Evropeyskaya Elektrotekhnica presented breakthrough technological developments for oil refining and the electric power sector during a meeting with investors

Evropeyskaya Elektrotekhnica presented breakthrough technological developments for oil refining and the electric power sector during a meeting with investors

May 30, 2019. Moscow — PJSC Evropeyskaya Elektrotekhnica (hereinafter, the “Company” or “Group”), one of the leaders in the Russian engineering market, held a meeting with representatives of the investment community and the media in Moscow on May 28. This event represented a new step in the long-term Investor Relations program implemented by the Company.

It brought together private investors, representatives of the Moscow Exchange, credit rating agency ACRA, investment funds, management companies, family offices, investment companies, venture capital companies, and business media.

Representatives of the top management at PJSC Evropeyskaya Elektrotekhnica demonstrated the operational and financial (IFRS) results of the Company's activities in 2018 to those present at the event. The results of the R&D program, which enabled the Company to achieve a technological breakthrough in the development of innovative equipment for the oil refining and electric power sectors, were publicly presented for the first time.

The presentation shown during the event is available on the Company website at link (in Russian only).

Ilya Kalenkov, General Director of PJSC Evropeyskaya Elektrotekhnica, commented on the Company's operating results for 2018:

“The Company demonstrated continuous progressive development and growth in operational indicators in 2018. The increase in physical volumes of shipped output reached +48.0 %. The number of engineering centers amounted to 16. In the structure of supplied engineering and technological products, we estimate the percentage of our own products to be around 35 %. The share of export deliveries in the structure of the Company's revenue amounted to 9 %.

Today PJSC Evropeyskaya Elektrotekhnica contributes in one way or another to almost all large and medium-sized projects implemented in the domestic manufacturing industry. A list of our largest customers is given on slide 4 of the presentation.

Not so long ago we created a short formula for expressing the development strategy of our Company: “Commercialization of technological innovations”. Our extensive R&D program in the last 1.5 years resulted in breakthrough developments that we are presenting publicly for the first time today.”

Sergey Dubenok, Head of the Board of Directors of PJSC Evropeyskaya Elektrotekhnica, presented the financial results of the Company's activities for the past year and gave his assessment on the Company's reliable financial condition:

“The Company managed to increase not only its consolidated revenue by 26.6 % to RUB 3,286.7 million in 2018, but also our profits, which increased by more than double to RUB 293.1 million (+117.5 %). More information can be found on slide 14.

The Company continues to scale up its business, relying on its own financial resources. The net debt of the Company at the end of 2018 reached an even greater negative value (RUB -153.1 million).

A stable high cash flow from operating activities, absence of debt load, high volumes of own and external sources of liquidity — all this ensures the availability of funding for the Company's further business growth and for launching new high-margin activities.

The Company shows high asset liquidity ratios, and the current liquidity ratio increased to 2.6. In April–May 2019, the Company reached agreements with three banks — Sberbank, Sovcombank, and Promsvyazbank — on opening credit lines and providing bank guarantees, with a total limit of RUB 1,685 million (more information on slides 15–16). These external sources of liquidity can be used by the Company both at the stage of conducting tender procedures (generating new business) and for the purpose of implementing the contracts obtained.

The Company continues its practice of dividend payments, adhering to the principles of its Dividend Policy on payment of at least 20 % of profit as per IFRS.

The Company's efforts to develop its business and maintain a strong financial condition have been noted by the credit rating agency ACRA, which in February 2019 raised the Company rating to the BBB- investment level according to the national scale of the Russian Federation."

In the third part of the event, Ilya Kalenkov presented a line of innovative highly profitable developments of the Company to the public for the first time. The new facilities will be of interest for:

• Mini-refineries with oil refining volumes of up to 2.5 million tons of oil per year;

• Market operators interested in providing customers with fuel oil with a sulfur content not exceeding 0.5 % due to increasingly strict regulatory requirements,

• Energy companies using fuel oil as fuel.

