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DGAP-UK-Regulatory News vom 15.05.2018

ROSTELECOM PJSC: ROSTELECOM ANNOUNCES ITS IFRS FINANCIAL AND OPERATING RESULTS FOR THE FIRST QUARTER OF 2018

ROSTELECOM PJSC (RKMD)

15-May-2018 / 13:02 CET/CEST
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.


 

 

 

rostelecom announces its ifrs financial and operating results for the first quarter of 2018

 

THE DIGITAL TRANSFORMATION DELIVERS STRONG REVENUE GROWTH OF 8%

Moscow, Russia - May 15, 2018 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), Russia's national telecommunications operator, today announces its consolidated financial results for the first quarter of 2018 prepared in accordance with IFRS[1].

KEY ACHIEVEMENTS

  • Revenue grew by 8% year-on-year in the first quarter of 2018 with average annual revenue growth of more than 5% over the last four quarters;
  • The digital segment's[2] contribution to total revenue reached 53%;
  • Consistently high growth rates in FTTx Broadband clients (+7%) and in IPTV subscribers (+12%), while ARPU continues to grow in our core broadband and IPTV segments;
  • Increase in revenues from VAS and cloud services amounted to 86% in the first quarter of 2018, as a result of video surveillance projects, "Smart City", and the promotion of cloud services and data centre services.

 

FIRST QUARTER 2018 FINANCIAL HIGHLIGHTS

  • Revenue grew by 8% to RUB 76.2 billion compared to the first quarter of 2017 on a like for like basis[3];
  • OIBDA[4] increased to RUB 23.2 billion on a like for like basis;
  • OIBDA margin of 30.4%;
  • Net profit increased by 15% to RUB 3.9 billion compared to the first quarter of 2017 on a like for like basis;
  • CAPEX[5] decreased by 15% to RUB 15.1 billion (19.8% of revenue) from RUB 17.7 billion (25.2% of revenue) in the first quarter of 2017;
  • Consolidated Free Cash Flow (FCF) of RUB (5.8) billion[6] compared to RUB (2.3) billion in the first quarter of 2017;
  • Net debt[7] increased by 6% since the beginning of the year and amounted to RUB 191.8 billion, resulting in a Net Debt/OIBDA ratio of 1.9x.

 

Key figures for 1Q 2018, RUB mln

RUB million

1Q 2018

1Q 2017

(like for like)

% change, y-o-y

1Q 2017

(as reported)

Change (%)

Revenue

76,203

70,273

8%

70,436

8%

OIBDA

23,194

23,162

0.1%

21,569

8%

OIBDA margin %

30.4%

33.0%

-

30.6%

-

Operating Income

8,357

8,650

(3%)

8,093

3%

Operating margin %

11.0%

12.3%

-

11.5%

-

Net Income

3,864

3,358

15%

3,150

23%

% of revenue

5.1%

4.8%

-

4.5%

-

Capital Expenditure

15,125

17,714

(15%)

17,714

(15%)

% of revenue

19.8%

25.2%

-

25.1%

-

Net debt

191,788

180,005

7%

180,005

7%

Net debt/ annualised OIBDA

1.9

1.9

-

1.9

-

FCF

(5,849)

(2,309)

-

(2,309)

-

 

Mikhail Oseevsky, President of Rostelecom, commented:

"The Q1 2018 results came in line with our expectations. Our revenue is growing at a solid average annual rate of more than 5 per cent, which is an outstanding performance for our industry. Our operating business keeps improving, demonstrating OIBDA and net income growth. This is driven by the expansion of our digital segment, which grew by more than 20% in the first quarter of 2018 and currently accounts for 53% of our top-line. We are also increasing our competitive positions in the key pay-TV and broadband segments, thanks to a growing subscriber base and higher ARPU. Furthermore, we are delighted to have recorded 65% of new user connections in the pay-TV market. This, in turn, was achieved by promoting new services such as video surveillance, where we saw the subscriber base doubling in the reporting period. Higher demand for cloud services, data centers and information security solutions is also contributing to our top-line. We continue to successfully implement the Russian government's state projects of high strategic importance. Public funding enabled us to expand the number of high-speed connections in Russian healthcare centres and across remote areas during the first quarter. Rostelecom was also responsible for handling video surveillance for the presidential election in March 2018.

