Rostelecom OJSC: Final Results UK Regulatory Announcement MOSCOW ROSTELECOM REPORTS CONSOLIDATED IFRS FINANCIAL RESULTS FOR THE FOURTH QUARTER AND FULL YEAR ENDED DECEMBER 31, 2012 Rostelecom OJSC (MICEX-RTS: RTKM, RTKMP; OTCQX: ROSYY) (the “Group” and the “Company”) Russia’s national telecommunications operator, today announced its IFRS consolidated^1 financial results for the fourth quarter and twelve months ending December 31, 2012^2. The Group’s revenues for 2012 amounted to RUB 321.3 billion, a year-on-year increase of 7% compared to 2011. The Group’s revenue mix is evolving with the contribution from Rostelecom’s growth segments, which include mobile communications, broadband and pay-TV. Rostelecom’s OIBDA margin was 36.9% in 2012, reflecting the active development of the Group’s mobile segment and the construction of 3G+ networks in 4Q 2012, as well as the increase in revenue from high-growth segments, though at lower margins than traditional segments, and the creation of reserves to compensate employees affected by the Group’s plans to reduce administrative personnel by up to 20% in 2013. According to the Senior Vice - President of Rostelecom Pavel Zaitsev, ‘In 2012 all managers’ and employees’ efforts were focused on strengthening Rostelecom’s competitive position. We started to actively explore breakthrough areas of the business, such as – mobile broadband and pay-TV. So far, we have built 3G+ networks in 24 regions, 10 of which are already providing commercial mobile data transmission services to our subscribers. After the launch of our single interactive TV platform in May 2012, the service’s number of subscribers doubled to 1.4 million giving Rostelecom a 49% share of the Interactive TV market.’ KEY OPERATING HIGHLIGHTS: *Total number of households passed rose 6% year-on-year, reaching 33.8 million^3, of which 16.4 million (48%) were passed using FTTx technology *Total broadband subscriber base up 12% year-on-year to 9.2 million *The B2C subscriber base increased 12% to 8.5 million, of which the number of subscribers connected optically, increased 1.6 times year-on-year to 2.8 million (or 33% of the total subscriber base), giving the Company the highest rate of growth in the market in Russia. Rostelecom’s share of the B2C broadband markets is 40%. *Total Pay TV subscriber base increased 12% year-on-year to 6.6 million subscribers. *Out of the total subscriber base, the number of interactive TV subscribers more than doubled to 1.4 million, with the penetration of optical networks reaching 34%. Rostelecom’s share of the Interactive TV market is 49%. *Total mobile communications subscribers rose 4% year-on-year to 13.6 million. *The acquisition of SkyLink gave Rostelecom access to 3G licenses in 69 regions across Russia. *So far, 3G+ networks have been constructed and tested in 24 Russian regions, with commercial launches having taken place in 10 of those. KEY FINANCIAL HIGHLIGHTS IN 2012: *Revenues up 7% year on year to RUB 321.3 billion *OIBDA^4 up to RUB 118.6 billion *OIBDA margin of 36.9% compared with 37.5% a year earlier (without taking into account the non-monetary effect on Q4 2011 results due to reduced long-term social obligations, as a result of a new labour contract signed by Rostelecom, its employees and the labour union in December 2011^5). *Net profit of RUB 35.2 billion (RAS net profit is used as a basis for dividend calculation on preferred shares up to RUB 32.7 billion). *Capital expenditure^6 of RUB 91.2 billion, representing 28.4% of consolidated revenues *Net debt^7 of RUB 203.1 billion with a net debt / OIBDA^8 ratio of 1.7x as at December 31, 2012. KEY FOURTH QUARTER 2012 FINANCIAL HIGHLIGHTS: *Revenues up 4% year-on-year to RUB 82.6 billion *OIBDA up to RUB 24.6 billion with an OIBDA margin of 29.8% compared to 32.7% a year earlier (without taking into account the non-monetary effect on Q4 2011 results due to reduced long-term social obligations, as a result of a new labour contract signed by Rostelecom, its employees and the labour union in December 2011). *Net profit was RUB 4.6 