ROSTELECOM PJSC (RKMD)
ROSTELECOM PJSC: ROSTELECOM FINANCIAL AND OPERATING RESULTS FOR THE THIRD QUARTER AND NINE MONTHS OF 2021

09-Nov-2021 / 09:31 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.


 

 

Third quarter revenue increased by 5%, with OIBDA[1] up 9%

Moscow, Russia - November 9, 2021 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), the largest digital service provider in Russia, today announces its consolidated financial results for the third quarter and nine months of 2021 prepared in accordance with IFRS.

THIRD QUARTER 2021 KEY FINANCIAL HIGHLIGHTS

  • Revenue increased by 5% to RUB 141.2 billion compared to 3Q 2020;
  • OIBDA up 9% to RUB 58.3 billion;
  • OIBDA margin up 1.5 p.p. to 41.3%;
  • Net profit of RUB 8.4 billion, compared to RUB 11.8 billion reported in 3Q 2020;
  • CAPEX[2] excluding state programs increased by 1% year-on-year to RUB 24.6 billion (17.4% of revenue);
  • FCF[3] of RUB 13.3 billion, compared to RUB 18.9 billion for the same period of 2020;
  • Net Debt[4] (including lease liabilities) increased by 8% YTD, amounting to RUB 502.5 billion, resulting in a Net Debt (including lease liabilities)/OIBDA ratio of 2.3x.

 

KEY FINANCIAL HIGHLIGHTS FOR NINE MONTHS OF 2021

  • Revenue increased by 7% to RUB 411.8 billion compared to the nine months of 2020;
  • OIBDA increased by 13% year-on-year to RUB 169.7 billion compared to the nine months of 2020;
  • OIBDA margin increased by 2.3 p.p. to 41.2% compared to the nine months of 2020;
  • Net profit increased by 17% to RUB 31.4 billion compared to the nine months of 2020;
  • CAPEX excluding state programs increased by 7% year-on-year to RUB 76.2 billion (18.5% of revenue);
  • FCF improved by RUB 13.5 billion, to amount to RUB 16.6 billion.

 

 

 

 

 

 

 

 

 

 

 

 

Key figures for 3Q 2021, RUB mln

RUB million

3Q 2021

3Q 2020

 change, y-o-y

Revenue

141,213

134,988

5%

OIBDA

58,323

53,678

9%

OIBDA margin %

41.3%

39.8%

-

Operating Income

21,228

23,423

(9%)

Operating margin %

15.0%

17.4%

-

Net Income

8,398

11,768

(29%)

% of revenue

5.9%

8.7%

-

Capital Expenditure excl. state programs

24,638

24,326

1%

% of revenue

17.4%

18.0%

-

Net debt (incl. lease liabilities)

502,487

501,593

0.2%

Net debt (incl. lease liabilities)/ OIBDA

2.3

2.6

-

FCF

13,339

18,939

(5,600)


Key figures for 9M 2021, RUB mln

RUB million

9M 2021

9M 2020

 change, y-o-y

Revenue

411,760

383,880

7%

OIBDA

169,698

149,559

13%

OIBDA margin %

41.2%

39.0%

-

Operating Income

65,698

61,670

7%

Operating margin %

16.0%

16.1%

-

Net Income

31,382

26,870

17%

% of revenue

7.6%

7.0%

-

Capital Expenditure excluding state programmes

76,192

70,977

7%

% of revenue

18.5%

18.5%

-

Net debt (incl. lease liabilities)

502,487

501,593

0.2%

Net debt (incl. lease liabilities)/ OIBDA

2.3

2.6

-

FCF

16,561

3,015

13,546

 

 

 

 

Mikhail Oseevskiy, President of Rostelecom, commented: "In the third quarter of 2021, Rostelecom continued to grow steadily, having achieved its key financial and operational targets. Revenue grew by 5%, OIBDA increased by 9%, and the company continues to increase its free cash flow, which reached almost RUB 17 billion during the 9 months of 2021, which will support our plans to increase dividend payments for the current year (of RUB 6 per share) and beyond.

 

"A key strategic initiative for the period was the recent acquisition by Rostelecom of BFT, a leading public services digitisation provider. Our focus on identifying promising and fast-growing digital business segments is a significant part of our transformation."

