Sistema PJSFC: Sistema announces financial results for the third quarter 2021

Sistema PJSFC (SSA) Sistema PJSFC: Sistema announces financial results for the third quarter 2021 02-Dec-2021 / 10:00 MSK Dissemination of a Regulatory Announcement, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. Sistema announces financial results for the third quarter 2021   Moscow, Russia - 2 December 2021 - Sistema PJSFC ("Sistema", the "Corporation", or together with its subsidiaries and affiliates the "Group") (LSE: SSA, MOEX: AFKS), a Russian publicly traded investment company, announces its unaudited consolidated financial results in accordance with International Financial Reporting Standards (IFRS) for the third quarter of 2021 (3Q 2021) ending 30 September 2021.   KEY HIGHLIGHTS IN 3Q 2021 AND AFTER THE END OF THE REPORTING PERIOD   Monetising stake in Segezha Group. In October 2021, Sistema signed an agreement to sell a stake in Segezha Group to Bonum Capital for USD 150 million. Segezha Group's acquisition of forestry assets in Siberia. In October 2021, Segezha Group reached an agreement to acquire 100% of LLC Inter Forest Rus, which owns 24 forestry assets in Krasnoyarsk Krai and the Irkutsk region with a substantial forest resource base, from Bonum Capital for USD 515 million. The transaction will double Segezha Group's annual allowable cut and make the Company one of the largest leaseholders of forest land globally. Acquisition of Nearmedic Group. In September 2021, JSC New Investment Holding, jointly controlled by Sistema and Sberbank, acquired Nearmedic Group, which does business in the pharmaceuticals, biotechnology and healthcare sectors. Sistema has the right to acquire Sberbank's equity interest in JSC New Investment Holding and Sberbank has the right to sell its interest to Sistema on certain conditions. Sistema's divestment of Sistema Capital LLC. In September 2021, Sistema signed binding agreements for the sale of a 70% stake in the charter capital of Sistema Capital for RUB 3.5 bln. Payment of dividends for FY 2020. In August 2021, Sistema, in line with its approved dividend policy, paid dividends for FY 2020 of RUB 2,991.5 million, or RUB 0.31 per ordinary share. Sistema stock buyback. In 3Q 2021, Sistema repurchased 74.7 million ordinary shares, representing 0.77% of its charter capital, for RUB 2,201 million. The current buyback programme provides for the repurchase of up to RUB 7.0 billion worth of the Corporation's ordinary shares by a wholly owned subsidiary of Sistema through 17 September 2022. The maximum number of shares to be repurchased under the Programme is capped at 343 million. Continued debt portfolio optimisation. In 3Q 2021, the Corporation placed RUB 15 billion of series 001P-21 bonds with a semi-annual coupon rate of 8.40% per annum, as well as RUB 15 billion of series 001P-22 bonds with a quarterly coupon rate of 8.20% per annum. The put option on both series of bonds is in five years. In November 2021, the Corporation completed bookbuilding for a RUB 5 billion series 001P-23 bond issue with a quarterly coupon rate of 9.95% per annum. Improved credit rating outlook. In September 2021, Expert RA revised the outlook for the Corporation's credit rating upward from stable to positive, and affirmed the rating at ruAA-.   SUSTAINABILITY (ESG)   Superior ratings for Sistema's ESG practices. In October 2021, Sistema rated among the three leading companies in an ESG ranking of Russian publicly traded financial companies compiled by the National Rating Agency (NRA). The NRA ranking included 30 leading banks, financial institutions, infrastructural institutions and insurance companies, and named Sistema among the companies with the highest level of sustainability practice in their core operations.   3Q 2021 FINANCIAL RESULTS   Consolidated revenuegrew by 21.8% year-on-year to RUB 225.1 billion. Adjusted OIBDA[1]increased by 4.7% year-on-year to RUB 75.0 billion. Adjusted OIBDA margin was 33.3%. Adjusted net profit was RUB 2.3 billion.   Vladimir Chirakhov, President and Chief Executive Officer of Sistema, said: "Sistema's results for 3Q 2021 underscore the Corporation's ability to grow the value of its portfolio assets. We again accelerated the growth of our business, increasing Group revenue by 22% year-on-year and adjusted OIBDA by 5%. The key drivers of Sistema's growth were our consolidated public assets - MTS and Segezha Group - as well as the performance of our fast-growing non-public asset Steppe. "MTS maintained high revenue and adjusted OIBDA growth rates thanks to increased consumption of telecoms services and the contribution of segments beyond connectivity, which accounted for more than 60% of the Company's growth. Segezha Group continues to develop its vertically integrated business model, and as a result revenue for the period grew by more than a third, while adjusted OIBDA more than doubled. Steppe achieved accelerated revenue and adjusted OIBDA growth rates of 88% and 134% year-on-year, respectively, due to a record grain harvest and growth of global wheat prices. "In the third quarter we fully consolidated the results of Binnopharm Group, our pharmaceuticals holding, for the first time. The company accelerated revenue growth to 28%, while OIBDA increased by almost 1.5x year-on-year. We believe that Binnopharm Group could become a major driver of growth in the value of the Corporation's portfolio. "OZON continues to set new records across all key metrics. In 3Q growth of GMV including services reached 145% year-on-year, driven by record order numbers as well as record numbers of active users and marketplace sellers. Importantly, we continue to see substantial growth potential for OZON and support the Company's strategy to grow its presence in the Russian e-commerce market, including by increasing investments in logistics infrastructure and assortment. "Major events of recent months include Segezha Group's announcement of the acquisition of forestry assets in Siberia from Bonum Capital for USD 515 million. Sistema has also agreed to sell a minority stake in Segezha Group to Bonum Capital for USD 150 million. Both transactions create significant value: Segezha Group will practically double its annual allowable cut and become one of the largest leaseholders of forest lands globally, while Sistema will be able to partially monetise its investments in Segezha Group. "Finally, we continue to invest in fast-growing and high-potential sectors. In September we took an important step to further strengthen our presence in the Russian pharmaceuticals market through the joint acquisition with Sberbank of Nearmedic Group."   *** Conference call information   Sistema's management will host a conference call today at 9:00 am (New York time) / 2:00 pm (London time) / 3:00 pm (CEST) / 5:00 pm (Moscow time) to present and discuss the 3Q 2021 results.   To participate in the conference call, please dial: Russia [phone]   United Kingdom [phone]   United States [phone]   Germany [phone]   Sweden [phone]   Conference ID: 657738   Link to webcast:https://mm.closir.com/slides?id=657738   Or quote the conference call title: Sistema Third Quarter 2021 Financial Results.   A replay of the conference call will be available on Sistema's website www.sistema.ru for at least seven days after the event.   For further information, please visit www.sistema.ruor contact:   Investor Relations Sergei Levitskiy Tel: [phone] [e-mail] Public Relations Sergei Kopytov Tel.: [phone] [e-mail] SISTEMA RESULTS REVIEW   (RUB mln) 3Q 2021 3Q 2020 Change 9M 2021 9M 2020 Change Revenue 225,118 184,890 21.8% 576,662 498,260 15.7% Adj. OIBDA 75,029 71,662 4.7% 190,450 180,159 5.7% Operating income 38,985 39,862 (2.2%) 90,139 86,824 3.8% Net profit/(loss) 888 2,334 (61.9%) (5,395) (7,299) n.a. Adj. net profit/(loss) 2,292 2,598 (11.8%) (3,494) (4,876) n.a.   Sistema's consolidated revenue increased by 21.8% year-on-year to RUB 225.1 billion, driven by revenue growth at key assets: at MTS, thanks to higher consumption of telecoms services and accelerated revenue growth in the fintech and media segments as well as digital and cloud-based solutions for business; at Segezha Group, thanks to a favourable pricing environment across all product types and a recovery in demand from the construction industry; at Steppe, thanks to a record harvest, higher crop prices, and the launch and development of new segments. The consolidation of Binnopharm Group's results in Sistema's financial statements from 25 June 2021 also had an impact on the Corporation's revenue.   The Group's adjusted OIBDA[2] increased by 4.7% year-on-year to RUB 75.0 billion mainly as a result of higher adjusted OIBDA at subsidiaries: at MTS, partly due to increased revenues in the telecoms segment, including roaming, and the contribution of the fintech business; at Segezha Group, on the back of revenue growth, and also thanks to execution of a strategy to produce higher-margin plywood and packaging products, as well as measures to control growth of production costs; at Steppe, due to a favourable pricing environment for the company's products, a more effective sales strategy for the company's own and third-party agricultural products, an increase in gross milk yield, and the development of new business segments including packaged cheese, dairy products and plant-based alternatives as well as the export of specialty agricultural crops.   Adjusted net profit in 3Q 2021 was RUB 2.3 billion.   Group SG&A costs increased by 39.1% to RUB 39.9 billion mainly due to higher SG&A costs at MTS, the Corporate Centre and Segezha Group. The increase in the Corporate Centre's SG&A costs was due to accruals for the LTI programme. The increase in MTS's SG&A costs was driven by increased advertising expenses for the promotion of ecosystem products as well as accruals for the updated options incentive programme. Segezha Group's SG&A costs increased mainly due to bonus payments for management following the IPO. Group SG&A also increased due to the consolidation of Binnopharm Group.   Group capex increased to RUB 47.5 billion as a result of investments by key assets in projects focused on growing scale, diversification and improving efficiency: at MTS, in network development with a focus on expanding 4G capacity, as well as in new business areas in its digital ecosystem; at Segezha Group, in the modernisation of the Segezha and Sokol PPMs and the expansion of the Vyatka Plywood Mill, as well as in the construction of a boiler and pellet plant in Sokol; at Steppe, in the development of dairy farms and processing facilities, upgrades to agricultural equipment and acquisitions of land plots. OVERVIEW OF PORTFOLIO COMPANIES   MTS[3]   LEADING TELECOMMUNICATIONS OPERATOR AND DIGITAL SERVICES PROVIDER IN RUSSIA   (RUB mln[4]) 3Q 2021 3Q 2020 Change 9M 2021 9M 2020 Change Revenue 138,165 127,508 8.4% 390,680 361,220 8.2% Adj. OIBDA 61,506 59,120 4.0% 174,000 162,795 6.9% Adj. OIBDA margin 44.5% 46.4% (1.8 p.p.) 44.5% 45.1% (0.5 p.p.) Operating income 33,642 33,790 (0.4%) 92,591 86,911 6.5% Adj. net profit attributable to Sistema 8,283 9,436 (12.2%) 24,992 24,812 0.7%   In 3Q 2021, MTS's revenue increased by 8.4% year-on-year to RUB 138.2 billion due to increased consumption of basic telecoms and financial services and the development of digital and cloud-based solutions for business and media verticals. Non-telecoms segments accounted for more than 60% of MTS's revenue growth.   In 3Q 2021, adjusted OIBDA amounted to RUB 61.5 billion, an increase of 4.0% year-on-year, on the back of revenue growth due in part to an increase in telecoms segment revenues, including roaming, and the contribution of the fintech segment.   The adjusted OIBDA margin in 3Q 2021 was 44.5%.   