ROSTELECOM PJSC (RKMD)
ROSTELECOM PJSC: Rostelecom announces its IFRS financial and operating
results for the second quarter and half year 2020
05-Aug-2020 / 09:48 MSK
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rostelecom announces its ifrs financial and operating results
for the second quarter and FIRST half year of 2020
Q2, 2020 Revenue growth of 13%; 15% increase in OIBDA[1]; net revenue up 32%
Moscow, Russia - August 5, 2020 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX:
ROSYY), the largest digital integrated service provider in Russia, today
announces its consolidated financial results for the second quarter and
first half year of 2020 prepared in accordance with IFRS[2].
In accordance with the accounting policy of the Group, the acquisition of
Tele2 Russia has been recognized as a business combination under common
control. According to this method the merger of businesses arising from a
transfer of entity stakes under common control of the Group's shareholders,
is presented as if the merger took place in the earliest period of the
statements, or, if later, effective from the date that common control was
put into effect; for this purpose comparatives are revised. Rostelecom's
consolidated financial statements for 2019 have therefore been revised to
incorporate Tele2 Russia's performance as if the acquisition had been
completed on 1 January 2019.
Q2 2020 KEY ACHIEVEMENTS
- Consolidated revenue grew by 13% year-on-year;
- Mobile services grew by 16% year-on-year;
- Sales in digital services increased by 68% year-on-year;
- OIBDA grew by 15%;
- Net profit increased by 32% year-on-year.
Q2 2020 FINANCIAL HIGHLIGHTS
- Revenue grew by 13% to RUB 127.3 billion compared to the second quarter
of 2019
- OIBDA up by 15% to RUB 48.8 billion;
- OIBDA margin grew by 0.8 p.p. to 38.3%;
- Net profit increased by 32% to RUB 7.7 billion;
- CAPEX[3] stood at RUB 24.7 billion (19.4% of revenue) from RUB 18.3
billion (16.2% of revenue) in the second quarter of 2019;
- FCF[4] stood at RUB (8.8) billion compared to RUB 14.6 billion in the
second quarter of 2019;
- Net debt[5] increased by 22% since the beginning of the year to RUB
407.1 billion, resulting in a Net Debt/OIBDA ratio of 2.2x.
Key figures for 2Q 2020, RUB mln
RUB million 2Q 2020 2Q 2019 change, y-o-y
Revenue 127,279 113,012 13%
OIBDA 48,800 42,476 15%
OIBDA margin % 38.3% 37.6% -
Operating Income 18,557 16,002 16%
Operating margin % 14.6% 14.2% -
Net Income 7,731 5,863 32%
% of revenue 6.1% 5.2% -
Capital Expenditure 24,661 18,290 35%
% of revenue 19.4% 16.2% -
Net debt 407,118 325,010 25%
Net debt/ annualised OIBDA 2.2 2.0 -
FCF (8,832) 14,619 (23,451)
FIRST HALF YEAR 2020 FINANCIAL HIGHLIGHTS
? Revenue increased by 11% to RUB 248.9 billion compared to the first half
of 2019;
? OIBDA increased by 14% year-on-year to RUB 95.9 billion compared to the
first half of 2019;
? OIBDA margin grew by 0.7 p.p. to 38.5% compared to the first half of
2019;
? Net profit increased by 14% to RUB 15.4 billion compared to the first
half of 2019;
? CAPEX excluding state programmes stood at RUB 46.7 billion (18.7% of
revenue) compared to RUB 44.0 billion (19.7% of revenue) in the first half
of 2019;
? FCF was at RUB (14.8) billion compared to RUB (0.9) billion in the first
half of 2019;
? Net debt increased by 22% since the beginning of the year to RUB 407.1
billion, resulting in a Net Debt/OIBDA ratio of 2.2x
Key figures for 1HY 2020, RUB mln
RUB million 6M 2020 6M 2019 change, y-o-y
Revenue 248,892 223,237 11%
OIBDA 95,883 84,341 14%
OIBDA margin % 38.5% 37.8% -
Operating Income 37,504 32,766 14%
Operating margin % 15.1% 14.7% -
Net Income 15,443 13,530 14%
% of revenue 6.2% 6.1% -
Capital Expenditure 46,658 44,039 6%
% of revenue 18.7% 19.7% -
Net debt 407,118 325,010 25%
Net debt/ annualised OIBDA 2.2 2.0 -
FCF (14,778) (899) (13,879)
Mikhail Oseevskiy, President of Rostelecom, commented:
"Our strong financial and operating results for the second quarter of this
year evidence our resilience and successful passage through a difficult
spring and early summer period, where the general population and business as
a whole have faced unprecedented challenges relating to quarantine measures,
the widespread transition to online and severe economic uncertainty.
