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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Teleset Net | LSE:TNW | London | Ordinary Share | CY1010051815 | ORD EUR0.02 (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 53.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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TIDMTNW
RNS Number : 1384S
Teleset Networks PCL
13 May 2009
Press Announcement
+------------------------------------+----------------------------------------------+
| FOR IMMEDIATE RELEASE | 13 May 2009 |
+------------------------------------+----------------------------------------------+
2008 results ahead of market expectations
Teleset Networks ("Teleset" or "the Company"), a leading alternative fixed-line
telecom operator in the Volga region of the Russian Federation, announces
results for the year ended 31 December 2008.
+----------------+-------------+-------------+--------------+--------------+
| Year ended 31 | 31.12.2005 | 31.12.2006 | 31.12.2007 | 31.12.2008 |
| December | US$ | US$ | US$ | US$ |
+----------------+-------------+-------------+--------------+--------------+
| Operating | 9,428,684 | 13,460,783 | 22,737,313 | 30,623,447 |
| revenue | | | | |
+----------------+-------------+-------------+--------------+--------------+
| Operating | (5,765,196) | (7,736,787) | (14,137,674) | (18,287,108) |
| expenses | | | | |
+----------------+-------------+-------------+--------------+--------------+
| Operating | 3,663,488 | 6,160,733* | 8,938,378 | 12,796,874 |
| profit | | | | |
+----------------+-------------+-------------+--------------+--------------+
| EBITDA | 5,696,259 | 8,544,002* | 12,427,240 | 17,179,461 |
+----------------+-------------+-------------+--------------+--------------+
| Net profit | 2,541,640 | 2,768,552 | 5,142,984 | 8,562,435** |
+----------------+-------------+-------------+--------------+--------------+
| Earnings per | | 0.0271 | 0.0405 | 0.0558 |
| share | | | | |
+----------------+-------------+-------------+--------------+--------------+
*Before admission costs
** Net profit attributable to the equity holders of the holding company.
"We will continue to pursue our stated strategy for sustained and profitable
growth both organically and through carefully selected acquisitions in the Volga
Region to add value for our shareholders."
Yiannis Demetriou, Chief Executive Officer
CONTACTS
+------------------------------------------------+-------------------------+
| Teleset Networks | +357 22 450 790 |
+------------------------------------------------+-------------------------+
| Yiannis Demetriou | |
+------------------------------------------------+-------------------------+
| | |
+------------------------------------------------+-------------------------+
| Blue Oar Securities Plc - Nominated Adviser & | +44 20 7448 4400 |
| Broker | |
+------------------------------------------------+-------------------------+
| Shane Gallwey | |
+------------------------------------------------+-------------------------+
| | |
+------------------------------------------------+-------------------------+
| Bankside Consultants - Financial PR adviser | +44 20 7367 8888 |
+------------------------------------------------+-------------------------+
| Simon Bloomfield or Andy Harris | |
+------------------------------------------------+-------------------------+
Chairman's statement
During 2008, Teleset Networks made significant further progress in implementing
its strategy of becoming a leading telecommunications player and market
consolidator in the Volga Region of Russia. Having established a strong position
in Kazan and Naberezhnye Chelny, where we continue to win market share, we made
our first strategic move outside the Republic of Tatarstan with an acquisition
in the Ulyanovsk region.
In 2008, Teleset Networks continued to achieve excellent growth in revenues and
profits. This reflects the demand, from corporate and residential users, for
modern telecommunications infrastructure and services. The success of the
Company is the result of being able to take advantage of this opportunity having
invested substantially in an all-digital network and by offering the full range
of broadband services at competitive prices.
Teleset Networks' financial performance for the year ended 31 December 2008
clearly demonstrates the excellent operational and strategic progress we are
making. Not only did we achieve strong organic growth, we also successfully
completed the integration of OOO Svyazinvest in Naberezhnye Chelny. Acquired by
Teleset at the end of 2007, OOO Svyazinvest contributed significantly to group
revenue and profit in the second half of 2008.
Revenues for the year were up 35 per cent to US$30.6 million compared to US$22.7
million in 2007 with operating profit up 44 per cent to US$12.8 million (2007:
US$8.9 million). Basic earnings per share for 2008 were US$ 0.0558 (2007:
US$0.0405).
In September 2008 we made an important step towards our goal of becoming a
significant regional telecommunications player with the US$15.7 million cash
acquisition of 51 per cent of OOO Simbirsky Telecommunications Systems ("STS"),
a private fixed-line telecom operator in Ulyanovsk, the capital of Ulyanovsk
region. Our experience of successfully integrating previous acquisitions,
combined with the encouraging performance since we acquired STS, gives us
confidence that we will be able to integrate the business as planned and to
realise the expected operational and financial benefits from the enlarged
business.
Board changes
We continue to enjoy the valuable input and support of our shareholders.
Mr. Yuri Mashintsev, Executive Director of Templeton Asset Management Limited,
resigned as a Non-Executive Director of the Company in April 2008. His deep
financial knowledge and experience were of great support to the Board and I
would like to thank him for his significant contribution to the development of
the business.
In December 2008, the Board welcomed Mr. Matjaz Schroll, an Executive Director
of Templeton Asset Management Limited, as a Non-Executive Director of Teleset
Networks. We look forward to receiving the benefit of his advice and experience.
In April 2009, Mr. Gueorgui Horozov, a Non-Executive Director, representing
Black Sea Trade and Development Bank, resigned from the Board. I would like to
thank him for his valuable input to the company and wish him well for the
future.
Outlook
Despite the economic downturn, the Board expects the Company's financial
performance to reflect demand for telecom services which remains strong in both
residential and business sectors. As a result of our continuous focus on cost
control, we will continue to be competitive and will not have to undertake the
drastic cost-reduction measures of some of our peers.
We believe that broadband penetration will continue to drive the development of
the telecom market in Russia, replacing dial-up and enabling the Company to
sustain revenue growth, average revenue per user ('ARPU') and margins over the
coming years.
In 2009, the Company will continue to pursue its strategy for long-term
profitable growth, both organically and through new investments, and we remain
confident that despite the negative economic circumstances, we will make further
progress and continue our strong financial record.
Philippos Vatiliotis
Non-executive Chairman
Chief Executive Officer's review
In 2008, Teleset Networks successfully continued to pursue its strategy of
expansion through organic growth and acquisitions in the Volga Region of Russia.
During the year, we significantly increased market share within the Republic of
Tatarstan and established a presence in the Ulyanovsk Region through the
acquisition of OOO Simbirsky Telecommunications Systems ("STS").
OOO Svyazinvest, a telecom operator in Naberezhnye Chelny (the second biggest
city of Tatarstan with the population of about 600,000 located 250 kilometers
from Kazan), acquired by the Company at the end of 2007, was successfully
integrated in 2008 and delivered results in line with management expectations.
The acquisition has given us a significant presence in a second major city,
where we now have a 10 per cent market share and where we believe we can
strengthen our position significantly.
The acquisition of STS was Teleset's first strategic move outside the Republic
of Tatarstan and represented an important step towards Teleset's stated goal of
being a leading consolidator in the Volga region's telecom industry.
As a result of offering an increasing range of services, in particular broadband
services, at competitive prices to a growing customer base, the Company achieved
strong growth in revenue and profit for the year with ARPU and margins improved.
Underpinning this success is a continuous investment in developing and expanding
our all-digital telephone and data transmission network, our focus on delivering
top-quality services to both corporate and residential customers, and our
ability to attract and retain highly qualified and experienced members of staff.
Telephony services
Fixed telephony provides the Company with a reliable source of revenue which
continues to grow. A significant contributor to increasing market share has been
our success in securing exclusive agreements with developers for providing
telephony to new residential properties and business centres. In addition to
generating new revenue for Teleset, this has also helped to mitigate the impact
of intense competition and to minimise customer churn.
At 31 December 2008, the total number of telephony subscribers (including STS)
was 161,200, an increase of 23 per cent on the total of 130,800 at the end of
2007. At 31 December 2008, the total number of subscribers was 114,200
in Kazan, 18,400 in Naberezhnye Chelny and 28,600 with STS in Ulyanovsk.
During 2008, Teleset Networks continued to win corporate customers, including
companies, government organisations and smaller businesses, which now represent
11 per cent of total subscribers.
The quality of Teleset's service is reflected in a high level of client
retention, especially in the corporate sector, where many customers (including
Metro Cash & Carry, the local branch of the Federal Tax Service, the local
branch of Sberbank (the largest bank in Russia), and the Central Bank of Russia)
have been with us for more than five years. New customers won in 2008 include
the Ministry of Economy of Tatarstan and many other state organisations and
private companies.
Over the next few years, we anticipate that the number of corporate customers
will continue to grow and will make an increasingly significant contribution to
the Company's financial performance.
Internet services
Overall, revenues in 2008 from internet services grew to US$9.9 million and
represented 32 per cent of total revenues (2007: 29 per cent).