billion. *Capital expenditure of RUB 27.7 billion, that is 33.6% of consolidated revenues. CONSOLIDATION AND INTEGRATION OF ZAO SKY LINK ACCOUNTS The acquisition of ZAO SKY LINK is a transaction under common control. In accordance with the Company’s accounting policy under IFRS, such transactions are accounted for as if the acquisition was completed at the beginning of the earliest period that is presented in the financial statements, but not earlier than the period in which Sky Link was acquired under common control of the Group’s majority shareholder. The comparative information, which is presented in the current financial statements, has therefore been restated from the date that ZAO Sky Link was acquired by Svyazinvest, i.e. Oct 1, 2010. FINANCIAL SUMMARY % % RUB million 4Q 2012 4Q 2011 change, FY 2012 FY 2011 change, y-o-y y-o-y Revenue 82,560 79, 656 4% 321,251 301,494 7% OIBDA 24, 582 30,855 (20%) 118,554 117,712 1% OIBDA margin, % 29.8% 38.7% 36.9% 39.0% Operating profit 7,954 18,410 (57%) 53,825 60,188 (11%) Operating margin, 9.6% 23.1% 16.8% 20.0% % Net profit 4,614 15,489 (70%) 35,240 42,527 (17%) Net margin, % 5.6% 19.4% 11.0% 14.1% Capital 27,721 40,584 (32%) 91,181 83,231 10% expenditures % of revenue 33.6% 50.9% 28.4% 27.6% Net debt 203,084 161,516 26% 203,084 161,516 26% Net debt/annualized 1.7х 1.4х 1.7х 1.4х OIBDA OPERATING REVIEW Revenue structure by services^9 % % RUB million 4Q 2012 4Q 2011 change, FY 2012 FY 2011 change, y-o-y y-o-y Local telephony 21,286 21,594 (3%) 85,734 88,061 (3%) services Intra-zone telephony 4,669 5,132 (9%) 18,754 21,393 (12%) services DLD/ILD telephony 4,986 6,288 (21%) 20,390 24,070 (15%) services Interconnection and traffic 5,550 5,017 11% 21,003 19,774 6% transit services Broadband 12,886 12,066 7% 49,797 46,396 7% Internet Pay TV 2,555 1,859 37% 9,147 6,706 36% Mobile communication 10,172 10,320 (1%) 41,161 40,660 1% services Data services (VPN, data centres, 5,714 5,275 8% 20,815 18,872 10% wholesale Internet sales) Rent of channels 2,443 2,798 13% 11,269 10,365 9% Cloud services 4,826 2,339 106% 6,625 2,764 140% Other 7,473 6,608 13% 36,556 22,442 63% Total revenue 82,560 79,656 4% 321,251 301,494 7% Revenue structure by customer segments % change, % RUB million 4Q 2012 4Q 2011 y-o-y FY 2012 FY 2011 change, y-o-y Residential 40,569 41,550 (3%) 162,493 165,634 (2%) customers Corporate 18,651 19,925 (6%) 69,015 69,555 (1%) customers Governmental 14,851 10,996 35% 53,452 34,484 55% customers Operators 8,489 7,185 18% 36,291 31,821 14% Total revenue 82,560 79,656 4% 321,251 301,494 7% Revenue in 4Q 2012 rose 4% compared to the same period last year and amounted to RUB 82.6 billion, which was made up from: *Growth in revenue from cloud and IT services, as well as revenue from infrastructure rental as part of other revenues *Growth in revenues from providing broadband services to a growing subscriber base *Growth in revenues from providing pay-TV services to a growing subscriber base. This growth was partially offset by a decline in revenues from Domestic Long Distance and International Long Distance and intrazonal telephony services, which primarily reflected on-going changes in usage patterns for traditional fixed-line services. Rostelecom’s revenue in 2012 reached RUB 321.3 billion, a 7% increase over 2011, achieved due to growth in cloud and IT service segments, but also from growth in revenue from providing broadband and pay-TV services. Key operating indicators Number of Subscribers 4Q 2012 4Q % change, 3Q % change, (millions): 2011 y-o-y 2012 y-o-y Household passed 33.8 32.0 6% 33.4 1% incl FTTх 16.4 12.9 27% 15.7 4% Local telephony 27.1 28.5 (5%) 27.5 (1%) Mobile 13.6 13.1 4% 13.5 0.3% Broadband Internet access 9.2 8.2 12% 8.9 4% incl. Residential 8.5 7.6 12% 8.2 4% Corporate 0.7 0.6 9% 0.6 2% Pay TV incl. 6.6 5.9 12% 6.4 4% IPTV 1.4 0.7 102% 1.2 19% Traffic, generated by residential and corporate subscribers^10 (billions of minutes) Intra-zone 2.4 2.7 (11%) 2.3 4% DLD 1.2 1.3 (13%) 1.1 8% ILD 0.1 0.1 (13%) 0.1 (4%) The number of households passed grew 