eastcomtrans llp annual report for 2014 year - rns · pdf file• key highlights 2014. ......

Eastcomtrans LLP

Annual report

for 2014 year

Content

1. Company overview • General information

• Vision, mission, and strategy

• Message from the CEO

• History of development

• Supervisory Board

• Key highlights 2014.

• Operational activity • Transport network of Kazakhstan

• Types of cars

• Railway freight industry and trends

• Structure of Kazakhstan rolling stock fleet

• Railway freight transportation demand in Kazakhstan

3. Financial activity • Financial and economic indicators

• Analysis of financial and economic activity

4. Risk factors

5. Social activity

6. Corporate Governance • Corporate governance

• Organizational structure

7. Financial statements

8. Additional information

2

General information

► Company was founded in 2002 as Limited Liability Partnership

► Structure of Ownership:

− Mr. Marat Sarsenov – 55,998%;

− Steinhardt Holding N.V. – 37,332%. (Netherlands)

− International Finance Corporation – 6,67% (USA)

► Company provides following types of services:

− Freight forwarding services;

− Leasing of private car fleet;

− Technical maintenance of the rolling stock;

− Tank wagon cleaning;

− Transshipment services at Aktau sea port;

− Multimodal forwarding;

− Leasing of wagons.

► As of 31, December 2014 own rail fleet made up to 12 035 wagons.

► Total capital investments for the 2002-2014 exceeded $720 ml.

► Total staff of 153 employees, including 50 administrative and managerial staff, and 103 – maintenance personnel.

► Head office is located in Almaty. Representative offices are located in Karaganda, Pavlodar, Atyrau, Shymkent, st. Zashita and Dostyk and branches in Astana and Aktau.

General information

3 3

Vision:

Eastcomtrans LLP is a leading private operator of railcars in Kazakhstan,

strong player on international cargo shipment market. Company provides full

range of high-quality transportation and logistics services due to its own

transport infrastructure, high professionalism of personnel and advanced

control management system. Final goal of management is to create largest,

regional, vertically integrated holding entity in Central Asia region.

Company overview

Mission:

Mission of Eastcomtrans LLP reflects its infrastructural purpose, which is to

provide clients with competitive, high-quality and modern transportation

services of industrial goods, thereby contributing to economic and

transportation development of the country.

Strategy:

To increase Company‟s added value by 2018 due to business diversification

and growth of economic efficiency.

Membership in associations:

Eastcomtrans LLP is a member of the Association of National Freight

Forwarders of Kazakhstan, Kazakhstan Association of Operators of carriers and

Railcars, and an individual member of the International Federation of Freight

Forwarders Associations (FIATA).

4

«Teamwork will empower us to achieve even more success!»

Message from CEO

5

We are pleased to welcome you on behalf of Eastcomtrans LLP, the biggest railcar operator on the transport market in the

Republic of Kazakhstan.

Our Company has been active in transport market for more than 12 years. Nowadays, Eastcomtrans is one of the most

acknowledged leaders on Kazakh transport market, providing full range of rail transportation services. The modern fleet

allows us to provide maximum effective services to our clients. Quality of our services has been recognized by large

Kazakh and global entities, since our Company‟s objective has been and always will be building solid reliable relationship

with our clients. Thanks to that, our Company regularly increases its shipment volumes and renews its car fleet.

We are certain that our teamwork will empower us to achieve even more success!

6

Message from CEO

History of development 2002- 2004

Establishment of the

Company

2005-2007

Growth of railcar fleet and

diversification of

operational activity

2009

Growth of railcar fleet Growth of railcar fleet.

Receipt of credit rating

2008

Diversification of financial

partners and business

processes‟ optimization

2011-2012

Switching to international

finance resources. Growth

of fleet. Improvement of

ratings.

• A group of private

investors founded

Eastcomtrans LLP.

• The Company signed a

loan agreement with

"BTA Bank“ for 10-

years credit facility.

• Signed the very first

contract on railcar lease

with Tengizchevroil.

• Signed first contract with

"Azovmash“ and

“Uralvagonzavod“.

Purchased first lot of

500 oil tanker cars.

• The period of an intense

operational portfolio

diversification. Signed

lease and forwarding

contracts with CNPC,

Turgay Petroleum,

Matin, Karakudukmunai,

KuatAmlon, etc.

• Within 3 years Company

increased its fleet size up

to 1700 cars.

• Financial statements

were transferred to IFRS.

• Financial audit was

provided by PWC.

• During the World

financial crisis period,

the Company makes

emphasis on the local

development institutes,

signing three lease

agreements with KDB-

Leasing.

• As of December 31,

2009 the Company's

railcar fleet amounted to

2822 units.

• For the very first time

signed a 3-year contract

with TCO.

• Total fleet size achieved

2 822 cars by the end of

2009.

• The Company becomes

an individual member of

FIATA (International

Federation of Freight

Forwarders

Associations).

• Signed a 7-year contract

with «Zhaykmunai" on

oil and gas tanker cars‟

lease in Chinarevskoe

oil field.

• Fitch Ratings assigned

the Company term

issuer default rating at

«B-» on international

scale. Outlook is

“Stable".

• 2010 was the year of the

largest car fleet growth

after 3,076 cars were

purchased. The total

fleet of cars reached

5901 units.

• In accordance with the

auditor rotation policy,

in 2010 the Company

switched to Deloitte in

audit of financial

indicators.

• The partnership with

Raiffeisen-Leasing

Kazakhstan was started.

• Successfully completed

ISO audit.

• Started an intense

diversification of the loan

portfolio.

• Signed a $25 ml. loan

agreement with «HSBC

Kazakhstan.“ to

refinance part of the debt

to BTA.

• Signed $100 ml.

Tranche-A syndicate

facility with BNP

Paribas. Loan was used

to fully refinance BTA

loan and to purchase

new cars.

• The company started to

diversify types of

transportation services,

focusing on the mining

sector.

• Fleet amount increased

to 9782 units.

• Fitch Ratings upgraded

the corporate rating from

«B-» to «B / Stable» - on

the international scale.

• Contracts with TCO

resigned for the new 4-

year term and transited

into U.S. dollars.

• Eastcomtrans had

become the largest

operator for TCO.

Увеличение парка

вагонов и улучшение

кредитного рейтинга

• IFC had become the new

shareholder for ECT

with 6.67% stake in

equity.

• The Company has

successfully completed a

debut 5-year $100ml.

Eurobonds emission on

the London Stock

Exchange at 7.75%

coupon yield.

• 1402 wagons were

purchased. The total

fleet size had achieved

11,184 units.

• The second rating from

Moody's Investor

Service at "B3“/Stable

was assigned.

• Signed the contract for

the financial statements

audit with KPMG.




• In 2014, Gazprombank

provided a 9-year loan

of $ 50 million, which

were used to purchase

853 cars.

• Moody's Investor

Services raised its

forecast for all of the

company's ratings from

"stable" to "positive."




Growth of fleet.

International projects

implementation. Status of

international corporate.

Growth of fleet and ratings

2010 2013 2014

7

Supervisory Board

8

Vadim Malakhov

Head of Supervisory Board

Head of Supervisory Board since June

2015. Mr. Malakhov graduated from

Kazakh Polytechnic Institute in 1982,

majoring in geochemistry.

From 1996 to 1998 he was a Head of the

company responsible for the quality –

“BEST” LLP. From 2002 till 2015 Mr.

Malakhov has been the General Director

of “Eastcomtrans“ LLP.

Ekaterina Benjamin

Independent Director

of Supervisory Board

was appointed as an Independent

member of the Supervisory Board in

December 2014. Mrs. E. Benjamin has

an extensive experience in financial

institutions such as Citibank

Kazakhstan, Bank Petrocommerce,

Kazinvestbank, HSBC Bank

Kazakhstan, Altyn Bank; From 2005 till

2011, Mrs. Benjamin has been an

Independent Director at Visor Capital,

"Kazakhmys“ Pension fund,

Altaypolimetal.

Yuri Lavrinenko



was appointed as an Independent


2013. Mr. Lavrynenko holds a Ph.D. in

economics. Since 2010, Mr. Lavrynenko

served as Advisory to KTZ President.

Mr. Lavrinenko was the General

Director of

«KamkorRepairCorporation» from 2007

to 2008, Managing Director of the

branch of KTZ from 2006 to 2007, the

First Deputy Minister of Transport and

Communications of the Republic of

Kazakhstan from 2002 to 2006 and

Deputy Speaker of Majilis of

Kazakhstan from 1999 to 2002.

Mikhail Kuznetsov



was appointed as an independent


May 2015. Mr. Kuznetsov (Ph.D.) and

holds a «Chartered Director" of the

British Institute of Directors cum

Executive MBA IE Business school

(Madrid). Mr. Kuznetsov held senior

positions in companies "Aviacor",

"LUKOIL-Volga", "Promsvyaz" and

"The International Finance Corporation»

(IFC). Currently, Mr. Kuznetsov is an

Independent director on the Board of

Directors of "Energosetproject“JSC, of

"Echo" (Roscosmos), "Credit Bank of

Moscow" JSC. He is also the CEO and

managing partner of Corporate

Development Center, and the executive

director of the Association of Corporate

Directors.

Key highlights in 2014

On February 11, 2014 the National Bank of Kazakhstan has devalued tenge by 18.9 percent. Tenge exchange rate increased from

155 to 185 per dollar.

Country Conditions:

Gross revenue in 2014 has grown to USD 174 923 ml.

EBITDA achieved USD 130 883 ml. in 2014

EBITDA margin comprised 75% in 2014

Financial highlights:

GazPromBank: Company disbursed a 9-year loan from GazPromBank JSC in the amount of $50 million with interest rate of

margin 6,5% + 1m LIBOR, tenor 7+2years.

Al Hilal provided 5-year loan in the amount of $34,5 million with interest rate 6,5 in USD and 8,25 in KZT. The received funds

were used to fully refinance of loan with HSBC Bank Kazakhstan.

EBRD: Company signed Term Sheet with EBRD in the amount of $140 million.

Borrowings:

Corporate rating: Fitch: June 03,2014 Fitch Ratings re-confirmed the corporate Eastcomtrans LLP long-term issuer rating at the level B on the

international scale. National scale rating was also increased from B + to BB, with a rating outlook "stable.“

Moody’s: July 10, 2014 Moody's Investors Service has changed to “Positive” from “Stable” the outlook on Eastcomtrans LLP's

B3 corporate family rating (CFR), B3-PD probability of default rating (PDR), B3.kz national scale rating (NSR) and the B3 senior

secured rating assigned to the company's $100 million five-year notes, with a loss given default (LGD) assessment of LGD3/49%.

Concurrently, Moody's has affirmed these ratings.

Acquisition of rolling stock : In 2014 the Company signed contracts for the purchase of 853 wagons, including:

200 Hoppers;

400 Covered wagons;

153 Open top;

100 Dump cars.

Supervisory Board 1. Mr. Vadim Malakhov – Head of Supervisory Board

2. Mrs. Ekaterina Benjamin – Independent Director of Supervisory Board

3. Mr Yuri Lavrinenko – Independent Director of Supervisory Board

4. Mr. Mikhail Kuznetsov – Independent Director of Supervisory Board

25.12.2014 Mrs. Ekaterina Benjamin was appointed as Independent member of the Supervisory Board, succeeding Mr. Adilzhan

Kozhabergenov.

19.05.2015 Mr. Mikhail Kuznetsov was appointed as Independent member of the Supervisory Board.

01.06.2015 Mr. Vadim Malakhov was appointed as Chairman of the Supervisory Board, succeeding Mr. Marat Sarsenov.

9

Operational activity

10

Transport network of Kazakhstan

Transport sector in Kazakhstan is of a significant importance. Vast territory of 2.7

million km², low density of population, long distances between industrial and

agricultural centers, as well as remoteness from world markets, makes developed

transportation system vital for Kazakhstan.

Railway is the main mode of long distance cargo shipment in Kazakhstan. Large

area, and high level of export, import and transit of goods makes railway transport

absolutely essential element of the whole Kazakh economics.

There are 16 boarder points (11 with Russia, 2 with Uzbekistan, 1 with Kyrgyzstan,

2 with China), which connect Kazakh railway network with neighboring countries.*

Management is carried out by Kazakhstan Temir Zholy National Company JSC

(KTZ). KTZ has railway network on its the balance sheet. Part of network is

managed by railway administration of Russian Federation and Kyrgyzstan.

Rail network of Kazakhstan

11

Kazakhstan has an extensive railway network with total length of approximately 15 thousand km, 6000 of which being double track, and about 5000 being electrified. Spread

out length of main ways comes up to 18.8 thousand km; station and specialized tracks - up to 6.7 thousand km. The value of rail transport in Kazakhstan is very large. More

than 68% of total turnover and more than 57% of the country's passenger traffic accounts for the railways. Railway industry employs more than 125,000 people, which comes

up to nearly 1% of whole population of Kazakhstan.

The share of transport in GDP amounts to 7.4%. The share of rail transport in total freight traffic of the country - 8.27%. At the same time, 48% of revenue of freight traffic

and 29% of passenger traffic accounts for railway enterprises from all the revenues of transport enterprises of the state.**

Source:Internet

* Source: https://ru.wikipedia.org

**Source: Agency of statistics of the RK

• Average lifetime – 40 years

• Average capacity – 40 tons

• Average tank volume – 76

m3

• Max speed – 120 kmp/h

• Used for transportation of

liquefied petroleum gases

(LPG) and light

hydrocarbons

Types of cars

• Average lifetime – 32 years

• Average capacity – 60 tons

• Average tanker volume –

73 m3



oil and refined products

(light refined products,

viscous refined products,

petrol)

Oil tanker car (RTW) Gas tanker car (RTW) Gondolas

• Average lifetime – 22

years

• Average capacity – 74

tons



bulk cargo (ore, coal, etc.)

Technical specifications: Technical specifications: Technical specifications:

Hoppers Platforms Dumpcars


years

• Average capacity – 72,5

tons



cement

Technical specifications:


years


tons



containers



years


tons



bulk cargo (ore, coal, etc.)


12

Freight shipment market of Kazakhstan

13

Railway freight industry and trends

Due to its economic and geographical characteristics, Kazakhstan is considered to be one of the most cargo intensive

economies in the world, which makes the country highly dependent on its transportation system. Dynamic trade relations

with Asia, CIS countries and Europe create highly potential transit opportunities.

Railway is the main mode of freight transportation over long distances in Kazakhstan. A vast territory and high level of

export, import and transit of goods makes the railway transport an important element of the entire economy. As of the

end of 2014, the operating length of railways amounts to 15,341 km, around 5,000 km of which were electrified.

In 2014 the railway transport accounted for 8% and 44% of the county‟s freight transportation and freight turnover,

respectively. While railway freight may take a smaller percentage of the total, it functions as a freight link between

Kazakhstan and its neighbors. In fact the development of the Asia-Europe land bridge, a project to link Asia with Europe

via rail, stands to benefit Kazakhstan's railway freight sector.

Kazakhstan's railway freight network operates on the broad gauge system, of which around 26% is electrified. As such,

the country's rail network links in with those of Russia, Kyrgyzstan, Turkmenistan and Uzbekistan. For railway freight to

enter or exit China, gauges must be changed, as China operates on the standard rail gauge system. Such gauge

differences between neighboring countries' networks creates difficulties and delays.

Automobile transport dominates Kazakhstan freight mix mainly because transportation of all type of cargos over short

distances is performed by land transport. Railways are limited to freight to its final destinations – railway stations. After

the cargo reaches the station, all other transportation is performed by road transports. Road freight has been growing with

CAGR of 12% since 2009, and is to continue to dominate the sector and is projected to grow by 11% in 2014. The length

of public motor roads is 96,873 km, 89% of which is paved.

