ANNUAL REPORT 2012 moving forward
Annual report 2012 Time can be measured, but it cannot be stopped. By sweeping mankind along with the uncontrollable flow time dictates its own ifs and buts forcing people to reject the generally accepted stereotypes and thoroughly search for new development patterns, apply innovative approach- es, design cutting-edge technologies. Evolvement has its definite laws: staying where you are typically means miss- ing real opportunities. Only constant movement, while overcoming time and distance, is the soundest way to for- tify the conquered positions and hit the targets. The entire history of TAIF-NK Public Stock Company is the continuous and steady progression to new objectives, fresh achievements and new reaches of success. Contents Annual report TAIF-NK PSC 2012
Contents
General Director’s message 6
Chapter 1. about company 8 Chapter 5. Corporate management 50
1.1. Background 10 5.1. Share capital and dividends 52 1.2. Refining sector and Company’s Standing in Refining Sector 11 5.2. Corporate management and control bodies 52 1.3. The Company’s business priorities 18 5.3. Major undertaken transactions 1.4. Main events of the year 19 (major undertaken transactions and interested party transactions) 57 5.4. Information on subsidiaries and affiliates 58 5.5. Information on compliance with the Corporate Code of Conduct recommendations 59 4 Chapter 2. on the development in terms 5 of its priority lines of business 22 Chapter 6. Key risk factors 60
2.1. Production operation 24 6.1. Industry related risks 62 2.2. Review of the marketing activities results 27 6.2. Country and regional risks 64 2.3. Main economic and financial indicators of the Company 32 6.3. Financial risks 64 6.4. Legal risks 65 Chapter 3. Development prospects 36 Chapter 7. Financial statements 66
Chapter 4. Corporate and social responsibility 40 Contact details 72 4.1. Quality, ecology, industrial and occupational safety 42 4.2. Personnel 45 4.3. Social policy 47 4.4. Charity 48 4.5. Tax payments 49 General DirectorAbout’s companymessage Annual report TAIF-NK PSC 2012
In the reporting year the Company kept on implement- whole assortment of goods produced by TAIF-NK PSC will ing its strategic initiatives which were aimed at the develop- possess the enhanced environmental characteristics, includ- ment and extension of the oil refining production, strength- ing lower sulphur content in aromatic and highly volatile ening the Company`s position in the field, increase the assets hydrocarbons. capitalization. Within the frame of the aforesaid project as of the end of The Company maintained its focus on modernization of 2012 the contracts for basic engineering and license on hy- the existing process units – that is CDU/VDU-7 and Middle droconversion technology VEBA COMBI CRACKING (VCC) and Distillates Hydrotreating Complex of refinery, FCC unit of gas- license equipment delivery were concluded with the compa- oline plant – in order to increase the efficiency of production ny Kellogg Brown and Root (USA). The company Toyo Engi- activity, to implement the resource and energy saving, envi- neering (Japan) was adopted as the designer and vendor of ronmentally-friendly technologies along with prevention, the equipment for VCC unit. systematic decrease and avoidance of negative effect of pro- cess facilities on environment. There is plenty of work to be done ahead, but I have no doubt that the TAIF-NK PSC team will do its best for the suc- In the reporting year the Company completely made a cessful realization of the Company`s long-term strategy. switchover to the diesel fuel output of EURO-5 standard, in advance fulfilled the requirements of technical regulation I express my appreciation to TAIF-NK PSC personnel «On requirements to motor and aviation gasoline, diesel and for the complete professionalism and conscientious work. marine fuels, jet fuels and fuel oil». I would like to express gratitude to the shareholders for their 6 7 trust and support. I am sure that the year of 2013 will be the 28 filling stations are put into operation under the brand year of the Company`s new success – a milestone of the name of TAIF-NK PSC, 13 stations of which are served by the Company`s dynamic development and enhance of produc- Company directly. The total oil products sales through the fill- tion efficiency, increase in its share stock and growth of in- ing stations served by TAIF-NK PSC equaled to 46,6 thous tons vestment attractiveness. For this purpose TAIF-NK PSC pos- with the increase of 22% if compared with the previous year. sesses all things – the teams of experts, high technologies, the image of a trustworthy business partner, and the most Beyond any doubt the Company`s most major, capital- important thing is that we have a strong wish to work and intensive and strategically significant project is the construc- achieve better results! tion of Heavy Residue Conversion Complex (HRCC), the main objective of which is the exclusion of highly sulphur fuel oil output through the increase of higher margin light products meeting the world and European quality specifications along Dear Shareholders, In the reporting year the Company’s plants processed with the refining depth increase to not less than 95%. The Colleagues and Business Partners! 8,384 thous tons of crude oil. Average utilization of the refi- aforesaid project implementation makes it possible to create ning capacity equaled to 100.48%. Overall petroleum pro- more than 700 new highly paid work places, to increase the I bring herewith to your attention TAIF-NK Annual Report duct output amounted to 8,132 thous tons, the Company’s budgets revenue of all levels that will result in living stan- that summarizes the results of the Company’s activities over proceeds from sales of products, works and services amoun- dards improvement of the population of Nizhnekamsk city the year 2012. ted to over RUB 128 bln; about RUB 43 bln was directed to the and Nizhnekamsk district along with the economic prosperi- budgets of different levels. The net income equaled to RUB ty of the Republic of Tatarstan and the Russian Federation. A. K. Kalimullin I am happy to note that the year 2012 was profitable and 10,8 bln. Net assets made up RUB 36,4 bln showing a 22,2% The mentioned above complex implementation will improve TAIF-NK PSC constructive to TAIF-NK. increase at 2012 year-end. the ecological situation in the region significantly as the General Director about company
The greatest thing in this world is not so much where we are, but in what direction we are moving
Chapter 1 About company Annual report TAIF-NK PSC 2012
about company • high-octane motor gasoline components MTBE and TAME production units with capacity of 24.8 and 152.8 Nearly all main process facilities thous tons by product respectively were put into opera- of TAIF-NK PSC were either constructed tion in 2009; or revamped through the latest 10 years • commercial gasoline compounding with capacity of 600 thous tons by product. and Atomic Supervision and Federal Agency on Technical 1.1. Background • hazardous cargo handling operations for railway trans- portation. As can be seen from the above nearly all main process Regulating and Metrology pursuant to which the refineries facilities of TAIF-NK PSC were either constructed or revamped should provide the sufficient production and supply of the TAIF-NK PSC consists of two large production comple- through the latest 10 years. The intensive development and qualitative oil products to the domestic market meeting the TAIF-NK Public Stock Company was registered on July, xes – refinery and gasoline plant. appliance of modern foreign and national technologies in the requirements of the technical regulation «On requirements 29th, 1998 (State Registration Certificate of legal entity enterprise’s construction and revamping allowed the Com- to motor and aviation gasoline, diesel and marine fuels, jet pany to take a 6th place among the oil refineries of Russia in fuels and fuel oil». The Russian Federation governmental No. 1018/к, issued by State Registration Chamber of the Refinery comprises the following units: feed processing depth. policy aimed to the sector development is also supported by Ministry of Justice of the Republic of Tatarstan, the previous • CDU/VDU-7 – primary oil distillation unit with capacity the existing calculation system of the crude and oil products Company`s full name: TAIF-NK CJSC). of 7.344 thous tons/year by feedstock was constructed export taxes «60-66», introduction of the protective duty in 1979 and revamped in 2003 and within the period of for motor gasolines export at the rate of 90% of the crude The Company exists under the Civil Code of the Russian 2008–2012; 1.2. Refining sector and Company’s standing duty and increase of excise taxes for the low-grade motor Federation, the Federal Law on Joint-Stock Companies, other • Visbreaking unit with capacity of 1.800 thous tons/year regulatory legal acts of the Russian Federation and the Char- in refining sector fuels along with the introduction of decreasing coefficient by feedstock was built in 2003; for high-grade fuels. 10 ter of TAIF-NK PSC. 11 • Middle Distillates Hydrotreating Complex was put into operation in 2002, and it comprises the following units: TAIF-NK`s key activities are the following: As reported by Ministry of Energy of the Russian Fede- – hydrogen generation unit with capacity of 16.39 thous Crude oil is the base component of economies of many ration in 2012 the oil companies invested about RUB 190 bln • oil refining, oil products and their derivatives sales; tons/year by product; countries, particularly, the economy of Russia that disposes of to the refineries modernization, and in 2013 the investments • building and operation of petrochemical industrial pro- – kerosene hydrotreating unit with capacity of 610 thous the sizeable hydrocarbon reserves along with the fuel-and- for the given goals can be increased almost twice and will be ductions. tons/year by product; energy complex. equaled to more than RUB 350 bln.*
The Company carries out its activities for hydrocarbon – diesel fuel hydrotreating unit with capacity of 2.015 In the reporting year Russia was the world-wide leader TAIF-NK PSC is one of the leading oil products market crude processing and oil products sales in accordance with thous tons/year by feedstock was revamped within by hydrocarbon resources upstream: in Russia the growth of players of Russia and the Republic of Tatarstan. In 2012 the the licenses (authorizations) for implementation of the fol- the period 2011–2012; crude-oil with gas condensate output equaled to 1,3% – up Company`s share in the total oil-feed processing amounted lowing activities: – sulphur recovery unit with capacity of 35.14 thous to 518 mln tons in comparison with 2011. In 2012 oil exports to 3,1% in the Russian Federation and 53,7% in the Republic tons/year by product; • operation of chemically hazardous production facilities, from the Russian Federation amounted to 239 mln tons being of Tatarstan. • unit for production of road bitumen with capacity of • operation of fire and explosion hazardous production shortened to 1% in comparison with the year of 2011. In 2012 102 thous tons/year by feedstock (BND 60/90) was put facilities, the feed processing on the Russian refineries increased to 4% In this case the Company produces 100% of jet fuel, into operation in 2007. • hazardous wastes collection, utilization, detoxification, if compared with the previous year and amounted to more 95,7% of diesel fuels, 87,8% of motor gasolines, 54,5% of transportation and handling (storage), than 268 mln tons of crude-oil and gas condensate. straight-run gasoline and 50,5% of fuel oil out of the total Gasoline plant comprises the following units: volume of oil products yielded in the Republic of Tatarstan. • operation of hydraulic engineering structures, • Fluid catalytic cracking unit with capacity of 1000 thous In 2012 the key factor affecting the refining industry of tons/year by feedstock was put into operation in 2006; Russia was the revamping of the Russian refineries accord- One of the more marketable Company`s products are TAIF-NK PSC consists of two large production • gas condensate primary distillation unit with capacity ing to the quadripartite agreements concluded in 2011 with the motor gasolines of EURO-4 environmental standard. complexes – refinery and gasoline plant of 1000 thous tons/year by feedstock was put into op- the State representing by the Federal Antimonopoly Service * E- magazine «Neftegazovaya Vertical» eration in 2006; of Russia, Russian Federal Service for Ecological, Technical (http://www.ngv.ru/news/oborot_topliva_klassa_evro_2_zapreshchen_v_rossii_s_1_yanvarya/) About company Annual report TAIF-NK PSC 2012
Dinamics of gasolines consumption in the Republic of Tatarstan TAIF-NK`s share in the total volume of diesel fuel ex- in comparison with Privolzhsky Federal District and the Russian Federation (l/man) ported from Russia equals to about 2,8%. The Company ex- In the reporting year the Company ported about 55% of the total sales of the aforesaid product. completely made a switchover 307.1 307.1 327.5 305.2 315.2 327.2 313.8 305.9 339.4 to the diesel fuel output (summer and winter Sales of TAIF-NK`s products is done through: type) of EURO-5 standard, in advance fulfilled • direct sales; the requirements of technical regulation • stock exchange (ZAO Saint-Petersburg International «On requirements to motor and aviation Mercantile Exchange); gasoline, diesel and marine fuels, • electronic trade platform OnlineContract; jet fuels and fuel oil» • home network of filling stations.