"The strategic direction provided by Rostelecom's digital transformation has
enabled us to embed digital services into our DNA. Our market offer is
therefore sustainable and has significant potential based on the need to
meet the demands of a new modern reality.
"Completing the consolidation of Tele2 Russia's mobile business was timely.
The transaction has made us a truly integrated digital provider, which is a
unique position to be in both in terms of the breadth of services assembled
under the Rostelecom brand and the opportunities open to Rostelecom to serve
the needs of clients in the 21st Century with new digital services.
"I therefore consider our second quarter achievements in terms of growth in
revenue, OIBDA and net profit in the second quarter by 13%, 15% and 32%
respectively, as a great achievement by the entire Rostelecom team. We are
seeing the first signs of recovery in economic activity for our clients,
many of whom are projecting a return to growth in the coming quarters. This
will lead to an expansion of work being carried out to digitize various
industries and aspects of people's daily lives. By the year-end we plan to
go to the board of directors and present to the market an updated strategy
that will set more precise goals, taking into account the inclusion of Tele2
Russia as a fully consolidated member of the group, and illustrate new
initiatives that can create additional value for shareholders. "
Vladimir Kirienko, First Vice-President of Rostelecom, said:
"In the second quarter, top-line growth accelerated to 13%. The double-digit
growth rates were achieved thanks to the expansion of the mobile segment and
the rapid growth of digital services. Some service categories, such as,
information security services, continue to show exponential growth: in the
reporting quarter, revenues in this area grew 2.5 times, in part due to the
active development of mass cybersecurity services.
"Our cloud services, data centre services, smart solutions in the field of
urban infrastructure management and state electronic services remain in
demand. The popularity of the Rostelecom Key solution and converged packages
is also growing. Rostelecom's solid growth trajectory is the fruit of hard
work from a professional team that has built high levels of trust from our
customers. Customers have appreciated how quickly Rostelecom has been able
to adapt to changes and put customers first by offering convenient and
useful services in a timely manner. We have managed to support our clients
in recent months both by adapting the terms of service provided within the
framework of current contracts and by creating new popular digital services.
We have as an example developed a new product that remotely screens the
temperature of employees using thermal imaging, our products typically
integrate themselves seamlessly into clients' existing corporate systems.
This service has already been used by a number of companies such as ALROSA
and LUKOIL. Another unique digital solution recently offered to the market
is "Retail Hub", a product that uses algorithms and AI to enable retail
chains to update information on electronic displays and to help focus the
attention of buyers on the right products online, thereby expanding the
range of purchases and increasing the average ticket. Our Tele2 colleagues
have also gone to great lengths to provide subscribers with a large range of
convenient remote services and remote ways of connecting to them. Our main
priority is to remain close to clients, surround them with important and
useful services, while remaining reliable and trusted partners when it comes
to meeting their digital needs both in the present and future.
Sergey Anokhin, Senior Vice-President and Chief Financial Officer, added:
"We have comfortably made it through the first half of this year in terms of
our financial performance and we have continued to implement our strategy.
However, despite the noticeable relaxation of quarantine restrictions and
the first signs of recovery in economic activity, there remains significant
uncertainty about the future development of the pandemic and macroeconomic
indicators. Based on this, the management team maintains a conservative view
when it comes to forecasting growth rates for 2020. We expect an increase in
consolidated revenue of at least 5%, an increase in OIBDA of at least 5%;
and we expect to keep ?APEX within 100-110 billion rubles excluding state
programmes."
KEY OPERATING HIGHLIGHTS
Fixed-line business
Number of 2Q 2020 2Q change, y-o-y 1Q 2020 change,
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