DJ SISTEMA ANNOUNCES FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2018
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Sistema PJSFC (SSA)
SISTEMA ANNOUNCES FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2018
03-Apr-2019 / 10:15 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
SISTEMA ANNOUNCES FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FULL YEAR 2018
Moscow, Russia - 3 April 2019 - Sistema PJSFC ("Sistema" or the "Company",
together with its subsidiaries, "the Group") (LSE: SSA, MOEX: AFKS), a
publicly-traded diversified Russian holding company, today announces its
unaudited consolidated financial results in accordance with International
Financial Reporting Standards (IFRS) for the fourth quarter 2018 and audited
consolidated financial results in accordance with International Financial
Reporting Standards (IFRS) for full year ended 31 December 2018.
SUCCESSFUL DELIVERY AGAINST STRATEGIC AND OPERATIONAL GOALS
· Sustained revenue growth1 due to strong results from the majority of
portfolio companies.
· At least double digit OIBDA growth at MTS, Detsky Mir, Segezha Group,
Agroholding Steppe, Medsi, RTI, BPGC and hospitality assets under new IFRS
standards, driven by excellent operating results and financial discipline.
· Added operational scale in real estate development and increased sector
attractiveness for investors: In February 2019, Sistema sold 51% of JSC Leader
Invest to Etalon Group, while retaining a 49% stake in the company. Following
this transaction, Sistema acquired 25% of Etalon Group for USD 226.6 million.
The transactions create a top-3 player in the Moscow and St Petersburg
markets, bring together complementary development portfolios, allow Leader
Invest's projects to leverage Etalon's general contracting capacity and
regional sales network to accelerate construction and sales, and realise
significant synergies in construction as well as reduction of administrative
expenses.
· Increased and crystalized value of pharmaceuticals business: In December
2018, Sistema acquired a stake in a leading pharmaceutical company, OBL Pharm,
for RUB 1.83 billion. Sistema made the acquisition as a member of a consortium
of investors that also included VTB Bank and members of the OBL Pharm
management team. The strategic aim of the transaction is the merger of OBL
Pharm with Sistema's pharmaceutical holding, Binnopharm, and utilisation of
synergies in marketing and sales, combining R&D functions and reducing
administrative costs. The medium-term goal of the combined company is to
become a top-5 Russian pharmaceuticals producer in the non-state segment, the
fastest-growing segment in the Russian pharma market.
· Strengthened position in the fast-growing e-commerce market: In February
2019, Sistema acquired 18.7% of Russia's leading multi-category online
retailer, Ozon Holdings, from MTS for RUB 7.9 billion. The decision to
increase the stake is based on Sistema's strategic bet on growth prospects for
e-commerce and market consolidation through investments in the market leader.
· MTS Bank divestment to maximise synergies between telecommunications and
banking businesses: In February 2019, Sistema sold 39.5% of PJSC MTS Bank to
PJSC MTS for RUB 11.4 billion. As a result of the transaction, Sistema's stake
in MTS Bank declined to 5.0% and MTS's stake increased from 55.2% to 94.7%.
MTS's consolidation of MTS Bank will facilitate deeper integration of the bank
with MTS and rapid development of an ecosystem of digital bank services.
· Debt portfolio optimisation via an active presence on the public bond
market: In February-March 2019, Sistema successfully returned to the local
capital market. The Corporation repurchased series 001P-07 bonds in the amount
of RUB 482.2 million out of the total of RUB 10 billion during a tender offer,
and completed a secondary placement of this amount, issued a RUB 10 billion
001P-090 series bond and successfully closed the books on a RUB 10 billion
001P -10 series issue. The placements generated significant investor interest
in Sistema's debt securities and demonstrated positive market perception of
the Corporation's investment case. The funds raised will be used to refinance
existing debt.
· Dividend payments: In March 2019, Sistema's Board of Directors resolved to
recommend to the Annual General Meeting of Shareholders to be held on 29 June
2019 to pay dividends based on 2018 results in the amount of RUB 1,061.5
million (which corresponds to RUB 0.11 per ordinary share or RUB 2.2 per GDR).
FY 2018 FINANCIAL RESULTS
· Consolidated revenue[1] increased by 12.1% year-on-year to RUB 777.4
billion.
· Excluding the impact of new IFRS standards,[2] Group revenue increased by
11.1% year-on-year to RUB 770.2 billion.
· Adjusted OIBDA[3] increased by 34.3% year-on-year to RUB 265.3 billion; the
adjusted OIBDA margin was 34.1%.
· Excluding the impact of new IFRS standards, adjusted OIBDA increased by
11.3% year-on-year to RUB 219.8 billion; the adjusted OIBDA margin was 28.5%.
