Consolidated financial results according to IFRS For reader convenience, amounts in USD were converted at the average exchange rate for the applicable period (average exchange rates for 2020 and 2019 were 413.46 and 382.87 KZT/USD, respectively; period-end exchange rates as at 31 December 2020 and 31 December 2019 were 420.91 and 382.59 KZT/USD, respectively).

In 2020, revenue was KZT
4,556 bln
(USD 11,019 mln) compared to KZT 6,859 bln in 2019
EBITDA amounted to KZT
1,151 bln
(USD 2,785 mln) compared to KZT 1,963 bln in 2019
Free cash flow was KZT
88 bln
(USD 213 mln) compared to KZT 592 bln in 2019
Net profit for the period was KZT
172 bln
(USD 416 mln) compared to KZT 1,158 bln in 2019. Net profit for the period attributable to the parent company’s shareholders was KZT 273 bln (USD 661 mln)
The Company’s net debt as at 31 December 2020 was USD
6,162 mln
down 0.2% from USD 6,171 mln at end-2019
Total debt as at 31 December 2020 was USD 9,690 mln, down
3.4%
year-on-year
Consolidated financial results according to IFRS
Indicator Unit 2019 2020 %
OilSource: S&P Global Platts. USD/bbl 64.21 41.84 –34.8
Average exchange rate KZT/USD 382.87 413.46 8.0
Revenue KZT bln 6,859 4,556 –33.6
USD mln 17,915 11,019 –38.5
Share in profit of JVs and associates KZT bln 828 511 –38.3
USD mln 2,163 1,236 –42.8
Net profit KZT bln 1,158 172 –85.2
USD mln 3,026 416 –86.3
Net profit for the period attributable to the parent company’s shareholders KZT bln 1,197 273 –77.2
USD mln 3,127 661 –78.9
EBITDAEBITDA = revenue plus share in profit from JVs and associates, net, minus cost of purchased oil, gas, oil products and other materials minus production expenses minus G&A expenses minus transportation and selling expenses minus taxes other than income tax. KZT bln 1,963 1,151 –41.3
USD mln 5,126 2,785 –45.7
Free cash flowFree cash flow (FCF) = cash flow from operating activities (net of net movement in TCO prepayments) minus acquisition of property, plant and equipment, intangible assets, investment properties, exploration and evaluation assets plus proceeds from the loan previously provided to the Caspian Pipeline Consortium. KZT bln 592 88 –85.1
USD mln 1,537 213 –86.2
Net debtNet debt = non-current borrowings plus current borrowings minus cash and cash equivalents minus short-term bank deposits minus long-term bank deposits. Guarantees issued are not included in the calculation. KZT bln 2,361 2,594 9.9
USD mln 6,171 6,162 –0.2
Total debtTotal debt = non-current borrowings plus current borrowings. Guarantees issued are not included in the calculation. KZT bln 3,838 4,078 6.3
USD mln 10,030 9,690 –3.4
Statement of profit or lossCertain amounts shown in this column do not correspond to the amounts shown in the consolidated financial statements as at 31 December 2019 because they reflect reclassifications made.
KZT mln 2019Certain amounts shown in this column do not correspond to the amounts shown in the consolidated financial statements as at 31 December 2019 because they reflect reclassifications made. 2020 Change %
Revenue and other income
Revenue 6,858,856 4,556,037 –2,302,819 –33.6
Share in profit from joint ventures and associates, net 827,979 511,195 –316,784 –38.3
Finance income 240,880 109,753 –131,127 –54.4
Gain on sale of subsidiaries 17,481 519 –16,962 –97.0
Other operating income 24,936 24,576 –360 –1.4
Total revenue and other income 7,970,132 5,202,080 –2,768,052 –34.7
Costs and expenses
Cost of purchased oil, gas, oil products and other materials –3,913,744 –2,277,066 1,636,678 –41.8
Production expenses –721,693 –740,786 –19,093 2.6
Taxes other than income tax –454,295 –269,559 184,736 –40.7
Depreciation, depletion and amortization –337,424 –360,283 –22,859 6.8
Transportation and selling expenses –420,402 –458,186 –37,784 9.0
General and administrative expenses –213,967 –170,208 43,759 –20.5
Impairment of property, plant and equipment, intangible assets, exploration and evaluation assets –150,751 –243,694 –92,943 61.7
Exploration expenses –57,068 –19,807 37,261 –65.3
Impairment of investments in joint ventures and associate − –30,654 − −
Finance costs –317,433 –297,551 19,882 –6.3
Other expenses –7,203 –32,151 –24,948 346.4
Net foreign exchange (loss)/gain 8,479 –23,935 –32,414 –382.3
Total costs and expenses –6,585,501 –4,923,880 1,661,621 –25.2
Profit before income tax 1,384,631 278,200 –1,106,431 –79.9
Income tax expenses –226,180 –106,303 119,877 –53.0
Profit for the year from continuing operations 1,158,451 171,897 –986,554 –85.2
Discontinued operations
Profit after income tax for the year from discontinued operations 6 − − −
Net profit for the year 1,158,457 171,897 –986,560 –85.2
Net profit/(loss) for the year attributable to:
the parent company’s shareholders 1,197,157 273,237 –923,920 –77.2
the non-controlling interest –38,700 –101,340 –62,640 161.9
1,158,457 171,897 –986,560 –85.2

