motor sich

Transcription

motor sich

15, Motorostroiteley Ave.
Zaporozhye, 69068, Ukraine
Tel.: (38 061) 720-48-14
Fax: (38 061) 720-50-00
Е-mail: [email protected]
www.motorsich.com
MOTOR SICH JSC
Annual report 2 012
MOTOR SICH JSC
2012
CONTENTS
Address of the Chairman of the Board
of Directors of Motor Sich JSC . . . . . . . . . . . . . . 3
Basic Information about the Company . . . . . . .
- Information about the Company . . . . . . . . . . . . .
- Information about State Registration
of Motor Sich JSC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- Information about Statutory Capital. . . . . . . . . . .
- Information about Auditor . . . . . . . . . . . . . . . . . .
- Specialization of the Company . . . . . . . . . . . . . . .
- Corporate Strategy of the Company. . . . . . . . . . .
- Mission of the Company . . . . . . . . . . . . . . . . . . . .
- Positioning of the Company in Industry . . . . . . . .
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Structure of the Company . . . . . . . . . . . . . . . . .
- Business Units Located
at the Territory of Ukraine. . . . . . . . . . . . . . . . . .
- Subdivisions Having Rights to Open Current
and Settlement Accounts . . . . . . . . . . . . . . . . . .
- Subsidiary Companies . . . . . . . . . . . . . . . . . . . . .
- Health Resorts . . . . . . . . . . . . . . . . . . . . . . . . . . .
- Representative Offices
of Motor Sich JSC . . . . . . . . . . . . . . . . . . . . . . . .
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Management Bodies of Motor Sich JSC . . . . .
- The Board of Directors. . . . . . . . . . . . . . . . . . . . .
- General Meeting of Shareholders. . . . . . . . . . . .
- Supervisory Board . . . . . . . . . . . . . . . . . . . . . . . .
- Internal Audit Commission . . . . . . . . . . . . . . . . .
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Production Activity . . . . . . . . . . . . . . . . . . . . . . .
- Main Indices of Production
and Financial Activity . . . . . . . . . . . . . . . . . . . . .
- Production Activity
and Work in progress . . . . . . . . . . . . . . . . . . . . .
- Labour and Salary . . . . . . . . . . . . . . . . . . . . . . . .
- Advanced Technologies. . . . . . . . . . . . . . . . . . . .
- Certificates and Licences . . . . . . . . . . . . . . . . . . .
- Service Maintenance . . . . . . . . . . . . . . . . . . . . . .
- Priority Activities . . . . . . . . . . . . . . . . . . . . . . . . . .
- Prospects for 2013 . . . . . . . . . . . . . . . . . . . . . . .
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Foreign Economic Activity . . . . . . . . . . . . . . . . . 38
- Cash Inflow by Regions . . . . . . . . . . . . . . . . . . . . . . . . . 40
- Participation in Exhibitions . . . . . . . . . . . . . . . . 40
Financial and Economic Activity . . . . . . . . . . . . 44
- Credit Policy of the Company . . . . . . . . . . . . . . . 46
- Indices of the Company’s Financial Stability,
Business Activity and Credit Worthiness . . . . . . 47
Investment Activity
of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 48
- Capital Investments . . . . . . . . . . . . . . . . . . . . . . . 50
- The Company’s Investments
into Legal Entities . . . . . . . . . . . . . . . . . . . . . . . . 50
- Attraction of Budgetary Funds and Investments for
Financing the Development and Preproduct
on of New Kinds of Products in 2012 . . . . . . . . 51
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- Analysis of Changes in Cost
of the Company’s Shares . . . . . . . . . . . . . . . . . .
- Quantity and Structure of Shareholders. . . . . . .
- Information about Depositary
- Information about Custodier
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Main Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . .
- Industry Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- Legal Risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
- Risks Connected with
Production Activity of Emitter. . . . . . . . . . . . . . .
- Financial Risks . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Personnel and Personnel Policy. . . . . . . . . . . . .
- Personnel Structure . . . . . . . . . . . . . . . . . . . . . . .
- Personnel Development . . . . . . . . . . . . . . . . . . .
- Prospects of Personnel Policy for 2013 . . . . . . .
- Youth Policy of the Company . . . . . . . . . . . . . . .
- Social Sphere . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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Financial Statements. . . . . . . . . . . . . . . . . . . . . .
- Consolidated Balance Sheet . . . . . . . . . . . . . . . .
- Consolidated Statement
of Financial Performance . . . . . . . . . . . . . . . . . .
- Consolidated Statement
of Changes in Owner's Equity . . . . . . . . . . . . . . .
- Consolidation Principles . . . . . . . . . . . . . . . . . . .
- Main Aspects of Accounting Policy . . . . . . . . . .
- Notes to Financial Statements . . . . . . . . . . . . . .
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MOTOR SICH
Dear Shareholders, Colleagues and Partners!
Motor Sich JSC would like to present you its Annual
Report for 2012.
Speaking about the Company’s activity in the past year
we notice with satisfaction that Motor Sich JSC has finished reporting year with positive results. It is proved
by financial results of 2012.
The Company has no wage arrears. The wages are paid
out without delays, according to terms and conditions
of Collective Agreement.
Throughout its history Motor Sich JSC adheres to principles of fair and conscientious business. It allows us to
keep unblemished reputation and gain the trust of
partners from all over the world.
Successful creation of modern production facilities
and development of new kinds of highly demanded
products has proved correctness of our strategy.
Motor Sich JSC applies advanced means of corporate
management in order to increase transparency and
availability of information for shareholders and
potential investors.
Like in previous years, the Company pays great
attention to technical upgrading and reconstruction
of production facilities, repairing of buildings,
improvement of labour conditions for increasing the
output of main products.
The Company is concerned with personnel policy,
solution of social problems of emplyees and their
families, maintaining healthy moral environment
within the staff.
I would like to express thanks to the Company team,
our shareholders and business partners, all those
who help Motor Sich JSC in its successful activities
and stable development in pursuit of new goals.
Chairman of the Board of Directors,
Motor Sich JSC
V.A. Boguslayev
Basic Information
about the Company
MOTOR SICH
Information about the Company
n Information about State Registration of
Motor Sich JSC
n Information about Statutory Capital
n Information about Auditor
n Specialization of the Company
n Corporate Strategy of the Company
n Mission of the Company
Positioning of the Company in Industry
n
n
MOTOR SICH
BASIC INFORMATION ABOUT THE COMPANY
Short title: Motor Sich JSC
Full title: Motor Sich Joint Stock Company
Enterprise code: 14307794
Legal address: 15 Motorostroiteley Avenue, Zaporozhye 69068, Ukraine
Tel:
Fax:
E-mail:
Web-site:
(38 061) 720-48-14
(38 061) 720-50-00
[email protected]
www.motorsich.com
INFORMATION ABOUT STATE REGISTRATION
OF MOTOR SICH JSC
Place of registration – the Executive Committee of Zaporozhye City Council.
Date of state registration – 25.05.1994.
INFORMATION ABOUT STATUTORY CAPITAL
The statutory capital of Motor Sich JSC is UAH 280,529,650.00. It is divided into 2,077,990 simple registered
shares issued in book-entry form. Nominal value of each share is UAH 135.
Number of Certificate about registration of shares in book-entry form: 205/1/11
Registration body: the State Commission on Securities and Stock market.
ISIN code assigned to simple registered shares of Motor Sich JSC by the National Depositary of Ukraine: UA 4000143135.
Each simple registered share of Motor Sich JSC provides the same scope of rights to its owner (shareholder).
Motor Sich JSC is the first Ukrainian issuer who has implemented Global Depositary Receipt Program with
Deutsche Bank. Deutsche Bank Trust Company Americas is appointed the exclusive custody of Motor Sich global
depositary receipts (GDR). GDR/shares ratio is 10:1. Motor Sich JSC has taken up obligations to protect the rights
of GDR holders, inform them, granted the right to participate in the Company management and obtain part of
profit in the form of dividends, guaranteed possibility to convert GDR into shares.
6
ANNUAL REPORT
2012
INFORMATION ABOUT AUDITOR
Authenticity and completeness of financial reports of Motor Sich JSC for 2012 is confirmed by private auditing
company “ZaporozhAudit. Taxes. Law” (Enterprise Code 13625523) according to Agreement No 2729/09-Д
(General Accounting), dated 10.04.2009. Location of auditing company: 8 Tikhy Pereulok Street, Zaporozhye.
Date of state registration of private auditing company “ZaporozhAudit. Taxes. Law” – 21.01.1994; Enterprise
code – 1 103 120 0000 012930. Certificate of Auditing Chamber No. 0057, dated 26.01.2001, about registration as an auditing entity. Validity term of Certificate is extended till November 04, 2015.
SPECIALIZATION OF THE COMPANY
Development and production of gas turbine engines for military and civil aviation, industrial units for ground
application (Gas-turbine power plants, Gas pumping units, Combined heat and power plants), modernization
of helicopter equipment.
CORPORATE STRATEGY OF THE COMPANY
Corporate strategy of Motor Sich JSC is based on the large-scale diversification of production, strengthening and
expansion of its positions in the market of aviation equipment and its support services, realized in the following
basic strategic directions:
n development and implementation of special programmes on manufacture of competitive products;
n expansion of sales and services markets;
n improvement of marketing activity;
n creation of efficient high-technology production facilities as a result of their technical upgrading;
n arrangement of efficient quality management system.
MISSION OF THE COMPANY
Motor Sich JSC works to be the best company in the sphere of aviation engine-building.
Based on successful 100-year activity of the Company, utilizing our highest intellectual potential, using unique
advanced technologies, in close cooperation with our business partners, we make Ukraine an aviation power.
Basic Information About the Company
7
MOTOR SICH
POSITIONING OF THE
COMPANY IN INDUSTRY
Motor Sich JSC is a specialized enterprise, which
basic products are gas turbine engines for civil and
military aircraft, created on their basis industrial
gas turbine drives for power and gas-pumping stations, as well as gas turbine power stations and
gas-pumping units with these drives.
Tens of thousands of engines produced by Motor
Sich JSC are installed in aircraft of worldwide
known firms: Antonov, Ilyushin, Beriev, Tupolev,
Yakovlev, Kamov, Mil, Czech “Aero Vodochody”
and Chinese NAMC. They are operated in civil
and military aircraft of more than 120 countries
of the world.
Many engines of the Company became world leaders in their class: AI-25TL turbojet engines are used
in more than three thousand training airplanes and
training-combat airplanes in 42 countries of the
world; helicopter engines of TV3-117 family are
used in 64 countries of the world in all helicopters
of average carrying capacity produced in Russia; D18 engine are used for “Ruslan” and “Mriya” that
are the highest capacity transport airplanes in the
world; D-136 is the most powerful engine in the
world for Mi-26 helicopters, etc.
In order to occupy new market niche, Motor Sich
JSC is now developing, overhauling and upgrading
helicopters under its own Helicopter Engineering
Programme.
Taking into account achievements of the Company
in helicopter engineering, Vyacheslav Boguslayev,
Chairman of the Board of Directors of Motor Sich
JSC, was given authority of the General Designer
for manufacture and upgrading helicopter equipment by Order of the Cabinet of Ministers of
Ukraine No. 906-р, dated 14.11.2012.
Production Plan of the Company includes industrial
power-generating sets. Motor Sich JSC manufactures gas-turbine drives with power of 2.5, 6.3, 8
MW, gas-turbine power-generating sets with output of 2.5, 6 MW.
Except for main aircraft and industrial products,
the Company manufactures wide range of consumer goods.
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Motor Sich JSC is a part of aviation industry complex of
Ukraine. Traditionally, it is deeply integrated with
enterprises of aviation industry of Russia.
At the present time, Motor Sich JSC performs the
following prospective works:
In the sphere of mass production — improvement of
wear characteristics of D-18T engines and their modifications, AI9-3B, TV3-117VMA-SBM1, D-36 engines
of all series, TV3-117V, D-436TP, D-436-148, AI-450МS families.
There was started mass production of:
n AI-222 engines for Yak-130, L-15 and other combat
trainers produced in Russia and China;
n TV3-117VMA-SBM1V engines designed for
upgrading a huge fleet of “Mi” and “Ka” helicopters
all over the world, as well as for installation in new
helicopters;
n TV3-117VMA-SBM1V series 4 and 4E engines
designed for upgrading Mi-8T helicopters;
n small MS-400 engines for unmanned aerial vehicles.
There was developed, prepared to pilot and mass
production:
n AI-25TLSh engine, a new modification of AI-25TL
engine, for upgrading L-39 training airplanes;
n TV3-117VMA-SBM1V series 1 engine with Full
Authority Digital Engine Control (FADEC) and
TV3-117VMA-SBM1V series 2 engine with
upgraded automatic control system and improved
performance characteristics for Mi-28, Mi-17 and
other helicopters.
n MS-14 engine for upgrading An-2 and for installation in new short-range aircraft;
n MS-500V turbo-shaft engine for helicopters with
take-off weight from 3.5 to 6 t;
n small MS-400H and MS-450 engines for unmanned
aerial vehicles;
n D-436TP-М engine with thrust reverser for upgraded Bе-200 aircraft;
ANNUAL REPORT
D-436-148FМ engine for An-178 transport aircraft;
D-27 engine for Аn-70 military transport aircraft;
n AI-450М/М1 engines for upgrading Mi-2 helicopter;
n AI-9V-1 auxiliary power unit for “Mi” and “Ка” helicopters;
n D-36MB engine for Аn-74 aircraft;
n
n
2012
AI-450S and AI-450S2 for general purpose aircraft;
creation of test benches for development of the
engine main units and different special tests;
n gas-turbine drives and power generating sets for Russia
and Ukraine, including combined heat and power plants
with gas-steam cycle or cogeneration cycle.
n
n
Basic Information About the Company
9
Structure of the Company
MOTOR SICH
Business Units Located
at the Territory of Ukraine
n Subdivisions Having Rights to Open Current
and Settlement Accounts
n Subsidiary Companies
n Health Resorts
Representative Offices of Motor Sich JSC
n
n
MOTOR SICH
BUSINESS UNITS LOCATED
AT THE TERRITORY OF UKRAINE
Zaporozhye
Machine-Building Plant
named after V.I. Omelchenko
Year of foundation – 1988.
Areas of activity:
n testing of aircraft engines;
n assembly and testing of EG-1000 and EG-6000
gas-turbine power generating sets;
n testing of 6.3, 8, 10 MW D-336, AI-336 gas-turbine drives;
n testing of D-18T engines;
n manufacture of blades;
n foundry.
