SCM GROUP PUBLIC REPORT 2011
SCM GROUP PUBLIC REPORT 2011 SCM GROUP PUBLIC REPORT 2011
SCM GROUP PUBLIC REPORT 2011 CREATING SUSTAINABLE VALUE
- Page 2 and 3: CONTENTS 2011 Financial Results 3 C
- Page 4 and 5: CEO statement Dear Colleagues and P
- Page 6 and 7: 1 June SCM, jointly with BEST Analy
- Page 8 and 9: SCM Group's activities in the debt
- Page 11 and 12: SCM Group corporate information SCM
- Page 13 and 14: THE SCM MISSION: SUCCESS, TOGETHER
- Page 15 and 16: AMIR AYSAUTOV METALS AND MINING BUS
- Page 17 and 18: YEKATERINA LAPSHINA MEDIA BUSINESS
- Page 19 and 20: NATALIA YEMCHENKO PUBLIC RELATIONS
- Page 21 and 22: SCM Group corporate structure 1. SC
- Page 23 and 24: Heavy Engineering SCM completed the
- Page 25: 25 SCM GROUP PUBLIC REPORT CREATING
- Page 28 and 29: Metinvest Group’s strategic visio
- Page 30 and 31: Sales Metinvest International S.A.
- Page 32 and 33: Sales geography, 2011 Region Steel
- Page 34 and 35: Energy. DTEK DTEK is the largest pr
- Page 36 and 37: DTEK's key production indicators In
- Page 38 and 39: Power distribution DTEK's power dis
- Page 40 and 41: Financial services. Banking and ins
- Page 42 and 43: In November the bank co-underwrote
- Page 44 and 45: Mining Machines Group's financial i
- Page 46 and 47: Agriculture. HarvEast Holding HarvE
- Page 48 and 49: Dnepropetrovsk Television Service S
- Page 50 and 51: Real estate. ESTA Group ESTA Group
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong> <strong>2011</strong><br />
CREATING SUSTAINABLE VALUE
CONTENTS<br />
<strong>2011</strong> Financial Results 3<br />
CEO statement 4<br />
<strong>SCM</strong> Group<br />
events calendar <strong>2011</strong> 5<br />
<strong>SCM</strong> Group's activities<br />
in the debt capital markets 8<br />
<strong>SCM</strong> Group corporate<br />
information 11<br />
<strong>SCM</strong> Group's history 11<br />
Corporate culture: mission, vision,<br />
values 13<br />
<strong>SCM</strong> Company management 14<br />
Corporate governance 20<br />
<strong>SCM</strong> Group corporate structure 21<br />
<strong>SCM</strong> Group corporate<br />
transformation program <strong>2011</strong> 22<br />
<strong>SCM</strong> Group's assets structure <strong>2011</strong> 24<br />
<strong>SCM</strong> Group's business 27<br />
Mining and metals. Metinvest 27<br />
Energy. DTEK 34<br />
Financial services. Banking and<br />
insurance 40<br />
Heavy Engineering.<br />
Ukrainian Machine Building<br />
Holding 43<br />
2<br />
Port business. Portinvest 45<br />
Agriculture. HarvEast Holding 46<br />
Media. Ukraine Media Group,<br />
Segodnya Multimedia Publishing,<br />
and Dnepropetrovsk Television<br />
Service 47<br />
Real estate. ESTA Group 50<br />
Clay mining. United Minerals<br />
Group 52<br />
Retail trade. Ukrainian Retail 54<br />
Petroleum products retailing.<br />
Parallel 55<br />
Pharmaceuticals.<br />
Ukrainian Pharmacy Holding 56<br />
Telecommunications. Vega 57<br />
<strong>SCM</strong> Sport.<br />
FC Shakhtar and Donbass Arena 58<br />
Associated companies 59<br />
Sustainable development 61<br />
Key post-reporting period<br />
events 2012 69<br />
Contacts 72
<strong>2011</strong> Financial Results<br />
Assets<br />
$ m<br />
Sales<br />
volume<br />
$ m<br />
Net<br />
profit<br />
(loss)<br />
$ m<br />
EBITDA<br />
$ m<br />
3<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
28 22 675 466 +25.54<br />
2010 <strong>2011</strong><br />
12 819<br />
19 542<br />
2010 <strong>2011</strong><br />
2 258<br />
850 2010 <strong>2011</strong><br />
3 376<br />
4 934<br />
2010 <strong>2011</strong><br />
DYNAMICS, %<br />
+52.45<br />
+165.65<br />
+46.15<br />
Introduction
CEO statement<br />
Dear Colleagues and Partners,<br />
The past year was very important from the standpoint of <strong>SCM</strong><br />
Group's development. In <strong>2011</strong>, we conducted in-depth<br />
analysis of our business, goals, and philosophy. The need<br />
for this analysis emerged following the financial results we<br />
achieved during the reporting year. <strong>SCM</strong> Group's combined<br />
assets amounted to $28bn in <strong>2011</strong>, while our combined<br />
revenue exceeded $19bn. We have grown substantially, and<br />
with that growth, our influence on Ukraine’s economy and<br />
society has become even more prominent.<br />
We are fully cognizant of the need to consider the multiple<br />
interests of a variety of stakeholders, besides our shareholders<br />
and business partners, in our daily work and strategic<br />
decision-making. Primarily, those are the interests of our<br />
250,000 employees, as well as the interests of about 10m<br />
people who live in the regions where we are present.<br />
It is also important for us to consider the interests of our<br />
clients and counterparties, since we constantly cooperate<br />
with thousands of organizations and entities. Let us not forget<br />
about the army of FC Shakhtar fans, the large audience<br />
of Ukraine Television Channel, as well as hundreds of thousands<br />
of individual clients of First Ukrainian International<br />
Bank, Parallel, Brusnychka, and our pharmacies, as well.<br />
Last, but not the least, important stakeholders for us are<br />
the local businesses – hundreds of thousands of enterprises<br />
and entrepreneurs, on whose performance Ukraine's GDP<br />
growth and future wellbeing depends.<br />
I am convinced that our mission – Success Together – is as<br />
current today as never before, as are our strategic goals. As<br />
an effective business, we strive to win the world championships<br />
in the lowest prime cost of production, quality and<br />
sales; as an employer – the world championship in the level<br />
of compensation; and as a corporate citizen, we strive to<br />
make the towns where our enterprises operate as comfortable<br />
for living as possible. We also constantly invest in the<br />
upgrading and development of our enterprises, which allows<br />
us to create new jobs, win new clients, and increase our tax<br />
payments.<br />
Improving the economic and the social infrastructure, as well as<br />
the business environment in the regions of our presence, is our<br />
clear focus. We contribute to this improvement by introducing<br />
clear and transparent tender procedures, which stimulate our<br />
suppliers and subcontractors to invest in their development.<br />
4<br />
We certainly create opportunities for professional and career<br />
growth – in <strong>SCM</strong> Group’s companies, as well as at the regional<br />
and national level.<br />
I’d like to emphasize once more that society’s expectations<br />
of big business’ responsibility has always been high. This is<br />
why, in <strong>2011</strong>, <strong>SCM</strong> Group decided to unite our social projects<br />
under the national Social Partnership Program, involving not<br />
only our companies and enterprises, but also the local authorities<br />
and the citizens in the regions of our presence. The<br />
program is intended to run during 2012–2014, with a total<br />
investment of $60m.<br />
Finally, I would like to express my gratitude to every member<br />
of our large team of hundreds of thousands of professionals<br />
for their dedication and loyalty.<br />
Oleg Popov<br />
CEO, <strong>SCM</strong> Company
12 January DTEK signed a 49 year lease for<br />
Dobropolyeugol, a state-owned mining<br />
enterprise<br />
21 January DTEK joined the Declaration of responsible<br />
business partnership, initiated by the CSR<br />
Development Center<br />
25 January <strong>SCM</strong> participated in the annual meeting<br />
of the World Economic Forum in Davos for<br />
the fifth consecutive year. <strong>SCM</strong> is a strategic<br />
partner of the Forum<br />
28 January <strong>SCM</strong> joined the new UN initiative – Global<br />
Compact LEAD<br />
4 February Service-Invest (DTEK) completed<br />
the reconstruction of the five substations<br />
and put the new high-voltage transmission<br />
line into operation<br />
11 February ESTA Holding created a new department to<br />
manage the hotel business development<br />
2 March Stolichny TSUM LLC (ESTA Group)<br />
completed the purchase of Kievsky TSUM<br />
Trading House LLC and M-Service LLC<br />
10 March <strong>SCM</strong> and Smart Group jointly created<br />
HarvEast agricultural holding<br />
11 March <strong>SCM</strong> completed the purchase of 100%<br />
share in Renaissance Capital Bank<br />
(Renaissance Credit TM)<br />
18 March 14 DTEK's enterprises completed<br />
the certification of its enterprises'<br />
environmental management systems to<br />
comply with ISO 14001:2004 standard<br />
23 March DTEK completed the certification<br />
of the occupational safety management<br />
systems at its enrichment, distribution, and<br />
service enterprises to comply with OHSAS<br />
18001:2007 standard<br />
<strong>SCM</strong> Group<br />
events calendar <strong>2011</strong><br />
5<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
30 March <strong>SCM</strong> participated in the Ukrainian Summit,<br />
organized by The Economist, as partner<br />
1 April DTEK Power Trade began the delivery<br />
of electric power to Moldova<br />
5 April Makeyevka Steel Plant changed its status<br />
to the branch of Yenakiyevo Steel Plant<br />
(Metinvest)<br />
14 April At System Capital Management’s General<br />
Shareholders Meeting a decision was made<br />
to retain the company profit for 2010 for<br />
business development<br />
27 April DTEK expanded its social partnership<br />
programs to include Lvov, Burshtyn, and<br />
Dobrotvor<br />
29 April Parallel opened the new gas station complex<br />
in Donetsk<br />
12 May Donbass Television Channel (Ukraine Media<br />
Group) launched the satellite broadcasting<br />
13 May <strong>SCM</strong> presented IV annual Ukrainian<br />
National Higher Educational Institutions<br />
Rating, Compass, prepared jointly with Kiev<br />
International Sociology Institute<br />
6 May DTEK Holdings B.V. increased the number<br />
of independent directors on its Supervisory<br />
Board – from one to three<br />
16 May <strong>SCM</strong> Group’s transportation assets were<br />
consolidated under Portinvest, a new<br />
sectoral holding<br />
19 May Segodnya Crimea, a local issue of Segodnya<br />
Newspaper, came out<br />
25 May Metinvest closed down all open hearth<br />
furnaces at Azovstal Steel Plant<br />
26 May DTEK introduced the new concept<br />
of development strategy till 2030<br />
Introduction
1 June <strong>SCM</strong>, jointly with BEST Analytical Center,<br />
presented the Ukrainian Energy Rating,<br />
which rated the energy efficiency<br />
of Ukraine's Oblasts<br />
1 June Parallel opened two gas station complexes<br />
in Donetsk and Gorlovka<br />
1 June Metinvest opened a new service center<br />
in Mariupol<br />
6 June DTEK created DTEK Neftegaz, a subsidiary<br />
company, to develop projects in oil and gas<br />
industry, on the continent and offshore<br />
20 June Metinvest signed a long-term contract with<br />
Air Liquide (France) to supply industrial<br />
gases to Yenakiyevo Steel Plant<br />
23 June Ukraine Television Channel joined the group<br />
of founders of the Industrial Television<br />
Committee, a Ukrainian television industry<br />
association<br />
29 June The integration of Ilyich Steel Plant<br />
in Mariupol into Metinvest Group was<br />
completed<br />
13 July Metinvest jointly with other investors<br />
purchased a 50% share in the metals<br />
business of Industrial Group, which<br />
manages Zaporozhstal<br />
15 July Metinvest commissioned the new mine<br />
– Affinity mine of United Coal Company<br />
(USA)<br />
16 July The operational integration of the First<br />
Ukrainian International Bank and<br />
Dongorbank was completed<br />
25 July DTEK, Kiev City State Administration,<br />
and USAID signed the Memorandum<br />
of Cooperation under the Municipal Heating<br />
Reform Project, to improve the infrastructure<br />
and the energy efficiency of the Kiev city<br />
heat supply system<br />
6<br />
8 August Metinvest opened a service center and<br />
a sales office in Saratov (Russian Federation)<br />
15 August <strong>SCM</strong> transferred the strategic management<br />
rights to Krivoy Rog Mining Equipment to<br />
Ukrainian Machine Building Holding<br />
29 August Ukrainian Machine Building Holding won<br />
the tender for supplying equipment to<br />
the Moscow subway<br />
1 September Segodnya Western Ukraine, a local issue<br />
of Segodnya Newspaper, came out<br />
5 September Ukrainian Machine Building Holding created<br />
a service company<br />
13 October ESTA Holding transferred the management<br />
rights to Kiev Hotel (Donetsk) to The<br />
Rezidor Hotel Group<br />
13 October Metinvest was awarded one of the four<br />
awards of the World Steel Association for<br />
the best industrial production occupational<br />
safety project<br />
17 October DTEK Power Trade renewed the export<br />
145–200 MW of electricity to Poland<br />
20 October Metinvest organized an international<br />
conference, dedicated to the matters<br />
of occupational safety<br />
31 October Parallel opened 7 gas station complexes<br />
in Lugansk Oblast during the month<br />
of October<br />
4 November Parallel opened 4 gas station complexes<br />
in Lugansk Oblast and in Mariupol (Donetsk<br />
Oblast)<br />
1 December DTEK and the Ministry of Energy and<br />
Coal Industry of Ukraine signed 49<br />
year concession agreements to invest<br />
in Rovenkyanthracite and Sverdlovanthracite<br />
state-owned companies
5 December Metinvest opened a new service center<br />
in Lvov<br />
6 December Metinvest commissioned a modern blast<br />
furnace complex #3 at Yenakiyevo Steel<br />
Plant<br />
6 December Segodnya Multimedia press-studio began<br />
its operations<br />
9 December DTEK won the tender of the State Property<br />
Fund of Ukraine for the sale of 25% stake<br />
in Kievenergo<br />
15 December ESTA Holding purchased a 50% share in the<br />
second line of Leonardo Business Center<br />
(Kiev)<br />
22 December First Ukrainian International Bank increased<br />
its statutory capital by $97m – to $429m<br />
22 December DTEK Power Trade and Vostokenergo<br />
(DTEK) signed an agreement with stateowned<br />
NEK Ukrenergo, securing access<br />
to the inter-state electric power export<br />
networks for 2012<br />
22 December Metinvest commissioned the second<br />
launching platform for magnetic floatation<br />
beneficiation of iron ore concentrate at<br />
InGOK<br />
28 December DTEK Power Trade signed contracts with<br />
EDF Trading (France) и CEZ Group (Czech<br />
Republic) to supply electricity to Hungary,<br />
Poland, Slovakia, and Romania<br />
28 December Ukrainian Machine Building Holding won<br />
the tender for the sale of 94.9% share<br />
in Gorlovka Heavy Engineering Plant<br />
7<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Introduction
<strong>SCM</strong> Group's activities<br />
in the debt capital markets<br />
January<br />
<strong>SCM</strong> paid the final installment on its $545m syndicated loan.<br />
The syndicated four-year loan was granted to <strong>SCM</strong> in March<br />
2007. The loan was arranged by BNP Paribas (Suisse) SA,<br />
Bayerische Hypo- und Vereinsbank AG (UniСredit Group),<br />
NATIXIS, Raiffeisen Zentralbank Osterreich AG, and Standard<br />
Bank plc.<br />
February<br />
Metinvest placed a $750m, seven-year Eurobond with<br />
a yield of 8.75%, due on February 14, 2018. The funding<br />
will be used for its capital investment program and other corporate<br />
purposes. The Eurobond was underwritten by Credit<br />
Suisse Securities (Europe) Limited, Deutsche Bank AG (London<br />
Branch), ING Bank N.V. (London Branch), The Royal<br />
Bank of Scotland plc, Sberbank of Russia, and VTB Capital<br />
plc.<br />
Metinvest was granted a $75m pre-export loan facility, with<br />
repayment due in 2013, from Rabobank. The funding will<br />
be used for further upgrading of its production facilities and<br />
other corporate purposes.<br />
Ukrainian Machine Building Holding signed an agreement<br />
with Sberbank of Russia for a $40m credit line. The funding<br />
will be used to implement investment programs, develop<br />
the company's production facilities, and to replenish working<br />
capital due to the growth of sales volume and the development<br />
of the distribution network.<br />
Azovstal Steel Plant (Metinvest) repaid its $175m Eurobond<br />
with a yield of 9.125%, which matured in February <strong>2011</strong>.<br />
The Eurobond was underwritten by ING Bank N.V. и Moscow<br />
Narodny Bank Limited.<br />
8<br />
March<br />
Metinvest signed an agreement with Sberbank of Russia to<br />
open a $175m, 3-year stand-by credit line. The funding will<br />
be used for the capital investment program and other corporate<br />
purposes.<br />
Khartsyzsk Pipe Plant (Metinvest) repaid the $39.5m loan<br />
facility in advance. The loan was granted by VTB Bank.<br />
April<br />
Metinvest B.V. (Netherlands), Metinvest Group’s holding<br />
company, signed a $100m, 3-year pre-export line of credit<br />
with UniCredit bank. The funding will be used for the working<br />
capital replenishment, as well as for the implementation<br />
of the long-term strategic investment projects.<br />
July<br />
HarvEast Holding signed a $25.1m, 10-month loan facility<br />
with Prominvestbank. The funding will be used for the replenishment<br />
of the company's working capital.<br />
August<br />
ASKA Insurance Company repaid the $0.125m line of credit<br />
granted by Finance and Credit Bank.
September<br />
DTEK signed a $150m, 3-yearm multi-currency line of credit<br />
with ING Bank Ukraine. The funding will be used for business<br />
development purposes.<br />
October<br />
Erste Group Bank AG increased DTEK's limit from the $64.5m<br />
(€50m), 3-year credit line to $129m (€100m).<br />
DTEK was granted a $312m (10bn RUR), 5-year loan by<br />
Russian Commercial Bank (Cyprus), VTB Group.<br />
DTEK signed a $500m (15 713.5m RUR), 5-year line<br />
of credit with Sberbank of Russia. The funding will be used<br />
for the working capital replenishment, the financing of capital<br />
expenditures, as well as for purchasing the new assets.<br />
November<br />
Metinvest B.V. secured a $1bn, 5-year loan facility at LIBOR<br />
+3%. Most of the funding will be used to re-finance the previously<br />
received pre-export loans on more favorable terms.<br />
The remaining funding will be used for the working capital<br />
replenishment, the implementation of investment programs,<br />
and other general corporate purposes. The loan facility was<br />
arranged by Deutsche Bank AG, BNP Paribas, Erste Group<br />
Bank AG, Rabobank International, The Bank of Tokyo-Mitsubishi<br />
UFJ Ltd, Barclays Bank plc, Raiffeisen Bank International<br />
AG, and Credit Suisse AG.<br />
9<br />
December<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
HarvEast Holding signed a $13.8m, 12-month line of credit<br />
with Prominvestbank. The funding will be used for the working<br />
capital replenishment and for the necessary production<br />
purchases for the spring sowing campaign.<br />
DTEK signed the $260m, 3-year lines of credit with Uni-<br />
Credit Group. The funding will be used for general corporate<br />
purposes, including the working capital replenishment and<br />
the financing of capital expenditures.<br />
Introduction
<strong>SCM</strong> Group<br />
corporate<br />
information<br />
<strong>SCM</strong> Group's history<br />
11<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
System Capital Management (<strong>SCM</strong>) was<br />
founded by Rinat Akhmetov (100% owner)<br />
in 2000 in Donetsk, Ukraine. Its main purpose<br />
is to be a strategic investor in key segments<br />
of the Ukrainian economy. These are, primarily,<br />
mining, metals, and energy. Since its foundation,<br />
<strong>SCM</strong> has been developing its business, based<br />
on the industrial assets it owns and making<br />
large-scale investments, both in Ukraine and<br />
internationally. <strong>SCM</strong> is constantly seeking to<br />
expand its business by gaining presence in other<br />
dynamic sectors of economy including: banking,<br />
insurance, telecommunications, real estate,<br />
media, clay mining, heavy engineering, retail<br />
trade, agriculture, transportation, and others.<br />
<strong>SCM</strong> <strong>SCM</strong> Group corporate information
2000–2002<br />
GROWING THE PORTFOLIO<br />
<strong>SCM</strong> expands its investment portfolio. It is during this period<br />
that the company acquires its first assets in mining, metals,<br />
and energy, and begins introducing a single standard<br />
of management across the Group.<br />
2002–2004<br />
INVESTING: ORGANIC GROWTH<br />
AND M&A<br />
During this period, the main focus is on establishing international<br />
standards of business management at all of the company’s<br />
key assets. Meanwhile, enterprises are modernized and<br />
production indicators are raised, where possible, using experience<br />
and know-how, accumulated by <strong>SCM</strong> professionals. The<br />
company begins to implement its long-term growth strategy<br />
and to increase the effectiveness of its business. This means<br />
building vertically-integrated industrial businesses and forming<br />
a team of world-class managers capable of running them.<br />
2004–2006<br />
DIVERSIFICATION,<br />
GROWTH,<br />
RESTRUCTURING, AND<br />
TRANSPARENCY<br />
During this period, <strong>SCM</strong> begins actively implementing its<br />
corporate transformation program, aimed at increasing<br />
the effectiveness of the Group’s corporate structure and<br />
corporate governance. The first steps within the program’s<br />
framework are forming Metinvest and DTEK holdings to exercise<br />
strategic and operational management of the Group’s<br />
assets in metals, mining, and energy, respectively. During<br />
this period, <strong>SCM</strong> also actively invests in the new areas: media,<br />
real estate, and telecommunications. <strong>SCM</strong> also grows its<br />
presence in its main business areas: mining, metals, energy,<br />
and financial sector. The company institutes the preparation<br />
of consolidated financial statements in accordance with International<br />
Financial Reporting Standards (IFRS).<br />
12<br />
2007–2008<br />
STABILITY<br />
<strong>SCM</strong> group develops a distinct business development strategy.<br />
Business expansion is based on organic growth, as well<br />
as on new acquisitions in strategically important segments<br />
of the economy and industry (mining and metals, energy, financial<br />
sector, telecommunications, real estate, retailing, and<br />
others). Simultaneously, <strong>SCM</strong> begins exiting from sectors,<br />
presence in which does not comply with the approved business<br />
development strategy. During this period the Group also<br />
accumulates the necessary financial reserves to ensure business<br />
stability during volatile economic periods. At the foundation<br />
of this stability are balanced approach to doing business,<br />
effective and efficient decision-making, conservative<br />
approach to borrowing, clear priority setting, and, undoubtedly,<br />
the team of talented professionals.<br />
2009–Present time.<br />
LOOKING TO THE FUTURE.<br />
GROWTH<br />
By the 10th year of operations <strong>SCM</strong> becomes Ukraine’s largest<br />
private national investor. The Group’s share in the country’s<br />
GDP amounts to 7%, while its enterprises employ approximately<br />
244,000 people. <strong>SCM</strong>’s geography of presence<br />
includes Ukraine, Russia, Switzerland, Italy, Bulgaria, United<br />
Kingdom, and the USA. The Group’s approach to doing business<br />
remains unchanged: long-term investment in businesses<br />
with high growth and ROI potential. The main goal also<br />
remains constant – to become not only Ukraine’s leading financial<br />
and industrial group, but also a truly competitive and<br />
successful global business.
