NLMK.L Regulatory News (NLMK)

30 Nov 2007 15:02

OJSC Novolipetsk Steel30 November 2007 PRESS RELEASE 30 November 2007 NOVOLIPETSK STEEL 9M 2007 US GAAP RESULTS OJSC Novolipetsk Steel (NLMK), the LSE listed leading Russian steel producer,today announces its consolidated results for 9M 2007. Highlights: Strong 9M 2007 financial results: • Revenues amounted to USD 5,545.6 million (+29% year-on-year) • Operating cash flow reached USD 1,979.0 million • EBITDA* amounted to USD 2,463.2 million (+35% year-on-year); EBITDA margin was 44% (+1 per cent point year-on-year) • Cash and cash equivalents as of 30 September, 2007 amounted to USD 1,388.5 million - Disposals of non-core assets in accordance with the Group's internalrestructuring plan: • Disposal of stakes in energy assets for USD 78.7 million in February 2007. Proceeds from the transaction were directed to the modernization and development of in-house energy facilities; • Disposal of the Company's 54.88% stake in OJSC Lipetskcombank for USD 47.7 million in June 2007. - Total capex in 9M 2007 reached USD 616.0 million. In Q3 2007, the majorprojects under way as part of Phase 2 of the Technical Upgrading Programme wereas follows: • EUR 23 million contract signed with Siemens VAI (Germany) to supply two new 160 tonne ladle furnaces for BOF production at the Company's main site in Lipetsk. These will substantially expand NLMK's product mix enabling the Company to better supply the automotive industry, white goods producers and the electrical engineering industry; • EUR 33 million contract signed with Sundwig (Germany) to supply an additional pre-painting line, with an annual production capacity of 200,000 tonnes of steel. Commissioning the group's third pre-painting line will lift galvanized steel capacity to 1.1 million tonnes, including 0.6 million tonnes of pre-painted steel. • Commissioning a new high-tech 300,000 tpy pickling line for hot rolled grain-oriented and carbon steel at the Lipetsk production site. In addition to reducing costs, the company's wastewater discharge into the Voronezh river will be reduced by 800 tpy (or 8%). • Continuous furnace #4 relined increase production capacity of the hot rolling mill. The project capex is around USD 60 million. - In November 2007, NLMK has entered into an agreement with Tebian ElectricApparatus Stock Co., Ltd (TBEA), the major Chinese transformer producer, tocreate a joint Russian-Chinese service centre to process (cutting and packing)and sell transformer and dynamo steels in the city of Shenyang, Lyaolinprovince, China. The service centre project is aimed at increasing sales volumesand service quality in the rapidly developing Chinese transformer steel market. - At NLMK's Extraordinary General Meeting held on 28 September, approval wasgranted for H1 2007 dividends of RUR 1.5 per ordinary share. Funds for dividendpayments on Global Depositary Shares (GDSs) were transferred to the depositarybank on 20 November, 2007. The depositary bank makes payment no later than 5days after the receipt of funds. Key financials for nine months ended 30 September, 2007 USD, million Q3 2007 ** Q2 2007 % 9M 2007 9M 2006 % Revenue 1 936.5 1 858.9 4% 5 545.6 4 285.0 29%Gross profit 974.9 930.9 5% 2 723.2 2 046.8 33%Operating income 797.4 744.0 7% 2 181.5 1 676.0 30%EBITDA* 892.6 822.5 9% 2 463.2 1 827.7 35%EBITDA margin (%) 44% 44% 44% 43%Net profit*** 592.5 608.4 -3% 1 657.4 1 684.7 -2% * EBITDA = Net income (post share of minorities) + income tax +/- interestexpense/(income) + depreciation +/- losses/(gains ) on disposals of property,plant and equipment +/- losses/(gains) on financial investment +/- losses/(gains) from disposal of subsidiaries + accretion expense on asset retirementobligations - gains on loan restructuring ** 9M 2006 and 9M 2007 and H1 are official reporting periods. Q2 and Q3 2007numbers are derived by computational method. *** Decrease in net