T.C. EKONOMİ BAKANLIĞI Serbest Bölgeler, Yurtdışı Yatırım ve Hizmetler Genel Müdürlüğü

Transcription

1 Evrak bilgisine adresinden"-tkq152972e5" Evrak Takip Numarası ve Evrak Kayıt Tarihi ile erişebilirsiniz. T.C. EKONOMİ BAKANLIĞI Serbest Bölgeler, Yurtdışı Yatırım ve Hizmetler Genel Müdürlüğü Sayı : Konu : Özbekistan / Özelleştirme Duyurusu TÜRKİYE ODALAR VE BORSALAR BİRLİĞİNE Dumlupınar Bulvarı No:252 (Eskişehir Yolu 9. Km.) /ANKARA Uzbekneftegaz (Özbek Petrol ve Gaz Kurumu) Milli Holding Şirketi bünyesindeki Uzneftgazkurilishinvest A. Ş. tarafından Taşkent Ticaret Müşavirliğimize iletilen bir yazıda; bahse konu şirketin % 49, ona bağlı JSC Mubarekneftegazmontazh şirketinin % 28.34, JSC Buharagazpromstroy şirketinin % 12.71, JSC Kashkadaryaneftegazpromstroy şirketinin % 51 lik devlet hisselerinin özelleştirme yoluyla stratejik yabancı yatırımcılara satılacağı bildirilmektedir. Konuya ilişkin olarak ayrıntılı bilginin Taşkent Ticaret Müşavirliğimizden alınması mümkün bulunmakta olup, söz konusu özelleştirme ihalelerine dair bilgilendirici dokümanlar ekte gönderilmektedir. Bilgilerini ve konunun Kuruluşunuz bünyesinde yer alan firmalarımıza duyurulması hususunda gereğini rica ederim. EKLER: 1. Buharagazpromstroy Özelleştirme İlanı 2. Kashkadaryaneftegazpromstroy Özelleştirme İlanı 3. Mubarekneftegazmontazh Özelleştirme İlanı 4. Uzneftegazstroyinvest Özelleştirme İlanı DAĞITIM: Dış Ekonomik İlişkiler Kuruluna Türkiye Odalar ve Borsalar Birliğine Müstakil Sanayici ve İş Adamları Derneğine Türkiye İhracatçılar Meclisi Başkanlığına Tüm Sanayici ve İş Adamları Derneğine Türk Sanayiciler ve İşadamları Derneğine Anadolu Aslanları İş Adamları Derneğine Ömür ATILGAN Bakan a. Daire Başkanı "Bu belge, 5070 sayılı Elektronik İmza Kanununun 5. maddesi gereğince güvenli elektronik imza ile imzalanmıştır." T.C. Ekonomi Bakanlığı Serbest Bölgeler, Yurtdışı Yatırım Ve Ayrıntılı Bilgi İçin: Furkan USTA - Dış Ticaret Uzman Yardımcısı Hizmetler Genel Müdürlüğü İnönü Bulvarı No: Emek/ANKARA Telefon: Faks: ustaf@ekonomi.gov.tr Elektronik Ağ: 1/1

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3 JSC «Kashkadaryaneftegazpromstroy» LIST OF CONTENT 1 Abstract General information about the company Rational reasonability of the development of enterprise Financing requirement The share of the company delivered to the investors Marketing plan summary Key financial indicators forecast Forecast of revenues and earnings for Forecast of investments and income for Net profit forecast for Main benefits and risks of the project Main indicators of investment attractiveness of the project 10 2 Company Description History of the company Information about the owners (shareholders) of the Company Structural organization of the company Administration and management The main financial indicators for the 5 years 16 3 Organization of the production Machine and mechanism Production assets, capacity, infrastructure UE «Kashkadaryatransdorpromstroy» UE «Kashkadaryaspewenergomontaj» UE «Kashkadaryactroymontajservis» UE «Kashkadaryapromstroymaterial» UE «Kashkadaryatransservisstroy» UE «Kashkadaryaneftegasstroyinvest» Raw materials base Impact on the environment 19 4 Description of works / services Main types of works/services Purpose and scope The main characteristic The main features, benefits of customers The presence or the need for licensing The degree of readiness for release and sales 21 Страница 2

4 JSC «Kashkadaryaneftegazpromstroy» 4.7. The need for certification, and certificates The need for and the possibility of modernization of products (works / services) Guarantee and service 22 5 Market review The general analysis of the market, works and services Market segmentation, analysis capacity, saturation, and dynamics of market segments Analysis of the competitive environment Marketing and sales strategy works and services Marketing analysis of the strengths and weaknesses of the company 24 6 Financing plan Conventions used in the construction of financial models The financing structure The results of the financial model of the project Investment Analysis Project Analysis of sensitivity and scenario analysis 29 7 The main risks analysis Characteristics of the main risks An analysis of the degree of influence on the economic efficiency of risk for different participants of the project and options to minimize these 30 risks 7.3.Conclusions and recommendations 31 8 Contact information 32 Страница 3

5 JSC «Kashkadaryaneftegazpromstroy» 1. Abstract 1.1. General information about the company Joint Stock Company "Kashkadaryaneftegazpromstroy" was created under the state program of privatization on the basis of state-owned enterprises, the order 785 dated from , the Kashkadarya Territorial Administration of State Property Committee of Uzbekistan. Address of the Company: , Republic of Uzbekistan, Kashkadarya region, Karshi district, Mevazor village, Navruzkurgani. In accordance with the Law of the Republic of Uzbekistan "On joint-stock companies and protection of shareholders' rights" on May 6, 2014 and the decision taken at an extraordinary general meeting of shareholders on January 30, 2015 and registered on the Charter, in the new edition of , 65, the name of the company was renamed to JSC "Kashkadaryaneftegazpromstroy» («Qashqadaryoneftgazsanoatqurilish» joint-stockcompany). Страница 4

6 JSC «Kashkadaryaneftegazpromstroy» The main activity of JSC "Kashkadaryaneftegazpromstroy" is the construction and commissioning of the production capacity of the fuel and energy complex production facilities for civil construction. In addition to performing contractual construction works, the Company manufactures products for industrial purposes, produces consumer goods, providing services Rational reasonability of the development of enterprise The Company strengthens its competitive advantage by expanding the scope of services and the introduction of new services. The Company is committed to the full and timely implementation of the commitments under the contracts. That is to prove a positive assessment of the organization, and its place among the companies in the oil and gas industry, and benefits to expand financial opportunities and the growth of confidence in the company among the "Customers." 1.3. Financing requirement The need to attract additional financial resources is a necessity for the production costs of the following main objectives: - renewal the material and technical base of the Company, including the purchase of new technology and equipments, in accordance with the Resolution of the Cabinet of Ministers form March 28, «On measures for the effective management of State Property"; - development and introduction of new technologies and equipment; - growth in the provision of works and services; - acquisition of business equipment to the tasks defined by the Decree of the President of the Republic of Uzbekistan PD-2158 "On measures of further implementation of information and communication technologies in the real economy" Страница 5

7 1.4. The share of the company delivered to the investors JSC «Kashkadaryaneftegazpromstroy» JSC "Kashkadaryaneftegazpromstroy" was established as a joint stock company. Today the Company s statutory fund is UZS. Statutory fund of the Company is divided into shares with a par value of 1500,0 UZS Share of the shareholder Shareholder Items of shares Thousand UZS 1 JSC «Uzneftegazstroyinvest» ,00 2 Share of other legal entity ,5 1,32 3 The proportion of individuals (2,210 people). % ,5 47,68 TOTAL Страница 6

8 JSC «Kashkadaryaneftegazpromstroy» In accordance with Annex 1 to the Decree of the President of the Republic of Uzbekistan dated from April 28, 2015 # PD-2340 "On measures to increase the proportion of the value of private property and the economy," share of the JSC "Kashkadaryaneftegazpromstroy" is projected to be sold in the amount of 51% to strategic foreign investors. The distribution of the statutory fund of JSC "Kashkadaryaneftegazpromstroy" after the implementation of the Presidential Decree dated from April 28, 2015, # PD-2340 will appear in the following order: Share of the shareholder Shareholder Items of Thousand % shares UZS 1 Share of the strategic foreign investor ,00 2 Share of other legal entity ,5 1,32 3 The proportion of individuals (2,210 people) ,5 47,68 TOTAL Marketing plan summary An active marketing strategy is required in the appearance of increasing competition and the development of new segments. The marketing strategy of the company conceived taking into account expected changes in the market and is focused on strengthening the Company's position in the market, to increase the competitiveness of the estimates, the expansion of the network of services and improve the quality, renewal of the staff with attraction of the professionals and young specialists. The main objectives of the Company's marketing strategy is aimed at ensuring costeffective operation in a constantly changing environment, the competitiveness of the Company in order to meet the interests of customers, maintaining the public image, for maximum customer satisfaction in terms of volume, structure and quality of service, which creates conditions for stability of the business relationship. Besides, the Company has set a goal to increase competitiveness, which is intended to increase promotional activities, the creation of additional enterprises to provide new types Страница 7

9 JSC «Kashkadaryaneftegazpromstroy» of services, the organization of an effective system of control and management, the introduction of new information technologies. The implementation of the above mentioned tasks is estimated to be realistic, given sufficient support from the founder and relatively high profitability of the Company Key financial indicators forecast Forecast of revenues and earnings for Indicators Total income including income from construction activities The total costs Direct production costs Period expenses Income from financial operations Profit before tax Income tax and tax on profits Net income Taking into consideration of development works and services for the past 6 years and taking into account strategic objectives assigned to the Company's, the total revenue in 2020 is projected at the rate of mln. UZS or 1,3 times more than in And over the past 6 years and taking into account the tasks set to the Company, the total projected profits in 2020 of 545 mln. UZS or 3,3 times more than in Страница 8

10 Forecast of investments and income for JSC «Kashkadaryaneftegazpromstroy» The investments of the Company in 2020 will be amounted 1 700,0 mln. UZS The average annual income to invest in period of will estimate 20%. Provision is further improving and intensifying investment activities will be through the following: - placement of funds from the sale of shares of JSC "Kashkadaryaneftegazpromstroy" in financial instruments large and strong domestic banks; - growth in scope of works and services; - enhance monitoring and analysis of the Customers, to which the company carried out works and services. Страница 9

11 Net profit forecast for JSC «Kashkadaryaneftegazpromstroy» The projected net profit for the will increase by 3,3 times from 163 million UZS in 2014 up to 545 million UZS in Main benefits and risks of the project Taking into view of the positive prospects of the Company's main advantages for strategic investors are: - the corporate management system ensures the greatest transparency of the Company's operations and to adequately assess the risks; - the presence of the Company's divisions in all regions of the country; - historically formed a strategic base of the Company; - the financial stability and solvency of the Company is guaranteed by the mandatory requirements of the Regulatory body and confirmed by the presence of high ranking and the highest category of issuers; - high liquidity of the shares, which creates an opportunity for shareholders to freely dispose them and leave the Company at its request; - deserved reputation and image of the Company generated among the Customers. However, the major risk factors for the project, according to the Company are as follows: Corporate risk; Risks of termination of the license; Risks related to changes in the value of the scope of work and cost of services; Risks from inflation; Social risks; Liquidity risk. To minimize and reduce the impact of the above risks the Company developed strategic and tactical decisions that exclude the occurrence of risk situations Main indicators of investment attractiveness of the project Страница 10

12 JSC «Kashkadaryaneftegazpromstroy» The main indicators characterizing investment attractiveness of the participation of potential investors in the capital of JSC "Kashkadaryaneftgazpromstroy" include: - the Company is considered as one of the leading construction company JSC "Uzneftegazstroyinvest"; - long-term sustainable growth of the Company's key performance indicators; - the reputation of a stable and reliable partner for most of the large corporate and individual Customers; - organizational and legal form of the company, providing the most clearness and transparency for investors and shareholders; - credibility and high business reputation of the main shareholder of the Company - JSC "Uzneftegazstroyinvest"; - the formed statutory fund of the JSC "Kashkadaryaneftgazpromstroy" in the amount of ,0 thousand UZS. - the policy pursued by the company, as a priority, aimed at expanding the regional network and the scale of its activities; - a high level of financial stability and solvency of the company, confirmed by the financial indicators over the past 4 years, exceeding the set standard for more than 2 times. 2. Company Description 2.1. History of the company In accordance with the Presidential Decree dated from , the PD-2154 "On the transformation of the National Corporation of Oil and Gas Industry" Uzbekneftegaz ", the Resolution of the Cabinet of Ministers dated from , 523" On organization of the National Holding Company "Uzbekneftegaz" and the order of Territorial Administration of the State Property Committee of the Kashkadarya region on December 29, was established JSC" Kashkadaryaneftegazpromstroy. " Страница 11

13 JSC «Kashkadaryaneftegazpromstroy» According to the Decree of the President of the Republic of Uzbekistan on August 21, 2006 PD-446 and the Order of the Cabinet of Ministers of July 29, P, JSC "Kashkadaryaneftegazpromstroy" is a structural subdivision of the Company "Uzneftegazstroyinvest", National Holding Company "Uzbekneftegaz". In accordance with the Law of the Republic of Uzbekistan "On joint-stock companies and protection of shareholder rights" dated from May 6, 2014, LRU-370, and the decision taken at an extraordinary general meeting of shareholders on January 30, 2015 and registered by the Charter in the new edition from for the name of the company was renamed to JSC "Kashkadaryaneftegazpromstroy» («Qashqadaryoneftgazsanoatqurilish» jopint-stock-company). In last 20 years, under the reform and modernization of the Company the following targeted works were carried out, which are characterized by the following steps: First, a new methodological basis, changes and additions to internal and founding documents, the development of new regulations governing labor relations, aimed at increasing the personal liability of employees and the strengthening of economic discipline were developed. There was an inventory of all the existing rules and optimization of their conditions. Страница 12

14 JSC «Kashkadaryaneftegazpromstroy» Second, the retraining program has been implemented, starting with senior executives and ending at the level of ordinary personnel to master modern approach of work and the market mechanisms for customer satisfaction. Thirdly, there have been gradual reform of the structure of sub structural enterprises, as the vast scope of work and services are provided by them. Fourth, a fundamentally new level of investment has been organized work aimed at the efficient use of available resources with a view to ensuring the principles of repayment, diversification and liquidity. Fifthly, measures on the expansion of services provided, as well as improving the quality of work were organized to ensure financial stability and solvency of the Company. In addition, measures were taken for the development, implementation and use of modern information technology to improve the quality of services. 2.2 Information about the owners (shareholders) of the Company share of JSC "Uzneftegazstroyinvest" - 51,00 %, UZS, items of share; - share of other legal entity- 1,32%, UZS, items of share; - share of individuals (2210 people) - 47,68%, UZS, items of share Страница 13

15 2.3. Structural organization of the company JSC «Kashkadaryaneftegazpromstroy» 2.4. Administration and management: The structure of the administration of JSC "Kashkadaryaneftegazpromstroy": Chairman of the board: Rahimov Ruziqul Rajabovich, tel: 0 (375) First deputy Chairman of the board : Shanazarov Keldiyar, tel Страница 14

16 Staff: JSC «Kashkadaryaneftegazpromstroy» Category of personnel Quantity 1 Managers 78 2 Specialists 53 3 Technicians 40 4 Service personnel 30 5 Production personnel 741 Average salary Average salary Category of personnel (month) (year) 1 Managers Specialists Technicians Service personnel Production personnel total Indicators WF Average number of emp. Average salary (year) WF Average number of emp. Average salary (year) WF Average number of emp. Average salary (year) managers specialists technicians production personnel 2 service personnel Страница 15

17 JSC «Kashkadaryaneftegazpromstroy» 2.5. The main financial indicators for the last 5 years Including date by year Designation Gross revenue (mln. UZS) The scope of construction activities on its own (mln. UZS) Costs 1 sum income (tiyin) 97,50 96,0 97,3 97,5 98,1 Costs 1 sum of income from construction activities (tiyin) 97,22 96,8 96,7 98,0 95,4 Balance sheet profit (mln. UZS) Net profit (mln. UZS) Profitability (%) 2,6 2,7 2,7 2,6 2,0 Number of total employees (people) Overall productivity per 1 employee in current prices (thousand UZS) Wages Fund - all ((mln. UZS)) The average salary of 1 employee (thousand UZS) 316,9 486,5 376,4 455,1 456,3 - the amount of net profit in 2014 is amounted to 163 mln UZS. Thereby continuing to ensure stable profitability of the Company; - it is formed a new, methodical and methodological base of the Company relevant market competition, in order to implement the principles of maintaining an adequate level of financial stability based on the dynamic growth of the share capital. Страница 16

18 3. Organization of the production JSC «Kashkadaryaneftegazpromstroy» 3.1. Machine and mechanisms Type is machine and mechanisms Quantity units Run-out up to 50% Run-out up to 80% Run-out up to 100% Machinery and equipment Vehicles Страница 17

19 3.2. Production assets, capacity, infrastructure JSC «Kashkadaryaneftegazpromstroy» The structure of the JSC "Kaschkadaryaneftegazpromstroy" includes the following Unitary Enterprises: 1. UE "Kashkadaryatransdorpromstroy" It is the general contractor specialized organization for the construction of main oil and gas pipelines, water pipelines and other facilities construction line. Performs installation, insulation and styling and earthworks. In addition, it engaged in the operation of construction machines and mechanisms, provides the objects of society mechanisms. 2. UE "Kashkadaryaspetsenergomontazh" It is a specialized enterprise which deals with installation works. The enterprise provides electric installation works and adjustment works on industrial and civil construction objects. 3. UE "Kashkadaryastroymontajservis" It is the general contractor specialized organization for civil construction works at the objects of housing, community facilities, industrial buildings and structures. 4. UE "Kashkadaryapromstroymaterial" It provides a complete set of material and technical resource facilities for construction purposes to all enterprises under the JSC "Kashkadaryaneftegazpromstroy". In addition, the company carries out construction works on the objects of housing, community facilities, industrial buildings and structures. 5. UE"Kashkadaryatransservisstroy" It is the general contractor specialized organization for civil construction works at the objects of housing, community facilities, industrial buildings and structures. Страница 18

