ANNUAL REPORT 2015 VOLUME 1 04 About the Report
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ANNUAL 20152015 REPORT VOLUME 1 Samruk-Energy JSC ANNUAL 2015 REPORT Samruk-Energy JSC 02 Content CONTENT 01. ABOUT THE REPORT 04 02. MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS 06 MESSAGE FROM THE CHAIRMAN OF THE MANAGEMENT BOARD 08 03. KEY PERFORMANCE INDICATORS 10 04. ABOUT THE COMPANY 12 Mission, Vision and Values 14 Business Model 15 Development Strategy 17 Strategic Areas, Objectives and Tasks by 2025 18 Business Transformation 20 Key Events in 2015 24 International Cooperation 25 Restructuring, reorganization and new companies acquisition 26 Asset Privatization 27 ASSETS STRUCTURE 05. MARKET OVERVIEW 28 Electricity Market 29 Coal Market 35 SWOT Analysis of the Company in the Market 37 06. PERFORMANCE RESULTS 40 Production Activities 41 Information about Subsidiaries and Affiliates 46 Financial Results 57 Company Performance Management Analysis (MD&A) 59 Investment Activities 75 Innovative activities, improving energy efficiency and energy saving 79 07. CORPORATE MANAGEMENT 82 Corporate Management Structure 83 Information on Shareholders 83 Board of Directors 84 Internal Audit Service 93 SAMRUK-ENERGY JSC Content 03 Management Board 94 Corporate Governance Code 107 Performance Goals Monitoring Procedures 108 Precautionary Principle 108 Participation in Charters and Initiatives 109 Membership in Associations and/or National and International Organizations Involved in the Protection of Interests 109 Ombudsman: Management of Conflicts 110 08. RISK MANAGEMENT AND QUALITY CONTROL 110 09. SUSTAINABLE DEVELOPMENT 120 Environmental Factors 121 Social Factors 126 Economic Factors 147 Intercation with Society 150 Production Liability 152 10. INFORMATION ABOUT EXTERNAL AUDITING FIRM 154 Criteria for Selecting an External Auditor 154 Information about the Auditing Firm 154 Conclusion of the Independent Auditor 157 11. FINANCIAL STATEMENTS 158 Consolidated Statement of Financial Position 158 Consolidated Statement of Profit or Loss and Other Comprehensive Income 160 Consolidated Statement of Changes in Equity 161 Consolidated Statement of Cash Flows 163 12. ANNEXES 164 Acronyms 164 Correspondence Table of GRI Management Report 166 CONTACT INFORMATION 171 ANNUAL REPORT 2015 VOLUME 1 04 About the Report 01 ABOUT THE REPORT This integrated report (hereinaf- ter – the Report) of Samruk-Energy JSC (hereinafter – the Company) re- flects material facts of the company’s performance. The Report provides all interested parties with a review 0of the results and achievements of Samruk-Energy Group of Companies’ activity in the period from January 1 to December 31, 2015. Consolidated financial statements of the Company for 2015 as of December 31, 2015 and In 2011, along with the Annual Re- for 2014 as of December 31, 2014 stated port, the Company published the Re- herein are the outcome of the audit port on Sustainable Development of conducted1 by an independent auditor Samruk-Energy Group of Companies – PricewaterhouseCoopers LLP (PwC). that covers the period from January 1 This Report also provides infor- to December 31, 2010. The previous In- mation on the Company’s economic tegrated Annual Report was published activities sustainable development in May 2015. and financial and operational results. The Company plans to publish an Information and quantitative data are Integrated Report on an annual basis. presented for 2015, however in order to compare and analyze the informa- tion in figures, we used the data for PROCESS OF DETERMINING 2013 and 2014, where applicable. THE CONTENT OF THE REPORT The Company started issuing its non-financial reports in 2010. The This Report has been prepared in Company’s first Annual Report of accordance with the principles of the 2009 results was published in 2010. Global Reporting Initiative (herein- after – GRI version G4) and Industry Protocol in the field of Electric Utili- ty (Electric Utility, EU), reporting re- quirements of United Nations Global Compact and International Financial Reporting Standards. The table in- dicating the location of standard el- ements in the Report is attached to the Report (see Appendix 2: Table of Report’s Compliance with GRI Guide- lines). SAMRUK-ENERGY JSC About the Report 05 LIMITATION OF THE SCOPE STATEMENTS CONCERNING AND BOUNDARIES OF THE REPORT THE FUTURE The Company is a management Data in the Report associated with company, that does not perform pro- the future are based on the forecast duction activities; therefore its impact information. Words including “be- on the environment is minimal. This lieves”, “assumes”, “anticipates”, “es- Report contains consolidated infor- DATA AND CALCULATION timates”, “intends”, “plans”, and indi- mation on Samruk-Energy Group MEASUREMENT TECHNIQUES, cators marked