blok eng pdf.indd

Transcription

blok eng pdf.indd

Kazan Open
Joint Stock Company
«ORGANICHESKY SINTEZ»
ANNUAL REPORT
2006
The world today is the technocratic world. The concept
of progress is connected with the science and technics
development process and technology development. And in
this world organic chemistry takes the special place of one of
the “future sciences”.
Today polymeric materials pretend for domination in all fields
of the human life, from the large-scale constructions and
outer-space exploration to the household field. It becomes
obvious in the moment of acquaintance with the number of
facts based on the real projects and inventions, which are still
considered as the Future technologies, but can be realized at
the favorable conditions in the nearest future. One of the basic
components of each of the mentioned inventions is use of
these or those kinds of polymeric materials.
Organic chemistry, start with the direction of modern society
development, becomes the original arm of forming not only
new technologies but also new science-technical and design
thinking. Even the scientists of the 20th years of the XXth
century told that such time will come. And we fall to live during
the time when these brave forecasts come true!
The given report is made by the Economic Analysis
Department of OJSC «Kazanorgsintez» on the basis of the
data of the structural divisions of the enterprise, independent
auditor’s report of the company and the official external
sources, with the purpose to display the balanced and proved
picture of economic, ecological and social productivity of
organization’s activity. The report is intended for a wide range
of people, including management of OJSC «Kazanorgsintez»,
shareholders of the Company, investors and other interested
parties.
When making up the report, the company was guided by the
following principles:
openness, completeness and importance;
reliability, quality and objectivity;
comparability, clearness and timeliness.
When making up the report
polymeric materials were used only.
TABLE OF CONTENT
part I
ABOUT THE COMPANY
ABOUT THE COMPANY
10
MESSAGE FROM GENERAL DIRECTOR
12
MESSAGE FROM DEPUTY GENERAL DIRECTOR
- DIRECTOR ON ECONOMY AND FINANCE
13
MISSION AND STRATEGY
14
MAIN PARAMETERS OF ACTIVITY
15
MAJOR FACTORS OF RISK
18
EVENTS OF THE YEAR
REVIEW OF ECONOMY OF RUSSIA AND
TATARSTAN REPUBLIC
19
26
EXIT
part II
part III
part IV
INDUSTRIAL ACTIVITY
COMMERCIAL ACTIVITY
INVESTMENT ACTIVITY
STRUCTURE OF COMMODITY OUTPUT
PRODUCTION AND THE COST PRICE
OF PRODUCTS
INDUSTRIAL STRUCTURE OF
OJSC “KAZANORGSINTEZ”
ETHYLENE PLANT
LDPE PLANT
HDPE PLANT
ORGANIC PRODUCTS PLANT
PLANT FOR PRODUCTION OF NITROGEN,
OXIGEN AND COLD (NOC)
PLANT FOR PREPARATION AND HOLDING
MAJOR OVERHAULS (PHMO)
AUXILIARY DIVISIONS
29
part V
CORPORATE MANAGEMENT
POSITION IN INDUSTRY
61
DEVELOPMENT PROGRAM
75
REVIEW OF THE BASIC PRODUCTS MARKET
62
DEVELOPMENT PROGRAM FINANCING
76
REVIEW OF OUTPUT RESULTS
68
DEVELOPMENT PROGRAM PERFORMANCE
78
RAW MATERIAL SUPPLY
70
30
33
34
35
38
39
part VI
86
STRUCTURE OF BOARD OF DIRECTORS
87
88
STRUCTURE OF EXECUTIVE MANAGEMENT
89
AUTHORIZED CAPITAL AND STOCK MARKET 92
ESSENCIAL FACTS AND DEALS
96
LIST OF AFFILIATED PERSONS
97
DATA ABOUT THE COMPANY
98
40
40
41
INDEPENDENT AUDITORS’
REPORT AND CONSOLIDATED
FINANCIAL STATEMENTS
STATEMENT OF MANAGEMENT RESPONSIBILITIES
FOR THE PREPARATION AND APPROVAL
OF THE CONSOLIDATED FINANTIAL
STATEMENTS
102
INDEPENDENT AUDITORS’ REPORT
103
CONSOLIDATED FINANTIAL STATEMENTS FOR
THE YEAR ENDED 31 DECEMBER 2006:
CONSOLIDATED INCOME STATEMENT
105
CONSOLIDATED BALANCE SHEET
108
CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS’ EQUITY
109
DEVELOPMENT OF TECHNOLOGIES AND
BRANDED ASSORTMENT
42
QUALITY SYSTEM
42
RESOURCES EFFICIENCY
46
ECOLOGYCAL POLICY
48
NATURE PROTECTION
49
MANAGEMENT OF PERSONNEL
54
SOCIAL FIELD
56
CONSOLIDATED STATEMENT OF
CASH FLOWS
110
NOTES TO THE CONSOLIDATED FINANTIAL
STATEMENTS
111
PART I
ABOUT THE COMPANY
part I // ABOUT THE COMPANY //
10
11
ABOUT THE COMPANY
Since 1999 activity is carried out according to the world standards ISO 9000. In
2006, Ecological Management System
ISO 14001:2004 and Integrated Quality
Management System ISO 9001 and ISO
14001 have been certificated in OJSC
«Kazanorgsintez».
The revenues from product sales according to the results of 2006 have made
15.5 bln.roubles, net profit – 2.2 billion
roubles. Number of personnel came to
more than 8 ths. employees.
Credit ratings according to Standard and
Poor’s agency - «В-», Fitch Ratings agency – «B». The outlook on ratings “stable”.
Within the framework of the development program realization the capital investments of 10.4 bln.roubles have been
financed in 2006.
OJSC «Kazanorgsintez»
OJSC «Kazanorgsintez» includes six
plants and the auxiliary divisions located
on one industrial platform with a total
in the chemical industry of Russia, located area of 4.2 sq.km., and possessing uniin the capital of Tatarstan Republic, in Kazan. The enterprise is form transport, power and telecommufounded in 1958. In 1963 the first batch of products - phenol nication infrastructure:
and acetone was produced.
Ethylene plant. The main prodNow the enterprise produces polyethylene, polyethylene pipes, ucts of the plant are ethylene, propylphenol, acetone, ethylene glycol, ethanolamines and other ene, phenol and acetone. All ethylene is
products of organic synthesis, the total assortment includes further processed at LDPE plant, HDPE
more than 170 denominations with a total production volume plant and organic products plant.
over 1 mln. tons. Products correspond to the international qualLDPE plant. Produces various
ity standards of GOST R ISO 9001-2001 (ISO 9001:2000) and are
grades and compositions of low density
exported to many countries of the world.
polyethylene.
is one of the largest enterprises
Plant for production of nitro- At the time, the following plants are
gen, oxygen and cold. About 85 % of its getting ready for commissioning:
products oxygen and cold consumed by
Bisphenol-A plant.
other plants and divisions of the enterThe
“know-how”
of «Idemitsu Kosan Co.,
prise.
Ltd». Capacity of the plant – 70 ths. tons
Plant for preparation and makper year.
Organic products plant. Pro- ing major overhauls. Carries out the
duces ethylene oxide and other prod- preparation & realization of current and
Polycarbonates plant ucts on the ethylene oxide basis: ethyl- major overhauls of the industrial equipthe first in Russia, the “know-how” of
ene glycol, ethanolamines and others.
ment in all divisions of the enterprise.
«Asahi Kasei Engineering Corporation»
using non-phosgene method and the
“know-how” of without waste production. Capacity of the plant – 65 ths. tons
per year.
Plant for production and processing of high density polyethylene
(HDPE plant). Releases various brands
and compositions of high density polyethylene, pressure and gas pipes of
HDPE.
MESSAGE FROM DEPUTY GENERAL DIRECTOR
DIRECTOR ON ECONOMY AND FINANCE
MESSAGE FROM
GENERAL DIRECTOR
Dear ladies
and gentlemen!
Dear ladies and
gentlemen!
During the last several
years we can notice the positive
dynamics of our basic financial-
Summing up the work
done by us, it would be
desirable to note first of all, that
the leaving year was one of the most
important and the most difficult in the
history of our enterprise, but the primary goals of 2006 have been solved.
In 2006 the revenues from product sales
have made more than 15.5 billion roubles,
which is by 16.4 % above the level of the
last year, the net profit has increased by 10 % and has reached 2.2
bln.roubles. The index of physical volume of commodity output
has made 104 % to the level of 2005, thus the part of production
units has been stopped for reconstruction. Growth of financial
parameters has been influenced by a favorable conjuncture in
the markets of basic products and resuming of basic raw material ethane delivery volumes from the Orenburg Helium Plant.
Released products correspond to the consumers requirements.
OJSC “VNIIS” has confirmed the conformity of Quality Management System and Ecological Management of OJSC «Kazanorgsintez» to the international standards ISO 9001 and 14001.
Its worth to note, that financing of the development program
is carried out basically out of credits and loans. The great work
for reducing the interest rates and using the new financial
tools has been made for minimization of charges under the
debt service. Solving this problem we entered the international capital market and had successfully issued Eurobonds.
The company has kept at the former level the international
credit ratings from Fitch and Standard & Poor’s agencies which
is important for the further investment program realization.
Realizing the principle of social partnership, «Kazanorgsintez»
creates new workplaces and pays worthy material compensation. During 2006 more than 1,100 people have been employed, the average salary amount has made 16.7 ths. roubles,
and number of personnel by the end of the year has made
8,323 employees. The average salary amount at our enterprise is one of the highest among the enterprises of Tatarstan.
In the past year, 21 activities have been carried out with the purpose of increasing the efficiency of using the fuel, energy and
other material resources. Expenses for those activities realization
in 2006 have increased 1.3 times in comparison with 2005 and
have made 5.1 mln. roubles. Economic benefit from the activities realization has made 82.9 million roubles. According to the
results of 2006 the enterprise was awarded with the Diploma of Realization of the tasks in view and the growth of finanthe Ministry of Economics and Industry of Tatarstan Republic cial parameters have led to the growth of company capi«For significant, stable results in energy and resources saving». talization which by the end of 2006 has exceeded 1.1 billion dollars, which is 1.5 times above the level of the last year.
The year of 2006 was the key year in investment projects realization. We have finished HDPE and phenol pro- Development program realization is the first step to the goal
duction units’ modernization. Volumes of HDPE produc- in view – to become one of the leading petrochemical comtion in 2006 are the highest for the all history of the plant. panies of the world. Every person of our enterprise deserves
the words of gratitude for the proved work, self-feedback and
According to the approved schedule the new plants con- the right attitude to the business. Support of shareholders and
struction is being carried out: bisphenol-A and polycar- trust of investors will help us to solve tasks in view in the future.
bonates. There is an assembling of the new double cell
cracking furnace at ethylene plant which will allow to proGENERAL DIRECTOR
cess ethane with productivity of ethylene 18 tons/hour.
OJSC «KAZANORGSINTEZ»
L.S. Alyokhin
economic parameters. The year 2006 is not exception, despite of the part of our production
units have been stopped for reconstruction.
We achieved the growth of the physical volumes of production by 4% to the level of 2005.
Profit from sales proceeds has grown by 13%
in comparison with 2005 and reached 3.8 bln.
roubles and net profit has increased by 10%. I
should note with satisfaction that our partners
from Orenburg gas processing plant resumed
supplies of ethane that allowed us to load our
capacities more completely.
2006 became the turning year in investment projects realization.
The modernization of high density polyethylene and phenolacetone production units is finished. And we’ve started to feel
efficiency from these projects in the 4th quarter already. The construction of bisphenol-A plant and polycarbonates plant is being continued. In total for 2006 the financing of the investment
program made the highest figure for our enterprise – 10.4 bln.
roubles. With the commissioning of the two new plants in 2007
those investments will start to bring the effect.
Under the supervision of general director of our enterprise, in
2006 financial department solved the problem of optimization
of the investment projects financing, for that reason the activities
for interest rates reduction and using of the new financial instruments have been carried out.
For the first time OJSC «Kazanorgsintez» has entered to the international capital market and issued the five-year unsecured
loan participation notes for the amount of 200 mln. US dollars
with listing at the London stock exchange. Debut issue of OJSC
«Kazanorgsintez» was quite successful: subscription to our notes
almost two times exceeded the first volume of placement, and
the rate of attraction appeared lower than for issuers with the
same rating. One of the most important factors here became the
professional organization of the loan and the level of credit rating.
Ratings of the two international rating agencies: Standard&Poor’s
and Fitch Ratings, received in 2005, are staying at the same level,
which is very important for the further investment program realization. The significant part of the borrowed funds we directed to
refinancing of the more expensive credits of Sberbank, so we increased the average term of the debt service, released the funds
from the securitization, decreased the average interest rate, and
thereby increased the financial stability of the company.
In 2006 the development of the functional integrated management system of the enterprise SAP R/3 was continued: the
module “Project management” at gathering the actual costs, the
module “Technical service and repair of the equipment” at the
auxiliary shops and the software of the module “Management of
the personnel” were installed, filling of the business information
storing «BW» is being continued.
Nowadays it’s impossible to imagine the effective management
of the enterprise financial-economic system without the budgeting system, which has been installed 7 years ago and got widely
developed in 2006. The system allows us to plan and control the
financial flows, to form the optimal financial strategy, realizing
correlation of strategic and operational plans of the company for
keeping up the financial stability.
As a president of the water-polo team “Sintez”, I express the special gratitude to the trainer’s team and the players for their sports
achievements in the current season. Thanks to their efforts and
full self-realization, the team became the silver prize-winner of
the Championship of Russia for the first time, and also became
the finalist of the Euro Cup LEN TROPHY 2005-2006. That is the
significant input to the development of the republican sport and
to the image of the company.
The position of OJSC «Kazanorgsintez» as one of the leading enterprises of the chemical industry of Russia continues to become
stronger and we can say with confidence that according to many
parameters we are the company of the international level.
DEPUTY GENERAL DIRECTOR DIRECTOR ON ECONOMY AND FINANCE OJSC «KAZANORGSINTEZ»
M. F. Mukhametshin
14
15
MAIN PARAMETERS
OF ACTIVITY
MISSION AND STRATEGY
MISSION
Our purpose is to be the best
in the Russian market of chemical goods,
№
to meet high world standards in mutual relations
Parameters
Units
2004
2005
2006
2006/2005
with our business partners, investors, employees, society and
environment.
1
Commodity output
Cost price
Index of physical volume
mln.RUR
mln.RUR
%
11,870.4
8,823.7
100.4
13,597.0
10,367.6
92.2
15,771.2
12,066.5
104.3
116.0%
116.4%
113.1%
2
Revenues from sale
Including export
Cost price
Profit
Profitability
mln.RUR
%
11,787.8
2,928.3
8,743.8
3,044.0
25.8
13,328.6
2,710.1
9,985.1
3,343.5
25.1
15,517.7
2,815.2
11,735.5
3,782.2
24.4
116.4%
103.9%
117.5%
113.1%
97.2%
3
Taxes (calculated)
mln.RUR
1,839.2
1,696.0
34.2
2.0%
4
Net profit
mln.RUR
1,981.6
2,002.1
2,209.0
110.3%
5
Amortization
mln.RUR
308.1
392.9
586.6
149.3%
6
Own capital
mln.RUR
7,676.9
9,257.6
11,120.2
120.1%
7
Capital investments
mln.RUR
1,437.9
5,169.2
11,467.6
221.8%
8
Financing of capital
investments
mln.RUR
1,114.7
7,061.2
10,382.0
147.0%
9
Liabilities (total debt)
mln.RUR
1,300.3
7,065.2
16,968.5
240.2%
We shall achieve performance of the tasks put to us by shareholders
due to professionalism and introduction of new technologies.
OJSC “Kazanorgsintez” in mutual relations with business partners,
consumers, financial and public institutions strictly adheres to the
principles of business ethics, considers its reputation as one of our
most powerful assets. Constructive partner relations are maintained
with suppliers, buyers, authorities and all interested groups of
society.
The guarantee of successful development of the enterprise and
prosperity of business are people, therefore OJSC “Kazanorgsintez”
aspires to create a corporate environment in which each employee
can realize professional opportunities with the utmost advantage
for himself and the company. We provide to our employees good
working conditions and worthy material compensation.
The main directions of investments are the introduction of up to
date “know-how” and our own scientific development.
STRATEGY
OJSC “Kazanorgsintez” strives so that the highest level of industrial
and ecological safety requirements of legislations is adhered to and
10 Accounts receivable
mln.RUR
966.4
2,880.4
3,476.1
117.8%
makes the best efforts for the maximum reduction of adverse affects • Realization of the Development Program for increasing the
capacities of existing products and production of new ones
on the environment and human health.
11 Average personnel
number
employees
7,061
7,607
8,072
106.1%
RUR / month
12,181
15,463
16,739
108.3%
• Increasing production with the high added value
• Increasing efficiency by optimization the parity of internal and
export sales
• Diversification of the raw-material base
• Reduction of expenses under the saving resources program
• Diversification of the financing base
12 Average salary
CITY
UNDER DOME
Even in the polar districts of our planet it is possible to establish comprehensible temperature conditions, using the sun
light only, if to build something like a hothouse. However
the glass is too heavy for this purpose - it is needed to be
transferred to the pole. But what if we want to cover with the
dome not only one single building but the city? Then the
glass construction will be awfully complicated.
Arise the application of the polymer films. But it is quite difficult to create the effective construction from them. If the
megadome will be built on the skeleton basis, the construc-
tion will be heavy and nonresistant to the nature cataclysms
(for example wind flows).
Alexander Bolonkin, space specialist, and Richard Katkart,
geographer, offered to arise nonskeleton “Evergreen polar
domes”, supported at the melted condition by the small exuberant pressure inside the settlement. The skin can be made
from the transparent film with the width of 0.1 mm, for example. For additional heat insulation, the wall of the dome
has cellular structure. More over, dome’s authors provided
rectangular grid of the thinnest wires in the depth of the film,
warning about the dome’s damage.
Certainly, ultrathin (about micrometer and less) polymeric
films, possessing the necessary strength for such construction, are considered as the products of high technologies
themselves. Their creation and mass production - is the purpose for the nearest years. However, there is nothing fantastic
in the plans of Bolonkin and Katkart, just only the assumption about the future application of such domes on moon
and on Mars.
18
19
Risks listed below can render negative influence on activity of OJSC «Kazanorgsintez».
COUNTRY AND The enterprise is registered as the tax bearer and carries out primary activity in Kazan. The
REGIONAL economic situation in Russia for the last several years had stabilized and has a predictable
RISKS character. There are such positive tendencies as: growth of the gross domestic product
(GDP), stabilization of the national currency, growth of the real level of wages, reduction in
rates of inflation. The credit rating of Russia in a foreign currency on the international scale in
long-term prospect has increased by the end of 2006 up to the investment level, and made
by data of: Standard&Poor’s - BBВ +; Fitch - BBB +; Moody’s - Baa2. Increase of Russia credit
rating opens additional opportunities for attraction of extra loan facilities both inside of the
country, and from foreign capital market.
However positive tendencies can change. Economic and political instability in Russia can
negatively influence to the activity of OJSC «Kazanorgsintez».
The risks connected to geographical features of the country and region in which primary
activity is carried out, are insignificant, since the location of the enterprise is characterized by
absence of the increased danger of acts of nature, and presence of traffic intersections and
ways of communication excludes inaccessibility of the enterprise for suppliers and consumers.
INDUSTRY The risks connected with possible change of prices for raw materials, services used by
RISKS the company.
Raw materials and power have the greatest relative density in the structure of expenses of
chemical industry. Prices for basic raw materials are influenced by the world oil prices at different extent. The most influence is experienced by propan-butane and benzene. The decision
of questions of raw materials supply of OJSC «Kazanorgsintez» is being promoted by closer
cooperation with OJSC “Gazprom”, enterprises of oil-and-gas chemical complex on the territory
of Tatarstan Republic on mutually advantageous conditions, and also a policy of the country
leaders of Tatarstan Republic, directed to the active state support of whole oil-and-gas chemical
complex of Republic. Provision of the enterprise with the electric power is carried out by OJSC
“Tatenergo” from two power sources of Kazan Thermal Power Stations-2 and Thermal Power
Station-3 which are interconnected and have connections with RAO “UES “. The heat supply is
carried out by Kazan Thermal Power Station-3. Provision of the enterprise with power resources
is carried out without fail. The enterprise in the activity uses basically local sources of resources,
works, and services.
The risks connected with possible change of prices for company’s products in the
local market.
The great demand for OJSC «Kazanorgsintez» products and its competitive advantages allow
establishing prices up to the level of world prices without reduction of the sales volumes
during many years. For price level definitions are considered: market condition, prices of
competitors, and costs of production. However, competitive struggle of the companies and
aspiration for increasing the share in the Russian market can influence the change of the
market prices.
The risks connected with influence of the world prices conjuncture for exported
products.
The part of OJSC «Kazanorgsintez» products is exported. The policy of export contracts
provides the conclusion of contracts till 1 year. The prices for products are established according to the conditions of deliveries and a conjuncture in each concrete country. These
prices can feel fluctuations under influence of the factors which are not controllable by OJSC
«Kazanorgsintez».
RISKS CONNECTED The risks connected with the production process
WITH ACTIVITY OF Industrial activity of OJSC «Kazanorgsintez» is interfaced with possibility of adverse factors,
including failure of the equipment, carrying out of not planned works for repair and, as conTHE COMPANY
sequence, decrease of the industrial parameters below the expected level. Considering it, at
the enterprise the automated control system of technological processes is being installed. In
full and in time scheduled preventive, current and major overhaul of production assets are
carried out. Certificates of conformity are received for: quality management system GOST
R ISO 9001-2001 (ISO 9001: 2000); ecological management system ISO 14001: 2004; integrated management system ISO 9001 and ISO 14001.
The risks connected with licenses effect
For the activity in the field of production and use of natural resources OJSC «Kazanorgsintez»
receives the licenses, permitting such activities. In the majority cases the possibility of license withdrawal is provided if requirements of license agreements are not carried out. OJSC
«Kazanorgsintez» aspires to fulfill all requirements of license agreements.
Environmental risks
Activity of OJSC «Kazanorgsintez» is interfaced with the potential danger of pollution of the
environment or causing damages to it. The ecological policy of the Company is approved
at OJSC «Kazanorgsintez», certificates of ecological management system and integrated
system of quality management and ecological management are received. The scheduled
nature protection actions are carried out aimed to prevention of the harmful influence of the
operating units to the environment.
20
FINANCIAL The risks connected with inflation in Russia
RISKS At increase in the inflation rate the depreciation of national currency and increase of the
EVENTS OF THE YEAR
JANUARY
prices are taking place. The increase in the rates of rise of prices can lead to the growth of
expenses of the enterprise (due to the rise in power resources, raw material, and materials
prices), growth of costs of loan funds and become the reason of decrease in parameters
of profitability. Therefore in case of significant excess of actual parameters of inflation over
forecasts of the Government of the Russian Federation, the management of the enterprise
plans to take actions on restriction of expenses growth, decrease of debt receivables and
reduction of its average terms.
The risks connected with changes of currency exchange rates
The part of production is sold to the foreign market; therefore the enterprise is the subject
of the certain currency risk. The basic costs of the enterprise – roubles, whereas the revenues
from products’ sales for export in rouble equivalent increase with increase in a rate and decrease with reduction of a rate.
21
I
New development of OJSC «Kazanorg- OJSC «Kazanorgsintez» has hold Scientifisintez» for low density polyethylene cally-practical conference devoted to the 5th
production with use of liquid fraction anniversary of funcof low-molecular polyethylene instead of tioning of informaimport catalyst oils is awarded with bronze tion system ERP of
medal according to the results of participa- class SAP R/3 where
tion in the world Interior of innovations, heads and the main
scientific researches and new technologies experts of the lead“Bruxelles-Eureka” which annually takes place ing enterprises of
in Belgium.
oil-and-gas industry
have participated.
FEBRUARY
The risks connected with changes of interest rates
The enterprise has long-term credits and loans denominated in foreign currency and in
roubles, with the “floating” and fixed interest rates. In this connection, the increase in “floating” interest rates and the exchange rate can lead to the price rise of the debt service for the
enterprise. For reduction of the given risk OJSC «Kazanorgsintez» receives credits in different
currencies, aspires to optimize a ratio of received credits with the fixed and “floating” interest rates, and also carries out systematic activity for reduction the interest rates and credits’
margin.
II
Products of OJSC «Kazanorgsintez» The association of swimming pools of Russia
are awarded with two diplomas of the has awarded a complex «Orgsintez» with the
All-Russia organization of the quality, 2nd honor place according to the results of
testifying the conformity to the highest level traditional review-competition among the
established by the program swimming pools of Russia.
«Russian quality». Diplomas
are given for low density and
high density polyethylene
and composition of middle
density
polyethylene
for
The unit for washing waters return has been
commissioned at purification units, which allowed to reduce discharge into r. Volga from
6,100 down to 100 cubic meters a day.
pipes and connecting details
LEGAL RISKS The risks connected with change of rules of the Customs control and duties
for natural gas networks, and
In view of purchasing import equipment and delivery of products for export there is a risk of
also for pipes from polyeth-
change of the state customs regulation that can affect to OJSC «Kazanorgsintez» expenses.