profit during the reporting period results fromnon-operating factors, proceeds from disposal of stake in Lebedinsky GOK andOJSC KMA Ruda as well as Lipetskcombank and Prokopievskugol Group in 2007. (Formore information see comments on pp.3-4 and in Consolidate financial resultssection, p.8) Commenting on NLMK's US GAAP 9M 2007 results, Galina Aglyamova, Vice PresidentFinance & CFO, said: "NLMK has demonstrated strong financial results in 9M 2007. Operating incomesurged 30% on a year-on-year basis and the EBITDA margin stood at 44%. Thecompany's sound performance was driven by a favorable pricing environment in ourcore markets, improved sales mix and implementation of a number of importantprojects within Phase 2 of the Technical Upgrade Programme. "This year, some negative one-off factors influenced our performance, such asthe technical malfunction of blast furnace number six and non-compliance withcoal supply terms caused by accidents at major Russian coal mines. Nevertheless,NLMK managed to meet its planned production volumes, demonstrating thesustainability of the Company's business model. "We expect that NLMK will demonstrate strong financial results for the remainderof 2007 and maintain its position among world's most profitable steelmakingcompanies." Management Comments In recent years, NLMK has maintained its position as one of the most efficientsteel producers in the world. The main drivers contributing to the Company'sprofitability in 9M 2007 were the favorable pricing environment in the steelmarket and successful implementation of the 2nd phase of the Technical UpgradingProgramme of Company's "Sustainable Growth Strategy 2007-2011". In 9M 2007, NLMK substantially increased sales of high value-added products. Thecommissioning of the new hot dip galvanizing line enabled the Group to increasethe production of hot dip galvanized and pre-painted steel. The consolidation ofVIZ-Stal since August 2006 contributed to the growth of electrical steelproduction to 542,000 tonnes, which is 141,000 tonnes (+35%) higher than in 9M2006. Favorable steel market conditions were the main factor that resulted in asubstantial growth of sales revenue and financial results as compared to 9M2006. Thus, sales revenue in 9M 2007 amounted to USD 5,545.6 million (+29%year-on-year), operating profit was USD 2,181.5 million (+30%), EBITDA USD2,463.2 million (+35%). The acquisition of Altai-koks in April 2006 and VIZ-Stal in August 2006 alsocontributed significantly to the growth of consolidated financial results in 9M2007. Net profit in 9M 2007 amounted to USD 1,657.4 million, which is 2% behind 9M2006 results. Net profit was impacted by asset disposals in 2006 (Lebedinsky GOK and KMA Ruda)as well as in 2007 (Lipetskcombank and Prokopievskugol Group). If the impact ofthese one-off activities is excluded, the Company's net profit in 9M 2007 wouldgrow by 32%. The strong pricing environment and increase in sales volumes after the recoveryof blast furnace #6 resulted in Q3 2007 sales revenue and operating profitincrease of 4% and 7% respectively as compared to Q2 2007. The USD 15.9 million (3%) decrease in the third quarter net profit was theresult of the recognition of the Lipetskcombank and Prokopievskugol Groupdisposals in the Q2 2007 financial statements. In 9M 2007, net cash flows received from operating activities amounted to USD1,979.0 million, which exceeds the 9M 2006 result by 92%. The Group generatesstrong operating cash flow, demonstrating its high level of financialsustainability. Steel segment USD, million Q3 2007 Q2 2007 % 9M 2007 9M 2006 % Revenue from 1,770.9 1,679.7 5% 5,049.3 3,991.4 27%external customers Revenue from 6.8 5.4 25% 18.5 7.7 142%intersegmentaloperations Gross profit 767.8 751.8 2% 2,153.1 1,763.3 22% Operating profit 641.6 611.5 5% 1,773.0 1,496.9 18% Profit before 525.0 507.8 3% 1,312.0 1,613.7 -19%minorities The steel segment is the