Rusnano Financials and Compliance Under Scrutiny

Rusnano's financials and compliance have been under scrutiny, with some accusing the company of lacking transparency and accountability.

Rusnano's financial reports have been criticized for being incomplete and inconsistent, with some reports showing a significant increase in profits while others show a decline.

Rusnano's CEO, Anatoly Chubais, has stated that the company is committed to transparency and has implemented measures to improve its financial reporting.

However, some analysts have questioned the effectiveness of these measures, citing instances of inconsistent financial reporting and lack of disclosure.

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Rusnano's financial performance has been a mixed bag over the years. In 2019, the company's net losses reached over 16.5 billion rubles, a significant decrease from the 5.6 billion ruble profit in 2018.

The company's capital decreased by 20.3% in 2019, amounting to 79.22 billion rubles. Rusnano's assets as of December 31, 2019, were measured at 167.6 billion rubles, a 9.6% decrease from the previous year. In 2019, 51.1 billion rubles were allocated for debt servicing, of which 37.6 billion rubles were spent on repayment of the principal amount of debt.

Rusnano's operating expenses remained almost at the level of the previous year, at 5.44 billion rubles in 2019. The company paid over 152 billion rubles in taxes in 2019 and also paid 130 billion rubles invested by the state in its creation.

The investigation found that Gorkov had placed Rusnano's funds in Smolensky Bank, totaling between 460 to 740 million rubles, under the guise of settlement and cash services.

Rusnano's net loss decreased by 0.5 billion rubles compared to 2012 and amounted to 23.8 billion rubles in 2013, which corresponds to the business plan adopted by the company.

In 2013, RUSNANO formed a provision for a possible reduction in the cost of investments and loans, which was formed as part of the audit and restructuring process launched in 2012.

The decision to reserve funds is made by RUSNANO on the basis of a new, more stringent methodology for assessing and analyzing investment activities, which was introduced in the company in 2013.

At the end of 2013, RUSNANO decided to create reserves for a possible decrease in the cost of financial investments in the amount of 18.4 billion rubles.

Rusnano's total losses and provisions in 2013 amounted to about 23 billion rubles.

The company has organized targeted work to improve the projects for which reserves have been formed, and it's essential to note that the formation of a reserve does not mean that these funds will be automatically written off.

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Rusnano Group made a profit of 4.5 billion rubles in 2016 under IFRS. This is a significant increase from the previous year.

The company's net profit from financial assets, reflected at fair value, was 5.6 billion rubles in 2016. This includes equity stakes and loans to Rusnano project companies.

The fair value of Rusnano's investment portfolio increased to 140.6 billion rubles by the end of 2016. This is a 0.2 billion ruble increase from the previous year.

The increase in the value of assets denominated in each of the currencies was 11.4 billion rubles, 11.3 million dollars, and €1 million, respectively. This is a result of the company's investment in various projects.

Rusnano's revenues from exits from investment projects increased to 17.8 billion rubles in 2016. This is more than 2.6 times the revenue from 2015.

The average profitability of 11 exits implemented in 2016 was about 11%. This is a significant return on investment for the company.

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The debt of Rusnano JSC decreased by 16.4 billion rubles in 2016, including early repayment of obligations by 2.6 billion rubles. This is a positive sign for the company's financial health.

Rusnano's long-term liabilities decreased to 86 billion rubles by December 31, 2016. This is a significant reduction from the previous year's liabilities of 132.5 billion rubles.

In Q1, RUSNANO plans to increase spending on project management and the creation of new funds. This is a strategic move to find and attract investors from Asia-Pacific and other regions.

RUSNANO is reorienting its activities within the current geopolitical situation, which requires a shift in focus to attract investors from new regions.

RUSNANO successfully reduced its expenses on transportation services, travel expenses, economic support, consulting, and legal services.

The company aimed to reach a globally accepted indicator of 1.95% of the cost of assets per year, which is a common practice in the private equity industry.

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Rusnano's CEO Anatoly Chubais mentioned that the corporation had to go through a lengthy process to become an OJSC, requiring six decisions and orders from the government.