This strong performance reflects the buoyant demand for internet services in
Russia where broadband penetration increased to 19.8 per cent in 2008 compared
to 12 per cent the previous year. Broadband penetration is forecasted by
industry experts to continue to increase over the next few years to levels
experienced in Western economies.
In 2008 the Company's DSL subscriber base increased by 135 per cent with the
number of subscribers reaching 26,300 compared to 11,200 in 2007. This rapid
growth is reflected in xDSL traffic for the year which rose by 475 per cent to a
level equivalent to 716,000 Gb compared to 126,800 Gb for 2007.
As a result of broadband penetration, dial-up traffic growth for 2008 was a more
modest 5 per cent and, whilst it will continue to make a positive financial
contribution, over time it will reduce its overall importance to the Company.
Revenue growth has also been achieved through wide-ranging marketing and sales
activities. Combined with the development of new products and services, these
have enabled us to win and retain new customers.
We have developed a client-oriented approach, offering our customers solutions,
tailored to their needs and budgets. Our customers benefit from our seasonal
promotional campaigns which we arrange on a regular basis. Many of our marketing
activities target young people, the most active users of internet services.
Cable TV
The cable TV service, marketed by Teleset Networks since 2007 in four districts
of Kazan, is growing in popularity and gives subscribers access to more than 50
TV channels delivered via the Company's fiber optic network. By the end of 2008
the Company had 1,700 cable TV subscribers. During 2008, service coverage was
expanded to 6 districts (Kirovsky, Sovetsky, Vahitovsky, Aviastroitelny,
Privolzhsky and Moskovsky).
Teleset's ability to offer a full package of fixed-telephony, internet access
and cable TV services, has proven key to the Company securing exclusive
agreements with developers for new residential and business properties.
The cable TV service is available to both Teleset's telephone subscribers and
customers of other networks. In addition to offering the service at competitive
prices, incentives to new customers include single billing and settlements at
700 teller terminals and numerous Sberbank and Tatfondbank ATMs located across
Kazan.
The Cable TV Association of Russia estimates that, in Russia as a whole, by the
end of 2008, 36 million households (equivalent to 100 million people) had cable
TV facilities with 15 million households having signed up to multi-channel TV
packages. In Russia, there are a total of 58 million households equivalent to
142 million people.
According to Cable TV Association of Russia, the cable TV sector in Russia will
continue to develop, despite the economic slowdown, and will experience a rapid
increase in demand when the economy recovers. In anticipation of this and the
government-controlled switch from analog to digital TV broadcasting scheduled
for 2014, we plan to focus strongly on expanding our cable TV content to ensure
that Teleset can compete effectively in this growing market.
Acquisition
During the year, we demonstrated our acquisition management capabilities with
the successful completion, as planned, of the integration of OOO Svyazinvest, a
telecom operator in Naberezhnye Chelny (the second biggest city of Tatarstan)
acquired at the end of 2007. In addition to providing a significant market
presence in Naberezhnye Chelny, with 10 per cent of the city's telecom market,
OOO Svyazinvest made a significant contribution to profit in the second half of
the year as expected.
In September 2008, Teleset Networks made its first acquisition outside
Tatarstan, purchasing 51 per cent of OOO Simbirsky Telecommunications Systems
for a cash consideration of US$15.7 million.
The remaining 49 per cent shareholders of STS, whose business interests include
real estate development in Ulyanovsk, have agreed to support the future
development of the business and to retain their shares for at least 12 months.
The Company has the right of first refusal to acquire the minority shares on the
same price-earnings multiple as was paid for the 51 per cent already acquired.
STS is based in Ulyanovsk, the capital city of the Ulyanovsk region of Russia
which sits astride the Volga River. Ulyanovsk is located 870 kilometres
south-east of Moscow and 240 kilometres from Kazan, where Teleset is
headquartered. STS is the leading independent fixed-line operator in Ulyanovsk
with a market share of approximately 13 per cent, just under 30,000
subscribers and a network which covers all the four districts of the city.
The customers of STS are residential subscribers and corporate clients including
Alfa Bank and Sberbank (leading Russian banks), Metro Cash & Carry and Eldorado
(retail), as well as state regulatory bodies and authorities.
Since completion of the acquisition, the financial performance of STS has been
encouraging and we are confident that the Company will realise the economies of
scale and synergies as expected.
Prior to the acquisition, STS had won a zonal licence allowing it to handle
traffic between local networks within the Ulyanovsk region. This part of the
business is starting to generate incremental revenues and is expected to become
a significant contributor to revenues in the future.
For 2007, STS made revenues of US$4.6 million. It started contributing to the
profitability of the group immediately after the completion of the acquisition.
The integration of STS was completed exactly as planned in March 2009 and we
expect the acquisition to enhance earnings for 2009.
Ulyanovsk has a population of 635,000 and is an expanding commercial and
industrial city. In June 2008, the city was granted "Free Economic Zone" status
by the Russian Ministry of Economic Development and Trade, a move that is
expected to attract new investment and business to the Ulyanovsk Region.
Ulyanovsk is already a significant industrial centre with UAZ (automobile),
Aviastar (civil airplanes) and Volzhanka (confectionery) among the companies
with manufacturing operations located there. With 11 educational institutions
and universities, the city has a significant academic population creating
additional demand for broadband internet services.
With its experience in applying properly management and corporate governance
practices, Teleset Networks expects to gain significant benefits stemming from
economies of scale and substantial synergies that will be realised as a result
of successfully integrating the newly acquired company.
Financial Review
The Company has achieved a strong financial performance in 2008, creating a
solid platform for future growth. EBITDA was US$17.2 million and EBITDA margin
was 56 per cent (2007: US$12.4 million and 55 per cent respectively). Net profit
for the year attributed to the equity holders of the parent was US$8.5 million
and net profit margin 28 per cent (2007: US$5.1 million and 23 per cent).
Operating revenues were US$30.6 million of which 48 per cent were from telephony
services (2007: US$22.7 million with 52 per cent from telephony).
Internet services continued to increase their share of total revenue, growing by
47.7 per cent to US$9.9 million and representing 32 per cent of total revenue
(2007: US$6.7 million and 29 per cent for the year).
ISDN rental and connection fees which increased by 43.4 per cent to US$2.7
million (2007: US$1.9 million).
Capital expenditure was US$7.5 million, which was invested in telecomminication
equipment, network computer hardware, land and premises.
In 2008, interest expenses decreased by 4 per cent to US$1.9 million (2007:
US$2 million), despite the increase in indebtedness due to the LIBOR reduction
in 2008.
In 2008 we drew down the US$10 million second tranche of the loan from
Black Sea Trade and Development Bank.
Interest income almost doubled and reached US$1.7 million (2007: US$ 0.9
million).
In April 2008, Teleset Networks successfully raised US$9.8 million, via an offer
to shareholders on a pro-rata basis, of 20 million new shares of EUR0.02 at a
price of 25 pence each. The proceeds of the pro rata offer are being used to
accelerate the growth of the business.
The pro rata offer was over-subscribed and excess share applications were scaled
back accordingly. The total number of ordinary shares in issue following this
issue amounted to 157,556,715.
Future developments
In 2009, broadband penetration will continue to be the key driver of the growth
and development of Teleset Networks. According to IKS Consulting, broadband
penetration in the cities with populations of more than one million people will
reach 40 per cent within the next few years. This illustrates the future
potential for Teleset to further expand its network, market share and revenues.
We will continue to pursue our stated strategy for sustained and profitable
growth both organically and through carefully selected acquisitions in the Volga
Region to add value for our shareholders. In the current economic environment,
we believe that potential targets may become available at attractive prices.
At the same time, we will maintain our focus on improving operational
performance and controlling costs. Specifically, we are developing competitive
packages incorporating telephony, broadband and cable TV that will enhance
customer loyalty whilst improving ARPU. We are re-enforcing our sales and
marketing activities through the expansion of our agency network and improving
service quality. We are also continuously seeking to improve operational
efficiency and economies of scale across the business.
Yiannis Demetriou
Chief Executive Officer
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF TELESET NETWORKS PUBLIC COMPANY
LIMITED
Report on the Consolidated Financial Statements
We have audited the financial statements of the parent company Teleset Networks
Public Company Limited (the "Company") and its subsidiaries ("the Group"),
which comprise the consolidated balance sheet as at 31 December 2008 and the
consolidated income statement, consolidated statement of changes in equity and
consolidated cash flow statement for the year then ended, and a summary of
significant accounting policies and other explanatory notes.
We have reported separately on the financial statements of the Company for the
year ended 31 December 2008.
