News

1H 2005 REVENUE TOTALED RUR 14.7 BILLION, as reported under our first interim IFRS statement

24.10.2005

The present consolidated financial statement for the six months of 2005 is prepared in accordance with International Financial Reporting Standards (IFRS) and is presented in the extent of unaudited Consolidated Balance Sheet, Consolidated Statement of Operations (Profit and Loss Statement), and the Notes to the Consolidated Financial Statements for the 6-month period ended June 30, 2005.

OJSC ‘Uralsvyazinform’ is publishing the 6-months’ financial statements under IFRS for the first time. The unaudited financial statement does not include comparable financial data for the six months of 2004. For comparability purpose, the company provides the audited financial data for the period ended December 31, 2004, and as of December 31, 2004.

The financial statements under IFRS comprise the consolidated financial statements, property and liabilities of OJSC ‘Uralsvyazinform’ and its 15 subsidiaries. As of July 1, 2005 the largest of these subsidiaries, including ZAO ‘Ermak RMS’, OOO ‘South Urals Cellular Phone’, ZAO ‘Tyumenruscom’, OOO ‘Uralcom’, and ZAO ‘VSNET’ were reorganized in the form of merger with and into OJSC ‘Uralsvyazinform’.

Financial highlights, RUR million


Main Balance Sheet data, RUR million


In commenting the results of 1H 2005, Anatoly Ufimkin, CEO noted, ‘It is a pleasure for me to present the half-year unaudited financial statements under IFRS. Firstly, because here at USI, it is the first-ever interim financial report under international accounting standards, which proves for our continued effort in developing the company’s transparency. In our opinion, the results have reconfirmed the sustainable growth of the business, as Uralsvyazinform delivered in line with management’s expectations. Despite somewhat lower margins, we expect that these should recover in the second half of the year. This optimistic outlook is backed by the ongoing progress in a number of fields, including:

• Our mobile business has delivered strongly in terms of revenues, with an increased contribution of over 27% to overall revenues. Since the beginning of the year, our mobile subscriber base increased by 58%, while we expect it to reach 3.5 million benchmark by the end of the year. Together with new services, primarily data transmission, unregulated services contribute almost 33% to the company’s revenues. I trust this to be a positive indicator, which offers the sense of business versatility and its favorable growth outlooks.
• Sustainable growth in local and long-distance segments. In the first six month of the year, USI added 80 thousand subscribers to its fixed-line network. Domestic and international long-distance traffic increased by 8% and 12%, respectively, compared to 1H 2004. We also expect that new local tariffs in effect since September 1, 2005 will have a positive impact on cash generation. On average, monthly subscriber fees for residents increased by 22%, and by 15% for organizations.
• Within the end-2005 — 2006, Uralsvyazinform is placing two bond issues worth RUR 5.0 billion, following the approval by the Board of Directors in September this year, which should help diversify our debt structure.

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6-Month Financial Statements for the period ended June 30, 2005