“SAMRUK-ENERGY” JSC | Integrated ANNUAL REPORT

Financial and economic indicators

No.

Indicator, mln. tenge

2016 (actual)

2017 (actual)

2018 (actual)

2019 (forecast)

2020 (forecast)

1

Income from sales of goods and services delivered

181,310

219,892

260,400

255,094

286,085

1.1.

Electricity production

124,085

151,861

185,355

170,870

195,569

1.2.

Sale of electricity by energy supplying organizations

90,284

94,458

96,955

95,854

103,327

1.3.

Heat production

13,991

17,370

21,674

20,015

20,005

1.4.

Transmission and distribution of electricity

33,448

38,058

40,020

38,384

42,364

1.5.

Sale of chemically purified water

1,662

1,672

1,824

1,790

1,827

1.6.

Lease

3,504

3,289

3,542

3,502

3,502

1.7.

other

778

1,701

1,597

3,790

3,865

2

Cost of goods sold

(136,127)

(159,611)

(188,356)

(205,395)

(219,707)

2.1.

Cost of electricity production

(91,658)

(107,795)

(129,110)

(132,047)

(142,070)

2.2.

Cost of electricity sales by energy supplying organizations

(88,644)

(91,817)

(95,938)

(95,014)

(102,133)

2.3.

Cost of heat production

(13,699)

(17,122)

(20,023)

(20,036)

(21,039)

2.4.

Cost of electricity transmission

(26,506)

(28,337)

(30,068)

(33,181)

(34,601)

2.5.

Cost of sale of chemically purified water

(1,614)

(1,644)

(1,736)

(1,766)

(1,823)

2.6.

Cost of other types of core business

(215)

(443)

(640)

(977)

(965)

 

Amortization of fixed and intangible assets

(41,053)

(43,824)

(52,364)

(50,868)

(54,474)

3

Gross profit

45,184

60,281

72,044

49,699

66,378

4

Financing income(1)

3,396

2,805

2,333

341

794

5

Other income

6,061

3,224

5,347

787

760

6

Expenses for sale of products and services

(3,017)

(15,145)

(14,340)

(6,316)

(8,005)

7

General administrative expenses

(12,826)

(12,709)

(13,018)

(15,274)

(13,385)

8

Operating profit

29,341

32,427

44,686

28,109

44,987

9

Earnings before amortization, interest and CIT (EBITDA)

71,581

77,328

97,825

80,061

100,575

10

Finance costs (2) (3)

(19,218)

(29,182)

(33,129)

(30,804)

(28,032)

11

Other expenses from non-core operations (4)

(2,056)

(5,959)

(16,549)

(692)

(362)

12

Share of profit / loss of organizations accounted for using the equity method and investments impairment

4,895

(26,636)

9,752

12,981

13,992

13

Profit (loss) from discontinued operations

2,494

1,670

(1,584)

2,292

0

 

Profit (loss) from disposal of subsidiaries

 

 

287

 

 

14

Profit (loss) before tax

24,912

(21,650)

11,143

13,014

32,139

15

Corporate income tax expenses

(6,521)

(5,553)

(7,718)

(5,953)

(7,710)

16

Total profit before minority interest

18,391

(27,203)

3,425

7,061

24,429

17

Minority interest

632

681

184

282

282

18

Total profit attributable to the Group’s Shareholders

17,759

(27,884)

3,241

6,779

24,147

1  in FS forex gains for 2018 were reported in “other income” section
2  in FS balance from the exchange rate difference of 2017 was reported in “financial expenses” section
3  in FS forex loss for 2018 was reported in “finance costs” section
4  in FS impairment loss (NET) was recognized in “other expenses” item

Note: interpretation of income and cogs was presented with a breakdown by types of activities (not by segments) and was mentioned without elimination.

Revenues from sales of products and services provided across “Samruk-Energy” JSC group of companies in 2018 amounted to 260 400 mln. tenge:

Consolidated revenues, mln. tenge

Structure of 2018 income by main types of activity

The growth of consolidated revenue occurred in the segment of electricity generation owing to the growth in electricity sales volumes and tariffs. The main increase occurred at “Ekibastuz SDPP-1” LLP owing to an increase in electricity sales from 14,113 mln. kWh to 18,340 mln. kWh and an increase in the weighted average tariff from 6.39 tenge/kWh to 6.8 tenge/kWh.

