Sistema Announces Financial and Operating Results for the Year Ended December 31, 2005.MOSCOW -- Sistema AFK Sistema is a large Russian holding company, headed by business oligarch Vladimir Yevtushenkov. In March 2006, Yevtushenkov controlled 62% of the shares in Sistema.[1] (LSE LSE - Language Sensitive Editor : SSA (Serial Storage Architecture) A fault tolerant peripheral interface from IBM that transfers data at 80 and 160 Mbytes/sec. SSA uses SCSI commands, allowing existing software to drive SSA peripherals, which are typically disk drives. ), the largest private sector consumer services Consumer Services refers to the formulation, deformulation, technical consulting and testing of most consumer products, such as food, herbs, beverages, vitamins, pharmaceuticals, cosmetics, hair products, household cleaners, [paints, plastics, metals, waxes, coatings, minerals, company in Russia Russia, officially the Russian Federation, Rus. Rossiya, republic (2005 est. pop. 143,420,000), 6,591,100 sq mi (17,070,949 sq km). and the CIS Cis (sĭs), same as Kish (1.) (1) (CompuServe Information Service) See CompuServe. (2) (Card Information S , today announced its consolidated US GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial results for the year ended December December: see month. 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 (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , 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 Corporate Governance The relationship between all the stakeholders in a company. This includes the shareholders, directors, and management of a company, as defined by the corporate charter, bylaws, formal policy, and rule of law. and communication responsibilities of a listed company listed company n → compañía cotizable listed company n → société cotée en Bourse listed company list n → . We still have work to do but are committed to ensuring the highest levels of corporate transparency For other definitions of transparency, see . Corporate transparency is a form of radical transparency : The construct removing all barriers to - and facilitating of - free and easy public access to corporate, political and personal information and the laws, rules, social 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 Communicating information, including data, text, pictures, voice and video over long distance. See communications. 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 Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. with US$ 1.78 billion of Group revenues originating from the Ukraine Ukraine (y  `krān, ykrān`), Ukr. Ukraina, republic (2005 est. pop. and other CIS
countries There are two lists concerning CIS countries:
Consolidated OIBDA OIBDA Operating Income Before Depreciation & Amortization 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 Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered 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 Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. 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 Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-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 The miniaturization of electronic circuits. See chip. 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 In the physical sciences, non-life is an umbrella term set to distinguish or characterize those inanimate chemical precursors found in the primeval soup of the early years of planetary evolution from which life, theoretically, evolved or came into existence. business and further diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. 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 Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. 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 sevenfold Adjective 1. having seven times as many or as much 2. composed of seven parts Adverb by seven times as many or as much Adj. 1. . Operating costs operating costs npl → gastos mpl operacionales also increased as a result of significant initial costs of expansion, and the full year operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: 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 Cushman is a manufacturer of industrial vehicles, personal vehicles, and other custom vehicles, including parking patrol auto rickshaws. Models Haulster (Small industrial multi-purpose truck) Bellhop Series (Golf Carts) Tug(Large Truck) & Wakefield Wakefield, estate, United States Wakefield, family estate of George Washington, on the Potomac River, E Va.; part of the George Washington Birthplace National Monument (see National Parks and Monuments, table). Stiles Stiles can refer to: People