key segment for the Group. The steel segment's share ofconsolidated revenue from external customers exceeds 90%. In 9M 2007 the steel segment produced 6.8 million tonnes of steel, 2.4 milliontonnes of saleable slabs and 4.0 million tonnes of rolled products. Revenue from external customers in 9M 2007 amounted to USD 5 049.3 million,which is 27% higher than in 9M 2006, operating profit was USD 1,773.0 million(+18% compared to 9M 2006). The major reasons for this improvement are theincrease of prices for main products and the consolidation of VIZ-Stal. Sales revenue from external customers and operating profit in Q3 2007 were USD1,770.9 million and 641.6 million respectively, an increase of 5% q-o-q. Themain reasons for the sales revenue and operating profit growth were an increasein sales volumes and higher steel prices. Generally, the steel segment's operating profit is expected to grow year-on-yeardue to high current prices for steel and fixed prices for ore and the majorityof coking coal concentrate supplies through to the year end. Mining segment USD, million Q3 2007 Q2 2007 % 9M 2007 9M 2006 % Revenue from 28.4 19.9 42% 71.5 70.4 2%external customers Revenue from 187.1 195.8 -4% 575.1 333.9 72%intersegmentaloperations Gross profit 146.7 150.0 -2% 431.4 212.6 103% Operating profit 129.7 130.6 -1% 384.5 183.3 110% Profit before 114.0 107.4 6% 325.1 151.5 115%minorities In 9M 2007, NLMK's mining segment comprised OJSC Stoilensky GOK, OJSC Dolomiteand OJSC Stagdok. These companies mainly supply raw materials to NLMK'sproduction facilities in Lipetsk and also sell limited volumes outside theGroup. Iron ore producer Stoilensky GOK, the principal mining company within the Group,produced 8.8 million tonnes of iron-ore concentrate (+0.3 million tonnes or 4%year-on-year) and 1.3 million tonnes of sinter ore (+0.3 million tonnes or 33%year-on-year) in 9M 2007. The mining segment's revenue from external customersgrew modestly (2%) and amounted to USD 71.5 million. Intersegmental sales in 9M 2007 rose by USD 241.2 million reaching USD 575.1million. This increase resulted from price rises and volumes of iron oreconcentrate shipped to NLMK. The total segment's revenue in Q3 2007, including intersegmental sales, remainedat the level of the previous which resulted from stable volumes shipped and ironore concentrate prices. As 89% of the mining segment's sales in value terms are internal sales, thesegment's share of NLMK's consolidated external revenue in 9M 2007 was 1%. In this segment we expect significant growth (over 70%) of operating profityear-on-year due to increase in iron ore prices and sales volumes. Coke-chemical segment USD, million Q3 2007 Q2 2007 % 9M 2007 9M 2006 % Revenue from 115.3 137.7 -16% 358.5 130.2 175%externalcustomers Revenue from 48.3 20.3 138% 95.2 61.4 55%intersegmentaloperations Gross profit 47.3 28.8 64% 99.6 37.8 164% Operating profit 23.6 5.3 342% 32.1 15.9 101% Profit before 18.1 2.0 786% 18.2 9.4 93%minorities * Coke-chemicals financial results for 9M 2006, recognized since OJSC Altai-Koksconsolidation in Q2 2006 The coke-chemical segment comprises OJSC Altai-koks and its subsidiaries, whichwere consolidated within the Group from Q2 2006. Altai-koks is one of theleading producers of coke in Russia. In 9M 2007, Altai-koks produced 2.9 milliontonnes of 6% moisture coke. In 9M 2007, the coking segment's revenue from external customers was USD 358.5million, while operating profit amounted to USD 32.1 million. The year-on-yearfinancial growth is caused by the consolidation of OJSC Altai-Koks from Q2 2006. The coke-chemical segment's share of 9M 2007 consolidated revenue was 6%. The 16% decrease in the segment's revenue from external customers in Q3 2007q-o-q, results from a reduction of coke production and sales volumes resultingfrom insufficient supplies in the coal market and non-compliance of somesuppliers to meet the