THE <strong>SCM</strong> MISSION:<br />
SUCCESS, TOGETHER<br />
We invest in the continuous growth and<br />
effectiveness of our business, and through this<br />
support the economic and social development<br />
of society as a whole.<br />
THE <strong>SCM</strong> VISION:<br />
CREATING THROUGH<br />
DEVELOPMENT<br />
We build effective businesses and manage<br />
them according to the best world standards<br />
and practices, ensuring long-term returns<br />
on our investment and participation in the<br />
development of the regions in which we are<br />
present.<br />
Corporate culture:<br />
mission, vision, values<br />
13<br />
OUR VALUES:<br />
EFFECTIVENESS,<br />
PROFESSIONALISM,<br />
ACCOUNTABILITY<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Effectiveness<br />
as a means to achieve the best results<br />
in everything we do. For us, effectiveness is:<br />
• reaching the goals we set;<br />
• applying contemporary technologies and<br />
approaches to doing business;<br />
• constantly improving the processes and<br />
methods of doing business;<br />
• rational allocation and use of resources;<br />
• seeking new opportunities;<br />
• preparedness for change.<br />
Professionalism<br />
in doing business, including investing<br />
in people and stimulating innovation and<br />
enthusiasm towards work. For us, there is<br />
particular importance in:<br />
• meeting the highest standards;<br />
• stimulating initiative and innovation;<br />
• investing in professional development and<br />
loyalty of employees;<br />
• attracting and retaining highly qualified<br />
personnel;<br />
• evaluating achievements fairly.<br />
Accountability<br />
to our employees, our partners, our<br />
communities, and society as a whole.<br />
<strong>SCM</strong> Group corporate information
<strong>SCM</strong> Company management<br />
OLEG POPOV<br />
GENERAL DIRECTOR<br />
CEO of <strong>SCM</strong> since January 2006.<br />
2001–2006 – Executive Director of <strong>SCM</strong>.<br />
2000 – Joined <strong>SCM</strong> as Deputy to the CEO.<br />
1992–2000 – Worked in various government offices.<br />
Chairman of the Board of FC Shakhtar.<br />
Represents <strong>SCM</strong> interests on the Supervisory Boards of Metinvest,<br />
DTEK, banks, and Ukraine Media Group.<br />
Areas of responsibility: taking and approval of the key financial,<br />
investment, and personnel decisions, both directly at<br />
<strong>SCM</strong> and in the Group’s assets, as well as evaluating the performance<br />
of top management of these assets.<br />
EDUCATION:<br />
Graduated from Donetsk State University in 1996.<br />
Graduated from Donetsk Polytechnical Institute in 1991.<br />
14<br />
MARGARITA POVAZHNAYA<br />
FINANCIAL DIRECTOR<br />
<strong>SCM</strong>’s Financial Director since September 2009.<br />
July 2008–September 2009 – Deputy Financial Director<br />
of <strong>SCM</strong>.<br />
2003 – Joined <strong>SCM</strong> as Chief Accountant.<br />
Prior to joining <strong>SCM</strong>, Ms. Povazhnaya worked as Chief Accountant<br />
in various large Ukrainian companies (Scandic<br />
South, Artemovsk Champagne Winery, etc.).<br />
Member of Metinvest and DTEK Audit Committees.<br />
Areas of responsibility: organizing tax and financial audit<br />
of <strong>SCM</strong> Company and <strong>SCM</strong> Group’s foreign assets, budgeting<br />
and cash flow planning for <strong>SCM</strong> Group.<br />
EDUCATION:<br />
Graduated from Donetsk State University of Management<br />
with a postgraduate degree in 2008.<br />
Other credentials include: Ph.D. in Public Administration, International<br />
Financial Reporting ACCA Diploma, mini-MBA<br />
diploma.<br />
Graduated from Donetsk State Commercial University with<br />
major in Industrial Management in 1995.
AMIR AYSAUTOV<br />
METALS AND MINING BUSINESS DEVELOPMENT<br />
DIRECTOR<br />
<strong>SCM</strong> Metals and mining Business Development Director since<br />
November 2009.<br />
August 2008–November 2009 – Strategy and Investment<br />
Director, Clever Management.<br />
2003–2008 – Senior Project Manager, McKinsey & Company,<br />
Moscow and Dubai offices.<br />
Represents <strong>SCM</strong> interests on the Metinvest Holding Supervisory<br />
Board.<br />
Areas of responsibility: strategy, investment, finance, and risk<br />
management for <strong>SCM</strong>’s metals and mining business.<br />
EDUCATION:<br />
Graduated from Georgetown University School of Business<br />
(Washington, USA) with an MBA in 2003.<br />
Graduated from Kazakhstan National Technical University<br />
with major in Economics and Enterprise Management<br />
in 2001.<br />
15<br />
SERGEY KOROVIN<br />
ENERGY BUSINESS DEVELOPMENT DIRECTOR<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
<strong>SCM</strong> Energy Business Development Director since March<br />
2010.<br />
2008–2010 – member of Microsoft Russia Board of Directors,<br />
responsible for cooperation with telecommunications<br />
sector.<br />
2002–2008 – advanced from Consultant to Junior Partner<br />
in McKinsey & Company, Denmark and Moscow offices.<br />
Represents <strong>SCM</strong> interests on the DTEK Supervisory Board.<br />
Areas of responsibility: strategy, investment, finance, and risk<br />
management for <strong>SCM</strong>’s energy business.<br />
EDUCATION:<br />
Graduated with honors from Moscow State University named<br />
after M.V. Lomonosov with major in Computational Mathematics<br />
and Cybernetics in 1993.<br />
<strong>SCM</strong> <strong>SCM</strong> Group corporate information
ILYA ARKHIPOV<br />
BUSINESS DEVELOPMENT DIRECTOR<br />
Business Development Director at <strong>SCM</strong> since November<br />
2005.<br />
2001–2005 Consultant, McKinsey & Co, Moscow.<br />
2000–2001 – Operations Manager for Russia’s largest online<br />
auction resource, Molotok.ru for NetBridge, an internet<br />
company.<br />
1995–2000 – Consultant, Coopers & Lybrand and PriceWaterhouseCoopers,<br />
Moscow.<br />
Represents <strong>SCM</strong>’s interests on the Supervisory Boards of Farlep-Invest,<br />
First Ukrainian International Bank, ASKA and<br />
ASKA-Life Insurance Companies.<br />
Areas of responsibility: participating in determining<br />
the Group’s business strategy for telecommunications, banking,<br />
and insurance sector.<br />
EDUCATION:<br />
MBA from INSEAD (France), a leading European business<br />
school, in 2004.<br />
Graduated from the Plekhanov Academy of Economics<br />
in Russia as a Specialist in Enterprise Management in 1999.<br />
16<br />
NIKOLAI NESTERENKO<br />
NEW BUSINESS DEVELOPMENT DIRECTOR<br />
New Business Development Director at <strong>SCM</strong> since September<br />
2007.<br />
2002–2007 – Senior Manager for Strategy Development for<br />
a range of the Group’s new businesses, such as heavy engineering,<br />
real estate, etc.<br />
2001 – Joined <strong>SCM</strong> as Manager of the Financial Control Department.<br />
1997–2001 – Worked at Keramet Invest, having grown<br />
from Stock Broker to General Manager.<br />
Currently is heading ESTA Holding – <strong>SCM</strong> sectoral holding,<br />
managing its real estate projects, as well as is chairing<br />
the Supervisory Board of ESTA Property Management. Sits on<br />
the Supervisory Boards of <strong>SCM</strong> Group hotels.<br />
Areas of responsibility: determining <strong>SCM</strong>’s strategic business<br />
development in real estate, heavy engineering, pharmaceuticals,<br />
and transport sectors, as well as seeking new areas for<br />
investment.<br />
EDUCATION:<br />
MBA from INSEAD (France), a leading European business<br />
school, in 2007.<br />
Graduated from the Financial Accounting Department of Donetsk<br />
State University in 1998.
YEKATERINA LAPSHINA<br />
MEDIA BUSINESS DEVELOPMENT DIRECTOR<br />
Media Business Development Director at <strong>SCM</strong> since August<br />
2010.<br />
November 2008 – August 2010 – Investment Director and<br />
Junior Partner at Adela Holding Limited (Russia).<br />
August 2006 – September 2008 – Deputy Business Development<br />
Director at Energoprom Management.<br />
March 2004 – August 2006 – Senior Consultant at Ernst &<br />
Young.<br />
Represents <strong>SCM</strong>’s interests on Supervisory Boards<br />
of the Group’s media businesses.<br />
Areas of responsibility: strategy, investment, finance, and risk<br />
management for <strong>SCM</strong>’s media business.<br />
EDUCATION:<br />
Graduated from the Russian Federation State Financial Academy<br />
with Masters Degree in Economics in 2005.<br />
Graduated from the Institute of International Economic Relations<br />
(Moscow) with a Bachelor’s Degree in Economics<br />
in 2003.<br />
Other credentials include: CMA (Certified Financial Manager)<br />
Certificate, 2nd level candidate for CFA (Certified Financial<br />
Analyst) Program.<br />
17<br />
SERGEY ZUZAK<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
AGRICULTURAL BUSINESS DEVELOPMENT DIRECTOR<br />
Agricultural Business Development Director since September<br />
<strong>2011</strong>.<br />
July 2010 – August <strong>2011</strong> – Investment Manager at <strong>SCM</strong><br />
mining and metals business development division.<br />
2004–2010 – Investment Manager at Horizon Capital (before<br />
2006 – Western NIS Enterprise Fund).<br />
1999–2003 – Specialist at Creditanstalt Investment Bank.<br />
Represents <strong>SCM</strong>'s interests on the supervisory boards<br />
of HarvEast Holding and United Minerals Group Limited.<br />
EDUCATION:<br />
Graduated from the National University Kyiv-Mohyla Academy<br />
with major in Economic Theory and Entrepreneurship<br />
in 2001.<br />
<strong>SCM</strong> <strong>SCM</strong> Group corporate information
ANDREY TELENKOV<br />
RETAIL BUSINESS DEVELOPMENT DIRECTOR<br />
Retail Business Development Director since December <strong>2011</strong>.<br />
November 2010 – February <strong>2011</strong> – Department Head at<br />
Uralsib Corporation, responsible for private equity.<br />
2008–2010 – Leanvest Investment Group Business Development<br />
Director.<br />
2005–2008 – Consultant at McKinsey & Company office<br />
(Moscow).<br />
Represents <strong>SCM</strong>'s interests on the Supervisory Boards<br />
of Ukrainian Retail, Parallel, and Ukrainian Pharmacy Holding.<br />
Area of responsibility: strategy, investment, finance, and risk<br />
management for <strong>SCM</strong>’s retail business.<br />
EDUCATION:<br />
Graduated from the Moscow State University named after<br />
M.V. Lomonosov, with major in calculus and cybernetics.<br />
18<br />
JOCK MENDOZA-WILSON<br />
INTERNATIONAL AND INVESTOR RELATIONS<br />
DIRECTOR<br />
International and Investor Relations Director at <strong>SCM</strong> since<br />
December 2006.<br />
2005–2006 – Director of Corporate Communications for<br />
the <strong>SCM</strong> Group.<br />
1984 – Began his career with Ford Europe Company. Then,<br />
in 1989, launched his own PR consultancy in London.<br />
Worked as Regional Director for Middle East and North Africa<br />
at Promoseven Weber Shandwick PR (Dubai), later – as<br />
Regional Director for Eastern Europe at Mmd. Advised U.S.<br />
Government agencies on their public diplomacy programs<br />
in the Middle East.<br />
Areas of responsibility: developing and implementing communications<br />
strategies and programs, aimed at establishing<br />
contacts with both government authorities and NGOs; developing<br />
relations with international governments, business,<br />
and media, as well as maintaining relations with the investment<br />
and finance community.<br />
EDUCATION:<br />
Graduated as an Economist from Herriot-Watt University<br />
(Edinburgh, Scotland) in 1984.
NATALIA YEMCHENKO<br />
<strong>PUBLIC</strong> RELATIONS AND COMMUNICATIONS<br />
DIRECTOR<br />
Public Relations and Communications Director at <strong>SCM</strong> since<br />
December 2006.<br />
2005–2006 – Public Relations Manager for <strong>SCM</strong> Group.<br />
2003 – Joined <strong>SCM</strong> Group as a Sector Group Manger.<br />
2001–2003 – Director, Keramet Invest.<br />
1998–2001 – Financial Manager at KOLO, an investment<br />
company.<br />
Chairs the Audit Committee and the Editorial Council<br />
of Ukraine Television Channel.<br />
Areas of responsibility: communicating with stakeholders, including<br />
media, employees, residents in regions of company<br />
presence, government authorities, community organizations,<br />
and the general public, as well as company reputation<br />
management.<br />
Represents <strong>SCM</strong>’s interests on the Supervisory Board<br />
of Ukraine Media Group and Dnepropetrovsk Television Service,<br />
as well as Chairs the Audit Committee and the Editorial<br />
Board of Ukraine Television Channel.<br />
EDUCATION:<br />
MBA from INSEAD (France), a leading European business<br />
school, in <strong>2011</strong>.<br />
Graduated from Donetsk National University as a Specialist<br />
in Finance and Credit in 1998.<br />
19<br />
ROMAN BUGAYOV<br />
CORPORATE RIGHTS AND FOREIGN ASSET<br />
MANAGEMENT DIRECTOR<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Corporate Rights and Foreign Asset Management Director at<br />
<strong>SCM</strong> since September 2007.<br />
2005–2007 – Manager of the Corporate Rights Department<br />
for <strong>SCM</strong> Group.<br />
2003 – Joined <strong>SCM</strong> Group as Economist.<br />
2002–2003 – Economist at Keramet Invest.<br />
1996–2002 – Worked in the Donetsk Oblast Office<br />
of the Anti-Monopoly Committee of Ukraine as a Specialist,<br />
Senior Specialist, then Department Manager.<br />
Serves as Director of a range of <strong>SCM</strong>’s foreign companies.<br />
Areas of responsibility: determining and implementing company<br />
policy regarding the management of corporate rights;<br />
organizing and handling operations involving corporate<br />
rights belonging to the company and its subsidiaries; and<br />
organizing the activities of foreign companies belonging to<br />
<strong>SCM</strong>.<br />
EDUCATION:<br />
Graduated from the Donetsk Institute of Entrepreneurship<br />
as a Specialist in Organizational Management in 2000, with<br />
major in Economic and Legal Aspects of Commercial Activity.<br />
<strong>SCM</strong> <strong>SCM</strong> Group corporate information
MARTA MOONEN<br />
HUMAN RESOURCES DIRECTOR<br />
Human Resources Director at <strong>SCM</strong> since August 2010.<br />
2007 – Joined <strong>SCM</strong> as Human Resources Manager.<br />
2005–2007 – Worked as Head of HR Department at Baker<br />
Tilly Ukraine.<br />
2002–2004 – Worked as Leading HR Specialist at UTEL Telecommunications<br />
company.<br />
Areas of responsibility: personnel selection, development<br />
and implementation of human resources management policies,<br />
development of KPI for personnel evaluation and career<br />
planning, designing motivation, rotation, and promotion<br />
programs for personnel.<br />
EDUCATION:<br />
Graduated from Kiev National Linguistic University with major<br />
in Organizational Management in 2008.<br />
20<br />
Corporate governance<br />
<strong>SCM</strong>’s system of corporate governance is in line with the highest<br />
international standards and is based on world best practice.<br />
It allows the company to quickly and effectively make<br />
the decisions, necessary to ensure the dynamic development<br />
of all the Group’s sectoral holdings and business areas.<br />
As the majority shareholder and the main investor, <strong>SCM</strong><br />
Group governs its sectoral holdings by delegating its representatives<br />
to sit on the respective Supervisory Boards. The<br />
participation of minority shareholders in the governance<br />
of these holdings is also executed through their representatives<br />
on the Supervisory Boards.<br />
For individual areas of business where there are no sectoral<br />
holdings, the system of corporate governance works through<br />
the immediate Supervisory Boards of the operating companies.<br />
Through time, this corporate governance structure has demonstrated<br />
its effectiveness for achieving <strong>SCM</strong> Group’s goals<br />
and is being constantly improved.
<strong>SCM</strong> Group corporate structure<br />
1. <strong>SCM</strong> Company<br />
2. Minority<br />
shareholders<br />
3.2. Holding General<br />
Director<br />
* Applies only to<br />
Metinvest and DTEK<br />
Sectoral Holding<br />
Supervisory Board<br />
3.Sectoral Holding<br />
Managing Company<br />
3.3. Holding Board<br />
3.1.1. Auditing Committee<br />
3.1.2. Strategy and Investment<br />
Committee<br />
3.1.3. Appointment and<br />
Compensation Committee<br />
3.1.4. Health, Occupational Safety,<br />
and Environment Committee*<br />
21<br />
4. Supervisory Boards<br />
of Operational companies<br />
4. Operational<br />
companies<br />
Legend:<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
when decision is made<br />
not to create a sectoral<br />
holding<br />
when decision is made<br />
to create a sectoral<br />
holding<br />
<strong>SCM</strong> <strong>SCM</strong> Group corporate information
<strong>SCM</strong> Group corporate transformation program<br />
<strong>2011</strong><br />
Mining and metals<br />
Metinvest B.V. jointly with the two other investors purchased<br />
a 50% share in the metals business of Industrial Group,<br />
which manages Zaporozhstal and also obtained an option to<br />
purchase the remaining 50% share in the stated company.<br />
Makeyevka Steel Plant changed its status to the branch<br />
of the Yenakiyevo Steel Plant (Metinvest).<br />
The integration of Ilyich Steel Plant in Mariupol into Metinvest<br />
Group was completed, and Clarendale Limited (Cyprus),<br />
with Vladimir Boyko being the end beneficiary, became one<br />
of Metinvest Group’s shareholders. As a result, Metinvest's<br />
ownership structure changed to the following: <strong>SCM</strong> Group<br />
(71.25%), Smart Group (23.75%), Clarendale Limited<br />
(5%).<br />
Energy<br />
DTEK and the Ministry of Energy and Coal Industry of Ukraine<br />
signed a 49-year concession lease for Rovenkyanthracite and<br />
Sverdlovanthracite, the state-owned mining enterprises.<br />
The stated agreements were signed as a result of the open<br />
concession tenders, which were conducted in Ukraine for<br />
the first time. The property of the state coal enterprises will be<br />
managed by DTEK Rovenkyanthracite LLC and DTEK Sverdlovanthracite<br />
LLC.<br />
DTEK won the tender of the State Property Fund of Ukraine<br />
for the sale of 25% share in Kievenergo, having proposed<br />
a price of $56.3m. As a result, DTEK acquired a controlling<br />
71.82% share in the company.<br />
22<br />
Financial services<br />
<strong>SCM</strong> completed the purchase of the 100% share in Renaissance<br />
Capital Bank (Renaissance Credit TM). The bank will<br />
continue its development in the consumer and point-of-sale<br />
loan segments.<br />
The operational integration of First Ukrainian International<br />
Bank and Dongorbank was completed. The integration allowed<br />
First Ukrainian International Bank to expand its regional<br />
and ATM networks. As a result, the integrated bank<br />
is in the top–10 largest financial institutions in the country,<br />
based on its financial indicators.<br />
Real estate<br />
Stolichny TSUM LLC (ESTA Group) completed the purchase<br />
of Kievsky TSUM Trading House LLC and M-Service LLC.<br />
Completion of the transaction will enable ESTA Group to proceed<br />
with the Kiev Central Univermag Shopping Mall reconstruction<br />
project.<br />
ESTA Holding purchased a 50% share in the second line<br />
of Leonardo Business Center (Kiev).<br />
Media<br />
<strong>SCM</strong> purchased a 9% share in Dnepropetrovsk Television<br />
Service, having increased its stake in the stated company to<br />
67.99%. Dnepropetrosk Television Service (Channel 34) is<br />
a local air and cable broadcasting company, covering the city<br />
of Dnepropetrovsk and the adjacent regions.