Profit

Revenue for 2020 was KZT 4,556 bln (USD 11,019 mln), down 33.6% year-on-year. The downtrend was mainly attributable to a 34.8% year-on-year decrease in the average Dated Brent oil price, lower oil sales due to production cuts at certain fields in accordance with the OPEC+ deal, as well as lower volumes of oil trading and sales of oil products by KMG International. The decrease in revenue was partially offset by the tenge’s depreciation against US dollar by 8.0%.

Share in profit from joint ventures and associates

The share in profit from joint ventures and associates in 2020 decreased by 38.3% year-on-year to KZT 511 bln (USD 1,236 mln) mainly due to a decrease in the profit from Tengizchevroil LLP (TCO), JSC Mangistaumunaigaz (MMG) and Kashagan. The share in the profit from TCO and MMG decreased by 58.2% and 79.6% in the reporting period, to KZT 173 bln (USD 420 mln) and KZT 17 bln (USD 41 mln), respectively, due to lower average oil prices and production decline. The share in Kashagan’s loss in 2020 was KZT 7 bln (USD 17 mln) as a result of lower oil prices. At the same time, Kashagan’s free cash flow was positive at USD 463 mln. In 2020, Ural Group Limited (UGL), PetroKazakhstan Inc. (PKI) and Valsera Holdings B.V. (Valsera) also made a loss of KZT 10 bln (USD 25 mln), KZT 9 bln (USD 21 mln) and KZT 6 bln (USD 15 mln) in terms of KMG’s share, respectively.

Costs

In the reporting period, the cost of purchased oil, gas, oil products and other materials amounted to KZT 2,277 bln (USD 5,507 mln), reflecting a decrease of 41.8% year-on-year, due to lower cost of purchased crude oil and oil for refining, as well as lower global oil prices, which was partly offset by the tenge’s depreciation against US dollar. Purchases of oil for resale decreased by 46.4% year-on-year to KZT 1,311 bln (USD 3,171 mln). The cost of oil for refining fell by 50.9% year-on-year to KZT 314 bln (USD 758 mln).

Other expenses

In 2020, production expenses increased slightly year-on-year to KZT 741 bln (USD 1,792 mln).

General and administrative expenses decreased by 20.5% to KZT 170 bln (USD 412 mln).

Taxes other than income tax decreased by 40.7% to KZT 270 bln (USD 652 mln) mainly as a result of lower expenses on rent tax, export customs duty and MET as a result of lower oil prices.