In 3Q 2021, adjusted net profit decreased due to higher depreciation, debt servicing costs (on the back of higher interest rates) and the negative impact of derivatives operations.   Capex. In 3Q 2021, capex increased by 41.5% year-on-year to RUB 33.1 billion mainly due to increased investments in network development to expand 4G capacity, as well as increased investments in new business streams as part of ecosystem development.   OUTLOOK FOR 2021   MTS expects high-single-digit revenue growth in 2021, OIBDA growth of at least 6% and capex of RUB 110 billion.   KEY HIGHLIGHTS IN 3Q 2021 AND AFTER THE END OF THE REPORTING PERIOD   Consolidation of 100% of Sistema Capital. In September 2021, MTS completed a transaction to acquire a 70% stake in Sistema Capital LLC, which increased MTS's share in the management company to 100%. The transaction will accelerate new product launches for retail investors and high-net-worth clients, expand the range of MTS's financial services and enable the Group to increase its share of the rapidly growing investment services market.   Spin-off of infrastructure and tower assets. In September 2021, an Extraordinary General Meeting of shareholders approved MTS's reorganisation through the spin-off of tower infrastructure into the wholly owned subsidiary BIK LLC, as well as a part of MTS's up-and-coming and digital infrastructure into the wholly owned subsidiary company JSC MVS.   High dividend payouts. In November 2021, MTS made dividend payments for 1H 2021 of RUB 10.55 per ordinary share (RUB 21.1 per ADR). The company's current dividend policy expires in 2021, with the announcement of a new dividend policy expected in early 2022.       SEGEZHA GROUP LEADING RUSSIAN VERTICALLY INTEGRATED FORESTRY HOLDING   (RUB mln) 3Q 2021 3Q 2020 Change 9M 2021 9M 2020 Change Revenue 25,609  18,966 35.0% 68,280 50,177 36.1% Adj. OIBDA[5] 10,508 5,079 106.9% 23,694 11,284 110.0% Adj. OIBDA margin 41.0% 26.8% 14.3 p.p. 34.7% 22.5% 12.2 p.p. Operating income 6,915 3,509 97.1% 16,701 6,612   152.6% Adj. net profit/(loss) attributable to Sistema 3,974 (3,319) n.a. 10,526 (5,383) n.a.   Segezha Group's revenue increased by 35.0% year-on-year to RUB 25.6 billion in 3Q 2021 as positive factors observed in 1H 2021 continued to impact results, including strong demand from the construction industry and price growth across all of the Group's product types.   Segezha Group's adjusted OIBDA increased by 106.9% year-on-year in 3Q 2021 to RUB 10.5 billion mainly due to growth of prices across all of the Group's product types and also due to the execution of a strategy to produce higher-margin plywood, packaging and glulam products. OIBDA was also supported by management efforts to curb increases in production costs, including increasing the efficiency of the Group's logging operations and higher productivity.   Adjusted OIBDA margin increased by 14.3 p.p. year-on-year to 41.0% in 3Q 2021.   Adjusted net profit amounted to RUB 4.0 billion, compared with a loss of RUB 3.3 billion a year earlier, as a result of increased operating profit and positive effect from currency exchange differences.   Capex increased by 99.9% in 3Q 2021 to RUB 4.4 billion. Investments were aimed at supporting Segezha Group's growth strategy, including the modernisation of the Segezha and Sokol PPMs, the expansion of the Vyatka Plywood Mill, the construction of a boiler and a pellet plant in Sokol at the Sokol Woodworking Plant, as well as the modernisation of the Onega LDK plant. In addition, a deferred payment was made to complete the acquisition of the Novoeniseisk Wood-Chemical Complex.   Net debt totalled RUB 34.1 billion in 3Q 2021, down 31.4% year-on-year as a result of the partial repayment of bank loans and an increase in cash on hand following the company's IPO on Moscow Exchange.   Paper production decreased by 14.2% year-on-year to 88.1 thousand tonnes mainly due to planned modernisation works at the Segezha PPM under the approved programme. Paper sales volumes[6] decreased by 23.5% to 83.4 thousand tonnes following a decrease in production volumes for the period.   In 3Q 2021, Segezha Group produced 382.9 million paper sacks and bags, up 14.1% year-on-year thanks to the execution of an investment programme and the installation of new facilities. Segezha Group sold 385.0 million paper sacks,[7] an increase of 7.2% year-on-year due in part to the development of the consumer packaging segment. Demand from the construction industry also exceeded supply, which drove up product prices and sales volumes.   In 3Q 2021, production of birch plywood totalled 48.3 thousand cubic metres, up 5.6% year-on-year. Sales volumes in 3Q 2021 totalled 42.6 thousand cubic metres, an increase of 13.2% year-on-year thanks to continuing high product demand. Plywood prices increased 2.3x year-on-year on the back of a supply shortage due to strong demand in the construction segment. An additional factor contributing to the significant price increase was the seasonal decline in stocks of raw materials used in the production of birch plywood, namely birch logs, which are mainly harvested in winter.   Sawn timber production increased by 4.2% year-on-year to 339.4 thousand cubic metres due in part to the initial results of the consolidation of the assets of the Novoeniseisk Wood?Chemical Complex from 15 September 2021. Sales volumes of sawn timber[8] decreased by 26.3% year-on-year in the reporting period, mainly due to disruptions in global supply chains. Sawn timber prices continued to rise in the reporting period on the back of strong demand in the construction industry, considerable price increases for raw materials and a rise in logistics costs globally.   In 3Q 2021, production of glulam products and house kits grew by 49.4% year-on-year thanks to the launch of a new splicing line. Sales in the reporting period rose by 73.3% year-on-year on the back of increased production volumes and higher prices.   