Qiwi PLC (QIWI) 2014 Q4 法說會逐字稿

Greetings and welcome to the Qiwi fourth quarter and full year 2014 earnings conference call. (Operator Instructions). As a reminder this conference is being recorded. I will now turn the conference over to Mr. Yakov Barinskiy, Head of Investor Relations. Thank you, Mr. Barinskiy. You may now begin.

Thank you operator and good morning everyone. Welcome to the Qiwi fourth quarter and full year 2014 earnings call. I'm 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 Thursday, March 19, 2015. Access information for the replay is listed on today's earnings press release which is available on 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. These forward-looking statements about our expectations for 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 annual report on Form 20-F 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 revenues, 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.

Thank you Yakov and good morning everyone. Thanks for joining us today. Our fourth quarter results remained strong despite the general macro situation in our core markets, which once again proves the value of our integrated network of physical and virtual distribution channel to our merchants, consumers and partners.

In 2014 we continued to strengthen our market position, establish new strategic partnerships and further increase our product awareness across both physical and virtual distribution channel.

Our total payment volume increased by 15% to reach RUB645b, while payment volume in three key market verticals grew even faster by 35% to reach RBU335b.

Our results demonstrate the resilience of our business model to the macroeconomic slowdown in Russia. We will continue to seek new opportunities to gain new market share in the existing markets by introducing new partnerships, introducing new products and services to fuel growth in the future.

As of December 31 we had 17.2m Visa Qiwi Wallet accounts, a growth of 1.8m as compared to the prior year. Also, we have further broadened the coverage of our physical distribution network reaching more than 181,000 kiosks and terminals, which adds to our dominant position in this channel.

Turning to the numbers. In the fourth quarter, total adjusted net revenue increased 45% to RUB2.5b. Payment adjusted net revenue was up 41%, driven by strong payment volume and net revenue yield growth in our ecommerce and money remittances verticals.

The financial services vertical continued to suffer from difficulties in the Russian banking sector, which resulted into a decrease in payment volumes.

Telecom vertical trends remained largely the same, with slight decrease in payment volumes. The net revenue yield dynamics driven by other market yield comparison -- compression.

Adjusted EBITDA grew 24% in the quarter, predominantly affected by disproportionately large marketing and advertising expense.

Adjusted net profit grew by 5%, largely affected by the same factors as adjusted EBITDA.

For full year 2014 our adjusted net revenue, adjusted EBITDA and adjusted net profit were RUB8.8b, RUB4.8b and RUB3.5b respectively, thus demonstrating growth at 43%, 62% and 61%.

Our Board of Directors decided to refrain from paying out the dividend this quarter primarily due to the difficult situation in the banking sector which forces us to maintain a buffer in order to secure our relationship with large merchants. We view this decision as temporary and seek to return to our usual dividend distribution pattern once the situation stabilizes.

Now I would like to walk you through some important recent developments. In November we opened up our network for Russian eBay shoppers. We view this partnership as truly unique and highly important with the eBay brand and positioning in the Russian ecommerce space. We feel it serves as recognition of the success Qiwi has achieved to date and will benefit us in establishing relationships with international players in the future.

Also in November we acquired Money.Mail.Ru, a payment to the eCom service and Omni advertising group project. With that deal happening, we now have direct access to such well-known platforms as Vkontakte, Odnoklassniki and Moi Mir as well as other new advertising services, primarily online games. We believe that this deal will allow us to leverage advertising channel and further increase awareness to our product and attract new users to our network.

Just recently we have announced a strategic partnership with MegaFon which we see as a big achievement in the first step in rolling out our mobile network update model. We worked for almost a year on this project. I'm very happy with the result. I'm sure that continued leveraging our services will be fully appreciated by the users and will drive growth.

With this I will turn the call to Alexander who will take you through our financial results in more detail. Alexander.

Thank you, Sergey, and good morning everyone. As Sergey described, we delivered a strong financial and operating performance in the quarter and the year. I will start with a discussion of our fourth quarter and full year financial results in more detail, and then conclude by providing the guidance for 2015.

