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PJSC Mostotrest publishes its financial and operating results for the first half of 2020

04/09/20  

PJSC Mostotrest (or, together with its consolidated subsidiaries, Mostotrest, the Company or the Group) publishes its financial and operating results for the first half of 2020(a).

Key Operating and Financial Results:

  • Backlog(b) was RUB324.2 billion (+16% compared to the beginning of the year), with new projects added in 1H2020 totaling RUB96.7 billion(c)
  • Revenue decreased by 7% year-on-year, to RUB53.1 billion, due to a decrease in construction volumes
  • 1H2020 gross profit decreased by 37% to RUB 6.9 billion. Gross profit margin was 13.1%, compared with 19.4% for the previous reporting period. The decline in gross margin was mainly due to materials price inflation
  • EBITDA(d) declined by 62% year-on-year to RUB2.9 billion, due to a lower gross profit. EBITDA margin was 5.4% compared to 13.2% in the comparable period
  • Net loss was RUB 1.8 billion compared to net profit of RUB 2.6 billion in the previous reporting period, due to a decrease in gross profit and an increase in net finance costs
  • Capital expenditure was RUB1.8 billion.

Mostotrest CEO Vladimir Vlasov comments on the results:

“1H2020 was a challenging period for the Group, both in terms of preparation for pivotal corporate events in connections with the spin off from Mostotrest part of capacities and assets and in terms of efforts to maintain our backlog and revenue amid the pandemic this past spring.

Despite a limited number of tenders held in the reporting period (a total of RUB435.4 billion(e) in new projects offered to the market, compared to RUB606.1 billion(e) in 1H2019), we were able to participate in the largest tenders held in the reporting period and sign 3 new large contracts totaling RUB97.9 billion including VAT. The addition to our backlog of such projects as construction of the A-289 ‘Krasnodar-Temryuk’ Highway (RUB49.3 billion excluding VAT), construction of the road network with engineering structures and rearrangement of utilities on the Kuryanovskiy Boulevard – Kantemirovskaya Street section, including a bridge over the Moscow River and a split-level traffic interchange with Kashirskoye Avenue (RUB20.1 billion excluding VAT), and construction of the 5th Kabelnaya Street – Northeast Throughway road section (RUB12.1 billion excluding VAT) resulted in 16% backlog growth in 1H2020, compared to the beginning of the year.

In terms of financial results, in view of completion of essentially all of our large-scale projects and the launch of implementation of new projects mentioned above only towards the end of the reporting period, construction volumes in the reporting period decreased slightly, which, along with the negative dynamics across a number of cost items. As an example, we have seen a significant increase in prices for steel structures in the reporting period, which, coupled with intensive use of such structures in Moscow-based construction projects, led to a significant increase in the cost of materials in our cost base, affecting our profit and margins.

In the reporting period, the Company embarked on a restructuring process in connection with the establishment of an infrastructure holding company on the platform of NatProjectStroy Group of Companies JSC, with the participation of the VEB.RF State Corporation. Roads & Bridges, a new joint-stock company to be spun off from Mostotrest, is scheduled for incorporation in the second half of the year. As part of the restructuring process, virtually all of the Group's property, rights, obligations and liabilities in relation to creditors and debtors will be transferred to Roads & Bridges JSC, along with the reducing both revenue and expenses at Mostotrest. While highly intensive, the process is aimed at achieving an ambitious state goal – establishment of the largest infrastructure holding company, with unique competence and technologies being able to develop the country’s infrastructure.”

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a) The press-release has been prepared on the basis of the unaudited consolidated interim condensed financial statements prepared in accordance with the IFRS for the six months ended 30 June 2020, as well as on the basis of the management accounts as at and for the same periods, as this set of financial statements in their entirety provide a comprehensive overview of the Group’s performance for the six months ended 30 June 2020 and 2019.

To make the information in the press-release user friendly special notes are used. The information based on management accounts is marked with {*}.

The detailed “basis of presentation” description can be found in the Appendix nr. 2 at the end of the press-release.

b) The company’s backlog represents its management’s estimate of the contract value of its projects that remain to be completed as at a particular date, excluding VAT. Such value is calculated as the total contract value for each project that remains to be completed less the amounts already received under the contracts for such projects. The total contract value of a particular project represents the total amount that the relevant entity expects to receive under the contract for such project, assuming the contract is performed in accordance with its terms. A project is included in the backlog of a relevant entity when either a firm letter of commitment is executed by the customer or a letter is received confirming its bid has been successful.. A project is included in the backlog of a relevant entity when either a firm letter of commitment is executed by the customer or a letter is received confirming its bid has been successful. Backlog may not be indicative of the relevant entity’s future operating results.

c) Excluding other revenue. Net of VAT.

d) EBITDA is defined as net profit from continuing operations net of income tax, net finance costs and depreciation and amortisation. EBITDA has limitations as an analytical tool, and one should not consider it in isolation, or as a substitute for analysis of the Group’s operating results as reported under IFRS.

e) Including VAT. Customers: Avtodor, the Federal Roads Agency, Moscow City Construction Department. Company estimates based on information available on the official Russian Federation public procurement information website http://zakupki.gov.ru.

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NOTES TO EDITORS

Mostotrest PJSC is the largest diversified infrastructure construction company with a footprint across all key and related market segments, and a participant in pioneering public-private partnership projects in Russia. According to the EMBS Group, an independent industry consultancy, Mostotrest 2018 share of the Russian transport infrastructure construction market was 15%.

The Mostotrest Group core business segments include construction and reconstruction of bridges (including road, railway and city bridges), roads and other transport infrastructure, as well as road maintenance, repair and operation services. In 2012, Mostotrest also diversified into road concession management.

The company was founded in 1930 for the construction of customized and extra-large bridges.

Currently, Mostotrest is involved in the implementation of a number of complex integrated transport infrastructure projects, such as construction and reconstruction of segments of the M-1 “Belarus”, M-4 «Don» and M-7 “Volga” highways, as well as Moscow City transport infrastructure development.