Head of State receives a report on activities of “Samruk-Kazyna” JSC from its CEO

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27 October 2016

On October 27, 2016; President of Kazakhstan Nursultan Nazarbayev received a report from CEO of «Samruk-Kazyna» JSC Umirzak Shukeyev. In its report, the CEO outlined the results and activities of the Fund in the last nine months of the year, as well as the implementation of the transformation and privatization programs.

Chairman of the Management Board, in his report, noted the positive dynamics in the financial performance of the Group over the specified period. In particular, the consolidated revenues of the Fund Group, according to preliminary data, amounted to 3 trillion 927 billion tenge, and the operating profit before taxes of the top 12 portfolio companies - 405 billion tenge which is 297% higher than the plan and 114% higher than the same period of 2015.

The report noted that the production performance of the Fund's group is, generally, in line with the plans: production of oil and gas condensate amounted to 16.74 million tons, the volume of natural gas - 3.54 billion cubic meters. Similarly, Cargo turnover of KTZ for the first nine months of 2016 amounted to 136 billion ton-kilometers, and passenger turnover of KTZ - 13.7 billion passenger-kilometers. The volume of uranium mining by «NAC» Kazatomprom» JSC was 18.1 thousand tons.

From 2012 to 2016, the Fund has achieved good results and addressed the key issues. Transformation road for its structure and activities, as well as the long-term development strategy of the Fund group, has been set. In particular, the Fund has improved its EBITDA margin efficiency. As per the preliminary results of 2016, it is expected to reach 22% from the level of 16% in 2011. The indicator of external debt of the Fund as at June 30, 2016 amounted to US$ 16.8 billion. This is significantly lower than the amount of external debt of 2010 (less by US$ 12 billion due to the restructuring of BTA Bank and reduction of KMG debt).

The Fund carries out systematic work on the transformation to be a strategic holding company that manages assets through a Board of Directors and key performance indicators. Recently, the Fund has adopted a new organizational structure, fully compliant with the new strategic objectives of the OECD standards and in consonance with the best international practices.

In particular, as part of the Transformation program, the number of companies in the Fund's group has been reduced from 600 to 525, and the number of management levels from nine to seven. By the end of 2018, the number of the Fund companies will be reduced to 300, and the number of management levels up to four. The corporate center of «Samruk-Kazyna» JSC has strengthened requirements for positions, assessed compliance of positions, developed a transparent recruitment process, and has progressed on criteria for evaluation of performance. As a result, the staff of the Fund has been renewed by 40%, the number of managing directors has been reduced from 16 to 9, and the number of employees by 15%.

The President was also informed about the status of the Fund’s privatization program and the recent development on its plan to transfer 216 assets to private environment. To date, the State Commission for Economic Modernization has agreed on implementation methods of 133 assets and 39 assets, among them, of worth 7.4 billion tenge have already been sold. The Fund has devised plans and preparations in advance for the implementation of the remaining assets which are to be transferred to the competitive environment in accordance with the Comprehensive privatization plan for 2016-2020.

As part of the Fund's participation in State Program for Innovation and Industrial Development of Kazakhstan -2 (SPIID-2), the Fund continues to implement 11 out of 22 projects worth US$ 26 billion. In addition to large-scale projects in traditional industries such as in oil & gas and in energy sectors, the Fund implements projects in priority sectors of SPIID-2, in ferrous and nonferrous metallurgy, and in oil-gas and agrochemicals. A number of sites have been built and about two thousand jobs have been created. There will be further creation of over 25 thousand jobs during the construction phase and more than four thousand during the operation phase. Under the «Nurly Zhol» program, the Fund implements seven projects with an investment of US$ 2 billion which is likely to contribute in creation of 6,500 temporary jobs and more than 1,200 permanent jobs. Transport and logistics with an immense transit potential, as well as infrastructure and energy projects are currently under implementation.

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