· Adjusted net profit attributable to Sistema was RUB 1.1 billion.
· Excluding the impact of new IFRS standards, adjusted net profit attributable
to Sistema declined by 98.5% to RUB 0.1 billion.
4Q 2018 FINANCIAL RESULTS
· Group revenue increased by 15.5% year-on-year to RUB 225.1 billion.
· Excluding the impact of new IFRS standards, Group revenue increased by 12.7%
year-on-year to RUB 219.8 billion.
· Adjusted OIBDA increased by 45.5% year-on-year to RUB 66.8 billion; the
adjusted OIBDA margin was 29.7%.
· Excluding the impact of new IFRS standards, adjusted OIBDA increased by
15.5% year-on-year to RUB 53.0 billion; the adjusted OIBDA margin was 23.8%.
· Adjusted net profit attributable to Sistema was RUB 391 million.
· Excluding the impact of new IFRS standards, the adjusted net loss
attributable to Sistema was RUB 2.0 billion.
· Net financial liabilities[4],[5] at the Corporate Centre were RUB 213.4
billion as of 31 December 2018.
· Cash position5 at the Corporate Centre as of 31 December 2018 was RUB 9.8
billion.
SISTEMA'S CURRENT STRATEGIC IMPERATIVES
· Maximise shareholder value and reduce market capitalisation discount to NAV
· Attract third-party capital to enhance investment resources
· Reduce gross debt at the Corporate Centre to RUB 140-150 billion
Andrey Dubovskov, President and Chief Executive Officer of Sistema, said:
"Sistema delivered impressive financial and operating results in 2018. Group's
revenue for the year increased by 12% to RUB 777 billion on the back of robust
growth of our key assets. Most assets grew at significantly above the average
growth rates of the markets in which they operate. Notably, MTS, Detsky Mir,
Segezha Group, Agroholding Steppe and Medsi strengthened their leadership
positions in their respective industries. MTS is not only increasing revenue
from mobile services and smartphone sales, but is also entering new, adjacent
high-growth markets including IT outsourcing, Internet of Things, cloud
services, e-sports and web-based event ticket sales. Detsky Mir continues to
grow its business in Russia and Kazakhstan, and has expanded to Belarus and
launched a pet supplies business - all while increasing profitability. Segezha
Group continues to expand its product lines, focusing on demand from
high-opportunity export markets. Agroholding Steppe is now a top-6 Russian grain
exporter and continues to demonstrate strong growth across all its main business
segments. Steppe also launched its own retail brand as it aims to grow closer to
consumers. Based on FY 2018 performance, Medsi has established itself as the
leading private healthcare business in Russia by revenue and one of the
fastest-growing healthcare businesses globally.
"Group adjusted OIBDA increased by 34% thanks to double-digit OIBDA growth at
all key portfolio companies. The new IFRS accounting standards had a significant
impact on the results of MTS and Detsky Mir, though on a like-for-like basis
these companies also delivered strong OIBDA growth.
"In late 2018 and early 2019 we completed a number of strategic transactions,
demonstrating that we continue to add value to our assets in an environment
where we have limited investment resources. As part of a consortium of investors
we acquired a leading Russian pharmaceutical company, OBL Pharm, and plan to
merge it with our pharmaceutical holding, Binnopharm, significantly increasing
the value of that business. In future we plan to bring the combined company to
the public markets. As a result of transactions involving Leader Invest and
Etalon Group, we have changed the landscape of the Russian residential property
market, establishing a company that is a top-3 developer in the Moscow and St
Petersburg markets by construction volumes and sales. Additionally, we continued
to increase our exposure to Ozon, the leading multi-category online retailer.
This transaction represents Sistema's strategic investment in the fast-growing
e-commerce industry through a company that is poised to consolidate this highly
fragmented market.
"We have somewhat modified the Group strategy adopted last year to reflect
current market conditions, though our key objectives remain unchanged: maximise
shareholder value and reduce the discount between market capitalisation and net
asset value, attract third-party capital to diversify and expand our investment
resources, and reduce gross debt to RUB 140-150 billion. In the coming years our
focus will be on growing the value of four portfolio companies - Agroholding
Steppe, Segezha Group, Medsi and Ozon. We are targeting valuations of USD 1-2
(MORE TO FOLLOW) Dow Jones Newswires
April 03, 2019 03:16 ET (07:16 GMT)
DJ SISTEMA ANNOUNCES FINANCIAL RESULTS FOR THE -2-
billion for each of these companies. We view these companies - which we will
ultimately contemplate to bring to capital markets - as catalysts to enhance
Sistema's valuation and the key to reducing the discount.