Board of Directors' Responsibility for the Financial Statements
The Company's Board of Directors is responsible for the preparation and fair
presentation of these consolidated financial statements in accordance with
International Financial Reporting Standards as adopted by the European Union
(EU) and the requirements of the Cyprus Companies Law, Cap 113. This
responsibility includes: designing, implementing and maintaining internal
control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or
error; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditors' Responsibility
Our responsibility is to express an opinion on these consolidated financial
statements based on our audit. We conducted our audit in accordance with
International Standards on Auditing. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain reasonable
assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the
amounts and disclosures in the financial statements. The procedures selected
depend on the auditor's judgment, including the assessment of the risks of
material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control
relevant to the entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entity's internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the
reasonableness of accounting estimates made by the Board of Directors as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the consolidated financial statements give a true and fair view
of the financial position the Group as of 31 December 2008 and of its financial
performance and its cash flows for the year then ended in accordance with
International Financial Reporting Standards as adopted by the EU and the
requirements of the Cyprus Companies Law, Cap. 113.
Report on Other Legal Requirements
Pursuant to the requirements of the Companies Law, Cap. 113, we report the
following:
* We have obtained all the information and explanations we considered necessary
for the purposes of our audit.
* In our opinion, proper books of account have been kept by the Company.
* The Company's financial statements are in agreement with the books of account.
* In our opinion and to the best of our information and according to the
explanations given to us, the consolidated financial statements give the
information required by the Companies Law, Cap. 113, in the manner so required.
* In our opinion, the information given in the report of the Board of Directors is
consistent with the consolidated financial statements.
Other Matter
This report, including the opinion, has been prepared for and only for the
Company's members as a body in accordance with Section 156 of the Companies Law,
Cap.113 and for no other purpose. We do not, in giving this opinion, accept or
assume responsibility for any other purpose or to any other person to whose
knowledge this report may come to.
+----------------------------------+----------------------------------+
| Grant Thornton | |
+----------------------------------+----------------------------------+
| Certified Public Accountants | |
| (Cy) | |
+----------------------------------+----------------------------------+
| Nicosia, 12 May 2009 | |
+----------------------------------+----------------------------------+
CONSOLIDATED INCOME STATEMENT
Year ended 31 December 2008
+--------------------------------------------------+------+--------------+---------------+
| | | | |
+--------------------------------------------------+------+--------------+---------------+
| | | 2008 | 2007 |
+--------------------------------------------------+------+--------------+---------------+
| | Note | US$ | US$ |
+--------------------------------------------------+------+--------------+---------------+
| | | | |
+--------------------------------------------------+------+--------------+---------------+
| Revenue | 1 | 30,623,447 | 22,737,313 |
+--------------------------------------------------+------+--------------+---------------+
| Operating expenses | | (18,287,108) | (14,137,674) |
+--------------------------------------------------+------+--------------+---------------+
| Other income | 2 | 460,535 | 338,739 |
+--------------------------------------------------+------+--------------+---------------+
| Operating profit | 3 | 12,796,874 | 8,938,378 |
+--------------------------------------------------+------+--------------+---------------+
| Finance income | 5 | 1,689,764 | 1,183,327 |
+--------------------------------------------------+------+--------------+---------------+
| Finance costs | 5 | (2,532,820) | (2,197,015) |
+--------------------------------------------------+------+--------------+---------------+
| Profit before tax | | 11,953,818 | 7,924,690 |
+--------------------------------------------------+------+--------------+---------------+
| | | | |
+--------------------------------------------------+------+--------------+---------------+
| Tax | 6 | (3,138,748) | (2,781,706) |
+--------------------------------------------------+------+--------------+---------------+
| Net profit for the year | | 8,815,070 | 5,142,984 |
+--------------------------------------------------+------+--------------+---------------+
| | | | |
+--------------------------------------------------+------+--------------+---------------+
| Attributable to: | | | |
+--------------------------------------------------+------+--------------+---------------+
| Equity holders of the parent | | 8,562,435 | 5,142,984 |
+--------------------------------------------------+------+--------------+---------------+
| Minority interest | | 252,635 | |
| | | | - |
+--------------------------------------------------+------+--------------+---------------+
| | | 8,815,070 | 5,142,984 |
+--------------------------------------------------+------+--------------+---------------+
| | | | |
+--------------------------------------------------+------+--------------+---------------+
| Earnings per share attributable to equity | 7 | | |
| holders of the parent (cents) | | | |
+--------------------------------------------------+------+--------------+---------------+
| Basic earnings per share | | 5.58 | 4.05 |
+--------------------------------------------------+------+--------------+---------------+
| Diluted earnings per share | | 5.15 | 3.56 |
+--------------------------------------------------+------+--------------+---------------+
CONSOLIDATED BALANCE SHEET
31 December 2008
+--------------------------------------------------+------+---------------+-------------+
| | | 2008 | 2007 |
+--------------------------------------------------+------+---------------+-------------+
| | Note | US$ | US$ |
+--------------------------------------------------+------+---------------+-------------+
| ASSETS | | | |
+--------------------------------------------------+------+---------------+-------------+
| Non-current assets | | | |
+--------------------------------------------------+------+---------------+-------------+
| Property, plant and equipment | 8 | 32,209,568 | 30,479,215 |
+--------------------------------------------------+------+---------------+-------------+
| Intangible assets | 9 | 28,559,091 | 17,401,362 |
+--------------------------------------------------+------+---------------+-------------+
| | | 60,768,659 | 47,880,577 |
+--------------------------------------------------+------+---------------+-------------+
| | | | |
+--------------------------------------------------+------+---------------+-------------+
| Current assets | | | |
+--------------------------------------------------+------+---------------+-------------+
| Inventories | 12 | 3,185,603 | 1,978,888 |
+--------------------------------------------------+------+---------------+-------------+
| Trade and other receivables | 13 | 6,826,416 | 5,862,542 |
+--------------------------------------------------+------+---------------+-------------+
| Refundable taxes | | 370,120 | - |
+--------------------------------------------------+------+---------------+-------------+
| Cash at bank and in hand | 14 | 22,588,307 | 15,024,993 |
+--------------------------------------------------+------+---------------+-------------+
| | | 32,970,446 | 22,866,423 |
+--------------------------------------------------+------+---------------+-------------+
| | | | |
+--------------------------------------------------+------+---------------+-------------+
| Total assets | | 93,739,105 | 70,747,000 |
+--------------------------------------------------+------+---------------+-------------+
| | | | |
+--------------------------------------------------+------+---------------+-------------+
| EQUITY AND LIABILITIES | | | |
+--------------------------------------------------+------+---------------+-------------+
| Equity attributable to the equity holders of the | | | |
| parent | | | |
+--------------------------------------------------+------+---------------+-------------+
| Share capital | 15 | 4,335,361 | 3,082,011 |
+--------------------------------------------------+------+---------------+-------------+
| Other reserves | 17 | 28,084,984 | 28,112,295 |
+--------------------------------------------------+------+---------------+-------------+
| Retained earnings | | 17,773,401 | 9,210,966 |
+--------------------------------------------------+------+---------------+-------------+
| | | 50,193,746 | 40,405,272 |
+--------------------------------------------------+------+---------------+-------------+
| Minority interest | | 4,023,233 | |
| | | | - |
+--------------------------------------------------+------+---------------+-------------+
| Total equity | | 54,216,979 | 40,405,272 |
+--------------------------------------------------+------+---------------+-------------+
| | | | |
+--------------------------------------------------+------+---------------+-------------+
| Non-current liabilities | | | |
+--------------------------------------------------+------+---------------+-------------+
| Borrowings | 18 | 22,770,642 | 20,652,130 |
+--------------------------------------------------+------+---------------+-------------+
| Deferred tax liabilities | | 3,107,243 | 3,759,112 |
+--------------------------------------------------+------+---------------+-------------+
| Deferred income | | 90,013 | |
| | | | - |
+--------------------------------------------------+------+---------------+-------------+
| | | 25,967,898 | 24,411,242 |
+--------------------------------------------------+------+---------------+-------------+
| | | | |
+--------------------------------------------------+------+---------------+-------------+
| Current liabilities | | | |
+--------------------------------------------------+------+---------------+-------------+
| Trade and other payables | 19 | 5,737,582 | 3,900,827 |
+--------------------------------------------------+------+---------------+-------------+
| Deferred income | | 13,707 | - |
+--------------------------------------------------+------+---------------+-------------+
| Borrowings | 18 | 7,802,939 | 2,000,000 |
+--------------------------------------------------+------+---------------+-------------+
| Current tax liabilities | | | 29,659 |
| | | - | |
+--------------------------------------------------+------+---------------+-------------+
| | | 13,554,228 | 5,930,486 |
+--------------------------------------------------+------+---------------+-------------+
| | | | |
+--------------------------------------------------+------+---------------+-------------+
| Total liabilities | | 39,522,126 | 30,341,728 |
+--------------------------------------------------+------+---------------+-------------+
| | | | |
+--------------------------------------------------+------+---------------+-------------+
| Total equity and liabilities | | 93,739,105 | 70,747,000 |
+--------------------------------------------------+------+---------------+-------------+
On 12 May 2009 the Board of Directors of Teleset Networks Public Company Limited
authorised these financial statements for issue.
