NLMK.L Regulatory News (NLMK)

17 Apr 2007 07:03

OJSC Novolipetsk Steel17 April 2007 17.04.2007 Preliminary Results for the Year Ended 31 December, 2006 OJSC Novolipetsk Steel ("NLMK", "the Group"), the LSE-listed leading Russiansteel producer, today announced its preliminary consolidated US GAAP results forthe year ended 31 December 2006. Highlights: Strong 2006 financial performance: • Sales revenues amounted to USD 6,045.6 million (+38% year-on-year)• Cash flow from operating activities was USD 1,585.1 million• EBITDA* amounted to USD 2,631.2 million (EBITDA margin 44%)• Net profit was USD 2,066.0 million (+50% year-on-year)• Cash and cash equivalents of USD 665.2 million as of 31 December, 2006 Recent Developments: - In 2006, NLMK continued its dynamic development through further integrationinto key raw materials, acquisition of rolling facilities in our company's coremarkets, and optimization of existing Group structure. Vertical integration in raw materials segment: • Acquisition of 94% stake in Altai-koks, the largest independent coke producer in Russia. The asset has been consolidated into NLMK's financial statements since April 2006. This stake was acquired for USD 636.4 million. Acquisition of rolling facilities in core markets: • Acquisition of DanSteel A/S, the Danish steel re-roller, for USD 104 million, from the company under common control. DanSteel A/S has been consolidated into NLMK's financial statements since December 2005. • Acquisition of VIZ-Stal, the second-largest electrical steel manufacturer in Russia, for USD 550.7 million. VIZ-Stal has been consolidated into NLMK's financial statements since August 2006. Optimization of the existing Group structure: • Disposal of 12% interest in Lebedinsky GOK for USD 400 million in January 2006. • Increase of share ownership in LLC NTK up to 100%, in July 2006. LLC NTK is the key logistics provider for the Group, responsible for transportation of the Group's supplies of raw materials and delivery of steel products to customers in Russia and abroad. • Disposal of a 92% interest in iron ore producer KMA Ruda for USD 302.5 million in September 2006. Proceeds from the disposal are to be invested in the development of the Group's key iron ore asset, Stoilensky GOK. • Resolution to dispose of energy assets in December 2006. NLMK's energy holdings were classified as non-core investments by the NLMK Board of Directors. - Creation of a joint venture with the Duferco Group. This joint ventureincludes one steel making plant and five steel rolling facilities in Europe andthe USA as well as a network of steel service centers. In 2006, joint venturecompanies produced 2.0 million tonnes of crude steel and 4.5 million tonnes ofrolled steel. NLMK acquired its 50% interest in this joint venture forapproximately USD 805 million. The purchase price is subject to a post-closingadjustment based on the results of the audited financial statements of the jointventure companies for the fiscal year ended 30 September, 2006. - Capital expenditure, including acquisition and construction of property, plantand equipment, in 2006 amounted to USD 618.7 million - Approval of phase two of the Technical Upgrade Programme (2007 - 2011), withtotal planned investment of USD 4.4 billion. This program will ensuresustainable growth in all segments across the Group's value chain. Key targetsare as follows: • To increase crude steel production by 40% to 12.4 million tonnes per year • To increase the production of rolled steel products by 90% through organic growth and acquisition of rolling facilities on core markets • To efficiently develop NLMK's raw materials base to cover projected increases in steel production - Within the framework of the previously announced internal restructuring plan,the annual general shareholders meeting approved Mr. Alexey Lapshin as thePresident (Chairman of the Management Board) of NLMK on 6 June, 2006. The Boardof Directors approved the new Management Board, upon recommendations by thePresident. - The Board of Directors recommended a 2006 total dividend payment of RUR 3.0per ordinary share (1 GDS = 10 ordinary shares). Taking into account theprevious interim dividend payment for the first half of 2006 of RUR 1.5 perordinary share (approved by EGM held on 29 September, 2006) the Board isrecommending payment of an additional RUR 1.5 per ordinary share. The dividendpayment is subject to the approval of the annual shareholders meeting in June2007. Key financial highlights for year ended 31 December, 2006 USD, million 2006 2005 Change, %Revenue 