Key 2021 financial results For reader convenience, amounts in USD were converted at the average exchange rate for the applicable period (average exchange rates for 2021 and 2020 were 426.06 and 413.46 KZT/USD, respectively; period-end exchange rates as at 31 December 2021 and 31 December 2020 were 431.80 and 420.91 KZT/USD, respectively)
For more details see the Financial Statements section
| Indicator | Unit | 2021 | 2020 |
|---|---|---|---|
| Dated Brent, | USD/bbl | 70,91 | 41,84 |
| Average exchange rate | KZT/USD | 426,06 | 413,26 |
| Period-end exchange rate | KZT/USD | 431,80 | 420,91 |
| Revenue | KZT bln | 5 839 | 3 625 |
| USD mln | 13 704 | 8 767 | |
| Share in profit of JVs and associates | KZT bln | 769 | 281 |
| USD mln | 1 804 | 679 | |
| | KZT bln | 1 197 | 172 |
| USD mln | 2 810 | 416 | |
| Net profit for the period attributable to the parent company’s shareholders | KZT bln | 1 216 | 273 |
| USD mln | 2 853 | 661 | |
| | KZT bln | 1 609 | 810 |
| USD mln | 3 776 | 1 960 | |
| | KZT bln | 1 256 | 664 |
| USD mln | 2 947 | 1 607 | |
| Free | KZT bln | 669 | 50 |
| USD mln | 1 570 | 121 | |
| | KZT bln | 3 746 | 4 078 |
| USD mln | 8 676 | 9 690 | |
| | KZT bln | 2 204 | 2 594 |
| USD mln | 5 104 | 6 162 |
| Indicator | Unit | 2021 | 2020 | Change |
|---|---|---|---|---|
| Revenue and other income | ||||
| Revenue | KZT mln | 5 838 793 | 3 624 964 | 2 213 829 |
| Share in profit from joint ventures and associates, net | KZT mln | 768 733 | 280 815 | 487 918 |
| Finance income | KZT mln | 84 599 | 87 987 | (3 388) |
| Gain on sale of joint ventures | KZT mln | 19 835 | 0 | 19 835 |
| Other operating income | KZT mln | 30 779 | 19 020 | 11 759 |
| Total revenue and other income | KZT mln | 6 742 739 | 4 012 786 | 2 729 953 |
| Costs and expenses | ||||
| Cost of purchased oil, gas, oil products and other materials | KZT mln | (3 596 491) | (1 901 236) | (1 695 255) |
| Production expenses | KZT mln | (693 031) | (656 178) | (36 853) |
| Taxes other than income tax | KZT mln | (428 639) | (254 322) | (174 317) |
| Depreciation, depletion and amortisation | KZT mln | (322 068) | (317 427) | (4 641) |
| Transportation and selling expenses | KZT mln | (131 912) | (137 144) | 5 232 |
| General and administrative expenses | KZT mln | (148 478) | (146 625) | (1 853) |
| Impairment of property, plant and equipment, exploration and evaluation assets, intangible assets and assets classified as held for sale | KZT mln | (20 724) | (243 893) | 223 169 |
| Exploration expenses | KZT mln | (79 083) | (19 807) | (59 276) |
| Impairment of investments in joint venture and associate | KZT mln | (64) | (30 654) | 30 590 |
| Finance costs | KZT mln | (249 265) | (265 372) | 16 107 |
| Net foreign exchange gain/(loss) | KZT mln | 17 781 | (16 189) | 33 970 |
| Other expenses | KZT mln | (24 510) | (28 094) | 3 584 |
| Total costs and expenses | KZT mln | (5 676 484) | (4 016 941) | (1 659 543) |
| Profit/(loss) before income tax | KZT mln | 1 066 255 | (4 155) | 1 070 410 |
| Income tax expenses | KZT mln | (221 393) | (85 276) | (136 117) |
| Profit/(loss) for the year from continuing operations | KZT mln | 844 862 | (89 431) | 934 293 |
| Discontinued operations | ||||
| Profit after income tax for the year from discontinued operations | KZT mln | 352 478 | 261 328 | 91 150 |
| Net profit for the year | KZT mln | 1 197 340 | 171 897 | 1 025 443 |
| Net profit/(loss) for the year attributable to: | ||||
| the parent company’s shareholders | KZT mln | 1 215 561 | 273 237 | 942 324 |
| the non-controlling interest | KZT mln | (18 221) | (101 340) | 83 119 |
| KZT mln | 1 197 340 | 171 897 | 1 025 443 |
Revenue
Revenue for 2021 was KZT 5,839 bln (USD 13,704 mln), up 61.1% year-on-year. The uptrend was mainly attributable to the growth of Brent crude price by 69.5% year-on-year, tenge's depreciation against US dollar by 3.0% year-on-year, and higher volumes of oil trading and sales by KMG International N.V. (KMGI). The revenue growth was curbed by production cuts at certain fields in accordance with OPEC+ deal and natural decline in production from mature fields.
