TIDMTNW
RNS Number : 8853Z
Teleset Networks PCL
30 September 2009
Press Announcement
+------------------------------------+----------------------------------------------+
| FOR IMMEDIATE RELEASE | 30 September, 2009 |
+------------------------------------+----------------------------------------------+
Teleset Networks ("Teleset" or "the Company"), a leading alternative fixed-line
telecom operator in the Volga region of the Russian Federation, today announces
its unaudited Interim Results for the six months ended 30 June 2009.
Financial Highlights
Teleset achieved an excellent financial performance for the first half of 2009
despite generally unfavourable economic circumstances. During the period, the
Company's operating revenue grew by 43 per cent to RUR 502 million (H1 2008: RUR
351 million) with EBITDA margin increasing substantially to 62 per cent
(H1 2008: 59 per cent). Net profit margin also increased to 31 per cent compared
to 29 per cent for the same period last year.
The functional currency of the subsidiaries of Teleset Networks is the Russian
ruble, while the presentation currency is the US dollar. As a result of the
substantial depreciation of the ruble, the presentation of the Company's results
in US dollars does not reflect the true underlying performance of Teleset
Networks which has been very positive when compared to its peers.
* Operating revenue grew by 43 per cent to RUR 502 million (H1 2008: RUR 351
million)
* EBITDA margin increased substantially to 62 per cent (H1 2008: 59 per cent)
* Net profit margin also increased to 31 per cent compared to 29 per cent for the
same period last year
* Net debt reduced from USD 8 million to USD 4 million
+---------------------------------+--------------+----------------+------------------+
| 6 months ended June, 30 | 1H 2009 | 1H 2008 | Change |
+---------------------------------+--------------+----------------+------------------+
| Operating revenue, RUR | 502,052,585 | 351,248,598 | 43% |
+---------------------------------+--------------+----------------+------------------+
| Operating revenue, USD | 15,127,304 | 14,754,081 | 2.5% |
+---------------------------------+--------------+----------------+------------------+
| Operating profit, USD | 6,635,099 | 6,549,610 | 1.3% |
+---------------------------------+--------------+----------------+------------------+
| EBITDA, USD | 9,350,090 | 8,667,207 | 7.9% |
+---------------------------------+--------------+----------------+------------------+
| EBITDA margin | 62% | 59% | |
+---------------------------------+--------------+----------------+------------------+
| Net profit, USD | 4,714,034 | 4,349,851 | 8.4% |
+---------------------------------+--------------+----------------+------------------+
| Net margin | 31% | 29% | |
+---------------------------------+--------------+----------------+------------------+
| Earnings per share, cent | 2.99 | 2.91 | 2.7% |
+---------------------------------+--------------+----------------+------------------+
Operational Highlights
* Successful completion of STS (Ulyanovsk) integration with a significant
contribution to revenue and profit
* Broadband base growth of 32 per cent to 34,600 subscribers
* Successful zonal network operation
* Launch of a unified call-centre for our customers in Tatarstan
* Strong underlying development of the enlarged business
Contacts
+------------------------------------------------+----------------------------+
| Teleset Networks: Yiannis Demetriou (CEO) | +357 22 450 790 |
+------------------------------------------------+----------------------------+
| Astaire Securities Plc - Nominated Adviser & | +44 20 7448 4400 |
| Broker: | |
| Shane Gallwey | |
+------------------------------------------------+----------------------------+
| Bankside Consultants - Financial PR adviser: | +44 20 7367 8888 |
| Simon Bloomfield, Steve Liebmann, Andy Harris | |
+------------------------------------------------+----------------------------+
Non-executive Chairman's statement
The economic landscape has changed dramatically since the middle of 2008 with
the decline in the global economy and turmoil in the financial markets creating
exceptionally challenging business conditions all over the world.
Against this background, the performance of Teleset Networks has been most
encouraging and all four operational companies within the Group (Teleset in
Kazan, TNPKO, Teleset in Naberezhnye Chelny and STS in Ulyanovsk) have been
delivering strong results.
Management's main priority has been focused on continuing the organic
development of the Company whilst successfully completing the integration of
STS, as planned, in March 2009. As expected, STS contributed significantly to
profitability for the 6 months ended 30 June 2009 and we are now starting to
realise synergies from the enlarged business.
Building the customer base
At 30 June 2009, the total number of Teleset Networks telephone subscribers was
161,600 with broadband users increasing by 32 per cent to 34,600 since the end
of 2008. This in turn reflects continuing growth in broadband penetration in
Tatarstan which, at 32 per cent, compares favourably with the average
penetration of 25 per cent for Russia as a whole*.
The investment we made in our digital network is enabling Teleset to take full
advantage of this situation by actively promoting DSL with the offer of
complementary services, such as IPTV, WiFi connection and many others.
Another important step in the development of Teleset is the zonal network, which
has already become an important contributor to the Company's overall revenue.
Board of directors
In April 2009 Mr. Georgui Horozov, a Non-executive Director representing the
Black Sea Trade and Development Bank, resigned from the Board. His vast
experience has been of great value to us and I would like to thank him for his
valuable input to the Company.
I would also like to thank my Board colleagues for their hard work during the
last challenging months and to pay tribute to employees, at all levels, for
their commitment and loyalty to the Company.
Future prospects
Teleset Networks is continuing to build the business and shareholder value for
the long-term, investing in the infrastructure of the Volga region and
building strong relationships with our customers and property developers that
are based on excellent service and on our commitment to helping them thrive in
this fast changing world.
We are confident that 2009 will be another year of significant and profitable
progress.