"Given the need to strike a balance between decreasing debt, continuing to
invest and delivering returns to shareholders, the Board of Directors has
recommended that the General Meeting of Shareholders approve dividends for the
full year 2018 in the amount of RUB 1.1 billion, or RUB 0.11 per share. As we
previously stated, after the debt load has been substantially reduced, the
Company will return to the question of dividend payments, with the aim of
strengthening our investment case."
***
Conference call information
Sistema's management will host a conference call today at 10:00 am (New York
time) / 3:00 pm (London time) / 4:00 pm (CET) / 5:00 pm (Moscow time) to present
and discuss the FY 2018 results.
To participate in the conference call, please dial:
Russia
+7 495 213 1767
8 800 500 9283 (toll-free)
UK
+44 330 336 9125
0800 358 6377 (toll-free)
US
+1 323 794 2588
888 394-8218 (toll-free)
Conference ID: 2565520
Link to webcast: https://webcasts.eqs.com/sistema20190403
Or quote the conference call title: "Sistema Fourth Quarter and Full Year 2018
Financial Results".
A replay of the conference call will be available on Sistema's website
www.sistema.com [1] for at least seven days after the event.
For further information, please visit www.sistema.com [1] or contact:
Investor Relations Public Relations
Nikolai Minashin Sergei Kopytov
Tel.: +7 (495) 730 66 00 Tel.: +7 (495) 228 15 32
n.minashin@sistema.ru kopytov@sistema.ru
FINANCIAL SUMMARY AND GROUP OPERATING REVIEW
Excluding impact of
new IFRS standards
(RUB 4Q 4Q Change FY FY Change 4Q Change FY Change
million) 201 201 201 201 201 201
8 7 8 7 8 8
Revenue 225 194 15.5% 777 693 12.1% 219 12.7% 770 11.1%
,11 ,98 ,40 ,42 ,84 ,19
4 8 5 4 3 6
Adj. 66, 45, 45.5% 265 197 34.3% 53, 15.5% 219 11.3%
OIBDA 796 915 ,27 ,55 043 ,82
3 8 9
Operating 32, 13, 141.5% 128 90, 42.4% 25, 85.8% 114 26.3%
income 664 524 ,60 290 127 ,00
0 3
Loss (15 (98 - (45 (94 - (17 - (46 -
attributa ,21 ,89 ,89 ,60 ,62 ,95
ble to 5) 0) 8) 2) 7) 2)
Sistema
Adjusted 391 (2, - 1,1 4,1 (73.0%) (2, - 60 (98.5%)
profit/(l 167 14 19 021
oss) ) )
attributa
ble to
Sistema
In 2018, Sistema's consolidated revenue increased by 12.1% year-on-year as a
result of increased revenue from key assets: MTS, as the core telecoms business
benefitted substantially from a better pricing environment in Russia, data usage
increased, revenue from new business lines accelerated rapidly and smartphone
sales were strong; Detsky Mir, on the back of new store openings, growth in
like-for-like sales, growth in the e-commerce segment and increased traffic at
previously opened stores; Segezha Group, as a result of increased sales volumes
of paper and packaging, higher prices for paper and sawn timber, and weakening
of the rouble; Agroholding Steppe, due to growth of the field crop segment as
wheat prices have increased, strong growth of the agrotrading division and
increased milk production; Medsi, due to increased capacity utilisation and as a
result in-patient revenue, higher revenue from the CDC at Krasnaya Presnya and
expansion of the chain of clinics; and real estate assets, driven by sales
growth and earlier revenue recognition due to the adoption of the IFRS 15
standard.
Group adjusted OIBDA increased by 34.3% on the year, reflecting strong results
at MTS, primarily due to the new accounting standards, increased revenue and
strong performance of the Ukrainian business; Detsky Mir as a result of the new
IFRS standards, optimisation of buying prices, efficient management of the
product assortment and increased operational efficiency; Segezha Group, as a
result of increased prices on most key products as well as the commissioning of
a new papermaking machine in late 2017; Agroholding Steppe, due to increased
operational efficiency in the field crop segment and increased contributions
from the agrotrading segment; Medsi, as capacity utilisation of key assets
ramped up and revenue per square metre of medical facilities rose. Excluding the
effect of the new accounting standards, Group adjusted OIBDA increased by 11.3%
versus 2017 primarily as a result of growth at MTS, Detsky Mir, Segezha,
Agroholding Steppe and Medsi. The adjusted OIBDA margin increased by 5.6 p.p. to
34.1%, principally as a result of the new accounting standards. Without taking
into account the new standards, the adjusted OIBDA margin was unchanged at
28.5%.
