Ombudsman

Email address: o.bekbas@samruk-energy.kz

Telephone: +7 (7172) 69-23-56

Acting as an independent party, the Ombudsman contributes to the establishment and development of corporate values and culture, high standards of professional conduct and business ethics at the Company. Independence, neutrality, impartiality and confidentiality are basic principles of Ombudsman’s work.

Independence:

1) The Ombudsman is independent in his activities and independent in his judgments;

2) The Ombudsman cannot hold another position in the supervised Company that could compromise his independence and neutrality;

Neutrality and impartiality:

1) The Ombudsman is neutral, impartial and independent when considering an appeal;

2) The Ombudsman does not stand with any of the conflicting (arguing) parties;

3) The Ombudsman has no personal financial and (or) nonfinancial interests resulting from consideration of appeals.

Confidentiality:

1) The Ombudsman does not disclose information if he does not receive permission from the person who submitted an appeal, and even in this case, he independently makes the final decision at his own discretion. The only exceptions are cases that are stipulated by current legislation of the Republic of Kazakhstan.

2) The Ombudsman does not disclose the names of those who addressed an appeal to him at giving recommendations on key trends, identified issues, existing policies and established practice.

The Ombudsman tasks include:

1) assistance in the settlement of labor disputes, conflicts, problematic social and labor issues as well as helping employees in observing the principles of business ethics;

2) assistance in increasing the rating and image of the supervised Company, early prevention and settlement of disputes and conflicts;

3) assistance in increasing the rating and image of the supervised Company, early prevention and settlement of disputes and conflicts;

4) The Ombudsman submits problematic issues that are systemic in nature and require taking appropriate decisions (comprehensive actions), effective propositions for their resolution to the Board of Directors/Supervisory Board, and if available, to the Audit Committee under the Board of Directors/ Supervisory Board.

The Ombudsman acts on the basis of Regulations on the Ombudsman approved by the Board of Directors. In 2019, the Regulations were updated with regard to the inclusion of rules governing the interaction of “Samruk- Energy” JSC Ombudsman with Ombudsmen of subsidiaries and affiliates.

In 2019 the Ombudsman received 20 different verbal appeals. All persons who submitted an appeal received comprehensive answers. Appeals and responses to them do not have a negative impact on the social stability of the Company as a whole. No case of appeal to the Ombudsman regarding discrimination on racial, religious, national, gender, age, political and other grounds was recorded. Respectively, in this regard, there were no written appeals.

The Internal Audit

The mission of the Internal Audit Service is to provide the Board of Directors and the Management Board with necessary assistance in performing their responsibilities to achieve the strategic goals of the Company by conducting unbiased internal audits based on a risk-based approach, providing recommendations and sharing knowledge. The main goal of the IAS is to provide the Board of Directors with independent, objective audit guarantees and advice aimed at improving risk management, internal control and corporate governance systems.

44 scheduled and 6 unscheduled audit assignments were completed in 2019 across “Samruk-Energy” JSC group of companies, including:

— audit of processes for managing energy efficiency, energy resources, operation and maintenance of production equipment;

— evaluation of Transformation program implementation;

— audit of occupational health and safety and environmental protection processes;

— assessment of the degree of achievement of executives’ KPI;

— IT audit and evaluation of human resource management processes.

Based on the results of audits conducted, 295 recommendations were given, including:

— 76 A category (recommendations with immediate priority);

— 102 B category (urgent priority);

— 117 C category (medium priority).

All audit assignments are performed in accordance with the International Professional Standards for Internal Auditing. Based on the audits results, recommendations aimed at improving internal controls, risk management and corporate governance systems were given.

The priority of audit assignments is determined by selecting the processes with the highest available risks, as well as requests for conducting audits made by the Sole Shareholder and “Samruk-Energy” JSC Board of Directors are considered as a priority.

As part of improving the corporate governance system at the Company, in 2019, the IAS continued to implement and update action plans for:

— the strategic plan of the IAS;

— the program for ensuring and improving quality;

— a three-year plan for the transition to audits based on testing of internal controls.
Moreover, the IAS regularly monitors the implementation of recommendations of external auditors and evaluates the effectiveness of activities on the implementation of IAS recommendations.

As part of the organization and coordination of interaction with the 2nd line of defense of the Company, the IAS held meetings with structural units of the 2nd line of defense (Compliance Service, Departments: Risk Management and Internal Control, Legal Support, Security and Financial Control) every quarter.

Following the meetings:

— it was agreed to exchange and discuss information requiring attention during inspections conducted by the 2nd and 3rd lines of defense.

— It was decided to organize an internal electronic platform for the regular exchange of information and the subsequent storage of this information.

According to the 2019 results, the Company’s Board of Directors evaluated the IAS’s performance as “EFFECTIVE”.

A corporate management system was introduced at the Company in accordance with the international standard ISO 9001:2015. “Samruk-Energy” JSC effectively manages its business while focusing on the needs and expectations of stakeholders.

To confirm the compliance of the corporate governance system with the requirements of the international standard ISO 9001:2015, the Company annually passes an external audit. It is carried out in accordance with TÜV NORD CERT procedures with confirmation of the scope of the management system in part of services for corporate energy asset management.

In November 2019, the Company successfully passed the 2nd External Supervisory Audit. Following the conducted Audit, positive aspects of development and performance of the corporate governance system were noted and recommendations for its further improvement were provided.

The external audit

The Company’s audit organization is selected in line with the Rules for selection of an audit organization for “Samruk- Kazyna” JSC and organizations, more than fifty percent of voting shares (equity stake) of which are directly or indirectly held by “Samruk-Kazyna” JSC under ownership or trust management, approved by the decision of «Samruk- Kazyna» JSC Management Board.

Quality and cost of services are the main criteria determining the choice of an audit organization. PricewaterhouseCoopers («PwC») network of firms has been the external auditor of the Company since 2012. PwC holds a leading position in the provision of audit and consulting services: the audit clients include almost half of the companies entered into the FTSE 100 and Fortune 500 ratings. In order to improve the quality of services delivered to fuel and energy industry enterprises in different countries of the world, the Global Energy Center was established as part of the firm, which comprises more than 4,000 professionals. Visit www.pwc.kzfor more information..

According to “Samruk-Energy” JSC Policy in engaging audit organizations services, the Company applies the principle of rotation of a partner bearing the main responsibility for the audit, every five years. Baurzhan Burkhanbekov was the partner who had main responsibility for the audit in 2016– 2017. Dana Inkarbekova has been the partner since 2018. Furthermore, there are special conditions at “Samruk- Energy” JSC group of companies relating to hiring of audit organizations’ employees.

Therefore, in the event of expected appointment of an audit organization employee who participated in the compulsory audit of the Company as an employee of an audit organization within two years preceding the date of his/her appointment (election) to the Company as a member of the Management Board, managing director and chief auditor, it is required to obtain a preliminary approval of the Audit Committee in order to avoid conflicts of interest.

PwC conducts audit at the following SA of the Company:

Fees paid to the audit firm for auditing services for 2019