Privolzhsky Federal District in which territory the Com- Bashneft, ОАО Rosneft, ОАО Gazprom neft, ОАО TNK-BP Hold- pany performs its production operation is characterized by ing, ОАО Surgutneftegas, ОАО NK LUKOIL, ОАО Tatneft named the high concentration of refining capacities along with the after Shashin V. D. and their subsidiaries and affiliates in the best technical-and-economic indexes in the Russian Federa- different market segments. tion that leads to the high competition in the region. The principal competitors of TAIF-NK PSC on the oil 2010 2011 2012 The principal competitors of TAIF-NK PSC when deliv- products retail market in the Republic of Tatarstan are ОАО Russian Federation Privolzhsky Federal District Republic of Tatarstan ered oil products to the domestic and foreign markets are the Tatneft named after Shashin V. D., ОАО HK Tatnefteproduct, 12 Russian vertically-integrated oil companies such as: ОАО ANK ОАО ANK «Bashneft, ОАО NK LUKOIL. 13 Source: InfoTEK magazine
In 2012 motor gasolines consumption in the Republic of Ta- of the declaration and certificates for the following assort- tarstan equaled to 339.4 l/man and 54.5 tons/1 km of road ment:
that is above the average indexes of Privolzhsky Federal Dis- • diesel fuel EURO-5 grades А,В,С,D,E; trict and Russia. • unleaded motor gasoline grade Regular-92 EURO-4;
• unleaded motor gasoline grade Premium Euro-95 In the reporting year the Company completely made a EURO-4; switchover to the diesel fuel output (summer and winter type) of EURO-5 standard, in advance fulfilled the requirements of • jet fuel grade RТ; technical regulation «On requirements to motor and avia- • aviation gas turbine fuel grade JET А-1; tion gasoline, diesel and marine fuels, jet fuels and fuel oil». • fuel oil М-100; • low-viscosity marine fuel. The confirmation of TAIF-NK`s products compliance with the technical regulation requirements is the availability The petrochemical complex OAO Nizhnekamskneft- echim of the Republic of Tatarstan is the consumer of all straight-run gasoline volume produced by the Company.
TAIF-NK PSC takes a 6th place among the oil The essential part of fuel oil produced by TAIF-NK PSC refineries of Russia in feed processing depth is exported, amounting more than 3% of the total volume of Russian export supply of the product. About company Annual report TAIF-NK PSC 2012
Key performance indicators of Russian main refineries Key performance indicators of Russian main refineries in 2012 in 2012
CDU CDU Refining Depth, Crude Intake, Refining Depth, Crude Intake, No. Refinery Utilization Ratio, No. Refinery Utilization Ratio, % thous tons % thous tons % %
1. Ufaneftekhim* 90.6 8,619.5 90.73 18. Nizhegorodnefteorgsintez* 63.6 16,053.0 94.43 2. Omsk Refinery 88.5 20,947.0 104.70 19. Khabarovsk Refinery 63.4 3,922.1 90.16 3. volgogradneftepererabotka 87.6 11,360.7 104.23 20. Komsomolsk Refinery 61.9 7,483.7 93.55 4. Novo-Ufimsky Refinery* 86.9 6,704.9 94.76 21. Achinsk Refinery 59.9 7,445.3 100.61 5. Permnefteorgsintez* 82.5 13,121.9 100.39 22. Ukhtaneftepererabotka 57.8 3,731.4 100.50 14 6. TAIF-NK* 75.0 8,383.7 100.48 23. Kuibyshev Refinery* 56.4 6,679.6 95.46 15 7. gazprom neftekhim Salavat* 73.8 6,747.3 101.82 24. Kirishinefteorgsintez 56.3 20,537.4 97.75 8. Angarsk Petrochemical Company 72.9 10,050.0 98.67 25. Krasnodareconeft 55.9 2,537.2 103.56 9. Novokuibyshev Refinery* 71.3 7,771.5 81.33 26. Afipsky Oil Refinery 55.4 4,819.8 131.69 10. TANECO* 71.3 7,018.6 100.27 27. Tuapse Refinery 55.0 4,553.9 56.46
11. Ufimsky Refinery* 70.8 5,449.1 57.00 Total for Russian Federation 71.2 268,213.9 96.17 12. Saratov Refinery* 69.8 6,888.9 105.98 TAIF-NK PSC share, % 3.1
13. Syzran Refinery* 68.1 6,654.7 74.88 total for Privolzhsky Federal District 107,506.7 14. moscow Refinery 67.4 10,618.2 87.39 TAIF-NK PSC share, % 7.8
15. Orsknefteorgsintez* 65.6 5,816.7 121.18 total for Republic of Tatarstan 15,613.9 16. Ryazan Refinery 64.9 16,315.4 108.05 TAIF-NK PSC share, % 53.7 17. yaroslavnefteorgsintez 63.7 15,277.8 101.51 * Making part of Privolzhsky Federal District (PFD) Sources: InfoTEK magazine, proprietary information About company Annual report TAIF-NK PSC 2012
Basic oil products output in the Russian Federation (thous tons)
Motor gasoline Diesel fuel Fuel oil Straight-run gasoline No. Company/Refinery 2010 2011 2012 2010 2011 2012 2010 2011 2012 2010 2011 2012 1. Angarsk Petrochemical Company 1,398.3 1,336.9 1,343.2 2,841.3 2,895.1 2,575.1 2,095.0 2,257.9 2,442.6 531.2 289.4 266.2 2. Afipsky Oil Refinery 0.0 0.0 0.0 1,010.5 1,305.9 1,789.6 1,603.1 1,846.9 2,135.6 584.7 681.1 818.3 3. Achinsk RefineryV NK 1,240.6 1,034.7 1,026.7 2,470.2 2,454.7 2,197.0 2,749.6 2,769.1 2 ,827.2 338.7 609.6 521.2 4. Volgogradneftepererabotka 1,437.4 1,490.4 1,696.9 3,125.5 3,077.3 3,162.5 1,777.2 1,505.5 1,196.2 311.7 235.6 323.2 5. Gazprom neftekhim Salavat* 643.2 676.8 878.1 2,079.6 2,131.1 2,093.5 1,685.9 1,570.7 1,604.1 629.7 593.1 423.4 6. Kirishinefteorgsintez 2,387.8 2,292.8 2,203.1 5,129.2 5,095.1 5,145.5 7,159.4 7,342.6 8,189.4 0.0 0.0 0.0 7. Komsomolsk Refinery 485.9 405.3 414.3 2,114.1 2,128.4 2,069.2 3,046.2 2,984.4 2 ,807.7 1,026.8 1,095.7 992.3 8. Krasnodareconeft 0.0 0.0 0.0 822.6 790.3 627.6 1,113.3 1,153.1 1,107.9 461.6 450.2 447.7 9. Kuibyshev Refinery* 1,014.3 961.0 938.5 2,148.0 2,327.4 2,328.7 2,816.2 2,612.6 2,604.3 149.6 221.9 263.9 10. Moscow Refinery 2,237.5 2,367.9 2,234.1 2,729.9 2,676.5 2,507.0 2,589.6 2,836.9 3,285.3 224.3 284.3 316.0 11. Nizhegorodnefteorgsintez* 2,147.6 3,065.8 3,072.8 3,841.3 4,161.0 4,225.0 6,062.0 6,158.1 5,654.7 0.0 0.0 0.0 12. Novokuibyshev Refinery* 929.6 906.2 875.6 1,950.5 2,090.9 2,100.6 2,710.1 2,320.6 2,061.0 197.5 303.5 371.7 13. Novo-Ufimsky Refinery* 1,362.5 1,740.8 1,645.0 2,331.0 1,942.4 1,919.9 876.3 797.2 800.5 301.3 235.8 70.2 14. Omsk Refinery 3,581.7 4,095.2 4,687.1 6,040.4 6,125.3 5,719.2 3,048.2 3,036.8 2,197.4 0.0 0.0 0.0 16 17 15. Orsknefteorgsintez* 752.4 742.6 917.8 1,450.9 1,486.8 1,676.1 1,935.3 1,945.3 1,925.4 0.0 0.0 0.0 16. Permnefteorgsintez* 1,854.1 1,585.3 1,758.5 3,925.7 3,882.9 3,893.7 2,058.7 2,226.5 2,105.5 191.0 0.0 0.0 17. Ryazan Refinery 2,915.1 3,024.8 3,138.7 4,128.9 4,241.8 3,898.0 5,085.0 5,759.0 5,516.4 0.0 695.6 98.6 18. Saratov Refinery* 870.8 854.0 1,004.5 1,886.0 1,502.7 1,568.8 1,976.6 1,713.0 1,989.5 0.0 0.0 0.0 19. Syzran Refinery* 993.1 1,008.8 1,059.0 2,081.3 2,142.2 1,926.0 2,139.4 2,193.9 2,013.2 237.0 176.1 154.7 20. TAIF-NK* 548.8 583.2 587.0 1,926.1 1,913.4 1,916.0 2,053.7 1,987.1 2,014.4 1,150.3 1,207.1 1,173.7 21. TANECO* 0.0 0.0 0.0 0.0 1,043.0 1,976.8 61.0 980.6 22. Tuapse Refinery 232.4 0.0 0.0 1,431.7 1,432.2 1,437.1 2,066.9 2,069.2 2,017.3 640.1 908.3 954.1 23. Ufaneftekhim* 1,684.6 1,605.1 1,718.9 3,226.1 3,293.7 3,500.7 362.7 609.8 726.4 0.0 0.0 0.0 24. Ufimsky Refinery* 1,710.3 1,194.1 1,267.6 2,107.7 2,177.4 1,812.0 1,563.3 1,430.8 1,476.8 598.7 583.1 425.7 25. Ukhtaneftepererabotka 432.3 469.5 369.2 1,064.2 1,186.2 989.0 1,162.6 1,509.4 1,560.6 60.0 64.4 101.1 26. Khabarovsk Refinery 369.1 386.9 418.7 419.7 408.2 266.4 1,130.7 1,257.2 1,354.4 258.0 296.0 218.8 27. Yaroslavnefteorgsintez 2,302.4 2,352.3 2,430.6 4,299.4 4,041.6 4,030.7 4,743.2 4,909.7 5,128.4 512.1 43.5 0.0 Total for Republic of Tatarstan 623.0 650.0 668.5 2,021.8 2,000.7 2,002.9 2,053.7 3,030.1 3,988.3 1,150.3 1,268.1 2,154.3 TAIF-NK PSC share, % 88.1 89.7 87.8 95.3 95.6 95.7 100.0 65.6 50.5 100.0 95.2 54.5 Total for Privolzhsky Federal District 14,585.5 14,990.5 15,804.8 29,076.5 29,168.9 29,120.3 26,492.2 26,914.3 27,289.6 3,595.9 3,525.6 4,012.4 TAIF-NK PSC share, % 3.8 3.9 3.7 6.6 6.6 6.6 7.8 7.4 7.4 32.0 34.2 29.3 Total for Russian Federation 36,013.8 36,754.3 38,353.7 69,914.0 70,207.3 69,417.0 69,518.8 72,900.2 74,285.2 11,133.2 11,833.0 11,706.2 TAIF-NK PSC share, % 1.5 1.6 1.5 2.8 2.7 2.8 3.0 2.7 2.7 10.3 10.2 10.0
* Making part of Privolzhsky Federal District (PFD) Sources: InfoTEK magazine, proprietary information About company Annual report TAIF-NK PSC 2012