In March, we updated our strategy and dividend policy, which confirmed that the on-going digital transformation of the business a key part of the roadmap for 2018-2022 and a key component for a robust business development strategy. We are a trusted digital partner for families, business and the State, and a credible provider of a wide range of high quality products and services in telecommunication, IT and other areas.

To achieve this, Rostelecom is focusing on the creation of a solid ecosystem for its products and services, with a focus on higher quality customer care. We are also enhancing our technological platform, increasing the capability of our human resources function and improving operational efficiency across the business. Our strategy is fully aligned with the Russian State's "Digital economy" programme, where Rostelecom plays one of the key roles.

The consistent implementation of our new strategic goals will contribute to higher dividend payments to our shareholders as we aim to deliver an industry leading dividend yield."

 

Sergei Anokhin, Senior Vice-President and Chief Financial Officer, added:

"Rostelecom's strong results for the first quarter of 2018 reflect our highly confident outlook for future developments of the digital segment. We expect our performance to continue to improve across all key financial indicators. We therefore revise our full year forecast for revenue growth, and anticipate an increase of more than 2 per cent. OIBDA margin is expected to be above 31.5% in 2018 with CAPEX of RUB 60-65 billion, excluding the implementation of government programmes."

 

 

 

KEY OPERATING HIGHLIGHTS

  1. The number of broadband subscribers grew by 2% to 12.7 million in the first quarter of 2018 compared to the corresponding period of last year;

      The B2C subscriber base grew by 2% to 12.0 million, whilst the number of subscribers connected by fibre optic increased by 7% year-on-year to 7.8 million (65% of the subscriber base);

  1. The number of pay-TV subscribers grew by 5% to 9.9 million households compared to the corresponding period of last year;

      The number of IPTV subscribers increased by 12% to 5.0 million;

  1. The number of MVNO subscribers increased almost 4-fold over the year and reached 0.9 million;
  2. The number of local telephony subscribers decreased by 8% to 18.7 million.

 

Number of subscribers (million):

1Q 2018

1Q 2017

% change, y-o-y

4Q 2017

% change, y-o-y

Broadband

12.7

12.5

2%

12.7

0.01%

Residential clients

12.0

11.7

2%

12.0

0.2%

Corporate clients

0.7

0.8

(3%)

0.8

(3%)

Pay TV

9.9

9.4

5%

9.8

2%

Incl. IPTV

5.0

4.4

12%

4.8

2%

MVNO subscribers

0.9

0.2

292%

0.8

6%

Local telephony services

18.7

20.3

(8%)

19.1

(2%)

 

 

KEY EVENTS RELATING TO 1Q 2018 AND AFTER THE END OF THE REPORTING PERIOD

Business news

  • Rostelecom continues to develop and expand its range of services:

    Rostelecom released outdoor surveillance camera solutions to ensure the security of private households and open areas surrounding buildings, within its "Video Surveillance" service;

    A brand-new cloud-based offering was introduced to provide greater security and faster performance of web resources; the launch of this solution will allow Rostelecom to expand the range of information security services and offer customers new protection mechanisms;

    A number of nationwide initiatives were launched to promote high speed Internet connection and IPTV, including "Cinemania", "Gainful film collection", "Movies for you", "Year of cinema 2018", "2018 CPE" and others;

    A pilot project based on the 4K technology for the HoReCa segment was launched in Saint-Petersburg;

    Rostelecom improved the functionality of its services and enhanced its offering for corporate and state clients within the following product lines: "Hosted PBX", "Web conferencing", "Managed communication services", "Virtual Data Centre", and "Information security";

    Special offers within the MVNO project were launched, including:

  • "Free month" and "Two Internet connections" promo actions, which allow users to get a 50% discount on Home Internet connection, provided mobile communication is used extensively;
  • A new "SMS Advertising" service was launched for B2B and B2G clients of Rostelecom's mobile services.

