Krasnodar, November 18, 2005– Southern Telecommunications Company [(RTS: KUBN, KUBNP; MICEX: UTEL, UTELP; ADR OTC: STJSY, KUE FRA)], the principal telecommunications provider for Russia’s Southern Federal District, today reported its unaudited consolidated financial results for the first half of 2005 in accordance with International Financial Reporting Standards (IFRS).
The interim financial statements of the Company consist of the accounting balance sheet, the P&L statement and explanatory notes to the financial statements. These financial statements do not contain all disclosures required by IFRS for interim reports. However, the scope of these statements is sufficient to gain a clear view of the Company’s financial standing and its operating results.
As "UTK" PJSC submits its IFRS semiannual unaudited financial statements for the first time, they do not contain comparison with financial results for the same period last year. Instead, the Company presents for comparison financial results as of December 31, 2004 of the audited financial statements for the year ended December 31, 2004
KEY FINANCIAL HIGHLIGHTS, RUR mln:
|
Description |
1H 2005 |
2004 |
|
Revenue |
8,976.5 |
17,322.8 |
|
Operating expenses including amortization and depreciation |
(6,586.6) |
(13,117.3) |
|
EBITDA* |
3,378.0 |
4,482.3 |
|
EBITDA margin, % |
37.6% |
25.9% |
|
Depreciation and amortization |
(1,398.9) |
(2,699.2) |
|
Operating profit |
991.0 |
1,506.3 |
|
Operating margin, % |
11.0% |
8.7% |
* EBITDA includes Earnings Before Interest, Taxes, Depreciation and Amortization
The Company’s consolidated revenue for the first half of 2005 amounted to RUR 8,976.5 mln. Revenues from telecom services were RUR 8,550.8 mln, other revenues — RUR 425.7 mln. The main revenue components were earnings from local voice, DLD/ILD and value-added services (33.8%, 32.2% and 6.9%, respectively).
Revenue structure (RUR mln)
|
Revenue sources |
1H 2005 |
Specific weight, % |
2004 |
Specific weight, % |
|
Sale of telecom services |
8 550,8 |
95,26% |
16 543,0 |
95,50% |
|
Domestic long-distance telephone calls |
2 887,8 |
32,17% |
5 894,0 |
34,02% |
|
Local telephone calls |
3 030,7 |
33,76% |
4 786,8 |
27,63% |
|
Installation and connection fees |
343,6 |
3,83% |
1 423,7 |
8,22% |
|
International long-distance telephone calls |
560,0 |
6,24% |
1 095,8 |
6,33% |
|
Services for national operators |
281,9 |
3,14% |
876,9 |
5,06% |
|
New services |
623,8 |
6,95% |
803,4 |
4,64% |
|
Rent of telephone channels |
400,1 |
4,46% |
624,9 |
3,61% |
|
Other telecommunications services |
212,6 |
2,37% |
394,9 |
2,28% |
|
Cellular services |
3,5 |
0,04% |
209,2 |
1,21% |
|
Radio and TV broadcasting |
99,0 |
1,10% |
192,0 |
1,11% |
|
Data transfer and telematic services |
80,4 |
0,90% |
170,8 |
0,99% |
|
Documentary services |
27,3 |
0,30% |
70,5 |
0,41% |
|
Other revenues |
425,7 |
4,74% |
779,8 |
4,50% |
|
Revenue from rent of assets (excluding from rent of telephone channels) |
54,9 |
0,61% |
93,6 |
0,54% |
|
Recreational services |
44,1 |
0,49% |
106,4 |
0,61% |
|
Construction services |
14,4 |
0,16% |
124,5 |
0,72% |
|
Sale of goods |
92,5 |
1,03% |
193,5 |
1,12% |
|
Agency fees |
13,1 |
0,15% |
21,6 |
0,12% |
|
Sale of cable production |
0,2 |
0,00% |
185,4 |
1,07% |
|
Other non-telecom revenues |
206,4 |
2,30% |
54,9 |
0,32% |
|
Total revenues |
8 976,5 |
100,00% |
17322,8 |
100,00% |
1H 2005 operating expenses amounted to RUR 7,985.5 mln. Expenses on wages, salaries and other employee benefits and payroll taxes, depreciation charges, payments to other telecom operators as well as expenses on materials, repairs and maintenance, utilities and other operating expenses accounted for major part of operating expenses.
Operating expenses structure (RUR mln)
|
Operating expenses |
1H 2005 |
Specific weight, % |
2004 |
Specific weight, % |
|
Wages, salaries, other employee benefits and payroll taxes |
2,853.3 |
35.7% |
6,112.6 |
38.6% |
|
Depreciation and amortization |
1,398.9 |
17.5% |
2,699.2 |
17.1% |
|
Materials, repairs and maintenance, utilities |
977.7 |
12.2% |
2,297.2 |
14.5% |
|
Taxes other than income tax |
347.9 |
4.4% |
555.1 |
3.5% |
|
Interconnection charges – domestic companies |
1,236.3 |
15.5% |
2,495.2 |
15.8% |
|
Provision for impairment of receivables |
300.0 |
3.8% |
70.1 |
0.4% |
|
Loss on disposal of property, plant and equipment |
18.5 |
0.2% |
42.8 |
0.3% |
|
Other operating expenses |
852.9 |
10.7% |
1,544.2 |
9.8% |
|
Total operating expenses |
7,985.5 |
100.0% |
15,816.5 |
100.0% |
Measures on expenditure control and optimization resulted in considerable reduction of the portion of staff costs and material expenses in the first half of 2005. Operating margin increased by 2.3 percentage points over 2004 to 11.0 %, and EBITDA margin — by 11.7 percentage points to 37.6 %.
Interest expenses amounted to RUR 1,516.4 million in the reporting period. In order to reduce the Company’s short-term debts and the service value of its credit portfolio, "UTK" PJSC plans to place series-04 bond issue worth RUR 5 bln in December of 2005.
Main operational highlights
|
Description |
1H 2005 |
2004 |
|
Number of basic telephones (subscriber lines in use), ths sets* |
3,972.0 |
3,928.2 |
|
Increase in number of basic telephone sets, ths sets** |
43.8 |
360.9 |
|
DLD and ILD traffic (outgoing charged), mln minutes |
936.0 |
1,985.0 |
|
Internet traffic, dial-up, mln minutes |
1,044.2 |
1,477.6 |
|
Internet traffic through dedicated channels, ?b |
26.1 |
41.7 |
|
Average number of employees on payroll, people* |
38,297.0 |
39,337.0 |
* as at the end of the reporting period; ** for the reporting period
Business efficiency indicators
|
Description |
1H 2005 |
2004 |
|
Revenue per one line, RUR |
2,404. |
4,386.2 |
|
Revenue per one employee, RUR ths |
228.2 |
452.3 |
|
Lines per one employee |
95.5 |
103.7 |
|
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