The FBRK editorial team continues its series of publications devoted to the analysis of the financial statements of Kazakhstan's social-entrepreneurial corporations (SECs). SEC «Atyrau» in 2023 increased its scale of operations and significantly strengthened its financial position, but faced challenges with operational profitability. The corporation more than doubled its revenue, assets grew to 33.9 billion tenge, cash and cash equivalents reached 7.5 billion tenge, while net profit stood at 9.9 million tenge compared to 9.1 million tenge in the previous year.
OPERATING ACTIVITIES: SCALE GROWTH AMIDST DECLINING EFFICIENCY
Revenue from the sale of goods, works and services grew to 240.5 million tenge from 117.8 million tenge in 2022. This twofold increase reflects the successful expansion of the corporation's activities as a regional development institution.
The structure of operating income reflects the diversification of the corporation's activities. The main sources of revenue were the implementation of the «Aul Amanaty» programme (33.4 million tenge), income from land lease (7.5 million tenge), expertise of public-private partnership projects (2.5 million tenge) and other operating services.
Additionally, the corporation implemented a special project for house construction generating income of 197.1 million tenge, which constituted a significant portion of the total income for the year.
However, the revenue growth was accompanied by a disproportionate increase in cost of sales to 627.9 million tenge from 423.3 million tenge. As a result, the corporation recorded a gross loss of 387.5 million tenge compared to 305.5 million tenge in the previous year, indicating the need to optimise the operating model.
Administrative expenses amounted to 173.7 million tenge, with more than half (89.041 million tenge) accounted for by staff costs, reflecting the labour-intensive nature of the development institution's activities. Significant travel expenses (12.895 million tenge) confirm the corporation's activity in implementing regional projects.
FINANCIAL RESULTS: MAINTAINING PROFITABILITY AMIDST OPERATIONAL DIFFICULTIES
Financial income decreased significantly to 372.7 million tenge from 902.7 million tenge, posing a challenge to the corporation's financial model. This decline reflects changes in the structure of financial assets and the terms of their placement. Financial expenses amounted to 106.9 million tenge, primarily related to the fair value remeasurement of financial instruments.
Other expenses amounting to 264.97 million tenge included significant costs for asset disposal (204.7 million tenge), indicating active portfolio restructuring, and the creation of provisions for impairment of accounts receivable (49.5 million tenge), reflecting a conservative approach to asset valuation.
The net result was a profit of 9.9 million tenge compared to a profit of 9.1 million tenge in 2022. Despite gross losses from core operations and a reduction in financial income, the corporation maintained profitability through effective management of total income and expenses.
FINANCIAL POSITION: SIGNIFICANT STRENGTHENING OF THE RESOURCE BASE
The corporation's assets grew from 24 billion tenge to 33.9 billion tenge, demonstrating the successful capitalisation of the development institution.
The corporation's liquidity strengthened significantly. Cash and cash equivalents grew to 7.5 billion tenge, of which 6.3 billion tenge were placed in banks and 1.3 billion tenge in savings accounts. Long-term financial assets increased ninefold to 1.5 billion tenge from 168.5 million tenge in the previous year.
Income from placing funds in deposits amounted to 222.1 million tenge, which, given the reduction in total financial income, indicates the need to optimise the financial asset management strategy.
The corporation's investment portfolio includes interests in 30 subsidiaries and associates with a total value of 4.998 billion tenge. The most significant assets are a 50% stake in AO ATMA «Atyrau Airport and Transportation» valued at 1.45 billion tenge, a 48% stake in LLP «Akzhayik Avtopark» valued at 1.79 billion tenge and a 49% stake in LLP «iClinic Atyrau Medical Centre» valued at 634.3 million tenge.
STRUCTURE OF CAPITAL AND LIABILITIES
Equity increased significantly to 27.2 billion tenge from 18.9 billion tenge. In 2023, the corporation carried out a large-scale recapitalisation, doubling its declared capital to 60 million shares and additionally placing 8.197 million shares for the implementation of investment projects. Basic earnings per share amounted to 0.03 tenge with dividends paid of 764 thousand tenge.
The structure of liabilities reflects the sectoral priorities of the development institution. Total liabilities grew to 6.66 billion tenge, consisting almost entirely of long-term loans to regional administrations. The main growth came from financing agricultural projects through the Department of Agriculture and Land Relations of the Atyrau Region — 5.2 billion tenge compared to 3.546 billion tenge. Financing for entrepreneurship and tourism remains stable at 1.5 billion tenge. Current liabilities are minimal — just 5 million tenge.
AUDIT OPINION
LLP «Kazyna audit company» expressed an unqualified opinion on the fairness of the financial statements, confirming compliance with international standards and the adequacy of the internal control system.
CONCLUSIONS
In 2023, SEC «Atyrau» demonstrated significant achievements in scaling its activities: a twofold increase in operating revenue, substantial strengthening of its financial position and liquidity, expansion of its investment portfolio, and the maintenance of profitability in challenging operating conditions.
At the same time, the corporation faced important strategic challenges, including declining operational efficiency amidst growth, gross losses from core operations, and a significant reduction in financial income.
Strategic priorities going forward include optimising the operating model to achieve gross profitability, diversifying sources of financial income, developing high-margin lines of business, and strengthening operational control over major projects.
SEC «Atyrau» demonstrated resilience and adaptability as a development institution, maintaining profitability amid scaling activities and external challenges. A strong financial base and a diversified asset portfolio create the foundation for optimising the operating model and further developing key areas in the Atyrau region.
Previously, we analysed the financial statements of SEC «Ertis» for 2023. In future publications, the FBRK editorial team plans to continue the analysis of the financial statements of other regional SECs, which will provide a comprehensive picture of the effectiveness of these development institutions and their contribution to the economy of Kazakhstan.
To be continued...