This process dragged on, with Rusnano hoping to become an OJSC in March, according to a representative of the corporation.

Sitronics considered the risks of participating in the project too high for itself, as explained by a source familiar with the details of the project.

Rusnano supports "reasonable and correct" proposals from the Accounts Chamber, and has even changed its regulatory documents to reflect this. This suggests a commitment to transparency and accountability.

The company's strategy until 2020 was approved by the Board of Directors, and all performance indicators for 2013 were met. The key indicator, the volume of sales by portfolio companies of Rusnano, exceeded the planned value by almost half, reaching 93 billion rubles.

Rusnano has also reduced its operating costs to 1.95% of the value of assets per year, a level generally accepted in the global private equity industry. This demonstrates the company's ability to manage expenses effectively.

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Here are the 7 violations and shortcomings revealed by the Accounts Chamber, along with Rusnano's response:

The Board of Directors plays a crucial role in overseeing the strategic direction and financial decisions of RUSNANO Management Company.

As of April 2017, the Board of Directors consisted of 11 members, including RUSNANO Putilin, who served as Chairman of the Board of Directors.

RUSNANO Chubais, the Chairman of the Management Board, was also a member of the Board of Directors at that time.

The Board of Directors approved additional financing for CJSC Fiber Optic Systems, a portfolio company, which will contribute to its earliest possible exit to design capacity.

The funds were allocated on a parity basis with JSC Gazprombank, another participant in the project.

The Board of Directors also approved the conclusion of an additional agreement with Promsvyazbank PJSC for a loan disbursement and repayment schedule.

Here's a list of the Board of Directors members as of April 2017:

The Prosecutor General's Office reported that 227 million rubles allocated to Rusnano for high-tech projects were embezzled. This is a significant amount of money, and it's concerning to see that it was misused.

The head of the Prosecutor General's Office, Yury Chaika, prepared a report to the Federation Council in April 2016, detailing the embezzlement of budget funds. The report revealed that FSB of Russia had uncovered the embezzlement, and it's clear that there were some serious issues with how Rusnano was managing its finances.

Rusnano's management company was criticized by the Accounts Chamber for not having proper control over the use of funds. The Chamber audited 17 projects out of 102 funded by state guarantees and found 21 problematic projects. This lack of oversight allowed for the misuse of funds.

The Prosecutor General's Office also reported that 44 criminal cases were initiated regarding embezzlement and abuse during the construction of the Vostochny cosmodrome. The damage exceeded 11 billion rubles, which is a staggering amount.

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Rusnano's response to the criticism from the Accounts Chamber was to admit that their previous methods were wrong and to change their rules for paying premiums. However, the company still rejected the "unreasonable" recommendations of the Accounts Chamber regarding bonuses for unprofitable projects.

Rusnano's revenue increased slightly from 2.5 billion rubles in 2010 to 2.6 billion rubles in 2011, but this was mainly due to interest income. The company's operating expenses also increased to 5.6 billion rubles in 2011 compared to 5.1 billion in 2010.

Here are some key dates and figures related to the embezzlement and misuse of funds at Rusnano:

Rusnano has been actively investing in various high-tech projects, aiming to develop the nanoindustry in Russia. In 2013, the company launched 8 new production facilities, including the RM Nanotech plant, which is Europe's largest membrane filter plant for water treatment.

Rusnano's total investment in 2013 was 16.4 billion rubles, including additional financing of existing projects. This investment helped to establish new production facilities and expand the company's portfolio.

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Here are some of the notable production facilities launched with Rusnano's participation:

Industrial electricity storage is a game-changer that will revolutionize the electric power industry.

The current system is designed for maximum consumption, but new technologies are breaking this principle.

Lithium-ion batteries are already replacing the existing technology, pumped storage stations, which are expensive and obsolete.

Rusnano plans to expand its production of lithium-ion batteries in Novosibirsk, which are currently used in trolleybuses.

By 2027, these batteries will be used in residential buildings, transforming homes from consumers to electricity producers.

On December 1, 2011, a joint production of LTE equipment was launched between Micron Rusnano and Nokia Siemens Networks.

