Summary Special-Purpose Project Financial Statements Joint Stock Company “The State Export-Import Bank of Ukraine” Access to Long Term Finance Project As at 31 December 2019 and for the year then ended and for the period from the Loan Agreement effectiveness to 31 December 2019 Together with Independent Auditors’ Report Joint Stock Company “The State Export-Import Bank of Ukraine” Access to Long Term Finance Project Summary Special-Purpose Project Financial Statements Contents Independent Auditor’s Report Summary Special-Purpose Project Financial Statements Summary of Funds received 1 Summary of Expenditures 2 Statement of Designated Account 3 Summary of Statement of Expenditures (SOEs) 4 Notes to the Summary Special-Purpose Project Financial Statements 5 Supplemental Information on Sub-projects 7 Ernst & Young Audit Services LLC ТОВ «Ернст енд Янг 19A Khreshchatyk Street Аудиторськi послуги» Kyiv, 01001, Ukraine вул. Хрещатик, 19А Tel: +380 (44) 490 3000 Киïв, 01001, Украïна Fax: +380 (44) 490 3030 Тел.: +380 (44) 490 3000 www.ey.com/ua Факс: +380 (44) 490 3030 Report of the independent auditor on the summary special-purpose project financial statements To the Management Board of Joint Stock Company “The State Export-Import Bank of Ukraine” Opinion The summary special-purpose project financial statements of the Access to Long Term Finance Project (“ALTFP”) administered by Joint Stock Company “The State Export-Import Bank of Ukraine” (the “Bank”), financed under the International Bank for Reconstruction and Development (the “IBRD”) Loan Agreement №8727-UA (the “Loan Agreement”), which comprise the statement of designated account, the summary of funds received, the summary of expenditures for the year ended 31 December 2019, and the summary of statement of expenditures (SOEs) for the year ended 31 December 2019 and for the period from the Loan Agreement effectiveness to 31 December 2019, and related notes (the “summary special- purpose project financial statements”), are derived from the audited special-purpose project financial statements of ALTFP for the year ended 31 December 2019 and for the period from the Loan Agreement effectiveness to 31 December 2019. In our opinion, the accompanying summary special-purpose project financial statements are consistent, in all material respects, with the audited special-purpose project financial statements, in accordance with the financial reporting provisions of the “Guidelines: Annual Financial Reporting and Auditing for World Bank-Financed Activities” issued by the World Bank and dated 30 June 2003 (“the World Bank’s guidelines”). Summary special-purpose project financial statements The summary financial special-purpose project statements do not contain all the disclosures required by financial reporting provisions of the World Bank’s guidelines. Reading the summary special-purpose project financial statements and the auditor’s report thereon, therefore, is not a substitute for reading the audited financial statements and the auditor’s report thereon. The audited special-purpose project financial statements and our report thereon We expressed an unmodified audit opinion on the audited special-purpose project financial statements of ALTFP in our report dated 29 May 2020. That report also includes An Emphasis of matter – basis of accounting and restriction on distribution and use section that draws attention to Note 2 to the audited special-purpose project financial statements. Note 2 to the audited special-purpose project financial statements describes the basis of accounting used in preparation of the special-purpose project financial statements. The special-purpose project financial statements were prepared to assist the Bank in complying with the financial reporting provisions of the World Bank’s guidelines. As a result, the special-purpose project financial statements may not be suitable for another purpose. Accordingly, we draw attention to Note 2 (i) A member firm of Ernst & Young Global Limited to the summary special-purpose project financial statements, which reproduces Note 2 to the audited special-purpose project financial statements and describes the basis of accounting used in the audited special-purpose project financial statements. As a result, the summary special-purpose project financial statements may not be suitable for another purpose. Our auditors’ report on the special-purpose project financial