Foundation for Export of Kazakhstan

FOUNDATION FOR EXPORT OF KAZAKHSTAN

ANNUAL REPORT 2018

01 Economic competence of the State is composed of many factors with one of the most important – the products export to the other countries. Support of the export potential is the foundation of successful development of the Kazakhstan economy. Three rectangles put in the graphic symbol of the logo of KazakhExport symbolize the keystones of that foundation – the guarantee of the State, stability and integrity of the export support system. Contents

Key Events in 2018 • ...... • 2 • Message of the Chairman of the Board of Directors • ...... • 4 • Message of the Chairman of the Management Board • ...... • 6 • 1. About KazakhExport • ...... • 8 • 2. Development strategy • ...... • 17 • 3. Operating results • ...... • 22 • 4. Financial results • ...... • 38 • 5. Procurement practice • ...... • 40 • 6. Primary goals and tasks in 2019 • ...... • 42 • 7. Corporate governance • ...... • 44 • 8. Risk management • ...... • 56 • 9. Human resources policy • ...... • 60 • 10. Social responsibility policy • ...... • 63 • 11. Charity and sponsorship • ...... • 64 • 12. Financial statements • ...... • 65 • Relocation to Astana City

Establishment of a representative office in Almaty City

KEY Reissuance of license No.2.1.55 dated 21 May, EVENTS 2018 to the right to carry in 2018 out insurance (reinsurance) activity in “general insurance” industry

Making amendments Putting into experimental to Resolution of the operation of the single Management Board of information platform Digital the National Bank of the Baiterek Republic of Kazakhstan No.170 “On fixing Entry of KazakhExport statutory values and to the Board methods to calculate of representatives of prudential standards and the Insurance ombudsmen other binding rules and under the new requirements limits of the amount of of the legislation concerning capital of a bank at a insurance activity particular date and the Signing the Memorandum Rules for calculating and of cooperation with the limits of the net foreign Azerbaijan export and exchange position” dated investment encouragement 13 September, 2017 fund – AZPROMO concerning attribution of an agreement of voluntary loan insurance to the hard type of pledge

2 Signing the Memorandum of understanding and cooperation and the Joint Signing a reinsurance Plan of Actions between agreement between the Ministry of Foreign KazakhExport and the Russian Affairs, the National export credits and investments Chamber of Entrepreneurs insurance agency “EXIAR” under of the RK “Atameken” the XIII International Conference and KazakhExport for the “Eurasian Economic Integration” purposes of strengthening of interaction, concurrence Signing the Agreement for and coordination of implementation of joint projects actions between the with Belgazprombank OJSC parties regarding under which the instrument promotion of the provided for financing trade Kazakhstan goods, works projects between the residents and services export in of the Republic of Kazakhstan the near and far foreign and the Republic of Belarus, countries which is absolutely new instrument for the Belarusian Affirmation of the financial market strength rating assigned by Moody’s at the level Baa3/stable In accordance with the State of the Nation Address by the President of the Republic of Opening representative Kazakhstan dated 5 October, offices in the cities 2018, the funds to support of Kazan and Xi’an KazakhExport are provided for within the limits of 500 billion tenge for support of the processing industry and non- resource export

Participation in the international exhibition of imported products (China International Import Expo), which is the first in the PRC’s history

3 Ключевые события 2018 года • Обращение Председателя Совета директоров • Обращение Председателя Правления • 1. О компании KazakhExport • 2. Стратегия развития • 3. Операционные результаты деятельности • 4. Финансовые результаты деятельности • 5. Практика закупок • 6. Основные цели и задачи на 2019 год • 7. Корпоративное управление • 8. Управление рисками • 9. Кадровая политика • 10. Политика в области социальной ответственности • 11. Благотворительность и спонсорство • 12. Финансовая отчетность •

• Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Dear Ladies and Gentlemen!

n fulfilment of the State of and opportunity to take competitive positive dynamics. At the end of Ithe Nation Address by the niche in the world trade will allow 2018, the volume of non-primary First President of the Republic ensuring stable development of the goods, works and services exports of Kazakhstan – Yelbassy – country on a long-term horizon. amounted to $22.9 billion. The Nursultan Nazarbayev: “Third outrunning growth is recorded in Modernization of Kazakhstan: In August 2017, the Program such industries as wood-working Global Competiveness” dated “National Export Strategy of the industry – by 62%, chemical 31 January 2017 the government Republic of Kazakhstan” for 2018– industry – by 22%, mechanic has developed the Strategic 2022 was adopted. To determine engineering – by 19.3%, food Development Plan of the Republic success of the Program specific industry – by 7.6%. of Kazakhstan until 2025. The indicator was taken: sesqui- principal goal thereof is to attain fold increase in volume of non- The export geography is expanding. quality and stable economic resource Kazakhstan export by The major markets for Kazakhstan recovery leading to social welfare 2022 as against 2015, as well as processed goods became China, of the Kazakhstan people up to the diversification of sales markets and Russia, the European Union level of the OECD countries. export of goods and services. countries, Uzbekistan, Turkey, Japan, Kyrgyzstan, UAE, and Afghanistan One of the systemic reforms In this regard the key role is assigned which account for about 75% of the furthering achievement of the target to “Export Insurance Company total export. goal is activation of the private “KazakhExport” JSC established in sector owing to development of accordance with the best world The basic indicators of foreign trade competitive environment and practices. and export demonstrate stable export potential. Development of growth. As compared to 2017, the the effective strategy considering The interim results of realization of foreign trade turnover of Kazakhstan potential of the domestic economy the National Export Strategy show increased by 20% up to $93.5 billion,

4 Ключевые события 2018 года • Обращение Председателя Совета директоров • Обращение Председателя Правления • 1. О компании KazakhExport • 2. Стратегия развития • 3. Операционные результаты деятельности • 4. Финансовые результаты деятельности • 5. Практика закупок • 6. Основные цели и задачи на 2019 год • 7. Корпоративное управление • 8. Управление рисками • 9. Кадровая политика • 10. Политика в области социальной ответственности • 11. Благотворительность и спонсорство • 12. Финансовая отчетность •

export increased by almost 26% and The financial strength rating of the in 2018 of the insurance liabilities approximated to $61 billion. Export Company assigned by Moody’s in the amount exceeding 90 billion of the finished products increased Investors Service agency is affirmed tenge that 2.2 times exceeds the by 16%, or by $485 million. at the level of Baa3, the outlook of level of 2017. the financial strength rating is kept As at 1 January 2019, KazakhExport “stable”. It is important to note that In 2019, KazakhExport will continue supported more than 70 Moody’s rating agency affirms the to work on institutional development Kazakhstan exporting companies Company’s rating at the level of the of the Company through receipt of in all regions of Kazakhstan with sovereign rating of the Republic of the State guarantee for the liabilities 27 of which enjoyed the services Kazakhstan for several years. of KazakhExport and increase in of KazakhExport in 2018 for the equity capital for the purpose of first time. In particular, more than KazakhExport is a full member of ramping up non-resource export. 300 insurance agreements were such international associations as concluded that 1.5 times more “Prague Club of the Berne Union” and Chairman of the Board of Directors, than in 2017. The export contracts “Aman Union”, which include world’s Deputy Prime Minister to the amount exceeding $1 billion largest export credit agencies. The of the Republic of Kazakhstan were supported for supply of the Company has the wide partner’s Yerbolat Dossayev Kazakhstan products of mechanic network in the Russian Federation, engineering, metallurgy, chemistry, Uzbekistan, Tajikistan, and other food and consumer goods industry, states. agro-industrial complex in such countries as Azerbaijan, Belarus, The measures of the State export Germany, Czech Republic, Georgia, support allowed enhancing efficient China, Mongolia, Kyrgyzstan, Russia, work of KazakhExport National Tajikistan, and Uzbekistan. Company and ensured assumption

5 Ключевые события 2018 года • Обращение Председателя Совета директоров • Обращение Председателя Правления • 1. О компании KazakhExport • 2. Стратегия развития • 3. Операционные результаты деятельности • 4. Финансовые результаты деятельности • 5. Практика закупок • 6. Основные цели и задачи на 2019 год • 7. Корпоративное управление • 8. Управление рисками • 9. Кадровая политика • 10. Политика в области социальной ответственности • 11. Благотворительность и спонсорство • 12. Финансовая отчетность •

Message of the Chairman of the Management Board

Dear Customers, Partners, and Colleagues!

his year became the beginning exceeded 370 billion tenge and Giving our support, the Kazakhstan Tof the new stage in our activity. increased by half as compared to exporter participates in tender in KazakhExport took major efforts 2017. Slovakia for construction of railroad. for institutional development, One more company concluded the expansion of the volumes of Today our partners in all regions of export contract to construct gold exporters support and quantity of Kazakhstan are both big companies beneficiation plant in Kyrgyzstan. the companies from the processing and representatives of the small and The construction materials and sector, which increased export medium-scale business. The products equipment produced in Kazakhstan through the use of our instruments. of the Kazakhstan manufacturers will be used within the scope of the are exported to Azerbaijan, Armenia, project: electrical equipment, metal In 2018, 27 manufacturers-exporters Belarus, Germany, Georgia, Italy, structures, sandwich panels, etc. from all regions of Kazakhstan China, Kyrgyzstan, Mongolia, Russia, enjoyed support of KazakhExport for Tajikistan, Turkmenistan, Uzbekistan, Having the status of the national the first time in such industries as and Japan. company, we expanding the agro-industrial complex, consumer geography of our presence. The goods and food industry, mechanic In 2018, we refused non-operating work performed by KazakhExport engineering, metallurgy, and activity relating to reinsurance allowed strengthening cooperation chemistry. of classic types of risk, having with the international development concentrated on support of non- institutions and financial At the end of 2018, the amount of resource export and development of organizations, as well as increasing export contracts performed with a new direction – export of services. the number of partners in Russia, the assistance of KazakhExport Tajikistan, and Uzbekistan. This

6 Ключевые события 2018 года • Обращение Председателя Совета директоров • Обращение Председателя Правления • 1. О компании KazakhExport • 2. Стратегия развития • 3. Операционные результаты деятельности • 4. Финансовые результаты деятельности • 5. Практика закупок • 6. Основные цели и задачи на 2019 год • 7. Корпоративное управление • 8. Управление рисками • 9. Кадровая политика • 10. Политика в области социальной ответственности • 11. Благотворительность и спонсорство • 12. Финансовая отчетность •

ensures our support for the Government of the Republic of export projects at all stages of Kazakhstan, will continue to work on implementation. enlargement of the customer base, as well as partner banks network In accordance with the Development development both in Kazakhstan Strategy, in 2018 KazakhExport and in the near and far foreign has opened the first foreign countries. representative office in Kazan, which is operating not only in Tatarstan, but Thank our customers and partners also in the Volga region in general. for fruitful cooperation! I wish The work on opening a network financial stability and prosperity! of representative offices in near- border regions of Russia, as well as Chairman of the Management Board in the countries of the Central Asia, Export Insurance Company has been commenced. “KazakhExport” JSC Ruslan Iskakov Considering the tasks entrusted to Export Insurance Company “KazakhExport” JSC, in 2019 the Company, together with the Sole Shareholder – National Management Holding “Baiterek” JSC and the

7 Emerald Towers The architecture The office complex located in Nur- of the Emerald Sultan. The height of the buildings Towers is unique with of the Emerald Towers is 37 and 49 floors. The height of the 49-story its features: starting nd building is 201 meters! from the 32 floor the area of each subsequent floor is extended. Thus, the buildings become asymmetrical with a top deflecting by 9 meters. The mass of the tallest building is 186 thousand tons. Bored piles and 3-meter-thick base slab were placed in its footing. The concept of the complex 01 was developed by internationally renowned architect Roy Varacalli and Zeidler Partnership Architects (Canada) in cooperation with Bazis Design Institute. About KazakhExport • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

xport Insurance Company to support the Kazakhstan export of commercial and political risks E“KazakhExport” Joint- by implementing insurance accompanying performance of Stock Company (hereinafter – instruments to protect export foreign economic contracts of the KazakhExport) is the national operations. KazakhExport offers non-resource sector exporting development institution established the services relating to insurance companies.

To support the growth in exports of non-primary goods, works and services in priority sectors of the economy and to form the practices of financial- and-insurance and non-financial support of the Kazakhstan enterprises. Mission To become a key development institution in implementation of the State foreign economic policy of the Republic of Kazakhstan in the Central Asian region and the countries of the Eurasian Economic Union.

Vision

9 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Brief history of KazakhExport

2003 2010 Establishment of KazakhExport Increasing the authorized capital (Resolution of the Government stock for the purpose of support of the Republic of Kazakhstan of the export trade financing No.442 dated 12 May, 2003). operations.

2005 – July 2018 2013 Operating in the insurance Joining NMH Baiterek JSC market as a reinsurance (Sole Shareholder). organization both on proportional and non- proportional basis. 2014 Joining Aman Union – Association of the largest export credit agencies of the Islamic states and the Arab world.

2004 2012 2015 Joining the Prague Club of the For the first time in the history Assignment of the status of an Berne Union – Association of of Kazakhstan, the domestic Observer of the Berne Union the largest international export locomotives were exported to formed in 1934 and representing credit agencies (37 agencies, the Republic of Tajikistan with an unofficial union of insurance 34 countries and 3 transnational the financial and insurance companies engaged in organizations). support of KazakhExport. insurance of export credits and investments. Assignment of the international financial strength rating by For the first time in the history Moody’s Investors Service rating of Kazakhstan, the first export agency. transaction of the international level was concluded with the participation of KazakhExport on a leasing financing basis to supply 10 domestic locomotives to the Republic of Azerbaijan.

