TIDM84ZP
RNS Number : 8681Q
Sovereign Wealth Fund Samruk-Kazyna
30 June 2022
"Sovereign Wealth Fund "Samruk-Kazyna" JSC
Consolidated financial statements
For the year ended December 31, 2021
with independent auditor's report
Independent auditor's report
Consolidated financial statements
Consolidated statement of financial
position...............................................................................................................................
1-2
Consolidated statement of comprehensive
income.....................................................................................................................
3-4
Consolidated statement of changes in
equity...............................................................................................................................
5-6
Consolidated statement of cash
flows...........................................................................................................................................
7-8
Notes to the consolidated financial statements
1. ...... General information
2. ...... Basis of preparation
3. ...... Summary of significant accounting policies
4. ...... Significant accounting estimates and judgements
5. ...... Disposals and assets classified as held for sale or
distribution to the shareholder
6. ...... Property, plant and equipment
7. ...... Intangible assets .
8. ...... Exploration and evaluation assets
9. ...... Investments in joint ventures and associates
10. ..... Loans issued and Finance lease receivables
11. ..... Amounts due from credit institutions
12. ..... Other financial assets
13. ..... Other non-current assets
14. ..... Inventories
15. ..... Trade accounts receivable and other current assets
16. ..... Cash and cash equivalents
17. ..... Equity
18. ..... Borrowings
19. ..... Loans from the government of the Republic of
Kazakhstan
20. ..... Prepayment on oil supply agreement
21. ..... Lease liabilities
22. ..... Provisions
23. ..... Other non-current liabilities
24. ..... Trade and other payables, and other current
liabilities
25. ..... Revenue
26. ..... Cost of sales
27. ..... General and administrative expenses
28. ..... Transportation and selling expenses
29. ..... Impairment loss
30. ..... Finance costs
31. ..... Finance income
32. ..... Share in profit of joint ventures and associates,
net
33. ..... Income tax expenses .
34. ..... Consolidation
35. ..... Related party disclosures
36. ..... Financial instruments and financial risk management
objectives and policies
37. ..... Commitments and contingencies
38. ..... Segment reporting
39. ..... Subsequent events
In millions of tenge Note 20 2 1 2020
-------------------------------------------- ----- ----------- -------------
Assets
Non-current assets
Property, plant and equipment 6 14,264,058 13, 70 3,885
Intangible assets 7 2,004,032 2,022,024
Exploration and evaluation assets 8 278,949 367,393
Investment property 37,014 40,560
Investments in joint ventures and
associates 9 5,681,234 4,985,676
Loans issued and finance lease receivables 10 357,413 366,830
Amounts due from credit institutions 11 104,803 135,315
Deferred tax assets 33 69 , 148 79,267
Other non-current financial assets 12 6 67 , 832 614,382
Other non-current assets 13 578,19 0 44 7 ,907
-------------------------------------------- ----- ----------- -------------
24,0 42
, 673 22,763,239
-------------------------------------------- ----- ----------- -------------
Current assets
Inventories 14 728,897 626,363
VAT receivable 168,889 256,319
Income tax prepaid 55,513 97,503
1,02 4 ,
Trade accounts receivable 15 892 66 7 ,107
Loans issued and finance lease receivables 10 46,703 55,406
Amounts due from credit institutions 11 671,859 354,257
Other current financial assets 12 506,895 188,427
Other current assets 15 209,986 184,769
Cash and cash equivalents 16 2,810,730 2,227,669
-------------------------------------------- ----- ----------- -------------
4,657, 8
6,224, 364 20
Assets classified as held for sale
or distribution to the Shareholder 5 42,721 61,787
-------------------------------------------- ----- ----------- -------------
6,267, 085 4 ,719,607
-------------------------------------------- ----- ----------- -------------
30,3 09
Total assets , 758 27,482,846
-------------------------------------------- ----- ----------- -------------
In millions of tenge Note 20 2 1 2020
---------------------------------------------- ------ ----------- ------------
Equity and liabilities
Equity attributable to equity holder
of the Parent
5,25 8 ,
Share capital 17.1 5,268,580 657
1, 894 ,
Currency translation reserve 17.9 545 1,763,499
Revaluation reserve of investments
at fair value through other comprehensive
income 32,694 31,464
Hedging reserve 17.10 (48,906) (60,416)
Other capital reserves 17.11 (16,984) (16,984)
8,1 25 , 6,5 02 ,
Retained earnings 704 544
---------------------------------------------- ------ ----------- ------------
15,2 55 13,4 78 ,
, 633 764
1,6 72 ,
Non-controlling interest 17.8 1,917,459 851
---------------------------------------------- ------ ----------- ------------
17,1 73
Total equity , 092 15,151,615
---------------------------------------------- ------ ----------- ------------
Non-current liabilities
6,6 08 ,
Borrowings 18 6,908,483 990
Loans from the Government of the Republic
of Kazakhstan 19 569,105 562,449
Lease liabilities 21 379,985 396,441
Provisions 22 442,394 386,921
Deferred tax liabilities 33 1,333, 617 1,143,256
Employee benefit liabilities 125,455 120,943
Prepayment on oil supply agreements 20 - 185,680
Other non-current liabilities 2 3 187,843 138,08 5
---------------------------------------------- ------ ----------- ------------
9,94 6 ,
882 9, 54 2,765
---------------------------------------------- ------ ----------- ------------
Current liabilities
Borrowings 18 954,209 850 , 210
Loans from the Government of the Republic
of Kazakhstan 19 10,264 30,773
Lease liabilities 21 129,676 118,878
Provisions 22 100,348 80,980
Employee benefit liabilities 14,981 14,051
Income taxes payable 16,766 10,567
Trade and other payables 2 4 1,118,055 828,258
Prepayment on oil supply agreements 20 - 97,882
Other current liabilities 2 4 845,485 752,031
---------------------------------------------- ------ ----------- ------------
2, 7 8 3
3,189,784 ,630
Liabilities associated with assets
classified as held for sale or distribution
to the Shareholder 5 - 4,836
---------------------------------------------- ------ ----------- ------------
3,189,784 2,788,466
---------------------------------------------- ------ ----------- ------------
13,136,
Total liabilities 666 12,331,231
---------------------------------------------- ------ ----------- ------------
30,3 09
Total equity and liabilities , 758 27,482,846
---------------------------------------------- ------ ----------- ------------
Managing Director for Economy and Finance -
Member of the Management Board
--------------------
Nazira Nurbayeva
Chief accountant
--------------------
Almaz Abdrakhmanova
In millions of tenge Note 20 2 1 2020
-------------------------------------- ----- ----------- ------------
11,709, 8,55 6 ,
Revenue 2 5 658 009
Government grants 54, 614 35,408
-------------------------------------- ----- ----------- ------------
11,764,
272 8,591, 417
(8,79 4 (6,618, 721
Cost of sales 2 6 , 057 ) )
2,97 0 ,
Gross profit 215 1,972, 696
(4 49 ,
General and administrative expenses 2 7 492 ) (425,875)
Transportation and selling expenses 2 8 (728,331) (670,549)
Impairment loss 29 (129,783) (34 3 ,741)
Gain on disposal of subsidiaries 2,203 219
1,66 4 ,
Operating profit 812 5 3 2,750
(55 5 , (608, 953
Finance costs 3 0 537 ) )
Finance income 3 1 1 74 , 898 180,188
(59,7 95
Other non-operating loss (51,327) )
Other non-operating income 95, 242 93,26 5
Share in profit of joint ventures
and associates, net 3 2 1,142,082 641,608
Net foreign exchange (loss)/gain,
net ( 777 ) 50,094
2,4 69 ,
Profit before income tax 393 829, 157
( 5 61 ,
Income tax expenses 3 3 036) (246,615)
-------------------------------------- ----- ----------- ------------
1, 908 ,
Net profit for the year 357 5 82 ,542
-------------------------------------- ----- ----------- ------------
Net profit for the year attributable
to:
1,6 29 ,
Equity holder of the Parent 216 5 58 , 192
Non-controlling interest 279,141 24 , 350
-------------------------------------- ----- ----------- ------------
1, 908 ,
357 5 82 ,542
-------------------------------------- ----- ----------- ------------
In millions of tenge Note 2021 2020
----------------------------------------- ------ ----------- ------------
Other comprehensive income
Other comprehensive income to be
reclassified to
profit or loss in subsequent periods
Exchange differences on translation
of foreign operations 1 51 , 889 516,078
Unrealized (loss)/gain from revaluation
investments at fair value through
other comprehensive income (389) 1,962
Share of the other comprehensive income
of associates and joint ventures 9 2,382 5,113
Gain/(loss) on transactions with hedge
instruments 17.10 15,88 8 (10,425)
Net realized gain on investments at
fair value through other comprehensive
income 840 98
Tax effect on transactions of OCI (1 2 , 6
components 20) (37,255)
Other comprehensive income to be
reclassified to
profit or loss in subsequent periods,
net of tax 1 57 , 990 475,571
----------------------------------------- ------ ----------- ------------
Other comprehensive income not to
be reclassified to
profit or loss in subsequent periods
Share of the other comprehensive loss
of associates and joint ventures 9 (169) (285)
Actuarial loss on defined benefit
plans (41 2 ) (8,295)
Tax effect on transactions of OCI
components 46 2 -
Other comprehensive loss not to be
reclassified to
profit or loss in subsequent periods (1 19 ) (8,580)
----------------------------------------- ------ ----------- ------------
Other comprehensive income for the
year, net of tax 1 5 7, 871 466,991
----------------------------------------- ------ ----------- ------------
Total comprehensive income for the 2,0 66 ,
year, net of tax 228 1,04 9 ,533
----------------------------------------- ------ ----------- ------------
Total comprehensive income for the
year, attributable to:
1,7 74 ,
Equity holder of the Parent 115 9 84 , 022
Non-controlling interest 292,113 65 , 511
----------------------------------------- ------ ----------- ------------
2,0 66 ,
228 1,04 9 ,533
----------------------------------------- ------ ----------- ------------
Managing Director for Economy and Finance -
Member of the Management Board
--------------------
Nazira Nurbayeva
Chief accountant
--------------------
Almaz Abdrakhmanova
Attributable to the equity holder of the Parent
Revaluation
reserve
of investments
at fair
value
through
Additional other Currency Other
In millions of Share paid-in comprehen-sive translation Hedging capital Retained Non-controlling
tenge Note capital capital income reserve reserve reserves earnings Total interest Total
----------------- ------ -------- ------------ --------- --------- --------- ---------- ---------------- ----------
( 46 1 2 , 1 4 ,
Balance as at December 5, 229 2 9 , 1,3 19 , 726 6 , 176 7 0 8 1, 63 342 ,
31, 2019 , 112 17,303 354 , 406 ) (16,984) , 856 , 321 4, 632 953
------------------------- -------- ----------- --------------- ------------ --------- --------- --------- ---------- ---------------- ----------
Net profit for the 558 , 558 ,
year - - - - - - 192 192 24,350 582,542
Other comprehensive
income/(loss) for
the year - - 2,272 443,608 (13,276) - (6,774) 425,830 41,161 466,991
------------------------- -------- ----------- --------------- ------------ --------- --------- --------- ---------- ---------------- ----------
Total comprehensive
income/(loss) for 984 , 65 , 1,04
the year - - 2,272 443,608 (13,276) - 55 1,418 022 511 9 ,533
------------------------- -------- ----------- --------------- ------------ --------- --------- --------- ---------- ---------------- ----------
Issue of shares 29,545 - - - - - - 29,545 18 29,563
( 120 ( 120
, 000 , 000
Dividends - - - - - - ) ) (65,695) (185,695)
Other contributions
of the Shareholder - (17,323) - - - - 1,205 (16,118) - (16,118)
Other transactions
with the Shareholder - - - - - - 40,483 40,483 - 40,483
Other distributions ( 99 ( 99 ( 99
to the Shareholder - - - - - - ,850) ,850) - ,850)
Transfer of assets
to the Shareholder - - - - - - (24,809) (24,809) - (24,809)
Discount on loans
from the Government - - - - - - (37,581) (37,581) - (37,581)
Disposal of subsidiaries - - - - - - - - (14,040) (14,040)
Change in ownership
interests of
subsidiaries
- disposal of interest
that does not result
in the loss of control - - (170) 74 - - 25,174 25,078 59,492 84,570
Reserve for put option
of non-controlling
interest holder of
a subsidiary - - - - - - (9,721) (9,721) (3,510) (13,231)
(63 1 (60 6 (4,16
Other equity movements - 20 8 411 (414) - ) ) (3,557) 3 )
( 60 15 ,
Balance as at December 5, 258 31 , 1, 763 , 416 6 , 5 13 , 1, 6 1 5 1
31, 2020 , 657 - 464 , 499 ) (16,984) 02,544 4 78,764 72,851 , 615
------------------------- -------- ----------- --------------- ------------ --------- --------- --------- ---------- ---------------- ----------
Attributable to the equity holder of the Parent
Revaluation
reserve
of investments
at fair
value
through
other Currency Other
In millions of Share comprehen-sive translation Hedging capital Retained Non-controlling
tenge Note capital income reserve reserve reserves earnings Total interest Total
--------------- ----- -------- ------------ --------- --------- ---------- ----------- ---------------- ------------
Balance as at ( 60 15 ,
December 5, 258 31 , 1, 763 , 416 6 , 5 13 , 1, 6 1 5 1
31, 2020 , 657 464 , 499 ) (16,984) 02,544 4 78,764 72,851 , 615
--------------- ----- -------- --------------- ------------ --------- --------- ---------- ----------- ---------------- ------------
Net profit 1,62 1,629
for the year - - - - - 9, 216 , 216 279,141 1,908,357
Other
comprehensive
income 1 , 130 11 , 12 , 1 5
for the year - 230 , 449 960 - 1,260 1 44,899 972 7 ,871
--------------- ----- -------- --------------- ------------ --------- --------- ---------- ----------- ---------------- ------------
Total
comprehensive 1 ,7 2 ,0
income 1 , 130 11 , 1,6 74 , 292 66 ,
for the year - 230 , 449 960 - 30,476 115 , 113 228
--------------- ----- -------- --------------- ------------ --------- --------- ---------- ----------- ---------------- ------------
Issue of 9 , 9 ,
shares 17.1 923 - - - - - 923 5,759 15,682
Dividends 17.2 - - - - - (88,337) (88,337) (92,511) (180,848)
Other
transactions
with
the
Shareholder 17.3 - - - - - 6,286 6,286 - 6,286
Other
distributions
to
the
Shareholder 17.4 - - - - - (65,582) (65,582) - (65,582)
Transfer of
assets to the
Shareholder 17.5 - - - - - (37,434) (37,434) - (37,434)
Discount on
loans from
the
Government 17.6 - - - - - (278) (278) - (278)
Disposal of
subsidiaries - - - - - - - 1,225 1,225
Change in
ownership
interests
of
subsidiaries
- disposal
of interest
that does not
result in the
loss of 17 7 17 7 3 6 2 14
control 17.7 - - - - - ,9 07 , 907 , 680 , 587
Other equity
movements - - 597 (450) - 122 269 1,342 1,611
Balance as at
December 5, 2
31, 2021 68,580 3 2,694 1,894,545 (48,906) (16,984) 8,125,704 15,255,633 1,917,459 1 7,173,092
--------------- ----- -------- --------------- ------------ --------- --------- ---------- ----------- ---------------- ------------
Managing Director for Economy and Finance -
Member of the Management Board
--------------------
Nazira Nurbayeva
Chief accountant
--------------------
Almaz Abdrakhmanova
2020
(restated)
In millions of tenge Note 2021 *
-------------------------------------------- ------ ------------ -------------
Cash flows from operating activities
12 , 528
Receipts from customers ,322 9,236,272
Payments to suppliers (7,397,233) (5,349,378)
(1,11 4
Payments to employees , 920 ) (1,022,274)
(1,717,
Other taxes and payments 500 ) (1,308,729)
Receipts from suppliers under the
arbitration decision 3 7 112,058 -
Operations with financial instruments
(the Fund and Kazpost) 13,690 19,360
Short-term lease payments and variable
lease payments (49,012) (57,634)
Proceeds from subsidized interest
rates on financial liabilities - 29,183
Return of VAT from the budget 241,670 110,054
Other payments (100,811) (157,836)
Income taxes paid (347,423) (214,006)
Interest paid (557,366) (520,080)
Interest received 114,565 146,453
-------------------------------------------- ------ ------------ -------------
Net cash flows received from operating 1,72 6 ,
activities 040 911,385
-------------------------------------------- ------ ------------ -------------
Cash flows from investing activities
Acquisition of property, plant and
equipment, and exploration and evaluation
assets and other non-current assets (1,295,235) (1,061,691)
Acquisition of intangible assets (31,994) (23,036)
Proceeds from sale of property, plant
and equipment 36,956 5,025
Proceeds from sale of other non-current
assets 47,662 52,982
Dividends received from joint ventures
and associates 9 547,447 246,164
Acqusition of subsidiaries, net of
cash acquired with the subsidiary 89 (26,499)
(Issuance)/redemption of bank deposits,
net (328,434) 297,967
Loans issued (17,541) (14,237)
Proceeds from sale of subsidiaries,
net of cash of disposed subsidiaries (27,819) 11,657
Proceeds from sale/(acquisition) of
joint ventures and associates, net 12,181 70,469
Additional contributions to share
capital of joint ventures and associates
without change in ownership 9 (1,926) (22,227)
Repayment of loans issued 30,480 79,937
Acquisition of debt instruments (728,299) (312,747)
Proceeds from sale/repayment by issuers
of debt instruments 722,163 108, 98 3
Other payments (36,916) (7,375)
Net cash flows used in investing (1,071,
activities 186 ) (594,628)
-------------------------------------------- ------ ------------ -------------
2020
(restated)
In millions of tenge Note 2021 *
-------------------------------------------- ------ ------------ -------------
Cash flows from financing activities
Proceeds from borrowings 18 1,462,347 1,859,611
Repayment of borrowings (1,171,065) (1,811,258)
Reservation of cash for payment of
borrowings 18 (292,258) -
Share buyback by subsidiary - (212)
Repayment of lease liabilities 21 (121,314) (95,384)
Contributions to the share capital 1 7
by the Equity holder of the Parent .1 9,923 26,000
Contributions by non-controlling interest 792 18
Distributions to the Shareholder (67,568) (59,852)
Dividends paid to non-controlling
interest of subsidiaries 17.2 (92,076) (72,054)
Disposal of interest that does not 1 7
result in the loss of control . 7 247,474 83,944
1 7
Dividends paid to the Shareholder .2 (88,337) (120,000)
Bonds early extinguishment premium
and fees paid 18 - (45,278)
Other payments (2,120) (7,527)
-------------------------------------------- ------ -------------
Net cash flows used in financing
activities (114,202) (241,992)
-------------------------------------------- ------ ------------ -------------
Net increase in cash and cash equivalents 540, 652 74, 765
Effects of exchange rate changes on
cash and cash equivalents 41,984 158,52 4
Changes in cash and cash equivalents
disclosed as part of assets held for
sale 979 87
Change in allowance for expected credit
losses (554) 33 1
Cash and cash equivalents at the beginning
of the year 2,227,669 1,993,962
-------------------------------------------- ------ ------------ -------------
Cash and cash equivalents at the
end of the year 1 6 2,810,730 2,227,669
-------------------------------------------- ------ ------------ -------------
* Certain numbers shown here do not correspond to the
consolidated financial statements for the year ended December 31,
2020 and reflect adjustments made, refer to Note 2.
Managing Director for Economy and Finance -
Member of the Management Board
--------------------
Nazira Nurbayeva
Chief accountant
--------------------
Almaz Abdrakhmanova
1. General information
Corporate information
"Sovereign Wealth Fund "Samruk-Kazyna" JSC (the "Fund" or
"Samruk-Kazyna") was established on November 3, 2008 in accordance
with the Decree of the President of the Republic of Kazakhstan
dated October 13, 2008 and the Resolution of the Government of the
Republic of Kazakhstan dated October 17, 2008. The formation was
enacted by the merger of "Sustainable Development Fund "Kazyna" JSC
("Kazyna") and "Kazakhstan Holding Company for State Assets
Management "Samruk" JSC ("Samruk") and the additional transfer to
the Fund of interests in certain entities owned by the Government
of the Republic of Kazakhstan (the "State" or the "Government").
The Government is the sole shareholder of the Fund (the
"Shareholder" or the "Parent").
During this process the Government's overall objective was to
increase management efficiency and to optimise organisational
structures for them to successfully achieve their strategic
objectives as set in the respective Government programs.
The Fund is a holding company combining companies listed in Note
34 (the "Group"). Prior to February 1, 2012, the Fund's activities
were governed by the Law of the Republic of Kazakhstan On National
Welfare Fund No. 134-4 dated February 13, 2009 and were aimed to
assist in provision of stable development of the state economy,
modernization and diversification of economy, and improvement of
the Group companies' efficiency. According to the Law of the
Republic of Kazakhstan enacted on February 1, 2012 On Sovereign
Wealth Fund No. 550-4, the Fund's activity is focused on improving
sovereign wealth of the Republic of Kazakhstan by increasing the
long-term value of the Group companies and by effective management
of the Group assets.
For management purposes, the Group is organized into
organizational business units based on their products and services,
and has 8 (eight) reportable operating segments as follows (Note
38):
-- Oil and gas segment includes operations related to
exploration and production of oil and gas, transportation of oil
and gas and refining and trading of crude oil, gas and refined
products.
-- Transportation segment includes operations related to railway
and air transportation of cargo and passengers.
-- Communication segment includes operation of fixed line communication, including local, long-distance intercity and international telecommunication services (including CIS and non-CIS countries); and also renting out of lines, data transfer services and wireless communication services.
-- Energy segment includes operations related to production and
distribution of electricity, the function of oversight over the
input of electricity into the energy system and consumption of
imported electricity, the function of centralized operation and
dispatch of facilities in the Unified Energy System of
Kazakhstan.
-- Mining segment includes exploration, mining, processing,
sales of mineral resources and geological exploration.
-- Industrial segment includes industry enterprises and projects of chemical industry.
-- Corporate center segment covers Fund's investing and
financing activities, including provision of loans to related and
third parties.
-- Other segment includes operations related to assisting the
Government in increasing housing availability by investing into
residential development and other operations.
The address of the Fund's registered office is 17/10 Syganak
str., Nur-Sultan, the Republic of Kazakhstan.
These consolidated financial statements were authorised for
issue by the Managing Director for Economy and Finance - Member of
the Management Board and Chief accountant of the Fund on April 22,
2022 and preliminary approved by the Audit Committee of the Board
of Directors of the Fund. These consolidated financial statements
should be further approved by the Board of Directors and the Sole
Shareholder.
1. GENERAL INFORMATION (continued)
Privatization plan
On April 30, 2014 the Government approved the initial
Privatization Plan for 2014-2016. On December 30, 2015 the
Government approved the new 2016-2020 Complex Privatization Plan
(replacing previous 2014-2016 Privatization Plan) and the list of
all state owned assets to be privatized, including certain Fund
subsidiaries.
On December 29, 2020, by the Resolution of the Government of the
Republic of Kazakhstan No. 908 On Some Issues of Privatization for
2021-2025, a new comprehensive Privatization Plan for 2021-2025 was
approved (hereinafter - the "Privatization Plan"), which includes a
new list of state owned organizations and assets of the Fund's
group to be privatized and transferred to a competitive
environment.
2. Basis of preparation
These consolidated financial statements have been prepared on a
historical cost basis, except as described in the accounting
policies and the notes to these consolidated financial
statements.
These consolidated financial statements are presented in
Kazakhstan tenge ("tenge") and all monetary amounts are rounded to
the nearest million tenge except where otherwise indicated.
Statement of compliance
These consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") as issued by International Accounting Standard Board
("IASB").
The preparation of consolidated financial statements in
conformity with IFRS requires the use of certain critical
accounting estimates. It also requires management to exercise its
judgment in the process of applying the accounting policies. The
areas involving a higher degree of judgment or complexity, or areas
where assumptions and estimates are significant to the consolidated
financial statements are disclosed in Note 4.
In course of preparation of these consolidated financial
statements the Group management considered the current
international economic environment including complex of
uncertainties due to COVID-19 pandemic. The consolidated financial
statements were prepared on a going concern basis.
Restatement affecting comparative information
Changes in presentation of the consolidated statement of cash
flows
Certain amounts in the consolidated statement of cash flows for
the year 2020 have been presented in separate lines in accordance
with the presentation adopted in consolidated financial statements
for the year 2021. The Group changed the presentation of its
consolidated financial statements as the new presentation provides
information that is more relevant to users of the consolidated
financial statements.
Effect of reclassifications on the consolidated statement of
cash flows for 2020:
20 20 20 20
(as previously
In millions of tenge reported) Reclassification (restated)
-------------------------------------- ----------------- ------------------ -------------
Cash flows from investing activities
Proceeds from sale/repayment
of debt instruments
by issuers - 108,983 108,983
Other receipts 101,608 (108,983) (7,375)
----------------- ------------------ -------------
Net cash flows used in investing
activities (594,628) - (594,628)
-------------------------------------- ----------------- ------------------ -------------
2. BASIS OF PREPARATION (continued)
Foreign currency translation
Functional and presentation currency
Items included in these consolidated financial statements of
each of the Group's entities are measured using the currency of
primary economic environment in which the entity operates ("the
functional currency"). The consolidated financial statements are
presented in tenge, which is the Group's presentation currency.
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at the
reporting date exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognized in profit and
loss.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates as at
the dates of initial transactions. Non-monetary items measured at
fair value in a foreign currency are translated using the exchange
rates at the date when the fair value is determined.
Group entities
Gains, losses and financial position of all of the Group's
subsidiaries, joint ventures and associates (none of which has the
currency of a hyperinflationary economy) that have a functional
currency different from the presentation currency are translated
into the presentation currency as follows:
-- Assets and liabilities for each statement of financial
position presented are translated at the closing rate at that
reporting date;
-- Income and expenses for each statement of comprehensive
income are translated at average exchange rates (unless this
average is not a reasonable approximation of the cumulative effect
of the rates prevailing on the transaction dates; in which case
income and expenses are translated at the rate on the dates of the
transactions); and
-- All resulting exchange differences are recognized as a
separate component of other comprehensive income.
Exchange rates
Weighted average currency exchange rates established by the
Kazakhstan Stock Exchange ("KASE") are used as official currency
exchange rates in the Republic of Kazakhstan.
The following table presents currency exchange rates to
tenge:
April 22,
Weighted Weighted
December December average average
31, 2021 31, 2020 for 2021 for 2020 2022
----------------------- ---------- ---------- ---------- ---------- -----------
United States dollar 443 .9
("USD") 431.80 420.91 426.06 413.46 9
Euro ("EUR") 489.10 516.79 503.96 472.05 479.69
Russian ruble ("RUR") 5.76 5.62 5.78 5.73 5.67
----------------------- ---------- ---------- ---------- ---------- -----------
3. Summary of significant accounting policies
New and amended standards and interpretations
The accounting policies adopted in the preparation of the
consolidated financial statements are consistent with those
followed in the preparation of the Group's annual consolidated
financial statements for the year ended December 31, 2020, except
for the adoption of new standards and interpretations effective as
of January 1, 2021.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
New and amended standards and interpretations (continued)
The following amendments were applied for the first time in
2021:
-- Amendments to IFRS 9 Financial Instruments, IAS 39 Financial
Instruments: Recognition and Measurement, IFRS 7 Financial
Instruments: Disclosures, IFRS 4 Insurance Contracts and IFRS 16
Leases. The amendments provide temporary reliefs which address the
financial reporting effects when an interbank offered rate (IBOR)
is replaced with an alternative nearly risk-free interest rate
(RFR). The amendments include the following practical
expedients:
-- A practical expedient to require contractual changes, or
changes to cash flows that are directly required by the reform, to
be treated as changes to a floating interest rate, equivalent to a
movement in a market rate of interest;
-- Permit changes required by IBOR reform to be made to hedge
designations and hedge documentation without the hedging
relationship being discontinued;
-- Provide temporary relief to entities from having to meet the
separately identifiable requirement when an RFR instrument is
designated as a hedge of a risk component.
These amendments had no impact on the consolidated financial
statements of the Group:
-- Amendments to IFRS 16 Leases in regards of COVID-19-related
rent concessions. The amendments provide relief to lessees from
assessment whether a COVID-19-related rent concession is a lease
modification. The amendments did not have a material impact on the
consolidated financial statements, as the Group has not received
significant rent concessions related to pandemic.
Standards that have been issued but not yet effective
The new and amended standards and interpretations that are
issued, but not yet effective, up to the date of issuance of the
Group's financial statements are disclosed below. The Group intends
to adopt these new and amended standards and interpretations, if
applicable, when they become effective.
These amendments and interpretations did not have an impact on
the consolidated financial statements of the Group:
-- IFRS 17 Insurance Contracts ;
-- Amendments to IAS 1 Presentation of Financial Statements
named Classification of Liabilities as Current or Non-current;
-- Amendments to IFRS 3 Business Combinations named Reference to
the Conceptual Framework;
-- Amendments to IAS 16 Property, Plant and Equipment: Proceeds before Intended Use;
-- Amendments to IAS 37 Provisions, Contingent Liabilities and
Contingent Assets: Onerous Contracts - Costs of Fulfilling a
Contract;
-- Amendments to IAS 12 Income Taxes named Deferred Tax Related
to Assets and Liabilities arising from a Single Transaction;
-- Amendments to IFRS 1 First-time Adoption of International
Financial Reporting Standards - Subsidiary as a first-time
adopter;
-- Amendments to IFRS 9 Financial Instruments - Fees in the '10
per cent' test for derecognition of financial liabilities;
-- Amendments to IFRS 16 Leases named Lease Incentives;
-- Amendments to IAS 41 Agriculture named Taxation in Fair Value Measurements;
-- Amendments to IAS 1 Presentation of Financial Statements and
IFRS Practice Statement 2 Making Materiality Judgements;
-- Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Standards that have been issued but not yet effective
(continued)
The amendments to IAS 1 and IAS 8 will be effective for annual
reporting periods beginning on or after January 1, 2024, with early
application permitted.
The Group does not plan for early adoption in respect of
above-mentioned new standards and amendments to existing standards
to which this option is available.
The Group has not early adopted any standard, interpretation or
amendment that has been issued but is not yet effective.
Basis of consolidation
These consolidated financial statements comprise the financial
statements of the Fund and its controlled subsidiaries (Note
34).
Subsidiaries
Subsidiaries are the entities controlled by the Group. Control
is achieved when the Group is exposed, or has rights, to variable
returns from its involvement with the investee and has the ability
to affect those returns through its power over the investee.
Specifically, the Group controls an investee if and only if the
Group has:
-- Power over the investee (i.e. existing rights that give it
the current ability to direct the relevant activities of the
investee);
-- Exposure, or rights, to variable returns from its involvement with the investee;
-- The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting or similar
rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
-- The contractual arrangement with the other vote holders of the investee;
-- Rights arising from other contractual arrangements;
-- The Group's voting rights and potential voting rights.
The Group re-assesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidation of a
subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control over the
subsidiary.
Assets, liabilities, revenue and expenses of a subsidiary
acquired or disposed of during the year are included in the
consolidated statement of comprehensive income and consolidated
statement of financial position from the date the Group gains
control until the date the Group ceases to control the
subsidiary.
Except for acquisition in transactions between entities under
common control, subsidiaries are consolidated from the date when
control is obtained by the Group and are de-consolidated from the
date when control ceases. At the acquisition of the subsidiary,
acquisition cost is distributed between assets and liabilities
based on their fair value as at the date of acquisition. Financial
statements of the subsidiaries are prepared for the same reporting
period as those of the Fund, using consistent accounting
policies.
All intra-group balances and transactions, including unrealized
gains resulting from intra-group transactions are eliminated in
full. Unrealized losses are eliminated in the same manner as
unrealized gains, except that they are eliminated to the extent
that there is no evidence of impairment.
Non-controlling interest represents a portion of equity in
subsidiaries, which is not owned by the Group, and is recorded
separately in equity in the consolidated statement of financial
position separately from the equity attributable to the Parent.
Losses within a subsidiary are attributed to the non-controlling
interest even if that results in its deficit balance.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basis of consolidation (continued)
Subsidiaries (continued)
A change in the ownership interest of a subsidiary, without a
loss of control, is accounted for as an equity transaction. If the
Group loses control over a subsidiary, it:
-- Derecognises the assets (including goodwill) and liabilities of the subsidiary;
-- Derecognises the carrying amount of any non-controlling interest;
-- Derecognises the cumulative translation differences recorded in equity;
-- Recognises the fair value of the consideration received;
-- Recognises the fair value of any investment retained;
-- Recognises any surplus or deficit in profit or loss;
-- Reclassifies the Parent's share of components previously
recognised in OCI to profit or loss or retained earnings, as
appropriate, as would be required if the Group had directly
disposed of the related assets or liabilities.
Business combinations
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as an aggregate of
the consideration transferred, measured at acquisition date fair
value and the amount of any non--controlling interest in the
acquiree. For each business combination, the acquirer measures the
non-controlling interest in the acquiree either at fair value or at
the proportionate share of the acquiree's identifiable net assets.
Acquisition costs incurred are expensed and included in general and
administrative expenses.
When the Group acquires a business, it assesses the financial
assets acquired and liabilities assumed for appropriate
classification and designation in accordance with the contractual
terms, economic circumstances and pertinent conditions as at the
acquisition date. This includes an analysis of the need of
separation of embedded derivatives in host contracts by the
acquiree.
If the business combination is achieved in stages, equity
interest previously held by the Group in the acquiree is remeasured
to fair value at the acquisition date through profit or loss.
Any contingent consideration to be transferred by the acquirer
will be recognised at fair value at the acquisition date.
Contingent consideration classified as an asset or liability that
is a financial instrument and within the scope of IFRS 9 Financial
Instruments: Recognition and Measurement, is measured at fair value
with changes in fair value recognised in the statement of profit or
loss in accordance with IFRS 9. If the contingent consideration is
not within the scope of IFRS 9, it is measured at fair value
through profit and loss. Contingent consideration that is
classified as equity is not remeasured and subsequent settlement is
accounted for within equity.
Goodwill is initially measured at cost, being the excess of the
aggregate of the consideration transferred and the amount
recognised for non-controlling interests, and any previous interest
held, over the net identifiable assets acquired and liabilities
assumed. If the fair value of the net assets acquired is in excess
of the aggregate consideration transferred, the Group re-assesses
whether it has correctly identified all of the assets acquired and
all of the liabilities assumed and reviews the procedures used to
measure the amounts to be recognised at the acquisition date. If
the reassessment still results in an excess of the fair value of
net assets acquired over the aggregate consideration transferred,
then the gain is recognised in profit or loss.
After initial recognition, the goodwill is measured at cost less
any accumulated impairment losses. For the purpose of impairment
testing, goodwill acquired in a business combination is, from the
acquisition date of an entity by the Group, allocated to each of
the Group's cash-generating units that are expected to benefit from
the combination, irrespective of whether other assets or
liabilities of the acquiree are assigned to those units.
Where goodwill forms part of a cash-generating unit and part of
the operation within that unit is disposed of, the goodwill
associated with the operations disposed off is included in the
carrying amount of the operation when determining the gain or loss
on disposal of the operation. Goodwill disposed off in this
circumstance is measured on the basis of the relative values of the
operation disposed off and the portion of the cash-generating unit
retained.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basis of consolidation (continued)
Business combinations achieved in stages
The acquisition date fair value of the acquirer's previously
held equity interest in the acquiree is remeasured to fair value at
the acquisition date through profit or loss.
In a business combination achieved in stages the acquirer
recognises goodwill as of the acquisition date measured as the
excess of (a) over (b) below:
(a) The aggregate of:
(i) The consideration transferred measured in accordance with
this IFRS 3 Business Combinations, which generally requires
acquisition-date fair value;
(ii) The amount of any non-controlling interest in the acquiree
measured in accordance with IFRS 3; and
(iii) The acquisition-date fair value of the acquirer's
previously held equity interest in the acquire;
(b) The net of the acquisition-date amounts of the identifiable
assets acquired and the liabilities assumed.
Acquisition of subsidiaries from parties under common
control
Acquisition of subsidiaries from parties under common control
(entities under the Government's control) is accounted for using
the pooling of interest method.
Assets and liabilities of the subsidiary transferred under
common control are recorded in these consolidated financial
statements at the carrying amounts of the transferring entity (the
"Predecessor") at the date of the transfer. Related goodwill, if
any, inherent in the Predecessor's original acquisition is also
recorded in these consolidated financial statements. Any difference
between the total book value of net assets, including the
Predecessor's goodwill, and the consideration paid is accounted for
in these consolidated financial statements as an adjustment to
equity.
These consolidated financial statements are presented as if the
subsidiary had been acquired by the Group on the date it was
originally acquired by the Predecessor.
Change in ownership interests in subsidiaries
In transactions where part of the interest in existing
subsidiary is either sold or acquired, but control is retained, the
differences between the carrying amounts of net assets attributable
to interests in subsidiaries acquired or disposed and the
consideration given or received for such increases or decreases are
charged or credited to retained earnings.