• Road transport is less engaged in transportation of oil and coal, due to its inefficiency and high costs. Thus,

during 2014, 87% of coal was transported via railways and 98% of oil was transported via pipelines and

railway.

The pipeline network in Kazakhstan, developed as part of the Soviet system, was designed to optimize oil and gas

transportation to and from Russia, rather than within Kazakhstan. In the years following the collapse of the Soviet Union

in 1991, all oil and gas exports had to pass through the Russian pipeline network, meaning that Kazakhstan's northern

neighbor was able to control its hydrocarbon exports.*

Freight transportation structure in Kazakhstan, 2014

Freight turnover structure in Kazakhstan, 2014

Source: Agency of statistics of the RK

*Source: Agency of statistics of the RK

8%

86%

6%

0%

Railway Automobile Pipeline Other

44%

32%

23%

1%

Railway Automobile Pipeline Other

14 Source: Agency of statistics of the RK

Railway freight industry and trends • With the trans-Caspian tanker and rail exports and the development of an oil pipe route to China,

Kazakhstan has slowly reduced its reliance on Russia. Nevertheless, the vast majority of exports

continue to transit via Russian territory. Gas is currently only exported to Russia, although exports to

China are being targeted for the future. Since 2009, pipeline transportation in Kazakhstan has been

growing with CAGR of 7%.

• Growing oil and gas production is driving new capacity expansion projects. Existing infrastructure is

either being rehabilitated or expanded, while new pipeline projects are underway to enable increased

exports and domestic distribution.

Sea freight is concentrated at the Caspian region and mainly associated with development of oil and gas

industry in Kazakhstan.

• The two main ports in Kazakhstan are Aktau on the Caspian Sea and Semey on the Irtish river in the

northeast of the country. As part of the Kazakhstan Caspian Transportation System (further “KCTS”)

project (discussed further in Railway freight transportation demand), Kazakhstan could expand its port

facilities, boosting capacity at Aktau and building a new port at Kuryk. Under the KCTS concept, these

two ports would also be linked by pipeline to key oil fields in western Kazakhstan. Smaller facilities at

Atyrau and Bautino are used to support offshore operations in the Caspian Sea.

Air freight transport comprises less than 1% of total freight turnover in Kazakhstan.

Transportation volumes in Kazakhstan

Freight turnover in Kazakhstan, bln ton-km



248 268

280 295 294 273

1688

1972

2476

2718

2983 3134

163 194 214 213 226 221

0

500

1000

1500

2000

2500

3000

3500

2009 2010 2011 2012 2013 2014

mln

to

nn

es

Railway Automobile Pipeline

198 213

224 236 231

214

66 80

121 132

145 158

72

89 101

107 116 116

0

50

100

150

200

250

2009 2010 2011 2012 2013 2014

mln

to

nn

es

Railway Automobile Pipeline

15

Structure of Kazakhstan rolling stock fleet Since the collapse of USSR, subsidiary of KTZ, Kaztemitrans JSC (further “Kaztemirtrans”), has dominated the rails freight market after inheriting more than 100,000

railcars. Due to poor economic situation in Kazakhstan in 1990‟s, under-investment into renewal of wagon fleet led to their aging and gradual write-off. The graph below

provides the comparison number of private and Kaztemirtans‟ freight cars.

Kaztemirtans‟ underinvestment is aggravated by regulation of tariffs by Antimonopoly Agency due to its dominating position in the market, and limits its ability to earn higher

profit margins compared to private sector.

After economic revival in the beginning of 2000‟s and reforms undertaken by the government in the rail sector, the number of railcars operated by private companies boosted

significantly.

The Restructuring Program of Railway Transport of the RK (the reform launched in early 2000s) was aimed to commercialize freight railways sector and allow private

companies to enter the market and bring additional investment into the industry.

Nevertheless, starting from 2005, Kaztemirtrans started renewing its wagon fleet backed up by borrowings from third parties and its parent company KTZ.

Boosting economy and deregulation of the railway sector created opportunities for the private operators due to deficit of the freight railcars. As a result major part of private

operators was established showing CAGR of 17.6% from 2002 to 2014. In 2014 the share of private operator reached almost 54% (71,351 out of 132,291 units) compared to

10% (11,300 out of 109,600 units) in 1995.*

Structure of Kazakhstan rolling stock fleet

98,3 98,3 93,1

89,9 88,1

78,5 77,6 77 70,4

60,8 56,8 56,9

61,5 59,8 60,6

53,1 55,9

66,5 65,8 60,9

11,3 11,3 12,2 10,1 12,6 11,3 8,5 10,7

18,4

26,7 30,1

33,6 34,7 35,2 39,6 43,3

51,9

62,2 63,5

71,3

0

20

40

60

80

100

120

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Kaztemirtrans (inventory) freight cars Private companies' freight cars

16


*Source: Agency of statistics of the RK

Railway freight transportation demand in Kazakhstan

For the period 2009-2014 on average 59% of freight transported by railway is represented by coal, metals and metal ores,

and 12% was represented by construction cargo. Gondolas are the key means of transportation for coal, ores and construction

materials. The share of oil and oil products in railway transportation is around 12%.

Coal

Coal transportation comprises 43% of total volume of railway freight. The largest coal-basins are Karaganda and Ekibastuz

coal fields which account for more than 30% of coal production.

•From Karaganda coal basin, the coal is transported via railway to Russia and within Kazakhstan through the Astana-Almaty

and Zharyk-Dzhezkazgan railway routes;

•From Ekibastuz, the coal is transported via routes that connect stations of Ekibastuz coal fields (route Astana-Pavlodar) and

with internal consumers such as energy generating companies and power plants.

The main importer of Kazakhstani coal is Russia accounting for about 90% of total coal exported from Kazakhstan.

43%

28%

9%

3%

16%

Cargo turnover by railways in Kazakhstan, 2014

Gandolas Tanks Boxcars Platfoms Other



41%

18%

12%

10%

26%

The structure of railway freight transportation by main

cargoes in Kazakhstan, 2014

Coal Ore species Construction freight

Oil and oil products Other

98 104 107 108 102

44 44 46 47 43

33 26 26 45

23

17 28 29

36

35 26

27 25

34

24

0

50

100

150

200

250

300

350

2010 2011 2012 2013 2014

Freight transportation by type of products

Coal Ore species Other Construction cargo Oil and oil products Iron Wheat Chemicals and fertilizers

17


Ferrous and non-ferrous metal ores

Transportation of ore and ferrous metals comprises about 19% and 3% respectively. Iron ore is mainly exported

to Russia and China. Main consumers of iron ore are metallurgical complexes. Non-ferrous metal ore is mainly

transported via domestic routes and consists of bauxite, copper ore, copper concentrate and polymetallic ore.

For metallurgic industry, railway provides the most effective mean of transportation compared to oil and gas

sector, where pipeline transportation is more practical. Therefore, the metallurgic sector is occupied by large

industrial groups having their own transportation facilities. As a result, the sector offers limited opportunities for

third party market players providing rolling stock leasing services.

Construction cargo

Construction materials transportation, which comprises around 16% of railway freight, is mainly linked to

construction projects carried out in Kazakhstan, and is subject to seasonality, with slowdown in December-

February period

Oil and gas

Oil, oil products, LPG and sulphur are the key products transported in Western Kazakhstan as the largest oil and

gas fields are located in this area. These fields include Tengiz, Karachaganak, Kisimbai, Zhetybai, Tenge and

other.

• Around 80% of all transportation is made via pipelines and a relatively small portion of produced oil

and oil products (15%) is transported by railway.

Coal Ore and metals Oil and gas

Bogatyr Komir Kazzinc Tengizchevroil (TCO)

Kazakhmys Kazakhmys CNPC-AktobeMunaiGas

(Zhanazhol, Kenkiyak )

ENRC ENRC MangystauMunaiGas (Asar,

Zhetybai, Bekturly, other)

ArcelorMittal

Temirtau

ArcelorMittal

Temirtau

KazGerMunai (Akshabulak,

Nuraly and Aksai)

KSP Steel KazMunayGas Exploration and

Production (Uzen)

Frontier Mining Karachaganak Petroleum

Operating (Karachaganak)

Sunkar

Resources Zhaikmunai

Key goods transported by railway by companies



13 14 14 12 13

64 66 67

66 67

0 0 0

1 2

0

10

20

30

40

50

60

70

80

90

2010 2011 2012 2013

mlm

to

nn

es

Transportation of oil

Railway Pipelines Other

18

Gauge differences between Kazakhstan and Chinese rail network created difficulties and delays in transportation

of oil. This problem was tackled by the Dostyk JV (PetroKazakhstan), which constructed an oil terminal worth

USD 22.5 million with an annual capacity of 1.2 mln tons at Druzhba station (border with China). Test cargoes

began in mid-2000s and China began importing Kazakh crude from CNPC's AktobeMunaiGas fields and

PetroKazakhstan's Kumkol operations in 2003. The commissioning of the Kazakhstan-China oil pipeline in 2006

removed the need for rail exports to China.

Despite the inevitable restrictions of Kazakhstan's single gauge network, estimates suggest that the country has

the capacity to export 15-17 mln tons of oil by rail. However, actual volumes are believed to be much lower

(around 12-13 mln, please see adjacent graph). TCO, being the largest user of the rail network, has facilities to

load 11.3 mln tons of oil directly onto railcars at Tengiz for export via Russian and Ukrainian Black Sea ports.


Kashagan 6

(Reserves –12,580 mln. barrels

in oil equivalent)

Karachaganak 4


in oil equivalent)

Tengiz 2


in oil equivalent)Uzen3


in oil equivalent) Kalamkas and Zhetibay5


in oil equivalent)

Chinarevskoye 7

(Reserves –459 mln. barrels

in oil equivalent)

Zhanazhol and Kenkiyak 8


in oil equivalent)

Review of the key oil & gas fields in Kazakhstan by reserves 1

Notes to graphic

1.2P: Proven and probable reseves

2.Chevron, ExxonMobil, NC KMG, LUKOil

3.NC KMG

4.BG, Chevron, LUKOil, Eni, NC KMG

5.NC KMG, CNPC

6.Eni, ExxonMobil, NC KMG, Shell, Total, CNPC, INPEX

7.Zhaikmunai

8.CNPC AktobeMunaiGaz Source: Ministry of Oil and Gas of the RK, MEMR

48 49 47 46 44 42 40 38

34 35 33 36 38 41 43 43

12 12 11 11 10 9 8 9

7 13 15 15 15 15 16

0

20

40

60

80

100

120

2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F

mln

to

nn

es

Forecasted liquid production, 2015-2020

Other Tengiz Karachaganak Kashagan

19

Source: Internet

Financial Activity

20

Financial Statements: Balance Sheet (audited)

(KZT '000) 2008 2009 2010 2011 2012 2013 2014

Assets

Non-current assets

Property, plant and equipment 18 808 800 17 819 052 49 515 217 75 659 512 94 005 283 99 312 832 105 242 701

Long-term financial investments 3 722 581 4 206 585 19 281 22 464 314 109 115 163 23 997

Other non-current assets 678 469 642 088 1 636 995 4 096 312 51 527 48 263 44 798

Total non-current assets 23 209 850 22 667 725 51 171 493 79 778 288 94 370 919 99 476 258 105 311 496

Current assets

Inventories 10 082 8 012 40 866 62 278 68 478 79 185 93 774

Loans receivable 353 098 1 241 216 10 427 19 290 18 422 12 274 175 257

Trade and other receivables 2 442 109 1 388 964 2 031 584 2 166 373 3 722 031 5 138 954 6 900 135

Advance payments 137 158

- 505 347 689 647 680 621 2 989 141 1 837 775

Cash and cash equivalents 275 024 1 008 018 3 171 423 2 052 467 1 050 814 3 553 671 5 437 405

Total current assets 3 217 471 3 646 210 5 759 647 4 990 055 5 540 366 11 773 225 14 444 346

Total Assets 26 427 321 26 313 935 56 931 140 84 768 343 99 911 285 111 249 483 119 755 842

Equity and liabilities

Equity

Charter capital 840 000 840 000 840 000 840 000 840 000 3 845 400 3 845 400

Revaluation reserve on Property, plant and equipment 5 409 445 4 415 488 15 801 863 14 955 611 14 166 827 13 465 803 12 614 011

Retained earnings 3 677 771 5 018 040 8 761 111 13 584 322 19 451 800 26 809 948 28 370 829

Unpaid capital -207 460

- -

- - - -

Total Equity 9 719 756 10 273 528 25 402 974 29 379 933 34 458 627 44 121 151 44 830 240

Liabilities

Borrowings 14 191 741 13 739 679 24 365 305 47 127 311 55 459 394 56 132 752 63 576 739

Deferred income tax liabilty 1 761 886 1 747 578 5 972 022 6 751 301 7 830 051 9 445 321 9 766 550

Trade and other payables 753 938 553 150 1 190 839 1 509 798 2 163 213 1 550 259 1 582 313

Total Liabilities 16 707 565 16 040 407 31 528 166 55 388 410 65 452 658 67 128 332 74 925 602

TOTAL EQUITY AND LIABILITIES 26 427 321 26 313 935 56 931 140 84 768 343 99 911 285 111 249 483 119 755 842

21

Financial Statements: Income Statement (audited)

(KZT '000) 2008 2009 2010 2011 2012 2013 2014

Revenue 5 256 195 9 150 677 9 806 941 17 050 667 22 476 151 25 512 955 31 897 186

Cost of sales −3 017 971 −3 812 676 −2 037 302 −5 703 716 −8 766 962 −7 709 536 −10 930 694

Gross profit 2 238 224 5 338 001 7 769 639 11 346 951 13 709 189 17 803 419 20 966 492

Gross margin (%) 43% 58% 79% 67% 61% 70% 66%

General and administrative expenses −231 199 −459 984 −831 736 −979 913 −1 127 215 −1 685 002 −2 794 203

EBITDA 3 204 373 6 352 491 7 779 047 13 021 404 17 403 541 21 601 802 23 866 547

EBITDA margin (%) 61% 69% 79% 76% 77% 85% 75%

Depreciation accounting (total) −1 197 348 −1 474 474 −841 144 −2 654 366 −4 821 567 −5 483 385 −5 694 258

EBIT 2 007 025 4 878 017 6 937 903 10 367 038 12 581 974 16 118 417 18 172 289

EBIT Margin 38% 53% 71% 61% 56% 63% 57%

Finance income 504 374 474 302 879 583 101 468 611 116 57 077 35 278

Finance costs −1 518 437 −4 115 842 −2 003 072 −4 648 570 −5 380 377 −6 115 362 −14 571 996

Other Operating Expenses 681 585 70 010 −47 449 −13 674 −262 032 188 064 −91 662

Profit before income Tax 1 674 547 1 306 487 5 766 965 5 806 262 7 550 681 10 248 196 3 543 909

Income Tax 12 327 −388 978 −1 377 527 −1 178 736 −1 546 482 −2 090 022 −795 277

Net Income 1 686 874 917 509 4 389 438 4 627 526 6 004 199 8 158 174 2 748 632

Net Income margin (%) 32% 10% 45% 27% 27% 32% 9%

22

Financial Statements: Cash Flow Statement (audited)

(KZT '000) 2008 2009 2010 2011 2012 2013 2014

Cash generated from operations −687 033 5 717 844 9 182 676 13 513 891 11 625 837 14 074 136 15 534 705

Cash flows from investing activities −6 746 168 −205 847 −13 155 750 −31 058 765 −18 751 655 −14 678 684 −11 398 871

Cash flows from financing activities 6 777 660 −4 779 003 5 900 479 16 015 062 6 716 598 830 560 −3 504 753

Net change in cash and cash equivalents −655 541 732 994 1 927 405 −1 529 812 −409 220 226 012 631 082

Cash and cash equivalents at the beginning of the year 930 565 275 024 1 008 018 2 935 423 1 424 635 1 050 814 1 257 028

Cash and cash equivalents at the end of the year 275 024 1 008 018 2 935 423 1 424 635 1 050 814 1 257 028 2 155 105

23

24

Total revenue in 2014 reached 31 897 mln tenge ($174.9 mln at the exchange rate of the National Bank of Kazakhstan at the end of the year), which is higher than in 2013 by

25% in tenge and 6% in dollar terms.

