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Sistema PJSFC: Sistema announces financial results for the first quarter 2020

DJ Sistema PJSFC: Sistema announces financial results for the first quarter 2020

Sistema PJSFC (SSA) 
Sistema PJSFC: Sistema announces financial results for the first quarter 
2020 
 
10-Jun-2020 / 10:00 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. 
 
      Sistema announces financial results for the first quarter 2020 
 
  Moscow, Russia - 10 June 2020 - Sistema PJSFC ("Sistema" or the "Company", 
together with its subsidiaries and associates, "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 
            2020 ended 31 March 2020. 
 
            KEY GROUP HIGHLIGHTS 
 
  · Investments in Ozon. Sistema invested an additional RUB 3 billion in 
  Ozon to continue the implementation of its aggressive growth strategy. 
 
  · Establishing a new venture capital fund. The Company launched Sistema 
  SmartTech, a start-up fund focused on early stage investment. Sistema 
  SmartTech will primarily invest in projects of Russian origin, operating 
  in a variety of sectors and demonstrating growth potential through the 
  creation of new market niches. 
 
  · Development of one of the largest private laboratories in Russia. In 
  January 2020, Sistema-Biotech signed an investment agreement with the 
  International Medical Cluster Foundation to construct a multidisciplinary 
  biotechnology R&D laboratory and centre for preclinical testing of 
  cutting-edge developments and technologies in Skolkovo. The 
  Sistema-Biotech laboratory will focus on genetic research, the production 
  of diagnostic kits, cell-based biomedical products, biobanks and the 
  production of biopharmaceuticals. 
 
  · Secondary placement of series 001P-05 bonds. In February 2020, the Group 
  successfully completed a secondary placement of series 001P-05 
  exchange-traded bonds. During the tender offer, RUB 3.5 billion of bonds 
  out of the total RUB 10 billion issue were repurchased. The Company placed 
  all repurchased bonds through the secondary placement with a coupon rate 
  of 6.85% at 100% of the nominal value. 
 
            CORPORATE EVENTS AFTER THE END OF THE REPORTING PERIOD 
 
  · Appointment of Sistema's new President. In April 2020, Vladimir 
  Chirakhov was appointed President of Sistema. 
 
  · Dividends for 2019. In May 2020, the Board of Directors of Sistema 
  recommended that the Annual General Meeting of Shareholders distribute RUB 
  1.25 billion as the final dividend for FY 2019 (RUB 0.13 per ordinary 
  share or RUB 2.6 per GDR). The Annual General Meeting of Shareholders will 
  be held on 27 June 2020. 
 
  · New bonds issue. In May 2020, Sistema placed 10-year exchange-traded 
  bonds of series 001?-13 of RUB 15 billion at a 6.60% coupon rate with a 
  4-year put option. 
 
  · In May 2020, recognising increased focus on ESG in modern corporate 
  culture, Sistema's Board of Directors approved an amended version of the 
  Corporate Governance Code consistent with the best international ESG 
  practices and reflecting the Corporation's commitment to best in class ESG 
  performance. 
 
            INITIATIVES TO COMBAT COVID-19 
 
  · Over RUB 1 billion of investments to combat COVID-19 related to medical 
  aid, the production of personal protective equipment, employee healthcare 
  and supporting the customers of the Group's companies. 
 
  · Increasing the capabilities for COVID-19 diagnostics. In April 2020, 
  Sistema-Biotech obtained a registration certificate issued by Russian 
  healthcare regulator Roszdravnadzor for its coronavirus detecting test 
  system. In May 2020, Sistema-Biotech signed a contract with the healthcare 
  department of the Moscow city government to supply 1 million test systems. 
  Sistema-Biotech has also launched clinical and laboratory trials of a new 
  rapid response test system able to detect the COVID-19 virus within 30 
  minutes and within the workplace. 
 
  · Creation of a Support Centre for medical personnel focused on providing 
  organisational and financial support to healthcare workers during and in 
  the aftermath of the coronavirus pandemic. RUB 500 million was raised to 
  support the social initiative StranaBezVirusa; 25,000 COVID-19 diagnostic 
  test systems have been distributed for free to approximately 10 Russian 
  regions; 200,000 protective suits purchased from China were provided for 
  hospital staff in Moscow and the Moscow region. 
 
  · Leveraging digital technologies against COVID-19. MTS and Medsi have 
  launched free online consultations with primary care doctors and 
  pediatricians through their SmartMed telemedicine service across Russia. 
  Medsi has also launched its quality of patient care monitoring system 
  utilising artificial intelligence at its Clinical Hospital in Otradnoe, 
  which was converted to admit patients with pneumonia and COVID-19. Over 
  1,500 patients were admitted in two months. 
 
            1Q 2020 FINANCIAL HIGHLIGHTS 
 
  · Consolidated revenue[1] increased by 6.3% year-on-year to RUB 158.9 
  billion. 
 
  · Adjusted OIBDA[2] grew by 1.5% year-on-year to RUB 54.0 billion. 
 
  · Adjusted OIBDA margin amounted to 34.0%. 
 
  · Adjusted net loss attributable to Sistema was RUB 9.4 billion. 
 
 Vladimir Chirakhov, President and Chief Executive Officer of Sistema, said: 
 
        "Despite the negative impact of the COVID-19 pandemic and subsequent 
   lockdown measures in our core markets, Sistema increased both its revenue 
  and adjusted OIBDA in 1Q 2020 as a result of the strong performance of the 
            Group's portfolio of diversified assets. 
 