ylene for gas pipelines PE 80
GAS.
The risks connected with change of the tax laws
Consist in increase in cost price of products in case of increase in tax rates or introduction of
additional taxation.
The risks connected with change of judiciary practice
The questions connected with OJSC «Kazanorgsintez» activity and capable to affect the results of the current disputes of OJSC «Kazanorgsintez» with the third parties, are insignificant
since proceedings with participation of OJSC «Kazanorgsintez» have changeable character
and do not render essential influence on current results of the company.
In case of occurrence of one or several risks listed above, OJSC «Kazanorgsintez» will take all possible measures on reduction of
developed negative changes at the enterprise. At the moment, definition of the full list of specific actions at any risk is not obviously possible, because elaboration of adequate measures is complicated with uncertainty of situation development in the future.
Parameters of held actions will depend on features of the situation in each specific case. OJSC «Kazanorgsintez» cannot guarantee,
that the activities directed on overcoming of arisen negative changes, will lead to essential change of a situation.
MARCH
III
The collective agreement of OJSC «Design procedure for estimation of inte«Kazanorgsintez» is recognized grated factor of the worker for observance of
as one of the best in nomination requirements, rules and norms of industrial
«Enterprises and organizations of the indus- safety, protection and ecology» was came
trial sphere» of the into force with the purpose of provision incompetition
«The dustrial safety requirements observance and
best collective agree- perfection of preventive work system.
ments».
22
EVENTS OF THE YEAR
APRIL
IV
New installation of the pressure
23
EVENTS OF THE YEAR
pure hydrogen is commissioned with the
VII
purpose of HDPE Plant provision with highly
it is the best parameter among the enter-
purified hydrogen.
prises of Tatarstan Republic in all presented
The new biogenic station, being the impor-
sectors. The rating is made by the Publishing
tant part of the system of biological sewage
House «Secret of a firm».
JULY
swing adsorber (PSA) E-100 with
OJSC «Kazanorgsintez» has
taken the sixth place in the
capacity of 240 kg an hour of
chemical sector in the rating
of “200 the most open companies of Russia»,
treatment is put into operation. Process of
preparation and supply of biogenic solution
The expanded board «Competitiveness of commodity producers and results of social and
to aeration tanks is completely mechanized
economic development of Tatarstan Republic for the 1st half-year 2006» at a level of Govern-
and automated.
ment with participation of Prime Minister and also representatives of the President Body, the
State Council and Cabinet of Ministers of Tatarstan Republic has taken place on the territory
MAY
V
According to the operating sched- The engineering specification for the new-
of the enterprise.
ule reactors, intended for bisphe- est cable grade of polyethylene 153 KUSR
nol-A synthesis have arrived at OJSC release, possessing increased strength and
«Kazanorgsintez».
resistance to cracking is elaborated and approved.
AUGUST
The combined team of OJSC «Kazanorgsin-
VIII
OJSC «Kazanorgsintez» has Test works of the new type of flare head, albecome one of the three lowing reducing volumes of harmful emisleaders of the Russian sions in an atmosphere are completed.
tez» has won three bronze medals at sports
Federation for introduction of technologies
All-Russia Festival among the sport clubs
«NORTEL» in Russia and has been recognized
of industries which took place under aegis
as the indisputable leader for quantity of use
of Federal agency of physical training and
of technologies “know-how” in this sphere.
sports.
Orenburg gas processing plant resumed in full supplies of ethane – the main raw material of
IX
As a result of the scheduled au-
OJSC «Kazanorgsintez».
SEPTEMBER
dit carried out by the experts of
the certification body VNIIS, the
certificate report is received, confirming
JUNE
VI
The new building of the fire bri- OJSC «Kazanorgsintez» is recognized as a
that quality management system, ecological
gade depot for protection of the winner of competition «Ecoleader» among
management system and integrated man-
enterprise and nearby objects is large enterprises of Tatarstan Republic in the
agement system of OJSC «Kazanorgsintez» as
put into operation at OJSC «Kazanorgsintez». nomination «Introduction of technologies
a whole correspond to the requirements of
The new depot is equipped with the modern for gathering and processing of secondary
GOST R ISO 9001-2001 (ISO 9001:2000), and
equipment.
also to the requirements of ISO 14001:2004.
For the first time the set of polyethylene
resources» and is awarded with the Diploma
«For effective nature protection activity».
Water polo team “Sintez”, the general sponsor
grade 276-73 has been shipped in bulk in
Fitch Ratings has confirmed a credit rating of which is OJSC «Kazanorgsintez», became
the sea containers.
of OJSC «Kazanorgsintez» at a level «B» (the the bronze prize-winner in play of the Cup of
outlook - “Stable”) and a short-term rating at Russia of the season 2006-2007.
a level «B».
24
EVENTS OF THE YEAR
EVENTS OF THE YEAR
NOVEMBER
Within the framework of the 1st International
25
XI
OJSC «Kazanorgsintez» has taken
part in the exhibition “Interna-
economic forum «Presentation of the economic
tional chemical assembly ICA
potential of Tatarstan Republic» the Minister of
economic development and trade of the Rus-
- 2006” devoted to general chemistry, chemi-
sian Federation German Gref has visited OJSC
cal raw materials, equipment for the chemi-
«Kazanorgsintez».
cal industry, plastics and processing. According to the results of the exhibition organizers,
The project of OJSC «Kazanorgsintez» for return
which were JSC «Expocentre» and the Rus-
of a part of the purified sewage to water-circulation system of the enterprise has taken the 1st
sian Union of chemists, have awarded OJSC
place in the competition organized in Krasnoyarsk by the Ministry of Economics and technol-
«Kazanorgsintez» with the Diploma for active
ogy of Germany among graduates of the target Russian program of administrative staff retrain-
participation.
ing, past training abroad.
Within the framework of the second All-Russia ecological conference «New priorities of
According to the results of participation in the 13-th International exhibition «Oil. Gas. Petro-
national ecological policy in the real sector
chemistry-2006» and the specialized exhibition «Industrial ecology and safety» OJSC «Kaza-
of economy» the representative of OJSC
norgsintez» is awarded the supreme award - the Diploma of Grand prix «For the organization of
«Kazanorgsintez» has been awarded with
production and release of low density linear polyethylene» in the nomination «Production with
the honorable award «Ecological board of
the new or improved characteristics».
Russia» for the vigorous activity in the field
of the environment protection and rational
OJSC «Kazanorgsintez» has participated
in the main economical «Russian national
exhibition» in the capital of China, Beijing,
environmental use.
within the framework of carrying out of the
Year of Russia in China where the enterprise
has been positioned as one of the leading
OCTOBER
Standard&Poor’s has confirmed a Standard & Poor’s assigned a credit rating
enterprises of the industry of the Russian
credit rating of OJSC «Kazanorgsin- «В-» for Eurobonds issue of Kazanorgsintez
Federation.
X
tez» at a level «В-». The outlook of S.A.
rating is “Stable”.
The meeting with a theme «State-corporate
9.25 % through the special purpose vehicle public» with participation of the First deputy
XII
«Kazanorgsintez S. A.» with repayment in Oc- prime minister, Minister of Education and
The basic part of
tober, 30th, 2011. Listing of notes is carried sciences, and also heads of the largest enter-
reconstruction
out by the London stock exchange.
prises of Tatarstan Republic has taken place
phenol-acetone
on the territory of OJSC «Kazanorgsintez».
production unit at
OJSC «Kazanorgsintez» has carried out the partnership in development of professional
debut Eurobonds issue for 200 million USD at technical education system in Tatarstan Re-
DECEMBER
Fitch Ratings assigned the final rating “B” for Eurobonds issue by emitter Kazanorgsintez S.A.
of
ethylene plant has
been completed; due
to this the capacity
of
production
is
increased up to 65
thousand
tons
phenol a year.
of
THE REVIEW OF ECONOMY OF
RUSSIA AND TATARSTAN REPUBLIC
Positive financial result for January-Novem-
Index of chemical production in 2006 made The investment climate in Russia and Tatarstan Republic has been proved, which is con-
ber 2006 by the basic kinds of economic ac-
101.9 % against 2005. Growth of the in-
tivities of the large and middle organizations
26.6 trl. roubles in the current prices.
is received at rate of 3.5 trl. roubles, or
Gold and exchange currency reserves has increased by 3.2 trl.* 130.2 % against the similar period of the
dex is provided due to increase in volumes of
roubles in 2006, which is 2 times more, than in 2005. For the 1st of last year, including in processing productions
January 2007 the volume of gold and exchange currency reserves has –
roubles (151.0 %).
1,075 ths. tons, phenol - 221 ths.
tons, ethylene – 2,147 ths. tons for 2006
agency - «Ваа2», Fitch Ratings agency - «ВВВ +».
–
made
in the Russian Federation, which in relation
of 2006 is determined by Standard & Poor’s agency at the level «ВВ-», Moody `s agency
102%, 91%,
- «Ва1». According to the rating of «Expert RА », Tatarstan Republic is stably included in
In 2006 rate of growth of GDP has made
6.8 % against 6.4 % in
the year earlier. The volume of GDP of Russia, according to preliminary
estimation, has made
8.3 trl.* roubles . According to RosBusinessConsulting, Rus-
sia is on the 3rd place in the world because of the volume of gold and
exchange currency reserves according to the results of 2006. The size
of Stabilization fund for the 1st of January 2007 has made
2.3 trl. in
1.4 trl.
Investments into fixed capital increased
by
13.5 %
in comparison with 2005
(2005/2004 – 110.7 %). Thus the total amount
of investments into fixed capital according to
a rouble equivalent (8.8 % of gross national product).
Federal service of the state statistics has made
Inflation for 2006 was
9.0 %, against 10.9 % in 2005. The de- 4.5 trl. roubles. In structure of investments
crease of inflation rates basically is caused by: growth of the goods into fixed capital according to the sources
offer and a competition from import in connection with strengthen- of financing relative share of the own means
ing of a rouble exchange rate; growth of money demand in real sector of the organizations used on the investment
of economy in the process of proceeding growth of economy and purposes was
against
its dedollarization; decrease of inflationary expectations which was
reflected in growth of savings and investments.
foreign investments arrived to the economy
The monthly average salary across the Russian Federation was
ths.
45.1 %
47.5 %
in 2005. In 2006, 930 bln.* roubles of
24.5 %
10.7
of Russia, which is by
31.7 % more, than
roubles, which is
above the figure of 2005. The in 2005. Direct investments have grown by
in comparison with the previous
monthly average salary in Tatarstan Republic has made
period.
In
Tatarstan
Republic the amount
roubles in 2006, which is
above the parameter of the previ-
8.9 ths. 55.5 %
25.9 %
of investments into fixed capital has made
ous period.
Export of goods in 2006 has made
8 trl.* roubles, according to data
146 bln. roubles in 2006, which counting upon every person of population makes
25 % more than in 2005. Thus the share of 38.4 ths. roubles, this parameter is above
the CIS countries in total amount of export of Russia has increased
the average across Russia by 23 %.
from 13.8 % up to 14.3 %, the foreign countries has accordingly decreased from 86.2 % to 85.7 %. The gain of export is Index of industrial production for 2006 was
received due to the increase of capacities by 12.5 % and increase 103.9 %, in 2005 - 104 %.
in contract prices by 87.5 %.
Import of goods for 2006 made 4.3 trl.* roubles or by 30.8 %
of Bank of Russia, or
more, than in 2005. The share of the foreign countries in total amount
of import of Russia has grown from
82.6 %
the CIS countries has decreased, accordingly,
84.6 %,
from 17.4 % to
up to
15.4 % . The share of production of the chemical industry in import has decreased from 16.5 % in 2005 to 15.8 %.
firmed by the true data of the international rating agencies:
The long-term credit rating of the Russian Federation on the international scale by the
production of the basic chemical substances.
end of 2006 is determined by Standard & Poor’s agency at the level «BBB +», Moody’s
There have been produced polyethylene
to volumes of 2005 make
The long-term credit rating of Tatarstan Republic on the international scale by the end
102 % accordingly. Cost of export of pro-
the list of ten Russian regions with the least investment risks.
duction of the chemical industry increased by
17.7 %.
The long-term credit rating of OJSC «Kazanorgsintez» on the international scale, assigned in
On average, prices of producers of industrial 2005, is left without changes by the agencies by the end of 2006 - Standard & Poor’s «В-» and
Fitch Ratings «B». The outlook on ratings of the both agencies is “Stable”.
goods for 2006 have grown by
10.4 %
13.4 % in 2005. A gain of prices
for production has made: 1.6 % - mining of minerals resources (in 2005 - 31%);
13.3% - processing productions (in 2005 –
8.1 %); 14.3 % - chemical productions
(in 2005 – 10.8 %). The prices for products
against
MAIN PARAMETERS OF ECONOMY DEVELOPMENT
Parameters
(In % to the last year)
2003
2004
2005
2006
GDP
107.3
107.2
106.4
106.8
Consumer price index
by December of the last year
112.0
111.7
110.9
109.0
Production of the industry
107.0
108.3
104.0
103.9
Investments into a fixed capital
112.5
110.9
110.5
113.5
Export of goods
126.7
134.8
133.9
125.0
596 bln. roubles and has grown by
7.1% to the level of 2005. According to
Import of goods
124.8
128.0
128.5
130.8
the estimation of the federal bodies Tatarstan
Parameters
Rate for December, 31st RUR/$
29.45
27.75
28.78
26.33
Rate for December, 31st RUR/Euro
36.82
37.81
34.19
34.70
27.3
34.4
50.6
61.1
of chemical productions were formed under
influence of conjuncture of the world markets
basically.
The gross regional product in Tatarstan Republic (GRP) in 2006 made
620 bln.
roubles and became one of the highest figures in Russia. Share of GRP in GDP of Russia makes
2.3 %. The volume of indus-
trial output in Tatarstan Republic has made
Republic takes the second place (after Moscow) in the general rating of economic development and the third place in the rating
of social development (after Moscow and St.Petersburg).
The average price for oil grade Urals $/barrel
The material is prepared according to the data of the Ministry of economic development and trade and
Goskomstat of Russia
* According to the exchange rate on 31.12.2006, 1$ = 26.3311
PART II
INDUSTRIAL ACTIVITY
STRUCTURE OF COMMODITY OUTPUT
2005
13 597
mln.
RUR
32%
LDPE
31%
6%
Processing
5%
7%
Glycols
7%
9%
PE pipes
9%
12%
Other
11%
12%
Phenol, Acetone
6%
22%
HDPE
31%
2006
15 771
mln.
RUR
part II // INDUSTRIAL ACTIVITY //
30
PRODUCTION AND
THE COST PRICE OF PRODUCTS
31
PRODUCTION AND
THE COST PRICE OF PRODUCTS
In 2006 commercial output in amount of HDPE production units. Nevertheless, the
15,771 mln. roubles was produced, that is by percent of use of capacities has increased
16 % more than in 2005. The gain is basically by 4 % comparing to 2005 and has made
The full cost price of commodity output in Costs per rouble of commodity output have
received due to rise in prices by 11.7 %. Pro- 73.2 %. The general capacities increased by
duction in physical terms has increased by 1.2 % and have made by the beginning of
– 1,699 mln. roubles or 16.4 %. The increase fected by:
in the cost of production basically was influ-
increase in the prices and volumes of
4.3 %. In the year of 2006 the reconstruction 2006, 1,240 thousand of tons of organic synwas held in the phenol-acetone, LDPE and thesis products.
enced by the growth of volumes and rise in
purchased raw materials;
prices of purchased raw materials (the prices
change of structure of consumed raw
for ethane + 8 %, ethylene + 4 %, butane +
materials;
27 %, benzene +10 %). As a whole expenses
increase in the wages fund;
for purchase of raw material and materials
decrease of the cost of power resources.
the reported year made 12,067 mln. rou- decreased by 1.2 % and have made 77 cobles, increase in comparison to the last year pecks. Change of the level of costs has ef-
have increased by 25 % in 2006 against the
Maximum specific weight in costs took ex-
last year.
TOTAL VOLUME OF RELEASE OF MAIN KINDS OF PRODUCTS (In tons)
penses for raw material – 56.3 %, expenses
for work payment – 15.7 % and power
– 12.6 %.
Name
2004
2005
2006
2006/2005
Ethylene
321,875
263,621
318,304
120.7%
Phenol
41,951
41,887
24,491
58.5%
Acetone
26,669
26,680
15,355
57.6%
LDPE
202,181
167,298
181,836
108.7%
HDPE
186,501
166,868
208,250
124.8%
Ethylene oxide
55,266
46,831
38,455
82.1%
Pipes and polyethylene details
24,501
29,557
27,723
93.8%
Ethylene glycols
59,948
53,622
52,117
97.2%
Ethanolamines
11,755
12,606
11,963
94.9%
COST PRICE OF COMMODITY OUTPUT (in mln. RUR)
Name of expenses
2004
2005
2006
2006/2005
Raw material and materials
4,451
5,451
6,793
125%
Energy from the third party
1,469
1,619
1,522
94%
Salary with deductions
1,300
1,675
1,897
113%
Services of industrial character
430
380
323
85%
Amortization of fixed capital
308
385
580
151%
Other costs
866
858
951
111%
8,824
10,368
12,067
116%
General costs for production
INDUSTRIAL STRUCTURE
OF OJSC «KAZANORGSINTEZ»
THE INTEGRATED TECHNOLOGICAL
SCHEME OF PRODUCTION
Pipes
production
HDPE PRODUCTION
Ethylene plant
LDPE PRODUCTION
ETHYLENE
Organic products plant
Kazan Open
Joint Stock
Company
“ORGANICHESKY
SINTEZ”
PROPANEBUTANE
Plant for production of nitrogen,
oxygen and cold (NOC)
Plant for preparation and holding major
overhauls (PHMO)
ETHANE
BENZENE
ETHYLENE
PRODUCTION
UNIT 1
ETHYLENE
PRODUCTION
UNIT 2
ETHYLENE
PRODUCTION
UNIT 3
ETHYLENE
PRODUCTION
UNIT 4
Side products of ethylene
production
Propylene
Bisphenol-A plant
Polycarbonates plant
OWN ETHYLENE
RAW MATERIAL
Plant for production and processing
of high density polyethylene
(HDPE plant)
Liquid products of
pyrolysis
Other
PHENOL AND
ACETONE
PRODUCTION
SALES
ETHYLENE OXIDE
PRODUCTION
PRODUCTION PROCESS
AT KAZANORGSINTEZ
Low density polyethylene plant
(LDPE plant)
Production of
glycols,
textile processing
chemicals
and modifiers,
ethanolamines
es
34
LDPE PLANT
ETHYLENE PLANT
Ethylene plant consisting of four units for
production of ethylene and phenolic pro-
butane fractions for ethylene production, propylene output has decreased to 30.3 ths. tons, which is by 14 % lower than 2005.
LDPE plant consists of two units, ethylene In the reported year it was produced 181.8
is used as the basic raw material. The plant ths. tons of low density polyethylene which
duction is the first in the technological chain
produces various grades and compositions is by 8.7 % more than in 2005. Growth of pro-
of conversion of OJSC «Kazanorgsintez». The Phenol is used for caprolactam, diphenylpropane, medical preparamain products of the plant are: ethylene, tions, synthetic resins, softeners, herbicides productions. In 2006 it
of low density polyethylene for mold, blown, duction volumes is directly connected with
propylene, phenol and acetone. The main was produced 24.5 ths. tons, which is by 41.5 % lower than the level
raw materials are : ethane, propane-butane of 2005. Decrease in volumes is caused by reconstruction work at
the unique producer of electric-conductive has made 99.7 % (in 2005 г – 84.2 %). From
phenol-acetone production units due to which the capacity of pro-
duction of special cables and pipes for trans- of one unit with partial stop of productions
duction is increased
portation of explosives in mining industry, was made.
fraction and benzene.
Ethylene serves as the initial raw material for
production of polyethylene and ethylene
up to 65 thousand
tons of phenol a year.
oxide. All produced ethylene is transferred to
LDPE, HDPE and organic products plants for Acetone is used in
anhydride,
the further processing. Polyethylene produc- acetic
tions have the priority in maintenance with acetonecyanhydrine,
raw material. In 2006 it was produced 318.3 diphenylpropane proths. tons of ethylene (+20.7 % against 2005). ductions, and as solLoading of production capacities made vent in various indus74.9 %. The increase in production volumes tries. The volume of
is connected with resuming of ethane deli- production has made
veries from Orenburg helium plant.
15.4 ths.tons, which is
also below the level of
Propylene is intended for production of polypropylene, phenol, acetone, propylene oxide.
As a result of decrease in using of propane-
2005 by 42.4 %.
Relative share of ethylene plant in commodity output of OJSC
«Kazanorgsintez»
comes to 10 %. Number of the personnel
by the end of the year
made 1,072 employees.
extrusive and film productions. The plant is raw materials supplies. Loading of capacities
polyethylene compositions in the CIS, for pro- July till November 2006 the reconstruction
and composition of polyethylene with high
adhesive properties,
Relative share of LDPE
plant in commodity output of OJSC
«Kazanorgsintez»
comes to 32.6 %. Number of the personnel by
the end of the reported
period made 620 employees.
allow to increase corrosion resistance of
spiral-seam pipes in
case of pipe insulation by this kind of
polyethylene.
35
PLASTIC
AGAINST
RADIATION
During the long space travels like the human flight to Mars,
the main problem for the pilot’s health is radiation. Some of
NASA research centers investigate lots of design materials
capable to serve as the material for a space ship body, or at
least the material for the special protection from radiation.
Different researches show that people will need to use plastics more widely in the space ships, and will need to create
new kinds of polymeric materials constantly.
During the distant, and, that is possibly more important,
long-term travels the biggest threat for the people’s health
- are galactic space rays (GSR). Fragments, flying almost at
the light speed,sent by the explosion of the upnew stars extremely difficult to stop. These cores dive through the the
space ships and people’s bodies, killing single cells and destroying DNA molecules even more than gamma rays. Working on near-earth orbit, person is covered by the planet from
the fire of galactic rays.
It is known that the thin-walled aluminium space ship case,
like “Apollo” case, absorb almost half of radiation. Plastics
could be used as the alternative for the metals. They are rich
with hydrogen - the element, which absorb space rays very
good. For example, polyethylene, the same one which is
used for the plastic bags, block 20% more of the space rays
than aluminium. Strengthened polyethylene, created at the
Marshall Space Flight Center, 10 times stronger than aluminium, and at the same time lighter than “the winged metal”.
Even if this polymer wouldn’t be used for the whole space
ship construction, this new material can be used as the additional antiradiation protection. Probably in the already designing mars piloted ship even the living modules cases will
be made from the polymers.
38
HDPE PLANT
ORGANIC PRODUCTS PLANT
The plant for production and processing of high density polyethylene (HDPE) consists of two
production units:
Organic products plant uses ethylene as the static character, modify its structure, increasbasic raw material. The plant produces ethyl- ing strength characteristics.
ene oxide and products on basis of ethylene
1. HDPE PRODUCTION
Ethylene is used as the basic raw material.
2. PRODUCTION OF PLASTIC PRODUCTS
Plant produces various grades and composi- HDPE is used as the raw material for productions of high density polyethylene, intended tion of polyethylene pipes.
for production of mold, extrusion, cable
oxide (glycols, ethanolamines, textile-auxiliary substances, and also products for initial
preparation of oil – corrosion inhibitors and
Glycols are used by the gas-transport and
systems of gas supply, water supply, sewage
gas enterprises for gas dehydration, being
In the reported year it was produced systems, and systems of process piping. The
main raw material for production of foam
208.2 ths.tons of polyethylene, which is by volume of polyethylene pipes production in
polyurethane, and also are delivered to man-
24.8 % more, than in 2005. Increase in pro- 2006 has made 27.7 ths.tons(-6.2 % concern-
ufactures of synthetic fibers.
duction volumes is connected with the end ing 2005). Loading of capacities has made
of modernization works from 197 up to 510 58.8 % (in 2005 - 62 %). Polyethylene pipes
ths. tons in a year. Thus loading of capacities and fittings productions are the largest in
has decreased from 84.2 % to 74.7 %. For pro- Russia.
cessing of polyethylene into polyethylene
pipes and details it was directed 30.8 ths.tons
(+1.7 % against 2005), other part of production is marketed.
Specific weight of
HDPE plant in commodity output of OJSC
«Kazanorgsintez»
comes to 41.6 %. Number of the personnel 749 employees.
Cooling liquids are intended for application
in cooling systems of heat exchanging devices and engines of internal combustion.
paraffin sediments, proxanols-proxamines, In 2006 it was produced 74.9 ths.tons of commodity output, which is by 6.4 % lower than
demulsifiers and cooling liquids).
Polyethylene pipes are widely applied in
products, and also pressure and gas pipes.
39
the level of the last year. Loading of capacities has made 58 %. The
main reason of production volumes reduction
was decrease in supply
of the basic raw material
Ethanolamines are used in gas and oil indus- ethylene. Adverse martry for gas purification from acid and sulfur- ket conditions in 2006
containing organic compounds, and in pro- have led to reduction
duction of perfumery products.
of prices for produced
Oil demulsifiers, corrosion inhibitors and par- products, thus the prices
affin sediments are used by oil-extracting en- for the main raw material
Relative share of organic products plant
in commodity output
of OJSC «Kazanorgsintez» makes 11.8 %.
Number of the personnel - 717 employees.
terprises for oil-water separation, for increase have increased. Profitability of commodity
of layers petrofeedback and protection of output has decreased by 6 %.
the drilling equipment.
Textile-auxiliary substances: stearoxes, oleoxes, oxamines, oxethylene fat acids are used
in production of woolen, cotton, silk, artificial
fibers, imparting the fiber processability, anti-
40
PLANT FOR PRODUCTION OF
NITROGEN, OXYGEN AND A COLD (NOC)
AUXILIARY DIVISIONS
NOC plant was formed in 2005 by integration of auxiliary productions units. It produces com-
Provide technological process of the main productions with material and power resources,
pressed air, gaseous nitrogen, cold, liquid and gaseous oxygen. More than 85 % of these
mobile and rail transport, warehouse facilities, execute maintenance of buildings and equip-
power resources are consumed by other plants and divisions of the enterprise. The main kind
ment, are engaged in processing of polymeric waste, production of polypropylene bags,
of commodity output is liquid oxygen which
and also carry out
is shipped to consumers in tanks by rail and
automobile transport.
In 2006 relative share of NOC plant in
commodity output of OJSC «Kazanorgsintez» makes 0.4 %, Number of personnel by the end of the year - 302 employees.
quality
analysis
of products and
monitoring of the
Number of personnel by the end of 2006
made 2,636 employees.
environment.
PLANT FOR PREPARATION AND
HOLDING MAJOR
OVERHAULS (PHMO)
The plant was formed in 2005 on the basis of two affiliated repair organizations: OJSC «Tatkhimremont» and OJSC «Spetzneftekhimmontazh». The plant carries out preparation and
