1. travel
2. tourist destinations
3. france

Reform
of State-Owned Enterprises
April 2015
SOE Reform Taskforce
Task Force Leader
ü  over 10 years of professional experience in investment banking,
finance, economics and management consulting
ü  Advisor to the Minister of Economy of Lithuania
ü  Vice-Minister at the Ministry of Economy of Lithuania
Adomas Ąžuolas
Audickas
– Senior Advisor to
the Minister of
Economic
Development and
Trade of Ukraine
ü  successfully implemented SOE reform in Lithuania (fulfilled the
principles of transparency, corporate governance,
accountability for state enterprises and enacted the
privatization of non-profitable state enterprises)
ü  later, as a temporary administrator, was involved in the resolution of
the insolvency case of a Nasdaq-listed bank – Ukio Bank (together with
a team implemented good/bad band solution and transferred good part
of the bank to a private party)
ü  graduated from Reading University (BSc degree in finance and
banking) and from Vilnius University (mathematics)
ü  holds MBA degree from INSEAD
2
SOE Reform Taskforce
Roman Bondar
• 
• 
Daria Naumenko
over 8 years of extensive search and consulting experience
advising and placing senior executives in industrial and
agricultural companies
partner at Talent Advisors and member of CEO & BoD (PE)
Center of Excellence
• 
obtained Master’s degree in Finance at National Academy of
Management with honours
• 
has over 10 years of experience in equity research and
strategy (Dragon Capital), and audit (Deloitte & Touché)
• 
Strategist at Dragon Capital (steel, iron ore, coking coal and
coke sectors), later – equity trader
• 
holds a Master’s degree in Economics from Kyiv Taras
Shevchenko University, ACCA charterholder (since 2009)
• 
has extensive investment banking experience, worked on a
number of M&A transactions, debt and equity fund raisings
• 
Previously - reporting and controlling specialist at Industrial
Group Consortium
• 
Senior Associate at Dragon Capital investment banking
• 
holds a Master’s degree in Finance and Business Economics
from Manchester Business School and Master’s degree in
International Economics from Kyiv National Economics
University
Sergiy Gayda
Daria Volchenko
• 
over 7 years of extensive experience in various types of
debt and equity transactions (M&As, local bond and
Eurobond issues), corporate advisory and debt
restructuring, macroeconomic research
• 
Vice-president in investment banking at Dragon Capital
• 
graduated from the Ukrainian State University of Finance
and International Trade with a master's degree in
management
Anna Poisner
• 
has an extensive experience of drafting and negotiating
documents and providing legal advice in the areas of
mergers and acquisitions and international transactions
• 
international transactions and M&A lawyer at Dragon Capital
• 
law degree from Odessa National Academy of Law, Master of
Arts (Rutgers University, New Jersey, USA) Master of Laws
(New York University School of Law)
Inna Chuprinko
• 
over 7 years of experience in marketing, brand development
and marketing communications at international and local
companies (development and implementation of sales &
marketing plans)
• 
prior to joining the Force Team in 2015, she held Head of
Marketing positions at Dragon Capital, KMZ Industries,
Home Credit Group
• 
holds a diploma of higher education from Dneprodzerjinsk
State Technical University
Oksana Podrubenko
• 
more than 7 years of experience in operational consulting,
process improvement/reengineering
• 
manager at PricewaterhouseCoopers LLC (managing
projects, both in Public and Private Sector: key business
processes assessment,, development of management
system and improvement of procurement processes)
holds Master degree in Financial Management from Kyiv
National Economic University and Lean Six Sigma Green
Belt Certification
• 
3
SOE Sector: Context
Problem: Inefficient SOE Sector
§ 
State-owned enterprises (SOEs) have a large share in the
Ukrainian economy:
§ 
§ 
§ 
§ 
Aggregated data on SOEs for 9M2014
Ukraine Total
Ukraine has 3350 SOEs, however out of them only
1833 are operating
Total number of companies
the State is the largest employer: about 1m people
work at SOEs
Number of employees, m
0.93
Overdue salaries, UAHbn
0.7
The SOE sector in Ukraine urgently requires to be
reformed: it lacks transparency, supervision and efficient
governance
§ 
SOEs do not contribute their actual potential to the
state budget
§ 
the high level of corruption undermines public trust
in the SOEs and the whole public sector
3350
-Out of them operational
1833
Total assets, UAHbn
870.6
Asset depreciation rate, %
96.6
Net revenue, UAHbn
189.9
Net profit/(loss), UAHbn
(79.9)
Source: Ministry of Economy
The performance of the SOE sector is very weak: SOEs
reported an aggregated loss of UAH 80bn in 9M2014
Solution: SOEs Reform Initiative at the Ministry of Economy
§ 
The Ministry of Economy has made the reform of SOEs one of its top priorities
§ 
The goal of this reform is to build a healthy and transparent SOE management system that will aim to make
Ukraine adherent to global best practice, including OECD Guidelines
§ 
The full range of responsibilities for SOEs reform (from initiation through execution) has been assigned to the task
force “SOE Reload”, which is a working group at the Ministry led by Adomas Audickas, Senior Advisor to the Minister
of Economy
§ 
This group is working in cooperation with the Government, civil society and international organizations
4
Top-100 SOEs
Top-100 SOEs
§ 
For those parts of our reform that involve individual company analysis, we focus on top-100 companies (rather
than on 1833) . This applies to:
§ 
List of SOEs to be audited
§ 
Annual report on SOEs
§ 
Top-100 SOEs (excluding state-owned banks) account for ~90% of total SOE sector revenue and assets
§ 
The majority of SOEs had revenues less than EUR 1m in 9M2014 (around 80% out of 1833 operating SOEs)
Aggregated revenue for 9M2014 (excluding banks)
Aggregated assets for 9M2014 (excluding banks)
120%
120%
100%
86%
91%
96% 100%
100%
85%
80%
80%
56%
60%
57%
60%
89% 92%
100%
66%
42%
Source: Ministry of Economy
all 1833
top-300
0%
top-100
all 1833
top-300
top-100
top-50
top-10
0%
top-5
top-1
0%
0%
top-50
20%
top-10
20%
top-5
40%
top-1
40%
5
SOE Reform Structure
Goal: Increase efficiency of SOEs
Transparency &
accountability
§ Develop
Transparency
Guidelines, ensure
that SOEs publish
their accounts
§ Improve disclosure
standards
§ Prepare
comprehensive
overviews on the
SOE sector
§ Implement financial
audits and increase
their standards
§ Improve financial
and strategic
planning
Ownership &
Corp
governance
§ Develop Framework
document (SOE
Reform Concept)
for SOEs efficiency
and effectiveness
improvement
§ Establish a SOE
Reform Council
§ Develop Ownership
Policy, incl.