    Although there remains a substantial uncertainty about the length of the 
  pandemic and economic recovery, our portfolio companies are pressing ahead 
       with investment programmes: MTS is investing in network construction; 
        Segezha Group has entered the active construction phase of a plywood 
    production mill in the Kostroma region; Steppe enhances presence in crop 
production and dairy farming segments and pursues its strategy of increasing 
   land bank; Medsi is preparing to open a new medical centre in Michurinsky 
    prospekt in Moscow; Detsky Mir continues to open new stores; and Ozon is 
    focused on building fulfilment centres and the expansion of its delivery 
            infrastructure. 
 
While lockdown measures have challenged our portfolio companies operating in 
      consumer-facing markets, they managed to promptly restructure business 
         processes and strengthen both online sales and client communication 
         channels. MTS raised online smartphone sales by 70% compared to the 
   pre-lockdown period. Detsky Mir increased its share of online sales up to 
25% from total sales in 1Q 2020 and up to 42% in April. Etalon Group was one 
  of the first companies in the real estate market to launch online bookings 
   and sales of apartments. Finally, Ozon, which operates solely online, has 
     not only managed to maintain record growth in GMV but has significantly 
increased it to 115% year-on-year in 1Q 2020 and up to almost 200% in April. 
 
 Sistema's assets demonstrated resilience in the face of the global pandemic 
        measures, successfully adjusting their business processes to the new 
      environment. And while we may see a stronger impact of COVID-19 on the 
performance of some of our portfolio companies in the second quarter 2020, I 
     am convinced that this crisis will allow our assets to further increase 
    efficiency and continue market consolidation. Likewise, at the Corporate 
 Centre level, we have focused on costs optimisation and introduced measures 
            to reduce SG&A, which will be fully reflected in 2021 results." 
 
            *** 
 
            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 2020 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 
 
            +1 646-828-8193 
 
            888-394-8218 (toll free) 
 
            Conference ID: 7407014 
 
            Link to webcast: https://webcasts.eqs.com/sistema20200610 [1] 
 
   Or quote the conference call title: "Sistema First Quarter 2020 Financial 
            Results". 
 
      A replay of the conference call will be available on Sistema's website 
            www.sistema.com for at least seven days after the event. 
 
           For further information, please visit www.sistema.com 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 
 
SISTEMA RESULTS REVIEW 
 
(RUB million)                            1Q 2020 1Q 2019  Change 
Revenue                                  158,885  149,465   6.3% 
Adj. OIBDA                                54,045   53,234   1.5% 
Operating profit                          23,172   24,649 (6.0%) 
Net profit/ (loss) attributable to      (10,214)   16,641      - 
Sistema 
Adj. net profit / (loss) attributable    (9,409)   15,713      - 
to Sistema 
 
In 1Q 2020, Sistema's consolidated revenue increased by 6.3% year-on-year to 
      RUB 158.9 billion primarily driven by strong performance of MTS due to 
   revenue growth amid strong dynamics of mobile services revenue, increased 
 smartphone sales and MTS Bank's contribution; BPGC due to revenue growth as 

(MORE TO FOLLOW) Dow Jones Newswires

June 10, 2020 03:00 ET (07:00 GMT)

DJ Sistema PJSFC: Sistema announces financial -2-

a result of higher electricity transmission tariffs, an increase in utility 
connection services and higher rental payments; and Medsi due to significant 
  revenue growth from the Voluntary Health Insurance (VHI), Mandatory Health 
            Insurance (MHI) and individual patients segments. 
 
 Adjusted OIBDA increased by 1.5% year-on-year driven by improved results at 
  BPGC due to an increase in revenue while costs remained flat compared with 
       1Q 2019; at Medsi due to an increase in revenue; and at Steppe due to 
positive dynamics in its key operating segments. The dynamics of the Group's 
 adjusted OIBDA was also impacted by the decrease in OIBDA of Segezha Group, 
   as well as by the reflection of Sistema's share in the increase of Ozon's 
  net loss: in 1Q 2020, the Group's share in Ozon's net loss amounted to RUB 
            2.4 billion compared to RUB 1.1 billion in 1Q 2019. 
 
 Year-on-year adjusted net income dynamics is primarily accounted for by the 
      recognition of the gain from the divestiture of Sistema's 51% stake in 
       Leader Invest and subsequent revaluation of investments in associates 
           (remaining 49% stake in Leader Invest) in the first quarter 2019. 
 
The Group's selling, general and administrative expenses (SG&A) increased by 
 7.7% year-on-year to RUB 30.5 billion in 1Q 2020 primarily driven by higher 
    SG&A at MTS due to increase in headcount as MTS enhances presence in the 
digital areas. The SG&A/revenue increased slightly year-on-year and amounted 
            to 19.2%. 
 
     CAPEX grew by 31.9% year-on-year and amounted to RUB 28.1 billion in 1Q 
  2020, mainly driven by CAPEX growth at MTS related to network development, 
           as well as investments in the capacity increase at Segezha Group. 
 
OVERVIEW OF PORTFOLIO COMPANIES[3] 
 
MTS 
 
LEADING TELECOMMUNICATIONS OPERATOR AND DIGITAL SERVICES PROVIDER IN RUSSIA 
 
(RUB million[4])                     1Q 2020  1Q 2019     Change 
Revenue                              119,608  109,832       8.9% 
Adj. OIBDA[5]                         51,836   54,025     (4.1%) 
Adj. OIBDA margin5                     43.3%    49.2% (5.9 p.p.) 
Operating profit                      26,816   30,428    (11.9%) 
Adj. net profit attributable to        9,031    7,076      27.6% 
Sistema[6] 
 
    In 1Q 2020, MTS's revenue grew by 8.9% year-on-year to RUB 119.6 billion 
driven by growth in mobile service revenue, backed by an increase in tariffs 
      and a spike in smartphone sales in expectation of rouble depreciation. 
        Moreover, MTS Bank positively contributed to the growth in the group 
            revenue. 
 
