Developing village, we operate future!

JOINT STOCK COMPANY FUND OF FINANCIAL SUPPORT OF AGRICULTURE

ANNUAL REPORT FOR 2014

АSTANA-2015

Developing village, we operate future!

3 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014 Developing village, we operate future!

CONTENT

ADDRESS OF THE CHAIRMAN OF THE BOARD OF DIRECTORS...... 6

ADDRESS OF THE PRESIDENT OF THE BOARD ...... 9

KEY PERFORMANCE RESULTS ...... 12

COMPANY DEVELOPMENT STRATEGY ...... 12 The natural environment of Kazakhstan is extremely rich PRIMARY ACTIVITIES ...... 13 and diverse. The country has large reserves of many kinds EVALUATION OF RESULTS OF ACTIVITIES of valuable mineral resources, OF THE COMPANY, DYNAMICS OF DEVELOPMENT...... 14 vast areas of fertile arable land, extensive pastures and PLACEMENT OF SHARES...... 19 hayfields. Moreover, these natural resources are often COMPANY DEVELOPMENT STRATEGY...... 20 found together and create a natural foundation for the INFORMATION ABOUT CREDIT PORTFOLIO...... 21 development of a diversified and large-scale national WORK WITH PROBLEM LOANS...... 23 economy.

PURPOSES FOR THE FUTURE PERIOD (INVESTMENT PLANS OF THE COMPANY)...... 25

SHAREHOLDERS, CORPORATE MANAGEMENT...... 26

ORGANIZATIONAL STRUCTURE ...... 32

CALENDAR OF EVENTS ...... 36

AUDITED FINANCIAL STATEMENTS OF THE COMPANY...... 41

4 5 Developing village, we operate future!

The Fund issued almost 8 thousands of loans in the amount of 18,6 billions of tenge on these two directions in 2014. As designated agent on With diploma to the rural area Program, ADDRESS OF THE CHAIRMAN initiated by Head of state, the Fund has credited more than 17 OF THE BOARD OF DIRECTORS thousands of young specialists in the general amount of 32,5 billions of tenge during 5 years. A representative network is expanded in areas. Last year credit departments were opened in cities of Astana, Taldykorgan and Semei. In relation to significant increase of volumes of crediting on Employment Work Flow Chart – 2020 and Single-Industry Dear Sir / Madam! Cities Development Program the regular staffing of the company in increased on 36 units. Last year the main efforts of the financial In tote, from different sources of financing the Fund placed institutions of a Holding «KazAgro» were focused more 38,5 billions of tenge in form of rural loans in 2014, and on implementation of master-plans of a branch financed more than 13 thousands of clients, which is more than in program «Agrobusiness-2020», investment comparison with the last period on 20%. projects, and financial recovery of subjects of As representative of the shareholder, I’d like to note that agrarian business as well. the important thing in harmonious and successful work of the The results of activities of Joint Stock Company company is role of executive agency. The tasks set for the Board Fund of Financial Support of Agriculture in 2014 are being executed efficiently enough: high stable rates of growth demonstrated efficiency of fulfillment of tasks, of a portfolio are being preserved, the new initiatives on the set by Head of state N. A. Nazarba ev on basis of elaborated and timely decisions are being implemented widening of access to the credit resources for constantly. Third year in a row the Fund pays to the shareholder the rural community and increasing of welfare of dividends on simple shares. The dividend rate as of the end of the the rural area. financial year was 459 839 500 of tenge. As I am the Chairman of the Board of Directors, In 2015 the company is expected to increase the number of I can safe say about the serious contribution of active borrowers to 27,4 thousands. Use of new approaches to the Fund to the development of agriculture of financing of microfinance organizations will be started, which is the country. Despite the least volume of a credit going to put another spin on work on widening of accessibility of portfolio among the crediting companies of the credit resources for the rural area. Holding, the Fund is the biggest organization by number of clients in the structure of the Holding: by the end of 2014 number of active borrowers Yours faithfully, was more than 24,5 thousands. Considering Chairman of the Board of Directors the fact that almost half of the gross output of agricultural products is produced in private Dauren Makhazhanov plots, the activity and role of the Fund cannot be underestimated. The Fund is the important partner of the Government of the Republic of Kazakhstan in performing tasks on implementation of the state programs, focused on the support of rural business activity and do-it-yourself business. Within the program of Agrobusiness – 2020 the Fund was appointed as and operator on crediting of agricultural commodity producers to widen commercial dairy farms, to open milk reception centres, creation of family intensive gardens and implement drop irrigation. The company became the empowered organization on implementation of the other state programs as well. Within Employment work flow chart – 2020 and Single-Industry Cities Development Program the crediting of small and medium-sized businesses is being carried out.

6 7 ADDRESS OF THE PRESIDENT OF THE BOARD

Dear reader!

The year 2014 was significant for the Fund of Financial Support of Agriculture. Our company has reached the age of 20 years. During these years the company has established itself as a financial institution, focused on development of system of microcredit in the rural area. The guarantee of stability and fixity of the Fund lies in support of state in the person of Ministry of Agriculture of the Republic of Kazakhstan, the only shareholder – Joint Stock Company «National Managing Holding «KazAgro» - and painstaking work of every employee of the company, making contribution to the common cause. Volume of the credit portfolio was 57,1 billions of tenge, which is 1,5 times more than volume in 2013. The number of active borrowers was 24,5 thousands. During the last years the Fund substantially expanded its scope of activities and so affected on substantial growth of crediting of the rural community. Only in 2014 two new programs within branch program «Agrobusiness – 2020» - on creation and expanding of family commercial dairy farms, creation of milk reception centres were open. In 2014 with help of credits the Fund created and required 26 family commercial dairy farms, and more than 1 billions of tenge were directed on this. 10 projects on creation of milk reception centres were financed in the amount of 54 millions of tenge. This work will continue to the year 2020. Also the Fund developed the program of Borovoe crediting residents of towns and single-industrial Since old days, the natural wealth of Borovoe attracted the attention of cities, on which financing has started in the a man who came here in search of better living conditions. The forests are financial year. abundant in animals, lakes and are rich in fish. The natural conditions are The company became the empowered good for cattle breeding and agriculture. The creative forces of nature were organization on implementation of the other extremely generous by gathering together here, in the small area in the state programs as well. Within Employment work steppes, both the mountains, lakes, and forests as well as wonderful healthy flow chart – 2020 and Single-Industry Cities climate. Development Program the crediting of small and medium-sized businesses is being carried out.

9 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014

The Fund issued almost 8 thousands of loans in the amount of 18,6 billions of tenge on these two directions in 2014. As designated agent on With Diploma to the rural area project the Fund carries out crediting of young specialists of government sector, who came to work to the rural area, to purchase a house. Only in the past year by Rural pledge program 3300 of young workers received financial support on sum of 8,7 billions of tenge to buy their own house and work for the sake of the rural area. On some programs, which are in heavy demand among consumers, volumes of dinancing are significantly increased. In tote, the range of the credit products by the end of the year will consist of 16 credit programs. These days in branch offices and their departments 323 specialists give services. Moreover, привлечено 74 specialists were involved on the ground of outsourcing of various credit programs. Within first wave of privatization, carried out last year, the share of the Fund was implemented in 8 microcredit organizations on sum of 42,7 millions of tenge. Following the results of audit, conducted by the independent auditor – Limited Liability Partnership «Ernst and Young», - the positive growth is being observed by all the highlights figures. The ratio of profitability of capitals are increased from 2,74 to 3,25. However, level of net income has increase in one and half times comparing to 2013 - from 671,4 to 926,2 millions of tenge. The year has ended with substantial positive financial result. In 2015 implementation of the ongoing programs is being planned, and also introduction the new ones on developing of intensive (family) apple gardens and implementation of systems of drop irrigation, expanding of crediting of microcredit (microfinance) organizations.

Yours faithfully, President of the Board

Narmukhan Sarybaev

The Caspian Sea The Caspian Sea - the largest in the world closed body of water which can be classified as either the largest closed lake or afull- fledged sea because of its size and because of the fact that its bed is piled up with the earth crust of the oceanic type. It is located at the crossroads of Europe and Asia.