realization of routine and major overhauls of industrial equipment in all divisions of the enterprise. The basic kinds of works: repair of process equipment, pipelines, thermal insulation,
buildings and constructions, production of the equipment and metal constructions. In structure of repair fund the amounts of works which are carried out by PHMO plant constitute
IN 2007 IT IS PLANNED
TO PUT INTO OPERATION
TWO NEW PLANTS:
BISPHENOL-A PLANT.
The “know-how” of «Idemitsu Kosan Co., Ltd» has the following advantages: ecologically
clean process; high quality of products.
made 145 employees.
9 %.
Alongside with PHMO plant maintenance
works are carried out by the repair departments of main plants, repair workshops and
contractors. The amount of works which are
carried out by the contractors makes 30 % of
repair fund.
POLYCARBONATES PLANT.
made 397 employees.
The first in Russia, the “know-how” of «Asahi Kasei Engineering Corporation» using non-phosgene method and the “know-how” of without waste production.
made 110 employees.
41
42
DEVELOPMENT OF TECHNOLOGIES
AND BRANDED ASSORTMENT
In 2006 following new kinds of products are developed and produced:
Within the framework of the federal program «Effective consumption of power resources»
and the Tatarstan Republic law «About the approval of the Program «Power and resources
AT HDPE PLANT:
linear polyethylene grade PE2NT05-5, intended for blow films, and also using in mixtures with LDPE and HDPE has been produced at the first time;
savings in Tatarstan Republic for 2006-2010» the RESOURCES SAVINGS PROGRAM FOR 20062010 has been developed and confirmed in OJSC «Kazanorgsintez». This program was logic
continuation of the program of energy savings, acted at the enterprise in 2000-2005.
AT LDPE PLANT:
Following technological cards are developed:
THE PURPOSE OF THE PROGRAM:
for 153-KUSR compound with the increased cracking resistance;
for BGKPG - 01K compound with the lowered combustibility;
Increase of efficiency of use of natural-raw, material, labour and administrative -
for cable film compound (KPK VC), intended for manufacturing cable cores with film-
managerial resources.
foamed isolation;
TASKS OF THE PROGRAM:
for cable film compound (KPK NC), intended for manufacturing cable cores with
Introduction of the new advanced high technologies and the equipment, allowing
film-foamed isolation;
to provide decrease in specific charges for raw material, fuel and energy, and to
increase work productivity.
AT NOC PLANT:
Modernization of existing technological processes and the equipment, optimization
gaseous argon.
of parameters of technological processes.
Creation of the organizational, normative and economic conditions providing an
effective utilization of resources.
Use of secondary resources.
QUALITY SYSTEM
«Kazanorgsintez» carries out quality check Bodies in 2006. By results of the inspection
and laboratory tests at all stages of produc- control, previous certificates of conformity
tion. Since 1986, no essential complaints were confirmed. Repeated certification of
have been received to the address of the 8 kinds of products has been carried out as
The priority task for OJSC «Kazanorgsintez» in order to actions introduction for power-and-
company, concerning quality of the prod- well. 10 kinds of products have been certi-
resource efficiency is growth of production volumes at stabilization or decrease in absolute
ucts.
fied for the first time according to the system
consumption of initial kinds of resources.
of GOST R.
21 energy saving activities have been carried out in 2006. Expenses for those activities
Since 1999 activity is carried out according
to the world’s standards of ISO 9000. In 2005 General level of output quality remains sta-
realization in 2006 have increased by 1.3 times in comparison with 2005 and have made 5.1
the system of ecological management ISO ble. Production volume accepted by quality
mln. roubles. Economic benefit from the actions realization has made 82.9 million roubles.
14001:2004 and integrated system of qual- department at the first check has made:
ity management ISO 9001 and ISO 14001 are
In 2004 – 99.7 %,
certificated at OJSC «Kazanorgsintez».
In 2005 – 99.9 %,
In 2006 certified products for the amount of
14.5 bln. roubles were produced. The volume In 2006 – 99.9 %.
of certified products to the total amount of
commodity output made 91.8 % for 2006.
The inspection control of 50 kinds of products has been carried out by the Certification
43
TRAVELLING WITH
THE SUN
Even in 1968 number of soviet scientists offered to the attention of the government the design of the automobile with
the solar batteries; however because of the technological
imperfection the project hasn’t been realized in the USSR.
Since then, vehicles with the working on “the solar fuel” engine appeared in the whole world, but these projects never
go further than their project-designs. Nowadays, creation
of the “solar” vehicles became the matter of the foreseeable
future at last. Canadian company Spheral Solar developed
flexible solar batteries - jeansalike material, capable to produce electric energy under the sun rays influence.
Such material can be put on the surface of any form - not
only flat. So, it can be used for any buildings and constructions covering. Such material is much cheaper than the analogues which are used nowadays: the material is made from
thousands of tiny silicon balls, placed between two layers of
aluminium foil and sealed in the special polymer shell. Every
ball plays the role of the single photo element, at the time
when foil is used for the electric contacts.
In fact, new material gives the opportunity to transform the
covering of any vehicle to the original “fuel factory”, which,
at the presence of the reserve accumulator (in case of the
cloudy weather) is able to supply the engine with the necessary energy. Why the polymer is the basis of such new
material, can be easily explained. First of all, the possibility of
creation the material with the planned characteristics is being solved with the help of organic synthesis more successfully nowadays. Secondly, polymeric material can have such
characteristics which compensate defects of “traditional”
materials. Spheral Solar combined traditions and innovation
technologies quite successfully in its construction.
46
For estimation of power
resources efficiency
the index of power
consumption was
applied. During last 7
years the given index
of power consumption
tends to fall.
POWER INTENSITY OF COMMERCIAL OUTPUT (IN PRICES OF 2004),
TONES OF CONVENTIONAL FUEL/THS.RUR.
0.0400
0.0388
0.0366
0.0350
The index of thermal capacity of commod- The increase in consumption was because of
ity output has decreased by 12.2 % in 2006, the following reasons:
when reduction of thermal energy consumption made 8.5 % in comparison with 2005.
The index of electro capacity has increased
putting into work of the additional
equipment for keeping up of the
technological mode;
by 9.7 %, when increase in current consumpworks of the equipment in the un-
tion made 14.6 %.
loaded mode and small loadings be-
0.0337
0.0333
47
cause of insufficient amount of raw
0.0324
materials;
0.0300
2002
2003
2004
starting up of the process equip-
2006
2005
ment after carrying out of adjustment works.
The index of power consumption of commodity output has decreased by 3.9 %.
AVERAGE PRICE OF ELECTRICAL AND HEAT ENERGY ( RUR)
The effect from resources
savings actions was
reflected in the indexes
of power resources use.
So, the share of power
resources in the cost
price of commodity
output has decreased in
comparison with 2005
by 3 % and has made
12.6 %.
942
1000
SHARE OF ENERGY RESOURCES IN THE COST OF PRODUCTION, %
790
800
661
707
613
600
20.0
19.6
411
400
18.0
196
16.6
244
300
341
200
15.6
15.0
0
2002
2003
2004
2005
2006
12.6
electrical energy, MW/h
10.0
2002
2003
2004
2005
2006
heat energy, Gcal
The rise in prices for heat power for 2006 has iff group named «Base consumers» from
made 21 % on average in comparison with 01.01.2006.
2005. The prices for the electric power have
decreased in 2006 by 25 % in comparison
with 2005. Reduction of the average tariff for electric power in 2006 is connected
with the decision of the republican Power
Commission of Tatarstan Republic from
22.11.2005 №17/1 on the base of which OJSC
«Kazanorgsintez» is belonged to the tar-
According to the work results of 2006, the
enterprise was awarded with the Diploma
of the Ministry of Economy and Industry of
Tatarstan Republic «For significant, stable results on energy-and resource saving».
48
ECOLOGICAL POLICY
OJSC “Kazanorgsintez”, being engaged in production of products of organic synthesis, inorganic
products, polymers and products made of polymers is aware that process of production, gener-
OUR PURPOSES:
Organization of production according to the requirements of nature protection legislation;
ated waste products and output affects environ-
Development of production processes with con-
ment.
secutive minimization of negative influence on
We consider that introduction and sustenance
environment;
of ecological management system functioning
Reduction of consumption of raw materials, ma-
meeting the requirements of ISO 14001:2004 is
terials, water and power resources per unit of pro-
one of the main ways of solving and prevention of
duced output;
environmental problems.
Constant improvement of activity in the field of
environment protection;
Decrease in level of emergency situations with
ecological consequences.
OUR TASKS:
To create integrated system of quality manage-
activities related with nature protection, having
ment and ecological management according to
created system of motivation of their ecological
the requirements of standards ISO 9001:2000 and
activity;
ISO 14001:2004;
To raise qualification of workers of the company
To analyze tendencies, to take into account chang-
in the field of environment protection, using own
es and to develop necessary documents and pro-
resources and participating in regional and inter-
cedures according to requirements of nature pro-
national projects;
tection legislation, recommendations of territorial
nature protection bodies, generally accepted principles of ecological management;
To provide regular monitoring of the ecological
aspects and their affects on the environment and
To provide economical use of raw material, materials, water and power resources;
NATURE PROTECTION
OJSC «Kazanorgsintez» activities are carried
out on the basis of necessary licensing documents, according to the nature protection
legislation and ecological policy.
Expenses for the environment protection in
the reported year made 208.5 mln. roubles,
which is by 9.5 % more than in 2005. Growth
of expenses is connected with increase in
charges at carrying out of nature protection activities and increase in charges for
operation of fixed capital for nature protection purposes. 26 activities for soil and
ground resources protection, water objects,
atmospheric air protection have been executed in the reported year 2006 with the
purpose of prevention the harmful influence
of operating objects to the environment. The
total amount of expenses for performance of
nature protection activities made 71.4 mln.
roubles in 2006 (in 2005 – 60.8 mln.roubles).
All expenses are made from Company’s resources.
In 2006 there were put into operation: new
biogenic station of washing sewage purification, pump station, 4 cooling towers. Cost of
nature protection assets has increased by the
end of the reported period in 1.5 times and
has made 288 mln.roubles (in 2005 – 197.7
mln.roubles.) including:
To provide stage-by-stage switch to introduction
of resource saving technologies.
functioning of system of ecological management;
To involve workers of OJSC “Kazanorgsintez” into
The management of OJSC “Kazanorgsintez” declares that ecological management is included into
number of supreme priorities of our enterprise as a basis of the concept of steady development, in
this connection:
realizes special responsibility for achieving fixed objectives and expects active participation
cooling towers of circulation water supply;
biological sewage disposal units;
station for thermal liquid waste neutralization;
unit for collection and recycling of
hydrocarbon purges with their return to
the process;
green plantings;
from each employee in implementation of the objectives;
other funds.
undertakes to take all measures directed on constant increase of productivity of the ecological
management system;
declares readiness for open dialogue with the public and other interested parties regarding
influence on environment.
49
The total releases of harmful substances into
atmosphere, discharge of polluting substances in the reservoir, limits of waste formation, and limits of water consumption for
2006 do not exceed the established specifications. The control over a sanitary condition of the air environment, quality of sewage discharged into r. Volga, the control over
soil pollution are made by sanitary-industrial
laboratory of the Company and laboratory
of purification units according to the plansschedules confirmed by the state inspecting
bodies.
In 2006 there was a decrease of the established limit of harmful substances emission
in the atmosphere from 13.9 down to 12.3
ths. tons. The amount of emissions of harmful substances has decreased also and made
9.2 ths.tons (in 2005 – 10 ths.tons). 3,340
analyses were made, excess of set specifications was not revealed.
With a view of provision of the enterprise
with water for industrial and householddrinking needs, and also for transfer to users, water draw off was made from the river
Volga in the amount of 35.6 mln. cubic meters (in 2005 – 34.2 mln. cubic meters). The
increase in the amount of taken water is
connected with increase in capacity of water-circulation systems of the enterprise.
The percent of the water-circulation made
96.7 %. Actual volumes of draw off water
and the sewage discharged into basin didn’t
exceed the established limits. Contents of
polluting substances in the treated sewage in the reported period remained at the
level of 2005 within the established limits.
50
NATURE PROTECTION
51
NUMBER OF EMPLOYEES
BY THE END OF THE YEAR
During 2006 at the enterprise 31 ths.tons of
waste products of production and consumption were generated (in 2005 34.6 ths.tons).
As a whole during the year 23.6 ths.tons of
waste products were transferred to the specialized organizations for further use and recycling, 5.5 ths.tons of waste products were
neutralized, 1.2 ths.tons were used for own
needs, other part was placed at special platforms of the enterprise.
In 2006 The Board of Russian Consumers’
Service of Tatarstan Republic carried out the
complex check of all divisions of the Company on observance of sanitary-and-epidemiologic rules and rates. Essential remarks and
infringements concerning the preservation
of the environment have not been revealed.
Within 2006 the Body of certification OJSC
“VNIIS” carried out twice the checks of conformity of in force quality management system, ecological management system and integrated quality management system to the
requirements of GOST R ISO 9001-2001, ISO
14001:2004. By the results of the checks the
certificates of conformity of in force systems
to the requirements of GOST R ISO 90012001, ISO 14001:2004 were given out.
In 2006 The Board of Russian Technical
Service of Tatarstan Republic has drawn
the positive conclusion allowing OJSC
«Kazanorgsintez» receiving the license for
the manipulation with dangerous waste.
The management aspires to observe the bal-
Payments to «CLATM of TR» of the FSI
«CLATM of VFD»* in 2006 due to environmental affect made 2,978.1 ths. roubles (in
2005 – 3,397.5 ths. roubles), including:
the enterprise development.
for emissions of polluting substances into
the atmosphere – 945.4 ths. roubles;
7,252
ance between the economic and social effi-
7,996
8,323
ciency of the management of personnel, as
the human factor is one of the major aspects
of competitiveness and stability provision of
The main purpose of the personnel policy is
duly provision of the enterprise with qualified personnel in the necessary quantity, use
of knowledge and experience of employees
of the enterprise with maximum efficiency.
for discharge of polluting substances
into basin – 456.4 ths. roubles;
for accommodation of waste products
– 1,576.3 ths. roubles.
The sum of ecological payments in comparison with 2005 has decreased by 12.4 %
(419.4 ths. roubles), that is connected to the
decrease of normative rates for some kinds
of payments.
In 2006 OJSC «Kazanorgsintez» has been recognized as the winner of competition «Ecoleader» in the nomination «Introduction of
technologies for secondary resources gathering and processing» among enterprises of
Tatarstan Republic, and was awarded with
the diploma «For effective nature protection
activity» and commemorative medal «Ecoleader».
2004
2005
2006
TASKS OF PERSONNEL POLICY:
I
II
III
Provision of terms for realization of rights
Number of personnel of the enterprise by
and duties of citizens stipulated by labour
the end of the year made 8,323 persons,
and increased by 327 person (+4 %) in com-
legislation;
parison to 2005. The given changes basically
Rational use of personnel potential;
have occurred due to the acceptance of the
personnel to bisphenol-A plant and polycarbonates plant which are under construction,
Formation and maintenance of
and also to auxiliary productions.
effective work of labour collective.
AGE COMPOSITION
> 60 years old
* “Center of Tatarstan Republic for laboratory analysis and
technical measures” of the Federal State Institution “Center
of laboratory analysis and technical measures of Volga
Federal District”
2%
50-59 y.o.
22%
20-29 y.o.
21%
1%
< 20 years old
31%
40-49 y.o.
23%
30-39 y.o.
52
53
Selection of the personnel is carried out at The wages at the enterprise consist of the
Rate of labour productivity growth made ductive work; the Gratitude has been an-
OJSC «Kazanorgsintez» according to the constant (the tariff rate) and the variable
9.5 % in current prices. Thus rate of labour nounced to 430 workers; the rank of the
necessary educational level, practical experi- (premium) parts. It allows to provide social
productivity growth advances the rate of «Honorable worker of OJSC «Kazanorgsintez»
ence, and the professional, business, person- security for workers on the one hand, and to
monthly average wages growth. The param- have been received by 16 persons; 8 persons
al and morally-ethical characteristics, which motivate them to achieve the planned pa-
eter of staff turnover made 9.7 %, at the rate have been awarded the rank «Honorable
are necessary for execution of certain func- rameters of the divisions, and the enterprise
10 %.
chemist of the Russian Federation»; 8 em-
tions. During 2006 the rejuvenation of the as a whole on the other hand. Definition of
ployees of the enterprise have been awarded
personnel structure is observed at the enter- the level of payment is based on the concept
OJSC «Kazanorgsintez» also uses non-mate- the Honor Certificate
prise. So, the number of workers of the age of effective wages, competitive at the local
rial methods for encouraging its employees, of the Ministry of In-
category of 20-39 years has increased by 7 % labour markets, which provides the attraction
which promote formation of perception dustry and Energy
in comparison with and staying at the enterprise of the person-
of the participation and the importance of of the Russian Fed-
2005 and has made nel with necessary vocational characteristics
workers in corporate purposes achievement. eration; 10 persons
44 %. Average age of and high motivation to the effective work. In
In 2006, 873 persons have been awarded have got the Honor
the working person- total it has been spent 1,628 mln. roubles for
with the Honor Certificate of the enterprise Certificate
nel made 40.28 years wages payments in the reporting year.
for high professional skill, diligent and pro- Ministry of Econom-
The average salary at the
enterprise made 16.7
thousand roubles in
2006, which is by 8.3 %
more than in 2005, and
by 56 % more in comparison with the average salary across Russia.
of
the
in 2006 (2005 – 40.50
ics and industry of
y.o., 2004 – 41.19 y.o.).
Tatarstan
Each third worker of
Letters of gratitude
the enterprise has
LABOUR EFFICIENCY (THS. RUR /MONTH)
Republic,
of the President and
the higher educa-
Prime
tion.
Tatarstan
minister
of
Republic
have been handed
154
164
180
There are 1,158 managers, highly skilled
experts and workers at the enterprise
trained to bases of the
pedagogical knowledge among which
517 persons are certified as teachers and
641 - as instructors of
inservice training.
over to two workers of the enterprise.
AVERAGE SALARY (THS. RUR /MONTH)
At the enterprise the system of continuous professional and economic training of
12.2
15.5
16.7
staff is operating. Development of professional competence is the basic purpose
of the educational activity and the tasks
directed to the improvement of professional skills of the personnel. Training and
improvement of professional skill of the
staff is being carried out according to the
requirements of ISO 9001: 2000 (GOST ISO
9001-2001) and ISO 14001: 2004. In 2006,
2004
2005
2006
4,089 workers have passed vocational training and improvement of professional skills.
2004
2005
2006
POLYMER
SAVES LIVES
The group of engineers under the management of Christopher Coughlin from Naval Air Systems Command considers
that the number of polymers, used in the sports industry
field nowadays can help in creation of the new system of
life support for air vessels, space ships and submarines, due
to the effect of self-healing. Not long ago, American scientists discovered, for example, that polymer which covers the
skittles for bowling, helmets and balls for golf, has the curious feature - it can “pull together” open holes very quickly.
They try to find out the reason of the polymer self-healing
mechanism. Scientists consider that the reason is in the
“melting properties” of the polymer - “self-healing” occurs
when the polymer heats up till the determined temperature.
Nowadays, when contacting with fuel, polymer breaks up so
that it is necessary to hold the great research first, before using
the material for fuel tanks and fuselages covers. Christopher
Coughlin considers that this problem can be solved by experiments with the more resistant to aggressive environment material, for example urethane.
56
SOCIAL FIELD
SOCIAL FIELD
Activity of OJSC «Kazanorgsintez» in social field is directed to the creation and keeping up of
Construction of housing for workers of the enterprise. In 2006 the
favorable conditions for effective labour activity, formation of healthy psychological climate
construction of the last of 3 houses with 125 apartments of housing complex of
and rendering of social support concerning the personnel of the enterprise and Company as
OJSC «Kazanorgsintez» was finished. Workers of the enterprise have a priority
a whole. The company aspires, that its social responsibility was an integral part of corporate
at distribution of apartments which carries out according to the Regulations of
culture. Following to the given target allows to reduce possibility of reputation and financial
selection of nominees for housing purchasing under the Program of the social
risks and not to miss new opportunities.
mortgage.
OJSC «KAZANORGSINTEZ» ASPIRES TO HARMONIZE THE BUSINESS-PURPOSE
WITH THE PURPOSES OF COMPANY DEVELOPMENT BY MEANS OF:
I
REALIZATION OF SOME SOCIAL PROGRAMS directed to granting of privileges,
guarantees and indemnifications to the employees. The structure defending the labour
rights and social and economic interests of workers is the Trade-union committee of OJSC
II
RENDERING THE CHARITABLE AND SPONSOR’S HELP DIRECTED TO:
science and education development, and support of children’s homes and boarding
schools. So, in 2006 it has been transferred 900 ths. roubles for these purposes.
«Kazanorgsintez». By the end of 2006, 95 % of workers of the enterprise are the members
of the Trade union. The primary goals of social partnership between labour collective and
sports support and development of a healthy way of life. In 2006 the enterprise has
management are reflected in the collective agreement accepted for the period from 2005
to 2007, where the basic components of workers’ social package are reflected. At the trade-
es 2006, which took place at the hippodrome of Kazan. The collective of physical
union conference on results of 2006, the trade-union committee of the enterprise has stated
a positive estimation of terms and conditions and performance of the collective agree-
transferred 1 mln. roubles for organization of the Cup-final of the World for race horsculture of OJSC «Kazanorgsintez» has hold 41 activities of different kinds of sports
with participation of about 3,000 workers of the Company.
OJSC «Kazanorgsintez» is the general sponsor of water polo team “Sintez”. In 2005 for the
ment.
The number of priority directions of workers social support consists of the following:
first time in history, Kazan water polo team won the Cup of Russia. In Euro cup LEN TROPHY
of the 2005-2006 season the team “Sintez” has won the second place and has entered the
Rendering material assistance to the workers of OJSC «Kazanorgsintez» according to the collective agreement. In 2006 the total amount of payments made
semifinal of Cup LEN TROPHY 2006-2007. The team “Sintez” is also included into number of
33 mln. roubles.
season. In 2006 it has been directed 80 mln. roubles for keeping the team.
Non-state pensions provision. The program works since 1999 and allows forming additional social guarantees for workers. During 2006 15.2 mln. roubles have
been transferred to the fund of non-state pensions provision. The order of granting and conditions of calculation of non-state pension are determined by «Regulations on non-state pensions provision for workers of OJSC «Kazanorgsintez».
Health services, sanatorium treatment and recreation. In 2006, 5,307 workers
of the enterprise have been rendered free-of-charge services for the amount of
4.3 mln. roubles by the medical-sanitary unit of OJSC «Kazanorgsintez». Due to
the modern equipment and skilled experts medical-sanitary unit renders a wide
spectrum of services on revealing, diagnostics and preventive measures of diseases. In sanatorium – preventorium, which belongs to the Company 1,156 of
people passed the course of treatment in 2006.
leaders among the teams of the supreme league in the championship of Russia of 2006-2007
57
SOCIAL FIELD
SOCIAL FIELD
10 divisions of OJSC «Kazanorgsintez»
are engaged in the solving of problems of creation the favorable conditions for effective labour activity and
formation of the healthy psychological climate in the collective. By the end
of 2006, 743 people are occupied in
these divisions. Such divisions of the
enterprise include:
RECREATION CENTERS: “Solnechny”, SWIMMING POOL “SINTEZ”, where all
“Shelanga”, “Observatoria”. In total 2,766 peo- necessary conditions are created, both for
ple has had a rest in the centers during 2006. health improvement of the workers of the
The comfortable territory and buildings enterprise, and for maintenance of training
equipped with all necessary facilities allow process. During 2006, 36 sports-mass events
accepting the workers of the enterprise and have been hold there, by the results of one
members of their families for the rest all the of which Federal Agency on physical training
year round. In 2006 such large events as «Day and sports of Russia has noted an excellent
of chemists», VI Republican television festival hardware of the pool with the electronic and
of variety art, Russian festival of children’s sound equipment for carrying out the com-
COMBINE OF PUBLIC CATERING. It
unites 14 branches for 1,450 seating places,
the trading house “Sintez” with the area of
choreographic collectives «Spring trick», the petitions and the good organization. The
All-Russia forum of young citizens have been sportsmen of the swimming pool “Sintez” OJSC «KAZANORGSINTEZ» HISTORY
hold at the center “Solnechny”.
are the winners of Russian, European and the MUSEUM, established in 1977 under the
world championships.
administration initiative. During 2006 the
350 sq.m. located in the territory of the plant,
WATER-ROWING CENTER “SINTEZ”, with
