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Presentation for Investors February 15, 2010 1 Contents 1. Executive summary 2. Macroeconomic and Sector Overview 3. Ownership Structure and Group Overview 4. Business Overview and Strategy 5. Investment Projects 6. Financial Profile 2 Executive summary 3 Executive summary We are pleased to welcome investors to this presentation Purpose of this presentation is to brief you on the latest developments of ICA, provide an update on its financial performance and to discuss business strategy, financial policy and financial projections 100% Government owned through KazMunaiGas and KazTransGas with tangible evidence of government support Monopoly operator for gas transmission in Kazakhstan with no plans to allow competition or privatization Only feasible route for gas transit from Central Asian producers to European consumers Crucial link for Gazprom’s imports from Turkmenistan and Uzbekistan Long-term concession agreements in low risk business ICA’s 2009 financial results benefited from increase in international transit tariffs Notwithstanding the global economic downturn, ICA is continuing to demonstrate strong financial performance and sound financial position ICA is undertaking certain actions to weather downturn and is accordingly progressing important strategies and initiatives, which include revision of the capex programme, improving ICA’s liquidity management. 4 Macroeconomic and Sector Overview 5 Kazakhstan: Strong Market-Oriented Macroeconomic Environment GDP Growth (%) 140 120 100 80 60 40 20 0 2009 Economic Overview 130,9 132,3 103,8 77,2 56,1 21,5 13,5 23,2 9,8 30 9,3 41,8 9,7 10,6 9,6 8,5 3,2 1,1 2001 2002 2003 2004 2005 2006 2007 2008 2009 Nominal GDP (US$ bn) Population 16.2 mm GDP per Capita USD 8,451 GDP growth (real) 1.1% Trade balance/GDP 13.91% Total Debt/GDP 103.5% Real GDP (% change) Gross International Reserves and Inflation 50 46,7 47,6 200 38,6 40 30 20,8 20 10 Evolution of Tenge Against US Dollar 4,8 8,9 8,0 8,4 2,6 6,43,2 6,6 6,7 6,8 7,5 146,74 153,28149,58 136,04132,88 150 18,8 9,5 150 122,55 120,77 6,2 100 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2001 2002 2003 2004 2005 2007 2008 2009 Gross international reserves (US$ bn) Inflation (% change; end-period) Exchange rate KZT:US$ (average) Source: EIU, CIA 6 Energy Sector Outlook Global Conditions Kazakhstan Market 2009 With world oil prices rebounding from their early 2009 level due to global downturn, consumers tend to be willing for less expensive natural gas for energy needs. Thus, natural gas is expected to be the fastest growing component of world primary energy consumption The world energy gas consumption is expected to increases from 104 trillion cubic feet in 2006 to 153 trillion cubic feet in 2030 Proved gas reserves Gas production 3.7tcm Gas reserves/Production 104 years Proved oil reserves Oil production 35.1bn barrels 1.5 mln barrels per day Oil reserves/Production 63 years 35.6bcm Source: BP 2007 Statistical ReviewGas of World Energy Expected Domestic Production Global Consumption Growth Rates and Consumption (bcm) Average predicted % growth rate until 2025 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 50 40 30 20 10 0 2006 2.8 1.8 1.9 1.6 0.3 Oli Gas Coal Nuclear energy Other 2007 2008 2009 Production Source: Annual energy outlook 2004, International Energy 2005 Outlook Source: Wood Mackenzie 7 2010 2011 Domestic Demand 2012 2013 Natural Gas Demand Drives ICA’s Transmission Volumes Despite the current weakening of the global demand for energy due to the economic slowdown, in the longer term European demand for gas is expected to increase up to 700 bcm by 2030 from 540bcm in 2005, 480 bcm of which will be European import demand The gap between Russian company Gazprom’s domestic production and exports commitments will be between 200 and 300bcm in 2010: 200bcm will be sourced by Gazprom internally Given Gazprom’s low growth of long-term gas production, the additional 100bcm will be sourced from Uzbekistan, Kazakhstan, and Turkmenistan. The 25-year supply contract in 2003 between Russia and Turkmenistan supports this assumption Gazprom’s demand for gas from Turkmenistan and Uzbekistan is driven in turn by the demand for gas in