The net income of the Samruk Kazyna group of companies in H1 2020 amounted to about KZT212 billion, while according to the plan, a loss of KZT150 billion was expected. The Co-managing Director for Finance of Samruk Kazyna, Yernar Zhanadil, stated that during an online briefing.

The operating profit of the Fund and group of companies from January to June 2020 amounted to KZT215 billion, which is KZT79billion more than the planned values. The consolidated net profit of the Samruk Kazyna group of companies is expected to reach KZT421 billion by the end of 2020, with a planned value of KZT167 billion.

According to Ye. Zhanadil, the crisis trends in the market significantly affected the group’s financial results. However, the Fund’s portfolio companies are implementing updated targets, taking into account the adjustments made in view of COVID-19, and continue to take measures to strengthen financial stability.

“At the end of 2019, the Fund received a net KZT206 billion profit. As a dividends payer, the Fund directs all profit to the State. KZT49 billion received from the additional placement of KAP shares in 2019 has already been sent to the National Fund of the Republic of Kazakhstan. In addition, at the end of 2019, the Fund will send the government dividends in the amount of KZT120 billion. The remaining funds will be used to finance social facilities in Turkestan and Nur-Sultan, according to the instructions of the Government, as the Sole Shareholder of the Fund,” Yernar Zhanadil said.

Yernar Zhanadil noted that in view of the current market situation, the Fund has revised its approach to managing the financial resources of portfolio companies and reduced expenses.

“Taking the significant changes in the external environment into account, in accordance with the updated Development Plan of the company, the Group reduced expenses by KZT429 billion. The group’s companies have taken measures to optimize their expenses taking into account the least damage to the production and strategic goals of the companies,” Yernar Zhanadil said.

There is also decrease in accounts receivable by KZT60 billion, amounting to KZT661 billion for the Fund’s group within M6 2020.

According to Yernar Zhanadil, positive financial indicators are due to increase in the average oil price, strengthening of KZT against USD, as well as results of the group of companies’ activities.

In particular, due to growth of transit freight turnover by 24%, KTZh JSC increased its operating income, Samruk-Energy JSC increased the volume of heat production by 2%, mining and sales of coal by 2% and 3%. KEGOC ensured 6% increase in electricity capacity readiness to bear the load. Kazakhtelecom JSC exceeded the planned income for fixed and mobile services.

Despite the deterioration of the macroeconomic situation in H1 of the year, the total debt of the Fund increased slightly by 3.9% while the external debt of the group decreased as compared to the beginning of the year. Yernar Zhanadil associates increase in the total debt from KZT8.8 trillion to KZT9.2 trillion with the KZT weakening. 

At the end of his speech, Yernar Zhanadil announced the continuation of the event to strengthen the financial stability of the group. 

In particular, in July, KTZh JSC completed a transaction for the partial redemption of Eurobonds in the amount of USD277.8 million with a coupon of 6.95% and maturing in 2042 at the expense of funds raised in RUB, thereby reducing dependence on USD exchange rate.

In May, KazTransGas JSC completed a transaction for the partial redemption of Eurobonds from its own funds in the amount of USD43.7 million with a 4.375% coupon and maturing in 2027. The transaction was closed at a price below par value, about USD95. As of the current date, the price is about USD108.

GRES-2 will refinance its currency obligations in USD and RUB by attracting a loan in KZT for KXT105 billion at 12% in early August 2020. The current average borrowed capital rate of GRES-2 as of March 31, 2020, was 12.5% ​​per annum taking into account the negative impact of currency risk.

United Chemical Company LLP (UCC) was established in 2009 by a decision of the Board of Directors of JSC “Sovereign Wealth Fund “Samruk-Kazyna” dated November 28, 2008, in accordance with Order of the President of the Republic of Kazakhstan issued at the expanded meeting of the Government of the Republic of Kazakhstan dated October 13, 2008, on “creating a special company dealing with projects in chemical industry. JSC SWF Samruk-Kazyna is the Sole Shareholder of UCC.