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Financial Corporation "Sistema"

April 8, 2021

Sistema announces financial results for the fourth quarter and fy 2020

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 fourth quarter of 2020 (4Q 2020) and its audited consolidated financial results in accordance with IFRS for the full year ending 31 December 2020 (FY 2020). 

FY 2020 FINANCIAL HIGHLIGHTS

  • Consolidated revenue[1] grew by 5.7% year-on-year to RUB 691.6 billion.

  • Adjusted OIBDA[2] increased by 5.5% year-on-year to RUB 236.3 billion.

  • Adjusted OIBDA margin remained flat year-on-year at 34.2%.

  • Adjusted net profit attributable to Sistema was RUB 16.0 billion.

4Q 2020 FINANCIAL HIGHLIGHTS

  • Consolidated revenue increased by 6.9% year-on-year to RUB 193.4 billion.

  • Adjusted OIBDA increased by 6.1% year-on-year to RUB 56.2 billion.

  • Adjusted OIBDA margin decreased by 0.2 p.p. year-on-year to 29.1%.

  • Adjusted net profit attributable to Sistema was RUB 20.9 billion.

KEY GROUP HIGHLIGHTS IN 4Q 2020

IPO of Ozon[3]. In November 2020 Ozon held an IPO of American Depositary Shares (ADSs) on the NASDAQ and obtained a listing of its ADSs on Moscow Exchange. Total proceeds to the company, including the greenshoe as well as proceeds from a parallel private placement in which Sistema invested USD 67.5 million, totalled approximately USD 1.25 billion. Following completion of the IPO, fulfilment of the private placement agreement and conversion of convertible loans previously provided to Ozon, Sistema total stake in Ozon stood at 33.1%[4].

Debt capital markets programme. In November 2020 the Corporation completed a secondary placement of series 001P-04 exchange-traded bonds. The Corporation repurchased RUB 4.3 billion of bonds out of a total RUB 6.5 billion in the issue through a tender offer, and subsequently placed all of the repurchased bonds through a secondary placement with an annual coupon rate of 6.35% at 100.15% of the nominal value. Also in November 2020 Sistema placed RUB 5 billion of series 001 -16 bonds with a put option after 2.25 years and a coupon rate of 6.10% per annum, and RUB 14 billion of series 001 -17 bonds with a put option after 4.5 years and a coupon rate of 6.75% per annum.

Extension of Sistema buyback programme. In December 2020 Sistema announced an extension of the Corporation buyback programme to 31 December 2021. Launched on 17 September 2019, the programme provides for the repurchase of up to RUB 3.0 billion worth of the Corporation ordinary shares by a wholly owned subsidiary of Sistema. The maximum number of Shares to be repurchased under the Programme is capped at 300 million. As of 8 April 2021, 120.6 million shares had been repurchased for a total of RUB 1.6 billion.

MTS stock buyback. As part of MTS programme to repurchase up to RUB 15 billion of shares, Sistema wholly owned subsidiary Sistema Finance S.A. sold 14,534,801 ordinary shares of PJSC MTS for a total consideration of RUB 4.8 billion to LLC Bastion, a wholly owned subsidiary of MTS.

CORPORATE EVENTS AFTER THE END OF THE REPORTING PERIOD

Development of the pharmaceuticals business. In February 2021 Sistema and its financial partner, VTB Group (VTB), contributed their 56.2% stake in OJSC Sintez to the equity of Binnopharm Group LLC. At the same time, Sistema, VTB and a consortium of investors consisting of the Russia-China Investment Fund (a fund established by the Russian Direct Investment Fund and China Investment Corporation) and major Middle East funds contributed an 85.6% stake in JSC Alium to the equity of Binnopharm Group LLC. As a result, the effective stake of Sistema together with VTB in Binnopharm Group is 79%, and the investor consortium holds 15.8%. In March 2021 Group acquired a 32.4% stake in Sintez from JSC National Immunobiological Company, controlled by State Corporation Rostec.

PROGRESS IN ESG

Debut ESG financing. In November 2020 Sistema secured its first ESG financing from Sberbank. The RUB 10 billion credit line includes an option to tie the interest rate on each loan to sustainability performance (Sustainability Improvement Loan). Under the agreement Sistema committed to adopting its Environmental Policy and integrating responsible investment principles into its investment process. The transaction was the first ESG loan agreement between a Russian borrower and a Russian bank, and sets new standards for responsible investment in Russia.

Integration of ESG principles into portfolio management. In December 2020 the Board of Directors approved an updated set of investment criteria that integrate ESG factors into the investment process, thus fulfilling one of the KPIs under the Sberbank agreement.

Improved CDP rating. Sistema and MTS were both ranked among the top seven out of 29 Russian companies that voluntarily disclosed climate data in line with the international CDP (formerly known as Carbon Disclosure Project) reporting system in 2020. As a result, Sistema and MTS improved their positions in the global CDP rating to B.

Vladimir Chirakhov, President and Chief Executive Officer of Sistema, said:

In 2020 the Corporation increased revenue by 5.7% and adjusted OIBDA by 5.5%, thanks to contributions from MTS, Segezha Group, Steppe and Medsi. Our key consolidated portfolio companies overcame the challenges resulting from the COVID-19 pandemic, and were able to quickly adjust their business models and adapt their products and services to the new realities, which is reflected in their strong annual financial performance. MTS delivered strong growth due both to revenue growth in the core telecommunications segment as well as strong performance in other segments. Segezha Group achieved record revenue for the year and maintained a high level of profitability. Steppe delivered significant growth across its financial metrics as global grain prices increased and due to higher operational efficiency. Medsi grew revenue and OIBDA even despite the impact of restrictions on patient footfall in the first half of the year.

2020 was a year of transformation for our business. We completed our exit from Detsky Mir, held a successful IPO of Ozon that crystalised the value of this asset and established a foundation for the further expansion of the business. We also expanded our presence in the pharmaceuticals sector, combining our assets into Binnopharm Group, which is already one of Russia largest pharma producers and has the potential to become a focus of consolidation in the industry.

The Corporation continues to seek out new sources of growth, using the significant dividend income received from our portfolio companies as an investment resource. As part of this strategy our joint venture with Sber has acquired a stake in Elektrozavod Group, which includes transformer equipment production facilities in Moscow and Ufa, maintenance divisions, research and design institutes, an engineering centre and land plots totalling 19 hectares in the centre of Moscow. Our ambition is to create a leading Russian producer of transformer equipment using the acquired production facilities.

***

For further information, please visit www.sistema.com or contact:

IR Service

Nikolay Minashin

Phone: +7 (495) 730 66 00

n.minashin@sistema.ru

Press Service

Sergey Kopytov

Phone: +7 (495) 228 15 32

kopytov@sistema.ru

 

 

 

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