statements dated 29 May 2020 was intended solely for the Bank and the IBRD and should not be distributed to or used by parties other than the Bank or the IBRD. Accordingly, our auditors’ report on these summary special- purpose project financial statements is also intended solely for use of those same parties and should not be distributed to or used by parties other than these specified parties. Management’s responsibility for the summary special-purpose project financial statements Management is responsible for the preparation of the special-purpose project financial statements in accordance with the financial reporting provisions of the World Bank’s guidelines referred to above. Auditor’s Responsibility Our responsibility is to express an opinion on whether the summary special-purpose project financial statements of ALTFP are consistent, in all material respects, with the audited special- purpose project financial statements of ALTFP based on our procedures, which were conducted in accordance with International Standard on Auditing (ISA) 810 (Revised), Engagements to Report on Summary Financial Statements. Yulia Studynska Partner For and on behalf of Ernst & Young Audit services LLC Kyiv, Ukraine 30 June 2020 Ernst & Young Audit Services LLC is included in the Register of auditors and audit firms, registration number: 3516. (ii) A member firm of Ernst & Young Global Limited Joint Stock Company “The State Export-Import Bank of Ukraine” Access to Long Term Finance Project Summary Special-Purpose Project Financial Statements Summary of Expenditures for the year ended 31 December 2019 and for the period from the Loan Agreement effectiveness to 31 December 2019 (in US dollars) For the period from the Loan 2019 Agreement effectiveness to 31 December 2019 Category 1: Sub-loans to: JSC “Ukreximbank” 22,980,559 39,108,195 Sub-loan 1 2,101,328 7,995,019 Sub-loan 2 – 6,980,569 Sub-loan 3 – 1,095,264 Sub-loan 4 – 403,664 Sub-loan 5 499,682 603,641 Sub-loan 6 – 54,966 Sub-loan 7 – 307,563 Sub-loan 8 – 85,016 Sub-loan 9 – 218,221 Sub-loan 10 – 829,560 Sub-loan 11 41,247 96,410 Sub-loan 12 220,000 320,000 Sub-loan 13 7,113,998 7,113,998 Sub-loan 14 388,103 388,103 Sub-loan 15 35,763 35,763 Sub-loan 16 3,037,233 3,037,233 Sub-loan 17 323,738 323,738 Sub-loan 18 259,297 259,297 Sub-loan 19 915,696 915,696 Sub-loan 20 441,216 441,216 Sub-loan 21 192,106 192,106 Sub-loan 22 1,309,603 1,309,603 Sub-loan 23 65,375 65,375 Sub-loan 24 246,916 246,916 Sub-loan 25 91,336 91,336 Sub-loan 26 995,178 995,178 Sub-loan 27 1,176,866 1,176,866 Sub-loan 28 159,138 159,138 Sub-loan 29 159,138 159,138 Sub-loan 30 2,419,829 2,419,829 Sub-loan 31 151,983 151,983 Sub-loan 32 478,765 478,765 Sub-loan 33 157,024 157,024 Participating Financial Institution 1 – 2,000,000 Sub-loan 34 – 2,000,000 Total sub-loans 22,980,559 41,108,195 Category 2: Front end Fee (Note 3) – 375,000 Тotal Project Expenditures 22,980,559 41,483,195 The accompanying notes are an integral part of these summary special-purpose project financial statements 2 Joint Stock Company “The State Export-Import Bank of Ukraine” Access to Long Term Finance Project Summary Special-Purpose Project Financial Statements Statement of Designated Account for the year ended 31 December 2019 (in US dollars) Account name Ukreximbank World Bank account Related loan 8727-UA Currency US dollars Balance as at 1 January 2019 – principal 13,159,111 Balance as at 1 January 2019 – interest – Add: Advance payment 24,753,306 IBRD replenishments – Total interest earnings – 37,912,417 Deduct: Sub-loans disbursed (22,980,559) Total interest accumulated – Bank commissions – (22,980,559) Balance as at 31 December 2019 – principal 14,931,858 Balance as at 31 December 2019 – interest – The accompanying notes are an integral part of these summary special-purpose project financial statements 3 Joint Stock Company “The State Export-Import Bank of Ukraine” Access to Long Term Finance Project Summary Special-Purpose Project Financial Statements Summary of Statement of Expenditures for the year ended 31 December 2019 (in US dollars) Application No. Date of application Category 1 Category 2 Designated Account Description ALTF-EXIM05 30-Jan-2019 10,275,161 – 10,275,161 Advance to and documentation of Designated Account ALTF-EXIM06 04-Jun-2019 9,318,661 – 9,318,661 Advance to and documentation of Designated Account ALTF-EXIM07 24-Jun-2019 1,336,126 – 1,336,126 Advance to and documentation of Designated Account ALTF-EXIM08 27-Sep-2019 2,174,133 – 2,174,133 Advance to and documentation of Designated Account ALTF-EXIM09 19-Dec-2019 1,649,225 – 1,649,225 Advance to and documentation of Designated Account Total for the year ended 31 December 2019 24,753,306 – 24,753,306 The accompanying notes are an integral part of these summary special-purpose project financial statements 4 Joint Stock Company “The State Export-Import Bank of Ukraine” Access to Long Term Finance Project Summary Special-Purpose Project Financial Statements Notes to the Summary Special-Purpose Project Financial Statements (in US dollars unless otherwise indicated) 1. General Information The Access to Long Term Finance Project (further referred as the “ALTF” or the “Project”) is administered by the State Export-Import Bank of Ukraine (the “Borrower”, “Ukreximbank” or the “Bank”) under a Loan Agreement with the International Bank for Reconstruction and Development (the “IBRD”). The amount of the Loan Agreement #8727-UA dated 26 June 2017 (the “Loan Agreement”) is USD 150,000,000. The Loan Agreement became effective on 12 June 2018 (the Loan Agreement effectiveness). The objective of the Project is to improve access to long term finance for export oriented small and medium enterprises. 2. Accounting Policies Basis of preparation The ALTF summary special-purpose project financial statements have been prepared in accordance with the “Guidelines: Annual Financial Reporting and Auditing for World Bank-Financed Activities” issued by the World Bank and dated 30 June 2003. The ALTF summary special-purpose project financial statements have been prepared on a cash basis in respect of loan funds received from the IBRD and issued loans to selected beneficiary enterprises. Revenue and expenditures of the ALTF are accounted for by the Bank on an accrual basis in its separate financial statements, such incomes and expenditures are not recognised in these ALTF summary special-purpose project financial statements. To comply with the requirements of the “Guidelines: Annual Financial Reporting and Auditing for World Bank-Financed Activities” issued by the World Bank, the following specific schedules have been included as part of these ALTF summary special-purpose project financial statements: · Summary of Funds received for the year ended 31 December 2019 and for the period from the Loan Agreement effectiveness to 31 December 2019; · Summary of Expenditures for the year ended 31 December 2019 and for the period from the Loan Agreement effectiveness to 31 December 2019; · Statement of Designated Account for the year ended 31 December 2019; · Summary of Statement of Expenditures for the year ended 31 December 2019. In addition, with respect to Statement of Expenditures (“SOEs”) for the year ended 31 December 2019 and for the period from the Loan Agreement effectiveness to 31 December 2019, adequate supporting documentation has been maintained to support claims to the IBRD for replenishments of expenditures incurred. Expenditures claimed for replenishment under the SOE procedure were eligible for financing under the Loan Agreement #8727-UA. Summary special-purpose financial statements were prepared for the year ended 31 December 2019 and for the period from the Loan Agreement effectiveness to 31 December 2019. These summary special-purpose project financial statements were prepared by the Bank in order to comply with the World Bank Policy on Access to Information dated 1 July 2010, General Conditions for Loans dated 12 March 2012 and the Loan Agreement. According to the abovementioned documents, these summary special-purpose project financial statements shall be made publicly available in a timely fashion and in a manner acceptable to the IBRD and which complies with prevailing Ukrainian banking laws and regulations. Therefore, these summary special-purpose project financial statements do not contain information which is not allowed to be disclosed according to the Ukrainian banking law and regulations. Reporting currency These summary special-purpose project financial statements are presented in US dollars (“US dollars”) unless otherwise indicated. 