Philippos Vatiliotis, Non-executive Chairman
*Data from the report of the Ministry of Informatization and Communications of
Tatarstan on the results of the first half 2009 and goals for the second half
2009, http://mcrt.tatar.ru/rus/pressa/relizy/press-release/108921.htm
Chief Executive's statement
The results of Teleset Networks for the first half of 2009 provide a solid basis
for optimism about the future. Despite the fact that 2009 has so far been tough
for the economy and for the business generally, the results we have achieved
have met all our expectations with all areas delivering resilient performances.
As a consequence, we are confident that Teleset will emerge from this recession
a strong business with significantly better prospects than our competitors.
New opportunities
Teleset's success in difficult economic circumstances is the result of reacting
quickly to changes in market conditions and offering business and residential
users new and improved products and services at competitive prices.
This approach has been key in Teleset continuing the rapid expansion of its
broadband customer base which increased by 32 per cent in the first half of 2009
to 34,600 subscribers.
As a result of an active marketing and sales programme, Teleset is continuing to
grow its broadband customer base which will benefit the financial performance in
the second half of 2009 and beyond.
Another significant contributor to the Company's growth has been the zonal
network. We anticipate that this will become an increasingly significant source
of revenue.
Following the vast investment made in its digital network, Teleset Networks has
a significant edge over many of its local competitors. This will enable the
Company to continue to be successful, and increase share, in a rapidly changing
market.
Meeting the customers' needs
We have made major advances in customer service which will continue to be
crucial to our success. In January 2009, we launched a unified call-center for
our subscribers in Kazan and Naberezhnye Chelny. Now all our customers, whether
residential or corporate, fixed-line or broadband subscribers, can access
comprehensive advice on our services, tariffs and modern technologies.
Our goal is to make Teleset Networks a leader in customer service in the region.
For this purpose we have introduced a client satisfaction program, including
various measures to increase the loyalty of our clients. Our approach to
customer service will be to deliver products and service to suit their
individual needs.
Since this summer, our clients have been able to subscribe to our services both
separately and in a range of tailor-made packages on which they can benefit from
significant financial incentives.
We are proud that many new customers joined us in the first half 2009. They
include state and municipal institutions (Administration of the Ministry of
industry and trade of the Russian Federation for Tatarstan), educational
establishments (Kazan state technical university), numerous banks and a big
number of SMEs.
Results
Despite the financial downturn, the results we have achieved in the first half
of 2009 are in line with the budget and with the management's expectations.
It needs to be noted, that the functional currency of the subsidiaries of
Teleset Networks is the Russian ruble, while the presentation currency is the US
dollar. As a result of the substantial depreciation of the ruble, the
presentation of the Company's results in US dollars does not reflect the true
underlying performance of Teleset Networks which we believe is both excellent
and reflects a significantly better operational performance than our peers.
In the 6 months ended 30 June 2009, Teleset's operating revenue was USD 15.1
million. This means 2.5 per cent growth since last year. In ruble equivalent the
operating revenue growth rate is 43 per cent.
Net profit is USD 4.71 million, which means an increase on the first half of
2008 of 8.4 per cent (H1 2008: USD 4.34 million). In terms of the functional
currency, the increase was 51 per cent to RUR 156.5 million (H1 2008: RUR 103.5
million).
Another key figure is the EBITDA margin which was 62 per cent for the period (H1
2008 - 59 per cent).
Internet services continue to generate sustainable income which was USD 4.7
million or 35.8 per cent of total revenues (net of zonal revenues) for the first
half of 2009.
An important contributor to the Group's income remains telephony rental fees
which were USD 4.5 million, constituting 34.8 per cent of total income for the
period.
+------------------------+-------------------+----------------+
| | H1 2009, USD | Share of |
| | | revenue |
+------------------------+-------------------+----------------+
| Connection fees | 124,241 | 1.0% |
+------------------------+-------------------+----------------+
| Rental fees | 4,534,071 | 34.8% |
+------------------------+-------------------+----------------+
| Traffic fees | 1,188,327 | 9.1% |
+------------------------+-------------------+----------------+
| ISDN: Connection fees | 54,202 | 0.4% |
+------------------------+-------------------+----------------+
| ISDN: Traffic fees | 959,767 | 7.4% |
+------------------------+-------------------+----------------+
| Internet Services | 4,669,725 | 35.8% |
+------------------------+-------------------+----------------+
| IP Services | 220,348 | 1.7% |
+------------------------+-------------------+----------------+
| Sundry Income | 1,296,878 | 9.9% |
+------------------------+-------------------+----------------+
Outlook for full year 2009
Teleset is weathering the global economic storm quite well. It is also
benefiting from the low penetration of broadband services in Tatarstan and its
superior operating efficiency and consequent ability to win market share.
We continue to balance our rapid growth with strong business organisation and a
focus on optimising costs.
With sustainable growth coming from both an expanding product portfolio and from
selective expansion outside the region, all supported by a strong, cash-heavy
balance sheet, the future prospects of the Company seem very promising.
