Our company has quite close connections with the Omsk region. We have valued a wide variety of assets in Omsk, including agro-industrial assets, manufacturing enterprises (dairy), machine building enterprises, land plots, commercial real estate.
In this case, we share our experience of valuing farms and dairies, which was carried out by order of the group of companies "Prodo". The reports were prepared as part of the preparation of the property for sale, since the current owner decided to change the profile of activity in the region from animal farming to crop production, and accordingly these enterprises became non-core for him. The asset holders were the enterprises of the Luzinsky Milk Group and Omsk Bacon.
In particular, the assets of these companies included three dairy farms with more than 2,000 dairy cattle and a dairy factory producing products under the brand "Luzinskaya krynochka". We conducted an inspection and valuation of farms in the villages of Luzino, Rozovka and Petrovka in the Omsk region, as well as in the Novouralsky division. The property of the farms included real estate for livestock maintenance, land assets, agricultural machinery, dairy herd, cattle and young animals.
The enterprises were practically unprofitable and could operate with a small profit only as part of a vertically integrated holding company. Outside of it, due to outdated material and technical base and not the most productive breed (red-mottled), farms could not provide profitable commodity production. In this regard, when valuing farms, we had to refuse to use an income approach and make calculations within the framework of a comparative one, considering the sale of assets on the open market during an orderly liquidation.
The dairy was valued as an independent division, since it was to be sold separately and was potentially of interest to other investors. The approach to its valuation, on the contrary, was based mainly on the results of an income approach.
The company did not have the newest technological complex, but it could generate income in the foreseeable future, even working outside the holding. We have normalized the company's cash flows based on market prices for dairy products and raw milk purchased. In addition, the dairy's assets were valued as part of a cost-based approach. As a result, the two approaches showed comparable results, which indicated the correctness of the chosen methodology and the assumptions made during the valuation.
Our reports were used to make management decisions on the sale of this property. The results of the transaction were commented in the Omsk press. The sale took place under the control of the regional administration, as the enterprises were essential for the agro-industrial sector of the region.