privatization in ukraine igor bilous head of the state property fund of ukraine the state property...

PRIVATIZATION IN UKRAINEIGOR BILOUSHEAD OF THE STATE PROPERTY FUND OF UKRAINE

THE STATE PROPERTY FUND OF UKRAINE

DISCLAIMER

• This document (the “Document”) has been prepared by certain state governance bodies of Ukraine (“Authorized Management Bodies”) and is being furnished to public solely for the purpose of considering participation in privatization procedures regarding the state owned stake and/or assets in the company in relation to which this information is furnished (the “Company”). The Authorized Management Bodies make no representations or warranties as to the completeness of the information furnished herein. This Document contains descriptive materials, financial projections and other data compiled only for the convenience of parties interested in participating in privatization procedures regarding the state owned stake and/or assets in the Company.

• The sole purpose of this Document is to assist the prospective bidders in deciding whether to proceed with further analysis of this investment opportunity and involvement into privatization procedures. The Authorized Management Bodies make no representation or warranty, express or implied, as to the completeness of the information contained herein, and of this overview’s usefulness in predicting the Company’s future performance, or in estimating its current or future value. In furnishing this Document, the Authorized Management Bodies reserve the right to amend or replace this overview at any time, but do not undertake any obligation to provide the recipients with access to any additional information or to update or otherwise revise the Document, unless as required under applicable laws of Ukraine. The information in this Document does not purport to contain all information that may be required to evaluate the assets or businesses of the Company. Neither part of this Document, nor the fact of its distribution, should form the basis of, or be relied on in connection with, any contract or commitment or investment decision whatsoever, and the recipient thereof should conduct its own independent investigation and analysis of the information contained or referred to herein.

• This overview is being supplied to you solely for your information and does not constitute or form part of any offer or invitation or inducement to sell, or any solicitation of any offer to purchaser, any shares and/or assets in the Company, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of the Company.

• The sale process of the stake and/or assets of the Company will be completed in line with applicable privatization procedures under effective Ukrainian law.

2

1

UKRAINE TODAY

• NEW COUNTRY: NEW TAX LAW, FIGHT AGAINST CORRUPTION, DEREGULATION;

• WAR IS ALMOST OVER;

• GOVERNMENT UNDERSTANDS SIGNIFICANCE OF PRIVATE INVESTOR FOR PROSPERITY OF UKRAINE.


2

KEY POINTS

Positive Trend

3

2014 2015 2016

Fighting with corruption

National Anti-Corruption Bureau created

70 detectives

Anticorruption Prosecutor office

to be created

255 detectives142 place World rank

Security

improving• Army: 146K men

• Police: 200K men

• Military budget: 2% GDP

280K men

175K men

3% GDP

300K men

140K men

5% GDP

Positive Trend

4

2014 2015 2016

EU standards complying

EU Association Free trade agreement with

Canada

Implementation of EU association

National economy

grow

National debt restructuring

• Inflation:• Balance of trade:• FX reserves:• Direct

investments:

27-48%

+$2,2B.

$18,3B.

$2,2B.

12%

+$1,4B.

$25,4B.

$3,5B.

$3,6B. of debt cancelled (~20%)

Bank and SOE debt restructured

Debt repayments ($15,3B.)

postponed to 2019

National debt: $70B.,

including international: $39B.

25%

-$13,3B.

$7,5B.

$0,4B.

SPFU AND PRIVATIZATION

• WE UNDERSTAND: PRIVATE OWNER IS MORE EFFECTIVE THAN GOVERNMENT.

• WE MAKE ALL PROCEDURES AS SIMPLE AS POSSIBLE.

• FULL TRANSPARENCY, NO REGULATIONS, NO RESTRICTIONS.


5

• APPLICATION PROCESS - MAKE SECURITY DEPOSIT;

• PARTICIPATE IN AUCTION;

• SIGN AGREEMENT AND SETTLE THE PRICE.


6

3 SIMPLE STEPS TO BUY THE STATE-OWNED ENTERPRISE:

• Transparent process from announcement to auction;

• No specific constraints to participate.

PRIVATIZATION PRINCIPLES

7

TRANSPARENCY OF PROCEDURES

COMPLIANCE WITH THE NATIONAL LEGISLATION

RISKS MITIGATION

• Clear regulation exceptions for process;

• Investment obligations taken by investor;

• Funds origination.

