samruk kazyna invest llp · 050051 almaty, 180 dostyk avenue, e ... to the management of samruk...

Samruk Kazyna Invest LLP

Financial Statements for the year ended 31 December 2015

Samruk-Kazyna Invest LLP

Contents

Independent Auditors’ Report

Statement of Profit or Loss and Other Comprehensive Income 5

Statement of Financial Position 6

Statement of Cash Flows 7

Statement of Changes in Equity 8

Notes to the Financial Statements 9-35

«КПМГ Аудит» жауапкершілігі шектеулі серіктестік 050051 Алматы, Достық д-лы 180, Тел./факс 8 (727) 298-08-98, 298-07-08

KPMG Audit LLC 050051 Almaty, 180 Dostyk Avenue, E-mail: [email protected]

«КПМГ Аудит» ЖШС, Қазақстан Республикасының заңнамасы бойынша тіркелген компания жəне Швейцария заңнамасы бойынша тіркелген KPMG International Cooperative (“KPMG International”) қауымдастығына кіретін KPMG тəуелсіз фирмалар желісінің мүшесі. KPMG Audit LLC, a company incorporated under the Laws of the Republic of Kazakhstan, a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Independent Auditors’ Report

To the Management of Samruk Kazyna Invest LLP

We have audited the accompanying financial statements of Samruk Kazyna Invest LLP (the “Company”), which comprise the statement of financial position as at 31 December 2015, 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 judgement, 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.

Samruk Kazyna Invest LLP Statement of Financial Position as at 31 December 2015

6

The statement of financial position is to be read in conjunction with the notes to, and forming part of, the financial statements.

Note2015

‘000 KZT 2014

‘000 KZT

Assets Property and equipment 9 31,216 30,496

Intangible assets 10 10,490 11,519

Financial instruments at fair value through profit or loss 11 10,276,096 7,447,107

Available-for-sale investments 12 19,868 19,868

Non-current assets 10,337,670 7,508,990

Current tax asset 18,120 13,885

Other assets 13 38,020 63,522

Placements in banks 14 1,276,569 -

Cash and cash equivalents 15 486,051 1,585,087

Current assets 1,818,760 1,662,494

Total assets 12,156,430 9,171,484

Equity

Charter capital 16 11,321,949 8,583,514

Retained earnings 567,652 386,925

Total equity 11,889,601 8,970,439

Liabilities

Deferred tax liabilities 8 199,095 117,738

Non-current liabilities 199,095 117,738

Trade and other payables 17 57,416 59,018

Other taxes payable 10,318 24,289

Current liabilities 67,734 83,307

Total liabilities 266,829 201,045

Total equity and liabilities 12,156,430 9,171,484

Samruk Kazyna Invest LLP Statement of Cash Flows for the year ended 31 December 2015

7 The statement of cash flows is to be read in conjunction with the notes to, and forming part of, the financial statements.

‘000 KZT Note 2015 2014

Cash flows from operating activities

Profit before income tax 403,917 1,063,284

Adjustments for:

Depreciation and amortisation 9,10 18,450 22,126

Net gain on financial instruments at fair value through profit or loss (88,485) (1,117,707)

Provisions and employee benefits 364 (9,674)

Loss from sale of property and equipment 213 -

Finance (income)/expense (651,706) 1,696

(317,247) (40,275)

Changes in:

Other assets 25,502 (42,762)

Acquisition of financial instruments at fair value through profit or loss 11 (2,740,505) (4,596,898)

Acquisition of available-for-sale investments 12 - (98)

Trade and other payables (1,966) (10,012)

Other taxes payable (13,971) 46,275

Cash flows used in operations before income taxes and interest paid (3,048,187) (4,643,770)

Income tax paid (4,235) (1,073)

Interest received 28,463 3,956

Net cash used in operating activities (3,023,959) (4,640,887)

Cash flows from investing activities

Proceeds from bank deposits - 432

Placement of bank deposits (962,831) -

Decrease in restricted cash - 548

Acquisition of property and equipment (14,264) (6,781)

Acquisition of intangible assets (4,090) (276)

Net cash used in investing activities (981,185) (6,077)

Cash flows from financing activities

Proceeds from contributions to charter capital 16 2,738,435 5,154,676

Dividends paid (141,833) -

Net cash from financing activities 2,596,602 5,154,676

Net (decrease)/increase in cash and cash equivalents (1,408,542) 507,712

Cash and cash equivalents at 1 January 1,585,087 1,083,459

Effect of movements in exchange rates on cash and cash equivalents 309,506 (6,084)

Cash and cash equivalents at 31 December 15 486,051 1,585,087

Samruk Kazyna Invest LLP Statement of Changes of Equity for the year ended 31 December 2015

8 The statement of changes in equity is to be read in conjunction with the notes to, and forming part of, the financial statements.

‘000 KZT

Charter

capital Retained earnings

Total equity

Balance as at 1 January 2014 3,428,838 (558,621) 2,870,217

Profit and total comprehensive income for the year - 945,546 945,546

Transactions with owners, recorded directly in equity

Contribution to charter capital (Note 16) 5,154,676 - 5,154,676

Total transactions with owners 5,154,676 - 5,154,676

Balance as at 31 December 2014 8,583,514 386,925 8,970,439

Profit and total comprehensive income for the year - 322,560 322,560

Transactions with owners, recorded directly in equity

Contribution to charter capital (Note 16) 2,738,435 - 2,738,435

Dividends paid - (141,833) (141,833)

Total transactions with owners 2,738,435 (141,833) 2,596,602

Balance as at 31 December 2015 11,321,949 567,652 11,889,601

Samruk Kazyna Invest LLP Notes to the Financial Statements for the year ended 31 December 2015

9

Note Page Note Page

1 Reporting entity 10

2 Basis of accounting 11

3 Functional and presentation currency 11

4 Use of estimates and judgments 11

5 Revenue 12

6 Operating expenses 12

7 Finance income/(expense) 13

8 Income tax expense 13

9 Property and equipment 14

10 Intangible assets 15

11 Financial instruments at fair value through profit or loss 15

12 Available-for-sale investments 17

13 Other assets 18

14 Placements in banks 18

15 Cash and cash equivalents 18

16 Capital 18

17 Trade and other payables 19

18 Other taxes payable 19

19 Fair values and risk management 19

20 Contingencies 26

21 Related parties 27

22 Basis of measurement 29

23 Significant accounting policies 28

24 Subsequent events 35


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1 Reporting entity

(a) Kazakhstan business environment

The Company’s operations are primarily located in Kazakhstan. Consequently, the Company is exposed to the economic and financial markets of Kazakhstan, which display emerging-market characteristics. Legal, tax and regulatory frameworks continue to develop, but are subject to varying interpretations and frequent changes that, together with other legal and fiscal impediments, contribute to the challenges faced by entities operating in Kazakhstan. In addition, the recent significant depreciation of the Kazakhstan tenge, and the reduction in the global price of oil, have increased the level of uncertainty in the business environment.