This led to a growth in subscriber base to 0.9 million users;

  • Rostelecom continues to grow its digital segment:

    During the first quarter of 2018, the Company took the lead with around 65% of new subscriptions in the pay-TV market[8];

    The "Video Surveillance" client base doubled over the reporting period;

    Rostelecom was appointed as the operator of the Unified Biometric System under the Decree of the Government of the Russian Federation from February 22, 2018 #293-r;

    Rostelecom introduced a beta-version of the Unified Biometric System;

    Rostelecom and Positive Technologies started cooperation on the development of  web security applications;

    Jointly with Nokia and "Skolkovo" Fund, Rostelecom launched Russia's first open pilot site based on the new generation 5G network in the "Skolkovo" innovation centre;

    Rostelecom successfully delivered the video surveillance of Russia's presidential election on March 18, 2018. More than 46,000 IP-cameras were installed to monitor the election process; the contract was worth RUB 2.7 billion;

    Rostelecom signed an agreement with Rosselkhoznadzor (the Federal Service for Veterinary and Phytosanitary Surveillance) to cooperate in conversion of veterinary paperwork and clients' connection to the veterinary certification electronic platform "The federal information system Mercury";

    The integrated spatial information platform ("Geodata Information System" (GIS) "Zemlya" (the Earth), developed by Rostelecom, was launched in Russia's Arkhangelsk region;

    More than 66 million Russians citizens had registered to the Unified System of Identification and Authentication (USIA) by February 2018;

    Rostelecom signed an agreement that facilitates traffic monitoring and the provision of DDoS attacks protection services on the Technoserv Cloud platform;

  • Rostelecom signed and renewed a number of large contracts with the Russian Pension Fund, the Russian Post, the Federal Bailiffs Service, Rosselkhozbank (the Russian Agricultural Bank), Rosneft, Russian Television and Radio Broadcasting Network, the Transport Directorate of the World Football Cup 2018 in Russia and others;
  • The OmniChat call centre for VTB 24 systems was shortlisted at Call Centre Guru Awards 2018 and received the award for "Best technology application. Product of the year";
  • Rostelecom successfully completed the first stage of TEA Network (Transit Europe Asia) upgrade to 3x100G;
  • In preparation for the World Football Cup 2018, Rostelecom arranged TV and radio broadcast for VIDI 30X10G;
  • For Kazakh and Azerbaijani operators, Rostelecom improved Internet access and connectivity to 300 Gbit/s.

 

Other News

 

  • Rostelecom presented "Strategy 2022", approved by the board of directors, and the revised dividend policy for 2018-2020;
  • Sergei Anokhin was appointed as Rostelecom's Chief Financial Officer;
  • Rostelecom invested in mobile operating system developer Sailfish;
  • Rostelecom became the official regional sponsor of the 2018 FIFA World Cup;
  • International rating agency Fitch Ratings affirmed Rostelecom's long-term issuer default rating of BBB- with stable outlook;
  • Rostelecom announced the placement of its 001P-04R series bonds at a coupon rate of 7.15% per annum. The bonds, with a total nominal value of RUB 10 billion, have a six-year put option from the placement date and a maturity of 10 years with a nominal value of RUB 1,000 each.

 

 

 

 

 

 

OPERATING REVIEW

Revenue analysis

Revenue structure by services

RUB million

1Q 2018

1Q 2017

(like for like)

% change, y-o-y

1Q 2017

(as reported)

 Change (%)

Broadband

19,183

17,716

8%

17,508

 10%

TV services

8,175

6,905

18%

6,642

 23%

Fixed telephony

18,283

20,408

(10%)

20,399

 (10%)

Wholesale services

19,399

17,348

12%

17,311

 12%

Rent of channels

2,297

2,405

(5%)

2,403

 (4%)

Interconnect and traffic transit services

8,376

6,739

24%

6,743

 24%

VPN

5,524

5,077

9%

5,024

 10%

Rent and maintenance of telecommunications infrastructure

3,203

3,126

2%

3,141

 2%

VAS and cloud services

7,237

3,889

86%

3,894

86%

Other telecommunications services

2,610

2,584

1%

3,258

 (20%)

Other non-telecommunications services

1,317

1,425

(8%)

1,425

 (8%)

Total

76,203

70,273

8%

70,436

8%

 

 

 

 

 

 

 

Revenue structure by customer segments

RUB million

1Q 2018

1Q 2017

(like for like)

% change, y-o-y

1Q 2017

(as reported)

 Change (%)