and 6 buffets. The combine of public cater-
the total area of 7,830 sq. meters, located in
ing has hold 25 exhibitions of sales, competi-
the coast of the river Kazanka. The center has
tions of professional skills, «Days of national
the steam-ship “Sintez”, which is used for ex-
cookery», consumer conferences in 2006.
cursions along the river Volga for employees
museum has hold 239 excursions, with 1,740
visitors.
and the guests of the enterprise.
MEDICAL-SANITARY UNIT. The structure
of the medical-sanitary unit includes the
polyclinic, dental unit, 2 day time hospitals, 2
health centers and the sanatorium equipped
with the up to date medical equipment.
PALACE OF CHEMISTS. Is one of the lead- There are 6 department medical units. Such
HOUSING COMPLEX for accommodation
of workers of the enterprise and the people
sent to the business trip. Structure of the
ing cultural centers of Kazan which is visited experts as a therapist, a gynecologist, a surcomplex consists of the hotel «House of fornot only by workers of OJSC «Kazanorgsin- geon, an ophthalmologist, a neurologist, a
eign experts» for 116 people and 2 hostels.
tez», but also the citizens. There are 2 visual radiologist, an otolaryngologist, a doctor of
During 2006 the quantity of living people in
cinema halls for 650 and 150 seats, a sports ultrasonic diagnostics, a doctor-physiatrist,
the hotel made 1,974 persons or 8,107 perhall, 2 banquet halls and cafe in there. Daily, a doctor-urologist, a doctor of acupuncture
son/days. 295 people lived in the hostels of
14 creative collectives with more than 700 are always operating. In November, 2006
the complex.
the fluorographic device has been mounted
people are working in the Palace.
and put into operation. Used new methods
of diagnostics allow to reveal diseases at an
early stage and to carry out their preventive
measures.
The expenses for social field objects maintenance and social payments in 2006 made
700 mln. roubles and have grown up by 5.5% in comparison with 2005.
The basic tools of the social reporting of the Company are: the official web-site of the
company www.kazanorgsintez.ru, the newspaper “Sintez”, weekly meetings of the
trade-union committee leaders, the annual report of financial and economic activity
of the enterprise, and also other external sources of accommodation the information
of social policy of the enterprise.
PART III
COMMERCIAL ACTIVITY
POSITION IN INDUSTRY
Annually «Kazanorgsintez» sells more than 170 kinds of various chemical products in
volume more than 500 thousand tons. The marketing network of the company covers 27
countries of the world, including Russia. More than 2,000 enterprises are the buyers of our
production.
POSITION IN INDUSTRY IN 2006
Name
of the product
Production volume, ths. tons
Russia
OJSC “ Kazanorgsintez “
Share of OJSC
“Kazanorgsintez”, %
HDPE
476.0
208.3
44%
LDPE
588.1
181.8
31%
Polyethylene pipes
170.0
27.7
16%
Phenol
221.3
24.5
11%
Acetone
135.6
15.4
11%
Ethyleneglycol
409.4
43.9
11%
Ethanolamines
36.0
12.0
33%
part III // COMMERCIAL ACTIVITY //
62
REVIEW OF THE BASIC
PRODUCTS MARKETS
63
REVIEW OF THE BASIC
PRODUCTS MARKETS
POLYETHYLENE PIPES
POLYETHYLENE
POLYETHYLENE PRICE DYNAMICS IN RUSSIA AND EUROPE
AVERAGE PRICES FOR POLYETHYLENE PIPES IN RUSSIA (INCL.VAT)
In 2006 the total amount of the domestic
The volume of the domestic market of
market of polyethylene in Russia made
polyethylene pipes in Russia made 179
1,194 ths.tons and increased for a year by
$/TON
2,500
RUR /TON
ths. tons and has grown by 18 % to the
12 %, including due to increase in con-
6,500
level of 2005.
sumption of low density polyethylene by
6,000
2,000
The volume of production in Russia has
2.5 % and HDPE by 9.5 %.
5,500
grown by 17.5 % in comparison with
1,500
The volume of production in Russia in
5,000
2005 and has made 170 ths. tons.
4,500
comparison with 2005 increased by 2.5 %
2004
1,000
and made 1,064.2 ths. tons, including due
2005
2006
to increase in LDPE volumes by 2.4 % and
Information source: Him-Expert, ICI’S
12.06
10.06
08.06
06.06
04.06
02.06
12.05
10.05
08.05
06.05
04.05
02.05
12.04
10.04
08.04
04.04
06.04
500
HDPE by 0.1 %.
Information source: OJSC “Kazanorgsintez”
(according to price lists of producers)
Russia (incl. VAT)
Europe (spot prices, FD NWE)
POLYETHYLENE CONSUMPTION IN RUSSIA
(THS. TONS)
According to the data of the Ministry of Industry and Energy of Russia, the level of operating capacities use in polyethylene production
has come nearer to 100 %. In this connection reserves for essential
growth of production practically are absent.
943
1,066
1,194
Growth of production volumes of polyethylene in 2006 basically has
POLYETHYLENE PIPES CONSUMPTION
IN RUSSIA (THS. TONS)
143
152
179
been provided by increase of LDPE and HDPE at OJSC «Kazanorgsin-
+13%
+12%
The contribution of producers to the total gain of production has
made:
-1.3 % - decrease in volumes of «Kazanorgsintez» by 6.2 %
down to 27.7 ths. tons;
tez» and LDPE of LLC «Tomskneftekhim», thus LLC «Stavrolen» has
+12.1 % - increase in production of the enterprises with ca-
reduced volumes of HDPE production.
pacities of more than 10 ths. tons, excepting «Kazanorgsintez»;
The share of «Kazanorgsintez» in production volume of polyethylene
+6.7 % - increase in production of the enterprises with ca-
+17.8%
of the Russian Federation has made 37 % in 2006 (in 2005 - 32 %).
+6.3%
pacities less than 10 ths. tons.
Export of polyethylene in 2006 in comparison with 2005 increased
by 14 % in natural units, which is by 10 % caused by increase in HDPE
2004
2005
2006
Information sourse: Market Report Company (MRC)
export and by 4 % - increase in LDPE export.
Export and import practically have not influenced on the domestic
Import of polyethylene increased in comparison with the last year by
market of pipes.
52 %, which is mainly caused by increase in HDPE import in 2 times
The share of «Kazanorgsintez» in the all-Russian production was re-
up to 225 ths. tons and reduction of LDPE import by 71 % in compari-
duced from 20 % in 2005 down to 16 % in 2006 which is connected
son with 2005 down to 36 ths. tons.
with increase in production volumes of the basic competitor Chemi-
Average polyethylene prices dynamics is shown on the chart. The
cal Combine «Eurotrubplast», Moscow in 1.6 times. The average pric-
average polyethylene prices of OJSC «Kazanorgsintez» made 41 ths.
2004
2005
2006
roubles/ton including VAT in 2006.
Information sourse: Market Report Company (MRC)
es for polyethylene pipes of OJSC «Kazanorgsintez» made 60.1 ths.
roubles/ton including VAT.
64
REVIEW OF THE BASIC
PRODUCTS MARKETS
PHENOL
REVIEW OF THE BASIC
PRODUCTS MARKETS
PHENOL CONSUMPTION IN RUSSIA
(THS. TONS)
In 2006 consumption of phenol in Russia
ETHYLENEGLYCOL
ETHYLENEGLYCOL CONSUMPTION IN RUSSIA
(THS. TONS)
Demand of the Russian market for Ethyleneg-
made 184 ths.tons and increased by 0.6 % in
177
comparison with the previous period. Unlike
65
183
184
197
lycol has increased by 30 % in 2006 and made
154
200
200 ths. tons. Growth of the market demand
the last years, in 2006 the home market has
has been completely caused by increase in
shown the moderate dynamics. Volumes of
producers’ volumes by 12.6 % up to 409.4 ths.
phenol production in Russia decreased by
tons. The main producers of monoethylene-
9 % in comparison with 2005 and made 221
ths. tons. Volumes of export were reduced by
+3.4%
+0.6%
glycol are «Sibur-Neftekhim», «Petrokam»,
-21.8% +29.9%
«Nizhnekamskneftekhim» and «Kazanorg-
38 %. Decrease in volumes of phenol produc-
sintez». The share of OJSC «Kazanorgsintez»
tion in Russia basically is connected with de-
in production volume made 10.7 %, thus
crease in production of OJSC «Kazanorgsin-
the volume of production has decreased by
tez» in 1.7 times which is caused by carrying
2.6 % and made 43.9 ths. tons.
out of reconstruction. Demand of consumers
in the home market is completely satisfied
Export of products has decreased slightly -
with the Russian producers. Import of phenol
by 1 % down to 210 ths. tons, thus import
continues to remain insignificant – 0.5 % from
was reduced in 5.6 times down to 430 tons.
volume of the domestic market. The share of
The average prices for ethyleneglycol of OJSC
phenol of OJSC «Kazanorgsintez» in the total
«Kazanorgsintez» made 24.7 ths. roubles/ton
production of the Russian Federation has de-
2004
creased by 6 % in 2006 in comparison with
2005 and made 11 %.
2005
2006
2004
including VAT.
Information source: Information center “Kortes”
2005
2006
Information source: Information center “Kortes”
PHENOL PRICE DYNAMICS IN RUSSIA AND EUROPE
ETHYLENEGLYCOL PRICE DYNAMICS
IN RUSSIA AND EUROPE
The average phenol prices
Changes of ethylenegly$/TON
of OJSC «Kazanorgsintez» in
the chart.
Information source: Information
center “Kortes”, ICI’S
Russia (incl. VAT)
Europe (spot prices, FOB ERDAM)
Information source: Information
center “Kortes”, ICI’S
12.06
10.06
08.06
06.06
04.06
02.06
12.05
10.05
08.05
06.05
04.05
400
04.04
12.06
11.06
10.06
09.06
08.06
07.06
06.06
600
05.06
500
04.06
800
03.06
1,000
02.06
1,000
01.06
1,500
02.05
ton, including VAT.
Europe are presented on
1,200
12.04
2,000
col prices in Russia and in
1,400
10.04
2006 made 34.6 ths. roubles/
08.04
2,500
06.04
$/TON
Russia (incl. VAT)
Europe (spot prices, CIF NWE)
POLYMER
FIGHTS
WITH
LIGHTNING
The founder of the company BoltBlocker (San Diego, California) Doug Palmer offers absolutely new way of fighting with
lightnings. His lightning rod will be designed from... the water jet, which will be injected directly into the thunder clouds.
Lightning rod water represents itself the salt brine, where liquid polymers will be added: salt intended for strengthening
of water electrical conduction, and polymer will interfere to
the jet “disintegration” into the separate drops. Creation of
the working lightning rod aerial with the polymer help can,
for example, be based on the ability of the particles of the
number of up to date polymer compounds “to connect” with
them inorganic molecules with the help of electric charge of
the environment. Thus, the atmosphere electricity makes “a
trap” for itself.
Diameter of the jet is about 1 centimeter, and the maximum
height - 300 meters. Water jet will be turned on automatically when the level of electrifying will be high enough, and
the probability of thunder hit - maximum. Current will “run
down” along the jet and ground in the special earth device.
Such lightning rods first of all are intended for industrial en-
terprises, on the territory of which there is no opportunity to
install stationary constructions, and also for the enterprises,
representing vital value for environment and population: different kinds of electric stations, chemical industry objects,
dams, bridges and other constructions, which because of
their significance need the special protection. Of course,
there are no any words of nature management for the presence, but according to the opinion of some scientists, the
project of the water lightning rod is one of the most effective
steps to this goal achievement.
68
STRUCTURE OF SOLD OUTPUT
BY THE BASIC KINDS OF PRODUCTS IN 2006
In 2006 OJSC «Kazanorgsintez» sold goods
and services in amount of 15.5 bln.roubles.,
which is by 2.2 bln. roubles (+16.4 %) more
than in the last year. The growth of sales
proceeds has occurred basically because of
increase in sales volumes and the prices of
polyethylene. The sales volume of polyethylene in natural measures increased by 28.1 %,
the average prices of sale increased by 7.1 %.
In comparison with 2005 the total amount of
HDPE sales increased in 1.7 times, and LDPE
- in 1.2 times.
69
STRUCTURE OF OUTPUT SOLD IN THE DOMESTIC MARKET BY DISTRICTS IN 2006
The share in sales proceeds in the home market made 82 % and has increased in compari-
Polyethylene
pipes and details
Others
7%
Glycols
6%
Phenol, acetone
son with the last year by 2 %.
41%
It is sold products for the amount of 12.7 bil-
6%
9%
Others
lion roubles in the domestic market, which
10%
Processing
services
5%
is by 19 % more, than in 2005. The increase
53%
in sales in the domestic market has occurred
HDPE
Central Federal
District
Privolzhskiy
Federal District
due to the more favorable conjuncture of
31%
32%
LDPE
the Russian markets of basic products. The
main sales of OJSC «Kazanorgsintez» fall for
The basic specific weight in structure of sales
proceeds belongs to polyethylene of high
and low density (63 %).
Privolzhskiy Federal district and the Central
12,703 mln. RUR
Federal district of Russia (94 %).
15,518 mln. RUR
STRUCTURE OF EXPORT OUTPUT BY MAIN KINDS OF PRODUCTS IN 2006
Sales of the Company are based on the following principles:
Granting preferential terms to the constant consumers buying significant volumes of products for a long
time;
LDPE
41%
Expansion of highly effective commodity markets and search of new consumers;
Others
6%
Phenol, acetone
8%
Glycols
11%
HDPE
34 %
In 2006 OJSC «Kazanorgsintez» exported
products to 27 countries of Europe and Asia
for the total amount of 2.8 bln.roubles. The
basic relative share in export structure be-
The establishment of such prices for products which would allow entering the planned volume of profit
and to seize the greatest possible share in the market. Demand for OJSC «Kazanorgsintez» products, market
conditions, competitors’ prices, costs of production are considered when defining the price level;
A choice of deliveries to the domestic or the foreign market is carried out to maximize profitability of sales
and keep sufficient volume of export for its increasing at a favorable conjuncture.
longs to high and low density polyethylene
(75 %).
In 2006 the export sales proceeds increased
by 181 mln. roubles. (+6.9 %). The basic influence on sales proceeds growth was increase
in export volumes of polyethylene (+ 44 % in
2,815 mln. RUR
comparison with 2005).
STRUCTURE OF SALES PROCEEDS BY COMMODITY MARKETS
STRUCTURE OF EXPORT OUTPUT BY COUNTRIES
14.8%
14.0%
Kazakhstan
20.8%
Others
reported year. The markets of these coun-
6.5%
Finland
tries are characterized by growth of chemi-
6.2%
China
cal products consumption and higher price
5.5%
Poland
connection OJSC «Kazanorgsintez» consid-
4.1%
Uzbekistan
ers the given export direction as the priority.
28.1%
The main foreign markets are the countries
of the near abroad such as Ukraine, Belarus,
Export
20%
18%
Export
Kazakhstan and Uzbekistan the share of
which has come to 61 % of all export in the
Domestic market
80%
82%
Domestic market
level in comparison with world prices, in this
2005
2006
2,815 mln. RUR
Belarus
Ukraine
70
RAW MATERIAL SUPPLY
71
RAW MATERIAL SUPPLY
LARGE SUPPLIERS OF THE BASIC RAW MATERIAL IN 2006
In 2006 expenses of OJSC «Kazanorgsintez»
ths.tons
for raw materials and materials made 5,451
mln. roubles, including the share of raw materials and materials purchased in the do-
The name of raw
material
2004
mestic market, which has made 98 %, import
2005
2006
2006/2005
- 2 %.
Ethane
324
210
323
154%
The main raw materials for «Kazanorgsintez»
Including processing
137
64
118
184%
are the following: ethane, propane-butane,
Propane-butane
233
274
225
82%
ethylene and benzene. The share of expens-
99
109
15
14%
es for the basic raw materials in the total
Ethylene
138
135
136
101%
expenses for raw materials and materials in
44
28
5
16%
2006 made 79 %. The part of the basic raw
Benzene
45
45
27
60%
material is supplied as processing. Volume of
1.1
6.1
1.6
26%
OJSC
“Gasprom”
30 %
15 %
Other
OJSC
“Impex neftekhim”
11 %
18 %
OJSC
“Sibur Holding”
13 %
OJSC
“Tatneft”
13 %
OJSC
“Nizhnekamskneftekhim”
supply of the basic kinds of raw material is
presented in the table:
The prices for the main raw material in different extent are subject to influence of the world
oil prices. Propane-butane and benzene fall under the strongest influence.
RATES OF PRICE RISE ON THE MAIN RAW MATERIAL IN RELATION TO 2002
ETHANE – it is used for ethylene production. PROPANE-BUTANE – alternative kind of BENZENE – is used for phenol and acetone
Ethane supply to OJSC «Kazanorgsintez» is raw material in relation to ethane which also production. Deliveries of benzene are carried
carried out by ethane pipeline connect- is used for ethylene production. Producers of out by railway transportation in tanks. The
ing Orenburg GPZ and Minnibaevsky GPZ propane-butane are gas-oil refining plants. main deliveries of benzene are carried out
(Tatarstan Republic). Deliveries of ethane in Transportation of the given raw material is from such producers as OJSC «Sibur-Neft2006 increased by 54 % in comparison with carried out by railway tanks as condensed ekhim», OJSC «Severstal» and LLC «KINEF».
the last year, which is connected with resum- gas. Volumes of purchase have been re- Deliveries of benzene in 2006 are by 40 %
ing of production at Orenburg gas process- duced in 2006 by 18 % in comparison with lower than in 2005 that is connected with
ing plant.
300 %
281
238
250
206
reconstruction.
156
152
150
123
100
100
102
ETHYLENE – it is used for production of polyethylene and ethylene oxide. OJSC «Kazanorgsintez» produces ethylene independently, and
221
162
200
the last year in connection with growth of phenol-acetone productions shutdown for
ethane deliveries.
262
168
138
115
117
126
50
2002
2003
2004
2005
also buys it from outside. Transportation of ethylene is carried out by ethylene pipeline which connects five industrial enterprises among
themselves: «Kazanorgsintez», «Nizhnekamskneftekhim», «Ufaorgsintez», «Sterlitamak petrochemical plant» and «Salavatnefteorgsintez»
thanks to that any of producers can deliver ethylene to another. Deliveries of ethylene were kept at the level of 2005.
Benzene
Ethylene
Propane-Butane
Ethane
2006
CAR
FROM PLASTIC
For moving around the city economically and with comfort mini car is needed. Nobody argues with this. But “mini”
doesn’t mean “cheap”, “simple”, “boring” automatically. It is
more “not ordinary”. One of the little-known Brazil companies pretends to win some share of the market not somewhere, but in the USA. It is clear that many people in Brazil
drive American cars (though their own auto industry is quite
developed here), but it is difficult to imagine that satiated
with assortment Americans will pay attention to some car
from Brazil. What they can offer to attract consumers? Cars
offered to American consumers are very small, but not intended for people wishing to save money at all. Their price
vary from $14 up to $28 thousand. And at the same time it
worth to consider that the length of the offered car models makes “funny” 2.65-3.2 meters (like “Oka” model). And it
is asked: what is it for to pay such money, if you buy urban
“minicar - beetle”? The answer is: for design, originality, and
equipment. Both cars have the bodies from the composite
panels on the still framework. High level of the passive safety
is promised as due to the reasonable body construction, as
due to the blow bags, included in the basic equipment. It is
clear that such cars don’t weigh too much: 600 kg, 750 kg.
Believing that people drive alone around the city, and only
sometimes with one passenger, Brazilians decided that there
is no need in five or four chairs in the car. That’s why they
make both cars with three chairs.
PART IV
INVESTMENT ACTIVITY
DEVELOPMENT PROGRAM
THE FIRST STAGE (2004-2007)
Modernization of ethylene production unit with increase in capacity from 430 up to 640 ths. tons per
year (for providing HDPE plant with the raw material).
Modernization of HDPE production unit with increase in capacity from 197 up to 510 ths. tons per year
(for increasing the share in polyethylene market and creation of new up to date grades).
Construction of bisphenol-A plant with capacity of 70 ths. tons per year (for processing of own phenol
and acetone, providing polycarbonates plant with raw material and entry to new commodity markets).
Construction of polycarbonates plant with capacity of 65 ths. tons per year (for processing of own bisphenol-A and entry to new commodity markets).
Modernization of phenol production (for stabilization of work of existing production for provision of
bisphenol-A plant with raw material)
THE SECOND STAGE (2008-2010)
Construction of ethylene-propylene plant with capacity of 600 ths. tons per year of ethylene and 200
ths. tons per year of propylene (for providing of own productions with raw material with use of alternative kinds of raw material for ethylene production and producing new kinds of output).
Construction of linear polyethylene plant with capacity of 350 ths. tons per year (for increasing the share
on polyethylene market).
part IV // INVESTMENT ACTIVITY //
76
DEVELOPMENT
PROGRAM FINANCING
DEVELOPMENT
PROGRAM FINANCING
THE AVERAGE INTEREST RATE UNDER CREDITS AND THE SHARE OF
SECURED CREDITS ARE PRESENTED IN THE TABLE:
FINANCING ORGANIZATION
STRATEGY
I
Attraction of long-term credits for a period from 7 till 12 years in national and in
foreign currencies, with beneficial period of
crediting during realization of investments.
2
3
Cooperation with the international and
Russian banks.
6
7
8
of export-credit agencies (Hermes,
cash breaks.
Entering the international market of debt unsecured financing.
The share of
secured credits
on 31.12.2005
10.05%
32.25%
on 31.12.2006
7.47%
13.77%
Long-term credits with the repayment period of over 5 years make 35.5 % in the structure of
credits and loans, 53.5 % make credits with the repayment period from 3 till 5 years.
LIST OF PROJECTS OF THE 1ST STAGE
OF DEVELOPMENT PROGRAM
Atradius, JBIC).
4
Optimization of expenses for debt
(bln.roubles including VAT)
service at signing investment contracts
by opening the letters of credit, purchase of
Has been
financed in 2006
Has been financed
from 2004
till 2005
the equipment in leasing, delay of payment
till equipment delivery.
HDPE-510 Project
2.8
3.4
5
EP-640 Project
1.7
0.8
BPA-70 Project
3.1
1.5
PC-65 Project
2.8
2.0
10.4
7.7
Use short- and medium term credits for
Average % under
credits and loans
Execution of overdraft unsecured credits for covering of time
The priority is given for attraction of unsecured credits.
Attraction of credits under covering
77
current activity financing.
Total
At signing the contracts the payment terms and conditions such as letters of credit, purchases of the equipment in leasing, delay of payment till equipment delivery were worked
out in order of OJSC «Kazanorgsintez» credit indebtness diminishing.
With a view of debt service cost minimizing OJSC «Kazanorgsintez» has entered the international capital market, having placed a debut unsecured Eurobond issue for 200 mln. USD
in October, 2006. Listing of papers is carried out by the London stock exchange. The funds
received from bonds issue have been completely directed for repayment of the secured
credit of the Savings Bank of the Russian Federation.
In 2006 it has been financed 10.4 bln.roubles,
including own funds 3.3 bln.roubles. For
financing the investment program the following long-term credit contracts have been
concluded:
The Eurobond issue in the amount
of 200 mln. USD for repayment of se-
concluded in August, 2006 for the period of 7 years;
The International Moscow Bank - a multi currency line (USD/
EURO/RUR), an equivalent of 50 mln. USD. It is concluded in
December, 2006 for the period of 3 years;
ABN AMRO Bank (Moscow) - 30 mln. USD. It is concluded in
July, 2006 for the period of 3 years;;
cured credits. It is concluded in Octo-
RZB Finance - 1,717 mln. USD. The credit is given under guar-
ber, 2006 for the period of 5 years;
antee of ECA ExIm Bank (USA) for financing the 85 % of the
The Savings Bank of Russia - rouble
equivalent of 75 mln. USD for financing ethylene production unit modernization, bisphenol-A and polycarbonate plants construction. It is
equipment supply contract with the firm Grif Management
Inc. and 100 % of insurance premium of ECA ExIm Bank. It is
concluded in July 2006 for the period of 5 years.
In 2006 OJSC «Kazanorgsintez» has confirmed the international credit ratings from agencies
Standard & Poor’s «В-», the outlook is stable, and Fitch Ratings “B”, the outlook is stable.
Management of OJSC «Kazanorgsintez» forms credit portfolio keeping the optimum ratio of
own and loan capital that allows to provide the sufficient level of financial stability for carrying out stable operational activity and execution of development program.
78
DEVELOPMENT
PROGRAM PERFORMANCE
79
DEVELOPMENT
PROGRAM PERFORMANCE
ETHYLENE PRODUCTION UNIT RECONSTRUCTION
HDPE PRODUCTION UNIT RECONSTRUCTION
Within the given task realization in 2006:
The project of ethylene production unit modernization from 430 up to 640 thousand tons a year provides combination of the 2nd
«Univation Technologies» HDPE modernization project provides increasing of capacities from 197 up to 510 ths.tons a year as well as
release of the new grades of products such as:
1
2
and the 3rd units of gas separation to a single production unit with addition of the new equipment, capacity thus will be increased
from 160 up to 330 ths.tons per year and modernization of the 4th unit of gas separation from 235 up to 275 ths.tons per year. Modernization of the first unit of gas separation with increase in capacity is not foreseen.
grades without analogues in the Russian Federation intended for gas and water-pipes production, produced on
the basis of PE-100;
high-molecular film grades for durable films production
with thickness of 7-20 mk;
1
2
«Technip Benelux B.V.» basic design for ethylene production unit reconstruction was executed;
The execution of the detailed design of ethylene pro-
5
6
The new ethylene pump has been installed, modernization of
the two existing pumps is being continued;
The main and auxiliary equipment of «Technip Benelux B.V.»
high-selective double-cell cracking furnace with productivity
duction expansion by State Unitary Enterprise “Bashgi- of ethylene of 18 tons/hour have been installed, the installation of
Instrument system and heat insulation of pipelines is being continproneftekhim” is at the final stage;
3
4
Modernization of the propylene compressor of the refrigerating cycle has been carried out;
The new ethylene compressor of the refrigerating cycle
has been installed;
grades for petrol tanks and other high rigidity containers
extrusion moulding;
ued;
grades intended for rotary moulding;
grades intended for food and medical industry;
grades of linear low density polyethylene.
Works of reactors “A” and “C” modernization were completed;
The following items were installed and put into operation:
the construction of raw material purification;
the equipment for receipt, preparation and supply of the catalysts;
circulating gas compressors;
circulating gas water heat exchangers;
ethylene compressor;
the system with purge bins for polymer degassing;
the pelletizing and pneumotransport system;
unit for polyethylene shipment in containers;
the automated technological process control system;
3
4
5
Commissioning works and final adjustments are being carried
out at the new compounding line;
High pressure nitrogen compressors were installed;
7
8
The foundations for additional equipment, racks and constructions have been carried out;
There is an installation of bearing constructions. Installation of
the incoming equipment is being continued.
Subprojects:
The pressure-swing adsorber (PSA) of the
firm «Linde», producing highly purified hydrogen for HDPE Plant, with capacity of 240
kg. an hour has been put into operation.
Construction of the warehouse for liquefied
hydrocarbon gases is being carried out. Installation for the tank battery foundation was
executed. The supply and installation of the
tank battery equipment is being carried out.
The building of the operator’s room, fire and
pump station was executed.
Recovery unit equipment installation works are being carried
out; gas regeneration compressor was installed.
80
DEVELOPMENT
PROGRAM PERFORMANCE
81
DEVELOPMENT
PROGRAM PERFORMANCE
Subprojects
BISPHENOL-A PLANT
Increasing of air separation units capaci- Hexene-1 and isopentane warehouse exties:
pansion:
Plant construction is carried out on OJSC
1
2
3
4
5
6
7
8
Air separation and compressor units
were installed and put into operation;
Liquid nitrogen warehouse equipment
was installed; the installation of the Instrument system equipment is being
carried out.
«Kazanorgsintez» territory. Capacity - 70 ths.
tons per year. In industry bisphenol-A is pro-