Volochysk MachineBuilding Plant (VMZ)
Areas of activity:
n mass production of parts and metal products for
aircraft engines;
n production of technological tooling;
n overhaul of AI-20 engine and its modifications;
n production of EG-1000, PAES-2500 power generating sets;
n manufacture and assembly of GTE-MS-2,5; AI-2500M
power drives;
n production of consumer goods with special emphasis on a wide range of mufflers for motor cars and
agricultural equipment.
Snezhnoye MachineBuilding Plant (SMZ)
Areas of activity:
n production of blades for gas-turbine engines;
n production of parts and assembly units for mining
equipment;
n production of consumer goods with special emphasis on agricultural and utility equipment.
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Airline
Aircraft fleet of the Airline:
An-74ТК-200. . . . . . 1
An-12B . . . . . . . . . . . 1
An-12BК . . . . . . . . . 1
An-140 . . . . . . . . . . . 1
An-24RV . . . . . . . . . 2
Yak-40 . . . . . . . . . . . 2
Mi-8 . . . . . . . . . . . . . 1
Mi-2 . . . . . . . . . . . . 3
Airline has representative offices in the following cities
and countries:
n Kiev – 2 representative offices (Zhyliany and
Borispol airports)
n Istanbul/Turkey – “CASIO AIR SERVIS” Company
International codes:
IАТА code - М9
ICAO code - MSI;
Traffic documents code - 011.
Airline performs:
а) Regular passenger flights:
n Zaporozhye-Borispol-Zaporozhye;
n Lugansk-Borispol-Lugansk;
n Zaporozhye-Moscow-Zaporozhye (code sharing
agreement with “YuTair Ukraine” Airline about joint
flight operation)
b) passenger and cargo charter flights all over the world.
Tickets for the flights of Motor Sich Airline may be
reserved through the following Global Distribution
Systems (GDS):
Amadeus
Galileo
n TAIS
n Sirena-Travel.
n
n
ANNUAL REPORT
2012
SUBDIVISIONS HAVING RIGHTS TO OPEN CURRENT
AND SETTLEMENT ACCOUNTS
Lubny Machine-Tool Plant (Lubny, Poltava region)
Pervomaisk Accessories Plant (Pervomaisk,
Lugansk region)
n Kiev Accessories Plant (Kiev)
n Calibration Center (Zaporozhye)
n Construction Management and Social Development
Department (Zaporozhye)
n Canteen Center (Zaporozhye)
Company Store “MOTOR SICH” (Zaporozhye)
Medical and Sanitary Department of Motor Sich JSC
(Zaporozhye)
n Preschool Education Center (Zaporozhye)
n Sports Complex (Zaporozhye)
n Vinnitsa Aircraft Plant (Vinnitsa)
n subsidiary companies
n
n
n
n
SUBSIDIARY COMPANIES
The Company has founded the following subsidiaries
that are carrying out their activities at the present time:
n
Gulaypole Machine-Building Plant
17, 9th January Street, Town of Gulaypole, Zaporozhye
region, Ukraine
Lebedin Engine-Building Plant
18 Grushevaya Street, Town of Lebedin, Sumy region,
Ukraine
Main areas of activity:
n development, preparation and organization of
research and mass production of machine-building
products;
n production, procurement and sales of agricultural
products;
n provision of services to people on repairing and
maintenance of motor vehicles, as well as delivery of
spare parts for them;
n sales of process equipment, cars and tractors withdrawn from process usage.
n development, preparation and organization of pilot
and mass production of machine-building products;
n sales of manufactured products;
n manufacture of industrial products, consumer
goods, fuels and oils.
n
production of paint-and-lacquer materials;
production of metal and cardboard containers.
Share of Motor Sich JSC in statutory capital of the above
subsidiary companies is 100%.
Gulaypole Mechanical Plant
2 Kotovskogo Street, Zheleznodorozhnoye village,
Gulaypole district, Zaporozhye region, Ukraine
n preparation and organization of research and serial
production of aircraft engines, aviation equipment
and property;
n manufacture of electrical machines, equipment and
devices, industrial products;
n manufacture of agricultural machines, process equipment for textile industry, agricultural and garden tools;
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MOTOR SICH
HEALTH RESORTS
Health Resort “Priboy”
tennis courts with special cover;
two thousand meters of sport grounds;
n gym;
n billiard, cinema and concert halls;
n excellent national cuisine;
n indoor swimming pool.
n
n
Location: Primorsk, Zaporozhye region (Azov seashore).
Capacity: 7 comfortable buildings for 490 persons.
Number of vacationers per year: about 3 thous. persons.
Activity: family recreation.
Main advantages:
n comfortable rooms;
n nutritious food;
n equipped beach;
n gymnasium;
n various leisure facilities;
n indoor swimming pool.
Health Resort “Motor”
Location: Primorsk, Zaporozhye region (Azov seashore).
Capacity: 4 comfortable buildings for 500 persons
Number of vacationers per year: more than 3 thous.
persons.
Main advantages:
n comfortable, family atmosphere; perfect living
conditions;
n the best equipped beach at the Azov seashore;
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Medical-Care Vacation Hotel “Horizont”
Location: Alushta (South coast of the Crimea)
Capacity: 3 dormitory blocks for 500 persons.
Number of vacationers per year: more than 4 thous.
persons.
Specialisation: medical treatment of diseases of respiratory organs, functional diseases of nervous system,
as well as ear, nose and throat diseases.
Main advantages:
n picturesque scenery, clean air, warm sea;
n qualified medical service;
n balanced diet;
n various leisure facilities;
n equipped sports and play grounds;
n chain of stores and cafes.
ANNUAL REPORT
Sanatorium “Raduga”
Location: Volochysk
Sanatorium can accomodate 100 resting persons at the
same time.
Specialization: treatment of gastrointestinal tract
Main advantages:
n ancient dendrological park, lake, the Zbruch river;
n sporting grounds, “Terrainkur” paths for dosed
walking;
n fishing in summer period, sleighing and skiing in
winter period;
n gym, library, billiards, evening parties;
n Well No. 35 of “Kryshtaleva krynytsa” mineral
water;
n two well-rooms with water of different temperature;
n skilled medical service.
2012
Capacity: 6-storey building (with two lifts) for 250
persons
Time schedule: year-round.
Specialization: treatment of locomotor system, peripheral nervous system, upper respiratory tracts, cardiovascular system, digestive organs;
Main advantages:
n comfortable double rooms;
n balanced diet;
n qualified medical service;
n presence of all natural and medical factors that are
necessary for health improvement.
n “Terrainkur” paths for dosed walking, sporting
ground, beach, billiards, sauna;
n cinema and concert hall for 300 persons;
n There are conducted evening parties - discos, concerts. There are shown interesting movies.
Besides, sanatorium-preventorium arranges seminars,
conferences, trainings, banquets, professional holidays.
Sanatorium-preventorium
of Motor Sich JSC
Sanatorium-preventorium of Motor Sich JSC is located
30 km from Zaporozhye in picturesque park area on
the bank of the Dnieper river.
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Representative offices
of Motor Sich JSC
USA
Ukraine
30 Shelkovichnaya Street, Kiev, 01024, Ukraine
Phone: +38 044 253 9105, +38 044 253 4083,
Fax: +38 044 253 9034
E-mail: [email protected]
Director: Gennady Alekseyevich Barbinov
Brazil
Russia
14 Novopeschanaya Street, Moscow, 125252, Russia
Phone: +7 495 411 5155, Fax: +7 495 411 5155
Http://www.motorsich.ru
Director: Petr Ivanovich Kononenko
China
Representative Office
Asia Hotel, Office #403, #8 Gongti bei lu, Xinzhong xi
jie, Doncheng District, Beijing, 100027, China
Phone: +8610 65515762, Fax: +8610 65515762
Director: Oksana Nikolayevna Borukha
U.A.E.
Regional Office
Plot F4-02, SAIF Zone, Sharjah, U.A.E.
Phone: +9 716 557 8097, Fax: +9 716 557 8098
Director: Alexander Alexandrovich Lukyanov
Algeria
Regional Representation
81, Lotissement EI Feth, "Les Sables Rouges", El Biar,
Algiers, Algeria, 16030
Phone: +213 21 92 3720, Fax: +213 21 79 8749
Director: Nikolai Anatolyevich Suprun
India
India Liaison Office
24 Ferozeshah Rd., New Dehli, 110001, India
Phone: +91 114 350 4903, Fax: +91 114 350 4902
Director: Andrey Yevgenievich Miliukov
Belarus
Russia
Ukraine
China
Algeria
U.A.E.
Bangladesh
India
Uganda
Belarus
Bangladesh
Representative Office BS GROUP
House #199, Road #1, DOHS Mohakhali, Dhaka-1206,
Bangladesh
Phone: +88-02-8715530/8834617
Fax: +88-02-8824107
E-mail: [email protected], [email protected]
Director: Valery Vasilyevich Tychkov
131 Bogdanovicha Street, Minsk, 220123.
Phone: +003 751 73342157
Director: Petr Ivanovich Rogazhevsky
Brazil
SQS 403, Bloco R, Apt. 306, Brasilia
Mobile: +55 61 8328 0212
Representative: Sergey Yuryevich Chernyshev
USA
Uganda
1375, Coney Island Ave., Brooklyn
New-York, 11230, USA
Mobile: +00 134 775 567 84
e-mail: [email protected]
Director: Valery Vasilyevich Tychkov
13, Gowers St., Entebbe,Uganda
Phone: + 256 414-320-794
Fax: + 256 414 321-071
Representative: Victor Iosifovich Makukh
Management Bodies
of Motor Sich JSC
MOTOR SICH
The Board of Directors
n General Meeting of Shareholders
n Supervisory Board
n Internal Audit Commission
n
THE BOARD OF DIRECTORS
Pavel Dmitrievich
ZHEMANYUK
Deputy Chairman of the
Board of Directors,
Technical Director of
Motor Sich JSC
Mikhail Naumovich
BEREZOVSKY
Deputy Chairman of the Board
of Directors, Director of
Construction and Social
Development of Motor Sich JSC
Vladimir Timofeyevich
SHIRKOV
Deputy Chairman of the Board
of Directors, Marketing
Director of Motor Sich JSC
Roman Sergeyevich
GARANENKO
Member of the Board of
Directors, Quality Director of
Motor Sich JSC
Vladimir Borisovich
SEMENOV
Directors, Director of
Corporate Law and
Investment Projects
of Motor Sich JSC
Alexander Petrovich
NEDASHKOVSKY
Directors, Director of
Snezhnoye Machine-Building
Plant of Motor Sich JSC
MOTOR SICH
Sergei Anatoliyevich
VOITENKO
Deputy Chairman of the
Board of Directors,
Production Director of
Motor Sich JSC
Olimpy Valerianovich
POKATOV
Directors, Director of Human
Resources Department of
Motor Sich JSC
Konstantin Ivanovich
GORBIK
Ruslan Alexandrovich
PIDORICH
Directors, Head of Youth, Culture
and Public Relations Department
of Motor Sich JSC
Directors, Deputy Technical
Director of Tool Production of
Motor Sich JSC
Viktor Alekseyevich
LUNIN
Directors, Financial
Director of Motor Sich JSC
MOTOR SICH
GENERAL MEETING OF SHAREHOLDERS
MANAGEMENT BODIES OF MOTOR SICH JSC:
General meeting of shareholders (superior body);
Supervisory Board;
n Board of Directors (executive body);
n Internal Audit Commission.
n
n
Management bodies of Motor Sich JSC pay particular
attention to honesty, openness, efficiency, responsibility and achievement of the specified objectives.
Authorities and obligations of management bodies
are clearly divided and balanced. Corporate management system of Motor Sich JSC is built according
to international standards, the best world experience and current legislation of Ukraine. It provides
efficient cooperation between management and
control bodies, as well as external auditors and all
interested parties (shareholders, contractors, state
bodies); monitoring of the Company's activity for
achievement of the specified objectives.
COMPETENCE OF GENERAL MEETING
OF SHAREHOLDERS
General meeting of shareholders is the superior
management body of Motor Sich JSC. General meeting of shareholders may solve all questions related to
the Company’s activity. Questions that are in exclusive competence of general meeting of shareholders
are stipulated by current legislation, the Company’s
Statute and may not be submitted to other bodies of
the Company.
CORPORATE MANAGEMENT SYSTEM
OF MOTOR SICH JSC
Corporate management of the Company is a system of
relations between investors (owners of the Company),
its managers, and interested parties for provision of
efficient activity of the Company, equal influence of
parties and balance of corporate interests. Corporate
management creates system of levers and counterbalances for correlation of interests of senior managers,
shareholders and other interested parties.
22
CORPORATE MANAGEMENT SYSTEM OF
MOTOR SICH JSC IS BASED
ON THE FOLLOWING PRINCIPLES:
The Company protects rights of shareholders.
The Company provides equal attitude to all shareholders, including minority and foreign shareholders.
n The Company acknowledges legal rights of the interested parties and encourages active cooperation
between the Company and all interested parties for
increase of social wealth, creation of new work places
and achievement of financial stability of the Company.
n The Company provides timely disclosure of reliable
information about all important aspects of the
Company activities, including data about financial
state, results of business activity, structure of shareholders and management.
n The Board of Directors provides strategic business
management and efficient control of all managers. It
regularly reports to its shareholders and the Company.
n
n
COMPETENCE OF THE BOARD
OF DIRECTORS OF MOTOR SICH JSC
The Board of Directors is a permanent executive body
of the Company that controls its current activities.
The Board of Directors, within its powers stipulated by
effective legislation, Statute and corporate documents
of the Company, makes decisions, concludes agreements and acts otherwise on behalf of the Company in
order to achieve the Company’s objectives.
The Board of Directors consists of 12 persons. Term of
powers is 4 years.