Group selling, general and administrative expenses (SG&A) for the full year 2018
decreased by 7.5% versus 2017 to RUB 141.6 billion, mainly due to the new IFRS
standards. Without this effect, Group SG&A increased by 6.8% to RUB 163.5
billion. The SG&A/revenue ratio declined year-on-year from 22.1% to 18.2%;
excluding the impact of new IFRS standards the SG&A/revenue ratio declined to
21.2%, reflecting Sistema's continued success in improving operational
efficiency. SG&A at the Corporate Centre declined year-on-year by 10.3% to RUB
9.0 billion as a result of cuts in headcount, lower compensation expense and
reduced administrative expenses.
Group capital expenditures increased by 18.8% year-on-year to RUB 124.0 billion
in 2018, mainly in connection with increased capex at MTS as a consequence of
increased investments in network development in Russia and a focus on providing
the best LTE coverage in line with the company's strategy; and Detsky Mir, as
the company executed on its expansion strategy.
OPERATING REVIEW[6]
MTS
Leading telecommunications operator and digital services provider in Russia
Excluding impact of
new IFRS standards
(RUB 4Q 4Q Change FY FY Change 4Q Change FY Change
million) 201 201 201 201 20 2018
8 7 8 7 18
Revenue 130 116 11.3% 480 442 8.4% 130,5 11.8% 482,4 8.9%
,06 ,82 ,29 ,91 67 69
4 3 2 0
Adj. 54, 44, 24.0% 218 178 22.7% 47,17 6.5% 188,7 5.9%
OIBDA 970 313 ,83 ,35 4 95
3 8
Operating 28, 22, 28.9% 114 94, 20.7% 25,91 17.4% 106,8 12.8%
income 445 066 ,24 671 2 17
5
Adj. 8,7 6,7 29.2% 32, 29, 10.1% 9,520 40.9% 34,11 14.0%
profit 31 57 951 926 8
attributa
ble to
Sistema
In 4Q 2018 and FY 2018 revenue at MTS rose by 11.3% and 8.4% year-on-year,
respectively, driven by robust performance of Russian operations as the core
telecoms business benefitted substantially from a better pricing environment in
Russia, data usage increased, revenue from new business lines accelerated
rapidly, smartphone sales were strong, and as a result of the consolidation of
MTS Bank. The new IFRS standards had a non-material negative effect on revenue.
Adjusted OIBDA grew by 24.0% and 22.7% in 4Q and FY 2018, respectively, due to
the effect of new accounting standards, revenue growth, the consolidation of MTS
Bank and strong performance of the Ukrainian business. The abolition of internal
roaming and increased payments for frequency spectrum in Russia had a negative
impact on OIBDA. Excluding the effect of the new standards, adjusted OIBDA
increased by 6.5% and 5.9% in 4Q and FY 2018, respectively. The adjusted OIBDA
margin strengthened by 4.3 p.p. and 5.3 p.p. to 42.3% and 45.6% in 4Q and FY
2018, respectively.
In 3Q 2018 MTS recorded a provision of RUB 55.8 billion as the potential
liability in respect of an investigation by the US Securities and Exchange
Commission (SEC) and the US Department of Justice (DOJ). On 7 March 2019 MTS
announced a settlement with the SEC and DOJ under which MTS has agreed to pay
USD 850 million.
Including the provision, MTS's net profit attributable to Sistema for FY 2018
was RUB 3.4 billion. Excluding the effect of this one-time factor, adjusted
profit for FY 2018 was RUB 33.0 billion.
During calendar year 2018 MTS paid dividends totalling RUB 52 billion, or RUB
26.0 per ordinary share, in line with the company's dividend policy for
2016-2018.
OUTLOOK FOR 2019
MTS forecasts revenue growth of above 3%.
MTS targets keeping OIBDA flat, but expects Adjusted OIBDA dynamics to be
slightly negative.
Excluding costs for compliance with the Yarovaya law, MTS maintains its capex
forecast at around RUB 160 billion in 2018-2019. MTS lowers its estimate of
additional investment required to comply with the Yarovaya law from RUB 60
billion to RUB 50 billion over five years. Taking into account expenditures due
to the Yarovaya law, MTS expects capital expenditures to be approximately RUB 90
billion in 2019.
SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
On 21 March 2019, MTS announced a new dividend policy for 2019-2021. Under the
new dividend policy, the company will seek to pay at least RUB 28.0 per ordinary
MTS share per calendar year, distributed in two semi-annual payments.
In February 2019, MTS acquired a 39.48% stake in MTS Bank from Sistema for RUB
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April 03, 2019 03:16 ET (07:16 GMT)
DJ SISTEMA ANNOUNCES FINANCIAL RESULTS FOR THE -3-
11.4 billion, bringing its share in MTS Bank to 95%.
