The rating agency Expert-Rating has affirmed the financial stability rating of KSG Agro SA (Switzerland), the holding company of the agricultural holding KSG Agro, at the level of “uaA+” on the national scale (corresponds to the BBB level on the international scale), the company said in a press release on Wednesday following an audit of its activities over the first half of the year.
According to the rating agency, this assessment of the company’s performance in the first half of 2021 is due to an increase in the level of coverage by its own capital of its debt obligations, the company’s profitability and a good level of its EBITDA to available loans.
“Throughout the period from June 30, 2020 to June 30, 2021, KSG Agro’s equity capital grew by 52.46%, up to $14.47 million, including due to its profitable activity and the reduction of retained loss. For the same period the liabilities of KSG Agro S.A. decreased by 12.52%, down to $55.7 million. The decrease in liabilities of KSG Agro S.A. was mainly due to selling three subsidiary companies in May, 2021,” the rating agency said in the report.
According to it, debt obligations of KSG Agro S.A. as of June 30, 2021, decreased by 12.52% compared to June 30, 2020, to $55.69 million. Long-term loans predominated in the structure of the company’s debt obligations as of that date: their volume increased by 7.52%, to $27.25 million, whiles the volume of short-term liabilities decreased by 54.19%, to $2.91 million.
The agency noted that EBITDA of KSG Agro SA in the first half of 2021 decreased by 22.49% compared to January-June 2020, to $2.69 million. At the same time, the ratio of EBITDA to its loan obligations as of June 30, 2021 decreased by 2.03 p.p. versus the same date last year, to 8.95%, which indicates the company’s ability to service its debt obligations.
The agency’s report indicated that the current macroeconomic situation in Ukraine did not significantly affect the sales volumes of the agricultural holding’s products, in particular, its revenue in the first half of 2021 decreased by 12.1% compared to the same period in 2020, to $6.81 million. During the specified period, the net profit of KSG Agro increased 48 times, to $13.7 million, mainly due to the sale of its subsidiaries.
“Therefore, according to the results of the first half of 2021, KSG Agro S.A. demonstrated high profitability indicators,” the rating agency said.
The agency recalled that the borrower or the particular debt instrument with rating “uaA+” is characterized by a high creditworthiness compared to other Ukrainian borrowers or debt instruments.
Rating agency Expert-Rating has affirmed the financial stability rating of the agricultural holding KSG Agro S.A. at the level of “uaA +” on the national scale, according to the agency’s website.
The agency notes that a borrower or a separate debt instrument with a “uaA +” rating is characterized by high creditworthiness compared to other Ukrainian borrowers or debt instruments.
According to the agency’s data, as of March 31, 2021, the share of loans in the liabilities of KSG Agro was 47.70%, of which short-term loans – 5.12%, and long-term loans – 42.58%.
As of the beginning of 2021, the equity capital of KSG Agro S.A. covered loans from banks by 44.16% and by 19.64% – the total volume of loans from banks and the parent company OLBIS Investments Ltd., owned by owner of the agricultural holding Serhiy Kasianov.
“In 2020-2021, the management of the holding took measures to improve its credit history by fully repaying and restructuring overdue debts on bank loans, and also reduced the impact of foreign exchange risk on the KSG Agro’s creditworthiness by changing the lending currency from the U.S. dollar to the functional currency, that is the main currency that a company conducts its business,” the agency said in a report.
Expert-Rating also notes that in 2020 the ratio of the company’s EBITDA to its total liabilities increased by 8.04 percentage points (p.p.) compared to 2019, to 11.35%, EBITDA to loans received – by 16.70 p.p., to 23.94%, and EBITDA to bank loans – by 34.81 p.p., to 54.28%.
“The current level of EBITDA of KSG Agro S.A. covers a significant share of interest bearing liabilities in 2020, it exceeds the cost of paying interest on loans by over 4 times and the total financial expenses of the holding by over 3 times,” the report said.
The agency clarifies that as of December 31, 2020, the agricultural holding did not issue debt securities, except for short-term bills, the amount of debt on which was estimated at $2.35 million.
According to Expert-Rating, due to the listing of shares of KSG Agro S.A. on the Warsaw Stock Exchange (WSE), the agricultural company can issue new shares, thereby increasing the liquidity and value of its shares.
According to the agency, as of March 31, 2021, some 64.62% of the company’s shares belonged to Kasianov, who manages it through OLBIS Investments Ltd., 35.17% of the shares were in free circulation on the WSE, and 0.21% accounted for treasury shares.
Farmak pharmaceutical company (Kyiv) ranked fourth in the rating of companies in terms of sustainable development, according to a company’s press release.
According to the report, the rating was developed and conducted by experts of the Dengi and Korrespondent publications in partnership with the UN Global Compact Network Ukraine. In general, the rating includes 39 companies from various sectors of the economy, including the pharmaceutical company Darnitsa.
All rating participants were tested according to environmental, social and corporate governance (ESG) criteria. The jury took into account the anti-corruption policies and practices of companies, the situation with gender balance in the top management bodies, the average level of wages excluding the top staff, a set of key social programs and the amount of their funding, as well as the amount of funding for energy modernization and the dynamics of reducing the carbon footprint.