Share in profit from joint ventures and associates
Share in profit from joint ventures and associates more than doubled in 2021, totalling KZT 769 bln (USD 1,804 mln) mainly on the back of an increase in the profit from Tengizchevroil LLP (TCO) by KZT 268 bln (USD 617 mln), KMG Kashagan B.V. (Kashagan) by KZT 95 bln (USD 224 mln), JSC Mangistaumunaigaz (MMG) by KZT 63 bln (USD 148 mln), and KazRosGas LLP by KZT 20 bln (USD 47 mln).
Costs
In the reporting period, the cost of purchased oil, gas, oil products and other materials amounted to KZT 3,596 bln (USD 8,441 mln), reflecting an increase of 89.2% year-on-year, to a great extent due to the growth of average oil price and the tenge's depreciation against US dollar.
Other expenses
In 2021, production expenses increased slightly year-on-year to KZT 693 bln (USD 1,627 mln).
Transportation and selling expenses totalled KZT 132 bln (USD 310 mln), down 3.8% year-on-year.
General and administrative expenses increased by 1.3% to KZT 148 bln (USD 348 mln).
Taxes other than income tax increased by 68.5% to KZT 429 bln (USD 1,006 mln) mainly as a result of higher expenses on rent tax, export customs duty and mineral extraction taxMET as a result of higher oil prices.
Payroll expenses in 2021 amounted to KZT 386 bln (USD 907 mln), showing a 4.2% year-on-year increase, and were reflected in production expenses, transportation and selling expenses, and general and administrative expenses in the consolidated statement of comprehensive income.
Finance costs in 2021 were KZT 249 bln (USD 585 mln), down 6.1% year-on-year, mainly due to early full repayment of bonds due 2022 and 2023.
Impairment of assets
According to the assessment of 2021, the loss on impairment of assets amounted to KZT 21 bln (USD 49 mln), down 92% year-on-year (from KZT 244 bln or USD 590 mln). The amount of loss on impairment includes the impairment of KMG International’s assets of KZT 8 bln (USD 19 mln), KZT 4.5 bln (USD 10 mln) for Sunkar, Barys and Berkut self-propelled barges, and KZT 8 bln (USD 19 mln) for other assets. The loss on impairment of assets was significantly lower in 2021, as no signs of impairment of property, plant and equipment, intangible assets, exploration and evaluation assets were identified at JSC Embamunaigas.
Net profit
In the reporting period, the Company’s net profit amounted to KZT 1,197 bln (USD 2,810 mln) compared to KZT 172 bln (USD 416 mln) in 2020, showing a significant increase amid higher average oil price, growing revenues and incomes from the share in profit from joint ventures and associates, as well as zero depreciation of property, plant and equipment in 2021.
Net profit for the period attributable to the parent company’s shareholders was KZT 1,216 bln (USD 2,853 mln).
CAPEX
In 2021, CAPEX on an accrual basis in the Company’s segment reporting was KZT 414 bln (USD 972 mln), down 8.8%
EBITDA
Consolidated EBITDA increased by 98.6% year-on-year to KZT 1,609 bln (USD 3,776 mln) compared to KZT 810 bln (USD 1,960 mln) in 2020.
Adjusted EBITDA increased by 89% to KZT 1,256 bln (USD 2,947 mln) compared to KZT 664 bln (USD 1,607 mln) in 2020.
