Pillars of Success ANNUAL REPORT 2013 Pillars of Success

Тhe largest diversified company in the Russian transport infrastructure construction market, with a presence across A success story all core and related business 1 for more than 80 years 8 segments, and a participant in ’s pioneering public- Presence private partnership (PPP) in the most projects. 2 attractive investment regions 11 Unique broadly 3 diversified market player 12 Participation in all key 4 infrastructure development projects 24

Strong and growing 5 backlog 30

Leader in the road 6 services segment 40

Stable

7 management team 53

The only publicly listed 8 company in the sector 57

Strong engineering 9 tradition 68

http://mostotrest.ru/ Key Operation Activities

Construction Services Road Concession

Leading player in the Russian infrastructure Toll and bridges operation (UTS), With its joint venture partner VINCI, construction market. road repair and maintenance services Mostotrest owns 100% of NWCC on an equal (Mostotrest-Service). basis

What We Do What We Do What We Do —— Construction of roads and bridges; 1. Toll road operation —— NWCC is the concession holder for —— Construction of railway infrastructure; —— Operation of toll collection systems and the km 15 – km 58 toll section of the —— Construction of airfields and airports; intelligent transport systems (ITS); M-11 “ – ” —— Construction of seaports and waterway —— Development and implementation of Highway, currently under construction, infrastructure; optimal technological solutions for in accordance with a concession —— Construction of other infrastructure and traffic management; agreement with Avtodor; non-infrastructure projects; 2. Maintenance of transport infrastructure —— Type of concession agreement: direct —— Management of complex infrastructure —— Road marking services; toll collection agreement envisioning projects as General Contractor; —— Maintenance of electric lighting, traffic toll segment construction and operation —— Reconstruction of transport light, traffic density monitoring and road based on the co-financing principle, infrastructure. weather information systems; with subsequent transfer to concession 3. Transport infrastructure repair services holder for temporary operation and return of investment through beneficiary toll collection.

Key 2013 Results Key 2013 Results Key 2013 Results —— Won biggest ever contract in history —— 3x increase in the length of roads under Construction 40% completed as at of Russia’s road building industry – maintenance; 31 December 2013 construction of Section 6 of M-11 —— Number of branches increased from 5 “Moscow – St. Petersburg” Highway; to 12; —— Commissioned first ever life cycle —— Operations started on the first segment project in Russia – Voronezh Bypass on of M-4 “Don” Highway and first M-4 “Don” Highway; revenues generated; —— 17% revenue growth year-on-year. —— 4x revenue growth compared with 2012.

Financial Results, RUB billion Financial Results, RUB billion Revenue 106.9 Revenue 10.7 Gross Profit 11.9 Gross Profit 2.0 EBITDA 7.5 EBITDA 1.8 Net Profit 1.6 Net Profit 1.0 2013 Key Financial and Operating Results Ownership Structure

Backlog, RUB billion Market Share, % Mostotrest shares in affiliated and subsidiary companies % p. p. +26 + 0.5

2013 355.4 2013 9.9 %

2012 281.3 2012 9.4 %

2011 2011 279.9 8.6 % Construction Services

Revenue, RUB billion Gross Profit, RUB billion TSM UTS % % Construction and reconstruction of roads, Toll road operation, including as part of lifecycle airports and airfields, railway infrastructure and contracts +24 + 7 ports infrastructure Mostotrest-Service 2013 116.7 2013 14.0 Mostostroy-11 Operation, maintenance, repair and overhaul of Construction and reconstruction of road, railway roads and bridges and city bridges 2012 94.1 2012 13.1

% % 2011 2011 TSM 84 UTS 84 66.1 11.5

Mostostroy-11 25% Mostotrest-Service 60% Net Debt, RUB billion Net Working Capital, RUB billion

2013 (22.0) 2013 (32.1) Road concession

2012 2012 (0.2) (5.6) NWCC Toll road operation, including as part of 2011 2011 lifecycle contracts (17.5) (18.6)

% Revenue breakdown by segment, % NWCC 50

Construction Services Other 91% 8% 1% Shareholders structure % as of 31.01.2014

AM companies for Marc O’Polo 38.6% NPF BLAGOSOSTOYANIYE 29.4% Free float 32.0% Construction revenue breakdown by project, %

Bridges and highways Other 93% 1%

Marc O’Polo Investments Ltd. is a holding company. It is beneficially owned by NPF BLAGOSOSTOYANIYE is a non-governmental pension fund established Airfields and airports top-managers of N-Trans Group (N-Trans Group – largest private transportation with the participation of Russian Railways. 6% company in Russia, CIS and the Baltic states) Konstantin Nikolayev, Nikita Mishin and Andrei Filatov (31.55% in equal shares) and Arkady and Igor Rotenberg (68.45%). Pillars of Success

01. About Us 05 08 10 12 14 ABOUT US Chairman’s Company History Top Projects Business Model Mostotrest 2014–2018 and CEO’s Statment Key Development Areas Reputation as a reliable contractor with Footprint in regions that have traditionally The only broadly diversified industry an 80 year track record been key beneficiaries of investment in player: presence in all core and related infrastructure development market segments; experience in managing integrated, technically complex projects

02. 2013 Results 17 26 32 2013 RESULTS Market Overview Operating Results Financial Results

Participation in all key projects that will shape market development Strong and steadily growing backlog securing financial Russia’s biggest road maintenance and operation player in the medium term stability of the Company in the coming years and supporting Mostotrest’s ability to be selective in regard to participation in new tenders

03. Corporate 43 44 53 56 57 CORPORATE GOVERNANCE Governance Corporate Governance Principles Corporate Governance Structure Management Internal Control and Audit To Investors and Shareholders

Stable management team with impeccable The only publicly listed company in the industry reputation sector, the Company’s strong financial reputation and excellent relationships with leading banks gives it access to cheap debt financing

04. Social 63 70 74 SOCIAL RESPONSIBILITY Responsibility Personnel Occupational Health and Industrial Safety Environmental Protection

Most admired personnel in the industry , strong engineering tradition, professionals with vast experience in construction of highly complex infrastructure

05. Appendices 79 118 126 128 APPENDICES Consolidated Risk Management Basis for Presentation of Information Key Terms and Definitions Financial Statements

2 Mostotrest Annual Report 2013 3 Pillars 01. of Success About Us

Reputation 5 Chairman’s and CEO’s Statment as a reliable contractor with a proven 8 Company History track record

10 Top Projects 8

Footprint 12 Business Model in leading regions for infrastructure investment 14 Mostotrest 2014–2018 Key Development Areas

11

The only broadly diversified industry player with a presence in both core and related business segments

12

4 | CHAIRMAN’S AND CEO’S STATMENT 01. ABOUT US

Vladimir Vlasov Georgy Koryashkin CEO Chairman of the Board

CEO Member of the Board of of Mostotrest since 2006 Directors of Mostotrest since 2006

02. 2013 RESULTS

03. CORPORATE GOVERNANCE Dear Shareholders, Partners and Colleagues,

2013 was a challenging year for the Russian economy as The construction of the Kurortny Avenue Relief Road a whole and for infrastructure construction companies in was one of the most challenging large-scale projects the particular. We saw a significant slowdown in the rate of Company has ever undertaken. In addition to a 2-kilometer economic growth: GDP grew by 1.3% compared to 3.4% in section, the project included the construction of dozens of 2012. This was due to several factors, including low levels engineered structures: tunnels, interchanges, bridges and of investment especially in the real estate sector of the overpasses. The work was carried out in difficult geological economy and in infrastructure. In addition, co-financing and climactic conditions, applying the latest technology and of infrastructure projects from the National Welfare Fund utilizing a large number of subcontractors. We are proud 04. SOCIAL RESPONSIBILITY was postponed. As a result, the overall construction index that the road opened for traffic as planned, ahead of the in 2013 declined by 2.4%, and the transport infrastructure start of the Olympics. development segment was down 1%, primarily due to modest growth in investment in road and bridge construction (+1% compared with 2012) and reduced volumes of railway and airport infrastructure construction. Nevertheless, it is pleasing to note that, as in previous years, we continued to steadily increase our market share, which reached 9.9% in 2013, up from 9.4% in 2012.

2013 saw Russia enter the final and decisive phase 05. of preparations for the XXII Winter Olympics in . We continued to steadily increase our market share, APPENDICES As a market leader, Mostotrest has, in recent years, been which reached involved in the construction of several major transport infrastructure projects in Sochi. These high-priority % national projects were completed within tight contractual deadlines and under testing conditions. 9.9

Mostotrest Annual Report 2013 5 We are the only large-scale full-service infrastructure company in the industry. As such, Mostotrest is present in all core and related market segments and has a number of distinct advantages, the most important of which, in our opinion, are: The Moscow-Saint Petersburg Federal Highway project will continue to be a key driver for the road infrastructure Experience in managing complex projects, including general market and Mostotrest growth over the next few years contractor expertise

Extensive regional branch network, knowledge of specific local engineering and construction conditions and the market environment; flexibility in capacity and workforce making it one of the most attractive and important projects redeployment awarded in 2013. We are confident that our highly skilled workforce and experience in managing complex projects will mean we are able to complete the project in full and on Proven reputation as a reliable contractor for high-priority government contracts and financially sound сompany with time. strong relationships with the leading banks The new highway section will be a direct extension of the Vyshny Volochok Bypass which the Company is currently Large and steadily growing backlog allowing selective approach completing. The fact that both projects are physically close to participation in tenders to each other has enabled us to rapidly redeploy significant production capacity and workforce at minimal cost. Importantly, the new route will bypass densely populated areas, which will minimize the costs of construction site clearance. At the same time, we are involved in building infrastructure adjacent to M-11 in Moscow: the Businovskaya Interchange and its road link with These factors supported Mostotrest’s ability to win all Festivalnaya Street, which will remove traffic bottlenecks major tenders, which in 2013 took place predominantly in the area by providing convenient road links between the in the second half of the year. Additions to the backlog in M-11 Highway, the and Leningradski 2013 included: construction of the Bridge in Nizhny Avenue. Novgorod and the Voroshilovsky Bridge in Rostov-on-Don; additional construction work on the M-9 “Baltic“ Highway The Moscow-Saint Petersburg Federal Highway project and a section of the -Nakhodka-Vostochny will continue to be a key driver for the road infrastructure Port Highway, as well as construction of sections of the market and Mostotrest’s growth over the next few years. We M-4 “Don“ Highway and M-11 “Moscow-St. Petersburg” believe that our existing participation in a number of phases Highway. As a result, our backlog has increased by 26%, of the project gives us a strong competitive advantage when increasing by more than RUB190 billion, to RUB355.4 billion. it comes to bidding for new contracts that are likely to be tendered in 2014. One important highlight was winning the tender to build the sixth section of the M-11 “Moscow-Saint Petersburg” We would also single out for mention the performance Federal Highway, a contract with an initial value of more of the new service-focused businesses we acquired in than RUB150 billion. In addition to the construction of 2012, namely Mostotrest Service (formerly NITP) which a 209 km stretch of roadway, the project also involves specialises in road repair and maintenance, and UTS, the a significant number of complex engineered structures, company that runs Russia’s first toll road on a section of

As a result, our backlog has increased by 26% to more than

RUB355 billion

6 the M-4 ”Don” Highway. In 2013, revenue from the service 01.

segment grew more than 2.5 times to RUB7.7 billion ABOUT US up from RUB2.9 billion in 2012. At the same time the segment backlog also increased. The total length of roads serviced by the company quadrupled year on year to about 3,500 kilometers. At the end of 2013, Mostotrest- Despite a significant decrease in the Group’s net profit in 2013, the Service launched the first intra-group contract covering Board of Directors has recommended that the General Shareholders the maintenance and repair of the Voronezh Bypass. As Meeting approve a maintained dividend of RUB 2.0 billion for UTS, it virtually completed the task of installing toll stations and other required infrastructure on the highway, and began performing its operator functions on the first highway sections in 2013. We see strong upside potential 02.

in the service segment, which offers stable cash flows and 2013 RESULTS attractive rates of return. comprehensive and rational resource management against a backdrop of dynamic volume growth allowed us to We are pleased that our subsidiaries are engaged in increase operating efficiency and reduce capex by 10%. execution of long-term contracts, delivering high-quality services to customers and generating stable cash flows. Despite a significant decrease in the Group’s net profit Further development of the service segment will help drive in 2013, the Board of Directors has recommended that the Group’s profits and return on investment. Another the General Shareholders Meeting approve a maintained new area of business development is road concession dividend of RUB 2.0 billion. The Board’s decision to maintain management, where we are involved in the concession the dividend reflects the Group’s strong market position project to build the first section of the new Moscow- and quality backlog, and the Board’s confidence in its future Saint Petersburg Highway. Despite issues related to site prospects. 03. CORPORATE GOVERNANCE clearance, we are working hard to open the highway to traffic on time. By the close of the year, we had completed In 2014, we expect the government to maintain its works equivalent to about 40% of the total contract value. investment focus on the development of key federal highways, including M-11 “Moscow-Saint Petersburg”, In terms of our financial results, the Company reported M-4 “Don”, M-1 “”, М-5 “Urals”, М-7 “Volga”, significant revenue growth of 24% year-on-year, and М-9 “Baltic”, where Mostotrest is already actively involved. delivered a 7% increase in gross profit. We regard this as Continued implementation of major infrastructure projects a major achievement, in the context of a year where we had in the run-up to the World Cup 2018 should be an additional to cope with the additional costs associated with the delayed market driver. release of the construction site in a densely populated conurbation of Greater Sochi, issues with subcontractors The Company has strong competitive advantages which will 04. SOCIAL RESPONSIBILITY and other challenges that inevitably arise during the enable Mostotrest to further strengthen its position across implementation of large-scale projects. all market segments and successfully participate in tenders for priority government infrastructure projects. At the same At the same time an increase in bad debt provisions time, as in previous years, we will thoroughly analyze the impacted the Company’s EBITDA and net profit terms of all government-held tenders before taking any performance. EBITDA was down 16%, while net profit decisions. We will continue to take a cautious approach decreased by 2 times. In 2014, we will focus on the recovery to building additional capacity, sticking to our policy of of provisions, including debt recovery through the courts. ensuring a balanced distribution of work between our own divisions and subcontractors. This conservative approach Importantly, we kept our balance sheet discipline and in the current market conditions will allow us to avoid maintained a low financial leverage, ending the year excessive costs and to continue the dynamic development of 05. with negative net debt of RUB22 billion. In addition, the Company. APPENDICES

The Company reported significant revenue growth of % 24

Mostotrest Annual Report 2013 7 | SUCCESS STORY FOR MORE THAN 80 YEARS /1945–1992/ /1992–2010/ /2010–2012/ 01. ABOUT US Throughout its 80-year operating history, the Company has earned a reputation as a reliable contractor that delivers high quality projects on time. To government customers in charge of key projects that will shape the development of transport infrastructure in Russia, Mostotrest is a general contractor of choice.

Product network Advanced Diversification in all expansion and production core and related market introduction capabilities, segments

/1930/ /1930–1941/ of innovative innovative Acquisition of controlling interest in construction engineering LLC Engtransstroy Corporation and 02. technologies technologies LLC Transstroymekhanizatsiya in 2010 2013 RESULTS allowed Mostotrest to substantially expand the geographic scope of the Creation of the regional Mostotrest actively increases business and list of construction network of production its production capacities and projects types, as well as develop branches volumes of works and services general contractor capabilities. provided Introduction of innovative In order to develop related road cutting-edge construction Mostotrest upgrades repair, maintenance and operation Mostotrest’s First bridge-building technologies and expands its fleet of segments as well as road concession construction machinery, incorporation company in USSR Mostotrest acquired in 2012 Mostotrest’s Establishment of 12 plants equipment and vehicles Company founded in 1930 by Prior to 1941 – Mostotrest was producing bridge metalware controlling interests in Mostotrest- contribution to Russian Service and UTS and a 50% the Council of the People’s the only specialized bridging In 2007, Marc O’Polo shareholding in NWCC Commissars of the USSR organization in the USSR. economy recognised Investment Ltd. became the under the name All-Soviet by the highest state majority shareholder of the Trust for the construction of Between 1930 and 1941, Company and currently holds 03. CORPORATE GOVERNANCE extra-large bridges Mostotrest built nearly 200 awards 38.6 percent of its shares large bridges totaling over 1954 – Mostotrest as a part of 35 km in length, including Glavmostostroy became part of the major bridges over rivers the newly created Ministry of Dnieper, Volga, Angara, Oka, Transportation Construction of Moscow the USSR

1958 – Mostotrest awarded Order of Lenin for the successes in the development of Russian bridge 1930 1950 building 1990 2013 04. 1940 1960 2000 SOCIAL RESPONSIBILITY

/1992/ /2013/ /1930–1941/ /1941–1945/ /1945/ /1992/

05. Mostotrest’s contribution to The largest diversified APPENDICES Production Infrastructure Mostotrest’s Russian economy recognised Mostotrest reorganized company in the Russian development construction reorganization by the highest state awards into an open joint stock transport infrastructure construction market In-house production and overhaul May 1945 – Mostotrest became 1980 – Company awarded Order of the company Red Banner of Labour of specialized bridge- part of Glavmostostroy, an Mostotrest becomes the Mostotrest responsible for In December 1992, Mostotrest building equipment and entity then controlled by the market leader in the transport restoration of bridges destroyed 15 employees of Mostotrest awarded was reorganized into an open joint inventory metalware was USSR Transport Ministry infrastructure construction and during the Second World War Order of Lenin stock company established and underwent a significant operation sector with a market from the Volga to the Visla reorganization share of 10%

8 Mostotrest Annual Report 2013 9 | TOP PROJECTS 01. ABOUT US Top Projects Won in 2013 Project Geography

Mostotrest is building priority transport infrastructure in those Russian regions that have traditionally been the key beneficiaries of investment in the sector.

RUB122.5 billion1 RUB14.7billion1 RUB11.0 billion Sheremetyevo Businovskaya and M-11 “Moscow-St. Petersburg“ Moscow 4th Ring Road Airport Molodogvardeiskaya Traffic Highway Segments: km 15 – Section Interchanges km 58, km 258 – km 334 Construction, maintenance, over- Construction, maintenance, Construction of Volga River bridge (Vyshny Volochok Bypass), km 334 – km 543 02. haul and operations of the sixth repair, and overhaul of the sec- in 2013 RESULTS section (km 334 – km 543) of the tion (km 517 – km 544) of the M-11 “Moscow – St. Petersburg” M-4 “Don“ Highway in the Voro- M-11 “Narva“ Highway nezh region (bypassing Novaya Highway Section Usman and Rogachyovka) Section of M-11 “Moscow – St. Petersburg” Highway Completion Date Completion Date Completion Date between Businovskaya Interchange and Festivalnaya M-8 “Kholmogory“ Street in Moscow Highway Section

2018 2016 2017 M-9 “Baltic“ Highway Sections Saint Petersburg 03. CORPORATE GOVERNANCE

Transport facilities providing development for the Russian capital’s transport infrastructure, in particular, Kirov transport links with the Skolkovo Innovation Center Dmitrov

Mostotrest Share in Total Volume of Tenders Held Own Production Capacity , % Moscow in 2013, RUB billion, % Serpukhov Kolomna 04. Nizhny Novgorod SOCIAL RESPONSIBILITY Purchased materials Tula Own productions Ryazan Don River bridge in 31% Rostov-on-Don

2 RUB468.6 48% Voronezh Volga River bridge 52% billion in Nizhny Novgorod Ekaterinburg 69% Rostov-on-Don

Capacity 05. Bituminous concrete, m3 1,300,000 APPENDICES Mostotrest 225.1 Precast concrete and reinforced concrete Others 243.5 structures, t 65,000

Ready-mixed concrete and sand/concrete mixes, t 900,000

Steel structures, t 37,000

M-4 “Don“ Highway Section M-5 “Ural“ Highway 1 Сontract value of construction stage only. (Novaya Usman and Section 2 Including VAT. Customers: Avtodor, Rosavtodor, Moscow City Construction Department. Company estimates based on information available on the official Russian Federation public Company divisions including factories Rogachyovka bypass) procurement information website http://zakupki.gov.ru. in Moscow and Tula

10 Mostotrest Annual Report 2013 11 | BUSINESS MODEL 01. ABOUT US The only broadly diversified industry player with a presence in all core and related business segments, and with experience in managing integrated, technically complex projects.

Maintenance Preparation Construction and Operation1

02. 2013 RESULTS

03. CORPORATE GOVERNANCE

04. SOCIAL RESPONSIBILITY

Project risk assessment Optimization of engineered solutions Execution: Maintaining traffic flow

In-house Planning and analysis Development of optimal execution schedule Subcontracted: Road maintenance

Non-core auxiliary work Pre-project optimization Composition of project execution team: (power( and lighting installations, relocation Scheduled repair and overhauls of utility and communication lines) 05. APPENDICES Selection of subcontractors Development of documentation Non-core construction and assembly work Maintenance, repair and modernization Selection of suppliers for competitive bidding of automated air and road traffic control Project management team Core work in remote regions which have systems’ equipment and infrastructure no deployed in-house capacity

Commissioning Toll collection in favor of government customer1

1 Related to toll segments.

12 Mostotrest Annual Report 2013 13 | MOSTOTREST 2014–2018 KEY DEVELOPMENT AREAS

Over the past few years through a combination of organic The Company will seek to maintain dividends to shareholders growth and acquisitions, Mostotrest has evolved from at an attractive level. a niche contractor into the largest diversified infrastructure construction player in Russia. The Company has the requisite Access to capital markets to finance projects will play an expertise and competences to build any type of transport important role. Mostotrest is the only publicly listed company infrastructure using both its own capacity and the involvement in the Russian transport infrastructure construction industry of qualified subcontractors. and has a reputation as a reliable borrower from the largest Russian banks, which provides the Company with certain The Company intends to further develop and improve its competitive advantages in terms of access to capital. business in line with the needs of the Russian infrastructure construction market. In early 2014, Mostotrest’s Board of New Acquisitions Directors reviewed the Company’s development strategy up to In addition to organic growth or cooperation with leading 2018 and decided on the following main development areas. players in specific business segments, Mostotrest may in future consider acquiring stakes and participations in other Business Expansion and Market Share Growth companies, subject to efficiency criteria. Independent analysts project an average annual growth rate of 4%1 for the transport infrastructure market between Mostotrest intends to strictly comply with its strategy for 2014–2018. About 70% of the planned investment will be spent future acquisitions. Any potential acquisition will be assessed on construction and repair of roads. The bulk of financing in terms of its cost-effectiveness compared with organic will be used to upgrade federal highways, build toll roads development, its strategic impact on existing operations, (Moscow – Saint Petersburg and Moscow’s Central Ring Road), the possibility for operational control, as well as in terms of and modernise Moscow’s transport infrastructure and that of required return on investment. other cities hosting the Football World Cup. The Company is considering increasing its stakes in its The Company intends to respond effectively to growth in the subsidiaries in order to consolidate the earnings of efficient transport infrastructure construction market and meet the and fast-growing businesses. high standards expected by major government customers, by focusing on improving the efficiency of its production and Platform for Successful Development management processes, increasing productivity and making A full set of competencies, a growing backlog, a strong sensible use of its material and intellectual resources. engineering component to its business, highly skilled engineers and workers, and an effective combination of Mostotrest’s current backlog covers 3 years2 of revenue, own production capacity with general contracting expertise which enables the Company to be selective with regard to certainly offer the Company additional opportunities for access new projects. The Company’s strategic plan envisions steady to capital markets. market share expansion. At the same time, the growth in the volume of construction work performed by the Company using Its reputation as a reliable contractor that has been delivering its own production capacity should not significantly exceed projects on time and to the required quality for over 80 years, market growth rate, enabling the Company to minimize the as well as its partnerships with major foreign players give risk of downtime. Mostotrest clear competitive advantages in bidding for infrastructure construction projects and PPP contracts. Revenue growth will be driven by a balanced distribution of construction work between the Company’s own capacity and The transport infrastructure construction market has very subcontractors. strong potential, while Mostotrest’s business platform enables the Company to respond flexibly to demand and offer transport Backlog growth will be driven by participation in large, infrastructure customers and users a full range of services, complex projects (mainly in the road construction segment) from project design to maintenance and operation, as well that only a handful of construction companies are able to bid as to invest in developing Russia’s transport infrastructure, for. while adding strategically important PPP projects, including concessions, to its backlog.

1 Sberbank Investment Research (Transport Infrastructure of Russia: The Right Development Path, October 2013), KPMG Research (Russian Road Infrastructure Development Outlook, November 2013). 2 Based on backlog and revenue as of and for the year ended 31 December 2013.

14 Development and Strenghening Positions in Core and Related Business Segments 01. ABOUT US

Construction Services and participation Road concession in long-term investment contracts

Mostotrest has vast Most major infrastructure construction projects in Russia The acquisition in 2012 of experience in construction are expected to be tendered off in the form of long-term a stake in the concession of all types of transport investment contracts (concession / lifecycle / operation). business will allow the infrastructure, including roads, Such tenders feature tighter requirements for bidders. Company to diversify its cash bridges, railways, airports and flows and generate stable 02. ports. The Company is able Additional competitive advantages include availability of high-margin revenue at 2013 RESULTS to respond flexibly to market design capability enabling construction companies to be the operating stage of the opportunities, while developing involved in the development of project documentation, concession. and strengthening its position as well as own capacity for long-term project repair and in those segments that are maintenance post-completion. Concession experience and expected to be a priority for Over the past two years, the Company has been actively the government. partnership with a strong developing its capabilities in the following areas: foreign player will be useful — — Project design; in the case of a rapid — Mostotrest expects to — Sites preparation; development of concession — generate the bulk of its — Road repair, maintenance and toll-based operation projects in Russia going revenue from road and bridge (Service Segment). forward. building projects, considering Mostotrest’s expertise in related business segments allows current priority financing of it to participate in complex, long-term projects not only the segment. However, should in the construction phase, but also in the pre-production, 03. government investment be operation and maintenance stages. It means that the CORPORATE GOVERNANCE channeled to the development Company can effectively assess risks associated with such of other segments of the projects at all stages of the life cycle, from bid submission transport infrastructure through to the end of the project’s service life. construction market, the Company intends to diversify Mostotrest’s subsidiaries have all the requisite its revenue sources by competences. They include, among others, the operator participating in new projects. that has been implementing Russia’s first ever contract for toll-based operation of a highway section, and a company specializing in comprehensive maintenance and repair of Considering its market transport infrastructure. leadership and competitive advantages, Mostotrest will The availability of such expertise within the Group creates be selective in its choice significant competitive advantages when bidding for lifecycle of projects and will only contracts and it allows the Company to control the long- 04.

participate in those with term stage of operation of the facility, thus avoiding risks SOCIAL RESPONSIBILITY clearly defined risk profiles, associated with subcontractors. attractive profitability and Over the next five years, Mostotrest intends to rapidly compatible geography. expand its business volumes in the Service Segment, which offers stable cash flows and attractive profitability levels.

05. APPENDICES

Mostotrest Annual Report 2013 15 Pillars 02. of Success 2013 Results

Participation 17 Market Overview in all key projects that will shape 26 Operating Results market development in the medium term

24 32 Financial Results

Strong and steadily growing backlog ensuring financial stability and supporting Mostotrest’s ability to be selective in its participation in new tenders 30

Leader in road repair, maintenance and operation segment

40

16 ABOUT US 2013 RESULTS CORPORATE GOVERNANCE SOCIAL RESPONSIBILITY APPENDICES 05. 01. 02. 04. 03. 17 the upgrade of Kazan International Airport, as well as as Airport, as well of Kazan International the upgrade to services of transport availability ensure to measures and participants in the Universiade. guests some to budgets allocated year, as in the previous Just that reasons for expended not fully segments were market related procedures legal lengthy familiar: become have preparation; site and construction land allotment to or documentation of finalized project unavailability lengthy redesign; the need for due to tenders delayed by and review approvals documentation for procedures of delivery or delayed deliver to failure the government; disasters. and natural contractors; by unscrupulous work impact on had a significant factors more In addition, two regulations in industry in 2013 namely,changes the market legal existing and amendment of of new (development budget financing as of federal acts), and the reallocation of East in the Far flooding of large-scale a consequence Russia. The most significant achievement of 2013 was the completion achievement of 2013 was the The most significant All preparatory in Sochi and Kazan. sites of the construction 2014 Sochi Olympics support to the transport to ensure measures implemented in full were Universiade and the 2013 Kazan were projects infrastructure transport In Sochi, seven and construction part of the Olympics as commissioned These sports resort. as a winter development the city’s structures, engineered which were 60% of projects, split-level as three as well roads, included 14.1 km of new interchanges. traffic 2013 included the Universiade for The preparations projects infrastructure of 67 transport construction installations, network and road 20 street junctions, (10 road organization etc.), platforms, 24 railway 4 subway stations, Kazan from transportation passenger of intermodal station, train central the city’s Airport to International in 2013 were: Annual Report 2013

Development of major transport hubs of major transport Development First-class transport support to the Sochi Olympics in 2014 and support to the Sochi Olympics First-class transport the Kazan Universiade in 2013 Measures to improve public access to transport services, services, to transport public access to improve Measures passenger airline of regional including the development services Full implementation of scheduled transport infrastructure infrastructure transport of scheduled implementation Full projects and repair maintenance development Implementation of public-private partnership (PPP) projects, of public-private Implementation to and other measures including in highway construction, infrastructure transport financing for extra-budgetary attract The key areas of transport infrastructure market transport infrastructure market The key areas of development Development of Russia’s core transport infrastructure infrastructure transport core of Russia’s Development priority. government a top remains | MARKET OVERVIEW | MARKET Mostotrest Transport Infrastructure Market Dynamics, RUB billion (net of VAT) –1% 648.8 +ХХ % Transport700 Infrastructure660. Market1 Dynamics,654.7 594.4 591.8 One2013 of the key reasons for the weak market dynamics648,8 RUB600 billion (net of VAT) Transport infrastructure construction’s share of the–1% total was the failure by government customers to fulfill their 500 obligations2012 relating to construction site+ХХ clearance. % 654,7 construction700 market was 660.1 654.7 648.8 400 594.4 591.8 The2013 Russian market is characterized by a situation648,8 where 600 300 the2011 contractor is often unable to begin construction660,1 work 500 % 2012 654,7 200 in a timely manner, as the construction site that has 2010 591,8 400 100 been released to him has not been cleared. As a result, 11 2011 300 660,1 construction2009 companies have to deal with the594,4 associated 200 2009 2010 2011 2012 2013 legal issues. Virtually all contractors working primarily Transport Infrastructure Market Dynamics, 2010 591,8 on large-scale projects (Moscow, Sochi) have to face such RUBSource:100 billionPMR and EMBS(net Group of VAT Report) s –1% issues. The significance of these problems is reflected in 2009 +ХХ %594,4 700 2009 2010 660.20111 654.20127 648.82013 the bankruptcy procedures that were initiated in early 2014 594.4 591.8 by2013 such major firms as Tonnelny Otryad 44, Mostovik648,8 and Source:600 PMR and EMBS Group Reports ETS. The management of ETS explained that their decision 500 to2012 file for bankruptcy was caused by: the customer’s654,7 late 400 submission of project documentation and delays in the 2011 660,1 300 release of land for construction, as well as additional 200 costs,2010 not provided for in contracts, including591,8 in Sochi- 100 based projects. Largely for the same reasons, a number of well-established2009 Moscow-based players like594,4 Mosinzhstroy, 2009 2010 2011 2012 2013 Cosmos and Moscow Metrostroy find themselves in

AverageSource: PMR and Tender EMBS Group Size Report Growths Dynamics, difficulty. The latest development has seen Moscow RUB million (including VAT) Metrostroy write and open letter to President Putin, drawing his attention to the administrative issues involved 5 +14% Average Tender Size Growth Dynamics, 4.0 in subway construction projects in the Russian capital and RUB4 million (including VAT)3.2 3.5 appealing for action. 2.7 +14% 35 2.6 4.0 The total market for transport infrastructure 24 3.2 3.5 construction in 2013 amounted to RUB648.8 billion, 2.7 down from RUB654.7 billion in 2012. Transport 3 2.6 1 infrastructure construction’s share of the total 2 construction market was 11%, unchanged from 2009 2010 2011 2012 2013 the previous year. The key driver behind the weak Average1 Tender Size Growth Dynamics, market dynamics in 2013 was the end of large-scale Source: The Official Russian Federation public procurement RUBinformation million website (including http://zakupki.gov.ru VAT) construction projects in Sochi and Kazan. The biggest 5 2009 2010 2011 2012 +14% 2013 impact was seen in the road and airport construction 4.0 segments. Sochi- and Kazan-based projects had caused Source:4 The Official Russian Federation public procurement 3.5 information website http://zakupki.gov.ru 3.2 a one-off spike in demand that boosted the whole market. 2.7 The downward readjustment seen in the market was 3 2.6 a natural consequence of the ending of these projects in 2013 Tendering Structure by Customer, 2 2013. RUB billion (including VAT), % 1 Tendering Activity 2013 Tendering Structure by Customer, 12% A total of 117 tenders were held in Russia in 2013 (2012: RUB billion (including VAT), % 2009 2010 2011 2012 2013 84), with a combined value of RUB468.6 billion 1, which is 2 Source: The Official Russian Federation public procurement 59% higher than in 2012. About half of the total tendering information website12% http://zakupki.gov.ru Avtodor 217.6 volume in value terms were held by Avtodor. 46% Rosavtodor 196.8 Moscow 54.1 42% Avtodor 217.6 46% Rosavtodor 196.8 Moscow 54.1 201342 %Tendering Structure by Customer, RUB billion (including VAT), % Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru

1 Including VAT Customers:12% Avtodor, Rosavtodor, Moscow City Construction Department.The official Russian Federation public procurement information website http://zakupki.gov.ru. 2 Company estimates based on the information available on the official Russian Federation public procurement information website http://zakupki.gov.ru Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru 2013 Transport Infrastructure Market Structure, Avtodor 217.6 18RUB billion (net of VAT),46 %% Rosavtodor 196.8 Moscow 54.1 201374%42 Transport% Infrastructure Market Structure,14% 7% 5% RUB billion (net of VAT), %

74% 14% 7% 5% 67% 33% Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru

67% 33% Roads and bridges 478.6 2013 TransportConstruction Infrastructure Market322.0 Structure, Services 156.6 RUB Railwaysbillion (net of VAT), % 88.6 RoadsPorts and bridges 478.647.0 74%AirportsConstruction 322.0 14% 7%34.65% Services 156.6 Source:Railways EMBS Group report 88.6 Ports 47.0 Airports 34.6 67% 33% Source: EMBS Group report

Backlog Structure by Business Segment4,

RUB Roadsbillion and bridges 478.6 Construction 322.0 Construction: Services 20.7 156.6 4 Backlog Structure by Business Segmentroads, and bridges Railways 88.6 Construction: RUB Portsbillion 47.0 20.4 airports and airfields Airports 34.6 Construction: 20.7 roadsother infrastructureand bridges Source: EMBS Group report 2.7 Construction:Service 20.4 airports and airfields 0.1 4.1 Construction: other infrastructure 10.1 327.8 2.7 Service

4.1 Backlog250.70.1 Structure by Business Segment4, 327.8 RUB10.1 billion

Construction: 250.7 20.7 roads and bridges Construction: 20.4 2012 2013 airports and airfields Construction: other infrastructure 2.7 Service 2012 2013 0.1 4.1 10.1 327.8

Backlog250.7 Structure by Federal District, RUB billion 17.9 Backlog Structure by Federal District, Central Federal District 130.5 Southern Federal District RUB billion North-West Federal District 2012 2013 Other 7.4 4.0 17.9 Central Federal District 29.8 130.5 Southern Federal District North-West Federal District 240.1 Other 7.4 4.0 26.5 29.8 180.6 240.1 Backlog Structure by26.5 Federal District, RUB billion 180.6 17.9 Central Federal District 130.5 Southern Federal District North-West Federal District 2012 2013 Other 7.4 4.0 29.8 240.1 2012 2013 26.5 180.6 Backlog Structure by Customer, RUB billion

State corporations 28.3 Backlog Structure by Customer, RUB billionFederal agencies 43.5 Municipalities Regional goverments 35.7 2012 43.9 2013 State corporations 28.3 Private customers Federal agencies 38.6 43.537.6 Municipalities Regional goverments 44.9 202.0 35.7 43.9 Private customers 66.038.6 37.6

44.9 202.0 Backlog96.2 Structure by Customer, RUB billion 66.0

State corporations 28.3 96.2 Federal agencies 43.5 Municipalities 2012 2013 Regional goverments 35.7 43.9 Private customers 38.6 37.6 2012 2013 44.9 202.0

66.0

Share of Own Production in Total Cost of Materials, % 96.2

Share of Own Production in Total Cost of Materials, %

2012 2013 31%

Purchased materials 69% Own production 31%

Purchased materials 69% Own production Share of Own Production in Total Cost of Materials, %

Own Production of Construction Materials, RUB billion 31%

Purchased materials 1.069% Commercial concrete Own Production of Construction Materials,Own productionsand/cement RUB billion mix 2.5 Steel structures 1.0 Bituminious concrete 1.0 PrecastCommercial concrete concrete and 1.5 reinforcedsand/cement concrete mix structures 2.5 Steel structures 1.0 2.0 Bituminious concrete 1.8 Precast concrete and 1.5 reinforced concrete structures

3.0 3.2.00 Own1.8 Production of Construction Materials, RUB billion

3.0 3.0 1.0 Commercial concrete sand/cement mix Steel structures 2012 2.5 2013 1.0 Bituminious concrete Precast concrete and 1.5 reinforced concrete structures 2012 2013 2.0 1.8

3.20130 Fixed Asset Investments,3.0 % 1%

2013 Fixed6% Asset Investments, % 1% 12% 2012 2013 Building machinery and equipment 6% 45% Transportation facilities 12% Real estate BuildingFixed assets machinery under construction Otherand equipment fix assets 36% 45% Transportation facilities Real estate Fixed assets under construction 2013 Fixed Asset Investments, % Other fix assets 36% 1%

6% 12% Building machinery and equipment 45% Transportation facilities Real estate Fixed assets under construction Other fix assets 36% Revenue, RUB billion Gross Profit, RUB billion

14.0 Revenue, RUB 116.7billion Gross Profit, RUB billion 13.1

94.1 116.7 14.0 13.1

94.1

Revenue, RUB billion Gross Profit, RUB billion

2012 116.72013 2012 14.02013 13.1 Source: Consolidated financial statements under IFRS for 2013 and 2012 94.1 2012 2013 2012 2013

Source: Consolidated financial statements under IFRS for 2013 and 2012

EBITDA, RUB billion Net Income, RUB billion

EBITDA, RUB billion Net Income, RUB billion 11.3 2012 2013 2012 2013 9.4 Source: Consolidated financial statements under IFRS for 2013 and 2012 11.3 4.1 9.4

4.1 2.3 EBITDA, RUB billion Net Income, RUB billion

2.3 2012 2013 2012 2013

11.3

2012 9.42013 2012 2013

4.1

2.3

2012 2013 2012 2013 ABOUT US 2013 RESULTS CORPORATE GOVERNANCE SOCIAL RESPONSIBILITY APPENDICES 05. 01. 02. 04. 03. 19 660,1 654,7 648,8 594,4 591,8 +ХХ %

km % 2013 2012 2011 2010 2009 As part of measures to develop the national highway network, to develop the national As part of measures a total of 118.7 as toll operation in 2013 as well built and upgraded was of roads 18.5 km highways launched, including an of 172.6 km of federal and “Belarus” Highway (concession segment) of M-1 section M-4 “Don“ Highway sections 74 development funding infrastructure of total transport contracts is currently under way. is currently contracts highway the national develop to As part of measures and was built of 118.7 km of roads a total network, out of in 2013 (including 18.5 km financed upgraded The Federation). Russian of the Fund the Investment of the M-4 “Don” Highway sections of three reconstruction (km 492.7 – km 517 section (Voronezh has been completed km 877 – km 907 section region, in the Voronezh Bypass) 1,197 – km 1,240 in the and km region, in the Rostov of 3 sections of operation Toll-based region). Krasnodar the M-4 “Don” Highway has also been launched (km 225 – km 287.8 – km 321.3 Bypass), km 260 section (Bogoroditsk and km 330.8 – region, the Tula in Bypass) section (Efremov in the bypasses) and km 414.7 section (Yarkino for facilities start-up In addition, two Lipetsk region). of 18.5 km of the “Baltic” Highway were reconstruction as established ahead of schedule a full year commissioned program. investment target in the federal and upgrade and bridge construction, Invesment in road maintenance accounted for Development of the project documentation and preparation and preparation documentation of the project Development government under the relevant sites of construction 54.1 217.6 196.8 5% 88.6 47.0 34.6 478.6 4.0 2013 2013 2013 2013 2.3 7% 648.8 14.0 RUB billion –1% +14% , 4 Commercial concrete sand/cement mix Steel structures Bituminious concrete Precast concrete and reinforced concrete structures State corporations Federal agencies Municipalities Regional goverments Private customers Construction: airports and airfields Construction: other infrastructure Construction: roads and bridges Service Central Federal District Southern Federal District North-West Federal District Other 14% 3.5 2012 2012 654.7 156.6 322.0 Building machinery and equipment Transportation facilities Real estate Fixed assets under construction Other fix assets Purchased materials Own production r Avtodo Rosavtodor Moscow 4.1 13.1 2012 2012 Gross Profit, Net Income, RUB billion 2013 2013 2013 2013 33% 3.2 2011 2011 660.1 % 45% 69% 46 26.5 17.9 327.8 130.5 37.6 2.0 20.7 1.0 2.7 2.5 28.3 43.5 43.9 4.1 180.6 3.0 202.0 2013 9.4 2013 2.7 2010 2010 591.8 116.7 1% Annual Report 2013 6% RUB billion RUB billion

% 12 2012 2012 2012 2012 Construction Services 2.6 2009 2009 36% 594.4 12% Railways Airports Ports Roads and bridges 31% 42% 11.3 2012 94.1 2012 4.0 67% 74% 1 3 2 5 4 300 200 100 600 500 400 700 Source: EMBS Group report Source: The Official Russian Federation public procurement Russian Federation public Source: The Official http://zakupki.gov.ru information website Source: The Official Russian Federation public procurement Source: The Official Russian Federation http://zakupki.gov.ru information website Source: PMR and EMBS Group Reports 2013 Fixed Asset Investments, % Share of Own Production in Total Cost of Materials, % EBITDA, 2013 Tendering Structure by Customer, by Customer, Structure Tendering 2013 % VAT), billion (including RUB Source: Consolidated financial statements under IFRS for 2013 and 2012 Revenue, Average Tender Size Growth Dynamics, Average Tender Size Growth Dynamics, RUB million (including VAT) Transport Infrastructure Market Dynamics, RUB billion (net of VAT) 7.4 29.8 1.8 1.0 1.5 44.9 35.7 38.6 10.1 0.1 20.4 66.0 3.0 96.2 240.1 250.7 section of M-1 “Belarus” Highway (commissioned on on section of M-1 “Belarus” Highway (commissioned January 1, 2014). 2013 also saw the launch of the project out of Ring Road, financed Central build the Moscow to Federation. of the Russian Fund the National Welfare Implementation of PPP projects to develop toll roads got got roads toll develop to of PPP projects Implementation of 172.6 km of operation under way in 2013. Toll-based including an 18.5 km highways launched in 2013, federal Investment in construction, reconstruction and and reconstruction in construction, Investment by 84%. highways increased federal of key maintenance The amount of financing allocated to the construction the construction to The amount of financing allocated highways was 42% of the of federal and reconstruction development. infrastructure in transport investment total maintenance. built and highways were of 597.3 km of federal A total of 145.8 km. level the target above in 2013, well upgraded grew a mere 1% year-on-year in 2013, compared to 27% in 27% in to in 2013, compared 1% year-on-year a mere grew in budget financing in 2013 was mainly 2012. An increase and and bridge repair in spending on road by growth driven financing). The total amount invested in this segment in this segment amount invested financing). The total saw the market RUB478.6 billion. Therefore, to amounted which rate, growth in the investment reduction a significant In 2013, as in previous years, much of the investment into into much of the investment years, In 2013, as in previous and the road to was channeled infrastructure transport (74% of total segment and upgrade bridge construction Roads and Bridges Market Structure Market Structure Own Production of Construction Materials, RUB billion Backlog Structure by Customer, RUB billion Backlog Structure by Federal District, RUB billion Backlog Structure by Business Segment 2013 Transport Infrastructure Market Structure, 2013 Transport Infrastructure VAT), % RUB billion (net of RUB billion Mostotrest All scheduled transport infrastructure repair and Railways maintenance projects were completed in full. By the end The rail network historically accounts for the bulk of of 2013, the length of public federal roads compliant with passenger and freight . According to the relevant regulatory requirements for transport and Rosstat, 43% of the total Russian freight turnover in 2013 operating parameters was 23,637 km (2012: 21,865 km), was carried by rail (85% excluding pipeline transportation). or 46% of the total length of roads (2.9 percentage points more than in 2012). Among them – 1,546 km of highways Investment in railway construction accounted for 14% transferred for trust management to Avtodor (target: of total transport infrastructure development funding in 1,474 km). 2013. The total amount of investment in this segment was RUB88.6 billion, a 7% decrease year-on-year. The To improve the quality of the highways, the government decrease appears to be related to the reduction in funding implemented a set of measures to transition to long- needs under a number of postponed projects. An example term contracts, introduce innovative technologies, and of a major ”postponed” project, the deadline for which exercise a greater control over the quality of road works. has been pushed out for various reasons into 2014, is the construction of Tommot- start-up facility (Nizhny Investment in road overhaul and scheduled repair Bestyakh) on Berkakit-Tommot-Yakutsk railway in the and maintenance totaled RUB184.8 billion (2012: Sakha Republic (Yakutia). In addition, RZD has reviewed its RUB117.0 billion). A total of 8,956.8 km of federal highways investment program due to the challenging macroeconomic (+37% year-on-year) and 30,981 metres of bridges (+73% environment. Consequently, the commissioning of 450.4 km year-on-year) were commissioned in 2013, following of new railway lines previously planned for 2013 has been overhaul and repair. postponed to 2014.

Spending on the highway network was 111% of the budget Notable project completions in 2013 included the Sochi target for the year. Additional budgets were allocated to Olympic construction. Other key transport infrastructure ensure transport support for the Sochi Olympics, as well as development projects in 2013 included the construction to co-finance capital construction (federal and municipal of the Mga-Gatchina-Veimarn-Ivangorod railway section government property), including in the Moscow region, as and railway approaches to ports on the southern coast of well as construction of overpasses at road and railroad the Gulf of Finland, additional main tracks and sidings, intersections. a network of stations on the approaches to ports in the South and Far East of Russia, and an additional branch on the Tobolsk-Surgut railway.

