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Mostotrest announces Full Year 2012 Results


 OJSC Mostotrest (the Company or, together with its subsidiaries, Mostotrest or the Group) publishes its 2012 financial and operating results(a). Mostotrest, Russia’s leading integrated transport infrastructure construction group, delivered record financial results in 2012. The Group’s record financial result in 2012 was primarily driven by strong growth in construction volumes: revenue increased by 26%, and EBIDA and net profit grew by 22% and 17% respectively. Mostotrest increased its market share to 9.4% (b) in 2012. The Group continued to build a diversified business platform, including in-house design and site preparation ensuring efficient construction as well as concession and road maintenance business.

Key Operating and Financial Results:

  • The Group’s  market share increased to 9.4%(b), on the back of a 24% growth in in-house construction volumes (c)
  • Order intake(d) amounted to at RUB108.7* billion(e), backlog amounted to RUB304.8 billion
  • Revenue rose 26% to RUB123.7 billion, driven by increased construction volumes
  • Gross profit grew 14% to RUB14.8 billion, from RUB13.0 billion in 2011, driven by an increase in both in-house and subcontracted(f) construction volumes 
  • EBITDA(g) increased by 22% to RUB11.6 billion, while EBITDA margin was broadly flat at 9.4% 
  • Net profit grew 17% to RUB4.3 billion. Adjusted net profit(h) increased by 20% to RUB6.4 billion.

CEO COMMENT
“A solid backlog allowed us to outperform the market and deliver a 24% increase in in-house construction volumes increasing so the Group's market share to 9.4% in 2012.

The Group was able to convert these operational achievements into a record financial results demonstrating an revenue increase of 26% and EBITDA increase of 22%, which is certainly a great success.

This year we have improved our business platform further. First, we were able to acquire a concession business – a 50% stake in NWCC - that allows us to diversify our business toward long-term stable cash flows, effectively complementing the core construction business. Second, we have increased our presence in the services segment through the acquisition of NITP, a road repair and maintenance  firm, and we in addition increased our share in United Toll Collection Systems (UTCS), a company specialising in toll roads operation. The services segment appears to be quite promising and has added RUB21 billion in projects to the Group's backlog in its very first year of operation. Third, we have restructured our participation in TSM and ETS, increasing our share in TSM and exiting from ETS. The implementation of our strategy has enabled Mostotrest to build a unique business platform including construction, concession and services.

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a) This press release has been prepared on the basis of consolidated financial statements under IFRS for the year ended December 31, 2012, as well as management accounts for this period, as combination of both support general understanding of financial and operating results of all companies of the Group for the year ended December 31, 2011 and 2012.

For a more accurate explanation of data, the press release uses special notation. Information prepared on the basis of management accounts is marked with {*} throughout this document.

For more information about the representation basis, please refer to Appendix 2.

b)  Calculated as the amount of work performed in-house (revenue net of other revenue and cost of services of third-party subcontractors) in 2012, divided by 2012 market volume (including road repair and maintenance), in accordance with the EMBS Report (an independent consultant providing, among others, information and research on developed and emerging markets).

c) The amount of work performed in-house is calculated as revenue net of other revenue and cost of subcontractor services.

d) Backlog is not determined under IFRS or RAS. Backlog of an organization as of a given date represents management estimate of the value of outstanding work under concluded construction contracts for projects to be completed in the future, excluding VAT. The value is calculated as the total value of construction contracts to be completed in the future, net of revenue already recognized on such contracts. The total value of the contract for a specific project reflects the total amount that the company expects to receive under the contract for such a project, based on the assumption that the contract will be executed in accordance with all its terms. A project is included in the backlog of an organization after making a guarantee letter or receiving a letter from the customer confirming the tender award. The size of backlog may not reflect the future performance of the organization.

e) Net of VAT.

f) Subcontracted volumes are calculated as the ratio of cost of subcontractor services to revenue net of other revenue.

g) EBITDA is calculated as operating profit net of profits tax, net finance costs and depreciation. EBITDA is not defined by, or presented in accordance with IFRS. EBITDA as an analytical tool has limitations and should not be regarded separately from other indicators, or used instead of analyzing the results of operations of the Group, presented under IFRS.

h) Adjusted net profit is defined as operating profit before ETS and TSM dividends, share of non-controlling participants and depreciation, which are accounted for during consolidation.

NOTES TO EDITORS
Mostotrest is the largest diversified infrastructure construction company and a leading bridge-building company in Russia. According to EMBS Group, an independent industry consultant, Mostotrest had a 9.4% share in the Russian infrastructure construction market (except road repair and maintenance) in 2012.

The core competence of Mostotrest is construction and reconstruction of bridges (including road, rail and urban bridges), highways and other transport infrastructure.

The Company was founded in 1930 for the construction of extra large bridges. Over the years the Company completed more than 7,500 various infrastructure projects, including bridges, overpasses, tunnels and interchanges.
Currently, Mostotrest participates in the implementation of major infrastructure projects in Russia, including transport infrastructure for the 2014 Sochi Winter Olympics, a traffic interchange at the Entuziastov Avenue in Moscow, projects on M-4 "Don", M-7 "Volga" highways, etc.

Mostotrest Ownership Structure:
38.6% - Marc O'Polo Investments (beneficiary owners: Igor and Arkady Rotenberg, and executives of the transport Group N-Trans: Konstantin Nikolayev, Nikita Mishin and Andrei Filatov)
27.1% - TransFinGroup Management Company, the trust managers for Blagosostoyaniye Non-governmental Pension Fund
34.3% - free float.

For more information about Mostotrest please visit: www.mostotrest.ru

LEGAL DISCLAIMER
Some of the information contained in this press release may contain projections or other forward-looking statements regarding Mostotrest performance. Such projections and statements are indicated with words and expressions such as "expects", "anticipates", "estimates", "plans", "will", "may", "could", "possibly", including their negative forms and other words and expressions that have similar meaning. Mostotrest draws your attention to the fact that such statements are only predictions and assumptions with respect to future events and performance, while actual future events and performance may differ materially from those projected. Mostotrest declares that forecasts contained in this communication will not be subject to adjustment to reflect occurrence of any projected future events or those events, the occurrence of which was not known in advance. The actual future results may differ materially from those projected by Mostotrest, due to the influence of a number of factors. Such factors may include general economic conditions, our competitive environment, risks associated with economic activities in the Russian Federation, changing conditions in the Russian infrastructure construction market, as well as many other risks specifically related to Mostotrest and its activities.

Information contained herein is not intended for publication or distribution in whole or in part within the United States of America. These materials do not contain or constitute an offer for sale or purchase of securities in the United States. The securities referred to herein have not been and will not be registered under the United States Securities Act 1933  (hereinafter as amended and supplemented - Securities Act) and may not be offered or sold in the United States in the absence of registration under the Securities Act or an exemption from registration under the Securities Act or in a transaction that is not governed by registration provisions of the Securities Act.
Information contained herein is intended only for those persons in the United Kingdom, who in accordance with the Financial Services and Markets Act 2000 (hereinafter - FSMA) and Article 19 of the 2005 Order published in connection with the FSMA are «authorized persons» or «exempt persons» with professional investment experience, as well as for those to whom these materials can be transferred legally. No other person should be guided by these materials or rely on their content.

Distribution of information contained herein is limited.  Information contained herein is not intended for distribution in whole or in part in Australia, Canada or Japan.

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