  In 1Q 2020, adjusted OIBDA slightly decreased year-on-year and amounted to 
  RUB 51.8 billion. Revenue growth in the key telecoms sector had a positive 
  effect on OIBDA, while negative dynamics were primarily due to income from 
assets disposal: the sale of a stake in Ozon to Sistema PJSFC in 1Q 2019[7], 
       and the sale of MGTS real estate venues to JSC Business Nedvizhimost. 
 
  Adjusted OIBDA margin amounted to 43.3% in 1Q 2020, which is 5.9 p.p. less 
            than in 1Q 2019. 
 
  In 1Q 2020, growth in adjusted net profit by 27.6% year-on-year to RUB 9.0 
   billion was primarily due to a positive revaluation effect related to the 
 use of derivative instruments to manage the currency position of MTS Group. 
 A negative effect on the dynamics of the net profit growth year-on-year was 
     driven by 1Q 2019 income related to discontinued operations in Ukraine. 
 
    In 1Q 2020, the amount of capital expenditure increased primarily due to 
     increased levels of investment in the network development. In the first 
      three months of 2020, MTS Group commissioned 3,800 base stations in 69 
            Russian regions. 
 
     Outlook for 2020. MTS expects a slight growth in revenue in 2020 in the 
          range of 0-3%, a possible OIBDA decline by up to 2%, while capital 
            expenditure is estimated to remain flat at RUB 90 billion. 
 
            KEY EVENTS IN 1Q 2020 AND AFTER THE END OF THE REPORTING PERIOD 
 
Special dividend. In February 2020, MTS completed the payment of the special 
            dividend totalling RUB 26.48 billion, or RUB 13.25 per share. 
 
 Share buyback programme. In March 2020, MTS's Board of Directors approved a 
       buyback programme of a total of RUB 15 billion until the end of 2020. 
 
    Dividend for 2019. In April 2020, the Board of Directors recommended the 
 final dividend for 2019 of RUB 20.57 per share to be approved at the Annual 
            General Meeting of Shareholders on 24 June 2020. 
 
New bond issues. In May 2020, MTS successfully placed exchange-traded series 
001?-15 bonds in the amount of RUB 5.0 billion with a maturity of 6.5 years, 
 as well as RUB 7.0 billion seven-year exchange-traded series 001?-16 bonds. 
            The coupon rates of both issues amounted to 6.60%. 
 
In early June 2020, MTS placed two-year exchange-traded series 001?-17 bonds 
            in the amount of RUB 10.0 billion with a coupon rate of 5.50% 
 
COVID-19. Since the end of March 2020, MTS has observed increased traffic on 
   its fixed and mobile networks. A sharp drop in revenue from international 
     roaming is expected, and approximately a third of retail outlets remain 
            closed. 
 
  MTS is supporting medical professionals in the fight against the spread of 
  the virus. MTS is also developing new complex product offerings, combining 
      TV, books, music, telemedicine and fitness apps to support clients and 
            retain their loyalty after the crisis. 
 
            Segezha Group 
 
            LEADING RUSSIAN VERTICALLY INTEGRATED FORESTRY HOLDING 
 
(RUB million)                          1Q 2020 1Q 2019    Change 
Revenue                                 14,332  14,487    (1.1%) 
OIBDA                                    2,627   3,970   (33.8%) 
OIBDA margin                             18.3%   27.4%      (9.1 
                                                           p.p.) 
Operating profit                         1,091   2,714   (59.8%) 
Net profit/(loss) attributable to      (5,221)   2,730         - 
Sistema 
 
 In 1Q 2020, Segezha Group's revenue slightly decreased by 1.1% year-on-year 
   primarily due to a decline in global paper prices. Growth in the sales of 
     plywood and sawn timber contributed positively to the revenue dynamics. 
 
           Segezha Group's OIBDA amounted to RUB 2.6 billion in 1Q 2020. The 
  year-on-year decline was due to lower paper prices compared to record high 
   levels in 1Q 2019. Higher share of low-margin products sales (sawn timber 
    and plywood) in product mix also contributed to negative OIBDA dynamics. 
 
         OIBDA margin declined by 9.1 p.p. year-on-year to 18.3% in 1Q 2020. 
 
  Net loss amounted to RUB 5.2 billion in 1Q 2020. The year-on-year dynamics 
    were driven by currency exchange differences from the revaluation of the 
            company's FX-denominated debt. 
 
  Paper output decreased by 1.6% year-on-year to 99,300 tonnes[8] in 1Q 2020 
     due to scheduled repair works. Paper sales grew by 1.8% year-on-year to 
66,000 tonnes due to reduced stock inventory. The additional volume of paper 
            was sold largely to existing clients. 
 
  The production volume of paper sacks and bags grew by 4.6% year-on-year to 
334.3 million units[9] due to the launch of a new line for the production of 
    industrial paper packaging in Salsk in November 2019. Sales increased by 
12.1% year-on-year to 313.4 million units following the growth in production 
  volume, while a share of the output produced in the low winter season will 
     be sold in summer and autumn. Decreased sales of paper packaging in the 
   European market and in the Middle East and North Africa became a negative 
            factor. 
 
 Plywood production increased by 3.1% year-on-year to 49,500 cu m in 1Q 2020 
due to the new plywood production facility in the Kirov region, commissioned 
            in July 2018, reaching its full production capacity. 
 
   Plywood sales grew by 30.7% year-on-year to 48,900 cu m in 1Q 2020, which 
     corresponds to the production level in 1Q 2019. The growth in sales was 
  supported by favourable market conditions at the beginning of 2020 and the 
            expansion of the product range. 
 
