Last checked at 10 Nov 2016 10:01
PJSC ROSTELECOM / 3rd Quarter ResultsROSTELECOM ANNOUNCES ITS IFRS FINANCIAL AND OPERATING RESULTS FOR THE THIRDQUARTER AND NINE MONTHS OF 2016 10-Nov-2016 / 12:01 CET/CESTDissemination of a Regulatory Announcement, transmitted by EquityStory.RS,LLC - a company of EQS Group AG.The issuer is solely responsible for the content of this announcement. --------------------------------------------------------------------------- ROSTELECOM ANNOUNCES ITS IFRS FINANCIAL AND OPERATING RESULTS FOR THE THIRDQUARTER AND NINE MONTHS OF 2016 Higher revenues driven by a substantial increase in the digital segment'scontribution to overall revenue Moscow, Russia - November 10, 2016 - Rostelecom PJSC (MOEX: RTKM, RTKMP;OTCQX: ROSYY), Russia's national telecommunications operator, todayannounces its consolidated financial results for the third quarter and ninemonths of 2016 prepared in accordance with IFRS[1]. KEY ACHIEVEMENTS - Revenue grew by 0.4% to RUB 72.8 billion compared to the third quarter of 2015; - Net income doubled to RUB 4.1 billion in the third quarter of 2016; - Solid OIBDA margin of 34.4% in the third quarter of 2016; - Higher digital segment[2] share of revenue of 44%; - Rostelecom accounted for around 40%[3] of new subscriptions in the pay- TV market and over 50%[4] in the broadband market; - Total fibre optic network coverage reached 31.8 million households by the end of the third quarter of 2016; - Maintained high level of subscriber growth rate (+7%) for broadband and IPTV (+28%). THIRD QUARTER 2016 FINANCIAL HIGHLIGHTS - Revenue grew by 0.4% to RUB 72.8 billion compared to the third quarter of 2015; - OIBDA[5] fell by 1% to RUB 25.0 billion compared to the third quarter of 2015; - OIBDA margin of 34.4% compared to 34.7% in the corresponding period of last year; - Net profit doubled to RUB 4.1 billion compared to the third quarter of 2015; - CAPEX[6] decreased by 18% year-on-year to RUB 13.0 billion (17.9% of revenue) from RUB 16.0 billion (22.0% of revenue) in the third quarter of 2015; - Free Cash Flow (FCF)[7] fell by 9% to RUB 5.9 billion compared to the third quarter 2015; - Net debt[8] increased by 9% since the beginning of 2016, amounting to RUB 190.1 billion, resulting in a Net Debt / Annualised OIBDA ratio of 1.9x. Key figures for 3Q 2016 RUB million 3Q 2016 3Q 2015 % change, y-o-y Revenue 72,781 72,496 0.4%OIBDA 25,038 25,182 (1%)OIBDA margin % 34.4% 34.7%Operating Income 11,815 9,945 19%Operating margin % 16.2% 13.7%Net Income 4,060 2,046 98%% of revenue 5.6% 2.8%Capital Expenditure 13,029 15,978 (18%)% of revenue 17.9% 22.0%Net debt 190,071 174,899 9%Net debt/ annualised OIBDA 1.9 1.7FCF 5,851 6,420 (9%) NINE MONTHS OF 2016 FINANCIAL HIGHLIGHTS - Revenue grew by 0.3% to RUB 217.0 billion, compared to the nine months of 2015; - OIBDA fell by 4% to RUB 72.4 billion compared to the nine months of 2015; - OIBDA margin of 33.4% compared to 34.7% in the nine months of 2015; - Net profit fell by 16% to RUB 8.7 billion compared to the nine months of 2015; - CAPEX increased by 8% year-on-year to RUB 46.8 billion (21.6% of revenue) from RUB 43.4 billion (20.1% of revenue) in the nine months of 2015; - Free Cash Flow (FCF) was RUB -2.3 billion compared to RUB 12.9 billion in the corresponding period of last year. Key figures for the nine months of 2016 RUB million 9M 2016 9M 2015 % change, y-o-y Revenue 217,039 216,336 0.3%OIBDA 72,400 75,027 (4%)OIBDA margin % 33.4% 34.7%Operating Income 28,588 29,328 (3%)Operating margin % 13.2% 13.6%Net Income 8,663 10,274 (16%)% of revenue 4.0% 4.7%Capital Expenditure 46,797 43,383 8%% of revenue 21.6% 20.1%Net debt 190,071 174,899 9%Net debt/ annualised 1.9 1.7OIBDAFCF (2,320) 12,888 - Sergei Kalugin, President of Rostelecom, commented: 'Our third quarter results were robust, both from a financial andoperational perspective. We are delighted with the successful on-goingtransformation of the business, as well as the extent to which the digitalsegment is growing, driven by an increasing number of broadband and IPTVclients as well as sales in cloud services and other digital segments. Thiscombination has led to an increase in revenue and profit, enablingRostelecom to generate high margins and solid cash flow. 'We accomplished a number of important milestones during the quarter.Firstly, within the framework of an MVNO agreement, we commerciallylaunched our own-brand mobile services based on the Tele2 network. Thisgives customers access to Rostelecom's mobile proposition through the Tele2network across the country, it will strengthen customer loyalty in the B2Csegment and bolster our position in the corporate and state user segments. 'Furthermore, the Board of Directors has approved a new LTIP programme,which provides each employee with the opportunity to become a shareholder,and benefit from the Company's increasing success and shareholder valuegrowth. This will provide employees with a real sense of ownership, whichwill contribute to increased productivity and a more rapid transformationinto a digital service provider. 'Finally, the Board of Directors has approved another important initiativeto enhance efficiency and profitability - the introduction of a newproduction system based on 6 SIGMA and Lean Production approach, which weexpect to help us increase productivity by 20-30%, depending on thebusiness area function, and realise a 5-10% reduction in operating costs' Kai-Uwe Mehlhorn, Senior Vice-President and Chief Financial Officer, added: 'We are pleased with the third quarter results, particularly the underlyingperformance of the business, which demonstrate that management initiativesare delivering results: our consolidated revenue is growing, despite thefall in income from voice services. OIBDA is stable, despite toughcompetition and inflation. There are however grounds for beingconservative, due to the difficult macroeconomic environment and there issignificant risk that state reimbursement for the Bridging the DigitalDivide project will be reduced. In terms of guidance, we therefore expect up to 1% year-on-year revenuegrowth for the full year, and we expect a lower year-on-year OIBDA range ofbetween 4-6% compared to 2015. The impact of the lower reimbursement forthe BDD project is expected to be offset by success in optimising operatingexpenses and increase revenue from digital services. We expect full yearCAPEX of less than 19% of revenues (excluding the Bridging the DigitalDivide project 'BDD').' KEY OPERATING HIGHLIGHTS 1. The number of broadband subscribers grew by 7% year-on-year to 12.2 million in 3Q 2016; - The B2C subscriber base grew by 7% to 11.4 million, whilst the number of subscribers connected by fibre optic increased by 21% year-on-year to 7.1 million (59% of the subscriber base). 2. The number of pay-TV subscribers grew by 9% year-on-year to 9.2 million households. - The number of IPTV subscribers increased by 28% to 4.0 million. 3. The number of local telephony subscribers decreased by 8% to 20.9 million. Number of 3Q 2016 3Q 2015 % change, 2Q 2016 % change,subscribers y-o-y y-o-y(million): Broadband 12.2 11.4 7% 12.0 2%Residential 11.4 10.7 7% 11.2 2%Corporate 0.7 0.7 3% 0.7 1%clientsPay TV 9.2 8.4 9% 9.0 2%Incl. IPTV 4.0 3.1 28% 3.9 5%Local telephony 20.9 22.7 (8%) 21.3 (2%)services KEY EVENTS RELATING TO 3Q 2016 AND AFTER THE END OF THE REPORTING PERIOD Business news - Expanding the range of services: - Began providing mobile services under its own brand based on the Tele2 network under an MVNO agreement; now Rostelecom customers can access the Rostelecom mobile proposition through the Tele2 network across the country; - Rostelecom launched a federal Wi-Fi service for corporate clients and the public sector; - Rostelecom updated the 'Gaming' tariff plan to include premium accounts; and - Rostelecom launched a new IPTV smartphone app. - Rostelecom remains a preferred and reliable partner to the state: - Rostelecom organised video surveillance for the State Duma elections in 15 Russian regions; the total value of the contracts was more than RUB 500 million; - Rostelecom won a RUB 43 million tender to introduce the domestic 'MyOffice Mail' product for the Moscow Department for Information Technology; - On-going work on modernising the network infrastructure to ensure high quality