Analysis of financial-economic activity

9 151 9 807 17 051 22 476 25 513 31 897

61,7 66,5

114,9

149,1 165,6

174,9

2009 2010 2011 2012 2013 2014

Revenue, mln tenge Revenue, $ mln

The dynamics of total revenue for 2009-2014.

Comparative structure of total revenues, the 2013-2014.

79% 73%

16% 23%

5% 4%

2013 2014

Rent Operating Forwarding

Summary measure of total revenues in 2014 included proceeds in the following areas:

Revenue from rent of cars amounted to 23 227 million tenge (+ 16% year-to-g, 73% of total revenue).

Revenue from operating was 7 293 million tenge (an increase of 83% from the 2013, 23% of total revenue).

Revenue from freight forwarding and transshipment of cargo amounted to 1 295 million tenge (-1% year-to-g, 4% of total revenue).


25

Revenue from other services in 2014 amounted to 83 million tenge ($ 0.5 million, -41% year-to-r) and its share in total revenues is negligible (-0.3% in 2014 against -0.5%

in 2013).

Cost of sales in 2014 were 10 931 million tenge ($ 59.9 million), higher than the previous year by 42% in tenge and 20% in dollar.

3 813 2 037 5 704 8 767 7 710 10 931

25,7

13,8

38,4

57,0

50,0

59,9

2009 2010 2011 2012 2013 2014

COGS, mln KZT COGS, $ mln

Dynamics of production costs (COGS), 2009–2014 гг. Comparative structure of production costs, 2013–2014

70% 52%

17%

24%

4% 8%

4% 4%

5%

2013 2014Depreciation Repair

Use of railway infrastructure Payroll expenses

Wagons lease Other

Cost items Revenue (mln KZT),

2014

Revenue (mln KZT),

2013 growth rate, y-to-y Share, 2014 Share, 2013

Difference,

y-to-y

Depreciation 5 631 5 415 4% 52% 70% −18 п.п.

Repair of wagons 2 671 1 299 2,1х 24% 17% +7 п.п.

Use of railway infrastructure 906 344 2,6х 8% 4% +4 п.п.

Wagons lease 514 13 39х 5% 0,2% +~5 п.п.

Payroll expenses 415 288 1,4х 4% 4% –

Insurance of wagons 109 109 – 1% 1% –

Other 685 242 2,8х 6% 4% +2 п.п.

Total 10 931 7 710 42% 100% 100%

In 2014, the total production cost structure has undergone several changes - decreased the proportion of depreciation, increased the cost of repair of rolling stock and the cost

of renting:


26

Total financial expenses were 14 572 million tenge ($ 79.9 million), an increase of 2.4 times in tenge and 2 times in dollar


2014

Revenue (mln KZT),

2013 growth rate, y-to-y Share, 2014 Share, 2013 Difference

Expenses on compensation 5 820 5 112 14% 40% 84% −44 п.п.

Negative exchange rate. 8 752 1 003 8,7х 60% 16% +44 п.п.

Total 14 572 6 115 2,4х 100% 100%

Made payments to reimburse interest remuneration to financial institutions (BNP Paribas, HSBC Bank Kazakhstan "ATF Bank», IFC, Eurobonds, "Gazprombank», Al Hilal

Bank) and leasing companies ("Raiffeisen Leasing", "DBK-Leasing") for the received loans and credits.

Financial income in 2014 amounted to 35 million tenge against 57 million tenge a year earlier ($ 0.19 million and $ 0.37 million respectively), the rate of decline in tenge

made up 38%.

100; 29%

75; 21%

50; 14%

32; 9%

29; 8%

27; 8%

17; 5%

16; 5% 3; 1%

Eurobonds

BNP Paribas

Gazprombank

Al Hilal Bank

EBRD

IFC

KDB Leasing

ATF Bank

Raiffaisen Leasing

The structure of the loan portfolio, the end of 2014 ($ million and the share in the total portfolio)

Long-term and current financial debt of the Company at the end of

December 2014 amounted to $ 349 million (versus $ 364 million at the

beginning of the year, -4.3% year-to-r). The loan portfolio of the company

includes the following obligations to the financial institutions:

To the short-term portion of the debt accounted for about 15% of the total

loan portfolio, the long-term - 85%. The proportion of national currency

loans was 18%, the remaining 82% are denominated in US dollars. The

weighted average rate on the loan portfolio at the end of December 2014

amounted to 7.31% per annum.

General and administrative expenses in 2014 amounted to 2 794 million tenge ($ 15.3 million), + 66% y-to-y in tenge and 40% in US dollars

The main reasons for the growth of this group of expenditures in 2014 are large payments on insurance risks and unresolved offset VAT.


2014

Revenue (mln KZT),

2013 growth rate, y-to-y Share, 2014 Share, 2013 Difference

Payroll expenses 915 920 −1% 33% 55% −22 п.п.

Insurance of risks 946 0 − 34% − +~34 п.п.

Taxes other than CIT 325 47 7х 12% 3% +9 п.п.

Office rent 123 112 9% 4% 7% −3 п.п.

Other 485 606 −20% 17% 35% −18 п.п.

Total 2 794 1 685 66% 100% 100%


27

Net profit at the end of 2014 was 2 749 million tenge (-66% year-to-r), which is explained almost ninefold increase in foreign exchange losses (8 752 million tenge in 2014

to 1 003 million tenge a year earlier) due to the 19% depreciation of the tenge against the US dollar in February 2014. In dollar terms, net income was $ 15.1 million (-72%

year-to-year).

The Company's EBITDA in 2014 increased by 10% in tenge and amounted to 23 867 million tenge, in US dollars, this indicator decreased by 7% to $ 140.2 million in 2013

to $ 130.9 million in 2014. The EBITDA margin was 75% (-10 pp. y to-y).

Formation of EBITDA, 2014. ($ Mln)

130,9

59,9

15,3 31,2

Total revenue COGS SGA DDA EBITDA

174,9

Cash at the end of 2014 amounted to 2 155 million tenge ($ 11.8 million, + 71% y-to-y), the amount of funds on deposit grew by 43% and reached 3 282 million tenge ($

18.0 million). Thus, the total amount of Company‟s Cash for the year amounted to ~ $ 29.8 million.

Capital expenses in 2014 were 10 184 million tenge ($ 57 million, -18%), which mainly focused on the purchase of new rolling stock (see. Section "Park of cars").

Key financial covenants:

Covenant Required Level Indicator in 2014 Compliance with

the requirements

Current Ratio Min 0,75 1,3

Net Debt / EBITDA Max 3,75 2,4

Debt Service Coverage

Ratio Min 1,2 2,3

Tangible Net Worth Min $90 mln

(16 412 mln KZT)

$176 mln

(32 086 mln KZT)

Risk factors

28

Demand

In Kazakhstan over 60% of goods transported by rail are raw materials in mining manufacturing (coal, ore, petroleum, nonferrous and ferrous metals). In this regard, the

demand for different types of cars is largely determined by trends in the development of relevant industries. Cargo owners prefer leasing cars, not wishing to have their

property in order to reduce the risk of downtime and protect themselves in the event of short-term contracts.

The need for tank wagons for the transportation of oil and LPG is directly dependent on the global demand for oil and gas production from oil and gas pipelines and power

available in the Republic of Kazakhstan.

Kazakhstan's oil reserves are estimated at about 30 billion barrels, 77% of which are located in three major fields - Kashagan, Tengiz and Karachaganak. (Other key fields

include: Uzen Zhetybai, Janajol, Kalamkas, Kenkiyak Karanzhanbas, Kumkol North Buzachi, Alibekmola Central and Eastern Prorva Kenbai, Royal).

It is expected that from 2015, oil exports from Kazakhstan will grow by more than 8% per year due to increased production volumes in key fields.

It is projected that by 2020 Kazakhstan's oil production will reach 145.7 million tons a year, while export is more than 80%. Domestically, oil will be transported to

refineries and petrochemical plants for the subsequent production of petroleum products.

Competitors

The company faces strong competition in the transportation of oil and petroleum products as a result of the development of a network of pipelines in Kazakhstan and the

countries bordering with Kazakhstan, as the transportation of crude oil by pipeline is more cost-effective and cost-effective than rail.

Kazakhstan and Russia use the same railway gauge. In Russia there is an excess of rolling stock, whereas in Kazakhstan - deficit. In addition, the last 5 years in Kazakhstan

rent rates were higher than in Russia. These factors pose a threat to the emergence of Russian operators in the rolling stock of Kazakhstan, which may lead to increased

competition and lower rental rates.

Risk factors

29

Social activity

30

Social activity

Dental care program "Give a smile“.

In 2014, we continued implementing «Give a smile» program.

The program aims to provide social assistance to children from disadvantaged

groups in the form of assistance in their health care (dental services unwarranted

public services (orthodontics).

Target Audience: orphanages, boarding schools for children from poor families of

Almaty and Almaty region. Beneficiaries are LEU «SOS Children's Village

Almaty" Boarding School № 10 for low-income children, children's home number

2, number 1 Orphanage, NC "family-type children's home" Perzent "Regional and

orphanage.

Timeline for program implementation: 2013-2015.

Project is carried out with the participation of volunteer students from faculty of

Dentistry of Kazakh state University named after Asfendiyarov through practical

workshops on dental hygiene.

31

The "Professional orientation of children”

On 31 March, 2014 was a start date of “Professional world“ project. As part

of that, Viktor Tskhay, Head of repair department of "Eastcomtrans“ met up

with the youngsters to tell them all about working in railway field from A to Z.

Adilzhan Kozhabergenov, CFO of Eastcomtrans spoke about “Financial

management”, having young students deeply interested and involved in an

active dialogue and discussion of an example of equity investments and its

growth.

Introduction to the legal profession was carried out by Maxim Martynovsky,

Chief of legal department of Eastcomtrans in an orphanage №2, Almaty.

Children were very keen on learning more about types, statuses of the

profession, its positive and negative sides. They happily came to conclusion

that to love what you do is essential since people contribute great deal of their

time to work.

Corporate governance

32

Corporate governance

33

General Meeting of Participants

Supervisory Board

Director General

Entry of international strategic investor (IFC) into the Company, its leading positions on the market, emission of Eurobonds at KASE and LSE, geographical expansion of business,

projects for IPO - all these factors contribute to Company's transition to a new level of development. It also applies to importance of more complex and serious issues of corporate

governance, which not only involves adopting a formal approach, but more importantly - implementing principles of corporate governance into practice, including corporate

governance. The Company adheres to the principles of a national code of corporate governance, following the recommendations of international best practices in corporate governance.

The supreme body consisting of Participants or their representatives

The Supervisory Board

is a body of strategic

management and

control of the

Company.

The number of members

of the Supervisory Board

is determined by the

general meeting of

members, but cannot

excess five.

In 2014, the Supervisory Board of the Company consisted of 3 and from 19/05/2015 – of 4 members:

Structure of the Supervisory Board of the Company:

1.Marat Sarsenov - Chairman of the Supervisory Board. Born on June 6, 1967. Has been the Chairman of the Supervisory Board for the

last three years (scope of business – railway transport), until 01/06/2015; the shareholder of the Partnership with 55.998% stake in charter

capital of the Company;

By the decision of the General Meeting of participants dated on 01.06.2015, Mr. Vadim Malakhov, who previously held the position of

General Director of the Company, was elected as the Chairman of the Supervisory Board.

2.Ekaterina Benjamin - Independent Member of the Supervisory Board. Born on January 9, 1974. Mrs. Benjamin has extensive

experience working in financial institutions, such as Citibank Kazakhstan, Bank Petrocommerce, Kazinvestbank, HSBC Bank Kazakhstan,

Altyn Bank. Mrs Benjaminis is not a member of the Company and/or its subsidiaries and affiliates, was elected as Independent member of

the Supervisory board by the decision of the General Meeting of participants from 25.12.2014 instead of Mr. Kozhabergenov Adilzhan

Akhmetzhanovich;

3.Yuri Lavrinenko - Independent Member of the Supervisory Board. Born November 24, 1945. Advisor to the President of “Kazahstan

Temir Zholy" (KTZ) since November 2010; not a member of Company and/or its subsidiaries and affiliates.

By the decision of the General Meeting of participants dated 19.05.2015 the Supervisory board was extended to 4 members and Mr.

Mikhail Kuznetsov was elected as Independent Member of the Supervisory Board. Mr. Kuznetsov held senior positions in such

companies as "Aviacor", "LUKOIL-Volga", "Promsvyaz" and "The International Finance Corporation» (IFC). Currently, Mr. Kuznetsov

is an Independent director on the Board of Directors of "Energosetproject“JSC, of "Echo" (Roscosmos), "Credit Bank of Moscow" JSC.

He is also the CEO and managing partner of Corporate Development Center, and the executive director of the Association of Corporate

Directors.

Mr. Vadim Malakhov had been working as Director General in 2014. Mr. Malakhov was born on August 28, 1960, he held the position of

Director General of the Company from 2002 till 01.06.2015; He is not a member of the Company and/or its subsidiaries and affiliates. By

the decision of the General Meeting of participants dated on 01.06.2015, Mr. Yevgeniy Plakhotin, who previously held the post of the

First Deputy General Director of the Company, was appointed as the Director General of the Company;

The sole executive body

The company continues to introduce some elements of evaluation and monitoring of the internal control and risk management, in particular:

• The Company developed and approved the Rules of internal control on management and use of insider information.

• The Company takes steps to implement the system of IT-incident management control to formalize processing applications received by Information Technology Division

• The Company adopted the Regulations on the insurance policy for creation of insurance to protect property interests of the Company.

• In 2014 the Company adopted and implemented a plan for the development of the corporate governance system, provides for an adjustment of internal documents and

policies, the introduction of the Corporate Secretary, improving the quality of internal control and risk management, information disclosure, the quality of planning and

reporting practices of the remuneration of management and key personnel .

Organizational structure

Director General

Deputy to Director

General for commercial &

manufacturing

Commercial

Department

Representative office in

Astana

Aktau Branch

Finance Department

Administrative

Department

Technical Department

Legal Department

HR Department

IT Department

Logistic Department

34

Financial Statement

35

To the Management of Eastcomtrans LLP

We have audited the accompanying financial statements of Eastcomtrans LLP

(the “Company”), which comprise the statement of financial position as at 31

December 2014, and the statements of profit or loss and other comprehensive income,

changes in equity and cash flows for the year then ended, and notes, comprising a

summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial

statements in accordance with International Financial Reporting Standards, and for

such internal control as management determines is necessary to enable the

preparation of financial statements that are free from material misstatement, whether

due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements 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 financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts

and disclosures in the financial statements. The procedures selected depend on the

auditor‟s judgment, including the assessment of the risks of material misstatement of

the financial statements, whether due to fraud or error. In making those risk

assessments, the auditor considers internal control relevant to the entity‟s preparation

and fair presentation of the financial statements 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 financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our audit opinion.