agreed volumes (c. 180 th. tonnes) as well as to increasecoke shipment volumes to NLMK. The segment's operating profit in Q3 2007 amounted to USD 23.6 million. Thefour-fold growth in the segment's operating profit results from an increase in6% moisture coke average prices from USD 119.1 (FCA) in Q2 2007 up to USD 140.5(FCA) in the quarter under analysis. The abatement of the coke export taxamounting to 6.5% in mid-July 2007 positively impacted Q3 segment results. In Q32007, 43% of total coke sales volume was exported. High coke prices by the end of the current year given fixed coal prices, ongoingconsolidation and rise in sales volume in the internal market will ensuremany-fold y-o-y increase in the financial results of coke-chemical segment in2007. Other segments USD, million Q3 2007 Q2 2007 % 9M 2007 9M 2006 % Revenue from 21.8 21.6 1% 66.3 93.0 -29%externalcustomers Revenue from 1.6 1.3 27% 40.3 57.2 -30%intersegmentaloperations Gross profit 12.2 10.6 15% 36.6 36.1 1% Operating profit 5.8 6.1 -4% -5.6 -11.3 -50% Profit before 4.2 56.8 -93% 139.9 -7.7minorities Revenue from other operating segments primarily includes revenue from threeoperational units, the results of which do not exceed threshold values. Thesesegments include sea port services, financial services, banking (in H1 2007) andinsurance services, as well as coal mining and refinement by the ProkopievskugolGroup of Coal Companies (in Q1 2007). In 9M 2007, the gross profit from other segments amounted to USD 36.6 million,remaining the same y-o-y. Income before minority interests rose in 9M 2007 amounting to USD 139.9million, which is primarily attributable to the waiver of the Prokopievskugolobligations for the repayment of a loan within the framework of debtrestructuring. The additional driver was the recognition of financial results onthe disposal of the Prokopievskugol Group of Coal Companies and Lipetskcombank,recorded in the "Gain from disposal of subsidiaries" line. In Q3 2007, gross profit from other segments was USD 12.2 million and operatingprofit was USD 5.8 million. The decrease in profit before minorities of other segments in Q3 2007 of USD52.7 million (or 93%) q-o-q results is due to the recognition of ProkopievskugolGroup of Coal Companies and Lipetskcombank disposals in Q2 2007. Consolidated financial results In 9M 2007, NLMK's sales revenue reached USD 5,545.6 million, anincrease of 29% year-on-year. The key factors contributing to the level ofrevenue and profit were: • prices increases for the products sold by the Group; • consolidation of Altai-koks starting April 2006 and VIZ-Stal starting August 2006; • since March 2006 conditions for the delivery of exported products have changed. The sales price for NLMK's products now also include transportation costs to customers, border terminal or sea port. Gross profit in 9M 2007 amounted to USD 2,723.2 million, an increase of 33%year-on-year. Operating profit was USD 2,181.5 million, an increase of 30%.9M 2007 EBITDA amounted to USD 2,463.2 million, an increase of 35% year-on-year.The EBITDA margin for 9M 2007 was 44%, an increase of 1 percentage pointscompared with 9M 2006. NLMK Group's net profit in reporting period amounted to USD 1,657.4 million, adecrease of 2% compared with 9M 2006. The decrease of net profit is due to asignificant non-recurring income from the sale of stakes in Lebedinsky GOK andOJSC KMA Ruda which were recognized in 9M 2006. If the effect of thenon-recurring sale of assets was eliminated, NLMK's net profit growth in 9M 2007would have been 32%. In Q3 2007, revenue grew by 4% or USD 77.6 million q-o-q due to the recovery ofblast furnace #6 and higher prices on iron, slabs, cold-rolled steel,pre-painted steel and electrical steel. Ongoing efficient policy of hot-rolledsteel export sales also contributed to revenue growth. Gross profit increased by 5% or USD 44.1 million compared with Q2 2007, whileoperating