1.3. The Company’s business priorities 1.4. Main events of the year • The CDU/VDU-7 revamping project involves fulfillment TAIF-NK PSC and Engineering Company of updated industrial safety rules, implementation of Kellogg Brown and Root (USA) signed the automated process control system, enhancement the contract for Basic Engineering Package The main TAIF-NK’s business priorities are the devel- February of the column equipment operational efficiency, reduc- for the main HRCC Unit – Vacuum Residue opment of the crude oil refining capacities with the aim to tion of energy consumption through installation of ad- Hydroconversion Unit based on proprietary TAIF-NK PSC and Engineering Company Kellogg Brown attain to a greater refining depth, production of high perfor- ditional heat exchangers and revamping the heaters to process of VEBA COMBI CRACKING mance and competitive oil products conforming to the world increase in efficiency factor, as well as increase in heat- and Root (USA) signed the contract for Basic Engineering environmental standards, as well as intermediate products ers capacities up to 7.3 MTPA for feedstock. The project Package for the main HRCC Unit – Vacuum Residue Hydro- production in order to be in great demand in the chemical is currently being on its completion stage. conversion Unit based on proprietary process of VEBA COMBI and petrochemical industries of the Republic of Tatarstan. CRACKING. with TAIF-NK’s industrial facilities and the way of TAIF-NK’s TAIF-NK implements the construction of Heavy Residue Con- • Middle Distillates Hydrotreating Complex revamping TAIF-NK PSC successfully passed out compliance audit of Middle Distillates Hydrotreating Complex (Section 300) re- version Complex Project in order to fulfill the specified tasks project involves Gas Oil Hydrotreating Unit capacity in- the integrated management system for compliance with the vamping. the completion of which will permit TAIF-NK to be more mod- creasing by 2.3 MTPA for feedstock with zero heating requirements of three international standards, in particular, ern Refinery in Russia and to achieve greater refining depth oil production and Hydrogen Plant capacity increasing ISO 9001:2008 Quality Management System, ISO 14001:2004 TAIF-NK PSC was awarded with the Diploma of «Health, targeted to be no less than 95% for crude oil, to increase in by 4 KTPA for product and increasing elemental sulphur Environmental Management Systems, OHSAS 18001:2007 Safety and Environment – 2011» in the nomination of «High profit and significantly increase in the value of tax payments production by 50 KTPA. Occupational Health and Safety Management System. level of Health, Safety and Environment, implementation of into the budgets of all levels. unique for the region innovative projects and information • FCCU revamping project with increasing the unit’s ca- transparency». The program implementation of the filling stations pacity by 1.1 MTPA for feedstock includes FCCU switch- March 18 19 home network strengths the Company’s competitive posi- ing to process hydrotreated feedstock and increasing The first stage of Section 300 revamping and installa- tions. According to the program it is planned to construct and the capacity up to 1.1 MTPA for feedstock. TAIF-NK PSC Refinery laboratory was pronounced the tion of process equipment was finished at TAIF-NK’s Middle purchase gas filling stations for retail sale of motor gasoline winner of the competition «For the best achievements in Distillates Hydrotreating Complex. and in-house diesel fuels in order to meet population and en- testing (measuring) in 2011» in nomination of «Refinery Oil terprises demands of high quality motor fuels. products tests». May The Company implements the measures of revamping Labor collective conference took place in TAIF-NK PSC. and re-equipment of the operating facilities in order to im- A Collective Bargaining Agreement for 2011 was summarized According to Decree of the Government of the Russian prove production efficiency and implementation of environ- and the new one was approved for 2012. Federation № 485 dated May 16, 2012 TAIF-NK was awarded mentally friendly, resource and energy saving technologies as with a prize of Russian Federation Government regarding to well as to reduce negative impact of operating facilities on TAIF-NK PSC entered into agreement with Design In- product quality at the year – end 2011. the environment: stitute SoyuzKhimPromProject for general engineering of Heavy Residue Conversion Complex. TAIF-NK PSC annual general meeting approved annual report for 2011 as well as annual financial statements for TAIF-NK PSC received the new pattern of certificate 2011. Net profit received at year-end 2011 was distributed The main TAIF-NK’s business priorities «Crude oil processing and oil products production including and Board of Directors and Auditing committee of the Com- are the development of the crude oil refining production, storage and unloading of Aviation Fuels». pany was elected. capacities with the aim to attain to a greater refining depth, production of high performance April June and competitive oil products conforming to the world environmental standards Mr. Shatalov – Deputy Minister of Finance of the TAIF-NK PSC started to produce (100%) Diesel Fuel Russian Federation visited the Company. He acquainted summer type of EURO-5 environmental standard. About company Annual report TAIF-NK PSC 2012
and companies at the annually competition «ECOleader» November prepared by Ministry of environment & mineral resources of In June R. Minnikhanov, President of Tatarstan According to Decree of the Government Tatarstan Republic. TAIF-NK PSC became a prize winner in competition of Republic, participated in the Ceremony of the Russian Federation № 485 «100 Best Goods of Russia 2012» and «Best Products and dedicated to starting commercial operation dated May 16, 2012 TAIF-NK was awarded By the results of International Exhibition «Oil, Gas, services of the Republic of Tatarstan 2012». The following oil of Diesel Fuel of EURO-5 environmental standard with a prize of Russian Federation Petrochemistry-2012» TAIF-NK PSC was awarded with the products became prize winners on Tatarstan level: Unleaded Government regarding to product quality 1st Grade Diploma in nomination of «Products with new or Motor Gasoline Premium Euro-95, Road Construction Petro- improved properties» for development and implementation leum Bitumen BND 60/90, Diesel Fuel EURO Class, Jet Fuel RT R. Minnikhanov, President of Tatarstan Republic, of Diesel Fuel Euro-5 as well as received a Diploma in nomi- grade. Road Petroleum Bitumen BND 60/90 became a prize participated in the Ceremony dedicated to starting com- nation of «Implementation of environmentally friendly tech- winner on Federal level. December mercial operation of Diesel Fuel of EURO-5 environmental nologies to produce Euro-5 Diesel Fuels» given by Union of Oil standard. and Gas Producers of Russia. TAIF-NK PSC and Kellogg Brown and Root (USA) entered TAIF-NK PSC and Toyo Engineering (Japan) signed the into Agreement to supply Proprietary Equipment for VEBA second Long Lead Equipment Procurement Contract for VEBA TAIF-NK PSC received the certificate for road petroleum COMBI CRACKING. COMBI CRACKING unit of Heavy Residue Conversion Complex. bitumen BND 60/90 production. This certificate was received October in the system of facultative certification regarding to public R. Minnikhanov, President of Tatarstan Republic, par- Toyo Engineering is selected as Detailed Engineering road system «AVTODORCERT». TAIF-NK PSC acquired a license for Ultra Low Sulphur ticipated in Groundbreaking Ceremony dedicated to com- Contractor and equipment supplier (ЕР Contractor) for VEBA Diesel Fuel production from Shell Research Limited (Great mencement of the Heavy Residual Conversion Complex COMBI CRACKING unit. Britain). construction based on unique technology of VEBA COMBI July CRACKING. Participants of ceremony put into the founda- License Agreement and Basic Engineering Design 20 21 The Russian Federation Government prize distribution tion the Capsule with a Commemorative Message for Gene- Contract were concluded with AXENS (France) to revamp FCC TAIF-NK PSC received certificate of conformance of for high oil product quality occurred in the House of Govern- rations. Hydrotreating Section of Gasoline Plant with implementation Euro-5 Diesel Fuel for moderate climate. ment of the Russian Federation on October 25, 2012. Dmi- of selective hydrogenation process. try Medvedev – Chairman of the Government of the Russian Federation gave over awards. Mr. Kalimullin – General Direc- August tor of TAIF-NK received a prize and RF Government Laureate diploma. Mr. Novak, Minister of Energy of the Russian Federation visited the Company. He was shown the newest Euro5 Die- TAIF-NK PSC and Toyo Engineering (Japan) signed sel Fuel Plant and the scheme of Heavy Residue Conversion a Long Lead Equipment Procurement Contract for VEBA Complex. COMBI CRACKING unit of Heavy Residue Conversion Com- plex.