• Information disclosure;

• Access to the asset and management;

• Clear sale and purchase agreement.

• 99,6% of Odesa Portside Plant,

• 6 power-distributing companies and 4 CHP’s (51 to 100%).

3 WAVES OF PRIVATIZATION

8

315 COMPANIES ARE READY NOW

+400 OF STATE-OWNED JOINT STOCK COMPANIES

CORPORATIZATION OF 3000 STATE-OWNED ENTERPRISES

• all industries.

BONUS

• thousands of state-owned real estate objects are ready for sale in a Dutch auction way.

• even for strategic and military companies – minor shares will be sold.

the SPFU

the Ministry of Agrarian Policy and Food of Ukraine including 4 SOEs controlled by the State Agency of Fisheries of Ukraine

the Ministry of Energy and Coal Industry of Ukraine

the Ministry of Economic Development and Trade of Ukraine

other central governmental authorities

127

41

66

42

39

SCOPE OF PRIVATIZATION

SOES CONTROLLED BY:

302

315

9

APPENDIX I

TOP-12 SOES FOR PRIVATIZATION

10

Company Industry Revenue

2014 year, USD mln*

Share for privatization, %

Odesa Portside Plant Fertilisers 457 99,6%

Tsentrenergo Energy Generation 636 78,3%

Kharkivoblenergo Energy Distribution 332 65,0%

Mykolayivoblenergo Energy Distribution 127 70,0%

Zaporizhzhyaoblenergo Energy Distribution 342 60,3%

Khmelnytskeoblenergo Energy Distribution 93 70,0%

Ternopiloblenergo Energy Distribution 66 51,0%

Cherkasyoblenergo Energy Distribution 3 46,0%

Odesa CHP Energy Generation 22 100,0%

Kherson CHP Energy Generation 16 99,8%

Mykolayiv CHP Energy Generation 15 100,0%

Dniprodzerzhynsk CHP Energy Generation 15 99,9%

• *Average NBU exchange rate 11,8867 UAH/USD for 2014• **To be determined

TOP SOES FOR PRIVATIZATION IN 2015

11

FERTILIZERS: ODESA PORTSIDE PLANT

UAHm 2012 2013 2014

Revenue 5,372 4,904 5,428

Gross profit 168 (811) (39)

EBITDA (12) (1,034) (132)

Net profit (116) (1,144) (270)

Total assets 2,240 2,756 8,827

Financial debt - - 4,603

• The Odesa Portside Plant (OPP) is a major chemical production company accounting for 17% of ammonium nitrate and 19% of urea production capacity in Ukraine

• A specific advantage of the plant is that it is located at the end-point of the ammonia pipeline Tolyatti-Gorlovka-Odesa and operates sea chemicals transshipment terminal:

‒ Transhipment services provide additional source of revenue

• Apart from ammonium nitrate and urea OPP produces liquid nitrogen, carbon dioxide, liquid oxygen and sodium sulphate

• The plant due to its strategic location and connection to the chemical transportation infrastructure is export oriented

‒ Export sales account up to 85% of the output‒ Major export destinations incl. EU countries and USA

• The OPP’s financial performance is highly dependent on natural gas prices, with gas constituting 80 % of the production costs

‒ In 2014, apart from the natural gas supplies from the state-owned company Naftogaz OPP started importing gas from Hungary through reverse facilities

• The Odesa Portside Plant is state-owned by 99.57%

OPP fertilizers output, kt

Key financials (according to national GAAP)

Key highlights

Production Ammonia 1.1Urea 0.9Liquid nitrogen, carbon, dioxide, liquid oxygen and sodium sulphate (non-significant quantities)

Total production capacities 2.0Transshipment Ammonia 4.3Urea 5.0Methanol 1.0Liquid fertilizers 0.5

Total transshipment capacities 10.8

OPP capacities overview, mt pa

2009 2010 2011 2012 2013 2014

1,421 1,523 1,561 1,373 1,472

1,172

Odesa Portside Plant

DniproazotStirol (Gorlovka)