ANNUAL REPORT
2012
SUPERVISORY BOARD
Chairman of the Supervisory Board,
Director of Public Relations of
Motor Sich JSC
Petr Ivanovich
KONONENKO
Member of the Supervisory Board,
Director of Moscow Representative
office of Motor Sich JSC
Date of birth: 15.04.1956
Education: higher
Education: higher
Alexander Vyacheslavovich
BOGUSLAYEV
Valery Mikhailovich
LOGVIN
Director of Catering Center of
Motor Sich JSC
Anatoly Nikolayevich
MALYSH
Deputy Chairman of the Supervisory
Board of Motor Sich JSC, Deputy
Director of International Technical
Center of Motor Sich JSC
Education: higher
Education: higher
Director of Transport and Production
Administration of Motor Sich JSC
Mikhail Ivanovich
TRUSH
Chairman of Trade Union
Committee of Motor Sich JSC
Education: higher
Education: higher
Yury Mikhailovich
GRECHIKHA
Assembly fitter of workshop No. 31 of
Motor Sich JSC
Svetlana Alexandrovna
KHOREVA
Head of Finance-and-Economy
Education: specialized secondary
Education: higher
Mikhail Nikolayevich
MOLCHANOV
Competence of the Supervisory Board of Motor Sich JSC
The Supervisory Board of Motor Sich JSC is a body that protects rights of the
Company’s shareholders and, within its competence stipulated by Laws and
Statute, controls and regulates activities of the executive body.
The Supervisory Board consists of 9 persons. Term of powers is 2 years.
MOTOR SICH
INTERNAL AUDIT COMMISSION
Alexander Nikolayevich Polyviany
Chairman of Internal Audit Commission,
Deputy Head of Finance-and-Economy
Administration, Head of Labour and Wages
Department of Motor Sich JSC
Education: higher
Sergei Nikolayevich Vishnevsky
Member of Internal Audit Commission, Director of
Aviation Engine Production, Head of Production
Education: higher
Liudmila Ivanovna Zavgorodniaya
Member of Internal Audit Commission,
Chief Doctor of Medical and Sanitary
Department of Motor Sich JSC
Education: higher
Andrey Valentinovich Zinchenko
Member of Internal Audit Commission, Head of
Personnel Administration of Motor Sich JSC
Education: higher
24
ANNUAL REPORT
2012
Valentin Grigoryevich Pasternak
Director of Volochysk Machine-Building
Plant of Motor Sich JSC
Education: higher
Leonid Alekseyevich Pirogov
Deputy General Designer of Motor Sich JSC
Education: higher
Alexander Mikhailovich Pospelov
Director of Procurement Administration
of Motor Sich JSC
Education: higher
Competence of Internal Audit Commission of Motor Sich JSC
Internal Audit Commission carries out internal control and audit of financial and economic
activity of the Company.
Internal Audit Commission consists of 7 persons. Term of powers is 4 years.
Management Bodies of Motor Sich JSC
25
Production Activity
MOTOR SICH
Main Indices of Production and Financial Activity
n Production Activity and Work in progress
n Labour and Salary
n Advanced Technologies
n Certificates and Licences
n Service Maintenance
n Priority Activities
Prospects for 2013
n
n
MOTOR SICH
MAIN ASPECTS OF PRODUCTION AND
FINANCIAL ACTIVITY
n
Growth rate of production volume in comparable prices to 2011 – 115.6%;
n
Volume of industrial products shipped to the Customers is by 22.9% more than in 2011;
n
Specific weight of aviation equipment in the sold products – 92.3%;
n
Export share in the income from sold products – 93.1%.
n
Profitability of sales – 29.4%
Structure of products sold by Motor Sich JSC
in 2012 (%)
6,3
1,4
400
347
350
8,3
19,8
Income from sold products, works and services
during 2008 – 2012 period.
282
300
64,2
243
250
182
200
150
100
50
Mass-produced aircraft engines
313
258
214
165
100
2008
2009
2010
2011
2012
Overhauled aircraft engines
Other aviation equipment
Total income from sold products, works
and services:
General-purpose products
Consumer goods
28
including aviation equipment
ANNUAL REPORT
2012
PRODUCTION ACTIVITY AND
WORK IN PROGRESS
Motor Sich JSC delivered products according to the
concluded contracts in 2012. There were executed
276 contracts for the delivery of mass-produced and
overhauled engines, drives, power generating sets.
Specific weight of sold products in 2012 is as
follows:
6,3
There were performed works related to development
and introduction into production of the following consumer goods:
There was manufactured pilot batch of “Motor Sich
MBE-1” hosehold electrical oil mill;
n
There was manufactured batch of “Motor Sich MB8E” walking tractors equipped with electric starter,
hood and fenders;
n
There was manufactured pilot batch of “MS-470”
and “MS-475” petrol-powered saws with improved
technical characteristics and new design;
n
1,4
There was performed upgrading of electrocars into
gas-fired motor cars with “МS10P-03” engine;
n
There were manufactured upgraded outboard
motors “МS-40E” and “МS-40ED”.
n
92,3
Aviation equipment
General-purpose technical products
Consumer goods
In addition to production of engines the Company performed 98 contracts for the delivery of spare parts (55
of them – non-CIS countries, 40 – Aircraft Repair
Plants in Russia).
In 2012 there were sold consumer goods to the
amount of 97.5 mln. UAH.
There were continued works on implementation of
mass-production of several new aviation products in
the course of the year. There were manufactured:
4 МS-500V engines;
n 2 АI-450М engines;
n 4 MS-14 engines;
n 2 АI-450S engines;
n
There were prepared to production and were manufactured parts of prototype МS-500UBE, ТV3-117VМАSBМ2V, D-136-2 engines.
The company has allocated 116.6 million UAH of
own assets into the development and preparation to
mass production of new types of aviation products,
general technical products and consumer goods. This
amount will reach 609.3 million UAH, if we take into
account expenses for procurement of equipment,
manufacture and modification of test benches, performance of research and development works.
As of 01.01.2013, the process stock at Motor Sich JSC
amounted to 3,207.5 million UAH. During year 2012
the process stock increased by 867.9 million UAH
(37.1%). Main production process stock increased by
827.9 million UAH (36.5%), auxiliary production
process stock increased by 40.0 million UAH (57.8%).
The reasons for increase of main production process
stock were: increase of prices for material resources, creation of process stock for shipments in year 2013, development and manufacture of prototypes of new products.
Percentage of main products in the process stock:
n
n
As of 01.01.2012 – 97.0%;
As of 01.01.2013 – 96.6%.
Process stock created in 2012 will ensure uninterrupted and continuous work of the Company in
year 2013.
Production Activity
29
MOTOR SICH
LABOUR AND SALARY
The Company’s labour remuneration system provides
fair remuneration for employees’ labour depending on
complexity and conditions of work, employee’s professional and business qualities, results of the employee’s
work and economic activity of the Company’s corresponding subdivision.
Motor Sich JSC has introduced new wage rates and official salaries from July 01, 2012 in order to increase
social standards for all categories of the Company
employees pursuant to Law of Ukraine.
Increase of average wages from January till December
2012 has made 8.6%.
Average salary of production and industrial personnel
in December 2012 have amounted to 3,731 UAH,
industrial workers of main shops – 4,123 UAH, chief
foremen – 5,560 UAH, foremen – 4,136 UAH.
Motor Sich JSC occupies 10th place among 40 industrial enterprises of Zaporozhye as per salary level.
The Company constantly analyzes average salary of
all categories of workers, efficiency rate, labour
force data. Average efficiency rate has made
117.2% in year 2012.
The Company has no wage arrears, as well as tax
arrears to budgetary and extra-budgetary funds.
The Company’s labour force has increased by 6% in
2012. Labour force structure has changed due to the
increased amount of direct workers from 38.4% as of
01.01.2012 to 38.9% as of 01.01.2013.
Labour fluctuations has made 0.56% in year 2012.
The Company’s staff on the payroll during 2008 –
2012 (persons)
25 000
23 841
21 236 20 832
20 000
15 000 19 573 19 248
10 000
7 042
7 206
25 267
21 860
20 264
7 858
22 228
9 024
23 628
9 694
5000
2008
2009
2010
2011
2012
Total
including production and industrial
personnel
thereof direct workers and apprentices
Growth of average salary of the Company
employees in 2008 – 2012
3750
3295
2748
3000
2250
3577
1871
1500
1821
2135
3212
3488
2678
2080
750
2008
2009
2010
2011
2012
of a worker
of a production and industrial employee
2,1
Qualitative indices of personnel: Structure of production and
industrial personnel by categories, %
32,3
5,1
Industrial workers — 41.0%
41,0
Auxiliary workers — 19.5%
Quality control personnel — 5.1%
Engineers and technicians — 32.3%
19,5
30
Other categories — 2.1%
ANNUAL REPORT
2012
ADVANCED TECHNOLOGIES
Manufacture of aircraft engines which should be capable to compete with the products of the leading world
companies requires continuous improvement of production processes with due consideration of the latest
achievements of science and engineering.
Motor Sich JSC carries out the following activities in
this respect:
Implementation of new production processes:
n defect-free single-step braizing of HPT rotor blades
of АI-222 engine;
n vacuum brazing of steel tubular heat exchangers;
n carbonitriding with controlled carbon potential;
n casting of HPT rotor blade parts of АI-222 engine
with redesigned blanks;
n casting of IPT spacers of D-18Т engine with modified
feeding of cast products;
n casting of Fan Turbine rotor blades of D-18Т engine
with usage of ceramic filters;
n manufacture of titanium alloy bushings of “78” and
АI-450МS engines by means of powder metallurgy;
n restoration of magnesium casing of АI-222-25
engine by means of gas-dynamic spraying;
n restoration of worn-out surfaces by means of gasthermal spraying;
n thermostabilizing annealing of large-size thrust
reverser rings of D-436TP engine that are made of
АК4-1 alloy.
Implementation of advanced blanks:
n precision investment casting of heat-resistant and
structural alloys;
n precision centrifugal investment casting of titanium alloys;
n casting of monocrystal blades made of ЖС32, ЖС26
heat-resistant alloys;
n metal mould casting of magnesium and aluminum alloys;
n precise casting of large-size parts made of nonferrous alloys.
Joint research and development:
n with UkrNIIspetsstal Institute on enhancement of
process paremeters of hot isostatic pressing of
encapsulants with granules made of ЭП741НП alloy
in hot isostatic press QIH 0.9х1.5 for manufacture of
turbine disks;
n with Zaporozhye National Technical University on
complex investigation and development of methods of
repair of GTE parts made of high-alloyed titanium
compounds by means of welding using nanostructured additive materials;
n with Kharkov Physics and Technology Institute on
enhancement of process paremeters of hot isostatic
pressing of high-duty cast products made of titanium
and heat-resistant alloys;
n with Research and Development Centre “Advanced
Technologies” of Electric Welding Institute named after
Paton on development of thermal protective coating
for blades of АI-450-МS engine.
Information technologies:
The Company carries out purposeful works on application of computer-integrated technologies.
Main activities:
n development of Computer-Aided Design (CAD)
System for designing of aircraft engines, enhancement
of its functionality due to special complex calculation
and simulation systems.
n development of Computer-Aided Process Engineering
System;
n development of Management Integrated Control
System (MICS) on the basis of SAP solutions;
n creation and development of Integrated Product
Operation Support System;
n system integration of above mentioned systems and
formation of integrated data field of the Company;
n manufacturing application of CAD\CAM software:
Unigraphics, ADEM, MAGMASOFT, IMS-software;
n development of control software.
There was imported new process equipment, as
well as components and spare parts to it:
n DOOSAN LYNX220LM CNC machining center;
n PHOENIX II 275G semiautomatic gear-grinding
machine for Gleason-type conical gears;
n OMICRON 1000-ET5 multipurpose circular grinding
machine;
n LINEA IRON multipurpose surface-grinding machine;
n SARIX SX 200 HPM electrical discharge machine;
n AF-36 FLEMING air flow metering system;
n BOEHRINGER VDF32M CNC semiautomatic lathe;
n TRENS SBL300 CNC semiautomatic lathe.
Production Activity
31
MOTOR SICH
CERTIFICATES AND LICENCES
1. Certification of quality management system,
production and overhaul
Extended the term of “Repair Organization Certificate” No. СПР-11
untill 12.04.2014;
n
Confirmed validity of Quality Management System Compliance Certificate No.
ВР 27.1.4223-2011; issued by Certification Center “Gosaviasertifica” (Russia);
n
Confirmed validity of Quality System Compliance Certificate No. UA 226244;
issued by Bureau Veritas Certification;
n
n Confirmed validity of Quality System Compliance Certificate No. РОСС
UA.ИС25.К00031; issued by Certification Center “Quality” (Russia);
n Confirmed validity of Quality System Compliance Certificate No.
HTI/130-009/2010; for compliance with requirements of AQAP-2110
Standard (NАТО);
Received Maintenance Organization Certificate No. UA.145.0026; the
State Aviation Administration of Ukraine.
n
2. Type certificates for aviation equipment, ground equipment
and consumer goods
2.1. Received:
n Amendment to Type Certificate for АI-450-МS auxiliary power unit
No. СТ260-ВД/Д07, dated 24.04.2012 (AR IAC);
Amendment to Type Certificate No. СТ 267-АМД/Д05, dated 27.04.2012,
for ТV3-117VМА-SBМ1V engine (AR IAC);
n
n Data Sheet to Type Certificate No. ТД 0035 ver.3, dated 18.01.2012, for
extension of ТV3-117VМА-SBМ1V engine service life (the State Aviation
Administration of Ukraine);
Data Sheet to Type Certificate No. ТДД 0009 ver. 05, dated
28.08.2012, for extension of АI-450-МS engine service life (the
State Aviation Administration of Ukraine);
n
Aviation Equipment Developer’s Certificate No. Р-56, dated
13.07.2012 (AR IAC);
n
Certificate of Conformance No. UA1.050.0241034-12, dated
27.12.2012, for “Motor Sich МB-8” walking tractor (INPOMT, Ukraine);
n
Type Approval Certificate No. ODC 0550-0209/3.1 for D-336-1/2,
D-336-1/2-E, D-336-2Т, D-336-2Т-E, АI-336-2-8, АI-336-2-8-E,
GTE-6,3/МS, GTE-6,3/МS-E, GTE-8/МS, GTE-8/МS-E gas turbine
drives, dated 27.06.2012 (“SGS-UKRAINE”);
n
n Certificate of Conformance No. РОСС UA.ME22.H00299 for Motor
Sich PAES-2500 gas turbine power generation set and its modifications, dated 03.09.2012 (Kursk, Russia);
n Certificate of Conformance No. POCC UA.ME22.H00300 for Motor
Sich EG 6000Т-Т10500-3ВНМ1УХЛ1 gas turbine power generation
set, dated 03.09.2012 (Kursk, Russia);
32
ANNUAL REPORT
2012
n Certificate of Conformance No. C-UA.MХ04.В.00143 for D-336-1/2,
D-336-1/2 E, D-336-2Т, D-336-2Т-E, АI-336-2-8, АI-336-2-8-E gas
turbine drives, dated 08.08.2012 (Certification Center “Quality”, Russia);
Expert Advice No. 712, dated 03.04.2012, on conformity of products to Unified sanitation-and-epidemiological and hygienic requirements to goods subject to sanitation-and-epidemiological supervision (Research Center “Health”, Russia);
n
Approval No. РРС 00-046664, dated 19.01.2012, for application
of GTE-6/6,3 М1УХЛ1 gas turbine power generation set (Federal
Service of Ecological and Atomic Supervision, Russia);
n
n Data Sheet to Additional Type Certificate No. ДТВ-0003, dated
22.08.2012, for Мі-8МSB helicopter.
