APPROVED
by the Resolution of the
Management Board
of "Samruk-Kazyna" JSC
as of _______________
No______
Annual report
on the activities of "Kazpost" JSC
for 2014
Astana, 2015
Content
1. COMPANY IN FIGURES AND FACTS................................................................................5
2. ADDRESSES OF THE COMPANY'S MANAGEMENT ....................................................7
2.1. Address of the Chairman of the Board of Directors ......................................................7
2.2. Address of the Chairman of the Management Board ....................................................8
3. RESULTS OF 2014 ...................................................................................................................9
3.1. Major events and achievements .......................................................................................9
3.2. Significant projects ..........................................................................................................11
3.2.1. The "Transformation" Program ........................................................................11
3.2.2. Quality 12
3.2.3. 3.2.3. Technology & innovation ..........................................................................15
3.2.4. Business processes ................................................................................................20
3.2.5. Transportation .....................................................................................................23
3.2.6. Security .................................................................................................................25
3.2.7. Feedback ...............................................................................................................26
3.2.8. Image and information policy .............................................................................26
3.2.9. The implementation of a marketing plan ..........................................................27
4. INFORMATION ABOUT COMPANY................................................................................31
4.1. Company services ............................................................................................................31
4.2. Mission, vision, strategic targets.....................................................................................32
4.3. Form of incorporation and functional management structure ...................................33
4.4. Review of the regulatory environment ..........................................................................35
4.5. Licenses of the Company.................................................................................................36
4.6. Environmental analysis ...................................................................................................36
4.7. History and basic information ........................................................................................38
4.8. Cooperation with stakeholders .......................................................................................38
4.8.1. International cooperation ....................................................................................38
4.8.2. Participation in the charters, principles or other initiatives to which the
organization has joined or which espouses ....................................................................40
4.8.3. Memberships in associations (such as industry associations) and/or national and
international advocacy organizations .............................................................................41
4.8.4. The nature of the state's influence on the Company ........................................41
4.9. Открытые вопросы, требующие решения ................................................................42
5. CORPORATE GOVERNANCE ...........................................................................................44
5.1. Management body (Board of directors) ........................................................................44
5.1.1. Information on the Board of Directors ..............................................................44
5.1.2. Committees of the Board of Directors ...............................................................45
5.1.3. The track record of the Board of Directors .......................................................50
5.1.4. Criteria for the selection of new members of the Board of Directors .............52
5.1.5. Report of the Board of Directors ........................................................................52
5.2. The Internal Audit Service .............................................................................................55
5.3. Management Board (Правление) ..................................................................................56
5.3.1. Information about Management Board .............................................................56
5.3.2. Track record of the Management Board members ..........................................57
5.3.3. Criteria for selection of the Chairman of the Management Board .................57
5.3.4. Report on the Work of the Management Board ...............................................58
5.4. Evaluation of the management performance ................................................................59
5.5. The remuneration of senior management .....................................................................60
5.6. Combining of the leadership positions ...........................................................................61
5.7. Risk Management ............................................................................................................61
5.7.1. Price risk ...............................................................................................................62
5.7.2. Projects risks ........................................................................................................63
5.7.3. Risks of internal fraud in the provision of financial services...........................63
5.7.4. Personnel risk .......................................................................................................64
5.7.5. Risks of IT systems and IT infrastructure .........................................................64
5.7.6. Currency exchange risk .......................................................................................64
5.7.7. Regulatory risks ...................................................................................................64
5.8. Internal control ................................................................................................................65
6. ECONOMIC PERFORMANCE ...........................................................................................67
6.1. Macroeconomic actuators affecting the market, and the Company's business .........67
6.2. Economic goals and objectives and results. Analysis of Results of Company's
Operations ...............................................................................................................................67
6.2.1. Main financial and economic indicators ............................................................67
6.2.2. Key performance indicators................................................................................68
6.2.3. .Labor Productivity..............................................................................................68
6.2.4. Key performance indicators by segment ...........................................................69
6.2.5. Forecast of financial, economic and industrial indicators and targets for 201569
6.2.6. Industry average (rates) ......................................................................................71
6.3. The structure of revenues, expenditures, assets ............................................................72
6.3.1. 6.3.1 Structure of revenues .................................................................................72
6.3.2. Expenditure structure .........................................................................................73
6.3.3. Asset structure ......................................................................................................73
6.4. Segment Analysis .............................................................................................................74
6.4.1. Postal services .......................................................................................................74
6.4.2. Financial services .................................................................................................76
6.4.3. Transfer-agent activity ........................................................................................77
6.5. Accounting Policies ..........................................................................................................78
6.6. Contingent Liabilities and Contingent Assets ...............................................................78
6.7. Information about provisions .........................................................................................78
6.8. Forms of support from the government and the Fund ................................................79
6.9. Related party transactions ..............................................................................................79
6.9.1. Transactions with related parties .......................................................................79
6.9.2. Transaction ...........................................................................................................79
6.10. Financial activities .........................................................................................................80
6.10.1. Equity and debt securities and market capitalization ......................................80
6.10.2. Capital adequacy indicators ...............................................................................80
6.10.3. Liquidity indicators .............................................................................................80
6.10.4. Investment portfolio.............................................................................................81
6.10.5. Financial liabilities ...............................................................................................82
6.10.6. Interest rates on financial assets and liabilities .................................................82
6.11. Investment activity ........................................................................................................82
6.12. Procurement and interaction with the procurements and contractors ....................84
6.13. Tariff policy....................................................................................................................84
6.13.1. Natural monopoly market ...................................................................................84
6.13.2. The market of monopolistic competition ...........................................................85
7. SOCIAL RESPONSIBILITY AND DEVELOPMENT OF STAFF ..................................87
7.1. Improvement of working conditions ..............................................................................88
7.2. Settlement of complaints and appeals ............................................................................88
7.3. Collectively-contractual relationship .............................................................................88
7.4. Motivation ........................................................................................................................89
7.5. Training ............................................................................................................................89
7.6. Cultural events .................................................................................................................90
7.7. Charity and Sponsorship ................................................................................................91
7.8. Conflict Management ......................................................................................................92
7.9. Employment in the territory of the presence ................................................................92
7.10. Labor protection ............................................................................................................93
8. ENVIRONMENTAL RESPONSIBILITY ...........................................................................95
8.1. Energy Saving ..................................................................................................................96
9. ABOUT REPORT.................................................................................................................100
9.1. General information ......................................................................................................100
9.2. Reporting period and the report's time frame ............................................................100
9.3. Methodology and content ..............................................................................................100
9.4. Abbreviations and acronyms ........................................................................................100
10.
Appendixes ......................................................................................................................102
10.1. Appendix 1. Consolidated Financial Statements ......................................................102
10.1.1.
Consolidated statement on the financial position .............................................102
9.1.2. Consolidated statement of profit or loss and other comprehensive income ...103
9.1.3. Consolidated Statement of Changes in Equity ..................................................103
9.1.4. Consolidated Statement of Cash Flows ..............................................................104
9.2. Appendix 2 Notes to the Consolidated Financial Statements ....................................105
1. COMPANY IN FIGURES AND FACTS
Infrastructure
The network of production facilities. The number of production facilities As of January 1, 2015
amounted to 3137 units., including:
 2224 post offices (560 urban and 1664 rural);
 609 postal points (106 urban and 503 rural);
 115 mobile postal points;
 189 central operating areas
There are also 14 regional branches, the post office 2 (Messrs. Astana and Almaty) 4 specialized
divisions and branches:
 sorting center;
 Logistics Information Center "South";
 Republican service of special communication;
 branch «EMS-Kazpost»
Transportation. Daily mileage vehicles is 410 thousand. Km., With the number of vehicles is as
follows:
 1763 vehicles;
 58 mail cars
Employees
List number - 22 907 people, including:
 901 administrative staff;
 21,974 production staff;
 32 support staff
Volumes
The volumes of postal services - 320 750 000. Damage., Incl .:
 more than 213 million. Periodicals;
 more than 67 million. Written correspondence;
 more than 34 million. Other volumes (printing, packaging, converting)
 more than 4 million. Parcels;
 more than 0.5 million. Express mail (EMS)
The volume of financial services - 874.4 billion. Tenge, incl .:
 20 bn. Of remittances;
 about 260 bln. Of payments received;
 around 481 billion. Tenge payment of pensions and allowances
 Total in 2014 carried about 61 mln. Transactions
Market coverage
 100% market share in the payment of pensions and allowances (payments in rural areas,
home delivery);
 96% market share of periodicals;
 85% of the market share of written correspondence;
 65% market share in parcels;
 34% market share of municipal and other payments
Modernization
 405 automated post offices;
 carried purchase of more than 2.5 thousand. Computer equipment;
 upgraded model 9 offices;
 214 branches transferred to the single-level maintenance;
 13 offices installed electronic queue
2. ADDRESSES OF THE COMPANY'S MANAGEMENT
2.1. Address of the Chairman of the Board of Directors
2014 was a year of a number of very significant events for the Company, which are reflected in the
present Annual Report.
We made considerable work to improve corporate governance, transparency of its activities, as well
as the modernization of the process of client servicing. Openness and transparency in the interaction with
the Shareholder, partners, customers, employees and state institutions are our top priorities.
In 2014, the company in order to improve the efficiency and quality of service, introduced new types
of postal and financial services with the use of innovative IT-technologies.
It has shown dynamic growth in such a competitive market segments of postal services such as
express mail service and Direct Mail, what was due to optimization of the routes of mail transportation
and the successful implementation of quality standards of postal items movement.
The Company approved the program and started working on optimization of costs and improvement
of the production efficiency, determined basic initiatives and activities.
The previous year is also marked with the start of the Transformation program of the group of
companies of "Samruk-Kazyna" JSC. This is a program of large-scale transformations of the Fund and the
activities of controlled portfolio of the companies. "Kazpost" JSC has become one of the pilot companies
that will become pioneers in the introduction of new standards of work.Tempo and mood which employees
of the Company undertook this initiative with, inspire confidence in the success of all the key ideas of this
program.
In 2014, the company once again took an active part in the program of "People's IPO", as a broker
and transfer agent for the sale of shares of «KEGOC» JSC through the post office. This program was
successful. Company's post offices received more than 13 thousand of Customer orders for the purchase
of more than 5 million Shares of «KEGOC» JSC in the amount of more than KZT 2.6 billion.
Financial and operational achievements of the Company are quite satisfactory, despite the actual
that this was a difficult year for the company and for the industry as a whole. The next year, 2015 promises
to be even more difficult, experts' forecasts about the economic situation and the dynamics of the industry,
as well as the development of the group of companies of the Fund as a whole, are quite exciting.
However, I'm sure that a rich practical experience of the Company's employees, their energy, can
help overcome any difficulties, and we will continue to serve the good of our country, the most advanced
services provided by post offices in the most remote corners of our country will be familiar to Kazakhstan
People.
On behalf of the Board of Directors I would like to thank the management and employees of the
Company for their dedication to their work and their high professionalism.
Kind regards
Yelena Bakhmutova
2.2. Address of the Chairman of the Management Board
We would like to present to your attention an Annual Report of "Kazpost" JSC for 2014. This is
already our fourth public annual report.
We - the only national postal operator and one of the largest and most stable companies in
Kazakhstan, which provides its services to the entire population of the Country and provides a permanent
job for more than 22 thousand people throughout the country.
During the reporting year, there have been significant changes - launch of the "Transformation
Program", which will contribute to the development of our company, given the market and economic
changes.
"Transformation Program" is primarily aimed at changes in the consciousness of the people and mail
processes with its traditional services. Our major challenge is an access to high-quality and quantitative
level of mail exchange with the correct use of fast-growing e-commerce market.
Indeed, abandoning the old principles of work and orientation of the Company on new technologies,
development of new principles of the company's operation will be reflected in the increase of the
company's financial indicators.
During the reporting year, we have launched several groundbreaking initiatives - sms-notification
on the parcels delivery, automated postal stations (postamats), the hybrid electronic mail (HEM), etc.
We established a situation center which helps to cover objects of the Company with the video
surveillance. Launch of the Situation Centre will reduce the number of errors and irregularities in the
process of services rendering, as well as will simulate the effects of management decisions, using
information-analytical systems.
Among significant and large-scale projects of the previous year are modernization of offices and the
transition to the so-called "single-level" services for the population, which will create favorable conditions
not only for our employees, but also for our customers. It is important to note that the modernization of
offices is the first step in this direction.
As per today, the principle of a single-level service was introduced in many rural-type settlements.
We strive to saturate our rural departments with new services, and the creation and delivery of new services
go along with the introduction of innovative technologies. That is why we have been adjusted and revised
strategic objectives of the company, taking into account the approved "Transformation Program".
The advantage of our Company is that we are present in the most remote areas of the country, while
many second-tier banks closed their offices due to the low profitability of branches. Under these
circumstances, our branches will be the center of economic activity in rural areas and we will make every
effort to do so.
One of the strategic priorities of "Kazpost" JSC is the social responsibility of the employees before
public. Our company has more than 16 thousand production personnel in the all over the country. Being
aware of the responsibility to employees, we have decided that 2015 will be the year of the postman.
We have planned a number of initiatives that will contribute to improvement of the conditions of
employees: medical insurance, a new uniform, electronic gadgets and devices to reduce the time spent on
paper procedures, new sorting lines.
It is important for us that every employee is aware of his professional and personal responsibility
and actively participates in the process of the Company's transformation.
Undoubtedly, the key role in this process is played by all the staff of "Kazpost" JSC, as an efficient
team of associates is key to the success of the Company's business.
I want to thank the shareholders and partners for their trust, personnel for the efficient and
professional work and our contribution to the development of the company.
We are in constant search for new mechanisms of development of the postal industry, and I am
pleased to invite you all to cooperate as part of a renewed successful company.
Kind regards
Bagdad Mussin
3.
RESULTS OF 2014
3.1. Major events and achievements
2014 was a very bright and dynamic. In the presented calendar of major events and achievements
in 2014, including corporate, we can see that the year has been eventful for our Company.
Schedule of corporate events for 2014
№
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
Event
Period
2014 was declared as the Year of the operator
Increase of the production staff wages by 7%
Changes in the composition of the Board of Directors.
Management Board of "Samruk-Kazyna" JSC decided to elect
to the Board of Directors as independent directors the following persons: Ilkyavichyus
A.O., Shkodovs G.Y.
Successful carrying out in Almaty of the international conference "Trade Mission in
Kazakhstan" on "Remote trading, e-commerce"
As part of the modernization of post offices we opened exemplary post office in the city
of Karaganda on the basis of POC №17 with round the clock service area Post-24",
equipped with modern postal, banking equipment, electronic queuing
An enhanced annual reporting meeting on the results of work and
tasks for the coming period with the participation of representatives of state bodies, the
sole shareholder and branch trade unions
Changes in the composition of the Board of Directors.
Management Board of "Samruk-Kazyna" JSC decided to elect
to the Board of Directors of the following persons:
- member of the Board of Directors Baydauletov N.T. (Managing Director
of "Samruk-Kazyna" JSC as the representative of the interests of the Sole Shareholder);
- Independent directors: Berdalina Zh.K., Zhukov D.N., Zhandosov O.A.
Increased the additional wages of production personnel
by 10%
Launched mechanized sorting newspaper site
in Karaganda
By results of 2013 the Company received "silver" in the category
"Leader of exchange market of equity instruments"
According to the Association of Kazakhstan Business Internet and mobile commerce
"Kazpost" JSC became part of the largest players in e-commerce in Kazakhstan
A new post office (PO) №21 inAstana
January
January
January
Conference in Astana on postal and financial services
and electronic money transfers with the participation of the Universal Postal Union
(UPU), Regional Commonwealth in the Field of Communications (RCC)
"Samruk-Kazyna" JSC and the postal services of different countries
A solemn event dedicated to the launch of the Company's business transformation
program
Decision of the Board of Directors on early termination of the powers of Chairman of the
Management Board of "Kazpost" JSC Beisenbayev A.N.
Joint meeting of the 49th Council of Heads of Communication Administrations of the
Regional Commonwealth in the Field of Communications (RCC Board) and the 20th
Coordinating Council of the CIS member states for Informatization in Astana.
Introduction of commemorative stamp dedicated to the 15th anniversary of Astana
June
February
February
February
March
April
April
May
May
June
June
July
July
July
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
Participation of "Kazpost" JSC in a workshop on terminal dues within the Association of
postal operators in Europe PostEurop
( Jurmala, Latvia)
Decision of the Board of Directors to elect as a Chairman of the Management Board
of "Kazpost" JSC Mussin B.B.
75 anniversary of the Special Communications Service!
For the first time "Kazpost" JSC in order to develop SME in rural areas uses a classic
scheme of the franchise in the village Akylbay, becoming more accessible to the
population in the villages
A meeting of the Chairman of the Management Board of the Company with the National
Postal Service of China on reducing delivery times for online shopping, as well as the use
of the transit potential of Kazakhstan for delivery to other countries the goods ordered on
the internet resources of China
Launched a joint project with "Kazakhinstrakh" JSC, insurance policy can now be
purchased in the offices of the Company
For the first time "Kazpost" JSC launched an online service - a free mobile application
MyKazpost for owners of devices on iOS and Android platform, using which you can
track the location of postal item, determine postcode to find on the map the nearest post
office, learn the mode of its operation, to select the most convenient route to it
First "Kazpost" JSC launched a pilot project of "custom hybrid mail with confirmation of
receipt" in the cities of Aktobe
and Almaty
Launched the first automated postal station (postamat)
in commercial operation in the city of Almaty
Memorandum of Cooperation between "Kazpost" JSC and Emirates Post Group
The sole shareholder of "Samruk-Kazyna" JSC decided
to increase the number of authorized shares of "Kazpost" JSC
by 898,000 common shares with the placement through sale by the sole shareholder the
pre-emptive rights at the price of 1000 tenge per 1 ordinary share
According to the results of the expert survey aimed at obtaining the maximum
objective assessments of the relative quality of the national companies, conducted by the
research agency "Reyting.kz", "Kazpost" JSC
took 4 th place in the top five most effective national companies in Kazakhstan
Chairman of the Management Board, together with the Chairman of the Board of
Estonian Post Aavo Kёrmas participated in the International Forum
on the Transformation with the participation of Head of State Nursultan Nazarbayev
We opened the first museum of postal services in the city of Kostanay
At the end of the program "National IPO" "Kazpost" JSC, which took partas a broker and
transfer agent with the largest branch network in all regions of the country, has taken a
leading position in the number of applications received
for the purchase of shares of «KEGOC» JSC among other brokerage companies
Developed and launched a new, unique service «Print2Card»
for Self-design of a postcard. This service involves online creation of cards through the
mobile application "MyKazpost" which are further delivered to relatives and friends all
over the world;
Mashabayev A.Ye. was elected to the Board of Directors of "Kazpost" JSC a as a deputy
Chairman of the Management Board - a member of the Management Board of "Kazpost"
JSC.
Conduct of a meeting of the Board of directors of "Kazpost" JSC inRiga (Latvia). During
the visit, the members of the Board of Directors visited the facilities of Latvia Post,
Estonia Post.
"Kazpost" JSC was given the status of the designated operator of Kazakhstan (the order of
the Ministry of Investment and Development of the RK of November 27, 2014 №199)
July
August
August
August
August
August
August
September
September
September
September
October
October
October
November
November
November
November
November
37.
38.
39.
Dykanbaeva A.FO of the Company, was elected by the resolution of the Board of
Directors of "Kazpost" JSC to the Management Board
of "Kazpost" JSC.
Launched the service "Custom hybrid mail with confirmation
about receipt" all RPOC/CPOC of the Company
Presidential Decree on the eve of Independence Day of the Republic of Kazakhstan the
best employees of "Kazpost" JSC were awarded:
- The Order of "Kurmet" they awarded Sarmuldina A.K., head of the section of
processing and mail delivery of the organization and operation of the postal service of
West Kazakhstan Regional Branch of "Kazpost" JSC;
- The medal "Eren enbegi ushin" was awarded to postmen A. Akhmetov
and Moldabayev K. (North Kazakhstan and Zhambyl regional branches)
December
December
December
3.2. Significant projects
In terms of the future prospects of the Company's development 2014 was marked by several
important events and projects, such as:
3.2.1. The "Transformation" Program
1. About the program
The Transformation program was launched in 2014, it aims to create a competitive and stable
company with a high level of corporate governance, enhancing financial and operating efficiency by
the revision of the principles of work with the use of global best practices. This is a thorough analysis
and re-engineering of core business and production processes, their standardization and regulation.
The transformation will determine the business model of the strategic development of the
Company. This is the way to the totally new level of business and management of the Company, a
new level of performance in accordance with the highest international standards.
During the implementation of the program we will carry out standardization and optimization
of business processes and conditions that ensure quality of service, will use best practices, identify
and eliminate inconsistencies.
As a result of transformation our services will be supplemented with the new requirements for
the competence of employees of "Kazpost" JSC. Employees will have the opportunity to expand their
knowledge and skills, acquire new professional qualification.
The company will gradually develop people, conduct retraining of workers, measures to
improve skills through training and development.
The company, developing features/abilities of employees, will help to effectively conduct
business, work with the new system and processes designed during the transformation.
Employees will be trained to use new methods, tools and procedures in the context of changes
in the business processes in their daily activities.
Business transformation program of "Kazpost" JSC is the beginning of transformation of the
company, able to change in the face of global challenges and to rebuild its businesses. The basis of
success of the program is the intention of the team to take the path of effective reforms and updates.
It's worth noting that "Kazpost" JSC represents Kazakhstan is the Universal Postal Union, where
the modernization process is not stopped, the leading postal administrations permanently reshaping
business processes to reflect changes in domestic and foreign markets.
2. Report on the conducted
Formation of the Council for modernization of "Kazpost" JSC formed from among the
representatives of "Samruk-Kazyna" JSC, Management Board members, directors of departments,
heads of branches of "Kazpost" JSC.
During the reporting period, there were five meetings of the Modernization Council of the
Company. A project transformation team of 36 employees was formed, which consists of employees
of "Kazpost" JSC (Transformation Team of "Kazpost" JSC), employees of the Fund (the central office
of transformation) and involved experts.
Organizational structure of the transformation program (face-chart) was developed and
approved.
The Charter of the transformation program of "Kazpost" JSC was approved, it defines the
functional and organizational framework of the program content and results of the work, the
organizational structure of management of the program, functions, and regulation of interaction of
Program participants, program management procedures; standards for documenting of works and
timetable for the Program implementation.
Procedures on the organization and equipping of the Project Office were conducted, supply and
assembling of furniture was made, the workplace was organized.
Within the establishing of approaches and principles of the organization of information
exchange, the Modernization Council developed and approved the Communication strategy of the
Company.
The objectives of the communication strategy are aimed at examination of involvement,
understanding and readiness of employees to transformation, increase of the staff loyalty to the
Program that is the ultimate goal of change management - to ensure a smooth transition to a new
business standards.
Development of "Justification for Changes", which allows to determine the changes in the
processes and their impact on operations.
The rationale for changes reflect the types of the upcoming changes and their purpose.
Determination of a list of stakeholders of Transformation program of "Kazpost" JSC, which is a list
of stakeholders, each of which is assessed in terms of relevance to the program, whose opinion is
important for management decisions in the company. Such persons may include company executives,
heads of departments, divisions and experts who are recognized experts.
Determination of the target model of management, modeling work and carry out of the approval
procedure by the stakeholders.
A list of priorities for the transformation was development and agreed upon by all stakeholders:
list of priority changes for the transformation, evaluation of the impact of changes, which allows to
determine the changes in the processes and their impact on operations; key performance indicators,
including the most important performance indicators for monitoring.
The analysis of the current organizational structure, the number of staff of the Company
(benchmarking) in comparison with other postal operators was conducted.
As part of the work with the stakeholder of the company, the work was carried out to Assign
the Name (proper name) of the Business Transformation program of "Kazpost" JSC. According to the
results of voting, which took place on the corporate website, the e "Orken" title was the winning one,
which recalculated from the Kazakh language means "increase", "expansion" or "prosperity". On
December 5, 2014, the Modernization Council of Kazpost JSC was held, where the decision to award
the title (proper name) "Orken" to the Business transformation program of "Kazpost" JSC was made.
As part of the transformation program, we carried out work on the selection of companies to
provide consulting services.
According to the minutes of the open two-stage tender for consulting services for business
transformation program of "Kazpost" JSC the winner is "Ernst & Young - consulting services" LLP.
The role of the experts' is limited to the provision the best international experience to transform a part
of the program and the formation of all the results in accordance with the requirements.
3.2.2. Quality
Quality of services directly affect the main key performance indicators of business: the
company's attractiveness, potential of employees, yields and international ratings of company.
Management of the company in 2014, has worked on the implementation of integrated
and systemic measures to create viable and sustainable brand, allowing not only to preserve and
retain loyal customers but also attract new customer.
Understanding the need to create in the company at all levels of the philosophy of customeroriented approach is a good tool to create the conditions for wanting to build a business and
management, build mutually beneficial terms of cooperation with customers.
After reviewing our disadvantages and problems in servicing our customers, we have delivered
a clear and specific goals for organizing initiatives to improve the quality of their service.
As part of measures to improve the quality, there are open questions to be addressed, namely:
poor quality of service, particularly in urban post offices, our employees - operators, who have direct
contact with clients.
Our projects in this area:
3. Motivation
In order to establish the interest of operators in high-quality services, improving their efficiency
and increase sales, the 2014 was declared as the Year of the operator.
Within the year of the operator, the operator carried out measures to equip the operator
workstations, 2000 computers were replaced, they started work on the organization of training,
developed and approved standards of service quality, the analysis of existing business processes and
implemented a plan of measures for their re-engineering. They also initiated steps to organize nonmaterial motivation, such as a competition for the best operator.
A major step in this direction was also the first to develop and implemented incentive programs
for all operators, regardless of the location of territorial offices of basic services, such as:
 Remittances - 50 tenge per 1 transaction;
 bank cards - 100 tenge for each open payment card;
 on the program "People's IPO" - 300 tenge for each application to open a brokerage account.
As a result, revenue growth for the year as compared to the previous year only for transfers was
12%, an increase of activated cards in December 2014 to April 2014 amounted to more than 20%.
In this direction, a decision about the necessity of the organization of direct motivation system
in the Company, not only in essential services, but to apply this practice to all types of services
provided by operators.
4. Modernization of offices
The company continues to work on the modernization of our offices.
Modernizing department, we have taken care not only about improving the workplaces of
employees, but also clients with limited mobility and young moms with strollers - the entrance to the
departments is equipped with ramps. We have tried to create a comfortable environment
for the service and brought new upholstered furniture: chairs, sofas, etc.
The important point is to increase the number of operating windows for the service of large
flows of population. These changes - one of the components of the program of transformation of our
company.
In order to improve the quality of postal services seven post offices in the cities of Aktobe,
Taldykorgan, Taraz, Atyrau, Kyzylorda, Uralsk were modernized.
Upgrading these offices includes not only overhaulbut the upgrade of the technological content.
All modernized post offices are equipped with a single system of electronic queue, CCTV and fire
safety.
5. Mystery shopping
Quality of services directly affect the main key performance indicators of business: the
company's attractiveness, potential of employees, yields and international ratings of company.
In order to identify and analyze problems affecting the quality of service the Company has
implemented the project «Mystery shopping», or a "Mystery shopper".
The project started in September 2014. Mystery shopper (from English Mystery Shopper/Secret
Shopper, is also an alleged buyer) - a method of research, which is used in the marketing research
aimed at evaluation of consumer experience gained by the client in the process of goods or services
acquisition, and to address organizational issues, such as measurement of the level of compliance with
the standards of customer service by employees in the organization and ect. To collect information
trained people are involved (mystery shoppers), who carry out checks under the guise of potential /
actual customers.
To this end, we involved mystery buyers in different regions of the country (in Astana, Almaty,
Shymkent, Ust-Kamenogorsk, Kostanai, Pavlodar, Aktobe, Atyrau, Petropavlovsk and Karaganda).
The assessment covers 100 branches, including central operating areas, malls and offices in the
outskirts of cities, districts. The company created 16 "focus groups" that evaluated the following
factors, including: the quality of customer service; competence of staff; operating standards; exterior
and interior appearance of the department.
As a result of the evaluation they conducted 171 test purchase, identified more than 280
violations and identified areas for improvement.
Report on findings and recommendations was presented to the management board of the
Company on a monthly basis, based on the report appropriate measures were taken.
Also in the central office of the Company, in the regions they actively cultivate and used in the
practice the principle of using the services of senior and middle management, which are also "mystery
shoppers". This initiative has found good use, by identifying and "promulgation" violations through
the available chat on cell phones (WhatsApp), where everyone can see the existing shortcomings and
violations: as a worker, both employee determined such a violation, and the employee and
supervisor,from whom the absence of such functionality depends on.
In general, companies have managed to break the fear of complaints to someone, create an
appropriate corporate spirit - it is better to identify and correct themselves, all for the benefit of, and
improvement of customer service.
 the queues in urban post offices, which is basically due to more democratic rates in
comparison with competitorsboth in postal, and in the financial business
6. E-queue
In order to improve service quality and increase yield rates of staff, optimization of customers
service and queue management the work was carried out on the use of modern systems of the
electronic-queue in branches, especiallywhere we watched a large flow of customers.
Practice of introduction of the electronic-queue in branches not only improves the service and
makes it organized, but also improves the working environment of our employees accordingly,
demonstrates the company's commitment to the desire to improve and apply new technologies.
Subsequently, implementation and installation of modern systems is planned to be used on an ongoing
basis, the company has a clear plan in this regard.
In 2014 they carried out the installation of a new unified electronic-queue in 5 urban (upgraded)
offices in Kyzylorda, Pavlodar, Astana, Karaganda, Aktau.

customer service complaints by the existing contact center of the company
7. Contact Center
More than half the customers decide on cooperation during the first call to the company.
Therefore, it is important to provide to the caller comfortable waiting for connection
and fast connection to the right person.
In order to enhance the company's reputation in the eyes of customers they carried out work
on the receipt of more comfortable and short number of the contact center to complement the existing
8 800 080 08 80.
The company has received and put a single number "1499" and organized a free dial-up
from urban and cellular numbers.
The allocated a space in AB "Almaty post office" to accommodate the contact center,
provided comfortable and convenient working conditions for operators, seminarsare conducted not
only for the study of the professional skills of conversation,but also in the necessary knowledge
according to the existing product line.

offices that do not meet modern requirements of the customer service
8. One level service
In 2014, they also launched a project to improve the service and maintenance - single-level
service on a "face to face" basis. The company has 17 offices which already serve on the above
principle, which is designed to create a comfortable environment for our customers and accelerate the
process of customer service.
We understand the need for this project, since a large percentage of our clients - the elderly, who
until last year served standing at the box office. The company planned transition to a single-level
service in all regions of Kazakhstan.
9. Situation Centre, CCTV
In 2014, commissioned a situational center, carried out procurement and supply of special
equipment.
The spectrum of possibilities usage of the created situation center can improve the quality of
service by increasing control over the quality of services, as well as rapid response to problems
associated with customer service in the Company, including online monitoring:
 target dates for passage of postal items;
 electronic queue;
 cars of the company connected to the satellite navigation system (GPS)
Situation Centre and the installed equipment also enables videoconferencing to conduct
workshops, distance training and video monitoring of:
 front offices in post offices;
 postal wagons;
 the process of loading cargo and sorting process in sorting center;
 contact center;
 postamats
3.2.3. 3.2.3. Technology & innovation
Development of the company is inextricably linked to its technological development. New
technologies as such are innovations that provide social and economic benefits only after finding
practical application.
The emphasis on innovation and technology will allow us to implement the following projects:
1. Postamats
Postamats (automated postal stations) - is a terminal for self-service when sending or receiving
mail between corporations and individuals. The project aims to create a network of postamats
in the country to receive and issue postal items. The service is a new type of service in self-service
mode. The service is available for at least 16 hours a day7 days a week at the points of concentration
of potential consumers of postal services (shopping centers, railway stations, etc.).
In order to implement this project they made delivery and installation of 17 postamatsin the
cities of Astana, Almaty and Karaganda, launched the service for issuing premises, completed work
on the launch and commissioning of services for the issuance of shipments with cash on delivery and
acceptance of shipments in postamats, contracts for delivery of goods in postamats from 4 online
stores.
This type of service has several advantages for the customer: they do not need to go to the post
office for the parcel, the client can get it in the place which he often visits for other matters, in the
business center or shopping center; postamats are working around the clock; there is no need to stand
in line.
2. Automation of mail sorting line
Under the "introduction of automated sorting lines for registered mail (parcels, small packages)"
the installation and in December 2014 test mode launch of automated sorting line of parcels and small
packages were performed at the Sorting center.
The introduction of this line allowed:
 to increase productivity by 30%;
 eliminate errors when sorting by 99%;
 to sort without the knowledge of supply routes;
 cut 19 staff units
In addition, the updated technological schemes for all types of written correspondence (ordinary,
registered letter post, RM, parcels).Optimization of processes of reception and delivery of postal items
(refusal from wax, twine, kraft paper, tissue) including customers informing via phone. The reduction
in the number of deliveries of notices on registered mail, forms and books used .
3. Automation of periodicals sorting line
In Kostanai, Aktobe, Karaganda and North Kazakhstan regional branches they implemented the
project of mechanization of periodicals sorting process at a newspaper site that permits sorting of
periodicals to the level of each regional center and to the level of the postman of rural and urban post
offices, which reduces the time delivery of periodicals in the regional center by 3-4 hours and 10% of
rural POCs by one day.
Implementation of the project allowed:

increase productivity of by 60% ;

reduce "unnecessary" steps of the business process from 11 to 7;

4 hours reduction in the time of delivery in the regional centers
4. Hybrid e-mail
The hybrid electronic mail (hereinafter - HEM) - a service which allows users to exchange
messages and documents forwarded at the individual stageselectronically.
The advantage for customers: the rejection of routine work on the formation of the letters;
reducing the time of delivery of correspondence to remote regions; providing tracking of mail on-line;
reducing the cost of notification of receipt.
HEM provides such services as:
 receipt of letters electronically from consumers (senders);
 preprinting preparation;
 Printing of attachments;
 packing in an envelope;
 receipt, processing, transportation and delivery of registered letters;
 transmission to the information system of the legal entity the status on the delivery of
registered letters.
By using the technology of "Registered hybrid item with notificationon the receipt" the
information from businesses intended for distribution, with a list of recipients by region is sent
electronically in points GEO, where it is printed in the form of individualized paper and packed in the
envelope. Transfer of the finished registered letter correspondence is carried out, after the process of
receipt of letters in the software.
As part of this project we studied the issue for the integration of information exchange with the
Supreme Court of the Republic of Kazakhstan when sending subpoenas.In 2014, in a pilot mode they
launched service "Registered hybrid itemswith notification on the receipt" in Almaty and Aktobe. It
was also launched in Astana and three regional post offices - RPOCs (Yereimentausky and
Korgalzhynsky RPOC of the Astana post office and Osakarovsky RPOC of Karaganda regional
branch). It was also launched in all regional post offices and in regional centers in South Kazakhstan
and East Kazakhstan region.
In the nearest future it is planned to integrate with such organizations as the General Prosecutor's
Office of the Republic of Kazakhstan, Tax Committee, "National Information Technologies" JSC and
other interested state bodies and legal entities.
5. Mobile Postman
The introduction of "Mobile Postman", aimed also at improvement of the quality and control of
the services provided, allowed to extend the functionality of postmen and couriers.
"Kazpost" JSC, becoming closer and more accessible to customers, can now serve customers
by providing a check at the spot of payment for the service in their homes, apartments and offices.
The potential of the range of services provided by the "Mobile Postman":from payment for services
of mobile operators, utilities to the issuance of mail with the possibility of cash on delivery for the
parcel.
There are a total of 293 mobile postal devices, they have plans to purchase in the next year about
600 smartphones, which will be more modern and technological as per capabilities of the existing
ones, more convenient and easy to use by our employees.
In 2014 they delivered about 30 th.postal items using mobile postal devices.
6. Online postcard (Print2Card)
With the growth of Internet penetration in Kazakhstan, the company's customers less often send
written correspondence or postcards. Once the cards were one of the most valuable gifts for any
celebration. Today, paper postcard were replaced by postcards and congratulations on the social
networks.
For the first time in 2014 we introduced a new and unique service using Internet technology,
which allows you to create cards online through the mobile application «MyKazpost» with delivery
to your family and friends all over the world.
Print2Card - a combination of tradition and innovation. Print2Card service that allows you to
send a paper card, made on the customers own, that is using their smartphone.
We have updated the official website www.kazpost.kz and presented a mobile application
«MyKazpost» for gadgets, users of operating systems IOS and Android.
According to data and statistics at the end of 2014 more than 6.3 thousand people are actively
using this application, and about 4,500 downloads were made by customers of Android operating
system and 1800 - customers of IOS.
New sales channel showed the demand for this service among the population and has good
prospects for its development.
7. SMS and e-mail notification
In 2014, the company first introduced the service to notify clients through sms in the framework
of the "People's IPO", when customers were reported about the opening of brokerage accounts on cell
phones of customer.
This format of works on the notification was positively valued by customersand in the
subsequent the management of the company decided on the need for such a form of notification for
other services.
At the end of the year, we have reviewed the process for the other services and introduced a
notice on mail delivery (parcels, small packages, etc.).
The customer making the order, using e-commerce indicates the mobile number. This mobile
number is used as soon as the package comes in Kazakhstan. The introduction of such technologies
also allowed our postmen do not deliver the notice, making way to a few thousand kilometers a
day.Due to the introduction of new technologies we were able to free up time of our postmen and
more efficient use their working time.
The plans for 2015 - the introduction of this service in the provision of services
(Transfer transactions, the payment of pensions and benefits), the implementation of distribution
services on the e-mail address (e-mail).
8. Postmarket.kz
We have launched Trade Portal of "Kazpost" JSC - Postmarket.kz, intended for the sale of
goods. The first manufacturers placed their products (domestic products, etc.).
The Pavlodar branch launched a pilot project on the order and delivery of consumer goods from
wholesale producers with subsequent transfer of the project to Postmarket.
9. Internet subscription
We introduced the service "Internet subscription", the new modern format of subscription
for periodicals online www.postmarket.kz, which was launched in the framework of the corporate
transformation program "Orken."
Anyone will be able to subscribe via the Internet. Subscription is availableOnline on
www.postmarket.kz .Previously, customers had to go to the post office to subscribe, wait in the queues
and fill out various kinds of forms. The introduction of this service allows you to subscribe to the
required periodicals without leaving your home or office. The process of registration is simple - having
Register Online and selecting the directory you need to subscribe to the publication, the client only
needs to make a payment by credit card, and everything else for the client will be made by the
company's employees.
Now as the beginning only Kazakhstan leading newspapers "Yegemen Kazakhstan" and
"Kazakhstanskaya Pravda" are available for subscription via Internet.In the future, customers will be
able to choose from a catalog not only local, but also foreign publications posted
in subscription catalogs.
10. Outsourcing of postal services
The Company conducted business analysis for the provision of postal services among the
owners of the premises (shop, pharmacy). After the conclusion of the corresponding contract, the
entrepreneur provides services on the reception and delivery of postal items.Thus, for people in rural
areas there is an opportunity for a day, seven days a week without breaks, use the postal services.
The first pilot project in the framework of the plan for the organization of access to postal
services in rural areas, was carried out in the village Akylbay located in Abylayhansk rural district.
This project contributes to the development of small and medium-sized businesses.
Subsequently, the project has been replicated to other locations in the country (Akmola, Aktobe,
North Kazakhstan and Zhambyl region).
11. Other innovative projects
In 2014, the Company also launched innovative projects such as:
 "Online Application" for the issue of payment cards and the "online shopping" of stamps,
which will expand the geography of services;
 "The track numbers" - a project to update the system for tracking postal items, allowing a
more detailed logistical information on the location of the postal item;
 "Internet access points" - a project that provides an opportunity to rural residents enjoy free
internet access, as well as direct contact (to ask questions and to leave their appeals) with the Public
reception of "Nur Otan", akim of the city and the region.
12. Future projects
We are committed to continuously work on finding new and promising projects
to which we can safely include the following projects:
 New zip codes
We have studied the experience of developed countries in the use of new postal code
(England, Ireland, USA, Canada, Israel, Lithuania, etc.
New postal codes - is a postal code unique to each addresswith a unique code for every home
and office, which will help everyone to easily find the address.
We are working on the development of the pilot version of the information system Postcode.kz
and approved the terms of reference for making changes to the software associated with the use of
new postal codes.
 Electronic Office Boxes (kaz.post)
Work is underway on the development of a prototype of an electronic mail service and a beta
version of the portal Kaz.post.
Electronic Office Boxes (kaz.post) - a national e-mail service, an analog of the portal mail.ru,
where they will have the binding of e-mail to the mail address.
Each office box will have its virtual analogue boxwith the possibility of forwarding to personal
mailboxes.
3.2.4. Business processes
1. Payments
As part of the payment acceptance they automated customer information input in interface by
scanning them with ID cards, eliminating manual filling of the forms by clients (AP -4) by automating
print forms from the operating system. We automated the process of settlements with partners and
retain fees. A process for the receipt o f tax payments in favor of the tax authorities of Kazakhstan
without regional restrictions was introduced. Now, payment of tax is available at all branches of the
Company in favor of the tax authorities. To comply with the requirements of the legislation we
introduced automated forms - agreement to provide personal data on bank accounts, payments and
transfers. Implemented process of rounding (tiyn) when receiving payments and transfers.In order to
reduce operational risks
changed the procedure for payment of the reversal they limitedthe right of operator for the
"reverse" operation, the work is underway on the automation of receipt of cash on delivery.Rapidly
developing technologies pose new challenges the Company to ensure receipt of online payments in
favor of service suppliers "Astana-ERC","Kazakhtelecom" JSC, «AVON», «KMF» et al., receipt of
fines through online payment gateway, as well as, electronic authentication of proxies through the
system of ENIS and the E-notary. These projects will be implemented in 2015 within the approved
action plan.
In order to develop alternative sales channels the contract with LLP "Cash 24" was signed for
the installation of 380 payment terminals in the offices of the Company to quickly pay for cellular,
utilities and other payments. Given the demand from the population of the channel sales for 2015 we
approved the budget for the purchase of own payment terminals for installation in a branch of the
company, PSC premises, the tax committee.
2. Deposits
The algorithm and the automated calculation of compensation in case of early termination of
the Agreement, the accrual rate for the additional contributions, interest capitalization at the end of
the deposit term, at the end of the term the transfer of contribution is automated with capitalized
remuneration at the account of "On demand".
3. Money transfers
Implemented automatic printing of forms for all types of transfer of the Company: «Western
Union», international, express within the Republic of Kazakhstan, postal.
The work was conducted on a new contract with the company «Western Union»and on the
opening of new sales points. Optimized Customer Service processfor urgent transfer in the national
currency in the own system of money transfers.In 2015 we plan the branding of own transfer systems.
4. Payment of pensions and benefits
The company, together with the SCPP is constantly working to optimize the process of issuing
and delivery of pensions and benefits to remote rural areas and villages. From September 2014 to
January 2015 The company has worked on the transfer of the recipients of pensions and benefits,
living in the villages on the way to a new payment "enrollment in the current account in the villages,"
which allowed automating the cash deposit in the form of MT 102, to strengthen control over the
issuance of money from the accounts of recipients of pensions and benefits. During this period of time
the have transferred 117,818 recipients of pensions and benefits in 794 villages, including transfer of
about 22 thousand persons to the card accounts. In order to minimize operational risks in 2015 we will
continue to automate the current process of issuing by the method of delivery, "Home delivery in the
cities and district centers" with a special mobile device (the MPD). At the end of 2014 through the
MPUthey implemented service on the issuing of pensions and benefits from current accounts.
5. IPO program
In 2014 "Kazpost" JSC took an active part in the 2nd stage of the state program "The People's
IPO", which acted as a broker and transfer agent for the sale of shares of «KEGOC» JSC through post
offices.In order to improve customer service and bring the process into line with the requirements of
the National Bank of Kazakhstan they carried out the work on the automation of functionality for
receipt of payments under the program "People's IPO", they carried out online monitoring of payment
details.
Receipt of applications from investors was carried from 05 November to 5 December 2014.
Through the post office they made more than 13 thousand client order to purchase more than 5 million
of «KEGOC» JSC.-The Company's share in terms of the money involved in the second phase of the
program was 28% (1st place) among all brokers, in the total number of applications received in the
second phase of the program amounted to 31% (2nd place) among all brokers. By the number of
customer orders far ahead is Aktobe and Karaganda regional branches. By the volume of customer
orders in the lead are Astana, Almaty.