The financial statements reflect management’s assessment of the impact of the Kazakhstan business environment on the operations and financial position of the Company. The future business environment may differ from management’s assessment.

(b) Organisation and operations

A limited liability partnership Samruk-Kazyna Invest (the “Company”) was established on 25 July 2007. The Company was established in accordance with the laws of the Republic of Kazakhstan.

The founder of the Company is the Kazakhstan Holding for Management of State Assets “Samruk" JSC. In November 2008, the Sovereign Wealth Fund “Samruk-Kazyna” Joint Stock Company (further, the “Fund”) became a legal successor of the Kazakhstan Holding for Management of State Assets "Samruk" JSC. In this regard, the Company changed its name to Samruk-Kazyna Invest LLP and subsequently amended its Charter and re-registered its judicial documents.

During 2012, upon the decision of the Investment and Innovation Committee of the Fund new goals and tasks were defined for the Company. According to this decision, the Company will undertake to invest in new and existing projects of the Fund and other projects run by other companies. For financing these activities, on 13 September 2012 the Management Board of the Fund made a decision to increase the charter capital of the Company by additional contribution in the amount of KZT 756,838 thousand.

During 2013-2015 the charter capital of the Company was further increased by the total amount of KZT 10,170,111 thousand.

The Company’s registered office is 8, Kunayev street, Astana, the Republic of Kazakhstan.

The Company is ultimately controlled by the Government of the Republic of Kazakhstan.

Principal Activities

The main activity of the Company is the participation in the investment activities of the Fund through the following activities:

investment into the capital and assets of legal entities;

providing asset management services and investment and consulting services;

organisation of financing projects, including the evaluation of the sources of financing and syndicated project financing;

researching on corporate, industry, investment, economic and marketing issues;

consulting services on the issues of information and analytical support for investment activity;

supporting the initiatives of the private sector on the projects aimed at providing in-depth processing of raw materials, the use of advanced technology and equipment, as well as improving the quality and growth of output of goods and services;


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1 Reporting entity, continued

(b) Organisation and operations, continued

Principal Activities, continued

co-operation with existing investment funds and stimulating the activity of development institutions in order to share the risks of the project participants.

The goals of the Company include:

receiving net gain in the course of conducting independent economic activity;

participating in investment activities by providing expertise, participating in the management of some investment projects run by the Fund and other legal entities;

attracting foreign investments to the economy of the Republic of Kazakhstan;

identifying and evaluating the future-oriented projects, assets and companies beyond the territory of the Republic of Kazakhstan for investments and acquisitions facilitating the economic growth of the company and the Fund and transfer of technologies and knowledge into the existing and newly created enterprises in the Republic of Kazakhstan;

promoting private investments and expanding the investment activities of foreign companies in the territory of the Republic of Kazakhstan by means of joint financing of projects and otherwise assisting with implementation of projects;

developing and searching for ideas, suggestions and master plans to attract investments to the industries and projects, which are either new or non-traditional for the economy of the Republic of Kazakhstan, involving external consultants who possess the relevant expertise and experience for developing such industries.

2 Basis of accounting

Statement of compliance

The accompanying financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”).

3 Functional and presentation currency

The functional currency of the Company is the Kazakhstan tenge (“KZT”) as, being the national currency of the Republic of Kazakhstan, it reflects the economic substance of the majority of underlying events and circumstances relevant to them.

The KZT is also the presentation currency for the purposes of these financial statements.

Financial information presented in KZT is rounded to the nearest thousand.

4 Use of estimates and judgments

The preparation of financial statements in conformity with IFRS 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.


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4 Use of estimates and judgments, continued

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 significant areas of estimation uncertainty and critical judgments in applying accounting policies is described in the following notes:

Note 11 – financial instruments at fair value through profit or loss;

Note 19 – estimates of fair value of financial instruments.

Measurement of fair values

A number of the Company’s disclosures require the measurement of fair values, for both financial and non-financial assets and liabilities.

The Company has an established control framework with respect to the measurement of fair values. This includes a valuation team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values, and reports directly to the CFO.

The valuation team regularly reviews 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 valuation team 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.

Significant valuation issues are reported to the Company Audit Committee.

Further information about the fair value hierarchy and assumptions made in measuring fair values is included in the following notes:

Note 19 – fair value and risk management.

5 Revenue

‘000 KZT 2015 2014

Consulting services rendered to the Fund 627,288 759,563

Other - 47,415

627,288 806,978

6 Operating expenses

‘000 KZT 2015 2014

Wages and salaries 728,187 634,111

Rent expense 79,525 71,709

Business travel 36,721 17,731

Consulting services 23,645 52,055

Depreciation and amortisation 18,450 22,126

Transportation 14,937 14,880

Training 10,896 13,276

Maintenance and repair 6,334 11,394

Outsourcing 5,963 5,948

Other 38,904 16,475

963,562 859,705


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7 Finance income/(expense)

‘000 KZT 2015 2014

Net foreign exchange gain/(loss) 623,243 (6,084)

Interest income 28,463 4,388

Total financial income/(expense) 651,706 (1,696)

8 Income tax expense

(a) Amounts recognised in profit or loss

The Company’s applicable tax rate is the income tax rate of 20% for Kazakhstan companies.

