ANNUAL REPORT JSC «Volzhsky Abrasive Works» 2015

Size: px

Start display at page:

Download "ANNUAL REPORT JSC «Volzhsky Abrasive Works» 2015"

Shavonne Morton
6 years ago
Views:

1 Annual report approved by the Annual Shareholders Meeting JSC«Volzhsky abrasive works» «23» June 2016 Minutes 33 Annual report Preliminary approved By the Board of Directors of JSC «Volzhsky abrasive works» «21» April 2016 г. Minutes 146/ ANNUAL REPORT JSC «Volzhsky Abrasive Works» 2015 VOLZHSKY 1

2 Content: I. POSITION OF THE COMPANY AT THE MARKET II. FOREGROUND ACTIVITIES III.REPORT OF THE BOARD OF DIRECTORS IV. CONSUMPTION OF ENERGY RESOURCES V. COMPANY S OUTLOOK VI. DIVIDEND PAYMENT VII. MAIN RISKS VIII. BIG DEALS IX. DEALS WITH INTEREST X. BOARD OF DIRECTORS XI. CEO AND MANAGEMENT BOARD XII. REMUNIRATION OF THE MEMBERS OF THE BOARD OF DIRECTORS AND MANAGEMENT BOARD XIII. CORPORATE CODE 2

3 I. POSITION OF THE COMPANY AT THE MARKET JSC Volzhsky Abrasive Works is the largest company at the market of SiC crude black, green and electrotechnical, grinding grit and powders, abrasive tools vitrified- and bakelite-bonded and refractory products silica-alumina- and nitride-bonded. II. FOREGROUND ACTIVITIES The basement of current production of the Company is in the sector of abrasive tool, grinding materials and refractory products. Technological basis of production is melting and reprocessing of silicon carbide crude black and green, used in abrasive, refractory and metallurgical areas. III. REPORT OF THE BOARD OF DIRECTORS 1. Profile of the structure and activity of the Company 1.1. The highest governing body of the Company is the General Shareholders Meeting. Executive authority of the Company is Board of administration. General Director maintains the current management of the Company s activities; he is subordinated to the Board of Directors and to General Shareholders Meeting. Management is carried by processes of planning, organization, motivation and control necessary to formulate and achieve the goals of the Company Number of shareholders listed in the register on : Total including Physical persons Legal entities 4 including 1 nominal shareholders Chartered Capital of the Company is fully paid off and consists of Ordinary shares Preference shares Nominal value per share 5 rubles 1.4. Government s share (Municipal share) is not presented in Authorized Capital. Special right (golden share) is non-existent The Company has a branch office in Moscow, registered 12 th September Subordinate companies: not available Location and post address of the Company: Russia, , Volzhsky city, Volgograd region, Avtodoroga 6, Location and post address of the branch office: , Moscow, Warsaw road, 90, The given report has been drawn in accordance with the data of the Company, as well as of the branch office. 3

4 In 2015 the Board of Directors of JSC Volzhsky Abrasive Works held their meetings regularly. In 2015 ten meetings of the Board of Directors were held. Among different issues the Board of Directors quarterly examined and approved financial and business activity of the Company, approved the business-plan for 2015 and controlled its execution. 2. Main factors that influenced company s activity in the financial year 2.1.VAW financial and economic activity efficiency rate (th.rub.) Indices 2015 % to total 2014 % to total 1. Proceeds from sales of goods (works, services) including: sales of finished products , , services of main activity type , , income from leasing 624 0, sales of goods , , income from non-industrial , ,14 group 2. Profit from other activity types including: sales of fixed assets 60 0, , sales of other assets , ,66 Proceeds - total: Other income and expense Important items of other income and expenses Other incomes and expenses include the following groups: (th.rub.) Other income Currency sale gain Exchange gain Surplus from Inventory result Fine and penalties received Gain from unclaimed payables writing-off Income from inventory stock writing-off Compensation for Ukrainian refugees support Rate of exchange divergency from official rate at currency 4

