Letter from
the Chairman of
the Board of
Directors of KEGOC
Almassadam Satkaliyev
Chairman of the Board
of Directors of KEGOC
Dear Shareholders:
2020 was not an easy year, but a very important one for KEGOC. In March, the Board of Directors decided to allocate 100% of net income to the payment of dividends to shareholders.
This fulfilled President Kassym-Jomart Tokayev’s instruction to the national companies to pay all their net profits in the form of dividends.
In 2020 the Board of Directors demonstrated a high quality of management decisions, taking into account the interests of all stakeholders. The Board of Directors approved an updated Portfolio and Roadmap for the Business Transformation Programme in 2020. The benefits of the Business Transformation Programme projects for 2020 amounted to KZT 2.3 billion. In addition, an updated version of KEGOC’s business continuity rules was approved and amendments were made to the Company’s Business Plan for 2020-2024.
In 2020, KEGOC successfully continued the implementation of the strategic goals and objectives defined by the Board of Directors in KEGOC’s Development Strategy 2018-2028, demonstrating a high-quality level of business process management, efficient performance of the functions of the system operator of the UPS, as well as financial reliability.
The company has demonstrated its commitment to the best standards of corporate governance and its adherence to the principles of transparency: the activities of the Corporate Governance Enhancement Plan have been successfully implemented.
As a major employer, KEGOC was committed to creating decent and safe working conditions for its employees, and the staff showed a high level of commitment by successfully carrying out their duties under the quarantine conditions and achieving good operational and financial performance. As a result, 2020 ended with a net income of more than KZT 53.5 billion.
All of this enables KEGOC to maintain a high profile and to be an industry leader across the entire spectrum of operation and financial activities and to demonstrate high social stability performance. The conclusions of international rating agencies also attest to this. For example, in 2020, Fitch Ratings affirmed KEGOC’s long-term rating at BBB- with a stable outlook.
The company enters 2021 confidently and is determined to achieve its goals and objectives. The sound strategy, highly qualified and engaged staff is the foundation on which KEGOC’s further growth will take place in 2021.
On behalf of the KEGOC Board of Directors, I would like to thank all partners for their mutually beneficial cooperation, the staff for their highly efficient work, and all stakeholders for their support.
Letter from
the Chairman of
the Management
Board of KEGOC
Bakytzhan Kazhiyev
Chairman of the Management
Board KEGOC JSC
Dear readers:
Despite the challenges of 2020, not only for KEGOC, but also for the country and the world, the Company was doing its best to implement all tasks assigned by its shareholders and the Board of Directors according to KEGOC’s Development Strategy and we managed to achieve good results for the year.
The team had to work under the growing threat of coronavirus infection. In order to minimise its spread, a large portion of the team has switched to teleworking. At the same time all employees retained the same wages and bonuses and continued receiving all the financial support stipulated in the Collective Agreement.
Also, in the reporting period, a new Collective Agreement for 2021-2025 was concluded between KEGOC and employee representatives, which was brought in line with new amendments to the Labour Code and regulations of the Republic of Kazakhstan, as well as the Sectoral Agreement in the field of energy.
It should be noted that our staff showed self-discipline and understood the need for self-isolation, and even in such circumstances did everything possible to ensure that KEGOC, as the organisation responsible for the viability of the country, would ensure the reliable operation of the UPS to maintain uninterrupted transmission of electricity to industrial enterprises and electricity supplying organisations. The personnel completed the repair campaign according to the schedule and KEGOC received the certificate of readiness for operation in the autumn-winter period 2020-2021 on time.
At the same time, the Company, in successful collaboration with the power systems of the neighbouring states, were engaged in controlling the parallel operation, ensuring stable operation of the Kazakhstan power system, which is one of the Company’s top priorities.
As a result, KEGOC provided the following services in 2020: electricity transmission in the amount of 46.2 billion kWh, or 5% more than in 2019; technical dispatch in the amount of 99 billion kWh (102%). The amount of electricity generation-consumption balancing services in 2020 was 192.9 billion kWh, or 2.2% higher than in 2019.
Net income for the year was more than KZT 53.5 billion, up 31.2% on 2019.
KEGOC’s strong financial position is clearly evidenced by the Company’s share price. In 2020, the market price per KEGOC share reached a historic high of KZT 1,756, up almost 3.5 times the price of its initial public offering (KZT 505). For the Company, respecting and realising shareholders’ rights and interests is the key. E.g., in 2020, the Company paid dividends twice to the total amount of more than KZT 32.7 billion.
In the reporting year, an important area of operations was the implementation of investment projects aimed at improving the reliability of the National Power Grid of Kazakhstan. These include the rehabilitation of 220-500 kV overhead lines at Aktyubinskiye MES, Zapadnye MES and Sarbaiskiye MES branches of KEGOC, and West Kazakhstan Electricity Transmission Reinforcement Project.
As part of “Digital Kazakhstan” state programme KEGOC has started to build smart grids and continues the successful implementation of the Business Transformation Programme together with the central team of the Samruk-Kazyna JSC.
In the context of COVID-19 pandemic, the issue of support for domestic producers has become acute. I am pleased to note that KEGOC is among Samruk-Kazyna’s portfolio companies, whose long-term partners are domestic commodity producers. The Company also successfully cooperates with the Disabled Society, from whom it traditionally purchases workwear for operation staff that meets modern requirements.
In 2020, the Company’s employees demonstrated a high level of social and labour relations within the team despite the pandemic. As a result, the Social Stability Index (acc. Samruk Research Services) of KEGOC operation personnel in 2020 was 91% and the Engagement Index of the administrative and managerial staff was 90%.
In 2021, we intend to continue the implementation of major investment projects, carry out all scheduled maintenance work on overhead lines and substation equipment in a timely manner and obtain a certificate of readiness for the autumn-winter period in 2021-2022. An important area of work will be the implementation of optimisation projects (REVEX) aimed at improving the efficiency of our Company’s operations. In addition, we will be introducing a Process Indicator Management System in 2021.
I am confident that in the coming year, KEGOC will achieve all of its goals based on the considerable experience of its administrative and operational staff, the financial stability of the Company and the application of best practices.
KEGOC’s
Corporate Events
in 2020
Zhandos Nurmaganbetov was appointed Managing Director for Strategy and Development.
Zhanibek Kuanyshbayev was appointed General Director of the Financial Settlement Centre for Renewable Energy Sources Support LLP.
Fitch Ratings affirmed KEGOC’s long-term foreign currency issuer default rating of BBB- with a stable outlook.
An extraordinary General Meeting of Shareholders of KEGOC was held by absentee voting, at which Zhanbota Bekenov was elected to the Board of Directors of KEGOC as an independent director.
On the occasion of the 75th anniversary of Victory in the Great Patriotic War and Defender of the Fatherland Day, KEGOC’s employees planted 75 trees.
KEGOC successfully placed bonds (KZT 9.7 billion at par value) at the Kazakhstan Stock Exchange (KASE) to the total of KZT 9.03 billion at a yield of 12% per annum. The securities were placed as the first bond issue of the second bond programme with total amount of KZT 80 billion. The payback period is 15 years. As a result, 89.6% of the bonds were purchased by second-tier banks, 9.9% by other institutional investors and 0.5% by other legal entities.
Kazakhstan’s Minister of Energy, Nurlan Nogayev, visited KEGOC and held a meeting to discuss the development of the electricity sector.
KEGOC’s Annual General Meeting of Shareholders was held, which approved the annual financial statements and net income distribution procedure, decided on payment of dividends on ordinary shares and approved the amount of dividends per one ordinary share of KEGOC for 2019.
KEGOC paid the interests for the fourth coupon period on bonds of the first issue within the first bond programme of KEGOC (NIN: KZP01Y15F281, ISIN: KZ2C00003572, main market: KASE, category: bonds, KEGCb1). The total amount of coupon interest paid amounted to KZT 3,752,500,000.00 (three billion seven hundred fifty-two million five hundred thousand tenge 00 tiyn), coupon yield: 7.9% (seven point nine percent) per annum.