‘000 KZT 2015 2014

Deferred tax expense

Movement in deferred tax assets and liabilities due to origination and reversal of temporary differences 81,357 117,738

Total income tax expense 81,357 117,738

Reconciliation of effective tax rate for the year ended 31 December:

2015 2014

‘000 KZT % ‘000 KZT %

Profit before income tax 403,917 100.0 1,063,284 100.0

Income tax at the applicable tax rate 80,783 20.0 212,657 20.0

Recognition of previously unrecognised deferred tax asset - - (95,458) (9.0)

Non-deductible expenses 574 0.1 539 0.1

81,357 20.1 117,738 11.1

(b) Movement in deferred tax balances

‘000 KZT 1 January 2015 Recognised in profit or loss 31 December 2015

Property and equipment 1,453 601 2,054

Intangible assets 1,100 511 1,611

Financial instruments at fair value through profit or loss (223,541) (17,697) (241,238)

Trade and other payables 10,490 (73) 10,417

Tax loss carry-forwards 92,760 (64,699) 28,061

(117,738) (81,357) (199,095)


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8 Income tax expense, continued

(c) Movement in deferred tax balances, continued

‘000 KZT 1 January 2014 Recognised in profit or loss 31 December 2014

Property and equipment 555 898 1,453

Intangible assets 661 439 1,100

Financial instruments at fair value through profit or loss - (223,541) (223,541)

Trade and other payables 8,555 1,935 10,490

Tax loss carry-forward 85,687 7,073 92,760

Total deferred tax assets 95,458 (213,196) (117,738)

Unrecognised deferred tax assets (95,458) 95,458 -

Recognised deferred tax assets - (117,738) (117,738)

9 Property and equipment

‘000 KZT

Computers and office equipment Furniture

Others

Total

Cost

Balance at 1 January 2014 62,705 24,277 - 86,982

Additions 6,781 - - 6,781

Balance at 31 December 2014 69,486 24,277 - 93,763

Additions 1,491 - 12,773 14,264

Disposals (7,876) - - (7,876)

Balance at 31 December 2015 63,101 24,277 12,773 100,151

Depreciation and impairment losses

Balance at 1 January 2014 (38,846) (7,484) - (46,330)

Depreciation for the year (13,950) (2,987) - (16,937)

Balance at 31 December 2014 (52,796) (10,471) - (63,267)

Depreciation for the year (10,046) (2,966) (319) (13,331)

Disposals 7,663 - - 7,663

Balance at 31 December 2015 (55,179) (13,437) (319) (68,935)

Carrying amounts

At 1 January 2014 23,859 16,793 - 40,652

At 31 December 2014 16,690 13,806 - 30,496

At 31 December 2015 7,922 10,840 12,454 31,216

Depreciation expense of KZT 13,331 thousand (2014: KZT 16,937 thousand) has been charged to operating expenses.


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10 Intangible assets

‘000 KZT Computer software

Cost

Balance at 1 January 2014 34,663

Acquisitions 276

Balance at 31 December 2014 34,939

Acquisitions 4,090

Balance at 31 December 2015 39,029

Amortisation

Balance at 1 January 2014 (18,231)

Amortisation for the year (5,189)

Balance at 31 December 2014 (23,420)

Amortisation for the year (5,119)

Balance at 31 December 2015 (28,539)

Carrying amounts

At 1 January 2014 16,432

At 31 December 2014 11,519

At 31 December 2015 10,490

Amortisation expense of KZT 5,119 thousand (2014: KZT 5,189 thousand) has been charged to operating expenses.

11 Financial instruments at fair value through profit or loss

31 December 2015 31 December 2014

% of shares owned ‘000 KZT

% of shares owned

‘000 KZT

Samruk Kazyna - United Green LLP 49.00 4,491,577 50.10 1,713,300

Syrymbet JSC 12.61 3,908,860 12.61 3,367,707

Leasing Group JSC 49.00 751,342 49.00 2,123,010

KazFerrit LLP 25.00 659,245 - -

Machine Building Plant KazTekhMash LLP 49.00 343,090 49.00 243,090

SK Electrod LLP 25.00 121,936 - -

TUMAR TECHNO LLP 25.00 46 - -

10,276,096 7,447,107

Financial instruments at fair value through profit or loss comprise financial instruments designated on initial recognition in this category.

The purpose of these investments is to gain a profit from the increased share price of investees, and the Company plans to dispose of its shares in investees within five to seven years from the acquisition date.


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11 Financial instruments at fair value through profit or loss, continued

Syrymbet JSC

Within the framework of the Treaty on mutual realisation of the project “Exploitation of tin and construction of mining-and-metallurgical integrated work in the North-Kazakhstan oblast” (“the Treaty”), on 11 December 2013 the Company acquired 10,000 newly issued ordinary shares of Syrymbet JSC for cash consideration of KZT 1,732,502 thousand and obtained a 10% holding in the investee. On 25 February 2014 the Company acquired an additional 2,987 newly issued ordinary shares of Syrymbet JSC for cash consideration of KZT 517,498 thousand and increased its holding to 12.61%. The principal activity of Syrymbet JSC is the exploration and production of 45% tin concentrate and tin sublimates.

As part of the Treaty, the Company concluded additional put and call option agreements. According to the put option, the Company has a right to sell its shares to the majority shareholder of the Investee – Berkut Mining LLC, which holds 87.39% (2014: 87.39%) of the investee’s shares, after 2 years from the date the acquisition of shares was completed at a premium of 8% per annum over the initial cost of the shares to the Company. According to the call option, if the Company does not exercise its put option in full or partially after two years, Berkut Mining LLC has a right to buy the Company’s remaining shares at the fair value prevailing at that date less an 8% per annum discount based on the initial cost of the shares to the Company.

During 2015 the Management of Syrymbet JSC proposed to increase the share of the Company from 12.61% to 25% plus 1 share by purchase of an additional 17,014 ordinary shares. The Supervisory Board and Investing Committee approved the decision with the determined conditions. As at 31 December 2015 the purchase of additional shares in Syrymbet JSC is under consideration of National Welfare Fund Samryk Kazyna JSC, whose approval is required as a condition of the transaction.

Management engaged an independent appraisal company American Appraisal LLP to perform valuation of this investment. According to the valuation results, the fair value of the investment in Syrymbet JSC including the value of the options amounted to KZT 3,908,860 thousand resulting in a gain of KZT 541,153 thousand being recognised in profit or loss.

Samruk Kazyna-United Green LLP (“SKUG”)

Samruk Kazyna-United Green LLP (“SKUG”) was established on 19 March 2014 as a joint venture of Samruk Kazyna Invest LLP and UG Energy Limited. Management considers that the Company does not control SKUG due to the contractual arrangements of the joint venture agreement, which limit the Company’s ability to appoint the members of the executive body.

SKUG was formed to implement the investment project “Construction of solar power plants with a capacity of 400 MW, followed by their connection to the electrical grid and subsequent management of these solar plants in the Republic of Kazakhstan”. The construction of the first solar power plant project Burnoye with a capacity of 50 MW located in Zhualyn region, Zhambyl oblast, Kazakhstan, was completed in June 2015. And, starting from June 2015, the solar power plant produces and sells electricity to population.

