The ‘A' rating indicates that both the Issuing Company and its bond issue are qualified as highly reliable. Risk of a delay in meeting liabilities is relatively low, restructuring risk for the loan / part of the loan is minimal.
The Issuing Company is one of leading automobile manufacturers in Russia. It owns controlling stakes in several enterprises of the automotive industry, unites UAZ (Ulyanovsk Automobile Plant), ZMZ (Zawolzhsky Motorny Zawod), SOLLERS Far East and other production assets. The enterprises of the Group produce domestic UAZ off-road vehicles, SsangYongs automobiles (South Korea), ISUZU lorries as well as gasoline and diesel engines ZMZ. Besides, the Issuing Company is developing a dealership chain and benefits from its own leasing unit.
A major argument for the rating upgrade is the high potential and the positive trend in the Issuing Company's development. The Company's production assets enable it to manufacture a wide range of both domestic and foreign automobiles. Both the production capacities and the automobile brand portfolio are expanding. After a heavy performance drop in 2009, both sales result and incomes of the group improved in the first half year 2011. For 10 months 2011, the company sold 97.3 thousand automobiles exceeding the sales result over 10 months 2010 by 35%. The automobile engine sales result also visibly improved. Consolidated revenue of the Group as of 11/30/2011 was RUB 64.32 billion, far above the revenue secured for 11 months 2010. As the domestic economy revives after the crisis years, the upward trend in the production output and incomes of the Group is likely to continue.
Today, the Group shows favorable performance in the way of profit. In 2010, the Group's incomes rose against 2009, and the profit continued to grow in 2011. Operating profit for 2010 was RUB 2.27 billion against a loss of RUB 1.57 billion for 2009, EBITDA totaled RUB 4.55 billion against RUB 0.26 billion for 2009. For the first half year 2011, the Group's profit totaled RUB 0.9 billion against a loss of RUB 1.24 billion for 2010. Overall, the company's performance trends are favorable in 2011, the profit advance being particularly appreciable.
At the same time, the rating score is restricted by the high debt burden, although the amount of liabilities decreased considerably by early fourth quarter 2011 from what it had been in the preceding periods. In 2010, according to the Group's consolidated statements, its debt (short-term and long-term credits and loans) decreased by 9% year-on-year reaching RUB 24.5 billion as of December 31, 2010. The debt reduction trend continued in 2011. As of December 31, 2011, the Group's consolidated debt totaled RUB 16.649 billion which is favorable for the Issuing Company when estimating its reliability. Another negative point is that the debt still exceeds the Company's own funds. Debt to asset ratio in the first half year 2011 was 49%, debt to equity ratio reached 267.4%. At the same time, the company essentially improved its debt profile. Over 2009, short-term liabilities decreased by 34.9 percentage points against the start of the year reaching 30.5% as of December 31, 2010. In 2011, the share of short-term liabilities increased to 45.0% as of June 30, 2011.
OJSC SOLLERS has issued two series of bonds. Bond issue BO-02 was placed on May 5, 2010. The registered amount of the issue was RUB 2,000 million. The nominal (par) value of one bond is RUB 1,000. The FFMS assigned state registration no. 4B02-02-02461-D as of 8/29/2008 to the issue. ISIN code is RU000A0JQUW3. The bond maturity term is May 1, 2013.

This press release is based on the statement of assigning credit quality ratings to OJSC SOLLERS, its bond issues 02 and BO-2.
The rating score, along with any information and conclusions provided in this press release, only conveys our opinion on the company's reliability and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities.



<span class="yaspeller_error" data-spell-word="AK">AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Provision 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide business banking services to project and engineering entities implementing investment projects), the MICEX (as a prerequisite for including bonds in the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation base, for listing bonds and for providing access to the MICEX+ trading mode). Pursuant to an order of Russia's Government

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Press release by: A.V. Yakovenko
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