Notes to the Financial Statements

Notes to the Financial Statements31 December 2006 continued22. Balances and transactions with related parties continuedRevenue from transactions with OAO Kaustik is represented mainly by an operating lease ofproduction equipment.2006 2005Income statement caption Relationship $’000 $’000Inventory purchases:OAO Kaustik Under common control 9,513 7,961OOO Evroles Under common control 4 55OAO Plastcard Under common control 26 81OOO European ChemicalCompany Other related party 66 –9,609 8,097Production services purchases:OAO Kaustik Under common control 599 550(iii) Other related party issuesZirax plc agreements described below are related party agreements all of which have been enteredinto on an “arms’ length basis”.(a) On 28 October 2005 Zirax plc entered into a share purchase agreement with Mr. V. Andosovand Erith Group Limited pursuant to which it purchased the entire equity interest in the chartercapital of Zirax LLC for an aggregate consideration of $4,989,000.(b) On 3 November 2005 Zirax plc entered into two set-off agreements with Mr. V. Andosov andErith Group Limited respectively (the “Set-Off Agreements”). Under the Set-Off AgreementsZirax plc agreed to set off the aggregate $4,989,000 purchase price due and payable to Erith GroupLimited and Mr. V. Andosov by Zirax plc against the called-up but unpaid subscription price duefrom them to Zirax plc in respect of the issue of ordinary shares.(c) On 1 September 2005 Zirax LLC entered into a 20 year term framework agreement with OAOKaustik for the supply of raw materials and the provision of utilities and services. The prices for thesupply of goods and services under the framework agreement and any other contract entered intobetween the parties pursuant thereto are determined for the first year of its term and subject toreview thereafter in accordance with the formula set out therein. Pursuant to this frameworkagreement the parties executed several one-year agreements for the supply of hydrochloric acid,liquid calcium chloride, lime-milk, hot water, steam, natural gas, settled water, power, maintenanceand repair, transport and telecommunications, waste purification and disposal services.44ZiRAX Annual Report & Accounts 2006