|Item||RUB mln||share of operating expenses, %||share of revenue, %||RUB mln||share of operating expenses, %||share of revenue, %|
|Third-party charges related to principal activities||62,721||70.1||60.6||48,283||67.5||56.0|
|Freight and transportation services||7,994||8.9||7.7||6,202||8.7||7.2|
|Payroll and related charges||6,545||7.3||6.3||6,492||9.1||7.5|
|Depreciation and amortisation||4,569||5.1||4.4||3,473||4.9||4.0|
|Materials, repair, and maintenance||4,632||5.2||4.5||3,692||5.2||4.3|
|Taxes other than income tax||688||0.8||0.7||383||0.5||0.4|
|Total operating expenses||89,422||100.0||86.4||71,569||100.0||83.0|
The Company’s operating expenses increased by RUB 17,853 mln, or 24.9% year-on-year, to RUB 89,422 mln compared to RUB 71,569 mln in 2019. This rise was mainly due to a significant increase in the volume of operations related to principal activities.
Third-party Charges Related to Principal Activities
The third-party charges related to principal activities increased from RUB 48,283 mln to RUB 62,721 mln in 2020, up 29.9% year-on-year. This was primarily driven by a higher volume of the Company’s operations, tariff indexing by the Russian Railways and other subcontractors, and growth in international transportations with the involvement of outsourced transportation services. The weakening of the Russian ruble against the US dollar and the euro in 2020 has also had an impact on the amount of tariffs paid by foreign railway administrations and international maritime lines set in foreign currency.
Adjusted Operating Expenses
Adjusted operating expenses (as defined in the Adjustments and Additional Financial Information section) raised by 14.7% year-on-year, to RUB 26,701 mln compared to RUB 23,286 mln in 2019. The greatest contribution to dynamics of adjusted operating costs was from items Freight and transportation services, Materials, repair, and maintenance and Depreciation and amortisation. The Other expenses item shows decrease in absolute value.
|RUB mln||RUB mln||RUB mln||%|
|Freight and transportation services||7,994||6,202||1,792||28.9|
|Payroll and related charges||6,545||6,492||53||0.8|
|Depreciation and amortisation||4,569||3,473||1,096||31.6|
|Materials, repair, and maintenance||4,632||3,692||940||25.5|
|Taxes other than income tax||688||383||305||79.6|
|Adjusted operating expenses||26,701||23,286||3,415||14.7|
Freight and Transportation Services
Expenses related to freight and transportation services increased by RUB 1,792 mln, or 28.9%, year-on-year, to RUB 7,994 mln, that is caused by growth of business volumes, tariff indexing by subcontractors, wider footprint of the Company beyond the 1,520 gauge railway network
Payroll and Related Charges
Payroll and related charges increased by RUB 53 mln, or 0.8% year-on-year, from RUB 6,492 mln in 2019 to RUB 6,545 mln in 2020. Wage indexation and the changes in reserves for staff payments were partially compensated by 2.2% decrease in the average number of staff to 3,229 persons compared to 3,301 in 2019.
Depreciation and Amortisation
Depreciation and amortisation expenses increased by RUB 1,096 mln, or 31.6% year-on-year, to RUB 4,569 mln compared to RUB 3,473 mln in 2019. The growth is caused by raised sum of the fixed assets due to 2020 Investment Programme implementation and shift of the great part of the 2019 investments to the fourth quarter.
Materials, Repair, and Maintenance
Expenses related to materials, repair, and maintenance were up by 25.5% year-on-year to RUB 4,632 mln compared to RUB 3,692 mln in 2019. This was mainly due to an increase in the number of railcar repairs resulted from a higher fleet utilisation (37.8 thousand compared to 29.9 thousand in 2019). Another significant factor was the increase in the cost of materials used for repairs.
Taxes other than income tax
Taxes, excluding income tax, increased by 79.6% year-on-year to RUB 688 mln compared to 383 mln in 2019, mainly due to dynamics of VAT calculations.
Rental payments increased by RUB 11 mln, or 7.4% year-on-year, from RUB 149 mln to RUB 160 mln, due to the increase of operational leasing of the low-cost assets. At the same time, according to IFRS 16 financial statements “Lease”, leasing of assets with value exceeding RUB 350 thousand must be reflected in the IFRS statements in the form of right to use and leasing obligations.
Other Operating Expenses
Other operating expenses are an aggregate of various expense items such as security, consulting expenses, fuel and energy, licences and software, communication service and loss of sale of fixed assets, etc. In 2020, other operating expenses decreased from RUB 2,895 mln to RUB 2,113 mln, down 27.0% year-on-year. This decrease is mainly due to the lack of accruals of reserves for depreciation of fixed assets, as well as a decrease in costs under the items such as security, consulting expenses.
Interest expenses increased by RUB 738 mln, or 66.0% year-on-year, from RUB 1,118 mln to RUB 1,856 mln, mainly due to the increase in principal and use of usage factoring.
The increase in interest income by RUB 154 mln, or 41,8% year-on-year, from RUB 368 mln to RUB 522 mln, is due to an increase in the amount of loans provided.
Profit before Income Tax
As a result of the reasons described above, the Company’s profit before income tax increased by RUB 824 mln, or 5.4% year-on-year, from RUB 15,396 mln in 2019 to RUB 16,220 mln in 2020.
Income Tax Expenses
Income tax expenses decreased by RUB 85 mln, or 2.3% year-on-year, from RUB 3,646 mln in 2019 to RUB 3,561 mln in 2020, due to a reduction in taxable profit. The effective tax rate for 2020 was down to 22.0% from 23.7% in 2019.
Total Profit and Comprehensive Income for the Period
As a result of the factors discussed above, the profit for the full year of 2020 increased by RUB 909 mln, or 7.7% year-on-year, to RUB 12,659 mln compared to RUB 11,750 mln for the same period of 2019. Taking into account the exchange rate differences relating to foreign operations, as well as other effects, the total comprehensive income of the Company for the reporting period increased by 24.1% and amounted to RUB 13,898 mln, compared to RUB 11,195 mln for the full year of 2019.