• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Sistema Announces Financial and Operating Results for the Year Ended December 31, 2005

Posted on: Tuesday, 16 May 2006, 03:10 CDT

Sistema (LSE: SSA), the largest private sector consumer services company in Russia and the CIS, today announced its consolidated US GAAP financial results for the year ended December 31, 2005.

HIGHLIGHTS

-- Consolidated revenues up 32.4% to US$ 7.59 billion

-- OIBDA(1) up 21.1% to US$ 2.98 billion

-- Net income up 30.0% to US$ 534.4 million

-- Total consolidated assets up 48.4% to US$ 13.09 billion

Alexander Goncharuk, President and CEO, commented: "Sistema made the successful transition during 2005 to a public company with a global shareholder base. This was the result of years of considerable preparation to adopt the necessary structures and procedures to manage the resulting financial, corporate governance and communication responsibilities of a listed company. We still have work to do but are committed to ensuring the highest levels of corporate transparency and accountability across the group.

We have delivered on a number of the strategic objectives outlined during our initial public offering and are focused on achieving the remaining targets. As ever, some of these targets depend on third party decisions, which we continue to encourage. Our principal and driving aim is to generate enhanced returns for our shareholders, in terms of return on investment in our businesses and share price performance. In this respect, we take a direct and active interest in the management of our portfolio companies, and we are quick to identify, analyze and address issues and opportunities that arise within this wide range of businesses.

2005 was a year of strong organic and acquisition-led sales growth across the group, combined with a healthy increase in earnings. Our businesses are well positioned in high growth markets and we see significant opportunities to expand further in 2006." FINANCIAL SUMMARY (US$ millions) FY 2005 FY 2004 Growth Revenues 7,593.6 5,734.0 32.4% Operating income 1,957.4 1,664.7 17.6% Margin 25.8% 29.0% - Net Income 534.4 411.2 30.0% OIBDA 2,982.0 2,462.0 21.1% Margin 39.3% 43.0% -

FINANCIAL AND OPERATING REVIEW

Sistema's consolidated revenues increased by 32.4% year-on-year to US$ 7.59 billion for 2005, compared to US$ 5.73 billion in 2004. Existing businesses generated 27.7% year-on-year revenue growth or US$ 1.58 billion, with newly consolidated businesses including Barash, S-Toys and Tyumenneftegazsvyaz and others contributing a total of US$ 279 million to the 2005 result.

The non-telecommunications parts of the Group generated the highest levels of growth in the company, with the Technology segment representing 12.0% of total revenues, compared to 8.5% in 2004, and Retail increasing its share year-on-year from 1.4% to 2.6%. The Telecommunications segment represented 73.7% of total aggregated Group revenues in 2005, compared with 78.4% in 2004. The Group has also successfully continued its international operations with US$ 1.78 billion of Group revenues originating from the Ukraine and other CIS countries, compared to US$ 1.15 billion in the previous year.

Consolidated OIBDA increased by 21.1% year-on-year to US$ 2.98 billion in 2005, compared to US$ 2.46 billion in 2004. The OIBDA margin of 39.3% was lower than the 42.9% achieved in 2004, which was due to a decrease in profitability margins for the Telecommunications segment, as well as the higher growth levels of lower-margin business segments.

Group net income increased by 30.0% year-on-year to US$ 534.4 million in 2005, compared to US$ 411.2 million in 2004, with the net income margin slightly declining year-on-year from 7.2% to 7.0%.

Sistema's long-term debt increased by 28.5% to US $3.21 billion in 2005, from US$ 2.50 billion in 2004. Current debt increased significantly year-on-year from US$ 567.0 million to US$ 1.16 billion on the back of attracting several short-term loans, some of which were repaid in the beginning of 2006. The multiple of total debt to OIBDA as at December 31, 2005 stood at 1.47 times, compared to 1.24 times at the end of the previous year.

