Business news from Ukraine

REVENUE OF LOCAL BUDGETS’ GENERAL FUND IN JAN-JUNE 2019 AMOUNTES TO UAH 128.8 BLN

Revenue of the general fund of local budgets in January-June 2019 amounted to UAH 128.8 billion, excluding intergovernmental transfers, which was 19.6% higher than last year’s figures for the period, Ukraine’s Finance Ministry has said in a macroeconomic review for the first half of the current year. “The general fund of the local budgets excluding intergovernmental transfers received UAH 128.8 billion, which is 19.6% more than last year due to higher wages and business invigoration,” the Finance Ministry said.
As the State Treasury Service said, the local budgets in the first half of this year received UAH 283.58 billion in revenue. This includes UAH 264.95 billion (inclusive of intergovernmental transfers) sent to the general fund. Spending of the local budgets for this period amounted to UAH 261.48 billion, including UAH 225.75 billion taken from the general fund.
Among tax revenues, the largest growth in revenue transferred to the local budgets showed actual real estate tax payments, which grew by 32% compared to last year’s figure, up to UAH 2.108 billion.
The balance of the local budgets on deposit accounts at banks at the beginning of July amounted to UAH 7.6 billion, the review said. Funds from the general fund of the local budgets on deposit accounts shrank to UAH 3.4 billion, compared to UAH 8.6 billion in the first half of 2018, because the Cabinet of Ministers banned depositing assets of the general fund at banks this year.

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PARENT COMPANY OF METINVEST MINING AND METALLURGICAL GROUP SEES 7.5% FALL IN REVENUE IN APRIL

Revenue of Metinvest B.V. (the Netherlands), the parent company of the Metinvest mining and metallurgical group, fell by 7.5% or by $77 million in April compared with the previous month, to $954 million from $1.031 billion.
According to the preliminary unaudited consolidated monthly financial statements of the company, published on Thursday, earnings before interest, taxes, depreciation and amortization (EBITDA) in April was $173 million, which is 6% ($11 million) more than in March of the current year ($184 million).
According to the report, the adjusted EBITDA of the metallurgical division of the group in April 2019 was $53 million ($46 million in March), including $1 million from participation in the joint venture (minus $2 million). The mining division’s EBITDA is $151 million ($148 million in March), including from the joint venture – $28 million ($19 million). The expenses of the management company were $2 million ($8 million).
Total revenue in April 2019 consisted of the sales of the metallurgical division in the amount of $791 million ($844 million in March), mining – $305 million ($340 million), and intra-group sales – $142 ($152 million).
The total debt of the company in April increased $72 million compared to March, to $2.754 billion from $2.828 billion. At the same time, cash and its equivalents increased by $113 million, to $331 million from $218 million.

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UKRAINIAN BANKS’ REVENUE 40% UP IN JAN-FEB

Revenue of Ukrainian banks, not taking into account insolvent ones, in January and February 2019, totaled UAH 39.279 billion, which is 40.4% more than a year ago, according to a posting on the website of the National Bank of Ukraine (NBU).
Expenses of the banking system over the period accounted for UAH 30.588 billion, which is 27.5% more than a year ago.
Net profit of Ukrainian banks over the period came to UAH 8.691 billion, which is 2.2 times more than in January and February 2018.

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REVENUE OF UKRAINIAN BANKS GROW BY 38%

Revenue of Ukrainian banks, not taking into account insolvent ones, totaled UAH 20.18 billion in January 2019, which is 38% more than in January 2018, the National Bank of Ukraine (NBU) has reported on its website. The number of banks for the period from February 1, 2018 to February 1, 2018 decreased to 77 from 82 financial institutions.
The National Bank said that the interest income of banks in January increased by 18%, to UAH 13.282 billion, commission fees – by 18%, to UAH 4.628 billion. In addition, banks received UAH 1.656 billion from revaluation and purchase/sale operations (a loss of UAH 1.059 billion was recorded in January 2018), UAH 481 million of other operating income (an increase by 11%), UAH 79 million of other income (a decrease by 39%) and UAH 54 million from return of written-off assets (an increase by 38%).
The expenses of the banking system in January 2019 amounted to UAH 14.754 billion, which is 14% more than in January 2018.
Interest expenses increased by 10%, to UAH 6.255 billion, commission fees – by 35%, to UAH 1.47 billion, administrative expenses – by 15%, to UAH 4.136 billion, and contributions to reserves – by 14%, to UAH 1.759 billion. In addition, other operating expenses increased by 20%, to UAH 821 million, and other expenses decreased by 3%, to UAH 77 million.
After tax deduction, the net profit of Ukrainian banks in January 2019 amounted to UAH 5.426 billion, which is a 3.2-fold rise compared with January 2018.

