INFORMATION MEMORANDUM OAO CHELYABINSK POULTRY PLANT OAO Russian Auction House is inviting interested parties to participate in the sale by auction of 1,107,001 uncertificated registered ordinary shares of OAO Chely- Geography of sales abinsk Poultry Plant, a state-owned poultry farm lo- cated in Khanty-Mansiysk Autonomous Okrug (AO) – Yugra (hereinafter, the “Poultry Plant”), representing 94.13% of the Company’s total share capital. The auction is being held in the execution of Khanty- North-West Federal District Mansiysk AO – Yugra Government Order No. 656-rp dated 2% 16.11.2011 “On the List of the State-Owned Property of Tsentralny Federal District Khanty-Mansiysk AO – Yugra Slated for Privatization in 16% 2012 and the 2013-2014 Scheduling Period.” Ural Federal District Volga Federal District 58% Opening price – 1 450 mln rub. 19% Earnest money (deposit) – 145 mln rub. South Federal District 2% Call for bids – 70 mln rub. Siberian Federal District Auction date – 10.09.2012 3% 2 3 Today, AO Chelyabinsk Poultry Plant is comprised of four structural divi- Background information sions: Chelyabinsk Poultry Plant Full name – Open Joint-Stock Company Chelyabinsk Poultry Plant The Plant’s EVROVENT-500 poultry-keeping equipment ensures a high level (Ptitsefabrika Chelyabinskaya). of productivity, resource conservation, stock-keeping (poultry management) OGRN – 1037401636139 and environmental friendliness. Particular attention is paid to chicken feed – Registered/mailing address – OAO Chelyabinsk Poultry Plant Site, the cutting-edge technologies used in nutrition optimization, feed preparation Kopeysk, Chelyabinsk Oblast, 456658. and quality control ensure that chickens receive a balanced diet. The productiv- Industrial sector – agriculture. ity of the Plant’s egg grading and packing unit, outfitted with Dutch MOBA Market share – the Poultry Plant is one of the five largest poultry-pro- equipment, reaches up to 240,000 eggs per hour. duction units in Russia, ranked fourth according to the VIAPI Poultry-100 Under the current operational structure, roughly 40% of the Plant’s eggs are rating. sold via national networks, with the remaining 40% sold at small wholesale Ownership structure – Khanty-Mansiysk Autonomous Okrug, repre- within Chelyabinsk Oblast. sented by the State-Property Management Department of Khanty-Mansi- Yemanzhelinsk Stock Breeder (Yemanzhelinsky Plemre- ysk Autonomous Okrug – 94.133%; Natural persons – 5.867%. Corporate website – www.chepfa.ru. produktor) Supplies breeding material not only for the Poultry Plant but for poultry farmers in Perm, Orenburg, Kirov and other regions as well. This is the unit that produces the incubated egg of the Lohmann LSL-Classic breed. The production of edible eggs is another of the division’s important development areas. Business operations Peter and Paul Grain Complex (Petropavlovsky Zernovoi Complex) OAO Chelyabinsk Poultry Plant is one of the five largest poultry-pro- Located in the Verkhneuralsk District of Chelyabinsk Oblast, the grain com- duction units in Russia and a recognized leader of agricultural production plex, which forms a part of the Poultry Plant’s structure, is a leading grain pro- in the Ural Federal District. ducer. The integration of cutting-edge soil-, moisture- and energy-conservation The Poultry Plant is the region’s sole supplier of chicken eggs from top- technologies, high-performance/loss-minimizing harvesting equipment, and grade, genetically-healthy Lohmann Tierzucht poultry – eggs that consti- grain-cleaning units allows for the efficient management of operations from ini- tute the Poultry Plant’s main sales output. Moreover, the Plant is engaged tial processing to the production of top-grade seeds; expert management – the in the production of liquid pasteurized egg mixtures, powdered eggs and key to business success. chicken-meat products. The Peter and Paul Grain Complex is engaged not only in the production of The Plant works constantly to improve the quality of its products. As a grain but also in the breeding of Hereford cattle. result, Plant products have been environmentally-certified and have suc- Yemanzhelinsk Grain Reception Center (Yemanzhelinsky Khle- cessfully undergone quality-management certification pursuant to the re- bopriemny Punkt) quirements of ISO 9001. The grain produced by the Peter and Paul Grain Complex is sent for drying The products produced by OAO Chelyabinsk Poultry Plant are highly- and storage to the Yemanzhelinsk Grain Reception Center, located 35 km from regarded throughout the Russian Federation, winning numerous awards the main consumer of feed grain – OAO Chelyabinsk Poultry Plant. at high-profile regional and national exhibitions and competitions. Operations at OAO Chelyabinsk Poultry Plant encompass a meat-processing plant, where the slaughter of poultry takes place. All of the enterprise’s products are certified. 4 5 fication/development of new regional markets. Under its sales policy, OAO Chelyabinsk Poultry Plant uses the following Licenses distribution channels: 1. Producer – Wholesaler – Retailer – Consumer. 