Residential customers

34,086

33,782  

1%

33,967

0.3%

Corporate customers / Government customers

27,013

23,347  

16%

23,352

16%

Operators

13,986

12,004  

17%

11,990

17%

Other

1,119

1,140  

(2%)

1,128

(1%)

Total

76,203

70,273

8%

70,436

8%


In the first quarter of 2018, revenue increased by 8% to RUB 76.2 billion, compared to the first quarter of 2017 on a like-for-like basis, as a result of the following factors:

  • an 86% increase in revenue from VAS and cloud services, mainly due to proceeds from the video surveillance services provided during the presidential election in Russia, as well as the development of "Smart City" projects, data-centres and the promotion of cloud services;
  • a 12% increase in revenue from interconnect and traffic transmission services, and the organization of VPN channels;
  • an 8% rise in revenue from broadband services due to an increased number of subscribers and higher ARPU;
  • an 18% increase in revenue from pay-TV services due to growth in the IPTV subscriber base and higher ARPU.

 

 

 

 

 

 

 

 

Operating income analysis

Operating expenses structure

 RUB million

1Q 2018

1Q 2017

(like for like)

% change, y-o-y

1Q 2017

(as reported)

Change (%)

Personnel costs

(24,485)

(23,481)

4%

(23,923)

2%

Depreciation, Amortization and impairment losses

(14,078)

(14,506)

(3%)

(13,470)

5%

Interconnection charges

(14,144)

(10,705)

32%

(10,775)

31%

Materials, repairs and maintenance, utilities

(6,338)

(6,183)

3%

(6,183)

3%

Gain on the disposal of PPE and intangible assets

418

154

171%

154

171%

Impairment loss of financial assets measured at amortized cost

(1,174)

(656)

79%

(656)

79%

Other operating income

3,579

3,132

14%

3,132

14%

Other operating expenses

(11,624)

(9,377)

24%

(10,622)

9%

Total operating expenses

(67,846)  

(61,623)

10%

(62,343)  

9%

 

 

 

 

 

 

In the first quarter of 2018, operating expenses increased by 10% compared to the corresponding period of 2017 on a like for like basis and amounted to RUB 67.8 billion, largely due to the following factors:

  • a 32% increase (by RUB 3.4 billion) in interconnection charges, mainly due to higher expenditure on interconnect and traffic transit services, as a result of an increase in corresponding income;
  • a 24% increase (by RUB 2.2 billion) in other operating expenses, partly related to the video surveillance project for the presidential election, as well as equipment delivery as part of B2B/G projects and further promotion of Rostelecom's services;
  • a 4% increase (by RUB 1.0 billion) in personnel costs, mainly due to accrual of the provision under the new long-term incentive programme, as well as transformation in pension liabilities. Personnel costs decreased by 3%, excluding the accrual of the provision under the long-term incentive programme and transformation of pension liabilities;
  • a 79% increase (by RUB 0.5 billion) in impairment loss of financial assets measured at amortized cost, mainly due to one-off write-offs related to the past reporting periods. 

Operating profit in the first quarter of 2018 decreased by 3% to RUB 8.4 billion compared to the corresponding period on a like for like basis.

OIBDA for the first quarter of 2018 increased to RUB 23.2 billion. The OIBDA margin was 30.4% in the first quarter of 2018 compared to 33.0% in the corresponding period of 2017 on a like for like basis.

Net Income Analysis

In the first quarter of 2018, profit before tax reached RUB 4.9 billion, a 14% increase compared to the corresponding period in 2017 on a like for like basis.

The increase in profit before tax in the first quarter of 2018 mainly resulted from the following factors:

  • a decrease in losses from associates, mainly from the joint venture with Tele2 Russia, has been the major factor effecting the profit before tax dynamics;
  • a decrease in amortization expenditure has also had a positive impact on the profit before tax increase;
  • expenses related to the new long-term incentive programme and transformation in pension liabilities were also reflected in the profit before tax dynamics.

Income tax in the first quarter of 2018 increased by 10% to RUB 1.0 billion. Income tax dynamics reflects the increase in profit before tax.

The effective income tax rate was 21% in the first quarter of 2018, compared to the rate of 20% set by the Tax Code.

Net profit increased by 15% in the first quarter of 2018 and totalled RUB 3.9 billion on a like for like basis.