Russia, Ukraine, Poland as well as in Europe Volumes of domestic Kazakh gas may also significantly increase over the next 4-5 years (mainly due to exploration of the Kashagan oil field discovered in 2000) Transported volumes of gas and demand for transit capability are expected to increase in the short and medium terms ICA will remain the sole route for transportation of gas from Central Asia to European markets irrespectively of who will be operating under gas supply contracts (Gazprom, Ukraine, Kazakh-based gas exporting producers) Source: World Energy Investment Outlook Source: World Energy Investment Outlook 8 Ownership OwnershipStructure Structureand and Group GroupOverview Overview 9 Ownership Structure - 100% (Indirectly) Government Owned Government of Kazakhstan 100% JSC “Sovereign Wealth Fund “SamrukKazyna” 100% JSC “NC KazMunaiGas” 100% JSC “KazTransGas” 100% JSC “Intergas Central Asia” Government support Supportive Regulatory Environment Government Control Government stake – 100% capital and 100% control Consideration towards company’s interests Control over investment and dividend policy Implicit government support in negotiations with off-takers, suppliers and transit countries Unique status of exclusive agent for Kazakh gas exports It is the Government policy that all new major pipeline projects be led by KazTransGas Prudent Shareholder with LongTerm Strategic Vision Key strategic role of ICA as a sole operator of natural gas pipeline infrastructure in Kazakhstan Approval of key financial and financing parameters of KazTransGas History of reinvesting earnings into business development and modest dividends Data as of February 15, 2010 10 Group Structure – An Overview KazMunaiGas (KMG) KazMunaiGas is the National Oil and Gas Company of Kazakhstan, which is wholly-owned by the Sovereign wealth fund JSC («Samruk-Kazyna»), which is in turn 100% owned by the Government KMG is in charge of all the government’s commercial activities in the oil & gas industry, including prospecting, development, production, transportation, services, holding the monopoly over oil & gas pipelines in Kazakhstan and controls 60% of crude production and 100% of gas transportation KMG plays an active role in approving strategic decisions and business plans of KazTransGas KazTransGas (KTG) KazTransGas was established in accordance with the Resolution of the Government of the Republic of Kazakhstan No. 173 dated February 5, 2000 KTG is a 100% subsidiary and one of the three main businesses of the KMG Group The main goal of KTG is to manage the state’s strategic interests in the gas industry of the country and there are no plans for privatization 50% of revenues relate to the stable and profitable business of gas transmission. The main source of revenues is International Transit, which represents USD 822million, or 90% of gas transmission in 2009 11 Group Structure – An Overview Intergas Central Asia Intergas Central Asia, JSC (“ICA”) was incorporated in June 1997 and currently, being a member of KazTransGas group of companies (a subsidiary of the NC KazMunayGas) has the primary responsibility to operate and manage the gas transportation networks of Kazakhstan granted to ICA under the terms of concession. The principal activities of Intergas Central Asia focus on operation and maintenance of the main gas transportation system securing transmission of natural gas to domestic consumers and international gas transit. Notably, Intergas Central Asia controls and manages the main gas pipeline transportation system of the Republic of Kazakhstan with the total length of gas pipelines in excess of 11,000 km. Given the on-going reconstruction the throughput capacity of the pipelines has been invariably increasing. Within Kazakhstan, ICA is responsible for transportation of natural gas through 10 main gas pipelines serviced by 22 compressor stations equipped with 284 gas compressor units of various types and models. The most important in terms of transmission volumes is the main gas pipeline Central Asia-Center (“CAC”) with the aggregate length of 4,892 km in one-line estimation. In addition, ICA operates three underground gas storages (“UGS”), the biggest being Bozoi UGS located in Aktobe region. Others are Poltoratskoye UGS located in the Southern-Kazakhstan region and Akyrtobe UGS in Zhambyl region. Underground gas storages are used to smooth the seasonality of gas demand supplying extra natural gas in winter and during the periods with lower gas imports. 