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02.04.2001 00:00

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
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