Business news from Ukraine

POLISH RETAIL OPERATOR LPP GROUP TO OPEN TEN NEW STORES IN UKRAINE IN 2018

The Polish retail operator LPP Group, managing the brands Reserved, Cropp, House, Mohito, Sinsay, intends to open ten new stores with a total area of about 12,000 square meters in Ukraine in 2018, increasing the network to 98 outlets.
“Last year was very intensive for the development of the LPP network in Ukraine. In the past 12 months we have opened 16 new stores of 12,000 square meters in this country. Thus, by the end of 2017 our network in Ukraine grew to 88 shops of all five brands, the total area of which was 49,000 square meters,” the LPP spokeswoman told Interfax-Ukraine.
According to her, the company is very pleased with the results of sales in Ukraine’s LPP stores last year, which “gave a big impetus to the further expansion of the network in Ukraine.”
“The Ukrainian market is characterized by a significant sales potential. The key aspect here is almost 50 million people. This is one of the largest markets where LPP brands are present … As part of the development of the network, we plan to open ten stores in Ukraine in 2018: three Reserved stores, two Cropp stores, and five Sinsay shops. This will allow increasing the retail area of the network to 61,000 square meters,” the expert said.
LPP S.A. was established in 1995. The first store of the Reserved brand was opened in 2000.

NEW UKRAINIAN LAW ON LLC CONTAINS OBVIOUS IMPROVEMENTS FOR BUSINESS

The Law of Ukraine “On Limited Liability Companies” (bill No. 4666), adopted by the Parliament (Verkhovna Rada) on February 6, 2018, contains a number of obvious improvements, in comparison with the current legislation. According to the senior partner of ARIO LAW FIRM Julian Khorunzhyi, positive changes were made to the provisions on inheritance and succession of shares.
The innovation of the adopted document is the abolition of the quorum concept of the general meeting of the LLC members, without which the general meeting is not entitled to take a decision. However, according to Khorunzhyi, until the formation of the judicial practice of the application of the law, the concept of “quasi-quorum” will remain controversial – the number of votes of participants (from 50 to 100%) who are authorized to take decisions on specific issues within the competence of the general meeting.
Khorunzhyi considers it a positive moment that the adopted version of the draft law gives the absolute majority of questions to the LLC itself, does not establish unambiguous rules, but enables the company to adopt its own procedures, identify those bodies that it needs in corporate governance and anticipate possible ways out of potential corporate conflicts. In a one-participant model, the participant is no longer obliged to imitate the general meeting, but can take all decisions solely in the form of a written decision. Khorunzhyi said the law creates opportunities for the reorganization of joint-stock companies, which are not actually such, in an LLC, since the project eliminates the limitation of the maximum number of LLC members. At the same time, “unambiguous conclusions” about the adopted law can be made only after the signing of the draft law by the president, he said.

ENZIM TO INVEST OVER EUR 10 MLN TO ENTER BIOTECHNOLOGIES AND BIO PRODUCTS MARKETS

Private joint-stock company Enzim (Lviv) producing yeast, additives and mixtures for bakery, intends to invest over EUR10 million in the implementation of its strategic goal of becoming an international biotechnology company, the owner and CEO of the company Olena Vovk has said. “We plan to enter biotechnology and bio-products markets, which requires increasing production capacity,” she said in an interview with the Business weekly.
According to her, initially this expansion will take place on the basis of the Lviv production site. “However, we are also considering the possibility of acquiring external production sites: perhaps in Ukraine, or abroad. This is the next stage of our development,” Vovk said. She said that pursuing the goal, Enzim intends to produce natural ingredients first for the food industry and later for other industries. “The main competence of Enzim is fermentation processes and a yeast cell. On its basis it is possible to produce new bio-ingredients that will replace harmful chemical additives – flavor enhancers, preservatives or other substances that the civilized world refuses,” the company’s CEO said.
According to her, these bio solutions today are global trends and extend to the food, medical, cosmetic industries and agriculture, but their implementation requires significant investment in scientific development.
Vovk said that Enzim in 2016 created the R&D laboratory and attracted young scientists to cooperation.
Among the company’s other plans this year is investment of about EUR 2 million in the expansion of the capacity of the biological wastewater treatment complex to increase the production of its own biogas from the current 70% of its natural gas needs to 100% by the middle of 2019. The general director of Enzim said that the company managed to fully compensate for the cessation of deliveries to Russia, which accounted for about 10% of its production, thanks to entering other foreign markets. According to her, now the company delivers its products to 14 countries, exporting about 40% of its output. In particular, in recent years the company has increased its share of the Polish market to 10%.

