Sistema PJSFC : Sistema announces financial results for the third quarter 2020

 
 Sistema PJSFC (SSA) 
Sistema PJSFC: Sistema announces financial results for the third quarter 
2020 
 
03-Dec-2020 / 10:00 MSK 
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The issuer is solely responsible for the content of this announcement. 
 
      Sistema announces financial results for the third quarter 2020 
 
         Moscow, Russia - 03 December 2020 - Sistema PJSFC ("Sistema" or the 
"Company", together with its subsidiaries and associates, "the Group") (LSE: 
    SSA, MOEX: AFKS), a publicly-traded diversified Russian holding company, 
  today announces its unaudited consolidated financial results in accordance 
       with International Financial Reporting Standards (IFRS) for the third 
            quarter 2020 ended 30 September 2020. 
 
            KEY GROUP HIGHLIGHTS IN 3Q 2020 
 
  · Offering of Detsky Mir shares. In September 2020, Sistema and the 
  Russia-China Investment Fund (RCIF) fully exited Detsky Mir shareholding 
  through a public offering of Detsky Mir shares, resulting in an increase 
  of Detsky Mir free float up to almost 100%. Proceeds to Sistema amounted 
  to RUB 16.9 billion. 
 
  · MTS share buyback. As part of the MTS's share buyback programme of up to 
  RUB 15 billion, Sistema's wholly-owned subsidiary Sistema Finance S.A sold 
  7,445,927 ordinary shares of PJSC MTS to a wholly-owned subsidiary of MTS 
  LLC Bastion for RUB 2.5 billion. 
 
  · Optimisation of the debt portfolio. In September 2020, Sistema and 
  Sberbank signed an agreement that fully released Sistema's stake in MTS 
  from pledge. A loan secured by a pledge of 16% MTS shares was signed in 
  February 2018. 
 
  · Operations in the debt market. In September 2020, Sistema placed RUB 10 
  billion series 001?-15 bonds at a 6.70% coupon rate and with a 4-year put 
  option. In July 2020, the Corporation placed RUB 10 billion series 001?-14 
  bonds at a 6.35% coupon rate and with a 2.75-year put option. In July 
  2020, Sistema also repurchased its series 001P-06 exchange-traded bonds in 
  the amount of RUB 4.4 billion, and series 001P-09 bonds in the amount of 
  RUB 6.2 billion. 
 
  · Credit ratings upgrades. In September 2020, S&P upgraded Sistema's 
  rating from BB- to BB with stable outlook, and Expert RA upgraded 
  Sistema's rating by two notches from ruA to ruAA- with stable outlook. 
 
            CORPORATE EVENTS AFTER THE END OF THE REPORTING PERIOD 
 
  · IPO of Ozon. In November 2020, Ozon held an initial public offering 
  (IPO) of its American Depositary Shares (ADSs) on NASDAQ and obtained 
  listing of the ADSs on the Moscow Exchange. Gross proceeds to the company, 
  including the underwriters' overallotment option and the concurrent 
  private placement, where Sistema participated and invested USD 67.5 
  million, amounted to approximately USD 1.25 billion. Upon completion of 
  the initial public offering of Ozon, fulfilment of the private placement 
  agreement and conversion of the convertible loans previously provided to 
  Ozon, Sistema's total stake in Ozon will amount to at least 33.1%[1]. 
 
  · Secondary placement of series 001?-04 bonds. In November 2020, the 
  Corporation held a secondary placement of series 001?-04 exchange-traded 
  bonds. During the tender offer, the Corporation repurchased bonds in the 
  amount of RUB 4.3 billion out of the total RUB 6.5 billion issue. All 
  bonds repurchased during the tender offer were placed through secondary 
  bond placement at a 6.35% coupon rate at 100.15% of the nominal value. 
 
  · Placement of series 001?-16 bonds and 001?-17 bonds. In November 2020, 
  Sistema completed the book-building process for RUB 5 billion series 
  001?-16 bonds with a put-option in 2.25 years and RUB 14 billion series 
  001?-17 bonds with a put-option in 4.5 years. As a result of the 
  book-building, the coupon rate was set at 6.10% per annum for series 
  001?-16 bonds and at 6.75% per annum for series 001?-17 bonds. 
 
  · MTS share buyback. As part of the MTS's share buyback programme of up to 
  RUB 15 billion, Sistema's wholly-owned subsidiary Sistema Finance S.A sold 
  14,534,801 ordinary shares of PJSC MTS to a wholly-owned subsidiary of MTS 
  LLC Bastion for RUB 4.8 billion. 
 
            PROGRESS IN ESG 
 
  · Attracting ESG financing. In November 2020, Sistema for the first time 
  attracted ESG-financing from Sberbank. The RUB 10 billion credit line 
  comes with an option to tie the interest rate on each loan to 
  sustainability performance (Sustainability Improvement Loan). Under this 
  agreement, integration of ESG factors into Sistema's investment process 
  and the adoption of the Corporation's Environmental Policy were set as 
  KPIs to measure Sistema's sustainability performance. This pioneering 
  transaction, first between a Russian bank and a Russian borrower, 
  positions Sistema among the leaders of sustainable investing in Russia. 
 
