Auditing report on 1999 financial statements of BANK TURANALEM OJSC (Kazakhstan)

/KASE, Sep 06, 00/ - BANK TURANALEM OJSC (Almaty, official list of securities, category "A"), in accordance with the listing requirements, provided KASE the auditing report of "Ernst & Young" (Almaty, Kazakhstan) made on 1999 consolidated financial statements. Based data of an independent auditor, who finished the report on April 20, 2000, the following are the results of the issuer as of December 1999 and 1998 (in KZT mln): Indicator 1998 1999 -------------------------------------------------------------------- Authorised capital (paid up) 7,931 8,758 Weighted average issued shares, number of shares 822,434 896,886 Shareholders' equity 3,676 5,083 Total assets 18,371 46,027 Liquid assets 4,629 11,640 Loans and other outflows to the clients (net) 10,645 27,094 Liabilities to the Government and NBK 1,299 700 Liabilities to the banks 3,009 9,023 Liabilities to the clients 9,651 28,224 Operating profit 4,731 8,024 Total expenses 3,205 7,113 Net income 1,526 911 -------------------------------------------------------------------- Calculated by the data of auditing report: -------------------------------------------------------------------- Return on equity (ROE), % 41.51 17.92 Return on assets (ROA), % 8.31 1.98 Earnings per share (EPS), KZT 1,855.47 1,015.74 Price earnings ratio (P/E) - 12.31 Book value of a share, KZT 4,469.66 5,667.39 -------------------------------------------------------------------- Auditing was conducted by "Ernst & Young" in accordance with International accounting standards (IAS). Since BANK TURANALEM OJSC keeps its accounts and financial records based on the Kazakhstan Accounting Standards and banking legislature, financial statements of the bank were properly corrected to comply with IAS. The most of corrections related to revenue and expenses reporting practice, evaluation of securities and investments value, provisions for possible losses, deferred taxes and reporting of branch and daughter companies. Among the branch establishments of the bank are TuranAlem Securities LLP (Almaty, Kazakhstan, securities market activity, stake - 100%), Kazko Construction (Almaty, Kazakhstan, construction) and Samal Properties (Almaty, Kazakhstan, real estate business). The bank does not have shares of the last two companies, however it completely controls them. Consolidated financial statements was prepared according to the principle of "historic value" revised to real evaluation of securities holdings. This approach allows for some assumption and estimations made by the management in assessing companies' value to report in financial statements. For instance, the bank has revalued (decreased) the useful life of some assets (buildings) during 1999. In 1999, bank guided by IAS #36 re-estimated the value of unfinished construction and annulled the KZT362 mln provision for this construction. Besides, the reserve of KZT204 mln was written off due to completion of circulation of issued letter of credit. It was created to compensate possible losses expected in 1999 for this letter of credit. The sectoral division of bank's loans is following: (the comparative figures for 1998 are given in brackets): trade - 47% (51%), agriculture and food-staff industry - 12% (10%), industrial production - 19% (12%), mass media and education - 3% (-), other sectors 19% (27%). Bank's investments consisted of (as of December 31, 1999) KZT78 mln in "Insurance Company BTA Insurance" (40% stake), KZT42 mln in Non-state Open Accumulative Pension Fund KAZAKHSTAN CJSC (25%), KZT22 mln in PAMC BTA Asset Management CJSC (25%), KZT19 mln in Non-state Open Accumulative Pension Fund KURMET CJSC (23.7%) and KZT3 mln in other investments recipients. In the opinion of the auditor, consolidated financial statements of BANK TURANALEM OJSC give a reliable and objective picture of financial situation as of December 31, 1999. The results of economic activity and cash flow statement for the reported year were stated in compliance with IAS.