Heavy Engineering<br />
<strong>SCM</strong> completed the transaction for purchasing a 19.82%<br />
share in Donetskgormash, a 21.75% share in Druzhkovka<br />
Heavy Engineering Plant, and a 8.34% share in Kamensky<br />
Heavy Engineering Plant. Upon completing the transaction,<br />
<strong>SCM</strong> increased its shares in the stated companies to 69.87%<br />
in Donetskgormash, 87.13% in Druzhkovka Heavy Engineering<br />
Plant, and to 95.99% in Kamensky Heavy Engineering<br />
Plant.<br />
<strong>SCM</strong> transferred the strategic management rights to Krivoy<br />
Rog Mining Equipment (previously part of Metinvest Group)<br />
to Ukrainian Machine Building Group.<br />
Gorlovskiy Mashinostroitel Engineering Plant (Ukrainian Machine<br />
Building Group) won the tender for the sale of 94.9%<br />
share in Gorlovka Heavy Engineering Plant.<br />
Port business<br />
<strong>SCM</strong> created Portinvest, a sectoral holding to manage and<br />
invest in the Group's assets in the port business. Currently<br />
Portinvest manages Avlita Stevedoring and Sea Industrial<br />
Complex.<br />
Agriculture<br />
<strong>SCM</strong> made a decision to create HarvEast Holding, jointly<br />
with Smart Group, to manage the agricultural assets of Ilyich<br />
Steel Plant: 220,000 hectares of argicultural land; milk,<br />
pig, poultry, and fish farms, etc. The stated agricultural assets<br />
are located in Donetsk, Zaporozhye, Cherkassy, and Zhitomir<br />
Oblasts, as well as in Crimea.<br />
23<br />
Other<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
<strong>SCM</strong> sold its 24.99% stake share in Krasnaya Polyana Sand<br />
Quarry, thus, having exited from the enterprises' shareholders.<br />
The decision to sell <strong>SCM</strong>'s existing stake in the stated<br />
enterprise was caused by the Group's inability to increase<br />
it to the controlling size, in order to influence the strategic<br />
decision-making, as well as the financial and the operational<br />
activity of the enterprise.<br />
<strong>SCM</strong> Group corporate information
<strong>SCM</strong> Group's assets structure <strong>2011</strong><br />
Metals&<br />
Mining<br />
Metinvest<br />
Mining division<br />
Northern Ore Mining<br />
and Enrichment Plant<br />
(SevGOK)<br />
Central Ore Mining<br />
and Enrichment Plant<br />
(CGOK)<br />
Inguletsky Ore Mining<br />
and Enrichment Plant<br />
(InGOK)<br />
Komsomolskoye<br />
Mines Managemet<br />
Krasnodonugol<br />
United Coal Company<br />
Metallurgical<br />
division<br />
Azovstal Steel Plant<br />
Ilyich Steel Plant<br />
in Mariupol<br />
Yenakiyevo Steel Plant<br />
(YeMZ) and Makeyevka<br />
YeMZ Branch<br />
Khartsyzsk Pipe Plant<br />
(KHTZ)<br />
Promet Steel JSC<br />
(Bulgaria)<br />
Ferriera Valsider<br />
(Italy)<br />
Metinvest Trametal<br />
S.p.A. (Italy)<br />
Spartan UK Ltd.<br />
Metinvest Resource<br />
Avdeyevka Coke and<br />
Chemical Plant (AKHZ)<br />
INKOR and Co<br />
Kondratyevo<br />
Refractory Plant<br />
Logisics<br />
Skif Shipping<br />
Danube Stevedoring<br />
Sales<br />
Metinvest<br />
International S.A.<br />
(Switzerland)<br />
Metinvest Ukraine<br />
Metinvest SMC<br />
Metinvest Eurasia<br />
Energy<br />
DTEK<br />
Mining<br />
DTEK Pavlogradugol<br />
DTEK Dobropolyeugol<br />
DTEK Komsomolets<br />
Donbassa Mine<br />
DTEK Sverdlovanthracite<br />
DTEK Rovenkyanthracite<br />
DTEK Neftegaz<br />
Coal enrichment<br />
Pavlogradskaya Coal<br />
Enrichment Plant<br />
Kurakhovskaya Coal<br />
Enrichment Plant<br />
Dobropolskaya Coal<br />
Enrichment Plant<br />
Oktyabrskaya Coal<br />
Enrichment Plant<br />
Mospinskoye Coal<br />
Enrichment Plant<br />
Trading<br />
DTEK Trading<br />
Electicity, thermal<br />
power and heat<br />
generation<br />
Kievenergo<br />
Vostokenergo<br />
Alternative energy<br />
Wind Power<br />
Electricity<br />
distribution and<br />
sales<br />
DTEK PES<br />
Energougol<br />
Service Invest<br />
Power Trade<br />
Equipment<br />
manufacturing and<br />
repairs<br />
Pershotravensk<br />
Repair Mechanical Plant<br />
Financial<br />
services<br />
Banking<br />
First Ukrainian<br />
International Bank<br />
Renaissance Capital Bank<br />
Insurance<br />
ASKA<br />
ASKA-Life<br />
Heavy Engineering<br />
Mining Machines<br />
Group<br />
Druzhkovka Heavy<br />
Engineering Plant<br />
Gorlovskiy Mashinostroitel<br />
Engineering Plant<br />
Donetskgormash<br />
Donetskiy Energozavod<br />
Engineering Plant<br />
Krivoy Rog Mining<br />
Equipment Plant<br />
Kamensky Heavy<br />
Engineering Plant<br />
Sverdlovskiy Heavy<br />
Engineering Plant<br />
Mining Machines<br />
Engineering Technical Center<br />
Mining Machines – Quality<br />
System<br />
Mining Machines Trading<br />
Company<br />
Mining Machines Service<br />
Company<br />
Mining Machines –<br />
Business Comfort<br />
24<br />
Port<br />
business<br />
Portinvest<br />
Avlita Stevedoring<br />
Sea Industrial Complex<br />
Agriculture<br />
HarvEast Holding<br />
HarvEast Holding<br />
Media<br />
Ukraine Media Group<br />
Ukraine Television Channel<br />
Football Television<br />
Channel<br />
Football+ Television<br />
Channel<br />
Donbass Television<br />
Channel<br />
Digital Ventures<br />
Media Partnership<br />
Tele Pro Production Group<br />
Dnepropetrovsk<br />
Television Service<br />
Segodnya Multimedia<br />
Publishing Holding
25<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
<strong>SCM</strong> Group consists of the managing company (<strong>SCM</strong> Company) and more than 100 enterprises and companies in Ukraine,<br />
Russia, Europe (Italy, Bulgaria, United Kingdom, Switzerland), and the USA, in which it invests.<br />
The Group's enterprises overall employ approximately 244,000 people.<br />
Clay mining<br />
United Minerals<br />
Group<br />
Vesko<br />
Druzhkovskoye Mines<br />
Management<br />
Ogneupornerud<br />
Kerammekhanizatsiya<br />
Capital-Service<br />
Real estate<br />
ESTA Group<br />
ESTA Property-<br />
Management<br />
Investment real estate<br />
projects<br />
Donbass Palace Hotel<br />
Opera Hotel<br />
Leonardo Business Center<br />
(second line)<br />
Office and logistics centers<br />
in Kiev and Donetsk<br />
Ongoing projects<br />
Park Inn Hotel by Radisson<br />
Donetsk<br />
Kiev’s Central Univermag<br />
Shopping Mall<br />
Pushkinskiy multi-functional<br />
complex<br />
Andreyevskiy multi-functional<br />
complex<br />
Real estate projects at<br />
development stage<br />
Land plots<br />
Petroleum products<br />
retailing Parallel<br />
Parallel Chain<br />
Gefest Chain<br />
PitStop Chain<br />
Retail trade<br />
Ukrainian Retali<br />
Brusnichka<br />
ASSOCIATED COMPANIES*<br />
Metals and mining:<br />
Zaporozhkoks (Zaporozhye Coke and Chemical Plant)<br />
Krivoy Rog Iron Ore Plant<br />
Donetskkoks (Donetsk Coke and Chemical Plant)<br />
Dokuchayevsk Flux and Dolomite Plant (DFDK)<br />
Novotroitskoye Mines Management<br />
Krivbasszvryvprom Explosives Company<br />
Zaporozhstal<br />
Energy:<br />
Pharmaceuticals<br />
Ukrainian Pharmacy<br />
Holding<br />
Dneproenergo<br />
Donetskoblenergo<br />
Zapadenergo<br />
Vanco Prykerchenska Ltd. (British Virgin Islands)<br />
Telecommunications:<br />
Astelit<br />
MMDS Ukraine<br />
Zdravitsa chain<br />
Dobri Liky chain<br />
Tsentralnaya Pharmacy<br />
<strong>SCM</strong> Sport<br />
Shakhtar Football Club<br />
Donbass Arena Stadium<br />
Telecommunications<br />
Vega Telecommunications<br />
Group<br />
* Associated companies – are businesses where <strong>SCM</strong> Group, in its role as an investor,<br />
is capable of significant influence, but where it does not exercise full control.<br />
<strong>SCM</strong> Group corporate information
<strong>SCM</strong> Group's<br />
business<br />
Mining and metals.<br />
Metinvest<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Metinvest Group is an international<br />
vertically integrated group of metals and<br />
mining enterprises, managing each link<br />
of the production chain – from mining iron ore<br />
and coal, to coke and coking coal production,<br />
to smelting steel, and producing rolled steel<br />
sections, structural shapes, large diameter pipes,<br />
and other steel products with high added value.<br />
The Group includes mining and metallurgical<br />
enterprises in Ukraine, Europe, and the USA,<br />
subdivided into the mining and the metallurgical<br />
divisions.<br />
27<br />
<strong>SCM</strong> Group's business
Metinvest Group’s strategic vision is to become the leading<br />
vertically integrated steel producer in Europe, delivering sustainable<br />
growth and profitability, resilient to business cycles,<br />
thus, providing investors with returns at above the industry<br />
benchmarks.<br />
Metinvest B.V. (Netherlands) is a holding company for Metinvest<br />
Group. Metinvest Group’s main shareholders are <strong>SCM</strong><br />
Group (71.25%) and Smart Group (23.75%) and they<br />
manage the Group on a partnership basis. Clarendale Limited<br />
(Cyprus) owns a 5% share in Metinvest B.V.<br />
Metinvest Holding LLC is a managing company for Metinvest<br />
Group.<br />
Metinvest Group’s enterprises are located in close proximity<br />
to the key transportation routes and sea ports, providing<br />
the company with additional competitive advantages when<br />
making shipments to customers in Ukraine, CIS, Europe,<br />
Middle East, and South-East Asia. Metinvest exports the majority<br />
of its products to more than 1000 customers in 75<br />
countries worldwide, using its own international sales network,<br />
which covers most of the key regional markets.<br />
Metinvest Group’s enterprises employ more than 108,000<br />
people.<br />
28<br />
MAIN 1 METINVEST <strong>GROUP</strong><br />
ENTERPRISES<br />
Mining division<br />
Northern Ore Mining and Enrichment Plant (SevGOK) –<br />
leader in Ukraine's mining industry, one of the largest mining<br />
companies in Europe with a full production cycle for raw iron<br />
ore (concentrate and pellets) for metallurgy. The plant's annual<br />
concentrate production capacity is 14.4m tonnes and<br />
annual pellets production capacity is 10.5m tonnes. SevGOK<br />
sources iron ore from the two large ferrous quartzite fields,<br />
which in total constitute 3,807m tonnes of mineral resources,<br />
including 713m tonnes of proven ore reserves, reported<br />
according to JORC 2 standards.<br />
Central Ore Mining and Enrichment Plant (CGOK) – specializes<br />
in mining, processing, and production of raw iron ore<br />
(concentrate and pellets) for metallurgy. The plant’s annual<br />
concentrate production capacity is 6.2m tonnes and annual<br />
pellets production capacity is 2.2m tonnes. The plant produces<br />
commercial grade concentrate with an average Fe content<br />
of 65% and 68.2% and pellets with an average Fe content<br />
of 64%. CGOK sources iron ore from the fields, which in total<br />
constitute 2.689m tonnes of mineral resources, including<br />
710m tonnes of proven ore reserves, reported according to<br />
JORC 3 standards.<br />
Inguletsky Ore Mining and Enrichment Plant (InGOK) –<br />
specializes in mining and processing iron ore with an average<br />
Fe content of 63.7% to 67%. The plant's annual concentrate<br />
production capacity is 15.1m tonnes. InGOK sources iron ore<br />
from Ingulets ferrous quartzite field, which in total constitutes<br />
937 m tonnes of mineral resources, including 444 m<br />
tonnes of proven ore reserves.<br />
Komsomolskoye Mines Management – one of the largest<br />
suppliers of fluxing limestone in Ukraine. The enterprise's annual<br />
production capacity is 10–12m tonnes of commercial<br />
grade limestone.<br />
Krasnodonugol – one of the biggest coal mining companies<br />
in Ukraine, which both mines and enriches coking coal.<br />
1 Main enterprises, consolidated in <strong>2011</strong> into Metinvest B.V. (Metinvest<br />
Group holding company) reporting, according to the IFRS.<br />
2, 3 As of December 31, 2009
United Coal Company – one of the leading producers<br />
of coking coal in the USA. The company's proven reserves<br />
constitute 160m tonnes of high quality coal. The company's<br />
annual coking coal production capacity is about 6m tonnes.<br />
Metallurgical division<br />
Azovstal Steel Plant – one of the leaders in Ukraine's<br />
metallurgy, it is a modern, highly effective integrated enterprise<br />
– from coke and sinter production to steelmaking<br />
and the production of high quality long and flat rolled products.<br />
The plant's annual production capacity is 5.7m tonnes<br />
of cast iron, 6.2m tonnes of steel, and 5.2m tonnes of rolled<br />
produts. In May <strong>2011</strong> the plant has completely forgone<br />
the use of open-hearth blast furnaces for steelmaking in favor<br />
of the oxygen converters.<br />
Ilyich Steel Plant in Mariupol – one of the largest companies<br />
in Ukraine with a full steel production cycle. The plant’s<br />
annual production capacity is 7.3m tonnes of steel, 12.2m<br />
tonnes of agglomerate, more than 5.6m tonnes of cast iron,<br />
and more than 7.5m tonnes of rolled products.<br />
Yenakiyevo Steel Plant (YeMZ) and Makeyevka YeMZ<br />
Branch – the world leaders in steel billet production. The<br />
plant’s annual production capacity is 3.1m tonnes of cast<br />
iron, 2.7m tonnes of steel and approximately 0.5m tonnes<br />
of rolled products. Makeyevka YeMZ Branch (previously –<br />
Makeyevka Steel Plant) produces high quality rolled products<br />
and is equipped with the most modern steel rolling mills<br />
in Ukraine.<br />
Khartsyzsk Pipe Plant (KHTZ) – the largest producer<br />
of straight-seamed electro-welded large diameter steel piping<br />
in the CIS. The plant's annual production capacity is 1m<br />
tonnes of pipes.<br />
Promet Steel JSC (Bulgaria) – a modern-technology steel<br />
rolling plant, producing rolled sections and structural shapes<br />
using the continuous casting technology.<br />
Ferriera Valsider (Italy) – a steel plant producing structural<br />
rolled products. The plant's annual production capacity is<br />
0.4m tonnes of heavy plates and 0.6m tonnes of hot-rolled<br />
coil.<br />
29<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Metinvest Trametal S.p.A. (Italy) – a leader in Italian and<br />
European markets in structural carbon steel plates.<br />
Spartan UK Ltd. (United Kingdom) – the only producer<br />
of high-quality steel plates in the United Kingdom. The<br />
plant's annual production capacity is approximately 0.2m<br />
tonnes of heavy plates.<br />
Metinvest Resource – an exclusive supplier of black metal<br />
scrap to Metinvest Group's enterprises (Azovstal, YeMZ, Ilyich<br />
Steel Plant). The company's annual supply capacity is approximately<br />
2m tonnes of scrap.<br />
Avdeyevka Coke and Chemical Plant (AKHZ) – the largest<br />
modern-technology company in Europe’s coking coal industry<br />
producing coke and chemical products.<br />
INKOR and Co – one of the largest chemical products (naphtalene,<br />
phenol, cresol) manufacturers in the CIS and Europe.<br />
The enterprise's annual production capacity is 60,000 tonnes<br />
of naphtalene and up to 10,000 tonnes of phenol and cresol.<br />
Kondratyevo Refractory Plant – one of the largest producers<br />
of refractory products for metallurgy in Ukraine.<br />
Logistics<br />
Skif Shipping – the leading national transportation and dispatch<br />
company, servicing cargoes in Ukraine's largest ports<br />
and transporting cargoes all over Ukraine and beyond. The<br />
company owns more than 1,600 units of rolling stock, port<br />
crane, and forklifts.<br />
Danube Stevedoring – a shipping and logistics company.<br />
<strong>SCM</strong> Group's business
Sales<br />
Metinvest International S.A. (Switzerland) – responsible<br />
for the sale and the export of Metinvest Group rolled steel<br />
products.<br />
Metinvest Ukraine – responsible for the wholesale (carload)<br />
supply of Metinvest steel products in Ukraine and CIS<br />
countries, as well as for the sale of steel products to the largest<br />
industrial enterprises in Ukraine.<br />
Metinvest SMC – the largest and growing chain of service<br />
centers in Ukraine, selling the products of Metinvest Group’s<br />
enterprises, as well as of other producers in Ukraine and CIS,<br />
in small wholesale and retail quantities. The company also<br />
supplies heavy-duty steel rods for the construction industry.<br />
Metinvest Eurasia – the wholesale and the retail sales<br />
channel of Metinvest Group in Russian Federation. The company<br />
sells the products of Azovstal Steel Plant, Yenakiyevo<br />
Steel Plant, Ilyich Steel Plant, and other metal companies on<br />
the Russian market, through the network of branches, located<br />
in Central, Sourhtern, North-Caucasus, North-Western,<br />
and Privolzhsky federal districts.<br />
30<br />
Metinvest Group's financial indicators<br />
Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 16,007 14,555 +9.98<br />
Sales volume 14,189 9,358 +51.62<br />
Net profit (loss) 1,854 437 +324.26<br />
EBITDA 3,565 2,552 +39.69<br />
Metinvest Group's key production indicators, thousand tonnes<br />
2013<br />
11339<br />
Thermal coal mining<br />
Coking coal mining<br />
Steel production<br />
14375<br />
Iron ore concentrate production<br />
Cast iron production<br />
35741<br />
12385<br />
2891<br />
10098<br />
8745<br />
<strong>2011</strong> 2010<br />
35726<br />
7609<br />
40000<br />
30000<br />
20000<br />
10000<br />
0
Metinvest Group's key production indicators<br />
31<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Iron ore concentrate and coal production, thousand tonnes <strong>2011</strong> 2010 Dynamics, %<br />
Iron ore concentrate (production) 35,741 35,726 +0.04<br />
Coking coal (mining) 11,339 10,098 +12.3<br />
Thermal coal (mining) 2,013 2,891 –30.37<br />
Cast iron production, thousand tonnes <strong>2011</strong> 2010 Dynamics, %<br />
Azovstal Steel Plant 4,862 4,958 –1.9<br />
Ilyich Steel Plant 4 5,180 488 -<br />
Yenakiyevo Steel Plant 2,343 2,163 +8.3<br />
Total: 12,385 7,609 +62.77<br />
Steel production, thousand tonnes <strong>2011</strong> 2010 Dynamics, %<br />
Azovstal Steel Plant 5,584 5,700 –2.0<br />
Ilyich Steel Plant 5 6,122 547 -<br />
Yenakiyevo Steel Plant 2,669 2,498 +8.6<br />
Total: 14,375 8,745 +64.38<br />
Production indicators, thousand tonnes <strong>2011</strong> 2010 Dynamics, %<br />
Semi-finished products 2,974 3,018 –1.5<br />
Slab 2,460 2,195 12.1<br />
Square 514 823 –37.5<br />
Finished products 9,317 4,902 90.1<br />
Flat rolled products 6,407 2,472 159.2<br />
Long rolled products 2,618 2,213 18.3<br />
Rail products 292 217 34.6<br />
Piping products 678 317 113.9<br />
Large diameter pipes 631 309 104.2<br />
Other pipes 47 8 487.5<br />
Total: 12,969 8,237 57.4<br />
4,5 Ilyich Steel Plant integrated into Metinvset Group in November 2010. Consolidated production volumes are stated as of December 2010.<br />
<strong>SCM</strong> Group's business
Sales geography, <strong>2011</strong><br />
Region Steel products,<br />
thousand tonnes<br />
Coking coal<br />
products, thousand<br />
tonnes<br />
32<br />
Iron ore products,<br />
thousand tonnes<br />
Total,<br />
thousand tonnes<br />
Ukraine 2,066 557 1,502 4,125<br />
South-East Asia 1,369 11 832 2,212<br />
Europe 3,558 43 471 4,072<br />
CIS 1,900 30 5 1,935<br />
Middle East and North<br />
Africa<br />
1,196 17 - 1,213<br />
North America 66 360 - 426<br />
Other countries 163 43 - 206<br />
14%<br />
9%<br />
29%<br />
Investments<br />
3%<br />
1%<br />
29%<br />
16%<br />
The total volume of Metinvest Group’s investment in <strong>2011</strong><br />
amounted to $1.17bn (excluding M&A).<br />
Ukraine<br />
South-East Asia<br />
Europe<br />
CIS<br />
Middle East and North Africa<br />
North America<br />
Other<br />
Metallurgical division<br />
The total volume of investment in maintaining production<br />
capacity and capital repairs at the divison’s enterprises<br />
amounted to approximately $174m in <strong>2011</strong>. The performed<br />
repairs program involved oxygen converters, blast furnaces,<br />
and rolling mills.
