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QIWI plc. (NASDAQ:QIWI)

Q4 2013 Earnings Conference Call

March 12, 2014 08:30 ET

Executives

Yakov Barinskiy - Head, Investor Relations

Sergey Solonin - Chief Executive Officer

Alexander Karavaev - Chief Financial Officer

Analysts

Bob Napoli - William Blair

George Mihalos - Credit Suisse

Anastasia Obukhova - VTB Capital

Alexei Gogolev - Goldman Sachs

Bob Napoli - William Blair

Anna Lepetukhina - Sberbank

Operator

Good day, everyone and welcome to the QIWI Fourth Quarter and Full Year 2013 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the call over to Mr. Yakov Barinskiy, Head of Investor Relations. Please go ahead sir.

Yakov Barinskiy - Head, Investor Relations

Thank you, operator and good morning everyone. Welcome to the QIWI fourth quarter and full year 2013 earnings call. I am Yakov Barinskiy, Head of Investor Relations. And with me today are Sergey Solonin, our Chief Executive Officer and Alexander Karavaev, our Chief Financial Officer.

A replay of this call will be available until Wednesday, March 19, 2014. Access information for the replay is listed in today’s earnings press release, which is available in our Investor Relations website at investor.qiwi.com. For those listening to the replay, this call was held and recorded on March 12, 2014.

Before we begin, I would like to remind everyone that this call may contain forward-looking statements as they are defined under the Private Securities Litigation Reform Act of 1995. The forward-looking statements involve our expectations of future performance are subject to known and unknown risks and uncertainties. QIWI cautions that these statements are not guarantees of future performance. All forward-looking statements made today reflect our current expectations only and we undertake no obligation to update any statement to reflect the events that occur after this call. Please refer to the company’s most recent perspectives on Form 424B1 filed with the Securities and Exchange Commission for factors that could cause our actual results to differ materially from any forward-looking statements.

During today’s call, management will provide certain information that will constitute non-IFRS financial measures such as adjusted net revenue, adjusted EBITDA, adjusted net profit and adjusted net profit per share. Reconciliations to IFRS measures and certain additional information are also included in today’s earnings press release.

With that, we will begin by turning the call over to Sergey Solonin, our Chief Executive Officer.

Sergey Solonin - Chief Executive Officer

Thank you, Yakov and thanks everyone for joining us today. Our strong fourth quarter results capped a great first year for QIWI as a public company. Our fourth quarter and full year results demonstrate both the value of our truly integrated payment network and the continued execution of our growth strategy by our entire team. In 2014, we continue to build on our position as the leading provider of next generation payment services in Russia and the CIS.

For the year, the number of active Visa QIWI Wallet accounts on our network grew by 35% or 4 million to 15.4 million accounts. Visa QIWI Wallet payment volume grew by nearly 68% in 2013 to RUB265 billion. Our growth not only reflects the strong secular growth trends in the payments market we serve, but also the value we deliver to our customers, merchants and partners everyday.

Turning to our financial results, in the fourth quarter, adjusted net revenue increased 35% year-over-year reflecting strong growth of our Visa QIWI Wallet segment by 108%. We continued to penetrate the rapidly growing e-payments market in Russia and expect the solid momentum we have built in our virtual wallet business to continue throughout 2014. As expected, the growth of our QIWI Distribution business was affected in the fourth quarter by a decline in advertising revenue primarily due to the changes in customer mix and consumer banking landscape, which we discussed with you on our last quarterly call.

Looking to 2014, we expect to launch new advertising products, which we believe will compensate throughout advertising clients through the second half of 2013. Adjusted EBITDA in the fourth quarter grew 30% year-over-year and our adjusted net profit increased by 33%. In the fourth quarter, we announced consolidation of 100% in Blestgroup Enterprises. Blestgroup holds a long-term contract on terminal placement in over 1,200 spaces of X5 retail network in Russia. This still further straightens our QIWI Distribution business by providing our agents with some of the best locations across Russia.

For full year 2013, we delivered revenue of RUB6.17 billion and adjusted EBITDA of RUB2.98 billion, up 48% and 61% respectively from its prior year. Our adjusted net profit of RUB2.17 billion was up 66% and our fully diluted adjusted net profit per share was RUB41.44. As you saw this morning we also announced that our Board of Directors recommended a dividend of RUB0.32 per share to be approved by Annual General Meeting. Our dividend payment is a reflection of QIWI’s significant financial flexibility supported by our strong free cash flow and balance sheet. We remain committed to the prudent return of capital to our shareholders.