Given the vertically integrated operations of KMG, we analyse EBITDA broken down by the segments below. We analyse segmented information according to IFRS. Segment performance is evaluated based on revenues and net profit. The Group’s operating segments have their own structure and management according to the type of produced goods and provided services. Moreover, all segments are strategic directions of the business, which offer different types of goods and services in different markets. The Company’s activity consists of four main operating segments: oil and gas exploration and production, oil transportation, refining and sales of crude oil and refined products, NC KMG’s Corporate Centre, etc. (oilfield service companies and other insignificant companies). KMG presents the Corporate Centre’s activities separately, since NC KMG not only performs the functions of the parent company, but also carries out operational activities (processing of crude oil at Atyrau and Pavlodar refineries, and further sale of oil products to both domestic and export markets).
The key factor that contributed to increase in EBITDA by segment in 2021 was EBITDA increase in Oil and Gas Exploration and Production by KZT 652 bln (USD 1,501 mln) driven by oil price growth.
| Segments | Unit | 2021 | 2020 | Δ |
|---|---|---|---|---|
| Oil and gas exploration and production | KZT mln | 1 041 811 | 390 221 | 651 590 |
| USD mln | 2 445 | 944 | 1 519 | |
| % | 65 | 48 | 17 п.п. | |
| Oil transportation | KZT mln | 211 356 | 226 838 | -15 482 |
| USD mln | 496 | 549 | -53 | |
| % | 13 | 28 | 15 п.п. | |
| Refining and sales of crude oil and oil products | KZT mln | 289 422 | 214 839 | 74 583 |
| USD mln | 679 | 520 | 160 | |
| % | 18 | 27 | -9 п.п. | |
| Corporate Centre | KZT mln | 71 449 | (25 077) | 96 526 |
| USD mln | 168 | (61) | 228 | |
| % | 4 | -3 | 8 п.п. | |
| Others | KZT mln | 13 359 | (5 346) | 18 705 |
| USD mln | 31 | (13) | 44 | |
| % | 1 | -1 | 2 п.п. | |
| Elimination | KZT mln | (18 422) | 8 799 | (27 221) |
| USD mln | (43) | 21 | (65) | |
| % | -1 | 1 | -2 п.п. | |
| EBITDA | KZT mln | 1 608 975 | 810 274 | 798 701 |
| USD mln | 3 776 | 1 960 | 1 817 |
Cash flows
| Indicator | Unit | 2021 | 2020 | Change |
|---|---|---|---|---|
| Net cash flows from operating activities | KZT mln | 1 078 497 | 446 533 | 631 964 |
| Net cash flows used in investing activities | KZT mln | (988 694) | (205 611) | (783 083) |
| Net cash flows used in financing activities | KZT mln | (282 533) | (245 227) | (37 306) |
| Effects of exchange rate changes | KZT mln | 22 851 | 85 341 | (62 490) |
| Change in allowance for expected credit losses | KZT mln | (136) | 376 | (512) |
| Net change in cash and cash equivalents | KZT mln | (170 015) | 81 412 | (251 427) |
| Net change in cash and cash equivalents | USD mln | (399) | 197 | (596) |
Cash and cash equivalents
Consolidated cash and cash equivalents, including cash on deposit, increased marginally by 3.9% year-on-year to KZT 1,542 bln (USD 3,572 mln) as at 31 December 2021. The increase in cash and cash equivalents is mainly due to a positive net cash flow from operating activities in the amount of KZT 1,078 bln (USD 2,531 mln), which was partly offset by outflow of cash due to deconsolidation of JSC KazTransGas in the amount of KZT 380,438 mln. US dollar-denominated consolidated cash and cash equivalents increased by 1.3% to USD 3,572 mln compared to USD 3,528 mln as at 31 December 2020.
Dividends received
The Company is a parent company of the Group and receives dividends from its subsidiaries and associates, JVs and associated companies. The Company received dividends in the amount of KZT 415 bln (USD 976 mln) and KZT 135 bln (USD 326 mln) in 2021 and 2020, respectively. In 2021, dividends from Tengizchevroil amounted to KZT 177 bln (USD 416 mln), from Caspian Pipeline Consortium – KZT 96 bln (USD 226 mln), and from KazRosGas LLP – KZT 46 bln (USD 107 mln).