A total of 73.9 km of additional main railway lines was completed in 2013.

Expenses for road overhaul and repair and maintenance The share of railway transport in total freight turnover excluding increased by pipeline transportation is 58% 85%

20 ABOUT US 2013 RESULTS CORPORATE GOVERNANCE SOCIAL RESPONSIBILITY APPENDICES 05. 01. 02. 04. 03. 21 %

15 Six runways were commissioned following an upgrade an upgrade following commissioned Six runways were (Vnukovo), Moscow at the airports of Kazan, Penza, , and Buguruslan. by Airlines’ passenger turnover increased Airports segment accounted and upgrade The airport construction infrastructure transport financing for budget total 5% of for amounted in this segment in 2013. Investment development The decrease 18% year-on-year. RUB34.6 billion, down to of the reallocation due to primarily in actual funding was Other 2014-2015. the segment to for planned 2013 budget in spending on increase included a significant reasons of the general and the launch of development renewal fleet of of budget airlines, construction aviation segment (growth the which reduced etc.), airports in the suburbs, discounter hub airports. large build and upgrade plans to was 64% of Budget spending aimed at airport construction the annual target. turnover passenger Rosstat, to according Nevertheless, increase a 15% in 2013 was 225.2 billion passenger-km, 84.6 million airlines transported Russian year-on-year. up 14% year-on-year. passengers,

Annual Report 2013 %

Funding for the seaport and inland waterway infrastructure and inland waterway infrastructure for the seaport Funding by segment increased 16 Sochi, Ust-Luga, Taman, and . Novorossiysk Taman, Sochi, Ust-Luga, Canal and the Volga Basin. Canal and the Volga in the ports of commissioned 2013 saw infrastructure 136.9 million tons. Some areas saw an increase in freight in freight saw an increase Some areas 136.9 million tons. in the The bulk of investment on inland waterways. traffic of the infrastructure developing to segment was channeled Sea-Baltic White Waterway, Canal, Volga-Baltic the Moscow ports: almost 590 million tons in 2013, up 4% year-on-year. in 2013, up 4% year-on-year. 590 million tons ports: almost in 2013, including on inland waters of freight The volume totaled North and similar localities the Far to transportation in Russia has been growing, with Russian sea and river sea and river with Russian has been growing, in Russia This is reflected their competitiveness. ports increasing in Russian volumes in transshipment growth is a steady Moscow Canal. Moscow transportation freight of waterway The attractiveness Budget spending aimed at development of navigable inland inland of navigable at development Budget spending aimed Additional the annual target. was 109% of waterways of the reconstruction for allocated budget financing was accounted for 7% of total investment in transport in transport investment 7% of total for accounted the segment in for Funding development. infrastructure billion. RUB47.0 to by 16% year-on-year, 2013 increased Seaport and Inland Waterway Infrastructure Waterway Seaport and Inland segment infrastructure waterway The seaport and inland Mostotrest 2014 Outlook Encouraging investment in development of transport According to the plans of the Ministry of Transport of 3infrastructure and development of mechanisms for Russia, the main priorities in the field of transport extra budgetary funding for the industry. To increase the infrastructure construction in 2014 will be: investment attractiveness of the industry, the government intends to: Development of transport infrastructure in the regions —— Improve standards and regulations for project design, 1that will host the World Cup 2018 events, including pricing, and government examination; development of key federal highways under Avtodor trust —— Conclude long-term contracts for transport management (M-4 “Don”, M-11 “Moscow – St. Petersburg”, infrastructure design, construction and subsequent M-1 “Belarus” and M-3 “”), and those administered maintenance (life cycle contracts); by Rosavtodor (M-5 “Ural”, M-7 “Volga”, M-9 “Baltic”, etc.) —— Develop a regulatory framework to ensure further development and improvement of publicprivate Development of the Moscow region transport hub through partnerships; large-scale projects (the Central Ring Road). At the same —— Develop mechanisms for project financing, including 2time, the Moscow City budget envisions a reduction with the use of government guarantees, bonds, pension in spending on road construction in 2014 of 24%, to funds and the National Welfare Fund of the Russian RUB90.0 billion1, down from RUB117.9 billion 2 in 2012, due, Federation; among other reasons, to a large number of unfinished —— Increase transparency of budget spending by allowing projects from construction companies that in Q1 2014 public scrutiny and control. declared bankruptcy.

In 2014 the main priority will be development of transport The Moscow City budget envisions spending on road construction infrastructure in the regions that will host the World Cup 2018 in 2014 in the amount of events, including development of key federal highways

RUB90.0 billion

1 Including VAT. Moscow City Law “On the Budget of the City of Moscow for 2014 and the Planned Period 2015-2016” 2 Including VAT. Moscow City 2013 Budget Implementation Report (http://www.findep.mos.ru)

22 ABOUT US 2013 RESULTS CORPORATE GOVERNANCE SOCIAL RESPONSIBILITY APPENDICES 05. 01. 02. 04. 03. 23 8.2 11.2 36.1 50.1 18.6 (includingVAT) in 2013. Rosavtodor in 2013. Rosavtodor 4 in 2013; in repair and in 2013; in repair 4 billion

in construction and in construction 6 Estimated Cost of Construction, RUB billion . 6

141.9

Rosavtodor plans to invest in construction and reconstruction of and reconstruction to invest in construction plans Rosavtodor public roads of federal 84 sections RUB billion), compared to RUB217.6 billion to billion), compared RUB141.9 billion invest plans to in public roads of federal of 84 sections reconstruction billion RUB196.8 to 2014, compared – highways and bridges federal public of existing maintenance RUB206.0 billion

toll-based operation operation toll-based , 3

5 billion

the km 1,091 section – km 1,319 of the km – km 21 225of M-4 “Don“ Highway in 2013. Avtodor plans to plans to in 2013. Avtodor 4

the CRR Startup-up Facility 5 Annual Report 2013

150.4 of the km section 124 – km 194 of M-3 “Ukraine“ Highway Long-term investment agreement for M-4 “Don“ Highway Long-term investment agreement for reconstruction and subsequent (Moscow-Novorossiysk, via Voronezh, Rostov-on-Don and Krasnodar), in the Moscow and regions; Tula Start-up Facility 1 A complex of work and services ensuring comprehensive infrastructure development forsubsequent toll-based operation of Long-term investment agreement for financing, construction and toll-based operation of the km 208 – km 258 section of “Moscow-St. the M-11 Petersburg” Highway, Stage 4 Long-term investment agreement for construction, maintenance, repair, overhaul and toll- based operation of Including VAT. Company estimates on the basis of information available on the official Russian Federation public procurement information website http://zakupki.gov.ru. website information public procurement Federation on the official Russian available on the basis of information estimates Company Including VAT. http://zakupki.gov.ru. Including VAT. The official website of Rosavtodor (http://rosavtodor.ru). of Rosavtodor website The official Including VAT. Including VAT. Consolidated procurement plan of goods (works and services) for Avtodor for 2014. for Avtodor for and services) plan of goods (works procurement Consolidated Including VAT. Including VAT. Including contracts, where price is not yet estimated. Company estimates on the basis of information available on the official Russian Federation public procurement information website information public procurement Federation on the official Russian available on the basis of information Company estimates estimated. is not yet price where contracts, Including Including VAT. RUB Avtodor plans to announce tenders for the total amount of to announce tenders Avtodor plans Expected Key Avtodor Tenders in 2014 Tenders Avtodor Expected Key announce tenders for the total amount of RUB150.4 billion the total for tenders announce of RUB124.1 value with a combined 5 projects (including top preliminary conclusion that the City of Moscow intends to to intends the City of Moscow that conclusion preliminary billion of RUB83.8 value with a combined tenders announce RUB54.1 billion to compared An analysis of the proposed tendering activity leads to the to leads activity tendering of the proposed An analysis 3 4 5 6 Mostotrest ABOUT US 2013 RESULTS CORPORATE GOVERNANCE SOCIAL RESPONSIBILITY APPENDICES 02. 04. 05. 01. 03. 25 Annual Report 2013

М–4: of 1,517 km, length With a total is ‘‘Don’’ Highway the M-4 a massive undergoing currently which in 2019 reconstruction, in 796 km of upgraded will result built road sections. and newly a Category The M-4 will become a speed highway with 1 four-lane limit of 150 km/hr. M-10 Highway. The new M-11 M-10 Highway. The new lanes will have 4 to 10 traffic with a speed limit of 150 km/hr. М–11: km, of 669 With a total length – M-11 ‘‘Moscow the new Highway will St. Petersburg’’ two largest Russia’s connect metropolitan cities and will the system into be integrated of international transport the most relieving corridors, sections of the existing critical Mostotrest

bridges

517) km 14 |

492 – km flyovers

2 2

1 1 1 overpass flyovers 40

7

2011–2013 2012–2014 2011–2015 | : : :

|

billion 2015–2033 billion

‘‘Don’’ ‘‘Moscow – Saint-Petersburg’’ 2013–2029 km |15

km

19.7 16.3 billion 42.1 km

Festivalnaya Street Section of North Belt Road Street Festivalnaya RUB Construction 25 repair and maintenance Reconstruction, ( bypass of Voronezh RUB Construction Operation: 72 operation and toll repair maintenance, Construction, (km 258 – km 334) Bypass Volochyok of Vyshny RUB Construction Operation: 6 – Interchange of Businovskaya Construction М-4 М-11

bridges

overpass 44

bridges

|

2

5

| |

flyovers

flyovers flyovers

2 2 2 4 flyovers 1

544 section in Voronezh region region 544 section in Voronezh 63 1 1 1 633

3 |

27 km km

19 2012–2014 2014–2016 2011–2014 2014–2018 2010-2014

: : : : km |14 |

2014–2021 2016–2039 | billion 2015–2040 2014–2040

km km 225 – 517 – 5.5 billion 14.7 17.2 billion 122.5 billion

levels

km km

RUB Construction Operation: Operation: Operation: operation and toll repair Maintenance, of Usman and Rogachyovka bypasses) Usman and Rogachyovka (Novaya RUB Construction Construction, maintenance, repair and toll operation operation and toll repair maintenance, Construction, of 29 Construction in Moscow in Moscow RUB 5 Interchange Traffic of Businovskaya Reconstruction RUB Construction Operation: Construction, maintenance, repair and toll operation operation and toll repair maintenance, Construction, of Section 6 (km 334 – km 543) 209 RUB40.2 billion Construction: Operation: Construction and operation of km 15 – km 58 and operation Construction agreement) Head Segment (concession 43 and toll-based operation of a section of M-4 “Don” Highway, the general contractor for which is UTS, a Mostotrest subsidiary. As at 31 December 2013, no reliable estimate for the value of the value for estimate 2013, no reliable As at 31 December subsidiary. which is UTS, a Mostotrest for contractor of a section of M-4 “Don” Highway, the general operation and toll-based was available. terms with the contract phase in accordance and operation repair the maintenance, Maintenance period can be extended for 3 years. for be extended period can Maintenance Contract Value, net of VAT. Value, Contract date. complition the actual from it starts period is fixed, Operation repair maintenance, for under the contract management systems traffic and automated systems collection toll phase for of the construction value Estimated Net of VAT. 4 1 2 3

Mostrotrest is involved in all the key infrastructure projects that will shape the development that will shape the development projects infrastructure key in all the is involved Mostrotrest the medium term. over system road of Russia’s Participation in All Key Infrastructure Projects Infrastructure in All Key Participation of New Sections of Highway of New Reconstruction and Construction and Construction Reconstruction Construction of Highway Construction 24 Saint - Petersburg

М-11 ’’Moscow – Saint-Petersburg’’ Бологое Novgorod region

543 km Okulovka Veliky Novgorod

Vyshny Volochyok Veliky Novgorod Valday Valday 334 km National Park Vyshny Volochyok 258 km region Tver 58 km 15 km Moscow

Mendeleevo

Sheremetevo Businovskaya Traffic Interchange Airport

М-11 Zelenograd

Moscow Ring Road М-4 Skhodnya ‘‘Don’’ Novomoskovsk Khimki

225 km Moscow region Dmitrovskoe highway Dmitrovskoe Moscow

Festivalnaya st. Zelenogradskaya st. Zelenogradskaya 492 km

Section of highway from Businovskaya Interchange Voronezh Bypass and Novaya Usman Bypass to Festivalnaya Street (North Belt Road) Voronezh 517 km 544 km

633 km

Maintenance and operation Businovskaya Interchange Voronezh Zelenogradskaya st. Completed construction, Novaya maintenance and operation Usman

Moscow Ring Road Sections under construction Festivalnaya st. Festivalnaya

Other | OPERATING RESULTS

Key Commissioned Projects In 2013, Mostotrest commissioned 44 projects, with the 2012. The volume of commissioning of completed repair total length of constructed, reconstructed and repaired and overhaul projects increased fourfold year-on-year, to roads and bridges of 177 km. By the end of 2013, the length 2.2 million m2. The volume of bridges covered by the Group’s of roads covered by the Group’s maintenance contracts repair and maintenance contracts increased twofold year-on- was approximately 3,500 km, up three times compared to year, to 163,800 metres.

2013 Key Commissioned Projects1, RUB billion

Project Contract Value2

Phase 1 reconstruction of M-4 “Don” Highway (Voronezh Bypass) 12.0

Reconstruction of Runway 1 and adjacent taxiways at Vnukovo Airport in Moscow 8.6

Reconstruction of traffic interchange at 21 km on Novoryazansky Avenue in Moscow (M-5 “Ural”, Moscow – Chelyabinsk via Ryazan, Penza, Samara and Ufa) 4.4

Combined bridge over the Oka River in Nizhny Novgorod, as part of the project to extend Avtozavodskaya metro line from Moskovskaya Station to Gorkovskaya Station 4.4

Reconstruction of traffic interchange at the intersection of Leningradsky Avenue with Moscow Ring Road 4.1

Strong Backlog Growth In 2013, Mostotrest continued to expand its backlog totalled RUB355.4 billion, a 26% increase compared entering into a number of large contracts in the second with RUB281.3 billion. The total volume of infrastructure half of the year, including the largest ever life-cycle construction tenders held by government customers in contract in the road construction segment, for Section 6 2013 was RUB468.6 billion3. Mostotrest won contracts of the M-11 “Moscow – St. Petersburg” Highway. While the totaling RUB225.1 billion (RUB190.8 billion, net of VAT), Group’s revenue grew 24% in 2013, the year-end backlog which represents 48% of the total tendering volume.

Key 2013 New Project Additions, RUB billion

Project Contract Value2

Construction Segment Construction, maintenance, repair, overhaul and toll-based operation of the sixth section (km 334 – km 543) of M-11 “Moscow – St. Petersburg” Highway 122.5

Construction, maintenance, repair and overhaul of M-4 “Don” Highway (Moscow – Novorossiysk via Voronezh, Rostov-on- Don and Krasnodar), km 517 – km 544 section (with Novaya Usman and Rogachyovka bypasses) in Voronezh region 14.7

Bridge over Volga River in Nizhny Novgorod region 11.0

Reconstruction of M-9 “Baltic” Highway (Moscow – Latvian border (Riga-bound) via Volokolamsk), km 50 – km 82 section in Moscow region 7.4

Construction of km 0 – km 18 section of Vladivostok – Nakhodka – Vostochny Port Highway in Primorsky region 6.1 Services Segment Federal highway sections maintenance contracts 5.7

1 Commissioned projects are projects delivered to and accepted by customers against the relevant signed documentation. Actual completion dates in accordance with this definition may differ from completion dates as recorded for revenue recognition purposes under IFRS. 2 Net of VAT. 3 Including VAT. Customers: Avtodor, Rosavtodor, Moscow City Construction Department. The official Russian Federation public procurement information website http://zakupki.gov.ru.

26 660,1 654,7 648,8 594,4 591,8 +ХХ %

2013 2012 2011 2010 2009 ABOUT US 2013 RESULTS CORPORATE GOVERNANCE SOCIAL RESPONSIBILITY APPENDICES 05. 01. 02. 04. 03. 27 54.1 217.6 196.8 5% 88.6 47.0 34.6 478.6 4.0 2013 2013 2013 of the of the 2013 2.3 7% 5 648.8 14.0 RUB billion 660,1 660,1 654,7 654,7 648,8 648,8 –1% +14% , 594,4 594,4 4 591,8 591,8 Commercial concrete sand/cement mix Steel structures Bituminious concrete Precast concrete and reinforced concrete structures State corporations Federal agencies Municipalities Regional goverments Private customers Construction: bridges roads and Construction: and airfields airports Construction: other infrastructure Service Central Federal District Southern Federal District North-West Federal District Other 14% 3.5 2012 2012 654.7 322.0 156.6 +ХХ % +ХХ % Building machinery and equipment Transportation facilities Real estate Fixed assets under construction Other fix assets Purchased materials Own production Avtodor Rosavtodor Moscow 4.1 13.1 2012 2012 Gross Profit, Net Income, RUB billion 2013 2013 2013 2013 33% billion 3.2 2011 2011

660.1 % 45% 69% 46 26.5 17.9 327.8 130.5 37.6 2.0 20.7 1.0 2.7 2.5 28.3 43.5 43.9 4.1 180.6 3.0 202.0

2013 9.4 2013 2.7 2010 2010 591.8 116.7 1% 6% RUB billion RUB billion 12% 2012 2012 2012 2012 Construction Services 2.6 2009 2009 36% 594.4 12% Roads and bridges Railways Ports Airports 20.7 31% 42% 11.3 2012 94.1 2012 4.0 2013 2012 2011 2010 2009 2013 2012 2011 2010 2009 74% 67% 5 4 3 2 1 700 600 500 400 300 200 100 Source: EMBS Group report Source: EMBS Group Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru Source: PMR and EMBS Group Reports Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru 2013 Fixed Asset Investments, % Share of Own Production in Total Cost of Materials, % EBITDA, 2013 Tendering Structure by Customer, 2013 Tendering Structure by Customer, RUB billion (including VAT), % Source: Consolidated financial statements under IFRS for 2013 and 2012 Revenue, Average Tender Size Growth Dynamics, RUB million (including VAT) Transport Infrastructure Market Dynamics, RUB billion (net of VAT) 7.4 29.8 1.0 1.5 1.8 35.7 38.6 44.9 0.1 10.1 20.4 66.0 3.0 96.2 250.7 240.1 on-year, driven by new contracts from Avtodor. Avtodor. from contracts by new driven on-year, maintenance in the Company’s road for The volume of contracts backlog amounted to RUB Backlog Structure Backlog 92% represent projects Road and bridge building backlog. Group’s of region key the Group’s remains Russia Central in the of 2013, 88% of projects As at the end operations. and North- in the Central located were backlog Group’s of the completion Following Districts. Federal Western the Group’s in Sochi and the addition to sites construction build Section 6 (km 334 – km 543) to of the contract backlog Highway, the share – St. Petersburg” of M-11 “Moscow has of Russia District Southern Federal in the of projects in the North-Western of projects the share declined, while 2012. to compared has increased District Federal biggest the Group’s remained In 2013, the government agencies, federal from of contracts The share customer. in and municipal governments regional companies, state companies of state was 92%. The share backlog the Group’s year- than twofold more period increased in the reporting Own Production of Construction Materials, RUB billion Backlog Structure by Customer, RUB billion Backlog Structure by Federal District, RUB billion Backlog Structure by Business Segment Business by Structure Backlog 2013 Transport Infrastructure Market Structure, 2013 Transport Infrastructure Market VAT), % RUB billion (net of RUB billion RUB 54.1 54.1 217.6 196.8 217.6 196.8 5% 5% 88.6 47.0 34.6 88.6 47.0 34.6 478.6 478.6 4.0 4.0 2013 2013 2013 2013 2013 2013 2013 2013 2.3 2.3 7% 7% 648.8 648.8 14.0 14.0 RUB billion RUB billion –1% –1% +14% +14% , , 4 4 Bituminious concrete Precast concrete and reinforced concrete structures Commercial concrete sand/cement mix Steel structures Bituminious concrete Precast concrete and reinforced concrete structures Commercial concrete sand/cement mix Steel structures Private customers State corporations Federal agencies Municipalities Regional goverments Private customers State corporations Federal agencies Municipalities Regional goverments Construction: roads and bridges Construction: airports and airfields Construction: other infrastructure Service Construction: roads and bridges Construction: airports and airfields Construction: other infrastructure Service Central Federal District Southern Federal District North-West Federal District Other Central Federal District Southern Federal District North-West Federal District Other 14% 14% 3.5 3.5 2012 2012 2012 2012 654.7 654.7 322.0 156.6 322.0 156.6 Other fix assets Real estate Fixed assets under construction Other fix assets Building machinery and equipment Transportation facilities Real estate Fixed assets under construction Building machinery and equipment Transportation facilities Purchased materials Own production Purchased materials Own production Avtodor Rosavtodor Moscow Avtodor Rosavtodor Moscow 4.1 4.1 13.1 13.1 2012 2012 2012 2012 Gross Profit, Gross Profit, Net Income, RUB billion Net Income, RUB billion 2013 2013 2013 2013 2013 2013 2013 2013 33% 33% 3.2 3.2 2011 2011 2011 2011 660.1 660.1 % % 45% 45% 69% 69% 46 46 26.5 26.5 17.9 17.9 327.8 327.8 130.5 130.5 37.6 37.6 2.0 2.0 20.7 20.7 1.0 1.0 2.7 2.7 2.5 2.5 43.9 28.3 43.5 43.9 28.3 43.5 4.1 4.1 180.6 180.6 3.0 3.0 202.0 202.0 2013 2013 9.4 9.4 2013 2013 2.7 2.7 2010 2010 2010 2010 591.8 591.8 116.7 116.7 1% 1% % Annual Report 2013 6% 6% RUB billion RUB billion RUB billion RUB billion 12% 12%

2012 2012 2012 2012 2012 2012 2012 2012 Construction Services Services n Constructio 2.6 2.6 2009 2009 2009 2009 36% 36% 594.4 594.4 12% 12% Railways Ports Airports Roads and bridges Railways Ports Airports Roads and bridges and Roads 31% 31% 42% 42% 11.3 11.3 2012 2012 94.1 94.1 2012 2012 4.0 4.0 67% 74% 67% 74% 1 3 2 5 4 1 3 2 5 4 100 400 300 200 600 500 700 300 200 100 600 500 400 700 Source: EMBS Group report Source: EMBS Group report Source: EMBS Group public procurement Federation The Official Russian Source: website http://zakupki.gov.ru information Source: The Official Russian Federation public procurement Source: The Official Russian Federation information website http://zakupki.gov.ru Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru Source: PMR and EMBS Group Reports Source: PMR and EMBS Group Reports 2013 Fixed Asset Investments, % 2013 Fixed Asset Investments, % Share of Own Production in Total Cost of Materials, % Share of Own Production in Total Cost of Materials, % EBITDA, EBITDA, 2013 Tendering Structure by Customer, 2013 Tendering Structure VAT), % RUB billion (including 2013 Tendering Structure by Customer, 2013 Tendering Structure by Customer, RUB billion (including VAT), % Share of road and bridge construction projects is calculated as the value of road and bridge construction projects (net of repair, maintenance and operation projects), divided by the Group’s total backlog. total divided by the Group’s projects), and operation maintenance (net of repair, projects and bridge construction of road as the value is calculated projects and bridge construction of road Share Source: Consolidated financial statements under IFRS for 2013 and 2012 Source: Consolidated financial statements under IFRS for 2013 and 2012 Net of intercompany transactions. Net of intercompany Revenue, Revenue, Average Tender Size Growth Dynamics, Average Tender Size Growth Dynamics, RUB million (including VAT) Average Tender Size Growth Dynamics, RUB million (including VAT) Transport Infrastructure Market Dynamics, RUB billion (net of VAT) Transport Infrastructure Market Dynamics, RUB billion (net of VAT)

7.4 29.8 7.4 29.8 1.8 1.5 1.0 1.5 1.8 1.0 38.6 44.9 35.7 44.9 35.7 38.6 0.1 10.1 20.4 0.1 10.1 20.4 66.0 66.0 3.0 3.0 96.2 96.2 240.1 240.1 250.7 250.7 The share of projects to build roads and bridges in tthe Company’s to build roads of projects The share backlog is 92 4 5 Own Production of Construction Materials, RUB billion Own Production of Construction Materials, RUB billion Backlog Structure by Customer, RUB billion Backlog Structure by Customer, RUB billion Backlog Structure by Federal District, RUB billion Backlog Structure by Federal District, RUB billion Backlog Structure by Business Segment Backlog Structure by Business Segment Backlog Structure 2013 Transport Infrastructure Market Structure, Market Infrastructure Transport 2013 % of VAT), (net billion RUB 2013 Transport Infrastructure Market Structure, Infrastructure 2013 Transport (net of VAT), % RUB billion RUB billion RUB billion Mostotrest Key Projects in the Group’s Backlog as at 2013 Year-End

Project Contract Value, Scheduled % Completed Backlog, MSTT Role RUB billion1 Completion Estimate, RUB billion1 Construction of Section 6 (km 334 – km 543) of General М-11 “Moscow – St. Petersburg” Highway 122.5 2018 0,1% 122.4 Contractor

Construction of Section 4 of 4th Ring Road between General Entuziastov Avenue and Izmailovskoye Avenue 56.0 2015 57% 24.3 Contractor

Construction of km 15 – km 58 section of General M-11 “Moscow – St. Petersburg” Highway 40.2 2014 40% 24.1 Contractor

Construction of Businovskaya Interchange – Festivalnaya Street Section of M-11 “Moscow – General St. Petersburg” Highway 19.7 2014 17% 16.4 Contractor

Construction of Vyshny Volochok Bypass on General M-11 “Moscow – St. Petersburg” Highway 42.12 2015 61% 16.2 Contractor

Construction of km 517 – km 544 section 14.7 2016 1% 14.5 of M-4 “Don” Highway (Novaya Usman and General Rogachyovka bypasses) Contractor

Reconstruction of Businovskaya Traffic General Interchange in Moscow 17.2 2014 35% 11.2 Contractor

Volga River Bridge in Nizhny Novgorod 11.0 2017 4% 10.6 General Contractor Reconstruction of km 50 – km 82 of M-9 “Baltic” General Highway 7.4 2016 2% 7.3 Contractor Reconstruction of Mozhaisky Avenue (Kutozovski Avenue) between Moscow Ring Road and Garden General Ring 11.3 2014 36% 7.2 Contractor

Phase 2 and 3 construction of Kurortny Avenue General Relief Road in Sochi 50.6 2014 87% 6.7 Contractor

Construction of km 0 – km 18 of Vladivostok – Nakhodka – Vostochny Port Highway in Primorsky General Region, start-up complexes 2 and 3 6.1 2016 3% 5.9 Contractor

Reconstruction of km 17 – km 50 section of General M-9 “Baltic” Highway 15.7 2016 68% 5.0 Contractor Traffic interchange at intersection of Moscow Ring General Road with Mozhaiskoye Avenue 6.5 2014 23% 5.0 Contractor Reconstruction of Don River bridge adjacent to General Voroshilovsky Avenue in Rostov-on-Don 5.0 2017 2% 4.9 Contractor Reconstruction of km 16 – km 47 section of M-8 “Kholmogory” Highway 5.3 2015 15% 4.5 Subcontractor Construction of Molodogvardeiskaya Traffic Interchange in Moscow 8.6 2014 52% 4.2 Subcontractor Phase 1 – 1.2 construction of road section adjacent to Leningradski Avenue, with exit to Mnevniki General Street via Narodnogo Opolchenya Street 4.7 2014 26% 3.5 Contractor

Reconstruction of km 16 – km 40 section of General M-11 “Narva” (Ust-Luga Port approach) 4.1 2015 15% 3.5 Contractor

Maintenance, repair and toll-based operation of General km 225.6 – km 633.0 section 5.53 2014 38% 3.4 Contractor

Other projects General/ 54.6 Subcontractor TOTAL 355.4

1 Net of VAT. 2 Construction phase value. As at 31 December 2013, no reliable estimate for the value of the maintenance, repair and operation phase in accordance with the contract terms was available. 3 MSTT backlog calculation includes estimated value of the construction phase for toll collection systems and automated traffic management systems under the contract for maintenance, repair and toll-based operation of a section of M-4 “Don” Highway, the general contractor for which is UTS. As at 31 December 2013, no reliable estimate for the value of the maintenance, repair and operation phase in accordance with the contract terms was available. The contract value is adjusted due to an increase in the project scope.

28 660,1 654,7 660,1 654,7 648,8 648,8 594,4 591,8 594,4 591,8 +ХХ % +ХХ % 2013 2012 2011 2010 2009

2013 2012 2011 2010 2009 ABOUT US 2013 RESULTS CORPORATE GOVERNANCE SOCIAL RESPONSIBILITY APPENDICES 05. 01. 02. 04. 03. 29 54.1 54.1 217.6 196.8 5% 217.6 196.8 5% 88.6 47.0 34.6 88.6 47.0 34.6 478.6 4.0 2013 2013 2013 478.6 4.0 2013 2013 2013 2.3 7% 2013 648.8 14.0 2013 2.3 7% 648.8 14.0 RUB billion 660,1 654,7 RUB billion 648,8 –1% –1% +14% , 594,4 +14% 4 , Commercial concrete sand/cement mix Steel structures Bituminious concrete Precast concrete and reinforced concrete structures State corporations Federal agencies Municipalities Regional goverments Private customers Construction: other infrastructure Construction: roads and bridges Construction: airports and airfields Service Central Federal District Southern Federal District North-West Federal District Other 591,8 4 14% Commercial concrete sand/cement mix Steel structures Bituminious concrete Precast concrete and reinforced concrete structures State corporations State corporations s Federal agencie Municipalities goverments Regional customers Private Construction: roads and bridges Construction: airports and airfields Construction: other infrastructure Service Central Federal District Southern Federal District North-West Federal District Other 14% 3.5 2012 2012 3.5 654.7 2012 2012 322.0 156.6 654.7 +ХХ % Building machinery and equipment Transportation facilities Real estate Fixed assets under construction Other fix assets Purchased materials Purchased production Own Avtodor Rosavtodor Moscow 4.1 322.0 156.6 13.1 2012 Building machinery and equipment Transportation facilities Real estate Fixed assets under construction Other fix assets Purchased materials Own production Avtodor Rosavtodor Moscow 4.1 2012 13.1 2012 2012 Gross Profit, Net Income, RUB billion Gross Profit, Net Income, RUB billion 2013 2013 2013 2013 2013 2013 2013 2013 33% 33% 3.2 2011 2011 660.1 3.2 2011 2011 660.1 % % 45% 69% 46 45% 69% 46 26.5 17.9 327.8 130.5 37.6 2.0 20.7 1.0 2.7 2.5 28.3 43.5 43.9 4.1 180.6 3.0 202.0 26.5 17.9 327.8 130.5 37.6 2.0 20.7 1.0 2.7 2.5 28.3 43.5 43.9 4.1 180.6 3.0 202.0 2013 9.4 2013 2.7 2010 2010 2013 9.4 591.8 2013 2.7 116.7 2010 2010 591.8 116.7 1%

1% 6% RUB billion 6% RUB billion RUB billion 12% 2012 2012 2012 2012 RUB billion 12% 2012 2012 2012 2012 Construction Services Construction Services 2.6 2009 2009 2.6 36% 594.4 2009 2009 36% 594.4 12% Roads and bridges Railways Ports Airports 12% % 31 42% 11.3 Roads and bridges Railways Ports Airports 2012 31% 94.1 2012 42% 4.0 11.3 2012 94.1 2012 2013 2012 2011 2010 2009 4.0 74% 67% 5 4 3 2 1 700 600 500 400 300 200 100 74% 67% Source: EMBS Group report Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru Source: PMR and EMBS Group Reports Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru 2013 Fixed Asset Investments, % Share of Own Production in Total Cost of Materials, % Total Cost of Materials, Own Production in Share of EBITDA, 2013 Tendering Structure by Customer, RUB billion (including VAT), % Source: Consolidated financial statements under IFRS for 2013 and 2012 Revenue, Average Tender Size Growth Dynamics, RUB million (including VAT) Transport Infrastructure Market Dynamics, RUB billion (net of VAT) 5 4 3 2 1 700 600 500 400 300 200 100 7.4 29.8 1.0 1.5 1.8 35.7 38.6 44.9 20.4 0.1 10.1 66.0 3.0 96.2 240.1 250.7 Source: EMBS Group report Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru Source: PMR and EMBS Group Reports Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru advantage for the Company. for advantage Machinery and Investment in New Vehicles, Equipment of equipment, machinery and vehicles fleet Owning its own complex implement successfully the Company to allows projects. construction and in the renewal invest to continued In 2013, Mostotrest equipment, vehicles of construction of its fleet expansion of the road as in the development and machinery, as well segment. The total and operation repair maintenance, in 2013 was RUB5.1 billion, a 10% capex amount of related 38% of total allocated The company year-on-year. decrease of the road the development billion, to or RUB1.9 capex, segment. The reduction and operation repair maintenance, active the end of the Group’s was due to capex in overall construction in the road capacity of its own expansion in 2012. segment which was completed Own manufacturing capacity is an important strategic strategic important is an capacity Own manufacturing 2013 Fixed Asset Investments, % Share of Own Production in Total Cost of Materials, % Share of Own Production EBITDA, 2013 Tendering Structure by Customer, RUB billion (including VAT), % Source: Consolidated financial statements under IFRS for 2013 and 2012 Own Production of Construction Materials, RUB billion of Construction Own Production Backlog Structure by Customer, RUB billion Backlog Structure by Federal District, RUB billion Backlog Structure by Business Segment 2013 Transport Infrastructure Market Structure, RUB billion (net of VAT), % RUB billion Revenue, Average Tender Size Growth Dynamics, RUB million (including VAT) Transport Infrastructure Market Dynamics, RUB billion (net of VAT) 7.4 29.8 1.0 1.5 1.8 35.7 38.6 44.9 20.4 0.1 10.1 66.0 3.0 96.2 250.7 240.1 Own Production of Construction Materials, RUB billion Own Production of Construction Materials, Backlog Structure by Customer, RUB billion by Customer, Backlog Structure Backlog Structure by Federal District, RUB billion Backlog Structure by Business Segment 2013 Transport Infrastructure Market Structure, RUB billion (net of VAT), % RUB billion 62 36 807 54.1 217.6 196.8 1,294 5% Amount 88.6 47.0 34.6 478.6 4.0 2013 2013 2013 2013 2.3 7% 648.8 14.0 RUB billion –1% +14% , 4 Commercial concrete sand/cement mix Steel structures Bituminious concrete Precast concrete and reinforced concrete structures State corporations Federal agencies Municipalities Regional goverments Private customers Construction: airports and airfields Construction: other infrastructure Construction: roads and bridges Service Central Federal District Central Federal District Southern Federal North-West Federal District Other 14% 3.5 2012 2012 654.7 322.0 156.6 Other fix assets Building machinery and equipment Transportation facilities Real estate Fixed assets under construction Purchased materials Own production Avtodor Rosavtodor Moscow 4.1 13.1 2012 2012 Gross Profit, Net Income, RUB billion 2013 2013 2013 2013

33% 3.2 2011 2011 660.1 % 3 45% 69% 46 26.5 17.9 327.8 130.5 37.6 2.0 20.7 1.0 2.7 2.5 28.3 43.5 43.9 4.1 180.6 3.0 202.0 2013 9.4 2013 2.7 2010 2010 591.8 116.7 1% Annual Report 2013 6% RUB billion

RUB billion 12% 2012 2012 2012 2012 Construction Services 2.6 2009 2009 36% 594.4 12% Railways Ports Airports Roads and bridges 31% 42% convenient locations of manufacturing facilities; of manufacturing locations convenient control. cost Materials Uninterrupted and rapid delivery of necessary parts parts of necessary delivery and rapid Uninterrupted the thanks to sites, construction to and materials 11.3 2012 94.1 2012 4.0 — — 67% 74% Steel structures, '000 t Bituminous concrete, '000 m Ready-mixed concrete and sand/concrete mixes, '000 t Precast concrete and reinforced concrete structures, '000 t 1 3 2 5 4 100 300 200 600 500 400 700 Source: EMBS Group report Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru Source: PMR and EMBS Group Reports 2013 Fixed Asset Investments, % Share of Own Production in Total Cost of Materials, % EBITDA, 2013 Tendering Structure by Customer, RUB billion (including VAT), % Source: Consolidated financial statements under IFRS for 2013 and 2012 Revenue, Average Tender Size Growth Dynamics, RUB million (including VAT) Transport Infrastructure Market Dynamics, RUB billion (net of VAT) 7.4 29.8 1.8 1.5 1.0 38.6 44.9 35.7 0.1 10.1 20.4 66.0 steel structures. structures. steel covered its own needs in ready-mixed concrete and precast and precast concrete needs in ready-mixed its own covered reinforced mixes, sand-and-concrete structures, concrete and bituminous asphalt. In addition, structures concrete needs in 50% of the Group’s covered manufacturing own In 2013, raw materials and components accounted for for accounted and components materials In 2013, raw The Company fully cost. manufacturing 18% of the Group’s and reinforced concrete structures, 37,000 tonnes of steel of steel 37,000 tonnes structures, concrete and reinforced of bituminous and 1,300,000 cubic metres structures concrete. The Group’s existing capacity allows for manufacturing manufacturing for allows capacity existing The Group’s and sand- of concrete tonnes 900,000 of approximately concrete of precast 65,000 tonnes mixes, and-concrete expansion joints. In addition, Mostotrest owns and operates and operates owns joints. In addition, Mostotrest expansion plants. asphalt and cement-concrete The Company manufactures ready-mixed concrete, concrete, ready-mixed The Company manufactures bearings and structures, duct tubes, beam spans, steel — manufacturing include: manufacturing — The Group has own manufacturing capacity that that capacity manufacturing has own The Group of its needs in construction share a significant covers The benefits of in-house materials. and assembly Own Production Capacity Own Production 3.0 96.2 240.1 250.7 Mostotrest Own Production of Construction Materials, RUB billion Backlog Structure by Customer, RUB billion Backlog Structure by Federal District, by Federal Backlog Structure RUB billion Backlog Structure by Business Segment Backlog Structure 2013 Transport Infrastructure Market Structure, 2013 Transport Infrastructure Market RUB billion (net of VAT), % RUB billion 2013 Construction and Assembly Materials Output and Assembly 2013 Construction ABOUT US 2013 RESULTS CORPORATE GOVERNANCE SOCIAL RESPONSIBILITY APPENDICES 02. 04. 05. 01. 03. 31 2019 billion

billion 60 122.5 5.0 Construction of Section 6 (km 334 – – km 543) of M-11 “Moscow Highway St. Petersburg” RUB Reconstruction of Don RiverReconstruction Bridge Voroshilov in Rostov-on-Don RUB /2014–2018/ 2018 /2013–2017/ 20 - billion billion 10 RUB billion

11.0 2017 14.7 Volga River Bridge Volga in Nizhny Novgorod RUB Construction of M-4 “Don“ High Usman andway section (Novaya bypasses)Rogachyovka RUB /2013–2017/ /2014–2016/ Contract value, Contract - billion billion 2016 billion 7.4 6.1 Reconstruction of km 50 – km 82Reconstruction section of M-9 “Baltic” Highway RUB /2014–2016/ 6.5 Construction of Vladivostok – High Port Nakhodka – Vostochny way section in Primorsky Region RUB /2013–2016/ Traffic interchange at intersection interchange Traffic Ring Road with of Moscow Avenue Mozhaiskoye RUB /2012–2014/ 2015 billion billion billion Annual Report 2013 4.1

11.3 Reconstruction of M-11 “Narva”Reconstruction Highway section RUB /2013–2015/ 19.7 2014 Reconstruction of MozhaiskiReconstruction Avenue) (Kutuzovski Avenue Ring Road and between Moscow Ring Garden RUB /2012–2014/ Construction of Businovskaya Street – Festivalnaya Interchange – Section of M-11 “Moscow Highway St. Petersburg“ RUB /2012–2014/ Mostotrest 2013 billion billion 5.3 Reconstruction of km 16 – kmReconstruction 47 section of M-8 “Kholmogory“ Highway RUB 8.6 /2012–2015/ 2012 Construction of Traffic Molodogvardeiskaya Moscow in Interchange RUB /2011–2014/ billion

2011 billion 15.7 Reconstruction of km 17 – km 50Reconstruction section of M-9 “Baltic“ Highway RUB billion /2011–2016/ 42.1 Construction of Vyshny Volochok Volochok Construction of Vyshny – Bypass on M-11 “Moscow HighwaySt. Petersburg“ RUB /2011–2015/ 17.2 RUB Reconstruction of Businovskaya Reconstruction in Moscow Interchange Traffic 2010 /2011–2014/ billion

40.2 billion

2009

RUB Construction of km 15 – km 58 – section of M-11 “Moscow HighwaySt. Petersburg”

/2010–2014/ billion 50.6 Kurortny Avenue Relief Road Kurortny Avenue in Sochi RUB Phase 2 and 3 construction ofPhase 2 and 3 construction

56.0 /2010–2014/

RUB 4 of 4th Ring Road between 4 of 4th Ring Road between and Avenue Entuziastov Avenue Izmailovskoye Construction of Section Construction of Section /2008–2015/

A steadily growing backlog secures mid-term revenue and enables the Group to be selective be selective to Group the and enables revenue mid-term secures backlog growing A steadily economics. with questionable projects avoiding tenders in new in its participation Growing Backlog Secures Future Operations Operations Future Secures Backlog Growing 30 2008 | FINANCIAL RESULTS

Despite a number of challenges typical for the Russian EBITDA2 and net profit were RUB9.4 billion (down 16% transport infrastructure construction industry in 2013, 3year-on-year) and RUB2.3 billion (down 45% year-on-year), including a weaker market compared to 2012, the Company respectively, affected by provisions for doubtful receivables reported strong financial results for the year. in the amount of RUB2.1 billion;

Revenue grew 24% to RUB116.7 billion, driven by increased Net cash3 at the end of 2013 was RUB22.0 billion, driven 1construction volumes; by advances from customers, including under new large 4contracts concluded at the end of 2013. Gross profit increased by 7% to RUB14.0 billion. The moderate growth in gross profit was due to an increase 2 1 in subcontracted volumes ;

Key Financial and Operating Results of the Group for 2013 and 2012

RUB million 2012 2013 Change

Revenue 94,078 116,714 22,636 24%

Cost of sales (80,990) (102,704) (21,714) 27%

Gross profit 13,088 14,010 922 7%

Gross margin, % 13.9% 12.0% -1.9%

Other income 222 394 172 77%

Administrative expenses (4,968) (6,168) (1,200) 24%

Other expenses (506) (2,717) (2,211) 437%

Profit from operating activities 7,836 5,519 (2,317) -30%

Operating profit margin, % 8.3% 4.7% -3.6%

Finance income 592 202 (390) -66%

Finance costs, including: (2,797) (2,409) 388 -14%

Dividends and non-controlling interest expense (1,477) (220) 1,257 -85%

Share of profit/loss of equity accounted investees 180 229 49 27%

Profit before income tax 5,811 3,541 (2,270) -39%

Profits tax expense (1,723) (1,288) 435 -25%

Profit for the period 4,088 2,253 (1,835) -45%

Profit after tax for the period from discontinued operations 236 6

Profit for the period 4 , 3 2 4 2,259 (2,065) -48%

Profit margin, % 4.6% 1.9% -2.7%

EBITDA 11,267 9 , 4 3 0 (1,837) -16%

EBITDA margin, % 12.0% 8.1% -3.9%

1 The share of subcontracted volumes is calculated as the ratio of cost of subcontractor services to revenue. 2 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. 3 Net cash position is calculated as cash and cash equivalents net of debt.

