experience: Mr. Thomaides served as a director
at Globaltrans from 2004 to 2008 and sat on the Board
of Global Ports Investments PLC, Russia’s leading container
port operator. He has been a director at Leverret Holding Ltd
(Cyprus) since 2007.
Mr. Thomaides graduated from London Southbank University
with a BSc degree in Consumer Product Management.
John Carroll Colley
Senior Independent Non-executive Director
Appointed: April 2013
Committee Memberships: Audit Committee (Chairman),
Nomination Committee (Chairman), Remuneration Committee
(Chairman), ESG Committee.
Skills and experience: Mr. Colley has extensive experience
in international trade and risk management both in the public and
private sectors. From 2007 to 2010, Mr. Colley served as country
manager for Russia at Noble Resources SA. Prior to that, he
held various positions in the public sector, including at the office
of the US Trade Representative and the US 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.
Thomas Karsten Beute
Non-executive Director
Appointed: February 2024
Thomas Karsten Beute has a Master’s degree
in International Tax Law and has provided legal and
financial services solutions to clients for over 15 years.
He started his career at PricewaterhouseCoopers and
Ernst & Young, focused on tax advising principally related
to international real estate products. Mr. Beute then
went on to work extensively in the areas of investment,
asset management, consultancy and financing across
international markets for businesses such as global
management and financial services provider Amicorp and
private Swiss bank Julius Baer. He is Director and Owner
of both KCT Capital Ltd, which provides licensed asset
management and fund services, and Doral Group LLC,
an independent private financial services and investment
firm, both based in Dubai.
Stefan Henrich
Non-executive Director
Appointed: February 2024
Stefan Henrich has more than 20 years’ experience
in finance and business law with top tier financial
institutions across Europe, the Middle East and Asia.
In his role as a senior investment professional, multi-
jurisdictional transaction and asset management lawyer
and general counsel, he obtained a deep understanding
of asset and fund management, M&A, FinTech, trade
finance, venture capital and capital markets across
the global financial services industry.
As such, Mr. Henrich serves on a number of advisory,
supervisory and company boards and is approved
by the Dubai Financial Services Authority (DFSA),
the Financial Conduct Authority, UK (FCA) and
the Monetary Authority of Singapore (MAS). He is a Member
of the Bar Associations in the UK and Germany and holds
a Master of Laws (LL.M.) in International Business and
Finance Law from Queen Mary University of London.
Alexander Lemzakov
Non-executive Director
Appointed: February 2024
Alexander Lemzakov has a proven track record
in the IT industry, specialising in automotive, mobility and
AI. Based in Dubai, over the past decade he has developed
expertise in successfully identifying and developing market
opportunities, delivering innovative approaches to drive
business growth and creating important relationships
with strategic partners, governments and regulators, and
industry bodies.
Currently, he is Co-founder and Chief Executive Officer
of Wize, an IT platform company targeting the automotive
sector. As well as previous experience as an Executive Board
Member and Strategic Officer at car-sharing company Green
Crab, Mr. Lemzakov has held senior management positions
in a number of technology focused businesses. He holds
a Master’s degree in Information Technology.
Board of Directors
Effective from 26 February 2024 to 4 April 2024
George Papaioannou
Independent Non-executive Director
Appointed: April 2013
Committee Memberships: Audit Committee, Nomination
Committee, Remuneration Committee.
Skills and experience: Mr. Papaioannou has more than 20
years in financial reporting, risk management, auditing,
financial performance analysis and taxation. In 2004, he
founded G. Papaioannou Auditors Ltd, which provides
accounting, audit, tax and consulting services. From 2002
to 2004, he worked at Grant Thornton in Cyprus and before
that for PricewaterhouseCoopers in Cyprus. Mr. Papaioannou
holds a degree in Accounting and Financial Management from
the University of Essex. He is a qualified chartered accountant
and a Fellow of the Institute of Chartered Accountants
in England and Wales.
Other appointments: Mr. Papaioannou holds directorships
in several family-owned companies and in a very limited
number of other private companies.
Yousef Abu Laban
Non-executive Director
Appointed: February 2024
Yousef Abu Laban is Co-founder and Managing Partner
of Synergate LLC, a boutique financial services company
principally focused on countries in the Gulf Cooperation Council.
He has over 10 years’ experience in company formation, business
development and start-up advisory services.
A specialist in Computer Science and Information
Technology, Mr. Abu Laban graduated from the World Islamic
Sciences & Education University (W.I.S.E) where he majored
in Computer Network Systems.
Mikhail Loganov
Non-executive Director
Appointed: February 2024
Mikhail Loganov has extensive experience in corporate
finance, risk management, audit and business
administration. Throughout his career he has held
senior positions in the transportation and logistics
industry including as Chief Financial Officer and
then Chief Executive Officer at London-listed Global
Ports Investments PLC from 2013 until 2018, having
been on the Board since 2008. Mr. Loganov served
as Managing Director and Executive member of the Board
of Directors of Globaltrans Investment PLC for the five
years following its listing on the London Stock Exchange
in 2008 with responsibility for financial and reporting
activities as well as having oversight of capital markets
and M&A transactions. Currently he is based in Dubai
and acts as Chief Operating Officer and Head of Finance
at HeadOffice, a global multi family office firm.
Mr. Loganov started his career as a Financial Analyst
at American Express (Europe) having graduated with
honours from the UK’s University of Brighton with a degree
in Business Administration with Finance.
Overview
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
107 106
Elia Nicolaou
Non-executive Director
Appointed: March 2008
Committee Memberships: ESG Committee (Chair)
Skills and experience: Ms. Nicolaou has extensive experience
in commercial, corporate and funds law. She is currently
the Managing Director of Amicorp (Cyprus) Ltd.
Previously, she was head of the Corporate Legal department
at Polakis Sarris LLC and also worked at C. Patsalides LLC.
Ms. Nicolaou is a member of the Board of CIFA and WICCI,
the Chair of CyprusSouth East Asia Business Association,
participates in various associations of the Cyprus Chamber
of Commerce and sits on the boards of other listed and private
companies. Ms. Nicolaou graduated with an LLB in Law from
the University of Nottingham and holds an LLM in Commercial
and Corporate Law from University College London. She
has an advanced diploma in Business Administration from
the Cyprus International Institute of Management. She
was admitted to the Bar in Cyprus in 2003.
Anastasia van Rooijen
Non-executive Director
Appointed: February 2024
With her broad language base and deep understanding
of diverse cultures, Anastasia van Rooijen has held
various roles in multinational companies, strengthening
their communication structures and change management
processes. Specialising in employee and organisational
development, her business experience over 20 years has
spanned multiple industries including oil & gas, maritime,
beverages and consulting.
Mrs. van Rooijen has recently served as Organisational
Development Manager (2008–2022) at a residential
property development company Bonava (formerly NCC
AB), where she was responsible for the optimisation
of Human Resources processes, practices and program
initiatives. Having started her career as an interpreter, she
gained extensive experience holding various positions
in HEINEKEN, Det Norske Veritas and Deloitte.
Mrs. van Rooijen graduated from Saint Petersburg State
University where she majored in Linguistics.
Andrei Ryan
Non-executive Director
Appointed: February 2024
Andrei Ryan works as the Chief of Staff at Conundrum, a UK
based AI company that develops software for the digital
transformation of manufacturing, and serves as the General
Manager for their UAE business. Having started his
career in Finance at Canada’s Department of Foreign
Affairs and International Trade, Mr. Ryan spent five years
at international management consultancy firm McKinsey,
gaining extensive experience in advising global companies
on driving investment decisions, strategy development
and implementation of transformational change. From
2018 to 2022 he served in senior executive roles at Yandex
including as Head of Strategy for their E- commerce business
unit.
Mr. Ryan holds an MBA degree from INSEAD, a Master’s
in International Management degree from Vienna University
of Business and Economics and an Honours Bachelor
of Commerce (Finance) degree, from the University
of Ottawa.
Evgeny Yakushkin
Non-executive Director
Appointed: February 2024
Evgeny Yakushkin has over 15 years of experience
in management consulting and e-commerce, with deep
knowledge of e-commerce logistics operations. For five
years Mr. Yakushkin developed Alibaba’s retail business
in CIS (AliExpress) as Director of Strategy and Business
Development and was responsible for the operations,
building partnerships and M&A principally in retail
and logistics. Prior to that, he worked for McKinsey &
Company in strategy and service operations and has
designed and implemented transformation programmes
for clients in numerous sectors including banking,
financial services, telecom, energy, education, and
logistics, as well as for Sovereign Wealth Funds and non-
governmental organisations. Prior to joining McKinsey, he
worked in product marketing for Procter & Gamble, Sony and
Microsoft.
Mr. Yakushkin graduated from the department of Economics
and then Graduate School of Business at Lomonosov Moscow
State University. He also holds an MBA from INSEAD.
Board of Directors
Effective from 26 February 2024 to 4 April 2024
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
107 106
Elia Nicolaou
Non-executive Director
Appointed: March 2008
Committee Memberships: ESG Committee (Chair)
Skills and experience: Ms. Nicolaou has extensive experience
in commercial, corporate and funds law. She is currently
the Managing Director of Amicorp (Cyprus) Ltd.
Previously, she was head of the Corporate Legal department
at Polakis Sarris LLC and also worked at C. Patsalides LLC.
Ms. Nicolaou is a member of the Board of CIFA and WICCI,
the Chair of CyprusSouth East Asia Business Association,
participates in various associations of the Cyprus Chamber
of Commerce and sits on the boards of other listed and private
companies. Ms. Nicolaou graduated with an LLB in Law from
the University of Nottingham and holds an LLM in Commercial
and Corporate Law from University College London. She
has an advanced diploma in Business Administration from
the Cyprus International Institute of Management. She
was admitted to the Bar in Cyprus in 2003.
Anastasia van Rooijen
Non-executive Director
Appointed: February 2024
With her broad language base and deep understanding
of diverse cultures, Anastasia van Rooijen has held
various roles in multinational companies, strengthening
their communication structures and change management
processes. Specialising in employee and organisational
development, her business experience over 20 years has
spanned multiple industries including oil & gas, maritime,
beverages and consulting.
Mrs. van Rooijen has recently served as Organisational
Development Manager (2008–2022) at a residential
property development company Bonava (formerly NCC
AB), where she was responsible for the optimisation
of Human Resources processes, practices and program
initiatives. Having started her career as an interpreter, she
gained extensive experience holding various positions
in HEINEKEN, Det Norske Veritas and Deloitte.
Mrs. van Rooijen graduated from Saint Petersburg State
University where she majored in Linguistics.
Andrei Ryan
Non-executive Director
Appointed: February 2024
Andrei Ryan works as the Chief of Staff at Conundrum, a UK
based AI company that develops software for the digital
transformation of manufacturing, and serves as the General
Manager for their UAE business. Having started his
career in Finance at Canada’s Department of Foreign
Affairs and International Trade, Mr. Ryan spent five years
at international management consultancy firm McKinsey,
gaining extensive experience in advising global companies
on driving investment decisions, strategy development
and implementation of transformational change. From
2018 to 2022 he served in senior executive roles at Yandex
including as Head of Strategy for their E- commerce business
unit.
Mr. Ryan holds an MBA degree from INSEAD, a Master’s
in International Management degree from Vienna University
of Business and Economics and an Honours Bachelor
of Commerce (Finance) degree, from the University
of Ottawa.
Evgeny Yakushkin
Non-executive Director
Appointed: February 2024
Evgeny Yakushkin has over 15 years of experience
in management consulting and e-commerce, with deep
knowledge of e-commerce logistics operations. For five
years Mr. Yakushkin developed Alibaba’s retail business
in CIS (AliExpress) as Director of Strategy and Business
Development and was responsible for the operations,
building partnerships and M&A principally in retail
and logistics. Prior to that, he worked for McKinsey &
Company in strategy and service operations and has
designed and implemented transformation programmes
for clients in numerous sectors including banking,
financial services, telecom, energy, education, and
logistics, as well as for Sovereign Wealth Funds and non-
governmental organisations. Prior to joining McKinsey, he
worked in product marketing for Procter & Gamble, Sony and
Microsoft.
Mr. Yakushkin graduated from the department of Economics
and then Graduate School of Business at Lomonosov Moscow
State University. He also holds an MBA from INSEAD.
Board of Directors
Effective from 26 February 2024 to 4 April 2024
Overview
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
109 108
Jouslin Khairallah
Independent Non-executive Director
Appointed: April 2024
Committee Memberships: Audit Committee (Chair), ESG
Committee (Chair).
Jouslin Khairallah is a professional litigator and legal advisor
having practiced law for over 18 years and is the founder
and Managing Director of Khairallah Advocates and Legal
Consultants, a law firm based in Dubai. Mrs. Khairallah has
extensive experience in both the public and private sectors
and has represented large Middle East and multinational
corporate entities and individuals to resolve complex
and high value disputes. In 2022, she became a member
of the International Association of Lawyers and is also
a member of the Emirates Human Rights Association and
the Dubai Business Women Council.
Mrs. Khairallah holds a Bachelor of Law from Beirut Al
Arabia University.
Abdulla Belobaida
Independent Non-executive Director
Appointed: April 2024
Committee Memberships: Audit Committee, Nomination
Committee, Remuneration Committee.
Abdulla Belobaida has a wealth of entrepreneurial
experience gained in various sectors including trading,
real estate and the construction industry. He is a business
partner and board member of Engineering Contracting Co,
a well-established contracting firm providing engineering
and construction services in the UAE, as well as sitting
on the board of Prime Metal Industries, a leader
in the provision of steel and aluminum metalworks
in the region. Mr. Belobaida also manages a portfolio
of properties across the UAE handling legal and compliance
related issues.
Yousef Abu Laban
Non-executive Director
Appointed: February 2024
Yousef Abu Laban is Co-founder and Managing Partner
of Synergate LLC, a boutique financial services company
principally focused on countries in the Gulf Cooperation
Council. He has over 10 years’ experience in company
formation, business development and start-up advisory
services. A specialist in Computer Science and Information
Technology, Mr. Abu Laban graduated from the World
Islamic Sciences & Education University (W.I.S.E) where he
majored in Computer Network Systems.
Board of Directors
Effective from 4 April 2024
The composition of the Board of Directors presented below was approved
by shareholders at the Extraordinary General Meeting held on 4 April 2024.
Yerzhan Niyazaliyev
Chairman of the Board, Executive Director
Appointed: April 2024
Yerzhan Niyazaliyev has extensive experience
in management, development and consulting across
the pharmaceutical, hospitality, and food and beverage
sectors. An entrepreneur by background, since 2018 he has
held key senior positions at AQNIET Capital, a multi-format
investment company domiciled in Kazakhstan with a portfolio
of brands in retail, distribution, logistics and agriculture.
He first served as its CEO before moving to the Supervisory
Board in 2023. Mr. Niyazaliyev is also co-founder and
Chairman of Pana, a company focused on the hotel, restaurant
and catering industry with significant business presence
in Kazakhstan as well as Russia, the USA and Turkey.
Mr. Niyazaliyev graduated from M. Auezov South Kazakstan
University with a Bachelor of Science degree in history
and holds an LLB (Bachelor of Laws) degree from Maqsut
Narikbayev University and an LLM (Master of Laws) degree
from the Regional Social and Innovation University.
Jaafar Borhan
Senior Independent Non-executive Director
Appointed: April 2024
Committee Memberships: Nomination Committee (Chairman),
Remuneration Committee (Chairman), ESG Committee.
Jaafar Borhan Jaafar has over 13 years of experience
in the fields of relationship management, investment
consultancy, and government and corporate services. Since
early 2023, he has been CEO of Business Hub, a corporate
services provider in Abu Dhabi. Prior to that, Mr. Jaafar
was Commercial Director – SME & Business Development
for KEZAD Group (the Khalifa Economic Zone Abu Dhabi) and
has held senior managerial positions at RAKEZ (the Ras Al
Khaimah Economic Zone) as well as in various UAE companies
such as OnTime Government Services, UAE Exchange Centre,
and Emirates NBD.
He holds a Bachelor’s Degree in Business Administration and
Finance from Beirut Arab University.
ANNUAL REPORT 2023 Governance
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109 108
Jouslin Khairallah
Independent Non-executive Director
Appointed: April 2024
Committee Memberships: Audit Committee (Chair), ESG
Committee (Chair).
Jouslin Khairallah is a professional litigator and legal advisor
having practiced law for over 18 years and is the founder
and Managing Director of Khairallah Advocates and Legal
Consultants, a law firm based in Dubai. Mrs. Khairallah has
extensive experience in both the public and private sectors
and has represented large Middle East and multinational
corporate entities and individuals to resolve complex
and high value disputes. In 2022, she became a member
of the International Association of Lawyers and is also
a member of the Emirates Human Rights Association and
the Dubai Business Women Council.
Mrs. Khairallah holds a Bachelor of Law from Beirut Al
Arabia University.
Abdulla Belobaida
Independent Non-executive Director
Appointed: April 2024
Committee Memberships: Audit Committee, Nomination
Committee, Remuneration Committee.
Abdulla Belobaida has a wealth of entrepreneurial
experience gained in various sectors including trading,
real estate and the construction industry. He is a business
partner and board member of Engineering Contracting Co,
a well-established contracting firm providing engineering
and construction services in the UAE, as well as sitting
on the board of Prime Metal Industries, a leader
in the provision of steel and aluminum metalworks
in the region. Mr. Belobaida also manages a portfolio
of properties across the UAE handling legal and compliance
related issues.
Yousef Abu Laban
Non-executive Director
Appointed: February 2024
Yousef Abu Laban is Co-founder and Managing Partner
of Synergate LLC, a boutique financial services company
principally focused on countries in the Gulf Cooperation
Council. He has over 10 years’ experience in company
formation, business development and start-up advisory
services. A specialist in Computer Science and Information
Technology, Mr. Abu Laban graduated from the World
Islamic Sciences & Education University (W.I.S.E) where he
majored in Computer Network Systems.
Board of Directors
Effective from 4 April 2024
The composition of the Board of Directors presented below was approved
by shareholders at the Extraordinary General Meeting held on 4 April 2024.
Yerzhan Niyazaliyev
Chairman of the Board, Executive Director
Appointed: April 2024
Yerzhan Niyazaliyev has extensive experience
in management, development and consulting across
the pharmaceutical, hospitality, and food and beverage
sectors. An entrepreneur by background, since 2018 he has
held key senior positions at AQNIET Capital, a multi-format
investment company domiciled in Kazakhstan with a portfolio
of brands in retail, distribution, logistics and agriculture.
He first served as its CEO before moving to the Supervisory
Board in 2023. Mr. Niyazaliyev is also co-founder and
Chairman of Pana, a company focused on the hotel, restaurant
and catering industry with significant business presence
in Kazakhstan as well as Russia, the USA and Turkey.
Mr. Niyazaliyev graduated from M. Auezov South Kazakstan
University with a Bachelor of Science degree in history
and holds an LLB (Bachelor of Laws) degree from Maqsut
Narikbayev University and an LLM (Master of Laws) degree
from the Regional Social and Innovation University.
Jaafar Borhan
Senior Independent Non-executive Director
Appointed: April 2024
Committee Memberships: Nomination Committee (Chairman),
Remuneration Committee (Chairman), ESG Committee.
Jaafar Borhan Jaafar has over 13 years of experience
in the fields of relationship management, investment
consultancy, and government and corporate services. Since
early 2023, he has been CEO of Business Hub, a corporate
services provider in Abu Dhabi. Prior to that, Mr. Jaafar
was Commercial Director – SME & Business Development
for KEZAD Group (the Khalifa Economic Zone Abu Dhabi) and
has held senior managerial positions at RAKEZ (the Ras Al
Khaimah Economic Zone) as well as in various UAE companies
such as OnTime Government Services, UAE Exchange Centre,
and Emirates NBD.
He holds a Bachelor’s Degree in Business Administration and
Finance from Beirut Arab University.
Overview
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111 110
Board of Directors
Effective from 4 April 2024
Ruslan Izatov
Non-executive Director
Appointed: April 2024
Ruslan Izatov has extensive experience in finance and
accounting across business including construction, hospitality
and metals. In 2023, he was named Director General of AQNIET
Capital, a multi-format investment company domiciled
in Kazakhstan with a portfolio of brands in retail, distribution,
logistics and agriculture. He has held a number of senior
financial roles and is currently Chief Financial Officer of two
Kazakh companies. Mr. Izatov has also worked in education
as a senior lecturer in the Department of Economics at Kazakh
Economic University.
Mr. Izatov graduated with honours from Taraz State
University where he majored in economics.
Alexander Storozhev
Executive Director, Chief Procurement Officer
Appointed: From April 2013 to February 2024 and rejoined
in April 2024
Mr. Storozhev has held senior management roles
throughout a 20-year career in the rail industry and has
been with Globaltrans since it was established. He sits
on the boards of all Group subsidiaries. He 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.
Viacheslav Stanislavskiy
Executive Director, Head of Operations
Appointed: April 2024
Mr. Stanislavsky has more than 30 years of experience
in the rail industry. He joined New Forwarding Company,
a Globaltrans subsidiary, as Deputy General Director
for Operations and Commerce in March 2010 and
became First Deputy General Director in April 2011. Prior
to that, he had held various senior positions in a number
of transportation companies. Mr. Stanislavsky graduated
from Irkutsk National Research Technical University. He
also has a degree in railway engineering.
Anton Gazizov
Executive Director, Managing Director
Appointed: April 2024
Anton Gazizov has over 20 years of experience
in the finance and banking sectors most recently with
a focus on private equity, mezzanine financing and venture
capital investments. Currently he serves as Portfolio
Manager at AQNIET Capital, a multi-format investment
company domiciled in Kazakhstan and with a portfolio
of brands in retail, distribution, logistics and agriculture.
He is also CEO of Sky Light Invest in the UAE, a family
office. Mr. Gazizov’s international career comprises
positions at prominent institutions such as Deutsche Bank,
Goldman Sachs, and US hedge fund QVT. He holds a first-
class degree in Economics from Cambridge University,
an executive MBA from the London Business School and
is a Chartered Financial Analyst.
Dr. Abdultaiyab Bahrainwala
Non-executive Director
Appointed: April 2024
Dr. Abdultaiyab Bahrainwala has more than 14 years’
experience in corporate law and has advised across a wide
range of areas including real estate, company formation,
intellectual property, employment and commercial
transactions. He is a Partner at Dubai law firm Khairallah
Advocates & Legal Consultants where he heads their
Corporate Department. Dr. Bahrainwala has practiced law
in the United Arab Emirates for over a decade and built
an excellent reputation in the legal landscape of the region.
He holds a Law Doctorate from the European University Institute
in Paris, an LLM in International Business Law from National
University of Singapore, and a Bachelor of Arts and Laws from
the Maharaja Sayajirao University of Baroda, India.
Stefan Henrich
Non-executive Director
Appointed: April 2024
Stefan Henrich has more than 20 years’ experience in finance
and business law with top tier financial institutions across
Europe, the Middle East and Asia. In his role as a senior
investment professional, multi-jurisdictional transaction and
asset management lawyer and general counsel, he obtained
a deep understanding of asset and fund management, M&A,
FinTech, trade finance, venture capital and capital markets
across the global financial services industry.
As such, Mr. Henrich serves on a number of advisory, supervisory
and company boards and is approved by the Dubai Financial
Services Authority (DFSA), the Financial Conduct Authority,
UK (FCA) and the Monetary Authority of Singapore (MAS). He
is a Member of the Bar Associations in the UK and Germany and
holds a Master of Laws (LL.M.) in International Business and
Finance Law from Queen Mary University of London.
Kairat Itemgenov
Executive Director, Chief Strategy Officer,
shareholder
Appointed: April 2024
Kairat Itemgenov is a successful entrepreneur and owner
of AQNIET Capital, a multi-format investment company
domiciled and with major business interests in Kazakhstan.
Over the past 25 years he developed sizable businesses
across several sectors which include (i) a leading Kazakh
pharmacy chain Europharma, (ii) several hotels and lodging
properties, (iii) logistics company Satti Logistics which
operates its own truck and van fleets as well as (iv) KBI
Energy, an experienced player in the repair and instalment
of large-scale power generating equipment. In January 2024,
AQNIET Capital became a key shareholder of Globaltrans.
Prior to embarking on a business development path in 2006,
Mr. Itemgenov practiced law for ten years. He graduated
from Kazakh State National University where he majored
in jurisprudence.
Albina Amangeldinova
Non-executive Director
Appointed: April 2024
Albina Amangeldinova has more than 25 years of experience
in finance, freight rail transportation and logistics and since
2011 has been Director General of DAR Company-2008,
a Kazakh business focused on providing support services
to the rail transportation sector. She spent more than
a decade at National Company Kazakhstan Temir Zholy,
a leading logistics and transportation holding company
with the largest fleet of locomotives, freight and passenger
railcars in Kazakhstan, holding several key positions during
her time there.
Mrs. Amangeldinova has a degree in Economics from
the Almaty Institute of National Economy and also studied
law at Kazakh Humanitarian-Legal University.
ANNUAL REPORT 2023 Governance
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111 110
Board of Directors
Effective from 4 April 2024
Ruslan Izatov
Non-executive Director
Appointed: April 2024
Ruslan Izatov has extensive experience in finance and
accounting across business including construction, hospitality
and metals. In 2023, he was named Director General of AQNIET
Capital, a multi-format investment company domiciled
in Kazakhstan with a portfolio of brands in retail, distribution,
logistics and agriculture. He has held a number of senior
financial roles and is currently Chief Financial Officer of two
Kazakh companies. Mr. Izatov has also worked in education
as a senior lecturer in the Department of Economics at Kazakh
Economic University.
Mr. Izatov graduated with honours from Taraz State
University where he majored in economics.
Alexander Storozhev
Executive Director, Chief Procurement Officer
Appointed: From April 2013 to February 2024 and rejoined
in April 2024
Mr. Storozhev has held senior management roles
throughout a 20-year career in the rail industry and has
been with Globaltrans since it was established. He sits
on the boards of all Group subsidiaries. He 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.
Viacheslav Stanislavskiy
Executive Director, Head of Operations
Appointed: April 2024
Mr. Stanislavsky has more than 30 years of experience
in the rail industry. He joined New Forwarding Company,
a Globaltrans subsidiary, as Deputy General Director
for Operations and Commerce in March 2010 and
became First Deputy General Director in April 2011. Prior
to that, he had held various senior positions in a number
of transportation companies. Mr. Stanislavsky graduated
from Irkutsk National Research Technical University. He
also has a degree in railway engineering.
Anton Gazizov
Executive Director, Managing Director
Appointed: April 2024
Anton Gazizov has over 20 years of experience
in the finance and banking sectors most recently with
a focus on private equity, mezzanine financing and venture
capital investments. Currently he serves as Portfolio
Manager at AQNIET Capital, a multi-format investment
company domiciled in Kazakhstan and with a portfolio
of brands in retail, distribution, logistics and agriculture.
He is also CEO of Sky Light Invest in the UAE, a family
office. Mr. Gazizov’s international career comprises
positions at prominent institutions such as Deutsche Bank,
Goldman Sachs, and US hedge fund QVT. He holds a first-
class degree in Economics from Cambridge University,
an executive MBA from the London Business School and
is a Chartered Financial Analyst.
Dr. Abdultaiyab Bahrainwala
Non-executive Director
Appointed: April 2024
Dr. Abdultaiyab Bahrainwala has more than 14 years’
experience in corporate law and has advised across a wide
range of areas including real estate, company formation,
intellectual property, employment and commercial
transactions. He is a Partner at Dubai law firm Khairallah
Advocates & Legal Consultants where he heads their
Corporate Department. Dr. Bahrainwala has practiced law
in the United Arab Emirates for over a decade and built
an excellent reputation in the legal landscape of the region.
He holds a Law Doctorate from the European University Institute
in Paris, an LLM in International Business Law from National
University of Singapore, and a Bachelor of Arts and Laws from
the Maharaja Sayajirao University of Baroda, India.
Stefan Henrich
Non-executive Director
Appointed: April 2024
Stefan Henrich has more than 20 years’ experience in finance
and business law with top tier financial institutions across
Europe, the Middle East and Asia. In his role as a senior
investment professional, multi-jurisdictional transaction and
asset management lawyer and general counsel, he obtained
a deep understanding of asset and fund management, M&A,
FinTech, trade finance, venture capital and capital markets
across the global financial services industry.
As such, Mr. Henrich serves on a number of advisory, supervisory
and company boards and is approved by the Dubai Financial
Services Authority (DFSA), the Financial Conduct Authority,
UK (FCA) and the Monetary Authority of Singapore (MAS). He
is a Member of the Bar Associations in the UK and Germany and
holds a Master of Laws (LL.M.) in International Business and
Finance Law from Queen Mary University of London.
Kairat Itemgenov
Executive Director, Chief Strategy Officer,
shareholder
Appointed: April 2024
Kairat Itemgenov is a successful entrepreneur and owner
of AQNIET Capital, a multi-format investment company
domiciled and with major business interests in Kazakhstan.
Over the past 25 years he developed sizable businesses
across several sectors which include (i) a leading Kazakh
pharmacy chain Europharma, (ii) several hotels and lodging
properties, (iii) logistics company Satti Logistics which
operates its own truck and van fleets as well as (iv) KBI
Energy, an experienced player in the repair and instalment
of large-scale power generating equipment. In January 2024,
AQNIET Capital became a key shareholder of Globaltrans.
Prior to embarking on a business development path in 2006,
Mr. Itemgenov practiced law for ten years. He graduated
from Kazakh State National University where he majored
in jurisprudence.
Albina Amangeldinova
Non-executive Director
Appointed: April 2024
Albina Amangeldinova has more than 25 years of experience
in finance, freight rail transportation and logistics and since
2011 has been Director General of DAR Company-2008,
a Kazakh business focused on providing support services
to the rail transportation sector. She spent more than
a decade at National Company Kazakhstan Temir Zholy,
a leading logistics and transportation holding company
with the largest fleet of locomotives, freight and passenger
railcars in Kazakhstan, holding several key positions during
her time there.
Mrs. Amangeldinova has a degree in Economics from
the Almaty Institute of National Economy and also studied
law at Kazakh Humanitarian-Legal University.
Overview
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113 112
1 Dmitry Frolov succeeded Alexander Shenets who had served as Group CFO since 2008.
Valery Shpakov
Chief Executive Officer
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. He is an experienced
manager with a track 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.
Dmitry Frolov
Chief Financial Officer
Dmitry Frolov was appointed CFO in December 2023 1 . He has
been with the Group since 2012 and has had responsibility
for business development, M&A transactions and other
areas of corporate finance. He is a member of a number
of Globaltrans subsidiary boards. Mr. Frolov has more than
15 years’ experience in finance in the transportation and
logistics industry. He graduated from the Moscow State
Institute of International Relations, where he majored
in economics and finance.
Vyacheslav Stanislavsky
Deputy Chief Executive Officer, Head
of Operations, member of the Board
of Globaltrans, Executive Director
Mr. Stanislavsky has more than 30 years of experience
in the rail industry. He joined New Forwarding Company,
a Globaltrans subsidiary, as Deputy General Director
for Operations and Commerce in March 2010 and
became First Deputy General Director in April 2011. Prior
to that, he had held various senior positions in a number
of transportation companies. Mr. Stanislavsky graduated from
Irkutsk National Research Technical University. He also has
a degree in railway engineering.
Alexander Storozhev
Chief Procurement Officer, member of the Board
of Globaltrans, Executive Director
Mr. Storozhev has held senior management roles throughout
a 20-year career in the rail industry and has been with
Globaltrans since it was established. He sits on the boards
of all Group subsidiaries. He 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.
Kirill Prokofiev
CEO of BaltTransServis
Mr. Prokofiev was appointed CEO of BaltTransServis,
a Globaltrans subsidiary, in February 2017. Prior to his
appointment, he spent more than seven years working
in senior executive roles in the rail sector. He graduated
from the Saint Petersburg State University of Economics
where he majored in economics. He also holds an MBA
in Strategic Management from Moscow’s Higher School
of Economics.
Roman Goncharov
Head of Treasury
Mr. Goncharov has served as CFO of New Forwarding
Company, a Globaltrans subsidiary, since 2005 and has
over 20 years of management experience. He has an MBA
from the Moscow International School of Business.
Svetlana Brokar
Government Relations Officer
Ms. Brokar joined as Government Relations Officer
in December 2018. She is an attorney with significant
expertise in civil, tax, commercial, corporate, finance
and railway transport matters. From 2009 to 2013,
Ms. Brokar was a member of the Board of New Forwarding
Company, a Globaltrans subsidiary, and since 2014 has
acted as its in-house legal counsel or provided it with
legal services. She also previously worked with the non-
profit partnership “Council of Railway Operators”.
Ms. Brokar graduated with a law degree from Kaliningrad
State University.
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 the heads of key subsidiaries
and Group functions. Senior management is, in turn,
supported by a team of highly skilled and competent
line managers.
Executive Management
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
113 112
1 Dmitry Frolov succeeded Alexander Shenets who had served as Group CFO since 2008.
Valery Shpakov
Chief Executive Officer
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. He is an experienced
manager with a track 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.
Dmitry Frolov
Chief Financial Officer
Dmitry Frolov was appointed CFO in December 2023 1 . He has
been with the Group since 2012 and has had responsibility
for business development, M&A transactions and other
areas of corporate finance. He is a member of a number
of Globaltrans subsidiary boards. Mr. Frolov has more than
15 years’ experience in finance in the transportation and
logistics industry. He graduated from the Moscow State
Institute of International Relations, where he majored
in economics and finance.
Vyacheslav Stanislavsky
Deputy Chief Executive Officer, Head
of Operations, member of the Board
of Globaltrans, Executive Director
Mr. Stanislavsky has more than 30 years of experience
in the rail industry. He joined New Forwarding Company,
a Globaltrans subsidiary, as Deputy General Director
for Operations and Commerce in March 2010 and
became First Deputy General Director in April 2011. Prior
to that, he had held various senior positions in a number
of transportation companies. Mr. Stanislavsky graduated from
Irkutsk National Research Technical University. He also has
a degree in railway engineering.
Alexander Storozhev
Chief Procurement Officer, member of the Board
of Globaltrans, Executive Director
Mr. Storozhev has held senior management roles throughout
a 20-year career in the rail industry and has been with
Globaltrans since it was established. He sits on the boards
of all Group subsidiaries. He 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.
Kirill Prokofiev
CEO of BaltTransServis
Mr. Prokofiev was appointed CEO of BaltTransServis,
a Globaltrans subsidiary, in February 2017. Prior to his
appointment, he spent more than seven years working
in senior executive roles in the rail sector. He graduated
from the Saint Petersburg State University of Economics
where he majored in economics. He also holds an MBA
in Strategic Management from Moscow’s Higher School
of Economics.
Roman Goncharov
Head of Treasury
Mr. Goncharov has served as CFO of New Forwarding
Company, a Globaltrans subsidiary, since 2005 and has
over 20 years of management experience. He has an MBA
from the Moscow International School of Business.
Svetlana Brokar
Government Relations Officer
Ms. Brokar joined as Government Relations Officer
in December 2018. She is an attorney with significant
expertise in civil, tax, commercial, corporate, finance
and railway transport matters. From 2009 to 2013,
Ms. Brokar was a member of the Board of New Forwarding
Company, a Globaltrans subsidiary, and since 2014 has
acted as its in-house legal counsel or provided it with
legal services. She also previously worked with the non-
profit partnership “Council of Railway Operators”.
Ms. Brokar graduated with a law degree from Kaliningrad
State University.
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 the heads of key subsidiaries
and Group functions. Senior management is, in turn,
supported by a team of highly skilled and competent
line managers.
Executive Management
115
114
Corporate governance statement
During 2023, Globaltrans’ corporate affairs were
governed by the memorandum and articles
of association of the Company and the provisions
of applicable Cyprus law. Although the Company
was not subject to any mandatory corporate
governance code in its home jurisdiction of Cyprus,
nor required to observe the UK Corporate Governance
Code (formerly the Combined Code), it has
implemented various corporate governance measures
and practices, which are detailed below in this
section. Globaltrans continues to review its corporate
governance practices in line with international best
practice.
Globaltrans’ Board of Directors has adopted and
updated the Company’s Code of Corporate Governance
(the “Code”), guaranteeing that the interests of all
shareholders are given due consideration. The Code
comprises the various policies in relation to corporate
governance which have been adopted by the Company.
Although the Code is based on principles
recommended by the UK Corporate Governance Code,
this does not constitute voluntary compliance with
such governance code.
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.
This section provides an overview of our corporate
governance practices. For further information, please see
the Financial Statements section of this Annual Report.
Corporate governance policies
Globaltrans’ corporate governance policies and
practices are designed to ensure that the Group
upholds its responsibilities to shareholders and other
stakeholders. The Group promotes and applies this
principle across all levels of its organisation, supported
by clear and effective governance structures.
Globatrans’ policies include, inter alia:
Corporate documents and policies
• Articles of Association
• Appointment Policy for the Board of Directors and
Committees
• Audit Committee – terms of reference
• Board of Directors – terms of reference
• Corporate Secretary – terms of reference
• Dividend Policy
• ESG Committee – terms of reference
• Internal Audit Charter
• Nomination Committee – terms of reference
• Policy on Assessment of Independence and
Objectivity of External Auditor
• Remuneration Committee – terms of reference
• Risk Management Policy
• Risk Management Standard
Business ethics
• Anti-fraud Policy
• Business Continuity Policy
• The Code of Ethics and Conduct
• ESG Policy
• Green Office Initiative
• Policy on Reporting and Investigating Allegations
of Suspected Improper Activities (Whistleblowing
Policy)
• Corporate Diversity and Inclusion Policy
• Environmental and Energy Policy
• Freedom of Association Policy
• Health and Safety Policy
• Human Rights Policy
• Supplier Code of Conduct
Disclosure, transparency and market abuse
regulation
• Corporate Policy on the Treatment of the Rights
of Minority Shareholders
• Continuing Obligations Policy
• Disclosure Policy
• Internal Control Rules for Insider Information
• List of Insider Information
• Securities Dealing Code and PDMR Securities
Dealing Code
Privacy
• Privacy Policy
→ For the Group’s corporate governance documents and policies,
please visit our corporate website at:
https://www.globaltrans.com/governance/corporate-documents
Board’s 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 it 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 Nomination Committee leads the process
for Board appointments, 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 business’ scale, complexity and strategic
positioning. Non-executive Directors are drawn from
a wide range of industries and backgrounds including
Corporate Governance
Report
Overview
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Corporate governance statement
During 2023, Globaltrans’ corporate affairs were
governed by the memorandum and articles
of association of the Company and the provisions
of applicable Cyprus law. Although the Company
was not subject to any mandatory corporate
governance code in its home jurisdiction of Cyprus,
nor required to observe the UK Corporate Governance
Code (formerly the Combined Code), it has
implemented various corporate governance measures
and practices, which are detailed below in this
section. Globaltrans continues to review its corporate
governance practices in line with international best
practice.
Globaltrans’ Board of Directors has adopted and
updated the Company’s Code of Corporate Governance
(the “Code”), guaranteeing that the interests of all
shareholders are given due consideration. The Code
comprises the various policies in relation to corporate
governance which have been adopted by the Company.
Although the Code is based on principles
recommended by the UK Corporate Governance Code,
this does not constitute voluntary compliance with
such governance code.
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.
This section provides an overview of our corporate
governance practices. For further information, please see
the Financial Statements section of this Annual Report.
Corporate governance policies
Globaltrans’ corporate governance policies and
practices are designed to ensure that the Group
upholds its responsibilities to shareholders and other
stakeholders. The Group promotes and applies this
principle across all levels of its organisation, supported
by clear and effective governance structures.
Globatrans’ policies include, inter alia:
Corporate documents and policies
• Articles of Association
• Appointment Policy for the Board of Directors and
Committees
• Audit Committee – terms of reference
• Board of Directors – terms of reference
• Corporate Secretary – terms of reference
• Dividend Policy
• ESG Committee – terms of reference
• Internal Audit Charter
• Nomination Committee – terms of reference
• Policy on Assessment of Independence and
Objectivity of External Auditor
• Remuneration Committee – terms of reference
• Risk Management Policy
• Risk Management Standard
Business ethics
• Anti-fraud Policy
• Business Continuity Policy
• The Code of Ethics and Conduct
• ESG Policy
• Green Office Initiative
• Policy on Reporting and Investigating Allegations
of Suspected Improper Activities (Whistleblowing
Policy)
• Corporate Diversity and Inclusion Policy
• Environmental and Energy Policy
• Freedom of Association Policy
• Health and Safety Policy
• Human Rights Policy
• Supplier Code of Conduct
Disclosure, transparency and market abuse
regulation
• Corporate Policy on the Treatment of the Rights
of Minority Shareholders
• Continuing Obligations Policy
• Disclosure Policy
• Internal Control Rules for Insider Information
• List of Insider Information
• Securities Dealing Code and PDMR Securities
Dealing Code
Privacy
• Privacy Policy
→ For the Group’s corporate governance documents and policies,
please visit our corporate website at:
https://www.globaltrans.com/governance/corporate-documents
Board’s 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 it 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 Nomination Committee leads the process
for Board appointments, 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 business’ scale, complexity and strategic
positioning. Non-executive Directors are drawn from
a wide range of industries and backgrounds including
Corporate Governance
Report
Overview
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
117
116
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 free-float shareholders are represented and that
the interests of all stakeholders are taken into account.
As of 31 December 2023, the Board comprises 14
members, ten of whom are Non-executive Directors.
Three of the Non-executive Directors are independent.
Globaltrans separates the positions of Chairman and CEO
to ensure appropriate segregation of roles and a clear
division of responsibilities. As of 31 December 2023,
members of the Board of Directors held 14,555,939 shares
and GDRs in Globaltrans.
Diversity
Globaltrans values differences and is committed
to diversity, equality and inclusion (“DE&I”). The Board
does not operate a separate diversity policy. The Group’s
approach to diversity issues is set out in the Diversity
and Inclusion Policy adopted in 2020 and exists at all
levels of the Group, including the Board of Directors.
In line with the best practice and the Group’s commitment
to diversity, the Board does take into account DE&I aspects
when making new Board appointments and considering
the composition of the Board. As of 31 December 2023,
there are two female members on the Board, equivalent
to about 14% of the Board. The average age of the Board
is 53 years and ranges in age from 44 to over 60 years
old. Board members are from a range of different socio-
economic and ethnic backgrounds and have experience
across the following areas: the transportation and ports
industry, audit, accounting, economics, finance and
banking, law, engineering, international trade and risk
management.
→ Please refer to the Sustainability Report for further details on certain
diversity metrics in relation to the Board.