 

Vladimir Kirienko, First Vice-President of Rostelecom, commented: "The development of our brand-new services and solutions helps us generate additional value through our segment & cluster management model.. Our main goal is to strengthen our digital leadership by providing innovative products that are rising in demand as well as to ensure stable growth and efficiency in our core business. This has enabled us to perform well across our key financial metrics in absolute terms as well as to post OIBDA margin increase by solid 1.5 p.p."

 

 

Sergey Anokhin, Senior Vice-President and Chief Financial Officer added: "The Company continued to demonstrate stable business growth and a high level of cost control during the third quarter, which ensured that we remain within our budget for 2021.  The successful fulfilment of our plans during the 9 months of 2021, and the moderate macroeconomic risk outlook enables us to look more optimistically at our anticipated results for the whole Full Year. As a result of this, we are improving our previously published forecast for OIBDA growth in 2021 to 10-12% y-o-y. In terms of revenue, the Company continues to plan for growth of at least 5% and we expect CAPEX in the range of 110-115 billion rubles (excluding the implementation of state programs)."

 

 

 

KEY OPERATING HIGHLIGHTS

Fixed business

Number of subscribers (million):

3Q 2021

3Q 2020

change, y-o-y

Internet access

13.5

13.4

0.4%

B2C: Broadband

12.4

12.3

0.05%

B2B: Broadband + VPN

1.1

1.1

4%

Pay TV

10.9

10.7

2%

Incl. IPTV

6.3

5.9

7%

Hosted PBX

0.198

0.147

35%

Local telephony services

12,9

14,5

(11%)

 

ARPU[5] (RUB):

3Q 2021

3Q 2020

change, y-o-y

Internet access

 

 

 

B2C: Broadband

393

390

1%

B2B: Broadband + VPN

3,584

3,566

1%

Pay TV (B2C)

252

245

3%

Incl. IPTV

299

298

1%

Hosted PBX

945

1,119

(16%)

Blended ARPU[6]

551

537

3%

 

Mobile business

 

3Q 2021

3Q 2020

change, y-o-y

Data Traffic, incl. MVNO,Pb

1,750

1,351

30%

Churn, %

(8.0%)

(7.3%)

0.6 p.p)

Growth of active mobile Internet users, %

18.5%

25.5%

(7.0 p.p.)

 

 

 

  1. The total number of Internet subscribers among households grew to 12.4 million in the third quarter of 2021 compared to the corresponding period of last year. ARPU increased by 1% year-on-year to RUB 393;
  2. The total number of Internet and VPN subscribers in B2B increased by 4% year-on-year to 1.1 million; ARPU increased by 1% year-on-year to RUB 3,584;
  3. The number of pay-TV subscribers grew by 2% to 10.9 million users compared to the corresponding period of last year, with average ARPU of RUB 252 in B2C;
  • the number of IPTV subscribers increased by 7% to 6.3 million, and ARPU was RUB 299 in B2C;
  1. The number of active mobile Internet users increased by 18.5% year-on-year during 3Q 2021. Year-on-year growth in mobile Internet data traffic reached 30% during the third quarter of 2021; while cellular customer base churn amounted to 8.0%/

 

KEY EVENTS RELATING TO 3Q 2021 AND AFTER THE END OF THE REPORTING PERIOD

Business news

  • Rostelecom continues to develop and expand its range of products and services:
  •  Digital OTT platform Wink:
    • A new "Wink+more.tv" package has been introduced, with over 170 TV-channels, 35k movies and series;
    • As part of partner integration with the VK Group Internet Holding, Wink is now offered within the VK Combo subscription offer;
    • Further upgrades to the Wink+ OTT box, including a new Bluetooth remote with Marusya-powered voice control (Marusya is Rostelecom's smart speaker)
    • By the end of the nine months of 2021, the number of Wink customers accessing videos on two or more devices increased to 2.5 million.
  • Rostelecom's "Key solution":
    • The mobile app now has a technical support omnichat; also alarm code functionality has been improved;
    • Rostelecom.Key now covers over 192k apartments, which contributes to the revenue growth by 45% by 3Q 2021;
  • "Smart Home" and home video surveillance services:
    • Added a Face Detection function as well as introduced a new scheduled recording function for cameras;
    • 3Q 2021 revenue grew by 35% compared to 2Q 2021.
  • Evolving B2B services:
    • A new system was introduced for signing service contracts remotely for SMEs;
    • Predictive data science analytics to provide bespoke business solutions for SMEs was integrated into Rostelecom's products;
    • Rostelecom has developed and pilot tested in VTB and SovkomBank branches a new solution. The new product "Videoanalytics Retail PRO" integrates computer vision and image understanding into cameras across bank branches for better analytics of customer experience, identification of gaps and shortfalls in business processes which helps improve sales performance and optimise staff workload and efficiency;
    • A new automatic QR code reading function has been added to the Complex Perimeter Security system for better management of entry restrictions for clients' visitors and employees, in order to meet a wide range of requirements including safety management procedures related to the pandemics;
    • Rostelecom's Hosted PBX service is now available to customers who have been contracted with other operators and are keeping their telephone numbers;

