Annual Report 2015
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PREWAR YEARS THE LONGEST REINFORCED Until 1941 CONCRETE BRIDGEIN In-house production of specialty bridge- PRE-WAR EUROPE building equipment The country's only and standard steel structures, including specialized bridge- at a facility in Tula, 1,600 м which remains building enterprise operational to this day «МОСТОТРЕСТ»ОСНОВАН 25 JANUARY 25 ЯНВАРЯ 1930 ГОДА ON JANUARY 25, 1930, BY DECISION OF THE USSR GOVERNMENT, 2015 ANNUAL REPORt MOSTOTREST, A NATIONAL OVERSIZED BRIDGE CONSTRUCTION GROUP WAS 142 BRIDGES WITH ESTABLISHED UNDER THE USSR До 1941 г. A TOTAL LENGTH MINISTRY OF RAILWAYS OF 16 КМ единственная в стране специ- ализированная Significant expansion of мостострои- competencies, both through MORE THAN 700 MOSTOTREST organic growth and тельная acquisition of shares 1,086 in several companies in the организация EMPLOYEES WERE AWARDED road construction and employees operation sectors, as well number WITH ORDERS AND MEDALS as in a road concession of Mostotrest DURING THE WAR employees in 1930 1930 700 За рекордные 14 дней построен временный железнодорожный мост взамен полностью разрушенногоCOMPLETED моста PROJECTS: через Днепр в Киеве в 1943 году. Nor-AchinskBridge across the Razdangorge, Armenia, 1981 Myzinsky Bridge across the Oka in Gorky (now Nizhny Novgrod), 2015 1981 Bridge across the Vyatka near the village of Buyski Perevoz, Kirov region, 1984 Bridge across the Moscow Canal near the village of Khlebnikovo, А HISTORY OF GREAT 1984 Bridge across the Oka near Kolomna, 1987 Bridge across the Don in Rostov- The first-ever MILESTONES on-Don, 1987 bridge-building enterprise in the USSR The establishment of Mostotrest shaped bridge building into a standalone transport A striking geography of construction: several bridges across the Dnieper infrastructure construction industry, which, in Ukraine, a bridge across the Ishim in Petropavlovsk (Kazakhstan), a bridge in turn, became the key driver of technical across the Kura in Georgia's Gori, a bridge across the Angara in Irkutsk, progress in national bridge building a railway bridge across the Enissey in Krasnoyarsk, bridges across the Zeya in the Amur region, across the Selengu in Buryatia, across the Akhtuba in Astra- *** khan, across the Neva in Leningrad and across the Don near the Liski Station CONTENTS MOSTOTREST IS THE LARGEST DIVERSIFIED COMPANY IN THE RUSSIAN TRANSPORT About Us INFRASTRUCTURE CONSTRUCTION MARKET, 08 Chairman’s and CEO’s statement 12 Key Ongoing Projects WITH A PRESENCE ACROSS ALL CORE 14 Business Model AND RELATED BUSINESS SEGMENTS, 18 Strategy AND A PARTICIPANT IN RUSSIA’S PIONEERING 2015 Results PUBLIC-PRIVATE PARTNERSHIP PROJECTS (PPP). 22 Market Overview 30 Operating Results 35 Financial Results KEY ADVANTAGES Corporate Governance A success story for 85 years 44 Corporate Governance Structure 56 Internal Control and Audit Strong engineering tradition 58 Information for Investors and Shareholders Stable management team Social Responsibility The only large scale diversified 64 Personnel company in the sector 69 Occupational Health and Industrial Safety 73 Environmental Protection Presence in the most attractive investment regions Appendices Participation in all key 78 Auditors’ Report infrastructure development 80 Consolidated Financial Statements projects 132 Key Risk Factors Strong backlog Additional information 146 Basis of Presentation Leader in the road services 148 Key Terms and Definitions segment 149 Contacts 02 CONTENTS ABOUT US 2015 KEY FINANCIAL AND OPERATING RESULTS BACKLOG, RUB BILLION MARKET SHARE, % -15% + 0.5 PP REVENUE, RUB BILLION GROSS PROFIT, RUB BILLION -5% -7% EBITDA, RUB BILLION NET PROFIT, RUB BILLION -14% -30% BACKLOG BREAKDOWN, % REVENUE BREAKDOWN, % 03 OWNERSHIP STRUCTURE Mostotrest shares in affilated and subsidiary companies Construction Services Road concession SHAREHOLDERS STRUCTURE % AS OF 22.02.2016 1 Mostotrest owns UTS on a 50/50 basis through the joint venture Russian Highway Operations B.V., established by Mostotrest and VINCI. 2 Mostotrest owns 100% of Plexy Ltd., which holds a 50% stake in NWCC. 04 OWNERSHIP STRUCTURE ABOUT US KEY OPERATION ACTIVITIES ConstructionОсновные ОсновныеServices Road Concession Toll highway operation (UTS), Leading player With its joint venture partner road and bridge repair and in the Russian infrastructure VINCI, Mostotrest owns 100% maintenance services construction market of NWCC on an equal basis (Mostotrest-Service) WHAT WE DO WHAT WE DO WHAT WE DO • NWCC is the concession holder for • Construction of roads and bridges; • Toll road operation: the km 15 – km 58 toll section of the • Construction of railway infrastruc- — Operation of toll collection M-11 “Moscow – St. Petersburg” High- ture; systems and intellectual transport wayin