Yiannis Demetriou, Chief Executive Officer
Condensed consolidated statement of financial position
30 June 2009
+---------------------------------------------+------+------------+--------------+
| | | 30 June | 31 December |
+---------------------------------------------+------+------------+--------------+
| | | 2009 | 2008 |
+---------------------------------------------+------+------------+--------------+
| | Note | US$ | US$ |
+---------------------------------------------+------+------------+--------------+
| ASSETS | | | |
+---------------------------------------------+------+------------+--------------+
| | | | |
+---------------------------------------------+------+------------+--------------+
| Non-current assets | | | |
+---------------------------------------------+------+------------+--------------+
| Property, plant and equipment | 4 | 30,877,259 | 32,209,568 |
+---------------------------------------------+------+------------+--------------+
| Intangible assets | 5 | 27,082,000 | 28,559,091 |
+---------------------------------------------+------+------------+--------------+
| | | 57,959,259 | 60,768,659 |
+---------------------------------------------+------+------------+--------------+
| | | | |
+---------------------------------------------+------+------------+--------------+
| Current assets | | | |
+---------------------------------------------+------+------------+--------------+
| Inventories | | 2,982,024 | 3,185,603 |
+---------------------------------------------+------+------------+--------------+
| Trade and other receivables | 6 | 7,570,463 | 6,826,416 |
+---------------------------------------------+------+------------+--------------+
| Refundable taxes | 11 | - | 370,120 |
+---------------------------------------------+------+------------+--------------+
| Cash at bank and in hand | | 20,704,457 | 22,588,307 |
+---------------------------------------------+------+------------+--------------+
| | | 31,256,944 | 32,970,446 |
+---------------------------------------------+------+------------+--------------+
| | | | |
+---------------------------------------------+------+------------+--------------+
| Total assets | | 89,216,203 | 93,739,105 |
+---------------------------------------------+------+------------+--------------+
| | | | |
+---------------------------------------------+------+------------+--------------+
| EQUITY AND LIABILITIES | | | |
+---------------------------------------------+------+------------+--------------+
| | | | |
+---------------------------------------------+------+------------+--------------+
| Equity attributable to owners of the parent | | | |
+---------------------------------------------+------+------------+--------------+
| Share capital | | 4,335,361 | 4,335,361 |
+---------------------------------------------+------+------------+--------------+
| Other reserves | 7 | 25,729,135 | 28,084,984 |
+---------------------------------------------+------+------------+--------------+
| Retained earnings | | 22,487,435 | 17,773,401 |
+---------------------------------------------+------+------------+--------------+
| | | 52,551,931 | 50,193,746 |
+---------------------------------------------+------+------------+--------------+
| | | | |
+---------------------------------------------+------+------------+--------------+
| Minority interest | | 4,371,904 | 4,023,233 |
+---------------------------------------------+------+------------+--------------+
| Total equity | | 56,923,835 | 54,216,979 |
+---------------------------------------------+------+------------+--------------+
| | | | |
+---------------------------------------------+------+------------+--------------+
| Non-current liabilities | | | |
+---------------------------------------------+------+------------+--------------+
| Borrowings | 8 | 19,776,106 | 22,770,642 |
+---------------------------------------------+------+------------+--------------+
| Deferred tax liabilities | | 2,479,113 | 3,107,243 |
+---------------------------------------------+------+------------+--------------+
| Deferred income | 10 | 84,679 | 90,013 |
+---------------------------------------------+------+------------+--------------+
| | | 22,339,898 | 25,967,898 |
+---------------------------------------------+------+------------+--------------+
| | | | |
+---------------------------------------------+------+------------+--------------+
| Current liabilities | | | |
+---------------------------------------------+------+------------+--------------+
| Trade and other payables | 9 | 4,874,100 | 5,737,582 |
+---------------------------------------------+------+------------+--------------+
| Deferred income | 10 | 12,982 | 13,707 |
+---------------------------------------------+------+------------+--------------+
| Borrowings | 8 | 5,000,000 | 7,802,939 |
+---------------------------------------------+------+------------+--------------+
| Current tax liabilities | 11 | 65,388 | - |
+---------------------------------------------+------+------------+--------------+
| | | 9,952,470 | 13,554,228 |
+---------------------------------------------+------+------------+--------------+
| | | | |
+---------------------------------------------+------+------------+--------------+
| Total liabilities | | 32,292,368 | 39,522,126 |
+---------------------------------------------+------+------------+--------------+
| | | | |
+---------------------------------------------+------+------------+--------------+
| Total equity and liabilities | | 89,216,203 | 93,739,105 |
+---------------------------------------------+------+------------+--------------+
Condensed consolidated income statement
Period from 1 January 2009 to 30 June 2009
+--------------------------------------------------+------+-------------+--------------+
| | | | |
+--------------------------------------------------+------+-------------+--------------+
| | | 30 | 30 June 2008 |
| | | June 2009 | |
+--------------------------------------------------+------+-------------+--------------+
| | Note | US$ | US$ |
+--------------------------------------------------+------+-------------+--------------+
| | | | |
+--------------------------------------------------+------+-------------+--------------+
| Revenue | 12 | 15,127,304 | 14,754,081 |
+--------------------------------------------------+------+-------------+--------------+
| Operating expenses | | (8,644,708) | (8,452,544) |
+--------------------------------------------------+------+-------------+--------------+
| Other income | | 152,503 | 278,442 |
+--------------------------------------------------+------+-------------+--------------+
| Other expenses | | - | (30,369) |
+--------------------------------------------------+------+-------------+--------------+
| Operating profit | | 6,635,099 | 6,549,610 |
+--------------------------------------------------+------+-------------+--------------+
| Finance income | 14 | 644,895 | 735,076 |
+--------------------------------------------------+------+-------------+--------------+
| Finance costs | 14 | (818,276) | (914,533) |
+--------------------------------------------------+------+-------------+--------------+
