Results of annual general meeting of OJSC "Bayan-Sulu" (Kazakhstan) shareholders

/KASE, June 5, 00/ - According to listing requirements, OJSC "Bayan-sulu" (Kostanai, official list of securities, category "B") provided KASE with the minutes of shareholders annual general meeting, the report of the Board and the conclusion of the Revision commission, as well as with auditing report of "Serviceaudit" (Kostanai) made on 1999 financial statements. Considering the agenda of the meeting, held on April 14, 2000, the shareholders of OJSC "Bayan-sulu" decided to: - approve annual financial statements, the report of the Board and the conclusion of the Revision commission of the company for the year 1999; - apply for a credit to OJSC "Bank Apogey" to increase working capital of the company and equipment purchasing purpose. The meeting also approved the forecast of development and use of net profit of the company for year 2000. According to the forecast, it is planned to: - achieve production and shipping volume of 8,000 tons of confectionery on sum of KZT1,092,565 th (119.9% to 1999); - increase profitability of production from 4.3% to 5.6%; - receive after-tax profit on the sum of KZT47,000 th and distribute it as follow: production development - 55%, dividends payments - 20%, wages and social security - 20%, increase in reserve capital - 5%; - put into operation from June 1 a boiler house, which construction started in 1999 to lower the costs of energy source and production costs; - attract foreign investments on the sum of DM1 mln that will be directed on implementation of special program "Expansion and modernization of polygraphic production"; - use facilities of "KAMA-TS-102" equipment, which was bought for DM341 th in February 2000 using credit resources, to modernize cutting processes of packing. This facility will be also used to increase income from extraordinary activity, i.e. income from packing of production for food industry; - expand the assortment of production owing to introduction of 10 new brands of confectionery from alternative raw materials. The President of the company, Bogger E.A., has made a speech on results of year 1999. According to his report, production volume of confectionery in 1999 was 6,670 tons or KZT899,561 th. It is 73.6% of the volume for year 1998. Pre-tax profit from ordinary activity totaled KZT46,651 th, expenses from the account of net profit - KZT75,831 th, losses - KZT29,180 th against net profit of KZT46,351 th in 1998. The report proceeds that deterioration of financial results in 1999 originates from two main reasons. The first one is the influence of Russian crisis (August 1998), when devaluation of Russian rouble from 13 to 5 tenge coupled with abolishment of import tariff on the same type of production led to inflow of cheap production from Russia, i.e. Russian producers penetrated Kazakhstan's market. As a result, sales volume in the first quarter 1999, was 33.5% from the same number of previous year. The second reason is introduction in Kazakhstan of free floating exchange rate on April 4. It looked rather gloomy for the company as its import's share equals 70% of total production inputs. The devaluation led to losses due to exchange rate differentials on amount of KZT59,243 th. The repayments terms for accounts receivable increased that led to increased deficit of working capital and growth in accounts payable of supply providers to KZT126.3 mln (KZT93.9 in 1998). As a result, investments in fixed assets declined to KZT13.8 mln from KZT74.9 mln in the 1998. Despite these difficulties, OJSC "Bayan-Sulu" has managed to expand the assortment of production by introducing 8 new brands. The company has been also able to pay all taxes, fees and wages without delay. During the year, the company has participated in 4 exhibitions, where it has won 11 gold, 2 silver and 2 bronze medals. In February 1999, new Italian caramel production line was put into operation. According to the report of "Auditservice", all financial statements was provided in line with actual aspects of company's activity as of December 31, 1999. The results of economic activity and cash flows conforms with actual conditions and comply with Kazakhstan's accounting standards.