Overview of Ukrainian infrastructure

May 2016

Ukraine - geographical center of Europe

Geographical center of

Europe, making the country

an ideal trade hub to the EU,

Middle East and Asia.

U k r a i n e

Odessa

Kyiv

• #1 IT engineering force in Central and Eastern Europe (CEE) • 20 times growth in IT outsourcing sales since 2003 • IT services are 40% of all exports to US - the #1 trade category • 100+ global companies operate software R&D labs in Ukraine • 130,000 engineering graduates annually • 9.8% of graduates in math, sciences and computing • Jan Koum (WhatsApp) and Max Levchin (PayPal) born and raised in Kyiv

• #1 black soi l concentration globally • Over 70% of Ukraine is agr icultural land, valued at

> $100 bln. • #1 in sunflower oi l exports globally • #3 world grains exporter after the US and EU

Ukraine – country profile

Information Technology:

Agribusiness:

Natural resources:

• #2 manganese ores and graphite deposits globally • Signif icant iron ore deposits • Local gas production covers over 50% of needs

3

Largest European country.

45,5 mln. people population.

Nearly 100% literate. Member of 28 international organization, including UN and WTO.

Visa free travel for short stays for

most Western countries.

Deep and Comprehensive Free Trade Agreement with European Union.

Average salary: $156 per month.

Most cost-competitive manufacturing platform in Europe.

32.4

34.8

38.0*

13/14

14/15

15/16

Grains export growth

* 15/16 forecast

mln

. ton

s

Ukraine - important international transportation hub

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5 out of 10 European transport corridors run through Ukrainian territory.

Ukraine has one of the most extensive railroad networks in Europe handling a substantial part of

passenger and freight traffic.

Ukraine’s road network is no less extensive, covering the country’s entire territory and making possible

deliveries to any point of destination.

The upcoming reconstruction of river waterways will help river transport become a worthy alternative to its rail and road counterparts.

67%

26%

2015 Ukraine cargo transportation structure*

Trucks

Railway

Pipes

Water

Air

1.4 bln. tons

* Inside the country. Trucks transportation includes non-commercial turnover.

2015 freight

transportation

turnover:

1.4 bln tons20.9 thousand km

of railroad tracks

159.5 thousand kmof paved roads

4.8 thousand kmof trunk oil pipelines

1.6 thousand kmof operable river

waterways leading to the

Black Sea and the Sea of

Azov

40.1 thousand kmof gas pipelines

1.0 thousand kmof ammonia pipelines

Leading seaports sector

5

42%

33%

11%

Russia

Ukraine

Romania

Bulgaria

Georgia

Turkey

452 mln. tons

18 seaports 4 fishing ports Ukraine position in worldwide trade volumes:

#1 Sunflower oil #3 Grains following whole EU and USA

#4 Iron ore following Australia, Brazil and South Africa

Ukraine handles every 3rd ton of cargo in the Black Sea region

Odessa seaport view

66%

34%

Private vs State terminals 2015 turnover

Private terminals

State terminals144.5 mln. tons

29%

26%

19%

Iron ore, grains, black iron make 74% of ports turnover

Iron ore

Grains

Black iron

Other

144.5 mln. tons

Ukrainian private sector - to utilize state seaports potential

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Ukrainian government initiatives aimed to increase share of private terminals up to 100% via concession mechanism. Currently all state ports are audited by Big4

companies. Other initiatives:

Port dues decrease. Deregulation. Already led to 14x decrease of vessels waiting time.

Grains, containers, sunflower oil, oil products and fertilizers are handled by private terminals. Up to 50% of grains cargo supplied by

multinational companies.

Already invested in Ukraine:

Ukrainian railway – renovation through opening to the private sector

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5th largest rw network in Europe. 15th – worldwide. 20 948 km railways length. Covers all regions of the

country.

100% state owned, managed by Ukrzaliznytsya (UZ).