Sistema's capital expenditures, excluding acquisitions, amounted to US$ 2.48 billion in 2005, up 52.7% from US$ 1.63 billion in 2004.

Investments in acquisitions of operational businesses amounted to US$ 540.4 million in 2005 and the company also invested US$ 797.0 million in series of long-term investments during the reporting period, which are discussed in further details in the "Acquisitions and Divestitures" section of the press release.

Telecommunications

Revenues of the Telecommunications segment grew by 27.6% year-on-year to US$ 5.89 billion from US$ 4.62 billion. This was primarily driven by MTS' revenue growth, following sustained subscriber growth in Russia and the CIS. OIBDA of the Telecommunications segment increased by 21% to US$ 2.92 billion.

MTS's consolidated revenues increased by 28% year-on-year to US$ 5.01 billion, compared to US$ 3.92 billion in 2004. OIBDA was up 20% to US$ 2.57 billion with the OIBDA margin decreasing slightly to 51%. Net income increased by 14% to US$ 1.13 billion in 2005.

Comstar UTS' consolidated revenues increased by 30.5% year-on-year to US$907.6 million for the full year, compared to US$ 695.1 million in 2004. This growth was primarily organic, with businesses acquired during the year contributing US$ 32.6 million to total consolidated revenues in 2005. OIBDA was up 43.6% year-on-year to US$ 358.8 million from US$ 249.9 million in 2004, with the OIBDA margin consequently rising from 35.9% to 39.5%. Net income increased by 39.0% year-on-year to US$ 105.9 million in 2005 from US$ 76.1 million in 2004, with the net margin therefore rising to 11.7% from 11.0%.2

Technology

Technology continues to be one of the Sistema's fastest-growing segments, with revenues up 92.8% year-on-year to US$ 961.1 million in 2005 from US$ 498.4 million in 2004, with OIBDA more than tripling year-on-year to US$ 155.6 million. This growth was led by the IT services business, which reported a 60.8% increase in revenues to US$ 472.0 million in 2005 from US$ 293.5 million in 2004. The IT services business accounted for 49.1% of segment revenue with OIBDA increasing by over six times to US$ 12.1 million from US$ 1.8 million.

The telecommunications solutions business more than doubled its revenues to US$ 246.6 million from US$ 120.0 million for the previous year, with OIBDA up by 246.2% to US$ 131.9 million from US$ 38.1 million. The consumer electronics and EMS business also showed strong growth over the year, with revenues more than tripling to US$ 188.0 million in 2005 from US$ 51.6 million in 2004 and OIBDA up 44.6% from US$ 3.5 million to US$ 5.1 million. The microelectronic solutions business, accounting for 6.2% of segment revenues, remained relatively stable in 2005, reporting a 10.6% year-on-year revenue growth to US$ 59.6 million, with OIBDA down by 8% to US$ 8.1 million.

Concern SITRONICS successfully integrated companies previously acquired and from the beginning of 2005 formed a new business division, Integrated Security Systems. This division includes Videofon, who has contributed US$ 6.4 million to revenues and US$ 0.6 million to OIBDA for the Technology segment.

Insurance

Revenues for the Insurance segment increased by 45% year-on-year to US$ 408.9 million in 2005 from US$ 281.6 million in 2004 (excluding operations of Leader, which was sold in December 2005), following a 34.7 % year-on-year increase in gross premiums of US$ 464.2 million from US$ 344.5 million. The growth was primarily driven by the non-life business and further diversification in the customer base and service offering. The company successfully enhanced returns generated from the investment portfolio managed by Allianz-ROSNO Asset Management, who increased its third-party assets under management by almost six times in 2005 to US$ 152.7 million. ROSNO's net premiums earned increased by 38.9% year-on-year to US$ 364.8 million from US$ 262.5 million. The segment's share of Sistema group revenues remained largely unchanged year-on-year at 4.8%.