Hexene-1 and isopentane receiving and
keeping tanks, intershop communications pipelines were installed, the pump
house was constructed and its equipment was installed;
The wiring of the basic process equipButene-1 production unit reconstruction:
ment and installation of the tanks servThe static and dynamic equipment
ing platforms is being carried out.
was supplied in full, Instrument system
Butene-1 basis warehouse reconstruction:
equipment, pipelines and connecting
Foundation construction was completdetails deliveries are being completed;
ed;
The main process equipment at the exDesign documentation development is
ternal unit was installed, intershop combeing carried out.
munications lines installation was completed;
Control room and catalyst building were
constructed;
Equipment wiring works are carried out.
duced by condensation of phenol with acetone in presence of mineral acids and ion
exchange resin. The process of production at
the bisphenol-A plant will be carried out by
method of «Idemitsu Kosan Co., Ltd», which
has the following advantages: environmentally appropriate process; obtained product
possesses high quality.
The main raw materials for bisphenol-A production are phenol and acetone produced
by the enterprise. In its turn bisphenol-A is
the basic raw material for polycarbonates,
phenol formaldehyde and epoxide resins
production.
Foundation construction was completely finished;
Static equipment delivery and installation is at the final stage;
Dynamic and Instrument system equipment delivery and installation are being continued;
Pipelines for the process equipment connection and intershop
stockades of heat and material pipes are being installed;
Construction of operational building for technological process
management is being completed;
Demineralized water production unit capacity was increased;
The building of the fire and pump station and the laboratory was
completed;
Administration building reconstruction for bisphenol-A and
polycarbonates plants was completed.
82
DEVELOPMENT
PROGRAM PERFORMANCE
DEVELOPMENT
PROGRAM PERFORMANCE
POLYCARBONATES PLANT
PHENOL PRODUCTION UNIT MODERNIZATION.
Plant construction is carried out near the bisphenol-A plant. Capacity Within the given task realization in 2006:
- 65 ths.tons per year. Polycarbonate is a complex linear polyether of
The basis design was completely finished;
carbonic acid and phenols. There are two industrial ways of polycar-
Phenol production unit reconstruction for increase in capacity up to
bonates production: phosgenation of bisphenol-A and interesterfication of diphenyl carbonate with bisphenol-A (non-phosgene
method). Production process at polycarbonates plant will be based
on non-phosgene method, developed by «Asahi Kasei Engineering
Corporation».
Bisphenol-A, ethylene oxide, and CO2 are used as raw material. This
process does not use phosgene and methylene chloride and forms
small quantity of waste products. Production process represents
innovative technology without participation of contaminants and
without environmental contamination. Such unit is successfully used
by «Kimei Asahi Corporation» in Taiwan since June, 2002.
1
2
3
4
5
6
polycarbonates find wide application as a constructional material in
Worn out static and dynamic equipment replacement was fin-
3
4
5
ished;
was started;
65 ths. tons per year is being carried out with the purpose of bisphenol-A stable provision with phenol and acetone.
The automated technological process control system, including
new bunker type control room was put into operation;
The additional transformer substation and distributive posts were
installed and put into operation;
The most part of the detailed design documentation was de-
veloped;
Dynamic and static equipment delivery is being continued;
Process equipment and heat and material pipes intershop stockades are being installed;
Civil works of the process control room are at the final stage;
Tank battery equipment installation is at the final stage.
Due to thermostability, high impact strength and chemical inertness,
83
the electrical engineering and electronics, motor industry and production of consumer goods (lens, gears, multilayered glasses, packing, CD, and etc.).
Subprojects
Carbonic dioxide production unit construction: detailed design development was completed; more than a half of the basic process
equipment was supplied, installation was
started.
Water circulation supply block: construction
and installation are at the final stage.
Reconstruction of purification units: biogenic industrial sewage purification installation
was put into operation; additional tanks and
warehouse capacities are installed.
Water-line, steam line, underground communications construction works are at the
final stage.
1
2
Additional raw material warehouse capacities were put into operation, the tank car loading and receiving racks construction
Worn out Instrument system underground communications and As a result of the reconstruction works the production capacity of
65 ths.tons of phenol per year has been reached.
pipelines equipment, was replaced;
PART V
part V // CORPORATE MANAGEMENT //
86
CORPORATE
MANAGEMENT
STRUCTURE OF
BOARD OF DIRECTORS
Corporate management of the enterprise the competence and preparations of recom-
Shigabutdinov
Albert Kashafovich
Chairman of Board of directors,
general director of OJSC “TAIF”
is carried out according to the current leg- mendations to Board of directors for deciislation, the Charter, on the basis of precise sion-making on these questions.
distribution of the rights and duties of Board
of directors and Executive management.
The Corporate management system of OJSC
«Kazanorgsintez» is based on the Russian
87
The purpose of the Committee on audit is
provision of actual participation of Board of
directors in the control of financial and economic activity of the Company.
and international practice, and principles of
«Code of corporate behavior» of the Russian The Committee of Board of directors of the
Federation, and is directed to respect of the Company on compensations and the per-
Presnyakov Vladimir Vasilevich
Deputy Chairman of Board of directors,
deputy general director for oil refining
and petrochemistry of OJSC “TAIF”
Alyokhin Leonid Stepanovich
Member of Board of directors, chairman of
Executive management, general director
of OJSC “Kazanorgsintez”
Alekseev Sergey Vladimirovich
Member of Board of directors,
first deputy general director of OJSC
“Svyazinvestneftekhim”
Gaizatullin Radik Raufovich
Member of Board of directors, RТ Minister
of Finance, pre-doctorate degree in economic sciences
Kudryashov Vladimir Nikolaevich
Member of Board of directors, member
of Executive management, first deputy
general director - technical director on
production and development of OJSC
«Kazanorgsintez», pre-doctorate degree in
technical sciences
Metshin Ilsur Raisovich
Member of Board of directors, head of municipal formation “city of Kazan”
Sulteyev Rustem Nurgasimovich
Member of Board of directors, first deputy
general director of OJSC “TAIF”
Safina Guzelija Muharjamovna
Member of Board of directors, deputy
general director on economy and finance of OJSC “TAIF”
Safiullin Marat Rashitovich
Member of Board of directors, state
adviser to President of Tatarstan Republic
for social and economic issues, doctor of
economic sciences
Sabirov Rinat Kasimovich
Member of Board of directors, head of oiland-gas chemical complex department
of RT Cabinet of Ministers, pre-doctorate
degree in chemical sciences
Sarkin Andrey Vladislavovich
chief of the corporate management of
property and investments of OJSC “TAIF”,
pre-doctorate degree in economic sciences
Fardiev Ilshat Shaekhovich
Member of Board of directors, general
director of OJSC “Tatenergo”
rights and interests of all persons interested sonnel - promotes attraction to the managein the enterprise successful activity, promotes ment of the Company the qualified experts
keeping, development and augmentation of and creation of the necessary stimulus for
shareholders assets, growth of the market their successful work.
cost, maintenance of financial stability and The purpose of creation the Committees
profitability of the organization.
is the achievement of balance of interests
All the most significant events are carried of various groups of shareholders and acout on the basis of the open information ceptance by Board of directors of as much
interchange with shareholders and other in- as possible objective decisions according
terested parties. The executive management to the interests of all shareholders of OJSC
aspires to the maximal transparency of the «Kazanorgsintez», and also increase of investactivity directed to duly providing of objec- ment attraction. In case of need the experts,
tive data about the company to all interested possessing necessary professional knowlpersons on the one hand, and to safety confi- edge for work in the specified Committee,
dential and insider information, on the other can be involved in the work of the Committees.
hand.
In November, 2006, Board of directors of The Committees of Board of directors act on
OJSC «Kazanorgsintez» decided to create the basis of internal documents of the Comthe two committees, - Committee of Board pany - Regulations on the corresponding
of directors on audit and Committee of Committees approved by Board of directors
Board of directors on compensations and where tasks and functions of the Committhe personnel, and also the plan of work of tees, the order of their formation, activity and
the Committees for 2007 was approved. The quantitative structure are determined.
given committees are created according to
principles and positive international practice
of corporate management and intended for
preliminary consideration of the most important questions within the framework of
88
CORPORATE
MANAGEMENT
STRUCTURE
OF EXECUTIVE MANAGEMENT
According to the requirements of the Federal law «On joint-stock pal formation “city of Kazan”). Other eleven members of Board of dicompanies», Board of directors is elected
by annual meeting of rectors have been re-elected.
shareholders for the period of one year.
89
Alyokhin Leonid Stepanovich
Chairman of Executive management, mem-
In the first half-year 2006 Board of directors had held 4 sessions, in-
ber of Board of directors, general director
Board of directors of OJSC «Kazanorgsintez» consists of 13 members cluding 2 in the correspondence form. In the second half-year 2006
of OJSC «Kazanorgsintez»
Kudryashov Vladimir Nikolaevich
Member of Board of directors, Member of
Executive management, first deputy general
director - technical director on production
and in the specified structure was approved on June, 8th, 2006 by in the new structure, approved at the annual assembly of sharehold-
and development of OJSC «Kazanorgsintez»,
decision of annual general shareholders meeting. According to the ers, Board of directors had held 6 sessions, including 1 in the cor-
pre-doctorate degree in technical sciences
decision the following persons left structure of Board of directors: respondence form. During the sessions parameters of financial and
Minkina Guzelija Talgatovna (Head of administration of Moscow dis- economic activity of the Company, the issues connected to sale/
trict of Kazan) and Raimov Asaf Magsumovich (member of Executive purchase of assets, the issues of attracting external financing, deals
management, deputy general director –director on commerce of connected to purchase of the own shares by the enterprise, and othOJSC «Kazanorgsintez»). Following persons joined Board of directors: er questions of OJSC «Kazanorgsintez» activity were considered.
Alekseev Sergey Vladimirovich (first deputy general director of OJSC
“Svyazinvestneftekhim”) and Metshin Ilsur Raisovich (head of munici-
Mukhametshin Marat Faritovich
Gainullin Nail Samigullovich
Member of Executive management, deputy
Member of Executive management,
general director - director on economy and
deputy general director - chief engineer
finance of OJSC «Kazanorgsintez», pre-doc-
torate degree in economic sciences
MEMBERS OF BOARD OF DIRECTORS AND EXECUTIVE
MANAGEMENT, POSSESSING SHARES
OF OJSC «KAZANORGSINTEZ»
PARTICIPATION OF MEMBERS IN THE SESSIONS
OF BOARD OF DIRECTORS
(for December, 31st, 2006)
1 half-year 2006
Name
Participated
2 half-year 2006
Name
in sessions
(times)
4
Participated
in sessions
Alyokhin L.S.
Potashkin Andrey Fedorovich
(times)
Alyokhin L.S.
6
Gaizatullin R.R.
3
Alekseev S.V.**
6
Kudryashov V.N.
4
Gaizatullin R.R.
3
Minkina G.T.*
4
Kudryashov V.N.
5
Presnyakov V.V.
4
Metshin I.R.**
1
Raimov A.M.*
3
Presnyakov V.V.
5
Safiullin M.R.
4
Safiullin M.R.
5
Sabirov R.K.
4
Sabirov R.K.
6
Sulteyev R.N.
3
Sulteyev R.N.
3
Safina G.M.
4
Safina G.M.
6
Sarkin A.V.
4
Sarkin A.V.
5
Fardiev I.S.
3
Fardiev I.S.
4
Shigabutdinov A.K.
4
Shigabutdinov A.K.
5
Surname, name, patronymic/
position
Kudryashov
Vladimir Nikolaevich
member of Executive management
Share in the authorized
capital, %
general director - director on production
of OJSC «Kazanorgsintez»»
Raimov Asaf Magsumovich
general director - director on commerce
0.013
Gainullin Nail Samigullovich
Member of Executive management
0.003
Mukhametshin Marat Faritovich
0.01
Shaikhiev Gaifutdin Gilazovich
Kaleeva Larisa Nikolaevna
0.011
Total
0.037
The share of the specified persons in the authorized capital of joint-stock company
Gataullin Magdut Makhmutovich
general director - director on personnel and
general director - director on capital con-
general issues of OJSC «Kazanorgsintez»
Kurbanov Ravil Barievich
struction of OJSC «Kazanorgsintez»
Kaleeva Larisa Nikolaevna
during 2006 did not change.
* Left Board of directors, according to the decision of the annual meeting of
shareholders from June, 08th, 2006
** Joint Board of directors, according to the decision of the annual meeting of
shareholders from June, 08th, 2006
general director - director on economic
safety and regime of OJSC «Kazanorgsintez»
Member of Executive management, chief
accountant of OJSC «Kazanorgsintez»
ALL-SEEING
EYE
Scientists from the Massachusetts Institute of Technology (MIT)
designed the device , that solved number of lens optics problems,
which sufficiently limited the opportunities of many devices earlier.
The matter is that the opportunities of the optical system are determined by the lens’ properties, through which the view is carried
out with their optical axis. However the offer of the scientists, eliminate such kinds of problems: the matter first of all is that there is no
any lens in this invention. As a material, some unusual wire with the
width of about millimeter is used. It consists of the regular metal
strand, covered with insulator from the transparent polymer. When
the light fall onto this unusual polymer (created in MIT several years
ago) weak electric current is produced in the material, which goes in
the wire. For item location determination, the scientists constructed
the network of wires at first, presenting itself the model of Descartes
coordinate system. By electric impulses the authors of the work
could determine the linear parameters of the source and even its
sizes in the plain net projection.
For the practical appliance of the new device, MIT scientists gave
the spherical form to the device - as it is came to something like
parallels and meridians. That allowed to register the luminous radiation not in the plane but in the 3D space. Actually it is possible to
use any other construction form, but the sphere allows to project
the image to the more convenient owing to its symmetry coordinate system.
By the way, a ray, falling onto the sphere, is registered from the one
“side” first , and running though it (transparent skin allows to do so)
- from another. The coordinates of crossing the ray with the sphere
are transferred to the computer, which calculates the space location
of the line, to which direction the ray is falling, by those two points.
Using such device in practice, according to the inventors’ opinion,
will allow to realize the dreams of the science-fiction writes in the
nearest future, such as long-distance connection, supersensitive devices and eyes’ prosthesis, allowing the person to see.
92
AUTHORIZED CAPITAL
AND STOCK MARKET
AUTHORIZED CAPITAL
AND STOCK MARKET
By categories of shares Authorized capital
was distributed as follows:
As for January, 1st, 2007 the size of the Authorized capital of the Company has not
been changed comparing to data for the beginning of 2006 and made 1,904.71 million
roubles.
Authorized capital has been paid complete-
Type of shares
Cost, roubles
In 2006 the situation in the stock market
DYNAMICS OF RTS AND RТS-2 INDEXES BY MONTHS
(AT CLOSING) DURING 2006
was characterized by sufficient growth of in-
Proportion, %
dexes: as of the end of the reporting period
the RTS index reached maximum value and
Common
1,785,114,000
93.72
Preferred
119,596,000
6.28
Total 1,904,710,000 shares with the face-value of 1 rouble per
ly.
93
Extra general meetings of shareholders were share.
made 1,921.9 points on closing. The index of
2,500
Moscow Interbank Stock Exchange (MISE) at
the end of 2006 made 1,693.5 points. During
1,922
2,000
1,704
2006 growth of MISE index made 59 %. Rates
of growth of the index of RTS have decreased
not held during 2006.
1,693
1,707
1,521
1,477 1,495
1,500 1,293
1,551
1,477
1,435
1,461
1,316
1,627
1,565
1,614
1,838
1,697
1,657
1,453
at the same time. Thus, within 2005 increase
of RTS index made 83.3 %, and in 2006 - only
1,777
1,548 1,550
1,529
1,398
1,000 1,126
70.7 %.
Data on declared shares of the Company
500
Common registered stocks of OJSC «Kaza-
“Stock exchange “Russian Trading System”
(RTS) since May, 1997. Following trading
codes on RTS were assigned to shares of the
Index RTS-2
Index RTS
Company: КZOSP (RTS Board), KZOSG (RTS
Structure of stock capital
Exchange), KZOS (RTS Classical).
on 31/12/2006
Name
% of Authorized capital
Number of persons registered in the list of shareholders as of
During the all examined period shares of OJSC «Kazanorgsintez» were included into the list
of securities on the basis of which the Index of RTS-2 is calculated. The index of shares of
LLC “Telecom-Management”
48.76
31/12/2006 makes 8,904. Reduction of number of shareholders in
OJSC “Svyazinvestneftekhim”
26.64
comparison with the last year has occurred due to increase of the
RTS-2 is the indicator of the tenders at Stock exchange of RTS with shares related to «the
Other legal entities
12.65
share of LLC “Telecom-Management” in the Authorized capital by
second echelon» according to liquidity and capitalization.
Physical persons
11.95
0.13 % and other legal entities by 0.83 % that has lowered a share of
In 2006 the volume of the tenders at the Exchange market of OJSC “RTS” made 21.3 billion
physical persons - shareholders by 0.96 %.
roubles. Thus the volume of the tenders with shares of “the second echelon” under which
influence there is a change of RTS-2 index, made 10.3 billion roubles that corresponds to
48.5 % of general turnover. The volume of the tenders with shares of OJSC «Kazanorgsintez»
made 23.6 million roubles, or 0.23 % of total amount of the tenders with shares of “the second
Dividends
echelon”, where the greatest turnover has fallen to the common shares of OJSC “Novolipetz-
Quantity of shares on which dividends are charged: 1,904,710,000
shares.
Owners of preferred shares according to the Charter have the right to
receive annual dividends not less than 25 % of face-value of shares.
Dynamics of dividend payments on shares of the Company
Type of shares
Percent to face value on years
2003
2004
2005
2006
Common
25
27.5
15.14
27.5
Preferred
25
25
25
25
kiy metallurgical combine” (OJSC “NLMC” ) – 5.08 % and OJSC “Uralsvyazinform” – 3.31 %.
As at the end of 2006 the weight of the share of OJSC «Kazanorgsintez» among 68 emitters
By the decision of Board of directors of OJSC «Kazanorgsintez» it is
included into the list of securities on the basis of which RTS-2 index is calculated, made
recommended to pay dividends for work in 2006: preferred shares
0.78 %. The weight of the share shows the influence of shares of the emitter on change of the
25 %, common shares 27.5 % of face-value of shares. Cumulative pay-
RTS-2 index and is determined by the ratio of capitalization of this share considered in the
ments will make 520 mln.roubles that makes 23.5 % of net profit of
index to the total capitalization of all securities included in the list for the given index calcula-
2006.
tion. The greatest weight of the share, among participants of the given list has OJSC “NLMC”
– 8.41 %, the least weight belongs to the shares of OJSC “Nizhnekamskshina” – 0.13 %.
12.06
11.06
10.06
09.06
08.06
07.06
06.06
720,000,000
0
05.06
720,000,000
of Non-commercial partnership of OJSC
04.06
1
Common
norgsintez» are quoted at the trading system
03.06
Total amount, roubles.
02.06
Quantity, pieces
01.06
Face-value, roubles
12.05
Type of shares
94
95
AUTHORIZED CAPITAL
AND STOCK MARKET
AUTHORIZED CAPITAL
AND STOCK MARKET
RESULTS OF TENDERS OF OJSC «KAZANORGSINTEZ»
AT CLASSICAL MARKET OF RTS WITHIN 2006
TABLE OF QUOTATIONS OF COMMON SHARES OF OJSC «KAZANORGSINTEZ»
IN THE CLASSICAL MARKET OF RTS
USD
0.64
Period
Max quotation
Min quotation
Min quotation
Max quotation
for purchase
for purchase
for sale
for sale
3.6
3.5
4.0
4.3
2 quarter*
0.036
0.022
0.035
0.052
0.44
3 quarter
0.036
0.031
0.035
0.046
0.39
4 quarter
0.077
0.025
0.055
0.16
1 quarter
0.1515
0.03
0.0635
0.24
2 quarter
0.128
0.03
0.119
0.24
3 quarter
0.16
0.08
0.1215
0.36
4 quarter
0.175
0.1
0.155
0.25
1 quarter
0.305
0.0002
0.16
0.41
2 quarter
0.277
0.095
0.11
0.28
3 quarter
0.449
0.08
0.275
0.55
4 quarter
0.442
0.3
0.38
0.6
1 quarter
0.6
0.35
0.445
1.05
In 2006 at RTS stock exchange the maximal tors rights, purchase of earlier placed shares
2 quarter
0.583
0.3
0.42
0.78
quotation for purchase of one share of OJSC was carried out by the Company.
3 quarter
0.51
0.31
0.4155
0.78
4 quarter
0.62
0.375
0.4875
0.8
0.59
0.54
2003
0.49
2004
Purchase price
Sales price
01.07
12.06
11.06
10.06
09.06
08.06
07.06
06.06
05.06
04.06
03.06
02.06
01.06
0.34
Average price
2005
Min ($) Мax ($)
Purchase price
0.37
0.62
Sales price
0.42
0.64
Average price
0.40
0.63
2006
«Kazanorgsintez» made $0.62, the minimal
quotation for sale made $0.42, thus the total
volume of tenders made $ 6,343 thousand.
During 2006, 5,693,800 common shares
have been acquired on the balance of OJSC
“Kazanorgsintez”. In April 2006 the part of
According to RTS, capitalization of OJSC common shares (2,393,500 pieces) has been
«Kazanorgsintez» on 29/12/2006 made sold through the professional participant
$1,129.1 million, that is higher than the level of the stock market with the license for reof 2005 by 54.9 %.
For execution the decision of Board of directors of the Company and with a view of realizing the actions on increasing market cost
of shares and capitalization of the Company,
and maintaining the shareholders and inves-
1 quarter.
alization of broker activity. As a result from
operations with own shares the income of
2.5 million roubles is received. As of
31/12/2006 there are 3,300,300 common
shares on the balance of the Company in the
total amount of 46.3 million roubles.
* Decrease in quotations of shares is connected to increase in authorized capital 100 times
96
LIST OF AFFILIATED PERSONS
ESSENTIAL FACTS AND DEALS
ANNUAL GENERAL SHAREHOLDERS 1) Approvement of the annual report, annual accounting reporting of OJSC «KazanorgsinMEETING, 8TH OF JUNE, 2006 tez», including the report on profits and losses by results of financial 2005.
2) Distribution of the profit of OJSC «Kazanorgsintez», including payment of annual divi-
01 Shigabutdinov Albert Kashafovich
Chairman of Board of directors
02 Presnyakov Vladimir Vasilevich
Deputy chairman of Board of directors
03 Alekseev Sergey Vladimirovich
Member of Board of directors
04 Gaizatullin Radik Raufovich
05 Metshin Ilsur Raisovich
06 Sabirov Rinat Kasimovich
07 Sarkin Andrey Vladislavovich
08 Safina Guzelija Muharjamovna
09 Safiullin Marat Rashitovich
10 Sulteyev Rustem Nurgasimovich
11 Fardiev Ilshat Shaekhovich
dends in monetary form by results of financial 2005 was approved. The size of the dividend
under shares of each category is the following:
a) under preferred shares - at the rate of 25 % from their face-value;
b) under common shares - at the rate of 15.14 % from their face-value.
Term of dividends payment is till the 8th of June, 2007, according to the Charter of OJSC
«Kazanorgsintez».
3) Members of Board of directors of OJSC «Kazanorgsintez» were elected.
4) Auditor of OJSC «Kazanorgsintez» - Joint-Stock Company «DELOITTE AND TOUCHE CIS»
was authorized.
5) Members of Revision committee were elected.
6) Changes and additions to the Charter of OJSC «Kazanorgsintez» were made and approved
in the new wording.
12 Alyokhin Leonid Stepanovich
7) The deal between OJSC «Kazanorgsintez» and LLC «Telecom - Management» on granting
the property, transferred by LLC «Telecom - Management» (depositor) in the mortgage for a
13 Kudryashov Vladimir Nikolaevich
14 Gainullin Nail Samigullovich
15 Gataullin Magdut Mahmutovich
16 Kaleeva Larisa Nikolaevna
17 Kurbanov Ravil Barievich
18 Mukhametshin Marat Faritovich
19 Potashkin Andrey Fedorovich
20 Raimov Asaf Magsumovich
21 Shaikhiev Gaifutdin Gilazovich
security of credit of OJSC «Kazanorgsintez» (borrower) was approved. The price of the transaction: 1 % per year from mortgaging cost of the property - $311 million.
8) The decision of participation in Noncommercial partnership “Kazan industrial district” as
the founder was taken.
CHANGE OF THE SHARE IN THE Since 14th of July, 2006, OJSC «Kazanorgsintez» has increased the share in the Authorized
AUTHORIZED CAPITAL OF OJSC capital of OJSC “Spetzneftekhimmontazh” from 91.01 % up to 99.75 %. The share of belong“SPETZNEFTEKHIMMONTAZH”, ing to OJSC «Kazanorgsintez» of common shares has made 99.75 %.
14TH OF JULY 2006
EUROBOND ISSUE, OJSC «Kazanorgsintez» has carried out the issue of unsecured Eurobonds, terms of repay30TH OF OCTOBER 2006 ment: 30th of October, 2011;
the amount of the transaction: 200 000 000 US dollars under 9.25 %;
share from asset value: 21.21 %;
Date of decision-making on approval of the transaction by general shareholders meeting
- 12th of September, 2005.
Chairman of Executive management
22 LLC “Telecom-Management”
Possession more than 20 % of voting shares of the Company
23 OJSC “Svyazinvestneftekhim”
Possession more than 20 % of voting shares of the Company
24 CJSC “Ankorit”
Possession more than 20 % of the authorized capital of this company
25 OJSC “Spetsneftekhimmontazh”
26 LLC “TAIF INVEST”
27 LLC “Tatkhimremont”
SESSION OF BOARD OF DIRECTORS, The transaction by opening the credit line between OJSC «Kazanorgsintez», ABN AMRO
27TH OF NOVEMBER, 2006 BANK N.V., Netherland Deutschland Frankfurt-on-Main, Federal Republic of Germany and
28 JV “Elmer LTD”
«ABN AMRO Bank Joint-Stock Company» is approved. The amount of the credit line (Facility):
29 LLC “Agrosintez”
30 LLC “Trade House Orgsintez”
31 LLC “Novomoskovsky trubny zavod”
32 LLC “SHP “Kolos-Sintez”
33 LLC “DK Khimikov”
does not exceed €4.7million.
SESSION OF BOARD OF DIRECTORS, The decision on purchase of shares of OJSC «Kazanorgsintez» in the amount of not more
26TH OF DECEMBER, 2006 than 10 % from the authorized capital of the Company is accepted.
As of 01/01/2007
97
Name of the enterprise:
Kazan Open Joint Stock Company “Organichesky sintez”
(shortened name OJSC “Kazanorgsintez”)
Address of the enterprise:
420051, Republic Tatarstan, Kazan, Belomorskaya street, 101
Information on state registration:
Registered by RT Ministry of Finance in August 31, 1993, № 400.
Main state registration number in uniform
state register of legal entities: 1021603267674
Chief of the enterprise:
General Director Leonid Stepanovich Alyokhin
Legal status:
Open Joint Stock Company
Main kinds of activity
of the company are as follows:
Production, sale of products and goods, rendering services.
Representation of Company :
Moscow Representation of OJSC «Kazanorgsintez»
Location and postal address: 117186, Russian Federation,
Moscow, Sevastopol avenue, 43А, case 2
Chief - Zotov Alexander Gennadievich
Information about the Company
is published:
In newspapers “Respublika Tatarstan”, “Vatanym Tatarstan”, “Sintez”;
magazine “Bulletin of FSFR”; in Internet on the site