Cherkasskiy AzotSeverdonets’kiy

Azot

Rivneazot

to Toliattiazot

Ammonia pipeline and chemical producers

Source: Company’s data

112

ENERGY GENERATION: TSENTRENERGO

P&L (UAHm) 2011 2012 2013 2014Revenue 7,180 9,063 7,454 7,558Gross profit 546 884 780 294

Gross margin 8% 10% 10% 4%EBITDA 391 558 770 311

EBITDA margin 5% 6% 10% 4%Net profit 35 234 487 71

Trypilska Zmiivska Vuhlehirska Total

Installed capacity 1 800 MW 2 200 MW 3 600 MW7 600 MW

incl. gas-fired blocks 2x300 MW - 3x800 MW3 000 MW

incl. coal-fired blocks 4x300 MW 6x175 MW3x275 MW1x325 MW

4x300 MW4 600 MW

Coal grade A/T A/T G -Fuel consumption per kW

406 g/kW 405 g/kW 370 g/kW -

Electricity production (2014)

3,869 GWh 5,002 GWh 3,643 GWh12,514 GWh

Headcount, employees*

1 812 2 879 2 852 8 226**

• PJSC Tsentrenergo is Ukraine’s 2nd largest thermal generator with capacity of 7,600 MW. It operates 3 power plants in Kyiv, Kharkiv and Donetsk regions and has own repair services company Remenergo

• The Company produces up to 9% of total electricity in Ukraine, generating 15-18 TWh annually. PJSC Tsentrenergo’s share among all thermal GenCos reaches 22-23%

• In March 2013, a fire broke out at PJSC Tsentrenergo’s Vuhlehirska thermal power plant which forced shutdown of Vuhlehirska TPP for 7 months of 2013. Currently, 3 out of 4 damaged coal-fired blocks are fully reconstructed and operational

• Further decrease in electricity generation in 2014 is explained by the scarcity of the anthracite coal consumed by Trypilska and Zmievska TPPs and which was previously produced by the mines located in Donetsk and Lugansk regions currently left on the separatists-controlled territory. The company tried to make up for the shortage by importing coal from South Africa and Russia

• Majority stake in PJSC Tsentrenergo is state-owned (78.3%), free float accounts for the rest (21.7%)

Key assets geographical location

Key financials (according to national GAAP)

Key highlights

Key indicators


Balance Sheet (UAHm) 2011 2012 2013 2014Total assets 4,318 4,507 5,027 5,281

incl. PPE 2,147 2,091 2,026 2,088Total equity 1,863 2,086 2,503 2,428

Total liabilities 2,454 2,420 2,5232,853

incl. financial debt 567 699 784 182

Kyiv Kharkiv

Donetsk

21

3

Share in electricity generation in Ukraine

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

-

5

10

15

20

25

0%

5%

10%

15%

20%

25%

12.214.1 15.0 15.7

13.5 14.6 14.818.2

13.8 12.5

7% 7% 8% 8% 8% 8% 8% 9%7% 7%

20% 20% 20% 22% 21% 22% 20%23%

18% 18%

Centrenergo electricity output, TWh (lhs)Share in total electricity output, % (rhs)Share in thermal GenCos output, % (rhs)

*In 2013. ** incl. Remenergo 1

Tsentrenergo

13

ENERGY DISTRIBUTION: KHARKIVOBLENERGO

UAHm 2012 2013 2014Revenue 3,397 3,656 3,948Gross profit 190 128 67EBITDA 448 294 298Net profit 29 29 30Total assets 2,271 2,376 2,667Total equity 1,955 2,007 2,247Total liabilities 316 369 420

Operating metrics 2012 2013 2014

Distributed to customers (GW·h)

5,577 5,670 7,364

Grid losses (%) 13.8% 13.04% 12.44%

• JSC Kharkivoblenergo is one of the largest power distributing companies in Ukraine, which transmits and supplies energy to the highly industrialized Kharkiv region

• The Company serves 1.2 m households and 3,000 industrial customers (mostly machine-building plants). The Company’s largest consumers are water and heating utilities, the Kharkiv metro operator, and power machinery plants Turboatom and Elektrovazhmash

• The 2 groups - households and industrial customers account for 42.5% and 30.7% of the oblenergo’s energy sales, followed by commercial non-industrial consumers (23.5%), and municipal users (3.3%)

• JSC Kharkivoblenergo owns a 47,273 km grid with 8,162 MVA of transformer capacity