+-----------------------------------------+-----------------------------------------+
| | |
+-----------------------------------------+-----------------------------------------+
| .................................... | .................................... |
+-----------------------------------------+-----------------------------------------+
| Philippos Vatiliotis | Yiannis Demetriou |
+-----------------------------------------+-----------------------------------------+
| Non-Executive Chairman | Chief Executive Officer |
+-----------------------------------------+-----------------------------------------+
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2008
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| | Attributable to equity holders of the Company | | |
+----------------------------------------------------+--------------------------------------------------------------+-------------+---------------+
| | Share | Other | Retained | Total | Minority | Total |
| | capital | reserves | earnings | | interest | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| | US$ | US$ | US$ | US$ | US$ | US$ |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| | | (Note 17) | | | | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| At 1 January 2007 | 2,282,924 | 10,248,756 | 4,067,982 | 16,599,662 | | 16,599,662 |
| | | | | | - | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| | | | | | | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Exchange difference arising on the translation and | | 3,643,714 | | 3,643,714 | | 3,643,714 |
| consolidation of foreign subsidiaries | - | | - | | - | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Net gains and losses recognised directly in equity | - | 3,643,714 | - | 3,643,714 | - | 3,643,714 |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Net profit for the year | | | 5,142,984 | 5,142,984 | | 5,142,984 |
| | - | - | | | - | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Total recognised income for 2007 | - | 3,643,714 | 5,142,984 | 8,786,698 | - | 8,786,698 |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Issue of share capital | 799,087 | 13,780,325 | - | 14,579,412 | - | 14,579,412 |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Equity share based payments | | 439,500 | | 439,500 | | 439,500 |
| | - | | - | | - | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| | 799,087 | 17,863,539 | 5,142,984 | 23,805,610 | | 23,805,610 |
| | | | | | - | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| At 31 December 2007/ 1 January 2008 | 3,082,011 | 28,112,295 | 9,210,966 | 40,405,272 | | 40,405,272 |
| | | | | | - | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| | | | | | | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Deferred Taxation on the translation of | - | 2,092,638 | - | 2,092,638 | - | 2,092,638 |
| foreign operations | | | | | | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Exchange difference arising on the translation and | | (10,867,773) | | (10,867,773) | 25,892 | (10,841,881) |
| consolidation of foreign subsidiaries | - | | - | | | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Net gains and losses recognised directly in equity | - | (8,775,135) | - | (8,775,135) | 25,892 | (8,749,243) |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Net profit for the year | | | 8,562,435 | 8,562,435 | 252,635 | 8,815,070 |
| | - | - | | | | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Total recognised income for 2008 | - | (8,775,135) | 8,562,435 | (212,700) | 278,527 | 65,827 |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Issue of share capital | 630,726 | 9,240,296 | - | 9,871,022 | - | 9,871,022 |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Exchange difference from the conversion of share | 622,624 | (622,624) | - | - | - | - |
| capital into Euros | | | | | | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Aquisitions through business combinations | | | | | 3,744,706 | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| Equity share based payments | | 130,152 | | 130,152 | | 130,152 |
| | - | | - | | - | |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| | 1,253,350 | (27,311) | 8,562,435 | 9,788,474 | 4,023,233 | 13,811,707 |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
| At 31 December 2008 | 4,335,361 | 28,084,984 | 17,773,401 | 50,193,746 | 4,023,233 | 54,216,979 |
+----------------------------------------------------+-------------+---------------+---------------+----------------+-------------+---------------+
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2008
+--------------------------------------------------+------+--------------+----------------+
| | | | |
+--------------------------------------------------+------+--------------+----------------+
| | | 2008 | 2007 |
+--------------------------------------------------+------+--------------+----------------+
| | Note | US$ | US$ |
+--------------------------------------------------+------+--------------+----------------+
| CASH FLOWS FROM OPERATING ACTIVITIES | | | |
+--------------------------------------------------+------+--------------+----------------+
| Profit before tax | | 11,953,818 | 7,924,690 |
+--------------------------------------------------+------+--------------+----------------+
| Adjustments for: | | | |
+--------------------------------------------------+------+--------------+----------------+
| Depreciation of property, plant and equipment | 8 | 4,193,706 | 3,371,262 |
+--------------------------------------------------+------+--------------+----------------+
| Share based payment | | 130,152 | 439,500 |
+--------------------------------------------------+------+--------------+----------------+
| Amortisation of computer software | 9 | 62,236 | 41,162 |
+--------------------------------------------------+------+--------------+----------------+
| Amortisation of number capacity | 9 | 126,645 | 76,438 |
+--------------------------------------------------+------+--------------+----------------+
| (Profit) from the sale of property, plant and | | (85,397) | (99,358) |
| equipment | | | |
+--------------------------------------------------+------+--------------+----------------+
| Interest income | 5 | (1,689,764) | (869,492) |
+--------------------------------------------------+------+--------------+----------------+
| Interest expense | 5 | 1,904,575 | 1,982,860 |
+--------------------------------------------------+------+--------------+----------------+
| | | | |
+--------------------------------------------------+------+--------------+----------------+
| Cash flows from operations before working | | 16,595,971 | 12,867,062 |
| capital changes | | | |
+--------------------------------------------------+------+--------------+----------------+
| Increase in inventories and work in progress | | (1,083,343) | (289,409) |
+--------------------------------------------------+------+--------------+----------------+
| Decrease / (increase) in trade and other | | 983,619 | (965,557) |
| receivables | | | |
+--------------------------------------------------+------+--------------+----------------+
| (Decrease) / increase in trade and other | | (3,587) | 96,169 |
| payables | | | |
+--------------------------------------------------+------+--------------+----------------+
| Increase in deferred income | | | |
| | | 103,720 | - |
+--------------------------------------------------+------+--------------+----------------+
| Cash flows from operations | | 16,596,380 | 11,708,265 |
+--------------------------------------------------+------+--------------+----------------+
| Tax paid | | (3,378,875) | (2,722,925) |
+--------------------------------------------------+------+--------------+----------------+
| Net cash from operating activities | | 13,217,505 | 8,985,340 |
+--------------------------------------------------+------+--------------+----------------+
| | | | |
+--------------------------------------------------+------+--------------+----------------+
| CASH FLOWS FROM INVESTING ACTIVITIES | | | |
+--------------------------------------------------+------+--------------+----------------+
| Payment for purchase of intangible assets | 9 | (113,159) | (119,179) |
+--------------------------------------------------+------+--------------+----------------+
| Payment for purchase of property, plant and | 8 | (7,494,452) | (3,732,196) |
| equipment | | | |
+--------------------------------------------------+------+--------------+----------------+
| Acquisition of subsidiaries, net cash outflow on | 11 | (15,682,259) | (10,812,256) |
| acquisition | | | |
+--------------------------------------------------+------+--------------+----------------+
| Proceeds from disposal of property, plant and | 8 | 268,039 | 163,592 |
| equipment | | | |
+--------------------------------------------------+------+--------------+----------------+
| Interest received | | 1,689,764 | 869,492 |
+--------------------------------------------------+------+--------------+----------------+
| Net cash used in investing activities | | (21,332,067) | (13,630,547) |
+--------------------------------------------------+------+--------------+----------------+
| | | | |
+--------------------------------------------------+------+--------------+----------------+
| CASH FLOWS FROM FINANCING ACTIVITIES | | | |
+--------------------------------------------------+------+--------------+----------------+
| Proceeds from issue of share capital | | 9,871,022 | 14,579,412 |
+--------------------------------------------------+------+--------------+----------------+
| Repayments of borrowings | | (1,955,964) | (7,282,018) |
+--------------------------------------------------+------+--------------+----------------+
| Proceeds from borrowings | | 9,877,415 | 9,846,472 |
+--------------------------------------------------+------+--------------+----------------+
| Interest paid | | (1,904,575) | (1,982,860) |
+--------------------------------------------------+------+--------------+----------------+
| Net cash from financing activities | | 15,887,898 | 15,161,006 |
+--------------------------------------------------+------+--------------+----------------+
| | | | |
+--------------------------------------------------+------+--------------+----------------+
| Net increase in cash and cash equivalents | | 7,773,336 | 10,515,799 |
+--------------------------------------------------+------+--------------+----------------+
| Cash and cash equivalents: | | | |
+--------------------------------------------------+------+--------------+----------------+
| At beginning of the year | 14 | 15,024,993 | 4,351,946 |
+--------------------------------------------------+------+--------------+----------------+
| Effect of exchange rate fluctuations on cash | | (210,022) | 157,248 |
| held | | | |
+--------------------------------------------------+------+--------------+----------------+
| At end of the year | 14 | 22,588,307 | 15,024,993 |
+--------------------------------------------------+------+--------------+----------------+
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year ended 31 December 2008
1. Revenue