    Sawn timber output increased by 13.4% year-on-year to 245,200 cu m in 1Q 
 2020 on the back of the acquisition of Karelian Wood Company LLC, a logging 
   and wood processing enterprise located in the Republic of Karelia, at the 
        beginning of 2020. The volume of sawn timber sales increased by 9.0% 
 year-on-year to 207,100 cu m in 1Q 2020 backed by the subsequent production 
     increase. The additionally produced stock of sawn timber is sold to new 
            clients in Finland. 
 
  Sustainable development. Based on the 2019 performance, Segezha Packaging, 
      Segezha Group's European paper packaging operation, has been awarded a 
           Silver Medal sustainability rating by the EcoVadis for the second 
    consecutive year. The platform assesses corporate, social and ecological 
            responsibility. 
 
In 1Q 2020, four Segezha Group enterprises were certified in accordance with 
   the standards of the voluntary forestry certification PEFC (The Programme 
 for the Endorsement of Forest Certification). Three of them, Segezha Pulp & 
     Paper Mill, PLO Onegales, and PAO Onegales, achieved sustainable forest 
     management certification, while Onega Sawmills received the PEFC supply 
            chain certificate. 
 
   As part of its sustainable forestry policy, Segezha Group has initiated a 
  project focused on the development of seed plantation centres, in order to 
            produce containerised tree seedlings. 
 
            KEY EVENTS IN 1Q 2020 AND AFTER THE END OF THE REPORTING PERIOD 
 
 Business development. In January 2020, Segezha Group purchased the Karelian 
  Wood Company LLC, a logging and wood processing enterprise, from Finland's 

(MORE TO FOLLOW) Dow Jones Newswires

June 10, 2020 03:00 ET (07:00 GMT)

DJ Sistema PJSFC: Sistema announces financial -3-

Pin Arctic Oy Company. The facility is located near the city of Kostomuksha 
 in the Republic of Karelia. It has an output capacity of up to 250,000 cu m 
  of sawn timber per year, and an annual allowable cut of over 200,000 cu m. 
 
    Debut in the debt market. In January 2020, the Group successfully placed 
     three-year series 001P-01R bonds in the volume of RUB 10 billion with a 
coupon rate of 7.1%. The company was assigned a ruA- credit rating by Expert 
            RA. 
 
    Commencing construction of a plywood production mill in Galich, Kostroma 
     Region. The mill's design capacity is 130,000 cu m of large-sized birch 
            plywood per year. 
 
    Launch of the second phase of pellet production at Lesosibirsky LDK. The 
total pellet production capacity increased from 70,000 to 110,500 tonnes per 
            year. 
 
In April 2020, Segezha Group made a donation to the Segezha Central District 
Hospital for the purchase of medical equipment to fight coronavirus, 
including ambulances with portable ventilators. 
 
Agriculture Holding Steppe 
 
ONE OF RUSSIA'S LARGEST AGRICULTURE HOLDINGS AND LAND OWNERS 
 
(RUB million)[10]                  1Q 2020 1Q 2019   Change 
Revenue                              5,475   6,282  (12.8%) 
OIBDA                                1,115     829    34.5% 
OIBDA margin                         20.4%   13.2% 7.2 p.p. 
Operating profit                       756     597    26.5% 
Net profit attributable to Sistema     122     117     4.5% 
 
 In 1Q 2020, Steppe's revenue decreased by 12.8% year-on-year as a result of 
 a decline in crop carry-overs. This negative effect was partially offset by 
            positive dynamics in the Dairy and Orchards segments. 
 
  Steppe's OIBDA demonstrated a remarkable increase by 34.5% year-on-year in 
1Q 2020 and amounted to RUB 1.1 billion despite the decrease in revenue. The 
increase is due to increased production and efficiency in the Dairy segment, 
   an increase in apple sales during high season in the Orchards segment, as 
     well as positive dynamics in the Agrotrading, Sugar and Grocery Trading 
 segments. OIBDA margin grew by 7.2 p.p. year-on-year and amounted to 20.4%. 
 
 Steppe's CAPEX amounted to RUB 0.4 billion in 1Q 2020. Key investment areas 
    included the renewal of the farm machinery fleet and the construction of 
            dairy farms. 
 
   Steppe's net profit in 1Q 2020 amounted to RUB 122 million, which is 4.5% 
            higher year-on-year. 
 
 Land bank of Steppe in 1Q 2020 increased to 532,000 hectares as a result of 
    the consolidation of land assets in the Rostov region. The total area of 
orchards reached 780 hectares. The average export price of wheat sales in 1Q 
            2020 remained at the level of 1Q 2019. 
 
           Export volumes in the Agrotrading segment have slightly decreased 
    year-on-year since the beginning of the 2019/2020 season and amounted to 
    1,103,000 tonnes in 1Q 2020. The decline in export volumes was offset by 
            executing transactions with a higher margin. 
 
 The Dairy Farming segment reported solid growth: gross milk yield increased 
by 31% year-on-year to 17,300 tonnes in 1Q 2020, while cow productivity grew 
  by 5.6% year-on-year. The herd amounted to 6,014 lactating cows at the end 
            of the reporting period. 
 
            Sales volumes in the Sugar and Grocery Trading segment increased 
  substantially by 6% year-on-year in 1Q 2020 and amounted to 69,000 tonnes. 
 
            KEY EVENTS IN 1Q 2020 AND AFTER THE END OF THE REPORTING PERIOD 
 
In May 2020, Steppe acquired three agricultural enterprises in the Stavropol 
   region, including a dairy farm which, following renovation, will have the 
      capacity to accommodate 9,000 heads of lactating cows (18,900 heads of 
         cattle) and will become the largest dairy farm in Russia, with milk 
      production volume exceeding 100,000 tonnes per year. The deal has also 
            increased Steppe's land bank by 28,000 hectares. 
 
          In May 2020, Steppe sold 100% of shares of the Yuzhny agricultural 
enterprise, which specialises in tomato and cucumber production, to focus on 
         the key business segments - crop production, agrotrading and dairy. 
 