12 Organisational Structure of KTG JSC «KazTransGas» Main pipeline transmission of natural gas Intergas International B.V., 100% Domestic distribution and supply of natural gas JSC KazTransGas Aimak, 100% JSC KTG-Almaty, 100% JSC «Intergas Central Asia», 100% Gas and Gas Condensate Production Amangeldy Gas LLP, 100% JSC KazTransGas LNG, 100% Production and distribution of heat and power energy Samruk-Energo, 8,4% KazTransGas AG, Lugano, 50% Service companies Intergas Finance B.V., 100% Gazinservis LLP, 100% KTG- Tbilisi, 100% Center for for HR Center HR Development, Development, 5,5% 5.5% JV KyrKazGas, 50% JV Asian Pipeline, 50% 13 Corporate Governance Overview KazTransGas as a parent company conducts a policy of consistent improvement of corporate governance in ICA: KTG has created the following documents which were approved by KMG: – Corporate Governance Code – Statute on Board of Directors (2 out of 5 directors are independent) – Policy on Risk Management – Statute on Risks Committee – Rules of Risk Management Process Organization ICA has a well-defined five-year business plan (up to 2014) approved by its shareholders ICA current performance is aligned with long-term strategic goals through strategic scorecards approved by KMG ICA management performance is expected to be evaluated based on achievement of key performance indicators in 2009 14 Business Overview and Strategy 15 Intergas Central Asia – An Overview ICA Overview ICA Revenues 2004-2009 2005 2006 2007 2008 2009 258.89 306.71 502.21 548.27 678.206 712,471 Russian gas (transit) 84.11 83.76 82.98 67.40 80.882 91.133 Kazakh gas (to outside of the country) 21.40 22.89 32.82 43.72 58.357 66.279 Kazakh gas (within the country) 15.07 17.46 17.98 22.35 23.368 17.117 4.56 3.98 5.15 6.34 6.03 1.970 384.33 434.80 641.15 687.44 846.843 888.970 Revenues from sales of gas 0.23 1.93 14.56 - 0.17 Revenues from technical services 0.33 0.64 0.90 2.04 2.070 1,852 Revenues from gas storage 0.30 0.28 0.32 0.42 1.433 3.057 893.880 5% Transportation services: Central Asian gas (transit) Principal business is transportation of natural gas and, to a lesser extent: – management, maintenance and operation of the gas transportation system – storage of natural gas and provision of technical services to third parties – sales of natural gas to related parties Only route for gas transit between Central Asian producers and European consumers Robust and consistent cashflow generation 2009 total revenue: USD 893.880mm Increased 2009 revenues were mainly driven by international tariff increases with increased volumes of transported gas per kilometre 2004 Other 0.5% % Kyrgyz gas (transit) Total transportation revenues Transportation 99.5% Total revenues Revenues growth rate, % 385.19 437.65 656.92 690.54 850.516 14% 50% 5% 5% Transmission Revenues Breakdown 2009 By Transportation Domestic Export 7.5% Transportation 1.9% By Orientation By Client Kazakh Gas (domestic) 1.9% Kazakh Gas (outside) 7.5% Kyrgyz Gas 0.2% Other 9.6% Russian Gas 10.2% % International Transit 90.6% % Central Asian Gas 80.2% % Gazprom 90.4% KZT/USD exchange rate in 2009 assumed to be 150.0 * All conversions assume an exchange rate of 1 USD = 120.3 KZT, which was the closing rate of exchange as at 31 December 2007 on the 16 KASE as reported by the NBK - Gas Pipeline System of ICA Central Asia Centre (5 pipelines) (CAC Main Line) Throughput capacity: 56bcm Length: 886km Soyuz & Orenburg—Novopskov (Soyuz & Orenburg—Novopskov Main Line) Throughput capacity: 27bcm Length: 424km & 382km RUSSIA RUSSIA Selected pipeline network parameters Approx. 