OREANDA-NEWS. April 16, 2012. Mostotrest (hereinafter – MSTT or jointly with its subsidiaries Engtransstroy (ETS) and Transstroymekhanisatsiya (TSM) – Mostotrest, the Company or the Group) publishes its full year 2011 financial and operating results (a).

SUMMARY

In 2011, Mostotrest, Russia’s leading infrastructure construction group, delivered strong operating and financial results. The Group strengthened its market position, increased its profits and won a number of major tenders, including several innovative full life cycle projects. The Group continued to implement its strategy of acquiring new competences, develop existing competences, and diversifying into new business segments.

Key Operating Results
The Group’s market share increased to 8.6%(b), driven by an increase in the volume of works performed using its own in-house capabilities(c)
Backlog(d) rose 36% to RUB 319.8 billion, driven by, among other factors, participation in new-style infrastructure contracts in Russia
The Group won the three largest transport infrastructure development contracts tendered in Russia in 2011, with a combined contract value of RUB 74.0 billion(e), including construction, repair, maintenance and toll-based operation of a segment of the Moscow- Saint Petersburg Highway (Vyshny Volochek Bypass) (value: RUB 42.1 billion(e)), upgrade, repair and maintenance of a segment of M-4 Don Highway (value: RUB 16.3 billion(e)), and M-9 Baltiya Highway upgrade (value: RUB 15.7 billion(e)).

Key Financial Results
Revenue grew 32% to RUB 99.0 billion, driven by increased construction volumes
Gross profit increased by 18% to RUB 13.0 billion versus RUB 11.1 billion in 2010, driven by increased construction volumes along with increased share of works performed using services of subcontractors(f)
EBITDA(g) rose 6% to RUB 9.5 billion; EBITDA margin was 10% in 2011
Net profit grew 3.7x to RUB 3.7 billion. Adjusted net profit(h) increased by 20% to RUB 5.3 billion
Net cash position as at 2011 year-end grew 63% year-on-year to RUB 21.6 billion, driven by advances received, including from large contracts newly signed in 2011.

CEO COMMENT

“Despite slow growth in the industry in 1H2011, the infrastructure construction market performed strongly over the period growing 12% year-on-year.

2011 was one of the most successful years in the history of Mostotrest. Last year we significantly increased our project backlog and revenue, entered into related segments, developed new competences and expanded our headcount.

In 2011, we actively pursued implementation of complex infrastructure projects. Capitalising on our strong general contractor capability, our scale and our successful partnerships with international players, we were able to respond to new industry trends. Indeed, during the year we signed two full life cycle contracts where we will be responsible not only for the construction of roads but also for their subsequent maintenance and rehabilitation. a totally new concept in Russia. In addition, we won an operator’s contract for upgrade, repair, maintenance and toll-based operation of a segment of M-4 Don Highway.

Such contracts require that the general contractor not only has an impeccable reputation, but also the appropriate managerial and technical expertise in several different areas of transport infrastructure construction. These projects fit logically with our strategy of diversifying our operations and developing our presence in related business segments, including road maintenance and rehabilitation, and they lay a solid foundation for the Company’s further participation in these new-style contracts in Russia going forward”.

MARKET OUTLOOK

Development of transport infrastructure remains an absolute priority for the country. We are optimistic about the market prospects for infrastructure construction in Russia. In 2012, we expect the government to continue its investment in programs to develop the national road network, a key segment of our business.

As a next step, life cycle contracts may require the contractor to also assume the design responsibility. In addition, the government’s strategy to increase the length of tollroads will require expertise in installation and operation of traffic management systems. These trends are expected to result in projects becoming far bigger and much more complex which will strengthen the competitive position of the large diversified players like Mostotrest.

Government plans for transport infrastructure development, the size and quality of our backlog along with our construction expertise and our own production capacity allow us to be optimistic about the future.