digital services: - Increased fibre optic network coverage to 31.8 million households; - Rostelecom launched a sub-marine fibre optic link from Sakhalin - Kamchatka - Magadan. Now almost 500,000 inhabitants in the Kamchatka Krai and Magadan region, who had previously received their service via satellite, can enjoy unlimited high-speed internet; - Rostelecom maintains a large and stable share of total new connections. The Company continues to strengthen its competitive position in the broadband and pay-TV market, attracting around 40%[9] of all new subscribers in the pay-TV market and more than 50%[10] in the broadband market for the third quarter; - As part of its initiative to develop new fast growing business segments to drive revenue, Rostelecom launched a new teleshopping channel BOOM- TV, created in the JV framework with South Korean partners; - Rostelecom concluded a number of major contracts totalling RUB 1.8 billion to broaden the digital business segment. This includes a contract with the federally funded Judicial Department's information analytics centre, as well as contracts related to 'Smart City' projects, VPN and others; - Rostelecom signed long-term contracts with MTS, Vimpelcom and Megafon for the lease of its network infrastructure, thereby monetising its leading position as the major telecoms infrastructure operator in the country. Other news - The Company further optimised its debt portfolio by successfully completing a RUB 15 billion bond placement, with a record low coupon rate of 9.2%; - To accelerate Rostelecom's transformation into a digital services provider, the Board of Directors approved a new long-term incentivisation programme for employees to provide a greater sense of ownership in the business and to incentivise success. The Company also introduced a new corporate pension scheme. - To reinforce the Company's evolution into a digital services provider, the Company has also reviewed its production systems based on the tools and techniques of Lean Production and 6 SIGMA, which will increase productivity and reduce operating costs; - Noting the improving macroeconomic situation in the country, Fitch and S&P upgraded the Company's outlook to Stable for Rostelecom's credit ratings; OPERATING REVIEW Revenue analysis Revenue structure by services RUB million 3Q 3Q % 9M 2016 9M 2015 % 2016 2015 change, change, y-o-y y-o-y Broadband 16,497 15,910 4% 49,501 47,385 4%TV services 5,971 4,862 23% 17,312 14,198 22%Fixed telephony 21,219 24,150 (12%) 66,113 75,107 (12%)Wholesale services 19,143 18,987 1% 57,098 55,544 3%Rent of channels 2,566 2,899 (12%) 8,056 8,801 (8%)Interconnection and 8,122 8,053 1% 24,247 23,135 5%traffic transitservicesVPN 5,290 4,976 6% 15,492 14,410 8%Rent and maintenance 3,165 3,059 3% 9,303 9,198 1%of telecommunicationsinfrastructureVAS and cloud services 4,498 3,127 44% 11,846 8,315 42%Other 3,413 3,287 4% 9,799 10,374 (6%)telecommunicationsservicesOther non- 2,040 2,173 (6%) 5,370 5,413 (1%)telecommunicationsservicesTotal 72,781 72,496 0.4% 217,039 216,336 0.3% Revenue structure by customer segments RUB million 3Q 2016 3Q 2015 % 9M 2016 9M 2015 % change, change, y-o-y y-o-yResidential 32,634 33,086 (1%) 99,083 100,933 (2%)customersCorporate 13,573 13,976 (3%) 39,211 40,857 (4%)customersGovernment 12,781 11,698 9% 37,305 34,355 9%customersOperators 13,793 13,736 0% 41,440 40,191 3%Total 72,781 72,496 0.4% 217,039 216,336 0.3% In the third quarter of 2016, revenue increased by 0.4% to RUB 72.8 billioncompared to the third quarter of 2015. Revenue was influenced by thefollowing factors: - a 44% increase in revenue from VAS and cloud services due to an increase in the data-centres business, cloud services and the development of the 'Smart City' projects; - 23% increase in revenue from pay-TV due to growth in the IPTV subscriber base, an increase in the consumption of VoD services and higher ARPU; - a 4% increase in revenue from broadband services due to an increased number of subscribers; - a 12% decrease in revenue from fixed-line telephony services. In the nine months of 2016, revenue increased by 0.3% year-on-year to RUB217.0 billion as a result