The volume of deliveries of engineering products of PJSC Evropeyskaya Elektrotekhnica increased by 54% for the first 9 months of 2018

The volume of deliveries of engineering products of PJSC Evropeyskaya Elektrotekhnica increased by 54% for the first 9 months of 2018

December 11, 2018. Moscow — Evropeyskaya Elektrotekhnica Group of Companies (hereinafter — the Group) continues to publish operational results. This material describes the results of the Company's work for 9 months of 2018.

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 developments and engineering solutions. According to the results of the reporting period, engineering products made by the Company accounted for a total of around 39% of the Group's deliveries.

The Activity of Engineering Centers segment allows the Group to generate revenue 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 Q3 2018, the Group implemented 472 projects via 12 of its own engineering centers.

The updated list of completed projects with industry reference is published on the Company's website at http://euroet.ru/realizovannie_proekti.

Changes in key operational indicators of the Group's 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: "The growth rate of our operating activities by more than 1.5 times serves as proof that our Company is at the forefront of the growing Russian economy. This is also evidence that Evropeyskaya Elektrotekhnica's products are in high demand by customers from various sectors of the domestic economy.

Our positive expectations for further economic growth in Russia are also confirmed by research of the business environment. For example, the Purchasing Managers' Index (PMI) of manufacturing industries of the Russian Federation in November 2018 rose to 52.6 points against 51.3 points in October (the value of the PMI increasing above 50 points indicates a growth of business activity in the country, and its decrease points to a slowdown). The growth in production reflects an increase in the volume of orders and growing customer demand. Russian companies are optimistic about the future growth of production volumes. This has a positive impact on job growth: employment growth rates in Russia are at their highest since the beginning of 2017[1]. Rosstat data for the 10 months of 2018 also show a 3% growth of industrial production.

The data from Rosstat also indicate an accelerated growth rate with regard to investments in fixed assets in Q3 2018 to 5.2% in annual terms (2.8% in Q2 and 3.6% in Q1). The Russian Direct Investment Fund (RDIF) estimates investment growth in Q3 at 4.9%.

The development forecast for the retail sector is equally optimistic, due to a resurgence of effective demand among the population. This is a significant factor for us, as we actively cooperate with almost all large and medium-sized retail chains in Russia.  A positive fact: according to the results of 2018, a 30 percent increase in the introduction of new sites is predicted for shopping malls with a modern format in major Russian cities compared to figures from 2017 (forecast as of October 2018)[2].

Business investment activity in Russia is stimulated by the fact that fixed assets in the country deteriorated by as much as 47.3% at the end of 2017, which is still pretty close to the worst value in the recent history of the country (49.4% at the end of 2014).

The subsequent growth of Evropeyskaya Elektrotekhnica Group of Companies will be facilitated not only by the growth in the market for engineering equipment, which is the typical area of focus for our Company. We are also increasing the scope of activities of our subsidiary company, ROG-Engineering LLC, which specializes in the development, design and manufacture of packaged equipment for Oil&Gas and petrochemical industries. The company's contribution to the Group's aggregate figures will increase during 2019 and reach the planned levels starting from 2020."

Production: engineering equipment

During Q3 2018, the Group continued to supply engineering equipment from third-party vendors and in-house equipment:

Production: equipment for the Oil&Gas industry

Throughout the current year, Group subsidiary ROG-Engineering has successfully developed its business, which involves the development, engineering and manufacturing of equipment for the Oil&Gas and petrochemical industries.

For 9 months of 2018, the team at ROG-Engineering implemented a number of projects:

- Delivery of an end-of-pipeline tubular phase splitter (KDFT-A-1400-60-4-P-UHL1) for a subsidiary of PJSC NK Rosneft; equipment parameters: design pressure 4.0 MPa, with liquid capacity up to 11 thousand m3/day, water inlet up to 90%, output not more than 10%, and metal mass in dry form — 260 tons),

- Delivery of more than 50 sets of flare units for the Oil&Gas, oil refining, and gas processing industries as well as gas chemical plants for the purpose of mineral fertilizer production and organic chemistry in the Russian Federation and the CIS,

- Execution of supervision and commissioning works on two previously manufactured and delivered sets of flares Du1000 mm, H = 85 m and DU800 mm, H = 45 m for a subsidiary of PJSC NK Rosneft;

- Execution of supervision and commissioning works of the flare unit with air supply Du600/250/250 mm, Н = 40 m for a subsidiary of PJSC NK Rosneft.

During the reporting period, new contracts were signed:

- Delivery of two sets of slug catchers, with execution of supervision and commissioning works, for a subsidiary of PJSC NK Rosneft,

- Delivery of six sets of flares with tips, with execution of supervision and commissioning works, for subsidiaries of PJSC NK LUKOIL,

- Delivery of two horizontal flares, with execution of supervision and commissioning works, for a subsidiary of PJSC NK Rosneft,

During the reporting period, the Company successfully passed technical audits conducted by a number of customers: Enter Engineering Pte. Ltd, PJSC NK Rosneft, PJSC NK RussNeft, and PJSC NK LUKOIL.