Joint operations
A joint operation is a type of joint arrangement whereby the
parties that have joint control of the arrangement have rights to
the assets and obligations for the liabilities, relating to the
arrangement. In relation to its interests in joint operations, the
Group recognizes its: Assets, including its share of any assets
held jointly; Liabilities, including its share of any liabilities
incurred jointly; Revenue from the sale of its share of the output
arising from the joint operation; Share of the revenue from the
sale of the output by the joint operation; Expenses, including its
share of any expenses incurred jointly.
Investment in joint ventures and associates
An associate is an entity over which the Group has significant
influence. Significant influence is the power to participate in the
financial and operating policy decisions of the investee, but which
does not comprise control or joint control over those policies.
A joint venture is a type of joint arrangement whereby the
parties that have joint control of the arrangement have rights to
the net assets of the joint venture. Joint control is the
contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require
unanimous consent of the parties sharing control.
The considerations made in determining significant influence or
joint control are similar to those necessary to determine control
over subsidiaries.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Basis of consolidation (continued)
Investment in joint ventures and associates (continued)
The Group has interests in joint ventures which are jointly
controlled entities, whereby the venturers have a contractual
arrangement that establishes joint control over the economic
activities of the entities. Also, the Group has interests in
associates, in which it exercises significant influence over the
economic activities of the entities. The Group's investment in its
joint ventures and associates are accounted for using the equity
method.
Under the equity method, investment in joint venture / associate
is carried in the consolidated statement of financial position at
cost plus post acquisition changes in the Group's share of net
assets of the joint venture / associate. Goodwill relating to a
joint venture / associate is included in the carrying amount of the
investment and is neither amortised nor individually tested for
impairment.
The consolidated statement of comprehensive income reflects the
share of the results of operations of the joint venture /
associate. Where there has been a change in net assets recognized
directly in the equity of the joint venture / associate, the Group
recognises its share of any changes and discloses this, when
applicable, in the consolidated statement of changes in equity.
Unrealised gains and losses resulting from transactions between the
Group and joint venture / associate are eliminated to the extent of
the Group's interest in the joint venture / associate.
The share in profit of joint ventures / associates is shown on
the face of the consolidated statement of comprehensive income.
This is the profit attributable to equity holders of the joint
venture / associate and therefore is profit after tax and
non-controlling interest in the subsidiaries of the joint ventures
/ associates.
Financial statements of the joint venture / associate are
prepared for the same reporting period as those of the Parent.
Where necessary, adjustments are made to bring their accounting
policies in line with those of the Group.
After application of the equity method, the Group determines
whether it is necessary to recognise an additional impairment loss
on the Group's investment in its joint ventures / associates. The
Group determines at each reporting date whether there is any
objective evidence that the investment in the joint venture /
associate is impaired. If this is the case the Group calculates the
amount of impairment as the difference between the recoverable
amount of investment in the joint venture / associate and its
carrying amount and recognises impairment loss in the consolidated
statement of comprehensive income.
Upon loss of joint control over the joint venture and
significant influence over associate, the Group measures and
recognises any retaining investment at its fair value. Any
difference between the carrying amount of the investment in the
joint venture / associate upon loss of joint control / significant
influence and the fair value of the retained investment and
proceeds from disposal is recognized in profit or loss.
Current versus non-current classification
The Group presents assets and liabilities in the consolidated
statement of financial position based on current/non-current
classification. An asset is classified as current when it is:
-- Expected to be realized or intended to be sold or consumed in normal operating cycle;
-- Held primarily for the purpose of trading;
-- Expected to be realized within 12 (twelve) months after the reporting period; or
-- Cash or cash equivalent unless restricted from being
exchanged or used to settle a liability for at least 12 (twelve)
months after the reporting period.
All other assets are classified as non-current.
A liability is current when:
-- It is expected to be settled in normal operating cycle;
-- It is held primarily for the purpose of trading;
-- It is due to be settled within 12 (twelve) months after the reporting period; or
-- There is no unconditional right to defer the settlement of
the liability for at least 12 (twelve) months after the reporting
period.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Current versus non-current classification (continued)
The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are always classified as
non--current assets and liabilities.
Assets classified as held for sale and discontinued
operations
Assets and disposal groups classified as held for sale are
measured at the lower of carrying amount and fair value less costs
to sell. Assets and disposal groups are classified as held for sale
if their carrying amounts will be recovered through a sale
transaction rather than through the continuing use. This condition
is regarded as met only when the sale is highly probable and the
asset or disposal group is available for immediate sale in its
present condition. Management must be committed to the sale, which
should be expected to qualify for recognition as a completed sale
within 1 (one) year from the date of classification.
In the consolidated statement of comprehensive income for the
reporting period, and for the prior year comparable period, incomes
and expenses from discontinued operations are reported separately
from normal income and expenses, even when the Group retains a
non-controlling interest in the subsidiary after sale. The
resulting profit or loss (net of tax) is reported separately in the
consolidated statement of comprehensive income.
Property, plant and equipment and intangible assets once
classified as held for sale are not depreciated.
Oil and natural gas exploration, evaluation and development
expenditure
Costs incurred before obtaining subsoil use rights
(licenses)
Costs incurred before obtaining full subsoil use rights
(licenses) are expensed in the period in which they are incurred,
except when costs are incurred after signing preliminary agreements
with the Government of the Republic of Kazakhstan, in such cases
costs incurred after this date are capitalized.
Expenditures for acquisition of subsurface use rights
Expenditures for acquisition of subsurface use rights
(exploration and production) comprise signature bonuses, historical
costs, obligatory expenditures for ecological and social programs
and are capitalized within intangible assets as subsurface use
rights at exploration and evaluation phase.
Expenditures for acquisition of subsurface use rights are
accounted for on a field-by-field basis. Each field is tested for
impairment on an annual basis. If no future activity is planned,
the remaining balance of the acquisition costs is written off.
Starting from the commercial production on fields subsurface use
rights (remaining costs) shall be transferred to the property,
plant and equipment and shall be amortized using unit-of-production
method on actual production based on total proved reserves.
Exploration and evaluation expenditures (construction in
progress)
Exploration and evaluation expenditures include geological and
geophysical costs; costs directly related to exploration drilling;
stripping activities; overhead and other expenses on exploration
and evaluation, which could be related to a certain field. These
costs include employee remuneration, materials and fuel used, rig
costs and payments made to contractors. Except for geological and
geophysical costs, exploration and evaluation expenditures are
capitalized within exploration and evaluation assets, accounted for
by subsurface use contracts and are not amortized. If mineral or
hydrocarbon resources are not found, this could be an indication of
impairment. All capitalized costs are subject to technical,
commercial and management review at least once a year to confirm
the continued intent to develop or otherwise extract value from the
discovery. When this is no longer the case, the costs are written
off. If mineral or hydrocarbon resources are determined and
development is sanctioned, relevant costs are then transferred to
oil and gas or mining assets subclasses.
Development and production expenditures (oil and gas and mining
assets)
Development and production expenditures comprise previously
capitalized (and reclassified in commencement of production)
expenditures for acquisition of subsurface use rights and
exploration and evaluation costs; drilling of producing wells
regardless of the drilling results; construction of landfills;
development of surface technological facilities required for
production, collection and preparation of hydrocarbons and mineral
resources at fields; other costs incurred in the process of
organization of commercial production at fields; capitalized
discounted costs for wells and mines abandonment and site
restoration.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Oil and natural gas exploration, evaluation and development
expenditure (continued)
Development and production expenditures (oil and gas and mining
assets) (continued)
Development and production expenditures are capitalized within
property, plant and equipment (oil and gas and mining assets), and
are accounted for on a field-by-field basis.
Oil and gas and mining assets are depreciated using a
unit-of-production method based on actual production from
commencement of commercial production at fields. Certain oil and
gas and mining assets (surface facilities and equipment) with
useful lives significantly differing from those of the fields are
depreciated on a straight-line basis over their useful lives. The
cost of acquisition of subsurface use rights including discounted
decommissioning costs are depreciated over total proved reserves.
The other field development costs are amortized over proved
developed reserves.
Property, plant and equipment (other than oil and gas and mining
assets)
On initial recognition, property, plant and equipment is
measured at cost. Subsequently, property, plant and equipment are
stated at cost less accumulated depreciation, depletion and
impairment. The cost of self-constructed assets includes the cost
of materials, direct labour and an appropriate proportion of
production overheads.
Property, plant and equipment, other than oil and gas and mining
assets, principally comprise the following classes of assets, which
are depreciated on a straight-line basis over the expected useful
lives:
UPS Power transmission lines 50 years
Refinery assets 4-100 years
Pipelines 2-30 years
Buildings and premises 2-100 years
Railway tracks and infrastructure 10-80 years
Machinery, equipment and vehicles 2-50 years
Other 2-20 years
---------------------------------- ------------
In cases when items of property, plant and equipment are subject
to major inspection, the cost is recognized in the carrying amount
of property, plant and equipment as a replacement of component if
the recognition criteria set out in IAS 16 are satisfied.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected from its
use or disposal. Any gain or loss arising on derecognition of an
asset (calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is included in
profit or loss in the reporting period the asset is
derecognised.
Residual values, useful lives and methods of depreciation are
reviewed, and adjusted if appropriate, at each financial year
end.
Intangible assets
Intangible assets acquired separately are measured on initial
recognition at cost. The cost of intangible assets acquired in a
business combination is fair value as at the date of acquisition.
Following initial recognition, intangible assets are carried at
cost less any accumulated amortisation and any accumulated
impairment loss. Internally generated intangible assets, excluding
capitalised development costs, are not capitalised and expenditure
is charged against profits in the year in which the expenditure is
incurred.
The useful lives of intangible assets are assessed to be either
finite or indefinite. Intangible assets with finite lives are
amortised over the useful economic life and assessed for impairment
whenever there is an indication that the intangible asset may be
impaired. The amortisation period and the amortisation method for
an intangible asset with a finite useful life are reviewed at least
at each financial year-end. Changes in the expected useful life or
the expected pattern of consumption of future economic benefits
embodied in the intangible asset is accounted for by changing the
amortisation period or method, as appropriate, and treated as
changes in accounting estimates.
The amortisation expense on intangible assets with finite lives
is recognized in the consolidated statement of comprehensive income
in the expense category consistent with the function of the
intangible asset.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Intangible assets (continued)
Intangible assets with the finite useful life principally
comprise the following classes of assets which are amortised on a
straight-line basis over the expected useful lives:
Licenses 3-20 years
Software 1-14 years
Other 2-15 years
--------- -----------
Indefinite lives intangible assets are not amortized, but tested
for impairment annually or whenever there are indications of
impairment and, if necessary, written down to the recoverable
amount.
Investment properties
Investment property is initially measured at cost, including
transaction costs.
Since the Group adopted cost model, after initial recognition,
investment property is accounted for in accordance with the cost
model as set out in IAS 16 Property, Plant and Equipment, that is,
at cost less accumulated depreciation and less accumulated
impairment losses.
The depreciation is calculated based on straight line method
basis over the expected remaining useful average life of
2-100 years.
Investment property is derecognised (eliminated from the
consolidated statement of financial position) on its disposal or
when the investment property is permanently withdrawn from use and
no future economic benefits are expected in the future. The
difference between the net inflows arisen from the disposal and
carrying amount of the asset is recognised in the consolidated
statement of comprehensive income for the period in which it was
derecognized.
Impairment of non-financial assets
The Group assesses non-financial assets or groups of assets for
impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable.
Individual assets are grouped for impairment assessment purposes at
the lowest level at which there are identifiable cash inflows that
are largely independent of the cash inflows of other groups of
assets. If any such indication of impairment exists or when annual
impairment testing for an asset group is required, the Group makes
an estimate of its recoverable amount.
An asset's or cash generating unit's (CGU's) recoverable amount
is higher of its fair value less costs to sell and its value in
use. Where the carrying amount of an asset or CGU exceeds its
recoverable amount, the asset or CGU is considered impaired and an
allowance is made to reduce the asset to its recoverable amount. In
assessing value in use, the estimated future cash flows are
adjusted for the risks specific to the asset or CGU and are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of
money. An assessment is made at each reporting date as to whether
there is any indication that previously recognized impairment
provision may no longer exist or may have decreased. If such
indication exists, the recoverable amount is estimated.
A previously recognized impairment loss is reversed only if
there has been a change in the estimates used to determine the
asset's recoverable amount since the last impairment allowance was
recognized. If that is the case, the carrying amount of the asset
is increased to its recoverable amount.
That increased amount cannot exceed the carrying amount that
would have been determined, net of depreciation/ amortisation, had
no impairment loss been recognized for the asset in prior years.
Such reversal is recognized in profits and losses.
After such a reversal, the depreciation/amortisation charge is
adjusted in future periods to allocate the asset's revised carrying
amount, less any residual value, on a systematic basis over its
remaining useful life.
The following process is applied in assessing impairment of
goodwill:
-- Goodwill is tested for impairment annually as at December 31,
and when circumstances indicate that its carrying amount may be
impaired;
-- Impairment is determined for goodwill by assessing the
recoverable amount of the cash-generating units, to which the
goodwill relates. Where the recoverable amount of the
cash-generating units is less than their carrying amount an
impairment loss is recognized. Impairment losses relating to
goodwill cannot be reversed in future periods.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impairment of exploration and evaluation assets
Exploration and evaluation assets are tested for impairment when
reclassified to oil and gas development tangible or intangible
assets or whenever facts and circumstances indicate impairment. One
or more of the following facts and circumstances indicate that the
Group should test exploration and evaluation assets for impairment
(the list is not exhaustive):
-- The period for which the Group entity has the right to
explore and appraise in the specific area has expired during the
period or will expire in the near future, and is not expected to be
renewed;
-- Substantive expenditure on the further exploration for and
evaluation of hydrocarbon resources in the specific area is neither
budgeted nor planned;
-- Exploration for and evaluation of hydrocarbon resources in
the specific area have not led to the discovery of commercial
viable quantities of hydrocarbon resources and the Group entity has
decided to discontinue such activities in the specific area;
-- Sufficient data exist to indicate that, although a
development in the specific area is likely to proceed, the carrying
amount of the exploration and evaluation asset is unlikely to be
recovered in full from successful development or by sale.
Financial assets
Initial recognition and measurement
Financial assets are classified, at initial recognition, as
subsequently measured at amortised cost, fair value through other
comprehensive income (FVOCI), and fair value through profit or loss
(FVPL).
The classification of financial assets at initial recognition
depends on the financial asset's contractual cash flow
characteristics and the Group's business model for managing them.
With the exception of trade receivables that do not contain a
significant financing component or for which the Group has applied
the practical expedient, the Group initially measures a financial
asset at its fair value plus, in the case of a financial asset not
at fair value through profit or loss, transaction costs. Trade
receivables that do not contain a significant financing component
or for which the Group has applied the practical expedient are
measured at the transaction price determined under IFRS 15.
In order for a financial asset to be classified and measured at
amortised cost or FVOCI, it needs to give rise to cash flows that
are "solely payments of principal and interest (SPPI)" on the
principal amount outstanding. This assessment is referred to as the
SPPI test and is performed at an instrument level.
The Group's business model for managing financial assets refers
to how it manages its financial assets in order to generate cash
flows. The business model determines whether cash flows will result
from collecting contractual cash flows, selling the financial
assets, or both.
Purchases or sales of financial assets that require delivery of
assets within a time frame established by regulation or convention
in the market place (regular way trades) are recognised on the
trade date, i.e., the date that the Group commits to purchase or
sell the asset.
Subsequent measurement
For purposes of subsequent measurement, financial assets are
classified in three categories:
-- Financial assets at amortised cost (debt instruments);
-- Financial assets at fair value through other comprehensive income;
-- Financial assets at fair value through profit or loss.
Financial assets at amortised cost (debt instruments)
The Group measures financial assets at amortised cost if both of
the following conditions are met:
-- The financial asset is held within a business model with the
objective to hold financial assets in order to collect contractual
cash flows; and
-- The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial assets (continued)
Subsequent measurement (continued)
Financial assets at amortised cost (debt instruments)
(continued)
Financial assets at amortised cost are subsequently measured
using the effective interest (EIR) method and are subject to
impairment. Gains and losses are recognised in profit or loss when
the asset is derecognised, modified or impaired.
The Group's financial assets at amortised cost include trade and
other receivables, loans due from third and related parties, debt
securities of third and related parties and bank deposits.
Financial assets at fair value through other comprehensive
income
The Group measures financial assets at FVOCI if both of the
following conditions are met:
-- The financial asset is held within a business model whose
objective is achieved by both collecting contractual cash flows and
selling financial assets; and
-- The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding. Interest consists
of consideration for the time value of money, and for the credit
risk associated with the principal amount outstanding during a
particular period of time.
The Group's financial assets at FVOCI include mainly debt
securities of third and related parties.
Financial assets at fair value through profit or loss
Financial assets at FVPL include certain loans due from related
parties, which contain embedded derivative financial instruments,
and coupon bonds included in other financial assets mandatorily
required to be measured at fair value. Financial assets with cash
flows that are not solely payments of principal and interest are
classified and measured at FVPL, irrespective of the business
model. Notwithstanding the criteria for debt instruments to be
classified at amortised cost or at FVOCI, as described above, debt
instruments may be designated at FVPL on initial recognition if
doing so eliminates, or significantly reduces, an accounting
mismatch.
Financial assets at FVPL are carried in the consolidated
statement of financial position at fair value with net changes in
fair value recognised in the consolidated statement of
comprehensive income.
The Group's financial assets at FVPL include mainly loans
issued, debt and equity securities of third and related
parties.
Derecognition
A financial asset is primarily derecognised (removed from the
consolidated statement of financial position) when:
-- The rights to receive cash flows from the asset have expired; or
-- The Group has transferred its rights to receive cash flows
from the asset or has assumed an obligation to pay the received
cash flows in full without material delay to a third party under a
"pass-through" arrangement; and either (a) the Group has
transferred substantially all the risks and rewards of the asset;
or (b) the Group has neither transferred nor retained substantially
all the risks and rewards of the asset, but has transferred control
of the asset.
When the Group has transferred its rights to receive cash flows
from an asset or has entered into a pass-through arrangement, it
evaluates if, and to what extent, it has retained the risks and
rewards of ownership. When it has neither transferred nor retained
substantially all of the risks and rewards of the asset, nor
transferred control of the asset, the Group continues to recognise
the transferred asset to the extent of its continuing involvement.
In that case, the Group also recognises an associated liability.
The transferred asset and the associated liability are measured on
a basis that reflects the rights and obligations that the Group has
retained.
Continuing involvement that takes the form of a guarantee over
the transferred asset is measured at the lower of the original
carrying amount of the asset and the maximum amount of
consideration that the Group could be required to repay.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial assets (continued)
Impairment of financial assets
The Group recognises an allowance for expected credit losses
(ECLs) for all debt instruments not held at fair value through
profit or loss.
ECLs are based on the difference between the contractual cash
flows due in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at an approximation
of the original effective interest rate.
The expected cash flows will include cash flows from the sale of
collateral held or other credit enhancements that are integral to
the contractual terms.
ECLs are recognised in two stages. For credit exposures for
which there has not been a significant increase in credit risk
since initial recognition, ECLs are provided for credit losses that
result from default events that are possible within the next
12-months (a 12-month ECL). For those credit exposures for which
there has been a significant increase in credit risk since initial
recognition, a loss allowance is required for credit losses
expected over the remaining life of the exposure, irrespective of
the timing of the default (a lifetime ECL).
For trade and other receivables the Group applies a simplified
approach in calculating ECLs. Therefore, the Group does not track
changes in credit risk, but instead recognises a loss allowance
based on lifetime ECLs at each reporting date. The Group has
established a provision matrix that is based on its historical
credit loss experience, adjusted for
forward-looking factors specific to the debtors and the economic
environment.
The Group considers a financial asset in default when
contractual payments are 90 days past due. However, in certain
cases, the Group may also consider a financial asset to be in
default when internal or external information indicates that the
Group is unlikely to receive the outstanding contractual amounts in
full before taking into account any credit enhancements held by the
Group. A financial asset is written off when there is no reasonable
expectation of recovering the contractual cash flows.
Hedge accounting
The Group designates certain hedging instruments in respect of
foreign currency risk, as either hedges of net investments in
foreign operations or cash flow hedges.
At the inception of the hedge relationship, the Group documents
the relationship between the hedging instrument and the hedged
item, along with its risk management objectives and its strategy
for undertaking various hedge transactions. Furthermore, at the
inception of the hedge and on an ongoing basis, the Group documents
whether the hedging instrument is highly effective in offsetting
changes in fair values of foreign operations or cash flows of the
hedged item attributable to the hedged risk.
Amounts previously recognized in other comprehensive income and
accumulated in equity are reclassified to profit or loss in the
periods when the hedged item affects profit or loss, in the same
line as the recognized hedged item.
Hedge accounting is discontinued:
a) When the Group revokes the hedging relationship;
b) When the hedging instrument expires or is sold, terminated, or exercised; or
c) When it no longer qualifies for hedge accounting.
Any gain or loss recognized in other comprehensive income and
accumulated in equity at that time remains in equity and is
recognized when the forecast transaction is ultimately recognized
in profit or loss. When a forecast transaction is no longer
expected to occur, the gain or loss accumulated in equity is
recognized immediately in profit or loss. The gain or loss relating
to the ineffective portion is recognized immediately in profit or
loss.
Investments in foreign operations hedge
Foreign currency gain or loss arising on items that are
designated as part of the hedge of the Group's net investment in
foreign operations are recognized in consolidated statement of
comprehensive income within currency translation reserve.
Cash flow hedges
Foreign currency gain or loss arising from financial instruments
that are designated and qualify as cash flow hedges is recognized
in consolidated statement of comprehensive income within hedge
reserve.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Inventories
Inventories are valued at cost or net realisable value,
whichever is lower. Costs comprise charges incurred in bringing
inventory to its present location and condition. Net realisable
value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and estimated
costs necessary to sell.
The same cost formula is used for all inventories having a
similar nature and use. Inventories of oil and gas and energy
operating segments are valued on a first-in first-out ("FIFO")
basis. All other inventories are valued on the weighted-average
cost basis.
Cash and cash equivalents
Cash and cash equivalents are defined as cash on hand, demand
deposits, short-term and highly liquid investments with original
maturity of not more than 3 (three) months readily convertible to
known amounts of cash and subject to insignificant risk of change
in value.
Financial liabilities
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as
financial liabilities at FVPL, loans borrowings and payables, or as
derivatives designated as hedging instruments in an effective
hedge, as appropriate.
All financial liabilities are recognized initially at fair value
and in the case of loans and borrowings, plus directly attributable
transaction costs.
The Group's financial liabilities include trade and other
payables, loans and borrowings and derivative financial
instruments.
Subsequent measurement
The measurement of financial liabilities depends on their
classification as follows:
Financial liabilities at fair value through profit or loss
Financial liabilities at FVPL includes financial liabilities
held for trading and financial liabilities designated upon initial
recognition as at fair value through profit or loss.
Financial liabilities are classified as held for trading if they
are acquired for the purpose of selling in the near term. This
category includes derivative financial instruments entered into by
the Group that are not designated as hedging instruments in hedge
relationships as defined by IFRS 9. Separated embedded derivatives
are also classified as held for trading unless they are designated
as effective hedging instruments.
Gains or losses on liabilities held for trading are recognized
in profit or loss.
The Group has not designated any financial liabilities upon
initial recognition as at FVPL.
Trade and other payables
Trade payables are recognized initially at fair value and
subsequently measured at amortized cost using the effective
interest rate (EIR).
Loans and borrowings
After initial recognition, interest bearing loans and borrowings
are subsequently measured at amortized cost using the EIR. Gains
and losses are recognized in the consolidated statement of
comprehensive income when the liabilities are derecognized as well
as through the EIR amortization process.
Amortized cost is calculated by taking into account any discount
or premium on acquisition and fee or costs that are an integral
part of the EIR. The EIR amortization is included in finance
costs.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 (twelve) months after the reporting date.
Borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset are capitalized as
part of the cost of that asset. Other borrowing costs are
recognized as an expense when incurred.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Financial liabilities (continued)
Subsequent measurement (continued)
Financial guarantee contracts
Financial guarantee contracts issued by the Group are those
contracts that require a payment to be made to reimburse the holder
for a loss it incurs because the specified debtor fails to make a
payment when due in accordance with the terms of a debt instrument.
Financial guarantee contracts are recognised initially as a
liability at fair value, adjusted for transaction costs that are
directly attributable to the issuance of the guarantee.
Subsequently, the financial guarantee contracts after initial
recognition at the higher of the amount initially recognized less,
when appropriate, the cumulative amount of income/amortization in
accordance with the principles of IFRS 15 Revenue from Contracts
with Customers and the amount of the estimated allowance for
expected credit losses.
Derecognition of financial liabilities
A financial liability is derecognized when the obligation under
the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from
the same lender on substantially different terms, or the terms of
an existing liability are substantially modified, such an exchange
or modification is treated as a derecognition of the original
liability and the recognition of a new liability, and the
difference in the respective carrying amounts is recognized in
profit or loss.
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the
net amount reported in the consolidated statement of financial
position if, and only if, there is a currently enforceable legal
right to offset the recognised amounts and there is an intention to
settle on a net basis, or to realise the assets and settle the
liabilities simultaneously.
Fair value of financial instruments
The fair value of financial instruments that are traded in
active markets at each reporting date is determined by reference to
quoted market prices or dealer price quotations (bid price for long
positions and ask price for short positions), without any deduction
for transaction costs.
For financial instruments not traded in an active market, the
fair value is determined using appropriate valuation techniques.
Such techniques may include:
-- Using recent arm's length market transactions;
-- Reference to the current fair value of another instrument
that is substantially the same;
-- A discounted cash flow analysis or other valuation models.
An analysis of fair values of financial instruments and further
details as to how they are measured are provided in Note 38.
Leases
Determining whether the agreement is a lease or whether it
contains evidence of a lease is based on an analysis of the content
of the agreement at the date of the commencement of the lease. The
agreement is a lease or contains signs of a lease if the
implementation of the agreement depends on the use of a particular
asset (or assets), and the right to use the asset or assets as a
result of this agreement is transferred from one party to the
other, even if this asset (or these assets) is not indicated (not
specified) in the agreement explicitly.
The Group as lessee
For the lease contracts (or separate components of the
contracts), under which the Group is granted the right to control
the use of an identified asset (as defined by IFRS 16 Leases) for a
certain period of time in exchange for consideration, the Group
recognizes a right-of-use asset and a corresponding lease liability
at the inception of the contract. Non-lease components of the
contracts are accounted for in accordance with other relevant
standards.
In accordance with IFRS 16 Leases, the Group applies practical
expedient for not recognising the lease for the lease contracts
with lease term of less than 12 months at lease inception and
without purchase option, for the leases with variable lease rates
that do not depend on an index or rate and for the leases of low
value assets.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Leases (continued)
The Group as lessee (continued)
The Group recognizes short-term leases and leases of low value
assets as expense on a straight-line basis over the term of the
lease.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date.
Lease payments are discounted by using the Group incremental
borrowing rate, except when the rate is implicit in the lease and
can be readily determined.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
-- The lease term has changed or there is a significant event or
change in circumstances resulting in a change in the assessment of
exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a
revised discount rate.
-- The lease payments change due to changes in an index or rate
or a change in expected payment under a guaranteed residual value,
in which cases the lease liability is remeasured by discounting the
revised lease payments using an unchanged discount rate (unless the
lease payments change is due to a change in a floating interest
rate, in which case a revised discount rate is used).
-- A lease contract is modified and the lease modification is
not accounted for as a separate lease, in which case the lease
liability is remeasured based on the lease term of the modified
lease by discounting the revised lease payments using a revised
discount rate at the effective date of the modification.
At the commencement date , the Group measures the right-of-use
asset at cost that includes the amount of the initial measurement
of the lease liability, any lease payments made at or before the
commencement date less any lease incentives received, any initial
direct costs incurred by the lessee. The right-of-use asset is
subsequently measured according to the accounting policy that is
applied for own assets, including for depreciation and amortization
and impairment measurement.
The recognised right-of-use asset is depreciated over the
shorter period of expected useful life of the underlying asset or
lease term.
The Group presents lease liabilities in the consolidated
statement of financial position as a separate line (Note 21), while
right-of-use assets are presented within the same line item as that
within which the corresponding underlying assets would be presented
if they were owned, i.e. within property, plant and equipment (Note
6).
In accordance with the requirements of IFRS 16, the Group
classifies repayment of principal in cash flows from financial
activities. In accordance with the Group's accounting policy,
interest paid is classified as part of the cash flows from
operating activities. Payments on short-term leases, leases of low
value assets and variable rental payments not included in the
valuation of the lease liability are presented as part of operating
activities.
The Group as lessor
The Group enters into lease agreements as a lessor with respect
to some of its property, plant and equipment items.
Leases for which the Group is a lessor are classified as finance
or operating leases. Whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee,
the contract is classified as a finance lease. All other leases are
classified as operating leases. Rental income from operating leases
is recognised on a straight-line basis over the term of the
relevant lease.
Provisions
Asset retirement obligation (decommissioning)
Provision for decommissioning is recognized in full, on a
discounted cash flow basis, when the Group has an obligation to
dismantle and remove a facility or an item of property, plant and
equipment and to restore the site on which it is located, and when
a reasonable estimate of that provision can be made.
The amount recognized is the present value of the estimated
future expenditure determined in accordance with local conditions
and requirements. A corresponding addition to the carrying amount
of the related item of property, plant and equipment in the amount
equivalent to the provision is also recognized. This amount is
subsequently depreciated as part of the capital costs of the
production and transportation facilities in accordance with
respective depreciation method.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Provisions (continued)
Asset retirement obligation (decommissioning) (continued)
Changes in the measurement of an existing decommissioning
provision that result from changes in the estimated timing or
amount of the outflow of resources embodying economic benefits
required to settle the obligation, or change in the discount rate,
is accounted for so that:
a) Changes in the provision are added to, or deducted from, the
carrying amount of the related asset in the current period;
b) The amount deducted from the cost of the asset shall not
exceed its carrying amount. If a decrease in the provision exceeds
the carrying amount of the asset, the excess is recognized
immediately in the consolidated statement of comprehensive income;
and
c) If the adjustment results in an addition to the cost of an
asset, the Group considers whether this is an indication that the
new carrying amount of the asset may not be fully recoverable. If
it is such an indication, the Group tests the asset for impairment
by estimating its recoverable amount, and accounts for any
impairment loss, in accordance with IAS 36.
Other provisions
Provisions are recognized in the consolidated financial
statements when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an
outflow of resources embodying economic benefits will be required
to settle the obligation and a reliable estimate can be made of the
amount of the obligation. Where the Group expects a provision to be
reimbursed, for example under an insurance contract, the
reimbursement is recognized as a separate asset but only when the
reimbursement is virtually certain.
If the effect of the time value of money is material, provisions
are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time
value of money and, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision
due to the passage of time is recognized as a finance cost.
Employee benefits
Contributions to pension funds
The Group withholds 10% from the salary of its employees limited
to certain annual amounts as the employees' contribution to their
designated pension funds. Under the legislation, employees are
responsible for their retirement benefits payable by that pension
funds and the Group has no present or future obligation to further
compensate its employees upon their retirement in relation to these
arrangements.
Social tax
The Group pays social tax on salaries payable to employees
according to the current statutory requirements of the Republic of
Kazakhstan. Social tax is expensed as incurred.
Defined benefit plan
In accordance with the Collective Agreements signed with trade
unions and other benefit regulations, some subsidiaries of the
Group provide certain benefits to its employees upon their
retirement ("Defined Benefit Plan").
The Group recognises actuarial gains and losses arising from the
reassessment of the employee benefit liability in the period they
are identified in OCI and profits and losses, and recognises
benefit costs and obligations based on estimates determined in
accordance with IAS 19 Employee Benefits.
The obligation and cost of benefits under the defined benefit
plan are determined using the projected unit credit method. This
method considers each year of service as giving rise to an
additional unit of benefit entitlement and measures each unit
separately to build up the final obligation.
The cost of providing benefits is charged to profit and loss, so
as to attribute the total benefit cost over the service lives of
employees in accordance with the benefit formula of the defined
benefit plan. This obligation is measured at the present value of
estimated future cash flows using a discount rate that is similar
to the interest on government bonds where the currency and terms of
these bonds are consistent with the currency and estimated terms of
the defined benefit plan obligation. The defined benefit plans of
Group's subsidiaries are unfunded.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Equity
Share capital
Common shares are classified as equity. External costs directly
attributable to the issue of new shares, other than on a business
combination, are shown as a deduction from the proceeds in equity.
Any excess or deficiency of the fair value of consideration
received over the par value of shares issued is recognized as an
increase or decrease in the retained earnings.
Non-controlling interests
Non-controlling interests are presented in the consolidated
statement of financial position within equity, separately from the
equity attributable to the equity holders of the Parent. Losses of
subsidiaries are attributed to the non-controlling interest even if
this results in a deficit balance.
Dividends
Dividends are recognized as a liability and deducted from equity
at the reporting date only if they are declared before or on the
reporting date. Dividends are disclosed in the consolidated
financial statements when they are proposed before the reporting
date or proposed or declared after the reporting date but before
the consolidated financial statements are authorised for issue.
Other distributions to the Shareholder
Other distributions to the Shareholder recognized as deductions
from retained earnings are represented by expenses incurred or
asset distribution made at the discretion of the Shareholder,
including property, plant and equipment, interest in another
entities, other disposal groups, cash and other assets in
accordance with accounting policy of the Group.
Revenue recognition
Revenue is recognized when it is probable that the economic
benefits will flow to the Group and the amount of revenue can be
reliably measured.
Sale of goods
Revenues are recognized when (or as) the Group satisfies a
performance obligation by transferring a promised good or service
(i.e. an asset) to a customer. An asset is transferred when (or as)
the customer obtains control of that asset, which usually occurs
when the title is passed, provided that the contract price is fixed
or determinable and collectability of the receivable is reasonably
assured. For export sales, title generally passes at the border of
the Republic of Kazakhstan. Revenue is measured at the fair value
of the consideration received or receivable taking into account the
amount of any trade discounts, volume rebates and reimbursable
taxes.
Sales of support services are recognized as services are
performed provided that the service price can be determined and no
significant uncertainties regarding the receipt of revenues
exist.
Rendering of services
Revenue from rendering of services is recognized when the
services have been performed.
In respect of services related to transportation, revenue is
recognized with reference to the stage of completion of the
transportation at the reporting date provided that the stage of
completion of transportation and the amount of revenue can be
measured reliably. Prepayments received from customers relating to
transportation services that have not been started yet are
recognized upon receipt as "advances received from customers".
Deferred income is credited to current revenue, as the service is
provided.
The Group's revenue in the energy, communications and
transportation segments is primarily recognized over a period of
time, while the rest of the Group's revenue is primarily recognized
at a point in time.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Revenue recognition (continued)
Sale and lease back transactions
The Group accounts for a transfer of an asset in a sale and
leaseback transaction as a sale only if the transfer meets the
requirements of IFRS 15 Revenue from Contracts with Customers.
If, under IFRS 15, a sale is to be recognised by the
seller-lessee, then the right-of-use asset leased back is measured
at the proportion of the previous carrying amount of the asset that
relates to the right of use retained by the seller-lessee. The
seller-lessee recognises only the amount of any gain or loss that
relates to the rights transferred to the buyer-lessor.
If the transfer of an asset by the seller-lessee does not
satisfy the requirements of IFRS 15 to be accounted for as a sale
of the asset, the seller-lessee continues to recognize the
transferred asset and recognizes a financial liability equal to
proceeds for the transfer by applying IFRS 9 Financial
Instruments.
Interest income
For all financial instruments measured at amortised cost and
interest-bearing financial assets classified as investments held at
FVOCI, interest income is recorded using the effective interest
rate (EIR). EIR is the rate that exactly discounts the estimated
future cash payments or receipts over the expected life of the
financial instrument or a shorter period, where appropriate, to the
net carrying amount of the financial asset or liability.
Trade receivables
Accounts receivable represent the Group's right to the
consideration amount, which is unconditional (i.e., only the
passage of time is required before payment of the consideration is
due).
Contract liabilities from contracts with customers
A contract liability is recognised if a payment is received or a
payment is due (whichever is earlier) from a customer before the
Group transfers the related goods or services. Contract liabilities
are recognised as revenue when the Group performs under the
contract (i.e., transfers control of the related goods or services
to the customer).
Costs to obtain a contract
The Group pays commission to sales agents for new connected
subscribers in the communication segment. The commission to sales
agents is capitalized within other non-current assets in the
consolidated statements of financial position. Costs to obtain a
contract are amortized over the period the service is provided to
the customer.
Establishment of tariffs
A number of subsidiaries of the Group are subject to regulation
by the Committee for regulation of natural monopolies of the
Republic of Kazakhstan ("CRNM"). This ommittee is responsible for
approval of the methodology for tariff calculation and tariff
rates, under which the subsidiaries derive a significant portion of
their revenues.
Government grants
Due to the fact that the Government of the Republic of
Kazakhstan is the sole shareholder of the Fund, the Group analyses
all transactions with the Government to assess its role: where the
Government acts primarily in its capacity of the Shareholder or
where it acts as a regulator.
If it is determined that in a specific transaction the
Government acts in capacity of the Shareholder any gains or losses
incurred by the Group as a result of such transaction are reflected
directly in equity as either a contribution or withdrawal of equity
by the Shareholder.