    The Ministry of Agriculture of Russia included Steppe Agroholding in the 
        list of strategically important agricultural enterprises in the crop 
            producers category. 
 
  COVID-19. Growing demand for grocery products in March 2020 had a positive 
         impact on the performance of the Sugar and Grocery Trading segment. 
 
Medsi 
 
LEADING PRIVATE HEALTHCARE OPERATOR IN RUSSIA 
 
(RUB million) [11]                      1Q 2020 1Q 2019   Change 
Revenue                                   5,902   5,190    13.7% 
Adj. OIBDA                                1,117     883    26.5% 
Adj. OIBDA margin                         18.9%   17.0% 1.9 p.p. 
Operating profit                            624     160   290.8% 
Adj. net profit attributable to Sistema     333     211    58.3% 
 
  Medsi's revenue increased by 13.7% year-on-year in 1Q 2020 and amounted to 
   RUB 5.9 billion. Revenue growth in 1Q 2020 was due to an 11% year-on year 
increase in revenue from the Voluntary Health Insurance (VHI) segment to RUB 
     2.6 billion, alongside growth in the individual patients segment by 13% 
    year-on-year to RUB 1.7 billion and the Mandatory Health Insurance (MHI) 
            segment by 18.6% year-on-year to RUB 1.5 billion. 
 
Adjusted OIBDA increased by 26.5% year-on-year to RUB 1.1 billion in 1Q 2020 
            on the back of the growth in revenue. 
 
 Medsi's adjusted OIBDA margin rose by 1.9 p.p, year-on-year and amounted to 
            18.9%. 
 
 In 1Q 2020, adjusted net profit grew significantly by 58.3% year-on-year to 
            RUB 333 million. This was driven by increased adjusted OIBDA. 
 
  Revenue from the Clinical-Diagnostic Centre (CDC) in Belorusskaya amounted 
    to RUB 753 million in 1Q 2020. OIBDA reached RUB 272 million at an OIBDA 
            margin of 36%. 
 
    Revenue from the CDC in Krasnaya Presnya totalled RUB 698 million. OIBDA 
            reached RUB 227 million at an OIBDA margin of 33%. 
 
     Net debt increased in 1Q 2020 due to the use of credit lines to finance 
         CAPEX programmes, including the construction of a medical centre on 
  Michurinsky Prospekt in Moscow. Debt to OIBDA LTM remains at a comfortable 
            level of 0.7x. 
 
            KEY EVENTS IN 1Q 2020 AND AFTER THE END OF THE REPORTING PERIOD 
 
        In March 2020, Medsi acquired ASPEC clinic network in Izhevsk, which 
         includes a CDC with a daytime in-patient clinic, an adult clinic, a 
children's clinic, and a women's health clinic with a total area of 4,344 sq 
            m. 
 
 Out-patient network development in Moscow. Medsi opened the first Smart 500 
     clinic on Pokryshkin Street in Moscow. This new format of "convenience" 
     clinics, with an area of 500 sq m, includes 12-15 rooms for out-patient 
 medical care for children and adults, laboratory and functional diagnostics 
        facilities, and ultrasound. Medsi plans to open a family clinic with 
 advanced diagnostics in Maryino in the summer of 2020, with a total area of 
            4,400 sq m. 
 
   The construction of the medical centre on Michurinsky Prospekt continues, 
            with the opening planned for late 2020. 
 
    COVID-19. Since the second half of March, there has been a sharp drop in 
patient flow due to self-isolation and social distancing restrictions. Medsi 
 is at the forefront of the fight against COVID-19: the hospital in Otradnoe 
           has been repurposed as an in-patient infectious diseases' unit, a 
    comprehensive COVID-19 diagnostics programme has been launched, COVID-19 
   testing is carried out in clinics and at patients' homes, and telemedical 
            support for out-patient treatment is underway. 
 
Business Nedvizhimost 
 
RENTAL ASSETS WITH A UNIQUE POOL OF PROPERTIES 
 
(RUB million)                          1Q 2020 1Q 2019    Change 
Revenue                                    988     739     33.7% 
OIBDA                                      272     113    140.2% 
OIBDA margin                             27.5%   15.3% 12.2 p.p. 
Operating profit                           155      13  1,107.2% 
Net profit/(loss) attributable to          188    (38)         - 
Sistema 
 
  Revenue from the rental assets of Business Nedvizhimost increased by 33.7% 
  year-on-year and amounted to RUB 1.0 billion in 1Q 2020. Positive dynamics 
    year-on-year were due to growth in the rental real estate portfolio as a 
result of the acquisition of 54 ATS buildings from PJSC MGTS by JSC Business 
            Nedvizhimost in 2019. 
 
      In 1Q 2020, OIBDA grew significantly by 140.2% year-on-year to RUB 272 
million; OIBDA margin increased by 12.2 p.p. year-on-year to 27.5%. This was 
      driven by revenue growth and the optimisation of maintenance costs for 
            rental assets. 
 
 Business Nedvizhimost's net profit increased to RUB 188 million on the back 
            of positive OIBDA dynamics. 
 
            KEY EVENTS IN 1Q AND AFTER THE END OF THE REPORTING PERIOD 
 
The exchange-traded bonds programme. In March 2020, JSC Business Real Estate 
 registered 001P series exchange-traded bonds programme of a total of RUB 20 
            billion. 
 