Ilyich Steel plant began the implementation of the two large<br />
projects: construction of the turboblower and installation<br />
of the coal pulverizing unit in the blast furnace hearths. The<br />
turbobower will be put into operation in 2012, thus, allowing<br />
to increase the productivity of the blast furnace #3 by<br />
7%, as well as to decrease the weighted use of coke by 7kg<br />
per tonne of cast iron. The total volume of project investment<br />
in <strong>2011</strong> amounted to $8m. The coal pulverizing unit will also<br />
be put into operation in 2012, thus, allowing to completely<br />
forgo the use of natural gas in the plant’s blast furnaces, as<br />
well as to decrease the weighted use of coke by 29kg per<br />
tonne of cast iron. The total volume of project investment is<br />
$177m, $21m of which was used in <strong>2011</strong>. The stated technology<br />
will be installed at all the blast furnaces at the plant.<br />
Azovstal Steel Plant implemented the active stage of the controlled<br />
freezing unit construction at the heavy plate production<br />
facilities. Upon completion of the construction works,<br />
the plant will be able to produce rolled sheets from X80 and<br />
X90 grade steel. SMS Siemag AG was selected as general<br />
supplier of the equipment. The total project investment volume<br />
amounted to approximately $63m.<br />
Azovstal Steel Plant also invested $2.23m in the environmental<br />
projects in <strong>2011</strong>.<br />
Yenakiyevo Steel Plant put into operation a modern blast<br />
furnace complex #3 instead of the disassembled obsolete<br />
one. The installed annual capacity of the new equipment is<br />
1.2m tonnes of cast iron. During the period of operation,<br />
the new blast furnace allowed to decrease the weighted use<br />
of coke in cast iron production by 112.2kg per tonne (from<br />
572.2kg to 460kg per tonne) and the weighted use of iron –<br />
by 15.8kg per tonne (from 1,010kg to 994.3kg per tonne).<br />
The total project investment volume exceeded $226m,<br />
$60m of which was used in <strong>2011</strong>.<br />
Mining division<br />
InGOK commissioned the second complex for magnetic floatation<br />
beneficiation of iron ore concentrate with annual installed<br />
capacity of 3.3m tonnes of concentrate. The total project<br />
investment volume amounted to approximately $43m.<br />
33<br />
Focus points of the year<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
In 2001, steel production volume increased by 64.4% yearon-year,<br />
amounting to 14.375m tonnes, coking coal production<br />
increased by 12.3%, amounting to 11.34m tonnes,<br />
while iron ore concentrate production remained unchanged,<br />
amounting to 35.74m tonnes.<br />
The increase in steel production was caused by the integration<br />
of Mariupol Ilyich Plant into Metinvest in November<br />
2010, as well as by commissioning the reconstructed blast<br />
furnace #3 at Yenakiyevo Steel Plant at the end of the year.<br />
Simultaneously, the production volumes of Azovstal Steel<br />
Plant decreased by 96,000 tonnes, year-on-year.<br />
The volume of coking coal production at the US mines increased<br />
by 1.4m tonnes, while the Ukrainian mines of Metinvest<br />
demonstrated a 153,000 tonnes decrease in coking<br />
coal production.<br />
In spite of the 29.7% demand decrease for iron ore concentrate<br />
by the external consumers, its production remained<br />
stable and high. The reason for such production stability was<br />
the increased internal consumption – by Metinvest Group's<br />
enterprises, after the integration of Ilyich Plant into Metinvest,<br />
which was completed in June <strong>2011</strong>.<br />
Within the framework of Metinvest Group’s metallurgical<br />
enterprises’ modernization and reconstruction program,<br />
Azovstal Steel Plant put its open-hearth blast furnaces out<br />
of operation. The plant completely switched its production<br />
facilities to oxygen converters. As a result, the quality<br />
of the end product will increase significantly, while the environmental<br />
footprint of the plant will decrease.<br />
In June, Yenakiyevo Steel Plant signed a long-term contract<br />
with Air Liquide (France) for the supply of industrial gases. Under<br />
the signed contract, Air Liquide will invest $139m in the<br />
construction of the air separation unit with the installed daily<br />
production capacity of 1,700 tonnes of oxygen, nitrogen, and<br />
argon. The project will be funded by the European Bank for<br />
Reconstruction and Development. Additionally, Yenakiyevo<br />
Steel Plant implemented a large-scale $25m repairs program,<br />
aimed at increasing the environmental safety, the economic effectiveness,<br />
and operational reliability of its equipment.<br />
In July, United Coal Company commissioned Affinity Mine,<br />
a new mine with the installed annual production capacity<br />
of 1.9m tonnes of high quality coking coal.<br />
<strong>SCM</strong> Group's business
Energy. DTEK<br />
DTEK is the largest private vertically integrated energy<br />
company in Ukraine. DTEK occupies leadership positions<br />
in Ukraine’s coal mining, thermal power generation, and distribution<br />
industries.<br />
DTEK Holdings B.V. (Netherlands) is the holding company for<br />
DTEK and is 100% owned by <strong>SCM</strong> Group.<br />
Donbass Fuel and Energy Company (DTEK) LLC is the managing<br />
company for DTEK.<br />
DTEK enterprises employ approximately 104,000 people.<br />
DTEK <strong>GROUP</strong> ENTERPRISES<br />
Mining<br />
DTEK Pavlogradugol – the largest coal mining enterprise<br />
in Ukraine. It includes 10 mines, as well as the enterprises<br />
of transportation and production infrastructure. The coal reserves<br />
of the enterprise amount to 649.7m tonnes.<br />
DTEK Dobropolyeugol – a coal mining complex, including<br />
5 mines located in one of the largest industrial regions<br />
of Donbass. The coal reserves of the enterprise amount to<br />
369.5m tonnes.<br />
DTEK Komsomolets Donbassa Mine – one of the largest<br />
producers of thermal coal in Ukraine. The coal reserves<br />
of the enterprise amount to 114.7m tonnes.<br />
DTEK Sverdlovanthracite – an anthracite mining and enrichment<br />
complex located in Dolzhano-Rovenetsky industrial<br />
district of Lugansk Oblast. The enterprise includes 5 mines, 3<br />
enrichment factories, a mine construction company, as well<br />
34<br />
as a range of supporting enterprises. The anthracite reserves<br />
of the enterprise amount to 211.9m tonnes.<br />
DTEK Rovenkyanthracite – an anthracite mining and enrichment<br />
complex located in Bokovo-Khrustalny and Dolzhano-Rovenetsky<br />
industrial districts of Lugansk Oblast. The<br />
enterprise includes 6 mines, 3 enrichment factories, as well<br />
as a range of supporting enterprises. The anthracite reserves<br />
of the enterprise amount to 165.3m tonnes.<br />
DTEK Neftegaz – DTEK's subsidiary company, providing<br />
DTEK with fuel resources (e.g. DTEK's annual natural gas<br />
consumption amounts to 3bn cubic meters). The company<br />
is also engaged in hydrocarbon drilling – on land and in deep<br />
sea.<br />
Coal enrichment<br />
Pavlogradskaya Coal Enrichment Plant – one of the largest<br />
coal enrichment enterprises in Ukraine. The plant's annual<br />
installed capacity is 5.25m tonnes.<br />
Kurakhovskaya Coal Enrichment Plant – produces coal<br />
concentrate for thermal power plants. The plant's annual instaled<br />
capacity is 2.5m tonnes.<br />
Dobropolskaya Coal Enrichment Plant – a producer of enriched<br />
coal with the annual installed capacity of 4.5m tonnes.<br />
Oktyabrskaya Coal Enrichment Plant – a producer of enriched<br />
coal with the annual installed capacity of 2.6m tonnes.<br />
Mospinskoye Coal Enrichment Plant – a producer of enriched<br />
coal and concentrate for thermal power plants. The<br />
plant's annual installed capacity is 2.5m tonnes.
Trading<br />
DTEK Trading – carries out coal trading operations in Ukrainian<br />
and international markets.<br />
Electicity, thermal power and heat<br />
generation<br />
Kievenergo – a power generating enterprise, serving as<br />
a full-cycle power supplier to the city of Kiev. The enterprise<br />
produces, delivers, distributes, and sells electric and thermal<br />
power to the end consumers. Electric and thermal energy for<br />
Kievenergo is generated by the two thermal power plants –<br />
TPP–5 and TPP–6. The overall installed capacity of the stated<br />
TPP's, including thermal power supply stations and boiler<br />
rooms, amounts to 1,200 MW and 8,725 Gcal/hour. The<br />
overall size of Kievenergo's electricity grid is 11,700 km,<br />
while the size of its heat distribution grid (measured as a single<br />
pipe) is 4,500 km.<br />
Vostokenergo – is an energy generating company, which<br />
includes three thermal power plants: Zuevskaya TPP, Kurakhovskaya<br />
TPP, and Luganskaya TPP, with cumulative installed<br />
capacity of 4,157 MW.<br />
Alternative energy<br />
Wind Power – implements wind energy projects. The company's<br />
project portfolio amounts to 1,200 MW. The projects<br />
are to be implemented in Donetsk and Zaporpzhye Oblasts,<br />
as well as on the Azov Sea shore.<br />
35<br />
Electricity distribution and sales<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
DTEK PES Energougol – manages 11 transformer substations<br />
with the voltage of 35–110 kV, as well as 381 transformer<br />
substations and electric distribution points with<br />
the voltage of 6–10 kV and the total capacity of 452 MBA.<br />
The company also manages 1,179 km of high-voltage transmission<br />
lines in Donetsk Oblast.<br />
Service Invest – manages 88 high voltage with the voltage<br />
of 6.35 and 110 kV and the total transforming capacity<br />
of 2,372 MBA. The company also manages 2,684<br />
km of transmission lines with the voltage of 6–150 kV<br />
in Dnepropetrovsk and Donetsk Oblasts.<br />
Power Trade – exports electricity to European and CIS markets.<br />
The company is licensed as electric power supplier at<br />
non-regulated tariff and is a participant of Ukraine’s Wholesale<br />
Electric Power Market.<br />
Equipment manufacturing and<br />
repairs<br />
Pershotravensk Repair Mechanical Plant – provides mining<br />
equipment repair services, as well as produces roof support<br />
arches, various metal products, performs steel and cast<br />
iron casting, and pipe flanging.<br />
DTEK's financial indicators<br />
Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 7,052 3,220 +119<br />
Sales volume 4,969 3,062 +62.3<br />
Net profit (loss) 442 360 +22.78<br />
EBITDA 1,270 722 +75.9<br />
<strong>SCM</strong> Group's business
DTEK's key production indicators<br />
Indicators <strong>2011</strong> 2010 6 Dynamics, %<br />
Coal mining, thousand tonnes<br />
DTEK Pavlogradugol 15,414.2 15,043.0 +2.5<br />
DTEK Komsomolets Donbassa Mine 4,257.2 4,121.5 +3.3<br />
DTEK Dobropolyeugol7 3,265.3 3,014.6 +8.3<br />
DTEK Rovenkyanthracite8 7,324.4 6,033.6 +21.4<br />
DTEK Sverdlovanthracite9 Coal enrichment, thousand tonnes<br />
6,559.0 6,375.9 +2.9<br />
Raw coal enrichment 12,523.0 12,490.0 +0.3<br />
Concentrate production<br />
Power generation, m, KW•hour<br />
7,935.0 7,904.0 +0.4<br />
Vostokenergo power generation<br />
Power distribution, m KW•hour<br />
17,135.9 16,352.6 +4.8<br />
Volume of electricity purchases from the Wholesale Electric<br />
Power Market by Service-Invest and DTEK PES-Energougol<br />
14,066.1 13,287.0 +5.9<br />
Volume of electricity purchases from the Wholesale Electric<br />
Power Market by Donetskoblenergo<br />
10,324.9 10,173.7 +1.5<br />
Volume of electricity purchases from the Wholesale Electric<br />
Power Market by Kievenergo<br />
9,271.6 9,313.5 –0.4<br />
Electric power export, m, KW•hour 5,091.9 1,214.5 +319.3<br />
Coal export, thousand tonnes 3,396.0 1,961.0 +73.0<br />
Coal import, thousand tonnes 569.0 1,313.0 –57.0<br />
6 In 2010 Dobropolyeugol, Sverdlovanthracite, and Rovenkyanthracite were not managed by DTEK. Zapadenergo, Dneproenergo, Kievenergo, and Donetskoblenergo<br />
were DTEK's associated companies. DTEK concentrated the controlling share in Kievenergo on December 9, 2012. Dneproenergo, Zapadenergo,<br />
and Donetskoblenergo were integrated into DTEK in 2012.<br />
7 On December 22 2012 DTEK signed a 49-year lease agreement for Dobropolyeugol.<br />
8 On December 1 <strong>2011</strong> DTEK signed 49-year lease agreements for Rovenkyanthracite.<br />
9 On December 1 <strong>2011</strong> DTEK signed 49-year lease agreements for Sverdlovanthracite.<br />
36
Electric power export, m, KW•hour<br />
5091.9<br />
3396<br />
5000<br />
4000<br />
3000<br />
1961<br />
1214.5<br />
2000<br />
1000<br />
0<br />
2010 <strong>2011</strong><br />
2010<br />
<strong>2011</strong><br />
Investments<br />
The total volume of DTEK's investment in <strong>2011</strong> amounted to<br />
$540m (excluding M&A).<br />
Coal mining and enrichment<br />
The growth in coal mining volumes in <strong>2011</strong> resulted from<br />
the holistic modernization and equipment upgrade programs.<br />
In <strong>2011</strong> DTEK purchased four coal mining units of the local<br />
(Ukrainian Machine Building Holding) and foreign (Ostroj<br />
and T.Machinery) producers, in total worth $55.1m.<br />
Of the purchased equipment, three units were intended for<br />
DTEK Pavlogradugol (worth $44.2m) and one – for DTEK Dobropolyeugol<br />
(worth $10.9m). Additionally DTEK purchased<br />
34 tunneling machines by SANY (China), Kopeysk Heavy Engineering<br />
Plant (Russian Federation), and Yasynyvata Heavy<br />
Engineering Plant (Ukraine) for the mines of DTEK Pavlogradugol,<br />
DTEK Dobropolyeugol, and DTEK Komsomolets Donbassa,<br />
in total worth $17.3m.<br />
In <strong>2011</strong>, the mines of DTEK Pavlogradugol and DTEK Komsomolets<br />
Donbassa began the installation of the underground<br />
hanging monorail transport. The total volume of project investment<br />
was $4m.<br />
DTEK continued the holistic modernization and technical upgrade<br />
program of its enterprises. The largest projects were implemented<br />
at Pavlogradskaya (commissioning the primary slime<br />
processing unit), DTEK Oktyabrskaya (installation of the dry<br />
screening equipment), and Dobropolskaya (replacement<br />
of the two jigging machines) Coal Enrichment Plants. All DTEK's<br />
coal enrichment enterprises performed replacements and capital<br />
repairs of equipment, in total worth more than $6m.<br />
37<br />
Coal export, thousand tonnes<br />
Power generation<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
3000<br />
2000<br />
1000<br />
In <strong>2011</strong>, DTEK's power generating enterprises continued<br />
the large-scale equipment upgrade program.<br />
During the year, power generating units #10 at Luganskaya<br />
TPP and #8 at Kurakhovskaya TPP (both Vostokenergo) were<br />
put out of operation for reconstruction. The modernization<br />
process will continue in 2012 and it is intended to include<br />
all main equipment of the power generating units: boilers,<br />
turbines, generators, and transformers. Additionally the automated<br />
technological processes' management system will<br />
be installed, as well as the electric filters and volume tanks for<br />
the purification of the exit gases from CO2 compounds will be<br />
modernized. As a result of the stated upgrades, the installed<br />
capacity of the power generating unit #10 at Luganskaya TPP<br />
will increase from 175MW to 210MW, while the weighted<br />
use of fuel will decrease by 63 g/KW*hour, and the maneuverability<br />
range will increase from 45MW to 80MW. The<br />
capacity of the Kurakhovskaya TPP power generating unit<br />
#8 is planned to increase from 210MW to 225MW, while<br />
the weighted use of fuel is planned to decrease by 40.6 g/<br />
KW*hour. The electric filter was also installed at the stated<br />
power generating unit, with 50 g/nm3 smoke filtering capacity,<br />
which is compliant with the requirements of the EU<br />
Directive 2001/80. The upgrades will help prolong the longevity<br />
of the stated power generating units for 15–20 years.<br />
The total volume of investment in the upgrade of the two<br />
power generating units at Luganskaya and Kurakhkovskaya<br />
TPP's amounted to approximately $112m.<br />
The volume of investment in Kievenergo's power generating<br />
facilities amounted to $5m during the reporting year. The<br />
largest reconstruction works were performed at the chemical<br />
facilities of TPP–5, using the ultrafiltration and autotransformation<br />
technologies.<br />
0<br />
<strong>SCM</strong> Group's business
Power distribution<br />
DTEK's power distribution enterprises continued the upgrade<br />
of the existing equipment and the construction of the new<br />
units. Particularly, the reconstruction works were performed<br />
at Druzhkovka, Davydovka-Severnaya, Zueyvka, Ugolno-<br />
Rtutnaya, Novomakeyevka, and Shvernik (all Service-Invest)<br />
substations, as well as at Skiv, Oktyabrskaya, and Yuzhno-<br />
Donbasskaya #1 substations (all DTEK PES-Energougol).<br />
The renovations of the high-voltage transmission lines also<br />
continued. Additionally, Service-Invest completed the construction<br />
of the two substations, one of which is intended to<br />
supply electricity to Donetsk airport.<br />
The construction of Airport–110 kV substation was carried<br />
out within the framework of preparations to Euro–2012<br />
and was completed precisely on schedule. For the first time<br />
in Donbass, the new generation of electric equipment (ABB,<br />
Sweden-Switzerland) was installed. The total volume of investment<br />
amounted to $9.8m.<br />
The total volume of investment in the construction and the reconstruction<br />
of Service-Invest substations in <strong>2011</strong> amounted to<br />
$26m, and that of DTEK PES-Energougol – amounted to $5m.<br />
In <strong>2011</strong>, the volume of investment in developing Kievenergo's<br />
heat generation amounted to $19.1m. A large-scale<br />
reconstruction of Kievenergo's heating infrastructure was<br />
performed, in total worth approximately $14m.<br />
Occupational safety<br />
DTEK continued the implementation of the corporate standard<br />
for the individual safety gear. The total volume of project<br />
investment in the reporting year amounted to $2.2m.<br />
DTEK completed the certification of occupational safety management<br />
systems to comply with OHSAS 18001:2007 at<br />
the following enterprises: Service-Invest, DTEK PES-Energougol,<br />
Mospinskoye, Pavlogradskaya, Kurakhovskaya, DTEK Dobropolskaya,<br />
and DTEK Oktyabrskaya Enrichment Plants, as well as Socis,<br />
DTEK Service, and Pershotravensk Repair Mechanical Plant.<br />
The total volume of investment amounted to $21.8m.<br />
38<br />
14 DTEK's enterprises completed the certification of their environmental<br />
management systems to comply with ISO 14001:2004.<br />
The total volume of investment amounted to $0.6m.<br />
Focus points of the year<br />
In <strong>2011</strong>, DTEK's enterprises demonstrated significant growth<br />
of their production indicators, compared to 2010.<br />
10 DTEK Pavlogradugol, DTEK Komsomolets Donbassa Mine, and DTEK Dobropolyeugol.<br />
11 The volume of electricity of Vostokenergo and Dneproenergo, with the latter being an associated company in <strong>2011</strong><br />
(DTEK owned a 47.55% share).<br />
12 The indicators of Service-Invest and DTEK PES Energougol summarized, excluding Donetskoblenergo.<br />
The volume of coal mining by DTEK's mines 10 in <strong>2011</strong> amounted<br />
to 22.9m tonnes, cumulative 11 power generation increased<br />
to 33.0bn KW•hour, distribution – to 14.1bn KW•hour 12 .<br />
The increaed production of all DTEK's enterprises resulted<br />
from the implemented operational improvements, the ongoing<br />
large-scale equipment upgrade program, as well as<br />
the company's growth after purchasing the new assets.<br />
In June DTEK created DTEK Neftegaz, a subsidiary company,<br />
which will be responsible for oil and gas projects' development,<br />
on land and in deep sea. The development of oil and<br />
gas business will, in the long term, allow DTEK to diversify its<br />
fuel base and to provide for the needs of its power generating<br />
units fueled by gas and mazut (annual gas consumption<br />
exceeds 3bn cubic meters). The company will also be drilling<br />
methane from coal beds and gas from shale. DTEK has<br />
been implementing the pilot projects in this area since 2007.<br />
Currently, several mines of DTEK Pavlogradugol and DTEK<br />
Dobropolyeugol are running methane utilization projects.<br />
DTEK plans to launch the similar projects at the other mines<br />
of the two stated enterprises.<br />
In August, DTEK, Kiev City State Administration, and USAID<br />
signed a Memorandum of Cooperation under the Municipal<br />
Heating Reform Project, to improve the infrastructure and<br />
the energy efficiency of the Kiev city heat supply system.<br />
DTEK won the tender of the State Property Fund of Ukraine<br />
for the sale of a 25% share in Kievenergo, having proposed<br />
the price of $56.3m. As a result, DTEK controls a 71.82%<br />
sharein Kievenergo.