20 JSC «Kashkadaryaneftegazpromstroy» 6. UE "Kashkadaryaneftegazstroyinvest" It is the general contractor specialized organization for civil construction works at the objects of housing, community facilities, industrial buildings and structures. The need for new / additional production equipment The need for the acquisition of fixed assets for modernization and development of production detail is in the business plan of the Company for each accounting period. its own Raw materials base Components of the material and technical resources the company is able to engage on Supply of precast concrete, inert materials, cement, valves, bituminous oil, roofing, bricks are received from factories located in the Republic of Uzbekistan, as well as the factories of the Company Impact on the environment The Company progresses project in accordance with the standards for maximum permissible emissions, which are developed and agreed with the State Committee for Nature Protection of the Republic of Uzbekistan. Exceeding the quota for released ingredients of technological processes is under the strict control. 4. Description of works / services 4.1. Main types of works and services: The JSC "Kashkadaryaneftegazpromstroy" is able to carry out all kinds of civil works, but mainly aims to maintain capital construction and repair facilities in the fuel and energy complex. In addition to that the Company performs commercial traffic services, launched production of reinforced concrete products, necessary for the conduction of construction Purpose and scope Construction is closely connected with all branches of the national economy, especially with industrial production. On the one hand, the increase in the scope of construction depends on the development of industries that provide them with the necessary tools and objects of labor (machines, materials, construction, electricity, etc.). On the Страница 19

21 JSC «Kashkadaryaneftegazpromstroy» another hand, performing for many sectors of the economy on the basis of construction contracts, construction companies are inextricably linked to the activities of Customers. Branches of the economy perform in relation to the construction, both as suppliers and as consumers of construction products Main characteristics The main aim of the company is to combine economic interests and intellectual potential, material and non-material, labor and financial resources of its shareholders for economic activities, aimed at making a profit, with the implementation of construction and installation work including the production of building materials for its needs. The main areas of activity are: - implementation of construction and assembling works on the domestic market; - production and sales of building materials and structures; - technical and technological re-equipment of the Company The main features, benefits of customers The main features characterizing the quality of services provided by JSC "Kashkadaryaneftegazpromstroy" include: - high professional level of main personnel, both in terms of quality of the work and enter into contracts with customers; - the affordability of works and services of the Company, through the standardization of contract terms of service. Страница 20

22 4.5. The presence or the need for licensing JSC «Kashkadaryaneftegazpromstroy» 4.6. The presence or the need for licensing JSC "Kashkadaryaneftegazpromstroy" is a fully operational, with the presence of all the legal, human, material, technical, technological and methodological components for the full implementation of works and services. The executive board of the Company has a department working with customers (clients) which, if necessary, can in the shortest time to develop and introduce new kinds of production equipment and technology in the service sector. Страница 21

23 4.7. The need for certification, and certificates JSC «Kashkadaryaneftegazpromstroy» 4.8. The need for and the possibility of modernization of products (works / services) The possibility of modernization of products applicable to works and services exclusively in terms of the renegotiation of contracts of works and services as agreed with customers (clients). Exception is the contracts of works and services which are set by law. In some cases, the revision of the contracts terms requires a change in the previously deposited to the regulatory authority model rules for works and services Guarantee and service JSC "Kashkadaryaneftegazpromstroy" guarantee its customers (clients) to provide works and services in accordance with the laws and treaty provisions. Compliance with the requirements of solvency, established by the legislation, is carried out by maintaining the relevant standards within the established parameters for which information is provided on a quarterly basis to the regulatory body. Страница 22

24 5. Market review JSC «Kashkadaryaneftegazpromstroy» 5.1. The general analysis of the market, works and services In previous years, the management of construction - installation work, the Company was focused on central funding, and the objects have been included in the address program of construction of oil and gas industry of Uzbekistan. The customer must timely approve the cost estimates, which clearly justified the strategy of the project and its cost-effectiveness and assure on time funding for the phased purchase of construction materials and equipment, payment of salary and other compensation for production costs of contractor. Along with the implementation of already signed contracts for 2015 for the construction of roads and reconstruction works for the industry objects, the Company is seeking the ability to perform work and services to customers and offer third-party services to the public in the form of consumer goods Market segmentation, analysis capacity, saturation, and dynamics of market segments Further development of the provision of works and services in the field of construction work is connected primarily, to an increase in the scope of services to both domestic and foreign enterprises, through the introduction of new techniques and technologies, the expansion of infrastructure services, including increasing the number of experts, etc. as well as advocacy work in all regions of the country in order to promote the benefits provided works and services Analysis of competitive environment JSC "Kashkadaryaneftegazpromstroy" provides service works mainly for for enterprises of JSC "Uzneftegazstroyinvest" in the construction and repair of industrial and social facilities, construction of access roads and platforms to wells and compression stations foundations Marketing and sales strategy works and services The main point of dissemination of works and services is traditionally own advertising display. The implementation of the main scope work and services performed by legal entities of the Company. Страница 23

25 JSC «Kashkadaryaneftegazpromstroy» In the face of increasing competition, maintaining the strong position of JSC "Kashkadaryaneftegazpromstroy" in the market, as well as the development of new segments requires an active marketing strategy development. The marketing strategy of the company conceived taking into account expected changes in the market and is focused on strengthening the Company's position in the market, to enhance the competitiveness of budget and rate, expansion of sub structural organizations and to improve the quality of services, the completion of the Company's professional personnel and attraction of young workers. The main objectives of the Company's marketing strategy is aimed at ensuring costeffective operation in a constantly changing environment, the competitiveness of the company in order to meet the interests of customers, maintaining the public image, the maximum satisfaction of the customer (client) in scope, structure and quality of service, which creates conditions for sustainable business relationship. Besides, the Company has set a goal to increase competitiveness, which is intended to increase promotional activities, the creation of additional operational units for customer service, the organization of an effective system of control, the introduction of new methods of work and information technology. The realization of the set tasks ad objectives is estimated quite realistic, given sufficient support from the founders and relatively high profitability of the company Marketing analysis of the strengths and weaknesses of the company Taking in to account, that it is increasing the planned construction of residential houses on mortgage lending in 2015 in the Republic, it is necessary to determine the form of financing the construction of residential buildings and the need for funding. From the customer must be timely approvals and cost estimates, which clearly justified the strategy of the project and its cost-effectiveness and timely funding for the phased purchase of construction materials and equipment, payment of salary and other compensation for production costs of contractor. Along with the implementation of already signed contracts for 2015 for the construction of roads and overhaul for the industry the Company is seeking the ability to Страница 24

26 JSC «Kashkadaryaneftegazpromstroy» perform work and services to customers and third-party services to the public in the form of consumer goods. Customer must timely approve and cost estimate, which clearly justify the strategy of the project and its cost-effectiveness and assure on time funding for the phased purchase of construction materials and equipment, payment of salary and other compensation for production costs of contractor. Along with the implementation of already signed contracts for 2015 for the construction of roads and reconstruction works for the industry objects, the Company is seeking the ability to perform work and services to customers and offer third-party services to the public in the form of consumer goods. Competitive advantages Presence of one of the biggest regional base of materials and sub structural organizations Qualified specialists in key positions of production section and management board Well developed and productive methods of work and services. Experience in the filed construction works and services in Uzbekistan. Wide range of services provided. High level of reliability and financial stability Individuality of provided works and service Long-term partnership Customer base Introduction of IT in function of the Company Capabilities Low level of foreign company operational in the market Increase in the level of average salary and standards of living in the country High demand for Company service due to active loans for vehicles by the government Competitive deficiency Low level of material base in regional sub structural organizations Lack of qualified specialists in sub structural organizations of the company and fluctuation movement of personnel Lack of working and service experience in international market. Decreasing liquidity of investments Risks Risk of functioning many foreign companies in the domestic market Increased inflation (growth in prices) Customer loose due to competitive environment Страница 25

27 6. Financing plan Indicators Items of measurement JSC «Kashkadaryaneftegazpromstroy» Development plan for Investments requirement 1.2 Forecast of production of goods USD USD The prepositions used in the construction of financial models A number of indicators and the factors influencing the result, based on market conditions, expected demand, the expected price of services, the agreements reached with key customers (clients), planned marketing activities, etc, are used when constructing a financial model. The following groups of indicators are considered: - personnel (the need for personnel, labor costs, operation); - financial (need for financing sources and terms of attracting investment); - tax (tax rates and fees payable to the budgets of all levels); - marketing (cost of contracts and the forecast price changes); - investment (purchased equipment, purchase of equipment, capital costs for the construction of buildings and structures) and others. It takes into account the operating costs associated with the general economic activity of the Company, including the cost of depreciation and taxes. Operating expenses include: costs); - variables (outsourcing); - overhead (salaries, maintenance costs of equipment and buildings and other fixed - sales related to the implementation and promotion of insurance services; - administrative. The sources of attraction of investments, amounts and periods of attracting and refund are taken into account. income. Calculation is carried out operating profit, profit before tax, income taxes and net Страница 26

28 JSC «Kashkadaryaneftegazpromstroy» The information on the company in the corresponding period in the context of profitability and efficiency of operations, financial and property status of the company is analyzed Financing structure of the Company The financial resources of the company consist of a combination of its own funds and receivables from the outside, at the disposal of the company and designed to meet its financial obligations and finance of its current expenses. The availability of financial resources in the amounts required, as well as their effective use determines the financial strength of the company, the financial stability and solvency. The main source of financing is its own resources. Own funds of the Company formed by the internal (that profits remaining at the disposal of the company, depreciation) and external sources (this means additional contributions to the statutory fund, additional issue and sale of shares, other external sources of formation of own financial resources). Profit - is the main source of funds of the dynamically developing company. In the balance sheet it is: 1) explicit - as retained earnings; 2) in a veiled form - both created at the expense of profit funds and reserves. The amount of profit depends on many factors. The main factor among which is the ratio of income and expenses. Profit - is the main source of reserve capital (fund), which is intended to compensate for unexpected losses and potential losses of economic activity. The order of formation of the reserve capital is fixed in the regulations that govern the activities of the company as well as its statutes The results of the financial model of the project Indicators Total profit Total expense Net profit Страница 27

29 JSC «Kashkadaryaneftegazpromstroy» The planned amount of profit of the Company can be adjusted as a result of: - increase of the statutory fund; - conservation refinancing rate; - maintaining the level of payments. The presented figures are current as of the date of submission. The probability of matching the results and the projected parameters will depend on the possible increase in the statutory fund of the Company, market conditions and changes in the current legislation. Therefore, the Company set the goal of expanding and profitability are modified. The actual development of the Company will follow the planned parameters Investment Analysis of the Project In recent years, a policy aimed at expanding the regional network is regarded as a priority for the Company. Since its inception, the Company is actively involved in shaping the development of the services market in the country and systematically expanding its activities. Progress indicators provide the financial stability and solvency of the Company at a high level. For the last 4 years the Company's solvency ratio exceeds the State Inspectorate of the Republic of Uzbekistan in the standard of times, and has a positive dynamics. It is certainly serves as a guarantee of the Companies performance assumed commitments to customers, partners and shareholders. Also, the guarantee reserves formed from profit provides the guarantee of the Company of obligations to partners and dynamic improvement in operating performance and its sub structural organizations. Finally, this assessment helps to expand financial opportunities and the growth of trust to the company among customers. In accordance with the planned business plan for years , estimates of the profitability of the authorized capital, return on assets and earnings per share are as follows: Indicators Profitability of the statutory stock (%) 0,46 0,50 0,54 0,60 0,66 0,71 Profit per share (UZS) 692,6 762,9 823,4 899,5 983,4 1063,4 Страница 28

30 6.5. Analysis of sensitivity and scenario analysis JSC «Kashkadaryaneftegazpromstroy» During the business planning a sensitivity analysis is conducted, that is, the effect of changing the initial parameters of its final results is evaluated. The method of sensitivity analysis is to change the selected parameters within certain limits, provided that the other parameters remain unchanged. Through sensitivity analysis the resulting indicators for different values of given variables required for calculation can be evaluated. This type of analysis can help to determine the most critical variables that have the greatest affect on the feasibility and effectiveness of the business plan. As a fluctuating initials the following variables were taken: - volume of income; - expenses; - operating expenses or their components; -level of inflation;; - forming of reserves, etc. As the resulting indicators the following units were used: 1. Performance Indicators - index of profitability; - payback period; - cost-effective investments; 2. Annual figures - the balance sheet profit; - net profit; - surplus accumulated of real money. Absolute sensitivity analysis can help to determine the numerical deviation of resulting indicators under changing the values of the original variables. Scenario analysis of the project allows to evaluate the impact on the business plan for the possible simultaneous change of several variables by the probability of each scenario. Страница 29

31 7. The main risks analysis 7.1. Characteristics of main risks Corporate Risks JSC «Kashkadaryaneftegazpromstroy» This category of risk associated with the probability of deterioration in the financial condition of the Company because of adverse changes that may occur because of its activities, as well as affiliated organizations. The company has all the possibilities of direct influence on the probability of occurrence of these adverse changes, as well as possible to reduce the possible negative impact on its financial condition as a result of these changes. Risks of termination of license To date, the Company has a license for their activities. Licenses with specific deadlines. Activating in accordance with a license without violating licensing rules and regulations, the timely submission of reports to the relevant authorities allow the public to minimize these risks. Risks associated with changes in the value of the market and the cost of services This risk is generated by the results of the Company's operations, and causes the reduction of the amount of its profits. The causes of such risk may result from: reduction of potential of services, decline in demand for services and reduction of the Company's revenue in the form of income in terms of increasing competition and a number of other similar factors. As a result, the Company s financial condition could be at risk in decrease of dividends. These risks are assessed as moderate by the Company. account. Risks from inflation, devaluation and bank interest rates The Company is exposed to inflation risk because of its place surplus funds on a bank Currency risk That type of risk are considered as insignificant An analysis of the degree of influence on the economic efficiency of risk for different participants of the project and options to minimize these risks In order to minimize and reduce the impact of the above mentioned risks, the Company has developed a tactical decision to exclude the occurrence of risk situations. The Company can take the decision of denying the specific risks, both at the stage of preparation of the solution, and by refraining from activities in which the company is already involved Страница 30

32 JSC «Kashkadaryaneftegazpromstroy» if the actual risk of higher than expected. Also, the Company focuses on the following in order to minimize the risks: 1. Adoption of the risk - management decision to accept some (existing or planned) level of risk, without taking measures to reduce it, usually for technical or cost reasons. In case the risk of the need to take into account possible losses - the loss of a permanent nature, which can be easily foreseen; - Losses caused by the single, static risk. Typically, these risks are associated with substantial losses. The peculiarity of the fact that they do not lend themselves to statistical evaluation. 2. Reduction potential losses by prediction, and using more complete use of the available knowledge in the field Conclusions and recommendations Taking into account the positive prospects of the Company, the main advantages for strategic investors are: - the presence of the corporate management system, ensures the greatest transparency in the activities of the Company and assess the risks adequately; - factually established customer base of the Company; -Financial stability and solvency of the Company guaranteed by the mandatory requirements of the regulatory body confirmed the presence of high ranking; - high liquidity of the shares, which creates an opportunity for shareholders to freely dispose of them and leave the Company at its request; - earned reputation and image of the Company generated among customers. *Note: Tabular data and the data in the diagrams are presented according to the consolidated financial reporting. As well as overall data on staff takes in to account staff of the structural units of the company. Страница 31

33 8. Applications - Contact information: JSC «Kashkadaryaneftegazpromstroy» - Mailing adress: , Republic of Uzbekistan, Kashkadarya region, district Karshi, Navruz village, Mevazor MFY - Means of communication: Tel: (0375) , fax: 0375) office_kngsk_oaj@mail.ru - www. kngsk.uz - Codes of the company: - OKPO (General Classification of Enterprises and Organizations) IIN (Tax identification Number) SOATO (Indications System for Administrative-Territorial Formations),: OKONKh (General Classifier of Economy Branches): SOOGU (Government designation system) FS (Federal Assembly) OPF (Legal form of Organization) Bank details: Karshi branch of joint-stock commercial bank Uzpromstroybank - O\A , MFO Additional materials - A copy of the registration certificate; - Copy of the charter; - A copy of the license; - Scheme of the structure; - Driving the governance structure; - Main manager s resume; - Company photo. Страница 32

34 Rahimov Ruzikul Rajabovich Starting from April 22, 2014: Acting Chairman of the board of JSC Kashkadaryaneftegazpromstroy JSC «Kashkadaryaneftegazpromstroy» Date of birth: Place of birth: Kashkadarya region, Guzor district Nationality: Party member: Uzbek National Democratic Party Education: Graduated from: Higher 1974, Tashkent Financial Institute Specialty: Knowledge of foreign languages: Russian trade-economy WORK EXPERIENCE student of Tashkent Financial Institute economist at procurement department of the 3 rd representative office of the Karshikurilish construction union assistant economist at workers supply department of the Karshikurilish construction union chief accountant, economist at procurement department of the 3 rd representative office of the Karshikurilish construction Union deputy director of the Karshikurilish construction Union chairman of the board at Matlubot people s society, in Kashkadarya region deputy chairman of the board at Matlubot people s society, in Kashkadarya region chairman of trade society at Kashkadarya region chairman of Kashkadaryagushtsanoat Union head of the capital issues and privatization department of tej Union Uzgushtsutsanoat deputy director of the Karshikurilish construction Union chairman of the board of the JSC Kurilish materiaali ishlab chikarish va butlash deputy Chairman of the voard of JSC Kashkadaryaneftgazpromstroy director of UE Kashkadaryakurilishmontakservis of of JSC Kashkadaryaneftgazpromstroy Страница 33

