Annual Report 2006 English
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Annual report 2006 Annual review The EBRD, owned by 61 countries and two intergovernmental institutions, aims to foster the transition from centrally planned to market economies in 29 countries from central Europe to central Asia. The EBRD invests in virtually every kind of enterprise and financial institution, mainly in the form of loans and equity. Investments are designed to advance the transition to market economies and to set the highest standards of corporate governance. We do not finance projects that can be funded on equivalent terms by the private sector. In support of our investment activities, the EBRD conducts policy dialogue with national and local authorities to develop the rule of law and democracy. Transmittal letter to Governors London, 6 March 2007 In accordance with Article 35 of the Agreement Establishing the Bank and Section 11 of its By-Laws, the enclosed Annual Report of the Bank for 2006 is submitted by the Board of Directors to the Board of Governors. The Annual Report includes the approved and audited financial statements required to be submitted under Article 27 of the Agreement and Section 13 of the By-Laws. It also contains a separate statement on the Special Funds resources, in accordance with Article 10 of the Agreement Establishing the Bank, and covers the environmental impact of the Bank’s operations, as required under Article 35 of the Agreement. President Jean Lemierre Director Alternate Director László Andor Pavel Št˘epánek Terence Brown Walter Cernoia Anne Counihan Ib Katznelson João Cravinho Stefanos Vavalidis Alain de Cointet Francis Mougenez Sven Hegelund Baldur Pétursson Ole Hovland Jari Gustafsson André Juneau Judith St George Byung-Il Kim Peter Reith Elena Kotova – Vassili Lelakis Carole Garnier Kazimierz Marcinkiewicz Kalin Mitrev Kazuya Murakami Hiroyuki Kubota Michael Neumayr Hedva Ber Igor Podoliev Virginia Gheorghiu Enzo Quattrociocche Ugo Astuto Gonzalo Ramos David Martínez Hornillos Simon Ray Jonathan Ockenden Manuel Sager Turan Öz Joachim Schwarzer Rainald Roesch Jean-Louis Six Irena Sodin Mark Sullivan – Jan Willem van den Wall Bake Hans Sprokkreeff Contents 2 2006 in numbers 4 EBRD commitments 6 President’s message 8 Overview 22 Reform Democratic reform Economic reform Legal reform Environmental and social reform Integrity Good governance and transparency 30 Financial sector Banking sector Trade finance Equity funds Other financial services 36 Financing for small business Micro and small business financing Support for small and medium-sized enterprises 42 Energy Power sector Energy efficiency Natural resources 48 Infrastructure Municipal and environmental infrastructure Transport 54 Corporate sector Agribusiness Manufacturing Property and tourism Telecommunications and new media 62 Donor-funded activities and official co-financing Activities in 2006 Building stronger businesses 68 Nuclear safety 70 Evaluating EBRD activities 76 Procurement 78 Organisation and staffing Human resources EBRD management Governors and alternate governors EBRD Directors and alternate directors 86 Projects signed in 2006 100 Further information The EBRD’s Annual Report 2006 comprises two separate companion volumes: the Annual Review and the Financial Report, which includes the financial statements and the financial results commentary. The CD-ROM accompanying this publication contains the complete Annual Review (in a fully searchable format), the Financial Report and a complete list of all projects signed by the Bank since 1991. Both volumes are published in English, French, German and Russian. Copies are available free of charge from the EBRD’s Publications Desk: One Exchange Square, London EC2A 2JN Tel: +44 20 7338 7553 Fax: +44 20 7338 6102 Email: [email protected] European Bank for Reconstruction and Development 2006 in numbers EBRD commitments Gross annual €4.9 billion 00-06* €.8 billion disbursements committed to 301 disbursed in 2006 00-06* 4.9 3.7 3.8 projects, the EBRD’s 4.3 4.1 3.9 highest level of 3.7 2.5 investment 2.3 2.3 * Commitments signify the EBRD’s * Disbursements signify EBRD financing billion billion € annual business volume committed disbursed to clients following project signing. € under signed agreements. 02 03 04 05 06 02 03 04 05 06 Geographic distribution: Sectoral focus: €.4 billion committed to early Nearly half of EBRD financing and intermediate transition devoted to financial institutions countries1 to support local enterprises €1.9 billion to Russia Nearly one-fifth of financing €0.7 billion to advanced transition supported infrastructure developments, including municipal countries2 and transport projects EBRD commitments by region EBRD commitments by sector ■ Central Asia 6% 8% ■ Financial sector 1 23% 22% ■ Central Europe and 14% 16% ■ Energy 2 30% 27% 33% the Baltic states ■ 3 2006 2005 Infrastructure 2006 45% 2005 ■ Russia ■ Corporate sector 4 ■ South-eastern Europe 19% 28% 26% 17% 23% 38% 17% ■ Western CIS and 8% the Caucasus 1 Financial sector includes commitments to micro, small and medium-sized enterprises EBRD commitments by stage of transition via financial intermediaries. 