Independent Auditors’ Report

Opinion

In our opinion, the financial statements present fairly, in all material respects, the

financial position of the Company as at 31 December 2014, and its financial

performance and its cash flows for the year, then ended in accordance with

International Financial Reporting Standards.

Kim Y.V.

Certified Auditor

of the Republic of Kazakhstan,

Auditor‟s Qualification Certificate

No.МФ-0000042 of 8 August 2011

Alla Nigay

General Director of KPMG Audit LLC

acting on the basis of the Charter

36

Statement of financial position

37

In thousands of tenge Note

As at 31

December 2014

As at 31

December 2013

ASSETS

Non-current assets

Property, plant and equipment 6 105.242.701 99.312.832

Intangible assets 44.798 48.263

Loans due from employees 23.997 10.603

Non-current due from DAMU 13 - 104.560

Total non-current assets 105.311.496 99.476.258

Current assets

Inventories 93.774 79.185

Trade and other receivables 7 6.776.374 4.921.892

Other current assets 8 1.827.519 2.981.338

Current due from DAMU 13 123.761 217.062

Current income tax prepayment 10.256 7.803


Short-term bank deposits 9 3.282.300 2.296.643

Cash and cash equivalents 10 2.155.105 1.257.028

Total current assets 14.444.346 11.773.225

TOTAL ASSETS 119.755.842 111.249.483

EQUITY AND LIABILITIES

Equity 11

Charter capital 3.845.400 3.845.400

Revaluation fund 12.614.011 13.465.803

Retained earnings 28.370.829 26.809.948

TOTAL EQUITY 44.830.240 44.121.151

Non-current liabilities

Loans and borrowings 13 33.786.241 27.848.936

Bonds 14 17.862.890 14.990.000

Financial lease liabilities 15 2.427.289 3.614.491

Deferred tax liability 23 9.766.550 9.445.321

Total non-current liabilities 63.842.970 55.898.748

Current liabilities

Loans and borrowings 13 8.039.541 8.273.028

Bonds 14 266.940 225.526

Financial lease liabilities 15 1.193.838 1.180.771

Trade payables 16 731.923 790.800

Advances received 252.750 106.409

Other current liabilities 17 597.640 653.050

Total current liabilities 11.082.632 11.229.584

TOTAL LIABILITIES 74.925.602 67.128.332

TOTAL EQUITY AND LIABILITIES 119.755.842 111.249.483

Statement of profit or loss

38

In thousands of tenge Note 2014 2013

Revenue 18 31.897.186 25.512.955

Cost of sales 19 (10.930.694) (7.709.536)

Gross profit 20.966.492 17.803.419

Administrative expenses 20 (2.794.203) (1.685.002)

Other income 151.306 411.209

Other expenses (141.732) (149.873)

Net loss from disposal of property, plant and equipment (101.236) (73.272)

Operating profit 18.080.627 16.306.481

Finance income 22 35.278 57.077

Finance costs 22 (5.820.223) (5.112.401)

Foreign exchange loss, net (8.751.773) (1.002.961)

Profit before income tax 3.543.909 10.248.196

Income tax expense 23 (795.277) (2.090.022)

Profit and other comprehensive income for the year 2.748.632 8.158.174

Statement of cash flows

39

In thousands of tenge 2014 2013

Cash flows from operating activities

Profit before income tax 3.543.909 10.248.196

Adjustments:

Amortisation 5.694.258 5.483.385

Finance income (35.278) (57.077)

Finance costs 5.820.223 5.112.401

Net loss from disposal of property, plant and equipment 101.236 73.272

Provision for doubtful debts 4.074 912

Unrealized foreign exchange losses 8.156.114 967.504

Working capital adjustments

Increase of operating assets:

Inventories (14.589) (10.707)

Trade and other receivables (1.481.607) (1.339.975)

Other current assets (398.875) (763.880)

Increase of operating liabilities

Trade payables (58.877) (171.232)

Advances received 146.341 (251.875)

Other current liabilities (55.410) (18.787)

Cash flows from operating activities 21.421.519 19.272.137

Income tax paid (476.501) (467.276)

Interest paid on finance lease liability (433.904) (602.149)

Interest paid on loans and borrowings and bonds (4.976.408) (4.128.576)

Net cash flows from operating activity 15.534.706 14.074.136

Cash flows from investing activities

Purchase of property, plant and equipment (10.184.017) (12.470.272)

Purchase of intangible assets - (2.268)

Proceeds from sale of property, plant and equipment 14.814 58.925

Interest received from deposits 17.320 12.918

Deposits placed (14.875.026) (34.209.308)

Proceeds from repayment of deposits 13.804.369 31.912.666

Repayment of loans due from employees 19.439 20.255

Loans provided to employees (195.770) (1.600)

Net cash flows used in investing activities (11.398.871) (14.678.684)

Statement of cash flows

40

In thousands of tenge Note 2014 2013

Cash flows from financing activities

Proceeds from borrowings 21.448.198 4.839.543

Proceeds from bonds issuance - 14.782.727

Proceeds from contribution to the share capital - 3.005.400

Repayment of borrowings, including loan origination fees (21.745.067) (17.987.021)

Repayment of finance lease liabilities (1.168.341) (2.137.959)

Dividends paid (2.039.543) (1.672.130)

Net cash flows from financing activity (3.504.753) 830.560

Net increase in cash and cash equivalents 631.082 226.012

Effect of exchange rate fluctuations on cash and cash equivalents 266.995 (19.798)

Cash and cash equivalents as at 1 January 10 1.257.028 1.050.814

Cash and cash equivalents as at 31 December 10 2.155.105 1.257.028

Statement of changes in Equity

41

In thousands of tenge

Charter

capital

Revaluation

fund

Retained

earnings Total

Balance at 1 January 2013 840.000 14.166.827 19.451.800 34.458.627

Profit for the year – – 8.158.174 8.158.174

Other comprehensive income for the year

Amortization of revaluation reserve – (701.024) 701.024 –

Total comprehensive income for the year – (701.024) 8.859.198 8.158.174

Transactions with owners of the Company

Contribution to charter capital (Note 11) 3.005.400 – – 3.005.400

Dividends (Note 11) – – (1.501.050) (1.501.050)

Total transactions with owners of the Company 3.005.400 – (1.501.050) 1.504.350

Balance at 31 December 2013 3.845.400 13.465.803 26.809.948 44.121.151

Profit for the year - - 2.748.633 2.748.633

Other comprehensive income for the year

Amortization of revaluation reserve - (851.792) 851.792 -

Total comprehensive income for the year - (851.792) 3.600.424 2.748.632

Transactions with owners of the Company

Dividends (Note 11) - - (2.039.543) (2.039.543)

Total transactions with owners of the Company - - (2.039.543) (2.039.543)

Balance at 31 December 2014 3.845.400 12.614.011 28.370.829 44.830.240

Notes to the financial statement

1 REPORTING ENTITY

(a) Organization and operations

Eastcomtrans LLP (the “Company”) is a limited liability partnership established

under the laws of the Republic of Kazakhstan on 4 October 2002.

The principal activity of the Company is rendering of the services in the sphere of oil

and gas freight operations by railway over the territory of the Republic of

Kazakhstan.

The registered office of the Company is located at: office 11a, 77/7 Al-Farabi

Avenue, Almaty, 050040, Republic of Kazakhstan.

The Company is owned by Mr. M. Zh. Sarsenov (55,998%), a citizen of Republic of

Kazakhstan, and Steinhardt Holding N.V (37,332%), a company established under

the laws of the Netherlands, and International Finance Corporation (6.67%). The

ultimate controlling party is Mr. M.Zh. Sarsenov.

On 10 July 2014, Moody's Rating Agency confirmed B3 corporate credit rating under

the international and national scales to Eastcomtrans LLP. A credit rating outlook is

“Positive”.

On 3 June 2014, Fitch Ratings confirmed the Company‟s long-term credit ratings at B

level according to the international scale, and at BB(kaz) according to the local scale.

The credit rating outlook is “Stable”.

(b) Kazakhstan business environment

The Company‟s operations are primarily located in Kazakhstan. Consequently, the

Company is exposed to the economic and financial markets of the Republic of

Kazakhstan which display characteristics of an emerging market. The legal, tax and

regulatory frameworks continue its development, but are subject to varying

interpretations and frequent changes which together with other legal and fiscal

impediments contribute to the challenges faced by entities operating in the Republic

of Kazakhstan. The financial statements reflect management‟s assessment of the

impact of the Republic of Kazakhstan business environment on the operations and the

financial position of the Company. Actual business environment may differ from the

management‟s assessment.

2 BASIS OF ACCOUNTING

(a) Statement of compliance

These financial statements have been prepared in accordance with International

Financial Reporting Standards (“IFRSs”).

(b) Basis of measurement

These financial statements are prepared based on historic (primary) cost, except for

machinery and equipment and embedded financial instruments, accounted at the

revalued amount.

3 FUNCTIONAL AND REPRESENTATION CURRENCY

The national currency of the Republic of Kazakhstan is the Kazakh tenge (“KZT”),

which is the Company‟s functional currency and the currency in which these

financial statements are presented. All financial information presented in KZT,

unless otherwise specified, has been rounded to the nearest thousand.

4 USE OF ESTIMATES AND JUDGMENTS

The preparation of financial statements in conformity with IFRSs requires

management to make judgments, estimates and assumptions that affect the

application of accounting policies and the reported amounts of assets, liabilities,

income and expenses. Actual results may differ from those estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions

to accounting estimates are recognised in the period in which the estimates are

revised and in any future periods affected.

Information about critical judgments in applying accounting policies that have the

most significant effect on the amounts recognised in the financial statements is

included in the Note 6 - Property, plant and equipment.

Information about assumptions and estimation uncertainties that have a significant

risk of resulting in a material adjustment within the next financial year is included

in the following notes:

Note 6 - Property, plant and equipment;

Note 14 – Bonds.

Measurement of fair values

A number of the Company‟s accounting policies and disclosures require the

determination of fair value, for both financial and non-financial assets and

liabilities.

42

A number of the Company‟s accounting policies and disclosures require the

determination of fair value, for both financial and non-financial assets and liabilities.

The Company has an established control framework with respect to the measurement

of fair values. As a part of the control framework the Company‟s Financial Director

has overall responsibility for overseeing all significant fair value measurements,

including Level 3 fair values, and reports directly to the management of the

Company.

The Finance Department specialists regularly review significant unobservable inputs

and valuation adjustments. If third party information, such as broker quotes or pricing

services, is used to measure fair values, then the Finance Department specialist

assesses the evidence obtained from the third parties to support the conclusion that

such valuations meet the requirements of IFRS, including the level in the fair value

hierarchy in which such valuations should be classified.

When measuring the fair value of an asset or a liability, the Company uses market

observable data as far as possible. Fair values are categorised into different levels in a

fair value hierarchy based on the inputs used in the valuation techniques as follows.

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included in Level 1 that are observable for

the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from

prices).

Level 3: inputs for the asset or liability that are not based on observable market data

(unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be

categorised in different levels of the fair value hierarchy, then the fair value

measurement is categorised in its entirety in the same level of the fair value hierarchy

as the lowest level input that is significant to the entire measurement.

The Company recognises transfers between levels of the fair value hierarchy at the

end of the reporting period during which the change has occurred.

Further information about the assumptions made in measuring fair values is included

in the following notes:

Note 6 - Property, plant and equipment;

Note 14 - Bonds;

Note 24 – Fair value and risks management.

5 OPERATING SEGMENTS

The management of the Company considers the Company as one segment, which

uses out the wagons and renders the services of routine maintenance and freight

forwarding. The Company‟s assets are registered in Kazakhstan. All revenues of

the Company are generated in Kazakhstan. The Company‟s management analyses

the segment performance based on statement of profit or loss and other

comprehensive income prepared in accordance with IFRS.

The major client of the Company in 2014 and 2013 is Tengizchevroil LLP.

Information on sales is disclosed in Note 18.

6 PROPERTY, PLANT AND EQUIPMENT

43

Depreciation expense of KZT 5.631.469 thousand (2013: KZT 5.414.745 thousand)

has been charged to cost of sales and KZT 59.323 thousand to administrative

expenses (2013: KZT 63,088 thousand).



Machinery and

equipment Other Total

Cost:

At 1 January 2013 110.433.517 343.974 110.777.491

Additions 10.914.000 3.579 10.917.579

Disposal (121.497) (64.045) (185.542)

At 31 December 2013 121.226.020 283.508 121.509.528

Additions 11.696.254 40.457 11.736.711

Disposal (131.725) (32.262) (163.987)

At 31 December 2014 132.790.549 291.703 133.082.252

Accumulated depreciation and impairment:

At 1 January 2013 (16.714.214) (57.994) (16.772.208)

Depreciation charge (5.414.119) (63.714) (5.477.833)

Disposal 30.978 22.367 53.345

At 31 December 2013 (22.097.355) (99.341) (22.196.696)

Depreciation charge (5.630.977) (59.815) (5.690.792)

Disposal 34.696 13.241 47.937

At 31 December 2014 (27.693.636) (145.915) (27.839.551)

Net carrying amounts

At 1 January 2013 93.719.303 285.980 94.005.283

At 31 December 2013 99.128.665 184.167 99.312.832

At 31 December 2014 105.096.913 145.788 105.242.701

(a) Revaluation of machinery and equipment

Machinery and equipment are mainly represented by the railway wagons and gondola

wagons. The latest revaluation of the Company‟s machinery and equipment was

performed as at 31 December 2010 by an independent appraiser, American Appraiser

LLP. The fair value was determined based on the analysis of the CIS secondary

market, which was classified as an active secondary market by the appraiser.

As at 31 December 2014 the Company analysed the market value of the machinery

and equipment (or property, plant and equipment represented mostly by the different

types of wagons). As there was no active secondary market for relatively large lots of

wagons which was due to high uncertainty in the Russian market at the end of 2014,

the Company decided to abandon the comparative approach to value the wagons and

used the cost method. The Company requested prices on the wagons similar to those

used by the Company from two major suppliers, Scientific and Production

Corporation UralVagonZavod OJSC and Altaiwagon OJSC, and adjusted these prices

for physical depreciation to present the current condition of the wagon rolling stock.

Based on results of the analysis the Company made decision not to revalue the wagon

rolling stock, as its carrying amount did not materially differ from fair value as at the

valuation

As at 31 December 2014 the carrying amount of machinery and equipment would

have been KZT 92,482,901 thousand (2013: KZT 82,774,988 thousand), if machinery

and equipment had been recognized at cost less the accumulated depreciation and

impairment.

(b) Security

As at 31 December 2014 the machinery and equipment with net carrying amount of

KZT 63.411.094 thousand (2013: KZT 54,999,950 thousand) are subject to a

registered debenture to secure bank loans and borrowings (see Note 13); machinery

and equipment with net carrying amount of KZT 18.959.645 thousand (2013: KZT

20,116,951 thousand) are subject to a registered debenture to secure the Company‟s

bonds (see Note 14). Moreover, as at 31 December 2014 the machinery and

equipment with net carrying amount of KZT 6.467.714 thousand (2013: KZT

6,868,722 thousand) are subject to a registered debenture to secure the loans and

borrowings received by Center of Wagon Service – Yeskene LLP, an enterprise

under common control of the ultimate controlling party of the Company.

Leased property, plant and equipment

Machinery and equipment are mainly represented by the railway wagons and

gondola wagons. Machinery and equipment include wagon acquired under the

finance lease contracts signed with banks, with net carrying amount of KZT

9.551.123 thousand (2013: KZT 10,033,943 thousand). The wagons are pledged as

security of the respective finance lease contracts (see Note 15).