The Company has successfully certified and licensed all types of equipment manufactured.

R&D: In the framework of the program to develop new types of products, ROG-Engineering is ready to offer customers the latest technological solutions:

•    Plants for the preparation of water-in-fuel emulsions to save 12–15% of fuel oil,

•    Plants for increasing the octane rating of gasoline,

•    Plants for deep processing of fuel oil,

•    Plants for desulphurization of fuel oil (< 1.0%) and petrol and diesel fuel up to 10 ppm,

•    Complexes for disposal of waste and landfill gases with the possibility of gas processing (without dioxin formation), and

agro-technological complexes, which will simultaneously allow to obtain the raw materials necessary for industrial production of carbamide and gasoline, and also to supply the heat complex with its own manure, electricity, heat, fertilizers, carbon dioxide and nitrogen.

For the purpose of signing new contracts, the Company took part in a number of industry-specific exhibitions: 

- 15th Moscow International Oil and Gas Exhibition / MIOGE 2018 (Moscow),

- 22nd Uzbek International Exhibition Oil and Gas Uzbekistan/OGU 2018 (Tashkent),

- Surgut. Oil and Gas - 2018 exhibition,

- Tyumen Oil and Gas Forum 2018,

- St. Petersburg International Gas Forum 2018,

- VI International Forum and Exhibition Yamal Neftegaz 2018 (Novy Urengoy).

Activities of engineering centers

In August 2018, the Company opened a representative office in Lipetsk. This has increased the regional coverage of the Group in Central Russia. The close proximity to customers and a more accurate understanding of their needs allow the Company to better understand the specifics of working in the markets of particular regions.

In August 2018, two new contracts were signed for equipping two new terminals under construction at the Khabarovsk airport (Novy) and Balandino airport (Chelyabinsk). For these projects, the Company acts as a supplier for the general contractor, the Limak-Marashstroy consortium (Turkey). In 2018/2019, the volume of engineering equipment deliveries and services rendered by Evropeyskaya Elektrotekhnica Group of Companies under these contracts is preliminarily estimated at RUB 200 mln. The deliveries have already begun: The Company supplied cable support systems in August 2018. Further down the line, the Company will be focusing on deliveries of more complex engineering equipment, including substations, switchboard equipment, uninterruptible power supply units, ventilation systems, and lighting equipment.

[1] Source: study by IHS Markit analytical agency

[2] Source: “Russia's construction industry. Prospects for development in 2018-2020" study, prepared by INFOLine

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 Company 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):

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

press@euroet.ru           IR@euroet.ru

www.euroet.ru               www.euroetpao.ru

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       

ROG-Engineering LLC (www.rogeng.ru) performs the full range of services including:

- survey of existing Oil&Gas production facilities with presentation of engineering and process recommendations;

- engineering, design and construction of newly build projects;

- reconstruction and modernization of existing equipment and plants;

- design, fabrication and supply of complete process train equipment, modular process equipment, different types of pumping stations, mobile well-test and development units, flares and combustion systems, gas separator, gas treatment units and other types of Oil&Gas process equipment;

- design and implementation of hardware and software for Automated Process Control Systems;

- installation supervision;

- commissioning and start-up, designer's field supervision.

ROG-Engineering LLC designs and fabricates wide range modular process equipment with fully automated controls including:

- booster pumping stations BPS for any capacity;

- preliminary water knock-out units of vessel and tubular design with capacity up to 30 000 m3/day;

   Perfomance indicators of preliminary water knock-out units:

   • water cut of oil at inlet: up to 95% and greater;

   • water cut of oil at outlet: 0.5% to 5%;

   • content of petroleum products and solids in treated water: 5 to 50 mg/l.

- oil treatment plants with capacity of 0.2 to 4 million tons per year;

- produced water treatment units or separate vessels such as settlers of vessel or tubular design with volume of 10 to 200 m3 and with quality of water treatment of 5 to 50 mg/l;

- packaged well pad pumping station with capacity of 20 to 180 m3/hour;

- inlet separators for oil with high gas-oil ratio up to 2000 m3/m3;

- modernized separators and settlers with increased capacity of vessel and tubular designs;

- mobile well-test and development units;

- oil-well separation units;

- test separators for oil with normal and high gas-oil ratios up to 2000 m3/m3;

- associated petroleum gas treatment;

- gas treatment units;

- low pressure gas recovery units;

- gas dehydration units;

- combustion systems including flare KO drums, condensate drums, LP and HP flare risers, flare systems with tips for smokeless combustion;

- flare systems with demountable tips;

- flare systems with demountable flare stacks;

- horizontal flares for combustion LP and HP gases;

- horizontal flares for combustion of industrial waste gases;

- horizontal flares for combustion of liquid hydrocarbons and other combustible liquids;

- mobile filtration units;           

- various types of pumping stations;

- auxiliary and utilities equipment including modular buildings for control rooms, motor control centers and others.