10 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

2016 2017 Enlarging the range of insurance support instruments: voluntary Capitalization in the amount of 13.9 billion tenge loan insurance, advance payment insurance, trade financing to support financial stability and increase a scope in the national currency and the Russian roubles, as well as of provided support. financial leasing insurance. Transformation of Export Credit Insurance Capitalization of KazakhExport in the amount of 14 billion tenge: Corporation “KazExportGarant” JSC into Export the financial resources were intended to provide support to the Insurance Company “KazakhExport” JSC and entry exporters through implementation of pre-export and export in the list of the national companies. trade finance instruments. Actualization of the Development Strategy of Licenses for additional insurance classes – “Loan Insurance” and KazakhExport for 2014–2023 in accordance with “Civil Liability Insurance” – were obtained from the National the National Export Strategy of the Republic of Bank of the Republic of Kazakhstan, and the rules were prepared Kazakhstan. and new export support instruments were implemented including voluntary loan insurance, advance payment insurance, Improvement of the outlook of the financial pre-export financing, and leasing insurance. strength rating Baa3 affirmed by Moody’s – from “negative” to “stable.”

2018 Relocation of KazakhExport in Joining of KazakhExport the In accordance with the State March 2018 to Astana City to Board of the Representatives of the Nation Address by the the new address: 55A, Mangilik of the Insurance Ombudsmen President of the Republic of Yel Avenue, Baiterek BC, Astana under the new requirements Kazakhstan dated 5 October City. of the legislation on insurance 2018, the funds to support activity. KazakhExport are provided Establishment for within the limits of 500 of the representative office Commencement of works of the billion tenge for support of the in Almaty City. foreign representatives in the processing industry and non- Cities of Kazan and Xi’an. resource export. Reissuance of license No.2.1.55 dated 21 May, 2018 to the Putting into experimental right to carry out insurance operation of the unified (reinsurance) activity in the information platform Digital “general insurance” industry. Baiterek.

11 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Business model

KazakhExport

Financial Non-financial support support EXPORTER

In 2018, 50 exporters were Analysis of counterparties supported of which 27 exporters were provided Consultations on export support for the first time. transactions structuring

334 export contracts were Assistance in organization signed that is 65% more of business contacts than the indicator of 2017 FINANCIAL INSTITUTION The total amount of insurance liabilities – 90.2 billion tenge that 2.3 times exceeds the indicator of 2017

exporters were supported in 2018 contracts IMPORTER 50 for the first 334 more than the indicator 27 time 65 % of 2017

12 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Exporter and an importer conclude an export contract with deferred payment term

The exporter submits an insurance application to KazakhExport

KazakhExport KazakhExport considers an application and concludes an insurance agreement with INSURANCE the exporter PROCEDURE*

The exporter delivers goods and pays the insurance premium

If the importer does not pay for the goods received, KazakhExport compensates losses of an exporter

Note: Example of an instrument to insure an exporter’s credit)

13 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Our advantages

Opportunity to export subject to payment deferment or to increase volume of export sales subject to payment deferment;

Enlarging opportunities and improving conditions of crediting given insurance protection by KazakhExport, as insurance of KazakhExport is a security for bank credits;

Reduction of losses upon occurrence of an insured event of political nature, when fulfilment of obligations under an export contract does not depend on a counter- partner abroad;

Minimization of payment risks, since even providing a guarantee a risk is not excluded un full;

Effective instrument for the strategy of new market “safe entry”;

Protection of the Kazakhstan investments abroad against political risks;

Strategic planning based on revealed export risks;

As a rule, the procedure for insurance of export credits requires less expenses than opening a letter of credit;

Insurance of export credits is cheaper than factoring operations.

14 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. FinancialО компании statements •

Support instruments

KazakhExport is a unique insurance Activity of KazakhExport, as a export, which are developed in organization supporting the export national development institution, accordance with the best world of products of the domestic is primarily based on a need and practices in the area of export credit manufacturers through the opportunity to cover commercial insurance, as well as meet to the generally accepted international and political risks in order to support maximum the needs of the potential practices of insurance and it is an the national export of the goods, and active customer. important element supporting the services, and investments abroad. entrepreneurs from the stage of manufacturing of domestic goods to KazakhExport provides insurance their sale in the foreign markets. instruments to support the national

EXPORTER FINANCIAL INSTITUTION INVESTOR

No. Product title Short product description Covered risks

1 Exporter credit insurance Product provides an exporter with the coverage of a risk of a Commercial and political foreign counterparty’s default in financial obligations when selling its goods/work/service for export providing payment deferment.

2 Insurance of short-term Product is designated to protect exporters (as well as banks Commercial and political receivables providing financing for them) against risk of non-payment by foreign purchasers. Given this product, an exporter may insure planned sales turnover.

3 Pre-export financing Financing for an exporter to replenish the current assets for the Commercial and political purpose of manufacturing of the export products or performance of the works and services for export.

4 Advance payment Product enables to obtain alternative financing in the form of Commercial and political insurance advance payments from the foreign counterparties, which is required to replenish the current assets for the purpose of manufacturing of the export products or performance of the works and services for export.

5 Insurance of civil liability Protection of the holders of debentures issued by the exporters Commercial and political of exporters under against risk of default. debentures

6 Insurance of documentary Product provides a bank of an exporter (confirming bank) with Commercial and political letters of credit the coverage of a risk of default in financial obligations of an issuing bank opened a documentary letter of credit on behalf of an importer in favour of an exporter.

7 Export trade financing Financing is provided indirectly through the second tier banks Commercial and political through settlements in the form of a letter of credit.

15 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

No. Product title Short product description Covered risks

8 Loan insurance Product enables to obtain access to borrowed capital in order Commercial and political to develop export providing insufficient collateral and/or unwillingness of a creditor to assume a risk on transaction in full.

9 Financial leasing insurance Product enables to obtain access to leasing products in order Commercial and political to purchase equipment providing insufficient collateral and/or unwillingness of a lessor to assume a risk on transaction in full.

10 Insurance of a bank Product enables the participants of the international tenders Commercial and political payment guarantee to provide bank guarantees issued by the second tier banks of the Republic of Kazakhstan without being conditioned by confirmation by the foreign financial institutions.

11 Bank guarantee insurance Product provides coverage to the financial institutions of a risk of Commercial and political a foreign bank’s default in obligations.

12 Insurance of civil liability Providing insurance coverage to the banks against risk of Commercial and political of an exporter under exporters’ default in obligations under forward foreign exchange forward foreign exchange contracts. transactions

13 International factoring Insurance coverage for a financial organization with respect to Commercial and political insurance the factoring operations of the risk of foreign counterparties’ default in their contractual obligations.

14 Insurance of the Product provides coverage for the Kazakhstan investor of the risk Political Kazakhstan investments of loss due to political risks in a country of investment. abroad

EXPORTER

INVESTOR FINANCIAL INSTITUTION

16 Mausoleum of Khoja Ahmed Yasawi The mausoleum on the grave of the poet and preacher Khodja Ahmed Yasawi located in Turkestan in Turkestan Region.

The still existing mausoleum was built by order of Tamerlane 233 years after death of Khodja Ahmed Yasawi. In 1395, Tamerlane inflicted a defeat on 02 Tokhtamysh Khan, the ruler of the Golden Horde, and burned the city of Sarai-Berke which was the capital of the Horde. The commander decided to build a new grandiose memorial complex in place of the old mausoleum of Khoja Ahmed Yasawi in order to commemorate that victory. Development strategy • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

n accordance with the instruction level of 1% GDP. On the one hand, processing sector and the second Iof the Head of the State, the KazakhExport must contributing tier banks with the insurance Government Program “National to growth of the number of coverage of payment risk in foreign Export Strategy of the RK” was exporters and volumes of non- trade transactions and guarantees developed for the years 2018–2022 resource export and, on the other safety of export transactions. (National Export Strategy, NES). hand, satisfy technologically and The goal of the National Export institutionally the requirements The primary goal of the government Strategy of the RK is to create of enlarging customer base under policy in the area of export is to conditions to increase the volume conditions of increase in volumes diversify the export basket and to of non-resource export 1.5 times by of rendered support. ensure growth of the non-resource 2022 (as against the level in 2015) export at outstripping rates. and twice by 2025, as well as to The strategic directions of diversify sales markets and export KazakhExport development include Subject to the tasks of the National of the goods and services. improvement of the export support Export Strategy, the key strategic instruments, creation of conditions goals of KazakhExport are to KazakhExport strategy determines to increase the number of increase the volume of supported directions of development under exporters and to enhance operating export contracts and to increase conditions of expected growth of efficiency. the number of exporters received both the export-oriented activity financial support up to the target in the non-resource sector of As the part of its primary activity, values. economy and the volumes of KazakhExport provides the support of export up to the target companies-exporters from the

Increase in the number of exporters received financial support may be achieved through:

KazakhExport

Attracting active and Organizing business Enhancing potential exporters contacts through recognisability and in the regions the foreign awareness of activity 1 2 representative offices 3 of KazakhExport

In turn, increase in the number of export transactions per supported exporter may be achieved through:

Creating a unified Cutting the cost Enhancing efficiency Internet resource for of crediting and by means of the exporters (Digital insurance services automation of 1 Baiterek) 2 3 business processes

18 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Key strategic indicators

Amount of export Volume of assumed contracts insurance liabilities

billion billion 420 tenge 90.2 tenge

Volume of export revenue earned by the companies using KazakhExport Number support instruments of export contracts

billion 104.5 tenge 334 ea.

Volume of products manufactured by the entrepreneurs received support Return on assets billion ROA 157.8 tenge 3.3 %

Actually, Planned, Planned, Planned, № Key performance indicator Unit 2018 2019 2020 2021 billion 1 Amount of export contracts 420 250 300 350 tenge Volume of export revenue earned by the companies using billion 2 KazakhExport support instruments (with accumulations since 104.5 149.3 199.0 248.8 tenge 2014) billion 3 Volume of assumed insurance liabilities 90.2 95.0 125.0 155.0 tenge Number of exporters received support of KazakhExport for 4 ea. 27 20 20 20 the first time Volume of products manufactured by the entrepreneurs billion 5 157.8 149.3 199.0 248.8 received support (with accumulations since 2014) tenge 6 Number of export contracts ea. 334 318 328 338 not less not less not less 7 ROA % 3.3 than 1 than 1 than 1

19 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Results of work in the strategic directions Strategic Direction 1. Improving export support instruments

The purpose of this direction 2019, KazakhExport was capitalized Moreover, in 2018, resolution of the is to improve the financial and to the amount of 34 billion tenge. Management Board of the National service measures of support of Bank of the Republic of Kazakhstan the domestic exporters. These For the purposes of provision No.170 “On fixing statutory values measures are aimed at support of of the government guarantee, and methods to calculate prudential financial stability in the context of KazakhExport developed a set of standards and other binding rules assumption of the new insurance amendments to the Budget Code and limits of the amount of capital liabilities and expansion of of the Republic of Kazakhstan of a bank at a particular date and KazakhExport activity. concerning provision of the the Rules for calculating and limits of government guarantee for insurance the net foreign exchange position” In accordance with the Law of the payments to support export, which dated 13 September, 2017 was Republic of Kazakhstan “On the amendments became effective in amended concerning attribution republican budget for 2019–2021” April 2019. of an agreement of voluntary loan dated 30 November, 2018, in March insurance to the hard type of pledge.

Strategic Direction 2. Creating conditions to increase the number of exporters

The purpose of this direction is KazakhExport made arrangements During October-November 2018 to enhance recognisability and to expand the business contacts KazakhExport took part in bilateral awareness of KazakhExport and to between the domestic exporters meetings of B.A. Sagintayev, the increase the volumes of financial and the foreign partners on the Prime Minister of the Republic of support for the exporters through platforms of the international Kazakhstan, and the representatives regional and foreign presence with business forums held in Kazakhstan of Azerbaijan and the Russian focusing on small and medium- (AEF, II Kazakhstan-America Federation within the framework scale business and priority Business Forum, Kazakhstan-Poland of which the materials concerning industries. Business Forum, opening of the an opportunity of participation of IFCA, etc.). KazakhExport in the projects of In 2018, the new version of the supply of locomotives to the Republic organization chart of KazakhExport The trade mission to the cities of of Azerbaijan were submitted. was approved, which version Minsk and Moscow were organized provided for four salaried together with the Foreign Trade In November 2018, KazakhExport foreign representatives and the Chamber in September 2018. took part in the annual conference representative offices were opened A number of the meetings were organized by the Eurasian in the cities of Kazan and Xian. held with the banks of Belarus, Development Bank. On the side the Russian Federation and the lines of the conference a reinsurance The arrangements for organization negotiations were held concerning agreement was concluded with the of business contacts of potential an opportunity to cooperate with Russian export credit and investment foreign importers and the the customers of those banks insurance agency – EXIAR. Kazakhstan manufacturers of the with respect to the export trade goods were made in the past year. financing. On the basis of the existing infrastructure of the National The meetings with the banks of In October 2018, at the invitation Chamber of Entrepreneurs of the Uzbekistan and negotiations with of the Foreign Trade Chamber Republic of Kazakhstan “Atameken” the private companies in Kyrgyzstan KazakhExport took part in the (hereinafter – the NCE) the were held in April-May 2018. Trade and Economic Mission in Xian employees of the NCE were trained Likewise, KazakhExport organized (PRC) where the opportunities of to use the products of KazakhExport the trade mission in Azerbaijan export of the Kazakhstan goods in 14 regional centres of the country, together with the Foreign Trade using the financial instruments of as well as the cities of Astana, Chamber. KazakhExport were considered. Almaty, and Shymkent. The total

20 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

number of employees visited Corporation JSC – the employees The total number of employees training seminars is 61. of the companies-partners were visited training seminars is: EDF also trained to use the products of DAMU JSC – 99 and Agrarian Credit On the basis of the existing KazakhExport in all of 14 regional Corporation JSC – 78. infrastructure of the partners – centres, as well as in the cities of EDF DAMU JSC and Agrarian Credit Astana, Almaty, and Shymkent.