Coal mining and enrichment<br />
The growth of coal mining volume in <strong>2011</strong> by 19.7%, compared<br />
to 2010, was mainly a result of DTEK's purchasing<br />
a new coal company – Dobropolyeugol.<br />
In January <strong>2011</strong> DTEK signed a 49-year lease for Dobropolyeugol.<br />
The lease was signed by the regional branch<br />
of the State Property Fund of Ukraine in Donetsk Oblast,<br />
following the tender, conducted in December 2010. Dobropolyeugol<br />
was the applicant in the tender process on behalf<br />
of DTEK. DTEK intends to invest $240m in Dobropolyeugol<br />
mines during the next 5 years. The funding will be mainly<br />
used for equipment upgrades, capital construction, adding<br />
inventory, optimizing coal extraction, lengthening coal faces,<br />
as well as bringing the occupational safety management system<br />
in compliance with OHSAS 18001:2007. The coal from<br />
Dobropolyeugol will be supplied to Zuyevskaya and Kurakhovskaya<br />
TPP’s (both Vostokenergo); Ladyzhynskaya and<br />
Burshtynskaya TPP’s (both Zapadenergo); Zaporozhskaya<br />
TPP (Dneproenergo), as well as to the coke and chemical<br />
plants in Ukraine.<br />
DTEK Pavlogradugol and DTEK Komsomolets Donbassa Mine<br />
demonstrated stable annual coal mining growth in <strong>2011</strong><br />
(+2.4% and +3.1%, respectively). During the reporting<br />
year, DTEK Pavlogradugol produced the largest volume<br />
of coal in its history – 15.41m tonnes.<br />
In December DTEK integrated the two enterprises under<br />
the signed concession lease: DTEK Sverdlovanthracite and<br />
DTEK Rovenkyanthracite.<br />
Power generation<br />
In <strong>2011</strong>, the volume of power generated by Vostokenergo<br />
amounted to 17.1bn KW*hour (+4.8% year-on-year).<br />
In December, DTEK increased its share in Kievenergo from<br />
46.82% to 71.82%. The volume of power generated by<br />
Kievenergo in <strong>2011</strong> amounted to 4.5bn KW*hour (+9.1%<br />
year-on-year).<br />
39<br />
Power distribution<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
The cumulative volume of electricity purchased by Service-<br />
Invest and DTEK PES-Energougol from the Energorynok State<br />
Enterprise in <strong>2011</strong> amounted to 14.1bn KW*hour, having<br />
increased 5.9% year-on-year.<br />
The volume of electricity purchased by Kievenergo from<br />
the Energorynok State Enterprise in <strong>2011</strong> remained practically<br />
unchanged year-on-year – 9.3bn KW*hour.<br />
Service-Invest and DTEK PES-Energougol continued the implementation<br />
of the automated electricity metering system. In<br />
February, DTEK PES-Energougol launched the internet-portal<br />
for selling utility services to individual consumers, in order to<br />
simplify their interaction with the enterprise.<br />
Export operations<br />
In <strong>2011</strong>, DTEK increased the export of the surplus coal products<br />
by 73% (to 3.4m tonnes) year-on-year, as well as lowered<br />
the dependency of its power generating facilities from<br />
the imported coal by 57% (to 0.6m tonnes). The increase<br />
in coal exports resulted from expanding the range of markets<br />
in Western Europe, entering the markets of South-East<br />
Asia, as well as strengthening DTEK’s positions on the existing<br />
markets.<br />
In <strong>2011</strong>, the volume of DTEK's electricity export to Eastern<br />
Europe reached 5.1bn Kw*hour, having increased by 319%<br />
year-on-year. The stated increase resulted from the renewed<br />
shipments to Belarus, Moldova, and Poland. During the reporting<br />
year, DTEK also supplied electricity to Hungary, Slovakia,<br />
and Romania. In December DTEK Power Trade and<br />
Vostokenergo purchased access to the European inter-state<br />
electricity grid at the annual auction. At the end of the year,<br />
DTEK Power Trade signed framework agreements with EDF<br />
Trading (France) and CEZ Group (Czech Republic) to supply<br />
electricity to Hungary, Poland, Slovakia, and Romania<br />
in 2012.<br />
<strong>SCM</strong> Group's business
Financial services. Banking and insurance<br />
<strong>SCM</strong>’s Financial Services business is represented by two<br />
banks and two insurance companies.<br />
• First Ukrainian International Bank is one of the largest<br />
banks in Ukraine. It is a diversified banking institution<br />
rendering a full range of services to corporate and<br />
individual clients. The bank is among Ukraine’s top 10<br />
banks by key financial indicators. The bank’s regional<br />
network includes 169 branches.<br />
• Renaissance Capital Bank specializes in individual<br />
loans and operates under Renaissance Credit brand. The<br />
bank’s regional network includes 500 branches all over<br />
Ukraine.<br />
40<br />
• ASKA is one of the leading insurance companies<br />
in Ukraine. Its regional network includes 41 offices and<br />
60 branches all over Ukraine.<br />
• ASKA-Life is one of Ukraine’s market leaders in life insurance,<br />
providing a full range of relevant services.<br />
First Ukrainian International Bank's financial indicators<br />
Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 3,721 3,219 +15.6<br />
Capital 605 527 +14.8<br />
Loan portfolio 2,423 2,207 +9.79<br />
Net profit (loss) 56 71 –21.13<br />
Renaissance Capital Bank's financial indicators13 Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 71 n/a n/a<br />
Capital 33 n/a n/a<br />
Loan portfolio (including funds in other banks) 64 n/a n/a<br />
Net profit (loss) 2 n/a n/a<br />
13 Renaissance Capital Bank was purchased by <strong>SCM</strong> in <strong>2011</strong>.
ASKA financial indicators<br />
41<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Insurance assets 65 56 +16.07<br />
Capital 15 16 –6.25<br />
Insurance reserves 35 31 +12.9<br />
Insurance premiums 55 42 +30.93<br />
Insurance payments 21 17 +23.33<br />
Net profit (loss) (2.1) (0.47) +346.8<br />
ASKA-life financial indicators<br />
Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Insurance assets 24 22 +9<br />
Capital 4.4 3 +46.67<br />
Insurance reserves 18.5 18.5 -<br />
Premiums 4.5 1.4 +221.43<br />
Payments 1.4 0.8 +75<br />
Net profit (loss) 1.4 (0.1) +1.500<br />
Focus points of the year<br />
First Ukrainian International Bank<br />
In <strong>2011</strong>, the integration of First Ukrainian International Bank<br />
and Dongorbank was completed. Integration with Dongorbank<br />
helped to improve First Ukrainian International Bank's<br />
balance structure and placed it among the top 10 largest<br />
banks in Ukraine.<br />
The bank's net profit in <strong>2011</strong> amounted to $56.4m.<br />
In <strong>2011</strong>, the net interest revenue increased by 15.62% (to<br />
$122.7m) year-on-year, while the commission earnings increased<br />
by 15.9% (to $32.5m).<br />
The bank's assets grew by 15.59% – to $3.72m as of December<br />
31, <strong>2011</strong>. The total loan portfolio increased by 9.8%<br />
– to $2.42bn. That number includes $1.82bn of corporate<br />
loans (11.9% growth year-on-year) and $0.61bn of indi-<br />
vidual loans (3.9% growth year-on-year). The bank's statutory<br />
capital increased by $95.4m – to $429m.<br />
The external debt portfolio decreased by $109m (by 27.1%)<br />
and by the end of the reporting year amounted to $293.6m.<br />
Of the stated amount, $245m was received by issuing Eurobonds<br />
and $48m from other borrowed funds.<br />
The network of POS-terminals grew by 28.5% and as of December<br />
31, <strong>2011</strong> included 6,431 terminals, being 4th largest<br />
POS-terminal network in Ukraine. The network's turnover<br />
increased more than twofold year-on-year, excceding<br />
$195m.<br />
In May, Radius, a network of ATM's, serviced by the processing<br />
center of First Ukrainian International Bank, merged with<br />
the ATM network of VTB Bank (400 ATMs in 14 Oblasts<br />
of Ukraine). The merger allows First Ukrainian International<br />
Bank and its partners to service clients with low commission<br />
charges in close to 4,000 ATMs of the joint network.<br />
<strong>SCM</strong> Group's business
In November the bank co-underwrote the bonds issue<br />
of Pridneprovskaya, South-Western, Donetsk, South, Odessa,<br />
and Lvov Railways, in total worth $226m (1.8bn UAH).<br />
Renaissance Capital Bank<br />
During the reporting year, Renaissance Capital Bank expanded<br />
its presence in Ukraine from 17 to 25 Oblasts, including<br />
Crimea. The coverage of the regional network expanded<br />
from 28 to 142 branches.<br />
The bank's net profit at the end of <strong>2011</strong> amounted to<br />
$2.11m.<br />
The bank's assets increased by 39.72% to $71.05 m, as<br />
of December 31, <strong>2011</strong>.<br />
In <strong>2011</strong>, the bank sold its loan portfolio to First Ukrainian<br />
International Bank.<br />
In February, Ukraine's largest retail chains renewed their<br />
designated-purpose loan programs. As a result, the share<br />
of designated-purpose consumer loan sales in the bank's<br />
portfolio increased to 42%. The bank also launched the partnership<br />
program for the cross-selling of designated-purpose<br />
cash loans. By december the number of project partners was<br />
257.<br />
ASKA<br />
During the reporting year, ASKA collected $52.7m of insurance<br />
premiums, including $40.2m from the voluntary programs<br />
and $12.5m – from the mandatory ones. The overall<br />
volume of collected premiums grew 44.2% year-on-year,<br />
while the volume of voluntary insurance premiums grew by<br />
38.1% year-on-year, and the volume of mandatory insurance<br />
premiums grew by 69.3% year-on-year.<br />
The amount of insurance payments in <strong>2011</strong> was $18.75m<br />
including $14.44m under the voluntary programs and<br />
$4.3m – under the mandatory programs. The overall volume<br />
of payments grew 24.3% year-on-year, while the volume<br />
of payments under the voluntary programs grew by 25.3%,<br />
and under the mandatory programs – by 21.4%.<br />
42<br />
In <strong>2011</strong>, ASKA concluded 307,000 agreements, of those<br />
47,400 – for voluntary programs and 259,600 – for mandatory<br />
programs.<br />
51,415 claims were settled during the reporting year.<br />
As of December 31, <strong>2011</strong>, the volume of insurance reserves<br />
amounted to $28.7m, having grown 47.2% year-on-year.<br />
The largest share of ASKA's insurance portfolio is occupied by<br />
property insurance, accident insurance, transportation owners'<br />
civil responsibility insurance, and vehicle insurance.<br />
ASKA-Life<br />
In <strong>2011</strong>, the volume ASKA-Life collected $4.5m of insurance<br />
premiums – 3.3 times more, compared to 2010.<br />
As of December 31, <strong>2011</strong>, 147,721 persons purchased life<br />
insurance from ASKA-Life – 1.4 times more, compared to<br />
2010.<br />
The volume of the insurance payments made during the reporting<br />
year amounted to $1.5m, while the volume of the surrender<br />
value payments made amounted to $0.044m.
43<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Heavy Engineering.<br />
Ukrainian Machine Building Holding<br />
Ukrainian Machine Building Holding (UMBH) is Ukraine's<br />
leading mining equipment maker. Its enterprises specialize<br />
in the production of powered roof supports for coal-cutters<br />
and tunneling machines, dragline and band conveyors, lifters,<br />
rotary excavators, electric locomotives, pumping stations,<br />
aspirators, switch-yards, and other mining equipment<br />
components (in total about 400 items).<br />
Mining Machines NPK is a managing company for <strong>SCM</strong>’s<br />
heavy engineering enterprises.<br />
Ukrainian Machine Business Holding, Ltd. (Cyprus) is a holding<br />
company for Mining Machines Group.<br />
Mining Machines Group includes the following enterprises:<br />
• Druzhkovka Heavy Engineering Plant is the leading<br />
producer of mining equipment in the CIS and Eastern<br />
Europe, producing: powered roof supports, conveyors,<br />
wagons, line hangers, electric and inertia-type locomotives.<br />
• Gorlovskiy Mashinostroitel Engineering Plant is<br />
a large producer of mining equipment, including: coalcutters<br />
for flat-lying and steep coal banks, tunneling<br />
machines, plough machines, lever hoists, pumping stations,<br />
and hydraulic equipment.<br />
• Donetskgormash is a large heavy engineering enterprise,<br />
producing equipment for mining industries. The<br />
company’s product range includes: multiple-rope and<br />
drum hoists, centrifugal and axial-flow blowers, loadhaul-dump<br />
machines, lever hoists, underground belt<br />
conveyors, parachutes, line hangers, charging ladles,<br />
rotary equipment for open-cast mining, and universal<br />
rail brakes.<br />
• Donetskiy Energozavod Engineering Plant is a leading<br />
producer of switch-yards and dust-ignition-proof<br />
switch-yard substations in Ukraine and the CIS. The enterprise’s<br />
products are intended for supplying electricity<br />
to mines, as well as for open-cast works in coal and<br />
other mining industries.<br />
• Krivoy Rog Mining Equipment Plant is one of Ukraine’s<br />
largest producers of spare parts, junctions, and machinery<br />
for mining and raw materials’ enrichment.<br />
• Kamensky Heavy Engineering Plant is one of Russia’s<br />
leading producers of powered roof supports for coal<br />
mining enterprises.<br />
• Sverdlovskiy Heavy Engineering Plant specializes<br />
in capital repairs of powered roof support sections, rigging,<br />
metal constructions, and general mining equipment<br />
repairs.<br />
• Mining Machines Engineering Technical Center is<br />
intended to upgrade existing, and construct new equipment<br />
for all the company’s production facilities.<br />
• Mining Machines – Quality System exercises control<br />
on incoming raw materials, ongoing control of technological<br />
production processes, as well as the quality<br />
control of products manufactured at all company's enterprises.<br />
• Mining Machines Trading Company is in charge<br />
of the Group's product sales, as well as control and coordination<br />
of the Group's representative offices in Russian<br />
Federation and Kazakhstan.<br />
• Mining Machines Service Company performs warranty<br />
and non-warranty service and capital repairs<br />
of the mining equipment.<br />
• Mining Machines – Business Comfort performs capital<br />
construction, reconstruction and repairs of the buildings,<br />
as well as manages transportation, administrative<br />
logistics, social and non-industrial units.<br />
The total number of employees is approximately 11,500<br />
people.<br />
<strong>SCM</strong> Group's business
Mining Machines Group's financial indicators<br />
Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 534 409 +30.56<br />
Sales volume 225 201 +11.94<br />
Net profit (loss) 19 13.5 +40.74<br />
EBITDA 43 22 +95.45<br />
Investments<br />
In <strong>2011</strong>, the total volume of investment in Mining Machines<br />
Group's business development amounted to $13m (excluding<br />
M&A).<br />
44<br />
Focus points of the year<br />
In August, Mining Machines Group signed a contract with<br />
Mosmetrostroy for the supply of infrastructural equipment,<br />
particularly: 720 heavy-duty tipping buckets (ВГ–1,4) and<br />
4 lifters (2Ц2х1,1).<br />
In September, a service company was created to perform<br />
warranty service of the mining equipment produced by<br />
the Group, as well as to supply the necessary spare parts.<br />
In <strong>2011</strong>, a trade company in Russia and a representative office<br />
in Kazakhstan were launched. Currently, the Group's geography<br />
includes 10 countries: Armenia, Belarus, Georgia,<br />
Kazakhstan, Kyrgyzstan, Macedonia, Moldova, Russian Federation,<br />
Romania, and Estonia.<br />
A unified certificate of quality was introduced at all Mining<br />
Machines Group's enterprises, to certify both equipment and<br />
separate junctions and spare parts. The main goal of launching<br />
the Group's product certification was to prevent the customers<br />
from purchasing counterfeit equipment.
Portinvest Holding was created in <strong>2011</strong> to manage <strong>SCM</strong><br />
Group’s transportation business. Portinvest LLC is a managing<br />
company of the holding.<br />
Portinvest manages the following companies:<br />
Avlita Stevedoring specializes in trans-shipment of grain<br />
and metal products. The company's trans-shipment facilities<br />
are located in the non-freezing harbor of Sevastopol, Black<br />
Sea. The company owns two berths in Sevastopolskaya and<br />
Dokovaya bays, with total length of 500 meters, capable<br />
of servicing vessels of up to 80,000 tonnes displacement.<br />
The berths are equipped with railway access and 15 cranes<br />
(8 gantry and 7 dockside). Avlita Stevedoring operates<br />
Investments<br />
The total volume of investments in Portinvest Holding in <strong>2011</strong><br />
amounted to $0.73m (excluding M&A).<br />
Avlita Stevedoring began the modernization of the Inzhenernaya<br />
railway station worth $1.3m. Other equipment upgrades<br />
included the installment of the following: modern<br />
vacuum Sibilia unit for the collection of the solid particles<br />
in the internal facilities ($0.47m) and emergency power<br />
supply system ($0.1m). The company also began the process<br />
of certification to comply with ISO 9001 and ISO 14001.<br />
14 Portinvest Holding was created in <strong>2011</strong>.<br />
45<br />
Focus points of the year<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Port business. Portinvest<br />
a grain terminal, which is one of the largest in Ukraine, with<br />
a grain storage capacity of 170,000 tonnes, which allows<br />
the company to process up to 3m tonnes of cargo annually.<br />
The company's metal products trans-shipment facilities have<br />
the capacity to process more than 2m tonnes of cargo annually.<br />
Sea Industrial Complex is one of Ukraine’s largest dockyards,<br />
located in Sevastopol. The Complex performs all types<br />
of repairs for a wide range of vessels, up to 290m in length<br />
and up to 60,000 tonnes in deadweight.<br />
The total number of employees is 1,049 people.<br />
Portinvest's financial indicators14 Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 139 n/a n/a<br />
Sales volume 48 n/a n/a<br />
Net profit (loss) 4 n/a n/a<br />
EBITDA 16 n/a n/a<br />
The total volume of Avlita's regular and dry cargo trans-shipments<br />
during the reporting year amounted to 3.6m tonnes<br />
– a 12.5% increase year-on-year. Compared to 2010,<br />
the trans-shipment of metal products grew by 12% – from<br />
2.29m tonnes to 2.57m tonnes. The company's share in the<br />
overall volume of cargo trans-shipment through Ukraine's<br />
ports amounted to 15%. The volume of grain trans-shipment<br />
in <strong>2011</strong> grew by 5.8% – from 0.98m tonnes to 1.04m<br />
tonnes, making Avlita's share 6% of the market.<br />
<strong>SCM</strong> Group's business
Agriculture. HarvEast Holding<br />
HarvEast Holding was created in <strong>2011</strong>. HarvEast planned<br />
structure is an entity jointly controlled by <strong>SCM</strong> Group and<br />
Smart Group, to manage the agricultural assets, which previously<br />
belonged to the Ilyich Steel Plant in Mariupol, earlier<br />
integrated into Metinvest Group. HarvEast manages the agricultural<br />
assets in Donetsk, Zaporozhye, Cherkassy, and Zhitomir<br />
Oblasts, as well as in Crimea.<br />
Investments<br />
The total volume of investment in <strong>2011</strong> amounted to $8.9m<br />
(excluding M&A).<br />
The main part of investment funds in <strong>2011</strong> was used to purchase<br />
cultivation, tillage, and seeding machinery; as well as<br />
transportation and supporting equipment.<br />
15 HarvEast Holding was created in <strong>2011</strong>.<br />
46<br />
HarvEast Holding's main focus areas include:<br />
• crops (growing wheat, sunflower, barley, perennial<br />
herbs, and corn);<br />
• dairy farming;<br />
• mixed fodder production and growing seeds.<br />
The total area of the Holding's cultivated land amounts to<br />
220,000 hectares (Donetsk Oblast – 170,000 hectares, Zaporozhye<br />
Oblast – 20,000 hectares, Cherkassy and Zhitomir<br />
Oblasts – 10,000 hectares, Crimea – 20,000 hectares).<br />
The total number of employees – 9,431 people.<br />
HarvEast Holding's financial indicators15 Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 250 n/a n/a<br />
Sales volume 91 n/a n/a<br />
Net profit (loss) 2 n/a n/a<br />
EBITDA 15 n/a n/a<br />
Focus points of the year<br />
In <strong>2011</strong>, HarvEast Holding harvested 428,000 tonnes<br />
of grain and fodder crops.<br />
The total volumes of crops harvested were as follows: wheat<br />
– 256,700 tonnes, sunflower – 80,200 tonnes, barley –<br />
53,500 tonnes, corn – 20,800 tonnes.<br />
The Holding's dairy farms produced approximately 57,000<br />
tonnes of milk. The volume of meat produced was 8,800<br />
tonnes in live weight.<br />
The Holding also produced 5,600 tonnes of flour, 2,400<br />
tonnes of bread, and 56,200 tonnes of mixed fodder.
