The Fair Value of RUSNANO’s Investment Portfolio Grows by RUB 1.5 bln, not Including Exchange Rate Differences

03 April 2020

RUSNANO has published its financial results for 2019, drawn up in accordance with International Accounting Standards (IAS).

RUSNANO’s net loss for 2019 was RUB 16.5 bln. Despite this financial result, the actual accumulated level of profit / loss for the period 2015-2019 was higher than the target figure of RUB 18.2 bln, which was set out in accordance with RUSNANO’s long-term development programme.

Negative exchange rate differences amounting to RUB 6.9 bln had a significant impact on the financial results. Taking into account the factor of exchange rate differences the fair value of the investment portfolio decreased by 5.1%. More than 30% of ROSNANO’s investment portfolio consists of foreign assets, which are valued in foreign currencies. In 2019 the Russian ruble strengthened by almost 11% against the US dollar, which had a negative effect on the ruble value of RUSNANO’s foreign assets. Not counting exchange rate differences, the fair value of RUSNANO’s investment portfolio grew by RUB 1.5 bln.

Thanks to the effective management of its debt portfolio, which increased by RUB 6.7 bln, RUSNANO’s finance costs were RUB 0.3 bln less in 2019 than in 2018.

In the course of its investment activities, RUSNANO has exited 4 investment projects in 2019, the largest of which was the sale of its stake in the NANOLEK biopharmaceutical company. In the whole period between the date of its foundation and the end of 2019, RUSNANO successfully withdrew from 54 investment projects, generating an average internal rate of return (IRR) of 15.5% (under the management agreement between RUSNANO and Management Company RUSNANO the IRR on the fair value of its 2013 investments is one of the key indicators of its effectiveness) and a total income of RUB 75.3 bln. Moreover, the accumulated total of RUSNANO’s proceeds received a boost from its investments: the proceeds from its projects and the fair value as of the end of 2019 exceeded the total actual portfolio investment by RUB 14.1 bln.

Boris Podolsky, Managing Director of Management Company RUSNANO: “As far as its investment activities are concerned, RUSNANO’s greatest achievement in 2019 was the positive accumulation of results in its investment portfolio, and also its achievement of important milestones in the development of the nanotechnology industry, including growth in exports and in the proceeds of nanotechnology portfolio companies, the attraction of private investment into new funds and the launch of innovative production processes. In terms of its financial results, over the last 5 years RUSNANO has exceeded the target figures set out in the long-term development programme.”

In 2019 the high level of expenditure on debt servicing continued to have a significant impact on financial results. RUSNANO is the only Russian investment fund in the direct and venture investment sector for which the main source of financing is drawdown loans. The burden of the accumulated loan debt means that each year a significant proportion of its funds are used for debt servicing. Thus, in 2019 a total of RUB 51.1 bln was spent on debt servicing, of which RUB 37.6 bln were used to repay principal debt. Debentures of RUB 15.9 bln were repaid ahead of schedule.

Since it was founded RUSNANO has spent RUB 240 bln on debt servicing, which includes the timely payment of RUB 102 bln in interest to banks and holders of securities. RUSNANO has no debt due for repayment in 2020, and is continuing to take steps to reduce its debt burden.

RUSNANO’s Net Profit in the First Quarter of 2020 Was RUB 11.7 bln

In order to monitor the financial state of the company more efficiently at a time of economic instability on the global market, RUSNANO has published its first quarterly financial results drawn up in accordance with International Accounting Standards (IAS). According to its management accounting reports, in the first quarter of 2020 the company earned a net profit of RUB 11.7 bln.

This positive financial result was due to an increase of RUB 14.1 bln in the fair value of RUSNANO’s investment portfolio. The main factor behind this change was the positive effect of exchange rate differences, which accounted for RUB 13.8 bln. Without taking these exchange rate differences into account, the fair value of RUSNANO’s investment portfolio increased by RUB 0.3 bln in the first quarter of 2020

Additional information

Reference

RUSNANO Joint-Stock Company was founded in March 2011 through reorganization of state corporation Russian Corporation of Nanotechnologies. JSC RUSNANO contributes to implementation of the state policy on the development of the nanotechnology industry by investing directly and through investment funds of nanotechnology in financially effective high-technology projects providing the development of new production facilities in the Russian Federation. Its primary investment focus is in electronics, optoelectronics and telecommunications, healthcare and biotechnology, metallurgy and metalwork, energy, mechanical engineering and instrument making, construction and industrial materials, chemicals and petrochemicals. 100 percent of RUSNANO’s shares are state owned. Thanks to RUSNANO’s investments, there are currently 115 factories and R&D Centers opened in 37 regions in Russia.

Management of assets of RUSNANO JSC is carried out by Limited Liability Company established in December 2013, RUSNANO Management Company. Anatoly Chubais is the Chairman of its Executive Board.

Work to establish nanotechnology infrastructure and carry out educational programs is fulfilled by RUSNANO’s Fund for Infrastructure and Educational Programs, which was also established during the reorganization of the Russian Corporation of Nanotechnologies.