Induction and professional development
The Chair is responsible for ensuring that the induction
process for new directors joining the Board is well
constructed and timely. 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.
Activities
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 whenever the Board needs to discuss
pressing matters in between the scheduled meetings.
The Board met 24 times during 2023 and considered 105
items including the following:
Regular 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 the annual and semi-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 appointments to the Board of Directors
of subsidiaries
Ad hoc meetings
• Approval of material borrowings and pledges
by the Company and its subsidiaries
• Approval of the contracts of the Company
• 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 of various business
development opportunities and major transactions
• Consideration of M&A transactions
The Board and the Board Committees meetings in 2023 and the attendance of Directors
Board of Directors Nomination
committee
Remuneration
committee
Audit committee ESG committee
E A E A E A E A E A
Sergey V.
Maltsev
(Chairman)
24 24
John Carroll
Colley
24 24 5 5 5 5 5 5 2 2
Alexander
Eliseev
24 23
Sergey
Foliforov
24 24
Andrey Gomon 24 24
Vasilis
Hadjivassiliou
24 24 5 5
Elia Nicolaou 24 24 2 2
George
Papaioannou
24 24 5 5 5 5 5 5
Melina Pyrgou 24 24
Konstantin
Shirokov
24 23
Alexander
Storozhev
24 24
Michael
Thomaides
24 24
Marios Tofaros 24 24
Sergey V.
Tolmachev
24 24
E – Eligible
Corporate Governance Report
Remuneration of the Board and 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 2023
at the Annual General Meeting held on 21 April 2023.
→ For further information on the remuneration paid to the Board
and key executives in 2023, please see Note 35a of the Group’s
Consolidated Management Report and Consolidated Financial
Statements included in the Financial Statements section of this
Annual Report.
A – Attended
Overview
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
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 free-float shareholders are represented and that
the interests of all stakeholders are taken into account.
As of 31 December 2023, the Board comprises 14
members, ten of whom are Non-executive Directors.
Three of the Non-executive Directors are independent.
Globaltrans separates the positions of Chairman and CEO
to ensure appropriate segregation of roles and a clear
division of responsibilities. As of 31 December 2023,
members of the Board of Directors held 14,555,939 shares
and GDRs in Globaltrans.
Diversity
Globaltrans values differences and is committed
to diversity, equality and inclusion (“DE&I”). The Board
does not operate a separate diversity policy. The Group’s
approach to diversity issues is set out in the Diversity
and Inclusion Policy adopted in 2020 and exists at all
levels of the Group, including the Board of Directors.
In line with the best practice and the Group’s commitment
to diversity, the Board does take into account DE&I aspects
when making new Board appointments and considering
the composition of the Board. As of 31 December 2023,
there are two female members on the Board, equivalent
to about 14% of the Board. The average age of the Board
is 53 years and ranges in age from 44 to over 60 years
old. Board members are from a range of different socio-
economic and ethnic backgrounds and have experience
across the following areas: the transportation and ports
industry, audit, accounting, economics, finance and
banking, law, engineering, international trade and risk
management.
→ Please refer to the Sustainability Report for further details on certain
diversity metrics in relation to the Board.
Induction and professional development
The Chair is responsible for ensuring that the induction
process for new directors joining the Board is well
constructed and timely. 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.
Activities
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 whenever the Board needs to discuss
pressing matters in between the scheduled meetings.
The Board met 24 times during 2023 and considered 105
items including the following:
Regular 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 the annual and semi-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 appointments to the Board of Directors
of subsidiaries
Ad hoc meetings
• Approval of material borrowings and pledges
by the Company and its subsidiaries
• Approval of the contracts of the Company
• 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 of various business
development opportunities and major transactions
• Consideration of M&A transactions
The Board and the Board Committees meetings in 2023 and the attendance of Directors
Board of Directors Nomination
committee
Remuneration
committee
Audit committee ESG committee
E A E A E A E A E A
Sergey V.
Maltsev
(Chairman)
24 24
John Carroll
Colley
24 24 5 5 5 5 5 5 2 2
Alexander
Eliseev
24 23
Sergey
Foliforov
24 24
Andrey Gomon 24 24
Vasilis
Hadjivassiliou
24 24 5 5
Elia Nicolaou 24 24 2 2
George
Papaioannou
24 24 5 5 5 5 5 5
Melina Pyrgou 24 24
Konstantin
Shirokov
24 23
Alexander
Storozhev
24 24
Michael
Thomaides
24 24
Marios Tofaros 24 24
Sergey V.
Tolmachev
24 24
E – Eligible
Corporate Governance Report
Remuneration of the Board and 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 2023
at the Annual General Meeting held on 21 April 2023.
→ For further information on the remuneration paid to the Board
and key executives in 2023, please see Note 35a of the Group’s
Consolidated Management Report and Consolidated Financial
Statements included in the Financial Statements section of this
Annual Report.
A – Attended
Overview
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119
118
Board committees
Globaltrans has four principal committees that advise
the Board: the Audit Committee, the Nomination
Committee, the Remuneration Committee and the ESG
Committee.
These committees oversee, review and monitor key
areas on behalf of the Board and while they have
the authority to make recommendations, ultimate
decision-making responsibility for all matters lies
with the full Board. Each committee has written terms
of reference, approved by the Board, that summarises
the committee’s role and responsibilities.
Number
of members
Members
as at 31 December 2023
Minimum
meetings a year
Number
of meetings in 2023
Members and
meetings 3 members
all independent
John Carroll Colley
Independent Non-executive Director
(Chairman)
Vasilis Hadjivassiliou
Independent Non-executive Director
George Papaioannou
Independent Non-executive Director
4 5
Responsibilities
• 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
• Implementation of codes of conduct
• Assessment of the Chairman of the Board’s performance
Issues
considered
in 2023
• Review of the Group’s Consolidated Financial Statements for 2022 and interim financial results
for the six months ended 30 June 2023
• Review of the external auditor’s report to the Audit Committee following its full-year audit for 2022 and
review for the six months ended 30 June 2023
• Review of the Group’s external auditor and terms of reappointment for 2023
• The Committee recommended reappointment of the external auditors to the Board which, in turn, pro-
posed their reappointment at the Annual General Meeting of the Group held on 21 April 2023
• Review of the report of the external auditor on the audit strategy for the audit of 2023 financial statements
• Review of regulatory announcements by the Group
• Review of internal controls and risk management processes
• Review of the internal audit function and reports on its activities and on the internal audit model and plan
The Audit Committee meetings in 2023
Eligible Attended
John Carroll Colley 5 5
Vasilis Hadjivassiliou 5 5
George Papaioannou 5 5
The Nomination Committee meetings in 2023
Eligible Attended
John Carroll Colley 5 5
George Papaioannou 5 5
Corporate Governance Report
Nomination Committee
The role of the Nomination Committee is to monitor
and review the size, composition and balance
of the Board and its committees and to ensure
Number
of members
Members
as at 31 December 2023
Minimum
meetings a year
Number
of meetings in 2023
Members and
meetings 2 members
2 independent
John Carroll Colley
Independent Non-executive
Director (Chairman)
George Papaioannou
Independent Non-executive
Director
1 5
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
Issues considered
in 2023
• Advice to the Annual General Meeting on the appointment of Board members
• Termination of employment of CFO and appointment of new CFO
Globaltrans has the right structure, skills
and diversity for the effective management
of the Group.
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.
Overview
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Board committees
Globaltrans has four principal committees that advise
the Board: the Audit Committee, the Nomination
Committee, the Remuneration Committee and the ESG
Committee.
These committees oversee, review and monitor key
areas on behalf of the Board and while they have
the authority to make recommendations, ultimate
decision-making responsibility for all matters lies
with the full Board. Each committee has written terms
of reference, approved by the Board, that summarises
the committee’s role and responsibilities.
Number
of members
Members
as at 31 December 2023
Minimum
meetings a year
Number
of meetings in 2023
Members and
meetings 3 members
all independent
John Carroll Colley
Independent Non-executive Director
(Chairman)
Vasilis Hadjivassiliou
Independent Non-executive Director
George Papaioannou
Independent Non-executive Director
4 5
Responsibilities
• 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
• Implementation of codes of conduct
• Assessment of the Chairman of the Board’s performance
Issues
considered
in 2023
• Review of the Group’s Consolidated Financial Statements for 2022 and interim financial results
for the six months ended 30 June 2023
• Review of the external auditor’s report to the Audit Committee following its full-year audit for 2022 and
review for the six months ended 30 June 2023
• Review of the Group’s external auditor and terms of reappointment for 2023
• The Committee recommended reappointment of the external auditors to the Board which, in turn, pro-
posed their reappointment at the Annual General Meeting of the Group held on 21 April 2023
• Review of the report of the external auditor on the audit strategy for the audit of 2023 financial statements
• Review of regulatory announcements by the Group
• Review of internal controls and risk management processes
• Review of the internal audit function and reports on its activities and on the internal audit model and plan
The Audit Committee meetings in 2023
Eligible Attended
John Carroll Colley 5 5
Vasilis Hadjivassiliou 5 5
George Papaioannou 5 5
The Nomination Committee meetings in 2023
Eligible Attended
John Carroll Colley 5 5
George Papaioannou 5 5
Corporate Governance Report
Nomination Committee
The role of the Nomination Committee is to monitor
and review the size, composition and balance
of the Board and its committees and to ensure
Number
of members
Members
as at 31 December 2023
Minimum
meetings a year
Number
of meetings in 2023
Members and
meetings 2 members
2 independent
John Carroll Colley
Independent Non-executive
Director (Chairman)
George Papaioannou
Independent Non-executive
Director
1 5
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
Issues considered
in 2023
• Advice to the Annual General Meeting on the appointment of Board members
• Termination of employment of CFO and appointment of new CFO
Globaltrans has the right structure, skills
and diversity for the effective management
of the Group.
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.
Overview
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121
120
Remuneration Committee
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 2023
Minimum
meetings a year
Number
of meetings in 2023
Members and
meetings 2 members
2 independent
John Carroll Colley
Independent Non-executive Director
(Chairman)
George Papaioannou
Independent Non-executive Director
1 5
Responsibilities
• Remuneration of Executive Directors (Chairman and Executive Directors determine the remuneration
for independent members)
• Review of the Group’s remuneration policies
Issues considered
in 2023
• Approval of bonuses to the Chief Strategy Officer, General Counsel, Chief Financial Officer and
Managing Director
The Remuneration Committee meetings in 2023
Eligible Attended
John Carroll Colley 5 5
George Papaioannou 5 5
ESG Committee
The role of the ESG Committee is to monitor
the development of the Group’s sustainability strategy,
review and recommend ESG disclosures for Board
approval and approve the Group’s sustainability reports.
Number
of members
Members
as at 31 December 2023
Minimum
meetings a year
Number
of meetings in 2023
Members and
meetings 2 members
1 independent
Elia Nicolaou
Non-executive Director (Chair)
John Carroll Colley
Independent Non-executive Director
2 2
Responsibilities
• Monitoring of the development of the Group’s sustainability strategy (issues, policies, initiatives
related to ESG)
• Oversight of ESG disclosures
• Approval of annual sustainability report
• Review of the ESG activities of the Group
• Review of key performance indicators
Issues considered
in 2023
• Review of the latest sustainability trends and developments
• Review of the Group’s ESG activities and key performance indicators in 2022 and in the six
months ended 30 June 2023
• Approval of the Group’s annual Sustainability Report for 2022
• Approval of the Group’s ESG workplan and the activity of the ESG Committee in 2023–2024
The ESG Committee meetings in 2023
Eligible Attended
Elia Nicolaou 2 2
John Carroll Colley 2 2
Corporate Governance Report
Overview
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Remuneration Committee
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 2023
Minimum
meetings a year
Number
of meetings in 2023
Members and
meetings 2 members
2 independent
John Carroll Colley
Independent Non-executive Director
(Chairman)
George Papaioannou
Independent Non-executive Director
1 5
Responsibilities
• Remuneration of Executive Directors (Chairman and Executive Directors determine the remuneration
for independent members)
• Review of the Group’s remuneration policies
Issues considered
in 2023
• Approval of bonuses to the Chief Strategy Officer, General Counsel, Chief Financial Officer and
Managing Director
The Remuneration Committee meetings in 2023
Eligible Attended
John Carroll Colley 5 5
George Papaioannou 5 5
ESG Committee
The role of the ESG Committee is to monitor
the development of the Group’s sustainability strategy,
review and recommend ESG disclosures for Board
approval and approve the Group’s sustainability reports.
Number
of members
Members
as at 31 December 2023
Minimum
meetings a year
Number
of meetings in 2023
Members and
meetings 2 members
1 independent
Elia Nicolaou
Non-executive Director (Chair)
John Carroll Colley
Independent Non-executive Director
2 2
Responsibilities
• Monitoring of the development of the Group’s sustainability strategy (issues, policies, initiatives
related to ESG)
• Oversight of ESG disclosures
• Approval of annual sustainability report
• Review of the ESG activities of the Group
• Review of key performance indicators
Issues considered
in 2023
• Review of the latest sustainability trends and developments
• Review of the Group’s ESG activities and key performance indicators in 2022 and in the six
months ended 30 June 2023
• Approval of the Group’s annual Sustainability Report for 2022
• Approval of the Group’s ESG workplan and the activity of the ESG Committee in 2023–2024
The ESG Committee meetings in 2023
Eligible Attended
Elia Nicolaou 2 2
John Carroll Colley 2 2
Corporate Governance Report
Overview
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Strategic Report Sustainability Report Governance Financial Statements Additional Information
123
122
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.
Management undertakes a regular schedule of meetings,
presentations, conference calls and webcasts with
investors and sell-side analysts. The Group has a dedicated
Investor Relations team that acts as the primary point
of contact with the investor community.
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 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.
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 on 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
for 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 Audit 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 appointment
of GAC Auditors Ltd as the Group’s external auditor
in respect of the audit of the financial year ending
2023. The appointment was approved by the Group’s
shareholders at the Annual General Meeting
on 21 April 2023.
Shareholder engagement
Corporate Governance Report
• 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.
→ Please refer to the Financial Statements section of this
Annual Report for further details on our internal control
and risk management systems in relation to the financial
reporting process.
Overview
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
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.
Management undertakes a regular schedule of meetings,
presentations, conference calls and webcasts with
investors and sell-side analysts. The Group has a dedicated
Investor Relations team that acts as the primary point
of contact with the investor community.
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 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.
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 on 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
for 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 Audit 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 appointment
of GAC Auditors Ltd as the Group’s external auditor
in respect of the audit of the financial year ending
2023. The appointment was approved by the Group’s
shareholders at the Annual General Meeting
on 21 April 2023.
Shareholder engagement
Corporate Governance Report
• 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.
→ Please refer to the Financial Statements section of this
Annual Report for further details on our internal control
and risk management systems in relation to the financial
reporting process.
Overview
ANNUAL REPORT 2023 Governance
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Overview
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Strategic Report Sustainability Report Governance Financial Statements Additional Information
125 124
100%
100%
100%
100%
100%
100%
Globaltrans provides freight rail transportation,
railcar leasing and other ancillary services to clients
through its 100% owned subsidiaries (see chart below).
Source: Globaltrans; as of 31 December 2023.
Corporate Structure
Globaltrans’ key operating subsidiaries
RemTransServis,
OOO (Russia)
BTS-Locomotive
solutions,
OOO (Russia)
New Forwarding
Company,
AO (Russia)
GTI Management,
OOO (Russia)
Ural Wagonrepair
Company,
AO (Russia)
BaltTransServis,
OOO (Russia)
The Group’s corporate structure ensures effective
asset management and operational control while
creating logical business segments.
1 Imposed suspension of GDRs
trading on the LSE since
3 March 2022 continued
as of the date of publication.
2 The information in this section
is based upon notifications
and other information received
by the Company with respect
to beneficial ownership as of
5 February 2024.
3 For these purposes, the free
float consists of the ordinary
shares and GDRs held by
investors not affiliated or
associated with Globaltrans.
4 Directly or indirectly owned.
AQNIET Capital LLP is
beneficially owned by Kairat
Itemgenov.
5 Beneficially owned by
Andrey Filatov, co-founder of
Globaltrans.
6 Beneficially owned by
Alexander Eliseev, co-founder
of Globaltrans. This
shareholding is subject to the
signed binding agreement
to sell to AQNIET Capital
LLP. The completion of the
transaction is expected not
later than the second half
of 2024.
Public company driven by entrepreneurial spirit
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 CIS.
In 2008, Globaltrans successfully
undertook an Initial Public Offering
on the London Stock Exchange (“LSE”),
becoming the first freight rail group
servicing CIS cargo flows to be listed
internationally. In 2020, Globaltrans’
GDRs were admitted to trading
on the Moscow Exchange (“MOEX”).
Today, the majority of the Company’s
shares are in public hands with
Globaltrans’ free float amounting
to 55.7% of the issued share capital.
AQNIET Capital LLP (“AQNIET”),
an investment company domiciled and with
major business interests in Kazakhstan
is the largest single shareholder
of Globaltrans. AQNIET is beneficially
owned by Kairat Itemgenov, a Kazakh
entrepreneur who has successfully
developed sizeable businesses across
several sectors over the past 25 years.
The issued share capital of Globaltrans
consists of 178,318,259 ordinary shares
with a nominal value of USD 0.10
each, a certain portion of which is held
in the form of GDRs. The GDRs represent
one ordinary share each and have been
listed on the Main Market of the LSE
(ticker symbol: GLTR) since May 2008 1 and
on the Level One quotation list of MOEX
(ticker symbol: GLTR) since October
2020. Citibank N.A. is the depositary bank
for the GDR programme of Globaltrans.
Shareholder structure 2
Share Capital
55.7% 3
Free float
26.7% 4
AQNIET Capital
LLP
11.5% 5
Marigold
Investments Ltd
5.1% 6
Litten Investments
Ltd
0.9%
Transportation
Investments
Management Ltd
0.1%
Directors and
management
ANNUAL REPORT 2023 Governance
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125 124
100%
100%
100%
100%
100%
100%
Globaltrans provides freight rail transportation,
railcar leasing and other ancillary services to clients
through its 100% owned subsidiaries (see chart below).
Source: Globaltrans; as of 31 December 2023.
Corporate Structure
Globaltrans’ key operating subsidiaries
RemTransServis,
OOO (Russia)
BTS-Locomotive
solutions,
OOO (Russia)
New Forwarding
Company,
AO (Russia)
GTI Management,
OOO (Russia)
Ural Wagonrepair
Company,
AO (Russia)
BaltTransServis,
OOO (Russia)
The Group’s corporate structure ensures effective
asset management and operational control while
creating logical business segments.
1 Imposed suspension of GDRs
trading on the LSE since
3 March 2022 continued
as of the date of publication.
2 The information in this section
is based upon notifications
and other information received
by the Company with respect
to beneficial ownership as of
5 February 2024.
3 For these purposes, the free
float consists of the ordinary
shares and GDRs held by
investors not affiliated or
associated with Globaltrans.
4 Directly or indirectly owned.
AQNIET Capital LLP is
beneficially owned by Kairat
Itemgenov.
5 Beneficially owned by
Andrey Filatov, co-founder of
Globaltrans.
6 Beneficially owned by
Alexander Eliseev, co-founder
of Globaltrans. This
shareholding is subject to the
signed binding agreement
to sell to AQNIET Capital
LLP. The completion of the
transaction is expected not
later than the second half
of 2024.
Public company driven by entrepreneurial spirit
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 CIS.
In 2008, Globaltrans successfully
undertook an Initial Public Offering
on the London Stock Exchange (“LSE”),
becoming the first freight rail group
servicing CIS cargo flows to be listed
internationally. In 2020, Globaltrans’
GDRs were admitted to trading
on the Moscow Exchange (“MOEX”).
Today, the majority of the Company’s
shares are in public hands with
Globaltrans’ free float amounting
to 55.7% of the issued share capital.
AQNIET Capital LLP (“AQNIET”),
an investment company domiciled and with
major business interests in Kazakhstan
is the largest single shareholder
of Globaltrans. AQNIET is beneficially
owned by Kairat Itemgenov, a Kazakh
entrepreneur who has successfully
developed sizeable businesses across
several sectors over the past 25 years.
The issued share capital of Globaltrans
consists of 178,318,259 ordinary shares
with a nominal value of USD 0.10
each, a certain portion of which is held
in the form of GDRs. The GDRs represent
one ordinary share each and have been
listed on the Main Market of the LSE
(ticker symbol: GLTR) since May 2008 1 and
on the Level One quotation list of MOEX
(ticker symbol: GLTR) since October
2020. Citibank N.A. is the depositary bank
for the GDR programme of Globaltrans.
Shareholder structure 2
Share Capital
55.7% 3
Free float
26.7% 4
AQNIET Capital
LLP
11.5% 5
Marigold
Investments Ltd
5.1% 6
Litten Investments
Ltd
0.9%
Transportation
Investments
Management Ltd
0.1%
Directors and
management
Consolidated Management Report
Financial
Statements
p. 128
Consolidated Management Report
and Consolidated Financial
Statements
Read more →
p. 242
Management Report and Parent
Company Financial Statements
Read more →
In this section
Additional Information
Overview
ANNUAL REPORT 2023 Financial Statements 127 126
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Statements
p. 128
Consolidated Management Report
and Consolidated Financial
Statements
Read more →
p. 242
Management Report and Parent
Company Financial Statements
Read more →
In this section
Additional Information
Overview
ANNUAL REPORT 2023 Financial Statements 127 126
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Board of Directors and other officers
Board of Directors as of 5 April 2024
Mr. Jaafar Borhan
Senior Independent Non-Executive
Director
Appointed on 4 April 2024,
(Senior Independent Director
since 5 April 2024)
Chairman of Nomination Committee
(since 5 April 2024)
Member of ESG Committee
(since 5 April 2024)
Ms. Jouslin Khairallah
Independent Non-Executive Director
Appointed on 4 April 2024
Chairperson of the Audit Committee
(since 5 April 2024)
Chairperson of ESG Committee
(since 5 April 2024)
Mr. Abdulla Belobaida
Independent Non-Executive Director
Member of the Audit Committee
(since 5 April 2024)
Member of Remuneration Committee
(since 5 April 2024)
Member of Nomination Committee
(since 5 April 2024)
Mr. Abdultaiyab Bahrainwala
Non-Executive Director
Ms. Albina Amangeldinova
Non-Executive Director
Mr. Yerzhan Niyazaliyev
Chairman of the Board of Directors
Executive Director
Mr. Kairat Itemgenov
Executive Director
Mr. Anton Gazizov
Executive Director
Mr. Alexander Storozhev
Executive Director
Mr. Viacheslav Stanislavskiy
Executive Director
Mr. Ruslan Izatov
Non-Executive Director
Mr. Stefan Henrich
Non-Executive Director
Mr. Yousef Abu Laban
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
Mr. Aleksandr Lavrentjev
Registered office
Office Unit 3, Floor 6, Al Sila Tower
Abu Dhabi Global Market Square
Al Maryah Island, Abu Dhabi, UAE
Consolidated
Management Report
and Consolidated
Financial Statements
for the year ended
31 December 2023
Board of Directors and other officers ................................................................................................................................................................................... 129
Consolidated Management Report ........................................................................................................................................................................................ 130
Directors’ responsibility ................................................................................................................................................................................................................. 146
Independent Auditor’s Report ................................................................................................................................................................................................... 148
Consolidated income statement .............................................................................................................................................................................................. 152
Consolidated statement of comprehensive income .................................................................................................................................................. 153
Consolidated statement of financial position ................................................................................................................................................................ 154
Consolidated statement of changes in equity ............................................................................................................................................................... 156
Consolidated cash flow statement ......................................................................................................................................................................................... 160
Notes to the consolidated financial statements .......................................................................................................................................................... 162
1. General information .................................................................... 162
2. Basis of preparation ................................................................... 162
3. Adoption of new or revised standards and
interpretations ..................................................................................... 163
4. Summary of significant accounting policies ............ 163
5. New accounting pronouncements ................................... 181
6. Financial risk management .................................................. 183
7. Critical accounting estimates and judgements ..... 192
8. Segmental information ............................................................ 194
9. Non-IFRS financial information ......................................... 199
10. Revenue ........................................................................................... 204
11. Expenses by nature ................................................................. 206
12. Other gains/(losses) – net ................................................. 208
13. Employee benefit expense ................................................ 208
14. Finance income/(costs) - net .......................................... 209
15. Income tax expense ................................................................. 210
16. Net foreign exchange (losses) / gains ........................ 211
17. Property, plant and equipment ....................................... 212
18. Right-of-use assets .................................................................. 216
19. Intangible assets ........................................................................ 217
20. Principal subsidiaries ............................................................. 218
21. Share-based payments ......................................................... 221
22. Financial assets ......................................................................... 222
23. Other assets ................................................................................. 224
24. Inventories ..................................................................................... 225
25. Cash and cash equivalents ................................................ 225
26. Share capital, share premium
and treasury shares ......................................................................... 226
27. Dividends ........................................................................................ 227
28. Borrowings ..................................................................................... 227
29. Other lease liabilities ............................................................. 230
30. Deferred income tax ............................................................... 231
31. Trade and other payables .................................................... 233
32. Earnings per share ................................................................... 233
33. Contingencies ............................................................................. 234
34. Commitments .............................................................................. 237
35. Related party transactions ................................................ 238
36. Business combinations ........................................................ 241
37. Events after the balance sheet date ........................... 241
Overview
ANNUAL REPORT 2023 Financial Statements 129 128
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Board of Directors as of 5 April 2024
Mr. Jaafar Borhan
Senior Independent Non-Executive
Director
Appointed on 4 April 2024,
(Senior Independent Director
since 5 April 2024)
Chairman of Nomination Committee
(since 5 April 2024)
Member of ESG Committee
(since 5 April 2024)
Ms. Jouslin Khairallah
Independent Non-Executive Director
Appointed on 4 April 2024
Chairperson of the Audit Committee
(since 5 April 2024)
Chairperson of ESG Committee
(since 5 April 2024)
Mr. Abdulla Belobaida
Independent Non-Executive Director
Member of the Audit Committee
(since 5 April 2024)
Member of Remuneration Committee
(since 5 April 2024)
Member of Nomination Committee
(since 5 April 2024)
Mr. Abdultaiyab Bahrainwala
Non-Executive Director
Ms. Albina Amangeldinova
Non-Executive Director
Mr. Yerzhan Niyazaliyev
Chairman of the Board of Directors
Executive Director
Mr. Kairat Itemgenov
Executive Director
Mr. Anton Gazizov
Executive Director
Mr. Alexander Storozhev
Executive Director
Mr. Viacheslav Stanislavskiy
Executive Director
Mr. Ruslan Izatov
Non-Executive Director
Mr. Stefan Henrich
Non-Executive Director
Mr. Yousef Abu Laban
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
Mr. Aleksandr Lavrentjev
Registered office
Office Unit 3, Floor 6, Al Sila Tower
Abu Dhabi Global Market Square
Al Maryah Island, Abu Dhabi, UAE
Consolidated
Management Report
and Consolidated
Financial Statements
for the year ended
31 December 2023
Board of Directors and other officers ................................................................................................................................................................................... 129
Consolidated Management Report ........................................................................................................................................................................................ 130
Directors’ responsibility ................................................................................................................................................................................................................. 146
Independent Auditor’s Report ................................................................................................................................................................................................... 148
Consolidated income statement .............................................................................................................................................................................................. 152
Consolidated statement of comprehensive income .................................................................................................................................................. 153
Consolidated statement of financial position ................................................................................................................................................................ 154
Consolidated statement of changes in equity ............................................................................................................................................................... 156
Consolidated cash flow statement ......................................................................................................................................................................................... 160
Notes to the consolidated financial statements .......................................................................................................................................................... 162
1. General information .................................................................... 162
2. Basis of preparation ................................................................... 162
3. Adoption of new or revised standards and
interpretations ..................................................................................... 163
4. Summary of significant accounting policies ............ 163
5. New accounting pronouncements ................................... 181
6. Financial risk management .................................................. 183
7. Critical accounting estimates and judgements ..... 192
8. Segmental information ............................................................ 194
9. Non-IFRS financial information ......................................... 199
10. Revenue ........................................................................................... 204
11. Expenses by nature ................................................................. 206
12. Other gains/(losses) – net ................................................. 208
13. Employee benefit expense ................................................ 208
14. Finance income/(costs) - net .......................................... 209
15. Income tax expense ................................................................. 210
16. Net foreign exchange (losses) / gains ........................ 211
17. Property, plant and equipment ....................................... 212
18. Right-of-use assets .................................................................. 216
19. Intangible assets ........................................................................ 217
20. Principal subsidiaries ............................................................. 218
21. Share-based payments ......................................................... 221
22. Financial assets ......................................................................... 222
23. Other assets ................................................................................. 224
24. Inventories ..................................................................................... 225
25. Cash and cash equivalents ................................................ 225
26. Share capital, share premium
and treasury shares ......................................................................... 226
27. Dividends ........................................................................................ 227
28. Borrowings ..................................................................................... 227
29. Other lease liabilities ............................................................. 230
30. Deferred income tax ............................................................... 231
31. Trade and other payables .................................................... 233
32. Earnings per share ................................................................... 233
33. Contingencies ............................................................................. 234
34. Commitments .............................................................................. 237
35. Related party transactions ................................................ 238
36. Business combinations ........................................................ 241
37. Events after the balance sheet date ........................... 241
Overview
ANNUAL REPORT 2023 Financial Statements 129 128
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Adjusted EBITDA increased 6% year on year to RUB 52,289,028 thousand (2022:
RUB 49,216,294 thousand) with the Adjusted EBITDA Margin at 60% (2022: 60%) remains stable
year on year despite ongoing cost pressures.
The Group had a strong balance sheet with Net Debt to Adjusted EBITDA decreasing
to (0.52x) (2022 end: 0.09x). Net Debt reduced to RUB (27,399,728) thousand (2022 end:
RUB 4,596,305 thousand). As at 31 December 2023 and 31 December 2022, 100% of the Group’s
debt was denominated in Russian roubles.
Free Cash Flow of RUB 25,845,174 thousand increased 74% year on year
(RUB 14,824,581 thousand for 2022) as the 28% year-on-year decrease in Total CAPEX
to RUB 8,260,603 thousand (2022: RUB 11,423,671 thousand) and 50% year-on-year decrease
in Total CAPEX adjusted for M&A to RUB 10,091,996 thousand (2022: RUB 20,223,671 thousand).
Operational information
In 2023, Freight Rail Turnover (including Engaged Fleet) decreased 2% year on year and
the Group’s Transportation Volume (including Engaged Fleet) decreased 2%. The Freight Rail
Turnover (including Engaged Fleet) amounted to 138.8 billion tonnes-km (2022: 141.4 billion
tonnes-km) and the Group’s Transportation Volume (including Engaged Fleet) was 78.6 million
tonnes in 2023 (2022: 80.4 million tonnes).
The Average Number of Loaded Trips per Railcar decreased 5% year on year and the Average
Distance of Loaded Trips remained stable.
Average Price per Trip increased 10% year on year to RUB 71,125 (2022: RUB 64,553) reflecting
largely continued favourable market pricing conditions in both bulk and liquids segments.
The Empty Run Ratio for gondola cars improved to its lowest level in more than ten years at 36%
(2022: 41%) whereas the Total Empty Run Ratio decreased to 45% (2022: 50%).
Total Fleet decreased 1% to 65,644 units (2022 end: 66,115 units).
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)/
gains from financing activities”, “Share of loss of associate”, “Other gains – net”, “Net (gain)/
loss 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
Consolidated Management Report
The Board of Directors presents its report together with the audited consolidated financial
statements for the year ended 31 December 2023. 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
Globaltrans reported strong financial results in 2023 with growth achieved across all key metrics.
The overall performance of the freight rail transportation sector was relatively steady despite
the continued challenging operating environment that persisted for most of 2023, and which
resulted in widespread transformation of freight flows and logistics, as well as pressure on cargo
volumes and intensified cost pressures. The Group also improved its operational efficiency
with all service contracts remaining intact. Robust financial profile was maintained with further
deleveraging. Globaltrans sizably decreased its investments into fleet expansion and M&A in 2023
reflecting a conservative approach to investment given elevated new rolling stock prices.
IFRS financial information
Management considers amongst others the following IFRS measures in analysing the performance
of the Group.
The Group’s Total revenue increased 11% year on year to RUB 104,748,023 thousand
in 2023 (2022: RUB 94,474,032 thousand). Operating profit increased 29% year on year
to RUB 44,124,702 thousand in 2023 (2022: RUB 34,301,602 thousand). The profit for the year
ended 31 December 2023 increased 55% year on year to RUB 38,617,605 thousand (2022:
RUB 24,919,886 thousand).
On 31 December 2023 the total assets of the Group were RUB 130,385,766 thousand
(2022: RUB 110,154,102 thousand) and net assets were RUB 99,853,356 thousand (2022:
RUB 67,462,195 thousand).
On 31 December 2023 the total debt of the Group was RUB 15,377,104 thousand which decreased
26% as compared to end of 2022 which amounted to RUB 20,648,650 thousand. Total cash and
cash equivalents on 31 December 2023 increased 166% and amounted to RUB 42,776,832 thousand
(31 December 2022: 16,052,345 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 increased 7% year on year to RUB 87,387,994 thousand (2022:
RUB 81,609,908 thousand) largely supported by robust average pricing. Total Operating Cash
Costs were up 8% year on year to RUB 35,048,708 thousand (2022: RUB 32,373,079 thousand).
Overview
ANNUAL REPORT 2023 Financial Statements 131 130
Strategic Report Sustainability Report Governance Financial Statements Additional Information
RUB 49,216,294 thousand) with the Adjusted EBITDA Margin at 60% (2022: 60%) remains stable
year on year despite ongoing cost pressures.
The Group had a strong balance sheet with Net Debt to Adjusted EBITDA decreasing
to (0.52x) (2022 end: 0.09x). Net Debt reduced to RUB (27,399,728) thousand (2022 end:
RUB 4,596,305 thousand). As at 31 December 2023 and 31 December 2022, 100% of the Group’s
debt was denominated in Russian roubles.
Free Cash Flow of RUB 25,845,174 thousand increased 74% year on year
(RUB 14,824,581 thousand for 2022) as the 28% year-on-year decrease in Total CAPEX
to RUB 8,260,603 thousand (2022: RUB 11,423,671 thousand) and 50% year-on-year decrease
in Total CAPEX adjusted for M&A to RUB 10,091,996 thousand (2022: RUB 20,223,671 thousand).
Operational information
In 2023, Freight Rail Turnover (including Engaged Fleet) decreased 2% year on year and
the Group’s Transportation Volume (including Engaged Fleet) decreased 2%. The Freight Rail
Turnover (including Engaged Fleet) amounted to 138.8 billion tonnes-km (2022: 141.4 billion
tonnes-km) and the Group’s Transportation Volume (including Engaged Fleet) was 78.6 million
tonnes in 2023 (2022: 80.4 million tonnes).
The Average Number of Loaded Trips per Railcar decreased 5% year on year and the Average
Distance of Loaded Trips remained stable.
Average Price per Trip increased 10% year on year to RUB 71,125 (2022: RUB 64,553) reflecting
largely continued favourable market pricing conditions in both bulk and liquids segments.
The Empty Run Ratio for gondola cars improved to its lowest level in more than ten years at 36%
(2022: 41%) whereas the Total Empty Run Ratio decreased to 45% (2022: 50%).
Total Fleet decreased 1% to 65,644 units (2022 end: 66,115 units).
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)/
gains from financing activities”, “Share of loss of associate”, “Other gains – net”, “Net (gain)/
loss 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
Consolidated Management Report
The Board of Directors presents its report together with the audited consolidated financial
statements for the year ended 31 December 2023. 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
Globaltrans reported strong financial results in 2023 with growth achieved across all key metrics.
The overall performance of the freight rail transportation sector was relatively steady despite
the continued challenging operating environment that persisted for most of 2023, and which
resulted in widespread transformation of freight flows and logistics, as well as pressure on cargo
volumes and intensified cost pressures. The Group also improved its operational efficiency
with all service contracts remaining intact. Robust financial profile was maintained with further
deleveraging. Globaltrans sizably decreased its investments into fleet expansion and M&A in 2023
reflecting a conservative approach to investment given elevated new rolling stock prices.
IFRS financial information
Management considers amongst others the following IFRS measures in analysing the performance
of the Group.
The Group’s Total revenue increased 11% year on year to RUB 104,748,023 thousand
in 2023 (2022: RUB 94,474,032 thousand). Operating profit increased 29% year on year
to RUB 44,124,702 thousand in 2023 (2022: RUB 34,301,602 thousand). The profit for the year
ended 31 December 2023 increased 55% year on year to RUB 38,617,605 thousand (2022:
RUB 24,919,886 thousand).
On 31 December 2023 the total assets of the Group were RUB 130,385,766 thousand
(2022: RUB 110,154,102 thousand) and net assets were RUB 99,853,356 thousand (2022:
RUB 67,462,195 thousand).
On 31 December 2023 the total debt of the Group was RUB 15,377,104 thousand which decreased
26% as compared to end of 2022 which amounted to RUB 20,648,650 thousand. Total cash and
cash equivalents on 31 December 2023 increased 166% and amounted to RUB 42,776,832 thousand
(31 December 2022: 16,052,345 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 increased 7% year on year to RUB 87,387,994 thousand (2022:
RUB 81,609,908 thousand) largely supported by robust average pricing. Total Operating Cash
Costs were up 8% year on year to RUB 35,048,708 thousand (2022: RUB 32,373,079 thousand).
Overview
ANNUAL REPORT 2023 Financial Statements 131 130
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Consolidated Management Report
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 and Engaged Fleet)
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 and locomotives, unless otherwise stated,
and excludes Engaged Fleet.
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
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).
Changes in group structure
There were no changes in the Group structure of the Company during the year ended
31 December 2023 other than sale of 65.25% in Spacecom AS and incorporation of GLTR Cyprus Ltd.
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.
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.
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 and Engaged
Fleet).
EBITDA represents “Profit for the year” before “Income tax expense”, “Finance costs – net”
(excluding “Net foreign exchange transaction (losses)/gains 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 and Engaged
Fleet).
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”, “Acquisition of non-
controlling interest”, “Interest paid on lease liabilities”, “Interest paid on bank borrowings and
non-convertible unsecured bonds” “Interest paid on leases with financial institutions”, “Principal
elements of lease payments for other lease liabilities”, “Payment for rolling stock to disposed
subsidiary” plus “Cash inflow from disposal of subsidiary undertakings – net of cash disposed of”.
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).
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 providers
of infrastructure tariff (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 and locomotives, 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”.
Total CAPEX adjusted for M&A (a non-IFRS financial measure) is calculated as a combination
of Total CAPEX (which includes maintenance CAPEX) and cash inflows and outflows from
acquisitions and disposals.
Overview
ANNUAL REPORT 2023 Financial Statements 133 132
Strategic Report Sustainability Report Governance Financial Statements Additional Information
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 and Engaged Fleet)
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 and locomotives, unless otherwise stated,
and excludes Engaged Fleet.
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
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).
Changes in group structure
There were no changes in the Group structure of the Company during the year ended
31 December 2023 other than sale of 65.25% in Spacecom AS and incorporation of GLTR Cyprus Ltd.
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.
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.
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 and Engaged
Fleet).
EBITDA represents “Profit for the year” before “Income tax expense”, “Finance costs – net”
(excluding “Net foreign exchange transaction (losses)/gains 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 and Engaged
Fleet).
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”, “Acquisition of non-
controlling interest”, “Interest paid on lease liabilities”, “Interest paid on bank borrowings and
non-convertible unsecured bonds” “Interest paid on leases with financial institutions”, “Principal
elements of lease payments for other lease liabilities”, “Payment for rolling stock to disposed
subsidiary” plus “Cash inflow from disposal of subsidiary undertakings – net of cash disposed of”.
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).
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 providers
of infrastructure tariff (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 and locomotives, 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”.
Total CAPEX adjusted for M&A (a non-IFRS financial measure) is calculated as a combination
of Total CAPEX (which includes maintenance CAPEX) and cash inflows and outflows from
acquisitions and disposals.
Overview
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Consolidated Management Report
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 61% of the Group’s Net Revenue from the Operation of Rolling Stock
in 2023 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.
The sanctions imposed on the Russian Central Bank, National Settlement Depositary (“NSD”)
and number of commercial banks, the restrictions for capital movements outside Russian
Federation, the sanctions imposed by US, European Union and number of other countries
on the biggest Russian industrial groups adversely affects the business environment and
prospects of the Group and create significant risks. The restrictions on the export of certain
types of 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 situation is still evolving and further sanctions and limitations on business activity
of companies operating in the region, as well as consequences on the Russian economy
in general, may arise but the full nature and possible effects of these are unknown.
It is not possible for management to predict with any degree of certainty the impact
of this uncertainty on the future operations of the Group and estimate the financial effect
on the Group. Management is closely monitoring the situation and is ready to act depending
on the developments.
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.
Operational risks
The operational risks faced by the Group that could influence the Group’s operational efficiency
include the physical state of the Russian and CIS countries railway infrastructure which may
negatively impact the condition of the Group’s rolling stock, ability of relocation of rolling
stock between different countries 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 State railway company 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.
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 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 escalation of the conflict in Ukraine and the associated sanctions imposed by the US,
European Union and a number of other countries on some of the biggest Russian industrial
groups, as described in Note 33 to the consolidated financial statements, may adversely affect
the business environment and prospects of the Company and its subsidiaries and create significant
new risks, which did not exist as at the balance sheet date.
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.
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 and CIS 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 68% of the Group’s Net Revenue from
the operation of rolling stock in 2023; cost of borrowing and/or deterioration in market conditions
with potential impacts on the profitability and recoverability of investments; and reliance on State
railway company for issuing permits allowing the Group to operate locomotives.
The Group operates mainly in Russia, other emerging markets. Emerging markets, such as Russia
and Kazakhstan, 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. Further,
Overview
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Strategic Report Sustainability Report Governance Financial Statements Additional Information
and suppliers and in some cases, the Group becomes an integrated part of its customers’
operations. Around 61% of the Group’s Net Revenue from the Operation of Rolling Stock
in 2023 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.
The sanctions imposed on the Russian Central Bank, National Settlement Depositary (“NSD”)
and number of commercial banks, the restrictions for capital movements outside Russian
Federation, the sanctions imposed by US, European Union and number of other countries
on the biggest Russian industrial groups adversely affects the business environment and
prospects of the Group and create significant risks. The restrictions on the export of certain
types of 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 situation is still evolving and further sanctions and limitations on business activity
of companies operating in the region, as well as consequences on the Russian economy
in general, may arise but the full nature and possible effects of these are unknown.