6% year-on-year to 33.8 million^11, including 16.4 million (or 48%) passed by FTTx technology. The number of broadband subscribers grew 12% compared to the equivalent period last year, rising to 9.2 million subscribers. The subscriber base in the broadband B2C segment grew 12% to 8.5 million, out of which, those connected by FTTx technology grew 1.6 times year-on-year to 2.8 million (that is 33% of the total subscriber base), representing the highest rate of growth in the Russian market. Rostelecom’s share of the B2C broadband market was 40%. The number of pay-TV subscribers grew 12% compared to the equivalent period last year, comprising 6.6 million subscribers. Of that total, the number of interactive TV subscribers more than doubled to 1.4 million, with the penetration of optical networks making up 34%. Rostelecom’s share of the Interactive TV market was 49%. The number of mobile subscribers grew 4% compared with the equivalent period last year, rising to 13.6 million subscribers. The acquisition of SkyLink gave Rostelecom access to 3G licenses in 69 regions across Russia. So far, 3G+ networks have been built and undergone testing in 24 Russian regions, with commercial launches taken place in 10 areas. The number of subscribers to fixed-line local telephone services decreased year-on-year and quarter-on-quarter, due to changes in client preference in favour of mobile means of communication, although remaining significantly lower than for international peer companies. Operating Expenses^12 Structure % % RUB million 4Q 2012 4Q 2011 change, 2012 2011 change, y-o-y y-o-y Personnel costs 22,942 16,856 36% 84,308 76,252 11% Interconnection 12,853 10,770 19% 47,312 40,736 16% charges Materials, repairs and 6,360 6,902 (8%) 27,358 27,507 (1%) maintenance, utilities Other operating (3,523) (4,538) (22%) (13,868) (14,711) (6%) income Other operating 19,346 18,812 3% 57,587 53,998 7% expenses Total 57,978 48,802 19% 202,697 182,782 10% In 4Q 2012 the Company’s operating expenditure, excluding depreciation and amortisation, rose 19% year-on-year, to RUB 58.0 billion principally due to: *Personnel expenditure growing to RUB 22.9 billion, or 36%, compared to 4Q 2011 due, in the main part, to the effect of the one-off reduction in long-term social obligations, as a result of a new labour contract signed by Rostelecom, its employees and the labour union in December 2011 by RUB 4.8 billion, as well as the recruitment of commercial staff in the mobile segment, but also the creation of reserves to compensate employees affected by the Group’s plans to reduce administrative personnel by up to 20% in 2013 *Increased expenditure on operator services by 19% in comparison with the equivalent period in 2011 to RUB 12.9 billion, in connection with the increase in direct expenditure, dependent on the growth of the Company’s revenues. *The growth of other operating income and expenses in 4Q 2012, and FY 2012, was due to the increase in advertising expenditure linked to increased marketing activity promoting the Company’s services. Operational expenditure, excluding depreciation and amortisation, in 2012 was RUB 202.7 billion, up 10% compared to the equivalent period last year, in the main part, due to: *11% growth in personnel expenditure compared to the equivalent period in 2011 to RUB 84.3 billion, due to the effect of the one-off reduction in long-term social obligations, as a result of a new labour contract signed by Rostelecom, its employees and the labour union in December 2011 by RUB 4.8 billion, the recruitment of commercial staff in the mobile segment, and also the creation of reserves for compensation due to employees as part of the plan to reduce administrative personnel by 20% planned for 2013 *Increased expenditure on operator services by 16% year-on-year to RUB 47.3 billion, in connection with the increase in direct expenditure, which relates to the growth of the Company’s profits. The Company reported a 4Q 2012 OIBDA of RUB 24.6 billion and RUB 118.6 billion for the whole of 2012 with OIBDA margins in these periods of 29.8% and 