Payroll expenses in 2020 amounted to KZT 427 bln (USD 1,034 mln), showing a 0.3% year-on-year decrease, 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 2020 were KZT 298 bln (USD 720 mln), down 6.3% year-on-year, mainly due to early settlement of TCO prepayment facilities in 2019.

Impairment of assets

As a result of significant changes in market prices amid concerns over the COVID-19 pandemic and its impact on the economy in 2020, assumptions on oil prices, projected refinery margins, production volumes, exchange rates and inflation were revised in impairment testing. In 2020, KMG recognised impairment of assets in the amount of KZT 244 bln (USD 589 mln) in its consolidated statement of comprehensive income, including KZT 162 bln (USD 393 mln) for KMG International, KZT 60 bln (USD 146 mln) for JSC Embamunaigas, KZT 10 bln (USD Despite OPEC+ restrictions, we were able to maintain basic output across our operations and, given low oil prices, focused on shutting down unprofitable assets. In 2020, KMG’s output was 21.7 mln) for Sunkar, Barys and Berkut self-propelled barges, and KZT 11 bln (USD 25 mln) for other assets.

Net profit

The Company’s net profit fell 85.2% year-on-year to KZT 172 bln (USD 416 mln) due to lower average oil prices, lower revenue and income attributable to the share in profit from joint ventures and associates, and recognition of impairment of assets, which was partly offset by lower costs and taxes other than income tax.

Net profit for the period attributable to the parent company’s shareholders was KZT 273 bln (USD 661 mln).

CAPEX

In 2020, the Company’s CAPEX on an accrual basis (disclosed in the segment reporting) was KZT 454 bln (USD 1,098 mln), down 10.1% year-on-year. The main impact came from a 35% year-on-year decrease in CAPEX in the Oil and Gas Exploration and Production segment to KZT 168 bln (USD 405 mln). CAPEX on a cash basis amounted to KZT 396 bln (USD 959 mln) in 2020 compared to KZT 444 bln (USD 1,160 mln) in 2019.

EBITDA structure

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 consist of four main operating segments: oil and gas exploration and production, oil transportation, gas trading and 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).

Key factors that affected changes in EBITDA by segment in 2020:

  • Oil and gas exploration and production segment’s EBITDA decreased by USD 1,571 mln due to lower oil prices and decreased sales of crude oil
  • Gas trading and transportation segment’s EBITDA decreased by USD 343 mln due to a decrease in revenues from gas exports and international transit
  • Refining and sales of crude oil and oil products segment’s EBITDA decreased by USD 180 mln mainly due to lower sales by KMG International
EBITDAEBITDA = revenue plus share in profit from JVs and associates, net, minus cost of purchased oil, gas, oil products and other materials minus production expenses minus G&A expenses minus transportation and selling expenses minus taxes other than income tax. by segment, million USDNumbers may not add up due to rounding.
CAPEX, USD mlnNumbers may not add up due to rounding.
Segments Unit 2019 2020 %
Oil and gas exploration and production KZT mln 962,778 390,221 –59
USD mln 2,515 944 –62
% of EBITDA 49 34 –15 pp
Oil transportation KZT mln 219,204 226,838 3
USD mln 573 549 –4
% of EBITDA 11 20 9 pp
Gas trading and transportation KZT mln 457,829 352,565 –23
USD mln 1,196 853 –29
% of EBITDA 23 30 7 pp
Refining and sales of crude oil and oil products KZT mln 268,013 214,839 –20
USD mln 700 520 –26
% of EBITDA 14 19 5 pp
Corporate Centre KZT mln 42,345 –25,077 –159
USD mln 111 –61 –155
% of EBITDA 2 –2 –4 pp
OthersIncluding eliminations, which represent exclusion of intra-group turnovers. Inter-segment transactions were made on terms agreed to between the segments, i.e. not necessarily at market rates, except for certain regulated services, which are provided based on the tariffs available to related and third parties. KZT mln 12,565 –7,959 –163
USD mln 33 –19 –159
% of EBITDA 1 –1 –2 pp
EBITDA KZT mln 1,962,734 1,151,427 –41
USD mln 5,126 2,785 –46
% of EBITDA 100 100 0 pp
Statement of cash flows, KZT mln
2019 2020 Change %
Net cash flows from operating activities 123,801 446,533 322,732 261
Adjusted cash flows from operating activitiesAdjusted cash flows from operating activities = Net cash flows from operating activities minus TCO prepayments, net. 988,251 446,533 –541,718 –55
Net cash flows used in investing activities –319,562 –205,611 113,951 –36
Net cash flows used in financing activities –270,371 –245,227 25,144 –9
Effects of exchange rate changes –14,985 85,341 100,326 –670
Change in allowance for expected credit losses –279 376 655 –235
Net change in cash and cash equivalents –481,396 81,412 562,808 –117
Net change in cash and cash equivalents, USD mln –1,257 197 1,454 –116
Cash sources and uses, USD mlnNumbers may not add up due to rounding.
Camel

