Business news from Ukraine

UKRAINIAN FARMERS INCREASE PURCHASE OF UKRAINIAN MACHINERY BY 31%

Ukrainian farmers under the government-funded program to support acquisition of Ukrainian machinery and equipment bought it for the amount of over UAH 5.77 billion in 2019, which is 31.2% more than in 2018, Secretary of the National Committee for Industrial Development Olena Salikhova has said.
“At the same time, the amount of compensation [25% of the cost] for the purchased equipment according to the Ministry of Economic Development, Trade and Agriculture, in fact in 2019 amounted to UAH 640 million (applications submitted by farmers in September were satisfied), while applications filed in October-November for the amount of UAH 563 million were not compensated, but the equipment was purchased,” she said during a Thursday working meeting with Deputy Minister of Economic Development, Trade and Agriculture Taras Vysotsky with agricultural associations devoted to support programs for 2020.
In turn, Vysotsky said that this program was underfunded due to the fact that the budget provided for these purposes less funds (UAH 682 million) than the demand for this program.
“Farmers bought a lot more equipment under the program than there were funds in the budget, so we can discuss the possibility of considering this compensation in 2020. Our position is to complete all the programs,” the deputy minister said.
He said that in the fourth quarter, when there was no money left for compensation, farmers purchased equipment for UAH 2 billion, which means compensation for another UAH 500 million.

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KOVALSKA GROUP TO PURCHASE ONE OF THE LARGEST MANUFACTURERS OF AERATED CONCRETE IN UKRAINE

JSC Kovalska Reinforced Concrete Structures Plant, part of Kovalska Industrial and Construction Group, has received permission to purchase Energy Product LLC, one of the largest manufacturers of aerated concrete in Ukraine, and intends to complete the deal by late September this year, the press service of group has told Interfax-Ukraine.
“This transaction is one of the largest in Ukraine in the construction market. We, as the market leaders, are interested in diversifying our business lines, expanding our regions and developing new types of construction materials. The aerated concrete market has a high development potential. This asset will allow us to further satisfy the needs of clients in assortment. According to the group’s strategy, we plan to continue expansion in the southern and western regions,” Serhiy Pylypenko, the director general of Kovalska Group, said.
Energy Product LLC (Nova Kakhovka) was established in 2013 and is the fourth largest producer of aerated concrete in Ukraine. The plant’s capacity is 450-500 cubic meters of aerated concrete per year.
Kovalska Industrial and Construction Group has been operating in the construction market of Ukraine since 1956. The company is the leading manufacturer of construction materials, the developer and builder of Ukraine.

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KNIAZHA LIFE VIG’S SUPERVISORY BOARD APPROVES PURCHASE OF GOVT BONDS FOR UAH 56 MLN

The supervisory board of Kniazha Life Vienna Insurance Group (Kyiv) on July 9 approved the acquisition of government domestic loan bonds for the amount of UAH 56 million by the company, which is 13.24% of the cost of its assets (UAH 422.896 million), according to information in the database of the National Commission for Securities and the Stock Market.
The company saw UAH 360.4 million in net profit in 2018, which is 12.5% more than a year ago. Its assets grew by 10.9%, to UAH 422.9 million.
Retained profit totaled UAH 83.149 million, while a year ago it was UAH 67.225 million. Net worth grew by 26.5%, to UAH 123.9 million. Total bills receivable fell by 17%, to UAH 3.185 million.
Noncurrent liabilities expanded to UAH 53.081 million, while current remained unchanged at UAH 33.551 million.
PrJSC Kniazha Life VIG was established in 1999 and specializes in life insurance.

