The 'A' rating indicates that the Company is highly creditworthy. The risk of a failure to meet obligations in time is low, the full or partial debt restructuring risk is minimal. The rating assignment was based on the Credit Rating Methodology for Corporates (Issuers) and their Financial Assets (rev. January 23, 2014, including the amendments approved by the Methodology Committee on February 18, 2015).

BerozkaGaz Ugra JSC (previous name: CJSC YugraGasProcessing) operates in the Russian market as a company specializing in the value-added use of associated gases produced at the Salym fields and the Shapshinsky cluster of fields in Khanty-Mansi autonomous area - Yugra.

The sub-level increase results from improvements in a number of key economic performance indicators and a reduction in loan debt.

For the first time in years, BerozkaGaz Ugra JSC posted a substantial profit in the 9-month period of 2016.

For reference, the Company's 9-month net loss amounted to RUB 2.8 billion in 2015, RUB 1.7 billion in 2014. It should be noted that BerozkaGaz Ugra's 12-month net financial result was negative in the last 5 years; for example, its net loss for the whole year 2015 reached RUB 4.4 billion. However, the Company has overcome this negative trend this year, its 9-month net profit amounting to RUB 1.2 billion.

For the 12-month period ending at the beginning of Q4 2016, the company's sales revenue increased by 65.3%, net profit from sales by 40.8% year-on-year. Also, the Company substantially improved a number of key production cost efficiency indicators. In January-September 2016, its revenue per ruble of production expenses grew from RUB 2.03 to RUB 2.22; gross margin ratio increased from 51% to 60%; the markup on cost from 103% to 147%.

This year, BerozkaGaz Ugra JSC also reduced its loan debt. For the 9-month period in 2016, the Company's loan debt decreased by 13.6%.

The debt reduction and higher operating efficiency have improved the Company's debt profile. For the 9-month period in 2016, the overall debt ratio (total debt to total assets ratio) of BerozkaGaz Ugra JSC decreased to 2.35 from 2.46 in 2015, the 12-month debt to revenue ratio (based on liabilities) decreased from 8.61 to 4.8, which is a positive signal for the Company's credit rating.

BerozkaGaz Ugra JSC was established in October 2008 under the previous name of CJSC YugraGasProcessing) to implement a pilot project of its parent company MONOLIT LLC (later rebranded as BlueLine Project LLC, then as BerozkaGas Company) in Khanty-Mansi autonomous area - Yugra. The aim of the project was to create, commission and operate associated gas treatment (processing) capacities at the Salym fields (Salym Petroleum Development N.V.) and the Shapshinsky cluster of fields (RussNeft), to create and subsequently operate the power generating complexes supplying electricity to the Shapshinsky cluster of fields.

Today, BerozkaGaz Ugra JSC operates within BerozkaGas Company LLC as a production and engineering company implementing construction, reconstruction, modernization and technical upgrade projects for APG processing complexes, electricity generation, transmission and distribution facilities and managing the operation of these production complexes and facilities. The operation of the APG processing facilities, the core element of BerozkaGaz Ugra's business, contributes to the environmental program of Khanty-Mansi autonomous area – Yugra.

Full Company name: "BerozkaGaz Ugra" Joint Stock Company

Short name: "BerozkaGaz Ugra" JSC

Location: Tobolsky Trakt 4, Khanty-Mansiysk, Khanty-Mansi autonomous area - Yugra, Tyumen region, 628011 Russia

As of October 1, 2016, assets of BerozkaGaz Ugra JSC reached RUB 7.5 billion, the authorized capital was RUB 1 million. The Company's reports are audited by MICROPOL-CONSULTING LTD.

This press release is based on the monitoring results of the current credit rating assigned to BerozkaGaz Ugra JSC and the Credit Rating Methodology for Corporates (Issuers) and their Financial Assets (rev. January 23, 2014, including the amendments approved by the Methodology Committee on February 18, 2015).

AK&M Rating Agency assigned a rating to BerozkaGaz Ugra JSC for the first time on May 10, 2016. All announcements of this and previous rating actions are available on the www.akmrating.ru website.

The rating is valid until May 2017. AK&M Rating Agency may revise the rating and/or the outlook during this period if circumstances fundamentally influencing the Company's creditworthiness are revealed.

For estimation purposes, we completely rely on the reliability of information provided by the Company. The rationale for AK&M Rating Agency's judgment on the rating may include information acquired from other sources we deem to be reliable; however, the agency does not check the input data exhaustively and disclaims all responsibility for their possible errors.

The rating, along with any information and conclusions provided in this press release, only conveys our creditworthiness opinion and shall not be construed as a recommendation to make any investment decisions.

AK&M Rating Agency shall not be held liable for any interpretations, inferences and consequences related to the application of results of the rating estimation procedure by any third parties.

AK&M Rating Agency is a leading independent national rating agency engaged in rating activities since 1993.

AK&M Rating Agency

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www.akmrating.ru

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