10 11 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014 Developing village, we operate future!

OUR STRATEGIC PRIMARY MISSION DIRECTIONS ACTIVITIES

AND PURPOSES: The activity is carried out through multi-branch network and Development of rural business activity and improvement microcredit organizations, acting in the rural area. of welfare of population by way of efficient system of In 2014 the following credit programs were performed: microcredit in the rural area. Development of infrastructure ▶▶ «Microcredit organization» - crediting of microcredit of microfinance services in the rural area GROW organizations for further microcrediting of the rural population in accordance with the priority guidelines and agricultural commodity producers; DEVELOPMENT of the agrarian business OF INCOME OF THE ▶▶ «Employment - 2020» - microcrediting of participants of STRATEGY Employment workflow chart-2020; ▶▶ Expanding of volumes of microcredit COMPANY and providing of accessibility of ▶▶ «Single-industry cities» - microcrediting within the Republic’s microfinance services in the rural area As the Company is quasi-public, it builds an efficient IN 2014 WAS single-industry cities development; system of microcredit in the rural area. ▶ Increasing of proportion of livestock 137,6%. ▶ ▶▶ «Yrys» - crediting for development of mini commercial dairy sector in overall structure of crediting farms on 50 and 100 heads of the cattle; ▶ Financial recovery of rural sector and NET INCOME ▶ ▶▶ «Murabakha» - microcrediting of rural population in accordance agricultural commodity producers KEY RESULTS – 926,2 with principles of Islamic financing; MILLIONS OF OF THE ACTIVITY ▶▶ «Yeginzhai» – crediting of subjects of agrarian business on Institutional strengthening and development conducting of spring field and harvesting operations; of microcredit organizations (microfinance TENGE. The primary activity of the Company is organizations) ▶▶ «Zhykyzhai» - crediting for construction and field application microcredit of the rural population andagricultural of mini incubators; commodity producers, crediting of microcredit ▶ Qualitative development of network organizations. ▶ ▶▶ «Kesipker» - crediting for development of non-agrarian of efficiently operating microcredit In 2014 the total sum of loans issued was business; organizations (microfinance organiza- 38,6 billions of tenge, which is on 8,9 billions tions) in the rural area, including ▶▶ «Leasing of complexes of mini incubators» - purchasing of of tenge more, than in 2013. Growth of issue participation of the Company in the complexes of mini incubators and further transfer to leasing of is connected with increase of financing on authorized capital agricultural technological production; programs «Yeginzhai», «Kasipker», «Zhylyzhai», Employment work flow chart – 2020. Also on ▶▶ «Creation and development of milk reception centres»; participation of the Fund the implementation of Growth of efficiency of system of corporate management the program of business activity of single- ▶▶ «Rural pledge» (agent’s services) – extension of public budget and small towns of the republic, on which 1,4 loans to young specialists for purchasing (construction) of a billions of tenge were involved. house. ▶ Increase of efficiency of management Credit portfolio of the Bank as of January 1, is ▶ of assets of the Company 57,1 billions of tenge, number of active clients is 24 537, which is 1,5 times more than the last ▶▶ Development of corporate management year figure. and institutional development of the Company

▶▶ Providing of transparency of activity of the Company

12 13 EVALUATION OF RESULTS OF ACTIVITIES OF THE COMPANY. DYNAMICS OF DEVELOPMENT.

LOANS ISSUED

STRUCTURE OF LOANS ISSUED ON VOLUME IN VIEW OF CREDIT PRODUCTS IN 2014

Mangystau The sightseeing places of the area are the underground mosques carved into the rock pitches. Here, you can find the traces in the form of generic characters (tanba), petroglyphic drawings, and two-thirds of monuments of all Kazakhstan. The Great Silk Road has also gone through this area. The peninsula served as a gateway between the trade and economic relations of the West and the East. In our days, Aktau sea trade port is the successor of that great trade mission. In the depths of Mangystau, geologists discovered rich deposits of uranium and rare earth elements, oil and gas.

14 15 CHANGE OF CREDIT PORTFOLIO, MILLIONS OF TENGE GROWTH OF STOCKHOLDER EQUITY, MILLIONS OF TENGE

NUMBER OF ACTIVE BORROWERS GROWTH OF ASSETS, MILLIONS OF TENGE

16 17 DYNAMICS OF NET PROFIT

PLACEMENT OF SHARES

General number of ordinary shares as of December 31, 2014 is 25.998.630 shares, including placed shares - 25.692.450, belonging on 100% to the only shareholder of the company – Joint Stock Company «National Managing Holding «KazAgro». Denominational value of each ordinary Katon-Karagay share equals to 1000 tenge. The Katon-Karagay State national Park has about 400 lakes. It grows, at least, 1,000 species of higher plants. In some years, there are incredibly large harvests of mushrooms, pine nuts, Altai honeysuckle, cranberries, blueberries, as well as the rarest in Kazakhstan small-fruited cranberry which is included in the Red Book of the Republic of Kazakhstan. It is in these lands a unique branch of economy was created – breeding of Siberian stags (maral breeding): the noble deer are kept in the nurseries in the specially enclosed areas for breeding and obtaining of the valuable pharmacological raw materials – antlers (young horns) used in the manufacturing of pantocrine.

18 19 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014 Developing village, we operate future!

% of workers, occupied in training system in % 25 26,1 the course of the year (no less than 25%). PERFORMANCE OF % of satisfaction of workers with staff HIGHLIGHT FIGURES OF THE morale and pay system (no less than 80% % 86 87 DEVELOPMENT STRATEGY of workers) Rise of labour productivity by means of implementation of innovation in the activity persons 70 82 of the Company (number of clients per 1 Units of 2014 employee) Name of coefficient of productivity measure ment plan fact

Annual growth of credit portfolio of the Company % 117,1 149,9

Proportion of women in the structure of active borrowers of the Company and CREDIT microcredit organizations financed by the % 35 34,1 Company PORTFOLIO Number of users of services of the Company and financial organizations funded by it, in units (with account of Unit. 44 000 50 632 growth) CREDIT PORTFOLIO IN VIEW OF BRANCHES Amount of indebtedness in credit portfolio, Billions 0,5 0,3 (BILLIONS OF TENGE) subject to measures of financial recovery of tenge

Number of credit agreements, subject to measures of support within financial Unit. 219 105 recovery

Volume of funding of microcredit Billions organizations (microfinance organizations), 1,1 1,1 billions of tenge. of tenge Number of microcredit organizations (microfinance organizations), which attracted outward investments (loans) Unit. 2 1 with assistance of Centre of microcredit organizations support ROA % 1,0 1,89 ROЕ % 1,30 3,25 Indebtedness delinquency rate more than 90 days in loan portfolio of the Company (no % 15 3,6 greater 15%)

Maintenance of optimum level of formed reserves (provisions) on loan portfolio of the % 12 4,1 Company, in % (no greater 12%)

Availability of international certificate on quality management and corporate - - governance score: Credit portfolio of the Company by the end of 2014 was 57,1 billions of tenge, and in relation to the prior period grew on 19 billions of tenge. The bigger proportion of credit portfolio is on Southern Kazakhstan branch because the region is heavily populated. Further goes Central office of the international certificate on quality Recertification Recertification Company, which finances big projects, including microcredit (microfinance) organizations and leasing management of complexes of mini incubators. The third place by volume of credit portfolio is occupied by Almaty branch respectively, which is also explained by high population density in the given region. corporate governance score - -

20 21 Developing village, we operate future!