Total adjusted net revenue increased by 45% to reach RUB2.5b, up from RUB1.7b in the fourth quarter of 2013. Total adjusted net revenue growth, excluding revenue from fees for inactive accounts, increased 46% compared to the prior year.

Payment adjusted net revenue increased 41% to RUB1.8b, up from RUB1.3b in the prior year as a result of the strong revenue growth in our ecommerce, financial services and money remittances verticals which grew 73%, 45% and 104% respectively.

Revenue performance was driven by solid payments volume growth and growth in ecommerce and money remittances verticals.

Our financial services vertical continued to suffer from the situation in the Russian banking sector which resulted in slight volume decrease as compared to the fourth quarter of 2013.

Net revenue yields across three key verticals continued to grow partly because of currency conversion revenue growth, partly due to decreased agent fee for Visa Qiwi Wallet top-up which took place in mid-year 2014.

Telecom vertical trend remains unchanged with a slight decrease in both volumes and yield driven by a general yield compression in this market.

Other adjusted net revenue increased 60% to RUB630m, up from RUB395m in the prior year. Other adjusted net revenue, excluding inactivity fees, increased 73%, mainly driven by growth in the interest income, cash and settlement services and the new revenue stream coming from sale of kiosks, partially offset by declines in advertising revenues and our ongoing investment in call center which we include in other net revenue.

Moving to expenses. Adjusted EBITDA increased 24% to RUB911m, up from RUB753m in the prior year.

Adjusted EBITDA margin was 37% compared with 43% in the prior year. Adjusted EBITDA margin compression primarily resulted from abnormal high marketing and advertising expenses which disproportionately affected fourth quarter numbers.

Adjusted net profit increased 5% to RUB597m, up from RUB567m in the prior year. Adjusted net profit was largely affected by the same factors as adjusted EBITDA, as well as increase in depreciation and amortization expenses due to our ongoing investment in security and IT infrastructure.

Moving toward full year results. Total adjusted net revenue reached RUB8.8b, an increase of 43% as compared to RUB6.2b in the prior year.

Payment adjusted net revenue increased 51% to RUB6.5b from RUB4.3b in the prior year.

Other adjusted net revenue increased 26% to RUB2.3b, up from RUB1.8b.

Adjusted EBITDA for the full year was RUB4.8b, 62% growth year over year. Adjusted EBITDA margin was 54.5%, which we see as a normal margin level going forward.

Adjusted net profit was RUB3.5b as compared to RUB2.2b in the prior year. Adjusted net profit, excluding inactivity fees, was RUB3b, a growth of 71% year over year.

Now on to our guidance. Despite difficult macroeconomic situation and lower visibility over the potential market environment changes, we are providing the following guidance for 2015.

Both adjusted net revenue and adjusted net profit to increase by 12% to 16% over 2014. As was already noted on the two previous earnings calls, our financial services vertical is most affected by the slowdown and we might see further impact from this throughout the year. With that and certain other factors beyond our control, we reserve the right to revisit our guidance in the course of the year.

We would like to stress that our 2015 guidance does not imply any substantial scale change on the bottom line as a result of our ongoing investments in our key verticals, which includes the traditional consumers, marketing and promotion companies and launch of new products. We feel it is crucial to strengthen our market position this year in order to be prepared for driving future growth once the consumer confidence is back.

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

(Operator Instructions). Georgios Mihalos, Credit Suisse.

Great. Thanks for taking my questions, guys. I wanted to start off, Alexander, on the margins. Obviously, you're looking for revenue growth and EBITDA growth in 2015 to converge, be in line. Can you maybe parse out for us some of the expenses that you think are going to be temporary to 2015 or elevated in 2015 and how we should we be thinking about perhaps those expenses anniversarying at the end of the year and not being in the 2016 expense flow.

Thanks for the question, Georgios. On the scale effect in 2015, well, what we really expect to do is actually in that shaky market environment to increase our market share, especially in key verticals where we see the most potential. And those expenses primarily will be concentrated around the marketing and advertising expenses. So we will continue to launch the promotion campaigns as well as advertise our services across all the channels that we believe are efficient to gain more market share, more consumers in ecommerce, financial services, money remittance.