36.9% respectively. Depreciation and amortisation expenses in 4Q 2012 rose 34% compared to 4Q 2011 to RUB 16.6 billion, in connection with the reversal of the Amdocs software reserve. In 2012, amortization expenses rose 13% compared to 2011 to reach RUB 64.7 billion due to the video surveillance project for the Presidential elections and the commissioning of new fixed assets, specifically the construction of 3G networks. Rostelecom’s capital expenditure in 4Q 2012 was RUB 27.7 billion, 32% lower than for the corresponding period in 2011. In 2012, capital expenditure rose 10% overall compared to 2011, reaching RUB 91.2 billion. The 2012 increase in CAPEX primarily comprised of the maintenance of existing channels and the construction of new channels, to enable the video observation of the Presidential elections. Also, the modernization of broadband networks, the implementation of new IT systems, the launch of new services and the expansion of 3G networks required additional investment. The Company reported an operating profit of RUB 8.0 billion in Q4 2012 and RUB 53.8 billion for 2012, with operating margins of 9.6% and 16.8% respectively. The growth of financial expenditure in connection with the rise in gross debt was in part compensated by the positive effect of the exchange rate. Profit before tax in 4Q 2012 was RUB 4.7 billion and, RUB 44.0 billion for 2012, representing decreases of 74% and 17% respectively on the equivalent periods of 2011. This was for the most part due to the increase in amortization, but also as a result of the one-off decrease in expenditure from the pension plan in 4Q 2011. The Company’s rate of income tax in 4Q 2012 decreased 96% compared to 4Q 2011 to RUB 0.1 billion, whilst the full year of 2012 saw it decrease 18% to RUB 8.8 billion. This change in income tax related to changes to pre-tax profit. The effective income tax-rate for 4Q 2012 was 2%, whilst for the whole year the rate remained at 20%, in line with the Tax Code level of 20%. A lower effective rate in 4Q 2012 was due to the decrease in the level of taxable income generated by the losses realised by ZAO Sky Link. The Group reported a net profit of RUB 4.6 billion in Q4 2012, and RUB 35.2 billion for 2012,. FINANCIAL REVIEW Net operating cash flow rose 13% by the end of 2012 to RUB 96.2 billion. Net cash used for investment activities decreased 24% by the end of 2012 to RUB 87.5 billion. This decrease is linked to the use of investment funds in acquiring 71.8% of the shares in OAO NTK in 1Q 2011. The decrease in the amount of net cash received from financial activity by the end of 2012 was linked to Rostelecom’s acquisition of 3.86% ordinary shares in OOO Mobitel, but also the buyback of 28.2% of shares in OAO NTK. The Group’s total debt rose 24% year-on-year to RUB 214.4 billion. More than 98% of the Company’s total debt was ruble-denominated as of 31^st December 2012. Rostelecom’s net debt, as of 31^st December 2012, was RUB 203.1 billion, which is 1.7x and the Group’s OIBDA margin as at the end of 2012. KEY EVENTS IN 2012 AND AFTER THE END OF THE REPORTING PERIOD Operational Update: *Rostelecom signed a co-operation agreement with the retail networks of Svyaznoy and Euroset *Rostelecom launched federal bundle services for small- and mid-sized businesses. *Rostelecom successfully organised the video surveillance of the Russian Presidential Elections on March 4, 2012. *Rostelecom took receipt of federal LTE licenses. *Rostelecom carried out test launches of 3G+ networks in 24 regions. *Rostelecom carried out test launches of LTE base stations in Krasnodar and Sochi. *Rostelecom launched 3G+ networks commercially in 10 regions: in the Irkutsk region, in Primorsky and Perm Krai, in the Ulyanovsk region, in Penza region, in the Republic of Tatarstan, in the Nizhny Novgorod region, in the Saratov region, and in the Orenburg and Samara regions. *Rostelecom launched corporate bonds worth a total sum of RUB 35 billion. *Rostelecom’s Board of Directors’ approved the implementation of the 2013-017 development strategy. *Rostelecom’s Board