Banking

The Banking segment reported revenue growth of 62.4% year-on-year to US$ 106.8 million from US$ 65.7 million in 2004. This was primarily attributable to the strong growth in corporate lending and the successful start of retail operations, with the number of branches increasing to 12 and number of sub-branches to 41 during 2005, and loans issued to retail customers increasing sevenfold. Operating costs also increased as a result of significant initial costs of expansion, and the full year operating margin consequently fell from 17.8% to 11.9%.

Real Estate

In April 2006, Sistema announced the result of the regular valuation of its real estate portfolio, which was conducted by Cushman & Wakefield Stiles & Riabokobylko as of December 31, 2005. The report indicated a more than doubling of the value of Sistema's real estate portfolio over the past year from US$ 238.5 million to US$ 709.2 million.

Revenues in the real estate business were down 30.7% from US$ 113.1 million for 2004 to US$ 78.4 million for 2005 due to the fact that a large part of the real estate business' development projects was not completed at the year end and will therefore only contribute to the 2006 results. Consequently, operating income for the period declined to US$ 10.4 million from US$ 23.5 million in 2004.

Retail

Revenues for the retail business more than doubled year-on-year to US$ 208.0 million from US$ 79.3 million in 2004. This growth was principally driven by the opening of 25 new retail outlets during 2005, with the total number of outlets almost tripling to 38 by the end of the year and increasing further to 50 as of May 2006. The year-on-year development also reflected the purchases of Chudo-Ostrov, Virastayka and S-Toys businesses with revenues of US$ 10.0 million, US$ 0.9 million and US$ 53.7 million respectively. OIBDA for the segment increased at a lower pace due to its extensive roll-out program to US$ 12.1 million, compared to US$ 11.1 million in 2004.

Media

Consolidated revenues for the Group's Media segment amounted to US$ 52.4 million in 2005, compared to US$ 36.2 million in 2004. The segment's operating income was US$ 7.1 million for 2005 compared to an operating loss of US$ 0.9 million in 2004, as a result of the disposal of a number of print, publishing and distribution assets, including Nasha Pressa, Stolichnaya Pressa, Concern Radio Center, Credo Service and Gloros Stolitsa. The acquisition of the Esta cable television business and CTV, a digital television broadcasting company, contributed US$ 7.2 million to segment revenue.

ACQUISITIONS AND DIVESTITURES

MTS' 2005 acquisitions included a 51% equity interest in Bitel LLC, a Kyrgyz company holding a national GSM 900/1800 license in Kyrgyzstan; a 74.0% stake in Mobile TeleSystems Komi; a remaining 74.% equity stake in MTS-Tver, increasing its ownership in the company to 100%; a 100% in Barash Communication Technologies, Inc. ("BCTI") with operations in the Republic of Turkmenistan. MTS also acquired the remaining minority interest in Gorizont-RT in the Far East of Russia, thereby increasing its voting interest in the company to 100%. MTS also acquired: a 74.9% stake in Sweet-Com LLC, which holds a 3.5GHz radio frequency license for the Moscow region; the remaining 47.5% equity stake in Telesot Alania, a wireless operator in North Osetia (Russian Federation), increasing its ownership in the company to 100%; the remaining 6.47% equity stake in Sibinter Telecom, which has operations in the North-East part of the country, increasing its ownership in the company to 100%; and also the remaining 46.1% equity stake in ReCom, a wireless operator in the Orel region increasing its ownership in the company to 100% for a total cash consideration of US$ 360.2 million.

Comstar UTS's acquisitions included a 45.0% stake in Metrokom, a leading alternative fixed line operator in St. Petersburg, including the refinancing of its debt facility; 100.0% of Conversiya-Svyaz and Overta - two alternative fixed-line operators in the Saratov Region; 100.0% of CTK Contrast Telecom, a fixed-line provider in the Moscow Region; a 100.0% stake in Unitel, an alternative fixed line operator in the Moscow region, including the refinancing of its debts; and 89.4% of the common shares and 31.9% of the preferred shares of Tyumenneftegazsvyaz, an alternative fixed-line operator in the Tyumen region, for a total cash consideration of USD$ 50.5 million.