of the company by the address: www.kazanorgsintez.ru
Structure of Revision committee:
Hamzina Farida Asatovna - Chairman of revision committee,
chief accountant of OJSC “TRK “TBT”
Gabdrakhmanova Aida Rinatovna - Member of revision committee,
deputy chief of economical department of OJSC «Kazanorgsintez»
Gilmutdinova Nailya Zalyalyutdinova - Member of revision committee,
chief advisor of RT Ministry of Finance
Production and realization of research and developmental works,
development and introduction of new technologies in production.
Gazizullina Milyausha Rakhimzyanovna - Member of revision committee,
deputy chief accountant of “TAIF”
Production of equipment for chemical, petrochemical, oil refining and
other production and objects connected with use or storage of explosion
and fire dangerous, toxic substances and mixes.
Voronina Yulia Vladimirovna- Member of revision committee,
the chief advisor of the chemical and petrochemical complex of Department
of the fuel and energy complex strategic development
of RT Ministry of economy and industry
Financial, investment activity.
Work with shareholders is carried out by:
Management bodies of the Company:
Data on Auditor:
Data on registry holder:
General shareholders meeting
Board of directors
Individual executive body (General director)
Collective executive body (Executive management)
Auditor of the Company is CJSC «Deloitte and Тouche CIS»
Data on license of the auditor:
Number of license: Е002417
Date of issue: 06.11.2002
Validity: till 06.11.2007
Body issued the license: the Ministry of Finance of the Russian Federation
Register of shareholders is kept by Kazan branch of LLC «Eurasian Registrar»
Location: Tatarstan, 420043, Kazan, Vishnevsky street, 6
Number of license: 10-000-1-00332
Date of issue: 10.03.2005
Validity: without restriction of validity
Body issued the license: Federal service on the financial markets
of the Russian Federation
Tchekmaryov Sergei Fedorovich - Secretary of Board of directors
Phone: (843) 533-98-18
E-mail: [email protected]
Galyamova Alfia Zamirovna - Press secretary of OJSC «Kazanorgsintez»
Phone: (843) 533-99-67
Gavrilov Igor Viktorovich - Chief of the corporate management department
Phone: (843) 533-99-85
Annual report was authorized
by the decision of Board of directors
PART VI
INDEPENDENT AUDITORS’
REPORT AND CONSOLIDATED
FINANCIAL STATEMENTS
part VI // INDEPENDENT AUDITORS’ REPORT AND CONSOLIDATED FINANCIAL STATEMENTS //
102
103
STATEMENT OF MANAGEMENT’S
RESPONSIBILITIES FOR THE PREPARATION
AND APPROVAL OF THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR
ENDED 31 DECEMBER 2006
The following statement, which should be read in conjunction with the independent auditors’
ZAO Deloitte & Touche CIS Business Center “Mokhovaya” 4/7
responsibilities stated in the independent auditors’ report set out on pages 2-3, is made with
Vozdvizhenka St., Bldg. 2 Moscow, 125009 Russia
a view to distinguishing the respective responsibilities of management and those of the
Tel: +7 (495) 787 0600 Fax: +7 (495) 787 0601 www.deloitte.ru
independent auditors in relation to the consolidated financial statements of Open Joint Stock
Company “Kazanorgsintez” and its subsidiaries (the “Group”).
Management is responsible for the preparation of consolidated financial statements that present
To the Board of Directors of Open Joint Stock Company “Kazanorgsintez”:
fairly the financial position of the Group at 31 December 2006, and the results of its operations,
changes in shareholders’ equity and cash flows for the year then ended, in accordance with
We have audited the accompanying consolidated financial statements (the “financial statements”) of Open
International Financial Reporting Standards (“IFRS”).
Joint Stock Company “Kazanorgsintez” and its subsidiaries (the “Group”), which comprise of the balance sheet
as at 31 December 2006, and the statements of income, changes in shareholders’ equity and cash flows for
In preparing the consolidated financial statements, management is responsible for:
the year then ended, and a summary of significant accounting policies and other explanatory notes.
Selecting suitable accounting principles and applying them consistently;
Making judgments and estimates that are reasonable and prudent;
Management’s responsibility for the financial statements
Stating whether IFRS have been followed, subject to any material departures disclosed
and explained in the consolidated financial statements; and
Management is responsible for the preparation and fair presentation of these financial statements in
Preparing the consolidated financial statements on a going concern basis, unless it is
accordance with International Financial Reporting Standards. This responsibility includes: designing,
inappropriate to presume that the Group will continue in business for the foreseeable
implementing and maintaining internal control relevant to the preparation and fair presentation of
future.
financial statements that are free from material misstatement, whether due to fraud or error; selecting and
applying appropriate accounting policies; and making accounting estimates that are reasonable in the
Management, within its competencies, is also responsible for:
circumstances.
Designing, implementing and maintaining an effective system of internal controls
throughout the Group;
Auditor’s responsibility
Maintaining statutory accounting records in compliance with local legislation and
accounting standards in the respective jurisdictions in which the Group operates;
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted
Taking such steps to safeguard the assets of the Group;
our audit in accordance with International Standards on Auditing. Those standards require that we comply
Preventing and detecting fraud and other irregularities.
with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the
financial statements are free from material misstatement.
The consolidated financial statements for the year ended 31 December 2006 were approved
on 4 May 2007 in Kazan, Republic of Tatarstan, Russian Federation, by:
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
__________________________________
__________________________________
In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation
L. S. Alekhin
F. M. Kalimullin
and fair presentation of the financial statements in order to design audit procedures that are appropriate
General Director
Chief Financial Officer
in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s
internal control. An audit also includes evaluating the appropriateness of accounting policies used and
the reasonableness of accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements
Member of Deloitte Touche Tohmatsu
104
105
CONSOLIDATED INCOME STATEMENT FOR
THE YEAR ENDED 31 DECEMBER 2006
(in thousands of Russian roubles)
As restated
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
Notes
a basis for our audit opinion.
2006
2005
Sales
5
15,383,982
13,240,850
Cost of sales
6
(9,859,380)
(8,632,555)
5,524,602
4,608,295
(2,026,232)
(1,508,187)
(194,003)
(42,066)
(152,174)
(91,885)
43,152
(49,406)
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial
position of the Group as at 31 December 2006, and of its financial performance and its cash
Gross profit
flows for the year then ended in accordance with International Financial Reporting Standards.
Selling, general and administrative expenses
Emphasis of matter
7
Loss from other sales
Finance costs
8
As discussed in note 38, the corresponding figures for the year ended 31 December 2005 have
Income/(loss) from investments
9
been restated to correct certain errors. We have audited the adjustments that were applied to
Foreign exchange gain
restate the corresponding figures. In our opinion, such adjustments are appropriate and have
Other expenses
147,211
17,446
(154,894)
(351,493)
3,187,662
2,582,704
(676,383)
(568,887)
2,511,279
2,013,817
2,523,545
1,981,921
(12,266)
31,896
2,511,279
2,013,817
Basic
1.42
1.11
Diluted
1.33
1.04
10
been properly applied.
Profit before income tax
Income tax
11
Profit for the year
Moscow, Russia 4 May 2007
Attributable to:
Shareholders of the parent company
Minority interest
EARNINGS PER SHARE (RUR)
28
BASKET IN THE
VESTING POCKET
For some kind of liquids and bulk materials transportation,
containers of different kinds and volume are used nowadays. However all existing containers have one sufficient
defect: their own size is the same at the time they are full
and when they are empty. That’s why empty containers occupied the same area at transportation as the full ones. The
group of scientists from Germany under the management
of Gotfield Gerhard offered their own way of solving this
problem. German chemists designed the new kind of the
organic polymer on the basis of ethanol, the main feature
of which is its flexibility. This polymer has the property to
stretch, keeping its total volume. Experimental examples of
polymer with the width of 7-8 mm stretched till their width
reached 1,2 mm. “Using this kind of polymers we will be able
to create containers, which will occupy 5-6 times less place
when empty than when they are full”, - tells chemists Claus
Phreizenburg,- “Thus we make possible the transportation of
the significant number of containers keeping the significant
part of the useful space”.
108
109
CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS’ EQUITY FOR THE YEAR
ENDED 31 DECEMBER 2006
CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2006
As restated
Notes
2006
Equity attributable to shareholders of the parent company
2005
Notes
ASSETS
Share
Additional
Treasury
Retained
capital paid-in capital
stock
earnings
Total
Minority
Total
interest
equity
Balance at 31 December 2004
NON-CURRENT ASSETS:
Property, plant and equipment
12
24,873,904
14,222,848
– as previously reported
Intangible assets
13
32,599
40,528
Effect of correction of errors
Long-term investments
14
52,100
52,084
Investments in associates
15
29,278
31,801
Advances paid for licenses
16
1,039,946
683,665
26,027,827
15,030,926
CURRENT ASSETS:
38
– as restated
Profit for the year
1,904,710
1,515,015
(100,077)
6,245,872
9,565,520
11,694
9,577,214
-
-
-
120,171
120,171
-
120,171
1,904,710
1,515,015
(100,077)
6,366,043
9,685,691
11,694
9,697,385
-
-
-
1,981,921
1,981,921
31,896
2,013,817
-
(520,178)
(520,178)
-
(520,178)
Dividends
29
-
-
Loss on disposal of subsidiary
31
-
-
-
(249,787)
(249,787)
-
(249,787)
Inventories
17
2,257,163
1,819,261
Re-acquisition of issued shares
-
-
(86,687)
-
(86,687)
-
(86,687)
Trade and other accounts receivable
18
1,748,689
896,358
Taxes recoverable and prepaid
19
472,935
1,084,509
Re-issuance of ordinary shares
from treasury shares
-
-
186,764
-
186,764
-
186,764
Cash and cash equivalents
20
1,904,710
1,515,015
-
43,590
11,041,314
-
-
-
2,523,545
2,523,545
(12,266)
2,511,279
TOTAL ASSETS
784,163
426,320
5,262,950
4,226,448
31,290,777
19,257,374
Profit for the year
Dividends
SHAREHOLDERS’ EQUITY AND LIABILITIES
SHAREHOLDERS’ EQUITY:
Share capital
21
1,904,710
1,904,710
Treasury stock
21
(46,251)
-
Additional paid-in capital
21
1,515,015
1,515,015
9,801,397
7,577,999
13,174,871
10,997,724
Retained earnings
Equity attributable to shareholders of the parent company
Minority interest
31,324
43,590
13,206,195
11,041,314
NON-CURRENT LIABILITIES:
Long-term borrowings
23
11,301,384
4,692,117
Deferred tax liabilities
11
1,214,125
800,581
Obligations under finance leases
24
79,082
124,527
12,594,591
5,617,225
2,325,933
1,037,237
CURRENT LIABILITIES:
Trade payables
Advances received from customers
1,380,324
150,659
Short-term borrowings
25
925,145
913,398
Taxes payable
26
171,647
87,017
Other payables and accrued liabilities
27
TOTAL SHAREHOLDERS’ EQUITY AND LIABILITIES
– as restated
686,942
410,524
5,489,991
2,598,835
31,290,777
19,257,374
-
-
-
(300,147)
(300,147)
-
(300,147)
-
-
(81,300)
-
(81,300)
-
(81,300)
Re-issuance of ordinary shares
-
-
35,049
-
35,049
-
35,049
1,904,710
1,515,015
(46,251)
9,801,397 13,174,871
31,324
13,206,195
29
7,577,999 10,997,724
110
111
NOTES TO THE CONSOLIDATED FINANCIAL STATE
MENTS FOR THE YEAR ENDED 31 DECEMBER 2006
CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE YEAR ENDED 31 DECEMBER 2006
Notes
2006
2005
1
. GENERAL
Organisation
OPERATING ACTIVITIES:
Open Joint Stock Company “Kazanorgsintez” (the “Company”) was incorporated in Kazan, Republic
Cash flows from operations
30
Income tax paid
Interest paid
Net cash generated from operating activities
5,957,337
3,231,421
of Tatarstan, Russian Federation on 1 September 1993. The principal activity of the Company and its
(152,454)
(773,783)
(726,523)
(37,995)
subsidiaries (the “Group”) is production of chemical products and derivatives thereof (mainly ethyl-
5,031,100
2,466,903
Major production facilities of the Group are located in Kazan, Republic of Tatarstan, Russian Federation. The registered office of the Company is situated at the following address: 101 Belomorskaya
INVESTING ACTIVITIES:
Purchase of property, plant and equipment
Proceeds on disposal of property, plant and equipment
Advances paid for licenses
Purchase of equity investments
Proceeds on disposal of equity investments
Proceeds on disposal of subsidiary
Interest received
Dividends received
Net cash used in investing activities
(10,587,399)
159,412
(356,281)
40,230
5,445
(6,762,694)
3,712
(39,876)
(35,243)
8,594
100
5,690
7
(10,738,593)
(6,819,710)
1,428,083
(1,726,424)
13,666,544
(6,944,035)
(74,757)
(81,300)
2,571,975
(2,352,899)
4,905,223
(441,183)
(86,687)
35,049
(265,600)
186,764
(144,061)
6,037,560
4,639,132
330,067
FINANCING ACTIVITIES:
Proceeds from short-term borrowings
Repayments of short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Dividends paid
Proceeds on re-issuance of ordinary shares
Repayment of obligations under finance lease
Net cash generated from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of the year
Effect of exchange rate changes on cash held in foreign currencies
ene and polyethylene) which are marketed and sold primarily in the Russian Federation.
street, 420051, Kazan, Republic of Tatarstan, Russian Federation.
Details of the Company’s subsidiaries are in Note 36.
2
. ADOPTION OF NEW AND REVISED STANDARDS
In the current year, the Group has adopted all of the new and revised Standards and Interpretations
issued by the International Accounting Standards Board (the “IASB”) and the International Financial
Reporting Interpretations Committee (the “IFRIC”) of the IASB that are relevant to its operations and
effective for annual reporting periods beginning on 1 January 2006. The adoption of these new and
426,320
revised Standards and Interpretations has not significantly affected the amounts reported for the
current or prior years.
At the date of authorisation of these financial statements, the following Standards and Interpretations were in issue but not yet effective:
Standard/Interpretation
Effective for annual
periods beginning
on or after
IFRS 7 “Financial Instruments: Disclosures”
1 January 2007
286,325
IFRS 8 “Operating Segments”
1 January 2009
146,829
Amendment to IAS 1 “Presentation of Financial Statements”
on capital disclosures
1 January 2007
27,776
(6,834)
784,163
426,320
IFRIC 9 “Reassessment of Embedded Derivatives”
IFRIC 10 “Interim Financial Reporting and Impairment”
Cash and cash equivalents at end of the year
1 June 2006
1 November 2006
IFRIC 11 “IFRS 2 – Group and Treasury Share Transactions”
IFRIC 12 “Service Concession Agreements”
1 March 2007
1 January 2008
Management anticipates that the adoption of these Standards and Interpretations in future periods
will have no material financial impact on the financial statements of the Group.
Reclassifications
Certain comparative information, presented in the consolidated financial statements for the prior
reporting periods, has been reclassified in order to achieve comparability with the presentation used
in the consolidated financial statements for the year ended 31 December 2006. Certain costs were
reclassified between cost of sales, selling, administrative and general expenses and cost of other
sales. Those reclasses did not affect net profit for the year ended 31 December 2005.
112
113
3
. SIGNIFICANT ACCOUNTING POLICIES
Statement of compliance
The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards.
Basis of preparation
The financial statements have been prepared on the historical cost basis except for the valuation of
certain financial instruments. The principal accounting policies are set out below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities
(including special purpose entities) controlled by the Company. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits
from its activities.
Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess
of the cost of the business combination over the Group’s interest in the net fair value of the identifiable
assets, liabilities and contingent liabilities recognised. If, after reassessment, the Group’s interest in the
net fair value of the acquiree’s identifiable assets, liabilities and contingent liabilities exceeds the cost of
the business combination, the excess is recognised immediately in profit or loss.
The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of
the net fair value of the assets, liabilities and contingent liabilities recognised.
Investments in associates
An associate is an entity over which the Group has significant influence and that is not a subsidiary.
Significant influence is the power to participate in the financial and operating policy decisions of the
investee but is not control or joint control over those policies.
The results and assets and liabilities of associates are incorporated in these financial statements using
the equity method of accounting. Under the equity method, investments in associates are carried in
the consolidated balance sheet at cost as adjusted for post-acquisition changes in the Group’s share of
The results of subsidiaries acquired or disposed of during the year are included in the consolidated
the net assets of the associate, less any impairment in the value of individual investments. Losses of an
income statement from the effective date of acquisition or up to the effective date of disposal, as ap-
associate in excess of the Group’s interest in that associate (which includes any long-term interests that,
propriate.
in substance, form part of the Group’s net investment in the associate) are not recognised, unless the
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their ac-
Group has incurred legal or constructive obligations or made payments on behalf of the associate.
counting policies into line with those used by other members of the Group.
Any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets,
All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.
liabilities and contingent liabilities of the associate recognised at the date of acquisition is recognised
as goodwill. The goodwill is included within the carrying amount of the investment and is assessed
Minority interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately from the Group’s equity therein. Minority interests consist of the amount of those interests at the
date of the original business combination (see below) and the minority’s share of changes in equity
for impairment as part of the investment. Any excess of the Group’s share of the net fair value of the
identifiable assets, liabilities and contingent liabilities over the cost of acquisition, after reassessment, is
recognised immediately in profit or loss.
since the date of the combination. Losses applicable to the minority in excess of the minority’s interest
in the subsidiary’s equity are allocated against the interests of the Group except to the extent that the
Where a group entity transacts with an associate of the Group, profits and losses are eliminated to the
minority has a binding obligation and is able to make an additional investment to cover the losses.
extent of the Group’s interest in the relevant associate.
Business combinations
Special purpose entities
Acquisitions of subsidiaries and businesses are accounted for using the purchase method. The cost of
Special purpose entities (“SPEs”) are those undertakings that are created to satisfy specific business
the business combination is measured as the aggregate of the fair values of assets given, liabilities in-
needs of the Group and the Group has the right to the majority of the benefits of the SPE, or exposed
curred or assumed, and equity instruments issued by the Group in exchange for control of the acquiree,
to risks associated with activities of the SPE.
plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabili-
SPEs are consolidated in the same manner as subsidiaries when the substance of the relationship indi-
ties and contingent liabilities that meet the conditions for recognition under IFRS 3 Business Combina-
cates that the SPE is controlled by the Group.
tions are recognised at their fair values at the acquisition date, except for non-current assets that are
classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued
Operations, which are recognised and measured at fair value less costs to sell.
Goodwill
Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over
the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities of
the subsidiary recognised at the date of acquisition. Goodwill is initially recognised as an asset at cost
and is subsequently measured at cost less any accumulated impairment losses.
MICROTHIN ULTRASTRONG
The group of the British scientists under the
management of professor Andre Game form
Massachusetts University discovered the new
class of materials, existing only in the sciencefiction movies and books earlier. This is the
set of materials with the width of one atom
and with the properties, which were not considered possible before. These new materials
were created by the extraction of the single
atom layers from the regular crystals with the
use of “micromechanical cleavage” technology. Depending on crystals’ properties, their
copies with the width of one atom can be
polymers, metals, semiconductors, insulators,
magnets and etc.
Earlier it was considered, that such thin materials basically are not able to exist, but nowadays explorers demonstrated for the first time
that “one atom materials” not only possible to
exist but also simple to produce.
“Probably, the most important in this work is
that our discovery is not limited by one or two
materials. This is the whole set - thousands
of new materials. And they have variety of
properties, allowing to chose one, the most
suitable for something material”, - informed
doctor Konstantin Novoselov.
Discovered materials open almost unlimited
spectrum of new opportunities in the space,
building, chemical and military industry.
Probably they will radically change the human view point to the technological development perspectives, as the plastics did in
due time.
116
117
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating
Lease payments are apportioned between finance charges and reduction of the lease obligation so as to
units expected to benefit from the synergies of the combination. Cash-generating units to which
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged
goodwill has been allocated are tested for impairment annually, or more frequently when there is
directly to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capi-
an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is
talised in accordance with the Group’s general policy on borrowing costs (see below). Contingent rentals
less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying
are recognised as expenses in the periods in which they are incurred.
amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the
basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is
not reversed in a subsequent period.
Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except
where another systematic basis is more representative of the time pattern in which economic benefits
from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of
an expense in the period in which they are incurred.
the profit or loss on disposal.
Foreign currencies
The Group’s policy for goodwill arising on the acquisition of an associate is described under ‘Investments in associates’ above.
The funсtional currency of the Company and all its subsidiaries, which reflects the economic substance of
their operations, and presentation currency of the consolidated financial statements of the Group, is the
Revenue recognition
Russian rouble (‘RUR”).
Revenue is measured at the fair value of the consideration received or receivable.
In preparing the financial statements of the individual entities, transactions in currencies other than the
Sale of goods
entity’s functional currency (foreign currencies) are recorded at the rates of exchange prevailing at the
dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies
Revenue from the sale of goods is recognised when all the following conditions are satisfied:
are retranslated at the rates prevailing at the balance sheet date. Non-monetary items carried at fair value
The Group has transferred to the buyer the significant risks and rewards of ownership of the goods,
which is typically at the date of loading to third party for transportation;
that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the
The Group retains neither continuing managerial involvement to the degree usually associated
with ownership nor effective control over the goods sold;
currency are not retranslated.
The amount of revenue can be measured reliably;
Borrowing costs
It is probable that the economic benefits associated with the transaction will flow to the entity;
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
The costs incurred or to be incurred in respect of the transaction can be measured reliably.
which are assets that necessarily take a substantial period of time to get ready for their intended use or sale,
Dividend, interest and other revenue
Dividend revenue from investments is recognised when the Group’s right to receive payment has been
established.
Interest revenue is accrued on a time basis, by reference to the principal outstanding and at the ef-
fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign
Exchange differences are recognised in profit or loss in the period in which they arise.
are added to the cost of those assets, until such time as the assets are substantially ready for their intended
use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
Taxation
fective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts
Income tax expense represents the sum of the tax currently payable and deferred tax.
through the expected life of the financial asset to that asset’s net carrying amount.
Current tax
The loss from other sales includes revenues from sale of ancillary items, net of cost of sales. Other sales
The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit as reported
primarily consist of sales of electricity, water and heat.
in the income statement because it excludes items of income or expense that are taxable or deductible in
Leasing
other years and it further excludes items that are never taxable or deductible. The Group’s liability for cur-
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks
rent tax is calculated using tax rates that have been enacted by the balance sheet date.
and rewards of ownership to the lessee. All other leases are classified as operating leases.
Deferred tax
Assets held under finance leases are initially recognised as assets of the Group at their fair value at
Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the
the inception of the lease or, if lower, at the present value of the minimum lease payments. The cor-
financial statements and the corresponding tax bases used in the computation of taxable profit, and is ac-
responding liability to the lessor is included in the balance sheet as a finance lease obligation.
counted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all
taxable temporary differences, and deferred tax assets are generally recognised for all deductible
118
119
temporary differences to the extent that it is probable that taxable profits will be available against which
Land occupied by the Group’s facilities is owned by the Group. Land is not depreciated and is included in prop-