of Directors approved the appointment of Sergey Kalugin as President of Rostelecom to succeed Alexander Provotorov Reorganisation: *Acquisition of 3.86% of Rostelecom’s own ordinary shares, consequently increasing the Treasury’s stake to 6.55% *The Decree relating to the merger of Rostelecom and Svyazinvest was signed by the President of the Russian Federation. *State approval received for the acquisition of ZAO Sky Link, an additional share issue by Svyazinvest and also the transfer of additional Svyazinvest telecom assets. *In relation to the additional Svyazinvest share issue, Rostelecom acquired an additional 140,315,416 Svyazinvest shares to safeguard its 25% +1 stake until the merger. *The Rostelecom Board of Directors approved the price at which one ordinary and one preferred share will be bought from shareholders who vote against or do not take part in the voting over the company's reorganization. The buyback price of one ordinary share has been set at RUB 136.05 , with the price of one privileged share at RUB 95.24 as set by the independent appraiser Ernst and Young. M&A: *The acquisition of 100% of ZAO Sky Link gave Rostelecom access to 3G licenses in 69 regions across Russia *The acquisition of 28.2% of NTK, increasing Rostelecom’s share of the company to 100%. OTHER INFORMATION Conference call Rostelecom will host a conference call today at 8.00 AM (EST) / 12.00 PM (UK) / 1.00 PM (CET) / 4.00 PM (MOSCOW) To participate in the conference call, please dial: Russia +7 495 580 9543 UK/ International: +44 208 515 2301 US: +1 480 629 9835 A replay of the conference call will be available on the Company’s website http://www.rostelecom.ru/ir/results_and_presentations/financials/IFRS/2012/ in due course. ATTACHMENTS: 1. Reconciliation of OIBDA; 2. Statement of Comprehensive Income for Q4 and 2012 3. Statement of Cash Flows for 2012 4. Statement of Financial Position for 2012 ^1 Q1 2011 financial results include contributions from North-West Telecom OJSC, CenterTelecom OJSC, Southern Telecommunications Company OJSC, VolgaTelecom OJSC, Uralsvyazinform OJSC, Sibirtelecom OJSC, Far East Telecom OJSC (“RTOs”), and also Dagsvyazinform OJSC and Rostelecom OJSC (under RAS), which had been under common control of Svyazinvest OJSC and were merged with Rostelecom on April 1, 2011. Operating activities include contributions from Sky Link CJSC, which was acquired by Rostelecom from Svyazinvest on July 27, 2012 ^2 Q4 2012 represents unaudited results; 2012 audited ^3 Calculated as the sum of total number of households passed by xDSL, FTTx and xPON technologies, excluding technology intersections. ^4 Here and below, please refer to Attachment 1 to this statement for a full definition of OIBDA ^5 The non-monetary effect was RUB 4.7 billion on OIBDA margin in Q4 2011 and in total in 2011 without taking into account the non-monetary effect on the result of Q4 2011, due to the reduced long-term social obligations, as a result of the new labour contract signed by Rostelecom, its employees and the labour union in December 2011, which made up 39% . ^6 Here and below, capital expenditure (“CAPEX”) comprises cash spent on purchase of property, plant and equipment and intangible assets ^7 Here and below, net debt is calculated as the sum of long-term loans and short-term borrowings minus cash and cash equivalents and short-term investments ^8 OIBDA for the last 12 months ^9 Effective from April 1, 2011, the methodological changes in the revenue structure include the following: 1) revenue from DLD/ILD traffic transit, which were previously included in the “DLD / ILD telephony services” reporting line, are now included in the “Interconnection and traffic transit services” reporting line; 2) revenue from mobile interconnection services, previously included in the “Interconnection and traffic transit services” reporting line, are now presented under "Mobile Communication Services"; 3) other methodological changes had no significant impact on the reporting structure ^10 Excluding traffic, generated by other telecom operators ^11 Calculated as