PAST DUE DEBT IN VIEW OF BRANCHES (BILLIONS OF TENGE) WORK WITH PROBLEM LOANS

One of the main factors relevant to the financial compulsory extrajudicial procedure by tendering results of the FFSA is exclusion of the overdue (auction). As amended provides the observance indebtedness development. of the established procedures and sequences In the perspective of preventive measures of of non-judicial realization of the collateralized incurrence problem and overdue indebtedness property through an auction and which are aimed by FFSA has been initiated a set of actions in at minimizing risks for invalidating the results of 2014. the auction. In the frame of FFSA’s employees As part of the operational work on judgments encouragement on performance improvement in execution on indebtedness collection, the FFSA a part of the overdue indebtedness development introduced the procedure on interaction with the and repayment exclusion by FFSA has been institution of private judicial custodians. Activities reconsidered employee compensation plan. for the implementation of judicial acts by private Current employee compensation plan of the FFSA judicial custodians are the alternative way of includes bonus accrual on specific employee execution of executive documents. Private The primary proportion of past due debt was The Company developed plan of actions on production activity indicators. Employee amount judicial custodians materially interested in the formed on the basis of loans issued to microcredit further development of the rural microcredit of remuneration completely depends on the execution of the decision, because it affects organizations, which in their turn have high organizations, including financial recovery, activity results as in fulfilment of the objectives their income. Another advantage in favor of proportion of past due debt in their own credit consulting, training, development of new to be achieved on the overdue indebtedness private judicial custodians that all amounts of portfolios. conditions of crediting, which supposedly, will reduction. Employee compensation incentive the collected debt are insured. If the plaintiff The main reason of the current situation allow to reduce topical issues of microcredit system is extended to all FFSA employees but due to the fault of judicial custodian does not is insufficient professionalism of microcredit organizations. also to the members of the FFSA Managing receive adjudicated funds according to the law, organizations in the rural area. Board. the insurance company of the judicial custodians In the frame of efficient management over is obliged to pay to the claimant entire amount. troubled debt, FFSA reconsidered the working Thus, the appeal to the services of private judicial procedures on troubled loans, which provides custodians a priori have more guarantees. PAST DUE DEBT IN VIEW OF PROGRAMS several measures focused on collecting overdue debt. OF CREDITING ON 01.01.2015 By internal regulations of the FFSA identified the presentation of a claim-order by way of the article 13 of the Law “About payments and transfer of money” which is one of the main methods of the indebtedness collection on an extrajudicial basis. The FFSA expanded the procedure on carrying out extracurial realization of the collateralized property. According to the procedure, the FFSA can independently realize pledged property in

22 23 KEY MARKETS The receivers of services of the Company are rural population and homesteads and small farm enterprises, which use credits for implementation of small business-projects and increasing of welfare. As of January 1, 2015 number of active borrowers was 24 537 clients.

STRUCTURE OF ACTIVE BORROWERS BY REGIONS

Bayanaul The park is located near Sabyndykol Lake at the foot of the Bayanaul Mountains. The neighborhoods of Bayanaul are a climatic resort area. Zhasybay and Toraigyr lakes are the pearls of the park. At the State National Park, there is a campsite, operating holiday homes and children’s health centers to which, annually, over a hundred thousand Kazakhstani come for rest and leisure. Bayanaul is a home for about 50 species of birds and 40 species of animals among which one can distinguish a group of upland game, as that of great value, as well as argali, roe deer, badger, squirrel. The argali is a special pride of the park, it is included in the red Book as rare and endangered animal species in need of protection.

24 25 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014 Developing village, we operate future!

PURPOSES FOR THE FUTURE PERIOD. INVESTMSNT PLANS OF THE COMPANY

The primary purpose of the Company is to increase 2015 inclusion of rural population and microcredit organizations into Involvement of regulated banks and its services. By 2020 it is being foreign investors in to the process of planned to extend the number development of microcredit organizations of service receivers and funded financial organizations to 101 Implementation of corporate management 000. In 2015 the given figure will Search of investors for sale of share of be equal to 54 000 persons, interest of participation of the Company in growth of credit portfolio is created microcredit organizations planned to be 116,6%. The Company continues search of investors for Training of employees/consulting of implementation of their microcredit organizations ownership interest (share) in authorized capitals of microcredit organizations, 2016 created in 2007-2008 Diversification of activity of microcredit years within Conception of organizations (implementation of new development of network of credit products, financial services) microcredit organizations for crediting agricultural commodity producers of the Implementation of automation of business Republic of Kazakhstan. processes (scoring, credit module and As of January 1, 2015 20 etc.) from 51 created microcredit organizations repurchased share of the Company and Training of employees/consulting of operate on the market on microcredit organizations their own. Volume of share of the Company in remaining 31 microcredit organizations is 191,7 millions of tenge.

Pine Forest Pine Forest is a well-preserved artificial pine plantation in the North- Kazakhstan region, a natural monument of a national importance. At the present moment, the trees are characterized with high-quality trunks. The average diameter - 18-24 cm. The average height - 16-20 m.

26 27 Developing village, we operate future!

SHAREHOLDERS. CORPORATE MANAGEMENT. UTEPBAEV BOLAT ORYNBEKOVICH THE ONLY SHAREHOLDER ▶▶ JOINT STOCK COMPANY «NATIONAL MANAGING HOLDING «KAZAGRO». Independent director of the Board of Directors Graduated from Al-Farabi Kazakh State University (1992), HIGHER AUTHORITY OF THE COMPANY ▶▶ SHAREHOLDERS’ GENERAL political expert; Eurasian Market Institute (2001), economist. MEETING (ONLY SHAREHOLDER). Chairman of control and revision commission of Democratic Party of Kazakhstan Ak Zhol. MANAGERIAL BODY OF THE COMPANY ▶▶ THE BOARD OF DIRECTORS.

BOARD OF DIRECTORS

MAKHAZHANOV ZHAUYMBAEV DAUREN SABITOVICH KANAT SAGYNDYKOVICH Chairman of the Board of Directors member of the Board of Directors Graduated from Northern Kazakhstan State University, Master’s Graduated from E. A. Buketov Karaganda State University programme of Myrzakhmetov’s Kokshetau University. Ph.D in Economics. with a degree in accounting and auditing (degree with honors), Acting President of Board of Joint Stock Company «National Master’s programme of E. A. Buketov Karaganda State Managing Holding «KazAgro». University with a degree in economics (degree with honors), Institute of Contemporary Education «Bolashak» with a degree in legal studies (degree with honors). Managing Director of Joint Stock Company «National Managing Holding «KazAgro».

GLUKHOV SARYBAEV ANATOLII LEONIDOVICH NARMUKHAN KALMAKHANOVICH Independent director of the Board of Directors member of the Board of Directors, Graduated from Turan University (city of Almaty) with a degree Chairman of the Management Board in Finance and Credit. Director of Association of microfinance organizations of Graduated from M. Auezov Southern Kazakhstan State Kazakhstan. University with a degree in economics. President of Board of Joint Stock Company Fund of Financial Support of Agriculture.

28 29 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014

ACTIVITIES OF THE BOARD OF DIRECTORS, THE MOST IMPORTANT REACHED DECISIONS

In 2014 the Board of Directors met in 28 sessions. The most important decisions were made on the sessions of the Board of Directors on the following.

1. Approved: -The first bond program; -Strategy of development of information systems; -Risk management policy; -Supplements to the borrowing policy; -Rules of the organization and conducting of advertized bidding on disposition of property, related to long-term assets; -Rules of identification and risk assessment; -Rules on formation, approval and monitoring of development and budget plan; -Rules on fixing of limits on direct and contingent liabilities of bank-counterparties; -Changes into the Rules of sale of interest of Joint Stock Company in microfinance organizations;

2. Approved as amended: - Accounting policies; - Pledge policies; - Terms of credit on product programs;

3. Decisions made - about increasing of obligations of the Company on a stock, which equals to ten and more percents of dimension of the owned capital; - about preliminary approval of financial statements of Joint Stock Company Fund of Financial Support of Agriculture for the year 2013; - about submission of proposals to the only shareholder about order of distribution of net income for the year 2013 and size of dividends for a year per one ordinary share; - about approval of report of performance of the strategy of development of Joint Stock Company Fund of Financial Support of Agriculture for the year 2013. - about approval of report of performance of the development plan of Joint Stock Company Fund of Financial Support of Agriculture for the year 2013. Zhetykonyr - about sale of interest of Joint Stock Company Fund of Financial Support of Agriculture in authorized capital of LLP Microcredit Zhetykonyr has become a common noun because this is how, since Organization/Microfinance Organization; ancient times, the Kazakhs called the still sandy hills covered with - about approval of Budget of Joint Stock Company Fund of drought-resistant plants. However, Zhetykonyr sands located to the Financial Support of Agriculture for the year 2015; - about approval of adjusted development plan of Joint Stock south-east of the city of Zhezkazgan, over time, were exposed and Company Fund of Financial Support of Agriculture for the years now create a truly surreal sight. Today, you can watch the scenes 2011–2015. unnatural to the central part of Kazakhstan: on the background of sand dunes, the camels roam around while the toad lizards crawl around in 4. Set of issues of priority was made about signing deals the sand leaving the strip-trails of dots. representing certain interest, by Joint Stock Company Fund of Financial Support of Agriculture.

