Management

Network

Financial Report

FINANCIAL REPORT

For CYTA 2005 can be characterised as a year of stabilization in the Cyprus telecommunication market, following its liberalization.  For the year under review CYTA continues tο present satisfactory financial results, considering that for most of the services that are provided, CYTA is obliged to apply a cost oriented pricing policy.

Compared to the 2004 financial results and as a result of the reduction in tariffs, the profit margin decreased from 23% to 16%.  Revenue from services  decreased by £1,1m or 0,5% whereas the operating expenses increased by £15,1m or 8,4%.  As a result the operating surplus decreased by  £16,2m or 31%.  Earnings after tax which are transferred to reserves decreased from £31m in 2004 to £18m in 2005.   Earnings before interest, tax, depreciation and amortization (EBITDA) decreased from £95,2 m to £72,3m.  EBITDA margin decreased from 41% to 31% but it is still considered satisfactory.

FINANCIAL POSITION
The financial position of CYTA as reflected in the balance sheet is considered excellent. The capital base of CYTA, in the form of reserves, increased to £475,3m.

OPERATING REVENUE
Revenue from the traditional telecommunications services of fixed and mobile telephony decreased marginally by 4%. Revenue from other services increased by 14%, in line with CYTA’s business plans to promote services which have better prospects for expansion and profitability.

OPERATING EXPENSES
As a result of the strategy for better cost management the increase in operating expenses was restricted to 8,4%. The increase is mainly due to increases in staff costs, maintenance of equipment and advertisement and promotion.

FINES
The amount of £2,302m represents fines imposed on CYTA by the Commission for the Protection of Competition (£2,250m) and by the Commissioner of Electronic Communications and Postal Regulation (£0,052m). 

CAPITAL EXPENDITURE
The capital expenditure totalling £56,4m (2004 £74,4m) was wholly financed by CYTA’s own funds.  It is noted that the capital expenditure exceeded the depreciation charge for the year which amounted to £53m and that they constitute 24% of operating revenue.

LIQUID FUNDS
Liquid funds which are comprised of bank deposits and government bonds have been increased.  These funds will be used for financing CYTA’s development program and other investments.

RESERVES
The capital base of CYTA in the form of reserves including the surplus for the year of £18,3m and the profit of £439.000 from the revaluation of investments, reached £475m showing an increase of 4%.

LOANS AND OTHER LONG TERM LIABILITIES
Long term liabilities to foreign financial institutions remained at very low levels, £1,6m in 2005 and £1,8m in 2004.

RETIREMENT BENEFITS
The latest actuarial valuation carried out on 31.12.2005 by a professional actuary, showed an additional deficiency of £27,7m.  In accordance with CYTA Board’s decision the deficiency is recognized and written off equally in the years 2005 and 2006.  The pension scheme deficiency will be repaid in full with the approval of the supplementary Budget by the House of Representatives.

CONTRACTUAL COMMITMENTS
The contractual commitments amounted to £20,2m (2004 £24,0m).  They include amounts of £11,8m for outstanding orders in foreign currency, £4,6m for outstanding orders in Cyprus Pounds, £3,5m for buildings under construction and £0,3m for outstanding excavations.

Five Year Financial Summary

	2005 £m.	2004 £m.	2003 £m.	2002 £m.	2001 £m.
Operating Revenue	230	232	223	222	225
Operating Surplus	36	52	58	68	77
Surplus for the year transferred to reserves	18	31	10	1	69
Total Assets	590	567	497	555	508
Total Liabilities	115	110	71	139	93
Reserves	475	457	426	416	415
Cash Flow from Operating Activities	76	145	76	80	109
Capital Expenditure	(45)	(92)	(38)	(47)	(43)

 

	2005 £000	2004 £000	2005	2004
Non-Current Assets	345.315	342.378	59%	60%
Current Assets	244.783	224.494	41%	40%

 

	2005 £000	2004 £000	2005	2004
Reserves	475.312	456.590	81%	81%
Short-term Liabilities	102.172	99.160	17%	17%
Long-term Liabilities	12.614	11.122	2%	2%

 
Cash Flow from Operating Activities and Capital Expenditure

	2005 £000	2004 £000	2003 £000	2002 £000	2001 £000
Cash Flow from Operating Activities	76.442	145.198	76.377	79.895	109.400
Cash Flow in Investing Activities	45.428	92.598	38.266	46.914	43.243

^ top