The Technology segment's acquisitions in 2005 included a further 53.0% equity stake in Kvant, a personal computer and components manufacturer in Zelenograd, for a total cash consideration of US$ 6.0 million, thereby increasing Sistema's voting interest in the company to 88.0%; and an additional 33.0% stake in Strom Telecom, an information and communication technology unit, for a total cash consideration of US$ 19.8 million thereby increasing the shareholding to 100%.

In addition to this, the Group also acquired a 20% minority stake in Telmos from Rostelecom for a cash consideration of $8.5 million, increasing the Group's voting power in Telmos to 100%.

In October 2005, the Group completed the acquisition of minority shareholdings in five energy companies in the Republic of Bashkortostan for a total cash consideration of $613.3 million. The acquired shareholdings included 28.17% in Novoil, 25.52% in Ufimsky NPZ, 22.43% in Ufaneftekhim, 25.0% in ANK Bashneft and 24.87% in Ufaorgsintez. All the acquired companies are listed on the Russian Trading System ("RTS").

The Group increased its ownership interest in VAST, previously a joint venture in which Sistema had 51% ownership interest and 50% voting power, to 100% for a total cash consideration of US$160.0 million. VAST owns 3% stake in MTS. The Group also acquired on the open market 0.8% common shares of MTS for a total cash consideration of US$115.5 million. As a result of these transactions, Sistema's voting power in MTS increased by 2.3% to 52.8%.

Sistema also acquired a 5.0% stake in Mezhregionalny Transit Telecom (MTT), a nationwide telecommunications transit traffic operator, for a cash consideration of US$ 6.4 million, thereby increasing the group's voting interest to 50%.

In the retail segment, Detsky Mir acquisitions included a 100% stake in Vyrastai-ka, S-Toys and Chudo-Ostrov Neva retail and wholesale networks operating in Moscow and St. Petersburg for a total cash consideration of US$ 2.0 million.

In the Banking segment, Sistema acquired a further 13.0% stake in MBRD for US$ 10 million in cash and promissory notes, increasing its voting power to 99.0%.

Sistema's Radio and Space Technology business, Concern RTI Systems, acquired a 54.0% stake in MTU Saturn, which designs and installs electric systems, for a cash consideration of US$ 1.5 million. Sistema also purchased a 51.0% stake in Yaroslavl Radio Plant, a producer of commercial payload for satellites and professional communications facilities, for a cash consideration of US$ 6.1 million.

In the mass media segment, Sistema Mass Media acquisitions included a 100.0% minus 1 share in Esta group, a leading Russian cable television operator in the MMDS standard providing services to 217,000 customers; a 74.0% stake in Cifrovoe Teleradioveshanie (CTV), a digital television broadcasting company; and 75.0% of the Upravlenie and Leasing cable television operator in the Ekaterinburg region, for a total cash consideration of US$ 20.7 million.

Sistema also completed a number of disposals during the year including 100.0% of Kamov-Holding, an official distributor of Kamov helicopters, for US$ 11.8 million in cash; 100% stakes in the Nasha Pressa, Stolichnaya Pressa, Concern Radio Center, Credo Service and Gloros Stolitsa - traditional media assets - for a combined total cash consideration of US$ 4.0 million; and 100.0% of Leader, part of ROSNO's property insurance business, for US$ 6.0 million in cash.

RECENT EVENTS FOLLOWING THE END OF THE REPORTING PERIOD

Starting from the beginning of this year Sistema implemented a number of management changes, including the appointment of Vladimir Evtushenkov as Chairman of the Board of Directors, and the appointment of Alexander Goncharuk as President of the company. Other major appointments included Sergey Shchebetov, who was appointed CEO of Sistema Telecom; Alexander Gorbunov, who was appointed acting First Vice-President, Head of Strategy and Development of Sistema; Evgeny Utkin was appointed CEO of Concern SITRONICS and Mikhail Dunaev was appointed CEO of Sistema Mass Media.