2. Producer – Foodservice Establishments. № Type of activity Licensing authority Expiration date Operation of Fire/Explosion Hazardous RF Federal Service for Environmental, 1. 17.07.2014 Production Facilities Technological and Atomic Oversight Fixed assets Operation of Fire/Explosion Hazardous RF Federal Service for Environmental, 2. 08.11.2015 Production Facilities Technological and Atomic Oversight The Company’s fixed assets constitute the set of assets located at the Poultry Plant’s production site. Fixed assets are structured as follows (number of facilities – items): Certificate of Registration (list of hazardous RF Federal Service for Environmental, 3. 09.08.2015 • Buildings – 395; production facilities) Technological and Atomic Oversight • Land plots – total area of 66.4 k hectares, including 27.3 k privately-owned hectares and 39.1 k leased hectares. Operation of Chemically-Hazardous RF Federal Service for Environmental, Location: Yetkulsky District, Chelyabinsk Oblast – 10 k hectares, with the remaining land located in Verkhneuralsk 4. 01.10.2015 Production Facilities Technological and Atomic Oversight District, Chelyabinsk Oblast. • Machinery and equipment – 12,509 items; Activity Involving the Collection, Use, RF Federal Service for Environmental, • Perennial crops – 1; 5. Processing, Transportation and Disposal 10.06.2014 Technological and Atomic Oversight of Hazardous Waste • Productive livestock – 639 heads; • Production and business inventory – 1,862 items; Activity Involving the Freight-Handling of • Draught animals – 27 heads; 6. RF Ministry of Transport 03.08.2016 Hazardous Cargo by Rail • Installations – 251 items; RF Federal Service for the Oversight of • Vehicles – 310 items; 7. Use of Infectious Agents 27.12.2011 Consumer Protection and Human Welfare • Other fixed assets – 22 items. As of 31.12.2011, the residual (book) value of the Company’s fixed assets totals RUB 1,147,166,000 or 55% of all assets. 8. Breeding of Hereford Cattle RF Ministry of Agriculture 21.02.2013 The enterprise engages in the systematic upgrading of technical equipment and the construction of new engineering capacity. 9. Breeding of Lohmann LSL-Classic Hens RF Ministry of Agriculture 31.12.2013 Activity Involving the Production of Top-Grade 10. RF Ministry of Agriculture 27.02.2014 Seeds of Agricultural (Grain) Plants Sales markets According to the issuer’s Quarterly Reports, product sales are essentially conducted throughout the Russian Federa- tion: Orenburg, Chelyabinsk, Moscow, Sverdlovsk, Leningrad, Kurgan, Samara, Kemerovo, Saratov and Irkutsk Regions and the Republic of Tatarstan. The priority sales channel for OAO Chelyabinsk Poultry Plant products on the internal and external markets alike is the creation and utilization of a system aimed at ensuring maximum product sales via dynamically-growing distribution companies, the achievement of highly-efficient sales operations, expansion of the Company’s retail share, and the identi- 6 7 financial independence, however, the increase in short-term liabilities cannot be viewed as a factor capable of seriously Financial analysis of Company opera- undermining the Company’s general financial standing. The reduction in capital assets, coupled by the growth in floating assets, indicates that the degree of mobility of Com- tions 01.01.2008-01.01.2012 pany assets is increasing. On the whole, the balance-sheet value of the Company’s fixed assets grew over the analyzed period from RUB 989,407,000 to RUB 1,238,009,000, or by 25.1%. Throughout the entire period, the Company took steps to update its physical infra- structure – in 2010, it commissioned fixed assets worth a total of RUB 58,330,000, whereas in 2011, this figure stood at Analysis of the dynamic and struc- RUB 225,935,000. Over the whole period of analysis, the Company’s intangible-asset level dropped by a factor of almost 5.3 (as of ture of assets and liabilities, financial 01.01.2012, the value of intangible assets stood at RUB 39,000). As of 01.01.2008, the Company’s long-term financial investments had been fully discharged. The Company has no accounts payable, payments under which are expected more than 12 months after the reporting independence date. Short-term financial investments are in the form of short-term deposits at OAO Sberbank Rossii and OAO Rosselkhoz- bank, meaning that they can be viewed as assets with a high level of liquidity and low probability of loss. According to financial statements for the reporting period, funds at the The aforementioned figures evidence that over the analyzed period, the Company was supported by consistently high Company’s disposal grew from RUB 1,948,043,000 to RUB 2,252,658,000, or level of net equity and floating capital. by 15.6%. Net equity grew from RUB 1,240,605,000 to RUB 1,818,854,000, or by 46.6%. This net equity growth, coupled by a decline in liabilities, resulted in a significant improvement in the Company’s level of financial independence. Reserve capital over the analyzed period grew from RUB 31,440,000 to RUB 40,701,000, or by 29.5%, while accumulated retained profit increased from RUB 115,181,000 to RUB 234,641,000, more than doubling.