30 31 Developing village, we operate future!

MANAGEMENT BOARD

SARYBAYEV KULDEYEV NARMUKHAN KALMAKHANOVICH BOLAT BORASHOVICH

Chairman of the Management Board Member of the Management Board, Chief of Staff

In 2001 graduated from the South-Kazakhstan State University В 1994 году окончил Карагандинский государственный уни- of Auezov M. by occupation «Economist». верситет, с присвоением квалификации «экономист». He was appointed as the Chairman of the Management Board С октября 2014 года по настоящее время – руководитель of «Fund for financial support of agriculture’ JSC by the resolution аппарата - член Правления АО «Фонд финансовой поддерж- of the Board of Directors dated November 5, 2012. ки сельского хозяйства».

KUDASBAYEVA DOSMAGANBETOVA BAKYT ESKENDIROVNA KULZADA ADILBEKOVNA

Deputy Chairman of the Management Board Member of the Management Board, Director of Law Department She graduated from the Celinogradskii agricultural institute by background «Economist-Manager». In 1993 she graduated from the Kazakh State National University She elected as the Deputy Chairman of the Management Board of Al-Farabi with qualification «Lawyer». of «Fund for Financial Support of Agriculture» JSC by the Board From January, 2011 Director of Law Department – Member of Directors’ resolution dated November 19, 2012. of the Management Board of «Fund for Financial Support of Agriculture» JSC.

TAUBAYEV ALMAS ZHANATKHANOVICH

Deputy Chairman of the Management Board

In 2003 he graduated with honours from the Karaganda State University named after E.Buketov, with qualification «Economist», in 2006 he graduated mentioned university by background «Lawyer». From February, 2011 till the present – Deputy of the Management Board, Member of the Management Board of «Fund for Financial Support of Agriculture» JSC.

32 33 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014 Developing village, we operate future!

ORGANIZATION STRUCTURE

On May 28, 2014 on the council board of the first deputy of the Prime Minister of the Republic of Kazakhstan Sagintaev B. A. (minutes No11-5/05-948) the decision was made about increasing of regular staffing of Joint Stock Company Fund of Financial Support of Agriculture with purposes of providing of operating services of crediting of population and entrepreneurs in 27 of single-industry cities and small towns and making appropriate amendments to Articles of Association of the Company. By the decision of the Board of Directors of the Company No 32 from June 9, 2014 the appropriate amendments were made to Articles of Association of the Company in the part of expanding of directions of activities of the Company. The conducted analysis of the load on employees engaged into the credit process showed the necessity of increasing of the acting regular staffing of the Company on 36 staffing positions. By the decision of the Board of Directors of the Company No 17 from July 16, 2014 the new regular staffing of the Company was approved in number of 397 staffing positions.

Regular staffing of Joint Stock Company Fund of Financial Support of Agriculture on 31.12.2014.

Central office 74 Branches 323 Total 397

Organizational structure of the Company includes: President of the Board, deputies of the President, chief of staff, company secretary, spokesman, Internal Audit service, 11 departments, 14 branches. In accordance with requirements of legislation of the Republic of Kazakhstan, on the ground of Articles of Association and Charyn Canyon other internal regulations, there are Committees of the Board of Directors on strategic planning, internal audit and risks, Committee Charyn Canyon is a canyon stretching for 154 km along Charyn River in on social questions, personnel and rewards, which were created Kazakhstan. This is an extraordinarily beautiful place. Its walls everywhere and function in the Company. consist of large deposits of clay which, at sunset, turns red and shimmers with amazing shades. In the canyon, the time and natural factors have created Committee on strategic planning, internal audit and risks countless grottos, caves, huge cracks, as if they painted the whole canyon The Committee is an advisory and consultative body of the with them. Board of Directors, and created with aim of development and Charyn Canyon is a huge precipice, the depth of which is more than 200 presentation to the Board of Directors recommendations on meters. It begins from the banks of the river – inaccessible towering rock questions of defining of priority areas of activity of the Company, walls. strategic development and planning of the Company, internal

34 35 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014

audit and risks, attributed to the exclusive organizations. competence of the Board of Directors of the Theme of the conducted trainings: Company, stipulation of conditions of bond - «Accounting on international standards issues and derivative securities of the Company, of financial statements in microcredit and also making decisions about their issue, organizations»; participation of the Company in creation or - «Legal aspects of activities of microcredit activities of the other legal entities or secession organizations»; from the participants (shareholders) of the other - «Course on analysis of clients for rural legal entities by way of transfer (receiving) of a oriented microfinance organizations»; part or several parts of the assets, which in sum - «Management of overdue loans and equals to from ten to twenty five percents from all establishing of self-funding rates per cent»; the assets belonging to the Company, approval - «Fundamentals of successful microfinance». of Credit, Pledge policy of the Company, risk management policies, conditions of crediting of Also the Centre conducted diagnostics the Company. of 5 microcredit organizations with visit of consulting experts on the place of activity of Committee on social questions, personnel organizations with the aim of improvement of and rewards business processes and preparation of подго- The Committee is an advisory and consultative товки microcredit organizations to passing of body of the Board of Directors, and created accounting registration in 2016. for increasing of efficiency of management Within joint project with BG Kazakhstan of development of the Company through «Improvement of welfare of population through development of unprejudiced recommendations development of microcredit organizations» for the Board of Directors, on criteria of selection in 2014 a grant in the amount of 50 000 and appropriateness to them of persons, US dollars was attracted for the best луч- who are included into the Board of Directors, шей microcredit organization, participated in Board of the Company, evaluation of work and the project. The received funds microcredit rewards of persons included into the Board of organization transferred to easy-term loan of Directors, Board, company secretary, chief and rural entrepreneurs of Burlin district of Western employees of the internal audit service, risk Kazakhstan region. management department and other employees A work was conducted on engaging of an of the Company, appointment or agreeing of the international consulting expert, who carried out a appointment, which is carried out by the Board of range of meetings and negotiations with Limited Directors, and also on primary principles of the liability Partnership Microcredit organization Company in sphere of personnel, motivation and «Aldiyar Credit», Microcredit organization reward. «Murager», Microcredit organization «Vella» and other on questions of further development Centre of support of microcredit and attracting investments. Several organizations recommendations on perfection of business Limited Liability Partnership Centre of support processes were given according to the results of of microcredit organizations was created in the meetings. 2010 with participation of Joint Stock Company In November 2014 the Centre with Joint Fund of Financial Support of Agriculture and Stock Company Fund of Financial Support Microfinance centre (Poland). of Agriculture with support of company BG The mission of the Centre lies in participation Kazakhstan organized microfinance forum with in expanding of accessibility of financial services participation of state bodies, financial institutions, through development of microfinance. As associations, microcredit organizations and instruments they use institutional strengthening all the interested parties with aim of solving of of microfinance organizations, implementation topical issues of, including questions on the of innovative approaches in microfinance, origin of state accounting registration, raising increasing of financial literacy of population. of capital promotion of investments, interaction In 2014 the Centre conducted 5 trainings with state bodies and international institutions. on the basis of technologies, transferred by Microfinance centre (Poland), in which participated 71 employees from 12 microcredit

36 37 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014 Developing village, we operate future!

