FUIB: 20 Years of Sustainable Development The fast-growing First Ukrainian International Bank (FUIB), part of SCM Group, is well on track to becoming one of the TOP 5 financial institutions in Ukraine. The bank, which this year celebrates its 20th anniversary, is one of the country’s great financial success stories, as is evidenced by its latest accounts. The financial results show that FUIB enjoyed a net profit of some $56.4m last year, and the net assets growth of 15.6% to $3.7bn. FUIB managed to reduce its debt to overseas banks, while meeting all liabilities to international investors including those relating to its foreign loan portfolio. “FUIB is among the leaders of Ukraine’s banking system”, said Konstantin Vaisman, Chairman of the FUIB’s Management Board. “We remain a reliable, efficient and forward-thinking
bank and take actions to improve the transparency of our business. This has been noted by leading rating agencies and most reputable media.” Today FUIB is among Ukraine’s top 10 banks by key financials. The Bank serves over 20,000 corporate customers and over 1.5 million individuals. “The tightly-knit team and recognition by our customers has facilitated FUIB’s sustainable growth over our first 20 years,” said Ilya Arkhipov, Chairman of FUIB’s Supervisory Board. “Now we are halfway to our goal – to join Ukraine’s TOP 5 financial institutions ranked by key financial indicators. We will continue building a successful bank, a leadingedge, efficient, modern bank with the best products and services, and excellent
4Konstantin Vaisman, Chairman of the FUIB’s Management Board performance results,” he said. 4To read FUIB’s annual report 2011 highlighting key achievements since its inception, please go to the SCM website: www.scmholding.com/en/investor-relations/reports/
Lemtrans to Join SCM Group’s Transportation Business Ukraine’s Antimonopoly Committee has approved SCM’s purchase of Lemtrans, Ukraine’s largest private freight railcar operator.
Metinvest
2011
Results Page2
FUIB 20TH ANNIVERSARY
July 2012
“We believe in the potential of railroad transportation as both industrial production and transit cargo traffic through Ukraine are increasing. We’ve
been a minority shareholder of Lemtrans for several years. We know this business and its strengths well and see clearly how to develop its competitive
advantages to meet our customers’ transport needs and give them the best service,” said Nikolay Nesterenko, SCM Director of New Business Development.
DTEK Posts 23% Profit Surge Page 3
HarvEast Reaps Early Rewards Page3
SCM Corporate Governance Page 4
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LEMTRANS JOINS SCM
www.scmholding.com
NEWS
NEWS
July 2012
METINVEST 2011 RESULTS
NEW APPOINTMENT
SCM Appoints New Director of Retail Business Development SCM has appointed Andrey Telenkov as Director of Retail Business Development. With a degree in Mathematics and Cybernetics from Moscow State University, Mr Telenkov has consulting experience with McKinsey and Company and is 30 years old. He has served as
as Head of Department responsible for direct investment with Uralsib Financial Corporation. Commenting on the appointment, CEO of SCM Oleg Popov said, “SCM is going to pay more attention to its retail business. We want all senior managers of our assets to have access to the resources and I am proud to be joining the SCM team. expertise of the Together with my new colleagues at m a n a g i n g company.” Ukrainskiy Retail, Parallel and Ukrainian As SCM’s Director of Retail Business Pharmacy Holding I will be working hard Development to grow our business. Andrey Telenkov will represent SCM Andrey Telenkov as a shareholder Director of Business Development with in the Supervisory Boards of Ukrainskiy the Leanvest Investment Group, and Retail, Parallel-M LTD and Ukrainian
Pharmacy Holding. He will be responsible for strategy, investment, finance and risk management of these three enterprises.
Metinvest 2011 Results: Strong Financial Performance
Ilyich Steel Commissions Energy Efficient PCI
Metinvest B.V., the parent company of the international vertically integrated steel and mining group of companies, jointly referred to as “Metinvest”, has posted strong financial results for last year despite the volatile economic situation blighting much of Europe. Latest reports for the 12-month period which ended 31 December 2011 (prepared according to IFRS and assured by independent auditors) show that Metinvest enjoyed consolidated revenues up by 51.6% to $14.2bn compared with the previous year. Operating profit rocketed by a massive 186.4% to $2.7bn and net profit rose by 324.3% to $1.9bn. Operational data of the Group for 2011 reveals that year-on-year crude steel production soared by a huge 64.4%, coking coal production rose by 12.3% and production of iron ore concentrate
remained on the same level. To ensure the successful and timely implementation of its ambitious modernisation programme, Metinvest committed a record $1.165bn towards capital expenditure in 2011, a two-fold increase over the previous year. The Group’s success in bucking the economic downturn was hailed by Igor Syry, Chief Executive Officer of Metinvest, who said, “Despite the volatile economic situation the company demonstrated another strong operational and financial performance in 2011.” Sergiy Novikov, Chief Financial Officer of Metinvest, expressed confidence in the further success of the Group, “We are pleased to deliver another set of strong financial results. We are confident we have established a solid financial platform that will allow us to expand our business while delivering sustainable growth.”
