NIS-M2M GROUP OF COMPANIES REPORTS FINANCIAL RESULTS FOR THE TWELVE MONTHS ENDED DECEMBER 2011

Transcription

1 NIS-M2M GROUP OF COMPANIES REPORTS FINANCIAL RESULTS FOR THE TWELVE MONTHS ENDED DECEMBER 2011 Moscow, Russia April 24, 2011 The NIS-M2M Group of companies (federal navigation service provider OJSC NIS and M2M Telematics Group of companies), a global leader in transportation navigation and information services, today announces its consolidated financial results for the full year ended December 31, 2011 in accordance with US GAAP 1. FULL YEAR FINANCIAL HIGHLIGHTS o o o Consolidated revenues up significantly by 118.3% year-on-year to RUB 4,458 million OIBDA 2 up 76.8% year-on-year to RUB 246 million Net income of RUB 37 million, down 38.6% year-on-year FULL YEAR OPERATING HIGHLIGHTS By the end of December 2011, NIS-M2M, with its regional partners, had equipped 150,000 transport vehicles, opened 5,000 dispatch centres and deployed navigation and information systems in 4,000 companies, including 2,500 commercial companies. Some elements of the intelligent transport systems were deployed in 52 regions and 102 cities of Russia. Passenger transport dispatch systems were deployed in 100 cities. Major GLONASS deployment projects implemented in 2011 included: the transportation facilities of the Ministry of Internal Affairs and the Ministry of the Russian Federation for Civil Defence, Emergency Situations and the Rectification of the Consequences of Natural Disasters (over 12,000 vehicles); land passenger transportation facilities in Moscow (more than 2,200 vehicles); transportation facilities of the 2014 Olympics Games Sochi Logistics and Transportation Centre (over 2,500 vehicles); and Transneft s transportation facilities (approximately 6,700 vehicles). Prototypes of the ERA-GLONASS Emergency Response System were developed in the Moscow, Leningrad and Kursk regions and were tested with regional emergency services. During the reporting year, M2M Telematics developed 15 new types of GLONASS/GPS automatic vehicle tracking terminals, four software products and a production sample of the GeoS-3 navigation receiver. 1 Financial results of M2M Telematics Group of companies are consolidated into JSC Navigation-Information Systems. 2 OIBDA represents operating income before depreciation and amortization.

2 A total of 500,000 navigation devices were produced (navigation systems, chip sets, navigation and communication equipment), of which 300,000 were sold. 52,000 units of GLONASS navigation and communication equipment were produced and sold under the M2M Telematics brand. Approximately 100,000 Shturmann navigators were sold and two new connect navigator models: Shturmann Link 500SL and 501 MTS navigator, were launched. Alexander Gurko, Chief Executive Officer of NIS GLONASS, commented: NIS-M2M Group of companies maintained its leading position in the transportation telematics and satelite navigation market in 2011, due to its strong financial and operating growth. Our rapid growth resulted from large-scale GLONASS deployment projects in commercial and public sectors. Such projects included the creation of ERA-GLONASS, the establishment of an integrated automated passenger transportation dispatch centre and the provision of land passenger transportation safety solutions in Moscow as part of the creation of an Intelligent Transportation System in the city, the development of departamental (the Ministry of Internal Affairs of the RF, the Ministry of the RF for Civil Defence, Emergency Situations and the Rectification of the Consequences of Natural Disasters, the Federal Agency for Transport Supervision (Rostransnadzor) and others) and major industrial navigation and information systems (OJSC Transneft, OJSC Bashkirnefteproduct, FSUE Russian Post and others). In 2011, we saw a significant increase in the scope of deployment of GLONASS technology across Russia. We are confident that our regional development, the creation of new products for corporate clients and, above all, the launch of our services in the mass market, will provide us with significant growth across all our financial indicators in 2012 and beyond. This will also enable us to strengthen our leading positions in Russia and to expand our business successfully into other countries. NIS-M2M comprises the following companies: JSC Navigation-Information Systems (JSC NIS ) NIS is a federal navigation service operator, which facilitates the commercialisation of GLONASS technology in Russia and abroad. It is the market leader in the development of large-scale navigation and information systems and their deployment in transportation networks and facilities. M2M Telematics Ltd M2M Telematics is a technology industry leader, developer and systems integrator of complex solutions based on GLONASS/GPS technology, as well as intelligent transportation systems (ITC). It is a transport telematics service operator with a 30% market share in transport telematics and a 41% market share by implementation of navigation and information systems based on GLONASS technology. The company is ranked sixth in the top-10 leading innovative companies in Russia, as