5 purchase/sale Previous years profit Reimbursement of provisions Other income Total: Other expenses Exchange loss Trademark use Taxes Social expenses Expenses not related to of finished products production Reserves on doubtful debts Membership fees Credit institutions services Losses on inventory results, deficiencies Losses of previous years Bonuces paid Keeping of non-industrial group Fine and penalties charged Rate of exchange divergency from official rate at currency purchase/sale Expenses on Ukrainian refugees support Reparation of damages Exspenses connected with currency purchase Other excpenses Total: Accounts receivable (th.rub.) Indices As of As of Accounts receivable total including: Buyers and customers - JSC AvtoVaz LLC Alexandr, Ukraine LLC TH Volzhskie Abrazivy JSC Gomselmash, Belorussia STS Belarus Group

6 - JSC Metallurgical Plants LLC CarbonGroup, SPC Nizhneserginsky Metallurgical Plant JSC JSC BMZ RUS Inginiring Ltd Avtokomponent Gas Group Ltd Bezhiz Stal JSC Abraziv Ltd JSC Severstal LLC TH MetAbrasive Abrasive Plant JSC Llaid Mineral Products, Inc. USA Seven Refractories Chosun Refractories Co. Ltd Washington Mills, Norway Washington Mills Electro Minerals, USA Corbocorundum Universal LTD Advances paid: On taxes and duties Including: -VAT Profit tax Social insurance payments Other debtors Including: settlements with reporting persons settlements with employees on other 5.2 transactions settlements on material personal and voluntary insurance settlements on claims settlements with suppliers and sub-contractors settlements with different debtors and creditors Total: The current accounts receivable of the company includes accounts overdue according to the contract provisions: - As of December 31, th.rubles (including buyers and customers th.rubles, other debtors 437 th.rubles); - As of December 31, th.rubles (including buyers and customers th.rubles) 6

7 The reserve of th.rubles is made for accounts receivable as of December 31, 2015 including: - For buyers and customers th.rub. - Advances 57 th.rubles. - The reserve of th.rubles is made for accounts receivable as of December 31, 2014 including: - For buyers and customers th.rub. - Advances 99 th.rubles. 2.3.Accounts payable (th.rub.) Indices as of as of Accounts payable - total: including: Suppliers and sub-contractors including: - VNGS Ltd Lukoil-Volgogradenergo Ltd JSC INTER RAO Elektrogeneratsia Group of companies for production of electric and thermal power at nuclear power plants LLC MetalYug-Volgograd JSC Mosenergo ОGК LLC Promintekh LLC Rosgosstrakh CJSC Steel industrial company LLC Stroyenergokomplekt JSC FSC EEC JSC TsFR LLC Examination of buildings safety Security Service Ltd Service Smit Ltd T Plus JSC Volgograd Generating Company Ltd Ferro Ltd Accounts payable to the company s employees including: - settlements with employees on labor payment settlements on deposited sums Accounts payable to non-budgetary funds Accounts payable on taxes and dues Accounts payable to shareholders on income payment Other creditors including: - settlements on advances received Settlements with other debtors and creditors Total:

8 3. Events after the reporting date Events after the reporting date which influenced or could influence financial status, financial performance, cash flow or activity results between the reporting date and date of accounting signing for 2015 are absent. 4. Activity results upon activity types and geographical sale markets 4.1. Basic activities of the company: Basic activities of JSC VAW in 2015: Production of products (abrasive tool, grinding materials and refractory products), providing 98% of proceeds from sale of products, goods, work and services; Resale of goods (1 % of total proceeds); Nonindustrial services (1% of total proceeds). Net profit usage for the company's needs Profit of previous years the company used for paying dividends and remunerations in compliance with the decisions of the Board of Directors. Profit of the reporting year was used for social expenses (in compliance with the Collective Agreement), for covering of loss from keeping the objects of nonindustrial sphere, charity and other expenses made from profit in compliance with the Legislation. 6. Surplus fund According to the Charter of the Company the surplus fund was established in the amount of no less than 5% of the authorized capital in the amount (six hundred thousand) rubles. In the reporting period the reserve fund was not used. 7. Net assets The Company's net assets as of thousand rubles The Company's net assets as of thousand rubles Increase of the Company's net assets in thousand rubles 8. Labour and Remuneration Average headcount of VAW personnel in 2015 was 1576 employees. It increased on 5 employees or 0.3 % and became 1581 employees. As of part of management and employees among VAW personnel is 29,2 % (484 employees), workers 70,8 % (1171 8

9 employees).among total number of personnel men are 56,7% (939 employees), women 43,3% (716 employees). In 2015 remuneration fund increased by 16,1 % as compared with Structure and dynamics of remuneration fund % Remuneration fund total (th.rub.) , ,7 116, Payroll From it industrial personnel , ,3 116,0 Including workers , ,6 115,4 Employees , ,7 117,4 Non-industrial personnel 12646, ,4 120,0 2. Social payments 1781,5 2015,0 88,4 (rub.) In 2014 there was indexing of rates and wages from on 7%. Average earnings dynamics of 1 employee Indices 2015 (rub.) 2014 (rub.) Average earnings total ,8 Including industrial personnel ,8 Including workers ,8 Employees ,4 In 2015 average earnings grew by 15.8 % as compared with Rate (2015 to 2014) % Profit In the result of financial and economical activity JSC VAW gained net profit in the amount: th.rub th.rub. In 2015 from general activity JSC VAW gained gross profit in the amount th. rub., including: - from sale of commercial output th. rub., - from sale of services on basis activity - loss in the amount 284 th. rub., - from rent 624 th. rub., - from sales of goods 1162 th. rub., - from sales of non-industrial group services th. rub. proceeds from other activities in 2015 there was th. rub. Profit before tax was th. rub.. Profits tax was th. rub. 9

10 IV. Consumption of each energy resource used by the company JSC «Volzhsky Abrasive Works» in its activity consumes electric power, natural gas, gasoline and diesel fuel. Consumption of these types of energy resources in 2015 is given in the table below: Type of energy resources Unit of measurement Volume consumed Volume consumed in th. rub. 1. Electric power kwh Natural gas th.m Thermal energy (heating) Gcal 35, Gasoline litres Diesel fuel litres Other recourses were not used. V. Company s outlook Management of the company on the medium-term outlook proposes the concept of the restricted growth based on the principal of development with the minimum risks. Company has plans concerning setting up of new production, expansion or reduction of production, development of new types of products: abrasive materials. SiC black and green: - strengthening of company position at the markets of EU, USA and Asia due to moving to more qualitative and expensive market segment; - maximum satisfying of inner market demand in abrasive, refractory and developing metallurgical market segments; - diversification of abrasive materials (production of fine grain and mixtures for refractory production); - developing technologies and implementing a pilot project for SiC melting under film, which lets to get a new high-quality material, to reduce essentially environmental impact and to create the opportunities for expanding of production on the new site. Abrasive tool The Company manufactures the same scope of products as in previous years and also implements new technologies. Activities of the Company at present: - developing the technology of abrasive tool vitrified bonded production on low temperature for reduction of production costs; - introducing the technology of abrasive tool production from microcrystalline fused alumina; - diversification of abrasive tool vitrified bonded for deep grinding; - diversification of abrasive tool vitrified bonded of higher structure; - diversification and capacity expansion of abrasive tool bakelite bonded; - increasing of recycled material usage for production. 10