In April 2006, Mobile TeleSystems appointed Leonid Melamed as MTS' acting President and CEO. Mr. Melamed previously served as General Director of the ROSNO Insurance Group and has been replaced in that role by Levan Vasadze, previously Sistema First Vice President and Head of Strategy and Development. Vsevolod Rozanov, who previously served as Chief Financial Officer of Comstar UTS, was subsequently appointed as Vice President and Chief Financial Officer of MTS.

In February 2006, Comstar UTS completed its initial public offering and listing on the London Stock Exchange, which raised net proceeds of US$ 976.0 million for the company.

In February 2006, Comstar UTS announced the results of its public share purchase offer to MGTS common stock shareholders. Comstar UTS acquired 4.21% of MGTS ordinary shares during the offer period, for a total cash consideration of RUR 1.60 billion (equivalent of US$ 58.4 million). In March 2006, Comstar UTS also acquired 3.82% of MGTS ordinary shares in the open market for a total cash consideration of RUR 2.01 million (equivalent to US$ 73.4 million). As a result of these transactions, Comstar UTS' voting power and ownership interest in MGTS increased to 63.7% and 53.0%, respectively.

In January 2006, the Group contributed US$ 200.0 million to the share capital of Concern SITRONICS by purchasing the additional issue of its shares. This contribution increased the Group's share in Concern SITRONICS from 78.0% to 94.5%.

In February 2006, Concern SITRONICS successfully placed its debut Eurobond issue. The 3-year US$ 200 million loan notes were priced at 99.7% with an annual coupon of 7.9%. The notes are listed on the London Stock Exchange.

In February 2006, ROSNO acquired a 51% stake in Medexpress, provider of voluntary medical insurance in the north-western region of the Russian Federation, for a total cash consideration of US$ 6.6 million. The Group plans to develop Medexpress operations and use its distribution facilities as an additional channel for sale of ROSNO products.

In February 2006, the Group completed the acquisition of United Cable Networks (UCN), a pay-TV and broadband service provider in Russia, for a total cash consideration of US$ 145.9 million, including debt refinancing previously obtained by JIR Broadcasting, Inc. and JIR, Inc.

In March 2006, MBRD issued $60.0 million 8.9% Loan Participation Notes to finance a subordinated loan. The notes maturing in March 2016 are listed on the Luxembourg Stock Exchange.

In March 2006, Intourist purchased a 20% equity interest in Cosmos Hotel for approximately US$ 20.0 million. Upon completion of this transaction, Intourist became a controlling shareholder of Cosmos Hotel with 61.8% stake in its capital.

In March 2006, Concern RTI Systems purchased a 50%+1 share in UralElektro and a 100% share in UralElektro-K for a cash consideration of US$ 5.4 million. Both companies produce electronic equipment.

In March 2006, the Group announced two management incentive programs for its employees. Under the first program, Sistema transferred 14.7% of Concern SITRONICS stock to Concern SITRONICS' subsidiary, to establish a stock option plan for the top management of Concern SITRONICS. Under the second program, Sistema Finance, a subsidiary of the Group, purchased 44,564 shares of Sistema in the open market, for a total cash consideration of US$ 50.9 million. The shares are intended to be used for a share option program for Sistema's top management. (1) OIBDA is defined as operating income before depreciation and amortization. Please see the Appendix to this report for the full definition of OIBDA and its reconciliation to operating income. (2) Financial results of MTS and Comstar may vary from the earlier reported stand alone financial results due to differences in accounting principles and consolidation effects.

For further information, please visit www.sistema.com.