KEY HIGHLIGHTS IN 3Q 2021 AND AFTER THE END OF THE REPORTING PERIOD   Stronger positions through asset acquisitions. In October 2021, Segezha Group announced plans to acquire forestry assets in Siberia from Inter Forest Rus for USD 515 million. The deal will enable Segezha Group to double its annual allowable cut to 23.6 million cubic metres and to become one of the largest leaseholders of forest land globally. As a result of the deal, Segezha Group will also strengthen its leading positions in Russia and Europe in the production of sawn timber and become one of the top 10 manufacturers in the segment globally.   A transaction to consolidate the Novoeniseisk Wood-Chemical Complex into Segezha Group was completed on 15 September 2021. As a result of the acquisition, Segezha Group increased its annual allowable cut by 2.2 million cubic metres and annual sawn timber production capacity by 30%.   Expansion of production capacity. In November 2021, Segezha Group announced plans to build a glulam plant with a capacity of 240 thousand square metres in Segezha. The plant is expected to be commissioned in 2023. The goal of the project is to increase the production of high-added-value advanced processed wood products and expand sales geographies.   High dividend payouts. At a meeting on 10 November 2021, Segezha Group's Board of Directors recommended an interim dividend for 9M 2021 of RUB 6.6 billion (RUB 0.42 per share), more than the amount stipulated in the current dividend policy, which calls for payments of RUB 3 billion to RUB 5.5 billion annually from 2021 through 2023.   AGROHOLDING STEPPE ONE OF RUSSIA'S LARGEST AGRICULTURE HOLDINGS AND LANDOWNERS   (RUB mln[9]) 3Q 2021 3Q 2020 Change 9M 2021 9M 2020 Change Revenue 27,664 14,712 88.0% 39,260 22,292 76.1% Adj. OIBDA[10] 5,147 2,199 134.1% 8,357 4,893 70.8% Adj. OIBDA margin 18.6% 14.9% 3.7 p.p. 21.3% 21.9% (0.7 p.p.) Operating income 3,896 685 468.5% 6,122 3,594 70.4% Adj. net profit/(loss) attributable to Sistema 2,321 (227) n.a. 3,690 1,612 128.9%   Steppe's revenue in 3Q 2021 increased by 88.0% year-on-year to RUB 27.7 billion. The increase was driven primarily by an increase in the gross harvest in the Field Crops segment, higher sales in the Agrotrading segment and the launch of the new Niche Crops Trading segment. Revenue growth was also supported by positive dynamics in the Dairy Farming segment as a result of increased milk sales volumes; expansion of the production and distribution of packaged cheeses, dairy products and plant-based alternatives; as well as growth of the Sugar and Groceries Trading segment.   In 3Q 2021, adjusted OIBDA increased by 134.1% year-on-year to RUB 5.1 billion, mainly due to strong sales of both basic and niche crops, rising prices for wheat and niche crops, an increase in gross yield in the Dairy Farming segment (thanks to an increase in the number of high-yield dairy cattle), as well as the development of new business streams such as the production of packaged cheese, dairy products and plant-based alternatives, as well as exports of niche crops.   Adjusted OIBDA margin increased by 3.7 p.p. year-on-year to 18.6% in 3Q 2021.   In 3Q 2021, Steppe's adjusted net profit amounted to RUB 2.3 billion, compared with a loss of RUB 0.2 billion a year earlier.   Steppe's capex in 3Q 2021 amounted to RUB 1.5 billion. Investments were made in projects to develop dairy farms and processing facilities and expand processing capacity, as well as in agricultural equipment upgrades and land acquisitions.   Net debt as of the end of 3Q 2021 stood at RUB 28.5 billion, an increase of 23.4% year-on-year, due to the ramp-up of projects to expand processing capacity.   Steppe's land bank stood at 578,000 hectares as of the end of the reporting period.   In 2021, Steppe collected a record harvest: as of the end of September, the gross harvest stood at 1.6 million tonnes. Volumes of all crops, including grain and niche crops, increased considerably. The average export price for wheat in 9M 2021 increased by 24% year-on-year.   The Dairy Farming segment continues to deliver steady growth in terms of operating performance: the gross yield in 3Q 2021 increased by 19.0% year-on-year to 21.4 thousand tonnes, and the dairy herd numbered 8,040 head of cattle as of the end of the period. Average daily milk production per cow in 3Q 2021 was 30 kg.   Sales volumes in the Agrotrading segment in 9M 2021 increased by 73% year-on-year to 1,416 thousand tonnes. An effective sales strategy, increased volumes at Steppe's Swiss agrotrading unit, and the launch of trading in niche agricultural crops supported excellent operating and financial performance.   Sales volumes in the Sugar and Grocery Trading segment for 9M 2021 totalled 220 thousand tonnes. Increased sales of packaged products and the use of an effective trading strategy supported the segment's improved financial results.   KEY HIGHLIGHTS IN 3Q 2021   Steppe was rated in RAEX-Europe's ESG ranking, which has been published since 2018. Steppe was the second agricultural company to be rated and was ranked in 54th position. Prior to Steppe's rating, the only company in the agricultural sector to be rated was Rusagro, which was ranked 58th.   In July Steppe acquired 100% of PIR Group, a leading producer of packed cheese in Russia and one of the largest distributors of cheese, dairy products and plant-based alternatives.   MEDSI LEADING PRIVATE HEALTHCARE OPERATOR IN RUSSIA   (RUB mln) 3Q 2021 3Q 2020 Change 9M 2021 9M 2020 Change Revenue 7,179 6,749 6.4% 21,782 17,244 26.3% Adj.