• Number of employees at the Company is ca 7,100• The State holds a 65.0% stake in JSC Kharkivoblenergo• The minority stake of 29.8% belongs to Konstantin Grygoryshyn. The remaining

5.2% stake is on free float

Key financials

Key highlights

Key indicators



• Region area: 31.4k sq. km• Region population: 2.8 m• Key industries: machinery, construction materials, chemical industry, food

and processing industry, agriculture

Kyiv Kharkiv region

114

ENERGY DISTRIBUTION: MYKOLAYIVOBLENERGO

UAHm 2012 2013 2014

Revenue 1,326 1,379 1,505

Gross profit 159 105 114

EBITDA 138 49 111

Net profit 32 17 15

Total assets 968 998 1 034

Total equity 335 345 357

Total liabilities 633 653 677

• PJSC Mykolayivoblenergo transmits and supplies electricity in Mykolayiv region; the Company is the monopolist in the region. It serves 476,000 residential customers and 16,000 commercial and industrial customers: population and industrial enterprises are the main customers groups accounting for 46% and 24% of sales respectively

• Its installed transformer capacity is 3,361 MVA (6,000 substations). PJSC Mykolayivoblenergo owns 25,000 km of overhead transmission lines and 1,463 km of underground power cables. The Company also owns three small HPPs: 12,2 GW·h of electricity produced in 2014

• The state regulator approved UAH 80m of CapEx for the Company for 2014 and UAH 74m for 2015: modernization and reconstruction of transmission lines and equipment account for the bulk of CapEx. The wear rate of the lines averages 60%

• The Company has around 3,550 employees • In terms of financial leverage, PJSC Mykolayivoblenergo has relatively low bank debt,

but owes UAH 376m to the state wholesale electricity market operator Energorynok. These liabilities were accumulated before 2010 and are now structured as a long-term debt

• The State holds a 70% stake in the Company. VS Energy Group holds a minority interest in the Company

Key financials

Key highlights

Key indicators


Geographic location and region of operations

Mykolayiv region

Kyiv



2,647 2,615 2,577

Grid losses (%) 13.7% 12.3% 12.2%

• Region area: 24.6k sq. km• Region population: 1.2 m• Key industries: shipbuilding and other machinery manufacturing, food

processing

115

ENERGY DISTRIBUTION: ZAPORIZHOBLENERGO

UAHm 2012 2013 2014Revenue 5 050 4 747 4 070Gross profit 64 77 8EBITDA 133 180 8Net profit 23 25 6Total assets 2 290 1 487 1 736Total equity 45 45 45Total liabilities 1 107 1 144 1 365

• PJSC Zaporizhyaoblenergo is a top-10 electricity distributor in Ukraine, supplying electricity to the heavily industrialized Zaporizhya region

• The Company serves 783k residential customers and 23k commercial and large industrial enterprises including:

‒ steelmakers Zaporizhstal and Dniprospetsstal, Zaporizhya Ferroalloy

‒ engineering plants (e.g. Motor Sich)

• The oblenergo owns a 40,000 km low-voltage transmission grid with 9,749 MVA of installed capacity

• Number of employees at the Company is ca 5,800

• The State holds a 60.25% stake in the Company

• The minority shareholders are:

‒ Igor Surkis (16.5%)

‒ Konstantin Grygoryshyn (6.2%)

‒ Igor Kolomoisky (6.2%)

‒ the remainder 10.85% - free float

Key financials

Key highlights

Key indicators




Distributed to customers (GW·h) 8,327 8,298 8,472

Grid losses (%) 8.12% 8.97% 8.31%

Kyiv

Zaporizhya region

► Region area: 27.2k sq. km► Region population: 1.9 m► Key industries: engineering, metallurgy, energy-generation, industrial

goods production and agriculture

16

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ENERGY DISTRIBUTION : KHMELNYTSKEOBLENERGO


Distributed to customers (GW·h) 2,067 2,127 2,121

UAHm 2012 2013 2014

Revenue 933 1,001 1,101


EBITDA 115 129 109

Net profit 31 49 26

Total assets 544 899 878



• PJSC Khmelnytskeoblenergo transmits and supplies electricity in Khmelnitsky region; accounts for 75% of electricity sales in the region