As for all other expenses, we do not really expect any substantial change in trends in 2015.

Are there expenses built in there and perhaps not corresponding revenue tied to the telco deal, the MegaFon deal, that you announced, meaning sort of upfront investment that you're laying in now that perhaps will go away or you don't have a corresponding revenue stream right now to offset it.

It is partially true. So far, once we enter the MegaFon deal, we have to say that with that project expenses are not that crucial. And, as we told the public previously, that project indeed will not bring any substantial revenues, at least from the start of the project. So we expect the revenues to be visible in several markets as soon as we approve the model.

And, again, we really would concentrate around these verticals. I mean the marketing spend. So the advertising around the verticals where we see the most potential and you've seen the growth in money remittance, in ecommerce in 2014. We expect the trend to continue in this year and beyond.

Okay. Just the last question from me. The net revenue yield continues to be very, very healthy on the ecommerce side. That continues to increase. I think it is north of 3% this quarter. How should we be thinking about that playing out in 2015, meaning should we be thinking that there's some pressure on the yield as newer forms of volume come up, or come into the system?

Yes. Generally speaking, yes, we would really see the net revenue yields across all categories and on ecommerce close to the ceiling. So we would not really expect any further substantial expansion in 2015. And we as well would not really expect any substantial reduction in the yields. So I think the level we've reached so far is normalized for each of the categories.

Okay. Great. Thanks guys.

Thank you.

Robert Napoli, William Blair.

Thank you and good afternoon in Russia. Good morning here. Just on your 2015 guidance, some thoughts around maybe, Alexander, the growth of the financial services vertical in your guidance. Obviously the growth slowed down and you had highlighted that that would -- again is the biggest risk area on the banking side. In your guidance, are you expecting substantial declines from that vertical?

We would not really expect a substantial decline, but we obviously would expect the slowdown in growth. So we, on the conservative side, would really expect that the volumes there would be flat so will not see any substantial growth in 2015.

Okay. And then you suggested -- did you guys -- what acquisition did you make during the quarter? It wasn't clear to me what -- at the time you had acquired -- made an acquisition, but I didn't see that announced.

It wasn't really a huge acquisition. We acquired a project called Money.Mail.Ru from Mail.Ru.

Yes, right.

It's an in-house payment system and we reported it separately.

Okay. And then are you seeing anything different on the competitive front in the -- currently.

Well, no. Hi Bob. No, we don't see any really big changes or any pressure. More of it we see that we are still increasing the quantity of terminals so we are quite bullish and aggressive in terms of the market share.

Okay. And then on MegaFon, what is the game plan with the MegaFon Qiwi Visa Wallet?

Well, MegaFon gives access to their customers. So to really monetize this success you have to either cross-sell to these customers some of the services that Qiwi already has, or find new partnerships, or increase old partnerships on the merchant side. So this is a two side equation. So, first of all, we -- by this contract we solve the equation on the customer side partially so we have access to a much bigger customer base. And then it depends how we execute with merchants and how we give value to those customers so that they start to use all our other services.

And we are quite conservative right now on that. So we are trying to figure out the formula how it will be in the future, and then we will be able to tell you exactly what will be happening.

Great. Thank you.

Alexander Vengranovich, Otkritie Capital.

Yes, hi. A couple of questions from my side. So, first of all on your profitability guidance. Basically, you expect same profitability in 2015, but going forward should we also look -- should e also expect to have a strong operating leverage from your side? As far as I understand, you will invest a little bit more into the promotion of your products next year so -- this year 2015. But, after 2015, in case the crisis is over, should we expect that the share of SG&A to your net revenue should probably normalize at a bit lower level? So this is the first question.

And the second question about dividend cancellation. Is there anything specific behind it? Of course, I understand that the economic situation is not so good, but at the same time you don't have any leverage and you have quite a good cash cushion. What's behind the conservative policy regarding the decision not to pay the dividend? Maybe you're preparing some acquisition or whatever. Any detail will help.

Okay. Thank you for the questions. On margins going forward, yes, sure that is exactly right. So, generally speaking, that business we are running is very scalable. So we will expect 2015 being, let's say, a year of investment. And we have started to invest in the consumer base and the product heavily in 2014. Generally, as soon as we believe the crisis is over and consumer confidence is back, then we would expect further expansion of margins. So we obviously would expect a potential scale effect to kick in again.