| Profit before tax | | 6,461,718 | 6,370,153 |
+--------------------------------------------------+------+-------------+--------------+
| | | | |
+--------------------------------------------------+------+-------------+--------------+
| Tax | 15 | (1,356,110) | (2,020,302) |
+--------------------------------------------------+------+-------------+--------------+
| Net profit for the period | | 5,105,608 | 4,349,851 |
+--------------------------------------------------+------+-------------+--------------+
| | | | |
+--------------------------------------------------+------+-------------+--------------+
| Attributable to: | | | |
+--------------------------------------------------+------+-------------+--------------+
| Owners of the parent | | 4,714,034 | 4,349,851 |
+--------------------------------------------------+------+-------------+--------------+
| Minority interest | | 391,574 | - |
+--------------------------------------------------+------+-------------+--------------+
| | | 5,105,608 | 4,349,851 |
+--------------------------------------------------+------+-------------+--------------+
| | | | |
+--------------------------------------------------+------+-------------+--------------+
| Earnings per share (cent) | 16 | | |
+--------------------------------------------------+------+-------------+--------------+
| Basic earnings per share | | 2.99 | 2.91 |
+--------------------------------------------------+------+-------------+--------------+
| Diluted earnings per share | | 2.76 | 2.60 |
+--------------------------------------------------+------+-------------+--------------+
Condensed consolidated statement of comprehensive income
Period from 1 January 2009 to 30 June 2009
+-------------------------------------------------+------+-------------+--------------+
| | | | |
+-------------------------------------------------+------+-------------+--------------+
| | | 30 | 30 June 2008 |
| | | June 2009 | |
+-------------------------------------------------+------+-------------+--------------+
| | Note | US$ | US$ |
+-------------------------------------------------+------+-------------+--------------+
| | | | |
+-------------------------------------------------+------+-------------+--------------+
| Net profit for the period | | 5,105,608 | 4,349,851 |
+-------------------------------------------------+------+-------------+--------------+
| | | | |
+-------------------------------------------------+------+-------------+--------------+
| Comprehensive income | | | |
+-------------------------------------------------+------+-------------+--------------+
| Exchange difference on the translation of | | (3,036,859) | 2,972,049 |
| foreign operations | | | |
+-------------------------------------------------+------+-------------+--------------+
| Deferred tax on the translation of foreign | | 598,791 | (675,326) |
| operations | | | |
+-------------------------------------------------+------+-------------+--------------+
| Other comprehensive income, after tax | | (2,438,068) | 2,296,723 |
+-------------------------------------------------+------+-------------+--------------+
| | | | |
+-------------------------------------------------+------+-------------+--------------+
| Total comprehensive income for the period | | 2,667,540 | 6,646,574 |
+-------------------------------------------------+------+-------------+--------------+
| | | | |
+-------------------------------------------------+------+-------------+--------------+
| Attributable to: | | | |
+-------------------------------------------------+------+-------------+--------------+
| Owners of the parent | | 2,318,869 | 6,646,574 |
+-------------------------------------------------+------+-------------+--------------+
| Minority interest | | 348,671 | - |
+-------------------------------------------------+------+-------------+--------------+
| | | 2,667,540 | 6,646,574 |
+-------------------------------------------------+------+-------------+--------------+
Condensed consolidated statement of changes in equity
Period from 1 January 2009 to 30 June 2009
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| | | Attributable to the owners of the parent | | |
+----------------------------------------------------+------+----------------------------------------------------+-----------+-------------+
| | | Share | Other | Retained | Total | Minority | Total |
| | | capital | reserves | earnings | | interest | |
| | | | (Note 7) | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| | Note | US$ | US$ | US$ | US$ | US$ | US$ |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| At 1 January 2008 | | 3,082,011 | 28,112,295 | 9,210,968 | 40,405,274 | - | 40,405,274 |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| | | | | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Comprehensive income | | | | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Net profit for the period | | - | - | 4,349,851 | 4,349,851 | - | 4,349,851 |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Exchange difference arising on the translation of | | - | 2,972,049 | - | 2,972,049 | - | 2,972,049 |
| foreign subsidiaries | | | | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Deferred tax on the translation of foreign | | - | (675,326) | - | (675,326) | - | (675,326) |
| operations | | | | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Total comprehensive income for the period | | - | 2,296,723 | 4,349,851 | 6,646,574 | - | 6,646,574 |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| | | | | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Other equity changes | | | | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Issue of share capital | | 630,725 | 9,240,291 | - | 9,871,016 | - | 9,871,016 |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Equity share based payments | | - | 65,076 | - | 65,076 | - | 65,076 |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| | | 630,725 | 9,305,367 | - | 9,936,092 | - | 9,936,092 |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| At 30 June 2008 | | 3,712,736 | 39,714,385 | 13,560,819 | 56,987,940 | - | 56,987,940 |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| | | | | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| At 1 January 2009 | | 4,335,361 | 28,084,984 | 17,773,401 | 50,193,746 | 4,023,233 | 54,216,979 |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| | | | | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Comprehensive income | | | | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Net profit for the period | | - | - | 4,714,034 | 4,714,034 | 391,574 | 5,105,608 |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Exchange difference arising on the translation of | | - | (2,993,956) | - | (2,993,956) | (42,903) | (3,036,859) |
| foreign subsidiaries | | | | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Deferred tax on the translation of foreign | | - | 598,791 | - | 598,791 | - | 598,791 |