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EBRD LENDS EUR 38 MLN IN 2018 THE PURCHASE OF TROLLEY BUSES IN FOUR UKRAINIAN CITIES

The European Bank for Reconstruction and Development (EBRD) under the Ukraine Public Transport Framework project to improve public transport infrastructure signed four loan agreements worth EUR 38 million in total with trolleybus utilities of Mariupol, Kryvy Rih, Kharkiv, and Zhytomyr in January-November 2018 against municipal guarantees.
In particular, it signed a EUR 13 million agreement with municipally owned Mariupol Tram and Trolleybus Administration in July, while agreements worth at EUR 8 million each was signed in September with municipally owned Urban Trolleybus (Kryvy Rih) and municipally owned Trolleybus Depot No. 2 (Kharkiv). Late in November, the EBRD signed an agreement with municipally owned Zhytomyr Tram and Trolleybus Administration to the tune of EUR 9 million.
Under the project, the loans are additionally backed by EBRD loans from the Clean Technology Fund (CTF) and grants from the Eastern Europe Energy Efficiency and Environment Partnership (E5P).
According to the Antimonopoly Committee of Ukraine, in the case of Kryvy Rih, the city provided a guarantee for EUR 10 million, as the bank gives its municipal enterprise an additional EUR 2 million loan from the Clean Technology Fund. CTF loans for Mariupol and Kharkiv also accounted to EUR 2 million.
The loans are issued for 12 years with repayment in equal parts every six months after a two-year grace period.
Kryvy Rih’s interest rate on principal debt is set at 5.75% and is pegged to the rate of 6-month Euribor rate with the possibility of lowering. It depends on the city’s rating and the borrower’s compliance with the required financial ratios. At the same time, the rate for a CTF loan is only 0.75%.

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UKRAINE RELAXES PURCHASE OF FOREIGN CURRENCY FOR NONRESIDENTS

The National Bank of Ukraine (NBU) has relaxed the rules of buying foreign currency by nonresidents to return foreign investment abroad after transactions with government domestic loan bonds, the central bank has reported on its website. The respective initiative was approved by resolution No. 100 of the central bank’s board amending certain legal acts of the NBU dated September 18, 2018. The document came into force on September 20, with the exception of certain clauses, which will become effective on November 1, 2018. “Nonresidents for the purchase of foreign currency after operations with government bonds will need to submit the short list of documents as possible,” the NBU said in the report.
In particular, the resolution specifies the rules of settlements under operations with government domestic loan bonds, where a nonresident is a party: transactions with banks and nonresidents can be carried out without restrictions, operations with other counterparties can be carried out only on the stock exchange with settlements using the “delivery of securities against payment” principle.
In addition, the rules of servicing the operations on the government domestic loan bonds placement among the clients of primary dealers (broker contracts) are defined, which provides access to the primary government domestic loan bonds market for private investors.
The mechanism for servicing refinancing operations with a pool of assets as collateral has also been regulated. The procedure for conducting blocking operations for government domestic loan bonds under these transactions has been determined, and the NBU is given the opportunity to take into account the securities of banks that are deposited as collateral in favor of the central bank.

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UKRAGROCOM AND HERMES-TRADING TO COMPLETE PURCHASE OF TWO FARMS FOR $5.6 MLN BY LATE MAY

Ukragrocom and Hermes-Trading intend to complete the purchase of Inter-Contact-Agro LLC and Start (both based in Kirovohrad region) worth $5.6 million by May 30.
According to a report on the group’s website, the purchase of the companies is carried out within the framework of increasing the land bank to 120,000 hectares. Two agribusinesses manage more than 6,500 hectares of agricultural land in Kirovohrad and Odesa regions.
The group of the companies Ukragrocom and Hermes-Trading are part of an agricultural corporation specializing in production of grain and oilseeds, breeding pigs and cattle.
The group currently leases about 114,000 hectares of land, has five elevators with a total capacity of 353,000 tonnes of grain, a dairy farm, and a sugar plant.
Cattle stock at the farms is 6,000, pig numbers about 11,000 animals.
According to the unified state register of legal entities and individuals, the ultimate beneficiary of Inter-Contact-Agro and Start is the largest shareholder and the chairman of the board of directors of Kernel agricultural holding, Andriy Verevsky.
The revenue of Inter-Contact-Agro in 2017 decreased by 16.7%, to UAH 30.92 million, and net loss by four times, to UAH 4.28 million. Data for 2018 are not yet available.

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