• • KvK Rotterdam/Rotterdam • 3 0 JAN. 2009 • • • • • • • FINTUR HOLDINGS B.V• ANNUAL ACCOUNTS • AS AT 31 DECEMBER 2007 • TOGETHER WITH AUDITOR'S REPORT • Adopted by the general meeting of shareholders on 1 December 2008 • • Vastgesteld door de algemene vergadering van aandeelhouders op 1 december 2008 • • • • • • • • • • • • • • • • • • bt; • • • FINTUR HOLDINGS B.V . • TABLE OF CONTENTS • CONTENTS PAGES • ANNUAL REPORT OF THE DIRECTORS ......................................................... 3 • CONSOLIDATED BALANCE SHEETS ................................................................................ 6-7 • CONSOLIDATED STATEMENTS OF INCOME.................................................................. 8 • CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY........................................... 9 • CONSOLIDATED STATEMENTS OF CASH FLOWS.......................................................... 10 • NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.................................... 11-53 NOTE I ORGANISATION AND NATURE OF OPERATIONS........................................................................... 11-12 • NOTE2 BASIS OF PREPARATION AND SUMMARY OF SIGNIFICANT RELEVANT ACCOUNTING POLICIES....................................................................................................................... 12-30 • NOTE3 SEGMENT INFORMATION.................................................................................................................... 31-34 NOTE4 CASH, CASH EQUIVALENTS AND RESTRICTED CASH.................................................................. 35 NOTES TRADE RECEIVABLES........................................................................................................................... 35-36 • NOTE6 TRANSACTIONS AND BALANCES WITH SHAREHOLDERS AND OTHER RELATED COMPANIES.......................................................................................................................... 37-38 • NOTE7 INVENTORIES......................................................................................................................................... 39 NOTES OTIIER CURRENT ASSETS.................................................................................................................... 39 • NOTE9 PROPERTY AND EQUIPMENT, NET.................................................................................................... 40-41 NOTE JO INT AN GIB LE ASSETS - NET................................................................................................................. 42-43 NOTE II OTIIER NON-CURRENT ASSETS.......................................................................................................... 43 • NOTE 12 TRADE PAYABLES................................................................................................................................. 44 NOTE 13' TAXATION ON INCOME........................................................................................................................ 44-47 • NOTE 14 OTIIER CURRENT LIABILITIES........................................................................................................... 47 NOTE 15 OTIIER NON-CURRENT LIABILITIES ...................................................................................... ,.......... 48 NOTE 16 SHARE CAPITAL..................................................................................................................................... 48 • NOTE 17 COST OF SERVICES................................................................................................................................ 49 NOTE 18 GENERAL AND ADMINISTRATIVE EXPENSES................................................................................ 49 • NOTE 19 SELLING AND MARKETING EXPENSES............................................................................................ 50 NOTE20 FINANCIAL INCOME.............................................................................................................................. 50 NOTE21 FINANCIAL EXPENSE............................................................................................................................ 50 • NOTE22 AVERAGE NUMBER OF EMPLOYEES.......................................................................... 50 NOTE 23 COMMITMENTS AND CONTINGENCIES............................................................................................ 51-52 • NOTE 24 SUBSEQUENT EVENTS ...................................................... :................................................................... 53 • COMPANY-ONLY ACCOUNTSAT31 DECEMBER2007.................................................... 54 • COMPANY-ONLY BALANCE SHEETS............................................................ 55 ' • COMPANY-ONLY PROFIT AND LOSS ACCOUNTS.......................................................... 56 • NOTES TO THE BALANCE SHEET AND PROFIT AND LOSS ACCOUNT ................. 57-60 NOTE 25 GENERAL ........................................................................................................ ,,,,,,.. 57 NOTE 26 INTANGIBLE FIXED ASSETS....................................................................................... 57 • NOTE 27 FINANCIAL FIXED ASSETS......................................................................................... 58 NOTE 28 RECEIVABLES.......................................................................................................... 59 • NOTE 29 SHAREHOLDERS' EQUITY.......................................................................................... 59 NOTE 30 CURRENT LIABILITIES., .. ,,,,, ...... ,, .. , .......... ,, .. , ....... ,, ... ,.............................................. 60 NOTE 31 . EMPLOYEES ........................................................................................................................................... 60 • NOTE 32 REMUNERATION OF THE BOARD ...................................................................................................... 60 • NOTE 33 RELATED PARTIES .................. .'............................................................................................................. 60 • • • • • • • FINTUR HOLDINGS B.V . • TABLE OF CONTENTS • OTHER INFORMATION................................................................................... 61 • • PROFIT APPROPRIATION ACCCORDING TO THE ARTICLES OF ASSOCIATION .. ... 62 • •PROPOSED PROFIT APPROPRIATION................................................................. 62 • •AUDITOR'S REPORT................................................................................................... 63 • • • • • • • • • • • • • • • • • • • • • • • 2 • • • • FINTUR HOLDINGS B.V . • ANNUAL REPORT OF THE DIRECTORS • • General In accordance with the Articles of Association of the Company, the Board of Directors ofFintur • Holdings B.V. ("the Company") hereby submits the Annual Accounts for the year ended 31 December • 2007 . Activities • The major activity of the Company during the financial year was the participation and investment in various businesses in telecommunications (GSM) in several countries in the so-called "Eurasia • region". As at year-end 2007 management has no plans to change the activities of the Company and holds interests in the following GSM businesses: Kcell, Azercell (including internet service provider • Azeronline), Geocell and Moldcell. • Developments during the year • Results During the financial year 2007: • Revenues increased by 28% to USO 1,486.4 million compared to a growth of36% in the preceding year. • The Company made a (consolidated) profit to the amciunt ofUSD 262,850,000 (2006: USO 194,790,000). This profit resulted mainly from the Company's GSM business in Kazakhstan and • in Azerbaijan. During 2007 the Company's GSM activities in all countries realised a profit. • On 16 July 2007 TeliaSonera closed the MCT Corp. acquisitiop announced on 9 July. TeliaSonera acquired I 00 percent of the shares in MCT, a US-based company with majority controlling • shareholdings in three Eurasian GSM operators in Uzbekistan and Tajikistan and a small minority interest in the leading GSM operator in Afghanistan, for an enterprise value of approximately • USO 300 million. Although the acquisition has been performed by TeliaSonera, Fintur will be • responsible for the management of the operations . The directors propose to add USO 62,850,000 from the result for the year to other reserves and to • distribute dividends amounting to USO 200,000,000 in 2008. The amount of distributable reserves is USO 582.9 million as at 31 December 2007. As at 31 December 2007, Fintur has a sound financial • position ·evidenced by the fact that shareholders' equity amounts to 85% of total assets . • In December 2003, Sonera Corporation granted short-term loans to the subsidiaries operating in the GSM business for a total ofUSD 139,300,000 to finance the expansion of their GSM network and for the funding of working capital. The subsidiaries partially used these new borrowings to reimburse the • existing borrowings from financial institutions. As at 31 December 2007, short-term debt due to • TeliaSonera includes principal and accrued interest amounting to USO 71,000,000 (2006: USO 66,750,000) and USO 220,889 (2006: USO nil) respectively. The debt amount due to • TeliaSonera includes only a loan given to Geocell. The level of short-term financing from Sonera Corporation is expected to decrease significantly since the Company started to finance its subsidiaries • mainly from its own