[11] OIBDA 1,821 1,835 (0.8%) 5,068 4,107 23.4% Adj. OIBDA margin 25.4% 27.2% (1.9 p.p.) 23.3% 23.8% (0.6 p.p.) Operating income 1,011 1,163 (13.0%) 2,721 2,164 25.8% Adj. net profit attributable to Sistema 791 963 (17.9%) 2,367 1,622 46.0%   Medsi's revenue increased by 6.4% year-on-year and 26.3% year-on-year in 3Q 2021 and 9M 2021, respectively, due to a recovery in demand for routine medical care and continued demand for COVID-19-related services, including vaccinations, testing, CT scans and treatment at the Otradnoe infectious diseases clinic, and also thanks to developments in in-home care and telemedicine.   Adjusted OIBDA remained largely unchanged in 3Q 2021 due to the high base for COVID-19-related services in the same period last year. At the same time, adjusted OIBDA increased by 23.4% in 9M 2021. The net debt / adj. OIBDA LTM ratio remained at a comfortable 1.2x. Participation in the Nebo residential development project contributed RUB 357 million to adjusted OIBDA in 3Q 2021.   In 3Q 2021, adjusted OIBDA margin stood at 25.4%.   Adjusted net profit decreased year-on-year in 3Q 2021 mainly as a result of increased depreciation, adjusted OIBDA dynamics as well as increased interest expenses.   Utilisation in 3Q 2021 increased by 4 p.p. year-on-year to 51% for outpatient facilities[12]due to the resumption of routine medical care, while additional revenue for the diagnosis and treatment of COVID-19 was maintained. Utilisation at in-patient facilities decreased[13] by 21 p.p. to 84% due to limited volumes of mandatory healthcare insurance including from inter-regional insurance payments.   The average cheque decreased by 8.1% year-on-year to RUB 2,900 in 3Q 2021 due to a reduction in the share of services related to the diagnosis and treatment of COVID-19. At the same time, the decrease in the average cheque was offset by a significant increase in the number of patient visits and services provided.   Floor space increased by 2% year-on-year to 220.1 thousand square metres in 3Q 2021 thanks to the opening of new clinics in Moscow: CDC Shchelkovo and the clinics at Staroalekseevskaya and Lazorevy Proezd (Moscow).   KEY HIGHLIGHTS IN 3Q 2021 AND AFTER THE END OF THE REPORTING PERIOD   Network expansion. Construction continued on a new medical centre on Michurinsky Prospekt, with more than 34 thousand square metres of floor space, which is scheduled to open in 1Q 2022. The medical centre will include a CDC for children and adults, a daytime in-patient clinic and a 24- hour in-patient clinic with a centre for high-tech surgery.   Since the start of the year, Medsi has opened the new CDC at Shchelkovo, three new small-format SMART clinics opened in Moscow and one new clinic opened in Rostov-on-Don. A neurophysiological laboratory was launched at the Children's Clinic on Pirogovskaya. A children's in-patient clinic was opened at the Otradnoe clinical hospital.   The CDC at Shchelkovo (Moscow region) achieved its financial targets, and operations ceased at the former site at Shchelkovo.   The first diagnostic center under the SmartLab brand with space of 2 ths sq m was opened at the Otradnoe clinical hospital. Investment in the project will total at least RUB 400 million, and the center will have capacity to carry out up to 20 million analyses per year.   Rapid growth in installations of the SmartMed telemedicine app. The SmartMed telemedicine app has now been downloaded more than 1 million times since its launch. The number of telemedicine appointments in 3Q 2021 increased by 2.2x year-on-year.   BINNOPHARM GROUP ONE OF THE LEADING PHARMACEUTICAL PRODUCTION COMPANIES   (RUB mln[14]) 3Q 2021 3Q 2020 Change 9M 2021 9M 2020 Change Revenue 6,827 5,335 28.0% 18,029 14,765 22.1% OIBDA 2,209 1,538 43.7% 5,912 3,251 81.9% OIBDA margin 32.4% 28.8% 3.6 p.p. 32.8% 22.0% 10.8 p.p. Operating income 1 824 1 208 50,9% 4 915 2 493 97,1% Net profit 1,202 648 85.4% 3,231 1,034 212.6%   Revenue in 3Q 2021 and 9M 2021 increased by 28.0% and 22.1%, respectively, as a result of the execution of a diversified commercial strategy focused on expanding Binnopharm's product presence in different segments of the pharmaceutical market. The hospital segment grew by 18% year-on-year in 9M 2021 in part due to strong sales of antibiotics and medicines used to treat COVID-19. Due to efficient operations with pharmacies and pharmacy chains, retail sales grew by 51% year-on-year, with sales accelerating for products aimed at improving quality of life including the Venarus vein tonic, the Maxilac probiotic and the Neobutin antispasmodic. According to the analytical agency Allpharm, Binnopharm's year-on-year growth in sell-out (supplies to retail outlets) - in 9M 2021 exceeded the market growth rate.   OIBDA in 3Q 2021 and 9M 2021 increased by a significant 43.7% and 81.9% year-on-year, respectively, on the back of revenue growth, optimisation of the product portfolio and the realisation of synergies between the group's businesses, including a reduction in unit management and commercial costs as a percentage of revenue. The OIBDA margin was 32.4% and 32.8% in 3Q and 9M 2021, respectively.   Net profit grew by 85.4% and 212.6% year-on-year in 3Q and 9M 2021, respectively, due to an increase in OIBDA.   Net debt at the end of 9M 2021 decreased by 33.0% year-on-year to RUB 6.6 billion against a backdrop of positive cash flow from operating activities, resulting in efficient use of working capital.   KEY HIGHLIGHTS IN 3Q 2021 AND AFTER THE END OF THE REPORTING PERIOD   Completion of investment project. In August 2021, Binnopharm Group completed an investment project to modernise the Biocom plant in Stavropol. Approximately RUB 1 billion was invested in the development of the facility.   R&D expansion. In September 2021, the company announced plans to establish a state-of-the-art R&D centre in the Krasnogorsky district of the Moscow region that will unite the research functions of all Binnopharm Group enterprises, with launch planned for 2022. The centre will develop synthetic drugs and biotechnological medicines. Total investment will be approximately RUB 2.5 billion.   