In 2015, for customers of the securities market we are planning to launch the new service
"Internet trading".In addition, in 2015, and within the approved Action Plan will continue to work on
inventory and automation of required reports on brokerage activities as required by the National Bank
of Kazakhstan.
6. Payment cards
In 2014, we completed the certification for the transition to the status of principal participant in
the IPS Visa, the certification of the trade and Internet acquiring, from July the Company carries out
direct settlement with IPS Visa. This status is given only when a certain financial results was achieved
and allows you to work directlywith international payment system Visa, expand the product line for
payment cards, to develop a shopping and internet acquiring. Thus, the Company has moved to a new
level of interaction with the IPS Visa, which provides an opportunity to compete with the largest banks
of the Republic of Kazakhstan.
Due to the wide penetration of the Internet from the trading companies and service a growing
interest is to the e-commerce. In turn, one of the main directions of the company is the development
of e-commerce and provision of a full cycle of product choice, physical delivery and cashless payment
for the goods. Launching of e-commerce project is planned for 2015.
The portfolio of corporate payment cards Visa accounts for a small share of the market of
Kazakhstan, which provides a significant opportunity and a huge potential for business development
in this segment. In 2014 we launched a project on the issue of corporate cards for travel and
entertainment expenses of employees of the Central Administration of the Company. In the framework
of cross-selling in 2015 they planned the issuance of corporate payment cards Visa Business for the
payment for postal services by legal entities using non-cash method. In 2014 they implemented the
service of express money transfers «VISA to VISA», allowing holders of Visa payment cards at ATMs
of Kazpost send and receive money in real time.
In order to increase sales of payment cards, in conjunction with the IPS Visa an action to
stimulate the operators of the Company was held.As a result of the event, the Company's employees
were awarded monetary compensation for the issuance of payment cards.
In order to improve the skills of the Company's employees they conducted workshop on
corporate payment cards, with the participation of the IPS Visa.
During 2014, in order to reduce the costs of the Company together with "Kazkommertsbank"
JSC they conducted a major work to reduce tariffs for processing services.
Changes in Tariffs on payment cards, approved a new tariffon transfers from card to card
through Homebank.kz.
In 2015 they plan to abolish the tariff for cash withdrawals for pensioners in ATMs of
"Kazkommertsbank" JSC and "BTA Bank" JSC, which will allow the Company to offer to pensioners
comfortable service in the cities and reduce the cost of buying own ATM network.
The total number of users of the service «SMS-banking" as of 1.01.2014 - 2,543 units, in 2014
2,508 users have joined of 01.01.2015 - the number has reached 5051 units.).
In order to expand the range of services in 2015 they planned the introduction of new remote
services Transfers CARD to Cash, USSD-SMS payments, as well as non-cash payment of cash on
delivery in postamats, payment of postal, utilities and tax payments through POS-terminals.
In addition, to maintain card accounts, automation of accounting and reporting on transactions
with payment cards, the possibility of sale of joint retail products and services, loyalty programs it is
planned to introduce the module "Back office card system" in CIS "Colvir".
7. Other transations
As per operating activity in 2014, they implemented a number of measures aimed at the
automation of the process in support of the financial business operations and minimize operational
risks.For the due check of clients they acquired base of foreign public officials (hereinafter
BFPO).Work is underway to import base in «Colvir» for on-line monitoring of belonging of customers
to BFPO.
Herewith, it should be noted a number of negative factors affecting the efficiency of the financial
business in general, namely long-term revision and implementation of processes (for revision, testing
and implementation of the most important business processes it is required from 3 to 9 months); Low
equipping of departments, a lack of training documents, interfaces in the operating system in the
national language and as a result, poor education and low-skilled operators, prolonged tender
procedures, in the offices standards of customer service are not met, lack of client-based approach
(closure of branches in major cities for lunch, shorter working day, etc.), the lack of advertising for
the main types of payments - free taxes, low rates of payments. These problems will be solved in
2015.In addition, it is planned to carry out radical changes in terms of corporate services, procedural
changes of back office on the service of entities in the automation of registers sending, formation of
acts, reconciliations and tax invoices, records of cash transactions, arrangement of Provider Directory
maintenance, tariffs, CSC codes , IIN, conduct a single electronic file of clients. Most processes will
be implemented in the framework of the project of "Transformation", part will be implemented within
the framework of the current work in 2015.
8. Development of international postal exchange
To increase the volume of shipments by mail channels Agreement was signed between the China
Post Group and "Kazpost" JSC for cross-border exchange of small packets.As a result, introduction
of a new product "sending of small packets from the Xinjiang Uygur Autonomous Region of China
to the Republic of Kazakhstan, and in the opposite direction."
In order to optimize the process of incoming and outgoing international mails processing it was
decided to open a place of international mail exchange (PIPE) on the air area of the branch "Sorting
Center", of Almaty on the territory of a temporary storage warehouse of Almaty "International
Airport" JSC, (AIA), with an area of 900 sq.m. Also, we opened an aurarea for processing of
international correspondence PCI-5, in the processing station of EMS mailings shipment of the
"Sorting Center" branch on the territory of the AIA of Almaty.
In order to simplify the process of customs clearance of international mail, as well as to speed
up the processing time in PIPE of Almaty, changes in bylaws "Rules for processing and sending of
international mail in places and areas of international exchange of Kazakhstan" were made, which
provide for the elimination of the stamp of the customs officer at each international small package
that allows to speed up the processing of small packets to minimize the number of complaints,
customer appeals etc. As a result of this change, we have the following results: acceleration in the
processing of small packets; minimization in the number of complaints, appeals clients; labor saving
(reduction from 6 units to 2 units per working day); saving of performance materials (adhesive tape,
mastic).
3.2.5. Transportation
1. Motor vehicles fleet, fleet of postal vans and postal equipment
Given that the basic network of ground ways of the Republic are the roads (about 93.6 thousand.
km), the transportation of mail on in intraregional and intradistrict routes is made by road. In order to
be competitive in the logistics market of the republic, the Company must maintain, systematically
develop and improve the vehicle fleet.
Percent of tear-off of the vehicles decreased from 60% to 40%. In accordance with the plan of
capital investments in 2014 we purchased 83 units of vehicles including 35 units of heavy vehicles.
The following types of mandatory repairs of postal vans were made: overhaul (CR-1), depot repair,
maintenance in the volume (TO 3) actual repair of wheel pairs, replacement of batteries, maintenance
in volumes (TO 1).
2. Transportation of mail and target dates
To date, rail transport is the main means of transportation of mail on trunk routes of Kazakhstan.
Existing fleet of postal wagons (58 units) involved 16 routes, providing a continuous daily connection
between the cities of Astana, Almaty and all regional centers.
Transportation of mail on intraregional and intradistrict routes is provided by 1637 road routes.
To reduce the time of passage of mail and delivery of periodicals we provide the transportation
of mail by air on 44 air routes for many years.
We ensure compliance with established standards of quality of postal items: letter post, parcels.
With the established requirement on the frequency of mail transportation the execution was as
follows:
• on trunk routes (between regional centers) - 100% in the daily norm;
• on the intraregional routes (from the regional center to RPOC) - 100% with the standard of 4
times a week;
• on the intradistrict routes (from the district center to VPOC) - 100%, with the standard of 2
times a week.
The average frequency of mail transportation as of 01.01.2015, at the Company is as follows:
• on intraregional routes (from the regional center to RPOC) - 5.6 times a week;
• on intradistrict routes (from the district center to VPOC) - 3.5 times a week.
• In addition to the above activities the Company has carried out other activities, including the
following:
• revised timeframe for the passage of mail, including international one.
According to the results of the work, the time required for delivery was reduced and the time
for the written correspondence, sent from Almaty were established:
• D+1 - for the cities of Astana, Almaty, Taldykorgan;
• D+2 - for the city of Atyrau, Aktau, Aktobe, Karaganda, Kokshetau, Kyzylorda, Kostanai,
Pavlodar, Petropavlovsk, Uralsk, Ust-Kamenogorsk, Taraz, Shymkent;
• due to changes in the frequency of routes, the maximum time for delivery of periodicals from
"Day+8" to "Day+3" was reduced for 98% of rural post offices. For the reduction of the delivery of
international mail by 7-10 days, together with "KTZ" JSC, «KTZ Express», China Post and the
Russian Post the multimodal transportation of international mail from Zhengzhou - Astana - Moscow
(Zhengzhou - Astana: container transportation, Astana - Moscow: vans) was organized in the test
mode.
3. Trunk transportation
To meet the deadline for the passage of postal items and the prevention of complaints from
customers for the violation of milestones in 2014 the works were conducted on the optimization and
discovery of new main rail and road routes:
In connection with the transfer of passenger trains from Tver wagon plant to the People's
Republic of China wagons in a train of 23/24 of the "Almaty -Aktobe" route and 691/692 of the
"Atyrau - Uralsk" route in 2014 works were carried out to optimize the discovery of new Railway and
road routes:
• Railway route Almaty - Atyrau for the daily exchange with all the points in the south - west
direction due to transition of passenger train of Tver wagon plant to the People's Republic of China
wagons in a train of 23/24 of "Almaty -Aktobe" route;
• The route "Uralsk - Atyrau - Uralsk" in connection with the transfer of passenger train of Tver
wagon plant to the People's Republic of China wagons in the train of 691/692 of the "Atyrau - Aktobe"
route;
• Route "Kokshetau - Petropavlovsk" for the daily exchange in a northerly direction, to ensure
timely shipping of mail.
Total number of routes has increased by 7% and amounted to 1,763 (in 2013 - 1637). Serviced
by departmental transport and hired transport increased by 12 %.
The length of the route in 2013 - 2014.
Total
number of Serviced by hired and
Name of the routes per departmental transport
day
route
2013 2014 2013 2014
2013 2014
Hired
Dep.
Urban
142
176
0
4
142
172
Total length Serviced by hired and
(thousand
departmental
transport
km / day)
(thousand km)
2013 2014
2013 2014 2013 2014
Hired
Dep
17
0
25
0
17
25
Intraregional 155 134 38
Intradistrict 1340 1453 493
Total
1637 1763 531
29
562
595
117 105 53
847 891 195
1106 1168 264
59
326
410
13
51
64
13
59
72
40
143
201
46
267
338
4. Transit
"Kazpost" JSC in close cooperation with the Kazakh and Chinese railways, airlines and postal
operators in China and Russia are increasing the pace of transit capacity with the introduction of a
new mode of transportation of international mail in containers.
So, on the basis of the Agreement between the China post Group and "Kazpost" JSC concluded
in 2013 in 2014 they transported from "Khorgos-Orenburg" 1,800 tons of transit of international mail,
with growth in 2013 in 8 times.
In September 2014 "Kazpost" JSC together with the China Post and AirlinesKLM conducted
testing of air mail transit from China to Brazil through Kazakhstan from "Khorgos - Almaty - Sao
Paulo."
In August-September 2014 in conjunction with KTZ they conducted testing of the container
with the mail (2 containers: Urumqi - Dostyk - Almaty-1 and Chongqing - Altynkol - Almaty-1).
On December 3, 2014 as part of a regular container train Zhengzhou - Hamburg they
implemented a pilot sending of two 20-foot containers with consolidation and customs clearance of
multimodal scheme: from Zhengzhou to Astana in containers from Astana to Moscow to the terminal
of FSUP "Russian Post" via truck of "Kazpost" JSC.
Terms of transportation of international mail at a distance of 7743 km at a route of Zhengzhou
- Astana - Moscow amounted to 10 days.
Successful pilot projects have shown the competitive advantages of the delivery of mail by road,
which would reduce the time of delivery of international mail from China to Kazakhstan, Russia and
Europe.
3.2.6. Security
In order to ensure the information security of the Company, the basic principles of information
security management system are: compliance with the legislation of Kazakhstan, winning of the trust
of customers, ensuring the confidentiality, integrity and availability of information assets.
Compliance with the above principles, the Company achieved the following tasks: the active
participation of the Company's management in the management of information security, the
implementation of assessment and information risk management of the company, to increase the level
of protection of information assets of the Company, ensuring the confidentiality of customer
information and the mode of access to it, and others.
The Company has approved the regulations for information security. These rules define the
general procedure for the provision and use of software and hardware and information resources in
the corporate information network.
The constant work is being done to improve the technical equipment of the enterprises of the
postal network and regional divisions of postal security. Introduction of measures to protect postal
and financial interests and personnel. For example, employees are provided with personal protective
equipment, and technical means of security and protection are supplied. A technical audit of "Kazpost"
JSC was conducted on the issue of equipment with the technical security and CCTV cameras in
Atyrau, Zhambyl, Kyzylorda regional branches. For the installation of video surveillance systems in
regional branches the funds are provided totaling 14 435.3 thousand tenge which were promptly spent.
Inspections was the mail van were made to comply with labor discipline on the routes and
transportation of non-registered cargo. During inspections in 2014 there have been revealed 15 actuals
of unregistered transportation of baggage and cargo of 954 seats, weighing more than 17 tons of the
total amount of 1 million tenge, which is refunded in full.
A meeting was conducted (10.12.2014) organized by the Department of Anti-Drug and Drug
Control under MIA RK, work is underway on the issued assignments, and plan of joint activities was
designed.
Currently we introduced almost all of the necessary information technologies, the amount of
information being processed is growing, the international best practices are studied.
We constantly analyze the work of security departments in branches, aimed at efficient use of
resources, timely detection and mitigation of commercial, financial risks faced by the Company in the
implementation of agency agreements for the provision of credit and transfer agency services.
During the reporting period, the Company implemented a plan of preventive actions to prevent
thefts, burglaries, and a plan to minimize the risks of internal fraud in the provision of financial
services. There have been also developed an "Action Plan to ensure the safety of mailings", measures
were taken to identify persons inclined to commit theft of mail and/or replacement of enclosures using
a chemical trap. In addition, two pilot postal wagon were launched with DVRs, the inspections of
postal wagons are carried out constantly for transportation on the issue of the transportation of
unregistered cargo, unauthorized persons and prohibited items.
3.2.7. Feedback
The Company's corporate website has the functioning blog of the Chairman of the Management
Board of "Kazpost" JSC and the "Contact Us" page. These Internet site receives applications of the
service users and employees of the Company, which are checked officially, and according to the
results the authors answered. We provide timely and quality responding to the application from the
external blogs - Prime Minister of the Republic of Kazakhstan, the Minister of Transport and
Communications and other government agencies.
Personal blog of the Company's Head is one of the most visited in the group companies of the
Fund. Employees of company address to the Chairman of the Management Board of the Company
through his personal blog on the issues of staff number, wages, working conditions, share their
suggestions and ideas to improve the quality of work.
The "Contact Us" page is referred by the visitors of the web-site on the following issues: tracing
of mail (international, domestic), financial services, business cards, delivery time of subscriptions,
poor performance of tracking system of postal items, the schedule of post offices, the time required
for processing of mail shipments in the sorting center, etc.
During 2014 the total number of applications amounted to 288,706 (growth of up to 15.3% in
comparison with 2013.). The main topics of appeals are:
• search of international and domestic mail in order to obtain information about the reasons of
the non-received items from other countries (China, USA, UK, Russia) and their movement within
the Republic of Kazakhstan;
• frequent technical failures in the tracking system of "Kazpost" JSC on the website, see
"Tracking";
• no update on the site (address and timetable of POs, zip codes);
In order to improve the quality and construction of operative communication with clients we
established quality management, where a single point of recording and processing of applications is
operating, the call center of quality monitoring of services rendered by the Company was improved.
3.2.8. Image and information policy
The Company's activities demonstrates its commitment to the principles of openness and
transparency.
One of the indicators of the index of transparency and informative source - is an annual public
annual report of the Company. Report for 2013 was prepared in accordance with the requirements of
the reporting system of GRI (Global reporting initiative) and was posted on the official website of the
Company.
Report participated in the Annual Report Competition organized by the rating agency "Expert
RA Kazakhstan", and entered the "top 10 best", taking second place among the 131 companies in the
country.
The corporate events of the Company are accompanied by press releases and information
messages to the media. The Company annually provides to investors, partners and customers
advanced report on the financial and administrative operations.
We ensure the timely publication of financial statements in the online resource of the depository
of financial statements of the Ministry of Finance RK.
Information about the Company's corporate events is posted on the official website of
"Information and Accounting Center of the RK" according to the Regulations on Disclosure of
Information.
For public inspection we timely update on the corporate website (www.kazpost.kz) the
Resolutions of the Board of Directors relating to transactions with related parties and transactions with
persons who have special relationship with the Company, the list of affiliated persons and other
corporate events.
Monitoring of information for public inspection, development of internal regulatory documents,
conversion of corporate documents into the official languages and English for the required level of
availability.
There over 1753 published articles in newspapers, on TV and radio, news agencies, online media
and social networks about the activities of the Company during the reporting period.
According to the diagnostics of the corporate governance conducted by the Internal Audit
Service, the level of corporate governance was 76, 8%. The level of the component "Transparency"
for 2014 amounted to 84.1% (77% in 2013). The Company has an approved information policy, the
detailed financial information d, strategic directions of development are disclosed. Shortcomings
identified by this component are included in the action plan to improve the corporate governance of
the Company for 2015.
There is a new design of the official website of "Kazpost" JSC for the convenience of customers.
The corporate website has the formed and introduced new map of the branch network (over 3,000
units), elaborated forms of address, the online application form and user profiles, updated tracking
system for postal items and zip codes search tool. Centralization of all existing Web services, Web
modules are worked out in the same block, constant updating of the information, conversion of key
information to state and English languages. Quality management represents the report on received
appeals, keep records and control.
Quality management represents the report on received appeals, keep records and control.
In addition, in order to enhance legal literacy of employees of the Company the legal department
on a monthly basis informs workers on the changes in the legislation of Kazakhstan.
3.2.9. The implementation of a marketing plan
As part of the Marketing Plan we launched mobile application MyKazpost for owners of iOS
and Android devices, application was designed taking into account all the needs of customers.
MyKazpost optimizes time costs of customers and facilitates the work of call center, offering
convenient self-service "tracking" - the ability to track the movement of parcels online, "tariff
calculator" - client can calculate the cost of services provided by the company. In addition, intuitively
using the clear search engine, it is easy to find the necessary post office and/or zip code. The customer
can also use a service of "Courier Call" and "Order payment via Visa Card». To improve the
performance of post offices the customer can evaluate and make recommendations for improvement
the work of offices.
Introduction of User Echo service for express processing of requests from customers,
responding to the questions and reduction of the load from the Call-center of the Company. The
specified channel for the second half 2014 received applications from clients in the amount of 839
units.
For the first time the official website of "Kazpost" JSC took second place in the category "Best
Corporate Website" at the awarding of XII National Internet Award AWARD.kz. As a result of the
expert group work of the Competition for the best web-sites in Kazakhstan the lists of nominees from
670 submitted applications were developed, 132 web-sites passed to the second stage out of which the
web-site of "Kazpost" JSC took the prize.
1. Direct mail
Direct mail and direct marketing is a type of marketing communication, which is to provide a
direct interaction with the consumer. Direct marketing is based on the concept of individual approach
to the client, which uses feedback from the client, carried out without information intermediaries.
For the purpose of successful carrying out of interaction with the client, the client base is needed,
where the information about individuals and entities will be constantly updated. It also contains
information about requests, preferences, characteristics of each customer. Such information is
necessary to ensure the quality of service requirements and needs of the client.
As per this issue, the Company is working on a database to provide current and potential
customers and services on the addressed and non-addressed mailing of advertising materials. In
particular, automated report on contracts concluded at the level of regional branches, in accordance
with the list of customers, branches the work was conducted to attract customers to the service of the
addressed and unaddressed mailings of promotional materials.
Work is underway to conduct quality control checks of the delivery after the mailing, it analyzes
the quality of the distribution on the basis of information received from the Company's branches,
customers with whom we signed the contract, consumers of postal services.
In addition, work is underway to create online office for corporate clients with access via the
Internet or mobile phone to provide a report on refunds, billing and feedback.
Work is underway on the implementation of the technical basis for the online portal «Online
marketing with Kazpost», which is designed to provide small and medium-sized businesses with the
convenient services for the creation and sending of advertising material to the specific audience,
without leaving the office.
2. Parcels
The first automated postal station (postamat) was introduced to commercial operation in Almaty
at the mall "Ritz Palace" with the further expansion of the network in Almaty (9 units), Astana (6
units), Karaganda (2 units).
Introduction of the SMS service notifications when the incoming of mail to the post office for
delivery to the addressee.
Work is also underway to provide access for the corporate clients to online resources via the
Internet or mobile phone to keep track of lots of items, provision of a report on the return and feedback.
Within the framework of trilateral cooperation of the Company, financial institution of "Home
Credit Bank" (hereinafter HCB) JSC, and chain of electronics sand household appliances stores
"Mechta" (hereinafter - Mechta), HCB launched a pilot project on loans for the purchase of home
appliances and electronics of Mechta with delivery of goods to customers via the Company.
Having separated the online stores in a special target group, the Company has developed a
separate set of services, offered to online stores under special flexible terms. The company has a
permanent contract with the Kazakh companies that sell via the Internet, there are agreements that are
being signed.
For the development of e-commerce we use new organizational approaches, in terms of
provision of market access for goods and services provided via the Internet, which will increase the
markets. The Company is working to optimize organizational processes and logistics system of
"Kazpost" JSC, implements new projects that will contribute to the development of Internet trading
and e-commerce in the country.
The company is actively working on the efficiency of the process of delivery of large-sized mail.
In order to improve the quality of this type of services the Company considered the issues in the
acquisition of heavy trucks, in particular, the decision was made to purchase a tractors with an allmetal semitrailer. We also developed plans, directions and schedules for road transport.
3. Large-Sized postal items (LSPI)
The company is actively working on the efficiency of the process of delivery of large-sized mail.
In order to improve the quality of this type of services the Company considered the issue on the
acquisition of heavy trucks, in particular, the decision to purchase tractors with an all-metal
semitrailer.
The company produced 35 purchase of heavy trucks and is actively working on the efficiency
of the transportation process of mailings and large mailings from corporate clients. Plans were
developed on the directions and schedules for road transport.
To accelerate and simplify the procedure of registration of applications, work is underway on
the automation of the process of forms filling to send LSPI. The corporate website provides an
accessible "My Account" for corporate clients with the ability to track lot parcels. In addition, work
is underway on the introduction of the service "Full cycle LSPI".
4. State signs of postal charge and philatelic products
Issue of postage stamps is one of the activities of "Kazpost" JSC, it is the stamps which confirm
the payment of postal services. Kazakhstan Post was one of the first among the CIS countries, created
a specialized unit for the production of postage stamps, the main task and function is the direct
planning, publication, entry of postage stamps into the post-treatment, full maintenance of needs of
communication companies of the Republic in postage stamps.
For the purpose of further development of postage stamps and philatelic products, the Company
worked to strengthen the primary market of philately, considering projects on the issuance of
commercially focused stamps.
A ceremony on the entry of SSPC of a special series "Paintings of Children" about "Heroes of
the Kazakh fairy tales" to the postal circulation.
In accordance with the thematic plan of the SSPS release for 2014, the following SSP S were
released and deployed (using new printing technologies and innovative forms of issue):
1. Postage stamp of "Nauryz" series of a triangular shape;
2. Postal stamps block of three different sizes of the series "Memorable and anniversary dates"
on the theme of "125 years since the birth of Charlie Chaplin."
3. Souvenir block of four stamps of different sizes of a series "Architectural monuments of
Kazakhstan" on the theme of "Zhoshy Khan Mausoleum" using the technology of relief printing embossing.
4. Stamps under the program of «PostEurope» on the "National musical instruments" with the
placement of the QR-code image with reference to the National Museum of Musical Instruments.
Having read the QR-code with the mobile device you can hear the sound of folk musical instruments.
5. EMS-Kazpost
In 2014 we introduced a new service of "Economy Shipping". The service on the receipt,
transportation and delivery of shipments on the principle of "From door to door" by rail and by road
within Almaty and Astana and within Kazakhstan (registration and payment for shipping and
transportation of items are made locally). We introduced a service "Delivery by walking courier" receipt and delivery of lot items for the rendering of which only walking couriers are involved.
At the beginning of the 3rd quarter of 2014 we introduced the procedure of Onboard Tracking,
according to which the designated personnel conducted proactive tracking of shipments and promptly
addressing of issues raised from the part of competitors and the most demanding customers.
6. Money transfer
Conduct of works on the optimization of money transfer process. We updated the version of the
software to generate reports, design of the guide for the operator for the acceptance and payment of
international money transfers, renewal of transfers in foreign currency (US dollars) and cancellation
of manual conversion of foreign currencies.
Partners of "Kazpost" JSC are the national postal operators in other countries.
Transfers are made via safe and reliable international network, providing high-quality service
adapted to the needs of all its citizens of the country and its visitors.
4.
INFORMATION ABOUT COMPANY
The company provides a full range of postal and savings services to individuals and legal
entities. Postal industry plays an important role in the economy of Kazakhstan and from and its
operation plays the major role in the development and stability of systems of information exchange,
financial transactions and other aspects of the activity.
Currently, Kazakhstan has created the legal and institutional framework for the postal and
savings system. The Company employs more than 22 thousand people in 3137 stationary production
facilities of postal service (including 2167 - rural). The company has an extensive branch network:
branches are available in all regions of the country, about 90% of rural areas have access to basic
financial services only in the offices of the Company.
On the territory of the country's rural areas there are 6828 settlements, which are served by the
Company. Employees of the branches using mobile post offices, postmen of post offices and nearby
post offices provide postal services, acceptance of utilities and other types of payments, and so on.
Thus, all settlements of Kazakhstan are covered b y the Company's service. Thanks to a wide network
of post offices there is a unique opportunity to promote e-commerce, transport and logistics services,
financial and other services to individuals and legal entities.
Year after year, the company is expanding range of services, the quality of provision increases.
At the moment, business-processes are actively implemented that contributes to its emergence as a
major player in the industry. The Company also pays special attention to the investment development
and modernization of production. Information on all of these and other questions you will find in this
report.
4.1. Company services
The company provides a wide range of both mail and financial, agency and other services, and
is a system through which information, monetary and commodity flows pass.
In accordance with the legislation of the Republic of Kazakhstan the company provides the
following services:
postal services:
1) Public postal services;
2) services on the delivery of registered mail;
3) express delivery and courier delivery of mail;
4) distribution of publications via subscription and their sale;
5) sale of philatelic products;
6) other postal services in accordance with the legislation of the Republic of Kazakhstan;
financial activities and financial services:
7) broker, dealer and transfer-agent activity in the manner prescribed by the National Bank of
Kazakhstan;
Services on the delivery of pension payments and social benefits
9) leasing activity;
10) factoring services;
11) forfeiting operations;
12) acceptance of deposits, opening and maintenance of bank accounts of individuals and legal
entities;
13) cash transactions;
14) transfer operations;
15) collection of banknotes, coins and valuables;
16) carrying out of exchange transactions with foreign currency ;
17) settlements on behalf of legal persons for the service of public institutions using checks of
territorial divisions of the authorized body on budget execution;
18) provision of loans on the terms of payment, urgency and payback in terms of cash
withdrawals by checks of territorial divisions of the authorized body on budget execution;
19) opening and maintenance of correspondent accounts;
20) lotteries;
21) issuance of payment cards;
22) issue of own securities (except for shares);
23) borrowing transactions: provision of cash credits on the terms of payment of interest,
maturity and repayment.
The Company also provides services of hybrid electronic mail, ie delivery of a simple letter or
congratulations, which at certain stages of delivery is transmitted in electronic form combining two
technologies: traditional delivery by mail addresses and electronic transmission between units of
hybrid e-mail via informational postal network.
The company consists of the Republican Special Communication Service, which is engaged in
transportation and delivery of the packet and parcel mail, parcels of important, business and urgent
character, items containing any secrets protected by law, securities and high-value items both in the
country and abroad. Valuable goods are precious and rare earth metals, precious stones, jewelry, art
and antiquities, bank records, banknotes, special checks, credit cards, securities and others.
The company has extensive experience in direct marketing, including services on the delivery
of address (direct mail) and unaddressed distribution of advertising material, in particular to the
periodicals subscribers.
Transfer-agent network of the Company consists of 17 transfer-agent sectors in the regional
branches, post offices of Astana and Almaty, the communications center of Semey. With a help of
sectors transfer of documents of individuals and entities associated with the registration of transactions
in the register of holders of securities is performed. Company provides advice and information on the
issues of professional participants of the securities market and the stock market as a whole. Through
the sectors the transfer of orders/sales orders of the Company's broker customers that are found in all
regions of the country.
4.2. Mission, vision, strategic targets
Mission of "Kazpost" JSC
Provision of all clients with high-quality modern postal, financial, logistic services throughout
the territory of Kazakhstan, satisfying their needs.
Vision of "Kazpost" JSC
By 2022: innovation-oriented, responsive to changes in the internal and external market
environment business structure, which is a significant element of the country's economy, providing
high quality services to international standards and in accordance with the main directions of social
and economic policy of the Republic of Kazakhstan. Business portfolio of the Company is formed
based on the most effective use of all three dimensions of the postal network - physical, financial,
electronic, which complement each other on the principles of synergy: postal, financial, and logistical
services. Business strategy is based on the Company's transformation program with the ultimate goal
- to get a competitive advantage in these three markets, to achieve increase in market share and
increase revenues.
Strategic Goals
Expansion of the core business of "Postal Services"
 Strengthening of logistics functions and preparation to enter the foreign market
 development of financial services;
 Increase of operational efficiency
 Development of a brand of reliability and quality
 Development of organizational capacity.
Modern trends require changes in development strategy
Current trends in the postal industry demonstrate a high degree of variability, especially under
the influence of the current economic crisis in the world.
The main factors influencing the dynamics of changes in the traditional model of work of the
national postal operator, are:
 the decline of traditional mail (paper)as a result of the transition to electronic media;
 growth in parcel deliveries as a result of rapid growth dynamicsof e-commerce market;
 the growth of financial services in connection with a high level of confidence in the mailand
the availability of a wide branch network.
As a result, the management body of the Company and its Management Board decided
about the need to adjust or develop new, relevant Development Strategy of "Kazpost" JSC until 2022,
which is expected to be approved in the coming 2015.
The main emphasis of the new development strategy of "Kazpost" JSC
Key concepts for successful and sustainable development for the global postal industry, as an
integral part of the global economy, as was recognized at the conference on the Strategy of the
Universal Postal Union, are:

Diversification - expansion of existing and development of new adjacent markets,
introduction of complementary products on these markets;

innovations - new processes and products based on the achievements of modern
information and communication technologies on the use of the achievements of the economy,
knowledge, which are the main priority of successful postal administrations.
Diversification of "Kazpost" JSC must be based on fundamental market trends, where we see
the need to existing postal and financial business the supplement of new lines of business that we need
to clearly identify for themselves, namely:
 Agency services
 Logistics services;
 E-commerce services.
Sales channels of "Kazpost" JSC should also be clearly diversifiedto the following types:
 physical sales channels: customer service by visiting the Company's existing branch
network (direct contact of employees of the Company and the client);
 automated
sales
channels:
independent
customer
service
without the participation of employees of the Company (net of postamats and money receipt
and transfer terminals).
 remote / on-line sales channels: the service via the company website
and mobile applications.
4.3. Form of incorporation and functional management structure
Form of incorporation
The company was established in accordance with the Decree of the Government dated 20
December 1999 № 1940 "On the reorganization of the republican state enterprise of postal
communication and its subsidiaries state-owned enterprises."
The company is a legal entity established in the legal form of the company, and operates in
accordance with the laws of the Republic of Kazakhstan, the Company Charter, the Code of corporate
governance and internal documents.
The sole shareholder is a "National Welfare Fund" Samruk-Kazyna" joint-stock company.
Subsidiaries and affiliates of "Kazpost" JSC as of 31.12.2014 are.
Place of
registration
Name
Percentage of
ownership
2012 2013
2014
Main activity
LLP "Elektronpostkz (KZ)"
RK
Printing and
publishing activity
33%
100%
100%
«Kazpost GmbH» JV
Federal Republic
of Germany
Postal and logistic
activities
50%
50%
50%
In the reporting period there were no significant changes regarding size, structure or ownership.
Functional Management Structure
In accordance with the legislation of the Republic of Kazakhstan the Company's management
structure consists of the following controls:
 supreme body - the Sole Shareholder - "Samruk-Kazyna" JSC;
 management body - Board of Directors - the general management and control over the
activities of the Company and the activities of the Management Board;
 executive body - Management Board - manages the Company's current operations.
The Internal Audit Service (IAS) - oversees the financial and economic activities, evaluates the
internal control, risk management, execution of documents in the field of corporate governance and
consulting to improve the performance of the Company.
Enforcement of procedures by bodies and officials of the Company aimed at ensuring the rights
and interests of the Sole Shareholder and the Company's following the provisions of the legislation
and regulations in the area of corporate governance, provisions of the Charter and other internal
documents of the Company is assigned to the Corporate Secretary. Corporate Secretary as part of its
authorities controls over the preparation and conduct of meetings of the Board of Directors ensures
the formation of the materials on the agenda of the meeting of the Board of Directors, controls access
to them.
Corporate Secretary shall ensure the timely receipt of accurate and clear information by the
members of the Board of Directors. .
The Management Board of the Company, as a collegial executive body, makes decisions on all
operational matters.
"Samruk-Kazyna" JSC
Board of Directors
of Kazpost JSC
Corporate Secretary
Administration
The Internal Audit Service
Management
Representation in the
Russian Federation
Branches
Subsidiaries and affiliated
companies
State Service of
Special Communication
Almaty Post Office
"Elektronpost.(KZ)" LLP
(100%)
Postal service
Astana Post Office
Kazpost GmbH (50%)
Sorting center
Regional branches (14)
Management of
Information Technologies
Operation
Corporate Sales
Technical Services
Branch EMS-Kazpost
Logistics Information
Center "South"
Company's management is exercised by the Sole Shareholder. The management over branches
and subsidiaries of the Company is made by the following processes:
1) receipt and execution of the expectations of the Sole Shareholder;
2) preparation and monitoring of the execution of Letters on the expectations of the Management
Board towards the Company's affiliates, subsidiaries;
3) conduct of the Reporting meeting of the management staff on the outcome of branches,
subsidiaries;
4) design of a common policy for branches, subsidiaries of the Company.
As part of branches and subsidiaries management there is a planning of targets, bringing them
to the destination, information about the Company's expectations, control and monitoring, and
analysis of the performance of branches, subsidiaries of the Company.
In the reporting period there were no significant changes in the ownership structure of the
Company.
4.4. Review of the regulatory environment
Activity of "Kazpost" JSC is regulated:
 for postal services: the Ministry of Investment and Development of Kazakhstan, which is a
department
that
carries
out
within
its
competence
and
in
accordance
with the legislation of the Republic of Kazakhstan regulatory, control and realizable functions of
communication and information;
 for Financial Services (acceptance of deposits, opening and maintenance of bank accounts of
individuals): National Bank of the Republic of Kazakhstan;
 on brokering and transfer agent activity: National Bank of the Republic of Kazakhstan
"Kazpost" JSC for universal postal services related to the field of natural monopolies (Article 4 of the
Law of RK "On natural monopolies and regulated markets").
"Kazpost" JSC is included in the State Register of market subjects, having dominant or
monopolistic position (Resolution of the Management Board of the Agency of the Republic of
Kazakhstan for Protection of Competition as of October 25, 2013 № 105-PP) as the subject of the
telecommunication market with a dominant (monopolistic) position:
 by type of activity on the service of "delivery, distribution and delivery of printed periodicals"
and "for sending registered letters", within the geographic boundaries of the Republic of Kazakhstan,
on total domination share of more than 35%;
 by the type of activity "cash transactions in the settlements" within the geographic boundaries
of the Republic of Kazakhstan, on total domination share of over 50%.
4.5. Licenses of the Company
The Company is governed by the following license:
license for broker-dealer activities in the securities market with the right to handle client
accounts as a nominal holder (№ 0401200704 as of 03.02.2004, issued by the Agency for Regulation
and supervision of financial market and financial organizations);
license to conduct banking operations in national and foreign currency at the reception of
deposits, opening and maintaining bank accounts of individuals (№ 14 dated 24.02.2006, issued by
the Agency for Regulation and Supervision of Financial Market and Financial Institutions);
 license on transfer-agent activity (№ 001 of 12.05.2006, issued by the Agency for Regulation
and Supervision of Financial Market and Financial Institutions);
state license for activities related to drug trafficking (series NS №1 / 11 as of 28.01.2011,
issued by the Anti-drugs and control over the drug trafficking Committee under the MIA RK);
 State license for activities related to the trafficking of precursors and psychotropic substances.
4.6. Environmental analysis
The largest group of customers in the markets of letters sending are commercial organizations,
government agencies and individuals. Undoubtedly, geographical and social status of consumers are
much different, and this is due to the difference in the yield of certain segments of the market under
certain conditions.
"Kazpost" JSC remains the largest player in this market with a total share of about 85%.
However, in many segments the competition already exists and continues to evolve. In the most
attractive sub-segments of B2C, such as Direct Mail, according to expert estimates, the Company's
share does not exceed 30%. Constraints of Direct Mail services development are the high cost of
services (in terms of variable costs) and the lack of segmented databases for distribution, which
reduces the effectiveness of advertising campaigns for clients. It is also expected a slight decrease in
the total market due to the further development of the Internet and the switch to electronic
communication channels.
Segment of parcel shipments is growing, the market share of the company, according to experts,
taking into account all market participants on common costs shipments is of more than 60%. More
than half (55%) are in B2C segment - basically, these are catalog sales and online commerce. The
proportion of B2B-segment is about 30%. At the same time, the Company is most widely represented
in this market in remote areas, that are the least attractive segments. In the most attractive urban
segment, the Company has strong competition from both local and international companies. "Kazpost"
JSC to make a strong competition shall match the level of the major players in the market, including
the recognized world leaders, both in price and quality of services provided. High costs, and as a
consequence - the inability to quickly offer the market a product with the required quality-price ratio
creates a risks of loss of the most attractive segments of the market.
As you know Kazakhstan banking sector is represented by about 40 second-tier banks, which
compete with companies mainly in large cities and regional centers.
In the area of financial and banking services "Kazpost" JSC as was already noted, provides
services such as foreign exchange transactions, deposits, receipt of payments, cash management
services, collection and transportation of money and valuables, brokerage in the securities market,
electronic money transfers, transfer agency and other activities.
IN the financial services market it enjoys a steady growth. The most extensive network of
service belongs to "Halyk Bank of Kazakhstan" JSC (over 500 units), which covers mainly the cities
and district centers.
At the level of the district centers and villages, with almost a half of the population, "Kazpost"
JSC is the only player in the financial services market, which has a network of service.
In rural areas, the bulk of the income from financial services is mainly from the receipt of
payments, issue of pensions/benefits and the payment of wages of budget structures. A significant
potential belongs to the market of money transfers, both in the city and in the countryside, mainly
depending on the intensity of labor migration from neighboring countries.
In Kazakhstan, according to experts, the annual growth of the money transfer market is 11%,
while there is the ratio of 86% of cross-border payments and 24% of domestic payments. Currency
structure of remittances is as follows: US dollar (73.6%), tenge (3.4%), the euro (1.1%), Russian
rubles (21.7%), other (0.3%). Weak infrastructure of financial services in rural areas, along with a
large number of branches of "Kazpost" JSC in the regions causes the share of postal remittances of
5.2%. Bank of Kazakhstan and "Kazpost" JSC provide to their clients the money transfer services
through 18 represented various international money transfer systems. The leaders of the money
transfer market
in Kazakhstan: Golden Crown (34,9%), Western Union (18,8%), Contact (15,1%), Unistream
(11.0%), Blitz (5.8%), Fast Mail (3,8%), Faster (2,9%).
Advantages and disadvantages of the branch network of the Company
Advantages
Disadvantages
Postal services

branch network of the Republic of 
the poor quality of customer service
Kazakhstan;
and maintenance of infrastructure;
 the absence of regional offices of STB at the 
not more than 15% automated offices
level of districts, villages;
in the regions;

solid brand and financial postal banking in 
difficulty in managing sales
regions
(communication, business - planning, control
of sales, efficiency, reporting on income
and expenditure, motivation, training,
marketing
etc.);
 100% proportion of cash transactions.The
reason - the weak development of the card
business
and alternative sales channels (Internet
and mobile acquiring)
Financial services
 competitive rates as compared to the second- 
complex business processes in the
tier banks;
branches;
 the presence of postal services - high potential  non-developed agency services of STB for the development of financial services;
Redemption / delivery of credits, opening of

potential customer base on the number of deposits, insurance services, etc;
current accounts in the region - 1, 2 million
customers - the opportunity to transfer to the card,
and cross-selling
 the low level of access to services: the
lack of advertising (leaflets, posters,
articles).
4.7. History and basic information
Postal History of Kazakhstan includes three main stages of development of postal services in
the territory of our country: the pre-revolutionary, Soviet and independent (since 1991).
The Company itself has emerged as a tool for communication and management of the state and
only later became available to the general public. Despite the actual that the recent post has faced with
the significant pressure from the part of the actively developing phones and the Internet, it is a kind
of example of how communication and information contribute to the development of the process of
country governance. Since centuries later, similar problems will be faced by "e-government" provision of access to information and servicing of the process of state governance.
The first post office in the territory of modern Kazakhstan was opened in the days of the Russian
Empire - in 1860 in Vernyi (now is Almaty). Soon, it was converted into a post and telegraph office,
which in 1883 was subordinated to the 14 post offices.
In the USSR, from 1924 till 1991 the Kazakh SSR-mail has been an integral part of the unified
Soviet system of communication, and in the republic postage fees were paid by trademarks of the
Soviet Union.
Against the background of the formation of the Sovereign Republic of Kazakhstan as a state,
special attention was paid to gain acceptance in the international arena, which meant entering into
international alliances and organizations and provided for the adoption of common rules for the
development of mutual cooperation in strategic areas.
Since June 7, 2006 the sole shareholder is "National Welfare Fund "Samruk-Kazyna" JSC,
which owns 100% of the shares of the Company.
4.8. Cooperation with stakeholders
The company adopted the methods of evaluation and map for the stakeholders of "Kazpost"
JSC, which addresses the issue of stakeholder engagement: the relationship with the officials and
employees of the Company, the sole shareholder, government agencies, subsidiaries, business
partners, customers and the public.
Effective interaction with all stakeholders is a prerequisite for sustainable development.
Fundamental corporate values are honesty, reliability and professionalism of employees to the
interested parties and the Company as a whole.
Development and approval of method of evaluation and a map of stakeholders of the Company.
The methodology shows all interested parties the Company interacts with , to assess the degree of
interaction, the strength of support/counter stand of each stakeholder.
Stakeholder groups of the Company are divided into internal and external: 1) internal - Sole
shareholder; Board of Directors; Management Board; personnel of the Company; subsidiaries and
affiliated companies LLP "JV"Elektronpost.(KZ) "(Kazakhstan), Kazpost GmbH (Hamburg,
Germany);
2) external - state agencies; financial institutions (creditors); partners; international
organizations; competitors; suppliers; public, non-governmental organizations; the media; customers;
union.
The criterion for selection of stakeholders are: the Company's strategic priorities, information
transparency and disclosure, sectorial development programs, social issues, initiatives and proposals
of stakeholders and others.
4.8.1. International cooperation
"Kazpost" JSC is a member of the Universal Postal Union (UPU), of the Association of
European public postal operators Posteurop, Regional Commonwealth in the Field of
Communications (RCC). At the same time the national postal operator of Kazakhstan develops
cooperation with foreign postal administrations (FPA) in the bilateral format.In 2014, the personnel
of "Kazpost" JSC hold a meeting with foreign partners from Russia, Latvia, Lithuania, Estonia, the
United Arab Emirates, Switzerland, China, Australia, Italy, the Netherlands, Singapore, Hong Kong.
Universal Postal Union
In April 2014 in Berne (Switzerland), the regular session of the Postal Operations Council and
the Administrative Council of the Universal Postal Union was held, it was attended by a delegation of
"Kazpost" JSC.
Within the framework of the session bilateral meetings with the participants of the Kazakh
delegation and the UPU Director General, the Secretary General of the Association of PostEurop,
head of the delegation of Australia Post were held.
At the autumn session, which took place from 27 October to 14 November 2014, a meeting was
held with the Chairman of the Management Board and Secretary-General of the UPU International
Bureau, during which Mr. Hussein Bishar awarded "Kazpost" JSC a certificate, awarded for the best
realized project, financed by Quality of Service Fund among UPU member countries "Automation of
client queue flow". This project was included in the list of the best projects.
At the end of 2014 "Kazpost" JSC and UPU signed a license agreement for the integration of
information systems, allowing "Kazpost" JSC to connect to the mail tracking system and continue to
use the IPS light software and remittance systems STEFI.
