Baku, Azerbaijan, April 10
By Elena Kosolapova - Trend:
Kazakh National Welfare Fund Samruk-Kazyna improved financial performance in 2013, the fund's chief financial officer and board member, Nurlan Rakhmetov said on April 10.
He told Trend that according to the consolidated financial statement, which is to be finalized by April 20, the fund's assets in general were 15.3 trillion tenges in late 2013 (about $100 billion) and the total profit stood at about 440 billion tenges.
The fund's assets in late 2013 stood at 14.4 trillion tenges, excluding the second-tier banks (BTA Bank, Alliance Bank and Temir Bank). At the same time the fund's profit totalled 719 billion tenges.
Kazakh tenge's weighted average rate in January 2014 was about 155 tenges/$1, according to Kazakhstan's National Bank.
Following the February devaluation, tenge's rate fell nearly by 20 percent.
The average rate of tenge in March was 182.3 tenges per $1.
Rakhmetov stressed that these banks are not included into the fund's group in accordance with the national welfare fund law, despite the fact that the fund is a shareholder in these banks. Moreover, at the moment the fund carries out deals on selling them.
As for the profitability, the rate of which is shown in the fund's policy as strategic, the margin of earnings before interest, taxes, depreciation and amortization (EBITDA) increased last year by two percentage points, i.e. over 10 percent , and now stands at 21.3 percent.
"These are preliminary figures, but it is highly possible that they will also be included into the audited financial statement," Rakhmetov added.
He also said these results have been achieved thanks to the fund's development strategy, approved in September 2012. The strategy involves three areas of development.
The first is to increase long-term value of the company, second to participate in the modernization and diversification of the economy, and the third is the social responsibility.
"Our shareholder is the state, and the government always has a dual role, i.e., on one hand it should require increasing the company's value, but on the other hand, it is a regulator, responsible for the overall macroeconomic development of the country," Rakhmetov said.
He added that the latter interest sometimes conflicts with the former.
"Therefore, our strategy has three areas," Rakhmetov added.
Samruk-Kazyna CFO also said a number of initiatives have been implemented to enhance the long-term value of the fund's companies.
First of all, the coordination of treasury function was increased within the whole group.
"The annual effect from this was about 16-19 billion tenges. And the debt level will decrease by 147 billion tenges (nearly $1 billion at the old rate) if we complete this work and automate it," Rakhmetov said.
Secondly, the Samruk-Kazyna Fund jointly with its subsidiaries approved a three-year cost reduction program. This program is expected to help reduce costs by 132 billion tenges. Throughout 2013 the cost has been reduced by 50 billion tenges.
Thirdly, an electronic procurement system was introduced.
"Thanks to introducing of this system, we managed to save 16 billion tenges throughout 2013. And in 2014, all purchases will be conducted in an electronic form. And only thanks to this we are going to save 50-60 billion tenges in annual terms," Rakhmetov said.
Fourthly, great changes were made to the fund's investment policy in 2013 and minimum thresholds were set for the companies' profitability.
"Earlier the subsidiary companies were approving low-profit investment projects. We have banned this, i.e. we have set a lower threshold below which there can not be an internal profitability rate," Samruk-Kazyna CFO said.
Fifthly, regulations were introduced in the subsidiary management.
"There is also certain standardization on the corporate governance rating. We have set a goal, for this rating at all our companies to be no less than 75 percent by 2015 and no less than 85 percent by 2020. We will not be able to achieve 100 percent level because the state-owned companies can not be absolutely perfect in terms of corporate governance. But we are moving in this direction," Rakhmetov added.
He said all the target figures assigned to the fund for 2013 have been met.
Aside form that, much work is being conducted at the fund's companies as part of the development strategy. The work is aimed at regulating the social and labor relations.
A large survey was also conducted in 2013, which involved 30,000 production staff employees out of 340,000 employees of the fund and the so-called social stability rating was defined.
"The average rating for each group was 58 percent. Overall the rating is satisfactory, although there are things to work on. The main thing is that we have identified the pain spots and understand what we need in terms of social stability and social responsibility," Rakhmetov said.
The National Welfare Fund Samruk-Kazyna was established in line with Kazakh president's decree dated 2008 to enhance the competitiveness and sustainability of the national economy.
The fund brings together nearly all public assets of Kazakhstan and manages these assets on behalf of Kazakh government.
These assets include the JSC NC KazMunaiGas, Kazakhstan Railways JSC (Kazakhstan Temir Zholy), Kazakhstan Electricity Grid Operating Company JSC (KEGOC), Kazakhtelecom JSC and Kazakh National Atomic Company Kazatomprom.
Translated by E.A.
Edited by C.N.