| operations | | | | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Total comprehensive income for the period | | - | (2,395,165) | 4,714,034 | 2,318,869 | 348,671 | 2,667,540 |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| | | | | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Other equity changes | | | | | | | |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| Equity share based payments | | - | 39,316 | - | 39,316 | - | 39,316 |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| | | - | 39,316 | - | 39,316 | - | 39,316 |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
| At 30 June 2009 | | 4,335,361 | 25,729,135 | 22,487,435 | 52,551,931 | 4,371,904 | 56,923,835 |
+----------------------------------------------------+------+-----------+-------------+------------+-------------+-----------+-------------+
Condensed consolidated statement of cash flows
Period from 1 January 2009 to 30 June 2009
+--------------------------------------------------+------+-------------+--------------+
| | | | |
+--------------------------------------------------+------+-------------+--------------+
| | | 30 June | 30 June 2008 |
| | | 2009 | |
+--------------------------------------------------+------+-------------+--------------+
| | Note | US$ | US$ |
+--------------------------------------------------+------+-------------+--------------+
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
+--------------------------------------------------+------+-------------+--------------+
| Profit before tax | | 6,461,718 | 6,370,153 |
+--------------------------------------------------+------+-------------+--------------+
| Adjustments: | | | |
+--------------------------------------------------+------+-------------+--------------+
| Depreciation of property, plant and equipment | 4 | 2,593,880 | 2,033,591 |
+--------------------------------------------------+------+-------------+--------------+
| Share based payment | | 39,316 | 65,076 |
+--------------------------------------------------+------+-------------+--------------+
| Amortisation of intangible assets | 5 | 121,111 | 84,006 |
+--------------------------------------------------+------+-------------+--------------+
| Loss from the sale of property, plant and | | 70,300 | 30,369 |
| equipment | | | |
+--------------------------------------------------+------+-------------+--------------+
| Interest income | 14 | (644,895) | (735,076) |
+--------------------------------------------------+------+-------------+--------------+
| Interest expense | 14 | 528,878 | 872,321 |
+--------------------------------------------------+------+-------------+--------------+
| Deferred income | | 90,451 | - |
+--------------------------------------------------+------+-------------+--------------+
| | | 9,260,759 | 8,720,440 |
+--------------------------------------------------+------+-------------+--------------+
| Changes in working capital: | | | |
+--------------------------------------------------+------+-------------+--------------+
| Inventories | | 201,845 | (709,207) |
+--------------------------------------------------+------+-------------+--------------+
| Trade and other receivables | | (1,086,895) | (1,139,932) |
+--------------------------------------------------+------+-------------+--------------+
| Trade and other payables | | (623,166) | 2,092,168 |
+--------------------------------------------------+------+-------------+--------------+
| Cash flows from operations | | 7,752,543 | 8,963,469 |
+--------------------------------------------------+------+-------------+--------------+
| Tax paid | | (916,041) | (1,920,534) |
+--------------------------------------------------+------+-------------+--------------+
| Net cash from operating activities | | 6,836,502 | 7,042,935 |
+--------------------------------------------------+------+-------------+--------------+
| | | | |
+--------------------------------------------------+------+-------------+--------------+
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
+--------------------------------------------------+------+-------------+--------------+
| Payment for purchase of intangible assets | 5 | (85,935) | (2,852) |
+--------------------------------------------------+------+-------------+--------------+
| Payment for purchase of property, plant and | | (3,230,999) | (2,409,661) |
| equipment | | | |
+--------------------------------------------------+------+-------------+--------------+
| Proceeds from disposal of property, plant and | 4 | 57,140 | 35,451 |
| equipment | | | |
+--------------------------------------------------+------+-------------+--------------+
| Interest received | | 644,895 | 735,076 |
+--------------------------------------------------+------+-------------+--------------+
| Net cash used in investing activities | | (2,614,899) | (1,641,986) |
+--------------------------------------------------+------+-------------+--------------+
| | | | |
+--------------------------------------------------+------+-------------+--------------+
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
+--------------------------------------------------+------+-------------+--------------+
| Proceeds from issue of share capital | | - | 9,871,016 |
+--------------------------------------------------+------+-------------+--------------+
| Repayments of borrowings | | (5,537,214) | (1,109,190) |
+--------------------------------------------------+------+-------------+--------------+
| Proceeds from borrowings | | - | 10,000,000 |
+--------------------------------------------------+------+-------------+--------------+
| Interest paid | | (528,878) | (872,321) |
+--------------------------------------------------+------+-------------+--------------+
| Net cash (used in) / from financing activities | | (6,066,092) | 17,889,505 |
+--------------------------------------------------+------+-------------+--------------+
| | | | |
+--------------------------------------------------+------+-------------+--------------+
| Cash and cash equivalents: | | | |
+--------------------------------------------------+------+-------------+--------------+
| At beginning of the period | | 22,588,318 | 15,024,993 |
+--------------------------------------------------+------+-------------+--------------+
| Effect of exchange rate fluctuations on cash | | (39,372) | 216,976 |
| held | | | |
+--------------------------------------------------+------+-------------+--------------+
| At end of the period | | 20,704,457 | 38,532,423 |
+--------------------------------------------------+------+-------------+--------------+
Notes to the interim condensed consolidated financial statements
Period from 1 January 2009 to 30 June 2009
1. Unaudited financial statements
The interim condensed financial statements for the period ended 30 June 2009 and
from 1 January 2009 to 30 June 2009 respectively, have not been audited by the
external auditors of the Company.
2. Incorporation and principal activities
The Company Teleset Networks Public Company Limited (the "Company") was
incorporated in Cyprus on 19 June 2006 as a private company with limited
liability under the Companies Law, Cap. 113. Its registered office is at 89
Lemesou, 2121 Aglantzia, Nicosia, Cyprus.