Launch of a full production cycle for a new drug. Binnopharm Group developed and registered a pharmaceutical ingredient called linezolid, which is used for the production of the drug Linezolid. The first batch of 17,000 packages to complete the full production cycle came off the line at the end of October 2021. This antibacterial drug is used inter aliato treat the effects of COVID-19.   Credit rating assigned for the first time. In September 2021, Expert RA assigned Binnopharm Group an ruA rating with a stable outlook.   Debut bond issue. In November 2021, the company placed its debut issue of exchange-traded bonds, a RUB 3 billion note with a 9.9% coupon and a put option in two years. The funds from the placement will be used to implement investment projects and refinance the existing debt portfolio. BUSINESS NEDVIZHIMOST RENTAL ASSETS WITH A UNIQUE POOL OF PROPERTIES   (RUB mln) 3Q 2021 3Q 2020 Change 9M 2021 9M 2020 Change Revenue 999 2,140 (53.3%) 2,873 4,124 (30.3%) OIBDA 165   635 (74.1%) 1,177 1,321 (10.9%) OIBDA margin 16.5% 29.7% (13.2 p.p.) 41.0% 32.0% 8.9 p.p. Operating income 32 498 (93.5%) 781 926 (15.6%) Net (loss)/profit attributable to Sistema (239) 469 n.a. 73 744 (90.2%)   Revenue at Business Nedvizhimost in 3Q 2021 decreased by 53.3% year-on-year to RUB 1.0 billion due to a decrease in revenue from the sale of real estate.   OIBDA and OIBDA margin declined in 3Q 2021 due to lower real estate sales. The decrease in OIBDA was partially offset by cost optimisation and a lower tax burden due to a decrease in the cadastral value of land plots.   The company had a net loss in 3Q 2021 due to a decrease in real estate sales and an increase in interest expense stemming from the acquisition of country properties.   KEY HIGHLIGHTS IN 3Q 2021 AND AFTER THE END OF THE REPORTING PERIOD   Business reorganisation. In July 2021, Business Nedvizhimost's Annual General Meeting of Shareholders approved the company's restructuring through the spin-off of its country properties segment, Mosdachtrest. The reorganisation will enable Business Nedvizhimost to focus on improving the efficiency of its core business.   Development of a network of co-working spaces. In November 2021, Business Nedvizhimost announced the rebranding of its flexible workspace network at its properties in Moscow and St. Petersburg. The new brand is called officeless. The company plans to launch 14 co-working spaces by the end of 2024.   BPGC ONE OF RUSSIA'S BIGGEST POWER GRID COMPANIES   (RUB mln) 3Q 2021 3Q 2020 Change 9M 2021 9M 2020 Change Revenue 4,792 4,277 12.0% 14,564 14,658 (0.6%) OIBDA 844 515 63.9% 3,504 3,654 (4.1%) OIBDA margin 17.6% 12.0% 5.6 p.p. 24.1% 24.9% (0.9 p.p.) Operating profit/(loss) 130 (192) n.a. 1,368 1,544 (11.4%) Net profit/(loss) attributable to Sistema 104 (103) n.a. 1,005 1,155 (13.0%)   Revenue at BPGC in 3Q 2021 increased by 12.0% year-on-year to RUB 4.8 billion due to an increase in electricity consumption, including in the oil and gas sector.   In 3Q 2021, OIBDA increased by 63.9% year-on-year to RUB 0.8 billion mainly due to growth in revenue and other operating income, as well as a reduction in provisions for accounts receivable from a number of counterparties.   The OIBDA margin was 17.6%, an increase of 5.6 p.p. year-on-year in 3Q 2021.   Net profit in 3Q 2021 totalled RUB 0.1 billion, compared with a loss of RUB 0.1 billion a year earlier, primarily due to OIBDA growth.   Capex increased by 14.1% year-on-year in 3Q 2021 mainly due to an increase in proceeds from technical connections of customers.   KEY event after the end of the reporting period   Bashkirenergo LLC, a subsidiary of BPGC, is set to complete its Big Optical Ring project. This is one of the company's major long-term projects, which has been in progress since 2014 and is a necessary element for relay protection and automation devices, the creation of a system for exchanging technical information and the development of a data transmission network. Completion of the project means that power facilities are provided with stable, high-speed communication channels, which will result in more reliable power supply for consumers.   COSMOS HOTEL GROUP[15] ONE OF RUSSIA'S LEADING HOTEL MANAGEMENT COMPANIES   (RUB mln) 3Q 2021 3Q 2020 Change 9M 2021 9M 2020 Change Revenue 1,381 885 56.0% 3,044 1,889 61.2% Adj. OIBDA[16] 301 281 7.3% 522 112 367.0% Adj. OIBDA margin 21.8% 31.7% (9.9 p.p.) 17.1% 5.9% 11.2 p.p. Operating profit/(loss) 259 107 141.8% 133 (1,521) n.a. Adj. net profit/(loss) attributable to Sistema 190 (34) n.a. (118) (801) n.a.   Revenue at Cosmos Hotel Group increased by 56.0% year-on-year in 3Q 2021 to RUB 1.4 billion as most of the restrictions imposed on the operation of hotels due to the pandemic were lifted; the operations of nearly all hotels were suspended in 3Q 2020.   On the back of a partial recovery in revenue, adjusted OIBDA increased by 7.3% year-on-year to RUB 0.3 billion in 3Q 2021. OIBDA growth was impacted by an increase in the number of management personnel involved in the implementation of the company's development programme. The adjusted OIBDA margin was 21.8% in 3Q 2021.   Adjusted net profit totalled RUB 0.2 billion.   The share of revenue from hotels outside Russia in 3Q 2021 was 24.5%.   ADR[17]for the Group's hotel portfolio in 3Q 2021 increased by 38% year-on-year and amounted to RUB 6,300.   RevPAR[18]for the hotel portfolio increased by 62.8% to RUB 3,100 on the back of a recovery in occupancy.   Average occupancy in 3Q 2021 increased by 7.7 p.p. to 48.7%, thanks to the lifting of restrictions on hotel operations and a partial recovery in tourist and business flows.   KEY HIGHLIGHTS IN 3Q 2021 AND AFTER THE END OF THE REPORTING PERIOD   Expansion of the hotel chain. In October 2021, a management agreement was signed for the PSB Patriot hotel in the Moscow region. The four-star hotel with 230 modern, comfortable rooms is scheduled to open on 1 May 2022.   