It is not possible for management to predict with any degree of certainty the impact
of this uncertainty on the future operations of the Group and estimate the financial effect
on the Group. Management is closely monitoring the situation and is ready to act depending
on the developments.
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.
Operational risks
The operational risks faced by the Group that could influence the Group’s operational efficiency
include the physical state of the Russian and CIS countries railway infrastructure which may
negatively impact the condition of the Group’s rolling stock, ability of relocation of rolling
stock between different countries 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 State railway company 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.
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 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 escalation of the conflict in Ukraine and the associated sanctions imposed by the US,
European Union and a number of other countries on some of the biggest Russian industrial
groups, as described in Note 33 to the consolidated financial statements, may adversely affect
the business environment and prospects of the Company and its subsidiaries and create significant
new risks, which did not exist as at the balance sheet date.
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.
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 and CIS 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 68% of the Group’s Net Revenue from
the operation of rolling stock in 2023; cost of borrowing and/or deterioration in market conditions
with potential impacts on the profitability and recoverability of investments; and reliance on State
railway company for issuing permits allowing the Group to operate locomotives.
The Group operates mainly in Russia, other emerging markets. Emerging markets, such as Russia
and Kazakhstan, 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. Further,
Overview
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Strategic Report Sustainability Report Governance Financial Statements Additional Information
Consolidated Management Report
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.
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.
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 assets over current liabilities of RUB 39,017,720 thousand
as at 31 December 2023.
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.
Contingencies
The Group’s contingencies are disclosed in Note 33 to the consolidated financial statements.
Future developments
The Group’s strategic objective is to strengthen its position as a leading freight rail
transportation group in Russia. The future development of the Group may be affected
by the escalation of the conflict in Ukraine in the period after the balance sheet date. It is not
possible for the Board of Directors to predict with any degree of certainty the impact of this
uncertainty on the future operations of the Group and estimate the financial effect on the Group.
Results
The Group’s results for the year are set out on pages 19 and 20. On the date of this report,
the Board of Directors, having considered the profitability and liquidity position of the Group
as well as all the risks and recent developments, does not recommend the payment of a final
dividend and the net profit for the year is retained.
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. Due to recent sanctions
imposed by US, European Union and number of other countries, number of IT solutions will no
longer be maintained by US and European Union suppliers. Local IT specialists have introduced
alternative solutions to maintain the availability of IT services, continuity of business processes
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.
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 listed. 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, sanctions 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, sanctions, 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 attracts
external consultants.
Financial risks
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.
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.
Overview
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Strategic Report Sustainability Report Governance Financial Statements Additional Information
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.
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.
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 assets over current liabilities of RUB 39,017,720 thousand
as at 31 December 2023.
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.
Contingencies
The Group’s contingencies are disclosed in Note 33 to the consolidated financial statements.
Future developments
The Group’s strategic objective is to strengthen its position as a leading freight rail
transportation group in Russia. The future development of the Group may be affected
by the escalation of the conflict in Ukraine in the period after the balance sheet date. It is not
possible for the Board of Directors to predict with any degree of certainty the impact of this
uncertainty on the future operations of the Group and estimate the financial effect on the Group.
Results
The Group’s results for the year are set out on pages 19 and 20. On the date of this report,
the Board of Directors, having considered the profitability and liquidity position of the Group
as well as all the risks and recent developments, does not recommend the payment of a final
dividend and the net profit for the year is retained.
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. Due to recent sanctions
imposed by US, European Union and number of other countries, number of IT solutions will no
longer be maintained by US and European Union suppliers. Local IT specialists have introduced
alternative solutions to maintain the availability of IT services, continuity of business processes
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.
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 listed. 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, sanctions 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, sanctions, 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 attracts
external consultants.
Financial risks
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.
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.
Overview
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Strategic Report Sustainability Report Governance Financial Statements Additional Information
Consolidated Management Report
Branches
The Group operates through branches and representative offices, maintaining six branches
and eight representative offices during 2023 (seven branches and eight representative offices
during 2022).
Going concern
The 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 2024, including cash flows and borrowing facilities, and taking into account
the developments after the reporting date impacting the economic and business environment
in which the Group operates, as set out in Note 33 to the consolidated financial statements,
the Directors consider that the Group has adequate resources to continue in operation
for the foreseeable future.
Auditors
Following the completion of redomiciliation of Globaltrans Investment Plc from Cyprus to UAE,
ADGM effective from 26 February 2024, the Independent Auditor, GAC Auditors Ltd will
be replaced by RAI LLP, who has license in ADGM for the audit of public companies. A resolution
giving authority to the Board of Directors to fix the remuneration of RAI LLP 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.
Dividends
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 and if the conversion from the currency of payment
to US Dollars is possible for the Depositary, 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.
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 and limitations
on capital movement, if applicable. 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.
On the date of this report, the Board of Directors of the Company, having considered
the profitability and liquidity position of the Group as well as all the risks and recent developments,
does not recommend a payment of final dividends.
Share capital
As of 31 December 2023, the issued share capital of the Company comprised 178,318,259 ordinary
shares with a par value of US$0.10 per share (31 December 2022 comprised 178,740,916 ordinary
shares with a par value of US$0.10 per share).
Treasury shares
As of 31 December 2023, the Company didn’t have treasury shares (31 December 2022: 422 657
treasury shares).
Research and development activities
The Group has not undertaken any research and development activities during the year ended
31 December 2023.
Events after the balance sheet date
The events after the balance sheet date are disclosed in Note 36 to the consolidated financial
statements.
Overview
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The Group operates through branches and representative offices, maintaining six branches
and eight representative offices during 2023 (seven branches and eight representative offices
during 2022).
Auditors
Following the completion of redomiciliation of Globaltrans Investment Plc from Cyprus to UAE,
ADGM effective from 26 February 2024, the Independent Auditor, GAC Auditors Ltd will
be replaced by RAI LLP, who has license in ADGM for the audit of public companies. A resolution
giving authority to the Board of Directors to fix the remuneration of RAI LLP 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.
Dividends
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 and if the conversion from the currency of payment
to US Dollars is possible for the Depositary, 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.
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 and limitations
on capital movement, if applicable. 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.
On the date of this report, the Board of Directors of the Company, having considered
the profitability and liquidity position of the Group as well as all the risks and recent developments,
does not recommend a payment of final dividends.
Events after the balance sheet date
The events after the balance sheet date are disclosed in Note 36 to the consolidated financial
statements.
Overview
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Consolidated Management Report
Board performance
The Board held 24 meetings in 2023. The Directors’ attendance is presented in the table below.
Eligible Attended
John Carroll Colley 24 24
George Papaioannou 24 24
Alexander Eliseev 24 23
Melina Pyrgou 24 24
Konstantin Shirokov 24 23
Alexander Storozhev 24 24
Marios Tofaros 24 24
Elia Nicolaou 24 24
Sergey Tolmachev 24 24
Sergey Maltsev (Chairman) 24 24
Andrey Gomon 24 24
Sergey Foliforov 24 24
Vasilis Hadjivassiliou 24 24
Michalakis Thomaides 24 24
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.
Members of the Board of Directors
As at 31 December 2023, the Board comprises of 14 members (2022: 14 members), 10 (2022:
10 members) of whom are non-executive directors. Three (2022: three) 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 the date of this report are shown on page 129,
the members of the Board of Directors as of 31 December 2023 are shown in the table below, all
of them were members of the Board throughout the year 2023.
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 2023 amounted to RUB 1,076,241 thousand (2022: RUB 776,827 thousand) (Note 35).
Overview
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The Board held 24 meetings in 2023. The Directors’ attendance is presented in the table below.
Eligible Attended
John Carroll Colley 24 24
George Papaioannou 24 24
Alexander Eliseev 24 23
Melina Pyrgou 24 24
Konstantin Shirokov 24 23
Alexander Storozhev 24 24
Marios Tofaros 24 24
Elia Nicolaou 24 24
Sergey Tolmachev 24 24
Sergey Maltsev (Chairman) 24 24
Andrey Gomon 24 24
Sergey Foliforov 24 24
Vasilis Hadjivassiliou 24 24
Michalakis Thomaides 24 24
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.
Members of the Board of Directors
As at 31 December 2023, the Board comprises of 14 members (2022: 14 members), 10 (2022:
10 members) of whom are non-executive directors. Three (2022: three) 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 the date of this report are shown on page 129,
the members of the Board of Directors as of 31 December 2023 are shown in the table below, all
of them were members of the Board throughout the year 2023.
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 2023 amounted to RUB 1,076,241 thousand (2022: RUB 776,827 thousand) (Note 35).
Overview
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Consolidated Management Report
ESG Committee
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
also monitors the development of the Group’s sustainability strategy, reviews and recommends
ESG disclosures for Board approval and approves the Group’s sustainability reports. The ESG
Committee was comprised of two Board members: Elia Nicolaou, Non-executive Director,
who served as the Chair, and Carroll Colley, Independent Non-executive Director. The ESG
Committee meets 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 21 April 2023.
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 31 December 2023 the Board had 2 females representing approximately 14% 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.
The Board Committees
During 2023 the Board had four committees: the Audit Committee, the Nomination Committee,
the Remuneration Committee and the ESG Committee, which was established by the Board
of Directors in January 2022. 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 2023 all the members of the Audit Committee were independent and
the Audit Committee was chaired by Mr. Colley and was also attended by Mr. Papaioannou and
Mr. Hadjivassiliou. 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. As of 31 December 2023, the Nomination Committee was chaired by Carroll Colley and
George Papaioannou was 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. As of 31 December 2023, the Remuneration Committee was chaired by Carroll Colley and
George Papaioannou was 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.
Overview
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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
also monitors the development of the Group’s sustainability strategy, reviews and recommends
ESG disclosures for Board approval and approves the Group’s sustainability reports. The ESG
Committee was comprised of two Board members: Elia Nicolaou, Non-executive Director,
who served as the Chair, and Carroll Colley, Independent Non-executive Director. The ESG
Committee meets 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 21 April 2023.
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 31 December 2023 the Board had 2 females representing approximately 14% 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.
The Board Committees
During 2023 the Board had four committees: the Audit Committee, the Nomination Committee,
the Remuneration Committee and the ESG Committee, which was established by the Board
of Directors in January 2022. 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 2023 all the members of the Audit Committee were independent and
the Audit Committee was chaired by Mr. Colley and was also attended by Mr. Papaioannou and
Mr. Hadjivassiliou. 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. As of 31 December 2023, the Nomination Committee was chaired by Carroll Colley and
George Papaioannou was 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. As of 31 December 2023, the Remuneration Committee was chaired by Carroll Colley and
George Papaioannou was 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.
Overview
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Consolidated Management Report
Directors’ interests
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 2023 and
31 December 2022 are shown below:
The holders of special titles that provide special control rights and
description of such rights
The Company does not have any titles with special rights.
Any restrictions in exercising of voting rights of shares
There are no restrictions in the exercising of voting rights of shares issued by the Company.
By Order of the Board
Alexander Storozhev
Director
Abu Dhabi, ADGM, 05 April 2024
Company’s internal control and risk management systems in relation
to the financial reporting process
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 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.
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.
Overview
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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 2023 and
31 December 2022 are shown below:
| Name | Type of holding | 2023 | 2022 |
| Alexander Eliseev | Indirect holding of ordinaryshares and GDRs | 9,065,790 | 9,065,790 |
| Sergey Maltsev | Indirect holding of ordinaryshares | 5,490,149 | 5,490,149 |
The holders of special titles that provide special control rights and
description of such rights
The Company does not have any titles with special rights.
Any restrictions in exercising of voting rights of shares
There are no restrictions in the exercising of voting rights of shares issued by the Company.
By Order of the Board
Alexander Storozhev
Director
Abu Dhabi, ADGM, 05 April 2024
Company’s internal control and risk management systems in relation
to the financial reporting process
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 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.
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.
Overview
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Directors’ confirmations
Each of the directors, whose names and functions are listed in page 129 confirms that,
to the best of his or her knowledge:
(a) the consolidated financial statements, which are presented on pages 152 to 241, 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 taken 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; and
(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.
By order of the Board
Alexander Storozhev
Director
Abu Dhabi, ADGM, 5 April 2024
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.
As the Company has completed redomiciliation to ADGM, UAE on 26 February 2024, the Company’s
Board of directors must ensure that all legal and financial aspects are properly addressed,
including compliance with any new requirements in the new jurisdiction. From 1 January 2024
International Financial Reporting Standards as adopted by the European Union and
the requirements of the Cyprus Companies Law, Cap.113 will no longer be applicable and
International Financial Reporting Standards will be applied.
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.
Overview
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Each of the directors, whose names and functions are listed in page 129 confirms that,
to the best of his or her knowledge:
(a) the consolidated financial statements, which are presented on pages 152 to 241, 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 taken 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; and
(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.
By order of the Board
Alexander Storozhev
Director
Abu Dhabi, ADGM, 5 April 2024
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.
As the Company has completed redomiciliation to ADGM, UAE on 26 February 2024, the Company’s
Board of directors must ensure that all legal and financial aspects are properly addressed,
including compliance with any new requirements in the new jurisdiction. From 1 January 2024
International Financial Reporting Standards as adopted by the European Union and
the requirements of the Cyprus Companies Law, Cap.113 will no longer be applicable and
International Financial Reporting Standards will be applied.
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.
Overview
ANNUAL REPORT 2023 Financial Statements 147 146
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Independent Auditor’s Report
To the Members of Globaltrans Investment PLC
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the accompanying consolidated financial statements of the parent company
Globaltrans Investment PLC (the ‘’Company’’), which comprise the consolidated statement of
financial position as at 31 December 2023, and the consolidated statements of profit or loss and
other comprehensive income, changes in equity and cash flows for the year then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view
of the consolidated financial position of the parent company Globaltrans Investment PLC as at
31 December 2023, 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.
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 are independent
of the Group 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. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw attention to the operating environment of the consolidated financial statements, which
describes the impact of conflict between Russia and Ukraine. Our opinion is not modified in respect
of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements of the current period.
We have determined that there are no Key Audit Matters to communicate in our report.
Other information
The Board of Directors is responsible for the other information. The other information comprises
the information included in the Management Report, but does not include the consolidated
financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information 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, 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.
Responsibilities of the Board of Directors for the Consolidated Financial Statements
The 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.
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.
The Board of Directors is 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 judgment 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.
Overview
ANNUAL REPORT 2023 Financial Statements 149 148
Strategic Report Sustainability Report Governance Financial Statements Additional Information
To the Members of Globaltrans Investment PLC
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the accompanying consolidated financial statements of the parent company
Globaltrans Investment PLC (the ‘’Company’’), which comprise the consolidated statement of
financial position as at 31 December 2023, and the consolidated statements of profit or loss and
other comprehensive income, changes in equity and cash flows for the year then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view
of the consolidated financial position of the parent company Globaltrans Investment PLC as at
31 December 2023, 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.
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 are independent
of the Group 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. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw attention to the operating environment of the consolidated financial statements, which
describes the impact of conflict between Russia and Ukraine. Our opinion is not modified in respect
of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the consolidated financial statements of the current period.
We have determined that there are no Key Audit Matters to communicate in our report.
Other information
The Board of Directors is responsible for the other information. The other information comprises
the information included in the Management Report, but does not include the consolidated
financial statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information 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, 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.
Responsibilities of the Board of Directors for the Consolidated Financial Statements
The 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.
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.
The Board of Directors is 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 judgment 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.
Overview
ANNUAL REPORT 2023 Financial Statements 149 148
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Independent Auditor’s Report
Independent Auditor’s Report
• 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 and 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 the Board of Directors 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.
Report on Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
• In our opinion, 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
consolidated financial statements.
• In our opinion, and in the light of the knowledge and understanding of the Group and its
environment obtained in the course of the audit, we have not identified material misstatements in
the Management Report.
Other Matters
This report, including the opinion, has been prepared for and only for the Group’s members as a
body in accordance with 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.
Michalis Lambrianides
Certified Public Accountant and Registered Auditor
for and on behalf of
GAC Auditors Ltd
Certified Public Accountants and Registered Auditors
48 Inomenon Ethnon , Guricon House 1st floor, 6042
Larnaca, 5 April 2024
Overview
ANNUAL REPORT 2023 Financial Statements 151 150
Strategic Report Sustainability Report Governance Financial Statements Additional Information
• 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 and 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 the Board of Directors 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.
Report on Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
• In our opinion, 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
consolidated financial statements.
• In our opinion, and in the light of the knowledge and understanding of the Group and its
environment obtained in the course of the audit, we have not identified material misstatements in
the Management Report.
Other Matters
This report, including the opinion, has been prepared for and only for the Group’s members as a
body in accordance with 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.
Michalis Lambrianides
Certified Public Accountant and Registered Auditor
for and on behalf of
GAC Auditors Ltd
Certified Public Accountants and Registered Auditors
48 Inomenon Ethnon , Guricon House 1st floor, 6042
Larnaca, 5 April 2024
Overview
ANNUAL REPORT 2023 Financial Statements 151 150
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Consolidated statement of comprehensive income
for the year ended 31 December 2023
Items in the statement above are disclosed net of tax. There is no income tax relating
to the components of other comprehensive income above.
Consolidated income statement
for the year ended 31 December 2023
Note 2023 2022
RUB’000 RUB’000
10104,748,023
94,474,032
11 (57,899,197 )
(53,929,494 )
46,848,826
40,544,538
11 (346,867 )
(282,458 )
11 (5,494,083 )
(4,625,577 )
12,363,400,047
-
12 (283,221 )
(1,334,901 )
44,124,702
34,301,602
142,173,246
811,588
14 (2,405,410 )
(2,602,339 )
143,194,185
641,196
142,962,021
(1,149,555 )
47,086,723
33,152,047
15 (8,469,118 )
(8,232,161 )
38,617,605
24,919,886
38,620,269
25,193,420
(2,664 )
(273,534 )
38,617,605
24,919,886
32178,318
178,382
1
32216.58 141.23
The notes on pages 162 to 241 are an integral part of these consolidated financial statements. The notes on pages 162 to 241 are an integral part of these consolidated financial statements.
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 outstanding during the year.
Overview
ANNUAL REPORT 2023 Financial Statements 153 152
Strategic Report Sustainability Report Governance Financial Statements Additional Information
for the year ended 31 December 2023
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Profit for the year |
|
|
| Other comprehensive income: | ||
| Items that may be reclassified subsequentlyto profit or loss | ||
| Currency translation differences |
( |
( |
| Items that will not be reclassified to profitor loss | ||
| Currency translation differencesattributable to non-controlling interest |
|
( |
| Other comprehensive income for the year,net of tax |
( |
( |
| Total comprehensive income for the year |
|
|
| Total comprehensive income for the yearattributable to:owners of the Company |
|
|
| non-controlling interest |
|
( |
|
|
|
Items in the statement above are disclosed net of tax. There is no income tax relating
to the components of other comprehensive income above.
Consolidated income statement
for the year ended 31 December 2023
Note 2023 2022
RUB’000 RUB’000
| Revenue | |||
| Cost of sales | |||
| Gross profit | |||
| Selling and marketing costs | |||
| Administrative expenses | |||
| Profit from sale of subsidiary | |||
| Other (losses) / gains – net | |||
| Operating profit | |||
| Finance income | |||
| Finance costs | |||
| Net foreign exchange transaction gains/(losses) on financing activities | |||
| Finance income / (costs) – net | |||
| Profit before income tax | |||
| Income tax expense | |||
| Profit for the year | |||
| Profit attributable to: | |||
| Owners of the Company | |||
| Non-controlling interest | |||
| Weighted average number of ordinary sharesoutstanding (thousand) | |||
| Basic and diluted earnings per sharefor profit attributable to the equityholders of the Company during the year(expressed in RUB per share) |
10
11 (
11 (
11 (
12,36
12 (
14
14 (
14
14
15 (
(
32
1
32
The notes on pages 162 to 241 are an integral part of these consolidated financial statements. The notes on pages 162 to 241 are an integral part of these consolidated financial statements.
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 outstanding during the year.
Overview
ANNUAL REPORT 2023 Financial Statements 153 152
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| Note | 31 December 2023 | 31 December 2022 | |
| RUB’000 | RUB’000 | ||
| Non-current liabilities | |||
| Borrowings | 28 |
|
|
| Other lease liabilities | 29 |
|
|
| Contract liabilities | 10 |
|
|
| Deferred tax liabilities | 30 |
|
|
| Total non-current liabilities |
|
|
|
| Current liabilities | |||
| Borrowings | 28 |
|
|
| Other lease liabilities | 29 |
|
|
| Trade and other payables | 31 |
|
|
| Contract liabilities | 10 |
|
|
| Current tax liabilities |
|
|
|
| Total current liabilities |
|
|
|
| TOTAL LIABILITIES |
|
|
|
| TOTAL EQUITY AND LIABILITIES |
|
|
On 5 April 2024, the Board of Directors of Globaltrans Investment PLC authorised these financial
statements for issue.
By order of the Board
Alexander Storozhev
Director
Yerzhan Niyazaliyev
Director
Consolidated statement of financial position
at 31 December 2023
Note 31 December 2023 31 December 2022
RUB’000 RUB’000
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment | |||
| Right-of-use assets | |||
| Intangible assets | |||
| Other assets | |||
| Total non-current assets | |||
| Current assets | |||
| Inventories | |||
| Other assets | |||
| Loans and other receivables | |||
| Trade receivables | |||
| Current income tax assets | |||
| Cash and cash equivalents | |||
| Total current assets | |||
| TOTAL ASSETS | |||
| EQUITY AND LIABILITIES | |||
| Equity attributable to the ownersof the Company | |||
| Share capital | |||
| Share premium | |||
| Treasury shares | |||
| Common control transaction reserve | |||
| Translation reserve | |||
| Capital contribution | |||
| Retained earnings | |||
| Total equity attributable to the ownersof the Company | |||
| Non-controlling interest | |||
| Total equity |
17
18
19
23
24
23
22
22
25
26
26
(
The notes on pages 162 to 241 are an integral part of these consolidated financial statements.
Overview
ANNUAL REPORT 2023 Financial Statements 155 154
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Consolidated statement of changes in equity
for the year ended 31 December 2023
Attributable to the owners of the Company
Overview
ANNUAL REPORT 2023 Financial Statements 157 156
Strategic Report Sustainability Report Governance Financial Statements Additional Information
for the year ended 31 December 2023
Attributable to the owners of the Company
| Note | Share capital | Sharepremium | Treasuryshares | Commoncontroltransactionreserve | Cash flowhedge reserve | Translationreserve | Capitalcontribution | Retained earnings | Total | Non-controllinginterest | Total | |
| RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | ||
| Balance at 1 January 2022 |
|
|
( |
( |
|
|
|
|
|
|
|
|
| Comprehensive income | ||||||||||||
| Profit for the year |
|
|
|
|
|
|
|
|
|
( |
|
|
| Other comprehensive income | ||||||||||||
| Currency translationdifferences |
|
|
|
|
|
( |
|
|
( |
( |
( |
|
| Total comprehensive incomefor 2022 |
|
|
|
|
|
( |
|
|
|
( |
|
|
| Transactions with owners | ||||||||||||
| Dividends to ownersof the Company | 27 |
|
|
|
|
|
|
|
|
|
|
|
| Dividends to non-controllinginterest | 27 |
|
|
|
|
|
|
|
|
|
( |
( |
| Acquisition of NCI |
|
|
|
|
|
|
|
( |
( |
( |
( |
|
| Purchase of treasury shares | 26 |
|
|
( |
|
|
|
|
( |
|
( |
|
| Total transactions with owners |
|
|
|
|
|
|
|
( |
( |
( |
( |
|
| Balance at 31 December 2022 |
|
|
( |
( |
|
|
|
|
|
( |
|
Overview
ANNUAL REPORT 2023 Financial Statements 157 156
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Attributable to the owners of the Company
The notes on pages 162 to 241 are an integral part of these consolidated financial statements.
Consolidated statement of changes in equity
for the year ended 31 December 2023
Overview
ANNUAL REPORT 2023 Financial Statements 159 158
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| Note | Share capital | Sharepremium | Treasuryshares | Commoncontroltransactionreserve | Cash flowhedge reserve | Translationreserve | Capitalcontribution | Retained earnings | Total | Non-controllinginterest | Total | |
| RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | ||
| Balance at 1 January 2023 |
|
|
( |
( |
|
|
|
|
|
( |
|
|
| Comprehensive income | ||||||||||||
| Profit for the year |
|
|
|
|
|
|
|
|
|
( |
|
|
| Other comprehensive income | ||||||||||||
| Currency translationdifferences |
|
|
|
|
|
( |
|
|
( |
|
( |
|
| Total comprehensive incomefor 2023 |
|
|
|
|
|
( |
|
|
|
|
|
|
| Transactions with owners | ||||||||||||
| Dividends to ownersof the Company | 27 |
|
|
|
|
|
|
|
|
|
|
|
| Dividends to non-controllinginterest | 27 |
|
|
|
|
|
|
|
|
|
|
|
| Sale of SC |
|
|
|
|
|
|
|
( |
( |
|
( |
|
| Cancellation of treasuryshares | 26 |
( |
|
|
|
|
|
|
( |
|
|
|
| Total transactions with owners |
( |
|
|
|
|
|
|
( |
( |
|
( |
|
| Balance at 31 December 2023 |
|
|
|
( |
|
|
|
|
|
|
|
The notes on pages 162 to 241 are an integral part of these consolidated financial statements.
Consolidated statement of changes in equity
for the year ended 31 December 2023
Overview
ANNUAL REPORT 2023 Financial Statements 159 158
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| Note | 2023 | 2022 | |
| RUB’000 | RUB’000 | ||
| Cash flows from investing activities | |||
| Payment for acquisition of non-controlling interest | 20 |
|
( |
| Proceeds from sale of subsidiaries – net of cashdisposed of | 20 |
|
|
| Payment for rolling stock to disposed subsidiary |
( |
|
|
| Loans granted to related parties |
|
( |
|
| Loans granted to third parties |
( |
|
|
| Loan repayments received from related parties |
|
|
|
| Loans repayments received from third parties |
|
|
|
| Purchases of property, plant and equipment |
( |
( |
|
| Purchases of intangible assets |
( |
( |
|
| Proceeds from sale of property, plant and equipment | 17 |
|
|
| Interest received |
|
|
|
| Receipts from finance lease receivable – related parties |
|
|
|
| Receipts from finance lease receivable – third parties |
|
|
|
| Other |
|
( |
|
| Net cash used in investing activities |
( |
( |
|
| Cash flows from financing activities | |||
| Proceeds from bank borrowings | 28 |
|
|
| Repayments of borrowings | 28 |
( |
( |
| Repayments of non-convertible unsecured bonds | 28 |
( |
( |
| Principal elements of lease payments for other leaseliabilities | 28 |
( |
( |
| Interest paid on bank borrowings and non-convertibleunsecured bonds | 28 |
( |
( |
| Interest paid on other lease liabilities | 28 |
( |
( |
| Dividends paid to non-controlling interests in subsidiaries | 27 |
( |
( |
| Purchase of treasury shares | 26 |
|
( |
| Net cash used in financing activities |
( |
( |
|
| Net increase in cash and cash equivalents |
|
|
|
| Exchange gains on cash and cash equivalents |
|
|
|
| Cash and cash equivalents at beginning of year |
|
|
|
| Cash and cash equivalents at end of year | 25 |
|
|
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).
Consolidated cash flow statement
for the year ended 31 December 2023
| Note | 2023 | 2022 | |
| RUB’000 | RUB’000 | ||
| Cash flows from operating activities | |||
| Profit before tax |
|
|
|
| Adjustments for: | |||
| Depreciation of property, plant andequipment | 17 |
|
|
| Depreciation of right-of-use assets | 18 |
|
|
| Amortisation of intangible assets | 19 |
|
|
| Gain on sale of property, plant andequipment | 17 |
( |
( |
| Loss on derecognition arising on capitalrepairs | 17 |
|
|
| (Reversal of impairment)/impairmentof property, plant and equipment | 11 |
( |
|
| Other impairment | 12 |
|
|
| Profit on sale of subsidiaries | 12 |
( |
|
| Net impairment losses on trade and otherreceivables | 11 |
|
|
| Interest income | 14 |
( |
( |
| Interest expense and other finance costs | 14 |
|
|
| Net foreign exchange transaction losses/(gains) on financing activities | 14 |
( |
( |
| Other (gains) / 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 |
|
|
The notes on pages 162 to 241 are an integral part of these consolidated financial statements.
Overview
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Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
Overview
ANNUAL REPORT 2023 Financial Statements 163 162
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
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
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 infrastructure 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 infrastructure 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.
• The Group has a contractual relationship with the client and sets the terms of the transaction,
excluding the infrastructure tariff, such as selling and payment terms, bears credit risk and
controls the flow of receipts and payments. The infrastructure tariff is paid by the Group
and recharged to the customer as a reimbursement. Under these arrangements the Group
recognises revenue net of infrastructure tariff.
• The Group has a contractual relationship with the customer and sets the terms
of the transaction, excluding the infrastructure 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 providers of infrastructure tariff. Under these arrangements
the Group recognises revenue net of infrastructure tariff. 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
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
Overview
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Overview
ANNUAL REPORT 2023 Financial Statements 165 164
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
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.
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 (losses)/gains 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 – 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;
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,
Overview
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Overview
ANNUAL REPORT 2023 Financial Statements 167 166
Strategic Report Sustainability Report Governance Financial Statements Additional Information
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.
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:
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.
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.
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.
• 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, 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 (losses)/gains 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 (losses)/gains on cash and cash equivalents and other monetary assets” and “Net
foreign exchange transaction gains/(losses) on borrowings and other liabilities” are disclosed
after application of hedge accounting (i.e., excluding the foreign currency gains/losses arising
for the hedging).
Overview
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Strategic Report Sustainability Report Governance Financial Statements Additional Information
| Number of years, range | |
| Buildings | 30 |
| Rolling stock: (except locomotives) | |
| Gondola cars | 22 |
| Rail tank cars | 32 |
| Rail tank cars (specialised types) | 30-40 |
| Hoppers | 15-26 |
| Flat cars | 20-32 |
| Locomotives | 9-45 |
| Mounted wheels | 7 |
| Motor vehicles and other property, plant and equipment | 3 to 10 |
Overview
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Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated 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.
Leases
(a) The Group is the lessee
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.
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.
Intangible assets
(a) Customer relationships
Customer relationships acquired in a business combination are recognised at fair value
at the acquisition date. 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 their estimated useful life. 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.
Overview
ANNUAL REPORT 2023 Financial Statements 171 170
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Overview
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Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
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.
(b) The Group is the lessor
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.
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.
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.
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.
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.
Security deposits paid by the Group at the commencement of a lease contract that are held
by the lessor throughout the term of the lease and are refunded to the Group at the end of the lease
term if the Group has fully performed and observed all of the conditions set out in the contract
are accounted for as financial assets.
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
Overview
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Overview
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Notes to the consolidated financial statements
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.
Financial instruments
(a) 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 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.
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.
I nterest 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.
Overview
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Notes to the consolidated financial statements
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.
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.
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.
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.
(b) Financial liabilities
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 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. 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.
Overview
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Overview
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Notes to the consolidated financial statements
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 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.
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.
Uncertain tax positions
The Group’s uncertain tax positions are reassessed by management at the end of each
reporting period. Liabilities are recorded for income tax positions that are determined
by management as more likely than not to result in additional taxes being levied if the positions
were to be challenged by the tax authorities. The assessment is based on the interpretation
of tax laws that have been enacted or substantively enacted by the end of the reporting period,
and any known court or other rulings on such issues. Liabilities for penalties, interest and taxes
other than on income are recognised based on management’s best estimate of the expenditure
required to settle the obligations at the end of the reporting period. Adjustments for uncertain
income tax positions, other than interest and fines, are recorded within the income tax charge.
Adjustments for uncertain income tax positions in respect of interest and fines are recorded
within finance costs and other gains/(losses), net, respectively.
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.
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.
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.
Overview
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Notes to the consolidated financial statements
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
The new standards, interpretations, and amendments to the existing standards effective
for annual accounting periods commencing on 1 January 2023 are as follows:
IFRS 17 Insurance Contracts – (issued on 18 May 2017 and is effective for annual reporting
periods beginning on or after 1 January 2023 with earlier application permitted as long as IFRS 9
is also applied). The IASB completed its project on insurance contracts with the issuance
of IFRS 17 Insurance Contracts in May 2017. IFRS 17 replaces IFRS 4 and sets out principles
for the recognition, measurement, presentation and disclosure of insurance contracts within
the scope of IFRS 17. IFRS 17 requires insurance liabilities to be measured at a current fulfilment
value and provides a more uniform measurement and presentation approach for all insurance
contracts. These requirements are designed to achieve the goal of a consistent, principle-based
accounting for insurance contracts.
Amendments to IFRS 17 Insurance Contracts – (issued on 25 June 2020 and is effective
for annual reporting periods beginning on or after 1 January 2023). The main changes are:
•
Deferral of the date of initial application of IFRS 17 by two years to annual periods beginning
on or after 1 January 2023
•
Additional scope exclusion for credit card contracts and similar contracts that provide
insurance coverage as well as optional scope exclusion for loan contracts that transfer
significant insurance risk
•
Recognition of insurance acquisition cash flows relating to expected contract renewals,
including transition provisions and guidance for insurance acquisition cash flows recognised
in a business acquired in a business combination
•
Clarification of the application of IFRS 17 in interim financial statements allowing
an accounting policy choice at a reporting entity level
•
Clarification of the application of contractual service margin (“CSM”) attributable
to investment-return service and investment-related service and changes
to the corresponding disclosure requirements
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.
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.
Overview
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Overview
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Notes to the consolidated financial statements
The changes made to ISA 600 (Revised) are intended to:
•
Encourage proactive management of quality at the group engagement level and
the component level
•
Keep the standard fit for purpose in a wide range of circumstances and in a developing
environment
•
Reinforce the need for robust communication and interactions during the group audit
•
Foster an appropriately independent and challenging skeptical mindset of the auditor
The revisions aim to drive better quality and more consistent risk assessments,
as well as promote the exercise of professional skepticism.
None of the new standards, amendments to existing standards or interpretations is expected
to have a significant effect on 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 2023, 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.
As of the end of December 2023 the Russian Rouble has decreased against the US Dollar
from 70.3375 as of 31 December 2022 to 89.6883 Russian Roubles (27.5% decrease) and has
decreased against the Euro from 75.6553 as of 31 December 2022 to 99.1919 Russian Roubles
(31.1% decrease).
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.
•
Extension of the risk mitigation option to include reinsurance contracts held and non-financial
derivatives
•
Amendments to require an entity that at initial recognition recognises losses on onerous
insurance contracts issued to also recognise a gain on reinsurance contracts held
•
Simplified presentation of insurance contracts in the statement of financial position so that
entities would present insurance contract assets and liabilities in the statement of financial
position determined using portfolios of insurance contracts rather than groups of insurance
contracts
•
Additional transition relief for business combinations and additional transition relief for the date
of application of the risk mitigation option and the use of the fair value transition approach
–
Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies –
(issued on 12 February 2021 and is effective for annual reporting periods beginning on or after
1 January 2023). The IASB concluded that the concept of materiality could be applied
in making decisions about the disclosure of accounting policies. Therefore, the Board decided
to amend IAS 1 to replace all instances of the term ‘significant accounting policies’ with
‘material accounting policy information’. In the Board’s view, accounting policy information
is material if, when considered together with other information included in an entity’s financial
statements, it can reasonably be expected to influence decisions that the primary users
of general purpose financial statements make on the basis of those financial statements.
The Board concluded that these amendments would help entities reduce immaterial
accounting policy disclosures in their financial statements.
–
Amendments to IAS 8 – Definition of Accounting Estimates – (issued on 12 February
2021 and is effective for annual reporting periods beginning on or after 1 January 2023).
The amendments replace the definition of a change in accounting estimates with a definition
of accounting estimates. Under the new definition, accounting estimates are “monetary
amounts in financial statements that are subject to measurement uncertainty”. Entities
develop accounting estimates if accounting policies require items in financial statements
to be measured in a way that involves measurement uncertainty. The amendments clarify
that a change in accounting estimate that results from new information or new developments
is not the correction of an error.
–
Amendments to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single
Transaction – (issued on 7 May 2021 and is effective for annual reporting periods beginning
on or after 1 January 2023). The IASB amends IAS 12 to provide a further exception from
the initial recognition exemption. Under the amendments, an entity does not apply the initial
recognition exemption for transactions that give rise to equal taxable and deductible
temporary differences.
We understand that, based on management’s assessment, none of the above new standards,
interpretations and amendments to existing standards had any material effect on the Group/
Company. Management’s assessment will be considered during our audit.
Developments in auditing
ISA 600 (Revised 2022) – Audits of Group Financial Statements (Including the Work of Component
Auditors), effective for audits of group financial statements for periods beginning on or after
15 December 2023. ISA 600 (Revised) includes new and revised requirements and application
material that better aligns the standard with recently revised standards such as ISQM 1, ISA220
(Revised) and ISA 315 (Revised 2019). The new and revised requirements also strengthen
the auditor’s responsibilities related to professional skepticism, planning and performing a group
audit, two-way communications between the group auditor and component auditors, and
documentation.
Overview
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Notes to the consolidated financial statements
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 2023 and 31 December 2022, the Group did not have any 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 78.89% of the Group’s trade receivables as at 31 December 2023 (2022: 78.83%).
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 ‘Baa2’.
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.
The carrying amounts of monetary assets and liabilities denominated in US Dollars
as at 31 December 2023 and 31 December 2022 are as follows:
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 2023, would have increased/decreased by RUB 4,937 thousand (2022: 20% change,
effect RUB 158,706 thousand) and equity would have increased/decreased by RUB 4,937 thousand
(2022: 20% change, effect RUB 491,067 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
2023, would have increased /decreased by RUB NIL thousand (2022: 30% change, effect
RUB 32,836 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.
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 NIL thousand (2022: RUB NIL
thousand) foreign exchange losses and the “Exchange (losses)/gains 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 (losses)/gains on cash and cash equivalents and
other monetary assets” and “Net foreign exchange transaction gains/(losses) 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 NIL thousand (2022: RUB NIL 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.
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
Overview
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| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Assets | 29,478 | 1,046,653 |
| Liabilities | 232 | 29,070 |
Overview
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Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
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.
The gross carrying amounts, as per above, represent the Group’s maximum exposure to credit
risk on these assets as at 31 December 2023 and as at 31 December 2022 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.
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.
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 Group 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.
Overview
ANNUAL REPORT 2023 Financial Statements 187 186
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| Trade receivables | Finance lease receivables | |
| RUB’000 | RUB’000 | |
| As at 31 December 2023 | ||
| Current (not past due) | 3,748,020 | 138,760 |
| 1-30 days past due | 678,363 | - |
| 31-90 days past due | 205,866 | - |
| more than 90 days past due | 10,348 | - |
| Total | 4,642,597 | 138,760 |
| Trade receivables | Finance lease receivables | |
| RUB’000 | RUB’000 | |
| As at 31 December 2022 | ||
| Current (not past due) | 3,134,198 | 149,746 |
| 1-30 days past due | 589,065 | - |
| 31-90 days past due | 26,111 | - |
| more than 90 days past due | 11,402 | - |
| Total | 3,760,776 | 149,746 |
Overview
ANNUAL REPORT 2023 Financial Statements 187 186
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
The movement in the credit loss allowance for other receivables during the years 2023 and
2022 is presented in the table below:
The estimated expected credit loss allowance on loans receivable as at 31 December 2022
was immaterial.
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.
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 2023 and 2022:
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
2023 and as at 31 December 2022 based on the general approach of IFRS 9, was immaterial.
All cash and cash equivalents were performing (Stage 1) as at 31 December 2023 and
as at 31 December 2022.
The movement in the credit loss allowance for trade receivables during the years 2023 and 2022
is presented in the table below:
The estimated expected credit loss allowance on finance lease receivables as at 31 December
2023 and as at 31 December 2022 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.
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 2023 and 2022:
The gross carrying amounts, as per above, represent the Group’s maximum exposure to credit risk
on these assets as at 31 December 2023 and as at 31 December 2022 without taking into account
any collateral held. The Group does not hold any collateral as security for any loans receivable
or other receivable balances.
1 International rating agency Moody’s Investors Service.
2 Russian authorized credit rating agency ACRA.
3 Russian authorized credit rating agency Expert RA.
4 The rest of the balance sheet item ‘cash and cash equivalents’ is cash on hand.
Overview
ANNUAL REPORT 2023 Financial Statements 189 188
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| Non-performing | ||
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Opening balance as at 1 January | (4,602) | (6,141) |
| Assets written off during the year as uncollectible | 202 | 1,707 |
| Other | (21,232) | (168) |
| Closing balance as at 31 December | (25,632) | (4,602) |
| 2023 | 2022 | ||
| Rating | RUB’000 | RUB’000 | |
| Moody’s 1 | A2 - A1 | 859,279 | 4,187,545 |
| Moody’s 1 | Baa3 – Baa1 | 79,065 | 127,458 |
| Moody’s 1 | B1 | - | 1,337 |
| ACRA 2 | AAA(RU) - A(RU) | 41,723,686 | 11,600,969 |
| ACRA 2 | BBB+(RU) | 414 | - |
| Expert RA 3 | ruA+ - ruA | 114,005 | 28,926 |
| Other external non-rated banks – satisfactory credit quality (performing) | - | 95,360 | |
| Total cash at bank and bank deposits 4 | 42,776,449 | 16,041,595 |
| Trade receivables | ||
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Opening balance as at 1 January | (10,343) | (98,955) |
| Net loss allowance of financial assets at the start of the year | (7,490) | (2,736) |
| Assets written off during the year as uncollectible | 135 | 23,874 |
| Unused amounts reversed | - | 66,606 |
| Recoveries | 2,498 | 868 |
| Other | - | - |
| Closing balance as at 31 December | (15,200) | (10,343) |
| Internal credit risk rating grade | Company definition of category | 2023 | 2022 |
| RUB’000 | RUB’000 | ||
| Performing | Stage 1 – Counterparties have a low risk of default and a strong capacity to meet contractual cash flows | 261,446 | 22,155 |
| 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 | 10,881 | 9,762 |
| Non-performing or Credit-impaired | Stage 3 – Interest and/or principal repayments are more than 90 days past due | 25,632 | 4,602 |
Overview
ANNUAL REPORT 2023 Financial Statements 189 188
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Notes to the consolidated financial statements
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 2023 and 31 December 2022
are as follows:
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 2023 and 2022. 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
Liquidity risk
The Group has an excess of current assets over current liabilites of RUB 39,017,720 thousand
as at 31 December 2023 (2022: excess of current assets over current liabilites
RUB 4,946,447 thousand).