RTI 
 
LEADING DEVELOPER OF HIGH-TECH SOLUTIONS 
 
(RUB million)                          1Q 2020  1Q 2019 Change 
Revenue                                  3,708    3,826 (3.1%) 
Adj. OIBDA[12]                           (165)      163      - 
Adj. OIBDA margin                            -     4.3%      - 
Operating loss                           (294)    (421)      - 
Adj. net loss attributable to Sistema  (1,557)  (1,223)      - 
 
In 1Q 2020, RTI's revenue decreased slightly by 3.1% year-on-year to RUB 3.7 
      billion due to expected revenue fluctuations. Typically, most of RTI's 
            revenue falls on the second half of the year. 
 

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DJ Sistema PJSFC: Sistema announces financial -4-

Adjusted OIBDA decreased year-on-year in 1Q 2020 due to the financial 
   results of Element LLC, a joint venture with the Rostec State Corporation 
            specialising in microelectronics. 
 
    In 1Q 2020, adjusted net loss increased year-on-year due to the negative 
            adjusted OIBDA. 
 
  The decrease in net debt by 32.1% year-on-year to RUB 19.8 billion[13] was 
           due to the transfer of part of RTI Group's debt together with the 
 microelectronics assets to Element LLC, as well as repayment of a debt loan 
         of RUB 1.0 billion. RTI's accounts include RUB 5.0 billion of funds 
     earmarked for the execution of the works under state defense contracts, 
            which are not included in the calculation of net debt. 
 
BPCG 
 
ONE OF RUSSIA'S BIGGEST POWER GRID COMPANIES 
 
(RUB million)                      1Q 2020 1Q 2019   Change 
Revenue                              5,841   5,348     9.2% 
OIBDA                                1,910   1,428    33.8% 
OIBDA margin                         32.7%   26.7% 6,0 p.p. 
Operating profit                     1,210     770    57.0% 
Net profit attributable to Sistema     886     585    51.5% 
 
    Revenue of BPGC in 1Q 2020 grew by 9.2% year-on-year to RUB 5.8 billion. 
  This was due to an increase in the electricity transmission tariff from 01 
  July 2019, growth in utility connection services - including in connection 
     with changes in accounting policy - and an increase in rental payments. 
 
 In 1Q 2020, OIBDA and OIBDA margin grew by 33.8% and 6.0 p.p. year-on-year, 
 respectively. This significant increase in OIBDA was due to revenue growth, 
 while costs remained flat compared to the previous year. A decrease in grid 
            losses had a significant impact. 
 
 Net profit of BPGC in 1Q 2020 rose by 51.5% year-on-year to RUB 0.9 billion 
            amid positive OIBDA dynamics. 
 
            KEY EVENTS IN 1Q 2020 AND AFTER THE END OF THE REPORTING PERIOD 
 
     Upgrade of distribution networks. In 1Q 2020, the Company continued its 
       comprehensive reconstruction of distribution networks in the Ufa city 
         district. During the reporting period, 12 distribution points and 1 
    transformer substation were upgraded, and 2 km of cable lines were laid. 
 
   Construction of large infrastructure projects. In 1Q 2020, BPGC continued 
       construction of a 110 kV "Uizan-Baynazarovo" in the Beloretsk region, 
            Romanovka, as well as a TPS-4 in Ufa. 
 
       Inclusion of LLC Bashkirenergo in the list of strategically important 
 enterprises within the fuel and energy sector of Russia. The enterprise has 
a leading position in the Republic of Bashkortostan and is regularly counted 
            among the leading enterprises in the region. 
 
            Cosmos Hotel Group[14] 
 
            ONE OF RUSSIA'S LEADING HOTEL MANAGEMENT COMPANIES 
 
(RUB million)                           1Q 2020 1Q 2019  Change 
Revenue                                     811   1,083 (25.1%) 
Adj. OIBDA[15]                               24       7  222.9% 
Adj. OIBDA margin15                        2.9%    0.7%     2.2 
                                                           p.p. 
Operating loss                          (1,261)   (302)       - 
Adj. net loss attributable to             (428)   (621)       - 
Sistema15 
 
        In 1Q 2020, the revenue of the Cosmos Hotel Group decreased by 25.1% 
 year-on-year to RUB 0.8 billion due to a sharp drop in revenue from foreign 
        hotels and the Cosmos hotel complex due to the coronavirus pandemic. 
 
   Adjusted OIBDA of the Cosmos Hotel Group remained largely unchanged in 1Q 
         2020 despite negative revenue dynamics. This was mainly due to cost 
            optimisation. 
 
 Adjusted OIBDA margin grew by 2.2 p.p. year-on-year and amounted to 2.9% in 
            1Q 2020. 
 
 Adjusted net loss year-on-year in 1Q 2020 decreased due to the optimisation 
            of the debt portfolio. 
 
  In 1Q 2020, the share of revenue from hotels outside Russia decreased by 4 
  p.p. year-on-year and amounted to 12.7%. FX revenue from hotels outside of 
   Russia decreased by 32% year-on-year in 1Q 2020 due to a sharp decline in 
            occupancy in March. 
 
 ADR[16] for the Group's hotel portfolio increased year-on-year from RUB 3.1 
     thousand to RUB 3.7 thousand in 1Q 2020 due to the ADR growth of Cosmos 
  hotel complex, Cosmos Collection Izumrudny Les and Cosmos Collection Altay 
            Resort hotels resulting from increased room capacity. 
 
  Average occupancy decreased by 9 p.p. year-on-year to 45.9% in 1Q 2020 due 
         to a drop in tourist flow in February-March caused by the spread of 
coronavirus. The decline in occupancy was offset by ADR growth. As a result, 
        the hotel portfolio's RevPAR[17] remained unchanged year-on-year and 
            amounted to RUB 1.7 thousand. 
 
            KEY EVENTS IN 1Q 2020 AND AFTER THE END OF THE REPORTING PERIOD 
 
     Modernisation of Cosmos hotel complex. Cosmos Hotel Group continues the 
     modernisation and design refurbishment of the Cosmos hotel complex. The 
            project is due to be completed in 2023. 
 
