President’s letter
Ilya Zyubin
In recent years, the global economy has faced unprecedented challenges, which forced not only individual companies and markets but entire national and regional economies to adapt to the new normal, accelerate their transformation, and adopt proactive approaches. While the pandemic and geopolitical turbulence have had a sizeable impact on the global construction industry, they have also catalysed existing trends, including market consolidation and a large-scale digital transformation of business processes. Our Company has adapted to this challenge, getting a powerful impetus for a fundamentally new growth trajectory.
Development strategy
In 2021–2022, we set our sights on sustainable, profitable growth and delivered impressive operational and financial performance. This move has unlocked vast opportunities to fully deliver on our strategic plans, including an ambitious programme to grow our portfolio of high-potential projects across the board as well as to cement our leadership in the construction industry and tap new market segments.
With its 24 consecutive years of operating without losses, MSU-1 GC has become one of the leaders among Russian full-range engineering and construction companies through its highly consistent performance. The Company’s success in delivering on its goals was recognised by the business community, with the Group making it into the top three construction companies in Russia for reliability, measured by the amount of bank guarantees issued. For example, in 2022, bank guarantee limits with our key partner banks (Sber, VTB Bank, Gazprombank, etc.) exceeded RUB 80 billion. We have also substantially expanded our highly diversified project portfolio. By 2022-end, the Company had more than 300 completed and over 200 active projects of various types and scales, with more than RUB 200 billion worth of new contracts awarded. Over the past six years, MSU-1 GC completed more than 160 projects of various types: residential and business construction, social infrastructure, mixed-use developments, roads, bridges, and remediation of landfills for municipal solid waste. The Company also carried out unique large-scale reconstruction projects, such as the Cosmos pavilion (VDNH), the Children’s Musical Theatre of Young Actors, and many more.
Competitive advantages
MSU-1 GC’s business is vital to the national economy, as we build comfortable, modern homes, roads, and other projects that are critical for the entire country. Thanks to our hard work, millions of people across Russia have heat and light in their homes, children have access to education at tech-enabled schools, and the quality of social infrastructure has soared to new heights. The Company is rapidly growing, with 4.8 million m2 of property of all types built between 2014 and 2022.
Over its 24-year history, MSU-1 GC has transformed into a digital vertically integrated business that combines the roles of the general construction contractor, EPCM contractor, general design contractor, and manufacturer of certain types of building materials. Leadership in diversifying its fast-growing project portfolio and effective engagements with both government and commercial customers have become real competitive differentiators for the Company. Many years of expertise, digitised business processes, and a shared ecosystem for customers, contractors, and Company employees enable us to rapidly deliver on the most ambitious of challenges. Most of our operations are performed in-house using cutting-edge construction technology to ensure MSU-1 GC’s resilience as the construction industry goes through a transformation amid ongoing economic volatility.
A key focus area for MSU-1 GC is custom-build homes tailored to the individual customer’s requirements and needs. I am proud that the Company acted as general contractor on landmark projects such as the Rzhev Memorial to the Soviet Soldier, and the restoration of the Cosmos pavilion at VDNH and the Children’s Musical Theatre of Young Actors. I would also like to highlight our work on the construction of buildings for the Voronovskoye Moscow Clinical Centre for Infectious Diseases, which MSU-1 GC completed in record time.
ESG agenda
The Company fully recognises the great social responsibility that must be shouldered by large businesses, including construction companies, whose goal is to improve housing quality. That is why all ESG projects are under the close scrutiny of MSU-1 GC management.
For example, as part of the renovation programme, the Company has built over 300,000 m2 of projects, with over 240,000 m2, of property in progress and 900,000 m2 planned to be built.
Another focus area, which is important for the Russian regions, is improving the quality of transport infrastructure: MSU-1 GC has built over 24 km of roads, bridges, and overpasses as well as more than 35 related engineering infrastructure facilities.
We are confident that every organisation can contribute to environmental efforts and take pride in being engaged in complex environmental projects and the remediation of municipal solid waste landfills (over 10 landfills in total). Sites where we have neutralised environmental risks measure over 177 ha, and our portfolio of environmental projects spans 300 ha.
Ultimately, all this is done for people, and people are the key asset of MSU-1 GC. Undoubtedly, projects delivered by the Company are our shared success, to which each and every one of the Group’s 12,000 employees has directly contributed.
The Company remains committed to employee and customer health and safety while driving community development. We also strive to adopt innovative technology and approaches in our operating processes so as to minimise our environmental footprint and reduce injury rates at construction sites.
Corporate governance
Despite the ongoing challenges, the Company has stuck to its strategy while remaining committed to the highest governance principles. This approach enables us to build and strengthen trust-based relationships with our clients, suppliers, shareholders, and other stakeholders.
Future plans
The Company has commitments towards its commercial and government customers and partners and is responsible for the timely and reliable construction of projects. With this in mind, we will maintain a strong focus on implementing our development strategy.
The changes that we have introduced over the past two years – and will continue to roll out this year – will provide a solid foundation supporting our sustained business success. In this light, MSU-1 GC is well poised to further grow its share of the Russian construction market.