Annual Report RUSNANO 2011 Moscow 2012 Annual Report RUSNANO 2011 1 Contents Letter from the Chairman of the Board of Directors and the CEO and Chairman of the 3 Executive Board of RUSNANO Mission and Objectives of RUSNANO 5 Investment Activities of RUSNANO 6 • Review of Applications and Adoption of Projects 6 • Manufacturing Projects 10 • Sales of Nanotechnology Products Manufactured by Portfolio Companies 11 • Program 13+ for Commissioning New Manufacturing Facilities 12 • Joint Venture Capital Funds 13 • Foreign Subsidiaries 14 Sources of Financing in 2011 15 Management of Portfolio Companies 16 Key Performance Indicators 18 Monitoring Production of Goods in the Nanoindustry 19 Appendix A. Brief Descriptions of Projects Approved by RUSNANO in 2011 20 Appendix B. Company Profile 30 Appendix C. General Meeting of Shareholders 33 Appendix D. RUSNANO Board of Directors—members and meeting minutes 34 Appendix E. Members of Audit Committee of the Company 60 Appendix F. Members of the Executive Board of the Company 61 Appendix G. Main directions of the Company’s development 68 Appendix H. Structure of the Open Joint Stock Company 69 Appendix I. Large Transactions of the Company during 2011, Including Transactions 102 Acknowledged as Large Transactions in Conformance with the Federal Law On Joint Stock Companies and Other Transactions That, in Accordance with the Charter of the Company, Require Approval as Large Transactions: the Principal Conditions for Each and the Management Body Approving the Transaction Appendix J. Related-Party Transactions of the Company during 2011, Including 102 Transactions Acknowledged as Related-Party Transactions in Conformance with the Federal Law On Joint Stock Companies: the Related Party(Parties) for Each Principal Conditions, and the Management Body Approving the Transaction Appendix K. Allocation by the Company of Profit Obtained in 2011 114 Appendix L. Risks Arising from Activities of the Company 119 Appendix M. Results of Fulfilling Mandates and Directives from the President of the 122 Russian Federation and Authorizations from the Government of the Russian Federation Appendix N. Use of Energy Resources during 2011 in Real and Monetary Value 124 Appendix O. Annual Financial Report for 2011, the Auditor’s Opinion on the Reliability 125 of the Annual Financial Report, and the Report of the Audit Commission Annual Report RUSNANO 2011 2 Letter from the Chairman of the Board of Directors and the CEO and Chairman of the Executive Board of RUSNANO The year 2011 was RUSNANO’s first full year of work after far-reaching reorganization. We were a state corporation; today we are an open joint stock company, a familiar form for our investors and partners. Like other businesses, the effectiveness of our investments, their profitability, and their payback have become paramount for our company. We fully embrace the work of building a nanoindustry in Russian that operates at global standards and is capable of competing worldwide. RUSNANO will carry out its charge within the business-logic framework for which a joint stock company is designed. Matters best left to noncommercial logic have become the province of the Fund for Infrastructure and Educational Programs. The operations of these state institutes of development have been launched as they should be, in forms that follow functions. RUSNANO is one of the largest technology investors in Russia. Our projects are entirely within the high-tech sphere because we invest solely in nanotechnology projects. Consider these statistics. In 2011 RUSNANO invested more than 36 billion rubles in the development of the nanoindustry. But what is more important, simultaneously, private business invested in those projects. The sum of its investment exceeded 57 billion rubles. Only a partnership of private and government sectors can establish a viable nanoindustry. The year just past was the first in which a sizeable number of newly created businesses—portfolio companies founded with co-financing from RUSNANO— launched production facilities. In 2010 the first three manufacturing plants were commissioned; in 2011 we set our sights and all our energies on a program of 13+. And we met our goal. Why 13+? Some of our business commissioned several factories at once in difference regions of the country. It is a telltale sign that the innovation economy is growing beyond Moscow; in fact, it is bursting forth in Russia’s regions. For that reason, a significant share of our financial resources is going to the regions. In all, after less than four full years of cofinancing to create nanotechnology companies, RUSNANO has invested more than 100 billion rubles in promising businesses. That money is working as it should, as portfolio company earnings demonstrate. In 2011 they sold nano-enabled goods exceeding 11 billion rubles—a giant step from the just over one billion in sales in 2010. This year portfolio companies paid RUSNANO its first dividends. The Fund for Infrastructure and Educational Programs plays no lesser role in developing the country’s nanoindustry. After