32 660,1 654,7 648,8 594,4 591,8 +ХХ %

2013 2012 2011 2010 2009 ABOUT US 2013 RESULTS CORPORATE GOVERNANCE SOCIAL RESPONSIBILITY APPENDICES 05. 01. 02. 04. 03. 33 54.1 217.6 196.8 5% 88.6 47.0 34.6 478.6 4.0 2013 2013 2013 2013 2.3 7% 648.8 14.0 RUB billion 660,1 654,7 648,8 –1% +14% , 4 594,4 Commercial concrete sand/cement mix Steel structures Bituminious concrete Precast concrete and reinforced concrete structures State corporations Federal agencies Municipalities Regional goverments Private customers Construction: roads and bridges Construction: airports and airfields Construction: other infrastructure Service Central Federal District Southern Federal District North-West Federal District Other 591,8 14% 3.5 2012 2012 654.7 322.0 156.6 Building machinery and equipment Transportation facilities Real estate Fixed assets under construction Other fix assets Purchased materials Own production +ХХ % Avtodor Rosavtodor Moscow 4.1 13.1 2012 2012 Gross Profit, Net Income, RUB billion Net Income, 2013 2013 2013 2013 33% 3.2 2011 2011 660.1 % 45% 69% 46 26.5 17.9 327.8 130.5 37.6 2.0 20.7 1.0 2.7 2.5 28.3 43.5 43.9 4.1 180.6 3.0 202.0 2013 9.4 2013 2.7 2010 2010 591.8 116.7 1% % 6% RUB billion RUB billion 12% 2012 2012 2012 2012 Construction Services 2.6 2009 2009 36% 594.4 12% Roads and bridges Railways Ports Airports 31% 42% Phase 1 construction of the km 258 – km 334 section of the km 258 – km 334 section Phase 1 construction Highway – St. Petersburg” of the M-11 “Moscow Bypass); Volochok (Vyshny Avenue of Mozhaiski Avenue/Kutuzovsky Upgrade Ring; Ring Road and the Garden the Moscow between of at the intersection interchange Traffic Highway (North – St. Petersburg” the M-11 “Moscow in Moscow; Street Belt Road) with Festivalnaya Interchange; of the Businovskaya Reconstruction of the km 17 – km 50 section of Phase 1 reconstruction M-9 “Baltic” Highway; of the km 15 – km 58 section of Construction Highway. – St. Petersburg” M-11 “Moscow 11.3 2012 94.1 2012 4.0 — — — — — — 2012 2011 2010 2009 2013 74% 67% 5 4 3 2 1 700 600 500 400 300 200 100 Source: EMBS Group report Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru Source: PMR and EMBS Group Reports Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru 2013 Fixed Asset Investments, % Share of Own Production in Total Cost of Materials, % EBITDA, 2013 Tendering Structure by Customer, RUB billion (including VAT), % Source: Consolidated financial statements under IFRS for 2013 and 2012 for 2013 and 2012 under IFRS statements Consolidated financial Source: 24 In 2013 the Group’s revenue increased by increased revenue In 2013 the Group’s Revenue, Average Tender Size Growth Dynamics, RUB million (including VAT) Transport Infrastructure Market Dynamics, RUB billion (net of VAT) Construction and assembly volumes increased mainly as as mainly increased volumes and assembly Construction projects: large of the following a consequence — — — — — — 7.4 29.8 1.0 1.5 1.8 35.7 38.6 44.9 20.4 0.1 10.1 66.0 3.0 96.2 240.1 250.7 Own Production of Construction Materials, RUB billion Backlog Structure by Federal District, RUB billion Backlog Structure by Customer, RUB billion Backlog Structure by Business Segment 2013 Transport Infrastructure Market Structure, RUB billion (net of VAT), % RUB billion 54.1 217.6 196.8 5% 88.6 34.6 47.0 478.6 4.0 2013 2013 2013 2013 2.3 7% 648.8 14.0 RUB billion –1% +14% , 4 Commercial concrete sand/cement mix Steel structures Bituminious concrete Precast concrete and reinforced concrete structures State corporations Federal agencies Municipalities Regional goverments Private customers Construction: roads and bridges Construction: airports and airfields Construction: other infrastructure Service Central Federal District Southern Federal District North-West Federal District Other 14% 3.5 2012 2012 654.7 322.0 156.6 Building machinery Building machinery and equipment facilities Transportation Real estate constructio n under Fixed assets assets Other fix Purchased materials Own production Avtodor Rosavtodor Moscow 4.1 13.1 2012 2012 Gross Profit, Net Income, RUB billion 2013 2013 2013 2013 33% 3.2 2011 2011 660.1 % 45% 69% 46 26.5 17.9 327.8 130.5 37.6 2.0 20.7 1.0 2.7 2.5 28.3 43.5 43.9 4.1 180.6 3.0 202.0 2013 9.4 2013 2.7 2010 2010 591.8 116.7 Annual Report 2013 1%

6% RUB billion 4

RUB billion 12% 2012 2012 2012 2012 Construction Services 2.6 2009 2009 36% 594.4 12% Railways Ports Airports Roads and bridges 31% 42% 11.3 2012 94.1 2012 4.0 67% 74% recognized as of the completion date of the facility. date as of the completion recognized construction contract cannot be estimated reliably. If the revenue under the construction contract is recognized to the extent of recoverable costs incurred, the accumulated profit under this contract is under this contract profit the accumulated incurred, costs of recoverable the extent to is recognized contract the construction under If the revenue reliably. be estimated cannot contract a construction The Group recognizes revenue from long-term construction contracts according to the percentage-of-completion method or only to the extent of recoverable costs incurred when the outcome of when the outcome incurred costs of recoverable the extent to method or only the percentage-of-completion to according contracts construction long-term from revenue recognizes The Group 1 3 2 5 4 100 300 200 600 500 400 700 Source: EMBS Group report Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru Source: The Official Russian Federation public procurement information website http://zakupki.gov.ru Source: PMR and EMBS Group Reports development of the highway maintenance and operation and operation of the highway maintenance development segment. In the reporting period the Group’s revenue increased by by increased revenue period the Group’s In the reporting by increased driven year, with the previous 24% compared as by the rapid as well volumes, and assembly construction construction and assembly, highway maintenance and and highway maintenance and assembly, construction materials. of construction and sales services, operation Revenue from is derived revenue The bulk of the Group’s 2013 Fixed Asset Investments, % 2013 Fixed Asset Share of Own Production in Total Cost of Materials, % 4 EBITDA, 2013 Tendering Structure by Customer, RUB billion (including VAT), % Source: Consolidated financial statements under IFRS for 2013 and 2012 Source: Consolidated financial statements under IFRS for 2013 Mostotrest Revenue, Average Tender Size Growth Dynamics, RUB million (including VAT) Transport Infrastructure Market Dynamics, RUB billion (net of VAT) 7.4 29.8 1.8 1.5 1.0 38.6 44.9 35.7 0.1 10.1 20.4 66.0 3.0 96.2 240.1 250.7 Own Production of Construction Materials, RUB billion Own Production of Construction Materials, Backlog Structure by Customer, RUB billion Backlog Structure by Federal District, RUB billion Backlog Structure by Business Segment 2013 Transport Infrastructure Market Structure, RUB billion (net of VAT), % RUB billion In-house volumes of works1 increased by 8%, while tunnels, relocation of utility and communication lines, survey subcontracted volumes2 were up 52%. The share of work, construction of culverts, drainage and storm water subcontracted volumes3 increased to 44% in 2013, compared facilities and road pavement dismantling. Works performed with 36% in the previous year. The main types of non-core by subcontructors mainly refered to the project “Stage 2 and work performed by subcontractors were: construction of 3 Construction of the Kurortny Avenue Relief Road in Sochi”.

Revenue by Construction Project Type and Services

RUB million 2012 2013 Change

Revenue from contracts for construction of:

bridges and highways 77,616 98,418 20,802 27%

airfields and airports 8,200 6,394 (1,806) -22%

other facilities 4,729 1,016 (3,713) -79%

Total revenue from construction contracts 90,545 105,828 15,283 17%

Revenue from maintenance and repair of roads 2,855 9,939 7,084 248%

Other revenue 678 947 2 6 9 40%

Total revenue 94,078 116,714 22,636 24%

Roads and Bridges Airfields and Airports Revenue from road and bridge construction increased Revenue from airport and airfield construction decreased by 27% or RUB20.8 billion year-on-year, driven by by 22% or RUB1.8 billion, compared with the previous year. implementation of large-scale construction projects: The decrease in revenue was related to the completion of —— Stage 1 construction of the km 258 – km 334 section of the reconstruction of the airport in Sochi (Stage 2), and the M-11 “Moscow – St. Petersburg” Highway (Vyshny a decrease in the volume of work on the project for the Volochok Bypass); upgrade and development of Vnukovo Airport in Moscow at —— Reconstruction of Mozhaisky Avenue/Kutuzovsky the final stage of construction. This decrease was to some Avenue between the Moscow Ring Road and the Garden extent offset by increased construction volumes under the Ring; Sheremetyevo Airport upgrade project (Stage I) and the —— Traffic interchange at the intersection of the launch of upgrade work on the airport in Saratov. M-11 “Moscow – St. Petersburg” Highway (North Belt Road) with Festivalnaya Street in Moscow; Other Infrastructure4 —— Businovskaya Interchange reconstruction; Revenue from construction of other infrastructure —— Stage 1 reconstruction of the km 17 – km 50 section of decreased by 79% or RUB3.7 billion, compared with the M-9 “Baltic” Highway; previous year. This was mainly due to the completion of —— Construction of the km 15 – km 58 section of the the project to extend the Avtozavodskaya subway line in M-11 “Moscow – St. Petersburg” Highway). Nizhny Novgorod, and the project to build a section of Naryn-Lugokan Railway. In the period under review, the Group signed no new contracts for the construction of other infrastructure.

1 In-house volumes are calculated as revenue net of cost of subcontractor services. 2 Subcontracted volumes equal cost of subcontractor services in the Group’s total cost of sales. 3 The share of subcontracted volumes is calculated as the ratio of cost of subcontractor services to revenue. 4 Includes construction of railway and hydro infrastructure, as well as other non-core infrastructure, including construction of buildings, sports and culture facilities, metro lines, pedestrian overpasses, etc.

34 ABOUT US 2013 RESULTS CORPORATE GOVERNANCE SOCIAL RESPONSIBILITY APPENDICES 05. 01. 02. 04. 03. 35 -1% -4% 14% 12% 52% 22% 22% 38% 27% -28% Change 3 6 2 3 7 3 3 5 4 (13) (172) (854) (854) 1,305 1,305 2 , 6 0 0 17,759 17,759 2 1 , 7 1 4 4 3 7 2013 2 , 1 4 7 7 , 2 1 3 3 , 4 1 8 1 , 3 2 6 3,055 3,055 . 51,781 51,781 1 8 , 9 1 5 1 4 , 4 1 2 7 102,704 102,704 (+8%) correspond to an increase in revenue from from in revenue an increase to (+8%) correspond 6 9 6 4 609 609 2012 2 , 1 6 0 5 , 9 0 8 2 , 6 8 2 3,064 3,064 19,769 19,769 1 1 , 8 1 2 34,022 34,022 80,990 80,990 equal increase in revenue from subcontracted works, works, subcontracted from in revenue equal increase of the 2 and 3 Construction “Stage the project under mainly in Sochi”. Relief Road Avenue Kurortny of in-house in the cost behind the growth The drivers works in-house volumes or RUB2.6 by 22% year-on-year increased costs Staff and in headcount an increase due to billion. This was mainly of the completion facilitate to payments required overtime average time. As a result, in record-short Sochi projects the by 11% while increased Group the for headcount by 10%. wage increased average of 22% or RUB1.3 billion other expenses in The increase of design and survey the rising costs to was due mainly and of repair (+RUB651 million), and the cost work million). The (+RUB243 vehicles of motor maintenance with was associated work of design and survey rising costs development where number of contracts in the an increase the contractor. to was assigned documentation of project

5 . 6 , grew by 52%, compared with an 8% with an 8% by 52%, compared , grew 5

Annual Report 2013

M-3 “Ukraine”, between Moscow and the Ukrainian and the Ukrainian Moscow between M-3 “Ukraine”, border. M-4 “Don”, between Moscow and Novorossiysk; Moscow M-4 “Don”, between — — provided by third parties Fuel Depreciation and amortisation Machinery, equipment, transport, and labor services Materials Personnelexpenses RUB million Services of subcontractors Other cost of sales Total cost of sales Services of principal contractors Insurance In-house volumes are calculated as revenue net of cost of subcontractor services. of subcontractor net of cost as revenue calculated are In-house volumes Cost of subcontracted works equals the cost of subcontractor services in the Group’s total cost of sales. cost total in the Group’s services of subcontractor equals the cost works of subcontracted Cost services. of subcontractor cost less of sales cost total as the Group’s is calculated in-house works of Cost

Cost of Sales Cost A year-on-year increase in the cost of subcontracted works of subcontracted in the cost increase A year-on-year by the corresponding by 52% or RUB17.8 billion was driven by the rising costs of subcontractor services. The cost of of The cost services. of subcontractor by the rising costs work subcontracted of in-house works cost in the increase Cost of Sales increased of sales cost period, the Group’s In the reporting driven or RUB21.7 billion, mainly by 27% year-on-year, in the second half of 2012, following the acquisition of the acquisition of half of 2012, following in the second NITP). (formerly Mostotrest-Service — segment this business develop actively began to The Group with the previous year, mainly driven by servicing of the servicing of the by driven mainly year, with the previous highways: following — Services and operation maintenance repair, road from Revenue or RUB7.1 billion, compared 3.5 times increased services Revenue from Road Repair, Maintenance and Operation Operation and Road Repair, Maintenance from Revenue 5 6 7 Mostotrest Gross Profit and Margin Payroll expenses increased by 22% or RUB0.6 billion as the Gross profit increased by 7% or RUB0.9 billion, compared number of employees increased by 15% and wages grew by with the previous year, driven by increased construction 6%. The increase in headcount was linked to the significant volumes. growth in Mostotrest-Service volumes (the number of branches increased to 12 from 5 during the period under The Group’s gross profit margin was 12.0%, compared review) and the recruitment of more project management with 13.9% in 2012. The reduction in gross margin was specialists in response to new project wins in 2013. mainly caused by an increase in the share of subcontracted volumes1 in the Group’s total revenue. Other Expenses In the reporting period, other expenses increased 5 times Administrative Expense2 or by RUB2.2 billion year-on-year, driven by provisions for Against the backdrop of a 24% increase in revenue, doubtful receivables of RUB2.1 billion (RUB154 million in the Group’s administrative expenses for the period 2012). increased by 24% year-on-year or RUB1.2 billion. The share of administrative expenses in total revenue was 5%, unchanged year-on-year.

Administrative Expenses

RUB million 2012 2013 Change

Personnel expenses 2,959 3,606 6 4 7 22%

Consulting and audit services 187 319 1 3 2 71%

Social expenses 369 396 2 7 7%

Materials 171 143 (28) -16%

Insurance 141 139 (2) -1%

Bank fees 48 32 (16) -33%

Depreciation and amortisation 189 264 75 40%

Rent expense 130 170 4 0 31%

Taxes other than income tax 252 359 1 0 7 42%

Other administrative expenses 522 740 2 1 8 42%

Total administrative expenses 4,968 6,168 1,200 24%

1 The share of subcontracted volumes is calculated as the ratio of cost of subcontractor services to revenue. 2 Administrative expenses include personnel expenses, expenses for consulting and audit services, social expenses and other administrative expenses.

36 ABOUT US 2013 RESULTS CORPORATE GOVERNANCE SOCIAL RESPONSIBILITY APPENDICES 05. 01. 02. 04. 03. 37 0% -3% 20% 40% -81% -14% -85% 128% -66% 100% -100% -100% 3 2

50 (1) Change (2) 122 388 388 (100) (891) (444) (444) 1,257 (390)

3 7 0 35 50 107 202 2013 (220) (603) (1,586) (2,207) (2,409) 0 0 5 36 551 592 2012 (122) (695) (503) (1,477) The increase in interest payment expenses on loans and and on loans expenses payment in interest The increase increased period is due to in the reporting financial leases purposes and financing capital working for borrowings program. of the investment implementation with was associated interest Reduction in non-controlling in a subsidiary interest in non-controlling the decrease in earnings of 16.0%, and a decrease 49.9% to from period. a subsidiary in the reporting Tax Expense Profits by 25% or RUB0.4 billion decreased expense tax Profits for adjusted rate tax effective The Group’s year-on-year. expenses as financial recorded interest non-controlling in the an increase 34.2% due to 23.6% to from increased expenses. of non-deductible share Profit from Continuing Operations by 45% or decreased operations continuing from Profit by the same driven mainly RUB1.8 billion year-on-year dynamics. EBITDA that affected factors (2,797) (2,205)

4 Annual Report 2013

3 Total finance income Change in non-controlling interest Other finance income Interest income on loans given Foreignexchange gain Finance income: Finance Interest income on bank deposits RUB million Total finance costs Net finance cost Effect of discounting the financial assets and liabilities Change in non-controlling interest Interest expense on borrowings Interest expense on finance leases Finance costs: Finance Finance income and expenses of the Group primarily consist of interest earned on the bank deposits and loans given, finance expense incurred on the borrowings and finance leases and dividends leases and finance on the borrowings incurred expense finance given, earned on the bank deposits and loans of interest consist primarily of the Group and expenses income Finance paid to subsidiaries’ minority participants and non-controlling interest. subsidiaries’ minority participants and non-controlling paid to 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. as reported results operating of the Group’s analysis for or as a substitute it in isolation, and one should not consider tool, as an analytical has limitations EBITDA EBITDA is defined as net profit from continuing operations net of income tax, net finance costs and depreciation. EBITDA is not defined by, or presented in accordance with, IFRS. in accordance is not defined by, or presented EBITDA and depreciation. costs net finance tax, net of income operations continuing from is defined as net profit EBITDA Financial Income and Expenses and Financial Income on-year, due to a reduction in non-controlling interest, interest, in non-controlling a reduction due to on-year, expense in interest increase offset by an which was partially and financial leases. on borrowings advances from customers at the end of 2012. customers from advances RUB388 million year- by 14% or decreased costs Finance Group financial income decreased by 66% or 66% or by decreased financial income Group in free a decrease due to RUB390 million year-on-year, of significant with the absence associated flow cash 2013 was due to gross profit margin decline and an and an decline margin profit gross in 2013 was due to in other expenses. increase and Expenses Finance Income the growth in gross profit. in gross the growth 8.1% 12.0% in 2012 to from margin The decline in EBITDA The decline in EBITDA in the reporting period by 16% period by 16% the reporting in The decline in EBITDA of growth to was due or RUB1.8 billion year-on-year outstripping and other expenses expenses administrative EBITDA 3 4 Mostotrest Liquidity and Capital As at the year end the Group had debt of RUB4.5 billion and As of December 31, 2013 and 2012, cash and cash cash of RUB26.6 billion, therefore the Groups had negative equivalent balances were RUB26.6 billion and net debt at the end of the reporting period of RUB22.0 billion. RUB8.9 billion, respectively. The increase in cash balances was mainly due to advances received from customers, Under its existing banking arrangements, the combined including under new large contracts signed in 2H2013. credit limit available to the Group as at the end of During the reporting period, beginning-of-the-year cash the reporting period amounted to RUB50.3 billion balances and borrowings were used to finance working (RUB34.3 billion at December 31, 2012). capital, including repayment of loans raised to finance acquisitions in 2012, and implementation of the Group’s Net Working Capital1 investment program. Cash and cash equivalents include Negative net working capital increased by RUB26.4 billion cash at hand, cash in bank accounts and deposits with as compared with the end of 2012, and stood at original maturities of three months or less. RUB32.1 billion at the end of the reporting period.

Net Debt

RUB million 31.12.2012 31.12.2013 Change

Loans and borrowings 5,193 13 (5,180) -100%

Finance lease liabilities 3,469 4,525 1,056 30% 8,662 4,538 (4,124) -48% Cash and cash equivavelnts 8,864 26,566 17,702 200%

Net debt (202) (22,028) (21,826) 10,806%

As at the year end a negative value of net debt was As at the year end negative net working capital was

RUB22.0 billion RUB32.1billion

1 Net working capital is calculated as the difference between current operating assets (excluding cash and cash equivalents, prepayments of profits tax and other investments) and current operating liabilities (net of loans, provisions, profits tax liabilities and deferred income).

38 ABOUT US 2013 RESULTS CORPORATE GOVERNANCE SOCIAL RESPONSIBILITY APPENDICES 05. 01. 02. 04. 03. 39 2% -1% 37% 77% 34% 45% 16% 65% 470% Change 329 (46) 2,818 4,522 7,623 (5,792) (28,273) (34,065) (26,442) (26,442)

8,075 11,066 11,066 20,676 20,676 14,657 54,474 (21,492) (21,492) (65,047) (86,539) (32,065) 31.12.2013 8,121 8,248 10,135 20,347 20,347 46,851 Discontinued Operations a series of completed 2013, the Group In February an additional 25.9% acquire to transactions structured its participation in increasing in TSM, effectively stake in a 51.0% stake for 76.0%, in exchange 50.1% to TSM from payment in the amount of RUB0.12 billion. ETS and a cash in the amount of of this transaction The net result In the in equity. directly RUB0.17 billion was recorded ETS and included to attributable period, profit reporting to amounted statement and loss profit in the Group’s RUB0.006 billion (RUB0.236 billion in 2012). customers, driven by significant amounts of advances amounts of advances by significant driven customers, and other in trade 2013. The increase in late received by driven payable, in VAT increase an to was due payables period. in the reporting revenues stronger working financed period, the Group In the reporting from flow and cash use of bank loans via the mainly capital activities. operating (5,623) (5,623) (15,700) (36,774) (36,774) (52,474) 31.12.2012

RUB1.9 billion or 38% of the total RUB1.9 billion or 38% of the total Annual Report 2013

Amounts due from customers on construction contracts Prepayments Inventories Trade and other receivables RUB million Total Net working capital Total Trade and other payables Amounts due to customers on construction contracts 2013. The year on year reduction in total capital expenditure expenditure capital in total reduction on year 2013. The year phase of capacity of the active completion was due to segment in 2012. in the road-building expansion capital expenditures was allocated to the development to the development was allocated capital expenditures segment. and operation maintenance repair, of the road opened during were brunches of Mostotrest-Service 7 new and vehicles under the fixed assets renewal program and and program renewal assets under the fixed and vehicles maintenance repair, of the road as part of the development segment. and operation In 2013, the total amount of investments in fixed assets and and assets in fixed amount of investments In 2013, the total sheet amounted on the balance recorded assets intangible RUB5.1 billion (RUB5.6 billion in 2012). These capital to equipment construction acquire used to were expenditures Capex Structure of the Group’s Working Capital Working of the Group’s Structure The increase recorded in trade and other receivables was was and other receivables in trade recorded The increase from received on advances recoverable a rise in VAT due to 334 – km 543 Highway km 334 – km 543 Highway – St. Petersburg” M-11 “Moscow “Don” km 517 – and RUB4.6 billion under the M-4 project km 544 Highway project. under long-term construction contracts was due to was due to contracts construction under long-term in at the end taken customers from advances significant under the billion received of 2013, including RUB24.2 The increase in net liabilities (assets less liabilities) liabilities) less (assets in net liabilities The increase Mostotrest ABOUT US 2013 RESULTS CORPORATE GOVERNANCE SOCIAL RESPONSIBILITY APPENDICES 02. 04. 05. 01. 03.

41

1 633 90 60 464 120 240 km km Lipetsk region) ( 416 –

75 50 100 100 225 – km km

1 414

150 100 200 400 km “Don“ (Lipetsk region) 330 –

Cards: 10 seconds Cards: 5 seconds Transcoder: Cash: 25 seconds toll road sections in operation in operation sections road toll 85 170 125 340 km 2. 3. Government-authorized Government-authorized agent toll collection 1. Payment Modes/Time Throughput Throughput 170,280vehicles/day 5

М-4 1

75 50 321 100 200 with km (Tula region) (Tula 60 30 45 120 km 225 –

Toll Bar Toll Traffic Control Terminal Control Traffic Freight Vehicle Passway Vehicle Freight Passenger Vehicle Passway Vehicle Passenger Development of Development and System Transport Intellectual System Collection Toll The only Russian operator Russian The only km): 200+ length: (total Passenger Intermediate Coaches and trucks Coaches and trucks 2 2+ 2+ 3+ Axles, Units Axles,

2 2.6+ 2.6+ 2–2.6 09:00 – 21:00 Annual Report 2013 Height, M Height, M

I II Weather Hood Weather III IV 21:00 – 09:00 Toll Collection Booth Collection Toll Category

M-4 “Don“ Toll Rates Rates M-4 “Don“ Toll http://avtodor-ts.ru/paid_tariff Highways, a subsidiary of Avtodor, Toll of Avtodor The official website Source: Toll Road Operation Station Toll 1 ever commercial ever in Russia roads of toll operator Mostotrest

М-6

М-5

633 km М-8 Ryazan Yaroslavl

М-4 А-105 Pereslavl-Zalesskiy Kolomna

А-107 Bogoroditsk Voronezh Yelets

А-108 Moscow 225 km

Tver

Vyshny Volochok Vyshny

М-3 М-1 Segments under maintenance

km М-10 Ukraine

М-9 billion

М-11

А-116 revenue growth in reporting period in reporting growth revenue

Veliky Novgorod Veliky 20.7

Belorus

Road Maintenance 3x RUB backlog units of vehicles and equipment units of vehicles ~1,000 of roads under maintenance agreements under maintenance of roads ~3,500 Russia’s Biggest Road Maintenance and Operation Player Operation and Maintenance Road Biggest Russia’s 40 Pillars 03. of Success Corporate Governance

Stable 43 Corporate Governance Principles management team with impeccable 44 Corporate Governance Structure industry reputation

53 Management 53

The only publicly 56 Internal Control and Audit listed company in the sector, access to capital markets 57 To Investors and Shareholders

57

42 | CORPORATE GOVERNANCE PRINCIPLES 01. ABOUT US

Mostotrest Long-Term Corporate Governance Priorities

Safeguard the rights and interests of shareholders and other interested parties

The Company has adopted the General Shareholders are notified of the General Shareholders’ Meeting Rules and Shareholders’ Meeting at least 30 days Regulations. prior to the date of the meeting, regardless of the agenda.

02. 2013 RESULTS The Company offers its shareholders Members of the Board of Directors are The Chief Executive Officer (sole executive holding not less than one percent of obliged to refrain from actions that will or body of the Company) is not a participant the vote, the possibility to familiarize may result in a conflict of interest. in, CEO, board member or employee of a themselves with the list of persons competing legal entity. entitled to attend the General Shareholders' Meeting, as of submission of the list by the registrar.

Information Transparency 03. CORPORATE GOVERNANCE

The Company adopted Information Policy The main form of disclosure is publication The Company made broader commitments Rules and Regulations, which establish on the Company's website at in the area of public disclosure of the extent, methods and timing for public information about its operations, in disclosures and making information addition to those required by the existing available to shareholders and other www.mostotrest.ru legislation. interested parties.

Create an atmosphere of openness, trust and cooperation between the Company, its shareholders, 04.

managers, investors, employees, contractors and other interested parties SOCIAL RESPONSIBILITY

While interacting with interested parties in a spirit of openness, trust and cooperation, the Company

Discloses information about itself and its Is loyal and honest in its relations with Is mindful of quality and environmental operations, enabling shareholders and partners, contractors and staff. safety of its products and operations. investors to make informed investment decisions.

Strives to maintain a decent level of pay Participates in charitable activities. 05.

and labor conditions for its employees. APPENDICES

Mostotrest Annual Report 2013 43 Continuous improvement of the corporate governance The Company’s goals and objectives in the area of corporate system is a key long-term strategic priority at Mostotrest. governance are pursued in compliance with: —— Standards and requirements of the Russian legislation, Successful development, improvement and systematization including corporate law and securities market law of applicable corporate governance guidelines and rules are —— Key principles of the Code of Corporate Conduct, as framed and supported by the Company’s Code of Corporate recommended for public companies by a relevant FCSM Conduct. instruction —— Best international corporate governance standards and The Code is intended to ensure: effective protection practices, and ethical standards. of the rights and legitimate interests of shareholders; transparency of decision-making, professional and ethical In accordance with best corporate governance practice and responsibility of members of the Board of Directors, the Russian legislation, Mostotrest’s Board of Directors members of executive bodies, senior managers and includes three independent directors. other employees of the Company, as well as Mostotrest’s information transparency. In addition, the Company adopted the Regulations on the Protection of Information aimed at preventing insider The Code establishes general principles of corporate trading and protecting commercial information, as well as conduct (including guidelines for relationships with the Management Bodies Rules and Regulations. Mostotrest subsidiaries and affiliates), regulates basic corporate procedures and establishes the policy for protecting shareholder equity interests.

| CORPORATE GOVERNANCE STRUCTURE

The Company has a two-tier management structure, in which the Board of Directors oversees the activities of the sole executive body, the CEO.

GENERAL SHAREHOLDERS’ MEETING

Supreme governing body of the Company. By offering its shareholders the opportunity to participate in the General Shareholders’ Meeting, Mostotrest safeguards their legitimate rights and interests.

CHIEF OPERATING BOARD INDEPENDENT AUDITORS AND OFFICER OF DIRECTORS WATCHDOG COMMITTEE

Sole executive body ensuring day-to-day Management body ensuring the Company’s Control bodies monitoring the Company’s management of the Company. overall management and supervision. financial and economic activities. Determines development strategy and oversees implementation of decisions of the General Shareholders’ Meeting.

BOARD HR AND REMUNERATION CORPORATE SECRETARY BOARD AUDIT COMMITTEE COMMITTEE

44 General Shareholders’ Meeting Board of Directors 01.

One of the main objectives of the Company when holding The Board of Directors is responsible for the strategic ABOUT US General Shareholders’ Meetings is to ensure protection development of Mostotrest. of legitimate rights and interests of shareholders in connection with their participation in the meetings. Board of Directors key competences: —— Strategy elaboration; GSM Competences: —— Approval of material transactions; —— Amendments to the Articles of Incorporation; —— Setting targets for the Company's management and —— Company restructuring or liquidation; overseeing delivery thereof. —— Changes to the registered capital; —— Approval of certain transactions; The Board of Directors is governed by the Articles of —— Election of the Board of Directors and Watchdog Association and the Regulation on Procedures for Meetings 02.

Committee, and early termination of their power; of the Board of Directors. 2013 RESULTS —— Approval of the Company's auditors, annual reports, annual financial statements, as well as distribution of Board Composition profits and payment of dividends. When electing a Board of Directors, we target a combination of skills and professional expertise to maximize benefits to Annual General Shareholders’ Meeting Results the Company and its shareholders. Independent directors (28 June 2013): and a good balance between executive and non-executive —— Approved the 2012 Annual Report, annual financial Board members ensure the most optimal representation of statements for 2012, distribution of 2012 profits interests of all shareholders. (including dividend amount); —— Elected the Board of Directors and Watchdog Chairman of the Board Committee; The Board is led by the Chairman whose responsibilities 03. CORPORATE GOVERNANCE —— Approved RAS and IFRS independent auditors. include convening the Board meetings and elaboration of the Board meeting agendas. In addition, the Chairman No extraordinary General Shareholders’ Meeting was held controls execution of resolutions of the General in 2013. Shareholders’ Meeting and decisions of the Board of Directors, monitors the Company’s relations with its shareholders, the Board of Directors, management, executive and non-executive directors. Mr. Georgy Koryashkin is the Chairman of Mostotrest Board of Directors and has been since January 2011.

2013 Board Composition: 11 directors, of which 9 non- 04. SOCIAL RESPONSIBILITY executive (including the Chairman). Three non-executive directors are independent.

05. Annual General Shareholders’ Meeting to approve 2013 results to According to the best corporate governance practice and Russian APPENDICES be held on 27 June 2014 legislation there are three indepentent directors in the Board

Mostotrest Annual Report 2013 45 01. ABOUT US

02. 2013 RESULTS

03. CORPORATE GOVERNANCE Georgy Koryashkin Maria Zhurba Leonid Dobrovsky Vadim Korsakov Denis Kulikov Irina Makanova Chairman, Non-Executive Director Deputy Chairman, Non-Executive Director Executive Director Non-Executive Director Independent Director Non-Executive Director Board member since 2006 Board member since 2008 Deputy CEO of Mostotrest Board member since 2012 Board member since 2013 Board member since 2011 Board member since 2011 Born in 1969 in Moscow Born in 1979 in Dubna Born in 1969 in Saint Petersburg Born in 1975 in Moscow Born in 1976 in Yaroslavl Holds a degree in Economics and Holds a degree in Economics from Saint Born in 1965 in Moscow Holds a degree in Financial Management Holds a law degree from Moscow State Holds a law degree from Demidov Production Management from Petersburg Economics and Finance Graduated from Moscow Physics and from Saint Petersburg Economics and Law Academy (1992) Yaroslavl State University (1998) Ordzhonikidze State Academy of University (2001) Technical Science University in 1989 Finance Academy (1992) Management (1995) MBA (Financial Management) from the Professional experience: Professional experience: RF Ministry for Economic Development Professional experience: Professional experience: 2006 – present: Investor Protection 2006 – present: NPV Engineering, Head of Professional experience: and Trade Higher School of Commerce 2006 – present: Mostotrest, Deputy CEO 2011 – present: NPF BLAGOSOSTOYANIYE, Association, Executive Director Legal Department 04. SOCIAL RESPONSIBILITY 2006 – present: NPV Engineering, CEO (2006) 2002–2006: Montazhtransstroy-MTK, CEO Deputy Executive Director 2004–2006: RZD, First Deputy Head of MBA (Strategic Management) from the 2007–2011: РВМ Capital Management Property Management and Corporate Russian Peoples’ Friendship University Company, CEO Structure Department (2007) 2005–2007: International Contacts & Consulting Inc., CFO Professional experience: 2007– present: NPV Engineering, Head of Finance 2005–2007: Russian Lead Group Of Companies, CFO 05. APPENDICES

A new independent director, Mr. Denis Kulikov, was elected to the Board in 2013

46 Mostotrest Annual Report 2013 47 01. ABOUT US

02. 2013 RESULTS

03. CORPORATE GOVERNANCE Mikhail Noskov Yuri Novozhilov Alexander Shevchyuk Oleg Toni Vladimir Vlasov Independent Director Non-Executive Director Independent Director Non-executive Director Executive Director Board member since 2011 Board member since 2012 Board member since 2012 Board member since 2008 CEO of Mostotrest Board member since 2011 Born in 1963 in Moscow Born in 1974 in Saint Petersburg Born in 1983 in Moscow Holds a degree in International Economic Holds a degree in Economic Theory from Holds a degree in Finance and Credit Born in 1964 in Voronezh Born in 1970 in Kharkov Relations from the Moscow Finance Saint Petersburg State University (1996) from the RF Government Finance Holds a degree in Industrial and MBA from the Russian Economy University (1998) Academy (2005) Civil Construction from Voronezh Academy School of Business (2006) Professional experience: Engineering and Construction University Professional experience: 2012 – present: NPF BLAGOSOSTOYANIYE, Professional experience: (1986) Professional experience: 2014 – present: Tele2 Russia, CEO Executive Director 2004 – present: Investor Protection 2006 – present: Mostotrest, CEO 04. SOCIAL RESPONSIBILITY 2008 – 2014: SeverGroup, Deputy CEO 2009 – 2012: TransCreditBank, Chairman Association, Deputy Executive Director Holds a degree in Public and Municipal 2000 – 2005: Kolomensky Plant Holding 2007 – 2008: Severstal, Deputy CEO for of the Management Board Management from North-West Public Company, CEO Economics and Finance 2004 – 2009: RZD, First Deputy Head of Service Academy (2003) Corporate Finance Professional experience: 2006 – present: RZD, Vice-President

05. APPENDICES

48 Mostotrest Annual Report 2013 49 Mostotrest Average Headcount Employees by type of activity, % Employees by category, %

+11.0 % 1 %

25,871 2 % 23,204 11 % 10 % 20,341 транспортной инфраструктуры в России, 13 % 12 % млрд рублей (без НДС)

Источник: Данные Компании

500 654,7 75 % 76 % 566,5 400 660,1

2011 2012 2013 300

Blue-collar staff Blue-collar staff 200 591,8 Engineers Professionals 594,4 Financial and Economic specialists Managers 100 Others White-collar employers

2009 2010 2011 2012 2013

Mostotrest Employee Training and Upskilling Costs, RUB million Структура беклога Структура беклога 18.4 18.1 по бизнес-сегментам, млн рублей по бизнес-сегментам, млн рублей

15.7 319,7 304,8 11,3 12%

9,7 13% 4,0 +14% 14,8 654,6 8,7 55% 271,1 20% 13,0

2011 2012 2013 Мосты и дороги 475,8 Железные дороги 95,7 Cредневзвешенные процентные Аэропорты 42,4 Морские и речные порты 40,7 ставки по банковским кредитам, % 2012 2013 2012 2013 Расходы на охрану Источник: Отчет EMES Group 9.8 окружающей среды, млн руб. 8,9 Мосты и дороги Аэродромы и аэропорты 101,92 95,28 92,90 Железные дороги 6,8 Порты Прочая инфраструктура

660,1 654,7 2011 2012 2013 2011 2012 2013 594,4 591,8 566,5

Mostotrest Share Capital Structure Debt structure, % as at 31 January 2014 , % 2009 2010 2011 2012 2013

32.0 % 48 % 38.6 % 52 %

29.4 %

Long-term Debt Short-term Debt Marc O’Polo Investments Ltd Trustees of NPF Blagosostoyanie Other Shareholders

Mostotrest 2013 2013 Participation Investor Meetings , % of Mostotrest Senior Net Debt, RUB billion Management in Investor 7.6 (21.6) Meetings , % 4.5 (22.0) 3 % (29.3) (26.6) 15 %

8.7 (0.2) 17 %

68 % 45 % 52 % (8.9)

2011 2012 2013 During investment bank conferences In Company offices Cash CFO, IR Officer As part of Company roadshows Total Debt CEO, CFO, IR Officer Чистый долг IR Officer

Average Salary, RUB thousand

+10 % Total items considered during Board meetings 2013 46.5 Структура беклога по бизнес-сегментам, млн рублей

1 +14% 14,8 2012 42.5 319,7 6 3 304,8 11,3 13 13,0 9,7 2011 40.6 4,0 143 79 8,7 41 271,1

2012 2013

Corporate governance Approval of transactions Finance HR Strategy 2012 2013 Other

Структура персонала по категориям в 2013 году, % Железные дороги Порты Прочая инфраструктура

Средний уровень заработной платы, тыс. руб. 10,0% 46,5 42,5 Общее количество проведенных заседаний 40,6 143 139 139

12 36 2 11 35 11 34 Внеочередные Плановые Количество заседаний в заочной форме 26 24 Количество заседаний 23 в очной форме Количество рассмотренных вопросов 2011 2012 2013

2011 2012 2013

Mostotrest Average Headcount, person

+11%

2013 25,871

2012 23,204

2011 20,341

Average Salary, RUB thousand

+9%

2013 46.5

2012 42.5

2011 40.6

Employees by Category, %

1%

10%

13% Blue-collar staff Professionals Managers White-collar employers

76%

18,4 18,1

15,7

Employees by Type of Activity, %

2% 10%

12% Blue-collar staff Engineers 2011 2012 2013 Financial and Economic specialists Others

76%

Mostotrest Employee Training and Upskilling Costs, RUB million +15%

2013 18.1

2012 15.7

2011 18.4

Mostotrest OHS Investments, RUB million

Corporate Secretary +15,0 % The Corporate Secretary under the Board of11.9 Directors176.9 Board decisions are adopted by a three quarters majority ensures compliance with the corporate governance rules vote2013 of the elected members. Each director has one vote.18,1 and procedures as set out in the Russian law165.0 and the Corporate Code of Conduct.8.1 The129.8 responsibilities of the In 2013, the Board held 34 meetings, which discussed Corporate Secretary 121.7also include documentation storage, issues2012 relating to current operations and adopted15,7 important 1.0 111.0 disclosure and provision of information about the Company, strategic decisions, including those relating to: 110.0 and liaising with shareholders. Gennady Bogatyrev has been —— Annual General Shareholders’ Meeting; 2011 18,4 serving as the Company’s Corporate Secretary since 2008. —— Ordinary course of business: approval of the Company's participation in tenders for construction contracts; Board Procedures —— Financial and economic policy (credit policy issues); The Board of Directors convenes at least four times —— Operations of subsidiaries and affiliates; a year, in accordance with the adopted schedule. In —— Liquidation of ownership in ETS; 2011 2012 2013 between regular meetings the Board may convene for —— Disposal of non-core assets; extraordinaryOccupational meetings Health to discuss urgent issues relating —— HR. to the Company'sIndustrial Safety business (Training) operations and adopt relevant decisions.

Total Items Considered during Board Meetings

1

6 3 13 Corporate governance Approval of transactions 143 Finance 79 HR 41 Strategy Other

Board Meetings Structure and Number of Items Considered

Mostotrest Share Capital Structure 2011 2012 2013 as at 31 January 2014 , % Total Board meetings held 35 34 38

Scheduled Board meetings 11 11 12

Extraordinary Board meetings 24 23 26 32.0% 38.6% Marc O’Polo Investments Ltd In-praesentia Board meetings AM companies for — — 2 NPF BLAGOSOSTOYANIE In-absaentia Board meetings Free float 35 34 36

Number of2 9.4items% considered during Board meetings 139 139 143

Debt Structure, %

50

48% Long-term Debt 52% Short-term Debt

Weighted Average Interest Rates on Bank Loans, %

–0.9 p. p.

2013 8.9%

2012 9.8%

2011 6.8%

Net Debt, RUB billion

7.6 (21.6)

4.5 (22.0) (29.3) (26.6)

8.7 (0.2)

(8.9)

2011 2012 2013

Cash Total Debt Net Debt Чистый долг

Mostotrest 2013

Investor Meetings , %

15%

During investment 17% bank conferences In Company offices 68% As part of Company roadshows

2013 Participation of Mostotrest Senior Management in Investor Meetings , %

3%

CFO, IR Officer CEO, CFO, IR Officer 45% 52% IR Officer Board Meeting Attendance Statistics 01. ABOUT US

Board Member # of Board Meetings # of Board Audit Committee Meetings

Held Attended Held Attended

L. Dobrovsky 38 37

V. Korsakov 38 36

G. Koryashkin 38 38 02. 2013 RESULTS D. Kulikov1 23 23

A. Lugtmeijer2 15 15 2 2

I. Makanova 38 38

M. Noskov 38 37

Y. Novozhilov 38 38

03.

A. Shevchyuk 38 36 1 1 CORPORATE GOVERNANCE

O. Toni 38 36

V. Vlasov 38 38

M. Zhurba 38 38 3 3

04. SOCIAL RESPONSIBILITY Compensation of the Board of Directors The Board members are compensated in accordance All members of the Board of Directors are entitled to with Mostotrest Board Members Remuneration and compensation for their service on the Board, subject to at Compensation Rules as approved by the General least 50% Board meeting attendance. Shareholders' Meeting. Corresponding provisions of the Rules do not apply to independent directors, who The CEO is not entitled to compensation for his service on sign independent director contracts in accordance with the Board. Article 3.12.1. of Mostotrest Board of Directors Rules and Regulations. Compensation of the Board members consists of a fixed and a variable component. Subject to their good faith performance, members of the 05. Board of Directors are remunerated for participation in the APPENDICES Board meetings and reimbursed for associated expenses.

1 Member of the Board since 28 June 2013. Total number of Board meetings held from 28 June 2013 to 31 December 2013: 23 2 Member of the Board until 28 June 2013. Total number of Board meetings held from 1 January 2013 to 28 June 2013: 15

Mostotrest Annual Report 2013 51 Fixed Committee Responsibilities

Per-meeting attended fee The Audit Committee assists the Board of Directors in overseeing the completeness and accuracy of financial and other reports, the Equal to 6x minimum legal wage effective reporting process, internal control and internal audit processes, risk as at the date of a Board meeting management, as well as compliance with the existing legislation, Articles of Association and other internal regulations. Variable

Bonus based on full-year results

Depends on the Company's net profit for the year and the number Items Considered in 2013 of meetings attended by individual directors In 2013, the Audit Committee held three meetings to discuss the following key items:

The variable component is calculated based on the formula set out below: Approval of the Internal Audit Service 2013 Activity Plan

Remuneration = (NI*A)/(100*B*C), where Review of the 2012 Auditors’ Report and approval of the Audit “NI” – Net Income Committee opinion on the Auditors’ Report (Gross-Audit) “А” – Number of Board meetings attended by a director “В” – Number of directors on the Board “С” – Number of Board meetings in the period between the Annual General Shareholders' Meetings. Recommendations to the Board on new RAS and IFRS auditors

Analysis of 2012 financial statements Total compensation paid to Mostotrest Board members in 2013 amounted to RUB38.2 million, including Recommendations to the Board on the auditors' fees RUB21.5 million in meeting participation fees (fixed) and RUB16.7 million in performance bonuses (variable) based on 2012 results.

Board Committees HR and Remuneration Committee The Board of Directors has two committees: the Audit The HR and Remuneration Committee was established in Committee and the HR and Remuneration Committee. the beginning of 2013. Committees provide consulting support on core issues related to the Board authority and develop The key responsibilities of the HR and Remuneration recommendations to the Company’s Board of Directors and Committee cover the development of Mostotrest HR policy management. priorities and strategies, including in the areas of HR management, development and motivation; definition of Audit Committee principles and criteria for recruitment of CEOs, Deputy Committee composition as at 2013 year-end: CEOs, heads of departments; development of the CEO —— Alexander Shevchyuk (Committee Chair) and management performance analysis and evaluation —— Maria Zhurba methodology; and elaboration of principles and criteria for —— Yuri Novozhilov remuneration of the Company CEO (including management company or trust manager).

As at the end of 2013, the Committee was not elected and no Committee meetings were held in 2013.

52 | MANAGEMENT 01. ABOUT US The CEO, the Company’s sole executive body elected by Management Compensation the Board of Directors and accountable to the General Remuneration of the CEO and his deputies consists Shareholders’ Meeting and the Board, is responsible for the of a monthly salary (fixed component) set out in the day-to-day management of the Company’s operations. employment contract, and a bonus for the year (variable component), linked to the Company results. During in-praesentia Board meetings, the CEO submits to the Board reports on financial and economic activities Bonuses payable to the CEO are set by resolutions of the of Mostotrest and its subsidiaries and affiliates, as well Board of Directors. Bonus decisions relating to the CEO’s progress reports relating to resolutions of the General deputies are adopted by the KPI Committee, based on the Shareholders’ Meeting and decisions of the Board. CEO’s recommendations. The variable component is paid 02.

on the basis of the collective agreement. Monthly bonus 2013 RESULTS The CEO is assisted by 11 deputies, each of whom is amounts may not exceed 2x monthly salary. responsible for a specific area of Mostotrest operations. Total compensation paid to Mostotrest management including the heads of branches and management of consolidated subidiaries in 2013 amounted to RUB 547.8 million.

03. CORPORATE GOVERNANCE The Chief Executive Officer is not a participant in, CEO, board Mosototrest's key management including the CEO and member or employee of a competing legal entity key deputies have been with the Company since 2006. The management team has an impeccable reputation within the industry and many years of experience building highly complex transport infrastructure facilities

04. SOCIAL RESPONSIBILITY

05. APPENDICES

Mostotrest Annual Report 2013 53 01. ABOUT US Vladimir Vlasov Vladimir Monastyrev CEO, Member of the board of Directors Deputy CEO for Development

Mr. Vlasov holds an MBA degree from the Russian Academy of Mr. Monastyrev graduated from Moscow State University of National Economy. Railway Transport and holds a PhD in economics.

Mr. Vlasov has served as CEO since he joined the Company in Mr. Monastyrev joined Mostotrest in 2000. Before becoming September 2006. Prior to joining Mostotrest he held managerial the Deputy CEO he was a Head of Planning and Economic positions in forwarding companies and seaports of Department. and Saint Petersburg, as well as in Severstaltrans. In 2000-2005 02.

he served as CEO of Kolomna Plant Holding Company. 2013 RESULTS

Valery Dorgan Alexander Ostrovsky Deputy CEO for Marketing Deputy CEO for Production

Mr. Dorgan graduated from the Moscow State Automobile and Mr. Ostrovsky graduated from the Moscow Engineering and Highway Institute and holds a degree in airfield construction. He Construction Institute and holds a degree in hydro infrastructure 03. CORPORATE GOVERNANCE also received a degree in construction management from the development. Ordzhonikidze Moscow Management Institute, and holds a PhD in economics. Mr. Ostrovsky joined Mostotrest in 1973 and has held various managerial positions, including Head of Production and Mr. Dorgan has served as Deputy CEO for Marketing since 2010. Mr. Dorgan has over 35 years of experience in the transport Technology and Deputy Chief Engineer of one of Mostotrest’s infrastructure construction sector. Prior to joining the Group, he regional affiliates. Mr. Ostrovsky has more than 30 years of held various managerial positions at federal state enterprises experience in the bridge construction industry, including more responsible for highway infrastructure development in central than 20 years in managerial positions. Russia.