Strategic Direction 3. Enhancing operating efficiency

The purpose of this direction is Moreover, the training was organized communications with the exporters, to improve internal processes of in insurance of export credits and local executive authorities, NCE, as KazakhExport through development investments by EXIAR (Moscow, well as the branches of the second of the human capital assets, Russia) regarding: “Methods of tier banks. implementation of innovative insurance of the receivables of an technologies and automation of exporter, subsidizing a fee rate on The agreements with the Russian the business processes, as well as trade/pre-export financing. Methods export credit and investment rendering of the financial services to assess the credit risks”. insurance agency – EXIAR – regarding on the principle of “one-stop probation of the employees of service” by implementing the single As a part of the new organization KazakhExport and cooperation for portal of support of the Kazakhstan chart, KazakhExport increased a exchanging employees within the exporters. share of employees of the front framework of the international office from 17 up to 26 persons. The probations with the countries- In 2018, participation of the Senior Managers of the Department partners (Poland, Russia, UAE) are at employees of KazakhExport in of Insurance in the direction the stage of negotiations. SME Specialist Meeting 2018 in “Attraction” are assigned to each Ljubljana (Republic of Slovenia) was region of Kazakhstan in order to For the purposes of preparation of the organized. The training “Collection of establish communications with the complex support of entrepreneurs at credit information and Underwriting exporters. The regional managers all levels on the principle of “one- of purchaser” was received in visit the regions supervised stop service”, Digital Baiterek unified Amman ( Jordan). on a regular basis in order to information platform is put into get in contact and to establish experimental operation.

As part of this platform KazakhExport implements 6 exporter support measures:

Voluntary loan Voluntary financial Export trade 1 insurance 3 leasing insurance 5 financing

Bank payment guarantee Exporter credit Pre-export 2 insurance 4 insurance 6 financing

To enhance operating efficiency, Besides this, the work is performed on allowed automating preparation of in 2018, KazakhExport automated integration of 1C and the automated the regular reports of KazakhExport 50 reports, as well as developed information system PrSO designated submitted to the National Bank of additional modules as part of the for the purposes of reporting by all the Republic of Kazakhstan. accounting information system – 1C. insurance organizations. Integration

21 Nurly Tau Business Center A modern administrative residential complex with a total area of more than 8 hectares located in the business part of Almaty. The Nurly Tau Multifunctional Complex is a dominating structure of the office center of Almaty and the largest community center in Kazakhstan. The unique Hi-Tech architecture of the complex mirrors the silhouettes 03 of Trans-Ili Alatau Mountains. To achieve this effect, a special gray-blue tempered light- reflecting glass was used. Operating results • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

he insurance activity in the In addition, notwithstanding that Activity of KazakhExport is aimed at TRepublic of Kazakhstan is many insurance organizations hold development of the non-resource carried out by the legal entities licenses for almost all categories export of the country through holding a license to carry out of insurance in “General insurance” implementation of the insurance insurance activity issued by the industry, the export credits and support instruments. The basic competent authority. investments abroad are not insured macroeconomic index affecting against risks of their non-payment. activity of KazakhExport is export As at 1 January, 2019, the structure of These functions in the market of the products of the processing the insurance market is represented of Kazakhstan are performed by sector of the economy. by 29 companies1. KazakhExport only.

Structure of the insurance market of the Republic of Kazakhstan for 2016–2019: Institutional structure of insurance sector

Number 22 32 23 29 of insurance (reinsurance) 3 3 organizations Including life insurance 01.01.2017 7 01.01.2019 6 Number 59 56 of insurance brokers 15 15 Number of actuaries Number of insurance (reinsurance) organizations, which are members in Insurance 22 32 23 26 Payments Guarantee Fund JSC Number of representative offices of the insurance 3 3 organizations being non- residents of the Republic of 01.01.2018 7 01.03.2019 6 Kazakhstan 58 56 1 Based on data from the report of the National 15 14 Bank of the Republic of Kazakhstan “Current condition of the insurance sector”

23 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Basic insurance activity performances

Owing to performed work of companies received support for the (meat processing, egg production, KazakhExport on development first time. vegetable production, etc.). of the line of instruments and attraction to cooperation of the From commencement of activity In general, during the period second tier banks and development about 65 companies in total received from 2014 to the present time institutions, in 2018, more than 50 support in such industries as KazakhExport demonstrates growth manufacturers-exporters received mechanic engineering, metallurgy, in volumes of support rendered to support of KazakhExport in all chemistry, food and consumer goods the exporters of the Kazakhstan regions of Kazakhstan of which 27 industry, agro-industrial complex goods.

Items 2016 2017 2018 Amount of assumed liabilities 19,485 40,087 90,197 Support of export increased by (million tenge) Amount of premiums under insurance 638,492 1,060,186 2,119,505 agreements (thousand tenge) Amount of supported export contracts 92,828 196,137 419,778 times (million tenge) 2,2 Volume of provided trade financing 808 2,454 10,265* as compared to 2017 (million tenge) Volume of provided pre-export financing 470 4,803 6,911 (million tenge) Export contracts support to the amount of Number of supported manufacturers 32 42 27 (new) Number of insurance agreements 126 203 334 Number of insured export shipments 1,193 1,859 1,935 billion Number of foreign purchasers 96 108 191 420 tenge

* The TF projects are additionally financed at the expense of funds of the STBs to the amount of 2.2 billion tenge

24 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Over 2018, the volume of rendered Hyundai Trans Auto Kazakhstan, Chemical industry (Polymer insurance support of export KEMONT, KARLSCRONA); Production, HILL CORPORATION), increased more than by 2.2 times totally 42 manufacturing as compared to 2017. In addition, Food industry (Raiymbek group, facilities and exporters of the 334 export contracts are supported RG Brands, Rakhat, Bayan Sulu, services representing both during 2018 to the total amount of Almaty product, Eurasian Foods, big business entities, as well 420 billion tenge that is 2.1 times Molprodukt, Araltuz, Tulpar as small and medium-scale more than the similar indicator in Firm, Shymkentmay, EXPO business entities. 2017. FOOD, Iceberg PV, Unix, Ural poultry farm); Dynamics of growth of the number of insured export supplies, foreign importers-counterparties and concluded insurance agreements may be observed. During 2018 Dynamics of amount of export contracts and amount of assumed KazakhExport insured 1,935 insurance liabilities, million tenge export shipments made to 191 foreign importers-counterparties. 500 000 419 778

328 insurance agreements were 400 000 concluded given received 477 300 000 applications. 196 137 200 000 90 197 In 2018, the products of the 92 828 100 000 40 087 Kazakhstan manufacturers 19 485 were exported with support of 0 KazakhExport to such countries as 2016 2017 2018 Russia, China, Japan, Italy, Germany, AMOUNT OF EXPORT CONTRACTS AMOUNT OF ASSUMED INSURANCE LIABILITIES Belarus, Kyrgyzstan, Azerbaijan, Georgia, Armenia, Tajikistan, Dynamics of the number of received applications and concluded Uzbekistan, Turkmenistan, and insurance agreements (items) Mongolia. 600 477 In 2018, the companies from the 500 339 following sectors of the processing 400 328 302 industry received financial and 300 203 insurance support: 126 200

Mechanic engineering (Kaynar- 100 AKB, Kentau and Ural transfor 0 mer works, SaryarkaAutoProm, 2016 2017 2018 RECEIVED APPLICATIONS NUMBER OF AGREEMENTS

25 Information about amount of liabilities assumed in 2018 broken down by regions of export

TOTAL 90.197 bln tenge 100,0%

26 Italy Georgia 1.162 bln tenge 1.903 Azerbaijan 1,3% bln tenge 789.699 2,11% mln tenge 0,9% Tajikistan Mongolia 3.359 212.417 bln tenge mln tenge 0,24% 3,7%

Uzbekistan 2.823 Kyrgyzstan bln tenge 12.227 3,1% bln tenge 13,6%

Slovakia China 410.79 mln tenge 0,46% 2.0 bln tenge 2,2% Germany 94.025 mln tenge Russia 0,1% Armenia 64.912 305.798 mln tenge bln tenge 0,34% 72,0%

27 EXPORT SERVICE / WORK

Amount Amount of export of liabilities contracts 17,102 62,319 mln tenge mln tenge

Integra Construction KZ Kazgiprotsvetmet Priority sectors supported by AAEngineering KazakhExport during 2018, Omas Integrated million tenge

FOOD TOTAL INDUSTRY Amount of liabilities Amount Amount of export 90,197 of liabilities contracts mln tenge 33,722 148,424 mln tenge mln tenge Amount of export contracts Rakhat Tulpar Firm Rakhat-Oral 419,778 (confectionery) (sausage products) (confectionery) mln tenge Bayan Sulu Raimbek Bottlers Iceberg PV (confectionery) (drinks) (semi-finished products) Arassan Firm AkOrda Capital Unix (drinks, beer) (meat processing) (drinks) Almaty product Shymkentmay Ural poultry farm (confectionery) (oil and fat products) (chicken egg) RG Brands Kazakhstan Eurasian Foods Corporation Seynar (drinks) (oil and fat products) (oil and fat products) Araltuz EXPO FOOD (edible salt) (cereals)

28 CONSUMER GOODS INDUSTRY MECHANIC ENGINEERING / CONSTRUCTION MATERIALS

Amount Amount of export Amount Amount of export of liabilities contracts of liabilities contracts 231 11,184 9,091 105,804 mln tenge mln tenge mln tenge mln tenge

AGF group Kaynar-AKB Alina Group KTW and UTW Penoplex SaryarkaAutoProm Baltextile Hyundai Trans Auto Kazakhstan KEMONT KARLSKRONA LC AB

METAL WORKING AIC – CHEMICAL INDUSTRY FINISHED PRODUCTS

Amount Amount of export Amount Amount of export of liabilities contracts of liabilities contracts 13,953 53,595 16,098 28,752 mln tenge mln tenge mln tenge mln tenge

KSP Steel Qaraoi Meat Processing and Service (meat production) (meat production) ArcelorMittal Terra AkTep TMP (meat production) (meat production) TEMIC Green Land Alatau Kayip Ata KazArmaprom (grrenhouses) (meat production) Polymer Production Green Capital Kazakhstan AsiaAgroFood (grrenhouses) (molasses) HILL CORPORATION Zharkent starch works Khlopkoprom-Cellulose (molasses) (cellulose)

29 TOTAL Support of EIC KazakhExport JSC during Amount of export 2018, broken down by regions of the contracts 419,778 Republic of Kazakhstan mln tenge

Amount of liabilities 90,197 Industry mln tenge Number Export of export contracts geography North KazakhExport 334 support Kazakhstan instruments 71,886 mln Region

21,002 mln

7 Akmola

mln Insurance of CE, Region 4,752 Loan insurance Loan insurance, insurance of receivables, insurance of CE, West Kazakhstan insurance of the letters of 695 mln credit, TF, PF Region 19,598 mln 14 75 10,313 mln Kostanay Region 304 mln 2 Aktyubinsk 74 mln Region Loan insurance, Insurance of CE Insurance of CE Atyrau Region

26 92,794 mln 6,000 mln 23,660 mln * 000 mln Turkistan Region Kyzylorda oblast 14,172 mln Insurance of the letters of credit, TF Loan insurance Region

Mangistau 1,752 mln 1

The abbreviations used with respect to support instruments: insurance of CE – insurance of credit export (payment deferment) Loan insurance, TF insurance of receivables – insurance of short- term accounts receivable PF – pre-export financing 13 TF - export trade financing

30 Nur-Sultan City Almaty City

11,013 mln 92,794 mln

3,331 mln 23,660 mln

Loan insurance, insurance Insurance of CE, PF, Insurance of of the letters of credit, TF, Bank receivables, Bank guarantee insurance, guarantee insurance 2,000 mln 2 insurance of the letters of credit * North 000 mln 14 56 Kazakhstan Loan 30,750 mln Region insurance 10,519 mln

Insurance of CE, insurance Akmola of the letters of credit, PF, TF Region Pavlodar 3 Region 16,575 mln 38 6,162 mln 8 26,364 mln

2,628 mln East Kazakhstan Loan insurance Region Insurance of CE, PF

Insurance of the letters of credit, TF, Insurance of CE

Karaganda Region 41

89,624 mln 1,484 mln 7,572 mln 306 mln Shymkent City 15 29,564 mln Almaty Zhambyl Loan insurance, insurance of CE, Region mln Region insurance of the letters 1,749 of credit, PF, TF Insurance of the letters of credit, TF,

Turkistan Region Turkistan Loan insurance

Insurance of CE, PF, Loan insurance

* – the liabilities with the respect to those companies were assumed by KazakhExport in 2016–2017 for the period of 2–7 years. These companies are not numbered for the avoidance of incorrect calculation of the number of companies supported in 2018. The amount and number of export contracts for those exporters are taken into 19 consideration, since that export has become possible owing to liabilities assumed by KazakhExport

31 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Basic reinsurance activity performances