The principal activity of the Group, which is unchanged from last year, is to
provide telecommunication services to residential and business customers through
the operation of a local digital fixed?line network in Kazan, the capital of the
Republic of Tatarstan in the Russian Federation, in Naberezhnye Chelny, the
second largest city in the Republic and also in Ulyanovsk, the capital of
Ulyanovsk region. The basic services that Teleset Networks offers to its
customers are: traditional voice telephony, data transmission, value added
business services, cable TV, and other specialised telecom services.
3. Accounting policies
These interim condensed financial statements, which are presented in United
States Dollars, have been prepared in accordance with the International
Accounting Standard 34 "Interim Financial Reporting" as issued by the
International Accounting Standards Board and as adopted by the European Union.
The interim condensed financial statements do not include all the information
and disclosures that are required for the annual financial statements and must
be read in conjunction with the annual financial statements for the year ended
31 December 2008.
The Group has adopted all applicable new and revised International Financial
Reporting Standards (IFRS) and the Amendments to IFRS as issued by the
International Accounting Standards Board and adopted by the European Union, as
well as the Interpretations as issued by the International Financial Reporting
Interpretations Committee and adopted by the European Union, that relate to the
Group's operations.
The accounting policies and methods used in the preparation of the interim
condensed financial statements are in accordance with those used in the annual
financial statements for the year ended 31 December 2008.
As from 1 January 2009, the Group has adopted IAS 1 (Revised 2007):
"Presentation of Financial Statements" for the presentation of its financial
statements. The application of IAS 1 (Revised 2007): "Presentation of Financial
Statements" has significantly changed the presentation of the financial
statements including these interim condensed financial statements. The adoption
of the standard does not affect the financial position or profits of the Group,
but gives rise to additional disclosures, and also requires the preparation of a
new statement 'Statement of comprehensive income'. The measurement and
recognition of the Group's assets, liabilities, income and expenses is
unchanged, however some items that were recognised directly in equity are now
recognised in other comprehensive income, such as for example revaluation of
property, plant and equipment.
Accounting estimates and judgement
The preparation of financial statements requires the use of certain critical
accounting estimates and requires management to exercise its judgement in the
process of applying the Group's accounting policies. It also requires the use of
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of current events and actions, actual results may ultimately differ
from those estimates.
Costs that are incurred during the financial year are anticipated or deferred
for interim reporting purposes if, and only if, it is also appropriate to
anticipate or defer that type of cost at the end of the financial year.
Corporation tax is calculated based on the expected tax rates for the whole
financial year.
4. Property, plant and equipment
The main changes since last year?end are as follows:
+---------------------------------------------------+--------------+--------------+
| | 30 June 2009 | 30 June 2008 |
+---------------------------------------------------+--------------+--------------+
| | US$ | US$ |
+---------------------------------------------------+--------------+--------------+
| Additions | 3,230,999 | 2,409,661 |
+---------------------------------------------------+--------------+--------------+
| Disposals | (127,440) | (65,820) |
+---------------------------------------------------+--------------+--------------+
| Exchange differences | (1,841,987) | 1,402,590 |
+---------------------------------------------------+--------------+--------------+
| Amortisation for the period | (2,593,880) | (2,033,592) |
+---------------------------------------------------+--------------+--------------+
5. Intangible assets
The main changes since last year?end are as follows:
+---------------------------------------------------+--------------+--------------+
| | 30 June 2009 | 30 June 2008 |
+---------------------------------------------------+--------------+--------------+
| | US$ | US$ |
+---------------------------------------------------+--------------+--------------+
| Additions | 85,935 | 2,852 |
+---------------------------------------------------+--------------+--------------+
| Exchange differences | (1,441,915) | 1,318,369 |
+---------------------------------------------------+--------------+--------------+
| Amortisation for the period | (121,111) | (84,004) |
+---------------------------------------------------+--------------+--------------+
6. Trade and other receivables
+------------------------------------------------+--------------+----------------+
| | 30 June 2009 | 31 December |
| | | 2008 |
+------------------------------------------------+--------------+----------------+
| | US$ | US$ |
+------------------------------------------------+--------------+----------------+
| Trade receivables | 6,570,759 | 5,546,135 |
+------------------------------------------------+--------------+----------------+
| Less: Provision for impairment of receivables | (342,605) | (342,605) |
+------------------------------------------------+--------------+----------------+
| Trade receivables ? net | 6,228,154 | 5,203,530 |
+------------------------------------------------+--------------+----------------+
| Deposits and prepayments | 426,645 | 301,660 |
+------------------------------------------------+--------------+----------------+
| Advances to subcontractors | 100,040 | 224,313 |
+------------------------------------------------+--------------+----------------+
| Taxes paid in advance | 815,624 | 1,096,913 |
+------------------------------------------------+--------------+----------------+
| | 7,570,463 | 6,826.416 |
+------------------------------------------------+--------------+----------------+
7. Other reserves
+--------------------------+------------+--------------+---------+--------------+-------------+
| | Share | Translation | Share | Merger | Total |
| | premium | Reserve | option | Reserve | |
| | | | reserve | | |
+--------------------------+------------+--------------+---------+--------------+-------------+
| | US$ | US$ | US$ | US$ | US$ |
+--------------------------+------------+--------------+---------+--------------+-------------+
| At 1 January 2008 | 46,748,338 | 404,583 | 494,500 | (19,535,126) | 28,112,295 |
+--------------------------+------------+--------------+---------+--------------+-------------+
