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1H 2007 Results under International Accounting Standards (IAS)

25.09.2007

Ekaterinburg – September 25, 2007 – Uralsvyazinform (RTS and MICEX: URSI/URSIP, ADR: UVYZY/UVYPY), the leading carrier of fixed-line and mobile services in the Urals region, Russia presents unaudited consolidated financial statements for the 1H 2007 prepared under International Financial Reporting Standards (IFRS).

The financial statements for the six months of 2007 are prepared in accordance with International Financial Reporting Standards (IFRS) and are presented in the extent of Unaudited Consolidated Balance Sheet, Unaudited Consolidated Statement of Operations and the Notes to the Unaudited Consolidated Financial Statement for the 6 months of 2007. These reports do not have all disclosures required by IFRS, but their volume is sufficient to get an idea of the financial situation and the results of the Company’s activity over 6 months of 2007.

Revenue increased by 27.9% on 1H 2006, mainly due to revenue gains in:
- Intrazone services;
- Mobile services;
- New services (Internet, including broadband connections and ISDN, intelligent network, etc.).
Revenue growth in business segments totaled:
- Intrazone services – 104.2%;
- Mobile services – 27.2%;
- New services (Internet, non-regulated data transmission services, etc.) – 56.1%
OIBDA increased by 31.6% as compared to 1H 2006. As of 1H 2007 OIBDA margin totaled 33.5% (+0.9 p.p.). Operating margin grew by 3.3 p.p. on 1H 2006 and totaled 18.6%.
Net profit increased by 65.9% and amounted to US$ 53.1 mln.
Total subscriber base reached 8.4 mln., including 4.7 mln. GSM mobile subscribers.
On 01/02/2007 we introduced new tariff plans for local services. Therefore, since February 01, 2007 residential subscribers have 3 tariff option for local services (time-based, combined and unlimited tariffs).

Financial results, US$ mln.*:

Financial	1H 2007	1H 2006	Change, %
Revenues, US$ mln*	730.6	571.3	+27.9%
OIBDA, US$ mln	245.1	186.2	+31.6%
OIBDA margin	33,5%	32,6%	-
Operating profit, US$ mln	136.1	87.5	+55.5%
Operating margin	18,6%	15,3%	-
Profit before income tax, US$ mln	98.1	50.2	+95.4%
Net profit, US$ mln	53.1	32.0	+65.9%
Net margin	7,3%	5,6%	-
EPS	0.0013	0.0008	+62.5%

* Here and henceforth currency conversions are based on average exchange rates: 1H 2007 – RUR 26.07, 1H 2006 – RUR 27.5

Balance Sheet, US$ mln

Item	As of 30/06/07	As of 31/12/06
Non-current assets	1,974.4	1,789.9
Current assets, including	198.0	182.8
Cash and cash equivalents	9.6	23.5
TOTAL ASSETS	2,172.4	1,982.1
Shareholder’s Equity	798.2	733.2
Liabilities, including	1,374.2	1,248.9
Long-term liabilities	738.9	828.9
Short-term liabilities	635.3	415.3
TOTAL SHAREHOLDER’S EQUITY AND LIABILITIES	2,172.4	1,982.1

Operational results

Item	1H 2007	1H 2006	Change, %
Subscriber base:
Fixed-line, thous., including	3,680.3	3,630.0	+1.4%
Residents	3,152.6	3 122.0	+1.0%
Corporates	527.7	508.0	+3.9%
GSM Mobile, thous.*	4,618.8	4,051.9	+14.0%
Broadband, thous.	192.4	40.9	+370.4%

* For information: as of 01/09/2007 GSM mobile subscriber base reached 4 775.3 thous.

Anatoly Ufimkin, CEO comments on 1H 2007 results: «The key event of the 1H 2007 was introduction of new tariff plans for local services since February 01, 2007. We should note that on the whole, this transition, irrespective of its scale and social value, was easy and balanced. Besides, from the viewpoint of business development, the main growth drivers were mobile services and broadband Internet: these segments contributed almost 50% of the revenue growth in 1H 2007. Apart from GSM mobile subscriber base increase, there was also 11% ARPU growth. The broadband Internet became the most dynamic sector: the number of connected DSL-ports increased by 4,7 times. Due to the “Calling Party Pays” principle (effective since July 01, 2006) intrazone services contributed 37% of revenue growth. Well-balanced business growth in main segments and control over expenses, including continuation of headcount optimization and outsourcing, enabled us to dynamically increase net profit. Besides, net profit was also positively influenced by subsidiary restructuring program which resulted in sale of our stakes in the range of assets”.

Please download full PDF version to continue with Financial Overview 1H 2007.

To view complete accounting statements of Uralsvyazinform as of 1H 2007 under IFRS click here

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