the sum of total number of households passed by xDSL, FTTx and xPON technologies, excluding technology intersections. ^12 Excluding depreciation and amortisation ATTACHMENT 1 RECONCILIATION OF OIBDA OIBDA is a non-U.S. GAAP and non-IFRS financial measure, which the Company defines as operating income before depreciation and amortisation. We believe that OIBDA provides useful information to investors because it is an indicator of the strength and performance of our business operations, including our ability to finance capital expenditures, acquisitions and other investments and our ability to incur and service debt. OIBDA should not be considered in isolation as an alternative to net income, operating income or any other measure of performance under U.S. GAAP or IFRS. % % RUB million 4Q 2012 4Q 2011 change, 2012 2011 change, y-o-y y-o-y Operating income 7,954 18,410 (57%) 53,825 60,188 (11%) Add: Depreciation 16,628 12,445 34% 64,729 57,524 13% and amortisation OIBDA 24,582 30,855 (20%) 118,554 117,712 1% OIBDA margin, % 29.8% 38.7% 36.9% 39.0% ATTACHMENT 2 STATEMENT OF COMPREHENSIVE INCOME FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED DECEMBER 31, 2012 Twelve -month periods Three -month period ended ended 31.12.2012 31.12.2011 31.12.2012 31.12.2011 Revenue 321,251 301,494 82,560 79,656 Operating expenses Wages, salaries, other benefits and (84,308) (76,252) (22,942) (16,856) payroll taxes Depreciation, amortisation and (64,729) (57,524) (16,628) (12,445) impairment losses Interconnection (47,312) (40,736) (12,853) (10,770) charges Materials, utilities, repairs (27,358) (27,507) (6,360) (6,902) and maintenance Loss on disposal of property, plant (822) (792) (282) 174 and equipment and intangible assets Bad debt expense (1,318) (572) (152) (109) Other operating 13,868 14,712 3,523 4,538 income Other operating (55,447) (52,634) (18,912) (18,876) expenses Total operating (267,426) (241,305) (74,606) (61,248) expenses, net Operating profit 53,825 60,189 7,954 18,410 Income from 4,293 4,474 807 1,737 associates Finance costs (16,005) (13,069) (3,841) (2,804) Other investing 1,440 2,078 (351) 651 and financial gain Foreign exchange 480 (377) 156 105 gain/ (loss), net Profit before 44,033 53,295 4,725 18,099 income tax Income tax expense (8,793) (10,767) (111) (2,610) Profit for the 35,240 42,528 4,614 15,489 year Other comprehensive income Revaluation (loss) / gain on (407) 15 (255) 189 available-for-sale investments Revaluation gain on available-for-sale (740) - - - investments transferred to profit on sale Exchange differences on (89) - (22) - translating foreign operations Share of other comprehensive (loss)/ gain (102) 3 (39) 14 recognized by associates Income tax in respect of other 228 (3) 51 (38) comprehensive loss items Other comprehensive (1,110) 15 (265) 165 income for the year, net of tax Total comprehensive 34,130 42,543 4,349 15,654 income for the year Profit attributable to: Equity holders of 35,064 42,701 4,558 15,508 the Group Non-controlling 176 (173) 56 (19) interests Total comprehensive income attributable to: Equity holders of 33,960 42,716 4,294 15,673 the Group Non-controlling 170 (173) 55 (19) interests Earnings per share attributable to equity holders of 12.14 14.32 1.60 4.84 the Group – basic (in RUB) Earnings per share attributable to equity holders of 12.06 14.10 1.60 4.79 the Group –diluted (in RUB) ATTACHMENT 3 STATEMENT OF CASH FLOWS FOR THE NINE MONTHS ENDED DECEMBER 31, 2012 AND 2011 Year ended 31 December 2012 2011 Cash flows from operating activities Profit before income tax 44,033 53,295 Adjustments to reconcile profit before tax to cash generated from operations: Depreciation, amortization and impairment losses 64,729 57,524 Loss on sale of property, plant and equipment and 822 792 intangible assets Bad debt expense 1,318 572 Income from associates (4,293) (4,474) Finance costs excluding finance costs on pension and 15,054 12,030 other long-term social liabilities Other investing and financial gain (1,440) (2,078) Foreign exchange (gain)/ loss, net (480) 377 Share-based payment