DJ ROSTELECOM PJSC: ROSTELECOM FINANCIAL AND OPERATING RESULTS 4Q AND FY 2021
ROSTELECOM PJSC (RKMD) ROSTELECOM PJSC: ROSTELECOM FINANCIAL AND OPERATING RESULTS 4Q AND FY 2021 04-March-2022 / 09:40 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.
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Revenue increased by 6% in 2021; OIBDA[1] up 13%; FCF[2] up by 43%.
Moscow, Russia - March 4, 2022 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), Russia's largest integrated digital company, today announces its consolidated financial results for the fourth quarter and the full year of 2021 prepared in accordance with IFRS.
FOURTH QUARTER 2021 KEY FINANCIAL HIGHLIGHTS
-- Revenue grew by 3% to RUB 168.3 billion compared to 4Q 2020:
-- OIBDA up by 10% to RUB 49.1 billion;
-- OIBDA margin up by 1.9 p.p. to 29.2%;
-- Net profit of RUB 0.5 billion compared to net loss of RUB (1.5) billion in 4Q 2020;
-- CAPEX[3] excluding state programmes increased by 18% to RUB 42.5 billion (25.3% of revenue) compared to4Q 2020;
-- FCF of RUB 15.9 billion compared RUB 19.6 billion in 4Q 2020;
FULL YEAR 2021 FINANCIAL HIGHLIGHTS
-- Revenue increased by 6% to RUB 580.1 billion;
-- OIBDA grew by 13% to RUB 218.8 billion;
-- OIBDA margin improved by 2.2 p.p to 37.7%;
-- Net profit increased by 26% to RUB 31.8 billion;
-- CAPEX excluding state programs increased by 11% to RUB 118.7 billion (20.5% of revenue);
-- FCF increased by 43% to RUB 32.5 billion;
-- Net Debt[4] including lease liabilities increased by 8% since the beginning of the year to RUB 505.2billion, resulting in a Net Debt/OIBDA ratio of 2.3x.
Key figures for 4Q 2021, RUB mln
RUB million 4Q 2021 4Q 2020 change, y-o-y Revenue 168,332 163,009 3% OIBDA 49,116 44,491 10% OIBDA margin % 29.2% 27.3% - Operating Income 8,009 7,295 10% Operating margin % 4.8% 4.5% - Net Income 0.450 (1,507) - % of revenue 0.3% (0.9%) - Capital Expenditure excl. state programs 42,548 36,162 18% % of revenue 25.3% 22.2% - Net debt 505,197 466,035 8% Net debt/ annualised OIBDA 2.3 2.4 - FCF 15,938 19,644 (3,706) Key figures for FY 2021, RUB mln RUB million 2021 2020 change, y-o-y Revenue 580,092 546,889 6% OIBDA 218,814 194,050 13% OIBDA margin % 37.7% 35.5% - Operating Income 73,707 68,965 7% Operating margin % 12.7% 12.6% - Net Income 31,832 25,363 26% % of revenue 5.5% 4.6% - Capital Expenditure excl. state programs 118,740 107,139 11% % of revenue 20.5% 19.6% - Net debt 505,197 466,035 8% Net debt/ annualised OIBDA 2.3 2.4 - FCF 32,499 22,659 9,840
Mikhail Oseevskiy, President of Rostelecom, commented: "A number of strategic and structural changes have made it possible for Rostelecom to achieve its financial and operational targets set for 2021. We have successfully expanded and improved our product line, with an increased share of innovative digital services in the range as well as grown size of the business, while strengthening its market position in key segments. As a result, we managed to post positive performance across all key financial indicators. Solid growth was also demonstrated by FCF - over 40%. Strong 2021 results provide the basis for an increase in shareholder payouts relative to the lower limit set by the dividend policy. Therefore, management considers it possible to recommend to increase dividend payments to 6 rubles per share for 2021."
Sergey Anokhin, Senior Vice-President and Chief Financial Officer added: "In 2021, Rostelecom continued to show stable business growth and a high level of cost control, which together ensured decent financial results. We also managed to meet our guidance in terms of revenue and OIBDA growth for 2021, while substantial cash flow has enabled us to implement some of the planned investment projects ahead of schedule while keeping the targeted range of CAPEX/Sales ratio. We enhanced our operations both in mature core and new growing areas coupled with increased internal efficiency as well as streamlined and downsized business model. We also aimed at decreasing our OPEX and optimizing the company's debt structure to improve its cost and ensure resilience over the market volatility. On the financial front, these efforts have led to marginality growth, solid FCF generation as well as debt burden reduction. Operationally, they have enabled the company to further sustain and invest into growing promising areas. At the same time, the complex nature of the geopolitical context and uncertainty of the macroeconomic risks which can have a negative impact on the dynamics of the results of subsequent periods, we will take some time before discussing the potential prospects for 2022 until we see stabilisation and certainty and lower volatility in the financial markets."
