Today, TAIF Group, one of the largest business groups in Russia, published its annual report for 2015. In the last year, which was a year of its 25th anniversary, the holding managed to generate RUB 524 billion of revenue. And successful performance of the production programme allowed TAIF Group to further implement its strategic plans. A reporter of Realnoe Vremya had an insight into the Group's financial and production results for 2015.
Payments to The Budget of Tatarstan Rose By 45%
According to the document, the Group's aggregate proceeds amounted to RUB 617 billion in the reporting year having exceeded the 2014 result by RUB 34.7 billion or 6%. At the same time, the revenue made up over RUB 524 billion having exceeded the same indicator for the previous year - RUB 469.1 billion.
Strong economic performance enabled the Group to increase EBITDA, the indicator reflecting potential capacities in the field of financing and companiesí evaluation, by RUB 72.8 billion. According to the results of 2015, this indicator totaled over RUB 140 billion i.e. twice the figure of 2014.
The growth in the companies' earnings drives the growth in the earnings of the republic since TAIF is one of the major taxpayers in Tatarstan. Thus, last year, over RUB 63 billion of taxes and charges was paid out of the proceeds earned to all-level budgets and non-budgetary funds. This included RUB 21.2 billion paid to the consolidated budget of the Republic of Tatarstan that is by RUB 6.6 billion or by over 45% above the level of the previous reporting year.
Dynamics of TAIF Groupís aggregated proceeds for2013-2015, RUB billion
As suggested by the annual report, financial and economic performance of the holding company for 2015 have become the most successful over the entire period of its activity. Thus, last year, the sales proceeds of TAIF PSC inclusive of the indirect taxes amounted to RUB 111.3 billion while revenue grew by 13.5% and totaled RUB 94.4 billion. Like in the preceding years, the major share of the revenue profile consisted of the proceeds from sales, renting of property and suretyship services.
The company's financial sustainability indicators calculated based on its annual performance exceeded the standard value. Thus, equity-to-total-assets ratio amounted to 0.9, and equity-to-debt ratio equaled to 7.2 showing that the companyís own funds make up seven times the amount of liabilities.
Over RUB 69 Billion Spent For Modernization
The company's report contains production performance data. For many years, the Group's companies have been holding strong positions in the Russian petrochemicals and oil refining market. Thus, in the reporting year, TAIF Groupís share in the overall output volume in Russia amounted to 42% for plastics, 74% for rubbers, 8% for straight-run gasoline, 3% for diesel fuel, and 2% for motor gasoline grades. At the same time, its share in the entire production volume across Tatarstan amounted to 100% for plastics, almost 100% for rubbers, 100% for straight-run gasoline, 60% for diesel fuel, and 90% for motor gasoline grades as of the end of 2015.
Petrochemical and oil products manufactured by the Group are in high demand both in the domestic market and abroad. And despite the economic uncertainty increased lately and extension of economic sanctions by the US and EU states, the Group managed to raise its revenue from selling petrochemical and oil products by RUB 55.1 billion from the level of 2014 to RUB 524.2 billion . At the same time, domestic sales made up 67% of the total sales revenue. The share of export amounted to 33%. Target foreign markets where TAIF Groupís companies seek to sell their products are mainly the countries of Northwestern Europe, Mediterranean and Asian markets, the countries of Northern and Southern America, Africa and the CIS.
TAIF Group's sales revenue in the foreign and domestic markets for 2015
And the Group's sales proceeds from the chemical and petrochemical businesses amounted to RUB 261.5 billion in 2015 versus RUB 224.5 billion earned in 2014. Revenue grew by 16.5% - from RUB 202.3 billion in 2014 to RUB 235.7 billion in 2015. At the same time, investments in fixed assets made up RUB 25.5 billion or 1.5 times the amount invested in the previous reporting period.
Due to the strategy adopted, the main production capacities for the key products have been expanded over 15 years. Thus, ethylene production expanded 1.5 times and polymer production Ė 3.2 times including a 2.3 times expansion of rubbers, and a 3.8 times expansion of plastics.