KEGOC has paid dividends for 2019. The total amount of dividends was KZT 12.7 billion, or KZT 48.86 per ordinary share.
An extraordinary General Meeting of KEGOC Shareholders was held by absentee voting, at which the following decisions were taken: early terminate powers of Janusz Bialek, a member of KEGOC Board of Directors, independent director, and elect Nurlan Akhanzaripov to KEGOC Board of Directors as independent director.
KEGOC paid interest on the third coupon period on bonds of the second issue within the first bond program of KEGOC (NIN KZP02Y15F289, ISIN KZ2C00003978, KASE main market, category “bonds”, KEGCb2). The total amount of coupon interest paid was KZT 4.1 billion, with a coupon yield of 11.5% per annum.
KEGOC paid an author’s royalty of KZT 5 million to the employees of Vostochnye MES branch: Aleksei Zapolsky, Anatoli Ivanov, and Yerlan Tastanbekov for the innovator’s proposal of “Formation of OG-2 command when switching off L-2034 or L-2044”, the implementation of which saved KEGOC over KZT 51 million.
KEGOC, together with the Kazakhstan Stock Exchange (KASE), held the “Issuer Day” in a video conference format.
The event presented the Company’s performance for the first half of 2020.
KEGOC employees took part in a charity event to mark the International Day of Older Persons.
The Committee for Nuclear and Energy Supervision and Control of the Ministry of Energy of the Republic of Kazakhstan issued a certificate of readiness for operation in the autumn-winter period of 2020-2021 to KEGOC.
An Extraordinary General Meeting of KEGOC Shareholders was held, at which the semi-annual financial statements of KEGOC, the procedure for distribution of net income, the decision on payment of dividends on ordinary shares and the amount of dividend per one ordinary share of KEGOC for the first half of 2020 were approved.
KEGOC paid dividends on KEGOC ordinary shares for the first half of 2020. The total amount of funds allocated to dividends was KZT 20 billion, or KZT 77.09 per ordinary share.
The city of Nur-Sultan hosted one of the most important events in the regional electricity sector, the meeting of the Central Asian Electricity Coordination Council, chaired by KEGOC.
KEGOC announced the payment of interest on the first coupon period on bonds of the first issue within the second bond programme of KEGOC (ISIN KZ2C00006658, KASE main market, “bonds” category, KEGCb3) on 9 December 2020. The total amount of coupon interest paid was KZT 533,500,000.00 (five hundred thirty-three million five hundred thousand tenge 00 tiyn), coupon: 11.0% (eleven percent) per annum.
By decree of the President of the Republic of Kazakhstan on Independence Day the Order of Kurmet was awarded to Zhanabay Beksary, Chief of Staff – Managing Director for Human Resources Management of KEGOC, and Zhanabay Alshynbekov, Head of Akmolinskiye MES branch of KEGOC. The medals were awarded to Serikbay Ryskeldi, Director of Aktyubinskiye MES branch of KEGOC and to Bauyrzhan Arystanov, Head of the Operations Department.
An online event was held to celebrate the professional holiday of “Energy Worker Day” and the KEGOC Business Transformation Programme Information Day: IDEAS TO GROW with participation of representatives of Samruk-Kazyna JSC and colleagues of the Fund’s portfolio companies.
A new collective agreement for 2021-2025 was signed between KEGOC and employee representatives.
© 2021 Kazakhstan Electricity
Grid Operating Company
(KEGOC)
If Information Contained
in the Annual Report is Used, the User is Required
to Reference the Actual Report.
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Nur-Sultan, Z00T2D0
Kazakhstan
Tel.: +7 (7172) 69 38 24, 69 02 43
Fax +7 (7172) 21 11 08
E-mail kegoc@kegoc.kz
www.kegoc.kz