During 2015 Samruk-Kazyna Invest LLP made two cash contributions for a total amount of KZT 935,934 thousand (2014: eight contributions for a total amount of KZT 1,713,300 thousand) to the charter capital of SKUG.

Management engaged an independent appraisal company PricewaterhouseCoopers LLP to perform a valuation of this investment. According to the valuation results, the fair value of the investment in SKUG amounted to KZT 4,491,576 thousand resulting in a gain of KZT 918,998 thousand being recognised in profit or loss.

In December 2015 the Company and UG Energy Limited concluded an agreement for purchase of 12.69% of shares in SKUG from UG Energy Limited, for which the Company made a prepayment in the amount of KZT 925,407 thousand, which is a part of carrying amount of investment as at 31 December 2015.


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11 Financial instruments at fair value through profit or loss, continued

Leasing Group JSC

On 21 November 2014 the Company acquired 2,024,267,361 newly issued ordinary shares of Leasing Group JSC for cash consideration of KZT 2,123,010 thousand that provided the Company with a holding of 49% in Leasing Group JSC. The principal activity of the entity is investing through finance leasing and factoring operations.

Management engaged an independent appraisal company Valuation Service LLC to perform a valuation of this investment. According to the valuation results, the fair value of the investment in Leasing Group JSC amounted to KZT 751,342 thousand resulting in a loss of KZT 1,371,667 thousand being recognised in profit or loss.

KazTechMash LLP

In October 2014 the Company made a cash contribution of KZT 243,090 thousand to Machine Building Plant KazTechMash LLP (“KTM”). The principal activity of KTM is production of agricultural machinery and equipment. During the year ended 31 December 2015 the Company made an additional cash contribution of KZT 100,000 thousand to complete repair and construction works and for operating expenses.

Management engaged an independent appraisal company Valuation Service LLC to perform a valuation of this investment. According to the valuation results, the fair value of the investment in KazTechMash LLP approached its cost, and the management estimated the fair value of this investment at cost in order to be conservative given the uncertain economic situation of the company.

New investments made during 2015

During the year ended 31 December 2015 the Company made investments in new companies: KazFerrit LLP, SK Electrod LLP and Tumar Techno LLP.

In August 2015 the Company acquired a 25% stake in KazFerrit LLP for cash consideration of 659,245 thousand. As part of the investment project “Construction of plant for coal benefication with the capacity of 500,000 tonnes per year with recycling water supply ring closure”, the construction of plant in Karaganda city is planned for 2016.

Management engaged an independent appraisal company Valuation Service LLC to perform a valuation of this investment. According to the valuation results, the fair value of the investment in KazFerrit LLP approached its cost, and the management estimated the fair value at cost given the investment was made in August 2015 and although construction of new plant is proceeding, it is at a relatively early stage.

The Company’s exposure to market risks related to financial instruments at fair value through profit or loss is disclosed in Note 19.

12 Available-for-sale investments

On 30 April 2013 the Company acquired 0.1% of the ordinary shares of Chem-plus LLP for cash consideration of KZT 19,770 thousand. The principal activity of Chem-plus LLP is the construction of a plant for production of fertilizers with subsequent production and processing of glyphosate, caustic soda, phosphorus chloride and calcium chloride in Merke, Zhambyl oblast, Kazakhstan. The Company plans to increase its share in Chem-plus LLP or sell it at margin based on results of operations. Management believes that the fair value of this investment has not changed since the last reporting date.

On 6 May 2014, the Company invested KZT 98 thousand in Indox Samruk Kazakhstan LLP, which was created in cooperation with Indox Cryo Energy Overseas Ltd.


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13 Other assets

‘000 KZT 2015 2014

Prepayments 24,434 157

Receivable from the Fund 10,800 60,844

Receivables from employees 2,598 731

Inventory - 1,602

Other 188 188

38,020 63,522

None of the other assets are impaired or past due.

14 Placements in banks

Placements in banks represent interest bearing term deposits with maturity of less than one year, placed in Bank of Astana JSC rated B based on Standard and Poor’s rating agency long term ratings.

None of the placements in banks are impaired or past due.

15 Cash and cash equivalents

‘000 KZT Rating 2015 2014

Bank of Astana B 401,942 -

Kazkommertsbank JSC B- 64,087 1,565,075

Nurbank JSC B 20,022 20,012

Total cash equivalents 486,051 1,585,087

The above table is based on the credit ratings assigned by Standard&Poor’s scale.

None of the cash and cash equivalents are impaired or past due.

16 Capital (a) Charter capital

The Company was established on 25 July 2007. As at 31 December 2015 authorised capital is KZT 11,321,949 thousand (2014: KZT 8,583,514 thousand). During the years ended 31 December 2015 and 2014, the sole partner made cash contributions to capital in the amount of KZT 2,738,435 thousand and KZT 5,154,676 thousand, respectively.

(b) Dividends

In accordance with Kazakhstan legislation 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 or profit for the year if there is an accumulated loss brought forward. A distribution cannot be made if this would result in negative equity or the Company’s insolvency. In accordance with the legislation of the Republic of Kazakhstan. Under Kazakhstan legislation, as at the reporting date, reserves available for distribution amounted to KZT 567,652 thousand (2014: KZT 386,925 thousand).

During 2015 the Company paid dividends in the amount of KZT 141,833 thousand. No dividends were paid during 2014.