Dynamics of TAIF Groupís chemical and petrochemical production capacities expansion for 2000-2015, kta
The operating results achieved by TAIF Groupís companies are closely linked with huge investments made. TAIF has been implementing large-scale investment projects for the past few years aimed at the construction of new production facilities and revamp of those already existing. The investments made by TAIF Groupís companies in 2015 equaled to RUB 69.5 billion.
All investment programmes are of a long-lasting nature and are continuously upgraded with a glance to the current economic environment. Implementation of the 2025 development programs is estimated to cost RUB 492 billion. This will allow earning proceeds in the amount of ca. RUB 1.5 trillion and increasing tax payments to all-level budgets to RUB 134 billion as early as in 9 years.
In addition to petrochemicals and power energy, TAIF Group has businesses operating in other areas, too, namely, in the fields of construction, telecommunications, trade, services, and investments. TAIF Group's revenue from operations in other business areas made up RUB 123.5 billion having grown by 9.5% from RUB 112.7 billion in 2014.
Record Processing Volumes
The development of petrochemical, chemical, and power energy sectors as the areas of strategic significance for the industry and economy of the Republic of Tatarstan is the main vector of TAIF Group's activity. These businesses comprise the major share in the group's consolidated indicators. Thus, over 76% of the aggregate proceeds i.e. RUB 471.6 billion were earned by oil and gas processing, chemical, petrochemical and energy companies.
Last year was a watershed moment for oil production and oil and gas processing sectors of the industry because of a dramatic slump in global oil prices. In such a complicated situation, TAIF-NK PSC processed a record-breaking quantity of oil and gas feedstock - 8.4 million tons. Inward feedstock conversion depth made up 73.0% in the reporting year, slightly below the industrial average in Russia as a result of worsening oil quality from year to year. TAIF-NK is one of the few Russian refineries processing the heaviest and most sulfurous crude oil. This inevitably leads to uncontrollable deterioration of the process units they were not designed for. Therefore, TAIF-NK faces an urgent need to introduce new technologies and deepen oil refining.
Dynamics of hydrocarbon feedstock conversion depth across TAIF Group's oil and gas processing sector for 1995 - 2015, %
In aggregate, according to the results of 2015, TAIF-NK PSC produced 8.2 million tons of products including 5.1 million tons of light oil products. The company's revenue from oil and gas processing operations amounted to RUB 143.2 billion versus RUB 132.5 billion for the previous reporting year. Sales proceeds amounted to RUB 184.4 billion, however, while in 2014 the same figure was RUB 199.9 billion. Such a picture is attributable to the current macroeconomic situation in the world - not only oil prices dropped, but prices of oil products decreased much more.
Despite a weakened ruble and inflation, the company managed to implement all the projects and programmes planned to the total amount of RUB 40 billion in 2015.
At the end of the last year, TAIF-NK started producing gasoline meeting a new Euro-5 environmental specification ahead of the schedule set by the Russian government that became possible due to an accelerated modernization. The company continuously seeks to improve the quality of not only motor gasoline but road bitumen grades, too.
To improve the road surface quality in the Republic of Tatarstan and neighbor regions, the existing road bitumen unit of TAIF-NK will be modernized, while a polymer modified bitumen (PMB) production unit is under construction.
A new unit will allow adding the molecules of synthetic rubber to molten bitumen. This structure of road bitumen, though substantially increasing its production cost, will allow reaching some of the highest quality standards existing globally.
Bitumen with such specifications extends the roadway service life 2-3 times since it has higher resistance to deformation, cracking and rutting when exposed to excessive vehicle loads. Its application will improve road traffic safety level and create more comfortable conditions but only subject to meeting all other existing requirements. Indeed, construction of good roads requires not only high quality bitumen but also strict adherence to the technologies. For example, in Finland, Germany and Latvia, only high-strength rock materials - granites and marbles - are used for the upper layers of asphalt pavement instead of our gravel and rubble materials. Besides, road builders in these countries must necessarily wash, dry and grind rock fillers. Simultaneously, a certain temperature is maintained in the process of asphalt laying. It is adherence to these technologies and many other aspects that guarantees quality and long service life of the road.