11 Refractories: In order to increase total revenue and developing new market segments of SiC refractory articles production JSC VAW expands the product assortment and the market territory in Middle East and Europe. The production includes: - developing and introducing the technology of unmolded refractory in production; - developing the technology of reactionary sintered SiC articles production. The company gradually updates and reconstructs the production equipment. VI. DIVIDEND PAYMENT Annual general shareholders meeting of JSC VAW took the decision to pay dividends for 2014 financial year. Dividends on preference shares of A type for 2014 in compliance with the Charter are to pay in the amount 63 rubles per share. Dividends on ordinary shares are to pay in the amount 304 rubles per share (Minutes 32 of ). Shares Accrued, rub. Paid, rub. Ordinary Preference Total: VII. MAIN RISKS In the judgment of the Company s management the main possible changes in the external industrial sector and possible activities of the Company s management in this case: At the foreign market the main activity of the Company is production and sale of materials of silicon carbide. The principal customers of the products are the enterprises of abrasive, refractory and metallurgical branches. The most sales are in European Community countries which market is characterized by high capacity and opportunity of consumers expansion providing increase of material of higher processing, expansion of grain-size structure and increase of chemical and physical properties of materials. Despite the structural crisis in which has overtaken the market of SiC classified flour for photovoltaic industry and has caused the reduction in demand of SiC and in prices in all market segments, the Company has managed to keep the maximum operating rate in SiC melting that led to avoid losses, despite the short-term profits reduction. Unfortunately, despite the expectations of the principle producers of SiC, there was no activity increase on the main SiC markets in The appearance of new producers in metallurgic segment leads to prices reduction, for instance, in Europe by 3-5%. Besides, since January 1, 2014 in European Community, where the Company delivers the main part of its products, preferential import duties on SiC manufactured in Russia has been canceled, which means that price of Russian materials exported in European Community rises by 3,5%. 11

12 In order to reduce factors of possible signs of crisis which influence financial and economic situation of the enterprise, the Company is implementing the programme of technological and marketing improvement. This programme will help: - to expand the production and sales of new kinds of refractory materials produced by new technologies, in 2013 the constant client base oriented on this production especially in Germany began to form; - to expand the market due to new customers and delivery amount in the RF of SiC of metallurgic quality; - to create own electrical generation based on gas generator, which will reduce network consumption while high loading and improve costs; - geographical diversification of export will reduce risks and minimize possible negative consequences of possible unfavorable changes at the market of European Community. Risks, connected with possible changes of prices for raw materials, services used by the Company in its activity at the domestic market and their influence on the Company s activity: At the domestic market the principal activity of the Company is production and sale of abrasive tool. The main purchasing material is fused alumina (white and normal). Abrasive tool vitrified bonded production is 60-62% of total output, the black and green SiC tool is 28-30%, produced by the Company itself. The changing of the main purchasing material price will lead to the price changing of abrasive tool produced on its basis. In the judgment of the Company s management the changing of price for materials and the Company s supply services will increase the cost of its production, and the reduction of demand will be insignificant because of the leading positing on the market. The Company pays specific attention to production and sale of SiC abrasive tool, which means independence on foreign suppliers and constant and prospective work with consumers. To decrease risks of sales revenue reduction the Company has developed and introduced a new technology for nitride bonded refractory production. The most significant for the Company is decline in production of Russia and CIS countries, sales revenue reduction is possible in this case. Risks connected with possible changes of prices on raw materials, services used by the Company in its activity at the foreign market and their influence on the Company s activity: At the foreign market the principal activity of the Company is production and sale of SiC materials. The main factor influences on operating cost is energy cost. Their influence on the Company s activity and fulfillment of obligations concerning securities: At present the Company is a subject of the wholesale buying/selling energy market. It gives an opportunity to optimize as much as possible the process of direct energy buying at the primary cost. The programme of JSC VAW on putting into practice production, technological and sales processes has to solve a number of questions such as reduction of energy cost per item, further improvement of materials and as a result entry at the more expensive price segment of the market. Risks connected with possible changes of prices on the Company s products and/or services at the domestic market and their influence on the Company s activity and on obligations concerning securities: Prices on products implemented by the Company at the domestic market (first of all on abrasive tool) depends in many respects on production costs changing. Risks, connected with possible changes of prices on the Company s products and/or services at the foreign market: Export prices and their influence on the Company s activity and on obligations concerning securities. More than 50% of the Company s proceeds is formed by export sales of SiC materials. The changing of sell prices influences the Company s income and its liabilities to creditors. According 12