Now, I would like to briefly discuss with you the current Anti-Terrorism Legislation initiatives in Russia. First and foremost, let me point out that we welcome any measures aimed effectively fighting terrorism. We have and we will continue to always help that we can for anti-terrorist activities in Russian Federation. QIWI is open to any form of cooperation with Russia’s legislative bodies and with the professional community to help develop a proper legal framework of a safe and transparent payments industry in Russia.

Regarding recent developments the first reading on the proposed bill took place on February 28 where a Duma committee has discussed the current plan – language of the document and provided their comments. The financial market community has 30 days to amend the document so that it accounts for the simplification of identification procedures required for the usage of electronic payments system and potential removal of limits for socially important payments. We expect the second reading to take place at some point in April where the financial market community will present the proposed changes to the bill.

Looking forward in 2014 we remain focused on the execution of our growth initiatives which we discussed earlier. At the same time we will continue to invest in our user base through a number of marketing activities that we have initiated in the fourth quarter of 2013 in order to support continued growth of our business in 2015 and beyond. We will continue to leverage our leadership position, unique network, differentiated value added services and key business partnerships to expand the number of participants to our network, increase the utilization of our services and continue to drive the adoption of Visa QIWI Wallet.

I will now turn the call over to Alexander who will take you through our financial results in more detail. Alexander?

Alexander Karavaev - Chief Financial Officer

Thank you Sergey and good morning everyone. As Sergey discussed earlier QIWI delivered strong financial and operating performance in the quarter and year. I will spend sometime going through our fourth quarter and full year financial results in more detail and then conclude by reviewing our financial outlook for 2014. Adjusted net revenue increased by 35% to RUB1.7 billion, up from just under RUB1.3 billion in the fourth quarter of 2012.

Adjusted net revenue growth excluding revenue from fees for inactive accounts increased 24% compared to the prior year. By reporting segment, QIWI Distribution net revenue declined 4% to RUB807 million. The decline in net revenue was mainly driven by 26% decline in advertising services revenue, partially offset by solid 10% growth in payment volumes at our kiosks and terminals to approximately RUB145 billion. The decline in advertising revenue was mainly attributable to lower revenue from our bank partners which we discussed with you last quarter.

Moving to Visa QIWI Wallet, Visa QIWI Wallet net revenue more than doubled to reach RUB859 million. Revenue growth was primarily driven by the following three factors: First, an increase in active accounts and payment volumes. We increased our active Visa QIWI Wallet accounts by 4 million or 35% versus the prior year to 15.4 million accounts. Our Visa QIWI Wallet payment volume grew 47% to reach RUB78.6 billion in the fourth quarter.

Next, an increase in net revenue yield, Visa QIWI Wallet net revenue yield was 1.09% in the fourth quarter, up from 0.77% in the prior year period. The increase in Visa QIWI Wallet net revenue yield was driven mainly by an increase in volumes, in payment volumes associated with higher revenue generating transactions such as e-commerce. Last, higher customer fees from inactive accounts, these fees totaled to RUB157 million in the fourth quarter, up from zero in the prior year period. While we expect to continue recognizing this revenue going forward, we anticipate though that inactivity fees in 2014 will affect revenues to a lesser extent as compared to this year.

Moving to expenses, we have generally continued to experience positive operating leverage in our business, which affected our EBITDA and net profit. Adjusted EBITDA was RUB733 million in the fourth quarter, up 30% compared to RUB565 million in the prior year. The increase in adjusted EBITDA was primarily driven by revenue growth and continued operating leverage in the business partially offset by the investment in marketing and advertising activities as well as certain other non-recurring items such as reorganization costs, primarily consisting of severance payments and expenses associated with relocation to the new office building.

Adjusted EBITDA, excluding the effect of revenue derived from inactive accounts was RUB596 million, up 5% as compared to the prior year. Although we need to add back the non-recurring items that I just mentioned as well as the loss incurred of the results of the unauthorized activity in our system that we mentioned in our Form 20-F. Adjusted EBITDA would grow 52% year-over-year and the adjusted EBITDA margin would grow to 56.2% as compared to 48.6% in the previous year. Adjusted net profit was RUB567 million, up 33% compared to the prior year.

