“SAMRUK-ENERGY” JSC | Integrated ANNUAL REPORT

Comparative analysis (benchmarking)

Benchmarking is one of the most important elements of “Samruk-Energy” JSC management. Benchmarking aims to compare operating and financial pefromance with foreign peer companies to determine the strengths and weaknesses of “Samruk-Energy” JSC. The following indicators were used for benchmarking:

  • EBITDA margin;
  • Debt/EBITDA
  • Ratio of the share of borrowed funds (Debt / Equity)
  • Return on invested capital (ROIC).

The following peer companies were used for benchmarking:

  • Inter RAO UES PJSC (Russia);
  • CEZ Group (Czech Republic);
  • Drax Group (Great Britain).

Benchmarking results:

EBITDA margin for 2018

Return on Invested Capital (ROIC) for 2018

At present, in comparison with foreign peer companies. “Samruk-Energy” JSC is inferior in respect to certain indicators.

Financial stability indicators show that “Samruk-Energy” JSC fully uses available financial leverage.

At the same time, according to EBITDA margin, “Samruk-Energy” JSC outcompetes its peers. This indicator demonstrates a high profitability of sales.

As regards ROIC (return on long-term invested capital), “Samruk-Energy” JSC slightly outcompetes its European counterparts. However, in terms of this indicator, “Samruk-Energy” JSC is significantly inferior to the Russian holding company, characteristics of business of which are identical due to the similarity of economic conditions of operations, which indicates about the need to increase the efficiency (profitability, return) of investments.

Tariffs for electricity in 2018, US cents

“Samruk-Energy” JSC is an agent of the state policy in power sector. Due to a high degree of depreciation of energy sector, socially significant investment projects (aimed at reliability and continuity of the energy system of the Republic of Kazakhstan) have been implemented since 2009, which led to a significant increase in invested capital and respectively decreased the company’s return on investments indicator.

An additional factor that influences on the return on investment indicators is the low level of the electricity tariff in the Republic of Kazakhstan in comparison with the countries of peer companies.

Country

Tariff for kWh

In US cents

Average exchange rate of USD over 2018

Kazakhstan

16.25 tenge

4.7

344.8 tenge

Russia

3.9 rouble

6.2

62.7 rouble

Czech Republic

0.16 euro

18.8

0.85 euro

Great Britain

0.14 pound

18.6

0.75 pounds