If it is determined that in a specific transaction the
Government does not act in capacity of the Shareholder such
transactions are accounted for using provisions of IAS 20
Accounting for Government Grants and Disclosure of Government
Assistance. In such circumstances, government grants are recognized
at their fair value where there is reasonable assurance that the
grant will be received and all attaching conditions will be
complied with. When the grant relates to an expense item, it is
recognized as income over the period necessary to match the grant
on a systematic basis to the costs that it is intended to
compensate. Where the grant relates to an asset, the fair value is
credited to a deferred income account and is released to the
consolidated statement of comprehensive income over the expected
useful life of the relevant asset by equal annual instalments.
Grants related to income are presented separately in the
consolidated statement of comprehensive income within revenues from
operating activities.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Expense recognition
Expenses are recognized as incurred and are reported in the
consolidated statement of comprehensive income in the period to
which they relate on the accrual basis.
Income tax
Income tax for the year comprises current and deferred tax.
Income tax is recognized in the profits and losses, except to the
extent that it relates to items charged or credited to other
comprehensive income or equity, in which case it is recognized in
other comprehensive income. Current tax expense is the expected tax
payable on the taxable income for the year and any adjustment to
tax payable in respect of previous years.
Excess profit tax ("EPT") is treated as an income tax and forms
part of income tax expense. In accordance with the subsurface use
contracts, the Group accrues and pays EPT, at specified rates of
after tax profit which has been adjusted for specific deductions in
accordance with the applicable subsurface use contracts, when
certain internal rates of return are exceeded.
Deferred tax is calculated with respect to both corporate income
tax ("CIT") and EPT. Deferred EPT is calculated on temporary
differences for assets allocated to subsurface use contracts at the
expected rate of EPT to be paid under the contract.
Deferred tax is provided using the statement of financial
position method, in relation to temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The temporary
differences arising due to the following are not provided for:
-- The initial recognition of an asset or liability in a
transaction that is not a business combination and, at the time of
the transaction, affects neither accounting profit nor taxable
profit or loss; and
-- In respect of taxable temporary differences associated with
investments in subsidiaries, associates and interests in joint
ventures, when the timing of the reversal of the temporary
differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply to the period when the asset is
realised or the liability is settled based on the tax rates (and
tax laws) that have been enacted or substantively enacted at the
reporting date.
A deferred tax asset is recognized only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilized. Deferred tax assets are reduced to
the extent that it is no longer probable that the related tax
benefit will be realized.
Value added tax ("VAT")
Tax authorities permit the settlement of sales and purchases VAT
on a net basis. VAT re eivable represents VAT on domestic purchases
net of VAT on domestic sales. Export sales are zero rated.
Related parties
Related parties include the Group's Shareholder, key management
personnel, associates, joint ventures and entities in which a
substantial interest in the voting power is owned, directly or
indirectly, by the Group's shareholders or key management
personnel.
Contingent liabilities and contingent assets
Contingent liabilities are not recognised in the consolidated
financial statements. They are disclosed in the notes to the
consolidated financial statements (Note 37) unless the possibility
of an outflow of resources embodying economic benefits is
remote.
Contingent assets are not recognized in the consolidated
financial statements. Where an inflow of economic benefits is
probable, they are disclosed in the notes.
Subsequent events
Post-year-end events that provide evidence of conditions that
existed at the reporting date (adjusting events) are reflected in
the consolidated financial statements. Post-year-end events that
are not adjusting events are disclosed in the notes when
material.
4. Significant accounting estimates and judgements
The preparation of the consolidated financial statements in
conformity with IFRS requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities
and contingent assets and liabilities at the reporting date and
reported amounts of assets, liabilities, revenues, expenses and
contingent assets and liabilities during the reporting period.
Actual outcomes could differ from these estimates.
The key assumptions concerning the future and other key sources
of estimation uncertainty at the reporting date, that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below:
Considerations in respect of COVID-19 pandemic and hydrocarbon
economy in 2021
The impact of COVID-19 and unfavorable trend in the global
hydrocarbons market on the basis of preparation of this
consolidated financial statements has been considered as part of
the going concern assessment. To support this assertion liquidity
forecast has been assessed under several stressed scenarios. And as
a result, impairment tests were performed.
Recoverability of oil and gas assets, downstream, refining and
other assets
The Group assesses assets or CGU for impairment whenever events
or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Where an indicator of impairment
exists, a formal estimate of the recoverable amount is made, which
is considered to be the higher of the fair value less costs to sell
and value in use. These assessments require the use of estimates
and assumptions such as long-term oil prices, discount rates,
future capital requirements, operating performance (including
production and sales volumes) that are subject to risk and
uncertainty. Where the carrying amount of an asset or CGU exceeds
its recoverable amount, the asset/CGU is considered to be impaired
and is written down to its recoverable amount. In assessing
recoverable values, the estimated future cash flows are adjusted
for the risks specific to the asset group and are discounted to
their present value using a discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset. Fair value less costs to sell is identified
as the price that would be received to sell the asset in an orderly
transaction between market participants and does not reflect the
effects of factors that may be specific to the entity and not
applicable to entities in general.
Under IAS 36, one of the possible impairment indicators is the
presence of significant changes that had negative consequences for
the Group that occurred during the year or are expected in the near
future in the technological, market, economic or legal environment
in which the Group operates or in the market for which the asset is
used.
Impairment testing assumptions
The Group's long-term assumptions for Brent oil prices, KZT/USD
exchange rate and inflation projections have been revised and are
based on externally sourced forecasts and rates of the independent
research organizations considering long-tern market expectations.
Production volumes estimates are based on proved developed and
undeveloped reserves for subsidiaries, and on proved and probable
reserves for significant investments in joint ventures and
associates.
Production period is either based on subsoil use contracts'
expiration date or on extended license period, to which the Group
has strong intention to extend its licenses. Estimated production
volumes are based on the Group's production plans that are mostly
used for the purposes of application filing for extension of
subsoil use contracts.
Discount rates were estimated on the weighted average cost of
capital of the individual cash generating unit and ranged between
10.70%-16.30% depending on the functional currency, production
period, size, equity risk premium, beta and gearing ratio of the
relevant CGU.
The long-term price assumptions applied were derived from
Bloomberg consensus, so did the near-term commodity price
assumptions, a summary of which, in real 2021 terms, is provided
below:
2022 2023 2024 2025 2026
------------------- ----- ----- ----- ----- -----
Brent oil ($/bbl) 73 71.5 73 70 71
------------------- ----- ----- ----- ----- -----
In "Oil and gas" segment impairment charges of 12,751 million
tenge were recognized. Impairment charges mainly relate to partial
impairment of refining assets of KMG International N.V. (further
KMGI) of 8,298 million tenge (Note 29) and barges of
KazMorTransFlot LLP of 4,453 million tenge (Note 29). The
recoverable amounts of the barges were based on value-in-use
calculations and recoverable amount of KMGI assets for impairment
testing purposes was determined based on fair value less cost to
disposal.
Headroom of the majority of oil and refining assets are
sensitive to changes in price or other assumptions. The changes
within next financial periods may result in recoverable amount of
these assets above or below the current carrying amounts and
therefore there is a risk of impairment reversals or charges in
those periods.
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Oil and gas reserves
Oil and gas reserves are a material factor in the Group's
computation of depreciation, depletion and amortization expenses.
The Group estimates its oil and gas reserves in accordance with the
methodology of the Society of Petroleum Engineers (SPE). In
estimating its reserves under SPE methodology, the Group uses
long-term planning prices. Using planning prices for estimating
proved reserves removes the impact of the volatility inherent in
using year-end spot prices. Management believes that long-term
planning price assumptions, which are also used by management for
their business planning and investment decisions are more
consistent with the long-term nature of the upstream business and
provide the most appropriate basis for estimating oil and gas
reserves.
All reserve estimates involve some degree of uncertainty. The
uncertainty depends mainly on the amount of reliable geological and
engineering data available at the time of the estimate and the
interpretation of this data.
The relative degree of uncertainty can be conveyed by placing
reserves into one of two principal classifications, either proved
or unproved. Proved reserves are more certain to be recovered than
unproved reserves and may be further sub--classified as developed
and undeveloped to denote progressively increasing uncertainty in
their recoverability.
Estimates are reviewed and revised annually. Revisions occur due
to the evaluation or re-evaluation of already available geological,
reservoir or production data, availability of new data, or changes
to underlying price assumptions. Reserve estimates may also be
revised due to improved recovery projects, changes in production
capacity or changes in development strategy. Proved developed
reserves are used to calculate the unit of production rates for
depreciation, depletion and amortization in relation to oil and gas
production assets. The Group has included in proved reserves only
those quantities that are expected to be produced during the
initial subsoil use contract period. This is due to the
uncertainties surrounding the outcome of such renewal procedures,
since the renewal is ultimately at the discretion of the
Government. An increase in the Group's subsoil use contract periods
and corresponding increase in reported reserves would generally
lead to lower depreciation, depletion and amortization expense and
could materially
affect earnings. A reduction in proved developed reserves will
increase depreciation, depletion and amortization expense (assuming
constant production), reduce income and could also result in an
immediate write-down of the property's book value. Given the
relatively small number of producing fields, it is possible that
any changes in reserve estimates year on year could significantly
affect prospective charges for depreciation, depletion and
amortization.
Please refer Note 29 for details on annual impairment test
results.
Mining reserves
Mining reserves are a critical component of the projected cash
flow estimates that are used to assess the recoverable values of
assets and to determine depreciation and amortisation expense in
mining segment.
Group entities usually estimate reserves based on results of
detailed mine exploration, which is evaluated and approved by State
Reserves Commission (SRC) of Kazakhstan Geology Committee. Normally
upon stripping during production actual reserves of each area are
greater or lesser than geological reserves approved by SRC.
Uranium reserves (estimate)
Uranium reserves are a critical component of the Group's
projected cash flow estimates that are used to assess the
recoverable values of relevant assets as well as depreciation and
amortisation expense. Estimates of uranium reserves also determine
the life of mines, which in turn affect asset retirement obligation
calculations.
In 2021 and 2020, the Group engaged an independent consultant to
assess the Group's ore reserves and mineral resources in accordance
with the Australasian Code for reporting on geological exploration
works, mineral resources and ore reserves (hereinafter JORC Code).
Independent assessments of reserves and resources was carried out
as of December 31, 2021 and December 31, 2020. The consultant
reviewed all key information upon which the reported mineral
resource and ore reserve statements for the mining assets of the
Group are based.
The consultant's reports contain an assessment of the tons of
uranium contained in ore which has the potential to be extracted by
the existing and planned mining operations (the mineral resource),
and also the tons of uranium contained in ore currently planned to
be extracted as envisaged by the respective life-of-mine plans (the
ore reserve). The Group used the ore reserves data for calculation
of impairment of long-term assets, unit of production depreciation
for each of the Group's mines as well as asset retirement
obligation calculations.
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Goodwill
KMGI CGU, including goodwill
As at December 31, 2021 and 2020, the Group performed its annual
impairment tests for goodwill and downstream, refining and other
assets due to existence of impairment indicators at the CGUs of
KMGI. As the result of the impairment analysis, recoverable amount
of KMGI CGUs exceeded their carrying values.
Pavlodar refinery, goodwill
As of December 31, 2021 and 2020 the Group has goodwill of
88,553 million tenge related to acquisition of Pavlodar oil
chemistry refinery LLP (further Pavlodar refinery). The Group
performed annual impairment test for the Pavlodar refinery goodwill
using the current tolling business scheme employed by Pavlodar
refinery in December 2021 and 2020. The Group considered the
forecast for oil tolling volumes, oil tolling tariffs, capital
expenditures, among other factors, when reviewing for indicators of
impairment. The recoverable amount is calculated using a discounted
cash flow model. In 2021, the discount rate of 12.06% was
calculated based on the pre-tax weighted average cost of capital.
Forecasted cash flows till to 2029 were based on five-years
business plan of Pavlodar refinery 2022-2026, which assumes current
management estimates on potential changes in operating and capital
costs. As at December 31, 2021 and 2020 the recoverable amount of
goodwill, which was determined based on value-in-use, exceeded its
book value, as such no impairment of Pavlodar refinery goodwill was
recognized.
Sensitivity to changes in assumptions
Results of the assessment of recoverable amount of Pavlodar
refinery goodwill are sensitive to changes in key assumptions, in
particular, assumptions related to changes in discount rate and
target EBITDA in terminal period. Increase in discount rates by
1.0% to 13.06% and decrease of target EBITDA in terminal period by
1% would not result decrease of the recoverable amount of CGU
Pavlodar refinery to its carrying value.
Other CGUs
Revision to the Group's commodity price and other assumptions
have not resulted in impairment charges in any other CGUs of the
Oil and gas segment.
National Company "Kazakhstan Temir Zholy" JSC ("NC KTZh")
The management assesses the recoverability of goodwill annually
as of December 31 or every time when impairment indicators of the
single CGU appear.
For the analysis of goodwill impairment, the management has used
the detailed calculation of value in use of the single
cash-generating unit performed in the prior period as of December
31, 2020, considering the below criteria is met:
-- The assets and liabilities making up the Group CGU;
-- Prior year detailed calculation of value in use resulted in
substantial margin and the management ensured that there are no
circumstances that result in decrease of the headroom as of
December 31, 2021;
-- Based on the analysis of events occurred since the most
recent calculation of value in use and circumstances changed, the
likelihood that a current recoverable amount determination would be
less than the current carrying amount of the unit is remote.
To analyze the above factors, the management ensured that the
key operating indicators for 2021 exceed budget and analyzed the
impact of the most sensitive assumptions, such as:
-- Transit freight transportation volume - the market
demonstrates a favorable environment for the growth of transit;
and
-- Discount rate (WACC) - there have been no significant changes
in the inputs used to calculate discount rate.
Management concluded that the recoverable amount of the goodwill
exceeds its carrying amount as of December 31, 2021.
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Goodwill (continued)
National Company "Kazakhstan Temir Zholy" JSC ("NC KTZh")
(continued)
The Group performed a sensitivity analysis and concluded that
when using the following justifiably possible changes in the key
assumptions on an individual basis, while keeping other parameters
constant, the fair value of property, plant and equipment,
intangible assets and goodwill will be equal to its carrying
value:
-- Transit freight transportation volumes - a decrease of the
volumes by 9.84% compared to calculation;
-- Discount rate (WACC) - an increase of the discount rate from 11.46% to 12.65%.
With more significant changes in external or internal impairment
indicators or simultaneous adverse impact of several factors, the
analysis of external or internal indicators may result in the need
to recognise impairment in the future.
DP Ortalyk LLP, JV Akbastau JSC and Karatau LLP
Goodwill relates to business combinations in prior periods
being: 5,166 million tenge relates to subsurface use operations of
DP Ortalyk LLP at the area Central on Mynkuduk mine, 24,808 million
tenge relates to Karatau LLP and 18,520 million tenge relates to JV
Akbastau JSC, which independently perform subsurface use operations
at the Budenovskoye mine. At least annually, goodwill is tested for
impairment. The carrying value of goodwill applicable to each of
these entities is allocated to their respective cash generating
units and the recoverable amount was determined on a value in use
basis from forecast cash flows over the term of subsurface use
contracts. Forecast cash flows are based on the approved volume of
proven reserves, estimated volumes of production and sales over a
life of mine plan approved by management, using a discount rate of
12.97% for 2021 year (2020: 12.35%). Production volumes are
consistent with those agreed with the competent authority and
independent consultant's report and are based on the production
capacity of the cash-generating units.
Key assumptions used in calculations include forecast sales
prices, production costs and capital expenditures. Sales prices
used in developing forecast cash flows were determined using an
independent official source Ux Consulting LLC published in the
fourth quarter of 2021. Production costs and capital expenditures
are based on approved budgets for 2022-2026 and growth of 5.12%
which approximates long-term average inflation rates. The estimated
values in use significantly exceed the carrying amounts of the
non-current assets of the three cash-generating units, including
goodwill, and therefore even reasonably possible changes in key
assumptions would not lead to impairment losses being
recognised.
Khan Tengri Holding B.V., Kcell JSC and IP TV
For impairment testing, goodwill related to Communication
segment acquired through business combinations was allocated to
three cash-generating units ("CGUs") ("IP TV", "Kcell JSC" and
"Khan Tengri Holding B.V.").
The carrying amount of goodwill allocated to each of CGUs was as
follows:
In millions of tenge 202 1 20 20
-------------------------- -------- --------
Khan Tengri Holding B.V. 96,20 6 96,20 6
Kcell JSC 53,4 90 53,4 90
IP TV 2,706 2,706
152,402 152,402
-------------------------- -------- --------
The Group performed its annual impairment test in December 2021
and 2020:
-- The recoverable amount of the Khan Tengri Holding B.V. and
Kcell JSC CGUs has been determined based on the calculation of fair
value less costs of disposal as it was deemed to produce a more
reliable result. This valuation technique was based on unobservable
inputs (discounted cash flows) that represent Level 3 of the fair
value hierarchy.
-- The pre-tax discount rate applied to projected cash flows of
Khan Tengri Holding B.V. was 21.09% (2020: 18.63%), and cash flows
beyond the five-year period were extrapolated taking into account a
growth rate of 1.5% (2020: 1.5%). The pre-tax discount rate applied
to projected cash flows of Kcell JSC was 19.56% (2020: 17.88%), and
cash flows beyond the five-year period were extrapolated taking
into account a growth rate of 1.5% (2020: 1.5%).
-- The recoverable amount of IP TV CGU has been determined based
on a value in use calculation using cash flow projections from
financial budgets approved by senior management covering a
five-year period. The pre-tax discount rate applied to the cash
flow projections is 16.94% (2020: 15.02%), and cash flows beyond
the five--year period are extrapolated using a 1.5% growth rate
(2020: 1.5%).
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Goodwill (continued)
Khan Tengri Holding B.V., Kcell JSC and IP TV (continued)
The calculation of value-in-use for IPTV and fair value less
costs of disposal for Khan Tengri Holding B.V. and Kcell JSC CGUs
is most sensitive to the following assumptions:
-- Customer base over the forecast period and average revenue
per customer with direct impact on revenue growth rates;
-- The level of capital investments included in the financial plan;
-- EBITDA margin included in the financial plan;
-- Growth rate for cash flow extrapolation beyond the forecast period;
-- Discount rate.
As a result of this analysis, the Group has not identified an
impairment of goodwill related to these CGUs as at December 31,
2021.
Sensitivity to changes in assumptions - Khan Tengri Holding
B.V., Kcell JSC
Although management expects that the market share owned by the
Group will not grow over the forecast period, according to the
financial plan, slowing growth of customer base or a decrease in
the average revenue per customer, leading to a decrease in revenue
from current business plan by more than 6.67% (2020: 6.30%), would
result in a loss from impairment in Khan Tengri Holding B.V. CGU
for 389 million tenge (2020: 721 million tenge) and by more than
11.87% (2020: 5.06%), would result in a loss from impairment in
Kcell JSC: CGU for 177 million tenge (2020: 84 million tenge).
Increase in capital investments by more than 45% (2020: 85%)
would result in loss from impairment in Khan Tengri Holding B.V.
CGU for 3,481 million tenge (2020: 1,415 million tenge) and more
than 154% (2020: 91.5%) would result in loss from impairment in
Kcell JSC CGU for 249 million tenge (2020: 189 million tenge).
Decrease in EBITDA margin by more than 8% (2020: 14%) would
result in loss from impairment in Khan Tengri Holding B.V. CGU for
2,211 million tenge (2020: 980 million tenge) and more than 15%
(2020: 11.2%) would result in loss from impairment in Kcell JSC CGU
for 247 million tenge (2020: 204 million tenge).
Management recognises that the speed of technological change and
the possibility of new entrants can have a significant impact on
growth rate assumptions. A reduction to more than 17% (2020: 54.3%
per annum in the long-term growth rate in Khan Tengri Holding B.V
CGU would result in impairment loss for 208 million tenge (2020: 41
million tenge) and more than 11.15% (2020: 30.21% per annum in the
long-term growth rate in Kcell JSC would result in impairment loss
for 99 million tenge (2020: 261 million tenge).
An increase in pre-tax discount rate to 31% (2020: 33%) would
result in impairment loss in Khan Tengri Holding B.V. CGU for 35
million tenge (2020: 2,399 million tenge) and to 38.8% (2020:
28.85%) would result in impairment loss in Kcell JSC CGU for 445
million tenge (2020: 271 million tenge).
Sensitivity to changes in assumptions - IP TV
Although the management expects that the market share owned by
the Group would not grow over the forecast period, according to the
financial plan, slowing growth of customer base or decrease in the
average revenue per customer, leading to a decrease in revenue from
current business plan by more than 8.08% (2020: 3.65%), would
result in a loss from impairment in IP TV CGU for 59 million tenge
(2020: 0.03 million tenge).
Increase in capital investments by more than 240% (2020: 95%)
would result in loss from impairment in IP TV CGU for 3 million
tenge (2020: 0.2 million tenge).
Management recognizes that the speed of technological change and
the potential for new companies in the same industry to emerge can
have a significant impact on its growth assumptions. A slower
long-term growth rate for the IP TV business will not result in an
impairment loss.
An increase in pre-tax discount rate to 27% (2020: 23.56%) would
result in impairment loss in IP TV CGU for 48 million tenge (2020:
0.03 million tenge).
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Power generating assets
Impairment of non-financial assets
At each reporting date management assesses whether there is any
indication of impairment of separate assets or groups of assets,
and whether there is any indication that an impairment loss
recognised in prior periods for separate assets or groups of assets
other than goodwill may no longer exist or may have decreased.
Based on the results of the analysis carried out as of the end
of 2021, management identified indicators of impairment of
property, plant and equipment of the subsidiary - Almaty Electric
Power Stations JSC ("ALES").
The Group engaged independent experts to perform an impairment
test on ALES assets, which was conducted in accordance with IAS 36
Impairment of Assets.
The recoverable amount of property, plant and equipment and
intangible assets determined based on estimates of estimated future
cash inflows and outflows from the use of the assets, the discount
rate and other indicators. Management classifies property, plant
and equipment and intangible assets of each subsidiary as a single
cash--generating unit as it is the smallest identifiable group of
assets that generates cash inflows that are substantially
independent of cash flows from other assets and the lowest level at
which each the subsidiary controls the recovery of the value of the
assets. Management estimated the recoverable amount of property,
plant and equipment based on value in use, defined as the sum of
the estimated discounted future cash flows that the Group expects
to receive from their use.
Please refer Note 29 for details on impairment test results.
Modernisation of Almaty CHP-2 with the minimization of the
environmental impact
For the execution of the instructions of the President of the
Republic of Kazakhstan on taking actions to minimize emissions to
atmosphere, four modernization options for CHP-2 with the
minimization of the environmental impact have been considered:
transition of the existing boilers to gas flaring, reconstruction
of the existing boilers with the installation of gas-handling
equipment, extension of CHP-2 with the construction of CCGT plants
and installation of additional gas-handling equipment without
transition to natural gas and construction of a new gas-based
plant.
On May 31, 2021, the Government of the Republic of Kazakhstan
approved a proposal for the construction of a CCGT plant with a
capacity of 600 MW at the site of Almaty CHP-2.
During the meeting, the Prime Minister of the Republic of
Kazakhstan instructed the Ministry of Energy, together with
interested state bodies, Samruk-Kazyna JSC, in accordance with the
procedure established by law, to work out the issue of introducing
amendments and additions to the Law of the Republic of Kazakhstan
On Electricity in terms of providing the opportunity to implement
projects to existing energy producers aimed at solving the
environmental situation through the mechanism of the electric power
market.
The Prime Minister of the Republic of Kazakhstan also instructed
Samruk-Energy JSC, together with the Ministry of Energy, to
continue, in the prescribed manner, to attract a bank loan to
finance the project of transferring CHP-2 to gas, including the
installation of gas infrastructure. As part of this instruction,
the Company is working to organize project financing through loan
raising.
In order to implement the project to upgrade the Almaty CHP-2,
draft amendments to the Law of the Republic of Kazakhstan On
Electric Power Industry have been prepared, stipulating the
provision of an individual capacity tariff to energy producers
implementing investment projects for modernization, reconstruction
and/or expansion with the construction of generating plants using
gas as alternative fuel type to reduce emissions. The conclusion on
the draft amendments to the Law of the Republic of Kazakhstan On
Electric Power Industry was agreed by the Government of the
Republic of Kazakhstan and sent to the Majilis of the Parliament of
the Republic of Kazakhstan. The amendments are expected to be
adopted in April 2022.
The introduction of these amendments to the Law of the Republic
of Kazakhstan On Electric Power Industry will provide the Group
with a return on borrowed funds and a return on investment in the
future due to the mechanism of the electric power market.
On December 30, 2021, a positive conclusion was received from
RSE "Gosexpertiza" No. 02-0210/21 on the feasibility study project
of modernization of CHP-2 with minimization of environmental impact
with an option of construction of a new gas station with a capacity
of up to 600 MW at the site of Almaty CHP-2.
The project for the modernization of CHPP-2 provides for the
conservation of the existing capacities of CHP-2 after
commissioning new gas station. The Group's management plans to
complete the project of converting CHP-2 to gas by December 31,
2026.
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Power generating assets (continued)
Modernisation of Almaty CHP-2 with the minimization of the
environmental impact (continued)
Estimation of the recoverable amount of property, plant and
equipment of CHP-2
At December 31, 2021, the Group's management considered that
obtaining a positive opinion from RSE "Gosexpertiza" on the
feasibility study of the CHP-2 modernization project with
minimization of environmental impact with the option of building a
new gas station with a capacity of up to 600 MW at the site of
Almaty CHP-2 (the "project of conversion of CHPP-2 to gas") and the
mothballing of the existing capacities of CHP-2 were an indicator
of asset impairment and decided to assess the recoverable amount of
property, plant and equipment.
Management engaged an independent expert, Grant Thornton
Appraisal LLP, to perform an impairment test in accordance with IAS
36 Impairment of Assets.
Management has estimated the recoverable amount of the property,
plant and equipment based on estimated future cash inflows and
outflows from the use of the assets, the discount rate and other
indicators.
The Group's management classifies all property, plant and
equipment as a single cash-generating unit as it is the smallest
identifiable group of assets that generates cash inflows that are
largely independent of the cash flows generated by other assets and
the lowest level at which the Group exercises control over recovery
of the assets' value. Management has estimated the recoverable
amount of property, plant and equipment based on value in use,
which is the sum of the estimated discounted future cash flows that
the Group expects to receive from their use.
The key assumptions used by management in determining value in
use are:
Projected volumes and tariffs for the sale of electricity and
heat and the service of maintaining the readiness of electric
power
In accordance with the Law of the Republic of Kazakhstan On the
Electricity Industry, the energy producer independently sets the
selling price for electricity, but not higher than the cap tariff
for electricity of the corresponding group of energy producers
selling electricity and, if necessary, the price is adjusted. The
cap tariff is approved by the Ministry of Energy of the Republic of
Kazakhstan for groups of energy producers, formed by the type of
power plants, installed capacity, type of fuel used, distance from
the location of the fuel.
By Order of the Minister of Energy of the Republic of Kazakhstan
dated December 5, 2018 No. 475 On Approval of a Group of Energy
Producers Selling Electricity Samruk-Energy JSC is defined as a
separate 26th group of energy producers. By Order of the Ministry
of Energy of the Republic of Kazakhstan dated June 24, 2021 No. 211
On Amendments to the Order of the Minister of Energy of the
Republic of Kazakhstan dated December 14, 2018 No. 514 On Approval
of Cap Tariffs for Electricity the Group's electricity tariff is
10.23 tenge/kWh (excluding VAT) from July 1, 2021 for a period of
five years, broken down by years. At the same time, in accordance
with the Law of the Republic of Kazakhstan On Supporting the Use of
RES, from July 1, 2021, a surcharge was introduced to support the
use of renewable energy sources for conditional consumers in 1
electric energy consumption zone for 2021 in the amount of 1.57
tenge/kWh (excluding VAT) and for 2022 in the amount of 1.58
tenge/kWh (excluding VAT). Thus, the selling tariff for the Group's
electricity for 2021 is 11.80 tenge/kWh (excluding VAT) and for
2022 11.81 tenge/kWh (excluding VAT).
In reference to the instruction of the Head of State, a
moratorium was introduced on raising tariffs for regulated
utilities, namely water supply, sewerage, heat supply, gas supply
and electricity supply until July 1, 2022, the forecast for the cap
tariff for electricity per unit kWh. in the first half of 2022 is
based on the tariff approved by Order of the Minister of Energy of
the Republic of Kazakhstan No. 211 dated June 24, 2021. Starting
from the second half of 2022, the projected tariff was calculated
using the rules for approving the cap tariff for electricity.
In accordance with the Group's plans to complete the project of
converting CHP-2 to gas by December 31, 2026, cash flows after 2026
were calculated without taking into account the cash flows of
CHP-2. The tariff for electricity in 2027 was also calculated
taking into account the disposal of CHP-2 assets.
After the introduction of amendments to the Law of the Republic
of Kazakhstan On the Electricity Industry it is expected that
investments in the construction of a new plant will be fully
reimbursed through the electric power market.
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Power generating assets (continued)
Modernisation of Almaty CHP-2 with the minimization of the
environmental impact (continued)
Estimation of the recoverable amount of property, plant and
equipment of CHP-2 (continued)
Projected volumes and tariffs for the sale of electricity and
heat and the service of maintaining the readiness of electric power
(continued)
The sales volume forecast was made based on information from
previous years and management's expectations in accordance with the
Group's Development Plan for 2022-2026. The volume of electricity
sales is projected to be approximately at the level of 2022.
2022 2023 2024 2025 2026 2027
------------------------------- ------ ------ ------ ------ ------ ------
Electricity sales volume,
million kWh 4,835 4,835 4,835 4,835 4,835 2,611
Volume of sales of electric
capacity
per year at the cap tariff
, MW * month 781 781 781 850 850 470
Volume of sales of electrical
capacity per year at an
individual tariff, MW*month 70 70 70 - - -
Selling tariff for electric
energy, tenge/kWh 12.19 13.29 13.78 13.98 14.28 12.85
Cap tariff for capacity
thousand tenge / MW*month 590 590 590 590 619 619
Individual tariff for
capacity thousand tenge/
MW*month 3,139 3,139 2,479 - - -
------------------------------- ------ ------ ------ ------ ------ ------
The individual capacity tariff is determined in accordance with
an individual investment agreement with the Ministry of Energy of
the Republic of Kazakhstan and is aimed at covering the annual
principal repayments on refinanced loans raised to finance the
project "Reconstruction and expansion of Almaty CHP-2. III tranche.
Boiler unit No. 8", until the maturity of the loans in 2024.
If the selling tariff for electricity remains at the level of
11.81 tenge/kWh in the period 2022-2026, the replacement value of
property, plant and equipment will decrease by 22,665 million
tenge.
Projected volumes of sales of heat energy and chemically treated
water and forecast of the level of tariffs
2022 2023 2024 2025 2026 2027
----------------------------- ------- ------- ------- ------- ------- ------
Volume of heat energy
sales, thousand Gcal 5,298 5,298 5,298 5,298 5,298 2,038
Sales volume of chemically
treated water, thousand
tons 29,371 29,371 29,371 29,371 29,371 4,661
Tariff for the production
of heat energy, tenge/Gcal 3,703 3,820 3,911 4,004 4,096 6,244
Tariff for production
of chemically treated
water, tenge/ton 60.86 60.99 61.07 61.15 61.15 81.19
----------------------------- ------- ------- ------- ------- ------- ------
The heat sales forecast was made based on information for
previous years and management's expectations in accordance with the
Group's Development Plan for 2022-2026. The volume of sales of heat
energy and chemically treated water is projected at the level of
2022. The decrease in sales in 2027 is due to the disposal of the
existing assets of CHP-2.
The tariff for heat generation per Gcal unit in the first half
of 2022 is based on the approved tariff. From the second half of
2022 to 2026, the tariff is calculated at the level of approved
tariffs, adjusted for the forecast fuel cost as an emergency
regulatory measure. Starting from 2027, with the disposal of the
operating assets of CHP-2, the heat tariff is expected to maintain
a break-even level of profitability from heat in the long term for
terminal cost calculation.
The tariff for the production of chemically treated water per
ton in 2022-2026 is based on the approved tariffs. From 2027, the
tariff is predicted taking into account the disposal of the
existing assets of CHP-2.
In the event of a decrease/increase in sales of electricity,
heat and chemically treated water by 10%, the replacement value of
property, plant and equipment would decrease by 31,189 million
tenge / increase by 31,236 million tenge.
In the event of a 10% decrease/increase in the cap tariffs for
the sale of electricity, heat and chemically treated water, the
replacement value of property, plant and equipment would decrease
by 25,370 million tenge /increase by 25,397 million tenge.
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Power generating assets (continued)
Modernisation of Almaty CHP-2 with the minimization of the
environmental impact (continued)
Discount rate
The cash flows were discounted using an after-tax interest rate
of 12.68% per annum, which was determined based on the
Samruk-Energy's weighted average cost of capital. Should the
discount increase/decrease by 1%, the replacement value of
property, plant and equipment would decrease by 4,854 million
tenge/increase by 5,916 million tenge.
Long-term inflation rate
The long-term inflation rate used to calculate the terminal
value is 3.24% per annum.
Volume of capital expenditures
In millions of tenge 2022 2023 2024 2025 2026 2027
-------------------------------- ------ ------ ------ ------ ------ ------
Volume of capital expenditures 9,928 5,553 5,175 3,353 5,415 3,445
-------------------------------- ------ ------ ------ ------ ------ ------
As a result of the test, the value in use of property, plant and
equipment and intangible assets at December 31, 2021 was determined
to be 61,243 million tenge, which is higher than their carrying
amount. The Group recognized an impairment loss on property, plant
and equipment and intangible assets in the amount of 20,737 million
tenge.
At December 31, 2020, there were no indications of
impairment.
Analysis of the impairment indicators of power generating
property, plant and equipment
The Group's management performed the analysis of the impairment
indicators of property, plant and equipment of subsidiaries
Ekibastuz GRES-1 named after Bulat Nurzhanov LLP ("EGRES-1"),
Alatau Zharyk Company JSC ("AZhK"), "Tegis Munai" LLP, "Mangyshlak
Munai" LLP (hereinafter "Tegis Munai") and "Station Ekibastuzskaya
GRES-2" JSC (hereinafter "EGRES-2") in accordance with IAS 36
Impairment of Assets.
The principal facts and assumptions used in the analysis of the
impairment indicators are:
-- Lack of negative changes in the economic efficiency of
subsidiaries for the reporting period;
-- Changes in interest rates on loans and long-term inflation rate are not significant;
-- Lack of significant changes having adverse consequences for
subsidiaries, which occurred during the period or may presumably
occur in the nearest future;
-- Projected growth in the medium term in demand for electricity
in the northern and southern zones of the Republic of
Kazakhstan;
-- Increase in marginal electricity tariffs for energy producing
organisations (hereinafter referred to as "EPO") from July 1, 2021
in accordance with the Order of the Minister of Energy of the
Republic of Kazakhstan No. 211 dated June 24, 2021, taking into
account the rate of return determined in accordance with the
Methodology for determining the rate of return;
-- Changes in the Legislation in the field of electric power
industry, in terms of the introduction from July 1, 2021 of the
mechanism of a "through" surcharge to support the use of renewable
energy sources (hereinafter "RES"). These changes were introduced
in order to improve the cost accounting mechanism for the purchase
of electricity by traditional EPOs and according to which, a
surcharge for supporting the use of renewable energy sources is
added to the maximum tariff of traditional EPOs, which eliminates
losses incurred when purchasing electricity from renewable energy
sources.
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Power generating assets (continued)
Analysis of the impairment indicators of power generating
property, plant and equipment (continued)
Additional facts and assumptions used in the analysis of
impairment indicators for EGRES-1:
-- Over fulfilment of the plan in terms of key operational and
financial performance indicators as of December 31, 2021;
-- Projected increase in electricity sales volumes due to the
commissioning of power unit No. 1 from 2026;
-- Receipt of an individual tariff for services to maintain the
readiness of electric power, ensuring a return on investment under
the project "Restoration of power unit No. 1 with the installation
of new electrostatic precipitators" with commissioning in 2024
(investment agreement with the Ministry of Energy of the Republic
of Kazakhstan dated February 22, 2021).
Additional facts and assumptions used in the analysis of
indicators of impairment for EGRES-2:
-- Over fulfilment of the plan in terms of key operational and
financial performance indicators as of December 31, 2021;
-- Projected increase in electricity sales volumes due to the
commissioning of power unit No. 3 from 2026;
-- A significant increase in the electricity tariff - from 9.13
tenge/kWh to 9.69 tenge/kWh from April 1, 2021, and an increase to
10.16 tenge/kWh from July 1, 2021.
Additional facts and assumptions used in the analysis of
indicators of impairment for AZhK:
-- Over fulfilment of the plan in terms of key operational and
financial performance indicators as of December 31, 2021;
-- Projected growth in the medium term in demand for electricity
in Almaty and the Almaty region.
Based on analysis performed with respect to internal and
external impairment indicators, the Group's management concluded
that there are no impairment indicators as of the analysis date.
Therefore, the Group's management decided not to perform the
impairment test of property, plant and equipment and intangible
assets of these subsidiaries as of December 31, 2021.
Start date of gas production by Tegis Munai LLP
It is forecasted that natural gas production will commence in
2024, and it is assumed that 65% of gas production will be exported
starting from 2024.
The gas production commencement is postponed because the
contract territory is included in the territory of South-Kazakhstan
state conservation area, where it is prohibited to perform field
facilities construction and development prior to territory
separation from the protected areas.
The Group's management is working to coordinate the expansion of
the boundaries of the protected area, taking into account the
withdrawal of the contract area, together with authorised state
institutions. Management believes that there is a high probability
of a favorable decision in favor of the Group, based on the
experience of other companies that are part of the Group, whose
contract areas were also located on the territory of the South
Kazakhstan State Reserve Zone, but subsequently received permits to
conduct mining.
Therefore, Tegis Munai contacted the Ministry of Energy of RK
("ME RK") with the question of the relevance of production period
commencement extension, field facilities construction for gas
production, postponement of deadline for the implementation of
working program and contract's validity period since the issue of
contract territory separation is not settled yet. In September
2020, the subsurface use expert commission of ME RK decided to
postpone the following financing liabilities: education; R&D;
social and economic development of the region, and an abandonment
was given in terms of working program amendment on investment
liabilities under subsurface use contract.
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Power generating assets (continued)
Start date of gas production by Tegis Munai LLP (continued)
On December 3, 2020, Tegis Munai has sent an application to the
Supreme Court of the Republic of Kazakhstan on invalidation of the
ME RK abandonment in terms of working program amendment on
investment liabilities under subsurface use contract. On December
30, 2020, Tegis Munai received force-majeure certificate from the
Chamber of Commerce of Kazakhstan LLP comprising Atameken NCE
confirming that Tegis Munai is not able to perform subsurface use
contract commitments prior to the contract territory separation
from the protected areas and is not able to perform subsurface use
operations. Force-majeure circumstances are in force until the
contract territory separation from the protected areas.
On September 15, 2021, due to the ongoing process to withdraw
the contract area from the protected area, the Group received a new
certificate regarding the duration of circumstances of undetermined
force from the Foreign Trade Chamber of Kazakhstan LLP.
Assets related to uranium production
Assets related to uranium mines include property, plant and
equipment, mine development assets, mineral rights, exploration and
evaluation assets, investments in associates, investments in joint
ventures, and other investments.
For the purpose of impairment testing assets are grouped at the
lowest levels for which there are separately identifiable cash
inflows that are largely independent of the cash inflows from other
assets or groups of assets (termed as
'cash-generating units'). The Group has identified each mine
(contract territory) as a separate cash-generating unit unless
several mines are technologically connected with single processing
plant in which case the Group considers such mines as one
cash-generating unit.
As at December 31, 2021, management conducted an analysis and
did not find any impairment indicators of assets (generating units)
associated with the production of uranium products.
Assets retirement obligations
Oil and gas production facilities
Under the terms of certain subsoil use contracts, legislation
and regulations the Group has legal obligations to dismantle and
remove tangible assets and restore the land at each production
site. Specifically, the Group's obligation relates to the ongoing
closure of all non-producing wells and final closure activities
such as removal of pipes, buildings and recultivation of the
contract territories, and also obligations to dismantle and remove
tangible assets and restore territory at each production site.
Since the subsoil use contract terms cannot be extended at the
discretion of the Group, the settlement date of the final closure
obligations has been assumed to be the end of each subsoil use
contract period. The extent of the Group's obligations to finance
the abandonment of wells and for final closure costs depends on the
terms of the respective subsoil use contracts and current
legislation.
Where neither subsoil use contracts nor legislation include an
unambiguous obligation to undertake or finance such final
abandonment and closure costs at the end of the subsoil use
contract term, no liability has been recognized. There is some
uncertainty and significant judgment involved in making such a
determination. Management's assessment of the presence or absence
of such obligations could change with shifts in policies and
practices of the Government or in the local industry practice.
The Group calculates asset retirement obligations separately for
each contract. The amount of the obligation is the present value of
the estimated expenditures expected to be required to settle the
obligation adjusted for expected inflation and discounted using
average long-term risk-free interest rates for emerging market
sovereign debt adjusted for risks specific to the Kazakhstan
market.
At each reporting date the Group reviews site restoration
provisions, and adjusts them to reflect the current best estimate
in accordance with IFRIC 1 Changes in Existing Decommissioning,
Restoration and Similar Liabilities.
Estimating the future closure costs involves significant
estimates and judgments by management. Most of these obligations
are many years in the future and, in addition to ambiguities in the
legal requirements, the Group's estimate can be affected by changes
in asset removal technologies, costs and industry practice. The
Group estimates future well abandonment cost using current year
prices and the average long-term inflation rate.
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Assets retirement obligations (continued)
Oil and gas production facilities (continued)
The long-term inflation and discount rates used to determine the
obligation in the consolidated statement of financial position
across the Group entities at December 31, 2021 were in the range
from 2.23% to 8.10% and from 3.80% to 10.25%, respectively
(December 31, 2020: from 2.00% to 7.3% and from 3.68% to 11.00%,
respectively). As at December 31, 2021 the carrying amounts of the
Group's asset retirement obligations relating to decommissioning of
oil and gas facilities were 174,913 million tenge (December 31,
2020: 156,671 million tenge) (Note 22).
Major oil and gas pipelines
According to the Law of the RK On Major Pipelines which was made
effective on July 4, 2012 KazTransOil JSC (further - "KTO") has
legal obligation to decommission its major oil pipelines at the end
of their operating life and to restore the land to its original
condition. Asset retirement obligation is calculated based on
estimate of the work to decommission and rehabilitate. As at
December 31, 2021, the carrying values of the Group's asset
retirement obligations relating to decommissioning of pipelines and
land were 34,547 million tenge (December 31, 2020: 113,558 million
tenge) (Note 22).
Assets related to uranium production
In accordance with environmental legislation and the subsurface
use contracts, the Group has a legal obligation to remediate damage
caused to the environment from its operations and to decommission
its mining assets and landfills and restore landfill sites after
closure of mining activities. Provision is made based upon the net
present values of estimated site restoration and retirement costs
as soon as the obligation arises from past mining activities.
The provision for asset retirement obligations is estimated
based upon the Group's interpretation of current environmental
legislation in the Republic of Kazakhstan and the Group's related
programme for liquidation of subsurface use consequences on the
contracted territory and other operations supported by the
feasibility study and engineering research in accordance with the
applicable restoration and retirement standards and techniques.
Provisions for asset retirement obligations are subject to
potential changes in environmental regulatory requirements and the
interpretation of the legislation. Provisions for mining assets and
landfills retirement obligations are recognised when there is a
certainty of incurring of such liabilities and when it is possible
to measure the amounts reliably.
The calculation of the provision for production assets
retirement as at December 31, 2021 was performed by the Group based
upon assessments performed by independent and internal consultants.
The scope of work stipulated by the legislation and included in the
calculations included the dismantling of facilities and
infrastructure (pumping, injection and observation wells,
technological units for acidification and distribution of
solutions, pipelines, access roads, technological sites, landfills,
buildings and other facilities) and subsequent restoration of
land.
Principal assumptions used in such estimations include the
estimate of discount rate and the amount and timing of future cash
flows. The discount rate is applied to the nominal costs that
management expects to spend on mining site restoration in the
future.
Management's estimates based on current prices are inflated
using the expected long-term inflation rate of 5.12% in 2021 (2020:
5.17%), and subsequently discounted using a rate that reflects the
current market estimates of the time value of money and those risks
specific to the liability not reflected in the best estimate of the
costs. The discount rate is based on a risk-free rate determined as
interest rates on government bonds with the maturity as the average
of Group subsoil use contracts. The discount rate used by the
Group's companies for calculation of the provision as at December
31, 2021 is 9.85% (2020: 9.87%).
At December 31, 2021, the carrying value of the site restoration
provision was 31,431 million tenge (2020: 23,841 million tenge)
(Note 22). The increase is mainly attributable to the estimated
cost of reclamation at RU-6 LLP (a wholly owned entity) as its
mining allotment includes arable lands, pastures and the Kargaly
state nature reserve.
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Assets retirement obligations (continued)
Decommissioning of the Ulba plant facility
Management has assessed whether the Group has an obligation for
decommissioning and dismantling of the production facility of Ulba
Metallurgical Plant JSC and concluded that the Group has no legal
obligation to decommission this facility at the end of its useful
life as of December 31, 2021 and 2020.
In addition, management considered the extent to which the
Group's policies and statements may have created a constructive
obligation to decommission this production facility and concluded
that no liability should be recorded as:
-- Radiation contamination of the facility is limited and the
costs involved in remediation are not significant.
-- In the event of discontinuance of production activities, the
Group will not have an obligation to liquidate buildings and other
infrastructure. In addition, the possibility exists of redeployment
of the production facilities to alternative uses.
-- Timely inspections, surveys, repair work to reduce physical
damage and maintain the normal level of performance of structures
and engineering equipment can extend the useful life of the
facility for an indefinite period. These factors together with the
extended periods over which the Group's uranium reserves are
available to be mined mean that it is not practical to estimate a
reliable closure date for the UMP production facility.
In the event of future changes in environmental legislation and
in the field of the use of atomic energy or its interpretation, as
well as the Group's policy, obligations may arise which could
require recognition as liabilities in the financial statements.
Provision for environmental remediation
The Group also makes judgments and estimates in establishing
provisions for environmental remediation obligations. Environmental
expenditures are capitalized or expensed depending upon their
future economic benefit. Expenditures that relate to an existing
condition caused by past operations and do not have a future
economic benefit are expensed.
Liabilities are determined based on current information about
costs and expected plans for remediation and are recorded on
discounted basis. The Group's environmental remediation provision
represents management best estimate based on an independent
assessment of the anticipated expenditure necessary for the Group
to remain in compliance with the current regulatory regime in
Kazakhstan and Europe. The Group has classified this obligation as
non-current except for the portion of costs, included in the annual
budget for 2022. For environmental remediation provisions, actual
costs can differ from estimates because of changes in laws and
regulations, public expectations, discovery and analysis of site
conditions and changes in clean-up technology. Movements in the
provision for environmental remediation obligations are disclosed
in Note 22.
Provision for taxes
Uncertainties exist with respect to the interpretation of
complex tax regulations, changes in tax laws, and the amount and
timing of future taxable income. Given the wide range of the
Group's international business relationships and the long-term
nature and complexity of existing contractual agreements,
differences arising between the actual results and the assumptions
made, or future changes to such assumptions, could necessitate
future adjustments to taxable profits and expense already recorded.
The Group establishes provisions, based on reasonable estimates,
for possible consequences of audits by the tax authorities of the
respective countries in which it operates.
The amount of such provisions is based on various factors, such
as experience of previous tax audits and differing interpretations
of tax regulations by the taxable entity and the responsible tax
authority. Such differences of interpretation may arise on a wide
variety of issues depending on the conditions prevailing in the
respective Group company's domicile.
In assessing tax risks, management considers to be probable
obligations the known areas of non-compliance with tax legislation,
which the Group would not appeal or does not believe it could
successfully appeal, if additional taxes are charged. Such
determinations inherently involve significant judgment and are
subject to change as a result of changes in tax laws and
regulations, amendments to the taxation terms of the Group's
subsurface use contracts, the determination of expected outcomes
from pending tax proceedings and current outcome of ongoing
compliance audits by tax authorities. The provision for taxes
disclosed in Note 22 relates mainly to the Group's application of
Kazakhstan transfer pricing legislation. Further uncertainties
related to taxation are disclosed in Note 37.
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Provision for construction of social objects
The Government assigns various sponsorship and financing
obligations to the Group. Management of the Group believes that
such Government's assignments represent constructive obligations of
the Group and require recognition on the basis of respective
resolution of the Government of the Republic of Kazakhstan.
Furthermore, as the Government is the ultimate controlling party of
the Group, the expenditures on these assignments are recognized as
"other distributions to the Shareholder" directly in the
equity.
Useful lives of items of property, plant and equipment
The Group assesses remaining useful lives of items of property,
plant and equipment at least at each financial year-end. If
expectations differ from previous estimates, the changes are
accounted for prospectively as a change in an accounting estimate
in accordance with IAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors.
Deferred tax assets
Deferred tax assets are recognized for all allowances and unused
tax losses to the extent that it is probable that taxable temporary
differences and business nature of such expenses will be proved.
Significant management judgment is required to determine the amount
of deferred tax assets that can be recognized, based upon the
likely timing and level of future taxable profits together with
future tax planning strategies. The carrying amount of recognized
deferred tax assets as at December 31, 2021 was equal to 69,148
million tenge (December 31, 2020: 79,267 million tenge). Further
details are contained in Note 33.
Fair value of financial instruments
Where the fair value of financial assets and financial
liabilities recorded in the consolidated statement of financial
position cannot be derived from active markets, they are determined
using valuation techniques including the discounted cash flows
model. The inputs to these models are taken from observable markets
where possible, but where this is not feasible, a degree of
judgment is required in establishing fair values.
The judgments include considerations of inputs such as liquidity
risk, credit risk and volatility. Changes in assumptions about
these factors could affect the fair value of financial instruments
reported in the consolidated financial statements. Further details
are disclosed in Note 36.
Employee benefit liability
The Group uses actuarial valuation method for measurement of the
present value of defined employee benefit liability and related
current service cost. This involves use of demographic assumptions
about the future characteristics of current and former employees
who are eligible for benefits (mortality, both during and after
employment, rates of employee turnover, etc.) as well as financial
assumptions (discount rate, future annual financial assistance,
future annual minimum salary and future average railway ticket
price).
Due to the complexity of the valuation, the underlying
assumptions and its long-term nature, a defined benefit obligation
is highly sensitive to changes in these assumptions. All
assumptions are reviewed at each reporting date.
Estimation of expected credit losses
The measurement of impairment losses under IFRS 9 across all
categories of financial assets requires judgement, in particular,
the estimation of the amount and timing of future cash flows and
collateral values when determining impairment losses and the
assessment of a significant increase in credit risk. These
estimates are driven by a number of factors, changes in which can
result in different levels of allowances.
The Group's ECL calculations are outputs of complex models with
a number of underlying assumptions regarding the choice of variable
inputs and their interdependencies. Elements of the ECL models that
are considered accounting judgements and estimates include:
-- The Group's credit grading model, which assigns PDs to the individual grades;
-- The segmentation of financial assets when their ECL is assessed on a collective basis;
-- Development of ECL models, including the various formulae and the choice of inputs;
-- Determination of associations between macroeconomic scenarios
and, economic inputs, such as oil price with
one year lag, and the effect on PDs, EADs and LGDs.
4. SIGNIFICANT ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)
Accounting treatment of financing arrangements with Industrial
Development Fund JSC
The Group, represented by Passenger Transportation JSC and
Tulpar Wagon Construction Plant LLP, entered into a number of
trilateral purchase-sale and finance lease agreements with
Industrial Development Fund JSC, which is under the common control
of the Shareholder, to renew its passenger carriage fleet. Under
the agreements, Industrial Development Fund JSC finances Tulpar
Wagon Construction Plant LLP's construction of passenger carriages
on a 100% prepayment basis for ownership with a further finance
lease to Passenger Transportation JSC.
Management of the Group concluded that the transaction between
Tulpar Wagon Construction Plant LLP and Industrial Development Fund
JSC does not meet the requirements of IFRS 15 Revenue from
Contracts with Customers to account for the asset sale at the Group
level, as control over passenger carriages is not transferred to
Industrial Development Fund JSC, but left with the Group.
Industrial Development Fund JSC finances the construction of the
carriages, but is limited in its ability to direct the subsequent
use of and obtain all of the remaining benefits from the asset.
Accordingly, the Group recognises the obligation to Industrial
Development Fund JSC as a financial liability (borrowing) according
to IFRS 9 Financial Instruments and recognises passenger carriages
and work-in-progress as property, plant and equipment items and
construction in progress in accordance with IFRS 16.103 Leases.
Since financing was provided at preferential interest rates and
the terms were provided exclusively to finance the upgrade of the
Passenger Transportation JSC passenger carriage fleet based on a
Kazakhstan Government Resolution, the Group considers these
transactions as transactions with the Shareholder and recognises
fair value adjustments of the loans received at below market rate
through equity within retained earnings as other transactions with
the Shareholder (Note 17).
Swap transactions
The Group sells part of its uranium products under swap
transactions with separate agreements with the same counterparty,
being for sales and purchase of the same volume of uranium for the
same price at different delivery points or different timeframes.
Effectively, this results in the exchange of own uranium (produced
or purchased from the Group's entities) with purchased uranium.
Normally, under a swap transaction, the Group delivers physical
uranium to one destination point, and purchases the same volume of
uranium at a third party converter for sale to end customers. Swap
transactions are entered into primarily to reduce transportation
costs for uranium delivery from Kazakhstan to end customers.
Despite the fact that swap agreements are not formally related
to each other, management concluded that these transactions are in
substance linked and would not have occurred on an isolated basis,
driven by the existing market demand and supply forces. In
management's view, supply of the same volume of homogeneous product
(uranium) for the same price represents an exchange of products,
which should be presented on a net basis in the consolidated
financial statements, reflecting the economic substance of the
transaction. Interpretation of terms and approach to the accounting
for swap transactions requires judgement.
In 2021, the Group did not recognise sales revenue from swap
transactions of 146,910 million tenge and cost of sales of 135,158
million tenge. In 2020, the Group did not recognise sales revenue
from swap transactions of 71,331 million tenge, cost of sales of
65,713 million tenge.
Control over DP Ortalyk LLP
On July 22, 2021 the Group completed the sale of a 49% interest
in DP Ortalyk LLP (Note 17). The Group retains a 51% ownership
interest and majority voting rights in the Supervisory Board. Sales
activities of DP Ortalyk LLP are governed by the Marketing
agreement, any amendments to which would require consent by both
owners. The Group governs production activity within the 20% limit
permitted by law through its power to approve the entity's budget
by simple majority vote. Decisions about financing of DP Ortalyk
LLP are made by unanimous consent of both owners. urrently, DP
Ortalyk LLP does not rely on shareholders' or external financing.
Given that all production volumes are committed to be purchased by
the Group and CGNPC based upon market prices, production volumes
and costs have the most significant impact on financial results and
therefore are considered to be relevant activities for the purpose
of the control assessment. Based on these facts, the Group
management has concluded that the Group retains control over DP
Ortalyk LLP.
5. Disposals and assets classified as held for sale or distribution to the shareholder
Disposals in 2021
Financial Settlement Center of Renewable Energy LLP
In December 2021, in accordance with the Resolution of the
Government of the Republic of Kazakhstan dated November 30, 2021,
the Group transferred shares of Financial Settlement Center of
Renewable Energy LLP to the State property and privatization
committee of the Ministry of Finance of Republic of Kazakhstan with
the net assets of 37,122 million tenge free of charge (Note 17).
This transaction was recognized as transfer of assets to the
Shareholder in consolidated statement of changes in equity.
Net assets of Financial Settlement Center of Renewable Energy
LLP as at the transfer date are as follows:
At the date
In millions of tenge of transfer
------------------------------------------------------------- -------------
Assets
Property and equipment 28
Intangible assets 15
Deferred tax assets 235
Inventories 155
Trade receivables 25,792
Amounts due from credit institutions 38
Other current financial assets 5,113
Other current assets 2
Cash and cash equivalents 38,848
------------------------------------------------------------- -------------
Assets transferred to the Shareholder 70,226
------------------------------------------------------------- -------------
Liabilities
Trade and other payables 31,602
Income taxes payable 261
Other non-current and current liabilities 1,241
Liabilities directly associated with the assets transferred
to the Shareholder 33,104
------------------------------------------------------------- -------------
Net assets directly associated with the disposal group 37,122
------------------------------------------------------------- -------------
Vostokmashzavod JSC
On December 30, 2020 the Group, represented by its subsidiary
Repair Corporation Kamkor LLP, entered into a sale agreement with a
third party to sell shares of Vostokmashzavod JSC.
The Group classified the assets and liabilities of
Vostokmashzavod JSC as at December 31, 2020 as assets held for sale
measured at the lower of carrying amount and fair value less costs
to sell. On January 8, 2021 the Group completed sale transaction of
the shares of Vostokmashzavod JSC, and, as a result, lost control
over the subsidiary.
Assets and liabilities in the separate statements of
Vostokmashzavod JSC at the date of disposal amounted 6,656 million
tenge and 9,980 million tenge, respectively.
The result of disposal of the subsidiary is as follows:
In millions of tenge
-------------------------------------------------------------- --------
Advance received previously 100
Disposed net liabilities 3,324
Disposed non-controlling interest (849)
Adjustment to fair value of loans receivable and receivables
from a former subsidiary (2,575)
Net result from disposal of Vostokmashzavod JSC -
-------------------------------------------------------------- --------
As at the date of disposal Vostokmashzavod JSC had loans and
trade payables due to the Group with a carrying value of 5,529
million tenge and 938 million tenge, respectively. Under the
transaction for the acquisition of share in Vostokmashzavod JSC,
the buyer guaranteed the repayment of this debt. Therefore, as a
result of disposal, the Group recognized loans receivable and
receivables at their fair value of 3,251 million tenge and 641
million tenge, respectively, reflecting the adjustment to fair
value in the reconciliation above.
As a result, the disposal of Vostokmashzavod JSC in 2021 did not
have an impact on the financial result.
5. DISPOSALS AND ASSETS CLASSIFIED AS HELD FOR SALE OR
DISTRIBUTION TO THE SHAREHOLDER (continued)
Disposals in 2021 (continued)
Shokpar-Gagarinskoye LLP
At December 31, 2020, assets and liabilities of a subsidiary
Shokpar-Gagarinskoye LLP were classified as an assets held for sale
and liabilities directly associated with the assets held for sale
and were equal to 2,056 million tenge and 1 million tenge.
On July 9, 2021, the Group completed the sale of 100% shares of
Shokpar-Gagarinskoye LLP to a third party for 4,185 million
tenge.
Net assets of Shokpar-Gagarinskoye LLP as at the disposal date
are as follows:
At the date
In millions of tenge of disposal
-------------------------------------------------------- -------------
Assets
Property and equipment 2,056
Cash and cash equivalents 1
-------------------------------------------------------- -------------
Assets held for sale 2,057
-------------------------------------------------------- -------------
Liabilities
Trade payables 2
Other current liabilities 10
Liabilities directly associated with the assets held
for sale 12
-------------------------------------------------------- -------------
Net assets directly associated with the disposal group 2,045
-------------------------------------------------------- -------------
Net cash inflow from disposal of a subsidiary was as
follows:
In millions of tenge
-------------------------------------------------------- --------
Cash consideration received 2 , 953
Advance received previously 1,286
Less: cash and cash equivalents of disposed subsidiary ( 1 )
-------------------------------------------------------- --------
Total cash inflow 4 , 238
-------------------------------------------------------- --------
The resulting gain on disposal of Shokpar-Gagarinskoye LLP
amounted to 2,140 million tenge.
KT Cloud Lab LLP
On June 17, 2019, the Group concluded an agreement on sale of KT
Cloud Lab LLP. At December 31, 2020, assets and liabilities of KT
Cloud Lab LLP were classified as an assets held for sale and
liabilities directly associated with the assets held for sale and
were equal to 1,872 million tenge and 895 million tenge.
In accordance with the agreement, payments shall be made in 3
tranches (the first tranche in the amount of 30% of the purchase
price within 30 days after agreement signing date, the second
tranche in the amount of 35% of the purchase price within 12 months
after signing date and the third tranche in the amount of 35% of
the purchase price within 24 months after signing date).
On July 14, 2021, the buyer made the first tranche under the
purchase agreement in the amount of 30% of the purchase price. The
buyer's intention to exercise his right to early repurchase the
remaining stake in KT Cloud Lab LLP allowed the Group to recognize
the disposal of KT Cloud Lab LLP from the moment of receipt of the
first tranche and to recognize the payment arrears from the winner
of the tender in full.
On October 20, 2021, the buyer repaid the remaining part of the
purchase price ahead of the repayment schedule.
5. DISPOSALS AND ASSETS CLASSIFIED AS HELD FOR SALE OR
DISTRIBUTION TO THE SHAREHOLDER (continued)
Disposals in 2021 (continued)
KT Cloud Lab LLP (continued)
Net assets of KT Cloud Lab LL as at the disposal date are as
follows:
At the date
In millions of tenge of disposal
-------------------------------------------------------- -------------
Assets
Property and equipment 526
Intangible assets 484
Other non-current financial assets 77
Inventories 9
Trade receivables 916
Other current financial assets 164
Other current assets 39
Cash and cash equivalents 448
-------------------------------------------------------- -------------
Assets held for sale 2,663
-------------------------------------------------------- -------------
Liabilities
Deferred tax liabilities 11
Trade payables 146
Other current liabilities 645
Liabilities directly associated with the assets held
for sale 802
-------------------------------------------------------- -------------
Net assets directly associated with the disposal group 1,861
-------------------------------------------------------- -------------
Following is a schedule of consideration received from the
disposal of KT Cloud Lab LLP:
In millions of tenge
----------------------------------- ------
Cash consideration received 1,435
Less: cash disposed (448)
Total cash consideration received 987
----------------------------------- ------
As a result of disposal the Group has recognized loss from
disposal of the subsidiary of 426 million tenge.
Sales of 100% interests in subsidiaries - KazPV project
On June 10, 2021 the Group signed an agreement for the sale of
the Group's entire interest in Kazakhstan Solar Silicon LLP. The
sale was completed on July 12, 2021 upon receipt of full payment of
323 million tenge. At the date of loss of control net assets of
Kazakhstan Solar Silicon LLP amounted to 85 million tenge.
On July 16, 2021 the Group signed an agreement for the sale of
the Group's entire interest in Astana Solar LLP and on August 23,
2021 signed the act of acceptance after receiving full payment
under the contract. The payment received amounted to 380 million
tenge. At the date of loss of control net assets of Astana Solar
LLP amounted to 115 million tenge.
On October 26, 2021, an agreement for the sale of the Group's
entire interest in MK Kazsilicon LLP was signed. On November 19,
2021 after receiving full payment under the contract the Group
signed an act of acceptance certificate. The payment received
amounted to 652 million tenge. At the date of loss of control net
liabilities of MK Kazsilicon LLP amounted to 136 million tenge.
Total proceeds from sales of KazPV entities was 1,355 million
tenge less 16 million tenge cash and cash equivalents of disposed
entities at the disposal date. Net income from disposal of KazPV
subsidiaries amounted 1,291 million tenge.
5. DISPOSALS AND ASSETS CLASSIFIED AS HELD FOR SALE OR
DISTRIBUTION TO THE SHAREHOLDER (continued)
Disposals in 2020
Transtelecom JSC
In April 2018, a purchase and sale agreement was concluded on
the sale of 26% minus 1 (one) share of Transtelecom JSC. On January
24, 2020 the remaining balance of the purchase price was paid by
the buyer for 26% minus 1 (one) share of Transtelecom JSC. On
January 29, 2020 shares of Transtelecom JSC were disposed, as a
result, the Group lost control over the subsidiary and recognised
residual interest of 25% at fair value of 9,086 millon tenge as
investment in associate and disposal of non-controlling interest in
Transtelecom JSC of 14,040 million tenge in consolidated statement
of changes in equity.
At the date of loss of control net assets of Transtelecom JSC
were as follows:
Net assets
at the date
In millions of tenge of disposal
-------------------------------------------- -------------
Property, plant and equipment 85,466
Intangible assets 4,607
Other non-current financial assets 298
Other non-current assets 376
Inventories 2,307
VAT receivable 767
Income tax prepaid 169
Trade accounts receivable 8,333
Loans issued and finance lease receivables 798
Amounts due from credit institutions 27
Other current financial assets 626
Other current assets 11,545
Cash and cash equivalents 6,352
Total assets 121,671
-------------------------------------------- -------------
Borrowings 53,139
Lease liabilities 1,853
Deferred tax liabilities 4,467
Employee benefit liabilities 504
Other non-current liabilities 2,472
Trade and other payables 18,841
Other urrent liabilities 7,646
Total liabilities 88,922
-------------------------------------------- -------------
Net assets 32,749
-------------------------------------------- -------------
Net cash inflow from disposal of a subsidiary was as
follows:
In millions of tenge
-------------------------------------------------------- ----------
Cash consideration received 9,450
Advances received previously (470)
( 6 , 352
Less: cash and cash equivalents of disposed subsidiary )
-------------------------------------------------------- ----------
Total cash inflow 2 , 628
-------------------------------------------------------- ----------
Net of loss incurred by Transtelecom JSC for the period from
January 1, 2020 till the date of sale amounted to 15 million tenge.
The resulting loss on disposal of Transtelecom JSC amounted to 173
million tenge.
5. DISPOSALS AND ASSETS CLASSIFIED AS HELD FOR SALE OR
DISTRIBUTION TO THE SHAREHOLDER (continued)
Disposals in 2020 (continued)
MC SEZ Khorgos-Eastern Gates JSC ("Khorgos")
In March 2020, in accordance with the Resolution of the
Government of the Republic of Kazakhstan dated March 19, 2019 the
Group transferred 100% of shares in Khorgos free of charge to the
akimat of Almaty oblast. As a result, the Group lost control of
Khorgos and recorded the disposal of net assets of 24,809 million
tenge through equity in retained earnings.
The assets and liabilities of Khorgos as at the disposal date
are as follows:
Net assets
at the date
In millions of tenge of disposal
------------------------------- -------------
Property, plant and equipment 20,219
Intangible assets 555
Other non-current assets 2,734
Inventories 16
Trade accounts receivable 31
Other current assets 332
Cash and cash equivalents 1,886
Total assets 25,773
------------------------------- -------------
Employee benefit liabilities 3
Trade and other payables 847
Other urrent liabilities 114
Total liabilities 964
------------------------------- -------------
Net assets 24,809
------------------------------- -------------
Khorgos revenue and loss for the period from January 1 until the
disposal date were 60 million tenge and 1,248 million tenge,
respectively.
Uranium Enrichment Center JSC (TsOU)
In 2019 the Group has entered into a conditional contract to
sell its 50% interest minus 1 (one) share in JSC Uranium Enrichment
Center (TsOU) to its partner in this joint venture - TVEL JSC
(TVEL). The Group maintained 1 share of TsOU, which will retain the
Group's right to access uranium enrichment services in accordance
with the conditions previously agreed with TVEL. On March 17, 2020
the Group completed this sale. The contract price was 6,253 million
Russian rubles or 90 million euro fixed at an exchange rate as at
December 31, 2019. Actual cash consideration received was 90
million Euro (equivalent to 43,858 million tenge).
In millions of tenge
--------------------------------------------------------- ---------
Contract price at the exchange rate as at December
31, 2019 40 , 485
Less: carrying value of the investment in joint venture (18,671)
Transfer of foreign currency translation reserve 249
Gain from disposal of joint venture 22 , 063
--------------------------------------------------------- ---------
Gain from disposal of joint venture was included in other
non-operating income.
5. DISPOSALS AND ASSETS CLASSIFIED AS HELD FOR SALE OR
DISTRIBUTION TO THE SHAREHOLDER (continued)
Assets classified as held for sale or distribution to the
Shareholder
Assets classified as held for sale or distribution to the
Shareholder comprised the following:
December December
In millions of tenge Segment 31, 2021 31, 2020
-------------------------------------------- --------- ---------- ----------
4 2 ,61
Assets classified as held for sale 7 61, 360
Assets classified as held for distribution
to Shareholder, including: 104 427
KOREM JSC Energy - 323
Other 104 104
4 2 ,7 21 61 , 787
------------------------------------------------------ ---------- ----------
Liabilities associated with assets classified as held for sale
or distribution to the Shareholder comprised the following:
December December
In millions of tenge Segment 31, 2021 31, 2020
-------------------------------------- --------- ----------- ----------
Liabilities associated with assets
classified as held for sale - 4,814
Liabilities associated with assets
classified as held for distribution
to the Shareholder, including: - 22
KOREM JSC Energy - 22
- 4,836
------------------------------------------------------------ ----------
On April 14, 2021 in accordance with the Resolution of the
Government of the Republic of Kazakhstan dated March 17, 2021 the
Group transferred shares of KOREM JSC to the State property and
privatization committee of the Ministry of Finance of the Republic
of Kazakhstan with net assets of 312 million tenge free of charge
(Note 17).
During 2021, the Group reclassified to assets held for sale
property, plant and equipment of 45,451 million tenge mainly
represented by compressor station "Aral" for 40,378 million tenge
and property, plant and equipment of UTTiOS LLP for 5,009 million
tenge.
During 2021, the Group sold the compressor station "Korkyt-ata",
which was reclassified to assets held for sale in 2020, for the
consideration of 42,886 million tenge, of which 40,742 million
tenge were paid as at December 31, 2021.