Turning to the summary of financial results for full year 2013, total adjusted net revenue was RUB6.2 billion, up 48% compared with 2012. QIWI Distribution net revenue was RUB3.2 billion, up 12% from the prior year driven primarily by annuities and payment volumes. Visa QIWI Wallet net revenue was RUB2.9 billion, up 132% predominantly driven by increases in active wallets and payment volumes, higher average net revenue yield and higher fees from inactive accounts. Adjusted EBITDA for full year 2013 was almost RUB3 billion, up 61% from 2012 driven by top line growth and continued operating leverage in our business. Adjusted net profit was RUB2.2 billion, up 66% from 2012 and adjusted net profit per diluted share was RUB41.4.

Finally, as Sergey mentioned, we announced today that following the determination of fourth quarter 2013 results, our Board of Directors has recommended a dividend of $0.32 per share to be approved by Annual General Meeting. This is in line with our policy to distinguish all excess cash to our shareholders in the form of dividends.

Now, we will review our financial outlook. We reiterate the mid-term guidance we provided to you during our IPO, adjusted net revenue growth of 20% plus, continued modest adjusted EBITDA margin expansion, and adjusted net profit growth of 25% plus. Within the framework of our mid-term outlook, for 2014, we currently expect adjusted net revenue to increase by 20% to 22%. Our guidance is based on more secular trends in electronic payments and e-commerce and continued adoption of our Visa QIWI Wallet by new customers. Based on our 2014 revenue growth outlook and our expectations for continued modest margin improvement, we expect adjusted net profit to increase by 25% to 27% over 2013. We are pleased to note that even though 2014 is the year when we start to heavily in our consumer base on new products, we are confident to deteriorate our mid-term guidance in respect of 2014.

With that, operator, please open up the call for the questions.

Question-and-Answer Session

Operator

Thank you. At this time, we will be conducting our question-and-answer session. (Operator Instructions) Our first question is coming from the line of Bob Napoli with William Blair. Please proceed with your question.

Bob Napoli - William Blair

Thank you. Good morning or good afternoon your time. The question on your guidance, first of all, nice execution in the quarter, with the anti-terrorism legislation, has that resulted in any slowdown in momentum in the business in the first quarter? How should we be thinking about the first quarter trends versus the fourth quarter, do you expect growth, so is there any effect on your business and what do you have in your guidance, what are you assuming the outcome of that legislation is in your guidance?

Alexander Karavaev

Thank you very much for your question. So far we have not really seen any effect of the new legislation on the markets. And basically as Sergey said in his speech, we will expect that the law will be basically adopted in a way that will likely not damage the industry landscape. As for the guidance we are basically counting on certain slowdown in the consumer area. Although as we iterated a few times in our earnings calls, we are basically a little bit under-monetized, I would call it as we believe that we will have a lot of levers to pull in order to basically to complete the guidance that we are providing.

Bob Napoli - William Blair

Okay. Then a question on, just on I guess a significant customer Tinkoff to, I think their business is slowing down and they also talk about forming their own wallet although I think it’s only focused on P2P. First of all, how significant of a customer is Tinkoff and do you expect a slowdown from their business in 14, from business from Tinkoff?

Sergey Solonin

Okay, go ahead Alexander.

Alexander Karavaev

(indiscernible)

Sergey Solonin

Okay, so Tinkoff is not a significant customer in our portfolio, so I think he is less than 1% or something like that. And we actually we talked recently with Oleg and we think that he will be in the next year quite stable for us. So we already calculated for this effect in our guidance.

Bob Napoli - William Blair

Great. And then last question, I will turn it over, is just on the advertising, you said advertising was 8% of revenue in the fourth quarter, what does that – was that a year ago and what do you expect to spend on advertising in 2014?

Alexander Karavaev

We actually expect that we – that likely we will able to compensate the advertising revenues – to compensate the outflow of the advertisers that we experienced in Q3 and Q4. To achieve that we are now developing and launching a few new products that will target actually different segments not just the banking segment. So we were not really bullish on advertising revenues. But given the – I mean the point of the life cycle of the company we are still testing the waters of what advertising model will be the appropriate going forward. So we will see how those products will perform and as soon as we see traction, we certainly will launch them on scale. So all-in-all, we have built in our guidance kind of the moderate increase in advertising revenues in 2014.

