OREANDA-NEWS. Joint Stock Company SG-trans (the "Company", "SGT", "SG-trans" or "the Group"), a leading Russian rail freight operator, today announces its preliminary unaudited financial and operational results for the six months ended 30 June 2014.

H1 2014 financial highlights

Revenue grew by 6% year-on-year to RUB 10.3 bn, up from RUB 9.7 bn in H1 2013;

EBITDA increased by 27% reaching RUB 2.8 bn, compared to RUB 2.2 bn EBITDA in H1 2013;

EBITDA margin increased to 28% compared to 23% in H1 2013;

Net profit for the period decreased by 37% to RUB 314 mln, compared to RUB 495 mln in H1 2013;

Net debt as of 30 June 2014 decreased to RUB 23 bn, compared to RUB 28 bn as at 31 December 2013.

H1 2014 operational highlights

Following the consolidation of subsidiaries and newly acquired railcars as of 13 January 2014, a universal rail freight operator was formed with a total fleet by the end of the reporting period of more than 35,000 railcars;

Total transportation volumes increased by 9% year-on-year reaching 10.1 million tonnes;

Total freight turnover increased 11% year-on-year to 16.1 bn tonne-kilometres;

Thanks to our solid operational performance, our share of Russia's total LPG1 transportation market during the period accounted for 30%.

Key events in H1 2014

Cooperation agreement signed with Sberbank, through which the bank can provide finance to cover the purchase of railcars, the development of our production infrastructure as well as M&A transactions;

Maintenance services management division formed within the Company. Railcar maintenance agreements signed with 5 companies; approximately 4k railcars repaired. In order to avoid extra expenses incurred by procurement through third parties, the Company is shifting to direct purchases of costly parts, thereby lowering operating expenses;

Successful completion of consolidation of assets from SG-trans, Financial Alliance and Bashneft-trans, operating under the SG-trans brand. The transaction was closed on 13 January 2014.

Aleksey Taicher, President of SG-trans, commented on the results:

"Despite the overall negative rail freight market trends, SG-trans achieved solid results in 1H 2014, and continues to implement its growth strategy. We further expanded our railcar fleet while also increasing freight volumes and revenue. In addition, we maintained our focus on improving operational efficiency throughout the Group and restructured our branch network. I would also underscore the progress we are making in establishing the repair management segment as a separate business line, which enables us both to reduce our own costs and to increase revenue by providing services to third parties."

Konstantin Voevodin, Financial Director of SG-trans, added:

"Revenue and EBITDA in 1H 2014 increased by 6% and 27% year-on-year, respectively. The Group's 37% year-on-year decline in net profit for the period was due to higher net interest expense related to new borrowings that we undertook to finance our fleet expansion strategy. This strategy aims to enable SG-trans to increase revenue by expanding its client base. We also continue to play close attention to cost management, reducing our SG&A expenses by 10% year-on-year in 1H 2014. SG-trans has achieved high efficiency levels and is taking advantage of market opportunities as they arise.