On the dividend, look, we do not really have anything specific in mind. We're just, let's say, monitoring daily the liquidity of the Company. And what we see on the market is that basically, most of the banks in Russia, as well as larger businesses, they're also they already tried to limit their credit risk and that is leading to a liquidity crisis, so to say, meaning that big businesses would not usually tolerate large accounts receivable or credit risks and so on.

And that, I think we've been quite good in managing that so far. So we have a good relationship with all the merchants. But, in certain cases, to secure our relationship with the large merchants, they would require larger pre-payments to secure their credit risk, which is usual. And we just would like to have, for the next couple of quarters, probably the cash cushion to manage those type of things.

Okay. Thank you.

Ulyana Lenvalskaya, UBS.

Thank you and good afternoon, gentlemen. My first question will be about money remittances segment. Could you please comment where you see the market dynamics currently and your market share?

Okay. We -- I don't think that we publicly report our understanding of the market share. So we -- I think you may find the research for the Central Bank and their estimation of the market. If you take that research into consideration, then we would see our market share is something between 3% and 4% of total money remittance. That share has grown quite substantially because last year, I mean 2013, our share was less than 2% and -- which would seem quite a substantial expansion of the market share in 2014.

Again, let's see how the market develops. We, based on the statistics we have so far, we do not see any substantial changes in the dynamics. And we would want to continue executing our strategy to gain market share in that segment.

Thank you. My second question is about your current net cash position. Could you please identify what should we take as the Company's net cash position currently given the amount you received from the most recent FPO?

Essentially, we have not actually spent anything substantial out of the proceeds from FPO, so we still keep that amount as a cash cushion. That would potentially reserve for potential M&A and/or investments in new products.

And, the good way -- actually, on top of that, the good way to look at our net cash position would be to basically look at the fourth quarter net profit that we decided not to distribute as a dividend, kind of additional cash cushion to what we have on top of that FPO proceed.

Fine. So I should take the fourth quarter net income and add the sale proceeds, right?

Correct, correct. That is more or less correct.

And are you currently considering the buyback, because I still don't quite get the logic of not paying dividends and not doing buybacks and just sitting on a cash pile.

Well, we want to keep the cash cushion until the situation resolves in the banking segment. So we are -- we want to be on the safe side so -- and prepare for the worst, so to say. So we will see, in the first two quarters I think, what's going to happen. If the situation will not be worse, dramatically worse I mean, then we will come back to our normal distribution policy.

Okay. Thank you. And the last question from me. What should we expect in terms of the number of terminals this year? Do you expect any new addition?

The number of kiosks?

Terminals.

Yes, that's right.

Well, we expect that we will grow in this area. So right now we do plan quite conservatively, but still it is a substantial growth. And we have seen that this growth was already -- had already started in 2014. So we think that this growth will more or less continue.

Thanks. Very helpful.

Thank you.

Robert Napoli, William Blair.

Thank you. Just a follow up. I'd like to understand a little bit more of the remittance business which is growing so well. I think the other remittance companies that work with Russia, MoneyGram and Western Union have been -- they have talked about a slowdown in that market and you continue obviously to gain share. But I was wondering how -- what percentage of that business is -- is it all done from the kiosks? Is it -- so it's all -- so it's send -- I mean what is the mix of send and receive? And do you have a mobile money transfer remittance strategy that you're working on?

Thank you, Bob. Well, yes we do have some strategies that are on the mobile side of course. So we think that this year we will introduce some products in this area. But, generally, it is, of course, driven by a very low market share. So having this amount of terminals, of course, we think that our normalized market share should be bigger than we have today.

So -- and we think that we will develop this market share in 2015. And all of this, of course, on the send side. So we are not -- we're not on the receiving side yet. So we are managing the sender side in this business.

And which corridors are the most active for you? Can you tell us that?

I think the corridors -- they would be pretty much usual to what we would see in the key money remittance in for Russia for, let's say, the -- approximately half of them, a bit less than a half would be Russia to Russia. And then the rest would be from Russia, to CIS countries.