 

  • Digital segment:
  • as part of the development of cloud and data center services:
    • CloudLine services added to Rostelecom Data Center in Novosibirsk;
    • All Rostelecom data centers are now fully certified with the PCI DSS[7] standard;
    • Russian Baikal-T and Baikal-M processors have been recognised as technically compatible with the TIONIX VDI software for virtual desktop infrastructures that are essential for remote work environments;
    • A new National Cloud Platform facility was put into operation in Rostelecom's Kurchatov Data Center in Moscow;
    • The Domain Coordination Center .RU/.РФ и MSK-IX has included a back-up domain registration system which enables an uninterrupted operation of domain areas;
    • Rostelecom launched a new Tier III certified Data Center in Moscow with a 207 racks capacity.

Rostelecom was ranked first by the number of data racks commissioned last year, according to CNews Analytics.

  • Digital Region project:
    • Installation of 249 photo and video surveillance devices for better road traffic management, as well as three systems for transport weight-and-dimensional control;
    • Installation of 387 smart cameras in communal hallways and connection of 1,250 cameras to the city video surveillance platform;
    • External lighting systems modernised for four municipal entities.
  • Cyber security services:
    • A new version of the DLP system Solar Dozor 7.5 has been introduced with an added function for macOS workstations monitoring;
    • A competence center for Solar MSS cyber security services has been launched in Samara;
    • Successful delivery of a large-scale project for integration of the Solar Dozor DLP system for Rostelecom's client Unipro;
    • Completed integration of the Solar appScreener code scanner for System Technologies, the largest bank, financial and industrial software provider in Belarus;
    • Solar appScreener was chosen by the Engineering Physics Institute to assess software compatibility with the IT security requirements of the Federal Service for Technical and Export Control (FSTEK), a federal executive body responsible for implementing the government policy for IT security.
  • Rostelecom built a digital infrastructure for the Marchenkovskaya wind farm in the Rostov region;
  • Rostelecom's federal platform for remote voting has been successfully deployed at the Single Voting Day on 17-19 September 2021.

 

  • Operator business segment highlights include:
  • 8% year-on-year increase in О2О[8] project revenues during the nine months of 2021;
  • Rostelecom leased optical fiber spectrum at 17 sections of the highway network to ER-Telecom;
  • Provision of a Vladivostok to Tokyo channel for VimpelCom with a 10 Gbps capacity.

 

  • Large projects undertaken include:
  • An agreement with Russian Post to provide communication services for Russia's largest corporate data network;
  • An agreement with VTB to expand lease services for racks and process rooms;
  • An agreement with Danon for supply and installation of thermal camera stations and other devices for employee and visitor management;

 

  • Rostelecom's subsidiary, mobile operator Tele2, continues to strengthen its offering:
  •  New features and offers for Tele2 customers include:
    • Yandex Pay express checkout;
    • Tele2 Disk information storage facility;
    • Access to Telegram and Viber messengers even on zero balance;
    • SIM-cards remote registration with non-qualified e-signature in the GosUslugi app (Russia's public services portal);
    • More attractive international roaming offers in Turkey;
    • SIM-cards are now sold in Moscow airports;
  • Tele2 Russia launched a new service "Kids Online" which offers access to thousands of movies and cartoons as well as Wink's e-learning programmes.
  • Together with Mobile Solutions, Tele2 has launched "Smart Parking" the first smart device in Russia for parking payments;
  • Tele2 Russia released an online mini-series on customer service based on real customer enquiries addressed to Tele2 HelpDesk;
  • On the sustainability front, Tele2 has launched a national awareness campaign to raise awareness among the youth of the plight of older people and the digital challenges they are facing.