KEY OPERATING HIGHLIGHTS
Fixed services business
Number of subscribers (million): 4Q 2021 4Q 2020 change, y-o-y
FIBRE-BASED SERVICES
10.8 10.4 4%
Internet access
B2C: Broadband 9.8 9.5 4%
B2B/G: Broadband 0.7 0.6 10%
B2B/G: Broadband + VPN 1.0 0.9 10%
IPTV 6.4 6.1 5%
Hosted PBX 0.218 0.160 37%
TRADITIONAL SERVICES
Local telephony services 12.5 14.0 (11%)
B2C 9.9 11.3 (12%)
B2B/G 2.6 2.7 (6%)
Broadband xDSL
B2C: Broadband xDSL 2.5 3.0 (15%)
B2B/G: Broadband xDSL 0.2 0.2 (17%)
Cable TV 4.5 4.7 (6%)
ARPU[5] (RUB): 4Q 2021 4Q 2020 change, y-o-y
FIBRE-BASED SERVICES
380 377 1%
Internet access
B2C: Broadband 2,868 2,764 4%
B2B/G: Broadband 4,066 4,298 (5%)
B2B/G: Broadband + VPN 306 307 (0,3%)
IPTV 907 1,108 (18%)
Hosted PBX
TRADITIONAL SERVICES
Local telephony services 223 227 (2%)
B2C 575 585 (2%)
B2B/G
Broadband xDSL 462 450 3%
B2C: Broadband xDSL 1,527 1,324 15%
B2B/G: Broadband xDSL 191 186 3%
Cable TV 380 377 1%
Mobile business
4Q 2021 4Q 2020 change, y-o-y Data Traffic, incl. MVNO,Pb 1,856 1,442 29% Churn, % (8.05%) (8.09%) 0.04 p. p. Growth of active Internet users, % 17.6% 20.0% (2.4 p. p.) Subscriber base, mln 47.5 46.6 2% 1. The total number of fibre optic broadband internet subscribers among households grew by 4% to 9.8 millionin the fourth quarter of 2021 compared to the corresponding period of 2020; ARPU grew by 1% to RUB 380. 2. The total number of fibre optic broadband internet and VPN subscribers in B2B and B2G increased by 10%year-on-year to 0.7 million; ARPU was up by 3% to RUB 2,868. 3. The number of IPTV users grew by 5% to 6.4 million users compared to the corresponding period of lastyear, with average ARPU of RUB 306; 4. The number of active mobile Internet users grew in 4Q 2021 by 17.6% compared to the corresponding periodof 2020. The mobile Internet data traffic growth reached 29%; at the same time, cellular customer base churn was8.05%.The mobile subscriber base grew by 2% to 47.5 million users in 2021.
KEY EVENTS RELATING TO 2021 AND AFTER THE END OF THE REPORTING PERIOD
Business news - Rostelecom continues to develop and expand its range of products and services:
-- Wink: -- New services:? "Film Swap" for free exchange of a purchased movie within the first 20 minutes of watching; - Mobile data exchange for movie minutes;
-- New subscription offers and packages "Transformer", "Maximum", "Premium", Wink+more.tv;
-- Partnership-based integration of Wink and VK Combo;
-- Seamless migration of all IPTV subscribers to Wink.
Wink was among top three leaders for the number of paying OTT subscribers posting a five-fold growth of the subscriber base[6]; the total number of active Wink users surpassed three million in FY 2021;
-- As part of the gaming product line expansion, with the Gaming tariff as a core service: -- New gaming option launched to provide clients with a second account and share benefits with friends;
-- Expanded functionality and added options within Rostelecom.Key: -- Video analytics and traffic control functions for special vehicles;
-- Wider range of compatible equipment and an integrated intercom panel Sputnik;
-- Omnichat options added to the mobile app for technical support and expanded functionality;
Rostelecom.Key currently covers over 242,000 apartments, while the number of video cameras connected to the 'Key' platform has exceeded 10,000.
-- As part of Smart Home solutions: -- Face Detection service introduced with an option to programme the recording;
-- Further improvements to adhoc options, allowing for cloud recording only if an activity is recorded;
Three-fold growth of revenues from services compared to 2021.