04. SOCIAL RESPONSIBILITY

Oleg Tanana Victor Korotin CFO Chief Engineer, First Deputy CEO Mr. Tanana graduated from the Belarusian State University of Mr. Korotin graduated from the Institute of Railway National Economy and holds a degree in economics and social transport for Railway Transport Engineers and holds a PhD in planning. technology. Mr. Tanana has served as Deputy CEO for Economics and Finance 05. Mr. Korotin joined Mostotrest in 1970 and has held various since 2006. Prior to joining the Group, he was Director for APPENDICES managerial positions. He has served as Mostotrest’s Chief Economics and Finance of Kolomna Plant Holding Company and Engineer since 1990. He is the Group’s most senior technical of ZAO Balance-Oil. officer and has more than 40 years of experience in the Russian engineering and construction industry.

54 Mostotrest Annual Report 2013 55 | INTERNAL CONTROL AND AUDIT

Objectives of the Company’s internal control system: Internal Control Service Key responsibilities of the Internal Control Service include —— Ongoing collection and analysis of information about Ensure reliability of financial and management information and the Company’s financial and economic activities; reporting —— Assessment of the status and effectiveness of the internal control and risk management systems; —— Identification of significant risk factors; Promptly identify, analyze and manage operating risks —— Internal audits, corporate investigations, unannounced inspections and other actions; Ensure delivery of current operating targets and implementation —— Regular provision to CEO and the Board Audit of specific budgets and programs Committee of information about identified material weaknesses, recommended remedial actions and implementation thereof. Ensure preservation of assets and efficient use of resources Coordinated by the CEO and the Board, cooperation between the Company’s internal control bodies is aimed at Compliance with existing legislation and internal procedures improving management efficiency and reducing operating risk.

Corporate documents governing Mostotrest internal control procedures: Mostotrest’s internal control system includes the Board —— Mostotrest Rules for Internal Control over Financial and of Directors Audit Committee, the Corporate Watchdog Economic Activities; Committee and the Internal Control Service. —— Mostotrest Rules for the Board of Directors’ Audit Committee; Watchdog Committee —— Mostotrest Rules for the Corporate Watchdog The Watchdog Committee is a permanent internal control Committee; body that ensures regular monitoring of the Company’s —— Mostotrest Rules for Internal Control Service. financial and economic activities. Independent Auditors The Watchdog Committee acts on behalf of shareholders Pursuant to the existing Russian legislation, the Annual and reports to the General Shareholders’ Meeting. General Shareholders’ Meeting approves the auditors to perform an independent audit of the Company’s financial Key responsibilities of the Watchdog Committee include statements. Prospective auditors are proposed by the Board control over the financial and economic activities, of Directors, based on recommendations from the Audit compliance of the Company's financial and business Committee. operations with existing Russian legislation and the Company's Articles of Incorporation, as well as independent The amount and procedure for payment of the auditors’ analysis of information relating to the Company’s financial fees are set out in the contract for audit services. position. The amount of auditors’ fee is determined by the Board.

Mostotrest auditors in 2013: —— The Company’s RAS financial statements were audited by Gross-Audit; —— The Company’s IFRS financial statements were audited by KPMG.

56 Mostotrest Average Headcount Employees by type of activity, % Employees by category, %

+11.0 % 1 %

25,871 2 % 23,204 11 % 10 % 20,341 транспортной инфраструктуры в России, 13 % 12 % млрд рублей (без НДС)

Источник: Данные Компании

500 654,7 75 % 76 % 566,5 400 660,1

2011 2012 2013 300

Blue-collar staff Blue-collar staff 200 591,8 Engineers Professionals 594,4 Financial and Economic specialists Managers 100 Others White-collar employers

2009 2010 2011 2012 2013

Mostotrest Employee Training and Upskilling Costs, RUB million Структура беклога Структура беклога 18.4 18.1 по бизнес-сегментам, млн рублей по бизнес-сегментам, млн рублей

15.7 319,7 304,8 11,3 12%

9,7 13% 4,0 +14% 14,8 654,6 8,7 55% 271,1 20% 13,0

2011 2012 2013 Мосты и дороги 475,8 Железные дороги 95,7 Cредневзвешенные процентные Аэропорты 42,4 Морские и речные порты 40,7 ставки по банковским кредитам, % 2012 2013 2012 2013 Расходы на охрану Источник: Отчет EMES Group 9.8 окружающей среды, млн руб. 8,9 Мосты и дороги Аэродромы и аэропорты 101,92 95,28 92,90 Железные дороги 6,8 Порты Прочая инфраструктура

660,1 654,7 2011 2012 2013 2011 2012 2013 594,4 591,8 566,5

Mostotrest Share Capital Structure Debt structure, % as at 31 January 2014 , % 2009 2010 2011 2012 2013

32.0 % 48 % 38.6 % 52 %

29.4 %

Long-term Debt Short-term Debt Marc O’Polo Investments Ltd Trustees of NPF Blagosostoyanie Other Shareholders

Mostotrest 2013 2013 Participation Investor Meetings , % of Mostotrest Senior Net Debt, RUB billion Management in Investor 7.6 (21.6) Meetings , % 4.5 (22.0) 3 % (29.3) (26.6) 15 %

8.7 (0.2) 17 %

68 % 45 % 52 % (8.9)

2011 2012 2013 During investment bank conferences In Company offices Cash CFO, IR Officer As part of Company roadshows Total Debt CEO, CFO, IR Officer Чистый долг IR Officer

Average Salary, RUB thousand

+10 % Total items considered during Board meetings 2013 46.5 Структура беклога по бизнес-сегментам, млн рублей

1 +14% 14,8 2012 42.5 319,7 6 3 304,8 11,3 13 13,0 9,7 2011 40.6 4,0 143 79 8,7 41 271,1

2012 2013

Corporate governance Approval of transactions Finance HR Strategy 2012 2013 Other

Структура персонала по категориям в 2013 году, % Железные дороги Порты Прочая инфраструктура

Средний уровень заработной платы, тыс. руб. 10,0% 46,5 42,5 Общее количество проведенных заседаний 40,6 143 139 139

12 36 2 11 35 11 34 Внеочередные Плановые Количество заседаний в заочной форме 26 24 Количество заседаний 23 в очной форме Количество рассмотренных вопросов 2011 2012 2013

2011 2012 2013

Mostotrest Average Headcount, person

+11%

2013 25,871

2012 23,204

2011 20,341

Average Salary, RUB thousand

+9%

2013 46.5

2012 42.5

2011 40.6

Employees by Category, %

1%

10%

13% Blue-collar staff Professionals Managers White-collar employers

76%

18,4 18,1

15,7

Employees by Type of Activity, %

2% 10%

12% Blue-collar staff Engineers 2011 2012 2013 Financial and Economic specialists Others

76%

Mostotrest Employee Training and Upskilling Costs, RUB million +15%

2013 18.1

2012 15.7

2011 18.4

Mostotrest OHS Investments, RUB million

+15,0 % 11.9 176.9 2013 18,1 165.0 8.1 129.8 121.7 2012 15,7 1.0 111.0 110.0 2011 18,4

2011 2012 2013

Occupational Health Industrial Safety (Training)

Total Items Considered during Board Meetings

1

6 3 13 Corporate governance Approval of transactions 143 Finance 79 HR 41 Strategy Other

| TO INVESTORS AND SHAREHOLDERS 01. ABOUT US Mostotrest Share Capital Structure Share Capital as at 31 January 2014 , % Mostotrest’s registered capital amounts to RUB39,510,170, split into 282,215,500 ordinary shares with a par value of RUB0.14 each. According to the shareholder register as at January 31, 2014, Mostotrest’s shareholder base comprises of 268 individuals owning 6,530,200 shares (2.31% of 32.0% the share capital), and 2 legal entities, including one 38.6% Marc O’Polo Investments Ltd nominal holder. The nominal shareholder represents 1,584 AM companies for individuals and 283 legal entities, who own 2,981,725 shares NPF BLAGOSOSTOYANIE (1.06% of share capital) and 272,703,175 shares (96.63% of Free float 02.

share capital), respectively. 2013 RESULTS

29.4% Stock Market In 2010, the Company completed an initial public offering (IPO), which was the first ever in the Russian infrastructure Marc O’Polo Investments Ltd is a holding company, the beneficiaries of which are the senior construction market. The IPO created new competitive managers of N-Trans Group, a leading private operator in the transportation sectorin Russia, CIS and the Baltic countries: Konstantin Nikolayev, Nikita Mishin, Andrey Filatov (owning advantages, including access to capital markets on more 31.55% of the share capital in equal proportions), and Arkady Rotenberg and Igor Rotenberg favorable terms and greater confidence on the part of (jointlyDebt owning Structure, 68.45%). % clients and lenders. The Company’s shareholder base was NPF BLAGOSOTOYANIYE is a non-governmental pension fund established with the participation of Russian Railways. joined by mainly long-term domestic and international investors confident about the development prospects for the Russian infrastructure sector. As a result of the IPO, 03. CORPORATE GOVERNANCE Mostotrest shares were included in listings of Russian stock exchanges. 48% Long-term Debt 52% Short-term Debt The Company’s ordinary shares are included in the list of securities admitted to trading on the Moscow Stock With effect from April 8 2014, Mostotrest's shares have been Exchange (stock ticker - MSTT), and are included in the included in the A2 quotation list by the Moscow Stock Exchange MICEX Index calculation base.

Dividend Policy Mostotrest dividend policy is based on a balance of interests between the Company and its shareholders when 04. SOCIAL RESPONSIBILITY determining dividend payments, as well as on maximization Weighted Average Interest Rates on Bank Loans, % of the Company’s investment attractiveness and valuation, and respect and strict observance of the rights of shareholders as provided for in the current legislation of –0.9 p. p. the Russian Federation, the Articles of Incorporation and 2013 8.9% internal documents.

In accordance with the Russian legislation, Mostotrest 2012 9.8% pays dividends to shareholders from net profit for the year, based on the financial statements prepared in line with the Russian legislation. 05. 2011 6.8% APPENDICES Dividend History

2011 2012 2013 NetDividend Debt, Payment RUB billion (RUB million) 2,004 2,201 2,0011

7.%6 of Net(21.6) Profit Allocated to Dividend 54% 51% 89%1

4.5 (22.0) (29.3) 1 Dividends recommended by the Board of Directors held on 24 April(26.6 2014.) To be approved by the Annual Shareholders’ Meeting on 27 June 2014.

Mostotrest Annual Report8.7 2013 (0.2) 57

(8.9)

2011 2012 2013

Cash Total Debt Net Debt Чистый долг

Mostotrest 2013

Investor Meetings , %

15%

During investment 17% bank conferences In Company offices 68% As part of Company roadshows

2013 Participation of Mostotrest Senior Management in Investor Meetings , %

3%

CFO, IR Officer CEO, CFO, IR Officer 45% 52% IR Officer Mostotrest Average Headcount Employees by type of activity, % Employees by category, %

+11.0 % 1 %

25,871 2 % 23,204 11 % 10 % 20,341 транспортной инфраструктуры в России, 13 % 12 % млрд рублей (без НДС)

Источник: Данные Компании

500 654,7 75 % 76 % 566,5 400 660,1

2011 2012 2013 300

Blue-collar staff Blue-collar staff 200 591,8 Engineers Professionals 594,4 Financial and Economic specialists Managers 100 Others White-collar employers

2009 2010 2011 2012 2013

Mostotrest Employee Training and Upskilling Costs, RUB million Структура беклога Структура беклога 18.4 18.1 по бизнес-сегментам, млн рублей по бизнес-сегментам, млн рублей

15.7 319,7 304,8 11,3 12%

9,7 13% 4,0 +14% 14,8 654,6 8,7 55% 271,1 20% 13,0

2011 2012 2013 Мосты и дороги 475,8 Железные дороги 95,7 Cредневзвешенные процентные Аэропорты 42,4 Морские и речные порты 40,7 ставки по банковским кредитам, % 2012 2013 2012 2013 Расходы на охрану Источник: Отчет EMES Group 9.8 окружающей среды, млн руб. 8,9 Мосты и дороги Аэродромы и аэропорты 101,92 95,28 92,90 Железные дороги 6,8 Порты Прочая инфраструктура

660,1 654,7 2011 2012 2013 2011 2012 2013 594,4 591,8 566,5

Mostotrest Share Capital Structure Debt structure, % as at 31 January 2014 , % 2009 2010 2011 2012 2013

32.0 % 48 % 38.6 % 52 %

29.4 %

Long-term Debt Short-term Debt Marc O’Polo Investments Ltd Trustees of NPF Blagosostoyanie Other Shareholders

Mostotrest 2013 2013 Participation Investor Meetings , % of Mostotrest Senior Net Debt, RUB billion Management in Investor 7.6 (21.6) Meetings , % 4.5 (22.0) 3 % (29.3) (26.6) 15 %

8.7 (0.2) 17 %

68 % 45 % 52 % (8.9)

2011 2012 2013 During investment bank conferences In Company offices Cash CFO, IR Officer As part of Company roadshows Total Debt CEO, CFO, IR Officer Чистый долг IR Officer

Average Salary, RUB thousand

+10 % Total items considered during Board meetings 2013 46.5 Структура беклога по бизнес-сегментам, млн рублей

1 +14% 14,8 2012 42.5 319,7 6 3 304,8 11,3 13 13,0 9,7 2011 40.6 4,0 143 79 8,7 41 271,1

2012 2013

Corporate governance Approval of transactions Finance HR Strategy 2012 2013 Other

Структура персонала по категориям в 2013 году, % Железные дороги Порты Прочая инфраструктура

Средний уровень заработной платы, тыс. руб. 10,0% 46,5 42,5 Общее количество проведенных заседаний 40,6 143 139 139

12 36 2 11 35 11 34 Внеочередные Плановые Количество заседаний в заочной форме 26 24 Количество заседаний 23 в очной форме Количество рассмотренных вопросов 2011 2012 2013

2011 2012 2013

Mostotrest Average Headcount, person

+11%

2013 25,871

2012 23,204

2011 20,341

Average Salary, RUB thousand

+9%

2013 46.5

2012 42.5

2011 40.6

Employees by Category, %

1%

10%

13% Blue-collar staff Professionals Managers White-collar employers

76%

18,4 18,1

15,7

Employees by Type of Activity, %

2% 10%

12% Blue-collar staff Engineers 2011 2012 2013 Financial and Economic specialists Others

76%

Mostotrest Employee Training and Upskilling Costs, RUB million +15%

2013 18.1

2012 15.7

2011 18.4

Mostotrest OHS Investments, RUB million

+15,0 % 11.9 176.9 2013 18,1 165.0 8.1 129.8 121.7 2012 15,7 1.0 111.0 110.0 2011 18,4

2011 2012 2013

Occupational Health Industrial Safety (Training)

Total Items Considered during Board Meetings

1

6 3 13 Corporate governance Approval of transactions 143 Finance 79 HR 41 Strategy Other

and who are the banks of choice for Mostotrest, primarily Based on 2013 financial results the amount of dividends due to their decision-making efficiency. From the banks’ recommended by the Board of Directors accounted for perspective, Mostotrest is a solid borrower with an impeccableMostotrest reputation, Share Capital and Structureloans to the Company are providedas at 31 Januaryon highly 2014attractive , % terms (unsecured, with low interest rates). The Company targets to maintain its liquidity RUB2.0 billion ratio Debt/EBITDA at not more than 4, which is also the average requirement of the lending banks. The Company does not issue bonds, since they have long maturities and result32.0% in correspondingly high financing costs. At the end of the year Mostotrest 38.usually6% receivesMarc advances O’Polo Investments from Ltd customers, which are used, among others,AM companies to repay for short- term loans, providing flexibility and constantNPF BLAGOSOSTOYANIE access to Free float liquidity. Importantly, all credit limits are set at the Group level, i.e. subsidiaries benefit from the same attractive 29.4% The size of dividends payable to shareholders depends on terms and conditions as the parent company. the amount of net profit for the financial period and the Company’s investment needs to ensure development.

The dividend is recommended by the Board of Directors taking into account the financial result of the Company for Debt Structure, % the respective reporting period. It amounts to not less than 30% of adjusted consolidated net profit of Mostotrest and its subsidiaries under IFRS, and is subject to approval by the General Shareholders’ Meeting.

Based on 2012 financial results, the amount of accrued and paid dividends was RUB2,200 million, or RUB7.8 per share. 48% Long-term Debt 52% Short-term Debt Debt Profile At present, the Company takes out loans only with the leading Russian banks such as VTB, Sberbank and Gazprombank, with whom we have a history of cooperation

Debt Profile, RUB billion Weighted Average Interest Rates on Bank Loans, % 2011 2012 2013 –0.9 p. p. Short-Term Debt: 6,408 6,770 2,186 2013 8.9% Unsecured Bank Loans 5,541 5,193 13

Financial Lease Liabilities 2012 867 1,577 9.8% 2,173

Long-Term Debt: 1,224 1,892 2,352 2011 6.8% Financial Lease Liabilities 1,224 1,892 2,352

Total Debt 7,632 8,662 4,538

Cash Net Debt,29,254 RUB billion 8,864 26,567

Net Debt 7.6 (21,622)(21.6) (202) (22,029)

4.5 (22.0) (29.3) (26.6)

58 8.7 (0.2)

(8.9)

2011 2012 2013

Cash Total Debt Net Debt Чистый долг

Mostotrest 2013

Investor Meetings , %

15%

During investment 17% bank conferences In Company offices 68% As part of Company roadshows

2013 Participation of Mostotrest Senior Management in Investor Meetings , %

3%

CFO, IR Officer CEO, CFO, IR Officer 45% 52% IR Officer Mostotrest Average Headcount Employees by type of activity, % Employees by category, %

+11.0 % 1 %

25,871 2 % 23,204 11 % 10 % 20,341 транспортной инфраструктуры в России, 13 % 12 % млрд рублей (без НДС)

Источник: Данные Компании

500 654,7 75 % 76 % 566,5 400 660,1

2011 2012 2013 300

Blue-collar staff Blue-collar staff 200 591,8 Engineers Professionals 594,4 Financial and Economic specialists Managers 100 Others White-collar employers

2009 2010 2011 2012 2013

Mostotrest Employee Training and Upskilling Costs, RUB million Mostotrest Average Headcount Employees by type of activity, % Employees by category, % Структура беклога Структура беклога 18.4 по бизнес-сегментам, млн рублей по бизнес-сегментам, млн рублей +11.0 % 1 % 18.1 15.7 25,871 2 % 319,7 23,204 11 % 10 % 304,8 20,341 транспортной инфрастр11,3 уктуры в России, 12% 12 % 13 % млрд рублей (без НДС)9,7 13% Источник: Данные Компании 4,0 +14% 14,8 654,6 500 8,7 654,7 55% 75 % 76 % 566,5 271,1 20% 400 660,1 13,0 2011 2012 2013 300

Blue-collar staff Blue-collar staff 2011 2012 2013 200 594,4 591,8 Engineers Professionals Мосты и дороги 475,8 Financial and Economic specialists Managers 100 Железные дороги 95,7 Others White-collar employersCредневзвешенные процентные Аэропорты 42,4 Морские и речные порты 40,7 ставки по банковским кредитам, % 20092012 2010 2012011 3 2012 20122013 2013 Расходы на охрану Источник: Отчет EMES Group 9.8 окружающей среды, млн руб. 8,9 Мосты и дороги Mostotrest Employee Training and Upskilling Costs, Аэродромы и аэропорты RUB million 101,92 95,28 92,90 Железные дороги 6,8 Структура беклога Порты Структура беклога Прочая инфраструктура 18.4 18.1 по бизнес-сегментам, млн рублей по бизнес-сегментам, млн рублей

15.7 319,7 304,8 11,3 12%

9,7 13% 4,0 +14% 14,8 660,1 654,6 654,7 8,7 2011 2012 2013 55% 20% 2011 271,1 2012 2013 594,4 13,0 591,8 566,5

2011 2012 2013 Мосты и дороги 475,8 Железные дороги 95,7 Cредневзвешенные процентные Аэропорты 42,4 Морские и речные порты 40,7 ставки по банковским кредитам, % 2012 2013 2012 2013 Расходы на охрану Mostotrest Share Capital Structure Debt structure, % Источник: Отчет EMES Group 9.8 окружающей среды, млн руб. as at 31 January 2014 , % 2009 2010 2011 2012 2013 8,9 Мосты и дороги Аэродромы и аэропорты 101,92 95,28 92,90 Железные дороги 6,8 Порты Прочая инфраструктура

32.0 % 48 % 38.6 % 52 %

29.4 % 660,1 654,7 2011 2012 2013 Long-term Debt 2011 201Short-term2 Debt2013 Marc O’Polo Investments Ltd 594,4 Trustees of NPF Blagosostoyanie 591,8 Other Shareholders 566,5

Mostotrest 2013 2013 Participation Investor Meetings , % of Mostotrest Senior Net Debt, RUB billion Management in Investor 7.6 (21.6) Meetings , % Mostotrest Share Capital Structure Debt structure, % 4.5 (22.0) 2009 2010 2011 2012 2013 as at 31 January 2014 , % 3 % (29.3) (26.6) 15 %

8.7 (0.2) 17 % 32.0 % 48 % 52 % 38.6 % 68 % 45 % 52 % (8.9)

29.4 % 2011 2012 2013 During investment bank conferences In Company officesLong-term Debt Cash CFO, IR Officer Total Debt As part of CompanyShort-term roadshows Deb t CEO, CFO, IR Officer Чистый долг Marc O’Polo Investments Ltd IR Officer Trustees of NPF Blagosostoyanie Other Shareholders

Average Salary, RUB thousand Mostotrest 2013 2013 Participation Net Debt, RUB billion Investor Meetings , % of Mostotrest Senior +10 % Management in Investor Total items considered7.6 (21.6) Meetings , % during Board meetings 2013 46.5 Структура беклога (22.0) 4.5 по бизнес-сегментам, млн рублей 3 % (29.3) (26.6) 1 +14% 14,8 15 % 2012 42.5 319,7 6 3 304,8 8.7 (0.2) 11,3 13 13,0 17 % 9,7 2011 40.6 (8.9) 4,0 68 % 45 % 52 % 143 79 8,7 41 271,1

2011 2012 2013 2012 2013 During investment bank conferences In Company offices Cash CFO, IR Officer As part of Company roadshows Total Debt CEO, CFO, IR Officer Corporate governance Чистый долг IR Officer Approval of transactions Finance HR 2012 2013 Strategy Average Salary, RUB thousand Other +10 % Структура персонала Total items considered по категориям в 2013 году, % Железные дороги during Board meetings 2013 46.5 Структура беклога Порты по бизнес-сегментам, млн рублей Прочая инфраструктура

1 +14% 14,8 2012 42.5 319,7 6 3 304,8 11,3 13 13,0 9,7 2011 40.6 4,0 143 79 8,7 41 271,1

2012 2013

Corporate governance Approval of transactions Finance HR Strategy 2012 Средний 201уровень3 заработной платы, тыс. руб. Other 10,0% Структура персонала 46,5 42,5 Общее количество проведенных заседаний по категориям в 2013 году, % Железные дороги 40,6 143 Порты Прочая инфраструктура 139 139

12 36 2 11 35 11 34 Внеочередные Плановые Количество заседаний в заочной форме 26 24 Количество заседаний 23 в очной форме Количество рассмотренных вопросов 2011 2012 2013

2011 2012 2013

Средний уровень заработной платы, тыс. руб. 10,0% 46,5 42,5 Общее количество проведенных заседаний 40,6 143 139 139

12 36 2 11 35 11 34 Внеочередные Плановые Количество заседаний в заочной форме 26 24 Количество заседаний 23 в очной форме Количество рассмотренных вопросов Mostotrest Average Headcount, person 2011 2012 2013

+11%

2013 25,871

2011 2012 2013

2012 23,204

2011 20,341

Average Salary, RUB thousand

+9%

2013 46.5

Mostotrest Average Headcount, person 2012 42.5 +11%

2013 25,871 2011 40.6

2012 23,204

2011 20,341 Employees by Category, %

1%

10%

13% Blue-collar staff Average Salary, RUB thousand Professionals Managers White-collar employers +9% 76% 2013 46.5 18,4 18,1

15,7 2012 42.5

2011 40.6 Employees by Type of Activity, %

2% Employees by Category, % 10%

12% Blue-collar staff 1% Engineers 2011 2012 2013 Financial and Economic specialists Others 10%

13% 76% Blue-collar staff Professionals Managers White-collar employers

76%

Mostotrest Employee Training18,4 18,1 and Upskilling Costs, RUB million 15,7 +15%

2013 18.1 Employees by Type of Activity, %

2012 15.7

2% 10% 2011 18.4

12% Blue-collar staff Engineers 2011 2012 2013 Financial and Economic specialists Others

76% Mostotrest OHS Investments, RUB million

+15,0 % 11.9 176.9 2013 18,1 165.0 129.8 Mostotrest Employee Training 8.1 121.7 2012 15,7 and Upskilling Costs, RUB million 1.0 111.0 +15% 110.0 2011 18,4 2013 18.1

2012 15.7

2011 2012 2013

2011 18.4 Occupational Health Industrial Safety (Training)

Total Items Considered during Board Meetings

Mostotrest OHS Investments, RUB million 1 +15,0 % 3 11.9 176.9 6 201313 18,1 165.0 Corporate governance 129.8 Approval of transactions 8.1 Finance 2012 143 15,7 121.7 79 HR 1.0 111.0 41 Strategy 110.0 Other 2011 18,4

2011 2012 2013

Occupational Health Mostotrest Share Capital Structure Industrial Safety (Training) as at 31 January 2014 , %

Total Items Considered during Board Meetings

32.0% 1 38.6% Marc O’Polo Investments Ltd AM companies for NPF BLAGOSOSTOYANIE 6 3 Free float 13 Corporate governance Approval of transactions 29.4% 143 Finance 79 HR 41 Strategy Other

Debt Structure, %

Mostotrest Share Capital Structure as at 31 January 2014 , % 48% Long-term Debt 52% Short-term Debt

32.0% 38.6% Marc O’Polo Investments Ltd AM companies for NPF BLAGOSOSTOYANIE Free float

29.4% Weighted Average Interest Rates on Bank Loans, % 01. As at the year end a negative value of net debt was ABOUT US –0.9 p. p.

2013 8.9% RUB billion Debt22.0 Structure, %

2012 9.8%

2011 6.8%

Long-term Debt 02. 48% 2013 RESULTS 52% Short-term Debt

Net Debt, RUB billion In 2013, the Company used loans primarily to: Under current agreements with banks, the Group’s —— Finance working capital, including co-financing available7.6 (21.6) credit limit amounted to RUB50.3 billion at under a life-cycle contract (Vychni Volochok Bypass December 31, 2013 (RUB34.3 billion at December 31, 2012). 4.5 (22.0) construction); (29.3) —— Repay loans used to finance acquisitions made in 2012 Disclosure (26.6) (Mostotrest-Service, UTS and NWCC); According to the approved Code of Corporate Conduct, the —— Investment program implementation. Company considers publicity, transparency of information (0.2) Weighted Average Interest Rates on Bank Loans, % about its operations and8.7 financial results as a mechanism As at 31 December 2013 the debt of the Group amounted of control for its shareholders, the state and society as a 03. CORPORATE GOVERNANCE RUB4.5 billion, a 48% decrease year-on-year. Net debt whole, as well as an important tool for increasing investor –0.9 p. p. as at 31 December 2013 was negative and amounted and counterparty confidence.(8.9) 2013RUB22.0 billion. 8.9% Mostotrest ensures completeness, accuracy and timeliness The Company’s borrowings are denominated in Russian of the information disclosed, as well as its availability to all 2012rubles and bear fixed interest rates. 9.8% shareholders2011 and other interested2012 parties. 2013

Cash Website Total Debt 2011 6.8% Net Debt Чистый долг The main form of disclosure is publication of information on the Company's website at www.mostotrest.ru. Complementary forms of disclosure include press 04. SOCIAL RESPONSIBILITY conferences for Russian and foreign media, investor andMostotrest analyst conference 2013 calls, as well as presentations to Net Debt, RUB billion investorsInvestor inMeetings major international , % financial centers.

7.6 (21.6)

4.5 (22.0) (29.3) (26.6) 15%

During investment 8.7 (0.2) 17% bank conferences In Company offices 05. 68% As part of Company roadshows APPENDICES (8.9)

2011 2012 2013

Cash 2013 Participation of Mostotrest Senior Management Total Debt Net Debt in Investor Meetings , % Чистый долг 3%

MostotrestMostotrest 2013 Annual Report 2013 59

Investor Meetings , %

CFO, IR Officer CEO, CFO, IR Officer 45% 52% IR Officer

15%

During investment 17% bank conferences In Company offices 68% As part of Company roadshows

2013 Participation of Mostotrest Senior Management in Investor Meetings , %

3%

CFO, IR Officer CEO, CFO, IR Officer 45% 52% IR Officer Mostotrest Average Headcount Employees by type of activity, % Employees by category, %

+11.0 % 1 %

25,871 2 % 23,204 11 % 10 % 20,341 транспортной инфраструктуры в России, 13 % 12 % млрд рублей (без НДС)

Источник: Данные Компании

500 654,7 75 % 76 % 566,5 400 660,1

2011 2012 2013 300

Blue-collar staff Blue-collar staff 200 591,8 Engineers Professionals 594,4 Financial and Economic specialists Managers 100 Mostotrest Average Headcount Employees by type of activity, % Employees by category,Others % White-collar employers

2009 2010 2011 2012 2013 +11.0 % 1 %

25,871 2 % 23,204 11 % 10 % Mostotrest Employee Training and Upskilling Costs, RUB million 20,341 транспортной инфраструктуры в России, 13 % Структура беклога Структура беклога 12 % млрд рублей (без НДС) 18.4 18.1 по бизнес-сегментам, млн рублей по бизнес-сегментам, млн рублей Источник: Данные Компании 15.7 500 319,7 654,7 76 % 75 % 566,5 304,8 12% 400 11,3 660,1 9,7 2011 2012 2013 300 13% 4,0 +14% 14,8 Blue-collar staff Blue-collar staff 200 591,8 654,6 Engineers Professionals 594,4 8,7 55% Financial and Economic specialists Managers 100 20% Others White-collar employers 271,1 13,0 2009 2010 2011 2012 2013

2011 2012 2013 Мосты и дороги 475,8 Mostotrest Employee Training and Upskilling Costs, RUB million Железные дороги 95,7 Cредневзвешенные процентные Аэропорты 42,4 Структура беклога Структура беклога Морские и речные порты 40,7 ставки по банковским кредитам, % 18.4 18.1 по бизнес-сегментам, млн рублей 2012 по бизнес-сегмен2013там, млн рублей2012 2013 Расходы на охрану Источник: Отчет EMES Group 9.8 15.7 окружающей среды, млн руб. 8,9 319,7 Мосты и дороги Аэродромы и аэропорты 101,92 304,8 12% 11,3 95,28 92,90 Железные дороги 6,8 Порты 9,7 Прочая инфраструктур13%а 4,0 +14% 14,8 654,6 8,7 55% 271,1 20% 13,0

660,1 2011 2012 2013 654,7 Мосты и дороги 475,8 2011 2012 2013 Железные дороги 95,7 Cредневзвешенные процентные 2011 2012 2013 Аэропорты 42,4 Морские594,4 и речные порты 40,7 ставки по банковским кредитам, % 591,8 2012 2013 2012 2013 566,5 Расходы на охрану Источник: Отчет EMES Group 9.8 окружающей среды, млн руб. 8,9 Мосты и дороги Аэродромы и аэропорты 101,92 95,28 92,90 Железные дороги 6,8 Порты Прочая инфраструктура Mostotrest Share Capital Structure Debt structure, % as at 31 January 2014 , % 2009 2010 2011 2012 2013

660,1 32.0 % 48 % 654,7 38.6 % 52 % 2011 2012 2013 2011 2012 2013 594,4 591,8 566,5

29.4 %

Long-term Debt Short-term Debt Marc O’Polo Investments Ltd Trustees of NPF Blagosostoyanie Other Shareholders Mostotrest Share Capital Structure Debt structure, % as at 31 January 2014 , % 2009 2010 2011 2012 2013 Mostotrest 2013 2013 Participation Investor Meetings , % of Mostotrest Senior Net Debt, RUB billion Management in Investor 7.6 (21.6) Meetings , % 4.5 (22.0) 32.0 % 48 % 52 % 3 % 38.6 % (29.3) (26.6) 15 %

8.7 (0.2)

29.4 % 17 %

Long-term 68Deb %t 45 % 52 % (8.9) Short-term Debt Marc O’Polo Investments Ltd Trustees of NPF Blagosostoyanie Other Shareholders 2011 2012 2013 During investment bank conferences Mostotrest 2013 2013 Participation In Company offices Cash CFO, IR Officer of Mostotrest Senior As part of Company roadshowsNet Debt, RUB billion Total Debt Investor Meetings , % CEO, CFO, IR Officer Management in Investor Чистый долг 7.6 (21.6) IR Officer Meetings , % 4.5 (22.0) 3 % Average Salary, RUB thousand (29.3) (26.6) 15 % +10 % Total items considered 8.7 (0.2) during Board meetings 2013 46.5 Структура беклога 17 % по бизнес-сегментам, млн рублей 45 % (8.9) 68 % 52 % 1 +14% 14,8 2012 42.5 319,7 6 3 304,8 11,3 13 13,0 2011 2012 2013 9,7 During investment bank conferences 2011 40.6 In Company offices Cash 4,0 CFO, IR Officer 143 As part of Company roadshows 79 Total Debt CEO, CFO, IR Officer Чистый долг 8,7 IR Officer 41 271,1

2012 2013 Average Salary, RUB thousand

Corporate governance +10 % Total items considered Approval of transactions during Board meetings Finance 2013 46.5 Структура беклога HR Strategy по бизнес-сегментам, млн рублей 2012 2013 Other 1 +14% 14,8 319,7 2012 42.5 Структура персонала 6 3 304,8 по категориям в 11,32013 году, Железные дороги 13 % 13,0 Порты 9,7 Прочая инфраструктура 2011 40.6 4,0 143 79 8,7 41 271,1

2012 2013

Corporate governance Approval of transactions Finance HR Strategy 2012 2013 Other

Структура персонала по категориям в 2013 году, % Железные дороги Порты Прочая инфраструктураСредний уровень заработной платы, тыс. руб. 10,0% 46,5 42,5 Общее количество проведенных заседаний 40,6 143 139 139

12 36 2 11 35 11 34 Внеочередные Плановые Количество заседаний в заочной форме 26 24 Количество заседаний 23 в очной форме Количество рассмотренных вопросов 2011 2012 2013

Средний уровень заработной платы, тыс. руб. 10,0% 46,5 2011 2012 2013 42,5 Общее количество проведенных заседаний 40,6 143 139 139

12 36 2 11 35 11 34 Внеочередные Плановые Количество заседаний в заочной форме 26 24 Количество заседаний 23 в очной форме Количество рассмотренных вопросов 2011 2012 2013

2011 2012 2013 Mostotrest Average Headcount, person

+11%

2013 25,871

2012 23,204

2011 20,341

Mostotrest Average Headcount, person Average Salary, RUB thousand

+11% +9%

2013 25,871 2013 46.5

2012 23,204 2012 42.5

2011 20,341 2011 40.6

Employees by Category, %

Average Salary, RUB thousand 1%

+9% 10% 2013 46.5 13% Blue-collar staff Professionals 2012 42.5 Managers White-collar employers

76% 2011 40.6 18,4 18,1

15,7

Employees by Category, % Employees by Type of Activity, % 1%

10% 2% 10% 13% Blue-collar staff Blue-collar staff Professionals 12% Engineers Managers 2011 2012 2013 Financial and Economic specialists White-collar employers Others 76% 76% 18,4 18,1

15,7

Employees by Type of Activity, % Mostotrest Employee Training and Upskilling Costs, RUB million +15% 2% 10% 2013 18.1

12% Blue-collar staff Engineers 2012 2011 15.72012 2013 Financial and Economic specialists Others

2011 18.4 76%

Mostotrest OHS Investments, RUB million Mostotrest Employee Training and Upskilling Costs, RUB million +15,0 % +15% 11.9 176.9 2013 18,1 2013 18.1 165.0 8.1 129.8 121.7 2012 15,7 2012 15.7 1.0 111.0 110.0 2011 18,4 2011 18.4

2011 2012 2013

Occupational Health Mostotrest OHS Investments, RUB million Industrial Safety (Training)

+15,0 % 11.9 176.9 2013 18,1 165.0 Total Items Considered during Board Meetings

8.1 129.8 121.7 2012 1 15,7 1.0 111.0 110.0 6 3 201113 18,4 Corporate governance Approval of transactions 143 Finance 79 HR 41 Strategy 2011 2012 2013 Other

Occupational Health Industrial Safety (Training)

Total Items Considered during Board Meetings Mostotrest Share Capital Structure as at 31 January 2014 , % 1

6 3 13 Corporate governance Approval of transactions 32.0% Finance 143 38.6% Marc O’Polo Investments Ltd 79 HR AM companies for Strategy 41 NPF BLAGOSOSTOYANIE Other Free float

29.4%

Mostotrest Share Capital Structure Debt Structure, % as at 31 January 2014 , %

32.0% 38.6% Marc O’Polo Investments Ltd 48% Long-term Debt AM companies for 52% Short-term Debt NPF BLAGOSOSTOYANIE Free float

29.4%

Debt Structure, % Weighted Average Interest Rates on Bank Loans, %

–0.9 p. p.

2013 8.9%

Long-term Debt 48% 2012 9.8% 52% Short-term Debt

2011 6.8%

Net Debt, RUB billion

Investor7.6 (21.6) Relations Weighted Average Interest Rates on Bank Loans, % To create the most favorable conditions for meeting the The Company made broader commitments in the area of public information needs of investors, the Company4.5 established(22.0) (29.3) disclosure of information about its operations,–0.9 p. in p.addition to those the Investor Relations Office (IR). required by the existing legislation (26.6) 2013 8.9% The IR Office’s key responsibility is to establish the most effective two-way communication between Mostotrest and 8.7 (0.2) the investment community, by providing investors, analysts, 2012 9.8% financial media, and other interested parties with the necessary information(8.9) about the Company’s financial and Mostotrest website discloses: operational activities, thereby enabling them to establish 2011 6.8% —— The annual report; a fair valuation for the Company’s securities. —— Annual and interim consolidated financial statements in

accordance with IFRS; During the2011 period under review2012 we were able to significantly2013 —— Unconsolidated financial statements under RAS; improve the quality of disclosure, including through —— Composition of management bodies and information a considerableCash increase in the number of the Company’s Net Debt, RUB billion Total Debt about the CFO, CEO deputies and Corporate Secretary, senior managementNet Debt meetings with investment funds. The 7.6 including(21.6) brief biographical data; Чистый долг meetings were held in Mostotrest offices and as part of —— Information about Committees of the Board of international financial conferences. 4.5 (22.0) (29.3) Directors; —— Information about major Board decisions;(26.6) InMostotrest 2013, Mostotrest 2013 held more than 140 meetings with

—— Information about key Mostotrest shareholdings; RussianInvestor and Meetings international , % investment funds. —— Articles of Incorporation (as amended); —— Company regulations8.7 and(0.2 other) adopted internal documents; —— Information about current operations, including Company press releases;(8.9) 15% —— Other corporate information. During investment 17% bank conferences In Company offices 2011 2012 2013 68% As part of Company roadshows Cash Total Debt Net Debt Чистый долг

Mostotrest 2013 2013 Participation of Mostotrest Senior Management

Investor Meetings , % in Investor Meetings , %

3%

15%

During investment CFO, IR Officer 17% bank conferences CEO, CFO, IR Officer In Company offices 45% 52% IR Officer 68% As part of Company roadshows

2013 Participation of Mostotrest Senior Management in Investor Meetings , %

3% 60

CFO, IR Officer CEO, CFO, IR Officer 45% 52% IR Officer 2013 Key IR Events 01. ABOUT US

Deutsche Bank 2012 IFRS Renaissance- 1H2013 IFRS Investor meeting, Investor Results Release Capital Annual Results Release Metropol Conference and Non-Deal Investor and Non-Deal Roadshow Conference Roadshow /23.01.2013 – /24.10.2013/ 25.01.2013/ Moscow

London /22.04.2013 – /24.06.2013 – /30.09.2013 – 26.04.2013/ 25.06.2013/ 04.10.2013/ Moscow Moscow Moscow Helsinki London Stockholm London 02. 2013 RESULTS

Investor VTB Capital VTB Capital Goldman Meeting, Investment Forum Investment Forum Sachs Russian Morgan Stanley “RUSSIA “RUSSIA Corporate Day CALLING!” CALLING!”

/13.02.2013/ /21.05.2013 – /01.10.2013 – /22.10.2013/ 23.05.2013/ Moscow 03.10.2013/ Frankfurt London Moscow 03. CORPORATE GOVERNANCE

JANUARY FEBRUARY APRIL MAY JUNE SEPTEMBER OCTOBER

04. SOCIAL RESPONSIBILITY

Protection of Information and Prevention of Use of Insider —— List of documents which constitute commercially- Information secret material; The Company takes appropriate measures to organize —— Regulation to ensure protection of commercial secrets; storage, limit access to and protect commercially-sensitive —— List of insider information; information. Specifically, the Company's management —— List of persons with access to insider information bodies approved: (contracts with persons included in the list contain provisions for non-disclosure and non-use for personal gain of insider information available to them). 05. APPENDICES

In 2013 Mostotrest held

143 investor meetings

Mostotrest Annual Report 2013 61 Pillars 04. of Success Social Responsibility

Strong 63 Personnel engineering tradition Professionals with 70 Occupational Health and Industrial Safety vast experience in the construction of highly complex infrastructure 74 Environmental Protection

68

62 In the course of its business, Mostotrest endeavors to focus on not only the economic 01. but also the social aspects of its activities. ABOUT US

HR Policy: At the core of the Company’s HR policy is Mostotrest HR policy fully reflects current market a proficient staff incentivization system and the creation challenges, is comprehensive in scope and aims to: of opportunities for professional development and career growth. Improve labor productivity Labor Safety: Regular monitoring and assessment of working conditions at the Company's production facilities, training and examination of personnel, investing in Maintain optimal quantitative and qualitative HR structure 02.

measures to improve working conditions. 2013 RESULTS Develop a proficient staff incentivization system Employee health rehabilitation and recreation are covered by a dedicated comprehensive corporate program including Create comfortable working conditions compulsory and supplementary health insurance, paid medical spa treatment courses and medical examinations, Facilitate continuous professional growth and career as well as activities aimed at promoting a healthy lifestyle. development

Environmental Protection: Strict compliance with existing Russian environmental legislation limits the Maintain and develop a reserve pool of highly qualified members negative impact of the Company’s activities on the of staff environment. The Company holds a federal license to 03. CORPORATE GOVERNANCE collect, utilize, neutralize, transport and dispose of hazardous waste. Facilitate effective "generational change" (participate in training young professionals at specialized schools; develop professional mentoring) | PERSONNEL Develop social partnerships with public, trade union and We strongly believe that our employees are a key driver of professional communities our success. Diverse management expertise, the unique skills of our engineers acquired during decades-long Promote corporate team spirit experience with highly complex infrastructure projects, and the diligent work of our production staff combine to 04. SOCIAL RESPONSIBILITY create the best-in-class team in Russia’s infrastructure construction market. A high level of professionalism is the backbone of the Company’s success.