those deductible temporary differences can be utilised. Such assets and liabilities are not recognised if
erty, plant and equipment.
the temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the
Assets held under finance leases are depreciated over their expected useful lives on the same basis as similar
owned assets or, where shorter, the term of the relevant lease.
accounting profit.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the
Deferred tax liabilities are recognised for taxable temporary differences associated with investments in
sales proceeds and the carrying amount of the asset and is recognized in the income statement.
subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax
Construction in progress
assets arising from deductible temporary differences associated with such investments and interests are
Construction in progress comprises costs directly related to construction of property, plant and equipment
only recognised to the extent that it is probable that there will be sufficient taxable profits against which
including an appropriate allocation of directly attributable variable overheads that are incurred in construction.
to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable
Depreciation of constructed assets commences when the assets are put into operation.
future.
Intangible assets
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the
Intangible assets acquired separately are reported at cost less accumulated amortisation and accumulated impairment losses. Amortisation is charged on a straight-line basis over their estimated useful lives. The estimated
asset to be recovered.
useful life and amortisation method are reviewed at the end of each annual reporting period, with the effect of
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in
any changes in estimate being accounted for on a prospective basis.
which the liability is settled or the asset realised, based on tax rates and tax laws that have been enacted
or substantively enacted by the balance sheet date. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax
Software costs incurred for the development, implementation and enhancement of the operating systems, are
capitalised and amortised over the expected useful life of the system. Software costs relating to the maintenance of the operating system are recognised as an expense in the period in which they occur.
Impairment of tangible and intangible assets excluding goodwill
assets against current tax liabilities and when they relate to income taxes levied by the same taxation au-
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to
thority and the Group intends to settle its current tax assets and liabilities on a net basis.
determine whether there is any indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the
Current and deferred tax for the period
impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset,
Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate
the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. Where a
to items credited or debited directly to equity, in which case the tax is also recognised directly in equity,
reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual
or where they arise from the initial accounting for a business combination. In the case of a business
cash-generating units, or otherwise they are allocated to the smallest group of cash-generating units for which
combination, the tax effect is taken into account in calculating goodwill or in determining the excess of
a reasonable and consistent allocation basis can be identified.
the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the
liabilities over cost.
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects curProperty, plant and equipment
rent market assessments of the time value of money and the risks specific to the asset for which the estimates
Property, plant and equipment held for use in the production or supply of goods or services, or for ad-
of future cash flows have not been adjusted.
ministrative purposes, are stated in the balance sheet at their cost less any accumulated depreciation and
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount,
accumulated impairment losses.
the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment
Capitalised cost includes acquisition cost and major expenditures for improvements and replacements
loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in
that extend the useful lives of the assets or increase their revenue generating capacity. Repair and main-
which case the impairment loss is treated as a revaluation decrease.
tenance expenditures that do not meet the foregoing criteria for capitalisation are charged to the income
Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is
statement as incurred.
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does
Deprecation is computed under the straight-line method utilizing the estimated useful lives of the assets,
not exceed the carrying amount that would have been determined had no impairment loss been recognised
which are:
Buildings
Machinery and equipment
Other
for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in
25-40 years
10-22 years
3-10 years
profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
120
121
Inventories
Available-for-sale financial assets
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and,
Available-for-sale financial assets are those non-derivative financial assets that are designated as available-
where applicable, direct labour, transportation, handling costs and those overhead costs that have been
for-sale or are not classified in any of the three preceding categories. After initial recognition available-for-
incurred in bringing the inventories to their present location and condition. Cost is calculated using the
sale financial assets are measured at fair value with gains and losses being recognised as a separate compo-
weighted average method. Net realisable value represents the estimated selling price for inventories less
nent of equity until the investment is derecognised or until the investment is determined to be impaired at
all estimated costs of completion and costs necessary to make the sale.
which time the cumulative gain or loss previously reported in equity is included in the income statement.
Work in progress and semi-finished products are valued at the net unit cost of production allocated to the
The fair value of investments that are actively traded in organised financial markets is determined by refer-
estimated stage of completion.
ence to quoted market bid prices at the closing of business on the balance sheet date. For investments
Cash and cash equivalents
Cash and cash equivalents include cash on hand, cash with banks, deposits and marketable securities with
original maturity of three months or less.
Financial assets
Financial assets, except for cash and cash equivalents and financial assets out of scope of IAS 39 (Revised),
Financial Instruments: Recognition and Measurement, are classified into the following specified categories: financial assets as “at fair value through profit or loss” (“FVTPL”), “held-to-maturity” (“HTM”) investments,
“available-for-sale” (“AFS”) financial assets and “loans and receivables”. The classification depends on the
where there is no active market, fair value is determined using valuation techniques.
Dividends on AFS equity instruments are recognised in the consolidated income statement when the
Group’s right to receive payments is established.
Loans and receivables
Loans and receivables include trade receivables, loans, and other receivables that have fixed or determinable
payments that are not quoted in an active market and are measured at amortised cost using the effective
interest method less any impairment. Interest income is recognized by applying the effective interest rate,
except for short-term receivables when the recognition of interest would be immaterial.
nature and purpose of the financial assets and is determined at the time of initial recognition.
Impairment of financial assets
Effective interest method
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet
The effective interest method is a method of calculating the amortised cost of a financial asset and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts or payments through the expected life of the financial asset, or, where appropriate, a shorter period.
Income is recognised on an effective interest basis for debt instruments other than those financial assets
designated as at FVTPL.
Financial assets at FVTPL
The Group classifies financial assets as at FVTPL if:
date. Financial assets are impaired where there is objective evidence that, as a result of one or more events
that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted. For financial assets carried at amortised cost, the amount of the impairment is
the difference between the asset’s carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets
with the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes
in the carrying amount of the allowance account are recognised in the income statement.
they have been acquired principally for the purpose of selling in the near future; or
they are a part of an identified portfolio of financial instruments that the Group manages together and
has a recent actual pattern of short-term profit-taking.
With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the previously recognised impairment loss is reversed through the consolidated income statement
to the extent that the carrying amount of the investment at the date the impairment is reversed does not
HTM investments
exceed what the amortized cost would have been had the impairment not been recognised. Any increase in
fair value of AFS equity securities subsequent to an impairment loss is recognised directly in equity.
Debt securities with fixed or determinable payments and fixed maturity dates that the Group has the positive intent and ability to hold to maturity are classified as HTM investments. HTM investments are recorded
at amortised cost using the effective interest method less impairment, with income recognised on an
effective yield basis.
Financial liabilities and equity instruments issued by the Group
Classification as debt or equity
Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the
substance of the contractual arrangement.
122
123
Financial liabilities
Value-added taxes
Financial liabilities, including borrowings, trade and other payables are initially measured at fair value, net of
Value-added taxes (“VAT”) related to sales are payable to the tax authorities on an accrual basis based upon
transaction costs, and subsequently measured at amortised cost using the effective interest method.
invoices issued to the customer. VAT incurred for purchases may be reclaimed, subject to certain restrictions,
Equity instruments
against VAT related to sales.
4
An equity instrument is any contract that evidences a residual interest in the assets of an entity after de-
. CRITICAL ACCOUNTING JUDGEMENTS
AND KEY SOURCES OF ESTIMATION UNCERTAINTIES
ducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue
costs.
Provisions
In the application of the Group’s accounting policies management is required to make judgments, estimates
and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a
sources. The estimates and associated assumptions are based on historical experience and other factors that
past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can
are considered to be relevant. Actual results may differ from these estimates.
be made of the amount of the obligation.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estiThe amount recognised as a provision is the best estimate of the consideration required to settle the pres-
mates are recognised in the period in which the estimate is revised if the revision affects only that period, or
ent obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the
in the period of the revision and future periods if the revision affects both current and future periods.
obligation. Where a provision is measured using the cash flows estimated to settle the present obligation,
its carrying amount is the present value of those cash flows.
Employee benefit obligations
Critical judgments in applying accounting policies
The following are the critical judgments, apart from those involving estimations, that management has made
in the process of applying accounting policies and that have the most significant effect on the amounts
Remuneration to employees in respect of services rendered during a reporting period are recognised as an
recognised in financial statements.
expense in that period.
Taxation
The Group contributes to the Pension fund of the Russian Federation and Medical and Social Insurance
funds on behalf of all its employees. These contributions are recognised in the income statement as incurred.
Judgments are required in determining current income tax liabilities. The Group recognises liabilities for taxes
based on estimates of whether additional taxes will be due. Where the final outcome of various tax matters is
different from the amounts that were initially recorded, such differences will impact income tax and deferred
Segment reporting
tax provisions in the period in which such determination is made.
The majority of the Group’s business operations are located in the Russian Federation and relate primarily
The Group has not recognised a deferred tax liability in respect of temporary differences associated with
to the production and marketing of chemical products and derivatives thereof (mainly ethylene and poly-
investments in subsidiaries. The Group controls the timing of the reversal of those temporary differences and
ethylene). Therefore, business activities are subject to the same risks and returns and are addressed in the
does not expect their reversal in the foreseeable future.
consolidated financial statements of the Group as one reportable segment.
Environmental obligations
Dividends declared
The Group’s activities are subject to various laws and regulations governing the protection of the environDividends and related taxation thereon are recognised as a liability in the period in which they have been
ment. The Group pays fees to the regulatory authorities for the right to discharge within legal norms. Man-
declared and become legally payable.
agement believes this fee covers all environmental obligations, and this fee is recorded as an expense in the
Accumulated profit legally distributable by the Company are based on the amounts available for distribu-
period incurred. No other provisions for environmental obligations are recorded.
tion in accordance with the applicable legislation and as reflected in the statutory financial statements of
Key sources of estimation uncertainty
the individual entities of the Group. These amounts may differ significantly from the amounts calculated
on the basis of IFRS.
The following are the key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying
Treasury shares
Treasury shares are recorded at cost and disclosed as a deduction from equity.
amounts of assets and liabilities within the next financial year.
BLIND ONE
WILL SEE
ONE WITH
THE EYES
Soon, people with the limited vision will be able
to see the world more widely and more polyhedral than their healthy colleagues. The group of
the French scientists under the management
of Fransoir Deville created glasses prototype,
construction of which is copied from the...
dragonfly eye. Hemispheres of glasses consist
of the set of small crystals made from the special polymer.
“We decided to refuse the traditional glass”, - explains Fransoir-Ezhen, - “as it is not only fragile,
but also doesn’t give the opportunity to avoid
the optical distortion at glasses prismatic segments creation”.
Optical device not only gives the opportunity to
return vision to the people with affected eyes, it
expands world perception opportunities.
Visual angle of the average person doesn’t exceed 23-27 degrees. New device allow to expand the visual angle till 123,7 degrees, and
also gives the opportunity of “out-of-focus” vision.
Such devices are being used for mechanical
supervision systems creation for a long time,
but for the first time this technology was applied to the human being. Scientists consider
the first experiences unconditionally successful, but by physicians’ opinion, people wearing
such glasses will need seriously get used to
“the new world perception”..
126
127
Useful economic lives of property, plant and equipment
7
. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Management assesses the useful economic lives of property, plant and equipment considering the current technical condition of assets and potential changes in technology and demand. Any changes of
these conditions could affect prospective depreciation of property, plant and equipment and their car-
The Group reviews the carrying amounts of its tangible and intangible assets to determine whether there
General and administrative expenses
Selling expenses
Taxes, other than income tax
Bank charges
Other
is any indication that those assets are impaired. In making the assessment for impairment, assets that do
Total
rying value.
Impairment of assets
2006
2005
1,290,089
302,110
327,549
49,150
57,334
849,499
431,757
164,547
27,187
35,197
2,026,232
1,508,187
2006
2005
126,457
24,053
1,664
72,263
19,641
(19)
152,174
91,885
2006
2005
40,230
5,445
(2,523)
5,690
(61,241)
6,145
43,152
(49,406)
2006
2005
140,078
14,744
72
133,968
144,326
73,199
154,894
351,493
not generate independent cash flows are allocated to an appropriate cash generating unit. Management
8
necessarily applies its judgment in allocating assets that do not generate independent cash flows to ap-
. FINANCE COSTS
propriate cash generating units, and also in estimating the timing and value of underlying cash flows
within the value in use calculation. Subsequent changes to the cash generating unit allocation or to the
Contingencies
Interest expense
Interest under finance leases
Other expense/(income)
By their nature, contingencies will only be resolved when one or more future events occur or fail to oc-
Total
timing of cash flows could impact the carrying value of the respective assets.
cur. The assessment of such contingencies inherently involves the exercise of significant judgment and
9
estimates of the outcome of future events.
. INCOME/(LOSS) FROM INVESTMENTS
5
. SALES
By geographic region:
Domestic sales
Export sales
2006
2005
12,568,787
2,815,195
10,601,990
2,638,860
Interest income
Income/(loss) from investments
(Loss)/income from associates
Total
Total
10
15,383,982 13,240,850
. OTHER EXPENSES
By product:
High density polyethylene
Low density polyethylene
Organic products
Phenol, acetone and others
Plastic goods
5,293,530
5,181,111
1,894,301
1,623,754
1,391,286
Total
Rent of land
Maintenance of social infrastructure
Other expenses
Total
15,383,982 13,240,850
6
Maintenance of social infrastructure comprises primarily operating costs of facilities such as hotel, dormi-
. COST OF SALES
Raw materials
Energy and water
Labor costs
Depreciation
Maintenance and repairs
Auxiliary materials
Obsolescence provision charged/ (released)
Total
3,337,157
4,569,345
1,891,444
2,166,481
1,276,423
tory, hunting ground etc. In 2005 it also included losses on sale of apartments to employees.
2006
2005
5,695,534
2,030,948
971,473
619,167
378,134
160,931
3,193
4,262,796
2,068,428
1,049,609
500,321
410,812
341,147
(558)
9,859,380
8,632,555
Expenses for rent of land related to rent of an idle plot of land in the remote region of Tatarstan Republic,
the agreement was concluded at the request of the local tax authorities to increase tax collection in
Tatarstan Republic.
128
129
12
. PROPERTY, PLANT AND EQUIPMENT
11
. INCOME TAX
2006
Land Machinery and
2005
The Group’s provision for income tax is as follows:
406,799
(143,960)
413,544
544,554
24,333
Total
676,383
568,887
and buildings
equipment
assets
in progress
At 1 January 2005 – as previously
reported
Effect of correction of errors
8,190,091
55,867
9,360,087
77,253
439,772
25,000
1,281,946
-
19,271,896
158,120
At 1 January 2005 – as restated
8,245,958
9,437,340
464,772
1,281,946
19,430,016
(18,765)
48,610
(94,985)
(3,750)
6,794,831
(18,161)
6,843,441
(135,661)
(166,951)
289,956
(146,124)
1,341,849
(7,073)
105,266
(28,062)
(1,737,071)
(348,210)
-
8,350,198
10,586,690
559,215
6,293,483
25,789,586
(16,454)
916,908
48,425
(206,700)
2,767,831
(6,600)
76,788
11,519,978
(159,477)
(3,761,527)
11,568,403
(389,231)
-
9,250,652
13,196,246
629,403 13,892,457
36,968,758
(4,989,567)
(6,048,184)
(203,886)
(170,745)
(347,692)
(48,364)
-
(566,801)
60,136
8,591
46,463
117,361
485
8,664
-
107,084
134,616
At 31 December 2005
(5,091,585)
(6,232,052)
(243,101)
Charge for the year
Eliminated on disposals
(163,700)
12,194
(514,017)
185,410
(54,539)
6,536
At 31 December 2006
(5,243,091)
(6,560,659)
(291,104)
At 31 December 2005 – as restated 3,258,613
4,354,638
316,114
6,293,483
14,222,848
At 31 December 2006
6,635,587
338,299 13,892,457
24,873,904
Additions
Disposals
Disposed of on a disposal of
subsidiary
Transfers
The following presents a reconciliation of theoretical income tax
calculated at the rate effective in the Russian Federation (24%)
to the amount of actual income tax expense recorded in the income statement:
Theoretical income tax expense at 24%
Effect of non-deductible expenses and other permanent differences, net
3,187,662
765,039
(88,656)
2,582,704
619,849
(50,962)
Income tax expense
676,383
568,887
At 31 December 2005 – as restated
Additions
Disposals
Transfers
At 31 December 2006
Temporary differences between the Russian statutory tax accounts
and these financial statements give rise to the following deferred tax liabilities:
Accumulated depreciation
At 1 January 2005
Deferred tax liabilities, net
Total
Cost
Current income tax charge
Adjustment recognised in the year for tax charge of prior years
Deferred tax charge
Provision for doubtful debts
Accrued expenses
Other
Other Construction
1,227,489
(8,208)
(1,837)
(3,319)
818,767
(16,744)
(1,442)
1,214,125
800,581
Deferred tax rollforward
Balance at beginning of period
Charge to income statement
800,581
413,544
776,248
24,333
Balance at end of the period
1,214,125
800,581
Charge for the year
Eliminated on a disposal of
subsidiary
Eliminated on disposals
- (11,241,637)
- (11,566,738)
-
(732,256)
204,140
- (12,094,854)
Net book value
4,007,561
The Group’s plant sites presently occupy approximately 386 hectares of land for which the Group holds
the title. Currently, there is no charge to the Group for land use, except for certain annual taxes, which are
expensed as incurred.
At 31 December 2006 property, plant and equipment with the carrying value of RUR 39,270 thousand (31
December 2005 – nil), were pledged to secure letters of credit granted to the Group.
At 31 December 2006 property, plant and equipment with the carrying value of RUR 457,509 thousand (31
December 2005 – RUR 446,802 thousand) were pledged to secure certain short-term and long-term loans
granted to the Group (refer to notes 23 and 25).
130
131
During 2006 the interest of RUR 816,480 thousand have been capitalized in property, plant and equipment
2006
2005
1,046,965
(992,863)
364,227
(276,462)
54,102
87,765
29,278
31,801
1,254,774
549,933
Total (loss)/profit for the year
(11,036)
14,886
Group’s share of associates’ (loss)/profit for the year
(2,523)
6,145
2006
2005
1,615,488
241,771
415,560
1,264,027
174,669
393,028
(15,656)
(12,463)
(2005 – RUR 105,257 thousand).
At 31 December 2006 and 2005, property, plant and equipment include assets held under a number of
finance lease agreements (refer to note 24). At the end of the lease term the Group takes automatic owner-
Total assets
Total liabilities
ship of the assets.
Net assets
At 31 December 2006 and 2005 lease obligations were secured by leased assets with carrying value of RUR
Group’s share of associates’ net assets
467,818 thousands and RUR 339,629 thousand retrospectively.
Total revenue
13
16
. INTANGIBLE ASSETS
Intangible assets primarily comprise of costs incurred in connection with acquisition and
implementation of management information system SAP R/3 and are amortised over a period
of thirteen years.
2006
2005
Book value
Accumulated amortisation
109,351
(76,752)
109,536
(69,008)
Net book value
32,599
40,528
. LONG-TERM INVESTMENTS
OJSC “Tatneftekhiminvestholding”
National non-state pension fund
OJSC “Kazanskaya yarmarka”
Other
7%
5%
2%
-
7%
7%
2%
-
Total
Advances paid for licenses are comprised of prepaid amounts
for licenses for bisphenol and polycarbone plastic and high
density polyethylene production technologies.
17
. INVENTORIES
Stores and materials
Work in progress and semi-finished products
Finished goods
14
% Ownership
2006
2005
. ADVANCES PAID FOR LICENSES
Less: obsolescence allowance
2006
2005
38,537
10,557
2,950
56
38,537
10,557
2,950
40
52,100
52,084
15
Total
Several of the Group’s subsidiaries are engaged in agricultural
activity of breeding livestock intended for the production of
meat and planting and harvesting of potato and other agricultural
products. The aggregated biological assets of these subsidiaries
are not material to the accompanying Group’s consolidated
financial statements and are included in stores and materials.
18
. INVESTMENTS IN ASSOCIATES
Name of associate
LLC “Taif-Invest”
CJSC “Ankorit”
LLC “Novomoskovsky trubny zavod”
Principal activities
Investing activities
Chemical production
Manufacturing
. TRADE AND OTHER RECEIVABLES
% of ownership interest
2006
2005
40
39
26
40
39
26
2,257,163 1,819,261
Trade receivables
Advances paid
Other receivables and prepaid expenses
Less: provision for doubtful debts
Total
2006
2005
1,102,457
441,960
294,634
602,379
196,373
164,420
(90,362)
(66,814)
1,748,689
896,358
132
133
Share capital balance was adjusted for the effects of inflation in accordance with IAS 29 “Financial
19
Reporting in Hyperinflationary Economies”. The effect of such adjustments was recorded as Additional
. TAXES RECOVERABLE AND PREPAID
Value added tax
Income tax
Other taxes
Total
2006
2005
472,764
171
946,147
133,391
4,971
paid-in capital. The adjustment was determined using the inflation rate index from 1 September 1993,
the date the Company was established as a joint stock company, through 31 December 2002.
Group’s ownership structure was as follows:
% of ownership
472,935 1,084,509
20
. CASH AND CASH EQUIVALENTS
Cash in banks, denominated in RUR
Cash in banks, denominated in currency
Letters of credit
Restricted cash
Other cash and cash equivalents
Total
2006
2005
400,921
55,582
310,602
17,058
120,866
94,014
192,051
17,789
1,600
784,163
426,320
2006
2005
OJSC “Svyazinvestneftekhim”
26.6%
26.6%
LLC “Telecom-Management”
50.0%
48.6%
Other legal entities and individuals
23.4%
24.8%
100.0%
100.0%
Total
Common shareholders are allowed one vote per share. Preferred shares are non-voting. All common
shares and preferred shares are eligible for distribution of earnings available in accordance with
Russian statutory accounting regulations. Preferred shares holders are entitled to an annual payment
of dividends in the amount equal to 25% of their par value. Shareholders of preferred shares have a
21
preferred right to recover the par value of preferred shares in liquidation.
. SHARE CAPITAL AND ADDITIONAL PAID-IN CAPITAL
2006
‘000 shares
2005
‘000 shares
Authorised number of shares
Ordinary shares at par value of RUR 1 each
Preferred shares at par value of RUR 1 each
One share of the Company, held by the Government of Tatartstan, carries the right to veto certain
decisions taken at shareholders’ and Board of Directors’ meetings. Decisions subject to veto include:
increases and decreases in share capital, amendments to the Company’s charter, liquidation or
2,505,114
119,596
2,505,114
119,596
reorganization of the Group or any of its subsidiaries or branches and investments in other legal
entities. This veto right is referred to as “Golden Share”, and the term was extended indefinitely in
1998 by a decree of the President of Tatarstan and may be utilized by the Government of Tatarstan
Total authorised
2,624,710 2,624,710
Issued and fully paid number of shares
Ordinary shares at par value of RUR 1 each
Preferred shares at par value of RUR 1 each