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-- Further improvements of the B2B product offering: -- New services:? Wi-Fi 2.0 platform for B2B with an extended functionality for analysis of public Wi-Fi networkusers' activity; - Smart Office cloud service for remote control and administration of service facilities fromanywhere in the world provided there is Internet access; - Transport monitoring service for assessing the fleet quality and state; - Ad designer service allowing clients to publicise content and control TV-sets remotely within theTV for corporates product; - Data Science powered personified solutions for SMEs; - Digital Contract Signing solution for SMEs; - Additional options for Hosted PBX, including voice analytics, voice-activated digital assistants,integration with mobile numbers and automatic analysis of calls; - Rostelecom continues to grow its digital segment:
-- As part of cloud and data center services: -- All Rostelecom data centers are now PCI DSS[7] compliant;
-- Technical compatibility of the software for TIONIX VDI remote and virtual workstations and theRussian processors Baikal-T and Baikal-M;
-- New platform 'Public cloud platform' launched in a Moscow data center (Kurchatovsky);
-- Newly launched:? Second queue of the Udomlya data center for 800 racks; - New Novosibirsk data center for 304 racks; - New Tier III accredited data center for 207 racks launched in Moscow;
-- New facility acquired in the south of Moscow for the construction of four more data centers with atotal rack capacity of 7,000.
-- CloudLine services launched in the Novosibirsk data centers;
-- Rostelecom ranked first in the rating of largest Russian data center operators based on CNewsAnalytics;
-- As part of cybersecurity services: -- News services launched:? Solar advisor - employee efficiency monitoring system; - Solar Mss Sandbox service for protection against advanced cyber-attacks; - Cryptographic protection for the communication channels of Virtual Data Center users;
-- Projects realised:? Integration of a DLP-system Solar Dozor for Unipro, Zenith football club, Rosatom, National Bankof Kazakhstan; - Monitoring and emergency response within the infrastructures of Rosseti Ural and GLONASS; - Seven large contracts signed for the launch of Solar appScreener in the APAC region, includingstate bodies and Singapore airlines; - Adversary Emulation trainings for sector red teams under Ministry of Energy and cross-sectortrainings for TMK and the Sinara group;
-- Center of expertise for cybersecurity services Solar MSS opened in Samara;
-- Solar JSOC was transformed into a center for cyber-attacks response;
-- The Moscow Institute of Engineering Physics test and certification center has chosen SolarappScreener for analysis of its software for compliance with the information security certificationrequirements of the Federal Service for Technical and Export Control of Russia;
-- Pilot launch of the Cyber Polygon training project; - Operator business segment highlights:
-- O2O[8] project: -- revenues grew by 14% in FY 2021;
-- Fibre-optic line servicing expanded to 192.4 km (+6.1% compared with FY 2020);
-- Base stations servicing expanded to 103,500 units (+45% compared with FY 2020);
-- As part of international partners engagement: -- Two 100 GBs channels provided to China Telecom for a long-term lease;
-- IP-transit for the Kyrgyzstani telecom leader Alfa Telecom (TM Megacom);
-- As part of Russian partners engagement: -- Long-term contract signed with Megafon for a new service "Provision of an optic fibre segment".
-- Fibre opitics lease agreement signed with ER Telecom Holding for 17 segments of the transmissionnetwork.
-- Vladivostok-Tokyo channel with 10GBs in speed set up for VimpelCom; - As part of large projects and contracts: -- Contract signed with Russian Post for provision of communications services for the country's largestcorporate data network;
-- Rostelecom supplied Hosted PBX for over 1,800 offices of the Federal Treasury;
-- Rostelecom and Danone signed an agreement for supply and installation of TV-sets and other equipmentto monitor health and wellbeing of visitors and employees;
-- Rostelecom supplied infrastructure for automated workspaces for Rskhb-Intekh;
-- Rostelecom has signed a contract for provision of cloud access to Carsharing Russia (Delimobil). - Mobile business with Tele2 at its core continues to progress:
-- New solutions for clients:? Option to exchange mobile minutes for movies, coffee and Xiaomi smartphones; - Option to save up minutes of gigabytes with no expiry date; - Family and friends discounts; - Option to use Telegram and Viber messengers, as well as smart parking assistant with zero balance onthe account; - Register sim-cards remotely using unqualified electronic signature function in the GosKey app; - Option to purchase sim-cards on Yandex.Lavka, Yandex.Market and AliExpress;
Other news
-- Rostelecom presented its 2025 Strategy and the 2021-2023 Dividend Policy following the approval by theBoard of Directors;
-- Rostelecom's Board of Directors has extended Michael Ossevsky's tenure as company president until 2027;
-- Acquisition of BFT Group, the leading digitisation provider for state management
-- Acquisition of TBE-Telecom, a provider of MVNE platform;
-- Consolidation of 100% of Rostelecom Digital Technologies;
-- Rostelecom achieved Resg1 rating by AK&M for its ESG reporting and disclosure;
-- Rostelecom tops the ESG rating by the National Rating Agency;
-- Rostelecom has been included in the Bloomberg Gender-Equality Index for the third consecutive year;
-- The company was named the best employer in the telecom sector, while Tele2 Russia assumed leadershipamong mobile operators based on hh.ru rating, and has received two gold and three silver awards at the Global TopRanking Performers Awards;
-- Wink has won two awards for best OTT-service at Golden Ray and the Big Digit National awards.