Sistema is the largest private sector consumer services company in Russia and the CIS, with over 60 million customers. Sistema develops and manages market-leading businesses in selected service-based industries, including telecommunications, technology, insurance, banking, real estate, retail and media. Founded in 1993, the company reported revenues of US$ 7.59 billion for the full year 2005, and total assets of US$ 13.09 billion as at December 31, 2005. Sistema's shares are listed under the symbol "SSA" on the London Stock Exchange, under the symbol "AFKS" on the Russian Trading System (RTS), and under the symbol "SIST" on the Moscow Stock Exchange (MSE).

Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Sistema. You can identify forward looking statements by terms such as "expect,""believe,""anticipate,""estimate,""intend,""will,""could,""may" or "might" the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to Sistema and its operations.

APPENDIX - NON-GAAP FINANCIAL MEASURES

This results statement includes financial information prepared in accordance with United States Generally Accepted Accounting Principles (US GAAP), as well as other non-GAAP financial information. The non-GAAP financial information should be considered as an addition to, but not as a substitute for, information prepared in accordance with US GAAP.

OIBDA is operating income before depreciation and amortization and the OIBDA margin is defined as OIBDA as a percentage of net revenues. These measures are included in this results statement in order to provide additional information regarding the Group's ability to meet future debt service payments, capital expenditure and working capital requirements, and as a metric to evaluate profitability. OIBDA is not a measure of financial performance under US GAAP, and is not an alternative to net income as a measure of operating performance, or to cash flows from operating activities as a measure of liquidity. While depreciation and amortization are considered operating costs under GAAP, these items primarily represent the non-cash current period allocation of costs arising from the acquisition or development of long term assets in prior periods. OIBDA is commonly used as a criterion for evaluation of operating performance by credit and equity investors and analysts. The calculation of OIBDA may be different from the calculation used by other companies and comparability may therefore be limited. OIBDA can be reconciled to the Group's consolidated statements as follows: US$ thousands FY 2005 FY 2004 Operating Income 1,957,424 1,664,706 Add depreciation and amortization 1,024,592 797,274 OIBDA 2,982,016 2,461,980 SISTEMA JSFC AND SUBSIDIARIES - CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME US$ THOUSANDS FY 2005 FY 2004 Sales 7,143,386 5,415,491 Revenues from financial services 450,163 318,459 ----------- ----------- TOTAL REVENUES 7,593,549 5,733,950 ----------- ----------- Cost of sales, exclusive of depreciation and amortization shown separately below (2,877,169) (2,044,827) Financial services related costs, exclusive of depreciation and amortization shown separately below (342,018) (201,631) ----------- ----------- TOTAL COST OF SALES (3,219,187) (2,246,458) ----------- ----------- Selling, general and administrative expenses (1,414,313) (1,010,288) Depreciation and amortization (1,024,592) (797,274) Other operating expenses, net (71,392) (44,529) Equity in net income of investees 78,033 27,121 Gain on disposal of interests in subsidiaries 15,326 2,184 ----------- ----------- ----------- ----------- OPERATING INCOME 1,957,424 1,664,706 ----------- ----------- Interest income 66,132 18,061 Interest expense, net of amounts capitalised (225,684) (213,943) Currency exchange and translation (loss)/gain (13,913) 12,620 ----------- ----------- Income before income tax, minority interests, extraordinary gain and cumulative effect of a change in accounting principle 1,783,959 1,481,444 ----------- ----------- Income