OREANDA-NEWS. December 29, 2009. OJSC VolgaTelecom (RTS: NNSI/NNSIP; MICEX: VTEL/VTELP; ADR: VLGAY) has presented the results of its operations for 9 months of 2009 according to International Financial Reporting Standards (IFRS). Consolidated interim financial statements for 9 months of 2009 are not audited. Earlier VolgaTelecom did not report such statements.

For 9 months the Group’s sales revenue amounted to RUB 24, 265 million. For the reporting period the operating profit accounted for RUB 5, 140 million, and the net profit – RUB 2, 840 million. For 9 months the operating expenses totaled RUB 19, 125 million. 

Key financial performance

 

9 months of 2009

Sales revenue, RUB million

24, 265

Operating profit, RUB million

5, 140

Operating expenses, net, RUB million

19, 125

EBITDA *, RUB million

10, 664

EBITDA margin

43.9%

OIBDA*, RUB million

10, 732

OIBDA margin

44.2%

Net profit for the reporting period, RUB million

2, 840

Net profit margin

11.7%

* EBITDA is calculated as the sum of pretax earnings, interest expense, depreciation and amortization adjusted for the amount of interest receipts;

EBITDA margin is calculated as the ratio of EBITDA to Sales revenue;

ОIВDA is calculated as the sum of operating profit and expenses of item “Depreciation and amortization”;  

ОIВDA margin is calculated as the ratio of ОIВDA to Sales revenue;

Net profit margin is calculated as the ratio of Net profit for the reporting period to Sales revenue.

The consolidated interim financial statements comprise property, liabilities and the results of operations of VolgaTelecom Group providing local telephony, mobile and other telecommunications services.

Sales revenue structure

For 9 months of 2009 VolgaTelecom Group’s sales revenue structure was as follows: 35% or RUB 8, 496 million were local telephony services revenue. Revenue from data transmission network and telematic (Internet) services amounted to RUB 4, 387 million which is 18% of the total revenue. For 9 months of 2009 intrazonal telephony services revenue accounted for RUB 3, 403 million, or 14% of the total revenue. Mobile services revenue was RUB 3, 358 million or 14%.

For 9 months of 2009 sales revenue structure is as follows:

 

9 months of 2009, RUB million

Share,

%

Local telephony services

8, 496

35

Telegraphy services, data transmission network and telematic (Internet) services

4, 387

18.1

Intrazonal telephony services

3, 403

14

Mobile (cellular) services

3, 358

13.8

Interconnect and traffic transit services

3, 031

12.5

Assistance and agency services

379

1.6

Mobile radio, wire broadcasting, radio broadcasting and TV services

555

2.3

Other services

79

0.3

Revenue from other sales

577

2.4

Total

24, 265

100

Revenue structure for 9 months of 2009 by customer category:

 

9 months of 2009,

%

Individuals

57.1

Corporate customers

20.5

Government customers

7.7

Telecom operators

14.7

Total

100

Expenses

For 9 months of 2009 the Group’s expenses amounted to RUB 19, 125 million. The largest share in the structure of prime cost falls on personnel costs – RUB 6, 401 million or 33.5% of the total expenses. Depreciation and amortization expenses accounted for RUB 5, 592 million (29.2%).

The expenditure pattern of VolgaTelecom Group is as follows:

 

9 months of 2009, RUB million

Share,

%

Personnel costs

6, 401

33.5

Depreciation and amortization

5, 592

29.2

Telecom operators’ services costs

2, 684

14

Materials, repair and maintenance, public utility services

1, 998

10.5

Other operating expenses, of which:

2, 450

12.8

Expenses for services of third parties and expenses related to administration

678

3.5

Taxes, other than income tax

582

3

Fees on agency services

456

2.4

Total

19, 125

100

Investments

For 9 months of 2009 the investments amounted to RUB 1, 736 million. The largest portion of the investments was allocated to the development of mobile services – 43%. The share of investments in modern telecommunications services (arrangement of хDSL/Ethernet/FTTx access, NGN, etc.) accounted for 24%.

Structure of investments

Investments

9 months of 2009

RUB million

Share, %

Total investments

1, 736

100

Traditional telephony

46

3

Modern services (arrangement of хDSL/Ethernet/FTTx access, NGN, etc.)

423

24

Mobile (cellular) services

747

43

IT

300

17

Data transmission network

147

8

Other infrastructure

73

4

Equity and debt

At September 30, 2009 net assets of VolgaTelecom Group accounted for RUB 29, 329 million. However, the share of equity in balance-sheet total vs. the beginning of the reporting period has increased by 7 percentage points from 50% to 57%. At September 30, 2009 debt was RUB 12, 439 million, net debt – RUB 10, 157 million.

Debt load

 

9 months of 2009

December 31, 2008

Debt*, RUB million

12, 439

17, 027

Net debt**, RUB million

10, 157

15, 349

Net debt/Stockholders' equity

0.35

0.56

Net debt/Assets

0.20

0.28

* The Company’s debt is calculated as the sum of long-term and short-term loans and borrowings;

** Net debt is calculated as the sum of borrowings adjusted for cash and cash equivalents.

Statement of compliance

The consolidated financial statements are prepared and presented in accordance with the requirements of International Financial Reporting Standards (IAS) 34 “Interim Financial Statements”, as well as other International Financial Reporting Standards (IFRS) and respective interpretations approved by the Committee for International Financial Reporting Standards (CIFRS). All information should be considered with due account for the Group’s annual consolidated financial statements for the year ended December 31, 2008.