as “plan”, and similar of Companies (hereinafter, also the INCLUDING ASSUMPTIONS expressions refer to a forecast state- Group of Companies or the Holding), AND TECHNIQUES USED TO ment. Actual results may differ mate- which consists of 38 subsidiaries and PREPARE INDICES AND OTHER rially from the planned and target in- affiliates, for the purpose of full dis- INFORMATION INCLUDED dicators, expected results, evaluations closure of sustainable development IN THE REPORT and intentions, contained in the fore- indicators. The following organiza- cast statements. Forecast statements tions are exceptions: Data resources are the official re- are effective only as of the Report is- • Forum Muider B.V. – managing porting forms presented annually for sue date. The Company does not guar- company, a joint with RUSAL CJSC state statistics’ authorities. Several indi- antee the anticipated performance (50 % of SE); ces are collected and calculated accord- results presented in the forecast • Mersal Coal Holdings Ltd, Man- ing to the internal reporting forms au- statements will in fact be achieved; etas Coal Holdings Ltd, Grased- dited by the authorized representatives thus, they must not and may not be ol Coal Holdings Ltd, Bleson Coal of companies within the internal audit considered as the most plausible or Holdings Ltd, GROUCH ESTATE procedures. standardized scenario. Ltd, ALLOYAL Limited, WEXLER Calculation, collection and consol- LTD, METTLERA CORPORATION idation of production, social and envi- LTD, EnergoTradeUgol OJSC, Re- ronmental indicators presented in the sourceenergougol OJSC – subsidi- Report of the Company were carried aries of Forum Muider B.V.; out in accordance with the reporting • Bukhtarma HPP JSC, Shulbinsk principles and recommendations of the HPP JSC and Ust-Kamenogorsk Guide to reporting on sustainable de- HPP JSC – the assets are on lease velopment version 4 (Global reporting and concession. initiative, GRI G4) and the Company’s corporate management procedures. The probability of discrepancies of quantitative data for each category of indicators on sustainable development is minimized. Dependencies and specif- ic values are supplemented by absolute values. Quantitative data are reflected using a standard system of units and were calculated by using standard co- efficients. ANNUAL REPORT 2015 VOLUME 1 06 Message from the Chairman of the Board of Directors 02 MESSAGE FROM THE CHAIRMAN OF THE BOARD OF DIRECTORS costs were undertaken; as a result of which operational profit reached 46 0 bn. tenge, which is only 3% lower than the level in 2014. The consolidated total loss amounted to 77.8 bn. tenge, which is in part explained by the reflection of expenses based on currency difference. The Board of Directors of Sam- ruk-Energy JSC continue to aim at establishing an efficient operating 2holding and position as a leader in BEKTEMIROV KUANYSH Kazakhstan’s market, as set out in the ABDUGALIYEVICH Company’s long term development strategy from 2015-2015. The compa- Chairman of the Board of Directors of Samruk-Energy JSC ny’s mission is the creation of value for its shareholders, employees and the company, as a high-technology Dear readers guarantor of power supply in Kazakh- 2015 was a year full of contrast- stan and as a Eurasian supplier, guid- ing events which influenced a num- ed by the principles of environmen- ber of our decisions. In the context tal protection and lean production. of the global economic recession, the The company’s main development management needed to respond in a focus is the construction of “green” timely manner. In a market environ- energy facilities. Samruk-Energy JSC as ment of some stress – falling con- the largest power supplier in Kazakh- sumption, following an over-supply of stan’s market and plays akey role in im- power, demand for coal, and currency plementing plans towards the creation exchange corridor – stimulated the of a low-carbon economy. Technology use of business reserves and capacity. transformation in the Samruk-Ener- On behalf of the Company’s Board of gy Group of Companies will provide Directors, I would like to note the high a ten-fold increase of RES share in points of our work during 2015. In order generating capacity structure by 2025. to improve the efficiency of the com- pany’s activities a number ofactions to optimize operational and investment SAMRUK-ENERGY JSC Message from the Chairman of the Board of Directors 07 In the near future it is important issue will be proposed within the ini- to implement several large projects tial allocation in Kazakhstan’s market. in hydro- and wind- generation de- Current economic trends serve velopment in Almaty, and to bring in to highlight the timely start of the additional investment. The Signal for Transformation program. Our trans- new green energy formation program will