Evropeyskaya Elektrotekhnica Group of Companies increased the volume of engineering product deliveries by 38% in the first half of 2018

Evropeyskaya Elektrotekhnica Group of Companies increased the volume of engineering product deliveries by 38% in the first half of 2018

August 30, 2018. Moscow — Evropeyskaya Elektrotekhnica Group of Companies (hereinafter – the Group) publishes its debut operational review based on the results of its activities in H1 2018.

The Group highlights two complementary segments in its activities: Production and Activity of Engineering Centers. They are managed by a single corporate center of the Group, which also incorporates both the corporate governance and risk management system.

The Production segment allows the Group to participate in the initial stage of the value creation chain in specialized markets, developing and offering customers its own advanced designs and engineering solutions. According to the results of the reporting period, engineering products made by the company accounted for a total of around 37% of the Group's deliveries.

The Activity of Engineering Centers segment allows the Group to generate revenues and attractive profitability from its engineering projects; this is based on the Group's own engineering products as well as those of third-party vendors. As of the end of Q2 2018, the Group implemented 539 projects via 12 of its own engineering centers.

Changes in key operational indicators of Group activities:

Note: * The amount includes both investment in production assets and expenses related to working capital formation of the subsidiary ROG-Engineering

Ilya Kalenkov, General Director of PJSC Evropeyskaya Elektrotekhnica, commented on the published results: "We are positive about the dynamics and prospects of the engineering services market and the Group's operational results in the first half of the year. We have managed to create a solid foundation for the implementation of our ambitious 2018–2019 growth plans. This year we see new opportunities for growth in the Russian electric power and oil and gas industries, launch of new large infrastructure projects, continuation of the import substitution process in Russia, and demand on markets of neighboring countries. These positive factors ensure further growth in demand for the Group's services, both in the Group's usual sphere, the energy supply market, and also in the sphere of manufacturing equipment for the oil and gas and petrochemical industries."

Production: engineering equipment

In Q2 2018, the Group actively produced the following types of engineering equipment:

The Group's new products have high market potential based on a substantial intellectual and scientific component in line with their innovative engineering.

Production: equipment for the Oil&Gas industry

The Group's subsidiary ROG-Engineering LLC  develops, engineers and produces equipment for the Oil&Gas and petrochemical industries.

In Q2 2018, production was fully set up at ROG-Engineering; staff were recruited for the scientific and engineering, management and production areas. Engineering documentation for all basic types of products of the product range of the subsidiary was developed.

Certification of the main product categories in this area was completed:

-   oil and gas treatment units in modular and container design,

-   mobile units for well testing and development,

-   flares,

-   a deethanizer and low-temperature condensation unit,

-   gas separators,

-   a preliminary water removal unit.

ROG-Engineering experts took part in three field-specific exhibitions (one in Uzbekistan and two in Moscow) in H1 2018. Participation in four more exhibitions is scheduled before the end of 2018.

The Company created its product catalogue.

As of the end of Q2 2018, the Company received orders for more than RUB 300 million, of which orders for RUB 70 millions were filled by the end of the reporting date. Part of the manufactured equipment has already been put into operation at facilities of the Company's customers.

The Company completed certification of its products for PJSC Rosneft Oil Company and PJSC SIBUR Holding. An independent audit for compliance with the requirements for manufacturing equipment was successfully passed for PJSC Lukoil, for Enter Engineering and ERIELL companies (Uzbekistan).

Activities of engineering centers

Q2 2108 was characterized by a general resurgence in demand for engineering equipment after the end of the presidential elections in the Russian Federation.

In 2018, the Group established new engineering centers in the cities of Tyumen and Lipetsk in Russia. The Group's representative office was opened in Azerbaijan; an engineering center will be built on site.

The capacity of engineering centers in Moscow and St. Petersburg increased — both the number of staff and the computing capacity of the centers increased. A larger office began operating in St. Petersburg.

The capacity of the engineering center in Ufa increased — both for the purpose of providing engineering services in the electrotechnical market, and due to the launch of activities in the Oil&Gas sector.

The number of projects initiated by engineering centers increased in H1 2018 compared to the same period in 2017: by 27% in terms of the number of projects, and by 43% in monetary terms. For example, the Group sent more than 400 business offers to customers in the segment of medium and low voltage equipment, amounting to a total of more than RUB 10 billion.