7 TRADE AND OTHER RECEIVABLES

44

As at 31 December 2014 the trade receivables of the Company‟s major customer -

Tengizchevroil LLP – accounted for 32% of the total trade receivables (2013:

36%).

The movement in the provision for doubtful debt during the years ended 31

December was as follows:

As at 31 December 2014 the trade receivables not overdue and not impaired

amounted to KZT 6.776.374 thousand (2013: KZT 4,921,892 thousand).

As at 31 December the Company‟s trade receivables were denominated in the

following currencies:



Trade receivables 6.518.694 4.664.032

Other receivables from a related party (Note 26) 262.000 262.024

Less provision for doubtful debts (4.320) (4.164)

6.776.374 4.921.892


Provision for doubtful debt at the beginning of the year (4.164) (37.042)

Provision for the year (4.074) (335)

Writes-off 3.918 33.213

Provision for doubtful debt at the end of the year (4.320) (4.164)


USD 2.600.371 2.047.230

KZT 4.102.407 2.686.276

RUR 73.596 188.386

6.776.374 4.921.892

The Company‟s exposure to credit risk related to trade receivables is disclosed in

Note 24.

As at 31 December 2013 other current assets included advances paid to TD

Azovobschemash CJSC and WagontradePlus LLC for procurement of wagons, which

were provided to the Company in 2014. As at 31 December 2014 there were no

advances paid for wagons.

As at 31 December the advances paid were as follows:

On 30 and 31 December 2014 the Company opened a deposit in USD in SB

Sberbank JSC in the total amount of KZT 3.282.300 thousand with the interest rate

6% per annum. The term of deposit matures on 1 April 2015.

During 2013 the Company opened deposits in USD and in KZT in ATF Bank JSC

for the total amount of KZT 1,292,942 thousand with the interest rates from 0.2-

3.66% per annum. The terms of the deposits vary from 3 to 12 months.

On 28 November 2013 the Company opened a deposit in USD in SB HSBC Bank

Kazakhstan JSC for the amount of KZT 1,003,701 thousand at the interest rate of

0.15%. The deposit matured on 20 February 2014. A bank deposit in SB HSBC

Bank Kazakhstan JSC as at 31 December 2013 is subject to a registered debenture to

secure the bonds obligations if the rolling stock appears to be insufficient as security

(see Note 14). However, the bank deposit is not restricted.

The Company's exposure to credit risk and interest rate risks and sensitivity analysis

for financial assets and liabilities are disclosed in Note 24.

10 CASH AND CASH EQUIVALENTS

45

The movements in the impairment allowance for the years ended 31 December were

as follows: Altyn Bank JSC has a right to set a limitations with respect to cash placed in the

banks, if the Company fails to observe the payments schedule of the principal or

interest on the loans of the International Finance Corporation. As at 31 December

2014 the total of such cash placed in Altyn Bank JSC (SB Halyk Bank of

Kazakhstan JSC) was KZT 260.211 thousand (2013: on accounts of BNP

PARIBAS (SUISSE) SA and ATF Bank JSC: 578.572 thousand) (see Note 13).

Bank accounts in SB Sberbank JSC in the amount KZT 65.563 thousand as at 31

December 2014 are subject to secure completion of obligations on a loan from

BNP PARIBAS (SUISSE) SA. However, cash on these accounts is not restricted.

In December 2014 the Company opened a deposit in KZT in Altyn Bank JSC for

the total amount of KZT 85.000 thousand with the interest rate 10% per annum.

The term of the deposit matured on 15 January 2015.

The Company‟s exposure to credit risk and interest rate risk and a sensitivity

analysis for financial assets and liabilities are disclosed in Note 24.



Advances paid 1.258.313 2.776.688

Prepayment of the interest on guarantees received from ultimate

controlling party (Note 26) 246.150 194.675

Other 323.056 9.975

1.827.519 2.981.338


Advances paid for goods and services 1.264.057 1.230.080

Advances paid for wagons - 1.552.694

Less the impairment reserve (5.744) (6.086)

1.258.313 2.776.688


Impairment allowance at the beginning of the year (6.086) (5.509)

Write-offs 342 -

Charge for the year - (577)

Impairment allowance at the end of the year (5.744) (6.086)

9 SHORT-TERM BANK DEPOSITS


Short-term bank deposits 3.282.300 2.296.643


Cash in bank - USD 1.720.984 918.702

Cash in bank - KZT 432.674 322.249

Cash in bank - RUR 885 1

Cash in hand - KZT 562 16.076

2.155.105 1.257.028

11 CHARTER CAPITAL AND RESERVES

(a) Charter capital

12 CAPITAL MANAGEMENT

The Company has no formal policy for capital management but management seeks to

maintain a sufficient capital base for meeting the Company‟s operational needs, and to

maintain confidence of market participants and investors, creditors and to ensure future

business development. This is achieved with efficient cash management, constant monitoring

of Company‟s revenues and profit, and long-term investment plans mainly financed by the

Company‟s operating cash flows. With these measures the Company aims for steady profits

growth.

The management of the Company monitors the return on capital, which the Company

defines as net operating income divided by total shareholders‟ equity.

The management seeks to maintain a balance between the higher returns that might be

possible with higher levels of borrowings and the advantages and security afforded by a

sound capital position.

There were no changes in the Company‟s approach to capital management during the year.

The Company is not subject to externally imposed capital requirements.

13 LOANS AND BORROWINGS

This note provides information about the contractual terms of the Company‟s loans and

borrowings. For more information about the Company‟s exposure to interest rate and foreign

currency risk, see Note 24.

46



Value % Value %

Mr. M. Zh. Sarsenov 504.000 55,998% 504.000 55,998%

Steinhardt Holding N.V. 336.000 37,332% 336.000 37,332%

International Finance Corporation 3.005.400 6,67% 3.005.400 6,67%

3.845.400 100% 3.845.400 100%

During the year ended 31 December 2013 the Company admitted the International

Finance Corporation (“IFC”) as a participant of the Company; IFC made a capital

contribution of KZT 3.005.400 thousand and acquired an ownership interest of

6.67% in the Company.

(b) Dividends

The founders are entitled to receive dividends as declared from time to time and are

entitled to vote at meetings of the Company prorated to their ownership interests in

the charter capital.

In accordance with the legislation of the Republic of Kazakhstan the Company‟s

distributable reserves are limited to the balance of retained earnings as recorded in

the Company‟s statutory financial statements prepared in accordance with IFRS. As

at 31 December 2014 the Company had retained earnings, including the loss for the

current year, of KZT 28.370.829 thousand (2013: KZT 26.809.948 thousand).

During the year 2014 the Company declared dividends to the partners in the amount

of KZT 2.039.544 thousand, prorated to their ownership interests in the Company‟s

capital (2013: KZT 1.501.505 thousand).

(c) Security

As at 31 December 2014 the partners provided 37.332 % of the Company‟s shares as

a security for loans and borrowings of the Company (2013: 37.332%) (see Note 13).

(d) Value increment from revaluation of property, plant and

equipment

Revaluation fund is meant to reflect the results of property, plant and equipment

revaluation less deferred tax.


Creditor Currency

Effective

interest rate

Repayme

nt period 2014 2013

BNP PARIBAS (SUISSE) SA USD 6,67% 2017 8.578.787 12.993.914

BNP PARIBAS (SUISSE) SA USD 6,17% 2016 5.166.164 8.673.027

International Finance Corporation

(Note 26) USD 6,06% 2022 4.929.716 4.563.924

ATF Bank JSC USD 7,75-7,73% 2017 387.442 1.326.584

ATF Bank JSC USD 7,75-7,73% 2016 2.573.122 2.914.326

SB HSBC Bank Kazakhstan JSC USD 7,3-6,86% 2016 - 5.650.189

Islamic Bank Al Hilal JSC KZT 8,25% 2019 г. 3.316.849 -

Islamic Bank Al Hilal JSC USD 6,5% 2019 г. 2.482.941 -

Gazprombank OJSC USD 6,66% 2021 г. 9.028.045 -

European Bank for reconstruction

and

development KZT 11,52% 2022 5.362.716 -

41.825.782 36,121,964

Less the amounts payable within 12 months (8.039.541) (8.273.028)

Amounts payable after more than 12 months 33.786.241 27.848.936

On 25 February 2014 the Company signed a loan agreement with Gazprombank

OJSC in the amount of USD 50 million with a maturity period of 7 years with an

opportunity of prolongation to 24 months and interest rate 1 month LIBOR+6.5% per

annum. In March-July 2014 the Company received the loan proceeds that were

allocated to purchase a new wagon park.

On 3 July 2014 the Company signed loan agreements, under which Islamic Bank Al

Hilal JSC provided a loan in the amount of KZT 2.700.000 thousand with a maturity

period in July 2019 and a loan in the amount of USD 19.7 million with a maturity

period in July 2019. Expected profit Murabaha on these loans is 8.25% and 6.5% per

annum, respectively. Under these loan agreements, wagons and guarantees of

Mr. M. Zh. Sarsenov in the amount of USD 34.5 million are provided as collateral. In

July 2014 the Company received loan proceeds that were allocated to refinance the

indebtedness to Altyn Bank JSC in the total amount of KZT 5.790.735 thousand.

On 9 December 2014 the Company signed a loan agreement with European Bank for

Reconstruction and Development in the amount of KZT 5.451.000 thousand with a

maturity period of 8 years and interest rate of LIBOR+5.8% per annum including all

costs for refinancing. In December the Company received loan proceeds and partially

in advance redeemed amount of loans to BNP PARIBAS (SUISSE) SA.

13 LOANS AND BORROWINGS, CONTINUED

On 30 December 2014 the Company signed a loan agreement with European Bank

for Reconstruction and Development in the amount of USD 25 million with a

maturity period of 8 years and interest rate 5.8% per annum+3-month LIBOR and

USD 10 million with a maturity period of 5 years with an opportunity of prolongation

to 24 months and interest rate 5.5% per annum+3-month LIBOR.

As at 31 December the Company did not receive any proceeds from the European

Bank for Reconstruction and Development in accordance with the abovementioned

agreement that the Company plans allocate to purchase of new wagon park and

refinancing of loans.

On 14 August 2012 the Company, ATF Bank JSC and DAMU (Entrepreneurship

Development Fund) signed a tripartite subsidy agreement. According to the

agreement, DAMU will reimburse to the Company 7% interest out of total interest

payable by the Company under the loan agreement between the Company and ATF

Bank JSC at the rate of 8.94% per annum for the period from August 2012 to

November 2012, at the rate of 7.85% per annum for the period from November

2012 to December 2012 and at the rate of 3-month LIBOR+7.5% per

annum -further. Future interest payments on the loan at a rate of 7% per annum,

paid by DAMU, discounted at the market rate of interest of 7.85% per annum, were

recognised by the Company as the receivables from DAMU and accordingly the

income on government subsidies. In the following periods the Company recognized

the unwinding of discount on due from DAMU in finance income as income from

subsidies (see Note 22).

(а) Security

As at 31 December 2014 the Company‟s property, plant and equipment of the

amount of KZT 63.411.094 (2013: KZT 54,999,950 thousand) thousand are subject

to a registered debenture to secure the loans and borrowings (see Note 6).

As at 31 December 2014 the founders provided 37,332% of Company‟s shares as a

security of the Company‟s loans and borrowings (2013: 37,332%) (see Note 11).

Altyn Bank JSC has a right to set a limitations with respect to cash placed in the

banks, if the Company fails to observe the payments schedule of the principal or

interest on the loans of International Finance Corporation. As at 31 December 2014

the total cash placed in Altyn Bank JSC was KZT 260.211 thousand (2013:

578.572 thousand) (see Note 10).

14 BONDS

On 22 April 2013 the Company placed bonds for the total amount of KZT

14.782.727 thousand with nominal value of USD 100,000 thousand, with the

coupon of 7,75% per annum payable once every six months and maturity of 5 year,

which expire in October 2018.

The bonds are rated at B3 Positive by Moody‟s and B Stable by Fitch. Bond

obligations are secured by a pledge of rolling stock with net carrying amount of

KZT 18.959.645 thousand as at 31 December 2014 (31 December 2013:

20.116.951 thousand) as well as cash and deposit with Altyn Bank JSC (SB Halyk

Bank of Kazakhstan JSC), if the rolling stock appears to be insufficient as a

security (see Notes 9, 10).

(а) Embedded financial instrument - option of early redemption

of the remaining debt

In accordance with terms of the Prospectus for bond issue the Company may at any

time, at its own discretion, having sent the notification of the bondholders, to

47


48

redeem the bonds in full scope at the price, which represents the principal and

compensation of loss of benefit due to bond calling. Compensation for the loss of

benefit is estimated as the greater of (a) 1% of the nominal value of all outstanding

bonds, or (b) future coupon payments till maturity from the calling date discounted

at the rate stipulated in the Prospectus for bond issue. As at 31 December 2014 and on the date of bond placement, the fair value of the option

measured using the binomial model was equal to zero. Fair value measurement is categorized

to the Level 3 in the hierarchy of fair value.

14 BONDS, CONTINUED

(а) Embedded financial instrument - option of early redemption

of the remaining debt, continued

Management used the following assumptions to measure the embedded derivative

instrument:

Risk-free rates were assessed using the yield curves for the respective currencies

and varied from 0,12% to 1,89% for US Dollar (as at 31 December 2013: from

0,08% to 2,13%);

Volatility of rates in the model was determined on the basis of historic observations

of fluctuations in the actual rates during the year;

Transaction costs were not included in the model.

If spread decrease between the risk-free rates for KZT and USD narrow by 0.5%,

the fair value of the derivative would increase by KZT 141.136 thousand (as at 31

December 2013: KZT 5.682 thousand). Increase in volatility by 50% will result in

the increase of the fair value of the derivative by KZT 66.024 thousand (as at 31

December 2013: KZT 323 thousand).

The Company‟s exposure to liquidity risk related to trade receivables is disclosed

in Note 24.

15 FINANCE LEASE LIABILITIES

The Company entered into agreements to purchase property, plant and equipment,

primarily railway wagons and semi-wagons under deferred payment schedule.

These agreements transfer the ownership over the leased assets to the Company at

the end of the lease term.

Finance lease liabilities comprised the following as at 31 December:

Below are the amounts of future minimum lease payments and their discounted

value:



Creditor Currency Interest rate Maturity 2014 2013

BRK-Leasing JSC KZT 8,1% - 12% 2016-2018 3.091.484 4.058.918

Raiffeisen Leasing

Kazakhstan LLP

KZT

3 months

EURIBOR

+7,75% 2017 529.643 736.344

3.621.127 4.795.262

Less: the amounts

payable within 12

months (1.193.838) (1.180.771)

Amounts due for

settlements after 12

months 2.427.289 3.614.491

2014 2013


Minimum

lease

payments

Discounted

value of

minimum lease

payments

Minimum

lease

payments

Discounted

value of

minimum lease

payments

Within one year 1.456.212 1.193.839 1.549.179 1.180.771

From one to five years 2.683.667 2.427.288 4.141.977 3.614.491

Less the amounts,

representing the finance costs (518.752) - (895.894) -

Discounted value of

minimum lease payments 3.621.127 3.621.127 4.795.262 4.795.262

Less the amounts payable

within 12 months (1.193.838) (1.180.771)

Amounts due for

settlements after 12 months 2.427.289 3.614.491

On 24 June 2013 the interest rate on the financial leasing contracts with Raiffeisen

Leasing Kazakhstan LLC decreased by 1% to 7.75%+3M Euribor.

