Page 71 - UKRRptMay21

pay $14.1mn to the Ukrainian tax authorities, whereas from the company’s reports it did not look that the probability of such an outcome is high. The good news is that JKX has enough resources to pay the bill ($28.4mn in net cash as of end-March), so the potential payment won’t dry up the company’s liquidity. At the same time, the need to pay (even in a 1-2 year perspective) significantly restricts the company’s ability to invest into new E&P, which, coupled with high decline rates of hydrocarbon output in Ukraine observed over the last quarters, limits its value growth potential in the mid-term.
9.2.3 Transport corporate news
Ukrainian Railways generates UAH12bn losses in 2020.
State railway operator Ukrainian Railways percentage decreased net revenue 17% y/y to UAH75.3bn in 2020, according to its audited report released on April 9.
The company’s revenue freight transportation segment decreased 10% y/y to UAH65.0bn and its passenger segment by 58% y/y to UAH4.1bn. Due to cost cutting measures, operating losses in the passenger segment remained flat y/y at UAH12.9bn, but operating profit in the freight segment decreased 86% y/y to UAH1.2bn. Therefore, the company’s EBITDA fell 42% y/y to UAH10.0bn and its bottom line turned to negative UAH11.9bn from UAH3.0bn positive a year ago.
The company’s operating cash flow before working capital changes decreased largely in line with EBITDA, by 43% y/y to UAH10.5bn, in 2020. Its cash from operations decreased by 31% y/y to UAH10.4bn and purchase of PP&E remained flat y/y at UAH9.2bn. The company managed to repay net UAH4.5bn of debt in 2020, which made its cash balance fall 64% y/y to UAH2.5bn as of end-2020. Meanwhile, its total debt increased 6% y/y (solely due to the appreciation of foreign currency debt) and net debt increased 26% y/y to UAH32.2bn. As a result, its net debt to EBITDA reached 3.2x as of end-2020, from 1.5x a year ago.
Recall, last week, Ukrainian Railways revealed its financial plan for 2021 with revenue of UAH72.1bn (up 15% y/y) and EBITDA of UAH19.3bn (up 92% y/y), as well as a plan to nearly triple CapEx to UAH27.0bn.
S&P Global Ratings reported on April 21 that it had downgraded the long-term issuer credit rating on Ukrainian Railways (RAILUA) to CCC from B- and placed the ratings on CreditWatch with negative implications. The company is approaching the maturity of a USD 116 mln (UAH 3.2 bln) loan to a local bank on May 30, S&P reported, adding that refinancing options for the loan are limited. This is a part of the loans from Sberbank (total amount USD 200 mln) restructured in July 2020. According to S&P, the company's available cash and undrawn lines amounted to UAH 2.3 bln as of April 16, as well as UAH 2 bln cash flow that the company can accumulate by the end of May, “are barely sufficient to meet upcoming maturities and other financial commitments.” Therefore, the likelihood increases that the company will have
71 UKRAINE Country Report May 2021 www.intellinews.com