During the period from 2015 to payments is 20% below the average 2018 the estimated capacity (share) level of payments in the market. of the market of reinsurance for KazakhExport is evaluated based Estimated capacity (share) of the market of reinsurance fort 2015–2018, on amount of reinsurance premium (million tenge) reinsured to the residents. Period Items In addition, KazakhExport does not 2015 2016 2017 2018 assume risk reinsurance in highly Total amount of insurance loss-making categories of insurance, 288,272 356,903 370,173 384,845 premiums such as “motor transport insurance”, “annuity insurance”, “medical Reinsured, total 89,883 131,580 129,736 89,835 reinsurance” and some types of civil liability insurance. (%) 31.18 36.87 35.05 23.34

Starting from the second half of the Of which reinsured to the 14,614 18,327 20,668 14,676 year 2018 activity of KazakhExport residents relating to reinsurance was focused (%) 5.07 5,14 5,58 3,81 on primary activity, and increase in volume of business relating to Collection of net reinsurance 492 297 281 219 incoming reinsurance from the local premiums of KazakhExport market is not observed. Share of KazakhExport in % of the market premiums transferred 3.37 1.62 1.36 1.49 During 2018, 183 agreements to the residents are entered into for incoming reinsurance to the amount of charged gross premiums totalling Information about reinsurance activity for 2015–2018, (million tenge) 561 million tenge, and 7 agreements Period – for incoming reinsurance of direct Items insurance agreements to the amount 2015 2016 2017 2018 of charged premiums totalling 217 Gross incoming reinsurance 575 474 845 561 million tenge. premium Payments made 170 77 63.70 90.21 Owing to the reasonable Policy of Level of payments subject to reinsurance, quality underwriting 29.62 16.24 7.54 16.08 of reinsurance risks, the level of indemnity (%)

Major transactions settled with support of KazakhExport 1) KSP Steel LLP, Pavlodar City

The first Kazakhstan company area on which the manufacturing support regarding insurance of producing steel seamless pipes facilities of the company are situated export credit, pre-export financing for the oil-and-gas industry was is about 133 ha. More than 7,500 and export trade financing. In 2018, established early in 2007. The professionally trained specialists three transactions were concluded manufacturing centre of the work here. The plant operations are with KSP Steel, and two transactions company is located in Pavlodar City; coordinated by the head office of the were concluded for the purpose it is here where KSP Steel plant was company located in Almaty City. In of export of the large shipments officially opened in December 2007 order to increase the share of export of seamless pipes to the Russian with the participation of Nursultan and to entry the world market the Federation within the framework of Nazarbayev, the First President of exporter asked KazakhExport to which the manufacturing company the Republic of Kazakhstan. The total help. The national company rendered successfully exported the products

32 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

to the amount of about 550 million Owing to support provided by Russian roubles. In October 2018, KazakhExport the company could KazakhExport rendered support to raise the volumes of export of steel KSP Steel Company in insurance seamless casing, oil line, pumping- of exporter credit and pre-export and-compression pipes and collars financing to replenish current assets to the Russian Federation. in the amount of 2.65 billion tenge. The transaction was settled together KSP Steel successfully exported with SB Alfa-Bank JSC. the products to the amount of 2) AkTep LLP – meat-processing industrial complex, Aktobe City mln Russian rubles AkTep LLP is a company producing JSC under the crediting program 550 ecologically clean meat products, Agroexport; the loan is insured by which has the present-day KazakhExport. replenishment of current assets in the technologies. The company carries out on its own the entire processing The company-manufacturer was amount of process: from livestock breeding, financed to the amount of 2.9 billion compound feed output, fattening, tenge to purchase 18 thousand bln meat processing to shipment of the of bovine animals for the feeding tenge finished products customized for station that allowed increasing the 2.65 a particular consumer. The project volumes of export to the Russian was financed through the facility Federation. of Agrarian Credit Corporation

3) Zharkent starch plant LLP, Almaty oblast, Zharkent Town AkTep LLP was financed to the Zharkent starch plant LLP is a new Zharkent starch plant LLP has a amount of plant having the modern line for number of competitive advantages: advanced processing of corn grain to starch using the up-to-date - the industrial complex was bln equipment and high technologies. established by means of the state- tenge to purchase The purpose of the project is to of-the-art technologies using only 2.9 satisfy growing volume of needs in high-technology equipment and thousand starch products of the companies of advanced materials; of bovine the Republic of Kazakhstan, as well animals as the near and far foreign countries. - the manufacturing departments 18 The company has considerable are designed and constructed under experience of work in that industry the direction of the best world and a wide customer base; specialists in the starch industry; moreover, the market of demand for starch products is being constantly - the entire industrial complex is 80% studied. automated that allows producing the

KazakhExport approved the limit of financing to Support of KazakhExport allowed Zharkent starch plant LLP Zharkent starch plant LLP -fold increase in mln the volume 1.5 USD 2of export

33 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

products with exact carbohydrate million together with SB Alfa- composition and reducing cost of Bank JSC and Asia Alliance Bank the products; JSCB (Uzbekistan). To organize the financing of that transaction - high provision with the up-to- EIC KazakhExport JSC established date devices allows ensuring and partnership relations with one of the controlling quality of the entire Uzbek banks, studied its financial production cycle: from incoming raw position and fixed for that bank a materials to finished products. specific limit of risk of default on interbank loan. For the purpose of support of the domestic exporter and provision for Support of KazakhExport allowed the Uzbek importer with favourable Zharkent starch plant LLP doubling terms of financing, KazakhExport the volume of export of corn starch structured and approved the limit and molasses to Uzbekistan. of financing to the amount of $1.5

4) AGF Group PK LLP, Shymkent City

AGF Group PK LLP is the largest With the support of KazakhExport manufacturer of home textiles in the Kazakhstan exporter increased Kazakhstan. The factory is located the volume of sale of its products within Ontustik Special Economic to the foreign markets with setting Zone (SEZ), Shymkent City. Owing to the record. Two years ago the annual advantageous geographic location revenue from sale of the products the company has access to the of the company amounted to 450 AGF Group PK LLP major markets of raw materials million tenge, and during 2018 the suppliers (China, India, Pakistan, volume of export of the sewing annual revenue growth Turkey, etc.), as well as the sales factory increased up to 4.9 billion from sale of the products market (Russia, EU), and taking tenge. for 2 years from advantage of the preferences of mln the SEZ and the Customs Union it EIC KazakhExport JSC insured risks tenge offers advantageous conditions of Tengri Bank JSC the borrower of 450 for cooperation: best prices, short which is AGF Group PK LLP. bln terms of supplies, high quality of the to tenge products. 4.9

5) Green Land Alatau LLP, Almaty oblast, Kapchagay

The greenhouse complex of Green lighting system, mist irrigation Land Alatau LLP is specializing in system, and curtain system. production of ecologically clean vegetable produce, it supplies The Kazakhstan manufacturer directly to the large-sized sales of the vegetable produce under channels and hypermarkets of coverage successfully competes in Almaty City and Almaty oblast, as the foreign markets. The year round, Green Land Alatau LLP well as wholesale supplies to the already for seven years, Green exports annualy to Russian Federation. Land Alatau LLP produces the best the Russian market breeds of tomatoes and cucumbers The greenhouse complex is equipped without genetic modification; it thousand with the up-to-date European forms the personnel reserve for tons equipment – Dalsem (Netherlands) the greenhouse industry; it exports 7 – with the application of the more than 7 thousand tons of of vegetables advanced technologies of vegetable vegetables to the Russian market on production, such as hydroponics, annual basis. drop irrigation, supplementary

34 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Thanks to the special interplanting includes several kinds of cucumbers technology, the company grows and tomatoes. All products are non-stop the vegetable produce and produced without nitres and takes the crop more than 300 days a herbicides and they are ecologically year. The electronic climate control clean. Green Land Alatau LLP system by the means of the special software of the Dutch company – With the support of KazakhExport as delivers the goods to the customers Priva – allows creating several areas regards replenishment of the current on a deferred-payment basis that, with different temperature, humidity assets to purchase seeds, fertilizers in turn, allows competing in the foreign and lighting conditions. and biological protection agents for markets plants, the Kazakhstan manufacturer More than 250 persons work in could raise the volumes of products the company. The specialists of the output for export, deliver the goods company arranged supplies to the to the customers on a deferred- supermarkets of Kazakhstan and payment basis that, in turn, allows Russia. The range of the products competing in the foreign markets.

6) Kaynar-AKB LLP

Kaynar-AKB is the domestic and complete accumulator battery commodity producer of accumulator production cycle. batteries and it is entered into the Register of domestic commodity KazakhExport and SB Sberbank JSC producers of Samruk-Kazyna rendered support to Kaynar-AKB LLP Holding; it is a member of the in replenishing the current assets international union of accumulator to purchase raw materials. The battery producers “Interbat”. financing allowed the Kazakhstan accumulator battery producer raising Today Kaynar-AKB LLP is a company, the volumes of the products output which has both feet firmly on the for export. ground and has developed economy

7) AAEngineering Group LLP, Almaty City

The company is operating in the construction and the other – at the market of Kazakhstan since 1993. At stage of development of a feasibility that time the company was engaged study. As far back as this year the «KazakhExport» in output of construction materials. company began to cooperate with In 2013 the company was almost the foreign partners. The short- from the beginning of 2017 given a new lease of life with a new term plans contemplate designing, supprted more than perspective contemplating growth construction and commissioning of from production cooperative to Talas gold beneficiation plant, which companies development of a service direction is located in the Kyrgyz Republic. 60 exporters and rendering of complex services for the mining companies. Thus, Uniqueness of the company the organization, which can design consists in mastering technologies and construct the gold beneficiation of man-made mineral formation plants in a quality manner, appeared recycling, mastering technologies export in the market of Kazakhstan. of output and gold recovery both in contracts hydrometallurgical and beneficating 300 Today more than a thousand method through plantation. In its to the amount of persons are employed in the opinion, the South Africa technologic company. The specialists are school is deemed to be the most working in parallel on seven projects technologic school due to availability with four of them being already of good specialists and production billion at the stage of designing and engineers. 500 tenge

35 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

For the purposes of intensive with achieving specific multiplicative development and entry to the new effect, where the Kazakhstan AAEngineering Group LLP markets outside Kazakhstan, the specialists and the Kazakhstan company needed the government production are involved to perform plans to increase in volumes of export assistance. Having applied to works. In general, from the beginning KazakhExport and taking advantage of 2017 more than 60 companies- of one of the support instruments exporters were supported and this – bank guarantee insurance, the is more than 300 export contracts company became able to export the to the amount exceeding 500 billion million services to the amount of $107,500 tenge. $380 million, in particular, to engineer and supply the equipment to construct The short-term plans of Talas gold beneficiation plant in AAEngineering Group suppose Kyrgyzstan, and, moreover, using development of the markets of the construction materials produced Russia and Kyrgyzstan. Thus, the first on the territory of Kazakhstan and contracts to project the enterprises subcontracting specifically domestic will be signed in the next year and companies. increase in volumes of export to the neighbouring countries up to $380 This type of export is very important, million is already planned in the very since export of services allows near future. raising production in Kazakhstan

8) Molprodukt plant, Petropavlovsk City

Thanks to the government support Now the plant outputs 40 kinds in Kazakhstan, the export of milk of products and employs 240 products raised. Molprodukt plant persons. The company purchases located in Petropavlovsk City raw materials from the agricultural processes 500 tons a day. The producers of the North Kazakhstan company is existing since 2009. region and Akmola oblast. Over the years the large-scale reconstruction was carried out at The export of the plant products the plant –the high-technology has increased and now one third Molprodukt plant equipment meeting the European of the total volume of production is standards was installed. In 2016, it supplied to Russia. It is planned to insuring the loan in the amount was decided to increase productive find the sales market in China and of capacity of the company and to Mongolia. install innovative package making equipment. However, the Kazakhstan Likewise, taking advantage of billion manufacturer fell short of a pledge. the services of KazakhExport, tenge So, then KazakhExport Company the company became able to 2 helped and supported the company arrange uninterrupted supplies of by insuring the loan in the amount of expendable materials for production thanks to the government support, 2 billion tenge. After having received at more favourable prices. the government support, the volumes of processing and export volumes of processing and export increased by increased more than by 20%.

9) Iceberg PV LLP, Pavlodar City 20% This is one of the domestic as well as to some Russian cities. manufacturers, which was the first There are more than 80 items of to supply its products to Moscow. the products and semi-finished The Kazakhstan company – Iceberg products the production volumes PV LLP – is engaged in production of which make about 400 tons of frozen Russian ravioli, perogies, every month given total load. To dumplings, pancakes, hamburgers, increase the volumes of export the which it sells within Kazakhstan, company decided to conclude a

36 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

contract with the Russian company, protection, in particular, insurance of which specializes in sale of food payment deferment of the Russian Iceberg PV LLP products from Kazakhstan. Under purchaser under the export contract. concluded supply contract with the Thus, the Kazakhstan manufacturer items of the foreign purchaser, the exporter was received protection against risk of provided the government support importer non-payment. products and semi- as regards provision of financial 80 finished products

10) Bayan Sulu JSC, Kostanay City

This is one of the biggest companies in The Russian Federation is the tons the Republic of Kazakhstan engaged principal consumer of the export every month in production of confectionery. The products of Bayan Sulu JSC. The used 400 factory is founded in December government support instrument is 1974 and more than forty years insurance of short-term accounts now it is operating in Kostanay City. receivable. The insurance product The products of Bayan Sulu JSC are is designated to protect against actively promoted in the near and risk of non-payment by the foreign far foreign countries. The company purchasers of Bayan Sulu JSC where has a wide sales structure in such KazakhExport insures the portfolio of countries as Russia, Kyrgyzstan, export contracts of the insured party Turkmenistan, Uzbekistan, Azerbai on a deferred-payment basis. jan, Germany, China, and Belarus.

