ROSTELECOM Breakdown of operating expenses
RUB million 1Q 2021 1Q 2020 change Personnel costs (34,170) (32,190) 6% Depreciation, Amortization and impairment losses of non-current assets (31,656) (26,765) 18% Interconnection charges (23,627) (21,429) 10% Materials, repairs and maintenance, utilities (9,591) (8,840) 8% Gain on the disposal of PPE and intangible assets 2,545 1,359 87% Impairment loss of financial assets measured at amortized cost 1,295 (1,163) - Other operating income 5,202 5,657 (8%) Other operating expenses (19,284) (18,933) 2% Total operating expenses (109,286) (102,304) 7%
In the first quarter of 2021, operating expenses increased by 7% compared to the corresponding period of 2020, to amount to RUB 109.3 billion, largely due to the following factors: ? 18% increase (of RUB 4.9 bln) in depreciation, amortization and impairment losses for non-current assets, due to an
increase in depreciation charges associated with new objects, intangible assets and leases; ? 10% increase (of RUB 2.2 bln) in interconnection charges, due to increased direct costs as well as higher traffic
caused by the pandemic and the widespread transition to remote communications; ? 6% growth (of RUB 2.0 billion) in personnel costs, mainly due to an increase in the share of high-paid employees
with skills in digital business; ? charges relating to the impairment of amortized financial assets amounted to RUB 2.5 billion as a result of the
Company's new provisioning method based on projections of credit losses for certain counterparts or its groups; ? an 87% increase in gains from the disposal of PPE and intangible assets, amounting to RUB 1.2 billion, was recorded
mainly due better results in the disposal of real estate.
Operating profit for the first quarter of 2021 increased by 17% year-on-year to RUB 22.7 billion.
OIBDA for 1Q 2021 increased by 18% to RUB 55.4 billion. OIBDA dynamics were influenced by revenue growth, as well as by the changes in operating expenses referred to above. OIBDA margin for 1Q 2021 increased by 3.3 p.p. to reach 42.0%.
Net Income Analysis
Profit before tax increased by 56% year-on-year during the first quarter of 2021 to RUB 15.1 billion. This was mainly due to the increase in operating profit and the absence of foreign exchange losses during the reporting period.
Income tax in 1Q 2021 amounted to RUB 3.3 billion, compared to RUB 2.3 billion during the corresponding period of 2020, following the increase in profit before tax.
Net profit increased by 58% year-on-year during the first quarter of 2021 to reach RUB 11.8 billion.
Financial review
Net operating cash flow for 1Q 2021 increased by 74% to reach RUB 28.7 billion, compared to the corresponding period of 2020.
At the end of the first quarter of 2021, the cash outflow for investments in non-current assets, excluding state programmes, increased by 24% to RUB 27.2 billion (20.6% of revenue). Taking into account state programs, this figure increased by 18% to RUB 30.7 billion (23.3% of revenue).
Free cash flow for Q1 2021 amounted to RUB 2.1 billion, a year-on-year improvement of RUB 8.4 billion. This improvement is mainly due to the growth in OIBDA, as well as lower repayments of accounts payable compared to 1Q 2020.
Free Cash Flow (RUB, billion)
As at March 31, 2020, the Group's total debt (including lease liabilities) remained flat compared to the beginning of the year, amounting to RUB 510.1 billion. 100% of the Group's total debt remains rouble-denominated as at March 31st , 2021.
As at March 31, 2021, the Group's net debt (including lease liabilities) increased by 1% since the beginning of the year to RUB 470.7 billion. The company's debt burden over the past 12 months has decreased from 2.7x to 2.3x net debt/ OIBDA[9] (including lease liabilities). OTHER INFORMATION: CONFERENCE CALL
Rostelecom's management will hold a conference call and webcast today at 4:00 PM (Moscow), 3:00 PM (CET), 2:00 PM (UK) and 9:00 AM (NYT). To participate in the conference call, please dial:
UK/ International: +44 (0) 330 336 9125
USA: +1 929 477 0324
Russia: +7 (495) 213 1767
Confirmation Code (ENG): 8450902
Confirmation Code (RUS): 8589944
A webcast of the conference call will only be available in English. To access the webcast please follow the link: https://www.webcast-eqs.com/register/rostelecom20210513/en
A replay of the conference call will be available on the Company's website
https://www.company.rt.ru/ir/results_and_presentations/financials/IFRS/2021/1 /
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APPENDICES 1. Reconciliation of OIBDA; 2. Statement of Comprehensive Income for Q1 2021; 3. Statement of Cash Flows for Q1 2021; 4. Statement of Financial Position for Q1 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 1Q 2021 1Q 2020 change Operating income 22,672 19,309 17% Plus amortisation (31,656) (26,765) 18% Plus expenses related to the long-term management incentive programme (834) (714) 17% Plus expenses related to non-government pension insurance 275 294 (6%) OIBDA 55,437 47,082 18% OIBDA margin, % 42.0% 38.7%
APPENDIX 2: Statement of Comprehensive Income for Q1 2021
Three-month period ended
31 March (unaudited)
2020
2021
(restated)*
Revenue 131,958 121,613
Operating expenses
Wages, salaries, other benefits and payroll taxes (34,170) (32,190)
Depreciation, amortization and impairment losses (31,656) (26,765)
Interconnection charges (23,627) (21,429)
Materials, utilities, repairs and maintenance (9,591) (8,840)
Gain on disposal of property, plant and equipment and intangible assets 2,545 1,359
Impairment loss of financial assets measured at amortized cost 1,295 (1,163)
Other operating income 5,202 5,657
Other operating expenses (19,284) (18,933)
Total operating expenses, net (109,286) (102,304)
Operating profit 22,672 19,309
Share of net profit/(loss) of associates and joint ventures 18 166
Finance costs (8,893) (8,859)
Other investing and financial gain, net 1,282 646
Foreign exchange (loss)/gain, net 53 (1,543)
Profit before income tax 15,132 9,719
Income tax expense (3,322) (2,266)
Profit for the period 11,810 7,453
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent periods
Exchange differences on translation of foreign operations 12 419
Other comprehensive income for the period, net of tax 12 419
Total comprehensive income for the period 11,822 7,872
Profit attributable to:
Equity holders of the Group 11,594 7,250
Non-controlling interests 216 203
Total comprehensive income attributable to:
Equity holders of the Group 11,606 7,669
Non-controlling interests 216 203
Earnings per share attributable to equity holders of the Group - 3.46 2.81
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May 13, 2021 02:31 ET (06:31 GMT)