<strong>SCM</strong> Group is a significant player in Ukraine’s media market.<br />
We are actively strengthening our positions in this market by<br />
investing in the development of our media assets.<br />
Ukraine Media Group<br />
• Ukraine Television Channel is one of Ukraine’s leading<br />
nationwide television channels. The channel’s 24hour<br />
broadcasting includes informational, educational,<br />
children’s, entertainment, artistic, and sports programs.<br />
The Channel’s monthly audience exceeds 35m people.<br />
• Football Television Channel is Ukraine’s first specialized<br />
channel, dedicated exclusively to football: news,<br />
direct broadcasting of the leading European and Latin<br />
American championships, football life, and life of the famous<br />
football players. The channel is broadcast through<br />
cable television networks and is available through more<br />
than 500 cable TV operators, as well as satellite TV operators,<br />
such as Viasat and Xtra TV. The channel’s technical<br />
coverage through cable networks exceeds 90%<br />
of Ukrainian homes (Gfk Ukraine).<br />
47<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Media. Ukraine Media Group,<br />
Segodnya Multimedia Publishing,<br />
and Dnepropetrovsk Television<br />
Service<br />
• Football+ Television Channel is a premium-class channel<br />
broadcasting the national championships of England,<br />
Germany, and Brazil.<br />
• Donbass Television Channel is a general interest channel<br />
for viewers in Eastern Ukraine. The channel’s programming<br />
features socially-oriented content, including<br />
news and political talk-shows. The channel is broadcast<br />
in Donetsk and Lugansk Oblasts.<br />
• Digital Ventures is an internet holding, which is developing<br />
a large horizontal portal, www.tochka.net.<br />
• Media Partnership is a sales house, which has the exclusive<br />
rights to sell advertising air time on Ukraine Media<br />
Group’s channels.<br />
• Tele Pro Production Company specializes in creating<br />
and adaptation of the television formats.<br />
Ukraine Media Group's financial indicators<br />
Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 122 88.5 +37.85<br />
Sales volume 38 36 +5.56<br />
Net profit (loss) (37) (12) +208.33<br />
EBITDA (31) (5) +520<br />
<strong>SCM</strong> Group's business
Dnepropetrovsk Television Service<br />
<strong>SCM</strong> Group owns a controlling (67.99%) share in Dnepropetrovsk<br />
Television Service (Channel 34). Currently, the channel<br />
is not integrated into Ukraine Media Group.<br />
Segodnya Multimedia Publishing<br />
Holding<br />
<strong>SCM</strong> Group’s publishing business is consolidated under<br />
the Segodnya Multimedia holding, which is responsible for<br />
the strategic management of the following print and online<br />
media:<br />
• Segodnya newspaper – a national socio-political daily<br />
newspaper with 7 regional editions in Kiev, Odessa,<br />
Kharkov, Donetsk, Dnepropetrovsk, Lvov, and Simferopol.<br />
Average daily circulation – 94,400 copies.<br />
• Donetskie Novosti – a weekly newspaper and Donetskie<br />
Novosti Kurier, a free advertising weekly. Distributed<br />
in Donetsk.<br />
• Vecherniy Donetsk newspaper – a regional edition,<br />
aimed at a wide readership of all ages and social groups.<br />
Distributed in Donetsk and Donetsk Oblast.<br />
• Priazovskiy Rabochiy – large circulation socio-political<br />
newspaper, targeting the South of Donetsk Oblast. Distributed<br />
in Mariupol and Donetsk Oblast.<br />
• RIO newspaper – positioned in the inexpensive TVguides<br />
segment; promoted as an attractive advertising<br />
medium. Distributed in Donetsk and Donetsk Oblast.<br />
Segodnya Multimedia's financial indicators<br />
Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 24 26 –7.69<br />
Sales volume 10 9 +11.11<br />
Net profit (loss) (2) 2 –200<br />
EBITDA (1) (1) -<br />
48<br />
• Dom Sovetov newspaper – entertainment edition featuring<br />
practical advice regarding: housekeeping, gardening,<br />
growing vegetables, cuisine, fashion, home<br />
remedies, growing flowers. Distributed in Mariupol and<br />
adjacent areas.<br />
• Privet, Rebyata! newspaper – youth-oriented edition.<br />
Distributed in Mariupol and Donetsk Oblast.<br />
• Priazovye Sport newspaper – regional sport edition.<br />
Distributed in Mariupol.<br />
The holding also has two own production facilities, in Vyshgorod<br />
(Kiev Oblast) and in Mariupol (Donetsk Oblast) which<br />
offers a range of full-color printing services.<br />
Segodnya Multimedia also manages the following onlineportals:<br />
www.segodnya.ua, www.dnews.donetsk.ua,<br />
www.pr.ua, www.vecherka.donetsk.ua.<br />
Investments<br />
The total volume of Segodnya Multimedia’s investments<br />
in business development amounted to $1m.
Focus points of the year<br />
Ukraine Television Channel<br />
By the end of <strong>2011</strong>, Ukraine Television Channel increased its<br />
audience share by 12%, compared to 2010 (Gfk Ukraine).<br />
With 11.39% audience share and a 1.8% rating, the channel<br />
ranked #2 among Ukraine’s general interest channels<br />
(18+ audience in cities with population 50,000+).<br />
Among the Channel’s most successful projects in <strong>2011</strong> were:<br />
• Events – informational and analytical program (average<br />
audience share 15.1%, rating 4.2%);<br />
• Critical Point – journalist investigation program (average<br />
audience share 12.65%, rating 2.6%);<br />
• Events of the Week with Andrey Danilevich – analytical<br />
program (average audience share 12.64%, rating<br />
4.43%);<br />
• Marusya – television show (audience share 10.62%,<br />
rating 4.14%).<br />
The share of the Channel’s own TV production was 60%.<br />
Football Television Channel<br />
In <strong>2011</strong>, Football Television Channel had the following indicators:<br />
1.94% audience share, 0.15% rating (male audience<br />
18+ in cities with population 50,000 plus, Gfk Ukraine).<br />
Donbass Television Channel<br />
Donbass Television Channel launched satellite broadcasting.<br />
The intended audience growth is 3m viewers.<br />
In <strong>2011</strong>, Donbass Television Channel had the following indicators:<br />
0.25% audience share, 1.69% rating (Donetsk audience,<br />
Gfk Ukraine).<br />
49<br />
Digital Ventures<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
The average monthly audience of tochka.net portal in <strong>2011</strong><br />
was 2.2m users, while the average monthly coverage<br />
of Ukraine's internet audience was 15.21% (Gemius Audience).<br />
Segodnya Newspaper<br />
Segodnya ranks first by the single issue audience among<br />
all daily newspapers in Ukraine and among all newspapers<br />
in Kiev (TNS Ukraine). The newspaper's single issue audience<br />
grew by 47% to 1.6m readers.<br />
The average circulation of Segodnya Newspaper is 94,400<br />
copies.<br />
The revenue from printed newspaper sales in <strong>2011</strong> grew by<br />
17.3% – from $4.5m to $5.36m, while the advertising revenue<br />
grew by 15.2% – from $1.95m to $2.25m.<br />
The audience of www.segodnya.ua portal covers 10%<br />
of Ukraine's internet audience (Gemius Ukraine), securing<br />
Segodnya the leadership position on the national rating<br />
of news portals, as a result, the revenue from advertising on<br />
the portal grew by 153.2% – from $0.13m to $0.319m.<br />
In May, Segodnya Crimea regional edition was launched, followed<br />
by Western Ukraine. Today – in September.<br />
In December, Segodnya Multimedia press-studio opened.<br />
The press-studio is a modern media platform, offering<br />
a range of services.<br />
<strong>SCM</strong> Group's business
Real estate. ESTA Group<br />
ESTA Group is the holding company managing <strong>SCM</strong>’s real<br />
estate assets and one of the largest players in Ukraine’s real<br />
estate market. Among the Group’s main business areas are:<br />
commercial property; including office centers, logistics centers,<br />
shopping malls, and hotels.<br />
ESPV Limited (Cyprus) performs the holding company functions.<br />
ESTA Property Management manages the completed and<br />
operational real estate projects.<br />
Investment real estate projects:<br />
• Donbass Palace Hotel – a five-star hotel in the center<br />
of Donetsk. Total rooms: 129.<br />
• Opera Hotel – a five-star hotel in the center of Kiev. Total<br />
rooms: 137.<br />
• Leonardo Business Center (second line) – a multi-functional<br />
complex in the center of Kiev. Total area: 38,000<br />
square meters.<br />
• Office center at Kudryavskaya Street, Kiev. Total area:<br />
1,820 square meters.<br />
• Office center at Postysheva Street, Donetsk. Total area:<br />
14,500 square meters.<br />
Ongoing 16 real estate projects:<br />
• Park Inn Hotel by Radisson Donetsk – a four-star hotel.<br />
Total rooms: 172. Total investment – $15m. ESTA Group<br />
owns a 50% share in the project.<br />
• Kiev’s Central Univermag Shopping Mall – a project with<br />
unique location in the center of Kiev, at the intersection<br />
of Khreshchatik and Bogdana Khmelnitskogo Streets.<br />
Total area: 45,000 square meters. Total investment –<br />
$100m.<br />
50<br />
• Pushkinskiy multi-functional complex in the center<br />
of Donetsk. This is a class A project with the total area<br />
of 52,600 square meters. Total investment of $130m.<br />
• Andreyevskiy multi-functional complex on Frolovska<br />
Street in Kiev, with the total area of over 70,000 square<br />
meters. Total investment $200m.<br />
Real estate projects at development stage:<br />
• Business center at Moskovskaya Square, Kiev. Total area:<br />
3 hectares.<br />
Land plots:<br />
16 The ongoing projects are the projects being implemented during the reporting period.<br />
• Land plot in Dnepropetrovsk, Karl Marx Street. Total<br />
area: 0.15 hectares.<br />
• Land Plot in Donetsk, Leninskiy Avenue. Total area: 4<br />
hectares.<br />
• Land Plot in Kerch. Total area: 1.4 hectares.<br />
• Land Plot in Yalta, Dzerzhinskogo Street. Total area: 1.85<br />
hectares.<br />
• Land Plot in Pluty Village, Kiev Oblast, Koncha-Zaspa<br />
suburban district. Total area: 45 hectares.
Investments<br />
The total volume of investment in ESTA Holding's business development<br />
in <strong>2011</strong> amounted to $100m (excluding M&A).<br />
Focus points of the year<br />
In March, Stolichny TSUM LLC completed the purchase of Kievsky<br />
TSUM Trading House LLC and M-Service LLC. Completion<br />
of the transaction will allow to begin the Kiev's Central<br />
Univermag Shopping Mall reconstruction project, resulting<br />
in the twofold increase of the shopping mall's area – to 45<br />
square meters.<br />
51<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
ESTA Group's financial indicators<br />
Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 527 370 +42.43<br />
Sales volume 31 26 +19.23<br />
Net profit (loss) 17 15 +13.13<br />
EBITDA 5 6 –16.67<br />
In October, ESTA signed an agreement with Rezidor Hotel<br />
Group for the transfer of the management rights to Kiev Hotel<br />
in Donetsk to the latter. Kiev Hotel will be further managed<br />
under Park Inn Hotel by Radisson Donetsk name. The total<br />
number of rooms at the hotel is 172. The hotel will start receiving<br />
guests in the first half of 2012.<br />
In December, ESTA Holding purchased a 50% share in the<br />
second line of Leonardo Business Center in Kiev.<br />
ESTA Holding created a division to be in charge of developing<br />
the Group's hotel business, particularly, developing ESTA's<br />
hotel projects portfolio, increasing its effectiveness, as well as<br />
raising hotel service quality standards.<br />
<strong>SCM</strong> Group's business
Clay mining. United Minerals Group<br />
United Minerals Group Ltd. (UMG) manages <strong>SCM</strong> Group's<br />
assets in clay mining. UMG is Ukraine's largest supplier<br />
of white ball clay. The production capacity of the company's<br />
enterprises is approximately 3.6m tonnes per year, while<br />
the overall clay reserves of UMG's enterprises amount to approximately<br />
300m tonnes. UMG's production facilities are<br />
located in Donetsk and Lugansk Oblasts.<br />
Currently, UMG holding owns the following major clay mining<br />
companies:<br />
• Vesko specializes in mining and processing clay. The annual<br />
volume of extracted clay is 1.4m tonnes.<br />
• Druzhkovskoye Mines Management specializes<br />
in mining and processing clay and molding sand. It is<br />
sourcing clay from the unique field with clay deposits<br />
containing more than 30% of aluminum oxide in the<br />
dry substance. Annual volume of clay extraction is 0.5m<br />
tonnes.<br />
• Ogneupornerud specializes in clay mining. Annual volume<br />
of clay extraction is 1.7m tonnes.<br />
• Kerammekhanizatsiya owns licenses, entitling it to explore<br />
and mine clay reserves at Dobropolsky site (about<br />
12.74m tonnes of clay).<br />
• Capital-Service owns licenses entitling it to explore<br />
and mine white ball clay reserves at the Vidny–2 (9m<br />
tonnes) and Pokrovskoye (29.3m tonnes) sites.<br />
The total number of employees is 1,337 people.<br />
52<br />
Investments<br />
During the reporting year, UMG invested $2.3m in production<br />
facilities' expansion, exploration works, and project approval<br />
documentation preparation.<br />
Focus points of the year<br />
In <strong>2011</strong>, the volume of clay extraction increased twofold<br />
year-on-year – from 1.7m tonnes to 3.6m tonnes. The volume<br />
of sales grew by 30% year-on-year – from 2m tonnes<br />
to 2,6m tonnes.<br />
During the reporting year, UMG made shipments to more<br />
than 20 countries.<br />
United Minerals Group's financial indicators<br />
Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 98 123 –20.33<br />
Sales volume 124 79 +56.96<br />
Net profit (loss) 21 31 –32.26<br />
EBITDA 32 39 –17.95
Total clay mining volume, m, tonnes<br />
0<br />
2010 <strong>2011</strong><br />
2010<br />
<strong>2011</strong><br />
Sales geography<br />
Country Share of total sales,<br />
%<br />
Sales volume, thousand tonnes<br />
Russia 28 744<br />
Italy 19 498<br />
Ukraine 12 322<br />
Turkey 12 305<br />
Spain 11 299<br />
Belarus 6 152<br />
Poland 6 151<br />
Bulgaria 2 52<br />
UAE 1 29<br />
Other 3 91<br />
11%<br />
1.7<br />
6%<br />
12%<br />
6%<br />
3%<br />
1%<br />
2%<br />
12%<br />
3.6<br />
4<br />
3<br />
22<br />
1<br />
28%<br />
19%<br />
Russia<br />
Italy<br />
Ukraine<br />
Turkey<br />
Spain<br />
Belarus<br />
Poland<br />
53<br />
Sales volume, m, tonnes<br />
2.0<br />
Bulgaria<br />
UAE<br />
Other<br />
2.6<br />
2.5<br />
2.0<br />
1.5<br />
1.0<br />
0.5<br />
0<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
<strong>SCM</strong> Group's business
Retail trade. Ukrainian Retail<br />
Ukrainian Retail is developing <strong>SCM</strong> Group’s retail business<br />
under the Brusnichka brand in the Eastern regions of Ukraine.<br />
The main goal of the company is to create and operate one<br />
of the largest retail convenience store chains in Ukraine.<br />
The Brusnytsya chain operates convenience (or 'neighborhood')<br />
format stores, with floor space of 300–400 square<br />
meters and a product range of 6,500 items. Brusnichka retail<br />
Number of Brusnichka stores<br />
78<br />
54<br />
chain includes 98 stores in Donetsk, Kharkov, Dnepropetrovsk,<br />
Lugansk, Zaporozhye, and Poltava Oblasts.<br />
Ukrainian Retail also owns three logistics centers with the total<br />
area of 12,000 square meters, as well as production facilities,<br />
which provide the stores with fresh bakery and gastronomy<br />
products.<br />
The total number of employees – more than 2,900 people.<br />
Ukrainian Retail's financial indicators<br />
Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 109 81 +34.57<br />
Sales volume 109 79 +37.97<br />
Net profit (loss) (16) (10) +60<br />
EBITDA (9) (3) +200<br />
Investments<br />
98<br />
The total volume of investment in Brusnichka chain development<br />
in <strong>2011</strong> amounted to $28,7m (excludind M&A).<br />
Focus points of the year<br />
100<br />
In <strong>2011</strong>, Brusnichka launched a new retail format – freshmarket.<br />
During the reporting year, 16 new freshmarkets were<br />
75<br />
50<br />
25<br />
0<br />
Sales volume, $, m<br />
124.06<br />
91.24<br />
2010 <strong>2011</strong><br />
2010<br />
<strong>2011</strong><br />
130<br />
97.5<br />
32.5<br />
opened and 11 more were restyled. The chain also opened 8<br />
regular Brusnichka stores.<br />
The chain launched its own private label products in the midlevel<br />
price range under Brusnychna Collection.<br />
In <strong>2011</strong>, the sales volume increased 36% year-on-year –<br />
from $91.24m to $124.06m, while the number of customers<br />
grew by 27% – from 24.6m to 31.3m people.<br />
65<br />
0
Parallel manages <strong>SCM</strong> Group’s assets in the petroleum products<br />
wholesale and retail sector. In <strong>SCM</strong>’s portfolio, this business<br />
is represented by petrol station chains, operating under<br />
the Parallel, Gefest, and PitStop brands.<br />
Parallel-M, LTD serves as the managing company for the network<br />
of 81 gas station complexes in 6 regions of Ukraine.<br />
Parallel Nafta Ltd (Cyprus) is the holding company for <strong>SCM</strong>’s<br />
petroleum products retailing assets.<br />
A mini-market chain operating under ZZZIP!! brand includes<br />
76 mini-markets and operates 15 car washes.<br />
55<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Petroleum products retailing.<br />
Parallel<br />
Parallel also serves as the exclusive light oil supplier to the gas<br />
stations it manages, and provides fuel storage and transportation<br />
services. The company operates its own fuel testing<br />
and quality control facilities (an accredited laboratory), qualifying<br />
it to provide petrol product testing services.<br />
Parallel operates two large petroleum storage depots in Donetsk<br />
(Donetskgornefteprodukt) and Shakhtersk, as well as<br />
a fleet of modern petrol and gas tankers.<br />
The total number of employees is about 1,838 people.<br />
Parallel's financial indicators<br />
Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 67 65 +3.08<br />
Sales volume 381 290 +31.38<br />
Net profit (loss) 6 10 –40<br />
EBITDA 15 18 –16.67<br />
Investments<br />
The total volume of investment in Parallel's business development<br />
in <strong>2011</strong> amounted to $12,5m.<br />
Focus points of the year<br />
The volume of petroleum products' sales amounted to<br />
298,300 tonnes.<br />
In <strong>2011</strong>, Parallel opened 13 gas station complexes under Parallel<br />
brand and rebranded another 7 gas station complexes.<br />
Parallel won the tenders for the supply of gasoline and diesel<br />
fuel to a number of companies: PES-Energougol, Lisichanskugol,<br />
Donetskgeologiya, DRSU, Donetskoblenergo, etc.<br />
The total volume of fuel sales, resulting from the stated tenders<br />
amounted to $21m.<br />
In September, Parallel began fuel shipments to Neftepromgorg,<br />
which manages a chain of 20 gas stations in Donetsk<br />
and Lugansk Oblasts.<br />
The share of mini-market sales in the total Parallel's sales volume<br />
amounted to 4.6%.<br />
<strong>SCM</strong> Group's business
Pharmaceuticals.<br />
Ukrainian Pharmacy Holding<br />
Ukrainian Pharmacy Holding owns and manages at network<br />
of 200 pharmacies, serving over 30,000 customers daily.<br />
38 pharmacies are operating under the Zdravitsa brand,<br />
111 pharmacies under Dobri Liky brand, and one pharmacy<br />
under Tsentralnaya brand. The remainder of the pharmacies<br />
are currently operating without a unified brand, but will<br />
be rebranded under the Dobri Liky brand. Ukrainian Pharmacy<br />
Holding is also actively developing the small-batch pharmaceutical<br />
retailing format.<br />
The Zdravitsa chain offers a wide assortment of the quality<br />
pharmaceuticals, personal hygiene items, cosmeceuticals,<br />
children’s food, and cosmetics. The pharmacies also offer<br />
a high level of professional service and a wide range of additional<br />
services, including consulting assistance.<br />
56<br />
The Dobri Liky chain is a new, developing, socially-oriented<br />
network of pharmacies, formed on the basis of the previously<br />
unbranded pharmacies. The differentiating factors of this<br />
chain are low prices and wide product range. The chain has<br />
also undertaken to service customers with reduced-price<br />
prescriptions, as well as serving customers covered by State<br />
Social Insurance Fund's insurance programs against industrial<br />
accidents in Donetsk Oblast.<br />
Tsentralnaya is a premium-class pharmacy.<br />
The total number of employees is about 936 people.<br />
Ukrainian Pharmacy Holding's financial indicators<br />
Indicators, $, m <strong>2011</strong> 2010 Dynamics, %<br />
Assets 21 17 +23.53<br />
Sales volume 53 16 +231.25<br />
Net profit (loss) 0 0 -<br />
EBITDA 2 1 +100<br />
Investments<br />
The total volume of investment in the development<br />
of the pharmacies, managed by the Ukrainian Pharmacy<br />
Holding, amounted to $9m (excluding M&A).<br />
Focus points of the year<br />
In <strong>2011</strong>, Ukrainian Pharmacy Holding opened 8 Zdravitsa<br />
pharmacies and 98 Dobri Liky pharmacies.