+--------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+------------+
| | US$ | US$ |
+--------------------------------------------------------+------------+------------+
| Connection fees | 629,495 | 681,402 |
+--------------------------------------------------------+------------+------------+
| Rental fees | 9,893,433 | 7,887,954 |
+--------------------------------------------------------+------------+------------+
| Traffic fees | 4,238,931 | 3,338,097 |
+--------------------------------------------------------+------------+------------+
| ISDN Connection fees | 263,383 | 136,445 |
+--------------------------------------------------------+------------+------------+
| ISDN Traffic fees | 2,455,443 | 1,759,648 |
+--------------------------------------------------------+------------+------------+
| Internet services | 9,860,239 | 6,677,888 |
+--------------------------------------------------------+------------+------------+
| IP Services | 708,541 | 772,269 |
+--------------------------------------------------------+------------+------------+
| Zonal, LD and ILD fees | 328,825 | - |
+--------------------------------------------------------+------------+------------+
| Sundry Income | 2,245,157 | 1,483,610 |
+--------------------------------------------------------+------------+------------+
| | 30,623,447 | 22,737,313 |
+--------------------------------------------------------+------------+------------+
2. Other income
+--------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+------------+
| | US$ | US$ |
+--------------------------------------------------------+------------+------------+
| Technical services provided | 163,820 | 86,864 |
+--------------------------------------------------------+------------+------------+
| Sundry operating income | 211,318 | 152,517 |
+--------------------------------------------------------+------------+------------+
| Gain from sale of property, plant and equipment | 85,397 | 99,358 |
+--------------------------------------------------------+------------+------------+
| | 460,535 | 338,739 |
+--------------------------------------------------------+------------+------------+
3. Operating profit
+--------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+------------+
| | US$ | US$ |
+--------------------------------------------------------+------------+------------+
| Operating profit is stated after charging the | | |
| following items: | | |
+--------------------------------------------------------+------------+------------+
| Gain from sale of property, plant and equipment (Note | (85,397) | (99,358) |
| 8) | | |
+--------------------------------------------------------+------------+------------+
| Amortisation of number capacity (Note 9) | 126,645 | 76,438 |
+--------------------------------------------------------+------------+------------+
| Amortisation of computer software (Note 9) | 62,236 | 41,162 |
+--------------------------------------------------------+------------+------------+
| Depreciation of property, plant and equipment (Note 8) | 4,193,704 | 3,371,262 |
+--------------------------------------------------------+------------+------------+
| Staff costs (Note 4) | 5,056,247 | 3,754,177 |
+--------------------------------------------------------+------------+------------+
| Auditors' remuneration | 118,580 | 73,700 |
+--------------------------------------------------------+------------+------------+
4. Staff costs
+--------------------------------------------------------+---------------+--------------+
| | 2008 | 2007 |
+--------------------------------------------------------+---------------+--------------+
| | US$ | US$ |
+--------------------------------------------------------+---------------+--------------+
| Wages and salaries | 4,926,095 | 3,314,677 |
+--------------------------------------------------------+---------------+--------------+
| Share based payments | 130,152 | 439,500 |
+--------------------------------------------------------+---------------+--------------+
| | 5,056,247 | 3,754,177 |
+--------------------------------------------------------+---------------+--------------+
| Average number of employees: | 544 | 412 |
| Full time | | |
+--------------------------------------------------------+---------------+--------------+
| Part time | 74 | 36 |
+--------------------------------------------------------+---------------+--------------+
| | 618 | 448 |
+--------------------------------------------------------+---------------+--------------+
5. Finance income / cost
+--------------------------------------------------------+-------------+-------------+
| | 2008 | 2007 |
+--------------------------------------------------------+-------------+-------------+
| | US$ | US$ |
+--------------------------------------------------------+-------------+-------------+
| Interest income | 1,689,764 | 869,492 |
+--------------------------------------------------------+-------------+-------------+
| Net foreign exchange profit | | 313,835 |
| | - | |
+--------------------------------------------------------+-------------+-------------+
| Finance income | 1,689,764 | 1,183,327 |
+--------------------------------------------------------+-------------+-------------+
| | | |
+--------------------------------------------------------+-------------+-------------+
| Net foreign exchange losses | 537,299 | - |
+--------------------------------------------------------+-------------+-------------+
| Interest expense | 1,904,575 | 1,982,860 |
+--------------------------------------------------------+-------------+-------------+
| Other finance expenses | 90,946 | 214,155 |
+--------------------------------------------------------+-------------+-------------+
| Finance costs | 2,532,820 | 2,197,015 |
+--------------------------------------------------------+-------------+-------------+
| | | |
+--------------------------------------------------------+-------------+-------------+
| Net finance costs | (843,056) | (1,013,688) |
+--------------------------------------------------------+-------------+-------------+
6. Tax
+--------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+------------+
| | US$ | US$ |
+--------------------------------------------------------+------------+------------+
| Corporation tax - current year | 2,941,642 | 2,573,728 |
+--------------------------------------------------------+------------+------------+
| Deferred tax - charge (Note 19) | 197,106 | 207,978 |
+--------------------------------------------------------+------------+------------+
| Charge for the year | 3,138,748 | 2,781,706 |
+--------------------------------------------------------+------------+------------+
The tax on the Group's profit before tax differs from the theoretical amount
that would arise using the applicable tax rates as follows:
+--------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+------------+
| | US$ | US$ |
+--------------------------------------------------------+------------+------------+
| Profit before tax | 11,953,818 | 7,924,690 |
+--------------------------------------------------------+------------+------------+
| Tax calculated at the applicable tax rates | 2,868,916 | 1,901,926 |
+--------------------------------------------------------+------------+------------+
| Tax effect of allowances and income not subject to tax | 72,726 | 671,802 |
+--------------------------------------------------------+------------+------------+
| Deferred tax | 197,106 | 207,978 |
+--------------------------------------------------------+------------+------------+
| Tax charge | 3,138,748 | 2,781,706 |
+--------------------------------------------------------+------------+------------+
Taxation charge for the year is in respect of Russian Federation Tax. It is
computed on the appropriate rate on the chargeable profits for the year. Each
company in the Russian Federation is liable to taxation on profits at the rate
of 6.5% (for Russian Federation purposes) and also to taxes of the local
authorities. All Russian regions for year ended 31 December 2008 charge tax on
profits at the rate of 17.5%. As from 1 January 2009, the tax rate for Russian
Federation Tax purposes will decrease to 2% and the tax rate for the Regional
tax rate will increase to 18%.
The Company is taxed under Cyprus tax legislation and is subject to corporation
tax on its taxable profits at the rate of 10%. Interest receivable from
investment activities is subject to Special Contribution for Defence Fund at the
rate of 10%. In such a case 50% of this interest is not subject to corporation
tax. In addition, in some cases, dividends from abroad are subject to Special
Contribution for Defence Fund at the rate of 15%.
7. Earnings per share attributable to equity holders of the parent
+--------------------------------------------------------+--------------+--------------+
| | 2008 | 2007 |
+--------------------------------------------------------+--------------+--------------+
| Basic earnings per share | | |
+--------------------------------------------------------+--------------+--------------+
| Earnings attributable to shareholders (US$) | 8,562,435 | 5,142,984 |
+--------------------------------------------------------+--------------+--------------+
| Weighted average number of ordinary shares in issue | 153,556,715 | 127,094,284 |
| during the year | | |
+--------------------------------------------------------+--------------+--------------+
| Basic earnings per share (cents) | 5.58 | 4.05 |
+--------------------------------------------------------+--------------+--------------+
| | 2008 | 2007 |
+--------------------------------------------------------+--------------+--------------+
| Diluted earnings per share | | |
+--------------------------------------------------------+--------------+--------------+
| Earnings attributable to shareholders (US$) | 8,562,435 | 5,142,984 |
+--------------------------------------------------------+--------------+--------------+
| Effect of potentially dilutive shares (US$) | (128,343) | (323,117) |
+--------------------------------------------------------+--------------+--------------+
| | 8,434,092 | 4,819,867 |
+--------------------------------------------------------+--------------+--------------+
| Weighted average number of ordinary shares in issue | 153,556,715 | 127,094,284 |
| during the year | | |
+--------------------------------------------------------+--------------+--------------+
| Effect of potentially dilutive shares | 10,142,434 | 8,470,060 |
+--------------------------------------------------------+--------------+--------------+
| | 163,699,149 | 135,564,344 |
+--------------------------------------------------------+--------------+--------------+
| Diluted earnings per share (cents) | 5.15 | 3.56 |
+--------------------------------------------------------+--------------+--------------+
Basic earnings per share is calculated by dividing the profit for the year
attributable to the ordinary shareholders of the parent company by the weighted
average number of ordinary shares in issue during the year.
Diluted earnings per share is calculated after taking into consideration the
effect of all potentially dilutive shares in existence during the year.