Licenses
Licence АД No. 041410, dated 02.07.2012, “Rendering of educational
services by educational institutions”, issued by the Ministry of Education and
Science, Youth and Sport of Ukraine;
n
n Licence АB No. 419865, dated 23.11.2011, “Rendering of preschool educational services”, issued by Department of Education and Science of
Zaporozhye Regional State Administration;
Licence АГ No. 592046, dated 22.12.2011, “Rendering of passenger and
dangerous cargo transportation services by motor vehicles”, issued by the
Ministry of Transport and Communications of Ukraine;
n
n Licence АВ No. 472038, dated 23.09.2009, valid from 27.08.2009 untill
26.08.2014, “Natural gas supply at uncontrollable tariff”; issued by National
Power Control Commission of Ukraine;
Licence АВ No. 583195, dated 20.06.2011, valid untill 27.08.2014,
“Rendering of fixed local telephone services”; issued by National Power
Control Commission of Ukraine;
n
Licence АГ No. 600416, dated 06.07.2012, “Medical practice”, issued by
the Ministry of Health of Ukraine;
n
Licence АВ No. 583195, dated 20.06.2011, “Rendering of fixed local
telephone services”; issued by National Communications Control
Commission of Ukraine.
n
Production Activity
33
MOTOR SICH
SERVICE MAINTENANCE
Motor Sich JSC has an after-sales service division
(Product Support Department – PSD) that provides
technical support of all manufactured aircraft engines
within the whole period of their operation.
PSD is the main link connecting the Company with
numerous operating organizations.
All PSD relations with customers are regulated by the
concluded contracts: at present, more than 346 contracts are in force, as well as 274 additional agreements to them concerning technical support of
engines, extension of service life, performance of light
overhaul in service, and other services.
In 2012, Product Support Department:
has rendered various services to the amount of
247.2 mln. UAH;
n
has performed light overhaul of 78 engines:
thereof in service conditions - 54, at technical
Centers (Technical Center “МSME” in UAE;
Technical Center “Borisfen-Avia” in Russia) – 24;
n
n continued to master new production processes
for light overhaul in service of AI-93B, AI-450-МS,
D-436-148, ТV3-117VМА-SBМ1V, VK-2500,
D-336-2-8, D-436ТP engines;
n has performed theoretical and practical training
of 9 groups of foreign specialists in all aspects of
engine maintenance.
The sphere of PSD activity has become wider, as new
gas-pumping stations were put into operation in Iran,
Turkey, Turkmenia, Uzbekistan, Belarus, Russia,
Azerbaijan, Kazakhstan. Total of 115 engines are now
operated at gas-pumping stations, and 10 engines are
operated at power stations.
Presently, highly experienced specialists of PSD
render in-service support of the following new
equipment:
Аn-148 and An-158 airplanes with D-436-148
and AI-450-МS engines of Russia Airlines JSC (St.
Petersburg, Russia), Polet Airlines (Voronezh,
Russia), VАSО JSC, Aerosvit (Ukraine), Ukraine
International Airlines (Ukraine), Angara Airlines
(Irkutsk, Russia), AirKoreya (North Korea), Russia
Airlines (Moscow, Russia);
n
n Аn-140-100 airplanes with ТV3-117VМА-SBМ1
and AI9-3B engines of “Yakutia” Airlines (Russia),
“Motor Sich” Airlines (Ukraine), “НЕSA Airlines” and
“Police Aviation” Airlines (Iran);
34
n
L-15 airplanes with АI-222К-25 engines in China;
Мi-2 helicopter with АI-450V engines in Rostovon-Don;
n
K-8J airplanes with AI-25ТLK engine in China,
Sudan, Bolivia, Venezuela;
n
experimental-industrial operation of Mi-8MSB helicopters with TV3-117VMA-SBM1V series 4E engines,
as well as Mi-8MTV and Mi-24 helicopters with TV3117VMA-SBM1V engines;
n
experimental-industrial operation of 10 MW
gas-turbine units in the urban settlement of
Novopskov;
n
7 MW gas-turbine drives at CS “Eskisehir”
(Turkey), CS “Volkhov”, CS “Pikaleva”, underground
n
ANNUAL REPORT
gas storage station “Kanchurinskaya” (Russia), CS
“Yaro Yakhinskoye” (Russia), BCS “Krestishe”
(Ukraine);
n 8 MW gas-turbine drives at BCS “Shurtan”,
“Zevardy”, “Pamuk” (Uzbekistan), “Western Shatlyk”
(Turkmenia), CS “Lozinets” (Bulgaria), CS “YuzhnoBalykskaya” (Russia), CS “Abshirin”, “Sirjan”,
“Hadjiabad”, CS “Proletarskaya”(Ukraine);
n GTE-6.3МS at “Severnaya” heat and power station
(Belarus), “Kendyk” heat and power station
(Kazakhstan), “Igolskaya” gas-turbine power station, “NGT-Energiya” (Russia). Installation of 4 GTE6,3 МS gas-turbine power generating sets at
Tiamkinskoye field (Russia) and 2 sets at Sarakhs
field (Iran).
2012
Along with aircraft engines and engines of ground
application, PSD performs warranty repairs of consumer goods not only at the Company facilities,
but also directly in operating organizations of
Ukraine (Vinnitsa, Kirovohrad, Volyn’, Sumy, Kiev,
Cherkasy regions), as well as in the
Commonwealth of Independent States (Russia,
Uzbekistan, Kazakhstan, Belarus).
The Company successfully provides paid services.
There were repaired consumer goods to the amount of
48.879 thous. UAH in 2012.
Production Activity
35
MOTOR SICH
MAIN DIRECTIONS
OF THE COMPANY ACTIVITY
For stable and successful development of the
Company under conditions of hard competition in the
world aviation market, it needs to perform constant
monitoring of tendencies in consumer and raw material markets, and permanent development of the
range of goods.
The Company has specified the following main directions of activity:
major overhaul and modernization of helicopters,
including their remotorization;
n
development and mastering production of new
competitive engines with great export potential that
cover demands of Ukraine in aviation products;
n
development of engine modifications demanded
by the market of aviation products within short time
and with low money expenses for the development
of new kinds of products;
n
36
n development of scientific and technical reserve in
order to provide competitiveness of domestic
engines in future;
n
development and mastering production of helicopters;
development of aviation engine modifications for
ground application;
n
n high-quality repairs of engines within short period
according to flexible contract terms and conditions;
n field service of mass-produced engines, as well as
further improvement of their characteristics (reliability,
service life, cost effectiveness);
extension and deep integration of relations with
Russian aviation engine-building complex;
n
n expansion of presence at the international market
with primary orientation to the market of CIS and
Asian countries.
ANNUAL REPORT
2012
PROSPECTS FOR THE DEVELOPMENT OF NEW EQUIPMENT IN 2013
Works on aircraft engines designed by Motor Sich JSC
Works on МS-14 engine:
completion of research and development works, and
works on engine certification;
n
participation in flight development tests of Аn-2-100
aircraft with МS-14 turboprop engine;
n
n
finalizing the engine design documents.
Works on МS-500V engine:
research and development works, developmental
and special tests on the test bench;
n
n
finalizing the engine design documents;
n
manufacture of prototype models.
n increasing power-to-weight ratio of АI-9V
engines (creation of АI-9V-1 version)
n preparation
to mass production of D-27 engines;
n continuation of joint creation and development
of AI-450-MS series 1 and AI-450M/M1 engines
with Ivchenko-Progress SE.
Works on ground equipment:
n creation of GTE-8.3/МS gas-turbine drive for
EG-8000МS power generating set;
n creation of GTE-МS-2.5D gas-turbine drive with
gas-regulating unit produced domestically;
Works on TV3-117VMA-SBM1V engine:
manufacture of GTE-МS-2.5М gas-turbine
drive with set of attachment parts for upgrading
PAES-2500.
flight tests of Mi-24, Mi-8MT/Mi-17, Ка-27, Ка-29
and Ка-50 helicopters in cooperation with Mil and
Kamov Companies;
Works on helicopter themes:
n
n
n
works on further extension of the engine service life;
creation of different modifications of TV3-117VМАSBМ1V series 1 engine with new electronic automatic
control system for engines of Мi-28NM, Мi-171 and
Ка-52К helicopters;
n
n creation of modification of TV3-117VМА-SBМ1V
series 2 engine with upgraded automatic control system;
research and development works on creation of
TV3-117VМА-SBМ2V engine with increased power.
n
n certification of Мi-2 helicopter with new navigation
and radiocommunication equipment;
n
starting up Mi-2МSB helicopter for full-scale testing;
n
certification tests of Мi-8МSB(P) helicopter;
n
creation of advanced МSB-6 helicopter.
Development of production facilities:
introduction of advanced technologies for economy
of materials, increase of materials utilization rate,
reduction of labour-output ratio;
n
Creation of МS-500UBE auxiliary power unit.
n reconstruction of ТEК-3 with transfer of steam
waste-heat exchanger to water-heating mode;
Works on other aircraft engines:
n mastering repair of new kinds of equipment at Lubny
machine-tool plant;
modification of D-436TP engines into D-436TPM version (D-436TP engine with thrust reverser)
for performance of flight development tests in Bе200 aircraft;
n
introduction of energy-saving technologies, alternative energy sources etc.
n
n manufacture, bench and flight tests, certification
of TV3-117VMA-SBM1I engine;
cooperative deliveries of assembly units for AI222-25 turbofan engines manufactured under the
concluded contracts;
n
n manufacture of parts and units for AI-222К-25F
engine, testing of prototype engines;
Production Activity
37
Foreign Economic Activity
MOTOR SICH
Cash Inflow by Regions
Participation in Exhibitions
n
n
MOTOR SICH
CASH INFLOW
BY REGIONS
Implementation of export contracts concerning
aviation and ground equipment is traditionally
the main financial resource. The Company supplies new aircraft engines, gas-turbine drives and
other ground application products, spare parts,
repair-assembling tools, consumer goods. It carries out overhauling, aftersale maintenance of
aviation and ground equipment, renders in-operation services.
In Ukraine: Antonov SE, Kharkov State Aircraft
Production Enterprise, “Ukrainian Helicopters” JSC,
Lugansk Aircraft Repair Plant.
n
Cash inflow has increased by 42.4% as compared to
2011. The Company delivered AI-20 series 5, D-436148, AI-450-МS aircraft engines, gas turbine drives of
AI-20DME family to the internal market, as well as
repaired various modifications of aircraft engines and
ground equipment.
Export ratio in goods sold is 93.1%.
Export ratio in goods sold during 2008-2012
period.
100
91,5
95
90
93,2
93,1
In non-CIS countries: India, China, Algeria, Iran,
Peru, Colombia.
83,8
Money was received for the delivery and repair of various modifications of aircraft engines, as well as for the
delivery of corresponding spare parts.
85
80
2009
2010
2011
2012
Cash inflow under the concluded contracts has
increased by 13.2% in 2012 as compared to 2011.
Cash inflow from customers in Russia, CIS and nonCIS countries has increased. There was also observed
growth of cash inflow from Ukrainian customers.
In 2012 main customers were:
the Russian Federation: “Russian Helicopters”
Holding Company, Klimov JSC, Voronezh Aircraft
Production Association, Beriev Taganrog Aviation
Scientific Technical Complex, Rostov Helicopter
Plant JSC.
n In
Money was received for the delivery of mass produced
aircraft engines: TV3-117 of different versions, D-436148, AI-450-MS, VK-2500, D-136, D-436TP, TV3117VMA-SBM1, AI-9V.
40
The Company repaired aircraft engines, rendered services
for extension of service life, as well as delivered and
repaired ground equipment for CIS countries.
n
88,7
2008
n In CIS countries: Kazakhstan, Uzbekistan, Belarus,
Moldova.
In 2012 there was opened second stage of Motor Sich
Technical Center in UAE. New building of Technical
Center will be used for remororization of Мi-8 helicopters. It will allow Motor Sich JSC to increase the scope
of rendered services and sales at Middle East and
African markets.
The Company paid 30,240.5 thous. US dollars under
import contracts for acquisition, overhaul and refurbishment of equipment in the accounting year according to the foreign currency expediture plan.
Germany, Switzerland, USA, Poland, Bulgaria, Korea,
Czechia, Slovakia and other countries are main partners of Motor Sich JSC in the sphere of importing
equipment and spare parts, as well as overhauling and
upgrading equipment.
The following machines were purchased: machining
centers HURON, turning-milling centers DOOSAN,
high-vacuum furnaces SECO/WARWICK and TAV,
gear-grinding centers Gleason-PFAUTER, turningmilling centers, CNC machines TOSHULIN and other
process equipment.