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 Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. 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 retail outlet n → punto de venta retail outlet n → point m de vente retail outlet retail n → 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 operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. 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 Stolichnaya (Russian: Столичная: "capital (vodka)", stress on "lich" pronounced like "teach") is a Russian vodka produced from wheat and rye grains in Tambov, a town located in the Pressa, Concern Radio Center, Credo Credo A Latin word which means "a set of fundamental beliefs or a guiding principle.” For a company, a credo is like a mission statement. Notes: For example, Sam Walton, founder of Wal-Mart, established the "Three Basic Beliefs” as his company's credo. Service and Gloros Stolitsa. The acquisition of the Esta cable television business and CTV CTV Canadian Television (Network Limited) , a digital television broadcasting company Noun 1. broadcasting company - a company that manages tv or radio stations company - an institution created to conduct business; "he only invests in large well-established companies"; "he started the company in his garage" , contributed US$ 7.2 million to segment revenue. ACQUISITIONS AND DIVESTITURES MTS' 2005 acquisitions included a 51% equity interest in Bitel LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , a Kyrgyz Kyr·gyz or Kir·ghiz or Kir·giz n. pl. Kyrgyz or Kyr·gyz·es or Kirghiz or Kir·ghiz·es or Kirgiz or Kir·giz·es 1. company holding a national GSM (Global System for Mobile Communications) A digital cellular phone technology based on TDMA that is the predominant system in Europe, but also used worldwide. Developed in the 1980s, GSM was first deployed in seven European countries in 1992. 900/1800 license in Kyrgyzstan Kyrgyzstan (kĭrgēstän`), officially Kyrgyz Republic, republic (2005 est. pop. 5,146,000), c.76,600 sq mi (198,400 sq km), central Asia. ; a 74.0% stake in Mobile TeleSystems Mobile TeleSystems or MTS (RTS:B>MTSS MICEX:B>MTSI) is the largest mobile operator in Russia and CIS with over 74.67 million subscribers as of June 30, 2007.[1] The MTS wireless network operates using the GSM standard. Komi Komi (kō`mē, kô`–), Finnic people of the northeastern part of European Russia. There are two traditional branches of the Komi—Zyrians and Permyaks. ; a remaining 74.% equity stake in MTS-Tver, increasing its ownership in the company to 100%; a 100% in Barash Communication Technologies, Inc. ("BCTI BCTI Business Computer Training Institute BCTI Battlefield Control Terminal Interface ") with operations in the Republic of Turkmenistan Turkmenistan (t rkmyĕ'nyĭstän`), republic (2005 est. pop. 4,952,000), 188,455 sq mi (488,100 sq km), central Asia. . MTS (1) See Microsoft Transaction Server.(2) (Modular TV System) The stereo channel added to the NTSC standard, which includes the SAP audio channel for special use. 1. MTS - Message Transport System. 2. also acquired the remaining minority interest in Gorizont-RT in the Far East of Russia, thereby increasing its voting interest Voting interest in business and accounting is a percentage of voting stock owned. This notion is different from economic interest that refers to a percentage of all the equity issued, including preferred stock, warrants, and so on. 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 Alania: see Ossetia. , a wireless operator in North Osetia (Russian Federation Russian Federation: see Russia. ), increasing its ownership in the company to 100%; the remaining 6.47% equity stake in Sibinter Telecom, which has operations in the North-East Adv. 1. north-east - to, toward, or in the northeast nor'-east, northeast north-east n → nor(d)este m north-east north n → nord-est 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 Refinancing An extension and/or increase in amount of existing debt. of its debt facility; 100.0% of Conversiya-Svyaz and Overta - two alternative fixed-line operators in the Saratov Region; 100.0% of CTK CTK Christ The King (school; various locations) CTK Ceská Tisková Kancelár (Czech News Agency) CTK Composite Tool Kit CTK Configuration Toolkit CTK Chance to Kill (video games) 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 Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. of Tyumenneftegazsvyaz, an alternative fixed-line operator in the Tyumen region, for a total cash consideration of USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. $ 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 ANK Ankara (Turkey) ANK Attempted, Not Known ANK Alphanumeric Keyboard ANK Anunaki (ancient Sumerian Gods) Bashneft and 24.87% in Ufaorgsintez. All the acquired companies are listed on the Russian Trading System Russian Trading System (RTS) An electronic system in Russia, like the Nasdaq system on which the majority of Russian equities trading is conducted. ("RTS (Request To Send) An RS-232 signal sent from the transmitting station to the receiving station requesting permission to transmit. Contrast with CTS. 1. (operating system) RTS - run-time system. 2. "). 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$115.5 million. As a result of these transactions, Sistema's voting power in MTS increased by 2.3% to 52.8%. Sistema also acquired a 5.0% stake in Mezhregionalny Transit Telecom (MTT MTT 3-(4,5-Dimethylthiazol-2-Yl)-2,5-Diphenyltetrazolium Bromide MTT Machine Tool Technology MTT Microwave Theory and Techniques MTT Mobile Task Team MTT Multi-Table Tournament (poker) ), a nationwide telecommunications transit traffic operator, for a cash consideration of US$ 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 promissory note, unconditional written promise to pay a certain sum of money at a definite time to bearer or to a specified person on his order. Promissory notes are generally used as evidence of debt. , increasing its voting power to 99.0%. Sistema's Radio and Space Technology business, Concern RTI RTI - Return from interrupt Systems, acquired a 54.0% stake in MTU (1) (Maximum Transmission Unit, Maximum Transfer Unit) The largest frame size that can be transmitted over the network. For example, an Ethernet MTU is 1,500 bytes. Messages longer than the MTU must be divided into smaller frames. 