6 045.6 4 375.8 38%Gross profit 2 971.3 2 044.1 45%Operating income 2 243.3 1 844.0 22%EBITDA* 2 631.2 2 083.2 26%EBITDA Margin(%) 44% 48%Net profit 2 066.0 1 381.4 50% * 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 discontinued operations + impairment losses + accretion expense onasset retirement obligations; Commenting on the 2006 results, Dr. Vladimir Lisin, NLMK's Chairman of theBoard, said: "In 2006, NLMK once again demonstrated outstanding financial performance. TheCompany continues to be among the world's most profitable steel producers. NLMK's investment in modernization and the expansion of its productionfacilities have resulted in growth in production volumes and the furtherstrengthening of NLMK's key competitive advantage as one of the lowest coststeel producers in the world. NLMK's targeted efforts at extending its verticalintegration have enabled the Company to raise its level of raw materialself-sufficiency and increase its production of high value-added products. Theseefforts have manifested themselves in improving financial results and a growingmarket capitalization, sound evidence of the successful implementation of thecompany's growth strategy. In the future, we will continue to implement a strategy focused on strengtheningmarket leadership in our core markets and raising efficiency of all key segmentsof the NLMK Group. This will provide a strong platform for further growth andwill maximize returns for Company's shareholders". Commenting on the 2006 results, Galina Aglyamova, NLMK's CFO, said: "Increased sales revenue in 2006 was driven by an increase in the Company'ssteel output, a favorable market environment and our flexible sales strategy.In addition, the ongoing process of consolidation in the global steel industrycoupled with the strengthening Russian and world economies have had a positiveimpact on the market and the Company's financial position. In 2006, NLMK approved a Sustainable Growth Strategy for 2007 - 2011 thatenvisages a large-scale technical upgrading program and the pursuit of strategicacquisitions in NLMK's core markets. The Company's stable financial positioncontinues to enable NLMK to use the full range of financing means to implementour Sustainable Growth Strategy projects. Going forward, we expect lowervolatility in our steel products prices and further cash flow growth from ouroperations." MANAGEMENT COMMENTS In recent years, NLMK has maintained its position as one of the most efficientsteel producers in Russia and throughout the world. In 2006 the company madegreat progress in achieving both outstanding financial results and realizing itsgrowth strategy. After substantial scheduled overhauls at the Group's main production site in2005, production levels in pig iron and steel recovered last year. This increased production and sales volume, backed by favorable conditions inthe steel market, resulted in outstanding financial performance. Further contributing to this positive dynamic was active implementation of ourvertical integration strategy. In 2006, the Group acquired DanSteel A/S,Altai-koks and VIZ-Stal. The aggregate impact of the above factors resulted in sales revenue growth of38% to USD 6,045.6 million, EBITDA growth of 26% to USD 2,631.2 million and anincrease in net income of 50% to USD 2,066.0 million. The disposal of Group'sstakes in non-core iron ore assets (stakes in Lebedinsky GOK and KMA Ruda) werethe main reasons for the increase in net income in 2006. The Group is generating stable operating cash flow. In 2006, net cash receivedfrom operating activities amounted to USD 1,585.1 million, which largelycorresponds to the 2005 level. Operating cash flow and our own cash reserves atthe beginning of the year allowed NLMK to finance the organic development of itsasset base as well as new acquisitions without substantial debt. Steel Segment In 2006, the structure of the steel segment was substantially changed. The Groupacquired DanSteel A/S, a hot-rolled thick plate producer which sources slabsfrom NLMK. VIZ-Stal, the second-largest Russian producer of electrical steel,was also included into the steel segment. VIZ-Stal sources hot-rolled coils fromNLMK for the production of electrical steels. The steel segment continues to be the key segment of the Group. In 2006, thesegment generated USD 5,586.7 million in revenue from external customers,equating to 92% of consolidated revenue, and USD 2,108.4 million in operatingprofit. In 2006, sales revenue from external customers grew by USD 1,391.5 million, anincrease of 33%. Operating profit