September
TAIF-NK PSC and Shell Global Solution International BV (the Netherlands) entered into agreement for Feasibility In November R. Minnikhanov, Study development in order to revamp ULS Diesel Fuel Pro- President of Tatarstan Republic, participated duction Plant. in Groundbreaking Ceremony dedicated to commencement of the Heavy Residual TAIF-NK PSC became a winner in nomination of «Ef- Conversion Complex construction fective ecological program» among all-Russian enterprises ON THE DEVELOPMENT IN TERMS OF ITS PRIORITY LINES OF BUSINESS
The only way to achieve stable strength of life is to incessantlymove forward
Chapter 2 On the development Annual report TAIF-NK PSC 2012
On the development in terms Marketable products output in 2012 of its priority lines of business (%)
Motor Gasoline – 7.2 Heating Oil – 6.4 2.1. Production operation TAIF-NK’s refining depth was 75% in the accounting year and it considerably exceeded average industry all-Rus- sian index which was 71.2% in 2012. Straight-run gasoline and stable Vacuum Gas Oil – 8.8 During the reported year, the Company processed 8,383.7 natural gasoline – 21.0 thousand tons of crude oil, the average production capacity was The share of target products in the Company’s total out- 100.48%. put in the accounting year remained at the level of 2011 and Kerosene Fuel Oil – 24.8 amounted to 72.9%. and Aviation Kerosene – 3.7 Primary feedstock processing in 2012 (thous tons) Total volume of TAIF-NK’s marketable products was 8,132 thous tons in 2012. Diesel Fuel – 23.6 Other Oil Products – 4.5
Crude oil – 7,380.7 Total volume of Straight-run gasoline and stable natu- ral gasoline production was 1 709.7 thousand tons in 2012 24 that is 4.7 % higher than the previous year figure. 25 In the reporting year 1,916.0 thousand tons of diesel content 10 ppm max made up 49.2% in total motor fuel Total volume of kerosene and aviation kerosene pro- fuel was produced. Production of diesel fuel with sulfur output. duction increased in 2.9% in comparison with 2011 and Gas Condensate – amounted to 302.8 thousand tons. 1,003.0 Quality structure of Diesel fuel produced (%)
55.6 44.4 49.6 50.4 49.2 4.8 46.0 Feedstock processing ratio Refining depth in 2012 (thous tons) (%)
8,106.1 8,319.4 8,383.7 71.2 75.0
2010 2011 2012
Diesel fuel with sulfur content Diesel fuel with sulfur content Diesel fuel with sulfur content Average refining depth TAIF-NK`s refining depth 2 000 ppm max 10 ppm max 500 ppm max 2010 2011 2012 in the Russian Federation On the development Annual report TAIF-NK PSC 2012
Overall output of motor gasoline of grades 2.2. Review of the marketing Regular-92 and Premium EURO-95 In the reporting year 587.0 thousand tons activities results Total sales in the reporting year (thous tons) of motor gasoline was produced. made up 8,024 thousand tons In 2012 the production of motor gasoline 545.4 576.5 587.0 of oil products Premium Euro-95 was increased on 70.8% Total sales in the reporting year made up 8,024 thou- sand tons of oil products. In 2012 proceeds from products
sales made up RUB 128.6 bln. In the reporting year the major Structure of proceeds from sales of exported products In the reporting year 587.0 thousand tons of motor portion of the proceeds volume amounting to 51.4% is com- in 2012 according to delivery destinations (%) gasoline was produced that is 3.8 thousand tons more than prised with exported marketing products. the figures of 2011.F uel produced in the reporting year meets EURO-4 environment standard, at that 95.2% of the overall Geography of the exported products delivery destina- volume of produced fuel is Regular-92, the most marketable Far abroad – 83 tion is wide and includes countries near and far abroad. fuel, and 4.8% is motor gasoline Premium Euro-95. In 2012 the production of motor gasoline Premium Euro-95 was in- Nearly 86% of the total volume of proceeds from export creased on 70.8%. 2010 2011 2012 in 2012 accounted for the proceeds from sales of diesel fuel, fuel oil, vacuum gasoil and stable natural gasoline.
Near abroad – 17 Nearly 91% of the total volume of proceeds from 26 Actual utility consumption 27 in 2012 sales at the domestic market in 2012 accounts for the total proceeds from sales of straight-run gasoline, stable Unit of Amount excluding No. Description Quantity measurement VAT, (RUB mln) Structure of proceeds from sales of exported products in 2012 1. Electricity thous kW-h 295,380.0 573.9 (%) 2. Thermal energy Gkal 364,567.0 206.1 3. Natural gas thous nm3 51,383.0 175.0 Diesel Fuel – 32.0 Vacuum Gas Oil – 13.5
Stable natural gasoline – 12.7
Kerosene and Aviation Kerosene – 8.5
Heating Oil – 3.1
Fuel Oil – 27.5 Other Products – 2.7 On the development Annual report TAIF-NK PSC 2012
In 2012 the total volume of TAIF-NK PSC retail sales of Structure of proceeds from sales products at the domestic market in 2012 the oil products via gas filling stations made up 46.6 thous (%) The number of legal entities doing tons, that is 22% higher than similar indicators for the pre- their business under non-cash vious year. Such increase is the result of high-quality motor transactions using TAIF-NK PSC fuels production, balanced price policy, gas filling stations Straight-run gasoline and stable fuel cards has increased natural gasoline – 36.2 Motor Gasoline – 15.1 revamping and enlargement of customer base. by 1.3 comparing with the previous year In 2012 comparing to 2011 the volume of proceeds Heating Oil – 13.7 from TAIF-NK PSC gas filling stations increased for 25.9% and made up more than RUB 1.0 bln. Heavy gas oil – 1.8 The number of legal entities doing their business Structure of proceeds from retail sales of oil products Kerosene under non-cash transactions using TAIF-NK PSC fuel cards via own gas filling stations network in 2012 (%) and Aviation Kerosene – 1.5 has increased by 1.3 comparing with the previous year.
Fuel Oil – 1.3 Regular-92 – 78.9 TAIF-NK sells 3 types of fuel at retail; the most mar- ketable fuel type is motor gasoline of Regular-92 EURO-4 Diesel Fuel – 26.5 Other Products – 3.9 grade. Premium ЕURO-95 28 Gasoline– 5.5 29 In June, 2012 all TAIF-NK gas filling stations have begun to sell summer diesel fuel of EURO-5 environmental standard, and in December, 2012 – winter diesel fuel of EURO-5 envi- natural gasoline, diesel fuel, motor gasoline and heating Diesel Fuel – 15.6 Structure of proceeds from sales products at the domestic ronmental standard; presently all TAIF-NK gas filling stations oil. market in 2012 according to delivery destinations (%) sell the motor fuels of high class only.
Considering domestic market geography, due to capaci- ties and own gas filling station network, market of is priority The Republic destination of sales. In percentage terms part of oil products of Tatarstan– 84.5 sales in the Republic of Tatarstan in 2012 in monetary terms from the total volume of delivery to the domestic market made up 84.5%.
The Russian Federation – 15.5 In 2012 the total volume of TAIF-NK PSC retail sales of the oil products via gas filling stations made up 46.6 thous tons, that is 22% higher than similar indicators The main wholesale buyers of the oil products at the for the previous year. domestic market are OJSC Nizhnekamskneftechim, OOO Kar- sar, OAO HK Tatnefteproduct, Tatneft Group. On the development Annual report TAIF-NK PSC 2012
Geography of the gas filling stations working under taif-nk brand
Operated Gas Stations: PSC TAIF-NK ООО Karsar ООО Chulman-trans
12 Gas St-s in Kazan Staraya Yumjya
Mendeleevsk Gas st. No. 10 Isakovo KAZAN Yelabuga Shali Naberezhnye Chelny Menzelinsk P241 Nizhnekamsk Sosnovyi Bor Mamadysh Melekes Gas st. No. 11
Laishevo 30 Kamskie Polyany 31
Zainsk
Jalil Buinsk Tetushi Almetyevsk Aznakayevo
P241 Leninogorsk Bugulma On the development Annual report TAIF-NK PSC 2012
2.3. Main economic and financial Saleable product output Products sales indicators of the Company (RUB bln) (RUB bln)
93.0 125.4 130.3 93.5 124.3 128.6
Technical and economic indicators
Units No. Description 2010 2011 2012 of Measurement
1. Refining volume thous tons 8,106 8,319 8,384 2. Saleable products thous tons 7,884 8,075 8,132 2010 2011 2012 2010 2011 2012 3. Saleable products RUB bln 93.0 125.4 130.3 4. Proceeds from Sales RUB bln 93.5 124.3 128.6 5. EBITDA RUB bln 11.8 22.2 15.4 The high level of the Company production operation, Positive trend of saleable products output steady rise 6. Added value RUB bln 13.8 24.3 16.7 available resources effective management (natural, human, is kept at TAIF-NK in 2012 due to modernization programs 7. Assets RUB bln 36.5 51.2 67.4 financial, innovation and technology resources), activity di- realization, production efficiency improvement owing to 32 33 8. Net assets RUB bln 20.0 29.8 36.4 versification owing to high-efficiency projects, capitalization gained experience and scientific and technological poten- and credit rating rise enabled to achieve high results of opera- tial. Index of physical volume of production was 100.96%. 9. investment RUB bln 3.0 2.0 3.7 tional and financial activities in 2012. In 2012, TAIF-NK PSC saleable product output increased 10. Tax payments and charges RUB bln 22.6 38.1 42.8 by 3.9% as compared to the previous year and made up 11. headcount man 2,796 2,820 2,848 RUB 130.3 bln.
Feedstock refining output Investments Assets Net assets (mln tons) (RUB bln) (RUB bln) (RUB bln)
8.1 8.3 8.4 3.0 2.0 3.7 36.5 51.2 67.4 20.0 29.8 36.4
2010 2011 2012 2010 2011 2012 2010 2011 2012 2010 2011 2012 On the development Annual report TAIF-NK PSC 2012
In 2012 TAIF-NK achieved results made it possible Non-current and current assets ratio shows that current Non-current and current assets ratio to transfer into the different level budgets the amount by assets prevail within the Company assets and equal to 71% In 2012 TAIF-NK achieved results as of 31.12.2012 (%) made it possible to transfer into RUB 4.7 bln higher if compared with the year of 2011. of total assets. Current assets structure indicates a prevailing the different level budgets the amount share of high liquid current assets having a positive impact on by RUB 4.7 bln higher if compared EBITDA was RUB 15 bln characterizing a high effective- the liquidity ratio. Current assets – 71 with the year of 2011 ness of activity and reliability of TAIF-NK PSC. Values of current liquidity ratio and quick liquidity ra- In the reporting year the net assets equaled to RUB tio are defined as a ratio of current (turnover) assets amount 36.4 bln. The positive dynamics of TAIF-NK PSC net assets and high liquid current assets amount respectively to short- In 2012, the added value was RUB 16.7 bln, with growth at the stable level of the registered capital is the reflec- term liabilities amount. Values of current and quick liquid- that the maximum percentage was the production profit tion of the fact that the Company is in the constant progress and ity equaled to 1.6 and 1.23 correspondingly in 2012 indicate Non current (76%). this growth takes place generally due to the internal sources. a reasonable ratio of current assets to short-term liabilities assets – 29 amount that enables the Company to discharge its liabilities in a short time.