8. Property, plant and equipment
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| | Land | Telecom- | Motor | Furniture, | Total |
| | and | munication | vehicles | fixtures | |
| | premises | equipment | | and | |
| | | | | computer | |
| | | | | hardware | |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| | US$ | US$ | US$ | US$ | US$ |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Cost | | | | | |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| At 1 January 2007 | 2,846,915 | 28,625,009 | 706,777 | 3,760,604 | 35,939,305 |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Additions | 359,059 | 2,792,595 | 220,288 | 360,254 | 3,732,196 |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Disposals | (51,410) | (7,500) | (100,680) | (28,116) | (187,706) |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Exchange differences | 1,859,620 | 1,906,024 | 159,083 | 540,292 | 4,465,019 |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Acquisitions through business | 783,210 | 3,853,840 | 47,167 | 101,037 | 4,785,254 |
| combinations | | | | | |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Transfers | 7,524 | 21,965 | (579) | (28,910) | |
| | | | | | - |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| At 31 December 2007/ 1 | 5,804,918 | 37,191,933 | 1,032,056 | 4,705,161 | 48,734,068 |
| January 2008 | | | | | |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Additions | 650,829 | 4,953,634 | 216,977 | 1,673,012 | 7,494,452 |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Disposals | (61,771) | (101,185) | (78,907) | (28,537) | (270,400) |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Exchange differences | (1,111,431) | (8,340,410) | (146,296) | (376,554) | (9,974,691) |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Acquisitions through business | 303,375 | 9,491,413 | 43,132 | 500,116 | 10,338,036 |
| combinations | | | | | |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Transfers | 10,479 | 904,814 | (4,214) | (911,079) | |
| | | | | | - |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| At 31 December 2008 | 5,596,399 | 44,100,199 | 1,062,748 | 5,562,119 | 56,321,465 |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| | | | | | |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Depreciation | | | | | |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| At 1 January 2007 | 342,467 | 10,409,315 | 412,174 | 2,324,012 | 13,487,968 |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Charge for the year | 179,708 | 2,751,198 | 97,007 | 343,349 | 3,371,262 |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| On disposals | (11,114) | (1,888) | (94,102) | (16,368) | (123,472) |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Exchange differences | 94,824 | 844,353 | 110,698 | 410,339 | 1,460,214 |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Acquisitions through business | | 49,993 | 8,838 | 50 | 58,881 |
| combinations | - | | | | |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| At 31 December 2007/ 1 | 605,885 | 14,052,971 | 534,615 | 3,061,382 | 18,254,853 |
| January 2008 | | | | | |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Charge for the year | 211,770 | 3,466,186 | 142,982 | 372,768 | 4,193,706 |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| On disposals | (450) | (7,768) | (66,727) | (12,813) | (87,758) |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Exchange differences | (151,960) | (3,881,456) | (84,660) | (110,917) | (4,228,993) |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Acquisitions through business | 984 | 5,563,221 | 28,667 | 387,217 | 5,980,089 |
| combinations | | | | | |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| At 31 December 2008 | 666,229 | 19,193,154 | 554,877 | 3,697,637 | 24,111,897 |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| | | | | | |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| Net book amount | | | | | |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| At 31 December 2008 | 4,930,170 | 24,907,045 | 507,871 | 1,864,482 | 32,209,568 |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
| At 31 December 2007 | 5,199,033 | 23,138,962 | 497,441 | 1,643,779 | 30,479,215 |
+-------------------------------+--------------+----------------+--------------+----------------+----------------+
In the cash flow statement, proceeds from sale of property, plant and equipment
comprise:
+--------------------------------------------------------+------------+-----------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+-----------+
| | US$ | US$ |
+--------------------------------------------------------+------------+-----------+
| Net book amount | 182,642 | 64,234 |
+--------------------------------------------------------+------------+-----------+
| Profit from the sale of property, plant and equipment | 85,397 | 99,358 |
| (Note 2) | | |
+--------------------------------------------------------+------------+-----------+
| Proceeds from disposal of property, plant and | 268,039 | 163,592 |
| equipment | | |
+--------------------------------------------------------+------------+-----------+
Bank borrowings are secured on premises and equipment to the value of US$
16,540,661 (2007: US$ 15,080,531).
9. Intangible assets
+--------------------------------------+---------------+------------+---------------+---------------+
| | Goodwill | Computer | Number | Total |
| | (Note 14) | software | capacity | |
+--------------------------------------+---------------+------------+---------------+---------------+
| | US$ | US$ | US$ | US$ |
+--------------------------------------+---------------+------------+---------------+---------------+
| | | | | |
+--------------------------------------+---------------+------------+---------------+---------------+
| Cost | | | | |
+--------------------------------------+---------------+------------+---------------+---------------+
| At 1 January 2007 | 4,328,520 | 412,590 | 5,392,738 | 10,133,848 |
+--------------------------------------+---------------+------------+---------------+---------------+
| Additions | - | 119,179 | - | 119,179 |
+--------------------------------------+---------------+------------+---------------+---------------+
| Exchange differences | 348,928 | 193,635 | 417,521 | 960,084 |
+--------------------------------------+---------------+------------+---------------+---------------+
| Acquisitions through business | 4,011,893 | 53,981 | 2,579,382 | 6,645,256 |
| combinations | | | | |
+--------------------------------------+---------------+------------+---------------+---------------+
| At 31 December 2007/ 1 January 2008 | 8,689,341 | 779,385 | 8,389,641 | 17,858,367 |
+--------------------------------------+---------------+------------+---------------+---------------+
| Additions | - | 113,159 | - | 113,159 |
+--------------------------------------+---------------+------------+---------------+---------------+
| Exchange differences | (3,271,796) | (59,399) | (2,119,030) | (5,450,225) |
+--------------------------------------+---------------+------------+---------------+---------------+
| Acquisitions through business | 11,810,442 | | 4,823,695 | 16,634,137 |
| combinations | | - | | |
+--------------------------------------+---------------+------------+---------------+---------------+
| At 31 December 2008 | 17,227,987 | 833,145 | 11,094,306 | 29,155,438 |
+--------------------------------------+---------------+------------+---------------+---------------+
| | | | | |
+--------------------------------------+---------------+------------+---------------+---------------+
| Amortisation | | | | |
+--------------------------------------+---------------+------------+---------------+---------------+
| At 1 January 2007 | - | 232,949 | - | 232,949 |
+--------------------------------------+---------------+------------+---------------+---------------+
| Charge for the year (Note 3) | - | 41,162 | 76,438 | 117,600 |
+--------------------------------------+---------------+------------+---------------+---------------+
| Exchange differences | | 99,896 | 6,560 | 106,456 |
| | - | | | |
+--------------------------------------+---------------+------------+---------------+---------------+
| At 31 December 2007/ 1 January 2008 | - | 374,007 | 82,998 | 457,005 |
+--------------------------------------+---------------+------------+---------------+---------------+
| Charge for the year (Note 3) | - | 62,236 | 126,645 | 188,881 |
+--------------------------------------+---------------+------------+---------------+---------------+
| Exchange differences | | (21,297) | (28,242) | (49,539) |
| | - | | | |
+--------------------------------------+---------------+------------+---------------+---------------+
| At 31 December 2008 | | 414,946 | 181,401 | 596,347 |
| | - | | | |
+--------------------------------------+---------------+------------+---------------+---------------+
| | | | | |
+--------------------------------------+---------------+------------+---------------+---------------+
| Net book amount | | | | |
+--------------------------------------+---------------+------------+---------------+---------------+
| At 31 December 2008 | 17,227,987 | 418,199 | 10,912,905 | 28,559,091 |
+--------------------------------------+---------------+------------+---------------+---------------+
| At 31 December 2007 | 8,689,341 | 405,378 | 8,306,643 | 17,401,362 |
+--------------------------------------+---------------+------------+---------------+---------------+
The average remaining useful life of Number capacity is 73 years.
10. Goodwill
Goodwill acquired in a business combination is allocated to the cash generating
units (CGU's) that are expected to benefit from that business combination.
Goodwill represents the premium paid over the fair value of the net assets
obtained during the acquisition of TNPKO, Svyazinvest and OOO Simbirsky
Telecommunications Systems.
During the year the Directors received an external professional valuation report
for the acquisition of OOO Simbirsky Telecommunications Systems for identifying
and valuing intangibles that were previously not recognised by the subsidiary.
As a result of this an addition to number capacity of US$4,823,695 and the
related deferred tax liability of US$1,502,299 has been recognised. No other
significant intangibles not previously recognised were identified.