CALENDAR OF EVENTS

Within second wave of privatization in 2014 Joint Stock Company Fund of Financial Support of Agriculture году sold 8 microcredit organization on the amount of 42,7 millions of tenge. Ownership interests of Joint Stock Company Fund of Financial Support of Agriculture in Limited Liability Partnerships «Microcredit/ Microfinance organization «Turkestan Agro», «Ayu-Tas-Finans», «Aldiyar-Kredit», «Kordai», «Zhualy-Rantie», «Shalkar-Nesie» and «SelkhosKredit» were sold. In accordance with Order of the Government of the Republic of Kazakhstan from March 31, 2014 No 280 about some questions of privatization, next year sale of interest in the authorized capital of 9 subsidiary microcredit organizations of Joint Stock Company Fund of Financial Support of Agriculture is planned.

January ▶▶For optimization of process of completion of loan in Zhambyl region three subsidiary companies of National Holding Kazagro - Joint Stock Company Fund of Financial Support of Agriculture, Joint Stock Company «KazAgroFinans» and Joint Stock Company «Agricultural credit corporate enterprise» gathered under one roof. This allowed loan debtors to receive necessary service without going out of a building. ▶▶Financing of projects on procurement of alternative energy sources for installation on remote livestock places in Aktyubinsk region by “Murabakha” program.

February ▶▶During three weeks in Israel directors of Aktyubinsk and Mangistau brachches of the Fund attended International course on systems of support of female entrepreneurship. ▶▶By the decision of board of Joint Stock Company «National Managing Holding «KasAgro» the managing director of the Holding KazAgro Zhauymbaev Kanat Sagyndykovich was elected as member of the Board of Directors of Joint Stock Company Burgulyuk Fund of Financial Support of Agriculture. ▶In the conditions of correction of course of national currency Burgulyuk Tract is located in the spurs of the Tian Shan Mountains at ▶ an altitude of 1100 meters above the sea level, 50 km away from the city of rate which happened against the dollar Joint Stock Company Shymkent in Tolebi district of South Kazakhstan region. Burgulyuk River runs «National Managing Holding «KasAgro» took some measures through the whole Tract. Here, you can find a walnut grove, apple and apricot on mitigation of this event for its clients. By the program «Setti», orchards. Flora is represented by an abundance of conifers and hardwood implemented by the Fund on foreign exchange assets, attracted trees: pine, Tian Shan spruce, oaks, plane trees, barberry, chestnuts, wild from Islamic Development Bank, terms of microcredit remained rose, and other medicinal plants. the same, all the exchange risks the company took upon itself. ▶▶By the initiative of the Board of Directors of Joint Stock

38 39 Company Fund of Financial Support of Agriculture Мay ▶▶Single-Industry cities of Karaganda region Fund/United Nations Organization’ Development as of the end of 2013 the best employees of the ▶▶The day before 69th anniversary of the were included into the list of participants Program. Company were encouraged by package tours Victory representatives of Joint Stock Company of program of microcredit on Program of ▶▶Expecting the Rural Worker Day director abroad. Fund of Financial Support of Agriculture visited development of single-industry cities. of branch in West Kazakhstan region Kairiden ▶▶Joint Stock Company Fund of Financial family of veterans – residents of Saryarkin district Zhakiev was given a medal «Еңбек ардагері», Support of Agriculture and Association of Legal of city of Astana – husband and wife Danilov – August a departmental award «Ауыл шаруашылығы Entities «Coalition for «green» economy and veterans of the Great Patriotic War. ▶▶A department of the Fund for financing of саласының үздігі» was given to director of development G-Global» signed Memorandum of ▶▶An audit of consolidated financial statements rural projects has been opened in Semei. Pavlodar branch of the Fund Saira Yrykalasova. Understanding and Cooperation. of Joint Stock Company Fund of Financial ▶▶President of Board of the Fund N. Sarybaev Support of Agriculture, conducted by company gave a talk on briefing of service of central December March Limited Liability Partnership «Ernst and Young» communications on realization of address of the ▶▶Fund of Financial Support of Agriculture ▶▶President of Board of the Fund N.Sarybaev (branch in city of Astana) was completed. President of the Republic of Kazakhstan. designed collection «100 ideas for small completed an internship in city of Tel Aviv, on ▶▶The Fund increased amount of financing ▶▶The Fund initiated microcredit of the business», where projects on 100 business theme «Work of state bodies of Israel in the field of conducting of spring and field operations to 2 population on Program of development of single- plans for rural entrepreneurs on development of of Agriculture». All the measures, included into billions of tenge. industry cities in ten regions of the country. livestock farming, plant production, production the program, were directed on familiarization with ▶▶By Regional Committee Akmolin branch of of food and industrial products, giving services experience of Israel state bodies, and also small Joint Stock Company Fund of Financial Support September were included. and average farms, carrying out their activities in of Agriculture was appointed as empowered ▶▶The Fund conducted tenders on property. ▶▶Within second wave of privatization in the the field of agriculture. organization, which carries out crediting of end- ▶▶The Fund conducted practical seminar on Republic of Kazakhstan interests of the Fund in ▶▶The Fund started crediting of subjects of use borrowers within implementation of the familiarization with Islamic financial instrument 8 microcredit organizations were sold. agrarian business for conducting of spring and second direction of program «Employment work «Sukuk» field and harvesting operations by program of flow chart». ▶▶In village Kuryk of Karakiyan district of «Yeginzhai». Mangistau region the first movie hall in 3D format ▶▶Fund of Financial Support of Agriculture June was open within the program “Employment participated in «Start-up forum – 2014», ▶▶From June 09, 2014 the decision No 32 workflow chart – 2020”. organized in city of Astana Kazakhstan of Board of the Only Shareholder – Joint Stock Association of Entrepreneurs «KAZKA» with Company “National Managing Holding “KazAgro” October support of Akimat of city of Astana and Regional about paying of dividends on ordinary shares of ▶▶The Fund announced conducting of the Chamber of Entrepreneurs. the Fund for the year 2013 was made. open contest among microfinance (microcredit) ▶▶Private early childhood centre in village organizations for the right to receive loan on Аpril Zhalpaktobe of Zhambyl region opened thanks to Program of employment 2020. ▶▶Fund started financing of rural projects on crediting of the Fund by program «Employment ▶▶The Fund participated in Forum, devoted «Employment work flow chart – 2020». work flow chart -2020». to questions of expanding access to financial ▶▶For convenience of rural entrepreneurs ▶▶Financial recovery of enterprises of resources of microfinance organizations, department were open in cities of Astana and agriculture started in Karaganda region. Under especially rural oriented ones, by further Taldykorgan. If earlier for receiving credits this reason farmers, who received credits and functioning and stable development of microcredit residents of the nearby districts of these cities drawn up lease liabilities in different financial organizations in the conditions of entering of applied to Kokshetau and Almaty, now new institutions earlier, were able to refinance their new regulatory mode of sector from the side of departments are situated in the immediate loans and reduce load on business. National Bank of the Republic of Kazakhstan. neighbourhood. ▶▶A mini market appeared in township Karaoba ▶▶The first credit this year was issued on July of Zelenov district of West Kazakhstan region. conducting of spring and field and harvesting ▶▶On credit means of the Fund on program Thanks to loyal client of the Fund 50 villagers operations. Kyzylorda branch of the Fund “Kesipker” in rural district Novaya Uzenka of got a job. financed project on rice growing. Bukhar-Zhyrau district of Karaganda region a ▶▶In Shymkent representatives of the Fund recreational centre was open. November and of Joint Stock Company «Kazagrofinans» ▶▶The amendments were made into Articles ▶▶Joint Stock Company Fund of Financial conducted seminar for consultants of regional of Association of Fund of Financial Support of Support of Agriculture and Head Department entrepreneur service centre on programs, Agriculture. «Committee of Forestry and wildlife of Ministry of intended for entrepreneurs, engaged in ▶▶The Fund started microcredit by Program of Agriculture of Republic of Kazakhstan entered agriculture. development of single-industry cities. into the contract about joint implementation of ▶▶Fund of Financial Support of Agriculture ▶▶The Fund opened program of crediting of Program of microcredit «Eco-Dama» for 2014- changed some terms of crediting commercial dairy farms «Yrys». 2024 years within the project of Global Ecological

40 41 Developing village, we operate future!

