Transcript Document

№
Overall results of “UTK” PJSC activity for
the year 2002 according to International
Accounting Standards (IAS)
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№2
“Southern Telecommunications Company” PJSC is the largest operator
in the Southern Federal District of the Russian Federation providing
various telecom services (local, domestic and international long-distance
telephony, Internet access, data transmission, lease of channels and
others) for the first time presents the statement formatted IAS.
The Company’s financial statement is maintained its accounting
records in accordance with the Russian accounting regulations under
the historical cost convention. These statutory accounting reports have
been adjusted to present the accompanying financial statements in
accordance with IAS.
The Company’s financial statement have been audited by Independent
Auditor “Ernst and Young Vneshaudit”.
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№3
The Company presented financial statement with
view of past reorganization and united consolidated
mego-regional entities indices as well as its
subsidiaries.
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№4
Merged entities:
- “Electrosvyaz” of Adygeya Republic” PJSC
- “Svyazinform” of Astrakhan Region” PJSC
- “Volgogradelectrosvyaz” PJSC
- “KabBalktelecom” PJSC
- “Electrosvyaz” of Kalmykiya Republic” PJSC
- “Karachaevo-Cherkesskelectrosvyaz” PJSC
- “Rostovelectrosvyaz” PJSC
- “Sevosetinelectrosvyaz” PJSC
- “Electrosvyaz” of Stavropol Region” PJSC
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№5
•All consolidated regional entities have been consolidated on line-by-line
basis without change balance cost of any assets or liabilities. Significant
intercompanies balances and transactions have been eliminated.
•Amounts of consolidated regional entities’ assets and liabilities have been
transferred in “UTK” PJSC financial statement.
•As a result of merger it has not been accounted new assets and liabilities.
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№6
The Company has accounted for the merger based
on the principles of uniting of interests as described
in IAS 22 “Business Combinations”. In applying this
method, the Company has reflected amounts in the
consolidated financial statements at their historical
carrying amounts as if the entities had been
combined from January 1, 2002, the earliest period
presented.
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№7
Subsidiaries
“Autocenter-Yug” CJSC
Transport
100%
“Armavirskiy Zavod Svyazi” CJSC
Production of cable
100%
“Health care complex “Orbita” CJSC
Recreation services
100%
“CMTO” CJSC
Supply of materials
100%
Construction services
100%
“Yugsyazstroy” CJSC
“Telesot-Alaniya” CJSC
Cellular telecommunication services
“Stavtelecom named after V.I. Kuzminov” PJSC
“Intmashservice” OJSC
“Factorial” OJSC
Local, domestic telephony,
data transfer
53%
51%
Repair and maintenance of telecommunication
equipment
100%
Information and intermediary services,
consulting
100%
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№8
All financial indices of subsidiaries and “UTK” PJSC branches are
included to the Company’s financial statement.
The Company’s
management decided to transform only substantial companies' financial
statement in IAS due to numerous subsidiaries and branches. Others
subsidiaries and Company's branches have been included in IAS by the
Russian Financial Reporting results.
The main criterion determined transformation subsidiaries’ statement
was revenues importance, net profit before tax, long-term receivable,
short-term receivable and total amounts assets of affiliated company.
Importance of net assets was criterion for dependent companies.
For financial statement according to IAS we determined a level of
importance amounted 0.8% from “UTK” PJSC combined inflated
revenues for the year 2002, amounted to RUR 100 mln.
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№9
The
accompanying
Consolidated
Financial
Statement prepared in accordance with IAS taking
into account acquisition costs and adjusted in
accordance with IAS 29 “ Financial Reporting in
Hyperinflationary Economies”.
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№ 10
The main guidelines followed in adjusting the consolidated financial statement to current
purchasing power are:
- all amounts are stated in terms of the measuring unit current at December 31, 2002;
- monetary assets and liabilities at December 31, 2002 are not restated as they are already
expressed in terms of the monetary unit current at December 31, 2002;
- non-monetary assets and liabilities which are not carried at amounts current at December 31,
2002 and shareholders’ equity are restated by applying the relevant conversion factors;
- indexation adjustments to property, plant and equipment applicable to prior periods are credited
to “Retained earnings and other reserves” in the accompanying balance sheet;
- all items in the consolidated statements of income and of cash flows are adjusted by applying
appropriate conversion factors.