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 undrawn borrowing facilities amounting to RUB 29,000,000 thousand
as of 31 December 2023 (2022: RUB 42,783,333 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 2023 and 31 December 2022. 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.
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.
Overview
ANNUAL REPORT 2023 Financial Statements 191 190
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| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Total borrowings | 15,377,104 | 20,648,650 |
| Total capitalisation | 115,230,460 | 88,126,351 |
| Total borrowings to total capitalisation ratio (percentage) | 13.34% | 23.43% |
| 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 | Over five years | Total | |
| RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | |
| 31 December 2023 | ||||||||
| Borrowings | 990,107 | 2,697,528 | 2,086,700 | 2,997,037 | 4,208,639 | 4,578,954 | - | 17,558,965 |
| Trade and other payables | 581,157 | 12,005 | - | - | - | - | - | 593,162 |
| Other lease liabilities | 286,184 | 557,783 | 719,938 | 950,674 | 554,005 | 562,276 | 1,658 | 3,632,518 |
| 1,857,448 | 3,267,316 | 2,806,638 | 3,947,711 | 4,762,644 | 5,141,230 | 1,658 | 21,784,645 | |
| 31 December 2022 | ||||||||
| Borrowings | 1,240,580 | 3,761,571 | 2,200,301 | 5,437,567 | 6,693,045 | 3,216,301 | - | 22,549,365 |
| Trade and other payables | 402,763 | 1,210,094 | - | - | - | - | - | 1,612,857 |
| Other lease liabilities | 230,754 | 447,630 | 685,969 | 1,371,635 | 1,792,351 | 102,732 | 3,433 | 4,634,504 |
| 1,874,097 | 5,419,295 | 2,886,270 | 6,809,202 | 8,485,396 | 3,319,033 | 3,433 | 28,796,726 | |
Overview
ANNUAL REPORT 2023 Financial Statements 191 190
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Notes to the consolidated financial statements
(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:
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 providers of infrastructure tariff, a full service
is charged by the Group to its customers and the infrastructure 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 infrastructure
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 infrastructure 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 infrastructure
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 providers
of infrastructure tariff, obtains the right to direct them to provide services on its behalf.
Had the infrastructure tariff directly attributable to such services been excluded from
revenues and cost of sales for the year ended 31 December 2023 both would have decreased
by RUB 12,963,846 thousand (2022: RUB 10,957,305 thousand).
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 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 2023 and 31 December 2022 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 2023 and 31 December 2022 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 2023 and 31 December 2022, respectively. The discount
rate used was 18.5% p.a. (2022: 11.1% p.a.) (Note 28). The fair value as at 31 December 2023 and
31 December 2022 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:
i) Tax legislation
Russian tax, currency and customs legislation is subject to varying interpretations (Note 33).
Overview
ANNUAL REPORT 2023 Financial Statements 193 192
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Overview
ANNUAL REPORT 2023 Financial Statements 193 192
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
The Group does not have transactions between different business segments.
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.
Overview
ANNUAL REPORT 2023 Financial Statements 195 194
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| Gondola cars | Rail tank cars | Other railcars | Total | |
| RUB’000 | RUB’000 | RUB’000 | RUB’000 | |
| Year ended 31 December 2023 | ||||
| Total revenue – operator’s services | 64,542,462 | 35,043,375 | 311 | 99,586,148 |
| Total revenue – operating lease | 282,535 | 3,414,292 | 841,363 | 4,538,190 |
| Revenue (from external customers) | 64,824,997 | 38,457,667 | 841,674 | 104,124,338 |
| less Infrastructure and locomotive tariffs – loaded trips | (6,283,602) | (6,731,050) | - | (13,014,652) |
| less Services provided by other transportation organisations | (3,538,931) | (806,446) | - | (4,345,377) |
| Adjusted revenue for reportable segments | 55,002,464 | 30,920,171 | 841,674 | 86,764,309 |
| Depreciation and amortisation | (8,188,938) | (2,608,828) | (248,909) | (11,046,675) |
| Impairment of property, plant and equipment | 30,163 | (8,111) | - | 22,052 |
| Loss on derecognition arising on capital repairs | (249,618) | (34,822) | (8) | (284,448) |
| Additions to non-current assets (included in reportable segment assets) | 7,039,168 | 2,393,800 | 23,924 | 9,456,892 |
| Reportable segment assets | 51,913,859 | 21,357,916 | 2,971,154 | 76,242,929 |
| Gondola cars | Rail tank cars | Other railcars | Total | |
| RUB’000 | RUB’000 | RUB’000 | RUB’000 | |
| Year ended 31 December 2022 | ||||
| Total revenue – operator’s services | 59,447,945 | 31,077,753 | 12,299 | 90,537,997 |
| Total revenue – operating lease | 437,427 | 2,048,795 | 885,958 | 3,372,180 |
| Revenue (from external customers) | 59,885,372 | 33,126,548 | 898,257 | 93,910,177 |
| less Infrastructure and locomotive tariffs – loaded trips | (4,266,905) | (6,193,899) | (4,091) | (10,464,895) |
| less Services provided by other transportation organisations | (2,051,228) | (348,001) | - | (2,399,229) |
| Adjusted revenue for reportable segments | 53,567,239 | 26,584,648 | 894,166 | 81,046,053 |
| Depreciation and amortisation | (6,804,486) | (2,011,804) | (241,882) | (9,058,172) |
| Impairment of property, plant and equipment | (3,814,843) | (74,990) | (43,000) | (3,932,833) |
| Loss on derecognition arising on capital repairs | (192,293) | (117,581) | (4) | (309,878) |
| Additions to non-current assets (included in reportable segment assets) | 9,286,205 | 4,324,926 | 17,961 | 13,629,092 |
| Reportable segment assets | 47,459,256 | 29,754,578 | 3,233,340 | 80,447,174 |
Overview
ANNUAL REPORT 2023 Financial Statements 195 194
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
Segment assets and liabilities are reconciled to the Group assets and liabilities as follows:
A reconciliation of total adjusted revenue to total profit before income tax is provided as follows:
Overview
ANNUAL REPORT 2023 Financial Statements 197 196
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| 2023 | 2022 | |||
| Assets | Liabilities | Assets | Liabilities | |
| RUB’000 | RUB’000 | RUB’000 | RUB’000 | |
| Segment assets/ liabilities | 76,242,929 | - | 80,447,174 | - |
| Unallocated: | ||||
| Deferred tax liabilities | - | 8,734,998 | - | 9,081,239 |
| Current income tax assets/ liabilities | 149,107 | 75,280 | 613,758 | 1,555,014 |
| Property, plant and equipment | 1,166,593 | - | 834,936 | - |
| Right-of-use assets | 541,070 | - | 162,843 | - |
| Intangible assets | 2,076 | - | 1,760 | - |
| Other assets | 3,464,737 | - | 7,059,141 | - |
| Trade receivables | 4,627,397 | - | 3,750,433 | - |
| Loans and other receivables | 272,353 | - | 433,091 | - |
| Inventories | 1,142,672 | - | 798,621 | - |
| Cash and cash equivalents | 42,776,832 | - | 16,052,345 | - |
| Borrowings | - | 15,377,104 | - | 20,648,650 |
| Other lease liabilities | - | 3,096,087 | - | 4,194,796 |
| Trade and other payables | - | 2,438,472 | - | 6,384,348 |
| Contract liabilities | - | 810,469 | - | 827,860 |
| Total | 130,385,766 | 30,532,410 | 110,154,102 | 42,691,907 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Adjusted revenue for reportable segments | 86,764,309 | 81,046,053 |
| Other adjusted revenues | 623,685 | 563,855 |
| Total adjusted revenue | 87,387,994 | 81,609,908 |
| Cost of sales (excl. Infrastructure and locomotive tariffs - loaded trips, services provided by other transportation organisations, reversal of impairment/(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) | (29,167,495) | (27,695,998) |
| Selling, marketing and administrative expenses (excl. depreciation, amortisation and impairments) | (5,600,994) | (4,664,457) |
| Depreciation and amortisation | (11,298,975) | (9,349,704) |
| Net impairment losses on trade and other receivables | (50,258) | (20,535) |
| Reversal of impairment/(impairment) of property, plant and equipment | 22,052 | (3,932,833) |
| Loss on derecognition arising on capital repairs | (284,448) | (309,878) |
| Other gains – net | 3,116,826 | (1,334,901) |
| 44,124,702 | 34,301,602 | |
| Finance income | 2,173,246 | 811,588 |
| Finance costs | (2,405,410) | (2,602,339) |
| Net foreign exchange transaction (losses)/gains on financing activities | 3,194,185 | 641,196 |
| Profit before income tax | 47,086,723 | 33,152,047 |
Overview
ANNUAL REPORT 2023 Financial Statements 197 196
Strategic Report Sustainability Report Governance Financial Statements Additional Information
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 to providers
of of infrastructure tariff, 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 2023 and 2022 and
its reconciliation to Total revenue.
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 gain/(loss) on sale of property, plant and equipment”
and “Loss on derecognition arising on capital repairs”.
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.
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:
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:
Overview
ANNUAL REPORT 2023 Financial Statements 199 198
Strategic Report Sustainability Report Governance Financial Statements Additional 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.
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Total revenue | 104,748,023 | 94,474,032 |
| Minus “pass through” items | ||
| Infrastructure and locomotive tariffs: loaded trips | (13,014,652) | (10,464,895) |
| Services provided by other transportation organisations | (4,345,377) | (2,399,229) |
| Adjusted Revenue | 87,387,994 | 81,609,908 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Revenue | ||
| Russia | 104,714,413 | 92,677,592 |
| Estonia | 33,610 | 1,701,153 |
| Ukraine | - | 95,287 |
| 104,748,023 | 94,474,032 |
| 2023 | 2022 | |||
| RUB’000 | % revenue | RUB’000 | % revenue | |
| Revenue | ||||
| Customer A – rail tank cars segment | 21,732,232 | 21 | 21,234,661 | 22 |
| Customer B – gondola cars segment | 20,142,950 | 19 | 15,126,672 | 16 |
| Customer C – gondola cars segment | 11,492,224 | 11 | 11,046,722 | 12 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Non-current assets | ||
| Russia | 76,934,090 | 81,174,663 |
| Estonia | 1,172,242 | 1,175,214 |
| Cyprus | 9,268 | 12,105 |
| 78,115,600 | 82,361,982 |
Overview
ANNUAL REPORT 2023 Financial Statements 199 198
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
Adjusted EBITDA
Adjusted EBITDA represents EBITDA excluding “Net foreign exchange transaction (losses)/
gains from financing activities”, “Share of loss of associate”, “Other gains – net”, “Net (gain)/
loss 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 (losses)/gains 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 2023 and 2022 and
its reconciliation to EBITDA and Profit for the year:
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”, “Acquisition of non-controlling
interest”, “Principal elements of lease payments for other lease liabilities” plus “Cash inflow
from disposal of subsidiary undertakings – net of cash disposed of”.
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 gain/(loss) 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”, “Taxes (other than income
tax and value added taxes)” and “Other expenses”.
Overview
ANNUAL REPORT 2023 Financial Statements 201 200
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Adjusted EBITDA represents EBITDA excluding “Net foreign exchange transaction (losses)/
gains from financing activities”, “Share of loss of associate”, “Other gains – net”, “Net (gain)/
loss 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 (losses)/gains 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 2023 and 2022 and
its reconciliation to EBITDA and Profit for the year:
| 2023 | 2022 | |
| RUB‘000 | RUB‘000 | |
| Profit for the year | 38,617,605 | 24,919,886 |
| Plus (Minus) | ||
| Income tax expense | 8,469,118 | 8,232,161 |
| Finance costs – net | (2,962,021) | 1,149,555 |
| Net foreign exchange transaction (losses)/gainson financing activities | 3,194,185 | 641,196 |
| Amortisation of intangible assets | 429 | 325 |
| Depreciation of right-of-use assets | 2,445,695 | 2,596,568 |
| Depreciation of property, plant and equipment | 8,852,851 | 6,752,811 |
| EBITDA | 58,617,862 | 44,292,502 |
| Plus (Minus) | ||
| Loss on derecognition arising on capital repairs | 284,448 | 309,878 |
| Net foreign exchange transaction (losses)/gainson financing activities | (3,194,185) | (641,196) |
| Other gains/(losses) – net | 283,221 | 1,334,901 |
| Profit from sale of subsidiaries | (3,400,047) | - |
| Gain on sale of property, plant and equipment | (280,219) | (12,624) |
| Reversal of impairment/(impairment) of property,plant and equipment | (22,052) | 3,932,833 |
| Adjusted EBITDA | 52,289,028 | 49,216,294 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| “Pass through” cost items | (17,360,029) | (12,864,124) |
| Infrastructure and locomotive tariffs: loaded trips | (13,014,652) | (10,464,895) |
| Services provided by other transportation organisations | (4,345,377) | (2,399,229) |
| Total cost of sales, selling and marketing costs and administrative expenses (adjusted for “pass through” cost items) | (46,380,118) | (45,973,405) |
| Total Operating Cash Costs | (35,048,708) | (32,373,079) |
| Infrastructure and locomotive tariffs – empty runs and other tariffs | (19,489,606) | (18,540,527) |
| Repairs and maintenance | (4,273,915) | (3,942,968) |
| Employee benefit expense | (8,173,564) | (6,780,615) |
| Expense relating to short-term leases – rolling stock | (58,860) | (34,798) |
| Fuel and spare parts – locomotives | (1,957,931) | (2,016,665) |
| Engagement of locomotive crews | (93,812) | (116,042) |
| Other Operating Cash Costs | (1,001,020) | (941,464) |
| Advertising and promotion | (57,167) | (41,260) |
| Auditors’ remuneration | (49,997) | (46,187) |
| Communication costs | (25,437) | (24,676) |
| Information services | (18,582) | (15,230) |
| Legal, consulting and other professional fees | (114,467) | (94,298) |
| Expense relating to short-term leases – office | (94,052) | (92,990) |
| Taxes (other than on income and value added taxes) | (13,534) | (23,721) |
| Other expenses | (627,784) | (603,102) |
| Total Operating Non-Cash Costs | (11,331,410) | (13,600,326) |
| Depreciation of property, plant and equipment | (8,852,851) | (6,752,811) |
| Depreciation of right-of-use assets | (2,445,695) | (2,596,568) |
| Amortisation of intangible assets | (429) | (325) |
| Loss on derecognition arising on capital repairs | (284,448) | (309,878) |
| Net impairment losses on trade and other receivables | (50,258) | (20,535) |
| Reversal of impairment/(impairment) of property, plant and equipment | 22,052 | (3,932,833) |
| Gain on sale of property, plant and equipment | 280,219 | 12,624 |
| Total cost of sales, selling and marketing costs and administrative expenses | (63,740,147) | (58,837,529) |
Overview
ANNUAL REPORT 2023 Financial Statements 201 200
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
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 2023 and 2022, and reconciliation of Net Debt to Total Debt.
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”.
Total CAPEX adjusted for M&amp;A (a non-IFRS financial measure) is calculated as a com
bination
of Total CAPEX (which includes maintenance CAPEX) and cash inflows and outflows from
acquisitions and disposals.
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 2023
and 2022, and its reconciliation to Cash generated from operations.
Overview
ANNUAL REPORT 2023 Financial Statements 203 202
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Net Debt is defined as the sum of total borrowings (including interest accrued) less “Cash and
cash equivalents”.
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Total debt | 15,377,104 | 20,648,650 |
| Minus | ||
| Cash and cash equivalents | 42,776,832 | 16,052,345 |
| Net Debt | (27,399,728) | 4,596,305 |
| Net Debt to Adjusted EBITDA | -0.52x | 0.09x |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Cash generated from operations | 49,193,570 | 48,630,943 |
| Tax paid | (8,267,084) | (8,455,068) |
| Interest paid on bank borrowings and non-convertible unsecured bonds | (2,051,443) | (1,938,619) |
| Interest paid on other lease liabilities | (460,093) | (786,304) |
| Purchases of property, plant and equipment | (8,259,858) | (11,421,671) |
| Payment for Rolling stock to disposed subsidiary | (6,603,141) | - |
| Purchases of intangible assets | (745) | (2,000) |
| Principal elements of other lease payments | (2,477,780) | (2,402,700) |
| Cash inflow from disposal of subsidiary undertakings – net of cash disposed of | 4,771,748 | - |
| Acquisition of non-controlling interest | - | (8,800,000) |
| Total CAPEX | (8,260,603) | (11,423,671) |
| Total CAPEX adjusted for M&amp;A | (10,091,996) | (20,223,671) |
| Free Cash Flow | 25,845,174 | 14,824,581 |
| Attributable Free Cash Flow | 25,847,838 | 15,098,115 |
Overview
ANNUAL REPORT 2023 Financial Statements 203 202
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
(b) Liabilities related to contracts with customers
The Group has recognised the following liabilities related to contracts with customers
as of 31 December 2022 and 31 December 2023:
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 2023 includes RUB 810,821 thousand
that were included in the balance of the contract liability as of 1 January 2023 (year ended
31 December 2022: RUB 1,346,417 as of 1 January 2022).
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.
10. Revenue
(a) Disaggregation of revenue
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
2023 amounting to RUB 13,014,652 thousand (for the year ended 31 December 2022:
RUB 10,464,895 thousand) and the cost of engaging the fleet from third parties recharged
to clients of the Group amounting to RUB 4,345,377 thousand (2022: RUB 2,399,229 thousand).
Overview
ANNUAL REPORT 2023 Financial Statements 205 204
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| 31 December 2023 | 31 December 2022 | 1 January 2022 | |
| RUB’000 | RUB’000 | RUB’000 | |
| Current | |||
| Contract liabilities relating to railway transportation contracts – Third parties | 791,215 | 811,178 | 1,369,599 |
| Contract liabilities relating to railway transportation contracts – Related parties (Note 35) | 1,467 | 2,228 | 1,425 |
| 792,682 | 813,406 | 1,371,024 | |
| Non-current | |||
| Contract liabilities relating to railway transportation contracts – Third parties | 12,909 | 9,575 | 9,140 |
| Contract liabilities relating to railway transportation contracts – Related parties (Note 35) | 4,878 | 4,879 | 4,879 |
| 17,787 | 14,454 | 14,019 | |
| Total contract liabilities | 810,469 | 827,860 | 1,385,043 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Railway transportation – operator’s services (tariff borne by the Group) | 36,655,751 | 30,340,686 |
| Railway transportation – operator’s services (tariff borne by the client) | 62,930,397 | 60,197,311 |
| Other | 623,685 | 563,855 |
| Total revenue from contracts with customers recognised over time | 100,209,833 | 91,101,852 |
| Operating lease of rolling stock | 4,538,190 | 3,372,180 |
| Total revenue | 104,748,023 | 94,474,032 |
Overview
ANNUAL REPORT 2023 Financial Statements 205 204
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Total expenses | ||
| Depreciation of property, plant and equipment (Note 17) | 8,852,851 | 6,752,811 |
| Depreciation of right-of-use assets (Note 18) | 2,445,695 | 2,596,568 |
| Loss on derecognition arising on capital repairs (Note 17) | 284,448 | 309,878 |
| Amortisation of intangible assets (Note 19) | 429 | 325 |
| (Reversal of impairment)/impairment of property,plant and equipment (Note 17) | (22,052) | 3,932,833 |
| Gain on sale of property, plant and equipment (Note 17) | (280,219) | (12,624) |
| Employee benefit expense (Note 13) | 8,173,564 | 6,780,615 |
| Net impairment losses on trade and other receivables | 50,258 | 20,535 |
| Expense relating to short-term leases (rolling stock) | 58,860 | 34,798 |
| Expense relating to short-term leases (office) | 94,052 | 92,990 |
| Repairs and maintenance | 4,273,915 | 3,942,968 |
| Fuel and spare parts – locomotives | 1,957,931 | 2,016,665 |
| Engagement of locomotive crews | 93,812 | 116,042 |
| Infrastructure and locomotive tariffs: loaded trips | 13,014,652 | 10,464,895 |
| Infrastructure and locomotive tariffs: empty run trips and other tariffs | 19,489,606 | 18,540,527 |
| Services provided by other transportation organisations | 4,345,377 | 2,399,229 |
| Auditors’ remuneration | 49,997 | 46,187 |
| Legal, consulting and other professional fees | 114,467 | 94,298 |
| Advertising and promotion | 57,167 | 41,260 |
| Communication costs | 25,437 | 24,676 |
| Information services | 18,582 | 15,230 |
| Taxes (other than income tax and value added taxes) | 13,534 | 23,721 |
| Other expenses | 627,784 | 603,102 |
| Total cost of sales, selling and marketing costs and administrative expenses | 63,740,147 | 58,837,529 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Cost of sales | ||
| Infrastructure and locomotive tariffs: loaded trips | 13,014,652 | 10,464,895 |
| Infrastructure and locomotive tariffs: empty run trips and other tariffs | 19,489,606 | 18,540,527 |
| Services provided by other transportation organisations | 4,345,377 | 2,399,229 |
| Expense relating to short-term leases (rolling stock) | 58,860 | 34,798 |
| Employee benefit expense | 3,381,556 | 2,847,269 |
| Repairs and maintenance | 4,273,915 | 3,942,968 |
| Depreciation of property, plant and equipment | 8,788,362 | 6,662,020 |
| Depreciation of right-of-use assets | 2,320,501 | 2,464,331 |
| Loss on derecognition arising on capital repairs | 284,448 | 309,878 |
| Amortisation of intangible assets | 414 | 310 |
| Fuel and spare parts – locomotives | 1,957,931 | 2,016,665 |
| Engagement of locomotive crews | 93,812 | 116,042 |
| Gain on sale of property, plant and equipment | (275,960) | (7,470) |
| (Reversal of impairment)/impairment of property, plant and equipment | (22,052) | 3,932,833 |
| Other expenses | 187,775 | 205,199 |
| Total cost of sales | 57,899,197 | 53,929,494 |
| Selling, marketing and administrative expenses | ||
| Depreciation of property, plant and equipment | 64,489 | 90,791 |
| Depreciation of right-of-use assets | 125,194 | 132,237 |
| Amortisation of intangible assets | 15 | 15 |
| Gain on sale of property, plant and equipment | (4,259) | (5,154) |
| Employee benefit expense | 4,792,008 | 3,933,346 |
| Net impairment losses on trade and other receivables | 50,258 | 20,535 |
| Expense relating to short-term leases (office) | 94,052 | 92,990 |
| Auditors’ remuneration | 49,997 | 46,187 |
| Legal, consulting and other professional fees | 114,467 | 94,298 |
| Advertising and promotion | 57,167 | 41,260 |
| Communication costs | 25,437 | 24,676 |
| Information services | 18,582 | 15,230 |
| Taxes (other than income tax and value added taxes) | 13,534 | 23,721 |
| Other expenses | 440,009 | 397,903 |
| Total selling, marketing and administrative expenses | 5,840,950 | 4,908,035 |
Overview
ANNUAL REPORT 2023 Financial Statements 207 206
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
14. Finance income/(costs) - net
12. Other gains/(losses) – net
13. Employee benefit expense
Overview
ANNUAL REPORT 2023 Financial Statements 209 208
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Interest expense: | ||
| Bank borrowings | (1,733,788) | (1,258,143) |
| Non-convertible bonds | (204,879) | (561,448) |
| Total interest expense calculated using the effective interest rate method | (1,938,667) | (1,819,591) |
| Other lease liabilities | (464,560) | (780,601) |
| Total interest expense | (2,403,227) | (2,600,192) |
| Other finance costs | (2,183) | (2,147) |
| Total finance costs | (2,405,410) | (2,602,339) |
| Interest income: | ||
| Bank balances | 1,654,015 | 520,642 |
| Short term deposits | 492,734 | 222,453 |
| Loans to related parties (Note 35) | 9,666 | 18,033 |
| Loans to third parties | 2,726 | - |
| Total interest income calculated using the effective interest rate method | 2,159,141 | 761,128 |
| Finance leases – related parties (Note 35) | 609 | 1,609 |
| Finance leases – third parties | 13,496 | 16,531 |
| Total interest income | 2,173,246 | 779,268 |
| Other finance income | - | 32,320 |
| Total finance income | 2,173,246 | 811,588 |
| Net foreign exchange transaction (losses)/gains on borrowings and other liabilities | (70,925) | - |
| Net foreign exchange transaction (losses)/gains on cash and cash equivalents and other monetary assets | 3,265,110 | 641,196 |
| Net foreign exchange transaction (losses)/gains on financing activities (Note 16) | 3,194,185 | 641,196 |
| Net finance income/(costs) | 2,962,021 | (1,149,555) |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Other gains | 338,368 | 320,248 |
| Other losses | (628,581) | (448,484) |
| Net foreign exchange (losses) / gains (Note 16) | 6,992 | (1,187,428) |
| Gain from sale of subsidiaries (Note 20) | 3,400,047 | - |
| Other impairment | - | (19,237) |
| Total other gains/(losses) – net | 3,116,826 | (1,334,901) |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Wages and salaries | 3,282,401 | 2,925,075 |
| Termination benefits | 3,397 | 8,744 |
| Bonuses | 3,553,688 | 2,611,365 |
| Share based payment expense (Note 21) | - | 125,737 |
| Social insurance costs | 1,334,078 | 1,109,694 |
| Total employee benefit expense | 8,173,564 | 6,780,615 |
| Average number of employees during the year | 1,771 | 1,781 |
Overview
ANNUAL REPORT 2023 Financial Statements 209 208
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
As of 31 December 2023 the Company was 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.
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 will be payable by Russian 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%. Provision for taxes is recognised in the respective periods for the income tax
that will be payable by the Estonian subsidiaries where there is an intention that the net profits
will be distributed in the form of dividends.
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) / gains
The exchange differences credited to the income statement are included as follows:
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:
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 2023 and 2022, the Group incurred taxes on distributions from Estonian subsidiaries.
Overview
ANNUAL REPORT 2023 Financial Statements 211 210
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Finance income and costs (Note 14) | 3,194,185 | 641,196 |
| Other (losses) / gains – net (Note 12) | 6,992 | (1,187,428) |
| 3,201,177 | (546,232) |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Current tax: | ||
| Corporation tax | 8,111,952 | 8,763,224 |
| Withholding tax on dividends | 702,849 | 122,696 |
| Withholding tax on interest payments | 558 | 11,997 |
| Total current tax | 8,815,359 | 8,897,917 |
| Deferred tax (Note 30): | ||
| Origination and reversal of temporary differences | (346,241) | (665,756) |
| Total deferred tax | (346,241) | (665,756) |
| Income tax expense | 8,469,118 | 8,232,161 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Profit before tax | 47,086,723 | 33,152,047 |
| Tax calculated at domestic tax rates applicable to profits in the respective countries | 10,699,255 | 8,940,987 |
| Tax effects of: | ||
| Expenses not deductible for tax purposes | (218,447) | 29,216 |
| Allowances and income not subject to tax | 132,196 | 119,070 |
| Tax effect of tax losses for which no deferred tax asset was recognised | (4,629) | (119,649) |
| Withholding taxes: | ||
| Estonian income tax arising on distribution 1 | (497,474) | 1,772,393 |
| Dividend tax provision in relation to intended dividend distribution of subsidiaries | (1,744,903) | (2,354,808) |
| Withholding tax on interest payments | 558 | 190 |
| Over provision of current and deferred tax in prior years | (131,004) | (155,238) |
| Windfall tax | 233,566 | - |
| Tax charge | 8,469,118 | 8,232,161 |
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 2023 and 2022, the Group incurred taxes on distributions from Estonian subsidiaries.
Overview
ANNUAL REPORT 2023 Financial Statements 211 210
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| Rolling stock | Land and buildings | Motor vehicles | Other | Total | |
| RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | |
| At 1 January 2023 | |||||
| Cost | 128,806,367 | 447,195 | 247,323 | 1,046,626 | 130,547,511 |
| Accumulated depreciation | (52,034,377) | (149,548) | (143,343) | (613,317) | (52,940,585) |
| Net book amount | 76,771,990 | 297,647 | 103,980 | 433,309 | 77,606,926 |
| Year ended 31 December 2023 | |||||
| Opening net book amount | 76,771,990 | 297,647 | 103,980 | 433,309 | 77,606,926 |
| Additions | 8,566,804 | 298,653 | 66,086 | 138,444 | 9,069,987 |
| Disposals | (368,595) | - | (9,215) | (9,637) | (387,447) |
| Disposed through disposals of subsidiaries | (1,135,154) | (12,377) | (15,245) | (1,039) | (1,163,815) |
| Depreciation charge (Note 11) | (8,729,125) | (16,660) | (20,982) | (86,084) | (8,852,851) |
| Transfers | 164 | 69,399 | - | (69,563) | - |
| Impairment charge | (8,111) | - | - | - | (8,111) |
| Reversal of impairment | 30,163 | - | - | - | 30,163 |
| Transfer to inventories | (800,263) | (33) | - | (206) | (800,502) |
| Derecognition arising on capital repairs | (284,448) | - | - | - | (284,448) |
| Currency translation differences | 1,660 | 18 | 21 | 77 | 1,776 |
| Closing net book amount | 74,045,085 | 636,647 | 124,645 | 405,301 | 75,211,678 |
| At 31 December 2023 | |||||
| Cost | 130,579,728 | 795,400 | 255,216 | 1,060,247 | 132,690,591 |
| Accumulated depreciation | (56,534,643) | (158,753) | (130,571) | (654,946) | (57,478,913) |
| Net book amount | 74,045,085 | 636,647 | 124,645 | 405,301 | 75,211,678 |
| Rolling stock | Land and buildings | Motor vehicles | Other | Total | |
| RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 | |
| At 1 January 2022 | |||||
| Cost | 125,742,564 | 410,314 | 231,770 | 962,979 | 127,347,627 |
| Accumulated depreciation | (45,463,304) | (134,186) | (120,121) | (528,832) | (46,246,443) |
| Net book amount | 80,279,260 | 276,128 | 111,649 | 434,147 | 81,101,184 |
| Year ended 31 December 2022 | |||||
| Opening net book amount | 80,279,260 | 276,128 | 111,649 | 434,147 | 81,101,184 |
| Additions | 11,003,172 | 39,063 | 39,422 | 104,841 | 11,186,498 |
| Disposals | (263,571) | - | (2,942) | (2,359) | (268,872) |
| Disposed through disposals of subsidiaries | |||||
| Depreciation charge (Note 11) | (6,594,915) | (16,170) | (40,968) | (100,758) | (6,752,811) |
| Transfers | 1,792 | - | - | (1,792) | - |
| Impairment charge | (4,085,082) | - | - | (283) | (4,085,365) |
| Reversal of impairment | 152,532 | - | - | - | 152,532 |
| Transfer to inventories | (681,307) | - | - | (87) | (681,394) |
| Derecognition arising on capital repairs | (309,878) | - | - | - | (309,878) |
| Currency translation differences | (2,730,013) | (1,374) | (3,181) | (400) | (2,734,968) |
| Closing net book amount | 76,771,990 | 297,647 | 103,980 | 433,309 | 77,606,926 |
| At 31 December 2022 | |||||
| Cost | 128,806,367 | 447,195 | 247,323 | 1,046,626 | 130,547,511 |
| Accumulated depreciation | (52,034,377) | (149,548) | (143,343) | (613,317) | (52,940,585) |
| Net book amount | 76,771,990 | 297,647 | 103,980 | 433,309 | 77,606,926 |
Overview
ANNUAL REPORT 2023 Financial Statements 213 212
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
In the cash flow statement, proceeds from sale of property, plant and equipment comprise:
The consideration from sale of property, plant and equipment is further analysed as follows:
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):
Depreciation expense of RUB 8,788,362 thousand in 2023 (2022: RUB 6,662,020 thousand) has
been charged to “cost of sales” and RUB 64,489 thousand in 2023 (2022: RUB 90,791 thousand)
has been charged to “selling, marketing and administrative expenses” (Note 11).
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.
Based on management’s assessment, the useful economic life of the Group’s rolling stock
as of 31 December 2023 is considered appropriate.
Residual values of rolling stock
The Group reviews and adjusts the residual values of its rolling stock and wheel pairs
as of each balance sheet date, taking into account, among others, the price of scrap metal
as of the assessment date. Management has revised the residual value of the Group’s rolling stock
and wheel pairs as of 1 January 2023, following a significant decrease in market prices of scrap
metal. In making this assessment, management took into account actual scrap prices achieved
by the Group near the assessment date and available market information on the level of scrap
metal as at that date.
As a result of the revision of the residual values of the Group’s rolling stock and wheel pairs,
the depreciation charged in the income statement for the year ended 31 December 2023
is RUB 915,451 thousand higher than the one that would have been charged for the same period if
there was no revision in residual values. A reasonable change in the inputs used by management
would not result in material differences.
Based on management’s assessment, the residual values of the Group’s rolling stock
as of 31 December 2023 are considered appropriate.
Impairment assessment of rolling stock
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 2022, the management considered the deterioration of the economic
environment, the weak prevailing industry conditions, conflict between Russia and Ukraine and
the COVID-19 pandemic related uncertainties 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, the Group recognised impairment losses in amount
RUB 3,932,833 thousand related to the impairment of about 3.8 thousand units of rolling stock
(mostly gondola cars) blocked in Ukraine (Note 11).
No other impairment indicators or losses were noted. The impairment testing for all the CGUs,
indicated a significant headroom in the recoverable amount over the carrying amount of these
CGUs.
Overview
ANNUAL REPORT 2023 Financial Statements 215 214
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Net book amount | 387,447 | 268,872 |
| Gains on sale of property, plant and equipment (Note 11) | 280,219 | 12,624 |
| Consideration from sale of property, plant and equipment | 667,666 | 281,496 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Cash consideration received within year | 626,548 | 238,377 |
| Movement in advances received for sales of property,plant and equipment | 41,118 | 43,119 |
| 667,666 | 281,496 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Rolling stock | 13,649,738 | 11,529,299 |
| 13,649,738 | 11,529,299 |
Overview
ANNUAL REPORT 2023 Financial Statements 215 214
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
19. Intangible assets
Amortisation of RUB 414 thousand (2022: RUB 310 thousand) has been charged to “cost
of sales” in the income statement and RUB 15 thousand (2022: RUB 15 thousand) to “selling,
marketing and administrative expenses” (Note 11).
18. Right-of-use assets
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 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.
As at 31 December 2022 and 31 December 2023, there were no right-of-use assets and associated
lease liabilities arising from leases with financial institutions that were presented within property,
plant and equipment and borrowings, respectively.
The total cash outflow for leases in 2023 was RUB 2,937,873 thousand
(2022: RUB 3,189,004 thousand).
Overview
ANNUAL REPORT 2023 Financial Statements 217 216
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| Computer software | Customer relationships | Total | |
| RUB’000 | RUB’000 | RUB’000 | |
| At 1 January 2022 | |||
| Cost | 10,934 | - | 10,934 |
| Accumulated amortisation | (10,849) | - | (10,849) |
| Net book amount | 85 | - | 85 |
| Year ended 31 December 2022 | |||
| Opening net book amount | 85 | - | 85 |
| Additions | 2,000 | 2,000 | |
| Amortisation charge (Note 11) | (325) | - | (325) |
| Closing net book amount | 1,760 | - | 1,760 |
| At 31 December 2022 | |||
| Cost | 12,934 | - | 12,934 |
| Accumulated amortisation | (11,174) | - | (11,174) |
| Net book amount | 1,760 | - | 1,760 |
| Year ended 31 December 2023 | |||
| Opening net book amount | 1,760 | - | 1,760 |
| Additions | 745 | 745 | |
| Amortisation charge (Note 11) | (429) | - | (429) |
| Closing net book amount | 2,076 | - | 2,076 |
| At 31 December 2023 | |||
| Cost | 2,907 | - | 2,907 |
| Accumulated amortisation | (831) | - | (831) |
| Net book amount | 2,076 | - | 2,076 |
| Rolling stock | Land and buildings | Other | Total | |
| RUB’000 | RUB’000 | RUB’000 | RUB’000 | |
| Year ended 31 December 2022 | ||||
| Opening net book amount | 5,286,718 | 320,127 | - | 5,606,845 |
| Additions | 2,625,920 | 8,711 | - | 2,634,631 |
| Disposals | (1,413,726) | (11,457) | - | (1,425,183) |
| Change of terms of leases | (360,471) | (19,465) | - | (379,936) |
| Depreciation charge (Note 11) | (2,463,257) | (133,311) | - | (2,596,568) |
| Currency translation differences | - | (1,762) | - | (1,762) |
| As at 31 December 2023 | 3,675,184 | 162,843 | - | 3,838,027 |
| Year ended 31 December 2023 | ||||
| Opening net book amount | 3,675,184 | 162,843 | - | 3,838,027 |
| Additions | 890,088 | 19,146 | - | 909,234 |
| Disposals | (189,047) | - | - | (189,047) |
| Disposals through subleases | - | (38,136) | - | (38,136) |
| Change of terms of leases | 139,169 | 533,781 | - | 672,950 |
| Depreciation charge (Note 11) | (2,317,550) | (128,145) | - | (2,445,695) |
| Currency translation differences | - | 7 | - | 7 |
| Disposed through disposals of subsidiaries | - | (8,426) | - | (8,426) |
| As at 31 December 2023 | 2,197,844 | 541,070 | - | 2,738,914 |
Overview
ANNUAL REPORT 2023 Financial Statements 217 216
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
The accumulated non-controlling interest as of 31 December 2023 and 31 December 2022
comprised the following:
Acquisition of the 40% non-controlling interest in BaltTransServis, OOO
In February 2022 the Company acquired 40% non-controlling interest in BaltTransServis,
OOO following receipt by the Company of the approval from the Federal Antimonopoly Service
of the Russian Federation and satisfaction of the remaining pre-conditions, including settlement
of the remaining RUB 8,800,000 thousand of the purchase consideration.
In January 2023 the Group disposed of its shareholding 65.25% in Spacecom
AS for EUR 65,300,000.
In September 2023 the Group incorporated a new Cyprus company and holds 100% shares.
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 and 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.
20. Principal subsidiaries
The Company had the following subsidiaries at 31 December 2023 and 31 December 2022:
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.
1 BTS-Locomotive Solutions, OOO is a 100% subsidiary of BaltTransServis.
2 RemTransServis, OOO is a 100% subsidiary of BaltTransServis, OOO.
3 Spacecom Trans AS is 100% subsidiary of Spacecom AS.
Overview
ANNUAL REPORT 2023 Financial Statements 219 218
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Spacecom AS (including Spacecom Trans AS) | - | (15,506) |
| Total | - | (15,506) |
| 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 (%) | |||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||
| New Forwarding Company, АО | Russia | Railway transportation | 100 | 100 | 100 | 100 | - | - |
| GTI Management,OOO | Russia | Railway transportation | 100 | 100 | 100 | 100 | - | - |
| Ural Wagonrepair Company, AO | Russia | Repair and maintenance of rolling stock | 100 | 100 | 100 | 100 | - | - |
| Ukrainian New Forwarding Company OOO | Ukraine | Railway transportation | 100 | 100 | 100 | 100 | - | - |
| BaltTransServis,OOO | Russia | Railway transportation | 100 | 100 | 100 | 100 | - | - |
| BTS-Locomotive Solutions OOO 1 | Russia | Support activities for locomotive traction | - | - | 100 | 100 | - | - |
| RemTransServis,OOO 2 | Russia | Repair and maintenance of rolling stock | - | - | 100 | 100 | - | - |
| Spacecom AS | Estonia | Operating lease of rolling stock | - | 65.25 | - | 65.25 | - | 34.75 |
| Spacecom Trans AS 3 | Estonia | Operating lease of rolling stock | - | - | - | 65.25 | - | 34.75 |
| GLTR Cyprus Limited | Cyprus | Operation in Cyprus | 100 | - | 100 | - | - | - |
1 BTS-Locomotive Solutions, OOO is a 100% subsidiary of BaltTransServis.
2 RemTransServis, OOO is a 100% subsidiary of BaltTransServis, OOO.
3 Spacecom Trans AS is 100% subsidiary of Spacecom AS.
Overview
ANNUAL REPORT 2023 Financial Statements 219 218
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
Summarised cash flow statements
The information above includes the amounts before inter-company eliminations.
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 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.
The scheme matured by 31 December 2020 and was renewed on 1 January 2021 for another
three-year period.
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.
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 NIL thousand in this respect
for the year ended 31 December 2023 (2022: RUB 125,737 thousand) and the Group’s
liability in respect of this amounted to RUB NIL thousand as of 31 December 2023 (2022:
RUB 125,737 thousand).
The share-based payment liability as of 31 December 2023 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.
Summarised balance sheet
Summarised income statement
Overview
ANNUAL REPORT 2023 Financial Statements 221 220
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| Spacecom AS | ||
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Cash flows from operating activities | ||
| Cash generated from/(used in) operations | 921,130 | (1,170,770) |
| Income tax paid | - | (368,772) |
| Net cash generated from/(used in) operating activities | 921,130 | (1,539,542) |
| Net cash generated from/(used in) investing activities | (3,175) | 6,671,629 |
| Net cash used in financing activities | (962,408) | (4,978,418) |
| Net increase/(decrease) in cash and cash equivalents | (44,453) | 153,669 |
| Cash and cash equivalents at beginning of year | 222,442 | 71,069 |
| Exchange differences on cash and cash equivalents | (1,310) | (2,296) |
| Cash and cash equivalents at end of year | 176,679 | 222,442 |
| Spacecom AS | ||
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Current | ||
| Assets | - | 10,040,495 |
| Liabilities | - | 5,025,524 |
| Total current net assets | - | 5,014,971 |
| Non-current | ||
| Assets | - | 1,127,303 |
| Liabilities | - | 3,379 |
| Total non-current net assets | - | 1,123,924 |
| Net assets | - | 6,138,895 |
| Spacecom AS | ||
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Revenue | 33,610 | 1,701,153 |
| Profit before income tax | (7,312) | 6,095,012 |
| Income tax expense | - | (1,740,042) |
| Post-tax profit from continuing operations | (7,312) | 4,354,970 |
| Other comprehensive income | (6,944,213) | (1,984,219) |
| Total comprehensive income | (6,951,525) | 2,370,751 |
| Total comprehensive income allocated to non-controlling interests | (2,541) | 1,513,352 |
| Dividends paid to non-controlling interest | - | (2,759,806) |
Overview
ANNUAL REPORT 2023 Financial Statements 221 220
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
(b) Loans and other receivables
The carrying amounts of the Group’s loans and other receivables are denominated
in the following currencies:
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.