Other news

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING REVIEW

Revenue analysis

Revenue structure by services

RUB million

3Q 2021

3Q 2020

change, y-o-y

9M 2021

9M 2020

change, y-o-y

Mobile

 49,604  

 45,813  

8%

143,611

129,683

11%

Broadband

 24,851  

 22,565  

10%

72,691

66,752

9%

Digital

 18,418  

 19,322  

(5%)

50,457

46,856

8%

TV

 9,870  

 9,437  

5%

29,741

28,212

5%

Wholesale services:

 19,083  

 18,653  

2%

56,679

54,646

4%

Interconnect and traffic transit services

 4,519  

 4,487  

1%

13,447

13,210

2%

VPN

 8,105  

 7,376  

10%

23,743

21,506

10%

Rent of channels

 2,444  

 2,599  

(6%)

7,359

7,520

(2%)

Infrastructure services

 4,015  

 4,191  

(4%)

12,130

12,410

(2%)

Fixed telephony

 12,030  

 13,400  

(10%)

37,031

41,264

(10%)

Other services

 7,358  

 5,798  

27%

21,550

16,467

31%

Total

 141,213  

134,988  

5%

411,760

383,880

7%

 

 

 

 

 

 

 

In the third quarter of 2021, revenue increased year-on-year by 5% to RUB 141.2 billion, the dynamics was driven by the following factors:

  • 8% increase in revenue from mobile, mainly due to a higher volume of mobile Internet data consumption and standard voice services;
  • 10% growth in revenue from broadband due to a higher number of subscribers and higher ARPU for fibre optic tariff plans, as well as revenues from Internet connection contracts reflected in books;
  • High base effect of 2020 related to certain digital services driven by few significant projects

In the nine months of 2021, revenue increased by 7% year-on-year to RUB 411.8 billion, as a result of the following factors:

  • 11% increase in revenue from mobile, mainly due to a higher volume of mobile Internet data consumption and standard voice services;
  • 9% growth in revenue from broadband due to a higher number of subscribers, growth in ARPU as well as revenues from Internet connection contracts;
  • 8% increase in digital revenues mainly driven by with the development of platform solutions for e-government, the promotion of information security solutions, cloud services and data centre services.

 

 

 

Operating income analysis

Breakdown of operating expenses

 

RUB million

3Q 2021

3Q 2020

change, y-o-y

9M 2021

9M 2020

change, y-o-y

Personnel costs

(31,482)

(31,829)

(1%)

(97,848)

(96,086)

2%

Depreciation, Amortization and impairment losses of non-current assets

(35,985)

(29,252)

23%

(100,631)

(84,457)

19%

Interconnection charges

(24,612)

(24,204)

2%

(71,702)

(69,153)

4%

Materials, repairs and maintenance, utilities

(10,865)

(10,180)

7%

(30,425)

(27,920)

9%

Gain on the disposal of PPE and intangible assets

2,199

1,536

43%

7,377

3,841

92%

Impairment loss of financial assets measured at amortized cost

(1,701)

(669)

154%

(1,788)

(3,135)

(43%)

Other operating income

6,543

4,968

32%

15,814

15,280

3%

Other operating expenses

(24,082)

(21,936)

10%

(66,859)

(60,580)

10%

Total operating expenses

(119,985)

(111,566)

8%

(346,062)

(322,210)

7%

In the third quarter of 2021, operating expenses increased by 8% year-on-year, to amount to RUB 120.0 billion, largely due to the following factors:

  • 23% increase (of RUB 6.7 bln) in depreciation, amortization and impairment losses for non-current assets, partly due to a decrease of useful lives of items of a number of objects and intangible assets;
  • 10% increase (of RUB 2.1 bln) in other operating expenses, due to the formation of additional reserves as well as the advertising and marketing expenses;
  • 154% growth (of RUB 1.0 bln) in impairment loss of financial assets measured at amortized cost, partly attributable to the growth of reserves related to advance payments;
  • 43% increase (of RUB 0.7 bln) in gains from the disposal of PPE and intangible assets, mainly due to improving results associated with the disposal of Rostelecom's real estate portfolio.