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17 Trade and other payables

‘000 KZT 2015 2014

Payables to suppliers 4,011 4,934

Total financial liabilities 4,011 4,934

Provisions and employee benefits 52,086 52,450

Other payables 1,319 1,634

Total trade and other payables 57,416 59,018

18 Other taxes payable

‘000 KZT 2015 2014

VAT payable 2,354 24,289

Other taxes 7,964 -

10,318 24,289

19 Fair values and risk management

(a) Accounting classifications and fair values

The table below sets out the carrying amounts and fair values of financial assets and financial liabilities as at 31 December 2015:

‘000 KZT Designated at

fair value Loans and receivables

Available-for-sale

Other amortised

cost

Total carrying amount Fair value

Cash and cash equivalents - 486,051 - - 486,051 486,051

Placements in banks - 1,276,569 1,276,569 1,276,569

Financial instruments at fair value through profit or loss 10,276,096 - - - 10,276,096 10,276,096

Available-for-sale investments - - 19,868 - 19,868 19,868

Other financial assets - 10,800 - - 10,800 10,800

10,276,096 1,773,420 19,868 - 12,069,384 12,069,384

Trade and other payables - - - 4,011 4,011 4,011

- - - 4,011 4,011 4,011

The table below sets out the carrying amounts and fair values of financial assets and financial liabilities as at 31 December 2014:

‘000 KZT Designated at fair value

Loans and receivables

Available-for-sale

Other amortised

cost

Total carrying amount Fair value

Cash and cash equivalents - 1,585,087 - - 1,585,087 1,585,087

Financial instruments at fair value through profit or loss 7,447,107 - - - 7,447,107 7,447,107

Available-for-sale investments - - 19,868 - 19,868 19,868

Other financial assets - 62,446 - - 62,446 62,446

7,447,107 1,647,533 19,868 - 9,114,508 9,114,508

Trade and other payables - - - 4,934 4,934 4,934

- - - 4,934 4,934 4,934


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19 Fair values and risk management, continued

(a) Accounting classifications and fair values, continued

The estimates of fair value are intended to approximate the price that would be received to sell an asset, or paid to transfer a liability in an orderly transaction between market participants at the measurement date. However, given the uncertainties and the use of subjective judgment, the fair value should not be interpreted as being realisable in an immediate sale of the assets or transfer of liabilities.

Fair values of financial assets and financial liabilities that are traded in active markets are based on quoted market prices or dealer price quotations. For all other financial instruments, the Company determines fair values using other valuation techniques.

The objective of valuation techniques is to arrive at a fair value determination that reflects the price that would be received to sell the asset, or paid to transfer the liability in an orderly transaction between market participants at the measurement date.

Valuation techniques include net present value and discounted cash flow models, comparison to similar instruments for which market-observable prices exist, Black-Scholes and polynomial-option pricing models and other valuation models. Assumptions and inputs used in valuation techniques include risk-free and benchmark interest rates, credit spreads and other premia used in estimating discount rates, bond and equity prices, foreign currency exchange rates, equity and equity index prices and expected price volatilities and correlations. The objective of valuation techniques is to arrive at a fair value determination that reflects the price of the financial instrument at the reporting date that would have been determined by market participants acting at arm’s length.

The Company uses widely recognised valuation models to determine the fair value of common and more simple financial instruments, such as interest rate and currency swaps that use only observable market data and require little management judgment and estimation. Observable prices and model inputs are usually available in the market for listed debt and equity securities, exchange-traded derivatives, and simple over-the-counter derivatives such us interest rate swaps.

For more complex instruments, the Company uses proprietary valuation models. Some or all of the significant inputs into these models may not be observable in the market, and are derived from market prices or rates or are estimated based on assumptions. Example of instruments involving significant unobservable inputs include certain loans and securities for which there is no active market, certain over-the-counter structured derivatives, and retained interests in securitisations.

Fair value hierarchy

The Company measures fair values using the following fair value hierarchy, which reflects the significance of the inputs used in making the measurements:

Level 1: quoted market price (unadjusted) in an active market for an identical instrument.

Level 2: inputs other than quotes prices included within Level 1 that are observable either directly (i.e., as prices) or indirectly (i.e., derived from prices). This category includes instruments valued using: quoted market prices in active markets for similar instruments; quoted prices for similar instruments in markets that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

Level 3: inputs that are unobservable. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted prices for similar instruments where significant unobservable adjustments or assumptions are required to reflect differences between the instruments.


21

19 Fair values and risk management, continued (a) Accounting classifications and fair values, continued

The table below analyses financial instruments measured at fair value at 31 December 2015, by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position:

‘000 KZT Level 2 Level 3 Total Financial instruments at fair value through profit or loss - 10,276,096 10,276,096 Available-for-sale financial assets - 19,868 19,868 - 10,295,964 10,295,964

The table below analyses financial instruments measured at fair value at 31 December 2014, by the level in the fair value hierarchy into which the fair value measurement is categorised. The amounts are based on the values recognised in the statement of financial position:

‘000 KZT Level 2 Level 3 Total Financial instruments at fair value through profit or loss 4,079,400 3,367,707 7,447,107 Available-for-sale financial assets - 19,868 19,868 4,079,400 3,387,575 7,466,975

The Company’s investments in Samruk-Kazyna – United Green LLP, Leasing Group JSC and Machine Building Plant KazTechMash LLP included in financial instruments at fair value through profit or loss (Note 11) were considered to be Level 2 in the fair value hierarchy as at 31 December 2014 as Management based their assessment of the fair value of the shares in these companies on the cost of the investments, given that the transactions took place with an unrelated parties close to the reporting date, and therefore the transaction prices were considered to be the best estimate of the investments’ fair value at the reporting date. However, as at 31 December 2015 due to the nature of the investments, their fair values are determined based on a number of unobservable inputs. Therefore, these investments with a carrying value of KZT 4,079,400 thousand as at 31 December 2014 were transferred from Level 2 to Level 3 of the fair value hierarchy.

The following table shows a reconciliation from the opening balances to the closing balances for Level 3 fair values.

‘000 KZT Level 3

Balance at 1 January 2014 19,770

Net change in fair value 1,117,707

Purchases 517,596

Transfers into Level 3 1,732,502

Balance at 31 December 2014 3,387,575

Balance at 1 January 2015 3,387,575

Net change in fair value 88,485

Purchases 2,740,504

Transfers into Level 3 4,079,400

Balance at 31 December 2015 10,295,964


22



The table below sets out information about significant unobservable inputs used at year end in the measuring of financial instruments categorised as Level 3 in the fair value hierarchy as at 31 December 2015:

Name of the investee/Type of the financial instrument

Fair values, ‘000 KZT

Valuation technique

Significant unobservable input

Range of estimates (weighted average) for

unobservable input Reasonable shift

Fair value measurement

sensitivity

Samruk Kazyna - United Green LLP 49.00%/ Equity securirities

4,491,577 Discounted cash

flows

Tariff 34.61-97.75 KZT/kWh +/-5% 551/(554)

Risk adjusted discount rate

12.70% +/-1% 764/(672)

Inflation rate 0.07%-9.47% +/- 10% 23/(23)

Production volume 73,202-77,007 thousand kWh

+/- 5% 548 / (551)