            Corporate 
 
(RUB million)                           1Q 2020  1Q 2019  Change 
OIBDA                                   (4,198)  (1,548)       - 
Net loss                               (11,793)  (2,474)       - 
Corporate Centre's financial            207,808  231,485 (10.2%) 
liabilities[18] 
 
The Corporate Centre comprises Sistema and companies that control and manage 
            Sistema's interests in its subsidiaries and associates. 
 
       Negative dynamics of OIBDA was partly attributable to Ozon's net loss 
           accounted for using the equity method (investment in associates). 
 
       Financial liabilities of the Corporate Centre decreased significantly 
            year-on-year by 10.2 % to RUB 207.8 billion. 
 
The share of SG&A in Sistema's revenue in 1Q 2020 remained largely unchanged 
            year-on-year at 1.0 %. 
 
  As of 31 March 2020, the share of rouble-denominated financing exceeds 95% 
            of the financial liabilities of the Corporate Centre. 
 
    In February 2020, Sistema's wholly-owned subsidiary Sistema Finance S.A. 
    entered into an equity commitment agreement to provide financing for the 
     amount of up to EUR 263 million in connection with the acquisition by a 
group of purchasers controlled by SCP Group SARL (minority owned by Sistema) 
of the German hypermarket chain Real from Metro AG and its affiliates. It is 
   expected that other equity investors will participate in the financing of 
            the deal totaling EUR 263 million alongside Sistema Finance. 
 
            *** 
 
       For further information, please visit www.sistema.com [2] or contact: 
 
     Investor Relations         Public Relations 
 
       Nikolai Minashin           Sergey Kopytov 
 
Tel: +7 (495) 730 66 00 Tel.: +7 (495) 228 15 32 
 
  n.minashin@sistema.ru       kopytov@sistema.ru 
 
      Sistema PJSFC is a publicly traded diversified Russian holding company 
    serving over 150 million customers in the sectors of telecommunications, 
           high technology, financial services, retail, paper and packaging, 
     agriculture, real estate, tourism and medical services. The company was 
        founded in 1993. Revenue in 2019 was RUB 656.9 billion; total assets 
    equalled RUB 1.3 trn as of 31 December 2019. Sistema's global depositary 
    receipts are listed under the "SSA" ticker on the London Stock Exchange. 
  Sistema's ordinary shares are listed under the "AFKS" ticker on the Moscow 
            Exchange. Website: www.sistema.com [3]. 
 
        The Company is not an investment company, and is not and will not be 
          registered as such, under the U.S. Investment Company Act of 1940. 
 
    Some of the information in this press release may contain projections or 
      other forward-looking statements regarding future events or the future 
          financial performance of Sistema. You can identify forward looking 
  statements by terms such as "expect," "believe," "anticipate," "estimate," 
   "intend," "will," "could," "may" or "might" the negative of such terms or 
 other similar expressions. We wish to caution you that these statements are 
only predictions and that actual events or results may differ materially. In 
  addition, there is no assurance that the new contracts entered into by our 
      subsidiaries referenced above will be completed on the terms contained 
   therein or at all. We do not intend to update these statements to reflect 
  events and circumstances occurring after the date hereof or to reflect the 
     occurrence of unanticipated events. Many factors could cause the actual 
     results to differ materially from those contained in our projections or 
       forward-looking statements, including, among others, general economic 
 conditions, our competitive environment, risks associated with operating in 
  Russia, rapid technological and market change in our industries, impact of 
 COVID-19 pandemic on macroeconomic situation on the markets of presence and 
financial results of Sistema and its subsidiaries and associates, as well as 
        many other risks specifically related to Sistema and its operations. 
 
Appendix A 
 
     Operating Income Before Depreciation and Amortisation (OIBDA) and OIBDA 
           margin. OIBDA represents operating profit before depreciation and 
   amortisation. OIBDA margin is defined as OIBDA as a percentage of our net 
       revenues. Our OIBDA may not be similar to the OIBDA measures of other 
       companies; is not a measurement under accounting principles generally 
   accepted under IFRS and should be considered in addition to, but not as a 
  substitute for, the information contained in our consolidated statement of 
       profit and loss. We believe that OIBDA provides useful information to 
 investors because it is an indicator of the strength and performance of our 

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ongoing business operations, including our ability to fund discretionary 
 spending such as capital expenditures, acquisitions of businesses and other 
   investments and our ability to incur and service debt. While depreciation 
  and amortization are considered operating costs under IFRS, these expenses 
         primarily represent the non-cash current period allocation of costs 
 associated with long-lived assets acquired or constructed in prior periods. 
      OIBDA is commonly used as one of the bases for investors, analysts and 
      credit rating agencies to evaluate and compare the periodic and future 
            operating performance and value of companies. 
 
         Adjusted OIBDA, operating profit and profit attributable to Sistema 
shareholders. The Company uses adjusted OIBDA, adjusted operating profit and 
     adjusted profit/(loss) attributable to Sistema shareholders to evaluate 
    financial performance of the Group. These represent underlying financial 
 measures adjusted for a number of one-off gains and losses. We believe that 
   adjusted measures provide investors with additional useful information to 
   measure our underlying financial performance, particularly from period to 
   period, because these measures are exclusive of certain one-off gains and 
            losses. 
 
