Sistema PJSFC (SSA)
SISTEMA ANNOUNCES FINANCIAL RESULTS FOR THE FIRST QUARTER 2019
04-Jun-2019 / 10:00 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 FIRST QUARTER 2019
Moscow, Russia - 4 June 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 first quarter ended 31 March
2019.
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, and Medsi driven by excellent operating results and
financial discipline.
· Increased operational scale in real estate development: 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-three player in the Moscow and St Petersburg markets, bring
together complementary development portfolios, and allow Leader Invest to
leverage Etalon's general contracting capacity and regional sales network
to accelerate the construction and sales of its own projects, as well as
generating significant synergies in construction and reducing
administrative expenses.
· 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 Company has
also acquired shares from a number of minority shareholders in Ozon. As a
result, Sistema's direct ownership in Ozon stands at 21.9%. In addition,
venture fund Sistema_VC holds a 16.3% stake in Ozon. 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.
· Increased and crystalized value of pharmaceuticals business: In December
2018, Sistema acquired a stake in leading pharmaceutical company OBL Pharm
for RUB 1.83 billion, as part of an investment consortium consisting of
VTB and members of the OBL Pharm management team. The strategic aim of the
transaction is to merge OBL Pharm with Sistema's pharmaceutical holding,
Binnopharm, and to build the combined company, operating under the Alium
brand, into a top-five pharmaceutical producer in the commercial segment,
the fastest-growing segment of the Russian pharma market. In April 2019
the Russian Direct Investment Fund (RDIF), the Russia-China Investment
Fund (RDIF) and major Middle Eastern investors joined the project, and
will invest more than RUB 4 billion to acquire a stake in OBL Pharm.
· Debt portfolio optimisation via an active presence on the public bond
market: In February - April 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 via a
tender offer, and completed a secondary placement of the same amount,
issued two RUB 10 billion series 001P-009 and series 001P-10 bonds. The
placements generated significant investor interest in Sistema's debt
securities and demonstrated positive market perception of the
Corporation's investment case. Proceeds from these placements were used in
May 2019 to redeem at maturity the Company's USD 500 million Eurobond.
· Dividend payments: In March 2019, Sistema's Board of Directors resolved
to recommend that the Annual General Meeting of Shareholders approve
dividends for the full year 2018 of RUB 1,061.5 million (which corresponds
to RUB 0.11 per ordinary share or RUB 2.2 per GDR).
1Q 2019 FINANCIAL RESULTS
· Consolidated revenue increased by 10.4%[1] year-on-year to RUB 185.5
billion.
· Adjusted OIBDA[2] increased by 4.5% year-on-year to RUB 62.0 billion;
the adjusted OIBDA margin was 33.4%.
· Adjusted net profit attributable to Sistema[3] was RUB 15.7 billion.
Andrey Dubovskov, President and Chief Executive Officer of Sistema, said:
"Sistema continues to excel in our core competency: developing assets. Our
portfolio companies go off to a strong start to the year, delivering
excellent operational and financial results. Our portfolio companies
continued to set the trend in their respective markets, expanded the range
of products and services they offer customers, and increased their market
shares.
"Leveraging its core user base and advantages of scale, MTS is expanding in
attractive complementary digital industries - cloud services, e-sports and
Internet of Things. Detsky Mir continues to open new stores in Kazakhstan
and Belarus, transforming from a national to an international brand, while
simultaneously strengthening its e-commerce presence in the rapidly
developing Russian market. Segezha Group showcased historically strong
efficiency by posting a record OIBDA margin, while growing sales.
Agroholding Steppe continues to expand its business: revenue grew by triple
digits primarily due to growth in the Agrotrading segment. Steppe is also
continuing to build a port on the Azov Sea and two dairy farms in the Rostov
and Krasnodar regions. Medsi extended its lead over its competitors in the
private healthcare market, delivering high-quality growth in both the
Mandatory and Voluntary Health Insurance segments, as well as the individual
patients segment.
"As our portfolio companies continue to deliver strong results and generate
stable cash flow for the Corporation, work is underway at the Corporate
Centre to further crystallise the value of our businesses. In the first
quarter we focused on three areas: real estate, pharmaceuticals and
e-commerce.
"With the sale of a controlling stake in Leader Invest to Etalon Group and
the subsequent acquisition of a stake in Etalon, we laid the groundwork for
creation of a new residential real estate market leader in Moscow and St.
Petersburg. Integration of the two businesses is underway and we expect to
see benefits of synergies and scale in the near future. Another major
project relates to our pharmaceuticals business. We acquired leading Russian
pharmaceutical company OBL Pharm as part of a consortium of investors, and
are currently working to merge it with our existing asset, Binnopharm, under
the brand name Alium. In April, the RDIF, RCIF and major Middle Eastern
sovereign wealth funds signed on as co-investors, confirming the strong
investment case for this project.
"We also increased our stake in leading multi-category online retailer Ozon
through the consolidation of a stake owned by MTS and acquisition of shares
of several minority shareholders. Ozon is well placed to emerge a
market-leader from the fragmented e-commerce sector as the market leader,
which will enhance the value of Sistema's stake in the company. By
increasing our stake, Sistema aims to focus more resources and energy toward
this goal."
***
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 (CEST) / 5:00 pm (Moscow time) to
present and discuss the 1Q 2019 results.
To participate in the conference call, please dial:
Russia
+7 495 646 9190
8 10 8002 8675011 (toll-free)
UK
+44 330 336 9411
0800 279 7204 (toll-free)
US
+1 929 477 0402
866 575 6539 (toll-free)
Conference ID: 7037035
Link to webcast: https://webcasts.eqs.com/sistema20190604 [1]
Or quote the conference call title: "Sistema First Quarter 2019 Financial
Results".
A replay of the conference call will be available on Sistema's website
www.sistema.com [2] for at least seven days after the event.
For further information, please visit www.sistema.com [2] 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
(RUB million) 1Q 2019 1Q 2018 Change
Revenue 185,544 168,014 10.4%
Adj. OIBDA 61,962 59,269 4.5%
Operating profit 27,885 26,490 5.3%
Net profit/(loss) attributable to Sistema 16,641 (1,243) -
Adj. net profit / (loss) attributable to 15,713 (215) -
Sistema
In 1Q 2019, Sistema's consolidated revenue increased by 10.4% year-on-year
as a result of increased revenue from key assets: MTS, thanks to strong
results from the business in Russia and Ukraine; Detsky Mir, as a result of
the ramp-up of stores opened in 2017-18, improved like-for-like sales in
Russia and Kazakhstan and increased contributions from the e-commerce
segment; Segezha Group, primarily as a result of strong sales in the paper
and packaging segment; Agroholding Steppe, due to positive dynamics in the
agrotrading business, launch of the sugar and grocery product marketing
division, and stronger revenue from the Dairy and Vegetable divisions;
Medsi, as a result of a nearly three-fold increase in in-patient volumes
under the Mandatory Health Insurance programme, revenue growth in the
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