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 (1) Refers to the "actual data" in a packet or file minus all headers attached for transport and minus all descriptive meta-data. In a network packet, headers are appended to the payload for transport and then discarded at their destination. 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 Russian associated in some way with Russia. Russian blue a breed of cats with short, dense, silver-tipped blue-colored coat and vivid green eyes. cable television operator in the MMDS (Multichannel Multipoint Distribution Service or Microwave Multipoint Distribution Service) A digital wireless transmission system that works in the 2.2-2.4 GHz range. 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 levan Dentistry A fructose homopolymer linked by β-2,6 bonds, formed by the partial digestion of sucrose by Bacillus and Streptococcus spp, which is a component of dental plaque representing the first biochemical event in cariogenesis. Vasadze, previously Sistema First Vice President and Head of Strategy and Development. Vsevolod Rozanov, who previously served as Chief Financial Officer of Comstar UTS (Universal Timesharing System) Amdahl's version of Unix System V. Release 4.0 is POSIX compliant. , 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 London Stock Exchange London marketplace for securities. It was formed in 1773 by a group of stockbrokers who had been doing business informally in local coffeehouses. , which raised net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of US$ 976.0 million for the company. In February 2006, Comstar UTS announced the results of its public share purchase offer to MGTS MGTS Message Generator Traffic Simulator MGTS Message Generation Test System 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 Eurobond A bond that is denominated in a different currency than the one of the country in which the bond is issued. Notes: A eurobond is usually categorized by the currency in which it is denominated, and is usually issued by an international syndicate. 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 UCN Universidad Católica del Norte (Chile) UCN University College of the North (The Pas, Manitoba, Candad) UCN Ultra Cold Neutron UCN Unión del Centro Nacional ), a pay-TV and broadband service provider An ISP, telephone company, cable company or other carrier that offers high-speed communications to homes and businesses, typically for Internet access. Cable modems, DSL and T1 lines are the common technologies. See broadband, cable modem, DSL and T1. in Russia, for a total cash consideration of US$ 145.9 million, including debt refinancing previously obtained by JIR JIR Juventud de Izquierda Revolucionaria JIR Journal of Irreproducible Results JIR Journal of Improbable Results JIR Jumper for Infra Red Broadcasting, Inc. and JIR, Inc. In March 2006, MBRD issued $60.0 million 8.9% Loan Participation Notes to finance a subordinated loan In the field of finance, a subordinated loan is a type of loan which ranks after other debts should a company fall into receivership or be closed. It is also known as subordinated debt, or as junior debt. . The notes maturing in March 2016 are listed on the Luxembourg Stock Exchange The Luxembourg Stock Exchange (French: Bourse de Luxembourg) is a stock exchange based in Luxembourg City, in southern Luxembourg. . In March 2006, Intourist purchased a 20% equity interest in Cosmos cosmos (kŏz`məs), any plant of the tropical American genus Cosmos of the family Asteraceae (aster family). C. bipinnatus, Hotel for approximately US$ 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 MSE Mouse (computer) MSE Materials Science & Engineering MSE Mean Squared Error MSE Mean Square Error MSE Master of Science in Engineering MSE Manufacturing Systems Engineering MSE Mechanically Stabilized Earth ). Some of the information in this press release may contain projections or other forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or occurring after the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" 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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (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 Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. , 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 The apportionment or designation of an item for a specific purpose or to a particular place. In the law of trusts, the allocation of cash dividends earned by a stock that makes up the principal of a trust for a beneficiary usually means that the dividends will be treated as 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
|
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion