Rolf Group International Financial Reporting ... - Irish Stock Exchange

More documents

Recommendations

Info

BUSINESS DESCRIPTION OVERVIEW Rolf is a leading diversified car sales and services business in Russia. In 2006, Rolf sold over 130,000 cars in Russia to dealers and directly to customers. Originally established in Moscow in 1991, Rolf has grown over recent years in line with the growth of the market for imported foreign cars in Russia and currently operates through the five business divisions summarised below. See also ‘‘Presentation of Financial and Other Information’’ for explanation of the presentation of the financial information by reporting segment. Retail Rolf owns and operates 13 large car dealerships located on major thoroughfares in Moscow (and Moscow Region (‘‘Moscow Oblast’’)) and St. Petersburg, the cities which between them account for two-thirds of all imported cars sold in Russia, according to Rolf estimates. Through these dealerships, Rolf retails a diverse brand portfolio of cars including Mitsubishi, Hyundai, Ford, Audi, Mazda, Peugeot and Mercedes-Benz. Rolf has also made arrangements to sell Toyota and Lexus cars when it opens new dealerships in 2008. Each such dealership typically retails between one and four brands of car in separate showrooms, and there are 21 showrooms in total across the 13 dealerships. The Rolf brand is displayed prominently in these dealerships giving Rolf brand awareness in its own right. In addition to the retail showrooms, each dealership also has a dedicated car service operation, providing repairs, service and bodywork through comprehensive facilities including up to 50 mechanical service bays in one dealership and paint and bodywork shops. Distribution Rolf is the exclusive importer and distributor of new Mitsubishi cars in Russia on behalf of Mitsubishi Motors Corporation (‘‘Mitsubishi Motors’’). In its capacity as exclusive distributor for Mitsubishi Motors, Rolf manages the import of new cars into Russia, organises logistics for car warehousing and transportation, supervises brand promotion and designates official status to Mitsubishi dealerships in Russia. Rolf distributes Mitsubishi cars to 89 dealers in 63 cities across Russia. Of these 89 dealers, seven are owned by Rolf’s retail division and the remainder are independent. Rolf has an exclusive distribution contract with Mitsubishi Motors until 2009, and Rolf expects that it will be extended until 2012. However, the terms of the extension have not so far been agreed with Mitsubishi Motors (see ‘‘– Business Description – Operations – Distribution’’ and ‘‘– Risk Factors – Rolf may lose its exclusive distribution contract with Mitsubishi Motors Corporation’’). Rolf also currently has a 60 per cent. controlling stake in its subsidiary Carnet 2000 (with the remaining 40 per cent. owned by a subsidiary of Mitsubishi Corporation), which holds the only distribution contract in Russia for new imported Hyundai cars with Hyundai Motor Company (‘‘Hyundai Motor’’). This distribution contract is expected to end later this year. It is understood that Hyundai Motor will set up a new distribution entity, in which Rolf has been offered a minority equity stake. Spare parts, options and accessories Rolf is a leading distributor for car spare parts, options and accessories in Russia. Rolf has an exclusive distribution contract for Mitsubishi-branded original spare parts, options and accessories. Rolf has a number of non-exclusive contracts for the distribution of specialised branded parts, options and accessories, such as Nokian Tyres, Blaupunkt, iPod and Mobil Oil. Logistics Rolf’s logistics business involves the transportation, customs clearance and warehousing of new imported cars in Russia. This business was historically used only to transport cars for Rolf’s own Mitsubishi and Hyundai distribution networks. Since 2006, Rolf has entered into new logistics contracts with distributors for Volkswagen, Skoda and Mercedes-Benz cars in Russia. Rolf operates its logistics business using its own fleet of 172 Mercedes-Benz trucks and up to a further 300 trucks hired on a daily basis. Financial services Rolf’s financial services business, Rolf Pronto, brokers insurance policies and consumer loans for Rolf’s customers. Rolf Pronto has agreements with six retail banks and eight insurance companies through which customers may obtain car loans and insurance policies. Rolf Pronto takes no credit or underwriting 48
isk, is not involved in any of the credit or underwriting decisions and generates fee income from the provision of such brokerage services. For the year ended 31 December 2006, Rolf’s revenues and EBITDA were U.S.$2,728 million and U.S.$231 million respectively, compared with U.S.$1,987 million and U.S.$146 million for the year ended 31 December 2005. History and development In August 1991, Mr. Sergey Petrov, the current sole beneficiary of Rolf (see ‘‘Shareholding’’), together with several partners established Rolf Co. Limited as a taxi and car rental business in Moscow. The business used only foreign cars and quickly gained a reputation for having a customer-friendly service. Within a few months of its establishment, Rolf Co. Limited was appointed as an official service agent for Mitsubishi Motors. In 1992, Rolf started sales of Mitsubishi cars in Russia and sold 109 new cars. In 1994, Rolf opened the first Mitsubishi showroom in Moscow, and in 1995 began its distribution business by distributing Mitsubishi cars to other dealers outside of Moscow on a non-exclusive basis. In 1997, Rolf established its car import business with Hyundai Motor. In 1998, Rolf obtained exclusive distribution rights for Mitsubishi cars and spare parts in the European part of Russia, which were extended to the whole of Russia in 2003. In 1999, Rolf opened a leasing arm, CJSC Kelvin (‘‘Kelvin’’), and set up its first dealership in St. Petersburg for Mitsubishi cars. In 2000, Rolf agreed distribution rights with Hyundai Motor through a subsidiary called Carnet 2000, in which Rolf has a controlling 60 per cent. equity holding and a subsidiary of Mitsubishi Corporation (a separate entity from Mitsubishi Motors) has the remaining 40 per cent. equity holding (see ‘‘– Business Description – Overview’’). In 2001, Rolf opened dealerships selling Audi and Ford cars. In 2004, Rolf sold its leasing business through the sale of its interest in Kelvin and its original taxi and car rental business to Baring Vostok Capital Partners, a private equity fund, to support its investments in the key areas of distribution and retail operations, and spare parts, options and accessories distribution. In 2004, Rolf opened its first Mazda showroom at Rolf-Khimki in Moscow Oblast. In 2005, Rolf began brokering financial and insurance services through its subsidiary LLC ROLF Pronto (‘‘Rolf Pronto’’). In 2006, Rolf began offering logistics services to third parties through its subsidiary LLC ROLF Logistics (‘‘Rolf Logistics’’). In the same year, Rolf opened its first Mercedes and Peugeot dealerships, LLC Zvezda Stolici in Moscow and LLC Rolf Lahta P in St. Petersburg, respectively. In recent years Rolf has also refined its corporate structure, shareholding and management. In 2003, Sergey Petrov signed a contract to buy out the last minority shareholdings in Rolf and hired PricewaterhouseCoopers to advise on a restructuring of Rolf in order to create a transparent, vertically integrated group structure with a single holding company. As a result, in 2004 the Group’s holding company, Delance Limited, was registered in Cyprus and Sergey Petrov became its settlor and sole beneficiary through a family trust in Cyprus (see ‘‘Shareholding’’). At the same time, Sergey Petrov became Chairman of the Management Board and was replaced as CEO by Matt Donnelly. In 2005, Rolf entered into the U.S.$350 million Secured Syndicated Loan Facility with a syndicate of banks in order to finance expansion of the business. In September 2006, Sergey Petrov took the position of Honorary President and Nicholas Coulson was appointed as a Director of Delance Limited and as Chairman of Rolf’s Management Board. Nicholas Coulson resigned from both positions with effect from 5 June 2007. Sergey Petrov continues to provide strategic direction to Rolf (see ‘‘Management and Directors’’). COMPETITIVE STRENGTHS Premium retail business with a diversified brand portfolio Rolf believes that its well-chosen locations and high-quality premises provide a strong competitive advantage in Russia’s expanding foreign branded car market, which grew by 66 per cent. between 2005 and 2006 (measured by number of cars sold), according to Business Monitor International (‘‘BMI’’). Rolf’s dealerships are strategically located on major thoroughfares in Moscow and St. Petersburg, having each cost between U.S.$15 million and U.S.$25 million to construct. In the terms of the car retail industry, Rolf’s dealerships are large in size and turnover and on average, in 2006, each showroom sold approximately 300 cars per month. Moscow and St. Petersburg are the country’s two most affluent cities and together they account for approximately two-thirds of the Russian market for foreign cars, according to Rolf estimates. In addition, sales of imported foreign car brands are growing more quickly in Russia than sales of Russian car brands, according to BMI. 49