ANNUAL REPORT
2012
EXHIBITION
ACTIVITY
Cash inflow for the shipped products and rendered services as per payment currency was as
follows:
6,3
36,4
Motor Sich JSC persistently implements professional
marketing policy that makes it possible not only to
keep traditional sales markets of our products, but also
develop new ones. The following methods are used by
the Company to organize product sales:
n marketing research of sales markets for determining priorities and implementing merchantable production projects, as well as sales of aviation and
ground equipment;
2,8
54,5
US dollars
RUR
UAH
Euro
There were concluded contracts for purchasing high-vacuum furnaces SECO/WARWICK, five-axis machining centers, special-purpose grinding machines ESSM 500, other
equipment and components.
n participation in prestigious specialized exhibitions
related to the products manufactured by the Company;
n establishment of regional representative offices in
different regions of the world: Russia, South-East
Asia, China, India, Middle East, Africa, Latin
America. By means of the regional representative
offices Motor Sich JSC takes part in all tenders for
delivery of the Company products and services conducted by the state organizations of different countries, such as: China, India, Thailand, Bangladesh,
Sri Lanka, Algeria, the Gulf States, Bulgaria,
Hungary, Turkmenistan, Russia etc.;
establishment of the vast network of service centers
all over the world for improving quality and efficiency
of assistance to the Customers of our products;
n
task-oriented advertising campaigns aimed at promotion of our products in new markets, publications
in specialized magazines and catalogues.
n
In 2012, Motor Sich JSC took part in all major international exhibitions related to the Company’s products:
n exhibitions of aviation equipment – DefExpoIndia
(India), “Heli Russia 2012”, “Hydroaviashow”, “Engines2012” (Russia), “Farnborough International Airshow”
(Great Britain), “Airshow China” (China), “Dubai
Helishow 2012” (UAE), “ILA Berlin Air Show”
(Germany), “Africa Aerospase and Defence 2012”
(Republic of South Africa), “AVIASVIT –ХХI” (Ukraine).
products of ground application were demonstrated
at the following exhibitions: “IRAN OIL SHOW 2012”
(Iran), “MIOGE-2012” and “Russia Power 2012”
(Russia), “Power Gen India @ Central Asia 2012”
n
41
MOTOR SICH
(India), “OGU 2012” (Uzbekistan), “KIOGE 2012”
(Kazakhstan), “Oil and Gas 2012” (Ukraine).
Besides, the Company actively participated in different
exhibitions related to consumer goods, in competitions of loggers.
Meetings and negotiations with Operators and
Customers of aircraft engines and ground equipment manufactured by Motor Sich JSC were held
during all events. More than that, at exhibiitons in
Moscow, Gelendjik, Gostomel and Dubai was
demonstrated new sphere of Motor Sich activity Мi-8МSB and МSB-2 helicopters. Advertising and
presentation of advanced products was actively carried out during negotiations, in specialized publications and mass media of the countries holding exhibitions. Participation in exhibitions and concluded
contracts made it possible to consolidate the results
achieved by the Company in the development of
sales markets. Motor Sich JSC holds firm positions in
the markets of Russia, South-East Asia, Middle East,
countries of Africa and Latin America.
Prospects for 2013
Strengthening and continuation of cooperation with companies of the Russian Federation (delivery of aircraft
engines to the plants of Kazan, Ulan-Ude, Kumertau, St. Petersburg, Beriev Taganrog Aviation Scientific Technical
Complex, VASO JSC);
n
n
Conclusion of contracts for the delivery of PAES-2500 and EG-6000 power-generating sets to Russia;
n
Keeping and expansion of sales markets in non-CIS countries;
n
Execution of contracts for the delivery of engines to India, China, Algeria;
Conclusion of long-term agreements with partners from South-East Asia and Latin America (Bangladesh, Sri
Lanka, Peru, Colombia);
n
n
Continuation of cooperation with Ukrainian customers. Execution of contracts for the delivery of engines;
Promotion of new kinds of products and services to the market. Remotorization of operating helicopters with
new ТV3-117-SBМ1V engines.
n
n
42
Participation in international exhibitions and air shows in order to increase turnover and expand sales markets.
ANNUAL REPORT
2012
43
Financial and
Economic Activity
MOTOR SICH
Credit Policy of the Company
n Indices of the Company’s Financial
Stability, Business Activity and Credit
Worthiness
n
MOTOR SICH
CREDIT POLIC
OF THE COMPANY
Financial and economic activity of Motor Sich JSC is
aimed at provision of financial soundness, stable inflow
of financial resources and their efficient usage, rational
balance between internal and borrowed funds.
funds, payment of salary and other kinds of payments
related to production activities of the Company.
During the year, credit funds were used for procurement of equipment, replenishment of circulating
Credit resources share on the liabilities has reduced
from 4.8% to 3.2% during the reporting period.
Credit portfolio of Motor Sich JSC at the end of 2012
was reduced by 61.7 mln. UAH.
Dynamics of credit resources share on the liabilities in 2008 – 2012 (%)
20
18,1
15,5
16
12
8,9
8
4,8
3,2
4
2008
46
2009
2010
2011
2012
ANNUAL REPORT
2012
INDICES OF THE COMPANY’S FINANCIAL STABILITY, BUSINESS
ACTIVITY AND CREDIT
Profitability of sales (index that shows net profit share
in volume of sales) was 29.4% in 2012.
Profitability of current assets (that shows productivity
of circulating assets, as well as the profit earned by the
unit of circulating capital of the Company) has grown
from 27.2% up to 32.4%. It positively characterizes
financial activity of the Company.
Return on equity that is determining productivity of
investments into the Company has increased up to
33.9% in the accounting period. Return on equity of
Motor Sich JSC is at rather high level. It testifies to its
efficient activity.
Financial and Economic Activity
47
Investment Activity
of the Company
MOTOR SICH
Capital Investments
n The Company’s Investments into Legal Entities
n Attraction of Budgetary Funds and Investments
for Financing the Development and Preproduction of
New Kinds of Products in 2012.
n
MOTOR SICH
CAPITAL INVESTMENTS
n
In 2012, the Company performed works on reconstruction and technical reequipment of the operating
production facilities, construction of social facilities,
capital and light repair of buildings and structures.
764.4 mln. UAH of the Company’s own funds were
allocated for these purposes. Thereof, 427.7 mln.
UAH were spent for procurement of equipment for
main production facilities.
Dynamics of equipment procurement for main
production facilities in 2008 – 2012.
427,7
400
330,0
32
240
80
129,7
56,5
2008
2009
2010
2011
n Reconstruction of gatehouse with addition of the second floor over the entrance hall (Structure No. 7а);
n Construction of swimming pool at Health Resort “Priboy”.
There was performed planned scope of capital construction of social facilities. All recreation centers, preventoriums and children's health camps were timely
prepared for summer recreational season.
THE COMPANY’S
INVESTMENTS INTO
LEGAL ENTITIES
As of 01.01.2013, there are 37 companies, more than
10% shares of which belong to Motor Sich JSC.
308,9
160
Completed construction of Technical Museum;
2012
The Emitter owns the shares (equities) of the companies located in Ukraine, Russia, Republic of
Belarus. Investments into aviation industry are priority ones for strategic development of the Emitter and
further investments.
The following investments were made in 2012:
193 pieces of equipment were distributed among
workshops during the year:
n
High-vacuum furnaces;
n
CNC turning machines;
n
CNC turning semiautomatic machines;
n
Milling machines;
Electrical discharge machines and other process
equipment.
n
The following works were carried out:
Construction of foundations for installation of new
high-technology machining centers;
n
Reinforcement of foundation of buiding No.18 by
installation of piles and anterides;
n
Reconstruction of test benches for AI-222-25, AI222K-25, AI-25, AI-25TL, MS-500UBE, AI-450MS
engines;
n
50
n
founded “HELICOPTERS - MOTOR SICH” Ltd.
purchased controlling share of “Orsha Aircraft Repair
Plant” JSC.
n
ANNUAL REPORT
ATTRACTION OF
BUDGETARY FUNDS
AND INVESTMENTS FOR
FINANCING, DEVELOPMENT
AND PREPRODUCTION OF
NEW KINDS OF PRODUCTS
IN 2012
Development Works “Development and Introduction
of the Latest Design Solutions During Creation of
Advanced Light Helicopter with Take-off Weight from
5 to 6 tons” in the budget of 2013.
n continued participation in the Project of the European
Commission “Efficient Systems and Power Units for
Small Aircraft” (ESPOSA Project). The Company has
performed all scheduled works. Annual reports under
the Project were submitted to Coordinators, and were
approved by them.
To reduce the Company’s expenses, the Company’s
specialists:
n have developed “Concept of the State Special
Scientific and Technical Programme on the
Development of Aviation Industry of Ukraine for the
Period Untill 2020” and submitted it to Ministries and
Administrations for coordination.
n have developed draft Law of Ukraine “About State
Support of Aviation Leasing” and submitted it to corresponding Committees of the Supreme Soviet of Ukraine.
sent enquiries to the Ministry of Finance of Ukraine
about inclusion of funds for implementation of the
State Programms on the Development of Aviation
Industry of Ukraine, including Research and
n
2012
n performed research and development works
“Development and mass production of bypass turbofan engine for advanced versions of aircraft” (Stage 1.
Code “Е1” for 2012 – “Development of conceptual
design of bypass turbofan engine with power from
6500 to 9000 kgf and performance of design, experimental and production research works”) as regards
experimental and production research works for development of new production processes and special
equipment for mass production of efficient bypass turbofan engine”. Budgetary funds for the performed
works should be received in 2013.
n performed preliminary design for State Kiev Design
Bureau “Luch”.
Investment Activity of the Company
51
Securities
MOTOR SICH
Analysis of Changes in Cost
of the Company’s Shares
n Quantity and Structure of Shareholders
n Information about Depositary
n Information about Custodier
n
MOTOR SICH
ANALYSIS OF CHANGES IN COST OF THE COMPANY’S SHARES
In 2012, deals with Motor Sich JSC shares were carried out at FSTS Stock Exchange and the Ukrainian Stock
Exchange, as well as at off-exchange market. Total amount of deals with the Company shares has made about
2.35 billion UAH in 2012.
Year 2012 was one of the most difficult ones for the world and domestic share markets. According to expert
analyses, Ukrainian share market has lost more than 35% from the beginning of 2012. There were observed
essential fluctuations of share prices of Ukrainian emitters in this period. Securities of Motor Sich JSC did not
become an exception. There was registered minimum price of 1750 UAH and maximum price of 2880 UAH per
1 share of Motor Sich JSC.
Shares of Motor Sich JSC are among the most liquid securities that are very attractive for investments in Ukraine.
They have tangible fundamental growth potential for the near future.
Price and the scope of deals with Motor Sich shares at the Ukrainian Stock Exchange, UAH.
Period
Minimum
Maximum
At the end of period
Average daily
scope of deals
1,505
1,609
1,750
8.76 %
3,040
3,867.9
2,880
-25.54 %
2,977.8
2,230
2,210
- 0.9 %
4,332,721
13,936,486.8
2,587,958.8
- 81.4 %
2010
2011
2012
Change
Traditionally, in 2012, shares of Motor Sich JSC were leaders of turnover at the Ukrainian stock exchange. The
scope of deals has reached 2.3 billion UAH. At the stock market there were concluded deals to the amount
of 644 mln. UAH. That is more than 20% of all deals.
54
06.10.2012
06.07.2012
06.04.2012
06.01.2012
06.10.2011
06.07.2011
06.04.2011
06.01.2011
06.10.2010
06.07.2010
06.04.2010
06.01.2010
06.10.2009
06.07.2009
06.04.2009
06.01.2009
06.10.2008
06.07.2008
06.04.2008
06.01.2008
06.10.2007
06.07.2007
06.04.2007
06.01.2007
06.10.2006
06.07.2006
06.04.2006
06.01.2006
Inter-temporal changes of FSTS index and cost of Motor Sich JSC shares
4500
4000
FSTS index
3500
Average price of deals, UAH
3000
2500
2000
1500
1000
500
0
ANNUAL REPORT
2012
Price and scope of deals with Motor Sich shares at FSTS Stock Exchange, UAH.
Year
Minimum
Maximum
At the end of period
2006
2007
2008
2009
2010
2011
2012
Change (2012/2011)
275
430
166
280
1,550
1,602.16
1,778.5
11%
475
1,778.36
1,757
1,810
3,070
3,850
2,860
- 25.7 %
415
1,728.8
365
1,644.52
2,967
2,170
2,206.5
1.7 %
Average daily
scope of deals
246,802
2,516,041
1,982,324
676,047
600,137
471,968.72
39,053.91
- 91.7 %
Capitalization (market cost) of Motor Sich JSC as of the end of 2012 has made 5.95 billion UAH.
According to forecasts of analysts, Motor Sich shares have significant growth potential in 2013. They are still among
the most liquid securities that are attractive for investments in Ukraine.
QUANTITY AND STRUCTURE OF SHAREHOLDERS as of 12.02.2013*
Owners
of shares
Legal entities
Natural persons
Total
Q-ty of
Shareholders
Q-ty of shares, pcs.
Share in Statutory
Capital,%
Nominal value of
securities, UAH.
254
7,061
1,642,365
435,625
2,077,990
79
21
100
221,719,275.00
58,809,375.00
280,528,650.00
* Date of the last Summary Register of Shareholders of Motor Sich JSC for distribution of invitations to General Meeting.
The state is not a shareholder of Motor Sich JSC.
DEPOSITARY OF THE COMPANY’S SHARES
“All-Ukrainian depositary of securities” Private JSC performs accounting of Motor Sich shares (Enterprise
code: 35917889).
Licence for depositary activity as a depositary of securities: series АВ No. 498004 issued by the State Committee
of Securities and Share Market, dated 19.11.2009.
Location: 7-g Tropinina Street, Kiev, 04107, Ukraine
Phone: (044) 585 42 40 (41,42).
Site: www.ausd.com.ua
CUSTODIER OF THE COMPANY’S SHARES
Custodier, MOTOR-DEALER Ltd. (Enterprise code: 24513000), performs accounting of Motor Sich shares of shareholders, for whom the Company has opened securities accounts on the basis of the Register of Shareholders received
from the registrar in the course of dematerialization.
Licence for depositary activity as a custodier of securities: series АВ No. 456918 issued by the State Committee of
Securities and Share Market, dated 18.02.2009.
Location: 21 Omelchenko Street, Zaporozhye, 69068, Ukraine
Phone: (061) 720 49 85.
Site: www.motor-diler.com.ua
Securities
55
Main Risk Factors
MOTOR SICH
Industry Risks
n Legal Risks
n Risks Connected with Production Activity
of Emitter
n Financial Risks
n
MOTOR SICH
INDUSTRY RISKS
Industry risks are connected with small demand for
the Company products at the domestic market of
Ukraine, competition with foreign manufacturers,
orientation of sales to the Russian market, partial
consumer loss due to decision of Russian airlines to
perform aircraft engine overhaul and maintenance
at the Russian aircraft repair plants.
For provision of stable work and increase of profits,
the Company pursues consistent marketing policy
aimed at search of new customers and diversification
of sales markets.
Motor Sich JSC constantly increases quality and performance characteristics of its products, develops
new aircraft engines and their modifications,
improves engine in-service support system to hold
its positions at the world markets.
LEGAL RISKS
Legal risks are connected with adoption of normative legal acts that may change legal basis of the
Company activity.