35 first deputy Chairman of the board of of of JSC Kashkadaryaneftgazpromstroy present acting Chairman of the board of JSC Kashkadaryaneftegazpromstroy JSC «Kashkadaryaneftegazpromstroy» Страница 34

36 JSC «Kashkadaryaneftegazpromstroy» Sultanov Begali Balliyevich Starting from November 23, 2009: Acting deputy Chairman of the board of JSC Kashkadaryaneftegazpromstroy on construction and production issues Date of birth: Place of birth: Kashkadarya region, Yakkabog districtи Nationality: Party member: Uzbek N\A Education: Graduated from: Higher 1988, Samarkand State Architecture Institute Specialty: agricultural construction Knowledge of foreign languages: Russian WORK EXPERIENCE worker at hourse farm at Yakkabog Army service worker at hourse farm at Yakkabog student at Samarkand State Architecture Institute engineer at Muborak district National Education welder at installation department of construction enterprise Uzbeksanoatkurilish chief engineer, chief manager, master, welder at UE Kashkadaryaneftgazkurilishinvest 2009й. - present. - acting deputy Chairman of the board of JSC Kashkadaryaneftegazpromstroy on construction and production. Страница 35

37 JSC «Kashkadaryaneftegazpromstroy» Mukimov Avazbek Kurbonovich Starting from March 25, 2014: Acting deputy Chairman of the board of the JSC Kashkadarayneftgazpromstroy Date of birth: Place of birth: Andijan region, Asaka district Nationality: Party member: Uzbek N\A Education: Graduated from: Higher 1983, Samarkand State Architecture Institute Specialty: civil and industrial construction Knowledge of foreign languages: Russian WORK EXPERIENCE laboratory assistan at Cotton scientific Institution student at Samarkand State Architecture Institute army Service chief master at Agrokomkurilishtamirlash Union chief engineer at engineering department of Karshikurilish Union labarotary director at JSC Kashkadarayneftgazpromstroy deputy chairman of the board at JSC Kashkadarayneftgazpromstroy on production and construction director of UE Kashkadaryatransserviskurilish chief manager at UE Kashkadaryatransserviskurilish of JSC Kashkadarayneftgazpromstroy acting chief engineer at UE Kashkadaryatransserviskurilish of JSC Kashkadarayneftgazpromstroy acting first deputy Chairman of the board JSC Kashkadarayneftgazpromstroy 2014-present- acting deputy chairman of the board of the JSC Kashkadarayneftgazpromstroy Страница 36

38 Страница 1

39 LIST OF CONTENT 1 Abstract General information about the company Rational reasonability of the development of enterprise Financing requirement The share of the company delivered to the investors Marketing plan summary Key financial indicators forecast Forecast of revenues and earnings for Forecast of revenues and earnings for Net profit forecast for Main benefits and risks of the project Main indicators of investment attractiveness of the project 9 2 Company Description History of the company Information about the owners (shareholders) of the Company Structural organization of the company Administration and management The main financial indicators for the Organization of the production Machine and mechanism Production assets, capacity, infrastructure UE «Mahsus montaj va mehanizatsiya» UE «Er ustiqurilish» UE «Qurilishvaobodonlashtirish» UE «Qurilihkonstruktsiyalarivataminot» UE «Neftgazavtotranshizmat» UE «Kogonelektromontajchi» UE «Mahsuskimyohimoyaqurilish» LLC «Buhoroneftgazsuvqurilish» UE «Tibbiysanqism» Raw materials base Impact on the environment 18 4 Description of works / services Main types of works/services Purpose and scope The main characteristics The main features, benefits of customers 19 Страница 2

40 The presence or the need for licensing The degree of readiness for release and sales The need for certification, and certificates The need for and the possibility of modernization of products (works / services) Guarantee and service 21 5 Market review The general analysis of the market, works and services Market segmentation, analysis capacity, saturation, and dynamics of market segments Analysis of the competitive environment Marketing and sales strategy works and services Marketing analysis of the strengths and weaknesses of the company 22 6 Financing plan Conventions used in the construction of financial models The financing structure The results of the financial model of the project Investment Analysis Project Analysis of sensitivity and scenario analysis 28 7 The main risks analysis Characteristics of the main risks An analysis of the degree of influence on the economic efficiency of risk for different participants of the project and options to minimize these 30 risks 7.3. Conclusions and recommendations 31 8 Contact information 32 Страница 3

41 1. Abstract INVESTMENT OFFER 1.1. General information about the company The Company "Buharagazpromstroy" was created in 1966 under the Ministry of Construction of the oil and gas industry. On the basis of the Company "Buharagazpromstroy" in January 1999 it was formed Joint Stock Company "Buharagazpromstroy" in accordance with the Presidential Decree of , PD "On the transformation of the National Corporation of Oil and Gas Industry" Uzbekneftegaz", the Cabinet of Ministers of the Republic of Uzbekistan from , 523 "On organization of the National Holding Company" Uzbekneftegaz" and the order of Territorial Administration of the State Property Committee of Bukhara region on April 22, In accordance with the Decree of the President of the Republic of Uzbekistan on August 21, 2006 PD-446 and the Order of the Cabinet of Ministers of 29 July 2007 for 339, JSC "Buharagazpromstroy" is designated as a a structural subdivision of the Company "Uzneftegazstroyinvest", under the National Holding Company "Uzbekneftegaz". In accordance with the Law of the Republic of Uzbekistan "On joint-stock companies and protection of shareholder rights" of May 6, 2014, 370, and the decision taken at an extraordinary general meeting of shareholders on January 10, 2015 and registered by the Charter in the new edition of the name of the company was renamed to Joint Stock Company "Buharagazpromstroy» («Buxorogazsanoatqurilish» joint-sock-company). The main activity of JSC "Buharagazpromstroy" is the construction and commissioning of the production capacity of the fuel and energy complex production facilities for civil construction. In addition to performing contractual construction works, the Company manufactures products for industrial purposes, produces consumer goods, providing services Rational reasonability of the development of the Company The Company strengthens its competitive advantage by expanding the scope of services and the introduction of new services. The Company is committed to the full and timely implementation of the commitments under the contracts. That is to prove a positive assessment of the Страница 4

42 organization, and its place among the companies in the oil and gas industry, and benefits to expand financial opportunities and the growth of confidence in the company among the "Customers." 1.3. Financing requirement The need to attract additional financial resources is a necessity for the production costs of the following main objectives: - renewal the material and technical base of the Company, including the purchase of new technology and equipments, in accordance with the Resolution of the Cabinet of Ministers form March 28, «On measures for the effective management of State Property"; - development and introduction of new technologies and equipment; - growth in the provision of works and services; - acquisition of business equipment to the tasks defined by the Decree of the President of the Republic of Uzbekistan PD-2158 "On measures of further implementation of information and communication technologies in the real economy" 1.4. The share of the company delivered to the investors JSC "Buharagazpromstroy" was established in a form of a joint stock company. Today the Company s statutory fund is UZS. Statutory fund of the Company is divided into shares with a par value of 500,0 UZS Name of the shareholder Items of shares Share of the shareholder Thousand UZS 1 JSC Uzneftegazstroyinvest Share of other (7) legal entity Share of individuals (3130 people) TOTAL: In accordance with Annex 1 to the Decree of the President of the Republic of Uzbekistan dated from April 28, 2015 # PD-2340 "On measures to increase the proportion of the value of private property and the economy," share of the JSC % Страница 5

43 "Buharagazpromstroy" is projected to be sold in the amount of 51% to strategic foreign investors. The distribution of the statutory fund of JSC "Buharagazpromstroy" after the implementation of the Presidential Decree dated from April 28, 2015, # PD-2340 will appear in the following order: Share of the shareholder Name of the shareholder Items of Thousand % shares UZS 1 JSC Uzneftegazstroyinvest ,0 2 Share of other foreign investors ,71 3 Share of other (7) legal entity ,02 4 The proportion of individuals (2,210 people) ,27 TOTAL: Marketing plan summary An active marketing strategy is required in the appearance of increasing competition and the development of new segments. The marketing strategy of the company conceived taking into account expected changes in the market and is focused on strengthening the Company's position in the market, to increase the competitiveness of the estimates, the expansion of the network of services and improve the quality, renewal of the staff with attraction of the professionals and young specialists. The main objectives of the Company's marketing strategy is aimed at ensuring costeffective operation in a constantly changing environment, the competitiveness of the Страница 6

44 Company in order to meet the interests of customers, maintaining the public image, for maximum customer satisfaction in terms of volume, structure and quality of service, which creates conditions for stability of the business relationship. Besides, the Company has set a goal to increase competitiveness, which is intended to increase promotional activities, the creation of additional enterprises to provide new types of services, the organization of an effective system of control and management, the introduction of new information technologies. The implementation of the above mentioned tasks is estimated to be realistic, given sufficient support from the founder and relatively high profitability of the Company Key financial indicators forecast Forecast of revenues and earnings for Taking into consideration of development works and services for the past 5 years and taking into account strategic objectives assigned to the Company's, the total revenue in 2020 is projected at the rate of mln. UZS or 1,3 times more than in And over the past 5 years and taking into account the tasks set to the Company, the total projected profits in 2020 of mln. UZS or 1,4 times more than in Indicators Total income (mln. UZS) including income from construction activities The total costs (mln. UZS) Direct production costs Period expenses Income from financial operations Profit before tax Income taxes and other taxes on profits Net income (mln. UZS) Страница 7

45 Forecast of investments and income for The investments of the Company in 2020 will be amounted ,0mln. UZS The average annual income to invest in period of will estimate 20%. Provision is further improving and intensifying investment activities will be through the following: - placement of funds from the sale of shares of JSC "Buharagazpromstroy" in financial instruments large and strong domestic banks; - growth in scope of works and services; - enhance monitoring and analysis of the Customers, to which the company carried out works and services. Страница 8

46 Net profit forecast for The projected net profit for the will increase by 1,4 times from million UZS in 2014 up to million UZS in Main benefits and risks of the project Taking into view of the positive prospects of the Company's main advantages for strategic investors are: - the corporate management system ensures the greatest transparency of the Company's operations and to adequately assess the risks; - the presence of the Company's divisions in all regions of the country; - historically formed a strategic base of the Company; - the financial stability and solvency of the Company is guaranteed by the mandatory requirements of the Regulatory body and confirmed by the presence of high ranking and the highest category of issuers; - high liquidity of the shares, which creates an opportunity for shareholders to freely dispose them and leave the Company at its request; follows: - deserved reputation and image of the Company generated among the Customers. However, the major risk factors for the project, according to the Company are as services; Corporate risk; Risks of termination of the license; Risks related to changes in the value of the scope of work and cost of Risks from inflation; Social risks; Liquidity risk. To minimize and reduce the impact of the above risks the Company developed strategic and tactical decisions that exclude the occurrence of risk situations Main indicators of investment attractiveness of the project Страница 9

47 The main indicators characterizing investment attractiveness of the participation of potential investors in the capital of JSC "Buharagazpromstroy" include: - the Company is considered as one of the leading construction company JSC "Uzneftegazstroyinvest"; - long-term sustainable growth of the Company's key performance indicators; - the reputation of a stable and reliable partner for most of the large corporate and individual Customers; - organizational and legal form of the company, providing the most clearness and transparency for investors and shareholders; - credibility and high business reputation of the main shareholder of the Company JSC "Uzneftegazstroyinvest"; - the formed statutory fund of the JSC "Buharagazpromstroy" in the amount of ,0 thousand UZS. - the policy pursued by the company, as a priority, aimed at expanding the regional network and the scale of its activities; - a high level of financial stability and solvency of the company, confirmed by the financial indicators over the past 4 years, exceeding the set standard for more than 2 times Страница 10

48 2. Company Description 2.1. History of the company The Company "Buharagazpromstroy" was created in 1966 under the Ministry of Construction of the oil and gas industry. On the basis of the Company "Buharagazpromstroy" in January 1999 it was formed Joint Stock Company "Buharagazpromstroy" in accordance with the Presidential Decree of , PD "On the transformation of the National Corporation of Oil and Gas Industry" Uzbekneftegaz", the Cabinet of Ministers of the Republic of Uzbekistan from , 523 "On organization of the National Holding Company" Uzbekneftegaz" and the order of Territorial Administration of the State Property Committee of Bukhara region on April 22, In accordance with the Decree of the President of the Republic of Uzbekistan on August 21, 2006 PD-446 and the Order of the Cabinet of Ministers of 29 July 2007 for 339, JSC "Buharagazpromstroy" is designated as a a structural subdivision of the Company "Uzneftegazstroyinvest", under the National Holding Company "Uzbekneftegaz". In accordance with the Law of the Republic of Uzbekistan "On joint-stock companies and protection of shareholder rights" of May 6, 2014, 370, and the decision taken at an extraordinary general meeting of shareholders on January 10, 2015 and registered by the Charter in the new edition of the name of the company was renamed to Joint Stock Company "Buharagazpromstroy» («Buxorogazsanoatqurilish» joint-sock-company). Страница 11

49 In last 20 years, under the reform and modernization of the Company the following targeted works were carried out, which are characterized by the following steps: First, a new methodological basis, changes and additions to internal and founding documents, the development of new regulations governing labor relations, aimed at increasing the personal liability of employees and the strengthening of economic discipline were developed. There was an inventory of all the existing rules and optimization of their conditions. Second, the retraining program has been implemented, starting with senior executives and ending at the level of ordinary personnel to master modern approach of work and the market mechanisms for customer satisfaction. Thirdly, there have been gradual reform of the structure of sub structural enterprises, as the vast scope of work and services are provided by them. Fourth, a fundamentally new level of investment has been organized work aimed at the efficient use of available resources with a view to ensuring the principles of repayment, diversification and liquidity. Fifthly, measures on the expansion of services provided, as well as improving the quality of work were organized to ensure financial stability and solvency of the Company. In addition, measures were taken for the development, implementation and use of modern information technology to improve the quality of services Information about the owners (shareholders) of the Company - share of JSC "Uzneftegazstroyinvest" - 58,42 %, UZS, items of share; - share of other (7) legal entity- 3,46%, UZS, items of share; - share of individuals (3130 people) - 38,12%, UZS, items of share Страница 12

50 Structural organization of the company 2.4. Administration and management: The structure of the administration of JSC "Bukharagazpromstroy": Chairman of the board: Axmedov Asad Ahadovich, Tel: 0 (365) First deputy chairman of the board: Kamalov Vadim Islamovich, Tel: Deputy chairman of the board on production: Muratov Yusuf Gulyamovich, Tel: Страница 13

51 Staff: Category of personnel Quantity 1 Managers Specialists Technicians 51 4 Service personnel 73 5 Production personnel Average salary Average salary Category of personnel (month) (year) 1 Managers Specialists Technicians Service personnel Production personnel Страница 14

52 Indicators WF Average number of emp. Average salary (year) WF Average number of emp. Average salary (year) WF Average number of emp. Average salary (year) total managers specialists technicians production personnel service personnel The main financial indicators for the last 5 years - the amount of net profit in 2014 is amounted to mln UZS. Thereby continuing to ensure stable profitability of the Company; - in order to implement the principles of maintaining an adequate level of financial stability based on the dynamic growth of the share capital a new, methodical and methodological base of the Company relevant market competition is formed. Designation Including date by year Gross income (mln. UZS) The volume of construction activities on its own (mln UZS) Costs 1 sum income (tiyin) 95,2 97,6 97,8 96,2 96,4 Costs 1 sum of income from construction activities (tiyin) 94,5 97,7 98,0 94,9 95,2 Balance profit (mln. UZS) Net profit (mln. UZS) Cost-effective (%) 5,0 2,5 2,3 3,9 3,7 Number of total employees (people) Overall productivity per 1 employee in current prices (th , , , , ,9 UZS) Wages Fund - total (mln. UZS) , , , , ,4 The average salary of 1 employee (th. UZS) 506, 2 616,2 805, , ,4 Страница 15

53 3. Organization of the production 3.1. Machine and mechanisms Type is machine and mechanisms Quantity units Run-out up to 50% Run-out up to 80% Run-out up to 100% Machinery and equipment Vehicles Страница 16

54 Production assets, capacity, infrastructure The structure of the JSC "Bukharagazpromstroy" includes the following Unitary Enterprises: 1. Unitary Enterprise "Mahsus montaj va mehanizatsya" It is the general Enterprise of the Company specialized in the construction of main oil and gas pipelines, water pipelines and other facilities construction line. The Company carry outs installation, insulation and earthworks. In addition, it engaged in the operation of construction machines and mechanisms, loans mechanisms for commercial purposes. 2. Unitary Enterprise "Er ustiqurilish" The enterprise is a general contracting construction company of JSC Bukharagazpromstroy. It carries out civil works at the objects of housing, community facilities, industrial buildings and structures. The enterprise performs renovation and reconstruction of buildings and structures. 3. Unitary Enterprise "Qurilish va obodonlashtirish" The enterprise is a general contracting construction company of JSC Bukharagazpromstroy. It carries out civil works at the objects of housing, community facilities, industrial buildings and structures. 4. Unitary Enterprise "Qurilish konstruktsiyalari, taminot" The enterprise provides a complete set of facilities materials and technical resources for construction objects of JSC "Buharagazpromstroy". The enterprise has two factories which produce precast concrete structures, steel structures and wood products. Страница 17