3 well as sixth in the top-20 fast-growing Russian IT companies and 15 th in the top-20 largest IT developers in Russia. R&D Centre GeoStar Navigation Ltd. R&D Centre GeoStar Navigation is the market leader in the development and production of GLONASS/GPS multisystem navigation modules (chipsets) (approximately 70% market share). Content Master Ltd. Content Master Ltd is a leading Russian developer of SHTURMANN navigation products: automotive GPS navigation devices, navigation software, navigation content services and solutions for small and medium-size businesses, and the LBS platform. The company has a 10% market share in personal navigation devices (PND). It is also a navigation and information services operator for motorists. SHTURMANN is among the top-5 PND brands in Russia. CJSC NPP Transnavigation NPP Transnavigation is a leading Russian developer and systems integrator of complex solutions based on GLONASS/GPS navigation and information systems for passenger transportation. R&D Centre Transkor-K Ltd. R&D Centre Transkor-K is a developer of complex solutions based on GLONASS/GPS technology for different organisations, including ambulance services. M2M Electronics Ltd. M2M Electronics Ltd. is the market leader in navigation and information hardware production based on GLONASS/GPS technology in Russia. M2M Engineering Ltd. M2M Engineering Ltd. Is a developer of software solutions for Intelligent Transportation Systems, based in the town of Dubny, a special economic zone. FINANCIAL REVIEW Change Revenue, RUB mln 4,458 2, % OIBDA, RUB mln % OIBDA Margin (%) 5.5% 6.8% (1.3 p.p.)

4 Net Income, RUB mln (38.6%) Number of equipped vehicles ( 000) % Number of regional partners % Revenue The Group s significant revenue growth in the reporting period primarily resulted from the implementation of a number of large-scale GLONASS projects for both business and government customers. As part of these projects, approximately 150,000 vehicles were equipped with GLONASS technology in 2011, up 150% from OIBDA Rapid revenue growth was the key driver for OIBDA increase. The OIBDA margin (OIBDA/ revenue ratio) decreased by 1.3 p.p. in 2011 to 5.5% compared to 6.8% in The decrease was mainly due to the Group s dynamic expansion, as well as some costs associated with the implementation of projects, for which payment is expected in subsequent periods. Net Income In 2011, net income amounted to RUB 37 million compared to RUB 60 million in the previous year. The year-on-year decline in net income was mainly due to an increase in financing costs associated with the Group s development during the reporting period. OPERATING REVIEW In December 2011, NIS registered a subsidiary, NIS GLONASS Pvt Ltd., in India. This new subsidiary will support the localisation of equipment manufacturing and the development of software products for the Indian market. It will also support the all-indian partnership network, NIS GLONASS, as well as its expansion. The Group signed an agreement with an Indian company, DIMTS (Delhi Integrated Multimodal Transit System), to create a consortium for participation in tenders for the development of intelligent transportation systems and traffic management solutions in mega-cities of India. NIS signed an agreement of intent with the largest Indian state systems integrator, KELTRON (Kerala State Electronic Development Corporation), for the preparation of pilot projects in the state of Kerala, as well as participation in state tenders. NIS launched two pilot areas in the Indian cities of Hyderabad and Gurgaon for the demonstration and testing of solutions specific to the Indian market. In order to expand its geographical footprint, the Group signed a number of cooperation agreements with companies from Belarus, Ukraine, Kazakhstan, Brazil, South Africa, Turkey and other countries. In 2011, a number of special programmes aimed at deploying GLONASS satellite navigation technology were developed in partnership with NIS and adopted in 15 regions in Russia. The key