Motor Sich JSC, as an export-oriented company,
deeply feels drawbacks of current legislation, its
inconsistencies and susceptibility to changes that
hinder effective foreign economic activity. The
Company regularly runs into problems during customs clearance of goods (difficult procedure of customs registration, difficulties with timely and complete submission of documents), as well as during
obtainment of permits from the State Export Control
Authorities. To reduce impact of legal risks, Motor
Sich JSC submits proposals regarding introduction of
amendments in current normative acts in the sphere
of export control and customs clearance of goods, as
well as Laws of Ukraine, normative acts of the
Cabinet of Ministers and different ministries and
administrations that regulate other spheres of the
Company activity.
58
RISKS CONNECTED WITH
PRODUCTION ACTIVITY
OF EMITTER
Risks connected with production activity of emitter
may include personnel risk (lack and loss of qualified
personnel), risk of information leakage, risk of production accident.
In order to reduce personnel risk, Motor Sich JSC
performs appraisals of engineering and technical
personnel, provides professional development of
emplyees, training of future workers of the
Company at higher education establishments.
In order to reduce risk of information leakage, the
Company applied information security system, provided measures to reveal its violations, introduced
video surveillance system at the Company territory
and security system against unauthorized duplication of information.
To prevent risk of partial or complete suspension of
production, Motor Sich JSC carries out activities on
provision of labour safety, improval of labour discipline,
performs preventive actions to reveal breakdown
equipment and develop labour culture.
FINANCIAL RISKS
Financial risks play a significant role among the
Company risks. Main and most dangerous types of
financial risks are as follows: credit risk, liquidity risk,
currency risk and inflation risk.
Credit risk
Credit risk is connected with increase of interest rates
on credit, as well as demand of preschedule repayment of principal debt and interest charges.
The following factors helped to minimize credit risk:
thorough selection of banks based on the image and
stability of financial institution;
n
ANNUAL REPORT
analysis of credit terms and conditions that allowed
for reduction of interest rates under credit agreements,
as well as expenses on credit maintenance;
n
constant control of the Company’s financial state,
its ability and readiness to repay the credit that
allowed for reduction of the Company’s overall credit indebtedness.
n
Inflation risk
Inflation risk is characterized by possibility of
depreciation of the real cost of capital (in form of
financial assets of the Company), as well as the
expected profits and income of the Company from
financial transactions in conditions of inflation. The
source of this risk is an external environment in
relation to the Company, id est risk that does not
depend on its activity.
The following methods were used to minimize negative influence of inflation risk upon activity of
Motor Sich JSC:
timely control of profitability level included in the
cost of products;
n
gaining real income from financial deals and maintenance of credit portfolio in stable convertible currencies, such as USA dollar and Euro.
n
2012
Besides, basic part of credit resources for the purchase of new imported equipment is in foreign currency for minimization of currency risk.
Liquidity risk
Liquidity risk is a probability of losses caused by
impossibility to purchase or sell assets in the required
amount within a short period of time due to worsening of market conditions, probability of deficit of
financial resources or other highly liquid assets for
fulfilment of contractual liabilities. Management and
minimization of liquidity risk is performed by means
of complex measures aimed at increase of profits
and reduction of expenses.
The following measures helped to minimize liquidity risk:
n maintenance of sufficient level of financial resources
for financing of production, administrative and investment needs, as well as provision of stable fulfilment of
financial liabilities;
n
creation of optimal capital structure;
complex program on depreciation of accountable
monetary assets;
n
n
planning of the Company budget.
Currency risk
Currency risks are connected with adverse changing
of currency exchange rate. Foreign economic activity is especially subjected to such risks.
Selection of the most reliable currencies with relatively
stable exchange rates as the contract currency is a
widespread practice in international trade relations.
Motor Sich JSC is able to protect itself from currency
risks, as it has a large scope of export and import
operations carried out in one currency. Basic currencies of the international contracts of the Company
are USA dollars and Russian Federation roubles.
Main Risk Factors
59
Personnel and
Personnel Policy
MOTOR SICH
Personnel Structure
n Personnel Development
n Prospects of Personnel Policy for 2013
n Youth Policy of the Company
n Social Sphere
n
MOTOR SICH
PERSONNEL STRUCTURE
Labour force at the parent enterprise has increased
by 1762 persons as compared to January 1, 2012.
Labour force structure has changed due to the
increased quantity of additionally recruited direct
workers. Production and industrial personnel structure is as follows: 41.0% – direct workers, 19.5% –
auxiliary workers, 5.1% – quality control personnel,
32.3% – engineers and technicians and 2.1 % –
other categories.
Structure of personnel by categories as of January
01, 2013, %
2,1
Age structure of personnel, %
8,7
9,5
10,9
17,9
up to 30 years
From 31 to 40 years
From 41 to 50 years
33,8
19,2
From 51 to 55 years
From 56 to 60 years
Over 60 years
41,0
32,3
5,1
19,5
PERSONNEL DEVELOPMENT
Direct workers
Auxiliary workers
Quality control personnel
Engineers and technicians
Other categories
In 2012, the Company has employed 492 young specialists, including 214 young specialists with higher
education, 147 graduates of Zaporozhye Aviation
College, Electrotechnical College and other colleges,
and 131 graduates of technical vocational schools.
Educational structure of personnel, %
29,1
29,6
19,2
22,1
Higher education
Specialized secondary education
Secondary technical education
Secondary education
There are 32 candidates of science among employees of
the Company.
62
339 specialists of the Company were advanced in
qualification categories according to the results of
extraordinary attestation of engineers and technicians,
including 116 young specialists that have worked for
less than 3 years.
38 specialists of the Company among the newlyappointed department managers and deputy managers were trained at administrative courses conducted by the Academy of National Economy at the government of Russian Federation in “Modern Methods of
Joint-Stock Company Management”.
27 employees of the Company have passed competitive selection and were sent to Kharkov National
Aerospace University (KhAI) for eductaion in specialty
“Airplanes and Helicopters”. Education will take over
1.5 years on full-time basis.
ANNUAL REPORT
2012
Hired/dehired personnel at Motor Sich JSC during 12 months of year 2012:
Personnel category
Hired persons
Dehired persons
Balance, persons
Direct workers
Auxiliary workers
Engineers and technicians,
nonproductive personnel
Non-exempt personnel and
other categories
2,790
1,133
1,698
760
+1,092
+373
848
575
+273
200
176
+24
TOTAL
4,971
3,209
+1,762
56 employees of the Company were sent to correspondence department of Zaporozhue National
Technical University for education at the expense of
state budget.
industrial practice of 700 pupils of technical vocational schools of Zaporozhye, 400 college students
and 600 students of higher educational institutions
of Ukraine.
It is carried out regular work with young employees of
military age. During military service period, the
Company staff maintains correspondence with them,
arranges meetings, reserves workplaces for their
employment after demobilization. In 2012, 62 demobilized young workers were reemployed by the
Company of 86 persons that were called to military
service in 2011.
In 2013, the Company will make the following investments into educational sphere:
n Creation of material and technical basis for training in
specialties “Maintenance of aircraft and engines”,
“Manufacture of aircraft” in Zaporozhye Aviation College;
n Transfer of Mi-2 helicopter, separate assembly units
and modules, maintenance manual, operating manual
of helicopter and other visual aids to Zaporozhye
Aviation College;
n Creation of the unified educational centre of workers
for machine-building industry of Zaporozhye region on
the basis of “Motorostroitel” Technical College, attraction of budgetary funds for equipment of workshops
with modern CNC machines, training of teaching staff,
development of information infrastructure of the educational establishement;
n Probation of teaching staff of educational establishments at the Company departments;
n Obligatory coordination of educational programs
envisioning particular subjects adapted for current
production needs;
n Training of 150 unemployed persons as turners at
“Motorostroitel” Technical College during 3-month
courses;
n Training of students of Zaporozhye Aviation
College in product quality assurance and control of
CNC machines under coordinated programs.
One of the basic directions of work with personnel
in 2013 is the development of helicopter engineering, namely:
29 workers of the Company have got honorary title
“Distinguished engine-builder”. 18 workers have got
honorary title “Master with golden hands”.
PROSPECTS OF PERSONNEL
POLICY FOR 2013
In 2013, personnel policy of Motor Sich JSC will be
aimed at development of management system, provision of trained workers and specialists for implementation of plan for 2013, increased motivation of workers
for more efficient labour.
The Company personnel policy is based on the principle of continuity of generations. This principle can
be provided only by means of predicted sources of
qualified personnel such as technical vocational
schools and higher educational institutions. Motor
Sich JSC is the basis for all kinds of practice in workshops, process and design departments for preparation of student's essays and graduation papers. In
2013, it is planned to provide working places for
Personnel and Personnel Policy
63
MOTOR SICH
annual retraining and professional development of
30 workers is specialty “Airplanes and helicopters” at
Kharkov National Aerospace University (KhAI);
n training of 5 helicopter pilots at Krivoi Rog flying
colledge in specialty “Flight operation of aircraft” at
the Company expense with provision of obligatory
flying practice;
n continuous training of graduates of Zaporozhye
Aviation College, Zaporozhye Electrotechnical Colledge
at Kharkov National Aerospace University (KhAI) in specialties “Airplanes and helicopters”, “Metrology and
information-measuring technologies”, “Production of
aircraft engines and power units”;
n internship of specialists related with production of
helicopters at leading aviation enterprises of Ukraine.
n
For improvement of professional skills of department
managers and deputy managers that were appointed
in 2011-2012, it is planned to train them in “Modern
Methods of Joint-Stock Company Management” at
Moscow Academy of National Economy.
It was decided to certify the Company’s International
Technical Center according to Aviation Rules EASA
Part-147 in order to expand the sphere of services in
retraining of the customers’ specialists.
Taking into account complete technical reequipment of
the Company, constant updating of machines, introduction of advanced technologies and processing
methods, personnel policy will be aimed at continuous
improvement of professional skills of machine-operators, programmers, technicians and their training in
Fanuc, Sinumerik (Siemens), West Labs CNC systems
at workshops, as well as at the leading European companies-producers of advanced CNC machines.
Motor Sich JSC actively and fruitfully cooperates with
the State Employment Center regarding training,
retraining and probation of unemployed persons. In
2013, it is planned to arrange training and probation
of 50 unemployed persons in demanded professions
on the contractual basis.
Special attention is paid to employment of unemployed persons under grants of the Employment
64
Center. 165 persons were employed in 2012. Savings
of salary fund made up 1 mln. 672 thous. 242 UAH.
Total, 332 persons were employed. It is planned to
employ 180 unemployed persons in 2013.
YOUTH POLICY
In 2012, Motor Sich JSC carried out the following
activities under the Company’s Youth policy:
the V Youth Conference “Youth in aviation: new
decisions and advanced technologies”;
n
n
professional skill competition in 10 specialties;
n competition of wall newspapers “Corporate culture
of departments”;
familiarization excursions and sports competitions
for new young employees of the Company;
n
n military-and-sports competition for persons of military age;
participation in regional military-and-sports competition “Recruit -2012”.
n
commendation of young workers and specialists of
the Company with presentation of Certificates:
l “The best young worker” - 30 persons;
l “The best young foreman” - 20 persons;
l “The best young specialist” - 25 persons.
n
SOCIAL SPHERE
The Company’s social sphere includes practically all
types of social benefits: health care, education, recreation, sports, housing. Social facilities are financed
from the Company’s assets.
The Company spent 31.9 mln. UAH for capital investments in the objects of social sphere in 2012. The
Company is proud of the best local children’s health
and sport camps fully equipped for physical, psychical
and social development of the younger generation.
Children are provided with opportunities for individual
improvement, development of artistic skills and activation of their natural potential. 1535 children of the
ANNUAL REPORT
Company’s employees recreated at the camps.
Vacation hotel “Horizont” in the Crimea, Health
Centers “Motor” and “Priboy” at the Azov sea are
equipped with comfortable dormitory blocks, spacious
halls, cosy rooms (suites and semi-suites), canteens
with three daily meals, bars, saunas, billiard-rooms,
cinema halls, libraries, sports grounds and children’s
playgrounds.
Motor Sich JSC continues to build new objects of social
sphere. In October 2012, there was opened Technical
Museum in Zaporozhye. It is a unique museum for the
city and for Ukraine. There was put into operation
sports-and-recreational base “Rovesnik” and opened
Fame hall in Volochysk (Khmelnitsky region).
Sanatorium-preventorium in Volnoandreyevka village
at the bank of the Dnieper river and sanatorium
“Raduga” located in the town of Volochysk
(Khmelnitsky region) provide different medical and
preventive services for the resting people: baths,
2012
inhalations, ozokerite therapy, massage, remedial
gymnastics, physical and therapeutic procedures.
Tourist camp “Meridian” is the most affordable recreation site for the Company’s youth for many years. It is
situated in one of the most picturesque places,
Sedlasty island, not far from Kakhovka artificial lake.
Holiday-makers are provided with more than 100 cottages, sports ground, tennis tables, billiard-room,
rental boats and fascinating youth leasure programs.
19352 persons, including 13057 employees of the
Company and their children, recreated at health centers in 2012. There were popular collective arrivals,
mother and child arrivals, arrivals of veterans of the
Great Patriotic War and veterans of labour.
1654 persons live at the Company’s dormitories. 519
children study at the Center of preschool education.
Collectives of Cultural Center named after T.G. Shevchenko
and “Motor Sich” sports complex are well-known outside Zaporozhye and Ukraine.
Personnel and Personnel Policy
65
Financial Statements
MOTOR SICH
Consolidated Balance Sheet
n Consolidated Statement of Financial
Performance
n Consolidated Statement of Changes in
Owner's Equity
n Consolidation Principles
n Main Aspects of Accounting Policy
Notes to Financial Statements
n
n
MOTOR SICH
FINANCIAL STATEMENTS
Consolidated financial statements about the results of
the enterprise activities in 2012 were prepared based
on the International Financial Reporting Standards
(IFRS), the International Accounting Standards (IAS)
and their interpretation developed by the International
Financial Reporting Interpretations Committee (IFRIC)
in edition published at the site of the Ministry of
Finance of Ukraine as of 31.12.2012.
Financial statements are drawn up on the basis of
accounting records which were kept according to laws
68
of Ukraine by means of conversion and introduction of
corrections, as well as reclassification of items for
authentic representation of information according to
the International Financial Reporting Standards.
