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Financial Report

FINANCIAL REPORT

CYTA continues to present satisfactory financial results. For 2006 revenue from services increased by £18,7m or 7,5% whereas the operating expenses decreased by £2,8m or 1,3%. As a result the operating surplus increased by £21,5m or 118%. Earnings after tax, which are transferred to reserves, increased from £18m to £34m.

Earnings before interest, tax, depreciation and amortization (EBITDA) increased from £72,3m to £93,2m. EBITDA margin increased from 31% to 37%.

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, was £454,9m.  CYTA possesses the required financial means to implement its business plan successfully.

OPERATING REVENUE
Revenue from fixed telephone service decreased by 6%.  Revenue from mobile telephone service increased by 10% and revenue from other services (broadband services and other) increased by 31%, in line with CYTA’s business plans to promote services which have higher prospects for expansion and profitability.

OPERATING EXPENSES
As a result of the change in the accounting policy for writing off the actuarial valuation deficit from 2 to 5 years and the lower actuarial valuation deficit of £2,4m compared to £27,7m for 2005 the charge for the deficit decreased from £17,7m for 2005 to £4m for 2006.  The other operating expenses decreased by 1%.

CAPITAL EXPENDITURE
The capital expenditure totalling £54m (2005 £56,4m) 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 it constitutes 22% of operating revenue.

LIQUID FUNDS
Liquid funds which are comprised of bank deposits and government bonds have been increased by £3m. 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 was increased by the surplus for the year of £34,2m and the profit of £409.000 from the revaluation of investments. CYTA paid to the Government, in compliance with the law, £55m and as a result reserves decreased to £454,9m from £475,3m.

LOANS AND OTHER LONG TERM LIABILITIES
Long term liabilities to foreign financial institutions remained at very low levels, £1,4m in 2006 and £1,6m in 2005.

RETIREMENT BENEFITS
The latest actuarial valuation carried out on 31.12.2006 by a professional actuary, showed an additional deficiency of £2,4m.  In accordance with CYTA Board’s decision the deficiency is recognized and written off equally in the years 2006 to 2010 whereas the balance of the deficit of 2005 £13,85m will be written off equally in the years 2006 to 2009.  The pension scheme deficiency will be repaid in full upon the approval of the supplementary Budget by the House of Representatives.

CONTRACTUAL COMMITMENTS
The contractual commitments amounted to £15,3m (2005 £20,2m).  They include amounts of £9,5m for outstanding orders in foreign currency, £2,4m for outstanding orders in Cyprus Pounds, £3,2m for buildings under construction and £0,2m for outstanding excavations.

Five Year Financial Summary

	2006 £m.	2005 £m.	2004 £m.	2003 £m.	2002 £m.
Operating Revenue	249	230	232	223	233
Operating Surplus	40	18	43	48	53
Surplus for the year transferred to reserves	34	18	31	10	1
Total Assets	576	590	567	497	555
Total Liabilities	121	115	110	71	139
Reserves	455	475	457	426	416
Cash Flow from Operating Activities	113	76	145	76	80
Capital Expenditure	(44)	(45)	(92)	(38)	(47)

 

	2006 £000	2005 £000	2006	2005
Non-Current Assets	331.980	345.313	58%	59%
Current Assets	244.224	244.783	42%	41%

 

	2006 £000	2005 £000	2006	2005
Reserves	454.947	475.312	79%	81%
Short-term Liabilities	108.827	102.172	19%	17%
Long-term Liabilities	12.430	12.614	2%	2%

 

	2006 £000	2005 £000	2004 £000	2003 £000	2002 £000
Cash Flow from Operating Activities	113.044	76.442	145.198	76.377	79.895
Cash Flow used in Investing Activities	44.074	45.428	92.598	38.266	46.914

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