Bob Napoli - William Blair

Okay, that’s very helpful. But I am sorry to confuse you, but I was asking on the expense side, you had any investment your operating expenses were up in the fourth quarter because of…?

Alexander Karavaev

Okay, understood, yes. So basically what we started to spend in 2014, it’s not nearly the advertising though advertising is a part of that. But it’s more kind of a – all kinds of studies on the consumer behavior on the – I mean partners how the consumers are using our system and so on to basically better understand on how to approach them both from the standpoint of acquiring new consumers and secondly to convert the newcomers into the loyal users where we get the majority of revenues. Having said that, that expense that we incurred in fourth quarter 2013 is more or less non-recurring, I would expect going forward in 2014 we feel really plan for a substantial investment in advertising and marketing that will be more targeted the acquisition of new consumers in those segments that we consider to be key for us this year.

Bob Napoli - William Blair

Okay. Thank you very much.

Operator

Thank you. Our next question is coming from the line of George Mihalos with Credit Suisse. Please proceed with your question.

George Mihalos - Credit Suisse

Hey guys. Thanks for taking my questions. Can you hear me okay?

Sergey Solonin

Yes.

George Mihalos - Credit Suisse

Okay, great. So maybe just sort of starting off on the distribution side, you commented about some slower advertising growth. How should we be thinking about the revenue yield and distribution throughout the year, will it be at a similar level for the fourth quarter, first half of the year and then expand in the back half given some of your investments?

Alexander Karavaev

Yes. That’s basically how we think about that. Again I would basically stress again that we’re not guiding on the net revenue yields of any specific segment. But how we see that will likely going to be keeping the net revenue yield and distribution on a stable level and probably will experience some slight increase towards the end of the year.

George Mihalos - Credit Suisse

Okay, okay. That’s helpful. And then you commented about lowering activity fees in 2014 versus 2013, can you just remind us what sort of the normalized rate of inactivity fees are? They have been a little bit elevated I think the last two or three quarters.

Alexander Karavaev

Yes. That’s exactly right. So basically Q4 we already have started to come to something that with this yield is a normalized level. So historically we experienced around from RUB30 million to RUB40 million per quarter of inactivity fees. What we believe on distributing in 2014 is probably around the same amount. So per quarter we really would expect something from RUB30 million to RUB50 million of inactivity fees.

George Mihalos - Credit Suisse

Okay, that’s helpful. And then also just for modeling purposes as we think through the increased investments in the business that you’re making. I assume we should be thinking about margin expansion steering again a little bit more to the back half of the year relative to the first half. Is that how you’re thinking about it?

Sergey Solonin

Yes. This is exactly right as well. Yes, we – I mean it’s just or above the seasonality, so as you know that the third quarter and fourth quarter are usually the strongest one from a standpoint of revenue. And that we believe we’re going to experience this year as well and that’s exactly right. We maybe expect some slight increase in the margins towards the end of the year.

George Mihalos - Credit Suisse

Okay, great. And just last question from me guys. You’ve been sort of growing wallets at roughly about 1 million active a quarter. That seem to slowdown a little bit in the fourth quarter at least sequentially I think you’re up about 0.5 million. Anything to read into that or is there anything different in the fourth quarter that impacted the business or was it just timing?

Sergey Solonin

Not really actually. It’s – I mean how you see that I mean look the whole growth in the number of wallets that we experienced last year and in 2012 were basically driven by the product. So virtually we’re bringing the new products to the market and that’s primarily was due to word of mouth whenever we will have the kind of comprehensive advertising company of QIWI Wallet. So and what we think we’re probably approaching kind of situation from the standpoint of financial organic growth for QIWI Wallet. That’s why again I’d like to stress we’re planning a whole lot of activities in 2014 to attract new consumers and to kind of those who we are attracting to be the loyal users for QIWI Wallet. So again we’re not grading on the number of wallets but according to our estimation the rate of increasing the number of QIWI Wallets in a quarterly basis will still be quite high throughout 2014.

George Mihalos - Credit Suisse

Okay, thank you.

Operator

Thank you. (Operator Instructions) Our next question is coming from the line of Anastasia Obukhova with VTB Capital. Please proceed with your question.