tax expense (512,993) (445,731) ----------- ----------- Income before minority interests, extraordinary gain and cumulative effect of a change in accounting principle 1,270,966 1,035,713 ----------- ----------- Minority interests (740,514) (589,014) ----------- ----------- Income before extraordinary gain ands cumulative effect of a change in accounting principle 530,452 446,699 ----------- ----------- Extraordinary gain 3,956 - Cumulative effect of a change in accounting principle (net of income tax effect of nil) - (35,472) ----------- ----------- NET INCOME 534,408 411,227 =========== =========== Other comprehensive income/(loss): Unrealized gain on securities available for sale, net of income tax effect of nil 1,622 1,967 Change in fair value of interest rate swaps, net of income tax effect of US$ 537 and $245, respectively 1,701 (257) Translation adjustment, net of minority interests of $26,757 and $28,582, respectively, and income tax effect of nil (23,368) 29,979 ----------- ----------- ----------- ----------- Comprehensive Income 514,363 442,916 ----------- ----------- ----------- ----------- Weighted average number of common shares outstanding 9,475,980 8,100,000 ----------- ----------- Earnings (loss) per share, basic and diluted: ----------- ----------- Income before extraordinary gain and cumulative effect of a change in accounting principle 56.0 55.1 ----------- ----------- Extraordinary gain 0.4 - ----------- ----------- Cumulative effect of a change in accounting principle - (4.3) ----------- ----------- Net income 56.4 50.8 ----------- ----------- SISTEMA JSFC AND SUBSIDIARIES - CONSOLIDATED BALANCE SHEETS US$ THOUSANDS FY 2005 FY 2004 ASSETS CURRENT ASSETS: Cash and cash equivalents 482,647 503,747 Short-term investments 594,196 202,580 Loans to customers and banks, net 568,502 379,310 Insurance-related receivables 149,589 130,278 Accounts receivable, net 442,643 327,921 Prepaid expenses, other receivables and other current assets, net 578,152 230,460 VAT receivable 495,191 345,999 Inventories 482,909 276,832 Deferred tax assets, current portion 123,681 73,592 ----------- ---------- Total current assets 3,917,510 2,470,719 ----------- ---------- Property, plant and equipment, net 5,876,124 4,448,045 Advance payments for non-current assets 233,761 181,281 Investments in affiliated companies 914,203 206,520 Other investments 150,000 - Goodwill 330,932 174,341 Licenses, net 615,042 666,934 Other intangible assets, net 886,272 594,315 Debt issuance costs, net 82,662 27,267 Deferred tax assets 33,472 3,482 Other non-current assets 50,872 50,424 ----------- ---------- TOTAL ASSETS 13,090,850 8,823,328 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable 594,816 361,016 Bank deposits and notes issued 496,829 326,861 Insurance-related liabilities 412,328 344,460 Taxes payable 125,474 117,888 Deferred tax liabilities, current portion 28,149 22,071 Accrued expenses, subscriber prepayments and other current liabilities 993,344 770,192 Short-term notes payable 637,769 221,103 Current portion of long-term debt 520,310 340,938 ----------- ---------- Total current liabilities 3,809,019 2,504,529 ----------- ---------- LONG-TERM LIABILITIES: Capital lease obligations, net of current portion 6,682 3,412 Long-term debt, net of current portion 3,202,629 2,494,522 Subscriber prepayments, net of current portion 163,897 156,233 Deferred tax liabilities, net of current portion 237,916 228,977 Postretirement benefit obligation 16,217 11,513 ----------- ---------- Total long-term liabilities 3,627,341 2,894,657 ----------- ---------- -- Deferred revenue 125,700 130,913 ----------- ---------- TOTAL LIABILITIES 7,562,060 5,530,099 ----------- ---------- Minority interests in equity of subsidiaries 2,295,147 1,851,027 Commitments and contingencies - - SHAREHOLDERS' EQUITY: Share capital (9,650,000 shares with par value of 90 RUR issued and outstanding as of December 31,2005, 8,100,000 shares issued and outstanding as