37 U.S. Bank Tower It is the twelfth tallest building in the United States of America, the tallest skyscraper west of Chicago, and the tallest building in California.

The height of the building is 310 meters. Since the skyscraper is located in the earthquake- prone area, the design provided a strength reserve capable of withstanding an earthquake of magnitude up to 8.0 on the Richter scale. 04 The building has 73 floors and a two-level underground parking. It is one of the most widely recognized buildings in Los Angeles. Financial results

38 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

s at 31 December 2018, incomes on deposits in escrow – tenge (OCR), and changes in Athe assets of KazakhExport 218 million tenge. the reinsurance assets in the amounted to 48,646 million tenge; amount of 325 million tenge; at the end of 2018 the equity At the end of 2018 the aggregate capital of KazakhExport amounted expenditure amounted to 4,320 the total reinsured premiums to 43,309 million tenge; as at million tenge. amounted to 571 million tenge; December 31, 2018 the liabilities amounted to 5,337 million tenge. The operating expenses amounted the insurance and reinsuran to 2,424 million tenge: ce payments amounted to At the end of 2018 the 48 million tenge. comprehensive incomes amounted net provisions amounted to to 6,373 million tenge. 1,805 million tenge, which At the end of 2018 the total amount was formed as the administrative expenses amounted The operating incomes amounted to result of changes in the to 1,163 million tenge. 2,901 million tenge: Unearned premium reserve in the amount of 707 million Based on the results of activity for incomes on insurance premiums tenge (UPR), Incurred but not 2018, the ROA was equal to 3.34% – 2,119 million tenge; reported reserves in the amount and the ROE was equal to 3.71%. of 761 million tenge (INRR), incomes on reinsurance Outstanding claim reserves premiums – 563 million tenge; in the amount of 12 million

Dynamics of assets, capital and Dynamics of incomes and Dynamics of profitability ratios liabilities for 2016–2018, million expenditures for 2016–2018, for 2016-2018, % tenge million tenge

60 7 14.0

48,646 6.26% 50 46,164 6 12.0 6,373 6,213 43,310 4,787 42,188 5 10.0

40 4,081

4 8.0 3.71% 28,708

30 25,955 3 6.0 5.69% 2,216 2,131 20 2 1,586 4.0 3.34% 2,326 10 5,337 1 2.0 3,975 110 2,753 0.57% 0.50% 0 0 0.0 2016 2017 2018 2016 2017 2018 2016 2017 2018 ASSETS EQUITY CAPITAL LIABILITIES NET PROFIT EXPENSES INCOMES ROE ROA

39 30 St Mary Axe This 40-story tower located in the financial center of London can lay claim to being the first ecological skyscraper. It is made in the form of a lattice shell with a central substructure. The building was designed by the famous architect Norman Foster and built in 2001–2004 in the place of the Baltic Exchange damaged by the terrorist attack of the Irish Republican Army in 1992. The cost of construction was $400 million. Foster was intent on 05 using the sunlight and natural ventilation. With a height of 180 meters, the building turned out to be cost-effective structure as it consumes half the electricity than other buildings of this type. Procurement practice

40 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

he policy of selection of the 4. Provision to all potential procedures in KazakhExport meet Tsuppliers and work with them suppliers of equal opportunities the present-day requirements; the is based on implementation of the to take part in the procurement organization thereof is realized following basic principles presented process providing support of in electronic manner through the in the Rules of procurement of organizations of disabled persons Eurasian electronic portal – eep. the goods, works, and services of (disabled natural persons mitwork.kz. KazakhExport: carrying out entrepreneurial activity); Thus, each potential supplier is able 1. Publicity and transparency of to take part in the procurement the procurement process; 5. Fair competition between process and to seek a contract potential suppliers; awarding. 2. Optimal and effective expenditure of funds used for 6. Minimization of participation During the reporting period procurement purposes; of the intermediaries in the KazakhExport made purchases to procurement process. the amount exceeding 340 million 3. Purchase of quality goods, tenge of which the local content works, and services; To adhere to the above-mentioned was equal to 79% given the target principles, the procurement ratio of 60%.

1 5 3 4 2 6

41 Parthenon Monument of ancient architecture, an ancient Greek temple located on the Athenian Acropolis. The Acropolis is a 156-meter rocky spur with a slightly sloping apex (about 300 m long and 170 m wide). The first fortifications were built on the outskirts of Athens long before the Classic period. As early as the Archaic period, there were majestic temples, 06 sculptures, various religious objects. The Acropolis is also known as the Cecropia in honor of Cecrops who was the first king of Athens and the founder of the Acropolis according to the legend. Primary goals and tasks in 2019

42 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

or the purposes of enhancement the private entrepreneurship in 2019 in the Russian Federation Fof a degree of reliability of the form of subsidization of a (Moscow, Novosibirsk, Yeka and confidence in KazakhExport rate of fee on financial services terinburg), People’s Republic on the part of the companies- when exporting the Kazakhstan of China (Xian), Uzbekistan exporters, Kazakhstan and products; (Tashkent), Tajikistan (Dushan international financial institutions, be), Kyrgyzstan (Bishkek), and as well as export-credit agencies, 3. to further increase the Belarus (Minsk); it is expected within the context of authorized capital stock of planned activities: KazakhExport in accordance 5. to expand the coverage in the with the Law “On republican regions of Kazakhstan. 1. to receive the government budget for 2019–2020” in order guarantee for support of export; to support the exporters of non- resource goods and services; 2. to provide a legislative framework for the regulation of 4. to open 8 offices of the foreign provision of financial support to representatives till the end of

1 3 4

2 5

43 Burj Khalifa With a height of 828 meters, this skyscraper located in Dubai is the tallest building in the world. The shape of the building is reminiscent of a stalagmite. Khalifa Tower was designed as a “city within the city” having its own lawns, boulevards, and parks. The total cost of the structure is $1.5 billion. Unlike many other skyscrapers, Burj Khalifa has the foundation which is not fixed in the hard rock ground. To build 07 the foundation of the building, hanging piles with the length of 45 m and diameter of 1.5 m were used. Total amount of such piles is about 200. The shape of the building is asymmetrical in order to reduce the swinging effect of the wind. Corporate governance

44 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Description of the corporate governance system and principles

azakhExport considers the The basic principles of the Corporate 6. the principle of settlement of Kcorporate governance as an Governance enshrined in the Code corporate conflicts and a conflict instrument to enhance efficiency are: of interest; of activities of KazakhExport, to strengthen its reputation, and 1. the principle of delineation of 7. the principles of transparency to reduce the costs to raise the responsibilities; and objectivity of disclosure of funds. The appropriate corporate the information about activities governance system is a factor 2. the principle of protection of the of KazakhExport. determining a place of KazakhExport rights and interests of the Sole in the present-day economy. The Shareholder; The corporate governance principles rule of law is fundamental for the set forth in the Corporate Governance corporate governance. 3. the principle of effective Code are aimed at gaining confidence management of KazakhExport in relations arising in connection The Corporate Governance Code by the Board of Directors and with management of KazakhExport. is adopted in KazakhExport. the Management Board; The Code is a body of rules and recommendations, which 4. the principle of sustainable KazakhExport follows in the process development; of its activities in order to ensure high level of the corporate governance in 5. the principle of risk relations inside KazakhExport and management, internal control, with the other market players. and internal audit;

You may review the Report on compliance with provisions of the Corporate Governance Code and/ or actions taken to comply with it in the reporting year at the corporate web-site of KazakhExport: https://keg.kz/rubric/o_nas/korporativnoe_upravlenie/korporativnie_i_ vnutrennie_dokumenti

45 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Организационная структура менеджмента

Corporate Internal Audit Board Compliance Secretary Service of Directors Controller

Chairman of the Information Adviser PR Manager Security Manager Management Board

Managing Director Managing Director Vice-Chairman Vice-Chairman – member of the – member of the of the Management of the Management Management Board Management Board Board Board

Strategy and Human Resources Insurance Economic Planning Managing Director Management Department Department Department

Direct Insurance Accounting Information and Reinsurance Representative and Reporting Technology Underwriting Office in Almaty City Department Manager Department

Administration Risk Management Reinsurance Treasurer and Maintenance Department Department Activity Manager

Procurement Actuary Manager

Legal Support Department

46 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Board of Directors Members of the Board of Directors

During 2018 the Board of Directors of KazakhExport included the following persons:

Yerbolat Chairman of the Board 01.06.2016 – 31.01.2018 Deputy Prime Minister Askarbekovich of Directors 01.06.2016 – February of the Republic 2019 of Kazakhstan DOSSAYEV

Aydar Member of the Board 08.02.2017- 31.01.2018 Chairman of the Abdrazakhovich of Directors 08.02.2017– May 2019 Management Board of NMH Baiterek JSC ARIFKHANOV

Ruslan Viktorovich Member of the Board 15.02.2016 – 31.01.2018 Chairman of the ISKAKOV of Directors 15.02.2016 – February Management Board 2019 of EIC KazakhExport JSC

Damir Member of the Board 15.02.2016 – 31.01.2018 Serkbayevich of Directors – Independent 15.02.2016 – February Director 2019 SUYENTAYEV

Aytkul Member of the Board 13.09.2016 – 31.01.2018 Baygaziyevna of Directors – Independent 13.09.2016 – February Director 2019 SAMAKOVA

Yaroslav Member of the Board 13.09.2017 –31.01.2018 Grigoriyevich of Directors – Independent 13.09.2017 – February Director 2019 DILDYAYEV

Aynur Member of the Board 28.02.2018 –31.01.2018 Managing Director Sainovna of Directors 28.02.2018 – February – member of the 2019 Management Board of KUATOVA Baiterek NMH JSC

47 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

During 2018 the following changes to determine 7 (seven) members term of office until expiration occurred in the Board of Directors of of the Board of Directors of EIC of a term of office of the Board KazakhExport: KazakhExport JSC; of Directors of EIC KazakhExport JSC in general. The Sole Shareholder of KazakhExport to elect Aynur Sainovna Kuatova made the following resolutions to be a member of the Board of (minutes of the Management Board Directors of EIC KazakhExport of NMH Baiterek JSC No.07/18 dated JSC as a representative of the 28 February, 2018): Sole Shareholder subject to a

Report on activity of the Board of Directors During 2018 the Board of Directors Board of Directors of KazakhExport In percentage terms, the Chairman of KazakhExport held 12 meetings 10 (ten) business days prior to the and the members of the Board of of the Board of Directors of date of the meeting of the Board of Directors of KazakhExport attended KazakhExport: 8 meetings – in Directors of KazakhExport. 100% meetings of the Board of presentia and 4 ones – in absentia. Directors of KazakhExport during The materials, explanatory notes for During 2018 the Chairman and the the reporting period and the comprehensive consideration of the members of the Board of Directors member of the Board of Directors items were sent to the Chairman of KazakhExport duly attended the of KazakhExport – A.S. Kuatova – and the members of the Board of meetings of the Board of Directors attended 91.6% meetings. Directors of KazakhExport within the of KazakhExport and actively terms fixed by the Regulations of the participated in the work thereof.

In In During 2018, 103 items were Full name presentia absentia considered at the meetings of the */** */** Board of Directors of KazakhExport. Yerbolat Askarbekovich Dossayev 8/8 4 /4 Ruslan Viktorovich Iskakov 8/8 4 /4 During 2018 the Board of Directors of KazakhExport gave 22 instructions of Damir Serkbayevich Suyentayev 8/8 4 /4 which 18 instructions were executed Aytkul Baigaziyevna Samakova 8/8 4 /4 and the period of execution for 4 Aydar Abdrazakhovich Arifkhanov 8/8 4 /4 instructions did not arrive: the period of execution – until 31 May, 2019 Yaroslav Grigoriyevich Dildyayev 8/8 4 /4 and July 2019. Thus, in 2018 the Aynur Sainovna Kuatova 7/8 4 /4 instructions were 100% executed. *The total number of the meetings in which the member of the Board of Directors took part; ** The total number of the meetings in which the member of the Board of Directors could take part.

Topics of the items considered by the Board of Directors in 2018, quantity of the items 3 3 6 26 8  Planning and reporting  Approval of internal regulatory documents  Personnel matters 9  Internal and external audit matters  Items concerning the Board of Directors 103  Transactions/investment projects/securities items were considered  Risk management matters  Items concerning strategy and government programs 11 23  Other items

48 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Committees of the Board of Directors

For the purposes of enhancement 2. Personnel, Remuneration and For the purposes of conformance of efficiency of the management Social Matters Committee to the best corporate governance of development of KazakhExport of the Board of Directors of practice by the Board of Directors through elaboration of soundly- KazakhExport; of KazakhExport, the mentioned based recommendations for the committees of the Board of Directors Board of Directors, the following 3. Strategic Planning Committee of KazakhExport include the experts consulting and advisory bodies of the Board of Directors of (without the right of vote) having are formed and operating in KazakhExport. necessary professional knowledge KazakhExport: to work in a particular committee All proposals elaborated by from among the employees of 1. Audit Committee of the Board of the Committees shall be respective subdivisions of NMH Directors of KazakhExport; recommendations, which shall be Baiterek JSC. submitted for consideration by the Board of Directors of KazakhExport.