55 5. Unitary Enterprise "Neftgazavtotranshizmat" The enterprise has transportation facilities and machine, mechanisms. It provides transport services for all unitary enterprises of JSC Bukharagazpromstroy. 6. Unitary Enterprise "Kogonelektromontajchi" It is a specialized enterprise, which offers electric-cabling and adjustment works for industrial constructions, civil constructions and reconstruction works. 7. Unitary Enterprise "Mahsuskimyohimoyaqurilish" It is a specialized enterprise, which provides anti-corrosion protection and isolation of steel structures, piping and equipments. 8. "Bukharaneftgazsuvqurilish" LLC It is an organization which carries out civil works at industrial facilities, housing facilities, community facilities, as well as specialized work on installation of process equipment, pipelines. 9. Unitary Enterprise " Tibbiysanqism" Medical sanitary organization conducting medical and preventive medical service for the workers of JSC Buharagazpromstroy. The need for new / additional production equipment The need for the procurement of fixed assets for modernization and development of production detail is provided in the business plan of the Company for each accounting period Raw materials base Components of the material and technical resources the company is able to engage on its own. Supply of precast concrete, inert materials, cement, valves, bituminous oil, roofing, bricks are received from factories located in the Republic of Uzbekistan, as well as the factories of the Company Impact on the environment The Company progresses project in accordance with the standards for maximum permissible emissions, which are developed and agreed with the State Committee for Nature Protection of the Republic of Uzbekistan. Exceeding the quota for released ingredients of technological processes is under the strict control. Страница 18

56 4. Description of works / services 4.1. Main types of works and services: The JSC "Buharagazpromstroy" is able to carry out all kinds of civil works, but mainly aims to maintain capital construction and repair facilities in the fuel and energy complex. In addition to that the Company performs commercial traffic services, launched production of reinforced concrete products, necessary for the conduction of construction Purpose and scope Construction is closely connected with all branches of the national economy, especially with industrial production. On the one hand, the increase in the scope of construction depends on the development of industries that provide them with the necessary tools and objects of labor (machines, materials, construction, electricity, etc.). On the another hand, performing for many sectors of the economy on the basis of construction contracts, construction companies are inextricably linked to the activities of Customers. Branches of the economy perform in relation to the construction, both as suppliers and as consumers of construction products Main characteristics The main aim of the company is to combine economic interests and intellectual potential, material and non-material, labor and financial resources of its shareholders for economic activities, aimed at making a profit, with the implementation of construction and installation work including the production of building materials for its needs. The main areas of activity are: - implementation of construction and assembling works on the domestic market; - production and sales of building materials and structures; - technical and technological re-equipment of the Company The main features, benefits of customers The main features characterizing the quality of services provided by JSC "Buharagazpromstroy" include: Страница 19

57 - high professional level of main personnel, both in terms of quality of the work and enter into contracts with customers; - the affordability of works and services of the Company, through the standardization of contract terms of service The presence or the need for licensing 4.6. The degree of readiness for release and sales JSC "Buharagazpromstroy" is a fully operational, with the presence of all the legal, human, material, technical, technological and methodological components for the full implementation of works and services. The executive board of the Company has a department working with customers (clients) which, if necessary, can in the shortest time to develop and introduce new kinds of production equipment and technology in the service sector. Страница 20

58 The need for certification, and certificates 4.8. The need for and the possibility of modernization of products (works / services) The possibility of modernization of products applicable to works and services exclusively in terms of the renegotiation of contracts of works and services as agreed with customers (clients). Exception is the contracts of works and services which are set by law. In some cases, the revision of the contracts terms requires a change in the previously deposited to the regulatory authority model rules for works and services Guarantee and service JSC "Buharagazpromstroy" guarantee its customers (clients) to provide works and services in accordance with the laws and treaty provisions. Compliance with the requirements of solvency, established by the legislation, is carried out by maintaining the relevant standards within the established parameters for which information is provided on a quarterly basis to the regulatory body. Страница 21

59 5. Market review 5.1. The general analysis of the market, works and services In previous years, the management of construction - installation work, the Company was focused on central funding, and the objects have been included in the address program of construction of oil and gas industry of Uzbekistan. The customer must timely approve the cost estimates, which clearly justified the strategy of the project and its cost-effectiveness and assure on time funding for the phased purchase of construction materials and equipment, payment of salary and other compensation for production costs of contractor. Along with the implementation of already signed contracts for 2015 for the construction of roads and reconstruction works for the industry objects, the Company is seeking the ability to perform work and services to customers and offer third-party services to the public in the form of consumer goods Market segmentation, analysis capacity, saturation, and dynamics of market segments Further development of the provision of works and services in the field of construction work is connected primarily, to an increase in the scope of services to both domestic and foreign enterprises, through the introduction of new techniques and technologies, the expansion of infrastructure services, including increasing the number of experts, etc. as well as advocacy work in all regions of the country in order to promote the benefits provided works and services Analysis of competitive environment JSC "Buharagazpromstroy" provides service works mainly for for enterprises of JSC "Uzneftegazstroyinvest" in the construction and repair of industrial and social facilities, construction of access roads and platforms to wells and compression stations foundations Marketing and sales strategy works and services The main point of dissemination of works and services is traditionally own advertising display. Despite the introduction of web sites and other means of advertising the sales indictors of JSC "Buharagazpromstroy" and other companies s remains very low. The implementation of the main scope work and services performed by legal entities of the Company. In the face of increasing competition, maintaining the strong position of JSC " Buharagazpromstroy " in the market, as well as the development of new segments requires an active marketing strategy development. The marketing strategy of the Страница 22

60 company conceived taking into account expected changes in the market and is focused on strengthening the Company's position in the market, to enhance the competitiveness of budget and rate, expansion of sub structural organizations and to improve the quality of services, the completion of the Company's professional personnel and attraction of young workers. The main objectives of the Company's marketing strategy is aimed at ensuring costeffective operation in a constantly changing environment, the competitiveness of the company in order to meet the interests of customers, maintaining the public image, the maximum satisfaction of the customer (client) in scope, structure and quality of service, which creates conditions for sustainable business relationship. Besides, the Company has set a goal to increase competitiveness, which is intended to increase promotional activities, the creation of additional operational units for customer service, the organization of an effective system of control, the introduction of new methods of work and information technology. The realization of the set tasks ad objectives is estimated quite realistic, given sufficient support from the founders and relatively high profitability of the company Marketing analysis of the strengths and weaknesses of the company Taking in to account, that it is increasing the planned construction of residential houses on mortgage lending in 2015 in the Republic, it is necessary to determine the form of financing the construction of residential buildings and the need for funding. From the customer must be timely approvals and cost estimates, which clearly justified the strategy of the project and its cost-effectiveness and timely funding for the phased purchase of construction materials and equipment, payment of salary and other compensation for production costs of contractor. Along with the implementation of already signed contracts for 2015 for the construction of roads and overhaul for the industry the Company is seeking the ability to perform work and services to customers and third-party services to the public in the form of consumer goods. Customer must timely approve and cost estimate, which clearly justify the strategy of the project and its cost-effectiveness and assure on time funding for the phased Страница 23

61 purchase of construction materials and equipment, payment of salary and other compensation for production costs of contractor. Along with the implementation of already signed contracts for 2015 for the construction of roads and reconstruction works for the industry objects, the Company is seeking the ability to perform work and services to customers and offer third-party services to the public in the form of consumer goods. Competitive advantages Presence of one of the biggest regional base of materials and sub structural organizations Qualified specialists in key positions of production section and management board Well developed and productive methods of work and services. Experience in the filed construction works and services in Uzbekistan. Wide range of services provided. High level of reliability and financial stability Individuality of provided works and service Long-term partnership Customer base Introduction of IT in function of the Company Capabilities Low level of foreign company operational in the market Increase in the level of average salary and standards of living in the country High demand for Company service due to active loans for vehicles by the government Competitive deficiency Low level of material base in regional sub structural organizations Lack of qualified specialists in sub structural organizations of the company and fluctuation movement of personnel Lack of working and service experience in international market. Decreasing liquidity of investments Risks Risk of functioning many foreign companies in the domestic market Increased inflation (growth in prices) Customer loose due to competitive environment Страница 24

62 6. Financing plan Indicators Investments requirement Forecast of production of goods Items of measurement Development plan for th. UZS th. UZS The prepositions used in the construction of financial models A number of indicators and the factors influencing the result, based on market conditions, expected demand, the expected price of services, the agreements reached with key customers (clients), planned marketing activities, etc, are used when constructing a financial model. The following groups of indicators are considered: - personnel (the need for personnel, labor costs, operation); - financial (need for financing sources and terms of attracting investment); - tax (tax rates and fees payable to the budgets of all levels); - marketing (cost of contracts and the forecast price changes); - investment (purchased equipment, purchase of equipment, capital costs for the construction of buildings and structures) and others. It takes into account the operating costs associated with the general economic activity of the Company, including the cost of depreciation and taxes. Operating expenses include: - variables (outsourcing); - overhead (salaries, maintenance costs of equipment and buildings and other fixed costs); - sales related to the implementation and promotion of insurance services; - administrative. The sources of attraction of investments, amounts and periods of attracting and refund are taken into account. Страница 25

63 Calculation is carried out operating profit, profit before tax, income taxes and net income. The information on the company in the corresponding period in the context of profitability and efficiency of operations, financial and property status of the company is analyzed Financing structure of the Company The financial resources of the company consist of a combination of its own funds and receivables from the outside, at the disposal of the company and designed to meet its financial obligations and finance of its current expenses. The availability of financial resources in the amounts required, as well as their effective use determines the financial strength of the company, the financial stability and solvency. The main source of financing is its own resources. Own funds of the Company formed by the internal (that profits remaining at the disposal of the company, depreciation) and external sources (this means additional contributions to the statutory fund, additional issue and sale of shares, other external sources of formation of own financial resources). Profit - is the main source of funds of the dynamically developing company. In the balance sheet it is: 1) explicit - as retained earnings; 2) in a veiled form - both created at the expense of profit funds and reserves. The amount of profit depends on many factors. The main factor among which is the ratio of income and expenses. Profit - is the main source of reserve capital (fund), which is intended to compensate for unexpected losses and potential losses of economic activity. The order of formation of the reserve capital is fixed in the regulations that govern the activities of the company as well as its statutes. Страница 26

64 The results of the financial model of the project Indicators Total profit Total expense Net profit The planned amount of profit of the Company can be adjusted as a result of: - increase of the statutory fund; - conservation refinancing rate; - maintaining the level of payments. The presented figures are current as of the date of submission. The probability of matching the results and the projected parameters will depend on the possible increase in the statutory fund of the Company, market conditions and changes in the current legislation. Therefore, the Company set the goal of expanding and profitability are modified. The actual development of the Company will follow the planned parameters Investment Analysis of the Project In recent years, a policy aimed at expanding the regional network is regarded as a priority for the Company. Since its inception, the Company is actively involved in shaping the development of the services market in the country and systematically expanding its activities. Progress indicators provide the financial stability and solvency of the Company at a high level. For the last 4 years the Company's solvency ratio exceeds the State Inspectorate of the Republic of Uzbekistan in the standard of times, and has a positive dynamics. It is certainly serves as a guarantee of the Companies performance assumed commitments to customers, partners and shareholders. Also, the guarantee reserves formed from profit provides the guarantee of the Company of obligations to partners and dynamic improvement in operating performance and its sub structural Страница 27

65 organizations. Finally, this assessment helps to expand financial opportunities and the growth of trust to the company among customers. In accordance with the planned business plan for years , estimates of the profitability of the authorized capital, return on assets and earnings per share are as follows: Indicators Profitability of the statutory stock (%) 4,58 4,81 5,05 5,31 5,57 Profit per share (UZS) 2 291, , , , , Analysis of sensitivity and scenario analysis During the business planning a sensitivity analysis is conducted, that is, the effect of changing the initial parameters of its final results is evaluated. The method of sensitivity analysis is to change the selected parameters within certain limits, provided that the other parameters remain unchanged. Through sensitivity analysis the resulting indicators for different values of given variables required for calculation can be evaluated. This type of analysis can help to determine the most critical variables that have the greatest affect on the feasibility and effectiveness of the business plan. As a fluctuating initials the following variables were taken: - volume of income; - expenses; - operating expenses or their components; -level of inflation;; - forming of reserves, etc. As the resulting indicators the following units were used: 1. Performance Indicators - index of profitability; - payback period; - cost-effective investments; 2. Annual figures Страница 28

66 - the balance sheet profit; - net profit; - surplus accumulated of real money. Absolute sensitivity analysis can help to determine the numerical deviation of resulting indicators under changing the values of the original variables. Scenario analysis of the project allows to evaluate the impact on the business plan for the possible simultaneous change of several variables by the probability of each scenario. Страница 29

67 7. The main risks analysis 7.1. Characteristics of main risks Corporate Risks This category of risk associated with the probability of deterioration in the financial condition of the Company because of adverse changes that may occur because of its activities, as well as affiliated organizations. The company has all the possibilities of direct influence on the probability of occurrence of these adverse changes, as well as possible to reduce the possible negative impact on its financial condition as a result of these changes. Risks of termination of license To date, the Company has a license for their activities. Licenses with specific deadlines. Activating in accordance with a license without violating licensing rules and regulations, the timely submission of reports to the relevant authorities allow the public to minimize these risks. Risks associated with changes in the value of the market and the cost of services This risk is generated by the results of the Company's operations, and causes the reduction of the amount of its profits. The causes of such risk may result from: reduction of potential of services, decline in demand for services and reduction of the Company's revenue in the form of income in terms of increasing competition and a number of other similar factors. As a result, the Company s financial condition could be at risk in decrease of dividends. These risks are assessed as moderate by the Company. Risks from inflation, devaluation and bank interest rates The Company is exposed to inflation risk because of its place surplus funds on a bank account. Currency risk That type of risk are considered as insignificant An analysis of the degree of influence on the economic efficiency of risk for different participants of the project and options to minimize these risks In order to minimize and reduce the impact of the above mentioned risks, the Company has developed a tactical decision to exclude the occurrence of risk situations. The Company can take the decision of denying the specific risks, both at the stage of preparation of the solution, and by refraining from activities in which the company is Страница 30

68 already involved if the actual risk of higher than expected. Also, the Company focuses on the following in order to minimize the risks: 1. Adoption of the risk - management decision to accept some (existing or planned) level of risk, without taking measures to reduce it, usually for technical or cost reasons. In case the risk of the need to take into account possible losses - the loss of a permanent nature, which can be easily foreseen; - Losses caused by the single, static risk. Typically, these risks are associated with substantial losses. The peculiarity of the fact that they do not lend themselves to statistical evaluation. 2. Reduction potential losses by prediction, and using more complete use of the available knowledge in the field Conclusions and recommendations Taking into account the positive prospects of the Company, the main advantages for strategic investors are: - the presence of the corporate management system, ensures the greatest transparency in the activities of the Company and assess the risks adequately; - factually established customer base of the Company; - Financial stability and solvency of the Company guaranteed by the mandatory requirements of the regulatory body confirmed the presence of high ranking; - high liquidity of the shares, which creates an opportunity for shareholders to freely dispose of them and leave the Company at its request; - earned reputation and image of the Company generated among customers. *Note: Tabular data and the data in the diagrams are presented according to the consolidated financial reporting. As well as overall data on staff takes in to account staff of the structural units of the company. Страница 31

69 8. Applications - Contact information: - Mailing adress: , Republic of Uzbekistan, Bukhara city, Str. Zulfiya, house 2 - Means of communication: tel: (0365) , fax: (0365) bgps@mail.ru - www. bgps.uz - Codes of the company: - OKPO (General Classification of Enterprises and Organizations): IIN (Tax identification Number): SOATO (Indications System for Administrative-Territorial Formations),: OKONKh (General Classifier of Economy Branches): SOOGU (Government designation system) FS (Federal Assembly) OPF (Legal form of Organization) Bank details: Bukhara branch of joint-stock commercial bank Uzpromstroybank - O\A , МFO Additional materials - A copy of the registration certificate; - Copy of the charter; - A copy of the license; - Scheme of the structure; - Driving the governance structure; - Main manager s resume; - Company photo. Страница 32

70 Ahmedov Asad Ahadovich Starting from May15, 2014: Acting Chairman of the board of the JSC Bukharagazpromstroy Date of birth: Place of birth: Bukhara region, Bukhara district Nationality: Uzbek Education: Higher industry Specialty: Knowledge of foreign languages: Party member: N\A Graduated from: 1982, Bukhara institute of food and consumer construction work Russian WORK EXPERIENCE worker at textile factory student at Bukhara institute of food and consumer industry Army service worker, manager, site director at construction enterprise #1 Bukharagazpromstroy director of # 1 st representativeof JSC Bukharagazpromstroy deputy of chairman of the board of JSC Bukharagazpromstroy deputy of Bukhara region Khakim on construction issues chief technician at JSC Bukharagazpromstroy chief engineer and head of the production department at JSC Bukharagazpromstroy acting first deputy of the chairman of the board of JSC Bukharagazpromstroy acting chairman of the board of JSC Bukharagazpromstroy acting deputy of the chairman of the board at JSC Uzneftegazstroyinvest head of the production and construction department at JSC Uzneftegazstroyinvest Страница 33

71 first deputy of the chairman of the board of the JSC Bukharagazpromstroy present. acting chairman of the board of the JSC Bukharagazpromstroy Страница 34