Okay.

So those two are key. The players you just mentioned in the beginning of your question, so MoneyGram and Western Union, they are primarily doing their business in the corridor from Russia to the Western countries and that, of course, is not particularly large in Russia.

Okay. And then your other sector, the payment volume, what is -- do you have some investment businesses? The payment volume in other shows -- is becoming meaningful. I was just wondering if there's -- whether there's -- is there anything in there that we should be aware of.

No. Generally, those verticals that we show are the focus verticals still for us. So there are no new verticals that we would emphasize on.

And then e-commerce, who are -- I think you work with Alibaba and you mentioned also you've signed a partnership with eBay. What is -- who are your bigger partners? What are -- is it all virtual goods yet today and is there -- what is the strategy on building out the e-commerce portion?

Well, physical goods are growing actually very fast. So small physical goods, but mostly it's the eastern direction. So we think that our business with Alibaba will increase this year, so we have very high growth figures today.

We don't have that big growth figures on the physical goods on the western direction so -- and mostly, it happens because of the big average checks I think. So the average check on the eastern direction is very small. It's like $10 or something like that. So, -- and this segment was not affected by the crisis actually. We see that it increased proportionately to the devaluation of the ruble and increased it further. So we think that people will more likely to go for Chinese purchases, small Chinese purchases or eastern purchases.

Great. Thank you.

Anna Lepetukhina, Sberbank.

Yes, hello. I have several questions. First of all, I wanted to ask about other net revenues which is growing quite fast especially if you exclude the inactive accounts. Just can you probably walk us through what is driving this growth and what should we expect going forward? You mentioned sale of [kiosks]. Maybe you can elaborate on this?

I also wanted to ask to which extent in the fourth quarter you benefited from exchange rate volatility and whether you continue to benefit from it. And can you maybe sort of provide more color in which segment, if possible?

Thank you for the questions. On the other net revenue, the substantial increase in net revenue is not only due to revenue growth, but we introduced a new revenue line there. So we actually incorporated the new business this year. The business that is essentially production of self-service kiosks and the reparation, the repairing of self-service kiosks. So that part of the revenue was not present in 2013 and that is the major reason why you would see such an increase in other adjusted net revenue.

Other than that, the growth would be more or less in line with the volume of growth -- the growth of volume. And that is something that we actually can expect going forward.

On the ForEx volatility, yes, we benefited to a certain extent in Q4, especially in December. So the reason was that we obviously -- it was not really an intention to increase the net revenue, but to really limit our exposure towards currencies, because we are because we are funded, let's say, by rubles and we have to pay to the large merchants like eBay and Alibaba in hard currency. So that's why we were keeping hard currency spreads for quite a while and we had some extra incomes in Q4.

We are continuing to benefit from that to a certain extent in January. Now we see that the volatility is not that high, so we do not really see any abnormal gains in that respect. And the guidance that we've provided actually does not imply any substantial ForEx gains that may occur in the high volatility.

And can I just ask also about Mail Money? During this time that you've started to consolidate it. But, basically, if I look at the number of active Qiwi Wallet accounts, net addition in the fourth quarter was in line with third quarter. So, what was the organic growth, let's say, without Mail Money eWallet.

That's been primarily organic. So Money.Mail.Ru, so that transaction did not imply a lot of new consumer products. Products obviously that have certain active wallets, let's say, that are migrated to our system. But their number is not that significant, so you would not see that as a huge factor.

And generally, the deal itself is not about acquisition of the customer. It's more about the acquisition of the territories where we can have advertisement and where we are with the method of payment on money, on mail.ru transactions (inaudible), expanding the territory of Qiwi towards these segments.

Thank you. And one last question. Can you disclose the size of marketing expenses in 2014?

I say it should be around RUB0.5b, so you can -- we -- I think we are publishing the 20F Annual Report today as well. In the footnotes to the financial statements you will see the full detail of marketing expense.

Thank you.

Thank you.

Matthew Lipton, Autonomous Research.