Metinvest’s Financial Highlights 2011 Key indicators: 4Revenues 4EBITDA 4Net Profit 4Capital Expenditure
Million US $ 14,189 3,565 1,854 1,165
Growth + 51.6% + 39.7% + 324.3% + 100.2%
Key Milestones 2011 4Launch of a new blast furnance No.3 at Yenakyievo Steel Plant 4Launch of the Affinity mining complex at United Coal Company 4Decommissioning of open hearth furnaces at Azovstal Steel Plant 4Ilyich Steel Plant fully integrated into the Metinvest Group
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4Igor Syry, CEO of Metinvest
4Andrey Telenkov, SCM Director of Retail Business Development
Metinvest has announced a significant investment in its operations that will boost energy efficiency, reduce use of natural gas and cut emissions at Ilyich Steel Plant, Mariupol (Ilyich Steel). The plant is currently preparing to implement the use of “pulverized coal injection” (PCI), which will allow the replacement of natural gas as the energy source in the blast furnaces used for steel making with pulverized coal. Currently a power system for the PCI plant is being installed and testing of coal injection will take place in July. The total value of the project is $150m and the company has highlighted the environment friendly aspects of the PCI scheme as it reduces energy costs and increases energy efficiency in the production process.
DTEK, Ukraine´s largest independent fuel “Last year the Company entered a early 2012, Zakhidenergo, Dniproenergo, and energy company, is powering ahead new stage in its development. We have Donetskoblenergo, Dniprooblenergo and and announces an impressive 23.3% profit almost completed the formation of our Krymenergo also joined us. Now we face surge in 2011. structure in Ukraine, which by scale is the task of introducing DTEK’s best standards IFRS audited consolidated financials for similar to that of other European energy and practices to the new companies. We 2011 reveal that net profit of the company holding companies. Industrial and must maintain our leadership in the key was over UAH 3.5bn and consolidated energy producers, like Dobropolyeugol, industry indicators. To achieve this, DTEK revenue rose by 63% to about UAH 40bn. Rovenkyanthracite, Sverdlovanthracite is significantly increasing investments into EBITDA increased by 67.4% to over and Kyivenergo became a part of DTEK. In its assets. In 2012, capital investments will UAH 10bn. double to $1.1bn compared to DTEK continued to invest 2011,” said Yuriy Ryzhenkov, Chief DTEK’s Financial Highlights 2011 significantly into the Operating Officer of DTEK. Key indicators: Million UAH Growth modernisation of its main Today DTEK manages 28 coal 4Revenues 39,594 + 63.0% assets. CapEx almost mines and 12 thermal power plants 4EBITDA 10,821 + 67.4% doubled year-on-year to in Ukraine and remains committed UAH 4.3bn and the to building an efficient and reliable 4Net Profit 3,522 + 23.3% company announced a energy company, while establishing 4Tax Payments 5,556 + 60.1% 4www.dtek.com/en/investorsignificant increase in cooperative, trust-based relations 4Capital Expenditure 4,323 + 95.0% relations/annual-reports investments for the next year. with society.
Newly created HarvEast agricultural holding, a part of SCM Group, has recorded positive financial results for its first year of operations. According to preliminary financial reports, in 2011 sales proceeds of the company increased by 25% compared with the previous year. The results were welcomed by Simon Cherniavsky, CEO of HarvEast, who said, “We have demonstrated economic growth over the past year and, for the first time, our companies have delivered positive financial results.” Export contracts with INERCO TRADE S.A. (Switzerland) and Alfred C. Toepfer International GmbH (Germany) concluded in Q1 2012 confirm the success of the company. The Holding plans to export up to 30% of the 2012 yield. The news comes as it was announced the company has approved a UAH 80m investment programme to upgrade its agricultural motor fleet for the second half of this year. “Much of the equipment inherited with the acquisition of the assets is outdated which hampers the development of cutting-edge technologies. So, upgrading our agricultural motor fleet is one of top priorities,” stated Simon Chernyavsky.