| Deferred tax on the | - | (675,326) | - | - | (675,326) |
| translation of foreign | | | | | |
| operations | | | | | |
+--------------------------+------------+--------------+---------+--------------+-------------+
| Exchange difference | - | 2,972,049 | - | - | 2,972,049 |
| arising on the | | | | | |
| translation of foreign | | | | | |
| subsidiaries | | | | | |
+--------------------------+------------+--------------+---------+--------------+-------------+
| Issue of share capital | 9,240,291 | - | - | - | 9,240,291 |
+--------------------------+------------+--------------+---------+--------------+-------------+
| Equity share based | - | - | 65,076 | - | 65,076 |
| payments | | | | | |
+--------------------------+------------+--------------+---------+--------------+-------------+
| At 30 June 2008 | 55,988,629 | 2,701,306 | 559,576 | (19,535,126) | 39,714,385 |
+--------------------------+------------+--------------+---------+--------------+-------------+
| | | | | | |
+--------------------------+------------+--------------+---------+--------------+-------------+
| At 1 January 2009 | 55,366,010 | (8,370,552) | 624,652 | (19,535,126) | 28,084,984 |
+--------------------------+------------+--------------+---------+--------------+-------------+
| Deferred tax on the | - | 598,791 | - | - | 598,791 |
| translation of foreign | | | | | |
| operations | | | | | |
+--------------------------+------------+--------------+---------+--------------+-------------+
| Exchange difference | - | (2,993,956) | - | - | (2,993,956) |
| arising on the | | | | | |
| translation of foreign | | | | | |
| subsidiaries | | | | | |
+--------------------------+------------+--------------+---------+--------------+-------------+
| Equity share based | - | - | 39,316 | - | 39,316 |
| payments | | | | | |
+--------------------------+------------+--------------+---------+--------------+-------------+
| At 30 June 2009 | 55,366,010 | (10,765,717) | 663,968 | (19,535,126) | 25,729,135 |
+--------------------------+------------+--------------+---------+--------------+-------------+
8. Borrowings
+---------------------------------------------------+--------------+-----------------+
| | 30 June 2009 | 31 December |
| | | 2008 |
+---------------------------------------------------+--------------+-----------------+
| | US$ | US$ |
+---------------------------------------------------+--------------+-----------------+
| | | |
+---------------------------------------------------+--------------+-----------------+
| Current borrowings | | |
+---------------------------------------------------+--------------+-----------------+
| Bank loans | 5,000,000 | 7,802,939 |
+---------------------------------------------------+--------------+-----------------+
| | | |
+---------------------------------------------------+--------------+-----------------+
| Non current borrowings | | |
+---------------------------------------------------+--------------+-----------------+
| Bank loans | 19,776,106 | 22,770,642 |
+---------------------------------------------------+--------------+-----------------+
| Total | 24,776,106 | 30,573,581 |
+---------------------------------------------------+--------------+-----------------+
9. Trade and other payables
+---------------------------------------------------+---------------+-----------------+
| | 30 June 2009 | 31 December |
| | | 2008 |
+---------------------------------------------------+---------------+-----------------+
| | US$ | US$ |
+---------------------------------------------------+---------------+-----------------+
| Trade payables | 551,661 | 1,025,933 |
+---------------------------------------------------+---------------+-----------------+
| Advances from customers | 1,223,976 | 941,613 |
+---------------------------------------------------+---------------+-----------------+
| VAT | 178,710 | 206,617 |
+---------------------------------------------------+---------------+-----------------+
| Accruals | 528,507 | 640,102 |
+---------------------------------------------------+---------------+-----------------+
| Other payables | 2,391,246 | 2,923,317 |
+---------------------------------------------------+---------------+-----------------+
| | 4,874,100 | 5,737,582 |
+---------------------------------------------------+---------------+-----------------+
The fair values of trade and other payables due within one year approximate to
their carrying amounts as presented above.
10. Deferred income
+---------------------------------------------------+--------------+------------------+
| | 30 June 2009 | 31 December 2008 |
+---------------------------------------------------+--------------+------------------+
| | US$ | US$ |
+---------------------------------------------------+--------------+------------------+
| Government grants | 97,661 | 103,720 |
+---------------------------------------------------+--------------+------------------+
| | 97,661 | 103,720 |
+---------------------------------------------------+--------------+------------------+
| Deferred income after more than one year | (84,679) | (90,013) |
+---------------------------------------------------+--------------+------------------+
| Deferred income within one year | 12,982 | 13,707 |
+---------------------------------------------------+--------------+------------------+
11. Current tax liabilities / (current tax assets)
+---------------------------------------------------+--------------+------------------+
| | 30 June 2009 | 31 December 2008 |
+---------------------------------------------------+--------------+------------------+
| | US$ | US$ |
+---------------------------------------------------+--------------+------------------+
| Corporation tax | 65,388 | (370,120) |
+---------------------------------------------------+--------------+------------------+
| | 65,388 | (370,120) |
+---------------------------------------------------+--------------+------------------+
12. Revenue
+----------------------------------------------------+----------------+------------+
| | 30 June 2009 | 30 June |
| | | 2008 |
+----------------------------------------------------+----------------+------------+
| | US$ | US$ |
+----------------------------------------------------+----------------+------------+
| Connection fees | 124,241 | 323,499 |
+----------------------------------------------------+----------------+------------+
| Rental fees | 4,534,071 | 4,754,942 |
+----------------------------------------------------+----------------+------------+
| Traffic fees | 1,188,327 | 2,144,317 |
+----------------------------------------------------+----------------+------------+
| ISDN: Connection fees | 54,202 | 110,191 |
+----------------------------------------------------+----------------+------------+
| ISDN: Traffic fees | 959,767 | 1,228,024 |
+----------------------------------------------------+----------------+------------+
| Internet Services | 4,669,725 | 4,673,801 |
+----------------------------------------------------+----------------+------------+
