Transcript Slide 1

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
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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
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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
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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
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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
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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.
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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%
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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
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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:
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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
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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
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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
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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