expenses 18 588 Changes in net working capital: Increase in accounts receivable (7,628) (1,599) Increase/ (decrease) in employee benefits 378 (4,445) Decrease/ (increase) in inventories 240 202 Increase/ (decrease) in accounts payable, provisions 4,459 (5,804) and accrued expenses Increase/ (decrease) in other assets and liabilities 1,960 (309) Cash generated from operations 119,170 106,671 Interest paid (16,015) (12,230) Income tax paid (6,924) (9,064) Net cash provided by operating activities 96,231 85,377 Cash flows from investing activities Purchase of property, plant and equipment and (91,181) (83,231) intangible assets Proceeds from sale of property, plant and equipment 1,864 1,486 and intangible assets Acquisition of financial assets (4,436) (8,565) Proceeds from disposals of financial assets 8,300 9,176 Government grant received - 1,105 Interest received 236 934 Dividends received 827 193 Purchase of subsidiaries, net of cash acquired (1,287) (32,281) Proceeds from disposals of subsidiaries, net of cash 82 - disposed Acquisition of equity accounted investees (1,908) (3,640) Net cash used in investing activities (87,503) (114,823) Cash flows from financing activities Sale of treasury shares 2,775 1,754 Purchase of treasury shares (22,126) (1,487) Proceeds from bank and corporate loans 532,663 296,398 Repayment of bank and corporate loans (491,724) (250,410) Proceeds from bonds 10,000 - Repayment of bonds (7,285) (13,932) Proceeds from promissory notes 22,863 12,050 Repayment of promissory notes (22,939) (15,984) Repayment of vendor financing payable (163) (368) Proceeds from / (repayment of) other non-current (13) 72 financing liabilities Repayment of finance lease liabilities (1,824) (3,150) Acquisition of non-controlling interest (15,628) (366) Dividends paid to shareholders of the Group (12,131) (116) Dividends paid to non-controlling shareholders of (190) (303) subsidiaries Net cash (used in)/provided by financing activities (5,722) 24,158 Effect of exchange rate changes on cash and cash (16) (26) equivalents Net increase/(decrease) in cash and cash equivalents 2,990 (5,314) Cash and cash equivalents at beginning of year 7,380 12,694 Cash and cash equivalents at the end of year 10,370 7,380 ATTACHMENT 4 STATEMENT OF FINANCIAL POSITION 31 December 2012 31 December 2011 ASSETS Non-current assets Property, plant and equipment 385,994 335,205 Investment property 274 259 Goodwill and other intangible assets 87,830 88,937 Investments in associates 37,389 34,746 Other investments 2,498 3,635 Deferred tax assets 2,694 1,127 Other non-current assets 5,413 13,562 Total non-current assets 522,092 477,471 Current assets Inventories 4,534 4,763 Trade and other accounts receivable 33,992 28,790 Prepayments 3,912 2,706 Prepaid income tax 2,921 3,309 Other investments 952 3,926 Cash and cash equivalents 10,370 7,380 Other current assets 1,258 1,268 Total current assets 57,939 52,142 Total assets 580,031 529,613 EQUITY AND LIABILITIES Equity attributable to equity holders of the Group Share capital 106 106 Additional paid-in capital 34,839 34,736 Treasury shares (36,615) (17,161) Retained earnings and other reserves 257,143 247,253 Total equity attributable to equity 255,473 264,934 holders of the Group Non-controlling interests 493 7,784 Total equity 255,966 272,718 Non-current liabilities Loans and borrowings 150,907 91,851 Employee benefits 12,130 11,752 Deferred tax liabilities 23,236 20,813 Accounts payable, provisions and accrued 230 85 expenses Other non-current liabilities 4,136 3,689 Total non-current liabilities 190,639 128,190 Current liabilities Loans and borrowings 63,499 80,972 Accounts payable, provisions and accrued 59,889 39,196 expenses Income tax payable 50 242 Other current liabilities 9,988 8,295 Total current liabilities 133,426 128,705 Total liabilities 324,065 256,895 Total equity and liabilities 580,031 529,613 * * * For more information please visit http://www.rostelecom.ru/en/ir or contact: “Rostelecom Investor Relations / Rostelecom IR” application for iPhone and iPad is now available to