In September 2021, Cosmos Hotel Group, PJSC Promsvyazbank and Tourism.RF signed an agreement on cooperation in the hospitality sector. According to plans, the first joint projects will be two four-star hotels that the parties will develop in Anapa and Krasnodar by year end 2023 at assets owned by Promsvyazbank.   In October 2021, Cosmos Hotel Group and Baltros Group signed an agreement to jointly build out a four-star hotel complex in St. Petersburg. The hotel will operate under the Cosmos brand. Total investment in the project will amount to RUB 1.5 billion.     CORPORATE CENTRE   (RUB mln) 3Q 2021 3Q 2020 Change 9M 2021 9M 2020 Change OIBDA (7,161) 2,081 n.a. (24,020) (5,511) n.a. Net loss (13,373) (2,719) n.a. (39,094) (21,131) n.a. Corporate Centre's financial liabilities[19] 223,158 171,641 30.0% 223,158 171,641 30.0%   The Corporate Centre comprises Sistema and companies that control and manage Sistema's interests in its subsidiaries and associates.   Changes in the Corporate Centre's OIBDA were due primarily to an increase in SG&A costs owing to accruals under the LTI programme - suspended in 2018 and resumed in 2020 - as well as an increase in Ozon's net loss, which was driven by an increase in business development investments and reflected in the Corporate Centre's OIBDA attributable to Sistema, as well as by the sale of PJSC Detsky Mir shares in 3Q 2020.   The Corporate Centre's financial liabilities increased by 30.0% year-on-year due to the issue of RUB-denominated bonds. As of 30 September 2021, RUB-denominated financing accounted for 100% of the Corporate Centre's financial liabilities. Bonds accounted for 82% of the Corporate Centre's debt as of the end of 3Q 2021, up from 62% at the end of 3Q 2020.   In September 2021, JSC New Investment Holding, jointly controlled by Sistema and Sberbank, acquired Nearmedic International Limited, the sole owner of Nearmedic Plus LLC, Nearmedic Pharma LLC and a number of other companies doing business in Russia and Italy in the pharmaceuticals, biotechnology and healthcare sectors, for RUB 1. Nearmedic Group's net debt stood at RUB 5.9 billion as of the closing date of the transaction.   At the same time, Sistema and Sberbank Group provided JSC New Investment Holding with equity financing, in equal portions, worth a total of RUB 1.2 billion, to pay off part of Nearmedic Group's debt to Sberbank. In addition, Sistema and Sberbank entered into agreements to be fulfilled within a maximum of 3.5 years from the closing date of the transaction, giving Sistema the right to acquire from Sberbank and Sberbank the right to sell to Sistema its stake in JSC New Investment Holding along with the simultaneous transfer to Sistema of Sberbank's rights of claim on a loan provided to Nearmedic Group in the amount of up to RUB 2.8 billion.   *** For further information, please visit www.sistema.ru or contact:   Investor Relations Sergei Levitskiy Tel: [phone] [e-mail]   Public Relations Sergei Kopytov Tel.: [phone] [e-mail]   Sistema PJSFC is a publicly traded diversified Russian holding company serving over 150 million customers in the sectors of telecommunications, high technology, financial services, retail, paper and packaging, agriculture, real estate, tourism and medical services. The company was founded in 1993. Revenue in 2020 was RUB 691.6 billion; total assets equalled RUB 1.4 trillion as of 31 December 2020. Sistema's global depositary receipts are listed under the "SSA" ticker on the London Stock Exchange. Sistema's ordinary shares are listed under the "AFKS" ticker on the Moscow Exchange. Website: www.sistema.ru.   The Company is not an investment company, and is not and will not be registered as such, under the U.S. Investment Company Act of 1940.   Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Sistema. You can identify forward looking statements by terms such as "expect," "believe," "anticipate," "estimate," "intend," "will," "could," "may" or "might" the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. In addition, there is no assurance that the new contracts entered into by our subsidiaries referenced above will be completed on the terms contained therein or at all. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward- looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, impact of COVID-19 pandemic on macroeconomic situation on the markets of presence and financial results of Sistema and its subsidiaries and associates, as well as many other risks specifically related to Sistema and its operations.     Appendix A   Operating Income Before Depreciation and Amortisation (OIBDA) and OIBDA margin. OIBDA represents operating income before depreciation and amortisation. OIBDA margin is defined as OIBDA as a percentage of our net revenues. Our OIBDA may not be similar to the OIBDA measures of other companies; is not a measurement under accounting principles generally accepted under IFRS and should be considered in addition to, but not as a substitute for, the information contained in our consolidated statement of profit and loss. We believe that OIBDA provides useful information to investors because it is an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, acquisitions of businesses and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs under IFRS, these expenses primarily represent the non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. OIBDA is commonly used as one of the bases for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies.   