Сash and cash equivalents

Consolidated cash and cash equivalents, including cash on deposit, increased marginally by 0.6% year-on-year to KZT 1,485 bln (USD 3,528 mln) as at 31 December 2020. The increase in cash and cash equivalents is mainly due to a positive net cash flow from operating activities in the amount of KZT 447 bln (USD 1,080 mln) and the effect of exchange rate changes on cash and cash equivalents in the amount of KZT 85 bln (USD 206 mln). US dollar-denominated consolidated cash and cash equivalents decreased by 8.6% to USD 3,528 mln compared to USD 3,859 mln as at 31 December 2019.

Dividends received

The Company is a parent company of the Group and receives dividends from its subsidiaries, JVs and associated companies. The Company received dividends in the amount of KZT 135 bln (USD 326 mln) and KZT 126 bln (USD 330 mln) in 2020 and 2019, respectively. In 2020, dividends from Asia Gas Pipeline LLP (AGP) amounted to KZT 54 bln (USD 130 mln), from Mangistau Investments B.V. (MIBV) – KZT 32 bln (USD 78 mln), and from KazRosGas LLP – KZT 15 bln (USD 37 mln).

Dividends paid

In May 2020, KMG paid dividends in the amount of KZT 82 bln (USD 198 mln), including KZT 74 bln (USD 178 mln) paid to Samruk-Kazyna and KZT 8 bln (USD 19 mln) paid to the National Bank of the Republic of Kazakhstan in line with Samruk-Kazyna’s resolution.

Dividends from JVs and associates, USD mlnNumbers may not add up due to rounding.
Statement of financial position
2020 2019 Change %
Assets
Property, plant and equipment 4,369,745 4,484,271 –114,526 –2.6
Long-term bank deposits 56,528 52,526 4,002 7.6
Investments in joint ventures and associates 6,471,021 5,590,384 880,637 15.8
Other non-current assets 1,279,570 1,314,823 –35,253 –2.7
Short-term bank deposits 282,472 359,504 –77,032 –21.4
Cash and cash equivalents 1,145,864 1,064,452 81,412 7.6
Other current assets 1,001,569 1,208,351 –206,782 –17.1
 
Assets classified as held for sale 46,518 7,604 38,914 511.8
Total assets 14,653,287 14,081,915 571,372 4.1
Total assets, USD mln 34,813 36,807 –1,993 –5.4
Equity and liabilities
Total equity 8,636,679 8,196,656 440,023 5.4
Total equity, USD mln 20,519 21,424 –905 –4.2
Non-current borrowings 3,716,892 3,584,076 132,816 3.7
Other non-current liabilities 966,341 862,741 103,600 12.0
Current borrowings 361,556 253,428 108,128 42.7
Other current liabilities 971,819 1,185,014 –213,195 –18.0
Total liabilities 6,016,608 5,885,259 131,349 2.2
Total liabilities, USD mln 14,294 15,383 –1,088 –7.1
Total equity and liabilities 14,653,287 14,081,915 571,372 4.1
Total equity and liabilities, USD mln 34,813 36,807 –1,993 –5.4