Financial statement indicators Current assets structure as of 31.12.2012 (%)
34 No. Indicators Standard 2012 35
1. Equity to total assets 0.4–0.6 0.54 Cash – 28 Accounts receivable – 12 2. Financial stability index 0.5–0.7 0.55
Stocks – 19
Values of equity to total assets and financial stability Values of turnover ratios indicate that upon the aver- index indicate that 50% of the Company`s assets are financed age the turnover of the Company`s total capital takes place by means of stable sources in the form of the own assets and 2 times a year, the turnover of the current assets take place Financial investments – 28 Other current assets – 13 long-term liabilities. 2.6 times a year, characterizing the effective usage of the cur- rent assets.
Capital Current liquidity and Current Assets Turnover Indicators
No. Indicators 2012 No. Indicators Standard 2012
1. Total assets turnover ratio 2.17 1. Current liquidity ratio >1.5 1.60 2. Current assets turnover ratio 2.57 2. Quick liquidity ratio >1.0 1.23 development prospects
The principle of anyprogress is to reach the absolute limit and take one more small step further
Chapter 3 Development prospects Annual report TAIF-NK PSC 2012
Development prospects TAIF-NK PSC Simplified flow diagram after HRCC project implementation
The most large-scale, capital intensive and strategically TAIF-NK PSC HRCC construction has a budget and social Vacuum Residue significant project of TAIF-NK PSC is the Heavy Residue Con- significance. It is planned to create more than seven hundred version Complex construction (HRCC). new highly paid work places, and attract up to five thousand Propan-Butane workers for the period of HRCC construction, it will enable to Fraction improve the quality of citizens’ life of Nizhnekamsk and the The HRCC construction is intended to eliminate high- Vacuum Republic of Tatarstan. Project implementation will allow the TAIF-NK PSC sulphur fuel oil production and to increase the yield of higher Crude Oil Gas Oil Naphtha rise of added value from oil refining due to change-over to Existing VCC margin light products meeting the world and European qual- more profitable light oil products. Thus it will enable to in- Production EURO-5 ity requirements, along with the refining depth increase to crease the receipt of tax and other payments to all level bud- Diesel Fuel not less than 95%. gets up to RUB 57.8 bln, including to the federal budget up to RUB 50.4 bln, to the regional budget up to RUB 7.4 bln The HRCC will include the Vacuum Residue Hydrocon- (including the inflation expectations at the prices of the year version Unit as per Veba Combi Cracking (VCC) technology 2017). 38 developed by engineering company Kellogg Brown and Root 39 (USA), Hydrogen Production unit, Sulphur Recovery Unit, TAIF-NK PSC strategic development includes the expan- several auxiliary units and tank storage farms. VCC unit, Hy- VCC VGO sion of own gas filling station network considering the con- drogen Production Unit, Sulphur Recovery Unit and off-site Natural TAIF-NK PSC struction and obtainment of gas filling stations for the retail Hydrogen facilities commissioning is to be in 2016. VCC unit capacity is Gas Hydrogen Existing sales of own-produced Motor Gasoline and Diesel Fuel, the Production 2.7 MTPA of Vacuum Residue and up to 0.7 MTPA of Vacuum Fluid Catalytic arrangement of the existing plants revamping and upgrad- Unit Gas Oil. Cracking Unit ing to increase its effectiveness, as well as resource saving, energy-saving, environmentally efficient technologies im- Within the frame of the aforesaid project as of the end plementation: CDU/VDU-7, Middle Distillates Hydrotreating of 2012 the Contract for Basic Engineering Package, VCC pro- Complex, Catalytic Cracking Unit. cess License Agreement and Proprietary Equipment Supply Agreements were concluded with Kellogg Brown and Root The production of Naphtha will increase by 0.6 MTPA, company. The company Toyo Engineering (Japan) was ad- Liquefied Petroleum Gas by 0.3 MTPA, Diesel Fuel by 2.2 opted as the designer and vendor of the equipment for VCC MTPA, Kerosene by 0.3 MTPA due to TAIF-NK PSC strategic unit. Acid Gas Sulphur development plans realization including implementation Recovery measures for HRCC project, revamping of Middle Distillates Unit Hydrotreating Complex and Catalytic Cracking unit with the The most large-scale, capital intensive capacity increase in 2017 in comparison with 2012. TAIF-NK and strategically significant project assortment of goods will possess the enhanced environmen- of TAIF-NK PSC is the Heavy Residue tal characteristics, in particularly lower sulphur content (no Conversion Complex construction more than 10 mg/kg in motor gasolines and diesel fuels), in aromatic and highly volatile hydrocarbons. Corporate and social responsibility
Every man is a creative cause of what happens, the primum mobile with an original movement
Chapter 4 Corporate and social responsibility Annual report TAIF-NK PSC 2012
Corporate and social responsibility Environmental protection costs in 2012 (RUB mln)
Ambient Water resources air protection – 1 488.5 conservation – 63.3 4.1. Quality, ecology, industrial Policy on Quality, Industrial Safety, Occupational Health and occupational safety and Safety, and Environmental Protection is approved in the Company which is a basis for a functioning and constant im- Improvement of production provement of integrated management system in accordance and consumption wastes The Company has implemented, certified and put into with the principles and requirements of the international disposal procedures – 8.2 service the integrated management system with regard to standards. quality, industrial safety, occupational health and safety, and Land conservation – 4.7 environment policy so as to assure compliance with the in- TAIF-NK PSC treats the environmental protection and ternational standards ISO 9001:2008 «Quality Management ecological safety issue as one of the essential prerequisites for Miscellaneous environmental System», ISO 14001:2004 «Environmental management sys- successful operation and development of business. related arrangements – 1.9 tem», OHSAS 18001:2007 «Occupational Health and Safety Management System», EN/AS 9100:2009 «Quality Manage- The interface agreement between the Ministry of En- ment System – Requirements For Aviation, Space And De- vironment & Natural Resources of the Republic of Tatarstan 42 fense Organizations». and TAIF-NK PSC was concluded for the purpose of measures 43 implementation of the long-term purpose-oriented program under the auspices of the Ministry of Environment & Natural For the purpose of industrial safety improvement at the TAIF-NK PSC integrated management system enables «Environmental protection of Nizhnekamsk and Nizhnekamsk Resources of the Republic of Tatarstan, and TAIF-NK PSC be- Company subdivisions the “Consolidated work plan on provi- to reveal and remove systematically and promptly any pos- Municipal District for the period of 2012–2015» approved by came a prize-taker in nomination «For the effective ecological sion of industrial safety at TAIF-NK PSC hazardous production sible failures of the existing management system in order to the Resolution of the Cabinet of Ministers of the Republic program» between enterprises and organizations of national facilities” is elaborated each year. prevent and exclude their further appearance, satisfying at of Tatarstan dated 16.03.12 No. 222. The program includes importance for the results of 2011. maximum the customers` requirements for the high quality the environmental protection measures intended for preven- In order to provide the industrial safety much attention of oil products. tion, systematic reduction and minimization of the negative System of the operational control in TAIF-NK PSC in- is paid to timely realization of the reconstruction, revamping environmental impact from the production facilities. cludes the following: and technical upgrading of the production facilities. The confirmation of the TAIF-NK PSC integrated man- • registration of TAIF-NK PSC facilities in the State Reg- agement system efficiency is that the Company became The cost of the environmental protection arrangements ister of hazardous production facilities (currently this The cost of the industrial safety provision made up ap- a winner in a competition for award of the Russian Federa- of the Company totaled about RUB 1.6 bln in the reporting State Register contains 18 facilities of TAIF-NK); proximately RUB 135 mln in the reporting year. tion Government of 2011 in the field of quality and annual year. • acquisition and execution of the activity according to recognition of the products in a contest «100 best products No emergency situations and accidents occurred at of Russia». The environmental impact is minimized owing to the the licenses (approvals) on specific types of activity; • hazardous production facilities insurance and declar- TAIF-NK PSC industrial facilities owing to the effective work employment of new resource saving technologies and state- under the industrial safety. of-the-art process techniques as well as the compliance with ing, liability insurance of hazardous production facili- TAIF-NK PSC treats the environmental both the international and domestic environmental legisla- ties owners; protection and ecological safety issue tion and ecological safety and environmental protection • arrangement and functioning of non-professional The commitments the Company had taken with regard as one of the essential prerequisites standards. emergency response teams and arrangement of volu- to occupational safety were embodied in the reporting year for successful operation and development tary fire guard; by means of: of business The positive results of the environmental activity of the • conduction of emergency response drills concerning • arrangement of comprehensive and targeted preven- Company were marked during the annual contest ECO-Leader the elimination of emergency situations. tive control inspections of the Company’s structural Corporate and social responsibility Annual report TAIF-NK PSC 2012
Safety Agreement as well as the Action Plan on Improvement 4.2. Personnel As of 31st December, 2012 TAIF-NK PSC employs 2,952 of Working Conditions based on the Workplaces Assessment persons, where nearly 31% are women. Nearly 46% of Non-occurrence of accidents Findings. TAIF-NK PSC employees are under 35 years of age. Average and occupational diseases in the Company age of employees in the reporting year was 39.5 years old. proves the effectiveness of work in the sphere In November 2012 TAIF-NK confirmed once again its ex- TAIF-NK’s stable development is primarily the result of occupational safety in 2012 isting Safety Certificate compliance with occupational safety of purposeful, coordinated and responsible work of all Com- measures taken by the Company and specified by the govern- pany’s employees. The TAIF-NK’s main aspects in personnel ment regulatory requirements on occupational safety. management policy are as follows: • human resource planning for effective implementation divisions regarding the occupational safety, industrial Non-occurrence of accidents and occupational diseases of the short-term and long-term business strategy and and fire safety. During the scheduled shutdown for HR structure by occupation category for 2012 in the Company proves the effectiveness of work in the sphere Company’s plans; maintenance and repair, a series of audits were con- of occupational safety in 2012. (%) ducted to verify the observation of the state and local • qualitative selection of qualified employees of different regulatory acts in the field of health and safety by the Costs for the implementation of labour safety and level; Company’s employees and contractors; labour arrangements in the reporting year made up RUB • ensuring of competitive salary level; Managers – 12.4 • training and further examination of 1766 employees 78.8 mln. • enabling of training and skill improvement; from the Company’s staff for safety knowledge assess- Technicians and ment; • ensuring of safe and comfortable labor conditions; In 2012 the total amount of funds allocated for occupa- office staff – 22.4 • arrangement of review contest on occupational safety, tional health, industrial safety and environmental protection • strict compliance of labour and civil legislation require- industrial and fire safety, holding meetings to discuss made up about RUB 1.8 bln. ments 44 45 personnel health and safety related issues; • development of motivational system corresponding to • periodical arrangement of physical and chemical fac- skill level and personal contribution to the Company’s tors instrumental gauging at working places and in development; Workers – 65.2 subdivisions of the Company. • social protection improvement; The Company carries out provisional and periodic medi- • creating an atmosphere based on open mutual respect. cal check-ups and other types of medical examination with a view to watch over the personnel’s health.