PostEurop Association
In June, 2014. the visit of experts from the Association of European Postal Operators PostEurop
was made to analyze production processes of the sorting centers, post offices of "Kazpost" JSC.
Previously, experts have been proposed 4 project (events) to improve the quality of service. Out
of 4 projects "Kazpost" JSC was officially chosen for the implementation of International project and
Quality Project. At the same time, the rest of the projects proposed on the technology also did not go
unnoticed and were included in the work plan of the respective branches.
According to the results of the evaluation, experts praised the work done and executed projects.
For example, in order to save effort and costs, as well as for the convenience of customers, we created
enlarged delivery offices, set a target date of delivery of simple written letters from Talgar to Frankfurt
within 2 days at no additional cost, as well as the implemented many other offers of the advisory
nature to improve the quality of postal services of "Kazpost" JSC.
In September 2014 in San Marino of the Republic of San Marino the Plenary Assembly
PostEurop was held, during which it was announced about the transfer of "Kazpost" JSC from the
second to the fifth class of contribution, which means the improvement of the recognition of the
company.
Regional Commonwealth in the field of communication
The active position of "Kazpost" JSC in the RCC provides ongoing coordination with the
countries - participants of the Commonwealth, the exchange of best practices, development of
standardization programs of information and communication and postal technologies. These two
parties also work together to enhance the security of postal exchange between the countries - members
of the RCC, using joint efforts form a unified position in other international organizations.
In June a Conference was held on postal and financial services and electronic money transfers (
Astana) with the participation of representatives of the UPU, postal services of different countries, in
which were presented the strategy and the presentation of the UPU International Bureau, issues were
considered with the application of quality standards, guidance on postal payment services, IFS/STEFI
payments . Also, the participants were provided with a unique opportunity to share experiences and
learn about the best practices of designated operators in Kazakhstan, Azerbaijan, France and Italy.
In last July Joint meeting of the 49th Council of the RCC and the 20th Coordinating Council of
the CIS member-states for Informatization (Astana) was held.
As part of the event, the employees in the communications industry were awarded a diploma;
they are the workers of all countries of the CIS, including employees of "Kazpost" JSC for the
strengthening and development of RCC.
Bilateral cooperation
Within the framework of bilateral cooperation and expansion of relations in 2014, the following
activities were held:
• In June, - a visit of the Chairman of the Management Board of "Kazpost" JSC to Poste Italiane
for the exchange of experience within the business transformation program.
• In August - organization of a meeting of Chairman of the Management Board of "Kazpost"
JSC with representatives of the national postal service in China.At this meeting, special attention was
paid to reduction of the price and terms of delivery of parcels for Kazakhstan users of e-commerce,
which make purchases from online stores of PRC. They discussed mutual cooperation in the use of
transit potential of Kazakhstan for delivery of goods ordered on the internet resources of China to
other countries.
• In September - a visit of the Chairman and Deputy Chairman of the Management Board of
"Kazpost" JSC to the Netherlands Post to exchange experiences in the program of business
transformation.
• In September - organization of the visit of the delegation of Emirates Post (Emirates Post
Group) to Astana, during which a Memorandum of Understanding for the exchange of international
parcels between "Kazpost" JSC and Emirates Post was signed, and the draft agreement on the
exchange of money orders was submitted.
• In September - organization of a trip to the Deputy Chairman of the Management Board of
Hong Kong. During the visit they visited the production facilities, sorting center. They reached an
agreement on the use of best practices in the construction of Hong Kong logistics system, processing
and delivery of cross-border international parcels, the development and implementation of new
services with the use of innovative technologies and the development of e-commerce.
• Visit of the Chairman of the Management Board and Departments Directors, responsible for
the development of the postal and financial business, to the annual exhibition of PostExpo, during
which the delegation of "Kazpost" JSC acquainted with the technological advances in the postal and
postal and financial activities.
• Chairman of the Management Board of "Kazpost" JSC together with the Chairman of the
Board of Estonian Post participated in the International Forum on the transformation with the
participation of the Heads of State
• A meeting of the Board of directors of "Kazpost" JSC was held inRiga (Latvia). During the
visit, the members of the Board of Directors visited the facilities of Post Latvia, Estonia Post.
• In November, a meeting of the President of the Management Board of "Kazpost" JSC with the
head of the Post of Lithuania was organized on strategic cooperation in the field of transformation and
logistics
4.8.2. Participation in the charters, principles or other initiatives to which the
organization has joined or which espouses
The company does not perform any kinds of donations to political parties, politicians, and
related organizations, as well as any investment in the community. During the reporting period as part
of our interaction with external parties "Kazpost" JSC assumed no obligation and does not support
any charters or initiatives in the field of economic, environmental and social issues.
4.8.3. Memberships in associations (such as industry associations) and/or national and
international advocacy organizations
The company cooperates with the Association of Financiers of Kazakhstan on issues related the
improvement aspects of financial activities, the study of existing and emerging regulatory legal acts
regulating the financial sector. "Kazpost" JSC takes part in the development of appropriate
regulations, laws.
In accordance with the Law "On the National Chamber of Entrepreneurs of Kazakhstan"
"Kazpost" JSC from 2013 is a member of the National Chamber of entrepreneurs (hereinafter NChE).The objectives of the NChE are consolidation of the business community, presentation,
promotion and protection of the rights and legitimate interests of entrepreneurs, the organization of
effective interaction of business entities and their associations (unions) with government agencies,
fostering an enabling legal, economic and social conditions for the implementation of
entrepreneurship in the Republic of Kazakhstan, participation in the process of improvement the
legislation of Kazakhstan, which affect business.
In 2014 "Kazpost" JSC entered to the Association of Kazakhstan Internet Business and mobile
commerce (hereinafter - AKIB). AKIB is a non-profit organization the primary purpose of which is
the development of the industry of e-commerce, as well as the protection of the rights and interests of
business entities whose activities are connected with the Internet.
Since 2013 "Kazpost" JSC is a member of the Union of Transport of Kazakhstan
«KAZLOGISTICS» (hereinafter - the Union). The objectives of the Union are the interaction with
public authorities on the development of transport and logistics systems and the development of
public-private partnership, participation in the development of legislative and regulatory acts, the
support of the members of the Union in the implementation of projects in the field of transport
services, the development of multimodal transportation in the region, assistance for the
implementation of innovations in the field of logistics, assistance in the promotion and integration of
transport and logistics system of Kazakhstan in the global transportation system.
4.8.4. The nature of the state's influence on the Company
In accordance with the Law of the RK "On Post" "Kazpost" JSC have an obligation to provide
universal postal services, distribution of periodicals, payment of pensions, allowances and wages in
rural areas. The social orientation of these businesses is due to function of the state to ensure the rights
of citizens on the equal access to obtain information and the lack of social benefits and other operators
in rural areas, in addition to the national postal operator capable of provision of services mentioned.
This led to the inclusion of national postal operator to the Republican register of natural
monopolies (universal postal service) and the State register of market subjects with the dominant
(monopolistic) position on a particular product market (services for the delivery, distribution and
sending of printed periodicals), which in turn, led to the restriction of the National Postal operator.
Thus, the tariffs for universal postal services and services for the delivery, distribution and
sending of printed periodicals in accordance with the Law "On natural monopolies and regulated
markets" are regulated and coordinated by the authorized state body in the field of post. At the same
time the National Postal operator incurs losses for the provision of these services in rural areas,
because the current rates are set based on average rates which do not take into account differences in
the cost of services provided in urban and rural areas, or set below the prime cost. Despite this,
subsidies provision for current expenses of "Kazpost" JSC to provide universal postal services of the
State is not provided.
Activities of "Kazpost" JSC on deposits, opening and maintenance of bank accounts of
individuals is regulated by the authorized state body for regulation and supervision of financial market
and financial organizations, including through the establishment of separate prudential standards and
licensing.
In accordance with Article 193-1 of the Civil Code of the Republic of Kazakhstan the National
postal network and 100% of shares of "Kazpost" JSC are attributed to the strategic objectives of RK.
This greatly complicates "Kazpost" JSC in terms of the order of encumbrance and alienation of vacant
and unused objects in productive activities, as authorization for the above actions is provided by the
Commission on the strategic objectives of the Government of the Republic of Kazakhstan.
In July 2014 President of Kazakhstan Nursultan Nazarbayev signed the Law "On Amendments
and Additions to Certain Legislative Acts of the Republic of Kazakhstan on harmonization of the
legislation of the Republic of Kazakhstan- on the post with the rules of the Universal Postal Union
acts", which entered into force on 21 July 2014. The main objectives of the bill are to improve the
activity of postal communication, freedom of transit of international mail, to promote the development
of quality, affordable universal postal services.
According to the order of the Ministry for Investment and Development of Kazakhstan as of
November 27, 2014 №199 "Kazpost" JSC was given the status of the designated operator of
Kazakhstan.
4.9. Открытые вопросы, требующие решения
Today the company is facing in its work with open questions to be addressed in the short term,
which will improve the operational efficiency of the Company.
Separate accounting.
In accordance with the Law of RK "On natural monopolies and regulated markets"
"Kazpost" JSC (hereinafter - the Company) is obliged to keep separate records of income, expenses
and used assets for each type of regulated services, and in general an activity in the manner approved
by the competent authority.
As required by law, the Company developed a technique of separate accounting of revenue,
expenses and involved assets on public postal services and services of other activities (hereinafter Methods) agreed with the Committee of Communications and Informatization under the Ministry of
Communications and Information under the letter № 14-1-11/407-КСИ as of 26.02.2011, and
approved by the Management Board as of 01.04.2011 (Minutes № 26).
Reporting to the higher supervisory and regulatory authorities is prepared
on the basis of techniques manually and entails high costs and time resources.
At the moment, the calculation of separate accounting of incomes, costs and operating assets is held
by types of universal postal services, in the rest of the services rendered to the Company the
information is presented in aggregate form.
Also, today there is an issue about automating statistical accounting, which would provide
timely and accurate account of the statistical data used in the separate account.
Thus, the Company needs to automate the process of maintaining the system of separate
accounting and statistical records.
Getting extra budgetary funds - pensions and benefits.
Every year the company loses money to provide services for the payment of pensions
and benefits under an agency agreement with the State Center for Pension Payments
and requests of the Ministry of Health and Social Development of the Republic of Kazakhstan.
The annual loss of "Kazpost" JSC from the provision of services of pensions payment
and benefits accounted for more than KZT 3 bln., which has directly affected the current situation
in the postal sector (low wages, in compliance with the applicable requirements for safety of funds,
reducing the production network, especially in rural areas).
Generated losses due to the lack of growth of tariffs on them, including taking into account
annual inflation, which to date had a negative impact on the quality and conditions of service,
including in rural areas.
During 2013 and 2014 the issue was repeatedly discussed at the level of the Government of RK
and was supported - MLSP together with MEBP were charged at the refinement of the RB submit to
the RBC the budget request for additional budget.
In addition, they conducted an independent examination of the calculations by international
consulting company and confirmed by all relevant authorities.
As a result of the decision of the Republican Budget Commission in 2014 the issue on the
allocation of additional budgetary funds to "Kazpost" JSC to pay pensions and benefits was positively
considered.:
in 2015 - 3,052,687 thousand tenge;
in 2016 - 3,266,375 thousand tenge;
in 2017 - 3 495 021 thousand tenge;
Coverage of losses - the provision of services for the delivery of periodicals.
The issue of the current loss of "Kazpost" JSC for the delivery of periodicals in rural areas
becomes relevant for the company because of the need to invest in its development.
"Kazpost" JSC makes a loss on the provision of services for the delivery of periodicals in rural
areas amounting to over 4 bln. (Data at the end of the provision of service for 2014).
The solution to this problem for the company's management is the development of a mechanism
to cover losses of "Kazpost" JSC in terms of subsidizing of the owners of the newspapers
and magazine in part of delivery services of periodicals in rural areas.
Changes in the State Register of market subjects – services for the delivery, distribution and
delivery of printed periodicals. "
Company shall resolve the issue on amendments to the State Register of market subjects, having
dominant or monopolistic position in the replacement of the "service on delivery, distribution and
delivery of printed periodicals" to the "service on the distribution of periodicals by subscription."
The essence of the problem - along with the implementation of delivery and shipment of PP
under subscription accepted by affiliates of the Company and included in the catalog of the Company,
the Company provides services to third parties on the transmission and delivery of PP not included in
the catalog of the Company.At the same services to third parties are subject to tariffs set for the
provision of services on a subscription.
The decision - making changes in the State Register of market subjects, having dominant or
monopolistic position in the replacement of "services on delivery, distribution and delivery of printed
periodicals" to the "service on distribution of periodicals by subscription."
5. CORPORATE GOVERNANCE
The system of corporate governance of the Company is based on the legislation of Kazakhstan
statutory and internal documents, is one of the main actuators in ensuring respect for the interests of
the Fund. This system is aimed at a coherent and detailed construction of a balanced system of
relations with all stakeholders and improvement of the efficiency of the Company.
As part of the main course of development we carried out significant work to improve corporate
governance and transparency of activity of the Company. Openness and transparency in the interaction
with shareholders, partners, customers, employees and state institutions are the top priorities.
To date, the Company has made significant progress in the development of corporate
governance. Implemented a number of important initiatives in this area, as well as developed and
refined internal documents. In particular, the Company has made great step in the strengthening of the
role of the Board of Directors in making key decisions, in the improvement of the internal audit
function, in the improvement of transparency, etc.
In 2014, the Company's corporate governance diagnostics was carried out by the internal audit
service of "Kazpost" JSC according to the method of diagnostics of corporate governance in the
companies of "Samruk-Kazyna" JSC in the period from July to November 2014.
Compliance with the requirements of corporate governance best practices, according to the
results of diagnostics of corporate governance of the Company for 2014 is 76.8%, while the plan was
76%.
5.1. Management body (Board of directors)
5.1.1. Information on the Board of Directors
General management of the Company is performed by the Board of Directors, except for the
issues referred to the exclusive competence of the Sole Shareholder.
The Board of Directors activity is based on the principles of rationality, efficiency, activity,
integrity, honesty, responsibility, accuracy, professionalism, diligence, objectivity, regularity.
Board of Directors composition (As of 31.12.2014.)
No
Full Name
1
Bakhmutova Yelena
Leonidovna
2
Baidauletov
Nurzhan Talipovich
3.
Ilkyavichyus
Adamas Olegas
4.
Adriaan Ian
Houwink
5.
Skodovs Gints
Janowicz
Position
Chairman of the Board of Directors, representative of the Sole
Shareholder - Deputy Chairman of the Management Board of
"National Welfare Fund" Samruk - Kazyna " JSC
Member of the Board of Directors, representative of the sole
shareholder - General Manager on Asset Management in "NWF"
Samruk-Kazyna " JSC, a member of the Strategic Planning
Committee
Member of the Board of Directors, representative of the sole
shareholder - General Manager on Business Transformation in
"NWF" Samruk-Kazyna " JSC, a member of the Strategic Planning
Committee
Independent director of "Kazpost" JSC, Chairman of the Committee
on Human Resources, Remuneration and Social Affairs, Member of
the Internal Audit Committee
Independent director of "Kazpost" JSC, a member of the Committee
on Human Resources, Remuneration and Social Affairs, a member
of the Strategic Planning Committee
6.
Berdalina Zhanat
Kolanovna
Independent director of "Kazpost" JSC, Chairman of the Committee
on Internal Audit, a member of the Committee on Human
Resources, Remuneration and Social Affairs
7
Zhandosov Oraz
Aliyevich
Independent director of "Kazpost" JSC, Chairman of the Strategic
Planning Committee
8.
Zhukov Dmitriy
Nikolayevich
Independent director of "Kazpost" JSC, a member of the Committee
on Internal Audit, a member of the Strategic Planning Committee
9.
Mussin Bagdad
Batyrbekovich
Member of the Board of Directors, Chairman of the Management
Board of "Kazpost" JSC
5.1.2. Committees of the Board of Directors
To review the most important issues and make recommendations to the Board of Directors we
established the following committees: Committee on Internal Audit; The Strategic Planning
Committee; Committee on Human Resources, Remuneration and Social Affairs.
1. Internal Audit Committee
Internal Audit Committee under the Board of Directors of "Kazpost" JSC (the Committee) was
established in accordance with the resolution of the Board of Directors of "Kazpost" JSC dated
September 22, 2006.
The purpose of the Committee is to deepen the study of issues related to the competence of the
Board of Directors or studied by the Board in order to control the activities of the Management Board
and the development of the necessary recommendations to the Board of Directors and Management,
as well as improvement of the efficiency of the Board of Directors and improvement of corporate
governance.
The Committee operates in accordance with the Regulations on Internal Audit Committee under
the Board of Directors of the Company approved by the Board of Directors on June 27, 2013.
Composition of the Internal Audit Committee
(as of 31.12.2014)
No
Full Name
Berdalina Zhanat
Kolanovna
Adriaan Ian
2
Houwink
Zhukov Dmitriy
3.
Nikolayevich
1
4.
Mynsharipova Saya
Naymanbaykyzy
Position
Independent director of "Kazpost"
JSC, Chairwoman of the Committee
Independent director of "Kazpost"
JSC, a member of the Committee
Independent director of "Kazpost"
JSC, a member of the Committee
Director of the Department of Audit
and Control of "Samruk-Kazyna" JSC,
a member of the Committee (the
expert without voting rights).
The term of office
in 2014
Since April 3,
2014
Throughout 2014
Since April 3,
2014
Throughout 2014
Meetings of the Audit Committee in 2014:
Participation of members of the Internal Audit Committee in the meetings in 2014
No
Full Name
Total
meetings
(number)
1 Berdalina Zhanat Kolanovna
2 Adriaan Ian Houwink
3. Zhukov Dmitriy Nikolayevich
Mynsharipova Saya
4.
Naymanbaykyzy
Participation Participation
in meetings
in meetings
(number)
(%)
7
9
7
7
9
6
100
100
86
9
8
89
The Board of Directors of the Company dated April 3, 2014 №04/14 defines the following
members of the Committee for Internal Audit under the Board of Directors
"Kazpost" JSC
1) Chairwoman - Independent Director of "Kazpost" JSC Berdalina Zhanat Kolanovna;
2) Member - Independent Director of "Kazpost" JSC Adriaan Houwink;
3) Member - Independent Director of "Kazpost" JSC Zhukov Dmitry Nikolayevich;
4) member (expert without voting rights) - Mynsharipova Saya Naymanbaykyzy (Director of
the Department of Audit and Control of "Samruk-Kazyna" JSC).
In 2014, the Committee held nine meetings, including 1 meeting in-absentia (unscheduled). In
accordance with the agenda, the Committee considered 73 question and provided with appropriate
recommendations to the Board of Directors.
The Committee took part in the implementation of the transformation program of "Kazpost"
JSC, considered the financial reporting, internal control and risk management, internal and external
audits, regular meetings are held with the external auditors on the preparation of the annual financial
statements.
During 2014 Committee fully met the objectives, tasks and responsibilities in accordance with
the Regulations on the Committee, and the Committee's work plan for 2014. The Committee has
examined in detail all the issues on agendas of meetings, provided weighed and detailed
recommendations, which were adopted by the Board of Directors of the Company.
The Committee's work would greatly enhance the effectiveness of the Board of Directors. In
turn, this has a positive impact on the rating of corporate governance, as well as a positive impact on
the improvement of business processes, increasing the effectiveness of internal controls, transparency
and risk management in the Company.
2. The Strategic Planning Committee
The Strategic Planning Committee (hereinafter - Committee) of the Board of Directors of the
Company was established in accordance with the decision of the Board of Directors on September 22,
2006.
The purpose of the Committee is to deepen the study of issues related to the competence of the
Board of Directors in the following areas:
1) determination of the Company's development strategy and monitoring of its implementation;
2) consideration of the strategic goals and objectives of the Company in the long term;{/0}
3) implementation of investment and innovation activities of the Company.{/0}
The Committee operates in accordance with the Regulations on the Strategic Planning
Committee under the Board of Directors of "Kazpost" JSC, approved by the Board of Directors of the
Company on April 3, 2014.
The composition of the Strategic Planning Committee
(as of 31.12.2014)
No
Full Name
Position
The term of office in
2014
Independent director of "Kazpost"
JSC, Chairwoman of the Committee
General Manager Asset Management
Baidauletov Nurzhan
2
"NWF" Samruk-Kazyna ", a member
Talipovich
of the Committee
Chief Business Transformation
Ilkyavichyus Adamas
3.
"NWF" Samruk-Kazyna ", a member
Olegas
of the Committee
Skodovs Gints
Independent director of "Kazpost"
4.
Janowicz
JSC, a member of the Committee
Zhukov Dmitriy
Independent director of "Kazpost"
5.
Nikolayevich
JSC, a member of the Committee
Chief Expert of transport and
communication assets of "SamrukDagarova Aliya
6.
Kazyna" JSC, a member of the
Meyramovna
Committee (the expert with an
advisory capacity)
1
Zhandosov Oraz
Aliyevich
Since April 3, 2014
Since April 3, 2014
Since April 3, 2014
Since April 3, 2014
Since April 3, 2014
Throughout 2014
Meetings of the Strategic Planning Committee in 2014:
Participation of members of the Strategic Planning Committee in meetings
in 2014
No
Full Name
1 Zhandosov Oraz Aliyevich
Baidauletov Nurzhan
2
Talipovich
3. Ilkyavichyus Adamas Olegas
4. Skodovs Gints Janowicz
5. Zhukov Dmitriy Nikolayevich
6. Dagarova Aliya Meyramovna
Total
Participation Participation
meetings in meetings
in meetings
(number)
(number)
(%)
7
6
86
7
7
100
7
7
7
8
6
7
5
8
86
100
71
100
The Board of Directors of the Company as of April 3, 2014, Minutes №04 / 14, determined the
following composition of the Strategic Planning Committee under the Board of Directors of Kazpost
JSC:
1) Chairman - Independent Director of "Kazpost" JSC Zhandosov O.A.;
2) Member - Independent Director of "Kazpost" JSC Gints Shkodovs;
3) Member - Independent Director of "Kazpost" JSC Zhukov D.N. .;
4) Member - representatives of the interests of the Sole Shareholder Baidauletov N.T .;
5) member - representative of the Sole Shareholder Adamas Ilkyavichyus;
6) a member, expert with the advisory capacity - Dagarova A.M.Chief Expert of transport and
communication assets of "Samruk-Kazyna" JSC;
In 2014, there were 8 in-person meetings conducted. In accordance with the agenda of the
Committee 37 questions were considered and appropriate recommendations to the Board of Directors
were provided. During the reporting period, on the meetings of the Committee all the issues about
activities within the competence of the Committee were considered.
The Committee will consider the strategic development, investment and innovation,
transformation activity of "Kazpost" JSC and others.
In order to exchange experiences, the Committee visited the Post of Latvia and Estonia Post.
The Committee held in Riga (Latvia) the Committee meeting with members of the Committee and
representatives of the Company's management, where they discussed issues of Company's
development strategy.
At the initiative of a member of the Committee Adamas Ilkyavichyus three sessions were held
aimed at the improvement of the Company's development strategy. Sessions were held in the period
from October 7, 2014 to December 3, 2014. The meeting of the session were attended by members of
the Board of Directors, members of the Management Board, key employees of the Company, as well
as professors of the Nazarbayev University. The result of the work was the recommendations for
further development of the Company.
During the 2014 Committee fully met the objectives, tasks and responsibilities in accordance
with the Regulations on the Committee, as well as the work plan of the Committee for 2014. Where
unscheduled meeting were also held.
The Committee has examined in detail all the agenda issues of the Committee’s meetings,
presented informed and detailed recommendations, which were adopted by the Board of Directors of
the Company.
It should be noted that the work of the Committee meets the expectations of the Sole Shareholder
to improve the effectiveness of the Board of Directors of the Company and the Company's corporate
governance rating.
3. Committee on Human Resources, Remuneration and Social Affairs
Committee on Human Resources, Remuneration and Social Affairs (hereinafter - the
Committee) of the Nomination and Remuneration Committee of the Board of Directors of "Kazpost"
JSC was established in accordance with the resolution of the Board of Directors of "Kazpost" JSC as
of September 22, 2006.
The mission of the Committee is an in-depth study of issues related to the competence of the
Board of Directors of the Company in the following areas:
1) election of candidates for the positions of members of the Management Board, the Corporate
Secretary, Head of Internal Audit Service;
2) introduction of effective personnel policies in the Company;
3) provision of social support to employees of the Company and the settlement of social issues
The Committee operates in accordance with the Regulations on the Committee on Human
Resources, Remuneration and Social Affairs of the Board of Directors of "Kazpost" JSC, approved
by the Board of Directors of the Company on April 3, 2014.
The Committee on Human Resources, Remuneration and Social Affairs
(as of 31.12.2014)
No
1
2
3.
Full Name
Adriaan Ian
Houwink
Skodovs Gints
Janowicz
Berdalina Zhanat
Kolanovna
Position
Independent director of "Kazpost"
JSC, Chairwoman of the Committee
Independent director of "Kazpost"
JSC, a member of the Committee
Independent Director of "Kazpost"
JSC;
Committee member
The term of office in
2012
Since April 3, 2014
With 03 years
aprelya2014
With 03 years
aprelya2014
4.
Dagarova A.M.
Chief Expert of transport and
communication assets of "SamrukKazyna" JSC, a member of the
Committee (the expert with an
advisory capacity)
Throughout 2014
Meetings of the Committee on Human Resources, Remuneration and Social Affairs in 2014:
Participation of members of the Committee on Human Resources,
Remuneration and Social Affairs in the meetings in 2014
No
Full Name
1 Adriaan Ian Houwink
Skodovs Gints
2
Janowicz
Berdalina Zhanat
3.
Kolanovna
4. Dagarova A.M.
Total
meetings
(number)
Participation Participation
in meetings
in meetings
(number)
(%)
9
9
100
9
9
100
9
8
89
10
10
100
The Board of Directors of the Company on April 3, 2014 determined the following composition
of the Committee on Human Resources, Remuneration and Social Affairs under the Board of Directors
of "Kazpost":
1) Chairman - Independent Director of "Kazpost" JSC Adriaan Houwink;
2) Member - Independent Director of "Kazpost" JSC Gints Shkodovs;
3) Member - Independent Director of "Kazpost" JSC Berdalina Zhanat Kolanovna;
4) Member (an expert with a consultative capacity) - Chief Expert of the Communication Assets
Directorate of "Samruk-Kazyna" JSC Dagarova A.M.
In 2014, the Committee held 10 in-person meetings. In accordance
with the agenda of the Committee 41 issues were considered, according to the issues considered
the appropriate recommendations to the Board of Directors of the Company were made.
During the reporting period, on the meetings of the Committee all the issues about activities
within the competence of the Committee were considered.
The Committee will consider the organizational structure, key performance indicators, rewards
of a social nature, appointments to key positions, and others.
It should be noted that within the framework of the meeting of the Committee a meeting with
the chairman of the Association of Legal Entities "Association of Trade Unions of Information and
Communication" was held to discuss a new collective agreement for 2014-2016 years and the way of
its realization.
The Committee carried out the work on the preparation of the requirements for qualified
members of the Board of Directors, as well as draft Policy for the selection of candidates for the Board
of Directors.
During the 2014 Committee fully met the objectives, tasks and responsibilities in accordance
with the Regulations on the Committee, as well as the work plan of the Committee for 2014.
Committee also held unscheduled meetings.
The Committee has examined in detail all the agenda issues of the Committee’s meetings,
presented informed and detailed recommendations, which were adopted by the Board of Directors of
the Company.
It should be noted that the work of the Committee has improved the efficiency of the Board of
Directors of the Company and will have a positive impact on the improvement of corporate
governance rating.
5.1.3. The track record of the Board of Directors
Chairman of the Board of Directors - Deputy Chairman of the Management Board of "National
Welfare Fund" Samruk-Kazyna" JSC Bakhmutova Yelena Leonidovna, was born on February 27,
1962. She graduated in 1983 from Almaty Institute of National Economy. She has worked in senior
positions in the Ministry of Finance of the Republic of Kazakhstan, in the Ministry of Labor and
Social Protection, the National Bank of Kazakhstan, headed the Agency for Regulation and
Supervision of Financial Market and Financial Organizations of Kazakhstan.
From January 2012 to the present time - Deputy Chairman of the Management Board of
"National Welfare Fund" Samruk-Kazyna " JSC, from 17 June 2013 to the present time is the
Chairman of the Board of Directors of "Kazpost" JSC.
Member of the Board of Directors - General Manager on Asset Management of "NWF" SamrukKazyna" JSC Baidauletov Nurzhan Talipovich, was born on September 1, 1960.He graduated in 1986
from the Moscow Institute of Railway Transport, Department - Process control of railway
transportation. From 1986 to 2006 he worked in the railroad industry, then worked in senior positions
of the Ministry of Transport and Communications RK. From 2006 to March 2, 2014 - Managing
Director of the "National Welfare Fund" Samruk-Kazyna " JSC. From March 3, 2014 to present time
- Chief Director of Asset Management of "NWF" Samruk-Kazyna" JSC.
From April 1, 2014 to present time - Member of the Board of Directors of "Kazpost" JSC.
Member of the Board of Directors - General Manager of Business Transformation of "NWF"
Samruk-Kazyna" JSC, Ilkyavichyus Adamas Olegas, was born on December 10, 1975. In 2000 he
graduated from the Open University, Bachelor in Business Administration and Computer Sciences,
Tel Aviv, Israel, and then in 2007 - BMI Business School, Master of International Business
Administration BMI-197, Copenhagen, Denmark. During several years, he worked for IBM Global
Business Services, Program Manager of Global Business Transformation in Eurasian Natural
Resources Corporation, Business and Technology Management (ENRC BTS). From November 26,
2013 to March 2, 2014 is an advisor to the Chairman of the Management Board of "National Welfare
Fund" Samruk-Kazyna " JSC, and then to March 3, 2014 to present time - Chief Director of
Communication Assets Management in "NWF" Samruk-Kazyna" JSC.
From January 27, 2014 to present time - Member of the Board of Directors of "Kazpost" JSC.
Independent Director - Adriaan Ian Houwink, was born on 29 November 1957, a Dutch citizen.
He graduated in 1983 from University of Groningen (The Netherlands). Over the years, he held
executive positions at ABN AMRO Bank and Royal Bank of Scotland Plc (Royal Bank of Scotland,
London, Amsterdam).
He worked as CFO in big international companies, specializing in mergers and acquisitions,
restructuring, management over expenses and income, compiling of management accounts, budgeting
and forecasting issues. Since 2011 he is a member of the Omega Thinktank, Partner "Feel Power".
From August 7, 2012 to present time - Independent Director of "Kazpost" JSC.
Independent Director - Skodovs Gints Yanovich, was born on October 31, 1966, and in 1993
graduated from Riga Polytechnic University, Department of Radio Engineering and Communications,
Specialty - Communications Engineer, then in 2004 the Riga Business School (Riga Business School),
program - Executive MBA. Over the years, he held executive positions at companies such as
«Software House Riga» JSC, "IT Network Latvian postal service" JSC, "Latvian Post SJSC , «Post
Servise» JSC, «Metsepole Plus» JSC. Since July 2013 - Director of IT and development services at
the Center for Environment, Geology and Meteorology.
From January 27, 2014 to present time - Independent Director of "Kazpost" JSC.
Independent Director - Berdalina Zhanat Kolanovna, was born on July 3, 1957. In 1988 she
graduated from Almaty Institute of National Economy, majoring in economics, in 1998 - University
of Bristol (UK) - Diploma in International Business; 1999 - Ecole Nationale des Ponts et Chaussees,
France - Master of Business Administration (MBA Executive).In 1994 he received the Kazakhstan
auditor's qualification certificate number 0000007 .
Until October 1993 worked in the Ministry of Finance (Head of taxation of foreign economic
activity of the Main Tax Inspectorate of the RK) and Agency of statistics (Department of Economic
Analysis) .She was a the founder and director of the consulting company "Zhanat Bureau".From
February 1996 to December 2010 - Co-founder, Managing Partner, President, Senior Advisor to the
international auditing firm KPMG in Kazakhstan and Central Asia.From November 2008 to May 2012
- Member of the Board of Directors, Independent Director, Chairman of the Audit Committee of
"Kazakhstan Stock Exchange" JSC.
Concurrently, from July 2013 to the present day a member of the Board of Directors,
Independent Director, Chairman of Audit Committee of "National Agency for Technological
Development" JSC.
From April 1, 2014 to the present time - Independent Director of "Kazpost" JSC .
Independent Director - Zhandosov Oraz Aliyevich, was born on October 26, 1961,
In 1983 he graduated from the Moscow State University, named after M.V.Lomonossov,
majoring in economics, cybernetics. He worked at the Institute of Economics of the Academy of
Sciences of Kazakhstan. Over the years, he served as Chairman of the Management Board of the
National Bank of Kazakhstan, First Deputy Prime Minister - Chairman of the State Committee of the
Republic of Kazakhstan on investments, the Deputy Prime Minister - Minister of Finance, President
of «KEGOC» JSC, Assistant to the President of Kazakhstan, the Chairman of the Agency for
Regulation of Natural Monopolies and protection of competition.
He is currently the Director of the Center for Economic Analysis "Rakurs", a member of the
Presidium of the National Chamber of Entrepreneurs of Kazakhstan.
From April 1, 2014 to present time - Independent Director of "Kazpost" JSC .
Independent Director - Zhukov Dmitriy Nikolayevich,was born on February 3, 1973,
in 1994 he graduated from the T.Ryskulov State Economic University, specialty - economist. In 2000
he graduated from the State University of New York, MBA - Marketing and Management Information
Systems, Binghamton, NY, USA. During 10 years he is working in the banking sector. Then, he held
senior positions in «Central Asian American Enterprise Fund» LLP, "The European Bank for
Reconstruction and Development" JSC, «Vos Savant Projects» LLP.
From 11 January 2011 to the present time it is the project manager in
"Eurasian Bank" JSC. Also, since 11 January 2012 to the present day the Director General of MKO
"ProstoKredit" LLP.
From April 1, 2014 to the present time - Independent Director of "Kazpost" JSC .
Member of the Board of Directors, Chairman of the Management Board - Mussin Bagdad
Batyrbekovich, was born on March 3, 1983.In 1997 he graduated from the University of Suleyman
Demirel and Kazakh Institute of Law and International Relations of Almaty.
From 2004 to 2007 he worked in various positions of IT-departments
in "National Information Technologies" JSC, Ministry of Justice of the Republic of Kazakhstan. From
2010 to 2011 - Deputy Director of the Department of State Policy in the field of Information
Technology under the Ministry of Communications and Information of the Republic of Kazakhstan.
From 2011 to 2012 - Deputy Chairman of the Monitoring Committee of automation of public services
and the coordination of PSC activity under the Ministry of Communications and Information of the
Republic of Kazakhstan.
From 2012 to 2014 - Chairman of the Monitoring Committee of automation of public services
and the coordination of PSC activity under the Ministry of Transport and Communications. In April
2014 he was appointed as Chairman of the Management Board of the "National Information
Technology" JSC
5.1.4. Criteria for the selection of new members of the Board of Directors
Election of new members of the Board of Directors shall be as prescribed by the Charter and
internal documents of the Company. Member of the Board of Directors can not be a person:
who has outstanding or removed in accordance with the law a criminal record;
without higher education;
who was previously Chairman of the Board Directors, chief executive (CEO), deputy head of
the chief accountant of another legal entity in the period of no more than one year before the resolution
on compulsory liquidation or compulsory redemption of shares or conservation of another legal entity
declared bankrupt under the established order;
who has withdrawn consent to the appointment (election) to the position of the executive officer
for a period when the person is an executive officer in a financial institution.
Candidates to the members of the Board of Directors and members of the Board of Directors
shall have relevant experience, knowledge, skills, positive achievements and an impeccable reputation
in business and industry environment, necessary for the performance of their duties and the effective
operation of the entire Board of Directors for the benefit of the Sole Shareholder and the Company.
Member of the Board of Directors of the Company may not be part of more than four Boards of
Directors (Supervisory Board) of other organizations.
According to the requirements of the Law "On Joint Stock Companies"
the Board of Directors may also include the independent directors, their amount shall be not less
than one-third of the members of the Board of Directors.
The Director may be considered independent if he (she):
is not an affiliated person of the Joint Stock Company and has not been for three years prior to
his election to the Board of Directors (except for his being as an independent director of the jointstock company);
is not an affiliated person in relation to the affiliated persons of the company;
is not bound by subordination with officials of the joint stock company or organizations affiliates of the joint stock company and was not associated with the subordination with these persons
during the three years prior to his (her) election to the Board of directors;
not a civil servant;
is not representative of the shareholder at the meetings of the given Company's body and has
not been as such for three years prior to his election to the board of directors;
does not participate in the audit of the joint-stock company as an auditor, working as part of the
audit organization, and did not participate in such audit during three years prior to his election to the
board of directors.
Independent directors of "Kazpost" JSC for the reporting period shall comply with the criteria
of independence in full.
5.1.5. Report of the Board of Directors
The Board of Directors meets in accordance with the annual work plan, and upon the necessity.
In 2014, it held 16 meetings (including 12 in-person and 4 in-absentia) of the Board of Directors,
which reviewed 174 issues.
Particular attention of the Board of Directors was paid to: the transformation of the Company;
design of the Development Strategy; Anti-Corruption and Fraud in the Company; risk
management and internal audit.
In addition, the Board of Directors has introduced the practice of election and appointment of
employees in key positions following an open competition. The Board of Directors has implemented
a regular review of its work plan.
The Board of Directors considers the quarterly reports, and evaluates the activities of the Internal
Audit Service and that of the Corporate Secretary Administration of "Kazpost" JSC.
Reviewed quarterly reports:
On the status of execution of tasks of "Kazpost" JSC business transformation program."
•on the implementation of the Development Plan of "Kazpost" JSC for 2014-2018;
•on the execution of measures to implement the Strategy for the Development of the Company;
•on marketing and sales development and business;
•on staff development;
•on adherence to the principles enshrined in the Code of Corporate Governance;
•on the status of social responsibility, transparency, anti-corruption and fraud, and others.
Approved a number of strategic documents:
•The development plan of the Company for the years 2015-2019;
•IT Strategy of "Kazpost" JSC, 2014-2017;
•The development strategy of corporate risk management system of "Kazpost" JSC for 20152019.;
•The organizational structure of the central administration of "Kazpost" JSC and others.
In addition, pre-approval and submission to the Sole Shareholder: Annual report of "Kazpost"
JSC for 2013; The annual financial statements of "Kazpost" JSC for 2013, and others.
The Board of Directors took part in the Development Strategy of "Kazpost" JSC until 2022.
Starting from September 2014 holding of monthly sessions on the documents with the participation
of members of the Board of Directors, representatives of the Sole Shareholder and the Company's
management, where recommendations were made for its further development.
Board of Directors members took part in the Forum on Transformation with the participation of
the President of the Republic of Kazakhstan, which was held on October 6, 2014 in Astana.
Meetings of the Board of Directors in 2014
No
1
2
3.
4.
5.
6.
7
8.
9.
10.
11.
Full Name
Bakhmutova Yelena Leonidovna
Baidauletov Nurzhan Talipovich
Ilkyavichyus Adamas Olegas
Adriaan Ian Houwink
Skodovs Gints Janowicz
Berdalina Zhanat Kolanovna
Zhandossov Oraz Aliyevich
Zhukov Dmitriy Nikolayevich
Mussin Bagdad Batyrbekovich
Calle Tarien
Saudabayev Serik Bolatovich
All
sessions,
number
of
meetings
16
13
16
16
16
13
13
13
8
3
1
Attendance
of
meetings,
number
16
13
14
15
15
12
11
12
8
3
-
Attendance
of
meetings, %
100%
100%
88%
94%
94%
92%
85%
92%
100%
100%
0
Note
-
12.
Beisenbayev Askhat
Niyazbekovich
8
8
100%
-
1. Measures taken on the agreement of the Board of Directors to the Sole Shareholder
The Board of Directors shall take all necessary measures to take account of the positions and
opinions of the Sole Shareholder, including:
Board members receive timely orders, decisions of the Sole Shareholder against the Company
relating to the competence of the Board of Directors;
actively participate in working groups, committees of the Sole Shareholder, lead an active
correspondence, and maintain a dialogue with representatives of the Sole Shareholder;
implement the Sole Shareholder Expectations towards "Kazpost" JSC for 2014.
In accordance with the Regulations of the Board of Directors of "Kazpost" JSC Chairman of the
Board of Directors ensures relationships with the sole shareholder, brings the point of view of the Sole
Shareholder to the Board of Directors as a whole and provides the sole shareholder with the responses
on these request.
The procedure for the exchange of information between the Company and the sole shareholder
was carried out on a regular basis in accordance with law, the Charter, internal regulations of the
Company. Statutory and organizational and legal documents of the Company clearly define the
relationship of the Company and the Sole Shareholder, provide accountability of the Board of
Directors and executive bodies to the Sole Shareholder, differentiate the competence of the Board of
Directors
and executive bodies of the Company. The Board of Directors of the Company understands the
importance of continuous and effective interaction with the Sole Shareholder.
In 2014, the sole shareholder in respect of the Company considered and approved the decision
to include the following questions:
On the composition of the Board of Directors of "Kazpost" JSC as of 27.01.2014, №03/14;
On the composition of the Board of Directors of "Kazpost" JSC as of 14.03.2014.№08/14;
On the hearing of the Board of Directors of "Kazpost" JSC according to the results of 2013 as
of 17.04.2014, №14/14:
On execution of the shareholders' expectations and the implementation of strategic efficiency
indicators established in the Development Plan of "Kazpost" JSC for 2013 and on the development of
investment projects.
On the status of implementation of the Program for business transformation of "Kazpost" JSC
3.1 On the approval of the annual financial statements of "Kazpost" JSC for 2013 and the order
of distribution of net income, the payment of dividends on common shares and approval of dividend
per ordinary share.
3.2 On the increase in the number of authorized shares of "Kazpost" JSC, placement of the
shares within the number of authorized shares, method and price of their placement, the acquisition
of
the shares by "Samruk-Kazyna" JSC.
On the determination of the audit organization to audit the financial statements of "Kazpost"
JSC for 2014-2016, and the amount of payment for its services as of 29.05.2014, №26/14;
On making amendments and additions to the resolutions of the Management Board of "SamrukKazyna" JSC as of 01.10.2009.№88/09 "On establishment of limits on certain types of expenditures
and the regulations for legal entities the stakes of which are owned by
"National Welfare Fund" Samruk-Kazyna" JSC on the right of ownership or trust management
as of 20.06.2014.№28/14.
On the Chairman of the Management Board of "Kazpost" JSC as of 01.08.2014.№36/14;
7.1 On making amendments and additions to the Action Plan for the provision of sponsorship
and charity in 2014, implemented through the Corporate Fund "SK-Astana" JSC and the organization,
to the group of "Samruk-Kazyna" JSC with as of 15.09.2014.№43/14;
7.2On the increase in the number of authorized shares of "Kazpost" JSC, placement of the shares
within the number of authorized shares, method and price of their placement, the acquisition of shares
of " Kazpost" JSC by "Samruk-Kazyna " JSC as of 15.09.2014.№43/14.
On the establishment of limits on certain types of expenses and the regulations as of
25.09.2014.№44/14.
On making amendments and additions to the Rules of remuneration
and reimbursement of expenses of independent directors of the Companies of "NWF" SamrukKazyna" JSC as of 22.05.2009 (Minutes №55/09) as of 28.10.2014.№48/14.
2. The procedure for bringing the issues for the consideration by the Sole Shareholder
In accordance with the Charter of the Company, submission of issues for consideration by the
Sole Shareholder related to the competence of the Annual General Meeting of Shareholders, is
initiated by the Board of Directors.
Submission of other issues which are within the competence of the general meeting of
shareholders to the Sole Shareholder is initiated by the Board of Directors, the sole shareholder, and
in the process of voluntary liquidation - may be also be initiated by the liquidation commission of the
Company.
Legislation may provide for cases of compulsory bringing the matter before the Sole
Shareholder.
The costs of bringing the matter before the Sole Shareholder are incurred by the Company,
except in cases prescribed by law.
The information and materials provided to the sole shareholder, should be organized in relation
to the issues proposed to the Sole Shareholder and provide information to the extent necessary to make
informed decisions on these issues.
The company provides to the sole shareholder the separate decision on each issue submitted to
the Sole Shareholder.
The sole shareholder may be provided with additional information about the plans,
achievements and challenges of the Company, as well as analytical studies and materials of other
organizations on the activities of the Company.