The Group started using new types of products that significantly broaden its opportunities for establishing new business, including with customers of industries with whom opportunities for cooperation had previously been limited:

· electric heating systems — this equipment was shipped for main gas pipelines as part of the Power of Siberia project;

· oil and gas equipment — the Group's dedicated subsidiary, ROG-Engineering, received a number of contracts for engineering and production of equipment for the oil and gas and petrochemical industries (oil heating furnaces, flares, and the pipe version of preliminary water removal units);

· special cable penetrations — on the market for modular cable and pipe penetration systems, the Group became the main development partner of Roxtec (Sweden) in 2018, which produces this equipment in Russia. In addition, shipments of cable and pipe entries increased significantly in the reporting period, and the sales volume for this group of products  in H1 2018 was 2.7 times higher than in H1 2017.

The development of a sustainable prescriptive and preselling system for complex projects has continued: a comprehensive pool of strategic vendors and partners for collaborative study of prospective projects is systematically selected.

Licenses were obtained for the delivery of equipment and performance of work at SC Rosatom's facilities. These licenses allow for manufacturing and assembling in the first and second zones of the NPP.

The volume of physical shipments to the Group's customers (calculated in standard trucks) grew by 38% in H1 2018 compared to the same period in 2017.

In Q2, the Group delivered supplies to facilities for transport infrastructure (the Moscow Metro), the electric power sector (a power grid complex, a TPP in Kaliningrad), petrochemical companies, to retail chains.

In the reporting period, the Group implemented projects within Russia, where the regional coverage of supplies did not undergo significant changes. Projects are also being carried out in countries in Central Asia: Uzbekistan (a significant increase in supplies), Kyrgyzstan, Kazakhstan, and also in countries in the Middle East.

About the Group of Companies PJSC Evropeyskaya Elektrotekhnica

PJSC Evropeyskaya Elektrotekhnica (MOEX: EELT) provides comprehensive services in the sphere of creating energy and electric power supply systems, electric lighting systems, and low current systems at all types of facilities, as well as industrial electric heating systems.

The Company has been working in the electrical engineering market since 2004, and at present has its own engineering and production facilities. The Company is one of the leading distributors of electrical equipment in Russia, offering customers a wide range of products made both in Russia and abroad. Thanks to a well-organized and efficient logistics system, the Company is able to supply products (including oversize loads) all over Russia, including to hard-to-reach areas of the North, as well as Belarus, Kazakhstan, Turkmenistan, Kyrgyzstan and Uzbekistan. The Company established its own production of transformer substations, electric switchboard equipment of any complexity (up to 6300 A), electric lighting systems and electric heating systems.

The Company implements projects in the oil and gas sector, electric power sector, nuclear industry, metal industry, mining industry, and manufacturing industry and at transport infrastructure facilities. Evropeyskaya Elektrotekhnica's customers include companies such as Rosneft, Gazprom, NOVATEK, LUKOIL, and Nizhnekamskneftekhim. The Company's projects include Power of Siberia, Yamal LNG, Smolensk NPP, Data Center of Sberbank of Russia, and the Domodedovo, Sheremetyevo, and Pulkovo airports, etc.

Since 2018, the Group has been producing highly efficient modular process equipment for clients in Oil&Gas and petrochemical markets at the site of its subsidiary ROG-Engineering, a research and production company in Ufa (Republic of Bashkortostan, Russia).

Key financial indicators of PJSC Evropeyskaya Elektrotekhnica (IFRS, 2017): RUB 2.6 billion in revenue, RUB 134.7 million in net profit, RUB 1.2 billion in assets. The number of employees is about 400 (as of June 30, 2018). Since September 2017, common shares of PJSC Evropeyskaya Elektrotekhnica are traded on the Moscow Exchange with trading code EELT.

In June 2018, the Company was named "Leader of Import Substitution" at the "Leader of Competitive Sales" annual national awards, in which 450 domestic suppliers from various industries took part.

Contacts:

PJSC Evropeyskaya Elektrotekhnica

Tel .: +7 (495) 640-93-48

Mailing address: Building 3, 1 Lyotchika Babushkina St., Moscow, 129344

Press contact                Contact for investors and analysts

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For more information, please contact:

Stanislav Martyushev

Director for Corporate Communications and Investor Relations

PJSC Evropeyskaya Elektrotekhnica

Tel. +7 (495) 640-93-48, ext. 164       

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