Vega Telecommunications Group (Vega) is one of Ukraine’s<br />
largest private fixed-line, broadband access, and data transfer<br />
operators.<br />
Vega possesses a full range of licenses to provide fixed-line<br />
services across Ukraine. Services include local, inter-city, and<br />
international telephone connection, broadband connection,<br />
as well as transmission channel rental.<br />
Vega provides services in 47 cities and 2 population centers,<br />
in 20 Oblasts of Ukraine, with a full range of services (fixed-<br />
Telecommunications.<br />
Vega<br />
57<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
line telephone connection, broadband internet access, and<br />
data transfer) available in 38 population centers of Ukraine.<br />
Vega has also developed its own powerful country-wide<br />
baseline network.<br />
Operational management of Vega is undertaken by Farlep-<br />
Invest.<br />
The total number of employees – 2,254 people.<br />
Vega Telecommunication Group's financial indicators<br />
Vega Telecommunication Group's <strong>2011</strong> 2010 Dynamics, %<br />
Assets 111 94 +18.08<br />
Sales volume 89 93 –4.49<br />
Net profit (loss) (4) (7) –42.86<br />
EBITDA 14 20.8 –32.69<br />
Investments<br />
The total volume of investment in Vega's network construction<br />
and upgrade amounted to $6.7m.<br />
Vega completed its radio relay network upgrade project in 6<br />
Oblasts of Ukraine. As a result, the data transferring capacity<br />
of the network increased (from 34 to 100 mb/second)<br />
and coverage expanded to include Kharkov, Cherkassy, Volyn,<br />
Khmelnytsky, Zhitomir, and Chernigov Oblasts. The new<br />
and the upgraded parts of the network allow to decrease<br />
the maintenance costs and to prepare the network to satisfy<br />
the constantly growing demand for services.<br />
Focus points of the year<br />
During the reporting, year, Vega's services included: 26,555<br />
fixed connection lines, of which 9,684 to individua clients<br />
and 16,871 – to corporate clients. The resulting number<br />
of the subscriptions amounted to 616,813 (388,285 – individual<br />
clients, 228,528 – corporate clients).<br />
The number of new subscriptions to the internet service was<br />
39,126, of those 31,527 – by individual clients, 7,599 – by<br />
corporate clients. The resulting overall number of the subscriptions<br />
amounted to 143,565 (116,115 – individual clients,<br />
27,450 – corporate clients).<br />
The growth in broadband internet subscriptions in <strong>2011</strong> was<br />
12.8% year-on-year.<br />
Vega launched its broadband internet access services<br />
in Khartsyzsk and Kramatorsk (Donetsk Oblast). IPTV service<br />
was launched in test mode in Donetsk, Mariupol, Makeyevka,<br />
and Odessa.<br />
Vega launched corporate IP telephony-based corporate solutions<br />
for medium and small business.<br />
Vega launched fixed line connection services in Brovary (Kiev<br />
Oblast).<br />
<strong>SCM</strong> Group's business
<strong>SCM</strong> Sport.<br />
FC Shakhtar and Donbass Arena<br />
Shakhtar Football Club<br />
FC Shakhtar was founded in 1936. The club won the Ukrainian<br />
Championship (2002, 2005, 2006, 2008, 2010,<br />
<strong>2011</strong>), the Ukraine Cup (1995, 1997, 2001, 2002, 2004,<br />
2008, 2010, <strong>2011</strong>), the Ukraine Super Cup (2005, 2008,<br />
2010) and the UEFA Cup (2009).<br />
The football club has a well-developed sporting infrastructure<br />
that includes, among others, a modern training base and<br />
a football academy.<br />
Donbass Arena Stadium<br />
Donbass Arena is the first stadium in Eastern Europe to be<br />
designed and built in compliance with UEFA’s 5-star standard.<br />
The overall investment in the stadium and landscaping<br />
the surrounding park amounted to $400m.<br />
Donbass Arena is the home stadium of FC Shakhtar, as well as<br />
the cultural center of Donbass’ regional capital, Donetsk. The<br />
stadium’s building features restaurants, lounge-bar, dozens<br />
of fast food restaurants, a fitness center, as well as a fan cafe,<br />
a museum and FC Shakhtar’s brand giftshop. On days when<br />
Donbass Arena is not hosting football games, it hosts a wide<br />
range of events: concerts, shows, assemblies, presentations,<br />
press-conferences, and formal receptions. The stadium also<br />
receives international conferences and exhibitions.<br />
Focus points of the year<br />
During 2010/11 season the priorities of FC Shakhtar's transfer<br />
policy included stabilizing the productive connection<br />
among the players and preserving the existing team composition,<br />
which is why the club maintained the main set of players<br />
between seasons.<br />
58<br />
FC Shakhtar's financial indicators<br />
Source of income, $, m Season Season<br />
2010/11 2009/10<br />
Permanent and temporary<br />
transfers of players<br />
17.07 47.1<br />
Income from UEFA 24.47 6.66<br />
Commercial activity 21.21 16.2<br />
Total: 62.75 69.96<br />
FC Shakhtar's incom from commercial activity<br />
Source of income, $, m Season<br />
2010/11<br />
Season<br />
2009/10<br />
Sponsorship and advertising 6.78 5.9<br />
Sale of tickets and seasonal<br />
passes<br />
6.15 3.27<br />
Corporate lounges 5.02 4.27<br />
Branded products 2.76 2.26<br />
TV broadcasting rights 0.5 0.5<br />
Total: 21.21 16.2<br />
The successful performance in the League of Champions and<br />
entering the 1/4 of the final competition allowed the Club to<br />
grow revenues from UEFA in <strong>2011</strong> more than twofold – from<br />
$13m to $31m.<br />
The total revenue from sponsorship and advertising in <strong>2011</strong><br />
amounted to $45.2m ($4.4m in 2010).
Associated companies are businesses where <strong>SCM</strong> Group,<br />
in its role as an investor, is capable of significant influence<br />
(<strong>SCM</strong>’s share in such companies ranges between 25% and<br />
50%). In its associated companies, <strong>SCM</strong> participates in defining<br />
financial and operational policy, but does not exercise<br />
full control. <strong>SCM</strong> is involved in defining financial and operational<br />
policy of these associated companies through its representation<br />
on the Supervisory Boards.<br />
Metals and mining<br />
Zaporozhkoks (Zaporozhye Coke and Chemical Plant)<br />
– Ukraine’s leading coke and chemical enterprise with a full<br />
technology cycle for chemical-recovery and product processing<br />
– 24.99% share.<br />
Krivoy Rog Iron Ore Plant – Ukraine’s largest producer<br />
of commercial grade iron ore – 50.00% share.<br />
Donetskkoks (Donetsk Coke and Chemical Plant) – one<br />
of Ukraine’s largest coke and chemical enterprises, producing<br />
over 20 products – 37.51% share.<br />
Dokuchayevsk Flux and Dolomite Plant (DFDK) – one<br />
of Ukraine’s largest mining and processing enterprises, specializing<br />
in fluxing limestone and dolomite extraction and<br />
processing, and the largest producer of fired dolomite for<br />
metallurgy. It is also the only plant in Ukraine to produce<br />
powders for refractory materials – 50.00% share.<br />
Novotroitskoye Mines Management – a large mining enterprise,<br />
specializing in limestone and dolomite extraction<br />
and processing for metallurgy, refractory, glasswork, and<br />
sugar industries – 50.00% share.<br />
Krivbasszvryvprom Explosives Company – an industrial<br />
production enterprise specializing in blasting works at open<br />
casts of Ukrainian mines. It is also a large producer of emulsified<br />
and hydrolabile explosives – 50.00% share.<br />
Zaporozhstal – one of Ukraine’s large producers of hotrolled<br />
and cold-rolled coil – 24.9% share.<br />
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<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Associated companies<br />
Energy<br />
Dneproenergo – Ukraine’s second largest electric power<br />
producer. Dneproenergo’s production facilities include three<br />
thermal power plants (TPP) – Zaporozhskaya, Krivorozhskaya,<br />
and Pridneprovskaya – with a cumulative installed capacity<br />
of 8.2 GW•hour, amounting to 30% of the total installed<br />
capacity of all TPP’s in Ukraine – 49.44% share.<br />
Donetskoblenergo – a modern, technological, electric<br />
power distribution company with its own electricity grid;<br />
a reliable electricity supplier to Donetsk Oblast. The overall<br />
length of the company’s high voltage transmission lines is<br />
69,400 km. The cumulative installed capacity of the company’s<br />
transformer substations is 8,458 MBA – 31.28% share.<br />
Zapadenergo – one of Ukraine’s largest electric and thermal<br />
power producers. The company manages Burshtynskaya,<br />
Ladyzhinskaya, and Dobrotvorskaya TPP’s, as well as Galremenergo,<br />
Lvovenergospetsremont, and Zapadenergopostavka<br />
service companies. The cumulative installed capacity<br />
of the stated companies is 4,707.50 MW – 25.84% share.<br />
Vanco Prykerchenska Ltd. (British Virgin Islands) – performs<br />
deep sea oil and gas exploration and drilling at Prikerchensky<br />
field of the Black Sea continental shale – 33.5%<br />
share.<br />
Telecommunications<br />
Astelit – a national operator, providing mobile communication<br />
services to GMS 900 and GSM 1800 standards, operating<br />
under the life:) brand – 44.96% share.<br />
MMDS Ukraine – a telecommunications company providing<br />
digital television services and internet access, based on<br />
MMDS (Multichannel Multipoint Distribution System) –<br />
25.00% share.<br />
<strong>SCM</strong> Group's business
Sustainable<br />
development<br />
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<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
We believe that business and social goals are<br />
closely connected, since the quality of the social<br />
sphere largely depends on the level of business<br />
development. During the last years, the scale<br />
of <strong>SCM</strong> Group's business has grown, resulting<br />
in even greater influence on the Ukrainian<br />
society. This is why the social wellbeing<br />
of the communities in the regions of our presence<br />
is at the core of our sustainable development<br />
concept.<br />
Sustainable development
Our main social goal is to make the regions of our presence<br />
as convenient for living as possible, not only by the local,<br />
but also by the European standards. We strive to provide our<br />
employees with good and safe working conditions and to increase<br />
our productivity to the extent that our enterprises are<br />
capable of paying salaries, comparable to those in Eastern<br />
European countries.<br />
Achieving the social goals we set before ourselves is the prerequisite<br />
to achieving our business results, since it allows us<br />
attracting and retaining the best talent, managing our business<br />
risks, and making large-scale investments in the upgrade<br />
of our equipment.<br />
To maximize our contribution to Ukraine’s socio-economic<br />
development, we do the following:<br />
• Follow the principles of sustainable development<br />
in our operations. How we achieve our ambitious<br />
results is no less important to us than what those results<br />
are. In the operational planning for our enterprises we<br />
take into consideration the specific interests of the local<br />
communities and the Ukrainian society overall.<br />
• Implement social projects, which create practical<br />
value to the society. Our goal is not to duplicate<br />
the government’s efforts, but to complement the ongoing<br />
state-run social programs, where necessary. Particularly,<br />
we are focused on education, health, energy efficiency<br />
and local business development. We always take<br />
into consideration the priorities and the needs of the local<br />
communities where our enterprises operate.<br />
We believe that:<br />
• Safety and proper working conditions are the foundation<br />
of the sustainable approach to business.<br />
• By investing in our employees’ development, we help<br />
them grow professionally.<br />
• By implementing production efficiency programs,<br />
we bring our enterprises, and Ukraine’s economy as<br />
a whole, closer to comply with the international standards<br />
– particularly in energy consumption and greenhouse<br />
gasses’ emissions. For the local communities, this<br />
approach means cleaner air and water, as well as preserved<br />
biodiversity. For hundreds of thousands of our<br />
employees increased production efficiency means higher<br />
wages.<br />
62<br />
Business ethics and corporate<br />
governance<br />
Our long-term success is founded on the unified rules for all enterprises<br />
of <strong>SCM</strong> Group, as stated in our Code of Ethics, as well<br />
as the responsible approach to doing business, regular reporting,<br />
and constant dialogue with our stakeholders. Following these<br />
rules is mandatory for all <strong>SCM</strong> Group employees – from the CEO<br />
to the workers at our enterprises. Every company at <strong>SCM</strong> Group<br />
regularly discloses information about its business, indicators, and<br />
contribution to the local community development.<br />
Our employees<br />
<strong>SCM</strong> Group is the largest employer in Ukraine – with more than<br />
260,000 people working at its companies and enterprises.<br />
Our people are at the core of <strong>SCM</strong>’s sustainable development<br />
strategy, since without the strong dedicated team we would<br />
not be able to achieve the ambitious results and to be successful<br />
in the long term.<br />
We attract the talented professionals and provide them with<br />
career growth opportunities.<br />
We try to be the priority employer for the young generation,<br />
as well as for the seasoned professionals. We believe in the<br />
principles of succession and transparency in our relations<br />
with employees.<br />
We invest heavily in our personnel education and development<br />
– at all levels of <strong>SCM</strong> Group, s well as provide for<br />
the proper working conditions and quality medical care for<br />
our employees. The average salary level at <strong>SCM</strong> Group is<br />
twice the size of the average salary in Ukraine.<br />
Our ongoing projects for employees:<br />
• At DTEK Academy, a corporate university, employees<br />
and managers enroll in the programs, tailored to their<br />
needs jointly with the professors of well-known business<br />
schools, with London School of Business and Kyiv-Mohyla<br />
Business School among them.<br />
• Metinvest, in partnership with Russia’s leading business school,<br />
operates the integrated development program, targeting<br />
the employees from the company’s succession pool.
