Press Releases / 20.05.2011

Press Release as of 20.05.2011

Finance Classic Management Company LLC

AK&M Rating Agency assigned the ‘A’ rating to Finance Classic Management Company LLC as per the national scale, with a stable outlook


AK&M Rating Agency assigned the ‘A’ reliability rating (stable outlook) to Finance Classic Management Company LLC as per the national scale. The ‘A’ rating indicates that Finance Classic Management Company LLC is qualified as a highly reliable investment company. Risk of a delay in meeting liabilities is relatively low, restructuring risk for the loan / part of the loan is minimal.
One of the things supporting the rating score is the positive development of Finance Classic Management Company LLC. In 2010, the company's earnings (incomes from unit investment fund management operations) increased by 44% to RUB 10,661 thousand (RUB 5977 thousand in 2009). In the 1st quarter 2010, the company’s incomes increased by 56% year-on-year to RUB 2,608 thousand. In 2010, net profit increased more than twice (from RUB 614 thousand to RUB 1,320 thousand).
After a new closed-end real estate unit investment fund was established, the pool of funds managed by the company increased. Net value of assets of the company’s four unit investment funds reached about RUB 2 billion at the end of 2010. As of December 31, 2010, own funds of Finance Classic Management Company LLC reached RUB 72.5 million increasing by 44% December 31, 2009 (own funds continued to grow in the 1st quarter 2011). The company’s balance-sheet total also increased by about 44% from RUB 41.7 million to RUB 73.8 million in 2010.
The high quality of the company’s asset structure is favorable for the assessment of its financial standing. The share of cash funds in the asset structure was 95.1% in 2010 (95.9% in 2009) ensuring good financial manoeuvrability of Finance Classic Management Company LLC.
The company’s current and absolute liquidity ratios are pleasantly high and growing. Current liquidity ratio as of the end of 2010 was 59 (54.6 at the end of 2009). Over the year 2010, absolute liquidity ratio increased from 52.9 to 56.4.
Another positive signal is the high financial independence of Finance Classic Management Company LLC. Equity capital accounted for over 98% of the its liabilities in 2010. The company’s credit and loan liabilities decreased from RUB 100 thousand as of the end of 2009 to zero in 2010. Short-term liabilities (without deferred revenues) increased from RUB 756 thousand to RUB 1,244 thousand. At the same time, the cash flows generated by the company exceed its debt comfortably ensuring full debt coverage.
A good argument for the rating score is the high profitability achieved by the company. In 2010, balance sheet profit of Finance Classic Management Company LLC was RUB 1.788 million, net profit was RUB 1.32 million. The business profitability also improved considerably. Return on assets (ROA) of the company was 2.29% in 2010 (against 1.8% in 2009), return on equity (ROE) was 2.3% against 1.5%, return on capital employed (ROCE) was 3.15%, profitability of production assets was 359.33%, capital productivity ratio was 33.63%.
The high dependence on the macroeconomic environment sends a negative signal for the company. Three of the four closed-end investment funds managed by Finance Classic Management Company LLC are operating in the real estate investment domain; the fourth is intended for investments in monetary claims under credit contracts and loan agreements. As a result, incomes of unit holders and the demand for services provided by the management companies are not immune to credit risks depending on the situation in the real estate market. Poorer performance of the borrowers, falling real estate prices or an outflow of funds from the pooled investment market responding to the worsening market environment, if any, may visibly affect the company’s incomes and customer pool. Today, the ongoing global financial crisis offers little in the way of certainty as to how the unit investment funds managed by the company may perform. At the same time, Finance Classic Management Company LLC is not active in the stock market and does not depend on how much securities cost – which obviously reduces market risks.
Another argument restricting the rating score is the low diversification of incomes and customer base of Finance Classic Management Company LLC. The Company’s business is geared to the specially established unit investment funds. In 2010, incomes from unit investment fund management activities accounted for more than 80% of the company’s total incomes. The total pool of customers in whose interests the company Finance Classic Management Company LLC actually works (proceeding from the number of non-zero personal accounts of unit holders) consisted of about 10 legal entities as of 12/31/2010. Therefore, an outflow of just a couple big customers may affect the company’s activity as a whole. However, the customer base is currently expanding; the number of unit holders may be expected to grow resulting from the company’s rebranding policy and its market entry, with new unit investment funds established.
The cost of investment units may go up or down, the investment history is not implying future incomes, the state does not guarantee the profitability of investing in investment funds. Before acquiring an investment unit, please study the trust management rules carefully.
Details on unit investment funds and trust management rules for unit investment funds and other documents are available at: 7th Rostovskiy per. 11, 119121 Moscow; phone no. 7(495) 745-87-36;, Finance Classic Management Company LLC.

Finance Classic Management Company LLC (BFG Finance LLC before 4/20/2010) established in 2004, was licensed by the FFMS of Russia for managing investment funds, unit investment funds and non-state pension funds (lic. no. 21-000-1-00649 as of July 14, 2009). It specializes in the management of unit investment funds in the Russian Federation. The company is currently managing 4 closed-end investment funds. As of December 31, 2010, the company’s assets reached RUB 73.8 million, own funds amounted to RUB 72.5 million.

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This press release is based on the statement of assigning a rating score to Finance Classic Management Company LLC.
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.
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 – 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 AK&M Ratings count for approving the capitalization increase procedure for banks. Besides, AK&M Rating Agency is recognized by AHML and accredited by SRO National Securities Market Association.


CJSC Analysis, Consulting and Marketing Rating Agency
ul. Gubkina 3
Moscow, Russia
Press release by: A.Y. Zolotokopov
Phone no. (495) 916-70-30, fax no.: (499) 132-69-18.