The Company`s personnel is provided with detergents and neutralizing agents, special certified overalls, footwear Dynamics of the personnel educational level and other means of personal protection, milk. (%)
As at the end of reporting period the Company con- Description 2010 2011 2012 ducted the certification procedure at 1323 work places to check the labor conditions. In accordance with the Production Higher education 40.7 42.2 43.6 Inspection Program regarding assurance of compliance with Secondary professional education 22.1 21.7 21.1 the sanitary and epidemiological requirements, measure- ments were taken at work places to verify conformance to Elementary professional education 29.3 29.1 28.7 the specified sanitary norms and regulations. The activities Secondary education 7.7 6.8 6.4 for improvement of labor conditions were implemented un- der the elaborated by the Company Occupational Health and Primary education 0.2 0.2 0.2 Corporate and social responsibility Annual report TAIF-NK PSC 2012
Age structure 4.3. Social policy (man) Primarily TAIF-NK social policy is focused on improvement of employees’ quality Description 2010 2011 2012 of life. In view of this the Company enhances the employees High level of quality indexes of material and technical 18–35 years 1,491 1,388 1,356 social package every year means, production process development, investments utili- 36–40 years 283 360 367 zation degree as well as high level of labour, production and 41–50 years 569 623 627 management organization; favourable socio-psychological environment in TAIF-NK PSC has enabled to improve labour 51–60 years 491 543 568 productivity indexes. 60 and older 37 31 34 • additional payment to employees for meal, provision free of charge milk; • employees insurance under program of optional medi- The Company pays special attention for well-timed Expenses for employees training Dynamics of labour productivity cal insurance and optional accident insurance; staff recruitment. Professional recruitment of the TAIF-NK PSC (RUB mln) (RUB mln per year/man) • expenses for employees transportation to work and personnel is based on Company’s demand on employees of vice versa; appropriate levels of qualification and qualification require- 14.2 17.3 20.6 33.5 44.1 45.2 • periodic, planned and other medical examinations of ments to the employees. the employees; 46 47 • material support of pensioners, families with children The Company has organized HR reserve comprising of and disabled children; successful and promising employees to arrange conditions for professional and career advancement. • subsidized trips to children’s camps and sanatoriums; • festive events arrangement (Chemist Day, New Year). Training, continuing education and advanced train- ing of the Company’s workers are provided in Petrochemis- Total amount of expenses for social policy in 2012 made try and Oil Refining Technical School, and as for labour and up nearly RUB 376.1 mln. industrial safety issues personnel are trained in the Private 2010 2011 2012 2010 2011 2012 Educational Institution of Initial Professional and Additional The Company participates in the republican program Education «Bezopasnost truda» in Nizhnekamsk. Advanced «Social Mortgage». The total area of apartments given to training of TAIF-NK PSC managers and technicians is carried TAIF-NK PSC employees under this program in the year under out in the additional professional training institutes, modern institutions in the Republic of Tatarstan and the Russian Primarily TAIF-NK social policy is focused on improve- report is 1 935 sq. meters. educational technologies institutes and other educational Federation. ment of employees’ quality of life. In view of this the Com- pany enhances the employees’ social package every year. The In 2012, 696 workers attended training, continuing social package includes guarantees and compensations as education and advance training courses, 216 managers and required by labour legislation, additional payments provided The Company has organized HR reserve technicians attended short-term skills improvement courses. by the Company’s local acts as well: comprising of successful and promising • supplemental payments to employees for holiday; The total amount of the funds directed to the training employees to arrange conditions • material assistance to employees; for professional and career advancement course of the Company`s employees equaled to RUB 20.6 mln in the reporting year. • single-time payment to employees on retirement; Corporate and social responsibility Annual report TAIF-NK PSC 2012
4.4. Charity families under the Republican campaign «Please assist in 4.5. Tax payments ing to the tax and revenue legislation of the Russian Federa- preparing for schooling», as well as to handicapped people tion. In 2012, TAIF-NK PSC tax payments have increased in within the handicapped persons’ decade, and to the support- comparison with 2011 for 12.3% and made up about RUB ed veterans in honor of War Victory Day celebration. TAIF-NK TAIF-NK PSC charges and pays taxes and duties in due 42.8 bln. Growth made up 89.4% in comparison with the TAIF-NK PSC is one of the major budget revenue gener- is also actively involved and provides all-round support for time in compliance with the established procedure accord- year of 2010. ating enterprise in the region. The Company takes an active various municipal events such as «The Pancake Week», Sa- part in arrangement and implementation of the comprehen- bantui, City’s Day and New Year’s Day. sive social and economic programs on municipal and republi- Data on payments to the budgets Structure of tax payments to the budgets in 2012 can scale, namely the Company renders charitable assistance TAIF-NK provides a great support to the development (RUB bln) (%) to the social welfare institutions, institutions of health care, of sport in the Republic of Tatarstan. The Company is the education, physical fitness and sport, low-income citizens main sponsor of FC «Rubin» (Kazan) and sports team «MX- 22.6 38.1 42.8 The Russian and pensioners. Autosport». In the reporting year the following sporting Federation – 93.5 events were held with the support of TAIF-NK: international In the reporting year the Company has assisted organi- football tournament among juniors dedicated to the memory
zations like Nizhnekamsk Special Comprehensive Secondary of V. V. Vinnikov, annual international wrestling tournament, School No.18, Municipal Budgetary General Education Insti- the international wu-shu tournament, city boxing tourna-
tution Boarding School «Cadet boarding school», VESTA Social ment dedicated to the memory of Yu. V. Tyunin etc. Assistance Center, the youth children organization «Galak- The Republic tika», Municipal Budgetary Pre-school Education Institution Total amount of funds given for charity and sponsor of Tatarstan – 6.5
«Combined Kindergarten No. 68», Nizhnekamsk branch of support equaled to RUB 1.3 bln in 2012. 48 49 the Russia Paratroopers’ Union, Municipal Budgetary Gen- 2010 2011 2012 eral Education Institution Comprehensive Secondary School
No. 29, Nizhnekamsk Central Regional Multi-filed Hospital, Tatar Variety Theater «Muncha tashy», Public Fund for Culture Dynamics of indirect taxes share and Art Development, religious organizations, Comprehen- in gross proceeds sive Secondary School No. 5 located in Almetyevsk. Gross proceeds Annually the Company takes part in the charity events. (RUB bln) 123,8 170,0 181,3 The Company has provided assistance to children from needy 24.4% 26.9% 29.1%
The Company takes an active part in arrangement and implementation of the comprehensive social and economic programs on municipal and republican scale, namely the Company renders charitable assistance to the social welfare institutions, institutions of health care, education, physical fitness and sport, 2010 2011 2012 low-income citizens and pensioners Net proceed Indirect taxes (excise taxes, export customs duties, VAT) Corporate management
Wherever you go, if you want to move on, you must push your way
Chapter 5 Corporate management Annual report TAIF-NK PSC 2012
Corporate management Vladimir V. Presnyakov
Chairman of the Board of Directors Deputy General Director Petrochemicals and Refining TAIF PSC
5.1. Share capital 5.2. Company’s corporate management • Year of birth: 1951 and dividends and control bodies • Education background: higher education • Has no participating interest in TAIF-NK’s authorized capital • Does not hold any of TAIF-NK shares As of 31.12.2012, TAIF-NK PSC authorized capital The Company’s governing bodies in the reporting year amounted to RUB 5 851 077 000 (five billion eight hundred were as follows:
fifty one million and seventy seven thousand) which is di- • the General Shareholders Meeting; vided into registered ordinary shares making up 5 851 077 000 • Board of Directors; (five billion eight hundred fifty one million and seventy Rustem N. • Sole executive body (General Director). seven thousand) pieces having par value of RUB 1 (One) per Sulteev share. The TAIF-NK PSC sole shareholder is TAIF PSC. First Deputy General Director The Company’s dividend policy is based on the follow- 52 According to the sole shareholder’s resolution Production and Commerce TAIF PSC 53 ing principles: No.10/05-12 dd 10 May 2012, the current Company’s Board • reasonable allocation of profit taking into account sole of Directors was elected consisting of the following officials: shareholder interests as well as Company’s demand on • Year of birth: 1954 development; • Education background: higher education • enhance the Company’s investment appeal and in- • Has no participating interest in TAIF-NK’s authorized capital crease its capitalization; • Does not hold any of TAIF-NK shares
• respect and observance of shareholder rights provided by the Russian Federation legislation, Company’s Ar- ticles of Association and its in-house documents.
