Auditor's report on financial statement of KAZZINC JSC (Kazakhstan) for year 2004

/IRBIS, Galina Tsalyuk, July 14, 05/ - KAZZINC JSC (Ust-Kamenogorsk, hereinafter - company), whose common shares are circulating in the official "A" listing category of Kazakhstan stock exchange (KASE), has presented to KASE auditor's report made by Deloitte & Touche (Almaty) on the bank's consolidated financial statement for 2004, which was prepared in compliance with international accounting of financial statement (ISFS). Result of the company's financial and economic activity as on December 31 2003-2004 is as follows, in accordance with audited statement (th. KZT, unless otherwise specified): -------------------------------------------------------- As of As of Indicator Dec 31, 03 Dec 31, 04 -------------------------------- ---------- ---------- Authorized capital (paid) 39,485,850 35,592,570 Number of shares in circulation 20,643,659 20,643,659 Shareholders' equity 52,696,546 66,777,880 Total assets (net) 90,352,532 96,954,130 Net working capital -259,451 12,711,790 Accounts receivable (net) 15,757,911 21,799,050 Liabilities, total 37,619,210 30,127,500 Borrowed loans 17,831,505 12,774,450 Liabilities on financial rent 1,582,238 1,404,000 Accounts payable 7,780,380 6,383,260 Formed reserves 10,316,201 9,565,790 Volume of sales 66,791,314 97,266,090 Prime cost of sales 36,727,398 50,120,548 Net income (loss) 8,786,757 20,444,098 -------------------------------- ---------- ---------- Calculated by audited statement: -------------------------------- ---------- ---------- Return on sales (ROS), % 45.01 48.47 Return on equity (ROE), % 16.67 30.62 Return on assets (ROA), % 9.72 21.09 Earnings per 1 share (EPS), KZT 425.64 990.33 Price earnings ratio (P/E) - 1.06 Balance cost of 1 share, KZT 2,552.67 3,234.79 -------------------------------------------------------- Audit of the company's consolidated financial statement for 2003-2004 was conducted by Deloitte & Touche in compliance with international auditing standards. Company's consolidated financial statement, which was made according Kazakhstan accounting standards, was properly corrected for compliance with ISFS requirements. According to audit report considerable part of incomes, purchases, trade accounts receivable and payable and company's loans are expressed in US dollars, in this connection the company decided to use US dollar as currency of the report. For comparison the company also represented its consolidated statement in tenge. Articles of the balance were converted in tenge by market rate as on December 31 of the above years, incomes and expenses - by average rate for the period, when operations were made. All rate differences, occurring in the result of conversion, are reflected directly on the accounts on shareholders' equity. Consolidated financial statement for 2004 includes company's financial statement and the following subsidiary organizations: Shaimerden JSC (exploration and mining of mineral raw material, the company owns 100% shares), Prominvest CJSC (consulting services, 100%), Kazzink-Mash LLP (mechanical engineering and production of spare parts, 100% stake of the company's participation in authorized capital), Kazzink-Trans LLP (freight transportation, 100%), Kazzink-Shakhtostroy LLP (designing, construction and assemblage of mining production, underground and lifting constructions, 100%), Kazzink-Granit LLP (production of construction materials and constructions from natural stone, 100%), Green House-Zelenyi Dom LLP (growing, sale and processing of agricultural products, 100%), Kazzink- Remservice LLP (repair services, connection, servicing of equipment, 100%), Shubinskoye LLP (exploration and mining of mineral raw material, 100%), Kazzink-Tech LLP (previously - Pilot leaden plant JSC, development works, production of non-ferrous metals, scientific-research works, 99.5%), Kazzink-Aina LLP (organization of cultural-sanitary rest, 56.4%). In the opinion of Deloitte & Touche, consolidated financial statement in all essential aspects for sure reflects Group's (company's and its subsidiary organizations') financial position as on December 31, 2004, consolidated results of its financial economic activity, and its cash flow for the year, ended by the mentioned date, in compliance with ISFS. Company's primary activities - exploration and prospecting works, extraction and processing of non-ferrous ores, rare and precious metals, production of non-ferrous metal concentrates, including products containing precious metals, production of non-ferrous, rare and precious metals and their alloys, production of electrical and heat energy, other types of energy resources, sale of electrical power, non-ferrous, rare and precious metals, their alloys and non-ferrous metals concentrates, including precious at domestic and foreign markets, production of consumer goods, commercial, intermediary and foreign economic activity, wholesale and retail trade. [2004-07-14]