profit grew by 7% or USD 53.4 million. Net profit decrease in Q3 2007 of 3% q-o-q results from the recognition of thefinancial results of the disposal of the Prokopievskugol Group of Coal Companiesand Lipetskcombank, amounting to USD 82.1 million. Consolidated balance sheet As of 30 September 2007, NLMK's assets reached USD 10,009.1 million,an increase of 15% compared with 31 December, 2006. The share of the Company's own capital in the sources used tofinance NLMK's operations is permanently high and at the end of 9M 2007 was 83%.The Group's balance sheet structure reflects the financial stability of thecompany, which is confirmed by NLMK obtaining the highest credit ratings amongRussian steelmakers. NLMK's highly liquid assets substantially exceed the amount of itsdebt. NLMK's cash and cash equivalents position as of 30 September, 2007amounted to USD 1 388.5 million. In 9M 2007, the annualized return on assets (ROA) was 24% andannualized return on equity (ROE) was 29%. These ratios are lower than in 9M2006 due to the additional non-recurring gain from the divestments of NLMK'sinterests in Lebedinsky GOK and OJSC KMA Ruda in 2006. Cash Flow The strong pricing environment and growth of sales of high value-added productsresulted in a significant operating cash flow increase. In 9M 2007, net cashreceived from operating activities equaled USD 1,979.0 million, a 92% increasecompared with 9M 2006. Strong generation of operating cash flow allows NLMK to finance organic growthfrom its own cash funds without attracting substantial debt. In 9M 2007, netcash received from operating activities exceeded purchases and construction ofproperty, plant and equipment by 3.2 times. The cash outflow for investment activities in 9M 2007 amounted to USD 807.0million. The main cash outflow for investment activities in 9M 2007 wasassociated with investments in fixed assets (USD 616.0 million). Net cash flows associated with financial activities in 9M 2007 amounted to USD511.8 million. The main cash outflows associated with financial activities arepayment of dividends to shareholders (USD 347.6 million) and the repayment ofshort-term credits (USD 259.0 million). The main cash flow from financingactivities is associated with the proceeds from the disposal of stakes in energyassets that were classified by the Board of Directors of NLMK as non-coreassets. The proceeds from the transaction were USD 78.5 million. Cash and cash equivalents as at the end of 9M 2007 equaled USD 1,388.5 million. Outlook Following minor price adjustments, the market situation stabilized in November.In December, prices are deemed to remain close to the previous month's leveldespite the seasonality factor. Temporary underperformance of blast furnace #6 in Q2 and Q3 2007 did notsignificantly impact the annual planned production volumes. All the Group's operating segments will increase the financial results of theiroperating activities in 2007. Generally, across the Group, we expect 20-25%year-on-year growth in sales revenue and EBITDA. The estimated EBITDA margin in2007 will roughly correspond to 2006 level, which proves the Company's financialrobustness. In early 2008, we expect a gradual increase in export and internal pricesprimarily subject to higher raw materials costs and steel demand. Disclaimer: This announcement may contain a number of forward-looking statements relatingto, among others, the financial condition and results of operations of theCompany. Such forward-looking statements involve a number of risks anduncertainties that could cause actual results to differ materially from thosesuggested by them and are based on assumptions regarding the Company's presentand future business strategies and the environment in which the Company and itssubsidiaries operate both now and in the future. Forward-looking statementsspeak only as at the date of this announcement and save as required byapplicable legal and/or regulatory requirements the Company expressly disclaimsany obligation to release publicly any updates or revisions to anyforward-looking statements. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)PREPARED IN ACCORDANCE WITH ACCOUNTING PRINCIPLES GENERALLY ACCEPTED IN THEUNITED STATES OF AMERICA AS AT SEPTEMBER 30, 2007 AND DECEMBER 31, 2006AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006 INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS As at As at September 30 2007, December 31, 2006 ASSETS Current assetsCash and cash equivalents 1,388,468 665,213Short-term investments 144,407 37,261Accounts receivable, net 1,194,199 1,150,492Inventories, net 1,042,745 856,940Other current assets, net 134,000 331,322Restricted cash - 8,372 3,903,819 3,049,600Non-current assetsLong-term investments, net 880,077 810,350Property, plant and equipment, net 4,409,144 3,988,128Intangible assets, net 191,948 199,030Goodwill 590,702 559,703Other non-current assets 33,445 110,179 6,105,316 5,667,390Total assets 10,009,135 8,716,990 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilitiesAccounts payable and other liabilities 859,685 664,319Short-term borrowings 51,565 248,782Current income tax liability 80,265 80,350 991,515 993,451Non-current liabilitiesDeferred income tax liability 592,817 537,647Long-term borrowings 19,452 48,153Other long-term liabilities 27,709 194,872 639,978 780,672Total liabilities 1,631,493 1,774,123 Commitments and contingencies - - Minority interest 119,236 133,425 Stockholders' equityCommon stock, 1 Russian ruble par value - 5,993,227,240 shares 221,173 221,173issued and outstanding at September 30, 2007 and December 31,2006Statutory reserve 10,267 10,267Additional paid-in capital 52,395 1,812Accumulated other comprehensive income 1,038,272 589,986Retained earnings 6,936,299 5,986,204 8,258,406 6,809,442Total liabilities and stockholders' equity 10,009,135 8,716,990 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME For the nine For the nine months ended months ended September 30, September 30, 2007 2006 Sales revenue 5,545,557 4,284,964 Cost of salesProduction cost (2,525,207) (1,988,160)Depreciation and amortization (297,161) (250,018) (2,822,368) (2,238,178) Gross profit 2,723,189 2,046,786 General and administrative expenses (158,550) (129,312)Selling expenses (318,006) (207,735)Taxes other than income tax (58,997) (33,694)Accretion expense on asset retirement obligations (6,115) - Operating income 2,181,521 1,676,045 Loss on disposals of property, plant and equipment (24,575) (4,763)(Losses) / gains on investments, net (3,542) 395,341Interest income 68,241 82,711Interest expense (14,840) (19,379)Foreign currency exchange, net 55,889 (71,944)Gain from disposal of subsidiaries 82,116 -Other expenses, net (3,197) (11,147) Income from continuing operations 2,341,613 2,046,864 before income tax and minority interest Income tax (641,168) (522,207) Income from continuing operations before minority interest 1,700,445 1,524,657 Minority interest (18,429) (15,807) Equity in net earnings of associate (25,829) 497 Income from continuing operations 1,656,187 1,509,347 Discontinued operations Gain from operations of discontinued subsidiary (including 1,245 226,706gain on disposal of $225,852)Income tax - (51,334) Income from discontinued operations 1,245 175,372 Net income 1,657,432 1,684,719 Income from continuing operations per share (US dollars)basic and diluted 0.2764 0.2518 Income from discontinued operations per share (US dollars)basic and diluted 0.0002 0.0293 Net income per share (US dollars)basic and diluted 0.2766 0.2811 INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the nine For the nine months ended months ended September 30, September 30, 2007 2006CASH FLOWSFROM OPERATING ACTIVITIES Net income 1,657,432 1,684,719Adjustments to reconcile net income to net cash providedby