JOINT STOCK COMPANY FUND OF FINANCIAL SUPPORT FOR AGRICULTURE

Consolidated reporting forms in accordance with the list, approved by regulator}7 enactment of the authored government body of the Republic of Kazakhstan in accordance with the Law of the Republic of Kazakhstan dated 28 February 2007 No. 234-III “On accounting and financial statements” For the year ended 31 December 2014 with independent auditors’ report

CONTENTS

INDEPENDENT AUDITORS’ REPORT

Consolidated balance sheet (form No. 1) 1-2 Consolidated income statement (form No. 2) 3-4 Consolidated statement of cash flows (direct method) (form No. 3) 5-6 Consolidated statement of changes in equity (form No. 4) 7-10

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Principal activities 11 Basis of preparation 11 Summary of significant accounting policies 11 Significant accounting judgements and estimates 25 Balance sheet 26 Income statement 34 Other provisions 37 Risk management 37 Capital adequacy 46 Balkhash Subsequent events 46 It is a closed semi-freshwater lake in the Balkhash-Alakol Basin in the south-east of Kazakhstan, the second largest perennial salt lake (after the Caspian Sea) and13th in the list of the largest lakes in the world. It is unique, as it is divided by a narrow strait into two parts with different chemical characteristics of water: in the western part, it is practically fresh, and in the eastern- salty.

42 43 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014 Developing village, we operate future!

«Эрнст энд Янг» ЖШС ТОО «Эрнст энд Янг» Ernst & Young LLP Эл-Фараби д-лы, 77/7 пр. Аль-Фараби, 77/7 Al-Farabi ave., 77/7 «Эрнст энд Янг» ЖШС ТОО «Эрнст энд Янг» Ernst & Young LLP «Есентай Тауэр» гимараты здание «Есентай Тауэр» Esentai Tower Эл-Фараби д-лы, 77/7 пр. Аль-Фараби, 77/7 Al-Farabi ave., 77/7 Алматы к., 050060 г. Алматы, 050060 Almaty, 050060 «Есентай Тауэр» ғимараты здание «Есентай Тауэр» Esentai Tower EY Казахстан Республикасы Республика Казахе idH Republic of Kazakhstan Алматы қ., 050060 г. Алматы, 050060 Almaty, 050060 Building a better Тел.: +7 727 258 5960 Тел.: +7 727 258 5960 Tel.: +7 727 258 5960 EY Казақстан Республикасы Республика Казахстан Republic of Kazakhstan working world Факс: +7 727 258 5961 Факс: +7 727 258 5961 Fax: +7 727 258 5961 Building a better Тел.: +7 727 258 5960 Тел.: +7 727 258 5960 Tel.: +7 727 258 5960 www.ey.com working world Факс: +7 727 258 5961 Факс: +7 727 258 5961 Fax: +7 727 258 5961 www.ey.com

Independent auditors’ report Opinion

To the Shareholder and Management of JSC «Fund for Financial Support of Agriculture»: In our opinion, the consolidated reporting forms present fairly, in all material respects the consolidated financial position of JSC «Fund for Financial Support of Agriculture” and its subsidiaries as at 31 December We have audited the accompanying consolidated forms of JSC «Fund for Financial Support of Agriculture» 2014, and its consolidated financial performance and cash flows for the year then ended in accordance with and its subsidiaries (hereinafter together referred as «the Group») as at 31 December 2014, which comprise the Order of the Ministry of finance of the Republic of Kazakhstan N9422 dated 20August 2010. consolidated forms 1, 2, 3, 4 and explanatory note (the «Consolidated reporting forms»). The management prepared the consolidated reporting forms in accordance with the Order of the Ministry of finance of the Basis of preparation and restriction in use Republic of Kazakhstan N9422 dated 20 August 2010.Ответственность руководства за подготовку консо- лидированных форм отчётности. Without modifying our opinion, we draw attention to the notes to the consolidated reporting forms, which describe the basis of their preparation. The consolidated reporting forms are prepared by the Group to meet Management’s Responsibility for Preparation of the Consolidated Reporting Forms the requirements of the Order of the Ministry of finance of the Republic of Kazakhstan Ne422 dated 20 August 2010. As a result, the consolidated reporting forms may not be suitable for another purpose. Management of the Group is responsible for the preparation and fair presentation of the consolidated reporting forms in accordance with the Order of the Ministry of finance of the Republic of Kazakhstan N9422 Other matter dated 20 August 2010, and for such internal control as management determines is necessary to enable the preparation of the consolidated reporting forms that are free from material misstatement, whether due to The Group has prepared different set of consolidated financial statements in accordance with International fraud or error. Financial Reporting Standards for the year ended 31 December 2014, on which we issued a separate auditor’s report to the Shareholder and Management of the Group dated 20 March 2015. Auditors’ Responsibility

Our responsibility is to express an opinion on these consolidated reporting forms based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated reporting forms are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated reporting forms. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated reporting forms, whether due to fraud or error. In making those risk assessments, the auditor considers internal control of the Group relevant to the preparation and fair presentation of the consolidated reporting forms in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated reporting forms. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. State audit license for audit to practicei the Auditor Qualification Certificate No. 0000553 territory of the Republic of Kazakhstan: dated 24 December 2003 series McpiO-2 No. 0000003 issued by the Ministry of Finance of the Republic of Kazakhstan on 15 July 2005

44 45 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014 Developing village, we operate future!

Joint Stock Company Fund for Financial Support of Agriculture Consolidated financial statements Joint Stock Company Fund for Financial Support of Agriculture Consolidated financial statements

Form 1 Form 1 CONSOLIDATED BALANCE SHEET CONSOLIDATED BALANCE SHEET (CONTINUED) AS AT 31 DECEMBER 2014 thousand tenge Annex 1 Name of the entity’: JSC Fund of Financial Support for Agriculture to the Order of the Minister of Finance of the Republic Line Closing Beginning Information on reorganisation: No. 3927-1900-AO dated 24 August 2004 of Kazakhstan dated 20 August 2010 No. 422 Liability and equityr balance Type of activities: Micro lending code balance Form of incorporation: Joint Stock Company III. CURRENT LIABILITIES Form of reporting: consolidated Loans Average annual number of employees: 394 persons 210 1.700.000 250.000 Business entity: large Derivative financial instruments 211 – Legal address: Astana, Turan Ave. 19/1, postal code - 010000 Other current financial liabilities 212 thousand tenge – Short-term trade and other accounts payable 213 100.150 74.722 Assets Line Closing Beginning code balance Short-term provisions 214 balance 43.921 29.035 Current income tax liabilities I. Current assets 215 4.140 – Employee benefits 216 38 – Cash and cash equivalents 010 1.051.942 2.457.672 Other current liabilities 217 139.501 105.269 Financial assets available-for-sale 011 – Total current liabilities (sum of lines 210 through 217) Derivative financial instruments 012 – 300 1.987.750 459.026 Liabilities of disposal groups held for sale Financial assets at fair value through profit or loss 013 – 301 – IV. NON-CURRENT LABILITIES – Financial assets held-to-maturity 014 – Loans 310 24.961.184 12.018.845 Other current financial assets 015 17.163.340 9.932.514 Derivative financial instruments 311 – Short-term trade and other accounts receivable 523.991 260.229 Other non-current financial liabilities 016 312 – Current income tax 017 56.703 Long-term trade and other accounts payable Inventories 018 7.469 7.104 313 – Other current assets 019 1.825.639 1.255.583 Long-term provisions 314 – Deferred tax liabilities Total current assets (sum of lines 010 through 019) 20.572.381 13.969.805 315 893.564 388.293 100 Other non-current liabilities 316 205.413 188.781 Assets (or groups of disposal) held-for-sale 101 2.561 Total non-current liabilities (sum of lines 310 through 316) 400 26.060.161 12.595.919 II. NON-CURRENT ASSETS V. EQUITY Charter (share) capital Financial assets available-for-sale 110 – 410 25.692.450 25.692.450 Additional paid-in capital 411 – Derivative financial instruments 111 – Treasury equity instruments 412 – Financial assets at fair value through profit or loss 112 – Provisions 413 2.821.756 906.380 Retained earnings (uncovered loss) 414 1.045.270 723.959 Financial assets held-to-maturiry 113 – Total equity attributable to the equity holders of the parent (sum of lines 410 through 414) Other non-current financial assets 114 34.798.775 23.986.233 420 29.559.476 27.322.789 Long-term trade and other accounts receivable 115 1.399.425 1.630.207 Non-controlling interest 421 33.028 32.377 Investments accounted for under the equity method 116 84.904 117.323 Total equity (line 420 +/- line 421) 500 29.592.504 27.355.166 Investment propern' – 117 Balance (line 300 + line 301 + line 400 + line 500) 57.640.415 40.410.111 Property and equipment 118 689.796 639.455 Biological assets 119 – Exploration and evaluation assets 120 – Sarybayev Narmukhan Chairman of the Management Board Intangible assets 121 95.134 64.527 Deferred tax assets 122 – Daukenova Gulbarshyn Chief Accountant Other non-current assets 123 – Total non-current assets (sum of lines 110 through 123) 200 37.068.034 26.437.745 20 march 2015 Balance (line 100 + line 101 + line 200) 57.640.415 40.410.111

The accompanying notes on pages 11 to 42 are an integral part of these consolidated financial statements. The accompanying notes on pages 11 to 42 are an integral part of these consolidated financial statements.