OPERATING REVIEW
Revenue analysis
Revenue structure by services
RUB million 4Q 2021 4Q 2020 change 2021 2020 change Mobile 50,734 47,275 7% 194,345 176,958 10% Broadband 27,256 23,625 15% 99,947 90,377 11% Digital 37,942 30,442 25% 88,399 77,298 14% TV services 10,172 9,792 4% 39,913 38,004 5% Wholesale services 17,396 20,116 (14%) 74,075 74,762 (1%) Interconnect and traffic transit services 4,313 4,593 (6%) 17,760 17,803 0% VPN 5,986 8,216 (27%) 29,729 29,722 0% Rent of channels 2,348 2,575 (9%) 9,707 10,095 (4%) Rent and maintenance of telecommunications infrastructure 4,749 4,732 0,4% 16,879 17,142 (2%) Fixed telephony 11,831 13,356 (11%) 48,862 54,620 (11%) Other services 13,001 18,403 (29%) 34,551 34,870 (1%) Total 168,332 163,009 3% 580,092 546,889 6%
Revenue structure by segments and clusters
RUB million 4Q 2021 4Q 2020 change 2021 2020 change 1. Segments 90,449 93,602 (3%) 333,277 323 187 3% B2C[9] 34,717 35,134 (1%) 138,430 138,290 0.1% B2B/G[10] 39,853 43,044 (7%) 136,360 130,185 5% B2O[11] 15,879 15,424 3% 58,487 54,712 7% 2. Digital Clusters 41,481 35,024 18% 89,569 75,656 18% Data centers and cloud 12,512 11,678 7% 35,276 29,981 18% Digital Region 10,255 9,604 7% 23,568 22,082 7% Cyber Security 4,818 4,054 19% 8,856 6,024 47% Others 13,896 9,688 43% 21,869 17,569 24% 3. Mobile 53,813 49,673 8% 205,283 185,765 11% 4. Other 3,969 4,046 (2%) 14,917 17,380 (14%) Eliminations and corrections (21,379) (19,335) - (62,954) (55,099) - Total 168,332 163,009 3% 580,092 546,889 6%
In the fourth quarter of 2021, revenue increased by 3% to RUB 168.3 billion, compared to the fourth quarter of 2020, as a result of the following factors:
-- a 25% increase in revenue from digital services, mainly due to the growth of public platform solutions,video surveillance, and the promotion of data centre services;
-- a 15% increase in revenue from broadband reflecting the proceeds from Internet connection contracts,growth of client base in fibre optic tariff plans and ARPU;
-- a 7% increase in mobile business, driven by an increase in mobile Internet use and basic voice services.
Core contribution to revenue in the fourth quarter of 2021 came from Digital clusters, Mobile business as well as connectivity services, predominantly in B2B/G segment
During the twelve months of 2021, revenue increased by 6% to RUB 580.1 billion, year-on-year, as a result of the following factors:
-- a 10% increase in mobile business, driven by an increase in mobile Internet use and basic voice services;
-- a 14% increase in revenue from digital services, mainly due to the growth of public platform solutions,video surveillance, and the promotion of data centre services and cloud;
-- a 11% increase in revenue from broadband reflecting the proceeds from Internet connection contracts,growth of client base in fibre optic tariff plans and ARPU.
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Core contribution to revenue in the FY 2021 came from Mobile, Digital clusters (including Public Services and InfoSec), as well as B2B/G.
Operating income analysis
Operating expenses structure
RUB million 4Q 2021 4Q 2020 change 2021 2020 change Personnel costs (39,361) (40,303) (2%) (137,209) (136,389) 1% Depreciation, Amortization and impairment losses (39,428) (35,245) 12% (140,059) (119,702) 17% Interconnection charges (25,114) (26,482) (5%) (96,816) (95,635) 1% Materials, repairs and maintenance, utilities (13,001) (12,382) 5% (43,426) (40,302) 8% Gain on the disposal of PPE and intangible assets 1,674 2,151 (22%) 9,051 5,992 51% Impairment loss of financial assets measured at amortized (123) (4,030) (97%) (1,911) (7,165) (73%) cost Other operating income 4,922 6,603 (25%) 20,736 21,883 (5%) Other operating expenses (49,892) (46,026) 8% (116,751) (106,606) 10% Total operating expenses (160,323) (155,714) 3% (506,385) (477,924) 6%
In the fourth quarter of 2021, operating expenses increased by 3% compared to the corresponding period of 2020 and amounted to RUB 160.3 billion, largely due to the following factors:
-- a 12% increase (of RUB 4.2 bln) in depreciation, amortization and impairment losses, due to shorteruseful life for a number of core objects financial assets and intangible assets;
-- an 8% increase (of RUB 3.9 bln) in other operating expenses, partially due to the formation of additionalreserves, as well as promotion and marketing expenses;
-- a 25% decrease (of RUB 1.7 bln) in other operating income, mainly due to a rescheduled payment plan forthe proceeds from the Bridging the Digital Divide project for future periods;
-- a 97% decrease (of RUB 3.9 bln) in impairment losses of financial assets measured at amortized cost,partially due to recovery of reserves for certain assets.
