Annual Report 2015


Factor analysis of profit margin

Operating profit margin, %
Рентабельность деятельности,  %

Return on equity amounted to 0.01% in 2015. The following factors affected the return on equity level: net profit margin, asset turnover and financial leverage. Given the lack of growth in transportation operations, the return on sales was 5.5% in 2015, an increase of 1.3 p.p. from 2014, primarily due to the effect of the Company’s cost optimisation measures and improvements in the quality of work.

The positive net profit margin in 2015 compared with 2014 resulted from growth in sales profit as well as non-operating effects due to hedge accounting and the a decrease in exchange rate losses categorised as profit, which enabled the Company to break even in 2015 after generating a loss in 2014.

The target for EBITDA margin approved by the Company’s Board of Directors was exceeded by 1 p.p. primarily due to growth in sales profit of RUB 15.4 bln versus the plan. Compared with the previous year, the EBITDA margin declined by 3.1 p.p. due to the reflection of a significant number of non-operating factors in the 2014 financial statement (restoration of accounts receivable from the doubtful loan provisions for infrastructure and rolling stock lease services provided to suburban passenger companies (RUB +41.1 bln) as well as the revaluation of financial investments and an additional share issue by subsidiaries (RUB 31.4 bln, including RUB 23.1 bln from the establishment of UTLC). No proportionate measures were carried out in 2015.

Growth of 4 p.p. in financial leverage primarily resulted from an increase in the share of financial liabilities in the Company’s assets due to the revaluation of the foreign currency-denominated portion of the loan portfolio.

Despite the current macroeconomic conditions and tariff policy, asset turnover increased by 1 p.p. versus the 2014 level. This indicates that the Company is generating the same volume of income per rouble of established assets.

At the same time, the Company’s assets that were formed from contributions to the Company’s charter capital are not generating significant effects from the investments made due to the long-term nature of investments in such assets. Thus, the Company only expects new assets to generate significant economic benefits after the range of investment projects is fully completed.