Operating expenses for the nine months of 2021 increased by 7% year-on-year to RUB 346.1 billion, largely due to the following factors:

  • 19% increase (of RUB 16.2 bln) in depreciation charges and impairment losses of non-current assets, due to an increase in depreciation charges for new items of fixed assets, intangible assets and leases;
  • 10% increase (of RUB 6.3 bln) in other operating expenses, including due to the formation of additional reserves, the deployment of Digital Region projects and expenses relating to the advertising and promotion of the company's services;
  • 4% increase (of RUB 2.5 bln) in interconnection charges, due to an increase in direct costs driven by higher traffic volumes;
  • 9% increase (of RUB 2.5 bln) in expenses for materials, repairs and maintenance, partly due to an increase in utility bills;
  • 92% growth (of RUB 3.5 bln) in profit from disposal of PPE and intangible assets, mainly due to improving results associated with the disposal of Rostelecom's real estate portfolio.

Operating profit for the third quarter of 2021 decreased by 9% year-on-year to RUB 21.2 billion and increased by 7% to RUB 65.7 billion year-on-year during the nine months of 2021. The operating profit dynamics in the third quarter if 2021 was caused by higher growth in expenses.

OIBDA for 3Q 2021 increased by 9% to RUB 58.3 billion, and by 13% to year-on-year during the nine months of 2021 to RUB 169.7 billion. OIBDA dynamics were influenced by revenue growth and by the changes in operating expenses cited above. The OIBDA margin increased by 1.5 p.p. year-on-year to 41.3% during the third quarter of 2021 and was up 2.3 p.p. year-on-year to 41.2% during the nine months of 2021. 

Net Income Analysis

Profit before tax decreased by 20% year-on-year during the third quarter of 2021 to RUB 12.1 billion, rising by 19% during the nine months of 2021 to RUB 41.4 billion. The profit before tax dynamics in the third quarter of 2021 was due to the decrease in operating profit, a increase in finance costs and the absence of foreign exchange losses in 2021. The profit before tax dynamics in the nine months of 2021 was due to the increase in operating profit and the absence of foreign exchange losses in 2021.

Income tax in 3Q 2021 amounted to RUB 3.7 billion, compared to RUB 3.3 billion during the corresponding period of 2020. During 9M 2021, RUB 10.1 billion of income tax was paid, compared to RUB 7.9 billion during the nine months of 2020, which is mainly due to changes reported in profit before tax, as well as certain expenses that were not deducted for tax purposes.

Net profit decreased by 29% year-on-year during the third quarter of 2021 to RUB 8.4 billion. During the nine months of 2021, net profit increased by 17% year-on-year to RUB 31.4 billion.

Financial review

Net operating cash flow for 3Q 2021 decreased by 14% year-on-year to RUB 39.1 billion, compared to the corresponding period of 2020. During the nine months of 2021, net operating cash flow grew by 21% year-on-year to RUB 93.1 billion.

At the end of the third quarter of 2021, cash outflow on investments in non-current assets, excluding state programmes, increased by 1% to RUB 24.6 billion (17.4% of revenue). Taking into account state programmes, this figure decreased by 2% to RUB 29.8 billion (21.0% of revenue). At the end of the nine months of 2021, cash outflow on investments in non-current assets, excluding state programs, increased by 7% to RUB 76.2 billion (18.5% of revenue). Taking into account state programs, this figure increased by 9% to RUB 91.3 billion (22.1% of revenue).

Free cash flow for 3Q 2021 amounted to RUB 13.3 billion, compared to RUB 18.9 billion in 3Q 2020. Free cash flow for the nine months of 2021 improved by RUB 13.5 billion to reach RUB 16.6 billion. Factors that contributed to higher free cash flow during the third quarter of 2021 include changes in the working capital, mostly caused by an increase in accounts receivable for the Bridging the Digital Divide Project, as well as the replacement of short-term liquidity controls with long-term financial instruments.

The improvement in free cash flow during the nine months of 2021 was influenced by OIBDA growth, the dynamics of other assets and obligations item, as well as the uneven distribution of advance payments and project delivery within the calendar year.

