ROSTELECOM PJSC (RKMD)
ROSTELECOM PJSC: ROSTELECOM ANNOUNCES ITS IFRS FINANCIAL AND OPERATING
RESULTS FOR THE THIRD QUARTER AND NINE MONTHS OF 2019
07-Nov-2019 / 09:02 MSK
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
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rostelecom announces its ifrs financial and operating results
for the THIRD quarter and NINE MONTHS OF 2019
Q3 2019 DIGITAL SEGMENT[1] GROWTH OF 13% CONTRIBUTING 59% OF TOTAL REVENUE;
NET PROFIT UP 12%; MORE THAN TWOFOLD INCREASE IN FCF[2]
Moscow, Russia - November 7, 2019 - Rostelecom PJSC (MOEX: RTKM, RTKMP;
OTCQX: ROSYY), the largest digital service provider in Russia, today
announces its consolidated financial results for the third quarter and nine
months of 2019 prepared in accordance with IFRS[3].
KEY ACHIEVEMENTS
- Revenue grew by 5% year-on-year in the third quarter of 2019;
- Digital segment increased by 13% in the third quarter, while its
contribution to total revenue reached 59%;
- OIBDA[4] grew by 2% in the third quarter of 2019;
- Net profit increased by 12% and reached RUB 6.4 billion in the third
quarter of 2019;
- Free Cash Flow (FCF) increased by 116% to RUB 7.3 billion in the third
quarter of 2019.
THIRD QUARTER 2019 FINANCIAL HIGHLIGHTS
- Revenue grew by 5% to RUB 83.7 billion compared to the third quarter of
2018;
- OIBDA up by 2% to RUB 27.9 billion;
- OIBDA margin stood at 33.3% compared to 34.4% the third quarter of 2018;
- Net profit increased by 12% to RUB 6.4 billion compared to the third
quarter of 2018;
- CAPEX[5] decreased by 1% to RUB 16.1 billion (19.2% of revenue) from RUB
16.3 billion (20.6% of revenue) in the third quarter of 2018;
- FCF improved more than twofold to RUB 7.3 billion compared to the third
quarter of 2018;
- Net debt[6] increased by 10% since the beginning of the year to RUB
205.1 billion, resulting in a Net Debt/OIBDA ratio of 1.9x.
Key figures for 3Q 2019, RUB mln
RUB million 3Q 2019 3Q 2018 change, y-o-y
Revenue 83,727 79,414 5%
OIBDA 27,896 27,328 2%
OIBDA margin % 33.3% 34.4% -
Operating Income 10,455 10,934 (4%)
Operating margin % 12.5% 13.8% -
Net Income 6,412 5,703 12%
% of revenue 7.7% 7.2% -
Capital Expenditure 16,081 16,325 (1%)
% of revenue 19.2% 20.6% -
Net debt 205,053 203,347 1%
Net debt/ annualised OIBDA 1.9 2.0 -
FCF 7,261 3,368 3,893
NINE MONTHS OF 2019 FINANCIAL HIGHLIGHTS
? Revenue increased by 4% to RUB 242.6 billion compared to the nine months
of 2018;
? OIBDA increased by 9% year-on-year to RUB 81.4 billion compared to the
nine months of 2018;
? OIBDA margin grew by 1.4 p.p. to 33.6% compared to the nine months of
2018;
? Net profit increased by 29% to RUB 16.4 billion compared to the nine
months of 2018;
? CAPEX[7] increased by 17% to RUB 53.7 billion (22.1% of revenue) from
RUB 45.9 billion (19.7% of revenue) in the nine months of 2018;
? FCF improved to RUB 4.1[8] billion compared to RUB (3.3) billion in the
nine months of 2018.
Key figures for 9M 2019, RUB mln
RUB million 9M 2019 9M 2018 change, y-o-y
Revenue 242,554 232,982 4%
OIBDA 81,440 74,863 9%
OIBDA margin % 33.6% 32.1% -
Operating Income 29,920 27,633 8%
Operating margin % 12.3% 11.9% -
Net Income 16,362 12,661 29%
% of revenue 6.7% 5.4% -
Capital Expenditure 53,667 45,892 17%
% of revenue 22.1% 19.7% -
Net debt 205,053 203,347 1%
Net debt/ annualised OIBDA 1.9 2.0 -
FCF 4,066 (3,312) 7,378
Mikhail Oseevskiy, President of Rostelecom, commented:
We delivered robust topline and operational growth in the third quarter of
2019. Our digital segment grew by 13% and is closing in on an almost 60%
contribution to Group revenue. Total revenue across the Group grew by 5%,
in-line with our strategic objective. Smart City projects, cloud services,
data centers and cyber security contributed significantly to this strong
performance, adding to our core business streams of broadband and Pay TV.