The Group tests goodwill for impairment annually, or more frequently if there
are indications that goodwill might be impaired. Goodwill is allocated to the
Group's cash generating units (CGUs) for impairment test purposes as follows:
+-------------------------------------------------------+-------------+-----------+
| | 2008 | 2007 |
+-------------------------------------------------------+-------------+-----------+
| | US$ | US$ |
+-------------------------------------------------------+-------------+-----------+
| TNPKO | 3,897,192 | 4,648,928 |
+-------------------------------------------------------+-------------+-----------+
| Svyazinvest | 3,387,074 | 4,040,413 |
+-------------------------------------------------------+-------------+-----------+
| OOO Simbirsky Telecommunications Systems | 9,943,721 | |
| | | - |
+-------------------------------------------------------+-------------+-----------+
| | 17,227,987 | 8,689,341 |
+-------------------------------------------------------+-------------+-----------+
The recoverable amount of each of the above CGUs has been determined based on
value-in-use calculations. These calculations use cash flow projections based on
financial budgets approved by management covering a five-year period. The
management prepares the financial budgets based on past performance experience
and its expectations for business and market developments. Cash flows beyond the
five-year period are extrapolated using the estimate growth rates stated below.
The growth rates do not exceed the long-term average growth rate for the
business in which the CGU operates, and it is consistent with the macroeconomic
factors of the country of operation. The discount rate used does not include the
tax effects and reflects specific risks relating to the CGU.
11. Business combinations
On 1 September 2008 the Group acquired 51% of the share capital of OOO Simbirsky
Telecommunications Systems, a telecommunication company that operates in the
area of Ulyanovsk. The transaction has been accounted for by the purchase method
of accounting.
Purchase consideration:
+------------------------------------------------------------------+-------------+
| | US$ |
+------------------------------------------------------------------+-------------+
| Cash paid | 15,708,000 |
+------------------------------------------------------------------+-------------+
| Total purchase consideration | 15,708,000 |
+------------------------------------------------------------------+-------------+
| Fair value of the net assets acquired | (3,897,558) |
+------------------------------------------------------------------+-------------+
| Goodwill | 11,810,442 |
+------------------------------------------------------------------+-------------+
The main factors that contributed to the creation of goodwill are the potential
of good future profitability and profits growth, the expected synergies, and the
assembled workforce of the acquired company.
The assets and liabilities acquired were as follows:
+------------------------------------------------------+-------------+----------------+
| | Acquiree's | Fair value |
| | carrying | |
| | amount | |
| | before | |
| | combination | |
+------------------------------------------------------+-------------+----------------+
| | US$ | US$ |
+------------------------------------------------------+-------------+----------------+
| Number capacity - Intangible asset | - | 4,823,695 |
+------------------------------------------------------+-------------+----------------+
| Property, plant and equipment | 1,641,934 | 4,357,946 |
+------------------------------------------------------+-------------+----------------+
| Inventories | 123,372 | 123,372 |
+------------------------------------------------------+-------------+----------------+
| Trade and other receivables | 1,760,403 | 1,760,403 |
+------------------------------------------------------+-------------+----------------+
| Cash at bank and in hand | 25,741 | 25,741 |
+------------------------------------------------------+-------------+----------------+
| Trade and other payables | (1,903,251) | (1,903,251) |
+------------------------------------------------------+-------------+----------------+
| Current tax liabilities | (37,454) | (37,454) |
+------------------------------------------------------+-------------+----------------+
| Deferred tax liabilities | (240) | (1,508,181) |
+------------------------------------------------------+-------------+----------------+
| Net assets | 1,610,505 | 7,642,271 |
+------------------------------------------------------+-------------+----------------+
| Minority interest | | (3,744,713) |
+------------------------------------------------------+-------------+----------------+
| Net assets acquired | | 3,897,558 |
+------------------------------------------------------+-------------+----------------+
| | | |
+------------------------------------------------------+-------------+----------------+
| Cash consideration paid | | (15,708,000) |
+------------------------------------------------------+-------------+----------------+
| Cash and cash equivalents acquired | | 25,741 |
+------------------------------------------------------+-------------+----------------+
| Cash outflow on acquisition | | (15,682,259) |
+------------------------------------------------------+-------------+----------------+
The acquired company contributed US$ 1,909,665 of revenue and US$ 612,179 of net
profit between the dates of acquisition and the balance sheet date. If the
acquisition had taken place on the first day of the year, then the contribution
of the acquired company would have been approximately US$ 5,229,000 of revenue
and US$ 1,692,000 of net profit.
12. Inventories
+--------------------------------------------------------+------------+-------------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+-------------+
| | US$ | US$ |
+--------------------------------------------------------+------------+-------------+
| Materials for telephone network and exchanges | 2,256,605 | 1,257,683 |
+--------------------------------------------------------+------------+-------------+
| Spare parts and consumables | 881,120 | 712,148 |
+--------------------------------------------------------+------------+-------------+
| Goods for sale and cards | 47,878 | 9,057 |
+--------------------------------------------------------+------------+-------------+
| | 3,185,603 | 1,978,888 |
+--------------------------------------------------------+------------+-------------+
The cost of inventories recognised as expense and included in "operating
expenses" amounted to US$ 627,282 (2007: US$ 369,012).
Inventories are stated at cost.
13. Trade and other receivables
+--------------------------------------------------------+-------------+------------+
| | 2008 | 2007 |
+--------------------------------------------------------+-------------+------------+
| | US$ | US$ |
+--------------------------------------------------------+-------------+------------+
| Trade receivables | 5,546,135 | 4,743,053 |
+--------------------------------------------------------+-------------+------------+
| Less: Provision for impairment of receivables | (342,605) | (84,884) |
+--------------------------------------------------------+-------------+------------+
| Trade receivables - net | 5,203,530 | 4,658,169 |
+--------------------------------------------------------+-------------+------------+
| Deposits and prepayments | 301,660 | 179,444 |
+--------------------------------------------------------+-------------+------------+
| Taxes paid in advance | 224,313 | 123,037 |
+--------------------------------------------------------+-------------+------------+
| VAT recoverable | - | 457,647 |
+--------------------------------------------------------+-------------+------------+
| Other receivables | 1,096,913 | 444,245 |
+--------------------------------------------------------+-------------+------------+
| | 6,826,416 | 5,862,542 |
+--------------------------------------------------------+-------------+------------+
Concentration of credit risk with respect to trade receivables is limited due to
the Group's large number of customers. The Group's historical experience in
collection of accounts receivable falls within the recorded allowances. Due to
these factors, management believes that no additional credit risk beyond amounts
provided for collections losses is inherent in the Group's trade receivables.
Ageing of past due but not impaired:
+--------------------------------------------------------+------------+-----------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+-----------+
| | US$ | US$ |
+--------------------------------------------------------+------------+-----------+
| More than 120 days | 495,120 | 289,669 |
+--------------------------------------------------------+------------+-----------+
| | 495,120 | 289,669 |
+--------------------------------------------------------+------------+-----------+
Movement in provision for impairment of receivables:
+--------------------------------------------------------+------------+-----------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+-----------+
| | US$ | US$ |
+--------------------------------------------------------+------------+-----------+
| On 1 January | (84,884) | - |
+--------------------------------------------------------+------------+-----------+
| Impairment losses recognised on receivables | (257,721) | (84,884) |
+--------------------------------------------------------+------------+-----------+
| At 31 December | (342,605) | (84,884) |
+--------------------------------------------------------+------------+-----------+
The fair values of trade and other receivables due within one year approximate
to their carrying amounts as presented above.
14. Cash and cash equivalents
For the purposes of the cash flow statement, the cash and cash equivalents
include the following:
+--------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+------------+
| | US$ | US$ |
+--------------------------------------------------------+------------+------------+
| Cash at bank and in hand | 22,588,307 | 15,024,993 |
+--------------------------------------------------------+------------+------------+
| | | |
+--------------------------------------------------------+------------+------------+
| | 22,588,307 | 15,024,993 |
+--------------------------------------------------------+------------+------------+
15. Share capital
+---------------------------------+-------------+------------+-------------+-----------+
| | 2008 | 2008 | 2007 | 2007 |
+---------------------------------+-------------+------------+-------------+-----------+
| | Number | US$ | Number | US$ |
| | of shares | | of shares | |
+---------------------------------+-------------+------------+-------------+-----------+
| Authorised | | | | |
+---------------------------------+-------------+------------+-------------+-----------+
| Ordinary shares of EUR0,02 (2007: | 202,500,000 | 6,290,824 | 162,500,000 | 3,705,000 |
| CYP0,01) each | | | | |
+---------------------------------+-------------+------------+-------------+-----------+
| | | | | |
+---------------------------------+-------------+------------+-------------+-----------+
| Issued and fully paid | | | | |
+---------------------------------+-------------+------------+-------------+-----------+
| On 1 January | 137,556,715 | 3,082,011 | 102,736,610 | 2,282,924 |
+---------------------------------+-------------+------------+-------------+-----------+
| Issue of shares | 20,000,000 | 630,726 | 34,820,105 | 799,087 |
+---------------------------------+-------------+------------+-------------+-----------+
| Exchange difference arising on | | 622,624 | | |
| the conversion of the share | - | | - | - |
| capital into Euros | | | | |
+---------------------------------+-------------+------------+-------------+-----------+
| At 31 December | 157,556,715 | 4,335,361 | 137,556,715 | 3,082,011 |
+---------------------------------+-------------+------------+-------------+-----------+
Following the introduction of Euro as the official currency of the Republic of
Cyprus, the nominal value per share of the the Company's shares has been
converted from Cyprus Pounds to Euro based on the definite fixing of the
exchange rate EUR 1 = GBP0.585274. The difference of US$ 622,624 (EUR400,838) that
occurred between the converted nominal value of the shares in issue and the
translated into Euro total share capital amount is shown as an increase to share
capital above and has also been debited to the share premium account.
