History

Establishment of the companies to form the basis of Smart-Holding. These companies specialised in the supply of materials for the mining and metals industries and performed commercial and agency transactions with metal products and equipment.

Smart Group LLC was founded on 7 October 1999 to manage projects in the metals and mining sector. It set the stage for what was to become a vertically integrated business model in the metals industry.

Smart Group LLC gained control of Ingulets Iron Ore Enrichment Works (Ingulets GOK, Krivoy Rog) under a respective investment agreement. Within four years, the Group had made substantial investments in the development of Ingulets GOK, improving its performance and creating a solid foundation for further development.

Smart Group LLC acquired an interest in Southern Iron Ore Mining and Processing Works (UGOK), becoming one of the key players in the iron ore supply market in Ukraine.

The Company started diversifying its business by expanding its investment portfolio. The Group acquired Unex Bank. In addition, Smart Group LLC invested in companies under the Veres trademark, which were among leaders in the production of canned fruit and vegetables in Ukraine.

Makeyevka Metallurgical Plant entered the Smart Group LLC sphere of interest at a time when the plant was in the middle of bankruptcy proceedings. As a result of the successful rehabilitation during 2005 and 2006, the plant’s performance stabilised and it became one of the key assets in the metals business of the Holding Company. By that time, over USD 150 million had been invested into the development of the plant.

Remaining focused on business portfolio diversification, the Group acquired 83.6% in shares of Kherson Shipyard OJSC as part of a privatisation tender, beginning its shipbuilding business.

Smart-Holding CJSC was founded to consolidate assets and restructure the business. Under the supervision of the management Company, the investment portfolio diversification process continued through investments in shipbuilding, mining of non-metal materials and agribusiness.

Smart Group LLC acquired 93.83% in A.M. Gorkiy Balaklava Mine from the State. In line with the investment agreement, obligations were undertaken to mothball the production through a phased process and to deliver the environmental rehabilitation of the Balaklava Bay.

Smart-Holding and SCM made a strategic decision for the metals and mining sector of Ukraine to merge their mining and steelmaking assets into a new holding company, Metinvest B.V. (the Netherlands), thus founding one of the world's largest mining and metals companies.

Smart-Holding also entered the real estate and development business by starting cooperation with Yudzhin Company. At this time, Yudzhin had registered the right to use a land plot, developing and approving the mall construction project at Troitskaya Square next to the Olimpiyskiy National Stadium in Kiev.

In the same year, Smart-Holding acquired Chernomorsky Shipbuilding Yard (ChSY). The shipyard had not built any vessels since 2004, but performance was efficiently stabilised within a short amount of time. Today, ChSY is constructing a series of 10 corvettes for the Naval Forces of Ukraine's Ministry of Defence. It is the largest defence order of the Naval Forces in the history of the independent Ukraine.

Smart-Holding participated in a large-scale infrastructure project for the construction of the commercial sea port of Ochakov. The project’s objective is to transform the operations of a minor port into one of the Black Sea’s deep estuary harbours with a transhipment capacity of up to 20 million tonnes per year.

Smart-Nerudprom LLC was established for the implementation of business initiatives in the non-metal materials sector. As well as the Balaklava Mine, Smart-Holding acquired Yevpatoria Construction Materials Plant OJSC, Saky Construction Materials Plant OJSC and Zaporozhnerudprom OJSC.

In February 2008, Yudzhin Development Company signed a Memorandum for the demolition of the Troitskiy mall next to the Olimpiyskiy Stadium. The compromise was due to the understanding of how important it was for the country’s profile to comply with UEFA requirements in preparing for the final part of the European Football Championship in 2012. After the building demolition, Yudzhin started a large-scale reconstruction of Troitskaya Square. By the opening date of the European Football Championship, the Company had completed the first stage of the Square’s reconstruction and had prepared the infrastructure and the area adjacent to the country's main football arena. The Company invested more than USD 20 million to complete this stage.

Having evaluated the development prospects of the foodstuff retail business segment in Ukraine, Smart-Holding enterprises invested in the development of the Amstor retail chain under the same-name trademark. The new strategic investor boosted the network's development and created the required conditions to bring it to the level of a national operator.

In the same year, Smart-Holding made a decision to evaluate the potential and possibility for rehabilitation of the areas belonging to the Balaklava Mine. As a result of this evaluation, it presented a project for an all-year-round national resort, known as Balaklava Green, to be constructed in place of the abandoned Balaklava Mine quarries.

Smart-Holding became the co-founder of Sevastopol Football Club. In the 2010/2011 season, the club qualified for the Premier League of the Ukraine Football Championship.

Prom-Energo Product LLC became part of Smart-Holding.

Looking for new development drivers, the Group decided to develop its oil and gas business. In 2011, it made a large acquisition in this area: a majority stake of the British gas production company Regal Petroleum, controlling a number of high-potential gas-condensate fields in Ukraine. Later, its portfolio of oil and gas assets was expanded by gaining operational control over Ukrgazvydobutok, and this business line was institutionalised into Smart Energy LLC.

For the efficient management of agricultural assets and the implementation of investment projects in agribusiness, Smart-Holding and SCM established HarvEast agricultural Holding Company. Today HarvEast, which owns a land bank of 197,000 hectares, is laying claim to becoming a leader in the domestic agricultural market.

This year, the Balaklava Mine started work to prepare the enterprise's production capacities for further deployment of the Balaklava Green resort infrastructure.

Looking for new growth areas and taking into consideration the favourable conditions in the Ukraine banking business segment, Smart-Holding decided to develop its financial business. The Company purchased Bank Forum with a branch network covering virtually all regions of Ukraine from Commerzbank (Germany) international group. During the same period, Smart-Holding started negotiating the acquisition of BM Bank. Today, Smart-Holding is working out its banking business development strategy. The final model for the banking assets’ development will be determined once the acquisition process has been completed.

Realizing the importance of Ukraine’s energy potential, Smart-Holding made investments into construction of a solid biofuel plant in Vinnitsa region. The first stage of Vin-Pellet Plant LLC for the production of fuel pellets from agricultural waste was commissioned in November. Today, the Company is considering the possibility of scaling up this project by building up to ten similar plants in various regions of the country.

In April, Yudzhin Development Company won the privatisation tender to acquire the property complex of Sport Hotel in Kiev. Within the framework of the investment, the reconstruction of the hotel commenced to upgrade it to a three-star hotel complex. Subsequently, the Company signed an agreement for the management of the hotel with international hotel operator Rezidor Hotels Aps Danmark, and the hotel was renamed as Park Inn Kyiv Troyitska.

Another strategic move was the acquisition of shares in Frunze Machine-Building Science and Production Association (Frunze NPO, Sumy). This acquisition is regarded as a strategic investment in light of positive synergies with the oil and gas business.

In late 2012, Amstor opened its first supermarket in Kiev, confirming its intention to assert itself as a national operator. Today, two stores of the retail chain are operating in the capital city. Amstor is also planning to extend its presence in other regions of Ukraine in the medium term.

Smart-Holding completed development of its new long-term business development strategy to 2020. The document determined the strategic business lines that will become the focus of the financial and organisational efforts of Smart-Holding enterprises.

At the same time, Smart-Holding became an expert participant of the Scenarios for Ukraine project of Strategic Foresight at the World Economic Forum. The project objective is to formulate possible directions for the economic development of Ukraine.

Within the framework of its banking business development strategy, Smart-Holding performed the rebranding of Bank Forum, changing the visual identity of the bank’s offices. In August, a framework agreement was signed for the purchase of Ukrainian BM Bank.

Kherson Shipyard completed the performance of its landmark contract for the construction of a series of complete RST27 design tankers for SVL (Malta). It was the first series of complete tankers built in the history of independent Ukraine.

The shareholders of HarvEast approved the long-term development strategy of the agricultural holding company, one of its goals being the consolidation of a 500,000 hectare land bank.