            3Q 2020 FINANCIAL HIGHLIGHTS 
 
  · Consolidated revenue[2] grew by 9.6% year-on-year and stood at RUB 184.9 
  billion. 
 
  · Adjusted OIBDA[3] increased by 14.0% year-on-year and amounted to RUB 
  71.7 billion. 
 
  · Adjusted OIBDA margin rose by 1.5 p.p. year-on-year to 38.8%. 
 
  · Adjusted net profit attributable to Sistema amounted to RUB 2.6 billion. 
 
Vladimir Chirakhov, President and Chief Executive Officer of Sistema, noted: 
 
    "In the third quarter 2020, Sistema demonstrated strong business growth, 
 increasing its revenue by 9.6% and adjusted OIBDA by 14.0% year-on-year due 
 to the exceptional performance of its portfolio companies. MTS continued to 
      strengthen its leadership in the telecom market by actively developing 
    segments that are complementary to its core business, including fintech, 
     media, and B2B digital and cloud-based services. Segezha Group achieved 
   record revenue and OIBDA figures due to increases in production and sales 
 volumes, and against the backdrop of a weakening rouble. Steppe achieved an 
 impressive increase in revenue and OIBDA, on the back of an increase in its 
     gross harvest and agricultural products sales amid an increase in grain 
  prices. The growth in Medsi's financial performance was driven by deferred 
 demand for medical services caused by the lifting of lockdown restrictions, 
     and ongoing work to diagnose, treat and rehabilitate COVID-19 patients. 
 
        Our pharmaceutical holding Binnopharm Group, which is engaged in the 
production of the Sputnik V vaccine and drugs for the treatment of COVID-19, 
   saw significant growth in its financial performance as a result of strong 
   sales growth in all segments: retail, tender and export. In October 2020, 
    Binnopharm Group announced new strategic development priorities aimed at 
  significantly increasing the scale of its business. The diversification of 
       sales channels, new product development and updating the portfolio of 
            medical products will become the main drivers of further growth. 
 
  The strong results of our portfolio companies during the first nine months 
      of 2020 have created a solid basis for the Corporation's management to 
recommend to the Board of Directors to double the amount of dividends for FY 
  2020, provided that the positive trends continue in the fourth quarter. We 
      are also continuing to work on modifying our dividend policy, and will 
 present our proposals to the Board of Directors over the course of 2021. By 
 then, we hope that further progress will have been made in the global fight 
 against the COVID-19 pandemic, and the global and domestic economic outlook 
     will sufficiently improve to provide a better visibility of future cash 
            flows from our portfolio companies. 
 
    Crystallising the value of our private assets is an integral part of our 
  portfolio strategy. On this front, I am delighted to highlight the initial 
 public offering of American Depositary Shares (ADSs) of Ozon on NASDAQ with 
    simultaneous listing of the ADSs on MOEX in November 2020. This offering 
          raised gross proceeds of approximately USD 1.25 billion, including 
underwriters' overallotment option and the concurrent private placement, and 
   generated exceptionally strong interest from the international investment 
      community. We are delighted that a wide range of investors - including 
 Russian retail investors - now have the opportunity to share in the success 
            of this outstanding company." 
 
            *** 
 
            Conference call information 
 
Sistema's management will host a conference call today at 09:00 am (New York 
   time) / 2:00 pm (London time) / 3:00 pm (CEST) / 5:00 pm (Moscow time) to 
            present and discuss the 3Q 2020 results. 
 
            To participate in the conference call, please dial: 
 
            Russia 
 
            [phone] 
 
            UK 
 
            [phone] 
 
            US 
 
            [phone] 
 
            Germany 
 
            [phone] 
 
            Sweden 
 
            [phone] 
 
            Conference ID: 657738 
 
            Link to webcast: https://mm.closir.com/slides?id=657738 [1] 
 
   Or quote the conference call title: "Sistema Third Quarter 2020 Financial 
            Results". 
 
      A replay of the conference call will be available on Sistema's website 
            www.sistema.com [2] for at least seven days after the event. 
 
       For further information, please visit www.sistema.com [2] or contact: 
 
      Investor Relations         Public Relations 
 
        Nikolai Minashin           Sergei Kopytov 
 
Tel.: [phone] Tel.: [phone] 
 
   [e-mail]       [e-mail] 
 
            SISTEMA RESULTS REVIEW 
 
    (RUB million) 3Q 2020 3Q 2019  Change 9M 2020 9M 2019 Change 
          Revenue 184,890 168,682    9.6% 498,260 473,457   5.2% 
       Adj. OIBDA  71,662  62,861   14.0% 180,159 171,044   5.3% 
 Operating profit  40,535  29,357   38.1%  86,824  79,353   9.4% 

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December 03, 2020 02:00 ET (07:00 GMT)