Materials on issues related to the competence of the Annual General Meeting of Shareholders,
to be considered by the Sole Shareholder shall include:
1) the annual financial statements of the Company;
2) the auditor's report to the annual financial statements;
3) the BD's proposal on the distribution of the net income of the Company for the last financial
year and the amount of the dividend for the year per one common share of the Company;
4) information about appeals of the Sole Shareholder towards the actions of the Company and
its officials and the results of their review;
5) the annual report of the Company, including annual report of the Board of Directors;
6) other documents.
5.2. The Internal Audit Service
The Internal Audit Service is the body of the Company, which provides the organization and
implementation of internal audit in the Company. Organizationally and functionally the Services is
directly subordinate and accountable to the Board of Directors of the Company.
The mission of the Service is to assist the Board of Directors and the Management Board of the
Company in the performance of their duties to achieve strategic goals.
The main goal of Service - submit to the Board of Directors the independent and objective
assurance and consulting aimed at improvement of risk management system, internal control and
corporate governance of the Company.
The Internal Audit Service provides the organization and implementation of internal audit in the
Company, directly subordinates and accountable to the Board of Directors.
Service mission is to provide the necessary assistance to the Board of Directors and the
Management Board in carrying out their responsibilities to achieve strategic goals.
The main goal of Service - submit to the Board of Directors with independent and objective
information to ensure effective management of the Company by bringing a systematic approach to the
improvement of risk management, internal control and corporate governance.
In accordance with its tasks the Service performs the following functions:
• assesses the adequacy and effectiveness of internal controls in the Company;
• assesses the completeness of the application and effectiveness of the methodology of risk
assessment and risk management procedures in the Company;
• assesses for the implementation of and compliance with accepted principles of corporate
governance and appropriate ethical standards and values of the Company and others.
Managers and employees of the Service shall be appointed by the Board of Directors of the
Company. Activities of the Service are supervised by the Internal Audit Committee. The Head of
Service regularly meets with the Chairman of the Internal Audit Service on the activities of the
Service.
The Board of Directors annually approves the Risks - oriented annual audit plan of the Service,
as well as key performance indicators of the Service and its leader. Reporting of the Services on a
quarterly and annual basis is submitted to the Audit Committee and the Board of Directors of the
Company.
According to the annual audit plan of 2014 the implementation of 25 audit engagements is
provided. Audit plan is made in full.
Based on the results of audits for 2014 in order to enhance the effectiveness of internal control
and risk management, corporate governance, the Service issued 88 critical and 140 important
recommendations.
On a quarterly basis service monitors implementation of recommendations of the Service and
the external auditors.
5.3. Management Board (Правление)
5.3.1. Information about Management Board
The Management Board is a collegial executive body of the Company, which provides its
development and achievement of sustainable growth of performance, has the right to make decisions
on any matters activities not delegated by law, other legislative acts of the Republic of Kazakhstan
and the Company's Charter to the competence of the Sole Shareholder and the Board of Directors, is
responsible to the sole shareholder and the Board of Directors for the performance of its tasks.
The rights and obligations of the members of the Management Board are determined by the
legislation of Kazakhstan, Charter, Regulations on the Management Board of "Kazpost" JSC and the
employment contract.
Composition of the Management Board (as of 31.12.2014)
Full Name
Mussin Bagdad Batyrbekovich
Mashabayev Azat Yerkinovich
Zharilkaganov Murat Utepbergenovich
Kunhozhayeva Ainura Sovetovna
Position
Chairman of the Management Board, a
member of the Board of Directors
Deputy Chairman, Member of the
Management Board
Deputy Chairman, Member of the
Management Board
Deputy Chairman, Member of the
Management Board
5.3.2. Track record of the Management Board members
Chairman of the management Board - Mussin Bagdad Batyrbekovich, he was born on March 3,
1983. In 1997 he graduated from the University of Suleyman Demirel and Kazakh Institute of Law
and International Relations of Almaty.
From 2004 to 2007 he worked in various positions of IT-departments in "National Information
Technologies" JSC, Ministry of Justice of the Republic of Kazakhstan. From 2010 to 2011 - Deputy
Director of the Department of State Policy in the field of Information Technology under the Ministry
of Communications and Information of the Republic of Kazakhstan. From 2011 to 2012 - Deputy
Chairman of the Monitoring Committee of automation of public services and the coordination of PSC
activity under the Ministry of Communications and Information of the Republic of Kazakhstan.
From 2012 to 2014 - Chairman of the Monitoring Committee of automation of public services
and the coordination of PSC activity under the Ministry of Transport and Communications. In April
2014 he was appointed as Chairman of the Management Board of the "National Information
Technology" JSC. From August 1, 2014 to present time – Chairman of the Management Board of
"Kazpost" JSC.
Deputy Chairman of the Management Board - Mashabayev Azat Yerkinovich, he was born on
June 8, 1979. He graduated from the Kazakh Economic University. named after T.Rysskulov in the
specialty "Accounting and Auditing"; Bremen State University under the scholarship of the President
of the Republic of Kazakhstan "Bolashak", - in "Law"; Kazakh State University. named after AlFarabi, in "International Law".
From 2005 to 2012 he worked at a subsidiary of "Samruk-Kazyna" JSC, RSE "Public Service
Center", LLP «Strategy Partners Kazakhstan».
From January 2008 to the present time is a member of the Board of Directors in the status of an
independent director of "APF "Republic" JSC. From November 10, 2014 - Deputy Chairman of the
Management Board.
Deputy Chairman of the Management Board - Zharilkaganov Murat Utepbergenovich , was
born on October 4, 1956, he graduated from the Moscow State University of Railway Engineering,
Doctor of Economics. From January 2000 to April 2002 - the director of the Almaty post office. From
July 2002 to February 2009 he held executive positions in "NC"KTZ " JSC. Since February 2009, he
was appointed as a Managing Director - Chief Financial Officer of "Kazpost" JSC, from June of the
same year - Deputy Chairman of the Management Board. He is working in Kazpost JSC for more than
4 years.
Deputy Chairman of the Management Board - Kunkhozhayeva Ainura Sovetovna, was born on
December 8, 1966. Graduated from the Leningrad Institute of Soviet Trade named after F.Engels
(1983-1987), specializing in "Economics and merchandising". From 2008 to 2013 she worked in
senior positions in "BTA Bank" JSC.
Since August 1, 2013 - Deputy Chairman of "Kazpost" JSC.
Chief Financial Officer - Dykanbayeva Aliya Maratovna was born on December 12, 1973.She
graduated with honors from the Al-Farabi Kazakh State National University (1991-1995) In
"International Economic Relations".In 2001 she received a master's degree in "financial economy" of
the American University, Washington. From 2001 to 2013 she worked in leadership positions of
"Kazgiproneftetrans" JSC, "PetroKazakhstan Kumkol Resources" JSC , branch of «BG group»,
"PetroKazakhstan Oil Prodaks" LLP (Shymkent refinery).
From October 7, 2013 to the present day - CFO of "Kazpost" JSC.Deom December 11, 2014 Member of the Management Board of "Kazpost" JSC.
5.3.3. Criteria for selection of the Chairman of the Management Board
Chairman of the Management Board of the Company is appointed by the Management Board
of the Fund at a positive conclusion of the Committee on the personnel policy of the Fund, the
Nominating Committee and Remuneration Committee of the Board of Directors of the Company and
in the cases established by the legislation of the Republic of Kazakhstan, upon receipt of consent to
the appointment of the candidate for the post of Chairman of the Management Board of the Company.
Requirements for the position of the Chairman of the Management Board:
1) higher professional education (preferably in the field corresponding to the area of the
Company) and the degree of "Master" or further education in the field of management (management);
2) professional experience (excluding time of the university studies) or work experience in the
areas corresponding to the functional areas of office, of not less than fifteen (15) years, including not
less than five (5) years of experience in senior positions in the respective organization profile. Also,
the head of the department of the Fund - at least 1 year/head of the department of the Company - at
least 3 years, or subject to completion of study abroad (Master) in priority specialties confirmed by
the Republican Commission for training abroad. The presence of higher education, professional
experience in positions in the respective to the organization profile economic activity for at least
twelve (12) years, including in senior positions for at least three (3) years in accordance with the
economic activity corresponding to the profile of the company;
3) knowledge of the regulatory legal acts of the Republic of Kazakhstan, regulating relations in
the areas corresponding to the specialization of the position, as well as other obligatory knowledge
necessary for execution of functional responsibilities for the position;
4) the presence of positive achievements and impeccable reputation in the business and / or
industry environment needed to perform the duties and organization of effective work;
5) lack of outstanding or unwithdrawn in accordance with the law criminal record;
6) the knowledge of the state and foreign (-s) languages is preferable.
5.3.4. Report on the Work of the Management Board
The Management Board is a collegial executive body of the Company, provides for the
development and sustainable growth performance of the Company, has the right to make decisions on
any matters not within the competence of the Sole Shareholder and Board of Directors, and is
responsible for carrying out the tasks entrusted to it by the Sole Shareholder and the Board of Directors
of the Company.
The Management Board operates in accordance with the policies and decisions of the Sole
Shareholder and resolutions of the Company's Board of Directors.
In 2014 there were 47 meetings of the Management Board, where they reviewed and made
decisions on 369 issues concerning the current activities of the Company and referred by the
Company's Charter to the competence of the executive body. Range of issues considered by the
Management Board is connected with a need to make managerial decisions on both planned and urgent
matters of the Company's activity.
The priority directions of the Management Board's operation in 2014 were the development of
postal and financial services. Particular attention was paid to issues related to the launch and
implementation of the transformation program of "Kazpost" JSC, improvement of the efficiency and
productivity of administrative management, improvement of the quality of the company's services,
improvement of the customer-orientation of the company, the implementation of new projects and
services for customers, such as - the introduction of services of Hybrid e-mail, creation of own
network of postamats, equipping and launching of own situation center, the introduction of the
principle of "barrier-free service", SMS and e-mail notification of customers, launching of interactive
service «Print2Card» and others. Also, the Management Board on a systematic basis discusses issues
related to improvement of the working conditions of employees, improvement of their skills and
motivation.
During the reporting year, the Management Board approved and updated a number of internal
regulations, including: Procedure for the receipt, processing and delivery of EMS COD items, Rules
of market research and analysis of "Kazpost" JSC, Regulations for the Modernization (transformation)
Board of "Kazpost" JSC, Charter of the Transformation program of "Kazpost" JSC, debt management
policy and financial stability of "Kazpost" JSC, Methods of development and application of key risk
indicators of "Kazpost" JSC, Instructions for accounting of operations in the international nonequivalent exchange in "Kazpost" JSC, Rules for pricing in "Kazpost" JSC Method of calculation of
provisions in accordance with International Financial Reporting Standards and the requirements of
the legislation of Kazakhstan on accounting and financial reporting in "Kazpost" JSC, Rules of the
organization of password protection in "Kazpost" JSC, the procedure for setting exchange rates for
foreign exchange transactions and operations of "Kazpost" JSC, debt management policy and financial
stability of "Kazpost" JSC, Rules of the organization of work of postmen and others.
5.4. Evaluation of the management performance
According to the rules of evaluation of the Board of Directors performance, members of the
Board of Directors of "Kazpost" JSC the decision on the evaluation is made by the Board of Directors
of the Company. The mentioned decision defines the specific timing of the assessment, its methods
and resources. According to the resolution of the Board of Directors, with the availability of
appropriate justification, the evaluation of all or some of its types may be carried out two or more
times a year.
The evaluation process and its results (questionnaires, interviews, and so on) or the submitted
consultant's report is coordinated and summarized by the Chairman of the Board of Directors.
Evaluation of is the comparative nature with the assessment results in the previous period, the
evaluation results are discussed at a meeting of the Board of Directors. Evaluation of the Chairman of
the Board of Directors is made under the supervision of one of independent directors.
Following the discussion, the Chairman of the Board of Directors provides feedback to all
directors. In regard to the Chairman of the Board of Directors the feedback is provided by an
independent director.
April 17, 2014 The Board of Directors decided to hold the evaluation of the Board of Directors,
Board Committees and of each member of the Board of Directors of JSC "Kazpost" by questioning
(without the involvement of a consultant).
10 September 2014 the Board of Directors approved a plan of measures to improve the activities
of the Board of Directors of JSC "Kazpost".
With respect to the Management Board the most important areas are allocated, the and the most
significant challenges the Management Board should work in.
According to the evaluation the Board of Directors can take the following measures:
1) identify several major challenges on which the Board and the Committee shall focus on;
2) make adjustments to the plans and methods of work of the Board of Directors and its
committees, and so on.
The criteria for evaluation of the Board of Directors, its members and committees are:
documentation support of the Board of Directors operation; composition and structure of the Board
of Directors; role and tasks of the Board of Directors, Chairman of the Board of Directors; procedures
of the Board of Directors, information support of its activities; Committee's work; interaction of the
Board of Directors with the Management Board; the activities of the Corporate Secretary;
remuneration policy for directors.
When an individual assessment of Directors the special attention is paid to the following
actuators:
1) competence in matters within the responsibility of the Board of Directors and Committee, the
Director relates to;
2) knowledge of the industry and particularly of the scope of business;
3)attendance at the meetings of the Board of Directors and its Committees;
4) the degree of participation in the discussions at the meetings of the committee;
5) the activity at the meetings of the Bard of Directors and the nature of the vote in the decisionmaking process, as well as compliance with the terms of consideration of the materials submitted to
the Board of Directors;
6) focus on the search for solutions;
7) personal characteristics of directors and their impact on its performance.
In accordance with the decision of the Board of Directors of "Kazpost" JSC as of April 17, 2014
№ 05/14 the assessment of the activities of the Board of Directors, Board Committees and each
member of the Board of Directors of "Kazpost" JSC was held by questioning the current members of
the Board of Directors (without the involvement of a consultant).
According to the evaluation of the Board of Directors of the Company a plan for improvement
of the activity of the Board of Directors and its Committees was approved. It is planned to increase
the number of meetings of the Board of Directors and its Committees for 2015.
According to the Rules of evaluation and remuneration of executives of "Kazpost" JSC
according to the results of the year, the assessment involves motivational key performance indicators
(KPI), which characterize the effectiveness of financial and production activities of the Company.
Motivational KPIs are developed by the working group by cascading strategic goals into concrete
figures on business processes/activities of the Company in the form of a map with the KPI target
values.
The company approved the Rules of performance evaluation and awarding bonuses to
employees of the Internal Audit of "Kazpost" JSC.
Evaluation of goals of the Service's workers is held quarterly, the evaluation uses the system of
management by objectives. Evaluation targets are as follows:
•the extent of performance of the risk-based annual audit plan; timely reporting to the object of
audit, to the Board of Directors, the Audit Committee and Chairman of the Management Board;
•the share of significant recommendations adopted by auditees; number of comments from the
Audit Committee, the Board of Directors of the Company to the quarterly and annual reports of the
Service;
•monitoring over the implementation of significant recommendations of internal and external
auditors by the Company.
5.5. The remuneration of senior management
Board of Directors
Members of the Board of Directors who are public servants, and exercise their powers under
official duties, do not receive the compensation. Chairman of the Management Board does not receive
remuneration for serving
in the Board of Directors.
Remuneration is received only by independent directors. Terms and procedure of remuneration
and compensation to members of the Board of Directors are determined by resolution of the Sole
Shareholder.
The main forms of compensation:
•total annual fixed fee for membership in the Board of Directors;
•additional remuneration for participation in each internal meeting of committees of the Board
of Directors of "Kazpost" JSC as a member or chairman;
•reimbursement of expenses (travel, accommodation, per diem) associated with the travel for
the Board of Directors meetings, held outside the place of permanent residence of independent
directors.
In the case of participation of independent directors less than a half of all in-person and inabsentia meetings of the Board of Directors of "Kazpost" JSC in the reporting period, except for
absence in in-person meetings due to illness, finding in a vacation, a business trip, a fixed fee is not
paid.
Management Board
The order of the remuneration system and the remuneration of the members of the Management
Board is defined by the Regulations on the Management Board of "Kazpost" JSC and the Regulations
on the remuneration of employees of the central office.
The Board of Directors determines the size of salaries and terms of remuneration of the
Chairman and members of the Management Board in accordance with the above documents
differentiated on the basis of an individual approach, depending on the complexity of the job, position.
Remuneration system of the Chairman of the Management Board and its members includes base
salary and remuneration based on performance for the year.
Interest on the annual performance for management personnel of "Kazpost" JSC is paid for the
financial year after approval in due course of the financial and economic activity of "Kazpost" JSC on
the basis of audited financial statements. Remuneration on the results of the year is not of a permanent
nature.
5.6. Combining of the leadership positions
The company was established according to the decision of the Government of the Republic of
Kazakhstan dated 20 December 1999 № 1940 "On the reorganization of the republican state enterprise
of postal communication and its state-owned subsidiaries."
Under the law of the Republic of Kazakhstan, internal documents of the Company, such as the
Charter, Corporate Governance Code and other internal regulations, the Company is a legal entity
established in the legal form of the company
These documents do not provide for combining of the position of the Chairman of the Board of
Directors and Chairman of the Management Board.
5.7. Risk Management
The Company has adopted a risk management policy that reflects the vision, goals and
objectives of the risk management system in the Company. The policy defines risk management
framework, the main components of the risk management system, provides a systematic and
consistent approach in the implementation of the risk management process. The main objectives of
the policy are:
1) building of an effective and comprehensive system to create an integrated risk management
process, as part of the Company's management, as well as continuous improvement of activities based
on a single standardized approach to the methods and procedures for risk management;
2) provision of the acceptance by the Company of acceptable risks, appropriate to the scale of
its activities;
3) determination of retention ability and provision of the effective management over the risk
adopted.
Policy is aimed at the following objectives:
1) creation of a complete framework for decision-making and planning;
2) provision of continuous coherent risk management process based on the early identification,
assessment, analysis, monitoring, control for the achievement of these goals;
3) implementation and improvement of the management system, which helps to prevent and
minimize the impact of potential adverse events;
4) increase of the efficiency and resource allocation;
5) prevention of loss and costs by enhancing the effectiveness of the Company, which provides
to the Company the asset and equity protection;
6) ensuring the effectiveness of business processes, the reliability of internal and external
reporting and promotion of legal norms.
The Company's risk management system involves the Board of Directors, Management Board,
Risks Management Service, Internal Audit Service, the structural units of the Company.
As part of risk management, management of the Company during the reporting period have
taken the following measures:
As part of price risk management on the securities portfolio the Company's Board of Directors
decided to limit transactions in the securities market with non-government securities. As part of this
issue the Investment Policy of the temporary surplus funds of Kazpost JSC was revised. Plans for a
gradual restructuring of the investment portfolio was revised by bringing the actual distribution of
financial instruments in the structure, involving reduction of the total portfolio duration. As per
financial instruments which exceed allowable limits, the Company intends to carry out their sale in
the event of the best deals or by issuing orders to sell them. As the yield on all financial instruments
the benchmark of 3-year-old's government securities was established;
As part of the reduction of losses due to fraud and early response to the actuals of fraudulent
activities we have planned the introduction of automated systems for combating fraudulent
transactions (of antifraud system). In addition, the Company introduced a number of projects aimed
at prevention of internal fraud actuals, such as the introduction of verifiers, the launch of electronic
cashiers, installation of payment terminals;
In the field of project management the principles were developed and implemented in
accordance with international best practice;
In the area of liquidity risk management the Board of Directors of the Company approved the
plan, which provides for measures aimed at the gradual reduction in the difference between current
assets and liabilities of the Company;
In order to gain control over the quality of services provided, as well as rapid response to
problems associated with customer service in the Company a situation center was established;
As part of the risks associated with the program of "National IPO" the considerable work to
improve the processes of the internal control and automate the processing and accounting of client
orders was made.
Risks of the Company are divided into the following categories: 1) strategic risks; 2) financial
risks; 3) legal risks; 4) operational risks.
In the reporting period, key risks identified in the company are:
 price risk;
 projects risks
 risks of internal fraud in the provision of financial services;
 personnel risks
 risks of IT systems and IT infrastructure
 currency exchange risk.
 risks of non-compliance with the requirements of laws and regulatory bodies
5.7.1. Price risk
Price risk refers to financial risks, by the nature of occurrence is market risk and arises in the
Company due to changes in the market value of financial instruments held in the portfolio securities
of the Company. Changes in the market value of the securities has an impact on the cost of equity in
the period of holding of securities, and also reflect the extent of possible cost/income from revaluation
of securities in their sale to maturity.
Given that the implementation of the scenario of the urgent and full maintenance of obligations
to customers on current, deposit, retirement accounts is unlikely, as well as the actual that the securities
portfolio on 60% consists of highly liquid government securities, which can be used in repo
transactions in the event of the urgent need to ensure the full execution of obligations, the likelihood
of possible losses from early sale of securities is very low.
To reduce the range of possible loss in the event of the sale of securities to maturity, the
Company plans and carries out the following activities:
1) increase in highly liquid financial instruments (government securities, reverse repurchase
transactions). To minimize the impact of market risks in the procurement of governmental securities,
the Company is working on gaining access to the primary market for government securities;
2) focus on target segments with low credit risk, as the market value of certain financial
instruments is affected by the financial condition of the issuer (the ability to timely and fully pay the
percentage fee, pay issue). Credit risk management is to establish and respect the limits on transactions
by counterparties in accordance with the Policy of the Sole shareholder;
3) diversification of investments in various financial instruments (government, non-government
securities, Eurobonds, deposits, reverse repo transactions) to hedge market risks. The structure of the
portfolio securities of the Company allows the use of natural hedging without derivatives.
5.7.2. Projects risks
In connection with the diversion of large resources, as well as the importance of projects to
achieve the strategy's goals, risk management projects is one of the priorities of the risk management
of the Company. Internal regulatory documents of the Company regulating the project activity, based
on the approaches, methods of project management described in PMBoK. As part of the project
management, the Company has Innovation and Investment Committee in operation. Coordination of
the project was managed by a project office in the face of the Strategic Development Department.
Project risks are assessed both in terms of the impact of project investments on the Company's
financial performance and in terms of the maturity of project management processes (selection, project
implementation, monitoring over the effectiveness of use of project results).
Project risk management lays in the division of the responsibility for financing, implementation
and monitoring over the project between the relevant stakeholders of the project activity. Thus, the
project investments are necessarily considered by the budget committee, approved by the
Management Board. The responsibility for the justification of the investments and provision of
efficient use of project results rests upon the owners of processes the improvement of which is the aim
of the project (project originator). Project is implemented jointly by the external suppliers of software
and equipment required for the project, and the Company's business units, responsible for technologies
(IT, finance, postal technologies, accounting technologies etc.). The results of the projects were
accepted by the customer under the act of reception and transmission. The Board of Directors of the
Company has the Strategic Committee, which deals with the Company's strategic development,
including questions on specific project activities, significant projects. In order to increase
accountability in the framework of project activities, the Company uses a system of key performance
indicators (KPI). EKPIs are used to evaluate the effectiveness of both individual members of project
activities and project management processes in general.
5.7.3. Risks of internal fraud in the provision of financial services
Internal fraud risks are operational risks, the main causes of the risks of internal fraud are: the
lack of automation of services provision process, accounting in some rural subdivisions; large volume
and variety of transactions carried out in the ordinary course of business; personnel turnover in the
district, rural operating divisions of the Company. A large network of territorial divisions of the
Company, along with the advantages associated with coverage of more customers, creates the
complexity of operational control of all conducted operations, which also increases the risk of internal
fraud.
As part of the internal fraud risk management in the Company the internal control system
operates which covers all the processes and includes the construction of rules and procedures for the
implementation of current activities so as to eliminate or minimize the negative impact of fraudulent
activities of employees. As part of the operational processes both programmatic and organizational
control over operations / actions are used, during execution of which the risks of internal fraud can
occur.
Control activities are carried out through the following processes:
1. Subsequent control (departments / sectors of follow-up control of regional offices of the
Company):
1.1 Operational expenditure of verification operations carried out by means of automated
information systems;
1.2 upon the identification of suspicious transactions, the immediate notification of security
departments, department of internal control, regional, district offices;
2. Security (security departments of regional offices, security department of the central office):
2.1. conduct of internal investigations in all cases of violations (including follow-up departments
notification ), which lead to the occurrence of the risk of internal fraud;
2.2. measures on the damage recovery, including judicial decisions;
2.3. implementation in the database of the occurred risks of the control violation actuals.
3. Internal control (sectors / departments of internal control of regional offices, the Department
of Audit and Control of the central office):
3.1. Periodic comprehensive inspection of economic activities of regional branches.
5.7.4. Personnel risk
This type of risk is expressed in the manifestation of adverse events in the social and labor area.
For example, loss of working time and other resources to correct mistakes made by untrained
personnel; low quality of service in the provision of services; reduction of the Company's image; loss
of income. To prevent this risk, measures are being taken to increase wages, training and development
of personnel skills. As a result we conduct the maintenance of the turnover rate of operational
personnel involved in the provision of services at the level of not more than 8%.
5.7.5. Risks of IT systems and IT infrastructure
Failures in the software of the corporate information system (CIS) or hardware failures in the
CIS (servers, communication channels) are the main risks of IT systems and infrastructure, resulting
in downtime (processes and services); reduction of the image; loss of customers. To avoid these risks,
the Company is working on the following areas:
 thorough testing of changes before the industrial operation with a use of maximum load
modeling (maximum number of users, the maximum number of types of operations);
 data backup;
 upgrading of hardware of the CIS (replacement of server hardware to the more productive);
 replacement of equipment, which provides thermal, electric mode of server rooms.
The results of this work should be - the absence of downtime of information systems due to
server hardware failures, as well as a decrease in cases of violations and the duration of failures of the
CIS (hang-ups, slow performance of individual modules) after replacement of the server hardware.
5.7.6. Currency exchange risk
Risks associated with currency fluctuations. The Company may incur expenses from revaluation
of the currency. Among the measures proposed: diversification of investments in different currencies;
foreign currency hedging. These measures will help to retain the losses from the revaluation of
currency in the amount of storage capacity.
5.7.7. Regulatory risks
Violation of the requirements of the tax legislation of Kazakhstan in the timeliness of transfers
received from the public taxes in non-automated post offices, as well as violations of the requirements
for the technical supply of the premises in the district, rural post offices belong to the risk of noncompliance with the requirements of regulations and regulators. These violations could result in fines
from regulators.
The company is working on the following areas as preventive measures,:
accounting of amounts of untimely transferred mandatory payments to the budget accepted in
non-automated remote rural post offices;
gradual automation of remote rural post offices, the use of mobile devices (PDA - receipt printer)
in the provision of services in non-automated post offices;
gradual equipment of liaison offices with the security systems, alarm and fire alarm systems,
CCTV.
These activities allow to maintain the size of the fines paid by operating activities at the level of
working storage capacity.
5.8. Internal control
The system of internal control - a set of organizational policies, procedures, standards of conduct
and actions, practices and internal controls established by the Management Board and the Board of
Directors of the Company to ensure effective internal control over financial and economic activities
of the Company, and aimed at the Company's achievement of its objectives and minimization of the
risks in carrying out of activities.
Participants (actors) of the internal control system are the Board of Directors, the Audit
Committee of the Board of Directors, chief executive of the Company, the Management Board,
Internal Audit Service, a structural unit of the Company on the internal control issues (Department of
Audit and Control) and the structural unit on risk management (Risks Management Service), Risk
Committee, as well as officials and employees of the Company, its subsidiaries and affiliated
organizations responsible for the implementation of control procedures assigned to them by internal
documents of the Company.
Internal control is designed to provide reasonable confidence in achievement of the Company's
strategic and operational goals and is implemented by the organization of internal control system in
the Company the main objectives of which are:
improvement of efficiency of operating activity;
protection of assets and the efficient use of resources;
ensuring the completeness, reliability and accuracy of financial and management reporting;
compliance with the requirements of the legislation of Kazakhstan and internal regulatory
documents;
reduction of the probability of risks and the rate of possible losses (including material losses,
credit downgrade, etc.);
control over the effective functioning of the main and auxiliary business processes and analysis
of results of operations;
assistance in the development of an optimal organizational structure, etc.
The system of internal controls is an integral part of the corporate governance system it covers
all levels of management, all internal processes and operations of the Company.
Organization of the internal control system provides for the construction of the Company
management system that can quickly respond to the risks to control the main and auxiliary business
processes and daily operations of the Company, as well as perform the immediate notification of the
appropriate level of management on any significant deficiencies and areas for improvement.
Reliable and efficient operation of the internal control system requires the involvement and
constant interaction within the framework of internal control of officials and employees at all levels
of the Company.
The system of internal control of the Company consists of five interrelated components: 1)
control environment; 2) risk assessment; 3) control procedures; 4) information and its transfer; 5)
monitoring.
The Internal Audit Department is responsible for the direct assessment of the effectiveness of
internal control system, the formation and reporting to the Audit Committee and the Board of
Directors.
Evaluation of the effectiveness of the internal control system is used to determine the likelihood
of errors affecting the achievement of objectives and the accuracy of the statements of the Company,
determination of the materiality of these errors and determination of the ability of the internal control
system to fulfill its goals and objectives. The Internal Audit timely reports on the evaluation of the
internal control system efficiency to the Audit Committee and Board of Directors. The Board of
Directors is responsible for the disclosure of the internal control system in the annual report submitted
to the Sole Shareholder
In order to improve the effectiveness of the internal control system and performance of the audit
of the Company in 2014 we established three regional management departments of audit and control
of the Company: Northern regional management, South regional management and West regional
management, with the possibility of audit coverage of financial and economic activities of all branches
of the Company one once a year (100%), with the use of available resources.
Coordinating the work of regional offices is performed by the Department of Audit and Control.
The work of the Department of Audit and Control, and regional offices is organized on the basis of a
single annual audit plans.
As a result, the centralized organization of the audit service will show the following possibilities
and benefits:
• full coverage of the financial and economic activities of all branches once a year;
• increase of the responsibility of Auditors for the quality of internal audits;
• conducting of risk - oriented internal audits;
• high quality execution of tasks of of the Chairman and members of the Management Board.
• increase in the number of thematic and off-site inspections to minimize the risks.
In order to improve the quality of the audit system and improve the efficiency of internal audits,
we increased qualification requirements, increased the qualification requirements for the specialist of
the audit system, introduced changes in job descriptions.
6. ECONOMIC PERFORMANCE
6.1. Macroeconomic actuators affecting the market, and the Company's business
Kazakhstan took a ply for innovative development, the development of information and
communication technologies. There is a significant increase in the number of Internet users in the
country, rapidly developing e-commerce, a growing number of both services and e-government.
service users. In the country there is a need to provide qualitative financial services to the public and
businesses, particularly in rural areas, where post is the only structure. There is a growing demand for
transport and logistics services both domestically and from the international business, given the unique
geographical position of the country between the major economies such as China, Southeast Asia and
Europe.
Political actuators. Cancelation of licensing of postal services has reduced barriers to entry into
the market for new players. The Company is unable to monitor the process of input or output of
new/existing players of the postal services market from official sources, there is no transparency in
the market.
Implementation of the Strategy of development of the transport industry of the state until 2017
leads to the development of transit potential of the country and, as a consequence, an increase in traffic
to the territory of the country. This actual will lead to intensification of competition in the market of
cargo transportation, under which the Company will need to develop its transport and logistics system
for the supply of competitive services.
Economic actuators. To date, the Company's competitors offer their customers more services
and additional services on the postal market, which creates a risk of lowering the attractiveness of the
Company's services and requires more detailed study of the Company's own portfolio of services.
Restoration and development of business activity in the country has a positive impact on the
Company in the form of increased demand for services in the segment of "business". This actualor
requires the Company to focus on the segment of "business", preparation of special solutions/products
for businesses and enhancing of sales of services in this segment.
Social actuators. The observed growth in the standard of living of the population leads to an
increase in the purchasing power of consumers and their preferences shift toward higher-quality
services, despite their high cost. This actuator requires the Company to differentiate its portfolio of
services under the requirements of different customer segments and the introduction of additional
services that increase the value of services for customers.
Technological actuators. Development of the Internet and the number of its members provide
the Company with the opportunity to develop electronic and online services, cooperation with eretailers and businesses of distance trade.
Macroeconomic indicators
The Consumer Price Index,%
The world oil price (Brent), USD. US per barrel
Tenge exchange rate against the US dollar, tenge per $ 1 on
average per year
Real GDP growth,%
2012
2013
2014
6.0-8.0
80
6.0-8.0
70
6.0-8.0
60
150
150
182
5
6
4
6.2. Economic goals and objectives and results. Analysis of Results of Company's Operations
6.2.1. Main financial and economic indicators
At the end of 2014 the Company reported net income of 145.1 million tenge, which is above the
planned level by 929.7 million tenge and below 2013 by 19.5 mln. tenge.
Financial and economic indicators
Name
Total revenues, mln. tenge
Total expenditure, mln. tenge
Equity income/loss of companies accounted
for the use of the equity method, mln.tenge
The corporate income tax expenses, mln tenge
Net income/(loss), million tenge
Net income/(loss), million tenge
2012
27 014
25 949
0.8
2013
30 489
30 377
0.0
2014
32 765
32 472
-
119.4
945.8
27 014
52.4
164.5
30 489
148.1
145.0
32 765
During 2014 revenues totaled KZT 32.8 billion which is higher than the 2013 level by 6% or
KZT 2.27 bln.
Total expenditure on current activities (including CIT) was KZT 32.6 bln., which is higher than
the same period of 2013 by 8%, or by 2.3 bn., due to increase of production costs by 12% and general
and administrative expenses by 10%.
6.2.2. Key performance indicators
Indicator «ROACE» was 0.94% against the level of 2013 (2.83%), due to lower net income by
12%.
The decline in «EBITDA margin», compared to the same period in 2013 by 4.96% was due to
the increase in production costs due to the wage increases to the production personnel from 1 April
2014 by 10%, as well as lower income from agency services in connection with the introduction of
new restrictions by the National Bank, as well as a change in method of calculation of the index
«EBITDA margin».
According to results of the 2014 net income totaled KZT 145 million, which is below the level
of 2013 by KZT 19 mln.
Key performance indicators
Name
ROACE
EBITDA margin,%
Net income million
tenge
6.2.3. .Labor Productivity
2012
10.2
10.8
2013
2.8
6.0
2014
0.94
1.04
945.9
164.5
145.1
Productivity in terms of postal services in 2014 amounted to KZT 19.1 million, which is below
the 2013 level by 11% due to reduction in the amount of mail. Productivity in terms of financial
services execution was KZT 52 million, which is higher than the previous period by 9%.
Labor Productivity
Name
Postal services, mln. units.
Financial services million
tenge
2012
17.65
2013
21.5
2014
19.1
45
47.8
52.0
6.2.4. Key performance indicators by segment
Execution of the production program in 2014 is characterized by the following results:
- The volume of postal services for 2014 decreased with respect to the level of 2013 by 13.1%,
or 48 million units, by reducing the volume of services in subsidiaries and affiliates ("Elektronpost.
kz" LLP).
- The volume of loans under agency agreements with commercial banks for the period totaled
24.3 billion tenge, which is below by 50% to the fact of 2013 in connection with the introduction of
new restrictions by the National Bank.
In the area of financial services volumes for 2014 to the level of 2013 there is an increased by
6.4%, or 52.3 bln. tenge.
Operational KPI
Name
The volume of postal services, mln. units.
The volume of financial services, billion
tenge
The volume of agency services, billion
tenge
2012
311.58
2013
369.1
2014
320.75
794.7
822.1
874.4
32.5
48.8
24.3
6.2.5. Forecast of financial, economic and industrial indicators and targets for 2015
In 2015-2019, the Company plans to provide annual increase of trategic indicators.The
Developemnt Plan of "Kazpost" JSC for 2015-2019, approved by the Board of Directors of the
Company dated 10 November 2014, Minutes №14/14 provides the following target strategic KPIs of
the Company for 2015-2019.
Forecast of Strategic KPIs
Name
2015
6.
2017
2.
2019
-2
568,9
16.9
-2
548.4
26.5
-2
154.4
36.5
-1
717.0
46.9
924.5
59.5
Key performance indicators
EVA, mln. tenge
Company's value growth.
Net income million tenge
508.7
994.2
1
871.9
2
683.3
3
927.6
Postal services.
The
completion
of
the
postal
items
sorting
automation
process
in the sorting center of the branch "Information-logistics center "Yug". Postamats are planned for the
placement
in
shopping
malls
«MEGA»
in
Shymkent
and Aktobe.The company plans in 2015 to establish 100 postamats in 20 cities across the country.
Work
will
continue
on
the
implementation
of
hybrid
mail
services
in government agencies, private companies, and also in "Single accumulative pension fund" JSC.
Further development of such projects as "Mobile Postman", "Modernization of the contact center",
"Internet and SMS payments", "Skype" - Internet access points in rural areas, etc.The company will
streamline
reporting
as well as phased cancellation of paper forms.
As per transit of international mail - in 2015 from China to Europe there will be land transit, as
well as increased volume by 3 times (up to 700 mln. tenge). This will open a new item of international
postal exchange in the village Khorgos. It is also planned to expand the transit to the CIS countries.
Work will continue to reduce the delivery time and ensure the safety of postal items, as well as
for optimization of production processes.
Financial services
Development of financial services will be implemented through the implementation of such
measures as the introduction of «Postbank»; the establishment of processing center; projects "COD",
"unified system of utility payments", "Self-service terminals", "National IPO" projects on remittances
(Card to cash, Unistream, express translations); repayment of loans, deposit opening and
replenishment through the offices of the Company; e-Commerce; System of personal identification of
clients, "electronic cashier", "E-notary", the implementation of online payments in favor of "AstanaERC", " Kazakhtelecom" JSC, "AVON", the development of the international system of money
transfers "Unistream"and so on.
In addition, we plan to develop the agency business: insurance services, the conclusion of
pension contracts; receipt of declarations; etc.
Information Technologies.The company will enhance the role of information technology in its
activities, as the solution of strategic objectives is only possible through effective IT technologies.
The company plans to introduce the following IT projects: system of telecommunications
and communications for the contact center and the Situation Centre of the Company; monitoring
system of vehicles (GPS Monitoring); CCTV system in postal carriages in the front offices of the
regional branches; terminal network fro the receipt of payments; creation of a new index base; the
elimination of internal fraud (verifiers); electronic cashier; implementation of an electronic stamp;
implementation of an automated line for sorting mail.
In addition, they have planned completion of the following projects: the reception of parcels
to postamats through cash on delivery; consumer Internet subscription; implementation of SMS / Email notification / notification of clients on the receipt / delivery of postal items; Implementation of
periodicals in electronic format on the website of "Kazpost" JSC.
Integration of corporate information system of "Kazpost" JSC will be carried out with
information systems of "Air Astana", "Pony Express", the international center of boundary
cooperation "Khorgos".
It provides for the modernization of post offices with the equipment of the electronic-queue;
Modernization of service for tracking; the development of hybrid mail; development of an online store
Postmarket.kz; Integration of IS of public bodies with IS of "Kazpost" JSC for different types of
services (delivery of notifications, appeals, payment on the PSC services and RT fines, e-Notary).
Transformation
In 2015, it is planned to further implement the "transformation" in which will be the
standardization and optimization of business processes and conditions that ensure quality of service,
the use of best practices, identification and elimination of inconsistencies.
There will be new requirements for the competence of employees of "Kazpost" JSC. Employees
will have the opportunity to expand their knowledge and skills, acquire new skills. The company will
gradually develop their staff to conduct retraining of workers, measures to improve skills through
training and development. In developing the ability and capacity of employees, the Company will
strive to conduct business, efficiently and skillfully work with the new system and processes designed
during the transformation.
6.2.6. Industry average (rates)
1. Postal services
Rates for shipping of packages
Weight, kg
up to 0.3
0.5
1
1.5
2
EMS
Kazpost
Bekk Courier
Kazakhstan
570
580
590
600
610
UniPost
Direct
Delivery
DHL
Pony
Express
390
600
390
700
390
800
390 390 -
600
660
720
780
780
1600
1600
1600
1600
1600
600
600
790
955
1125
2. Financial services
Tariffs for individuals
Opening a current
account
Organizations
Kazpost JSC
"Halyk Bank of Kazakhstan" JSC
"Kazkommertsbank" JSC
"Bank TuranAlem" JSC
"Bank CenterCredit" JSC
"KaspiBank" JSC
"Tsesnabank" JSC
"Alliance Bank" JSC
Avarage
300
500
400
500
300
400
Cash withdrawal from an
account (nat. currency)
1%
0.7%
1%
0.5%
0 - 0.39
0.5%
0.5%
0.7
Tariffs for corporate customers
Organizations
Opening a current
account
Cash withdrawals from
the account on the
provisional application (in
nat. currency,%)
Kazpost JSC
"Halyk Bank of Kazakhstan" JSC
"Kazkommertsbank" JSC
"Bank TuranAlem" JSC
"Bank CenterCredit" JSC
"KaspiBank" JSC
"Tsesnabank" JSC
"Alliance Bank" JSC
Avarage
2000
3500
3500 - 5000
2500 - 5000
3000
2500 - 5000
2500 - 4000
3000-5000
3500
0.25 - 0.35
0.3 - 0.45
0.3 - 0.4
0.3 - 0.4
0.4
0.39
0.25
0.3
0.36
6.3. The structure of revenues, expenditures, assets
6.3.1. 6.3.1 Structure of revenues
At the end of 2014, total revenue of the company grew by 7.4% or KZT 2.276 billion in
comparison with 2013 and amounted to KZT 32.8 billion.
The structure of income, billion tenge
Name
2012
2013
Revenues from postal services
Revenues from financial services
Revenues from agency services
12,0
11,4
0,69
13,6
12,5
1,13
2014
15,9
13,2
0,6
During 2014 revenues totaled KZT 32.8 billion, which is higher than in 2013 by 6% or 2.27
billion tenge. Operating income amounted to KZT 30.3 billion, which is higher than the same period
of the last year by 2.5 bn., or 9% due to increase in the following types of income.
By postal services by 2.239 million tenge or 16% due to growth in revenue from the letters
(29%), parcels (3%), periodicals (24%) and express mail services (20%). Also, in 2014, there has been
unprecedented growth in income from international mail (hereafter - IPI). n 2013, these revenues
amounted to 1.3 bn.tenge, and in 2014 2.5 billion tenge, an the increase by 2 times. The major share
of revenue growth for IPI accounts for revenues of postal traffic and transit from China. At the end of
2013 The Company signed an agreement with China Post Group for ground transit services from
Khorgos (PRC) to Orenburg (Russia). Also test sending of air transit from China to Europe and Brazil
were conducted. Increase in revenues from transit services in the direction of Khorgos-Orenburg in
2014 amounted to 200 million tenge.
In addition, in 2014, they increased tariffs for delivery, distribution and sending of PP (in
average by 6.1%) according to the letter of the Committee of Communications and Information under
the Ministry of Transport and Communications №24-03-14/КСИ-2432-as of 16.07.2013. This factor
had a positive impact on the performance of income from PP and in general, the postal service.
For financial Services by 747 million tenge or 6% due to revenue growth for the implementation
of social payments (9%), reception of municipal and other payments (1%), money transfers (12%)
and other services (26%, collection services and transfer-agent activity) in the expansion of the
customer base and the development of services.
As per income from financing by 506 million tenge due to increase of yields on financial
instruments (repo) on the market by 10.7% (3.26% to 10.71%).
At the same time, there was a decrease in revenues from agency services against the 2013 figure
by 47%, or 529 million tenge in connection with the introduction of new restrictions on lending to
individuals by National Bank. As a result, in the reporting period, income from agency services
amounted to 600 million tenge against the level of fact in 2013 of 1 129 mln. tenge.
Revenues from non-operating activities as compared with the level in 2013 were lower by KZT
0.77 bln. mainly due to income on disposal of operating assets and intangible assets and exchange
differences due to lower volume of assets in foreign currency.
6.3.2. Expenditure structure
In the reporting period, expenses totaled KZT 32.62 billion, which is higher than the same period
in 2013 by 7% or KZT 2.1 bln. due to increased production by 12% and general and administrative
expenses by 10%. Operating expenses totaled KZT 26.8 billion, which exceeds the level of 2013 by
KZT 2.9 bln. or 12% mainly due to growth in labor costs by KZT 2.1 bln. This growth in spending is
due to the fact that in 2014, in addition to the annual increase in wages of production personnel by
7%, or KZT 1.046 billion, the cost of salary payments have been further increased by KZT 1 bln. as
a result of higher wages to production workers by 10% from April 1, 2014 as requested by the Head
of State.
General and administrative expenses totaled KZT 5.2 billion what is KZT 460 mln. higher than
in 2013, mainly due to the implementation of the program of business transformation process of the
Company.
According to the results of 2014 the Company's net income totaled KZT 145 million, which is
below the level of 2013 by KZT 19 mln.