 

Free Cash Flow (RUB, billion)

 

 

As at September 30, 2021, the Group's total debt (including lease liabilities) increased by 7% and amounted to RUB 544.0 billion.  The debt dynamics in the current year was due to higher lease liabilities stemming from the review of rental agreements' capitalisation terms. 100% of the Group's total debt remains rouble-denominated.

As at September 30, 2021, the Group's net debt (including lease liabilities) amounted to RUB 502.5 billion, an increase of 8% since the beginning of the year. The company's debt burden over the past 12 months has decreased from 2.6x to 2.3x net debt/OIBDA[9].

 


OTHER INFORMATION: CONFERENCE CALL

Rostelecom's management will hold a conference call and webcast today at 4:00 PM (Moscow), 2:00 PM (CET), 1:00 PM (UK) and 8:00 AM (NYT). To participate in the conference call, please dial:

UK/ International:   +44 203 984 9844

USA:    +1 718 866 4614

Russia:    +7 (495) 283 98 58

 

Confirmation Code (ENG):  539980

Confirmation Code (RUS):  619022

 

 

A webcast of the conference call will only be available in English. To access the webcast please follow the link: https://mm.closir.com/slides?id=539980.

 

A replay of the conference call will be available on the Company's website

https://www.company.rt.ru/en/ir/results_and_presentations/financials/IFRS/2021/3/.  

* * *

APPENDICES

  1. Reconciliation of OIBDA;
  2. Statement of Comprehensive Income for 9M 2021;
  3. Statement of Cash Flows for 9M 2021;
  4. Statement of Financial Position for 9M 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 costs line;
  • Expenses related to non-government pension insurance.

 

RUB million

3Q 2021

3Q 2020

change, y-o-y

9M 2021

9M 2020

change, y-o-y

Operating income

21,228

23,423

(9%)

65,698

61,670

7%

Plus amortisation

(35,985)

(29,252)

23%

(100,631)

(84,457)

19%

Plus expenses related to the long-term management incentive programme

(834)

(716)

16%

(2,501)

(2,526)

(1%)

Plus expenses related to non-government pension insurance

(276)

(287)

(4%)

(868)

(906)

(4%)

OIBDA

58,323

53,678

9%

169,698

149,559

13%

OIBDA margin, %

41.3%

39.8%

 

41.2%

39.0%

 


 

 

APPENDIX 2: Statement of Comprehensive Income for 9M 2021

 

 

Nine-month period ended
30 September (unaudited)

 

2021

2020
(restated)

Revenue

411,760

383,880

 

 

 

Operating expenses

 

 

Wages, salaries, other benefits and payroll taxes

(97,848)

(96,086)

Depreciation, amortization and impairment losses

(100,631)

(84,457)

Interconnection charges

(71,702)

(69,153)

Materials, utilities, repairs and maintenance

(30,425)

(27,920)

Gain on disposal of property, plant and equipment and intangible assets

7,377

3,841

Impairment loss of financial assets measured at amortized cost

(1,788)

(3,135)

Other operating income

15,814

15,280

Other operating expenses

(66,859)

(60,580)

Total operating expenses, net

(346,062)

(322,210)

Operating profit

65,698

61,670

 

 

 

Share of net profit/(loss) of associates and joint ventures

(22)

448

Finance income

1,607

1,709

Finance costs

(27,915)

(27,861)

Other investing gain, net

1,924

470

Foreign exchange (loss)/gain, net

145

(1,716)

Profit before income tax

41,437

34,720

Income tax expense

(10,055)

(7,850)

Profit for the period

31,382

26,870

Other comprehensive income

 

 

Other comprehensive income to be reclassified to profit or loss
in subsequent periods

 

 

Exchange differences on translation of foreign operations

96

526

Share of other comprehensive income of associates

55

-

Other comprehensive income for the period, net of tax

151

526

Total comprehensive income for the period

31,533

27,396

 

 

 

Profit attributable to:

 

 

Equity holders of the Group

30,044

26,084

Non-controlling interests

1,338

786

 

 

 

Total comprehensive income attributable to:

 

 

Equity holders of the Group

30,195

26,610

Non-controlling interests

1,338

786

Earnings per share attributable to equity holders of the Group -
basic (in roubles)