22. Financial assets
(a) Trade receivables
The carrying amounts of the Group’s trade receivables are denominated in the following currencies:
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.
Overview
ANNUAL REPORT 2023 Financial Statements 223 222
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| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Loans receivables – related parties (Note 35) | - | 401,151 |
| Other receivables – third parties | 297,959 | 36,519 |
| Other receivables – related parties (Note 35) | 26 | 23 |
| Less: Provision for impairment of other receivables | (25,632) | (4,602) |
| Loans and other receivables – net | 272,353 | 433,091 |
| Less non-current portion: | ||
| Other receivables - third parties | - | - |
| Total non-current portion | - | - |
| Current portion | 272,353 | 433,091 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Currency: | ||
| Russian Roubles | 272,353 | 433,089 |
| Euro | - | 2 |
| 272,353 | 433,091 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Trade receivables – third parties | 4,641,832 | 3,760,501 |
| Trade receivables – related parties (Note 35) | 765 | 275 |
| Less: Provision for impairment of trade receivables | (15,200) | (10,343) |
| Trade receivables – net | 4,627,397 | 3,750,433 |
| Current portion | 4,627,397 | 3,750,433 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Currency: | ||
| US Dollar | - | 32,859 |
| Russian Roubles | 4,627,397 | 3,693,691 |
| Euro | - | 23,883 |
| 4,627,397 | 3,750,433 |
Overview
ANNUAL REPORT 2023 Financial Statements 223 222
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
24. Inventories
All inventories are stated at cost.
25. Cash and cash equivalents
The weighted average effective interest rate on short-term deposits was 10.5-12.87% in 2023
(2022: 5.18-8.76%) and these deposits have a maturity of 1 to 12 days (2022: 1 to 18 days).
Cash and cash equivalents include the following for the purposes of the cash flow statement:
Cash and cash equivalents are denominated in the following currencies:
The carrying value of cash and cash equivalents approximates their fair value.
23. Other assets
The Group’s finance leases as at 31 December 2023 and 31 December 2022 are denominated
in Russian Roubles. The finance lease receivables are scheduled as follows:
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:
Overview
ANNUAL REPORT 2023 Financial Statements 225 224
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| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Raw materials, spare parts and consumables | 1,142,672 | 798,621 |
| 1,142,672 | 798,621 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Cash at bank and in hand | 42,617,451 | 14,997,495 |
| Short term bank deposits | 159,381 | 1,054,850 |
| Total cash and cash equivalents | 42,776,832 | 16,052,345 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Cash and cash equivalents | 42,776,832 | 16,052,345 |
| Total cash and cash equivalents | 42,776,832 | 16,052,345 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Russian Rouble | 41,902,714 | 11,616,051 |
| US Dollar | 29,478 | 1,013,793 |
| Euro | 844,640 | 3,422,501 |
| Total cash and cash equivalents | 42,776,832 | 16,052,345 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Prepayments – third parties | 3,283,283 | 3,889,771 |
| Finance leases to third parties | 137,801 | 137,914 |
| Finance leases to related parties | 959 | 11,832 |
| VAT recoverable | 42,694 | 3,019,624 |
| Other assets | 3,464,737 | 7,059,141 |
| Less non-current portion: | ||
| Finance leases to third parties | 33,378 | 95,748 |
| Finance leases to related parties (Note 35) | - | 953 |
| Prepayments for property, plant and equipment | 162,932 | 915,269 |
| Total non-current portion | 196,310 | 1,011,970 |
| Current portion | 3,268,427 | 6,047,171 |
| Less than one year | Between 1 to 5 years | Over 5 years | Total | |
| RUB’000 | RUB’000 | RUB’000 | RUB’000 | |
| At 31 December 2023 | ||||
| Minimum lease receivable | 118,819 | 50,174 | 1,179 | 170,172 |
| Less: Unearned finance income | (13,437) | (17,954) | (21) | (31,412) |
| Present value of minimum lease receivables | 105,382 | 32,220 | 1,158 | 138,760 |
| At 31 December 2022 | ||||
| Minimum lease receivable | 66,018 | 98,363 | - | 164,381 |
| Less: Unearned finance income | (12,973) | (1,662) | - | (14,635) |
| Present value of minimum lease receivables | 53,045 | 96,701 | - | 149,746 |
| 2023 | 2022 | |
| % | % | |
| Finance leases to third parties | 16.05 | 10.43 |
Overview
ANNUAL REPORT 2023 Financial Statements 225 224
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
27. Dividends
During the years ended 31 December 2023 and 2022, 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.
28. Borrowings
Bank borrowings
Bank borrowings mature by 2028 (2022: by 2027) and bear average interest of 10.2% per annum
(2022: 7.9% per annum).
There were no defaults or breaches of loan terms during the years ended 31 December 2023 and
31 December 2022.
The current and non-current bank borrowings amounting to RUB 6,423,132 thousand
and RUB 7,662,972 thousand respectively (2022: RUB 7,356,968 thousand and
RUB 5,056,405 thousand respectively) are secured by pledge of rolling stock with a total
carrying net book value of RUB 13,649,738 thousand (2022: RUB 11,529,299 thousand)
(Note 17).
26. Share capital, share premium and treasury shares
The total authorised number of ordinary shares at 31 December 2023 was 233,495,471 shares
with a par value of US$0.10 per share (31 December 2022: 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). The shareholders of the Company
at the Annual General Meeting which took place on 29 April 2022 approved the prolongation
of the term of the buyback program until the earlier of the close of the Annual General Meeting
of the Company to be held in 2023 or 12 months from the date of the approval.
During the year 2020, the Company 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). No
further acquisitions took place within the year 2021.
During the first six months of 2022, the Company purchased a total of 345,780 GDRs,
which are held in treasury for a total consideration of 832 thousand US Dollars (equivalent
to RUB 114,497 thousand). No further acquisitions took place within the last six months of 2022.
As of 31 December 2023 the Company didn’t have treasury shares (31 December 2022 – 422,657
GDRs which were held in treasury for a total consideration of 1.254 thousand US Dollars (equivalent
to RUB 145,993 thousand).
Overview
ANNUAL REPORT 2023 Financial Statements 227 226
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| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Dividends declared to non-controlling interest | - | 2,759,806 |
| Dividends paid to non-controlling interest | 334,268 | 1,728,073 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Current | ||
| Bank borrowings | 6,423,132 | 7,690,301 |
| Non-convertible unsecured bonds | 1,291,000 | 3,905,571 |
| Total current borrowings | 7,714,132 | 11,595,872 |
| Non-current | ||
| Bank borrowings | 7,662,972 | 7,802,778 |
| Non-convertible unsecured bonds | - | 1,250,000 |
| Total non-current borrowings | 7,662,972 | 9,052,778 |
| Total borrowings | 15,377,104 | 20,648,650 |
| Maturity of non-current borrowings | ||
| Between 1 and 2 years | 3,559,959 | 6,165,311 |
| Between 2 and 5 years | 4,103,013 | 2,887,467 |
| 7,662,972 | 9,052,778 |
| Number of shares | Share capital | Share premium | Total | |
| USD’000 | USD’000 | USD’000 | ||
| At 1 January 2022/31 December 2022/1 January 2023 | 178,740,916 | 17,875 | 949,471 | 967,346 |
| At 31 December 2023 | 178,318,259 | 17,832 | 949,471 | 967,303 |
| Number of shares | Share capital | Share premium | Total | |
| RUB’000 | RUB’000 | RUB’000 | ||
| At 1 January 2022/31 December 2022/1 January 2023 | 178,740,916 | 516,957 | 27,929,478 | 28,446,435 |
| Cancellation of treasury shares | (422,657) | (1,222) | - | (1,222) |
| At 31 December 2023 | 178,318,259 | 515,735 | 27,929,478 | 28,445,213 |
Overview
ANNUAL REPORT 2023 Financial Statements 227 226
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| 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 | |
| Year ended 31 | |||||
| December 2023 | |||||
| Opening amount as at 1 January 2023 | 15,493,079 | - | 4,194,796 | 5,155,571 | 24,843,446 |
| Cash flows: | |||||
| Amounts advanced | 8,800,000 | - | - | - | 8,800,000 |
| Repayments of borrowings | (10,188,110) | - | (2,477,780) | (3,750,000) | (16,415,890) |
| Interest paid | (1,731,993) | - | (460,093) | (319,450) | (2,511,536) |
| Non-cash changes: | |||||
| Interest charged | 1,733,788 | - | 464,560 | 204,879 | 2,403,227 |
| Net foreign exchange | 1 | - | 1,440 | - | 1,441 |
| Other lease liability | - | - | 909,234 | - | 909,234 |
| Change of terms of leases | - | - | 472,438 | - | 472,438 |
| Disposed through disposals of subsidiaries | - | - | (8,508) | - | (8,508) |
| Other | (20,661) | - | - | - | (20,661) |
| Closing amount as at 31 December 2023 | 14,086,104 | - | 3,096,087 | 1,291,000 | 18,473,191 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| 6 months or less | 5,204,824 | 6,700,884 |
| 6 to 12 months | 2,509,309 | 4,894,988 |
| 1 to 5 years | 7,662,971 | 9,052,778 |
| 15,377,104 | 20,648,650 |
| 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 | |
| Year ended 31 | |||||
| December 2022 | |||||
| Opening amount as at 1 January 2022 | 22,309,598 | - | 5,841,573 | 9,008,872 | 37,160,043 |
| Cash flows: | |||||
| Amounts advanced | 2,750,000 | - | - | - | 2,750,000 |
| Repayments of borrowings | (9,549,396) | - | (2,402,700) | (3,750,000) | (15,702,096) |
| Interest paid | (1,273,870) | - | (786,304) | (664,749) | (2,724,923) |
| Non-cash changes: | |||||
| Interest charged | 1,262,196 | - | 780,601 | 561,448 | 2,604,245 |
| Net foreign exchange | - | - | (2,755) | - | (2,755) |
| Other lease liability | - | - | 2,569,659 | - | 2,569,659 |
| Change of terms of leases | (1,805,278) | (1,805,278) | |||
| Other | (5,449) | - | - | - | (5,449) |
| Closing amount as at 31 December 2022 | 15,493,079 | - | 4,194,796 | 5,155,571 | 24,843,446 |
| Carrying amount | Fair value | |||
| 2023 | 2022 | 2023 | 2022 | |
| RUB’000 | RUB’000 | RUB’000 | RUB’000 | |
| Bank borrowings | 14,086,104 | 15,493,079 | 12,929,168 | 15,134,443 |
| Non-convertible unsecured bonds | 1,291,000 | 5,155,571 | 1,244,375 | 5,028,375 |
| 15,377,104 | 20,648,650 | 14,173,543 | 20,162,818 | |
Overview
ANNUAL REPORT 2023 Financial Statements 229 228
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
The fair value as at 31 December 2023 and 31 December 2022 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 2023 and 31 December 2022. The discount rate was 18.5% p.a.
(2022: 11.1% p.a.). The fair value measurements are within level 2 of the fair value hierarchy (2022:
level 2). The fair value as at 31 December 2023 and 31 December 2022 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.
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
The Group has the following undrawn borrowing facilities:
Drawdowns under certain of the above credit facilities are subject to successful conclusion
of additional agreements with the lenders, which, amongst others, will specify the terms of each
disbursement.
The weighted average effective interest rates at the balance sheet were as follows:
29. Other lease liabilities
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:
Overview
ANNUAL REPORT 2023 Financial Statements 231 230
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Russian Rouble | 15,377,104 | 20,648,650 |
| 15,377,104 | 20,648,650 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Fixed rate: | ||
| Expiring within one year | 1,000,000 | 10,083,333 |
| Expiring beyond one year | 28,000,000 | 32,700,000 |
| 29,000,000 | 42,783,333 |
| 2023 | 2022 | |
| % | % | |
| Bank borrowings | 10.2 | 7.9 |
| Non-convertible unsecured bonds | 8.8 | 8.5 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Other lease liabilities | ||
| Current lease liabilities | 2,198,502 | 2,400,332 |
| Non-current lease liabilities | 897,585 | 1,794,464 |
| Total lease liabilities | 3,096,087 | 4,194,796 |
| Maturity of other lease liabilities | ||
| Between 1 and 2 years | 450,483 | 1,694,562 |
| Between 2 and 5 years | 445,578 | 96,970 |
| Over 5 years | 1,524 | 2,932 |
| 897,585 | 1,794,464 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Beginning of year | 9,081,239 | 9,752,314 |
| Income statement charge (Note 15) | (346,241) | (665,756) |
| Exchange differences | - | (5,319) |
| End of year | 8,734,998 | 9,081,239 |
Overview
ANNUAL REPORT 2023 Financial Statements 231 230
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
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 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 Nil thousand (2022: RUB 89,231 thousand) for tax losses
amounting to RUB Nil thousand (2022: RUB 713,852 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 2023.
Deferred income tax liabilities of RUB 2,809,390 thousand (2022: RUB 1,683,687 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 55,871,122 thousand as at 31 December 2023 (2022: RUB 32,832,980 thousand).
31. Trade and other payables
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.
Overview
ANNUAL REPORT 2023 Financial Statements 233 232
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| Property, plant and equipment | Withholding tax provision | Intangible assets | Right-of-use assets | Total | |
| Deferred tax liabilities | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 |
| At 1 January 2022 | 9,082,738 | 1,123,424 | - | 798,065 | 11,004,227 |
| Charged/(credited) to: Income statement (Note 15) | (249,779) | (435,460) | - | (76,425) | (761,664) |
| Translation differences | - | (5,319) | - | - | (5,319) |
| At 31 December 2022 | 8,832,959 | 682,645 | - | 721,640 | 10,237,244 |
| Charged/(credited) to: Income statement (Note 15) | 76,521 | (568,623) | - | (217,794) | (709,896) |
| At 31 December 2023 | 8,909,480 | 114,022 | - | 503,846 | 9,527,348 |
| Tax losses | Trade and other payables | Other lease liabilities and Borrowings | Other assets / liabilities | Total | |
| Deferred tax assets | RUB’000 | RUB’000 | RUB’000 | RUB’000 | RUB’000 |
| At 1 January 2022 | - | (227,640) | (848,589) | (175,684) | (1,251,913) |
| Charged/(credited) to: Income statement (Note 15) | - | 36,420 | 46,774 | 12,714 | 95,908 |
| At 31 December 2022 | - | (191,220) | (801,815) | (162,970) | (1,156,005) |
| Charged/(credited) to: Income statement (Note 15) | - | 171,909 | 212,921 | (21,175) | 363,655 |
| Disposed through disposals of subsidiaries | |||||
| At 31 December 2023 | - | (19,311) | (588,894) | (184,145) | (792,350) |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Current | ||
| Trade payables to third parties | 550,862 | 338,540 |
| Other payables to third parties | 154,497 | 2,036,750 |
| VAT payable and other taxes | 1,485,159 | 3,441,091 |
| Accrued expenses | 113,874 | 98,140 |
| Accrued key management compensation, including share-based payment (Note 35) | 134,080 | 469,827 |
| 2,438,472 | 6,384,348 |
| 2023 | 2022 | |
| Profit attributable to equity holders of the company (RUB thousand) | 38,620,269 | 25,193,420 |
| Weighted average number of ordinary shares in issue (thousand) | 178,318 | 178,382 |
| Basic and diluted earnings per share (expressed in RUB per share) attributable to the equity holders of the Company during the year | 216.58 | 141.23 |
Overview
ANNUAL REPORT 2023 Financial Statements 233 232
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
33. Contingencies
Operating environment
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. Ongoing
political tension in the region and sanctions against certain Russian companies and individuals
have an additional negative impact on the Russian economy.
The geopolitical situation in Eastern Europe intensified on 24 February 2022 with
the commencement of the conflict between Russia and Ukraine. As at the date of authorizing
these financial statements for issue, the conflict continues to evolve as military activity proceeds.
In addition to the impact of the events on entities that have operations in Russia or Ukraine or that
conduct business with their counterparties, the conflict is increasingly affecting economies and
financial markets globally and exacerbating ongoing economic challenges.
The European Union as well as United States of America, Switzerland, United Kingdom and other
countries imposed a series of restrictive measures (sanctions) against the Russian government,
various companies, and certain individuals. The sanctions imposed include an asset freeze and
a prohibition from making funds available to the sanctioned individuals and entities. In addition,
travel bans applicable to the sanctioned individuals prevent them from entering or transiting
through the relevant territories. The Republic of Cyprus has adopted the United Nations and
European Union measures. The rapid deterioration of the conflict in Ukraine may as well lead
to the possibility of further sanctions in the future.
Emerging uncertainty regarding global supply of commodities due to the conflict between Russia
and Ukraine conflict may also disrupt certain global trade flows and place significant upwards
pressure on commodity prices and input costs as seen through early March 2022. Challenges
for companies may include availability of funding to ensure access to raw materials, ability
to finance margin payments and heightened risk of contractual non-performance.
The impact on the Group largely depends on the nature and duration of uncertain and
unpredictable events, such as further military action, additional sanctions, and reactions
to ongoing developments by global financial markets.
The financial effect of the current crisis on the global economy and overall business activities
cannot be estimated with reasonable certainty at this stage, due to the pace at which the conflict
prevails and the high level of uncertainties arising from the inability to reliably predict the outcome.
The event did not exist in the reporting period and is therefore not reflected in the recognition
and measurement of the assets and liabilities in the financial statements as at 31 December 2023
as it is considered as a non-adjusting event.
The Group actively monitors political developments on an ongoing basis. However,
the macroeconomic situation in Ukraine, Russia is out of Management’s control. The scope and
impact of any new potential sanctions (and any counter-sanctions) is yet unknown, however they
might further affect key Russian financial institutions as well as companies operating in the Russian
Federation.
Fluctuations in foreign exchange rates may also impact the operations of the Goup. The Russian
central bank had raised the key rate of interest from 9,5% to 20% as a preventive measure to stop
the devaluation of the RUB.
The Group continues to monitor the situation and implement a set of measures to minimize
the impact of possible risks on the Group’s operations and financial position.
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 2023 and 2022 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 and Ukraine. 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. Estonia represents well-developed market and economy with stable political systems
and developed legislation based on EU requirements and regulations.
Overview
ANNUAL REPORT 2023 Financial Statements 235 234
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Overview
ANNUAL REPORT 2023 Financial Statements 235 234
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
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 2023 and 31 December
2022 (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
In the opinion of management, there are no legal proceedings or other claims outstanding,
as of 31 December 2023 and 2022 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:
(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:
There were no contingent-based rents to be recognised in the income statement for the year
ended 31 December 2023 and 31 December 2022.
Overview
ANNUAL REPORT 2023 Financial Statements 237 236
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Property, plant and equipment | 62,413 | 879,341 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Not later than 1 year | 3,367,422 | 2,635,180 |
| Later than 1 year not later than 5 years | 25,397 | 856,038 |
| 3,392,819 | 3,491,218 |
Overview
ANNUAL REPORT 2023 Financial Statements 237 236
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
35. Related party transactions
Litten Investments Ltd, controlled by a Director of the Company, has a shareholding
in the Company of 5.1% as at 31 December 2023 (31 December 2022: 5.1%).
Goldriver Resources Ltd, controlled by a Director of the Company, has a shareholding
in the Company of 3.1% as at 31 December 2023 (31 December 2022: 3.1%).
As at 31 December 2023, another 0.1% (2022: 0.1%) 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
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 1,076,241 thousand (2022: RUB 776,827 thousand)
and analysed as follows:
(b) Sale of goods and services
(c) Other gains
(d) Year-end balances arising from sales/purchases of goods or services
Overview
ANNUAL REPORT 2023 Financial Statements 239 238
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Key management salaries and other short-term employee benefits | 3,334,479 | 2,702,399 |
| Share based compensation (Note 21) | - | 125,737 |
| 3,334,479 | 2,828,136 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Non-executive directors’ fees | 20,537 | 20,793 |
| Emoluments in their executive capacity | 1,055,704 | 738,450 |
| Share based compensation in their executive capacity | - | 17,584 |
| 1,076,241 | 776,827 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Revenue from entity under control of member of key management: | ||
| Operating lease of rolling stock | 832,175 | 813,750 |
| Other | 673 | 880 |
| 832,848 | 814,630 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Other gains from entity under control of member of key management: | ||
| Other gains | 112,567 | 96,722 |
| 112,567 | 96,722 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Trade receivables from related parties - current (Note 22): | ||
| Entity under control of member of key management | 765 | 275 |
| 765 | 275 | |
| Other receivables from related parties – current (Note 22): | ||
| Entity under control of member of key management | 26 | 23 |
| 26 | 23 | |
| Key management remuneration – current (Note 31): | ||
| Accrued salaries and other short-term employee benefits | 134,080 | 344,088 |
| Share based payment liability (Note 21) | - | 125,737 |
| 134,080 | 469,825 |
Overview
ANNUAL REPORT 2023 Financial Statements 239 238
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Notes to the consolidated financial statements
(e) Interest income
(f) Contract liabilities
(g) Loans
(h) Finance leases
(i) Operating lease commitments – Group as lessor
36. Business combinations
Disposal of subsidiary
In January 2023 the Group disposed of its 65.25% shareholding in Spacecom AS,
Estonia for EUR 65,300,000 (RUB 4,948,427 thousand) realising a profit from sale
of RUB 3,400,047 thousand.
37. Events after the balance sheet date
On 26 February 2024 the Company has completed redomiciliation to ADGM, UAE with
the registered address: Office Unit 3, Floor 6, Al Sila Tower, Abu Dhabi Global Market Square,
Al Maryah Island, Abu Dhabi, UAE.
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 148 to 151.
Overview
ANNUAL REPORT 2023 Financial Statements 241 240
Strategic Report Sustainability Report Governance Financial Statements Additional Information
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Finance leases (Note 14): | ||
| Entity under control of members of key management | 609 | 1,609 |
| 609 | 1,609 | |
| Loans (Note 14): | ||
| Entity under control of members of key management | ||
| Entity under control of members of key management | 9,666 | 18,033 |
| 9,666 | 18,033 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Contract liabilities relating to railway transportation contracts – current (Note 10): | ||
| Entity under control of member of key management | 1,467 | 2,228 |
| 1,467 | 2,228 | |
| Contract liabilities relating to railway transportation contracts – non-current (Note 10): | ||
| Entity under control of member of key management | 4,878 | 4,879 |
| 4,878 | 4,879 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Loans receivables (Note 22): | ||
| Entity under control of member of key management | - | 401,151 |
| - | 401,151 | |
| At the beginning of the period | 401,151 | - |
| Loans advanced during the year | - | 800,000 |
| Loans repaid during the year | (400,000) | (400,000) |
| Interest charged (Note 14) | 9,666 | 18,033 |
| Interest received | (10,817) | (16,882) |
| At the end of the period | - | 401,151 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Finance leases to related parties – current (Note 23): | ||
| Entity under control of member of key management | 959 | 10,879 |
| 959 | 10,879 | |
| Finance leases to related parties – non-current (Note 23): | ||
| Entity under control of member of key management | - | 953 |
| - | 953 |
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Entity under control of member of key management | ||
| Not later than 1 year | 856,038 | 836,960 |
| Later than 1 year not later than 5 years | - | 856,038 |
| 856,038 | 1,692,998 |
Overview
ANNUAL REPORT 2023 Financial Statements 241 240
Strategic Report Sustainability Report Governance Financial Statements Additional Information
Board of Directors and other officers
Board of Directors as of 5 April 2024
Mr. Jaafar Borhan
Senior Independent Non-Executive
Director
Appointed on 4 April 2024,
(Senior Independent Director
since 5 April 2024)
Chairman of Remuneration Committee
(since 5 April 2024)
Chairman of Nomination Committee
(since 5 April 2024)
Member of ESG Committee
(since 5 April 2024)
Ms. Jouslin Khairallah
Independent Non-Executive Director
Appointed on 4 April 2024
Chairperson of the Audit Committee
(since 5 April 2024)
Chairperson of ESG Committee
(since 5 April 2024)
Mr. Abdulla Belobaida
Independent Non-Executive Director
Member of the Audit Committee
(since 5 April 2024)
Member of Remuneration Committee
(since 5 April 2024)
Member of Nomination Committee
(since 5 April 2024)
Mr. Abdultaiyab Bahrainwala
Non-Executive Director
Ms. Albina Amangeldinova
Non-Executive Director
Mr. Yerzhan Niyazaliyev
Chairman of the Board of Directors
Executive Director
Mr. Kairat Itemgenov
Executive Director
Mr. Anton Gazizov
Executive Director
Mr. Alexander Storozhev
Executive Director
Mr. Viacheslav Stanislavskiy
Executive Director
Mr. Ruslan Izatov
Non-Executive Director
Mr. Stefan Henrich
Non-Executive Director
Mr. Yousef Abu Laban
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
Mr. Aleksandr Lavrentjev
Registered office
Office Unit 3, Floor 6, Al Sila Tower
Abu Dhabi Global Market Square
Al Maryah Island, Abu Dhabi, UAE
Management Report
and Parent Company
Financial Statements
for the year ended
31 December 2023
Board of Directors and other officers .................................................................................................................................................................................. 243
Management Report ......................................................................................................................................................................................................................... 244
Directors’ responsibility ................................................................................................................................................................................................................ 256
Auditors report ..................................................................................................................................................................................................................................... 258
Income statement .............................................................................................................................................................................................................................. 262
Statement of comprehensive income .................................................................................................................................................................................. 263
Statement of financial position ................................................................................................................................................................................................ 264
Statement of changes in equity ............................................................................................................................................................................................... 266
Cash flow statement ........................................................................................................................................................................................................................ 268
Notes to the parent company financial statements .................................................................................................................................................. 270
1. General information .................................................................... 270
2. Basis of preparation ................................................................... 270
3. Adoption of new or revised standards and
interpretations ...................................................................................... 271
4. Summary of significant accounting policies ............. 271
5. New accounting pronouncements .................................. 282
6. Financial risk management ................................................. 284
7. Critical accounting estimate and judgements ........ 295
8. Revenue .............................................................................................. 295
9. Other losses/(gains) – net .................................................... 295
10. Expenses by nature ................................................................. 296
11. Employee benefit expense .................................................. 296
12. Finance income and costs .................................................. 297
13. Income tax expense ................................................................. 297
14. Net foreign exchange gains/(losses) ......................... 298
15. Dividends ......................................................................................... 298
16. Property, plant and equipment ....................................... 299
17. Right-of-use assets ................................................................. 300
18. Investments in subsidiary undertakings .................. 301
19. Loans and other receivables ............................................. 303
20. Other assets ................................................................................ 304
21. Cash and cash equivalents ................................................ 304
22. Share capital, share premium
and treasury shares ......................................................................... 305
23. Borrowings .................................................................................... 306
24. Other lease liabilities ............................................................ 309
25. Payables and accrued expenses ................................... 309
26. Related party transactions ................................................ 310
27. Contingencies .............................................................................. 314
28. Business combinations ........................................................ 316
29. Events after the balance sheet date ........................... 316 Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
243 242
Board of Directors as of 5 April 2024
Mr. Jaafar Borhan
Senior Independent Non-Executive
Director
Appointed on 4 April 2024,
(Senior Independent Director
since 5 April 2024)
Chairman of Remuneration Committee
(since 5 April 2024)
Chairman of Nomination Committee
(since 5 April 2024)
Member of ESG Committee
(since 5 April 2024)
Ms. Jouslin Khairallah
Independent Non-Executive Director
Appointed on 4 April 2024
Chairperson of the Audit Committee
(since 5 April 2024)
Chairperson of ESG Committee
(since 5 April 2024)
Mr. Abdulla Belobaida
Independent Non-Executive Director
Member of the Audit Committee
(since 5 April 2024)
Member of Remuneration Committee
(since 5 April 2024)
Member of Nomination Committee
(since 5 April 2024)
Mr. Abdultaiyab Bahrainwala
Non-Executive Director
Ms. Albina Amangeldinova
Non-Executive Director
Mr. Yerzhan Niyazaliyev
Chairman of the Board of Directors
Executive Director
Mr. Kairat Itemgenov
Executive Director
Mr. Anton Gazizov
Executive Director
Mr. Alexander Storozhev
Executive Director
Mr. Viacheslav Stanislavskiy
Executive Director
Mr. Ruslan Izatov
Non-Executive Director
Mr. Stefan Henrich
Non-Executive Director
Mr. Yousef Abu Laban
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
Mr. Aleksandr Lavrentjev
Registered office
Office Unit 3, Floor 6, Al Sila Tower
Abu Dhabi Global Market Square
Al Maryah Island, Abu Dhabi, UAE
Management Report
and Parent Company
Financial Statements
for the year ended
31 December 2023
Board of Directors and other officers .................................................................................................................................................................................. 243
Management Report ......................................................................................................................................................................................................................... 244
Directors’ responsibility ................................................................................................................................................................................................................ 256
Auditors report ..................................................................................................................................................................................................................................... 258
Income statement .............................................................................................................................................................................................................................. 262
Statement of comprehensive income .................................................................................................................................................................................. 263
Statement of financial position ................................................................................................................................................................................................ 264
Statement of changes in equity ............................................................................................................................................................................................... 266
Cash flow statement ........................................................................................................................................................................................................................ 268
Notes to the parent company financial statements .................................................................................................................................................. 270
1. General information .................................................................... 270
2. Basis of preparation ................................................................... 270
3. Adoption of new or revised standards and
interpretations ...................................................................................... 271
4. Summary of significant accounting policies ............. 271
5. New accounting pronouncements .................................. 282
6. Financial risk management ................................................. 284
7. Critical accounting estimate and judgements ........ 295
8. Revenue .............................................................................................. 295
9. Other losses/(gains) – net .................................................... 295
10. Expenses by nature ................................................................. 296
11. Employee benefit expense .................................................. 296
12. Finance income and costs .................................................. 297
13. Income tax expense ................................................................. 297
14. Net foreign exchange gains/(losses) ......................... 298
15. Dividends ......................................................................................... 298
16. Property, plant and equipment ....................................... 299
17. Right-of-use assets ................................................................. 300
18. Investments in subsidiary undertakings .................. 301
19. Loans and other receivables ............................................. 303
20. Other assets ................................................................................ 304
21. Cash and cash equivalents ................................................ 304
22. Share capital, share premium
and treasury shares ......................................................................... 305
23. Borrowings .................................................................................... 306
24. Other lease liabilities ............................................................ 309
25. Payables and accrued expenses ................................... 309
26. Related party transactions ................................................ 310
27. Contingencies .............................................................................. 314
28. Business combinations ........................................................ 316
29. Events after the balance sheet date ........................... 316 Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
243 242
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 escalation of the conflict in Ukraine and the associated sanctions imposed by the US,
European Union and a number of other countries on some of the biggest Russian industrial
groups, as described in Note 27 to the financial statements, may adversely affect the business
environment and prospects of the Company and its subsidiaries and create significant new
risks, which did not exist as at the balance sheet date.
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.
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, 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 68%
of the Group’s Net Revenue from the operation of rolling stock in 2023; 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. Emerging markets, such
as Russia and Kazakhstan, 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,
Management Report
The Board of Directors presents its report together with the audited parent company financial
statements for the year ended 31 December 2023. 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
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.
Review of developments, position and performance of the Company’s
business
The Company’s profit for the year increased to RUB 16,438,208 thousand compared
to RUB 5,705,759 thousand for the year ended 31 December 2022. This was mainly the result
of the increase in the dividend income earned from the subsidiaries from RUB 7,064,907 thousand
during the year ended 31 December 2022 to RUB 13,597,095 thousand in the current year.
The net asset position of the Company has increased as of 31 December 2023
compared to 31 December 2022, with net assets as of 31 December 2023 amounting
to RUB 64,710,823 thousand compared to RUB 48,272,615 thousand as of 31 December 2022.
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
2023 other than sale of 65.25% in Spacecom AS and incorporation of GLTR Cyprus Ltd.
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.
ESG Committee of the Board analyses and oversees risks related to the environmental, social and
governance issues.
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. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
245 244
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 escalation of the conflict in Ukraine and the associated sanctions imposed by the US,
European Union and a number of other countries on some of the biggest Russian industrial
groups, as described in Note 27 to the financial statements, may adversely affect the business
environment and prospects of the Company and its subsidiaries and create significant new
risks, which did not exist as at the balance sheet date.
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.
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, 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 68%
of the Group’s Net Revenue from the operation of rolling stock in 2023; 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. Emerging markets, such
as Russia and Kazakhstan, 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,
Management Report
The Board of Directors presents its report together with the audited parent company financial
statements for the year ended 31 December 2023. 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
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.
Review of developments, position and performance of the Company’s
business
The Company’s profit for the year increased to RUB 16,438,208 thousand compared
to RUB 5,705,759 thousand for the year ended 31 December 2022. This was mainly the result
of the increase in the dividend income earned from the subsidiaries from RUB 7,064,907 thousand
during the year ended 31 December 2022 to RUB 13,597,095 thousand in the current year.
The net asset position of the Company has increased as of 31 December 2023
compared to 31 December 2022, with net assets as of 31 December 2023 amounting
to RUB 64,710,823 thousand compared to RUB 48,272,615 thousand as of 31 December 2022.
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
2023 other than sale of 65.25% in Spacecom AS and incorporation of GLTR Cyprus Ltd.
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.
ESG Committee of the Board analyses and oversees risks related to the environmental, social and
governance issues.
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. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
245 244
Management Report
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. Due to recent
sanctions imposed by US, European Union and number of other countries, number
of IT solutions will no longer be maintained by US and European Union suppliers. Local
IT specialists have introduced alternative solutions to maintain the availability of IT services,
continuity of business processes 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.
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 listed.
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, sanctions 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, sanctions, 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 attracts 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.
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 61%
of the Group’s Net Revenue from the Operation of Rolling Stock in 2023 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.
The sanctions imposed on the Russian Central Bank, NSD and number of commercial banks,
the restrictions for capital movements outside Russian Federation, the sanctions imposed by US,
European Union and number of other countries on the biggest Russian industrial groups adversely
affects the business environment and prospects of the Group and create significant risks.
The restrictions on the export of certain types of 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 situation is still evolving and further sanctions and limitations on business activity
of companies operating in the region, as well as consequences on the Russian economy in general,
may arise but the full nature and possible effects of these are unknown. It is not possible
for management to predict with any degree of certainty the impact of this uncertainty on the future
operations of the Group and estimate the financial effect on the Group. Management is closely
monitoring the situation and is ready to act depending on the developments.
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.
Operational risks
The operational risks faced by the Group that could influence the Group’s operational efficiency
include the physical state of the Russian, CIS and Baltic countries railway infrastructure which may
negatively impact the condition of the Group’s rolling stock, ability of relocation of rolling stock
between different countries 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. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
247 246
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. Due to recent
sanctions imposed by US, European Union and number of other countries, number
of IT solutions will no longer be maintained by US and European Union suppliers. Local
IT specialists have introduced alternative solutions to maintain the availability of IT services,
continuity of business processes 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.
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 listed.
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, sanctions 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, sanctions, 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 attracts 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.
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 61%
of the Group’s Net Revenue from the Operation of Rolling Stock in 2023 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.
The sanctions imposed on the Russian Central Bank, NSD and number of commercial banks,
the restrictions for capital movements outside Russian Federation, the sanctions imposed by US,
European Union and number of other countries on the biggest Russian industrial groups adversely
affects the business environment and prospects of the Group and create significant risks.
The restrictions on the export of certain types of 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 situation is still evolving and further sanctions and limitations on business activity
of companies operating in the region, as well as consequences on the Russian economy in general,
may arise but the full nature and possible effects of these are unknown. It is not possible
for management to predict with any degree of certainty the impact of this uncertainty on the future
operations of the Group and estimate the financial effect on the Group. Management is closely
monitoring the situation and is ready to act depending on the developments.
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.
Operational risks
The operational risks faced by the Group that could influence the Group’s operational efficiency
include the physical state of the Russian, CIS and Baltic countries railway infrastructure which may
negatively impact the condition of the Group’s rolling stock, ability of relocation of rolling stock
between different countries 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. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
247 246
Management Report
Results
The Company’s results for the year are set out on pages 16 and 17. On the date of this report,
the Board of Directors, having considered the profitability and liquidity position of the Group
as well as all the risks and recent developments, does not recommend the payment of a final
dividend and the net profit for the year is retained.
Dividends
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 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 and limitations on capital
movement, if applicable. 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.
On the date of this report, the Board of Directors of the Company, having considered
the profitability and liquidity position of the Group as well as all the risks and recent
developments, does not recommend the payment of final dividends.
Share capital
As of 31 December 2023, the issued share capital of the Company comprised 178,318,259
ordinary shares with a par value of US$0.10 per share (31 December 2022 comprised
178,740,916 ordinary shares with a par value of US$0.10 per share).
Treasury shares
As of 31 December 2023, the Company didn’t have treasury shares (31 December 2022: 422 657
treasury shares).
Research and development activities
The Company has not undertaken any research and development activities during the year
ended 31 December 2023.
Events after the balance sheet date
The events after the balance sheet date are disclosed in Note 28 to the financial statements.
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 2023, the Company has an excess of current assets over current liabilities
of RUB 12.491.384 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 Company’s strategic objective is to strengthen the Group’s position as a leading private freight
rail group in Russia. The future development of the Group may be affected by the escalation
of the conflict in Ukraine in the period after the balance sheet date. It is not possible for the Board
of Directors to predict with any degree of certainty the impact of this uncertainty on the future
operations of the Group and estimate the financial effect on the Company and its subsidiaries. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
249 248
The Company’s results for the year are set out on pages 16 and 17. On the date of this report,
the Board of Directors, having considered the profitability and liquidity position of the Group
as well as all the risks and recent developments, does not recommend the payment of a final
dividend and the net profit for the year is retained.
Dividends
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 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 and limitations on capital
movement, if applicable. 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.
On the date of this report, the Board of Directors of the Company, having considered
the profitability and liquidity position of the Group as well as all the risks and recent
developments, does not recommend the payment of final dividends.
Share capital
As of 31 December 2023, the issued share capital of the Company comprised 178,318,259
ordinary shares with a par value of US$0.10 per share (31 December 2022 comprised
178,740,916 ordinary shares with a par value of US$0.10 per share).
Treasury shares
As of 31 December 2023, the Company didn’t have treasury shares (31 December 2022: 422 657
treasury shares).
Research and development activities
The Company has not undertaken any research and development activities during the year
ended 31 December 2023.
Events after the balance sheet date
The events after the balance sheet date are disclosed in Note 28 to the financial statements.
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 2023, the Company has an excess of current assets over current liabilities
of RUB 12.491.384 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 Company’s strategic objective is to strengthen the Group’s position as a leading private freight
rail group in Russia. The future development of the Group may be affected by the escalation
of the conflict in Ukraine in the period after the balance sheet date. It is not possible for the Board
of Directors to predict with any degree of certainty the impact of this uncertainty on the future
operations of the Group and estimate the financial effect on the Company and its subsidiaries. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
249 248
Management Report
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.
Members of the Board of Directors
As at 31 December 2023, the Board comprises of 14 members (2022: 14 members), 10
(2022: 10 members) of whom are non-executive directors. Three (2022: three) 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 the date of this report are shown on page 243,
the members of the Board of Directors as of 31 December 2023 are shown in the table below,
all of them were members of the Board throughout the year 2023.
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 2023 amounted to RUB 447,627 thousand (2022: RUB 319,844 thousand).
Board performance
The Board held 24 meetings in 2023. The Directors’ attendance is presented in the table below.
Eligible Attended
John Carroll Colley 24 24
George Papaioannou 24 24
Alexander Eliseev 24 23
Melina Pyrgou 24 24
Konstantin Shirokov 24 23
Alexander Storozhev 24 24
Marios Tofaros 24 24
Elia Nicolaou 24 24
Sergey Tolmachev 24 24
Sergey Maltsev (Chairman) 24 24
Andrey Gomon 24 24
Sergey Foliforov 24 24
Vasilis Hadjivassiliou 24 24
Michalakis Thomaides 24 24
Branches
The Company does not operate through any branches.
Going concern
The 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 2024, including
cash flows and borrowing facilities, and taking into account the developments after the reporting
date impacting the economic and business environment in which the Group operates, as set out
in Note 27 to the financial statements, the Directors consider that the Company has adequate
resources to continue in operation for the foreseeable future.
Auditors
Following the completion of redomiciliation of Globaltrans Investment Plc from Cyprus to UAE,
ADGM effective from 26 February 2024, the Independent Auditor, GAC Auditors Ltd will be replaced
by RAI LLP, who has license in AGM for the audit of public companies. A resolution giving authority
to the Board of Directors to fix the remuneration of RAI LLP 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 Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
251 250
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.
Members of the Board of Directors
As at 31 December 2023, the Board comprises of 14 members (2022: 14 members), 10
(2022: 10 members) of whom are non-executive directors. Three (2022: three) 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 the date of this report are shown on page 243,
the members of the Board of Directors as of 31 December 2023 are shown in the table below,
all of them were members of the Board throughout the year 2023.
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 2023 amounted to RUB 447,627 thousand (2022: RUB 319,844 thousand).
Board performance
The Board held 24 meetings in 2023. The Directors’ attendance is presented in the table below.
Eligible Attended
John Carroll Colley 24 24
George Papaioannou 24 24
Alexander Eliseev 24 23
Melina Pyrgou 24 24
Konstantin Shirokov 24 23
Alexander Storozhev 24 24
Marios Tofaros 24 24
Elia Nicolaou 24 24
Sergey Tolmachev 24 24
Sergey Maltsev (Chairman) 24 24
Andrey Gomon 24 24
Sergey Foliforov 24 24
Vasilis Hadjivassiliou 24 24
Michalakis Thomaides 24 24
Branches
The Company does not operate through any branches.
Going concern
The 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 2024, including
cash flows and borrowing facilities, and taking into account the developments after the reporting
date impacting the economic and business environment in which the Group operates, as set out
in Note 27 to the financial statements, the Directors consider that the Company has adequate
resources to continue in operation for the foreseeable future.
Auditors
Following the completion of redomiciliation of Globaltrans Investment Plc from Cyprus to UAE,
ADGM effective from 26 February 2024, the Independent Auditor, GAC Auditors Ltd will be replaced
by RAI LLP, who has license in AGM for the audit of public companies. A resolution giving authority
to the Board of Directors to fix the remuneration of RAI LLP 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 Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
251 250
Management Report
ESG Committee
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
also monitors the development of the Group’s sustainability strategy, reviews and recommends
ESG disclosures for Board approval and approves the Group’s sustainability reports. The ESG
Committee was comprised of two Board members: Elia Nicolaou, Non-executive Director,
who served as the Chair, and Carroll Colley, Independent Non-executive Director. The ESG
Committee meets 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 21 April 2023.
