SUSTAINABLE DEVELOPMENT OF THE COMPANY

The targets of implementation of the Policy of sustainable development in the Company are to promote the Company’s contribution to the sustainable development of the Company in economic, social, and environment areas; to develop cooperation with the stakeholders and to enhance confidence in the Company on their part; to create favourable conditions to enhance effectiveness of labour and to fulfil the potential of the Company’s employees; to develop the corporate governance system, to enhance transparency of business processes. By recognizing the principles of the UN Global Contract.

In accordance with the Code of Corporate Governance of Samruk-Kazyna JSC and the Policy of sustainable development, the system of management in the field of sustainable development is arranged in the Company, which includes:

– commitment to the principles of sustainable development at the level of the Board of Directors, executive body, and employees;

– analysis of internal and external situation based on three components (economy, environment, social matters);

– detection of risks in the field of sustainable development in social, economic, and environment areas;

– composing a chart of stakeholders;

– determination of the targets and KPIs in the field of sustainable development, elaboration of a plan of actions and appointment of responsible persons;

– ntegration of sustainable development in the key processes, including risk management, planning, human resource management, investments, reporting, operating activities, and other, as well as in the development strategy and decision-making processes;

– advanced training for officials and employees in the field of sustainable development;

– regular monitoring and evaluation of the actions in the field of sustainable development, evaluation of the targets and KPIs achievement, taking corrective actions, and implementation of the continuous improvement culture.

8 initiatives of sustainable development in 2020 were determined: Improvement of corporate governance; Providing economic efficiency; Implementation of sustainable development system; Human resources development; Compliance with high ethical standards; Employees’ career enhancement in the field of sustainable development; Ensuring compliance with occupational safety and accident prevention regulations; and Enhancement of transparency

Likewise, 9 KPIs in this filed were determined; it should be noted that KPIs 2020 listed below were approved by the Board of Directors to evaluate activities of executive employees: Degree of measures implementation under the Plan for improving corporate governance; Net income; Return on average capital employed (ROACE); Net asset value (NAV); Debt/Equity; EBITDA; Level of satisfaction with service quality for each residential complex; Index of personnel involvement; and Information activity to promote image.

The Board of Directors and the Management Board provides a build-up of an adequate system in the field of sustainable development and implementation thereof. All employees and officials at all levels make contribution to sustainable development. The consultative and advisory body – the Committee for sustainable development – is formed under the Management Board of the Company with the primary objective to elaborate the policies and procedures in the field of sustainable development, as well as to submit proposals for consideration by the Management Board concerning implementation of the sustainable development system. The Chairman of the Committee is the Managing Director in charge of the sustainable development. We try to disclose in the report in the field of sustainable development the information concerning our effect (both positive and adverse) on environment, society, and economy. The actions taken in these directions have a great positive effect in terms of attainment of long-term stability, provision of economic effectiveness and social stability of the Company. By pursuing the Policy of sustainable development the Company provides to take actions in the field of sustainable development within the framework of the Plan of improvement of the corporate governance. The matters concerning implementation of the measures in the field of sustainable development were quarterly discussed at the meetings of the Board of Directors. In 2021, implementation of the planned measures will be continued..

In order to determine the contents of the report in the field of sustainable development the stakeholders are annually questioned about sustainable development. In October 2020, the stakeholders were questioned using a questionnaire in accordance with the GRI Standards represented by: a representative of the shareholder, members of the Board of Directors, members of the Management Board, employees, subsidiary, investors, customers, general constructors, companies under trust management, purchasers, representatives of the central state bodies and local executive bodies, mass media, suppliers, social media users, and financial institutions. Following the questioning, the Matrix of materiality of revealed aspects has been elaborated, which illustrates a correlation of significance of the aspects for the Company and the stakeholders. The horizontal axis of the Matrix ranges the aspects based on a degree of their significance for the Company, and the vertical axis ranges based on estimation of the stakeholders. Arrangement of significant aspects allows setting constructive cooperation with the stakeholders based on a clear understanding of their priorities.

Based on the results of revealed aspects, the information is disclosed on the following subjects:

Economic:

• economic performance;

• procurement practice;

• corruption counteraction.

Environmental:

• compliance with requirements.

Social:

• occupational/consumer health and safety;

• training and education;

• equal remuneration for women and men;

• non-discrimination;

• state policy.

The Company tries to create an effective system of cooperation with the stakeholders, which is based on respect and mutually advantageous cooperation. The Company determines a full list of stakeholders with which it cooperates in the course of its activities, which list contains a description of stakeholders’ contribution and their interests. When evaluating significance of the stakeholders, the stakeholders are ranged by significance for the Company by two factors: the power of influence of a stakeholder on the Company and degree of interest of a stakeholder in activities of the Company. The parties concerned (stakeholders) of the Company are purchasers and lessees of the residential premises of the Company, employees of the Company, the Sole Shareholder and the Board of Directors, subsidiaries and dependent organizations, general contractors and developers, companies under trust management, customers, local executive bodies and state bodies, financial institutions, mass media, and social media users.

The principles and procedures of cooperation with the stakeholders are formulated in the Code of Conduct and the Policy of sustainable development. The Company follows the procedure for corporate communication, which prescribes the mechanisms to work with various communication channels and target groups:

On 17 May 2018, the Compliance Controller was appointed by the resolution of the Board of Directors of the Company. The main goal of its activity is to determine the anti-corruption policy, as well as to monitor the implementation of anticorruption measures, including corruption risks assessment. The Compliance Controller, together with the structural divisions of the Company, ensures, if necessary, that internal regulatory documents are brought in accordance with the anti-corruption legislation of the Republic of Kazakhstan taking into account the analysis of corruption risks. Every year, work continues to form an anti-corruption culture by holding seminars, round-table meetings among employees of the Company with involving the representatives of the Agency of the Republic of Kazakhstan for civil service affairs and anti-corruption, the Prosecutor’s Office, law enforcement agencies; on an ongoing basis, explanatory work is carried out among employees of the Company regarding the anti-corruption legislation, as well as tests among employees of the Company involved in high-risk processes and due diligence of counterparties of the Company are carried out. In the first half of 2020, the Anti-Corruption Standard of the Company was developed in accordance with the Anti-Corruption Law of the Republic of Kazakhstan, analysis of the risks of corruption in procurement, recruitment, assessment, promotion and dismissal of employees, and other business processes of Samruk-Kazyna Construction JSC was carried out.

In the 2nd quarter of 2020, a comprehensive audit of the Company’s counterparties exceeded 10 million tenge under service procurement contracts was performed. The audits performed during the period from July 2020 to September 2020 included 5 procurement contracts based on the website www.zakup. sk.kz. In 2020, the hot line of the Company received 18 calls of which 14 were received in the 2nd half of 2020. The facts were not confirmed, there was no damage to the Company in the context of received appeals.

In accordance with the approved Development Strategy for 2018–2028, the Company strives to be an entity with sufficient resources, a lot of reliable partners, as well as expertise and experience for the effective management of projects, construction and real estate. Thereby, the Company supports the state-implemented housing development policy.

The Company complies with the principles of the Yellow Pages Rule, which proclaim the non-interference of the sector in those areas of the economy where the business is represented. As a quasi-public company, the Company conducts its activities in accordance with the list of activities approved by Decree of the Government of the Republic of Kazakhstan No. 1095 dated 28.12.2015.

The core goal of the Company in the procurement field is timely, efficient and complete provision of the resource requirements to ensure stable operation of all divisions with optimal conditions for their acquisition. The Company has built an effective procurement system based on the principles of transparency, equality and fair competition. Procurement procedures are public, transparent, standardized and simple. The Company’s procurement priorities are: purchasing goods, works and services from organizations of persons with disabilities that are members of the Register of organizations of persons with disabilities of the Group of Companies of Samruk-Kazyna JSC; purchasing goods from producers of the goods purchased from the Register of producers of the Group of Companies of Samruk-Kazyna JSC; purchasing from qualified prospective suppliers.

Selection of a supplier is carried out by the Company as follows: open bidding (including reverse auction); requesting quotations (including reverse auction); bidding through competitive negotiations; from one source. One of the activities of the Company is the operation of administrative buildings. The administrative building of Zeleny kvartal T4 Business Centre is under the trust management of the Company. The total area of the building is 32,706.8 square meters. The Company owns the administrative building of Kazyna Tower Business Centre located at the address: 10, Mangilik el. The total area is 15,121 square meters

The Company considers environmental protection to be an important part of its ongoing operation, acknowledges the need of maintenance of ecological balance and environmental friendliness. As part of the construction quality control, the Company monitors indirect environmental emissions generated at the construction sites of developers. The construction site has a huge negative impact on the air. Often the situation is aggravated by the fact that construction sites are located in close proximity to residential buildings, forming a focus of negative effects on the atmospheric air of built-up areas and public health. Air pollution emissions are formed at all construction stages, from the engineering preparation of the construction site territory to the landscaping and gardening of the territory. The sources of air pollution at construction sites are construction machines and mechanisms – truck cranes, excavators, graders, dump trucks, drop-side trucks, concrete pumps and concrete mixers, rollers, pavers, asphalter, diesel generators, welding machines, cutting machines, grinder machines, etc.

Construction projects of the Company impact the atmosphere negatively in varying degrees, and above all, the impact depends on the volume of construction and installation works. The legislation of the Republic of Kazakhstan regulates emissions of harmful substances into the environment. According to the Tax Code of the Republic of Kazakhstan, a fee is charged for environment emissions. The actual volume of environment emissions within and (or) in excess of the established standards for environment emissions is the tax unit: emissions of pollutants; discharge of pollutants; disposed production and consumption waste. The Company monitors mandatory implementation of a comprehensive assessment of pollution during facility construction by developers and fulfilment of its obligations and compliance with the standards. The Company, in studying working projects, analyses information on environmental impact assessment and environmental impact statements. Besides, the Company audits developers obtaining permits for environment emissions during facilities construction from the regional departments of natural resources and environmental management

The Company has developed the following corporate values:

These corporate values should become the norm of corporate culture and the main factors of the effectiveness of the development of a model of behaviour. The Company’s management must set the tone and maintain a corporate culture of high performance, responsibility and efficiency, where the employees think and act as owners of assets, with sharing the profits and losses with shareholders, and are ready to change to ensure that strategic goals of the Company are achieved.

The Company’s staff is a core asset, a strategic partner in achieving sustainable development goals. In 2020, the Board of Directors of the Company approved amendments and alterations to the HR Policy of the Company for 2018– 2028 to the extent of the approval of corporate values and improvement of the high-performance corporate culture. Based on the Corporate Standard for Human Resource Management approved by the Sole Shareholder of the Company, portfolio companies update their main business processes relating to human resources management in accordance with the reference model. Staff engagement is evaluated annually. The engagement index in 2020 was 63 % (2019: 61 %). This indicator is improved by 2 % and is positive.

The priority areas of the Company relating to human resources management are ensuring the needs of the Company in specialists having the appropriate professional competencies to implement the tasks facing the Company, development of competencies in the field of project management, and performance of engineering services. One of the essential areas of the HR Policy of the Company is the development of employees and providing employees with opportunities for professional and career progress. Taking into account the digital technologies advancement, such training methods as distance learning courses, webinars and onthe-job training, developing employees’ skills in working with software products, including training in BIM technologies in the field of construction, are actively used.

For 2020, at the CC level, 14 employees were hired, 35 employment agreements were terminated of which: 14 – due to staff reduction, 5 persons – by agreement between the parties, 10 – at their own request and 6 – upon the expiration of the EA term. During 2020, 8 employment agreements were terminated in CC Development LLP of which 2 were terminated due to staff redundancy, 5 employees were hired. Due to the sale of 51% interest, the number of CC Development LLP at the end of the reporting period is not consolidated. As of 01.01.2021, 12 women are on maternity leave.

The requirements for the vocational training process are regulated in the Company’s Employee Vocational Training and Development Rules.

Regular performance reviews – 100%, career development reviews – 94.7% of employees. For the executive employees (members of the Management Board), the Key Performance Indicators (KPIs) for the year are approved by the Board of Directors, and the KPI performance is assessed at the end of the year.

The activities of employees subordinate to the Board of Directors (4 employees) are evaluated by the Board of Directors on the basis of KPIs approved at the beginning of the year. For the Administrative staff, an annual review of the effectiveness of performance evaluation and individual development plans is carried out.

Сareer development reviews

94,7%

of employees

The Company’s remuneration system is regulated by the Rules for remuneration and awarding the Company’s employees, the purpose of which is to assist in achieving the strategic goals of the Company by establishing a remuneration system that allows employees to be rewarded for their performance in the reporting period and evaluating the staff effectiveness in achieving their goals.

In 2019, position grading and analysis of remuneration market were carried out to assess the level of competitiveness of wages of the Company’s employees; in 2020, the remuneration system was introduced subject to specified position grades for executive and administrative employees. The Rules for provision of social support to the Company’s employees determining the types and conditions of social support for employees have been in force since 2009. The following types of social support are provided to the Company’s employees: Financial aid; Compensation expenses; Health insurance for employees and their families. The Company provides for equal remuneration for men and women. In accordance with the Procedure for assessing staff activities, a comprehensive assessment of administrative and managerial employees is carried out annually until December 31 of the reporting year. Thus, the percentage of administrative employees who received regular performance and career development reviews in 2020 was 96%. The senior managers are assessed by achievement of the key performance indicators of the Company

The Chairman of the Management Board formulates a message to the employees for all significant projects implemented in the Company. Thus, in 2020, a message to the Company’s employees was about projects for the corporate culture diagnostics and development, as well as the project for introducing a position grading system.

At the same time, as part of the relationships between employees and management, the Company regularly holds:

– weekly operational meetings with executive employees and heads of structural divisions on operational activities;

– quarterly meetings of the Chairman of the Management Board with all employees of structural divisions regarding implementation of functional tasks and achievement of the approved Target charts for the reporting period.

The Company also introduced the practice of holding the meetings with the Chairman of the Management Board in the “no ties” format to discuss the issues, problems and suggestions of employees in an informal setting. The management’s reception hours on personal matters are set on a weekly basis.

The Company pays special attention to the health of employees, working conditions and ensuring safety at the workplaces. To increase the personal health potential of employees and members of their families, the Company:

– provides access to the health insurance services (health insurance) including twenty-four-hour consultation and dispatch service (Call Centre), ambulance services, inpatient treatment, outpatient care, employee medical preventive examination, services of a family doctor and a nurse at home, dental services, flu vaccination, etc.;

– provides financial support by granting benefits for health improvement as part of a leave;

– assists in the ongoing policy to strengthen and encourage employees to live healthy by providing rooms with sports equipment inside the administration building and the possibilities of getting discounts to visit the sports facilities

The Company also performs organized work to ensure safety of the employees at the workplaces:

– provides training for the employees on production processes by giving binding instructions and testing knowledge of the employees regarding safety and labour protection; instructions are given regarding fire safety and labour protection, primarily for newly hired employees;

– carries out regulated preventive repairs of equipment and utility systems in the office premises of the administrative building, computers and office equipment at the employees’ workplaces

The Company’s employees are located on the 14- 15th floors in Zeleny kvartal Business Centre, block T4 (hereinafter referred to as the Building) and in Kazyna Tower Business Centre. Each workplace is equipped with office equipment corresponding to their functional purpose and meeting the safety and labour protection requirements. The emergency ways and exits from the premises of the Building are marked with signs. The operability of the automatic fire-fighting equipment of the Building and the fire safety of employees at the workplaces is provided by a specialized service organization under a service contract. The inspection is carried out in accordance with the technical regulations once every six months. The skills of response of technical staff in case of accidents and fires are practised in accordance with the approved Training Plan (in connection with the introduced quarantine measures, training exercises are carried out without evacuating the employees from the Buildings). The newly hired employees are given an introductory fire safety briefing. During working hours, the temperature, lighting, as well as the microclimate inside the premises of the Building, where the workplaces are located, meets the sanitary and epidemiological requirements and is ensured by carrying out regulated periodic maintenance and scheduled preventive repairs and inspections of utility systems and equipment in the Building. Due to the introduced quarantine measures, the following is carried out in the Buildings: telemetric check of the temperature of employees, visitors and personnel at the entrance to the building; daily sanitization of premises with the use of disinfectants, mask regime and distance within public spaces and in the workplaces are observed.

In accordance with the Charity Policy and the Charitable Program of Samruk-Kazyna JSC, sponsorship and charity activities have been carried out through the single operator of the Group of Companies of Samruk-Kazyna JSC – Social Project Development Fund of Samruk-Kazyna Trust JSC. The funds for such activities were not provided for in the Company’s budget for 2020.

As part of the development of the volunteer movement in the group of companies SamrukKazyna, the Company’s employees actively participate in the volunteer movement, campaigns and events aimed at providing social assistance, such as: implementation of eco-projects; educational projects; Donor Day; volunteer clean-up – removal of garbage, snow, planting seedlings; improvement of the areas around the office and adjacent areas in Esil District. Also, social support and assistance was provided to war veterans, children undergoing treatment in an oncological hospital, large families and people with disabilities; employees of the Company actively participate in charitable contributions and events.