DAGOK Kustanaiasbest OJSC (Kazakhstan): financial indices

/IRBIS, Feb 13, 01/ - Following are financial and economic ratios of DAGOK Kustanaiasbest OJSC (Zhetikhara, Kustanai region), made by the data of the Listing Commission of Kazakhstan Stock Exchange (KASE). The information is published in connection with admission of the first issue bonds of the company into official list of the KASE securities, category "A". The management of DAGOK Kustanaiasbest OJSC assumes full responsibility for the reliability of presented information. DAGOK Kustanaiasbest OJSC presented its balance sheet, income and cash flow statements for the years 1997-1999 and 9 months 2000, which were made in accordance with the Kazakhstani accounting standards (KAS). The table below is compiled by the KASE specialists using data of the issuer (in th. KZT, unless otherwise specified). --------------------------------------------------------------------- As of As of As of As of Index Jan 01 '98 Jan 01 '99 Jan 01 '00 Oct 01 '00 ------------------------- ---------- ---------- ---------- ---------- Authorized capital 70,000 70,000 70,000 460,000 Shareholders' equity 586,236 550,849 836,969 1,573,028 Total assets 2,184,822 4,067,603 3,892,284 4,440,700 Net working capital -594,853 -662,175 -358,828 598,861 Accounts receivable 551,873 2,228,143 1,744,988 2,589,675 Loans attracted 266,265 452,805 512,748 547,611 Accounts payable 1,266,484 2,895,554 2,401,462 2,469,463 Sales 1,758,314 1,512,059 2,401,251 2,260,742 Net profit -96,750 -73,215 286,120 600,284 Return on sales (ROS), % 10.28 8.13 16.62 37.04 Return on equity (ROE), % - - 0.07 0.13 Return on assets (ROA), % - - 34.19 32.85 --------------------------------------------------------------------- International audit of the financial statements of DAGOK Kustanaiasbest OJSC for 1998-1999 was made by independent audit company KPMG Janat (Almaty, Kazakhstan). The auditor did not express its opinion over results of financial activity and cash flow statement for 1998 as it had not been able to examine figures on inventories and to receive sufficient auditor's arguments for correctness of balance figures compiled as of Dec.31, 1997. According to the auditor, corresponding corrections might have had significant impact on the balance sheet. The auditor has noted that except for impact of those corrections, the accounting balance gives a reliable presentation of financial situation of the company in all necessary aspects as of December 31, 1998. All data were complied in accordance with Kazakhstan accounting standards. In the auditing report for 1999, the auditor gave a conditional conclusion referring to lack of possibility to check amounts of inventories. It noted that "except for corrections that might have been required for.... the accounting balance gives a reliable presentation of financial situation of the company in all necessary aspects as of December 31, 1999 as well as the results of its financial and economic activities and cash flows as of indicated period in accordance with Kazakhstan accounting standards. Differences in the size of shareholder's equity (table below) given data of the auditor and the company, are explained by low income figures stated by the auditor in corresponding periods. By results of 1998, the company's figure of net income exceeds the auditor's data by KZT224 mln ($2.66 mln). This could be explained by the difference of KZT176 mln ($2.1 mln) in operating activity income. This lag was also conditioned by different methodologies applied to estimation of expenses for the periods (company's data - KZT200.0 mln against auditor's - KZT344.0 mln). The auditor has increased administrative expenses of the company from KZT158.0 mln to KZT288.0 mln. Shareholder's equity of DAGOK Kustanaiasbest OJSC (USD, mln) ------------------------------------------------------------------------------ As of As of As of As of Index Jan 01 '98 Jan 01 '99 Jan 01 '00 Oct 01 '00 ---------------------------------- ---------- ---------- ---------- ---------- Shareholder's equity 7.8 6.6 6.1 11.0 Additional unpaid capital (revalued) 13.9 12.6 7.6 7.4 Shareholder's equity (without revaluation) -6.2 -6.0 -1.6 3.6 Shareholder's equity 8.0 3.7 2.8 - ------------------------------------------------------------------------------ By results of 1999, net income of the company exceeds the auditor's figure by KZT211 mln ($1.53 mln) mainly due to the excess of company's data - KZT198 mln ($1.43 mln) over amount of income from operating activity. In turn, this is linked to attribution of some expenses (KZT240.0 mln including losses from exchange rate differential over bank credits of KZT169 mln ) and revenues (KZT42.0 mln) to income and losses from non-operating activity. Besides, large discrepancy of the data regarding income and sales volume relates to different evaluation applied to overdue amount of accounts receivables and corresponding