In March 2019, a class action lawsuit was filed in the US District Court for the
Eastern District of New York against MTS and certain of its managers alleging
certain securities-law violations relating to the MTS's recently announced
resolution of US government investigations. MTS is reviewing the allegations and
intends to defend its interests.
Detsky Mir[7]
The largest children's goods retailer in Russia
Excluding impact of
new IFRS standards
(RUB 4Q 4Q Change FY FY Change 4Q Change FY Change
million) 20 20 201 2017 201 201
18 17 8 8 8
Revenue 34 30 13.0% 110 97 14.3% 34, 13.0% 110 14.3%
,3 ,3 ,87 ,0 308 ,87
08 54 4 03 4
Adj. 6, 4, 48.5% 21, 10 98.0% 4,6 8.0% 12, 18.8%
OIBDA 37 29 115 ,6 33 666
2 1 64
Operating 4, 3, 30.7% 11, 8, 40.0% 3,7 1.3% 9,7 21.8%
income 81 68 232 02 32 70
3 2 4
Adj. 1, 1, 41.5% 3,2 2, 14.6% 1,4 8.7% 3,7 31.1%
profit 93 37 92 87 89 65
attributa 7 0 1
ble to
Sistema
In FY 2018 and 4Q 2018 Detsky Mir's revenue grew by 14.3% and 13.0%
year-on-year, respectively. Growth was driven by new store openings, an increase
in like-for-like (LFL) sales and online sales, as well as the continued ramp-up
of stores opened in 2017. LFL sales in Russia increased by 3.0% in 4Q
year-on-year and by 4.3% for FY 2018. Growth of LFL sales in Kazakhstan
increased by 30% year-on-year in KZT terms. The online segment[8] remained the
fastest-growing channel, with revenue growing by 82% to RUB 3.6 billion in 4Q
2018 and almost doubling for FY 2018 to RUB 8.8 billion. The online store
accounted for 7.9% of total sales in FY 2018, compared to 4.8% in 2017.
Adjusted OIBDA increased by 48.5% year-on-year in 4Q 2018 to RUB 6.4 billion.
Excluding the impact of new accounting standards, adjusted OIBDA rose by 8.0% to
RUB 4.6 billion, due in large part to optimisation of purchasing costs,
effective management of the assortment and increased operational efficiency. The
adjusted OIBDA margin increased by 8.1 p.p. for FY 2018 to 19.0%, and by 4.4
p.p. year-on-year for 4Q 2018 to 18.6%. Excluding the effect of new accounting
standards, the adjusted OIBDA margin for 4Q 2018 was 13.5%. With the new
accounting standards, the adjusted SG&A to revenue ratio decreased from 21.4% to
15.8% year-on-year in 4Q and decreased from 22.8% to 14.1% in 2018. Excluding
this effect, the ratio decreased by 0.6 p.p. year-on-year in 4Q and by 1.0 p.p.
in FY 2018.
Adjusted profit attributable to Sistema increased substantially in 4Q and FY
2018 due to increased operational efficiency and a reduction in SG&A to RUB 5.4
billion and RUB 15.7 billion, respectively. Excluding the effect of the new
accounting standards, profit increased by 31.1% in 2018.
100 new Detsky Mir stores were opened in 2018. As of 31 December 2018, the total
number of stores[9] stood at 743. In the medium term the company intends to open
at least 300 Detsky Mir stores with a target IRR of approximately 40% in the
next four years.
In December 2018, Detsky Mir opened the first Zoozavr branded store selling pet
supplies. Zoozavr offers pet products including pet food (including medical),
veterinary medicines, bath products, hygiene and grooming products and more.
Developing the new chain will allow the company to diversify its business and
apply its many years of experience and expertise in the retail sector.
SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
In February 2019, Detsky Mir opened its first store in Belarus, with total area
of 1,690 sq m. In Belarus, Detsky Mir operates under the Detmir brand.
In March 2019, Detsky Mir acquired a building in central Moscow that will house
the company's flagship store. The former Valday shopping complex building, with
3,624.5 sq m of space, is located at 11 New Arbat, building 1. The opening of
the flagship store is planned for the second half of 2019.
In March 2019, Detsky Mir announced that management would recommend allocating
100% of net profit for 4Q 2018 under Russian Accounting Standards (RAS) as
dividends, a total of RUB 3.3 billion. In March 2019, the Expert RA (RAEX)
rating agency assigned Detsky Mir a long-term credit rating of ruA+ with a
Stable outlook.