In the twelve months of 2021, operating expenses increased by 6% compared to the corresponding period of 2020 and amounted to RUB 506.4 billion due to the following factors:
-- a 17% increase (of RUB 20.4 bln) in depreciation, amortization and impairment losses, due to an increasein depreciation charges for new items of fixed assets, intangible assets and leases;
-- a 10% increase (of RUB 10.1 bln) in other operating expenses, partially due to the formation ofadditional reserves, as well as promotion and marketing expenses;
-- an 8% increase (of RUB 3.1 bln) in materials, repairs and maintenance and utilities, partly due to anincrease in utility bills;
-- a 73% decrease (of RUB 5.3 bln) in impairment losses of financial assets measured at amortized cost,partially due to recovery of reserves for certain assets;
-- a 51% increase (of RUB 3.1 billion) in gain on the disposal of PPE and intangible assets, mainly due toimproved performance in real estate portfolio management.
OIBDA structure by segments and clusters
RUB million 4Q 2021 4Q 2020 change 2021 2020 change 1. Segments 24,430 21 027 16% 110,952 97,515 14% B2C 6,306 6,525 (3%) 36,734 33,556 9% B2B/G 13,479 10,486 29% 57,231 49,522 16% B2O 4,645 4,015 16% 16,987 14,437 18% 2. Digital Clusters 12,700 9,013 41% 25,438 20,586 24% Data centers and cloud 5,236 3,980 32% 15,245 12,450 22% Digital Region 1,919 1,196 60% 5,094 4,415 15% Cyber Security 2,204 1,852 19% 3,216 1,752 84% Others 3,341 1,985 68% 1,883 1,970 (4%) 3. Mobile 21,806 17,878 22% 88,082 75,051 17% 4. Other (6,469) 593 - 1,699 6,024 (72%) Eliminations and corrections (3,351) (4,020) (7,357) (5,126) Total 49,116 44,491 10% 218,814 194,050 13%
Operating profit increased by 10% in 4Q 2021 to RUB 8.0 billion and increased by 7% to RUB 73.7 billion in FY 2021 year-on-year.
OIBDA for 4Q 2021 increased by 10% to RUB 49.1 billion and by 13% to RUB 218.8 billion in FY 2021 year-on-year. OIBDA dynamics were influenced by revenue growth, and the above-mentioned changes in operating expenses. The OIBDA margin in 4Q 2021 increased by 1.9 p.p. to 29.2% compared to the 4Q 2020. OIBDA margin in FY 2021 increased by 2.2 pp to 37.7% compared to FY 2020. Higher OIBDA in FY 2021 was mainly influenced by higher revenues in the mobile and B2B/G segments.
Net Income Analysis
In 4Q 2021, loss before tax stood at RUB (0.6) billion, compared to RUB (0.7) billion in the corresponding period of 2020. In FY 2021, profit before tax increased by 20% to RUB 40.8 billion compared to FY 2020. Loss before tax in 4Q 2021 was caused by uneven distribution of certain expenses across the calendar year. The dynamics of profit before tax in FY 2021 was driven by higher operating income and no foreign exchange losses in 2021.
The recovery of income tax in 4Q 2021 was RUB 1.1 billion compared to income tax of RUB 0.8 billion in 4Q 2020. In FY 2021, income tax was RUB 9.0 billion compared to RUB 8.7 billion in FY 2020. The recovery of income tax in 4Q 2021 was driven by the tax effect related to one-off accruals. The dynamics of income tax in FY 2021 was driven by changes in profit before tax, as well as expenditures, which are not deductible for tax purposes.
Net income in 4Q 2021 stood at RUB 0.5 billion, compared to RUB (1.5) billion the corresponding period of 2020, and in FY 2021 - net income increased by 26% to RUB 31.8 billion versus the FY 2020.
Financial review
Net operating cash flow in 4Q 2021 remained almost intact and reached RUB 59.3 billion, compared to the corresponding period of 2020. In FY 2021 net operating cash flow increased by 11% to RUB 152.5 billion compared to FY 2020.
Cash outflow for investments in non-current assets excluding state programmes in 4Q 2021 increased by 18% to RUB 42.5 billion (25.3% of revenue) and including state programmes it increased by 9% to RUB 56.6 billion (33.6% of revenue). Cash outflow for investments in non-current assets excluding state programmes in FY 2021 increased by 11% to RUB 118.7 billion (20.5% of revenue) and including state programmes it increased by 9% to RUB 147.8 billion (25.5% of revenue).