Members of the Committees of the Board of Directors

In accordance with the decision of the member of the Strategic Directors of EIC KazakhExport the Sole Shareholder, the Board of Planning Committee of the JSC; Directors of KazakhExport made Board of Directors of EIC decision on 30 March, 2018 to early KazakhExport JSC; the member of the Personnel, terminate the powers of Aydar Remuneration and Social Abdrazakhovich Arifkhanov and to the member of the Audit Matters Committee of the Board elect Aynur Sainovna Kuatova to be: Committee of the Board of of Directors of EIC KazakhExport JSC.

The members of the Committees of the Board of Directors of EIC KazakhExport JSC

Audit Committee

№ Members of the Committees Full name Position Member of the Board of Directors – 1 Chairman of the Committee Damir Serkbayevich Suyentayev Independent Director Member of the Board of Directors, 2 Member of the Committee Aynur Sainovna Kuatova representative of the Sole Shareholder Member of the Board of Directors – 3 Member of the Committee Aytkul Baigaziyevna Samakova Independent Director Member of the Board of Directors – 4 Member of the Committee Yaroslav Grigoriyevich Dildyayev Independent Director Project Manager of the Asset Management 5 Expert without vote Akbota Yermekovna Zhaparova Department of NMH Baiterek JSC

Personnel, Remuneration and Social Matters Committee

№ Members of the Committees Full name Position Member of the Board of Directors – 1 Chairman of the Committee Aytkul Baigaziyevna Samakova Independent Director Member of the Board of Directors, 2 Member of the Committee Aynur Sainovna Kuatova representative of the Sole Shareholder Member of the Board of Directors – 3 Member of the Committee Damir Serkbayevich Suyentayev Independent Director Member of the Board of Directors – 4 Member of the Committee Yaroslav Grigoriyevich Dildyayev Independent Director Project Manager of the Asset Management 5 Expert without vote Murat Mamyruly Mamekov Department of NMH Baiterek JSC

49 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Strategic Planning Committee

№ Members of the Committees Full name Position Member of the Board of Directors – 1 Chairman of the Committee Yaroslav Grigoriyevich Dildyayev Independent Director

Member of the Board of Directors, 2 Member of the Committee Aynur Sainovna Kuatova representative of the Sole Shareholder

Member of the Board of Directors – 3 Member of the Committee Aytkul Baigaziyevna Samakova Independent Director

Member of the Board of Directors – 4 Member of the Committee Damir Serkbayevich Suyentayev Independent Director

Project Manager of the Asset Management 5 Expert without vote Murat Mamyruly Mamekov Department of NMH Baiterek JSC

During 2018, the Corporate the Committees of the Board of Secretary of KazakhExport – A.T. Directors of KazakhExport. Davletova – was the secretary of

Quantity of meetings of the Committees of the Board of Directors 74

During 2018 the Committees of the The materials, explanatory notes

Board of Directors of KazakhExport for comprehensive consideration 42 held the meetings in presentia at of the items were sent to the the address of KazakhExport, the Chairman and the members of 18

Holding and its subsidiaries by way the Committees of the Board of 10 9 of video conferences. Directors of KazakhExport within 8 the terms fixed by the Regulations During 2018 the Committees of the of the Committees of the Board of Strategic Planning Audit Personnel, Board of Directors of KazakhExport Directors of KazakhExport 5 (five) Committee Committee Remuneration and considered 134 items in total. business days prior to the date of Social Matters the meeting of the Committee. Committee QUANTITY OF MEETINGS QUANTITY OF ITEMS

Meetings attended by the Chairman and the members of the Committees of the Board of Directors

During 2018 the Chairmen, members of Directors of KazakhExport and Committees of the Board of Directors of the Committees of the Board experts attended the meetings of the of KazakhExport as stated below:

Meetings Full name of the Chairman/member if the Committee, experts attended */** Aytkul Baigaziyevna Samakova 27/27 Damir Serkbayevich Suyentayev 27/27 Aynur Sainovna Kuatova 27/27 Yaroslav Grigoriyevich Kuatova 27/27 Expert of the Audit Committee of the Board of Directors, Project Manager of the Asset Management 5/10 Department of NMH Baiterek JSC – A.Ye. Zhaparova Expert of the Personnel, Remuneration and Social Matters Committee, Project Manager of the Asset 7/7 Management Department of NMH Baiterek JSC – M.M. Mamekov Expert of the Strategic Planning Committee, Project Manager of the Asset Management Department 6/6 of NMH Baiterek JSC – M.M. Mamekov

*The total number of the meeting in which the member of the Committee of the Board of Directors, expert took part; ** The total number of the meeting in which the member of the Committee of the Board of Directors, expert could take part.

50 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

During 2018, in percentage terms the the expert of the Audit of the Asset Management meetings of the Committees of the Committee of the Board of Department of NMH Baiterek JSC Board of Directors of KazakhExport Directors, the Project Manager – M.M. Mamekov – 100%. were attended by: of the Asset Management Department of NMH Baiterek M.M. Mamekov did not take part the Chairmen and the members JSC – A.Ye. Zhaparova – 50%; in the meetings of the Personnel, of the Committees of the Board Remuneration and Social Matters of Directors of KazakhExport – the expert of the Personnel, Committee and the Strategic 100%; Remuneration and Social Matters Planning Committee held on April Committee, the Strategic Planning 24, 2018 and July 24, 2018 because Committee, the Project Manager he was on leave.

The Board of Directors performance evaluation and trouble-shooting in corporate governance

In 2018, the International Financial of individual contribution of directors of indicators of adherence of Corporation (IFC) falling under the in work of the Board and committees, KazakhExport to the principles of the World Bank evaluated efficiency of determination of directions of further best corporate governance practice. activities of the Board of Directors of development of the BD work practice. EIC KazakhExport JSC in 2017. The comprehensive analysis of the The methods of evaluation were IFC was aimed at study of the basic In accordance with the Corporate formed up on the basis of the best directions of work of the Board of Governance Code and the Regulations international corporate governance Directors and allowed determining the of evaluation of activities of the Board practice. common and personal contribution of Directors of KazakhExport, the of each of its members to achieve efficiency of activities of the Board of In the course of evaluation the strategic tasks of KazakhExport, as Directors shall be evaluated on annual internal documents of KazakhExport well as, where applicable, to make basis. In addition, once three years and minutes of the meetings, reports corrections in its activity. such evaluation must be made with and plans of work of the Board and involving an independent professional committees were analysed, the The results of evaluation and organization. members of the Board and committees recommendations of the IFC experts were questioned, individual interviews were discussed at the meeting of the The key task of evaluation of efficiency were held with the participants. Board of Directors of KazakhExport. was to get objective information Based on the results of evaluation about current activities of the Board, The regular practice is independent the plan of actions was developed to committees, corporate secretary and evaluation of efficiency of activities further improve the work of the Board equation of the BD members, analysis of the Board of Directors is one of Directors.

Conflict of interests

The Policy for settling corporate For the purposes of monitoring and The Regulations of the Board of conflicts and conflict of interest, prevention of potential conflicts Directors of KazakhExport provide which regulates the order of of interest in KazakhExport, the that a member of the Board of and procedures for mediation members of the Board of Directors Directors shall be obliged: settlement of conflicts, as well as and the Management Board present actions of the bodies, officials and on a regular basis the information 1. to submit to KazakhExport the employees of KazakhExport within about their affiliates. information about its affiliates the context of those matters, is in within 7 (seven) days after a place in KazakhExport. The members of the Board of day of affiliation; Directors and the Management A register of affiliates, which is Board, employees of KazakhExport 2. to refrain from actions and to properly brought to the notice of perform their professional functions prevent situations, which result the executives of the business units, in good faith and reasonably in the or may potentially result in a executive body and governing body best interests of KazakhExport and conflict between its interests (or of KazakhExport, is regularly kept in the Sole Shareholder with avoiding interests of its related persons) KazakhExport in order to guarantee conflicts of interest and corporate and interests of KazakhExport; timely settlement of the conflict of conflicts. and in such a case to interest. immediately inform the Board

51 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

of Directors about existence of a A civil contract providing for the of the Board of Directors of conflict of interest; conditions of compliance with the KazakhExport. requirements provided for by the 3. to submit to the Board of internal regulatory documents This promotes the control of Directors the information about of KazakhExport, including situation connected with detection proposed transactions in which corporate conflicts and conflict of of the factors of appearance of a it may be held interested; interest, shall be concluded with a conflict of interest. member of the Board of Directors 4. to refrain from voting on items – an independent director in During 2018 the Corporate in adoption of a decision on KazakhExport. Secretary in KazakhExport did which it is personally interested. not notice the cases of corporate In addition, a member of The Regulations of the Management conflicts and conflicts of interest the Board of Directors must Board of KazakhExport provide for in activities of KazakhExport, its immediately disclose to the the rule that its members may bodies and officials. Board of Directors such interest hold concurrently positions in the and a basis for appearance governing bodies in the other thereof. organizations only by consent

Compliance

The compliance control system KazakhExport considers that of KazakhExport concerning cases of designed to prevent compliance risks countering and prevention of corruption or fraud in KazakhExport. associated with non-compliance with corruption and fraudulent factors are the requirements of the legislation of priority direction for it. The confidence system – “hot line” and the Republic of Kazakhstan, internal Senim trust line – were implemented rules and procedures is in place in Within the context of this direction owing to which anyone who wishes KazakhExport. of activity the Policy is adopted to from among the employees or counter corruption, which policy customers of KazakhExport, as well The process of compliance risk ma regulates the matters of organization, as other third persons, may address nagement is based on such princip measures for countering corruption to the Compliance Controller and les as independence, consistency, among the personnel and officials of inform about evidences of the continuity, and awareness. KazakhExport, determines the types cases of corruption and/or fraud by of corruption acts, regulates the telephone 8 (7172) 55 44 70 and to The Compliance Controller, which is work of KazakhExport management, e-mails: [email protected] or accountable to the Board of Directors employees and Ombudsmen on [email protected]. of KazakhExport, shall be in charge taking anti-corruption actions, as with the operating compliance risk well as determines the procedure to During 2018 the cases of corruption management. address to the Compliance Controller or fraudulent acts were not recorded in KazakhExport.

Executive body

The Management Board is a collegial legislation concerning insurance Management Board and to appoint a executive body of KazakhExport and activity, the number of the members new one according to the Articles of it follows in its activity the legislation of the Management Board must not Association and internal documents of the Republic of Kazakhstan, be less than three. of KazakhExport. The members of the Articles of Association of the Management Board must meet KazakhExport, and the Regulations Decision on the meeting of the the requirements made for the of the Management Board approved Management Board is made by officers of the financial organizations. by decision of the Board of Directors the Chairman of the Management of KazakhExport. Board. The competence of the A chief executive of the Manage Management Board is determined ment Board of KazakhExport is The Management Board is formed by the legislative acts of the the Chairman of the Management by the Board of Directors, which Republic of Kazakhstan, the Articles Board. Decision on election of determines quantity, term of office of Association of KazakhExport, and each of candidate members of of the Management Board, election the Regulations of the Management the Management Board is made of its chief executive and members, Board of KazakhExport. The Sole according to the Articles of as well as early termination of their Shareholder is entitled to terminate Association. powers. In accordance with the the powers of any member of the

52 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Under decisions of the Board of Board – from 2 October, 2014 to 5. Aslan Yermekovich Kaligazin – Directors, in 2018 the Management the present time; the Member of the Management Board of KazakhExport was Board – from 1 October, 2018 to composed of the following persons: 3. Rauan Omirbekovich Zhaxybayev the present time. – the Member of the Mana 1. Ruslan Viktorovich Iskakov – the gement Board – from 11 April, Over the reporting period the Chairman of the Management 2016 to the present time; executive body of KazakhExport held Board – from 15 February, 2016 58 meetings in presentia at which to the present time; 4. Kuat Tolegenovich Zholdybekov – 305 items were considered and 157 the Member of the Management documents were approved. 2. Yerdan Yerlanovich Bekkhozhin – Board – from 17 October, 2016 to the Member of the Management the present time;

The statistics of the meetings in presentia of the Management Board of KazakhExport attended by the members in 2018:

Participation № Full name % in meetings 1. Ruslan Viktorovich Iskakov 46 of 58 79 2. Yerdan Yerlanovich Bekkhozhin 48 of 58 82 3. Rauan Omirbekovich Zhaxybayev 49 of 58 84 4. Kuat Tolegenovich Zholdybekov 55 of 58 94 5. Aslan Yermekovich Kaligazin 13 of 58 22

Management remuneration

The basic principles to remunerate remunerations, compensation of KazakhExport follows the Rules the members of the Management expenses and payment of bonuses for selection, remuneration and Board are provided for and regulated to the members of the Board of compensation of expenses of by the Rules for remunerating the Directors of KazakhExport for their independent directors of subsidiaries officers based on results of work for fulfilment of their obligations,of National Management Holding a year as approved by the Board of including independent directors, are “Baiterek” JSC as approved by the Directors of KazakhExport. specified by the decision of the Sole decision of the Management Board Shareholder of KazakhExport. of National Management Holding The basic principles are: “Baiterek” Joint-Stock Company Remuneration is paid to a member dated 4 April, 2014 (minutes correlation between remune of the Board of Directors, which No.09/14). ration and performance of is a government official, and the tasks serving the interests of members of the Board of Directors, The basic purpose of the Rules is KazakhExport and shareholder; which are employees of the Sole to assist in achieving the strategic Shareholder of KazakhExport. goals of National Management simplicity and transparency Holding “Baiterek” Joint-Stock of the principles to assess an amount of a remuneration; Accordingly, remunerations are only Company by implementing the best paid to the members of the Board corporate governance practices as dependence of an amount of a of Directors being independent regards attraction and retention of remuneration on the results of directors of KazakhExport, and the highly skilled professionals to activity. the other members of the Board work in the Boards of Directors of of Directors are not remunerated the subsidiaries. The procedure for, amount for fulfilment of obligations of a and conditions of payment of member of the Board of Directors.