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№ 12
Results of “UTK” PJSC activity for the year 2002 according to IAS
Company’s revenue for the year 2002 reached RUR 11 885 370 ths. and
distributed in the followings:
Internet services
1,9%
Radio
broadcasting
1,4%
Data transmission
services
1,3%
Other
telecommunication
services
7,9%
Revenues from
other realizations
5,8%
Long-distance
communications
40,6%
Telegraph
services
1,6%
Installation and
connection fees
8,8%
International
communications
8,8%
Monthly
subscription fees
21,9%
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№ 11
Fixed assets recognition
“UTK” PJSC fixed assets have been transferred in
IAS with use of simplified models of shifting. Fixed
assets of two branches have been included in the
Company's financial statement from fixed account
register.
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№ 13
Company’s operating expenses for the year 2002
Other operating
Bad debt expenses
expenses
Loss on disposal of 1,1%
8,7%
property plant and
equipment
0,7%
Wages, salaries,
other benefit
expenses, payroll
taxes
38,1%
Depreciation and
amortization
22,4%
Taxes other than on
income
3,3%
Materials, repairs
and maintenance,
utilities
11,4%
Interconnection
charges
14,3%
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№ 14
Results of activity in accordance with IAS
 Revenue from core activity
RUR 891 966 ths.
 Net profit
RUR 1 046 116 ths.
 EBITDA
RUR 4 710460 ths.
 EBITDA margin
39.6%
 Own assets of shareholders taking into account inflation effect on the
authorized capital amounting to RUR 1 741 475 ths., on 31.12.2002 reach
RUR 12 404 397 ths.
 Revenue per 1 share reached RUR 0,30.

Retained income and other reserves correspond to assets minus
commitments and authorized capital of shareholder own assets reach
RUR 9 365 143 ths.
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№ 15
Subsequent events and bargains
New system of settlements with “Rostelecom”
PJSC
Under the planned changes, full consideration is
expected to be given to the cost of “Rostelecom” PJSC
carrying and benefits to the Company in terminating
domestic long-distance traffic.
Such system will increase the transparency and timeliness
of settlements.
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№ 16
Subsequent events and bargains
Sale of “Kuban GSM”- stake
On December 28, 2001 “UTK” PJSC and “Mobile
TeleSystems” PJSC entered into preliminary agreement for
the sale of the Company’s 24% stake in “Kuban GSM”
CJSC. The sale was completed in March 2002 for USD 33.6
million (approximately 1 billion rubles).
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№ 17
Subsequent events and bargains
Implementation of Oracle
On May 28, 2003, the Board of Directors approved an agreements
with “Otkritiye Technologii 98” CJSC to purchase
Oracle E-Business Suite for the amount of USD 21, 707
thousand (approximately 689 944).
Acquisition requirement is caused by:
enhancement of a management efficiency by financial and
human resources
enhancement of the control and the account of financial
and economic operations
enhancement of transaction speed and accuracy
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№ 18
Subsequent events and bargains
New agreements with “RTC-Leasing” PJSC.
In 2003 the Company concluded several agreements with
“RTC-Leasing” PJSC. Cost of equipment together with
installation and other services subject to capitalization acquired
under these agreements amounted to approximately 1,756
million rubles, and related undiscounted future lease payments
amounted to approximately 3 068 million rubles.
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№ 19
Subsequent events and bargains
Agreement Of Equipment Insurance
On March 28, 2003 the Company concluded an insurance
agreement with “Rosgosstrakh-Yug” OPJSC on insurance of
electronic equipment for the period of one year. The total
amount of insurance is 5,281,346.
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№ 20
The conclusions and assumptions relative to forecast of forthcoming events and
involve risks, uncertainties, other factors, which may cause results to differ
materially from those set forth in this presentation.
Such risks comprise the changes of the Company's activity and future trends of its
development; economic and political circumstances in Russia; future and existing
regulations of the Russian branch of communications; the Russian legislation; as
well as influences of competitiveness and other factors.
Taking into account those described above the Company doesn’t recommend
to rely on any statements concerning the forecast of Company’s future
operations.
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation
№
Thank you for your time !
04.09.2003, Krasnodar
“UTK” PJSC IAS Presentation