FC Sevastopol qualified for the Premier League of Ukraine’s Football Championship for the second time in its history.

Amstor retail chain opened its first supermarket in Dnepropetrovsk and started preparatory work to open a store in Lvov. The total number of retail chain stores reached 31.

In December, a condensate stabilization unit (CSU) was put into operation at Mekhedovsko-Golotovschinskoye gas-condensate deposit. The unit was fitted out with equipment from Propak Systems Ltd. (Canada), which proved to be among the top high-tech equipment in the world. This enabled Regal Petroleum (Smart Energy Group) to start production of liquefied gas corresponding to the autogas standard. Thus, the company became the second private producer of liquefied gas in Ukraine, and managed to surpass the closest competitor by the quality of the attained commodity products.

The political crisis of the beginning of the year, the annexation of the Autonomous Republic of Crimea by the Russian Federation and the military conflict that began in the East of the country significantly affected Smart-Holding’s development during this period. Subsequent economic recession, weakening of the national currency, imbalances in the financial markets, loss of governmental control over some territories of Ukraine put the leadership of Smart-Holding in a position where some difficult and at the same time necessary anti-recessionary decisions had to be made.

This and the following years, some business areas were re-formatted, the investment focus was shifted and participation in some projects was cancelled. As time has shown, the management company chose an appropriate anti-crisis strategy that enabled the holding company's enterprises to effectively overcome the encountered challenges.

This year, Smart-Holding definitively refused to buy BM-Bank. The National Bank of Ukraine refused to allocate a stabilization loan to Bank Forum PJSC and decided to introduce a provisional administration to the banking institution. Despite all the options offered by Smart-Holding for the rehabilitation of the bank, as well as some concrete steps from the shareholder to infuse the financial resources into the bank, the regulator made a decision to withdraw Bank Forum from the market and to dissolve it subsequently. Today, experts and officials agree that the then adopted decisions of the NBU were hasty, and Bank Forum could be saved and its depositors could be protected.

In connection with the annexation of the Autonomous Republic of Crimea by the Russian Federation, Smart-Holding decided to withdraw from businesses located on the peninsula – extraction of non-metallic minerals (Balaklava Ore Agency, Evpatoria and Saki construction material plants) and agricultural business (Vesna Farm). Subsequently, these companies were sold.

In June, Smart-Holding stopped financing of Sevastopol Football Club as the Crimean club could not participate in 2014-2015 football season of the Ukrainian Championship's Premier League.

In July, SCM and Smart-Holding completed a deal to merge mining and metallurgical assets of the two groups within the framework of their joint company Metinvest B.V. At the last stage of the transaction, Smart-Holding vested 100% shares in Trosilia Holdings Limited (Cyprus), which indirectly owns 46.15% shares in Yuzhnyi Iron Ore Enrichment Works (YUGOK), in the authorized capital of Metinvest B.V. As a result, the share of Smart-Holding in Metinvest B.V. increased to 23.76%.

Under the conditions of industrial recession, Smart Maritime Group had to shift the emphasis towards ship repair orders. This trend, with rare exceptions, continued during the next three years. In the challenging period, the shipbuilding group was brought into balance by operation of the machine-building segment and cargo handling.

A weighty part in the stabilization of Smart Maritime Group was played by re-organization made at the enterprises of the shipbuilding group. It was a response to a significant deterioration in the situation for the domestic shipbuilding industry.

During the re-organization, the shipyards' management structure was optimized, and the number of personnel was adjusted, which provided for the release of those employees who were not directly involved in the core production processes (administrative and support personnel). At the same time, the production capacities of the shipyards were preserved. Employees of both enterprises were then employed by Smart Maritime Group LLC.

Representation of Regal Petroleum completed certification of autogas of its own production and officially began its sales on an electronic trading platform.

The beginning of the year was marked by a corporate conflict with the minority shareholder of Amstor Group. Smart-Holding audited the performance of the group's enterprises and found out that its minority shareholder, which was also the managing partner of the store chain, taking advantage of the situation in the East of the country, had committed a series of illegal actions breaking the Ukrainian law. These actions grossly violated the rights of other shareholders and were aimed at personal enrichment of the minority shareholder. At the same time, the former partner caused serious damage to the infrastructure and the image of the store chain.

Smart-Holding decided to introduce direct administration to Amstor Group. The holding company invested in the restoration of the infrastructure and logistics, made everything possible to retain the teams of employees in the shopping centres. The total amount of investments in the restoration of the shopping chain exceeded UAH 150 million.

As a result, in July Smart-Holding and FOZZY GROUP reached an agreement to implement a joint project to resume the work of Amstor shopping chain. The agreement stipulated that Amstor's retail business would operate under Silpo brand, while Amstor shopping centres would keep their original name. Smart-Holding withdrew from the grocery retail and switched to investing in the commercial real estate management. A contract with Amstor Retail Group to manage Amstor shopping centres was concluded. It started consistent update work to develop a new concept of the shopping centres. Shopping malls were brought to a single format of family shopping centres having an emphasis on entertainment and leisure. Today, East Solution Group manages 6 shopping centres operating in 4 major cities. The total area of the shopping centres is over 80,000 square meters. In addition, Smart-Holding plans to regain control over 11 shopping centres in Donetsk region once the conflict in the East of Ukraine is settled. 

The anti-recessionary program, consistently implemented by the management company, was paying off – the performance of business blocks was stabilizing, and the companies were adapting to the new economic realities. At the same time, search for new growth points and objects for investment continued.

One of them was the project to create a logistics hub in the areas of Nikolaev Shipyard of Smart Maritime Group that were not used in the core production. The project involved creation of a hub in the format of an industrial park having an emphasis on cargo handling for agricultural sector and transhipment of metal structures. It was planned to reach the transhipment of more than 4 million tons per year.

Naval-Logistic management company and Naval Park operator were established for implementation of the project. The latter provides a full range of services related to transhipment of cargoes.

This year, Smart Maritime Group significantly increased the scope of ship repairs. A considerable part in the portfolio of ship repair orders included deep modernization and renovation of vessels. In December, Kherson shipyard of SMG completed the construction of a unique multipurpose ship, the oil garbage disposal vessel SEA ANT, and handed it over to the administration of Yuzhniy Sea Port.

In July, Regal Petroleum started drilling well no. 109 at Mekhedovsko-Golotovschinskoye gas-condensate deposit (Poltava region).

In September 2016, companies belonging to Smart Energy Group began selling their own natural gas on the electronic trading platform Fabrikant.ua, which ensures transparency of procurement processes and healthy competition. Over this year, the gas producing assets owned by the holding company produced more than 208 million cubic meters of gas and 3.7 thousand tons of liquefied gas from their own hydrocarbons.

Unex Bank, which previously worked primarily with clients from the industrial sector, changes its strategy and now starts developing as a universal bank with a focus on the retail business. This is facilitated by growing public confidence in the banking system and positive shifts in the Ukrainian economy as a whole. The bank’s net assets increase by 15% – to UAH 878 million, and the operating profit of the financial institution reaches UAH 11 million.

Smart Maritime Group continues to focus its efforts on providing high-quality ship repair services. One of the flagship projects of the year for the sub-holding company is the deep modernization of Donmaster Spirit dry cargo ship. Specialists of Kherson shipyard increase the length of the vessel to 119 meters, which significantly improves the technical and economic characteristics of the dry cargo carrier. Developing the metal processing business line, SMG launches a sheet metal processing service at Kherson shipyard, a joint project with Metinvest.

Companies of Smart Energy Group manage to increase the production of hydrocarbons significantly: gas – by 8.5%, to 226.3 million cubic meters, and condensate – by 8.2%, up to 18.3 thousand tons. This year, well No. 109 of Mekhedovsko-Golotovschinskoye deposit (Poltava region) is put into operation, and drilling of well No. 28 at Ostroverkhovskoye deposit (Kharkov region) begins.