Anastasia Obukhova - VTB Capital

Hi, this is Anastasia Obukhova. The question is regarding your guidance, what is the difference if you had to provide it in the start of the year, so that said that’s the recent macro – weakening macro indicators impact and the number that you expect for the full year both for the top line and the bottom line, so that is now you expect. So would you be more positive for example in the beginning of the year? And the second question regarding guidance, the other thing includes the potential impact from the launch of your software for example as part of the potential agreement with Visa? And do you expect that you also might see some positive improvements suggested by market participants, for example, for the document that is being prepared for the second reading, can it be – can they support the environment as well for you? Thanks.

Sergey Solonin

Okay, thank you very much for your questions. On the third question, I mean, look when you do not really believe that the guidance would be changing much, we were providing that like months ago. So what we believe again historically our business proves to be not cyclical. We are dealing really with the kind of future amount of consumers and usually small checks and the elasticity of those payments is quite high. So usually we have not really experienced kind of slowdowns due to the overall economic environment.

On the second question, that’s a very good one. So, the guidance does not include any effect of any new strategic alliances or actually the revenues driven by the existing strategic alliances. So everything which I mean any revenues that might come in addition to basically what we have in our guidance due to any strategic alliances or new partnership will be on top of it. Though I would like to stress that the projects that we are currently developing together with Visa and some other strategic partnerships, they are more long-term. So they likely will not see any tangible financial results in 2014. So it’s rather a story about 2015 and beyond.

On the competition side, basically it does not include any new competitors on the market, but again, we see the situation as of now in a way that we likely do not really have any competitive pressure. And basically you may actually compare to the eminence of some other companies that you would think can be the competitors of QIWI like PayPal and Yandex. And the market is so huge that has not really yet evolved the competition. So we do not really feel any competitive pressure even if some new participants and new entrants will enter the market like PayPal did few months ago. We are just not feeling any competitive pressure like we will not have any this year.

Anastasia Obukhova - VTB Capital

Okay, thank you very much.

Operator

Thank you. Our next question is coming from the line of Alexei Gogolev with Goldman Sachs. Please proceed with your question.

Alexei Gogolev - Goldman Sachs

Yes, good afternoon. Greetings for presentation. I have the following two questions. My first question is related to your potential partnership with one of the mobile operators, could you please update us on what’s happening with this partnership? When should we expect it to materialize? And do you have any understanding of the potential impact on your financials and number of active e-wallets? That’s the first question. And my second question is related to the dividend policy, so do you expect any changes in your dividend policy or you would prefer to stick to almost 100% payout in the foreseeable future? Thank you.

Sergey Solonin

Thank you very much for your question, Alexei. So, on our mobile operator partnership, we are still in negotiations that I hope will continue for maybe few weeks to months. We are in negotiation of some commercial aspects of the deal. So we are not finished. And as you know, part of this deal is Visa, so we are also talking to Visa and talking a lot about this partnership. So hopefully, we will have something to say on our first quarter earnings call as I said before. And on the potential impact on our revenues, again as I said before, we are not expecting very big growth in our revenues with this deal. For us, this is more the deal to understand how to work with operator to make few new products for customers and for merchants and to have the result of this project on the table, so that we can discuss future growth with other operators and go maybe abroad with these products. So for this case I would not expect really a big growth than we right now we were not putting any expectations on additional clients in our guidance. So that – that’s (indiscernible).

Alexei Gogolev - Goldman Sachs

Okay, understood. Regarding dividend policy?

Sergey Solonin

Yes. To your second question on dividends as for now we expect that we will pay out all the dividends that we historically paid for our shareholders. So as we announced earlier we will distribute dividend every quarter and then maybe in the end of the year will make some corrections so that we will be able to distribute as much as possible.

Alexei Gogolev - Goldman Sachs

Okay, excellent. And just one last follow-up question on these advertising revenues, could you please state in millions of rubles, what was the advertising revenue in absolute terms in the fourth quarter in adjusted net revenue terms?

Alexander Karavaev

In Q4 it’s been RUB88 million.

Alexei Gogolev - Goldman Sachs

Okay, I understood. Thank you.

Operator

Thank you. The next question is a follow-up question comes from the line of Bob Napoli with William Blair. Please proceed with your question.

Bob Napoli - William Blair

Thank you. Just the – are you going to give – change your – the structure, the format of your presentation beginning in the first quarter I think as you had discussed a year ago and breaking out more by product if you would? And I was wondering if you could tell us how much – what percentage of your payment volume was e-commerce this quarter versus last quarter?

Alexander Karavaev

Yes. That is still our plan and we’re working on it. So like announced in Q1 results will be already issued in the new format where we will not be broking down the volumes and net revenue by business units, by market segments. So it’s in process.