of the following factors: - a 42% increase in revenue from VAS and cloud services due to an increase in cloud services, data centre services and the development of the 'Smart City' projects; - a 22% increase in revenue from pay-TV services due to growth in the IPTV subscriber base, an increase in the consumption of VoD services and higher ARPU; - a 4% increase in revenue from broadband services due to an increased number of subscribers; - a 12% decrease in revenue from fixed-line telephony services. Operating income analysis Operating expenses structure[11] RUB million 3Q 2016 3Q 2015 % 9M 2016 9M 2015 % change, change, y-o-y y-o-y Personnel costs (21,750) (21,416) 2% (68,474) (68,511) (0%) Interconnection (12,241) (12,264) (0%) (36,704) (34,395) 7%charges Materials, (5,998) (5,821) 3% (17,304) (17,382) (0%)repairs andmaintenance,utilities Gain on the 402 236 70% 1,363 724 88%disposal of PPEand intangibleassets Reserves for (935) (785) 19% (2,675) (1,978) 35%bad debtexpenses Other operating 2,741 3,705 (26%) 10,226 10,797 (5%)income Other operating (10,419) (11,381) (8%) (32,676) (31,802) 3%expenses Total operating (48,200) (47,725) 1% (146,204) (142,546) 3%expenses In the third quarter of 2016, operating expenses, excluding amortisation,increased by 1% to RUB 48.2 billion compared to the corresponding period of2015. This is mainly due to a decrease in operating income from the'Bridging the Digital Divide' project, accompanied by a reduction inassociated costs under other operating expenses, and growth in personnelcosts because of one-off payments. In the nine months of 2016, operating expenses excluding amortisationincreased by 3% to RUB 146.2 billion, compared with the same period lastyear. This was influenced by the following factors: - a 7% increase in interconnection charges, partly as a result of a larger pay-TV subscriber base, leading to higher content costs as well as increased interconnection costs; - a 3% increase in other operating expenses, including increased expenses related to the 'Smart City' projects and others, accompanied by growth in corresponding income; - a 35% increase in reserves for bad debt expenses mainly due to one-off effect from the rate adjustment method of collecting receivables in the second quarter of 2016; Depreciation and amortisation expenses decreased by 14% year-on-year in thethird quarter of 2016 and by 5% in the nine months of 2016 to RUB 12.8billion and RUB 42.2 billion, respectively. The decrease is mainly due to arevision in the useful life of fixed assets. Operating profit in the third quarter of 2016 grew by 19% to RUB 11.8billion, compared to the corresponding period last year. For the 9 monthsof 2016 operating profit declined by 3% to RUB 28.6 billion. OIBDA in the third quarter of 2016 fell by 1%, and by 4% year-on-year inthe nine months of 2016, to RUB 25.0 billion and RUB 72.4 billion,respectively. The OIBDA margin was 34.4% in the third quarter compared to34.7% in the corresponding period of 2015; in the nine months of 2016 theOIBDA margin was 33.4% (34.7% in the nine months of 2015). Net Income Analysis In the third quarter of 2016, profit before income tax grew by 69% andamounted to RUB 6.0 billion and for 9 months to RUB 12.0 billion comparedto RUB 14.3 billion in the nine of 2015. Profit before tax in the third quarter of 2016 was mainly influenced by thefollowing factors: - higher level of operating profit; - the third quarter of 2015 higher comparable base of losses following the revaluation of financial instruments; - positive foreign exchange rate differences in the reporting period; - consolidation of losses from affiliated companies, mainly relating to the financial results of the JV with Tele2 Russia. Profit before income tax in the nine months of 2016, was mainly influencedby the consolidation of losses from affiliated companies, mainly relatingto the financial results of the JV with Tele2 Russia, lower losses from therevaluation of financial instruments and positive foreign exchange ratedifferences. In the third quarter of 2016, income tax increased 29% year-on-year andamounted to RUB 1.9 billion. The Company's income tax