For all financial leasing contracts signed with BRK-Leasing JSC effective from 1

September 2013 the interest rate decreased by 2% per annum.

15 FINANCE LEASE LIABILITIES, CONTINUED

As at 31 December 2014 and 31 December 2013, Mr. M.Zh. Sarsenov provided the

guarantees on the Company‟s finance lease liabilities in the amount of KZT

529.643 thousand and KZT 736.344 thousand, respectively (see Note 26).

The Company‟s exposure to liquidity risk related to finance lease liabilities is

disclosed in Note 24.

16 TRADE PAYABLES

17 OTHER CURRENT LIABILITIES

49



Payables for services 593.193 704.346

Payables for repair of rolling stock 117.971 26.452

Payables for inventories 10.662 47.404

Payables for rolling stock lease 10.097 12.598

731.923 790.800

At 31 December the Company‟s trade payables were denominated in the following

currencies:


USD 125.069 399.501

KZT 305.290 273.155

RUR 299.668 118.136

ЕURO 1.322 8

GBP 553 -

CHF 21 -

731.923 790.800

The Company‟s exposure to liquidity risk related to trade payables is disclosed in

Note 24.


Other taxes payable 567.398 617.805

Vacation reserve 30.242 35.091

Other - 154

597.640 653.050

At 31 December other taxes payable included the following:


Value added tax 523.084 577.493

Withholding tax 28.532 25.928

Other 15,782 14.384

567.398 617.805

18 REVENUE In thousands of tenge 2014 2013

Rental income from use of rolling stock 23.226.522 20.084.803

Operating services 7.292.758 3.984.822

Freight forwarding services 765.151 525.528

Consignor and consignee services 529.766 778.224

Other 82.989 139.578

31.897.186 25.512.955

During 2014 approximately 57% of the total revenue was derived from the services

rendered to one customer - Tengizchevroil LLP (2013: 62%). The use contracts on

rolling stock expire in 2016 but all of them are not non-cancellable.

19 COST OF SALES In thousands of tenge 2014 2013

Amortisation 5.631.469 5.414.745

Repair and technical maintenance of wagons 2.670.756 1.298.994

Use of railway infrastructure 906.133 343.968

Wagons lease 513.745 13.229

Maintenance of wagons 419.094 74.880

Payroll and related expenses 414.626 287.746

Insurance of wagons 108.888 108.798

Spare parts and other materials 54.192 13.646

Other 211.791 153.530

10.930.694 7.709.536

20 ADMINISTRATIVE EXPENSES

23 INCOME TAX EXPENSE

50

The Company signed two agreements with Insurance Company Amanat Insurance

JSC on compensation for harm caused to life, health or property of third parties as

well as environmental damaged caused by a sudden and unintentional accidental

release, combustion (fire), discharge (effluent), spraying, release or leakage of any

pollutants occurred during professional activities.

21 PERSONNEL COSTS



Insurance of risks 946.388 -

Payroll and related expenses 915.176 920.216

Taxes other than income tax 325.253 46.849

Office rent 122.642 112.456

Transportation 106.134 69.062

Consulting and other professional services 81.803 63.157

Amortization 62.789 68.640

Business trips 49.006 44.984

Bank fees 33.390 77.526

Materials 22.333 18.003

Utilities 21.913 21.077

Telecommunication services 17.332 19.644

Provision for doubtful debt (Notes 7, 8) 4.074 912

Repair and technical maintenance 1.343 24.019

Sponsorship (Note 26) 747 65.280

Other 83.880 133.177

2.794.203 1.685.002


Payroll and related expenses 1.329.802 1.207.962

Personnel costs in the amount of KZT 414.626 thousand (2013: KZT 287.746

thousand) are charged to the cost of sales and in the amount of KZT 915.176

thousand (2013: KZT 920.216 thousand) - to administrative expenses.

22 FINANCE INCOME/(EXPENSE)


Finance income

Income from subsidies (Note 13) 16.933 30.436

Discount amortization on long-term loans, issued to the

employees 2.290 2.879

Interest income on loans 2.088 -

Interest income on bank deposits 13.967 23.762

35.278 57.077

Finance costs

Interest expenses on bank loans (3.333.598) (3.362.339)

Interest expenses on bonds (1.425.272) (845.654)

Interest expenses on finance lease contracts (430.825) (592.176)

Interest expenses on guarantees (Note 26) (626.196) (311.377)

Discounting of long-term loans, issued to employees (4.332) (855)

(5.820.223) (5.112.401)


Current income tax expense 474.048 474.752

Deferred tax expense 321.229 1.615.270

795.277 2.090.022

For the years ended 31 December the reconciliation of income tax expense related

to profit before income tax estimated using the official tax rate of 20% (2013: 20%)

with the current income tax expense was as follows:


Profit before income tax 3.543.909

10.248.19

6

Official tax rate 20% 20%

Income tax at official tax rate 708.782 2.049.639

Expenses, that do not decrease tax base 86.495 40.383

795.277 2.090.022

As at 31 December the components of the deferred tax assets and liabilities include

the following:

business processes of its structural units, thus creating the risk management culture,

in which the Company‟s structural units and personnel are involved at the

Company‟s level.

(ii) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty

to a financial instrument fails to meet its contractual obligations. The Company

trades only with recognised creditworthy parties. It is the Company's policy that all

customers who wish to trade on credit terms are subject to credit verification

procedures. In addition, receivable balances are monitored on an ongoing basis

with the result that the Company's exposure to bad debts is not significant.

The carrying amount of financial assets represents the maximum credit exposure.

The maximum exposure to credit risk at the reporting date was:

24 FAIR VALUE AND RISK MANAGEMENT

(a) Classification in the financial statements and fair values

Management of the Company believes that the fair value of its financial assets and

liabilities approximates their carrying amounts.

(b) Financial risk management

The Company has exposure to the following risks from its use of financial

instruments:

• credit risk;

• liquidity risk;

• market risk.

(i) Risk management framework

The Management of the Company has overall responsibility for the establishment

and oversight of the Company‟s risk management framework. Management is

responsible for developing and monitoring the Company‟s risk management policies.

The draft of the Company‟s risk management policy has been submitted for

approval; based on the specifics of its operations the Company is building a risk

management system by integrating the principles of risk management with the

51


Statement of financial

position

Statement of profit or loss

and other comprehensive

income

In thousands of tenge 2014 2013 2014 2013

Deferred tax assets

Trade and other receivables 864 2.050 (1.186) (6.460)

Loans and borrowings 69.844 47.433 22.411 47.433

Other current liabilities 6.096 7.154 (1.058) (977)

76.804 56.637 20.167 39.996

Deferred tax liabilities

Property, plant and equipment (9.818.602) (9.437.634) (380.968) (1.696.220)

Due from DAMU (24.752) (64.324) 39.572 40.954

(9.843.354) (9.501.958) (341.396) (1.655.266)

Net deferred tax liability (9.766.550) (9.445.321) - -

Deferred tax expense - - (321.229) (1.615.270)



Due from DAMU (Note 13) 123.761 321.622

Trade receivables (Note 7) 6.776.374 4.921.892

Short-term bank deposits (Note 9) 3.282.300 2.296.643

Cash and cash equivalents, without considering cash in hand

(Note 10) 2.154.543 1.240.952

12.536.232 8.803.986

(iii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in raising funds

to meet commitments associated with financial instruments. Liquidity requirements

are monitored on a regular basis and management ensures that sufficient funds are

available to meet any commitments as they arise. The Company aims to maintain

the minimum level of cash and cash equivalents and other high liquid instruments

of an amount in excess of expected cash outflows on financial liabilities over the

next 30 days. As at 31 December 2014 the current assets of the Company exceeded

the current liabilities by KZT 3.361.714 thousand (2013: current assets

of the Company exceeded the current liabilities by KZT 543.641 thousand).

Management is addressing the Company‟s liquidity needs by implementing the

following measures:

Making long-term arrangements with customers to ensure sufficient cash flows from

operating activities.

Making arrangements with financial institutions.

The tables below show the general information on contract payments on financial

payments of the Company as at 31 December by the maturity period of these

liabilities:

For the year ended 31 December 2014

are carried out within the guidelines set by the Supervisory Board. The Company

does not apply hedge accounting in order to manage volatility in profit or loss. Currency risk

The Company is exposed to currency risk on sales, purchases and borrowings that

are denominated in a currency other than KZT. The currency in which these

transactions primarily are denominated is US Dollars (USD). Generally,

borrowings are denominated in currencies that match the cash flows generated by

the underlying operations of the Company, primarily USD. In addition, interest on

borrowings is denominated in the currency of the borrowing. This provides an

economic hedge without a need to enter into derivatives contracts.

In respect of other monetary assets and liabilities denominated in foreign

currencies, the Company‟s policy is to ensure that its net exposure is kept to an

acceptable level by buying or selling foreign currencies at spot rates when

necessary to address short-term imbalances.

The table below shows the sensitivity of the Company‟s profit before taxes to

change of USD exchange rate, which can be reasonably forecasted, with all other

variables remain unchanged. These factors do not affect the Company‟s equity.

52


In thousands of

tenge

Carrying

amounts

Less than 3

months

From 3 to

12 months

From 1 to 5

years

More than

5 years

Total cash

outflow

Loans and

borrowings 41.825.782 2.792.619 8.298.054 35.320.034 5.576.222 51.986.929

Bonds 18.129.830 - 1.680.153 21.501.091 - 23.181.244

Financial lease

liabilities 3.621.127 372.650 1.083.562 2.683.667 - 4.139.879

Trade payables 731.923 731.923 - - - 731.923

64.308.662 3.897.192 11.061.769 59.504.792 5.576.222 80.039.975

For the year ended 31 December 2013


Carrying

amounts

Less than 3

months

From 3 to

12 months

From 1 to 5

years

More than

5 years

Total cash

outflow

Loans and borrowings 36,121,964 2.701.430 8.184.006 30.648.963 1.507.853 43.042.252

Bonds 15,215,526 - 1.346.527 19.140.457 - 20.486.984

Financial lease

liabilities 4,795,262 408.964 1.140.215 4.141.977 - 5.691.156

Trade payables 790,800 790.800 - - - 790.800

56.923.552 3.901.194 10.670.748 53.931.397 1.507.853 70.011.192

(iv) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates

and interest rates will affect the Company‟s income or the value of its holdings of

financial instruments. The objective of market risk management is to manage and

control market risk exposures within acceptable parameters, while optimising the

return.

The Company incurs financial liabilities to manage market risk. All such transactions

The effect on profit before taxes

Increase/decrease

of USD exchange

rate

Increase

In thousands of

tenge

Decrease

In thousands of

tenge

2014 +20% - (7.532.762)

-20% 7.532.762 -

2013 +20% - (9.295.036)

-20% 9.295.036 -

(v) Interest rate risk

Changes in interest rates impact primarily loans and borrowings by changing either

their fair value (fixed rate debt) or their future cash flows (variable rate debt). The

management of the Company, when managing interest risks investigates the

changes of the rates on financial instruments, which may significantly affect the

positions with respect to this risk. For that the Company performs the analysis of

the scenarios, including potential effects of the changes in the interactions between

the types of interest risks and the general level of the exposure to interest risk, in

particular, the ratio of allocation of the interest risks of the Company between the

loans with the fixed and variable interest rates. However, at the time of raising new

loans or borrowings management uses its judgment to decide whether it believes that

a fixed or variable rate would be more favourable to the Company over the expected

period until maturity.

Exposure to interest rate risk

At the reporting date the interest rate profile of the Company‟s interest-bearing

financial instruments was as follows:

(c) Master netting or similar agreements

The Company may enter into sales and purchase agreements with

the same counterparty in the normal course of business. The related amount

receivable and payable do not always meet the criteria for offsetting in the statement

of financial position. This is because the Company may not have legally enforceable

rights to offset recognised amounts, because the rights to offset may be enforceable

only on the occurrence of future events. In particular, in accordance with the

Kazakhstan civil law an obligation can be settled by offsetting against a similar claim

if it is due, has no maturity or is payable on demand, however such offsetting is not

possible in case of the insolvency of one of the parties to the contracts.

The settlement operation have not been significant as at reporting and

comparative periods except for deposit balances in the amount of KZT 85.000

thousand (2013: 1.003.701 thousand) and balances on current accounts in the amount

of KZT 325.774 thousand (2013: 868.816 thousand) placed in Altyn Bank JSC.

53


Carrying amounts


Fixed rate instruments

Financial assets 3.367.300 2.296.643

Financial liabilities (27.021.104) (19.274.444)

(23.653.804) (16,977.801)

Variable rate instruments

Financial liabilities (36.555.635) (36.858.308)

Fair value sensitivity analysis for fixed rate instruments

The Company does not account for any fixed-rate financial instruments as fair value

through profit or loss or as available-for-sale. Therefore a change in interest rates at

the reporting date would not have an effect in profit or loss or in equity. Therefore a

change in interest rates at the reporting date would not affect profit or loss or equity.

Cash flow sensitivity analysis for variable rate instruments

A reasonably possible change of 100 basis points in interest rates at the reporting

date would have increased (decreased) equity and profit or loss net of taxes by the

amounts shown below. This analysis assumes that all other variables, in particular

foreign currency rates, remain constant. Profit or loss


100 bp

increase

100 bp

decrease

2014

Variable rate instruments (365.556) 365.556

Cash flow sensitivity (net value) (365.556) 365.556

2013

Variable rate instruments (368.583) 368.583

Cash flow sensitivity (net value) (368.583) 368.583

24 FAIR VALUE AND RISK MANAGEMENT, CONTINUED

(c) Master netting or similar agreements, continued

The table below shows financial assets and financial liabilities subject to enforceable master netting arrangements and similar arrangements as at 31 December 2014:

54

’000 KZT

Types of financial

assets/financial liabilities

Gross amounts of

recognised financial

asset/liability

Gross amount of recognised

financial liability/asset offset

in the statement of financial

position

Net amount of financial

assets/liabilities presented

in the statement of

financial position

Related amounts not offset in the

consolidated statement of financial

position

Financial

instruments Cash collateral Net amount

Short-term bank deposit 85.000 - 85.000 - 85.000 85.000

Cash and cash equivalents 325.774 - 325.774 - 325.774 325.774

Total financial assets 410.774 - 410.774 - 410.774 410.774

Loans and borrowings (18.674.677) - (18.674.677) - 293.501 (18,381,166)

Bonds (17.862.890) - (17.862.890) - 117.273 (17.745.617)

Total financial liabilities (36.537.557) - (36.537.557) - 410.774 (36,126,783)

The table below shows financial assets and financial liabilities subject to enforceable master netting arrangements and similar arrangements as at 31 December 2013:

’000 KZT

Types of financial

assets/financial liabilities

Gross amounts of


asset/liability

Gross amount of


liability/asset offset in the

statement of financial

position

Net amount of financial

assets/liabilities

presented in the

statement of financial

position

Related amounts not offset in the

consolidated statement of financial

position

Financial

instruments Cash collateral Net amount

Short-term bank deposit 1.003.701 - 1.003.701 - 1.003.701 1.003.701

Cash and cash equivalents

868.816 - 868.816 - 868.816 868.816

Total financial assets

1.872.517 - 1.872.517 - 1.872.517 1.872.517

Loans and borrowings

(31.558.040) (31.558.040) - 578.572 (30.979.468)

Bonds (14.990.000) - (14.990.000) - 1.293.945 (13.696.055)

Total financial liabilities (46.548.040) - (46.548.040) - 1.872.517 (44.675.523)


25 CONTINGENCIES

(a) Insurance

The insurance industry in the Republic of Kazakhstan is in a developing state and

many forms of insurance protection common in other parts of the world are not yet

generally available. The Company does not have full coverage for its property, plant

and equipment and business interruption. Until the Company obtains adequate

insurance coverage, there is a risk that the loss or destruction of certain assets could

have a material adverse effect on the Company‟s operations and financial position.