• The Company serves 550,000 residential customers and 19,500 commercial and industrial customers. Population, industrial and other commercial enterprises are the main customers groups accounting for 42%, 14% and 11% of sales respectively

• Its installed transformer capacity is 3,127 MVA (7,300 substations)• PJSC Khmelnytskeoblenergo owns 35,000 km of overhead transmission

lines and 1,000 km of cable power transmission lines• The Company has around 3,560 employees• The state regulator approved UAH 58m of CapEx for the Company for 2014

and UAH 51m for 2015• The State holds a 70% stake in the Company. VS Energy Group holds a

minority interest in the Company

Key financials

Key highlights

Key indicators



Kyiv

Khmelnitsk region

► Region area: 20.6k sq. km► Region population: 1.3 m► Key industries: machinery manufacturing, sugar production and other food

processing

17

ENERGY DISTRIBUTION: TERNOPILOBLENERGO

• PJSC Ternopiloblenergo transmits and supplies electricity to consumers in Ternopil region. It owns a 23,870 km grid with total transformer capacity of 4,382 MVA

• The Company serves ca 0.5 m of residential customers and several hundreds of industrial customers (mostly light and food industry plants and agri-businesses)

• Consumers base:

‒ 53.6% - residential customers

‒ 13.6% - industrial customers

‒ 12.9% - municipal and state users

‒ c.20% - other non-industrial customers

• The Company’s headcount is c. 2,300 employees

• The State holds a 51% stake in JSC Ternopiloblenergo. The minority stakes are held by Igor Kolomoisky (20%) and Konstantin Grygoryshyn (20%) with the remainder 9% - free float


Key financials

Key highlights

UAHm 2012 2013 2014

Revenue 655 721 787


EBITDA 64 81 36

Net profit 6 13 (16)

Total assets 653 708 752



Key indicators




1,215 1,234 1,235

Grid losses (%) 18.0% 17.79% 17.26%

Kyiv

Ternopil region

• Region area: 13.8k sq. km• Region population: 1.1 m• Key industries: agriculture, light and food industry, machine-building and

tourism

18

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ENERGY DISTRIBUTION: CHERKASYOBLENERGO

Electric power supply dynamics

Key financials

Key highlights

Sales structure by type of consumers

Enterprise location

Source: Company’s data 1

UAHm 2012 2013 2014

Sales

1,360

1,326

1,466

Gross profit

31

79

68

EBITDA

52

56

70

Net income

4

4

4

Total assets

498

514

601

Debt

6

9

10

47%

16%

10%

7%

5%

15%

Households Industrial consumers Agriculture companies

Public sector Public utility companies Other consumers

PJSC Cherkasyoblenergo

Kyiv

• PJSC Cherkasyoblenergo operates as an electric energy distributor and transmits electric energy in Cherkasy region. Company purchases electric energy from the state-owned enterprise “Energorynok” and distributes it to consumers via direct sales regulated by individual contracts.

• Electricity distribution in Ukraine is currently managed by 26 oblenergos, one per each region (except for Kyiv and Donetsk with two oblenergos). Being a natural monopolies, oblenergos are regulated by National Electric Energy Regulatory Committee (NERC).

• NERC sets retail tariffs for oblenergos based on expected costs, grid losses and CAPEX needs (cost-plus basis).

• Licensed area for Cherkasyoblenergo operations comprises 20.9k km. The enterprise supplies power to more then 632k consumers.

• Total length of aboveground electric power lines with voltage range of 0.4-154 kW amounts to 29.4 thousand km, whereas underground power cables with 0.4 – 110 kW voltage have length of 1.9 thousand km.

• Seasonality is common for the industry. In autumn and winter electric power supply increases by 25-30%. Maintenance cost related to transmission lines also tend to grow due to adverse weather conditions during that time.

• Government holds 46% stake in PJSC Cherkasyoblenergo.