dividends
§ Introduce boards to
unitary SOEs
§ Appoint
independent board
members
Nomination &
Remuneration
§ Set a transparent
and professional
nomination
procedure
§ Establish a
Nomination
Committee
§ Launch CEO
selection procedure
for the largest
SOEs
§ Set an incentivebased
remuneration policy
Privatization
Communication
§ Set clear
performance
objectives
§ Prepare the
privatization list
and list of
companies banned
from privatization
§ Increase public
awareness on the
SOE reform
§ Ensure timely
communication
with all
stakeholders and
enhance marketing
§ Improve current
privatization
practices, allow
hiring reputable
advisors
Projects
Tasks
§ Create audit
committees and
improve internal
controls
6
SOE Reform Council
§ 
§ 
The Ministry of Economy and the SOE
Taskforce intend to establish a SOE
Reform Council which is expected to
include reputable economists and
experts
The main goals of the SOE Reform
Council would be to oversee the
reform process and track progress,
and to provide guidance on
implementation of international best
practices in SOE management
Indicative composition
of the SOE Reform Council
§ 
Indicatively: 7 people
§ 
Below are indicative profiles of
such Reform Council members:
• 
High-level representatives of
IFIs
• 
High-level representatives of
private sector
• 
Reputable economists
7
Reform Progress (1/3)
ü  We have formed the SOE reform task force, streamlined reform initiatives and
assigned responsibilities
General
ü  Framework document covering all stages of the SOE reform has been developed and
approved inside the Ministry of Economy, we are now waiting for confirmation from
other Ministries
ü  We presented our reform concept to IMF and OECD and received positive feedback
ü  We are now establishing a SOE Reform Council which will include 5-7 experts, we
are developing procedures for its operations
ü  New transparency guidelines have been approved by CabMin (18 Feb 2015) – we
are now monitoring implementation
Transparency
&
accountability
ü  We are also drafting changes to the Law of Ukraine on SOE Management to facilitate
implementation of key transparency principles
ü  We’ve prepared a research report with the overview of top-100 SOEs
ü  We are now drafting legislation on strategic planning
8
Reform Progress (2/3)
ü  We are now drafting legislative changes to introduce supervisory boards to unitary
SOEs and ensure that both existing and newly established supervisory boards have
independent directors
Corporate
governance
ü  Audit: we’ve developed a draft CabMin resolution that envisages audit of the largest
SOEs and sets criteria for selection of independent reputable auditors
ü  We are now developing a procedure for SOE corporatization and list of companies to
be corporatized
ü  We’ve changed the nomination procedure for CEOs of key SOEs (changes to CabMin
Decree #777)
Nomination
ü  New CEOs for key SOEs will now be selected using a rigorous 2-stage procedure
with the pre-selection by the Line Ministries followed by the Nomination Committee
ü  The Nomination Committee includes five Ministers and five independent experts
ü  The CEO for 1 company has been already appointed using this new procedure, the
contest for CEO for ___ companies has been already announced, another 25
companies are planning to launch the procedure in the nearest future
Remuneration
ü  We are now developing a new remuneration structure for CEOs of key SOEs
ü  The purpose is to ensure that the compensation of CEOs of SOEs corresponds to the
private-sector level and is linked to the company performance
9
Reform Progress (3/3)
ü  List of companies to be privatized in 2015 has been approved by CabMin
ü  We are now developing privatization strategy and launching pre-marketing of the
most attractive assets
Privatization
ü  List of companies banned from privatization has been approved by CabMin and
submitted to the Parliament for approval
ü  We’ve identified a number of necessary steps to boost transparency and efficiency
of the privatization process, such as hiring advisors and improving process
supervision
ü  A dedicated PR person for SOE reform has been hired
ü  Main activities:
Communication
• 
We are constantly working with media: responding to media requests
and preparing press-releases
• 
We have added a section on the Ministry of Economy website that is
dedicated to our SOE reform
• 
We have published information on our reform on the website of the
National Reform Council at the President’s Administration of Ukraine
(reforms.in.ua)
• 
We are starting social media marketing (SMM) - such as Facebook
10