72 Kamalov Vadim Islamovich Starting from May 20, 2013: First deputy Chairman of the board of the JSC Bukharagazpromstroy Date of birth: Place of birth: Bukhara city Nationality: Party member: Uzbek N\A Education: Graduated from: Higher 1995, Bukhara institute of food and consumer industry Specialty: civil and industrial construction Knowledge of foreign languages: Russian WORK EXPERINCE worker at scientific organization of Bukhara Historical monuments safety Army service architect at culture center brick stacker at reclamation and construction union head of the planning and production department at reclamation and construction union chief manager at 7 th representative of JSC Bukharagazpromstroy leading engineer at UE Neftegazinshootquruvchi under the JSC Bukharagazpromstroy deputy director at UE Neftegazinshootquruvchi under the JSC Bukharagazpromstroy chief engineer at UE Neftegazinshootquruvchi under the JSC Bukharagazpromstroy acting first deputy chairman of the board of the JSC Bukharagazpromstroy present. - first deputy chairman of the board of the JSC Bukharagazpromstroy Страница 35

73 Muradov Yusuf Gulyamovich Starting from February 6, 2013: Deputy Chairman of the board of the JSC Bukharagazpromstroy - technical director Date of birth: Place of birth: Bukhara region, Bukhara city Nationality: Party member: Uzbek N\A Education: Graduated from: Higher 1980, Bukhara institute of food and consumer industry Specialty: Construction Agriculture Knowledge of foreign languages: Russian WORK EXPERIENCE mounter at Bukhara region road construction department Army service painter at construction installation department of construction company Uzbektamirgazqurilish technician master of safety laboratory at UE Viloyattamirqurilish chief engineer, technical engineer at UE Uzbekgazsanoatqurilish site director, chief manager, site labatory director at UE Uzbekgazsanoatqurilish production department head of UE Uzbekgazsanoatqurilish chief engineer at production and coordination department of UE Uzbekgazsanoatqurilish supplementary production director of farm under UE Uzbekgazsanoatqurilish chief engineer at production and coordination department at JSC Buhorogazsanoatqurilish chief engineer at 9 th representative company of JSC Bukharagazpromstroy deputy director, director of 2 nd representative office of JSC Bukharagazpromstroy deputy director of 9 th representative office of JSC Bukharagazpromstroy deputy director at 7 th representative office of JSC Страница 36

74 Bukharagazpromstroy geodesy control department head at JSC Bukharagazpromstroy deputy chairman of the board-technical manager of the JSC Bukharagazpromstroy acting chairman of the board of JSC Bukharagazpromstroy present deputy chairman of the board-technical manager of the JSC Bukharagazpromstroy Страница 37

75 Ergashev Oltibor Jumaboevich Starting from June 14, 2014: Deputy Chairman of the board of the JSC Bukharagazpromstroy on construction and production. Date of birth : Place of birth: Bukhara region, Olot district Nationality: Uzbek Education: Higher Specialty: Party member: N\A Knowledge of foreign languages: Russian Graduated from: 1985, Bukhara institute of food and consumer industry civil and industrial construction WORK EXPERIENCE concrete worker at 2 nd department of Buhorogradqurilish company practice master at regional study Centre of Bukhara city director at regional study Centre of Bukhara city site manager, manager, production department engineer at 20 th representative office of JSC Bukharagazpromstroy director of 5 th mobile construction enterprise of 20 th representative office of JSC Bukharagazpromstroy manager, accounted at 5 th mobile construction enterprise of 20 th representative office of JSC Bukharagazpromstroy deputy Khakim on construction issues of Bukhara region site manager at of 7 th representative office of JSC Bukharagazpromstroy deputy director of 7 th representative office of JSC Bukharagazpromstroy deputy director of UE Neftegazinshootquruvchi of JSC Bukharagazpromstroy chief engineer at UE Erustiqurilish of JSC Bukharagazpromstroy deputy chairman of the board-technical manager of the JSC Bukharagazpromstroy first deputy chairman of the board of the JSC Bukharagazpromstroy construction engineer at JV UZKORGAZCHEMISTRY 2014 present - Deputy Chairman of the board of the JSC Bukharagazpromstroy on construction and production. Страница 38

76 Xamroyev Umedjon Mubinovich Starting from October 21, 2013: Deputy Chairman of the board of the JSC Bukharagazpromstroy - commercial director Date of birth: Place of birth: Bukhara region, Jondor district Nationality: Uzbek Education: Higher Specialty: Party member: N\A Knowledge of foreign languages: Russian Graduated from: 2004, Bukhara State University economy WORK EXPERIENCE concretor, accountant at 3 rd representative office of JSC Bukharagazpromstroy accountant at UE Erustikurilish of JSC Bukharagazpromstroy chief accountant at UE Erustikurilish of JSC Bukharagazpromstroy acting chief accountant at UE Mahsusneftgazqurilish of JSC Bukharagazpromstroy chief accountant at UE Mahsusneftgazqurilish of JSC Bukharagazpromstroy chief accountant at UE Qurilishkonstrukstiyalarivataminot of JSC Bukharagazpromstroy acting deputy Chairman of the board of the JSC Bukharagazpromstroy - commercial director deputy Chairman of the board of the JSC Bukharagazpromstroy - commercial director Страница 39

77 Page1

78 LIST OF CONTENT 1 Abstract General information about the company Rational reasonability of the development of enterprise Financing requirement The share of the company delivered to the investors Marketing plan summary Key financial indicators forecast Forecast of revenues and earnings for Forecast of investments and income for Net profit forecast for Main benefits and risks of the project Main indicators of investment attractiveness of the project 9 2 Company Description History of the company Structural organization of the company Information about the owners (shareholders) of the Company Administration and management The main financial indicators for the Organization of the production Machine and mechanism Production assets, capacity, infrastructure JSC «Buharagazpromstroy» JSC «Mubarekneftegazmontaj» JSC «Yuggazstroy» JSC «Tashneftegazstroy» JSC «Kasgkadaryaneftegazpromstroy» Raw materials base Impact on the environment 18 4 Description of works / services Main types of works/services Purpose and scope The main characteristic The main features, benefits of customers The presence or the need for licensing The degree of readiness for release and sales The need for certification, and certificates 22 Page2

79 The need for and the possibility of modernization of products (works / services) Guarantee and service Integrated management system 23 5 Market review The general analysis of the market, works and services Market segmentation, analysis capacity, saturation, and dynamics of market segments Marketing and sales strategy works and services Marketing analysis of the strengths and weaknesses of the company 26 6 Financing plan Indicators of financial condition of the organization Conventions used in the construction of financial models The financing structure The results of the financial model of the project Investment Analysis Project Analysis of sensitivity and scenario analysis The main risks analysis Conclusions and recommendations 34 7 Application 35 Page3

80 INVESTMENT OFFER 1. Abstract 1.1. General information about the company Joint Stock Company "Uzneftegazstroyinvest was established in accordance with the Decree of the President of the Republic of Uzbekistan dated from August 21, 2006 PD-446, orders of National Holding Company "Uzbekneftegaz" dated from October 18, , and on November 21, in the form of open joint stock company. In accordance with the Decree of the President of the Republic of Uzbekistan dated from August 21, 2006 PD-446 and the Order of the Cabinet of Ministers from July 29, P, The Joint Stock Company "Uzneftegazstroyinvest" considered as a substructure organization of the National Holding Company "Uzbekneftegaz". JSC "Uzneftegazstroyinvest" is a single, has no compatible in Central Asia, the company capable of providing a set of works related to the construction of main pipelines for oil, gas, petroleum and water supply, together with all relevant industrial and civil construction Rational reasonability of the development of enterprise The Company strengthens its competitive advantage by expanding the scope of services and the introduction of new services. The Company is committed to the full and timely implementation of the commitments under the contracts. That is to prove a positive assessment of the organization, and its place among the companies in the oil and gas industry, and benefits to expand financial opportunities and the growth of confidence in the company among the "Customers." 1.3. Financing requirement The need to attract additional financial resources is a necessity for the production costs of the following main objectives: Page4

81 - renewal the material and technical base of the Company, including the purchase of new technology and equipments, in accordance with the Resolution of the Cabinet of Ministers form March 28, «On measures for the effective management of State Property"; - development and introduction of new technologies and equipment; - growth in the provision of works and services; - acquisition of business equipment to the tasks defined by the Decree of the President of the Republic of Uzbekistan PD-2158 "On measures of further implementation of information and communication technologies in the real economy" 1.4. The share of the company delivered to the investors Today the Company is the authorized fund is UZS. Statutory fund of the Company is divided into 342,088 shares with a par value of UZS Shareholder Items of shares Share of the shareholder Thousand UZS 1 NHC "Uzbekneftegaz" TOTAL % In accordance with Annex 1 to the Decree of the President of the Republic of Uzbekistan dated from April 28, 2015 PD-2340 "On measures to increase the proportion of the value of private property and the economy,", it is provided for implementation of a strategic foreign investor share of the JSC "Uzneftegazstroyinvest" in the amount of 49%. Page5

82 The distribution the statutory fund of JSC "Uzneftegazstroyinvest" after the implementation of the share in accordance with Presidential Decree dated from April 28, 2015, PD-2340 will appear in the following order: Shareholder Items of shares Share of the shareholder Thousand UZS % 1 NHC "Uzbekneftegaz" Share of the strategic foreign investor TOTAL Page6

83 Marketing plan summary An active marketing strategy is required in the appearance of increasing competition and the development of new segments. The marketing strategy of the company conceived taking into account expected changes in the market and is focused on strengthening the Company's position in the market, to increase the competitiveness of the estimates, the expansion of the network of services and improve the quality, renewal of the staff with attraction of the professionals and young specialists. The main objectives of the Company's marketing strategy is aimed at ensuring costeffective operation in a constantly changing environment, the competitiveness of the Company in order to meet the interests of customers, maintaining the public image, for maximum customer satisfaction in terms of volume, structure and quality of service, which creates conditions for stability of the business relationship. Besides, the Company has set a goal to increase competitiveness, which is intended to increase promotional activities, the creation of additional enterprises to provide new types of services, the organization of an effective system of control and management, the introduction of new information technologies. The implementation of the above mentioned tasks is estimated to be realistic, given sufficient support from the founder and relatively high profitability of the Company Key financial indicators forecast Forecast of revenues and earnings for Taking into consideration of development works and services for the past 5 years and taking into account strategic objectives assigned to the Company's, the total revenue in 2020 is projected at the rate of mln. UZS or 1,2 times more than in And over the past 5 years and taking into account the tasks set to the Company, the total projected profits in 2020 of $ mln. UZS or 1,5 times more than in Page7

84 Indicators Total income (mln. UZS) including income from construction activities The total costs (mln. UZS) Direct production costs Period expenses Income from financial operations Profit before tax Income tax and tax on profits Net income (mln. UZS) Forecast of investments and income for The investments of the Company in 2020 will be amounted mln. UZS The average annual income to invest in period of will estimate 20%. Provision is further improving and intensifying investment activities will be throw the following: - placement of funds from the sale of shares of JSC "Kashkadaryaneftegazpromstroy" in financial instruments large and strong domestic banks; - growth in scope of works and services; - enhance monitoring and analysis of the Customers, to which the company carried out works and services Net profit forecast for The projected net profit for the will increase by 1,5 times from million UZS in 2014 up to million UZS in Page8

85 Main benefits and risks of the project Taking into view of the positive prospects of the Company's main advantages for strategic investors are: - the corporate management system ensures the greatest transparency of the Company's operations and to adequately assess the risks; - the presence of the Company's divisions in all regions of the country; - historically formed a strategic base of the Company; - the financial stability and solvency of the Company is guaranteed by the mandatory requirements of the Regulatory body and confirmed by the presence of high ranking and the highest category of issuers; - high liquidity of the shares, which creates an opportunity for shareholders to freely dispose them and leave the Company at its request; - deserved reputation and image of the Company generated among the Customers. However, the major risk factors for the project, according to the Company are as follows: Corporate risk; Risks of termination of the license; Risks related to changes in the value of the scope of work and cost of services; Risks from inflation; Social risks; Liquidity risk. To minimize and reduce the impact of the above risks the Company developed strategic and tactical decisions that exclude the occurrence of risk situations Main indicators of investment attractiveness of the project The main indicators characterizing investment attractiveness of the participation of potential investors in the capital of JSC "Uznefegazstroyinvest" include: Page9

86 - The Company is a single, has no compatible in Central Asia, the company capable of providing a set of works related to the construction of main pipelines for oil, gas, petroleum and water supply, together with all relevant industrial and civil construction. - long-term sustainable growth of the Company's key performance indicators; - the reputation of a stable and reliable partner for most of the large corporate and individual Customers; - organizational and legal form of the company, providing the most clearness and transparency for investors and shareholders; - credibility and high business reputation of the main shareholder of the Company NHC "Uzbekneftegaz"; - the formed statutory fund of the JSC "Uzneftegazstroyinvest" in the amount of ,0 thousand UZS. - the policy pursued by the company, as a priority, aimed at expanding the regional network and the scale of its activities; - a high level of financial stability and solvency of the company, confirmed by the financial indicators over the past 4 years, exceeding the set standard for more than 2 times. Page10

87 2. Company Description 2.1. History of the company Joint Stock Company "Uzneftegazstroyinvest was established in accordance with the Decree of the President of the Republic of Uzbekistan dated from August 21, 2006 PD-446, orders of National Holding Company "Uzbekneftegaz" dated from October 18, , and on November 21, in the form of open joint stock company. In accordance with the Decree of the President of the Republic of Uzbekistan dated from August 21, 2006 PD-446 and the Order of the Cabinet of Ministers from July 29, P, The Joint Stock Company "Uzneftegazstroyinvest" considered as a substructure organization of the National Holding Company "Uzbekneftegaz". In recent years, under the reform and modernization of the Company the following targeted works were carried out, which are characterized by the following steps: First, a new methodological basis, changes and additions to internal and founding documents, the development of new regulations governing labor relations, aimed at increasing the personal liability of employees and the strengthening of economic discipline were developed. There was an inventory of all the existing rules and optimization of their conditions. Page11

88 Second, the retraining program has been implemented, starting with senior executives and ending at the level of ordinary personnel to master modern approach of work and the market mechanisms for customer satisfaction. Thirdly, there have been gradual reform of the structure of sub structural companies, as the vast scope of work and services are provided by them. Fourth, a fundamentally new level of investment has been organized work aimed at the efficient use of available resources with a view to ensuring the principles of repayment, diversification and liquidity. Fifthly, measures on the expansion of services provided, as well as improving the quality of work were organized to ensure financial stability and solvency of the Company. In addition, measures were taken for the development, implementation and use of modern information technology to improve the quality of services Structural organization of the company Page12

89 Information about the owners (shareholders) of the Company - the share of NHC Uzbekneftegaz - 100%, UZS, items of shares Administration and management: The structure of the administration of JSC "Uzneftegazstroyinvest": Chairman of the board: Alimov Avaz Abrorovich, Tel: 0 (371) Deputy Chairman on industrial construction: Ruzmetov Kabul Salaevich, tel: 0 (371) Deputy Chairman - Chief Manager: Najmiddinov Shukhrat Amonovich, Tel: 0 (371) Page13

90 Staff: Category of personnel Quantity 1 Managers Specialists Technicians Service personnel Production personnel Average salary Average salary Category of personnel (month) (year) 1 Managers Specialists Technicians Service personnel Production personnel Indicators WF Average number of emp. Average salary (year) WF Average number of emp. Average salary (year) WF Average number of emp. Average salary (year) total managers specialists technicians production personnel service personnel Page14

91 The main financial indicators for the Denomination including Gross income (mln. UZS) The volume of construction activities on its own (mln. UZS) Expenses on 1 UZS of income construction activities (tiyin) 96,2 97,0 95,7 95,3 96,5 Balance profit (mln. UZS) 95,9 97,2 96,7 96,6 95,4 Net income (mln. UZS) Cost-effective (%) The number of total staff (person) Overall productivity per 1 employee in current prices (th. UZS) Wages fund - total (mln. UZS) The average salary of 1 employee (th. UZS) the amount of net profit in 2014 is amounted to mln UZS. Thereby continuing to ensure stable profitability of the Company; - it is formed a new, methodical and methodological base of the Company relevant market competition, in order to implement the principles of maintaining an adequate level of financial stability based on the dynamic growth of the share capital. Indicators measure Scope of production of goods and provided service Net profit from production of goods and provides service mln. UZS mln. UZS Profit before tax mln.uzs Expenses mln.. UZS Net profit mln. UZS Value of assets mln. UZS Page15

92 3. Organization of the production 3.1. Machine and mechanisms Type is machine and mechanisms Quantity units Run-out up to 50% Run-out up to 80% Run-out up to 100% Machinery and equipment Vehicles Production assets, capacity, infrastructure The structure of JSC "Uzneftegazstroyinvest" consist of the following sub structural companies: JSC «Bukharagazpromstroy» The main activity of JSC "Bukharagazpromstroy" is the construction and commissioning of the production capacity of the fuel and energy complex production facilities and civil construction. Page16

93 In addition to performing contractual construction works, the Company manufactures products for industrial purposes (assembled reinforced concrete construction, concrete, metal, wood products, asphalt, etc..), Produces consumer goods, providing commercial services JSC «Mubarekneftegazmontaj» JSC "Mubarekneftegazmontaj" is an organization that can carry out complex work associated with the construction of main pipelines for oil, gas, oil and water supply, together with all relevant industrial and civil custom JSC «Yuggasstroy» JSC "Yuggazstroy" is the largest general contractor of JSC "Uzneftegazstroyinvest".The main activity of the Company is major construction and repair of main gas pipelines, construction of compressor stations and gas condensate fields, commissioning of production facilities of fuel and energy complex, social facilities, objects of public education and health JSC «Tashneftegasstroy» JSC "Tashneftegazstroy" performs construction and specialized work for industrial purposes, including the production of consumer goods and commercial services to the population, the provision of transport services and other activities permitted by applicable law, to improve the financial situation of the production sector and social service for workers and shareholders of the Company JSC «Kashkadaryaneftegaspromstroy» Activity of JSC "Kashkadaryaneftegaspromstroy" - is the construction of oil and gas industry, oil refining, commissioning of production facilities of fuel and energy complex, construction of social facilities. In addition to construction, the Company manufactures products for industrial purposes, produces consumer goods, providing commercial services. Page17