More information on this advanced equipment can be found in the presentation on slides 23—27. We are talking about five different types of facilities:

• Oil treatment unit (see more; in Russian only),

• Unit for sulphur reduction in oil products,

• Unit for increasing octane fuel,

• Deep fuel oil processing unit,

• Unit for reduction of fuel oil (as fuel) consumption.

Ilya Kalenkov noted in this part of the meeting: “Our engineers managed to implement a physico-chemical process in iron which allows to break long hydrocarbon chains in oil without use of heat.

The new equipment will significantly increase the profitability of small and medium refineries, which wish to acquire the process of secondary fuel oil processing but whose investment opportunities are limited.

These facilities are able to generate added value in the amount of RUB 80–150 million per month (when processing about 10,000 tons of oil or oil products). Our market strategy involves leasing the facilities, and we are carefully selecting our operating partners for this fundamentally new direction of our business.

We hope that in the period 2019–2022, the rental business for innovative facilities will allow us to generate about RUB 3.8 billion EBITDA in addition to the Company's usual activities. Obtaining such a significant financial result in the coming years should lead to a significant positive revaluation of the business value of PJSC Evropeyskaya Elektrotekhnica.

About Evropeyskaya Elektrotekhnica Group of Companies

• Evropeyskaya Elektrotekhnica Group of Companies (MOEX: EELT) offers comprehensive solutions in the field of engineering and technological systems for industrial, construction and infrastructural purposes: low and medium voltage distribution equipment, low current systems, lighting systems, industrial electric heating systems and equipment for the Oil&Gas and petrochemical industries.

• As a Russian joint-stock company with high corporate governance standards and financial sustainability, the Company's Mission is to improve people's quality of life with its entrepreneurial vigour and engineering competencies.

• The Company was founded in 2004 and unites a distribution center, engineering departments, an electrical laboratory and specialized production facilities. The company is one of the largest electrical equipment distributors in the Russian Federation and an industrial partner of leading companies on the international engineering market.

• The Company's logistics capabilities include delivery (including non-standard and oversize load) to customers throughout Russia, including hard-to-reach Northern areas, as well as to Central Asia, North Africa and the Middle East.

• The Company has its own production of the following equipment:

• Complete transformer substations;

• Medium voltage units;

• Low voltage panels of up to 6,300A (including metro solutions);

• Electric lighting systems;

• Industrial electric heating systems;

• Cabling and wiring products.

• Areas of application of the Company's competences:

• Oil&Gas industry;

• Electric power sector;

• Peaceful atom,

• Steel and mining industry;

• Engineering;

• Transport infrastructure, water supply and sanitation.

• Evropeyskaya Elektrotekhnica's customers include major Russian companies: Rosneft, Gazprom, NOVATEK, LUKOIL, Sibur and Nizhnekamskneftekhim. Supplies were successfully implemented for the following projects: Power of Siberia, Yamal LNG, Smolensk NPP, Data Center of Sberbank of Russia, the Domodedovo, Sheremetyevo, and Pulkovo Airports, etc.

• New areas of Company activity starting from 2018 include development and production of the following:

• Modular equipment for the Oil&Gas and petrochemical industries (Company subsidiary ROG-Engineering, Ufa, Republic of Bashkortostan, Russian Federation);

• Industrial specialized solutions for metro substations (currently being consolidated into the Group's structure: Metrotonnel, Moscow, Russian Federation);

• Industrial electric heating systems.

• Key financial indicators of PJSC Evropeyskaya Elektrotekhnica (IFRS):

The personnel headcount is around 350 people. 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 Import Substitution Leader 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 (800) 600-71-18

Mailing address: 1 Lyotchika Babushkina Street, Building 3, Moscow, 129344

For more information, please contact:

Stanislav Martyushev

Director for Corporate Communications and Investor Relations

PJSC Evropeyskaya Elektrotekhnica

Tel. +7 (495) 660-71-18 ext. 164

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