The inclusion of PJSC Patriot in the Ukrainian sanction list in response to Russia’s annexation of Crimea and its aggression in Donbas is unfounded, as the Company is owned by Cehriba Investments Limited whose beneficial owners are a group of private investors from the EU, the lottery operator said on Friday.

“We have had no relation to the former owners of the company, Oleg Boyko and Finstar Holding, since summer 2014," commented the Chairman of the Board of Patriot, Vladimir Zmazhenko.

According to the press release, the Russian businessman Oleg Boyko sold his share in the company last summer.

The company's management intends to appeal against the decision to the President, the company stated in the release.

Zmazhenko also stressed that the company makes regular military tax contributions, which amounted to UAH 43 million in 2014, as well as paying UAH 188 million in taxes to the state budget.

PJSC Patriot holds a lottery operating licence and operates in line with the law “On State Lotteries in Ukraine”, the company stated in the release. The existing managers of Patriot have temporarily retained their positions, following the decision of the new shareholders of Cehriba Investments Limited.

As reported, two of the three operators of the Ukrainian lottery market - M.S.L. LLC and private joint-stock company Patriot (both based in Kyiv) - were affected by a decree to extend sanctions signed by the President of Ukraine Petro Poroshenko on 16 September in response to Russia’s annexation of Crimea and its aggression in Donbas. According to the document, the companies are subject to five types of sanctions, including capital controls and asset freezes.

In August 2014, the then Finance Minister Oleksandr Shlapak, said that the law “On state lotteries in Ukraine” (October 2012) effectively created a monopoly of three private operators comprised of: M.S.L. LLC, owned by Alfa-Group’s minority shareholders through Evolot Limited (Cyprus); PJSC Patriot, allegedly owned by a Russian citizen through Cehriba Investments Limited (Cyprus) and Ukrainian National Lottery (UNL), owned by Olympic Gold Holdings Limited (BVI).

On 17 September, M.S.L. said it also considers that it was a mistake for the National Security and Defence Council of Ukraine to include the company in the sanctions list, and believes the decision may have been associated with an attempt of one of the political groups to "clear" the market, and expects that it will soon be resolved. M.S.L. stated that the company is owned by citizens of Ukraine and one EU citizen Marcos Shiapanis, and that Russians have no effect on the decision-making process.

In 2014, Patriot reported revenue of UAH 8.303 billion and net profit of UAH 4.8 million. A year earlier, Patriot’s revenue increased by 3.5 times to UAH 5.934 billion, and net profit grew by 38% to UAH 136 million.

In 2013, M.S.L.’s revenue increased by 19.7% to UAH 2.502 billion, while the reported loss for the period increased by 59.1% to UAH 132.6 million. UNL’s net revenue rose by 2.1 times to UAH 0.633 billion, with the net loss increasing by 33.9% and standing at UAH 10.8 million in 2013. The companies’ financial results for 2014 are not yet available.