July 1, 2011

Cherkizovo begins groundwork for Yeletsprom agro-industrial complex

Cherkizovo Group has announced the commencement of construction works at the agro-industrial complex Yeletsprom, worth RUB19.5 billion (approximately US$685 million).

The amount of planned investments includes borrowed funds granted by OJSC Gazprombank for a term of 10 years accounting for 80% of the total sum.

On June 28, a foundation stone ceremony took place where an integrated poultry meat production and processing enterprise will be constructed took place in Lipetsk region. During the ceremony, an agreement on cooperation between the government of Lipetsk region, OJSC Osobiye Economicheskiye Zony Regionalnogo Urlvnya, Yelets city administration and OJSC Kurinoye Tsarstvo to implement the investment project was signed.

The agro-industrial complex Yeletsprom includes the construction of a hatcher with the capacity of 160 million hatchable eggs per year, five broiler sites for 10 million bird place, four sites for the accommodation of parent poultry stock and replacement chicks for 900,000 birds (to ensure production of 98 million hatchable eggs), a killing and processing plant with the capacity of 24,000 birds per hour, a waste processing and recovery unit, multipurpose treatment facilities, a fodder production plant with the capacity 120 tonnes per hour (including the facilities to store 300,000 tonnes of grain and an oil crop processing plant) which will increase the Group's output of feed-stuffs by approximately 512,000 tpa, the grain storage capacity reaching about 800,000 tpa.

Besides, the project includes building of office, infrastructural and engineering premises including warehouse premises and housing for specialists as well as a motor transport enterprise and a modern logistic center with the refrigerated goods storage volume up to 50,000 tonnes.

The production is scheduled to start 2013, the full capacity to be reached in late 2015.

Cherkizovo Group's net profit in Q1 2011 as per US GAAP decreased by 42% to US$18.4 million as compared with 2010. The consolidated revenue increased by 16% to US$308.2 million. The adjusted EBITDA decreased by 30% to US$34.9 million. The GP decreased by 12% to US$64.6 million.