46 47 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014 Developing village, we operate future!

Joint Stock Company Fund for Financial Support of Agriculture Consolidated financial statements Joint Stock Company Fund for Financial Support of Agriculture Consolidated financial statements

CONSOLIDATED INCOME STATEMENT Form 2 CONSOLIDATED INCOME STATEMENT (CONTINUED) Form 2 FOR THE YEAR ENDED 31 DECEMBER 2014

thousand tenge thousand tenge

Line Reporting Previous Line Reporting Previous Name Name period code period period code period Revenue 010 – Exchange difference on investments to foreign 416 - – Cost of sales 011 – operations Gross profit (line 010 - line Oil) – 012 Hedging of net investments to foreign operations 417 - – Selling expenses 013 (1.976.546) (1.474.605) Other components of other comprehensive income 418 - – Adrrunisnative expenses 014 (739.084) (596.467) 419 - – Other expenses 015 – Adjustment at reclassification within profit (loss) Other income 016 – Tax effect of components of other comprehensive 420 - – income Total operating profit (loss) (+/- lines 012 through 016) 020 (2.715.630) (2.071.075) Total comprehensive income (line 300 + line 400) 500 926.191 672.978 Finance income 021 4.265.678 2.376.677 Total comprehensive income attributable to: - – Finance costs 022 (1.253.554) (413.539) Equity holders of the parent 925.540 672.816 Entity’s share in income (loss) of associates and joint 023 (8.461) (16.347) Non-controlling interest ventures accounted for under the equip’ method 651 162 - – Other non-operating income 024 1.014.869 755.527 EARNINGS PER SHARE 600 Other non-operating expenses 025 (195.209) (7.671) Including: - – Basic earnings per share - – Profit (loss) before tax (+/- lines 020 through 025) 100 1.107.693 623.572 From continuing operations - – Income tax benefit/expense 101 (181.502) 49.406 From discontinued operations - –

Profit (loss) after tax from continuing operations (line 200 Diluted earnings per share - – 100 — line 101) 926.191 672.978 From continuing operations - – Profit (loss) after tax from discontinued operations 201 – From discontinued operations - –

Profit for the year (line 200 + line 201) attributable to: 300 926.191 672.978

Equity holders of the parent 925.540 672.816

Non-controlling interest 651 162

Other comprehensive income, total (sum of lines 410 400 Sarybayev Narmukhan Chairman of the Management Board through 420) - –

Including: - – Daukenova Gulbarshyn Chief Accountant Revaluation of property and equipment 410 - – Revaluation of financial assets available-for-sale 411 - – 20 march 2015 Share in other comprehensive income (loss) of associates and joint ventures accounted for under the equip’ method 412 - –

Actuary income (loss) on pension liabilities 413 - –

Effect of change in income tax rate to the deferred tax of subsidiaries 414 - –

Cash flows hedging 415 - –

48 49 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014 Developing village, we operate future!

Joint Stock Company Fund for Financial Support of Agriculture Consolidated financial statements Joint Stock Company Fund for Financial Support of Agriculture Consolidated financial statements

CONSOLIDATED STATEMENT OF CASH FLOWS (DIRECT METHOD) Form 3 CONSOLIDATED STATEMENT OF CASH FLOWS (DIRECT METHOD) Form 3 FOR THE YEAR ENDED 31 DECEMBER 2014 FOR THE YEAR ENDED 31 DECEMBER 2014 Annex 3 to the Order of Minister of Finance of the Republic thousand tenge of Kazakhstan dated 20 August 2010 No. 422 Line Reporting Previous thousand tenge Name code period period 2. Cash outflow, total (sum of lines 061 through 071) 060 155.539 (175.409) Line Reporting Previous Name code period period Including: Purchase of property' and equipment 061 105.784 155.631 I. CASH FLOWS FROM OPERATING ACTIVITIES Purchase of intangible assets 062 49.755 19.778 Purchase of other non-current assets 063 - – Purchase of equity instruments of other entities 1. Cash inflow, total (sum of lines Oil through 016) 010 14.619.204 8.746.717 064 - – (excluding subsidiaries) and share in joint venture Including: Purchase of debt instruments of odier entities 065 - – Sales of goods and services 011 10.439.502 6.275.596 Acquisition of control over subsidiaries 066 - – Other revenue 012 - – Purchase of other financial assets 067 - – Advances received from buyers, customers 013 701.424 530.136 Issuing loans 068 - – Proceeds from insurance contracts 014 447 Futures and forward contracts, options and swaps 069 - – 070 Interest received 015 2.580.841 1.559.195 Investments in associates and subsidiaries - – Other payments 071 - – Other proceeds 016 896.990 381.790 3. Net cash from investing activities (line 040 - line 060) 080 (129.039) (150.944) 2. Cash outflow, total (sum of lines 021 through 027) 020 33.613.579 (24.768.156) III. Cash flows from financing activities Including: 1. Cash inflow, total (sum of lines 091 through 094) 090 19.752.467 18.756.675 Payments to suppliers for goods and services 021 1.299.314 1.534.823 Including: Advances given to suppliers of goods and services 022 930.609 930.866 Issue of shares and other financial instruments 091 - 3.685.500 Salary payments 023 1.002.052 763.779 Loans obtained 092 19.752.467 15.071.175 Interest payment 024 7.866 1.249 Interest received 093 - – Payments under insurance contracts 025 484 209 Odier proceeds 094 - – Income tax and other budget payments 026 445.273 236.612 2. Cash outflow, total (sum of lines 101 through 105) 100 2.034.783 (2.245.213) Other payments 027 29.927.981 21.300.618 3. Чистая сумма денежных средств от Including: - операционной деятельности (строка 010 – 030 (18.994.375) (16.021.439) Repayment of borrowings 101 1.430.554 (2.170.066) строка 020) Interest payment 102 - (13.945) Distribution of dividends 103 3. NET CASH FROM OPERATING ACTIVITIES (LINE 010 - LINE 020) 604.229 ( 61.202) Distribution to the shareholders 104 - – II. Cash flows from investment activities 040 26.500 24.465 Other disposals 105 - – 3. Net cash from financing activities (line 090 - line 100) 110 17.717.684 16.511.462 1. Cash inflow, total (sum of lines 041 through 051) 4. Effect of exchange rates to tenge 120 Including: 041 2.542 10.798 5. Increase +/- decrease in cash (line 030 +/- line 080 +/- 130 (1.405.730) 339.079 Sale of property and equipment 042 - – line 110) Sale of intangible assets 043 23.958 13.667 6. Cash and cash equivalents, beginning 140 2.457.672 2.118.593 Sale of other non-current assets 044 - – Sale of equity instruments of other entities (except for 7. Cash and cash equivalents, ending 150 1.051.942 2.457.672 045 - – subsidiaries) and equity shares in joint ventures Sale of debt instruments of other entities 046 - – Reimbursement at loss of control over subsidiaries 047 - – Sarybayev Narmukhan Chairman of the Management Board Sale of other financial assets 048 - – Futures and forward contracts, options and swaps 049 - Daukenova Gulbarshyn Chief Accountant Dividends received 050 - – Interest received 051 - –

