ROSTELECOM PJSC (RKMD)
ROSTELECOM PJSC: ROSTELECOM ANNOUNCES ITS IFRS FINANCIAL AND OPERATING
RESULTS FOR THE SECOND QUARTER AND HALF YEAR 2019
02-Aug-2019 / 09:00 MSK
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
rostelecom announces its ifrs financial and operating results
for the second quarter and half year 2019
Q2 2019 DIGITAL SEGMENT[1] GROWTH OF 11%; 13% INCREASE IN OIBDA[2]; NET
PROFIT UP 40%
Moscow, Russia - August 2, 2019 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX:
ROSYY), the largest digital service provider in Russia, today announces its
consolidated financial results for the second quarter and half year of 2019
prepared in accordance with IFRS[3].
KEY ACHIEVEMENTS
- Revenue grew by 4% year-on-year in the second quarter of 2019;
- Digital segment sales increased by 11% in the second quarter, while its
contribution to total revenue reached 57%;
- OIBDA grew by 13 % in the second quarter of 2019 to RUB 27.2 billion;
- Net profit increased by 40% and reached RUB 4.3 billion;
- Free Cash Flow (FCF) [4] increased to RUB 11.4 billion in the second
quarter of 2019.
SECOND QUARTER 2019 FINANCIAL HIGHLIGHTS
- Revenue grew by 4% to RUB 80.2 billion compared to the second quarter of
2018
- OIBDA up by 13% to RUB 27.2 billion;
- OIBDA margin grew by 2.9 p.p. to 33.9% compared to the second quarter of
2018;
- Net profit increased by 40% to RUB 4.3 billion compared to the second
quarter of 2018;
- CAPEX[5] increased by 6% to RUB 15.2 billion (19.0% of revenue) from RUB
14.4 billion (18.7% of revenue) in the second quarter of 2018;
- FCF improved to RUB 11.4 billion compared to RUB (0.8) billion in the
second quarter of 2018;
- Net debt[6] increased by 8% since the beginning of the year to RUB 201.6
billion, resulting in a Net Debt/OIBDA ratio of 1.9x.
Key figures for 2Q 2019, RUB mln
RUB million 2Q 2019 2Q 2018 change, y-o-y
Revenue 80,160 77,365 4%
OIBDA 27,162 23,983 13%
OIBDA margin % 33.9% 31.0% -
Operating Income 9,756 8,342 17%
Operating margin % 12.2% 10.8% -
Net Income 4,319 3,094 40%
% of revenue 5.4% 4.0% -
Capital Expenditure 15,243 14,442 6%
% of revenue 19.0% 18.7% -
Net debt 201,587 193,497 4%
Net debt/ annualised OIBDA 1.9 2.0 -
FCF 11,388 (832) 12,220
FIRST HALF YEAR 2019 FINANCIAL HIGHLIGHTS
? Revenue increased by 3% to RUB 158.8 billion compared to the first half
of 2018;
? OIBDA increased by 13% year-on-year to RUB 53.5 billion compared to the
first half of 2018;
? OIBDA margin grew by 2.7 p.p. to 33.7% compared to the first half of
2018;
? Net profit increased by 43% to RUB 10.0 billion compared to the first
half of 2018;
? CAPEX[7] increased by 27% to RUB 37.6 billion (23.7% of revenue) from
RUB 29.6 billion (19.3% of revenue) in the first half of 2018;
? FCF improved to RUB (3.2)[8] billion compared to RUB (6.7) billion in
the first half of 2018.
Key figures for 1HY 2019, RUB mln
RUB million 6M 2019 6M 2018 change, y-o-y
Revenue 158,827 153,568 3%
OIBDA 53,543 47,534 13%
OIBDA margin % 33.7% 31.0% -
Operating Income 19,465 16,699 17%
Operating margin % 12.3% 10.9% -
Net Income 9,950 6,958 43%
% of revenue 6.3% 4.5% -
Capital Expenditure 37,586 29,567 27%
% of revenue 23.7% 19.3% -
Net debt 201,587 193,497 4%
Net debt/ annualised OIBDA 1.9 2.0 -
FCF (3,195) (6,681) 3,486
Mikhail Oseevskiy, President of Rostelecom, commented:
"In keeping with our strategy priority, Rostelecom continues to develop its
digital segment through the expansion of our customized digital services for
different client segments.
