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Mostotrest publishes 1H2017 results


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 2017(a).

Mostotrest, Russia’s leading integrated transport infrastructure construction group, achieved strong financial results for the first half of 2017 benefiting from a significant upturn in construction volumes: revenue increased by 24% and net profit rose 4.7 times. 

Key Operating and Financial Results 

  • Backlog(b) stood at RUB365.5* billion, with new contract additions totaling RUB29.5* billion(c)
  • Revenue grew 24% year-on-year, to RUB84.2 billion, driven by increased construction volumes
  • Gross profit grew 13% to RUB11.0 billion in 1H2017
  • EBITDA(d) grew 18% on a like-for like basis, to RUB7.4 billion 
  • Net profit increased 4.7x to RUB2.2 billion
  • RUB3.0 billion dividend was paid out for 2016, representing 60% of IFRS profit for 2016

Mostotrest CEO Vladimir Vlasov comments on the results: 

«I am happy to report that the financial performance of the Mostotrest Group continues to show strong positive dynamics. In the reporting period, we again achieved double-digit growth in revenue, gross profit and EBITDA, as well as a multiple increase in net profit.

All our ongoing projects are progressing on schedule and within budget. Large-scale priority projects are characterized by the need to deliver significant construction volumes within a short space of time and so require mobilization of additional personnel and equipment. In the reporting period, in a number of segments we chose to forgo subcontracting and to use the services of third-party labor and equipment providers instead. This decision was driven by the following factors: a sharp reduction in the available pool of skilled subcontractors able to deliver the necessary quality and speed, combined with the fact that the use of third-party suppliers under Mostotrest supervision enables the Group to minimize future downtime risk  for its own resources and to preserve funding otherwise required for the acquisition of specialized equipment during the peak load. Therefore, in the reporting period, our expenses related to third-party personnel and equipment providers increased significantly. However, the Group effectively managed its other fixed costs. At the same time, due to an ongoing reduction in the number of financially strong subcontractors, Mostotrest increased its provisions for doubtful accounts receivable in the reporting period.

Importantly the Group's financing costs during the period decreased significantly, driven by a sharp reduction in interest rates on bank loans in the reporting period, as well as an attractively priced corporate bond issue completed in 2H2016.

Our current backlog allows us to approach the bidding process selectively. Therefore, in the absence of large projects on the market in the reporting period, we only marginally increased our backlog with new projects. Currently, we are considering participation in a number of new tenders, mainly in the City of Moscow. And we continue to deliver significant construction volumes under the key ongoing contracts in our backlog, which should support a strong financial performance by the Mostotrest Group in 2017.»

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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 2017 and 2016, 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 2017 and 2016. 

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) Backlog is not a measure defined by IFRS or RAS. 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, net of 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. 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.  

NOTES TO EDITORS

PJSC Mostotrest is the largest diversified company in the field of infrastructure construction, with a presence 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 2016 share of the Russian transport infrastructure construction market was 14.6%.

The Mostotrest Group key business segments include construction and reconstruction of bridges (including road, railway and city bridges), highways and other transport infrastructure, as well as road repair and maintenance services. In 2012, the Group diversified into a new business segment of road concession management.

The Company was established in 1930 for the construction of special and extra-large bridges.

Currently, Mostotrest is involved in a number of complex integrated transport infrastructure development projects, such as construction of several segments of the M-11 “Moscow – St. Petersburg” Highway, construction and reconstruction of segments of the M-4 “Don” Highway, and construction of the Kerch Strait Bridge.

For more detailed Company information, please visit www.mostotrest.ru

Full press-release