13 to the above mentioned, the Company does not expect the further reduction of export prices for the sold material and the negative influence of this factor on its obligations concerning securities. Risks exceptionally to the company: Available technology of SiC production, which has no analogs in Russia, needs special policy concerning preserving and training of technical personnel. Loss of qualified personnel can lead to serious technological losses and faults, and as a result, to the problems with the quality of finished products of grinding materials from SiC. Absence of special professional training programmes in colleges and universities, lack of similar production in Volgograd region and other regions of the Russian Federation, make the company have special programme of personnel preserving and training. This programme includes defined social benefits to working specialists including nongovernmental pension after retiring, financing of training programmes and own training centre for training workers. Management of the company supposes these measures to help minimize risks of shortage in qualified personnel at technologically complicated production of high quality SiC. In 2015 no big deals were made. In 2015 no deals with interest were made. VIII. BIG DEALS IX. DEALS WITH INTEREST X. BOARD OF DIRECTORS In 2015 in compliance with the decision of the Annual General Shareholders Meeting of in the Board of Directors of VAW were elected the following members: Murugappan Muthiah Murugappan Chairman of the Board of Directors Year of birth: 1955 Muthiah Muthiah Year of birth: 1959 Narayanan Ananthaseshan Year of birth: 1962 Number of shares in Company r s chartered capital: has no share Sridharan Rangarajan Year of birth:

14 Krishnaswamy Srinivasan Year of birth: 1957 Kostrov Sergey Vyacheslavovich Year of birth: 1965 Petrosyan Sergey Leonovich Year of birth: 1950 XI. CEO AND MANAGEMENT BOARD Chief Executive Officer of the Company is General Director. Kostrov Sergey Vyacheslavovich chairman of the management board Year of birth: 1965 Members of the Management Board: Orlov Victor Ivanovich Year of birth: 1946 Lukina Marina Vladimirovna Year of birth: 1970 Ivanova Olga Borisovna Year of birth:

15 Kostyuk Andrey Nikolaevich Year of birth: 1966 Bondarchuk Tatiana Petrovna Year of birth: 1973 Ermishin Dmitriy Victorovich Year of birth: 1972 XII. REMUNIRATION OF THE MEMBERS OF THE BOARD OF DIRECTORS AND MANAGEMENT BOARD At present Company do not practice any remuneration payments to the members of the Board of Directors and Management Board. XIII. CORPORATE CODE Company officially does not have Corporate Code, but in its activity JSC VAW provide shareholders all possibilities of taking part in control of the company and disclose information about its activity in compliance with Federal Law On Joint-Stock Companies, Federal Law On Securities Market and regulations of Federal Authorities on securities market. Shareholders have the right to take part in the management of the company by approving decisions on the most important matters of the company s activity at the annual shareholders meeting. Shareholders have the right to get complete and timely reliable information about the company. Information policy of JSC VAW provides free and easy access to the information. 15

VOLZHSKY ABRASIVE WORKS. ANNUAL REPORT (January 2009 December 2009)

VOLZHSKY ABRASIVE WORKS. ANNUAL REPORT (January 2009 December 2009) VOLZHSKY ABRASIVE WORKS ANNUAL REPORT 29 21 (January 29 December 29) VOLZSKY ABRASIVES WORKS Board of Directors M M Murugappan K Srinivasan S V Kostrov N Kishore P R Ravi S L Petrosyan V Ramesh Company