Page 1 and 2: U.S.$250,000,000 Colgrade Limited (
Page 3 and 4: IMPORTANT INFORMATION ABOUT THIS PR
Page 5 and 6: PRESENTATION OF FINANCIAL AND OTHER
Page 7 and 8: ENFORCEABILITY OF JUDGMENTS A signi
Page 9 and 10: OVERVIEW OF ROLF Summary Rolf is a
Page 11 and 12: OVERVIEW OF THE OFFERING Provisions
Page 13 and 14: l Limited Liability Company ‘‘R
Page 15 and 16: of whatever nature imposed, levied,
Page 17 and 18: RISK FACTORS An investment in the N
Page 19 and 20: Rolf faces the risk of product liab
Page 21 and 22: Risks Relating to Rolf’s Financia
Page 23 and 24: hostage-taking at a school in Besla
Page 25 and 26: the Currency Control Law and the re
Page 27 and 28: Underdevelopment of the Russian tax
Page 29 and 30: In certain circumstances, the Issue
Page 31 and 32: SELECTED CONSOLIDATED FINANCIAL INF
Page 33 and 34: Consolidated Cash Flow Data For the
Page 35 and 36: CAPITALISATION The following table
Page 37 and 38: For the year ended 31 December 2006
Page 39 and 40: wholesale prices for most of the mo
Page 41 and 42: The table below provides a breakdow
Page 43 and 44: U.S.$9,532 thousand for the year en
Page 45 and 46: For the year ended 31 December 2006
Page 47: Cash flows Operating cash flows bef
Page 51 and 52: Established relationship with consu
Page 53 and 54: The following chart describes the G
Page 55 and 56: As at 31 December 2006, the Guarant
Page 57 and 58: The following table gives details o
Page 59 and 60: Insurance repairs As one of Russia
Page 61 and 62: Mitsubishi spare parts arrive in Ru
Page 63 and 64: Spare parts, options and accessorie
Page 65 and 66: liquidity to further its strategic
Page 67 and 68: MEMBERS OF THE SENIOR MANAGEMENT TE
Page 69 and 70: . Closed Joint Stock Company ‘‘
Page 71 and 72: TRANSACTIONS WITH RELATED PARTIES P
Page 73 and 74: shall be entitled to accept the leg
Page 75 and 76: case may be, than those which would
Page 77 and 78: equest by the Trustee, Officer’s
Page 79 and 80: (c) Redemption for tax reasons The
Page 81 and 82: 9 Taxation All payments of principa
Page 83 and 84: under the Notes and the Guarantees,
Page 85 and 86: 17 Notices Notices to the Noteholde
Page 87 and 88: acceptance credit facility; any amo
Page 89 and 90: (l) any Lien in respect of obligati
Page 91 and 92: SUMMARY OF PROVISIONS RELATING TO T
Page 93 and 94: SUBSCRIPTION AND SALE ABN AMRO Bank
Page 95 and 96: of only to persons outside Hong Kon
Page 97 and 98: Savings Directive Cyprus has enacte
Page 99 and 100:
EU DIRECTIVE ON THE TAXATION OF SAV
Page 101 and 102:
INDEX TO FINANCIAL STATEMENTS Conso
Page 103 and 104:
Rolf Group International Financial
Page 105 and 106:
Board of Directors and other office
Page 107 and 108:
F-7
Page 109 and 110:
F-9
Page 111 and 112:
Rolf Group Consolidated Income Stat
Page 113 and 114:
Rolf Group Consolidated Statement o
Page 115 and 116:
Rolf Group Notes to the Consolidate
Page 117 and 118:
Page 119 and 120:
Page 121 and 122:
Page 123 and 124:
Page 125 and 126:
Page 127 and 128:
Page 129 and 130:
Page 131 and 132:
Page 133 and 134:
Page 135 and 136:
F-35
Page 137 and 138:
F-37
Page 139 and 140:
F-39
Page 141 and 142:
F-41
Page 143 and 144:
F-43
Page 145 and 146:
F-45
Page 147 and 148:
F-47
Page 149 and 150:
F-49
Page 151 and 152:
F-51
Page 153 and 154:
F-53
Page 155 and 156:
F-55
Page 157 and 158:
F-57
Page 159 and 160:
F-59
Page 161 and 162:
F-61
Page 163 and 164:
F-63
Page 165 and 166:
F-65
Page 167 and 168:
F-67
Page 169 and 170:
F-69
Page 171 and 172:
F-71
Page 173 and 174:
F-73
Page 175 and 176:
F-75
Page 177 and 178:
F-77
Page 179 and 180:
F-79
Page 181 and 182:
F-81
Page 183 and 184:
F-83
Page 185 and 186:
F-85
show all

Rolf Group International Financial Reporting ... - Irish Stock Exchange

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?