Dear members and partners,
Currently, KOMOS GROUP LLC is one of the largest agribusiness companies in Russia. KOMOS GROUP’s management system is based on interaction between the Management Company and its divisions, which are divided according to product type (poultry farming and egg production, pig farming and pork processing, milk processing, poultry farming and poultry meat processing, compound feed production, and distribution of frozen products).

To sum up the results of 2012, I would like to point out that our efforts were focused on internal efficiency improvement, balance maintenance in all business areas, and investments in the company’s development. Our company’s vertical integration and pursuit of the strategy of efficiency improvement allowed us to strengthen our market position and to enable sustainable growth in spite of dire market conditions caused by Russia’s entry into the WTO. The achieved results proved viability of the chosen strategy: according to IFRS financial statements KOMOS GROUP’s revenue totaled 20,9 billion rubles compared to 17,6 billion rubles in the previous year.

In 2012, we invested over 1 billion rubles into reconstruction and technical upgrade of our member companies. We improved allocation and complex utilization of raw materials, which gave us an opportunity to focus on manufacturing of high margin products. At the same time, we continued to invest in expansion of production facilities in other regions and acquired “Krasnokamsky meat processing plant “KELMI” JSC located in Perm region. We used both debt and equity financing as a source of funding during the year. In 2012, “Rosselkhozbank” JSC became our strategic partner; therefore its share in the company’s credit portfolio reached 23% by the end of the year. Loans from the following banks constitute three fourths of the company’s credit portfolio: Gazprombank JSC, Rosselkhozbank JSC, and Ural Bank for Reconstruction and development JSC.

In 2012, we continued to optimize the company’s structure and launched the process of joining four dairy plants into one legal entity that will enable us to optimize their production and management.

Establishment of a balanced brand portfolio, constant product variety improvement, and implementation of modern packaging solutions allowed us to enter new markets: products produced in the Udmurt Republic are currently sold in 53 regions of Russia. The company’s products can be found in stores of the following national retail chains: “Perekrestok”, “Lenta”, “Pyatyorochka”, “Magnit”, “Ashan”, “Karusel”, “Real Hypermarket”, “The Seventh Continent”, “Dixi”, «BILLA», «SPAR», and others. Last year we entered the market of the Republic of Kazakhstan.

I would like to express my heartfelt gratitude to investors, creditors and, in particular, to our employees. Their professionalism and efficiency are our key success factors: over 12 thousand employees implement international practices and modern scientific research while ensuring food security of the Russian Federation. We invest over 1 million dollars annually into professional development and education of our employees and attract the best industry specialists to our team. I would like to emphasize that we have long-term partnership with authorities of all levels in all regions of our presence, which signifies our mutual trust and intention to restore the Russian agribusiness in a collaborative manner.

Gradual technology upgrade and production efficiency improvement enabled us to become competitive participants of the global market. I believe that in the long-term perspective being a WTO member will identify strong companies, which are able to meet the global market requirements, and will make the agribusiness sector more transparent and attractive to foreign investors. The results achieved so far prove that KOMOS GROUP will proceed to pursue sustainable growth and strengthen its position as one of the leading Russian food manufactures.

Chairman of the Management Committee – CEO

Andrey Shutov