?JSC Svyazinvest
Information Department
119121 Moscow ul. Plyushikha, 55 str.2
tel.: (095) 727-0418, fax: (095) 727-0475; pr@svyazinvest.ru
May 21, 2003 Moscow
Svyazinvest (hereinafter - the Company) held a Board of Directors meeting on May 21, 2003, which was attended by the following:
L.D. Reiman - RF Minister of Communications;
A.V. Anoshkin - Assistant Head of the Office of the President of the Russian Federation;
A.V. Borodin - Head of the Department of Property and Industry, Construction, Transportation and Communications of the Property Ministry of the Russian Federation;
David Giovannis - representative of Mustcom Limited;
Stuart J. Paperin - Executive Vice President of Soros Charity Fund
The agenda of the meeting included discussion of Svyazinvest's 2003 business plan, information on results of the Company's financial performance, as well as its subsidiaries based on the 2002 reporting period, an analysis of the trends of the key performance indicators of subsidiaries, issues concerning the preparation and holding of the Company's annual general shareholders meeting. In addition, the discussion focused on Company's annual 2002 report, allocation of profits and losses and a number of other issues related to the Company's business.
The following resolutions were passed during the meeting:
1. To take note of the following information pertaining to the holding's 2003 business plan (per IAS):
operating revenue - Rub 122.4 billion;
operating expenses - Rub 98.8 billion
EBITDA - Rub 38.6 billion (32% of revenues)
pre-tax profit - Rub 6.4 billion;
net profit before minority shareholders' payout - Rub 0.9 billion;
cost per Rub 100 of revenue - Rub 81;
revenue per employee - Rub 355,000;
operating profit per employee - 75,000;
operating profit per line - Rub 1,020
revenue generated by new service - 3%.
2. To take note of the following information concerning the financial performance of the company's subsidiaries for the 2002 reporting period (aggregated financial reports*):
gross revenues - Rub 12-.3 billion (up 130.5% on 2001);
revenue from core activity - Rub 98.1 billion (up 125.9%);
standard operating expenses - Rub 88.8 billion (up 126.0%);
Sales profit (up 145.3%).
3. To take note of the analysis of the key performance indicators of the Ulyanovsk branch of Volga Telecom and the Kostroma Telecom branch of Central Telecom.
4. To hold the company's annual general shareholders meeting on June 26, 2003. To approve issues and documents associated with preparations for the AGM.
5. To recommend to the annual general shareholders meeting that Rub 50 million be paid out in dividends, an amount which is equal to 16.5% of total net profit. Dividends per share on the results of the Company's 2002 financial performance amount to Rub 0.002561694 compared with Rub 0.001793185 paid out in 2001. The total amount of dividends on the equity position owned by the state amounts to Rub 37.5 million, against Rub 26.25 million in 2001.
In addition, the Board of Directors made a preliminary examination of the Company's 2002 annual report, as well as the annual accounting reports of the Company, the report by the Audit Committee and auditor based on an audit of the Company's 2002 financial performance.
* aggregated financial reports are compiled by totaling the key performance indicators of the annual accounting reports of Svyazinvest, its subsidiaries and branches.
The corporate structure of Svyazinvest holding includes seven mega-regional telecommunications comapnies (MRC): Central Telecom, North Western Telecom, Volga Telecom, Southern Telecom, Uralsvyazinform, Far East Telecom, and long-distance and international telecom operator Rostelecom, six telecom operators which opted out of the merger process, and Giprosvyaz, telecom industry institute. These companies hold licenses and provide local, long-distance and international telecom network services, as well as electronic data transmission, ISDN, wireless subscriber access and cellular communication running on GSM, NMT-450, AMPS and DAMPS standards. Over 364,000 persons are employed at Svyazinvest.
In 2002 Svyazinvest completed the process of merging 72 regional telecom operators into seven mega-regional companies. At present, the top management of Svyazinvest holding is being focused on implementation of a corporate restructuring program, the purpose of which is to create a management system within its MRCs which is capable of functioning effectively and promoting dynamic growth for the unified operators. A core component of the corporate restructuring process is phasing in information systems within the mega-regional companies.
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