Name
Total
General and administrative costs
Cost of goods/services sold
Advertising and Marketing
The expenses from financing.
Other expenses
Corporate income tax
2013
2014
30 324
4 708
32 620
5 168
23 865
79
26 760
50
364
381
1 361
-52
113
148
6.3.3. Asset structure
Balance sheet total in 2014 was 51,2 billion tenge, in 2013 the balance sheet total amounted to
49,2 billion tenge.
The value of long-lived assets in 2014 totaled 33.2 billion tenge in 2013 amounted to 32.6 billion
tenge.The amount of current assets in 2014 was KZT 18 bln., in 2013 was KZT 16.6 bln.
Structure of assets (th.tenge)
2012
Long-term assets
2013
2014
Fixed Assets
Investment Property
Intangible assets
17,473,666 18,692,387 19,852,501
1,438,421
631,49
Investment securities available for sale
1,431,356
544,439
1,223,017
679,209
6,926,193 10,735,358 10,172,347
Loans to employees, long-term part
Other non-current assets and costs deffered
Total
166,32
689,059
721,21
285,49
534,269
579,264
26,921,580 32,626,868 33,227,548
short-term assets
Stock
Trade and other receivables and other current assets
Loans to employees, short-term part
Advance payment on income tax
Investment securities available for sale
Deposits in banks
Cash and cash equivalents
Total
Total assets:
823,935
715,166
746,572
2,181,588
3,185,591
3,660,323
38,555
159,897
51,027
182,892
49,52
137,317
1,206,548
4,016,178
483,987
500
1,421,321
1,000,000
10,776,699 11,459,872 10,955,443
17,970,496 16,578,535 19,203,400
51,198,044 49,205,403 46,124,980
6.4. Segment Analysis
6.4.1. Postal services
Revenues for postal services in 2014 are planned in the amount of 16 010 839.0 thousand tenge
with increase to the actual of 2013 by 13 625 740.0 thousand tenge by 2385 098.8 th. tenge or 18%.
Execution of the plan was 15,864 996.0 thousand tenge with increase to the actual of 2013 by 16% or
2 239 256 thousand tenge. Implementation of the plan of income in 2014 for postal services was 99%.
Planned volumes of postal services for 2014 are 367.0 million units with the decline to the actual
of 2013 of 369.0 million units by 2.0 million units or 1%. Execution of the plan was 321.0 million
units, with the decline to the actual of 2013 by 13% or 48.0 million units. Implementation of the plan
in terms of postal services in 2014 amounted to 88%.
Postal services
2012
The volume of postal services (million units),
Incl .:
letter correspondence
Parcels
Periodicals
Express Mail Service
Other
Revenues from postal services (th.tenge),
Including:
for written correspondence
Parcels
2013
312.0
369.0
64.0
4.0
217.0
0.42
27.
74.0
4.0
215.0
0.5
75.0
12001460
13625740
5022325
3241647
5831992
3766525
2014
321.0
67.8
4.1
213.8
0.5
34.6
15864996
7514560
3895446
Periodicals
Express Mail Service
other
1669879
1135707
931902
1710084
1167968
1149171
2113233
1400031
941i726
Letter correspondence
Revenues for 2014 are planned in the amount of 6 511 952,0 th.tenge with increase to the actual
of 2013 of 5 831 992,0 th. tenge by 679960.5 thousand tenge or 12%. Execution of the plan was
7514560.0 thousand tenge with an increase to the actual of 2013 by 29% or 1,682,568, 0 thousand
tenge. Implementation of the plan was 115%.
Planned volumes for 2014 are 67.0 million units with the decline to the actual of 2013 of 74.0
million units by 7.0 million units, or 9%. Execution of the plan was 67.8 million units, with the decline
to the actual of 2013 by 8%, or 6.2 million units. Implementation of the plan was 101%.
Parcels
Revenues for 2014 are planned in the amount of 4 680 597,0 thousand tenge with increase to
the actual of 2013 of 3 766 525,0 th. tenge by 914 071.8 thousand tenge or 24%. Execution of the plan
was 3895446.0 thousand tenge with increase to the actual of 2013 by 3% or 128 921.0 thousand tenge.
Implementation of the plan was 83%.
Volumes for 2014 are planned in the amount of 4.6 million units with an increase to the actual
of 2013 of 4.0 million units by 0.6 million units or 15%. Execution of the plan was 4.1 million units,
with an increase to the actual of 2013 by 1% or 0.1 million units. Implementation of the plan was
88%.
Periodicals
Revenues for 2014 are planned in the amount of 1 835 033,0 thousand tenge with increase to
the actual of 2013 of 1 710 084.0 th. tenge by 124948.8 thousand tenge or 7%. Execution of the plan
was 2113 233.0 thousand tenge with increase to the actual of 2013 by 24% or 403 149,0 thousand
tenge. Implementation of the plan was 115%.
Volumes for 2014 are scheduled to be 217,1 mln.units with an increase to the actual of 2013 of
215.0 million units by 2.1 million units or 1%. Execution of the plan was 213.8 million units, with the
decline to the actual of 2013 by 1% or 1.2 million units. Implementation of the plan was 98%.
Express Mail Service (EMS items)
Planned revenues for 2014 are in the amount of 1 525 471,0 thousand tenge with increase to the
actual of 2013 of 1167 968 th.tenge by 357 502.6 thousand tenge or 31%. Execution of the plan was
1400 031.0 thousand tenge with increase to the actual of 2013 by 20% or 232 063, 0 thousand tenge.
Implementation of the plan was 92%.
Planned volumes for 2014 are 0.5 million units with an increase to the actual of 2013 of 0.5
million units by 6% or 0,03 mln. nits. Execution of the plan was 0.5 million units, with an increase to
the actual of 2013 by 0,04 mln. units or 8%. Implementation of the plan was 102%.
SCS Service
Planned revenues for 2014 are in the amount of 2 357 142,0 thousand tenge with increase to the
actual of 2013 of 2 030 558,0 th. tenge by 326 584.0 thousand tenge or 16%. Execution of the plan
was 2243 175.0 thousand tenge with increase to the actual of 2013 by 10% or 212 617.0 thousand
tenge. Implementation of the plan was 95%.
Planned volumes for 2014 are 1.37 million units at the level of the actual of 2013. Execution of
the plan was 1,36 mln. units, with the decline to the actual of 2013 by 0.2%, or 0,003 mln.units.
Implementation of the plan amounted to 99.8%.
When filling out the report on implementation and monitoring of the Development Plan of
"Kazpost" JSC 'revenues and volumes for the service of special communication service are noted in
the articles "Letter post" (packages of SCS) and "parcels" (parcels of SCS).
6.4.2. Financial services
Income plan of financial services in 2014. was established with a gain of 16% to the actual of
2013 in the amount of 14,382,909 thousand tenge.
Execution of revenue plan: for 12 months in 2014 with a plan of 14,382,909 thousand tenge the
income from financial services amounted to 13,198,607 thousand tenge, the plan was executed by
91.8%, the failure was 1,184,301 thousand tenge, while in comparison with the same period of 2013
the revenues increased by 6%, or 747 561 thousand tenge.
Implementation of the plan in terms of: 12 months in 2014 at the plan 991 304 mln. Tenge the
volume of financial services amounted to KZT 874,409 mln., the plan is executed by 88%, nonperformance
is KZT 116.9 thousand, while in comparison with the same period of 2013. volumes increased
by 6%, or KZT 52,311 thousand.
Financial services
The volume of financial services
payment of wages
payment of pensions and benefits
receipt of payments
Money transfers
Revenues from financial services
payroll
payment of pensions
receipt of payments
money transfers
other
2012
2013
2014
794 747
95 001
462 888
220 916
15 051
11 397 764
998 622
4 452 196
4 138 954
590 255
876 822
822 098
80 324
473 610
249 925
17 638
12 451 046
1 065 421
4 757 094
4 915 399
639 477
1 073 655
874 409
88 146
505 456
260 126
20 576
13 198 607
1 058 100
5 110 945
4 953 148
718 640
1 357 774
Payment of wages
During 12 months of 2014 the volume of payments of wages amounted to 88 billion tenge,
(Growth to the fact of 2013 was by 10%), income from this service amounted to
KZT 1058 mln. (to the fact of 12 months of 2013 minus 1%).
Pensions and benefits
During 12 months of 2014 they provided services to pay pensions and benefits in the amount of
KZT 505 456 mln. (growth to the fact of 2013 was 7%), the income received in the amount of
KZT 5 110 945 mln. (growth to the fact of 12 months of 2013 - 7%).
Acceptance of payments
For 12 months in 2014 they provided services to receive payments in the amount of KZT 260
billion,
(Growth to the fact of 2013 was 4%), the income received in the amount of KZT 4 953 mln.
(Growth to the fact of 12 months of 2013 - 1%).
Money transfers
During 12 months of 2014 as per money transfer services in the amount of 20.5 billion tenge,
(Growth to the fact of 2013 was 17%), the income was received in the amount of 718.6 th. tenge
(growth to the fact of 12 months of 2013 - 12%).
Collection
For 12 months of 2014 the collection services revenues amounted to 541,226 thousand tenge,
the execution of the plan is 97.7% (to the actual of 12 months of 2013 -18.4%, or 83.9 million tenge).
Cash management services.
During 12 months of 2014 the income from cash services amounted to 440,099 thousand tenge,
the plan was executed by 109% (to the actual of 12 months of 2013 + 19.5% or 71.2 million tenge).
Agency services
During 12 months of 2014 revenues from the provision of agency services amounted to 599,903
thousand tenge, the plan was fulfilled by 38.4% (to the actual of 12 months of 2013 minus 46% or
minus 529,236 thousand tenge).
6.4.3. Transfer-agent activity
Transfer-agent activity is a licensed activities in the securities market. To date, the licensees for
this type of activity belong the companies: "Kazpost" JSC, "Halyk Savings Bank of Kazakhstan" JSC.
Services of Transfer Agents are of a low demand on the part of the subjects of the securities
market. This is due to the high concentration of market participants and investors in the city of Almaty.
Attracting of regional investors takes place mainly through the use of Internet trading in securities
trading, which already uses a number of brokers.
Currently, the transfer-agent network of the Company consists of a 17-transfer-agent sectors in
the regional branches, post offices of Astana and Almaty, urban postal service offices, (CPOC) of
Semey.Sectors are working on a permanent basis.
Sector workers to receive and transmit orders for securities transactions, as well as provide
advice and information on issues related to both the activities of professional participants of the
securities market and the stock market as a whole. Furthermore, sectors help to perform the receipt
and transfer of customer orders of the Company's broker that are found in all regions of the country.
In 2014, the Company provided the transfer agent services to two contractors:
• "Asyl Invest" JSC in eight regional centers and three CPOCs;
• "United Registrar of Securities" JSC - in 14 regional centers and 3 CPOCs.
In addition, before the start of the second phase of the program "National IPO" agreements were
concluded with brokerage companies only for the second stage period: "BCC Invest" JSC, "Centras
Securities" JSC, "Freedom Finance" JSC.
The volume of received and transmitted orders, customer orders and contracts in 2014 amounted
to only 42,847 pieces.
In terms of professional market participants:
1. "United Registrar of Securities" JSC - 38,068 pcs.;
2. "Asyl-Invest" JSC - 4718 pcs.;
3. "BCC Invest" JSC - 14 pcs.;
4. "Centras Securities" JSC - 27 pcs.;
5. "Finance Freedom" JSC - 20 pcs.
6.5. Accounting Policies
Financial accounting in "Kazpost" JSC is carried out on the basis of the accounting policies of
"Kazpost" JSC, approved by the Board of Directors of "Kazpost" JSC. In 2013, this policy was
amended. Changes and additions include the following:
• introduction of new requirements in preparation of the consolidated financial statements,
taking into account the subsidiaries of the Company;
• changes in the requirements for the recognition of financial instruments in accordance with
IFRS (IFRS 9,13), which defines such aspects of accounting for financial instruments as: Recognition
and derecognition of financial instruments and the classification and measurement of financial assets
and financial liabilities;
• describes the judgments of state subsidies, their definitions and classifications;
• describes the judgments about fair value, which is used in the case where any other section
requires or allows the use of fair value measurements or disclosures about fair value measurements
(and such assessments as fair value less costs of sale, based on fair value or disclosures about those
measurements);
• presents the requirements for accounting for the collateral to determine the classification of
assets that are passed to the Company or its subsidiaries, as a result of full and partial settlement of
the debtor's obligations to the Company or its subsidiaries.
Information about the external auditor
The external auditor of "Kazpost" JSC is the company LLC "Ernst & Young". This company is
a global leader in assurance, tax, transaction and advisory services.
Basic services of LLP "Ernst & Young":
1. auditing services;
2. tax and legal services;
3. consulting services;
6.6. Contingent Liabilities and Contingent Assets
Contractual obligations
As of 31 December 2014 there were contractual commitments for the acquisition of fixed assets
and intangible assets in the amount of 157.976 thousand tenge (as of December 31, 2013: in the
amount of 300.081 thousand tenge). As of December 31, 2014 the Company had no commitments for
the acquisition of inventories and other services.
Operating lease commitments
The Company is a lessee in a number of agreements on the lease of commercial real estate, as
well as vehicles and computer equipment to carry out their normal operations.
In all such cases, all the risks and benefits associated with the leased assets are retained by the
supplier for the period of such operating leases in cases where the Company is the lessee. The validity
of the lease agreements is not more than twelve (12) months from the balance sheet date, and the
Company has no non-cancellable contracts.
6.7. Information about provisions
Provisions for receivables and inventory write-offs, th. tenge
2012
2013
2014
Provision for bad and doubtful receivables,
thousand tenge
Provision for inventory write-offs, th. Tenge
805 447,00
934 087.00
1001 838.00
21 080,00
11 706,00
7 640,00
6.8. Forms of support from the government and the Fund
From the Government
Ministry of Finance issued guarantees for loans taken by "Kazpost" JSC at the Islamic
Development Bank in 2003. The maturity of the loan is June 2019. As of 31 December 2014 the debt
on the loan amounted to 605 million tenge.
From the Fund
On behalf of the Chairman of the Management Board of the Fund a program was developed to
gradually increase the authorized capital of "Kazpost" JSC. This program is approved by the
Management Board of the Fund, provides for an increase in the authorized capital of the Company at
the own expense of the Fund in the amount of more than 1.6 billion tenge.
The main objective of the program is to increase the level of technical strengthening of buildings
and structures of production facilities of "Kazpost" JSC in accordance with existing security and safety
procedures for the facilities carrying out the provision of financial services.
Under this program, a positive decision to increase the authorized capital of "Kazpost" JSC was
made in due course. As a result, the number of authorized common shares amounted to 917,196 shares
at the offering price of 1000 tenge per share.
6.9. Related party transactions
6.9.1. Transactions with related parties
During the reporting period deposit and card (salary and pension) transactions were made.
Procedures for the approval of related party transactions are in accordance with the requirements of
the legislation of Kazakhstan and the corresponding internal normative documents of the Company.
In the reporting period, the most significant transactions with related parties were transactions
on the card account and transactions on the account of the "on demand deposit".Transactions in respect
of which the standard terms and conditions were changed, or for which the usual procedures of
examination were not carried out and approvals were not registered. Transactions, which were formed
as a result of outstanding balances, representing a concentration of credit risk, are not registered.
6.9.2. Transaction
Transaction with related parties is carried out by the Company in accordance with the contracts
concluded with the relevant legal entities in accordance with the laws of the Republic of Kazakhstan.
During 2014, the total amount of transactions with organizations of "Samruk-Kazyna" JSC was
more than 1 billion tenge. Relations between the parties are of a commercial nature on the basis of
mutually beneficial cooperation. Significant terms of the deals include the provision of services for
special communications, subscription to periodicals, provision of broker and dealer services, receipt
of payments, collection of funds, provision of postal and financial services, etc..
Procedure for approval of the transaction is a contract between the parties. Transactions and
relationships between the Company and the third party are on normal commercial terms under the
law.
In accordance with the Articles of Association of the Company, the decision to execute
transactions or transactions in which the Company has an interest, in accordance with the laws of the
Republic of Kazakhstan are under the exclusive competence of the Board of Directors of the
Company.
6.10. Financial activities
6.10.1. Equity and debt securities and market capitalization
"Samruk-Kazyna" JSC is the sole shareholder owning 100% of shares of the Company.There
no convertible securities of the Company. The total number of authorized shares as of 31.12.2014 is
14,067,052 (fourteen million sixty-seven thousand and fifty-two) shares, including:
 common shares: 14,067,052 (fourteen million sixty-seven thousand and fifty-two) shares;
 no non-preferred shares;
In accordance with the resolution of the Board of Directors of "Kazpost" JSC, in January and
March 2014 the issues of additional common shares in an amount of 1 815.196 pieces totaling
1,815,196 thousand tenge was approved (2013: 2,084,071 thousand tenge).In 2014, the issued
ordinary shares were fully paid to "Samruk-Kazyna" JSC in cash.
Over the past 10 years, growth in the number of authorized shares of the Company was
an average of 30% annually. As a result, during this period, the number of authorized shares amounted
to more than 14 million pcs., which is six times higher than the figure for 2004.
"Kazpost" JSC is working to attract long-term borrowings by second-tier banks to finance
investment projects.In 2014, the Company's total liabilities increased by the amount of 971.6 million
tenge by raising funds under the general agreement Wakala (№3/WKL as of 03.12.2014) with "Islamic
Bank "Al Hilal" JSC in the amount of 1530 mln. tenge.Total borrowings as of 01.01.2014 amounted
to 3426 million tenge.
6.10.2. Capital adequacy indicators
Capital Adequacy
Equity, bln.tenge
Assets, billion tenge
Adequacy ratio of own funds (at least 0.12)
6.10.3. Liquidity indicators
Capital Liquidity
2012
2013
2014
8.9
46.1
0.19
10.7
49.2
0.22
12.6
52.4
0.24
Highly liquidity assets, billion tenge
Demand liabilities, billion tenge
The current liquidity ratio (not less than 0.3)
2012
2013
2014
15.4
30.0
0.51
25.6
33.8
0.47
16.0
34.0
0.47
6.10.4. Investment portfolio
In 2014, the Board of Directors of "Kazpost" JSC adopted a policy of investing temporarily free
funds of "Kazpost" JSC in the financial market.
Investment policy is designed as a tool to ensure the safety of temporarily free funds of
"Kazpost" JSC depending on the changing conditions in the financial markets, by identifying
mechanisms and tools of quality management of own investment portfolio, providing a moderate level
of profitability of operations at low risk of investments in the framework of the established
requirements of RK legislation.
"Kazpost" JSC defines the strategy of investment of temporarily free funds in the financial
market, as a conservative one. Conservative strategy is aimed at preservation of temporarily free funds
by minimization of investment risk. "Kazpost" JSC does not seek to maximize the size of the current
income from investments, giving priority to security investments.
The investment portfolio is a collection of investments in public and private securities, deposits
and reverse repo operations.
As of January 1, 2015 investment portfolio included government securities, corporate securities,
deposits, transactions under reverse repurchase transactions.
Company's Investment Portfolio Management is made by a common policy on money
management of "Samruk-Kazyna" JSC and legal entities, all voting shares (stakes) of which belong
to "Samruk-Kazyna" JSC. According to the common policy of the Fund the basic parameters of the
investment portfolio are developed, including its reference distribution and deviations from it, as well
as the share of financial instruments. The structure of the Company's investment portfolio does not
violate the limits set by the main parameters of the Portfolio of "Kazpost" JSC.
In order to manage the risks associated with investment in the financial market, the Company
applies a policy of setting limits on balance sheet and off-balance sheet liabilities for counterparty
banks of "Samruk-Kazyna" JSC's companies by complying with the limits set by the Fund, as well as
sub-limits, approved by the company.
In 2014, the National Bank of Kazakhstan admitted "Kazpost" JSC to the implementation of
transactions in government securities in their primary placement, and "Kazakhstan Stock Exchange"
JSC has awarded a Company a silver diploma in the category "Leader of exchange market of equity
instruments (shares)" JSC.
6.10.5. Financial liabilities
For the purpose of timely fulfillment of financial obligations in accordance with the Company's
internal documents the appropriate graphics were approved. Amounts under the agreement are repaid
in a timely manner. In particular, on a periodic basis to monitor repayment of principal, the same
procedure is applied in respect of accrued interest on the loans.
During the reporting period, the company carried out work on borrowings. These funds
according to the Company's development strategy up to 2022 are intended for financing and
refinancing approved capital expenditure required for the project. As a result of this work in 2014
additional borrowings amounting to more than 971.6 million tenge were borrowed.
In the course of its financial activities in the Company as per a credit agreements and loan
agreements the appropriate analysis for compliance with the covenants and conditions of the
agreements is carried out on a monthly basis.
As part of the interaction with the bank counterparties, according to the agreements signed
between the Company and the counterparty bank, quarterly financial statements of the Company and
other information in accordance with the contract were presented.Also a confidentiality agreement,
the additional agreement to the current loan agreements and loan agreements were signed.
Currently, the Fund is working on the implementation of the target model of the treasury
function management within the framework of this program, the Company carried out the relevant
work with second-tier banks.
6.10.6. Interest rates on financial assets and liabilities
The company is actively working to attract long-term borrowing by second-tier banks to finance
investment projects. In the reporting period, the company raised 971.6 million tenge at the rate of 6%
- 7.5%.
The company also carries out activities to strengthen and diversify an investment portfolio. The
main purpose of investing - preservation of temporarily free money preservation of the optimal
structure of financial assets and income investments with reliability through diversification. The 2014
average total investment portfolio amounted to 18.7 billion tenge at the average rate of return of
financial assets of 8.25% per annum.
6.11. Investment activity
Investment projects
Effectiveness of the Company in the future, provision of a high rate of development and
competitiveness is largely determined by the level of investment activity.
The purpose of the investment activity of the Company is to maximize shareholder value in the
long term, as well as the implementation of obligations under the Company's corporate and social
responsibility.
Individual investment projects and targeted investment programs form a portfolio of investment
projects under management and is an investment activity management of the Company.
Decision-making in the management of investment activity is carried out at all stages of the life
cycle of a single investment project in accordance with the division of responsibility and delegation
of authority in the following main levels of management:
• The Investment Committee of the Fund;
• The Board of Directors of the Company;
• The Management Board of the Company;
• The Investment Committee of the Company.
In 2014, the Company launched innovative projects such as: "Online Application" on the issue
of payment cards; "Online shopping" of stamps, which will expand the geography of Service; "track
numbers" - a project to upgrade a system for tracking of postal items, allowing a more detailed
logistical information about the location of the postal item; "Automated Network of postamats", which
allows you to receive mailings at any convenient time and place (shopping and entertainment centers,
stations, etc.); «Print2Card», a project which allows the creation of cards online, via mobile app
MyKazpost with a delivery all over the world; "SMS-notification" on the receipt / arrival of mailing;
"Internet subscription", which allows you to subscribe to periodicals without leaving home; "Internet
access points" - the project provides an opportunity to rural residents enjoy free Internet access, as
well as direct contact (ask questions and leave messages) with a public reception party "Nur Otan",
akims of cities and regions; "Mobile Postman", a service aimed at improvement of the quality and
control of services and expansion of the functionality of couriers.
For 2014 the actual development of the investment budget was 1.9 billion tenge.
As per investment projects the spent amount totaled 343,656 thousand tenge including VAT:
• modernization to exemplary post office: 105 819.1 th. tenge, financing was done at their own
expense. The project involves creation of optimal conditions for the Company's customer service,
improvement of the quality of services in the POs, the formation of a positive image from the part of
the population;
• the creation of a branch of the express mail «EMS Kazpost»: in the amount of 16 139.2
thousand tenge, financing is done at their own expense of 1 491.2 thousand tenge and borrowed funds
of 14,648 thousand tenge. The project envisages the possibility to provide services with a level of
quality of foreign companies with a worldwide reputation and global technology at a reasonable price
for customers;
• Mobile Postman: of 15,975.3 thousand tenge, financing is done at own expense.The project
offers the customer an additional opportunity to on-site service, the use of a mobile terminal, which
will increase the coverage of clients for whom the reduction of the time spent is the most important
factor when choosing an operator than the financial costs.
• development of logistics infrastructure: 11 369.3 thousand tenge, financing is done at their
own expense of 8 728.8 thousand tenge and at borrowings of 2 640,5 th.tenge;
• creation of PIPE at airports of Almaty and Astana of 2743.4 thousand tenge, financing is done
at own expense. The project will reduce the processing time of domestic and international postal
packets and EMS items received from planes in PIPE, located at the airport (processing at the territory
of PIPE, before sorting and customs clearance). Reduce the processing time of international postal
packets and EMS shipments passing through the air-section from 10 to 15 hours;
• establishment of the Situation Centre: 22,350.8 thousand tenge, financing is done at own
expense.Launch of Situation Centre will reduce the number of errors and irregularities in the process
of maintenance and service, as well as will model the consequences of management decisions using
information and analytical systems;
• business transformation program: 169,258.9 thousand tenge, financing is done at own expense.
Capital investments in production facilities
Capital investments for the maintenance of productive assets totaling 1583 407.2 thous. tenge
including VAT, of which 1,315,572 thousand tenge at own expense, 267 835.2 thousand tenge borrowed funds:
Capital investments
in facilities (th. KZT)
Name
Buildings and Structures
Vehicles:
Machinery and equipment:
Other fixed assets
Intangible assets
Internal funds
Borrowed
funds
Total
195 121.5
195 121.5
504 438.2 267 835.2 772 273.4
549 691.3
549 691.3
28 225.6
28 225.6
38 095.4
38 095.4
6.12. Procurement and interaction with the procurements and contractors
Procurement of goods, works and services in "Kazpost" JSC is regulated by the Rules of
procurement of goods, works and services of "Samruk-Kazyna" JSC and organizations, more than
fifty percent of the voting shares (participation) of which are directly or indirectly owned by "SamrukKazyna" JSC on the right of ownership or trust management, approved by the Board of Directors of
"Samruk-Kazyna" JSC and Procedure for procurement of goods, works and services of "Kazpost"
JSC, which provides certain benefits and preferences for domestic producers, entrepreneurs-suppliers.
The share of local content in the procurement of the Company under the contracts for 2014 was
63%.
During the reporting period the risks and rights violations for suppliers to exercise freedom of
association and collective bargaining are not registered.
Interaction with suppliers and contractors is governed by procurement rules. In order to detail
the internal procurement procedures and determine the responsibility between structural units in terms
of procurement and delivery of goods (works, services) there is a procedure for the procurement of
goods, works and services in "Kazpost" JSC.
Also, the Company has developed the Model Agreement on the procurement of goods, works
and services, providing for rights and obligations of the Customer and the Supplier.
6.13. Tariff policy
Tariff policy depends on the type of market in which the Company's services are: natural
monopoly, monopolistic competition and free competition.
In accordance with the RK Law "On natural monopolies and regulated markets" the tariffs for
Company services that are rendered on the market are:
1) natural monopoly - approved by the competent authority;
2) monopolistic competition - agreed with the competent authority.
6.13.1. Natural monopoly market
In accordance with the Law of RK "On natural monopolies and regulated markets" of "Kazpost"
JSC (hereinafter - the Company) the State Register of natural monopolies on the provision of universal
postal services, which consist in mail services operator on the delivery of ordinary letters, postcards
and parcels of users collected from mailboxes and (or) taken in the operating windows.
Tariffs for universal postal services, shall be approved by the competent authority of the
Committee of communication, informatization and information of the Ministry for Investment and
Development of Kazakhstan (hereinafter - the Committee).
In the first half of 2014 the Company presented a report on implementation of the tariff estimate
for 2013, as a result of its expertise, since the July 1, 2014 the temporary cancellation of compensatory
tariff for the service of sending a simple letter within the Republic of Kazakhstan in the amount of 58
tenge.
From 1 July 2014 there are the following rates for the service:
Services tariffs, tenge
Until 1
Jan
2014
January
1. 2014.
Name of service
Sending of a simple postcard up to 10g.
Sending a simple letter up to 20g.
for subsequent complete/incomplete 20g. weight
Sending of a simple wrapper up to 50g.
for each subsequent complete and incomplete 50g. of
simple wrapper
From
1 July
2014.
Reduction
in tariffs
tenge
%
35
58
10.
60
35
60
10.
60
0
2
0
0
0
3%
0
0
10.
10.
0
0
On December 22, 2014 the Company also sent to the Committee an application for approval to
limit the level of tariffs on the universal postal service for 2015-2019, this application has been
accepted for consideration by the competent authority. On 30 January 2014. a public hearing was held
regarding the consideration of tariff increase for universal services, the results of which were the
approved Company's proposal.
According to the terms established by the legislation of the Committee it is expected to receive
an order on the approval of tariff limits for universal postal services, in May this year, with the
introduction of the approved tariffs for the universal postal service on July 01, 2015.
6.13.2. The market of monopolistic competition
In accordance with the Law "On Competition" the company is included in the State register of
market subjects with a dominant (monopolistic) position with a share of dominance of over 35% in
the geographical boundaries of the Republic of Kazakhstan in terms of provision of services: on cash
transactions in the "settlements" (towns - district town and rural settlements), tariffs for 2014 have not
changed; for the registered letters sending.
The Company unified tariffs of local, national and international periodicals, installed a new
ceiling reasonable prices for services on distribution of periodicals by subscription:
Name of
service
Air
Ground
city
village
Approved tariffs for 2014
Local. / Rep.
Local. / Rep.
un.
Newspapers
per 1
kg.
1 copy
up to
30 g
1 copy
up to
30 g
Magazines
Newspapers
Magazines
Foreign
Newspapers
and
magazines
SHIPMENT of newspapers and magazines
130.83
54.23
Delivery of newspapers and magazines
5.35
7.11
5.35
7.11
10.73
8.29
10.7
8.29
10.7
10.73
for each additional
gram of weight over
30 grams
0.11
0.11
0.11
0.16
0.11
0.16
7. SOCIAL RESPONSIBILITY AND DEVELOPMENT OF STAFF
Provision of social responsibility and transparency for the Company is a requirement in today's
world.
Rating of social stability of the Company for 2014 to assess the corporate fund "Center of social
partnership" with respect to 2013 (55%) increased by 12% and now is 67%.
The increase was due to the following factors:
• Increased confidence in the strategic management decisions and evaluation of the personnel
policy among the production staff;
• Improved perception of employees to develop innovative proposals and implement them at
work;
• Increased level of trust within the team;
• Improved perception of the Company as an employer which fulfills all commitments and
guarantees to employees.
Performance measures in the field of CSR
No
Indicator name
1.
The number of personnel
2.
3.
4.
5.
Wages fund
The average monthly salary
Training costs
Staff turnover
un.
Personnel
pers.
million tenge
th.tenge
million tenge
%
Insurance:
Compulsory insurance
th.tenge
Voluntary insurance
th.tenge
Occupational safety:
The number of accidents at work per
%
thousand people.
Ecology
The number of emissions of pollutants
th. tons
6.
7.
8.
9.
2013
2014
+/-
21956
14847
22907
17787
951
2939
88
18.3
23.
74
20.
20.
-14
1.7
-3
4 607.7
-
3982 1
-
625.6
-
0.30
0.63
+ 0.33%
0.56
0.96
+ 0.4
The average headcount for the Company increased (compared with 2013 year - 21,956
employees) by 4% (951 employees) and amounted to 22,907 employees.
Wage fund of the production staff (as compared to 2013 - 14,847 mln. tenge) increased by 20%
(2 939 million tenge) and amounted to 15.289 million tenge.
During 2014 the turnover (compared with 2013 year - 23%) for the Company decreased by 3%
and now is 20%. Decrease in this indicator is due to the improvement of material and non-material
incentives for workers, wage increases of the production staff.
Personnel reserve
In order to organize the work on the selection of candidates for executive positions of the central
administration and branches of the Company's Qualification Commission operates. During 2014 19
meetings of the Commission were held. Percentage of workers substitution from the internal reserve
(31 pers.) for key positions was 55% (17 pers).
No
1.
2.
3.
4.
5.
Appointments
To the position of director of SD CA
To the position of director of the branch
To the position of the deputy director of the
branch
to the position of chief Accountant
to the position of Deputy Chief Accountant
11
4
From the
internal
reserve
2
7
6
2
7
2
7
Total
appointments
Total
3
17
In 2013, 63% (12 out of 19 employees).
7.1. Improvement of working conditions
In 2014, 405 automated post offices, purchase of more than 2.5 thousand computer technologies,
9 model offices were upgraded, 214 branches were transferred to single-level service, in 13 offices
installation of electronic queue.
Development of new sketches of a single form, as well as bags for postmen. In 2014, postmen
bags are provided in the amount of 1,196 units., In 2015 it is planned to provide 1,240 units of bags.
Also, in 2015 it is planned to provide more than 500 units of bicycles, electrical bikes (100
units.), mopeds (100 units.).
Cancellation of the "delivery of notifications" instead - the introduction of SMS notification on
the delivery of mail. I.e. the recipient receives an SMS notification on the arrival of the postal item in
the post office. In addition, the postman are provided with Postman mobile devices and smartphones
.
In 2014, postmen received 23 cell phones. It is also planned in 2015 to provide postmen with
the cell phones in the amount of 138 units.
In 2014, the Company entered into a contract of compulsory insurance of employee against
accidents while performing his job duties with "Life Insurance Company NOMAD LIFE" JSC
(Agreement Series 41 №41050314009/261213/8/35 dated 13.03.2014).
Company employees are insured against accidents in the amount of 462.0 17 people, including:
AP - 870.0, PP - 16553, SP - 39 totaling 4,607,662 tenge.
Contracts on annuity insurance with the companies: JSC "Subsidiary of Halyk Bank of
Kazakhstan on life insurance" HALYK - LIFE:, and two contracts with "Life Insurance Company
"Kazkommerts-life" JSC.
7.2. Settlement of complaints and appeals
For the purposes of prevention, resolution of complaints and appeals, to avoid social and labor
conflicts among employees, the Company has the Commission to resolve the social and labor
conflicts.
Since the beginning of 2014 they received 41 complaints on conflicts mostly related to issues
of quality of service and labor disputes. For each complaint appropriate actions were taken.
Since April 2014 in order to ensure improvement of the social situation the Company introduced
mobile group, which carried out two field visits to examine in detail the complaints of employees of
the Company:
According to the results of visit they considered the provisions on remuneration of employees
of branches and representative offices, taking into account issues of complaints. A team of this branch
participated in explanations.
During the reporting period, the total number of complaints received by the Company, including
through online sources and Contact Center, was 288,706 (up to 15.3% by 2013.), of which: 4,662
claims (1.6% of the total number of applications, a decline of 25.7% in 2013), and 713 complaints
(0.2% of the total number of applications, an increase of 18.6% by 2013.).
7.3. Collectively-contractual relationship
Since January 1, 2014 there is a new Collective Agreement for 2014-2016, concluded the
Company with the "Communication Workers Union of Kazakhstan" NGO and ALE "Association of
Trade Unions of Informatization and Communication", which provides additional social guarantees
to workers regarding wages, material assistance labor, etc.
The agreement provides for new types of monetary compensation, social benefits of employees
of the Company. In order to ensure the indexation, the dimensions of social benefits are set with
reference to the MCI.
In order to improve the conditions new internal documents governing the regulation of labor,
forms, wage system, wage rates and salaries, allowances and bonuses to employees of the Company
were enacted.
In addition, in March 2014 between the Ministry of Transport and Communications, PO
"Communication Workers Union of Kazakhstan", the Company and the JSC "Kazakhtelecom" signed
industrial agreement, which sets out the general principles for the regulation of social and labor
relations at the sectorial level and joint action to implement them .The agreement secured social
guarantees, benefits and compensation for workers in the telecommunications industry.
7.4. Motivation
In order to further enhance the material incentives to improve the efficiency of production,
improve the quality of services, professional development, (within the approved labor costs plan),
according to the order of the Branch Director or his authorized representative the incentive bonuses
were established:
1) allowance for the honorary title to workers with the honorary title "Kurmetti Teleman" /
"Uzdik Teleman" in the amount of 10% (ten percent) of the salary;
2) the allowance for professional skill is set to administrative employees (except for designated
nomenklature) and production staff of branches in the amount of not more than 50% of salary.
Extra allowance for training specialists established for conducting training sessions on retraining
and skills upgrading and training of workers of mass professions (operator, postman, sorter, etc.)
depending on the actual teaching time per month is in the following amounts:
• Up to 10 hours - no more than 10% (ten percent) of the salary;
• up to 20 hours - no more than 15% (fifteen percent) of the salary;
• more than 20 hours - no more than 20% (twenty percent) of the salary.
The Company includes commissions for services, such as:
• money transfer services - 50 tenge per 1 transaction
• Opening of a bank card - 100 tenge
• services under the IPO program - 300 tenge;
• delivery of invoices, notices - 15 tenge
• pension delivery notifications - 15 tenge
• receipt of parcels - 30 tenge, etc.
During the reporting period the non-financial motivation was given to 114 employees
(excluding affiliates rewards from leadership).
For fruitful work, the professionalism and high achievement:
• 45 employees received letters of thanks to celebrate the Day of communication;
• 5 employees of state awards (1 - the order "Kurmet", 2 medals - "Ereng enbegi ushin", 2 letters
- from the President of Kazakhstan Nursultan Nazarbayev);
• 35 workers - honorary title "Uzdik Teleman";
• 29 employees - the diplomas of "Samruk-Kazyna" JSC.
7.5. Training
In 2014, signing if a contract for the dual system of training with the Almaty
College of Communication at the Kazakh-American University in Almaty and Almaty
College of Engineering and Telecommunications of Almaty and Aktobe College of
Communication and Electrical Engineering.
During 2014 22 training activities were held (11 corporate seminars, 10 external
training activities) in which 162 employee of the Company improved their
qualification. Corporate seminars were held on the following topics: improvement of
processes on infrastructure management of the Company; development of key
performance indicators; effective sales techniques; issues of safety, health and
environmental protection, and others. In addition, the branches held production and
technical training.
In general, the Company have tested 4826 postmen and 2408 operator.
More than half of postmen and operators gave the correct answers (from 51 to
80%).
Postmen
Operators
Less 50% of
answers
51-80% of answers
29%
56%
74%
15%
12%
81-99 % of answers
14%
In the 1st quarter of 2014 a long-term project "Institute of mentors" was launched - the main
task of which is to improve the standards of service to be adapted in accordance with the requirements
of the times and the expectations of customers. The aim of the project is to provide the Company with
internal corporate training programs, developed by experienced workers. The implementation of the
"mentoring" is carried out in all branches of the Company. Pilot implementation was commenced with
the Astana post office with the further share of experience in all branches of the Company.
7.6. Cultural events
In order to improve the corporate culture, strengthen the image of the Company and the
continuity of traditions the cultural events were held.
In Almaty, on April 12, 2014 employees of the Company took part in the action «Alma-Qala»
- «Our city will soon bloom!" as a volunteer with the project on the planting of apple trees and other
trees.
In Kostanay on April 25 MSPE "Cultural and recreational center House of Friendship" held
regional competition "Kanatty aiyel 2014", its main goal - raising the status of working women. The
event was organized by the Commission on Women's Affairs, Family and Demographic Policy under
the Akim of Kostanay region, the regional committee of the trade union government, banks and public
services.
The competition included three tasks:
1. Presentation (homework) - no more than 3 min., The presentation of abilities and talents in
the free form (reprise, dance, song, etc.), hairstyle and costume of the participant were also evaluated.
2. Blitz quiz - participants answered questions about Kazakhstan, native land, independence of
our state at a speed.
3. "Handywoman" (homework) - to present any product made with the own hands (baked goods,
crafts, floral arrangement and so forth.).
4. Competition on evening dresses.
In the regional competition of talented and successful women participated Almagul
Kaybzhanova employee of the Company, Head of Mendykara District of postal service ofiice. She
has successfully coped with the tasks, presented to the audience and the jury original program, showed
her erudition, wit, bright personality, and in a bitter struggle has won the diploma of the competition
"Kanatty auyel 2014".
Employees of the Company participated in the I Games of among workers of group of
companies of "Samruk-Kazyna" JSC dedicated to the fifth anniversary of the Fund. Competitions
were held in five sports: mini football, volleyball, asyk-atu, table tennis and chess. In the fight for the
podium was attended by over 350 employees of 19 companies of the group of "Samruk-Kazyna" JSC.
7.7. Charity and Sponsorship
In celebration of the 69th anniversary of the Victory (May 9, 2014) in the Great Patriotic War
(hereinafter - GPW) was conducted an action "Letter from the Front", as well as activities to honor
war veterans and home front workers. Food baskets, as well as material assistance were prepared.
Veterans and people with disabilities of the GPW were able to pay free for utilities and take advantage
of preferential tariffs for sending simple letters in Kazakhstan.
In the city of Astana on May 15, 2014 the event was held to honor labor dynasties with the
participation of the Chairman of the Management Board of "Samruk-Kazyna" JSC. The Company
was presented by postal dynasty of Dyusselekovs (NKR) with a total experience of 102 years.
On May 30, 2014 in Astana was conducted a national competition of the epistolary genre. The
aim of the competition - the development of a written genre among the younger generation of
Kazakhstan. Competition winners were awarded certificates and prizes. Composition of Zhayna
Baltabay was sent to the International Bureau of the Universal Postal Union (UPU) in Bern
(Switzerland) to attend the 43 th International Youth Essay Competition of epistolary genre.
In celebration of International Children's Day the recreational activities were held for active
recreation for children in Almaty: hot air ballooning, trampolining, provision of gifts, organized for
the students of specialized child care, children from low-income families.
In addition, the Company adopted from June 1, 2014 the reduced rate for corporate fund "SOS
Children's Villages of Kazakhstan" for sending simple letters to foreign countries by air at a rate of
250 tenge (for each shipment weighing less than 50 grams).
Social projects in the field of
charity and sponsorship (th. KZT)
No
Name
1
2
Total
Day of Older Persons
3.
Material assistance to persons working in the organization in accordance with
the collective agreement (former employees)
4.
4.1
4.2
4.3
5.
Collective agreement
Purchase of vouchers for spa treatment
Purchase of vouchers for children summer camp
Cultural and sporting events
Acquisition of Christmas gifts to children of employees
2013
2014
33744
5503
35616
5916
1891
3350
21000
8000
8000
5000
5350
21000
8000
8000
5000
5350
In 2014, for the sponsorship and charitable assistance the Company allocated funds amounting
to 35,616 thousand tenge, which is 5.5% higher than in 2013 (33,744 thousand tenge).
7.8. Conflict Management
The company pays close attention to the settlement of corporate conflicts and conflicts of
interest. Union representatives are actively involved in the consideration of appeals or complaints of
workers in respect of acts or omissions of employees, in consideration of conflicts, in certification
within the specially created commissions or conciliation commissions, etc.
For the purposes of prevention, resolution of complaints and appeals, to avoid social and labor
conflicts among employees of "Kazpost" JSC the permanent commission for the settlement of social
and labor conflicts was established.
Since the beginning of 2014 41 appeals on labor conflicts were received. For each appeal the
corresponding decisions were made under the laws of the Republic of Kazakhstan.
The Company has a systematic approach to strengthen corporate culture, prevent and manage
the labor conflicts, establish rules of conduct, values and staff loyalty. For this purpose there are:
 Office of the Ombudsman;
 Commission for the settlement of social and labor conflicts;
 professional societies;
 there are mobile teams in accordance with the Action Plan on Corporate Social Responsibility
in order to clarify the policy of corporate social responsibility of the Company.
Approval of the rules on the regulation of corporate conflicts and conflicts of interest of
"Kazpost" JSC that define the concept of conflict of interest, a common list of possible situations of
conflict of interest, as well as confirm the procedure of settlement. Ombudsman was Appointed whose
duties are performed by Corporate Secretary. In the Ombudsman's functions include: the organization
of work on updating the internal documents, provision of opinions, monitoring of corporate conflicts,
participation in facilitating the development of channels of communication, conflict of interests (in
terms of the distribution of powers issues) and review procedures violations of the principles enshrined
in the Code of Business Conduct.
The Policy on work with reports of potential or known actuals of fraud, abuse and other illegal
acts there is a formalized mechanism for dealing with allegations of violations of the Code of Business
Conduct and policies of the Company.
For the settlement of labor relations, human rights of workers, creation of the conditions of
social protection of workers and their families of "Kazpost" JSC the collective agreement was signed
between the NGO "Union of Communications Workers of Kazakhstan", "Association of Trade Unions
of information and communication workers" ALE.