The joint venture, Center for Wireless Technologies, was located in the Tomsk special economic zone and aimed to produce high-capacity base stations.

The first base station released was the Flexi Multiradio 10 from Nokia Siemens Networks, which supported multiple communication standards.

This station offered over 10 Gbit/s capacity and consumed 30% less power compared to its predecessor.

By the end of December 2011, the joint venture planned to manufacture a batch of 1,000 pieces of equipment.

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RUSNANO has been actively investing in various high-tech projects, with a total investment of 16.4 billion rubles in 2013. This investment helped launch 8 new production facilities in Russia.

One of these facilities is RM Nanotech, which is Europe's largest membrane filter plant for water treatment. Another notable facility is ICM Glass Kaluga, the first enterprise in Russia for the production of foam glass crushed stone, a universal building material.

In addition to these facilities, RUSNANO has also invested in Acrylan, a production of aqueous nanodispersions for the paint and construction industry, and Crocus Nanoelectronics, the first phase of the magnetoresistive memory (MRAM) plant.

RUSNANO's investment strategy has been successful, with a net profit of 1 billion rubles in 2011, and a total investment of 16.4 billion rubles in 2013.

Here are some of the new production facilities launched with the participation of RUSNANO in 2013:

These facilities demonstrate RUSNANO's commitment to investing in high-tech projects and supporting the development of new industries in Russia.

Rusnano was founded in 2007 as a state-owned enterprise, with Vladimir Putin identifying nanotechnology as a priority area for the development of science and technology. The company was officially registered on September 19, 2007.

The government of Russia contributed 130 billion roubles in land and other assets to Rusnano in the same year. This significant investment was a major boost to the company's development.

Rusnano took the 4th place in the rating of Russia's leading innovative companies in 2011. This achievement marked a significant milestone in the company's growth and recognition.

The first nanocentre, "Rusnano", was opened in Kazan in 2012. This centre, known as the Centre of Nanotechnologies of the Republic of Tatarstan, was a major development for the region.

In 2013, Rusnano implemented a system to reduce the number of employees and costs. This move helped the company transition from being in debt to paying off its debts.

By 2019, the factories built with Rusnano's investments had paid 132 billion roubles in taxes to the federal budget, fully repaying the state's contribution. This achievement demonstrates the significant economic impact of Rusnano's investments.

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Rusnano's audits and reports have been a subject of interest, with the Accounts Chamber revealing several issues. The creation of the management company RUSNANO and the conclusion of an agreement on asset management of JSC RUSNANO negatively affected the quality of control over the targeted use of funds of loans and loans received under state guarantees.

Auditors of the Accounts Chamber analyzed 17 projects out of 102 projects financed by funds provided by state guarantees and found 21 problematic projects. These projects were transferred to BAU due to market factors, technological, financial, marketing, and other risks.

RUSNANO spent 25.4 million rubles on paying premiums for success in unprofitable projects, which went beyond the restrictions established by the rules for the provision of state guarantees. The company paid 20.9 million rubles for leaving Polycremonium, 1.75 million rubles for the ITN Nanovation project, and 1.42 million rubles for the Liliputian project.

The Accounts Chamber of the Russian Federation revealed 7 violations and shortcomings, which RUSNANO reported on their elimination in writing. The company's strategy until 2020 and a long-term business plan were approved by the Board of Directors, and all performance indicators were fulfilled in 2013.

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Here are the 7 violations and shortcomings reported by the Accounts Chamber:

Rusnano has expanded its presence globally through its subsidiary companies. Rusnano USA, Inc. was established in December 2010 to represent the company's interests in the US and Canada, and to promote Russian nanotechnology products worldwide.

Rusnano has a significant presence in Israel, where it has established Rusnano Israel Ltd. in December 2011. This subsidiary represents the company's interests and investment projects in Israel, and serves as a platform for cooperation between Russia and Israel's innovative industries.

Rusnano's subsidiary companies play a crucial role in the company's global expansion strategy. By establishing a presence in key markets, Rusnano can better serve its clients and partners, and promote the adoption of nanotechnology solutions worldwide.

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