As regards distribution and sales segments, the revenue growth is driven by an increase in volumes and tariffs.

Revenues from sales of products and services rendered detailed per producer

Indicator. mln.tenge

2016

(actual)

2017

(actual)

2018

(actual)

2019
(forecast)

2020
(forecast)

Income from sales of products and services rendered

181,310

219,892

260,400

255,094

286,085

“ESDPP-1” LLP

62,729

90,177

125,598

114,861

125,812

“AlmatyEnergoSbyt” LLP

90,284

94,458

96,955

95,854

103,327

“Almaty Power Plants” JSC

60,761

62,349

65,542

68,114

72,892

“Alatau Zharyk Company” JSC

33,848

38,658

40,258

38,572

42,555

“Moynak HPP” JSC

9,919

10,889

10,217

8,842

14,647

“FWPP” LLP1

3,435

4,388

4,460

0

0

“Shardarinsk HPP” JSC

3,157

3,405

3,318

2,731

5,924

“Bukhtarminsk HPP” JSC

3,503

3,288

3,541

3,502

3,503

Energy Solution center

334

666

937

1,391

1,391

“Green Energy” LLP

113

131

141

339

409

Intercompany turnover (elimination)

–86,773

–88,517

–90,567

–79,112

–84,374

1  The sale of 75 % interest in “FWPP” LLP is expected in 2019

Forecast for future period: in the forecast for 2019, revenue from sales is planned at 255,094 mln. tenge, which is 5,306 mln. tenge or 2 % lower than 2018 actual figure. The decrease was caused by reduction of tariff for electricity transmission and production.

Revenue increases in the forecast for 2020 compared to the forecast for 2019, this is because of growth of revenues from electricity production mainly owing to “Ekibastuz SDPP‑1” LLP. Also, the growth in revenues from electricity transmission and sale are expected because of an increase in volumes and tariffs.

The major share in the Company’s operating income comes from “Ekibastuz SDPP-1” LLP, “Almaty Power Plants” JSC, “Alatau Zharyk Company” JSC, “AlmatyEnerogSbyt” LLP. At the same time, at consolidation of revenues, intercompany turnover mainly in respect of energy producing and distribution companies is excluded from total amount.

Cost of goods and services

Indicator, mln. tenge

2016

(actual)

2017

(actual)

2018

(actual)

2019
(forecast)

2020
(forecast)

Fuel

31,626

43,363

56,768

56,684

61,043

Remuneration of labor and related expenses

22,316

24,035

25,231

26,331

27,268

Cost of purchased electricity

4,679

7,256

10,178

12,770

13,841

Depreciation of property. plant and equipment and amortization of intangible assets

41,053

43,824

52,364

50,868

54,474

Maintenance & repair

6,416

6,517

6,344

9,191

9,599

Services for electricity transmission and other services

7,444

8,506

10,019

10,769

12,417

Materials

1,880

1,762

1,773

2,510

2,629

Water supply

3,835

4,455

4,664

4,758

5,651

Grid losses

198

205

193

1,317

1,363

Taxes other than income tax

3,971

4,143

4,876

5,687

5,948

Emission charges

1,984

2,909

4,036

4,468

4,976

Outsourced services

7,528

7,394

8,219

17,048

17,416

Other

3,198

5,241

3,690

2,993

3,083

TOTAL

136,127

159,611

188,356

205,395

219,707

1  in FS emission charges for 2017 were recorded in “Others” item
2  in FS emission charges for 2018 were recorded “Taxes other than income tax” item

According to results of 2018, Cost of goods sold amounted to 188,356 mln. tenge, which is 18 % higher than 2017 actual figure. Mainly variable costs grew due to an increase in production and sales volumes, as well as due to an increase in prices for goods and services. There is also an increase in depreciation by 19 % due to a revision of property, plant and equipment service life (mainly at “Ekibastuz SDPP-1” LLP).