contributions duringthe nine months of 2016 decreased by 16% to RUB 3.4 billion. The income taxdynamics were a result of an income profit before tax. The effective income tax rate was 32% in the third quarter of 2016 andamounted to 28% in the nine months of 2016, compared to the 20% ratespecified by the Tax Code. The higher effective tax rate was due to thepresence of expenses that are non-deductible for tax purposes. Net profit grew by 98% and amounted to RUB 4.1 billion in the third quarterof 2016. In the nine months of 2016, net profit totalled RUB 8.7 billioncompared to RUB 10.3 billion in the nine months of 2015. Financial review Consolidated net operating cash flow amounted to RUB 18.2 billion in thethird quarter of 2016, compared to RUB 22.0 billion in the correspondingperiod of 2015, totalling RUB 42.3 billion in the nine months of 2016,compared to RUB 54.7 billion during the nine months of 2015. The reductionin net operating cash flow in the third quarter of 2016 was due to thehigher level of accounts receivable, a decrease in accounts payable, anincrease in interest paid as well as a decrease in proceeds from theBridging the Digital Divide project. The presence of significant recoveriesof income tax in the third quarter of 2016 had a positive impact on cashflow value. The reduction in consolidated net operating cash flow for thefirst 9 months of 2016 largely accounted for an increase in accountsreceivable and interest paid. In the third quarter of 2016, consolidated free cash flow amounted to RUB5.9 billion compared to RUB 6.4 billion in the third quarter of 2015.Consolidated free cash flow in the nine months of 2016 was RUB (2.3)billion compared to RUB 12.9 billion in the nine months of 2015. Consolidated cash outflow for investments in fixed assets in the thirdquarter of 2016 decreased by 18% year-on-year to RUB 13.0 billion,increasing by 8% to RUB 46.8 billion for the nine months of 2016 comparedto the corresponding period last year. This was due to CAPEX being unevenlydistributed across the calendar year, in the current financial year thevolume of investments was weighted in the first half. As at the 30th of September 2016, the Group's total debt grew by 7% sincethe full year of 2015, to RUB 200.4 billion. More than 99% of the Group'stotal debt was rouble-denominated as at 30th September 2016. As at 30th September, 2016 the Group's net debt amounted to RUB 190.1billion with a net debt / OIBDA annualised ratio of 1.9x. OTHER INFORMATION: CONFERENCE CALL Rostelecom's management will hold a conference call and webcast today at6.00 PM (Moscow), 4.00 PM (CET), 3.00 PM (UK) and 10.00 AM (NYT). Toparticipate in the conference call, please dial: Russia +7 495 213 1767UK/ International: +44(0) 330 336 9105US: +1 719 325 2229 Access Code: 7823005 A webcast of the conference call will be available at: http://www.audio-webcast.com/cgi-bin/visitors.ssp?fn=visitor&id=4031. A replay of the conference call will be available on the Company's websitehttp://www.rostelecom.ru/en/ir/results_and_presentations/financials/IFRS/2016/3/ in due course. * * * APPENDICES 1. Reconciliation of OIBDA 2. Statement of Comprehensive Income for 9M 2016 3. Statement of Cash Flows for 9M 2016 4. Statement of Financial Position for 9M 2016 APPENDIX 1: RECONCILIATION OF OIBDA OIBDA is a non-U.S. GAAP and non-IFRS financial measure, which the Companydefines as operating income before depreciation and amortisation as well asnon-cash expenses. We believe that OIBDA provides useful information toinvestors because it is an indicator of the strength and performance of ourbusiness operations, including our ability to finance capital expenditures,acquisitions and other investments and our ability to incur and servicedebt. Non-cash expenses related to the long-term management incentive programme,implying accruals in personnel costs line starting from Q2, 2014, are nottaken into account in the calculation of OIBDA. RUB million 3Q 2016 3Q 2015 % 9M 2016 9M 2015 % change, change, y-o-y y-o-y Operating 11,815 9,945 19% 28,588 29,328 (3%)income Plus 12,766 14,826 14% 42,247 44,461 (5%)amortisation Plus non-cash 457 411 11% 1,565 1,238 