Syrymbet JSC 12.61%/

Equity securities

3,908,860

Discounted cash flows

Forecasted long-term price for tin

USD 20.5-22.7 (21.6)

thousand per tonne+/-5%

690,360/ (690,394)


15.60% +/-5% (219,250)/

149,544

Inflation rate 5.5% on average +/-10% (82,181)/80,576

Production volume/Reserves

2,083 thousand tons per annum on average/

24,991 thousand tons in total (proven reserves)

+/-5% 936,937/

(936,937)

Syrymbet JSC/ Put option

Binomial option pricing model

Change in ordinary share price (volatility)

59%-73% (66%) +/-10% 103,608/

(105,671)

Risk free rate 8.0%-9.7%

(8.9%) +/-5% (2,648)/2,682

Leasing Group JSC 49.00%/ Equity securities

751,342 Adjusted

net assets value Adjustment to Net assets value

- +/-5% 37,567/(37,567)

Machine Building Plant KazTekhMash LLP 25.00%/

Equity securities 343,090

Adjusted net assets value

Adjustment to Net assets value

- +/-5% 17,155/(17,155)


23



The table below sets out information about significant unobservable inputs used at year end in the measuring of financial instruments categorised as Level 3 in the fair value hierarchy as at 31 December 2014:

Name of the investee/Type of the financial instrument

Fair values, ‘000 KZT

Valuation technique

Significant unobservable input

Range of estimates (weighted average) for unobservable

input Reasonable shift

Fair value measurement

sensitivity

Syrymbet JSC 12.61%/

Equity securities

3,367,707

Discounted cash flows

Forecasted long-term price for tin

USD 21.3-26.1 (23.7)

thousand per tonne+/-5%

411,899/ (411,880)


16.10% +/-5% (229,330)/

247,929

Inflation rate 5.9% on average +/-10% (96,898)/97,506

Production volume/Reserves

2,156 thousand tons per annum/

29,320 thousand tons in total (proven

reserves)

+/-5% 368,671/

(368,652)

Syrymbet JSC/ Put option

Binomial option pricing model

Change in ordinary share price (volatility)

56%-68% (62%) +/-10% 88,353/

(93,262)

Risk free rate 7.7%-9.5%

(8.6%) +/-5% (12,886)/8,584


24



The following table analyses the fair value of financial instruments not measured at fair value, by the level in the fair value hierarchy into which each fair value measurement is categorised as at 31 December 2015:

KZT’000 Level 1 Level 2 Level 3 Total fair

values

Total carrying amount

ASSETS Cash and cash equivalents - 486,051 - 486,051 486,051 Due from banks - 1,276,569 - 1,276,569 1,276,569 Other financial assets - 10,800 - 10,800 10,800 LIABILITIES Trade and other payables - 4,011 - 4,011 4,011

The following table analyses the fair value of financial instruments not measured at fair value, by the level in the fair value hierarchy into which each fair value measurement is categorised as at 31 December 2014:

KZT’000 Level 1 Level 2 Level 3 Total fair

values

Total carrying amount

ASSETS Cash and cash equivalents - 1,585,087 - 1,585,087 1,585,087 Other financial assets - 60,844 - 60,844 60,844 LIABILITIES Trade and other payables - 4,934 - 4,934 4,934

(b) Financial risk management

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

credit risk (see (ii));

liquidity risk (see (iii));

market risk (see (iv)).

(i) Risk management framework

The Supervisory Board has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

(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, and arises principally from the Company’s cash equivalents, placements in banks, financial instruments at fair value through profit or loss and available-for-sale investments.

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


25


(b) Financial risk management, continued

(iii) Liquidity risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company’s reputation.

Exposure to liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The amounts are gross and undiscounted, and include estimated interest payments and exclude the impact of netting agreements.

31 December 2015 Contractual cash flows

‘000 KZT Carrying amount Total

Less than 2 months

Non-derivative financial liabilities Trade and other payables 4,011 4,011 4,011 4,011 4,011 4,011

31 December 2014 Contractual cash flows

‘000 KZT Carrying amount Total

Less than 2 months

Non-derivative financial liabilities Trade and other payables 4,934 4,934 4,934 4,934 4,934 4,934

(iv) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices 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 limits its exposure to market risk by only investing in equity instruments after detailed analysis of financial position of counterparties and based on due diligence performed by independent professional companies. Management actively monitors financial performance of Investees.

Equity price risk

The Company is exposed to other price risk with respect to the fair value of its equity investments. Management consider that the fair value is dependent on underlying valuation inputs, sensitivity to which is disclosed in Note 19 (a).


26


(b) Financial risk management, continued

Currency risk

The Company’s exposure to foreign currency risk as at 31 December was as follows:

’000 KZT USD-

denominated USD-

denominated

2015 2014

Cash and cash equivalents 401,963 693,096

Placements in banks 916,569 -

Trade and other payables (1,511) -

Net exposure 1,317,021 693,096

A weakening of the KZT, as indicated below, against the USD at 31 December 2015 and 2014, would have increased (decreased) equity and profit or loss by the amounts shown below. This analysis is on a net-of-tax basis, and is based on foreign currency exchange rate variances that the Company considered to be reasonably possible at the end of the reporting period. The analysis assumes that all other variables, in particular interest rates, remain constant.

2015

KZT’000 2014

KZT’000

30% appreciation of USD against KZT 316,085 166,343

A strengthening of the KZT against the USD at 31 December 2015 and 2014 would have had the equal but opposite effect on the USD to the amounts shown above, on the basis that all other variables remained constant.

Interest rate risk

The Company does not account for any fixed-rate financial instruments as at 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.

20 Contingencies (a) Insurance

The insurance industry in 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 facilities, business interruption, or third party liability in respect of property or environmental damage arising from accidents on Company property or relating to Company operations. 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) Litigation

In the ordinary course of business, the Company is subject to legal actions and complaints. Management believes that the ultimate liability, if any, arising from such actions or complaints will not have a material adverse effect on the financial condition or the results of future operations.


27

20 Contingencies, continued (c) 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 interest charges. A tax year generally remains open for review by the tax authorities for five subsequent calendar years; however, under certain circumstances a tax year may remain open longer.

These circumstances may create tax risks in Kazakhstan that are more significant than in other countries. Management believes that it has provided adequately for tax liabilities based on its interpretations of applicable tax legislation, official pronouncements and court decisions. However, the interpretations of the relevant authorities could differ and the effect on these financial statements, if the authorities were successful in enforcing their interpretations, could be significant.