Refer to Note 26 of the 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 female directors
representing approximately 14% 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 52.4
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 the 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.
The Board Committees
During 2023 the Board had four committees: the Audit Committee, the Nomination Committee,
the Remuneration Committee and 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 2023 all the members of the Audit Committee were independent and
the Audit Committee was chaired by Mr. Colley and was also attended by Mr. Papaioannou and
Mr. Hadjivassiliou. 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. As of 31 December 2023 the Nomination Committee was chaired by Carroll Colley and
George Papaioannou was 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. As of 31 December 2023, the Remuneration Committee was chaired by Carroll Colley and
George Papaioannou was 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. Overview
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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
also monitors the development of the Group’s sustainability strategy, reviews and recommends
ESG disclosures for Board approval and approves the Group’s sustainability reports. The ESG
Committee was comprised of two Board members: Elia Nicolaou, Non-executive Director,
who served as the Chair, and Carroll Colley, Independent Non-executive Director. The ESG
Committee meets 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 21 April 2023.
Refer to Note 26 of the 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 female directors
representing approximately 14% 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 52.4
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 the 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.
The Board Committees
During 2023 the Board had four committees: the Audit Committee, the Nomination Committee,
the Remuneration Committee and 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 2023 all the members of the Audit Committee were independent and
the Audit Committee was chaired by Mr. Colley and was also attended by Mr. Papaioannou and
Mr. Hadjivassiliou. 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. As of 31 December 2023 the Nomination Committee was chaired by Carroll Colley and
George Papaioannou was 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. As of 31 December 2023, the Remuneration Committee was chaired by Carroll Colley and
George Papaioannou was 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. Overview
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Management Report
Significant direct or indirect holdings (including indirect shareholding
though structures or cross shareholdings)
The issued share capital of the Company consists of 178,318,259 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 on the Main
Market of the London Stock Exchange and in the Moscow Exchange, under the ticker GLTR.
The free float of Globaltrans amounts to approximately 56.9% of the issued share capital.
The Company’s depositary bank for the GDR programme is Citibank N.A.
Directors’ interests
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 2023 and 31 December 2022
are shown below:
The holders of special titles that provide special control rights and
description of such rights
The Company does not have any titles with special rights.
Any restrictions in exercising of voting rights of shares
There are no restrictions in the exercising of voting rights of shares issued by the Company.
By Order of the Board
Alexander Storozhev
Director
Abu Dhabi, ADGM, 5 April 2024
Company’s internal control and risk management systems in relation
to the financial reporting process
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 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.
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. Overview
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though structures or cross shareholdings)
The issued share capital of the Company consists of 178,318,259 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 on the Main
Market of the London Stock Exchange and in the Moscow Exchange, under the ticker GLTR.
The free float of Globaltrans amounts to approximately 56.9% of the issued share capital.
The Company’s depositary bank for the GDR programme is Citibank N.A.
Directors’ interests
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 2023 and 31 December 2022
are shown below:
| Name | Type of holding | 2023 | 2022 |
| Alexander Eliseev | Indirect holding of ordinaryshares and GDRs | 9,065,790 | 9,065,790 |
| Sergey V. Maltsev | Indirect holding of GDRs | 5,490,149 | 5,490,149 |
The holders of special titles that provide special control rights and
description of such rights
The Company does not have any titles with special rights.
Any restrictions in exercising of voting rights of shares
There are no restrictions in the exercising of voting rights of shares issued by the Company.
By Order of the Board
Alexander Storozhev
Director
Abu Dhabi, ADGM, 5 April 2024
Company’s internal control and risk management systems in relation
to the financial reporting process
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 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.
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. Overview
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Directors’ confirmations
Each of the directors, whose names and functions are listed in page 243 confirms that,
to the best of his or her knowledge:
(a) the financial statements, which are presented on pages 262 to 316, 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.
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; and
(iv) the 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 financial statements.
By order of the Board
Alexander Storozhev
Director
Abu Dhabi ADGM, 5 April 2024
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.
As the Company has completed redomiciliation to ADGM, UAE on 26 February 2024, the Company’s
Board of directors must ensure that all legal and financial aspects are properly addressed,
including compliance with any new requirements in the new jurisdiction. From 1 January 2024,
International Financial Reporting Standards as adopted by the European Union and
the requirements of the Cyprus Companies Law, Cap.113 will no longer be applicable and
International Financial Reporting Standards will be applied.
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. Overview
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Each of the directors, whose names and functions are listed in page 243 confirms that,
to the best of his or her knowledge:
(a) the financial statements, which are presented on pages 262 to 316, 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.
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; and
(iv) the 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 financial statements.
By order of the Board
Alexander Storozhev
Director
Abu Dhabi ADGM, 5 April 2024
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.
As the Company has completed redomiciliation to ADGM, UAE on 26 February 2024, the Company’s
Board of directors must ensure that all legal and financial aspects are properly addressed,
including compliance with any new requirements in the new jurisdiction. From 1 January 2024,
International Financial Reporting Standards as adopted by the European Union and
the requirements of the Cyprus Companies Law, Cap.113 will no longer be applicable and
International Financial Reporting Standards will be applied.
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. Overview
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Other information
The Board of Directors is responsible for the other information. The other information comprises
the information included in the Management Report, but does not include the financial
statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If, based on the work we have performed, 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.
Responsibilities of the Board of Directors for the Financial Statements
The 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.
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.
The Board of Directors is responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 financial statements.
Auditors report
To the Members of Globaltrans Investment PLC
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying financial statements of the parent company Globaltrans
Investment PLC (the ‘’Company’’), which comprise the statement of financial position as at
31 December 2023, and the statements of profit or loss and other comprehensive income, changes
in equity and cash flows for the year then ended, and notes to the financial statements, including
a summary of significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial
position of the parent company Globaltrans Investment PLC as at 31 December 2023, 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.
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 Financial Statements’’ section of our report. We are independent of the Company
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 financial
statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the IESBA Code. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw attention to the operating environment of the separate financial statements, which
describes the impact of conflict between Russia and Ukraine. Our opinion is not modified in respect
of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. Overview
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The Board of Directors is responsible for the other information. The other information comprises
the information included in the Management Report, but does not include the financial
statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent
with the financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated. If, based on the work we have performed, 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.
Responsibilities of the Board of Directors for the Financial Statements
The 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.
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.
The Board of Directors is responsible for overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 financial statements.
Auditors report
To the Members of Globaltrans Investment PLC
Report on the Audit of the Financial Statements
Opinion
We have audited the accompanying financial statements of the parent company Globaltrans
Investment PLC (the ‘’Company’’), which comprise the statement of financial position as at
31 December 2023, and the statements of profit or loss and other comprehensive income, changes
in equity and cash flows for the year then ended, and notes to the financial statements, including
a summary of significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial
position of the parent company Globaltrans Investment PLC as at 31 December 2023, 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.
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 Financial Statements’’ section of our report. We are independent of the Company
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 financial
statements in Cyprus, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the IESBA Code. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw attention to the operating environment of the separate financial statements, which
describes the impact of conflict between Russia and Ukraine. Our opinion is not modified in respect
of this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance
in our audit of the financial statements of the current period. These matters were addressed in the
context of our audit of the financial statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters. Overview
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Auditors report
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the 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 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 financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves a true and fair view.
We communicate with the Board of Directors 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.
Report on Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
• In our opinion, 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 financial
statements.
• In our opinion, and in the light of the knowledge and understanding of the Company and its
environment obtained in the course of the audit, we have not identified material misstatements
in the Management Report.
Other Matters
This report, including the opinion, has been prepared for and only for the Company’s members
as a body in accordance with 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 2023.
Michalis Lambrianides
Certified Public Accountant and Registered Auditor for and on behalf of
GAC Auditors Ltd
Certified Public Accountants and Registered Auditors
48 Inomenon Ethnon, Guricon House 1st floor, 6042
Larnaca, 5 April 2024 Overview
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261 260
professional scepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the 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 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 financial statements, including
the disclosures, and whether the financial statements represent the underlying transactions and
events in a manner that achieves a true and fair view.
We communicate with the Board of Directors 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.
Report on Other Legal Requirements
Pursuant to the additional requirements of the Auditors Law of 2017, we report the following:
• In our opinion, 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 financial
statements.
• In our opinion, and in the light of the knowledge and understanding of the Company and its
environment obtained in the course of the audit, we have not identified material misstatements
in the Management Report.
Other Matters
This report, including the opinion, has been prepared for and only for the Company’s members
as a body in accordance with 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 2023.
Michalis Lambrianides
Certified Public Accountant and Registered Auditor for and on behalf of
GAC Auditors Ltd
Certified Public Accountants and Registered Auditors
48 Inomenon Ethnon, Guricon House 1st floor, 6042
Larnaca, 5 April 2024 Overview
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261 260
Statement of comprehensive income
for the year ended 31 December 2023
Income statement
for the year ended 31 December 2023
Note 2023 2022
RUB’000 RUB’000
8 13,597,095 7,067,043
(1,063) (1,512)
(891,881) (677,369)
9 1,567,356 (8,661)
14,271,507 6,379,501
12 230,352 100,851
12 (305,416) (1,391,809)
12 2,953,515 752,089
12 2,878,451 (538,869)
17,149,958 5,840,632
13 (711,750) (134,873)
16,438,208 5,705,759
The notes on pages 270 to 316 are an integral part of these financial statements. The notes on pages 270 to 316 are an integral part of these financial statements. Overview
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263 262
for the year ended 31 December 2023
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Profit for the year | 16,438,208 | 5,705,759 |
| Other comprehensive income: | ||
| Items that may be reclassified subsequently to profitor loss: | ||
| Losses on cash flow hedging instrument | - | - |
| Reclassification adjustment to the income statement | - | |
| Total items that may be reclassified subsequentlyto profit or loss | - | - |
| Other comprehensive income for the year, net of tax | - | - |
| Total comprehensive income for the year | 16,438,208 | 5,705,759 |
Income statement
for the year ended 31 December 2023
Note 2023 2022
RUB’000 RUB’000
| Revenue | |||
| Marketing costs | |||
| Administrative expenses | |||
| Other (losses)/gains – net | |||
| Operating profit | |||
| Finance income | |||
| Finance costs Net foreign exchange transaction (losses)/ | |||
| gains on financing activities | |||
| Finance costs – net | |||
| Profit before tax | |||
| Income tax expense Profit for the year |
8 13,597,095 7,067,043
(1,063) (1,512)
(891,881) (677,369)
9 1,567,356 (8,661)
14,271,507 6,379,501
12 230,352 100,851
12 (305,416) (1,391,809)
12 2,953,515 752,089
12 2,878,451 (538,869)
17,149,958 5,840,632
13 (711,750) (134,873)
16,438,208 5,705,759
The notes on pages 270 to 316 are an integral part of these financial statements. The notes on pages 270 to 316 are an integral part of these financial statements. Overview
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263 262
| Note | 31 December 2023 | 31 December 2022 | |
| RUB’000 | RUB’000 | ||
| Non-current liabilities | |||
| Borrowings | 23 | - | 10,531,377 |
| Lease liabilities | 24 | - | 2,488 |
| Total non-current liabilities | - | 10,533,865 | |
| Current liabilities | |||
| Borrowings | 23 | - | 2,057,319 |
| Lease liabilities | 24 | 3,553 | 2,826 |
| Payables and accrued expenses | 25 | 80,501 | 115,383 |
| Total current liabilities | 84,054 | 2,175,528 | |
| Total liabilities | 84,054 | 12,709,393 | |
| Total equity and liabilities | 64,794,877 | 60,982,008 |
On 5 April 2024, the Board of Directors of Globaltrans Investment PLC authorised these financial
statements for issue.
Alexander Storozhev
Director
Yerzhan Niyazaliyev
Director
Statement of financial position
at 31 December 2023
Note 31 December 2023 31 December 2022
RUB’000 RUB’000
| Assets | |||
| Non-current assetsInvestments in subsidiary undertakings | |||
| Property, plant and equipment | |||
| Right-of-use assets | |||
| Other assets | |||
| Total non-current assetsCurrent 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 |
18 52,210,171 53,951,099
16 6,373 5,400
17 2,895 5,790
20 - 915
52,219,439 53,963,204
19 11,617,329 2,330,277
20 9,838 692
21 948,271 4,687,835
12,575,438 7,018,804
64,794,877 60,982,008
22 515,735 516,957
22 27,929,478 27,929,478
2,694,851 2,694,851
- (145,993)
33,570,759 17,277,322
64,710,823 48,272,615
The notes on pages 270 to 316 are an integral part of these financial statements. Overview
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Statement of changes in equity
for the year ended 31 December 2023
The notes on pages 270 to 316 are an integral part of these financial statements. Overview
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267 266
for the year ended 31 December 2023
| Note | Share capital | Share premium | Capital contribution | Treasury shares | Cash flow hedge reserve | Retained earnings | Total | |
| Balance at 1 January 2022 | RUB’000 516,957 | RUB’000 27,929,478 | RUB’000 2,694,851 | RUB’000 (31,496) | RUB’000 - | RUB’000 11,571,563 | RUB’00042,681,353 | |
| Comprehensive income | ||||||||
| ɜProfit for the year | - | - | - | - | - | 5,705,759 | 5,705,759 | |
| Other comprehensive income | ||||||||
| Losses on cash flow hedging instrument | - | - | - | - | - | - | - | |
| Reclassification adjustment to the income statement | - | - | - | - | - | - | - | |
| Total comprehensive income for 2022 | - | - | - | - | - | 5,705,759 | 5,705,759 | |
| Transactions with owners | ||||||||
| Dividend to owners of the Company | 15 | - | - | - | - | - | - | - |
| Total distributions to owners of the Company | - | - | - | - | - | - | - | |
| Purchase of treasury shares | 22 | - | - | - | (114,497) | - | - | (114,497) |
| Total transactions with owners | - | - | - | (114,497) | - | - | (114,497) | |
| Balance at 31 December 2022 | 516,957 | 27,929,478 | 2,694,851 | (145,993) | - | 17,277,322 | 48,272,615 | |
| Comprehensive income | ||||||||
| ɜProfit for the year | - | - | - | - | - | 16,438,208 | 16,438,208 | |
| Other comprehensive income | ||||||||
| ɜLosses on cash flow hedging instrument | - | - | - | - | - | - | - | |
| ɜReclassification adjustment to the income statement | - | - | - | - | - | - | - | |
| Total comprehensive income for 2023 | - | - | - | - | - | 16,438,208 | 16,438,208 | |
| Transactions with owners | ||||||||
| Dividend to owners of the Company | 15 | - | - | - | - | - | - | - |
| Total distributions to owners of the Company | - | - | - | - | - | - | - | |
| Cancellation of treasury shares | 22 | (1,222) | - | - | 145,993 | - | (144,771) | - |
| Total transactions with owners | (1,222) | - | - | 145,993 | - | (144,771) | - | |
| Balance at 31 December 2023 | 515,735 | 27,929,478 | 2,694,851 | - | - | 33,570,759 | 64,710,823 | |
The notes on pages 270 to 316 are an integral part of these financial statements. Overview
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267 266
| Note | 2023 | 2022 | |
| RUB’000 | RUB’000 | ||
| Cash flows from financing activities | |||
| ɜProceeds from borrowings | 23 | (8,706,600) | 8,706,600 |
| ɜRepayments of bank borrowings ɜPrincipal elements of lease payments | 23 23 | (3,134,921) (3,193) | (1,865,079)(2,328) |
| ɜInterest paid on bank borrowings | 23 | (1,040,861) | (297,378) |
| ɜInterest paid on lease liabilities | 23 | (199) | (253) |
| ɜPurchase of treasury shares | 22 | - | (114,497) |
| Net cash used in financing activities Net (decrease)/increase in cash and cash | (12,885,774) (6,570,758) | 6,427,0652,469,412 | |
| equivalentsɜExchange gains on cash and cashequivalents | 2,831,194 | 241,232 | |
| Cash and cash equivalents at beginningof year | 4,687,835 | 1,977,191 | |
| Cash and cash equivalents at end of year | 21 | 948,271 | 4,687,835 |
Cash flow statement
for the year ended 31 December 2023
Note 2023 2022
RUB’000 RUB’000
| Cash flows from operating activities | |||
| Profit before tax Adjustments for: | |||
| ɜDepreciation of property, plant and | |||
| equipmentɜDepreciation of right-of-use assets | |||
| ɜInterest on loans to related parties | |||
| ɜBank interest income | |||
| ɜInterest expense | |||
| ɜGain from sale of subsidiariesɜNet foreign exchange transaction losses/ | |||
| (gains) on financing activitiesOperating cash flows before working capitalchanges | |||
| Changes in working capital: | |||
| ɜDividend income not receivedɜOther assets | |||
| ɜPayables and accrued expenses | |||
| Net cash generated from operations | |||
| Interest received from loans from relatedparties | |||
| Tax paid | |||
| Net cash generated from operating activities | |||
| Cash flows from investing activitiesɜProceeds from sale of subsidiary | |||
| ɜAcquisition of non-controlling interest | |||
| ɜPurchases of property, plant and equipment | |||
| ɜLoans granted to related partiesɜLoan repayments received from relatedparties | |||
| ɜBank interest received |
17,149,958 5,840,632
16 3,450 2,639
17 2,895 2,895
8 - (2,136)
12 (230,352) (100,851)
12 305,416 1,391,809
9 (1,574,173) -
12 (2,953,515) (752,089)
12,703,679 6,382,899
(8,231) 20
649,530 (1,624,666)
(64,466) (50,192)
13,280,512 4,708,061
- 1,267
(703,408) (134,692)
12,577,104 4,574,636
18 4,948,427 -
18/20 - (8,800,000)
16 (4,423) (915)
26 (11,436,444) (6,858)
26 - 174,633
230,352 100,851
Net cash generated from investing activities (6,262,088) (8,532,289)
The notes on pages 270 to 316 are an integral part of these financial statements. Overview
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269 268
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
2023 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 2023. 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 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”.
Notes to the parent company financial statements
1. General information
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. Until 26 February 2024 the address
of its registered office was 20 Omirou Street, CY-3095 Limassol, Cyprus. On 26 February 2024
the Company has completed redomiciliation to ADGM, UAE with the registered address: Office Unit 3,
Floor 6, Al Sila Tower, Abu Dhabi Global Market Square, Al Maryah Island, Abu Dhabi, UAE.
Approval of the parent company financial statements
These parent company financial statements were authorised by the Board of Directors
of the Company on 5 April 2024.
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 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. The Company is the parent
of a group of companies involved in 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.
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.
2. Basis of preparation
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 2023 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. Overview
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271 270
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
2023 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 2023. 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 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”.
Notes to the parent company financial statements
1. General information
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. Until 26 February 2024 the address
of its registered office was 20 Omirou Street, CY-3095 Limassol, Cyprus. On 26 February 2024
the Company has completed redomiciliation to ADGM, UAE with the registered address: Office Unit 3,
Floor 6, Al Sila Tower, Abu Dhabi Global Market Square, Al Maryah Island, Abu Dhabi, UAE.
Approval of the parent company financial statements
These parent company financial statements were authorised by the Board of Directors
of the Company on 5 April 2024.
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 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. The Company is the parent
of a group of companies involved in 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.
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.
2. Basis of preparation
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 2023 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. Overview
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271 270
Notes to the parent company financial statements
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.
Uncertain tax positions
The Company’s uncertain tax positions are reassessed by management at the end of each
reporting period. Liabilities are recorded for income tax positions that are determined
by management as more likely than not to result in additional taxes being levied if the positions
were to be challenged by the tax authorities. The assessment is based on the interpretation
of tax laws that have been enacted or substantively enacted by the end of the reporting period,
and any known court or other rulings on such issues. Liabilities for penalties, interest and taxes
other than on income are recognised based on management’s best estimate of the expenditure
required to settle the obligations at the end of the reporting period. Adjustments for uncertain
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 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 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”
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.
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 Overview
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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.
Uncertain tax positions
The Company’s uncertain tax positions are reassessed by management at the end of each
reporting period. Liabilities are recorded for income tax positions that are determined
by management as more likely than not to result in additional taxes being levied if the positions
were to be challenged by the tax authorities. The assessment is based on the interpretation
of tax laws that have been enacted or substantively enacted by the end of the reporting period,
and any known court or other rulings on such issues. Liabilities for penalties, interest and taxes
other than on income are recognised based on management’s best estimate of the expenditure
required to settle the obligations at the end of the reporting period. Adjustments for uncertain
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 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 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”
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.
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 Overview
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273 272
Notes to the parent company financial statements
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.
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.
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.
income tax positions, other than interest and fines, are recorded within the income tax charge.
Adjustments for uncertain income tax positions in respect of interest and fines are recorded within
finance costs and other gains/(losses), net, respectively.
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.
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:
Number of years
Motor vehicles 3-5 Overview
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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.
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.
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.
income tax positions, other than interest and fines, are recorded within the income tax charge.
Adjustments for uncertain income tax positions in respect of interest and fines are recorded within
finance costs and other gains/(losses), net, respectively.
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.
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:
Number of years
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Notes to the parent company financial statements
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.
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.
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
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.
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.
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. Overview
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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.
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.
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
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.
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.
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. Overview
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277 276
Notes to the parent company financial statements
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.
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 Company has an unconditional right
to defer settlement of the liability for at least twelve months after the balance sheet date.
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. Overview
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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.
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 Company has an unconditional right
to defer settlement of the liability for at least twelve months after the balance sheet date.
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. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
279 278
Notes to the parent company financial statements
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.
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
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.
Share capital, share premium and treasury shares
Ordinary shares are classified as equity.
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. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
281 280
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.
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
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.
Share capital, share premium and treasury shares
Ordinary shares are classified as equity.
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. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
281 280
Notes to the parent company financial statements
–
Clarification of the application of contractual service margin (“CSM”) attributable
to investment-return service and investment-related service and changes
to the corresponding disclosure requirements
– Extension of the risk mitigation option to include reinsurance contracts held and non-
financial derivatives
– Amendments to require an entity that at initial recognition recognises losses on onerous
insurance contracts issued to also recognise a gain on reinsurance contracts held
– Simplified presentation of insurance contracts in the statement of financial position so
that entities would present insurance contract assets and liabilities in the statement
of financial position determined using portfolios of insurance contracts rather than groups
of insurance contracts
– Additional transition relief for business combinations and additional transition relief
for the date of application of the risk mitigation option and the use of the fair value
transition approach
• Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies
– (issued on 12 February 2021 and is effective for annual reporting periods beginning
on or after 1 January 2023). The IASB concluded that the concept of materiality could
be applied in making decisions about the disclosure of accounting policies. Therefore,
the Board decided to amend IAS 1 to replace all instances of the term ‘significant accounting
policies’ with ‘material accounting policy information’. In the Board’s view, accounting
policy information is material if, when considered together with other information included
in an entity’s financial statements, it can reasonably be expected to influence decisions
that the primary users of general purpose financial statements make on the basis of those
financial statements. The Board concluded that these amendments would help entities
reduce immaterial accounting policy disclosures in their financial statements.
• Amendments to IAS 8 – Definition of Accounting Estimates – (issued on 12 February
2021 and is effective for annual reporting periods beginning on or after 1 January 2023).
The amendments replace the definition of a change in accounting estimates with a definition
of accounting estimates. Under the new definition, accounting estimates are “monetary
amounts in financial statements that are subject to measurement uncertainty”. Entities
develop accounting estimates if accounting policies require items in financial statements
to be measured in a way that involves measurement uncertainty. The amendments clarify
that a change in accounting estimate that results from new information or new developments
is not the correction of an error.
• Amendments to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single
Transaction – (issued on 7 May 2021 and is effective for annual reporting periods beginning
on or after 1 January 2023). The IASB amends IAS 12 to provide a further exception from
the initial recognition exemption. Under the amendments, an entity does not apply the initial
recognition exemption for transactions that give rise to equal taxable and deductible
temporary differences.
We understand that, based on management’s assessment, none of the above new standards,
interpretations and amendments to existing standards had any material effect on the Group/
Company. Management’s assessment will be considered during our audit.
Developments in auditing
ISA 600 (Revised 2022) – Audits of Group Financial Statements (Including the Work
of Component Auditors), effective for audits of group financial statements for periods beginning
on or after 15 December 2023. ISA 600 (Revised) includes new and revised requirements and
application material that better aligns the standard with recently revised standards such
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 forms part
of the Company’s finance income, is 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. Transactions with non-controlling interests that do not
result in a change of control are classified as investment activities. Furhermore, principal payments
of deferred consideration are recognised as acquisition of subsidiaries within cash flows from
investing activities.
5. New accounting pronouncements
The new standards, interpretations, and amendments to the existing standards effective for annual
accounting periods commencing on 1 January 2023 are as follows:
• IFRS 17 Insurance Contracts – (issued on 18 May 2017 and is effective for annual reporting
periods beginning on or after 1 January 2023 with earlier application permitted as long as IFRS 9
is also applied). The IASB completed its project on insurance contracts with the issuance
of IFRS 17 Insurance Contracts in May 2017. IFRS 17 replaces IFRS 4 and sets out principles
for the recognition, measurement, presentation and disclosure of insurance contracts within
the scope of IFRS 17. IFRS 17 requires insurance liabilities to be measured at a current fulfilment
value and provides a more uniform measurement and presentation approach for all insurance
contracts. These requirements are designed to achieve the goal of a consistent, principle-based
accounting for insurance contracts.
Amendments to IFRS 17 Insurance Contracts – (issued on 25 June 2020 and is effective for annual
reporting periods beginning on or after 1 January 2023). The main changes are:
– Deferral of the date of initial application of IFRS 17 by two years to annual periods beginning
on or after 1 January 2023
– Additional scope exclusion for credit card contracts and similar contracts that provide
insurance coverage as well as optional scope exclusion for loan contracts that transfer
significant insurance risk
– Recognition of insurance acquisition cash flows relating to expected contract renewals,
including transition provisions and guidance for insurance acquisition cash flows recognised
in a business acquired in a business combination
– Clarification of the application of IFRS 17 in interim financial statements allowing
an accounting policy choice at a reporting entity level Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
283 282
to investment-return service and investment-related service and changes
to the corresponding disclosure requirements
– Extension of the risk mitigation option to include reinsurance contracts held and non-
financial derivatives
– Amendments to require an entity that at initial recognition recognises losses on onerous
insurance contracts issued to also recognise a gain on reinsurance contracts held
– Simplified presentation of insurance contracts in the statement of financial position so
that entities would present insurance contract assets and liabilities in the statement
of financial position determined using portfolios of insurance contracts rather than groups
of insurance contracts
– Additional transition relief for business combinations and additional transition relief
for the date of application of the risk mitigation option and the use of the fair value
transition approach
• Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting Policies
– (issued on 12 February 2021 and is effective for annual reporting periods beginning
on or after 1 January 2023). The IASB concluded that the concept of materiality could
be applied in making decisions about the disclosure of accounting policies. Therefore,
the Board decided to amend IAS 1 to replace all instances of the term ‘significant accounting
policies’ with ‘material accounting policy information’. In the Board’s view, accounting
policy information is material if, when considered together with other information included
in an entity’s financial statements, it can reasonably be expected to influence decisions
that the primary users of general purpose financial statements make on the basis of those
financial statements. The Board concluded that these amendments would help entities
reduce immaterial accounting policy disclosures in their financial statements.
• Amendments to IAS 8 – Definition of Accounting Estimates – (issued on 12 February
2021 and is effective for annual reporting periods beginning on or after 1 January 2023).
The amendments replace the definition of a change in accounting estimates with a definition
of accounting estimates. Under the new definition, accounting estimates are “monetary
amounts in financial statements that are subject to measurement uncertainty”. Entities
develop accounting estimates if accounting policies require items in financial statements
to be measured in a way that involves measurement uncertainty. The amendments clarify
that a change in accounting estimate that results from new information or new developments
is not the correction of an error.
• Amendments to IAS 12 – Deferred Tax related to Assets and Liabilities arising from a Single
Transaction – (issued on 7 May 2021 and is effective for annual reporting periods beginning
on or after 1 January 2023). The IASB amends IAS 12 to provide a further exception from
the initial recognition exemption. Under the amendments, an entity does not apply the initial
recognition exemption for transactions that give rise to equal taxable and deductible
temporary differences.
We understand that, based on management’s assessment, none of the above new standards,
interpretations and amendments to existing standards had any material effect on the Group/
Company. Management’s assessment will be considered during our audit.
Developments in auditing
ISA 600 (Revised 2022) – Audits of Group Financial Statements (Including the Work
of Component Auditors), effective for audits of group financial statements for periods beginning
on or after 15 December 2023. ISA 600 (Revised) includes new and revised requirements and
application material that better aligns the standard with recently revised standards such
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 forms part
of the Company’s finance income, is 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. Transactions with non-controlling interests that do not
result in a change of control are classified as investment activities. Furhermore, principal payments
of deferred consideration are recognised as acquisition of subsidiaries within cash flows from
investing activities.
5. New accounting pronouncements
The new standards, interpretations, and amendments to the existing standards effective for annual
accounting periods commencing on 1 January 2023 are as follows:
• IFRS 17 Insurance Contracts – (issued on 18 May 2017 and is effective for annual reporting
periods beginning on or after 1 January 2023 with earlier application permitted as long as IFRS 9
is also applied). The IASB completed its project on insurance contracts with the issuance
of IFRS 17 Insurance Contracts in May 2017. IFRS 17 replaces IFRS 4 and sets out principles
for the recognition, measurement, presentation and disclosure of insurance contracts within
the scope of IFRS 17. IFRS 17 requires insurance liabilities to be measured at a current fulfilment
value and provides a more uniform measurement and presentation approach for all insurance
contracts. These requirements are designed to achieve the goal of a consistent, principle-based
accounting for insurance contracts.
Amendments to IFRS 17 Insurance Contracts – (issued on 25 June 2020 and is effective for annual
reporting periods beginning on or after 1 January 2023). The main changes are:
– Deferral of the date of initial application of IFRS 17 by two years to annual periods beginning
on or after 1 January 2023
– Additional scope exclusion for credit card contracts and similar contracts that provide
insurance coverage as well as optional scope exclusion for loan contracts that transfer
significant insurance risk
– Recognition of insurance acquisition cash flows relating to expected contract renewals,
including transition provisions and guidance for insurance acquisition cash flows recognised
in a business acquired in a business combination
– Clarification of the application of IFRS 17 in interim financial statements allowing
an accounting policy choice at a reporting entity level Overview
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283 282
Notes to the parent company financial statements
The carrying amounts of monetary assets and liabilities denominated in Euro as at 31 December
2023 and 31 December 2022 are as follows:
Had US Dollar exchange rate strengthened/weakened by 30% (2022: 20% change) against
the Russian Rouble and all other variables remained unchanged, the post-tax profit
of the Company for the year ended 31 December 2023 would have increased/decreased
by RUB 4,503 thousand (2022: RUB 156,399 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 2023 and as of 31 December 2022.
Had Euro exchange rate strengthened/weakened by 30% (2022: 30% change) against
the Russian Rouble and all other variables remained unchanged, the post-tax profit
of the Company for the year ended 31 December 2023 would have increased/decreased
by RUB 200,389 thousand (2022: by RUB 1,437,823 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 2023 and as of 31 December 2022.
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 NIL (2022: RUB NIL) foreign
exchange losses and the “Exchange gains 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 (losses)/gains on cash and cash equivalents, loans and other
receivables and dividends receivable” are disclosed after application of hedge accounting
(i.e., excluding the foreign currency losses/gains arising for the hedging of RUB NIL thousand
(2022: RUB NIL)).
(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 2023
and 31 December 2022 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 2023 and 31 December 2022, 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.
as ISQM 1, ISA220 (Revised) and ISA 315 (Revised 2019). The new and revised requirements
also strengthen the auditor’s responsibilities related to professional skepticism, planning and
performing a group audit, two-way communications between the group auditor and component
auditors, and documentation.
The changes made to ISA 600 (Revised) are intended to:
• Encourage proactive management of quality at the group engagement level and the component
level
• Keep the standard fit for purpose in a wide range of circumstances and in a developing
environment
• Reinforce the need for robust communication and interactions during the group audit
• Foster an appropriately independent and challenging skeptical mindset of the auditor
The revisions aim to drive better quality and more consistent risk assessments, as well as promote
the exercise of professional skepticism.
None of the new standards, amendments to existing standards or interpretations is expected
to have a significant effect on the consolidated 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.
As of the end of December 2023 the Russian Rouble has decreased against the US Dollar from
70.3375 as of 31 December 2022 to 89.6883 Russian Roubles (27.5% decrease) and has decreased
against the Euro from 75.6553 as of 31 December 2022 to 99.1919 Russian Roubles (31.1%
decrease).
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 2023 and
31 December 2022 are as follows:
Overview
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285 284
2023 and 31 December 2022 are as follows:
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Assets Liabilities | 843,889 80,503 | 5,527,38949,967 |
Had US Dollar exchange rate strengthened/weakened by 30% (2022: 20% change) against
the Russian Rouble and all other variables remained unchanged, the post-tax profit
of the Company for the year ended 31 December 2023 would have increased/decreased
by RUB 4,503 thousand (2022: RUB 156,399 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 2023 and as of 31 December 2022.
Had Euro exchange rate strengthened/weakened by 30% (2022: 30% change) against
the Russian Rouble and all other variables remained unchanged, the post-tax profit
of the Company for the year ended 31 December 2023 would have increased/decreased
by RUB 200,389 thousand (2022: by RUB 1,437,823 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 2023 and as of 31 December 2022.
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 NIL (2022: RUB NIL) foreign
exchange losses and the “Exchange gains 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 (losses)/gains on cash and cash equivalents, loans and other
receivables and dividends receivable” are disclosed after application of hedge accounting
(i.e., excluding the foreign currency losses/gains arising for the hedging of RUB NIL thousand
(2022: RUB NIL)).
(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 2023
and 31 December 2022 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 2023 and 31 December 2022, 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.
as ISQM 1, ISA220 (Revised) and ISA 315 (Revised 2019). The new and revised requirements
also strengthen the auditor’s responsibilities related to professional skepticism, planning and
performing a group audit, two-way communications between the group auditor and component
auditors, and documentation.
The changes made to ISA 600 (Revised) are intended to:
• Encourage proactive management of quality at the group engagement level and the component
level
• Keep the standard fit for purpose in a wide range of circumstances and in a developing
environment
• Reinforce the need for robust communication and interactions during the group audit
• Foster an appropriately independent and challenging skeptical mindset of the auditor
The revisions aim to drive better quality and more consistent risk assessments, as well as promote
the exercise of professional skepticism.
None of the new standards, amendments to existing standards or interpretations is expected
to have a significant effect on the consolidated 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.
As of the end of December 2023 the Russian Rouble has decreased against the US Dollar from
70.3375 as of 31 December 2022 to 89.6883 Russian Roubles (27.5% decrease) and has decreased
against the Euro from 75.6553 as of 31 December 2022 to 99.1919 Russian Roubles (31.1%
decrease).
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 2023 and
31 December 2022 are as follows:
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Assets | 17,154 | 902,670 |
| Liabilities | - | 8,962 |
Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
285 284
Notes to the parent company financial statements
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.
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.
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 ‘B1’. 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 Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
287 286
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.
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.
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 ‘B1’. 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 Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
287 286
Notes to the parent company financial statements
The movement in the credit loss allowance for loans receivable during the years 2023 and 2022
is presented in the table below:
During the year 2022, the only movement in the gross carrying amount of the credit impaired
loans receivable were reversals 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 2023 and 31 December 2022 was not material.
During the years 2023 and 2022, the contractual cash flows of the Company’s credit-impaired
loans receivable as at 1 January 2023 and 1 January 2022, 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 modifications were driven by financial difficulties of the counterparty and inability
to make the originally agreed payments and the risks and rewards of the loans did not
change, the modifications did not result in derecognition of the said loans. In addition, these
modifications did not significantly impact the ECL on these loans.
The gross carrying amounts below represent the Company’s maximum exposure to credit risk
on these assets as at 31 December 2022:
Internal credit risk
rating grade
Company definition of category Gross carrying amount
Loans
receivable
Other
receivables
RUB’000 RUB’000
Performing Stage 1 – Counterparties have a low risk
of default and a strong capacity to meet
contractual cash flows
- 2,243,297
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
- -
The gross carrying amounts below represent the Company’s maximum exposure to credit risk
on these assets as at 31 December 2023:
Internal credit risk
rating grade
Company definition of category Gross carrying amount
Loans
receivable
Other
receivables
RUB’000 RUB’000
Performing Stage 1 – Counterparties have a low risk
of default and a strong capacity to meet
contractual cash flows
11,555,856 50,983
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
- 10,490
The gross carrying amounts, as per above, represent the Company’s maximum exposure to credit
risk on these assets as at 31 December 2023 and 31 December 2022, without taking account
of any collateral held. The Company does not hold any collateral as security for any loans
receivable or other receivable balances. Overview
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289 288
is presented in the table below:
| Loans Receivable | ||
| Non-performing | ||
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Opening balance | (1,862,872) | (1,476,783) |
| Reversals | - | - |
| Impairment | 1,862,872 | (386,089) |
| Foreign exchange difference Closing balance | - - | -(1,862,872) |
During the year 2022, the only movement in the gross carrying amount of the credit impaired
loans receivable were reversals 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 2023 and 31 December 2022 was not material.
During the years 2023 and 2022, the contractual cash flows of the Company’s credit-impaired
loans receivable as at 1 January 2023 and 1 January 2022, 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 modifications were driven by financial difficulties of the counterparty and inability
to make the originally agreed payments and the risks and rewards of the loans did not
change, the modifications did not result in derecognition of the said loans. In addition, these
modifications did not significantly impact the ECL on these loans.
The gross carrying amounts below represent the Company’s maximum exposure to credit risk
on these assets as at 31 December 2022:
Internal credit risk
rating grade
Company definition of category Gross carrying amount
Loans
receivable
Other
receivables
RUB’000 RUB’000
Performing Stage 1 – Counterparties have a low risk
of default and a strong capacity to meet
contractual cash flows
- 2,243,297
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
- -
The gross carrying amounts below represent the Company’s maximum exposure to credit risk
on these assets as at 31 December 2023:
Internal credit risk
rating grade
Company definition of category Gross carrying amount
Loans
receivable
Other
receivables
RUB’000 RUB’000
Performing Stage 1 – Counterparties have a low risk
of default and a strong capacity to meet
contractual cash flows
11,555,856 50,983
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
- 10,490
The gross carrying amounts, as per above, represent the Company’s maximum exposure to credit
risk on these assets as at 31 December 2023 and 31 December 2022, without taking account
of any collateral held. The Company does not hold any collateral as security for any loans
receivable or other receivable balances. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
289 288
Notes to the parent company financial statements
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 2023 and 31 December 2022.
The amounts, as per above, represent the Company’s maximum exposure to credit risk on these
financial instruments as at 31 December 2023 and 31 December 2022, 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 2023 and 31 December 2022 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 2023 and 31 December 2022 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.
Liquidity risk
As at 31 December 2023, the Company has an excess of current assets over current
liabilities of RUB 12,491,384 thousand (2022: excess of current assets over current liabilities
of RUB 4,843,276 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.
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 2023 and 31 December 2022:
Gross carrying amount
Rating 2023 2022
RUB’000 RUB’000
2023 and 31 December 2022, based on the general approach of IFRS 9, was immaterial. All cash and
cash equivalents were performing (Stage 1) as at 31 December 2023 and 31 December 2022.
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 2023 and 31 December 2022, none of the Company’s subsidiaries had defaulted
on or breached any covenants on their borrowings/bonds.
1 Russian rating agencies ACRA and RAEX.
2 International rating agency Moody’s Investors Service. Overview
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291 290
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 2023 and 31 December 2022.
| Stage 1 | ||
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| ɜPerforming ɜUnderperforming | 3,201,395 - | 10,818,511- |
| ɜNon-performing Total unrecognised gross amount | - 3,201,395 | -10,818,511 |
The amounts, as per above, represent the Company’s maximum exposure to credit risk on these
financial instruments as at 31 December 2023 and 31 December 2022, 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 2023 and 31 December 2022 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 2023 and 31 December 2022 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.
Liquidity risk
As at 31 December 2023, the Company has an excess of current assets over current
liabilities of RUB 12,491,384 thousand (2022: excess of current assets over current liabilities
of RUB 4,843,276 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.
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 2023 and 31 December 2022:
Gross carrying amount
Rating 2023 2022
RUB’000 RUB’000
| ACRA 1 | AAA(RU) | - 498,924 | |
| ACRA 1 | AA+(RU) | 36 | 29 |
| RAEX 1 | RuA | 9,891 | - |
| Moody’s 2 | A1 | 859,279 | - |
| Moody’s 2 | A2 | - | 4,187,545 |
| Moody’s 2 | B1 | - | 1,337 |
| Moody’s 2 | Baa2 | 77,309 | - |
| Moody’s 2 | Baa3 | 1,756 | - |
| Total | 948,271 | 4,687,835 | |
| 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 | |||
2023 and 31 December 2022, based on the general approach of IFRS 9, was immaterial. All cash and
cash equivalents were performing (Stage 1) as at 31 December 2023 and 31 December 2022.
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 2023 and 31 December 2022, none of the Company’s subsidiaries had defaulted
on or breached any covenants on their borrowings/bonds.
1 Russian rating agencies ACRA and RAEX.
2 International rating agency Moody’s Investors Service. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
291 290
Notes to the parent company financial statements
The rate of borrowings to total capitalisation as at 31 December 2023 and 31 December 2022
are as follows:
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 2023 and 2022. 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.
The table below summarizes the analysis of financial liabilities of the Company by maturity as of 31 December
2023 and 31 December 2022. 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 2023
ɜ
Payables
and accrued
expenses 1
- 12,005 - - - - 12,005
ɜ
Borrowings - - - - - - -
ɜ
Other lease
liabilities
296 592 888 1,777 - - 3,553
ɜ
Financial
guarantee
contracts 2
- 1,582,029 1,266,320 - 353,047 - 3,201,395
296 1,594,626 1,267,208 1,777 353,047 - 3,216,953
31 December 2022
ɜ
Payables
and accrued
expenses 1
- 16,517 - - - - 16,517
ɜ
Borrowings 382,148 - 1,324,737 733,958 2,067,258 11,485,758 15,993,859
ɜ
Other lease
liabilities
236 471 707 1,413 2,488 - 5,314
ɜ
Financial
guarantee
contracts 2
5,662,940 5,155,571 - - - - 10,818,511
6,045,324 5,172,559 1,325,444 735,371 2,069,746 11,485,758 26,834,201
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.