Authorised capital
On 26 March 2008 the authorised capital of the Company was increased from
162,500,000 to 202,500,000 shares of EUR 0.02 each.
Issued capital
On 15 April 2008 the Company issued 20,000,000 ordinary shares of EUR 0.02 each
at the price of GBP 0.25 for the total amount of GBP 5,000,000.
16.Share options
+--------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+------------+
| | Number of | Number of |
| | options | options |
+--------------------------------------------------------+------------+------------+
| On 1 January | 10,219,100 | 5,109,550 |
+--------------------------------------------------------+------------+------------+
| Granted during the year | | 5,109,550 |
| | - | |
+--------------------------------------------------------+------------+------------+
| At 31 December | 10,219,100 | 10,219,100 |
+--------------------------------------------------------+------------+------------+
| | | |
+--------------------------------------------------------+------------+------------+
Details of share options outstanding
+-------------+------------+------------+------------+------------+----------+----------+
| Number of | Date | Vesting | Earliest | Expiry of | Exercise | Fair |
| options | granted | date | exercise | exercise | price | value at |
| | | | date | date | CYP | grant |
| | | | | | | date |
| | | | | | | US$ |
+-------------+------------+------------+------------+------------+----------+----------+
| 5,109,550 | 12/10/2006 | 12/10/2007 | 12/10/2007 | 12/10/2016 | 0.162 | 0.065 |
+-------------+------------+------------+------------+------------+----------+----------+
| 1,021,910 | 1/05/2007 | 25/05/2007 | 25/05/2007 | 1/05/2012 | 0.21 | 0.030 |
+-------------+------------+------------+------------+------------+----------+----------+
| 1,021,910 | 1/05/2007 | 25/05/2008 | 25/05/2008 | 1/05/2012 | 0.21 | 0.040 |
+-------------+------------+------------+------------+------------+----------+----------+
| 1,021,910 | 1/05/2007 | 25/05/2009 | 25/05/2009 | 1/05/2012 | 0.21 | 0.055 |
+-------------+------------+------------+------------+------------+----------+----------+
| 1,021,910 | 1/05/2007 | 25/05/2010 | 25/05/2010 | 1/05/2012 | 0.21 | 0.065 |
+-------------+------------+------------+------------+------------+----------+----------+
| 1,021,910 | 1/05/2007 | 25/05/2011 | 25/05/2011 | 1/05/2012 | 0.21 | 0.070 |
+-------------+------------+------------+------------+------------+----------+----------+
| | | | | | | |
+-------------+------------+------------+------------+------------+----------+----------+
The fair value of options granted on initial recognition to employees during the
year ended 31 December 2008 was determined using the "Black Scholes Merton"
model. The model assumptions take into account a volatility rate of 30% and a
risk free rate of 4.8%.
17. Other reserves
+-------------------------+------------+--------------+------------+--------------+--------------+
| | Share | Translation | Share | Merger | Total |
| | premium | reserve | option | reserve | |
| | | | reserve | | |
+-------------------------+------------+--------------+------------+--------------+--------------+
| | US$ | US$ | US$ | US$ | US$ |
+-------------------------+------------+--------------+------------+--------------+--------------+
| At 1 January 2007 | 32,968,013 | (3,239,131) | 55,000 | (19,535,126) | 10,248,756 |
+-------------------------+------------+--------------+------------+--------------+--------------+
| Exchange difference on | - | 3,643,714 | - | - | 3,643,714 |
| the translation of | | | | | |
| foreign operations | | | | | |
+-------------------------+------------+--------------+------------+--------------+--------------+
| Issue of share capital | 13,780,325 | - | - | - | 13,780,325 |
+-------------------------+------------+--------------+------------+--------------+--------------+
| Equity share based | | | 439,500 | | 439,500 |
| payments | - | - | | - | |
+-------------------------+------------+--------------+------------+--------------+--------------+
| At 31 December 2007 | 46,748,338 | 404,583 | 494,500 | (19,535,126) | 28,112,295 |
+-------------------------+------------+--------------+------------+--------------+--------------+
| | | | | | |
+-------------------------+------------+--------------+------------+--------------+--------------+
| At 31 December 2007/ 1 | 46,748,338 | 404,583 | 494,500 | (19,535,126) | 28,112,295 |
| January 2008 | | | | | |
+-------------------------+------------+--------------+------------+--------------+--------------+
| Deferred tax on on the | - | 2,092,638 | - | - | 2,092,638 |
| translation of foreign | | | | | |
| operations | | | | | |
+-------------------------+------------+--------------+------------+--------------+--------------+
| Exchange difference on | - | (10,867,773) | - | - | (10,867,773) |
| the translation of | | | | | |
| foreign operations | | | | | |
+-------------------------+------------+--------------+------------+--------------+--------------+
| Issue of share capital | 9,240,296 | - | - | - | 9,240,296 |
+-------------------------+------------+--------------+------------+--------------+--------------+
| Equity share based | - | - | 130,152 | - | 130,152 |
| payments | | | | | |
+-------------------------+------------+--------------+------------+--------------+--------------+
| Exchange difference | (622,624) | | | | (622,624) |
| arising on the | | - | - | - | |
| conversion of the share | | | | | |
| capital into Euros | | | | | |
+-------------------------+------------+--------------+------------+--------------+--------------+
| At 31 December 2008 | 55,366,010 | (8,370,552) | 624,652 | (19,535,126) | 28,084,984 |
+-------------------------+------------+--------------+------------+--------------+--------------+
The merger reserve represents the excess of the nominal value of the shares
issued by Teleset Networks Public Company Limited over the nominal value of the
share capital of Teleset Limited and Teleset Invest Limited.
18. Borrowings
+--------------------------------------------------------+------------+------------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+------------+
| | US$ | US$ |
+--------------------------------------------------------+------------+------------+
| | | |
+--------------------------------------------------------+------------+------------+
| Current borrowings | | |
+--------------------------------------------------------+------------+------------+
| Bank loans | 7,802,939 | 2,000,000 |
+--------------------------------------------------------+------------+------------+
| | | |
+--------------------------------------------------------+------------+------------+
| Non current borrowings | | |
+--------------------------------------------------------+------------+------------+
| Bank loans | 22,770,642 | 20,652,130 |
+--------------------------------------------------------+------------+------------+
| Total | 30,573,581 | 22,652,130 |
+--------------------------------------------------------+------------+------------+
Maturity of non?current borrowings
+--------------------------------------------------------+-------------+-------------+
| Between one to two years | 5,886,511 | 6,802,940 |
+--------------------------------------------------------+-------------+-------------+
| Between two and five years | 13,894,792 | 9,864,099 |
+--------------------------------------------------------+-------------+-------------+
| After five years | 2,989,339 | 3,985,091 |
+--------------------------------------------------------+-------------+-------------+
| | 22,770,642 | 20,652,130 |
+--------------------------------------------------------+-------------+-------------+
The bank loans and overdrafts are secured as follows:
* By mortgage against immovable property of the Group for US$ 37,354,508 (2007:
US$ 24,699,961).
* Cross guarantees from Group companies
The weighted average effective interest rates at the balance sheet date were as
follows:
+--------------------------------------------------------+------------+-----------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+-----------+
| | | |
+--------------------------------------------------------+------------+-----------+
| Bank loans | 6.2% | 8.7% |
+--------------------------------------------------------+------------+-----------+
19. Trade and other payables
+--------------------------------------------------------+------------+-----------+
| | 2008 | 2007 |
+--------------------------------------------------------+------------+-----------+
| | US$ | US$ |
+--------------------------------------------------------+------------+-----------+
| Trade payables | 1,025,933 | 655,841 |
+--------------------------------------------------------+------------+-----------+
| Advances from customers | 941,613 | 487,753 |
+--------------------------------------------------------+------------+-----------+
| Accruals | 846,719 | 894,536 |
+--------------------------------------------------------+------------+-----------+
| Other payables | 2,923,317 | 1,862,697 |
+--------------------------------------------------------+------------+-----------+
| | 5,737,582 | 3,900,827 |
+--------------------------------------------------------+------------+-----------+
The fair values of trade and other payables due within one year approximate to
their carrying amounts as presented above.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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