operating activities:Minority interest 19,518 15,807Depreciation and amortization 297,161 250,018Loss on disposals of property, plant and equipment 24,575 4,763Losses / (gains) on investments, net 3,542 (395,341)Gain from disposal of subsidiaries (82,116) -Gain from operations of discontinued subsidiary (1,245) (226,706)Equity in net earnings of associate 25,829 (497)Deferred income tax expense / (benefit) 57,045 (13,470)Accretion expense on asset retirement obligations 6,115 -Other movements 4,441 27,103Changes in operating assets and liabilitiesIncrease in accounts receivable (61,538) (155,745)Increase in inventories (152,130) (68,914)Increase in other current assets (42,847) (150)Increase in loans provided by the subsidiary bank (104,973) (64,512)Increase / (decrease) in accounts payable and other 349,209 (117,640)liabilities(Decrease) / increase in current income tax payable (20,978) 90,052Net cash provided by operating activities 1,979,040 1,029,487 CASH FLOWSFROM INVESTING ACTIVITIES Acquisition of subsidiaries, net of cash acquired of - (1,348,063)$14,127Proceeds from adjustment of the original purchase price of 37,720 -subsidiariesProceeds from disposal of discontinued operations - 274,563Proceeds from sale of property, plant and equipment 7,256 9,475Purchases and construction of property, plant and (616,015) (415,320)equipmentProceeds from sale of investments 6,422 450,493Purchases of investments (45,039) (44,015)Loan issued (136,520) -Disposal of subsidiaries, net of cash disposed of $106,800 (59,848) -Movement of restricted cash (1,007) (1,534)Net cash used in investing activities (807,031) (1,074,401) CASH FLOWSFROM FINANCING ACTIVITIES Proceeds from borrowings and notes payable 39,956 12,026Repayment of borrowings and notes payable (259,029) (126,862)Capital lease payments (2,059) -Proceeds from disposal of assets to the company under 78,469 -common controlPayments to controlling shareholders for common control - (104,000)transfer of interests in subsidiaryDividends paid to minority shareholder of existing (21,553) -subsidiariesDividends to shareholders (347,595) (432,376)Net cash used in financing activities (511,811) (651,212)Net increase / (decrease) in cash and cash equivalents 660,198 (696,126)Effect of exchange rate changes on cash and cash 63,057 114,414equivalentsCash and cash equivalents at the beginning of the period 665,213 1,924,148Cash and cash equivalents at the end of the period 1,388,468 1,342,436 INTERIM CONDENSED Common Statutory Additional Accumulated Retained TotalCONSOLIDATED stock reserve paid-in other earnings stockholders'STATEMENTS OF capital comprehensive equitySTOCKHOLDERS' EQUITY income Balance at 221,173 10,267 1,812 72,129 4,809,094 5,114,475 December 31, 2005 Comprehensive income: Net income - - - - 1,684,719 1,684,719 Other comprehensiveincome: Net unrealized gain - - - (1,187) - (1,187)on a change invaluation ofinvestments Translation - - - 414,075 - 414,075adjustment Comprehensive income 2,097,607 Dividends to - - - - (784,853) (784,853)shareholders Payments to - - - - (104,000) (104,000)controllingshareholders forcommon controltransfer of interestsin subsidiary Balance at 221,173 10,267 1,812 485,017 5,604,960 6,323,229 September 30, 2006 Balance at 221,173 10,267 1,812 589,986 5,986,204 6,809,442 December 31, 2006 Comprehensive income: Net income - - - - 1,657,432 1,657,432 Other comprehensiveincome: Translation - - - 448,286 - 448,286adjustment Comprehensive income 2,105,718 Dividends to - - - - (707,337) (707,337)shareholders Earnings from - - 50,583 - - 50,583disposal of assets tothe company undercommon control Balance at 221,173 10,267 52,395 1,038,272 6,936,299 8,258,406September 30, 2007 For further information: NLMKAnton Bazulev +7 495 915 1575 Financial DynamicsJon Simmons +44 207 831 3113 This information is provided by RNS The company news service from the London Stock Exchange