21 Related parties

(a) Parent and ultimate controlling party

The Company’s immediate parent company is Sovereign Wealth Fund “Samruk-Kazyna” JSC, which is, in turn, controlled by the Government of the Republic of Kazakhstan.

Publicly available financial statements are produced by the Company’s parent.

Key management remuneration

Key management received the following remuneration during the year, which is included in personnel costs (see note 6):

‘000 KZT 2015 2014

Salaries and bonuses 69,958 30,687

69,958 30,687

(b) Other related party transactions

‘000 KZT Transaction value for the year

ended 31 December Outstanding balance as at

31 December

2015 2014 2015 2014

Sale of services:

Parent company 627,288 759,563 10,800 60,844

Purchase of goods and services:

Companies under common control 91,604 79,325 138 -

All outstanding balances with related parties are to be settled in cash within two months of the reporting date. None of the balances are secured. No expense has been recognised in the current year or prior year for bad or doubtful debts in respect of amounts owed by related parties. No guarantees have been given or received.

22 Basis of measurement

The financial statements are prepared on the historical cost basis except that financial instruments at fair value through profit or loss and available-for-sale investments are stated at fair value.


28

23 Significant accounting policies

The accounting policies set out below are applied consistently to all periods presented in these financial statements, and are applied consistently by the Company.

(a) Revenue

Services

Revenue from consulting services rendered is recognised in proportion to the stage of completion of the project at the reporting date. The stage of completion is assessed by reference to hours worked.

(b) Finance income and costs

The Company’s finance income and finance costs include:

interest income;

interest expense;

dividend income;

the net gain or loss on disposal of available-for-sale investments.

Interest income or expense is recognised using the effective interest rate method. Dividend income is recognised in profit or loss on the date that the Company’s right to receive payment is established.

(c) Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies of the Company at exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency at the exchange rate at that date. The foreign currency gain or loss on monetary items is the difference between amortised cost in the functional currency at the beginning of the period, adjusted for effective interest and payments during the period, and the amortised cost in foreign currency translated at the exchange rate at the end of the reporting period.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are translated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in a foreign currency that are measured based on historical cost are translated using the exchange rate at the date of the transaction.

Foreign currency differences arising in translation are recognised in profit or loss, except for differences arising on the translation of available-for-sale equity instruments which are recognised in other comprehensive income.

(d) Employee benefits

Short-term employee benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.


29

23 Significant accounting policies, continued

(e) Income tax

Income tax expense comprises current and deferred tax. It is recognised in profit or loss except to the extent that it relates to a business combination, or items recognised directly in equity or in other comprehensive income.

(i) Current tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years. Current tax payable also includes any tax liability arising from dividends.

(ii) Deferred tax

Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:

temporary differences on the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss;

temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Company is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and

taxable temporary differences arising on the initial recognition of goodwill.

A deferred tax asset is recognised for unused tax losses, unused tax credits and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax assets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their tax assets and liabilities will be realised simultaneously.

In determining the amount of current and deferred tax the Company takes into account the impact of uncertain tax positions and whether additional taxes, penalties and late-payment interest may be due. The Company believes that its accruals for tax liabilities are adequate for all open tax years based on its assessment of many factors, including interpretations of tax law and prior experience. This assessment relies on estimates and assumptions and may involve a series of judgments about future events. New information may become available that causes the Company to change its judgment regarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact the tax expense in the period that such a determination is made.


30


(f) Property and equipment

(i) Recognition and measurement

Items of property and equipment are measured at cost less accumulated depreciation and impairment losses.

Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to a working condition for their intended use, the costs of dismantling and removing the items and restoring the site on which they are located, and capitalised borrowing costs. Purchased software that is integral to the functionality of the related equipment is capitalised as part of that equipment.

If significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Any gain or loss on disposal of an item of property, plant and equipment is determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and is recognised net within other income/other expenses in profit or loss.

(ii) Subsequent expenditure

The cost of replacing a component of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the component will flow to the Company, and its cost can be measured reliably. The carrying amount of the replaced component is derecognised. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(iii) Depreciation

Items of property, plant and equipment are depreciated from the date that they are installed and are ready for use, or in respect of internally constructed assets, from the date that the asset is completed and ready for use. Depreciation is based on the cost of an asset less its estimated residual value.

Depreciation is generally recognised in profit or loss on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment, since this most closely reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Land is not depreciated.

The estimated useful lives of significant items of property, plant and equipment for the current and comparative periods are as follows:

Computers and computer equipment 5-12 years;

Furniture and office equipment 5-10 years.

Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

(g) Intangible assets

Acquired intangible assets are stated at cost less accumulated amortisation and impairment losses.

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific software. Amortisation is charged to profit or loss on a straight-line basis over the estimated useful lives of intangible assets. The estimated useful lives range from three to ten years.


31


(h) Financial instruments

The Company classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets.

The Company classifies non-derivative financial liabilities into the other financial liabilities category.

(i) Non-derivative financial assets and financial liabilities – recognition and derecognition

The Company initially recognises loans and receivables and debt securities issued on the date that they are originated. All other financial assets and financial liabilities are recognised initially on the trade date at which the Company becomes a party to the contractual provisions of the instrument.

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Company is recognised as a separate asset or liability.

The Company derecognises a financial liability when its contractual obligations are discharged or cancelled or expire. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

(ii) Financial assets at fair value through profit or loss

A financial asset is classified at fair value through profit or loss -category if it is classified as held for trading or is designated as such upon initial recognition. Financial assets may be designated at fair value through profit or loss if the Company manages such investments and makes purchase and sale decisions based on their fair value in accordance with the Company’s documented risk management or investment strategy and when they contain separable embedded derivatives. Directly attributable transaction costs are recognised in profit or loss as incurred. Financial assets at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss.

Interests in associates and joint ventures are accounted as financial instruments at fair value through profit or loss in accordance with the scope of exemption in IAS 28 Investments in Associates because management consider that the primary business activity of the Company is investing for capital appreciation, the investees are separate and autonomous businesses from the Company and the Company’s investment activities are clearly and objectively distinct from its other activities.

(iii) Cash and cash equivalents

Cash and cash equivalents include cash balances, call deposits and highly liquid investments with original maturities of less than three months, which are subject to insignificant risk of changes in their fair value, and are used by the Company in the management of short-term commitments.

Cash and cash equivalents are carried at amortised cost in the statement of financial position.