Segezha Group
Leading Russian vertically integrated forestry holding
Excluding impact
of new IFRS
standards
(RUB 4Q 4Q Change FY FY Change 4Q Change FY Change
million) 201 201 20 20 201 201
8 7 18 17 8 8
Revenue 15, 11, 39.6% 57,88 43 32.4% 15, 39.6% 57, 32.4%
872 370 9 ,7 872 889
25
Adj. 3,9 2,0 90.4% 12,98 7, 83.4% 3,6 78.6% 12, 70.8%
OIBDA 15 56 4 08 73 090
1
Operating 2,7 702 296.1% 8,178 3, 161.1% 2,6 270.7% 7,7 145.9%
income 81 13 03 03
2
Adj. 840 310 170.7% 54 81 (33.9%) 880 183.6% 323 297.2%
profit
attributa
ble to
Sistema
Segezha Group's revenue grew by 39.6% and 32.4%, respectively, in 4Q and FY
2018. The main growth driver was revenue from the Paper and Packaging division,
which accounted for 70% of total revenue. Revenue growth was driven by increased
sales volumes and higher prices for paper. Revenue for the year was also
positively affected by growth of prices for sawn timber through the first nine
months of the year and the depreciation of the rouble by 13.8% against the US
dollar and 10.4% against the euro in 4Q. In 2018 the average rouble rate
decreased by 7.5% against the dollar and by 12.2% against the euro.
Adjusted OIBDA increased year-on-year by 90.4% and 83.4% for 4Q and FY 2018,
respectively. Growth was driven by increased prices for most of Segezha's key
products, as well as the commissioning of a new paper-making machine at the end
of 2017, which added RUB 2.6 billion at the OIBDA level. The adjusted OIBDA
margin increased by 6.6 p.p. year-on-year in 4Q and rose by 1.7 p.p. for FY 2018
to 24.7% and 19.8%, respectively, due to price increases. The introduction of
the new IFRS 16 standard had a positive effect on adjusted OIBDA of RUB 242
million in 4Q 2018 and RUB 894 million in FY 2018.
Paper output increased by 18% year-on-year to 375.4[10] thousand tonnes due to
the commissioning and ramp-up of the new paper-making machine at the Segezha
Pulp & Paper Mill. Segezha Group's sales of sack paper increased by 19.6% to
244.0 thousand tonnes, driven by increased shipment volumes under current
contracts and expansion of the client portfolio.
In 2018 Segezha sold 1,284 million paper sacks, an increase of 7.8% versus the
year prior. Growth in production volumes was driven by the launch of the second
Triumph 5 QT SK paper-bag production line at Salsk, with total capacity of 25
million bags per year. Higher production volumes year-on-year were also
supported by improved order planning and as a result increased productivity at
existing facilities.
Birch plywood sales volumes increased by 26.0% to 119.8 thousand cu m in 2018.
Output growth was driven by the launch of the new plywood production facility in
the Kirov region in July 2018. Higher production volumes drove an expansion of
the client portfolio in the transport and formwork segments.
Sawn timber output increased by 3.1% to 924 thousand cu m in 2018 compared to
2017 due to increased production efficiency at Lesosibirsk. Sales volumes grew
by 4.1% on the back of higher production volumes, and also due to optimisation
of rail transport and new shipment channels.
In December 2018, a pelleting plant with capacity of 70 thousand tonnes of
pellets per year was commissioned at Lesosibirsk. The facility is used to
process sawdust and wood chippings generated as waste during timber production
processes.
In 4Q 2018 a multi-fuel boiler running on bark and wood waste was launched at
Segezha facility. The boiler will increase heat production at the facility by
25% and reduce the use of expensive fuel oil.
SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
In January 2019 an energy efficiency project was launched at the Vyatsk Plywood
Plant to utilise wood waste instead of natural gas. The project will reduce the
plant's costs by RUB 43.5 million.
Agroholding Steppe
Major agriculture holding and one of Russia's largest land owners
Excluding impact of
new IFRS standards
(RUB 4Q 4Q Change FY FY Change 4Q Change FY Change
million) 2018 2017 20 20 2018 201
18 17 8
Revenue 9,612 3,385 183.9% 24 10 136.6% 9,612 183.9% 24, 136.6%
,1 ,2 161
61 10
OIBDA 179 128 39.7% 4, 4, 22.1% 72 (43.8%) 4,6 14.9%
90 01 17
9 9
Operating (411) (388) - 3, 2, 23.2% (438) - 3,1 18.9%
(loss)/pr 26 64 47
ofit 1 7
Net (1,03 (680) - 1, 1, (3.1%) (924) - 1,2 10.0%
(loss)/pr 8) 09 13 43
ofit 5 0
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April 03, 2019 03:16 ET (07:16 GMT)
attributa
ble to
Sistema
Agroholding Steppe delivered significant revenue growth of 136.6% year-on-year
in 2018, to RUB 24.2 billion. The revenue increase was driven by growth in the
field crop segment, the intensive development of agrotrading and entry into
sugar and groceries trading segments, as well as increased production volumes in
the Dairy segment.