Financial review

Consolidated net operating cash flow in the first quarter of 2018 decreased by 44% to RUB 8.3 billion compared to the corresponding period in 2017. This decrease was mainly caused by changes in working capital which were mainly driven by an increase in accounts receivable related to one-off projects.

Consolidated cash outflow for investments in non-current assets decreased by 15% to RUB 15.1 billion in the first quarter of 2018. Excluding the state programmes, this figure  decreased by 27% to RUB 12.5 billion (16.4% of revenue). These trends were driven in the first quarter of 2018 by an uneven distribution of capital expenditure across the calendar year in accordance with the terms of signed contracts.

Consolidated free cash flow totalled RUB (5.8) billion in the first quarter of 2018. The consolidated free cash flow dynamics were driven by changes in the working capital, as well as the income tax refund in the first quarter of 2017.

As at March 31, 2018, the Group's total debt increased by 5% compared to the beginning of the year, and amounted to RUB 200.9 billion. Over 99% of the Group's total debt was rouble-denominated as at March 31, 2018.

As at March 31, 2018, the Group's consolidated net debt amounted to RUB 191.8 billion. The net debt /OIBDA ratio stood at 1.9x for the past twelve months ended in first quarter of 2018.

 

OTHER INFORMATION: CONFERENCE CALL

Rostelecom's management will hold a conference call and webcast today at 6.00 PM (Moscow), 5.00 PM (CET), 4.00 PM (UK) and 11.00 AM (NYT). To participate in the conference call, please dial:

Russia:    +7 495 213 1767

UK/ International:   +44 (0)330 336 9105

USA:    + 1 323 794 2551

Confirmation Code (ENG):  6592693

Confirmation Code (RUS):  7669038

 

 

A webcast of the conference call will only be available in English. To access the webcast please follow the link: http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=5547.

 

A replay of the conference call will be available on the Company's website http://www.rostelecom.ru/ir/results_and_presentations/financials/IFRS/2018/1/ in due course.

 

 

* * *

 

 

 

APPENDICES

  1. Reconciliation of OIBDA;
  2. IFRS 9, 15 and 16 standards application;
  3. Statement of Comprehensive Income for the first three months of 2018;
  4. Statement of Cash Flows for the first three months of 2018;
  5. Statement of Financial Position for the first three months of 2018.

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 non-cash 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.

Non-cash expenses related to the long-term management incentive programme, implying accruals in personnel costs line starting from Q2, 2014, are not taken into account in the calculation of OIBDA.

 

RUB million

1Q 2018

1Q 2017

(like-for-like)

% change, y-o-y

1Q 2017

(as reported)

Change (%)

Operating income

8,357

8,650

(3%)

8,093

8%

Plus amortisation

14,078

14,506

(3%)

 13,470

5%

Plus non-cash expenses related to the long-term management incentive programme

758

6

-

6  

-

OIBDA

23,193

23,162

0,1%

 21,569  

8%

OIBDA margin, %

30.4%

33.0%

 

30.6%

 

 

 

APPENDIX 2: IFRS 9, 15 and 16 STANDARDS APPLICATION

 

 

The Group initially adopted IFRS 9, 15 and 16 using the modified retrospective approach. For analytical purposes only, some information for 2017 is given in the IR materials on a comparative basis as if the standards were applied to the corresponding period of 2017.

 

The key changes related to the application of these standards are listed below:

 

*       Expenses related to the operating leases have been capitalized and are reflected in the accounting balance sheet under the title "Right-of-use assets (RoU)". The RoU related liabilities are reflected in relative balance lines under same titles;

*       The expenses related to the conclusion and implementation of contracts with customers have been capitalized and are reflected under "Revenue from Contracts with Customers";

*       Assets for contracts with customers in arrears on payments for services rendered, but yet not invoiced, were excluded from the accounts receivable balance;

*       Revenues from the sale of goods or provision of services of not sufficient individual value to customers, have been deferred;

*       Recurring advances, containing the financing component, have been discounted;

*       Impairment provisions of financial assets are recognised on the basis of expected credit losses.