Segodnya Voted Newspaper of the Year
In March 2012 Segodnya, the SCMowned national daily, made news of its own by winning the Newspaper of the Year title at the 16th Person of the Year National Programme, which are independent awards in Ukraine for the top achievements in professional and civil society activity in 2011. The newspaper is a market leader in the quality press and boasts the highest circulation in Ukraine. The newspaper is a mid-market, general interest newspaper and is the leader in the national daily press with an average circulation of 120,000 copies a day. Segodnya is published by Segodnya Multimedia, SCM’s publishing holding which has its own modern print plant. Today it includes 11 editions covering news, information, entertainment and advertising areas. Every year Segodnya Multimedia researches reader’s preferences and interests and fine-tunes the newspaper’s editorial to give them the content they are looking for. The senior executives believe this has been the key to the success of the newspaper. Yekaterina Lapshina, SCM Director of Media Business Development and Chairperson of Segodnya Supervisory
4 Yekaterina Lapshina, SCM Director of Media Business Development Board, received the award on behalf of Segodnya. Mrs Lapshina commented on the honorary award, “We are sincerely happy and proud to receive this award for our contribution to the development of the country and Segodnya will proudly bear the Newspaper of the Year title.”
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NEWSPAPER OF THE YEAR
HarvEast Reaps Early Rewards
DTEK PROFIT SURGE
NEWS July 2012 DTEK Powers Ahead with 23% Profit Surge in 2011
NEWS SCM ADOPTS NEW CGS
SCM Adopts New Corporate Governance Standards System Capital Management has decided to switch to the continentalstyle system of corporate governance by dividing the executive function of its
and investment appeal, SCM Group also made corporate changes and separated the business ownership and corporate governance. As a result, SCM will focus
United Minerals Group (UMG) Factfile
In 2011 the SCM Group paid about UAH 18.4bn to Ukrainian national and local budgets as well as nonbudget funds (including the Pension Fund), which is 28% more than in 2010. SCM news release, 15.03.2012 holdings´ management and the nonexecutive function of its supervisory boards. The decision will influence the boards and supervisory boards of existing holdings (Metinvest, DTEK, as well as other industrial holdings and individual assets) and any new companies the Group may launch. To improve business transparency
on strategic business management while SCM Holdings Limited will own the corporate rights of all its Ukrainian and international assets. These actions will not change the investment focus (Ukraine will remain our major investment destination) or the tax policy of the Group (our shareholder and businesses are responsible taxpayers and pay taxes in Ukraine).
SCM Group’s Social Initiatives
SOCIAL INITIATIVES
July 2012
SCM has taken the decision to consolidate its social initiatives and programmes into a single Social Partnership Programme. The new programme has been developed on the basis of the experience gained by SCM Group’s industrial holdings - Metinvest and DTEK - during implementation of their social programmes in the regions where they operate. Natalia Yemchenko, SCM Director of Public Relations and Communications, said the overall aim of SCM was to foster the economic and social development of Ukrainian society, adding, “Therefore social partnership projects are part and parcel of SCM´s programme of sustainable development.” The importance the company attaches to social partnership issues is clearly demonstrated by its significant investment in this area. In 2011, SCM invested UAH 100m in social partnership projects and plans to spend at least UAH 170m in 2012. In April SCM Group launched its first sustainable development portal (www.sustainability.scm.com.ua), which covers all the information about
the Group’s CSR activities. In addition, the Group recently presented its Sustainability Report 2010-H1 2011, which gives a more detailed description of stakeholder engagement and anticorruption initiatives compared with previous reports.
4United Mineral Group (UMG) manages the clay
producers in the SCM Group. At present it comprises three Ukrainian companies: VESCO, Druzhkovka Quarry, and Ogneupornerud. 4UMG is the leader in the Ukrainian clay mining
sector and the second biggest European supplier of white plastic clay. In addition, UMG has the biggest clay reserves among European companies. 4With annual production of 3 million tonnes,
UMG accounts for 50% of all Ukrainian white plastic clay output. 4The company operates 11 clay pits extracting
over 100 types of clay. Its total mines have estimated clay reserves of about 300m tonnes. 4The company sells to 25 countries worldwide
with the majority of exports going to the leading world producers of ceramic tiles, bricks, sanitary ware and refractories in Russia, Italy, Spain, Turkey, Poland, Belarus and the United Arab Emirates. 4The volume and the quality of production
4The online version of SCM Sustainability Report 2010-H1 2011 is available at SCM’s corporate web site at Sustainability section, as well as at sustainability portal of SCM Group.
For further information, or to subscribe, please contact: Jock Mendoza-Wilson, Director of International and Investor Relations System Capital Management, 117 Postysheva st., Donetsk 83001, Ukraine ir@scm.com.ua – www.scmholding.com
make UMG a world leader among global suppliers of plastic white ceramic clays and production is certified to the ISO 9001:2000 Quality Management System standard. 4UMG employs 1,500 people. www.umgukraine.com