of December 31, 2004) 30,057 25,090 Additional paid-in capital 1,479,743 198,882 Retained earnings 1,696,276 1,170,620 Accumulated other comprehensive income 27,567 47,610 ----------- ---------- TOTAL SHAREHOLDERS' EQUITY 3,233,643 1,442,202 ----------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 13,090,850 8,823,328 =========== ========== SISTEMA JSFC AND SUBSIDIARIES - CONSOLIDATED STATEMENTS OF CASH FLOWS US$ THOUSANDS 2005 2004 OPERATING ACTIVITIES: Net income $ 534,408 $ 411,227 Adjustments to reconcile net income to net cash provided by operations: Extraordinary gain (3,956) - Depreciation and amortization 1,024,592 797,274 Loss on disposal of property, plant and equipment 15,638 1,551 Long-term investments impairment - 3,070 (Gain)/Loss on disposal of interest in subsidiaries (15,326) 1,862 Cumulative effect of a change in accounting principle - 35,472 Minority interests 740,514 589,014 Equity in net income of investees (78,033) (27,121) Deferred income tax benefit (105,920) (58,903) Provision for doubtful accounts receivable 59,564 29,809 Allowance for loan losses 62,054 13,810 Inventory obsolescence expense 10,875 5,868 Changes in operating assets and liabilities, net of effects from purchase of businesses: Trading securities (306,567) 27,142 Loans to banks 86,254 (25,661) Insurance-related receivables (47,837) 31,111 Accounts receivable (181,033) (101,567) Prepaid expenses, other receivables and other current assets (343,342) 66,240 VAT receivable (149,192) (67,558) Inventories (200,444) (112,269) Accounts payable 311,936 54,110 Insurance-related liabilities 127,255 51,985 Taxes payable 6,566 (1,997) Accrued expenses, subscriber prepayments and other liabilities 218,510 171,966 Postretirement benefits obligation 4,704 7,636 ----------- ----------- Net cash provided by operations 1,771,220 1,904,071 ----------- ----------- INVESTING ACTIVITIES: Purchases of property, plant and equipment (2,095,235) (1,498,098) Purchases of intangible assets (372,552) (164,577) Purchases of businesses, net of cash acquired (540,404) (338,906) Proceeds from disposals of subsidiaries, net of cash disposed 12,862 649 Purchases of long-term investments (796,990) (76,217) Proceeds from sale of long-term investments 13,053 6,850 Purchases of short-term investments (839,516) (142,696) Proceeds from sale of short-term investments 662,847 180,650 Proceeds from sale of property, plant and equipment 4,179 7,807 Net increase in loans to customers (319,174) (39,898) ----------- ----------- Net cash used in investing activities (4,270,930) (2,064,436) ----------- ----------- FINANCING ACTIVITIES: Proceeds from/(Principal payments on) short-term borrowings, net 408,707 (263,981) Net increase in deposits from customers 112,663 150,876 Net increase in bank promissory notes issued 50,511 12,838 Proceeds from grants 3,360 3,285 Proceeds from capital transactions of subsidiaries - 9,445 Proceeds from long-term borrowings, net of debt issuance costs 1,357,125 1,458,082 Principal payments on long-term borrowings (526,852) (868,347) Principal payments on capital lease obligations (4,468) (7,924) Payments to shareholders of subsidiaries (198,333) (108,165) Dividends paid (8,752) (5,162) Proceeds from issuance of common stock, net of issuance costs 1,284,649 - Net cash provided by financing activities $ 2,478,610 $ 380,947 ----------- ----------- INCREASE IN CASH AND CASH EQUIVALENTS $ (21,100) $ 220,582 CASH AND CASH EQUIVALENTS, beginning of the period 503,747 283,165 ----------- ----------- CASH AND CASH EQUIVALENTS, end of the period $ 482,647 $ 503,747 =========== =========== CASH PAID DURING THE YEAR FOR: Interest $ (204,171) $ (265,779) Income taxes (708,505) (487,447) NON-CASH INVESTING AND FINANCING ACTIVITIES: Property, plant and equipment contributed free of charge $ 6,259 $ 13,597 Equipment acquired through vendor financing 2,533 20,714 Equipment acquired under capital leases 7,738 6,393

Source: Business Wire

More News in this Category