32


(h) Financial instruments, continued

(iv) Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale or are not classified in any of the above categories of financial assets. Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein, other than impairment losses and foreign currency differences on available-for-sale debt instruments, are recognised in other comprehensive income and presented within equity in the fair value reserve. When an investment is derecognised, the cumulative gain or loss in equity is reclassified to profit or loss. Unquoted equity instruments whose fair value cannot reliably be measured are carried at cost.

Available-for-sale financial assets comprise equity securities and debt securities.

(v) Non-derivative financial liabilities - measurement

The Company classifies non-derivative financial liabilities into the other financial liabilities category. Such financial liabilities are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition, these financial liabilities are measured at amortised cost using the effective interest method.

Other financial liabilities comprise loans and borrowings, bank overdrafts, and trade and other payables.

(i) Charter capital

Shares

The Company’s charter capital is classified as equity. Incremental costs directly attributable to issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effects.

(j) Impairment

(i) Non-derivative financial assets

A financial asset not carried at fair value through profit or loss, is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets (including equity securities) are impaired can include:

default or delinquency by a debtor;

restructuring of an amount due to the Company on terms that the Company would not consider otherwise;

indications that a debtor or issuer will enter bankruptcy;

adverse changes in the payment status of borrowers or issuers in the Company;

economic conditions that correlate with defaults;

the disappearance of an active market for a security; or

observable data indicating that there is measurable decrease in expected cash flows from a group of financial assets.

In addition, for an investment in an equity security, a significant or prolonged decline in its fair value below its cost is objective evidence of impairment.


33


(j) Impairment, continued

(i) Non-derivative financial assets, continued

Financial assets measured at amortised cost

The Company considers evidence of impairment for these assets at both an individual asset and a collective level. All individually significant assets are individually assessed for impairment. Those found not to be impaired are then collectively assessed for any impairment that has been incurred but not yet identified. Assets that are not individually significant are collectively assessed for impairment by grouping together assets with similar risk characteristics.

In assessing collective impairment the Company uses historical trends of the probability of default, timing of recoveries and the amount of loss incurred, adjusted for management’s judgement as to whether current economic and credit conditions are such that the actual losses are likely to be greater or less than suggested by historical trends.

An impairment loss is calculated as the difference between an asset’s carrying amount, and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflected in an allowance account. When the Company considers that there are no realistic prospects of recovery of the asset, the relevant amounts are written off. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease and the decrease can be related objectively to an event occurring after the impairment was recognised, the decrease in impairment loss is reversed through profit or loss.

Available-for-sale financial assets

Impairment losses on available-for-sale financial assets are recognised by reclassifying the losses accumulated in the fair value reserve in equity, to profit or loss. The cumulative loss that is reclassified from equity to profit or loss is the difference between the acquisition cost, net of any principal repayment and amortisation, and the current fair value, less any impairment loss previously recognised in profit or loss. Changes in impairment provisions attributable to application of the effective interest method are reflected as a component of interest income. If, in a subsequent period, the fair value of an impaired available-for-sale debt security increases and the increase can be related objectively to an event occurring after the impairment loss was recognised in profit or loss, then the impairment loss is reversed, with the amount of the reversal recognised in profit or loss. However, any subsequent recovery in the fair value of an impaired available-for-sale equity security is recognised in other comprehensive income.

(ii) Non-financial assets

The carrying amounts of the Company’s non-financial assets, inventories and deferred tax assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for use, the recoverable amount is estimated each year at the same time.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists.


34

23 Significant accounting policies, continued (j) Impairment, continued

(ii) Non-financial assets, continued

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.

(k) Provisions

A provision is recognised if, as a result of a past event, the Company has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognised as finance cost.

(l) Leases

(i) Determining whether an arrangement contains a lease

At inception of an arrangement, the Company determines whether such an arrangement is or contains a lease. This will be the case if the fulfilment of the arrangement is dependent on the use of a specific asset and the arrangement conveys a right to use the asset.

At inception or upon reassessment of an arrangement, the Company separates payments and other consideration required by such an arrangement into those for the lease and those for other elements on the basis of their relative fair values. If the Company concludes for a finance lease that it is impracticable to separate the payments reliably, then an asset and a liability are recognised at an amount equal to the fair value of the underlying asset. Subsequently the liability is reduced as payments are made and an imputed finance charge on the liability is recognised using the Company’s incremental borrowing rate.

(ii) Leased assets

Assets held by the Company under leases that transfer to the Company substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Other leases are operating leases and the leased assets are not recognised on the Company’s statement of financial position.

(iii) Lease payments

Payments made under operating leases are recognised in profit or loss on a straight-line basis over the term of the lease. Lease incentives received are recognised as an integral part of the total lease expense, over the term of the lease.

(m) Subsidiaries

Subsidiaries are investees controlled by the Company. The Company controls an investee when it is exposed to, or has rights to, variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.


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23 Significant accounting policies, continued (n) Comparative information

During the preparation of the Company’s financial statements for the year ended 31 December 2015, management made certain reclassifications affecting the corresponding figures to conform to the presentation of the financial statements for the year ended 31 December 2015.

In particular, the management has reconsidered the classification of the net foreign exchange loss as part of operating expenses. Therefore, the net foreign exchange loss was reclassified to finance income. The corresponding figures as at 31 December 2014 were reclassified accordingly.

(o) 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 2015, and have not been applied in preparing these financial statements. Of these pronouncements, potentially the following will have an impact on the financial position and performance. The Company plans to adopt these pronouncements when they become effective.

IFRS 9 Financial Instruments, 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.

The Company is assessing the potential impact on its financial statements resulting from the application of IFRS 9.

IFRS 15 Revenue from Contracts with Customers, 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 Programmes. 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 2018, with early adoption permitted. The Company is assessing the potential impact on its financial statements resulting from the application of IFRS 15.

Various Improvements to IFRS are dealt with on a standard-by-standard basis. All amendments, which result in accounting changes for presentation, recognition or measurement purposes, will come into effect not earlier than 1 July 2015.

24 Subsequent events On 3 February 2016, the Company’s sole shareholder made additional contribution to charter capital in the amount of KZT 1,345,045 thousand.

Statement of profit or loss and other comprehensive income

As reclassified

Effect of reclassifications

As previouslyreported

Operating expenses (859,705) 6,084 (865,789) Finance income (1,696) (6,084) 4,388

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