PJSC Mostotrest announces 1h2018 operating and financial 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 2018(a).

Key Operating and Financial Results:

  • Backlog(b) of the Group amounted to RUB319.9* billion (+11% to the beginning of the year), driven by new construction projects and road repair and maintenance volumes (including under existing long-term investment contracts entering operating phase) totalling RUB117.8* billion(c)
  • Revenue grew 3% to RUB86.5 billion year-on-year, driven by increased construction volumes
  • Gross profit fell 11% to RUB9.8 billion in 1H2018. Gross margin was 11.4%, down from 13.1% for the previous reporting period, mainly due to an increase in the share of subcontracted volumes(d)
  • EBITDA(e) was RUB6.9 billion, a 6% decrease on a like-for-like basis, due to a decrease in gross profit
  • Net profit was down 72% to RUB624 million
  • Capex totalled RUB1.6 billion.

Mostotrest CEO Vladimir Vlasov comments on the results:

“The key milestone for Mostotrest in the first half of 2018 was, without doubt, the launch of traffic on the road section of the Kerch Strait Bridge. Thanks to well-coordinated efforts of our builders and engineers, the bridge was put into operation six months ahead of contractual deadline.

Since the beginning of the year, the backlog of Mostorest increased by 11%, driven, among others, by the Services segment. The Group's backlog expanded with new projects at Mostotrest-Service, our road repair and maintenance subsidiary, and was boosted by existing large long-term investment contracts entering operating phase. Also in the reporting period, a RUB34.6 billion tender for the construction of a new section (Salaryevo Station – Stolbovo Station) of the Moscow Underground Sokolnicheskaya Line was held, following a postponement in 2017. Awarded to Mostotrest, the contract became the market's largest to be tendered in the first half of 2018. The total volume of tenders was RUB119.9 billion(f), a 38% decrease on a like-for-like basis. 1H2018 average tender size was RUB2.1 billion(f).

In terms of financial results, Mostotrest revenue increased by 3%. However, increased share of subcontracted volumes, prices for materials and financial costs associated with significant leverage used to co-finance long-term investment contracts and finance working capital for a number of large-scale projects with accelerated construction and completion, resulted in a decrease in the Group's profits”.
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 2018 and 2017, 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 2018 and 2017.

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 ôbasis of presentationö 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 companyĺs backlog represents its managementĺs 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 entityĺs future operating results.

c) Excluding other revenue. Net of VAT.

d) The share of subcontracted volumes is calculated as the ratio of cost of subcontractor services to revenue.

e) 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 Groupĺs operating results as reported under IFRS.

f) 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.