OJSC Mostotrest announces full year results for 2010
Mostotrest, Russia’s leading transport infrastructure construction group, produced a strong operating and financial performance in 2010, growing market share, increasing profits, and winning a number of new high profile tenders. The Group continued its strategic drive to increase the scale and scope of its operations, acquiring ETS and TSM during the year. The integration of these businesses proved very successful, increasing the Group’s backlog, broadening its service offering and enabling it to tender for, and win, several major infrastructure projects. Mosotrest ended the year in a very strong financial position and, with minimal debt and substantial net cash, helping the Group to deliver growth in 2011.
- Market share up to 8.4%(b) from 7.8% in 2009 – driven by growing volumes of works carried out with the own work forces(b).
- Backlog increased by 35.6% to 235.0 bln. rubles(c) - reflectingMostotrest's strong integrated business platform and diversified operations.
- Awarded the two largest transport infrastructure construction tenders in Russia at a combined value of 91.3 bln. rubles(c) including the 41 bln. rubles(c) construction of a section of the Moscow – Saint Petersburg highway and the 50.3 bln. rubles(c) construction of Kurortny Avenue alternate road in Sochi.
- Double-digit revenue growth in Group’s priority business segments - in its priority business segments, the Group achieved very strong trading with revenue up by 15.4% in bridge and road construction, 42.7% in railways and 113.5% in airports. Headline revenue dipped slightly by 5.2% to 74.9 bln. rubles (2009: 78.9 bln. rubles)as a number of projects were carried over into 2011.
- Gross Profits grew 4.2% from 10.6 bln. rubles in 2009 to 11.1 bln. rubles in 2010 driven by a 6.6% decrease in cost of sales - driven by increase in the share of work conducted in-house, which in turn reduced the expenses of subcontractor services. Gross profit margins increased from 13.4% to 14.8%.
- EBITDA(d) grew by 10.4% to 9.0 bln. rubles, with margin increasing from 10,3% to 12.0% - driven by growth in gross profits and reduction of administrative expenses.
- Adjusted net profit (i.e. profit from continuous operations without taking into account dividends paid in ETS and TSM, non-controlling interest and amortisation from consolidation) increased by 17.2% to 4.4 bln. rubles.
- Net cash volumes (cash and cash equivalents less loans and borrowings) stood at 13.3 bln. rubles at year end 2010 – this figure was 6 times higher than the figure at year end 2009.Such high level of net cash gives the Group great opportunities for further business growth.
- Recent acquisitions integrated and demonstrated sound financial performance - ETS (51.0%) and TSM (50.1%) acquired in Q2 2010 contributed to the strong overall performance of the Group.
Commenting on the results, CEO of OJSC Mostotrest Vladimir Vlasov said:“Although in 2010 the construction sector was still suffering from the consequences of the economic downturn, the markets in which Mostotrest operates proved to be very stable and this was reflected in our own performance and results.
2010 was an important year for Mosotrest. We made impressive progress towards our goal of becoming the leading integrated infrastructure group in Russia, increasing our market share and backlog, growing our revenues in our core segments and broadening our service offer into new infrastructure segments. The strategic acquisitions of ETS and TSM have bedded down well and we are already capturing the synergies - our integrated business model benefits from the additional general contracting expertise and access to new markets. This in turn increases our ability to bid for and win the largest tenders as we demonstrated in 2010.
We expect our markets to continue to grow in coming years, underwritten by both macroeconomic forecasts of growth and by large scale infrastructure projects that the authorities are committed to implementing, such as the 2014 Winter Olympic Games in Sochi, the APEC-2012 Summit in Vladivostok, and the 2013 Universiade in Kazan.
In 2011 the Russian government expects to increase significantly the level of federal spending on transport infrastructure, and Moscow, Russia’s biggest city, also sees investment into construction infrastructure more than tripling over the coming year. Mostotrest’s leading market presence and its very strong finances mean that it is ideally placed to take advantage of these favourable market conditions and to grow the business further in 2011”.
a) Pro forma financial statements has been prepared for information purposes only and does not reflect the actual results of operation of MSTT, if the acquisition of OOO Corporation Engtransstroy (ETS) and OOO Transstroymekhanisatsiya (TSM) had taken place on 1 January 2009. Pro forma financial statements are not necessarily indicative for the consolidated results of operations and financial position of MSTT for any future periods. Pro forma financial statements reflect MSTT's best estimates and have been prepared on the basis of available information and certain assumptions. The actual consolidated results operation and financial position of MSTT may differ significantly from the pro forma financial statements because of various reasons.
MSTT has chosen to prepare this press-release on the basis of the pro forma financial statements to better illustrate the performance of MSTT and its subsidiaries for the reporting periods. Pro forma financial statements should be read in conjunction with the audited consolidated financial statements of MSTT, prepared in accordance with the IFRS for 2010. This press-release quotes the balance sheet data from the consolidated financial statements.
The results of operations described in the pro forma financial statements, may not be comparable with the consolidated financial statements and may not be accurate with respect to future periods, given that MSTT, ETS and TSM were not under common control until 28 June and 13 May 2010, respectively.
The detailed “basis of presentation” description can be found in the Appendix nr. 3 at the end of the press-release.
b) Calculated as amount of works conducted in-house (revenue excluding services of subcontractors) in 2010 divided by 2010 market volumes according to PMR report. PMR is an independent industry consultant that provides market information advisory services in respect of central and eastern European countries and other emerging markets.
c) Excluding VAT.
d) EBITDA is defined as net profit from continuing operations net of income tax, net finance costs and depreciation.
NOTES TO EDITORS
Open Joint Stock Company “Mostotrest”, including OOO “Corporation Engtransstroy” and OOO “Transstroymekhanisatsiya”, is the largest diversified Russian infrastructure construction company and market leader among bridge construction companies of Russia. According to independent industry consultant PMR report, Mostotrest in 2010 had 8.4% of the Russian infrastructure construction market (excluding road maintenance and overhaul).
The Company’s core operations include construction and overhaul of bridges (including highway, railway and city bridges) and highways and other infrastructure facilities.
The Company was founded in 1930 for the construction of extra large bridges. The company has completed over 7,500 infrastructure facilities including bridges, foot bridges, tunnels and complex transport interchanges to date.
Mostotrest is currently working on many important infrastructure projects in Russia, including construction of the infrastructure facilities for the Sochi Winter Olympics 2014, the section of the Moscow Fourth Ring Road, infrastructure facilities on the M-4 “Don” highway and others.
Mostotrest shareholder structure:
38.9% - Marc O’Polo Investments, with beneficiaries including Arkady Rotenberg and top-managers of N-Trans Group: Konstantin Nikolayev, Nikita Mishin and Andrei Filatov;
26.5% - Blagosostoyanie Pension Fund;
34.6% - Free-float.
To learn more on Mostotrest, please visit www.mostotrest.ru.
Some of the information in this announcement may contain projections or other forward-looking statements regarding future events or the future financial performance of Mostotrest. You can identify forward-looking statements by terms such as 'expect', 'believe', 'anticipate', 'estimate', 'intend', 'will', 'could', 'may' or 'might', the negative of such terms or other similar expressions. Mostotrest wishes to caution you that these statements are only predictions and that actual events or results may differ materially. Mostotrest does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of Mostotrest, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, market change in the Russian infrastructure construction market, as well as many other risks specifically related to Mostotrest and its operations.
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