Press Releases / 04.02.2014

Press Release as of 04.02.2014

Baltic Coast

CJSC AK&M Rating Agency upgraded the credit rating of Baltic coast (CJSC) on the national scale to 'A+'. The outlook is stable.

The 'A+' rating indicates a very strong credit standing of Baltic coast. The risk of a failure to meet liabilities in time is insignificant.

The positive rating action reflects the increasing sales revenues, profitable operations, equity capital growth, better capital turnover, more headroom for substituting raw fish imports (with in-house fish farms operating at full capacity), favorable debt maturity profile, moderate debt burden and lower loan debt of Baltic coast.

The Company's sales revenues have been on a steady growth trend for the last six years increasing by more than 21% in 2012, more than 33% for 9 months of 2013.

The company's profitable operations are also contributing to the rating. At the end of the third quarter 2013, the Company's net profit increased year-on-year. Net profit of Baltic coast for 9 months 2013 reached RUB 152.2 million. Net profit-based return on equity (ROE) at the end of the third quarter 2013 exceeded 45%.

The equity capital of Baltic coast has been growing steadily in recent years, benefiting from the Company's growth and business expansion. The Company's equity capital increased more than twice in 2012, more than 28% for three quarters of 2013.

The faster capital turnover in 2013 indicates a higher operational efficiency of Baltic coast. At the end of the third quarter 2013, the general capital turnover ratio increased from 1.34 to 1.5, the accounts payable turnover ratio from 4.21 to 7.72, the accounts receivable turnover ratio from 2.36 to 3.42 compared with 2012.

Another powerful argument supporting the rating is a significant reduction in Baltic coast's dependence on raw fish imports since its in-house fish farms in Murmansk region reached full capacity. With more headroom for substituting imports by home-grown raw fish, Baltic coast enjoys a higher competitive edge in the domestic market of fish products, with obvious opportunities for further business expansion and boosting production efficiency.

Baltic coast benefits from a favorable debt maturity profile, the long-term loan debt accounting for over 98% of its total debt liabilities.

Another positive signal for Baltic coast's rating is its moderate debt burden: the loan debt to annual ratio being a mere 0.35, loan debt to assets ratio being 0.63, total debt to EBITDA ratio reaching 3.7.

Besides, the Company's loan debt is looking down, its total amount decreasing 1.48 times for three quarters of 2013.

At the same time, the low percentage of equity capital on the liabilities side, weak liquidity position, and a somewhat lower asset value are working against the credit rating of Baltic coast.

The low share of equity in liabilities has plagued Baltic coast for years. While growing from 11% to 18% for 9 months o 2013, this ratio still leaves much to be desired.

In 2013, the Company's liquidity position stayed fairly weak, although improving since 2012. At the end of the third quarter 2013, current liquidity ratio stayed at 1.8, acid test ratio at 0.84.

For three quarters of 2013, Baltic coast's assets decreased by 26%, which also exerts pressure on its credit rating, even though this reduction is attributable to the Company's shrinking long-term financial investments and debt receivable.

Baltic coast (part of the BALTIC COAST Group) was established on October 27, 2000 as a company specializing in the production and sales of fish and various kinds of fish products. The Company's core business activities currently include the breeding, processing and marketing of fish and fish products. Baltic coast's share in the domestic market of its products reaches 20% (about 25% in St. Petersburg and Leningrad region, approximately 10% in Moscow and almost 20% throughout Russia). The company's product range reaches 200 item names. As of October 1, 2013, the Company's assets totaled RUB 3.8 billion, annual sales revenue amounted to RUB 6.7 billion.

Corporate name: Baltic coast (CJSC).

en a

Baltic coast's auditor is CJSC Audit Firm CONSULT registered by order 313/235-p of the Head of St. Petersburg's Petrogradsky District Administration as of December 26, 1991, Primary State Registration Number 1027806877658. The audit firm is located at ul. Prof. Popova 27, office 12-N, 197022 St. Petersburg, Russia. Since 2003, CJSC Audit Firm CONSULT has been a member of SRO Nonprofit Partnership Audit Chamber of Russia registered in the State Register of Self-regulatory Audit Organizations under primary registration number 10301002154.

This press release is based on the statement of assigning a credit rating to Baltic coast (CJSC).

The credit rating, 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 to the Company.

CJSC 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.

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

CJSC AK&M Rating Agency is accredited by the Ministry of Finance of the Russian Federation (order no. 452 as of September 17, 2010).

CJSC AK&M Rating Agency
ul. Gubkina 3
Moscow, Russia
Press release by: A.G. Chumachenko
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18