grew by USD 584.9 million, an increase of38% year-on-year. The following factors had a positive impact on financial results in 2006: • Growth of sales volumes in real terms at NLMK • Price increases for NLMK's main steel products in both domestic and export sales markets • Increases in the sales of finished products (heavy plates) in Europe due to the consolidation of DanSteel A/S in 2006 • Consolidation of VIZ-Stal in August 2006, which resulted in increased sales volume, revenue, and profit from sales of high value-added electrical steel products Mining Segment In 2006, NLMK's mining segment was comprised of OJSC Stoilensky GOK, OJSCDolomite and OJSC Stagdok, companies that supply raw materials to NLMK'sproduction facilities in Lipetsk and which also sell certain volumes outside theGroup. A stake in KMA Ruda, held by the mining segment from March to August 2006, wassold by NLMK. Its disposal is reflected in the consolidated income statementwithin income from discontinued operations. Iron ore producer Stoilensky GOK, the principal mining company within the Group,produced 11.3 million tonnes of iron-ore concentrate and 1.4 million tonnes ofsinter ore in 2006. Last year, the output of Dolomite, an NLMK subsidiary, was1.9 million tonnes of flux dolomite. Stagdok, which supplies limestone, produced3.2 million tonnes of fluxing limestone in the same period. In 2006, the mining segment's revenue from external customers was USD 91.0million, which is 4% lower than the level reached in 2005. This decrease was dueto lower product volumes supplied to external customers as a result of growth inturnover from within the Group companies. The segment's revenue, including intersegmental sales, was USD 614.6 million in2006, an increase of 11% year-on-year and which resulted from increasedpurchases from NLMK. As 85% of the mining segment's sales in value terms are internal sales withinthe Company, the segment's share in NLMK's consolidated external revenue in 2006was 2%. Operating profit for the mining segment increased in 2006 compared to 2005 byUSD 19.8 million, (+7% year-on-year) primarily due to higher sales volumes. Coke-chemical Segment The coke-chemical segment is comprised of OJSC Altai-koks and its subsidiaries,consolidated within the Group from Q2 2006. Altai-koks is one of the leadingproducers of coke in Russia. In 2006, Altai-koks produced 3.0 million tonnes ofcoke. In 2006, the coking segment's revenue from external customers and intersegmentalsales was USD 252.7 million. The coke-chemical segment's share of 2006consolidated revenue is 4%. Segment operating profit amounted to USD 23.9million in 2006. After putting into operation new coke battery #5 at the end of 2006, totalproduction capacity reached 5.0 million tonnes of coke per year. Other Operating Segments Revenue from other operating segments primarily includes revenue from threeoperational units, whose results do not exceed threshold values. These segmentsinclude sea port services, financial services, and banking and insuranceservices, as well as mining and enrichment of coal by the Prokopievskugol Groupof Companies. In 2006, revenue from other segments from external customers was USD 115.2million (+34% year-on-year). The revenue increase is mainly attributable to theconsolidation of the financial results of Prokopievskugol Group, which wasselling a portion of its products to external customers, from Q2 2006. In 2006, gross profit from other segments amounted to USD 36.7 million, a 31%decrease year-on-year. Operating loss in 2006 was USD 174.7 million. Thisoperating loss was due to the consolidation of Prokopievskugol Group's 2006financial results in an environment of unfavorable market prices and highproduction costs. In March 2007 the company agreed to sell the Prokopievskugol Group of Companiesto the City Administration of Prokopievsk. The transaction is completed in April2007. Consolidated financial results In 2006, Group's consolidated sales revenue amounted to USD 6,045.6 million(+38% year-on-year). The increase in revenue was primarily driven by growth insales and production volumes as well as the consolidation of Dansteel A/S'(during whole 2006), Altai-koks' and Prokopievskugol Group's financial resultsfrom April 2006 and VIZ-Stal's financial results from August 2006. In addition,since March 2006, conditions for the delivery of NLMK's products for export havechanged. Currently, the sales price for NLMK's products includes payment forcargo transportation up to border crossing points or port stations. Gross profit for 2006 amounted