reorganization of the state corporation, the fund took on responsibility for essential work not suited to an open joint stock company: building infrastructure in technology, education, organization, and law. During the year, the Board of Directors and the Executive Board reviewed proposed projects and carefully considered the progress in earlier-approved portfolio companies. There were a few instances in which we had to take the difficult step of closing a project. You will read about that, and the other highlights from 2011, in Annual Report RUSNANO 2011 3 this annual report. In general, we can say that despite some delays, natural for projects of this size, we are moving forward, even outdistancing indicators set in our strategy for 2015. We would like to acknowledge the considerable help the Board of Directors has received from two of its committees, the Science and Technology Board and the Committee on Investment Policy. We are grateful, too, for the support of our shareholder, the Government of the Russian Federation. Vladislav Putilin Anatoly Chubais Annual Report RUSNANO 2011 4 Mission and Objectives of RUSNANO RUSNANO was established on March 11, 2011, as an open joint stock company through reorganization of state corporation Russian Corporation of Nanotechnologies, which had been founded in 2007. Federal law № 211 On Reorganization of the Russian Corporation of Nanotechnologies dated July 27, 2010, stipulated the universal succession of the company to all rights and responsibilities of the state corporation. The non-commercial Fund for Infrastructure and Educational Programs also resulted from the state corporation’s reorganization. RUSNANO’S mission is to commercialize advances in nanotechnology by establishing profitable businesses that are capable of competing in global and, in some cases, domestic markets. RUSNANO becomes a co-investor in these endeavors to build a nanotechnology industry based on developments by Russian scientists and leading foreign technologies transferred to the Russian Federation. So far, RUSNANO is without parallel in the Russian Federation. The country’s nanoindustry is evolving though, and the appearance of competitors in the mid-term, perhaps including private companies, is highly likely. The purpose of the Fund for Infrastructure and Educational Programs is to create infrastructure for innovation in the country. The indices by which RUSNANO will be measured remain unchanged: by 2015 sales of nano-enabled products by companies in which RUSNANO has invested will reach or exceed 300 billion rubles and Russia’s nanoindustry as a whole will achieve sales of 900 billion rubles or more. Annual Report RUSNANO 2011 5 Investment Activities of RUSNANO Review of Applications and Adoption of Projects RUSNANO received 229 applications for project financing during 2011. These applications had budgets totaling 814.3 billion rubles of which 435.9 billion rubles (53.5 percent) was sought from the company. From April 1, 2008, when RUSNANO began accepting applications, through December 31, 2011, the company registered 2113 applications1 totaling 4.45 trillion rubles. Applicants requested 2.37 trillion rubles (51 percent) of the total from RUSNANO. Financing requests came from 35 countries and 200 cities or towns within the Russian Federation. The largest number of domestic applications in 2011 came from the Central Federal Okrug (66 applications, 54 percent), the Privolzhsky Federal Okrug (26 applications, 21 percent), Northwestern Federal Okrug (12 applications, 10 percent), and the Siberian Federal Okrug (7 applications, 6 percent). In comparison with the previous year, the number of applications from Russia fell by nearly two-thirds, from 343 in 2011 to 123 in 2011 (figure 1). 168 Central Federal Okrug 66 46 Privolzhsky Federal Okrug 26 38 Northwestern Federal Okrug 12 Siberian Federal Okrug 42 7 2010 Urals Federal Okrug 26 5 2011 6 Far Eastern Federal Okrug 3 12 Southern Federal Okrug 2 5 Northern Caucasian Federal Okrug 2 0 20 40 60 80 100 120 140 160 180 Figure 1. Domestic applications by federal okrug, 2010 and 2011 During 2011, 106 foreign applicants from 24 countries submitted requests for financing (figure. 2). That number is 10 percent higher than in 2010 when 96 foreign applicants submitted requests. 1 Of these applications, 2,092 were for manufacturing projects, funds, or nanocenters and 21 were for infrastructure or educational programs. The latter two were transferred to the Fund for Infrastructure and Educational Programs for evaluation. Annual Report RUSNANO 2011 6 United States 37 43 Germany 13 22 India 6 United Kingdom 3 5 Switzerland 3 5 South Korea 2 5 1 Japan 4 2010 Israel 3 4 2011 Australia 3 Finland 2 Canada 2 5 Denmark 2 Austria 2 Other Countries 11 17 0 5 10 15 20 25 30 35 40 45 50 Figure 2. Applications from foreign countries, 2010 and 2011 Analysis of the applications received by RUSNANO in 2011 reveals that 92 percent sought cofinancing for manufacturing projects, either new manufacturing or broadening and modernizing existing manufacturing.