“The rating methodology reflects the realities of the world economy and focuses on indicators that should be a priority for Ukrainian businesses. Development of legislation on non-financial activities would contribute to the growth of a culture of business sustainability and accelerate the economic transition of Ukraine in accordance with the Sustainable Development Goals,” Partnership Manager at the UN Global Compact Network in Ukraine Alina Konovalchenko said.
“To assess the achievements in sustainable development, it is important to look not only at the company’s projects, but also at the context. That is, by what methods the company achieved results, whether the changes will be long-term and systemic, and how they will affect the stakeholders. Our position in the rating is a good confirmation that social responsibility is an integrated approach, from transparent financial reporting, fair tax payments and decent working conditions to environmental initiatives,” Executive Director of Farmak Volodymyr Kostiuk said, adding that Farmak is the first Ukrainian pharmaceutical company to join the UN Global Compact.
Farmak is the leader of the Ukrainian pharmaceutical market, it produces medicines in all 14 therapeutic groups.
Rinat Akhmetov with a fortune of $7.6 billion topped the rating of the richest businessmen in Ukraine, according to the website of Forbes Ukraine.
According to the updated rating, his fortune as the richest in the list of Ukrainian businessmen has increased from $2.8 to $7.6 billion. Now Akhmetov is ranked 330th in the ranking of the richest people in the world. Its largest assets are Metinvest ($3.3 billion) and DTEK Group ($2.1 billion).
The second place was taken by businessman Victor Pinchuk. Since June 2020, his fortune has grown from $1.4 billion to $2.5 billion. Of this amount, $800 million is real estate, $700 million is money, and $500 million is Interpipe.
Kostiantyn Zhevaho is third in the rating. His fortune increased from $1.1 billion to $2.1 billion. His largest asset is Ferrexpo ($1.4 billion).
The list includes Ihor Kolomoisky with $1.8 billion, Hennadiy Boholiubov with $1.7 billion, Petro Poroshenko with $ 1.6 billion and Vadim Novinsky with $1.4 billion.
Forbes Ukraine estimates Novinsky’s fortune in June 2020 at $810 million.
The international rating agency S&P Global Ratings has confirmed the long-term sovereign ratings of Ukraine in foreign and national currency on the global scale at “B” level, ratings on the national scale at “uaA” and short-term ratings at “B”, the outlook for long-term ratings is stable.
“Ukraine’s growth, balance of payments and public finances exceeded our expectations in 2020. The adequacy of reserves has improved, which provides protection against possible adverse external events, including further delays in the payment of concessional loans,” the agency explained the rating confirmation on Saturday night.
At the same time, S&P noted that epidemiological considerations continue to pose a serious risk.
The agency indicated that it could raise the ratings over the next year if Ukraine’s external liquidity indicators and the consolidation of state finances are better than projected today, including as a result of a more active economic recovery.
At the same time, the ratings could be downgraded in the event of disruptions to concessional financing from international financial institutions or from capital markets, which would call into question the government’s ability to meet its debt service obligations, S&P said.
“Such disruptions may occur if the government abandons key reforms, such as ensuring the independence of the National Bank of Ukraine (NBU), which acts as a monetary authority and regulator of the financial system,” the message reads.
JSC “Khmelnytskoblenergo” made a clean sweep of the “Activity” ratio in the rating “Transparency and financial sustainability of state-owned enterprises in Ukraine”, created by Institute of Economic and Social Reforms (INEKO), based in Bratislava, Slovakia. Khmelnytskoblenergo beat the competition of 50 SOEs badly, securing the 1st place with the 9.2 pts. (out of 10), while the 2nd place got only 7.0 pts.
The rating was created by two think tanks, Institute for Economic and Social Reforms in Slovakia (INEKO) and the International Center for Policy Studies (ICPS), Ukraine. US Embassy in Ukraine and SlovakAid provided support for the project.
According to the methodology of the rating, the “Activity” ratio demonstrates “the efficiency of a company in its everyday business operations” and consists of Working Capital Turnover Ratio and Accounts Receivable Turnover Ratio.
Khmelnytskoblenergo also finished 8th on the “financial sustainability” and 6th on the “transparency” scale among the 50 companies analyzed.
The evaluation criteria for the Transparency scale were, according to the rating methodology, transparency and access to information, economic indicators, public procurement and property, human resources policy, ethics and conflict of interests, grants and charity policy.
According to Oleg Kozachuk, Acting CEO of Khmelnytskoblenergo, this is the recognition of the Khmelnytskoblenergo efficiency: “That’s the result of 4 years of hard work of the whole team – company’s management and almost 3,000 employees”.
Rating “Transparency and financial sustainability of state-owned enterprises in Ukraine” has been created as a part of the “Strengthening democratic stability of key state institutions in Ukraine” project by International Center for Policy Studies (ICPS) and Institute of Economics and Social Reforms in Slovakia (INEKO) with the support of US Embassy in Ukraine and SlovakAid.
JSC “Khmelnitskoblenergo” Electricity distribution service operator (DSO) in Khmelnytsk region, 70% of the company’s shares belong to the state, other 30% – to private legal entities and individuals. The company’s net profit in 2019 amounted to UAH 85.7 million, which is more than the profit of all state electricity DSOs in Ukraine combined. Dividends on the state share for 2019 amounted to about UAH 30 million.
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