Kazakhtelecom OJSC (Kazakhstan): financial indices

/IRBIS, Apr 2, 01/ - Following is a brief description of financial and economic indicators of Kazakhtelecom OJSC (Almaty). The description is compiled according to the conclusion of Listing commission of Kazakhstan Stock Exchange (KASE). Information is published in connection with admission of the first issue bonds (KZ2CUY03A347, KZTKb1, $100, $25 mln, March 13, 01 - March 13, 04, semiannual coupon at 10% APR) of the company into official list of the KASE securities under category "A" of the group "A-". The management of Kazakhtelecom OJSC assumes all responsibility for information submitted to KASE Listing commission. International audit International audit of the company's 1998 and 1999 financial statements was made by Deloitte & Touche (Almaty, Kazakhstan). In the opinion of Deloitte & Touche, financial statements give a reliable and objective picture of Kazakhtelecom financial condition for the years 1998 and 1999, as well as the results of its activities and cash flows for indicated periods in compliance with International Accounting Standards. The most significant discrepancy in major financial ratios that was mentioned in the documents of Deloitte & Touche and Kazakhtelecom concern the net income of year 1998: KZT2.27 bln net loss based on the auditor's data against KZT2.04 bln net income by the company's data. As the notice presented by Kazakhtelecom reads, following are the reasons for such a discrepancy: - the company and the auditor used different methods of settling accounts with foreign partners (which resulted in a decrease of the income from primary activities by KZT0.5 bln); - auditor showed a deferred income tax of KZT1.6 bln; - exchange rate difference loss at KZT2.2 bln was corrected by Deloitte & Touche by using undistributed income of previous years; - depreciation of fixed assets was shown by Deloitte & Touche including inflation adjustments, which differs from the company's depreciation amount by KZT0.9 bln. Accounts receivable As of January 1, 2001 total accounts receivable based on financial statements of Kazakhtelecom equaled KZT7.96 bln, or 1.9% more than it was in 1999. Based on the last investment memorandum of Kazakhtelecom, more than 41.2% of accounts receivable should come from CIS countries and other foreign countries. About 16.5% of receivables are to be collected from the public, and 32.9% should come from private legal entities. Past due receivables accounted for 40.9% of the total as of January 1, 2000, or KZT1.2 bln and 7.5% less than it was in late 1999. In 2000 Kazakhtelecom wrote off KZT470.6 mln as noncollectible debt, including KZT392.7 mln for telecommunication services. Deloitte & Touche accrued KZT1.8 bln and KZT0.85 bln provisions for the accounts receivable for the years 1998 and 1999, respectively. Based on the note presented by Kazakhtelecom, its bad debt provisions equaled KZT4.0 bln and KZT0.5 bln, respectively (they were added to "Administrative expenses" article of the Income statement). Kazakhtelecom provisions for the year 1998 contain the provisions of previous periods, whereas in the report of Deloitte & Touche the latter were corrected using undistributed income of previous years. Financial ratios calculated by Kazakhtelecom mln KZT, unless otherwise specified --------------------------------------------------------------------------------- Ratio RatiRaRatio As of As of As of As of As of As of Jan 1.99 Jan 1.00 Apr 1.00 July 1.00 Oct 1.00 Jan 1.01 -------------------------- -------- -------- -------- --------- -------- -------- Authorized capital 12,137 12,137 12,137 12,137 12,137 12,137 Shareholders' equity 32,307 30,881 36,363 36,491 35,635 36,392 Book value of the assets 52,452 57,497 58,778 58,867 59,696 68,589 Working capital -2,327 -1,382 2,073 2,998 4,582 7,009 Accounts receivable 5,991 7,477 7,143 8,375 8,307 7,616 Accounts payable 6,664 5,006 5,694 6,139 5,216 4,717 Bank loans 12,901 18,364 16,145 14,748 15,258 17,113 Total liabilities 20,145 26,616 22,415 22,376 24,060 24,582 Sales 23,528 29,852 8,575 17,293 26,345 36,001 Cost of goods sold 14,146 15,777 4,418 10,677 16,294 22,566 Net income 2,041 -958 2,745 3,522 4,661 5,306 Book value of a share, KZT 2,662.0 2,544.4 2,996.1 3,006.7 2,936.2 2,998.5 Return on sales (ROS), % 39.9 47.1 48.5 38.3 38.2 37.3 Return on equity (ROE), % 6.3 - - - - 14.6 Return on assets (ROA), % 3.5 - - - - 7.7 --------------------------------------------------------------------------------- Financial ratios calculated by Deloitte & Touche mln KZT, unless otherwise specified -------------------------------------------- Ratio 1998 1999 -------------------------- ------- ------- Authorized capital 12,137 12,137 Shareholders' equity 36,162 34,550 Book value of the assets 59,444 63,309 Working capital -294 -946 Accounts receivable 6,451 7,604 Accounts payable 4,196 3,964 Bank loans 13,472 19,072 Total liabilities 26,048 30,961 Sales 23,528 29,852 Cost of goods sold 18,006 19,039 Net income -2,265 -1,399 Book value of a share, KZT 2,979.6 2,846.7 Return on sales (ROS), % 30.9 38.5 -------------------------------------------- Liabilities By the data of Kazakhtelecom, the amount of his liabilities decreased by KZT2 bln (7.6%) in 2000. However, it should be kept in mind that the liabilities calculated by Deloitte & Touche exceed noticeably (by KZT5.9 bln in 1998 and KZT4.3 bln in 1999) those calculated by the company. Most of the liabilities are the bank loans. Their proportion increased from 64% in 1998 to 70% in 2000 (by the data of Deloitte & Touche - 52% and 62% for 1998 and 1999, respectively). The major lender of Kazakhtelecom, KFW bank (Germany). It accounts for 86% of the bank loans received by the company in 1998 and 66% in 1999, informs the auditor. Cash flows mln KZT, unless otherwise specified ------------------------------------------------------------------- By data of By data of Kazakhtelecom Deloitte & Touche ---------------------- ----------------- Ratio 1998 1999 2000 1998 1999 ------------------------ ------ ------ ------ -------- ------- Operating cash flow 5,561 3,725 10,514 5,628 6,556 Investment cash flow -7,403 -5,319 -9,989 -7,561 -6,957 Financing cash flow 1,462 2,074 -26 1,522 930 Net cash provided (used) -380 480 499 -410 529 ------------------------------------------------------------------- Income statement mln KZT, unless otherwise specified ------------------------------------------------------------------------- By data of By data of Kazakhtelecom Deloitte & Touche ---------------------- ----------------- Ratio 1998 1999 2000 1998 1999 ------------------------------ ------ ------ ------ -------- ------- Sales 23,528 29,843 36,001 26,048 30,961 Cost of goods sold 14,146 15,862 22,566 18,006 19,039 Gross income 9,382 13,981 13,434 8,041 11,926 Expenses of the period 6,665 6,971 6,769 4,098 4,858 Income from primary activities 2,716 7,010 6,665 2,182 6,214 Income (loss) from secondary activities -640 -4,137 1,273 -2,882 -6,321 Income tax 0,3 1,356 2,643 -1,565 -1,292 Extraordinary gains (loss) -35 -2,196 11 - - Net income (loss) 2,041 -958 5,306 -2,265 -1,399 -------------------------------------------------------------------------