As the enterprise applies IFRS for the first time, components of consolidated financial statements do not
contain comparative information for the previous year,
except for financial performance characteristics (balance sheet) as of 31.12.2012. Thus, these consolidated financial statements may not be considered a complete set of consolidated financial statements according to the International Financial Reporting Standards.
ANNUAL REPORT
2012
CONSOLIDATED BALANCE SHEET
(FINANCIAL PERFORMANCE CHARACTERISTICS) thous. UAH
31.12.2011
31.12.2012
Assets
Intangible assets by residual value
Fixed assets by residual value
Long-term financial investments
Fair value of investment property
Long-term debit indebtedness
Other capital assets
Production stock
Commercial debt and other debit indebtedness
Monetary resources and their equivalents
Current financial investments
Other current assets
Capital assets and disposal groups
441
3,551,064
296,657
29,600
8,246
3,372,050
1,675,739
371,430
79,657
46,005
26,936
312
4,114,260
299,551
32,368
15,403
166
4,424,839
1,645,286
218,230
657,840
69,298
1,223
Total assets
9,457,825
11,478,776
Cover of deferred charges and payments
Long-term liabilities
Short-term bank credits
Current debt against long-term liabilities
Commercial debt and other credit indebtedness
Deferred incomes
877,914
297,815
300,327
29,463
2,116,081
214
1,070,124
180,000
451,769
30,266
2,099,449
457
Total liabilities
3,621,814
3,832,065
Registered capital
280,529
280,529
Additionally invested capital
172,731
408,078
45,496
44 ,144
Liabilities
Other additional capital
Reserve capital
70,763
73,934
5,267,008
6,833,325
32,151
27,273
1,440
1,742
5,805,816
7,614,479
Minority share
30,195
32,232
Total liabilities
9,457,825
11,478,776
Retained profits
Withdrawn capital
Accumulated exchange differences
Total owner’s equity
69
MOTOR SICH
CONSOLIDATED STATEMENT
OF FINANCIAL PERFORMANCE (thous. UAH)
2012 год
Incomes
Net incomes (receipts) from sale of products
(goods, works, services)
Other operating incomes
Shareholding incomes
Financial incomes
Other incomes
Total incomes
7,928,376
5,292,407
24,367
22,049
27,509
13,294,708
Expenses
Cost of sold products
(goods, works, services)
Administrative expenses
Sales expenses
Other operating expenses
Financial expenses
Shareholding losses
Other expenses
Profit tax
Total expenses
11,686,181
Minority share
10,942
Net profit
Net profit per one ordinary share
(UAH per share)
70
4,650,385
566,479
399,498
5,321,059
49,743
7,392
46,632
644,993
1,619,469
792.87
2012
ANNUAL REPORT
CONSOLIDATED STATEMENT
OF CHANGES IN OWNER’S EQUITY (thous. UAH)
Item
Additionally
Other
Statutory
invested
additional
fund
capital
capital
Reserve
capital
Balance as at the
beginning of year
280,529
70,763
172,731
45,496
Adjustment:
- correction
of mistakes
Retained
profits
Withdrawn
capital
5,259,767 -32,151
Accumulated
exchange
differences
Total
1,440
5,798,575
7,241
Adjusted balance
as at the beginning 280,529
of year
172,731
45,496
70,763
Net profit for the
accounting period
7,241
5,267,008 -32,151
1,440
5,805,816
1,619,469
1,619,469
-49,981
-49,981
Distribution
of profit:
Payments
of dividends
Deductions
for reserve capital
3,171
-3,171
Withdrawal
of capital:
Resale of bought
out shares
235,347
Other changes
-1,352
Total changes
in capital
Balance as at the
end of year
4,878
280,529
235,347
-1,352
3,171
1,566,317
4,878
408,078
44,144
73,934
6,833,325 -27,273
240,225
302
-1,050
302
1,808,663
1,742
7,614,479
71
MOTOR SICH
Consolidation principles.
A subsidiary is an undertaking more than 50% of which voting rights (shares) belong directly or indirectly to the
Group, or the Group has other oppportunity to control its financial or operating policy, and obtain economic benefits from that. Subsidiaries are consolidated from the date when the Group gets actual control over them (date
of purchase). Consolidation terminates after the loss of control over these undertakings.
Excess of acquisition cost over fair cost of the Group’s share in the acquired identified net assets is represented as
goodwill. If acquisition cost is less than fair cost of net assets of the acquired subsidiary, then corresponding difference is represented directly in the comprehensive income statement.
Balance of the debt which has originated as a result of intragroup transactions is excluded in the course of consolidation.
Incomes and expenses of intragroup transactions, as well as unrealized profits and unrealized losses, which can
be reimbursed, will be excluded during preparation of consolidated financial statements for 2013. Comparative
information for 2012 will be adjusted as well.
Essential items of financial statements of the subsidiaries which, during preparation of financial statements for
2012, applied accounting policy different from accounting policy of the Group, were adjusted according to
accounting policy of the Group.
Minority share of subsidiaries in net assets of these enterprises shall be represented as a separate component of
the Group’s equity.
Translation of foreign currency.
Items represented in financial statements of separate enterprises of the Group are evaluated in corresponding functional currency by each enterprise of the Group. Amounts represented in consolidated financial statements are evaluated in national currency of Ukraine, hryvnya, which is a functional currency and representing currency for the Group.
Foreign currency transactions are represented by exchange rate of the National Bank of Ukraine (NBU), established at
the date of the transaction. Exchange differences arising as a result of foreign currency transaction shall be included in
consolidated statement of comprehensive income based on the exchange rate effective at the date of the transaction.
Monetary assets and foreign currency liabilities shall be translated in hryvnyas by official rate of the NBU as at the
accounting date. Profits or losses arising as a result of translation of assets and liabilities shall be represented in
consolidated statement of comprehensive income.
Main aspects of accounting policy of Motor Sich JSC
The present accounting policy (further referred to as “accounting policy”) describes accounting basis, standards,
rules and procedures applied during accounting and financial reporting by all structural units of Motor Sich JSC,
as well as its affiliated companies. Accounting policy determines principles of admission and assessment of
accounting entities, definition and description of separate items of financial statements of the enterprise, as well
as consolidated financial statements of the group of affiliated companies (further referred to as “Group”).
Management of the Group determines and adopts the policy so that financial statements represented information:
- relevant for decision-making by customers;
- fairly representing financial position and performance of the Group (or the enterprise);
- reflecting economic sense of events and transactions, and not just their legal form.
72
ANNUAL REPORT
2012
The purpose of financial statements is to provide such information on the Group and the enterprise financial position, performance and cash flows that would be useful for making economic decisions by customers.
Application field of accounting policy:
The accounting policy is developed for accounting and reporting according to the National Accounting Standards
(Regulations), the International Accounting Standards/International Financial Reporting Standards, as well as for
tax reporting based on accounting data.
Accounting is performed based on the unified chart of accounts approved by Chief Accountant according to Order
of the Ministry of Finance of Ukraine No. 291, dated 30.11.1999.
Financial reporting under IFRS is drawn up based on information about assets, liabilities, equity, accounting transactions and statements of the enterprise performance according to accounting data by conversion of items according to the International Financial Reporting Standards.
The enterprise uses accounting data for accounting according to tax laws of Ukraine.
The present accounting policy is obligatory for application by all persons involved in formation of the enterprise
assets and liabilities, performance of transactions influencing the enterprise financial state.
Учетные аспекты:
The first financial statement of the enterprise based on the International Financial Reporting Standards is drawn
up for 2013. Representation and disclosure of information complies with IAS1. Comparative information is represented concerning one previous period – 2012. Notes describe basic corrections of items and their evaluation
required for conformity with the International Financial Reporting Standards.
Financial reporting elements recognition criteria:
Assets is a resource controlled by the enterprise as a result of past events and from which future economic benefits are expected by the enterprise.
Liability is an obligation of the enterprise arising from past events, the settlement of which is expected to result in
an outflow from the enterprise resources embodying economic benefits.
Equity is the residual interest in the enterprise assets after deducting all its liabilities.
Income is an increase in economic benefits during the accounting period in the form of inflows or enhancements
of assets or decreases of liabilities that result in increases in equity, other than those relating to contributions from
equity participants.
Expenses are decreases in economic benefits during the accounting period in the form of outflows or depletions
of assets or incurrences of liabilities that result in decreases in equity, other than those relating to distributions to
equity participants (shareholders).
The elements of financial statements are subject to recognition if they meet the above-mentioned definitions, if it
is probable that any future economic benefit associated with them will flow to or from the enterprise; and if the
item's cost or value can be measured with reliability.
73
MOTOR SICH
Notes to Financial Statements
CAPITAL ASSETS
Fixed assets
Cost value of fixed assets is subject to recognition as asset only if:
n there is a probability that the enterprise will obtain future economic benefit related to the item;
n the item's cost value can be measured with reliability.
The item of fixed assets which can be recognised as asset is subject to evaluation according to the cost value.
All items of fixed assets, which are acquired, obtained or produced by own means, but are not put into operation, are
reflected in the accounts of capital construction and fixed assets acquisition (manufacturing). After actual putting into
operation, items or their components which are parts of the starting complex are transferred to the corresponding fixed
assets accounts. Before putting into operation, items (components) are recognised as qualifying assets provided that the
period of their creation exceeds 365 days. In that case, the fixed assets cost value includes financial expenses connected with creation of such qualifying assets according to the National Accounting Standards (Regulations)/the
International Financial Reporting Standards.
Items of fixed assets which were acquired (built) for the purpose of sale are classified as the goods for resale and are
accounted as per section “Inventories” of the Accounting Policy.
Subsequent expenses which are referring to the item of fixed assets that is recognised already, increase its balance cost
if it is supposed acquisition of the future economic benefits exceeding originally calculated standard parametres of the
existing item of fixed assets.
Amortisation of fixed assets
Amortisation of fixed assets is calculated by straight-line method according to the useful life determined by technicians of the enterprise.
Liquidation value of fixed assets is equal to zero for calculation of amortisation.
Depreciation of the acquired asset is started from the next month after putting the asset into operation.
The land is not depreciated.
The capital assets of little value which are used for the needs of items of social sphere are depreciated 100 % at the
moment of their putting into operation.
The capital assets of little value which are used for the needs of primary production are depreciated by production
method.
The other capital assets of little value are depreciated 50 % when they are put into operation and 50 % when they
are written-off from balance.
The enterprise stops recognition of the balance value of fixed assets:
n after retirement of the asset;
n when no future economic benefits are expected from its operation or retirement.
74
ANNUAL REPORT
2012
STRUCTURE AND FLOW OF FIXED ASSETS (thous. UAH)
Buildings,
structures,
transmitting
equipment
Machinery and
equipment
Transport
vehicles
Other fixed
assets
Total
1,881,778
1,531,619
177,458
874,949
4,465,804
Received per year
263,905
502,769
52,158
189,481
1,008,313
Increases in value
3,704
2,107
83
101
5,995
75,611
19,377
463
20,647
116,098
2,073,776
2,017,118
229,236
1,043,884
5,364,014
Balance as of 31.12.11
110,238
325,494
70,468
408,540
914,740
Accrued per year
86,221
188,269
16,762
92,266
383,518
Increases in value
32
782
20
15
849
Retired per year
12,245
16,719
346
20,043
49,353
184,246
497,826
86,904
480,778
1,249,754
Net book value
as of 31.12.11
1,771,540
1,206,125
106,990
466,409
3,551,064
Net book value
as of 31.12.12
1,889,530
1,519,292
142,332
563,106
4,114,260
Item
Cost
Retired per year
Depreciation
As of December 31, 2012:
n amount of fixed assets with respect to which exist limitations stipulated by effective legislation regarding the right of
ownership is 88,127 thous. UAH;
n cost of fixed assets issued as mortgage is 896,163 thous. UAH;
n residual cost of fixed assets which are temporarily not in use is 94,380 thous. UAH;
n historical (revaluated) cost of fully depreciated fixed assets is 166,010 thous. UAH;
n cost of vendible fixed assets is 75,116 thous. UAH;
n cost of fixed assets received under operational lease conditions is 161,567 thous. UAH;
n depreciation of fixed assets with respect to which exist limitations regarding the right of ownership is 285,028
thous. UAH.
75
MOTOR SICH
INTANGIBLE ASSETS
The following groups of intangible assets are specified for financial reporting:
n Rights;
n Trademarks;
n Production licences;
n Software and software licences;
n Other intangible assets.
Item can be recognised as an intangible asset, if such item meets:
definition of intangible asset;
n the following recognition criteria:
- there is a probability that the enterprise will obtain the future economic benefits related to the asset;
- the asset’s cost value can be measured with reliability.
n
An intangible asset should be evaluated initially at the cost value of acquisition. All intangible assets that are
acquired, obtained or created, but are not put into operation, shall be reflected at the account of capital investments
into acquisition (creation) of intangible assets. After the beginning of their actual use, intangible assets are reflected at the account of intangible assets.
The cost of intangible assets created by the enterprise includes all expenses for creation, production and preparation of an asset for usage for its intended purpose.
Amortisation of intangible assets is calculated by straight-line method during their useful life. Liquidation value of
the intangible assets with restricted useful life is assumed as equal to zero.
INVESTMENTS
The Group possesses corporate rights in other enterprises. For the purpose of financial reporting, investment are
classified as follows:
n trade investments;
n investments withheld until settlement;
n investments in associated companies;
n investments in subsidiary companies.
Trade investments are accounted by fair value with reference of its changes to profit or loss of the corresponding reporting period.
Investments withheld until settlement and investments with fixed settlement term are accounted by depreciated cost value. Investments which do not have fixed settlement term are accounted by their cost value.
Investments in associated companies (the investor has significant influence, but does not control from 20 to
50 % of shares) are accounted by equity method. Results, assets and obligations of associated companies
are included in financial statements according to individual share. Balance value of such investments is
decreased when it is recognised reduction of benefit during evaluation of separate investments.
Investments into subsidiary companies (the investor controls more than 50 % of shares) are completely consolidated.
76
ANNUAL REPORT
2012
FINANCIAL INVESTMENTS (thous. UAH)
Item
Per year
At the end of year
long-term
short-term
Financial investments by method of shareholding in:
Associated enterprises
23,940
286,092
Other financial investments in:
shares and interests in statutory capital
of other enterprises
shares
676
631,029
bonds
873
651,276
11,910
5,954
other financial investments
Total
610
654,969
299,551
657,840
INVENTORIES
Inventories are classified by the following groups:
n Basic raw materials, materials, fuel and power stocks;
n Auxiliary raw materials, materials and other stocks;
n Work in progress;
n Spare parts;
n Construction materials;
n Finished products, semifinished products and the goods for resale.