2012 2013 2014

- 500

1,000 1,500 2,000 2,500 3,000 3,500

1,250

1,300

1,350

1,400

1,450

1,500

Electric power supply Sales

GW

h

UA

Hm

19

Balance Sheet (UAHm) 31-Dec-12 31-Dec-13 31-Dec-14Total assets 178.7 289.4 331.8 incl. PPE 56.2 92.2 87.5

Total equity (107.6) (158.8) (229.1)Total liabilities 286.3 448.3 560.9 incl. financial debt - - - incl. trade accounts payable 213.5 362.8 475.9

ENERGY GENERATION: ODESA CHP

Heating65%

Electricity35%

Operational parametersInstalled capacity

• Heating 779 Gcal/hour

•Electricity 68 MWt

Production volumes, 2014

• Heating 397,866 Gcal

•Electricity 58.9m kWh

Other parameters

• # of employees (2014) 420

• PJSC Odesa TPP is the monopolist thermal power producer in the city of Odesa, one of the largest cities in Ukraine with population of c. 1m

• The fuel mainly used is natural gas and to some extend heavy oil• The thermal power is transmitted via heated water for heating and hot water

supply. Heated water and steam are supplied via 4 main thermal pipelines to the network of the municipal company Odesa Heating Supply responsible for delivering the power to the final customers (households and offices)

• Electricity generated is sold to the state-company Energorynok• Similar to other TPPs in Ukraine operations of PJSC Odesa TPP are seasonal. The

heating power and electricity are produced during the heating season- usually from October to April

• The stake owned by the state in PJSC Odesa TPP is 99.989%


Key financials

Key highlights

Key indicators


P&L (UAHm) 2012 2013 2014Revenue 273.4 275.0 266.4 Gross profit 0.4 3.5 (4.7)EBITDA (0.2) (81.6) (107.0)Net profit (15.7) (51.2) (70.3)

Kyiv

PJSC Odesa TPP

Revenue split, 2014

120

ENERGY GENERATION: KHERSON CHP

P&L (UAHm) 2012 2013 2014Revenue 193.1 192.5 189.5 Gross profit 0.3 (5.8) (14.6)EBITDA 22.4 (17.7) 32.7 Net profit 8.5 (27.8) 15.6

Heating45%

Electricity55%

Key indicatorsKey financials


Kyiv

PJSC Kherson TPP


Total equity 9.2 (21.2) (5.9)Total liabilities 180.2 220.3 228.5 incl. financial debt - - - incl. trade accounts payable 105.2 157.1 153.8

Operational parametersInstalled capacity






Other parameters


• PJSC Kherson TPP is a combined heat and power producer which is servicing up to 50% of the households which are receiving centralized heating supply of the Kherson city, the center city of the Kherson region having almost 400k inhabitants

• Natural gas in the main fuel while heavy oil could be used as supplementary. Natural gas is supplied by the state company NJSC Naftogaz

• Similar to other TPPs in Ukraine, operations of Kherson TPP are seasonal. The heating power and electricity are produced during the heating season usually from October to April

• The stake owned by the state in PJSC Kherson TPP is 99.8%

Key highlights

Revenue split, 2014


21

ENERGY GENERATION: MYKOLAYIV CHP

• PJSC Mykolayiv TPP supplies heating power to more than 40% of the households and enterprises of the city of Mykolayiv, the center city of the Mykolayiv region having almost 500k inhabitants

• The company is also important electricity generator in Mykolayiv• Natural gas in the main fuel while heavy oil could be used as supplementary• Similar to other TPPs in Ukraine operations of Mykolayiv TPP are seasonal. The

heating power and electricity are produced during the heating season - usually from October to April

• PJSC Mykolayiv TPP is 100% state-owned

Key assets geographical locationKey highlights

Balance Sheet (UAHm) 31-Dec-12 31-Dec-13 31-Dec-14Total assets 75.9 103.5 117.9incl. PPE 25.1 33.1 34.6

Total equity 33.1 25.7 42.9Total liabilities 42.8 77.8 74.7incl. financial debt - - -incl. trade accounts payable 29.4 63.1 57.9

P&L (UAHm) 2012 2013 2014Revenue 188.5 199.0 177.7Gross profit 5.7 15.3 4.6EBITDA 22.7 0.1 26Net profit 15.2 (2.7) 17.2

