Auditing report on 1999 financial statements of Astana finance OJSC

/KASE, Aug. 07, 00/ - Astana-finance OJSC (Almaty, official list of securities, category "B") in accordance with the listing requirements provided KASE with auditing report made by Arthur Andersen (Almaty, Kazakhstan) on the issuerТs 1999 financial statements. Based on the data of an independent auditor, following were the results of the company as of December 31, 1998 and 1999 (in th. KZT): Indicator 1998 1999 ------------------------------------------------------------------- Authorized capital (registered) 100,000 3,100,000 Authorized capital (paid up) 100,000 102,436 ShareholdersТ equity 102,886 113,166 Total assets 7,829,597 10,615,162 Raised funds 7,640,842 9,781,210 Loan portfolio (net) 7,472,856 7,322,007 Reserve for loan losses 131,732 513,594 Operating income 252,238 910,208 Total expenses 252,238 902,364 Net income 0 7,844 ------------------------------------------------------------------- Calculated based on the data of the auditor: ------------------------------------------------------------------- Return on equity (ROE), % 0 6.93 Return on assets (ROA), % 0 0.07 Earnings per share (EPS), KZT 0 76.57 Book value of a share, KZT 1,028.86 1,104.75 ------------------------------------------------------------------- The auditing was conducted by Arthur Andersen in accordance with International accounting standards. Since Astana-finance OJSC keeps its records and makes financial statements based on the Kazakhstan accounting standards, as well as banking legislature, instructions and regulations of the National Bank of Kazakhstan, the auditor had to make some adjustments and regroupings of the balance sheet articles to make them in conformity with the requirements of the International committee on accounting standards. As a result, there are some discrepancies in the ratios calculated by the bank and those of independent auditor. Some information regarding previous years was reclassified to make it in line with 1999 financial statements. Presently Astana-finance is the agent of Administrative Council of Astana FEZ and the Ministry of Finance. Most of the loans are distributed on the basis of agent agreements. The company does not bear any risks on these loans. Besides, the company participates in credit program under the Small Scale Business Association. Loans are mostly granted in Astana city. According to the auditing report, the sectoral division of the companyТs loans is following (the comparative figures for 1998 are given in brackets): power sector - 32% (34%), air transport - 29% (17%), manufacturing - 14% (3%), agriculture - 6% (34%), construction - 11% (0%), services - 8% (7%), housing utilities - 0% (5%), commerce - 0.6% (0.5%), individuals - 0.2% (0.1%), the rest 0.4% (0.6%). The most loans granted in 1998 were non-interest bearing assigned for end-borrowers. In 1999 interest rates were varying from 8-25%. In the opinion of the auditor, financial statements of the company as of Dec. 31, 1999 includes advance payment for KZT758,900,851 relating to construction projects or 75% of total contract cost. No independent examination was conducted to check the true cost of the project. Also. The auditor could not find confirmation that the project will not be delayed any further without additional costs. Auditors also reported that as of Dec. 31, 2000 Astana-Finance held 98% shares of daughter energy company. The investment was accounted at cost price (IAS#27). Besides, there were no estimations for potential decrease in value of required reserve. In the opinion of the auditor, financial statements of Astana-finance OJSC give a reliable and objective picture of the companyТs financial situation as of December 31, 1999, 1998, as well as the results and cash flows as of indicated dates in accordance with International accounting standards. Astana-finance is non-banking financial organization. Main activities: investment activity, some kind of banking activity, etc.