Corporate ethics

The corporate ethics is an important of development of this direction The purposes of the Code of part of the corporate culture of of work on improvement of the Business Conduct are to improve, KazakhExport. The Code of Business corporate culture in KazakhExport. systematize and regulate the Conduct is in place for the purpose relations of KazakhExport aimed

53 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

at enhancement of efficiency of on mutual confidence, respect, of provision of the Code and the corporate governance and accountability, and control. participation therein. assistance in successful interaction with the employees, customers, KazakhExport carries out its activity In 2018, Senim hot line (telephone suppliers, business partners, persons with recognising supremacy of and e-mail) is implemented in concerned and competent public the Constitution, laws and other KazakhExport to collect confidential authorities through the application regulatory legal acts of the Republic communications concerning of the generally accepted standards of Kazakhstan in relation to the violation of the principles and rules and rules of business conduct. internal documents of KazakhExport of the Code of Business Conduct. and without allowing making In accordance with the Code of decisions at personal discretion of KazakhExport Ombudsmen initiates Business Conduct the employees of officials and other employees of consideration of disputes regarding KazakhExport assume the obligation KazakhExport. violation of the provisions of to comply with the rules of the Code. the Code of Business Conduct of In accordance with the corporate KazakhExport, including conflicts KazakhExport operates in strict governance principles, KazakhExport of interest, and participates in accordance with the legislation has the Ombudsmen institute. settlement thereof. of the Republic of Kazakhstan, the generally accepted principles Its functions include collection of During 2018 there were not any of business conduct, and internal information about non-compliance complaints from the customers, documents of KazakhExport. with the provisions of the Code of partners and other third persons Business Conduct of KazakhExport, about violation by the employees Relations between the Sole consulting the employees, officials and officials of KazakhExport of the Shareholder, members of the Board of KazakhExport on the provisions of requirements of the legislation of of Directors and the Management the Code, initiation of consideration the Republic of Kazakhstan or the Board of KazakhExport are built of the disputes concerning violation corporate ethics.

Internal Audit Service

The purpose of creation of the internal administrative subordination and In 2018, the Methods of evaluation of audit system in KazakhExport is to accountability ensuring objectivity efficiency of the internal control sys- protect the interests and rights of the of auditors and independence of tem and evaluation of efficiency of Sole Shareholder of KazakhExport, the Internal Audit Service. To the the corporate risk management sys- to assist in achieving strategic goals extent of that accountability the tem, which methods were approved and tasks through systematized and governing bodies of KazakhExport by the Board of Directors on 27 July, consistent approach to evaluation are provided with reliable and 2018 (minutes No.7), were updated. and enhancement of efficiency of the relevant information about a level of Based on the results of made eval- processes of corporate governance, efficiency of the systems of internal uations the efficiency of the internal risk management and internal control, corporate governance and control system totally ranked 67% control. In its activity the Internal risk management. and efficiency of the corporate risk Audit Service of KazakhExport takes management system ranked 74%. into consideration all effective The Board of Directors of International professional standards KazakhExport approved the risk- The IAS quarterly monitors execution of internal audit and the Code of oriented Annual audit plan and of recommendations of the IAS and ethics of internal auditors adopted audit program of the IAS, the key external auditors. The IAS employees by the International Institute of performance indicators of the IAS train on a continuous basis for Internal Auditors, with following and its head. the purpose of improvement and the approved internal regulatory advanced training. documents relating to internal audit. A report on activity of the IAS is quarterly submitted to the Audit When performing its functions The generally accepted con Committee and the Board of the IAS confirmed for the Board ceptual model of internal audit Directors of KazakhExport. of Directors its independence on corresponding to the International influence of any persons. professional standards of internal In accordance with the Annual audit is in place in KazakhExport, audit plan of the IAS for 2018, 10 The Board of Directors annually with which the functions of internal audit engagements were provided evaluates efficiency of work of audit are separated from the for and carried out in full, including the IAS and its head on the basis functions of internal control and risk evaluation of efficiency of the of approved key performance management. The internal audit is internal control system and risk indicators. At the end of 2018, the IAS in the state of special functional and management system. activity was evaluated as “effective”.

54 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Corporate Secretary

During 2018 the Corporate Secretary submitted for consideration by the In accordance with clause 4 of the of KazakhExport – A.T. Davletova Board of Directors on quarterly Rules for disclosing the information – performed the work on ensuring basis – till the end of the first month to the Sole Shareholder of EIC timely execution by the heads of following the reporting quarter. KazakhExport JSC about decisions subdivisions and officials of the adopted by the Board of Directors instructions of the Sole Shareholder, Timely disclosure of the information of EIC KazakhExport JSC as approved the Board of Directors and its about KazakhExport, corporate by the decision of the Board of committees. The subdivisions were events and other information was Directors of EIC KazakhExport JSC provided with the extracts from provided under the requirements dated 18 May, 2017, during 2018 the minutes/decisions within one-two of the legislation of the Republic of letters were sent on timely basis business days after the day on which Kazakhstan and internal documents (within three business days after the minutes were signed, based of KazakhExport. signing the minutes). on the results of held meetings of the Board of Directors and its During 2018 the information about During 2018 the legislation of committees. corporate events was posted the Republic of Kazakhstan was on the Internet resource of the monitored and the information about During 2018 there were not failures financial statements depositorythe amendments and alterations to comply with the time limits for and KazakhExport in pursuance of made to some legislative acts of signing the minutes of the meetings the requirements of the legislation the Republic of Kazakhstan was of the Board of Directors; the of the Republic of Kazakhstan. The sent to the members of the Board minutes were prepared and signed letter of notice was sent to the of Directors of KazakhExport in the at least within 3 (three) business National Bank of the Republic of form of communications. days after the meeting was held. Kazakhstan concerning changes in the membership of the Board of During 2018 the Corporate Secretary During 2018 there were not failures Directors and determination of the of KazakhExport – A.T. Davletova to comply with the time limits quantity of members of the Board of – consulted the subdivisions on for preparing and submitting the Directors. the matters put for consideration reports on work of the Board of by the Board of Directors and its Directors, the Corporate Secretary; In 2018, the competent authority did committees. under the requirements of the not make any comments or impose Regulations of the Board of Directors any sanctions for disclosure of of KazakhExport the reports were information.

External audit

In 2018, the work on external audit partner in the project, if an external documents of KazakhExport, of the financial statements was auditor other than the previous one including the Policy on organization performed by KPMG-Audit LLP with is chosen. and carrying out of external audit, to which the contract was concluded determine whether there is a threat for 2015–2018. Under the Code of ethics, rendering of independence for an external of a number of non-auditing auditor when receiving the services. In accordance with the Policy on services not connected with audit of organization and carrying out of the financial statements may results external audit, the external auditor in a conflict of interest affecting must pursue the principle of rotation independence of an external auditor. of a partner in the project every five years. To ensure independence of opinion of an external auditor carrying out In the event an external auditor audit of the financial statements, carried out external audit in the tax audit, special-purpose audit previous year is chosen, such KazakhExport is prohibited to external auditor shall prepare a plan purchase and/or receive the services of succession of a partner in the of that auditor relating to business project, which shall be submitted accounting and preparation of the for consideration by the Audit financial statements. Committee of the Board of Directors of KazakhExport. It is not required KazakhExport shall follow the RK to prepare a plan of succession of a legislation and the internal regulatory

55 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Great Pyramid of Giza The Pyramid of Cheops (Khufu) is a monument of architectural art of ancient Egypt, the only one of the Seven Wonders of the World that has survived to this day and the oldest one of them. The Pyramid of Cheops is the largest of the pyramids built on the Giza Plateau. Its base rests on a natural rocky prominence with a height of 12–14 m. The initial height of the pyramid was 146.7 meters but later the top was lost 08 and now the height is 137.3 meters. Until 1880, the pyramid was considered the tallest structure in the world. Risk management

56 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Risk management system

he risk management system is risks, controlling basic and auxiliary is within the critical area, 38 risks are Tan integral component part of business processes and daily of high priority, and 10 risks take the activities of KazakhExport, which is operations of KazakhExport. third place of priority. aimed at identification, assessment and monitoring of all existing risks, As at 1 January, 2019, the Risk as well as the measures to be taken Management Department of to minimize a level of the risks, KazakhExport together with which may adversely affect the the business units performed financial stability and reputation. comprehensive identification and assessment of risks of KazakhExport In accordance with the requirements for the reporting period. Based on of the National Bank of the Republic the results of this work a register of Kazakhstan and the best of risks, business process, risk and corporate governance practices, the control matrix were elaborated and regular reports on risks are put in approved; risk map and the Plan of place from which the Management actions to manage high and critical Board and the Board of Directors risks were developed subject to of KazakhExport receive from time fixing the periods of actions to be to time the information about risk taken and responsible persons. situation, including risk map and reports on risks. As and when Under the Register of risks of necessary, the Management Board KazakhExport, at the end and the Board of Directors are of 2018, 49 risks were provided with details of considerable identified of which 1 risk changes in risks.

KazakhExport presents on a regular basis the reports on risks to the National Bank of the Republic of Kazakhstan.

The Regulations of the internal control system of KazakhExport is elaborated and approved. The organization of the internal control system provides for composing KazakhExport management system capable of quickly responding to

57 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Key risks and actions to manage the same

risks actions Risk of failure to execute a plan of enlarging the data base of domestic enterprises engaged in export; financial feasibility study (FFS) meetings with customers, foreign banks, potential foreign partners; active PR events on a continuing basis; optimizing internal business processes relating to the primary activity (on a continuing basis).

Risk of failure to achieve target enlarging the data base of domestic enterprises engaged in export; indicators with respect to a scope of assumed obligations prompt responding to received inquiries for insurance on a continuing basis. Risk of early response actions, restricted enforcement actions (compliance risk) Carrying out proper internal control of compliance with the rules of the effective or sanctions taken or imposed by legislation, including control regulating insurance activity (on a continuing basis). the National Bank of the Republic of Kazakhstan Foreign exchange risk continuous control of foreign exchange positions; stress testing / test of sensitivity of changes in foreign exchange rates (on a quarterly basis); monitoring adherence to the limits of foreign exchange position on a monthly basis. Credit risk – a risk of loss of funds placed controlling and monitoring the financial condition of financial organizations being with second tier banks due to default counterparties of KazakhExport (on a quarterly basis); placing the funds only with the second tier banks meeting the requirements of the Rules for managing financial assets and liabilities of KazakhExport (on a continuing basis); monitoring the limits and process of allocation of temporarily free liquidity in KazakhExport (on a monthly basis); monitoring reporting on temporarily free funds (on a monthly basis). Risk of security portfolio depreciation continuous monitoring of financial condition of issuers; effective management of treasury portfolio; controlling the Asset and Liability Management Board.

58 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

List of actions taken to improve the corporate risk management system

the Limits of liability (sum the Risk Management Policy of insured) under separate KazakhExport is approved and insurance/reinsurance in effect. agreements are approved and in effect (including aggregates of insurance and reinsurance agreements) broken down by categories (types) of insurance;

the Plan for emergency circumstances and ensuring continuity of activity of KazakhExport is approved;

59 Woolworth Building The skyscraper built in 1910–1913 in New York as the headquarters of the retail chain of F. W. Woolworth Company.

It was the tallest building in the world in 1913–1930. A hundred years after construction, it still makes the top 50 highest skyscrapers in the United States. In 1972, the skyscraper was declared 09 a national historic site.

Human resources policy

60 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

he human capital assets are and develop the human capital In accordance with the Development Tthe primary strategic resource assets, comfortable conditions are Strategy of KazakhExport, it of paramount importance to created for career development and is provided to open 14 foreign achieve the tasks and goals facing advancement, training, as well as representative offices in the KazakhExport. material and moral well-being of the countries of priority and high interest employees. (in 8 countries). In 2018, 4 staffing The policy of human capital assets positions were allotted therefrom. management in KazakhExport is As at 31 December, 2018, the staff pursued in the following strategic number was equal to 65 staffing In percentage terms, a share of directions: positions (in 2017: 51 staffing employees of the front office is position). On 27 July, 2018 the equal to 40%, the middle office – composing the transparent and Board of Directors approved the 34%, and the back office – 12%. open system of selection and new organization chart subject to assessment of the personnel; increase in the number by additional The average age of employees 14 staffing positions. of KazakhExport is 35 years. The enhancing labour efficiency; share of the senior executives by Increase in the number was initiated categories is equal to 29.5%, non- providing continuous training in order to expand coverage of executive employees – 70.5%. As for and development of the export-oriented business entities gender, the share of women among personnel; with implemented measures of the executives is equal to 44.4%. In support, to promote regional the total number of employees the development of the corporate products to the foreign markets, share of women is equal to 36%, culture. and to improve existing business men – 64%. processes. The consistent work is performed At the end of 2018, the turnover rate in KazakhExport to strengthen of personnel was equal to 6%.