to USD 2,971.3 million (+45% year-on-year),operating profit was USD 2,243.3 million (+22% year-on-year). Slowdown in theoperating income growth rate, relative to gross profit growth, is due toimpairment losses and accretion expense on asset retirement obligation, which isUSD 156.7 million in total and includes USD 144.6 million attributable toProkopievskugol Group of Companies. Apart from that, selling expenses increasedby USD 263.0 million due to changes in conditions for the delivery of exportedproducts. Net profit (including profit on sale of financial assets and from discontinuedoperations) amounted to USD 2,066.0 million (+50% year-on-year). EBITDA reachedUSD 2,631.2 million (+26% year-on-year), and EBITDA margin was 44%. The more substantial growth of net profit as compared to operating profit andEBITDA is explained by significant gains on the sale of financial investmentsand non-recurring income from the sale in Q1 2006 of NLMK's stake in LebedinskyGOK and KMA-Ruda in Q3 2006. Consolidated balance sheet As of 31 December, 2006, NLMK's assets increased by 40% from 31 December 2005and reached USD 8,717.0 million. The Group's capital structure traditionally comprises a substantial portion ofequity capital. By the end of 2006, equity capital represented 78% of thecapital structure. Current assets on Group's balance sheet substantially exceed the amount of debt.Cash and cash equivalents as of 31 December, 2006 amounted to USD 665.2 million,which is USD 1,258.9 million or 65% below the level of 31 December, 2005. Thisdecrease was primarily due to financing of the acquisitions of Dansteel A/S,Prokopievskugol Group of Companies, Altai-koks, VIZ-Stal and joint venture withDuferco Group. Group's balance sheet structure reflects the financial stability of the company,which is confirmed by receipt of the highest credit ratings among Russiansteelmakers. In 2006, annualized return on assets (ROA) was 28% and annualized return onequity (ROE) was 35%, both higher than in the first half of 2006. Cash Flow Stable generation of operating cash flow allows NLMK to support the Group'sorganic growth as well as new acquisitions with its own funds. In 2006 net cash received from operating activities amounted to USD 1,585.1million, almost 2.6 times higher than net cash used for investments in fixedassets, which amounted to USD 618.7 million. The Group actively implements a vertical integration strategy. This results ina growing self-sufficiency in raw materials and increased rolling capacity,enabling growth in output of high value-added products. Major cash outflows weredue to acquisitions (excluding acquired cash) totaling USD 1,347.6 million andinvestments in associates of USD 805.5 million. Cash outflow for investment activities in 2006 amounted to USD 2,042.8, which is3.8 times higher than in 2005. Net cash flows associated with financial activities in 2006 amounted to USD933.2 million. The main cash outflows associated with financial activities in2006 are dividend payments to shareholders. In 2006, cash and cash equivalents were USD 665.2 million, which is 65% below2005 figures. The Group's sustainable financial position allows for a flexible businessdevelopment strategy. Shareholder value creation remains NLMK's key priority.NLMK will therefore continue to pursue its objectives based on stringentfinancial discipline and well-balanced investment projects. Outlook We believe that export prices growth for most of Group's steel products duringQ1 2007 will continue in Q2 2007. This anticipated increase in export prices, aswell as seasonal factors in Russia, will spur further domestic price growth.According to our estimates, there is a possibility of price softening towardsthe end of 2007. 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. CONSOLIDATED FINANCIAL STATEMENTS PREPARED IN ACCORDANCE WITH ACCOUNTING PRINCIPLESGENERALLY ACCEPTED IN THE UNITED STATES OF AMERICA AS AT AND FOR THE YEARS ENDEDDECEMBER 31, 2006, 2005 AND 2004 CONSOLIDATED BALANCE SHEETS As at As at As at December 31, December 31, December 31, 2006 2005 2004ASSETS Current assetsCash and cash equivalents 665,213 1,924,148 1,348,615Short-term investments 37,261 27,040 21,153Accounts receivable, net 1,150,492 708,515 588,562Inventories, net 856,940 559,250 475,303Other current assets, net 331,322 208,920 148,748Restricted cash 8,372 7,979 5,094 3,049,600 3,435,852 2,587,475Non-current assetsLong-term investments, net 810,350 31,470 51,425Property, plant and equipment, net 3,988,128 2,415,001 2,257,628Intangible assets, net 199,030 