       Adjusted operating profit and adjusted OIBDA can be reconciled to our 
            consolidated statements of profit and loss as follows: 
 
RUB million                              1Q 2020         1Q 2019 
Operating income                         23,172           24,649 
Provisions for litigation and             (274)              175 
amounts due under contracts with 
clients (RTI) 
Accruals related to LTI program at portfolio    19           164 
companies 
Impairment of hospitality assets          1,109                0 
Impairment of non-current assets           319                 0 
(MTS) 
Other non-recurring (income) /            (176)              382 
loss, net 
Adjusted operating income                24,170           25,371 
Depreciation and amortisation            29,875           27,864 
Adjusted OIBDA                           54,045           53,234 
 
        Adjusted profit / (loss) attributable to Sistema shareholders can be 
    reconciled to our consolidated statements of profit and loss as follows: 
 
RUB million                         1Q 2020        1Q 2019 
Net profit / (loss)                 (10,214)              16,641 
attributable to Sistema 
Revaulation of liability                0                (1,722) 
with regards to the U.S. 
Department of Justice and 
the SEC investigation 
(MTS) 
Accruals related to LTI                18                    259 
program at portfolio 
companies 
Provisions for litigation             (178)                  152 
and amounts due under 
contracts with clients 
(RTI) 
Impairment of hospitality              975                     0 
assets 
Impairment of non-current              160                     0 
assets (MTS) 
Other non-recurring                   (170)                  382 
(income) / loss, net 
Adjusted net profit /                (9,409)              15,713 
(loss) attributable to 
Sistema 
 
Consolidated net debt. We define consolidated net debt as consolidated total 
  debt less cash, cash equivalents and deposits in banks. Consolidated total 
debt is defined as total borrowings plus finance lease. The total borrowings 
  is defined as long-term borrowings, short-term borrowings and liability to 
  Rosimushchestvo. We believe that the presentation of consolidated net debt 
 provides useful information to investors because we use this measure in our 
        management of consolidated liquidity, financial flexibility, capital 
            structure and leverage. 
 
       Consolidated net debt can be reconciled to the borrowings as follows: 
 
RUB million                  31 March 2020 31 December 2019 
Long-term borrowings               631,549           491,416 
Short-term borrowings               96,766           129,454 
Liability to Rosimushchestvo         9,060             7,215 
Total borrowings                   737,375           628,085 
Consolidated finance lease1        20,0182           18,2393 
Consolidated total debt            757,393           646,324 
Cash and cash equivalents        (131,542)          (63,669) 
Deposits in banks                  (2,835)           (1,741) 
Consolidated net debt              623,016           580,915 
 
            1 In accordance with the standard IAS 17 
 
            2 Including RUB 1,438 million of short-term finance lease 
 
            3 Including RUB 1,289 million of short-term finance lease 
 
            **** 
 
  Full press please including financial statements is available on Sistema's 
website http://www.sistema.com/investors-shareholders/financial-results/ and 
            in the Attachment to the current release. 
 
=--------------------------------------------------------------------------- 
 
[1] Hereinafter the results for 1Q 2019 are presented taking into account 
reclassification of Detsky Mir, Leader-Invest, MTS operations in Ukraine and 
RTI microelectronics businesses as discontinued operations. 
 
[2] Hereinafter see Appendix A for the definitions of adjusted OIBDA, 
adjusted operating profit, adjusted net profit attributable to Sistema, 
consolidated debt and consolidated net debt and their reconciliation to IFRS 
financials. 
 
[3] Here and hereafter revenues are presented on an aggregated basis, 
excluding revenues from intra-segment (between entities in the same segment) 
transactions, but before inter-segment (between entities in different 
segments) eliminations, unless accompanied by the word "consolidated". 
Amounts attributable to individual companies, where appropriate, are shown 
prior to both intra-segment and inter-segment eliminations and may differ 
from respective standalone results due to certain reclassifications and 
adjustments. 
 
[4] MTS results are presented with reclassification of business in Ukraine 
as part of discontinued operations from 4Q 2019. The results for 1Q 2019 
have been restated to reflect the results of this reclassification. 
 
[5] Adjustment for the one-off write off of non-current assets in the amount 
            of RUB 0.3 billion in 1Q 2020. 
 
[6] Here and hereafter net profit is presented in Sistema's share. 
Adjustments include revaluation of liabilities under SEC investigation and 
non-current assets write-off in the first quarter 2020. 
 
       [7] In the financial statement of MTS, this income is reflected below 
            operating profit. 
 
[8] About 34% of paper produced was supplied to converting facilities to 
produce paper packaging. 
 
[9] Including 20.5 million consumer paper bags. 
 
[10] RZ Agro is accounted for as an investment in a joint venture in 
Agroholding Steppe's IFRS financial statements. 
 
[11] Adjusted OIBDA, adjusted OIBDA margin and adjusted net profit are 
adjusted for accruals related to the LTI programme, the effect of clinic 
acquisitions in Izhevsk. 
 
[12] As at 31.03.2019, the financial results of microelectronic assets 
transferred to Element LLC were recorded in the financial statements as 
assets for sale in net profit (or loss). Adjusted OIBDA in 1Q 2020 includes 
the net loss of Element LLC, which is accounted for using the equity method 
of accounting (classified as investments in associates). Excluding the 
results of Element LLC, the adjusted OIBDA of RTI in 1Q 2020 amounted to RUB 
0.2 billion. 
 
[13] Including financial lease 
 
[14] Management accounts 
 
[15] Adjustments in 1Q 2020 related to one-off impairment of the hotels 
outside of Russia due to COVID-19 pandemic's influence on their financial 
performance 
 
[16] Average Daily Rate 
 
[17] Revenue per available room per day 
 
[18] Corporate Centre's financial liabilities here and thereafter are 
presented in accordance with management accounts and include, among others, 
liability to Rosimushchestvo. 
 
Attachment 
 
File: Sistema 1Q 2020 Financial Results [4] 
 
ISIN:          US48122U2042 
Category Code: QRF 
TIDM:          SSA 
LEI Code:      213800JSZ2UUK4QQK694 
Sequence No.:  68787 
EQS News ID:   1066669 
 
End of Announcement EQS News Service 
 
 
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