94 The necessity of new / additional production equipment The need for the acquisition of fixed assets for modernization and development of production is detailed in the business plan of the Company for each accounting period Raw materials base Components of the material and technical resources the company is able to engage on its own. Supply of precast concrete, inert materials, cement, valves, bituminous oil, roofing, bricks are received from factories located in the Republic of Uzbekistan, as well as the factories of the JSC Uzbekneftegasstroyinvest and its sub structural companies Impact on the environment The Company progresses project in accordance with the standards for maximum permissible emissions, which are developed and agreed with the State Committee for Nature Protection of the Republic of Uzbekistan. Page18

95 4. Description of works / services 4.1. Main types of works and services: In accordance with the Decree of the President of the Republic of Uzbekistan dated August 21, 2006 PD-446 JSC "Uzneftegazstroyinvest" is the executive body, which remains controlling stock of shares in five construction joint-stock companies - subsidiaries of the company. Construction units of JSC "Uzneftegazstroyinvest" able to carry out all kinds of civil works, but mainly aims to maintain capital construction and repair facilities in the fuel and energy complex. In addition to that the Company performs commercial traffic services, launched production of concrete products, necessary for the conduction of construction Purpose and scope Construction is closely connected with all branches of the national economy, especially with industrial production. On the one hand, the increase in the scope of construction depends on the development of industries that provide them with the necessary tools and objects of labor (machines, materials, construction, electricity, etc.). On the another hand, performing for many sectors of the economy on the basis of Page19

96 construction contracts, construction companies are inextricably linked to the activities of Customers. Branches of the economy perform in relation to the construction, both as suppliers and as consumers of construction products Main characteristics The main aim of the company is to combine economic interests and intellectual potential, material and non-material, labor and financial resources of its shareholders for economic activities, aimed at making a profit, with the implementation of construction and installation work including the production of building materials for its needs. The main areas of activity are: - implementation of construction and assembling works on the domestic market; - production and sales of building materials and structures; - technical and technological re-equipment of the Company The main features, benefits of customers The main features characterizing the quality of services provided by JSC "Uzneftegazstroyinvest" include: - high professional level of main personnel, both in terms of quality of the work and enter into contracts with customers; Page20

97 - the affordability of works and services of the Company, through the standardization of contract terms of service The presence or the need for licensing 4.6. The degree of readiness for release and sales JSC "Uzneftegazstroyinvest" is a fully operational, with the presence of all the legal, human, material, technical, technological and methodological components for the full implementation of works and services. The executive board of the Company has a department working with customers (clients) which, if necessary, can in the shortest time to develop and introduce new kinds of production equipment and technology in the service sector. Page21

98 The need for certification, and certificates 4.8. The need for and the possibility of modernization of products (works / services) The possibility of modernization of products applicable to works and services exclusively in terms of the renegotiation of contracts of works and services as agreed with customers (clients). Exception is the contracts of works and services which are set by law. In some cases, the revision of the contracts terms requires a change in the previously deposited to the regulatory authority model rules for works and services. Page22

99 Guarantee and service JSC "Uzneftegazstroyinvest" guarantees its customers (clients) to provide works and services in accordance with the laws and treaty provisions. Compliance with the requirements of solvency, established by the legislation, is carried out by maintaining the relevant standards within the established parameters for which information is provided on a quarterly basis to the regulatory body. JSC "Uzneftegazstroyinvest" guarantee its Customers (clients) the provision of services in accordance with the laws, legal norms and contract provisions Integrated management system: Page23

100 Page24

101 5. Market review 5.1. The general analysis of the market, works and services In previous years, the management of construction - installation work, the Company was focused on central funding, and the objects have been included in the address program of construction of oil and gas industry of Uzbekistan. The customer must timely approve the cost estimates, which clearly justified the strategy of the project and its cost-effectiveness and assure on time funding for the phased purchase of construction materials and equipment, payment of salary and other compensation for production costs of contractor. Along with the implementation of already signed contracts for 2015 for the construction of roads and reconstruction works for the industry objects, the Company is seeking the ability to perform work and services to customers and offer third-party services to the public in the form of consumer goods Market segmentation, analysis capacity, saturation, and dynamics of market segments Further development of the provision of works and services in the field of construction work is connected primarily, to an increase in the scope of services to both domestic and foreign enterprises, through the introduction of new techniques and technologies, the expansion of infrastructure services, including increasing the number of experts, etc. as well as advocacy work in all regions of the country in order to promote the benefits provided works and services Marketing and sales strategy works and services The main point of dissemination of works and services is traditionally own advertising display. The implementation of the main scope work and services performed by legal entities of the Company. In the face of increasing competition, maintaining the strong position of JSC "Uzneftegazstroyinvest" in the market, as well as the development of new segments Page25

102 requires an active marketing strategy development. The marketing strategy of the company conceived taking into account expected changes in the market and is focused on strengthening the Company's position in the market, to enhance the competitiveness of budget and rate, expansion of sub structural organizations and to improve the quality of services, the completion of the Company's professional personnel and attraction of young workers. The main objectives of the Company's marketing strategy is aimed at ensuring costeffective operation in a constantly changing environment, the competitiveness of the company in order to meet the interests of customers, maintaining the public image, the maximum satisfaction of the customer (client) in scope, structure and quality of service, which creates conditions for sustainable business relationship. Besides, the Company has set a goal to increase competitiveness, which is intended to increase promotional activities, the creation of additional operational units for customer service, the organization of an effective system of control, the introduction of new methods of work and information technology. The realization of the set tasks ad objectives is estimated quite realistic, given sufficient support from the founders and relatively high profitability of the company Marketing analysis of the strengths and weaknesses of the company Taking in to account, that it is increasing the planned construction of residential houses on mortgage lending in 2015 in the Republic, it is necessary to determine the form of financing the construction of residential buildings and the need for funding. From the customer must be timely approvals and cost estimates, which clearly justified the strategy of the project and its cost-effectiveness and timely funding for the phased purchase of construction materials and equipment, payment of salary and other compensation for production costs of contractor. Along with the implementation of already signed contracts for 2015 for the construction of roads and overhaul for the industry the Company is seeking the ability to perform work and services to customers and third-party services to the public in the form of consumer goods. Page26

103 Customer must timely approve and cost estimate, which clearly justify the strategy of the project and its cost-effectiveness and assure on time funding for the phased purchase of construction materials and equipment, payment of salary and other compensation for production costs of contractor. Along with the implementation of already signed contracts for 2015 for the construction of roads and reconstruction works for the industry objects, the Company is seeking the ability to perform work and services to customers and offer third-party services to the public in the form of consumer goods. Competitive advantages Presence of one of the biggest regional base of materials and sub structural organizations Qualified specialists in key positions of production section and management board Well developed and productive methods of work and services. Experience in the filed construction works and services in Uzbekistan. Wide range of services provided. High level of reliability and financial stability Individuality of provided works and service Long-term partnership Customer base Introduction of IT in function of the Company Capabilities Low level of foreign company operational in the market Increase in the level of average salary and standards of living in the country High demand for Company service due to active loans for vehicles by the government Competitive deficiency Low level of material base in regional sub structural organizations Lack of qualified specialists in sub structural organizations of the company and fluctuation movement of personnel Lack of working and service experience in international market. Decreasing liquidity of investments Risks Risk of functioning many foreign companies in the domestic market Increased inflation (growth in prices) Customer loose due to competitive environment Page27

104 6. Financing plan 6.1. Indicators of financial condition of the organization FINANCIAL PERFORMANCE FINANCIAL PERFORMANCE Page28

105 Financing structure of the Company The financial resources of the company consist of a combination of its own funds and receivables from the outside, at the disposal of the company and designed to meet its financial obligations and finance of its current expenses. The availability of financial resources in the amounts required, as well as their effective use determines the financial strength of the company, the financial stability and solvency. The main source of financing is its own resources. Own funds of the Company formed by the internal (that profits remaining at the disposal of the company, depreciation) and external sources (this means additional contributions to the statutory fund, additional issue and sale of shares, other external sources of formation of own financial resources). Profit - is the main source of funds of the dynamically developing company. In the balance sheet it is: 1) explicit - as retained earnings; 2) in a veiled form - both created at the expense of profit funds and reserves. The amount of profit depends on many factors. The main factor among which is the ratio of income and expenses. Profit - is the main source of reserve capital (fund), which is intended to compensate for unexpected losses and potential losses of economic activity. The order of formation of the reserve capital is fixed in the regulations that govern the activities of the company as well as its statutes The prepositions used in the construction of financial models A number of indicators and the factors influencing the result, based on market conditions, expected demand, the expected price of services, the agreements reached with key customers (clients), planned marketing activities, etc, are used when constructing a financial model. The following groups of indicators are considered: Page29

106 - personnel (the need for personnel, labor costs, operation); - financial (need for financing sources and terms of attracting investment); - tax (tax rates and fees payable to the budgets of all levels); - marketing (cost of contracts and the forecast price changes); - investment (purchased equipment, purchase of equipment, capital costs for the construction of buildings and structures) and others. It takes into account the operating costs associated with the general economic activity of the Company, including the cost of depreciation and taxes. Operating expenses include: - variables (outsourcing); - overhead (salaries, maintenance costs of equipment and buildings and other fixed costs); - sales related to the implementation and promotion of insurance services; - administrative. The sources of attraction of investments, amounts and periods of attracting and refund are taken into account. Calculation is carried out operating profit, profit before tax, income taxes and net income. The information on the company in the corresponding period in the context of profitability and efficiency of operations, financial and property status of the company is analyzed The results of the financial model of the project Indicators Total profit Total expense Net profit Page30

107 The planned amount of profit of the Company can be adjusted as a result of: - increase of the statutory fund; - conservation refinancing rate; - maintaining the level of payments. The presented figures are current as of the date of submission. The probability of matching the results and the projected parameters will depend on the possible increase in the statutory fund of the Company, market conditions and changes in the current legislation. Therefore, the Company set the goal of expanding and profitability are modified. The actual development of the Company will follow the planned parameters Investment Analysis Project In recent years, a policy aimed at expanding the regional network is regarded as a priority for the Company. Since its inception, the Company is actively involved in shaping the development of the services market in the country and systematically expanding its activities. Progress indicators provide the financial stability and solvency of the Company at a high level. For the last 4 years the Company's solvency ratio exceeds the State Inspectorate of the Republic of Uzbekistan in the standard of times, and has a positive dynamics. It is certainly serves as a guarantee of the Companies performance assumed commitments to customers, partners and shareholders. Also, the guarantee reserves formed from profit provides the guarantee of the Company of obligations to partners and dynamic improvement in operating performance and its sub structural organizations. Finally, this assessment helps to expand financial opportunities and the growth of trust to the company among customers. Indicators Profitability of the stationery stock (%) 8,27 8,47 8,59 8,73 9,42 9,53 Profit per share (UZS) , , , , , ,2 Page31

108 Analysis of sensitivity and scenario analysis During the business planning a sensitivity analysis is conducted, that is, the effect of changing the initial parameters of its final results is evaluated. The method of sensitivity analysis is to change the selected parameters within certain limits, provided that the other parameters remain unchanged. Through sensitivity analysis the resulting indicators for different values of given variables required for calculation can be evaluated. This type of analysis can help to determine the most critical variables that have the greatest affect on the feasibility and effectiveness of the business plan. As a fluctuating initials the following variables were taken: - volume of income; - expenses; - operating expenses or their components; -level of inflation;; - forming of reserves, etc. As the resulting indicators the following units were used: 1. Performance Indicators - index of profitability; - payback period; - cost-effective investments; 2. Annual figures - the balance sheet profit; - net profit; - surplus accumulated of real money. Absolute sensitivity analysis can help to determine the numerical deviation of resulting indicators under changing the values of the original variables. Page32

109 The main risks analysis Characteristics of main risks Corporate Risks This category of risk associated with the probability of deterioration in the financial condition of the Company because of adverse changes that may occur because of its activities, as well as affiliated organizations. The company has all the possibilities of direct influence on the probability of occurrence of these adverse changes, as well as possible to reduce the possible negative impact on its financial condition as a result of these changes. Risks associated with changes in the value of the market and the cost of services This risk is generated by the results of the Company's operations, and causes the reduction of the amount of its profits. The causes of such risk may result from: reduction of potential of services, decline in demand for services and reduction of the Company's revenue in the form of income in terms of increasing competition and a number of other similar factors. As a result, the Company s financial condition could be at risk in decrease of dividends. These risks are assessed as moderate by the Company. Risks from inflation, devaluation and bank interest rates The Company is exposed to inflation risk because of its place surplus funds on a bank account. Currency risk That type of risk are considered as insignificant. An analysis of the degree of influence on the economic efficiency of risk for different participants of the project and options to minimize these risks In order to minimize and reduce the impact of the above mentioned risks, the Company has developed a tactical decision to exclude the occurrence of risk situations. The Company can take the decision of denying the specific risks, both at the stage of preparation of the solution, and by refraining from activities in which the company is Page33

110 already involved if the actual risk of higher than expected. Also, the Company focuses on the following in order to minimize the risks: 1. Adoption of the risk - management decision to accept some (existing or planned) level of risk, without taking measures to reduce it, usually for technical or cost reasons. In this case several losses should be taken into account: - the permanent losses, which can be easily foreseen; - losses caused by the single, static risk. Typically, these risks are associated with substantial losses. The peculiarity of these is that they do not lend themselves to statistical evaluation. 2. Reduction potential losses by prediction, and using more complete use of the available knowledge in the field Conclusions and recommendations Taking into account the positive prospects of the Company, the main advantages for strategic investors are: - the presence of the corporate management system, ensures the greatest transparency in the activities of the Company and assess the risks adequately; - factually established customer base of the Company; -Financial stability and solvency of the Company guaranteed by the mandatory requirements of the regulatory body confirmed the presence of high ranking; - high liquidity of the shares, which creates an opportunity for shareholders to freely dispose of them and leave the Company at its request; - earned reputation and image of the Company generated among customers. *Note: Tabular data and the data in the diagrams are presented according to the consolidated financial reporting. As well as overall data on staff takes in to account staff of the structural units of the company. Page34

111 7. Applications - Contact information: - Mailing adress: , Republic of Uzbekistan, Tashkent city, Chilanzar district, Mukimiy Str., Means of communication: tel: (0371) , fax: (0371) stroyinvest@uzngsi.uz Codes of the company: - OKPO (General Classification of Enterprises and Organizations) IIN (Tax identification number) : SOOGU (Government designation system) OKONKh (General Classifier of Economy Branches) SOATO (Indications System for Administrative-Territorial Formations), FS (Federal Assembly) OPF (Legal form of Organization)153 - Bank details: Chilonzor branch of a private joint-stock commercial bank "ORIENT FINANCE." - O\A , MFO Additional materials - A copy of the registration certificate; - Copy of the charter; - A copy of the license; - Scheme of the structure; - Driving the governance structure; - Main manager s resume; - Company photo. Page35

112 Alimov Avaz Abrorovich Starting from January 8, 2015: Chairman of the board of JSC Uzneftegazstroyinvest Date of birth: Place of birth: Bukhara region, Kogon city Nationality: Party member: Uzbek N/A Education: Graduated from: Higher 1991 Bukhara institute of food and consumer industry Speciality: civil and industrial construction Knowledge of foreign languages: Russian State awards (which): 1994 Certificate of Honour of the Republic of Uzbekistan WORK EXPERIENCE: Mechanic at construction department #5 under Bukharagaspromstroy Deputy of production-construction department at construction department #5 under Bukharagaspromstroy Chief engineer, deputy of director at construction department # 9 under Mubarkneftegazmontaj Chief engineer of the 2 nd reperesentative under Mubarkneftegazmontaj General director of UE Trubodetal under Mubarkneftegazmontaj Industrial construction deputy of the director general of JSC Uzbekneftegazstroyinvest Industrial construction and complex construction deputy of the director general of JSC Uzbekneftegazstroyinvest Acting general director of the JSC Uzbekneftegazstroyinvest General director of the JSC Uzbekneftegazstroyinvest present - Chairman of the board of the JSC Uzbekneftegazstroyinvest Page36

113 Ruzmetov Kabul Sallayevich Starting from January 8, 2015: Deputy of chairman of the board of JSC Uzneftegazstroyinvest Date of birth: Place of birth: Khorezm region, Khiva city Nationality: Party member: Uzbek N/A Education: Graduated from: Higher 1984 Samarkand institute of architecture and construction Speciality: civil and industrial construction Knowledge of foreign languages: Russian WORK EXPERIENCE brick stacker at construction department of Cotton Ministry lecture listener at Samarkand institute of architecture and construction student at Samarkand institute of architecture and construction constructer at mobile construction department under Khorezm region Cotton ministry constructer at construction department #41 Khorezm region Cotton ministry Manager and construction expert at mobile contruction department under Company Sredazspewstroytransgas head of the construction site #7 under Concrete plant, JSC Yuggasstroy head of the road construction department, JSC Yuggasstroy director of UE Janubgazyulquruvchi, JSC Yuggasstroy acting deputy General director of JSC Uzneftegazstroyinvest deputy General director of JSC Uzneftegazstroyinvest present deputy of chairman of board of JSC Uzneftegazstroyinvest Page37

