QUARTERLY REPORT Open Joint Stock Company “VolgaTelecom” The issuer’s code: 00137 - А For quarter IV of 2004 The issuer’s location: Russian Federation, 603000, Nizhny Novgorod city, M.Gorky sq., Post House The information contained in this quarterly report is subject to disclosure in accordance with Russian Federation legislation on securities General Director / V.F. Lyulin / Date: February 11, 2005 Chief Accountant / N.I. Popkov / Date: February 11, 2005 LS Contact person: Leading expert in securities Mironova Elena Petrovna Telephone: (8312) 34 22 10 Fax: (8312) 30 67 68 E-mail address: [email protected] Internet web-site address where the information contained in this quarterly report is disclosed: http://www.volgatelecom.ru/?id=312 1 Table of contents Introduction ………………………………………………………………………………….6 I. Brief data on persons forming the issuer’s management body structure, data on bank accounts, on auditor, appraiser, and the issuer’s financial adviser, and also on other persons who signed the quarterly report 1.1. Persons, forming the issuer’s management body structure ……….……………………8 1.2. Data on the issuer’s bank accounts …………………………………………………….10 1.3. Data on the issuer’s auditor (auditors) ………………………………………………....65 1.4. Data on the issuer’s appraiser ………………………………...………………………. .65 1.5. Data on the issuer’s advisers ……………………………………………………………66 1.6. Data on other persons who signed this quarterly report ………………………………..66 II. Basic information on the issuer’s financial-economic status 2.1. Indicators of the issuer’s financial-economic activity ………………………………….67 2.2. The issuer’s market capitalization ………………………………………………….…..67 2.3. The issuer’s liabilities …………………………………………………………..………68 2.3.1. Accounts payable ……………………………………………………………..….68 2.3.2. The issuer’s credit background …………………………………………………..68 2.3.3. The issuer’s liabilities from the guarantee provided to third parties ……………..68 2.3.4. The issuer’s other liabilities …………………………………………………..….68 2.4. The purposes of the emission and the trends of usage of resources obtained from the issuing securities placement ……………………………...69 2.5. Risks related to the acquisition of being placed (placed) issuing securities …………...69 2.5.1. Industry risks ……………………………………………………………………..69 2.5.2. Country and regional risks ……………………………………….........................70 2.5.3. Financial risks ……………………………………………………………………70 2.5.4. Legal risks ………………………………………………………………..………70 2.5.5. Risks related to the issuer’s activity ………………………………………………71 III. Detailed information on the issuer 3.1. Background of establishment and development of the issuer …………………………71 3.1.1. Data on the brand name of the issuer …………………………………………….71 3.1.2. Data on the issuer’s state registration ……………………………………….……72 3.1.3. Data on establishment and development of the issuer ……………………………73 3.1.4. Contact information ……………………………………………………………....74 3.1.5. Taxpayer Identification Number ………………………………………………….74 3.1.6. The issuer’s branches and representation offices …………………………………74 3.2. The issuer’s core economic activity ………………………………………………..……76 3.2.1. The issuer’s industry membership ………………………………………………..76 3.2.2. The issuer’s core economic activity ………………………...................................77 3.2.3. Major kinds of products (works, services) …………………………………….…77 3.2.4. The issuer’s suppliers whose share is 10 and more percent of all supplies of inventory holdings, with indication of their share in the total scope of supplies ...77 3.2.5. The issuer’s products (works, services) sales markets …………………………..77 2 3.2.6. Activity practice in relation to circulating capital and inventories .......................78 3.2.7. Raw materials …………………………………………………………………...78 3.2.8. Major competitors ……………………………………………………………….78 3.2.9. Data on the issuer’s licenses ……………………................................................79 3.2.10. The issuer’s joint activity ……………………………...……………………....85 3.2.13. Additional requirements to issuers whose core activity is communication services providing......................................................................................................................86 3.4. The issuer’s future activity plans ………………………………………………………122 3.5. The issuer’s participation in industrial, bank and financial groups, holdings, concerns and associations …………………………………………………..………...124 3.6. The issuer’s subsidiary and affiliated economic companies …………………………..125 3.7. Composition, structure and the cost of the issuer’s fixed assets, information on the plans of acquisition, replacement, retirement of fixed assets, and also on all facts of charge of the issuer’s fixed assets ……………………………………………………129 3.7.1. Fixed assets ……………………………………………………………….