6. Property, plant and equipment
Pipelines Railway Machinery, Construc-
and Buildings tracks equipment tion
Oil and refinery and and and Mining in
In millions of tenge gas assets assets premises infra-structure vehicles assets Other progress Total
----------------------- ------------ ------------ ---------- ---------------- ----------- ---------- ---------- ---------- ------------
Net book value at
January 1,1 52 3,2 07 1 69 , 1 3 ,
1, 2020 4,232,980 2,186,306 , 396 1,134,626 , 696 164,837 953 900, 390 14 9,184
Foreign currency
translation 366,276 43,416 9,164 (70) 28,817 - 9,579 15,345 472,527
Changes in estimates 27,038 10,923 (195) - (1,032) (13,552) 3,358 - 26,540
Additions 19,930 4,143 8 , 156 3 , 075 95 , 187 26,983 19 , 687 1,056,336 1,233,497
Additions through
lease
agreements 1,558 468 11,294 - 139,493 - 5,365 - 158,178
Acquisition through
business combinations - - 10,979 - 12,212 - 3,046 1,079 27,316
Disposals (18,443) (29,041) (17,528) (134) (73,516) (3) (4,746) (7,304) (150,715)
Depreciation charge (271,726) (149,339) (72,040) (36,788) (330,223) (27,308) (20,722) - (908,146)
Depreciation and
impairment
on disposals 13,876 12,257 4,148 100 40,446 - 4,156 5,294 80,277
Impairment/write-off,
net of reversal of
impairment
(Note 29) (38,202) (156,275) 3,268 26 (21,569) (376) (2,077) (34,617) (249,822)
Transfer from/(to)
assets
classified as held
for
sale or distribution
to the Shareholder - (834) (24,223) - (77,813) (2,055) (1,054) (1,274) (107,253)
Transfers from/(to)
intangible assets
(Note
7) (609) (96) - - 31 - (619) (12,096) (13,389)
Transfers from/(to)
exploration and
evaluation
assets, investment
property 67 - (21,045) - (68) 26 (1) - (21,021)
Transfer from/(to)
inventories,
net 42 1,591 13 (5,098) 423 5,584 564 3,593 6,712
Other transfers and
reclassifications 122,632 62,601 111,904 65,876 295,772 611 12,253 (671,649) -
----------------------- ------------ ------------ ---------- ---------------- ----------- ---------- ---------- ---------- ------------
Net book value at
December 1,17 6 1,1 61 1 98 ,
31, 2020 4,455,419 1,986,120 , 291 , 613 3,315,856 154,747 74 2 1,255,097 13,703,885
----------------------- ------------ ------------ ---------- ---------------- ----------- ---------- ---------- ---------- ------------
1,76 4 1,4 47 5,8 12 3 75 ,
Historical cost 6,207,948 3,607,779 , 392 , 389 , 284 338,271 66 4 1,374,385 20,928,112
Accumulated
depreciation (2,4 96
and impairment (1,752,529) (1,621,659) (588,101) (285,776) ,428) (183,524) (176,922) (119,288) (7,224,227)
----------------------- ------------ ------------ ---------- ---------------- ----------- ---------- ---------- ---------- ------------
Net book value at
December 1,17 6 1,1 61 1 98 ,
31, 2020 4,455,419 1,986,120 , 291 , 613 3,315,856 154,747 74 2 1,255,097 13,703,885
----------------------- ------------ ------------ ---------- ---------------- ----------- ---------- ---------- ---------- ------------
6. PROPERTY, PLANT AND EQUIPMENT (continued)
Pipelines Railway Machinery, Construc-
Oil and and Buildings tracks equipment tion
In millions gas refinery and and and Mining in
of tenge assets assets premises infra-structure vehicles assets Other progress Total
-------------- --------- ---------- ---------- ---------------- ----------- ------- -------- ---------- ----------
Including
right-of-use
assets under
lease
agreements
Net book
value at
January 4 3 ,
1, 2020 814 928 73,958 - 276,203 - 22,484 - 417,387
Foreign
currency
translation 4,180 144 1,408 - 21,192 - 2,432 - 29,356
Changes in
estimates - 5,009 (294) - (1,225) - 3,358 - 6,848
Additions
through
lease
agreements 1,558 468 11,294 - 139,493 - 5,365 - 158,178
Capitalized
repair works - - - - 3,598 - - - 3,598
Acquisition
through
business
combinations - - 939 - 1,659 - - - 2,598
Disposals (1,305) - (1,040) - (42,499) - (922) - (45,766)
Depreciation
charge (7,300) (296) (17,086) - (57,998) - (3,225) - (85,905)
Depreciation
and
impairment
on disposals - - 322 - 20,566 - 645 - 21,533
Impairment,
net of
reversal
of
impairment - - - - (5,925) - - - (5,925)
Net book
value at
December
31, 2020 40,947 6,253 69,501 - 355,064 - 30,137 - 501,902
-------------- --------- ---------- ---------- ---------------- ----------- ------- -------- ---------- ----------
Historical
cost of
right-of-use
assets under
lease
agreements 53,747 7,014 102,001 - 530,064 - 35,063 - 727,889
Accumulated
depreciation
and
impairment
of
right-of-use
assets under
lease
agreements (12,800) (761) (32,500) - (175,000) - (4,926) - (225,987)
-------------- --------- ---------- ---------- ---------------- ----------- ------- -------- ---------- ----------
Net book
value at
December
31, 2020 40,947 6,253 69,501 - 355,064 - 30,137 - 501,902
-------------- --------- ---------- ---------- ---------------- ----------- ------- -------- ---------- ----------
6. PROPERTY, PLANT AND EQUIPMENT (continued)
Pipelines Railway Machinery,
and Buildings tracks equipment
In millions of Oil and refinery and and and Mining Construc-tion
tenge gas assets assets premises infra-structure vehicles assets Other in progress Total
------------------- ------------ ------------ ---------- ---------------- ------------ ---------- ---------- -------------- ------------
Net book value at
January 1,17 6 1,1 61 1 98 ,
1, 2021 4,455,419 1,986,120 , 291 , 613 3,315,856 154,747 74 2 1,255,097 13,703,885
Foreign currency
translation 98,734 8,465 1,522 19 9,795 - 2,585 4,725 125,845
Changes in 1 8 ,
estimates 11,268 2,710 (2,040) - 1 , 219 5,474 1 - 632
12 5 1,38
Additions 55,688 5,238 10,921 55 , 910 38,510 5,391 1,144,165 5 , 878
Additions through
lease
agreements 3,570 32,599 6,445 - 89,991 - 4,320 - 136,925
Capitalized repair
works
on right-of-use
assets - - - - 8,788 - - - 8,788
Lease
modifications - (625) 3,949 - 1,001 - (3,532) - 793
Disposals (38,685) (49,215) (16,789) (4,296) (63,503) (950) (7,094) (1,378) (181,910)
Depreciation
charge (283,824) (176,588) (73,995) (37,228) (349,006) (34,186) (21,869) - (976,696)
Depreciation and
impairment
on disposals 23,604 20,352 12,224 4,076 53,785 1 6,284 419 120,745
Impairment, net of
reversal
of impairment
(Note
29) (3,940) (8,279) (15,278) (618) (28,203) 199 383 16,604 (39,132)
Reversal of
provision
under an onerous
contract - - - - - - - 1,125 1,125
Transfer from/(to)
assets
classified as
held for
sale or
distribution
to the
Shareholder - (24) (11,608) - (33,561) - (451) (35) (45,679)
Transfers
from/(to)
intangible assets
(Note
7) (5,123) - (1) - (41) - (16) (20,128) (25,309)
Transfers
from/(to)
exploration and
evaluation
assets,
investment
property 16,674 - 2,314 - 89 1,033 (22) - 20,088
Transfer from/(to)
inventories,
net 46 1,511 146 (4,383) 1,487 7,690 1,463 2,120 10,080
Other transfers
and
reclassifications 163,579 146,890 55,329 90,669 369,461 2,271 8,266 (836,465) -
------------------- ------------ ------------ ---------- ---------------- ------------ ---------- ---------- -------------- ------------
Net book value at
December
31, 2021 4,497,010 1,969,154 1,149,430 1,209,907 3,503,068 174,789 194,451 1,566,249 14,264,058
------------------- ------------ ------------ ---------- ---------------- ------------ ---------- ---------- -------------- ------------
38 5 38 7
Historical cost 6,536,027 3,781,994 1,817,250 1,516,829 6,319,236 , 96 6 ,546 1,661,461 22,406,309
Accumulated
depreciation
and impairment (2,039,017) (1,812,840) (667,820) (306,922) (2,816,168) (211,177) (193,095) (95,212) (8,142,251)
------------------- ------------ ------------ ---------- ---------------- ------------ ---------- ---------- -------------- ------------
Net book value at
December
31, 2021 4,497,010 1,969,154 1,149,430 1,209,907 3,503,068 174,789 194,451 1,566,249 14,264,058
------------------- ------------ ------------ ---------- ---------------- ------------ ---------- ---------- -------------- ------------
6. PROPERTY, PLANT AND EQUIPMENT (continued)
Pipelines Railway Machinery,
Oil and and Buildings tracks equipment
In millions of gas refinery and and and Mining Construc-tion
tenge assets assets premises infra-structure vehicles assets Other in progress Total
------------------- --------- ---------- ---------- ---------------- ----------- ------- -------- -------------- ----------
Including
right-of-use
assets under lease
agreements
Net book value at
January
1, 2021 40,947 6,253 69,501 - 355,064 - 30,137 - 501,902
Foreign currency
translation 868 148 730 - 7,691 - 734 - 10,171
Changes in
estimates - - 85 - - - - - 85
Additions through
lease
agreements 3,570 32,599 6,445 - 89,991 - 4,320 - 136,925
Capitalized repair
works - - - - 8,788 - - - 8,788
Lease
modifications - (625) 3,949 - 1,001 - (3,532) - 793
Disposals (11,296) (9) (2,992) - (7,665) - (507) - (22,469)
Depreciation
charge (6,494) (32,200) (16,590) - (69,070) - (5,007) - (129,361)
Depreciation and
impairment
on disposals - 9 995 - 6,944 - 380 - 8,328
Transfer from
property,
plant and
equipment - - - - 483 - - - 483
Other transfers
and
reclassifications - - (18) - - - 18 - -
Net book value at
December
31, 2021 27,595 6,175 62,105 - 393,227 - 26,543 - 515,645
------------------- --------- ---------- ---------- ---------------- ----------- ------- -------- -------------- ----------
Historical cost
of right-of-use
assets under
lease agreements 39,203 39,146 110,231 - 680,191 - 36,413 - 905,184
Accumulated
depreciation
and impairment of
right-of-use
assets under
lease agreements (11,608) (32,971) (48,126) - (286,964) - (9,870) - (389,539)
------------------- --------- ---------- ---------- ---------------- ----------- ------- -------- -------------- ----------
Net book value at
December
31, 2021 27,595 6,175 62,105 - 393,227 - 26,543 - 515,645
------------------- --------- ---------- ---------- ---------------- ----------- ------- -------- -------------- ----------
As at December 31, 2021 property, plant and equipment with net
book value of 898,485 million tenge was pledged as collateral for
some of the Group's borrowings (December 31, 2020: 959,895 million
tenge).
As at December 31, 2021 the cost of fully amortised property,
plant and equipment of the Group was equal to 1,228,077 million
tenge (December 31, 2020: 1,320,644 million tenge).
In 2021 the Group capitalized borrowing costs at an average
interest rate of 6.14% in the amount of 48,624 million tenge (Note
18) (2020: at an average interest rate of 4.85% in the amount of
26,763 million tenge).
7. Intangible assets
Marketing
related
Subsur-face intangible
In millions of tenge Licenses use rights Goodwill assets Software Other Total
----------------------------- ---------- ------------ ---------- ------------ ---------- --------- ----------
Net book value at 700,3 299 , 75 , 2,00
January 1, 2020 64 845,690 459 28,960 51, 900 535 1 , 908
Foreign currency 48 ,
translation 907 19,429 1,002 2,776 363 835 73,312
Additions 5,156 100 - - 17,702 3,808 26,766
Acquisition through
business combinations - - 15,520 - 329 3,889 19,738
Disposals (1,354) - - - (7,117) (2,176) (10,647)
Amortization charge (44,591) (33,681) - - (19,224) (5,633) (103,129)
Accumulated amortization
and impairment on
disposals 1,343 - - - 6,334 130 7,807
(Impairment)/reversal
of impairment, net
(Note 29) (222) - - (6,911) (1,158) 1,153 (7,138)
Transfer from/(to)
assets classified
as held for sale
or distribution to
the Shareholder - - - - (62) - (62)
Transfers from/(to)
property, plant and
equipment, net (Note
6) 124 609 - - 11,455 1,201 13,389
Transfers from/(to)
other non-current
assets - - - - 80 - 80
Other transfers and
reclassifications 1,318 - - - 3,328 (4,646) -
----------------------------- ---------- ------------ ---------- ------------ ---------- --------- ----------
Net book value at
December 31, 2020 711,045 832,147 315,981 24,825 63,930 74,096 2,022,024
Foreign currency
translation 13,110 5,219 284 642 126 685 20,066
Additions 8,287 2,918 - - 21,495 3,039 35,739
Disposals (3,227) - - - (2,449) (1,932) (7,608)
Amortization charge (43,399) (39,215) - - (20,858) (3,354) (106,826)
Accumulated amortization
and impairment on
disposals 3,196 - - - 2,285 1,930 7,411
(Impairment)/reversal
of impairment, net
(Note 29) (566) - - - (3,602) 5 (4,163)
Transfer from/(to)
assets classified
as held for sale
or distribution to
the Shareholder - - - - 26 - 26
Transfers from/(to)
property, plant and
equipment, net (Note
6) 508 5,123 - - 8,267 11,411 25,309
Transfers from/(to)
exploration and evaluation
assets (Note 8) - 9,665 - - - - 9,665
Transfers from/(to)
other non-current
assets 2,158 - - - 231 - 2,389
Other transfers and
reclassifications 1,045 - - - 5,014 (6,059) -
----------------------------- ---------- ------------ ---------- ------------ ---------- --------- ----------
Net book value at
December 31, 2021 692,157 815,857 316,265 25,467 74,465 79,821 2,004,032
----------------------------- ---------- ------------ ---------- ------------ ---------- --------- ----------
Historical cost 894,480 957,749 431,470 65,371 222,313 158,331 2,729,714
Accumulated amortization
and impairment (202,323) (141,892) (115,205) (39,904) (147,848) (78,510) (725,682)
----------------------------- ---------- ------------ ---------- ------------ ---------- --------- ----------
Net book value at
December 31, 2021 692,157 815,857 316,265 25,467 74,465 79,821 2,004,032
----------------------------- ---------- ------------ ---------- ------------ ---------- --------- ----------
Historical cost 869,540 933,938 432,947 63,722 189,762 148,180 2,638,089
Accumulated amortization
and impairment (158,495) (101,791) (116,966) (38,897) (125,832) (74,084) (616,065)
----------------------------- ---------- ------------ ---------- ------------ ---------- --------- ----------
Net book value at
December 31, 2020 711,045 832,147 315,981 24,825 63,930 74,096 2,022,024
----------------------------- ---------- ------------ ---------- ------------ ---------- --------- ----------
8. Exploration and evaluation assets
In millions of tenge Tangible Intangible Total
--------------------------------------------------------------- --------- ----------- ---------
Net book value at January 1, 2020 340,865 31,029 371,894
Foreign currency translation 16,935 - 16,935
Change in estimate (845) - (845)
Additions 15,208 787 15,995
Impairment/write-off, net of reversal of impairment (Note 29) (32,054) (4,164) (36,218)
Transfers from/(to) property, plant and equipment, net (93) - (93)
Transfer from/(to) inventories, net (274) (1) (275)
Net book value at December 31, 2020 339,742 27,651 367,393
Foreign currency translation 4,822 - 4,822
Change in estimate 15 - 15
Additions 13,069 831 13,900
Disposals (5,842) (5,397) (11,239)
Impairment/write-off, net of reversal of impairment (Note 29) (76,869) (2,214) (79,083)
Depreciation and impairment on disposals 5,842 4,970 10,812
Transfers from/(to) property, plant and equipment, net (17,707) - (17,707)
Transfers from/(to) intangible assets (Note 7) - (9,665) (9,665)
Transfer from/(to) inventories, net (299) - (299)
Net book value at December 31, 2021 262,773 16,176 278,949
--------------------------------------------------------------- --------- ----------- ---------
Historical cost 284,201 19,381 303,582
Accumulated impairment (21,428) (3,205) (24,633)
--------------------------------------------------------------- --------- ----------- ---------
Net book value at December 31, 2021 262,773 16,176 278,949
--------------------------------------------------------------- --------- ----------- ---------
Historical cost 365,000 35,825 400,825
Accumulated impairment (25,258) (8,174) (33,432)
--------------------------------------------------------------- --------- ----------- ---------
Net book value at December 31, 2020 339,742 27,651 367,393
--------------------------------------------------------------- --------- ----------- ---------
As at December 31, 2021 and 2020 the exploration and evaluation
assets are represented by the following projects:
In millions of tenge 2021 2020
---------------------- -------- --------
Kashagan 191,463 186,062
KazTransGas projects 19,567 17,366
Embamunaigas 16,357 33,458
Urikhtau 13,726 38,834
Zhambyl - 59,603
Other 37,836 32,070
278,949 367,393
---------------------- -------- --------
9. Investments in joint ventures and associates
As at December 31 investments in joint ventures and associates
comprised the following:
2021 2020
----------------------- ------------------------
Place of Carrying Percentage Carrying Percentage
In millions of tenge Main activity business amount ownership amount ownership
---------------------- ---------------------- ------------------- ---------- ----------- ----------- -----------
Joint ventures
Oil and gas
exploration
Tengizchevroil LLP and production Kazakhstan 3,105,942 20.00% 2,793,887 20.00%
Construction and
operation
Asia Gas Pipeline LLP of the gas pipeline Kazakhstan 504,807 50.00% 291,086 50.00%
Oil and gas
Mangistau Investments development
B.V. and production Kazakhstan 207,410 50.00% 142,585 50.00%
Beineu-Shymkent Construction and
Pipeline operation
LLP of the gas pipeline Kazakhstan 200,338 50.00% 156,771 50.00%
Processing and sale
of
natural gas and
refined
KazRosGas LLP gas products Kazakhstan 54,317 50.00% 76,702 50.00%
Production and sale
of
Forum Muider B.V. coal Kazakhstan 53,747 50.00% 42,437 50.00%
Oil and gas
Ural Group Limited exploration
BVI and production Kazakhstan 41,453 50.00% 44,585 50.00%
Oil and gas
exploration
JV Kazgermunai LLP and production Kazakhstan 32,289 50.00% 32,840 50.00%
Other 175,289 1 50 , 741
------------------------------------------------------------------- ---------- ----------- ----------- -----------
3,7 31 ,
Total joint ventures 4,375,592 634
------------------------------------------------------------------- ---------- ----------- ----------- -----------
Associates
Mining and processing
of
metal ores,
production
Kazzinc LLP of refined metals Kazakhstan 548,879 29.82% 531,591 29.82%
Caspian Pipeline Transportation of
Consortium liquid
JSC hydrocarbons Kazakhstan/Russia 473,880 20.75% 478,134 20.75%
Exploration,
production,
processing and
export
JV KATCO LLP of uranium Kazakhstan 85,123 49.00% 55,845 49.00%
Exploration,
production
and
processing of oil
PetroKazakhstan Inc. and
("PKI") gas Kazakhstan 84,905 33.00% 78,636 33.00%
Other 112,855 109,836
------------------------------------------------------------------- ---------- ----------- ----------- -----------
Total associates 1,305,642 1,254,042
------------------------------------------------------------------- ---------- ----------- ----------- -----------
4,9 85 ,
5,681,234 676
----------------------------------------------------------------- ---------- ----------- ----------- -----------
9. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES (continued)
The following tables illustrate summarized financial information
of significant joint ventures, based on IFRS financial statements
of these entities for 2021, reflecting equity method accounting
adjustments:
Ural
Asia Gas Mangistau Beineu-Shymkent Forum Group JV
In millions of Tengizchevroil Pipeline Investments Pipeline KazRosGas Muider Limited Kazgermunai
tenge LLP LLP B.V. LLP LLP B.V. BVI LLP
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
Joint ventures
Non-current
assets 21,900,722 1,266,161 480,741 588,673 45,961 165,165 254,152 65,184
Current
assets,
including 1,454,491 551,179 160,802 159,038 80,90 7 28,498 911 54,869
Cash and cash
equivalents 331,602 394,184 101,431 26,064 31,428 6,907 830 49,531
Non-current
liabilities, 608,53
including 6,307,907 4 138,617 304,146 225 53,600 129,822 18,405
Non-current
financial
liabilities 3,886,200 404,571 - 282,759 - 48,235 95,775 -
Current
liabilities,
including 1,517,597 199,192 86,154 81,515 18,009 32,569 2,335 37,070
Current
financial
liabilities 60,529 173,173 - 64,738 - 1,803 - -
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
1,009,61 108,63
Equity 15,529,709 4 416,772 362,050 4 107,494 122,906 64,578
Share of
ownership 20.00% 50.00% 50.00% 50.00% 50.00% 50 . 00% 50.00% 50.00%
Consolidation
adjustments - - (976) 19,313 - - (20,000) -
Carrying
amount
of investment
as at
December 31,
2021 3,105,942 504,807 207,410 200,338 54,317 53,747 41,453 32,289
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
Revenue 6,793,158 857,998 763,148 200,362 196,978 103,081 - 118,071
Depreciation,
depletion
and
amortization (894,739) (81,135) (66,434) (23,996) (221) (8,218) (61) (59,318)
Finance income 2,341 1,082 181 1,894 2,908 3,805 - 743
Finance costs (62,409) (35,232) (9,296) (14,916) - (798) (3,918) (1,752)
Income tax
expenses (946,429) (128,361) (55,667) - (12,467) (6,838) (171) (27,785)
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
Profit/(loss)
for
the year 2,208,327 507,108 160,308 131,067 41,903 22,822 (22,120) 12,21 6
Other
comprehensive
income/(loss) 393,933 765 18 - 4,394 (57) 3,995 1,596
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
Total
comprehensive
income/(loss) 2,602,260 507,873 160,326 131,067 46,297 22,765 (18,125) 13,812
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
Dividends
received 208,397 40,216 15,338 20,700 45,532 72 - 7,441
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
9. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES (continued)
The following tables illustrate summarized financial information
of significant joint ventures, based on IFRS financial statements
of these entities for 2020, reflecting equity method accounting
adjustments:
Ural
Asia Gas Mangistau Beineu-Shymkent Forum Group JV
In millions of Tengizchevroil Pipeline Investments Pipeline KazRosGas Muider Limited Kazgermunai
tenge LLP LLP B.V. LLP LLP B.V. BVI LLP
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
Joint ventures
Non-current
assets 20,221,619 1,333,611 468,069 544,058 44,681 134,249 246,111 101,629
Current
assets,
including 908,846 616,479 89,172 147,802 118,142 34,903 993 24,627
Cash and cash
equivalents 50,588 180,065 5,267 18,027 44,459 9,091 833 19,264
Non-current
liabilities,
including 6,412,967 886,36 2 160,711 351,719 207 57,77 5 115,216 35,090
Non-current
financial
liabilities 4,061,782 692,254 - 335,084 - 52,564 81,291 -
Current
liabilities,
including 748,064 481,556 110,186 76,155 9,212 26,503 2,718 25,486
Current
financial
liabilities 69,558 464,699 21,306 63,101 - 1,637 - -
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
Equity 13,969,434 582,17 2 286,344 263,986 153,404 84,874 129,170 65,680
Share of
ownership 20.00% 50.00% 50.00% 50.00% 50.00% 50 . 00% 50.00% 50.00%
Consolidation
adjustments - - ( 587 ) 24,778 - - (20,000) -
Carrying
amount
of investment
as at
December 31,
2020 2,793,887 291,086 142,585 156,771 76,702 42,437 44,585 32,840
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
Revenue 3,776,155 727,503 488,032 201,524 167,016 100,937 - 101,595
Depreciation,
depletion
and
amortization (700,929) (78,212) (75,609) (18,222) (289) (7,323) (14) (27,084)
Finance income 3,887 7,352 239 - 2,293 500 - 511
Finance costs (58,264) (54,943) (9,555) (14,365) - (3,110) (16,986) (1,598)
Income tax
expenses (371,799) (90,323) (19,663) - (6,628) (5,968) (1,077) (6,200)
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
Profit/(loss)
for
the year 867,380 350,677 33,498 110,010 7,785 23,109 (20,531) 31,245
Other
comprehensive
income /
(loss) 1,216,017 2,964 (1,479) - 16,232 (100) 11,671 4,337
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
Total
comprehensive
income/(loss) 2,083,397 353,641 32,019 110,010 24,017 23,009 (8,860) 35,582
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
Dividends
received - 53,821 32,291 - 15,155 3,006 - 10,372
--------------- --------------- ---------- ------------ ---------------- ---------- --------- --------- ------------
9. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES (continued)
The following tables illustrate summarized financial information
of significant associates, based on IFRS financial statements of
these entities for 2021 and 2020, reflecting equity method
accounting adjustments:
2021 2020
------------------------------------------------------- -------------------------------------------------
Petro-
Kazakhstan
Petro-Kazakhstan
Inc. JV KATCO Inc.
Caspian Caspian
Pipeline Pipeline
Kazzinc Consortium JV KATCO Kazzinc Consortium
In millions of tenge LLP JSC LLP ("PKI") LLP JSC LLP ("PKI")
----------------------- ---------- ----------- ---------- ------------------ ---------- ----------- --------- -------------
Associates
Non-current assets 1,487,330 2,050,452 85,480 255,912 1,732,663 2,082,957 73,426 284,545
Current assets 848,662 229,939 125,413 88,537 491,115 193,677 73,445 67,047
Non-current
liabilities 302,288 32,699 9,87 3 20,905 300,729 32,817 8,768 72,335
Current liabilities 193,195 163,712 10,192 45,717 140,509 134,300 8,291 20,426
190,82
Equity 1,840,509 2,083,980 8 277,827 1,782,540 2,109,517 129,812 258,83 1
Share of ownership 29.82% 20.75% 49.00% 33.00% 29.82% 20.75% 49.00% 33.00%
Goodwill - 41,454 68 - - 40,409 68 -
Unrecognized gain
on transactions with
associates - - (8,451) - - - (7,831) -
Impairment of the
investment - - - (6,778) - - - (6,778)
----------------------- ---------- ----------- ---------- ------------------ ---------- ----------- --------- -------------
Carrying amount
of investment 548,879 473,880 85,123 84,905 531,591 478,134 55,845 78,636
----------------------- ---------- ----------- ---------- ------------------ ---------- ----------- --------- -------------
Revenue 1,484,652 925,320 116,791 113,185 1,243,589 872,851 93,923 83,863
----------------------- ---------- ----------- ---------- ------------------ ---------- ----------- --------- -------------
Profit/(loss) for
the year 224,656 438,091 61,016 24,369 252,431 393,165 52,267 (26,702)
Other comprehensive
income - 60,033 - 3,149 - 180,142 - 13,223
----------------------- ---------- ----------- ---------- ------------------ ---------- ----------- --------- -------------
Total comprehensive
income/(loss) 224,656 498,124 61,016 27,518 252,431 573,307 52,267 (13,479)
----------------------- ---------- ----------- ---------- ------------------ ---------- ----------- --------- -------------
Other - - (620) - - - (538) -
Dividends received 63,274 107,614 - 2,763 53,442 - 30,870 2,609
----------------------- ---------- ----------- ---------- ------------------ ---------- ----------- --------- -------------
All of the above joint ventures and associates are strategic for
the Group's business.
9. INVESTMENTS IN JOINT VENTURES AND ASSOCIATES (continued)
The following tables illustrate aggregate financial information
of individually insignificant joint ventures (the Group's
proportional interest):
In millions of tenge 2021 2020
----------------------------------------------- --------- --------
Carrying amount of investments as at December
31 175, 289 150,741
----------------------------------------------- --------- --------
Net profit for the year 88,049 4 , 760
Other comprehensive loss ( 29 7) ( 357 )
----------------------------------------------- --------- --------
Total comprehensive income/(loss) 87,752 4 , 403
----------------------------------------------- --------- --------
The following tables illustrate aggregate financial information
of individually insignificant associates (the Group's proportional
interest):
In millions of tenge 2021 2020
----------------------------------------------- --------- ---------
Carrying amount of investments as at December 1 12, 8
31 55 109,836
----------------------------------------------- --------- ---------
Net profit for the year 49 , 535 78 , 717
Other comprehensive income/(loss) 569 6 , 130
----------------------------------------------- ---------
Total comprehensive income 50 , 104 84 , 847
----------------------------------------------- --------- ---------
In 2021 dividends received from individually insignificant joint
ventures and associates were equal to 36,100 million tenge (2020:
44,598 million tenge).
The following table summarizes the movements in equity
investments in joint ventures and associates in 2021 and 2020:
In millions of tenge 2021 2020
--------------------------------------------------- ---------- ------------
Balance as at January 1 4,985,676 4,242,871
Share in profit of joint ventures and associates,
net (Note 32) 1,142,082 641,608
(24 6 , 164
Dividends received (547,447) )
Change in dividends receivable (3,339) 5, 815
Adjustment of unrealized income* (6,294) 2,936
Additional contributions without change
in ownership 1,926 17,391
Acquisitions 1,618 213
Disposals (89) (22,273)
Transfers to assets classified as held for
sale or distribution to the Shareholder - 3,709
Foreign currency translation 101,309 349,926
Other comprehensive income, other than foreign
currency translation 2,213 4,828
( 36 , 790
Impairment, net (Note 29 ) (5,921) )
Discount on loans issued 8,495 21,620
Financial guarantees issued 672 -
Other changes in equity of joint ventures
and associates 333 (14)
--------------------------------------------------- ---------- ------------
4,9 85 ,
Balance as at December 31 5,681,234 676
--------------------------------------------------- ---------- ------------
* Adjustment of unrealized income represent unrealized income
from sale of inventory from joint ventures to Group and capitalized
borrowing costs on the loans provided by the Group to joint
ventures.
As at December 31, 2021, the Group's share in unrecognized
losses of joint ventures and associates was equal to 15,581 million
tenge (December 31, 2020: 20,514 million tenge).
10. Loans issued and Finance lease receivables
As at December 31, loans issued and finance lease receivables
comprised the following:
In millions of tenge 2021 2020
--------------------------------------------- ---------- ---------
Loans issued at amortized cost 238 , 186 225,812
Loans issued at fair value through profit
or loss 123,161 138,024
Finance lease receivables 62,003 74,024
--------------------------------------------- ---------- ---------
Total loans and finance lease receivables 423,350 437,860
( 15,624
Less: allowance for expected credit losses (19,234) )
--------------------------------------------- ---------- ---------
Loans issued and finance lease receivables,
net 404,116 422,236
( 55,406
Less: current portion (46,703) )
--------------------------------------------- ---------- ---------
Non-current portion 357 , 413 366,830
--------------------------------------------- ---------- ---------
Movements in the loan allowance for expected credit losses for
the years ended December 31 were as follows:
In millions of tenge 2021 2020
Allowance at January 1 15,624 13,4 88
Charged, net (Note 29) 1,046 2,053
Disposal of subsidiary 2,564 -
Write-off, net - (16)
Foreign exchange difference, net - 99
Allowance at December 31 19,234 15,624
---------------------------------- ------- --------
As at December 31 the components of finance lease receivables
are as follows:
In millions of tenge 2021 2020
Within one year 13,781 16,737
Later than one year, but not later than
five years 36,952 41,466
After five years 45,055 58,838
----------------------------------------- --------- ---------
Lease payments 95,788 117,041
Less: unearned finance income (33,785) (43,017)
----------------------------------------- --------- ---------
Net investment in finance leases 62 , 003 74,024
----------------------------------------- --------- ---------
In millions of tenge 2021 2020
-------------------------------------------- -------- --------
Loans issued in US dollars 308,483 321,687
Loans issued and finance lease receivables
in tenge 94,525 97,215
Loans issued in other foreign currencies 1,108 3,334
-------------------------------------------- -------- --------
404,116 422,236
-------------------------------------------- -------- --------
11. Amounts due from credit institutions
As at December 31 amounts due from credit institutions comprised
the following:
In millions of tenge 2021 2020
-------------------------------------------- ---------- ----------
Bank deposits 694,517 370,845
Loans to credit institutions 83,585 122,217
Less: allowance for expected credit losses (1,440) (3,490)
Amounts due from credit institutions, net 776,662 489,572
Less: current portion (671,859) (354,257)
-------------------------------------------- ----------
Non-current portion 104,803 135,315
-------------------------------------------- ---------- ----------
11. AMOUNTS DUE FROM CREDIT INSTITUTIONS (continued)
In millions of tenge 2021 2020
---------------------------- -------- --------
Rating from +( 1) to -( 3) 340,907 124,409
Rating from +( 1) to ( 2) 103,874 1,608
Rating from -( 3) to -( 3) 271,091 284,997
Rating from +( 1) to -( 3) 60,790 78,558
776,662 489,572
---------------------------- -------- --------
Weighted Weighted
average average
interest interest
In millions of tenge 2021 rate 2020 rate
---------------------------- -------- ---------- -------- ----------
Amounts due from credit
institutions, denominated
in US dollars 646,484 0.35% 308,948 0.47%
Amounts due from credit
institutions, denominated
in tenge 130,177 5.66% 180,623 3.46%
Amounts due from credit
institutions, denominated
in other currencies 1 4% 1 0.70%
776,662 489,572
---------------------------- -------- ---------- -------- ----------
12. Other financial assets
As at December 31 other financial assets comprised the
following:
In millions of tenge 2021 2020
------------------------------------------------- ----------- ----------
Financial assets at fair value through
other comprehensive income, including: 21,935 56,830
Bonds of Kazakhstani financial institutions 11,662 42,331
Treasury bills of the Ministry of Finance
of the Republic of Kazakhstan 8,615 6,492
Treasury notes of foreign governments 904 1,810
Corporate bonds 694 6,135
Equity securities 60 62
1 ,016 ,
Financial assets at amortized cost, including: 884 683,618
Bonds of Kazakhstani financial institutions 343, 307 333,082
Corporate bonds 1 1 4, 685 104,700
Notes of the National Bank of the Republic
of Kazakhstan 96 , 393 62,295
Eurobonds of the Ministry of Finance of
the Republic of Kazakhstan 1,8 69 1,834
Other financial assets at amortized cost,
including:
Reservation of cash for repayment of borrowings
(Note 18) 259,459 -
Restricted cash 1 83 , 044 170,135
Other accounts receivable 122 , 136 114,510
Amounts due from employees 1 0 ,447 12,441
Dividends receivable 6 , 685 3 , 427
Other 11 , 507 10,730
(1 32 ,
Less: allowance for expected credit losses 648 ) (129,536)
Financial assets at fair value through
profit or loss, including: 135 , 908 62,361
Equity securities 106 , 197 56,955
Guaranteed returns from a shareholder of
a joint venture 11,750 -
Forward and futures contracts 10,965 97
Options 3 , 18 8 1,048
Corporate bonds 2 , 993 3,508
Bonds of Kazakhstani financial institutions 815 753
1,174 ,
Total financial assets 727 802,809
( 506 ,
Less: current portion 895 ) (188,427)
------------------------------------------------- ----------- ----------
Non-current portion 6 67 , 832 614,382
------------------------------------------------- ----------- ----------
12. OTHER FINANCIAL ASSETS (continued)
In June and November 2021, the Group made reservation of cash in
total amount of 681 million US dollars (equivalent to 292,258
million tenge) for repayment of the loan from Eximbank, out of
which 77 million US dollars (equivalent to 32,799 million tenge)
(Note 18) was repaid in July 2021. As at December 31, 2021 balance
of cash reservation for repayment of borrowings due to Eximbank
equaled 604 million US dollars (equivalent to 259,459 million
tenge), including accrued interest.
As at December 31 other financial assets by currency, except for
derivatives, comprised:
In millions of tenge 2021 2020
------------------------------------------------- ---------- --------
Financial assets, denominated in tenge 742 , 117 618,107
Financial assets, denominated in US dollars 387 , 042 149,242
Financial assets, denominated in euro 2 4 , 804 29,363
Financial assets, denominated in rubles 1 2 14
Financial assets, denominated in other currency 6 , 599 4,938
1,160 ,
574 801,664
------------------------------------------------- ---------- --------
13. Other non-current assets
As at December 31 other non-current assets comprised the
following:
In millions of tenge 2021 2020
-------------------------------------- --------- ----------
Advances paid for non-current assets 361,269 217,889
Long-term VAT receivable 180,022 194,145
Long-term inventories 54,655 67,306
Prepaid expenses 19,300 10,521
Other 21,598 24,166
Less: impairment allowance (58,654) (66,120)
578,190 4 4 7,907
-------------------------------------- --------- ----------
14. Inventories
As at December 31 inventories comprised the following:
In millions of tenge 2021 2020
---------------------------------------------- -------- --------
Uranium products (at lower of cost and net
realizable value) 221,613 183,360
Oil refined products for sale (at lower
of cost and net realizable value) 89,725 56,712
Production materials and supplies (at lower
of cost and net realizable value) 65,354 65,869
Crude oil (at cost) 62,326 34,151
Work in progress (at lower of cost and net
realizable value) 57,477 45,104
Gas processed products (at cost) 34,538 32,841
Oil and gas industry materials and supplies
(at cost) 34,437 38,196
Goods for resale (at lower of cost and net
realizable value) 34,193 60,180
Fuel (at lower of cost and net realizable
value) 24,089 20,489
Railway industry materials and supplies
(at cost) 17,300 15,010
Aircraft spare parts (at cost) 14,744 13,308
Electric transmission equipment spare parts
(at cost) 5,499 4,845
Uranium industry materials and supplies
(at lower of cost and net realizable value) 3,828 1,841
Telecommunication equipment spare parts
(at cost) 2,069 1,805
Other materials and supplies (at lower of
cost and net realizable value) 61,705 52,652
728,897 626,363
---------------------------------------------- -------- --------
Uranium products and goods for resale as at December 31, 2021
and December 31, 2020 include inventory received under inventory
loans in the amount of 8,597 million tenge, which corresponds to
the estimated fair value of consideration transferred on the
transaction date. A liability corresponding to the obligation to
return inventory was recognised in the same amount in other
liabilities (Notes 23, 24) and further revalued in accordance with
the changes of market prices for inventory.
15. Trade accounts receivable and other current assets
As at December 31 trade accounts receivable comprised the
following:
In millions of tenge 2021 2020
-------------------------------------------- ---------- ----------
Trade accounts receivable 1,074,650 714, 3 28
( 49,758 ( 47,221
Less: allowance for expected credit losses ) )
-------------------------------------------- ---------- ----------
1,024,892 66 7 ,107
-------------------------------------------- ---------- ----------
As at December 31 other current assets comprised the
following:
In millions of tenge 2021 2020
------------------------------------- --------- -----------
Advances paid and deferred expenses 114,163 89,778
Other prepaid taxes 86,740 84,595
Other non-financial current assets 21,930 24,79 8
(1 2,847
Less: impairment allowance ) (14 , 402)
------------------------------------- --------- -----------
209,986 184 , 7 69
------------------------------------- --------- -----------
At December 31, 2021 the Group's receivables of 131,120 million
tenge were pledged under certain Group borrowings (December 31,
2020: 156,111 million tenge).
Movements in the allowance for expected credit losses for trade
accounts receivable for the years ended December 31 were as
follows:
In millions of tenge 2021 2020
Allowance at January 1 47,221 46,076
Charged, net 5,873 10,213
Foreign exchange difference, net (594) 3,596
Change in estimate (4) 3
Transfers from/(to) assets classified as
held for sale or
distribution to the Shareholder, net (1,157) (32)
Write-off, net (1,581) (12,635)
Allowance at December 31 49,758 47,221
------------------------------------------ -------- ---------
Movements in the impairment allowance for other current assets
for the years ended December 31 were as follows:
In millions of tenge 2021 2020
Allowance at January 1 14,402 19,379
Charged, net 1,379 (3,071)
Foreign exchange difference, net 3 16
Change in estimate (29) (137)
Transfers to assets classified as held for
sale or
distribution to the Shareholder - (5)
Write-off, net (2,908) (1,780)
Allowance at December 31 12,847 14,402
-------------------------------------------- -------- --------
16. Cash and cash equivalents
As at December 31 cash and cash equivalents comprised the
following:
In millions of tenge 2021 2020
------------------------------------------------ ---------- -----------
Bank deposits - US dollars 999,449 740,940
Bank deposits - tenge 661,752 405,360
Bank deposits - other currency 32,941 55,743
Current accounts with banks - US dollars 690,971 701,048
Current accounts with banks - tenge 221,834 24 8 , 087
Current accounts with banks - other urrency 34,709 44,149
Reverse repurchase agreements and other
treasury securities with contractual maturity
of three months or less 141,035 15,421
Balances on brokerage accounts payable on
demand 19,193 -
Cash on hand 7,403 9,057
Cash in transit 2,290 8,185
Less: allowance for expected credit losses (847) (321)
------------------------------------------------ ---------- -----------
2,810,730 2,227,669
------------------------------------------------ ---------- -----------
Within the framework of diversification, the Group continues to
place part of its free liquidity in money market instruments, such
as automatic repurchase agreements secured by government
securities.
Short-term bank deposits are placed for varying periods of
between 1 (one) day and 3 (three) months, depending on immediate
cash needs of the Group. As at December 31, 2021 the weighted
average interest rates for short-term bank deposits were 8.34% in
tenge, 0.26% in US dollars, 5.07% in other currency; and current
accounts were 0.7% in tenge, 0.26% in USD dollars, 0.46% in other
currency, respectively (December 31, 2020: the weighted average
interest rates for short-term bank deposits were 7.7% in tenge,
0.39% in US dollars, 1.13% in other currency; and current accounts
were 0.1% in tenge, 0.07% in US dollars, 0.35% in other currency,
respectively).