26%expensesrelated tothe long-termmanagementincentiveprogramme OIBDA 25,038 25,182 (1%) 72,400 75,027 (4%) OIBDA margin, 34.4% 34.7% 33.4% 34.7%% APPENDIX 2: Statement of Comprehensive Income for 9M 2016 Three-month period ended 30 September (unaudited) 2016 2015 Revenue 217,039 216,336 Operating expensesWages, salaries, other (68,474) (68,511)benefits and payroll taxesDepreciation, amortization (42,247) (44,461)and impairment lossesInterconnection charges (36,704) (34,395)Materials, utilities, (17,304) (17,382)repairs and maintenanceGain on disposal of 1,363 724property, plant andequipment and intangibleassetsBad debt expense (2,675) (1,978)Other operating income 10,266 10,797Other operating expenses (32,676) (31,802)Total operating expenses, (188,451) (187,008)netOperating profit 28,588 29,328 Loss from associates (5,004) (2,302)Finance costs (12,724) (12,026)Other investing and 640 108financial gain/(loss), netForeign exchange gain/ 547 (802)(loss)Profit before income tax 12,047 14,306Income tax expense (3,384) (4,032)Profit for the period 8,663 10,274 Other comprehensive incomeItems that may bereclassified subsequentlyto profit or loss:Exchange differences on (417) 257translating foreignoperations, net of taxOther comprehensive income (417) 257for the period, net of taxTotal comprehensive income 8,246 10,531for the period Profit attributable to:Equity holders of the Group 8,253 9,924Non-controlling interests 410 350Total comprehensive incomeattributable to:Equity holders of the Group 7,834 10,157Non-controlling interests 412 374 Earnings per share 3.68 4.39attributable to equityholders of the Group -basic(in roubles)Earnings per share 3.64 4.33attributable to equityholders of the Group -diluted(in roubles) APPENDIX 3: Statement of Cash Flows for 9M 2016 Nine-month period ended 30 September (unaudited) 2016 2015Cash flows from operating activitiesProfit before tax 12,047 14,306Adjustments to reconcile profitbefore tax to cash generated fromoperations:Depreciation, amortization and 42,247 44,461impairment lossesGain on disposal of property, plant (1,363) (724)and equipment and intangible assetsBad debt expense 2,675 1,978Loss from associates 5,004 2,302Finance costs excluding finance 12,366 11,473costs on pension and other long-termsocial liabilitiesOther investing and financial gain (640) (108)Foreign exchange (gain)/loss, net (547) 802Share-based motivation program 1,184 938Changes in net working capital:Increase in accounts receivable (9,258) (6,919)Increase in employee benefits 128 147(Increase)/decrease in inventories (615) 1,523Decrease in accounts payable, (2,142) (2,311)provisions and accrued expensesDecrease in other assets and (1,932) (211)liabilitiesCash generated from operations 59,154 67,657Interest paid (14,383) (12,590)Income tax refund 1,395 2,260Income tax paid (3,822) (2,653)Net cash from operating activities 42,344 54,674 Cash flows from investing activitiesPurchase of property, plant and (46,797) (43,383)equipment and intangible assetsProceeds from sale of property, 2,133 1,597plant and equipment and intangibleassetsAcquisition of financial assets (5,737) (10,250)Proceeds from disposals of financial 6,376 5,890assetsInterest received 827 705Dividends received 20 5Purchase of subsidiaries, net of (2,438) (464)cash acquired Proceeds from disposals of equity - 322 accounted investeesProceeds from disposals of (1) -subsidiaries, net of cash disposedAcquisition of equity accounted (778) (98)investeesNet cash used in investing (46,395) (45,676)activities Cash flows from financing activitiesPurchase of treasury shares - (2,867)Sale of treasury shares 8 -Proceeds from bank and corporate 496,127 368,768loansRepayment of bank and corporate (492,822) (376,378)loans Proceeds from bonds 15,000 10,000 Repayment of bonds (2,734) (2,408)Repayment of vendor financing (7) (44)payableRepayment of other non-current - (3)financing liabilitiesOptions settlement repayments (231) (448)Repayment of finance lease (116) (56)liabilities Acquisition of non-controlling - (2,079) interest Dividends paid to shareholders of (13,295) (7,676) the GroupDividends paid to non-controlling (248) (287)shareholders