The structure of cost of goods sold by main types of activity

Forecast for the future period: in the forecast for 2019, the cost of goods sold and services rendered increases due to an increase in prices for goods and services. In particular, there is a significant increase in costs for third-party services and grid losses due to the emergence of services for maintaining the availability of electric capacity to bear the load caused by the introduction of a capacity market (the single operator is a third party and therefore the Company’s intercompany turnover will decrease). In the forecast for 2020, costs for goods sold increases in connection with the growth of variable costs, which is driven by increase in output and sales, as well as because of goods and services’ prices escalation.

Sales costs, mln. tenge

Sales costs in 2018 decreased by 805 mln. tenge compared with 2017 and amounted to 14,340 mln. tenge. This deviation is caused by the introduction of a temporarily decreasing coefficient at the level of 0.87 for the transfer of exported electricity, as well as a decrease in Ekibastuz SDPP-1’s volume of electricity exports to the Russian Federation.

In the forecast for 2019, sales costs reduction compared to the actual figure of 2018 is 56 % due to the lack of electricity exports to the Russian Federation.

Administrative expenses, mln. tenge

At the end of 2018, administrative expenses amounted to 13,018 mln. tenge, which is 309 mln. tenge or 2 % more in comparison with the same period in 2017.

Forecast for the future period: Administrative expenses in the forecast for 2019 are higher than in 2018 and amount to 15,274 mln. tenge. The increase is mainly caused by the planned transformation costs and the annual indexation of inflation. In the forecast for 2020, administrative expenses reduce by 1,888 mln. tenge compared with the forecast for 2019 and amount to 13,385 mln. tenge because transformation costs reduce.

Finance costs, mln. tenge

According to 2018 results, finance costs amounted to 33,129 mln. tenge, which is 3,947 mln. tenge higher than 2017 actual figure. Finance costs increased mainly due to refinancing of a portion of dollar Eurobonds during 2017 by using borrowed funds denominated in tenge with higher borrowing rate.

Forecast for the future period: In the forecast for 2019–2020, finance costs decreases owing to annual repayment of loans.

Share of profits of joint ventures and associates and impairment of investments

Indicator, mln. tenge

2016

(actual)

2017

(actual)

2018

(actual)

2019
(forecast)

2020
(forecast)

Share of profits of joint ventures and associates

4,895

(26,636)

9,752

12,981

13,992

Share income for 2018 amounted to 9 752 mln. tenge, having increased by 36,388 mln. tenge compared to the same period.

The main changes occurred with respect to the following assets:

“Ekibastuz SDPP-2 Plant” JSC – loss reduction by 6,134 mln. tenge in comparison with the previous year was caused because of the below factors:

  • increase in operating profit by 1,841 mln. tenge (an increase in the weighted average tariff for electricity from 6.6 tenge / kWh to 7.53 tenge / kWh);
  • assets impairment losses were not available (losses from impairment of assets in the amount of 5,844 mln. tenge were recognized in 2017;
  • an increase in foreign exchange losses in the amount of 2,997 mln. tenge.

Forum Muider – an increase in profit by 2,682 mln. tenge was mainly driven by an growth of coal sales volumes at “Bogatyr-Komir” LLP in the domestic market by 4,859 thous. tons (16 %) and an increase in export prices by 6.7 %.

Dynamics of change in share income, mln. tenge

“Balkhash TPP” JSC – loss reduction by 27,571 mln. tenge in 2018 is because in 2017 “Samruk-Energy” JSC recognized the loss of impairment in investments in the BTPP under IAS 36 “ Assets impairment”.

In the plan for 2019, the share of profit is 12,981 mln. tenge, 13,992 mln. tenge in 2020.

Profit/ (loss) from discontinued operations

Indicator, mln. tenge

2016

(actual)

2017

(actual)

2018

(actual)

2019
(forecast)

2020
(forecast)

Profit from discontinued operations

2,494

1,670

(1,584)

2,292

According to results of 2018, the loss from discontinued operations for 1,000 mln. tenge occurred due to adjusting the value of “Mangyshlak-Munay” LLP and “Tegis Munay” LLP assets to market value. In addition, payments liabilities for the social and economic development of the region were accrued in “Mangyshlak-Munay” LLP under IFRS 37.

In the forecast for 2019, the assets of “Mangyshlak-Munay” LLP, “Tegis Munay” LLP, “FWPP” LLP and “EWP” LLP were attributed to the discontinued operations.