OIBDA grew by 22.2% year-on-year to RUB 4.9 billion for FY 2018 as a result of
higher operational efficiency in the field crop segment and the impact of growth
in the Agrotrading segment.
Capex increased by 18.8% to RUB 1.9 billion for 2018 due to the beginning of new
projects implementation in the Dairy segment and logistics which provide for
production increase and vertical integration of the business.
The increase in net debt was due to purchases of grain from third parties as
part of Steppe's agrotrading activities, as well as the start of financing of
new investment projects in line with the capex programme.
The results of the field crop segment came under pressure from dry conditions in
grain producing Russia's regions, which led to a slight decrease in the gross
wheat crop during the 2018 season. The average export price for Steppe's wheat
increased by more than 15% year-on-year; combined with the high proportion of
high-quality wheat and growth of export volumes offset the decrease in
harvesting volumes.
Steppe's land bank increased to 401 thousand hectares as of the end of 2018
following acquisitions of new agricultural assets in the Rostov region.
Grain export volumes in 2018 exceeded 1.1 million tonnes, a fourfold increase
year-on-year, putting Steppe among Russia's six largest exporters of grain for
the first half of the 2018 grain season.
The Dairy segment delivered stable growth of operational results. Gross milk
yield for 2018 increased by 18.3% to more than 46.5 thousand tonnes, while
productivity per cow increased by 5.4% year-on-year. As of the end of the year
the herd numbered approximately 4,800 cows.
The gross vegetable harvest in 2018 increased by 2.7% to 46.3 thousand tonnes,
which is a record for this segment of Steppe's business.
In December 2018 Steppe launched its own retail brand for the company's produce
in the fresh segment across the whole of Russia. Vegetables and fruit will be
sold under a single brand, along with dozens of grains and sugar from the
Investprom-opt trading house, which Steppe acquired in November 2018.
SIGNIFICANT EVENTS AFTER THE END OF THE REPORTING PERIOD
In February 2019, Steppe and the Government of the Rostov region signed an
Agreement on Cooperation with the aim of building a grain terminal in the town
of Azov. Steppe plans to build a grain terminal with trans-shipment capacity of
more than 2 million tonnes. Total investment in the project will amount to
roughly RUB 1.1 billion.
Medsi
Leading private healthcare operator in Russia
Excluding impact of
new IFRS standards
(RUB 4Q 4Q Change FY FY Change 4Q Change FY Change
million) 201 2017 201 201 201 201
8 8 7 8 8
Revenue 5,5 3,475 60.3% 17, 11, 52.1% 5,5 60.3% 17, 52.1%
71 747 670 71 747
Adj. 1,6 303 440.9% 3,6 1,9 82.9% 1,5 403.8% 3,1 60.1%
OIBDA 39 00 68 28 51
Operating 836 (275) - 693 1,1 (39.3%) 799 - 557 (51.2%)
income 42
Adj. 909 283 221.2% 1,0 837 26.7% 929 227.6% 1,1 42.1%
profit 61 89
attributa
ble to
Sistema
Medsi's revenue increased by 60.3% year-on-year in 4Q 2018 to RUB 5.6 billion
due to a fourfold increase in in-patient treatments under the Mandatory Health
Insurance programme (MHI), revenue growth of 26% to RUB 1.9 billion in the
Voluntary Health Insurance segment (VHI), and an increase in revenue from
individual patients of 15% to RUB 1.5 billion. Revenue for 2018 increased by
52.1% to RUB 17.7 billion due to increased capacity utilisation and, as a
result, revenue from in-patient services increased 27.7% to RUB 5.4 billion,
higher revenue from the CDC at Krasnaya Presnya in Moscow as well as the
expansion of the clinic network following acquisitions of clinics in St
Petersburg and Perm and the opening of three new clinics in Moscow. The average
cheque increased by 43.4% to RUB 2,100, primarily due to the increased
proportion of complex procedures in the in-patient segment and the diagnostic
segment, and also due to the effect of higher prices in line with market trends.
Adjusted OIBDA increased by 440.3% and 82.9% in 4Q and FY 2018, respectively,
due to the continued ramp-up of facilities and increase in revenue per sq m of
medical space. The new IFRS standards had an impact of RUB 200 million and RUB
449 million in the fourth quarter and full year 2018, respectively. The adjusted
OIBDA margin grew by 20.7 p.p. and 3.4 p.p. to 29.4% and 20.3% in 4Q and FY
2018, respectively thanks to growth in capacity utilisation and an increase in
efficiency per sq m.