5 objective of these special programmes is to create an integrated regional navigation system in Russia. During the reporting period, the Group established the largest regional affiliate network in the navigation and information services market in Russia and the CIS, comprising 74 existing regional dispatch centres and 16 authorised service centres. In 2011, M2M Telematics developed 15 new types of automatic vehicle tracking terminals. The company also developed a high quality GLONASS/GPS equipment system with two SIM cards, a builtin battery, a Wi-Fi module and specialised GLONASS equipment for river transport. It has also developed unique software systems including M2M-GIS Platform and M2M-HD Control, amongst other products. The Group also implemented high-tech science and technology projects for the Ministry of Transportation of the RF, the Ministry of Industry and Trade, the Federal Road Agency (Rosavtodor), the Federal Agency for Transport Supervision (Rostransnadzor), Rosstandart R&D ABT , R&D Oblik-CIS, R&D Platforma, R&D Smeschenie-N and others. In addition, the Group is working on joint projects with leading automakers, including Russian Buses, KAMAZ, Kommash, Sollers, FORD, Trolza and Machinery and Industrial Group. Outlook for 2012 The Russian market for navigation and information services for transportation is expected to increase to RUB 120 billion by 2016, representing a tenfold growth in five years. According to estimates by NIS experts, the market was valued at RUB 12 billion in The key growth drivers will be the deployment of GLONASS technology in large scale, state, regional and sectoral infrastructure projects. NIS-M2M intends to participate in the implementation of these projects. In 2012, NIS-M2M also plans to participate in a tender for the development of a GLONASS-based toll road system for vehicles over 12 tonnes to be used on the Russian federal highways. NIS-M2M has developed a prototype system and has already cooperated with international partners for the implementation of this project. The Group intends to test and launch navigation and information services for motorists in 2012, a new offering for the Russian market. NIS-M2M is also planning to substantially increase its production of GLONASS/GPS chipsets, primarily based on its brand new Geos-3 navigation software. In 2012, NIS-M2M with its Indian partners (Landsmiths Projects, CERT Infotrack, Chemtrols, Mahindra Telematics, HBL, KELTRON and DIMTS) plans to participate in Indian state tenders for the deployment of monitoring and information systems for passenger bus transportation in the following cities: Mumbai, Bangalore, Dehli, Chandigarh, Hyderabad, Jaipur, Nagpur and others. Development of ERA-GLONASS Project In 2011, within the framework of the state contract, NIS opened a federal navigation and information centre in Moscow, a regional navigation and information centre in St.Petersburg and a regional switching centre in Kursk. A total of 72 switching centres are expected to be opened in Russian regions in 2013.

6 In 2012, within the framework of the ERA-GLONASS project, prototype state systems will be deployed in the following regions: Novosibirsk, Ryazan andsamara, as well as in the Republic of Bashkortostan. In 2012, The Group plans to develop an ERA-GLONASS prototype based on the federal and regional navigation and information centres and regional switching points. The prototype system will be tested with regional emergency services. Development of Navigation-Information Systems division In line with its development of a navigation-information systems division, the Group intends to complete a product line for domestic and export markets, as well as increase the Group s presence in the regions. The Group therefore plans to open navigation and information centres in 32 Russian regions in the North-South and East-West transport corridors. Development of Operator Services division In line with the development of this division, the Group plans to create joint ventures with key players in the navigation and information services market, as well as to implement pilot projects to provide commercial services to the mass market. For further information, please contact: JSC NIS Olga Antonova Head of External Communications Tel: +7 (495) , ext antonovaoa@nis-glonass.ru The NIS-M2M Group of companies is a vertically integrated innovation holding company in Russia, which comprises market and technology leaders in transport telematics, navigation and information services, and leaders in navigation chipset and equipment development. The Group consists of the following companies: JSC Navigation-Information Systems, M2M Telematics Ltd, R&D Centre GeoStar Navigation Ltd., Content Master Ltd., CJSC NPP Transnavigation, R&D Centre Transkor-K Ltd., M2M Electronics Ltd., M2M Engineering Ltd. JSC Navigation- Information Systems, the parent company, is a federal navigation service operator. JSC NIS is the sole developer of the ERA-GLONASS project. Certain statements in this presentation may contain assumptions or forecasts in respect to forthcoming events within JSC NIS-M2M Telematics Group of companies and JSFC Sistema. The words expect, estimate, intend, will, could and similar expressions identify forward-looking statements. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to reflect events and circumstances occurring after the above-mentioned date or to reflect the occurrence of unanticipated events. Many factors could cause the actual results of JSC NIS-M2M Telematics Group of companies and JSFC Sistema to differ materially from those contained in our projections or

7 forward-looking statements, including, among others, deteriorating economic and credit conditions, our competitive environment, risks associated with operating in Russia, rapid technological and market change in our industries, as well as many other risks specifically related to JSC NIS-M2M Telematics Group of companies and JSFC Sistema and their operations.