accordance with a concession systems (ITS); agreement with Avtodor; • Construction of airfields and airports; — Development and implementation • Type of concession agreement: direct • Construction of seaports and water- of optimal technological solutions toll collection agreement envision- way infrastructure; for traffic management; ing toll segment construction and • Construction of other infrastructure • Maintenance of transport infrastruc- operation based on the co-financing and non-infrastructure projects; ture: principle, with subsequent transfer to concession holder for temporary — Road marking services; • Management of complex infrastruc- operation and return of investment ture projects as General Contractor; — Maintenance of electric lighting, through beneficiary toll collection. traffic light, traffic density moni- • Reconstruction of transport toring and road weather informa infrastructure. tion systems; • Transport infrastructure repair ser- vices. KEY 2015 RESULTS KEY 2015 RESULTS KEY 2015 RESULTS • Toll-based operation as of November • Won tenders totaling more than • Growing business – new branches 2015. RUB100 billion; and acquisition of road maintenance companies; • Launch of a new large scale project – Kerch Strait bridge. • More than 3,600 km of roads under maintenance contracts. Financial Results, Financial Results, RUB billion RUB billion 2014 2015 2014 2015 Revenue..........................140.1 ................131.0 Revenue............................10.9 ...................13.7 Gross Profit ....................18.0 ..................16.3 Gross Profit ...................... 2.6 ....................3.0 EBITDA .............................13.3 ..................10.2 EBITDA ...............................2.5 .................... 2.9 Net Profit ............................5.7 ....................2.8 Net Profit ............................ 1.2 ......................1.7 05 OWNERSHIP STRUCTURE ABOUT US ESTABLISHED FOR A GREAT CAUSE Photo: Valeriy Kravchenko 06 07 OWNERSHIP STRUCTURESTATEMENT ABOUT US despite difficult economic conditions, we proved once again that Mostotrest Vladimir Vlasov rightfully remains Russia’s leading infrastructure company. Operating in an extremely challenging market and Chief Executive Officer on tight contract schedules, we were able to successfully implement many complex projects and win large tenders, while still maintaining the highest level of construction quality and efficiency. Our performance proved that the Com- pany not only boasts a glorious oper- ating history, but also faces a secure Chairman’s and CEO’s future. As we anticipated, 2015 proved diffi- statement cult both for the overall Russian eco- nomy and for our own industry. The 2015 federal budget deficit was approx- In 2015, Mostotrest celebrated imately 2.4% of GDP, with the transport th infrastructure construction market its 85 anniversary. We take great down 5%. The crisis also affected the pride in our corporate history, banking system, with many financial which, encompasses the completion institutions seeing their licenses revoked, while credit terms toughened of thousands of construction projects, and government guarantees became the award of numerous state more difficult to obtain. However, the honors and a truly unique heritage. difficult macroeconomic environment, the operational and financial results of the Mostotrest Group demonstrated the underlying resilience of the com- 13.9% DESPITE WHAT WAS A CHALLENGING YEAR, THE GROUP WAS STILL ABLE TO GROW, INCREASING ITS MARKET SHARE UP TO 13.9% VLADIMIR MONASTYREV Dear shareholders, partners and colleagues: Mostotrest has come a long way from its Chairman of the Board beginnings as the country’s first bridge- building enterprise to become Russia’s premier transport infrastructure construc- tion company. Today, Mostotrest is an organisation of professionals spanning RUB3.0 BILLION several generations, a Company that respects operating traditions and where extensive experience combines with CONSIDERING STRONG 2015 FINANCIAL RESULTS AND STABLE an unceasing commitment to technical CAPACITY UTILISATION WITH ONGOING AND NEW PROJECTS, innovation. THE BOARD OF DIRECTORS RECOMMENDED THE GENERAL 2015, however, was not just our anni- SHAREHOLDERS’ MEETING TO APPROVE A DIVIDEND versary year. It was also a period when, OF RUB3.0 BILLION, OR 85% OF IFRS NET PROFIT ATTRIBUTABLE TO MOSTOTREST SHAREHOLDERS 08 09 pany, founded on outstanding project selection and man- agement, highly professional staff and a very experienced RUB13.6 BILLION management team. Consequently, despite what was a chal- lenging year, the Group was still able to grow, increasing its market share, from 13.4% to 13.9% year on year. We witnessed very weak overall demand for new projects MOSTOTREST’S YEAR-END throughout 2015. The total