11,000km of pipelines 22 compressor stations 122 gas distribution stations Active storage capacity of 4.2bcm Total transported volume in 2009: 91.1bcm Active pipelines Gas fields KAZAKHSTAN Bukhara–Ural (Bukhara–Ural Main Line) Throughput capacity: 2bcm Length: 1,175km Bukhara Gas–Almaty (BGR-TBA Main Line) Throughput capacity: 4bcm Length: 1,585km UZBEKISTAN KYRGYZSTAN TURKMENISTAN CHINA Gazly–Shymkent (BGR-TBA Main Line) Throughput capacity: 1bcm Length: 314km Source:ICA ICA Source: 17 Gas Pipeline System of ICA Pipeline System Pipeline Year(s) of Construction Central Asian System CAC Pipeline 1967-1987 5 parallel pipelines total 4088 km in length 30 bcm per year 41% Makat-Northern Caucases Pipeline 1985-1987 370 km 14,5 bcm per year 57% Soyuz Pipeline 1976 382 km 32,6 bcm per year 99% Orenburg-Noyopskov Pipeline 1975 382 km 8,1 bcm per year 45% Bukhara-Ural Pipeline 1963-1964 2 parallel pipelines each 1,175km in length 2 bcm per year 14% Zhanazhol-Oktyabrsk Aktobe Pipeline 1988 143 km 0.5 bcm per year 58% Kartaly-Rudnyi-Kustanai Pipeline 1965-1977 227 km 0.7 bcm per year 18% Bukhara Gas TashkentBishkek-Almaty Pipeline Gazli-Shymkent Pipeline 1975-1999 2 parallel pipelines each 1,585km in length 2,8 bcm per year 13% Uralsk System Aktobe System Length Source: ICA 18 Current Throughput Capacity Capacity used in 2009, % Concession Agreements ICA carries out its operations on the basis of the concession agreements, pursuant to which ICA has the right to operate the natural gas transportation system of Kazakhstan Rights Obligations Operate the main gas transportation Annual payment to the Government system in Kazakhstan – Concession payment of KZT 2.1 bln annually in 2008 up to 2017 – 20 years (15+5) starting in 1997 Invest USD 30 million per year and not less – Agreement is renewable thereafter with two further 5-year extensions if agreed by parties than USD 450million in aggregate during 1997-2017 in order to maintain and upgrade the transportation system – Transfer of shares at the end of the concession period – To date, ICA’s has invested over USD 1billion in total A legally binding framework Right to use the land related to the assets – Contingency of New Investment obligations covered by the concession agreement New (replaced) equipment becomes ICA’s legally owned asset 19 Tariffs & ARNM* Methodology ICA Tariffs Units 2004 2005 2006 2007 2008 2009 2010 Domestic transportation $/150 tenge/1000 cub m legal entities $/150 tenge/1000 cub m 2,8 2,8 2,8 2,8 2,8 2,8 2,8 residential clients $/1000 cub m/100 km 1,14 1,14 1,14 1,14 1,14 1,14 1,14 0,76-0,9 0,760,9 1,10 1,10 & 1,6 0** 1,40 & 1,60** 1,70** 1,70 Export transportation International transit Russian gas $/1000 cub m/100 km 0,90 0,90 1,10 1,10 1,40 1,70 1,70 Uzbek gas $/1000 cub m/100 km 0,68 0,76 1,10 1,10 1,40 1,70 1,70 Turkmen gas $/1000 cub m/100 km 0,68 0,76 1,10 1,10 1,40 1,70 1,70 $/150 tenge/1000 cub m/ per month 0,04 0,04 0,04 0,04 0,04 0,04 0,04 Gas storage •ARNM: Agency for Regulation of Natural Monopolies •** $1.6 is a tariff for Kyrgyzstan 20 Tariffs & ARNM Methodology (Cont’d) International gas transmission: – Tariffs are not subject to regulation because of the concession agreement but are arrived at through negotiation – Tariffs are set in US dollars and ICA has the ability to negotiate directly with its counterparties – In July 2001, the VAT rate on international transit was reduced to zero from 20% based on intergovernmental agreements – Since the beginning of 2009, the international tariffs have been increased by 21.4% (gas transit to Gazprom) which ensures a sufficient level of profitability. In 2010, Intergas and Gazprom have reached an agreement to keep international transit tariff at the level of 2009 of $1,70 for 1000 м3 for 100km. Domestic gas transportation: – Domestic tariffs are regulated and set with political considerations in mind – The methodology and the approval process for domestic gas transportation tariffs are established by one of Kazakhstan’s main regulatory bodies, ARNM (Agency for Regulation of National Monopolies) – ICA and the rest of the KTG Group benefit from the Government in principal supporting future increases in domestic (regulated) tariffs, although tariffs have not changed since 2003 and have historically been kept at artificially low levels – Only a small portion less than 3% of ICA’s revenues is exposed to regulated tariffs Main principles of the ARNM tariff methodology: – Cover all economically feasible expenses – Cover all taxes and other payments to the state budget – Ensure minimum rate of return necessary for company’s sustainable operations 21 Main Counterparties Gazprom is the main recipient of