INTRODUCTION

JSC NMSK Kazmortransflot (hereinafter – KMTF) was established by Decree of the Government of the Republic of Kazakhstan dated December 4, 1998 No. 1239.

On October 21, 2013 JSC NMSK Kazmortransflot was transformed into LLP NMSK Kazmortransflot (protocol SD of JSC NC KazMunayGas No. 9/2013 clause 3 of June 20, 2013). As of December 31, 2019, the size of the authorized capital KMTF is 11,575,721 thousand tenge.

KMTF is a national operator of sea, coastal shipping and represents the interests of Kazakhstan in the Caspian Sea. Currently, KMTF carries out the following activities: sea oil transportation; the provision of forwarding services; service fleet services; rendering of fleet services to support maritime operations and rental of office premises.

Sea transportation of oil includes oil transportation to the Caspian ports of Makhachkala (Russia), Baku (Azerbaijan), Turkmenistan and in the open seas.

    KMTF’s asset structure includes:

  • Merchant fleet: own oil tankers: Astana, Almaty and Aktau, each of them with a deadweight of 12,000 tons; Atyrau, Aktobe, Oral with a deadweight of 13,000 tons. As well as oil tankers of the Aframax type – Alatau and Altai, each of them with a deadweight of 115,000 tons.
  • Fleet supporting maritime operations (FPMO): 12 units – main tugboats “Esil”, “Tobol”, “Ural”, “Irtysh”, 8 barge platforms of the KMG series with a carrying capacity of 3,600 tons each;
  • fleet for participation in the Tengizchevroil Future Expansion Project: 3 MCV class ships Barys, Berkut and Sunkar and 3 tugs Talas, Emba and Irgiz.

Brief information on the structure of company assets

Name of organization in the structure of NMSK Kazmortransflot LLP

Share

Included in consolidation

Consolidation method (full, proportional, equity, value)

1

Kazmortransflot Ltd

100%

Yes

full

2

Kazmortransflot UK Ltd

100%

Yes

full

3

Alatau Shipping ltd

100%

Yes

full

4

Altai Shipping ltd

100%

Yes

full

ANALYSIS OF COMPANY ACTIVITY

1. Manufacturing program

(thousand tons)

Indicators

2016

2017

2018

2019

Growth rate by years

fact

fact

fact

plan

fact

А

1

2

3

4

5

6

7=3/2

8=6/5

9=6/4

1

Oil transportation in total, including:

7 081

6 951

7 077

5 490

10 728

98%

195%

152%

1.1

over the Caspian Sea

2 875

2 480

2 738

450

543

86%

121%

20%

1.1.1

in the direction of Aktau-Makhachkala

1 611

662

1 875

450

505

41%

112%

27%

1.1.2

in the direction of Aktau-Baku

33

234

0

0

0

709%

1.1.3

in the direction of Turkmenistan-Makhachkala

1 072

137

0

0

38

13%

1.1.4

in the direction of Makhachkala (Y. Korchagin) -Baku

159

1 447

863

0

0

908%

0%

1.2

on the open seas

4 206

4 471

4 339

5 040

10 185

106%

202%

235%

1.2.1

towards the Black Sea

2 968

3 024

1 861

2 880

3 678

102%

128%

198%

1.2.2

in the direction beyond the Black Sea

1 238

1 447

2 478

2 160

6 507

117%

301%

263%

Oil transportation

The total volume of KMTF oil transportation in 2019 amounted to 10 728 thousand tons of oil, or 195% compared to the planned indicator (5 490 thousand tons).

In the Caspian Sea, the volume of oil transportation in 2019 amounted to 543 thousand tons, or 121% of the plan (450 thousand tons). Basically, tanker shipments of Kazakhstan oil from Aktau port to the port of Makhachkala were carried out from the resources of Karazhanbasmunai JSC. Additional volumes of oil transportation provided by the resources of the shipper of Eurasian Trading & Shipping FZE.

In 2019, KMTF operated its own tanker Atyrau on this line, and the chartered Kazakhstan tankers Abai and Kazakhstan were also involved.

Compared to 2018, there is a decrease in transportation volume to 27% due to the trend of a decrease in the supply of Kazakh oil to the port of Aktau.