In the face of increasing competition in today’s Mostotrest HR Policy is implemented in strict compliance infrastructure construction market, efficient HR with existing Russian labor legislation and the Collective management becomes paramount. Agreement, which was extended in March 2013. The Agreement guarantees equal rights and opportunities to all Mostotrest employees, regardless of their nationality, gender or other discriminatory criteria. The key driver of career growth and better remuneration is employee 05. professionalism. APPENDICES

Mostotrest Annual Report 2013 63 Mostotrest Average Headcount Employees by type of activity, % Employees by category, %

+11.0 % 1 %

25,871 2 % 23,204 11 % 10 % 20,341 транспортной инфраструктуры в России, 13 % 12 % млрд рублей (без НДС)

Источник: Данные Компании

500 654,7 75 % 76 % 566,5 400 660,1

2011 2012 2013 300

Blue-collar staff Blue-collar staff 200 591,8 Engineers Professionals 594,4 Financial and Economic specialists Managers 100 Others White-collar employers Mostotrest Average Headcount Employees by type of activity, % Employees by category, % 2009 2010 2011 2012 2013 +11.0 % 1 % Mostotrest Employee Training and Upskilling25,871 Costs, RUB million2 % 23,204 11 % 10 % 20,341 Структура беклога Структура беклога транспортной инфраструктуры в России, 13 % 18.4 18.1 12 % по бизнес-сегментам, млн рублей по бизнес-сегментам, млн рублей млрд рублей (без НДС)

15.7 319,7 Источник: Данные Компании 304,8 500 654,7 11,3 12% 75 % 76 % 566,5 400 660,1 9,7 13% 2011 2012 2013 4,0 +14% 14,8 654,6 300 Blue-collar staff Blue-collar8,7 staff 55% 200 591,8 Engineers Professionals 594,4 271,1 20% Financial and Economic specialists Managers 100 Others White-collar employers 13,0

2009 2010 2011 2012 2013 2011 2012 2013 Мосты и дороги 475,8 Железные дороги 95,7 Cредневзвешенные процентные Mostotrest Employee Training and Upskilling Costs, RUB million Аэропорты 42,4 Морские и речные порты 40,7 ставки по банковским кредитам, % 2012 2013 2012 201Стр3 уктура беклога Структура беклога Расходы на охрану 18.4 по бизнес-сегментИсточник:ам ,Отче млнт EMESрубл ейGroup по бизнес-сегментам, млн рублей 9.8 окружающей среды, млн руб. 18.1 8,9 15.7 Мосты и дороги Аэродромы и аэропорты 319,7 101,92 95,28 92,90 Железные дороги 304,8 6,8 Порты 11,3 12% Прочая инфраструктура 9,7 13% 4,0 +14% 14,8 654,6 8,7 55% 271,1 20% 13,0 660,1 654,7 2011 2012 2013 2011 2012 2013 Мосты и дороги 475,8 2011 2012 2013 594,4 Железные дороги 95,7 Cредневзвешенные процентные 591,8 Аэропорты 42,4 566,5 Морские и речные порты 40,7 ставки по банковским кредитам, % 2012 2013 2012 2013 Расходы на охрану Источник: Отчет EMES Group 9.8 окружающей среды, млн руб. 8,9 Мосты и дороги Аэродромы и аэропорты 101,92 95,28 92,90 Железные дороги 6,8 Порты Mostotrest Share Capital Structure Debt structure, % Прочая инфраструктура as at 31 January 2014 , % 2009 2010 2011 2012 2013

32.0 % 48 % 660,1 38.6 % 52 % 654,7 2011 2012 2013 2011 2012 2013 594,4 591,8 566,5 29.4 %

Long-term Debt MostotrestShort-term Average Debt Headcount Employees by type of activity, % Employees by category, % Marc O’Polo Investments Ltd Trustees of NPF Blagosostoyanie Other Shareholders +11.0 % 1 %

Mostotrest Share Capital 25,871 Structure Debt2 % structure, % Mostotrest 2013 2013 Participation 2009 2010 2011 2012 2013 Net Debt,as RUB23,204 at 31 billion January 2014 , % 11 % 10 % Investor Meetings , % of Mostotrest Senior 20,341 Management in Investor транспортной инфраструктуры в России, 7.6 (21.6) 12 % 13 % Meetings , % млрд рублей (без НДС) 4.5 (22.0) Источник: Данные Компании 3 % (29.3) 32.0 % (26.6) 48 % 500 654,7 38.6 % 52 % 15 % 75 % 76 % 566,5 400 660,1 8.7 (0.2) 2011 2012 2013 300 17 % Blue-collar staff Blue-collar staff 200 591,8 29.4 % Engineers Professionals 594,4 68 % 45 % 52 % (8.9) Financial and Economic specialists Managers 100 Mostotrest Average Headcount Employees by type of activity, % Employees by category,Others Long-term % Debt White-collar employers Short-term Debt Marc O’Polo Investments Ltd 2009 2010 2011 2012 2013 +11.0 % Trustees of NPF Blagosostoyanie 1 % 2011 Other Shareholders 2012 2013 During investment bank conferences 25,871 2 % In Company offices 23,204 11 % Cash 10 % CFO, IR Officer Total Debt Mostotrest Employee Training and Upskilling Costs, RUB million As part of20,341 Company roadshows Mostotrest 2013 2013 Participation CEO, CFO, IR Officer Чистый долг Net Debt, RUB billion транспортной инфраструктуры в России, IR Officer Investor Meetings , % of Mostotrest Senior13 % Структура беклога Структура беклога 12 % Management in Investor млрд рублей (без НДС) 18.4 7.6 (21.6) 18.1 по бизнес-сегментам, млн рублей по бизнес-сегментам, млн рублей Meetings , % Источник: Данные Компании Average Salary, RUB thousand 15.7 4.5 (22.0) 319,7 500 654,7 3 % 76 % 75 % +10 % (29.3) (26.6) 566,5 304,8 12% 400 11,3 660,1 Total items considered 15 % 9,7 13% 2011 2012 2013 2013 46.5 300 during Board meetings 8.7 (0.2) Структура беклога 4,0 Blue-collar staff Blue-collar staff по бизнес-сегментам, млн рублей +14% 14,8 654,6 17 % 200 594,4 591,8 Engineers Professionals +14% 14,8 8,7 55% 1 Financial and Economic specialists Managers (8.9) 100 271,1 20% Others2012 68 % 45 % White-collar42.5 52 employer % s 319,7 6 3 304,8 13,0 11,3 13 13,0 2009 2010 2011 2012 2013 9,7 2011 2012 2013 2011 40.6 2011 2012 2013 Мосты и дороги 475,8 During investment bank conferences 4,0 143 Mostotrest Employee Training and Upskilling Costs, RUB million Железные дороги 95,7 79 In Company offices Cash CFO, IR Officer 8,7 Аэропорты 42,4 41 As part of Company roadshows CредневзвешенныеTotal Debt процентные CEO, CFO, IR Officer Чистый долг Структура беклога Структура беклог271,1а Морские и речные порты 40,7 IR Officer ставки по банковским кредитам, % 2012 2013 18.4 18.1 по бизнес-сегментам, млн рублей 2012 по бизнес-сегмен2013 там, млн рублей Расходы на охрану Источник: Отчет EMES Group 9.8 2012 2013 15.7 окружающей среды, млн руб. 8,9 319,7 Мосты и дороги Average Salary, RUB thousand Аэродромы и аэропорты 101,92 304,8 12% Corporate governance 11,3 95,28 92,90 Железные дороги Approval of transactions 6,8 +10 % Порты Finance Total items considered 9,7 Прочая инфраструктур13а% HR during Board meetings 2013 46.54,0 Strategy +14% 14,8 2012 654,6 2013 Структура беклога по бизнес-сегментам, млн рублей Other 8,7 55% 271,1 +14% 2014,8% 1 Структура персонала 2012 42.5 13,0 319,7 по категориям в 2013 году, % Железные дороги 6 3 304,8 Порты 11,3 13 13,0 Прочая инфраструктура 660,1 2011 2012 2013 654,7 9,7 Мосты и дороги 475,8 2011 2012 2013 40.6 Железные дороги 95,7 4,0 143 2011 2012 2013 Аэропорты 42,4 Cредневзвешенные79 процентные 594,4 Морские и речные порты 40,7 8,7 41 ставки по банковским кредитам, % 591,8 2012 2013 2012 2013 566,5 271,1 Расходы на охрану Источник: Отчет EMES Group 9.8 окружающей среды, млн руб. 2012 2013 8,9 Мосты и дороги Аэродромы и аэропорты 101,92 95,28 92,90 Железные дороги Corporate governanc6,8e Порты Approval of transactions Прочая инфраструктура Finance Mostotrest Share Capital Structure Debt structure, % HR as at 31 January 2014 , % 2009 2010 2011 2012 2013 Strategy 2012 2013 Other

Структура персонала по категориям в 2013 году, % Железные дороги Средний660,1 уровень заработной платы, тыс. руб. Порты 32.0 % 48 % 654,7 Прочая инфраструктура 38.6 % 52 % 2011 2012 2013 10,0% 2011 2012 2013 594,4 46,5 Общее количество проведенных заседаний 591,8 42,5 566,5 40,6 143 29.4 % 139 139 Long-term Debt 12 36 2 Short-term Debt Marc O’Polo Investments Ltd 11 35 11 34 Внеочередные Плановые Trustees of NPF Blagosostoyanie Количество заседаний Other Shareholders Mostotrest Share Capital Structureв заочной форме Debt structure, % 26 24 as at 31 January 2014 , % Количество заседаний 2009 2010 2011 2012 2013 23 вMostotrest очной форме 2013 2013 Participation КоличествоInvestor Meetings , % of Mostotrest Senior Net Debt, RUB billion рассмотренных вопросов Management in Investor 7.6 (21.6) Meetings , % 2011 2012 2013 4.5 (22.0) 32.0 % 48 % 3 % Средний уровень заработной платы, тыс. руб. 38.6 % 52 % (29.3) (26.6) 15 % 10,0% 2011 2012 2013 46,5 8.7 (0.2) Общее количество проведенных заседаний 42,5 17 % 40,6 29.4 % 143 (8.9) 139 Long-term68 Deb %139t 45 % 52 % Short-term Debt Marc O’Polo Investments Ltd 12 36 2 Trustees of NPF Blagosostoyanie 11 35 11 34 Внеочередные Other Shareholders Плановые Количество заседаний 2011 2012 2013 During investment bank conferences в заочной форме 26 Mostotrest 2013 2013 Participation In Company offices Cash 24 CFO, IR Officer Количество заседаний As part of Company 23roadshowsNet Debt, RUB billion в очной форме Total Debt Investor Meetings , % of Mostotrest Senior CEO, CFO, IR Officer Management in Investor Количество Чистый долг 7.6 (21.6) IR Officer рассмотренных Meetings , % вопросов 2011 2012 2013 4.5 (22.0) 3 % Average Salary, RUB thousand (29.3) (26.6) 15 % +10 % Total items considered Mostotrest Average Headcount, person 2011 2012 8.7 201(0.2)3 during Board meetings 2013 46.5 Структура беклога 17 % +11% по бизнес-сегментам, млн рублей 68 % 45 % 52 % (8.9) +14% 14,8 1 2013 25,871 2012 42.5 319,7 6 3 304,8 11,3 13 2012 23,204 13,0 2011 2012 2013 9,7 During investment bank conferences 2011 40.6 In Company offices Cash 4,0 CFO, IR Officer 143 2011 20,341 As part of Company roadshows 79 Total Debt CEO, CFO, IR Officer Чистый долг 8,7 IR Officer 41 271,1

2012 2013 Average Salary, RUB thousand

Corporate governance +10 % Total items considered Approval of transactions Average Salary, RUB thousand during Board meetings Finance 2013 46.5 Mostotrest Average Headcount, person Структура беклога HR Strategy +9% по бизнес-сегментам, млн рублей 2012 2013 Other +14% 14,8+11% 1 2013 46.5 319,7 2012 42.5 2013 25,871 Структура персонала 6 3 304,8 по категориям в 201311,3 году, % Железные дороги 13 2012 42.5 13,0 Порты 2012 23,204 9,7 Прочая инфраструктура 2011 40.6 4,0 143 2011 40.6 79 2011 20,341 8,7 41 271,1

2012 2013

Employees by Category, % Corporate governance Approval of transactions 1% Finance Average Salary, RUB thousand HR 2012 2013 Strategy 10% Other +9% 13% Blue-collar staff 2013 Структура персонала46.5 Professionals по категориям в 2013 году, Железные дороги Managers % Порты White-collar employers 2012 42.5 Прочая инфраструктурСреднийа уровень заработной платы, тыс. руб. 76% 10,0% 2011 18,4 40.6 18,1 46,5 42,5 Общее количество проведенных заседаний 15,7 40,6 143 139 139

Employees by12 Type36 of Activity, 2 % Employees by Category, % 11 35 11 34 Внеочередные Плановые Количество заседаний 1% в заочной форме 26 2% Количество заседаний 24 23 10% в очной форме 10% Количество рассмотренных 12% Blue-collarвопросов staff 13% Blue-collar staff Engineers 2011 2012 2013 2011 2012 2013 Financial and Economic specialists Professionals Others Managers Средний уровень заработной платы, White-collar employers тыс. руб.

76% 76% 10,0% 46,5 2011 2012 2013 42,5 18,4 18,1 Общее количество проведенных заседаний 40,6 143 15,7 139 139 36 2 12 Mostotrest Employee Training 11 35 11 34 Внеочередные Employees by Type of Activity, % Плановые Aand trade Upskilling union organization Costs, RUB that million was established over Widespread use of the most advanced technologies in Количество заседаний 75 years ago and which covers more than ten thousand transport infrastructure construction requires a persistent в заочной форме +15% 26 employees ensures additional protection of Mostotrest focus on the improvement of employee skills and Количество заседаний 24 23 в очной форме employee2013 rights and interests. 18.1 qualifications.2% The company currently employs 13 PhDs. Количество 10% рассмотренных 76% of managers, professionals and white-collar employees вопросов The Board HR and Remuneration Committee is involved in hold university degrees, while 19% completed vocational 2011 2012 2013 development2012 of the HR policy strategic and tactical15.7 aspects. and12 specialized% technical training. Blue-collar staff Engineers 2011 2012 2013 Financial and Economic specialists Following the integration of new member companies into Mostotrest’s HR structure is stable.Others In 2013, staff turnover 2011 18.4 the Group (TSM in June 2010 and Mostotrest-Service was below the industry average and amounted to 22%. in July 2012), Mostotrest developed a uniform set of HR Turnover among professional76% and highly skilled staff was 2011 2012 2013 management standards and practices for all of its member 14%,Mostotrest and among Average blue-collar Headcount, staff it person was 24%. companies. Employee Compensation System +11% Headcount and HR Structure Mostotrest has developed an effective employee InMostotrest 2013, Mostotrest OHS Investments, average headcount RUB million increased by 11% compensation2013 system optimally combining cash and25,871 non- year-on-year, to 25,871 driven by substantial increase cash incentives. Mostotrest Employee Training in construction volumes and developing of the Services and2012 Upskilling Costs, RUB million +15,023,204 % segment. 11.9 176.9 The Company maintains employee wages at competitive levels.2013 Compensation includes a fixed (salary+15% and 18,1 165.0 Men make up the vast majority (88%) of the staff, due to the guaranteed2011 extra pay) and a variable (bonus)20,341 component. 2013 18.1 specific nature of Mostotrest8.1 operations.129.8 121.7 2012 15,7 1.0 111.0 110.0 2012 15.7 2011 18,4

2011 18.4 Mostotrest Average Headcount, person Average Salary, RUB thousand

2011 2012 +11% 2013 +9% Occupational Health 2013 Industrial Safety (Training) 25,871 2013 46.5 Mostotrest OHS Investments, RUB million

2012 23,204 2012 42.5 +15,0 % 176.9 Total Items Considered during Board Meetings 11.9 2013 2011 20,341 2011 40.6 18,1 165.0 1 8.1 129.8 121.7 2012 15,7 64 6 3 1.0 111.0 13 110.0 Corporate governance Employees by Category, % 2011 18,4 Approval of transactions 143 Finance Average Salary, RUB thousand79 HR 1% 41 Strategy Other +9% 10201%1 2012 2013 2013 46.5 13% Occupational Health Industrial Safety (Training) Blue-collar staff Professionals 2012 42.5 Managers White-collar employers

76% 2011Mostotrest Share Capital Structure 40.6 Total Items Considered during Board Meetings as at 31 January 2014 , % 18,4 18,1

1 15,7

6 3 Employees by Category, % 13 32.0% Employees by Type of Activity, % Corporate governance Approval of transactions 38.6% Marc O’Polo Investments Ltd Finance 1% AM companies for 143 NPF BLAGOSOSTOYANIE 79 HR Free float 41 Strategy 10% 2% Other 10% 13% 29.4% Blue-collar staff Blue-collar staff Professionals 12% Engineers 2011 2012 2013 Managers Financial and Economic specialists White-collar employers Others 76% 76% Debt Structure, % Mostotrest Share Capital Structure 18,4 18,1 as at 31 January 2014 , % 15,7

Employees by Type of Activity, % Mostotrest Employee Training 32.0% 48% Long-term Debt 52% Short-term Debt and Upskilling Costs, 38.RUB6% million Marc O’Polo Investments Ltd AM companies+15% for NPF BLAGOSOSTOYANIE 2% Free float 10% 2013 18.1

29.4% 12% Blue-collar staff Engineers 2012 2011 15.72012 2013 Financial and Economic specialists Others 2011 18.4 76% Weighted Average Interest Rates on Bank Loans, % Debt Structure, %

–0.9 p. p.

2013 8.9% Mostotrest OHS Investments, RUB million Mostotrest Employee Training 2012and Upskilling Costs, RUB million 9.8% 48% Long-term Debt +15,0 % 52% Short-term Debt +15% 11.9 176.9 2011 6.8% 2013 18,1 2013 18.1 165.0 8.1 129.8 121.7 2012 15,7 2012 15.7 1.0 111.0 110.0 Net Debt, RUB billion 2011 18,4 2011 18.4 7.6 (21.6)

4.5 (22.0) Weighted Average Interest Rates on Bank Loans, % (29.3) (26.6) 2011 2012 –0.9 p. p. 2013

Occupational Health 2013 8.9% Mostotrest OHS Investments,8.7 (0.2 RUB) million Industrial Safety (Training)

2012 +15,0 %9.8% (8.9) 11.9 176.9 Total2013 Items Considered during Board Meetings 18,1 165.0 2011 6.8% 8.1 129.8 2012 1 15,7 2011 121.7 2012 2013 1.0 111.0 110.0 Cash 6 3 Total Debt 201113 18,4 Net Debt Net Debt, RUB billion Чистый долг Corporate governance Approval of transactions 7.6 (21.6) 143 Finance 79 HR 41 Strategy 4.5 (22.0) Mostotrest 2013 (29.3) Other 2011 2012 2013 Investor Meetings , % (26.6) Occupational Health Industrial Safety (Training) 8.7 (0.2)

15% (8.9) Total Items Considered during Board Meetings During investment Mostotrest Share Capital Structure 17% bank conferences as at 31 January 2014 , % 1 In Company offices As part of Company roadshows 68% 2011 2012 2013 6 3 13 Cash Corporate governance Total Debt Net Debt Approval of transactionsЧистый долг 32.0% Finance 143 38.6% Marc O’Polo Investments Ltd 79 HR AM companies for Strategy 41 NPF BLAGOSOSTOYANIE 2013 Participation of Mostotrest SeniorOther Management Free float in Investor Meetings , Mostotrest 2013 % Investor Meetings , % 29.4% 3%

15%

Mostotrest Share Capital StructureCFO, IR Officer as at 31 January 2014 , % CEO, CFO, IR Officer Debt Structure, % During investment 45% 52% IR Officer 17% bank conferences In Company offices 68% As part of Company roadshows

32.0% 38.6% Marc O’Polo Investments Ltd 48% Long-term Debt AM companies for 52% Short-term Debt NPF BLAGOSOSTOYANIE Free float 2013 Participation of Mostotrest Senior Management in Investor Meetings , % 29.4%

3%

Debt Structure, % Weighted Average Interest Rates onCFO, Bank IR Officer Loans, % CEO, CFO, IR Officer 45% 52% IR Officer –0.9 p. p.

2013 8.9%

Long-term Debt 48% 2012 9.8% 52% Short-term Debt

2011 6.8%

Net Debt, RUB billion

7.6 (21.6) Weighted Average Interest Rates on Bank Loans, % 4.5 (22.0) (29.3) –0.9 p. p. (26.6)

2013 8.9% 8.7 (0.2)

2012 9.8% (8.9)

2011 6.8%

2011 2012 2013

Cash Net Debt, RUB billion Total Debt Net Debt 7.6 (21.6) Чистый долг

4.5 (22.0) (29.3) (26.6) Mostotrest 2013

Investor Meetings , %

8.7 (0.2)

(8.9) 15%

During investment 17% bank conferences In Company offices 2011 2012 2013 68% As part of Company roadshows Cash Total Debt Net Debt Чистый долг

Mostotrest 2013 2013 Participation of Mostotrest Senior Management

Investor Meetings , % in Investor Meetings , %

3%

15%

During investment CFO, IR Officer 17% bank conferences CEO, CFO, IR Officer In Company offices 45% 52% IR Officer 68% As part of Company roadshows

2013 Participation of Mostotrest Senior Management in Investor Meetings , %

3%

CFO, IR Officer CEO, CFO, IR Officer 45% 52% IR Officer Mostotrest runs a number of non-cash employee motivation 01.

programs. In accordance with the Collective Agreement, ABOUT US In 2013, staff turnover was below the industry average and amounted to the Company offers its employees a benefits package that includes private medical insurance, compensation for medical spa treatment courses and recreation % for employees and their families, entrance fees for 22 entertainment and sports events, and additional paid annual leave, subject to 5 years uninterrupted service with the Company.

The Company runs a number of corporate social programs, including a longstanding successful program 02.

for incentivization of production leaders. Employees are 2013 RESULTS rewarded for hard work, increased productivity, individual initiative and long and flawless performance at the Company. Incentives include commendations, bonuses, valuable gifts, Certificate of Merit awards, "Honorary Mostotrest Employee" and “Honorary Mostotrest Retiree” title awards. Employees designated as "Honorary Mostotrest Retiree" receive a lump sum retirement bonus In 2011-2013, Mosotrest employees and retirees benefited from and a monthly allowance. following types of assistance and bonuses: one-off lump sums at retirement, annual Victory Day targeted assistance to war veterans For outstanding services to the Company and the State, (former employees of the Company), annual Builder Day targeted employees are nominated for government and ministerial 03. CORPORATE GOVERNANCE assistance to retirees (former employees of the Company). awards and honorary titles. In addition, financial assistance was provided to employees on various other occasions (childbirth, marriage, pharmaceutical treatments, funeral services, etc.)

In 2013, the average wage was RUB 46,534, a 10% increase from 2012.

Guaranteed additional pay, a part of the fixed remuneration 04. SOCIAL RESPONSIBILITY component, is paid in accordance with existing Russian 192 Mostotrest employees received in 2011 – 2013 labor legislation and is linked to the nature of work, working —— Awards: conditions, seniority, etc. —— “Distinguished Builder of the Russian Federation”: 2 —— “Honorary Builder of Russia”: 16 Considerable attention is spent on strengthening the link —— “Honorary Builder of Moscow”: 6 between job performance and remuneration. The bonus —— Orders and medals: 8 system is an effective employee motivation tool. A dedicated —— Certificates of Merit and Certificates of Gratitude: 160 committee establishes monthly bonus pools, which are subsequently distributed based on the Labor Distribution Index (LDI). 05. To promote staff creativity in working toward long-term APPENDICES objectives, as well as to encourage employees to achieve specific operating targets, the Company offers one-off incentive bonuses and annual performance-linked bonuses.

In addition, the Company's offers its employees holiday and anniversary bonuses, one-off retirement bonuses and financial assistance to those experiencing difficulties.

Mostotrest Annual Report 2013 65 Mostotrest Average Headcount Employees by type of activity, % Employees by category, %

+11.0 % 1 %

25,871 2 % 23,204 11 % 10 % 20,341 транспортной инфраструктуры в России, 13 % 12 % млрд рублей (без НДС)

Источник: Данные Компании

500 654,7 75 % 76 % 566,5 400 660,1

2011 2012 2013 300

Blue-collar staff Blue-collar staff 200 591,8 Engineers Professionals 594,4 Financial and Economic specialists Managers 100 Others White-collar employers

2009 2010 2011 2012 2013

Mostotrest Employee Training and Upskilling Costs, RUB million Структура беклога Структура беклога 18.4 18.1 по бизнес-сегментам, млн рублей по бизнес-сегментам, млн рублей

15.7 319,7 304,8 11,3 12%

9,7 13% 4,0 +14% 14,8 654,6 8,7 55% 271,1 20% 13,0

2011 2012 2013 Мосты и дороги 475,8 Железные дороги 95,7 Cредневзвешенные процентные Аэропорты 42,4 Морские и речные порты 40,7 ставки по банковским кредитам, % 2012 2013 2012 2013 Расходы на охрану Источник: Отчет EMES Group 9.8 окружающей среды, млн руб. 8,9 Мосты и дороги Аэродромы и аэропорты 101,92 95,28 92,90 Железные дороги 6,8 Порты Прочая инфраструктура

660,1 654,7 2011 2012 2013 2011 2012 2013 594,4 591,8 566,5

Mostotrest Share Capital Structure Debt structure, % as at 31 January 2014 , % 2009 2010 2011 2012 2013

32.0 % 48 % 38.6 % 52 %

29.4 %

Long-term Debt Short-term Debt Marc O’Polo Investments Ltd Trustees of NPF Blagosostoyanie Other Shareholders

Mostotrest 2013 2013 Participation Investor Meetings , % of Mostotrest Senior Net Debt, RUB billion Management in Investor 7.6 (21.6) Meetings , % 4.5 (22.0) 3 % (29.3) (26.6) 15 %

8.7 (0.2) 17 %

68 % 45 % 52 % (8.9)

2011 2012 2013 During investment bank conferences In Company offices Cash CFO, IR Officer As part of Company roadshows Total Debt CEO, CFO, IR Officer Чистый долг IR Officer

Average Salary, RUB thousand

+10 % Total items considered during Board meetings 2013 46.5 Структура беклога по бизнес-сегментам, млн рублей

1 +14% 14,8 2012 42.5 319,7 6 3 304,8 11,3 13 13,0 9,7 2011 40.6 4,0 143 79 8,7 41 271,1

2012 2013

Corporate governance Approval of transactions Finance HR Strategy 2012 2013 Other

Структура персонала по категориям в 2013 году, % Железные дороги Порты Прочая инфраструктура

Средний уровень заработной платы, тыс. руб. 10,0% 46,5 42,5 Общее количество проведенных заседаний 40,6 143 139 139

12 36 2 11 35 11 34 Внеочередные Плановые Количество заседаний в заочной форме 26 24 Количество заседаний 23 в очной форме Количество рассмотренных вопросов 2011 2012 2013

2011 2012 2013

Mostotrest Average Headcount, person

+11%

2013 25,871

2012 23,204

2011 20,341

Average Salary, RUB thousand

+9%

2013 46.5

2012 42.5

2011 40.6

Employees by Category, %

1%

10%

13% Blue-collar staff Professionals Managers White-collar employers

76%

18,4 18,1

15,7

Employees by Type of Activity, %

2% 10%

12% Blue-collar staff Engineers 2011 2012 2013 Financial and Economic specialists Others

76%

Education and Upskilling Mostotrest Employee Training Maintaining a high level of staff professionalism is and Upskilling Costs, RUB million a strategic objective at Mostotrest. As a key criterion +15% for career growth, professionalism is achieved primarily through continuous improvement of employee skills 2013 18.1 and qualifications. Consequently, Mostotrest pays close attention to the education and training of employees. Compulsory training for blue-collar workers and engineers 2012 15.7 fully complies with existing Russian legislation and includes a range of activities (vocational training and retraining, 2011 18.4 upskilling, seminars and training for management and professionals).

Upskilling, at least once every five years, is mandatory for all Mostotrest engineers and technical employees. Typically, training is conducted at specialist universities (mostly Moscow State University of Railway Engineering). Mostotrest OHS Investments, RUB million Mostotrest professionals are involved in the development of training program curricula. Mandatory training for blue- A strategic objective at Mostotrest is the retention and +15,0 % collar employees is generally conducted by Mostotrest development of a talent pool of valuable employees.11.9 176.9 These production training professionals, with obligatory people form the backbone of our professional team and 2013 18,1 examination in a licensed training center. their loss would pose a serious threat to the165.0 Company's business. In 2013, Mostotrest8.1 129.8pressed ahead with its Each Mostotrest department holds annual themed programme to develop121.7 one single management talent pool. 2012 15,7 1.0 111.0 workshops for employees of regional divisions. Lectures are Dedicated programmes that evaluate and develop the key 110.0 offered by recognized experts. managerial qualities and skills required of future leaders 2011 18,4 were rolled out to the talent pool members. Based on In 2013, the Group’s total investment in staff training and an evaluation of the results, we identified the guidelines development amounted to RUB18.1 million. needed to develop the skills and key professional qualities of pool members. We conducted both general development courses (Principles of Management, Principles of 2011 2012 2013 Economics) and targeted programmes aimed at preparing individualsOccupational for specific Health managerial positions. In 2013, Industrial Safety (Training) representatives from all regional divisions of the Group attended the programme; in total 36 employees were Total investment in staff training and development in 2013 enrolled into the management talent pool. increased by MindfulTotal Items of the Considered importance during of recruiting Board young Meetings talent, Mostotrest has, over the years, been actively and % directly involved in the education of a new generation of 1 15 professionals. Mostotrest cooperates with specialized 6 3 13 Corporate governance Approval of transactions 143 Finance 79 HR 41 Strategy Other

Mostotrest Share Capital Structure as at 31 January 2014 , %

66

32.0% 38.6% Marc O’Polo Investments Ltd AM companies for NPF BLAGOSOSTOYANIE Free float

29.4%

Debt Structure, %

48% Long-term Debt 52% Short-term Debt

Weighted Average Interest Rates on Bank Loans, %

–0.9 p. p.

2013 8.9%

2012 9.8%

2011 6.8%

Net Debt, RUB billion

7.6 (21.6)

4.5 (22.0) (29.3) (26.6)

8.7 (0.2)

(8.9)

2011 2012 2013

Cash Total Debt Net Debt Чистый долг

Mostotrest 2013

Investor Meetings , %

15%

During investment 17% bank conferences In Company offices 68% As part of Company roadshows

2013 Participation of Mostotrest Senior Management in Investor Meetings , %

3%

CFO, IR Officer CEO, CFO, IR Officer 45% 52% IR Officer Employee Development and Engagement 01.

The Company understands the importance of dialogue ABOUT US To enhance the prestige of the construction industry and building and feedback between management, HR service and trades, in 2013 Mostotrest participated in the professional the workforce. Distribution to the team of timely and excellence contest for young professionals of Moscow-based complete information about upcoming corporate events construction companies and design bureaus, where the Company and management decisions relating to the Company's took 1st place in the category "Best Team of Young operations and labor conditions is an important driver Professionals in the Road Construction Sector". of workforce efficiency. A monthly corporate newspaper and intranet are effective tools to inform employees about production targets, labor achievements, shortcomings and social plans. In addition, Mostotrest HR service conducts annual employee satisfaction surveys focusing on 02.

working conditions and employee perception of changes 2013 RESULTS in the Company's business, as well as the performance of management. To this end, an employee poll is conducted annually. In 2013, approximately 2,000 employees took part in the poll. The polling results became the basis for a number of important HR policy decisions. Specifically, the educational institutions in the City of Moscow (Moscow roadmap to improve the social-psychological environment State University of Railway Engineering, Moscow and working conditions was supplemented with additional Automobile and Road University, Moscow College of Urban measures. Development and Entrepreneurship). Undergraduates from these schools and a number of regional universities One of the key HR objectives at Mostotrest is the regularly undertake industrial and pre-graduation development and preservation of the corporate team 03. CORPORATE GOVERNANCE internships at Mostotrest. In the period 2011-2013, 459 spirit. Cohesion and coordinated teamwork are important students participated in internships at Mostotrest. drivers of the Company’s business success. We hold annual celebrations in connection with the National Builder's Between 2011-2013, Mostotrest recruited 257 young Day, our professional holiday, as well as anniversary dates professionals - graduates from specialized universities and marking the establishment of our regional divisions. We colleges. Of these, 90 were recruited in 2013. Graduates also hold various competitions and organize cultural, sports from specialized schools and universities, including Moscow and recreational activities: Mostotrest Winter Olympics, the State University of Railway Engineering, Rostov State WWII Victory Day Tournament and the Mostotrest Football University of Railway Transport, Moscow State Automobile Cup. and Road University (State Technical University), Saratov Technical University, Voronezh State Architecture and 04. SOCIAL RESPONSIBILITY Construction University, Nizhny Novgorod State University In November 2013, MOKON, a Mostotrest production subsidiary, of Architecture and Civil Engineering, Yaroslavl Technical took 3rd place in the nomination “Employer of the Year” of University, Siberian Highway University, Siberian State the Best Employer of Moscow Award. Railway University filled positions as construction and assembly foremen, mechanics, engineers and technicians.

05. APPENDICES

Mostotrest Annual Report 2013 67 Best Personnel in Industry, Strong Engineering Tradition, Up-to-Date Technology

More than 80 years of experience in construction of sophisticated engineered structures

Completed in Last 20 Years:

More than 40 8 three-level interchanges More than 750 Developed proprietary complex traffic bridges, including: technology that is interchanges, including: 2 four-level interchanges unique in Russia The biggest cable bridge (Zhivopisny, Moscow) First ever 5-level interchange in Russia (Businovskaya, ongoing Construction of construction) The most beautiful bridge1 (over the Oka River in Murom, sophisticated Vladimir region) infrastructure providing uninterrupted traffic flow

1 The bridge over the Oka River in Murom won "The most beautiful bridge" award from Rosavtodor.

68 | OCCUPATIONAL HEALTH AND SAFETY (OHS)

The Company adopted a corporate quality, OHS and Favorable working conditions for employees and environmental protection policy based on the following industrial safety are a priority at Mostotrest. The Company fundamental principles: makes every effort to minimise workplace injuries and occupational diseases, prevent industrial accidents and improve the effectiveness of labor protection. People are our most valuable asset Legislation Preserving life and health of employees throughout the Mostotrest occupational health and industrial safety policy production process is a top priority is guided by the applicable legislation of the Russian Federation, in particular, Federal Law 197-FZ of 30.12.2001 Labor Code of the Russian Federation, and Federal Law OHS is an integral part of management and employee 116-FZ of 21.07.1997 On Industrial Safety at Hazardous activities Production Facilities (as amended on 4.03.2013).

OHS Management Compliance with OHS laws and regulations; progressive In 2003, Mostotrest implemented a corporate OHS system and consistent improvement of corporate OHS standards in those areas where internationally recognized standards set based on international standards, including OHSAS higher requirements 18001:1999. The system includes an OHS manual and a set of standards underlying OSH management processes.

The Company runs dedicated OHS and environmental Provision of necessary information to relevant government agencies, as required by the existing legislation, protection departments under the CEO Office and in disclosing both positive and negative outcomes of OHS and regional subsidiaries. environmental protection measures and activities The OHS Department under the CEO Office is split into two units: Occupational Health and Industrial Safety. Both units Encouraging employees to contribute to improving report to the Company’s Chief Engineer. occupational health, industrial safety and environmental protection In January 2013, responsibility for OHS was divided between the CEO Office units and the Group’s regional subsidiaries. The resulting multi-level management and control system boosted the efficiency of OHS policy implementation, as each structural unit of the Group became more conscious of its responsibility in the field.

The Group employs 84 OHS professionals.

In 2013, Mostotrest OHS Department together with The Group employs representatives of regional branch offices and the trade union conducted more than 60 inspections of working and safety conditions at production sites and the sanitary conditions of accommodation and amenity areas. The 84 OHS professionals Company investigated industrial accidents and adopted remedial action. In addition, OSH officers participated in relevant workshops and seminars.

70 Key Corporate Measures to Improve OHS 01. ABOUT US

Occupational Health

Ensure safety during construction and Provide certified industrial outfits, footwear assembly, operation of construction OHS training, workplace briefings and and other personal protective gear to machinery and equipment, as well as safety employee examination employees, in accordance with established of tools, materials and supplies standards

02. Compliance with existing legislation in 2013 RESULTS Mandatory primary (at entry) and Inspections, monitoring and testing of OHS terms of procedures for investigation and periodic (during employment) medical conditions at production and construction registration of occupational accidents and examinations sites occupational diseases

Industrial Safety

Insure the Group’s civil liability for damage Maintain state registry of hazardous to life and health of third parties, damage Corporate control over industrial safety production facilities (registration, re- to property of third parties, damage to the compliance registration, exclusion from state registry) environment 03. CORPORATE GOVERNANCE

Established in 2013, the Group’s OHS Department held management rigor with regard to OHS and compliance a number of important events. Together with OHS officers with preventive maintenance schedules. The Company took from the Company's regional branches, the department remedial action. audited the organization and implementation of production controls at Mostotrest manufacturing and construction With regard to the Group’s contractors, the OHS effort sites, identified and reclassified hazardous production consists of verifying relevant permits, formalization of 04. SOCIAL RESPONSIBILITY facilities in the state register of hazardous production admission to Mostotrest production and construction sites, facilities, in accordance with Federal Law 22-FZ of and subsequent monitoring of working conditions at such 4.03.2013, and took out compulsory insurance policies for sites. Prior to admitting a contractor, Mostotrest OHS civil liability of owners of hazardous production facilities, officers hold OHS briefings for contractor staff. for injuries resulting from accidents (approximately 100 manufacturing and construction sites). The department The Company intends to continue improving its OHS staff participated in specialized workshops and seminars. procedures and methods. In 2013, we launched development of the corporate standard Organization of As in the previous year, the Group registered no accident at Corporate OHS Control, with practical implementation its high-risk production facilities in 2013. At the same time, scheduled for 2014. Going forward, Mostotrest intends to the number of incidents on such sites increased. Incident introduce new fire safety standards and a new regulation 05. analysis showed that the main reason was the lack of local for highly hazardous work. APPENDICES

Mostotrest Annual Report 2013 71 Life and Health Insurance Total number of workplace injuries in 2013 decreased by The provision of life and health insurance for employees is an important tool to improve working conditions. All Mostotrest employees are insured with the regional offices % of the Russian Federation Social Insurance Fund, including 6 compulsory social insurance against industrial accidents and occupational diseases. In addition, the Company takes out annual group insurance policies against accidents from RESO-Guarantee insurance firm.

Training At Mostotrest, we are convinced that ensuring comfortable and safe working conditions is impossible without employee Workplace Injuries awareness of applicable safety regulations. Consequently, The nature of Mostotrest’s core operations means the risk particular attention is paid to staff OHS training and of workplace injuries is ever-present. examination.

Total number of workplace injuries in 2013 decreased by 6% Blue-collar employees are trained in OHS during their year-on-year, with fatalities down 4x. job training, re-training and upskilling, with subsequent examination, registration and certification. The Company takes all possible measures to prevent emergency situations involving personal injury in the At our production sites we conduct primary workplace workplace. In 2013, we increased the number of scheduled briefings, as well as repeated, ad-hoc and targeted preventive OHS inspections at regional subsidiary briefings. Briefings are logged in relevant registers. manufacturing and construction sites. The post of OHS Supervisor was introduced at all production facilities of Staff involved in drafting design and technical regional subsidiaries and, in 2013, OHS officers were documentation (production specifications and schedules, relieved from their duty to control industrial safety and etc.) are compulsorily informed about the applicable environmental protection, which re-focused them on OHS standards and procedures, against written occupational health and boosted their efficiency. acknowledgement.

Key Workplace Injury Statistics

2011 2012 2013

Headcount 20,341 23,204 25,871

Injuries 45 53 50

Workplace Injury Occurrence Rate1 2.21 2.28 1.93

Days Away from Work (man-days) 4,589 2,592 2,103

Average Severity Rate (man-days)2 102 49 42

1 Workplace Injury Occurrence Rate: # of injuries per 1,000 employees. 2 Average Severity Rate: # of disability days per accident.

72 Mostotrest Average Headcount Employees by type of activity, % Employees by category, %

+11.0 % 1 %

25,871 2 % 23,204 11 % 10 % 20,341 транспортной инфраструктуры в России, 13 % 12 % млрд рублей (без НДС)

Источник: Данные Компании

500 654,7 75 % 76 % 566,5 400 660,1

2011 2012 2013 300

Blue-collar staff Blue-collar staff 200 591,8 Engineers Professionals 594,4 Financial and Economic specialists Managers 100 Others White-collar employers

2009 2010 2011 2012 2013

Mostotrest Employee Training and Upskilling Costs, RUB million Структура беклога Структура беклога 18.4 18.1 по бизнес-сегментам, млн рублей по бизнес-сегментам, млн рублей

15.7 319,7 304,8 11,3 12%

9,7 13% 4,0 +14% 14,8 654,6 8,7 55% 271,1 20% 13,0

2011 2012 2013 Мосты и дороги 475,8 Железные дороги 95,7 Cредневзвешенные процентные Аэропорты 42,4 Морские и речные порты 40,7 ставки по банковским кредитам, % 2012 2013 2012 2013 Расходы на охрану Источник: Отчет EMES Group 9.8 окружающей среды, млн руб. 8,9 Мосты и дороги Аэродромы и аэропорты 101,92 95,28 92,90 Железные дороги 6,8 Порты Прочая инфраструктура

660,1 654,7 2011 2012 2013 2011 2012 2013 594,4 591,8 566,5

Mostotrest Share Capital Structure Debt structure, % as at 31 January 2014 , % 2009 2010 2011 2012 2013

32.0 % 48 % 38.6 % 52 %

29.4 %

Long-term Debt Short-term Debt Marc O’Polo Investments Ltd Trustees of NPF Blagosostoyanie Other Shareholders

Mostotrest 2013 2013 Participation Investor Meetings , % of Mostotrest Senior Net Debt, RUB billion Management in Investor 7.6 (21.6) Meetings , % 4.5 (22.0) 3 % (29.3) (26.6) 15 %

8.7 (0.2) 17 %

68 % 45 % 52 % (8.9)

2011 2012 2013 During investment bank conferences In Company offices Cash CFO, IR Officer As part of Company roadshows Total Debt CEO, CFO, IR Officer Чистый долг IR Officer

Average Salary, RUB thousand

+10 % Total items considered during Board meetings 2013 46.5 Структура беклога по бизнес-сегментам, млн рублей

1 +14% 14,8 2012 42.5 319,7 6 3 304,8 11,3 13 13,0 9,7 2011 40.6 4,0 143 79 8,7 41 271,1

2012 2013

Corporate governance Approval of transactions Finance HR Strategy 2012 2013 Other

Структура персонала по категориям в 2013 году, % Железные дороги Порты Прочая инфраструктура

Средний уровень заработной платы, тыс. руб. 10,0% 46,5 42,5 Общее количество проведенных заседаний 40,6 143 139 139

12 36 2 11 35 11 34 Внеочередные Плановые Количество заседаний в заочной форме 26 24 Количество заседаний 23 в очной форме Количество рассмотренных вопросов 2011 2012 2013

2011 2012 2013

Mostotrest Average Headcount, person

+11%

2013 25,871

2012 23,204

2011 20,341

Average Salary, RUB thousand

+9%

2013 46.5

2012 42.5

2011 40.6

Employees by Category, %

1%

10%

13% Blue-collar staff Professionals Managers White-collar employers

76%

18,4 18,1

15,7 and periodic (during employment) medical examinations 01. OHS investments increased by of employees operating in harmful and hazardous working ABOUT US conditions. Employees by Type of Activity, % % To prevent occupational diseases in regional branches, the 36 Company performs workplace certification, followed by either remedial action or workplace liquidation. 2% 10% The Group’s manufacturing and construction sites are equipped with healthcare points that carry all the necessary 12% Blue-collar staff first-aid equipment and medical supplies.Engineers 2011 2012 2013 Financial and Economic specialists Others 02.

Rehabilitation and recreation of employees engaged in 2013 RESULTS operations with harmful and dangerous working conditions are covered by state76 social% insurance and the Company. On recruitment, managers and professionals are trained Medical spa treatment courses in health resorts in the in OHS in vocational training institutions and then as Moscow region, North Caucasus and on the Black Sea coast necessary, but not less than once every three years, with are organized together with the Company’s trade union. mandatory registration and certification. OHS Investment Production sites are equipped with OHS boards and stands. FollowingMostotrest the Employee basic principles Training of adopted corporate policies Safety signs mark workplaces and passageways leading to inand the Upskilling field of quality, Costs, occupational RUB million health, industrial them. safety and environmental protection, the Company+15% has been fully financing all necessary measures to protect 03. CORPORATE GOVERNANCE Healthcare the2013 health of its employees and ensure industrial safety.18.1 The Company cares about the health of its employees on the At Mostotrest, we are convinced that investment in OHS daily basis, seeking to minimize the risks of occupational should under no circumstances be a source of cost diseases and diseases of a general nature. To this end, optimization.2012 Consequently, our OHS investments15.7 have regular preventive and rehabilitative health interventions been growing every year. In 2013, we invested approximately are performed, including mandatory primary (at entry) RUB176.9 million in OHS, a 36% increase from 2012. 2011 18.4

04. SOCIAL RESPONSIBILITY

Mostotrest OHS Investments, RUB million

+15,0 % 11.9 176.9 2013 18,1 165.0 8.1 129.8 121.7 2012 15,7 1.0 111.0 110.0 05. 2011

APPENDICES 18,4

2011 2012 2013

Occupational Health Industrial Safety (Training)

Total Items Considered during Board Meetings Mostotrest Annual Report 2013 73 1

6 3 13 Corporate governance Approval of transactions 143 Finance 79 HR 41 Strategy Other

Mostotrest Share Capital Structure as at 31 January 2014 , %

32.0% 38.6% Marc O’Polo Investments Ltd AM companies for NPF BLAGOSOSTOYANIE Free float

29.4%

Debt Structure, %

48% Long-term Debt 52% Short-term Debt

Weighted Average Interest Rates on Bank Loans, %

–0.9 p. p.

2013 8.9%

2012 9.8%

2011 6.8%

Net Debt, RUB billion

7.6 (21.6)

4.5 (22.0) (29.3) (26.6)

8.7 (0.2)

(8.9)

2011 2012 2013

Cash Total Debt Net Debt Чистый долг

Mostotrest 2013

Investor Meetings , %

15%

During investment 17% bank conferences In Company offices 68% As part of Company roadshows

2013 Participation of Mostotrest Senior Management in Investor Meetings , %

3%

CFO, IR Officer CEO, CFO, IR Officer 45% 52% IR Officer | ENVIRONMENTAL PROTECTION

The Group’s key environmental Mostotrest is fully aware of its responsibility for the protection efforts include: potentially negative impact of its operations on the environment, and is duly focused on environmental protection. Ensure compliance with environmental legislation of the Russian Federation One corporate policy priority in the field of environmental protection is to minimize the negative impact of polluting production processes on the ecosystem and human health. Control quality and quantity of wastewater, air pollution and condition of waste disposal facilities Mostotrest environmental policy is implemented across four key areas: air protection, conservation of land and vegetation, water conservation, waste management, and Develop and enforce standards for emissions, discharges, waste production and consumption waste management. generation and disposal limits The Group’s environmental policy is implemented in Monitor environmental protection within sanitary buffer zones strict compliance with Russian legislation, including its fundamental laws On Environmental Protection, On Production and Consumption Waste and On Air Protection, Monitor condition of water bodies as well as the Water Code of the Russian Federation.

Reduce waste generation and ensure safe waste storage and Mostotrest holds a federal license to collect, utilize, handling neutralize, transport and dispose of hazardous waste.

The Company takes out liability insurance policies for Reduce harmful impact of waste on the environment damage to life and health of third parties, damage to property of third parties, and damage to the environment.

Dedicated environmental protection management units operate under the CEO Office and in subsidiaries.

Environmental protection officers are integrated in labor safety, quality and ecology departments. For information about the Company's labor safety units within the structure of the CEO Office Labor Safety Department see Occupational Health and Safety.

Manufacturing and construction sites of the Group’s regional divisions negatively impact the environment through: —— Air pollution; —— Water pollution; —— Production and consumption waste.

The main reason for a significant increase in production Mostotrest holds a federal license to collect, utilize, neutralize, and consumption waste volumes in 2013 was the end transport and dispose of hazardous waste. of construction at the Olympic sites in Sochi and the associated substantial increase in waste disposal and recycling volumes.