Selection and orientation of the personnel

The candidates are publicly admission of restriction of the rights The system of orientation of new and transparently selected in of the candidates. The personnel employees is in place to render KazakhExport to the vacant are selected based on assessment support in effective integration positions on a competition basis. of professional and personal of new employees into working The personnel selection system is competences of a candidate. environment. based on equal approach to the candidates when hiring and non-

61 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Training and development of the personnel

The system of external and All employees of KazakhExport regional subdivisions of EDF DAMU internal personnel training is in received training in business profile. JSC, NCE Atameken, Agrarian place in KazakhExport subject to Credit Corporation JSC the training implementation of the present-day In 2018, a business trainer position workshops concerning activity and technologies. The access is provided is created in KazakhExport to measures of support of KazakhExport to electronic book library with the increase coverage of partners and were conducted relating to the use of a mobile application, the second tier banks with the products products of EIC KazakhExport JSC. language courses are organized. of EIC KazakhExport JSC, in all 17

Evaluation of efficiency of employees’ activity

The system of evaluation of efficiency pegging of a remuneration to the the results and, on the contrary, to of employees’ activity on the basis results of activity of the employees. determine the employees, which of the key performance indicators have to develop. (hereinafter – the KPI) is in place in The KPI allow motivating the high- KazakhExport, which provides for efficiency employees to achieve

Labour remuneration and motivation of the employees

Since 2017 the grading system provide the fair labour remuneration. level of salary of the employees developed together with the The grading system provides for subject to estimation of the market external consultants – Hay Group, estimating and determining value of level of labour remuneration. international consulting company – each position in achieving strategic is implemented in KazakhExport to goals in order to ensure competitive

Social benefits

The social support is focused on of their motivation. The basic assistance and voluntary medical enhancement of attractiveness directions of the social assistance for insurance (health insurance) of of KazakhExport as an employer, the employees provide for rendering the employees and members of creation of comfortable conditions the following social support for employees’ families. for the personnel and intensification the employees: rendering material

Personnel reserve and succession

In KazakhExport the personnel KazakhExport annually participate in included in the EQF, and one of them reserve policy is formed as part of the qualifying rounds to be included was promoted from the post of the Single personnel reserve of NMH into the personnel reserve. director of a division to the post of Baiterek JSC (hereinafter – the SPR). Managing Director in 2018. In 2018, 7 employees of KazakhExport The high-performance employees were included into the SPR. In 2018, with the highest potential of 7 KazakhExport employees were

Labour protection

The Instruction on safety and During 2018 there were not any protection of labour for the violations of the Instruction and no employees of EIC KazakhExport accident was registered. JSC is in place in KazakhExport. In accordance with the Instruction, from time to time the instructions on safety and protection of labour are given in KazakhExport.

62 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Great Wall of China Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. It is one of the largest and oldest Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements • architectural monuments in the world, one of the new Seven Wonders of the World, and a part of the UNESCO World Heritage Site.

Social responsibility means to form team-oriented, responsibility of KazakhExport, as a socially protected, creative corporate member of KazakhExport, and economically motivated and relates to all areas of functioning collective of employees; of KazakhExport, including social 10 and economic areas. KazakhExport to improve labour and rest confirms its endeavour to carry conditions, to enhance out business activity in such a way employees’ labour safety in that to take into consideration the accordance with the best world interests and to further sustainable standards; development of all parties concerned. to achieve and keep a status of KazakhExport sets itself the following the present-day high-efficient goals by taking the actions in the area and socially responsible of corporate social responsibility: KazakhExport.

to contribute to keep the high level of economic development of a country;

to further social progress of KazakhExport;

Social responsibility policy

63 The principles to render sponsor and/or The basic directions in rendering sponsor charity support: support include support of:

existence of an objective need actions taken on instruction of 11 (expediency) to render sponsor and/or the President of the Republic of charity support; Kazakhstan, the Prime Minister of the Republic of Kazakhstan, the Head of the transparency and responsibility when Administration of the President of the making decisions; Republic of Kazakhstan, the governing body of KazakhExport, in accordance practical efficiency of the actions with the decisions of the executive for rendering sponsor and/or charity body of KazakhExport; support; actions taken in connection with availability of funds in the annual extraordinary situations of natural and budget to render sponsor and/or charity man-caused nature; support; social projects; control of intended expenditure of funds allocated within the limits of funds to international conferences, forums with render sponsor and/or charity support; the participation of the Head of the State, the members of the Government positive influence on reinforcement of of the Republic of Kazakhstan, the image of KazakhExport. members of the governing body and executive body of KazakhExport.

The basic directions in rendering charity support mean support of disabled persons, orphanages, other non-for-profit organizations of social area.

Charity and sponsorship

64 Mercury Tower Multifunctional complex, part of Moscow City International Business Center in Moscow.

The tower’s height is 306 meters (75 floors above the ground and 5 floors of underground parking); the total area is 173,960 m. The building has 2 stand-alone reinforced concrete frames making Mercury Tower 12 resistant to earthquakes of magnitude up to 6.

Financial statements

65 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Financial Statements

You may review the full financial statements of KazakhExport, including conclusion of the auditor, at the corporate web-site: https://keg.kz/rubric/o_nas/otchetnost/finansovaya_otchetnost

Statement of Financial Position as at 31 December 2018

2018 2017 thousand thousand tenge tenge ASSETS Cash and cash equivalents 26,871,413 27,045,334 Deposits with banks 11,099,359 8,436,945 Investment securities: - at fair value through other comprehensive income 7,435,977 - - at fair value through profit or loss 1,511,226 - Financial assets available for sale - 8,576,549 Accounts receivable on insurance and reinsurance 1,014,713 956,700 Share of reinsurers in provisions for insurance agreements 509,093 834,419 Fixed assets 71,662 46,593 Current tax asset 92,632 216,116 Deferred tax assets 24,455 6,361 Other assets 15,726 44,540 Total assets 48,646,256 46,163,557

LIABILITIES Provisions for insurance agreements 4,885,796 3,406,628 Accounts payable on insurance and reinsurance 36,764 154,984 Loan obtained from Samruk-Kazyna JSC 212,512 276,573 Other liabilities 201,514 137,210 Total liabili 5,336,586 3,975,395

EQUITY CAPITAL Share capital 37,100,000 37,100,000

Additional paid capital on loan obtained from Samruk-Kazyna JSC 732,819 732,819 at a rate below market rate Equalization provision 7,904 62,114 Provision for allied perils 510,942 - Provision for changes in fair value of securities (1,267,664) (1,849,217) Retained profit 6,225,669 6,142,446 Total equity capital 43,309,670 42,188,162 Total liabilities and equity capital 48,646,256 46,163,557

66 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Statement of Profit and Loss

2018 2017 thousand thousand tenge tenge Charged insurance premiums, gross 2,679,063 1,905,462 Charged insurance premiums transferred to reinsurers (562,370) (571,988) Charged insurance premiums, net 2,116,693 1,333,474 Changes in unearned premium reserves, gross (707,365) (904,701) Share of reinsurers in changes in unearned premium reserves, gross (366,915) 219,335 Unearned insurance premiums, net 1,042,413 648,108 Paid claims (55,817) (1,382,188) Indemnity for recourse claim 450 1,242,081 Changes in provisions for insurance agreements, gross (771,803) (175,806) Change of share of reinsurers in provisions for insurance agreements 41,589 83,852 Paid claims, net (785,581) (232,061) Interest incomes calculated using the effective interest rate method 2,896,843 2,856,172 Other interest incomes 102,896 133,914 Interest expenses (29,185) (33,370) Net income from change of fair value of investment securities measured at fair value the 61,006 - changes in which are reported as parts of profit or loss for the period Net profit from foreign currency transactions 612,379 65,109 Net fee incomes/(expenses) 2,135 (408) General administrative expenses (1,162,595) (891,030) Losses from impairment of debt financial assets (691,790) - Other operating income, net 4,207 16,373 Profit before income tax 2,052,728 2,562,807 Expense on income tax (467,176) (431,511) Profit for the year 1,585,552 2,131,296 Other comprehensive income, less income tax Items, which were or may be subsequently reclassified as parts of profit or loss: Provision for changes in fair value (financial assets available for sale): - Net change of fair value 239,197 234,699 - Net change of fair value carried over as part of profit or loss (1,435) - Other comprehensive income for the year, less income tax 237,762 234,699 Total comprehensive income for the year 1,823,314 2,365,995

67 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements •

Statement of Cash Flow

2018 2017 thousand tenge thousand tenge CASH FLOW FROM OPERATING ACTIVITIES Profit before income tax 2,052,728 2,562,807 Adjustments: Changes in provisions, less reinsurer’s share 1,804,494 777,320 Depreciation of discount and premiums 66,729 62,733 Deterioration and depreciation 15,681 11,779 Interest expense on loan obtained from Samruk-Kazyna JSC 29,185 33,370 Losses from impairment of debt financial assets 691,790 - Net income from change of fair value of investment securities measured at fair value the changes in which are re-ported as parts of profit or loss for the period (61,006) - Interest incomes calculated using the effective interest rate method (2,896,843) (2,856,172) Other interest incomes (102,896) (133,914) Unrealized foreign exchange (601,197) 65,109 Cash flows from operating activities before changes in operating assets and liabilities 998,665 686,269 (Increase)/decrease in operating assets Deposits with banks (2,568,687) (4,013,453) Accounts receivable on insurance and reinsurance (59,298) (211,142) Other assets 26,771 (32,451) Increase/(decrease) in operating liabilities Accounts payable on insurance and reinsurance (118,220) 133,566 Other liabilities 63,186 68,519 Net use of cash from operating activities before received fee and paid income tax (1,657,583) (3,531,929) Paid income tax (367,057) (394,332) Received fee 2,513,306 2,643,031 Paid fee (786) (925) Received/(used) cash from/(in) operating activities 487,880 (1,284,155)

CASH FLOW FROM INVESTING ACTIVITIES Acquisition of fixed and intangible assets (31,183) (39,590) Cash flows used in investing activities (31,183) (39,590)

CASH FLOW FROM FINANCING ACTIVITIES Share issue - 13,900,000 Repayment of loan obtained from Samruk-Kazyna JSC (92,460) (92,460) Paid dividends (639,389) (32,956) Cash flows (used in)/from financing activities (731,849) 13,774,584

Net (decrease)/increase in cash and cash equivalents (275,152) 12,450,839 Effect of changes in foreign exchange rates by amount of cash and cash equivalents 101,231 (43,062) Cash and cash equivalents at the beginning of the year 27,045,334 14,637,557 Cash and cash equivalents at the end of the year 26,871,413 27,045,334

68 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements • - - capital 234,699 234,699 (32,956) 2,131,296 2,365,995 25,955,123 42,188,162 13,900,000 13,867,044 Total equity Total - - - 155,741 226,361 (37,664) (32,956) 2,131,296 2,131,296 3,855,409 6,142,446 Retained profit Retained ------234,699 234,699 234,699 securities changes in (1,849,217) (2,083,916) fair value of of value fair Provision for for Provision ------perils 226,361 226,361 for allied for (226,361) Provision Provision (226,361) ------62,114 37,664 37,664 24,450 provision Equalization Equalization ------rate 732,819 732,819 Additional the market the market Kazyna JSC at JSC at Kazyna from Samruk- from loan obtained loan obtained paid capital on the rate below below the rate ------13,900,000 13,900,000 37,100,000 37,100,000 23,200,000 13,900,000 Share capital Share Balance as at 31 December 2017 31 December as at Balance thousand tenge Balance as at 1 January 2017 as at Balance income Other comprehensive as reclassified be subsequently or may which were Items, or loss: profit parts of value fair change of Net income comprehensive other Total the year for income comprehensive Total allied perils for provision to Transfer reserve equalization from Transfer with owners transactions Total Total comprehensive income comprehensive Total year for the Profit as parts of directly reported with owners Transactions equity capital issue Share dividends Paid Statement of Changes in Capital of Statement

69 • Key Events in 2018 • Message of the Chairman of the Board of Directors • Message of the Chairman of the Management Board • 1. About KazakhExport • 2. Development strategy • 3. Operating results • 4. Financial results • 5. Procurement practice • 6. Primary goals and tasks in 2019 • 7. Corporate governance • 8. Risk management • 9. Humanresources policy • 10. Social responsibility policy • 11. Charity and sponsorship • 12. Financial statements • - - 237,762 237,762 (62,417) 1,585,552 (639,389) 1,823,314 (639,389) 42,188,162 42,125,745 43,309,670 Total equity Total capital - - 54,210 (510,942) 1,585,552 (639,389) 6,142,446 (406,208) 1,585,552 5,736,238 6,225,669 (1,096,121) Retained profit Retained - - - - - 237,762 237,762 343,791 237,762 (1,849,217) (1,267,664) (1,505,426) Provision for for Provision changes in of value fair securities ------510,942 510,942 510,942 Provision for for Provision allied perils ------7,904 62,114 62,114 62,114 62,114 (54,210) (54,210) Equalization Equalization provision ------732,819 732,819 732,819 Additional paid capital on loan obtained Samruk- from JSC at Kazyna below the rate the market rate ------37,100,000 37,100,000 37,100,000 37,100,000 37,100,000 37,100,000 Share capital Share Total transactions with owners transactions Total Transfer to provision for allied perils for provision to Transfer reserve equalization from Transfer 2018 31 December as at Balance Total comprehensive income for the year for income comprehensive Total as parts directly reported with owners Transactions equity capital of dividends Paid Total other comprehensive income comprehensive other Total Other comprehensive income Other comprehensive be subsequently or may which were Items, or loss: of profit as parts reclassified value fair change of Net Recalculated balance as at 1 January 2018 as at balance Recalculated income comprehensive Total year for the Profit Balance as at 1 January 2018 as at Balance 1 January 2018 IFRS 9 as at to transition from Effect thousand tenge

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