of subsidiariesNet cash used in financing 1,682 (13,478)activities Net decrease in cash and cash (2,738) (4,479)equivalentsEffect of exchange rate changes on (369) 1cash and cash equivalentsCash and cash equivalents at 7,165 16,945beginning of the periodCash and cash equivalents at the end 4,427 12,466of the period APPENDIX 4: Statement of Financial Position for 9M 2016 30 September 2016 31 December (unaudited) 2015AssetsNon-current assetsProperty, plant and 334,580 338,699equipmentInvestment property 99 107Goodwill and other 60,730 60,755intangible assetsInvestments in associates 70,205 74,474Other financial assets 845 621Deferred tax assets 620 627Other non-current assets 9,821 8,241Total non-current assets 476,900 483,524 Current assetsInventories 4,709 4,060Trade and other accounts 50,337 43,152receivablePrepayments 2,140 2,822Prepaid income tax 2,870 927Other financial assets 5,913 5,719Cash and cash equivalents 4,427 7,165Other current assets 2,063 2,600Total current assets 72,459 66,445Held for sale assets 1,727 1,351Total assets 551,086 551,320 Equity and liabilitiesEquity attributable toequity holders of the GroupShare capital 93 93Additional paid-in capital 90 87Treasury shares (66,932) (68,669)Retained earnings and other 308,238 314,237reservesTotal equity attributable 241,489 245,748to equity holders of theGroupNon-controlling interests 4,246 3,916Total equity 245,735 249,664 Non-current liabilitiesLoans and borrowings 140,543 126,620Employee benefits 5,522 5,021Deferred tax liabilities 33,175 30,238Accounts payable, 5,018 3,545provisions and accruedexpensesOther non-current 5,908 5,543liabilitiesTotal non-current 190,166 170,967liabilities Current liabilitiesLoans and borrowings 59,868 59,934Accounts payable, 48,367 62,268provisions and accruedexpensesIncome tax payable 42 215Other current liabilities 6,908 8,272Total current liabilities 115,185 130,689Total liabilities 305,351 301,656Total equity and 551,086 551,320liabilities Rostelecom (www.rostelecom.ru) is one of the largest nationaltelecommunications operators in Russia and Europe. The Company operates inall segments of the telecommunications market and covers millions ofhouseholds in Russia. Rostelecom is an undisputable leader of the broadband and pay-TV markets inRussia with over 12.2 million fixed-line broadband subscribers and over 9.2million pay-TV subscribers, over 4.0 million of which are subscribed toRostelecom's IPTV services. In the nine months of 2016 the Group generated RUB 217.0 billion ofrevenue, RUB 72.4 billion of OIBDA (33.4% of revenue) and RUB 8.7 billionof net income. The Group is a market leader in providing telecommunications services togovernment bodies and corporates of all levels. Rostelecom is an important innovator that provides solutions in the fieldof E-Government, cloud computing, healthcare, education, security andhousing & utility services. The Group's stable financial position confirmed by its credit ratings.Rostelecom was assigned 'BBB-' and 'BB+' international credit ratings byFitch Ratings and Standard&Poor's respectively. * * * Certain statements in this press release are forward-looking statementswithin the meaning of the U.S. federal securities laws and intended to becovered by the safe harbours created thereby. Those forward-looking statements include, but are not limited to: - Assessment of Rostelecom's PJSC (the Company) future operating and financial results as well as forecasts of the present value of future cash flows and related factors; - The Company's plans to take ownership stakes in other organisations; - the Company's anticipated capital expenditures and plans to construct and modernize its network; - the Company's expectations as to the growth in demand for its services, plans relating to the expansion of the range of its services and their pricing; - the Company's plans with respect to improving its corporate governance practices; - the Company's expectations as to its position in the telecommunications market and forecasts on the development of the market segments within which the Company operates; - economic outlook and industry trends; - the Company's