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Press Releases / 24.07.2013
Press Release as of 24.07.2013 IC UFS Finance LLC CJSC AK&M Rating Agency affirmed the national scale credit rating of IC UFS Finance LLC at ‘A’, with a stable outlook. The ‘A’ rating indicates a high credit standing of the investment company. Risk of a delay in meeting liabilities is relatively low, restructuring risk for a loan / part of a loan is minimal. IC UFS Finance LLC established on May 5, 2008 (IC Arbat Finance LLC until September 25, 2009) is part of international group UFSInvestmentCompany providing the whole range of services and investment solutions in the Russian and global financial markets. The company is a member of self-regulatory organization “National Association of Securities Market Participants” (NAUFOR) and nonprofit organization “International Financiers Guild”. The Company is licensed to provide professional dealer, brokerage, custody and securities management services (the licenses are non-expiring). We appreciate the steadily growing equity capital, moderate debt burden, and comfortable liquidity position as positive rating drivers for UFS Finance. Since incorporation, UFS Finance’s authorized capital has grown almost 5-fold. The last such increase was in the first quarter of 2012, the authorized capital reaching RUB 200 million (compared with RUB 88.6 million at the start of the year). As a result, equity capital grew almost twice, which enhanced the Company’s financial viability (equity to total assets ratio reaching 0.23 as of December 31, 2012 against 0.11 at the start of the year 2012). The Company also nearly doubled its net worth (from RUB 104.4 million to RUB 200.4 million, still higher above the minimum requirements set by Russia’s Federal Financial Markets Service). The equity capital increase drove up quite a number of UFS Finance’s financial metrics. In particular, the share of debt in liabilities decreased from 89% to 77%, the debt to net asset ratio almost twice. As of December 31, 2012, the net debt / equity capital multiple was 0.22x, indicating a moderate debt burden on the Company. In 2012, UFS Finance continued to improve its already strong liquidity position. Absolute liquidity ratio exceeded 100% (against 90% at the start of the year), current liquidity grew from 111% to 130%. At the same time, the rating of UFS Finance is under pressure of shrinking earnings. In 2012, the falling OTC market quotations and fluctuating exchange rates cut into the Company’s net profit leaving it fairly high, though. Given the business expansion, the Company may well be expected to improve its financial performance on the medium-term and long-term horizons, provided that the market stays positive. This forecast is backed by the Company’s steadily high (or at least medium, factoring in the UFS funds) return on asset management operations exceeding the standard benchmarks (MICEX-10, RTSI, IFX-Cbonds, etc.), which indicates high professional expertise of the Company’s portfolio managers. No reduction in the asset trust management portfolio has been detected over the period under review, but we regard the narrow customer base in this business segment as a negative rating driver.
This press release is based on the statement of assigning a credit rating to IC UFS Finance LLC . The credit rating, along with any information and conclusions provided in this press release, only conveys our opinion on the Company’s credit standing and shall not be considered as advice on the purchase and sale of securities or the provision of loan facilities. AK&M Rating Agency will not incur any responsibility 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 is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010). AK&M Ratings are recognized by the Central Bank of Russia (for providing unsecured lending facilities – Regulation 323-P), Vnesheconombank (for granting subordinated loans) and SME Bank (for its program of lending to SME businesses), RUSNANO (when selecting banks to provide cash and settlement services to project and engineering companies implementing investment projects), the MICEX (for the Corporate Bond Index / MICEX CBI and Municipal Bond Index / MICEX MBI calculation and bond listing purposes). By a resolution of Russia’s Government AK&M Ratings count for the recapitalization of banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.
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