(b) Taxation contingencies in Kazakhstan

The taxation system in Kazakhstan is relatively new and is characterised by frequent

changes in legislation, official pronouncements and court decisions, which are often

unclear, contradictory and subject to varying interpretation by different tax

authorities. Taxes are subject to review and investigation by various levels of

authorities, which have the authority to impose severe fines and penalties. A tax year

generally remains open for review by the tax authorities for ten subsequent calendar

years under newly amended tax law but under certain circumstances a tax year may

remain open longer.

Management believes that it has provided adequately for tax liabilities based on its

interpretations of applicable tax legislation, official pronouncements and court

decisions.

(c) Operating lease liabilities – the Company as a lessee

In 2012 the Company signed an office lease agreement. The term of the agreement is

5 years. The agreement contains the clause on lease term extension. The agreement

does not provide for any limitations with respect to the Company.

The future minimum lease payments under non-cancellable leases were payable as

follows.

(d) Loan covenants

In accordance with the terms of loan agreements signed between the Company and

its creditors, the Company shall observe certain financial and non-financial

covenants. Penalties may be charged for breach of such covenants, or the banks

may demand early repayment of financial liabilities. In order to mitigate such risks,

the Company performs monitoring of such financial and non-financial covenants.

As at 31 December 2014 and 2013 the Company was in compliance with all

financial and non-financial covenants.

(e) Litigations

The management are not aware of any significant existed or open litigations as well

as any potential claims against the Company.

26 RELATED PARTIES

(а) Ultimate controlling party

Mr. M. Zh. Sarsenov is the main stakeholder and ultimate

controlling party of the Company.

(b) Transactions with key management personnel

Key management remuneration

During 2014 the key management remuneration included salaries and short-term

payments in the amount of KZT 230.001 thousand (2013: KZT 99.783 thousand),

which are included in personnel costs (see Note 21).

(c) Other related party transactions

Below is the information on the Company with other related party transactions.

Related party transactions were made on terms agreed to between the parties that

may not necessarily be at market rates. Outstanding balances at the year-end are

unsecured, short-term and settlement occurs in cash.

For 2014 and 2013, the Company has not recorded any impairment of trade

accounts receivables relating to amounts owned by related parties. This assessment

is undertaken each financial year through examining the financial position of the

related party and the market in which the related party operates.

Sales and purchases with related parties and the balances with related parties

during 2014 and 2013 were as follows:

55


During one year 154.363 112.608

From one to five years 154.363 337.824

308.726 450.432


Sales and purchases with related parties and the balances with related parties during

2013 and 2012 were as follows: (c) Other related party transactions, continued

On 17 July 2012 the Company provided 440 items of property, plant and

equipment with total carrying value of KZT 3.107.736 thousand to Eurasian

Development Bank as a security under a loan agreement concluded between

Eurasian Development Bank and Center for Wagon Service – Eskene LLP, an

entity under common control of the Company‟s ultimate controlling party (see

Note 6). In addition, under a tripartite project support agreement concluded

between the Company, Center for Wagon Service – Eskene LLP and Eurasian

Development Bank on 16 July 2012, the Company committed to provide technical

and personnel support to the project carried out by Center for Wagon Service –

Eskene LLP related to construction of wagon service center in Atyrau Oblast (see

Note 6).

In December 2013 the Company additionally provided to the Eurasian

Development Bank 500 items of machinery and equipment as a security for the

loan agreement. As at 31 December 2014 machinery and equipment with total

carrying amount of KZT 6.467.714 thousand (2013: KZT 6.868.722 thousand) in

the number of 940 items were provided to secure the loans received by the Center

of Wagon Service – Eskene LLP.

On 15 November 2013 the Company and Center of Wagon Service – Eskene LLP

signed the pledge agreement. According to the terms of the agreement the Center

of Wagon Service – Eskene LLP shall pay a one-off fee in the amount KZT

262.000 thousand to the Company for providing the security, and interest

calculated as 5% per annum during the period from 1 January 2014 and ending the

date of the release of the collateral.

On 22 January 2014 the Company and Center for Wagon Service – Eskene LLP

signed an additional agreement on abolishment of repayment from settlement of

5% per annum from 1 January 2014 ending to the date of encumbrance relief from

the collateral.

In 2013 the Company provided sponsorship to Charity Fund Zhakiya (see Note 20).

27 SUBSEQUENT EVENTS

On 11 March 2015 the Supervisory Board of the Company approved to repurchase

own securities of KZT 12.500.000 thousand.

56



Statement of profit or loss and other comprehensive income

Ultimate controlling party - Mr. M. Zh. Sarsenov

Interest income on loans 2.088 -

Interest expenses on guarantees (Note 22) 626.196 311.377

Administrative expenses 163.163 236.256

Owner - Steinhardt Holding N.V.

Administrative expenses - 134.983

Owner - International Financial Corporation

Interest expense on loans 319.774 135.771

The Company under common control of the ultimate

controlling party - the Center for Wagon Service - Eskene

LLP

Other income - fee for collateral providing - 233.974

Cost - storage 3.529

Cost - expenses on the transportation of wheel pairs 804 750

PF Charity fund Zhakiya

Other income - rental income

Administrative expenses

107

747

80

65.000

Budan

Income - Operating services 120 -

Statement of financial position

Ultimate controlling party - Mr. M. Zh. Sarsenov

Loans and borrowings 146.000 -

Consideration receivable 2.339 -

Prepaid interest on the guarantees received 246.150 194.675

Owner - International Finance Corporation

Loans and borrowings 4.929.716 4.563.924

Company is under common control of the ultimate controlling

party - the Center for Wagon Service - Eskene LLP

Other receivables 262.000 262.024

Other current assets 172.281 93.500

Trade payables - 750

28 SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods

presented in these financial statements.

(а) Foreign currency translation

The financial statements are presented in tenge, which is the Company‟s functional

and presentation currency.

Transactions in foreign currencies are initially recorded at their respective functional

currency spot rates at the date the transaction first qualifies for recognition.

Monetary assets and liabilities denominated in foreign currencies are retranslated at

the functional currency rate of exchange ruling at the reporting date. Any exchange

gains and losses arising from assets and liabilities denominated in foreign currencies

subsequent to the date of the underlying transaction are credited or charged to the

statement of profit or loss and other comprehensive income.

Non-monetary items that are measured in terms of historical cost in a foreign

currency are translated using the exchange rates as at the dates of the initial

transactions.

Weighted average currency exchange rates established by the Kazakhstan Stock

Exchange (“KASE”) are used as official currency exchange rates in the Republic of

Kazakhstan.

The currency exchange rate of KASE as at 31 December 2014 was 182.35 tenge to 1

US Dollar, 3.17 tenge to 1 Russian Ruble and 221.97 tenge to 1 Euro. These rates

were used to translate monetary assets and liabilities denominated in US Dollars,

Russian Rubles and Euro as at 31 December 2014 (2013: 154.06 tenge to 1 US

Dollar, 4.68 tenge to 1 Russian Ruble and 212.02 tenge to 1 Euro, respectively).

(b) Property, plant and equipment

Property, plant and equipment are initially recorded at cost, net of accumulated

depreciation and accumulated impairment losses, if any. Such cost includes the cost

of replacing part of the property, plant and equipment and borrowing costs for long-

term construction projects if the recognition criteria are met. When significant parts

of property, plant and equipment are required to be replaced at intervals, the

Company recognizes such parts as individual assets with specific useful lives and

depreciates them accordingly. Likewise, when a major inspection is performed, its

cost is recognised in the carrying amount of the plant and equipment as a replacement

if the recognition criteria are satisfied. All other repair and maintenance costs are

recognised in profit or loss as incurred.

Subsequent to initial recognition, machinery and equipment are measured at

revalued amounts, being their fair value at the date of revaluation less any

subsequent accumulated depreciation and impairment losses. Valuations are

performed with sufficient frequency to ensure that the fair value of a revalued asset

does not differ materially from its carrying amount.

A revaluation surplus is recorded in other comprehensive income and credited to

the asset revaluation reserve in equity. However, to the extent that it reverses a

revaluation deficit of the same asset previously recognised in profit or loss, the

increase is recognised in profit and loss. A revaluation deficit is recognised in the

statement of profit or loss and other comprehensive income, except to the extent

that it offsets an existing surplus on the same asset recognised in the asset

revaluation reserve.

An annual transfer from the asset revaluation reserve to retained earnings is made

for the difference between depreciation based on the revalued carrying amount of

the asset and depreciation based on the asset‟s original cost. As at the revaluation

date the accumulated depreciation is restated proportionately with the change in the

gross carrying amount of the asset so that the carrying amount of the asset after

revaluation equals its revalued amount. Upon disposal, any revaluation reserve

relating to the particular asset being sold is transferred to retained earnings.

Depreciation is calculated on a straight-line basis over the estimated useful lives of

the assets as follows:

57


Years

Machinery and equipment 15-40

Other 3-15

An item of property, plant and equipment and any significant part initially

recognised is derecognised upon disposal or when no future economic benefits are

expected from its use or disposal. Any gain or loss arising on derecognition of the

asset (calculated as the difference between the net disposal proceeds and the

carrying amount of the asset) is included in the statement of profit or loss and other

comprehensive income when the asset is derecognised.

The residual values, useful lives and methods of depreciation of property, plant and

equipment are reviewed at each financial year end and adjusted prospectively, if

appropriate.

(c) Impairment of non-financial assets

The Company assesses, at each reporting date, whether there is an indication that an

asset may be impaired. If any indication exists, or when annual impairment testing for

an asset is required, the Company estimates the asset‟s recoverable amount. An

asset‟s recoverable amount is the higher of an asset or cash-generating unit (CGU)

fair value less costs to sell and its value in use. Recoverable amount is determined for

an individual asset, unless the asset does not generate cash inflows that are largely

independent of those from other assets or groups of assets. When the carrying amount

of an asset or CGU exceeds its recoverable amount, the asset is considered impaired

and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their

present value using a pre-tax discount rate that reflects current market assessments of

the time value of money and the risks specific to the asset. In determining fair value

less costs to sell, recent market transactions are taken into account. If no such

transactions can be identified, an appropriate valuation model is used. These

calculations are corroborated by valuation multiples, quoted share prices for publicly

traded companies or other available fair value indicators.

The Company bases its impairment calculation on detailed budgets and forecast

calculations, which are prepared separately for each of the Company‟s CGUs to

which the individual assets are allocated. These budgets and forecast calculations

generally cover a period of five years. For longer periods, a long-term growth rate is

calculated and applied to project future cash flows after the fifth year.

Impairment losses of continuing operations, including impairment on inventories, are

recognised in the statement of comprehensive income in expense categories

consistent with the function of the impaired asset, except for a property previously

revalued when the revaluation was taken to other comprehensive income. In this case,

the impairment loss is also recognised in other comprehensive income up to the

amount of any previous revaluation.

For assets an assessment is made at each reporting date to determine whether there is

an indication that previously recognised impairment losses no longer exist or have

decreased. If such indication exists, the Company estimates the asset‟s or CGU‟s

recoverable amount. A previously recognised impairment loss is reversed only if

there has been a change in the assumptions used to determine the asset‟s recoverable

amount since the last impairment loss was recognised. The reversal is limited so that

the carrying amount of the asset does not exceed its recoverable amount, nor

exceed the carrying amount that would have been determined, net of depreciation,

had no impairment loss been recognised for the asset in prior years. Such reversal

is recognised in the statement of profit or loss and other comprehensive income

unless the asset is carried at a revalued amount, in which case, the reversal is

treated as a revaluation increase.

(d) Financial assets

Initial recognition and measurement

Financial assets within the scope of IAS 39 are classified as loans and receivables

or held-to-maturity investments, as appropriate. The Company determines the

classification of its financial assets at initial recognition.

All financial assets are recognised initially at fair value plus transaction costs,

except in the case financial assets recorded at fair value through profit or loss.

The Company‟s financial assets include cash and short-term deposits, trade and

other receivables and loans receivable.

Subsequent measurement

The subsequent measurement of financial assets depends on their classification as

described below:

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or

determinable payments that are not quoted in an active market. After initial

measurement, such financial assets are subsequently measured at amortised cost

using the effective interest rate method (EIR). Amortised cost is calculated by

taking into account any discount or premium on acquisition and fees or costs that

are an integral part of the EIR. The EIR amortisation is included in finance income

in the statement of profit and loss and other comprehensive income. The losses

arising from impairment are recognised in the statement of profit and loss and other

comprehensive income in finance costs for loans and in cost of sales or other

operating expenses for receivables.

Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at

banks and on hand. For the purpose of the statement of cash flows, cash and cash

equivalents consist of cash and short-term deposits with maturities of three months

as defined above, net of outstanding bank overdrafts.

58


(e) Impairment of financial assets

The Company assesses at each reporting date whether there is any objective evidence

that a financial asset or a group of financial assets is impaired. A financial asset or a

group of financial assets is deemed to be impaired if there is objective evidence of

impairment as a result of one or more events that has occurred since the initial

recognition of the asset (an incurred „loss event‟) and that loss event has an impact on

the estimated future cash flows of the financial asset or the group of financial assets

that can be reliably estimated. Evidence of impairment may include indications that

the debtors or a group of debtors is experiencing significant financial difficulty,

default or delinquency in interest or principal payments, the probability that they will

enter bankruptcy or other financial reorganisation and observable data indicating that

there is a measurable decrease in the estimated future cash flows, such as changes in

arrears or economic conditions that correlate with defaults.

Financial assets carried at amortised cost

For financial assets carried at amortised cost, the Company first assesses whether

objective evidence of impairment exists individually for financial assets that are

individually significant, or collectively for financial assets that are not individually

significant. If the Company determines that no objective evidence of impairment

exists for an individually assessed financial asset, whether significant or not, it

includes the asset in a group of financial assets with similar credit risk characteristics

and collectively assesses them for impairment. Assets that are individually assessed

for impairment and for which an impairment loss is, or continues to be, recognised

are not included in a collective assessment of impairment.

If there is objective evidence that an impairment loss has incurred, the amount of the

loss is measured as the difference between the asset‟s carrying amount and the

present value of estimated future cash flows (excluding future expected credit losses

that have not yet been incurred). The present value of the estimated future cash flows

is discounted at the financial assets original effective interest rate. If a loan has a

variable interest rate, the discount rate for measuring any impairment loss is the

current EIR.

The carrying amount of the asset is reduced through the use of an allowance account

and the loss is recognised in the statement of comprehensive income. Interest income

continues to be accrued on the reduced carrying amount and is accrued using the rate

of interest used to discount the future cash flows for the purpose of measuring the

impairment loss. The interest income is recorded as finance income in the

statement of profit or loss and other comprehensive income. Loans together with

the associated allowance are written off when there is no realistic prospect of future

recovery and all collateral has been realised or has been transferred to the

Company. If, in a subsequent year, the amount of the estimated impairment loss

increases or decreases because of an event occurring after the impairment was

recognised, the previously recognised impairment loss is increased or reduced by

adjusting the allowance account. If a future write-off is later recovered, the

recovery is credited to finance costs in the statement of profit or loss and other

comprehensive income.

(f) Financial liabilities

Initial recognition and measurement

Financial liabilities within the scope of IAS 39 are classified as financial liabilities

at fair value through profit or loss, and other financial liabilities, as appropriate.