expectations as to the regulation of the Russian telecommunications industry and assessment of impact of regulatory initiatives on the Company's activity; - other statements regarding matters that are not historical facts. Such forward-looking statements are subject to risks, uncertainties andother factors, which could cause actual results to differ materially fromthose expressed or implied by these forward-looking statements. Theserisks, uncertainties and other factors include: - risks relating to changes in political, economic and social conditions in Russia as well as changes in global economic conditions; - risks relating to Russian legislation, regulation and taxation, including laws, regulations, decrees and decisions governing the Russian telecommunications industry, securities industry as well as currency and exchange controls relating to Russian entities and their official interpretation by regulatory bodies; - risks relating to the Company, including the achievement of the anticipated results, levels of profitability and growth, ability to create and meet demand for the Company's services including their promotions, and the ability of the Company to remain competitive in a liberalized telecommunications market; - technological risks associated with the functioning and development of the telecommunications infrastructure, technological innovations as well as the convergence of technologies; - other risks and uncertainties. For a more detailed discussion of these and other factors, see the Company's Annual Report and the Company's other public filings. Many of these factors are beyond the Company's ability to control orpredict. Given these and other uncertainties, readers are cautioned not toplace undue reliance on any of the forward-looking statements containedherein or otherwise. The Company does not undertake any obligation torelease publicly any revisions to these forward-looking statements (whichare made as of the date hereof) to reflect events or circumstances upon theannual report publication or to reflect the occurrence of unanticipatedevents, except as may be required under applicable laws. Note: This announcement contains inside information.Full name and position making the announcement - Pavel Nezhutin, Directorof Corporate Governance Department. [1] International financial reporting standards. [2] The digital segment comprises broadband, pay-TV, VPN, VAS and cloudservices [3] Company data, estimates from the analytical agency TMT-consulting [4] Company data, estimates from the analytical agency TMT-consulting [5] Here and below, please refer to Attachment 1 of this statement for afull definition of OIBDA [6] Here and below, capital expenditure ('CAPEX') comprises cash spent onfixed assets and intangible assets [7] Here and below, FCF is calculated as free cash flow from operatingactivity minus CAPEX, plus proceeds from selling fixed assets andintangible assets [8] Here and below, net debt is calculated as total debt less cash, cashequivalents and short-term investments (other financial assets) [9] Company data, estimates from the analytical agency TMT-consulting [10] Company data, estimates from the analytical agency TMT-consulting [11] Excluding amortisation --------------------------------------------------------------------------- The EquityStory.RS, LLC Distribution Services include RegulatoryAnnouncements, Financial/Corporate News and Press Releases.Archive at www.dgap.de/ukreg --------------------------------------------------------------------------- Language: English Company: PJSC ROSTELECOM 30 Goncharnaya st. 115172 Moscow Russia Phone: +7 (499) 999-82-83 Fax: +7 (499) 999-82-22 E-mail: rostelecom@rt.ru Internet: www.rostelecom.ru ISIN: US7785291078 Listed: Foreign Exchange(s) Moscow Category Code: QRT TIDM: RKMD Sequence Number: 3583 Time of Receipt: 10-Nov-2016 / 12:00 CET/CEST End of Announcement EquityStory.RS, LLC News Service --------------------------------------------------------------------------- 519509 10-Nov-2016UK-Regulatory-announcement transmitted by DGAP - a service of EQS Group AG.The issuer is solely responsible for the content of this announcement.