OREANDA-NEWS. July 07, 2010. OJSC VolgaTelecom (RTS): NNSI/NNSIP, MICEX: VTEL/ VTELP, ADR: VLGAY) presents the results of its operations for 1Q-2010 according to International Financial Reporting Standards (IFRS). The consolidated interim financial statements for 3 months of 2010 are not audited. Earlier VolgaTelecom did not prepare such statements.

At Q I-2010 end the Group’s sales revenue amounted to RUB 8, 468 million. Operating profit for the reporting period accounted for RUB 2, 022 million, and the net profit – RUB 1, 375 million. In Q I-2010 net operating expenses amounted to RUB 6, 446 million.

Key financial performances

 

Q I-2010

 

Sales revenue, RUB million

8,468

Operating profit, RUB million

2,022

Operating expenses, net*, RUB million

6,446

EBITDA *, RUB million

3,842

EBITDA margin*, %

45.4

OIBDA*, RUB million

3,831

OIBDA margin*, %

45.2

Net profit for the reporting period, RUB million

1,375

Net profit margin*, %

16.2

* Operating expenses, net are calculated as the sum of expenses under items “Personnel costs”, “Depreciation and amortization”, “Telecom operators’ services costs”, “Materials, repair and maintenance, public utility services”, and “Other operating expenses” adjusted for the amount of other operating profit;

EBITDA is calculated as the sum of pretax earnings, financial expenses, depreciation and amortization adjusted for the amount of interest receipts of pension plan assets and financial assets;

EBITDA margin is calculated as EBITDA/ “Sales revenue”;

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

OIBDA margin is calculated as OIBDA/ “Sales revenue”;

Net profit margin is calculated as “Profit for the reporting year”/ “Sales revenue”.

The consolidated interim financial statements reflect financial position and the results of operations of Group of companies VolgaTelecom providing local telephony, mobile and other telecommunications services.

Sales revenue structure

In the structure of sales revenue of Group of companies VolgaTelecom at Q I-2010 end 36.7% are local telephony services revenue – RUB 3, 111 million. Revenue from data transmission network services, telematic services (Internet) and telegraphy services accounted for RUB 1, 578 million which is 18.6% of total sales revenue. In the reporting period intrazonal telephony services revenue amounted to RUB 1, 074 million or 12.7% of sales revenue. In sales revenue structure mobile services hold 13.6% - RUB 1, 147 million.
Sales revenue structure for Q I-2010 is as follows:

 

Q I-2010, RUB million

Share, %

Local telephone services

3,111

36.7

Telegraphy, data transmission network and telematic (Internet) services

1,578

18.6

Mobile services

1,147

13.6

Intrazonal telephony services

1,074

12.7

Interconnect and traffic transit services

1,003

11.9

Mobile radiotelephony,wire broadcasting,radio broadcasting andTVservices

189

2.2

Assistance and agency services

127

1.5

Other services

17

0.2

Revenuefromothersales

222

2.6

Total

8, 468

100

Sales revenue structure by categories of consumers for Q I-2010:

 

Q I-2010, %

Individuals

58.5

Business entities

19.6

State-financed organizations

7.9

Communications operators

14.0

Total

100

Expenditure pattern

For Q I-2010 the Group’s operating expenses amounted to RUB 6, 917 million. The largest share in the structure of prime cost falls on personnel costs – RUB 2, 284 million or 33.0% of the total expenses. Depreciation and amortization expenses accounted for RUB

1, 809 million (26.2%).

Expenditure pattern of VolgaTelecom’s Group is as follows:

 

Q I-2010, RUB million

Share, %

Personnel costs

2,284

33.0

Depreciation and amortization

1,809

26.2

Communications operators’ services costs

908

13.1

Materials, repair and maintenance, public utility services

698

10.1

Other operating expenses

1,218

17.6

Total operating expenses

6, 917

100

Other operating profit

471

 

Total operating expenses, net

6,446

 

Investments

In Q I-2010 the investments amounted to RUB 646.0 million. The largest part of the investments was allocated for the development of value-added services – 62% or RUB 403.0 million (arrangement of хDSL/Ethernet/FTTx access, mobile business development, NGN, etc.). At Q I-2010 end the share of investments into mobile services development accounted for 8% of the total investments.

Investments structure

Investments

Q I-2010

RUB million

Share, %

Total investments

646.0

100%

Traditional telephony

6.0

1%

Value-added services (arrangement of хDSL/Ethernet/FTTx access, NGN, etc.)

403.0

62%

Including mobile services

52.2

8%

IT investments

66.2

10%

Data transmission network

9.7

2%

Other infrastructure

161.1

25%

Stockholder equity and creditor's equity

At March 31, 2010 net assets of Group of companies VolgaTelecomaccounted for RUB 32, 060 million. In this regard the share of stockholder equity in balance-sheet total increased by 3.3 percentage points - from 60.4% to 63.7% vs. the reporting period beginning. At March 31, 2010 interest-bearing debt accounted for RUB 8, 921 million, and the net debt – RUB 6, 711 million.

Debt load

 

Q I-2010

December 31, 2009

Debt*, RUB million

8,921

10,404

Net debt**, RUB million

6,711

8,371

Net debt/shareholders’ equity

0.21

0.27

Netdebt/Assets

0.13

0.17

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

** Net debt is calculated as the sum of loan obligations adjusted for the amount of cash and cash equivalents, as well as for the amount of promissory notes and bonds available for sale.

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 VolgaTelecom Group annual consolidated financial statements for the year ended December 31, 2009.