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UKRAINIAN MOBILE COMMUNICATIONS OPERATOR KYIVSTAR HAS 13.2% RISE IN REVENUE IN 2018

Net revenue of JSC Kyivstar in 2018 totaled UAH 18.719 billion, which is 13.2% more than in 2017. According to a report of the VEON parent company, revenue of the operator from providing mobile communications services grew by 13.6%, to UAH 17.412 billion, and from the provision of fixed-line communication services – by 6.5%, to UAH 1.206 billion. In addition, earnings before interest, taxes, depreciation and amortization (EBITDA) last year rose by 14.2%, to UAH 10.529 billion, and EBITDA margin – by 0.5 percentage points (p.p.), to 56.2%.
Kyivstar’s capital expenditure in 2018 (not including the cost of licenses) increased 18.4%, to UAH 3.1 billion. The number of mobile operator’s subscribers in the fourth quarter of 2018 decreased 0.5% compared with the fourth quarter of 2017, to 26.4 million, while the number of fixed-line subscribers increased 11%, to 0.9 million.
In the fourth quarter of 2018, the operator’s income increased 16.6%, to UAH 5.009 billion. Of these, UAH 4.671 billion was revenue from mobile services (a rise of 17.2%), and UAH 311 million – income from fixed-line services (a rise of 9.1%). EBITDA over this period increased 12%, to UAH 2.793 billion, EBITDA margin decreased 2.3 p.p., to 55.8%. Capital investment in the fourth quarter of 2018 amounted to UAH 749 million, which is 40.4% more than in the same period of 2017. According to the operator, mainly the funds were sent to the development of the 4G network, improving the quality of services.
In the last quarter of last year, the ARPU (average income per subscriber) grew by 18.2%, to UAH 58, while MoU (minutes per user) decreased 1%, to 584 minutes.
According to the Kyivstar’s press release, in the fourth quarter of 2018 the number of mobile Internet users increased 18.2% compared with the same period in 2017, to 14.8 million, the consumption of data traffic increased by 152.4%, to 2.753 GB per subscriber. “The 2.5-fold increase in the consumption of data traffic, the increase in the number of mobile Internet users influenced the ARPU indicator: in the fourth quarter, this figure increased 18.2%, to UAH 58,” the company said.
In addition, Kyivstar also reminded that in recent years, the need for subscribers to use several SIM cards at the same time has been decreasing in the mobile market of Ukraine. Last year, the operator transferred taxes and other payments totaling UAH 10.5 billion to the national budget, including more than UAH 4 billion for licenses to develop new communication technologies in the country.
Kyivstar is a Ukrainian mobile communications operator. VEON international group (earlier VimpelCom) is the shareholder in Kyivstar. The group’s shares are listed on NASDAQ (New York).

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KPMG-UKRAINE BOOSTS REVENUE BY 39%

KPMG in Ukraine in the 2018 fiscal year (ended on September 30, 2018) boosted revenue by 39%, to UAH 473 million and increased the number of employees, the company said in a statement on its website. The segment of advisory services showed the highest growth rates, as well as revenue from audit, tax and legal advice, the company said.
“The gradual integration of Ukraine into the EU is reflected in the improvement of business practices of Ukrainian companies, which, in turn, increases the demand for qualified advisory services,” the statement quoted Managing Partner at KPMG in Ukraine Andriy Tsymbal as saying.
In 2018 KPMG in Ukraine increased the number of its employees by 289, of which 167 are university graduates and entry-level specialists.
Globally, KPMG International in FY 2018 increased total revenue in local currencies by 7.1% from FY2017 to a record amount of $29 billion in the equivalent.
KPMG in Ukraine has been working on the Ukrainian market since 1992. It provides audit and assurance, tax and legal, advisory, risk consulting, and forensic services.

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