A Svyazinvest Board of Directors meeting was held n December 4th, with the following items on the agenda:
1) Examination of the methodology used for establishing a feasible cost system and the methodology for recording separate revenues and expenses for various types of services, devised by OAO Svyazinvest in association with McKinsey & Co.;
2) Main business indicators of OAO Svyazinvest for 3Q 2001;
3) Progress Report on restructuring subsidiaries of JSC Svyazinvest;
4) Progress Report on dividends payable to OAO Svyazinvest subsidiaries on the results of 2000;
5) an analysis of main business indicators of subsidiaries: OAO CenterTelecom and OAO Central Telegraph.
On the first item - the Board of Directors took note of the methodology which is being used to determine a feasible cost system for recording separate revenues and expenses for the various types of services, devised jointly with McKinsey & Co.
The main issues involved in distinguishing the new joint methodology from that of the Anti-Monopoly Ministry include:
- separating financial and managerial expensing;
- a more precise itemization of chargeable services;
- separating expense items according to business processes;
- revaluation of fixed assets at their current operating levels for the existing network;
- using the equity return principle (the average-weighted value of a company's equity) to determine economically feasible expenses.
On the second item - the Board of Directors heard and took note of the company's 3Q 2001 business results.
On the whole during the first nine months of 2001 OAO Svyazinvest generated Rub. 66.4 bn, which is 24.5% more than the same period in 2000, with a pre-tax profit of Rub 10.6 bn (up 14.6%), while net profit stood at Rub. 6.4 bn (up 4%) and social contributions totaling Rub. 507 bn. Income derived from new services rose 54%, including Internet services, which were up 64.2%.
On the third item - the Board of Directors heard a progress report on the restructuring of OAO Svyazinvest subsidiaries.
To date, general shareholders meetings have passed the merger in the Far East, Urals and Volga. Shareholders of all the constituent companies have voted for the merger by over a 90% majority. It was noted that the restructuring process is proceeding according to plan within the pre-established deadlines.
The Board of Directors studied information on the progress of restructuring and assigned the Board of Executives of Svyazinvest to continue work in this area.
As for the fourth item on the agenda - the Board of Directors heard a progress report on dividends due to Svyazinvest from its subsidiaries based on the business results of 2000.
In accordance with resolutions passed by general shareholders meetings devoted to 2000 business results, the total amount of dividends payable on common shares for the holding company's subsidiaries was Rub. 638.1 mn, or 8.7% of the net profit earned by Svyazinvest subsidiaries, including Rub. 311.9 mn for dividends payable on shares owned by Svyazinvest.
On the fifth item - the Board of Directors studied a report on the main business indicators of Svyazinvest subsidiaries OAO CenterTelecom and OAO Central Telegraph.
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