notwithstanding its voting rights are less than 25% of the Group.
Ultimate beneficial owners of the Group are:
1,785,114
119,596
1,785,114
119,596
OJSC “TAIF” (“TAIF”), which controls LLC “Telecom-Management”;
The Government of Tatarstan, through its control of OJSC “Svyazinvestneftekhim”.
Total issued and fully paid
1,904,710 1,904,710
Treasury shares
At the beginning of the year
Re-acquired by the Group
Re-issued from treasury shares
5,694
(2,394)
25,257
10,030
(35,287)
At the end of the year
3,300
-
Treasury shares are recorded as a deduction from issued and fully paid share capital at 31
December 2006 in the amount of RUR 46,251 thousand (31 December 2005 – nil).
UNIVERSAL
MATERIAL
In 1994 Russian scientist Fedor Barishnikov offered the idea
of universal “construction” material creation, suitable for any
kinds of buildings, furniture and other household items creation. According to the plan of the inventor, it should be the
organic polymer, possessing the opportunity of form “fixation” under the influence of electrical dischargers passed
through it, or under the influence of chemical reagents.
Barishnikov’s technics is simple: special machine tool gives
the polymer brick the necessary form. Then - “semifinished”
item is put into the special “electric furnace” or the chamber
with the chemical solution - catalyst. After “the hardening”
the surface of the item is polished and processed with the
paint-and-varnish materials. By Barishnikov’s opinion, there is
a possibility of producing of wide spectrum of products from
bridges bearing constructions and building blocks till dishes
and household items.
At our times, chemists from the Cornell University developed
the new composite material, which got the name of “flexible
ceramics”. “Ceramics” consists of microscopic silicon pieces
and polymers and possesses unique properties. The mate-
rial is transparent like glass, possesses elasticity, flexibility and
durability.
Today “flexible ceramics” is applied in industry and house
constructions, at optical devices production, space industry
and other industries of economy. Durability, plasticity and
lightness of the material, created by the Cornell University
scientists, gives us the opportunity to embody the ideas of
the Russian inventor about the universal construction material, which can be used for designing of all parts of constructions from bearing constructions till window “glassing”.
136
137
23
22
. LONG-TERM BORROWINGS
. RECONCILIATION OF SHAREHOLDERS’ EQUITY (UNAUDITED)
A reconciliation of shareholders’ equity between the Group’s combined Russian statutory
financial statements prepared in accordance with Russian Accounting Standards (“RAS”) and
the Group’s IFRS consolidated financial statements is as follows:
2006
Group equity per RAS
Increase/(decrease) due to effect of:
Property, plant and equipment valuation
Investments valuation
Inventory valuation
Allowance for doubtful accounts
Additional deferred income tax liability
Other accrued expenses
Additional paid-in capital valuation
Other
Group equity per IFRS
2005
11,188,395 9,365,878
3,084,782
55,818
(15,656)
(24,179)
(656,475)
(21,487)
(337,030)
(67,973)
`
2,702,323
46,769
(12,463)
(10,835)
(614,673)
(69,765)
(337,030)
(28,890)
13,206,195 11,041,314
The following represents reconciliation between earnings
determined under RAS and IFRS:
Group earnings per RAS
Increase/(decrease) due to effect of:
Additional depreciation expense
Change in deferred income tax provision
Change in bad debt provision
Change in provision for fines and penalties
Changes in inventory valuation reserves
Fixed assets disposals and write-down, net
Annual bonuses reversal/(accrual)
Impairment of consolidated investments
Difference in accounting treatment for financial leases
Distribution to shareholders
Other
Group earnings per IFRS
2006
2005
-
841,438
International Moscow Bank
A multicurrency loan facility of USD 50,000 thousand bearing
the interest rates of 11% (for RUR loans), LIBOR + 1.9%
(for USD loans) and EURIBOR + 1.9% (for EUR loans) per
annum with final repayment due on 12 December 2009.
The principal is repayable monthly starting from
September 2009. The loan is unsecured.
50,395
-
Sberbank
A RUR-denominated loan facilities up to equivalent
of USD 209,855 thousand at interest rate that changed
in 2006 from 13.25% to 12% per annum with final repayment
due at the date starting on 29 April to 20 November 2012.
The principal is repayable in equal quarterly installments
beginning after seven quarters from the date of drawing
the facility. The loan was repaid in December 2006.
-
2,475,739
A USD-denominated loan facility up to USD 81,200 thousand
bearing a varying interest rate with a maximum of 6.9%
per annum with final repayment due on 24 January 2016.
The principal is repayable in equal semi-annual installments
beginning after ten quarters from the date of drawing
the facility. The loan is unsecured.
2,177,575
558,007
bearing a maximum interest rate of 7.91% per annum with
final repayment due on 24 April 2015. The principal is repayable
in equal semi-annual installments beginning after six quarters
from the date of drawing the facility. The loan is unsecured.
178,285
-
bearing interest at rate that varies from 9.5% to 11.5% per
annum based on quarter revenue received with final repayment
due on 10 August 2013. The principal is repayable in equal
quarterly installments beginning on 27 August 2009.
The loan is secured by the pledge of equipment with
the carrying value of RUR 35,974 thousand.
254,733
-
bearing interest rate that varies from 9.5% to 11.5% per annum
based on quarter revenue received with final repayment due
on 29 August 2013. The principal is repayable in quarterly
installments ranging from 1% to 10% of principal beginning
on 27 June 2009. The loan is secured by the pledge of
equipment with the carrying value of RUR 116,182 thousand.
125,158
-
Vneshtorgbank
A RUR-denominated loan facility of RUR 840,000 thousand
bearing interest at 12.5% per annum with final repayment
due on 22 March 2008. The loan was repaid on 3 July 2006.
2,175,171 1,946,053
(141,247)
(3,853)
(13,344)
(3,193)
(29,649)
62,110
332,328
132,923
33
(140,890)
19,346
(16,438)
558
(12,604)
(62,110)
84,698
249,787
(54,583)
2,511,279 2,013,817
138
139
2006
ABN AMRO
A EUR-denominated loan facility up to EUR 35,560 thousand
bearing interest at EURIBOR + 1.25% per annum with the final
repayment due on 6 September 2011. The principal is repayable
in equal semi-annual installments starting from sixth month
after delivery date. As a term of the loan, the Company has
taken out credit insurance on behalf of ABN AMRO.
repayment due on 24 January 2017. The principal is repayable
after delivery date. As a term of the loan, the Company has
taken out credit insurance on behalf of ABN AMRO.
repayment due on 22 June 2007. The principal is repayable
after delivery date. The loan is secured by equipment with
the carrying value of RUR 112,827 thousand.
repayment due on 27 July 2017. The principal is repayable in
equal semi-annual installments starting from sixth month after
equipment start-up date. As a term of the loan, the Company
has taken out credit insurance on behalf of ABN AMRO.
bearing an interest rate of LIBOR + 2,85% per annum with final
repayment due on 06 July 2009. The loan is secured by the pledge
of equipment with the carrying value of RUR 2,020 thousand.
956,475
696,881
135,535
782,347
2005
466,870
443,614
141,024
-
2006
2005
Manufacturers and Traders Trust Company
A USD-denominated debt instrument of USD 1,371 thousand
bearing interest at LIBOR + 0.75% per annum with the final
repayment due on 12 January 2013. The principal is repaid
in 13 equal semi-annual installments starting
from 12 January 2007. The loan is uncesured.
36,107
-
from 12 January 2007. The loan is unsecured.
42,873
-
36,107
-
90,280
-
72,215
-
6,056
5,965
Other borrowings
822,446
Corporate bonds
Loan participation notes in the amount of USD 200,000 thousand,
bearing interest at 9.25%, due on 30 October 2011 and issued
by Kazanorgsintez S.A., special purpose entity, on a limited recourse
basis for the sole purpose of funding a loan to the Company. The
notes are fully and unconditionally guaranteed by the Company.
Interest payments on the notes are due semi-annually in April
and October of each year, commencing on 30 April 2007.
5,350,114
-
Total
Less: Current portion repayable within one year and shown
under short-term borrowings (refer to note 25)
Net long-term borrowings
11,856,457 4,932,657
(555,073)
(240,540)
11,301,384 4,692,117
The long-term borrowings are repayable as follows:
-
RZB Finance LLC
A USD-denominated debt instrument of USD 883 thousand
repayment due on 25 March 2011. The principal is repaid
from 25 September 2006. The loan is unsecured.
20,930
-
A USD-denominated debt instrument of USD 833 thousand
repayment due on 25 September 2011. The principal is repaid
from 25 March 2007. The loan is unsecured.
21,945
-
Within one year
Later than one year and not later than five years
Later than five years
Total
555,073
8,967,603
2,333,781
240,540
2,196,448
2,495,669
11,856,457 4,932,657
140
141
24
27
. OBLIGATIONS UNDER FINANCE LEASES
. OTHER PAYABLES AND ACCRUED LIABILITIES
2006
2005
91,539
83,443
153,046
136,103
174,982
(15,545)
289,149
(30,385)
159,437
(80,355)
258,764
(134,237)
79,082
124,527
Minimum lease payments
Due within one year
Due later than one year and not later than five years
Total future lease payments
Less: future finance charges
Present value of minimum lease payments
Less: current portion of finance lease obligations (refer to note 27)
Non-current finance lease obligations
At 31 December 2006 and 2005 the lease obligations are denominated in USD and secured
by leased production equipment with a carrying value of RUR 467,818 thousand and RUR
339,629 thousand, respectively (refer to note 12).
25
. SHORT-TERM BORROWINGS
2006
2005
ABN Amro, EURO-denominated
305,759
ABN Amro, USD-denominated
Other, RUR-denominated
64,313
Current portion of long-term borrowings repayable within one year 555,073
327,040
302,063
43,755
240,540
Total
925,145
913,398
2006
2005
300,211
105,401
94,380
80,355
4,554
102,041
81,166
131,757
134,237
150
63,214
686,942
410,524
2006
2005
-
490,279
29,899
Dividends declared in respect of the year ended 31 December 2005:
-ordinary shares (RUR 0.1514 per share)
270,248
- preferred shares (RUR 0.25 per share)
29,899
-
Dividends payable
Wages and salaries payable
Customs duties
Current portion of finance lease obligations (refer to note 24)
Deferred income
Other payables and accrued liabilities
Total
28
. EARNINGS PER SHARE
The calculation of basic earnings per share is based on profit
for the year of RUR 2,523,545 thousand (2005 –
RUR 1,981,921 thousand) divided by weighted average number
of ordinary shares in issue during the year of 1,783,414 thousand
(2005–1,785,114 thousand), excluding convertible preferred shares.
The calculation of fully diluted earnings per share is based
on profit for the year of RUR 2,523,545 thousand (2005 –
RUR 1,981,921 thousand) divided by a weighted average number
of ordinary shares in issue during the year and the effect
of convertible preferred shares of 1,903,010 thousand
(2005–1,904,710 thousand).
The interest rates per annum on these borrowings are vary as
follows:
EURO-denominated
EURIBOR +
2.75%
USD-denominated
RUR-denominated
From 6% to 13%
EURIBOR+
2.75% to
EURIBOR+
3.25%
LIBOR+3.25%
to 8.75%
From 0% to 13%
At 31 December 2006 property, plant and equipment with
the carrying value of RUR 190,506 thousand (31 December 2005 –
RUR 235,865 thousand) were pledged to secure short-term loans
granted to the Group (refer to note 12).
26
Total
. DIVIDENDS
Dividends declared in respect of the year ended 31 December 2004:
- ordinary shares (RUR 0.275 per share)
- preferred shares (RUR 0.25 per share)
Total
. TAXES PAYABLE
Property tax
Unified social tax
Land tax
Personal income tax
Income tax
Other taxes
29
2006
2005
35,262
33,846
31,643
17,890
13,560
39,446
13,010
27,506
4,922
11,990
29,589
171,647
87,017
300,147
520,178
142
143
30
32
. RECONCILIATION OF PROFIT BEFORE TAXATION
TO CASH FLOWS FROM OPERATIONS
As restated
2005
Related parties are considered to include shareholders, affiliates, entities under common
ownership and control and members of key management personnel.
3,187,662 2,582,704
Included in financial statements are the following transactions and balances with related
parties:
2006
OPERATING ACTIVITIES:
Adjustments for:
Depreciation and amortisation
(Income)/loss from investments
Change in provision for doubtful debts
Change in obsolescence allowance
Loss on disposal of property, plant and equipment
Finance costs
Other
. RELATED PARTIES
740,000
(43,152)
23,548
3,193
25,679
152,174
186
575,147
49,406
(18,023)
(558)
(2,667)
91,923
(38)
Sales of goods and services
Purchase of goods and services
Re-issuance of ordinary shares from treasury shares
Bank interest received
Trade and other receivables
Trade payables and advances received from customers
Cash held in banks
2006
2005
326,536
3,152,719
37,578
1,398
188,218
1,210,413
22,077
653,934
975,326
186,764
1,107
208,491
168,811
127,780
Operating cash flow before movements in working capital 4,089,290 3,277,894
Increase in trade and other receivables
Decrease/(increase) in taxes recoverable and prepaid,
other than income tax
Increase in inventories
Increase in trade payables
Increase in advances received from customers
Increase in other payables and accrued liabilities
Increase in taxes payable, other than income tax
Cash flows from operations
(875,895)
(32,197)
478,183
(441,095)
1,288,696
1,229,665
80,857
107,636
(474,760)
(409,148)
513,908
37,489
105,003
213,232
5,957,337 3,231,421
31
. DISPOSAL OF SUBSIDIARY
In May 2005 the Company increased the share capital of LLC “Keramika Sintez” by contributing a brick plant with a net book value RUR 207,143 thousand and a cash contribution of RUR
35,189 thousand, bringing the Company’s total investment in the subsidiary to RUR 242,342
thousand. On 27 June 2005 the Group disposed of 100% of its holding in LLC “Keramika
Sintez” to OJSC “Kazan silicate walling plant” and LLC “Industrial enterprise Kazan” (parties controlled by the largest shareholder) for a cash consideration of RUR 100 thousand. Management
ceased to consolidate this company from the date on which control ceased. Loss on disposal
was recorded as distribution to a shareholder directly in equity.
2005
Net assets disposed of
Other receivables
Other payables
241,126
14,760
(5,999)
249,887
Total consideration
Loss on disposal
-
100
249,787
Key management compensation for the year ended 31 December 2006 amounted to RUR
41,199 thousand (31 December 2005 – RUR 39,587 thousand) and included salaries and bonuses to employees of the Group and remuneration to members of Board of Directors.
33
. COMMITMENTS AND CONTINGENCIES
Litigation
Unresolved tax litigation at 31 December 2006 amounted to approximately RUR 74,131
thousand. Management believes that the risk of an unfavorable outcome to the litigation is
possible.
The Group has been and continues to be the subject of other legal proceedings and adjudications from time to time, none of which has had, individually or in the aggregate, a material adverse impact on the Group. Management believes that the resolution of all business matters
will not have a material impact on the Group’s financial position or operating results.
Russian taxation contingencies
The taxation system in the Russian Federation is at a relatively early stage of development,
and is characterised by numerous taxes, frequent changes and inconsistent enforcement at
federal, regional and local levels.
The Government of the Russian Federation has commenced a revision of the Russian tax
system and passed certain laws implementing tax reform. The new laws reduce the number
of taxes and overall tax burden on businesses and simplify tax laws. However, these new tax
laws continue to rely heavily on the interpretation of local tax officials and fail to address many
existing problems. Many issues associated with the practical application of new legislation are
unclear and complicate the Group’s tax planning and related business decisions.
144
145
In terms of Russian tax legislation, authorities have a period of up to three years to re-open tax
declarations for further inspection. Changes in the tax system that may be applied retrospectively by authorities could affect the Group’s previously submitted and assessed tax declarations.
The total capital commitments for 2007 are estimated at RUR 10.2 billion, including RUR 1.01
billion of contracted commitments. Management expects to finance capital expenditures
through current profit and long-term borrowings.
While management believes that it has adequately provided for tax liabilities based on its
interpretation of current and previous legislation, the risk remains that tax authorities in the
Russian Federation could take differing positions with regard to issues of interpretation. This
uncertainty may expose the Group to additional taxation, fines and penalties that could be
significant.
The Russian insurance industry is in a developing state and many forms of insurance protection
common in other parts of the world are not yet generally available in Russia.
Management has assessed possible tax risk at 31 December 2006 to be approximatelyRUR
36,090 thousand.
Local authorities have significant influence on the Group’s operations. In 2006 the Group
incurred RUR 140,078 thousand (2005 – RUR 133,968 thousand) under a rent agreement with
Tatarstan Republic Government (refer to note 10). Management is unable to estimate the level
of influence that may be imposed by the local government in the future and the potential
impact on its financial position and results of operations.
Russian insurance environment
The Group maintains insurance cover for major production assets including insurance cover for
damage related to explosion or environmental damage arising from accidents on the Group’s
property or related to the Group’s operations. The Group does not have coverage for business
interruption. Management believes that the existing level of insurance coverage addresses all
major risks which could have a material effect on the Group’s operations and financial position.
34
. FINANCIAL INSTRUMENTS
The following table sets out the carrying amount, by maturity, of the Group’s financial instruments that are exposed to interest rate risk at 31 December 2006 and 2005:
Russian Federation risk
As an emerging market, the Russian Federation does not possess a fully developed business
and regulatory infrastructure including stable banking and judicial systems, which would
generally exist in a more mature market economy. The economy of the Russian Federation
is characterized by a currency that is not freely convertible outside of the country, currency
controls, low liquidity levels for debt and equity markets, and continuing inflation. As a result,
operations in the Russian Federation involve risks that are not typically associated with those
in more developed markets.
Stability and success of Russian economy and the Group’s business mainly depends on the
effectiveness of economic measures undertaken by the government as well as the development of legal and political systems.
Environmental matters
The Group’s management believes that it is in compliance with all current existing environmental laws and regulations of the Russian Federation. However, environmental laws and
regulations continue to evolve. The Group is unable to predict the timing or extent to which
those environmental laws and regulations may change. Such change, if it occurs, may require
that the Group modernize technology to meet more stringent standards.
Capital commitments
The Board of Directors of the Company approved a strategic plan for the development of
its production facilities through 2010 (the “Plan”). According to that Plan the following new
production facilities will be installed:
Bisphenol producing plant;
Polycarbonate plastics plant;
New ethylene plant;
New polyethylene plant; and
New recycling and other auxiliary workshops.
Within
one year
After one year
but before
five years
After
five years
80,355
370,072
555,073
79,082
8,967,603
2,333,781
159,437
370,072
11,856,457
1,005,500
9,046,685
2,333,781
12,385,966
134,237
672,858
240,540
124,527
2,196,448
2,495,669
258,764
672,858
4,932,657
1,047,635
2,320,975
2,495,669
5,864,279
Total
2006
Finance lease liabilities
Total
2005
Finance lease liabilities
Total
Other financial instruments of the Group not included in the above table are mostly represented by accounts receivable and payable and are not subject to interest rate risk
35
. RISK MANAGEMENT
The Group’s operations are dependent on a stable gas supply. Presently, the gas market in
Russia is controlled by the gas monopoly OJSC “Gazprom” and its subsidiaries, the Group’s
major supplier of gas. The management of the Group is continuously engaged in ensuring a
stable supply of gas.
The Group’s financial instruments at 31 December 2006 comprise trade accounts and other
receivables, other current assets, cash and cash equivalents, bank overdrafts and trade accounts and other payables all of which are recorded at their carrying values, which approximate the fair values of these instruments as a result of their short-term duration..
THE SECOND
SKIN
American scientists design a survival suit for Mars, which could be
possible to spray onto the person’s skin by the way of aerosol. The
essence of the idea is simple: instead of sew and stick together the
survival suit from the pieces of different materials, it will be sprayed
directly onto the person’s skin by the way of quickly hardening
spray. Though, helmet, gloves and boots will stay traditional for the
time. The technology of such evaporation (as a material the special
polymer is used) is already being experienced by military men.
Simply it can be explained as follows, the smallest drops or short
polymer fibres got the electric charge and under the influence of
the electrostatic field direct to the goal - the item which should be
covered with the film - where they form the conjoint surface. The
scientists intend to create something alike, but capable to make water and air impenetrable film on the human body. After its hardening the film gets high strength, keeping elasticity for legs and arms
moving.
The main idea concluded in the fact that, when the air layer is absent the film itself will fulfill the function of the backpressure production, which won’t allow the body to blow off and burst in the
extra rarefied atmosphere. Specially for this purpose the tight fit of
the polymer to the human’s body is needed.
The version with the evaporated gloves is also possible. To be more
concrete - with the squeezed out to the palm, like a gel, and congealing at the moment. Evaporated survival suite can be taken off :
and it will copy exactly the person’s body. As the authors of the bio
survival suit confirm, the suit will be needed to be “strengthened”
with the underwear, supplied with the built-in thermoregulation
system, and probably with the exoskeleton with drivings-amplifiers, put on the survival suit.
It is quite possible, that in the nearest future such survival suits will
be used not only in space, but also at deep-waters conditions, radiative and chemical aggressive environment.
148
149
36
The Group is exposed to currency risk in that a significant portion of long and short term borrowings are denominated in foreign currencies. The Group management controls over this risk
by aligning the foreign currency borrowings with expected currency sales proceeds.
The Group manages its liquidity risk through a combination of short-term and long-term
financing and self generated funds.
At 31 December 2006 and 2005 the Group had facilities for the management of its day to day
liquidity requirements available with the following banks:
2006
2005
ABN AMRO Bank
Alfa-Bank
Bank overdraft facilities in MKB Avers
394,967
658,278
100,000
645,394
100,000
Total short-term borrowing facilities
1,153,245
745,394
Short-term borrowing facilities:
. INVESTMENTS IN SUBSIDIARIES
Nature of business
2006
% of ownership
2005
Agriculture
Agriculture
Repair & Maintenance
100
98
100
100
98
91
Agriculture
Repair & Maintenance
Trading
Agriculture
Entertainment
90
100
70
51
100
90
100
70
51
-
Trading
50
50
-
-
Subsidiaries
Incorporated in Russian Federation
LLC “Agrosintez”
OJSC “Luch Sintez”
OJSC “Spetsneftekhimmontazh”
OJSC “Shelangovsky plodovoyagodny
sovkhoz”
LLC “Tatkhimremont”
LLC “Trade House Orgsintez”
LLC “Kolos-Sintez”
LLC “DK Khimikov”
Incorporated in Hungary
Less: Short-term borrowings received related
to the above facilities
(305,260)
(624,159)
Net short-term borrowing facilities
847,985
121,235
LLC “Elmer”
Special purpose entity
Incorporated in Luxembourg
Long-term borrowing facilities:
ABN AMRO Bank N.V.
ABN AMRO Bank
Sberbank RF
Vneshtorgbank
International Moscow Bank
Total long-term borrowing facilities
Less: Long-term borrowings received related
to the above facilities
Kazanorgsintez S.A.
3,604,081
1,060,566
8,761,082
1,316,555
3,550,950
266,643
8,569,343
840,000
-
14,742,284
13,226,936
(10,762,095)
(4,903,465)
Net long-term borrowing facilities
3,980,189 8,323,471
Net facilities available
4,828,174 8,444,706
Weighted average interest rate for bank overdrafts
denominated in RUR
13%
13%
Financing
In August 2006 the Group founded a new entertainment company, LLC “DK Khimikov”, in
which the Group holds a 100% interest. The Group made an initial contribution of RUR 300
thousand in cash.
Kazanorgsintez S.A. is a special purpose entity of the Group. It was incorporated in as a public
limited liability company on 4 August 2005 under the laws of Luxembourg. In October 2006
Kazanorgsintez S.A. issued USD 200,000 thousand Loan participation notes due on 30 October 2011, which are listed on the London Stock Exchange plc’s Gilt Edged and Fixed Interest
Market.
On 18 February 2005 the Group founded a new agricultural entity, LLC “Kolos-Sintez”, in which
the Group holds a 51% interest together with LLC “UK Zolotoy Kolos” which holds the remaining 49% interest. The Group made an initial capital contribution of RUR 51 thousand in cash.
In April 2005 the Group made an additional contribution of agricultural inventory and fixed assets with a carrying value of RUR 77,547 thousand to LLC “Kolos-Sintez”. The additional investment did not result in an increase in the Group’s holding in the company.
.
150
151
37
. EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE
Gas supply
On 1 March 2007 the ethane main supplier OJSC “Orenburggazprom”, affiliate of OJSC
“Gazprom”, stopped gas shipments due to disputes with the Group over the terms of the gas
supply agreement. Management of the Group started the negotiations with OJSC “Orenburggazprom” and believes that the negotiations will be finalised by the end of May 2007 and
ethane supplies will be restarted.
38
. RESTATEMENTS
Subsequent to issuing of the Group’s consolidated financial statements for the year ended 31
December 2005, management identified certain errors in accounting for property, plant and
equipment, and the related deferred taxes, in 2004, and disposal of a subsidiary in 2005. It
was concluded that consolidated financial statements for the year ended 31 December 2005
should be restated to correct these matters. The effects of restatement are summarised below:
Notes
Group equity at 31 December 2004 – as previously reported
9,577,214
Net book value of property, plant and equipment
12
158,120
Deferred tax liabilities recognised on net book value of property,
plant and equipment
11
(37,949)
Total effect of correction of errors
120,171
Group equity at 31 December 2004 – as restated
9,697,385
Profit for the year ended 31 December 2005 – as previously reported
1,764,030
Loss on disposal of a subsidiary recorded directly in equity
Profit for the year ended 31 December 2005 – as restated
.
©A-GROUP. 2006
31
249,787
2,013,817

blok eng pdf.indd

Transcription

Similar documents

THE SVERDLOVSK REGION: 17 ADVANTAGES

012602 Art. VESPINO

Punch-a

- Pharmstandard

Push it to the Limit - North American Rail Shippers

TV Airtime RTVI

Russian Rhaspsody Daylily

Exhibition–Bazaar of New Russian and West Literature

Kallima - Press Release - Exhibit-e