Hi guys. Good evening. It hasn't come up on the call yet so I just thought I'd ask about it. The terrorism legislation from over a year ago now that obviously impacted some of the wallet registration requirements, is that having any impact on your business now that you've -- it's obviously been in the market for a bit? And then I have another follow up.

Hi Matt. Thanks for your question. Yes, well, we think that it really slowed down our customer acquisition in 2014. Now we are adjusting to the new regulations and we are already collecting some of the data from our partners, so we think that generally the effect has already passed. So we've had this effect in 2014. So if we wouldn't have these regulatory requirements we would grow faster. So it's already embedded into our growth.

Got it. And then I think this hasn't also talked about before. It seems like competition is obviously potentially picking up with some of the other banks like Sberbank and things. So is that requiring you to spend more on developers, or just given the economic situation in Russia is it actually -- do you think personnel expenses will be a little softer in 2015?

No. It's essentially quite the opposite. We do not really feel anything competitive pressure from the standpoint of labor costs. And again let's see how the labor market develops in 2015 especially given that the IT engineers were really scarce resource in the Russian market. But now we feel like we are one of the best employers in that area especially. So we feel that we might have some benefit in that market to really gain the best talent.

Great. And a last one from me. The 40 basis point yield in telecom for the quarter, is that the run rate that you're assuming for 2015 or are you expecting to take another step down? Thank you.

So, that's a good question. Again, I -- we would believe that that is something that should be stable, so we do not really expect any further decline in telecom net revenue. So, our estimation of that in 2015 and probably going forward, that should be around those levels.

Thank you.

Igor Gerasimov, Goldman Sachs.

Hi guys. Thanks for your presentation. Your payment volumes were actually quite impressive this quarter and I just wanted to know your feeling to what extent you attribute your increase in payment volumes and in payment revenues to higher OpEx and higher marketing expenses in the fourth quarter of 2014? And I have one more question after that. Thanks.

Yes, certainly, there is no direct correspondence of the marketing spend in Q4 to the volumes actually. Let's say the big chunk of the marketing spend that we incurred in 2014, especially in Q4, is let's say the brand awareness, building the confidence of the users, as well as for certain promotion campaigns that attract new partners to the Qiwi system. And then those campaigns usually would not convert immediately to the increasing of volumes. So we really expect the effects of that promo and advertising to be visible in 2015.

That's clear. Thanks. And my other question would be about OpEx expenses once again. Your marketing activity accounts for approximately RUB400m according to your press release and what were the sources of pick-up in OpEx in the fourth quarter versus the third quarter? Thanks.

Well, probably it's kind of usual, a bit of inflation of the course towards the year-end. And, on top of that, we actually had certain new line items in 2014, primarily presented by additional costs of, let's say, running Qiwi as a public company. So we obviously were first time through to give the Sarbanes-Oxley audit that year. So we had to implement a system of internal controls, higher additional resources in the financial area, in the financial reporting department, internal audit and so on, just to comply with the regulation. Those expenses, they probably are the second largest factor of the increase in OpEx in Q4.

Very clear. Many thanks.

Thank you.

Olga Naydenova, BCS.

Hi guys. I have a couple of questions. One is again on the money remittances segment. From what I see on CBR statistics, the volume of money remittances, at least to the outside Russia, is dropping dramatically, more than a third quarter over quarter in dollar terms, which calculates to almost 20% in ruble terms. How do you see that market generally as you penetrate it and what do you plan? I hear you plan to increase your market share, but what do you see for the market overall?

We think that the decrease is really lower on the segments of CIS countries. In ruble terms, we see -- we do not expect a very substantial decrease. But, here again you can take this information. I think it's public from the Central Bank or other agencies who can show you that.

In our case, we have a very low market share still and we think that we will be expanding this market share. In any case, our growth was very high in 2014, so we think that we will continue to grow in terms of the market share, as soon as the -- our channel is really cost efficient for the market.

Okay. And I have one other small question. Do you have any proportion of your cost base nominated in FX and if you can share that with us and also the same thing on the revenue side?