5 Joint Stock Company “The State Export-Import Bank of Ukraine” Access to Long Term Finance Project Summary Special-Purpose Project Financial Statements Notes to the Summary Special-Purpose Project Financial Statements (in US dollars unless otherwise indicated) 3. IBRD Financing International Bank for Reconstruction and Development financing is provided through Loan Agreement #8727-UA dated 26 June 2017 between the IBRD, as the Lender, and Ukreximbank, as the Borrower. The obligations of the Borrower according to the Loan Agreement are guaranteed by the Ukrainian Government. The Borrower paid to the IBRD a front end fee in the amount equal to 0.25% of the amount of the loan. On the date of the Loan Agreement becoming effective the IBRD, on behalf of the Borrower, withdrew from the loan account and paid to itself the front end fee of USD 375,000 not using Designated Account. According to the Loan Agreement, the interest rate is calculated as the Reference Rate for the Loan Currency plus the Variable Spread. The interest is paid on 15 March and 15 September each year. The principal is to be paid by installments semi-annually on 15 March and 15 September beginning on 15 March 2022 through 15 March 2052. The closing date of the ALTF is 31 March 2022. The closing date is the date specified in the Loan Agreement, after which the IBRD may, by notice to the Borrower, terminate the right to make withdrawals. The Project consists of the following: Part A. Credit facility to provide financing to export oriented SMEs: (i) Ukreximbank on-lending through Participating Financial Institutions (the “PFI”). The establishment and operation of a credit facility within Ukreximbank for the provision of financing (through Subsidiary Financing Agreements) to selected PFIs to provide financing (through Sub-financing) to private export oriented SMEs to finance the cost of carrying out Sub-projects. (ii) Ukreximbank direct lending as PFI. The establishment and operation of a credit facility within Ukreximbank for the provision of Sub-loans to private export oriented SMEs to finance the cost of carrying out Sub-projects. The table below sets forth the categories of items to be financed out of the proceeds of the loan: Category Description of Category Part of the Project (1) Sub-Loans Part A (2) Front end Fee – Details of the IBRD financing as at 31 December 2019 are as below: Total line of credit Amounts disbursed Amounts undisbursed Sub-Loans 149,625,000 41,108,195 108,516,805 Front end Fee 375,000 375,000 – Balance of Designated Account – 14,931,858 (14,931,858) Total 150,000,000 56,415,053 93,584,947 4. Reconciliation of Amounts Shown as Received from the IBRD to Actual Expenditures Incurred The supporting schedule to the reconciliation of amounts shown as received from the IBRD to actual expenditures of the ALTF as at 31 December 2019 is as follows: Designated Category 1 Category 2 Total Account Accounted according to the IBRD data 41,040,053 375,000 15,000,000 56,415,053 According to the Bank data 41,108,195 375,000 14,931,858 56,415,053 Difference* 68,142 – (68,142) – * The proceeds of the loan were used by Ukreximbank for financing under Category 1. The statement of expenditures for USD 68,142 was sent to IBRD on 4 May 2020. The IBRD transferred the proceeds of the Loan to the Designated Account in 2020. 6 Joint Stock Company “The State Export-Import Bank of Ukraine” Access to Long Term Finance Project Summary Special-Purpose Project Financial Statements Notes to the Summary Special-Purpose Project Financial Statements (in US dollars unless otherwise indicated) 5. Supplemental Information on Sub-projects Information regarding sub-projects agreed for financing for the period from the Loan Agreement Effectiveness to 31 December 2019: Correspondence Amount of Disbursed sub- Methodology of purchase Ecological Sub-project Description of sub-project Activity with acceptance Participating Bank sub-project project amount within sub-project category criteria Participating Working capital Sub-project 1 Production of equipment Yes Commercial practice C Financial Institution (purchase of raw materials) 2,000,000 2,000,000 1 Working capital Plastic packaging Sub-project 2 Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 7,995,019 7,995,019 manufacturing Working capital Sub-project 3 Food industry Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 6,980,569 6,980,569 Investment Sub-project 4 Printing industry Yes Commercial practice C JSC “Ukreximbank” (purchase of equipment) 1,095,264 1,095,264 Investment Sub-project 5 Food industry Yes Commercial practice C JSC “Ukreximbank” (purchase of equipment) 