116 000 state owned wagons 86 000 privately owned wagons Current government initiatives highlights:

Public Joint Stock Company “UZ” creation

completed. Performed by merging State Administration for Railway Transport of Ukraine with 49 state owned companies of railway sectors. PJSC structure

will make UZ more client oriented, providing possibility for joint

rw policy implementation for all state owned rw assets.

New, reforms oriented executives hire. For e.g. Mr.

Wojciech Balczun was appointed head of UZ . Previously he successfully managed Polish railways, making them profitable and performing their IPO afterwards.

Increasing competitiveness of rw transport by allowing

locomotives private owners to perform rw transporting operations. Depicted in a new law on rw

transport, prepared by Ministry of infrastructure.

26%

19%

14%

14%

10% 8%

oil and producrs

scrap metal

fertilisers

woods

cement

coke

black metals

grains

building materials

other

coal

ore

RW cargo structure

345 mln. tons

2015 data

Electrical locomotives

Require replacement

1720

Diesel locomotives

Require replacement

2152

Implementation of government initiative to allow locomotives private owners to perform transportation will lead to considerable investments into Ukrainian rw sector.

90% Require replacement

Roads concession - to fill financing gap

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Developed road network. 159 463 km total length. 916 mln. tons transported in 2015. Concession mechanism to be improved. Provision of guarantees to investors, removal of roads from strategic assets list to give the green light for concessions. Current government initiatives highlights:

5% of duties gained from oil products retail trade flow to local budgets for road maintenance. Implemented in 2015.

50% of customs over plan earnings transferred into roads repair funds. Initiative

already implemented into 4 regions (Odessa, Lviv, Chernovtsy, Volyn’) and

for 6 months allowed to earn additional 38 mln. USD for roads maintenance.

Increase penalties for overweighed (>40 tons) trucks. Special purpose government organization

“Ukrtransbezpeka” to control trucks cargo load via mobile weighing systems.

International roads

210

370

776

min. 2000

2014

2015

2016

Required

National roads

Actual financing of roads maintenance funds increase year-by-year. However, no adequate concession mechanism

developed to cover shortfall for complete roads recovery.

mln

. USD

Ukraine in 2023 – top tourists destination and leading transit country

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Largest aircraft in the world – Antonov -225 was made in Ukraine.

31 airlines. 20 airports. 10,7 mln. passengers. 120,7 th. aircrafts served.

Current government initiatives highlights:

“Open Sky” system implemented for Odessa and Lviv airports.

Governmental program on airports development till 2023 approved in 2016. According to the program the following steps

will be performed:

Single government company to manage airports

development to be created.

Transfer of all airports terminals under the private companies

management via concession mechanism. This will allow to

make terminal operations self-funded and finance runways reconstruction.

These measures are aimed to bring airport international terminals managing companies and new airlines to the country. This, in turn, is expected to lead to 2x times passengers flow increase till 2023.

Key functioning airports locations

TIS Group of terminals – leading port in Ukraine

8,393

12,020

12,263

17,166

18,840

21,417

25,867

26,578

2008

2009

2010

2011

2012

2013

2014

2015

TIS turnover, th. tons

CA

GR

15

,5%

632 vessels

72 248 trucks

346 187 wagons

The largest port in Ukraine. Located in port Yuzhny.

Completely private. Established in 1994.

500 mln. USD - total amount of direct investments.

5 Terminals form the Group: TIS‐Grain, TIS‐Fertilizers,

TIS‐Ore, TIS-Coal and TIS‐Container terminal.

Focused on «Panamax» and «Capesize» vessels.

2 455 best in class professionals make up TIS team.

Currently jointly with Cargill implement grain terminal project with 4 mln. tons turnover capacity. Cooperate with EBRD on project financing. Terminal to be launched in 1Q 2018.

View on TIS terminals

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Thank you for your attention!

Andrey Stavnitser

General manager TIS Group of Marine Terminals

Ukraine, port Yuzhny

www.tis.ua E-mail: mail@tis.ua

Tel. +38 (0482) 300 711