17. Equity
17.1 Share capital
During 2021 and 2020 the Fund issued common shares, which were
paid as follows:
Number of Par value Share capital
shares authorized per share, in millions
Payment for shares and issued in tenge of tenge
--------------------------- ------------------- ------------ --------------
3,481,9 57 5, 229 ,
As of December 31, 2019 , 769 112
Cash contributions 764 34,075,462 2 6 , 000
21,848,312;
Property contributions 1,875 465,216 3,545
--------------------------- ------------------- ------------ --------------
3,481,9 60
As of December 31, 2020 , 408 5,258,657
9 , 923 ,
Cash contributions 1,000 089 9 , 923
3,481,9 5,2 6 8,
As of December 31, 20 2 1 6 1, 408 580
--------------------------- ------------------- ------------ --------------
As at December 31, 2021 3,481,961,408 shares of the Fund were
fully paid (December 31, 2020: 3,481,960,408 shares).
Cash contributions
In August 2021, the Shareholder made cash contributions to the
Fund's share capital of 9,923 million tenge. These amounts were
aimed to finance the project " Construction of Infrastructure
facilities on the territory of SEZ "National Industrial
Petrochemical Technopark".
17.2 Dividends
Dividends attributable to equity holder of the Parent
On November 30, 2021, the Fund declared and paid dividends to
the Shareholder of 88,337 million tenge based on financial results
of 2020 in accordance with the Resolution of the Government dated
November 21, 2021.
On August 26, 2020, the Fund declared and paid dividends to the
Shareholder of 120,000 million tenge based on financial results of
2019 in accordance with the Resolution of the Government dated
August 21, 2020.
17. EQUITY (continued)
17.2 Dividends (continued)
Dividends attributable to non-controlling interest
During 2021 the Group declared dividends of 92,511 million tenge
to the holders of non--controlling interest in National Company
"KazMunayGas" JSC ("NC KMG") group, Kazakhtelecom JSC ("KTC"),
National Atomic Company "Kazatomprom" JSC ("NAC KAP") and
Kazakhstan Electricity Grid Operating Company JSC ("KEGOC"). Total
amount of dividends paid to the holders of non--controlling
interest during 2021 equaled 92,076 million tenge.
17.3 Other transactions with the Shareholder
In September 2021, the Group represented by its subsidiaries
Passenger Transportation JSC and Tulpar Wagon Building Plant LLP
entered into a three-side purchase and finance lease arrangements
with Industrial Development Fund JSC, which is under common control
of Shareholder, for renewal of passenger waggon fleet for 13,125
million tenge. Interest is repaid annually at 1.5%. The principal
amount is subject to repayment in annual instalments until it is
fully repaid in 2041. The grace period on repayment of principal
amount is 6 years.
The borrowings were obtained at the rates below market and the
fair value of the borrowings was calculated based on market
interest rate of 10.78%. The Group recognized the adjustment to
fair value of 7,857 million tenge with the deferred tax effect of
1,571 million tenge as other transaction with the Shareholder (Note
18).
17.4 Other distributions to the Shareholder
Social projects financing
During 2021 in accordance with the Shareholder's resolution, the
Group provided funding for procurement of vaccines against COVID-19
for the total amount of 13,410 million tenge and recognised the
funding as other distributions to the Shareholder in the
consolidated statement of changes in equity. As of December 31,
2021 these liabilities were fully paid off.
Also, during 2021 in accordance with Shareholder's resolutions,
the Fund recognised liabilities for financing of various social
projects for the amount of 25,983 million tenge as other
distributions to the Shareholder in the consolidated statement of
changes in equity. As of December 31, 2021, the Group made
repayment of liabilities of 29,878 million tenge.
Financing construction of social facilities
During 2021 in accordance with the Shareholder's resolutions,
the Fund recognized liabilities for financing of the construction
of the Center of Kazakhstan Gymnastics Federation in Nur-Sultan
city and the construction of the park for the family rest in
Nur-Sultan city in the amount of 18,000 million tenge and 8,500
million tenge, respectively.
In 2020 in accordance with the Shareholder resolution, the Fund
recognized liabilities for financing of the construction of social
medical facilities of 50,004 million tenge as other distributions
to the Shareholder in the consolidated statement of changes in
equity. As of December 31, 2021, the Group made repayment of this
liability of 23,750 million tenge.
17.5 Transfer of assets to the Shareholder
Transfer of 100% share in Financial Settlement Center of
Renewable Energy LLP
In December 2021, in accordance with the Resolution of the
Government of the Republic of Kazakhstan dated November 30, 2021,
the Group transferred shares of Financial Settlement Center of
Renewable Energy LLP to the State property and privatization
committee of the Ministry of Finance of Republic of Kazakhstan with
the net assets of 37,122 million tenge (Note 5). This transaction
was recognized as transfer of assets to the Shareholder in
consolidated statement of changes in equity.
Transfer of shares of KOREM JSC
In April 2021, in accordance with the Resolution of the
Government of the Republic of Kazakhstan dated March 17, 2021 the
Group transferred shares of KOREM JSC to the State property and
privatization committee of the Ministry of Finance of the Republic
of Kazakhstan with net assets of 312 million tenge (Note 5). This
transaction was recognized as transfer of assets to the Shareholder
in consolidated statement of changes in equity.
17. EQUITY (continued)
17.6 Discount on loans from the Government
During 2021, the Group made partial early repayment of bonds
with the nominal amount of 558 million tenge purchased by the
National Bank of Republic of Kazakhstan. Due to the early
redemption of obligations, the Group recognized the decrease in
discount on loans from the Government of 278 million tenge in
consolidated statement of changes in equity (Note 19).
17.7 Change in ownership interests of subsidiaries - disposal of
interest that does not result in the loss of control
Disposal of 49% interest in PE Ortalyk LLP
The Group and China General Nuclear Power Group, CGNPC, agreed
to build a plant for the production of fuel assemblies, Ulba-FA LLP
located on the territory of Ulba Metallurgical Plant JSC. CGNPC
guaranteed the purchase of Ulba-FA LLP products, and in return the
Group agreed to sell a 49% interest in DP Ortalyk LLP to CGNPC or
its affiliate.
In April 2021 the parties signed a sale and purchase agreement,
where the selling price of a 49% stake in DP Ortalyk LLP was
determined in the amount of 435 million US dollars (equivalent to
186,437 million tenge) based on a fair value assessment determined
by an independent appraiser.
On July 22, 2021 the sale of the interest in DP Ortalyk LLP was
completed after obtaining all state permits and fulfilling all the
preliminary conditions of the sale and purchase agreement. The
re-registration has been completed and CGNM UK Limited (a
subsidiary of CGNPC) became the owner of a 49% interest in DP
Ortalyk LLP. The Group retains a 51% ownership interest. The
management of the Group has determined that the Group retains
control over DP Ortalyk LLP, because the Group has significant
rights to manage the enterprise's production activities and
influence the profits from them (Note 4).
In millions of tenge
------------------------------------------------------ -----------
Selling price at the exchange rate as of April 22,
2021 186,437
Less: foreign exchange loss (579)
------------------------------------------------------ -----------
Consideration received 185,858
------------------------------------------------------ -----------
Net assets of the subsidiary at the date of disposal
of the interest 55,258
------------------------------------------------------ -----------
Non-controlling interest, 49% 20,389
------------------------------------------------------ -----------
Selling price at the exchange rate as of April 22,
2021 186,437
Less: non-controlling interest (20,389)
Less: corporate income tax (33,466)
------------------------------------------------------ -----------
Increase in equity attributable to equity holder of
the Parent 1 32 , 582
------------------------------------------------------ -----------
Mutual cooperation between the Group and CGNM and its related
entities involved (CGNM Group) is governed by commercial agreement
that contains put and call options.
Call option grants the Group the right to demand CGNM Group to
sell their interest in DP Ortalyk LLP and Ulba--FA LLP after
occurrence of any of the following events: (1) there is a deadlock
situation for a decision made by the Group and CGNM Group as
participants of DP Ortalyk LLP and Ulba-FA LLP, (2) CGNM Group
ceases to own its interest in Ulba-FA LLP, (3) CGNM Group submits a
notice of liquidation, (4) CGNM Group causes a material breach of
commercial terms of Ulba-FA LLP that has not been addressed, (5)
Ulba-FA LLP does not complete any of its planned activities on the
specified date because of unfulfilled liabilities by the CGNM
Group, including shipment of fuel tablets within 24 months after
the first order placed. CGNM Group has 60 days to eliminate an
event occurred before the option is exercised. Call option is
exercised at fair value of shares as of the date the notice of
option exercise.
17. EQUITY (continued)
17.7 Change in ownership interests of subsidiaries - disposal of
interest that does not result in the loss of control
(continued)
Disposal of 49% interest in PE Ortalyk LLP (continued)
Put option grants the CGNM Group the right to demand the Group
to buy their interest in DP Ortalyk LLP and Ulba--FA LLP after
occurrence of any of the following events: (1) there is a deadlock
situation for a decision made by the Group and CGNM Group as
participants of DP Ortalyk LLP and Ulba-FA LLP, (2) CGNM Group
ceases to own its interest in DP Ortalyk LLP, (3) the Group submits
a notice of liquidation, (4) the Group causes a material breach of
commercial terms of Ulba-FA LLP that has not been addressed, (5)
Ulba-FA LLP does not complete any of its planned activities on the
specified date because of unfulfilled liabilities by the Group,
including shipment of fuel tablets within 24 months after the first
order placed. The Group has 60 days to eliminate an event occurred
before the option is exercised. Put option is exercised at fair
value of shares as of the date the notice of option exercise. With
respect of valuation of derivative instruments relating to above
mentioned put and calls options the Group determined that such
value is immaterial as the exercise price is set at the fair value
of the shares.
The Group considered the impact of above mentioned call and put
options on the financial statements, in particular the Group
considered whether the existence of put option requires recognition
of financial liabilities at the amount equal to net present value
of the redemption amount pursuant to requirement of IAS 32.
Consequently, as at the date of transaction and as at September 30,
2021 the Group has recognised a liability in the amount of 185,210
million tenge in accordance with the terms of the sale and purchase
agreement of a 49% stake in DP Ortalyk LLP, which provides the
right to CGNM to request the Group to buy back that entity's
ownership interest in DP Ortalyk LLP at fair value on the date of
purchase if DP Ortalyk LLP does not receive a new subsoil use
contract on Zhalpak field by December 31, 2021, the Group assessed
that obtaining that subsoil use contract was outside of control of
the Group. The subsoil use contract was received on December 14,
2021 and then the liability was derecognised in correspondence with
equity amount. There was no material change to its fair value
between initial recognition date and extinguishment date.
As of December 31, 2021 the Group has not recognised financial
liability to purchase shares in DP Ortalyk LLP as required by IAS
32 because management believes that other conditions requiring
purchase of shares listed above are under the Group's control, i.e.
the Group does not have unavoidable obligation to pay cash.
Disposal of 24% of shares of Kcell JSC
On September 30, 2021, the Group, represented by its subsidiary
KTC, sold 24% of shares of Kcell JSC through open trading on
Kazakhstan Stock Exchange (KASE). As a result of disposal of
shares, the Group recognized proceeds of 55,280 million tenge,
non-controlling interest increased by 14,885 million tenge, and the
difference of 40,395 million tenge was recognized as an increase in
retained earnings.
17.8 Non-controlling interest
The following tables illustrate information of subsidiaries in
which there is significant non-controlling interests as at December
31:
Non-controlling interest
----------------------------------------------
2021 2020
--------------------- ---------------------- ----------------------
Carrying Carrying
Share amount Share amount
--------------------- --------- ----------- --------- -----------
NC KazMunayGas JSC 9.58% 700,873 9.58% 762,616
NAC Kazatomprom JSC 25.00% 644,719 25.00% 535,302
Kazakhtelecom JSC 47.97% 344,297 47.97% 267,297
10.00% - 10.00% -
KEGOC JSC 1 27,251 1 27,567
Air Astana JSC 49.00% 13,536 49.00% 3,796
Other 186,783 76,273
1,917,459 1,672,851
--------------------- --------- ----------- --------- -----------
All significant subsidiaries with non-controlling interest are
registered in Kazakhstan.
17. EQUITY (continued)
17.8 Non-controlling interest (continued)
The following tables illustrate summarized financial information
of subsidiaries, in which there are significant non-controlling
interests as at December 31, 2021 and for the year then ended:
NC KazMunay-Gas Kazatomprom Kazakhtelecom Air Astana
In millions of tenge JSC NAC JSC JSC KEGOC JSC JSC
-------------------------------------------- ---------------- ------------ -------------- ----------- -----------
Summarized statement of financial position
10 , 545 1,1 79 ,
Non-current assets , 725 748 92 7 , 854 4 39 , 045 3 30 , 035
3 , 106
Current assets , 536 771 , 756 306 , 731 73 , 397 1 45 , 892
4, 121 ,
Non-current liabilities 296 2 55 , 581 403 ,4 93 1 94 , 250 2 90 , 765
1,3 72 ,
Current liabilities 284 1 58 , 822 1 86 , 915 45 ,68 4 15 7 , 538
-------------------------------------------- ---------------- ------------ -------------- ----------- -----------
1, 537 ,
Total equity 8, 158 ,681 101 644 , 177 27 2 , 508 2 7, 624
-------------------------------------------- ---------------- ------------ -------------- ----------- -----------
Attributable to: 7, 457 ,
Equity holder of the Parent 808 8 92 , 382 2 99 , 880 245, 257 14 , 088
Non-controlling interest 700 , 873 644 , 719 344 ,297 27, 251 13,536
-------------------------------------------- ---------------- ------------ -------------- ----------- -----------
Summarized statement of comprehensive
income
6,546 ,
Revenue 903 691 , 011 581 , 495 186 , 443 321 , 139
1 ,197 ,
Profit for the year 340 22 0 , 026 97 , 444 75 , 494 15 , 486
Other comprehensive income/(loss) 130 , 652 268 (6,304) - 4 , 390
-------------------------------------------- ---------------- ------------ -------------- ----------- -----------
Total comprehensive income/(loss) for 1,327 ,
the year, net of tax 992 22 0 , 294 91 , 140 75 , 494 19, 876
-------------------------------------------- ---------------- ------------ -------------- ----------- -----------
Attributable to: 1,344 ,
Equity holder of the Parent 408 1 41 , 043 84 , 456 75 , 494 19 , 876
(1 6 , 416
Non-controlling interest ) 79 , 251 6 , 684 - -
-------------------------------------------- ---------------- ------------ -------------- ----------- -----------
Dividends declared to non-controlling
interest (10 , 980) (63 , 668) (13 , 711) ( 4, 152) -
-------------------------------------------- ---------------- ------------ -------------- ----------- -----------
Summarised cash flow information
Operating activity 618 , 090 118 , 729 237 , 180 83 , 869 96 , 954
( 528 , ( 90 , 106 (6 2 , 321
Investing activity 287 ) (71 , 241) ) ) (5 , 294)
(2 82 , (1, 843 ( 26 , 591 (3 1 , 346
Financing activity 533 ) ) ) ) (80 , 399)
Net (decrease)/increase in cash and cash ( 192 ,
equivalents 730 ) 45 , 645 120 , 483 (9,798) 1 1 , 261
-------------------------------------------- ---------------- ------------ -------------- ----------- -----------
17. EQUITY (continued)
17.8 Non-controlling interest (continued)
The following tables illustrate summarized financial information
of subsidiaries, in which there are significant non-controlling
interests as at December 31, 2020 and for the year then ended:
NC KazMunay-Gas Kazakhtelecom Kazatomprom Air Astana
In millions of tenge JSC JSC NAC JSC KEGOC JSC JSC
-------------------------------------------- ---------------- -------------- ------------ ---------- -----------
Summarized statement of financial position
Non-current assets 12,176,863 929,390 1,146,991 411,590 316,346
Current assets 2,476,425 186,036 542,289 116,820 125,253
Non-current liabilities 4,683,232 427,409 237,915 183,055 283,029
Current liabilities 1,333,375 169,477 111,572 69,689 150,823
-------------------------------------------- ---------------- -------------- ------------ ---------- -----------
Total equity 8,636,681 518,540 1,339,793 275,666 7,747
-------------------------------------------- ---------------- -------------- ------------ ---------- -----------
Attributable to:
Equity holder of the Parent 7,874,065 251,243 804,491 248,099 3,951
Non-controlling interest 762,616 267,297 535,302 27,567 3,796
-------------------------------------------- ---------------- -------------- ------------ ---------- -----------
Summarized statement of comprehensive
income
Revenue 4,556 , 037 520 , 917 587 , 457 350 , 660 157 , 224
Profit/(loss) for the year 171,896 65,308 221,368 68,531 (38,673)
Other comprehensive income 403,662 602 42 - 6,944
-------------------------------------------- ---------------- -------------- ------------ ---------- -----------
Total comprehensive income/(loss) for
the year, net of tax 575,558 65,910 221,410 68,531 (31,729)
-------------------------------------------- ---------------- -------------- ------------ ---------- -----------
Attributable to:
Equity holder of the Parent 677,743 64,140 183,580 68,531 (31,729)
Non-controlling interest (102,185) 1,770 37,830 - -
-------------------------------------------- ---------------- -------------- ------------ ---------- -----------
Dividends declared to non-controlling ( 12,682 ( 43,423
interest ) ( 6,315 ) ) ( 3,275 ) -
-------------------------------------------- ---------------- -------------- ------------ ---------- -----------
Summarised cash flow information
Operating activity 311,761 170,971 161,593 96,702 (11,236)
Investing activity (70,841) (119,485) 48,759 (65,795) 2,363
Financing activity (245,226) (32,109) (201,415) (30,690) 20,992
Net (decrease)/increase in cash and cash
equivalents (4,306) 19,377 8,937 217 12,119
-------------------------------------------- ---------------- -------------- ------------ ---------- -----------
17. EQUITY (continued)
17.9 Currency translation reserve
The currency translation reserve is used to record exchange
differences arising from the translation of financial statements of
the subsidiaries, whose functional currency is not tenge and whose
financial statements are included in the consolidated financial
statements. In 2021 foreign translation difference amounted to
245,256 million tenge (2020: 860,588 million tenge).
Certain borrowings of the Group denominated in US dollars were
designated as hedge instrument for the net investment in the
foreign operations. As at December 31, 2021 unrealized foreign
currency loss of 93,367 million tenge resulting from translation of
these borrowings were transferred to currency translation reserve
recognized in other comprehensive income (2020: loss of 344,510
million tenge).
17.10 Hedge reserve
National Company "Kazakhstan Temir Zholy" JSC ("NC KTZh")
On August 7, 2015, the Group hedged cash flows to reduce the
risk of changes in tenge equivalent revenue denominated in Swiss
Francs. The principal from Eurobonds issued on June 20, 2014 on the
Swiss stock exchange and maturing on June 20, 2022 is used as
hedging instrument, which is separately identifiable and reliably
estimated. A highly probable revenue stream forecast relating to
transit transportation in Swiss Francs, in particular, first sales
to be received in the period from January 1 to June 20, 2022, is
the hedged item in this hedging relationship.
For the year ended December 31, 2021, the effective portion of
823 million tenge was recorded in the hedging reserve in other
comprehensive income as net hedging instrument profit (2020: 15,220
million tenge as a net loss).
Air Astana JSC
In 2015 Air Astana entered into a cash flow hedge with finance
lease obligations denominated in US dollars, to reduce the risk of
changes in sales revenue expressed in US dollars. In connection
with the transition of the functional currency to US dollar, this
hedge ceased to be economically effective from December 31,
2017.
As a result of the change, the hedge relationship has been
discontinued so that starting from January 1, 2018 no further
foreign currency translation gains or losses are transferred from
profit or loss to hedge reserve, and the hedge reserve recognized
in equity as at December 31, 2021 shall remain in equity until the
forecasted revenue cash flows are received.
During 2021 amount reclassified from the hedging reserve to
foreign exchange loss from inception of the hedge was 5,010 million
tenge before tax of 1,002 million tenge (2020: 4,819 million tenge
before tax of 964 million tenge). Hedge income attributable to
non-controlling interest comprised 2,455 million tenge (2020: 2,361
million tenge).
National Company "KazMunayGas" JSC ("NC KMG")
The Group buys crude oil from the market, refines it and later
sells the finished products (e.g.: gasoline, diesel, jet fuel
etc.). Throughout a given period, the volatility associated with
the oil market, both in crudes and in finished products, is
transmitted to the Group's refinery margin (difference between the
purchase price of crude oil and the selling price of finished
products). To reduce this volatility, the Group hedges the margin
with a swap on a hedged basket as relevant for the period.
For the year ended December 31, 2021, the effective part of
10,055 million tenge was recorded in the cash flow hedging reserve
through other comprehensive income as net fair value gain on cash
flow hedging instruments (for the year ended December 31, 2020: 24
million tenge as net fair value loss on cash flow hedging
instruments).
17.11 Other capital reserves
Other capital reserves include mainly remuneration of employees
for the services rendered in the form of share-based payments with
equity instruments of a subsidiary in which they are employed. The
cost of equity-settled remunerations is recognized, together with a
corresponding increase in other capital reserves, over the period
in which performance and/or service conditions are fulfilled,
ending on the date on which the relevant employees become fully
entitled to the award.
17. EQUITY (continued)
17.12 Book value per share
In accordance with the decision of the Exchange Board of
Kazakhstan Stock Exchange JSC ("KASE") dated October 4, 2010
financial statements shall disclose book value per share (common
and preferred) as of the reporting date, calculated in accordance
with the KASE rules.
In millions of tenge 2021 2020
------------------------------------------- ------------- --------------
30 , 309
Total assets , 758 27,482,846
(2,0 04
Less: intangible assets ,0 32 ) (2,022,024)
(1 3 , 136
Less: total liabilities , 666 ) (12,331,231)
------------------------------------------- ------------- --------------
1 5 , 169
Net assets for common shares , 060 13,129,591
------------------------------------------- ------------- --------------
3,481,961,40 3,481,960,40
Number of common shares as at December 31 8 8
Book value per common share, tenge 4 , 356 3,771
------------------------------------------- ------------- --------------
Earnings per share
Weighted average number of common shares
for basic and 3,481,9
diluted earnings per share 60 , 762 3,481,958,351
Basic and diluted share in net profit for
the period 54 8 . 07 167.30
------------------------------------------- ------------- --------------
18. Borrowings
As at December 31 borrowings, including interest payable,
comprised the following:
Weighted Weighted
average average
interest interest
In millions of tenge 2021 rate 2020 rate
------------------------ ---------- ---------- ---------- ----------
Fixed interest rate
borrowings 6,599,170 6,026,196
Loans received 1,804,252 13 . 41% 1,529,212 13 . 41%
Debt securities issued 4,794,918 8 . 56% 4,496,984 8 . 45%
Floating interest
rate borrowings 1,263,522 1,433,004
Loans received 1,159,936 10 . 79% 1,330,210 8 . 22%
Debt securities issued 103,586 9 . 79% 102,794 8 . 42%
------------------------ ---------- ---------- ---------- ----------
7,862,692 7,459,200
Less: amounts due
for settlement within
12 months (954,209) (850,210)
------------------------ ---------- ---------- ---------- ----------
Amounts due for
settlement
after 12 months 6,908,483 6,608,990
------------------------ ---------- ---------- ---------- ----------
7,862,692 7,459,200
------------------------ ---------- ---------- ---------- ----------
In millions of tenge 2021 2020
--------------------------------------- ---------- -----------
US dollar-denominated borrowings 5,037,496 4,908,083
Tenge-denominated borrowings 1,896,980 1,893,815
Other currency-denominated borrowings 928,216 657,30 2
--------------------------------------- ---------- -----------
7,862,692 7,459, 200
--------------------------------------- ---------- -----------
18. BORROWINGS (continued)
As at December 31, the bonds comprised:
In millions Issuance Redemption December December
of tenge amount date Interest 31, 2021 31, 2020
----------------- -------------------- ----------- ---------- ---------- ----------
Bonds
Bonds LSE 1.5 billion 6.3 75
2018 USD 204 8 % 639,046 631,832
Bonds LSE 1.25 billion 5.3 75
2018 USD 2030 % 540,156 530,776
Bonds LSE 1.25 billion
2017 USD 2047 5.75% 522,827 516,505
Bonds LSE
2017 1 billion USD 2027 4.75% 428,552 419,390
Bonds LSE 1,100 million
201 4 USD 20 42 6.95% 396,207 386,652
Bonds LSE 750 million
2020 USD 2033 3.50% 325,735 317,474
Bonds KASE 0.3 billion
2019 KZT 2034 11.50% 308,433 308,433
Bonds ISE 750 million 4.3 75
2017 USD 2027 % 307,808 299,934
Bonds LSE 500 million
2018 USD 2025 4.75% 216,760 212,117
Bonds LSE 500 million
2021 USD 2026 2% 213,291 -
Bonds KASE 129 billion
2020 tenge 2023 10.90% 100,041 100,041
Bonds SIX
Swiss Exchange 185 million
2014 Swiss Francs 2022 3.64% 89,208 90,036
Bonds MOEX 15 billion Russian
2017 roubles 2022 8.75% 86,832 84,563
Bonds KASE
2019 80 billion KZT 2026 11.86% 80,226 80,208
Bonds SIX
Swiss Exchange 170 million
2018 Swiss Francs 2023 3.25% 79,713 80,016
Bonds AIX 100 billion
2018 KZT 2024 11.84% 77,875 77,875
Bonds KASE
2018 75 billion KZT 2024 9.25% 76,831 76,831
Inflation
Bonds KASE rate +
2016 50 billion KZT 2026 2.52% 53,376 52,763
Other - - 355,587 334,332
----------------- -------------------- ----------- ---------- ---------- ----------
Total 4,898,504 4,599,778
--------------------------------------- ----------- ---------- ---------- ----------
Debt securities issued
In October 2021 the Group issued Eurobonds for the total amount
of 500 million US dollars on London Stock Exchange (LSE)
(equivalent to 211,271 million tenge at the exchange rate as of
date of transaction) with an annual coupon rate of 2% and maturity
in 2026.
Loans received
In 2021 the Group received a long-term loan from VTB Bank (PJSC)
for 38,169 million Russian roubles (equivalent to 229,015 million
tenge) at the rate of key rate of Central Bank of Russia + 2.25%
per annum and maturity of 6 years for the full early repayment of
the loan due to Eximbank in 2022.
During 2021, the Group received borrowed funds in the amount of
529 million US dollars (equivalent to 224,731 million tenge) under
an open credit line with the State Development Bank of China with
interest rate of 5.8% per annum and maturity until 2037. The
principal will be repaid starting from 2022. Interest is paid in
semi-annual installments.
In December 2021, the Group, to repay a loan from Moscow Credit
Bank, within the framework of the credit agreement with Bank VTB
PJSC, borrowed 19,400 million Russian Roubles (equivalent to
112,714 million tenge). Loan interest is repaid quarterly at the
"key rate of the Russian Central Bank + 2.75%". Principal is due to
be repaid in a lump sum in December 2024.
In 2021 the Group partially repaid 105 million US dollars
(equivalent to 44,734 million tenge) including accrued interest,
and received a short-term loan from Halyk bank under revolving
credit facility of 100 million US dollars (equivalent to 42,813
million tenge) with 5% interest rate for full early repayment of
the loan from Eximbank in 2022 and to finance working capital.
In 2021 the Group received a long-term loan from Halyk bank in
the total amount of 109,855 million tenge with 11% interest rate
and maturity of 4 years to refinance its existing loans from Japan
Bank for International Cooperation (JBIC) and Development bank of
Kazakhstan JSC (DBK). The loan from Halyk bank was partially repaid
for 22,827 million tenge, including accrued interest.
18. BORROWINGS (continued)
Loans received (continued)
During 2021 the Group made partial repayment of the loan from
Eximbank for 79 million US dollars (equivalent to 33,039 million
tenge), including accrued interest. Moreover, in June and November
2021, the Group made reservation of cash in total amount of 681
million US dollars (equivalent to 292,258 million tenge) for
repayment of the loan from Eximbank, out of which 77 million US
dollars (equivalent to 32,799 million tenge as at the payment date)
was repaid in July 2021 and 604 million US dollars (equivalent to
259,459 million tenge as at the reporting date), including accrued
interest, was repaid in January 2022 (Note 12).
In 2021 the Group made full early repayment of the loan from
JBIC for 155 million US dollars (equivalent to 67,392 million
tenge), including accrued interest.
In 2021 the Group made full and partial repayment of the loans
from DBK for 142 million US dollars (equivalent to 59,507 million
tenge), including accrued interest, and 29,409 million tenge,
including accrued interest.
In April 2021, the Group repaid the principal debt on a loan
agreement with a syndicate of international and Kazakhstan banks -
Bank of Tokyo Mitsubishi UFJ, Mizuho Bank, Ltd, Sumitomo Mitsui
Banking Corporation, Halyk Bank of Kazakhstan JSC, Commercial and
Industrial Bank of China JSC in Almaty and Citibank, N.A., Jersey
Branch with Tokyo-Mitshubishi UFJ Bank, LTD in the the amount of
150 million US dollars (equivalent to 64,360 million tenge at the
exchange rate at the payment date) according to the loan repayment
schedule. The loan's matury was up to October 30, 2022 with a grace
period until April 30, 2021 at an annual interest rate of 1.4% +
3-month Libor. In October 2021 the Group early repaid the principal
of 450 million US dollars (equivalent to 192,407 million tenge at
the exchange rate at the payment date).
In 2021 the Group made partial repayment of its syndicated loan
for 97 million US dollars (equivalent to 41,447 million tenge).
During 2021, the Group received tranches of 74,188 million tenge
from Halyk Bank, including 51,088 million tenge for financing
capital projects and 23,100 million tenge for replenishment of
working capital. During 2021, the Group repaid loans from Halyk
Bank in the amount of 28,090 million tenge.
Loans with an interest rate below the market
In 2021, the Group, entered into trilateral purchase and finance
lease agreements with Industrial Development Fund JSC, which is
under the common control of Shareholder, to renew its passenger
carriage fleet. The Group accounts for the financial liabilities
under the above agreements as borrowings (Note 4). The Group
recognised the adjustment to fair value at 7,857 million tenge net
of the deferred tax effect of 1,571 million tenge through equity in
retained earnings as other transactions with the Shareholder (Notes
17, 33).
Covenants
Under the terms of some loan agreements, respective subsidiaries
of the Group are obliged to comply with certain covenants. The
Group reviews compliance with all the Group loan covenants at each
reporting date.
Loan received from Bank VTB PJSC
Within the framework of the credit agreement with Bank VTB PJSC,
which stipulates compliance with specific financial covenants, such
as net debt to EBITDA, interest coverage ratios and coverage ratios
(including ( ) ratio of total debtors' EBITDA to the Group EBITDA;
(b) ratio of total debtors' revenue to the "Kazakhstan Temir Zholy"
JSC ("KTZ") Group revenue; (c) the ratio of the total carrying
amount of debtors` assets to the carrying amount of the KTZ Group
assets) calculated on the basis of consolidated KTZ Group data,
starting from December 31, 2021 and quarterly thereafter. As at
December 31, 2021, these financial covenants had been met. At the
same time, on December 30, 2021, the Group received a waiver from
Bank VTB PJSC waiving the right to consider as a breach the
non-compliance with cross-default and insolvency terms of the loan
agreement, if the value of the assets of any Group entity is less
than its liabilities (taking into account contingent and
prospective liabilities).
18. BORROWINGS (continued)
Covenants (continued)
Loans received from Eurasian Development Bank
On October 31, 2011 the Group, represented by its subsidiary
SSAP LLP, obtained a credit line in Eurasian Development Bank (EDB)
in the amount of 8,820 million tenge maturing in 2024 and an
interest rate of 10.5%, which corresponded to the market interest
rate for similar loans.
The loan was obtained as part of reconstruction of the sulphuric
acid plant and is due for settlement in accordance with the
established schedule starting from March 1, 2016. Interest is due
for settlement starting from March 1, 2014.
As part of the credit agreement with EDB, the SSAP LLP
undertakes to ensure payment on the debt-service ratio of at least
1.2 and the ratio of Debt / EBITDA not exceeding 3.5.
Based on the results of 2020, the Group calculated these ratios,
where the Debt / EBITDA ratio was 4.58. Debt service ratio is
calculated based on the free cash flow divided by the amount of
debt payments. As at December 31, 2020 the debt service ratio was
0.72, which meant a breach of obligations under the contract.
Due to the fact that the Group did not receive a waiver from the
bank before December 31, 2020 the long term portion of loans of
2,086 million tenge was reclassified to current liabilities.
On October 29, 2021, a letter was received from the EDB on the
decision to exclude the execution of financial indicators.
Accordingly, as at December 31, 2021, the long term portion of loan
of 1,505 million tenge was reclassified to non-current
liabilities.
On December 30, 2016 the Group, represented by its subsidiary JV
Alaigyr LLP, received a credit line for a period of 7 years from
the EDB in the amount of 56 million US dollars for the construction
of a mining and processing plant with interest repayment every six
months and repayment of the principal amount of the loan at the
maturity of loan agreement.
In accordance with the signed agreement, JV Alaigyr LLP must
comply with the loan requirements for compliance with certain
financial and non-financial covenants. As at December 31, 2021 and
2020, JV Alaigyr LLP did not comply with these covenants. The Group
notified in 2020 about the non-fulfillment of the covenants and
received a waiver letter from compliance with these covenants as at
December 31, 2021 and 2020 and not to send the Group a claim for
call of loan. The EDB resumed issuing new tranches on the credit
line.
As of December 31, 2021 the Group complied with all financial
and non-financial covenants under other loan agreements.
As at December 31 the carrying amount of borrowings of the Fund
and the Group subsidiaries is presented below:
In millions of tenge 2021 2020
------------------------------------ ----------- -----------
NC KMG and its subsidiaries 3,700,776 4,017,810
NC KTZh and its subsidiaries 1,448,443 1,444,085
UCC and its subsidiaries 764,879 516,888
The Fund 578,552 553,217
KazTransGas and its subsidiaries 484,709 -
Kazakhtelecom and its subsidiaries 237,916 284,527
Samruk-Energy and its subsidiaries 223,755 196,075
KEGOC and its subsidiaries 171,199 161,034
EGRES-2 99,678 100,611
NAC KAP and its subsidiaries 89,017 97,827
Air Astana 26,895 69,035
Other subsidiaries of the Fund 36,873 18,09 1
------------------------------------ -----------
Total borrowings 7,862,692 7,459, 200
------------------------------------ ----------- -----------
18. BORROWINGS (continued)
Covenants (continued)
Loans received from Eurasian Development Bank (continued)
Changes in borrowings are as follows:
In millions of tenge 2021* 2020*
------------------------------------------------- ------------ ------------
Balance as at January 1 7,459,200 6,841,393
Received by cash 1,462,347 1,849,611
Interest accrued 448,533 439,898
(8,4 86 (3 2 , 060
Discount ) )
Interest capitalized (Note 6 ) 48,624 26,763
Interest paid (505,303) (471,638)
Repayment of principal (1,170,506) (1,720,862)
Purchase of property plant and equipment
financed by borrowings 27,705 5,729
Amortization of discount 18,320 22, 551
Write-off of borrowings - (653)
Finance costs for the early redemption of
bonds (Note 30) - 45,278
Bonds early extinguishment premium and fees
paid - (45,278)
Repayment of principal and interest by reserved
cash (32,799) -
Foreign currency translation 120,106 493,124
(5,04 9
Other ) 5,344
Balance as at December 31 7,862,692 7,459,200
------------------------------------------------- ------------ ------------
* Cash proceeds and repayments of certain borrowings obtained by
the Fund's Corporate Center are included within cash flows from
operating activities because these borrowings are part of the
Fund's main activity of assets management. These borrowings were
not included within changes in financial liabilities.
19. Loans from the government of the Republic of Kazakhstan
As at December 31 loans from the Government of the Republic of
Kazakhstan comprised the following:
Redemption Interest
In millions of tenge date rate 2021 2020
------------------------------------- ------------ --------- --------- ---------
Bonds acquired by the National
Bank of the Republic of Kazakhstan
using the assets of the National
Fund 2035-2063 0.01%-3% 558,982 541,754
Loans from the Government of 0.1 5
the Republic of Kazakhstan 2022-2046 %-0.4% 20,387 51,468
579,369 593,222
Less: amounts due for settlement
within 12 months (10,264) (30,773)
--------------------------------------------------- --------- --------- ---------
Amounts due for settlement
after 12 months 569,105 562,449
--------------------------------------------------- --------- --------- ---------
Bonds acquired by the National Bank of the Republic of
Kazakhstan
In accordance with the Rules on proceeds to the National Fund of
the Republic of Kazakhstan from transfer of assets of national
managing holdings, national holdings, national companies and their
subsidiaries, affiliates and other legal entities affiliated with
them to the competitive environment approved by the Resolution of
the Government of the Republic of Kazakhstan No. 323 dated June 4,
2018, funds received from sale of national assets can be used for
redemption of Fund's liabilities due to the National Fund.
In this regard, in 2021, in accordance with the adopted
corporate decisions of the Fund, a partial early repayment of bonds
at par value in the amount of 558 million tenge was carried out
within the eleventh issue of the Fund's bonds purchased by the
National Bank of the Republic of Kazakhstan. In this regard, the
Fund recognized amortization of the discount on loans from the
Government of the Republic of Kazakhstan in the amount of 278
million tenge in a consolidated statement of changes in equity
(Note 17).