Adjusted OIBDA, operating income and profit attributable to Sistema shareholders. The Company uses adjusted OIBDA, adjusted operating income and adjusted profit/(loss) attributable to Sistema shareholders to evaluate financial performance of the Group. These represent underlying financial measures adjusted for a number of one-off gains and losses. We believe that adjusted measures provide investors with additional useful information to measure our underlying financial performance, particularly from period to period, because these measures are exclusive of certain one-off gains and losses.   Adjusted operating income and adjusted OIBDA can be reconciled to our consolidated statements of profit and loss as follows:   RUB millions 3Q 2021 3Q 2020 9M 2021 9M 2020 Operating income 38,985 39,862 90,139 86,824 Accruals related to LTI program at portfolio companies 1,981 2 2,515 134 Impairment of hospitality assets - - - 1 109 Impairment of non-current assets (MTS) - - - 1 248 Other non-recurring income, net   668 - (17) Provisions for amounts due under contracts with clients at RTI   381 - 991 Adjusted operating income 40,966 40,913 92,654 90,289 Depreciation and amortisation 34,063 30,749 97,795 89,869 Adjusted OIBDA 75,029 71,662 190,450 180,158                           Adjusted loss attributable to Sistema shareholders can be reconciled to our consolidated statements of profit and loss as follows:   RUB millions 3Q 2021 3Q 2020 9M 2021 9M 2020 Net profit/(loss) attributable to Sistema 888 2,334 (5,395) (7,299) Accruals related to LTI program at portfolio companies 1,404 2 1,900 130 Impairment of hospitality assets     - 975 Impairment of non-current assets (MTS)     - 624 Other non-recurring income, net   (5) - (11) Provisions for amounts due under contracts with clients at RTI   268 - 706 Adjusted net profit/(loss) attributable to Sistema 2,292 2,598 (3,494) (4,876)   Consolidated net debt. We define consolidated net debt as consolidated total debt less cash, cash equivalents and deposits in banks. Consolidated total debt is defined as total borrowings plus finance lease. The total borrowings is defined as long-term borrowings, short-term borrowings and liability to the Russian Federation. We believe that the presentation of consolidated net debt provides useful information to investors because we use this measure in our management of consolidated liquidity, financial flexibility, capital structure and leverage.                     Consolidated net debt can be reconciled to the borrowings as follows: RUB millions 30 September 2021 30 June 2021 Long-term borrowings    656,366    613,025 Short-term borrowings    140,310    137,173 Total borrowings    796,676    750,198 Consolidated finance lease1    19,5282    19,2113 Consolidated total debt    816,205    769,409 Cash and cash equivalents (69,125) (84,103) Deposits in banks (1,307) (1,108) Consolidated net debt 745,772 684,198 (1) In accordance with the standard IAS 17. (2) Including RUB 1,778 million of short-term finance lease. (3) Including RUB 1,572 million of short-term finance lease.   **** Full press please including financial statements is available on Sistema's website http://www.sistema.com/investors-shareholders/financial-results/ and in the Attachment to the current release. ([1]) Here and hereinafter, see Annex A. ([2]) Group adjusted OIBDA in 3Q 2021 was impacted by the reflection of the Group's share in the RUB 2.9 billion increase in Ozon's net loss from RUB 1.6 billion in 3Q 2020 to RUB 4.5 billion in 3Q 2021, as well as by the sale of PJSC Detsky Mir shares in 3Q 2020 (RUB 3.7 billion).  ([3]) In March 2019, MTS reached a resolution with the U.S. Securities and Exchange Commission (SEC) and Department of Justice (DOJ) and signed a Consent Order (Order) with the SEC and a Deferred Prosecution Agreement (DPA) with the DOJ. Under the DPA and the Order in September 2019 MTS appointed an independent compliance monitor. In connection with the previously disclosed independent compliance monitorship, certain transactions were identified relating to MTS's subsidiary in Armenia, and such transactions were disclosed to the DOJ and SEC. The DOJ and SEC have requested information regarding the transactions and MTS has initiated an investigation into the matter. At this point, there is no information on the completion date and the results of the investigation. ([4]) MTS's results are presented including the divestment of NVision Group in 4Q 2020. The results for 2020 are restated due to the divestment of NVision Group. ([5]) Adjusted for allocations related to the LTI programme. ([6]) Approximately 46% of paper produced was supplied to Segezha Group's own converting facilities to produce paper packaging. ([7]) Including 27.0 million consumer paper bags. ([8]) Including sawn timber produced at the Sokol PPM. ([9]) RZ Agro is reflected in Steppe's IFRS accounts as an investment in a joint venture. ([10]) Adjusted for allocations related to the LTI programme. Including effect from acquisition al of subsidiaries in 2020. ([11]) For all adjusted indicators, adjustments are made for accruals related to the LTI programme. ([12]) Out-patient facilities in Moscow. ([13]) Utilisation accounts for the multiple use of one in-patient bed at daytime in-patient facilities. ([14]) Data presented here is based on management accounts, as Binnopharm Group's financial results are consolidated into Sistema's reporting from June 25, 2021, and due to the absence of comparative IFRS information for Binnopharm Group. Accordingly, net profit is not adjusted for non-controlling interests. ([15]) Based on management accounts. ([16]) Adjusted due to a one-time write-off in 1Q 2020 as a result of the impact of the COVID-19 epidemic on the financial results of hotels outside Russia. ([17]) Average daily rate. ([18]) Revenue per available room per day. ([19]) Based on management accounts. Attachment File: Sistema 3Q 2021 Financial Results

ISIN:	US48122U2042
Category Code:	QRT
TIDM:	SSA
LEI Code:	213800JSZ2UUK4QQK694
Sequence No.:	128096
EQS News ID:	1253569

End of Announcement	EQS News Service