74 01. ABOUT US Pollution and Waste Statistics, ‘000 t

2011 2012 2013

Air pollution 2.48 4.02 4.67

Water pollution 45.41 39.68 41.95

Production and Consumption Waste 162.83 248.90 1,528.83

Total Gross Pollution and Waste 210.73 292.60 1,575.45 02. 2013 RESULTS

The increase in solid waste volumes was also driven by Anti-dust measures in accordance construction volume growth in 2013. 1with client-approved Construction Site Regulations; Due to the nature of Mostotrest’s operations, the following business processes had the most harmful effect on the Schedules and routings for motorized environment in 2013: construction, assembly and other 2cleaning and watering of construction site access roads operations in water conservation zones, asphalt production and driveways; and use of mobile machinery and equipment. 03. CORPORATE GOVERNANCE Maintaining construction site sanitary condition The most successful example of implementation of the 3monitoring log: Company’s environmental policy is the preparation and —— Daily monitoring; execution of the project " km 15 – km 58 Segment of —— Registration of monitoring results; the M-11 “Moscow - St. Petersburg” Highway”. A set of —— Weekly acknowledgement of monitoring results by environmental protection measures had been developed environmental officers of the Company’s regional for the project prior to practical implementation, in line divisions and heads of construction sites, against with European practice in infrastructure development. signature; Measures to minimize the damage to the ecosystem will be implemented both during construction and throughout Monitoring of transport vehicle toxicity and emission levels the project life. As part of the project, in 2013 the Company in the Company’s regional divisions, under the relevant 04. 4 SOCIAL RESPONSIBILITY erected bridges over the Klyazma River and the Moscow contracts with Ecotest (Sochi); Canal in Khimki, using an integrated execution approach to minimize damage to water bodies. In particular, temporary Monthly environmental audits of the Company’s regional filters were installed to reduce the impact on water quality, 5divisions involved in the Sochi Olympic construction river beds were fortified for protection against wind and throughout 2013. water erosion, and the necessary equipment was installed to preserve natural plant formation on the slopes of the Klyazma river valley and its tributaries, by preventing the escape of groundwater to the surface.

In Sochi, in addition to requirements of the existing 05. environmental legislation, the Company applied APPENDICES additional environmental protection measures during the Olympic construction:

Mostotrest Annual Report 2013 75 In 2013, Mostotrest implemented its annual environmental action plan in full:

Air Protection Water Conservation —— Drafting standards for allowable emissions and permits —— Permits for discharge of pollutants to the terrain; for discharge of pollutants; —— Control of storm water discharge quality; —— Audits for compliance of vehicle emissions with —— Maintenance (cleaning) of stormwater systems; technical standards; —— Monitoring of industrial sites to prevent contamination —— Regular scheduled maintenance and repair of vehicles of ground and surface water; and machinery; —— Laboratory analysis of water quality in closed-circuit —— Replacement of worn baghose filters in concrete mixing vehicle washing systems; plants operating in dusty conditions; —— Environmental monitoring of water bodies; —— Monitoring of production compliance with established —— Installation of waste water runoff barriers; maximum permissible emission (MPE) limits; —— Installation of recycling units in concrete production —— Monitoring of air pollution at control points; plants. —— Antidust measures (use of curtain trucks, watering of internal driveways. Production and Consumption Waste Management —— Development of waste generation and disposal limits; Conservation of Land and Vegetation —— Extension of production and consumption waste —— Regular cleaning of manufacturing and construction disposal limits; sites; —— Primary recording of waste movement; —— Control of soil quality on manufacturing sites and in —— Industrial waste removal contracts with licensed sanitary buffer zones; operators; —— Lawn-making, tree-planting, asphalting and concreting —— Environmental staff training (112 hours) – "Ensuring of sites and driveways; Environmental Safety in Hazardous Waste —— Use of closed-circuit wheel-washing systems Management"; preventing ground pollution; —— Timely removal and disposal of solid waste, industrial —— Proper sanitary maintenance of industrial areas waste, waste fluorescent lamps, tires, batteries, waste (portable toilet rentals, removal of utility waste water, oil, etc.; disinfestations); —— Separate collection of production and consumption —— Tree fencing on construction sites; waste; —— Use of pallets for solids. —— Scheduled migration from open-top to Euro containers; —— Recycling of reinforced concrete with the use of crushing plant.

76 At Mostotrest, we attach great importance to improving the 01. Mostotrest total investment in environmental protection in 2013 skills and qualifications of our environmental professionals. ABOUT US was The learning process is continuous, with training schedules adopted annually. In 2013, our environmental managers and professionals participated in the Green Standards Seminar held by Avtodor, and RUB92.9million undertook advanced training via internal corporate programmes ("Environmental Safety Responsibility of Business Administration Managers and Professionals", "Environmental Safety in Environmental issues are increasingly becoming the Hazardous Waste Management", "Compliance of subject of debate within professional, public and civil- Industrial Enterprises with Sanitary Legislation 02.

society organizations. Relevant meetings, workshops and and its Practical Application"). 2013 RESULTS seminars are held on a regular basis, producing roadmaps and methods for solving urgent environmental challenges, Mostotrest total investment in environmental protection in including in the field of industrial production. Mostotrest is 2013 was RUB92.9 million. an active participant in such public discussions. In 2013, the Company’s environmental officers Mostotrest undergoes annual independent environmental took part in the 7th National Environmental audits that provide an objective evaluation of the Protection Seminar “Current Legislation in Company's environmental activities, an important factor the Area of Natural Resource Management of business reputation. In 2013, the audit was conducted and Environmental Protection: Practice and by StroyTechExpertisa, the certification body of Region- Challenges”, as well as in a corporate workshop Certification. No irregularities were revealed and Mostotrest dedicated to the Company’s 2013 environmental received the Certificate of Conformity. 03. CORPORATE GOVERNANCE measures and activities.

04. SOCIAL RESPONSIBILITY

05. APPENDICES

Mostotrest Annual Report 2013 77 05. Appendices

79 Consolidated Financial Statements

79 Auditors’ Report

80 Consolidated Statement of Financial Position

82 Consolidated Statement of Profit or Loss and Other Comprehensive Income

83 Consolidated Statement of Changes in Equity

84 Consolidated Statement of Cash Flows

86 Notes to the Consolidated Financial Statements

118 Risk Management

126 Basis for Presentation of Information

128 Key Terms and Definitions

78 | CONSOLIDATED FINANCIAL STATEMENTS

Auditors’ Report

ZAO KPMG Тel.: +7 (495) 937 4477 01.

Naberezhnaya Tower Complex, Block C Fax: +7 (495) 937 4400/99 ABOUT US 10 Presnenskaya Naberezhnaya, Moscow 123317 Internet www.kpmg.ru

To the Shareholders and Board of Directors

OJSC MOSTOTREST We have audited the accompanying consolidated financial statements of OJSC Mostotrest (the «Company») and its subsidiaries (the «Group»), which comprise the consolidated statement of financial position as at 31 December 2013, and the consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for 2013, and notes, comprising a summary of significant accounting policies and other explanatory information.

02.

Management’s Responsibility for the Consolidated Financial Statements 2013 RESULTS Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free material misstatement, whether due to fraud or error.

Auditors’ Responsibility Our responsibility it to express an opinion on the fair presentation of these consolidated financial statements based on our audit. We conducted our audit in accordance with Russian Federal Auditing Standards and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial 03. CORPORATE GOVERNANCE statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of these consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to express an opinion on the fair presentation of these consolidated financial statements. 04. SOCIAL RESPONSIBILITY Opinion In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Group as at 31 December 2013, and its financial performance and its cash flows for 2013 in accordance with International Financial Reporting Standards.

Samarin M.V. Director, (power of attorney dated 1 October 2013 No. 85/13) ZAO KPMG 14 April 2014 05. Moscow, Russian Federation APPENDICES

Audited entity: OJSC Mostotrest Independent auditor: ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a part of the KPMG Europe LLP group, and a member firm of the KPMG network of independent member firms Registered by the Moscow Registration Chamber on 23.12.1992, Registration No.14112 affiliated with KPMG International Cooperative («KPMG International»), a Swiss entity.

Entered in the Unified State Register of Legal Entities on 09.05.2008 by the Registered by the Moscow Registration Chamber on 25 May 1992, Registration No. 011.585. Moscow Intel-Regional Tax Inspectorate No.3 of the Ministry for Taxes and Duties of the Russian Federation, Registration No. 1027739167246, Certificate series 77 Entered in the Unified State Register of Legal Entities on 13 August 2002 by the Moscow Intel-Regional No. 014540170. Tax Inspectorate No.39 of the Ministry for Taxes and Duties of the Russian Federation, Registration No. 1027700125628, Certificate series 77 No. 014540170.005721432. 6-5, ulitsa Barklaya, Moscow, 121087 Member of the Non-commercial Partnership «Chamber of Auditors of Russia». The Principal Registration Number of the Entry in the State Register of Auditors and Audit Organisations: No. 10301000804.

Mostotrest Annual Report 2013 79 Consolidated Statement of Financial Position as at 31 December 2013, Mln RUB

Note 31 December 2013 31 December 2012

Assets

Goodwill 26 1,272 1,272

Intangible assets 368 518

Property, plant and equipment 13 17,990 16,680

Trade and other receivables 18 658 293

Amounts due from customers on construction contracts 17 3,238 -

Equity-accounted investees 14 8,233 8,058

Prepayments 275 399

Deferred tax assets 12 132 -

Other non-current assets 15 273 250

Non-current assets 32,439 27,470

Inventories 16 8,075 8,121

Current income tax assets 558 228

Trade and other receivables 18 14,657 10,135

Amounts due from customers on construction contracts 17 11,066 8,248

Prepayments 20,676 20,347

Cash and cash equivalents 19 26,566 8,864

Other current assets 15 760 895

Assets classified as held for sale 6 - 14,596

Current assets 82,358 71,434

Total assets 114,797 98,904

The consolidated statement of comprehensive income is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 86 to 123.

80 Consolidated Statement of Financial Position as at 31 December 2013, Mln RUB 01. ABOUT US Note 31 December 2013 31 December 2012

Equity

Share capital 136 136

Additional paid in capital 6,049 6,049

Reserve for available-for-sale financial assets 137 126

Retained earnings 14,514 14,888

Equity attributable to owners of the Company 20,836 21,199

Non-controlling interests 461 227 02. 2013 RESULTS Total equity 20 21,297 21,426

Liabilities

Loans and borrowings 22 2,352 1,892

Trade and other payables 23 792 213

Deferred tax liabilities 12 13 1,038

Non-current liabilities 3,157 3,143

Loans and borrowings 22 2,186 6,770

Non-controlling interests 355 1,367 03. CORPORATE GOVERNANCE

Trade and other payables 23 21,492 15,700

Amounts due to customers on construction contracts 17 65,047 36,774

Provisions 543 297

Current income tax liabilities 720 83

Liabilities directly associated with the assets classified as held for sale 6 - 13,344

Current liabilities 90,343 74,335

Total liabilities 93,500 77,478

Total equity and liabilities 114,797 98,904 04. SOCIAL RESPONSIBILITY

These consolidated financial statements were approved by management on 14 April 2014 and were signed on its behalf by

V.N. Vlasov O.G. Tanana General Director Deputy General Director for Economics and Finance 05. APPENDICES

The consolidated statement of comprehensive income is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 86 to 123.

Mostotrest Annual Report 2013 81 Consolidated Statement of Profit or Loss and Other Comprehensive Income for 2013,Mln RUB

2013 2012

Total (Continuing Continuing Discontinued Note operations) operations operation Total

Revenue 7 116,714 94,078 31,031 123,705

Cost of sales 8(a) (102,704) (80,990) (29,336) (108,920)

Gross profit 14,010 13,088 1,695 14,785

Other income 394 222 351 558

Administrative expenses 8(b) (6,168) (4,968) (1,194) (6,160)

Other expenses 8(c) (2,717) (506) (583) (1,079)

Results from operating activities 5,519 7,836 269 8,104

Finance income 9 202 592 181 640

Finance costs 9 (2,409) (2,797) (103) (2,766)

Net finance costs (2,207) (2,205) 78 (2,126)

Share of profit of equity accounted investees (net of income tax) 229 180 - 180

Profit before income tax 3,541 5,811 347 6,158

Income tax expense 12 (1,288) (1,723) (111) (1,834)

Profit from continuing operations 2,253 4,088 236 4,324

Discontinued operations

Profit after tax from discontinued operations 5 6 - - -

Profit for the year 2,259 4,088 236 4,324

Other comprehensive income

Items that are or may be reclassified to profit or loss

Change in fair value of available-for-sale financial assets 14 23 - 23

Related income tax (3) (4) - (4)

Other comprehensive income, net of income tax 11 19 - 19

Total comprehensive income 2,270 4,107 236 4,343

Profit attributable to:

Owners of the parent 1,916 4,074 236 4,310

Non-controlling interests 343 14 - 14

Profit 2,259 4,088 236 4,324

Total comprehensive income attributable to:

Owners of the parent 1,927 4,093 236 4,329

Non-controlling interests 343 14 - 14

Total comprehensive income 2,270 4,107 236 4,343

Earnings per share

Basic and diluted earnings per share (RUB) 10 6.77 14.50 0.84 15.34

The consolidated statement of comprehensive income is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 86 to 123.

82 Consolidated Statement of Changes in Equity for 2013, Mln RUB 01. ABOUT US Attributable to equity holders of the Company

Reserve for available- Additional for-sale Reserve Non- Share paid-in financial for own Retained controlling Total capital capital assets shares earnings Total interests equity

Balance at 1 January 2012 136 6,192 107 (561) 12,809 18,683 (7) 18,676

Total comprehensive income

Profit - - - - 4,310 4,310 14 4,324

Net change in fair value of available-for- 02. sale financial assets - - 23 - - 23 - 23 2013 RESULTS

Income tax on other comprehensive income - - (4) - - (4) - (4)

Total comprehensive income - - 19 - 4,310 4,329 14 4,343

Transactions with owners, recorded directly in equity

Treasury shares sold (Note 20) - (143) - 561 - 418 - 418

Dividends to equity holders (Note 20) - - - - (2,004) (2,004) - (2,004)

Acquisition of subsidiary with non- controlling interest (Note 26) ------235 235 03. Acquisition of non-controlling interest CORPORATE GOVERNANCE without a change in control (Note 26) - - - - (227) (227) (15) (242)

Balance at 31 December 2012 136 6,049 126 - 14,888 21,199 227 21,426

Total comprehensive income

Profit - - - - 1,916 1,916 343 2,259

Net change in fair value of available-for- sale financial assets - - 14 - - 14 - 14

Income tax on other comprehensive income - - (3) - - (3) - (3)

Total comprehensive income - - 11 - 1,916 1,927 343 2,270 04. Transactions with owners, recorded SOCIAL RESPONSIBILITY directly in equity

Dividends to equity holders (Note 20) - - - - (2,201) (2,201) (109) (2,310)

Changes in ownership interests in subsid- iaries

Net result on disposal of subsidiary and acquisition of non-controlling interests (Notes 6 and 27(b)) - - - - (89) (89) - (89)

Balance at 31 December 2013 136 6,049 137 - 14,514 20,836 461 21,297

05. APPENDICES

The consolidated statement of comprehensive income is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 86 to 123.

Mostotrest Annual Report 2013 83 Consolidated Statement of Cash Flows for 2013, Mln RUB

2013 2012

Cash flows from operating activities

Profit for the year 2,259 4,324

Profit after tax from discontinued operations (6) -

Profit from continuing operations 2,253 4,324

Adjustments for:

Depreciation and amortisation 3,682 3,357

Share of profit of equity accounted investees (229) (180)

Profits attributable to non-controlling interests 220 1,528

Loss on disposal of property, plant and equipment 56 207

Net finance costs 2,040 599

Change in allowance for doubtful loans given and other receivables 560 (67)

Income tax expense 1,288 1,834

9,870 11,602

Change in:

Inventories 66 (1,978)

Trade and other receivables (4,716) 2,241

Amounts due from customers on construction contracts (6,056) (770)

Prepayments (205) (7,820)

Provisions 246 (135)

Trade and other payables 6,532 2,019

Amounts due to customers on construction contracts 28,273 (9,061)

Assets and liabilities classified as held for sale, net (6) -

Cash flows from/(used in) operations before income taxes paid 34,004 (3,902)

Income tax paid (1,813) (1,945)

Net cash from/(used in) operating activities 32,191 (5,847)

The consolidated statement of comprehensive income is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 86 to 123.

84 Consolidated Statement of Cash Flows for 2013, Mln RUB 01. ABOUT US 2013 2012

Cash flows from investing activities

Proceeds from sale of property, plant and equipment 179 395

Acquisition of property, plant and equipment (1,605) (2,448)

Acquisition of intangible assets (55) (117)

Placement of funds on bank deposits (291) (1,277)

Withdrawal of bank deposits 345 2,000

Loans given (144) (381) 02. 2013 RESULTS Repayment of the loans given 271 456

Interest received 136 689

Dividends received 61 38

Acquisition of equity accounted investee (159) (6,801)

Acquisition of subsidiaries, net of cash acquired (Note 6 and Note 26) (906) (673)

Net cash used in investing activities (2,168) (8,119)

Cash flows from financing activities

Sale of treasury shares - 476 03. CORPORATE GOVERNANCE

Proceeds from loans and borrowings 105,995 29,918

Repayment of loans and borrowings (111,185) (29,261)

Payment of finance lease liabilities (2,396) (1,834)

Interest paid (2,178) (1,237)

Dividends paid to equity holders of the Company (Note 20) (2,201) (2,004)

Dividends paid to non-controlling interests (356) (692)

Net cash used in financing activities (12,321) (4,634)

Net increase/(decrease) in cash and cash equivalents 17,702 (18,600) 04. SOCIAL RESPONSIBILITY

Cash and cash equivalents at 1 January 8,864 29,254

Cash and cash equivalents at 31 December 26,566 10,654*

* cash and cash equivalents as at 31 December 2012 in the Consolidated Statement of Financial Position included cash balances of RUB 1,790 million related to operations classified as held for sale at 31.12.12 (Note 6)

05. APPENDICES

The consolidated statement of comprehensive income is to be read in conjunction with the notes to, and forming part of, the consolidated financial statements set out on pages 86 to 123.

Mostotrest Annual Report 2013 85 Notes to the Consolidated Financial 4. Use of estimates and judgments Statements for 2013 The preparation of consolidated financial statements in conformity with IFRSs requires management to make judgments, estimates and 1. Reporting entity assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. (a) Business environment Actual results may differ from those estimates. The Group’s operations are located in the Russian Federation. Consequently, the Group is exposed to the economic and financial Estimates and underlying assumptions are reviewed on an ongoing markets of the Russian Federation which display characteristics of an basis. Revisions to accounting estimates are recognised in the period emerging market. The legal, tax and regulatory frameworks continue in which the estimates are revised and in any future periods affected. development, but are subject to varying interpretations and frequent changes which together with other legal and fiscal impediments Information about critical judgments in applying accounting policies contribute to the challenges faced by entities operating in that have the most significant effect on the amounts recognised in the Russian Federation. The consolidated financial statements reflect the consolidated financial statements is included in the following management’s assessment of the impact of the Russian business notes: environment on the operations and the financial position of the Group. —— Note 24(c)(ii) – allowances for trade receivables; The future business environment may differ from management’s —— Note 35(c)(i) – revenue recognition of сonstruction contracts in assessment. progress; —— Note 35(j) – useful life of property, plant and equipment. (b) Organisation and operations OJSC Mostotrest (the “Company”) and its subsidiaries (the “Group”) Information about assumptions and estimation uncertainties that have comprise Russian open joint stock companies (OAO) and limited a significant risk of resulting in a material adjustment within the next liability (OOO) companies as defined in the Civil Code of the Russian financial year is included in the following notes: Federation and a company located in Cyprus. The Company was —— Note 14 – equity-accounted investees; established as a state-owned enterprise in 1930. The Company was —— Note 30 – contingencies; privatised as an open joint stock company in December 1992. —— Note 35(c)(i) – revenue recognition of сonstruction contracts in progress. The Company’s registered office is 6 Barklaya str., bld. 5, Moscow, 121087, Russian Federation. Measurement of fair values A number of the Group’s accounting policies and disclosures require The Group’s principal activity is the construction of transport the measurement of fair values, for both financial and non-financial infrastructure assets, including railway, highway and city bridges, assets and liabilities. overpasses, interchanges, and other engineering structures for the state municipal entities. The Group’s major customers are When measuring the fair value of an asset or a liability, the Group government agencies and other public bodies. The Group primarily uses market observable data as far as possible. Fair values are operates in the European part of the Russian Federation. categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows. The Company’s shares are traded under MSTT symbol on Moscow —— Level 1: quoted prices (unadjusted) in active markets for identical Interbank Currency Exchange (MICEX) stock exchange in Russia. assets or liabilities. —— Level 2: inputs other than quoted prices included in Level 1 that 2. Basis of accounting are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Statement of compliance —— Level 3: inputs for the asset or liability that are not based on These consolidated financial statements have been prepared in observable market data (unobservable inputs). accordance with International Financial Reporting Standards (“IFRSs”). If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, 3. Functional and presentation currency then the fair value measurement is categorised in its entirety in The national currency of the Russian Federation is the Russian Rouble the same level of the fair value hierarchy as the lowest level input that (“RUB”), which is the Company’s functional currency and the currency is significant to the entire measurement. in which these consolidated financial statements are presented. All financial information presented in RUB has been rounded to The Group recognises transfers between levels of the fair value the nearest million. hierarchy at the end of the reporting period during which the change has occurred.

86 Further information about the assumptions made in measuring fair The financial information for the segments is prepared in 01.

values is included in the following notes: accordance with the same accounting standards as those used to ABOUT US —— Note 24– financial instruments. prepare the Group’s consolidated financial statements under IFRS. The financial information presented to the Group’s CEO is derived 5. Operating segments from the internal management reports. The Group’s CEO reviews Under the current structure, the Group is organized into construction operating performance of the segments on at least a quarterly basis and services business segments. The construction segment includes and allocates resources on this basis. Mostotrest and TSM, while services segment includes rapidly expanding entities Mostotrest-Service (former NITP) and UTS.

Discontinuied Continuing operations operation Eliminations and 02. Construction Services ETS other Consolidated Group 2013 RESULTS

Financial measure / Segment 2013 2012 2013 2012 2013 2012 2013 2012 2013 2012

Revenue 106,861 91,224 10,700 2,864 1,371 31,031 (2,218) (31,041) 116,714 94,078

-external revenue 106,656 89,995 9,937 2,848 1,371 30,991 (1,250) (29,756) 116,714 94,078

-intersegment revenue 205 1,229 763 16 - 40 (968) (1,285) - -

Cost of sales (94,998) (78,429) (8,654) (2,576) (1,263) (29,336) 2,211 29,351 (102,704) (80,990)

Gross profit 11,863 12,795 2,046 288 108 1,695 (7) (1,690) 14,010 13,088

Operating profit 3,982 7,755 1,435 67 33 269 69 (255) 5,519 7,836

Profit before income tax 2,508 6,213 1,292 42 13 347 (272) (791) 3,541 5,811 03. CORPORATE GOVERNANCE Income tax expense (955) (1,711) (284) (13) (7) (111) (42) 112 (1,288) (1,723)

Segment result 1,553 4,502 1,008 29 6 236 (314) (679) 2,253 4,088

Depreciation and amortisation 3,302 2,922 381 332 9 104 (10) (105) 3,682 3,253

Share of profit of equity accounted investees, net of income tax 262 180 - - - - (33) - 229 180

Dividends payable and non- controlling interest, recognised as finance cost 110 (1,477) - - (14) (51) (316) 51 (220) (1,477)

Capital expenditures 3,139 4,985 1,941 635 2 137 (3) (137) 5,080 5,620 04.

Non-current assets 31,793 30,702 3,959 1,085 - 816 (3,313) (5,133) 32,439 27,470 SOCIAL RESPONSIBILITY

Current assets 80,345 53,892 1,505 1,514 - 12,367 508 (10,935) 82,358 56,838

Assets classified as held for sale ------14,596 - 14,596

Total assets 112,138 84,594 5,464 2,599 - 13,183 (2,805) (1,472) 114,797 98,904

Non-current liabilities 1,941 2,806 2,340 337 - 29 (1,124) (29) 3,157 3,143

Current liabilities 89,549 59,053 1,785 1,657 - 13,462 (991) (13,181) 90,343 60,991

Liabilities directly associated with the assets classified as held for sale ------13,344 - 13,344 05.

Total liabilities 91,490 61,859 4,125 1,994 - 13,491 (2,115) 134 93,500 77,478 APPENDICES

Non-controlling interest ------461 227 461 227

Major customers customer contributed RUB 17,699 million (15% of the Group’s total In 2013, revenue from two customers individually exceeded 10% revenue) and is included in the construction and service segments. of the Group’s total revenue. Revenue from one of the customers accounted for RUB 33,063 million (28% of the Group’s total revenue) In 2012, revenue from two customers individually exceeded 10% and is included in the construction and service segments. The other of the Group’s total revenue. Revenue from one of the customers

Mostotrest Annual Report 2013 87 accounted for RUB 22,619 million (24% of the Group’s total revenue) Disposal group held for sale and is included in the construction and service segments. The other customer contributed RUB 18,448 million (20% of the Group’s total At 31 December 2012, the disposal group comprised of the following revenue) and is included in the construction and service segments. assets and liabilities:

6. Discontinued operation Mln RUB 31 December 2012 On 31 January 2013 the Group exchanged its 51% interest in OOO EngTransStroy (ETS) which constituted a separate operating Non-current assets 2,168 segment for an additional share in OOO TransStroyMekhanizatsia Trade receivables (incl. amounts due from (TSM) through a number of transactions to increase the group’s customers on construction contracts) 9,845

ownership interest from 50.1% to 76%. Prior to the transactions, the Cash and cash equivalents 1,790 same counterparty controlled significant minority interests in both Other current assets 793 TSM and ETS. All the exchange transactions were negotiated on a combined basis between the Group and above mentioned non- Assets classified as held for sale 14,596 controlling shareholders; therefore the result on the transactions was Loans and borrowings 1,000 reported on a net basis. Trade and other payables (incl. amounts due to customers on construction contracts) 12,357 The ETS segment was a discontinued operation and classified as held for sale as at 31 December 2012. Management committed to a plan to Other current liabilities (13)

sell this segment in late 2012 following a strategic decision to dispose Liabilities directly associated with assets classified of subsidiaries with general contractor competence without own as held for sale 13,344 production facilities. Net assets directly associated with disposal group 1,252

Mln RUB 7. Revenue Disposal of interest in ETS

Consideration receivable for shares in ETS 560 Mln RUB 2013 2012

Group's share in ETS's net assets derecognised 234 Revenue from contracts for construction of:

Goodwill derecognised (1,291) bridges and highways 98,418 77,616

Tax effect 328 airfields and airports 6,394 8,200

(169) other facilities 1,016 4,729

Acquisition of interest in TSM Total revenue from construction contracts 105,828 90,545

Consideration payable for shares in TSM (681) Revenue from maintenance and repair of roads 9,939 2,855 Carrying amount of 25.9% interest acquired 677 Other revenue 947 678 (4) Total revenue 116,714 94,078 Net result on transactions recognised in equity (173)

Cash flows used in discontinued operation

Mln RUB 2013 2012

Net cash used in operating activities (1,448) (2,883)

Net cash from investing activities (3) 517

Net cash from financing activities (7) 59

Net cash flows for the period (1,458) (2,307)

88 Below is the information on the geographical allocation of revenues (b) Administrative expenses 01.

from construction contracts. This allocation is made based on the ABOUT US geographical location of construction sites: Mln RUB 2013 2012

Personnel expenses 3,606 2,959 Mln RUB 2013 2012 Social expenses 396 369 Central Federal District 76,090 53,359 Taxes other than income tax 359 252 Southern Federal District 21,206 22,413 Consulting and audit services 319 187 Northwestern Federal District 4,588 4,281 Depreciation and amortisation 264 189 Far Eastern Federal District 2,132 2,826 Rent expense 170 130 Volga Federal District 1,778 6,295 02.

Materials 143 171 2013 RESULTS Siberian Federal District 34 1,371 Insurance 139 141 Total revenue from construction contracts 105,828 90,545 Bank fees 32 48

Other 740 522 As at 31 December 2013 revenue from construction contracts for total amount of RUB 19,885 million (2012: RUB 26,672 million) were 6,168 4,968 pledged as a security under guarantees issued to customers by banks on behalf of the Group. (c) Other expenses

8. Income and expenses Mln RUB 2013 2012 03. CORPORATE GOVERNANCE (a) Cost of sales Allowance for doubtful accounts receivable, prepayments and loans given 2,142 154

Allowance for obsolete inventories 180 - Mln RUB 2013 2012 Fines and penalties 68 46 Services of subcontractors 51,781 34,022 Loss on disposal of property, plant and Materials 18,915 19,769 equipment 56 165

Personnel expenses 14,412 11,812 Provision for claims received 52 -

Depreciation and amortisation 3,418 3,064 Other expenses 219 141

Machinery, equipment, transport, and labor 2,717 506 services provided by third parties 3,055 2,682 04. SOCIAL RESPONSIBILITY

Fuel 2,147 2,160

Insurance 1,326 964

Services of principal contractors 437 609

Other 7,213 5,908

102,704 80,990

05. APPENDICES

Mostotrest Annual Report 2013 89 9. Net finance costs 11. Employee benefit expenses

Mln RUB 2013 2012 Mln RUB 2013 2012

Recognised in profit or loss: Wages and salaries 14,488 11,877

Interest income on bank deposits 107 551 Contributions to State pension fund 3,530 2,894

Interest income on loans given 35 36 18,018 14,771

Foreign exchange gain 50 -

Effect of discounting the financial assets 12. Income taxes and liabilities 3 - The Group’s applicable tax rate is the income tax rate of 20% Other finance income 7 5 for Russian companies (2012: 20%). Total finance income 202 592

Interest expense on borrowings (1,586) (695) (a) Amounts recognised in profit or loss

Interest expense on finance leases (603) (503) Mln RUB 2013 2012 Effect of discounting the financial assets and liabilities - (122) Current tax expense

Non-controlling interests (220) (1,477) Current year 2,452 1,408

Finance costs (2,409) (2,797) Adjustments of prior years tax (4) 10

Net finance costs recognised in profit or loss (2,207) (2,205) 2,448 1,418

Deferred tax expense 10. Earnings per share Origination and reversal of temporary differences (1,160) 305

The calculation of basic earnings per share at 31 December 2013 Total income tax expense recognised in profit or loss 1,288 1,723 was based on the profit attributable to the ordinary shareholders of RUB 1,916 million (2012: RUB 4,310 million), and a weighted Income tax recognised in other comprehensive income (3) (4) average number of ordinary shares outstanding of 282,215,500 (2012: 281,040,562), calculated as shown below. The Company does Total income tax expense 1,285 1,719 not have dilutive potential ordinary shares.

Mln RUB 2013 2012 2013 2012 Current tax expense recognised in profit Issued shares at 1 January 282,215,500 279,763,273 or loss (Note 12) 2,448 1,418

Sale of own shares - 1,277,289 Current tax expense recognised in equity (Note 6) (328) - Weighted-average number of shares for the period ended 31 December 282,215,500 281,040,562 2,120 1,418

Profit attributed to shareholders from continuing operations (mln RUB) 1,910 4,074

Profit attributed to shareholders from discontinued operation (mln RUB) 6 236

Profit attributed to shareholders (mln RUB) 1,916 4,310

Basic and diluted earnings per share from continuing operations (RUB) 6.77 14.50

Basic and diluted earnings per share from discontinued operation (RUB) 0.02 0.84

Basic and diluted earnings per share (RUB) 6.79 15.34

90 Reconciliation of effective tax rate: 01. ABOUT US

2013 2012

Mln RUB % Mln RUB %

Profit before income tax from continuing operations 3,541 100% 5,811 100%

Income tax at applicable tax rate 708 20% 1,162 20%

Non-deductible expenses 606 17% 614 11%

Non-taxable income (27) (1%) (66) (1%)

Adjustments of prior years tax (4) 0% 10 0%

Tax on dividends 20 1% 3 0% 02. 2013 RESULTS Effect of tax rates in foreign jurisdictions (15) (1%) - 0%

1,288 36% 1,723 30%

(b) Recognised deferred tax assets and liabilities Deferred tax assets and liabilities are attributable to the following:

Assets Liabilities Net

Mln RUB 2013 2012 2013 2012 2013 2012

Property, plant and equipment - - (1,241) (1,208) (1,241) (1,208) 03. CORPORATE GOVERNANCE Intangible assets 1 1 (1) (30) - (29)

Investments - - (82) (38) (82) (38)

Inventories 34 8 - (142) 34 (134)

Trade and other receivables 315 103 (18) - 297 103

Construction contracts (including due from and due to customers) 713 209 (167) (219) 546 (10)

Loans and borrowings 8 8 - - 8 8

Trade and other payables 177 136 (31) (7) 146 129

Provisions 64 44 (5) (3) 59 41 04. SOCIAL RESPONSIBILITY Other 335 87 - - 335 87

Tax loss carry-forwards 17 13 - - 17 13

Net tax assets/liabilities 1,664 609 (1,545) (1,647) 119 (1,038)

Set off of tax (1,532) (609) 1,532 609 - -

Tax assets/liabilities 132 - (13) (1,038) 119 (1,038)

05. APPENDICES

Mostotrest Annual Report 2013 91 (c) Movement in deferred tax balances

Recognised Acquisition Recognised in other throught Discon- 1 January in profit or comprehen- business tinued 31 Decem- Mln RUB 2012 loss sive income combination operation ber 2012

Property, plant and equipment (1,327) 107 - (10) 22 (1,208)

Intangible assets - 61 - (90) - (29)

Investments (2) (30) (4) (2) - (38)

Inventories 294 (432) - - 4 (134)

Trade and other receivables 314 75 - 4 (290) 103

Construction contracts (including due from and due to customers) 368 (230) - 1 (149) (10)

Trade and other payables 124 34 - (2) (27) 129

Loans and borrowings (109) 117 - - - 8

Provisions 106 (41) - 1 (25) 41

Other 60 27 - - - 87

Tax loss carry-forwards 12 1 - - - 13

(160) (311) (4) (98) (465) (1,038)

Recognised Recognised in other 1 January in profit or comprehen- 31 Decem- Mln RUB 2013 loss sive income ber 2013

Property, plant and equipment (1,208) (33) - (1,241)

Intangible assets (29) 29 - -

Investments (38) (41) (3) (82)

Inventories (134) 168 - 34

Trade and other receivables 103 194 - 297

Construction contracts (including due from and due to customers) (10) 556 - 546

Loans and borrowings 129 17 - 146

Trade and other payables 8 - - 8

Provisions 41 18 - 59

Other 87 248 - 335

Tax loss carry-forwards 13 4 - 17

(1,038) 1,160 (3) 119

(d) Unrecognised deferred tax liabilities At 31 December 2013 the temporary differences associated with future through distribution of dividends to the Company. The deferred investments in subsidiaries amounted to RUB 122 million (2012: tax assets and liabilities were not recognised as at 31 December 2013 RUB 673 million). They are expected to be reversed in the foreseeable since such dividends are taxed at 0% rate.

92 13. Property, plant and equipment 01. ABOUT US

Buildings Machinery and and Construction Mln RUB Land structures equipment Vehicles Other in progress Total

Cost or deemed cost

Balance at 1 January 2012 314 6,422 8,342 4,738 641 545 21,002

Additions 8 326 2,607 1,790 342 520 5,593

Acquisitions through business combinations 16 18 178 19 1 1 233

Disposals - (463) (332) (222) (219) - (1,236)

Discontinued operation - (174) (81) (134) (130) (31) (550) 02. 2013 RESULTS Transfers - 582 55 21 11 (669) -

Balance at 31 December 2012 338 6,711 10,769 6,212 646 366 25,042

Additions 48 577 2,252 1,799 66 302 5,044

Disposals - (168) (127) (196) (130) (7) (628)

Transfers - 108 99 - 4 (211) -

Balance at 31 December 2013 386 7,228 12,993 7,815 586 450 29,458

Depreciation and impairment losses

Balance at 1 January 2012 - 825 3,130 2,004 131 - 6,090 03.

Depreciation for the year - 397 1,378 925 299 - 2,999 CORPORATE GOVERNANCE

Disposals - (75) (181) (122) (206) - (584)

Discontinued operation - (33) (27) (30) (53) - (143)

Balance at 31 December 2012 - 1,114 4,300 2,777 171 - 8,362

Depreciation for the year - 437 1,738 1,100 203 - 3,478

Disposals - (83) (97) (135) (57) - (372)

Balance at 31 December 2013 - 1,468 5,941 3,742 317 - 11,468

Carrying amounts

Balance at 1 January 2012 314 5,597 5,212 2,734 510 545 14,912 04. SOCIAL RESPONSIBILITY Balance at 31 December 2012 338 5,597 6,469 3,435 475 366 16,680

Balance at 31 December 2013 386 5,760 7,052 4,073 269 450 17,990

In 2013 depreciation expense of RUB 3,273 million (2012: During 2013, the Group acquired equipment under finance lease of RUB 2,818 million) was charged to cost of sales, RUB 205 million RUB 3,278 million (2012: RUB 3,147 million). (2012: RUB 181 million) to administrative expenses. 14. Equity-accounted investees (a) Security No material assets were pledged at 31 December 2013 and 2012 31 Decem- 31 Decem- except for those received under finance lease agreements. Mln RUB Note ber 2013 ber 2012 05. APPENDICES Interest in joint venture (a) 6,425 6,458 (b) Leased property, plant, and equipment The Group leases production equipment under a number of finance Interests in associates (b) 1,808 1,600

lease agreements. Certain leases provide the Group with the option Balance at at the end of the to purchase the asset at a beneficial price at the end of the lease period 8,233 8,058 terms. At 31 December 2013 the net book value of leased property, plant, and equipment was RUB 7,731 million (2012: RUB 6,103 million). None of the Group’s equity accounted investees are publicity listed The leased property, plant, and equipment secure lease obligations. entities and consequently do not have published price quotations.

Mostotrest Annual Report 2013 93 (a) Joint venture by estimating the fair values of the subsidiary’s interest in the assets and liabilities of the joint venture on the date of acquisition. Acquisition of interest in a joint venture NWCC in 2012 On 25 December 2012 the Group obtained control over Plexy Limited The major asset of the equity accounted investee is the concession (“Plexy”), a Cyprus based company, by acquiring 100% of equity agreement, an identifiable amortizable intangible asset with carrying interest for a consideration of RUB 7,957 million, paid in cash. value of RUB 24,278 million as at 31 December 2013. The goodwill on Plexy owns a 50% interest in Vinci Concessions Russie SAS (“VCR”), acquisition is included in the carrying value of the investment in the a company incorporated in France that owns 100% participation joint venture. interest in North-West Concession Company (“NWCC”), a limited liability company incorporated in Russia. The following table summarises the financial information of NWCC as included in its own financial statements, adjusted for fair value NWCC is an operator of the 15-58 km segment of the Moscow-Saint adjustments at acquisition and differences in accounting policies. Petersburg Toll Highway, under a concession service arrangement The table also reconciles the summarised financial information to the with the State Company Russian Highways. The remaining 50% carrying amount of the Group’s interest in NWCC. stake in the joint venture is owned by Vinci, a global infrastructure construction and concession management group. OОO “NWCC”

The acquisition of Plexy by the Group effectively represents an 31 Decem- 31 Decem- Mln RUB ber 2013 ber 2012 acquisition of an interest in a joint venture NWCC. Therefore, the transaction is accounted for using the equity method in these Percentage ownership interest 50% 50% consolidated financial statements. Non-current assets 24,865 20,942

The allocation of the consideration paid to the net identifiable assets of Current assets 5,167 8,405 Plexy (the parent company for the equity accounted investee) and the Non-current liabilities (12,584) (12,578) fair value of the equity accounted investee (NWCC) itself is presented Current liabilities (6,487) (5,742) below. Net assets (100%) 10,961 11,027

Mln RUB 2012 Group’s share of net assets (50%) 5,481 5,514

Consideration paid in cash 7,780 Goodwill 944 944

Transaction costs 177 Carrying amount of equity-accounted invest- ment 6,425 6,458 7,957

Fair value of net identifiable assets of subsidiary (7,013) 2013 2012 Goodwill on acquisition 944 Revenue 8,953 -

Profit and total comprehensive income The fair value of the identifiable assets acquired and the liabilities (100%) (66) - assumed were as follows: Profit and total comprehensive income (50%) (33) -

Group’s share of profit and total 31 December comprehensive income (33) - Mln RUB 2012

Non-current assets (b) Impairment testing Investment in joint venture (NWCC) 5,514 At 31 December 2013 the carrying amount of the Group’s investment

Current assets in the joint-venture NWCC was RUB 6,425 million, including the related goodwill of RUR 944 million. The major asset of NWCC is the Cash and cash equivalents 997 concession agreement, an identifiable amortizable intangible asset Other current assets, net 502 with the carrying value of RUB 24,278 million as at the reporting date. NWCC is in the process of constructing the 15-58 km section of Net identifiable assets 7,013 the Moscow-Sankt-Petersburg motorway (“Project”) in accordance with the construction schedule and therefore is capitalising the costs The fair value of the investment in the joint venture, which has been of the construction of the intangible asset. The intangible asset will accounted for as an equity accounted investee, has been determined be amortized over the life of the concession agreement (till 2041), commencing the date when the construction is completed.

94 At the end of 2013 the indicators of future traffic flows used in assumptions would need to change individually for the estimated 01. the financial model supporting the concession arrangement were recoverable amount to be equal to the carrying amount. ABOUT US decreased. The Group concluded that such decrease represents an indication that its investment in the equity accounted investee might Rate required for carrying amount to equal be impaired. Therefore, the Group carried out an impairment test with In percent recoverable amount respect to its investment. Discount rate 13.99%

The recoverable amount of the investment in the joint venture (“CGU”) was estimated based on the present value of the future cash flows (c) Associate expected to be derived from the CGU over the life of the concession The following table summarises the financial information of associate agreement (value in use). The recoverable amount of the CGU was as included in its own financial statements, adjusted for fair value estimated to be higher than its carrying amount and no provision adjustments at acquisition and differences in accounting policies. 02.

for impairment was recognised as at 31 December 2013. The key The table also reconciles the summarised financial information to the 2013 RESULTS assumptions used in the estimation of the recoverable amount are set carrying amount of the Group’s interest in this company. out below. The values assigned to the key assumptions represented management’s assessment of future trends in the relevant industries OAO Mostostroy 11 and were based on historical data from both external and internal sources. 31 Decem- 31 Decem- ber 2013 ber 2012

Percentage ownership interest 25.002% 25.002% Discount rate 12.52% Non-current assets 5,955 5,384 Traffic revenue (average annual) growth rate 6.1% Current assets 10,336 6,345 Budgeted EBITDA (average annual) growth rate 7.4% Non-current liabilities (4,351) (2,370) 03. CORPORATE GOVERNANCE

Current liabilities (5,372) (3,623) The discount rate was a post-tax measure estimated based on the historical industry average weighted-average cost of capital, Net assets (100%) 6,568 5,736 with a possible debt leveraging of 66.5% at a market interest rate Group’s share of net assets (25.002%) 1,642 1,434 of 10.89%. Goodwill 166 166

The Group engaged an independent traffic advisor specialized in Carrying amount of interest in associates 1,808 1,600 development of transportation models and forecast of traffic to make traffic growth projections and revenue forecast for the Project. The traffic revenue forecast was adjusted to take into account inflation 2013 2012 over the period of the concession agreement. 04.

Revenue 14,858 11,161 SOCIAL RESPONSIBILITY

Budgeted EBITDA was estimated taking into account past experience Profit and total comprehensive income (100%) 1,047 718 of forecasting the costs of constructing and operating such an asset as well as the projected traffic revenue. Profit and total comprehensive income (25.002%) 262 180

The cash flow projections included specific estimates for the period Group’s share of profit and total comprehensive income 262 180 through the end of the concession agreement due to the fact that the traffic and revenue projections covered the periods through the end of Dividends received by the Group 54 33 the concession agreement.

The estimated recoverable amount of the CGU exceeded its carrying 05. amount by approximately RUB 2,719 million. Management has APPENDICES identified that a reasonably possible change in two key assumptions could cause the carrying amount to exceed the recoverable amount. The following table shows the amount by which these two

Mostotrest Annual Report 2013 95 15. Other assets 17. Construction contracts in progress

31 Decem- 31 Decem- 31 Decem- 31 Decem- Mln RUB ber 2013 ber 2012 Mln RUB ber 2013 ber 2012

Loans given 769 839 Progress billings 170,438 216,132

Available-for-sale investments 234 220 Unbilled revenue 10,839 13,658

Bank deposit with maturities more than Contract revenue accumulated 3 month 23 79 to the period end 181,277 229,790

Other investmants 7 7 Contract costs accumulated to the period end (158,570) (197,298)

1,033 1,145 Expected losses recognised accumulated to the period end (458) (138) Non-current 273 250 Recognised profits less recognised losses 22,249 32,354 Current 760 895 Contract revenue accumulated to the period 1,033 1,145 end 181,277 229,790

Progress payments and advances received (232,020) (266,039) Available-for-sale investments comprise equity instruments of Net payables to customers of group held financial institutions that are mainly listed either on the MICEX stock for sale - 7,723 exchanges. The fair value of available-for-sale equity investments was determined by reference to their quoted market prices. Net payables to customers (50,743) (28,526) Due from customers 14,304 8,248 The Group’s exposure to credit, currency and interest rate risks Due to customers (65,047) (36,774) related to other assets is disclosed in note 24. (50,743) (28,526)

16. Inventories Non-current retentions 3,238 -

Current retentions 2,957 3,486 31 Decem- 31 Decem- Mln RUB ber 2013 ber 2012 6,195 3,486

Construction materials 7,684 7,914

Work in progress 391 207 The retentions on construction contracts are amounts of progress

8,075 8,121 billings that are not paid until the satisfaction of conditions specified in the contract for the payment of such amounts or until defects have been rectified. The retentions are measured at the fair value of the No inventories were pledged at 31 December 2013 and 2012. consideration receivable based on the expected timing of cash inflows. 18. Trade and other receivables

31 Decem- 31 Decem- Mln RUB ber 2013 ber 2012

Trade receivables 2,337 1,312

Value added tax 12,288 8,293

Security deposits for participation in tenders 343 168

Taxes other than income tax 5 7

Other receivables 342 648

15,315 10,428

Non-current 658 293

Current 14,657 10,135

15,315 10,428

96 The Group’s exposure to credit risk and impairment losses related to The share capital of RUB 35 million was formed prior to 01. trade and other receivables are disclosed in note 24(c)(ii). 31 December 2002 when the Russian economy was considered to ABOUT US be hyperinflationary for IFRS purposes. Therefore the share capital 19. Cash and cash equivalents was adjusted for the effect of hyperinflation by RUB 96 million as at 31 December 2002. As a result, the carrying value of the share capital amounted to RUB 131 million since that date until the issue of 31 Decem- 31 Decem- Mln RUB ber 2013 ber 2012 additional shares in 2010.

Petty cash 2 1 (b) Reserve for acquisition of own shares Cash at banks 963 1,576 The reserve for acquisition of the Company’s own shares represents

Bank deposits with maturities less than the cost of the Company’s shares held by the Group. At the reporting 3 months 25,601 7,287 date the Company held none of its own shares. 02. 26,566 8,864 2013 RESULTS During the year ended 31 December 2012 the Company re-sold 2,452,227 treasury shares for cash consideration of RUB 418 million. For the purpose of the statement of cash flows, cash and cash The difference of RUB 143 million between the consideration received equivalents comprise the following at 31 December: and the acquisition cost of the treasury shares sold was recorded in the additional paid-in capital.