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. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
293 292
are as follows:
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Total borrowings | - | 12,588,696 |
| Total capitalisation Total borrowings to total capitalisation ratio (percentage) | 64,710,823 0.00% | 48,272,61526.08% |
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 2023 and 2022. 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.
The table below summarizes the analysis of financial liabilities of the Company by maturity as of 31 December
2023 and 31 December 2022. 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 2023
ɜ
Payables
and accrued
expenses 1
- 12,005 - - - - 12,005
ɜ
Borrowings - - - - - - -
ɜ
Other lease
liabilities
296 592 888 1,777 - - 3,553
ɜ
Financial
guarantee
contracts 2
- 1,582,029 1,266,320 - 353,047 - 3,201,395
296 1,594,626 1,267,208 1,777 353,047 - 3,216,953
31 December 2022
ɜ
Payables
and accrued
expenses 1
- 16,517 - - - - 16,517
ɜ
Borrowings 382,148 - 1,324,737 733,958 2,067,258 11,485,758 15,993,859
ɜ
Other lease
liabilities
236 471 707 1,413 2,488 - 5,314
ɜ
Financial
guarantee
contracts 2
5,662,940 5,155,571 - - - - 10,818,511
6,045,324 5,172,559 1,325,444 735,371 2,069,746 11,485,758 26,834,201
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.
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. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
293 292
Notes to the parent company financial statements
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 27.
8. Revenue
9. Other losses/(gains) – net
Other losses/(gains) – net 1,567,356 (8,661)
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 the credit risk of the counterparty. Refer to Note 19.
The fair value as at 31 December 2023 and 31 December 2022 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.
The discount rate used for US Dollar denominated loans to related parties as at 31 December 2023
was Nil (31 December 2022: Nil) and for Russian Rouble denominated loans to related parties
as at 31 December 2023 was Nil (31 December 2022: Nil). The fair value measurements of loans
to related parties as at 31 December 2023 and 31 December 2022 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 2023 and
31 December 2022 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 2023, 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 2023.
The discount rate used for Russian Rouble denominated bank borrowings as at 31 December 2023
was 11.0% (Note 23). There were no US Dollar denominated borrowings as at 31 December 2023
and 31 December 2022. The fair value measurements of bank borrowings as at 31 December 2023
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. Overview
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295 294
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 27.
8. Revenue
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Interest on loans to related parties calculated usingthe effective interest rate method (Note 26) | - | 2,136 |
| Dividend income (Note 26) | 13,597,095 | 7,064,907 |
| Total | 13,597,095 | 7,067,043 |
9. Other losses/(gains) – net
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Net foreign exchange transaction (losses)/gains on non-financing activities (Note 14) | (6,817) | (8,661) |
| Gain from sale of subsidiaries (Note 28) | 1,574,173 | - |
Other losses/(gains) – net 1,567,356 (8,661)
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 the credit risk of the counterparty. Refer to Note 19.
The fair value as at 31 December 2023 and 31 December 2022 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.
The discount rate used for US Dollar denominated loans to related parties as at 31 December 2023
was Nil (31 December 2022: Nil) and for Russian Rouble denominated loans to related parties
as at 31 December 2023 was Nil (31 December 2022: Nil). The fair value measurements of loans
to related parties as at 31 December 2023 and 31 December 2022 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 2023 and
31 December 2022 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 2023, 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 2023.
The discount rate used for Russian Rouble denominated bank borrowings as at 31 December 2023
was 11.0% (Note 23). There were no US Dollar denominated borrowings as at 31 December 2023
and 31 December 2022. The fair value measurements of bank borrowings as at 31 December 2023
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. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
295 294
Notes to the parent company financial statements
12. Finance income and costs
13. Income tax expense
10. Expenses by nature
11. Employee benefit expense
1 Includes RUB NIL for the year 2023 (RUB NIL for the year 2022) in fees paid to the Company’s statutory audit firm for tax consultancy services. Overview
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297 296
| 2023 | 2023 | |
| RUB’000 | RUB’000 | |
| Included in finance costs: | ||
| ɜInterest expense on bank borrowings (Note 23) ɜInterest expenses on loans – Related parties (Note 26) | (102,877) (190,809) | (291,615)(713,852) |
| Total interest expense calculated using the effectiveinterest rate method | (293,686) | (1,005,467) |
| ɜInterest expense on other lease liabilities (Note 23) | (199) | (253) |
| ɜImpairment of loans receivable | (11,531) | (386,089) |
| Total finance costs | (305,416) | (1,391,809) |
| Included in finance income: | ||
| ɜInterest income on bank balances | 230,352 | 100,851 |
| Total interest income calculated using the effectiveinterest rate method | 230,352 | 100,851 |
| Total finance income | 230,352 | 100,851 |
| ɜNet foreign exchange transaction (losses)/gainson cash and cash equivalents, loans and otherreceivables and dividends receivable | 2,953,515 | 752,089 |
| Net foreign exchange transactions (losses)/gains fromfinancing activities (Note 14) | 2,953,515 | 752,089 |
| Finance costs – net | 2,878,451 | (538,869) |
13. Income tax expense
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Current tax: | ||
| ɜCorporation tax ɜWithholding tax on dividends receivable | 8,343 702,849 | 180122,886 |
| ɜWithholding tax on bank interest | 558 | 11,807 |
| Total tax expense | 711,750 | 134,873 |
10. Expenses by nature
| 2023 | 2022 | |
| Statutory auditor’s remuneration for statutory audit | RUB’000 11,686 | RUB’0007,722 |
| servicesStatutory auditor’s remuneration for other assurance | 4,308 | 5,398 |
| services | ||
| Advertising and marketing expenses | 1,063 | 1,512 |
| Expenses relating to short-term leases | 899 | 331 |
| Depreciation of property, plant and equipment (Note 16) | 3,450 | 2,639 |
| Depreciation of right-of-use assets (Note 17) | 2,895 | 2,895 |
| Employee benefit expense (Note 11) | 744,373 | 558,370 |
| Legal, consulting and other professional services 1 | 67,837 | 32,014 |
| Bank charges | 2,364 | 14,565 |
| Non-executive directors’ fees (Note 26) | 20,537 | 20,793 |
| Travel expenses | 7,277 | 4,906 |
| Stock exchange and financial regulator fees | 4,438 | 7,151 |
| Taxes other than on income | 254 | 9,710 |
| Other expenses Total marketing costs and administrative expenses | 21,563 892,944 | 10,874678,881 |
11. Employee benefit expense
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Salaries | 323,885 | 204,413 |
| Bonuses | 397,602 | 316,782 |
| Share based compensation | - | 21,954 |
| Social security costs | 22,886 | 15,221 |
| Total employee benefit expense | 744,373 | 558,370 |
| Average number of staff employed during the year | 11 | 9 |
1 Includes RUB NIL for the year 2023 (RUB NIL for the year 2022) in fees paid to the Company’s statutory audit firm for tax consultancy services. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
297 296
Notes to the parent company financial statements
16. Property, plant and equipment
Motor vehicles Total
RUB’000 RUB’000
At 1 January 2022
ɜ
Cost 13,193 13,193
ɜ
Accumulated depreciation (5,154) (5,154)
Net book amount 8,039 8,039
Year ended 31 December 2022
ɜ
Depreciation charge (Note 10) (2,639) (2,639)
Closing net book amount 5,400 5,400
At 31 December 2022/1 January 2023
ɜ
Cost 13,193 13,193
ɜ
Accumulated depreciation (7,793) (7,793)
Net book amount 5,400 5,400
Year ended 31 December 2023
ɜ
Additions 4,423 4,423
ɜ
Depreciation charge (Note 10) (3,450) (3,450)
Closing net book amount 6,373 6,373
At 31 December 2023
ɜ
Cost 17,616 17,616
ɜ
Accumulated depreciation (11,243) (11,243)
Net book amount 6,373 6,373
The tax on the Company’s results before tax differs from the theoretical amount that would arise
using the applicable tax rates as follows:
2023 2022
RUB’000 RUB’000
Profit before tax 17,149,958 5,840,632
ɜ
Tax calculated at the applicable tax rate 2,143,745 730,079
ɜ
Tax effect of expenses not deductible for tax purposes (256,719) (8,068)
ɜ
Tax effect of allowances and income not subject to tax (1,878,683) (710,024)
ɜ
Foreign withholding tax on dividends receivable 703,407 122,886
Tax charge 711,750 134,873
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.
Gains on disposal of qualifying titles (including shares, bonds, debentures, rights thereon etc.)
are exempt from Cyprus income tax.
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)
2023 2022
RUB’000 RUB’000
Finance income and costs (Note 12) 2,953,515 752,089
Other gains - net (Note 9) (6,817) (8,661)
Total foreign exchange gains/(losses) 2,946,698 743,428
15. Dividends
During the years ended 31 December 2023 and 31 December 2022, the Company didn’t declare and
paid dividends. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
299 298
Motor vehicles Total
RUB’000 RUB’000
At 1 January 2022
ɜ
Cost 13,193 13,193
ɜ
Accumulated depreciation (5,154) (5,154)
Net book amount 8,039 8,039
Year ended 31 December 2022
ɜ
Depreciation charge (Note 10) (2,639) (2,639)
Closing net book amount 5,400 5,400
At 31 December 2022/1 January 2023
ɜ
Cost 13,193 13,193
ɜ
Accumulated depreciation (7,793) (7,793)
Net book amount 5,400 5,400
Year ended 31 December 2023
ɜ
Additions 4,423 4,423
ɜ
Depreciation charge (Note 10) (3,450) (3,450)
Closing net book amount 6,373 6,373
At 31 December 2023
ɜ
Cost 17,616 17,616
ɜ
Accumulated depreciation (11,243) (11,243)
Net book amount 6,373 6,373
The tax on the Company’s results before tax differs from the theoretical amount that would arise
using the applicable tax rates as follows:
2023 2022
RUB’000 RUB’000
Profit before tax 17,149,958 5,840,632
ɜ
Tax calculated at the applicable tax rate 2,143,745 730,079
ɜ
Tax effect of expenses not deductible for tax purposes (256,719) (8,068)
ɜ
Tax effect of allowances and income not subject to tax (1,878,683) (710,024)
ɜ
Foreign withholding tax on dividends receivable 703,407 122,886
Tax charge 711,750 134,873
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 contributionfor defence. | ||
Gains on disposal of qualifying titles (including shares, bonds, debentures, rights thereon etc.)
are exempt from Cyprus income tax.
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)
2023 2022
RUB’000 RUB’000
Finance income and costs (Note 12) 2,953,515 752,089
Other gains - net (Note 9) (6,817) (8,661)
Total foreign exchange gains/(losses) 2,946,698 743,428
15. Dividends
During the years ended 31 December 2023 and 31 December 2022, the Company didn’t declare and
paid dividends. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
299 298
Notes to the parent company financial statements
Details of the direct and indirect investments in the subsidiary undertakings are as follows:
Name 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 (%)
2023 2022 2023 2022 2023 2022
New Forwarding
Company, АО
Russia Railway
transportation
100 100 100 100 - -
GTI Management,
OOO
Russia Railway
transportation
100 100 100 100 - -
Ural Wagonrepair
Company, AO
Russia Repair and
maintenance
of rolling
stock
100 100 100 100 - -
Ukrainian New
Forwarding
Company OOO
Ukraine Railway
transportation
100 100 100 100 - -
BaltTransServis,
OOO
Russia Railway
transportation
100 100 100 100 - -
RemTransServis,
OOO 1
Russia Repair and
maintenance
of rolling
stock
- - 100 100 - -
BTS-Locomotive
Solutions OOO 2
Russia Support
activities
for locomotive
traction
- - 100 100 - -
Spacecom AS Estonia Operating
lease
of rolling
stock
- 65.25 - 65.25 - 34.75
Spacecom Trans
AS 3
Estonia Operating
lease
of rolling
stock
- - - 65.25 - 34.75
GLTR Cyprus
Limited
Cyprus Operation
in Cyprus
100 - 100 - - -
17. Right-of-use assets
18. Investments in subsidiary undertakings
2023 2022
RUB’000 RUB’000
At beginning of year 53,951,099 44,851,099
Disposals (1,767,247) -
Incorporation of subsidiaries 26,319 -
Acquisition of subsidiaries - 9,100,000
At end of year 52,210,171 53,951,099
1 RemTransServis, OOO is a 100% subsidiary of BaltTransServis, OOO.
2 BTS-Locomotive Solutions, OOO is a 100% subsidiary of BaltTransServis, OOO.
3 Spacecom Trans AS was 100% subsidiary of Spacecom AS as of 31.12.2022 and disposed during 2023. Overview
ANNUAL REPORT 2023 Financial Statements
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301 300
Name 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 (%)
2023 2022 2023 2022 2023 2022
New Forwarding
Company, АО
Russia Railway
transportation
100 100 100 100 - -
GTI Management,
OOO
Russia Railway
transportation
100 100 100 100 - -
Ural Wagonrepair
Company, AO
Russia Repair and
maintenance
of rolling
stock
100 100 100 100 - -
Ukrainian New
Forwarding
Company OOO
Ukraine Railway
transportation
100 100 100 100 - -
BaltTransServis,
OOO
Russia Railway
transportation
100 100 100 100 - -
RemTransServis,
OOO 1
Russia Repair and
maintenance
of rolling
stock
- - 100 100 - -
BTS-Locomotive
Solutions OOO 2
Russia Support
activities
for locomotive
traction
- - 100 100 - -
Spacecom AS Estonia Operating
lease
of rolling
stock
- 65.25 - 65.25 - 34.75
Spacecom Trans
AS 3
Estonia Operating
lease
of rolling
stock
- - - 65.25 - 34.75
GLTR Cyprus
Limited
Cyprus Operation
in Cyprus
100 - 100 - - -
17. Right-of-use assets
| Offices | Total | |
| RUB’000 | RUB’000 | |
| At 1 January 2022 | ||
| ɜCost | 15,977 | 15,977 |
| ɜAccumulated depreciation | (7,292) | (7,292) |
| Net book amount | 8,685 | 8,685 |
| Year ended 31 December 2022 | ||
| ɜAdditions | 8,685 | 8,685 |
| ɜDepreciation charge (Note 10) | (2,895) | (2,895) |
| Closing net book amount | 5,790 | 5,790 |
| At 31 December 2022/1 January 2023 | ||
| ɜCost | 15,977 | 15,977 |
| ɜAccumulated depreciation | (10,187) | (10,187) |
| Net book amount | 5,790 | 5,790 |
| Year ended 31 December 2023 | ||
| ɜDepreciation charge (Note 10) | (2,895) | (2,895) |
| Closing net book amount | (2,895) | (2,895) |
| At 31 December 2023 | ||
| ɜCost | 15,977 | 15,977 |
| ɜAccumulated depreciation Net book amount | (13,082) (2,895) | (13,082)(2,895) |
18. Investments in subsidiary undertakings
2023 2022
RUB’000 RUB’000
At beginning of year 53,951,099 44,851,099
Disposals (1,767,247) -
Incorporation of subsidiaries 26,319 -
Acquisition of subsidiaries - 9,100,000
At end of year 52,210,171 53,951,099
1 RemTransServis, OOO is a 100% subsidiary of BaltTransServis, OOO.
2 BTS-Locomotive Solutions, OOO is a 100% subsidiary of BaltTransServis, OOO.
3 Spacecom Trans AS was 100% subsidiary of Spacecom AS as of 31.12.2022 and disposed during 2023. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
301 300
Notes to the parent company financial statements
19. Loans and other receivables
The weighted average contractual interest rate on loans receivable from related parties
was 0.0% at 31 December 2023. The weighted average effective interest rate on loans
receivables from related parties was 0.0% at the 31 December 2023.
The other receivables from related parties at 31 December 2023 and at 31 December 2022 carry
no contractual interest.
The carrying value of loans and other receivables at the reporting date approximates their fair
value. As at 31 December 2023, the fair values of US Dollar denominated loans to related parties
are based on cash flows discounted using a rate of Nil (31 December 2022: Nil). The discount
rate used for Russian Rouble denominated loans to related parties as at 31 December 2023
was Nil (31 December 2022: Nil). The fair value measurements of loans to related parties and
other receivables from related parties as at 31 December 2023 and 31 December 2022 are within
level 3 of the fair value hierarchy.
The carrying amounts of the Company’s loans and other receivables are denominated
in the following currencies:
Total loans and other receivables 11,617,329 2,330,277
Acquisition of non-controlling interest in BaltTransServis, OOO
In February 2022 the Company acquired 40% non-controlling interest in BaltTransServis, OOO
following receipt by the Company of the approval from the Federal Antimonopoly Service
of the Russian Federation and satisfaction of the remaining pre-conditions, including payment
of the remaining RUB 8,800,000 thousand of the purchase consideration.
In January 2023 the Group disposed of its shareholding 65.25% in Spacecom AS for EUR 65,300,000.
In September 2023, the Company incorporated a new Cyprus company and holds 100% shares.
The following amounts are included in the statement of cash flows in relation to acquisitions and
disposals of subsidiaries:
2023 2022
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.
Based on assessment performed by management as of 31 December 2023, no indicators
of impairment of the Company’s investments in subsidiary undertakings were identified. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
303 302
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Loans to related parties | 11,555,856 | - |
| Less: Provision for impairment of loans to related parties | - | - |
| Loans to related parties – net (Note 26) | 11,555,856 | - |
| Other receivables – third parties | - | 2,122 |
| Other receivables – related party (Note 26) Total loans and other receivables – net | 61,473 11,617,329 | 2,328,1552,330,277 |
| Less non-current portion: | ||
| ɜLoans to related parties (Note 26) | - | - |
| Total non-current portion Current portion | - 11,617,329 | -2,330,277 |
The weighted average contractual interest rate on loans receivable from related parties
was 0.0% at 31 December 2023. The weighted average effective interest rate on loans
receivables from related parties was 0.0% at the 31 December 2023.
The other receivables from related parties at 31 December 2023 and at 31 December 2022 carry
no contractual interest.
The carrying value of loans and other receivables at the reporting date approximates their fair
value. As at 31 December 2023, the fair values of US Dollar denominated loans to related parties
are based on cash flows discounted using a rate of Nil (31 December 2022: Nil). The discount
rate used for Russian Rouble denominated loans to related parties as at 31 December 2023
was Nil (31 December 2022: Nil). The fair value measurements of loans to related parties and
other receivables from related parties as at 31 December 2023 and 31 December 2022 are within
level 3 of the fair value hierarchy.
The carrying amounts of the Company’s loans and other receivables are denominated
in the following currencies:
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| US Dollars | - | - |
| Russian Roubles | 61,473 | 89,102 |
| Euro | 11,555,856 | 2,241,175 |
Total loans and other receivables 11,617,329 2,330,277
Acquisition of non-controlling interest in BaltTransServis, OOO
In February 2022 the Company acquired 40% non-controlling interest in BaltTransServis, OOO
following receipt by the Company of the approval from the Federal Antimonopoly Service
of the Russian Federation and satisfaction of the remaining pre-conditions, including payment
of the remaining RUB 8,800,000 thousand of the purchase consideration.
In January 2023 the Group disposed of its shareholding 65.25% in Spacecom AS for EUR 65,300,000.
In September 2023, the Company incorporated a new Cyprus company and holds 100% shares.
The following amounts are included in the statement of cash flows in relation to acquisitions and
disposals of subsidiaries:
2023 2022
| RUB’000 | RUB’000 | |
| Proceeds from sale of SC | 4,948,427 | - |
| Acquisition of non-controlling interest in BaltTransServis, | - | (8,800,000) |
| OOO | ||
| Total net cash inflow | 4,948,427 | (8,800,000) |
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.
Based on assessment performed by management as of 31 December 2023, no indicators
of impairment of the Company’s investments in subsidiary undertakings were identified. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
303 302
Notes to the parent company financial statements
22. Share capital, share premium and treasury shares
Number
of shares
Share capital Share premium Total
USD’000 USD’000 USD’000
At 1 January 2022/31
December 2022/1 January
2023
178,740,916 17,875 949,471 967,346
31 December 2023 178,318,259 17,832 949,471 967,303
Number
of shares
Share capital Share premium Total
RUB’000 RUB’000 RUB’000
At 1 January 2022/
31 December 2022/
1 January 2023
178,740,916 516,957 27,929,478 28,446,435
ɜ
Cancellation of treasury
shares
(422,657) (1,222) - -
At 31 December 2023 178,318,259 515,735 27,929,478 28,445,213
The total authorised number of ordinary shares at 31 December 2023 was 233,495,471 shares
with a par value of US$0.10 per share (31 December 2022: 233,918,128 shares with a par value
of US$0.10 per share). All issued shares are fully paid.
As of 31 December 2023, the Company didn’t have treasury shares (31 December 2022 –
422,657 GDRs which were held in treasury for a total consideration of 1.254 thousand US
Dollars (equivalent to RUB 145,993 thousand).
20. Other assets
21. Cash and cash equivalents
Cash and cash equivalents include the following for the purposes of the cash flow statement:
2023 2022
RUB’000 RUB’000
Cash and cash equivalents 948,271 4,687,835
948,271 4,687,835
Cash and cash equivalents are denominated in the following currencies:
Total cash and cash equivalents 948,271 4,687,835
The carrying value of cash and cash equivalents approximates their fair value. Overview
ANNUAL REPORT 2023 Financial Statements
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305 304
Number
of shares
Share capital Share premium Total
USD’000 USD’000 USD’000
At 1 January 2022/31
December 2022/1 January
2023
178,740,916 17,875 949,471 967,346
31 December 2023 178,318,259 17,832 949,471 967,303
Number
of shares
Share capital Share premium Total
RUB’000 RUB’000 RUB’000
At 1 January 2022/
31 December 2022/
1 January 2023
178,740,916 516,957 27,929,478 28,446,435
ɜ
Cancellation of treasury
shares
(422,657) (1,222) - -
At 31 December 2023 178,318,259 515,735 27,929,478 28,445,213
The total authorised number of ordinary shares at 31 December 2023 was 233,495,471 shares
with a par value of US$0.10 per share (31 December 2022: 233,918,128 shares with a par value
of US$0.10 per share). All issued shares are fully paid.
As of 31 December 2023, the Company didn’t have treasury shares (31 December 2022 –
422,657 GDRs which were held in treasury for a total consideration of 1.254 thousand US
Dollars (equivalent to RUB 145,993 thousand).
20. Other assets
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Prepayments – third parties | 9,838 | 1,607 |
| Total other assets | 9,838 | 1,607 |
| Less non-current portion: | ||
| Prepayments – third parties (Note 18) | - | 915 |
| Total non-current portion Current portion | - 9,838 | 915692 |
21. Cash and cash equivalents
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Cash at bank Total cash and cash equivalents | 948,271 948,271 | 4,687,8354,687,835 |
Cash and cash equivalents include the following for the purposes of the cash flow statement:
2023 2022
RUB’000 RUB’000
Cash and cash equivalents 948,271 4,687,835
948,271 4,687,835
Cash and cash equivalents are denominated in the following currencies:
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| US Dollars | 17,154 | 902,670 |
| Russian Roubles | 87,228 | 498,951 |
| Euro | 843,889 | 3,286,214 |
Total cash and cash equivalents 948,271 4,687,835
The carrying value of cash and cash equivalents approximates their fair value. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
305 304
Notes to the parent company financial statements
The weighted average effective interest rates at the balance sheet are as follows:
The carrying amount and fair value of current and non-current borrowings are as follows:
The fair value of borrowings and other liabilities were determined using valuation techniques.
As at 31 December 2022, 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 2022. The discount rate used
was a level 2 discount rate of 11.10% as at 31 December 2022.
The carrying amounts of the borrowings are denominated in the following currencies:
Total borrowings - 12,588,696
The Company has the following undrawn borrowing facilities:
- 16,293,400
Drawdowns under certain of the above credit facilities are subject to successful conclusion
of additional agreements with the lenders, which, amongst others, will specify the terms
of each disbursement.
23. Borrowings
2023 2022
RUB’000 RUB’000
Maturity of non-current borrowings
Between 1 and 2 years - 1,182,851
Between 2 and 5 years - 9,348,526
- 10,531,377
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:
- 12,588,696
фNote: 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 2022 are secured by pledge of rolling stock
held by the Company’s subsidiary GTI Management, OOO with a pledged market value
RUB 6,439,751 thousand. Overview
ANNUAL REPORT 2023 Financial Statements
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307 306
| 2023 | 2022 | |
| % | % | |
| Bank borrowings | - | 7.34 |
| Loans from related parties | - | 9.00 |
The carrying amount and fair value of current and non-current borrowings are as follows:
| Carrying amount | Fair value | ||||
| 2023 | 2022 | 2023 | 2022 | ||
| RUB’000 | RUB’000 | RUB’000 | RUB’000 | ||
| Bank borrowings | - | 3,168,244 | - | 3,048,328 | |
| Loans from related parties | - - | 9,420,452 12,588,696 | - - | 8,695,88211,744,210 | |
The fair value of borrowings and other liabilities were determined using valuation techniques.
As at 31 December 2022, 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 2022. The discount rate used
was a level 2 discount rate of 11.10% as at 31 December 2022.
The carrying amounts of the borrowings are denominated in the following currencies:
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Russian Roubles | - | 12,588,696 |
Total borrowings - 12,588,696
The Company has the following undrawn borrowing facilities:
| 2023 | 2022 | |
| Fixed rate: | RUB’000 | RUB’000 |
| ɜExpiring beyond one year | - | 16,293,400 |
- 16,293,400
Drawdowns under certain of the above credit facilities are subject to successful conclusion
of additional agreements with the lenders, which, amongst others, will specify the terms
of each disbursement.
23. Borrowings
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Current | ||
| ɜBank borrowings | - | 1,343,467 |
| ɜLoans from related parties | - | 713,852 |
| Total current borrowings | - | 2,057,319 |
| Non-current | ||
| ɜBank borrowings | - | 1,824,777 |
| ɜLoans from related parties | - | 8,706,600 |
| Total non-current borrowings Total borrowings | - - | 10,531,37712,588,696 |
2023 2022
RUB’000 RUB’000
Maturity of non-current borrowings
Between 1 and 2 years - 1,182,851
Between 2 and 5 years - 9,348,526
- 10,531,377
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:
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| 6 months or less | - | 696,486 |
| 6 to 12 months | - | 646,981 |
| 1 to 5 years | - | 11,245,229 |
- 12,588,696
фNote: 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 2022 are secured by pledge of rolling stock
held by the Company’s subsidiary GTI Management, OOO with a pledged market value
RUB 6,439,751 thousand. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
307 306
Notes to the parent company financial statements
24. Other lease liabilities
- 2,488
25. Payables and accrued expenses
Total current trade and other payables 80,501 115,383
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:
US dollar - 8,962
Total payables and accrued expenses 80,501 115,383
Reconciliation of liabilities arising from financing activities:
Bank
borrowing
Other lease
liabilities
Total liabilities
from financing
activities
RUB’000 RUB’000 RUB’000
Opening balance 1 January 2023 12,588,696 5,314 12,594,010
Cash flows:
ɜ
Amounts advanced - - -
ɜ
Repayment of principal (11,841,521) (3,193) (11,844,714)
ɜ
Interest paid (1,040,861) (199) (1,041,060)
Non-cash changes:
ɜ
Interest expense 293,686 199 293,885
ɜ
Foreign exchange gains - 1,432 1,432
At end of year - 3,553 3,553
Bank
borrowings
Other lease
liabilities
Total liabilities
from financing
activities
RUB’000 RUB’000 RUB’000
Opening balance 1 January 2022 5,039,086 8,685 5,047,771
Cash flows:
ɜ
Amounts advanced 8,706,600 8,706,600
ɜ
Repayment of principal (1,865,079) (2,328) (1,867,407)
ɜ
Interest paid (297,378) (253) (297,631)
Non-cash changes:
ɜ
Interest expense 1,005,467 253 1,005,720
ɜ
Foreign exchange losses - (1,043) (1,043)
At end of year 12,588,696 5,314 12,594,010 Overview
ANNUAL REPORT 2023 Financial Statements
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309 308
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Current lease liabilities | 3,553 | 2,826 |
| Non-current lease liabilities | - | 2,488 |
| Total lease liabilities | 3,553 | 5,314 |
| Maturity of other lease liabilities | ||
| ɜBetween 1 and 2 years | - | 2,488 |
| ɜBetween 2 and 5 years | - | - |
- 2,488
25. Payables and accrued expenses
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Current | ||
| ɜAccrued key management personnel compensation,including share based payment (Note 26) | 32,626 | 93,195 |
| ɜAccrued expenses | 11,685 | 5,671 |
| ɜOther payables to third parties | 12,005 | 16,517 |
| ɜOther payables to related parties | 24,185 | - |
Total current trade and other payables 80,501 115,383
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:
| 2023 RUB’000 | 2022RUB’000 | |
| Euro | 80,501 | 49,967 |
| Russian Roubles | - | 56,454 |
US dollar - 8,962
Total payables and accrued expenses 80,501 115,383
Reconciliation of liabilities arising from financing activities:
Bank
borrowing
Other lease
liabilities
Total liabilities
from financing
activities
RUB’000 RUB’000 RUB’000
Opening balance 1 January 2023 12,588,696 5,314 12,594,010
Cash flows:
ɜ
Amounts advanced - - -
ɜ
Repayment of principal (11,841,521) (3,193) (11,844,714)
ɜ
Interest paid (1,040,861) (199) (1,041,060)
Non-cash changes:
ɜ
Interest expense 293,686 199 293,885
ɜ
Foreign exchange gains - 1,432 1,432
At end of year - 3,553 3,553
Bank
borrowings
Other lease
liabilities
Total liabilities
from financing
activities
RUB’000 RUB’000 RUB’000
Opening balance 1 January 2022 5,039,086 8,685 5,047,771
Cash flows:
ɜ
Amounts advanced 8,706,600 8,706,600
ɜ
Repayment of principal (1,865,079) (2,328) (1,867,407)
ɜ
Interest paid (297,378) (253) (297,631)
Non-cash changes:
ɜ
Interest expense 1,005,467 253 1,005,720
ɜ
Foreign exchange losses - (1,043) (1,043)
At end of year 12,588,696 5,314 12,594,010 Overview
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309 308
Notes to the parent company financial statements
(b) Loans from related parties
The balances at the 31 December 2022 carry a weighted average contractual interest rate
of 9.0% per annum. The weighted average effective interest rate at the 31 December 2022
was 9.0%.
(c) Other receivables from related parties
At end of year 61,473 2,328,155
ɜ
Subsidiaries (Note 8) 13,597,095 7,064,907
Total 13,597,095 7,064,907
26. Related party transactions
Litten Investments Ltd, controlled by a Director of the Company, has a shareholding
in the Company of 5.1% as at 31 December 2023 (31 December 2022: 5.1%).
Goldriver Resources Ltd, which has a shareholding in the Company of 3.1% as at 31 December 2023
(2022: 3.1%), is controlled by a Director of the Company.
As at 31 December 2023, another 0.1% (2022: 0.1%) 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) Loans to related parties
2023 2022
RUB’000 RUB’000
Loans to subsidiaries:
ɜ
At beginning of year - 506,351
ɜ
Loan advances 11,436,444 6,858
ɜ
Interest charged (Note 8) - 2,136
ɜ
Loan repaid during the year - (174,633)
ɜ
Interest repaid during the year - (1,267)
ɜ
Impairment (11,531) (386,089)
ɜ
Reversal of impairment - -
ɜ
Net foreign exchange 130,943 46,644
At end of year 11,555,856 -
Consists of:
ɜ
Non-current portion - -
ɜ
Current portion 11,555,856 -
At end of year 11,555,856 -
Loans to related parties – gross amount 11,555,856 -
Less: Provision for impairment of loans to related parties - -
Loans to related parties – net 11,555,856 -
The balances at the 31 December 2023 carry a weighted average contractual interest rate of 0.0%
per annum. Overview
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311 310
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Loans from subsidiaries: | ||
| ɜAt beginning of year | 9,420,452 | - |
| ɜLoan advances | (8,706,600) | 8,706,600 |
| ɜInterest charged (Note 8) | 190,809 | 713,852 |
| ɜInterest charged (Note 8) | (904,661) | - |
| At end of year | - | 9,420,452 |
| Consists of: | ||
| ɜNon-current portion | - | 8,706,600 |
| ɜCurrent portion | - | 713,852 |
| At end of year | - | 9,420,452 |
The balances at the 31 December 2022 carry a weighted average contractual interest rate
of 9.0% per annum. The weighted average effective interest rate at the 31 December 2022
was 9.0%.
(c) Other receivables from related parties
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Other receivables (dividends) | ||
| ɜSubsidiaries | 61,473 | 2,328,155 |
| At end of year | 61,473 | 2,328,155 |
| Consists of: | ||
| Non-current portion | - | - |
| Current portion | 61,473 | 2,328,155 |
At end of year 61,473 2,328,155
| (d) Dividend income from related parties | ||
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Dividend income from related parties: |
ɜ
Subsidiaries (Note 8) 13,597,095 7,064,907
Total 13,597,095 7,064,907
26. Related party transactions
Litten Investments Ltd, controlled by a Director of the Company, has a shareholding
in the Company of 5.1% as at 31 December 2023 (31 December 2022: 5.1%).
Goldriver Resources Ltd, which has a shareholding in the Company of 3.1% as at 31 December 2023
(2022: 3.1%), is controlled by a Director of the Company.
As at 31 December 2023, another 0.1% (2022: 0.1%) 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) Loans to related parties
2023 2022
RUB’000 RUB’000
Loans to subsidiaries:
ɜ
At beginning of year - 506,351
ɜ
Loan advances 11,436,444 6,858
ɜ
Interest charged (Note 8) - 2,136
ɜ
Loan repaid during the year - (174,633)
ɜ
Interest repaid during the year - (1,267)
ɜ
Impairment (11,531) (386,089)
ɜ
Reversal of impairment - -
ɜ
Net foreign exchange 130,943 46,644
At end of year 11,555,856 -
Consists of:
ɜ
Non-current portion - -
ɜ
Current portion 11,555,856 -
At end of year 11,555,856 -
Loans to related parties – gross amount 11,555,856 -
Less: Provision for impairment of loans to related parties - -
Loans to related parties – net 11,555,856 -
The balances at the 31 December 2023 carry a weighted average contractual interest rate of 0.0%
per annum. Overview
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311 310
Notes to the parent company financial statements
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.
(h) Impairment losses
(i) Key management personnel compensation
610,056 554,597
(j) Directors’ remuneration
Total directors’ remuneration 447,627 319,844
32,626 93,195
(j) Loan commitments under borrowings from subsidiaries
As at 31 December 2023, the Company had undrawn facilities amounting to RUB 6,293,400
(at 31 December 2022 – RUB 6,293,400) thousand under borrowings agreements with subsidiary
undertakings. These mature within 2026.
(e) Interest income
(f) Interest expenses
interest rate method
(g) 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:
2023 2022
RUB’000 RUB’000
as the guarantor for the obligations 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 2023 and 31 December
2022 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 2023 and
31 December 2022 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.
1 Represents the maximum amount of obligation under each contract, being the contractual undiscounted cash flows under the loan
agreements as at 31 December 2023 and 2022.
2 Key management salaries and other short term employee benefits’ include directors’ remuneration amounting to RUB 447,627 thousand
(2022: RUB 319,844 thousand), analysed as per below. Overview
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313 312
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.
(h) Impairment losses
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Impairment losses of loans to subsidiaries (Note 19) | (11,531) | (386,089) |
(i) Key management personnel compensation
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Key management salaries and other short-term employeebenefits 2 | 610,056 | 532,643 |
| Share based compensation | - | 21,954 |
610,056 554,597
(j) Directors’ remuneration
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Directors’ fees (Note 10) | 20,537 | 20,793 |
| Emoluments in their executive capacity | 427,090 | 299,051 |
Total directors’ remuneration 447,627 319,844
| (i) Year-end balances arising from payables to key management | ||
| 2023 | 2022 | |
| Accrued key management remuneration (Note 25): | RUB’000 | RUB’000 |
| ɜAccrued salaries and other short-term employee benefits | 32,626 | 71,241 |
| ɜShare based payment liability | - | 21,954 |
32,626 93,195
(j) Loan commitments under borrowings from subsidiaries
As at 31 December 2023, the Company had undrawn facilities amounting to RUB 6,293,400
(at 31 December 2022 – RUB 6,293,400) thousand under borrowings agreements with subsidiary
undertakings. These mature within 2026.
(e) Interest income
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Interest income: | ||
| ɜInterest on loans to subsidiaries (Note 8) | - | 2,136 |
| Total interest income calculated using the effectiveinterest rate method | - | 2,136 |
(f) Interest expenses
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Interest expenses: | ||
| ɜInterest on loans from subsidiaries (Note 12) Total interest expenses calculated using the effective | (190,809) (190,809) | (713,852)(713,852) |
interest rate method
(g) 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:
2023 2022
RUB’000 RUB’000
| Subsidiaries 1 | 3,201,395 | 10,818,511 |
| Total guaranteed obligations | 3,201,395 | 10,818,511 |
| During the years ended 31 December 2023 and 31 December 2022 the Company has acted |
as the guarantor for the obligations 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 2023 and 31 December
2022 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 2023 and
31 December 2022 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.
1 Represents the maximum amount of obligation under each contract, being the contractual undiscounted cash flows under the loan
agreements as at 31 December 2023 and 2022.
2 Key management salaries and other short term employee benefits’ include directors’ remuneration amounting to RUB 447,627 thousand
(2022: RUB 319,844 thousand), analysed as per below. Overview
ANNUAL REPORT 2023 Financial Statements
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313 312
Notes to the parent company financial statements
The financial effect of the current crisis on the global economy and overall business activities
cannot be estimated with reasonable certainty at this stage, due to the pace at which
the conflict prevails and the high level of uncertainties arising from the inability to reliably
predict the outcome.
The event did not exist in the reporting period and is therefore not reflected in the recognition
and measurement of the assets and liabilities in the financial statements as at 31 December
2023 as it is considered as a non-adjusting event.
The Group actively monitors political developments on an ongoing basis. However,
the macroeconomic situation in Ukraine, Russia is out of Management’s control. The scope and
impact of any new potential sanctions (and any counter-sanctions) is yet unknown, however
they might further affect key Russian financial institutions as well as companies operating
in the Russian Federation.
Fluctuations in foreign exchange rates may also impact the operations of the Goup. The Russian
central bank had raised the key rate of interest from 9,5% to 20% as a preventive measure
to stop the devaluation of the RUB.
The Group continues to monitor the situation and implement a set of measures to minimize
the impact of possible risks on the Group’s operations and financial position.
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 2023 and 2022 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. 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
(k) Guarantees from subsidiaries
Borrowings with a carrying amount of RUB 3,168,245 thousand as of 31 December 2022 are secured
by pledge of rolling stock held by the Company’s subsidiary GTI Management, OOO with a pledged
market value RUB 3,640,452 thousand.
(l) Other payables to related parties
27. Contingencies
Operating environment of the Company
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. Ongoing
political tension in the region and sanctions against certain Russian companies and individuals
have an additional negative impact on the Russian economy.
The geopolitical situation in Eastern Europe intensified on 24 February 2022 with
the commencement of the conflict between Russia and Ukraine. As at the date of authorizing
these financial statements for issue, the conflict continues to evolve as military activity proceeds.
In addition to the impact of the events on entities that have operations in Russia or Ukraine or that
conduct business with their counterparties, the conflict is increasingly affecting economies and
financial markets globally and exacerbating ongoing economic challenges.
The European Union as well as United States of America, Switzerland, United Kingdom and other
countries imposed a series of restrictive measures (sanctions) against the Russian government,
various companies, and certain individuals. The sanctions imposed include an asset freeze and
a prohibition from making funds available to the sanctioned individuals and entities. In addition,
travel bans applicable to the sanctioned individuals prevent them from entering or transiting
through the relevant territories. The Republic of Cyprus has adopted the United Nations and
European Union measures. The rapid deterioration of the conflict in Ukraine may as well lead
to the possibility of further sanctions in the future.
Emerging uncertainty regarding global supply of commodities due to the conflict between Russia
and Ukraine conflict may also disrupt certain global trade flows and place significant upwards
pressure on commodity prices and input costs as seen through early March 2022. Challenges
for companies may include availability of funding to ensure access to raw materials, ability
to finance margin payments and heightened risk of contractual non-performance.
The impact on the Group largely depends on the nature and duration of uncertain and
unpredictable events, such as further military action, additional sanctions, and reactions
to ongoing developments by global financial markets. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
315 314
cannot be estimated with reasonable certainty at this stage, due to the pace at which
the conflict prevails and the high level of uncertainties arising from the inability to reliably
predict the outcome.
The event did not exist in the reporting period and is therefore not reflected in the recognition
and measurement of the assets and liabilities in the financial statements as at 31 December
2023 as it is considered as a non-adjusting event.
The Group actively monitors political developments on an ongoing basis. However,
the macroeconomic situation in Ukraine, Russia is out of Management’s control. The scope and
impact of any new potential sanctions (and any counter-sanctions) is yet unknown, however
they might further affect key Russian financial institutions as well as companies operating
in the Russian Federation.
Fluctuations in foreign exchange rates may also impact the operations of the Goup. The Russian
central bank had raised the key rate of interest from 9,5% to 20% as a preventive measure
to stop the devaluation of the RUB.
The Group continues to monitor the situation and implement a set of measures to minimize
the impact of possible risks on the Group’s operations and financial position.
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 2023 and 2022 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. 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
(k) Guarantees from subsidiaries
Borrowings with a carrying amount of RUB 3,168,245 thousand as of 31 December 2022 are secured
by pledge of rolling stock held by the Company’s subsidiary GTI Management, OOO with a pledged
market value RUB 3,640,452 thousand.
(l) Other payables to related parties
| 2023 | 2022 | |
| RUB’000 | RUB’000 | |
| Accrued key management remuneration (Note 25): | ||
| ɜOther payables to related parties | 24,185 24,185 | -- |
27. Contingencies
Operating environment of the Company
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. Ongoing
political tension in the region and sanctions against certain Russian companies and individuals
have an additional negative impact on the Russian economy.
The geopolitical situation in Eastern Europe intensified on 24 February 2022 with
the commencement of the conflict between Russia and Ukraine. As at the date of authorizing
these financial statements for issue, the conflict continues to evolve as military activity proceeds.
In addition to the impact of the events on entities that have operations in Russia or Ukraine or that
conduct business with their counterparties, the conflict is increasingly affecting economies and
financial markets globally and exacerbating ongoing economic challenges.