gas transmitted by KTG/ICA under the Russian, Uzbek and Turkmen gas transit contracts – – – The contracts for gas transportation are signed by ICA and the owners of the gas. The owner of Russian, Uzbek and Turkmen natural gas is Gazprom The tariff for gas international transit is set in accordance with the agreement between ICA and Gazprom The 5-year contracts signed with Gazprom in November 2005 stipulate the following volumes for 2009: Gazprom Volumes Breakdown for 2009 60 50,605 48,029 50 Transit Volumes Breakdown 2009 TCO 3.540 bcm Kyrgazgas 0.239 bcm 45,2 Domestic 7.914 bcm KazRosGas 6.474 bcm Contracted volumes 40 30 % Factual volumes 20 11,78 10 13,11 Gasprom 72.92 bcm 10 0 Russian gas Turkmen Gas Uzbek Gas Counterparty regions are becoming stronger – Turkmenistan strongly depends on gas exports and demand for its gas remains strong. Gas exports are the key source of hard currency proceeds, and the Kazakhstani route is the only export route currently available to them On December 12th, 2009 first thread of the main gas pipeline Kazakhstan-China which transports gas from Turkmenistan to China through Kazakhstan territory has been launched. ICA carries out maintenance service of first thread of the gas pipeline with projected gas transit volume of about 6 bln m3 in 2010. Second thread of the gas pipeline is currently under construction and plans to be launched by the end of 2012 with increased volumes of gas up to 30-40 bln m3. 22 Gas transportation volumes dynamics Gas transportation volumes (mln m3) In 2009 ICA transported total volumes of 91.1 bcm of gas International gas transit volumes accounted for 80% of the all gas transported In 2010 ICA expects reduction in Central Asian gas transit – – In 2010 Gazprom and Turkmenistan agreed to transport gas up to 30 bcm Despite reduction in gas transportation, Gazprom agreed to stick to take-or-pay condition of 80% transmission volumes specified in contract 60000 50000 40000 30000 20000 10000 0 2009 Russian gas 2010E Central Asian Gas 23 2011E Kazakh gas exports 2012E 2013E Kazakh gas for domestic consumption 2014E Kyrgyz gas transit Relationship with Gazprom Gazprom is an owner of natural gas that is transported by Intergas in accordance with terms of Russian, Turkmen and Uzbek gas transportation contracts Five year contract with Gazprom was signed in 2005 with take-or-pay condition in respect to 80% of projected volumes. Take-or-pay condition for 80% of projected volumes apply to both Turkmen and Uzbek gas. The contact specifies following volumes: Turkmen gas: 45,2bcm, Uzbek gas: 10,0bcm, Russian gas: 50,6bcm In 2010, Intergas and Gazprom have reached an agreement to keep international transit tariff in the order $1,70 for 1000 м3 for 100km. Previously the tariff was increased in 2009 to $1,70 (+21.4%) Gazprom is a strategic partner for Kazakhstan in a geopolitical context and an important provider of hard currency ICA (as a part of the KMG group) and Gazprom are both empowered by Kazakhstan and the Russian Federation to negotiate the contracts Ultimately, the end consumers of the gas transmitted by ICA under its contract with Gazprom are European customers Gazprom’s counterparty risk for ICA is minimal: - Gazprom is more dependant on ICA than ICA on Gazprom, as Gazprom has to meet requirements from its European customers - Russia’s need for ICA’s gas volumes ensures that if Gazprom were ever to fail, an appropriate replacement would be created and transmission would not be interrupted 24 Medium-Term Contract with Gazprom will Provide Greater Stability to ICA’s Credit Profile Main Conditions of Gazprom’s Contracts Main Implications Gazprom’s own production has for years remained 1. Transit from Turkmenistan and Uzbekistan to the Russian border stable Transmission tariff remained at the level of 2009 Enhancement of throughput capacity of gas USD 1.70 for 1000 bcm per 100 km. transportation system Contract has been signed for 5 years (2006 – Throughput of the CAC pipeline is projected to 2010) initially increase from current 56 bcm to 60 bcm and then ultimately to 80 bcm 80% of transmission volumes is guaranteed by ICA revenues are expected to increase to USD “take or pay” condition 1bln by 2010 2. Transit through northwest of Kazakhstan