Dividends paid
In May 2021, KMG paid dividends in the amount of KZT 56 bln (USD 131 mln), including dividends paid to Samruk-Kazyna and KZT 50 bln (USD 117 mln) paid to the National Bank of the Republic of Kazakhstan in line with Samruk-Kazyna’s resolution dated 4 May.
| Item | Unit | 2021 | 2020 | Change |
|---|---|---|---|---|
| Assets | ||||
| Property, plant and equipment | KZT mln | 3 405 980 | 4 369 745 | (963 765) |
| Long-term bank deposits | KZT mln | 56 058 | 56 528 | (470) |
| Long-term bank deposits | KZT mln | 6 550 384 | 6 471 021 | 79 363 |
| Other non-current assets | KZT mln | 533 303 | 1 279 570 | (746 267) |
| Short-term bank deposits | KZT mln | 510 513 | 282 472 | 228 041 |
| Cash and cash equivalents | KZT mln | 975 849 | 1 145 864 | (170 015) |
| Other current assets | KZT mln | 1 619 379 | 1 001 569 | 617 810 |
| Assets classified as held for sale | KZT mln | 795 | 46 518 | (45 723) |
| Total assets | KZT mln | 13 652 261 | 14 653 287 | (1 001 026) |
| Total assets | USD mln | 31 617 | 34 813 | (3 196) |
| Equity and liabilities | ||||
| Total equity | KZT mln | 8 158 681 | 8 636 679 | (477 998) |
| Total equity | USD mln | 18 895 | 20 519 | (1 624) |
| Non-current liabilities | ||||
| Non-current borrowings | KZT mln | 3 261 347 | 3 716 892 | (455 545) |
| Other non-current liabilities | KZT mln | 859 949 | 966 341 | (106 392) |
| Current borrowings | KZT mln | 484 980 | 361 556 | 123 424 |
| Other current liabilities | KZT mln | 887 304 | 971 819 | (84 515) |
| Total liabilities | KZT mln | 5 493 580 | 6 016 608 | (523 028) |
| Total liabilities | USD mln | 12 723 | 14 294 | (1 572) |
| Total equity and liabilities | KZT mln | 13 652 261 | 14 653 287 | (1 001 026) |
| Total equity and liabilities | USD mln | 31 617 | 34 813 | (3 196) |
Debt management
KMG’s gross debt is represented by bonds and loans. The debt portfolio is mainly formed in US dollars – the currency of principal incomes. Accordingly, the “organic” hedging of currency risk is achieved without the need to use derivative financial instruments.
Gross debt
Gross debt including guarantees as at 31 December 2021 was KZT 3,748 bln (USD 8,680 mln), down 13.2%
To reduce the impact of FX risk on the Company’s leverage, we entered into a number of deals to refinance loans. During the reporting period, Atyrau Refinery refinanced the following loans denominated in foreign currency:
- in January 2021, Atyrau Refinery made a full early repayment of a USD 126 mln loan from JSC Development Bank of Kazakhstan by borrowing KZT 54 bln from JSC Halyk Bank;
- in November 2021, Atyrau Refinery made a provision for a full early repayment of a USD 518 mln loan from The Export-Import Bank of China (Eximbank) in January 2022 by borrowing RUB 38 bln from PJSC VTB;
- in December 2021 Atyrau Refinery made a full early repayment of a USD 119 mln loan from Japan Bank for International Cooperation (JBIC) by borrowing KZT 56 bln from JSC Halyk Bank.
Gross debt after the full early repayment of the loan from the Export-Import Bank of China (Eximbank) in January 2022 amounted to KZT 3,524 bln (USD 8,158 mln).
KMG International obtained short-term working capital loans worth USD 50 mln from Cargill and a USD 46 mln loan from Banque de Commerce et de Placements. KMG International also partially repaid a USD 71 mln short-term loan from ING Bank B.V., including the fee.
Net debt
Net debt as at 31 December 2021 was KZT 2,204 bln (USD 5,104 mln), down 15% in tenge terms compared to 31 December 2019.