7.9. Employment in the territory of the presence
The company provides jobs for more than 22,702 people. In the branches of "Astana Post
Office" - 824, "Almaty post office" - 1169, Aktobe RB - 958, Atyrau RB - 753, Almaty RB - 2280,
Akmola RB - 1368, EKRB - 2094, Zhambyl RB - 1174, Karaganda RB - 1805, Kyzylorda RB - 790,
Kostanay RB - 1378, Mangystau RB - 487, Pavlodar RB - 1101, NKRB - 1660, WKRB - 807, SKRB
- 1830 Branch of "Kazpost" JSC ILC "Yug" - 537, branch "RSSS" - 275 , a subsidiary of "technical
service" - 101, a subsidiary of "Postal Service" - 81, the branch "Management of Information Systems
Operation" - 95, the branch "Management of corporate sales" - 46, branch "Sorting Center" - 566, the
branch "EMS Kazpost" - 172.
Number of employees by category, pers.
Administrative personnel
Production personnel
2012
2013
2014
1101
20773
965
20984
920
21739
Supporting personnel
Total
345
51
43.
22219
22000
22702
7.10. Labor protection
By the end of 2014, the Company recorded - 10 accidents. Studying the dynamics of
occupational injuries in "Kazpost" JSC for 2014 shows that, compared with previous years, 2012 and
2013, in 2014 work the injury declined by 3 and 4 cases.
The dynamics of industrial injuries
Indicators
Dog bites
Fall (fracture, contusion)
Traffic accident
Assault
Other circumstances
Total
2012
2013
2014
4.
2
5.
2
13
1
7
2
2
2
14.
3.
3.
1
1
2
10.
The trend of occupational injuries is as follows: in the index of robbery - 1 case was recorded
that shows 1 case less than in 2013 and were absence in 2012. For a specified period in 2014 there
were 3 cases of fall (fracture, contusion) of employees of the Company, that by 4 cases less than in
2013 and 1 case more than in 2012. Also in 2014 there were 3 cases of dog bite of employees of the
Company, which in turn showed the results such as 2 cases less than in 2013 and 1 case more than in
2012. The index for other reasons have the same values in 2012, 2013 2014.
Number of work-related injuries
Indicators
The number of victims of accidents, including:
victims who received disability
victims who died
2012 2013 2014
13
1
-
14.
1
10.
1
Key performance indicators of LPM (KPI) is to determine the number of accidents at work per
1000 people.
The company has managed in recent years to minimize the number of accidents at work by 1000
people.
The indicator of the number of accidents at work per thousand pers. for 2014 was 0.44%, which
is respectively 0.19 and 0.16 per cent less than in the corresponding period of 2013 and 2012.
However, it should be noted the declining trend of the indicator at the end of 2014, as compared with
the results for 2012 and 2013.
The number of accidents at work per thousand people.
Indicators
Coefficient characterizing, the number of
accidents per 1,000 people
2012 2013 2014
0.6
0.63
0.44
In order to minimize and anticipate the accidents at work the company conducts all kinds of
briefings on health and safety. With working employees and with all the newly hired employees,
regardless of their education, work experience in the profession or position, with temporary workers,
travelers, pupils and students who arrived on job training or practice.
Pursuant to the requirements of Section 5 "Occupational health and safety" of the Labor Code
of Kazakhstan, as well as for the prevention of accidents at work in "Kazpost" JSC an order "On
measures of health and safety" was issued.
Funds under "Expenses for health and safety" item of the budget of the Company are directed
to improve working conditions and acquisition of: individual and collective protection means,
overalls, speсial food, special foot, medicine, masks, respirators, fire extinguishers: fire-prevention
measures, sanitary treatment of buildings and structures, activities for compulsory insurance of
employees (GAP) and conduct of medical examinations of workers, and more. According to the
results of 2014 for the labor protection measures 66,943,068 tenge were spent. Additional spending:
compulsory insurance of 4607662 tenge. For: uniforms in 2014 - 14,901,491 tenge.
Certification of production facilities in terms of work carried out in all branches of the Company
in accordance with the deadlines.
In accordance with the Law "On mandatory insurance of civil liability of an employer for
causing harm to life and health of employees in the performance of labor (official) duties" the
Company on an annual basis enters into a contract with a life insurance company.
"Kazpost" JSC signed a contract for employee compulsory insurance against accidents at
execution of labor (official) duties with "Life Insurance Company" NOMAD LIFE " JSC (Contract
Series 41 №41050314009/261213/8/35 dated 13.03.2014).
Company employees insured against accidents: 462.0 17 people, including: AP - 870.0, PP 16553, SP - 39 totaling 4,607,662 tenge.
Conduct of arrangements, issue of orders: "On compensation for summer footwear for postmen
of branches", the size of compensation payments amounted to 52 181 952,00 tenge per 7,044 people
and "compensation for winter shoes of postmen of branches", the size of compensation payments
amounted to 65,875 640 tenge per 7114 people.
For the purpose of internal control in the structural units of the Company, with 100%
participation of the Company's subsidiaries, in the central office and 22 branch offices of "Kazpost"
JSC a "Day of safety and labor protection" was held from 10 to 11 June 2014.In the central
administration and branches of the Company a commission was established, a schedule and program
of a 100% participation of JSC "Kazpost" JSC were approved. Composition of the Safety and health
Day Acts. Events were planned to eliminate detected violations and deficiencies with the definition
of terms for elimination and the responsible officials for the Company.
In order to improve the skills of workers of labor protection services and environmental
protection in branches they held a seminar-workshop on safety, health and environmental protection
with a hearing of reports of branches. The seminar-workshop was held in the East Kazakhstan regional
branch (in Ust-Kamenogorsk) in order to provide practical and methodological assistance to workers
of LBS of branches of the Company on the topic: "Improvement of professional knowledge and skills
of departments of labor protection and environmental protection of branches, minimization of
industrial accidents and unauthorized emissions to the environment".
Measures of corrective and preventive actions were taken in the structural units of the Company,
where the accidents occurred in the workplace. Control is being performed to compensate for damage
caused to the life and health of employees in the performance of their work duties.
8. ENVIRONMENTAL RESPONSIBILITY
Company's environmental activities are carried out in accordance with the Environmental Code
of the Republic of Kazakhstan, other normative legal acts of the Republic of Kazakhstan in the field
of environmental protection, as well as regulated by policies on the protection of health, safety and
environmental protection of the Company.
Prevention of unauthorized and excessive air emissions, continuous improvement of
management system in the field of environmental protection are the main policy directions of the
Company in the field of environmental protection.
The company is constantly working to improve governance impact on the environment.
Periodical development of measures aimed at reduction of the impact on the environment and control
of the exposure. The Company management periodically reviews the implementation of planned
activities.
The company implements a wide range of measures to prevent accidents, working to improve
the environmental responsibility, comply with the legislation of Kazakhstan, industry and corporate
standards and norms.
In 2014 we managed to reduce the amount of excess (unauthorized) emissions by 2.47 tons from
the previous comparable period. For objects that are potential sources of emissions of pollutants into
the atmosphere, standards for emissions into the environment were set. Development of an action plan
for the protection of the environment.
Subsidiaries of the Company during the year work on the execution of the Action Plan for
Environmental Protection. In particular, considerable work on sanitation, beautification of the area of
branches and post offices in the regions was made. Municipal waste and other industrial waste are
removed in a timely manner, in accordance with the contracts concluded with specialized
organizations.
Non-hazardous waste to be placed at the site, tons
2012
2013
2014
Volumes of non-hazardous waste to be
6106 6248 6157
placed at the site, tons
In order to reduce pollutant emissions from boilers operated in Atbasar, Yenbekshilder, Akkol
RPOC of Akmola RB dust filters and Cyclone of type TL 15-500 * 1UP, CN 11-600, CC-15 were
installed with a removal efficiency of 85%, 92% and 90%, respectively .
In order to ensure resource conservation, reduce the negative impact on the environment, the
Company shall take all possible measures to reduce emissions.
Emissions of pollutants, tons/year
2011
2619
2012
973
2013
963
In 2014 actual emissions are below by 30 tons, compared with 2013 year.
The structure of the relevant pollutants
by type and weight, tons
Indicators
NO 2
SO 2
Solid particles
Others
Total
2012
70
124
433
346
973
2013
2014
69
123
429
342
963
67
119
415
332
933
The company uses coal, diesel and natural gas as a fuel for heating industrial and office premises
in the autumn-winter period. To minimize the impact of the materials used the company annually
conducts the gasification heating of facilities. In Almaty, Aktobe, Kostanay and Mangystau regional
branches gasification of heating systems of 10 production facilities was held.
The company launched a project on the transfer of project vehicles to alternative fuels
This project provides transfer of vehicles on the use as a fuel an alternative fuel - gas. The project
will reduce the operating costs of vehicles and reduce the amount of harmful emissions into the
atmosphere.
In 2014, 320 vehicles were equipped with gas equipment. A reregistration of 37 units of vehicles
in the traffic police authorities.
It is planned to use renewable energy sources such as solar, wind, which will result in a
significant reduction in emissions.
In 2014 the Company has made arrangements for the transfer of the vehicle fleet on gas
equipment. At the end of the year the number of converted vehicles was 201 units.
8.1. Energy Saving
As part of the implementation of the Law "On energy saving and energy efficiency" and action
plan "Energy Saving Program and Energy Efficiency of "Kazpost" JSC for 2014-2020.", they received
an opinion on the buildings survey in 14 regional branches and 2 post offices.
Inspection of buildings was made in the period from March to November 2014, which included
the following range of activities:
• collection of baseline information on buildings, climatic parameters, systems of heat,
electricity, gas and water supply, instrument accounting for the consumption of energy and other.;
• implementation of theoretical calculations of the heat balance of buildings according to the
results of the data received;
• instrumental examinations to obtain information about the actual parameters of energy
consumption and thermal performance of buildings, thermal inspection of walling and building
systems;
• analysis of the documentary evidence and the results of the survey instrument;
• calculation of the actual performance of energy efficiency in buildings;
• identification of the main indicators of energy efficiency of buildings;
• documenting of the results of the energy audit, development of energy audit conclusions.
According to the results of the survey they assessed the effectiveness of the use of energy
resources, the causes of violations and deficiencies in their use, identified existing reserves of savings,
offered organizational and technical energy-saving measures for the implementation of the identified
potential energy savings, as well as investment-saving measures with an estimate of the expected
funding and the expected result in physical and monetary terms.
They designed limits of consumption of electric energy for regional branches. The expected
effect is of 6,525,332 kWh per year *.
As part of the overhaul and maintenance activities carried out in the field of energy conservation
and efficiency:
AB "Almaty post office":
• in post offices buildings (PO-12, 13, 14, 15, 18, 20, 28, 31, 38, 39, 40, 43, 51, 59) devices of
cold and hot water were installed in a quantity of 14 pieces. amounting to 84.00 thousand tenge;
• in post office building at 134 Bogenbai batyr str., modernization of 2 thermal centers, including
installation of equipment with an automatic control of parameters of the heating system depending on
the outdoor temperature. The total project cost was 8 729.766 thousand tenge. Projected savings of
heat is 140-150 Gcal per year;
• replacement of 2 transformers to more efficient (TMG) in the amount of 2 200,00 thousand
tenge;
• replacement of boiler of the 48 md PO "Karasu" 48 Centralnaya str, in the amount of 280.00
thousand tenge.
Atyrau Regional Branch:
• installation of energy-efficient gas-fired boilers with an efficiency of at least 95% with
automatic control in the amount of 5 units, what totaled 310.00 thousand tenge.
Aktobe regional branch:
• conduct of gasification of Bayganinsky RPOC at Karaukeldy village, 37 Barack-Batyr str., in
the amount of 1 097.6 thousand tenge. Estimated annual savings amount to 700.00 thousand tenge.
Almaty regional branch:
• in buildings of Karasai RPOC of PO Koksai 2Kozhabekov str., and Talgarsky RPOC PO
Tonkeris, .48 Centralmaya str., installation of electric power meters;
• replacement of incandescent lamps with energy-saving ones (Talgarsky RPOC - 25 pcs.,
Shelek POC - 25 pcs.) in the amount of 22.50 thousand tenge.Savings in the 3rd quarter amounted to
5.70 thousand tenge;
• replacement of boilers in the building of Sheleksky POC at Shonzha village, 69 Arziyev str.,
Costs amounted to 369.39 tenge;
• in POC Koksai, POC Tonkeris installation of electricity metering devices in the amount of 2
pcs. amounting to 8.00 thousand tenge. The savings per month was 1.20 thousand tenge;
East Kazakhstan Regional Branch:
• installation of cold water metering device in VPOC Bystrukha in the amount of 1 unit, 7.6
thousand tenge.Savings compared to an expense without meter installation was 10%;
• in the building of Ziryanovsk RPOC installation of multirate electricity meters.Savings
compared to a rate of simple electronic meter is in an average of 15%, ie 4.4 thousand tenge per month;
• installation of cold water metering device in CPOC-12of Ust-Kamenogorsk, Menovnoye
village, 11/6 . Gorkogo str., in the amount of 8.40 thousand tenge.
Zhambyl regional branch:
• in the administrative building of RPOC named after of T.Ryskulov and VPOC Nurlykent of
Zhualinsk district the installation of modern double-glazed windows with multi-chamber, 30 and 9 pc
respectively. The effect is expected in 3-4 quarters of this year.
Karaganda regional branch:
• in CPOC №29, №17, the CPOC No 17 of Karaganda installation of multirate electricity
metering devices. Expected effect is until the end of the year 1 600,00 kW or 34,00 thousand tenge;
• in CPOC in Saran, at: Saran, 11 Lenin str.,installation of energy-saving lamps in the amount
of 25 pieces amounting to 81.725 thousand tenge;
• installation of multi-chamber glazing in POC of Karaganda,6 md., 4a house, in the amount of
1 947.423 thousand tenge.
Kostanai regional branch:
• in the building Sarykol RPOC installation of windows with multi-chamber Fiberglass in the a
mount of 4 059.714.
Kyzylorda regional branch:
• in buildings of CPOC №16, of №8 Kyzyl-Orda city, the installation of electricity meters in the
amount of 9.242 thousand tenge;
• installation of energy-saving lamps in the amount of 100 pieces, in the amount of 334.99
thousand tenge;
• multi-chamber glazing of 11 pcs., in the amount of 1 170.83 thousand tenge.
Mangystau regional branch:
• gasification of VPOC Akshukur of Tupkaraganskiy ROIC and VPOC Kyzyltobe of
Munaylinsky RPOC in the amount of 3 980,00 thousand tenge
Pavlodar regional branch:
• in buildings of PRB at Pavlodar, Ak.Satpayev, 50, VPOC of Michurin, at 2A Sadovaya str,
VPOC Novochernoyarka, at 1 Mira, VPOC Krasnoarmeyka, at 60 years October str, house 15 and PO
-11 at 58 Kamzin str., installation of electricity metering devices in the amount of 6 pieces, amounting
to 97.14 thousand tenge.
North-Kazakhstan regional branch:
• in POC at Petropavlovsk, 1 Railway Station Square, incandescent bulbs were replaced by
fluorescent lamps of 14 pcs. amounting to 40,320 thousand tenge. Savings per year will be 46,500
thousand tenge; multi-chambered plastic windows were installed in the amount of 6 pieces, in the
amount of 600.00 thousand tenge;
• RPOC and VPOC installation of multirate electricity metering devices in the amount of 11
pieces. amounting to 77.00 thousand tenge.
South-Kazakhstan regional branch:
• in 8 post offices of Sairam RPOC installation of multirate electricity metering devices in the
amount of 8 pieces, in the amount of 105 thousand tenge.
Branch "Republican Special Communication Service":
- DRL lamps were replaced with energy saving ones in the amount of 18 pieces in the amount
of 340.83 thousand tenge. Expected effect is 96,00 thousand tenge per month.
As fuel for heating industrial and office premises in the autumn-winter period, the Company
uses, as noted above coal, diesel and gas. Below is the information on the volume of energy
consumption.
Electric power
Name
un.
Annual electricity consumption
The annual volume of the cost for the purchase of
electricity
Average electricity purchase tariff
mln. kWh
KZT
million
tg/ kWh
2012
2013
2014
20.067
20.383
20.635
264,673
287.491
331.288
10.3
13.5
16.055
Thermal energy
Name
Annual consumption of thermal energy
The annual volume of costs for the purchase of thermal
energy
The average purchase rate for thermal energy
un.
th.Gcal
KZT
million
tg/Gcal
2012
2013
2014
47.096
48.725
33.48
114.66
145.417
146.492
2434.58
2984.46
4375.45
Natural gas
Name
Annual consumption of natural gas
The annual volume of costs for the purchase of natural
gas
un.
2012
2013
2014
thous.cu.m.
KZT
million
781.212
1108.26
1933.36
12.89
14.868
18.499
2013
2014
Thermal coal
Name
Annual electricity consumption
The annual volume of the cost for the purchase of
electricity
Average electricity purchase tariff
un.
t.n.t.
KZT
million
tg/ t.n.t.
2012
10777
10342.2
8543
80.375
91.491
81.742
7458.01
8846.4
9568.3
Water supply of Company's facilities - centralized, some post offices use imported water.
Formed household and industrial waste water are drained into the existing sewer network or a septic
tank.
The Company's activities do not adversely impact on the flora and fauna. The company has no
facilities located on the territory of the state of national parks or nature reserves, specially protected
natural territories.
9.
ABOUT REPORT
"Kazpost" Joint Stock Company (hereinafter - the Company) presents to the reader an Annual
Report of the Company for 2014 (hereinafter - the Report).This report presents the key indicators of
the Company's activity required by best practices for corporate annual reports preparation, as well as
information about the company's sustainable development.
The content of the report is defined in accordance with the main aspect of the Company's
strategy.It describes some directions of development, includes plans and the Company's possibilities
to be implemented in the short term.
The main objective of the report - to inform stakeholders on progress, and provide information
transparency of the Company's activity.
9.1. General information
This document is the fourth annual report of the Company, which contains information about
the current status, sustainable development, corporate governance and social responsibility. Company
submits annual reports to the reader, which contain important information about the economic, social
and environmental performance.
On the questions regarding information, which is contained in this report, contact the main office
at the following address: 010000, Republic of Kazakhstan, Astana city, 8 D. Kunayev str., Department
of corporate governance; Phone: +7 (7172) 61-16-99, fax: +7 (7172) 61-16-87, e-mail:
kazpost@kazpost.kz, marketing department.
9.2. Reporting period and the report's time frame
The reporting period is the period from 1 January to 31 December 2014. Company's
performance indicators are presented in dynamics for 2012, 2013 and 2014.
Information on the results of financial and economic activities is presented in the consolidated
financial statements as of December 31, 2014, in Appendix 1 to this report, and is also published on
the corporate website: www.kazpost.kz .
The report covers the activities of the Company as a whole. Subsidiaries and affiliated
organizations do not have a significant effect on the Company's activity, and that is why the
information on their work is limited to the financial and economic indicators.
9.3. Methodology and content
The Report is based on the Guidelines for reporting in the field of sustainable development (GRI
- Global reporting initiative) of version 3.1. Calculations, collection and consolidation of economic,
social and environmental indicators were conducted in accordance with the requirements of this
Guidelines. In the calculation of quantitative data the common practice of measurement units system
was used.
The report is prepared in accordance with the level of "C" according to the GRI reporting
requirements. In the future, the Company plans to conduct an independent assurance of this report for
completeness and accuracy of the information provided and the level of compliance with GRI.
9.4. Abbreviations and acronyms
AC
UPU
SCPP
CPO
ILC





The Administrative Council (of the Universal Postal Union)
Universal Postal Union
State Center for Pension Payments
city post office
Information and Logistics Center
IS
CI
CSR
IB
IFAD
NBK
PO
RB
RSCS
RPOC
RK
BD
POC
VPOC
Fund
CA
GRI
LPI

















information system
capital investment
Corporate social responsibility
International Bureau of the Universal Postal Union
International Fund for Agricultural Development
The National Bank of the Republic of Kazakhstan
post office
Regional Branch
Republican Special Communication Service
regional post office center
the Republic of Kazakhstan
Board of Directors
The Postal Operations Council (Universal Postal Union)
village post office center
"Samruk-Kazyna" JSC
Central Administration
• Global Reporting Initiative (Reporting Guidelines for Sustainable
Development)
 large-sized postal items
10.
Appendixes
10.1. Appendix 1. Consolidated Financial Statements
10.1.1. Consolidated statement on the financial position
As of December 31, 2014
2014
th.tenge
Note
Restated
2013
th.tenge
Restated
2012
th.tenge
assets
Long-term assets
Fixed Assets
4
19,852,501
18,692,387
17,473,666
Investment Property
5
1,223,017
1,431,356
1,438,421
Intangible assets
6
679.209
544.439
631.490
Investment securities available-for-sale
10
10,172,347
10,735,358
6,926,193
Loans to employees, long-term part
Other non-current assets and costs deffered
7
721.210
579.264
689.059
534.269
166.320
285.490
33,227,548
32,626,868
26,921,580
short-term assets
Inventory Stock
8
746.572
715.166
823.935
Trade and other receivables and other current assets
9
3,660,323
3,185,591
2,181,588
Loans to employees, short-term part
Advance payment on income tax
7
49.520
137.317
51.027
182.892
38.555
159.897
Investment securities available-for-sale
10
1,421,321
483.987
1,206,548
Deposits with banks
11
1,000,000
500,000
4,016,178
Cash and cash equivalents
12
10,955,443
11,459,872
10,776,699
Total current assets
17,970,496
16,578,535
19,203,400
Total assets
Capital and liabilities
51,198,044
49,205,403
46,124,980
Capital
Share capital
13
14,067,051
12,251,855
10,167,784
Reserve capital
13
480.587
480.587
480.587
Revaluation reserve for securities available for sale
13
(886.835)
(493.880)
(609.335)
Equity attributable to equity holders of the Parent Company
(477.766)
13,183,037
(730.083)
11,508,479
(766.784)
9,272,252
Non-controlling interests
(778)
(1,683)
7,307
Total equity
13,182,259
11,506,796
9,279,559
The cumulative loss
Long-term liabilities
Deposits from customers
Loans from financial institutions
14
57.591
2,768,529
103.734
2,728,735
148.263
15
Employee benefits liabilities
Deferred tax liability
16
24
501.516
869.549
426.239
694.316
168.707
760.470
4,197,185
3,953,024
3,343,643
2,266,203
Short-term liabilities
Trade and other payables and other current liabilities
17
4,321,416
4,187,025
3,415,887
Payables to subscribers and publishers received on subscription
18
4,898,009
5,277,573
5,208,386
1,037,610
127.965
846.944
207.183
718.296
308.638
Debts on the money transfers received
Debts on the received transfer of pensions, wages and other payments
Prepaid incomes
18
1,573,538
1,651,384
1,194,664
Deposits from customers
14
15
20,762,072
760.322
20,329,997
Loans from financial institutions
20,703,262
1,106,860
Employee benefits liabilities
16
49.940
53.080
9.778
-
-
1,681,072
33,818,600
33,745,583
33,501,778
Total liabilities
38,015,785
37,698,607
36,845,421
Total equity and liabilities
51,198,044
49,205,403
46,124,980
Payables under repurchase agreements
635.060
9.1.2. Consolidated statement of profit or loss and other comprehensive income
For the year ended on December 31, 2014
Note
19.
20.
Incomes
Cost of sales
Gross profit
General and administrative costs
Financial income
Financial expenses
Allowance for trade and other receivables and other current assets
Sale expenses
21.
22.
22.
9.
2014
th.tenge
30,365,539
(26,760,180)
2013
th.tenge
27,820,372
(23,864,673)
3,605,359
(5,169,880)
1,663,423
(381.103)
(107.415)
(50.110)
3,955,699
(4,699,373)
1,103,814
(331.816)
(163.353)
(78.984)
(214.013)
(46.988)
23.183
349.958
Operating loss
Net positive (negative) exchange difference
Net gain on investment securities available-for-sale
Other non-operating income
23.
(439.726)
329.793
102.314
300.745
Profit before tax
(Expense)/savings on income tax
24.
293.126
(148.067)
112.140
52.408
Net profit for the year
145.059
164.548
Profit entitlement:
To the shareholders of the parent company
Non-controlling interests
146.006
(947)
176.060
(11,512)
145.059
164.548
(390.787)
138.638
(2,168)
(23.183)
(392.955)
115.455
Other comprehensive income
Articles that have been or may be subsequently reclassified to profit or loss:
Unrealized (loss) gain on investment securities available-for-sale
Realized gains on investment securities available-for-sale reclassified to
profit or loss
Items that are not subsequently reclassified to profit or loss:
Revaluation of pension liabilities of defined benefit plan, net of deferred
taxes
108.664
-
Other comprehensive income for the year, net of tax
(284.291)
115.455
Total comprehensive income for the year, net of tax
(139.232)
280.003
Entitlement:
To the shareholders of the parent company
Non-controlling interests
(138.285)
(947)
291.515
(11,512)
(139.232)
280.003
11.34
15.17
Basic and diluted earnings per share:
Profit for the year attributable to ordinary shareholders of the Parent
Company, in tenge
16.24
13
9.1.3. Consolidated Statement of Changes in Equity
For the year ended on December 31, 2014
th.tenge
Note
Authorized
capital
Equity attributable to owners of the parent Company
Revaluation
reserve for
securities
The
Reserve
available for
cumulative
Nontrolling
capital
sale
loss
Total
shareholders
Total
capital
January 1, 2013
10,167,784
480.587
Net profit for the year
Net change in fair value of
financial assets available for
sale
-
-
(609.335)
-
(766.784)
9,272,252
7,307
9,279,559
176.060
176.060
(11,512)
164.548
-
-
115.455
-
115.455
-
115.455
Total comprehensive income
-
-
115.455
176.060
291.515
(11,512)
280.003
Issue of shares
13
2,084,071
-
-
-
2,084,071
-
2,084,071
Dividends
13
-
-
-
(141.538)
(141.538)
-
(141.538)
Exchange difference
-
-
-
2,179
2,179
2,522
4.701
December 31, 2013
12,251,855
480.587
(730.083)
11,508,479
(1,683)
11,506,796
Net profit for the year
Net change in fair value of
financial assets available for
sale
Revaluation of pension
liabilities of defined benefit
plan, net of deferred taxes
-
-
-
146.006
146.006
(947)
145.059
-
-
(392.955)
-
(392.955)
-
(392.955)
-
-
-
108.664
108.664
-
108.664
Total comprehensive income
-
-
(392.955)
254.670
(138.285)
(947)
(139.232)
Issue of shares
13
(493.880)
1,815,196
-
-
-
1,815,196
-
1,815,196
Exchange difference
-
-
-
(2,353)
(2,353)
1,852
(501)
December 31, 2014
14,067,051
480.587
(477.766)
13,183,037
(778)
13,182,259
(886.835)
9.1.4. Consolidated Statement of Cash Flows
For the year ended December 31, 2014.
Note
Cash flows from operating activities
Profit before tax
2014
th.tenge
2013
th.tenge
293.126
112.140
Adjustments to reconcile profit before tax with net cash flows
Depreciation and impairment of fixed assets and investment property
1,802,817
1,938,747
Amortization and impairment of intangible assets
4.5
6
126.735
347.675
Net gain on disposal of fixed assets
23
(10.994)
(252.652)
Financial income
22
(1,663,423)
(1,103,814)
Financial expenses
22
381.103
331.816
Impairment charge of trade and other receivables
9
107.415
163.353
Accrual of provision for obsolete inventory
21
7,641
-
Income from reversal of provision for impairment of investment securities available for sale
Impairment of receivables for the tax paid at source
10
(100.252)
-
6.059
Employee benefit liabilities
16
228.200
342.492
Unrealized (positive) foreign exchange losses
(194.266)
108.668
Cash flows from operating activities before changes in operating capital
978.102
1,994,484
Changes in inventories
(39.047)
108.769
Change in trade and other receivables and other current assets
Changes in loans to employees
(693.132)
5,591
(1,107,356)
(776.792)
Changes in trade and other payables and other current liabilities
224.418
547.601
Changes in accounts payable to publishers for the received subscription
(379.564)
69.187
Changes in accounts payable for money transfers
128.364
128.648
Changes in accounts payable on transfers of pensions, wages and other payments
(79.218)
(101.455)
Changes in deferred income for subscription
Changes in deferred income for the delivered mail
(52.087)
(25.759)
434.366
22.354
Changes in accounts and deposits from customers
(117.949)
382.393
Changes in employee benefit obligations
(59.154)
(52.865)
Changes in bank deposits
(500,000)
3,500,000
Cash flows from operating activities
Income tax paid
Interest paid
(609.435)
(46.012)
(319.618)
5,149,334
(71.467)
(297.538)
Interest received
1,630,600
924.353
Net cash flows from operating activities
655.535
5,704,682
Cash flows from investing activities
Proceeds of fixed assets
(2,720,571)
(2,987,628)
Proceeds from intangible assets
proceeds from sales of fixed assets
(261.505)
-
(240.260)
334.372
Purchase of investment securities available for sale
(980.094)
(2,837,732)
Sale of investment securities available-for-sale
499.319
-
Net cash used in investing activities
(3,462,851)
(5,731,248)
Cash flows from financing activities
Issue of shares
1,815,196
2,084,071
Borrowing from financial institutions
971.691
1,274,000
Repayment of loans from financial institutions
(550.950)
(829.325)
Dividends paid to shareholders of the Parent Company
13
-
(141.538)
Changes in securities sold under repurchase agreements
-
(1,681,072)
Net cash flow from financing activities
2,235,937
706.136
Effect of currency exchange rate changes for cash and cash equivalents
66.950
3,603
Net change in cash and cash equivalents
(504.429)
683.173
Cash and cash equivalents as of 1 January
11,459,872
10,776,699
10,955,443
11,459,872
Cash and cash equivalents as of 31 December
13
12
9.2. Appendix 2 Notes to the Consolidated Financial Statements
GENERAL PROVISIONS
Organizational structure and activity of "Kazpost" JSC (the "Company") was formed under the laws of the Republic of
Kazakhstan in the form of a joint stock company. Company's registered office is located at: 010000, Astana city, 13 Auezov str.
As of December 31, 2014 and 2013 100% of the shares of the Company are owned by "Samruk-Kazyna" JSC.
The main activities of the company include reception, transport and delivery of ordinary and express mail and parcels, and
provision of all kinds of banking transactions. In addition, the company is an agent for the delivery of newspapers and magazines,
subscription to periodicals - newspapers and magazines. The company also acts as an agent for a number of Kazakh banks to issue and
repay loans.
The company is licensed by the Agency for Regulation and Supervision of Financial Market and Financial Institutions (the
"FSA") №14 as of 24 February 2006 to conduct banking operations in national and foreign currency deposits, opening and maintaining
bank accounts of individuals and legal entities. In addition, the company also has a license of FSA №0401200704 as of 3 February 2004
on broker and dealer activities in the securities market with the right to manage client accounts as a nominal holder, as well as AFS
license №001 as of 12 May 2006 on the transfer and agency activity.
The Company's activities is related to natural monopoly over public postal services and, accordingly, the Company is subject
to regulation of the Ministry of Transport and Communications, which approves the methodology for calculation of tariffs and tariffs
for these types of services.
As of December 31, the Company had the following subsidiaries:
Percentage of ownership
Name
Place of registration
Main activity
2014
2013
Printing and publishing
«Electronpost.kz» LLP
Republic of Kazakhstan
activity
100%
100%
Federal Republic of
Postal and logistics
«Kazpost GmbH» LLP
Germany
activities
50%
50%
The Company and its subsidiaries collectively referred to as the Group.
The consolidated financial statements for the year ended 31 December 2014 were authorized for issue by the Group
Management on March 10, 2015.
(b) The business environment in the Republic of Kazakhstan
The Group operates mainly in the territory of Kazakhstan. Consequently, the Group is exposed to the economic and financial
markets of Kazakhstan which display characteristics of an emerging market. Legal and regulatory framework and tax laws continue to
evolve, but is subject to varying interpretations and frequent changes which together with other legal and fiscal impediments contribute
to the challenges faced by entities operating in Kazakhstan. The accompanying consolidated financial statements reflect management's
assessment on the possible impact of the implementation of the financial and economic environment on the operations and financial
position. The subsequent development of conditions for the performance of the financial and economic environment may differ from
management's assessment.
Basis for the preparation of financial statements
Applicable Standards
The accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (hereinafter - "IFRS") as issued by the International Accounting Standards Board (IASB).
(b) Basis of measurement of financial performance
The consolidated financial statements have been prepared in accordance with the principle of actual costs, except for
investment securities available-for-sale stated at fair value.
(c) Functional and presentation currency for these consolidated financial statements
The functional currency of the Company and most of its subsidiaries is the Kazakhstani tenge, being the national currency of
the Republic of Kazakhstan, as it reflects the economic substance of the majority of operations and related circumstances of its activities.
Kazakhstani Tenge is also the presentation currency of these consolidated financial statements.
All consolidated financial statements are rounded to the nearest thousand tenge.
(d) Use of estimates and judgments
The preparation of consolidated financial statements in conformity with IFRS requires management to make judgments,
estimates and assumptions that affect the application of accounting policy and the value of assets and liabilities, income and expenses
represented in the consolidated financial statements. Actual results could differ from those estimates.
The estimates and underlying assumptions are reviewed on a regular basis. Adjustments accounting estimates are recognized
in the period in which the estimates are revised and in any future periods affected.
Notes listed below provide information about significant areas of uncertainty in estimates and critical judgments in application
of accounting policies:
in terms of provision for impairment of trade and other receivables and other current assets - Note 9;
in terms of impairment of financial instruments available for sale - Note 10;
in terms of the useful life of fixed assets - Note 3 (h);
in terms of employee benefit obligations - Note 16;
in terms of assessment of the fair value of financial assets and liabilities - Note 27.
(e) Changes in accounting policies and data presentation procedure
The Group has adopted the following new standards and amendments to standards, including any subsequent amendments to
other standards, with the date of the initial application of 1 January 2014.
2 BASIS OF PREPARATION OF FINANCIAL STATEMENTS, CONTINUED
(e) Changes in accounting policies and presentation of data, continued
Investment companies (Amendments to IFRS (IFRS) 10 "Consolidated Financial Statements", IFRS (IFRS) 12 "Disclosure of
information on Interests in Other Entities" and IFRS (IAS) 27 "Separate Financial Statements" (see. (i));
Offsetting of Financial Assets and Financial Liabilities (Amendments to IFRS (IAS) 32 "Financial Instruments: Presentation
of information" (see. (ii)).
Disclosure of the recoverable amount of non-financial assets - Amendments to IFRS (IAS) 36 "Impairment of Assets" (see.
(iii))
The nature and effects of these changes are shown below.
(I) Investment companies
These amendments provide an exception to the requirement for consolidation for companies which satisfy the definition of
an investment company in accordance with IFRS (IFRS) 10. According to the exclusion of the requirements for the consolidation the
investment companies should take into account the subsidiaries at fair value and changes therein are recognized in profit or loss for the
period.
(ii) Financial assets and financial liabilities
Amendments to IFRS (IAS) 32 "Financial Instruments: Information provision" - "Offsetting of Financial Assets and Financial
Liabilities" do not introduce new rules for offsetting of financial assets and liabilities and contain an explanation of the offsetting criteria
to address inconsistencies in their application. The amendments clarify that the company currently has a legally enforceable right of
offset, if this right does not depend on future events, and is valid in the course of business, and in the event of failure (default), insolvency
or bankruptcy of the company and all of its counterparties.
The Group believes that this amendment will not have a material impact on the consolidated financial statements as the Group
does not present financial assets and financial liabilities on a net basis in the consolidated statement on the financial position.
(iii) Information Disclosure on the recoverable amount of non-financial assets
This amendment removes the requirement on the disclose of information about the recoverable amount if the unit generating
cash flows includes goodwill or intangible assets with indefinite useful lives, and herewith the impairment is absent.
3 SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently by the Group to all reporting periods presented in these
consolidated financial statements, except as described in Note 2 (e), which addresses changes in accounting policies.
(a) Basis of consolidation
(i) Business combination transaction
Business combination transactions are accounted for using the purchase method at the acquisition date, which is the date when
control is transferred to the Group.
The Group tests goodwill at the acquisition date as follows:
the fair value of the recovery transferred; plus
the amount of recognized non-controlling interest share in the acquiree; plus
fair value of the existing equity interest in the acquired entity, if the business combination is achieved in stages; minus
the net amount of recognized amounts (generally it is fair value) of the identifiable assets acquired less liabilities assumed.
If this difference is negative, then the profit or loss is recognized immediately as a profit from bargain purchase.
The recovery transferred does not include amounts relating to the settlement of pre-existing relationships. Such amounts are
generally recognized in profit or loss for the period.
Costs incurred by the Group as a result of the business combination transaction, other than the costs associated with the
issuance of debt or equity securities are attributed to expenses as incurred.
Any contingent consideration is recognized at fair value at the acquisition date. If the contingent consideration is classified as
equity, it is not remeasured and settlement is accounted for within equity. Otherwise, changes in the fair value of the contingent
consideration are recognized in profit or loss for the period.
(ii) Non-controlling interests
Non-controlling interest is estimated as the proportionate share of the identifiable net assets of the acquiree at the acquisition
date.
Changes in the Group's interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(a) Basis of consolidation, continued
(iii) Subsidiaries
Subsidiaries are entities controlled by the Group. The Group controls the subsidiary, when the Group is exposed to risks
associated with variable income from participation in investee or has the right to receive such income, and is able to use its powers in
respect of the enterprise for the purpose of influencing to the amount of that income. The financial statements of subsidiaries are included
in the consolidated financial statements from the date control is obtained until the date of termination. Accounting policies of
subsidiaries have been changed where necessary to align in accordance with the accounting policies adopted by the Group. Losses
attributable to non-controlling interest in a subsidiary are allocated to non-controlling interests in full even if it leads to a debit balance
("deficit") on this account.
(iv) Acquisition of businesses from companies under common control
Business combinations arising from transfers of interests in entities that are under the control of the shareholder that controls
the Group are accounted for as if the acquisition transaction had occurred at the beginning of the earliest comparative period, or on the
date of establishment of common control, if the latest came later; for this purpose comparatives are restated. The acquired assets and
liabilities are stated at the carrying amounts, recognized in the consolidated financial statements of the controlling shareholder of the
Group. The components of equity of the acquired entities are added to the corresponding components of the Group's capital with the
exception of the authorized capital of the acquired entities which is recognized as part of additional capital. Any cash paid for the
acquisition is recognized directly in equity.
(V) Loss of control
With the loss of control over a subsidiary, the Group derecognises its assets and liabilities, as well as the related noncontrolling interests and the other components of equity. Any surplus or deficit arising as a result of loss of control is recognized in
profit or loss for the period. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at
the date of loss of control. Subsequently, the share accounted for as investment in an associate (using the equity method) or as financial
assets available for sale, depending on the extent to which the Group continues to affect to the company said.
(vi) Participation in investees accounted for using the equity method
The Group's participation in investees accounted by the equity method, includes participation in associates and joint ventures.
Associates are those entities, over the financial and operating policies of which the Group has significant influence. And the
Group does not have control or joint control over the financial and operating policies of these companies. If the group has between 20
and 50 percent of the voting rights in the company, the existence of a significant impact is expected. Joint ventures are objects over
which the Group has joint control, where the Group has rights to the net assets of these objects. The Group has no rights to the assets
of joint ventures and is not responsible for their obligations.
Shares in associates and joint ventures are accounted for using the equity method and are initially recorded at cost. The cost
price of the investment includes transaction costs.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(a) Basis of consolidation, continued
(vi) Participation in investees accounted for using the equity method, continued
In the consolidated financial statements, the Group recognizes its share in the profit or loss and in other comprehensive income
of investees accounted for using the equity method. This share is calculated taking into account adjustments to bring the accounting
policies of a particular object in accordance with the accounting policies of the Group, from the date of significant influence or joint
control commencement until the date of cessation of significant influence or joint control.
When the Group's share of losses of an investee are accounted using the equity method, exceeds its interest in the object, the
carrying amount of that interest (including any long-term investments) is reduced to zero and further losses are not recognized unless
the Group has obligation to compensate the losses of the investee, or made payments on its behalf.
(vii) Transactions eliminated (eliminable) when consolidation
Intra-group balances and transactions, and any unrealized gains and losses on intra-group transactions are eliminated.
Unrealised gains arising from transactions with investments accounted for using the equity method are eliminated by reducing the cost
of the investment to the extent of the Group's interest in the corresponding investee. Unrealised losses are eliminated in the same way
as unrealized gains, but only to the extent while they are not evidence of impairment.
(b) Income and expense recognition
Incomes are recognized when the economic benefits of the Group is assessed as probable, and if the income can be measured
reliably, regardless of the time of payment. Revenue is measured at the fair value of the received or receivable revenue, taking into
account contractually defined terms of payment and excluding taxes or duties. The Group assesses its contracts providing for income
generation in accordance with certain criteria in order to determine if it is acting as principal or agent. The group concluded that it is
acting as principal on all such contracts, except as noted below. Income from services is recognized based on the stage of completion.
When the outcome of the contract can not be estimated reliably, revenue is recognized only to the extent of costs incurred that can be
recovered.
Services for the delivery of mail
Revenues from the delivery of simple and registered mail is recognized by reference to the stage of completion at the balance
sheet date. The stage of completion of services is estimated based on the average delivery time of mail. Shipping costs of such items
are recognized as incurred.
Fee and commission income
In cases where the Group acts as an agent and not principal, the proceeds from the transactions are recognized in the net
amount of commission made by the Group. The Group receives fee income from the various types of services it provides to its
customers. Fee and commission income includes fee and commission income for the transfer of pensions, salaries and allowances to
civil servants, the commission for handling municipal and other payments, money transfer fee, as well as fees received for the issuance
of loans on behalf of a third party, such as a second-tier banks. Fee and commission income is recognized at the end of a transaction to
which it relates.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(b) Recognition of income and expenses, continued
Income from rentals
Income from facilities provided under operating leases are accounted for on a straight-line basis over the lease term and
included in operating income due to its nature.
Sale of goods
Revenue is recognized at the time when there is strong evidence (usually in the form of an executed sales agreement) that the
significant risks and rewards of ownership have been transferred to the buyer, receipt of appropriate compensation is likely, costs and
possible return of goods can be estimated reliably, participation in the management of the goods sold discontinued and the amount of
revenue can be measured reliably. Revenue is measured at the fair value transferred or expected receivable, net of the amounts of
compensation returns, trade discounts and volume of discounts.
Other expenses
When the Group's contributions to social programs are for the benefit of the Company as a whole, and not restricted to the
Group's employees, they are recognized in profit or loss as incurred.
(c) Financial income and expenses
Financial income and expenses of the Group include:
interest income;
interest expense;
dividend income;
the net amount of profit or loss on disposal of financial assets available for sale;
the net amount of profit or loss from revaluation of financial assets and liabilities denominated in foreign currency;
loss on changes in fair value of contingent consideration classified as a financial liability;
reclassification of net profit margins, previously recognized in other comprehensive income.
Interest income and expenses are recognized by the effective interest rate. Dividend income is recognized in profit or loss on
the date when the Group gets the right to receive payment.
(d) Deferred revenue on subscription
Deferred revenue on a subscription are the sum of money that the Group has collected at the end of the year for the service of
delivery of periodicals to be provided in the next year.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(e) Foreign currency
Transactions in foreign currencies
Transactions in foreign currencies are transferred to the respective functional currencies of Group entities at exchange rates
at the dates of the transactions.
Monetary assets and liabilities denominated in foreign currencies at the reporting date are retransferred to the functional
currency at the exchange rate existing at that date. Positive or negative exchange differences on monetary items is the difference between
amortized cost in the functional currency at the beginning of the period, adjusted for interest accrued at the effective interest rate and
payments during the period, and the amortized cost in foreign currency transferred 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 retransferred to the
functional currency at the exchange rate prevailing at the date the fair value was determined. Non-monetary items that are measured on
the basis of actual cost in a foreign currency are recalculated using the exchange rate at the date of the transaction.
Foreign currency differences arising from recalculation are recognized in profit or loss for the period except for differences
arising from the conversion of equity instruments classified as financial assets available-for-sale and are recognized in other
comprehensive income.
In preparing these consolidated financial statements tenge exchange rate to the following currencies was used:
December 31, 2014 December 31, 2013
ADF
264.17
237.36
USD
182.35
153.61
EUR
221.97
211.17
Pound Sterling
283.34
253.29
Russian Ruble
3.17
4.69
Foreign operations
Assets and liabilities of foreign operations, including goodwill and amount to fair value adjustments arising on acquisition,
are recalculated into the presentation currency at the exchange rates at the balance sheet date. Income and expenses of foreign entities
are recalculated into the presentation currency at the exchange rates at the dates of the transactions.