The source of dividends is a net profit gained by the Guzeliya M. Company. Net profit is derived from the Company`s accounts Safina and financial statements as compiled in accordance with the requirements of the Russian legislation. Deputy General Director Economics and Finance TAIF PSC The amount of paid out dividends equaled to RUB 4.1 bln in 2012. • Year of birth: 1955 • Education background: higher education • Has no participating interest in TAIF-NK’s authorized capital • Does not hold any of TAIF-NK shares Corporate management Annual report TAIF-NK PSC 2012
Abdulkhamit A. Amil K. Nazmutdinov Kalimullin
Transport Advisor Deputy General Director General Director Production and Commerce TAIF PSC TAIF-NK PSC
• Year of birth: 1949 • Year of birth: 1950 • Education background: higher education • Education background: higher education • Has no participating interest in TAIF-NK’s authorized capital • Has no participating interest in TAIF-NK’s authorized capital • Does not hold any of TAIF-NK shares • Does not hold any of TAIF-NK shares
Andrei V. Alexander Z. Sarkin Fridman
Head of Corporate Property and Investments Management 54 TAIF PSC 55
• Year of birth: 1960 • Year of birth: 1952 • Education background: higher education • Education background: higher education • Has no participating interest in TAIF-NK’s authorized capital • Has no participating interest in TAIF-NK’s authorized capital • Does not hold any of TAIF-NK shares • Does not hold any of TAIF-NK shares
Dmitry I. Artemy A. Teslenko Osipyan
Head of Financial and Economic Department TAIF PSC
• Year of birth: 1961 • Year of birth: 1944 • Education background: higher education • Education background: higher education • Has no participating interest in TAIF-NK’s authorized capital • Has no participating interest in TAIF-NK’s authorized capital • Does not hold any of TAIF-NK shares • Does not hold any of TAIF-NK shares Corporate management Annual report TAIF-NK PSC 2012
Luiza V. Yeryashkina Board of Directors. The only member of the Company’s cor- Changes in the TAIF-NK PSC Senior Economist Oil & Gas and Chemical Complex Con- porate body who received remuneration for managerial Board of Directors trolling, Financial and Economic Department TAIF PSC functions in 2012 is the sole executive body – TAIF-NK PSC • Year of birth: 1984 General Director. Company’s Board of Directors Company’s Board of Directors • Education background: higher education had been acted till 10th May 2012 acting since 10th May 2012 (was elected by the shareholder’s resolution dd 25 April 2011) (was elected by the shareholder’s resolution dd 10 May 2012) • Does not hold any of Company’s shares. The amount of remuneration to the person represent- ing the TAIF-NK’s sole executive body is determined in accor- R. N. Sulteev R. N. Sulteev Tatyana A. Abayeva dance with the relevant labour contract as well as the Com- V. V. Presnyakov V. V. Presnyakov Accountant Consolidated Statements Service, Account- pany’s in-house regulations.* ing Department TAIF PSC A. K. Shigaboutdinov G. M. Safina • Year of birth: 1987 R. A. Shigaboutdinov A. V. Sarkin • Education background: higher education • Does not hold any of Company’s shares. A. A. Babynin A. A. Nazmutdinov 5.3. Major undertaken transactions D. I. Teslenko (a list of major undertaken transactions and interested party transactions) A. K. Kalimullin Guzeliya R. Abzalina • Year of birth: 1977 A. Z. Fridman • Education background: higher education A. A. Osipyan • Does not hold any of Company’s shares 56 57 No deals recognizable as major transactions according TAIF-NK PSC General Director is elected by the Com- The Audit Committee was elected in pursuance of the In the year under report, no remunerations (reim- to the Federal Law On Joint-Stock Companies were under- pany’s Board of Directors for a period of 3 (three) years. Amil TAIF-NK PSC shareholder’s resolution dated 10 May 2012, bursement of expenses) were paid to the members of the taken by the Company in 2012. K. Kalimullin was elected as TAIF-NK PSC General Director by consisting of: the Resolution of the Board of Director dd 22 October 2011.
Rushan R. Shamgunov Information on interested part transactions undertaken Amil K. Kalimullin Audit Committee Chairman General Director TAIF-NK PSC Head of Petrochemicals and Oil Refining Department The Company’s Body Person • Year of birth: 1950 TAIF PSC to Approve Interested Essential Conditions the Transaction in Transaction • Education background: higher education • Year of birth: 1978 • Has no participating interest in TAIF-NK’s authorized • Education background: higher education capital • Does not hold any of Company’s shares. The Board of Directors TAIF-NK PSC Subject: Loan Agreement • Does not hold any of Company’s shares. Parties: Venera Kh. Mustafina TAIF-NK PSC (Lender), Head of Foreign Trading Department, Production and yughimterminal OOO (Lendee) Sales Division TAIF PSC Total transaction amount: RUB 28,776,000 • Year of birth: 1976 • Education background: higher education • Does not hold any of Company’s shares. * The above-mentioned information is given subject to requirements of compliance with the Russian Federation Personal Information Protection Act Corporate management Annual report TAIF-NK PSC 2012
5.5. Information on compliance by Issuers of Issue-grade Securities as approved under Order Information on interested party with the Corporate Code of Conduct No. 11-46/пз-н dd 04 October 2011 issued by the FFMS of the transactions undertaken (extension) recommendations Russian Federation as well as under the Guideline No. 03-849/р «The Recommended Approaches to Presentation of Informa- The Company’s Body Person to Approve Interested Essential Conditions tion On Compliance with the Corporate Code of Conduct in the Transaction in Transaction The information is disclosed in accordance with the Joint-Stock Company Annual Reports» as issued by the FCSM requirements of the Regulations on Information Disclosure of the Russian Federation under the date of 30 April 2003. The Board of Directors TAIF-NK PSC Subject: Real Estate Mortgage Agreement Information on TAIF-NK PSC compliance Parties: with the Corporate Code of Conduct recommendations TAIF-NK PSC (Pledgee),
yughimterminal OOO (Pledger) Compliance Clauses of the Corporate Code of Conduct (Yes/No) Remarks Transaction amount: RUB 7,957,363
The shareholders should be provided with access to the list of Yes Item 14.8 The Board of Directors TAIF-NK PSC Subject: Movable Estate Pledge Agreement persons authorized to participate in the General Shareholders` of TAIF-NK PSC Parties: Meeting from the General Shareholders` Meeting starting no- Articles of Association TAIF-NK PSC (Pledgee), tice until the attendee General Shareholders` Meeting closing yughimterminal OOO (Pledger) date, in case of an absentee General Shareholders` Meeting – until the ballots submission cutoff date Transaction amount: RUB 5,509,684 and 30 kopecks 58 The articles of association of the joint-stock company should stip- Yes Item 15.2.1 59 The Board of Directors TAIF-NK PSC Subject: Real Estate Mortgage Agreement ulate that the board of directors shall be given authority for ap- of TAIF-NK PSC proval of the company’s financial and business plan on yearly basis Articles of Association Parties: TAIF-NK PSC (Pledgee), The articles of association of the joint-stock company should Yes Item 15.2.33 yU-SVL ZAO (Pledger) stipulate that the board of directors shall be granted the right of TAIF-NK PSC to give approval to any contractual terms and conditions jointly Articles of Association Transaction amount: RUB 15,318,632 and 38 kopecks with the general director
The articles of association of the joint-stock company should Yes Item 15.6 stipulate that the Board of Directors shall be elected on cumu- of TAIF-NK PSC 5.4. Information on subsidiaries – SVL. Terminal OOO, lative voting basis Articles of Association
and affiliates – YU-SVL ООО (YU-SVL ZAO before 21.12.2012), The scope of the joint-stock company’s in-house documents Yes Items 15.19-15.30 of TAIF-NK PSC – Yughimterminal ООО, should include the procedure for the Board of Directors’ meetings Articles of Association, – Solvalub Shipping ZАО; Article 8 of Regulations on TAIF-NK PSC Board of Directors TAIF-NK PSC holds shares and stakes in the equity capi- • Chulman-Trans ООО (since 2010) – the core business tals of the following companies: activity is transhipment and retail trade of oil products. The joint-stock company’s Articles of association or in-house Yes Items 14.2.20, 15.2.28 documents should contain a provision that any major transac- of TAIF-NK PSC • LLC «TAIF-NK-AZS» (since 2007) – the core business ac- tion shall be approved prior to its consummation Articles of Association tivity is leasing of property;
• «SNRG Logistic Limited» (since 2008) – a company The joint-stock company should have its own website intended Yes www.taifnk.ru; holding companies conducting tran-shipping activities to show any company related information on regular basis http://www.e-disclosure.ru/ in Port Kavkaz: portal/company.aspx?id=14456 KEY RISK FACTORS
Moving forward is only possible with a strong belief in achieving the objective
Chapter 6 Key risk factors Annual report TAIF-NK PSC 2012
Key rick factor Risks associated with industrial competition Risks associated with rising of tariff rates for energy com- modities In the Russian oil processing industry there is intense competition between Russian oil companies and indepen- Risks of increase in TAIF-NK’s expenditures due to in- dent refineries in terms of principal directions of production crease of energy costs related to growth of tariffs in the and administrative activities. Russian Federation energy industry may have an unfa- Risk management is an integral part of TAIF-NK’s inter- 6.1. Industry related risks vourable impact on the Company’s business operation. In order to mitigate risks associated with industrial nal environment and incorporates the following: To mitigate this kind of risk, Company’s expenditures are competition, TAIF-NK carries out a set of measures: optimized and energy-efficient technologies are imple- • implementation of risk-oriented approach to all aspects • implementation of strategically important project of mented. Solution to the issue of energy supply is facilitated of operational and managerial activities; constructing a Heavy residue conversion complex in by close cooperation with enterprises of the petrochemical TAIF-NK’s core business operations is processing of • performing systematic analysis of the identified risks; order to exclude production of heavy oil products (fuel and energy complexes of the Tatarstan Republic, control crude oil and gas condensate and oil products sales, so the • Generation of the risk control system and the system of oil, vacuum gas oil), export duties on which reduced at- of expenditures types, budgeting, monitoring world-wide Company is subject to risks which are traditionally common monitoring the risk management operating efficiency; tractiveness of these oil products export sales; and sector-wide trends. to oil and gas processing industry, namely: • understanding by all Company’s employees of funda- • constant market monitoring and bringing in new buy- mental principles and approaches to risk management ers in order to tap new market segments; Environmental risks and risks of industrial safety accepted in the Company; Risks associated with potential changes of prices for crude oil • adjustment of salable products structure, depending • ensuring the required regulatory and methodological and oil products on demand, price proposals of the oil products market support; participants. The Company fully recognizes the responsibility for creating safe working conditions and maintaining favourable 62 • allocation of authorities and responsibility for risk man- Fluctuations of crude oil prices, and correspondingly, 63 environment and industrial safety, continuously controls its agement among TAIF-NK’s structural subdivisions. oil products prices caused by oil reserves status, decisions operations in order to ensure compliance with corresponding of OPEC, geopolitical situation (instability associated with Risks of access to transportation infrastructure environmentally-friendly standards, and implements envi- The Company’s aim in risk management is ensuring outbreak of armed conflicts or acts of terrorism), growth/ ronmental protection programs. additional guarantees in achieving strategic objectives on drawdown of alternative energy forms’ share, investors’ ex- When transporting feedstock, energy commodities account of early warning, risk detection and assurance of pectations, seasonal increase of fuel consumption, condition and products TAIF-NK mainly depends on transportation TAIF-NK’s policy with regard to control over industrial maximum risk management efficiency. The key target of the of primary commodity markets, condition of equity and cur- capacities of the following government monopolies: JSC AK Transneft, OJSC AK Transnefteproduct, JSC Russian Railways, safety and environment protection is focused on ensuring risk management process in TAIF-NK is assurance of the op- rency markets, world and regional level of demand and sup- as well as of OJSC Gazprom in terms of consumed gas trans- compliance with applicable legal requirements by means eration process continuity and operations stability by means ply and other factors, may have a great impact on the Com- portation. of investing significant funds into compliance with require- of threats warning and limitation of severity of Company’s pany economics. ments of industrial safety standards and enforcement of en- activities exposure to external and internal unfavourable In order to minimize influence of such risks the Com- vironmental protection measures, including application of factors. Mitigation of risk of price changes for feedstock is pany carries out a set of measures aimed to: technologies providing mitigation of the negative impact on achieved by executing long-term contracts with crude oil and the environment. gas condensate suppliers. • long-term planning of commodities flow, timely back- ing up of oil and oil products circulation rates and of TAIF-NK PSC has sufficient opportunities for commod- railway vehicles’ capacities; ity flows redistribution depending on conditions at the ex- • effective commodities flows redistribution in means of ternal and internal markets which contributes to mitigation transport; The Company’s aim in risk management is ensuring additional guarantees in achieving of risks associated with fluctuations of prices for oil products. • search for and elaboration of alternative feedstock sup- The advantage in carrying out export activities is that when pliers and ways of products delivery (including obtain- strategic objectives on account of early warning, contracting the volumes the Company doesn’t fix a price for a ing control over terminals’ operating activity in terms of risk detection and assurance of maximum long-run period which enables to swiftly respond to the mar- oil products trans-shipment, development of own gas risk management efficiency ket situation. filling station network). Key risk factors Annual report TAIF-NK PSC 2012
• changes in legislation including tax legislation which The second factor of mitigating a currency-related risk can result in additional Company’s obligations. is the redirection of a part of currency earnings to financing of TAIF-NK’s policy with regard to control Credit risks associated with failure the imported equipment supply within construction of Heavy over industrial safety and environment to perform by the contracting parties Economic risks may be related to the status of gov- Residue Conversion Complex. protection is focused on ensuring compliance of obligations to pay ernment obligations to pay subsidies, status of gold and with applicable legal requirements by means for supplied products are minor forex reserves, changes in exchange rate, etc. Risks which of investing significant for TAIF-NK PSC are associated with social and economic as well as political funds into compliance with requirements 6.4. Legal risks processes in the Russian Federation are beyond Company’s of industrial safety standards and enforcement control. of environmental protection measures, including application of technologies providing Performing its business activities on the territory of the The Company organizes its operation based on accurate TAIF-NK PSC performs regular monitoring of projects mitigation of the negative impact Russian Federation, TAIF-NK PSC is susceptible to potential compliance with legislation, follows and responds swiftly to and adopted legislative acts which enables to adjust Compa- on the environment occurrence of legal risks, associated with changes in currency changes in the legislation, as well as the Company strives for ny’s business operation in a timely manner in order to mini- regulation, tax and anti-trust legislation, customs control and a meaningful dialogue with regulatory authorities in matters mize the specified risks. duties regulation. of law norms interpretation.