Look, on the revenue side, generally speaking more from the revenue side than the cost side. The expenses denominated in US dollars are not that substantial. On the -- historically on the cost side. So we were thinking that the US dollar expenses would probably constitute something between 15% to 20% given that shaky environment. So, basically what we did we approached all the key vendors and basically fixed wherever possible the contracts that were previously given in American dollars than rubles and by having all that we -- we have substantially decreased the share of US dollars expenses.

On the revenue, so, we are not really disclosing that data in detail. But generally speaking, that should be probably around the same percentage. And the segments that primarily consists of US dollar payments will obviously be ecommerce, especially if people are buying the goods, let's say, on eBay or on Alibaba.

But, from a let's say a liquidity management, we don't really see those expenses -- of those revenues as a US dollars. Basically, the people, primarily, if they are using our network of kiosks or Qiwi Wallet, they would fund their purchases in rubles and basically we convert the currency for them. So generally speaking, if you're really see the decrease in disposable income in rubles, then the behavior would be like as in those revenue streams are really ruble denominated. So, the dynamics of the revenue side to the cost side in rubles are different.

Again, generally speaking, we do not really feel any substantial effects of ForEx volatility so far.

Okay. Thank you. Thank you.

Igor Gerasimov, Goldman Sachs.

Thanks guys. Thanks for taking another question. I just wanted to confirm your guidance for 2015. When you provided your growth figures, you said that you exclude the scale effects from them. This implies that potentially growth can be higher or lower depending on how your marketing campaign will be developing and how -- what will be the impact from your partnerships etc.

Well, the partnerships will not really impact that a lot. So, let's say, all this is embedded in the guidance. So, generally speaking, let's put it that way, that part of the marketing spend that we incur for investments in the consumer base, that we are expecting to incur in 2015 also relates to our partnerships. But this is not something that is very specific to the partnerships. It's just a general types of campaigns that allows us to get the users across the key category, key vertical.

Okay. So, there is still governance for adjusted net income already incurred by the marketing expense at more or less comparable level versus 2014, for instance, because you will need to grow market share and all this stuff. Am I right?

Yes, that is exactly right. Yes, that is exactly right.

Okay. Thanks. It's very clear.

Okay. Thank you.

Vladimir Bespalov, VTB Capital.

Hi. Hello. Thank you for this presentation and the results. I have a couple of questions. One. Could you please comment on your CapEx? Could you provide your CapEx guidance for this year for example and whether it's affected or not by FX in one way or another?

And the second question is some further clarification on dividends. You refrained from paying dividends this time just to have some cushion. But, for example, if you see then over the next couple of quarters, the situation is more or less stable and you don't need to hold this cash on the balance sheet, can we expect that you'll increase your payout compared to what we have seen or what we have seen historically? Thank you.

Thanks for your question. Yes, definitely, if we see that nothing really bad happens on the banking side, we will return back to our regular dividend payout.

And on the CapEx question, maybe Alexander will --

Yes, so on CapEx, so again, as you will see in 20F report, so the CapEx for this year was approximately RUB400m. Let's say in a general case that's been affected by the ForEx side across a big part of the IT equipment and licenses we buy from the international vendors. Though we -- again we are trying to (inaudible) all the contracts now in rubles to hedge ourselves in the ForEx field. So, we don't really expect a substantial ForEx effect to kick in until the CapEx budget. And going forward, we do not really expect any substantially different CapEx spend. So the level that we have in 2014 is something that you should see as a normalized level going forward.

Okay. Thank you. On dividends, just one more clarification. The question was basically would you be ready to distribute more dividends as if like in two quarters, to say for this quarter and for the next if you refrain from paying, or you will just return to normal which was something like about 100% of your net profit.

Obviously, -- we will obviously return to let's say -- something. So, we again, on average, we were paying something like 85%, 90% of net profit and as soon as we hopefully, hopefully soon return to that practice again, then we obviously will be kicking up those net profits that -- for which we have not distributed the dividend. Does that answer the question?

Okay. Thank you.

I would now like to turn the conference back over to management for any closing remarks.

Thanks, operator. Given the results of the fourth quarter, we think that Qiwi is very well positioned for the shaky economic conditions and we see a lot of opportunities ahead. So thank you very much for joining us on this conference today and goodbye.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time and thank you for your participation.