The tariff increase negotiated with Gazprom was Transmission tariff remained at the level of 2009 specifically to enable ICA to undertake major investment projects that will benefit both companies USD 1.70 for 1000 bcm per 100 km. Contract has been signed for 5 years (2006 – 2010) 25 Well Defined Strategy Strategy: ICA’s strategy is driven by the government’s aim and goals for the gas industry and for ICA to continue to maintain its unique position as the sole route between Central Asian producers and European customers Fundamental strategy documents: Gas Industry Development of Kazakhstan until 2015 Program of Gas Industry Development of Kazakhstan for 2004-2010 – 5-year rolling business plan updated annually with budgets Business Plan 2010-2014 Key Goals Implementation ICA has already invested about USD 1 billion in Maintain and enhance reliability and performance maintaining reliance; Direct future investment towards upgrading the transit capacity and evaluating possibilities of new routes; Feasibility of new transit routes, including a route from CAC pipeline to southern Kazakhstan and China of existing pipeline; Increase the throughput capacity of existing pipeline system to support expected growth in export volumes; Adopt the latest information technologies for management of the pipeline network; Develop new pipeline systems to diversify customer base 26 Major Investment Projects 27 Major Investment Projects Construction of Turbocompressor station #4 of Compressor station Makat – Goal: upgrade gas pipeline and reduce maintenance costs – Project cost: USD 200-250 mln – Stage: feasibility study was completed, project documentation is at the stage of implementation – Project start date: 2010 – Project end date: 2012 – Financing: ICA considers options of funding the project either by cash generated from operations or conducting trade financing transaction Increase of Turbocompressor station # 5 of CAC pipeline-5 – Goal: upgrade gas pipeline and reduce maintenance costs – Project cost: approximate USD 400-500 mln – Stage: feasibility study is at the stage of implementation – Project start date: 2011 – Completion date: 2014 – Financing: ICA considers options of funding the project either by cash generated from operations or conducting trade financing transaction 28 Financial Profile 29 Capital Structure and Debt Maturity Profile ICA has both ordinary and preferred shares, with the latter paying an annual dividend of a minimum 1% of nominal value – a small dividend payment was made in November 2009 of KZT 0,248mln in respect of the preferred shares which has limited impact on cash flow. Dividend payout historically has been low, allowing for the internally generated cash to be used for investments ICA’s long term debt is mainly for investment projects (increase of throughput capacity for the gas transmission network, the most profit generating asset) In December 2008 ICA redeemed USD 71mln of its USD Bond 2011 and in February 2009 USD 60mln of its USD Bond 2017. Both repurchases were financed by the company’s cash and were prompted by market conditions and attractive pricing ICA’s forecasted long-term debt (all on an unsecured basis): Outstanding Debt ($ mn) USD Bond 2011 Facility Amount 01.01.2010 01.01.2011 01.01.2012 250.0 178.9 178.9 0.0 HSBC Plc facility (Hermes) 56.4 43.3 37.5 31.7 Commercial loan of HSBC 18.0 9.8 6.5 3.2 USD Bond 2017 600.0 540.0 540.0 540.0 TOTAL 924.4 772.0 762.9 574.9 Source: ICA 30 Debt Maturity Profile Debt breakdown By scheduled debt repayments, $mln By interest rate split, 1H 2009 By currency split, 1H 2009 Scheduled debt repayments, $mln 600 540 500 400 Floating rate 7.4% USD 100% 300 187,9 200 100 69 9 9 5,8 5,8 5,8 5,8 2012 2013 2014 2015 2016 0 2009 2010 2011 Fixed rate 92.6% 2017 Source: ICA Financials Scheduled debt repayments spread out across the years, however 2011 and 2017 years are relatively high repayments due to maturity of USD Bond 2011 and 2017 In 2008 ICA established Accumulation Fund for Eurobonds debt repayment in which ICA accumulates free cash as set in debt repayment schedule. Cash is invested in the highly liquid financial instruments such as cash at bank accounts, deposits and considers investing in very low risky securities such as