The FBRK editorial team continues its series of publications dedicated to the analysis of the financial statements of Kazakhstan's social-entrepreneurial corporations (SECs). Today we will examine the financial statements of SEC "Konayev" for 2023 — the regional development institution of the Almaty region, demonstrating stable financial indicators despite a number of controversial points noted by independent auditors.
OPERATING RESULTS AND BALANCE SHEET STRUCTURE
The financial results of SEC "Konayev" in 2023 demonstrated a significant volume of operating activity: revenue amounted to 4.7 billion tenge, and gross profit reached 5.3 million tenge. At the same time, the corporation showed an operating loss of 886 million tenge, which is typical for development institutions where priority is given to fulfilling socio-economic functions rather than maximising profits.
Particular attention is drawn to the asset structure of the corporation, the total volume of which amounted to 42.1 billion tenge. Meanwhile, current assets (33.5 billion tenge) significantly exceed non-current assets (8.5 billion tenge), which may indicate the corporation's readiness to respond quickly to market changes. This balance sheet structure is typical for financial development institutions focused on an active investment policy.
A conservative approach to liquidity management was confirmed by the impressive amount of cash and cash equivalents — 6.4 billion tenge. This provided SEC "Konayev" with a significant margin of safety for implementing strategic projects and maintaining stability in the regional market.
CREDIT ACTIVITIES AND SUPPORT FOR THE AGRO-INDUSTRIAL SECTOR
One of the key areas of the corporation's activity was lending to the agro-industrial complex. SEC "Konayev" provided loans to agricultural producers totalling 3.52 billion tenge. This area demonstrates the corporation's active role in supporting regional agriculture.
Furthermore, a significant portion of the corporation's assets consists of short-term financial assets measured at amortised cost, amounting to 3.1 billion tenge, as well as long-term financial assets totalling 869 million tenge. These instruments allow the corporation to manage credit resources effectively and support regional development projects.
LIABILITIES AND HR POLICY
The structure of the corporation's long-term liabilities deserves particular attention. In addition to liabilities under contracts with customers amounting to 287 million tenge, a significant portion consisted of loans from the State Institution "Department of Agriculture of the Almaty Region" totalling 23.3 billion tenge. These funds were received under agency agreements and reflect the close interaction of the SEC with regional government bodies in implementing state programmes to support the agricultural sector.
Personnel costs demonstrate the scale of the organisation's activities: salaries amounted to 655 million tenge, and payroll taxes totalled 47.6 million tenge. The average number of employees was 56 people.
AUDITOR'S COMMENTS AND CORPORATE GOVERNANCE ISSUES
At the same time, the independent audit of SEC "Konayev's" financial statements revealed certain problematic aspects. The audit firm Anderson Qazaqstan LLP expressed a qualified opinion, noting the insufficiency of evidence regarding the opening and closing balances of the reporting period for the balance sheet item "Treasury shares" amounting to 505.3 million tenge. This raises questions about the transparency of some of the corporation's financial transactions and the need to improve internal accounting procedures.
Despite this qualification, the auditors confirmed that the financial statements of SEC "Konayev" have been prepared, in all material respects, in accordance with the requirements of International Financial Reporting Standards and give a true and fair view of the financial position of the corporation as at 31 December 2023.
CAPITAL STRUCTURE
It is worth noting the structure of the corporation's capital: the share capital is 11.5 billion tenge with the almost complete placement of the declared shares — 11.49 billion units. The book value per ordinary share is 1,002 tenge.
At the same time, no treasury shares were recorded on the balance sheet, which contradicts the data in the audit opinion where the problematic amount of 505.3 million tenge is noted for the item "Treasury shares". This inconsistency confirms the validity of the auditors' comments and indicates the need to improve corporate governance.
CONCLUSIONS AND PROSPECTS
Overall, the financial picture of SEC "Konayev" for 2023 reflects the model of a socially-oriented development institution, balancing between commercial efficiency and the fulfilment of socially significant tasks. The corporation demonstrated a conservative approach to asset management, maintaining a significant share of liquidity for rapid response to economic changes.
Significant volumes of agricultural lending indicate the SEC's active role in supporting regional agriculture. At the same time, the operating loss reflects the specific nature of the development institution's activities, where social effectiveness often takes precedence over financial results.
Special attention should be paid to the corporation's related party structure. Transactions with related parties in 2023 amounted to 4.1 billion tenge for loans and 6.98 billion tenge for payables to the State Institution "Department of Entrepreneurship and Industrial-Innovative Development of the Almaty Region", which underscores the close integration of the SEC into the regional system of public administration and its role as a tool for implementing state policy in the field of agriculture.
Analysis of financial risks shows the corporation's conservative approach to management. The SEC does not use derivative financial instruments to hedge currency risks, focusing on transactions in the national currency. At the same time, credit risk remains manageable thanks to diversification of the loan portfolio by region and industry, and concentration of funds in short-term deposits (1.1 billion tenge) provides liquidity with minimal risks.
The further development of SEC "Konayev" depends on the corporation's ability to effectively use available resources to stimulate economic activity in the region and support agriculture. At the same time, increasing the transparency of financial transactions and improving the corporate governance system in accordance with the recommendations of independent auditors could be an important factor for success.
As a reminder, we previously analysed the financial statements of SEC "Semey" for 2023. In subsequent publications, the FBRK editorial team plans to continue the analysis of financial statements of other regional SECs, which will allow for a comprehensive picture of the effectiveness of these development institutions and their contribution to the economy of Kazakhstan.
To be continued...