31 Decem- 31 Decem- Mln RUB ber 2013 ber 2012 (c) Dividends In accordance with Russian legislation the Company’s distributable Petty cash and cash at banks 965 1,577 reserves are limited to the balance of retained earnings as recorded in Bank deposits with maturities less than the Company’s statutory financial statements prepared in accordance 3 months 25,601 7,287 with Russian Accounting Principles. 03. CORPORATE GOVERNANCE Cash at banks and bank deposits with maturities less than 3 months attributable to discontinued operation (Note 6) - 1,790 Dividends in the amount of RUB 2,201 million, or RUB 7.8 per share were accrued and paid during the year ended 31 December 2013 26,566 10,654 (2012: RUB 2,004 million, or RUB 7.10 per share).

The Group’s exposure to interest rate risk and a sensitivity analysis for (d) Fair value reserve financial assets and liabilities are disclosed in note 24. The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investments are 20. Capital and reserves derecognised or impaired.

(a) Share capital 21. Capital management 04. SOCIAL RESPONSIBILITY The Group has no formal policy for capital management but management seeks to maintain a sufficient capital base for meeting Ordinary shares the Group’s operational and strategic needs, and to maintain 2013 2012 confidence of market participants. This is achieved with efficient cash

Authorised shares 282,215,500 282,215,500 management, constant monitoring of Group’s revenues and profit, and long-term investment plans mainly financed by the Group’s operating Par value 0.14 RUB 0.14 RUB cash flows. With these measures the Group aims for steady profits On issue at 1 January 282,215,500 279,763,273 growth. Sold for cash - 2,452,227 22. Loans and borrowings On issue at end of period, fully paid 282,215,500 282,215,500 This note provides information about the contractual terms of the 05. Group’s interest-bearing loans and borrowings, which are measured APPENDICES Ordinary shares at amortised cost. For more information about the Group’s exposure All shares rank equally with regard to the Company’s residual assets. to interest rate, foreign currency and liquidity risk, see note 24.

The holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders’ meetings. In respect of the Company’s shares that are held by the Group, all rights are suspended until those shares are reissued.

Mostotrest Annual Report 2013 97 31 Decem- 31 Decem- 23. Trade and other payables Mln RUB ber 2013 ber 2012

Current liabilities 31 Decem- 31 Decem- mln RUB ber 2013 ber 2012 Unsecured bank loans 13 5,193 Trade payables 8,162 8,730 Finance lease liabilities 2,173 1,577 Value added taх payable 11,145 4,890 2,186 6,770 Payables to personnel 1,971 1,512 Non-current liabilities Taxes payable other than income tax and Finance lease liabilities 2,352 1,892 value added tax 559 502

Total loans and borrowings 4,538 8,662 Other payables and accrued expenses 447 279

22,284 15,913 Finance lease liabilities are payable as follows: Long-term 792 213

Short-term 21,492 15,700 Present Future value of 22,284 15,913 minimum minimum lease lease Mln RUB payments Interest payments The Group’s exposure to currency and liquidity risks related to trade 31 December 2012 and other payables is disclosed in note 24(c)(iii). Less than one year 1,979 402 1,577

Between 1 and 5 years 2,144 252 1,892

4,123 654 3,469

31 December 2013

Less than one year 2,642 469 2,173

Between 1 and 5 years 2,642 290 2,352

5,284 759 4,525

The carrying amounts of all of the Group’s loans and borrowings are denominated in RUB.

The bank loans are attracted in RUB under fixed interest rates. The weighted-average effective interest rates for the reporting period were as follows:

Mln RUB 2013 2012

Bank loans 8.9% 9.1%

Finance lease liabilities 14.7% 16.2%

Finance lease liabilities are secured by the leased assets, see Note 13.

98 24. Fair values and risk management 01. ABOUT US (a) Accounting classifications and fair values

Financial assets and liabilities are classified by measurement categories as at 31 December 2013 as follows:

Loans and Available for sale Other financial receivables (level 1) liabilities Total

Financial assets measured at fair value

Other assets - 234 - 234

- 234 - 234 02. 2013 RESULTS Financial assets not measured at fair value

Other assets 799 - - 799

Cash and cash equivalents 26,566 - - 26,566

Trade and other receivables 15,315 - - 15,315

42,680 - - 42,680

Financial liabilities not measured at fair value

Unsecured bank loans - - 13 13

Finance lease liabilities - - 4,525 4,525 03. CORPORATE GOVERNANCE Trade payables - - 22,284 22,284

- - 26,822 26,822

Financial assets and liabilities are classified by measurement categories as at 31 December 2012 as follows:

Loans and Available for sale Other financial receivables (level 1) liabilities Total

Financial assets measured at fair value -

Other assets 220 - 220 04. SOCIAL RESPONSIBILITY - 220 - 220

Financial assets not measured at fair value

Other assets 925 - - 925

Cash and cash equivalents 8,864 - - 8,864

Trade and other receivables 10,428 - - 10,428

20,217 - - 20,217

Financial liabilities not measured at fair value

Unsecured bank loans - - 5,193 5,193 05. APPENDICES Finance lease liabilities - - 3,469 3,469

Trade payables - - 15,913 15,913

- - 24,575 24,575

(b) Measurement of fair values The basis for determining fair values is disclosed in note 4. Inputs for The fair values of financial assets and liabilities as at the reporting the valuation of the available-for-sale financial assets are primarily dates were not significantly different from their carrying amounts. based on the observable market data (hierarchy level 1).

Mostotrest Annual Report 2013 99 (c) Financial risk management State, State-owned and State-funded corporations. This category The Group has exposure to the following risks from its use of financial consists of State-owned corporations, primarily Russian Railways, as instruments: well as Russian Highways. —— credit risk (see 24(c)(ii)); —— liquidity risk (see 24(c)(iii)); Regional authorities. This category consists of local governments —— market risk (see 24(c)(iv)). such as the Moscow city government, and local government entities or authorities such as the State authority for highways at the (i) Risk management framework administration of the Nizhniy Novgorod region. The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. Municipal authorities. This category consists of municipal The management is responsible for developing and monitoring the authorities, such as the administration of Nizhniy Novgorod. Group’s risk management policies. The management reports regularly to the Board of Directors on its activities. Private customers, including ‘‘public private partnership’’ concessionaires. This category consists of private construction The Group’s risk management policies are established to identify and companies and concessionaires for ‘‘public private partnerships’’ analyse the risks faced by the Group, to set appropriate risk limits (PPP), such as OOO North-West Concession Company. and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect The Group’s contracts usually require an annual advance payment changes in market conditions and the Group’s activities. The Group, from its customers of up to 30 percent of the anticipated annual work through its training and management standards and procedures, aims amount. The Group typically uses this amount to finance some of its to develop a disciplined and constructive control environment in which raw materials, fuel and labour costs. However, the Group is typically all employees understand their roles and obligations. required to provide its customers with a bank guarantee covering the refund of this amount if the Group fails to perform its contractual The Group’s Audit Committee oversees how management monitors obligations. Most of the Group’s construction contracts provide for compliance with the Group’s risk management policies and monthly progress payments in arrears based on a schedule of works procedures and reviews the adequacy of the risk management performed during that month. framework in relation to the risks faced by the Group. The Group’s Audit Committee is assisted in its oversight role by Internal Audit. The Group issues its invoices to customers in accordance with terms Internal Audit undertakes both regular and ad hoc reviews of risk specified in the relevant contract, which generally require payment management controls and procedures, the results of which are within one to 30 days after the invoice date. To ensure the timely reported to the Audit Committee. collection of its account receivables and to minimise the incurrence of bad debts, the Group has implemented management controls and (ii) Credit risk established collection monitoring and investigation procedures to Credit risk is the risk of financial loss to the Group if a customer or manage its accounts receivable and work-in-progress. It regularly counterparty to a financial instrument fails to meet its contractual monitors the status of accounts receivable and work-in-progress and obligations, and arises principally from the Group’s receivables from actively seeks to manage the risk of non-payment or late payment customers and investments in securities. primarily by maintaining close customer contacts.

The carrying amount of financial assets represents the maximum The Group establishes an allowance for impairment that represents its credit risk exposure. estimate of incurred losses in respect of trade and other receivables and investments. The only component of this allowance is a specific Trade and other receivables loss component that relates to individually significant exposures. The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The concentration of The two most significant customers of the Group account for credit risk geographically or with respect to sales transactions with RUB 7,749 million of the trade receivables’ carrying amount a single customer is disclosed in Note 5. (including amounts due from customers on construction contracts) at 31 December 2013 (in 2012: two customers with the amount of In monitoring customer credit risk, the Group’s ultimate customers RUB 5,309 million). are typically divided into the following broad categories:

Federal State agencies. This category consists of agencies of the Russian Ministry of Transport, primarily the federal highway agency, Rosavtodor, the federal railway agency, Roszheldor, and the federal marine and river transport agency, Rosmorrechflot.

100 Impairment losses 01. ABOUT US The ageing of trade and other receivables and amounts due from customers on construction contracts at the reporting date was as follows:

Gross Impairment Gross Impairment

Mln RUB 31 December 2013 31 December 2013 31 December 2012 31 December 2012

Trade and other receivables

Not past due 2,800 - 2,087 -

Past due 0-183 days 41 (1) 191 (184)

Past due more than 183 days 1,752 (1,570) 458 (424) 02. 2013 RESULTS Amounts due from customers on construction contracts

Not past due 14,485 (181) 8,402 (154)

19,078 (1,752) 11,138 (762)

As at 31 December 2013 the allowance for doubtful prepayments equivalents are held with bank and financial institution counterparties, amounted to RUB 1,281 million (2012: RUB 256 million). which are rated BB- to BBB, based on rating agency Fitch and Standard & Poor’s ratings. Based on historic default rates, the Group believes that, apart from the above, no impairment allowance is necessary in respect of trade Guarantees receivables not past due or past due by up to 183 days; the main The Group considers that financial guarantee contracts entered into 03. CORPORATE GOVERNANCE portion of the trade receivables balance relates to customers that by the Group to guarantee the indebtedness of other parties are have a good track record with the Group. insurance arrangements, and accounts for them as such. In this respect, the Group treats the guarantee contract as a contingent The allowance accounts in respect of trade receivables are used liability until such time as it becomes probable that the Group will be to record impairment losses unless the Group is satisfied that no required to make a payment under the guarantee. recovery of the amount owing is possible; at that point the amounts are considered irrecoverable and are written off against the financial The financial guarantees provided to third parties and outstanding asset directly. At 31 December 2013 and 2012 the Group did not have as at 31 December 2013 amounted to RUB 22 million (2012: any collective impairment on its trade receivables. RUB 322 million).

In addition, the majority of the balance of construction in progress (iii) Liquidity risk 04. SOCIAL RESPONSIBILITY due from customers (Note 17) is from government agencies and other Liquidity risk is the risk that the Group will encounter difficulty in public bodies, therefore, there is a concentration of credit risk with meeting the obligations associated with its financial liabilities that such type of customers. are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as possible, that Based on the Group’s monitoring of customer credit risk, the Group it will always have sufficient liquidity to meet its liabilities when believes that, except as indicated above, no impairment allowance is due, under both normal and stressed conditions, without incurring necessary in respect of trade receivables and other receivables and unacceptable losses or risking damage to the Group’s reputation. amounts due from customers on construction contracts not past due. As at 31 December 2013 the Group’s total current liabilities exceeded Investments total current assets by RUB 8.0 billion. The Group maintains a number The Group limits its exposure to credit risk by only investing in liquid of credit lines with a number of major Russian banks to meet 05. securities. Management actively monitors credit ratings and given requirements for short-term finance. The undrawn credit facilities APPENDICES that the Group only has invested in securities with high credit ratings, at 31 December 2013 amounted to RUB 50.4 billion and are available management does not expect any counterparty to fail to meet its to the Group the term of 1-3 years. Management believes that current obligations. agreements with banks are sufficient to maintain appropriate liquidity in the foreseeable future. Cash and cash equivalents The Group held cash and cash equivalents of RUB 26,566 million at 31 December 2013 (2012: RUB 10,654 million), which represents its maximum credit exposure on these assets. The cash and cash

Mostotrest Annual Report 2013 101 Exposure to liquidity risk The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the impact of netting agreements.

Carrying Contractual Mln RUB amount cash flows 0-6 mth 6-12 mth 1-2 yrs 2-3 yrs over 3 yrs

31 December 2013

Non-derivative financial liabilities

Bank loans 13 13 13

Finance lease liabilities 4,525 5,284 1,397 1,245 1,630 836 176

Trade payables 8,162 8,192 7,225 322 28 58 559

Non-controlling interests 355 355 355 - - - -

13,055 13,844 8,990 1,567 1,658 894 735

31 December 2012

Non-derivative financial liabilities

Bank loans 5,193 5,497 251 5,246 - - -

Finance lease liabilities 3,469 4,123 1,038 941 1,468 540 136

Trade payables 8,730 8,811 8,074 589 10 22 116

Non-controlling interests 1,367 1,367 1,367 - - - -

18,759 19,798 10,730 6,776 1,478 562 252

(iv) Market risk Exposure to interest rate risk Market risk is the risk that changes in market prices, such as foreign At the reporting date the interest rate profile of the Group’s interest- exchange rates, interest rates and equity prices will affect the bearing financial instruments was as follows: Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control Carrying amount market risk exposures within acceptable parameters, while optimising the return. 31 Decem- 31 Decem- Mln RUB ber 2013 ber 2012

Currency risk Fixed rate instruments

The Group does not have significant exposure to foreign currency risk. Financial assets 213 411

Financial liabilities (4,538) (8,662) (v) Interest rate risk Changes in interest rates impact primarily loans and borrowings (4,325) (8,251) by changing either their fair value (fixed rate debt) or their future Variable rate instruments cash flows (variable rate debt). Management does not have a formal policy of determining how much of the Group’s exposure should be Financial assets 579 507 fixed or variable rates. However, at the time of raising new loans or borrowings management uses its judgment to decide whether it Fair value sensitivity analysis for fixed rate instruments believes that a fixed or variable rate would be more favourable to the The Group does not account for any fixed-rate financial instruments Group over the expected period until maturity. as fair value through profit or loss or as available-for-sale. Therefore a change in interest rates at the reporting date would not have an effect in profit or loss or in equity.

Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the reporting date would have no material impact on equity and profit or loss of the Group.

102 (vi) Other market price risk Sensitivity analysis – equity price risk 01.

Management of the Group monitors the mix of debt and equity The majority of the Group’s equity investments are listed either ABOUT US securities in its investment portfolio based on market indices. on MICEX stock exchanges. For such investments, classified as Material investments within the portfolio are managed on an individual instruments available-for-sale, an increase of the MICEX index by 5% basis and all buy and sell decisions are approved by the management. at the reporting date, would lead to an increase in shareholders’ equity The primary goal of the Group’s investment strategy is to maximise of RUB 12 million after tax (2012: increase by RUB 16 million); similar investment returns. reduction in these indices would lead to a decrease in shareholders’ equity of RUB 12 million after tax (2012: decrease of RUB 16 million). The Group does not enter into commodity contracts other than The determined sensitivity in the fair value reflects each equity to meet the Group’s expected usage and sale requirements; such instrument’s sensitivity to the related market index. contracts are not settled net.

02.

25. Significant subsidiaries 2013 RESULTS

Ownership interest

Subsidiary Country of incorporation 31 December 2013 31 December 2012

OOO "Transstroymechanizatsiya" Russia 84.0% 50.1%

ООО "Taganka Most" Russia 100% 100%

ООО "United Toll Systems" Russia 84.3% 84.3%

ZАО "Mostotrest-Service" Russia 60% 60%

Plexy Limited Cyprus 100% 100% 03. CORPORATE GOVERNANCE

26. Acquisition of subsidiary Identifiable assets acquired and liabilities assumed The Mostotrest-Service’s identifiable assets acquired and the (a) Acquisition of road maintenance and repair liabilities assumed were as follows: company Mostotrest-Service in 2012 On 7 July 2012 the Group obtained control of CJSC “ZAO Natsionalnaya Recog- Industrialno-Torgovaya Palata” (“NITP”), a servicing company nised fair specialized in maintenance and repair, including road markings and values on Mln RUB Note acquisition general overhaul of roads and bridges, by acquiring 60% of equity interest for a consideration of RUB 513 million, paid in cash. NITP was Non-current assets 04. renamed to Mostotrest-Service on 25 July 2013. Property, plant and equipment 13 233 SOCIAL RESPONSIBILITY

Intangible assets 451 From the date of acquisition to 31 December 2012 Mostotrest-Service (former NITP) contributed revenue of RUB 2,142 million and profit of Other non-current assets 126 RUB 45 million to the Group’s total revenue and total profit. Current assets

If all acquisitions of businesses had occurred on 1 January 2012, Prepayments, trade and other receivables 738 management estimates that consolidated revenue would have Cash and cash equivalents 81 increased by RUB 2,984 million, and consolidated profit for the year Other current assets 18 would not have changed significantly. In determining these amounts, management has assumed that the fair value adjustments that arose Non-current liabilities on the date of acquisition would have been the same if the acquisition Loans and borrowings (28) 05. had occurred on 1 January 2012. APPENDICES Other non-current liabilities (131)

Current liabilities

Loans and borrowings (14)

Trade and other payables (885)

Net identifiable assets, liabilities and contin- gent liabilities 589

Mostotrest Annual Report 2013 103 Goodwill 28. Operating leases

Goodwill has been recognized as a result of the acquisition as follows: At 31 December, the future minimum lease payments under non- cancellable leases were payable as follows.

Mln RUB 2012 31 Decem- 31 Decem- Total consideration paid in cash 513 Mln RUB ber 2013 ber 2012

Less Group's share in the net identifiable assets and Less than one year 290 171 liabilities of the acquiree (353) From one to five years 414 324 Goodwill 160 More than five years 1,526 1,037

2,230 1,532 Goodwill is attributable mainly to the synergies expected to be achieved from integration of the acquired company into the Group’s business. There were no impairment of goodwill from the date of The Group leases a number of land plots, warehouses and production acquisition of the subsidiary till the reporting date. equipment under operating leases. The leases typically run for an initial period of 5 to 49 years for land plots, one to two years for 27. Acquisition of non-controlling interest production equipment and other property, with an option to renew the lease after that date. Lease payments are usually increased annually (a) Acquisition of additional non-controlling interests in to reflect market rentals. UTS in 2012 On 9 November 2012 the Group acquired an additional 33.3% equity Since the title to land plots and other property does not pass to the interest in UTS for RUB 242 million, increasing its ownership interest Group, the lease payments are regularly revised based on the market from 51% to 84.3%. The carrying value of the UTS’s net assets rates, and the Group does not have an interest in the residual value of as at the date of the transaction was RUB 45 million. The Group the leased property, all the risks and rewards incidental to ownership recognised a decrease in non-controlling interests by RUB 15 million. of these assets remain with the lessor. As such, the Group classifies The difference between the carrying value of the acquired non- these leases as operating leases. controlling interest and the consideration paid amounting to RUB 227 million was recorded in the equity, being transaction with During the year ended 31 December 2013 the Group recognised owners. RUB 538 million operating lease expenses in the profit or loss (2012: RUB 625 million). (b) Acquisition of additional non-controlling interests in TSM in 2013 29. Commitments On 31 January 2013 the Group increased it’s ownership interest in As at 31 December 2013 and 2012 the Group did not have significant TSM from 50.1% to 76% (see Note 6). contractual obligations to purchase property, plant and equipment.

On 29 October 2013 the Group acquired an additional 8% interest in 30. Contingencies TSM for RUB 225 million, increasing its ownership interest from 76% to 84%. The carrying value of the TSM’s net assets as at the date of the (a) Insurance transaction was RUB 3,877 million. The Group recognised a decrease The insurance industry in the Russian Federation is in a developing in non-controlling interests by RUB 310 million. The difference state and many forms of insurance protection common in other parts between the carrying value of the acquired non-controlling interest of the world are not yet generally available. The Group does not have and the consideration paid amounting to RUB 85 million was recorded full coverage for its plant facilities, business interruption, or third in the equity, being transaction with owners. party liability in respect of property or environmental damage arising from accidents on Group property or relating to Group operations. Until the Group obtains adequate insurance coverage, there is a risk that the loss or destruction of certain assets could have a material adverse effect on the Group’s operations and financial position.

The Group has to comply with the Law on Urban Planning, including for causing injury to life, health or property of third parties as a result of conducting construction works or defects in construction, renovation, overhaul of capital construction assets. The Group will also be held responsible for accidental loss of or damage to property being constructed. In order to reduce the risk of losses and obligations to

104 third parties as a consequence of conducting construction works, The new transfer pricing rules primarily apply to cross-border 01. the Group has obtained full insurance coverage against civil liabilities transactions between related parties, as well as to certain cross- ABOUT US arising under the construction contracts in accordance with the terms border transactions between independent parties, as determined of these contracts. under the Russian Tax Code. In addition, the rules apply to in-country transactions between related parties if the accumulated annual (b) Litigation volume of the transactions between the same parties exceeds As at 31 December 2013 and 2012 the Group was not engaged in a particular threshold (RUB 3 billion in 2012, RUB 2 billion in 2013, and litigations, the outcome of which might have material effect on the RUB 1 billion in 2014 and thereon). consolidated financial statements. Since there is no practice of applying the new transfer pricing rules by (c) Warranties the tax authorities and courts, it is difficult to predict the effect of the The Group has certain warranty obligations under construction new transfer pricing rules on these consolidated financial statements. 02.

contracts terms which range from one to twenty years. The Group 2013 RESULTS performed analysis of historical data on actual compensations paid These circumstances may create tax risks in the Russian Federation and defects rectified under these warranties for the past seven years. that are substantially more significant than in other countries. Based on this analysis, the Group concluded that the probability of Management believes that it has provided adequately for tax the constructions works carried out during the reporting period will liabilities based on its interpretations of applicable Russian tax not satisfy the quality conditions specified in the contract and require legislation, official pronouncements and court decisions. However, the repair, is low. Therefore the Group did not recognize a warranty interpretations of the relevant authorities could differ and the effect liability on construction contracts as at the reporting date. on these consolidated financial statements, if the authorities were successful in enforcing their interpretations, could be significant. The retentions held by customers under the construction contracts are usually returned in full. 31. Related party transactions 03. CORPORATE GOVERNANCE (d) Taxation contingencies (a) Control relationships The taxation system in the Russian Federation continues to evolve As at 31 December 2013 the Mostotrest’s shareholders structure was and is characterised by frequent changes in legislation, official as follows: pronouncements and court decisions, which are sometimes —— 38.63% - Marc O’Polo Investments contradictory and subject to varying interpretation by different tax —— 24.99% - OAO TFK Finans authorities. —— 36.38% - free-float.

Taxes are subject to review and investigation by a number of (b) Transactions with key management personnel authorities, which have the authority to impose severe fines, penalties and interest charges. A tax year generally remains open for review (i) Management remuneration by the tax authorities during the three subsequent calendar years; During 2013 key management received remuneration in the amount of 04. SOCIAL RESPONSIBILITY however, under certain circumstances a tax year may remain open RUB 586 million (2012: RUB 519 million) that is included in personnel longer. Recent events within the Russian Federation suggest that costs. the tax authorities are taking a more assertive and substance-based position in their interpretation and enforcement of tax legislation. During the reporting period there were no other material transactions conducted with key management personnel and their close family New transfer pricing legislation enacted in the Russian Federation members. starting from 1 January 2012 provides for major modifications making local transfer pricing rules closer to OECD guidelines, but creating additional uncertainty in practical application of tax legislation in certain circumstances. 05. The new transfer pricing rules introduce an obligation for the APPENDICES taxpayers to prepare transfer pricing documentation with respect to controlled transactions and prescribe new basis and mechanisms for accruing additional taxes and interest in case prices in the controlled transactions differ from the market level. The new transfer pricing rules eliminated the 20-percent price safe harbour that existed under the previous transfer pricing rules applicable to transactions on or prior to 31 December 2011.

Mostotrest Annual Report 2013 105 (c) Transactions with other related parties

The Group’s other related party transactions are disclosed below.

(i) Sales

Transaction value Outstanding balance

Mln RUB 2013 2012 2013 2012

Sale of goods to:

Investments in equity accounted investees 12 53 - 55

Other related parties - 8 11 136

Services rendered to:

Investments in equity accounted investees 10,609 16 (925) (1,440)

Other related parties 51 145 12 113

Discontinued operation 42 2,249 - 429

10,714 2,471 (902) (707)

(ii) Purchases

Transaction value Outstanding balance

Mln RUB 2013 2012 2013 2012

Sale of goods to:

Investments in equity accounted investees - - - (4)

Other related parties 102 838 7 (13)

Services rendered to:

Investments in equity accounted investees 628 461 (1,599) (83)

Other related parties 771 676 156 (41)

Discontinued operation 346 13,120 - (471)

1,847 15,095 (1,436) (612)

Purchases of goods and services from related parties mainly consist of purchases from companies related to shareholders of the Group and minority participants of the subsidiaries.

(iii) Loans

Transaction value Outstanding balance

Mln RUB 2013 2012 2013 2012

Loans given to:

Investments in equity accounted investees - - 584 507

Other related parties - 30 - -

- 30 584 507

The loan to equity accounted investee was recognized in 2012 as further period of one year, unless it is cancelled by any of the parties a result of the acquisition of Plexy (see note 15). The loan was initially concerned. The loan bear interest which is equal to the maximum granted in order to enable the equity accounted investee to meet rate that may be deducted for tax purposes in France as published by its cash flow needs. The loan is renewable at each expiry date for the “Journal Officer” during the last month of each calendar quarter.

106 The interest is calculated on the daily balances and it is capitalized interest rates published by the “Journal Officer” fluctuated between 01. quarterly. During the year ended 31 December 2013 the quarterly 2.81% and 2.82% (2012: between 3.01% and 4.01%). ABOUT US

Interest income on these loans for 2013 amounted to RUB 15 million (2012: RUB 0 million).

Transaction value Outstanding balance

Mln RUB 2013 2012 2013 2012

Loans received from

Other related parties - 5,713 3 3

- 5,713 3 3 02. 2013 RESULTS

The loans received from the related parties bear interest at 8.5% a. IFRS 10 Consolidated Financial Statements (2011) per annum. Interest expense on these loans for 2013 amounted to b. IFRS 11 Joint Arrangements RUB 65 million (2012: RUB 55 million). c. IFRS 12 Disclosure of Interests in Other Entities d. IFRS 13 Fair Value Measurement (iv) Acquisition of Plexy Ltd. e. Presentation of Items of Other Comprehensive Income On 25 December 2012 the Group acquired 100% of equity interest (Amendments to IAS 1) in Plexy Ltd., which owns a 50% participation interest in NWCC, for cash consideration of RUB 7,957 million (refer to note 14). The nature and effects of the changes are explained below. The equity interest was purchased from Perceive Holding Ltd and Octacore Holding Ltd, controlled by beneficial owners of Marc O’Polo. (a) Subsidiaries 03. CORPORATE GOVERNANCE The transaction was approved by the disinterested shareholders of As a result of IFRS 10 (2011), the Group has changed its accounting the Company at the extraordinary general shareholders’ meeting policy for determining whether it has control over and consequently on 14 December 2012. whether it consolidates its investees. IFRS 10 (2011) introduces a new control model that focuses on whether the Group has power over an 32. Events subsequent to the reporting investee, exposure or rights to variable returns from its involvement date with the investee and ability to use its power to affect those returns. No significant events occurred after the reporting date. In accordance with the transitional provisions of IFRS 10 (2011), the 33. Basis of measurement Group reassessed the control conclusion for its investees at 1 January The consolidated financial statements are prepared on the historical 2013. As a consequence, the Group has not changed its control cost basis except: conclusion in respect of its investments. 04. SOCIAL RESPONSIBILITY —— items of property, plant and equipment are stated at their fair values as at the date of the first-time adoption of IFRSs (b) Joint arrangements on 1 January 2008; As a result of IFRS 11, the Group has changed its accounting policy —— financial investments classified as available-for-sale are stated at for its interests in joint arrangements. Under IFRS 11, the Group has fair value; classified its interests in joint arrangements as either joint operations —— equity items in existence at 31 December 2002 include (if the Group has rights to the assets, and obligations for the liabilities, adjustments for the effects of hyperinflation, which were relating to an arrangement) or joint ventures (if the Group has calculated using conversion factors derived from the rights only to the net assets of an arrangement). When making this Russian Federation Consumer Price Index published by the assessment, the Group considered the structure of the arrangements, Russian Statistics Agency, GosKomStat. Russia ceased to be the legal form of any separate vehicles, the contractual terms of the hyperinflationary for IFRS purposes as at 1 January 2003. arrangements and other facts and circumstances. Previously, the 05. structure of the arrangement was the sole focus of classification. APPENDICES 34. Changes in accounting policies Except for the changes below, the Group has consistently applied the The Group has re-evaluated its involvement in its only joint accounting policies set out in Note 35 to all periods presented in these arrangement and has reclassified the investment from a jointly consolidated financial statements. controlled entity to a joint venture. Notwithstanding the reclassification, the investment continues to be recognised by applying The Group has adopted the following new standards and amendments the equity method and there has been no impact on the recognised to standards, including any consequential amendments to other assets, liabilities and comprehensive income of the Group. standards, with a date of initial application of 1 January 2013.

Mostotrest Annual Report 2013 107 (c) Fair value measurement When the excess is negative, a bargain purchase gain is recognised IFRS 13 establishes a single framework for measuring fair value immediately in profit or loss. and making disclosures about fair value measurements when such measurements are required or permitted by other IFRSs. It unifies the The consideration transferred does not include amounts related to the definition of fair value as the price that would be received to sell an settlement of pre-existing relationships. Such amounts are generally asset or paid to transfer a liability in an orderly transaction between recognised in profit or loss. market participants at the measurement date. It replaces and expands the disclosure requirements about fair value measurements Transaction costs, other than those associated with the issue of in other IFRSs, including IFRS 7. As a result, the Group has included debt or equity securities, that the Group incurs in connection with additional disclosures in this regard (see notes 6 and 24). a business combination are expensed as incurred.

In accordance with the transitional provisions of IFRS 13, the Group Any contingent consideration payable is recognised at fair value at the has applied the new fair value measurement guidance prospectively acquisition date. If the contingent consideration is classified as equity, and has not provided any comparative information for new it is not remeasured and settlement is accounted for within equity. disclosures. Notwithstanding the above, the change had no significant Otherwise, subsequent changes in the fair value of the contingent impact on the measurements of the Group’s assets and liabilities. consideration are recognised in profit or loss.

(d) Presentation of items of other comprehensive (ii) Non-controlling interests income Non-controlling interests are measured at their proportionate share As a result of the amendments to IAS 1, the Group has modified the of the acquiree’s identifiable net assets at the acquisition date. presentation of items of other comprehensive income in its statement of profit or loss and other comprehensive income, to present Changes in the Group’s interest in a subsidiary that do not result in separately items that would be reclassified to profit or loss from those a loss of control are accounted for as equity transactions. that would never be. Comparative information has been re-presented accordingly. (iii) Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls 35. Significant accounting policies an entity when it is exposed to, or has rights to, variable returns The accounting policies set out below have been applied consistently from its involvement with the entity and has the ability to affect those to all periods presented in these consolidated financial statements, returns through its power over the entity. The financial statements and have been applied consistently by Group entities. of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control (a) Basis of consolidation ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group. (i) Business combinations Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the Business combinations are accounted for using the acquisition non-controlling interests to have a deficit balance. method as at the acquisition date, which is the date on which control is transferred to the Group (see note 35(a)(iii)). (iv) Loss of control Upon the loss of control, the Group derecognises the assets and The Group measures goodwill at the acquisition date as: liabilities of the subsidiary, any non-controlling interests and the —— The fair value of the consideration transferred; plus other components of equity related to the subsidiary. Any surplus or —— The recognised amount of any non-controlling interests in the deficit arising on the loss of control is recognised in profit or loss. If acquiree; plus the Group retains any interest in the previous subsidiary, then such —— If the business combination is achieved in stages, the fair value of interest is measured at fair value at the date that control is lost. the pre-existing equity interest in the acquire; less Subsequently it is accounted for as an equity-accounted investee —— The net recognised amount (generally fair value) of the or as an available-for-sale financial asset depending on the level of identifiable assets acquired and liabilities assumed. influence retained.

108 (v) Interests in equity-accounted investees When an operation is classified as a discontinued operation, the 01.

The Group’s interests in equity-accounted investees comprise comparative statement of comprehensive income is re-presented as if ABOUT US interests in associates and a joint venture. the operation had been discontinued from the start of the comparative period. Associates are those entities in which the Group has significant influence, but not control or joint control, over the financial and (c) Revenue operating policies. Significant influence is presumed to exist when the Group holds between 20% and 50% of the voting power of another (i) Construction contracts entity. A joint venture is an arrangement in which the Group has Contract revenue includes the initial amount agreed in the contract joint control, whereby the Group has rights to the net assets of the plus any variations in contract work, claims and incentive payments, arrangement, rather than rights to its assets and obligations for its to the extent that it is probable that they will result in an inflow of liabilities. economic benefits and can be measured reliably. As soon as the 02.

outcome of a construction contract can be estimated reliably, contract 2013 RESULTS Interests in associates and joint ventures are accounted for using revenue is recognised in profit or loss in proportion to the stage of the equity method and are recognised initially at cost. The cost of the completion of the contract. Contract expenses are recognised as investment includes transaction costs. incurred unless they create an asset related to future contract activity.

The consolidated financial statements include the Group’s share of the The stage of completion is assessed by reference to the share of the profit or loss and other comprehensive income of equity accounted costs incurred to date in the total estimated contract costs. investees, after adjustments to align the accounting policies with those of the Group, from the date that significant influence or joint When the outcome of a construction contract cannot be estimated control commences until the date that significant influence or joint reliably, contract revenue is recognised only to the extent of contract control ceases. costs incurred that are likely to be recoverable. An expected loss on a contract is recognised immediately in profit or loss. 03. CORPORATE GOVERNANCE When the Group’s share of losses exceeds its interest in an equity- accounted investee, the carrying amount of that interest including (ii) General contractor services any long-term investments, is reduced to zero, and the recognition of For certain operations the Group undertakes to perform general further losses is discontinued, except to the extent that the Group has contractor services. In this type of contracts being the general an obligation or has made payments on behalf of the investee. contractor, the Group acts as a principal, and, therefore, recognizes revenue from ultimate customer and the related cost incurred from (vi) Transactions eliminated on consolidation the subcontractors on gross basis. Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions, are eliminated. (iii) Services rendered Unrealised gains arising from transactions with equity-accounted Revenue from services rendered is recognised in proportion to the investees are eliminated against the investment to the extent of the stage of completion of the transaction at the reporting date. The stage 04. SOCIAL RESPONSIBILITY Group’s interest in the investee. Unrealised losses are eliminated in of completion is assessed by reference to surveys of work performed. the same way as unrealised gains, but only to the extent that there is no evidence of impairment. (iv) Commissions When the Group acts in the capacity of an agent rather than as the (b) Discontinued operations principal in a transaction, the revenue recognised is the net amount of A discontinued operation is a component of the Group’s business, the commission made by the Group. operations and cash flows of which can be clearly distinguished from the rest of the Group and which: (v) Other revenue —— represents a separate major line of business or geographical Revenue from other activities is recognised when significant risks and area of operations; rewards of ownership have been transferred to the buyer, recovery —— is part of a single co-ordinated plan to dispose of a separate of the consideration is probable, the associated costs and possible 05. major line of business or geographical area of operations; or return of goods can be estimated reliably, and there is no continuing APPENDICES —— is a subsidiary acquired exclusively with a view to resale. management involvement with the goods, and the amount of revenue can be measured reliably. Classification as a discontinued operation occurs upon disposal or when the operation meets the criteria to be classified as held for sale, if earlier.

Mostotrest Annual Report 2013 109 (d) Finance income and costs provided. A liability is recognised for the amount expected to be paid The Group’s finance income and finance costs include: under short-term cash bonus or profit-sharing plans if the Group —— interest income; has a present legal or constructive obligation to pay this amount as —— interest expense; a result of past service provided by the employee, and the obligation —— dividend income; can be estimated reliably. —— the net gain or loss on the disposal of available-for-sale financial assets; (ii) Defined contribution plans —— the foreign currency gain or loss on financial assets and financial A defined contribution plan is a post-employment benefit plan under liabilities; which an entity pays fixed contributions into a separate entity and —— impairment losses recognised on financial assets (other than will have no legal or constructive obligation to pay further amounts. trade receivables); and Obligations for contributions to defined contribution pension plans, —— non-controlling interest clasfied as a debt instrument. including Russia’s State pension fund, are recognised as an employee benefit expense in profit or loss in the periods during which services Interest income or expense is recognised using the effective interest are rendered by employees. Prepaid contributions are recognised method. Dividend income is recognised in profit or loss on the date as an asset to the extent that a cash refund or a reduction in future that the Group’s right to receive payment is established. payments is available. Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which the employees render the service are discounted to their present value.

(e) Foreign currency (iii) Other long-term employee benefits The Group’s net obligation in respect of long-term employee benefits (i) Foreign currency transactions other than pension plans is the amount of future benefit that Transactions in foreign currencies are translated to the respective employees have earned in return for their service in the current functional currencies of Group entities at exchange rates at the dates and prior periods; that benefit is discounted to determine its of the transactions. present value, and the fair value of any related assets is deducted. The discount rate is the yield at the reporting date on government Monetary assets and liabilities denominated in foreign currencies bonds that have maturity dates approximating the terms of the at the reporting date are translated to the functional currency at Group’s obligations and that are denominated in the same currency the exchange rate at that date. The foreign currency gain or loss in which the benefits are expected to be paid. The calculation is on monetary items is the difference between amortised cost in performed using the projected unit credit method. Remeasurements the functional currency at the beginning of the period, adjusted for are recognised in profit or loss in the period in which they arise. effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of (g) Income tax the reporting period. Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to Non-monetary assets and liabilities denominated in foreign a business combination, or items recognised directly in equity or in currencies that are measured at fair value are translated to the other comprehensive income. functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are (i) Current tax measured based on historical cost are translated using the exchange Current tax comprises the expected tax payable or receivable on rate at the date of the transaction. the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax Foreign currency differences arising in translation are recognised payable in respect of previous years. Current tax payable also includes in profit or loss, except for differences arising on the translation of any tax liability arising from dividends. available-for-sale equity instruments which are recognised in other comprehensive income. (ii) Deferred tax Deferred tax is recognised in respect of temporary differences (f) Employee benefits between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. (i) Short-term employee benefits Deferred tax is not recognised for: Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is

110 —— temporary differences on the initial recognition of assets or (h) Inventories 01.

liabilities in a transaction that is not a business combination and Inventories are measured at the lower of cost and net realisable value. ABOUT US that affects neither accounting nor taxable profit or loss; The cost of inventories is based on the weighted-average method, and —— temporary differences related to investments in subsidiaries, includes expenditure incurred in acquiring the inventories, production associates and joint arrangements to the extent that the Group or conversion costs and other costs incurred in bringing them to is able to control the timing of the reversal of the temporary their existing location and condition. In the case of manufactured differences and it is probable that they will not reverse in the inventories and work in progress, cost includes an appropriate share foreseeable future; and of production overheads based on normal operating capacity. —— taxable temporary differences arising on the initial recognition of goodwill. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling A deferred tax asset is recognised for unused tax losses, unused tax expenses. 02.

credits and deductible temporary differences, to the extent that it is 2013 RESULTS probable that future taxable profits will be available against which they (i) Assets held for sale or distribution can be used. Deferred tax assets are reviewed at each reporting date Non-current assets, or disposal groups comprising assets and and are reduced to the extent that it is no longer probable that the liabilities, that are expected to be recovered primarily through sale or related tax benefit will be realised. distribution rather than through continuing use, are classified as held for sale or distribution. Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the Such assets, or disposal group, are generally measured at the laws that have been enacted or substantively enacted by the reporting lower of their carrying amount and fair value less cost to sell. Any date. impairment loss on a disposal group is allocated first to goodwill, and then to the remaining assets and liabilities on pro rata basis, except The measurement of deferred tax reflects the tax consequences that that no loss is allocated to inventories, financial assets, deferred tax 03. CORPORATE GOVERNANCE would follow the manner in which the Group expects, at the end of the assets or employee benefit assets, which continue to be measured in reporting period, to recover or settle the carrying amount of its assets accordance with the Group’s other accounting policies. Impairment and liabilities. Deferred tax assets and liabilities are offset if there is losses on initial classification as held for sale or distribution and a legally enforceable right to offset current tax assets and liabilities, subsequent gains or losses on remeasurement are recognised in and they relate to income taxes levied by the same tax authority on profit or loss. Gains are not recognised in excess of any cumulative the same taxable entity, or on different tax entities, but they intend impairment loss. to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously. Intangible assets and property, plant and equipment once classified as held for sale or distribution are not amortised or depreciated. In accordance with the tax legislation of the Russian Federation, tax In addition, equity accounting of equity-accounted investees ceases losses and current tax assets of a company in the Group may not be once classified as held for sale or distribution. 04. SOCIAL RESPONSIBILITY set off against taxable profits and current tax liabilities of other Group companies. In addition, the tax base is determined separately for each (j) Property, plant and equipment of the Group’s main activities and, therefore, tax losses and taxable profits related to different activities cannot be offset. (i) Recognition and measurement Items of property, plant and equipment are measured at cost In determining the amount of current and deferred tax the Group less accumulated depreciation and any accumulated impairment takes into account the impact of uncertain tax positions and whether losses. The cost of certain items of property, plant and equipment additional taxes, penalties and late-payment interest may be due. at 1 January 2008, the Group’s date of transition to IFRSs, was The Group believes that its accruals for tax liabilities are adequate for determined by reference to its fair value at that date. all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies Cost includes expenditure that is directly attributable to the acquisition 05. on estimates and assumptions and may involve a series of judgments of the asset. The cost of self-constructed assets includes the cost of APPENDICES about future events. New information may become available that materials and direct labour, any other costs directly attributable to causes the Group to change its judgment regarding the adequacy of bringing the asset to a working condition for their intended use, the existing tax liabilities; such changes to tax liabilities will impact the tax costs of dismantling and removing the items and restoring the site on expense in the period that such a determination is made. which they are located, and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

Mostotrest Annual Report 2013 111 If significant parts of an item of property, plant and equipment have (ii) Construction contracts asset different useful lives, they are accounted for as separate items (major The construction contracts asset represents an intangible asset components) of property, plant and equipment. identified as part of purchase price allocation to assets and liabilities of the acquiree in a business combination. The construction contracts Any gain or loss on disposal of an item of property, plant and asset is measured at fair value at the date of acquisition, and equipment is determined by comparing the proceeds from disposal subsequently accounted for at cost less accumulated amortisation and with the carrying amount of property, plant and equipment, and is accumulated impairment losses. recognised net within other income/other expenses in profit or loss. The construction contracts asset is amortized during the period of (ii) Subsequent expenditure execution of the contract. The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is (iii) Other intangible assets probable that the future economic benefits embodied within the Other intangible assets that are acquired by the Group, which have component will flow to the Group, and its cost can be measured finite useful lives, are measured at cost less accumulated amortisation reliably. The carrying amount of the replaced component is and accumulated impairment losses. derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred. (iv) Subsequent expenditure Subsequent expenditure is capitalised only when it increases the (iii) Depreciation future economic benefits embodied in the specific asset to which Items of property, plant and equipment are depreciated from the it relates. All other expenditure, including expenditure on internally date when they are installed and are ready for use, or in respect generated goodwill and brands, is recognised in the profit or loss as of internally constructed assets, from the date when the asset is incurred. completed and ready for use. Depreciation is based on the cost of an asset less its estimated residual value. (v) Amortisation Amortisation is based on the cost of the asset less its estimated Depreciation is generally recognised in profit or loss on a straight- residual value. line basis over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the Amortisation is generally recognised in profit or loss on a straight- expected pattern of consumption of the future economic benefits line basis over the estimated useful lives of intangible assets, other embodied in the asset. Leased assets are depreciated over the than goodwill, from the date that they are available for use since this shorter of the lease term and their useful lives unless it is reasonably most closely reflects the expected pattern of consumption of future certain that the Group will obtain ownership by the end of the lease economic benefits embodied in the asset. The estimated useful lives term. Land is not depreciated. for the current and comparative periods are as follows: —— construction contracts 1.5 years; The estimated useful lives of items of property, plant and equipment —— software 3-5 years. for the current and comparative periods are as follows: —— buildings and structures 17 years; Amortisation methods, useful lives and residual values are reviewed at —— machinery and equipment 7 years; each financial year end and adjusted if appropriate. —— vehicles 7 years; —— other PPE 3 years. (l) Amounts due from/ to customers on construction contracts Depreciation methods, useful lives and residual values are reviewed at Amounts due from customers on construction contracts represent each reporting date and adjusted if appropriate. the amount of construction contracts in progress less consideration received by the Group for works already performed. Amounts due (k) Intangible assets from customers are presented separately in the statement of financial position for all contracts in which costs incurred plus recognised (i) Goodwill profits and losses exceeds consideration received. Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated impairment losses. If the consideration received for works performed to date exceeds costs incurred plus recognised profits and losses, then the difference

112 is presented as Due to customers on construction contracts in the Cash and cash equivalents 01. statement of financial position. Cash and cash equivalents comprise cash balances, call deposits and ABOUT US highly liquid investments with maturities of three months or less from Construction contracts in progress represent the gross amount the acquisition date that are subject to insignificant risk of changes in expected to be collected from customers for contract work performed their fair value. to date. It is measured at cost plus profit recognised to date (see note 35(c)(i)) less recognised losses. Cost includes all expenditure In the statement of cash flows, cash and cash equivalents includes related directly to specific projects and an allocation of fixed and bank overdrafts that are repayable on demand and form an integral variable overheads incurred in the Group’s contract activities based on part of the Group’s cash management. normal operating capacity. Available-for-sale financial assets (m) Financial instruments Available-for-sale financial assets are non-derivative financial assets 02.