During the second quarter, Rostelecom launched RTK Key, an outdoor video
surveillance solution for residential properties. The platform's
capabilities can be enhanced by additional services available to developers,
management companies and residents. Home video surveillance and smart
intercom, which can be controlled via a mobile application, were the first
products available on the platform. In future, the platform will be
supplemented by other solutions such as remote meter readings, a smart gate
bar, a digital key, and others as part of Rostelecom's broader plan to
introduce a comprehensive cross-vertical line up of products including
"smart household", "smart apartment building" and "smart city".
We are seeing significant demand for virtual IT infrastructure from
corporate and state companies. To ensure our cloud services offering remains
competitive, we have expanded the bandwidth allocated to the virtual
offering by 10 times to 10 Gb/s, we have significantly increased the
availability and stability of services at all data centre sites, and we have
also commenced commercial operation of an additional 800 rack spaces at the
new "Udomlya" data centre.
A good example of our strategy in action is the recent introduction of Solar
MSS to the market as an updated ecosystem of cybersecurity services, which
includes nine mutually integrated managed services. The technological core
of this ecosystem is a platform built on breakthrough technology consisting
of SD-WAN software-defined networks. The mix of technologies selected as
part of Solar MSS ensures protection against all major types of attacks,
while providing the ability to focus our offering on the most critical
segments for each individual client organization. As Russia's leading
monitoring and response centre, Solar JSOC supplements all Solar MSS
services by providing expert analytics, cyber threat alerts and proven
methods to counter hacking. During the first half of 2019, our centre
recorded and prevented over 400,000 suspected cyber-attacks, enabling us to
protect our clients' business interests. Our leading competency in the cyber
security space has led to Rostelecom being entrusted for several years with
securing the back-end infrastructure behind public Q&A sessions with
President of Russia, with all cyber-attacks successfully repelled to date.
As part of our active promotion of industrial Internet solutions, where our
digital technologies and solutions enable corporate clients to realise
efficiencies, a remote function has been launched to control SIM-cards on
devices and sensors, operated in the M2M network. This has been designed to
help businesses of all sizes to optimise their internal processes, provide
new services, reduce costs and subsequently increase revenues. Together with
LUKOIL we also launched the first smart wells in the Perm region fields, to
help monitor and manage oil and gas equipment remotely.
Our many operational achievements in the digital business segment led to
strong financial results in the second quarter of 2019. The company recorded
growth across all key indicators: revenue increased by 4%, operating profit
before depreciation grew 13%, leading to a 40% increase in net profit. In
addition, our free cash flow, which services our ability to maintain our
dividend payments to shareholders, has significantly improved.
The double-digit growth rate of our digital business points to the momentum
the Company's transformation into a reliable digital partner for the
citizens, businesses, and the State has achieved. We will continue to
implement key strategic projects, develop digital ecosystems, invest in
technological infrastructure and human capital, and we will strengthen our
leadership in providing digital services to all types of clients."
Sergey Anokhin, Senior Vice-President and Chief Financial Officer, added:
"Rostelecom's results for the second quarter of 2019 drive our confident
outlook for the future development of our digital segment and improvement of
our internal efficiency. This enables us to enhance our guidance for the
full year of 2019 on revenue and OIBDA, now we expect them to grow not less
than 3%. As for the CAPEX programme, it remains unchanged within the range
of RUB 65-70 billion, including the regulatory CAPEX amounting to RUB 7
billion, excluding the implementation of government programmes."
KEY OPERATING HIGHLIGHTS
Number of 2Q 2019 2Q 2018 change, y-o-y 1Q 2019 change,
subscribers y-o-y
(million):
Internet 13.0 13.0 0.4% 13.0 0.1%
access
B2C: Broadband 12.0 12.0 0.1% 12.0 0.01%
B2B: Broadband 1.0 1.0 4% 1.0 1%
+ VPN
Pay TV 10.2 10.0 2% 10.2 0.03%
Incl. IPTV 5.4 5.1 7% 5.4 1%
MVNO 1.3 1.0 39% 1.3 6%
subscribers
Local 16.6 18.3 (9%) 17.0 (2%)
telephony
services
ARPU[9] (RUB): 2Q 2Q 2018 change, 1Q 2019 change, y-o-y
2019 y-o-y
Internet
access
B2C: Broadband 398 380 5% 397 0.4%
B2B: Broadband 3,510 3,118 13% 3,266 7%
+ VPN
Pay TV (B2C) 248 239 4% 249 (0.5%)
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