Process risks, associated with failure of production equipment may lead to stoppage of production and failure to achieve projected operational and financial indicators. 6.3. Financial risks In order to exclude the effect of these risks on the Company’s business operation, the following measures are taken: timely 64 65 detection of such risks, planned preventative maintenance is performed, technical upgrading and modernization of pro- Credit risk duction facilities, strict compliance with process operating regulations, recruitment and training of qualified person- Credit risks associated with failure to perform by the nel, annual overhaul, monitoring of the equipment technical contracting parties of obligations to pay for supplied products condition, performance of laboratory investigations, imple- are minor for TAIF-NK PSC. The Company mitigates this group mentation of automated control systems and other activities. of risks using financial instruments by means of advanced payments and bank guarantees.
Currency risk 6.2. Country and regional risks Risks of unfavorable changes of currency rates when converting dollar-denominated export receivables into Russian rubles to cover expenses are minimized in TAIF-NK Risks associated with TAIF-NK’s operation on the terri- PSC. This is stipulated by the fact that crude oil prices are tory of the Republic of Tatarstan and the Russian Federation quoted in US dollars. In its turn crude oil is the basic feed- can be divided into political and economic risks. stock for the Company and takes up the largest propor- tion in the cost structure, and the prices for marketable Political risks are: products are quoted based on the crude oil price, which • political course deviation that may influence country’s allows insuring earnings from considerable currency fluc- investment attractiveness and lead to limitation of po- tuations. tential attraction of foreign capital; Financial statements
Life is like riding a bicycle. To keep your balance, you must keep moving
Chapter 7 Financial statements Annual report TAIF-NK PSC 2012
Financial statements Balance sheet as of 31 december 2012 (RUB thous)
As of As of As of Description Line code 31 Dec 2012 31 Dec 2011 31 Dec 2010 Balance sheet as of 31 december 2012 (RUB thous) LIABILITIES
As of As of As of III. Capital and reserves Description Line code 31 Dec 2012 31 Dec 2011 31 Dec 2010 Statutory capital (share capital, statutory ASSETS fund, shareholder contributions) 1310 5,851,077 5,851,077 5,851,000 Treasury stocks 1320 (—) (—) (—) I. Non-current assets Revaluation of non-current assets 1340 — — — Intangible assets 1110 2,389 1,796 1,499 Additional capital (without revaluation) 1350 18,677 18,677 — Results of studies and developments 1120 — — 3,300 Reserve funds 1360 292,554 292,550 292,550 intangible development assets 1130 — — — Retained earning (retained loss) 1370 30,203,601 23,608,937 13,810,557 Tangible development assets 1140 — — — Total for Section III 1300 36,365,909 29,771,241 19,954,107 fixed assets 1150 15,993,773 15,021,294 15,658,313 68 69 income-bearing investments in tangible assets 1160 108,344 35,751 37,647 IV. Long-term liabilities financial investments 1170 2,464,418 2,464,569 2,627,969 Long-term loan funds 1410 — — — deferred tax assets 1180 34,868 52,940 27,425 deferred tax liabilities 1420 838,091 827,981 592,254 Other non-current assets 1190 608,036 384,383 327,505 Reserves for contingent liabilities 1430 — — — Total for Section I 1100 19,211,828 17,960,733 18,683,658 Other long-term liabilities 1450 — — — Total for Section IV 1400 838,091 827,981 592,254 II. Current assets inventory 1210 9,205,560 7,397,677 5,843,014 V. Short-term liabilities value added tax on acquired assets 1220 1,927,804 1,604,296 1,218,047 Short-term loan funds 1510 799 32 1,016,349 Receivables 1230 5,945,376 5,074,409 5,283,893 Short-term accounts payable 1520 30,061,580 20,553,726 14,847,637 financial investments 1240 13,304,600 35,539 35,539 Unearned income 1530 — — — monetary funds 1250 13,384,702 17,089,867 4,302,264 Estimated liabilities 1540 47,974 44,951 28,293 Other current assets 1260 4,370,819 2,082,709 1,093,337 Other short-term liabilities 1550 36,336 47,299 21,112 Total for Section II 1200 48,138,861 33,284,497 17,776,094 Total for Section V 1500 30,146,689 20,646,008 15,913,391
BALANCE 1600 67,350,689 51,245,230 36,459,752 BALANCE 1700 67,350,689 51,245,230 36,459,752 Financial statements Annual report TAIF-NK PSC 2012
Profit and loss statement Profit and loss statement (RUB thous) (RUB thous)
Description Line code As of Jan-Dec As of Jan-Dec Description Line code As of Jan-Dec As of Jan-Dec 2012 2011 2012 2011
Revenues 2110 128,597,660 124,268,968 FOR REFERENCE ONLY Cost of sales 2120 (104,751,348) (94,519,203) The result of non-current assets evaluation, Gross margin (loss) 2100 23,846,312 29,749,765 not included into the net income (loss) over the period 2510 — — Business expenses 2210 (8,845,260) (7,375,082) The result of other operations, not included into Administrative expenses 2220 (2,282,799) (2,110,884) the net income (loss) over the period 2520 — 18,677 Profit (loss) on sales 2200 12,718,253 20,263,799 Gross financial result of the period 2500 10,764,966 15,908,019 70 71 income from partnership with third companies 2310 36,890 34,764 Base profit (loss) per share 2900 1.8398 2.7156 interests receivable 2320 1,331,906 309,160 diluted earning (loss) per share 2910 — — interests payable 2330 (65,299) (14,152) Authenticity of the data presented in the Company’s Annual Report has been approved by TAIF-NK Audit Committee Other revenues 2340 102,366,238 82,195,183 Other expenses 2350 (102,760,498) (82,797,781) Profit (loss) before taxation 2300 13,627,490 19,990,973 Current income tax 2410 (2,816,309) (3,883,132) including permanent tax liabilities (assets) 2421 135,815 103,311 Change of deferred tax liabilities 2430 (27,050) (244,545) General Director A. K. Kalimullin Change of deferred tax assets 2450 (17,954) 26,171 Others 2460 (1,211) (125)
Net income (loss) 2400 10,764,966 15,889,342 Chief Accountant D. R. Kuramshina Contact details Annual report TAIF-NK PSC 2012
Contact details
TAIF-NK Public Stock Company (TAIF-NK PSC) made up in accordance with the Russian Statement of Standard Accounting Practice • Place of location: TAIF-NK PSC, Industrial Area, Nizhne- kamsk, 423570, Republic of Tatarstan, Russian Federation • Place of location and postal address: 10, Yamasheva pr., (P.O. Box 134), Kazan, 420080, Republic of Tatarstan, Rus- • Postal address: TAIF-NK PSC, P.O. Box 20, OPS-11, Nizhne- sian Federation kamsk, 423570, Republic of Tatarstan, Russian Federation • Tel. (843) 555-62-44. Fax (843) 555-60-67 • Tel. +7 (8555) 38-16-16. Fax: +7 (8555) 38-17-17 • E-mail: [email protected] • E-mail: [email protected] • Website: www.acg-pkf.ru • Website: www.taifnk.ru • Being a member of self-regulating organization of non- commercial partnership «Institute of Professional Audi- Registrar: tors». (Place of location: 14, build. 1, Nametkina Str., 72 Moscow, Russian Federation), accredited by Russian Fed- eration Ministry of Finance as per the Order of Ministry Euro-Asian Registrar Limited Liability Company, Kazan of Finance dd. 16.07.2002 № 145 Branch
PriceWaterHouseCoopers Closed Joint-Stock Cоmpany • Place of location and postal address: 6, Vishnevskogo Str., (PwC Audit CJSC) – the auditor of the accounting (financial) Kazan, 420043, Republic of Tatarstan, Russian Federation statements made up in accordance with IFRS • Tel. (843) 236-63-96. Fax (843) 236-27-52 • Place of location and postal address: 10, Butyrsky Val Str., • E-mail: [email protected] Belaya Ploschad Business Centre, Moscow, 125047, Rus- • Website: www.erd.ru sian Federation • License: № 10-000-1-00332, without limitation of the • Tel. (495) 967-60-00. Fax (495) 967-60-01 validity period, issued on March 10, 2005 by FFMS Russia • E-mail: [email protected]
• Website: www.pwc.ru
Information on the Company’s auditors: • Being a member of self-regulating organization of au- ditors «Non-Commercial Partnership» «Russian Audit FBK Povolzhie Limited Liability Company (FBK Povolzhie Chamber» (Place of location: 3/9, 3rd Syromyatnichesky OOO) – the auditor of the accounting (financial) statements per., Moscow, Russian Federation)