One of the milestone business events in 2017 is the opening of Park Inn by Radisson Kyiv Troyitska Hotel jointly with the Rezidor Hotel Group. The hotel, located on Troitskaya Square in Kyiv, a two-minute walk away from the main national sports arena NSC Olimpiyskiy, underwent a deep modernization and conversion. Companies of Smart-Holding Group fully fulfilled their investment obligations undertaken in the framework of the relevant government tender for the right to redesign the former Sport Hotel.

Veres Group develops new sales markets, making up for the loss of the large Russian market due to the embargo imposed by the Russian government. This and next year, the share of export supplies to other countries increases to 18% (+11 percentage points), and their geography expands to 25 countries. During this period, shipment of products to such countries as Latvia, Lithuania, Poland, the United Arab Emirates, Jordan, China and the USA begins.

In 2017, companies of Metinvest Group produce 7.6 million tons of steel and 27.5 million tons of iron ore concentrate. The operating indicators see a minor decline due to the loss of control over assets located in the conflict zone in the east of the country. However, the business becomes more stable due to a greater loading of available capacities and adjustment of the operating model. Metinvest's financial results improve significantly. The sales proceeds grow by 44% compared to previous year, i.e. to $ 8,931 million. Ukraine’s share in the total sales portfolio increases to 28%, while the share of Europe – another priority steel and iron ore market – remains at 36%.

For Smart Maritime Group, 2018 is marked by the resumption of shipbuilding. The company signs a contract for the construction of two fully outfitted hulls of chemical tankers for the Dutch VEKA Shipbuilding WT B.V. The vessels will be built and delivered to the customer next summer, and the successful and high-quality implementation of the contract will lay the foundation for continued cooperation with the Dutch partners in subsequent years. During this period, 74 vessels are repaired and revamped on the stocks of SMG. Another major contract for the shipbuilders is the manufacture of the basic elements of radial thickeners for Southern Mining and Processing Plant (Southern GOK, Krivoy Rog). At the end of the year, the shipbuilding sub-holding increases its production output almost twofold – to UAH 610 million.

Unex Bank continues to implement its retail business development strategy. In 2018, the bank increases the volume of retail loans by UAH 79 million – to UAH 121 million, compared with the beginning of the year. Its net assets grow up by 6% (UAH 54 million) to reach UAH 932 million.

This year becomes the most successful one for gas production projects. This is facilitated by both the liberalization of tax regimes in the industry and the successful implementation of a broad investment program in previous periods. Smart Energy shows impressive growth in all product groups: gas production increases by 31%, gas condensate production grows up by 40%, and propane-butane production goes up by 50%. During this period, the gas producing companies significantly increase their operating well stock. Two wells are put into operation in Kharkov region (No. 28 at Ostroverkhovskoye deposit and No. 10 at Vasischevskoye deposit), and wells No. 12 and No. 6 at Sviridovskoye deposit in Poltava region resume their operations once their workover is ended.

In 2018, Metinvest shows the best results for the last four years, proving that the group successfully readjusted itself due to proactive operational, strategic and financial management. Its cast iron production grows up by 3%, steel production remains unchanged, while coke and coal production increases by 11% and 9%, accordingly.

In 2018, Metinvest acquires 24.99% in Pokrovskoye mine group and Sviato-Varvarinskaya coal processing plant, as well as 23.71% in the Ukrainian producer of blast-furnace coke – YuzhKoks. These acquisitions provide a long-term supply of high-quality coking coal and coke, as well as strengthen Metinvest's self-sufficiency in these key raw materials.

In 2018, Metinvest shows impressive financial results. The Group’s revenue grows up by 33%, and its EBITDA increases by 23%. In addition, this year, Metinvest normalizes its debt portfolio through successful refinancing of bonds and a syndicated loan.

This year, the management company of Smart-Holding begins to configure a new development strategy for the group.