figure for necessary provisions (table below). Amount of necessary provisions for problematic debts of DAGOK Kustanaiasbest OJSC ------------------------------------------- 1998 1999 ----------------- ----------------- KZT, mln USD, mln KZT, mln USD, mln ------- -------- -------- -------- -------- Company 20.7 0.25 47.5 0.34 Auditor 161.6 1.92 199.5 1.44 ------------------------------------------- The company and its financial consultant stated that auditor had too strictly applied methods for evaluation of overdue debts. The company and TuranAlem Securities LLP referred to common practice of the world asbestos market, where period of deferred payments could reach one year. There is another fact to be noted separately. As of the end of third quarter 2000, 67% of the authorized capital (KZT1.052 bln) consisted of additional unpaid capital or fixed assets reevaluation amount. The revaluation was conducted in late 1996 according to the legislative requirements. In the opinion of auditor, it can not reflect current market prices or price of acquisition. No independent revaluation of fixed assets had been made by the time, the data were submitted to the Listing commission. According to the data of cash flow statement and auditor conclusions for 1998 and 1999 (KPMG Janat) the company experienced difficulties related to lack of funds and had to apply for a banking credits. By results of third quarter 2001, cash flows from operating activities amounted to (-)42.5 mln tenge, from financing activity (difference between borrowed and redeemed amounts of credits) - (+) 134.5 mln tenge, that is 89.3 mln tenge in total. Thus, the company may be forced to apply for a credit trying to redeem its bonds. Company's indicators regarding cash flows. Comparison of the auditors and company's data (thousand tenge) --------------------------------------------------- As of As of As of As of Jan 01 '98 Jan 01 '99 Jan 01 '00 Oct 01 '00 ------- ---------- ---------- ---------- ---------- Net cash flows from operating activity Company 28,709 -216,019 74,458 -45,200 Auditor - 417,322 -231,037 - --------------------------------------------------- Net cash flows from financing activity Company 22,980 186,840 -65,453 134,506 Auditor - 223,713 228,696 - --------------------------------------------------- Credits* Company 405,620 553,520 1,913,648 1,336,800 Auditor - 373,431 682,973 - --------------------------------------------------- Redemption Company 175,820 366,680 1,979,101 1,202,294 Auditor 149,718 453,813 --------------------------------------------------- * - the company's management suggests that difference in ratios for 1998 and 1999 relates to short-term credits renewed during the year (credit lines), which have not been considered by the auditor. Nowadays, the accounts payable figure consists of three functioning credit lines (Bank TuranAlem OJSC, Bank CentreCredit OJSC and Temirbank OJSC, maturity - 2001-2002, interest rates - 22-24% APR) for a total of 2,895,605 US dollars and one long term credit (Halyk Bank Kazakhstan, maturity - 2003, interest rate - 18%) for a total of 2,950,000 US dollars. The financial statements suggest that DAGOK Kustanaiasbest OJSC experiences deficit of funds and is forced to borrow money. The company explained this fact by the cash gap, the difference between shipment and payment. The company borrows money in the framework of three functioning credit lines. Dynamics of receivable and payables of DAGOK Kustanaiasbest OJSC ---------------------------------------------------------------- 1997 1998 1999 2000 2001 ---------------------------------- ----- ----- ----- ----- ----- Accounts receivable - goods shipment balance at the beginning of a year 185 398 1,967 1,325 1,606 goods shipped 1,941 1,639 2,243 2,762 goods paid off 1,728 70 2,885 2,481 changes during a year 213 1,569 -643 281 ---------------------------------- ----- ----- ----- ----- ----- Acocunts payable - operating activity balance at the beginning of a year (accounts and bills payable) 286 675 1,574 1,662 1,430 goods shipped 2,084 2,971 3,686 2,712 goods paid off 1,694 2,073 3,598 2,945 changes during a year 390 899 88 -232 ---------------------------------------------------------------- Analysis of the information issuer has submitted to KASE and preliminary data of economic activity in 2000 suggest that the company has achieved substantial positive results during last two years. Following facts reflect this success: - company's activity become profitable, at that major source of profits (68% in 1999, 82% in 2000) is operating activity; - volume of sales double for last two years; - growth in payables was stopped, payments for shipped goods equaled to actual shipment; - accounts receivable decreased - redemption sums exceeded sum of granted credits; - working capital grew up from (-) 662 mln tenge in late 1998 to KZT766 mln tenge as of the end of third quarter 2000.