8.94

8.50

Earnings per share attributable to equity holders of the Group -
diluted (in roubles)

8.87

8.42

 

 

 

 

 

APPENDIX 3: Statement of Cash Flows for 9M 2021

 

 

Nine-month period ended
30 September (unaudited)

 

2021

2020
(restated)

Cash flows from operating activities

 

 

Profit before tax

41,437

34,720

 

 

 

Adjustments to reconcile profit before tax to cash generated from operations

 

 

Depreciation, amortization and impairment losses

100,631

84,457

Gain on disposal of property, plant and equipment and intangible assets

(7,377)

(3,841)

Impairment loss of financial assets measured at amortized cost

1,788

3,135

Share of net profit/(loss) of associates and joint ventures

22

(448)

Finance income

(1,607)

(1,709)

Finance costs excluding finance costs on employee benefit obligations

27,890

27,827

Other investing gain, net

(1,924)

(470)

Foreign exchange loss/(gain), net

(145)

1,716

Share-based motivation program

2,364

2,586

 

 

 

Increase in accounts receivable and contract assets

(24,911)

(22,186)

Increase in employee benefits

247

574

Increase in inventories

(2,680)

(2,601)

Decrease in accounts payable, provisions and accrued expenses

(2,118)

(1,205)

Increase in contract costs, prepayments and other assets

(7,429)

(12,791)

Increase/(decrease) in other liabilities

1,524

(1,387)

Cash generated from operations before income tax and interest paid

127,712

108,377

 

 

 

Interest paid

(27,731)

(26,897)

Income tax refund

42

1,005

Income tax paid

(6,895)

(5,439)

Net cash from operating activities

93,128

77,046

Cash flows from investing activities

 

 

Purchase of property, plant and equipment and intangible assets

(91,258)

(83,842)

Proceeds from sale of property, plant and equipment, intangible assets and assets held for sale

8,139

4,495

Acquisition of financial assets

(14,369)

(8,157)

Proceeds from disposals of financial assets

11,631

3,072

Interest received

837

494

Subsidy from Government

5,715

4,822

Dividends received

444

402

Purchase of subsidiaries and business, net of cash acquired

(983)

(115,131)

Distribution received from joint venture

399

-

Proceeds from disposal of subsidiaries, net of cash disposed

47

(74)

Acquisition of equity accounted investees

(252)

(125)

Net cash used in investing activities

(79,650)

(194,044)

 

 

 

 

Nine-month period ended
30 September (unaudited)

 

2021

2020
(restated)*

Cash flows from financing activities

 

 

Issue of share capital

-

66,000

(Purchase) of treasury shares

(2,759)

-

Proceeds from bank and corporate loans

459,527

701,971

Repayment of bank and corporate loans

(456,188)

(658,998)

Proceeds from bonds

14,934

40,000

Repayment of bonds

(1,945)

(2,034)

Repayment of vendor financing payable

-

(2)

Proceeds from other non-current financing liabilities

-

(29)

Repayment of lease liabilities

(13,266)

(10,611)

Acquisition of non-controlling interests

-

(36)

Dividends paid to shareholders of the Group

(16,864)

(16,751)

Dividends paid to non-controlling shareholders of subsidiaries

(1,198)

(1,305)

Net cash (used in) / from financing activities

(17,759)

118,205

 

 

 

Effect of exchange rate changes on cash and cash equivalents

(27)

(283)

Net (decrease)/increase in cash and cash equivalents

(4,308)

924

 

 

 

Cash and cash equivalents at beginning of the period

31,215

19,955

Cash and cash equivalents at the end of the period

26,907

20,879

 

 

APPENDIX 4: Statement of Financial Position for 9M 2021

 

30 September

31 December

2021

2020

(unaudited)

(restated)

Assets

 

 

Non-current assets

 

 

Property, plant and equipment

586,136

575,558

Goodwill and other intangible assets

143,275

141,353

Right of use assets

111,871

95,733

Trade and other accounts receivable

6,248

6,317

Investments in associates and joint ventures

10,918

10,896

Other financial assets

781

815

Other non-current assets

14,242

12,975

Deferred tax assets

8,353

8,970

Contract assets

726

972

Contract costs

16,865

16,326

Total non-current assets

899,415

869,915

 