download for free from the Apple App Store via: https://itunes.apple.com/ru/app/rostelecom-investor-relations/id596370946?mt=8. Investor Relations Department Tel. +7 (499) 995 97 80 email@example.com * * * Rostelecom (www.rostelecom.ru) is Russia’s largest national telecommunications operator with presence in all Russian regions. The Group is a universal operator and undisputable leader of broadband and pay-TV markets in Russia with over 9 million fixed-line broadband subscribers and over 6.5 million pay-TV subscribers. As Rostelecom develops its mobile data networks, its position as a major mobile operator is growing with over 13.5 million currently subscribed to Rostelecom’s mobile voice services. The Group is also an important innovator that provides solutions in the field of medicine, E-Government, cloud computing and education. Rostelecom was assigned a ‘BBB-’ and ‘BB+’ international credit ratings by Fitch Ratings and Standard & Poor’s respectively, both with a ‘Stable’ outlook. The Group generated RUB 321.3 billion of consolidated revenues, RUB 118.6 billion of OIBDA (36.9% of revenues) and RUB 35.2 billion of net income for the twelve months ended December 31, 2012. * * * Certain statements in this press release are forward-looking statements within the meaning of the U.S. federal securities laws and are intended to be covered by the safe harbors created thereby. Those forward-looking statements include, but are not limited to: *Management’s assessment of the Company’s future operating and financial results as well as forecasts of the present value of future cash flows and related factors; *the Company’s anticipated capital expenditures and plans to construct and modernize its network; *the Company’s expectations as to the growth in demand for its services, plans relating to the expansion of the range of its services and their pricing; *the Company’s plans with respect to improving its corporate governance practices; *the Company’s expectations as to its position in the telecommunications market and the development of the market segments within which the Company operates; *economic outlook and industry trends; *the Company’s expectations as to the regulation of the Russian telecommunications industry and assessment of impact of regulatory initiatives on the Company’s activity; *other statements regarding matters that are not historical facts. Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include: *risks relating to changes in political, economic and social conditions in Russia as well as changes in global economic conditions; *risks relating to Russian legislation, regulation and taxation, including laws, regulations, decrees and decisions governing the Russian telecommunications industry, securities industry as well as currency and exchange controls relating to Russian entities and their official interpretation by regulatory bodies; *risks relating to the Company, including the achievement of the anticipated results, levels of profitability and growth, ability to create and meet demand for the Company’s services including their promotions, and the ability of the Company to remain competitive in a liberalized telecommunications market; *technological risks associated with the functioning and development of the telecommunications infrastructure, technological innovations as well as the convergence of technologies; *other risks and uncertainties. For a more detailed discussion of these and other factors, see the Company’s Annual Report and the Company’s other public filings. Many of these factors are beyond the Company’s ability to control or predict. Given these and other uncertainties, readers are cautioned not to place undue reliance on any of the forward-looking statements contained herein or otherwise. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements (which are made as of the date hereof) to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as may be required under applicable laws. Contact: Rostelecom OJSC
Rostelecom OJSC: Final Results
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