CSIA

2 S – Analytica Success factors and basis for making informed business decisions Management reporting Financial statements based on IFRS Management data: −commercial data −production data −fixed assets −loans −taxes Reliability of information Timeliness Business planning Availability of the enterprise model for business planning Business planning format = reporting format Reliability of model parameters and data Use of actual historical data as a basis for business planning CSIA

3 CSIA CSIA (corporate system for information and analysis) – a software module allowing to form reporting by transformation of accounting data automatically Bookkeeping system 1 C Galaktika Parus SAP Other CSIA IFRS financial statements P&L Cash Flow Balance sheet Management data Production cost breakdown Sales price Purchase price Inventory Quantities produced Quantities sold Other CSIA is based on 1C, but allows to use any kind of accounting system to form IFRS based reporting Management reporting S – Analytica

4 CSIA CSIA approach. Basic accounting blocks. 60 Suppliers 20 Production 90 Sales 67 Borrowings 68 Taxes 01 Fixed assets Loans Repayment Interest Taxes accrual Payment of taxes VAT Capex Depreciation Cost price of sold fixed assets Cost price of sold services Finished products Shipping produce Payment for products and services Sale of products and services Payment for supplies Shipping supplies Use of materials in production Utilities and services 62 Customers 51 Cash 10 Materials 43 Output Each node of the diagram is represented in the bookkeeping CSIA construct a table of correspondence between bookkeeping and managements accounts The management reports are then produced via the management accounts CSIA uses the principle of dual recording S – Analytica

5 Business planning Actual historical data obtained from CSIA are used actively Reporting are of the same format as business planning format Business plan tables are constructed as immediate extensions of tables with actual data Running monthly business planning is performed CSIA S – Analytica

66 Semi-finished Product E Semi-finished Product E Semi-finished Product A Semi-finished Product A Finished Product A Finished Product A Production cost breakdownInventoryQuantity producedQuantity for captive useQuantity sold Cost of salesCost priceSalesSales priceMargin CSIA S – Analytica

77 (kRUR) 11 months 2008 Production of semi-finished product E (tonne) RUR/kg14,59 Raw materials Raw material A (tonne) RUR/kg2,15 Raw material B Other materials1 377 Semi-finished products Utilities Electrical energy Steam Water Other utilities Direct labor Direct overheads By-product credits Captive use of semi-finished product E (tonne) for semi-finished product A (tonne) RUR/kg 14,59 for semi-finished product B (tonne) RUR/kg 14,59 (kRUR) 11 months 2008 Production of finished product A (tonne) RUR/kg 15,14 Raw materials Semi-finished product A (tonne) RUR/kg 15,06 FINISHED PRODUCT Opening inventory 409 (tonne) 26 RUR/kg 15,73 Total input Production (tonne) RUR/kg 15,14 Total output Cost of sales (tonne) RUR/kg 15,14 Closing inventory (tonne) 117 RUR/kg 15,38 SALES Cost of sales (tonne) RUR/kg 15,14 Commercial cost Revenue (tonne) RUR/kg 17,49 Margin (kRUR) 11 months 2008 Production of semi-finished product A (tonne) RUR/kg15,06 Raw materials3 759 Utilities Electrical energy Steam Other utilities Semi-finished products Semi-finished product E (tonne) RUR/kg 14,59 Other semi-finished products Direct labor4 972 Direct overheads By-product credits SEMI-FINISHED PRODUCT A Opening inventory4 137 (tonne)275 RUR/kg15,05 Total input from production Total output Captive use for Finished Product A (tonne) RUR/kg15,06 Captive use for semi-finished product D (tonne)9 632 RUR/kg15,06 Quantity sold0 Closing inventory7 862 (tonne)523 RUR/kg15,06 Step-by-step production cost breakdown from Raw materials -> semi – finished products -> finished product S – Analytica