Bob Napoli - William Blair

Okay. Can you give me any feel for e-commerce, the rate of growth of e-commerce, what percentage of the business is e-commerce today?

Alexander Karavaev

It’s – so it’s currently I mean it obviously depend on how you define e-commerce. So we define it very broadly so including all the virtual goods. So all-in-all it should be around a quarter as of now and it’s one of the fastest growing. I quite frankly would not like to kind of to predict I mean we just will give you all the data in the Q1 results.

Bob Napoli - William Blair

Okay. And that’s about a quarter of the QIWI Wallet volume?

Alexander Karavaev

Yes. That’s exactly right.

Bob Napoli - William Blair

Okay. And just one last question the kiosks you haven’t grown the kiosks for a while, they have been relatively flat and I think I sense some change in your strategy that you’re maybe thinking about growing the number of kiosks again, is that correct and why is that?

Sergey Solonin

Yes. This is correct. And we expect that we will grow kiosks business in 2014 as soon as we understand now that our proposal on the market is really much better than any of the competitors. So we right now feeling some demand on the kiosks, on the hardware level, so some kiosks being brought and we expect some growth – it will not be that big but I hope that it will be close to 10 plus percent.

Bob Napoli - William Blair

10% growth. That’s a lot. I mean that’s kind of a change in strategy, Sergey. What promoted that change in strategy?

Sergey Solonin

Well first of all if you – as you saw this year and the end of the year we closed the deal with (indiscernible). We’re preparing few more deals this year. So we’re not operating these kiosks but we’re helping our agents to have good location on the federal level and QIWI is the only company I think right now in Russia if we can operate on the federal level with this quality and support.

Bob Napoli - William Blair

Great, thank you.

Sergey Solonin

Thank you.

Operator

Thank you. (Operator Instructions) Our next question is coming from the line of Anna Lepetukhina with Sberbank. Please proceed with your question.

Anna Lepetukhina - Sberbank

Yes, hello. I have a question on the draft law. I do understand that it’s too early to talk about the implications, but maybe you made some internal estimates. So if we assume that changes are introduced to the draft law and only person-to-person transactions will be banned for non-personalized account, how it will impact your revenues growth and also expenses? And also do you intend to extend the number of partners, where people can personalize accounts and how it can impact your expenses?

Sergey Solonin

Well, thank you for your question. It’s as you say, if we see the changes that will allow people to – that will put (indiscernible) for peer-to-peer payments. And altogether payments will be as they are now. So we will not have any changes in our revenues, because for today we are not charging (indiscernible) payments in our system are free of charge. So even in the case that we don’t expect that the consumer will have hard identification, so he will have to come to the office and show his passport, come himself. So even in this case we will not have big impact on our revenues. So we will not have any impact on our revenues although we will see the slowdown on our wallet peer-to-peer payments volumes. In this case, we think that for those people, for those customers that we have today will already have enough points, where thousands of points around Russia where he can come and where he can register. Although I don’t think that it’s not to come below, I am hoping that the changes will foresee the soft type of identification and the consumer will have other means to identify himself. So in this scenario, we will not have any impact of this law.

Anna Lepetukhina - Sberbank

Sorry. And I have a follow-up. So, to understand correctly that you do not plan to expand the number of partners and also, I mean, you do not generate revenues from peer-to-peer transactions, but at the same time you generate revenues when people transfer money to bank accounts basically for money transfers. So as a result of this there should be some impact at least on your money transfer payments, what about these payments?

Sergey Solonin

Well, money transfers, is a really very small stream for today. So we are – if you look at money transfer business, we are a little 1% market share. So this is very small for us. Although yes, it may impact money transfers I think, but again, you don’t have today, so if your alternative is to go to any money transfer center, then it is also possible that you will have the center for registering and showing the (indiscernible). And we will have some several programs on money transfer here. So we think that we will be through all the strategic partners we have already today.

Anna Lepetukhina - Sberbank

Okay, thank you. And one more question if I can and what was revenues from advertising in the fourth quarter of 2012?

Alexander Karavaev

Just one second please, it will be RUB18 million.

Anna Lepetukhina - Sberbank

Thank you.

Operator

Thank you. It appears we have no further questions at this time. And this does conclude today’s teleconference. You may disconnect your lines at this time and thank you for your participation.

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