114 Najmiddinov Shuhrat Amonovich Starting from January 8, 2015: Deputy of chairman of the board-chief manager of JSC Uzneftegazstroyinvest Date of birth: Place of birth: Buhkara region, Gijduvan city Nationality: Party member: Uzbek Member of Uzbekistan National Democratic Party Education: Graduated from: Higher 1985 Bukhara institute of food and consumer industry Speciality: civil and industrial construction, finance Knowledge of foreign languages: Russian State awards (which): 2002 Shukrat medal WORK EXPERIENCE technician, drawing constructor at Uzgipproloyihaqurilish army service technician, at Uzgipproloyihaqurilish engineer, chief engineer, head of the construction department at Bukhara executive office of construction head of the construction department of civil construction at Bukhara executive office of construction head of the construction department at Bukhara executive office of construction deputy Bukhara region Khakim on issues of construction of roads and civil construction deputy of director at UE Qorovulbozormahsusmontaj, JSC Mubarekneftegasmontaj deputy of chairman of the board of JSC Mubarekneftegasmontaj head of the capital construction department at NHC Uzbekneftegaz chief manager and deputy of general director on projects at JSC Uzneftegazstroyinvest chief manager and deputy of general director on civil construction at JSC Uzneftegazstroyinvest present - deputy od the chairman of the board and chief manager at at JSC Uzneftegazstroyinvest. Page38

115 Страница 1

116 LIST OF CONTENT 1 Abstract General information about the company Rational reasonability of the development of enterprise Financing requirement The share of the company delivered to the investors Marketing plan summary Key financial indicators forecast Forecast of revenues and earnings for Forecast of revenues and earnings for Net profit forecast for Main benefits and risks of the project Main indicators of investment attractiveness of the project 10 2 Company Description History of the company Information about the owners (shareholders) of the Company Structural organization of the company Administration and management The main financial indicators for the last 5 years 15 3 Organization of the production Machine and mechanism Production assets, capacity, infrastructure Raw materials base Impact on the environment 19 4 Description of works / services Main types of works/services Purpose and scope The main characteristics The main features, benefits of customers 22 Страница 2

117 The presence or the need for licensing The degree of readiness for release and sales The need for certification, and certificates The need for and the possibility of modernization of products (works / services) Guarantee and service 24 5 Market review The general analysis of the market, works and services Market segmentation, analysis capacity, saturation, and dynamics of market segments Analysis of the competitive environment Marketing and sales strategy works and services Marketing analysis of the strengths and weaknesses of the company 27 6 Financing plan Conventions used in the construction of financial models The financing structure The results of the financial model of the project Investment Analysis Project Analysis of sensitivity and scenario analysis 32 7 The main risks analysis Characteristics of the main risks An analysis of the degree of influence on the economic efficiency of risk for different participants of the project and options to 35 minimize these risks 7.3. Conclusions and recommendations 35 8 Contact information 36 Страница 3

118 INVESTMENT OFFER 1. Abstract 1.1. General information about the Company Joint Stock Company "Mubarekneftegazmontaj" was created in accordance with the Order of the State Committee for State Property Management and Entrepreneurship Support of the Republic of Uzbekistan 639-dated from , in the form of open joint stock company. JSC "Mubarekneftegazmontaj" (hereinafter the "the Company") is a single, incomparable in Central Asia, an organization capable of providing a set of works related to the construction of main pipelines for oil, gas, oil and water supply, together with all corresponding objects of industrial and civil construction Rational reasonability of the development of the Company The Company strengthens its competitive advantage by expanding the scope of services and the introduction of new services. The Company is committed to the full and timely implementation of the commitments under the contracts. That is to prove a positive assessment of the organization, and its place among the companies in the oil and gas industry, and benefits to expand financial opportunities and the growth of confidence in the company among the "Customers." 1.3. Financing requirement The need to attract additional financial resources is a necessity for the production costs of the following main objectives: - renewal the material and technical base of the Company, including the purchase of new technology and equipments, in accordance with the Resolution of the Cabinet of Ministers form March 28, «On measures for the effective management of State Property"; - development and introduction of new technologies and equipment; Страница 4

119 - growth in the provision of works and services; - acquisition of business equipment to the tasks defined by the Decree of the President of the Republic of Uzbekistan PD-2158 "On measures of further implementation of information and communication technologies in the real economy" 1.4. The share of the company delivered to the investors JSC "Mubarekneftegazmontaj" was established in a form of a joint stock company. Today the Company s statutory fund is UZS. Statutory fund of the Company is divided into shares with a par value of 5000,0 UZS Share of the shareholder Name of the shareholder Thousand Items of shares % UZS 1 JSC Uzneftegazstroyinvest NHC Uzbekneftegaz Share of other (2) legal entity Share of individuals (1533 people) TOTAL: In accordance with Annex 1 to the Decree of the President of the Republic of Uzbekistan dated from April 28, 2015 # PD-2340 "On measures to increase the proportion of the value of private property and the economy," share of the JSC "Mubarekneftegazmontaj" is projected to be sold in the amount of 51% to strategic foreign investors. The distribution of the statutory fund of JSC "Mubarekneftegazmontaj" after the implementation of the Presidential Decree dated from April 28, 2015, # PD-2340 will appear in the following order: Страница 5

120 Share of the shareholder Name of the shareholder Thousand Items of shares % UZS 1 JSC Uzneftegazstroyinvest NHC Uzbekneftegaz Share of the foreign investors Share of other (2) legal entity Share of individuals (1533 people) TOTAL: Marketing plan summary An active marketing strategy is required in the appearance of increasing competition and the development of new segments. The marketing strategy of the company conceived taking into account expected changes in the market and is focused on strengthening the Company's position in the market, to increase the competitiveness of the estimates, the expansion of the network of services and improve the quality, renewal of the staff with attraction of the professionals and young specialists. The main objectives of the Company's marketing strategy is aimed at ensuring costeffective operation in a constantly changing environment, the competitiveness of the Company in order to meet the interests of customers, maintaining the public image, for maximum customer satisfaction in terms of volume, structure and quality of service, which creates conditions for stability of the business relationship. Страница 6

121 Besides, the Company has set a goal to increase competitiveness, which is intended to increase promotional activities, the creation of additional enterprises to provide new types of services, the organization of an effective system of control and management, the introduction of new information technologies. The implementation of the above mentioned tasks is estimated to be realistic, given sufficient support from the founder and relatively high profitability of the Company Key financial indicators forecast Forecast of revenues and earnings for Taking into consideration of development works and services for the past 5 years and taking into account strategic objectives assigned to the Company's, the total revenue in 2020 is projected at the rate of mln. UZS or 111,8% more than in And over the past 5 years and taking into account the tasks set to the Company, the total projected profits in 2020 of mln. UZS or 216,7% than in Indicators Total income (mln. UZS) including income from construction activities The total costs (mln. UZS) Direct production costs Period expenses Income from financial operations Profit before tax Income taxes and other taxes on profits Net income (mln. UZS) Страница 7

122 Forecast of investments and income for It is planned to make investments (reinvestment) in the production of the Company for 5 years in the amount of mln. UZS The average annual income to invest in the period will estimate 4.5%. Provision is further improving and intensifying investment activities will be through the following: - placement of funds from the sale of shares of JSC "Mubarekneftegazmontaj" in financial instruments large and strong domestic banks; - participation in the tender (bidding) for construction of the apart from system of NHC "Uzbekneftegaz"; - growth in scope of works and services; - enhance monitoring and analysis of the Customers, to which the company carried out works and services. Страница 8

123 Net profit forecast for The projected net profit for the will increase by 2,16 times from mln. UZS in 2014 up to million UZS in Main benefits and risks of the project Taking into view of the positive prospects of the Company's main advantages for strategic investors are: - the corporate management system ensures the greatest transparency of the Company's operations and to adequately assess the risks; - the presence of the Company's divisions in all regions of the country; - historically formed a strategic base of the Company; - the financial stability and solvency of the Company is guaranteed by the mandatory requirements of the Regulatory body and confirmed by the presence of high ranking and the highest category of issuers; - high liquidity of the shares, which creates an opportunity for shareholders to freely dispose them and leave the Company at its request; - deserved reputation and image of the Company generated among the Customers. However, the major risk factors for the project, according to the Company are as follows: Corporate risk; Risks of termination of the license; Risks related to changes in the value of the scope of work and cost of services; Risks from inflation; Social risks; Liquidity risk. To minimize and reduce the impact of the above risks the Company developed strategic and tactical decisions that exclude the occurrence of risk situations Main indicators of investment attractiveness of the project Страница 9

124 The main indicators characterizing investment attractiveness of the participation of potential investors in the capital of JSC "Mubarekneftegazmontaj" include: - the Company is considered as one of the leading construction company of JSC "Uzneftegazstroyinvest"; - long-term sustainable growth of the Company's key performance indicators; - the reputation of a stable and reliable partner for most of the large corporate and individual Customers; - organizational and legal form of the company, providing the most clearness and transparency for investors and shareholders; - credibility and high business reputation of the main shareholder of the Company JSC "Uzneftegazstroyinvest"; - the formed statutory fund of the JSC "Mubarekneftegazmontaj" in the amount of ,0 thousand UZS. The policy pursued by the company, as a priority, aimed at expanding the regional network and the scale of its activities. Страница 10

125 2. Company Description 2.1. History of the company State Enterprise "Mubarekneftegazmontaj" was established in 1993 by combining the specialized assembly companies located in the Kashkadarya and Bukhara region. According to the State Committee for State Property Management and Support of Entrepreneurship of the Republic of Uzbekistan 639 dated from , the Company transformed into Open Joint Stock Company "Mubarekneftegazmontaj." According to the Decree of the President of the Republic of Uzbekistan on August 21, 2006 PD-446 and the Order of the Cabinet of Ministers of 29 July 2007, 339, JSC "Mubarekneftegazmontaj" was designated as a structural subdivision of the JSC "Uzneftegazstroyinvest", under National Holding Company "Uzbekneftegaz". In accordance with the Law of the Republic of Uzbekistan "On joint-stock companies and protection of shareholder rights" of May 6, 2014, 370, and the decision taken at an extraordinary general meeting of shareholders on January 10, 2015 and registered by the Charter in the new edition of the name of the company was renamed to Joint Stock Company "Mubarekneftegazmontaj" («Muborakneftgazmontaj» joint-sock-company). Страница 11

126 In last 20 years, under the reform and modernization of the Company the following targeted works were carried out, which are characterized by the following steps: First, a new methodological basis, changes and additions to internal and founding documents, the development of new regulations governing labor relations, aimed at increasing the personal liability of employees and the strengthening of economic discipline were developed. There was an inventory of all the existing rules and optimization of their conditions. Second, the retraining program has been implemented, starting with senior executives and ending at the level of ordinary personnel to master modern approach of work and the market mechanisms for customer satisfaction. Thirdly, there have been gradual reform of the structure of sub structural enterprises, as the vast scope of work and services are provided by them. Fourth, a fundamentally new level of investment has been organized work aimed at the efficient use of available resources with a view to ensuring the principles of repayment, diversification and liquidity. Fifthly, measures on the expansion of services provided, as well as improving the quality of work were organized to ensure financial stability and solvency of the Company. Страница 12

127 In addition, measures were taken for the development, implementation and use of modern information technology to improve the quality of services Information about the owners (shareholders) of the Company - share of JSC "Uzneftegazstroyinvest" - 51,0%, UZS, items of share; - share of other (2) legal entity- 3,34%, UZS, items of share; - share of individuals (1553 people) - 25,49%, UZS, items of share 2.3. Structural organization of the company 2.4. Administration and management: The structure of the administration of JSC "Mubarekneftegazmontaj" Chairman of the board: Kushayev Bakhrom Boltayevich Tel: 0 (375) First deputy chairman of the board: Abdurahmanov Rashid Ahatovich. Tel: Chief accountant: Sobirov Jahongir Hazratovich Tel: Страница 13

128 Staff: Category of personnel Quantity 1 Managers Specialists Technicians 87 4 Service personnel 32 5 Production personnel Страница 14

129 Category of personnel Average salary Average salary (month) (year) 1 Managers Specialists Technicians Service personnel Production personnel Indicators WF Average number of emp. Average salary (year) WF Average number of emp. Average salary (year) WF Average number of emp. Average salary (year) total managers specialists technicians production personnel service personnel The main financial indicators for the last 5 years - the amount of net profit in 2014 is amounted to 6 428,0 mln UZS. Thereby continuing to ensure stable profitability of the Company; - in order to implement the principles of maintaining an adequate level of financial stability based on the dynamic growth of the share capital a new, methodical and methodological base of the Company relevant market competition is formed. - ensured the continuous growth of the number of enterprises of the Company for the implementation of construction activities in all regions of the country. Страница 15

130 Designation Including Gross income (mln. UZS) The scope of construction activities on its own (mln. UZS) Costs 1 sum income (tiyin) 94,7 94,5 90,9 91,2 93,0 Costs 1 sum of income from construction activities (tiyin) 96,2 93,9 91,3 91,5 93,4 Balance profit (mln. UZS) Net profit (mln. UZS) Cost-effective (%) 5,6 5,8 10,0 9,7 8 Number of total employees (people) Overall productivity per 1 employee in current prices (th. UZS) Wages Fund - total (mln. UZS) The average salary of 1 employee (th. UZS) Страница 16

131 3. Organization of the production 3.1. Machine and mechanisms Run-out Run-out Run-out Type is machine and Quantity up to up to up to mechanisms units 50% 80% 100% Machinery and equipment Vehicles Load capacity mechanisms Страница 17

132 Production assets, capacity, infrastructure The Company has an enterprise which deals with control of equipments, automation and electric works, management of the sanitary installation and technological installation, with 34 teams available for the construction and overhaul of commercial, administrative and social facilities. The need for new / additional production equipment There is a need to purchase machine tools equipped with modern technologies of production management; - Modern means of welding; - Lifting mechanisms; - Earth-moving machinery; - Means of transport; - The means to check the quality of welding; - Testing equipments; Страница 18

133 Raw materials base The Company independently is ably to procure components of material resources. Supply of precast concrete, inert materials, cement, valves, bituminous oil, roofing, bricks are received from factories located in the Republic of Uzbekistan, as well as the factories of the Company Impact on the environment The Company progresses project in accordance with the standards for maximum permissible emissions, which are developed and agreed with the State Committee for Nature Protection of the Republic of Uzbekistan. Exceeding the quota for released ingredients of technological processes is under the strict control. Страница 19

134 4. Description of works / services 4.1. Main types of works and services: The Company offers the following services and activities to customers (customers): execution of the specialized (assembly) of the construction of production, processing and transportation of oil and gas in complex with housing, socio-cultural and domestic institutions, the commissioning of production capacity of the fuel - energy complex production facilities - civil construction under turnkey contractors and other agreements in the territory of Uzbekistan and outside; installation of instrumentation, automation and commissioning of the equipment; operation of foreign economic activity; commercial activities (wholesale and retail); implementation of urban, suburban, intercity and international transportation of passengers and goods by road; production of fittings and technological units for pipelines; production of flare devices, metal and non-standard equipment for the fuel and energy complex, and objects of NHC "Uzbekneftegaz"; installation of instrumentation and fire signaling equipment, installation of equipment and automation; production of technical oxygen; production of garments, consumer goods, provision of commercial services; provision of services for the heat treatment of welded joints of pipelines; service quality control of welded joints by nondestructive method; services of lifting and transport equipment; repair service pressure vessels and process equipment; design technological units and steel structures Purpose and scope Construction is closely connected with all branches of the national economy, especially with industrial production. On the one hand, the increase in the scope of Страница 20

135 construction depends on the development of industries that provide them with the necessary tools and objects of labor (machines, materials, construction, electricity, etc.). On the another hand, performing for many sectors of the economy on the basis of construction contracts, construction companies are inextricably linked to the activities of Customers. Branches of the economy perform in relation to the construction, both as suppliers and as consumers of construction products Main characteristics At present the Company has six specialized enterprises, located in the Bukhara and Kashkadarya regions: Unitary Enterprise KIP "Montaj-servis", JSC "Mubarekneftegazmontaj" (Amirabad v., district Kagan, Bukhara region), the main activity - installation of instrumentation, automation and commissioning of equipment at the facilities capital construction, repair and reconstruction, installation of technological pipelines; "Mubarekneftegazmontazhspetsstroy"LLC, JSC "Mubarekneftegazmontaj" (Mubarek city, Kashkadarya region), the main activity - assembling, tying the linear part of oil and gas pipelines, compressor stations, plants for oil and gas; Unitary Enterprise "Karaul-Bazar Mahsusmontaj", JSC "Mubarekneftegazmontaj" (Karaul Bazar city, Bukhara region), the main activity - construction and installation of ventilation systems, gasification of settlements; Unitary Enterprise "Neftegazuskunamontaj", JSC "Mubarekneftegazmontaj" (Karaul Bazar city, Bukhara region), the main activity - the installation of surface and underground facilities at oil and gas facilities, installation of technological equipment and pipelines, compressor stations, oil refineries and gas, oil and other objects gas industry. Unitary Enterprise "Trubodetal", JSC "Mubarekneftegazmontaj" (Amirabad v., district Kagan, Bukhara region) - industrial enterprise, the main activity of which is the enlarged assembly units and production of pipeline fittings, metal, supports for technological lines, ensuring the construction of oil and gas lifting mechanisms. Страница 21