| IP Services | 220,348 | 421,473 |
+----------------------------------------------------+----------------+------------+
| Zonal, LD, ILD fees | 2,079,745 | - |
+----------------------------------------------------+----------------+------------+
| Sundry Income | 1,296,878 | 1,097,834 |
+----------------------------------------------------+----------------+------------+
| | 15,127,304 | 14,754,081 |
+----------------------------------------------------+----------------+------------+
13. Staff costs
+----------------------------------------------------+---------------+--------------+
| | 30 June 2009 | 30 June 2008 |
+----------------------------------------------------+---------------+--------------+
| | US$ | US$ |
+----------------------------------------------------+---------------+--------------+
| Wages and salaries | 2,303,968 | 2,223,173 |
+----------------------------------------------------+---------------+--------------+
| Share based payments | 39,316 | 65,076 |
+----------------------------------------------------+---------------+--------------+
| | 2,343,284 | 2,288,249 |
+----------------------------------------------------+---------------+--------------+
14. Finance income / cost
+----------------------------------------------------+---------------+--------------+
| | 30 June 2009 | 30 June 2008 |
+----------------------------------------------------+---------------+--------------+
| | US$ | US$ |
+----------------------------------------------------+---------------+--------------+
| Interest income | 644,895 | 735,076 |
+----------------------------------------------------+---------------+--------------+
| Finance income | 644,895 | 735,076 |
+----------------------------------------------------+---------------+--------------+
| | | |
+----------------------------------------------------+---------------+--------------+
| Net foreign exchange transaction losses | 252,275 | - |
+----------------------------------------------------+---------------+--------------+
| Interest expense | 528,878 | 872,321 |
+----------------------------------------------------+---------------+--------------+
| Other finance expenses | 37,123 | 42,212 |
+----------------------------------------------------+---------------+--------------+
| Finance costs | 818,276 | 914,533 |
+----------------------------------------------------+---------------+--------------+
| | | |
+----------------------------------------------------+---------------+--------------+
| Net finance costs | (173,381) | (179,457) |
+----------------------------------------------------+---------------+--------------+
15. Tax
+-------------------------------------------------------+-------------+------------+
| | 30 June | 30 June |
| | 2009 | 2008 |
+-------------------------------------------------------+-------------+------------+
| | US$ | US$ |
+-------------------------------------------------------+-------------+------------+
| Corporation tax ? current period | 1,322,295 | 1,921,246 |
+-------------------------------------------------------+-------------+------------+
| Deferred tax ? charge | 33,815 | 99,056 |
+-------------------------------------------------------+-------------+------------+
| Charge for the period | 1,356,110 | 2,020,302 |
+-------------------------------------------------------+-------------+------------+
16. Earnings per share
+--------------------------------------------------------+-----+-------+-----+-------+-----+
| | 30 June | 30 June |
| | 2009 | 2008 |
+--------------------------------------------------------------+-------------+-------------+
| Basic earnings per share | | |
+--------------------------------------------------------------+-------------+-------------+
| Earnings attributable to shareholders (US$) | 4,714,034 | 4,349,851 |
+--------------------------------------------------------------+-------------+-------------+
| Weighted average number of ordinary shares in issue during | 157,556,715 | 149,424,847 |
| the year | | |
+--------------------------------------------------------------+-------------+-------------+
| Basic earnings per share (cent) | 2,99 | 2,91 |
+--------------------------------------------------------------+-------------+-------------+
| | 2009 | 2008 |
+--------------------------------------------------------+-------------+-------------+
| Diluted earnings per share | | |
+--------------------------------------------------------+-------------+-------------+
| Earnings attributable to shareholders (US$) | 4,714,034 | 4,349,851 |
+--------------------------------------------------------+-------------+-------------+
| Effect of potentially dilutive shares (US$) | (89,027) | (193,418) |
+--------------------------------------------------------+-------------+-------------+
| | 4,625,007 | 4,156,433 |
+--------------------------------------------------------+-------------+-------------+
| Weighted average number of ordinary shares in issue | 157,556,715 | 149,424,847 |
| during the year | | |
+--------------------------------------------------------+-------------+-------------+
| Effect of potentially dilutive shares | 10,094,838 | 10,140,686 |
+--------------------------------------------------------+-------------+-------------+
| | 167,651,553 | 159,565,533 |
+--------------------------------------------------------+-------------+-------------+
| Diluted earnings per share (cent) | 2.76 | 2.60 |
+--------------------------------------------------------+-----+-------+-----+-------+-----+
17. Related party transactions
The following transactions were carried out with related parties:
17.1 Directors' remuneration
The remuneration of Directors and other members of key management was as
follows:
+--------------------------------------------------------+------------+------------+
| | 30 June | 30 June |
| | 2009 | 2008 |
+--------------------------------------------------------+------------+------------+
| | US$ | US$ |
+--------------------------------------------------------+------------+------------+
| Non executive Directors | 52,876 | 25,072 |
+--------------------------------------------------------+------------+------------+
| Executive Directors | 223,564 | 273,412 |
+--------------------------------------------------------+------------+------------+
| Share based payments | 39,316 | 65,076 |
+--------------------------------------------------------+------------+------------+
| | 315,756 | 363,560 |
+--------------------------------------------------------+------------+------------+
18. Contingent liabilities
The Group had no contingent liabilities as at 30 June 2009.
19. Commitments
The Group had no capital or other commitments as at 30 June 2009.
20. Events after the end of the reporting period
There were no material events after the reporting date, which have a bearing on
the understanding of these interim condensed financial statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PUUPUBUPBGAB
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