FCF in 4Q 2021 totalled RUB 15.9 billion compared to RUB 19.6 billion in 4Q 2020. Free cash flow in FY 2021 increased by RUB 9.8 billion (+43% year-on-year) and reached RUB 32.5 billion. The FCF dynamics in 4Q 2021 and FY 2021 was driven by OIBDA growth, changes in working capital, mainly due to higher advance payments for platform solutions projects for the digital government. This in turn determined a more intensive investment programme in the end of 2021.
Free Cash Flow (RUB, billion)
As at December 31, 2021, including lease liabilities, the Group's total debt increased by 12% and amounted to RUB 568.7 billion, partially driven by the increase in lease liabilities following the reconsideration of capitalisation terms in rent contracts. 100% of the Group's total debt remained rouble-denominated as at December 31, 2021.
As at December 31, 2021, the Group's net debt, including lease liabilities, increased by 8% compared to the beginning of the year and amounted to RUB 505.2 billion. The net debt /OIBDA ratio[12] decreased to 2.3x from 2.4x for the last twelve months.
* * *
APPENDICES 1. Reconciliation of OIBDA; 2. Statement of Comprehensive Income for FY 2021; 3. Statement of Cash Flows for FY 2021; 4. Statement of Financial Position for FY 2021.
APPENDIX 1: RECONCILIATION OF OIBDA
OIBDA is a non-U.S. GAAP and non-IFRS financial measure, which the Company defines as operating income before depreciation and amortisation as well as some certain expenses. We believe that OIBDA provides useful information to investors because it is an indicator of the strength and performance of our business operations, including our ability to finance capital expenditures, acquisitions and other investments and our ability to incur and service debt.
The following indicators are not taken into account in the calculation of OIBDA:
-- Expenses related to the long-term management incentive programme, implying accruals in personnel costsline;
-- Expenses related to non-government pension insurance.
RUB million 4Q 2021 4Q 2020 change 2021 2020 change Operating income 8,009 7,295 10% 73,707 68,965 7% Plus amortisation (39,428) (35,245) 12% (140,059) (119,702) 17% Plus expenses related to the long-term management incentive (1,243) (1,679) (26%) (3,744) (4,205) (11%) programme Plus expenses related to non-government pension insurance (436) (272) 60% (1,304) (1,178) 11% OIBDA 49,116 44,491 10% 218,814 194,050 13% OIBDA margin, % 29.2% 27.3% 37.7% 35.5%
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APPENDIX 2: Statement of Comprehensive Income for FY 2021
Year ended 31
December
2020
2021
(restated)
Revenue 580,092 546,889
Operating expenses
Wages, salaries, other benefits and payroll taxes (137,209) (136,389)
Depreciation, amortization and impairment losses (140,059) (119,702)
Interconnection charges (96,816) (95,635)
Materials, utilities, repairs and maintenance (43,426) (40,302)
Gain on disposal of property, plant and equipment and intangible assets 9,051 5,992
Impairment loss of financial assets measured at amortized cost (1,911) (7,165)
Other operating income 20,736 21,883
Other operating expenses (116,751) (106,606)
Total operating expenses, net (506,385) (477,924)
Operating profit 73,707 68,965
Share of net profit of associates and joint ventures 261 969
Financial income 2,205 2,032
Finance costs (38,923) (36,670)
Other investing gain/(loss), net 3,230 (91)
Foreign exchange gain/(loss), net 336 (1,183)
Profit before income tax 40,816 34,022
Income tax expense (8,984) (8,659)
Profit for the year 31,832 25,363
Other comprehensive income/(loss)
Other comprehensive income/(loss) to be reclassified to profit or loss in subsequent periods
Exchange differences on translation of foreign operations 196 181
Net other comprehensive income to be reclassified to profit or income in subsequent periods 196 181
Other comprehensive income/(loss) not to be reclassified to profit or loss in subsequent
periods
Remeasurement of defined benefit pension plans 75 21
Share of other comprehensive income of associates 57 -
Income tax on remeasurement of defined benefit pension plans (15) (4)
Net other comprehensive income not to be reclassified to profit or loss in subsequent periods 117 17
Other comprehensive income for the year, net of tax 313 198
Total comprehensive income for the year 32,145 25,561
Profit attributable to:
Equity holders of the Group 28,549 23,326
Non-controlling interests 3,283 2,037
Total comprehensive income attributable to:
Equity holders of the Group 28,862 23,524
Non-controlling interests 3,283 2,037
Earnings per share attributable to equity holders of the Group - 8.50 7.43
basic (in roubles)
Earnings per share attributable to equity holders of the Group - 8.40 7.32
diluted (in roubles)
APPENDIX 3: Statement of Cash Flows for FY 2021
Year ended 31 December
2021 2020
(restated)
Cash flows from operating activities
Profit before tax 40,816 34,022
Adjustments to reconcile profit before tax to cash generated from operations
Depreciation, amortization and impairment losses 140,059 119,702
Gain on disposal of property, plant and equipment and intangible assets (9,051) (5,992)