Exchange differences are recognized in other comprehensive income and are recognized as part of equity in the provision of
accumulated exchange differences in conversion of other currencies. However, if the foreign operation is not a 100 percent subsidiary
of the Group, a part of these exchange differences are in proper proportion to the non-controlling interest.
On disposal of a foreign operation, in which the Group loses control, significant influence or joint control, the amount deferred
in accumulated reserve in exchange differences on conversion of other currencies, is reclassified to profit or loss as part of the gain or
loss on disposal of the foreign units.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(e) Foreign currency, continued
(ii) Foreign departments
In the case when the Group disposes only part of its investment in a subsidiary that includes a foreign operation while retaining
control over it, a part of the reserve of accumulated exchange differences on conversion of foreign currency is redistributed to noncontrolling interest in the proper proportion. When the Group disposes of only part of its investment in an associate or joint venture that
includes a foreign department, and at the same time retains significant influence or joint control, the corresponding proportional part of
the reserve of accumulated exchange differences is reclassified to profit or loss for the period.
In the event when the Group does not expect and does not intend in the near future to carry out calculations on a monetary
item receivable from or payable to a foreign department, the positive and negative exchange differences arising in respect of such
articles form part of the net investment in a foreign department; and are recognized in other comprehensive income and presented as
part of equity in the provision of accumulated exchange differences on conversion of other currencies.
(f) Resources
Inventories are stated at the lower values: cost or net sale value. The cost of inventories is determined based on FIFO ("firstin - first-out") and includes expenditure incurred in acquisition of inventories, production costs or processing and other costs incurred
in bringing the inventories to their present location and bring them to the appropriate state. Applied to own production inventories and
work in progress, cost includes an appropriate share of production overheads based on normal operating capacity.
The net sale price is the estimated (calculated) selling price in the ordinary course of business, less the estimated costs of
completion and stocks to sell them.
(i) Assets held for sale or distribution
Non-current assets or disposal groups comprising assets and liabilities that are expected to be recovered primarily through
sale or distribution to owners, rather than through continuing use are classified as assets held for sale or distribution to owners.
These assets or disposal groups are measured, usually at the lower of the two values - the carrying amount of the asset (s) and
its fair value less sale costs. Any impairment loss on a disposal group is first related to reduction of goodwill and then to the rest of its
assets and liabilities in proportion, except for inventories, financial assets, deferred tax assets or assets under employee benefit plans,
investment property, which continue to be measured in accordance with the relevant provisions of Group's accounting policies.
Impairment losses when the initial classification of assets and disposal groups held for sale or distribution in favor of owners, as well
as gains or losses resulting from their subsequent measurement are recognized in the profit or loss for the period. The value, which
recognizes these profits do not exceed the total amount of the impairment loss.
Intangible assets and fixed assets are not amortized since the classification as assets held for sale or distribution in favor of
owners. In addition, investments accounted for using the equity method, cease be reported using this method since their classification
as assets held for sale or distribution in favor of owners.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(h) Basic means
Recognition and Measurement
Property, plant and equipment are stated at cost less accumulated amortization and accumulated impairment losses.
In Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of assets constructed (built)
on their own includes the cost of materials, direct labor costs, all other costs directly attributable to bringing the asset to working
condition for its intended use, the costs of dismantling and removing the items and restoring the site, and capitalized borrowing costs.
Software purchase costs that is integral to the functionality of the related equipment is capitalized as part of that equipment cost.
If significant components that make up a fixed asset have different useful lives, they are accounted for as separate items (major
components) of property and equipment.
Any gain or loss on disposal of property, plant and equipment is determined by comparing the proceeds from disposal with
the carrying amount and is recognized net within "other income" or "other expenses" in profit or loss for the period.
Subsequent costs
Costs associated with the replacement of an item of fixed assets increase carrying amount of the item if it is probable that the
Group will obtain future economic benefits associated with the specified component, and its cost can be measured reliably. The carrying
amount of the replaced part is derecognised. The cost of routine maintenance of property, plant and equipment are recognized in profit
or loss as incurred. The fixed assets include special spare parts and accessories with a significant initial value and useful life of more
than one (1) year. Other spare parts and accessories are recognized in inventories and are expensed at the time of transfer to the service.
Depreciation
Fixed assets are amortized from the date on which they are installed and ready to use, and as for fixed assets that were built
by own means - from the moment of completion of the facility and it readiness for use. Depreciation is calculated based on the cost of
the asset less its estimated residual value.
As a rule, each component of property, plant and equipment is depreciated on a straight-line basis over the estimated useful
lives, since this most closely reflects the expected pattern of consumption of future economic benefits embodied in the asset and
depreciation are included in profit or loss for the period.Leased assets are depreciated during the shortest period: the lease term and the
useful life of the assets, except for the cases when the Group has reasonable assurance that it will obtain ownership by the assets at the
end of the lease term. Land is not depreciated.
Estimated useful lives for the current and comparative periods are as follows:
Buildings and structures 5-60 years
Machinery and equipment 2-15 years
Vehicles 3-28 years
Other fixed assets 2-15 years.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(h) Property and equipment, continued
Depreciation, Continued
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if necessary.
(I) Intangible assets
Research and development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and
understanding, is recognized in profit or loss as incurred.
Development activities include the planning or design of the production of new or substantially improved products and
processes. Development costs are capitalized only if they can be estimated reliably, production or process is technically and
commercially feasible, the future economic benefits are probable and the Group intends to complete the development and to use or sell
the asset and has sufficient resources for this . The expenditure capitalized includes the cost of materials, direct labor costs and overhead
costs that are directly attributable to preparation of assets to its intended use, and capitalized borrowing costs.Other development
expenditure is recognized in profit or loss as incurred.
After initial recognition, capitalized development costs are stated at cost less accumulated depreciation and any accumulated
impairment losses.
Client base
The customer base of the Group was acquired in a business combination. At initial recognition, the asset was valued at fair
value at the date of its acquisition.
Other intangible assets
Other intangible assets are represented mainly by software, are stated at cost less accumulated depreciation and impairment
losses.
Subsequent costs
Subsequent cost is capitalized in the value of a particular asset only when it increases the future economic benefits embodied
in the asset. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as
incurred.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(I) Intangible assets, continued
Depreciation
Depreciation is calculated on the basis of the cost of the asset less its estimated residual value.
As per intangible assets, other than goodwill, depreciation is usually commenced from the date of readiness of these assets to
be used and recognized in profit or loss on a straight-line basis over the estimated useful lives, since this most closely reflects the
expected character of consumption of future economic benefits from these assets by the Company. The estimated useful lives for the
current and comparative periods are as follows:
Customer base 5 years
Other intangible assets 5-10 years.
At the end of each financial year depreciation methods, useful lives and residual values are reviewed for the need for their
review and, if necessary, they are revised.
(j) Investment property
Investment property is property held to generate profits from the rental and / or increase its market value, but not for sale in
the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment
properties are accounted for in accordance with the model at cost. Investment property is measured at cost less accumulated depreciation
and impairment losses. Depreciation is calculated on a straight-line basis over the term of service which is 10-60 years, and is recognized
in the income and loss statement. Plots of land and construction in progress are not depreciated.
If the nature of the use of a property changes and it is reclassified as fixed assets, the carrying value at the date of
reclassification becomes its cost for this property for the purposes of subsequent reflection in the consolidated financial statements.
(k) Rent
Determination of availability in the agreement of the element of rent
At the inception of the relationship by agreement, the Group determines whether the agreement as a whole lease or contains
a lease element. This occurs if the execution of the agreement depends on the use of a specific asset and the agreement conveys the
right to use the asset.
At the inception of the relationship or reassessment of the arrangement the Group separates payments and interest on those
relating to the lease and those that are related to other elements of the agreement, in proportion to their fair value. If, in the case of a
finance lease, the Group concludes that a significant separation payments is impracticable, the asset and liability are recognized at an
amount equal to the fair value of the contractual asset. Subsequently, the liability is reduced as payments are made and an imputed
finance charge is admitted, which is calculated based on the rate of borrowings used by the Group.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(k) Rent, continued
(ii) Leased assets
If the Group retains the assets under lease agreements, under which the Group assumes substantially all the risks and rewards
of ownership in respect of these assets, such contracts 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 (discounted) value of the minimum lease payments.
Subsequently, the asset is accounted for in accordance with the accounting policy applicable to that asset.
Other leases are classified as operating leases and the leased assets are not recognized in the statement of financial position.
(iii) Lease payments
Payments made under operating leases are recognized in profit or loss on a straight-line basis over the lease term. Amount of
the received incentives is recognized as an integral part of the total lease expense over the lease term.
Minimum lease payments made under finance leases are distributed between finance charges and reduction of the outstanding
liability. Financial expenses shall be allocated to each period during the lease term so that the periodic rate of interest on the remaining
balance of the liability remains constant.
(l) Financial Instruments
The Group classifies non-derivative financial assets into the following categories: financial assets at fair value and changes
therein are recognized in profit or loss, financial assets held to maturity, loans and receivables and financial assets available for sale.
The Group classifies non-derivative financial liabilities as other financial liabilities.
Non-derivative financial assets and liabilities - recognition and derecognition
The Group initially recognizes loans and receivables as well as debt securities issued on the date of their occurrence/issuance.
Initial recognition of all other financial assets and liabilities on the date of the transaction, in which the Group becomes party to the
contractual provisions of the instrument.
Group derecognizes a financial asset at the time of the expiration of the contractual rights to the cash flows from the asset, or
when the Group transfers the rights to receive the contractual cash flows on the financial asset as a result of a transaction in which the
other party receives substantially all the risks and rewards of ownership of these financial assets. Any involvement in transferred
financial assets that is created or retained by the Group is recognized as a separate asset or liability.
Group derecognizes a financial liability at the moment when executed or canceled its contractual obligations or their maturity
date expires. Financial assets and liabilities offset and presented in the statement of financial position on a net basis only when the
Group currently has legal protection of the right to carry out offset of the recognized amounts and intends either to settle on a net basis,
or to realize the asset and settle theliability simultaneously.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(l) Financial instruments, continued
Non-derivative financial assets and liabilities - the recognition and derecognition, continued
The Group currently has legal protection of the right to carry out a set-off, if this right is not due to an event in the future and
is legally enforceable in the normal course of operations and in the event of default, insolvency or bankruptcy of the Group or any of
the counterparties.
Loans and receivables
The category of loans and receivables includes non-quoted in an active market financial assets with fixed or determinable
payments. Such assets are recognized initially at fair value plus any directly attributable transaction costs. After initial recognition, loans
and receivables are measured at amortized cost, which is calculated using the effective interest method, less any impairment losses.
In the category of loans and receivables included financial assets of the following classes: loans to employees (see. Note 7),
trade and other receivables (see. Note 9), bank deposits (see. Note 11) and cash and cash equivalents (see . Note 12).
Cash and cash equivalents
Cash and cash equivalents comprise cash balances, call deposits and highly liquid investments with maturities of three months
or less than from the date of purchase, and are subject to insignificant risk of changes in their fair value.
Bank overdrafts that are repayable on demand and used by the Group as part of an integrated system of cash management are
included in cash and cash equivalents in the statement of cash flows.
Financial assets available for sale
Financial assets available for sale are non-derivative financial assets that have been identified in the specified category or not
classified in any of the above categories of financial assets. Upon initial recognition, such assets are measured at fair value plus any
directly attributable transaction costs. After initial recognition, they are measured at fair value and changes therein are other than
impairment losses and foreign exchange gains on debt instruments classified as available for sale are recognized in other comprehensive
income and presented within equity in the provision for changes in fair value. At the time the investment is derecognised the amount
accumulated in gain or loss is reclassified to profit or loss for the period. Unquoted equity instruments the fair value of which can not
be reliably determined, are carried at cost.
Assets classified as available for sale, includes equity and debt securities.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(l) Financial instruments, continued
Non-derivative financial liabilities - Assessment
The Group classifies non-derivative financial liabilities as other financial liabilities. Such financial liabilities are recognized
initially at fair value less directly attributable transaction costs. After initial recognition, these financial liabilities are measured at
amortized cost using the effective interest method.
Other financial liabilities include accounts and deposits from customers, borrowed funds of other financial institutions, trade
and other payables, payables for remittances payable on pensions, wages and other payments, and securities sold under "repo"
agreements.
"Repo" and "Reverse repo" transactions
Securities sold under sale and repurchase agreement (hereinafter - the "repos" transaction) are accounted for as secured
financing transactions, secured by the pledge of securities, with the securities retained in the consolidated statement of financial position
and the liability to counterparties are included in current liabilities as securities sold under sale and repurchase agreement. The difference
between the sale and repurchase price represents interest expense and is recognized in profit or loss over the term of the "repos"
transaction using the effective interest method.
Securities purchased under agreements on the procurement or sale with the repurchase obligation (hereinafter - the transaction
of "reverse repos") are recorded as a transaction of "reverse repos" with the term of up to 90 days in cash and cash equivalents.The
difference between the purchase price and sale price represents interest income and is recognized in profit or loss over the term of the
transaction of "repos" using the effective interest method.
If the assets acquired under repurchase agreements are sold to third parties, the obligation to return securities is recorded as a
liability held for trading and measured at fair value.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(l) Financial instruments, continued
Depreciated cost
The depreciated cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial
recognition, minus principal repayments, plus or minus the cumulative depreciation of the difference between the initially recognized
amount and the maturity determined using the method the effective interest rate, and less any impairment loss. Premiums and discounts
amount, including initial transaction costs are included in the carrying amount of the related instrument and amortized based on the
effective interest rate of the instrument.
Financial assets or liabilities/issued at rates different from market rates are re-measured at the moment of receipt/issue at fair
value, being future interest payments and principal repayment (principal amount) of debt, discounted at market interest rates for similar
instruments . The resulting difference is recognized in profit or loss as gains or losses from the receipt/issue of financial instruments at
rates different from market ones. Subsequently, the carrying amount of such assets or liabilities is adjusted for amortization of the
gains/losses on the receipt/issue, and the related income/expense is recorded in interest income/expense in profit or loss using the
effective interest method.
The principle of fair value measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in a normal transaction between
market participants at the measurement date on the main market or, in its absence, the most advantageous market to which the Group
has access at that date. The fair value of the liability reflects the risk of non-compliance.
As far as possible, the Group estimates the fair value of an instrument using quoted prices of the instrument in an active
market. The market is regarded as active if the operation on asset or liability occur with sufficient frequency and in sufficient quantities
to determine the quotes on a regular basis.
In the absence of current prices in an active market the Group uses valuation techniques that make maximum use of observable
input data and minimal use of unobservable inputs. The chosen valuation technique incorporates all actuators that market participants
would consider in the circumstances.
The best evidence of the fair value of a financial instrument on initial recognition is normally the transaction price, ie the fair
value of consideration paid or received. If the Group determines that the fair value at initial recognition differs from the transaction
price and the fair value is not supported by the current quoted market prices for similar assets or liabilities and is not based on valuation
techniques using only the observed raw data, financial instruments are initially measured at fair value adjusted to defer the difference
between the fair value at initial recognition and the transaction price. After initial recognition, the difference is recognized in profit or
loss as appropriate throughout the life of the tool, but not later than the time when the assessment is fully supported by observable input
data or when the operation is completed.
If the asset or liability at fair value have a demand and supply price, assets and long positions are measured at a bid price,
liabilities and short positions are measured at an asking price.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(l) Financial instruments, continued
Offsetting of assets and liabilities
Financial assets and liabilities offset and are stated in the consolidated statement on the financial position on a net basis in the
event of the existence of legal protection of the right and the intention of the parties to settle the debt on the offset basis or to realize the
asset and settle the liability simultaneously; and this right is legally enforceable in the normal course of operations and in the event of
default, insolvency or bankruptcy of the Group or any of the counterparties.
(m) Impairment
Non-derivative financial assets
As at each balance sheet date the financial asset, not categorized as financial instruments at fair value and changes therein are
recognized in profit or loss, including interest in the investee accounted for by the equity method, is tested for the presence of objective
evidence of impairment . A financial asset is impaired if objective evidence indicates that after the initial recognition of an asset the
event occurred, which resulted in a loss and that the loss event had a negative effect on the estimated future cash flows of the financial
asset that can be estimated reliably.
Objective evidence of impairment that financial assets (including equity securities) may include:
default or delinquency by a debtor;
restructuring of debt due before the Group on terms that otherwise would not be considered by the Group;
signs of the future bankruptcy of the debtor or issuer;
adverse changes in the payment status of borrowers or issuers in the Group;
economic conditions that correlate with defaults;
the disappearance of an active market for a security, or
observable data indicating a measurable decrease in the estimated future cash flows from a group of financial assets.
In addition, objective evidence of impairment of investments in equity securities is a significant or continuing decline in its
fair value below its cost.
Financial assets measured at amortized cost
Features that confirm those assets are impaired, the Group considers both at the level of individual assets and, together, at the
level of groups of assets. All assets that are individually significant are collectively assessed for impairment on an individual basis.
Those assets for which no impairment was found at the level of an individual asset, are jointly assessed for impairment that has been
incurred but has not yet been identified. Individually insignificant assets are assessed for impairment together by combining assets with
similar risk characteristics.
In assessing impairment at the level of groups of assets the Group uses historical trends of the probability of loss, recovery of
time and the amount of loss incurred, adjusted for management's judgment about whether current economic and credit conditions are
such that the actual losses may be more or less than expected based on historical trends of losses.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(m) Impairment, continued
(I) Non-derivative financial assets, continued
Financial assets carried at amortized cost, continued
An impairment loss is calculated as the difference between the asset carrying amount and the present value of expected future
cash flows, discounted at the original effective interest rate of the asset. Losses are recognized in profit or loss and reflected in an
allowance account. If the Group believes that the prospects for recovery of the asset are not realistic, appropriate amounts are written
off. Interest on the impaired asset continues to be recognized through the "unwinding of the discount." In the event of any subsequent
event causes a decrease in the magnitude of the impairment loss and the decrease can be related objectively to an event occurred after
the impairment was recognized, the recovered amounts which were previously allocated to an impairment loss, are recognized in profit
or loss for the period.
Financial assets available for sale
Impairment losses on financial assets classified as available-for-sale are recognized by the reclassification to profit or loss in
the period of incurred losses accumulated in the fair value reserve in equity. The amount of accumulated impairment losses excluded
from equity and recognized in profit or loss is the difference between the cost of acquisition of the asset (net of any principal repayment
and amortization) and current fair value, less any impairment loss on that financial asset previously recognized in profit or loss. Changes
arising from impairment provisions in connection with the use of the effective interest method are recognized as a component of interest
income. If subsequently the fair value of an impaired debt securities classified as available-for-sale increases and the increase can be
objectively related to an event occurring after the impairment loss was recognized in profit or loss for the period, the impairment loss
is reversed, with the amount of the reversal recognized in profit or loss for the period. However, any subsequent recovery in the fair
value of an impaired equity securities classified as available-for-sale is recognized in other comprehensive income.
Objects of investments accounted for using the equity method
Impairment in respect of investments accounted for using the equity method are estimated by comparing the recoverable
amount of the investment and its carrying value. An impairment loss is recognized in profit or loss and reversed in the event of a
favorable change in the estimates used to determine the recoverable amount.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(m) Impairment, continued
Non-financial assets
The carrying value of the Group's non-financial assets, other than investment property, inventories and deferred tax assets are
reviewed at each reporting date to determine whether there is an indication of impairment or not. If any such indication exists, the
recoverable amount of the asset is calculated. In respect of goodwill and intangible assets that have indefinite lives or that are not yet
ready for use, the recoverable amount is estimated each year at the same time.
For the purpose of impairment testing, assets that can not be tested individually are grouped together into the smallest group
that generates cash inflows from continuing use of the related assets, largely independent of those from other assets or CGU. Subject to
the limitations as to what level of testing can not be above the level of the operating segments for the purpose of impairment testing of
goodwill those CGU to which goodwill has been allocated are aggregated so that the impairment test is carried out at the lowest level,
on which the goodwill is monitored for internal reporting purposes. Goodwill acquired in the transaction of business combination is
allocated to groups of CGU that are expected to benefit from the synergies of this combination.
Group's corporate assets do not generate separate cash flows and they are used by more than one CGU. Corporate assets are
allocated between the CGU on a reasonable and consistent basis, and their check for impairment as part of the testing of the CGU to
which the appropriate corporate asset was allocated.
The recoverable amount of an asset or CGU is the greater of its value in use of the asset (this unit) and its fair value less sale
costs. 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 risks specific to this asset or CGU.
Impairment losses are recognized when the carrying amount of an asset or CGU to which the asset belongs, exceeds its
recoverable amount.
Impairment losses are recognized in profit or loss for the period. Impairment losses of CGU first to reduce the carrying amount
of goodwill allocated to the relevant CGU (or group of CGU) and then to reduce the carrying amount of the other assets in the CGU
(group of CGUs).
Amounts written off by the impairment loss of goodwill is not reversed. In respect of other assets each balance sheet date is
studied for the assessment of impairment losses recognized in prior periods, in order to identify indications that the loss has decreased
or no longer exists. Amounts written off for impairment losses are reversed in the event when there have been changes in the estimates
used in the calculation of the recoverable amount. An impairment loss is reversed only to the extent of the amount, which represents
the asset before their carrying amount at which they would be reflected (net of accumulated depreciation) if it had not been recognized
as an impairment loss.
(n) Provisions
A reserve is recognized if as a result of a past event, the Group has a present legal or constructive obligation resulting from
past practice, the value of which can be estimated reliably, and an outflow of economic benefits to settle the obligation is probable.
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. Amount representing the amortization of the discount is recognized as financial
cost.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(n) Employee Benefits
Short-term benefits
In determining the amount of the obligation in respect of short-term employee benefits the discounting basis is not used and
relevant expenses are recognized as the related services were provided by personnel. The amounts expected to be paid under short-term
cash bonus payments or profit-sharing liability is recognized when the Group has a present legal or due to past practice, the obligation
to pay this amount as a result of the provision of services to workers in the past, and the magnitude of this obligation can be estimated
reliably.
Defined contribution plans
Defined contribution plans is an employee benefits plan on the post-employment at the company, under which an entity pays
fixed contributions into a separate entity (or fund) and does not bear any legal or arising from past practice obligations to pay further
amounts. Obligations to the Single Accumulative Pension Fund of Kazakhstan (hereinafter, "SNPF" JSC), are recognized as employee
benefits expense in profit or loss in the periods in which the employees rendered the related service.
Defined benefit plans
Defined benefit plan is a plan for employee benefits upon termination of their employment at the company, other than a
defined contribution plan. Net obligation in respect of the Group's pension with the defined benefit plans is calculated separately for
each plan by estimating the amount of future benefit that employees have earned in the current and prior periods. Amount defined on
this basis is discounted to its present value and the fair value herewith of any plan assets is deducted. The discount rate is a market rate
of return liabilities at the end of the reporting period, government bonds that have maturity dates approximating the terms of the Group's
obligations and that are denominated in the same currency in which the payment of these fees is expected.
The calculation are performed annually by a qualified actuary, which applies the projected standard unit method. When as a
result of the calculations for the Group we obtain a potential asset the recognized asset is limited to the (discounted) value of any
economic benefits available in the form of future refunds from the plan or in the form of reductions in future contributions to the plan.
When calculating the reduced (discounted) value of the economic benefits we take into account all the requirements for minimum
funding applicable to any of the Group's plans. An economic benefit is available to the Group if the Group can implement it within the
term of the plan or when the final settlement of the plan liabilities.
Revaluation of net liabilities of defined benefit plan, including actuarial gains and losses, return on plan assets (excluding
interest) and the effect of the limit value of assets (except for interest if any) is recognized immediately in other comprehensive income.
The Group determines the amount of net interest expense (income) at a net liability (asset) plan for the period by applying the discount
rate used to estimate the liabilities of defined benefit plan at the beginning of the annual period to net liabilities (assets) plan on that
date, taking into account any kind of change in the net liabilities (assets) plan for the period as a result of contributions and benefits.
The net amount of interest and other expenses related to defined benefit plans are recognized in profit or loss.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(o) Employee benefits, continued
Defined benefit plans, continued
If you change the payments under the plan or its sequestration, the change aroused in payments of previous periods service,
or the profit or loss on curtailment recognized immediately in profit or loss. The Group recognizes a gain or loss from the calculation
of the plan liabilities when the settlement occurs.
Other long-term employee benefits
Net obligation in respect of the Group's long-term employee benefits, other than payments under the pension plans is the
amount of future benefit that employees have earned in the current and prior periods. That benefit is discounted to determine its present
value, and the fair value of any related assets is deducted. As the discount rate a market rate of return liabilities at the end of the reporting
period of government bonds is used the maturity dates of which approximating the terms of the Group's obligations and that are
denominated in the same currency in which the payment of these fees is expected. Calculations are made using the projected unit credit
method. Restatements are recognized in profit or loss in the period in which they arise.
(p) Capital
Authorized share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options
are recognized as a deduction from equity, net of any tax effects.
In the case of repurchase of own shares by the Group the amount paid, including costs directly associated with the redemption,
is recognized in the consolidated financial statements as a deduction from equity, net of any tax effects. Repurchased shares are classified
as treasury shares and are recognized in the reserve for own shares. In case of sale or subsequent reissue of treasury shares the amounts
received is recorded as an increase in equity and gain or loss emerging from this transaction is recognized as an increase in additional
paid-in capital.
The funds are recognized in equity
The funds are recognized in equity (other comprehensive income) in the consolidated statement of financial position of the
Group include the following components:
Investment revaluation reserve of available-for-sale reflects changes in the fair value of investments available-for-sale.
Reserve fund includes funds transferred from retained earnings based on the decision of the shareholders and can not be
distributed as dividends.
Dividends
Dividends are recognized as a liability and deducted from equity on the balance sheet date only if they are declared before the
balance sheet date inclusive. Dividends are disclosed in the consolidated financial statements when they are proposed before the
reporting date or proposed or declared after the balance sheet date but before the financial statements approval for issue.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(q) Income tax
Income tax expense comprises current income tax and deferred tax and is recognized in profit or loss except to the extent that
it relates to a business combination or to items recognized directly in equity or in other comprehensive income .
Current tax
Current income tax includes the amount of the tax, which is expected to be paid or reimbursed in respect of taxable income
or loss for the year and is calculated based on the tax rates enacted or substantively enacted at the balance sheet date, and any adjustment
to income tax of previous years. The calculation of liabilities for current income tax also includes any tax liability arising in connection
dividends.
Deferred tax
Deferred tax is recognized on temporary differences between the carrying amounts of assets and liabilities determined for the
purposes of their reflection in the financial statements and their tax bases. Deferred tax is not recognized for:
temporary differences arising from the initial recognition of assets or liabilities in a transaction that is not a business
combination and affect neither accounting nor taxable profit or loss;
temporary differences relating to investments in subsidiaries, associates and joint ventures, to the extent that the Group is able
to control the reversal of the temporary differences and it is probable that the temporary difference will not be reversed in the foreseeable
future; and
taxable temporary differences arising from the initial recognition of goodwill. A deferred tax asset is recognized for unused
tax losses, tax credits and deductible temporary differences to the extent of probable future taxable profit against which they can be
implemented. Deferred tax assets are reviewed at each balance sheet date and reduced to the extent th realization of the related tax
benefit is no longer probable.
Deferred tax is measured at the tax rates that will apply in the future, when the temporary differences reverse, based on the
enacted or substantively enacted laws at the balance sheet date.
The measurement of deferred tax reflects the tax consequences that follow from the manner in which the Group intends to
recover or settle the carrying amount of assets and liabilities or settle at the end of the reporting period. Deferred tax assets and liabilities
are offset in the event where there is a legally enforceable right to set off current tax assets against current tax liabilities and the assets
and liabilities relate to income taxes levied by the same taxation 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 tax assets of these companies will be realized simultaneously with
the payment of their tax liabilities.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(q) Income taxes, continued
(II) Deferred tax, continued
In accordance with the tax laws of RK Group's company cannot set off tax losses and assets for current income tax against
taxable profits and liabilities of current income tax expense of other Group's companies .In addition, the tax base is determined by each
principal activity of the Group individually. Therefore, tax losses and taxable profits related to different activities cannot be offset.
In determining the current and deferred income tax the Group accounts for the impact of uncertain tax positions and the
possibility of additional taxation and charging of penalties and interest for late payment of tax. Based on the results of its assessment of
a number of actuators, as well as the interpretation of the Kazakh tax legislation and past experience, management believes that the
obligation to pay tax for all tax periods for which the tax authorities have the right to verify the completeness of the payments to the
budget, are reflected in full screen. This assessment is based on estimates and assumptions and may involve the formation of a number
of judgments about the impact of future events. Over time, the disposal of the Group may enter new information in connection with
which the Group may need to change their judgments about the adequacy of existing tax liabilities. Such changes in the value of tax
liabilities affect the amount of tax for the period in which these opinions have changed.
(r) Value Added Tax (VAT)
Revenues, expenses and assets are recognized net of the amount of VAT, except:
When the VAT incurred on acquisition of assets or services is not recoverable from the taxation authorities, in this case the
VAT is recognized as part of the cost of acquisition of the asset or part of an expense item, depending on the circumstances
Amounts receivable and accounts payable into account together with the VAT.
The net amount of VAT recoverable or payable to the tax authorities is included in receivables or payables in the consolidated
statement of financial position.
VAT receivable is attributable to the acquisition, which have not been settled at the balance sheet date. VAT receivable can
be taken to offset VAT payable, as well as at the request of VAT receivable may be refunded from the tax authorities of the state. If
according to the norms of the existing tax laws or compensation settlement of VAT is deferred to the following twelve (12) months
after the reporting date, such a VAT receivable is transferred to the long-term assets. In the case of non-refundabilitty, VAT recoverable
is an expense in the consolidated statement on the comprehensive income.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(s) changes to the presentation - the reclassification of the previous year indicators
In preparing the consolidated financial statements for the year ended December 31, 2014, management has made certain
reclassifications to conform to changes in presentation of the consolidated financial statements for the year ended December 31, 2014.
In accordance with IFRS (IAS) 1 "Presentation of Financial Statements" in the consolidated statement of financial position as
at 31 December 2013 and 31 December 2012 the long-term investment securities available for sale with a remaining maturity of more
than one year the amount of 11,036,031 thousand tenge and 7,241,276 thousand tenge, respectively, were reclassified from short-term
to long-term assets.
In addition, in accordance with IFRS (IAS) 40 "Investment Property", as at 31 December 2013 and 31 December 2012, the
Group introduced a part of office space provided by the Group in the rent, as investment property separately in the consolidated
statement of financial position, in order to comply with reporting in the current year. In the consolidated financial statements for the
year ended December 31, 2013, investment property was presented in the line of fixed assets in the consolidated statement of financial
position. Management believes that the presentation of data is more consistent with the requirements of IFRS and give a clearer view
of the consolidated financial position and results of operations.
According to the
statements of the Effect of
prior period
reclassification
Reclassified
20,123,743
20,123,743
(1,431,356)
1,431,356
10,735,358
10,735,358
18,692,387
1,431,356
10,735,358
30,859,101
short-term assets
Investment securities available-for-sale
Total current assets
11,219,345
11,219,345
(10,735,358)
(10,735,358)
483.987
483.987
Consolidated statement of financial position as at 31 December 2012
Long-term assets
Fixed Assets
Investment Property
Investment securities available-for-sale
Total non-current assets
18,912,087
18,912,087
(1,438,421)
1,438,421
6,926,193
6,926,193
17,473,666
1,438,421
6,926,193
25,838,280
short-term assets
Investment securities available-for-sale
Total current assets
8,132,741
8,132,741
(6,926,193)
(6,926,193)
1,206,548
1,206,548
th.tenge
Consolidated statement of financial position as at 31 December 2013
Long-term assets
Fixed Assets
Investment Property
Investment securities available-for-sale
Total non-current assets
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(s) changes to the presentation order - the reclassification of the previous year indicators, continued
Moreover, in the consolidated statement of cash flows for the year ended December 31, 2013, following the requirements of
IFRS (IAS) 7 "Statement of Cash Flows", the Group has transferred the amount of repayments of long-term loans to employees and the
issuance of long-term loans to employees from investing activities in operations and presented them on a net basis as a change in loans
to employees, as well as a change in the reclassified securities sold under repurchase agreements, from investment activities to financial
activities. The table below shows the impact of these reclassifications on the consolidated statement of cash flows for the year ended
December 31, 2013:
According to the
statements of the Effect of
prior period
reclassification
Reclassified
Change in loans to employees
-
(776.792)
(776.792)
Cash flows from operating activities
5,926,126
(776.792)
5,149,334
Net cash flows from operating activities
6,481,474
(776.792)
5,704,682
Repayment of long-term borrowings by workers
72.650
(72.650)
-
Issuance of long-term loans to employees
(849.442)
849.442
-
Change in securities sold under repurchase agreements
(1,681,072)
1,681,072
-
Net cash flows from investing activities
(8,189,112)
2,457,864
(5,731,248)
2,387,208
(1,681,072)
(1,681,072)
(1,681,072)
706.136
th.tenge
Consolidated Statement of Cash Flows for the year ended December 31,
2013
Cash flows from operating activities
Cash flows from investing activities
Cash flows from financing activities
Purchase of securities under repurchase agreements
Net cash flows from financing activities
The above reclassifications do not affect the results of operations or capital of the Group.
(t) New standards and interpretations not yet adopted to the use
Certain new standards, amendments to standards and interpretations are not yet effective as of December 31, 2014 and have
not been applied in the preparation of the consolidated financial statements.The Group plans to adopt these standards and interpretations
when they become effective.
3 BASIC PROVISIONS OF ACCOUNTING POLICIES, CONTINUED
(t) New standards and interpretations not yet adopted for the use, continuation
The new standard /
The possible impact on the
amendment to the
consolidated financial
standard
Brief description of the requirements
statements
IFRS
IFRS (IFRS) 9, which was published in July 2014, replaces the existing
The Group has not yet analyzed
(IFRS 9) "Financial IFRS (IAS) 39 "Financial Instruments: Recognition and
the likely impact of the new
Instruments"
Measurement".IFRS (IFRS 9) includes revised guidance on the
standard in terms of its impact on
classification and measurement of financial assets, including a new model the financial position and results
of expected credit losses for the evaluation of impairment and new general of operations.
requirements for hedge accounting. Also new standard upholds guidance
on the recognition and derecognition of financial instruments adopted in
IFRS (IAS) 39.
IFRS (IFRS) 9 becomes effective for annual periods beginning on January
1, 2018 or after that date. Earlier application of standard is permitted.
IFRS
IFRS (IFRS) 15 establishes a general framework of principles to determine The Group has not yet analyzed
(IFRS) 15 "Revenue whether there should be recognized as revenue, in what amount and when. the likely impact of the new
from contracts with It replaces the existing guidance on revenue recognition, including IFRS
standard in terms of its impact on
customers"
(IAS) 11, "Construction Contracts", IFRS (IAS) 18 "Revenue" and
the financial position and results
explaining IFRIC (IFRIC) 13 "Customer Loyalty Programs".
of operations.
The underlying principle of the new standard is that the company
recognizes revenue to reflect the transfer of the promised goods or services
to customers in the amount corresponding to the compensation to which the
enterprise in accordance with their expectations, will be entitled to in
exchange for those goods or services. The new standard provides detailed
disclosure in respect of revenue, includes guidance on accounting for
transactions that were previously not considered in its entirety, as well as
improves the guidance on accounting for agreements consisting of many
elements.
IFRS (IFRS) 15 shall enter into force for annual periods beginning on
January 1, 2017 or after that date. Earlier application of standard is
permitted.
The following new standards and amendments to standards are not expected to have a material impact on the consolidated financial
statements.
IFRS (IFRS) 14 "Deferred tariff adjustment".
Accounting for the acquisition of interests in joint operations (amendments to IFRS (IFRS) 11).
Clarification of allowable depreciation methods (Amendments to IFRS (IAS) 16 and IFRS (IAS) 38).
Defined benefit plans: employees' contributions (amendment to IFRS (IAS) 19).
The project "Improvements to IFRSs." Cycle: 2010-2012.
The project "Improvements to IFRSs." Cycle: 2011-2013.
Kazpost JSC
Notes to the Consolidated Financial Statements for the year ended December 31, 2014
Fixed Assets
Fixed assets include the following:
th.tenge
Actual cost
As of 1 January 2013, restated
Receipts
Reclassified from investment property, restated
Reclassified to investment property, restated
Land Plots
Buildings
and
Structures
1,177,506
43.907
-
11,623,938
164.519
319.324
(330.332)
7,070,777
995.960
-
4,301,364
1,426,852
-
1,398,553
228.197
-
Transfers.
Disposals
At December 31, 2013, restated
Receipts
Reclassified from investment property
Reclassified to investment property
Impairment of fixed assets
(1,966)
1,219,447
9.611
-
278.042
(105.119)
11,950,372
31.599
468.359
(306.394)
(2,835)
13.757
(295.429)
7,785,065
950.622
-
48.482
(94.159)
5,682,539
1,322,481
-
(63.029)
(36.372)
1,527,349
176.870
-
Transfers.
Disposals
As of December 31, 2014
(67.526)
(432)
1,161,100
230.912
(13,027)
12,358,986
(263)
(289.720)
8,445,704
(157.652)
6,847,368
263
(94.283)
1,610,199
Machinery and
equipment
Vehicles
Other fixed
assets
Constru
ction in
progres
s
51.411
372.688
(277.25
2)
(1,715)
145.132
287.119
(163.38
6)
268.865
Total
25,623,549
3,232,123
319.324
(330.332)
(534.760)
28,309,904
2,778,302
468.359
(306.394)
(2,835)
(555.114)
30,692,222
4 FIXED ASSETS, CONTINUED
th.tenge
Accumulated depreciation and impairment
As of 1 January 2013, restated
Accrual
Impairment (Note 20)
Reclassified from investment property, restated
Reclassified to investment property, restated
Disposals
Transfers
As of December 31, 2013, restated
Accrual
Reclassified from investment property
Reclassified to investment property
Disposals
As of December 31, 2014
Net book value
As of 1 January 2013, restated
At December 31, 2013, restated
As of December 31, 2014
Buildings
and
Structures
Machinery and
equipment
Vehicles
Other fixed
assets
Construction in
progress
Total
-
995.098
405.947
42.982
(17.123)
(31.403)
608
1,396,109
4,125,462
790.573
279.318
(295.357)
31,250
4,931,246
2,055,445
277.512
(89.908)
20.839
2,263,888
973.878
141.465
(36.372)
(52.697)
1,026,274
-
8,149,883
1,615,497
279.318
42.982
(17.123)
(453.040)
9,617,517
-
400.816
29.440
(66.290)
(4.751)
1,755,324
793.407
(289.667)
5,434,986
482.341
(151.810)
2,594,419
116.729
(88.011)
1,054,992
-
1,793,293
29.440
(66.290)
(534.239)
10,839,721
1,177,506
1,219,447
1,161,100
10,628,840
10,554,263
10,603,662
2,945,315
2,853,819
3,010,718
2,245,919
3,418,651
4,252,949
424.675
501.075
555.207
51.411
145.132
268.865
17,473,666
18,692,387
19,852,501
Plots
-
4 FIXED ASSETS, CONTINUED
In 2013, an impairment loss in the amount of 279.318 thousand tenge was a write-off of the carrying value of the postal sorting
machine to zero cost. This loss was recognized in the consolidated statement of profit or loss and other comprehensive income as cost of
sales. The recoverable amount is based on management's estimates of the expected net fair value less costs on sale, which was determined
with reference to an active market. The group also devalued software relating to postal sorting machines (Note 6).
As of December 31, 2014 the gross book value of fixed assets fully depreciated amounted to 4,652,902 thousand tenge (2013:
4,272,458 thousand tenge).
As of December 31, 2014 the carrying value the fixed assets was 116.751 thousand tenge were pledged as collateral for the loan
from the Islamic Development Bank (2013: 114.289 thousand tenge) (Note 15).
In 2014 and 2013 the Group has not capitalized any borrowing costs.
Investment Property
Reconciliation of the carrying amount
Restated
th.tenge
Note
2014
2013
Actual cost
Balance as of 1 January
1,584,479
1,573,471
Reclassification from assets
4
306.394
330.332
Reclassified to assets
4
(468.359)
(319.324)
Balance as of 31 December
1,422,514
1,584,479
Accumulated depreciation and impairment
Balance as of 1 January
153.123
135.050
Accrual
9.524
43.932
Reclassification from assets
4
66.290
17.123
Reclassified to assets
4
(29.440)
(42.982)
Balance as of 31 December
199.497
153.123
Net book value as of December 31,
1,223,017
1,431,356
Investment property comprises a number of commercial properties that are leased to third parties.
5 INVESTMENT PROPERTY, CONTINUED
Fair value hierarchy
The fair value of investment property is determined by internal assessors and for most of the property - an independent
appraiser.
As of December 31, 2014 the fair value of investment property is 2,512,048 thousand tenge and are classified within Level 3
fair value hierarchy based on the initial data for the application of assessment methods (2013: 1,863,466 thousand tenge).
Intangible assets
Intangible assets include the following:
th.tenge
Cost
As of January 1, 2013
Receipts
Disposals
As of December 31, 2013
Receipts
Disposals
As of December 31, 2014
Accumulated amortization and
impairment
As of January 1, 2013
Charge for the year
Impairment (Note 20)
Disposals
As of December 31, 2013
Charge for the year
Disposals
As of December 31, 2014
Database
of clients
Other
intangibleassets
Assets under
development
Total
38.695
(4,546)
34.149
(3,193)
30.956
2,273,221
97.224
(848.827)
1,521,618
233.029
(30.113)
1,724,534
163.649
163.649
33.022
(107)
196.564
2,311,916
260.873
(853.373)
1,719,416
266.051
(33.413)
1,952,054
3,225
6.259
(4,546)
4.938
6.259
(3,193)
8,004
1,677,201
315.242
26.174
(848.578)
1,170,039
120.476
(25.674)
1,264,841
-
1,680,426
321.501
26.174
(853.124)
1,174,977
126.735
(28.867)
1,272,845
Net book value
121
As of January 1, 2013
As of December 31, 2013
As of December 31, 2014
35.470
29.211
22.952
596.020
351.579
459.693
163.649
196.564
631.490
544.439
679.209
As of December 31, 2014 and 2013 other intangible assets primarily consist of software for the provision of banking, postal and
logistics services, accounting.
In 2013, the Group reclassified the advances paid for the implementation of SAP to the category of assets in the implementation
phase, in the amount of 163.649 thousand tenge. The company expects to implement SAP software during 2015.
In 2013, the Group recognized an impairment of the software associated with the postal sorting machines, in the amount of 26.174
thousand tenge. As disclosed in Note 4, the recoverable amount was based on management's estimates of the expected net fair value less
costs of sale.
LOANS TO EMPLOYEES
In 2014 and 2013, the Group provided loans to its employees at a rate of 6% per annum for the purchase of property totaling
137.200 thousand tenge and 849.442 thousand tenge in connection with the relocation of the head office from Almaty to Astana. In 2009
and 2011, in accordance with the recommendations of the Government of the Republic of Kazakhstan, the Group provided its employees
with the long-term interest-free loans for the purchase of property.
These loans are collateralized by the acquired property and are linked to the ongoing activities of employees in the Group. Upon
initial recognition the loans were discounted to its fair value and the discount was reflected as a deferred consideration in other assets in
the consolidated statement of financial position. The amount of amortization of deferred consideration is reflected in the consolidated
statement of comprehensive income in financial expenses (Note 22) and interest income on loans are recorded in the consolidated statement
of comprehensive income as financial income (Note 22).
As of December 31, 2014 and 2013 loans to employees are recorded net of allowance for impairment in the amount of 27.446
thousand tenge. Loans must be repaid within 2014-2028 years.
Stock
Inventories consist of the following:
th.tenge
Materials
Stamps
Consumer goods
Total
TRADE AND OTHER RECEIVABLES AND OTHER ASSETS short
Trade and other receivables and other current assets consist of the following:
th.tenge
Trade receivables
Amounts payable to ascertain and for damage, loss and theft
Advances paid to publishers
Advances paid for goods and services
Prepaid taxes other than income taxes
Other current assets
Other receivables
Less: stock for impairment of trade and other receivables and other current assets
Total
Dec. 31
2014
650.028
68.885
27.659
746.572
Dec. 31
2013
604.820
67.226
43.120
715.166
Dec. 31
2014
3,547,962
910.053
2,303
88.941
7,087
105.815
4,662,161
(1,001,838)
3,660,323
Dec. 31
2013
2,592,925
839.395
352.667
104.905
11.357
7.372
183.611
4,092,232
(906.641)
3,185,591
9 TRADE AND OTHER RECEIVABLES AND OTHER CURRENT ASSETS, CONTINUED
As of 31 December the amounts to ascertain represent arrears of violations where suspected and guilty persons are not known at
the balance sheet date, or the true nature of these amounts has not been established by the Group. Receivables for damage, loss and theft
is a theft loss on cash and other assets that the Group expects to recover from the suspected and guilty persons, is currently in the process
of administrative proceedings under investigation or during the trial. The Group has established a reserve for the full amount of such
damages. Reserves for debt amounts to be reclassified before clarification to the receivables on damage, loss and theft as identifying the
guilty persons or other assets as revealing the true nature of these amounts. Reserves for arrears of damage, loss and theft will be reversed
as the guilty party reimburse the losses caused. If such losses are restored, they will be written off in accordance with the Kazakh legislation.