Besides, TAIF-NK is about to complete its largest project - the construction of the Heavy Residue Conversion Complex that will allow discontinuing the production of the oil produce having low market price. As we reported earlier, the project is based on a unique Veba Combi CraŮking technology, which will make the production process waste-free while crude conversion depth will reach 98.5%. And the engineering solutions implemented in the HRCC project eliminate the risk of any environmental impact in the course of the plant operation.
Focus on Development of Own Power Plants
The prerequisite for uninterrupted development of the Group's production facilities is the energy sector. Last year, Russian industrial enterprises continued increasing energy production at their own power plants. This allows reducing companies' dependence on the power energy prices and their market fluctuations, cutting expenses for the construction of grids and utility connection, reducing the losses of power energy and the costs of its transmission to grids.
The core activity of TAIF Group in the area of energy generation is represented by an energy company TGK-16 OJSC, whose operations are aimed to ensure a reliable and uninterrupted supply of power and heat energy to the holding's industrial enterprises and the population of the Republic of Tatarstan. The company's aggregate revenue for 2015 made up RUB 21.8 billion against RUB 21.6 billion in 2014.
In terms of the installed power capacity, TGK-16 ranks second among the generating companies in Tatarstan. As of the end of 2015, this indicator in TGK-16 OJSC was 1,264 MW or 17% of the entire installed electric power capacity of the power generating companies in Tatarstan. Installed heat capacity of TGK-16 OJSC's co-generation plants amounted to 5,681 Gcal per hour or 43% of the overall installed heat capacity in the republic.
In the revenue profile of TAIF Groupís energy companies for 2015, the largest share, in monetary terms, falls on the sales of heat energy, which makes 61%.
TAIF Groupís energy companies revenue profile for 2015
TGK-16 OJSC is the major producer of heat energy in Tatarstan. Among the company's power plants, the largest heat energy output falls on Nizhnekamsk CHP (PTK-1). Its share amounted to 81% of the entire volume in 2015.
At the time being, a priority investment project is the construction of a new energy generating unit at Kazan CHP-3 on the basis of a state-of-the-art 389.64 MW 9HA.01 gas turbine supplied by GE. The unit will allow increasing power energy output and substantial reduction of fuel equivalent consumption for power supply.
RUB 16 Billion For Social Projects
A prerequisite for successful operation and development of a business is a comprehensive work focused on implementation of social programmes including those in the field of environmental protection and occupational safety. The holding spent RUB 8.5 billion for environmental protection activities in 2015. The costs of industrial safety activities amounted to RUB 2.8 billion and RUB 1.4 billion was spent for occupational safety.
In 2015, TAIF Group companies spent RUB 16 billion for social projects in the Republic of Tatarstan including the support to the needs of children, education, culture, health care and sports.
In addition to promoting mass sports and healthy lifestyle, TAIF Group traditionally pays much attention to the support of professional sports in the Republic of Tatarstan. Owing to a long-term cooperation and financial support of TAIF Group, the key Tatarstan teams successfully take on Russian and international competitions. TAIF Group's companies spent over RUB 2.46 billion for promotion and support of sports and healthy lifestyle.
Within the framework of the program aimed at the revival of an open-air museum on Sviyazhsk Island-Town and an ancient town of Bolgar, TAIF Group continues financing the restoration work carried out on these sites. In 2015 alone, RUB 400 million was spent for these purposes. And total investments since 2012 have exceeded RUB 600 million.
A separate focus is put on social programmes for the Group's employees, whose number exceeds 43 thousand people today. The average income level of TAIF Groupís staff reached RUB 40.5 thousand per month having exceeded the republic-wide average by 38%, and the national average Ė by 19%.
In 2015, through participation in the Republican Social Mortgage Program, the Groupís employees were provided with 40.9 thousand sq. meters of living quarters. Besides, TAIF Group successfully implements its own supplemental housing program, under which TAIF Groupís employees were provided with 83 thousand sq. meters of living quarters in 2015. Under this programme, the employees will be granted interest-free loans to make down payments. In 2015, these loans totaled RUB 333 million.
Thus, the holding is able to constantly fulfill its social commitments due to stable financial performance, which constantly grows as a result of reasonable management of own capital. That, in its turn, enables the company not to abandon investment projects in unstable economic environment.