Impairment loss of financial assets measured at amortized cost 1,911 7,165
Share of net profit of associates and joint ventures (261) (969)
Finance income (2,205) (2,032)
Finance costs excluding finance costs on employee benefit obligations 38,889 36,622
Other investing gain/(loss), net (3,230) 91
Foreign exchange (gain)/loss, net (336) 1,183
Share-based motivation program 3,508 3,860
Increase in accounts receivable and contract assets (13,004) (7,278)
Increase in employee benefits 236 321
Increase in inventories (1,769) (243)
Increase in accounts payable, provisions and accrued expenses 11,182 11,094
Increase in contract costs, prepayments and other assets (17,022) (16,873)
Increase/(decrease) in other liabilities 10,690 (2,064)
Net cash generated from operations before income tax and interests paid 200,413 178,609
Interest paid (39,043) (35,594)
Income tax refund 42 1,706
Income tax paid (8,942) (7,931)
Net cash from operating activities 152,470 136,790
Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets (147,840) (135,987)
Proceeds from sale of property, plant and equipment, intangible assets and assets held for 10,333 6,236
sale
Acquisition of financial assets (24,356) (14,196)
Proceeds from disposals of financial assets 19,253 11,461
Interest received 1,118 719
Subsidy from Government 16,418 14,901
Dividends received 444 569
Purchase of subsidiaries and business, net of cash acquired (2,661) (119,444)
Distribution received from joint venture 399 1,665
Proceeds from disposals of equity accounted investees 462 -
Proceeds from disposal of subsidiaries, net of cash disposed 195 (74)
Acquisition of equity accounted investees (722) (1,574)
Net cash used in investing activities (126,957) (235,724)
Cash flows from financing activities
Issue of share capital - 66,000
Purchase of treasury shares (4,343) -
Proceeds from bank and corporate loans 591,793 847,214
Repayment of bank and corporate loans (566,040) (852,883)
Proceeds from bonds 14,944 50,000
Repayment of bonds (1,945) (1,934)
Repayment of vendor financing payable - (2)
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Proceeds from / (repayment of) other non-current financing liabilities - (29) Proceeds from sale of non-controlling interests - 35,000 Repayment of lease liabilities (18,560) (14,682) Acquisition of non-controlling interests (4,480) (36) Dividends paid to shareholders of the Group (16,797) (16,664) Dividends paid to non-controlling shareholders of subsidiaries (1,750) (1,433) Net cash (used in)/from financing activities (7,178) 110,551 Effect of exchange rate changes on cash and cash equivalents 20 (357) Net increase in cash and cash equivalents 18,355 11,260 Cash and cash equivalents at beginning of the year 31,215 19,955 Cash and cash equivalents at the end of the year 49,570 31,215
APPENDIX 4: Statement of Financial Position for FY 2021
31 December
31 December
2020
2021
(restated)
Assets
Non-current assets
Property, plant and equipment 607,638 575,851
Goodwill and other intangible assets 149,007 141,184
Right of use assets 113,202 95,733
Trade and other accounts receivable 7,174 6,317
Investments in associates and joint ventures 14,056 10,896
Other financial assets 3,017 815
Other non-current assets 13,063 12,900
Deferred tax assets 10,666 9,027
Contract assets 439 972
Contract costs 16,749 16,326
Total non-current assets 935,011 870,021
Current assets
Inventories 12,572 10,792
Contract assets 7,758 6,710
Contract costs 947 674
Trade and other accounts receivable 59,190 50,166
Prepayments 11,429 8,953
Prepaid income tax 1,842 1,377
Other financial assets 13,965 11,482
Other current assets 9,888 7,892
Cash and cash equivalents 49,570 31,215
Asset classified as held for sale 716 831
Total current assets 167,877 130,092
Total assets 1,102,888 1,000,113
Equity and liabilities
Equity attributable to equity holders of the Group
Share capital 95 95
Treasury shares (13,345) (14,374)
Retained earnings and other reserves 200,726 194,424
Total equity attributable to equity holders of the Group 187,476 180,145
Non-controlling interests 39,926 37,604
Total equity 227,402 217,749
Non-current liabilities
Loans and borrowings 342,136 372,406
Lease liabilities 103,722 86,392
Employee benefits 6,906 6,670
Deferred tax liabilities 44,641 41,851
Accounts payable and accrued expenses 1,047 1,580
Contract liabilities 15,300 15,811
Provisions 5,730 5,848
Other non-current financial liabilities 21,443 10,774
Other non-current liabilities 43,286 32,831
Total non-current liabilities 584,211 574,163
Current liabilities
Loans and borrowings 102,271 32,535
Lease liabilities 20,603 17,399
Accounts payable and accrued expenses 82,401 96,082
Income tax payable 3,365 3,023
Contract liabilities 42,512 34,680
Provisions 22,816 9,413
Other financial liabilities - 1,914
Other current liabilities 17,307 13,155
Total current liabilities 291,275 208,201
Total liabilities 875,486 782,364
Total equity and liabilities 1,102,888 1,000,113
PJSC Rostelecom is the largest integrated digital services and products provider, operating in all segments of the telecommunications market in Russia. The Company serves millions of households, state and private enterprises across the country.