In the open seas, the volume of oil transportation in 2019 amounted to 10 185 thousand tons or 202% of the plan (5 040 thousand tons). On October 30, 2018 a Framework agreement on deliveries and transportation was concluded between JSC NC “KazMunayGas”, “KMG International N.V.” and NMSK Kazmortransflot LLP, which allowed to improve production indicators of oil transportation in open seas, overfulfillment is observed in comparison with the planned indicator

2. Key Consolidated Financial and Economic Indicators

(million tenge)

Indicators

2016

2017

2018

2019

Growth rate by years

fact

fact

fact

plan

fact

А

1

2

3

4

5

6

7=3/2

8=6/5

9=6/4

1

Revenues, including:

23 031

23 832

44 562

43 229

97 293

103%

225%

218%

1.1

Operating income

22 457

22 505

43 092

43 110

96 246

100%

223%

223%

1.2

Financing income

343

52

46

33

125

15%

383%

275%

1.3

Income from non-core activities

230

1 274

1 424

87

922

554%

1060%

65%

2

Costs, including:

22 536

23 758

38 104

44 071

91 584

105%

208%

240%

2.1

Cost price

17 716

19 642

29 153

40 164

72 783

111%

181%

250%

2.2

General and administrative expenses

2 515

2 291

3 155

2 594

2 801

91%

108%

89%

2.3

Implementation costs

54

40

194

25

1 145

74%

4495%

591%

2.4

Financing costs

1 502

1 138

2 134

1 219

1 877

76%

154%

88%

2.5

Non-core expenses

748

648

3 468

70

12 978

87%

18541%

374%

3

Profit / loss before tax

495

74

6 457

-842

5 709

15%

-678%

88%

4

CIT expenses

-1 978

321

3 515

0

1 876

-16%

53%

5

Total profit

2 473

-247

2 942

-842

3 833

-10%

-455%

130%

6

Capital investments

1 246

29 265

11 934

1 409

1 359

2348%

96%

11%

KMTF revenues for 2019 amounted to 97,293 million tenge, which is 225% of the plan. In relation to the same period last year, revenues amounted to 218%.

Revenues from the core business of KMTF for 2019 amounted to 96,246 million tenge, which is 223% of the planned indicator. The growth is due to the implementation of the production program by 95%, as well as an increase in actual tariffs for freight in open seas. In relation to the same period last year, revenues amounted to 223%.

Income from financing for the reporting period amounted to 125 million tenge or 383% of the plan.

Revenues from non-core activities for the reporting period of the current year amounted to 922 million tenge.

Expenditures for 2019 under KMTF are 91,584 million tenge, which is 208% of the plan. In relation to the same period, expenses amounted to 240%.

Expenditures on KMTF core business for 2019 amounted to 72,783 million tenge or 181% of the plan. The growth was due to the availability of additional resources from shippers in open seas, respectively, tankers were chartered, in connection with this there were additional costs for a scheduled charter. Accordingly, compared with the same period last year, there is an increase in consumption.

For 2019, general and administrative expenses amounted to 2,801 million tenge, or 108%. In relation to the same period, expenses amounted to 89%.

Costs of sales amounted to 1,145 million tenge. The excess occurred on expenses for brokerage commissions, and this was due to the involvement of the leased fleet, as well as the search for customers for its own fleet (Altai and Alatau) to provide oil transportation services in the open seas. Compared to the same period last year, expenses amounted to 591%.

Financial expenses amounted to 1,877 million tenge or 154% of the plan. Compared to the same period last year, expenses account for 88% due to an increase in the average exchange rate.

Non-core business expenses amounted to 12 978 million tenge. In 2019, an impairment was accrued on KMTF vessels of KZT 12,604 million.

The total profit for 2019 is 3,833,196 thousand tenge, against the planned loss of 841,849 thousand tenge. The main reasons for improving the indicator from the plan are as follows:

1) execution of the production program for oil transportation by 95%;

2) increase in tariffs for open seas by 63% ($ 11.40 / $ 7);

3) excess of income under the TCO Future Expansion Project from the target;

4) changes in macro forecast indicators, an increase in the US dollar rate by 9%.

Capital investments for 2019 amounted to 1,359 million tenge, or 96% of the plan.