 

 

Current assets

 

 

Inventories

13,474

10,792

Contract assets

15,725

6,710

Contract costs

816

674

Trade and other accounts receivable

67,635

50,166

Prepayments

7,404

8,953

Prepaid income tax

877

1,377

Other financial assets

14,579

11,482

Other current assets

8,365

7,892

Cash and cash equivalents

26,907

31,215

Asset classified as held for sale

545

831

Total current assets

156,327

130,092

Total assets

1,055,742

1,000,007

 

 

 

Equity and liabilities

 

 

Equity attributable to equity holders of the Group

 

 

Share capital

95

95

Treasury shares

(11,761)

(14,374)

Retained earnings and other reserves

204,637

194,424

Total equity attributable to equity holders of the Group

192,971

180,145

 

 

 

Non-controlling interests

38,836

37,587

Total equity

231,807

217,732

 

 

 

Non-current liabilities

 

 

Loans and borrowings

359,053

372,406

Lease liabilities

103,000

86,392

Employee benefits

6,917

6,670

Deferred tax liabilities

44,724

41,672

Accounts payable and accrued expenses

864

1,580

Contract liabilities

12,844

15,811

Provisions

5,473

5,848

Other financial liabilities

19,411

10,912

Other non-current liabilities

41,918

32,831

Total non-current liabilities

594,204

574,122

 

 

 

Current liabilities

 

 

Loans and borrowings

62,460

32,535

Lease liabilities

19,460

17,399

Accounts payable and accrued expenses

83,222

96,033

Income tax payable

2,236

3,023

Contract liabilities

33,082

34,680

Provisions

12,260

9,413

Other financial liabilities

-

1,914

Other current liabilities

17,011

13,156

Total current liabilities

229,731

208,153

Total liabilities

823,935

782,275

Total equity and liabilities

1,055,742

1,000,007

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 broadband users stands at over 13.5 mln users, it has more than 10.9 mln pay-TV customers, over 6.3 mln of which are subscribed to IPTV. Tele2 Russia, a Rostelecom subsidiary, is a major player in the mobile market with the industry leading NPS, a customer satisfaction benchmark. The joint mobile subscriber base is over 46.6 mln users.

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.

During the 9M 2021, the Group generated RUB 411.8 bln of revenues, RUB 169.7 bln of OIBDA (41.2% of revenue) and RUB 31.4 bln of net income.

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.

The Group's stable financial position is confirmed by its credit ratings. Rostelecom has been assigned 'BBB-' and 'BB+' international credit ratings by Fitch Ratings and Standard & Poor's respectively, and AA(RU) by ACRA.

 

*   *   *

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 forecasts of 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 expansion of 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 the development 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 assessment of 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 in global economic conditions;
  • risks relating to Russian legislation, regulation and taxation, including laws, regulations, decrees and decisions governing the Russian telecommunications industry, securities industry as well as currency and exchange controls relating to Russian entities and their official interpretation by regulatory bodies;
  • risks relating to the Company, including the achievement of the anticipated results, levels of profitability 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 telecommunications infrastructure, technological innovations as well as the convergence of technologies;
  • other risks and uncertainties. For a more detailed discussion of these and other factors, see the Company's Annual Report and the Company's other public filings.

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.


[1] Here and below, please refer to Attachment 1 of this statement for a full definition of OIBDA.

[2] Here and below, capital expenditure ("CAPEX") comprises cash spent on fixed assets and intangible assets.

[3] 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.

[4] Here and below, Net Debt is calculated as total debt (including long-term and short-term lease liabilities) less cash, cash equivalents and short-term investments (other financial assets).

[5] Average revenue per user

[6] Blended ARPU includes revenue from one user subscribed to a number of services simultaneously, including broadband, IPTV and digital cable TV

[7] The Payment Card Industry Data Security Standard (PCI DSS) is a set of requirements intended to ensure that all companies that process, store, or transmit credit card information maintain a secure environment.

[8] Operator to Operator

[9] OIBDA for the last 12 months



ISIN: US7785291078
Category Code: QRT
TIDM: RKMD
LEI Code: 2534001D752JPNM0H170
Sequence No.: 126309
EQS News ID: 1247272

 
End of Announcement EQS News Service

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