ANNUAL REPORT 2007

Financial Report 2007

Summary of Results
2007 was a particularly successful year for CYTA. The Organisation’s excellent financial results reflect the robustness of its operations in what has become a highly competitive and strictly regulated environment. Operating revenue rose by £16,3m or 6,5% while operating expenses increased by £0,5m or 0,2%. As a result, the operating surplus rose by £15,8m or 40%. Earnings after tax, which are transferred to reserves, grew from £34m to £47m. Earnings before interest, tax, deprecation and amortization (EBITDA) increased from £93,2m to £103m while the EBITDA margin rose from 37% to 39%.

Financial Position
CYTA’S overall financial position, as shown on the balance sheet, is considered to be excellent. The Organisation’s capital base, in the form of reserves, stood at £502,7m as of 31 December 2007. CYTA thus has the financial resources that are essential to the successful implementation of its business plan.

Operating Revenue
Technological advances led to a 4% reduction in fixed telephony revenue and an increase of 7% in revenue from mobile telephony. Revenue from other services (broadband and others) grew by 21% as a result of CYTA’s policy of reinforcing those activities which, according to its business plan, have the greatest potential for development and profitability. 

Operating Expenses
Operating expenses increased by £0,5m. This was mainly due to a £6.9m rise in personnel costs while the depreciation charge fell by £6,7m.

Capital Expenditure
Additions to fixed assets amounted to £48.9m compared to £54m in 2006. Capital expenditure, which was wholly financed by CYTA’s own funds, exceeded the depreciation charge of £45,9m and represented 18% of operating revenue.

Liquid Funds
Liquid funds in the form of government bonds and bank deposits increased by £10m. These funds will be used to finance CYTA’s development plan and other investments.

Reserves
The Organisation’s capital base in the form of reserves was reinforced by the surplus of £47,5m and the profit of £0,2m from the revaluation of investments.

Loans and Other Long-Term Liabilities
CYTA’s long-term liabilities to suppliers and financial organisations abroad remained at very low levels, and the total fell from £1,4m in 2006 to £1,2m in 2007.

Retirement Benefits
A new actuarial valuation of the pension scheme, carried out on 31 December 2007, identified neither deficit nor surplus. In accordance with a decision of the Board of Directors, the 2006 deficit is recognised and will be written off by equal amounts in the years 2006-2010 while the remainder of the 2005 deficit will be written off from 2006 to 2009.

Contractual Commitments
In 2007, contractual commitments amounted to £17,6m (£15,3m in 2006). This sum comprised £8,2m for outstanding orders in foreign currency, £4,1m for outstanding orders in Cyprus pounds and £5,3m for buildings under construction.

Five Year Financial Summary