The Group classifies non-derivative financial assets into the following that are designated as available-for-sale or are not classified in any of 2013 RESULTS categories: loans and receivables and available-for-sale financial the above categories of financial assets. Such assets are recognised assets. initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and The Group classifies non-derivative financial liabilities into the other changes therein, other than impairment losses (see note 35(n)(i)) and financial liabilities category. foreign currency differences on available-for-sale debt instruments (see note 35(e)(i)), are recognised in other comprehensive income and (i) Non-derivative financial assets and financial liabilities – presented within equity in the fair value reserve. When an investment recognition and derecognition is derecognised, the cumulative gain or loss in equity is reclassified to The Group initially recognises loans and receivables and debt profit or loss. Unquoted equity instruments whose fair value cannot securities issued on the date that they are originated. All other reliably be measured are carried at cost. financial assets and financial liabilities are recognised initially on the 03. CORPORATE GOVERNANCE trade date at which the Group becomes a party to the contractual Available-for-sale financial assets comprise equity securities and debt provisions of the instrument. securities.

The Group derecognises a financial asset when the contractual (ii) Non-derivative financial liabilities - measurement rights to the cash flows from the asset expire, or it transfers the The Group classifies non-derivative financial liabilities into the other rights to receive the contractual cash flows on the financial asset financial liabilities category. Such financial liabilities are recognised in a transaction in which substantially all the risks and rewards of initially at fair value less any directly attributable transaction costs. ownership of the financial asset are transferred. Any interest in Subsequent to initial recognition, these financial liabilities are transferred financial assets that is created or retained by the Group is measured at amortised cost using the effective interest method. recognised as a separate asset or liability. Other financial liabilities comprise loans and borrowings, bank 04. SOCIAL RESPONSIBILITY The Group derecognises a financial liability when its contractual overdrafts, and trade and other payables. obligations are discharged or cancelled or expire. Financial assets and liabilities are offset and the net amount presented in the statement Non-controlling interest of financial position when, and only when, the Group has a legal right In accordance with the Law on Limited Liability Companies No. 14-FZ to offset the amounts and intends either to settle on a net basis or to dated 8 February 1998, each participant in a Russian limited liability realise the asset and settle the liability simultaneously. company is entitled to withdraw from the company and receive the book value of its participatory share in the company, if the company’s Loans and receivables charter does not provide for the opposite. Such rights are recognized Loans and receivables are a category of financial assets with fixed as a puttable debt instrument and, therefore, profit or loss attributable or determinable payments that are not quoted in an active market. to minority participants is recognized as finance costs. Such assets are recognised initially at fair value plus any directly 05. attributable transaction costs. Subsequent to initial recognition loans (iii) Share capital APPENDICES and receivables are measured at amortised cost using the effective interest method, less any impairment losses (see note 35(n)(i)). Ordinary shares Ordinary shares are classified as equity. Incremental costs directly Loans and receivables category comprise the following classes of attributable to issue of ordinary shares and share options are financial assets: trade and other receivables as presented in note 18 recognised as a deduction from equity, net of any tax effects. and cash and cash equivalents as presented in note 19.

Mostotrest Annual Report 2013 113 Repurchase, disposal and reissue of share capital (treasury shares) significant are collectively assessed for impairment by grouping When shares recognised as equity are repurchased, the amount of the together assets with similar risk characteristics. consideration paid, which includes directly attributable costs, net of any tax effects, is recognised as a deduction from equity. Repurchased In assessing collective impairment the Group uses historical trends shares are classified as treasury shares and are presented in the of the probability of default, timing of recoveries and the amount of treasury share reserve. When treasury shares are sold or reissued loss incurred, adjusted for management’s judgement as to whether subsequently, the amount received is recognised as an increase current economic and credit conditions are such that the actual losses in equity, and the resulting surplus or deficit on the transaction is are likely to be greater or less than suggested by historical trends. presented in additional paid-in capital. An impairment loss is calculated as the difference between an asset’s (n) Impairment carrying amount, and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses (i) Non-derivative financial assets are recognised in profit or loss and reflected in an allowance account. A financial asset not carried at fair value through profit or loss, When the Group considers that there are no realistic prospects of including an interest in an equity-accounted investee, is assessed recovery of the asset, the relevant amounts are written off. Interest on at each reporting date to determine whether there is any objective the impaired asset continues to be recognised through the unwinding evidence that it is impaired. A financial asset is impaired if objective of the discount. When a subsequent event causes the amount evidence indicates that a loss event has occurred after the initial of impairment loss to decrease and the decrease can be related recognition of the asset, and that the loss event had a negative effect objectively to an event occurring after the impairment was recognised, on the estimated future cash flows of that asset that can be estimated the decrease in impairment loss is reversed through profit or loss. reliably. Available-for-sale financial assets Objective evidence that financial assets (including equity securities) Impairment losses on available-for-sale financial assets are are impaired can include: recognised by reclassifying the losses accumulated in the fair —— default or delinquency by a debtor; value reserve in equity, to profit or loss. The cumulative loss that is —— restructuring of an amount due to the Group on terms that the reclassified from equity to profit or loss is the difference between the Group would not consider otherwise; acquisition cost, net of any principal repayment and amortisation, and —— indications that a debtor or issuer will enter bankruptcy; the current fair value, less any impairment loss previously recognised —— adverse changes in the payment status of borrowers or issuers in profit or loss. Changes in impairment provisions attributable in the Group; to application of the effective interest method are reflected as —— economic conditions that correlate with defaults; a component of interest income. If, in a subsequent period, the fair —— the disappearance of an active market for a security; or value of an impaired available-for-sale debt security increases and —— observable data indicating that there is measurable decrease in the increase can be related objectively to an event occurring after the expected cash flows from a group of financial assets. impairment loss was recognised in profit or loss, then the impairment loss is reversed, with the amount of the reversal recognised in profit In addition, for an investment in an equity security, a significant or or loss. However, any subsequent recovery in the fair value of an prolonged decline in its fair value below its cost is objective evidence impaired available-for-sale equity security is recognised in other of impairment. comprehensive income.

Financial assets measured at amortised cost Equity-accounted investees The Group considers evidence of impairment for these assets at both An impairment loss in respect of an equity-accounted investee is an individual asset and a collective level. All individually significant measured by comparing the recoverable amount of the investment assets are individually assessed for impairment. Those found not to be with its carrying amount. An impairment loss is recognised in profit impaired are then collectively assessed for any impairment that has or loss, and is reversed if there has been a favourable change in the been incurred but not yet identified. Assets that are not individually estimates used to determine the recoverable amount.

114 (ii) Non-financial assets An impairment loss in respect of goodwill is not reversed. In respect 01.

The carrying amounts of the Group’s non-financial assets, other than of other assets, impairment losses recognised in prior periods are ABOUT US inventories and deferred tax assets are reviewed at each reporting assessed at each reporting date for any indications that the loss has date to determine whether there is any indication of impairment. If decreased or no longer exists. An impairment loss is reversed if there any such indication exists, then the asset’s recoverable amount is has been a change in the estimates used to determine the recoverable estimated. For goodwill and intangible assets that have indefinite amount. An impairment loss is reversed only to the extent that the lives or that are not yet available for use, the recoverable amount is asset’s carrying amount does not exceed the carrying amount that estimated each year at the same time. would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets (o) Provisions that generates cash inflows from continuing use that are largely A provision is recognised if, as a result of a past event, the Group 02.

independent of the cash inflows of other assets or CGU. Subject has a present legal or constructive obligation that can be estimated 2013 RESULTS to an operating segment ceiling test, for the purposes of goodwill reliably, and it is probable that an outflow of economic benefits will impairment testing, CGUs to which goodwill has been allocated are be required to settle the obligation. Provisions are determined by aggregated so that the level at which impairment testing is performed discounting the expected future cash flows at a pre-tax rate that reflects the lowest level at which goodwill is monitored for internal reflects current market assessments of the time value of money and reporting purposes. Goodwill acquired in a business combination the risks specific to the liability. The unwinding of the discount is is allocated to groups of CGUs that are expected to benefit from the recognised as finance cost. synergies of the combination. (i) Warranties The Group’s corporate assets do not generate separate cash inflows A provision for warranties is recognised when the underlying products and are utilised by more than one CGU. Corporate assets are or services are sold. The provision is based on historical warranty allocated to CGUs on a reasonable and consistent basis and tested for data and a weighting of all possible outcomes against their associated 03. CORPORATE GOVERNANCE impairment as part of the testing of the CGU to which the corporate probabilities. asset is allocated. (ii) Onerous contracts The recoverable amount of an asset or CGU is the greater of its A provision for onerous contracts is recognised when the expected value in use and its fair value less costs to sell. In assessing value in benefits to be derived by the Group from a contract are lower than use, the estimated future cash flows are discounted to their present the unavoidable cost of meeting its obligations under the contract. value using a pre-tax discount rate that reflects current market The provision is measured at the present value of the lower of the assessments of the time value of money and the risks specific to the expected cost of terminating the contract and the expected net cost asset or CGU. of continuing with the contract. Before a provision is established, the Group recognises any impairment loss on the assets associated with An impairment loss is recognised if the carrying amount of an asset that contract. 04. SOCIAL RESPONSIBILITY or its related cash-generating unit (CGU) exceeds its estimated recoverable amount. (p) Leases

Impairment losses are recognised in profit or loss. Impairment (i) Determining whether an arrangement contains a lease losses recognised in respect of CGUs are allocated first to reduce the At inception of an arrangement, the Group determines whether such carrying amount of any goodwill allocated to the CGU (group of CGUs), an arrangement is or contains a lease. This will be the case if the and then to reduce the carrying amounts of the other assets in the fulfilment of the arrangement is dependent on the use of a specific CGU (group of CGUs) on a pro rata basis. asset and the arrangement conveys a right to use the asset.

05. APPENDICES

Mostotrest Annual Report 2013 115 At inception or upon reassessment of an arrangement, the Group profit or loss attributable to ordinary shareholders of the Company by separates payments and other consideration required by such an the weighted average number of ordinary shares outstanding during arrangement into those for the lease and those for other elements the period, adjusted for own shares held. Diluted EPS is determined on the basis of their relative fair values. If the Group concludes for by adjusting the profit or loss attributable to ordinary shareholders a finance lease that it is impracticable to separate the payments and the weighted average number of ordinary shares outstanding, reliably, then an asset and a liability are recognised at an amount adjusted for own shares held, for the effects of all dilutive potential equal to the fair value of the underlying asset. Subsequently the ordinary shares, which comprise convertible notes and share options liability is reduced as payments are made and an imputed finance granted to employees. charge on the liability is recognised using the Group’s incremental borrowing rate. (r) Segment reporting An operating segment is a component of the Group that engages (ii) Leased assets in business activities from which it may earn revenues and incur Assets held by the Group under leases that transfer to the Group expenses, including revenues and expenses that relate to transactions substantially all the risks and rewards of ownership are classified as with any of the Group’s other components. All operating segments’ finance leases. Upon initial recognition the leased asset is measured operating results are reviewed regularly by the Group’s CEO, who is at an amount equal to the lower of its fair value and the present value the Group’s chief operating decision maker, to make decisions about of the minimum lease payments. Subsequent to initial recognition, resources to be allocated to the segment and assess its performance. the asset is accounted for in accordance with the accounting policy applicable to that asset. Segment results that are reported to the Group’s CEO include items directly attributable to a segment as well as those that can be Other leases are operating leases and the leased assets are not allocated on a reasonable basis. recognised on the Group’s statement of financial position. Segment capital expenditure is the total cost incurred during the year (iii) Lease payments to acquire property, plant and equipment, and intangible assets other Payments made under operating leases are recognised in profit than goodwill. or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease 36. New standards and interpretations expense, over the term of the lease. not yet adopted The following new Standards, amendments to Standards and Minimum lease payments made under finance leases are apportioned Interpretations are not yet effective as at 31 December 2013, and have between the finance expense and the reduction of the outstanding not been applied in preparing these consolidated financial statements. liability. The finance expense is allocated to each period during the The Group has not yet analysed the likely impact of the new standards lease term so as to produce a constant periodic rate of interest on the and improvements on its financial position or performance. The Group remaining balance of the liability. plans to adopt these pronouncements when they become effective.

(iv) Other expenses —— IFRS 9 Financial Instruments is to be issued in phases and To the extent that the Group’s contributions to social programs is intended ultimately to replace International Financial benefit the community at large and are not restricted to the Group’s Reporting Standard IAS 39 Financial Instruments: Recognition and employees, they are recognised in profit or loss as incurred. Measurement. The first phase of IFRS 9 was issued in November 2009 and relates to the classification and measurement of (q) Earnings per share financial assets. The second phase regarding classification and The Group presents basic and diluted earnings per share (“EPS”) measurement of financial liabilities was published in October data for its ordinary shares. Basic EPS is calculated by dividing the 2010. The Group recognises that the new standard introduces

116 many changes to the accounting for financial instruments and have been allocated. Under the amendments, the disclosure of 01.

is likely to have a significant impact on Group’s consolidated information about the recoverable amount of impaired assets ABOUT US financial statements. The impact of these changes will be will be required only when the recoverable amount is based analysed during the course of the project as further phases of on fair value less costs of disposal. The amendments apply the standard are issued. The Group does not intend to adopt this retrospectively for annual periods beginning on or after 1 January standard early. 2014. Early application is permitted, which means that the —— Investment Entities (Amendments to IFRS 10, IFRS 12 and amendments can be adopted at the same time as IFRS 13. IAS 27) will be effective for annual periods beginning on or —— IFRIC 21 Levies provides guidance on accounting for levies in after 1 January 2014. The amendments introduce a mandatory accordance with the requirements of IAS 37 Provisions, Contingent consolidation exception for certain qualifying investment Liabilities and Contingent Assets. The interpretation defines entities. A qualifying investment entity is required to account a levy as an outflow from an entity imposed by a government in for investments in controlled entities, as well as investments in accordance with legislation. Levies do not arise from executory 02.

associates and joint ventures, at fair value through profit or loss. contracts or other contractual arrangements. However, outflows 2013 RESULTS The consolidation exception will not apply to subsidiaries that within the scope of IAS 12 Income taxes, fines and penalties, are considered an extension of the investment entity’s investing and liabilities arising from emission trading schemes are activities. The amendments are to be applied retrospectively explicitly excluded from the scope. The interpretation confirms unless impracticable. that an entity recognises a liability for a levy when – and only —— Amendments to IAS 32 Financial Instruments: Presentation - when – the triggering event specified in the legislation occurs. Offsetting Financial Assets and Financial Liabilities specify that an An entity does not recognise a liability at an earlier date, even entity currently has a legally enforceable right to set-off if that if it has no realistic opportunity to avoid the triggering event. right is not contingent on a future event; and enforceable both The interpretation is effective for annual periods commencing in the normal course of business and in the event of default, on or after 1 January 2014. The interpretation is applied on insolvency or bankruptcy of the entity and all counterparties. a retrospective basis. Early adoption is permitted. The amendments are effective for annual periods beginning on or —— Amendments to IAS 39 Novation of Derivatives and Continuation 03. CORPORATE GOVERNANCE after 1 January 2014, and are to be applied retrospectively. of Hedge Accounting add a limited exception to IAS 39, to provide —— Amendments to IAS 36 Recoverable Amount Disclosures for Non- relief from discontinuing an existing hedging relationship when Financial Assets. The IASB has issued amendments to reverse the a novation that was not contemplated in the original hedging unintended requirement in IFRS 13 Fair Value Measurement to documentation meets specific criteria. The amendments are disclose the recoverable amount of every cash-generating unit effective for annual periods beginning on or after 1 January 2014. to which significant goodwill or indefinite-lived intangible assets Early application is permitted.

04. SOCIAL RESPONSIBILITY

05. APPENDICES

Mostotrest Annual Report 2013 117 | RISK MANAGEMENT

Risk management is a cornerstone of strategic management and Mostotrest Ongoing Risk Management Efforts internal control. —— Development of corporate risk management culture; —— Development of a reliable information and research The Company has an integrated risk management system in place database to support decision-making; that acts to prevent or minimize the impact of negative factors on its —— Implementation of international Project Management operations. (EPCM) standards developed by the Project Management Institute (PMI), a leading international project management association; The risk management process involves: —— Risk management planning; risk identification and assessment; Risk identification and assessment —— Development of investment risk management programs; —— Insurance of contract liabilities; —— Ongoing monitoring of competitors, their management Elaboration of risk response measures methods and business activity; and risk containment within admissible limits —— Reassignment of risks to subcontractors («mirror» counter-guarantees); — Continuous monitoring of risk factor dynamics — Ongoing improvement of the budgeting system; —— Centralised procurement.

Ensuring effectiveness of control measures and activities Project Management as Component of Risk Management System The Company operates an integrated information system (IS) utilising software from leading Russian and foreign vendors. Different IS The risk management policy and systems are reviewed regularly to segments are used for managing Mostotrest subsidiaries and affiliates, ensure they reflect changes in market conditions and the Group’s monitoring subcontractor operations (including control over financial operations. The Group sets training and management standards reporting), creating commercial and financial models, and monitoring and procedures that support the development of a disciplined and operating costs. constructive control environment in which all employees understand their roles and responsibilities. One of the key components of Mostotrest’s IS is Spider Project, a cutting-edge professional project management software that allows The Board of Directors’ Audit Committee oversees the management’s the Company to generate detailed calendar and resource models for performance with regard to its duty to control compliance with the upcoming projects, including assessments of deadlines, budgets and adopted risk management rules and procedures. The Company’s likely financial outcomes. Currently, the calendar and resource planning Internal Control Service assists the Audit Committee in controlling and reporting system covers the entire backlog of the Company. and overseeing the system. The Internal Control Service carries out scheduled and random audits of risk management controls and The project management system enables Mostotrest to generate procedures, and submits its reports to the Audit Committee. realistic production schedules, balance distribution of resources between in-house and subcontracted volumes, evaluate economic benefits of Mostotrest Key Risk Management Methods various production solutions, monitor the revenue and expenditure sides —— Rejection of risky investments, unreliable partners and customers; of the budget, and ultimately manage construction in the most effective —— Insurance; way. —— Financial planning; —— Compliance with relevant standards; The unique project planning system adopted at Mostotrest has been —— Coordination and coherence of management programs and highly praised by KPMG in the course of an international audit of the processes supporting the Company’s development. planning system.

118 01.

Key Risk Factors ABOUT US The main risk factors, which are taken into account in planning the Company’s operations are set out below

Risk Risk Description Risk Signif- Mostotrest Approach Material Facts and icance and to Risk Management Risk Management in 2013 Probability

Country Risk

Risk of government The share of orders from government Significance: Mostotrest is quite conservative in its Mostotrest focused on participat- customers bodies and agencies in Mostotrest’s High approach to selecting potential projects, ing in major priority tenders, such backlog exceeds 90%. giving preference to high priority state as Section 6 of the M-11 «Mos- infrastructure projects. cow – St. Petersburg» Highway, Consequently, the demand for the the Usman Bypass on the M-4 Group’s services depends directly on Probability: Projects in this category currently 02. High «Don» Highway and continued 2013 RESULTS the readiness of the government to include construction of the toll highway reconstruction of the M-9 «Baltic» pursue transport infrastructure devel- M-11 «Moscow - St. Petersburg», Highway. opment projects. transport infrastructure development in Moscow and other major Russian cities, In the second half of the year, Government revenue, largely driven by and the development of the national toll Mostotrest successfully won the oil and commodity prices, has a direct road network and major international above tenders, increasing its impact on the level of government airports. backlog by 26%. spending, including on infrastructure projects. A focus on priority government projects In 2013, the President of Russia reduces the risk of a project pipeline ordered financing from the With respect to ongoing projects, the shortfall. National Welfare Fund to be allo- impact of adverse macroeconomic cated to the development of the factors on the state budget may lead to country’s transport infrastruc- the government postponing completion ture, including construction of or reducing the scope of projects, or the M-11 Highway and Moscow’s otherwise modifying or abandoning Central Ring Road (CRR). Mosto- projects or delaying payments to trest is advantageously placed at 03. contractors. both sites, which increases the CORPORATE GOVERNANCE Company’s chances of winning the forthcoming tenders.

Operational and Industry Risks

Risks associated with Mostotrest operations are exposed Significance: Historically, Mostotrest has an Well-established internal proce- Mostotrest contract to a number of risks inherent in the High impeccable reputation in the field of dures and effective project man- liabilities infrastructure construction industry infrastructure construction. Throughout agement enable Mostotrest to as a whole, as well as specific risks our 80-year history, our customers have deliver all its projects on time or, associated with complex projects Probability: had no significant complaints about the on occasion, ahead of schedule. 04.

undertaken by the Company. quality of completed projects. SOCIAL RESPONSIBILITY Low Currently, Mostotrest is ahead of A key operational risk is the risk of To ensure effective management schedule in building the Vyshny fulfilling the Group’s post-tender con- of operational risk, the Company Volochyok Bypass on the M-11 tractual commitments to customers, implemented a number of procedures, «Moscow - St. Petersburg» namely delivering projects on time and including the OSH management system, Highway. to the required standard. internal budgeting process, as well as project management standards and Despite significant customer requirements for preparation of project delays in relation to site prepa- documentation, resource planning, ration for the construction of the budgeting and internal workflow. Kurortny Avenue Relief Road and other infrastructure in Sochi, The Company’s information systems Mostotrest mobilized all its re- allow it to estimate schedules for com- sources to complete the projects pletion of construction assignments, in time for the Olympics. determine the required scope of work and analyze costs associated with each phase of the project. 05. APPENDICES Different types of insurance cover a number of risks associated with pro- jects undertaken by Mostotrest. Diversified customer base, dispersed operations and geographic presence further reduce operational risks.

Mostotrest Annual Report 2013 119 Risk Risk Description Risk Signif- Mostotrest Approach Material Facts and icance and to Risk Management Risk Management in 2013 Probability Operational and Industry Risks

Risks associated with Transport infrastructure projects are Significance: Mostotrest experts scrutinize tender In 2013, major Mostotrest projects customer’s contract often located on land belonging to or High documentation prior to submission of affected by construction site liabilities leased by third parties with residential, bids and give preference to projects preparation delays included: commercial or industrial premises. where responsibility for construction 1. Kurortny Avenue Relief Road Project sites may also be in areas with Probability: site clearance is clearly defined. In 2. km 15 – km 58 section physical or legal constraints for project High densely populated areas, the risk of of the М-11 «Moscow – design (for example, environmental delays to the release of land is scruti- St. Petersburg» Highway constraints). Usually, customers bear nised very closely and an assessment is 3. Northern Belt Road between the responsibility for construction site embedded in cost estimates. Businovskaya Interchange clearance and the relocation of utility and Festivalnaya Street and communication lines. Timely completion and delivery of 4. Businovskaya Interchange. construction projects is a priority for Customers may fail to fulfill or only Mostotrest. The Company is flexible even Nevertheless, Kurortny Avenue partially fulfill their obligations, which in the event of a delay by the customer. Relief Road in Sochi still opened may cause delays in construction and Preliminary work can be carried out to traffic in time for the Olympic increase costs. even when the land is not fully cleared or Games. The Company is making only partially cleared. efforts to bridge the delays in the For administrative, political or other rest of the above projects in 2014. reasons, public authorities may delay In parallel with the preparation of land formal acceptance of construction by the customer, Mostotrest is able to In 2013, Mostotrest faced payment projects, which may result in delayed carry out preparatory construction delays for delivered volumes on payments for completed work. work, deploy its workforce in essential some projects. In 1H 2013, the areas, and deliver the required machin- Company raised loans to finance Payment delays and additional costs ery and construction materials. This working capital, and as a result may have a negative impact on the minimises the negative impact from both accounts receivable and debt Group’s cash flow and lead to a signifi- delayed land release and enables the increased at the half year stage. cant build-up in receivables. Company to start construction as soon However, all outstanding customer as practicable. amounts were settled before the year end. In addition, Mostotrest In recent years, large integrated received advances under both new projects have been gaining ground. and ongoing contracts. Contractors under such contracts are involved in site clearance. In addition a growing number of contracts now include long-term maintenance and operating stages. Mostotrest has an excellent reputation among government customers, which helps facilitate dialogue with these customers in the event of challenges, and supports the Company’s efforts to ensure customers meet their own obligations

120 Risk Risk Description Risk Signif- Mostotrest Approach Material Facts and 01. icance and to Risk Management Risk Management in 2013 ABOUT US Probability

Risks associated with Hiring construction subcontractors ex- Significance: Mostotrest prefers cooperation with re- Several subcontractors failed to Mostotrest role as poses Mosototrest to risks involved in High liable partners, who have longstanding meet their contractual obligations general contractor managing those operations effectively relationships with the Company. under Sochi-based construction projects . Mostotrest was able to In addition, there may also be the risk In some cases, provisions are made to Probability: promptly replace these subcon- of shortage of qualified and experi- cover subcontractor liabilities. tractors and build certain volumes enced subcontractors, as well as the Medium When hiring subcontractors, Mostotrest using its own capacity. The need risk of default by subcontractors after to perform additional non-core they receive advance payments. usually requires submission of coun- ter-guarantees covering subcontractor operations had a negative impact liabilities, that mirror Mostotrest’s own on project costs. contractual liabilities with its respective The Company made provisions customers. for doubtful receivables under Mostotrest maintains an extensive Sochi-based projects, including 02. database of subcontractors and gives as a result of under-delivery of 2013 RESULTS preference to the most reliable and volumes by subcontractors against trusted partners. advances paid. The Company is currently involved in litigation and negotiations to recover such provisions. In 2013, no new projects with significant non-core volumes were added to the Group’s backlog.

03. CORPORATE GOVERNANCE

Risks associated with Mostotrest’s role as a subcontractor Significance: The Company is very thorough when In 2013, no risks arose out of Mostotrest’s role as creates the risk of direct dependence Medium choosing both subcontractors and contracts under which Mostotrest subcontractor on general contractors. general contractors. acted as a subcontractor. Mostotrest depends on the general Mostotrest has established solid In 2013, the Group added new sub- contractor who is responsible for over- Probability: partnerships with industry leaders contractor contracts for RUB1.6 all project management, coordination Low such as SK MOST, ARKS, , and billion to its backlog. and other aspects of the construction others. Having a strong reputation in process, including timely access to the the industry, Mostotrest tries to choose project site, completeness and quality partners that reflect its own corporate of technical specifications, access culture and construction management to project engineers, preparation of approach. auxiliary territories in close proximity 04. to construction sites, access to utilities A steadily growing backlog that covers SOCIAL RESPONSIBILITY and other services, as well as for revenue for several years ahead allows addressing various operational issues Mostotrest to be selective when choos- to ensure project completion. Without ing new projects, including as a subcon- the general contractor’s cooperation tractor, and avoid risky engagements. on these aspects, Mostotrest may be Currently, only 3% of contracts in the unable to complete projects within Company’s backlog are subcontractor budget and on time. contracts. In line with its strategy, Mostotrest prefers to act as a general contractor where it can control all as- pects of project implementation.

05. APPENDICES

Mostotrest Annual Report 2013 121 Risk Risk Description Risk Signif- Mostotrest Approach Material Facts and icance and to Risk Management Risk Management in 2013 Probability Operational and Industry Risks

Risk of regulatory Regulatory changes during the term of Significance: Mostotrest lawyers closely monitor In 2013, amendments were made changes a contract may result in the occurrence Medium the Russian legislation and promptly to Federal Law 44-FZ «On the of relevant risks. respond to relevant changes. Contracting System, which entered into force in January 2014. In particular, changes in taxation may All projects Mostotrest bids for are directly affect the economics of the Probability: thoroughly appraised, including in terms project. Low of legal compliance and their fit with the Group’s tendering strategy. In addition, the need to comply with a large number of regulations, building Mostotrest gives preference to those codes and standards may also poten- projects that are most transparent and tially generate risks. intelligible from a technical, financial and legal standpoint.

Risk of commodities Materials price fluctuations may result Significance: To mitigate the risk, Mostotrest embeds In 2013 prices for materials, par- and construction in increased project costs. Medium inflation projections and other essential ticularly cement, crushed stone, materials price factors that influence project profitabil- macadam mixes, rolled steel and volatility ity into its budgets prior to submitting steel structures decreased. bids. Probability: Medium For most commodities and materials Mostotrest operates a centralised pro- Overall, materials prices de- curement system from its head office creased by 4% in 2013. The share that closely monitors inventories, en- of materials costs as percentage of ables favorable terms to be negotiated revenue was 16%, down from 21% with suppliers and controls the supply in 2012. process. To manage price inflation risk after winning a tender, Mostotrest assesses the volumes of materials required for execution and their current market value. In the event of a high likelihood of price increases, the Company is able to purchase the required materials in advance.

Risk of adverse Failure to complete and deliver projects Significance: Mostotrest projects are insured against In 2013, Mostotrest faced un- weather or natural in accordance with contract terms, due Medium unforeseen weather and climate events. foreseen weather events in Sochi disaster to long-term adverse weather condi- where heavy rains caused flooding. tions, natural calamities and disasters Because all its construction may result in project cost overruns. Probability: projects were insured, Mostotrest Low received compensation for the losses suffered due to adverse weather conditions.

122 Risk Risk Description Risk Signif- Mostotrest Approach Material Facts and 01. icance and to Risk Management Risk Management in 2013 ABOUT US Probability

Risks associated The construction industry is charac- Significance: Mostotrest pays particular attention In 2013, to ensure high standards with the use of heavy terized by specific types of operations Medium to training its employees in health and of health and safety, the Company machinery and haz- that increase the risk of accidents. safety. conducted various activities, ardous materials These include construction site oper- including: ations, operation of large machinery The Company believes that its standards Probability: and procedures meet industrial safety 1. Audits of health and safety and equipment, and other hazardous Low operations. requirements. conditions on construction sites, and checks of amen- ity premises and sanitary facilities 2. Seminar for the Company’s OSH officers, also involving representatives of the State Labor Inspectorate 02. 2013 RESULTS 3. Network meetings of chief engineers, chief machine men, chief power engineers and production and technical service managers, with reports on OSH conditions

03. CORPORATE GOVERNANCE

M&A risk The Company’s expansion through Significance: Mostotrest policy is to take controlling In 2013, Mostotrest divested its M&A exposes it to certain operating High stakes in acquired/target companies, in shareholding in Engtransstroy risks. order to facilitate their integration and (ETS), originally acquired in 2010. promote the Group’s corporate culture Relations with minority shareholders across its subsidiaries. The ETS divestment was driven by of acquired companies may also poten- Probability: the following: tially carry certain risks. Low Potential transactions are tested for le- gal compliance and economic feasibility 1. ETS financial performance prior to being submitted to the Board of had a negative impact on Directors for approval. the Group’s overall financial results Important strategic acquisitions are included in the agenda of the General 2. Completion of development Shareholders’ Meeting. at Mostotrest and TSM of 04.

the general contracting SOCIAL RESPONSIBILITY expertise, which had been the main driver behind the acquisition in 2010 of ETS, a general contractor

05. APPENDICES

Mostotrest Annual Report 2013 123 Risk Risk Description Risk Signif- Mostotrest Approach Material Facts and icance and to Risk Management Risk Management in 2013 Probability Financial Risks

Credit risk Credit risk is the probability of a Significance: The management has developed a credit Revenue from its two largest cus- financial loss to the Group if a customer High policy involving assessment of custom- tomers accounted for 28% and 15% or counterparty fails to perform its ers’ credit quality. of the Company’s total revenue. contractual obligations. The Group analyses external credit Trade receivables from the Group’s In particular, such losses may occur in Probability: ratings (if any) and, in some cases, bank two largest customers at year end case of significant amounts of receiv- Low references. Transactions with customers 2013 amounted to RUB7.7 billion ables, loans issued and investment included in the high-risk category are (RUB5.3 billion at the end of 2012). securities. The Group’s exposure to carried out on a prepayment basis and Overdue receivables at year end credit risk depends essentially on are subject to management authoriza- 2013 amounted to RUB222 million the individual characteristics of each tion. (RUB41 million at the end of 2012). customer. The Group makes impairment provisions As at December 31, 2013, cash covering trade and other receivables and and cash equivalents amounted to investments, based on the amount of RUB25.6 billion, which represents actual credit losses previously incurred. the maximum level of credit risk on The amount is determined based on past such assets. payment statistics for similar financial assets. Due to a significant volume of current orders, Mostotrest over More than 90% of projects in the Group’s the next few years has the ability backlog are for government customers to be selective in respect of new and agencies whose credit risk, as a projects, which facilitates credit rule, is assessed as low. Therefore, risk containment. credit risk is concentrated on a few large customers. The Group invests only in liquid securities and does not expect any counterparty defaults. Cash and cash equivalents are placed with banks and financial institutions with credit ratings from BB- to BBB, as defined by Fitch and Standard & Poor’s rating scales

Market risk Volatility of financial markets could Significance: The Group makes efforts to control Weighted average rates for bank lead to fluctuations in the cost of Low market risk exposure and contain market loans and finance lease obliga- borrowings, changes in equity prices risk within acceptable limits, while opti- tions at the end of 2013 were 8.9% and foreign exchange rates, which may mizing return on investment. and 14.7%, respectively, down by adversely affect the Group’s profits 0.2 pp. and 1.5 pp., compared to the Probability: Mostotrest management does not or the value of its existing financial Low rates at the end 2012. instruments. limit itself to the use of either fixed- or floating-rate loans exclusively. When There were no borrowings in contemplating new loans, the decision to foreign currency in Mostotrest’s favour fixed or floating rates, depends on portfolio. the prevailing environment and corre- sponding benefits. A solid financial position and its repu­ tation as a reliable borrower among the leading Russian and foreign banks significantly reduces the risk of fluctua- tions in the Company’s cost of borrowing. Mostotrest subsidiaries benefit from the same favorable credit terms as the parent company. Almost all payments to suppliers and contractors are denominated in rubles. There are no borrowings in foreign cur- rencies, the value of which is tied to float- ing interest rates in the Company’s loan portfolio. This virtually eliminates the risk of foreign exchange rate fluctuations.

124 Risk Risk Description Risk Signif- Mostotrest Approach Material Facts and 01. icance and to Risk Management Risk Management in 2013 ABOUT US Probability

Liquidity risk In the event of free cash flow shortage, Significance: Mostotrest approach is to manage the Mostotrest timely fulfills its finan- the Group may experience difficulties High risk by maintaining, as far as possible, cial obligations. in fulfilling its financial obligations. sufficient liquidity at all times, to meet its liabilities, both under normal and The total balance of unused bank distressed conditions, without incurring credit limit at the end of 2013 Probability: amounted to RUB50.3 billion. Low unacceptable losses or compromising the Group’s reputation. Management estimates that this is sufficient to maintain liquidity For the purposes of short-term financing of the Group in the foreseeable of working capital, the Group has credit future. line agreements with a number of leading Russian banks. The terms of these agree- Cash and cash equivalent balances ments extend to subsidiaries of the Group. at the end of 2013 amounted to RUB25.6 billion, compared to an opening balance at the start of the 02. 2013 RESULTS year of RUB8.9 billion. . Cash in the reporting year was used to finance working capital, repay loans used for acquisitions completed in 2012, and pursue the Group’s investment program. Thus, with debt of RUB4.5 billion, negative net debt of the Group amounted to RUB22.0 billion.

Personnel risks 03. CORPORATE GOVERNANCE Risk of loss of quali- Personnel turnover, in the case of Significance: To minimize the risk, the Group’s In 2013, Mostotrest staffing levels fied personnel its increase or changes in working High personnel policy is aimed at creating remained stable, with a turnover conditions, may lead to a shortage of favorable working conditions, motivating rate below the industry average. qualified personnel. employees, and creating opportunities The risk of losing skilled profes- for professional development and career sionals did not change significantly. Implementation of technically complex Probability: Low growth. The employee compensation is infrastructure projects exposes the based on the principle of fair economic Group to a significant risk of injuries to reward and consists of fixed and variable employees. components, as well as the provision of social benefits. Specific measures are adopted to reduce the OSH risk in certain types of opera- tions, including compliance with legal and regulatory requirements, and implemen- tation of the OSH Management System. 04. SOCIAL RESPONSIBILITY

Technology-Related and Environmental Risks

Risk of negative envi- Mostotrest operations may have Significance: Minimizing the negative effects of the Environmental responsibility is ronmental impact a potential negative impact on the High Company’s operations on the environment a priority in implementation of environment. and on human health is a management many of the Company’s projects. priority. Specifically, Mostotrest is paying particular attention to environmen- Probability: When planning its operations, the Compa- Medium tal issues in its project to build the ny aims to reduce any negative impact on toll section (km 15 – km 58 ) of the the environment. M-11 “Moscow – St. Petersburg“ Highway. The Company has adopted a corporate 05.

policy in the field of OSH and environmen- APPENDICES tal protection. All operations are carried out in accord- ance with applicable Russian environmen- tal safety legislation.

In addition to the above, Mostotrest is exposed to a number of other risks. More information about the risks associated with the Group’s operations can be found in the international prospectus drafted in connection with the initial public offering of Mostotrest shares, available on our corporate website at (http://mostotrest.ru/investors/disclosing_information/international-investment-memorandum/,Section “Risk Factors“, pp. 10–41).

Mostotrest Annual Report 2013 125 | BASIS FOR PRESENTATION OF INFORMATION

Important information Some of the information contained in this report may contain have not been and will not be registered under the United States projections or other forward-looking statements regarding Securities Act 1933 (hereinafter as amended and supplemented – Mostotrest performance. Such projections and statements Securities Act) and may not be offered or sold in the United are indicated with words and expressions such as “expects”, States in the absence of registration under the Securities Act or “anticipates”, “estimates”, “plans”, “will”, “may”, “could”, an exemption from registration under the Securities Act or in “possibly”, including their negative forms and other words and a transaction that is not governed by registration provisions of the expressions that have similar meaning. Mostotrest draws your Securities Act. Any failure to comply with this restriction may result attention to the fact that such statements are only predictions and in a violation of US securities laws. assumptions with respect to future events and performance, while actual future events and performance may differ materially from In the United Kingdom, this presentation is being distributed to those projected. Mostotrest declares that forecasts contained in and is only directed at (i) persons who are outside the United this communication will not be subject to adjustment to reflect Kingdom and (ii) persons inside the United Kingdom, who are (a) occurrence of any projected future events or those events, the investment professionals falling within Article 19(5) of the Financial occurrence of which was not known in advance. The actual future Services and Markets Act 2000 (Financial Promotion) Order 2005 results may differ materially from those projected by Mostotrest, (the “Order”) or (b) high net worth companies, and other persons to due to the influence of a number of factors. Such factors may whom it may lawfully be communicated, falling within Article 49(2) include general economic conditions, our competitive environment, (a) to (d) of the Order (all such persons in (i) and (ii) above together risks associated with economic activities in the Russian being referred to as “relevant persons”). Any invitation, offer or Federation, changing conditions in the Russian infrastructure agreement to subscribe, purchase or otherwise acquire securities construction market, as well as many other risks specifically will be engaged in only with, relevant persons. Any person who is related to Mostotrest and its activities. not a relevant person should not act or rely on this presentation or any of its contents. Information contained herein is not intended for publication or distribution in whole or in part, directly or indirectly in or into No other person should be guided by these materials or rely the United States of America. These materials do not contain or on their content. Distribution of information contained herein constitute an offer for sale or purchase of securities in the United is limited. Information contained herein is not intended for States or any other jurisdiction. The securities referred to herein distribution in whole or in part in Australia, Canada or Japan.

126 01. ABOUT US Basis of Presentation This report contains information on the performance of The audited consolidated financial statements of the Group as at OAO “Mostotrest” (MSTT, or together with its consolidated and for the year ended 31 December 2013 includes the results of subsidiaries OOO “Transstroymekhanizatsiya” (TSM), OOO “United TSM, UTS, Mostotrest-Service and Plexy Ltd. It also includes the Toll Systems” (UTS), ZAO “Mostotrest-Service“ (Mostotrest-Service, results of ETS for the period from 1 January 2013 to its disposal formerly ZAO NITP) and Plexy Limited – Mostotrest, the Company date of 31 January 2013. The analysis of discontinued operations is or the Group). not the part of this report.

All data in this document is provided on the basis of the For the purposes hereof, the Group obtained certain statistical, consolidated results of the Group excluding the results of market and pricing information relating to the Russian 02.

OOO “Engtransstroy Corporation“ (ETS) which was sold at the infrastructure market and its specific aspects from the following 2013 RESULTS beginning of 2013. The impact of the deconsolidation of the external sources: Ministry of Transport of the Russian Federation discontinued ETS segment is detailed in the Group financial (hereinafter - Ministry of Transport), the State Company Avtodor statements. (hereinafter - Avtodor), the Department of Finance of the Government of Moscow, the website http://zakupki.gov.ru and The financial information presented in this announcement reports prepared by PMR dated 7 April 2011 and EMBS Group is based on the audited consolidated financial statements of dated 12 April 2012, 18 April 2013 and 10 April 2014 (the Reports). OAO “Mostotrest“ prepared in accordance with International This information is reproduced by the Group with precision in Financial Reporting Standards(“IFRS”) as at and for the years its original form and, as far as the Group can ascertain on the ended 31 December 2013 and 2012. basis of information published by such third-party sources, such information did not omit any facts, so that it could be materially The consolidated financial information of the Group is presented inaccurate or misleading. The Group has not independently verified 03. CORPORATE GOVERNANCE in Russian rubles, the Company’s functional currency which, in the this or other information coming from third parties. In addition, opinion of management, is the most comprehensible currency to official data published by government agencies of the Russian primary users of the financial statements. Federation may be significantly less complete or backed by research, than in more developed countries. PMR and EMBS Group The audited consolidated financial statements of the Group as at have given and not withdrawn their consent to the inclusion of and for the year ended 31December 2012 includes the results of information from the Reports to this report. TSM (acquired on 13 May 2010); ETS (acquired on 28 June 2010 and disposed on 31 January 2013), UTS (incorporated on 17 May 2011), All financial and operational information contained in this It also includes the results of Mostotrest-Service for the period announcement and that has not been prepared in accordance from its acquisition date of 5 July 2012 through to 31 December with IFRS is intended solely for use as analytical material, and 2012 and Plexy Ltd. which owns 50% stake in the North-West investors should not consider this information separately or in 04. SOCIAL RESPONSIBILITY Concession Company (NWCC) for the period from its acquisition any combination as an alternative to the analysis of consolidated date of 25 December 2012 through to 31 December 2012. financial statements of the Group and financial information in accordance with IFRS, which can be found on the corporate website of Mostotrest: www.mostotrest.ru.

05. APPENDICES

Mostotrest Annual Report 2013 127 | KEY TERMS AND DEFINITIONS

Amount of works performed using own in-house capabilities is Municipalities include Administrations, Department for motorways and the total revenue from construction contracts less cost of services of management of motorway traffic in cities subcontractors Net cash volumes is the negative value of net debt Average tender size is calculated on the basis of the total cost and Net debt is defined as the difference between the total amount of short- number of tenders published by the official Russian Federation public term and long-term loans and borrowings and cash and cash equivalents procurement information website http://zakupki.gov.ru Net margin is net profit divided by revenue Avtodor (Russian Highways State Company) is a State Company Net working capital is defined as the difference between current established to upgrade and develop Russia’s existing road infrastructure operating assets (net of cash and equivalents, income tax receivable and network, including the major . It manages the other non-current assets) and current operating non-interest bearing design, construction, repair and maintenance functions of the Company’s liabilities (net of loans and borrowings, provisions, non-controlling highway projects, develops the Company’s highways infrastructure and interest and income tax liabilities) services, and attracts private investment using public-private partnership PMR is independent industry consultancy which provides market Backlog – the relevant entity’s backlog represents management’s information advisory services in respect of Central and Eastern European estimate of the contract value of its projects that remain to be completed countries and other emerging markets as at a particular date, excluding VAT. Backlog is not a measure defined Public–private partnership (PPP) – describes a government service by IFRS or RAS or private business venture which is funded and operated through EBITDA is defined as Earnings before interest, tax, depreciation and a partnership of government and one or more private companies with the amortisation. EBITDA is not defined by, or presented in accordance with, aim of carrying out long-term investment projects under mutually agreed IFRS or RAS. EBITDA is presented as a supplemental measure of the conditions entity’s operating performance. EBITDA has limitations as an analytical RAS means Russian Accounting Standards tool, and investors should not consider it in isolation, or as a substitute for Regional governments include local governments such as Moscow City analysis of the entity’s operating results as reported under IFRS government and local authorities, Department of Transportation and EBITDA margin is EBITDA divided by revenue Road Facilities of Vladimir Region, etc. Effective tax rate is computed by dividing total income tax expense by the Roadshow – a series of meetings of the management with investors and company’s earnings before tax net of changes in non-controlling interest shareholders in TSM’s profit reported as finance cost Rosavtodor (the Federal Roads Agency) is a federal executive body EMBS Group is an independent industry consultancy which provides, and part of the Ministry of Transport of the Russian Federation. It is among other services, market information advisory services within responsible for providing public services and managing government a number of business sectors across emerging markets and developed property in the area of road transport and infrastructure, including markets globally managing the federal road network. Federal agencies include Agencies of the Russian Ministry of Rosstat – Federal Service of State Statistics Transportation (Rosavtodor, Roszheldor, Rosaviaciya, Rosmorrechflot) Share of works performed using own in-house capabilities is calculated Gross margin is gross profit divided by revenue as the amount of works performed by own in-house capabilities divided Gross profit is calculated by subtracting cost of sales from revenue by total revenue IFRS means International Financial Reporting Standards State corporations are State-owned and State-funded corporations KPI – key performance indicators (mainly Russian Highways and Russian Railways OJSC in the report) Market share – total share of Mostotrest, TSM, Mostotrest-Service and VAT means value added tax UTS calculated as volume of works carried out with the own workforce Weighted-average interest rate is determined as annual interest in 2013 less other revenue divided by the total transport infrastructure expense on loans and borrowings outstanding as at the reporting date market according to PMR and EMBS Group Reports divided by the total amount of loans and borrowings outstanding as at that date

128 Notes

Contact us Stock exchange: MOSCOW STOCK EXCHANGE 6 Barklaya Str., Bld. 5, 13 Bolshoy Kislovsky Per., Moscow, Russia, 121087 Moscow, Russia, 125009 phone: +7 (495) 669-79-99 4/7, Vozdvizhenka Str., Bld. 1, fax: +7 (495) 669-77-11 Moscow, Russia, 125009 e-mail: [email protected] phone: +7 (495) 363-32-32 www.mostotrest.ru fax: +7 (495) 705-96-22 www.moex.com Investor Relations Olesya Lapina Auditor: KPMG Head of Investor Relations 10 Presnenskaya Naberezhnaya, phone: +7 (465) 669-79-99 Moscow, Russia, 123317 e-mail: [email protected] phone: +7 (495) 937-44-77 fax: +7 (495) 937-44-99 www.kpmg.ru