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UTK

August 4, 2003

1H03 performance results of “UTK” PJSC according to Russian Accounting Standards

·        1H03 totalrevenuereachedRUR5 849.5 million whichisup21,5% comparedwiththesame period of 2002, revenues from sale of telecom services rose26%.

·        Profit from sales increased by 15.1% compared to 1H02 and stood at RUR 1 344.8 mln.

·        During 1H03 number of basic telephone sets rose by 96.6 thousand sets, a 45%-increase over 1H02.

·        Long-distance traffic rose 20% compared to the same period last year.

 

Krasnodar — 4 August 2003 —  "UTK" PJSC

In 1H03 "UTK" PJSC generated a total revenue of RUR 5 849.5 mln which is up 21,5% compared to the same period last year. In addition revenues from sale of telecom services reached RUR  5735.6 mln (a 26,0%-increase), including: domestic and international long-distance telephony (taking into account transit traffic) — 51,5% (up 20,6%), urban telephone network — 31,1% (up 31,8%), rural telephone network — 7,2% (up 31,4%), Internet services — 2,6% (up 38,2%), other services — 7,6% (ISDN, IP-telephony, intelligent services, sale of service telephone cards, wired radio, wireless communication, television, etc.).

Operating costs stood at 4504,7 (+23,5%).  Excess of costs over revenues resulted from: costs growth for property insurance related to the performed inventory of property and  audit of insurance contracts in all the merged companies; active application of leasing mechanism allowing to set adequate terms of fixed assets’ usage; increase of additional maintenance expenses alongside with growth of user's base and network traffic.

1H03 operating costs structure has developed as follows: wages and salaries - 45,3%, depreciation charges — 11,5%, material expenses — 8,5%, payments to Rostelecom — 13,3%, other costs — 21,5%. Due to quick modernization of communication networks material expenses are down 9.7% as compared to 1H02.

Profit from sales rose by 15,1% to RUR 1344.8 mln. 1H03 operating profitability reached 23%.

 

Description

RUR mln

Change y-o-y, %

1H02

1H03

"UTK" PJSC financial performance

Revenue

4816,3

5849,5

21,5%

including from sale of telecom services

4552,5

5735,6

26,0%

Profit from sales

1168,4

1344,8

15,1%

Depreciation charges

372,9

517,3

38,7%

Interest expenses

69,6

153,7

120,9%

EBITDA2

1985,3 (958,2)1

1528,5

-23% (+59,5%)1

Pre-tax profit

1542,8 (671,2)1

857,5

-44,4% (+27,8%)1

Net profit

 1085,0 (304,4) 1

673,5

-37,9% (+121,3%)1

Indicators of "UTK" PJSC business efficiency

EBITDA margin

19,9%1

26,1%

6,2%

Revenue per employee, RUR ths

109 981

142 016

29,1%

Revenue per line, RUR

1 520

1 748

14,9%

Number of lines per employee, lines

72,3

81,3

12,3%

1Without taking into account gains from sale of financial assets in 2002.

2 In "UTK" PJSC EBITDA parameter is calculated as sum of pre-tax profit, depreciation charges and interest expenses.

 

 

 

1H03 financial performance of other operating activity has made RUR (-205,5) million, however the given parameter is up 38.4% in comparable conditions with the similar period of 2002. Negative result can be explained by including some taxes in the structure of other operating costs. Besides, interest expenses increased in the accounting period owing to growth of external financing volume in order to improve the parameters of the Company’s business activity and to reduce the return period on invested capital. As at 1 July 2003 the parameter of financial independence made 0.59 showing the Company’s financial stability.

 The financial result of non-operating activity rose 12 % to RUR (-281,8) million. Negative value of the given parameter can be explained by a large share (43%) of exchange losses in the non-operating costs’ structure in connection with the significant volume of trade loans traditionally used by telecom operators as a form of financing. But the value of exchange losses was reduced by 25,2 % due to measures on reduction of the share of foreign borrowed capital (in dollar terms) undertaken by the Company.

Pre-tax profit was down 44,4 % standing at RUR 857,5 million. But taking into account  the correction of 1H02 pre-tax profit by the sum of gains in financial assets (securities), 1H03 pre-tax profit posted an increase of 27.8% on 1H02.

Net profit is down 37,9 % to RUR 673,5 million. But in comparable conditions with the same parameter of the last year net profit  posted an increase of 121,3 %.

From the beginning of 2003 number of the basic telephones rose by 96,6 thousand sets (up 45% over 1H02) including 74,4 thousand sets – in urban telephone network (+47,7 %). Thus, as at 1 July 2003 "UTK" PJSC operated 3,4 million basic telephone sets, including 2,6 million – in urban TN. Since the beginning of 2003 volume of long-distance traffic has made 871 million minutes (+20 %).

As at 1 July 2003 average number of the Company’s employees on pay-roll was 41189 people, a 3,2 %- decrease on the beginning of 2003 and a 5,9 %-decrease over 1H02.

According to preliminary results 1H03 capex stood at RUR 1911.3 mln  (+103,9 %), fixed assets put into service amounted to RUR 1086.2 mln (+151,1 %). Automatic telephone exchange with total installed capacity of 105.9 thousand lines (+29,1 %) were put into operation including 79.4 thousand lines in urban TN. As at 1 July 2003 total installed capacity of local communication networks exceeded 3.65 million lines.

The largest telecom facilities and exchanges put into operation by the Company in 1H03 were the following: automatic telephone exchanges in Maikop (10000??), Stavropol (9950??), Armavir (5660??), Vladikavkaz (3834??), Pyatigorsk (2338??), Kislovodsk (2000??), Kurganinsk (1536??); cable TV network for 1 000 users in Volgograd; radio-relay communication line from Ust-Labinsk to Belorechensk and Apsheronsk (89.6 Km.); FOL from Rostov-on-Don to Aksay and Novocherkassk (48.2 km), FOL from Nalchik to Nartkala (10.3 km); cable communication line from Cherkessk to Karachaevsk (65 km), Center of multiple access to Internet in Rostov-on-Don (75 ports), Intelligent platform PROTEY in Rostov-on-Don (240 ports), Extension of data transmission network in Rostov-on-Don (1200 ports).

 

You can familiarize yourself with 1H03 financial reports and other additional information about the Company  on the site www.stcompany.ru. . We also inform  that  new section “Presentations”  is created on the Company’s site under the heading "Investor relations”. There you can find the presentation of 2002 Annual report of “Southern Telecommunications Company” PJSC and  the Report of "UTK" PJSC General Director  at the Annual General Shareholders’ Meeting held on 25 June 2003.

 

 

 

 

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