Recognition of inventories
Inventories are reconized by the enterprise if they belong to it and:
- there is a high probability to obtain the future economic profit from their usage;
- their cost can be evaluated with reliability.
n
Transfer of risks and profits connected with possession of inventories is the basis for inventory items inclusion (writing-off) in/from inventories.
The cost value of inventories includes all expenses for acquisition, processing and other expenses incurred to deliver inventories to their current location and state.
Method of inventories evaluation during retirement.
The enterprise uses the following evaluation methods during retirement of inventories:
n Method of weighted average cost;
n Method of identified cost.
At use of the weighted average method, the cost of each item is determined as the weighted average of the cost of
similar interchangeable items at the beginning of the period and the cost of similar items purchased or produced
during the period.
Method of identified cost provides writing inventories down at the real cost of each unit determined according to
the item of Accounting Policy. This method is used for evaluation of the retirement of inventories in case of transactions with accessories, assembly units and parts with nameplate data.
77
MOTOR SICH
BALANCE VALUE OF INVENTORIES (thous. UAH)
Item
Production stocks
Balance value as of
31.12.2011
Balance value as of
31.12.2012
974,952
1,394,635
338
319
Work in progress
2,165,730
3,020,259
Finished products
221,968
185,632
5,291
6,882
3,368,279
4,607,727
Animals raising and fattening
Goods
Total
As of December 31, 2012, balance value of inventories is as follows:
n delivered for processing – 106 564 thous. UAH;
n registered as mortgage – 256 059 thous. UAH;
n presented as commission – 107 thous. UAH.
DEBIT INDEBTEDNESS.
Debit indebtedness are the contractual demands shown to buyers and other persons on reception of money
resources, the goods or services. For the purpose of financial reporting, debit indebtedness is classified as current
(obtainment is expected within current year or operational cycle) or as long-term (debit indebtedness which cannot be classified as current one).
Debit indebtedness is classified as commercial debit indebtedness (originating for the goods and services sold
during usual economic activities) and uncommercial (other) debit indebtedness. Initial recognition of debit
indebtedness is performed at fair value of the transferred assets. Short-term debit indebtedness is evaluated and
reflected at net realisable value in financial reporting.
The enterprise accumulates doubtful debts for reflection of doubtful debit indebtedness. Reserve of doubtful
debts is accrued based on financial solvency of separate debtors. Debit indebtedness is referred to the doubtful
debt according to the following criteria:
n limitation period of indebtedness expires earlier, than in 12 months from accounting date;
n the debtor is absent at the address specified in documents;
n the debtor is declared a bankrupt.
78
ANNUAL REPORT
2012
STRUCTURE OF COMMERCIAL
AND OTHER DEBIT INDEBTEDNESS (thous. UAH)
Item
As of 31.12.2011
As of 31.12.2012
Debit indebtedness for products,
works and services:
net realisable value
412,875
427,563
- of budgetary payments
353,908
315,897
- of advances granted
720,169
705,659
188,787
196,167
13,246
15,403
1,688,985
1,660,689
Debit indebtedness under settlement:
Other current debit indebtedness
Long-term debit indebtedness
Total
MONETARY ASSETS AND THEIR EQUIVALENTS
Monetary assets of the Group include cash in banks, cash on hand, monetary instruments and equivalents of
monetary assets which are not restricted in use.
At the initial recognition, foreign currency transactions are reflected by translation of the amount in foreign currency into the balance-sheet currency at the rate of the National Bank of Ukraine as at the date of transaction. The
amounts of paid and received advance payments in the foreign currency are translated into the reporting currency with the use of the currency rate as at the date of payment or receipt of advance payment.
Exchange rate differences as per the foreign currency monetary items are determined as at the Balance Sheet date.
Exchange rate differences from translation of the Balance Sheet items denominated in the foreign currency are
reflected in other operating income and expenses.
79
MOTOR SICH
MONETARY ASSETS (thous. UAH)
Item
Cash account
Current accounts in banks
Other accounts in banks (letters of credit, cheque-books)
As of 31.12.2011
349
204
201,480
183,215
48,401
25,296
Monetary assets in transit
Equivalents of monetary assets
Total
As of 31.12.2012
97
97,646
9,418
347,876
218,230
LEASE
Lease is classified as a finance lease if it transfers substantially all the risks and rewards incident to ownership, and
meets one of recognition criteria stipulated by IAS 17 "Lease". All other leases are classified as operating leases.
Assets held for financial lease are recognized as the enterprise assets at the fair value or the discounted cost of the
minimum lease payments at the date of receipt. Corresponding indebtedness should be included in the Balance
Sheet as obligations on financial lease with separation into long-term and short-term indebtedness.
80
ANNUAL REPORT
2012
PROVISION OF FUTURE EXPENSES AND PAYMENTS
Provisions are recognised, if the enterprise has legal or actual liabilities as a result of certain event in the past,
for settlement of which, with the greater degree of probability, outflow of resources will be required, and
which can be estimated with sufficient reliability.
PROVISION OF FUTURE EXPENSES AND PAYMENTS (thous. UAH)
Item
As of 31.12.2011
As of 31.12.2012
Provision of vacation allowances
8,409
9,803
Provision of future payments
for additional pension coverage
264,138
286,177
75,634
70,361
Target financing
529,733
703,783
Total
877,914
1,070,124
Provision of future payments
for implementation of guarantees
The Group recognises provision of vacation allowances as a reserve that is formed monthly based on the salary
fund and estimated rating. Rating is calculated based on data of previous reporting periods taking into account
adjustment for reporting period data. Provision of future payments for implementation of guarantees is also calculated based on data of previous reporting periods.
The Group participates in the state pension plan with determined payments that provides for early retirement of
employees working in harmful and dangerous labour conditions. Obligation reflected in consolidated financial
statements as regard to the pension plan with determined payments shall be determined based on actuary’s
report.
“Target financing” item contains funds in the amount of 682,411 thous. UAH that were released as a result of
income tax allowance for aircraft-building enterprises, got out of basic activity, as well as out of the enterprise
research and development works used for the needs of aircraft-building industry.
81
MOTOR SICH
USAGE OF STATE SUBSIDIES (thous. UAH)
Item
Year 2011
Repayment of bank credits received for purchase
of equipment for technical reequipment of production
facilities and modernisation of the enterprise.
Year 2012
27,613
28,444
Payment of interest on credits received for purchase
of fixed assets.
1,894
4,086
Payment of expenses for research
and development works.
6,092
35,608
Payment of expenses connected with increase
of production output.
140,099
480,897
Payment for equipment and works connected with
technical reequipment and modernisation
of production facilities.
115,114
265,405
Total
290,812
814,440
EMPLOYEE BENEFITS
All employee benefits are accounted as current ones according to IAS 19.
The Group shall pay obligatory payments to the State Pension Fund and the Social Insurance Fund for its employees in
the amount stipulated by Laws. Contribution is calculated as percentage of the current gross amount of salaries, and is
included in expenses during recognition of corresponding liabilities for payment of the contribution.
82
ANNUAL REPORT
2012
PROFIT TAX EXPENSES
Profit tax expenses are measured and accounted in financial statements of the enterprise according to IAS 12.
Profit tax expenses reflected in the Statement of financial performance consist of the amounts of current profit tax and
deferred profit tax.
Current profit tax is determined based on taxable profit for the reporting period calculated as per the tax laws of Ukraine.
Deferred tax is recognised in the amount expected to be paid or recovered due to the difference between the Balance
Sheet assets and liabilities that are specified in financial statements, and corresponding tax bases of assets and liabilities.
Deferred ptofit taxes are calculated based on temporary differences with application of the balance sheet liability method.
Deferred tax assets and liabilities are calculated based on tax rates expected to be applicable in the period when assets
are sold or recovered based on the tax rates acting at the reporting date, or about introduction of which in the nearest
future it was known reliably at the reporting date.
PROFIT TAX (thous. UAH)
Item
Current profit tax
Amount
735,916
Deferred tax liabilities
As at the beginning of reporting year
199,186
As at the end of reporting year
108,263
Included in Statement of Financial Performance - Total Including:
644,993
current profit tax
735,916
reduction of deferred tax liabilities
-90,923
83
MOTOR SICH
RECOGNITION OF LOANS AND OBTAINED CREDITS
All long-term and short-term loans are recognised in the reporting period in which they were obtained.
Expenses on loans are recognised by accrual method – i.e. in the period in which they arised based on contract
conditions.
Expenses on loans which are directly connected with acquisition, construction or production of qualifying assets
are capitalised as a part of such assets if the assets recognition criteria are met.
Other expenses on loans are recognised as expenses of the period in which they arised.
LIABILITIES
Liabilities are accounted and recognised by the enterprise according to IAS 37.
Liabilities of the Group are classified as long-term ones (term of repayment is over 12 months) and current ones
(term of repayment is up to 12 months).
Long-term liabilities (except for deferred income taxes) are accounted depending on their type or either at amortised cost or discounted cost.
Current credit indebtedness is accounted and reflected in the Balance Sheet at initial cost which is equal to fair
value of obtained assets or services.
LONG-TERM LIABILITIES (thous. UAH)
Long-Term Liabilities
As of 31.12.2011
As of 31.12.2012
Long-term bank loans
72,721
44,596
Deferred tax liabilities
199,186
108,263
25,908
27,141
297,815
180,000
Other long-term liabilities
Total
The Group transfers part of long-term liabilities into short-term liabilities, when it remains less than 365 days as
of the Balance Sheet date until the return of debt portion under conditions of contract.
84
ANNUAL REPORT
2012
COMMERCIAL AND
OTHER CREDIT INDEBTEDNESS (thous. UAH)
Item
Issued bills
As of 31.12.2011 As of 31.12.2012
3,829
4,829
125,999
196,330
1,841,895
1,670,594
- of budgetary payments
25,589
11,178
- of insurance
26,846
32,731
- of salary
45,942
56,329
- with participants
10,044
34,465
Other current liabilities
35,937
92,993
2,116,081
2,099,449
Credit indebtedness for goods, works and services
Current obligations under settlement:
- of advances received
Total:
OWNER'S EQUITY
Statutory capital includes cost of property which was obtained by the enterprise as a result of privatisation.
By the end of 2012, the registered statutory capital of Motor Sich JSC is 280,528,650 thous. UAH. It consists of
2 077 990 ordinary registered shares with nominal value of 135 UAH.
Motor Sich JSC accrues dividends on shares and recognises them as liabilities at the reporting date only if they are
declared before and including the reporting date. Accumulated profit is distributed according to procedure established by the Meeting of Shareholders.
85
MOTOR SICH
RECOGNITION OF INCOME AND EXPENSES
Income of the enterprise is recognised on the accrual basis when it is probable that economic benefits will
increase as a result of transaction, and when the revenue can be measured reliably.
Income arising from the sale of goods is recognised when the seller has actually transferred to the buyer significant risks, benefits and control over assets (the goods are shipped and ownership is transferred), and when all
recognition criteria of the income have been satisfied according to IAS 18.
When the enterprise renders services and performs works under the contract during agreed time, revenue is
recognised in the accounting period in which the services are rendered, and is calculated based on total value of
the contract or the completed stage. Acceptance Report signed by the both Parties is a documentary evidence that
the customer has accepted results of performed works and rendered services.
Interest income is recognised in the period which it refers to on the accrual basis.
Dividend income is recognised when the shareholder's right to receive payment is established.
SALE INCOME (thous. UAH)
Item
Year 2012
Net income from selling products (goods, works, services)
- from production and repairing of aircraft engines
- from production and repairing of ground equipment
- from production of consumer goods
6,437,445
435,714
98,285
- other goods, works, services
956,932
Total sale income
7,928,376
COST OF SALES (thous. UAH)
Item
Material costs
2,110,342
Personnel expenses
1,315,594
Depreciation of fixed assets
291,114
Other
933,332
Total cost of sales
86
Year 2012
4,650,382
ANNUAL REPORT
2012
ADMINISTRATION EXPENSES (thous. UAH)
Item
Personnel expenses:
Year 2012
210,526
- including salary, social costs
181,192
- business travel expenses
15,547
Maintenance cost of fixed assets
46,569
Depreciation of fixed assets
21,558
Labour safety expenses
3,723
Training expenses
15,262
Fire-fighting and security expenses
22,595
Typographic and postal-telegraph expenses
4,925
Other
241,321
Total administration expenses
566,479
SELLING EXPENSES (thous. UAH)
Item
Transportation, insurance expenses
Personnel expenses:
Year 2012
82,316
9,678
- including salary, social costs
4,959
- business travel expenses
4,719
Warranty service and repair
60,663
Marketing and advertising
46,137
Other
200,704
Total selling expenses
399,498
87
MOTOR SICH
OTHER INCOME AND EXPENSES (thous. UAH)
Item
Income
Expenses
4,335,795
4,300,293
Other operating income and expenses
Selling of foreign currency
Expenses for research and development
Operating lease of assets
4,300,293
8,439
331
40,906
27,765
165,856
80,176
531
5,708
Maintenance of housing-and-utilities,
social-and-cultural facilities
4,362
4,362
Other operating income and expenses
736,518
715,666
5,292,407
5,321,059
24,367
7,392
Operating difference in rates
Selling of other circulating assets
Penalties, fines and forfeits
Total
Incomes from shareholding and investment in:
Associated enterprises
Other financial income and expenses
Dividends
155
Interest on credit
49,743
Other financial income and expenses
21,894
Total
21,894
49,743
Sale of financial investments
7,868
11,309
Non-operating difference in rates
9,848
12,176
Other income and expenses
Donated assets
33
Debiting of capital assets
Other income and expenses
Total
1,521
9,760
21,626
27,509
46,632
Structure of income with respect to ordinary types of activity has not changed since the previous reporting period.
Income from the ordinary types of activity, the same as in the previous period, for 90% consists of income from production and overhaul of aircraft engines, and ground equipment. Income from selling consumer goods is negligible.
The highest figures in items “Other operating income and expenses” belong to the income and expenses related
to selling of foreign currency and other negotiable assets, as well as maintenance of social sphere facilities.
Absolute values of income/expenses have increased significantly in comparison with the previous year.
88

motor sich

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