 

APPENDIX 3: Statement of Comprehensive Income for the first three months of 2018

 

 

 

Three-month period ended

31 March

(unaudited)

 

2018

 

2017[9]

 

 

 

Revenue

                76,203  

            70,436  

 

 

 

Operating expenses

 

 

Wages, salaries, other benefits and payroll taxes

(24,485)

(23,923)

Depreciation, amortization and impairment losses

(14,078)  

(13,470)

Interconnection charges

(14,144)  

(10,775)

Materials, utilities, repairs and maintenance

(6,338)  

(6,183)

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

                      418  

154

Impairment loss of financial assets measured at amortized cost

(1,174)

(656)

Other operating income

3,579  

3,132

Other operating expenses

(11,624)  

(10,622)

Total operating expenses, net

(67,846)  

                (62,343)

Operating profit

8,357  

8,093  

 

 

 

Gain/(loss) from associates and joint ventures

                          4  

(1,024)

Finance costs

(4,054)

(3,666)

Other investing and financial gain, net

                      565  

481

Foreign exchange (loss)/gain, net

(9)  

123

Profit before income tax

4,863  

4,007

Income tax expense

(999)  

(857)

Profit for the period

3,864  

3,150

 

 

 

Other comprehensive income/(loss)

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

Exchange differences on translating foreign operations, net of tax

3

(148)

Other comprehensive income/(loss) for the period, net of tax

3

(148)

Total comprehensive income for the period

3,867

3,002

 

 

 

Profit attributable to:

 

 

Equity holders of the Group

3,703  

3,046

Non-controlling interests

                      161  

104

 

Total comprehensive income attributable to:

 

 

Equity holders of the Group

3,706  

2,889

Non-controlling interests

                      161  

113

 

 

 

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

1.65  

1.36

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

1.61  

1.35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

APPENDIX 4: Statement of Cash Flows for the first three months of 2018

 

 

Three-month period ended 31 March
(unaudited)

 

2018

 

2017

Cash flows from operating activities

 

 

Profit before tax

4,863

4,007

Adjustments to reconcile profit before tax to cash generated from operations:

 

 

Depreciation, amortization and impairment losses

14,078

13,470

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

(418)

(154)

Impairment loss of financial assets measured at amortized cost

1,174

656

(Gain)/loss from associates and joint ventures

(4)

1,024

Finance costs excluding finance costs on pension and other long-term social liabilities

4,022

3,666

Other investing and financial gain, net

(565)

(481)

Foreign exchange loss/(gain), net

9

(123)

Share-based motivation program

707

(4)

Changes in net working capital:

 

 

(Increase) in accounts receivable

(8,686)

(4,662)

Increase/(decrease) in employee benefits

237

(242)

(Increase)/decrease in inventories

(662)

130

Increase in accounts payable, provisions and accrued expenses

3,364

3,094

Decrease in other liabilities

(3,610)

(1,538)

Cash generated from operations

14,509

18,843

Interest paid

(4,586)

(4,823)

Income tax refund

-

1,293

Income tax paid

(1,615)

(414)

Net cash from operating activities

8,308

14,899

 

 

 

Cash flows from investing activities

 

 

Purchase of property, plant and equipment and intangible assets

(15,125)

(17,714)

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

826

506

Acquisition of financial assets

(1,644)

(1,484)

Proceeds from disposals of financial assets

1,963

2,477

Interest received

143

97

Dividends received

-

1

Purchase of subsidiaries, net of cash acquired

(548)

(64)

Acquisition of equity accounted investees

(3,375)

-

Net cash used in investing activities

(17,760)

(16,181)

 

 

 

Cash flows from financing activities

 

 

Proceeds from bank and corporate loans

171,190

112,899

Repayment of bank and corporate loans

(160,336)

(109,714)

Proceeds from bonds

10,000

-

Repayment of bonds

(11,133)

-

Repayment of vendor financing payable

(8)

(2)

Options settlement repayments

-

(103)

Payments  of lease liabilities (IFRS16)

(730)

-

Repayment of finance lease liabilities

(28)

(12)

Net cash used in financing activities

8,955

3,068

 

 

 

Effect of exchange rate changes on cash and cash equivalents

(19)

(215)

Net (decrease)/increase in cash and cash equivalents

(516)

1,571

Cash and cash equivalents at beginning of the period

3,815

4,257

Cash and cash equivalents at the end of the period

3,299

5,828

 

 

 

 

 

 

 

 

 