government notes Significant portion of interest rate on debt is fixed interest rate, which indicates very low exposure to changes in interest rates Current debt is dominated in USD poising substantial foreign exchange book losses in the case of Tenge devaluation 31 Intergas’ Income Statement* Sales EBITDA $ mn 1 100 $ mn 250 $ mn 500 1 000 850,52 900 893,88 450 379,38 400 800 656,90 700 600 500 Net Income 690,54 395,04 405,39 183,78 165,80 350 281,58 300 1 148,70 150 250 437,65 400 200 300 150 200 100 100 50 0 100 161,99 2006 2007 2008 2009 77,64 50 0 2005 200 0 2005 2006 2007 2008 2009 2005 2006 2007 2008 Coefficients 2005 2006 2007 2008 2009 ROE 14.54% 21.62% 18,9% 17.4% 25% Operation margin (%) 33.1% 31.9% 38% 31.1% 59% *Source: Financials & Business Plan of ICA for 2010 - 2014 * KZT/USD Exchange rate is 120.77 for 2008 and 150 for 2009-2010 * 2009 Figures are expected 32 2009 Intergas’ Balance Sheet and Cash Flows Statements* Net Funds from Operations Assets $ mn 500 $ mn 450 2 100 400 1 800 350 2 018,302 038,752 018,40 $ mn 1 000 914,8 841 772 800 1 500 1 367,67 300 600 250 200 Financial Debt 211,30 168,10 545,8 1 200 221,97 932,27 186,31 900 150 400 313,6 600 100 200 300 50 0 0 2005 2006 2007 2008 2009 0 2005 2006 2007 2008 2009 2005 2006 2007 Ratios 2005 EBITDA Interest Coverage (x) Total Debt/EBITDA (x) Total Debt/Total Capitalization Net Debt/Net Total Capitalization FFO/avg. total debt FFO interest coverage (x) EBITDA/Capex (x) 4.77 1.78 37.00% 35.28% 49.01% 4.17 0.80 2006 2007 10.96 1.78 44.48% 42.94% 58.42% 8.95 0.91 5.27 2.36 50.50% 43.87% 29.71% 3.04 0.62 * Source: Financials & Business Plan of ICA for 2010 – 2014 (2009 Figures are expected) * KZT/USD Exchange rate is 120.3 for 2007, 120.77 for 2008 and 150 for 2009 33 2008 4.17 2.09 43.8% 37.2% 33.93% 3.08 2.10 2009 7.12 1.90 42.11% 26.12% 48.51% 6.12 3.24 2008 2009 Intergas’ Covenant compliance of Bank Facility and KMG Bank Facility Financial Covenants Bank facility 1) RBS Bank Kazakhstan Credit Line ($50mln) Credit metrics 2006 EBITDA/Sales > 40% (x) EBITDA/Capex > 65% (20062007); 100( (2008-cur.) (x) EBITDA/Finance Cost > 1,5 (x) 2007 2008 9M 2009 2009E 43% 55% 46% 59% 44.5% 0.91 0.62 2.10 3.65 3.24 - 6.55 2.8 3.62 351% 2) HSBC Bank Kazakhstan & Debt/Equity < 1.5 (x) 0.8 1.02 0.78 0.73 0.73% Citibank Kazakhstan Credit Line ($17.9mln) Current Assets/Current Liabilities > 1.0 (x) 2.8 3.1 5.06 6.13 7.04 53% 53% 42.3% 56.18% 54.2% Gross Profit/Sales > 15% (x) KMG Financial Covenants Credit metrics Total Debt/EBITDA < 3.5 (x) Net Debt/Net Capitalization <0.5 (x) Current Assets/Current Liabilities > 1 (x) Operational liquidity > 1 (x) EBIT/Interest > 2 (x) 2006 2007 2008 9M 2009 2009E 1.78 2.36 2.1 1.55 1.9 42.9% 43.9% 37.2% 25..5% 26.12% 2.8 3.1 5.06 6.13 7.04 29.1 11.6 16.6 44.6 53 9 5.2 3.1 4.0 5.6 * Source: Financials & Business Plan of ICA for 2010 – 2014 (2009 Figures are forecast) * KZT/USD Exchange rate is 120.3 for 2007, 120.77 for 2008 and 150 for 2009 34 Capital Expenditures ICA Maintenance CAPEX - Development CAPEX Program & Requirements 2008 – 2010 capital investment strategy includes – – Maintaining and enhancing reliability and performance of existing pipeline while increasing throughput capacity Further investment dependents on growth of transportation volumes No pipeline capacity expansion until firm agreements on tariffs and volumes are achieved Conditional projects – – Significant modernisation and re-construction of existing network, including upgrading technology & telecom systems Upgrading the CAC (Central Asia Center) pipeline Financing from internally generated funds and 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0 610,7 465,62 337,9 209,4 209,4 167,83 2005 199,61 178,2 2006 186,31 129,2 2007 188,4 221,97 156,9 150 2008 external sources ICA CAPEX USD 30mn of investments per year under the ICA Maintenance concession agreement and not less than USD 450mn in aggregate Starting from 2008 operating cash flows were able to fund capex since the significant portion of capex was maintenance capex. In 2009 100% of total capex is maintenance capex. As a result, CFO/Capex ratio was improved Source: ICA financials and business plan for 2010-2014 (2009 Figures are expected) 35 Cash from operations 2009 150