Occupational safety<br />
We aim at achieving zero number of accidents at our industrial<br />
enterprises and set equally ambitious goals before our<br />
subcontractors and suppliers.<br />
Our goal is not only investing in the technological safety<br />
of our enterprises, but also helping our employees step by<br />
step to change their attitude to safety – their own and that<br />
of their colleagues.<br />
Our main health and occupational safety goals:<br />
• shaping the responsible attitude of our employees to occupational<br />
safety and their own health;<br />
• creating safe working conditions and providing our<br />
workers with the necessary modern safety gear;<br />
• preventing the professional illnesses.<br />
Our ongoing strategic initiatives, aimed at improving<br />
the working conditions and raising the occupational safety<br />
level:<br />
• Metinvest and DTEK implemented the corporate standard<br />
of Safety Audits at their enterprises. Following this<br />
standard, the top managers of all levels regularly visit<br />
the production facilities, in order to check on the safety<br />
of the working conditions.<br />
• Metinvest is implementing the corporate standard<br />
of safety for its subcontractors.<br />
• Metinvest and DTEK implemented the new corporate<br />
standards for the safety gear.<br />
Our ongoing health programs:<br />
• Metinvest implemented the corporate health care strategy<br />
with the three main components: first aid, encouraging<br />
healthy lifestyle, and occupational health.<br />
• DTEK began to implement the Occupational Medicine<br />
project, aimed at improving health and safety of miners<br />
in the Eastern Ukraine.<br />
The total volume of investment by <strong>SCM</strong> Group’s industrial<br />
holdings in occupational safety in <strong>2011</strong> amounted to<br />
$170m.<br />
63<br />
Environment<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Our goal is to minimize the environmental footprint of our<br />
industrial enterprises, especially the emissions of greenhouse<br />
gasses. <strong>SCM</strong> Group’s dedication to the sustainable approach<br />
to business development helps us to manage environmental<br />
risks.<br />
Most <strong>SCM</strong> Group’s enterprises were built during the soviet<br />
era, when sourcing raw materials and selecting the sites for<br />
industrial construction was planned without any consideration<br />
of the possible environmental footprint. As a result,<br />
the production cycles of <strong>SCM</strong>’s industrial enterprises influence<br />
the environment in the regions of our presence. Metinvest<br />
and DTEK have been mitigating the results of this obsolete<br />
approach to environment by implementing long-term<br />
investment programs, aimed at decreasing the level of emissions<br />
and at the environmental rehabilitation of the local territories.<br />
Maintaining the environmental balance is at the foundation<br />
of our dialogue with the local communities and the local authorities.<br />
We constantly work on preserving the environment<br />
and on maintaining the certain level of comfort at the territories<br />
where our enterprises operate.<br />
Our environmental protection principles:<br />
• preservation and rational consumption of the natural resources,<br />
including energy resources;<br />
• minimizing and preventing the negative impact of our<br />
production cycles on the environment;<br />
• monitoring the environmental footprint of <strong>SCM</strong> Group’s<br />
industrial enterprises;<br />
• facilitating the adaptation of the international environmental<br />
protection standards in Ukraine;<br />
• partnering with the local authorities and the local communities<br />
within the framework of the environmental<br />
initiatives.<br />
<strong>SCM</strong> Group’s key industrial enterprises have successfully implemented<br />
the modern environmental management system,<br />
compliant with ISO 14001 standards, as well as the environmental<br />
policies are functioning at our industrial holdings.<br />
Sustainable development
Our main environmental activities:<br />
• reducing harmful emissions;<br />
• preservation and rational consumption of water;<br />
• rational use of land;<br />
• utilization of waste;<br />
• preserving biodiversity;<br />
• fighting climate change;<br />
• shaping the environmental culture;<br />
• participation in regional, national, and industry environmental<br />
programs.<br />
Metinvest and DTEK are implementing the following longterm<br />
equipment upgrade programs, aimed at resulting in the<br />
cleaner environment:<br />
• Metinvest continued the implementation of metallurgical<br />
production modernization program, intended to<br />
lower the environmental impact of its enterprises. In<br />
<strong>2011</strong>, Azovstal Steel Plant completely switched from<br />
the open-hearth blast furnaces to oxygen converters for<br />
steel production, which will improve the plant’s environmental<br />
indicators.<br />
• Vostokenergo (DTEK) continued the reconstruction of its<br />
power-generating units, intended to improve the quality<br />
of emissions purification from dust, sulfur oxides, and<br />
nitrogen.<br />
<strong>SCM</strong> Group’s industrial enterprises also work on joint implementation<br />
projects within the framework of Kyoto Protocol<br />
mechanisms.<br />
Environmental culture<br />
Environmental problems stimulate us to revisit our way of doing<br />
things and provide us with an opportunity to change our<br />
behavior and, therefore, our environmental footprint. We<br />
believe that the environmental culture should be based on<br />
the responsible behavior – not only of the companies and<br />
their employees, but also of the local communities where<br />
the companies operate.<br />
We hope our environmental projects create the necessary<br />
foundation to fully integrate our stakeholders and local communities.<br />
Our ongoing environmental culture projects:<br />
64<br />
• Healthy Environment Is Everyone’s Business – an environmental<br />
education program, focused on energy- and<br />
resource- efficiency; fighting climate change; involving<br />
the local communities in resolving their city’s environmental<br />
problems; as well as on facilitating environmentally<br />
friendly behavior (Metinvest).<br />
• Green Office – a program, focused on facilitating rational<br />
and careful consumption of the office resources<br />
(<strong>SCM</strong>).<br />
Energy efficiency<br />
Increasing energy efficiency and facilitating the rational consumption<br />
of energy resources are among <strong>SCM</strong> Group’s priority<br />
goals. Our industrial enterprises implement large-scale<br />
investment programs, aimed at increasing energy efficiency<br />
of production.<br />
Our principle in energy efficiency – constantly decreasing<br />
energy consumption by using energy conservation technologies<br />
in all spheres of our activity.<br />
Our key activities in energy efficiency:<br />
• upgrade of industrial equipment;<br />
• use of energy saving technologies;<br />
• implementation of energy saving programs.<br />
<strong>SCM</strong> Group’s strategic goal is to make our production facilities<br />
as energy efficient as possible. This will allow us decreasing<br />
the prime cost of production, as well as minimizing our<br />
environmental footprint, including harmful emissions.<br />
Our ongoing energy efficiency programs (Metinvest and<br />
DTEK):<br />
• improving energy efficiency management systems;<br />
• annual energy efficiency program development and<br />
implementation;<br />
• improving energy resources consumption accounting<br />
systems at the industrial enterprises, aimed at lowering<br />
the overall consumption;<br />
• implementing energy saving technologies within<br />
the framework of the ongoing equipment upgrade programs.<br />
All our projects, aimed at increasing energy efficiency of industrial<br />
production, as well as at developing environmental
culture and raising the society’s awareness of the matters related<br />
to climate change and effective use of energy resources,<br />
are united under Energoeffektivnost.UA program. One<br />
of such projects is Ukraine Energy Index, launched in April<br />
<strong>2011</strong>. The project allowed mapping the energy efficiency<br />
potential of Ukraine’s Oblasts, as well as evaluating the effect<br />
of the implemented energy efficiency projects. The index<br />
also made it possible to define the priority areas, in which<br />
the energy efficiency projects could bring maximum value.<br />
Details are available at www.energy-index.com.ua. Details<br />
about Energoeffektivnost.UA program are available at www.<br />
energo.scm.com.ua.<br />
Local communities<br />
Cooperation with the local communities in the regions where<br />
our enterprises operate, is the core element of <strong>SCM</strong> Group’s<br />
strategy, since most of our enterprises are the biggest employers<br />
and taxpayers in those regions. This creates strong<br />
connection between our business and the local communities.<br />
We believe that in the regions where our enterprises are<br />
town-forming, the condition of the infrastructure, utilities<br />
sector, healthcare, education, culture, and sport significantly<br />
impacts the quality of our employees’ life and, therefore,<br />
the way our enterprises operate.<br />
In order to resolve the local social issues and boost the development<br />
of the regions where we operate, we made a decision<br />
in favor of social investments within the framework<br />
of the social partnership agreements. We are rather thorough<br />
in selecting the areas for social investment: we analyze<br />
the local social structure; we involve the local stakeholders,<br />
including the authorities and the NGOs; and we prepare<br />
the list of projects for the joint funding and implementation<br />
under the social partnership agreements.<br />
Since 2008, DTEK has been implementing social programs<br />
under the social partnership agreements. As of <strong>2011</strong>, such<br />
agreements were signed with 19 cities and 4 regions of Donetsk,<br />
Dnepropetrovsk, Zaporozhye, Vinnitsa, Lugansk, Lvov,<br />
and Ivano-Frankovsk Oblasts. The priority social investment<br />
areas are energy efficiency and utilities, healthcare, social infrastructure,<br />
local business development, education, culture,<br />
and sport.<br />
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<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
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In <strong>2011</strong>, Metinvest began to implement its social investment<br />
strategy, which defined a range of corporate social programs<br />
for further funding and execution.<br />
During the reporting year, <strong>SCM</strong> Group united all its social<br />
projects under a Social Partnership Program, involving<br />
not only our enterprises, but also the local authorities and<br />
the population in the regions of our presence.<br />
Our priority social investment areas:<br />
• developing the regions of our presence: infrastructure,<br />
education, healthcare, culture, and sport;<br />
• developing local business;<br />
• environment and energy efficiency;<br />
• corporate volunteering.<br />
At the foundation of our Social Partnership Program lies<br />
the principle of finding holistic solutions to the social problems<br />
in the regions of our presence, as well as a result-oriented<br />
approach and active involvement of the local communities<br />
in our projects.<br />
In <strong>2011</strong>, <strong>SCM</strong> Group’s enterprises implemented more than<br />
300 projects in more than 50 residential areas in 8 Oblasts<br />
of Ukraine. The total volume of investment in the <strong>2011</strong> social<br />
projects amounted to $13m.<br />
Healthcare<br />
<strong>SCM</strong> invests in healthcare projects in the regions where its<br />
enterprises operate, since the state-owned medical infrastructure<br />
is practically worn out and requires immediate restoration<br />
and upgrade.<br />
Our goal is to provide access to high quality medical infrastructure<br />
not only for our employees, but also for the citizens<br />
in the regions of our presence.<br />
Our ongoing projects in healthcare:<br />
• DTEK participates in Telemedicine national project implementation.<br />
The project is aimed at creating the all-<br />
Ukrainian telemedical network, to provide access to<br />
quality medical assistance to the local population, including<br />
the citizens from the remote regions, using<br />
the modern technologies.<br />
Sustainable development
• Funding and supporting programs for the medical institutions<br />
in the regions of our presence.<br />
Education<br />
We invest in this area, since quality professional education allows<br />
preparing the future professionals, as well as forming<br />
the proper business environment in the country.<br />
Our ongoing education programs:<br />
• Modern Education national program, aimed at bringing<br />
the quality of education at the Ukrainian universities to<br />
match the needs of the real economy sector. The program<br />
is based on the specific actions, intended to improve<br />
the quality of higher education in Ukraine in terms<br />
of complying with the modern labor market demands.<br />
The program consists of several projects: Compass university<br />
rating - determines education at which universities<br />
offers the best practical value and job prospects; FormulaS<br />
– open master-classes for students, conducted by<br />
<strong>SCM</strong> top-managers. In <strong>2011</strong>, the new project, Passport<br />
of the Profession, was added to the program. The project<br />
goal – contribution to creating the new type of professional<br />
standards in Ukraine, particularly in areas of critical<br />
importance to <strong>SCM</strong> Group’s business: mining and<br />
metals, energy, and media.<br />
• Joint programs with the local universities – for instance,<br />
Azovstal Steel Plant’s School-University-Plant program<br />
(Metinvest) and DTEK Group. Both programs are aimed<br />
at teaching the employees the contemporary technologies,<br />
used in Ukraine’s leading companies.<br />
• Programs, aimed at supporting the regional education<br />
institutions.<br />
Local business development<br />
We realize that <strong>SCM</strong> Group can only grow if Ukraine’s economy<br />
grows and local small and medium business develops.<br />
This is why we began to work on our own projects, aimed at<br />
developing business environment in the regions of our presence.<br />
66<br />
Sport<br />
We believe that investment in the sport education for children<br />
is the foundation of our nation’s future health. Historically,<br />
developing local sports, especially for children, has been <strong>SCM</strong><br />
Group’s focus for a long time.<br />
Our goal is to support the development of a wide range<br />
of sporting activities by providing financial and material assistance<br />
to the sport clubs, schools, and activities.<br />
Our ongoing projects in sport:<br />
• Shakhtar Football Academies for Children – youth football<br />
development program (Metinvest).<br />
• Supporting sport activities and schools in the regions<br />
of our presence.<br />
Corporate volunteering<br />
We encourage our employees to participate in improving<br />
the quality of life of the vulnerable population categories.<br />
We support our employees’ voluntary participation in various<br />
social projects for orphaned and sick children, war veterans,<br />
and other unprotected constituents.<br />
Joint projects with the Foundation for<br />
the Development of Ukraine<br />
<strong>SCM</strong> implements social projects jointly with the Foundation<br />
for the Development of Ukraine, founded in 2005 as <strong>SCM</strong>’s<br />
corporate foundation. In 2008, the foundation changed its<br />
status to the personal foundation of <strong>SCM</strong>’s Shareholder –<br />
Rinat Akhmetov. The Foundation’s priority areas are modern<br />
education, health, cultural heritage, and targeted assistance.<br />
When participating in joint projects with the Foundation for<br />
the Development of Ukraine, we offer to our employees an<br />
opportunity to make their personal contribution to tackling<br />
the important social issues. For instance, annually, before<br />
the Children’s Day, our employees participate in the fundraising<br />
drive, aimed at helping the children in need of special<br />
care.
The following projects <strong>SCM</strong> Group implements jointly with<br />
the Foundation for the Development of Ukraine.<br />
Digital future of journalism. The project is aimed at educating<br />
the journalists, willing to embrace the digital culture<br />
and to develop their newsrooms, according to the latest tendencies<br />
in the world media industry. The classes are being<br />
held on the premises of the National University Kyiv-Mohyla<br />
Academy.<br />
Telemedicine. The initiative is being implemented within<br />
the framework of the national project called “Cancer is treatable.<br />
Modern diagnostics and treatments in oncology” and<br />
implies the unification of the existing efforts in the telemedicine<br />
area of the Ministry of Health of Ukraine, National Academy<br />
of Medical Sciences of Ukraine, MTS Ukraine, and DTEK.<br />
The initiative’s goal is increasing the access of the citizens<br />
in the Oblast centers and in the remote areas to highly specialized<br />
medical care, using telecommunication technologies.<br />
Targeted Assistance. The project implies providing financial<br />
aid to the needy and those who found themselves in difficult<br />
life situations. The assistance is primarily allocated for the expensive<br />
and complex medical treatments, not provided in full<br />
by the government programs and funding.<br />
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<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Sustainable development
Key postreporting<br />
period<br />
events 2012<br />
January<br />
69<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
<strong>SCM</strong> was declared one of the most attractive<br />
companies to work for, according to the results<br />
of Ernst & Young's annual 'Best Employer,<br />
Determined by the Experienced Job Candidates'<br />
survey.<br />
Segodnya Multimedia presented a joint project<br />
with The New York Times – Ukraine and The<br />
World 2012. Global Agenda magazine. The<br />
first issue summarized the results of <strong>2011</strong> and<br />
described the main world tendencies of 2012<br />
in politics, geopolitics, economy, culture, IT, and<br />
sport, as well as featured the best photos from<br />
The New York Times for <strong>2011</strong>.<br />
Key post-reporting period events 2012
Gorlovskiy Mashinostroitel Engineering Plant (Mining Machines<br />
Group) successfully passed the re-certification audit<br />
to comply with ISO 9001:2008 standard.<br />
DTEK won the tender of the State Property Fund of Ukraine<br />
for the sale of a 40% share in Donetskoblenergo. The purchase<br />
price was $58m. As a result, DTEK acquired a 71.34%<br />
share in the company.<br />
DTEK signed an agreement with the State Property Fund<br />
of Ukraine for the purchase of a 45% stake in Zapadenergo<br />
at $242m – $4.32m higher than the price, determined<br />
by the independent valuator. As a result, DTEK acquired<br />
a 70.94% share in the company.<br />
February<br />
DTEK signed a 3-year, $110m multi-currency revolving credit<br />
facility with Ukrsotsbank. The funding will be used for the replenishment<br />
of DTEK's working capital.<br />
DTEK signed a 3-year, $150m line of credit with UniCredit<br />
Bank Austria AG. The funding will be used for the general<br />
corporate purposes, including working capital replenishment<br />
and financing capital repairs, in line with the company's longterm<br />
development strategy.<br />
March<br />
DTEK Holdings B.V. acquired a 95.4% share in Belozerskaya<br />
Mine.<br />
Metinvest and Krivoy Rog City Council signed an agreement<br />
for long-term cooperation and joining efforts in resolving<br />
the local social issues. Signing the agreement was a part<br />
of Metinvest's new social policy. The overall investment volume<br />
in the city's social programs in 2012 was increased twofold<br />
– to $5m.<br />
70<br />
DTEK signed an agreement with the State Property Fund<br />
of Ukraine for the purchase of a 25% share in Dneproenergo<br />
for $147m ($0.68m higher than the price, offered<br />
by DTEK at the privatization tender on January 11, 2012).<br />
The price of the share was determined by the independent<br />
valuator as of March 1, 2012. The initial purchase price<br />
of $147m was set by the State Property Fund of Ukraine. As<br />
a result of the transaction, DTEK acquired a 72.93% share<br />
in Dneproenergo.<br />
Dneproenergo completed the certification of its occupational<br />
safety and environmental management systems to comply<br />
with OHSAS 18001:2007 and ISO 14001:2004 standards.<br />
<strong>SCM</strong> Group completed a number of corporate transformations,<br />
aimed at increasing transparency and investment attractiveness<br />
of its business.The transformations were aimed<br />
at separting the functions of business management and<br />
ownership. As a result, <strong>SCM</strong> Company will be performing<br />
a strategic management function, while <strong>SCM</strong> Holding Limited<br />
(Cyprus) will be performing an ownership funcion of all<br />
<strong>SCM</strong> Group's assets. Since 2012 all shares of <strong>SCM</strong> Company<br />
and <strong>SCM</strong> Holdings Limited are directly owned by Rinat Akhmetov<br />
(previously Rinat Akhmetow owned <strong>SCM</strong> Holdings<br />
Limited indirectly, through <strong>SCM</strong> Company).<br />
April<br />
HarvEast holding signed a $7m, 5-year leasing agreement<br />
with OTP Leasing. The funding will be used to upgrade<br />
the agricultrual machinery. Within the framework of the investment<br />
program, the following will be purchased: cultivation,<br />
tillage, and seeding machinery, as well as harvesting<br />
and storage equipment.<br />
DTEK won the tender of the State Property Fund of Ukraine<br />
for the sale of a 50% share in Dneprooblenergo with the purchase<br />
price of $82.6m. Upon completing the transaction,<br />
DTEK acquired a 51.505% share in the company.
<strong>SCM</strong>, Metinvest, and DTEK presented the Social Partnership<br />
Program, uniting all sustainability initiatives of <strong>SCM</strong> Company<br />
and its businesses, focused on the infrastructural and<br />
business development, as well as education, health, environment,<br />
energy efficiency, culture, and sport in their regions<br />
of presence. In 2012, more than $20m will be allocated for<br />
the Program funding.<br />
<strong>SCM</strong> launched an online portal (www.sustainability.scm.<br />
com.ua) with consolidated information on all CSR and sustainability<br />
initiatives of the Group.<br />
ESTA Group opened Park Inn by Radison hotel in Donetsk,<br />
managed by The Rezidor Hotel Group.<br />
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May<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
DTEK signed an agreement with the State Property Fund<br />
of Ukraine for the purchase of a 45% share in Krymenergo<br />
for $31m. As a result, DTEK acquired a 57.49% share in Krymenergo.<br />
Key post-reporting period events 2012
System Capital Management<br />
Ukraine, 83001,<br />
Donetsk, Postisheva Str. 117<br />
Tel: +38 062 388 50 37<br />
E-mail: scm@scm.com.ua<br />
www.scm.com.ua<br />
Mining and Metals<br />
Metinvest<br />
Ukraine, 83048,<br />
Donetsk, Artema Str. 130,<br />
Business Center “Donetsk City”<br />
Tel: +38 062 388 16 16<br />
E-mail: metinvest@metinvestholding.com<br />
www.metinvestholding.com<br />
Energy<br />
DTEK<br />
Ukraine, 01601,<br />
Kiev, Mechnikova Str. 2а,<br />
Business Center “Parus”, 23rd floor<br />
Tel: +38 044 581 45 39<br />
E-mail: info@dtek.com<br />
www.dtek.com<br />
Financial services, banking and<br />
insurance<br />
First Ukrainian International Bank (FUIB)<br />
Ukraine, 04070,<br />
Kiev, Andreevska Str. 4<br />
Tel: +38 044 231 70 00<br />
E-mail: info@fuib.com<br />
www.pumb.ua<br />
Renaissance Capital Bank<br />
Ukraine, 02002,<br />
Kiev, Raisa Okipna Str. 8b<br />
Tel: +38 044 496 88 96<br />
E-mail: info@rccf.ua<br />
www.rencredit.com.ua<br />
72<br />
ASKA insurance company<br />
Ukraine, 83052,<br />
Donetsk, Illicha Prospect 100<br />
Tel: +380 62 348 38 00<br />
E-mail: aska_info@aska.com.ua<br />
www.aska.com.ua<br />
ASKA-Life insurance company<br />
Ukraine, 03186,<br />
Kiev, Aviakonstruktora Antonova Str. 5, 2nd floor<br />
Tel: +38 044 492 84 92<br />
E-mail: office@aska-life.com.ua<br />
www.aska-life.com.ua<br />
Engineering<br />
Mining Machines Group<br />
Ukraine, 83003,<br />
Donetsk, Goryachkina Str. 20,<br />
Business Center “Yujnaya Palmira”<br />
Tel: +38 062 381 53 07<br />
E-mail: sec1@mmc.kiev.ua<br />
www.mmc.kiev.ua<br />
Port business<br />
Portinvest<br />
Ukraine, 03150,<br />
Kiev, Bolshaya Vasilkovskaya Str. 77а<br />
Tel: +38 044 239 18 76<br />
E-mail: office@portinvest.com.ua<br />
Agriculture<br />
HarvEast Holding<br />
Ukraine, 83008,<br />
Donetsk, Artema Str. 51а<br />
Tel: +38 062 311 57 57<br />
E-mail: press@harveast.com<br />
www.harveast.com
Media<br />
Ukraine Media Group<br />
Ukraine, 03148,<br />
Kiev, Geroev Kosmosa Str. 4<br />
Tel: +38 044 495 85 55<br />
E-mail: info@mgukraine.com<br />
www.mgukraine.com<br />
Segodnya Multimedia<br />
Ukraine, 03056,<br />
Kiev, Borschagovskaya Str. 152b<br />
Tel: +38 044 457 24 00<br />
E-mail: info@segodnya.ua<br />
www.segodnya-multimedia.com<br />
Real Estate<br />
ESTA Group<br />
Ukraine, 83000,<br />
Donetsk, Postysheva Str. 117<br />
Tel: +38 062 381 51 21<br />
E-mail: esta@estaholding.com<br />
www.estaholding.com<br />
Clay mining<br />
United Minerals Group Limited<br />
Ukraine, 83050,<br />
Donetsk, Rosa Luxemburg Str. 48b<br />
Tel: +38 062 311 88 97<br />
E-mail: office@umgukraine.com.ua<br />
www.umgukraine.com<br />
Retail trade<br />
Ukrainian Retail<br />
Ukraine, 83003,<br />
Donetsk, Illicha Str. 19zh<br />
Tel: +38 062 381 58 30<br />
E-mail: office@ur.ua<br />
www.brusnichka.com.ua<br />
Contacts<br />
73<br />
Petroleum products retailing<br />
Parallel<br />
Ukraine, 83037,<br />
Donetsk, Petrovsky 4/8<br />
Tel: +38 062 386 00 48<br />
E-mail: post@parallel.ua<br />
www.parallel.ua<br />
Pharmaceuticals<br />
Ukrainian Pharmacy Holding<br />
Ukraine, 83059,<br />
Donetsk, Skladskaya Str. 3b<br />
Tel: +38 062 348 87 00<br />
E-mail: info@aptekaholding.com.ua<br />
www.aptekaholding.com.ua<br />
Telecommunications<br />
Vega Group<br />
Ukraine, 03680,<br />
Kiev, Fizkultury Street 30b<br />
Tel: +38 044 230 84 30<br />
E-mail: info@vegatele.com<br />
www.vegatele.com<br />
<strong>SCM</strong> Sport<br />
FC Shakhtar<br />
Ukraine, 83050,<br />
Donetsk, Artema Str. 86а<br />
Tel: +38 062 387 01 02<br />
E-mail: feedback@shakhtar.com<br />
www.shakhtar.com<br />
Donbass Arena<br />
Ukraine, 83048,<br />
Donetsk, Cheluskintsev Str. 189е<br />
Tel: +38 062 388 88 83<br />
E-mail: mail@donbass-arena.ua<br />
www.donbass-arena.com<br />
<strong>SCM</strong> <strong>GROUP</strong> <strong>PUBLIC</strong> <strong>REPORT</strong><br />
CREATING SUSTAINABLE VALUE<br />
Contacts
www.scm.com.ua,<br />
www.scmholding.com