Other proceeds 060 155.539 (175.409) 20 march 2015

The accompanying notes on pages 11 to 42 are an integral part of these consolidated financial statements. The accompanying notes on pages 11 to 42 are an integral part of these consolidated financial statements. 50 51 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014 Developing village, we operate future! Form 3 Form 4 Annex 4 − − − − − − − − − − − − − − − − − − − − − − 799.525 799.525 (61.202) 4.882.663 3.685.500 1.258.365 672.978 672.978 27.355.166 thousand tenge thousand tenge 21. 21. Total equity Total Total equip' Total 377 − − − − − − − − − − − − − − − − − − − − − − − − − − 32. 162 162 Non¬ 32.215 32.215 Non¬ to the Order of Minister Finance interests controlling interests controlling − − − − − − − − − − − − − − − − .816 − − − − − − − − 723.959 (61.202) (61.202) earnings Retained 112.345 112.345 672 672.816 earnings Retained ) ) − − − − − − − − − − − Consolidated financial statements Consolidated financial statements of the Republic of Kazakhstan dated 20 August 2010 No. 422 of the Republic Kazakhstan dated 20 − − − − − − − − − − − − − − − − Pro 906.380 Pro 1.258.365 1.258.365 visions 351.985 351.985 isions ( ( − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − equity equity Treasury Treasury instalments instruments Equity of the Parent Equity of the Parent − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − − capital capita Addition paid-in al paid-in Additional − − − − − − − − − − − − − − − − − − − − − − − − − − capital 3.685.500 3.685.500 (share) Charter 25.692.450 capita (share) Charter 22.006.950 22.006.950 311 227 228 229 300 310 312 313 314 315 316 317 318 400 Line 221 222 223 224 225 226 code 011 010 100 200 210 220 Line code Atame of components Name of components Cash flows hedging (net of tax effect) on investments to foreign operations Fxchange difference I edging of net investments to foreign operations with owners, total (sum oflines 310 through Transactions 318) Including: Benefits to employees in the form of shares Including: Cost of employees services Issue of shares according to the scheme benefits employees in the form of shares l ax benefit with respect to the scheme of benefits employees in the form of shares Contributions from owners Issue of treasury equity instruments (shares) Issue of equity instruments related to business combination Hquity component of convertible instruments (net tax effect) Distribution of dividends Other distributions to owners Other transactions with owners Change in ownership subsidiaries, not resulting loss of control Balance at 1 January of the reporting year (line 100 + line 200 + line 300) Balance at 1 January of the previous year Change in accounting policy Restated balance (line 010 + /- line Oil) comprehensive income (line 210 + line 220) Total Profit (loss) for the year Other comprehensive income, total (sum of lines 221 through 229) Including: Cain from revaluation of property and equipment (net tax effect) of amortization from revaluation property and Transfer equipment (net of tax effect) Revaluation of available-for-sale financial assets (net tax effect) Share in other comprehensive income (loss) of associates and joint ventures accounted for under the equity method Actuary income (loss) on pension liabilities of change in income tax rate to the deferred Effect subsidiaries CONSOLIDATED STATEMENT OF CHANGES STATEMENT CONSOLIDATED YEAR ENDED 31 DECEMBER 2014 THE FOR IN EQUITY The accompanying notes on pages 11 to 42 are an integral part of these consolidated financial statements. The accompanying notes on pages 11 Joint Stock Company Fund for Financial Support of Agriculture Joint Stock Company Fund for Financial Support of Joint Stock Company Fund for Financial Support of Agriculture Joint Stock Company Fund for Financial Support of The accompanying notes on pages 11 to 42 are an integral part of these consolidated financial statements. The accompanying notes on pages 11 (CONTINUED) OF CHANGES IN EQUITY STATEMENT CONSOLIDATED

52 53 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014 Developing village, we operate future! Form 4 Form 4 − − − − − − − − − − − − − − − − − − − − − − 926.191 926.191 (604.229) 1.344.175 1.915.376 27.355.166 29.592.504 thousand tenge thousand tenge Total equity Total equity Total 377 − − − − − − − − − − − − − − − − − − − − − − − − 651 651 32. 33.028 33.028 Non¬ Non¬ interests interests controlling controlling − − − − − − − − − − − − − − − − − − − − − − 723.959 925.540 925.540 (604.229) (604.229) 1.045.270 earnings earnings Retained Retained Consolidated financial statements Consolidated financial statements − − − − − − − − − − − − − − − − − − − − − − − − Accountant Pro Pro 906.380 1.915.376 1.915.376 2.821.756 visions visions − − − − − − − − − − − − − − − − − − − − − − − − − − − − − equity equity Treasury Treasury instalments instalments Equity of the Parent Equity of the Parent − − − − − − − − − − − − − − − − − − − − − − − − − − − − capital capital Addition Addition al paid-in al paid-in − − − − − − − − − − − − − − − − − − − − − − − − − − capital capital (share) (share) Charter Charter 25.692.450 25.692.450 711 401 500 600 610 620 621 622 623 624 625 626 627 628 629 700 710 712 713 714 715 716 717 718 800 Line Line code code 20 march 2015 Sarybayev Narmukhan Chairman of the Management Board Daukenova Gulbarshyn Chief Atame of components Atame of components Change in accounting policy Restated balance (line 400 +/- line 401) comprehensive income (line 610 + line 620) Total Profit (loss) for the year Other comprehensive income, total (sunt of lines 621 through 629) Including: Cain from revaluation of property and equipment (net tax effect) transfer of amortization from revaluation property and equipment (net of tax effect) Revaluation of available-for-sale financial assets (net tax effect) Share in other comprehensive income (loss) of associates and method joint ventures accounted for under the equip’ Actuary' income (loss) on pension liabilities of change in income tax rate on the deferred rax 1 *ffect subsidiaries (Ash flows hedging (net of tax effect) on investments to foreign operations 1 exchange difference 1 ledgingof net investments to foreign operations with owners, total (sum of lines 710 through Transactions 718) Including: Benefits to employees in the form of shares Including: Cost of employees services Issue of shares according to the scheme benefits employees in the form of shares l ax benefit with respect to the scheme of benefits employees in the form of shares Contributions from owners Issue of treasury equip' instruments (shares) Issue of equity instalments related to business combination Equip' component of convertible instruments (net tax effect) Distribution of dividends Other distributions to owners ()ther transactions with owners Change in ownership subsidiaries, not resulting loss of control Balance at 31 December of the reporting year (line 500 + line 600 + 700) Joint Stock Company Fund for Financial Support of Agriculture Joint Stock Company Fund for Financial Support of (CONTINUED) OF CHANGES IN EQUITY STATEMENT CONSOLIDATED to 42 are an integral part of these consolidated financial statements. The accompanying notes on pages 11 Agriculture Joint Stock Company Fund for Financial Support of (CONTINUED) OF CHANGES IN EQUITY STATEMENT CONSOLIDATED to 42 are an integral part of these consolidated financial statements. The accompanying notes on pages 11

54 55 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014 Developing village, we operate future!

Korgalzhyn Korgalzhyn Reserve is located 130 km south-west of the city of Astana. It was formed in 1968 to preserve the unique wetlands. Usually, tourists are attracted by the large-sized birds: flamingos, curly pelicans, swans, herons, gulls, cranes, birds of prey, as well as large concentrations of waterfowl and shorebirds in the waters. The tourists are especially interested in the rare species of birds, especially, bustard and little bustard, endemic larks and small passerine birds.

56 57 Annual Report of Joint Stock Company Fund of Financial Support of Agriculture for 2014

JSC «Fund for Financial Support of Agriculture» Astana, pr.Turan, 19/1, BC «Eden» Tel. +7 7172 678-252 е-mail: [email protected] www.kazagro.kz/wev/fond

Printed by the«EvoPrint» printing production. Astana, Kunaev street 12/2, 1 access, 2 floor, office 44 tel.: 784-270, 755-185 mob.: +7 777 522 50 82 +7 777 522 50 91 e-mail: [email protected] www.evoprint.kz

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