Adjusted net profit increased by 220.6% in 4Q 2018 and 26.7% in FY 2018.
Excluding the effect of new accounting standards, adjusted net profit increased
by 227.6% and 42.1% in 4Q and FY 2018, respectively.
Revenue at the CDC at Belorusskaya in 4Q 2018 increased by 17% year-on-year, to
RUB 622 million. OIBDA increased by 20% to RUB 264 million and the OIBDA margin
grew by 1.2 p.p. to 42.4%.
In 4Q 2018 capacity utilisation at the Krasnaya Presnya CDC increased by 9 p.p.
to 39%, which helped drive a twofold increase in revenue to RUB 500 million and
a 4.8 p.p. increase in the OIBDA margin to 28.3%.
Real Estate (Leader Invest, Business-Nedvizhimost)
Full-cycle moscow development company and rental assets with a unique pool of
properties
Leader Invest
Excluding impact of
new IFRS standards
(RUB million) 4Q 4Q Change FY FY Change 4Q Change FY Change
20 2017 201 201 2018 201
18 8 7 8
Revenue 6, 2,521 152.5% 12, 6,3 100.9% 435 (82.8%) 2,9 (52.8%)
36 676 08 78
6
OIBDA 2, (301) - 3,1 415 654.6% (731) - (1, -
02 29 038
6 )
Operating 2, (288) - 2,9 221 1,253. (746) - (1, -
income / 01 90 3% 178
(loss) 1 )
Profit/(loss) 1, 91 1,011. 772 164 372.2% (1,25 - (2, -
attributable 00 8% 6) 104
to Sistema 7 )
Rental assets: Business Nedvizhimost
Excluding impact of
new IFRS standards
(RUB 4Q 4Q Change FY FY Change 4Q Change FY Change
million) 20 20 20 20 201 2018
18 17 18 17 8
Revenue 4, 2, 88.4% 7, 6, 31.0% 4,5 88.4% 7,887 31.0%
55 41 88 01 51
1 6 7 9
OIBDA 3, 1, 86.4% 4, 2, 59.3% 3,2 85.6% 4,553 57.7%
29 76 59 88 83
8 9 8 7
Operating 3, 1, 83.0% 4, 2, 60.9% 3,1 81.7% 4,229 59.1%
income 13 71 18 62 11
2 2 4 9
Profit 2, 1, 98.0% 3, 1, 90.1% 2,5 98.7% 3,163 91.1%
attributa 58 30 14 65 97
ble to 7 7 7 5
Sistema
Leader Invest
In 4Q 2018 Leader Invest's sales of real estate in Moscow grew 5.5x year-on-year
to 55 thousand sq m. Cash collections from sales reached RUB 10.1 billion thanks
to increased sales at a number of sites, primarily the business-class
developments at 120 Lobachevskogo and 4 Bulvar Yana Rainisa, the premium class
developments at 5 Pokrovsky Bulvar and the comfort class site at 14 Mishina as
well as sale of the Decart Business Centre.
As of the end of 2018 the sales portfolio including commercial real-estate and
parking spaces totalled 209.3 thousand sq m.
Leader Invest's revenue grew by 152.5% and 100.9% year-on-year to RUB 6.4
billion and RUB 12.7 billion in 4Q and FY 2018, respectively. The main sources
of revenue recognition in 4Q were the Vsevolozhsky, Pokrovsky, Chertanovskaya
and Michurinsky developments. Other developments that made a substantial
contribution to revenue in 2018 were Daev, Demyana Bednogo, Kavkazky Plyus, Yana
Rainisa and Fabritsiusa.
Revenue in 4Q and FY 2018 was driven primarily by an increased level of
completion of projects under construction and higher volumes of NSA available
for sale, primarily due to 120 Lobachevsky, as well as previously recognised
revenue due to the introduction of the IFRS 15 standard.
Excluding the effect of new accounting standards, revenue decreased in 2018 due
to the decrease in deliveries of new developments - in 2017 the premium class
Daev and Serpukhovsky projects were delivered, while in 2018 one business class
project was delivered, the Schastye v Mnevnikakh residential complex at 15 Ul.
Demyana Bednogo.
Positive trends in OIBDA and the OIBDA margin in 4Q and FY 2018 were due to
higher sales volumes and supply dynamics, as well as the impact of new IFRS
standards.
Factors driving the net loss for FY 2018 excluding the effect of new standards
were the decrease in revenue due to a lower number of project deliveries, and
also increased advertising spend.
Rental assets: Business Nedvizhimost
In 4Q 2018 revenue from Sistema's rental assets (Business Nedvizhimost and its
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April 03, 2019 03:16 ET (07:16 GMT)
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