Key financials Key indicators


Operational parameters

Installed capacity





•Electricity 94m kWh

Other parameters


22

Kyiv

PJSC Mykolayiv TPP

Revenue split, 2014

ENERGY GENERATION: DNIPRODZERZHYNSK CHP

P&L (UAHm) 2012 2013 2014Revenue 187.7 183 176 Gross profit 9.4 6 5

Gross margin 5.0% 3.0% 3.1%EBITDA (32.0) 1.5 14.2

EBITDA margin -17.1% 0.8% 8.1%Net profit (2.2) 0.1 0.5

• PJSC Dniprodzerzhynsk TPP is a combined heat and power producer which is servicing residential area of Dniprodzerzhynsk located on the right bank of the Dnipro river. Dniprodzerzhynsk is an industrial city in Dnipropetrovsk oblast having app. 240k inhabitants

• Natural gas is the main fuel used by the TPP. It is supplied by the state company NJSC Naftogaz

• The stake owned by the state in PJSC Dniprodzerzhynsk TPP is 99.9277%


Key indicators

Key highlights

Key financials

Operational parameters

Installed capacity


•Electricity 61.6 MWt




Other parameters


Revenue split, 2014

Electricity44%

Heating56%

Kyiv

PJSC Dniprodzerzhynsk TPP


Total equity 2.2 (23.7) (23.3)Total liabilities 259.4 374.2 521.9 incl. trade accounts payable 152.3 281.6 395.1


23

APPENDIX II

ADDITIONAL INFO

24

THE DISPOSAL OF EQUITY STAKES WILL BE CONDUCTED IN TWO MAJOR WAYS

• Minority stakes (up to 25%) of the state-owned enterprises will be sold on the stock exchange.

• Majority stakes (50% and more) will be auctioned through a tender with open price offers.

In any case, if the stake to be acquired exceeds 25% or 50 % or is otherwise deemed to grant controlling powers in the governing bodies of the SOE, then the approval of the Antimonopoly Committee of Ukraine must be obtained prior to the purchase.

Title to privatized property is evidenced by an SPA which must be certified by a Ukrainian notary.

PRIVATIZATION METHODS

25

Foreign individuals and legal entities MAY PARTICIPATE in the privatization process, along with Ukrainian citizens and legal entities, EXCEPT:

• for entities more than 25% of the assets of which are state-owned;

• state bodies;

• employees of state privatization bodies;

• state business entities or their subsidiaries of any legal organizational form;

• persons that are incorporated in off-shore zones or in jurisdictions that are listed in FATF’s "Non-Cooperative Countries or Territories“;

• legal entities or private individuals on any sanction list;

• all persons that are directly or indirectly controlled by the persons specified;

The Privatization Law stipulates that foreign investors must submit a declaration of the origin of the funds with which they intend to pay for the property being privatized, regardless of the value of the purchase.

ELIGIBLE PARTICIPANTS IN PRIVATIZATION

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Specific post-acquisition investment obligations must be included into the SPA, i.e.:

• Preservation of the main types of activity;

• Modernization of production;

• Compliance with mobilization targets;

• Ensuring social guarantees for employees;

• Environmental protection obligations;

• Repayment of debts;

• Other obligations agreed between buyer and seller.

The period for the fulfillment of investment obligations, except the obligation regarding the compliance with mobilization targets, may not exceed 5 years.

Any future transfer of shares which are subject to investment obligations must be approved by the SPFU. If the state privatization authority approves such a transfer of shares (property), the investment obligations must be assumed by the new owner of the shares (property).

INVESTOR’S POST-PRIVATIZATION COMMITMENTS

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• There are restrictions on investors in shares of SOEs that enjoy a monopoly (dominant) position in the national market for the relevant products, or that are of strategic significance to the national economy and/or security.

• In such cases only a majority stake in such a SOEs may be offered for privatization and privatization is performed on a case-by-case basis, and such privatization is strictly regulated.

• Specific rules may be established for privatization of SOEs in certain industries (i.e., electricity, telecoms).

• If an enterprise which is to be sold through an auction or a tender or at a stock exchange is identified as “strategic,” the bidders must provide information to the privatization authorities about related undertakings and other additional documentation that may be requested by the SPFU.

PRIVATIZATION OF “STRATEGIC” SOES

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Thank you for your attention!

THE STATE FUND OF PROPERTY OF UKRAINE

Igor Bilous

Head of the State Property Fund of Ukraine

[email protected]

www.spfu.gov.ua29

mailto:[email protected]

http://www.spfu.gov.ua/

privatization in ukraine igor bilous head of the state property fund of ukraine the state property...

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