2 Energy comprises natural resources and the power sector. 3 Infrastructure comprises municipal infrastructure and transport. ■ Advanced countries 4 Corporate sector comprises agribusiness, manufacturing, property and tourism, 14% 16% telecommunications and new media. ■ Early/intermediate 26% 38% countries 2006 2005 ■ Russia 48% 58% 1 Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, FYR Macedonia, Georgia, Kazakhstan, Kyrgyz Republic, Moldova, Mongolia, Montenegro, Romania, Serbia, Tajikistan, Turkmenistan, Ukraine, Uzbekistan. 2 Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovak Republic, Slovenia. European Bank for Reconstruction and Development EBRD commitments by sector (€ million) Financial sector Energy1 Corporate sector Bank equity Natural resources Agribusiness 94.6 196.2 480.7 321.5 (+240%) 11.8 (--94%) 426.2 (--11%) Bank lending Power and energy Manufacturing 796.7 528.4 392.7 1,078.8 (+35%) 389.8 (--26%) 714.7 (+82%) Equity funds Property and tourism 284.4 163.5 199.6 (--30%) Infrastructure 200.3 (+23%) Non-bank financial institutions Municipal infrastructure Telecommunications and new media 196.1 297.5 123.0 333.6 (+70%) 307.1 (+3%) 149.3 (+21%) Small business finance Transport 55.7 668.0 274.3 (+393%) 529.2 (--21%) Note: The figure in brackets shows the percentage increase/ 1 The energy efficiency components within all EBRD projects decrease since 2005. signed in 2006 amounted to €670 million, compared ■ 2005 ■ 2006 with €205 million in 2005. €33. billion of cumulative commitments, mobilising €69.6 billion from other sources, for a total project value of €10.9 billion Annual commitments 00--06 Cumulative 006 2005 2004 2003 2002 1991--2006 Number of projects1 01 276 265 222 178 2,268 consisting of: – standalone projects 167 156 141 129 105 1,392 – investments under frameworks 134 120 124 93 73 876 EBRD commitments (€ million) 4,96 4,277 4,133 3,721 3,899 33,348 Resources mobilised (€ million) 8,915 6,222 8,799 5,307 4,862 69,571 Total project value (€ million) 1,851 10,499 12,932 9,028 8,761 102,919 1 The calculation of the number of projects signed by the EBRD has been simplified to reflect the actual number of operations to which the Bank made commitments during the year. Previously, the measure was weighted, assigning proportional values to partially signed operations and individual investments under frameworks. An operation that is not linked to a framework and involves only one client is referred to as a standalone project. Operations extended to a number of clients (for example, credit lines to banks) have a framework, which represents the overall amount approved by the Board. Investments under frameworks represent the commitment to individual clients. Financial results 00--06 (€ million) 006 20051 20041 20031 20021 Operating income ,667 1,544 659 538 331 Expenses, depreciation and amortisation (225) (219) (190) (198) (219) Operating profit before provisions ,44 1,325 469 340 112 Provisions for impairment of loan investments (5) 197 (76) (7) (26) Net profit for the year ,89 1,522 393 333 86 Reserves and retained earnings 6,974 4,684 1,718 952 655 Provisions for impairment of loan investments (cumulative) 41 323 508 465 535 Total reserves and provisions 7,15 5,007 2,226 1,417 1,190 1 Amendments to International Financial Reporting Standards in 2006 have resulted in a change to the Bank’s accounting policy in relation to financial guarantees, as explained in the “Accounting policies” section of the Financial Report. The figures from previous years have been restated to conform to the new accounting policy. 4 European Bank for Reconstruction and Development 5 EBRD commitments Central Europe and the Baltic states South-eastern Europe Figures in € million Figures in € million Croatia ▲ 1,576.4 Lithuania ▲ 460.9 Albania ▲ 335.7 50.0 24.0 62.1 302.7 (+505%) 20.5 (--15%) 48.2 (--22%) Czech Republic ▲ 1,107.5 Poland ▲ 3,659.9 Bosnia and Herzegovina ▲ 584.2 51.7 339.6 108.1 47.0 (--9%) 259.2 (--24%) 133.0 (+23%) Estonia ▲ 470.5 Slovak Republic ▲ 1,069.4 Bulgaria ▲ 1,369.4 7.7 59.0 285.1 0.2 (--97%) 19.0 (--68%) 155.0 (--46%) Hungary ▲ 1,850.5 Slovenia ▲ 658.1 FYR Macedonia ▲ 430.2 101.3 38.3 32.6 50.5 (--50%) 2.0 (--95%) 35.1 (+8%) Latvia ▲ 322.0 Montenegro ▲ 38.5 27.2 16.2 0.0 (--100%) 0.1 (--99%) Romania ▲ 3,330.2 500.2 254.7 (--49%) Note: The figure in brackets shows the percentage Serbia ▲ 1,107.7 increase/decrease