Moscow, Russia – 30 August 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, today announces its unaudited consolidated financial results in accordance with International Financial Reporting Standards (IFRS) for the second quarter of 2021 (2Q 2021) ending 30 June 2021.
Segezha Group IPO. In April 2021, Segezha Group held an IPO on Moscow Exchange, raising RUB 30 billion with a purpose to finance its investment programme and optimise its debt leverage. At the time of the IPO, the company's capitalisation was RUB 125.5 billion, with a free float of 23.9%. The Corporation’s stake is 72.0%.
Development of the pharmaceuticals business. On 25 June 2021, Ristango Holding Limited, the 100% owner of Binnopharm Group, shareholders signed a new shareholder agreement. According to the agreement, Sistema had obtained control over the operating activities of Ristango Holding Limited, which provided the basis for consolidating Binnopharm Group’s results in Sistema’s financial statements as of that date. Also in June 2021, Sistema sold an 11.2% equity stake in Ristango Holding Limited to Nevsky Property Investments Limited, controlled by VTB Capital, for RUB 7 billion. As a result, Sistema and VTB’s effective stake in Binnopharm Group is 75.3%; VTB Capital holds 11.2%, and a consortium of investors consisting of the Russian Direct Investment Fund (RDIF), the Russia-China Investment Fund (co-founded by RDIF and China Investment Corporation) and leading Middle Eastern funds holds 12.5%.
New dividend policy. In May 2021, the Board of Directors approved a new dividend policy, under which the Corporation targets annual payments of no less than RUB 0.31 per ordinary share in 2021, RUB 0.41 per ordinary share in 2022 and RUB 0.52 per ordinary share in 2023. In addition to the basic dividend, the Board of Directors has recommended that, starting from 2022, Sistema distribute 10% of the absolute growth in its adjusted OIBDA for the previous year to shareholders, in the event that the Corporation delivers absolute OIBDA growth of more than 5% for the previous year and that the net debt / OIBDA ratio does not exceed 3.0x as of the end of the previous year.
In June 2021, the Annual General Meeting of shareholders approved the distribution of dividends totalling RUB 2,991.5 million, or RUB 0.31 per ordinary share for full year 2020.
Improved credit ratings. In May 2021, S&P affirmed Sistema’s rating at BB and revised the outlook to positive from stable. The agency noted the increase in the share of liquid assets in Sistema’s portfolio and the increase in the value of its asset portfolio as a result of the Ozon and Segezha Group IPOs. In June 2021, Fitch Ratings upgraded Sistema’s rating to BB with a stable outlook, noting the considerable increase in the scale of the business operations of Segezha Group, Steppe and Medsi, as well as the elimination of currency risks in the Corporation’s debt portfolio.
Debt capital markets programme. In April 2021, the Corporation placed RUB 10 billion of series 001P-20 bonds with a semi-annual coupon rate of 8.2% per annum. In July 2021, the Corporation placed RUB 15 billion of series 001P-21 bonds with a semi-annual coupon rate of 8.4% per annum. In August 2021, the Corporation completed bookbuilding of series 001P-22 bonds amounting to of RUB 15 billion with a quarterly coupon rate of 8.2% per annum.
Sistema stock buyback. The extended 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 by 17 September 2022. The maximum number of shares to be repurchased under the Programme is capped at 343 million. As of 23 August 2021, 173.4 million shares had been repurchased.
MTS stock buyback. From May to July 2021, as part of the MTS programme to buy back stock up to a value of RUB 15 billion, Sistema’s wholly owned subsidiary Sistema Finance S.A. along with Sistema PJSFC sold a total of 22,796,040 ordinary shares and American depositary shares of PJSC MTS for a consideration of RUB 7.5 billion to LLC Bastion, a wholly owned subsidiary of MTS.
Approval of new ESG policies. In May 2021, Sistema’s Board of Directors approved an Environmental Policy and a Human Rights Policy. These documents enhance Sistema’s ESG management system and elaborate on the provisions of its Sustainability Policy. They provide guidance to help portfolio companies improve their management of environmental and human rights issues, thereby reducing the exposure of Sistema’s investment portfolio to environmental and social risks.
Consolidated revenue grew by 16.0% year-on-year to RUB 180.0 billion.
Adjusted OIBDA increased by 6.7% year-on-year to RUB 58.5 billion.
Adjusted OIBDA margin was 32.5%.
Adjusted net loss attributable to Sistema was RUB 3.4 billion.
"In the second quarter of 2021 we delivered accelerated growth of revenue and adjusted OIBDA of 16% and 7%, respectively, driven by strong performance from our public and non-public assets. MTS accelerated growth into double digits amid growth in demand for telecoms and financial services, as well as growth of revenue from the retail segment and also thanks to contributions from digital and cloud solutions for business and the media segment. Segezha Group increased revenue by 45% year-on-year amid a favourable pricing environment and growth of demand as the global construction sector recovers, as well as due to productivity growth and the launch of new higher-margin products. Solid revenue growth delivered by Steppe of 77% year-on-year was driven by growth in the Field Crops and Agrotrading segments due to increased exports of agricultural crops, sales of stock from last year's harvest and higher global grain prices, as well as positive dynamics in the Dairy segment as sales volumes of milk increased, and growth of revenue from the Sugar and Grocery Trading segment. Medsi grew revenue by 60% year-on-year as demand for regular medical services recovered amid continued demand for COVID-19 diagnostics, prevention and treatment. Binnopharm Group delivered revenue growth as it continued to execute on a strategy of aggressive sales growth into the hospital and retail segments.
"Our unconsolidated portfolio companies also delivered high growth rates during the period as their businesses continued to expand. Ozon continued its dynamic growth despite the high base of 2Q 2020 when online shopping boomed to anomalous levels during lockdown. Ozon's revenue in 2Q 2021 grew by 94% year-on-year, while average growth over the past few years reached 136%, underscoring the persistent trend of triple-digit growth. Etalon Group's real estate sales totalled 122.3 thousand sqm or RUB 24.9 billion, up 29% and 115% year-on-year, respectively. To support future growth Etalon has already launched sales for its flagship ZIL-Yug project and the second phase of Nagatino i-Land. The company is also focusing on expanding its offering by acquiring new projects, some of which are planned for launch in 1H 2022.
"Key events during the period included the IPO of Segezha Group, during which the company raised RUB 30 billion in new capital to reduce its debt and invest in attractive new projects that will substantially grow both the business and shareholder value. We are also pleased that our work to build a leading pharmaceuticals holding has been recognised by VTB Group, which previously provided financing for the project and in June 2021 became a shareholder when VTB Capital acquired an 11% stake in Binnopharm Group."
To participate in the conference call, please dial:
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+46 10 551 30 20
Link to webcast: https://mm.closir.com/slides?id=657738
Or quote the conference call title: “Sistema Second 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.ru or contact:
Tel.: +7 (495) 730 66 00
Tel.: +7 (495) 228 15 32
 Taking into account the partial exercise of the option for an additional placement of secondary shares as part of the stabilisation procedure following the IPO and the option exercise on the part of Segezha Group President Mikhail Shamolin.