The Company determines the classification of its financial liabilities at initial

recognition.

All financial liabilities are recognised initially at fair value and, in the case of loans

and borrowings, net of directly attributable transaction costs.

The Company‟s financial liabilities include trade and other payables, finance lease

liabilities and borrowings.

Subsequent measurement

The measurement of financial liabilities depends on their classification as described

below:

Loans and borrowings

After initial recognition, interest bearing loans and borrowings are subsequently

measured at amortised cost using the EIR method. Gains and losses are recognised

in the statement of profit and loss and other comprehensive income when the

liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on

acquisition and fees or costs that are an integral part of the EIR. The EIR

amortisation is included in finance costs in the statement of profit or loss and other

comprehensive income.

59


Trade and other payables

Liabilities for trade and other amounts payable are recognized at cost which is the fair

value of the consideration to be paid in the future for goods and services received,

whether or not billed to the Company.

(g) Embedded derivative financial instruments

Embedded derivatives are separated from the host contract and accounted for

separately if the economic characteristics and risks of the host contract and the

embedded derivative are not closely related, a separate instrument with the same

terms as the embedded derivative would meet the definition of a derivative, and the

combined instrument is not measured at fair value through profit or loss.

Derivatives are recognised initially at fair value at the transaction date and subsequent

to initial recognition, derivatives are measured at fair value. All derivatives in a net

receivable position (positive fair value) are reported as assets. All derivatives in a net

payable position (negative fair value) are reported as liabilities.

Changes in the fair value of embedded derivatives are recognised immediately in

profit or loss.

Although the Company trades in derivative instruments for risk hedging purposes,

these instruments do not qualify for hedge accounting.

(h) Derecognition of financial assets and liabilities

Financial assets

A financial asset (or, where applicable a part of a financial asset or part of a group of

similar financial assets) is derecognised when:

the rights to receive cash flows from the asset have expired;

the Company has transferred its rights to receive cash flows from the asset or has

assumed an obligation to pay the received cash flows in full without material delay to

a third party under a “pass-through” arrangement; and either (a) the Company has

transferred substantially all the risks and rewards of the asset, or (b) the Company has

neither transferred nor retained substantially all the risks and rewards of the asset, but

has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset or

has entered into a pass-through arrangement, it evaluates if and to what extent it has

retained the risks and rewards of ownership. When it has neither transferred nor

retained substantially all of the risks and rewards of the asset, nor transferred control

of the asset, the asset is recognised to the extent of the Company‟s continuing

involvement in the asset. In that case, the Company also recognises an associated

liability. The transferred asset and the associated liability are measured on a basis

that reflects the rights and obligations that the Company has retained.

Continuing involvement that takes the form of a guarantee over the transferred

asset is measured at the lower of the original carrying amount of the asset and the

maximum amount of consideration that the Company could be required to repay.

Financial liabilities

A financial liability is derecognised when the obligation under the liability is

discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on

substantially different terms, or the terms of an existing liability are substantially

modified, such an exchange or modification is treated as the derecognition of the

original liability and the recognition of a new liability. The difference in the

respective carrying amounts is recognised in the statement of profit or loss and

other comprehensive income.

(i) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in

the statement of financial position if there is a currently enforceable legal right to

offset the recognised amounts and there is an intention to settle on a net basis, to

realise the asset and settle the liability simultaneously.

(j) Fair value of financial instruments

The fair value of financial instruments that are traded in active markets at each

reporting date is determined by reference to quoted market prices or dealer price

quotations (bid price for long positions and ask price for short positions), without

any deduction for transaction costs.

For financial instruments not traded in an active market, the fair value is

determined using appropriate valuation techniques. Such techniques may include

Using recent arm‟s length market transactions;

Reference to the current fair value of another instrument that is substantially the

same

A discounted cash flow analysis or other valuation models.

Analysis of fair value of financial instruments and additional information of the

methods of its measurement are disclosed in Note 24.

60


(k) Inventories

Inventories are valued at the lower of cost or net realisable value. Costs include

charges incurred in bringing inventory to its present location and condition. Net

realisable value is the estimated selling price in the ordinary course of business, less

the estimated costs of completion and estimated costs necessary to make the sale. The

same cost formula is used for all inventories having a similar nature and use. All

inventories are valued on the FIFO basis.

(l) Leases

The determination of whether an arrangement is, or contains, a lease is based on the

substance of the arrangement at inception date. The arrangement is assessed for

whether the fulfilment of the arrangement is dependent on the use of a specific asset

or assets or the arrangement conveys a right to use the asset, even if that right is not

explicitly specified in an arrangement.

Company as a lessee – finance lease

Finance leases that transfer substantially all the risks and benefits incidental to

ownership of the leased item to the Company, are capitalised at the commencement

of the lease at the fair value of the leased property or, if lower, at the present value of

the minimum lease payments. Lease payments are apportioned between finance

charges and reduction of the lease liability so as to achieve a constant rate of interest

on the remaining balance of the liability. Finance charges are recognised in finance

costs in the statement of profit or loss and other comprehensive income.

A leased asset is depreciated over the useful life of the asset. However, if there is no

reasonable certainty that the Company will obtain ownership by the end of the lease

term, the asset is depreciated over the shorter of the estimated useful life of the asset

and the lease term.

Company as a lessee – operating lease

Operating lease payments are recognised as an operating expense in the statement of

profit or loss and other comprehensive income on a straight-line basis over the lease

term.

Company as a lessor – operating lease

Leases in which the Company does not transfer substantially all the risks and benefits

of ownership of an asset are classified as operating leases. Initial direct costs incurred

in negotiating an operating lease are added to the carrying amount of the leased asset

and recognised over the lease term on the same basis as rental income. Contingent

rents are recognised as revenue in the period in which they are earned.

(m) Provisions

General

Provisions are recognised when the Company has a present obligation (legal or

constructive) as a result of a past event, it is probable that an outflow of resources

embodying economic benefits will be required to settle the obligation and a reliable

estimate can be made of the amount of the obligation. Where the Company expects

some or all of a provision to be reimbursed, for example under an insurance

contract, the reimbursement is recognised as a separate asset but only when the

reimbursement is virtually certain. The expense relating to any provision is

presented in the statement of profit or loss and other comprehensive income net of

any reimbursement.

If the effect of the time value of money is material, provisions are discounted using

a current pre-tax rate that reflects, where appropriate, the risks specific to the

liability. Where discounting is used, the increase in the provision due to the passage

of time is recognised as a finance cost.

(n) Employee benefits

The Company does not have any pension arrangements separate from the state

pension system of the Republic of Kazakhstan, which requires current

contributions by the employer calculated as a percentage of current gross salary

payments; such expense is charged in the period the related salaries are earned. The

Company has no post-retirement benefits or other compensated benefits requiring

accrual. The Company pays social tax according to the current statutory

requirements of the Republic of Kazakhstan. Social tax is expensed as incurred.

(o) Dividends

Dividends are recognised as a liability and deducted from equity at the reporting

date only if they are approved before or on the reporting date. Dividends are

disclosed when they are proposed before the reporting date or proposed or declared

after the reporting date but before the financial statements are authorised for issue.

(p) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits

will flow to the Company and the revenue can be reliably measured, regardless of

when the payment is being made. Revenue is measured at the fair value of the

consideration received or receivable, taking into account contractually defined

terms of payment and excluding taxes or duty. The Company assesses its revenue

arrangements against specific criteria in order to determine if it is acting as

61


principal or agent. The Company has concluded that it is acting as a principal in all of

its revenue arrangements. The following specific recognition criteria must also be met

before revenue is recognised:

Rental income

Rental income arising from operating leases of rolling stock is accounted for on a

straight line basis over the lease term and is included in revenue line in the statement

of profit or loss and other comprehensive income.

Rendering of services

In respect of services revenue is recognized by reference to the stage of completion at

the reporting date provided that the stage of completion and the amount of revenue

can be measured reliably.

(q) Expense recognition

Expenses are accounted for at the time the actual flow of the related goods or services

occur, regardless of when cash or its equivalent is paid, and are reported in the

financial statements in the period to which they relate.

(r) Finance income and costs

The Company‟s finance income and finance costs include:

interest income;

income from subsidies;

discount of loans issued to employees;

interest expense;

Interest income and expense shall be recognized by the interest effective rate method.

(s) Government grants

Government grants provided to compensate the Company for the finance expenses

incurred are recognised initially as deferred income at fair value when there is

reasonable assurance that they will be received and that the Company will comply

with the conditions associated with the grant. Respective grant receivables are then

amortised and discount is recognised in finance income during the term of the

subsidised loan.

(t) Borrowing costs

Borrowing costs directly attributable to the acquisition, construction or production of

an asset that necessarily takes a substantial period of time to get ready for its intended

use or sale are capitalised as part of the cost of the respective assets. All other

borrowing costs are expensed in the period they occur. Borrowing costs consist of

interest and other costs that an entity incurs in connection with the borrowing of

funds.

(u) Income tax expense

Current income tax

Current income tax assets and liabilities for the current period are measured at the

amount expected to be recovered from or paid to the taxation authorities. The tax

rates and tax laws used to compute the amount are those that are enacted or

substantively enacted, at the reporting date in the countries where the Company

operates and generates taxable income. Current income tax relating to items

recognised directly in equity is recognised in equity and not in the statement of

profit or loss and other comprehensive income.

Management periodically evaluates positions taken in the tax returns with respect

to situations in which applicable tax regulations are subject to interpretation and

establishes provisions where appropriate.

Deferred income tax

Deferred tax is provided using the liability method on temporary differences

between the tax bases of assets and liabilities and their carrying amounts for

financial reporting purposes at the reporting date.

Deferred income tax liabilities are recognised for all taxable temporary differences,

except:

•When the deferred income tax liability arises from the initial recognition of

goodwill or of an asset or liability in a transaction that is not a business

combination and, at the time of the transaction, affects neither the accounting profit

nor taxable profit or loss; and

•In respect of taxable temporary differences associated with investments in

subsidiaries, associates and interests in joint ventures, where the timing of the

reversal of the temporary differences can be controlled and it is probable that the

temporary differences will not reverse in the foreseeable future.

Deferred tax assets are recognised for all deductible temporary differences, the

carry forward of unused tax credits and any unused tax losses. Deferred tax assets

are recognised to the extent that it is probable that taxable profit will be available

against which the deductible temporary differences, and the carry forward of

unused tax credits and unused tax losses can be utilised, except:

62


• When the deferred income tax asset relating to the deductible temporary

difference arises from the initial recognition of an asset or liability in a transaction

that is not a business combination and, at the time of the transaction, affects

neither the accounting profit nor taxable profit or loss;

• In respect of deductible temporary differences associated with investments in

subsidiaries, associates and interests in joint ventures, deferred income tax assets

are recognised only to the extent that it is probable that the temporary differences

will reverse in the foreseeable future and taxable profit will be available against

which the temporary differences can be utilised.

The carrying amount of deferred income tax assets is reviewed at each balance sheet

date and reduced to the extent that it is no longer probable that sufficient taxable

profit will be available to allow all or part of the deferred income tax asset to be

utilised. Unrecognised deferred income tax assets are reassessed at each balance

sheet date and are recognised to the extent that it has become probable that future

taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are

expected to apply to the year when the asset is realised or the liability is settled,

based on tax rates (and tax laws) that have been enacted or substantively enacted

at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside

profit or loss. Deferred tax items are recognised in correlation to the underlying

transaction either in profit or loss and other other comprehensive income or

directly in equity.

Deferred income tax assets and deferred income tax liabilities are offset if a legally

enforceable right exists to set off current tax assets against current income tax

liabilities and the deferred taxes relate to the same taxable entity and the same

taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria

for separate recognition at that date, are recognised subsequently if new

information about facts and circumstances changed. The adjustment is either be

treated as a reduction to goodwill (as long as it does not exceed goodwill) if it

incurred during the measurement period or recognised in profit or loss.

29 NEW STANDARDS AND INTERPRETATIONS NOT YET

ADOPTED

A number of new Standards, amendments to Standards and Interpretations are not

yet effective as at 31 December 2014, and have not been applied in preparing these

consolidated financial statements. Of these pronouncements, potentially the

following will have an impact on the Company‟s operations. The Company plans

to adopt these pronouncements when they become effective.

IFRS 9, published in July 2014, replaces the existing guidance in IAS 39 Financial

Instruments: Recognition and Measurement. IFRS 9 includes revised guidance on

the classification and measurement of financial instruments, including a new

expected credit loss model for calculating impairment on financial assets, and the

new general hedge accounting requirements. It also carries forward the guidance

on recognition and derecognition of financial instruments from IAS 39. IFRS 9 is

effective for annual reporting periods beginning on or after 1 January 2018, with

early adoption permitted.

IFRS 15 establishes a comprehensive framework for determining whether, how

much and when revenue is recognised. It replaces existing revenue recognition

guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13

Customer Loyalty Programs. The core principle of the new standard is that an

entity recognises revenue to depict the transfer of promised goods or services to

customers in an amount that reflects the consideration to which the entity expects

to be entitled in exchange for those goods or services. The new standard results in

enhanced disclosures about revenue, provides guidance for transactions that were

not previously addressed comprehensively and improves guidance for multiple-

element arrangements. IFRS 15 is effective for annual reporting periods beginning

on or after 1 January 2017, with early adoption permitted.

63


Additional information

64

KTZ – «Kazakhstan Temir Zholy» JSC

TSO – «Tengizchevroil» LLP

IFC – International Finance Corporation

LSE – London Stock Exchange

KASE - Kazakhstan Stock Exhange

USD, $ - National currency of the United States of America.

blrd. – billion

mln. – million

th. – thousand

un. – unit

b.w. – Beats. weight.

Km. – Kilometers

Km/h – Kilometers in hour

Ebitda - Earnings before Interest, Taxes, Depreciation and Amortization

Ebit - Earnings before Interest, Taxes

IPO - Initial Public Offering

DSCR – Debt Service Cover Ratio

LPG – Liquefied carbon dioxide

RTW – Railway Transport wagon

F – Forecast

Y-to-y – year to year

Glossary

65

«EASTCOMTRANS» LLP:

Legal address:

050040, Republic of Kazakhstan, Almaty,

Al-Farabi 77/7 BC "Esentai Tower" n.p. 11a

Mailing address:

LLP "Eastcomtrans"

Registered address:

050040, Republic of Kazakhstan, Almaty,

Al-Farabi 77/7, BC "Esentai Tower" n.p. 11a

Tel.: +7 (727) 3-555-111

Fax: +7 (727) 3-555-222

E-mail: [email protected]

www.ect.kz

CREATE THE FURTURE TOGETHER

REGISTRAR:

JSC “The Integrated Securities Registrar"

Address: 050000, Republic of Kazakhstan,

Almaty, Abylai Khan, d 141

Tel.: +7 (727) 2-724-760

Fax: +7 (727) 2-724-766

www.tisr.kz

AUDITOR

«KPMG Audit» LLP

Address: 050051, Republic of Kazakhstan,

Almaty, Dostyk ave 180, BC "Koktem"

Tel.: +7 (727) 2-980-898

Fax: +7 (727) 2-980-708

www.kpmg.com/kz

Contact Information

66

http://www.ect.kz/

http://www.ect.kz/

http://www.ect.kz/

http://www.ect.kz/

http://www.ect.kz/

http://www.tisr.kz/

http://www.tisr.kz/

http://www.tisr.kz/

http://www.tisr.kz/

http://www.tisr.kz/

http://www.kpmg.com/kz

eastcomtrans llp annual report for 2014 year - rns · pdf file• key highlights 2014. ......

Documents