20. Prepayment on oil supply agreement
In 2018, the KMG Kashagan B.V. signed the second supplementary
agreement to the crude oil supply agreement entered into in 2016.
Under the terms of the supplementary agreement, the term of oil
supplies was extended until December 2025, accordingly the minimum
volume of oil from the Kashagan field was increased, and for the
period from 2018 to 2025 amounts to 16.6 million tons.
The Agreement stipulates price determination on the basis of
current market quotations and prepayment is reimbursed by means of
physical supply of crude oil.
In accordance with the terms of the agreement, supply of oil
started from January 2017. The KMG Kashagan B.V. considers this
agreement as a contract, which was signed for the purpose of
delivery of non-financial items in accordance with the Company's
expectations and sale requirements.
During 2021, the KMG Kashagan B.V. delivered crude oil for the
amount of 1,424 million US dollars (equivalent to 606,526 million
tenge) with total volume of 2,653 thousand tons, therefore,
according to the delivery schedule the remaining supply volume
equaled 8,600 thousand tons as at December 31, 2021. The remaining
volume will be supplied under the crude oil supply agreement.
The total amount of accrued remuneration for 2021 was 3,885
million tenge (2020: 13,735 million tenge) (Note 30). Payment of
remuneration shall be made in kind with crude oil.
As at December 31, 2021, the KMG Kashagan B.V. fully reimbursed
by the prepayment outstanding under the crude oil supply agreement
(as at December 31, 2020: 283,562 million tenge).
In accordance with the terms of agreement, KMG Kashagan B.V.
must ensure the supplied volume of crude oil is unencumbered.
Prepayment on oil supply agreement is recognized as a contract
liability to customers in accordance with IFRS 15.
21. Lease liabilities
The Group has leases for various items of property, plant and
equipment, mainly aircraft.
From 2012 to 2014, Air Astana JSC ("Air Astana"), a subsidiary
of the Group, acquired 10 (ten) aircraft on a fixed-rate lease
basis with a transfer of ownership at the end of the lease term.
The lease term for each aircraft is 12 (twelve) years. Air Astana
has the option of purchasing each aircraft at a nominal price at
the end of the lease term. Most aircraft leases are for eight years
with no option to purchase at the end of the lease term.
Loans provided by financial institutions to the lessor in
respect of 5 (five) new Airbus were guaranteed by European Export
Credit Agencies, 3 (three) Boeing 767 aircraft were guaranteed by
US Export Import Bank.
Air Astana pledged the leased assets with carrying amount of
279,848 million tenge to secure lease liabilities (December 31,
2020: 266,484 million tenge).
The Group's leases are subject to certain covenants. These
covenants impose restrictions in respect of certain transactions,
including, but not limited to restrictions in respect of
indebtedness. These requirements have been met during 2021 and
2020.
As at December 31, 2021 interest calculation was based on
effective interest rates ranging from 4.01% to 15.62%
(December 31, 2020: from 4.01% to 14.5%).
As at December 31 future minimum lease payments under leases
together with the present value of the net minimum lease payments
comprised the following:
Present value of
Minimum lease payments minimum lease payments
------------------------- --------------------------
In millions of tenge 202 1 20 20 2021 2020
---------------------------------- ------------ ----------- ----------- -------------
1 53 ,2 1 29 ,
Within one year 53 139,234 676 118,878
3 52 , 2 75 ,
Two to five years inclusive 881 343,809 509 288,224
10 4 ,
After five years 178, 637 138,253 476 108,217
---------------------------------- ------------ ----------- ----------- -------------
684,771 621,296 509,661 515,319
Less: amounts representing
finance costs (175,110) (105,977) - -
---------------------------------- ------------ ----------- ----------- -------------
Present value of minimum 5 09 ,
lease payments 509,661 515,319 661 515,319
Less: amounts due for settlement
within (1 29 ,
12 months 676 ) (118,878)
---------------------------------- ------------ ----------- ----------- -------------
Amounts due for settlement 3 79 ,
after 12 months 985 396,441
---------------------------------- ------------ ----------- ----------- -------------
The Air Astana lease obligations are denominated in US
dollars.
21. LEASE LIABILITIES (continued)
Changes in lease liabilities are as follows:
In millions of tenge 2021 20 20
------------------------------ ----------- ---------
Balance as at January 1 515 , 319 426,856
( 33 , 999
Interest paid ) (27,320)
( 121 ,
Repayment of principal 314 ) (95,262)
Interest accrued 3 7 , 903 33,835
Business combination - 1,037
Foreign currency translation 7 , 853 35,711
Additions of leases 1 19 , 229 152,415
Lease agreement termination (12,588) (14,895)
Other (2,742) 2,942
Balance as at December 31 5 09 , 661 515,319
------------------------------ ----------- ---------
22. Provisions
As at December 31 provisions comprised the following:
Provision
Asset Provision for construction
retirement for environ-mental Provision of social
In millions of tenge obligations remediation for taxes objects Other Total
------------------------- ------------- -------------------- ----------- ------------------ --------- ---------
Provision at January
1, 2020 260,648 64,341 18,184 4,904 122,153 470,230
Foreign currency
translation 8 , 705 3,704 (1) - 12,747 25,155
Transfer to liabilities
associated with assets
classified as held
for sale (24) - - - - (24)
Change in estimate 19,746 (1,877) - - 1,975 19,844
Unwinding of discount 17,138 2,526 - - 154 19,818
Provision for the
year 1,815 5,454 722 - 19,035 27,026
Use of provision (739) (5,426) (7,019) - (72,421) (85,605)
Reversal of unused
amounts (1,189) (43) (1,451) (1,032) (4,828) (8,543)
Provision at December
31, 2020 306,100 68,679 10,435 3,872 78,815 467,901
Foreign currency
translation 3,082 1,087 118 - 2,134 6,421
20 , ( 4,494 ( 554 1 5 ,
Change in estimate 317 ) - - ) 269
Unwinding of discount 17,728 4,021 - - 180 21,929
Provision for the 4 7 ,
year 1 , 041 5,678 5,138 - 35,143 000
( 869
Use of provision (519) (6,776) (1,834) ) (15,682) (25,680)
Reversal of unused
amounts (1,329) (1) (748) - (1,908) (3,986)
Other changes - - 4,618 - 9,270 13,888
Provision at December 3 4 6, 107 , 542 ,
31, 2021 420 68, 194 17, 727 3, 003 398 742
------------------------- ------------- -------------------- ----------- ------------------ --------- ---------
Current portion and non-current portion of provisions are
presented as follows:
Provision
Asset Provision for construction
retirement for environ-mental Provision of social
In millions of tenge obligations remediation for taxes objects Other Total
----------------------- ------------- -------------------- ----------- ------------------ ------- --------
Current portion 2,030 8,190 10,435 3,872 56,453 80,980
Non-current portion 304,070 60,489 - - 22,362 386,921
----------------------- ------------- -------------------- ----------- ------------------ ------- --------
Provision at December
31, 2020 306,100 68,679 10,435 3,872 78,815 467,901
----------------------- ------------- -------------------- ----------- ------------------ ------- --------
1 7 , 67 , 100 ,
Current portion 4 , 844 7 , 683 727 3, 003 091 348
3 41 40 , 442 ,
Non-current portion , 576 60, 511 - - 307 394
----------------------- ------------- -------------------- ----------- ------------------ ------- --------
Provision at December 3 46 1 7 , 107 , 542 ,
31, 2021 , 420 68, 194 727 3, 003 398 742
----------------------- ------------- -------------------- ----------- ------------------ ------- --------
Other provisions as at December 31, 2021 included provisions for
aircraft maintenance for the amount of 54,910 million tenge
(December 31, 2020: 34,965 million tenge), and gas transportation
provision of 31,562 million tenge (December 31, 2020: 30,766
million tenge).
23. Other non-current liabilities
As at December 31 other current liabilities comprised the
following:
In millions of tenge 2021 2020
--------------------------------------------- -------- --------
Other financial liabilities
Obligations under guarantee agreements 36,527 47,200
Accounts payable 11,139 21,536
Historical costs associated with obtaining
subsoil use rights 10,891 11,922
Other 16,016 17,355
Other non-financial liabilities
Contract liabilities to customers 52,404 6,937
Advances received and deferred income 27,872 27,055
Government grant liability 14,596 29
Liabilities under inventory loan agreements
(Note 14) 13,461 -
Other 4,937 6,051
--------
187,843 138,085
--------------------------------------------- -------- --------
In 2020 the Group obtained finished goods under commodity loans
totalling 21.9 million US dollars. A liability was initially
recognised to return inventory at a cost of 8,597 million tenge.
This liability is subsequently remeasured in accordance with
changes in market prices for these goods. In the current period,
additional agreements were concluded to extend the maturity of
these commodity loans until May-June 2023, as a result of which the
commodity loans were reclassified to noncurrent liabilities at
December 31, 2021.
24. Trade and other payables, and other current liabilities
As at December 31 trade accounts payable comprised the
following:
In millions of tenge 2021 2020
---------------------------------------------- ---------- --------
Trade accounts payable 937,027 731,348
Accounts payable for the supply of property,
plant and equipment 164,985 82,722
Other accounts payable 16,043 14,188
---------------------------------------------- ---------- --------
1,118,055 828,258
---------------------------------------------- ---------- --------
As at December 31, trade accounts payable were expressed in the
following currencies:
In millions of tenge 2021 2020
---------------------------------------------- -------- --------
Tenge-denominated trade accounts payable 441,996 413,111
US dollar-denominated trade accounts payable 394,706 239,608
Other currency-denominated trade accounts
payable 100,325 78,629
---------------------------------------------- -------- --------
937,027 731,348
---------------------------------------------- -------- --------
24. TRADE AND OTHER PAYABLES, AND OTHER CURRENT LIABILITIES (continued)
As at December 31 other current liabilities comprised the
following:
In millions of tenge 2021 2020
------------------------------------------------- ---------- ----------
Other financial liabilities
Obligations to the Shareholder on the financing
of social projects 52,755 54,027
Amounts due to customers 39,980 40,364
Due to employees 32,139 35 , 181
P ayable under repo transactions 11,464 2,851
Obligations under guarantee agreements 3,929 6,174
Historical costs associated with obtaining
subsoil use rights 2 , 680 2,856
Dividends payable 814 477
Other 2 5 , 800 2 4 , 738
Other non-financial liabilities
Contract liabilities to customers 297,865 228,774
Other taxes payable 188,831 179,929
Vacation and other employee benefits allowance 105,774 87 , 479
Pension and social contributions liabilities 21,834 16,750
Amounts due under uranium swap contracts 15,355 11,588
Advances received and deferred income 14,523 11,971
Joint operations liabilities 4,569 -
Government grant liability 4,246 197
Liabilities under inventory loan agreements 99 10,522
Other 22,828 38,153
----------
845,485 752,031
------------------------------------------------- ---------- ----------
Joint operations liabilities represent obligations of the Group
under the terms of the joint operations contractual agreements that
require equal volumes of uranium to be purchased during the period
by the participants. In 2021 the Group did not purchase the
required volume.
During 2021, the Group entered into direct repurchase agreements
with counterparties on KASE. These agreements relate to treasury
bills of the Ministry of Finance of the Republic of Kazakhstan and
notes of the National Bank of the Republic of Kazakhstan with a
carrying value of 11,464 million tenge as at December 31, 2021 (as
at December 31, 2020: 2,851 million tenge).
25. Revenue
Revenue comprised the following for the years ended December
31:
In millions of tenge 2021 2020
----------------------------------------------- ----------- ----------
Sales of crude oil 3,709,616 1,971,894
Sales of oil refined products 2,651,786 1,844,148
Railway cargo transportation 1,191,187 1,075,719
Sales of gas products 762,571 810,280
Sales of refined gold 718,828 637,758
Sales of uranium products 666,944 563,266
Telecommunication services 579,528 519,687
Electricity complex 344,980 262,969
Air transportation 331,840 162,962
Oil and gas transportation fee 323,103 289,858
Electricity transmission services 314,056 286,804
Oil processing fees 202,527 192,482
Railway passenger transportation 58,636 39,397
Interest income 54,731 40,137
Postal services 43,198 41,765
Less: Crude oil Quality Bank (5,950) (2,283)
Less: indirect taxes and commercial discounts (625,199) (538,286)
Other revenue 387,276 357,452
----------------------------------------------- ----------- ----------
11,709,658 8,556,009
----------------------------------------------- ----------- ----------
25. REVENUE (continued)
In millions of tenge 2021 2020
---------------------- ----------- ----------
Geographical markets
Kazakhstan 4,747,372 4,041,217
Other countries 6,962,286 4,514,792
11,709,658 8,556,009
---------------------- ----------- ----------
26. Cost of sales
Cost of sales comprised the following for the years ended
December 31:
In millions of tenge 2021 2020
----------------------------------------------- ---------- ----------
Materials and supplies 5,010,551 3,225,362
Personnel costs , including social taxes
and withdrawals 1,008,765 910,830
Depreciation, depletion and amortization 1,000,869 940,167
Fuel and energy 447,310 362,935
Repair and maintenance 287,066 254,890
Production services rendered 264,925 241,946
Mineral extraction tax 145,116 86,858
Taxes other than social taxes and withdrawals 117,540 103,853
Transportation expenses 117,206 58,662
Interest expense 5 8 , 337 62,544
Communication services 49,183 49,140
Rent 40,954 46,152
Security services 25,293 21,351
Other 220,942 254,031
----------------------------------------------- ---------- ----------
8,794,057 6,618,721
----------------------------------------------- ---------- ----------
27. General and administrative expenses
General and administrative expenses comprised the following for
the years ended December 31:
In millions of tenge 2021 2020
------------------------------------------------- -------- --------
Personnel costs, including social taxes
and withdrawals 215,732 204,885
Depreciation and amortization 44,133 36,172
Audit and consulting services 32,874 34,755
Taxes other than social taxes and withdrawals 29,710 31,399
Other services by third parties 18,826 5,254
Sponsorship and charitable donations 9,216 10,596
Repair and maintenance 8,558 7,882
Allowance for expected credit losses for
trade receivable and other assets 6,985 6,983
Rent 4,682 4,600
Business trips 4,213 2,576
Utilities expenses and maintenance of buildings 3,765 3,677
Communication services 2,847 2,384
Professional education and advanced trainings 2,358 1,526
Fines and penalties 2,351 1,229
Transportation services 2,322 2,339
Bank services 2,178 1,733
Other 58,742 67,885
------------------------------------------------- -------- --------
449,492 425,875
------------------------------------------------- -------- --------
28. Transportation and selling expenses
Transportation and selling expenses comprised the following for
the years ended December 31:
In millions of tenge 2021 2020
------------------------------------------- -------- --------
Transportation 398,890 472,576
Rent tax 129,056 41,120
Custom duties 109,151 72,959
Depreciation and amortization 18,445 17,356
Commission fees to agents and advertising 18,179 15,325
Personnel costs, including social taxes
and withdrawals 17,699 17,423
Rent expenses 6,286 7,293
Other 30,625 26,497
------------------------------------------- -------- --------
728,331 670,549
------------------------------------------- -------- --------
29. Impairment loss
Impairment loss comprised the following for the years ended
December 31:
In millions of tenge 2021 2020
--------------------------------------------------- -------- ----------
Impairment of property, plant and equipment,
exploration and evaluation assets and intangible
assets (Notes 6, 7, 8) 122,378 2 9 3,178
Impairment of investments in joint ventures
and associates (Note 9) 5,921 36 , 790
Impairment of assets held for sale 4,872 3,115
Accrual of expected credit losses on loans
issued (Note 10) 1,046 2,053
Accrual/(reversal) of expected credit losses
on cash and cash equivalents 553 (337)
(Reversal)/impairment of VAT receivable (4,602) 7,553
Reversal of expected credit losses on amounts
in credit institutions (2,046) (3,970)
(Reversal)/accrual of expected credit losses
on other financial assets (1,414) 4,901
Other 3,075 458
129,783 34 3 ,741
--------------------------------------------------- -------- ----------
For the following non-current assets impairment losses were
recognised for years ended:
In millions of tenge 202 1 20 20
----------------------------------------------- ---------- ----------
Impairment expense
Almaty Electric Power Stations JSC CGU 20,737 -
Refining CGU of KMGI 8 , 298 162 , 455
Sunkar, Barys and Berkut, self-propelled
barges (Barges) 4 , 453 10 , 297
EMG CGU - 60,440
Other 9 , 807 36 ,586
Write-off
Zhambyl project 59,283 -
Brownfields of KMG EP 19, 800 19,692
KLPE - 3,593
Samtyr, Zhayik, Saraishyk, Zaburunie projects - 115
122 , 378 2 9 3,178
----------------------------------------------- ---------- ----------
Almaty Electric Power Stations JSC CGU
In 2021 the Group performed impairment test of the assets of
ALES. The Group has estimated the recoverable amount of property,
plant and equipment of ALES based on value in use, which is the sum
of the estimated discounted future cash flows that the Group
expects to receive from their use. As a result of the test, the
Group recognized an impairment loss on property, plant and
equipment of 20,737 million tenge.
As at December 31, 2020, there were no indicators of
impairment.
29. IMPAIRMENT LOSS (continued)
CGUs of KMGI
In 2020, as a result of the test performed, KMGI recognized
impairment loss of property, plant and equipment and intangible
assets of 155,544 million tenge and 6,911 million tenge,
respectively.
On July 2, 2021, an incident occurred at the Petromidia Refinery
(further Petromidia), subsidiary of KMGI, that led to fire and
resulted in temporarily interruption of the production until
damaged facilities are repaired. KMGI conducted assessments to
estimate the incident consequences and recognized impairment of
property, plant and equipment of Petromidia for 1,615 million
tenge.
For the year ended December 31, 2021, based on the results of
the property, plant and equipment physical inspection, KMGI
recognized an impairment loss of property, plant and equipment for
6,683 million tenge.
Barges
The recoverable amount of the barges of NMSC KazMorTransFlot LLP
was determined on the basis of value-in-use method. Value-in-use
was assessed as the present value of the future cash flows expected
to be derived from the barges until the end of the existing and
probable contracts at the discount rate of 10.7% (2020: 11.3%). As
a result of the test, the Group recognized an impairment loss of
4,453 million tenge for the year ended December 31, 2021 in regards
of Barys and Berkut barges (2020: 10,297 million tenge on Sunkar,
Barys and Berkut barges).
EMG CGU
In 2020, Embamunaigas (further EMG), subsidiary of KazMunayGas
Exploration Production JSC (further KMG EP), carried out an
assessment of the recoverable amount of property, plant and
equipment and exploration and evaluation assets due to the presence
of impairment indicators such as decline in the forecasted oil
prices.
The result of this assessment indicated that the carrying value
of assets exceeded their estimated recoverable amount by 60,440
million tenge, particularly, 44,098 million tenge of property,
plant and equipment and 16,342 million tenge of exploration and
evaluation assets were impaired.
For the year ended December 31, 2021, no impairment or reversal
of impairment indicators for property, plant and equipment,
intangible assets and exploration and evaluation assets were
observed.
Zhambyl project
For the year ended December 31, 2021 the Group has written off
the exploration and evaluation assets in the amount of 59,283
million tenge of Zhambyl project, the subsoil use contract for
which was terminated and the contract territory was relinquished to
the Government.
Brownfields of KMG EP
For the year ended December 31, 2020 the Group has written off
the exploration and evaluation assets in the amount of 12,829
million tenge as a result of termination of Ozen-Karamandybas
exploration subsoil use contract, the contract territory of which
was relinquished to the Government. Also, the Group partially
reduced the contract area at Karaton-Sarkamys site and,
accordingly, wrote off exploration and evaluation expenses in the
amount of 6,863 million tenge.
As at December 31, 2021 the Group partially reduced the contract
area at Taisoigan site and, accordingly, wrote off exploration and
evaluation expenses in the amount of 19,800 million tenge.
30. Finance costs
Finance costs comprised the following for the years ended
December 31:
In millions of tenge 2021 2020
---------------------------------------------- -------- --------
Interest on loans and debt securities issued 446,272 440,027
Interest on lease liabilities 37,903 33,853
Discount on provisions and other payables 22,517 20,557
Revaluation loss on financial assets at
fair value through profit/loss 10,791 9,906
Interest on oil supply agreement (Note 20) 3,885 13,735
Discount on assets at rates below market 2,687 2,310
Financial guarantees 721 12,757
Finance costs for the early redemption of
bonds (Note 18) - 45,278
Other 30,761 30,530
---------------------------------------------- -------- --------
555,537 608,953
---------------------------------------------- -------- --------
31. Finance income
Finance income comprised the following for the years ended
December 31:
In millions of tenge 2021 2020
Interest income on amounts due from credit
institutions and cash and cash equivalents 76,876 66,117
Revaluation gain on financial assets at
fair value through profit/loss 42,419 10,765
Interest income from loans and financial
assets 28,477 36,541
Income from financial guarantees 14,839 10,277
Income from subsidized interest rates on
financial liabilities 2,176 29,558
Discount on liabilities at rates below market 119 11,201
Other 9,992 15,729
----------------------------------------------- -------- --------
174,898 180,188
----------------------------------------------- -------- --------
32. Share in profit of joint ventures and associates, net
Share in profit/(loss) of joint ventures and associates
comprised the following for the years ended December 31:
In millions of tenge 2021 2020
-------------------------------------- ---------- ---------
Asia Gas Pipeline LLP 253,554 175,339
Tengizchevroil LLP 441,665 173,476
Caspian Pipeline Consortium JSC 90,904 81,582
Mangistau Investments B.V. 80,154 16,749
Kazzinc LLP 66,996 75,280
Beineu Shymkent Gas Pipeline LLP 65,533 55,005
JV KATCO LLP 29,278 25,073
KazRosGas LLP 20,952 957
JV South Mining Chemical Company LLP 14,334 11,533
Kazakhstan - China Pipeline LLP 13,464 10,380
Kazakhoil-Aktobe LLP 13,379 2,448
Valsera Holdings B.V. 11,868 (6,137)
Forum Muider B.V. 11,383 11,504
Teniz Service LLP (3,089) 3,891
Ural Group Limited BVI (11,060) (10,265)
Other 42,767 1 4, 793
-------------------------------------- ---------- ---------
1,142,082 641,608
-------------------------------------- ---------- ---------
33. Income tax expenses
Income tax expenses comprised the following for the years ended
December 31:
In millions of tenge 2021 2020
------------------------------------------- -------- --------
Current income tax expenses
Corporate income tax ("CIT") 328,309 190,640
Withholding tax on dividends and interest
income 47,752 16,043
Excess profit tax 1,237 (194)
Deferred income tax expense/(benefit)
Corporate income tax ("CIT") 148,782 17,090
Withholding tax on dividends and interest
income 34,990 26,021
Excess profit tax (34) (2,985)
--------
Income tax expenses 561,036 246,615
------------------------------------------- -------- --------
A reconciliation of income tax expenses applicable to profit
before income tax at the statutory income tax rate (20% in 2021 and
2020) to income tax expenses was as follows for the years ended
December 31:
In millions of tenge 2021 2020
----------------------------------------------- ------------ ------------
Accounting profit before income tax 2,46 9 ,393 829,157
Income tax expenses on accounting profit 493, 8 79 165,831
Tax effect of other items, which are not
deductible 75 , 821 43,936
Change in unrecognized deferred tax assets (12,034) 82,035
Effect of different corporate income tax
rates 46,818 26,219
Excess profit tax 1,203 (3,179)
Share in non-taxable profit of joint ventures (10 2 , 536
and associates (86,923) )
Other differences 42 , 272 34,309
----------------------------------------------- ------------ ------------
Total corporate income tax expenses 561,036 246,615
----------------------------------------------- ------------ ------------
33. INCOME TAX EXPENSES (continued)
Deferred tax balances, calculated by applying the statutory tax
rates effective at the respective reporting dates to the temporary
differences between tax basis of assets and liabilities and the
amounts reported in the consolidated financial statements, are
comprised of the following at December 31:
2021 2020
------------------------------------------------ --------------------------------------------------
Excess Excess
In millions of Corporate profit Withholding Corporate profit Withholding
tenge income tax tax tax Total income tax tax tax Total
---------------- ------------ -------- ------------ ---------- ------------ -------- ------------ ------------
Deferred tax
assets
Property, plant
and
equipment 35 , 346 - - 35 , 346 51,983 - - 51,983
Tax loss 827,83 827,83
carryforward 9 - - 9 883,930 - - 883,930
Employee
related
accruals 1 8 , 500 - - 1 8 , 500 16,864 - - 16,864
Allowance for
expected
credit losses
of financial
assets 3 4 , 593 - - 3 4 , 593 36,876 - - 36,876
Provision for
environmental
remediation 85, 226 - - 85, 226 71,398 - - 71,398
1 59 ,8 1 59 ,8
Other accruals 65 - - 65 148,834 - - 148,834
Other 52, 470 - - 52, 470 34,648 - - 34,648
Less:
unrecognized
deferred
tax assets (640,459) - - (640,459) (652,493) - - (652,493)
Less: deferred
tax assets
offset with
deferred
tax ( 504 , ( 504 ,
liabilities 232 ) - - 232 ) (512,773) - - (512,773)
---------------- -------- ------------ ------------ -------- ------------ ------------
Deferred tax
assets 69,148 - - 69,148 79,267 - - 79,267
---------------- ------------ -------- ------------ ---------- ------------ -------- ------------ ------------
Deferred tax
liabilities
Property, plant
and 1,287, 1,28 8
equipment 711 358 - , 069 1,127,858 392 - 1,128,250
Undistributed
earnings
of joint
ventures and
associates - - 465,891 465,891 - - 419,083 419,083
Other 8 3 , 889 - - 8 3 , 889 108,696 - - 108,696
Less: deferred
tax assets
offset with
deferred
tax ( 504 , ( 504 ,
liabilities 232 ) - - 232 ) (512,773) - - (512,773)
---------------- ------------ -------- ------------ ---------- ------------ -------- ------------ ------------
Deferred tax 1,333,
liabilities 867, 368 358 465,891 617 723,781 392 419,083 1,143,256
---------------- ------------ -------- ------------ ---------- ------------ -------- ------------ ------------
Net deferred
tax (79 8 , (1,26 4
liabilities 220 ) (358) (465,891) , 469 ) (644,514) (392) (419,083) (1,063,989)
---------------- ------------ -------- ------------ ---------- ------------ -------- ------------ ------------
33. INCOME TAX EXPENSES (continued)
The movements in the net deferred tax liabilities were as
follows for the years ended December 31:
2021 2020
----------------------------------------------- ------------------------------------------------
Excess Excess
In millions of Corporate profit Withholding Corporate profit Withholding
tenge income tax tax tax Total income tax tax tax Total
------------------- ----------- -------- ------------ ---------- ------------ -------- ------------ ----------
Balance at January
1 644,514 392 419,083 1,063,989 614,048 3,377 356,581 974,006
Foreign currency
translation 2 , 993 - 11,818 1 4 , 811 3,776 - 36,481 40 , 257
Charged to other
comprehensive
income 340 - - 340 7,074 - - 7,074
Recognised in
equity
(Note 1 7 ) 1,571 - - 1,571 - - - -
Acquisition of
subsidiaries - - - - 3,560 - - 3,560
Transfer from/(to)
assets
classified as
held for
sale or
distribution
to the
Shareholder 20 - - 20 (1,034) - - (1,034)
harged/( redited)
to 14 8 , 18 3 ,
profit and loss 782 (34) 34,990 738 17,090 (2,985) 26,021 40,126
----------- -------- ------------ ----------
Balance at
December 79 8 , 1,26 4
31 220 358 465,891 , 469 644,514 392 419,083 1,063,989
------------------- ----------- -------- ------------ ---------- ------------ -------- ------------ ----------
A deferred tax asset is recognized only to the extent that it is
probable that future taxable profits will be available against
which the asset can be utilized. Deferred tax assets are reduced to
the extent that it is no longer probable that the related tax
benefit will be realized. Unrecognized deferred tax asset arising
mainly from tax losses carry forward were equal to 640,459 million
tenge as at December 31, 2021 (December 31, 2020: 652,493 million
tenge).
Tax losses carryforwards as at December 31, 2021 in the Republic
of Kazakhstan expire for tax purposes 10 (ten) years from the date
they are incurred.
34. Consolidation
Subsidiaries included in the consolidated financial statements
are presented as follows:
Ownership percentage
--------------------------- ------------------------- ------------------ -----------------------
Country
Main activity of incorporation 2021 2020
--- --------------------------- ------------------------- ------------------ ----------- ----------
National Company
"KazMunayGas" Exploration, production,
JSC processing and
("NC KMG") and transportation 90. 42
1 subsidiaries of oil and gas Kazakhstan % 90. 42 %
National Company Exploration, production,
"QazaqGaz" JSC transportation,
(former- National sale and storage
Company "KazTransGas" of natural gas
JSC) and
2 and subsidiaries gas condensate Kazakhstan 100.00% 90. 42 %
Exploration and
production
3 KMG Kashagan B.V. of hydrocarbons Netherlands 95.00% 95.00%
National Company
"Kazakhstan Temir
Zholy" JSC ("NC Passenger and cargo
4 KTZh") and subsidiaries transportation Kazakhstan 100.00% 100.00%
National Atomic
Company "Kazatomprom" Production and
JSC mining
("NAC KAP") and of uranium, rare
5 subsidiaries metals Kazakhstan 75 .00% 75 .00%
Samruk-Energy JSC
("Samruk-Energy") Electricity and
6 and subsidiaries heat production Kazakhstan 100.00% 100.00%
Kazakhstan Electricity
Grid Operating
Company JSC ("KEGOC") Electricity transmission 90.00% 90.00% +
7 and subsidiaries services Kazakhstan + 1 1
Kazpost JSC and Postal and financial
8 subsidiaries activities Kazakhstan 100.00% 100.00%
Kazakhtelecom JSC Telecommunication 52 . 03 52 . 03
9 ("KTC") and subsidiaries services Kazakhstan % %
Air Astana JSC
1 ("Air Astana") 5 1 . 00 5 1 . 00
0 and subsidiaries Air transportation Kazakhstan % %
1 Samruk-Kazyna Construction Construction and
1 JSC and subsidiaries real estate management Kazakhstan 100.00% 100.00%
National Mining
Company Exploration, mining
1 "Tau-Ken Samruk" and processing
2 and subsidiaries of solid minerals Kazakhstan 100.00% 100.00%
Development and
Samruk-Kazyna Ondeu implementation
LLP (former- United of projects
1 Chemical Company in the chemical
3 LLP) and subsidiaries industry Kazakhstan 100.00% 100.00%
Samruk-Kazyna Invest
1 LLP
4 and subsidiaries Investments Kazakhstan 100.00% 100.00%
1 Samruk-Kazyna Contract
5 LLP P rocurement activities Kazakhstan 100.00% 100.00%
1 Stantsiya Ekibastuzskaya
6 GRES-2 JSC ("EGRES-2") Power generation Kazakhstan 100.00% 100.00%
Transformation
SK Business Service services, information
17 LLP and subsidiaries and IT services Kazakhstan 100.00% 100.00%
18 Qazaq Air JSC Air transportation Kazakhstan 100.00% 100.00%
Kazakhstan nuclear Servicing companies
electric in the electricity
19 plants LLP sector Kazakhstan 100.00% 100.00%
Electricity market
20 KOREM JSC operator Kazakhstan - 100.00%
--- --------------------------- ------------------------- ------------------ ----------- ----------
35. Related party disclosures
In accordance with IAS 24 Related Party Disclosures, parties are
considered to be related if one party has the ability to control
the other party or exercise significant influence over the other
party in making financial or operational decisions. In considering
each possible related party relationship, attention is directed to
the substance of the relationship, not merely the legal form.
Related parties include key management personnel of the Group,
enterprises in which a substantial interest in the voting power is
owned, directly or indirectly, by the Group's key management
personnel and other entities controlled by the Government. Related
party transactions were made on terms agreed to between the parties
that may not necessarily be at market rates, except for certain
regulated services, which are provided based on the tariffs
available to related and third parties.
35. RELATED PARTY DISCLOSURES (continued)
The following table provides the total amount of transactions,
which have been entered into with related parties as at December
31:
Other
Joint state-controlled
In millions of tenge Associates ventures entities
-------------------------------- ----- ----------- ---------- ------------------
Due from related parties 2021 6,189 28,732 35,262
2020 3,008 29,132 22,639
Due to related parties 2021 40,544 282,269 8,186
2020 27,742 218,085 9,163
Sale of goods and services 2021 215,647 281,751 835,404
2020 137,678 324,665 736,717
Purchase of goods and services 2021 206,969 1,816,227 37,443
2020 268,838 1,163,124 23,381
Other (loss)/income 2021 714 7,243 3,823
2020 8,870 26,557 3,756
Cash and cash equivalents,
and amounts due from credit
institutions (assets) 2021 - 78 154,768
2020 - 242 262,012
Loans issued 2021 14,169 300,929 14,100
2020 17,279 313,509 5,559
Borrowings 2021 22,438 4 964,744
2020 14,004 4 1,065,166
Other assets 2021 17,204 28,912 160,638
2020 6,833 16,802 158,936
Other liabilities 2021 41,258 59,415 54,610
2020 65,329 46,634 39,063
Interest accrued due from
related parties 2021 2,547 32,796 12,753
2020 6, 733 31,424 26,820
Interest accrued due to
related parties 2021 4,529 5,258 79,655
--------------------------------
2020 12,462 4,763 79,974
-------------------------------- ----- ----------- ---------- ------------------
As at December 31, 2021 some of the Group's borrowings of 42,907
million tenge were guaranteed by the Government of the Republic of
Kazakhstan (December 31, 2020: 48,121 million tenge).
Total compensation to key management personnel included in
general and administrative expenses in the consolidated statement
of comprehensive income was equal to 6,406 million tenge for the
year ended December 31, 2021 (December 31, 2020: 6,247 million
tenge). Compensation to key management personnel mainly consists of
contractual salary and other payments based on achievement of
operating results.
36. Financial instruments and financial risk management objectives and policies
The Group's principal financial instruments consist of
borrowings, loans from the Government of the Republic of
Kazakhstan, lease liabilities, amounts due to the customers,
derivatives, cash and cash equivalents, loans issued, amounts due
from credit institutions, other financials assets, as well as
accounts receivable and accounts payable. The main risks arising
from the Group's financial instruments are interest rate risk,
foreign currency risk and credit risk. The Group also monitors the
liquidity risk arising from all financial instruments.
Interest rate risk
Interest rate risk is the risk that the value of a financial
instrument will fluctuate due to changes in market interest rates.
The Group limits interest rate risk by monitoring changes in
interest rates in the currencies in which its cash, investments and
borrowings are denominated.
The Group's exposure to interest risk relates primarily to the
Group's long-term and short-term borrowings with variable interest
rates (Note 18).
36. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Interest rate risk (continued)
The following table demonstrates the sensitivity of the Group's
profit before income tax (through the impact on variable rate
borrowings) to a reasonably possible change in variable LIBOR
interest rates, with all other variables held constant.
Increase/
(decrease) Effect on
in basis profit before
In millions of tenge points* income tax
--------------------- ------------ ---------------
2021
( 12 , 148
US dollar 1 25 /(25) )/2, 369
2020
US dollar 100/(25) (8,942)/2,235
--------------------- ------------ ---------------
* 1 basis point = 0.01%.
Currency risk
As a result of significant borrowings, lease liabilities, and
trade accounts payable, cash and cash equivalents, amounts due from
credit institutions and accounts receivable denominated in the US
dollars, the Group's consolidated financial position can be
affected significantly by movement in the US dollar / tenge
exchange rates.
The following table demonstrates the sensitivity of the Group's
profit before income tax to a reasonably possible change in the US
dollar and euro, with all the variables held constant.
Increase/(decrease) Effect on
in exchange profit before
In millions of tenge rate income tax
--------------------- -------------------- ------------------
2021
( 3 5 3 ,7
1 3 .00%/(1 54 )/ 2 70,8
US dollar 0 .00%) 63
1 3 .00%/(1 ( 9 , 977
Euro 0 .00%) )/ 7 , 675
2020
US dollar 14.00%/(11.00%) (431,973)/339,984
Euro 14.00%/(11.00%) (10,545)/8,285
--------------------- -------------------- ------------------
Credit risk
Credit risk arising from the inability of a party to meet the
terms of the Group's financial instrument contracts is generally
limited to the amounts, if any, by which the counterparty's
obligations exceed the obligations of the Group to that party. It
is the Group's policy to enter into financial instruments with a
diversity of creditworthy parties. The maximum exposure to credit
risk is represented by carrying amount of each financial asset.
The Group considers that its maximum exposure is reflected by
the amount of loans issued (Note 10), amount due from credit
institutions (Note 11), trade accounts receivable and other current
assets (Note 15), other financial assets (Note 12), and cash and
cash equivalents (Note 16), net of allowances for expected credit
losses recognized at the reporting date.
Concentrations of credit risk may arise from exposures to a
single debtor or to groups of debtors having similar
characteristics such that their ability to meet their obligations
is expected to be affected similarly by changes in economic or
other conditions.
The Group has a policy that ensures enforcement of constant
control procedures for sales to only be made to buyers with an
appropriate credit history and that an acceptable credit exposure
limit is not exceeded. Credit risk is minimised by the fact that
the Group operates on a prepayment basis with the majority of its
buyers.
36. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Liquidity risk
Liquidity risk is the risk that the Group will encounter
difficulty in raising funds to meet commitments associated with its
financial liabilities. Liquidity risk may result from an inability
to sell a financial asset quickly at price close to its fair
value.
Liquidity requirements are monitored on a regular basis and
management ensures that sufficient funds are available to meet any
commitments as they arise.
The table shown below summarizes the maturity profile of the
Group's financial liabilities at December 31 based on contractual
undiscounted payments.
Due later Due later Due later
than than than
1 month 3 months 1 year
but not but not but not
later later later
In millions of On than 3 than than Due after
tenge demand months 1 year 5 years 5 years Total
--------------------------- --------- ---------- ---------- ---------- ---------- ----------
At December 31,
202 1
Loans from the
Government of the
Republic of Kazakhstan 13 24 21,298 173,638 1,851,202 2,046,175
299 , 92 8 3, 572 12, 654
Borrowings 900 101,620 , 299 , 501 7,752,556 , 876
Lease liabilities 8,147 31,208 110,723 375,346 135,925 661,349
Due to customers 39,975 - 4 16 - 39,995
Financial guarantees 29,408 16,785 59,393 191,499 106,300 403,385
Trade and other 587,3 1,133,7
payables 461,775 49 72,589 11,679 353 45
736,9 1,19 4, 324 16, 939
839,218 86 2 , 306 , 679 9,846,336 , 525
--------------------------- --------- ---------- ---------- ---------- ---------- ----------
At December 31,
20 20
Loans from the
Government of the
Republic of Kazakhstan 13 24 43,343 92,154 2,007,592 2,143,126
1,005, 3, 608 12, 2
Borrowings 79 , 199 89,703 872 , 6 39 7,506,849 90,2 62
Finance lease liabilities 4,953 25,395 106,419 335,323 123,909 595,999
Due to customers 40,356 - 8 13 - 40,377
2 73 , 1 03 , 489 ,
Financial guarantees 27,404 20,5 25 64, 625 599 299 452
Trade and other 348,4 853,1
payables 53 416,480 64,588 22,227 1,448 96
500,3 552,1 1,284, 4, 331 9,7 43 16, 412
78 27 855 , 955 , 097 , 412
--------------------------- --------- ---------- ---------- ---------- ---------- ----------
Capital management
The Group manages its capital primarily through capital
management of its subsidiaries while conducting its oversight
function. Major objective of the capital management is to ensure
that subsidiaries of the Group will be able to continue as a going
concern while maximising the return to shareholders through the
optimisation of the debt and equity balance. The Group manages
capital of its subsidiaries by setting various performance
indicators tailored to the business need and industry specific
matters of each subsidiary.
The Group manages capital of its subsidiaries by setting various
performance indicators tailored to the business need and industry
specific matters of each subsidiary. Key performance indicators
("KPI") used by the Group to manage capital of its subsidiaries are
ratios of: Debt to Earnings before Interest, Taxes, Depreciation
and Amortization, and Interest ("D/EBITDA") from continuing and
discontinued operations; and Debt to Equity ("D/E"). Debt is
considered to be equal to all borrowings, debt securities,
guarantee and finance lease liabilities of relevant subsidiaries
reduced by value of cash and cash equivalents. Equity is considered
to be equal to the entire equity of the subsidiary attributable to
majority shareholders.
36. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Capital management (continued)
Allowed maximum for the indicator is approved for each
subsidiary based on the needs and specifics of its business and
varies within following ranges (consolidated KPI's for the Group
have been presented for reference purposes as the Group does not
monitor KPI's on the consolidated level):
KPI 2021 2020
---------- ------- -----
D/EBITDA 2 . 32 3.58
D/E 0.5 4 0.59
---------- ------- -----
In billions of tenge 2021 2020
-------------------------------------------- --------- ---------
Borrowings (Note 18) 7, 863 7,459
Loans from the Government of the Republic
of Kazakhstan (Note 19) 5 79 593
Lease liabilities (Note 21) 5 10 515
Derivative instruments 2 1
Guaranteed principal amount of liabilities
of entities outside the Group 341 4 2 7
-------------------------------------------- --------- ---------
Total debt 9 ,295 8, 995
(2, 811
Less: cash and cash equivalents ) (2,228)
-------------------------------------------- --------- ---------
Net debt 6,484 6, 767
-------------------------------------------- --------- ---------
EBITDA 3,998 2,512
1 7 , 1
Total equity 7 3 15,152
-------------------------------------------- --------- ---------
Fair values of financial instruments
The Group uses the following hierarchy for determining and
disclosing the fair value of financial instruments by valuation
technique:
-- Level 1: quoted (unadjusted) prices in active markets for
identical assets or liabilities.
-- Level 2: other techniques for which all inputs which have a
significant effect on the recorded fair value are observable,
either directly or indirectly.
-- Level 3: techniques which use inputs which have a significant
effect on the recorded fair value that are not based on observable
market data.
As at December 31, 2021 and 2020 the carrying amount of the
following Group's financial instruments is a reasonable estimate of
their fair value:
Level Level Level December
In millions of tenge 1 2 3 31, 2021
-------------------------------- --------- --------- --------- ----------
Financial instruments category
Assets
Loans issued at fair value 1 23 , 1 23 ,
through profit and loss - - 161 161
Financial assets measured
at fair value through OCI 1 , 134 20,741 6 0 21,935
Financial assets at fair value 121 ,
through profit and loss 74 , 356 14 , 486 32 , 913 755
Derivative financial assets - 14,153 - 14,153
-------------------------------- --------- --------- --------- ----------
December
In millions of tenge Level 1 Level 2 Level 3 31, 2020
-------------------------------- -------- --------- ---------- ----------
Financial instruments category
Assets
Loans issued at fair value
through profit and loss - - 138,024 138,024
Financial assets measured
at fair value through OCI 8,988 47 , 779 63 56 , 830
Financial assets at fair value
through profit and loss 34,643 3, 897 2 2 , 676 61,216
Derivative financial assets - 97 1,048 1 , 145
-------------------------------- -------- --------- ---------- ----------
36. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Fair values of financial instruments (continued)
December 31, 2021
--------------------------------------------------------------------
Fair value by level of assessment
---------------------------------------------
Based on
Quotations From the the significant
in an active observed amount of
market market unobserved
In millions of Carrying Fair (Level (Level (Level
tenge amount value 1) 2) 3)
------------------------- --------- ---------- -------------- ---------- -----------------
Financial assets
Loans issued at
amortized cost
and finance lease 28 0 , 27 3 , 25 8 ,
receivables 955 189 - 1 4 , 800 389
Amounts due from 776 , 66
credit institutions 2 770 , 714 546 , 900 215 , 651 8,163
Financial liabilities
7, 862 8, 575 5, 039 2, 484 1,051 ,
Borrowings , 692 , 232 , 417 , 584 231
Loans from the
Government of the 5 79 ,
Republic of Kazakhstan 369 374 , 861 - 374 , 861 -
Guarantee obligations 40 , 456 38 , 655 - 33 , 330 5, 325
------------------------- --------- ---------- -------------- ---------- -----------------
December 31, 2020
----------------------------------------------------------------------
Fair value by level of assessment
---------------------------------------------
Based on
Quotations From the the significant
in an active observed amount of
market market unobserved
In millions of Carrying Fair (Level (Level (Level
tenge amount value 1) 2) 3)
------------------------- ----------- ---------- -------------- ---------- -----------------
Financial assets
Loans issued at
amortized cost
and finance lease
receivables 284,212 271,526 - 17,441 254,085
Amounts due from
credit institutions 489,572 498 , 082 335,558 162 , 524 -
Financial liabilities
Borrowings 7,459, 200 8,370,443 5,246,774 2,217,000 906,669
Loans from the
Government of the
Republic of Kazakhstan 593,222 416,166 - 416,166 -
Guarantee obligations 53 , 374 51 , 693 - 35 , 972 15,721
------------------------- ----------- ---------- -------------- ---------- -----------------
The fair value of the above financial instruments has been
calculated by discounting the expected future cash flows at
prevailing interest rates.
The significant unobservable inputs used in the fair value
measurements categorized within Level 3 of the fair value hierarchy
are shown below:
Range as of December
31,
--------------------------- ------------ --------------- -------------------------
Significant
Valuation unobservable
technique inputs 2021 2020
--------------------------- ------------ --------------- ------------ -----------
Loans issued at amortized Discounted Interest/
cost and finance lease cash flow discount 3 .1%-30
receivables method rate % 7 .5%- 15%
------------ ---------------
Amounts due from credit
institutions 6.94% -
------------ ---------------
3 . 5% -1
Borrowings 7 % 1.9 % -13%
Financial guarantee
issued 4.5%-5.25% 4.9%
---------------------------------------------------------- ------------ -----------
36. FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
IBOR Reform
Following the decision by global regulators to phase out IBORs
and replace them with alternative reference rates, the Group has
disclosed contracts that could be affected. During 2021, the Group
has not completed the transition of a significant portion of its
IBOR exposure to risk free rates (RFRs) for those interest rate
benchmarks such as USD LIBOR that will cease to be available after
June 30, 2023 and for which the transition date has not yet been
determined.
IBOR reform exposes the Group to various risks, which the
project is managing and monitoring closely. These risks include but
are not limited to the following:
-- Conduct risk arising from discussions with market
counterparties due to the amendments required to existing contracts
necessary to effect IBOR reform;
-- Financial risk to the Group that markets are disrupted due to
IBOR reform giving rise to financial losses;
-- Pricing risk from the potential lack of market information if
liquidity in IBORs reduces and RFRs are illiquid and
unobservable;
-- Operational risk arising from changes to the Group's IT
systems and processes, also the risk of payments being disrupted if
an IBOR ceases to be available;
-- Accounting risk if the Group's hedging relationships fail and
from unrepresentative income statement volatility as financial
instruments transition to RFRs.
The table below shows the Group's exposure to significant IBORs
subject to reform that have yet to transition to the alternative
interest rate benchmarks as at the current year end and the prior
year end. The table excludes exposures to IBOR that will expire
before transition is required:
December
In millions of tenge USD Libor 31, 2021
-------------------------------------- ---------- ----------
Non-derivative financial liabilities 91,861 91,861
Borrowings 91,861 91,861
-------------------------------------- ---------- ----------
37. Commitments and contingencies
Operating environment
Kazakhstan continues economic reforms and development of its
legal, tax and regulatory frameworks as required by a market
economy. The future stability of the kazakhstan economy is largely
dependent upon these reforms and developments and the effectiveness
of economic, financial and monetary measures undertaken by the
government.
Since the beginning of March 2020, the world markets are
experiencing a significant volatility in oil demand and oil prices,
in particular as a result of COVID-19 pandemic. Kazakhstan tenge
value has fallen significantly against the major world currencies.
In the opinion of the Group's management, these trends will not
have a material impact on the Group's future financial position,
results of operations and business prospects.
Commodity price risk
The Group generates most of its revenue from the sale of
commodities, primarily crude oil and oil products. Historically,
the prices of these products have been volatile and have fluctuated
widely in response to changes in supply and demand, market
uncertainty, the performance of the global or regional economies
and cyclicality in industries.
Prices may also be affected by government actions, including the
imposition of tariffs and import duties, speculative trades, an
increase in capacity or an oversupply of the Group's products in
its main markets. These external factors and the volatility of the
commodity markets make it difficult to estimate future prices.
A substantial or extended decline in commodity prices would
materially and adversely affect the Group's business and the
consolidated financial results and cash flows of operations. The
Group does not hedge significantly its exposure to the risk of
fluctuations in the price of its products.
37. COMMITMENTS AND CONTINGENCIES (continued)
Transfer pricing control
Transfer pricing control in Kazakhstan has a very wide scope and
applies to many transactions that directly or indirectly relate to
international business regardless of whether the transaction
participants are related or not. The transfer pricing legislation
requires that all taxes applicable to transaction participants are
related or not. The transfer pricing legislation requires that all
taxes applicable to a transaction should be calculated based on
market price determined in accordance with the arm's length
principle.
The new law on transfer pricing came into effect in Kazakhstan
from January 1, 2009. The new law is not explicit and there is
little precedence with some of its provisions. Moreover, the law is
not supported by detailed guidance, which is still under
development. As a result, application of transfer pricing control
to various types of transactions is not clearly regulated.
Because of the uncertainties associated with the Kazakhstan
transfer pricing legislation, there is a risk that the tax
authorities may take a position that differs from the Group's
position, which could result in additional taxes, fines and
interest at December 31, 2021.
As at December 31, 2021 management believes that its
interpretation of the transfer pricing legislation is appropriate
and that it is probable that the Group's positions with regard to
transfer pricing will be sustained.
Taxation
Kazakhstan's tax legislation and regulations are subject to
ongoing changes and varying interpretations. Instances of
inconsistent opinions between local, regional and national tax
authorities are not unusual, including opinions with respect to
IFRS treatment of revenues, expenses and other items in the
financial statements. The current regime of penalties and interest
related to reported and discovered violations of Kazakhstan's tax
laws are severe. Due to uncertainties associated with Kazakhstan's
tax system, the ultimate amount of taxes, penalties and interest,
if any, may be in excess of the amount expensed to date and accrued
at December 31, 2021. As at December 31, 2021, Management believes
that its interpretation of the relevant legislation is appropriate
and that it is probable that the Group's tax positions will be
sustained, except as provided for or otherwise disclosed in these
consolidated financial statements.
Horizontal monitoring
From July 2020, the State Revenue Committee of the Ministry of
Finance of the Republic of Kazakhstan (hereinafter -"SRC") launched
a pilot project to introduce horizontal monitoring, which will last
until December 31, 2023. The main goal of horizontal monitoring is
to create partnerships between tax authorities and large taxpayers
by timely response and prevention of their risky transactions that
may lead to violations of tax, currency and other legislation,
which is controlled by tax authorities. In order to implement the
pilot project of SRC, together with the business community, the
rules for its implementation were developed and approved, and the
categories of taxpayers were determined.
In 2021 a number of subsidiaries of the Group have become
parties to the pilot project to introduce horizontal monitoring
which includes the procedure of historical data inspection. In
February 2022 SRC completed the inspection of historical data of
EGRES-1 for the period of 2016-2020 and provided recommendations.
The main recommendation is related to the discrepancy between fixed
assets by belonging to asset groups according to the National
Classifier of Fixed Assets. EGRES-1 expressed its disagreement with
this recommendation and continues to work to clarification its
position.
Comprehensive tax audit at Atyrau refinery for 2015-2017
On December 15, 2020, based on 2015-2017 comprehensive tax
audit, Atyrau refinery received additional tax assessment for VAT
for 9,257 million tenge, including penalties, and reduction in tax
carry-forward losses for 29,026 million tenge. Atyrau refinery has
not agreed with tax audit results, and, on January 28, 2021, sent
an appeal to the Ministry of Finance of the Republic of Kazakhstan.
As of December 31, 2021, appeal consideration was suspended by the
Ministry of Finance of the Republic of Kazakhstan until
clarification of the circumstances. The Group believes that the
risk of additional tax assessment is remote, as such, the Group did
not recognize any provisions as of December 31, 2021.
37. COMMITMENTS AND CONTINGENCIES (continued)
Legal proceedings
The proceedings initiated against Mr. Stati and his related
parties related to the arrest of shares KMG Kashagan B.V. belonging
to the Fund
The proceedings initiated against Mr, Stati and his related
parties on the suit of the Fund due to the arrest of shares KMG
Kashagan B,V, belonging to the Fund
On September 14, 2017 the pre-judgement attachment in respect of
the Fund's rights on management of 50% KMG Kashagan B.V. shares
worth 5.2 billion US dollars was imposed with regard to the
decision of the Amsterdam Court (the "Pre-judgement
Attachment").
The named Pre-judgement Attachment was imposed as part of the
claim for recognition and enforcement of the arbitral award on the
matter of Anatolie Stati, Gabriel Stati, Ascom Group SA and Terra
Raf Trans Trading Ltd, against the Republic of Kazakhstan issued in
2013 by the Arbitration Tribunal at the Arbitration Institute of
the Stockholm Chamber of Commerce.
On December 18, 2020, the Supreme Court overturned the decision
of the Amsterdam Court of Appeal dated May 7, 2019 to maintain the
arrest and sent the case to the Court of Appeal in The Hague. The
Court of Appeal in Hague started on April 4, 2022.
Currently, the Fund makes all necessary arrangements to protect
its interest in accordance with the established procedure and will
continue to defend its rights and legitimate interests.
The Main process on Mr. Stati's claim, filed on December 7,
2017, in which Mr. Stati asks the court to recognize the Fund as
part of the Republic of Kazakhstan and oblige the Fund to comply
with the arbitral award
On March 17, 2021, hearings were held on the Main process on Mr.
Stati's claim, filed on December 7, 2017, in which Mr. Stati asks
the court to recognize the Fund as part of the Republic of
Kazakhstan and oblige the Fund to comply with the arbitral award of
December 19, 2013.
On April 28, 2021, the District Court of Amsterdam granted the
request made by the Fund to postpone the Main Process pending the
decision of the Court of Appeal in The Hague to challenge the
restriction on the shares of KMG Kashagan B.V.
Currently, the Fund makes all necessary arrangements to protect
its interest in accordance with the established procedure and will
continue to defend its rights.
The civil litigation at KMG International N.V.
Faber Invest & Trade Inc. (further Faber), the
non-controlling shareholder of KMGI subsidiaries, resumed several
previous civil filings in 2020, one of which challenged the
increase in the Rompetrol Rafinare Constanta, the KMGI subsidiary,
share capital in 2003-2005. The hearings have been held
periodically, but no final decisions were made. On July 13, 2021,
the court rejected the complaint of Faber.
However, Faber appealed against this decision. As a result of
hearing in December 2021 the court admitted the appeal and sent
back the file to be re-settled. Next hearings are scheduled to May
2022.
The Group believes that its position with regard to the new
Faber filing will be sustained similar to the matters resolved in
2020 in favour of the Group, and as such, the Group did not
recognize any provisions as of December 31, 2021.
Settlement of the arbitration between KazTransGas JSC ("KTG")
and the partners of the North Caspian project on gas price calculus
from the Kashagan field
On February 19, 2021, a decision was issued of the arbitration
proceedings on the claim of KTG against the partners of the North
Caspian project on gas price calculus from the Kashagan field
(Decision). The Decision was issued in favor of KTG. In accordance
with the Decision, the parties, within 30 days from the date of its
adoption, must make calculations based on the principles
established by the Decision and determine the amounts to be paid in
favor of KTG, including reimbursement of legal costs.
During 2021 KTG received from the partners of the North Caspian
Project under this Resolution 112,058 million tenge, including VAT
(equivalent to 262 million US dollars) and adjusted the cost of
purchased gas for resale in the amount of 85,396 million tenge
(equivalent to 200 million US dollars), and also recognized fines,
penalties and reimbursement of arbitration costs in the total
amount of 11,951 million tenge (equivalent to 28 million US
dollars) in other income.
37. COMMITMENTS AND CONTINGENCIES (continued)
Cost recovery audits
Under the base principles of the production sharing agreements,
the Government transferred to contractors the exclusive rights to
conduct activities in the subsurface use area, but did not transfer
rights to this subsurface use area either to ownership or lease.
Thus, all extracted and processed oil (i. . the hydrocarbons
produced) are the property of the Government. Works are carried out
on the basis of compensation and the Government pays to the
contractors not in cash but in the form of the portion of oil
production, thereby allowing the contractors to recover their costs
and earn profit.
In accordance with the production sharing agreements, not all
costs incurred by the contractors could be reimbursed. Certain
expenditures need to be approved by the authorized bodies. The
authorized bodies conduct the cost recovery audits. In accordance
with the cost recovery audits completed prior to December 31, 2021,
certain amounts of the costs incurred by contractors were assessed
as non-recoverable. The parties to the production sharing
agreements are in negotiations with respect to the recoverability
of those costs.
As of December 31, 2021 the Group's share in the total disputed
amounts of costs is 979,556 million tenge (2020: 871,407 million
tenge). The Group and its partners under the production sharing
agreements are in negotiation with the Government with respect to
the recoverability of these costs.
Kazakhstan local market obligation
The Government requires oil companies in the RK to supply a
portion of the products to meet the Kazakhstan domestic energy
requirement on an annual basis, mainly to maintain oil products
supply balance on the local market and to support agricultural
producers during the spring and autumn sowing and harvest
campaigns.
Kazakhstan local market oil prices are significantly lower than
export prices and even lower than the normal domestic market prices
determined in an arm-length transaction. If the Government does
require additional crude oil to be delivered over and above the
quantities currently supplied by the Group, such supplies will take
precedence over market sales and will generate substantially less
revenue than crude oil sold on the export market, which may
materially and adversely affect the Group's business, prospects,
consolidated financial position and performance.
In 2021, in accordance with its obligations, the Group delivered
7,114 thousand tons of crude oil (2020: 6,401 thousand tons) to the
Kazakhstan market.
Oil supply commitments
As of December 31, 2021 the Group had commitments under the oil
supply agreements in the total amount of 8.6 million ton (as at
December 31, 2020: 13.5 million ton).
Commitments under oilfield and mining field licenses and
subsurface use contracts
As at December 31, 2021 the Group had following commitments on
fulfillment of minimal work programs with respect to the
requirements of their oilfield and mining licenses and related
subsurface use contracts with the Government (in millions of
tenge):
Capital Operational
Year expenditures expenditures
----------- -------------- --------------
2022 566,633 179,784
2023 357,231 92,853
2024 437,950 94,638
2025 348,609 98,423
2026-2059 3,328,346 1,544,673
----------- -------------- --------------
Total 5,038,769 2,010,371
----------- -------------- --------------
Capital commitments
As at December 31, 2021 the Group, including its joint ventures
and associates, had capital commitments of approximately 2,269,940
million tenge related to acquisition and construction of property,
plant and equipment (as at December 31, 2020: 2,416,411 million
tenge).
37. COMMITMENTS AND CONTINGENCIES (continued)
Capital commitments (continued)
As at December 31, 2021, the Group had commitments in the total
amount of 592,889 million tenge (as at December 31, 2020: 321,724
million tenge) under the investment programs approved by the joint
order of Ministry of Energy of the Republic of Kazakhstan and
Committee on Regulation of Natural Monopolies and Protection of
Competition of the Ministry of National Economy of the Republic of
Kazakhstan (hereinafter - the "CRNM") to facilitate production
units.
Commitments on secondary use of anti-crisis funds
As at December 31, 2021 the Fund's commitments included
commitments to finance the program "Nurly Zher" programme (formerly
the Affordable Housing Programme 2020) in the amount of 3,241
million tenge and commitments to finance investment projects in the
amount of 8,919 million tenge, including the following:
-- Financing the implementation of the investment project
"Construction of an integrated gas chemical complex in Atyrau
region. The first Phase" in the amount of not greater than 8,063
million tenge;
-- Financing of the project "Creation of a special economic zone
"Taraz Chemical Park" in the amount of 201 million tenge;
-- Financing the acquisition of three leased aircraft by Qazaq
Air JSC in the amount of 655 million tenge.
38. Segment reporting
For management purposes, the Group is organized into
organizational business units based on their products and services,
and has 8 (eight) reportable operating segments (Note 1 ).
Certain of operating segments have been formed by aggregation of
smaller reportable segments in line with the organizational
structure of the Group. Each reportable segment maintains its
accounting records in line with IFRS. Financial performance of each
segment prepared in line with IFRS is reported to the chief
operating decision maker for the purposes of making decisions about
allocating resources to the segment and assessing its
performance.
Eliminations represent the exclusion of intra-group turnovers.
Inter-segment transactions were made on terms agreed to between the
segments that may not necessarily be at market rates, except for
certain regulated services, which are provided based on the tariffs
available to related and third parties.
38. SEGMENT REPORTING (continued)
The following table represents information about profit and
loss, assets and liabilities of operating segments of the Group for
2021:
In millions of Oil and Corporate
tenge gas Mining Trans-portation Com-munication Energy Industrial center Other Elimination Total
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- -------- ------------ ------------
Revenues from
sales
to external 624, 11,709,
customers 7,314,716 1,415,150 1,619,200 383 649,753 30,567 41,144 14,745 - 658
Revenues from
sales
to other 4,18 (469,2
segments 47,846 79 4,026 4 87,462 5,529 297,783 22,320 29 ) -
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- -------- ------------ ------------
628, (469,2 11,709,
Total revenue 7,362,562 1,415,229 1,623,226 567 737,215 36,096 338,927 37,065 29 ) 658
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- -------- ------------ ------------
Geographical
markets
607, (469,2 4,747,
Kazakhstan 1,343,883 749,320 1,399,420 216 712,787 27,983 338,927 37,065 29 ) 372
Other countries 6,018,679 665,909 223,806 21,351 24,428 8,113 - - - 6,962,286
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- -------- ------------ ------------
22 2 27 5 2,97
Gross profit 1,896,249 288,594 407,454 , 481 190,305 6,959 , 203 18,122 (335,152) 0 , 215
General and (5 7 (4 49
administrative , 456 , 492
expenses (215,143) (37,336) (108,931) ) (26,152) (6,595) (24,419) (3,970) 30,510 )
Transportation
and selling
expenses (692,357) (15,784) (6,950) (13,769) (12,249) (1,151) - (5) 13,934 (728,331)
34 , 1 74
Finance income 117,541 11,108 22,062 9,004 11,290 1,863 28,152 919 (61,041) , 898
(3 4 (55 5
(37, , 576 , 537
Finance costs (304,745) (7,425) (151,194) (49,417) (54,315) (6,173) 786 ) ) 90,094 )
Share in
profits/(loss)
of joint
ventures and
associates 999,424 118,554 10,826 - 11,509 (219) 1,986 2 - 1,142,082
Foreign
exchange
gain/(loss),
net 110,922 3,131 3,727 2,3 49 2,390 (28,979) (93,264) (363) (690) (777)
Depreciation,
depletion
and
amortization (595,203) (69,949) (195,162) (121,822) (76,816) (6,240) (2,147) (2,658) 3,800 (1,066,197)
Impairment of
property,
plant and
equipment,
exploration
and evaluation
assets and
intangible
assets (95,961) 4,885 (1,860) (5,961) (20,849) (2,542) - (90) - (122,378)
Impairment of ( 18
other , 326
assets (162) (2,862) (7) (396) 577 (500) ) 624 13,647 (7,405)
(5 61
Income tax (2,94 ( 4 , , 036
expenses (388,631) (61,510) (36,617) (30,196) (30,806) (468) 2 ) 370 ) (5,496) )
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- -------- ------------ ------------
Total net
profit/(loss) 89 , 10 ,
for the year 1,456,260 291,732 150,356 760 76,273 (38,795) 130,893 467 (258,589) 1,908,357
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- -------- ------------ ------------
Other segment
information
Total assets of (7,9
the 1,341, 8,3 09 3 73 26 , 2 30,3
segment 18,592,151 2,739,861 4,133,241 590 1,616,981 1,128,970 , 598 , 645 79) 09 , 758
Total
liabilities of 217, 13,136,
the segment 6,790,420 469,838 2,820,223 667,222 788,374 884,803 1,790,290 503 (1,292,007) 666
Allowances for
expected
credit losses
for doubtful
accounts (2,943) (248) 108 (2,768) (974) 125 - 115 (400) (6,985)
Investments in
joint
ventures and
associates 4,851,977 703,195 27,688 - 90,472 5,215 35,013 15 (32,341) 5,681,234
Capital (97,5
expenditures (535,515) (71,066) (412,021) (123,986) 74 ) (336,848) (307) (4,883) 9,758 (1,572,442)
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- -------- ------------ ------------
38. SEGMENT REPORTING (continued)
The following table represents information about profit and
loss, assets and liabilities of operating segments of the Group for
2020:
In millions of Oil and Corporate
tenge gas Mining Trans-portation Com-munication Energy Industrial center Other Elimination Total
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- --------- ------------ ------------
Revenues from
sales
to external
customers 4,838,789 1,227,048 1,309,894 561,602 555,963 12,151 30,691 19,871 - 8,556,009
Revenues from
sales
to other
segments 28,911 189 3,969 4,662 124,398 8,586 272,124 12,099 (454,938) -
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- --------- ------------ ------------
Total revenue 4,867,700 1,227,237 1,313,863 566,264 680,361 20,737 302,815 31,970 (454,938) 8,556,009
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- --------- ------------ ------------
Geographical
markets
Kazakhstan 1,090,531 661,039 1,193,100 547,388 654,024 15,288 302,815 31,970 (454,938) 4,041,217
Other countries 3,777,169 566,198 120,763 18,876 26,337 5,449 - - - 4,514,792
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- --------- ------------ ------------
Gross profit 1,143,283 278,252 276,454 186,966 179,342 691 182,407 14,830 (289,529) 1,972,696
General and
administrative
expenses (191,562) (32,936) (100,820) (49,214) (26,988) (5,698) (24,540) (4,012) 9,895 (425,875)
Transportation
and selling
expenses (639,237) (14,444) (4,870) (12,869) (12,647) (1,113) - - 14,631 (670,549)
Finance income 110,261 6,296 47,448 7,673 10,231 686 36,538 15,586 (54,531) 180,188
Finance costs (320,188) (8,203) (187,814) (52,992) (59,364) (5,968) (37,210) (15,331) 78,117 (608,953)
Share in
profits/(loss)
of joint
ventures and
associates,
net 518,157 115,387 11,111 - 11,685 (2,083) (12,649) - - 641,608
Foreign
exchange
gain/(loss),
net 199,385 4,076 (57,823) 7,124 2,694 (31,029) (75,732) 1,831 (432) 50,094
Depreciation,
depletion
and
amortization (552,964) (62,880) (180,682) (114,241) (78,336) (7,088) (2,208) (1,744) 1,346 (998,797)
Impairment of
property,
plant and
equipment,
exploration
and evaluation
assets and
intangible
assets (263,358) (7,107) (12,864) (5,792) (466) (3,591) - - - (293,178)
Impairment of
other
assets (37,932) (3,015) (19,380) (890) (1,104) (1,659) 1 2 ,120 (1,203) 2,500 (50,563)
Income tax
expenses (117,493) (64,875) (9,010) (20,975) (24,216) (130) (3,724) (4,143) (2,049) (246,615)
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- --------- ------------ ------------
Total net
profit/(loss)
for the year 262,506 293,832 (35,745) 59,924 72,821 (52,164) 201,679 7,009 (227,320) 582,542
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- --------- ------------ ------------
Other segment
information
Total assets of
the
segment 16,854,461 2,411,794 3,861,110 1,220,457 1,574,935 804,995 7,738,822 337,307 (7,321,035) 27,482,846
Total
liabilities of
the segment 6,535,391 377,221 2,701,075 664,364 756,442 609,561 1,696,538 199,447 (1,208,808) 12,331,231
Allowances for
expected
credit losses
for doubtful
accounts (2,222) 320 (552) (2,470) (1,860) (541) - 124 218 (6,983)
Investments in
joint
ventures and
associates 4,214,205 650,943 21,218 - 79,035 5,273 4 7 ,330 13 (32,341) 4,985,676
Capital
expenditures (490,344) (49,446) (340,727) (116,242) (93,861) (349,854) (601) (3,086) 9,725 (1,434,436)
---------------- ----------- ---------- ---------------- --------------- ---------- ----------- ---------- --------- ------------ ------------
39. Subsequent events
Dividends received
In January 2022, the Group received dividends from joint
ventures of the Group: Kazakhoil-Aktobe LLP, KazGerMunay LLP and
Mangistau Investment B.V. of 3,000 million tenge, 4,338 million
tenge and 97 million US dollars (equivalent to 41,996 million tenge
as at payment date), respectively.
Dividends declared to the Group
On March 31, 2022, the associated company Kazzinc LLP announced
the distribution of net profit in the form of a dividend to the
participants. The amount of declared dividends to the Group
amounted to 88,819 million tenge, 10,000 million tenge of which
were paid on April 18, 2022.
Other distributions to the Shareholder
On April 15 2022, the Group made a payment to finance projects
aimed at the development of Kazakhstani professional sports and
elite sports in the amount of 9,700 million tenge based on the
Resolution of the Shareholder.
Inspections
Starting from January 2022, various state bodies have initiated
inspections in some companies of the Group. Currently, the
inspections have not been completed and, accordingly, the Group is
unable to assess the impact on the consolidated financial
statements.
State of emergency
On January 2, 2022 protests started in Mangystau region of
Kazakhstan related to significant increase in the liquified
petroleum gas retail price. Further, protests began in other cities
and resulted in riots, damage to property and loss of life. On
January 5, 2022 the Government declared a state of emergency.
During the protests internet access was restricted across
Kazakhstan, bank operations and transactions were suspended, the
stock and commodity exchanges were closed. From January 5, 2022 the
movement of trains at some stations had been suspended. Also,
flights to Almaty from January 5 to January 14, 2022, and to Aktau
from January 4 to January 9, 2022 had been suspended. During the
period from January 9 till January 14, 2022, the Group has fully
ensured the stability of railway freight and passenger
transportation and air traffic.
As a result of the above protests and state of emergency the
President of the Republic of Kazakhstan has made certain public
announcements regarding possible measures including amendments to
the tax legislation, introducing measures for financial stability,
controlling and stabilizing the inflation rate and the tenge
exchange rate. On January 19, 2022 the state of emergency was
lifted.
On January 24, 2022, the Shareholder approved an action plan
(hereinafter - the "Plan"), which was developed in pursuance of the
assignment by the President of Kazakhstan on the subject of
reforming all areas of activity of the Fund and its portfolio
companies. The Plan reflects the implementation of systematic
measures to change the personnel policy, the procurement system,
initiatives to increase the corporate social responsibility by the
Fund and its portfolio companies, support business, improve the
processes of the compliance service, new approaches to dividend and
investment policy, privatization of assets and development of human
capital. The Group has started to implement the Plan.
The Group is currently unable to quantify what the impact, if
any, may be on the financial position of the Group of any new
measures the Government may take or any impact on the Kazakhstan
economy as a result of the above protests and state of
emergency.
Impact of sanction risks
In February 2022, due to the conflict between the Russian
Federation and Ukraine, numerous sanctions have been announced by
majority of western countries against the Russian Federation. These
sanctions are targeted to have a negative economic impact on the
Russian Federation.
Due to the growing geopolitical tensions, since February 2022,
there has been a significant increase in volatility on the
securities and currency markets, as well as a significant
depreciation of the tenge against the US dollar and the euro.
The Group regards these events as non-adjusting events after the
reporting period, the quantitative effect of which cannot be
estimated at the moment with a sufficient degree of confidence.
39. SUBSEQUENT EVENTS (continued)
Impact of sanction risks (continued)
As at December 31, 2021, the Group had cash and cash equivalents
and amounts due from credit institutions in various currencies with
total amount of equivalent to 204,644 million tenge and borrowings
of 522,915 million tenge at subsidiaries of Russian banks. As at
the date of issue of these consolidated financial statements, cash
and cash equivalents and amounts due from credit institutions held
at subsidiaries of Russian banks equaled to 10,659 million tenge
due to the transfer of funds to Kazakhstan banks. The transfer was
made without any loss. As at the date of issue of these
consolidated financial statements borrowings due to subsidiaries of
Russian banks equaled 393, 948 million tenge.
Administrative offense in terms of environmental
requirements
Based on the results of an audit conducted by the Department of
Ecology of East Kazakhstan Region, on February 10, 2022 the Group
received calculations, according to which administrative fine
amounted to 18,516 million tenge under the protocol of
administrative offense. As of April 8, 2022 the Group received an
updated calculation of the administrative fine, which amounted to
10,470 million tenge.
The Group management does not agree with the calculation and
considers the probability of confirming the calculations as
unlikely. The Group began to challenge this administrative fine in
the court.
Investment in Uranium Fund
On November 22, 2021, the Group signed a Framework Agreement
with Genchi Global Limited to participate in ANU Energy OEIC Ltd
(hereinafter - "ANU Energy"), created on the Astana International
Financial Center (hereinafter - "AIFC"). The purpose of the ANU
Energy is to store physical uranium as a long-term investment, the
initial acquisition of which will be carried out through a joint
investment of the founders of ANU Energy in the amount of 50
million US dollars. The Group's required capital contribution to
ANU Energy is 24.5 million US dollars (equivalent to 12,368 million
tenge) and this amount was paid in March 2022.
After the start of ANU Energy's operations, as part of the
second stage of its development, it is expected to attract
additional investments of up to 500 million US dollars from
institutional and/or private investors through a public or private
placement in order to purchase additional volumes of uranium. The
parameters and timing of the placement will be determined by market
conditions.
Also, in accordance with the Framework Agreement, the Group and
ANU Energy signed a short-term contract for the sale and purchase
of natural uranium concentrates, under which the Group will supply
natural uranium concentrates no later than May 2022.
Damage of portable mooring devices 2 and 3 ("PMD-2" and "PMD
-3") at the Caspian Pipeline Consortium ("CPC") Marine Terminal
On March 21, 2022, as a result of damage of PMD-2 and PMD -3 due
to a severe storm in the Black Sea, oil loading at the CPC Marine
Terminal (Novorossiysk) was completely stopped. Currently, oil is
being shipped using PMD-1. The resumption of work in the normal
mode of PMD-3 is expected in the near future and this will allow
restoring the capacity of the CPC oil pipeline in full. Completion
of restoration work at PMD-2 is planned after the resumption of
operation of PMD-3.
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FR URVURUNUNOAR
(END) Dow Jones Newswires
June 30, 2022 09:24 ET (13:24 GMT)
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