OREANDA-NEWS. December 30, 2010. Uralsvyazinform (RTS and MICEX URSI/URSIP, ADR: UVYZY/UVYZYP) – a universal telecommunications provider operating in the Urals region – hereby presents the consolidated interim results of its financial statements for the first nine months of 2010, drafted in accordance with international financial standards (IFRS).

Highlights of 9M10 financial results  

The company’s revenue increased by 6.0% to RUR 32.1 bln in the first nine months of 2010 compared with the same period last year.  The rise in revenue was mainly attributable to a 23.6% increase in revenue from mobile and radio (cellular) telephony.  In addition, revenue gains were also seen in telegraph, datacom and telematic services, up 14.0%.

The proportion of revenue from unregulated telecommunications services (cellular telephony, datacom and Internet) accounted for 54.0%.

EBITDA increased by 23.1% and amounted to RUR 14,546 mln.

EBITDA margin increased to 45.4% (up from 39.1% in 9M09).

Operating margin amounted to 26.6% at the end of the reporting period (up from 18.9% in 9M09).

Net profit more than doubled, coming in at RUR 5,745 mln.  

Headline financial indicators  

Indicator

9M10

9M09

Change

Revenue, RUR, mln

32,055

30,254

 plus 6.0%

Operating expenses before depreciation and amortization, RUR, mln

18,608

19,441

-4.3%

EBITDA, RUR, mln

14,546

11,820

 plus 23.1%

EBITDA margin,%

45.4%

39.1%

 plus 6.3%

Operating profit, RUR, mln 

8,540

5,709

 plus 49.6%

Operating margin, %

26.6%

18.9%

 plus 7.7%

Profit during reporting period, RUR, mln

5,745

2,426

 plus 136.8%

Net margin, %

17.9%

8.0%

 plus 9.9%

EBITDA is calculated as profit before taxation not including depreciation, amortization and interest expenses (net).

Margins are calculated as the ratio of the respective indicator to revenue. 

Revenue 

On the whole, the company generated revenue equal to RUR 32,055 mln ( plus 6.0%) in the first nine months of 2010.  The overall revenue breakdown looks as follows (in RUR, mln): 

 

9M10

9M09

Change

RUR, mln

Proportion

RUR, mln

Proportion

Mobile and radio (cellular) telephony

11,872

37.0%

9,605

31.8%

 plus 23.6%

Local voice

8,291

25.8%

7,812

25.8%

 plus 6.1%

Telegraph, datacom and telematic services (Internet)

5,454

17.0%

4,782

15.8%

 plus 14.0%

Intrazonal telephony

3,141

9.8%

3,401

11.3%

-7.6%

Interconnect and traffic transmission

2,010

6.3%

3,370

11.1%

-40.3%

Other revenue

824

2.6%

838

2.8%

-1.7%

Mobile and radio, wire broadcasting, radio broadcasting and television

415

1.3%

402

1.3%

 plus 3.2%

Outsourcing and agency fees

27

0.1%

37

0.1%

-27.0%

Other services

21

0.1%

7

0.0%

 plus 200.0%

Total

32,055

100.0%

30,254

100.0%

 plus 6.0%

Thanks to an increase in ARUP during the first nine months of 2010, the proportion of mobile and radio (cellular) services rose from 31.8% to 37.0%.

Growth in revenue from Telegraph, datacom and telematic services (Internet) amounted to 14.0%, accounting for 17.0% of the revenue breakdown.

Operating expenses

The company’s operating expenses amounted to RUR 24,492 mln (-4.7%). The company’s overall operating expense breakdown looks as follows: 

 

9M10

9M09

Change

RUR, mln

Proportion

RUR, mln

Proportion

Payrolls

6,300

25.7%

6,001

23.3%

 plus 5.0%

Depreciation and amortization

5,884

24.0%

6,264

24.4%

-6.1%

Interconnect

3,665

15.0%

4,365

17.0%

-16.0%

Materials, repair and maintenance of services

2,255

9.2%

2,471

9.6%

-8.7%

Other operating expenses, incl.

6,388

26.1%

6,604

25.7%

-3.3%

Outsourcing and management expenses

1,924

7.9%

1,717

6.7%

 plus 12.1%

Agency expenses

1,512

6.2%

1,779

6.9%

-15.0%

Taxes, except profit tax

775

3.2%

791

3.1%

-2.0%

Property lease expenses

527

2.2%

532

2.1%

-0.9%

Total operating expenses

24,492

100.0%

25,705

100.0%

-4.7%

As a result, EBITDA increased 23.1% and amounted to RUR 14,546 in 9M10, operating profit increased 49.6% to RUR 8,540 mln, pre-tax profit rose 128.0% to RUR 7,382, and net profit went up 136.8% to RUR 5,745 mln.

Debt 

Indicators, RUR, mln

As of June 30, 2010

As of Dec. 31, 2009

Change

Long-term borrowed liabilities

9,665

14,102

-31.5%

Current borrowed liabilities

5,940

8,626

-31.1%

Total borrowed liabilities (interest debt)

15,605

22,728

-31.3%

Net dent

12,623

21,104

-40.2%

Net debt/EBITDA

0.87

1.79

-51.4%

Interest debt is calculated as the sum of long-term and current borrowed liabilities

Net debt is calculated as the difference between interest debt and monetary resources, cash & equivalents

The general director of Uralsvyazinform, Sergey Lukash, assessing the results of the company’s financial activities for 9M10, had the following to say: “the results show that the company continues to show steady growth in its operating efficiency.  Mobile business and Internet access are the main growth drivers, which rose 24% and 14%, respectively, while together they account for more than half of the company’s revenue.  Strict control allowed the company to reduce its expenses by nearly 5%, whereas revenue increased by 6%.  One of the operator’s main achievements was to more than double net profit.  The company’s cost-cutting policy has allowed it to decrease net debt since the beginning of the year.  In addition, implementation of the company’s strategy aimed at further strengthening its market positions in the mobile, broadband and pay TV segments should lay and groundwork for further successful expansion on the competitive market in the Urals region”.