Trade and other receivables are denominated in the following currencies:
Dec. 31
Dec. 31
th.tenge
2014
2013
Tenge
2,203,541
1,552,475
ADF
1,093,029
935.248
Russian Ruble
245.869
197.876
USD
34.278
30.185
Other currencies
5,306
5,118
122
Total
Analysis of trade and other receivables by maturity as of December 31 is as follows:
Has not
Past due but not impaired
expiredWIDE nor
<30
30-60
th.tenge
Total
impaired
days
days
2014
3,582,023
3,511,217
60.188
10.618
2013
2,720,902
2,634,528
15.118
37.520
3,582,023
60-90
days
7.983
2,720,902
90-120 days
15.831
Movements in the provision for impairment for the year ended December 31, can be represented as follows:
Amounts payable to
ascertain and for
damage, loss and
Trade
Other
th.tenge
theft
receivables
receivables
Advances paid
As of January 1, 2013
719.968
17.817
3,649
13.643
Accruals/(reversal) for the
year
131.215
33.016
1,152
(2.030)
Write-off during the year
(11.789)
As of December 31, 2013
839.394
50.833
4,801
11.613
Accruals/(reversal) for the
year
72.272
8.831
7.289
19.023
Write-off during the year
(12.218)
As of December 31, 2014
899.448
59.664
12.090
30.636
> 120
days
9.922
Total
755.077
163.353
(11.789)
906.641
107.415
(12.218)
1,001,838
9 TRADE AND OTHER RECEIVABLES AND OTHER CURRENT ASSETS, CONTINUED
The Group establishes an allowance for doubtful accounts receivable balances and amounts to asking. Significant judgment is
used to estimate doubtful accounts. To assess the impairment of accounts receivable the historical and projected financial performance of
the client are recorded. Changes in the economy, industry or specific customer conditions may require adjustments to the allowance for
doubtful accounts recorded in the consolidated financial statements.
INVESTMENT SECURITIES AVAILABLE FOR SALE
Investment securities available for sale include the following:
Dec. 31
Dec. 31
th.tenge
2014
2013
Treasury bills of Ministry of Finance of the Republic of Kazakhstan
7,858,293
7,509,235
Bonds of local financial institutions
3,635,123
3,710,110
Corporate bonds
100.252
Total
11,593,668
11,219,345
Bonds of local financial institutions include the following:
Dec. 31
Dec. 31
th.tenge
Credit rating
2014
2013
"Eurasian Bank" JSC
Moody's: B1 / negative
1,442,720
1,559,902
"Kazkommertsbank" JSC
Moody's: B2 / Negative / NP
1,080,963
922.495
"Caspian Bank" JSC
Moody's: B1 / negative / NP
336.598
337.790
"Bank CenterCredit" JSC
Moody's: B2 / Negative / NP
774.842
821.026
"Mortgage organization" Kazakhstan
Mortgage Company" JSC
Fitch: BB + / Negative
68.897
3,635,123
3,710,110
Interest rates and maturities of investment securities available for sale are as follows:
th.tenge
December 31, 2014
December 31, 2013
%
Treasury bills of Ministry of Finance of the Republic
of Kazakhstan
4.3% -8.75%
Bonds of local financial institutions
5.5% -11.0%
Corporate bonds
13%
Maturity
2015-2032
2015-2023
2028
%
Maturity
4.3% -8.8%
2014-2032
5.5% -9.2%
2014-2023
Not applicable
Not applicable
In 2014, the Group recognized an unrealized loss on investment securities available for sale, in the amount of 392.955 thousand
tenge (2013: profit of 138.638 thousand tenge). In 2014, the Group recognized a realized gain on sale of investment securities availablefor-sale with a total of 2,062 thousand tenge (2013: 23.183 thousand tenge).
Impairment of financial investments available-for-sale
At each balance sheet date, the Group accounts for impairment of securities classified as investments available for sale. In
particular, management uses judgment to estimate the amount and timing of future cash flows on an individual basis to determine the
123
amount of impairment loss. These calculations are based on an assumption about the number of actuators and the actual results may be
different, leading to changes in reserve in the future.
INVESTMENT SECURITIES AVAILABLE FOR SALE, CONTINUED
Impairment of financial investments available for sale, continued
As of 31 December 2014 the Group held corporate bonds of the issuer "Kazakhstan Kagazy" JSC (hereinafter, "Kazakhstan
Kagazy" JSC), which is still in the initial stage of implementation of the restructuring program, launched in 2012, with the gross value of
309.105 thousand tenge. As of December 31, 2013, the Group wrote off the bonds of Kazakhstan Kagazy of 100% against a previously
created provisions. In 2014, the Group regained some bonds of Kazakhstan Kagazy of 100.252 thousand tenge after the announcement of
the repayment schedule, as amended, in accordance with the restructuring plan, the analysis of the financial position of the issuer and cash
in the amount of 7.974 thousand tenge obtained in the execution of the restructuring plan in 2014 by the issuer.
BANK DEPOSITS
As of December 31, 2014 and 2013, short-term bank deposits represent deposits with local banks, with the credit rating assigned
by the agency Moody's B/negative, with the remaining term to maturity of twelve (12) months or less, at a rate of 8.5% per annum,
denominated in tenge.
Cash and cash equivalents*
Cash and cash equivalents comprise the following:
Dec. 31
Dec. 31
th.tenge
2014
2013
Current accounts in tenge with Kazakhstan banks
5,798,071
6,152,404
Reverse "repo" agreements of up to 90 days
2,555,549
3,152,911
Cash on hand
2,282,158
1,721,251
Current accounts in tenge in foreign currency in domestic banks
319.665
433.306
Total
10,955,443
11,459,872
In 2014 and 2013 the Group entered into reverse repurchase agreements with counterparties on KASE. These agreements relate to the
treasury bills of the Ministry of Finance of the Republic of Kazakhstan and the notes of the National Bank of Kazakhstan, having the fair
value of 2,685,071 thousand tenge as of 31 December 2014 (2013: 3,410,421 thousand tenge).
Cash and cash equivalents are denominated in the following currencies:
Dec. 31
Dec. 31
th.tenge
2014
2013
Tenge
10,593,052
10,985,238
USD
323.486
402.193
Russian Rouble
12.778
53.625
EUR
22.018
15.465
Other currencies
4.109
3,351
Total
10,955,443
11,459,872
CAPITAL
Share capital
The share capital includes the following:
Number of authorized, issued
and fully paid ordinary shares
as of January 1,
Ordinary shares authorized,
issued and paid during the
year
Ordinary shares authorized,
issued and paid during the
year
Total, in thousands tenge
2014
Price of
accommodation
in tenge
2014
th.tenge
2013
Price of
accommodation
in tenge
2013
th.tenge
12,251,856
1,000
12,251,855
10,167,784
1,000
10,167,784
1,815,196
1,000
1,815,196
2,084,071
1,000
2,084,071
14,067,052
-
14,067,051
1
12,251,856
344
12,251,855
In accordance with the resolution of the Board of Directors of "Kazpost" JSC, in January and March 2014 the Group approved
the issuance of additional common shares in the amount of 1,815,196 shares with a total of 1,815,196 thousand tenge (2013: 2,084,071
thousand tenge). In 2014, the issued common shares were fully paid by Samruk-Kazyna JSC.
Reserve capital
Reserve capital includes funds transferred from retained earnings in 2003-2006 based on the resolutions of the shareholders. The
funds in the account are not subject to capital reserve allocation.
Revaluation reserve for investment securities available-for-sale
Revaluation reserve reflects changes in fair value of investment securities available-for-sale (Note 10).
124
Dividends
In 2014, the Company did not declare or pay a dividend (2013: 141.538 thousand tenge, 12 tenge per share).
Earnings per share
Basic earnings per share as was calculated is based on the profit attributable to ordinary shareholders of the Parent Company and
the weighted average number of ordinary shares outstanding during the year. The Company has no potential ordinary shares, having a
dilutive effect.
Net profit attributable to ordinary shareholders of the parent company, ths. Tenge
Weighted average number of ordinary shares for basic earnings per share
Net profit attributable to ordinary shareholders of the Parent Company for the
calculation of basic earnings per share, tenge
2014
146.006
12,872,593
2013
176.060
11,606,264
11.34
15.17
Accounts and customer deposits
Deposits from customers include the following:
Customer current accounts
Demand deposits
fixed-term deposits
Total
Less: time deposits with maturities greater than one year
Deposit accounts with a maturity of up to one year
Deposits from customers represent the following account:
2014
th.tenge
19,199,166
1,443,620
118.067
20,760,853
2013
th.tenge
18,941,132
1,251,629
673.045
20,865,806
(57.591)
20,703,262
(103.734)
20,762,072
2014
th.tenge
2013
th.tenge
Customer current accounts:
Account of pensions and state benefits
13,750,634
13,634,800
Current accounts of individual entrepreneurs
1,271,361
1,242,606
Current accounts of legal entities
1,234,909
1,166,903
Plastic cards
1,126,844
969.796
Salary Account
731.282
739.813
Current accounts of budgetary organizations
582.935
536.230
Current accounts of individuals
298.602
395.675
Accounts of brokerage services
101.814
168.813
Other
100.785
86.497
Total
19,199,166
18,941,133
Demand deposits
1,443,620
1,251,629
fixed-term deposits
Fixed term deposits - up to one year
60.476
569.310
Fixed term deposits - over one year
57.591
103.735
Total
118.067
673.045
During 2014 and 2013 the interest rate on term deposits were installed in the range of 0.8% to 5.3% per year. Deposits were mainly
denominated in tenge.
FINANCIAL INSTITUTIONS LOANS
Loans of financial institutions include the following:
15 FINANCIAL INSTITUTIONS LOANS , continued
Unused loan funds
As of 31 December 2014 the Group had unused lines of credit limits (as of 31 December 2013: not available).
Employee benefits liabilities
Reconciliation of discounted employee benefit obligations for the years ended December 31 are as follows:
2014
2013
th.tenge
th.tenge
125
The total amount of obligations as of 1 January
Included in the profit or loss for the period:
Current period service cost
Past period service cost
Interest expense (Note 22)
Included in other comprehensive income:
Actuarial (gain) loss arising from:
- Demographic assumptions
- Financial assumptions
- Adjustments based on experience
479.863
178.485
26.757
201.443
38.377
72.921
253.383
11.207
291.981
(131.463)
(296.348)
(135.830)
16.188
16.188
Other:
Remuneration paid during the year
Total liabilities as of December 31
(59.154)
551.456
(52.865)
479.319
Short-term deposits
Longer-term
49.940
501.516
53.080
426.239
Employee benefits liabilities
The Group has a long-term commitment to employee benefits in accordance with IFRS (IAS) 19 "Employee Benefits", which is
determined using actuarial valuations. The actuarial valuation involves numerous assumptions, which may differ from actual future events.
Assumptions include the discount rate, future salary increases, mortality rates and future pension increases. Due to the complexity of the
evaluation and its long-term nature, the obligation to a defined benefit plan has a high sensitivity to changes in these assumptions. All
assumptions are reviewed at each reporting date.
The collective agreement of the Group approved for 2014-2016 years, stated that employees receive a lump sum payment
upon retirement of old age at a rate of one (1) the average monthly salary if the employee has less than twenty (20) years of work
experience in the Group, and of 2 times the average monthly wage at the experience in service for over 20 years. Also, the Group
has the following types of payments subject to actuarial valuation:
a lump sum payment upon retirement due to disability;
funeral benefit for the retiree;
funeral benefit of the employee;
material assistance to pensioners on the Day for the Elderly;
material assistance to pensioners, veterans and home front workers to May 9;
payments for disability resulting from an accident at work.
These benefits are unfunded.
16 Employee benefit obligations, CONTINUED
The key assumptions used to determine the liabilities of the Group are as follows:
2014
2013
Discount rate
7.92%
5.77%
The increase in wages in the future
8.0%
4.0%
Height monthly calculation indices (MCI)
4.0%
7.45%
Average inflation
7.0%
4.0%
In 2014 and 2013, the Group used the average long-term rate of inflation to adjust the current fair value of future cash flows,
discounted to net present value of cash flows at the risk-free rate of government bonds with the same maturity.
Assumptions regarding future mortality are based on published statistics and demographic mortality tables of the Republic of
Kazakhstan in 2013.
Norms of turnover on an annual basis used in the calculation as of December 31, 2014, are presented in the table below:
Administrative and
2014
managerial personnel
Production personnel
30 years
12.76%
12.26%
from 30 to 50 years
8.58%
12.44%
Over 50 years
4.17%
8.46%
Sensitivity analysis
Below we show how the obligations under a defined benefit plan with the reasonably possible change in one of the most
significant actuarial assumptions at the balance sheet date may be affected if other actuarial assumptions remain unchanged.
December 31, 2014
th.tenge
The discount rate (1% change)
Future growth of wages (3% change)
Norma of turnover (change of 3%)
Commitment to a defined benefit plan
Increase
Reduction
(29,850)
33.154
96.946
(90.730)
(24.429)
21.987
Despite the fact that this analysis does not take into account the full distribution of the expected cash flows under the plan, it
provides a rough idea of the sensitivity of these assumptions.
126
TRADE AND OTHER ACCOUNTS PAYABLE AND OTHER CURRENT LIABILITIES
Trade and other receivables and other current liabilities include the following:
2014
2013
th.tenge
th.tenge
Payables to employees
1,231,173
844.676
Payables for fixed assets
850.793
692.550
Advances received
671.761
663.206
Trade payables
557.419
786.201
Accounts payable for taxes other than income taxes
362.900
347.141
Arrears on payments received from customers
218.402
578.755
Other commitments
428.968
274.496
Total
4,321,416
4,187,025
Trade and other payables are non-interest bearing and are normally settled within 30-180 days. Trade and other payables is
mainly denominated in tenge.
Deferred income/payables to publishers on the received SUBSCRIPTION
2014
2013
th.tenge
th.tenge
Deferred revenue on subscription
Legal entities
434.160
433.141
Individuals
1,077,834
1,104,197
1,511,994
1,537,338
Deferred revenue for the delivery of postal items
Prepaid subscriptions from subscribers, payable to Publishers:
Prepayment from legal entities
Pre-payment from individuals
Amounts owed to publishers
61.544
1,573,538
114.046
1,651,384
2,146,091
2,652,937
98.981
4,898,009
2,271,328
2,724,253
281.992
5,277,573
2014
th.tenge
2013
th.tenge
10,181,612
931.542
2,433,547
13,546,701
6,169,045
4,226,772
2,113,233
1,326,279
755.330
726.283
709.598
448.226
234.920
67.264
18,936
22.952
30,365,539
9,560,222
858.305
1,266,742
11,685,269
5,822,515
4,016,524
1,710,084
2,028,014
658.929
561.223
668.188
384.385
214.750
31.856
15.714
22.921
27,820,372
INCOME
Revenues include the following:
Services for the delivery of postal items:
Within the country
International
International unequal exchange
Fee for transfer of pensions, salaries and other payments
Fee for the processing of municipal and other payments
Commission for the delivery of periodicals
Agency fees for conversion services and the recovery of loans
Transfer fee
Customer accounts maintenance
Transportation funds
renting of facilities
Sale of postal products
Brokerage
Consumer goods
Other currencies
Total
Operation of international unequal exchange
International unequal exchange is a service rendered to other countries for the delivery of mail. Incoming mail is the income of
the Group, as it includes mail distribution services in Kazakhstan. Outgoing mail items are expenses of the Group.
COST OF SALES
Cost of sales includes the following:
Staff costs
2014
th.tenge
16,824,308
2013
th.tenge
14,397,164
127
Transportation services
Stock
Depreciation and amortization
Maintenance and repair of fixed assets
Security costs
Utilities
Communication services
IT services
Rent
Travel expenses
Insurance
An impairment loss (Notes 4,6)
Others
Total
2,163,044
1,904,412
1,714,954
966.721
760.525
615.848
529.365
298.507
295.006
196.447
44.012
1,467
445.564
26,760,180
1,874,171
1,824,638
1,765,935
863.689
733.789
521.265
485.365
325.052
219.194
214.828
36.938
305.492
297.153
23,864,673
Rental expenses are expenses incurred by the Group in the preparation of commercial premises under an operating lease for its
normal operations. In all such cases, all the risks and rewards associated with the leased assets are retained by the lessor for the duration of
such operating leases.
General and administrative costs
General and administrative costs include the following:
Staff costs
Taxes other than income tax
Rental expenses
Depreciation and amortization
Travel expenses
Hospitality and expenses for charity
Communication services
Professional services
Banking services
Repair and maintenance of office
Utilities
Earning / (reversal) of provision for obsolete inventory
Others
Total
Financial income / financial expenses
Finance income and expenses include the following:
Financial income
Interest income on investment securities available-for-sale
Interest income on securities purchased under repurchase agreements
Interest income on loans to employees (Note 7)
Interest income on bank deposits
Total
Financial expenses
Interest expense on loans of financial institutions
Amortization of deferred interest on loans to employees (Note 7)
Interest expense on employee benefit obligations (Note 17)
Interest expense on finance leases
Interest expense on customer accounts and deposits
Interest expense on securities sold under repurchase agreements
Total
Other non-operating income
Other net non-operating expenses include the following:
Decrease in unnecessarily accrued expenses of previous years, including interest
expense on deposits from customers
Income from cancellation of obligations at the end of the period of limitation
2014
th.tenge
3,211,123
878.906
246.472
214.598
135.837
88.996
71.564
58.283
47.665
24.354
16.579
7,641
167.862
5,169,880
2013
th.tenge
2,876,491
790.970
170.077
214.995
114.621
78.806
60.866
69.342
49,800
52.198
32.418
(8,690)
197.479
4,699,373
2014
th.tenge
2013
th.tenge
834.837
675.656
89.794
63.136
1,663,423
675.490
169.989
62.937
195.398
1,103,814
(271.590)
(42.960)
(38.377)
(13.619)
(12.996)
(1,561)
(381.103)
(188.908)
(43.723)
(11.207)
(6.312)
(79.846)
(1,820)
(331.816)
2014
th.tenge
2013
th.tenge
132.308
63.236
-
128
Revenue from fines under economic contracts
Profits from the sale of fixed assets
Other non-operating income (expense)
Total
40.293
10.994
53.914
300.745
99.670
252.652
(2,364)
349.958
expense / (benefit) for income taxes
Savings on corporate income tax for the year ended December 31, includes the following:
2014
2013
th.tenge
th.tenge
Expenses related to income tax
13.746
Expense / (benefit) for deferred income tax
148.067
(66.154)
Total expense / (benefit) for income taxes
148.067
(52.408)
Reconciliation of income tax savings in respect of income before income tax expense calculated using the statutory rate of 20%, with the
cost of income tax expense for 2014 and 2013 is presented below:
2014
2013
th.tenge
th.tenge
Income before corporate income tax
293.126
112.140
58.625
22.428
Income tax expense calculated at the statutory tax rate of 20%
Other non-deductible expenses (not taxable income)
Disposal of fixed assets
Change in unrecognized deferred assets
Non-taxable interest income on investment securities available-for-sale
Reversal of impairment of other receivables
Expense / (benefit) for income taxes
Assets and deferred tax liabilities as of December 31 included:
62.180
1,870
25.392
148.067
(3,343)
(93.789)
22.296
(52.408)
Consolidated Statement
on profit and loss and other
comprehensive income
Other
aggregate
income
Consolidated Statement
of financial position
December 31,
December 31,
2014
2013
January 1,
2013
2014
2013
2014
-
-
980
-
(980)
-
-
24.023
-
(24.023)
24.023
-
11.933
10.167
3,563
1,766
6.604
-
Accruals
251.768
186.344
155.603
65.424
126.605
-
Provision for inventories
1,528
2,341
4.216
(813)
(1,875)
-
Employee benefits liabilities
110.292
95.864
-
41.594
-
(27.166)
375.521
318.739
164.362
83.948
154.377
(27.166)
(1,245,070)
(1,013,055)
(924.832)
(232.015)
(88.223)
-
(1,245,070)
(1,013,055)
(924.832)
(232.015)
(88.223)
-
(869.549)
(694.316)
(760.470)
(148.067)
66.154
(27.166)
th.tenge
Profit or loss
Deferred tax assets
Amortization of premiums on
securities available-for-sale
Interest on customer deposits and
loans to financial institutions
Provisions for trade and other
receivables
Deferred tax liability
Property, equipment and intangible
assets
Deferred income tax
Net deferred tax liability
24 Expenses/(benefit) for income taxes, continued
Reconciliation of deferred tax liabilities, net
Balance as of 1 January
Income tax expense for the period recognized in profit or loss
Savings on income tax for the reporting period recognized in other comprehensive
income
Balance as of 31 December
2014
th.tenge
(694.316)
(148.067)
2013
th.tenge
(760.470)
66.154
(27.166)
(869.549)
(694.316)
129
Group offset the tax assets and tax liabilities only in cases where it has a legally enforceable right to set off current tax assets
against current tax liabilities and assets and deferred tax liabilities relate to income taxes levied by the same taxation authority .
CONTINGENT LIABILITIES, COMMITMENTS AND OPERATIONAL RISK
Current taxes
Kazakhstan's tax legislation and regulations are subject to ongoing changes and varying interpretations. There are often instances
of inconsistent opinions between local, regional and national tax authorities. The current regime of penalties and interest related to reported
and discovered violations of Kazakhstan's tax laws are severe. Penalties include fines, as a rule, 50% of the taxes additionally assessed and
interest is assessed at the refinancing rate established by the National Bank of Kazakhstan multiplied by 2.5. Fiscal periods remain open to
review by tax authorities for five (5) calendar years preceding the year of review.
Under certain circumstances tax reviews may cover longer periods. Because of the uncertainties associated with Kazakhstan's
tax system, the amount of taxes, penalties and interest, if any, may exceed the amount expensed to date and accrued at December 31, 2014.
In the assessment of tax risks, management considers to be of possible areas of tax that the Group would not appeal or does not
believe that it could successfully appeal, if the additional taxes will be charged by the tax authorities. Such a determination requires
significant judgment and may change as a result of changes in tax laws and legal acts, the expectations from pending tax proceedings and
outcome of ongoing audits by tax authorities for compliance. Management believes that it has accrued the required amounts and created
all the necessary provisions for taxation as of December 31, 2014.
Litigation
In the course of its normal activities the Group is faced with various types of legal claims. Management believes that the ultimate
liability arising from litigation (if any), will not have a material adverse effect on the financial position or future operations.
Contractual obligations
As of 31 December 2014 the Group had contractual commitments for the acquisition of fixed assets and intangible assets in the
amount of 157.976 thousand tenge (as of December 31, 2013: in the amount of 300.081 thousand tenge). As of 31 December 2014 the
Group had commitments for the acquisition of inventories (materials and spare parts) and other services (as of 31 December 2013: absent).
25 CONTINGENT LIABILITIES, COMMITMENTS AND OPERATIONAL RISK, continued
Insurance
The insurance industry in Kazakhstan is in its infancy and many forms of insurance protection common in other parts of the
world, are not yet available in Kazakhstan. The Group does not have full insurance coverage for its plant facilities, business interruption
losses, or incurred obligations to third parties in respect of damage caused to the property or the environment as a result of accidents or
operations. As long as the Group obtains adequate insurance coverage, there is a risk that the loss or destruction of certain assets could
have a material adverse effect on the financial position of the Group.
Operating lease commitments - Group as a lessee
The Group is a lessee in a number of agreements on the lease of commercial real estate, as well as vehicles and computer
equipment to carry out their normal operations.
In all such cases, all the risks and rewards associated with the leased assets are retained by the supplier for the period of such
operating leases in cases where the Group is the lessee. The validity of the lease agreements is of not more than twelve (12) months from
the balance sheet date, and the Group has no non-cancellable contracts.
Operating lease commitments - Group as lessor
The Group is the lessor in a number of agreements for lease of commercial real estate, which in most cases is a surplus office
and production areas of a Group. The Group has no lease agreements without the right to termination.
FINANCIAL INSTRUMENTS, OBJECTIVES AND POLICIES IN RISK MANAGEMENT
The Group's operations are subject to risks. The Group is managed through a process of ongoing identification, measurement and
monitoring, as well as subject to risk limits and other controls. The risk management process is critical to the Group's continuing
profitability and each employee is responsible for the risks associated with his or her responsibilities.
Group is exposed to financial risks: currency risk, credit risk, interest rate risk, liquidity risk. The Group is also exposed to
operational risks.
Risk management structure
The structure of risk management in the Group is listed on several levels, with the involvement of the following agencies and
units of the Group: Board of Directors, Management Board, Risks Management Service, Internal Audit Service, other subdivisions.
Board of Directors
The Board of Directors plays a key role in overseeing the system of corporate risk management. The Board of Directors carries
out the setting of objectives of the Group, as well as approves documents in risk management, establishing the possibility of risk-taking
and risk appetite.
Management Board
The Management Board is responsible for the organization of an effective system of risk management and the establishment of a
framework of risk control to ensure compliance with corporate policies.
26 FINANCIAL INSTRUMENTS, OBJECTIVES AND POLICIES ON RISK MANAGEMENT, continued
Risk management structure, continued
Risk Management Service
Risk Management Service is responsible for monitoring compliance with the principles of risk management policies and risk
limits of the Group. Risk Management Service is responsible for the independent control of risks, including monitoring the risk of exposures
against limits and the assessment of risks of new products and structured transactions. This service also provides a complete information
collection in the system of risk assessment and reporting of risks.
The Internal Audit Service
Function of the Internal Audit Service of the Group in the risk management process is the audit of risk management procedures
and methodologies for risk assessment and development of proposals to improve the effectiveness of risk management procedures. Internal
Audit Service discusses the results of all assessments with management, and reports its findings and recommendations to the Committee
on Internal Audit.
130
Structural Divisions
One important element in the structure of the risk management system is the structural divisions of the Group. Structural divisions
are responsible for the implementation of the action plan for risk management, early detection and reporting of significant risks in their
activities. Their duties also include making suggestions for risk management for inclusion in the action plan.
Credit risk
Credit risk - the risk of non-performance or improper performance of obligations by the counterparty on time and in full.
Credit risk can arise due to the deterioration of financial condition of counterparties and issuers, fall of a goodwill of counterparty
and issuer.
The methods of credit risk management in the Group are as follows: Provision for possible losses, compliance with established
limits for transactions with customers, in-depth analysis of creditworthiness, which minimizes the risk of counterparty default. Also, when
placing the cash the Group provides conditions - triggers the upon implementation of which the Group has the right to direct debiting of
the deposit amount on correspondent accounts with the respective counterparties.
The maximum exposure of credit risk in the event of default by other parties under financial instruments is equal to the carrying
value of financial assets as presented in the accompanying consolidated financial statements and the disclosed financial commitments, if
any, at the end of the year.
Risks associated with credit-related commitments
The carrying value of the consolidated statement of financial position, excluding the effect of mitigation through the use of
collateral agreements, most accurately reflects the maximum exposure to credit risk on these items.
As per financial instruments at fair value, the carrying value represents the current credit risk exposure but not the maximum risk
exposure that could arise in the future as a result of changes in value.
Credit quality per class of financial assets
The Group manages its credit quality of financial assets using internal credit ratings. The table below shows the credit quality by
class of assets on the consolidated statement of financial position based on the Group's credit rating system.
26 FINANCIAL INSTRUMENTS, OBJECTIVES AND POLICIES ON RISK MANAGEMENT, continued
Credit risk, continued
Neither past due nor impaired
Below the
Overdue or
High
Standard
standard
individually
rating
rating
rating
impaired
th.tenge
Note
2014
2014
2014
2014
Loans to employees
7
770.730
Cash deposit in restricted use
126.758
Trade and other receivables
9.
3,511,217
70.806
Investment securities availablefor-sale
10.
11,593,668
Deposits with banks
11.
1,000,000
Cash and cash equivalents
(excluding cash on hand)
12.
8,673,285
Total
25,548,900
126.758
70.806
Total
2014
770.730
126.758
3,582,023
11,593,668
1,000,000
8,673,285
25,746,464
Neither past due nor impaired
th.tenge
Loans to employees
Cash deposit in restricted use
Trade and other receivables
Investment securities availablefor-sale
Deposits with banks
Cash and cash equivalents
(excluding cash on hand)
Total
9.
High
rating
2013
-
Standard
rating
2013
740.086
2,542,092
Below the
standard
rating
2013
57.625
-
Overdue or
individually
impaired
2013
27.446
50.833
10.
11.
-
11,219,345
500,000
-
-
11,219,345
500,000
12.
-
9,738,621
24,740,144
57.625
78.279
9,738,621
24,876,048
Note
7
Total
2013
767.532
57.625
2,592,925
According to the Group's policy it shall maintain accurate and consistent risk ratings across the credit portfolio. This facilitates
focused management of the applicable risks and the comparison of credit exposures across all lines of business, geographic regions and
products. The rating system is based on a number of financial analytics, combined with processed market information to provide the main
inputs for the measurement of counterparty risk. All internal risk ratings are based on different categories and in accordance with the
Group's rating policy. The attributable risk ratings are assessed and updated regularly.
26 FINANCIAL INSTRUMENTS, OBJECTIVES AND POLICIES ON RISK MANAGEMENT, continued
Liquidity risk and funding management
131
Liquidity risk - the risk that the Group will not be able to meet its payment obligations when they fall due under normal and unexpexted
conditions. To limit this risk, management has arranged diversified funding sources in addition to the existing minimum amount of
customer deposits. The Group also signed agreements on credit lines to manage the current liquidity. Management also manages assets
with taking into account the liquidity, and daily monitors future cash flows and liquidity. This process includes an assessment of the
expected cash flows and the availability of high-quality software that can be used to secure additional funding if required. The Group
management plans to further increase the volume and cost of services provided.
Analysis of financial liabilities by remaining term to maturity
The table below shows the Group's financial liabilities as of December 31, 2014 and 2013 in the context of time left to maturity based on
contractual undiscounted repayment obligations. Liabilities that are repayable on demand are treated as if the requirement of discharge
was announced at the earliest possible date. However, the Group expects that many customers will not request repayment on the earliest
date on which the Group could be required to pay and the table does not reflect the expected cash flows, calculated on the basis of the
Group's deposit retention history.
th.tenge
From 1
More
Financial liabilities
Less than
From 3 to
year to 5
than 5
As of December 31, 2014
On demand
3 months
12 months
years
years
Total
Trade and other loan payable
2,055,582
2,055,582
Amounts owed to publishers on the received
subscription
1,654,436
3,243,573
4,898,009
Debts on the money transfers received
1,037,610
1,037,610
Arrears on the received transfer of pensions,
salaries and other payments
127.965
127.965
Deposits from customers
20,642,784
14.727
62.873
40.469
20,760,853
Loans from financial institutions
20.346
1,389,406
3,224,575
4,634,327
Total undiscounted financial liabilities
th.tenge
Financial liabilities
As of December 31, 2013
Trade and other loan payable
Amounts owed to publishers on the
received subscription
Debts on the money transfers received
Arrears on the received transfer of
pensions, salaries and other payments
Deposits from customers
Loans from financial institutions
Total undiscounted financial liabilities
23,863,941
1,689,509
4,695,852
3,265,044
-
33,514,346
On demand
2,332,002
Less than
3 months
-
From 3 to
12 months
-
From 1
year to 5
years
-
More
than 5
years
-
Total
2,332,002
846.944
2,285,375
-
2,992,198
-
-
-
5,277,573
846.944
207.183
20,192,762
22,831,385
5,781
155.458
2,446,614
566.988
739.042
4,298,228
100.275
3,013,062
3,113,337
93.411
93.411
207.183
20,865,806
4,000,973
32,782,975
26 FINANCIAL INSTRUMENTS, OBJECTIVES AND POLICIES ON RISK MANAGEMENT, continued
Liquidity risk and funding management, continued
Analysis of financial liabilities based on contractual maturities, continued
The analysis of the maturity gap does not reflect the historical stability of current accounts, the liquidation of which has
historically taken place over a longer period than indicated in the table above.
Market risk
Market risk - the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market
variables such as interest rates, exchange rates and equity prices. The Group considers its market risk in the category of non-trading
portfolio. Non-trading positions are managed and monitored using sensitivity analysis. The Group has no significant concentration of
market risk.
Market risk - non-trading portfolio
Interest risk
Interest rate risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial
instruments.
Fair value sensitivity analysis
Management of interest rate risk, based on the analysis of interest rate repricing, supplemented by monitoring the sensitivity of
financial assets and liabilities. Sensitivity analysis of net profit or loss and equity (net of taxes) to changes in interest rates (repricing risk),
based on a simplified scenario of yield curves by 100 basis points increase or decrease in interest rates and revised positions of interest and
liabilities
existing
as
of
December
31,
2014 and December 31, 2013, can be represented as follows.
2014
2013
th.tenge
th.tenge
Parallel shift of 100 basis points in the direction of decreasing rates
29.190
27,648
Parallel shift of 100 basis points in the direction of increasing rates
(29.190)
(27,648)
Analysis of the sensitivity of profit or loss for the year ended December 31, 2014 and December 31, 2013 and equity to changes
in the fair value of investment securities available-for-sale and changes therein are recognized in equity in the period, due to changes in
132
interest rates (compiled on the basis of positions existing as of 31 December 2014 and 31 December 2013 and a simplified scenario of
parallel shift in the yield curves by 100 basis points increase or decrease in interest rates) can be represented as follows:
th.tenge
2014
2013
Profit or loss
Capital
Profit or loss
Capital
Parallel shift of 100 basis points in the direction of
increasing of rates
(450.108)
(511.291)
Parallel shift of 100 basis points in the direction of
decreasing of rates
491.509
560.939
26 FINANCIAL INSTRUMENTS, OBJECTIVES AND POLICIES ON RISK MANAGEMENT, continued
Market risk - non-trading portfolio, continued
Currence exchange risk.
Currency exchange risk - the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.
The Board has set limits on positions by currency based on the norms of the National Bank of Kazakhstan. Positions are monitored on a
daily basis.
The following table shows the currency in which the Group has significant exposure as of 31 December 2014 and 2013 for nontrading monetary assets and liabilities and its forecasted cash flows. The analysis calculates the effect of a possible change in foreign
exchange rates against the tenge, with all other variables held constant (due to non-trading monetary assets and liabilities the fair value of
which is sensitive to changes in the exchange rate). The effect on equity does not differ from the effect on the consolidated income
statement. A negative amount in the table reflects a potential net reduction in profit or loss, or equity, while a positive amount reflects a
net potential increase.
Increase/
Effect on profit
Increase/
Effect on profit
decrease in
before tax
decrease in
before tax
exchange rate
2014
exchange rate
2013
Currency
2014
th.tenge
2013
th.tenge
USD
30.00%
332.800
30.00%
400.086
EUR
30.00%
7.964
30.00%
5,362
Russian Ruble
20.00%
9.686
20.00%
19.702
ADF
30.00%
68.090
30.00%
17,716
USD
EUR
Russian Ruble
ADF
10.00%
10.00%
(20.00%)
10.00%
110.933
2,655
(9.686)
22.697
10.00%
10.00%
(20.00%)
10.00%
133.362
1,787
(19.702)
5,905
Operational risk
Operational risk is defined as the risk of loss arising due to a failure in internal processes and systems, human error, fraud, human
actuators, or due to external actuators. When controls fail to perform, operational risks can cause damage to reputation, have legal
implications or lead to financial loss (Note 9). The Group can not expect that all operational risks are eliminated, but through a control
framework and by monitoring and responding to potential risks could manage the risks. Controls include effective segregation of duties,
access, authorization and reconciliation procedures, staff education and assessment processes, including internal audit.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Group uses the following hierarchy of methods for determining and disclosing the fair value of financial instruments:
Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2: evaluation model, all feed date of which have a significant effect towards the recorded fair value that are directly or
indirectly based on the information observed on the market;
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on the
information observable at the market.
27 FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED
The following table provides an analysis of financial instruments presented in the financial statements at fair value by level of the fair
value hierarchy:
December 31, 2014
th.tenge
Assets at fair value
Investment securities available-for-sale
Assets the fair value of which is disclosed
Loans to employees
Cash deposit in restricted use
Trade and other receivables
Bank deposits
Cash and cash equivalents
The estimate of fair value using
Quoted prices
Significant
in active
Observable
markets
inputs
(Level 1)
(Level 2)
Total
1,122,472
10,471,196
11,593,668
-
770.730
126.758
3,582,023
1,000,000
10,955,443
770.730
126.758
3,582,023
1,000,000
10,955,443
133
Liabilities the fair value of which is disclosed
Trade and other loan payable
Amounts owed to publishers on the received subscription
Debts on the money transfers received
Arrears on the received transfer of pensions, salaries and other
payments
Deposits from customers
Loans from financial institutions
December 31, 2013
th.tenge
Assets at fair value
Investment securities available-for-sale
Assets the fair value of which is disclosed
Loans to employees
Cash deposit in restricted use
Trade and other receivables
Bank deposits
Cash and cash equivalents
Liabilities the fair value of which is disclosed
Trade and other loan payable
Amounts owed to publishers on the received subscription
Debts on the money transfers received
Arrears on the received transfer of pensions, salaries and other
payments
Deposits from customers
Loans from financial institutions
-
2,055,582
4,898,009
1,037,610
2,055,582
4,898,009
1,037,610
-
127.965
20,760,853
127.965
20,760,853
-
3,875,389
3,875,389
896.798
10,322,547
11,219,345
-
740.086
39.317
2,720,902
500,000
11,459,872
740.086
39.317
2,720,902
500,000
11,459,872
-
2,332,002
5,277,573
846.944
2,332,002
5,277,573
846.944
-
207.183
20,859,956
3,489,057
207.183
20,859,956
3,489,057
27 Fair value of financial instruments continued
Financial instruments carried at fair value
Investment securities available for sale, the value of which is determined using a valuation technique primarily consist of
unquoted equity and debt securities. These securities are valued using models which sometimes include only incorporate data observable
in the market, and in others - data both observable and unobservable. The non-market observable data include assumptions regarding the
future financial performance of the investee, its risk profile, and economic assumptions regarding the industry and geographical jurisdiction
in which the investee operates.
Changes in terms of fair value of financial instruments
During 2014 and 2013, the Group did not make transfers of financial instruments between levels.
Financial assets and liabilities not measured at fair value in the statement of financial position
The fair value of financial instruments that are not carried at fair value in the consolidated statement of financial position
approximates their carrying value as of December 31, 2014 and 2013.
The following describes the methodologies and assumptions used in determining the fair value of those financial instruments that
are not reflected in these consolidated financial statements at fair value.
Assets for which fair value approximates their carrying value
In the case of financial assets and financial liabilities that are liquid or having a short term of maturity (less than three months) it
is assumed that their fair value approximates carrying value. This assumption is also applied to deposits and accounts without a specific
maturity and financial instruments with floating rate.
Financial instruments with fixed and floating rate
In the case of quoted debt securities fair value is based on quoted market prices. In the case of unquoted debt instruments the
model of discontinued future cash flows is used at the current interest rate appropriate for the remaining term to maturity for debt
instruments with similar terms and credit risk.
The fair value of financial instruments
In cases where the fair value of financial assets and financial liabilities recognized in the consolidated statement of financial
position can not be determined on the basis of active markets, they are determined using valuation techniques including discounted cash
flow model. The source data for these models as possible are taken from observable markets, but in cases where this is not feasible, a
degree of judgment is required to determine fair value. The judgments include considerations of inputs such as liquidity risk, credit risk
and volatility. Changes in assumptions about these actuators could affect the reported fair value of financial instruments recognized in the
consolidated financial statements.
CAPITAL ADEQUACY
The Group maintains an actively managed capital base to cover risks inherent in the business.
The main objective of capital management for the Group is to ensure compliance with the Group's external capital requirements
necessary to support its business and maximize shareholder value.
The Group manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk
characteristics of its activities. Compared to previous years, in the objectives, policies and processes for managing capital changes have
occurred.
134
The National Bank of the Republic of Kazakhstan requires a national postal operator to maintain capital adequacy ratio of not
less than 12% of total assets.
As of December 31, 2014 and 2013 capital adequacy ratio of the Group meet the requirements specified above.
2014
2013
Equity, calculated in accordance with the rules of the FSC, in thousands tenge
12,654,503
10,831,787
Total assets in thousands tenge
51,198,044
49,205,403
Capital adequacy ratio,%
25%
22.0%
TRANSACTIONS WITH RELATED PARTIES
In accordance with IFRS (IAS) 24 "Disclosures about related parties" the parties considered to be related if one party has the
ability to control or significant influence over the operating and financial decisions of the other party. When deciding on the issue of the
related party relationship, attention is paid to the substance of the relationship, not merely the legal form.
Terms and conditions of transactions with related parties
Mail delivery and financial services to related parties are made on terms agreed between the parties. Sale of goods, including
envelopes, postcards, etc., and purchase from related parties for the year ended December 31, 2014, based on market conditions.
Outstanding balances at year-end are not provided, are interest free and settlement occurs in cash. Evaluation of receivables for
impairment is conducted each financial year through examining the financial position of the related party and the market in which it
operates. For the year ended 31 December 2014, as well as for the year ended 31 December 2013, the Group has not recorded any
impairment of receivables from related parties.
The relationships with those related parties with whom the Group entered into significant transactions or had significant balances
outstanding as of 31 December 2014 and 2013 are detailed below.
TRANSACTIONS WITH RELATED PARTIES, continued
The balance of transactions with entities under common control or significant influence of Samruk-Kazyna
2014
th.tenge
Trade and other receivables as of 1 January
Arising during the year
Paid during the year
Trade and other receivables as of 31 December
Entities under
common control
92.625
1,827,403
(1,828,932)
91.096
2013
Entities
under common
control
72.668
1,791,683
(1,771,726)
92.625
Trade and other payables as of 1 January
Accrued during the year
Paid during the year
Trade and other payables as of December 31,
358.309
3,032,502
(3,134,505)
256.306
260.285
2,361,278
(2,263,254)
358.309
Customers Deposits as of January 1,
Received
Paid
Customer deposits as of December 31,
100,000
(100,000)
-
300,000
630,000
(830,000)
100,000
Cash deposit in restricted use
Customer current accounts
Transactions with companies under common control or significant influence of Samruk-Kazyna JSC
2014
th.tenge
Sales to related parties - postal services
Procurement of goods
Procurement of services
Interest expense on customer deposits
The balance of transactions with other state-owned companies
Entities under
common control
1,504,535
770.673
1,808,154
2014
th.tenge
Cash and cash equivalents
Investment securities available-for-sale
Transactions with other state-owned companies
57.625
107.575
2013
Organizations
under common
control
995.771
450.640
1,661,007
27.183
Entities under
common control
7,728,063
7,858,293
2013
Organizations
under common
control
8,784,027
7,578,132
2014
2013
135
th.tenge
Interest income on investment securities available-for-sale
Interest income on securities purchased under repurchase agreements
Interest expense on securities sold under repurchase agreements
Entities under
common control
407.418
675.656
1,561
Organizations
under common
control
337.745
169.989
1,820
TRANSACTIONS WITH RELATED PARTIES, continued
Awards to key management personnel
Key management personnel consists of 10 people as of 31 December 2014 (2013: 12). Total short and long term award of key
management personnel amounted to 107.092 thousand tenge for the year ended 31 December 2014 (2013: 134.466 thousand tenge).
Control relationships
Parent company of the Group is "National Welfare Fund" Samruk-Kazyna " JSC ("Shareholder"). The ultimate controlling party
of the Group is the Government of the Republic of Kazakhstan. Group parent company prepares its financial statements available to external
users.
During 2014 the Group had provided to the shareholder the postal and other services in the total amount of 14,194 thousand
tenge, and recognized a receivable as of December 31, 2014 in the amount of 1,192 thousand tenge (2013: 19.948 thousand tenge and
1,209 thousand tenge, respectively), which were included in the amount of transactions and balances of transactions with "entities under
common control" in the table above. During 2013, the Group paid dividends to shareholders, the details of which are given in Note 14.
During 2013, the Group sold and bought back 16 buildings formerly owned by shareholders, but under constant monitoring by
the Group during the entire useful life, in the amount of 176.567 thousand tenge.
136