APPENDIX 5: Statement of Financial Position for the first three months of 2018

 

 

31 March 2018 (unaudited)

31 December[10]
2017

Assets

 

 

Non-current assets

 

 

Property, plant and equipment

346,104  

348,430

Investment properties

152

159

Goodwill and other intangible assets

59,027

59,820

Lease Assets

16,663

-

Trade and other accounts receivable

7,779

8,352

Investments in associates and joint ventures

69,258

65,879

Other financial assets

1,498

1,600

Other non-current assets

4,821

4,352

Deferred tax assets

824

647

Contract assets

541

-

Contract Cost

11,783

-

Total non-current assets

518,450

489,239

 

 

 

Current assets

 

 

Inventories

6,832

6,169

Contract assets

8,587

-

Trade and other accounts receivable

47,332

47,813

Prepayments

4,698

3,455

Prepaid income tax

2,101

159

Other financial assets

5,803

5,963

Other current assets

2,871

2,619

Cash and cash equivalents

3,299

3,815

Total current assets

81,523

69,993

Held for sale assets

1,203

997

Total assets

601,176

560,229

 

 

 

Equity and liabilities

 

 

Equity attributable to equity holders of the Group

 

 

Share capital

93

93

Additional paid-in capital

91

91

Treasury shares

(65,556)

(65,556)

Retained earnings and other reserves

316,712  

311,494

Total equity attributable to equity holders of the Group

251,340  

246,122

Non-controlling interests

3,462

3,242

Total equity

254,802

249,364

 

 

 

Non-current liabilities

 

 

Loans and borrowings

176,373

166,660

Lease liabilities

13,195

-

Employee benefits

4,970

4,733

Deferred tax liabilities

38,423

35,681

Accounts payable, provisions and accrued expenses

2,364

2,233

Other non-current liabilities

13,142

6,383

Total non-current liabilities

248,467

215,690

 

 

 

Current liabilities

 

 

Loans and borrowings

24,517

24,712

Lease liabilities

3,858

-

Accounts payable, provisions and accrued expenses

57,575

60,666

Income tax payable

123

1,162

Other current liabilities

11,835

8,635

Total current liabilities

97,908

95,175

Liabilities held for sale

(1)

-

Total liabilities

346,374  

310,865

Total equity and liabilities

601,176  

560,229

 


Rostelecom (www.rostelecom.ru) is one of the largest national telecommunications operators in Russia and Europe. The Company operates in all segments of the telecommunications market and covers millions of households in Russia.

Rostelecom is an undisputable leader of the broadband and pay-TV markets in Russia with over 12.7 million fixed-line broadband subscribers and over 9.9 million pay-TV subscribers, over 5.0 million of which are subscribed to Rostelecom's IPTV services.

In the first quarter of 2018, the Group generated RUB 76.2 billion of revenues, RUB 23.2 billion of OIBDA (30.4% of revenue) and RUB 3.9 billion of net income.

The Group is a market leader in providing telecommunications services to government bodies and corporates of all levels.

Rostelecom is an important innovator that provides solutions in the field of E-Government, cloud computing, healthcare, education, security and housing & utility services.

The Group's stable financial position confirmed by its credit ratings. Rostelecom was 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] International financial reporting standards.

[2] The digital segment comprises broadband, pay-TV, VPN, VAS and cloud services.

[3] Here and below the like for like basis means that the IFRS standards 9, 15 and 16 were applied to the financial results of the first quarter of 2017. Details are reflected in Appendix 2.

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

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

[6] Here and below free cash flow is FCF is calculated as free cash flow from operating activity minus CAPEX, plus proceeds from selling fixed assets and intangible assets, plus interest received

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

[8] Estimates from the analytical agency Telecom Daily

[9] The Group initially adopted IFRS 15 and IFRS 16 using the modified retrospective approach. Under this approach, the comparative information is not restated. The Group applied IFRS 9 from 1 January 2018 and has not restated comparative information for 2017 for financial instruments in the scope of IFRS 9.

[10] The Group initially adopted IFRS 15 and IFRS 16 using the modified retrospective approach. Under this approach, the comparative information is not restated. The Group applied IFRS 9 from 1 January 2018 and has not restated comparative information for 2017 for financial instruments in the scope of IFRS 9.




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