Structure of operating expenses

Operating Expenses1 Structure


RUB million FY 2012 FY 2011 % change,
y-o-y
Personnel costs 84,308 76,252 11%
Interconnection charges 47,312 40,736 16%
Materials, repairs and maintenance, utilities 27,358 27,507 (1%)
Other operating income (13,868) (14,711) (6%)
Other operating expenses 57,587 53,998 7%
Total 202,697 182,782 10%

Operational expenditure, excluding depreciation and amortisation, in 2012 was RUB 202.7 billion, up 10% compared to the equivalent period last year, in the main part, due to:

  • 11% growth in personnel expenditure compared to the equivalent period in 2011 to RUB 84.3 billion, due to the effect of the one-off reduction in long-term social obligations, as a result of a new labour contract signed by Rostelecom, its employees and the labour union in December 2011 by RUB 4.8 billion, the recruitment of commercial staff in the mobile segment, but also the creation of reserves for compensation due to employees as part of the 20% optimization of administrative personnel planned for 2013
  • Increased expenditure on operator services by 16% year-on-year to RUB 47.3 billion, in connection with the increase in direct expenditure, which relates to the growth of the Company’s profits.

The Company reported a FY 2012 OIBDA of RUB 118.6 billion with OIBDA margin 36.9%.

In 2012, depreciation and amortisation expenses rose 13% compared to 2011 to reach RUB 64.7 billion due to the video surveillance project for the Presidential elections and the commissioning of new fixed assets, specifically the construction of 3G+ networks.

In 2012, capital expenditure rose 10% overall compared to 2011, reaching RUB 91.2 billion. The 2012 increase in CAPEX primarily comprised of the maintenance of existing channels and the construction of new channels, to enable the video observation of the Presidential elections. Also, the modernization of broadband networks, the implementation of new IT systems, the launch of new services and the expansion of 3G+ networks required additional investment.

The Company reported an operating profit of RUB 53.8 billion for 2012, with operating margin of 16.8%.

The growth of financial expenditure in connection with the rise in gross debt was in part compensated by the positive effect of the exchange rate.

Profit before tax was RUB 44.0 billion for 2012, representing decreases of 17% on the equivalent period of 2011. This was for the most part due to the increase in amortization, but also as a result of the one-off decrease in expenditure from the pension plan in 4Q 2011.

The Company’s rate of income tax in the full year 2012 decreased 18% compared to 2011 to RUB 8.8 billion. This change in income tax related to changes to pre-tax profit. The effective income tax-rate for whole 2012 year remained at 20%, in line with the Tax Code level of 20%.

The Group reported a net profit of RUB 35.2 billion for 2012.

1 Excluding depreciation and amortisation

History

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