……129 3.7.2. The cost of the issuer’s real property assets ………………………....................129 IV. Data on the issuer’s financial-economic activity 4.1. The results of the issuer’s financial-economic activity ……………...............................129 4.1.1. Profit and losses ………………………………………………………………...129 4.1.2. Factors that affected the change of proceeds amount from the issuer’s sale of goods, products, works, services and profit (losses) of the issuer from the core activity …………………………………………………………………………...130 4.2. The issuer’s liquidity ……………………………………………………………………130 4.3. The size, structure and adequacy of the issuer’s capital and current assets …………….130 4.3.1. The size and the structure of the issuer’s capital and current assets …………….130 4.3.2. The adequacy of the issuer’s capital and current assets ………………………. 130 4.3.3. Monetary funds ………………………………………………………………….130 4.3.4. The issuer’s financial investments ……………………………………………….130 4.3.5. The issuer’s intangible assets …………………………………………………….131 4.4. The data on policy and the issuer’s expenses in the area of science-engineering development, and also in relation to licenses and patents, new developments and investigations ………………………………..…………………………………......132 4.5. Analysis of the development trends in the issuer’s core activity area …………………..132 V. Detailed data on persons making up the structure of the issuer’s management bodies, the issuer’s bodies controlling its financial-economic activity, and brief data on the issuer’s employees (workers) 5.1. Data on the structure and scope of competence of the issuer’s management bodies …….140 5.2. Information about the persons making up the structure of the issuer’s management bodies ……………………………………………………………………………………..146 5.3. Data on the size of remuneration, benefits and/or compensation of expenses for each management body of the issuer …………………………………….…………………...177 5.4. Data on the structure and scope of competence of the bodies controlling the issuer’s financial-economic activity …………………………………..…………………………179 5.5. Information about the persons making up the structure of bodies controlling the issuer’s 3 financial-economic activity ……………………………………………………………180 5.6. Data on the size of remuneration, benefits and/or compensation of expenses for the body controlling the issuer’s financial-economic activity ..………………………………….188 5.7. Data on the numbers and generalized data on education and composition of the issuer’s employees (workers), and also the data on the change of the numbers of the issuer’s employees (workers) ………………………………………..………………...188 5.8. Data on any liabilities of the issuer to the employees (workers) related to their opportunities to participate in the issuer’s Charter capital (share fund) ………………188 VI. Data on the issuer’s participants (stockholders) and on related party transactions made by the issuer 6.1. Data on the total number of the issuer’s stockholders (participants) …………………..189 6.2. Data on the issuer’s participants (stockholders) possessing at least 5% of the issuer’s Charter capital (share fund) or at least 5% of the issuer’s common stock, and also the data on participants (stockholders) of such entities, possessing at least 20% of the Charter capital (share fund) or at least 20% of their common stock….………………..189 6.3. Data on participation of the state or municipal organization in the issuer’s Charter capital (share fund), availability of special right (“golden share”) …………………….191 6.4. Data on limitations for participation in the issuer’s Charter capital (share fund) ............191 6.5. Data on changes in the structure and scope of participation of the issuer’s stockholders (participants) possessing at least 5% of the issuer’s Charter capital (share fund) or at least 5% of the issuer’s common stock ………………………………………….….191 6.6. Data on related party transactions made by the issuer ………………………………....196 6.7. Data on the size of the accounts receivable …………………………………................200 VII. The issuer’s accounting statement and other financial information 7.1. The issuer’s annual accounting statement ……………………………………………...201 7.2. The issuer’s quarterly accounting statement for the last accomplished report quarter ...201 7.3. The issuer’s summary accounting statement for the last three accomplished fiscal years or for each accomplished fiscal year .…………………………………………………201 7.4. Data on total amount of export, and also on the share of export in the total volume of sales ………………………………………………………………………………..201 7.5. Data on essential changes occurred in the structure of the issuer’s property following the end date of the last accomplished fiscal year ……………………………………..201 7.6. Data on the issuer’s participation in legal processes in case, when such participation may essentially affect the issuer’s financial-economic activity ……………………………201 VIII. Additional data on the issuer and issuing securities placed by the issuer