Historically the Company has relied exclusively on internal sources to fund its growth, reinvesting its net profit in development and not resorting to debt financing. Following this course, the Company assesses the impact of risks of changes in interest rates on its business activities as insignificant.

The Company operates in the Russian Federation, Kazakhstan, Uzbekistan, and in several other countries across the world. The bulk of the Company’s contracts are in national currency. The cost of equipment, materials, services and employee salaries are denominated in roubles. A part of purchased equipment is imported. A small part of the Company’s contracts is denominated in foreign currency. Even though the share of contracts in foreign currency does not exceed 3% of the total contractual base of the Company, a sharp change in the exchange rate of such a currency may affect its financial results. Changes in the exchange rate of foreign currencies mainly have a negligible effect on the activities of the Company (the Company is slightly exposed to currency risks).

The Company’s activities depend on the rouble exchange rate and inflation rate. With the growth of foreign exchange rates against the rouble, the national currency will weaken. The weakening of the rouble will result in accelerated inflation, which could negatively affect the operational performance and the financial position of the Company. It is not possible to predict the critical inflation rate for the Company, since in addition to the level of consumer prices, it is necessary to take into account changes in the real purchasing power of the rouble, changes in the prices of raw materials (materials) used by the Company in its activities, the situation on the market of engineering and technological systems, and further government policy in this field.

In the Company’s opinion, the economic situation in the country (and region) is looking up, which is favourable to its business and its ability to fulfil contractual obligations. In the event of a negative impact of changes in the exchange rate, inflation and interest rates on the Company’s activities, it plans to conduct a risk analysis and make appropriate decisions in each case, including:

• revise the Investment Programme;
• optimise the cost structure;
• change the structure of the provided services in order to maximise profits.