Rostelecom is Russia's undisputed market leader, providing high-speed Internet access and pay-TV. The total number of fibre broadband users stands at c.11 mln users, it has 11 mln pay-TV customers, over 6.4 mln of which are subscribed to Rostelecom's IPTV services. Tele2 Russia, a Rostelecom subsidiary, is a major player in the mobile market with over 47.5 mln subscribers and the industry-leading NPS, a customer satisfaction benchmark.
During the FY 2021, the Group generated RUB 580.1 bln of revenues, RUB 218.8 bln of OIBDA (37.7% of revenue) and RUB 31.8 bln of net income.
The Group is the leading provider of telecommunications services to government bodies and corporates of all levels.
Rostelecom is a key strategic innovator that provides solutions in the following fields: E-Government, cybersecurity, data-centres and cloud computing, biometry, healthcare, education and housing & utility services.
* * *
Certain statements in this press release are forward-looking statements within the meaning of the U.S. federal securities laws and intended to be covered by the safe harbours created thereby.
Those forward-looking statements include, but are not limited to:
-- Assessment of PAO Rostelecom's (the Company) future operating and financial results as well as forecastsof the present value of future cash flows and related factors;
-- The Company's plans to take ownership stakes in other organisations;
-- the Company's anticipated capital expenditures and plans to construct and modernize its network;
-- the Company's expectations as to the growth in demand for its services, plans relating to the expansionof the range of its services and their pricing;
-- the Company's plans with respect to improving its corporate governance practices;
-- the Company's expectations as to its position in the telecommunications market and forecasts on thedevelopment of the market segments within which the Company operates;
-- economic outlook and industry trends;
-- the Company's expectations as to the regulation of the Russian telecommunications industry and assessmentof impact of regulatory initiatives on the Company's activity;
-- other statements regarding matters that are not historical facts.
Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include:
-- risks relating to changes in political, economic and social conditions in Russia as well as changes inglobal economic conditions;
-- risks relating to Russian legislation, regulation and taxation, including laws, regulations, decrees anddecisions governing the Russian telecommunications industry, securities industry as well as currency and exchangecontrols relating to Russian entities and their official interpretation by regulatory bodies;
-- risks relating to the Company, including the achievement of the anticipated results, levels ofprofitability and growth, ability to create and meet demand for the Company's services including their promotions,and the ability of the Company to remain competitive in a liberalized telecommunications market;
-- technological risks associated with the functioning and development of the telecommunicationsinfrastructure, technological innovations as well as the convergence of technologies;
-- other risks and uncertainties. For a more detailed discussion of these and other factors, see theCompany's Annual Report and the Company's other public filings.
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Many of these factors are beyond the Company's ability to control or predict. Given these and other uncertainties, readers are cautioned not to place undue reliance on any of the forward-looking statements contained herein or otherwise. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements (which are made as of the date hereof) to reflect events or circumstances upon the annual report publication or to reflect the occurrence of unanticipated events, except as may be required under applicable laws.
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[1] Here and below, please refer to Attachment 1 of this statement for a full definition of OIBDA.
[2] Here and below Free Cash Flow ("FCF") is calculated as net cash from operating activity minus CAPEX, plus proceeds from selling fixed assets and intangible assets, plus interest received, plus subsidy from government.
[3] Here and below, capital expenditure ("CAPEX") comprises cash spent on fixed assets and intangible assets.
[4] Here and below, Net Debt is calculated as long-term and short-term loans and borrowings, (a) plus long- and short-term lease liabilities, (b) minus cash and cash equivalents, and (c) minus other financial assets.
[5] Average revenue per user
[6] Based on GFK data
[7] Payment Card Industry Data Security Standard
[8] Operator to Operator
[9] Customers
[10] Corporate and government clients
[11] Operators
[12] OIBDA for the last twelve months
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ISIN: US7785291078 Category Code: ACS TIDM: RKMD LEI Code: 2534001D752JPNM0H170 Sequence No.: 146813 EQS News ID: 1294351 End of Announcement EQS News Service =------------------------------------------------------------------------------------
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