88 BALANCE SHEET as of kRUR Tangible assets and intangible assets Fixed assets Finished goods value in inventory Other inventories value Customers receivables Payables Other debtor and creditor-770 Deferred expenses9 258 Working capital TOTAL INVESTED CAPITAL Capital Retained earnings Shareholders equity Cash available Short term borrowings Long term borrowings Net Indebtedness Tax payable/receivable TOTAL FINANCING CASH FLOW STATEMENT 11 months 2008 kRUR EBIT5 989 Depreciation Gains & losses on sales of fixed assets 425 Income tax Change in taxes payable & receivable9 656 Change in working capital Finished goods value in inventory Other inventories value Customers receivables Payables Other debtor and creditor Deferred expenses Cash flow from operating activities Fixed assets expenditures Acquisition of investment and shares Proceed from the sale of fixed assets Proceed from the sale of investment and shares Cash flow from investing activities loans received loans paid (including interest) Dividends0 Capital increase0 Cash flow from financing activities NET CHANGES IN CASH AND CASH EQUIVALENT opening cash closing cash PROFIT & LOSS STATEMENT 11 months 2008 kRUR NET SALES Product A Product B Product C Services … Transportation cost Product A Product B Product C … Costs of goods sold Product A Product B Product C Services … GROSS MARGIN Product A Product B Product C Services … Commercial & Admin costs Gains & losses on sales of fixed assets-425 Miscellaneous financial gains & losses Other gains & losses EBIT5 989 Borrowing charges Gains & losses on exchange rate and currency conversion Total сharges and income on net indebtedness Current income taxes NET RESULT Financial statements CSIA S – Analytica

9 ItemActivity descriptionResponsibleSupportRemarks 1. Provide bookkeeping data from the Client’s bookkeeping system ClientS-Analytica In the form of DBF file; in case of 1C system only access to the Client’s accounting system is needed 2. Development of the format of management reports including financial statements and management data Client S-Analytica S-Analytica will facilitate the development of the formats 3. Examination and optimization of bookkeeping accounts and analytical data S-AnalyticaClient S-Analytica will analyze analytical data used in bookkeeping. In order to form management reports and reach a certain level of detail, in some cases it is necessary to add data to certain accounts. Client input required for adding the analytical data to bookkeeping accounts 4. Develop a table of correspondence between bookkeeping and management accounts S-AnalyticaClient The management reports are then produced via the management accounts, which reflect the economic essence of the business. 9 CSIA S – Analytica

10 ItemActivity DescriptionResponsibleSupportRemarks 5. Develop a direct interface between the management accounts and management report captions based on CSIA software S-AnalyticaClient Client will check that all the amounts reported under each management report caption are justified 6. Prepare final version of CSIA settings for the management reporting S-Analytica 7. Installation of a local component of CSIA on each enterprise, and the central component - at the head office. S-AnalyticaClient Every day local components of CSIA receive data transformed from bookkeeping databases of the enterprises. Then the data is automatically transferred from the local CSIAs to the central component (via FTP). 8. Creation of a spreadsheet- based model of an enterprise for business planning. S-AnalyticaClient A distinctive feature of our approach to business planning is active use of actual data obtained via CSIA. Tables of a business plan are of the same format as management reports. Timely updating of the business model with actual data allows to organise running monthly planning. 10 CSIA S – Analytica

11 CSIA CSIA software module set up for management reporting CSIA installed locally (the local system) and at the head office (the central system). Established connections between local and central systems. Instruction on the use of CSIA including a)a table of correspondence between bookkeeping and management accounts b)a table with formulas based on management accounts for each management report caption c)Instruction how to prepare the reports A spreadsheet-based model of an enterprise for business planning. Training of specialists on working with CSIA and business plan model S – Analytica

12 Month 1.Month 2.Month 3.Month Activity description - Contract award - Kick-off meeting - Provide bookkeeping data from the Client’s bookkeeping system - Development of the format of management reports including financial statements and management data - Examination and optimization of bookkeeping accounts and analytical data - Develop a table of correspondence between bookkeeping and management accounts - Develop a direct interface between the management accounts and management report captions based on CSIA software - Prepare final version of CSIA settings for the management reporting - Installation of a local component of CSIA on each enterprise, and the central component - at the head office -Creation of a spreadsheet-based model of the enterprise for business planning 12 \ CSIA S – Analytica