21,086 21,594Goodwill 559,703 173,357 179,815Other non-current assets 110,179 133,747 67,984 5,667,390 2,774,661 2,578,446Total assets 8,716,990 6,210,513 5,165,921 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilitiesAccounts payable and other liabilities 664,319 565,983 449,962Short-term borrowings 248,782 5,282 5,312Current income tax liability 80,350 40,639 78,638 993,451 611,904 533,912Non-current liabilitiesDeferred income tax liability 537,647 300,712 305,472Long-term borrowings 48,153 45,341 3,796Other long-term liabilities 194,872 45,505 16,463 780,672 391,558 325,731Total liabilities 1,774,123 1,003,462 859,643 Commitments and contingencies - - - Minority interest 133,425 92,576 85,787 Stockholders' equityCommon stock, 1 Russian ruble par value - 221,173 221,173 221,1735,993,227,240 shares issued and outstandingat December 31, 2006, 2005 and 2004Statutory reserve 10,267 10,267 10,267Additional paid-in capital 1,812 1,812 680Accumulated other comprehensive income 589,986 72,129 242,387Retained earnings 5,986,204 4,809,094 3,745,984 6,809,442 5,114,475 4,220,491Total liabilities and stockholders' equity 8,716,990 6,210,513 5,165,921 CONSOLIDATED STATEMENTS OF INCOME For the year For the year For the year ended December ended December ended December 31, 2006 31, 2005 31, 2004 Sales revenue 6,045,625 4,375,806 4,460,056 Cost of salesProduction cost (2,716,434) (2,048,828) (1,838,927)Depreciation and amortization (357,941) (282,876) (241,229) (3,074,375) (2,331,704) (2,080,156) Gross profit 2,971,250 2,044,102 2,379,900 General and administrative expenses (188,648) (101,351) (92,784)Selling expenses (325,361) (62,371) (57,006)Taxes other than income tax (57,215) (36,356) (32,985)Impairment losses (136,916) - -Accretion expense on asset retirement (19,765) - -obligations Operating income 2,243,345 1,844,024 2,197,125 Loss on disposals of property, plant and (3,582) (11,579) (12,168)equipmentGains on investments, net 400,696 2,771 165,955Interest income 111,789 98,708 49,971Interest expense (29,692) (15,377) (12,878)Foreign currency exchange loss, net (74,975) (9,805) (39,101)Other expenses, net (26,526) (16,468) (10,614) Income from continuing operations 2,621,055 1,892,274 2,338,290 before income tax and minority interest Income tax (706,605) (497,273) (566,532) Income from continuing operations before 1,914,450 1,395,001 1,771,758minority interest Minority interest (25,773) (21,080) (9,449) Equity in net earnings of associate 501 3,701 - Income from continuing operations 1,889,178 1,377,622 1,762,309 Discontinued operations Gain from operations of discontinued 228,499 3,773 10,192subsidiary and assets held for sale(including gain on disposal of $227,524 in2006)Income tax (51,714) - - Income from discontinued operations 176,785 3,773 10,192 Net income 2,065,963 1,381,395 1,772,501 Income from continuing operations per share(US dollars)basic and diluted 0.3152 0.2299 0.2941 Income from discontinued operations per share(US dollars)basic and diluted 0.0295 0.0006 0.0017 Net income per share (US dollars)basic and diluted 0.3447 0.2305 0.2958 CONSOLIDATED STATEMENTS OF CASH For the year For the year For the yearFLOWS ended ended ended December 31, December 31, December 31, 2006 2005 2004 CASH FLOWSFROM OPERATING ACTIVITIESNet income 2,065,963 1,381,395 1,772,501Adjustments to reconcile netincome to net cash provided byoperating activities:Minority interest 25,773 21,080 9,449Depreciation and amortization 357,941 282,876 241,229Loss on disposals of property, 3,582 11,579 12,168plant and equipmentGains on investments, net (400,696) (2,771) (165,955)Gain on disposal of discontinued (227,524) - -subsidiaryEquity in net earnings of (501) (3,701) -associateDeferred income tax benefit (38,732) (3,677) (35,945)Stock-based compensation - 1,132 -Impairment losses 136,916 - -Accretion expense on asset 19,765 - -retirement obligationsOther movements 21,386 (3,984) 15,198Changes in operating assets andliabilitiesIncrease in accounts receivable (141,359) (91,585) (158,628)Increase in inventories (159,995) (53,270) (132,375)(Increase) / decrease in other (16,905) (33,208) 331current assetsIncrease in loans provided by (69,776) (69,142) (86,501)the subsidiary bank(Decrease) / increase in (23,125) 121,031 146,731accounts payable and otherliabilitiesIncrease / (decrease) in current 32,376 (33,990) 51,140income tax payableNet cash provided by operating 1,585,089 1,523,765 1,669,343activitiesCASH FLOWSFROM INVESTING ACTIVITIESAcquisitions of subsidiaries, (1,347,545) - (173,856)net of cash acquired of $14,127in 2006 and $38,109 in 2004Purchases of equity investments (805,503) - -Proceeds from disposal of 302,526 - -discontinued operationsProceeds from sale of property, 15,565 10,706 8,352plant and equipmentPurchases and construction of (618,677) (580,198) (269,459)property, plant and equipmentProceeds from sale of 465,274 72,872 518,866investmentsPurchase of investments (54,758) (42,722) (185,594)Movement of restricted cash 339 (3,122) 3,378Net cash used in investing (2,042,779) (542,464) (98,313)activitiesCASH FLOWSFROM FINANCING ACTIVITIESProceeds from borrowings and 224,870 20,143 2,545notes payableRepayment of borrowings and (183,305) (13,866) (22,161)notes payableCapital lease payments (379) - (40,818)Contributions from controlling - 33,185 -shareholdersPayments to controlling (104,000) - (635,383)shareholders for common controltransfer of interests in newsubsidiaries, net of cash of$1,070 received in transferredsubsidiary in 2004Payments to controlling - - (2,617)shareholders for common controltransfers of interests inexisting subsidiariesProceeds from controlling - - 5,554shareholders for sale ofinvestmentsDividends paid to previous (83,547) - -shareholder of acquiredsubsidiary see Note (a)Dividends paid to minority (20,228) (1,390) -shareholder of existingsubsidiariesDividends to shareholders (766,646) (384,973) (332,817)Net cash used in financing (933,235) (346,901) (1,025,697)activitiesNet (decrease) / increase in (1,390,925) 634,400 545,333cash and cash equivalentsEffect of exchange rate changes 131,990 (58,867) 73,641on cash and cash equivalentsCash and cash equivalents at the 1,924,148 1,348,615 729,641beginning of the periodCash and cash equivalents at the 665,213 1,924,148 1,348,615end of the period Supplemental disclosures of cashflow information: Cash paid during the year for:Income tax 611,408 434,885 479,732Interest 28,781 13,623 12,002 Non cash operating activities:Offset of income tax payable 99,115 96,427 76,251with VAT receivable Non cash investing activities:Capital lease liabilities 8,460 - 19,920incurredReclassification of restricted - - 15,000cash to long-term investments Non cash investing and financingactivities as a result of:Transfers of subsidiary - 30,797 597,665interests from common controlparties reflected as capitalcontribution, net of cashreceived of $33,185 in 2005 and$1,070 in 2004Fair value of net assets 1,347,545 - 173,856acquired from third parties innew subsidiaries, net of cashacquired of $14,127 in 2006 and$38,109 in 2004 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' Common Statutory Additional Accumulated Retained TotalEQUITY AND COMPREHENSIVE INCOME stock reserve paid-in other earnings stockholders' capital comprehensive equity incomeBalance at 14,440 32 680 27,672 2,567,084 2,609,908December 31, 2003 Comprehensive income: Net income - - - - 1,772,501 1,772,501 Other comprehensive income: Net unrealized gain on a change in valuation - - - 66 - 66of investments Cumulative translation adjustment - - - 214,649 - 214,649 Comprehensive income 1,987,216 Stock split 206,733 - - - (206,733) - Increase in statutory reserve - 10,235 - - (10,235) - Dividends to shareholders - - - - (338,915) (338,915) Transfers of subsidiary interests from - - - - 598,735 598,735controlling shareholders Payments to controlling shareholders for - - - - (636,453) (636,453)common control transfer of subsidiaryinterests Balance at 221,173 10,267 680 242,387 3,745,984 4,220,491 December 31, 2004 Comprehensive income: Net income (see Note (a)) - - - - 1,381,395 1,381,395 Other comprehensive income: Net unrealized gain on a change in valuation - - - 7 - 7of investments Cumulative translation adjustment - - - (170,265) - (170,265) Comprehensive income 1,211,137 Stock-based compensation - - 1,132 - - 1,132 Dividends to shareholders - - - - (382,267) (382,267) Transfers of subsidiary interests from - - - - 63,982 63,982controlling shareholders Balance at 221,173 10,267 1,812 72,129 4,809,094 5,114,475December 31, 2005 Comprehensive income: Net income - - - - 2,065,963 2,065,963 Other comprehensive income: Net unrealized loss on a change in valuation - - - (1,177) - (1,177)of investments Cumulative translation adjustment - - - 519,034 - 519,034 Comprehensive income 2,583,820 Dividends to shareholders - - - - (784,853) (784,853) Payments to controlling shareholders for - - - - (104,000) (104,000)common control transfer of subsidiaryinterests Balance at 221,173 10,267 1,812 589,986 5,986,204 6,809,442December 31, 2006 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