SMART MARITIME GROUP PLANS TO DOUBLE REVENUE IN 2018

Smart Maritime Group (SMG) of Smart-holding, uniting Kherson and Mykolaiv shipyards, plans to double consolidated sales revenue in 2018, to UAH 647 million. SMG said on its website, the projected growth of financial indicators of the group in 2018 is based on plans to resume the implementation of ship building contracts at the SMG’s shipyards.
“In 2018, it is planned to increase consolidated revenue in all spheres of SMG’s operations, to UAH 646.8 million, including thanks to the resumption of the implementation of ship building contracts at the shipyards,” the group said.
The press service said that consolidated revenue in 2017 was UAH 317 million, which is 19% less than in 2016. “The decline in revenue is linked to the unstable economic situation and the absence of demand on ship building both on the domestic and foreign markets,” the group said.
The volume of ship repair at the group doubled in 2017 compared with 2016: SMG’s shipyards modernized and repaired 78 ships compared with 46 in 2016, the press service said. Taking into account the plans for the implementation of new contracts, in 2017, the shipyards of the group launched a program for the modernization of production facilities, foreseeing investment of more than UAH 30 million, the group said.
“The funds, in particular, are aimed at construction of a new workshop for the manufacture of offshore metal structures, the renovation of crane equipment, the metalworking line and the repair work of certain sections of the technological chain of metal processing,” the press service said. As reported, in November 2017, SMG and Restis Group, one of the largest transport companies of Greece, signed a memorandum of cooperation in the field of shipbuilding. the parties agreed to study the possibility of building ocean-grade bulk carriers, which will be used for carriage of bulk general cargo, at the production facilities of SMG.

MONEY STOCK IN UKRAINE 2.7% DOWN IN JANUARY

Money stock in Ukraine in January 2018 decreased by 2.7%, to UAH 1.177 trillion, the relevant preliminary data of monetary statistics have been posted on the website of the National Bank of Ukraine (NBU).
According to the central bank, the corresponding dynamics is due to the growth of off-bank cash by 3.3%, to UAH 321.573 billion, and ending stock on deposits by 2.4%, to UAH 854.874 billion.
The loan portfolio of banks in January increased 2.9%, to UAH 1.039 trillion. At the same time, the volume of loans in the national currency rose by 0.4%, to UAH 572.224 billion, in foreign currency by 4.7%, to UAH 466.999 billion.
According to the NBU, the cost of hryvnia loans for businesses last month decreased by 0.5 percentage points, to 15.3% per annum, foreign exchange by 0.5 percentage points, to 6.1% per annum.
The cost of hryvnia loans for the population decreased 2.3 percentage points in January, to 29.7% per annum, in foreign currency by 0.5 percentage points, to 8.4% per annum.
The deposit portfolio of banks in the national currency in January fell by 2.9%, to UAH 476.239 billion, while in foreign currency decreased by 1.8%, to UAH 378.636 billion.
Monetary base in January narrowed 1.7%, to UAH 392.326 billion.
Net forex reserves fell by 9.5% in January 2018, to $6.039 billion. The debt of banks on refinancing loans decreased 1.5%, to UAH 67.65 billion.

SHARE OF SHADOW ECONOMY IN UKRAINE SHRINKS IN 2017

The share of the shadow economy in Ukraine in January-September 2017 shrank to 33% of GDP, decreasing by 3 percentage points (pp) compared to the same period of 2016, according to materials posted on the website of the Ministry of Economic Development and Trade.
“All the four methods used to assess the level of the shadow economy showed a decrease in the share of the shadow economy compared to the same period in 2016,” the ministry said.
This happened against the backdrop of the moderate growth of production, the stable forex rate and moderate inflation. The share of the shadow economy decreased thanks to an improvement in the expectations of businesses and households, the weakening of investment risks, it said.
At the same time, the dynamics of the reduction in the share of the shadow economy are hampered by low confidence in the institutions of power, ongoing challenges to the stability of the financial system and the occupied areas in the east of the country, it added.
The highest share of the shadow economy has traditionally been revealed by the method of comparing households’ expenditures and retail turnover, according to which the shadow economy accounts for 48% of GDP. However, this indicator is 3 pp below similar calculations for the nine months of 2016.