The contribution from these new services is becoming more tangible and
visible and provides solid evidence of the company's steady digital
transformation.
Progress has also been made in increasing operational efficiency, including
through the optimisation of our real estate portfolio. An important element
of this process is the sale of excess real estate, as reflected in the third
quarter agreement to sell the premises of the historic Central Telegraph
building. The landmark property was sold for RUB 3.5 billion - the effect of
this major transaction will be reflected in the fourth quarter, and I would
like to recognise terrific work done by the Rostelecom team to complete this
process and deliver maximum value to our stakeholders in the current market
conditions.
Our achievements, including the on-going success and outstanding results by
Tele2 Russia enable us to record a two-digit growth in profits and a more
than twofold increase in FCF, which forms the basis for our dividend
calculations.
In terms of Rostelecom's digital transformation, we are on track to
delivering on the approved strategic plan, having gained good momentum on
our key strategic initiatives and strengthening our leadership as a digital
partner for the society, business and the State."
Vladimir Kirienko, First Vice-President of Rostelecom, commented:
We continue to develop our smart digital services ecosystem and are
improving our product offering.
In the third quarter of 2019, Rostelecom launched 'Game Market [1]', a
platform which brings together more than 2,200 games developed by 48 Russian
and international developers. This launch increases our exposure to and
participation in the gaming ecosystem and to the gamer community, with our
key 'Game' tariff plan at the heart of our offer. We have also made
available to gamers the subscription to the cloud-based game platform GFN.RU
which is able to turn any computer into a powerful gaming machine for the
best gaming experience when it comes to popular online games. The GFN.RU
cloud platform has emerged in Russia thanks to cooperation of SAFMAR group
and NVIDIA (the US) - the global leader of Graphics Processing Units and
visual computing. Rostelecom became the only provider in Russia to offer its
clients the GNF.RU subscription at the same price as the vendor.
For its corporate clients, Rostelecom launched an M2M Control service, which
enables SIM cards on applications and sensors to be controlled remotely
within the M2M[9] system to help optimize business processes when
communicating with IoT[10] devices. Rostelecom's solution is essential when
it comes to streamlining production and optimising internal processes to
transition new digital technologies which helps optimize internal processes,
provide access to new services and technologies, reduce costs and increase
revenues for both large and SME businesses.
One successful example of realizing the potential of the Industrial Internet
was the joint project of Rostelecom and Rusagro to launch a smart farming
tool that facilitates control and management of harvesting processes. The
platform is built based on IoT technology which collects agronomic data from
sensors and RFID cards installed on agricultural equipment. The smart
farming tool covers the entire cycle from real-time monitoring of harvesting
processes to the transportation and transmission of agronomic data on to
Rusagro's automated information system via mobile networks.
Across the Russian regions, Smart City projects are becoming increasingly
popular (including among local governments) as they help create a better
living environment for citizens through the application of digital services
in everyday life, assisting with utilities management, road infrastructure,
education and healthcare. Some of these projects include the installation of
600 photo and video identification CCTV cameras across the city of
Bashkortostan, the implementation of a number of smart solutions in
Taganrog, making it the first Smart City in Southern Russia, and the
integration of a smart system in Yamal to control and optimise the waste
collection process through online monitoring of trash containers equipped
with sensors. We have delivered a number of similar projects across the
country, which has been accelerating our top-line due to its sustainable
double-digit growth in sales.
Sergey Anokhin, Senior Vice-President and Chief Financial Officer, added:
"Our strong third quarter results are in line with our budget plan in terms
of reaching targets around expanding the digital segment and improving
internal efficiencies. Our results and achievements for the nine months
provide us with sufficient visibility on year-end performance to confirm our
guidance for revenue and OIBDA for 2019. We expect both KPIs to grow by no
less than 3%. We also expect the CAPEX programme to be within the range of
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