The European Union as well as United States of America, Switzerland, United Kingdom and other
countries imposed a series of restrictive measures (sanctions) against the Russian government,
various companies, and certain individuals. The sanctions imposed include an asset freeze and
a prohibition from making funds available to the sanctioned individuals and entities. In addition,
travel bans applicable to the sanctioned individuals prevent them from entering or transiting
through the relevant territories. The Republic of Cyprus has adopted the United Nations and
European Union measures. The rapid deterioration of the conflict in Ukraine may as well lead
to the possibility of further sanctions in the future.
Emerging uncertainty regarding global supply of commodities due to the conflict between Russia
and Ukraine conflict may also disrupt certain global trade flows and place significant upwards
pressure on commodity prices and input costs as seen through early March 2022. Challenges
for companies may include availability of funding to ensure access to raw materials, ability
to finance margin payments and heightened risk of contractual non-performance.
The impact on the Group largely depends on the nature and duration of uncertain and
unpredictable events, such as further military action, additional sanctions, and reactions
to ongoing developments by global financial markets. Overview
ANNUAL REPORT 2023 Financial Statements
Strategic Report Sustainability Report Governance Financial Statements Additional Information
315 314
Notes to the parent company financial statements
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. Estonia represents well-developed market and economy with stable political systems and
developed legislation based on EU requirements and regulations.
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.
28. Business combinations
Disposal of subsidiary
In January 2023 the Company disposed of 65.25% of Spacecom AS, Estonia for EUR 65,300,000
(RUB 4,948,427 thousand) realising a profit from sale of RUB 1,574,173 thousand.
29. Events after the balance sheet date
On 26 February 2024, the Company has completed redomiciliation to ADGM,
UAE with the registered address: Office Unit 3, Floor 6, Al Sila Tower, Abu Dhabi Global Market
Square, Al Maryah Island, Abu Dhabi, UAE.
There were no other material post balance sheet events which have a bearing on the understanding
of these consolidated financial statements.
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317 316
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. Estonia represents well-developed market and economy with stable political systems and
developed legislation based on EU requirements and regulations.
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.
28. Business combinations
Disposal of subsidiary
In January 2023 the Company disposed of 65.25% of Spacecom AS, Estonia for EUR 65,300,000
(RUB 4,948,427 thousand) realising a profit from sale of RUB 1,574,173 thousand.
29. Events after the balance sheet date
On 26 February 2024, the Company has completed redomiciliation to ADGM,
UAE with the registered address: Office Unit 3, Floor 6, Al Sila Tower, Abu Dhabi Global Market
Square, Al Maryah Island, Abu Dhabi, UAE.
There were no other material post balance sheet events which have a bearing on the understanding
of these consolidated financial statements.
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Overview
ANNUAL REPORT 2023 Additional Information 319
Strategic Report Sustainability Report Governance Financial Statements Additional Information
318
Additional
Information
Additional Information
p. 320
Selected Operational
Information
Read more →
p. 323
Definitions
Read more →
p. 326
Presentation of Financial
and Other Information
Read more →
p. 328
Contacts
Read more →
In this section
ANNUAL REPORT 2023 Additional Information 319
Strategic Report Sustainability Report Governance Financial Statements Additional Information
318
Additional
Information
Additional Information
p. 320
Selected Operational
Information
Read more →
p. 323
Definitions
Read more →
p. 326
Presentation of Financial
and Other Information
Read more →
p. 328
Contacts
Read more →
In this section
Overview
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Fleet
31.12.2022
Owned Fleet
Gondola cars 42,292
Rail tank cars 18,454
Locomotives 71
Other railcars 1,537
Total 62,354
Owned Fleet as % of Total Fleet 94%
Leased-in Fleet
Gondola cars 3,419
Rail tank cars 342
Locomotives 0
Total 3,761
Leased-in Fleet as % of Total Fleet 6%
Total Fleet (Owned Fleet and Leased-in Fleet)
Gondola cars 45,711
Rail tank cars 18,796
Locomotives 71
Other railcars 1,537
Total 66,115
Total Fleet by type, %
Gondola cars 69%
Rail tank cars 28%
Locomotives 0.1%
Other railcars 2%
Total 100% 100% - -
Selected Operational
Information for the year
ended 31 December 2023
2022 2023 Change Change, %
114.5 109.5 (5.1) -4%
20.4 19.6 (0.8) -4%
134.9 129.0 (5.9) -4%
85% 85% - -
15% 15% - -
100% 100% - -
58.1 55.5 (2.7) -5%
18.9 18.1 (0.8) -4%
77.0 73.5 (3.5) -5%
Engaged Fleet), billion tonnes-km
141.4 138.8 (2.7) -2%
Transportation Volume (including
Engaged Fleet), million tonnes
80.4 78.6 (1.8) -2%
Average Rolling Stock Operated, units
Gondola cars 44,240 44,663 423 1%
Rail tank cars 12,332 12,446 115 1%
Locomotives 49 42 (7) -15%
Total 56,637 57,153 517 1%
31.12.2022 31.12.2023 Change Change, %
7,474 6,164 (1,310) -18%
11% 9% - -
13.7 14.5 - -
17.3 17.7 - -
15.0 15.9 - -
4.1 4.9 - -
14.5 15.2 - -
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Fleet
31.12.2022
| 31.12.2023 Change Change, % | Leased-out Fleet | |||
| Leased-out Fleet as % of Total Fleet | ||||
| 42,267 (25) 0% | Average age of Owned Fleet | |||
| 17,973 (481) -3% | Gondola cars | |||
| 65 (6) -8% | Rail tank cars Locomotives | |||
| 1,508 (29) -2%61,813 (541) -1% | Other railcars | |||
| Total | ||||
| 94% - - | ||||
| 3,419 0 0% | ||||
| 411 69 20% | Operation of rolling stock | |||
| 1 1 0% | ||||
| 3,831 70 2% | Freight Rail Turnover (excluding Engaged Fleet), billion tonnes-km | |||
| Gondola cars | ||||
| 6% - - | Rail tank cars | |||
| Total | ||||
| 45,686 (25) 0%18,384 (412) -2% | Freight Rail Turnover (excluding Engaged Fleet) by fleet type, % | |||
| 66 (5) -7% | Gondola cars | |||
| Rail tank cars | ||||
| 1,508 (29) -2% | Total | |||
| 65,644 (471) -1% | Transportation Volume (excluding Engaged Fleet), million tonnes | |||
| Gondola cars | ||||
| 70% - - | Rail tank cars | |||
| 28% - - | Total | |||
| 0.1% - -2% - - | Freight Rail Turnover (including |
Owned Fleet
Gondola cars 42,292
Rail tank cars 18,454
Locomotives 71
Other railcars 1,537
Total 62,354
Owned Fleet as % of Total Fleet 94%
Leased-in Fleet
Gondola cars 3,419
Rail tank cars 342
Locomotives 0
Total 3,761
Leased-in Fleet as % of Total Fleet 6%
Total Fleet (Owned Fleet and Leased-in Fleet)
Gondola cars 45,711
Rail tank cars 18,796
Locomotives 71
Other railcars 1,537
Total 66,115
Total Fleet by type, %
Gondola cars 69%
Rail tank cars 28%
Locomotives 0.1%
Other railcars 2%
Total 100% 100% - -
Selected Operational
Information for the year
ended 31 December 2023
2022 2023 Change Change, %
114.5 109.5 (5.1) -4%
20.4 19.6 (0.8) -4%
134.9 129.0 (5.9) -4%
85% 85% - -
15% 15% - -
100% 100% - -
58.1 55.5 (2.7) -5%
18.9 18.1 (0.8) -4%
77.0 73.5 (3.5) -5%
Engaged Fleet), billion tonnes-km
141.4 138.8 (2.7) -2%
Transportation Volume (including
Engaged Fleet), million tonnes
80.4 78.6 (1.8) -2%
Average Rolling Stock Operated, units
Gondola cars 44,240 44,663 423 1%
Rail tank cars 12,332 12,446 115 1%
Locomotives 49 42 (7) -15%
Total 56,637 57,153 517 1%
31.12.2022 31.12.2023 Change Change, %
7,474 6,164 (1,310) -18%
11% 9% - -
13.7 14.5 - -
17.3 17.7 - -
15.0 15.9 - -
4.1 4.9 - -
14.5 15.2 - -
Overview
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Employees
Terms that require definitions are marked with capital letters in this
announcement 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”,
“Other gains/(losses) – 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”,
“Reversal of impairment of intangible assets” and
“Profit from sale of subsidiary”.
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/
(reversal 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 and Engaged
Fleet).
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 the rail infrastructure
provider 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 and
Engaged Fleet.
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
Definitions
Selected operational information
for the year ended 31 December 2023
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Employees
| 31.12.2022 | 31.12.2023 | Change | Change, % | |
| Total employees | 1,768 | 1,802 | 34 | 2% |
| 2022 | 2023 | Change | Change, % | |
| Average Number of Loaded Trips per Railcar | ||||
| Gondola cars | 19.8 | 18.8 | (1.0) | -5% |
| Rail tank cars | 25.6 | 24.2 | (1.3) | -5% |
| Total | 21.0 | 20.0 | (1.1) | -5% |
| Average Distance of Loaded Trip, km | ||||
| Gondola cars | 1,968 | 1,978 | 10 | 0% |
| Rail tank cars | 1,079 | 1,082 | 3 | 0% |
| Total | 1,733 | 1,741 | 8 | 0% |
| Average Price per Trip, RUB | 64,553 | 71,125 | 6,572 | 10% |
| Net Revenue from Operation of RollingStock, RUB million | 76,798* | 81,102* | 4,304 | 6% |
| Net Revenue from Operation of Rolling Stock by clients (incl. their affiliates and suppliers) | ||||
| Top-10 clients | 67% | 68% | - | - |
| Other (including small and mediumenterprises) | 33% | 32% | - | - |
| Net Revenue from Operation of Rolling Stock by contract type, % | ||||
| Service Contracts | 59% | 61% | - | - |
| Other contracts (including ad-hoctransportation) | 41% | 39% | - | - |
| Net Revenue from Engaged Fleet,RUB million | 876* | 1,124* | 248 | 28% |
| Empty Run Ratio, % | ||||
| Gondola cars | 41% | 36% | - | - |
| Rail tank cars and other railcars | 94% | 92% | - | - |
| Total Empty Run Ratio, % | 50% | 45% | - | - |
| Empty Run Costs, RUB million | 17,283* | 18,297* | 1,014 | 6% |
| Share of Empty Run Kilometres Paidby Globaltrans, % | 99% | 99% | - | - |
Terms that require definitions are marked with capital letters in this
announcement 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”,
“Other gains/(losses) – 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”,
“Reversal of impairment of intangible assets” and
“Profit from sale of subsidiary”.
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/
(reversal 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 and Engaged
Fleet).
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 the rail infrastructure
provider 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 and
Engaged Fleet.
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
Definitions
Selected operational information
for the year ended 31 December 2023
Overview
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in maintenance, purchased rolling stock in transition
to its first place of commercial utilisation, rolling stock
leased out and Engaged Fleet).
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”
(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”, “Interest paid on leases
with financial institutions”, “Payment for acquisition
of non-controlling interest”, “Payment for rolling stock
to disposed subsidiary” plus “Proceeds from sale
of subsidiaries – net of cash disposed of”.
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).
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.
Leased-in Fleet is defined as fleet leased in under
operating leases, including railcars and locomotives.
Leased-out Fleet is defined as fleet leased out to third
parties under operating leases.
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.
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 (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 (a non-
IFRS financial measure, derived from management
accounts) describes the net revenue generated from
freight rail transportation services which is adjusted
for respective “pass through” loaded railway tariffs
(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 – third parties”, “Trade payables
– related parties”, “Other payables – third parties”,
“Other payables – related parties”, “Accrued
expenses”, “Accrued key management compensation,
including share-based payment”, “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 (office)”, “Taxes (other
than income tax and value added taxes)” and “Other
expenses”.
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 and locomotives, and
excludes Engaged Fleet.
Service Contracts are contracts with an initial term
greater than one-year that stipulates an obligation
to transport a specified amount of cargoes for the client.
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 and Engaged Fleet
in the relevant period.
Total CAPEX (a non-IFRS financial measure)
is calculated on a cash basis as the sum of “Purchases
of property, plant and equipment” (which includes
maintenance CAPEX), “Purchases of intangible assets”
and “Principal elements of lease payments for leases
with financial institutions”.
Total CAPEX adjusted for M&A (a non-IFRS financial
measure) is calculated as a combination of Total CAPEX
(which includes maintenance CAPEX) and cash inflows
and outflows from acquisitions and disposals.
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 and Engaged Fleet 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 and
locomotives, 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/(gains) on trade and other
receivables”, “Impairment/(reversal of impairment)
of property, plant and equipment” and “(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 “(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).
Definitions
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in maintenance, purchased rolling stock in transition
to its first place of commercial utilisation, rolling stock
leased out and Engaged Fleet).
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”
(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”, “Interest paid on leases
with financial institutions”, “Payment for acquisition
of non-controlling interest”, “Payment for rolling stock
to disposed subsidiary” plus “Proceeds from sale
of subsidiaries – net of cash disposed of”.
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).
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.
Leased-in Fleet is defined as fleet leased in under
operating leases, including railcars and locomotives.
Leased-out Fleet is defined as fleet leased out to third
parties under operating leases.
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.
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 (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 (a non-
IFRS financial measure, derived from management
accounts) describes the net revenue generated from
freight rail transportation services which is adjusted
for respective “pass through” loaded railway tariffs
(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 – third parties”, “Trade payables
– related parties”, “Other payables – third parties”,
“Other payables – related parties”, “Accrued
expenses”, “Accrued key management compensation,
including share-based payment”, “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 (office)”, “Taxes (other
than income tax and value added taxes)” and “Other
expenses”.
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 and locomotives, and
excludes Engaged Fleet.
Service Contracts are contracts with an initial term
greater than one-year that stipulates an obligation
to transport a specified amount of cargoes for the client.
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 and Engaged Fleet
in the relevant period.
Total CAPEX (a non-IFRS financial measure)
is calculated on a cash basis as the sum of “Purchases
of property, plant and equipment” (which includes
maintenance CAPEX), “Purchases of intangible assets”
and “Principal elements of lease payments for leases
with financial institutions”.
Total CAPEX adjusted for M&A (a non-IFRS financial
measure) is calculated as a combination of Total CAPEX
(which includes maintenance CAPEX) and cash inflows
and outflows from acquisitions and disposals.
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 and Engaged Fleet 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 and
locomotives, 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/(gains) on trade and other
receivables”, “Impairment/(reversal of impairment)
of property, plant and equipment” and “(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 “(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).
Definitions
Overview
ANNUAL REPORT 2023 Additional Information 327
Strategic Report Sustainability Report Governance Financial Statements Additional Information
326
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 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 2023
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 Russian subsidiaries.
Non-IFRS financial information
In this Annual Report, the Group has used certain
measures not recognised by EU IFRS or IFRS (referred
to as “non-IFRS measures”). 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
Presentation
of Financial and Other
Information
Financial information 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 are 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. These non-IFRS measures are unaudited
and have not been prepared in accordance with
IFRS or any other generally accepted accounting
principles. As such, they have limitations as analytical
tools, and you should not consider them in isolation
or place undue reliance on them. Similarly titled
measures are used by other companies for a variety
of purposes and are often calculated in ways that
reflect the circumstances of those companies. You
should exercise caution in comparing these measures
as reported by us to the same or similar measures
as reported by other companies.
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 2023 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.
The Group has obtained certain statistical and
market information that is presented in this Annual
Report from the third-party sources. 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.
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 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.
ANNUAL REPORT 2023 Additional Information 327
Strategic Report Sustainability Report Governance Financial Statements Additional Information
326
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 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 2023
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 Russian subsidiaries.
Non-IFRS financial information
In this Annual Report, the Group has used certain
measures not recognised by EU IFRS or IFRS (referred
to as “non-IFRS measures”). 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
Presentation
of Financial and Other
Information
Financial information 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 are 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. These non-IFRS measures are unaudited
and have not been prepared in accordance with
IFRS or any other generally accepted accounting
principles. As such, they have limitations as analytical
tools, and you should not consider them in isolation
or place undue reliance on them. Similarly titled
measures are used by other companies for a variety
of purposes and are often calculated in ways that
reflect the circumstances of those companies. You
should exercise caution in comparing these measures
as reported by us to the same or similar measures
as reported by other companies.
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 2023 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.
The Group has obtained certain statistical and
market information that is presented in this Annual
Report from the third-party sources. 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.
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 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.
Overview
ANNUAL REPORT 2023 Additional Information 329
Strategic Report Sustainability Report Governance Financial Statements Additional Information
328
GRI Content Index
GRI standard Disclosure Location Explanation Annual
Report page
General disclosures
GRI 2: General
Disclosures 2021
2-1 Organisational details Corporate Structure
At a Glance
p. 125
p. 6-9
2-2 Entities included in the
organisation’s sustainability
reporting
Corporate Structure p. 125
2-3 Reporting period, frequency
and contact point
Sustainability Report
Contacts
• 1 January – 31 December
2023, annual.
• Financial reporting and
sustainability reporting
are aligned
• Investor Relations
Phone: +971 50 8867452
Email: irteam@globaltrans.com
p. 64
p. 336
2-4 Restatements of information No restatements in the
reporting period.
2-5 External assurance External assurance for the
Group’s Sustainability Report
was not conducted in the
reporting period.
2-6 Activities, value chain and
other business relationships
At a Glance
Our Assets
p. 6-9
p. 10-11
2-7 Employees Sustainability Report p. 74
2-9 Governance structure and
composition
Corporate
Governance Report
p. 98
2-10 Nomination and selection of
the highest governance body
Corporate
Governance Report
p. 98
2-11 Chair of the highest
governance body
Corporate
Governance Report
p. 98
2-12 Role of the highest
governance body in overseeing
the management of impacts
Corporate
Governance Report
p. 98
2-13 Delegation of responsibility
for managing impacts
Corporate
Governance Report
p. 98
2-14 Role of the highest
governance body in sustainability
reporting
Sustainability Report p. 64
2-15 Conflicts of interest Sustainability Report Please see the Group’s
Code of Ethics and
Conduct which is available
on the corporate website.
p. 72
GRI standard Disclosure Location Explanation Annual
Report page
2-16 Communication of critical
concerns
Sustainability
Report
Please see the following
policies of the Group which
are available on the corporate
website:
• Anti-fraud Policy
• The Code of Ethics and
Conduct
• Policy on Reporting
and Investigating
Allegations of Suspected
Improper Activities
(Whistleblowing Policy).
p. 72
2-18 Evaluation of the
performance of the highest
governance body
Corporate
Governance Report
p. 98
2-19 Remuneration policies Corporate
Governance Report
For further information
on the remuneration paid
to the Board and key
executives in 2023, please
see Note 35a of the Group’s
Consolidated Management
Report and Consolidated
Financial Statements included
in the Financial Statements
section of this Annual Report.
p. 98
2-20 Process to determine
remuneration
Corporate
Governance Report
p. 98
2-21 Annual total
compensation ratio
Corporate
Governance Report
For further information
on the remuneration paid
to the Board and key
executives in 2023, please
see Note 35a of the Group’s
Consolidated Management
Report and Consolidated
Financial Statements included
in the Financial Statements
section of this Annual Report.
p. 98
2-22 Statement on sustainable
development strategy
Sustainability
Report
Message from
the Board
Message from
the CEO
p. 64
p. 16
p.18
ANNUAL REPORT 2023 Additional Information 329
Strategic Report Sustainability Report Governance Financial Statements Additional Information
328
GRI Content Index
GRI standard Disclosure Location Explanation Annual
Report page
General disclosures
GRI 2: General
Disclosures 2021
2-1 Organisational details Corporate Structure
At a Glance
p. 125
p. 6-9
2-2 Entities included in the
organisation’s sustainability
reporting
Corporate Structure p. 125
2-3 Reporting period, frequency
and contact point
Sustainability Report
Contacts
• 1 January – 31 December
2023, annual.
• Financial reporting and
sustainability reporting
are aligned
• Investor Relations
Phone: +971 50 8867452
Email: irteam@globaltrans.com
p. 64
p. 336
2-4 Restatements of information No restatements in the
reporting period.
2-5 External assurance External assurance for the
Group’s Sustainability Report
was not conducted in the
reporting period.
2-6 Activities, value chain and
other business relationships
At a Glance
Our Assets
p. 6-9
p. 10-11
2-7 Employees Sustainability Report p. 74
2-9 Governance structure and
composition
Corporate
Governance Report
p. 98
2-10 Nomination and selection of
the highest governance body
Corporate
Governance Report
p. 98
2-11 Chair of the highest
governance body
Corporate
Governance Report
p. 98
2-12 Role of the highest
governance body in overseeing
the management of impacts
Corporate
Governance Report
p. 98
2-13 Delegation of responsibility
for managing impacts
Corporate
Governance Report
p. 98
2-14 Role of the highest
governance body in sustainability
reporting
Sustainability Report p. 64
2-15 Conflicts of interest Sustainability Report Please see the Group’s
Code of Ethics and
Conduct which is available
on the corporate website.
p. 72
GRI standard Disclosure Location Explanation Annual
Report page
2-16 Communication of critical
concerns
Sustainability
Report
Please see the following
policies of the Group which
are available on the corporate
website:
• Anti-fraud Policy
• The Code of Ethics and
Conduct
• Policy on Reporting
and Investigating
Allegations of Suspected
Improper Activities
(Whistleblowing Policy).
p. 72
2-18 Evaluation of the
performance of the highest
governance body
Corporate
Governance Report
p. 98
2-19 Remuneration policies Corporate
Governance Report
For further information
on the remuneration paid
to the Board and key
executives in 2023, please
see Note 35a of the Group’s
Consolidated Management
Report and Consolidated
Financial Statements included
in the Financial Statements
section of this Annual Report.
p. 98
2-20 Process to determine
remuneration
Corporate
Governance Report
p. 98
2-21 Annual total
compensation ratio
Corporate
Governance Report
For further information
on the remuneration paid
to the Board and key
executives in 2023, please
see Note 35a of the Group’s
Consolidated Management
Report and Consolidated
Financial Statements included
in the Financial Statements
section of this Annual Report.
p. 98
2-22 Statement on sustainable
development strategy
Sustainability
Report
Message from
the Board
Message from
the CEO
p. 64
p. 16
p.18
Overview
ANNUAL REPORT 2023 Additional Information 331
Strategic Report Sustainability Report Governance Financial Statements Additional Information
330
GRI Content Index
GRI standard Disclosure Location Explanation Annual
Report page
2-23 Policy commitments Sustainability Report
Corporate
Governance Report
p. 72
p. 114-115
2-24 Embedding policy
commitments
Sustainability Report
Corporate
Governance Report
p. 72
p. 114-115
2-25 Processes to remediate
negative impacts
Sustainability Report
Corporate
Governance Report
p. 72
p. 114-115
2-26 Mechanisms for seeking
advice and raising concerns
Sustainability Report Please see the following
policies of the Group
which are available
on the corporate website:
• Anti-fraud Policy
• The Code of Ethics and
Conduct
• Policy on Reporting
and Investigating
Allegations of Suspected
Improper Activities
(Whistleblowing Policy)
p. 72
2-27 Compliance with laws and
regulations
Sustainability Report There were no instances
of non-compliance with
laws and regulations during
the reporting period.
p. 72
2-28 Membership associations Sustainability Report Union of Railway Transport
Operators - SOZHT (New
Forwarding Company) Council
of Transport Workers - STR
(New Forwarding Company)
Railway Engineering
Association – OPZHT (Ural
Wagonrepair Company)
2-29 Approach to stakeholder
engagement
Sustainability Report p. 70
2-30 Collective bargaining
agreements
Sustainability Report In 2023, there were no
collective bargaining
agreements in the Group
companies.
p. 73
Material topics
GRI 3: Material
Topics 2021
3-1 Process to determine material
topics
Sustainability Report p. 65
3-2 List of material topics Sustainability Report p. 65
GRI standard Disclosure Location Explanation Annual
Report page
Economic performance
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 84
GRI 201: Economic
Performance 2016
201-1 Direct economic value
generated and distributed
Sustainability
Report
p. 84
201-2 Financial implications
and other risks and
opportunities due to climate
change
Sustainability
Report
p. 92
Anti-corruption
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 72
GRI 205: Anti-
corruption 2016
205-1 Operations assessed for
risks related to corruption
Sustainability
Report
Please see the Group’s Anti-
fraud Policy which is available
on the corporate website.
p. 72
205-2 Communication and
training about anti-corruption
policies and procedures
Sustainability
Report
Please see the Group’s Anti-
fraud Policy which is available
on the corporate website.
p. 72
205-3 Confirmed incidents of
corruption and actions taken
Sustainability
Report
No incidents of corruption in
the reporting period.
p. 72
Anti-competitive behavior
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
Please see the Group’s
Code of Ethics and Conduct
which is available on the
corporate website.
p. 72
GRI 206: Anti-
competitive
Behavior 2016
206-1 Legal actions for anti-
competitive behavior, anti-
trust, and monopoly practices
Sustainability
Report
Please see the Group’s
Code of Ethics and Conduct
which is available on the
corporate website.
p. 72
Energy
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 86-87
GRI 302: Energy
2016
302-1 Energy consumption
within the organization
Sustainability
Report
p. 87
Water and effluents
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 88
303-5 Water consumption Sustainability
Report
p. 88
ANNUAL REPORT 2023 Additional Information 331
Strategic Report Sustainability Report Governance Financial Statements Additional Information
330
GRI Content Index
GRI standard Disclosure Location Explanation Annual
Report page
2-23 Policy commitments Sustainability Report
Corporate
Governance Report
p. 72
p. 114-115
2-24 Embedding policy
commitments
Sustainability Report
Corporate
Governance Report
p. 72
p. 114-115
2-25 Processes to remediate
negative impacts
Sustainability Report
Corporate
Governance Report
p. 72
p. 114-115
2-26 Mechanisms for seeking
advice and raising concerns
Sustainability Report Please see the following
policies of the Group
which are available
on the corporate website:
• Anti-fraud Policy
• The Code of Ethics and
Conduct
• Policy on Reporting
and Investigating
Allegations of Suspected
Improper Activities
(Whistleblowing Policy)
p. 72
2-27 Compliance with laws and
regulations
Sustainability Report There were no instances
of non-compliance with
laws and regulations during
the reporting period.
p. 72
2-28 Membership associations Sustainability Report Union of Railway Transport
Operators - SOZHT (New
Forwarding Company) Council
of Transport Workers - STR
(New Forwarding Company)
Railway Engineering
Association – OPZHT (Ural
Wagonrepair Company)
2-29 Approach to stakeholder
engagement
Sustainability Report p. 70
2-30 Collective bargaining
agreements
Sustainability Report In 2023, there were no
collective bargaining
agreements in the Group
companies.
p. 73
Material topics
GRI 3: Material
Topics 2021
3-1 Process to determine material
topics
Sustainability Report p. 65
3-2 List of material topics Sustainability Report p. 65
GRI standard Disclosure Location Explanation Annual
Report page
Economic performance
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 84
GRI 201: Economic
Performance 2016
201-1 Direct economic value
generated and distributed
Sustainability
Report
p. 84
201-2 Financial implications
and other risks and
opportunities due to climate
change
Sustainability
Report
p. 92
Anti-corruption
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 72
GRI 205: Anti-
corruption 2016
205-1 Operations assessed for
risks related to corruption
Sustainability
Report
Please see the Group’s Anti-
fraud Policy which is available
on the corporate website.
p. 72
205-2 Communication and
training about anti-corruption
policies and procedures
Sustainability
Report
Please see the Group’s Anti-
fraud Policy which is available
on the corporate website.
p. 72
205-3 Confirmed incidents of
corruption and actions taken
Sustainability
Report
No incidents of corruption in
the reporting period.
p. 72
Anti-competitive behavior
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
Please see the Group’s
Code of Ethics and Conduct
which is available on the
corporate website.
p. 72
GRI 206: Anti-
competitive
Behavior 2016
206-1 Legal actions for anti-
competitive behavior, anti-
trust, and monopoly practices
Sustainability
Report
Please see the Group’s
Code of Ethics and Conduct
which is available on the
corporate website.
p. 72
Energy
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 86-87
GRI 302: Energy
2016
302-1 Energy consumption
within the organization
Sustainability
Report
p. 87
Water and effluents
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 88
303-5 Water consumption Sustainability
Report
p. 88
Overview
ANNUAL REPORT 2023 Additional Information 333
Strategic Report Sustainability Report Governance Financial Statements Additional Information
332
GRI standard Disclosure Location Explanation Annual
Report page
Emissions
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability Report p. 90-91
p. 97
GRI 305:
Emissions 2016
305-1 Direct (Scope 1) GHG
emissions
Sustainability Report p. 90-91
p. 97
305-2 Energy indirect (Scope 2)
GHG emissions
Sustainability Report p. 90-91
p. 97
305-3 Other indirect (Scope 3)
GHG emissions
Sustainability Report At this stage the Group does
not calculate other indirect
emissions (Scope 3).
p. 90-91
p. 97
305-4 GHG emissions intensity Sustainability Report p. 90-91
p. 97
305-5 Reduction of GHG
emissions
Sustainability Report p. 90-91
p. 97
Waste
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability Report p. 89
GRI 306: Waste
2020
306-1 Waste generation and
significant waste-related impacts
Sustainability Report p. 89
306-2 Management of significant
waste-related impacts
Sustainability Report p. 89
306-3 Waste generated Sustainability Report p. 89
306-4 Waste diverted from
disposal
Sustainability Report p. 89
306-5 Waste directed to disposal Sustainability Report p. 89
Supplier environmental assessment
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability Report p. 72-73
GRI 308: Supplier
Environmental
Assessment 2016
308-1 New suppliers that were
screened using environmental
criteria
Sustainability Report p. 72-73
308-2 Negative environmental
impacts in the supply chain and
actions taken
Sustainability Report p. 72-73
GRI standard Disclosure Location Explanation Annual
Report page
Employment
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 74-76
GRI 401:
Employment 2016
401-1 New employee hires and
employee turnover
Sustainability
Report
p. 74-76
401-2 Benefits provided
to full-time employees that
are not provided to temporary
or part-time employees
Sustainability
Report
p. 81-82
401-3 Parental leave Sustainability
Report
p. 81
Occupational health and safety
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 83
GRI 403:
Occupational
Health and Safety
2018
403-1 Occupational health and
safety management system
Sustainability
Report
p. 83
403-2 Hazard identification,
risk assessment, and incident
investigation
Sustainability
Report
p. 83
403-4 Worker participation,
consultation, and
communication
on occupational health and
safety
Sustainability
Report
p. 83
403-5 Worker training on
occupational health and
safety
Sustainability
Report
p. 83
403-6 Promotion of worker
health
Sustainability
Report
p. 83
403-9 Work-related injuries Sustainability
Report
p. 83
Training and education
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 80-81
GRI 404: Training
and Education
2016
404-1 Average hours of
training per year per employee
Sustainability
Report
p. 80-81
404-2 Programs for upgrading
employee skills and transition
assistance programs
Sustainability
Report
p. 80-81
404-3 Percentage of
employees receiving regular
performance and career
development reviews
Sustainability
Report
p. 80-81
GRI Content Index
ANNUAL REPORT 2023 Additional Information 333
Strategic Report Sustainability Report Governance Financial Statements Additional Information
332
GRI standard Disclosure Location Explanation Annual
Report page
Emissions
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability Report p. 90-91
p. 97
GRI 305:
Emissions 2016
305-1 Direct (Scope 1) GHG
emissions
Sustainability Report p. 90-91
p. 97
305-2 Energy indirect (Scope 2)
GHG emissions
Sustainability Report p. 90-91
p. 97
305-3 Other indirect (Scope 3)
GHG emissions
Sustainability Report At this stage the Group does
not calculate other indirect
emissions (Scope 3).
p. 90-91
p. 97
305-4 GHG emissions intensity Sustainability Report p. 90-91
p. 97
305-5 Reduction of GHG
emissions
Sustainability Report p. 90-91
p. 97
Waste
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability Report p. 89
GRI 306: Waste
2020
306-1 Waste generation and
significant waste-related impacts
Sustainability Report p. 89
306-2 Management of significant
waste-related impacts
Sustainability Report p. 89
306-3 Waste generated Sustainability Report p. 89
306-4 Waste diverted from
disposal
Sustainability Report p. 89
306-5 Waste directed to disposal Sustainability Report p. 89
Supplier environmental assessment
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability Report p. 72-73
GRI 308: Supplier
Environmental
Assessment 2016
308-1 New suppliers that were
screened using environmental
criteria
Sustainability Report p. 72-73
308-2 Negative environmental
impacts in the supply chain and
actions taken
Sustainability Report p. 72-73
GRI standard Disclosure Location Explanation Annual
Report page
Employment
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 74-76
GRI 401:
Employment 2016
401-1 New employee hires and
employee turnover
Sustainability
Report
p. 74-76
401-2 Benefits provided
to full-time employees that
are not provided to temporary
or part-time employees
Sustainability
Report
p. 81-82
401-3 Parental leave Sustainability
Report
p. 81
Occupational health and safety
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 83
GRI 403:
Occupational
Health and Safety
2018
403-1 Occupational health and
safety management system
Sustainability
Report
p. 83
403-2 Hazard identification,
risk assessment, and incident
investigation
Sustainability
Report
p. 83
403-4 Worker participation,
consultation, and
communication
on occupational health and
safety
Sustainability
Report
p. 83
403-5 Worker training on
occupational health and
safety
Sustainability
Report
p. 83
403-6 Promotion of worker
health
Sustainability
Report
p. 83
403-9 Work-related injuries Sustainability
Report
p. 83
Training and education
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 80-81
GRI 404: Training
and Education
2016
404-1 Average hours of
training per year per employee
Sustainability
Report
p. 80-81
404-2 Programs for upgrading
employee skills and transition
assistance programs
Sustainability
Report
p. 80-81
404-3 Percentage of
employees receiving regular
performance and career
development reviews
Sustainability
Report
p. 80-81
GRI Content Index
Overview
ANNUAL REPORT 2023 Additional Information 335
Strategic Report Sustainability Report Governance Financial Statements Additional Information
334
Code TCFD Recommended Disclosures Comments
Governance:
TCFD 1 (a)
Describe the Board’s oversight of climate-
related risks and opportunities.
p. 92-93
TCFD 1 (b) Describe management’s role in assessing
and managing climate-related risks and
opportunities.
p. 92-93
Strategy:
TCFD 2 (a)
Describe the climate-related risks and
opportunities the organisation has
identified over the short, medium, and
long term.
p. 94-96
TCFD 2 (b) Describe the impact of climate-related risks
and opportunities on the organisation’s
business, strategy and financial planning.
p. 94-96
TCFD 2 (c) Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios.
p. 96
Risk Management:
TCFD 3 (a)
Describe the organisation’s processes
for identifying and assessing
climate-related risks.
p. 96-97
Targets & Metrics:
TCFD 4 (a)
Disclose the metrics used by the
organisation to assess climate-related risks
and opportunities in line with its strategy
and risk management process.
p. 97
TCFD 4 (b) Disclose Scope 1, Scope 2 and,
if appropriate, Scope 3 greenhouse gas
emissions, and the related risks
p. 97
TCFD 4 (c) Describe the targets used by the
organisation to manage climate-related
risks and opportunities and performance
against targets.
Going forward, the Group will
work to demonstrate its progress
in addressing climate change.
GRI standard Disclosure Location Explanation Annual
Report page
Diversity and equal opportunity
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 77-79
GRI 405: Diversity
and Equal
Opportunity 2016
405-1 Diversity of governance
bodies and employees
Sustainability
Report
Corporate
Governance Report
p. 77-79
p. 116
405-2 Ratio of basic salary and
remuneration of women to men
Sustainability
Report
p. 77-79
Non-discrimination
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 77-79
GRI 406: Non-
discrimination 2016
406-1 Incidents of discrimination
and corrective actions taken
Sustainability
Report
No incidents of discrimination
occurred in the reporting period.
p. 77-79
Freedom of association and collective bargaining
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 72-73
GRI 407: Freedom
of Association
and Collective
Bargaining 2016
407-1 Operations and suppliers
in which the right to freedom
of association and collective
bargaining may be at risk
Sustainability
Report
p. 72-73
Local communities
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 84-85
GRI 413: Local
Communities 2016
413-1 Operations with local
community engagement, impact
assessments, and development
programs
Sustainability
Report
p. 84-85
Supplier social assessment
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 72
GRI 414:
Supplier Social
Assessment 2016
414-1 New suppliers that were
screened using social criteria
Sustainability
Report
p. 72
Customer privacy
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 73
GRI 418: Customer
Privacy 2016
418-1 Substantiated complaints
concerning breaches of customer
privacy and losses of customer data
Sustainability
Report
No breaches of customer
privacy in the reporting period.
p. 73
GRI Content Index
TCFD Index
ANNUAL REPORT 2023 Additional Information 335
Strategic Report Sustainability Report Governance Financial Statements Additional Information
334
Code TCFD Recommended Disclosures Comments
Governance:
TCFD 1 (a)
Describe the Board’s oversight of climate-
related risks and opportunities.
p. 92-93
TCFD 1 (b) Describe management’s role in assessing
and managing climate-related risks and
opportunities.
p. 92-93
Strategy:
TCFD 2 (a)
Describe the climate-related risks and
opportunities the organisation has
identified over the short, medium, and
long term.
p. 94-96
TCFD 2 (b) Describe the impact of climate-related risks
and opportunities on the organisation’s
business, strategy and financial planning.
p. 94-96
TCFD 2 (c) Describe the resilience of the organisation’s
strategy, taking into consideration different
climate-related scenarios.
p. 96
Risk Management:
TCFD 3 (a)
Describe the organisation’s processes
for identifying and assessing
climate-related risks.
p. 96-97
Targets & Metrics:
TCFD 4 (a)
Disclose the metrics used by the
organisation to assess climate-related risks
and opportunities in line with its strategy
and risk management process.
p. 97
TCFD 4 (b) Disclose Scope 1, Scope 2 and,
if appropriate, Scope 3 greenhouse gas
emissions, and the related risks
p. 97
TCFD 4 (c) Describe the targets used by the
organisation to manage climate-related
risks and opportunities and performance
against targets.
Going forward, the Group will
work to demonstrate its progress
in addressing climate change.
GRI standard Disclosure Location Explanation Annual
Report page
Diversity and equal opportunity
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 77-79
GRI 405: Diversity
and Equal
Opportunity 2016
405-1 Diversity of governance
bodies and employees
Sustainability
Report
Corporate
Governance Report
p. 77-79
p. 116
405-2 Ratio of basic salary and
remuneration of women to men
Sustainability
Report
p. 77-79
Non-discrimination
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 77-79
GRI 406: Non-
discrimination 2016
406-1 Incidents of discrimination
and corrective actions taken
Sustainability
Report
No incidents of discrimination
occurred in the reporting period.
p. 77-79
Freedom of association and collective bargaining
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 72-73
GRI 407: Freedom
of Association
and Collective
Bargaining 2016
407-1 Operations and suppliers
in which the right to freedom
of association and collective
bargaining may be at risk
Sustainability
Report
p. 72-73
Local communities
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 84-85
GRI 413: Local
Communities 2016
413-1 Operations with local
community engagement, impact
assessments, and development
programs
Sustainability
Report
p. 84-85
Supplier social assessment
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 72
GRI 414:
Supplier Social
Assessment 2016
414-1 New suppliers that were
screened using social criteria
Sustainability
Report
p. 72
Customer privacy
GRI 3: Material
Topics 2021
3-3 Management of material
topics
Sustainability
Report
p. 73
GRI 418: Customer
Privacy 2016
418-1 Substantiated complaints
concerning breaches of customer
privacy and losses of customer data
Sustainability
Report
No breaches of customer
privacy in the reporting period.
p. 73
GRI Content Index
TCFD Index
Overview
ANNUAL REPORT 2023 Additional Information 337
Strategic Report Sustainability Report Governance Financial Statements Additional Information
336
Auditors
Stock exchanges General contacts
Globaltrans Investment PLC
Unit 3, Floor 6, Al Sila Tower, Abu Dhabi Global
Market Square, Al Maryah Island, Abu Dhabi, UAE.
Phone: +971 50 886 7452
Website: www.globaltrans.com
Investor Relations
Mikhail Perestyuk
Daria Plotnikova
Phone: +971 50 886 7452
E-mail : irteam@globaltrans.com
Daria Plotnikova
Phone: +971 50 886 7452
E-mail: esg@globaltrans.com
Depositary bank
Citibank, N.A.
Phone: +1 212 723 5435 / +44 207 500 2030
Email: citiadr@citi.com
Website: www.citi.com/adr
Contacts
For investors and shareholders
ESG
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
GAC Auditors Ltd
Guricon House, 48 Inomenon Ethon Street,
CY-6042 Larnaca, Cyprus
Phone: +357 24 638 833
Fax: +357 24 638 820
For media
Anna Vostrukhova
Head of Media Relations
Phone: +971 50 886 7452
Email: media@globaltrans.com
Laura Gilbert
Lightship Consulting
Phone: +44 7799 413351
Email: laura.gilbert@lightshipconsulting.co.uk
ANNUAL REPORT 2023 Additional Information 337
Strategic Report Sustainability Report Governance Financial Statements Additional Information
336
Auditors
Stock exchanges General contacts
Globaltrans Investment PLC
Unit 3, Floor 6, Al Sila Tower, Abu Dhabi Global
Market Square, Al Maryah Island, Abu Dhabi, UAE.
Phone: +971 50 886 7452
Website: www.globaltrans.com
Investor Relations
Mikhail Perestyuk
Daria Plotnikova
Phone: +971 50 886 7452
E-mail : irteam@globaltrans.com
Daria Plotnikova
Phone: +971 50 886 7452
E-mail: esg@globaltrans.com
Depositary bank
Citibank, N.A.
Phone: +1 212 723 5435 / +44 207 500 2030
Email: citiadr@citi.com
Website: www.citi.com/adr
Contacts
For investors and shareholders
ESG
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
GAC Auditors Ltd
Guricon House, 48 Inomenon Ethon Street,
CY-6042 Larnaca, Cyprus
Phone: +357 24 638 833
Fax: +357 24 638 820
For media
Anna Vostrukhova
Head of Media Relations
Phone: +971 50 886 7452
Email: media@globaltrans.com
Laura Gilbert
Lightship Consulting
Phone: +44 7799 413351
Email: laura.gilbert@lightshipconsulting.co.uk