403,664 403,664 Investment Production of refrigerating Sub-project 6 Yes Commercial practice C JSC “Ukreximbank” (purchase of equipment) 603,641 603,641 equipment Investment Sub-project 7 Wood processing Yes Commercial practice C JSC “Ukreximbank” (purchase of equipment) 54,966 54,966 Working capital Sub-project 8 Production of metal goods Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 307,563 307,563 Investment Sub-project 9 Agriculture Yes Commercial practice C JSC “Ukreximbank” (purchase of equipment) 85,016 85,016 Investment Sub-project 10 Agriculture Yes Commercial practice C JSC “Ukreximbank” (purchase of equipment) 218,221 218,221 Working capital (purchase of raw materials) & Sub-project 11 Agriculture Yes Commercial practice C JSC “Ukreximbank” Investment (purchase of equipment) 829,560 829,560 Working capital Sub-project 12 Food industry Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 96,410 96,410 Working capital Sub-project 13 Wood processing Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 320,000 320,000 Working capital Sub-project 14 Agriculture Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 7,113,998 7,113,998 Working capital (purchase of raw materials) & Sub-project 15 Agriculture Yes Commercial practice C JSC “Ukreximbank” Investment (purchase of equipment) 388,103 388,103 Working capital Sub-project 16 Agriculture Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 35,763 35,763 Working capital (purchase of raw materials) & Sub-project 17 Transport services Yes Commercial practice C JSC “Ukreximbank” Investment (purchase of equipment) 3,037,233 3,037,233 Sub-project 18 Investment 323,738 323,738 Agriculture Yes Commercial practice C JSC “Ukreximbank” 7 Joint Stock Company “The State Export-Import Bank of Ukraine” Access to Long Term Finance Project Summary Special-Purpose Project Financial Statements Notes to the Summary Special-Purpose Project Financial Statements (in US dollars unless otherwise indicated) Correspondence Amount of Disbursed sub- Methodology of purchase Ecological Sub-project Description of sub-project Activity with acceptance Participating Bank sub-project project amount within sub-project category criteria (purchase of equipment) Investment Sub-project 19 Mining of minerals Yes Commercial practice C JSC “Ukreximbank” (purchase of equipment) 259,297 259,297 Working capital (purchase of raw materials) & Sub-project 20 Agriculture Yes Commercial practice C JSC “Ukreximbank” Investment (purchase of equipment) 915,696 915,696 Investment Production of dental Sub-project 21 Yes Commercial practice C JSC “Ukreximbank” (purchase of equipment) 441,216 441,216 equipment Working capital Wholesale trading of Sub-project 22 furniture, carpets, lighting Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 192,106 192,106 devices Working capital Sub-project 23 Production of aluminium Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 1,309,603 1,309,603 Working capital Sub-project 24 Agriculture Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 65,375 65,375 Investment Sub-project 25 Mining of minerals Yes Commercial practice C JSC “Ukreximbank” (purchase of equipment) 246,916 246,916 Working capital Sub-project 26 Agriculture Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 91,336 91,336 Working capital Sub-project 27 Food industry Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 995,178 995,178 Working capital Sub-project 28 Carpet production Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 1,176,866 1,176,866 Investment Sub-project 29 Agriculture Yes Commercial practice C JSC “Ukreximbank” (purchase of equipment) 159,138 159,138 Investment Sub-project 30 Agriculture Yes Commercial practice C JSC “Ukreximbank” (purchase of equipment) 159,138 159,138 Working capital Sub-project 31 Agriculture Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 4,536,283 2,419,830 Working capital Production of personal Sub-project 32 Yes Commercial practice C JSC “Ukreximbank” (purchase of raw materials) 151,983 151,983 protective clothing Investment Sub-project 33 Metallurgical industry Yes Commercial practice C JSC “Ukreximbank” (purchase of equipment) 478,765 478,765 Investment Production of electric Sub-project 34 Yes Commercial practice C JSC “Ukreximbank” (purchase of equipment) 157,024 157,024 maсhines Yes Total for the period from the Loan Agreement effectiveness to 31 December 2019 43,224,649 41,108,195 8