136 Production of technical oxygen; providing special vehicles for transportation of pipes, installation of equipment, metal products and other goods, as well as human resources to construction sites and oil and gas facilities in accordance with the Decree of the President and the Cabinet of Ministers under the Localization programme. (localize the production of import-substituting products) The main features, benefits of customers The main features characterizing the quality of services provided by JSC "Mubarekneftegazmontaj" include: - high professional level of main personnel, both in terms of quality of the work and enter into contracts with customers; - the affordability of works and services of the Company, through the standardization of contract terms of service The presence or the need for licensing Страница 22

137 The degree of readiness for release and sales JSC "Mubarekneftegazmontaj"is a fully operational, with the presence of all the legal, human, material, technical, technological and methodological components for the full implementation of works and services. The executive board of the Company has a department working with customers (clients) which, if necessary, can in the shortest time to develop and introduce new kinds of production equipment and technology in the service sector. JSC "Mubarekneftegazmontaj" has the following licenses: License AA 134 dated from , the construction and repair of main gas pipelines, oil pipelines, oil pipelines, issued by the Cabinet of Ministers of the Republic of Uzbekistan; License 1473 from , the implementation of the construction of extremely dangerous objects and objects of a high risk, issued by the Cabinet of Ministers The need for certification, and certificates Страница 23

138 The need for and the possibility of modernization of products (works / services) The possibility of modernization of products applicable to works and services exclusively in terms of the renegotiation of contracts of works and services as agreed with customers (clients). Exception is the contracts of works and services which are set by law. In some cases, the revision of the contracts terms requires a change in the previously deposited to the regulatory authority model rules for works and services Guarantee and service JSC "Mubarekneftegazmontaj" guarantee its customers (clients) to provide works and services in accordance with the laws and treaty provisions. Compliance with the requirements of solvency, established by the legislation, is carried out by maintaining the relevant standards within the established parameters for which information is provided on a quarterly basis to the regulatory body. Страница 24

139 5. Market review 5.1. The general analysis of the market, works and services In previous years, the management of construction - installation work, the Company was focused on central funding, and the objects have been included in the address program of construction of oil and gas industry of Uzbekistan. The customer must timely approve the cost estimates, which clearly justified the strategy of the project and its cost-effectiveness and assure on time funding for the phased purchase of construction materials and equipment, payment of salary and other compensation for production costs of contractor. Along with the implementation of already signed contracts for 2015 for the construction of roads and reconstruction works for the industry objects, the Company is seeking the ability to perform work and services to customers and offer third-party services to the public in the form of consumer goods Market segmentation, analysis capacity, saturation, and dynamics of market segments Further development of the provision of works and services in the field of construction work is connected primarily, to an increase in the scope of services to both domestic and foreign enterprises, through the introduction of new techniques and technologies, the expansion of infrastructure services, including increasing the number of experts, etc. as well as advocacy work in all regions of the country in order to promote the benefits provided works and services Analysis of competitive environment JSC "Mubarekneftegazmontaj" provides service works mainly for for enterprises of JSC "Uzneftegazstroyinvest" in the construction and repair of industrial and social facilities, construction of access roads and platforms to wells and compression stations foundations. Страница 25

140 Marketing and sales strategy works and services The main point of dissemination of works and services is traditionally own advertising display. Despite the introduction of web sites and other means of advertising the sales indictors of JSC "Mubarekneftegazmontaj" and other companies s remains very low. The implementation of the main scope work and services performed by legal entities of the Company. In the face of increasing competition, maintaining the strong position of JSC "Mubarekneftegazmontaj" in the market, as well as the development of new segments requires an active marketing strategy development. The marketing strategy of the company conceived taking into account expected changes in the market and is focused on strengthening the Company's position in the market, to enhance the competitiveness of budget and rate, expansion of sub structural organizations and to improve the quality of services, the completion of the Company's professional personnel and attraction of young workers. The main objectives of the Company's marketing strategy is aimed at ensuring costeffective operation in a constantly changing environment, the competitiveness of the company in order to meet the interests of customers, maintaining the public image, the maximum satisfaction of the customer (client) in scope, structure and quality of service, which creates conditions for sustainable business relationship. Besides, the Company has set a goal to increase competitiveness, which is intended to increase promotional activities, the creation of additional operational units for customer service, the organization of an effective system of control, the introduction of new methods of work and information technology. The realization of the set tasks ad objectives is estimated quite realistic, given sufficient support from the founders and relatively high profitability of the company. Страница 26

141 Marketing analysis of the strengths and weaknesses of the company Taking in to account, that it is increasing the planned construction of residential houses on mortgage lending in 2015 in the Republic, it is necessary to determine the form of financing the construction of residential buildings and the need for funding. From the customer must be timely approvals and cost estimates, which clearly justified the strategy of the project and its cost-effectiveness and timely funding for the phased purchase of construction materials and equipment, payment of salary and other compensation for production costs of contractor. Along with the implementation of already signed contracts for 2015 for the construction of roads and overhaul for the industry the Company is seeking the ability to perform work and services to customers and third-party services to the public in the form of consumer goods. Customer must timely approve and cost estimate, which clearly justify the strategy of the project and its cost-effectiveness and assure on time funding for the phased purchase of construction materials and equipment, payment of salary and other compensation for production costs of contractor. Along with the implementation of already signed contracts for 2015 for the construction of roads and reconstruction works for the industry objects, the Company is seeking the ability to perform work and services to customers and offer third-party services to the public in the form of consumer goods. Competitive advantages Presence of one of the biggest regional base of materials and sub structural organizations Qualified specialists in key positions of production section and management board Well developed and productive methods of work and services. Experience in the filed construction works and services in Uzbekistan. Wide range of services provided. High level of reliability and financial stability Competitive deficiency Low level of material base in regional sub structural organizations Lack of qualified specialists in sub structural organizations of the company and fluctuation movement of personnel Lack of working and service experience in international market. Decreasing liquidity of investments Страница 27

142 Individuality of provided works and service Long-term partnership Customer base Introduction of IT in function of the Company Capabilities Low level of foreign company operational in the market Increase in the level of average salary and standards of living in the country High demand for Company service due to active loans for vehicles by the government Risks Risk of functioning many foreign companies in the domestic market Increased inflation (growth in prices) Customer loose due to competitive environment Страница 28

143 6. Financing plan Indicators Investments requirement Forecast of production of goods Items of measurement mln. USD mln. USD Development plan for , , , , , , , , , , , , The prepositions used in the construction of financial models A number of indicators and the factors influencing the result, based on market conditions, expected demand, the expected price of services, the agreements reached with key customers (clients), planned marketing activities, etc, are used when constructing a financial model. The following groups of indicators are considered: - personnel (the need for personnel, labor costs, operation); - financial (need for financing sources and terms of attracting investment); - tax (tax rates and fees payable to the budgets of all levels); - marketing (cost of contracts and the forecast price changes); - investment (purchased equipment, purchase of equipment, capital costs for the construction of buildings and structures) and others. It takes into account the operating costs associated with the general economic activity of the Company, including the cost of depreciation and taxes. Operating expenses include: - variables (outsourcing); - overhead (salaries, maintenance costs of equipment and buildings and other fixed costs); - sales related to the implementation and promotion of insurance services; - administrative. The sources of attraction of investments, amounts and periods of attracting and refund are taken into account. Страница 29

144 Calculation is carried out operating profit, profit before tax, income taxes and net income. The information on the company in the corresponding period in the context of profitability and efficiency of operations, financial and property status of the company is analyzed Financing structure of the Company The financial resources of the company consist of a combination of its own funds and receivables from the outside, at the disposal of the company and designed to meet its financial obligations and finance of its current expenses. The availability of financial resources in the amounts required, as well as their effective use determines the financial strength of the company, the financial stability and solvency. The main source of financing is its own resources. Own funds of the Company formed by the internal (that profits remaining at the disposal of the company, depreciation) and external sources (this means additional contributions to the statutory fund, additional issue and sale of shares, other external sources of formation of own financial resources). Profit - is the main source of funds of the dynamically developing company. In the balance sheet it is: 1) explicit - as retained earnings; 2) in a veiled form - both created at the expense of profit funds and reserves. The amount of profit depends on many factors. The main factor among which is the ratio of income and expenses. Profit - is the main source of reserve capital (fund), which is intended to compensate for unexpected losses and potential losses of economic activity. The order of formation of the reserve capital is fixed in the regulations that govern the activities of the company as well as its statutes. Страница 30

145 The results of the financial model of the project Indicators Total profit Total expense Net profit The planned amount of profit of the Company can be adjusted as a result of: - increase of the statutory fund; - conservation refinancing rate; - maintaining the level of payments. The presented figures are current as of the date of submission. The probability of matching the results and the projected parameters will depend on the possible increase in the statutory fund of the Company, market conditions and changes in the current legislation. Therefore, the Company set the goal of expanding and profitability are modified. The actual development of the Company will follow the planned parameters Investment Analysis of the Project In recent years, a policy aimed at expanding the regional network is regarded as a priority for the Company. Since its inception, the Company is actively involved in shaping the development of the services market in the country and systematically expanding its activities. Progress indicators provide the financial stability and solvency of the Company at a high level. For the last 4 years the Company's solvency ratio exceeds the State Inspectorate of the Republic of Uzbekistan in the standard of times, and has a positive dynamics. It is certainly serves as a guarantee of the Companies performance assumed commitments to customers, partners and shareholders. Also, the guarantee reserves formed from profit provides the guarantee of the Company of obligations to partners and dynamic improvement in operating performance and its sub structural Страница 31

146 organizations. Finally, this assessment helps to expand financial opportunities and the growth of trust to the company among customers. In accordance with the planned business plan for years , estimates of the profitability of the authorized capital, return on assets and earnings per share are as follows: Indicators Profitability of the statutory stock (%) 8,04 9,26 10,35 11,47 12,62 Profit per share (UZS) Analysis of sensitivity and scenario analysis During the business planning a sensitivity analysis is conducted, that is, the effect of changing the initial parameters of its final results is evaluated. The method of sensitivity analysis is to change the selected parameters within certain limits, provided that the other parameters remain unchanged. Through sensitivity analysis the resulting indicators for different values of given variables required for calculation can be evaluated. This type of analysis can help to determine the most critical variables that have the greatest affect on the feasibility and effectiveness of the business plan. As a fluctuating initials the following variables were taken: - volume of income; - expenses; - operating expenses or their components; -level of inflation;; - forming of reserves, etc. As the resulting indicators the following units were used: 1. Performance Indicators - index of profitability; - payback period; - cost-effective investments; 2. Annual figures Страница 32

147 - the balance sheet profit; - net profit; - surplus accumulated of real money. Absolute sensitivity analysis can help to determine the numerical deviation of resulting indicators under changing the values of the original variables. Scenario analysis of the project allows to evaluate the impact on the business plan for the possible simultaneous change of several variables by the probability of each scenario. Страница 33

148 7. The main risks analysis 7.1. Characteristics of main risks Corporate Risks This category of risk associated with the probability of deterioration in the financial condition of the Company because of adverse changes that may occur because of its activities, as well as affiliated organizations. The company has all the possibilities of direct influence on the probability of occurrence of these adverse changes, as well as possible to reduce the possible negative impact on its financial condition as a result of these changes. Risks of termination of license To date, the Company has a license for their activities. Licenses with specific deadlines. Activating in accordance with a license without violating licensing rules and regulations, the timely submission of reports to the relevant authorities allow the public to minimize these risks. Risks associated with changes in the value of the market and the cost of services This risk is generated by the results of the Company's operations, and causes the reduction of the amount of its profits. The causes of such risk may result from: reduction of potential of services, decline in demand for services and reduction of the Company's revenue in the form of income in terms of increasing competition and a number of other similar factors. As a result, the Company s financial condition could be at risk in decrease of dividends. These risks are assessed as moderate by the Company. Risks from inflation, devaluation and bank interest rates The Company is exposed to inflation risk because of its place surplus funds on a bank account. Currency risk That type of risk are considered as insignificant. Страница 34

149 An analysis of the degree of influence on the economic efficiency of risk for different participants of the project and options to minimize these risks In order to minimize and reduce the impact of the above mentioned risks, the Company has developed a tactical decision to exclude the occurrence of risk situations. The Company can take the decision of denying the specific risks, both at the stage of preparation of the solution, and by refraining from activities in which the company is already involved if the actual risk of higher than expected. Also, the Company focuses on the following in order to minimize the risks: 1. Adoption of the risk - management decision to accept some (existing or planned) level of risk, without taking measures to reduce it, usually for technical or cost reasons. In case the risk of the need to take into account possible losses - the loss of a permanent nature, which can be easily foreseen; - Losses caused by the single, static risk. Typically, these risks are associated with substantial losses. The peculiarity of the fact that they do not lend themselves to statistical evaluation. 2. Reduction potential losses by prediction, and using more complete use of the available knowledge in the field Conclusions and recommendations Taking into account the positive prospects of the Company, the main advantages for strategic investors are: - the presence of the corporate management system, ensures the greatest transparency in the activities of the Company and assess the risks adequately; - factually established customer base of the Company; -Financial stability and solvency of the Company guaranteed by the mandatory requirements of the regulatory body confirmed the presence of high ranking; - high liquidity of the shares, which creates an opportunity for shareholders to freely dispose of them and leave the Company at its request; - earned reputation and image of the Company generated among customers. *Note: Tabular data and the data in the diagrams are presented according to the consolidated financial reporting. As well as overall data on staff takes in to account staff of the structural units of the company. Страница 35

150 8. Applications Contact information - Mailing adress: , Republic of Uzbekistan, Kashkadarya region, Mubarek city, 2-nd microrion/ - Means of communication: tel: (0375) , fax: (0375) smkmngm@mail.ru Codes of the company: - OKPO (General Classification of Enterprises and Organizations): IIN (Tax identification Number): SOATO (Indications System for Administrative-Territorial Formations),: OKONKh (General Classifier of Economy Branches): SOOGU (Government designation system) FS (Federal Assembly) OPF (Legal form of Organization) Bank details: Mubarek branch of joint-stock commercial bank Uzpromstroybank - O\A , МFO Additional materials - A copy of the registration certificate; - Copy of the charter; - A copy of the license; - Scheme of the structure; - Driving the governance structure; - Main manager s resume; - Company photo. Страница 36

151 Kushayev Bakhrom Boltayevich Starting from April 30, 2010: Chairman of the board of JSC Mubarekneftegazmontaj Date of birth: Place of birth: Bukhara region, Gijduvan district Nationality: Party member: Uzbek N\A Education: Graduated from: Higher 1992, Bukhara institute of food and consumer industry Specialty: mechanical engineering Knowledge of foreign languages: Russian WORK EXPERIENCE army service mechanic at 5 th construction-installation department of JSC Bukharagazpromstroy depot officer at 5 th construction-installation department of JSC Bukharagazpromstroy head of the material and technical supply department at JSC Mubarekneftegazmontaj first deputy Chairman of the board of JSC Neftegazkurilish director at 8 th representative office of JSC Mubarekneftegazmontaj head of the material and technical supply department at JSC Mubarekneftegazmontaj director of Neftegazinginiring LLC director of UE Neftegazuskunamontaj of JSC Mubarekneftegazmontaj 2010 й. - present - Chairman of the board of JSC Mubarekneftegazmontaj Страница 37

152 Abdurakhmanov RAsgid Ahadovich Starting from July 17, 2011: Acting first deputy Chairman of the board of JSC Mubarekneftegazmontaj Date of birth: Place of birth: Kashkadarya region, Guzor district Nationality: Party member: Uzbek N\A Education: Graduated from: Higher 1989, Tashkent Polytechnic Institute Specialty: industrial and civil construction Knowledge of foreign languages: Russian WORK EXPERIENCE worker at Dustlik farm in Guzar dictrict worker at 3 rd representative office of UE Shurtanneftgaz chief engineer, site manager, master at 3 rd representative office of Uzbeksanoatkurilish company, in Bukhara city йй. head of the construction and reconstruction department, site manager, at UE Shurtanneftgaz site manager at UE Neftgazuskunamontaj of JSC Mubarekneftegazmontaj director of the UE Muborakmontaj of JSC Mubarekneftegazmontaj present. - acting first deputy Chairman of the board of JSC Mubarekneftegazmontaj Страница 38

153 Adizov Dilmurod Tuymuradovich Starting from November 1, 2013: Acting deputy Chairman of the board of JSC Mubarekneftegazmontaj on construction production Date of birth: Place of birth: Bukhara region, Kogon city Nationality: Party member: Uzbek N\A Education: Graduated from: Higher 1995, Bukhara institute of food and consumer industry Specialty: industrial and civil construction Knowledge of foreign languages: Russian WORK EXPERIENCE student at Bukhara institute of food and consumer industry chief engineer, head of the production department at 9 th representative office of JSC Mubarekneftegazmontaj director of UE Trubodetal, JSC Mubarekneftegazmontaj acting chief manager and deputy chairman of the board of JSC Mubarekneftegazmontaj 2013 й. - present - Acting deputy Chairman of the board of JSC Mubarekneftegazmontaj on construction production Страница 39

154 Makhmudov Akhmad Uktamovich Starting from May 20, 2013: Deputy Chairman of the board of JSC Mubarekneftegazmontaj on financial issues Date of birth: Place of birth: Bukhara region, Bukhara city Nationality: Party member: Uzbek N\A Education: Graduated from: Higher 2002, Bukhara State university Specialty: economist Knowledge of foreign languages: Russian WORK EXPERIENCE broker at Buhoro-FB LLC, in Bukhara city leading specialist at Titan LLC, in Bukhara city director of the RAU Invest LLC, in Bukhara city head of the corporate management and financial credit documents department of JSC Mubarekneftegazmontaj acting deputy Chairman of the board of JSC Mubarekneftegazmontaj on financial issues present - deputy Chairman of the board of JSC Mubarekneftegazmontaj on financial issues Страница 40