SUSTAINABLE DEVELOPMENT OF THE COMPANY

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

• commitment to the principles of sustainable development at the level of the Board of Directors, the executive body and employees;
• analysis of the internal and external situation in three components (economy, ecology, social issues);
• identification of risks in the field of sustainable development in the social, economic and environmental spheres;
• building a stakeholder map;
• definition of goals and KPIs in the field of sustainable development, development of an action plan and identification of responsible persons;
• integration of sustainable development into key processes, including risk management, planning, human resource management, investment, reporting, operating activities, etc., as well as into development strategy and decision-making processes;
• advanced training officials and employees in the field of sustainable development; and
• regular monitoring and evaluation of actions in the field of sustainable development, assessment of the achievement of goals and KPIs, performance of the corrective actions, the introduction of a culture of continuous improvement.

6 KPIs have been identified in this area; it should be noted that the following KPIs are approved by the Board of Directors in 2021 to assess activities of executive employees:

• Free cash flow;
• Sale of residential and commercial real estate;
• NAV;
• Reduced Lost Time Injury Frequency (LTIF);
• Return of investment and margin on the Projects;
• Degree of implementation of the Action Plan for the improvement of corporate governance for 2022.

The Board of Directors and the Management Board ensure the formation of an appropriate system in the field of sustainable development and implementation thereof. All employees and officials at all levels contribute to sustainable development. A consultative and advisory body has been formed under the Company’s Management Board – the Sustainable Development Committee – with the main task to develop policies and procedures in the field of sustainable development, as well as submitting proposals for consideration by the Management Board on the implementation of the sustainable development system. A Chairperson of the Committee is the Managing Director in charge of sustainable development. In the report on sustainable development, we aim to disclose the information about our impact (both positive and negative) on the environment, the society and the economy. Actions taken in these areas have the greatest positive effect in terms of achieving long-term sustainability, ensuring the economic efficiency and social stability of the Company. Implementing the Policy on sustainable development, the Company provides, within the framework of the Plan for the improvement of corporate governance, for the performance of actions in the field of sustainable development. The issues of performance of the actions in the field of sustainable development were discussed on a quarterly basis at the meetings of the Board of Directors. In 2022, it is planned to approve the Plan for the improvement of corporate governance for 2022–2023.

To determine the content of the report in the field of sustainable development, an annual survey of stakeholders in the field of sustainable development is conducted. In January 2022, a survey of stakeholders was conducted through questioning in accordance with GRI Standards in the person of: representative of the shareholder, members of the Board of Directors, members of the Management Board, employees, subsidiary, investors, customers, general contractors, enterprises in trust management, buyers, representatives of the central government agencies and local executive bodies, the mass media, suppliers, users of social media, and financial institutions. As a result of the survey, the Materiality Matrix of the identified aspects was developed, which illustrates the ratio of the importance of aspects for the Company and stakeholders. The aspects are ranked on the horizontal axis of the Matrix based on their degree of significance for the Company and on the vertical axis – based on the assessment of stakeholders. The ranking of significant aspects allows constructively forming interaction with stakeholders based on a clear understanding of their priorities.

Matrix of materiality of identified aspects

DETERMINATION OF MATERIAL TOPICS

MAP OF STAKEHOLDERS OF SAMRUK-KAZYNA CONSTRUCTION JSC

EFFECTIVE STAKEHOLDER ENGAGEMENT

The Company strives to create an effective stakeholder engagement system, which is based on respect and mutually beneficial cooperation.

The Company defines a complete list of stakeholders with which it communicates in the course of its activities, with describing the contribution of stakeholders and their interests. When assessing the significance of stakeholders, the stakeholders are ranked in terms of their importance for the Company based on two factors: the strength of the stakeholder’s influence on the Company and the degree of stakeholder’s interest in the activities of the Company.

The parties concerned (stakeholders) of the Company are buyers and lessees of 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, enterprises in trust management, customers, local executive agencies and government authorities, financial institutions, the mass media, and users of social media.

The principles, mechanisms and procedures for communication with stakeholders are formulated by the Code of Conduct, the Policy for Sustainable Development and the Map of Stakeholders:

PREVENTING AND COMBATING CORRUPTION

On 17 May 2018, a Compliance Controller was appointed by the resolution of the Board of Directors of theCompany.

Within the framework of the legislation of the Republic of Kazakhstan in the field of compliance, the Reference model for the compliance function in the portfolio companies of Samruk-Kazyna JSC and internal regulatory documents of the Company concerning the Compliance Controller, it reviews and analyses internal regulatory documents for the presence of corruption risks, identifies and evaluates the Company’s business processes subject to compliance risks, forms an anti-corruption culture in the Company in order to minimize corruption and reputational risks.

The work continues every year on the formation of an anti-corruption culture of the Company by conducting compliance trainings, testing for knowledge of the Law of the Republic of Kazakhstan On Combating Corruption, the Code of Conduct, and explanatory work is also carried out on an ongoing basis among employees of the Company regarding operations of the Hot Line, actions related to combating corruption.

In accordance with the Law of the Republic of Kazakhstan On Combating Corruption, in 2021 an analysis of corruption risks was carried out on the procedure for determining the cost of collateral (pledge, interest), the HR management business process, the procurement management business process and other processes; the Action Plans were developed and approved, responsible performers were appointed and the deadlines for the performance of the actions are determined with the planned period in 2022.

As part of compliance with the Financial Control Measures, explanatory actions were taken regarding the timely submission of declarations on assets and liabilities, income and property, by persons specified by the legislation of the Republic of Kazakhstan; control was provided on the submission of documents confirming the declarations filing.

To comply with anti-corruption restrictions and prevent conflicts of interest, control is provided, the need to disclose information is brought to the attention of persons, a list of affiliates is prepared in accordance with the legislation of the Republic of Kazakhstan, the timeliness of placing a list of affiliates on the Financial Reporting Depository is controlled, affiliation and presence/absence of a conflict of interest in relation to CEO-1 are checked, employees of the Company are consulted on an ongoing basis in order to avoid conflicts of interest.

In 2021, 100 % consideration of appeals and complaints received through the Hot Line and other official channels was ensured in a timely manner, internal checks were carried out on appeals, answers were sent, information was brought to the attention of the relevant persons; when a violation was confirmed, the Company’s management was sent information about the need to apply appropriate measures to persons committed a violation.

The compliance with the requirements of the Law of the Republic of Kazakhstan On Combating Corruption and approved compliance policies are monitored on an ongoing basis.

SUPPORT OF THE STATE POLICY

In accordance with the approved Development Strategy, the Company strives to become an organization with sufficient resources, a wide range of reliable partners, as well as competencies and experience for the effective management of projects, construction and real estate. In this regard, the Company supports the policy pursued by the State in the field of housing construction. 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 quasipublic company, the Company carries out its activities in accordance with the list of activities approved by Resolution of the Government of the Republic of Kazakhstan No.1095 dated 28 December 2015.

RESPONSIBLE SUPPLY CHAIN

The main goal of the Company in the field of procurement activities is to timely, effectively and completely meet the need for resources for the stable operation of all subdivisions, with optimal conditions for their acquisition. The Company has built an effective procurement system based on the principles of informational openness, transparency, equality and development of fair competition. Procurement procedures are public, transparent, standardized and simple. The priorities of the procurement activities of the Company are: the acquisition of goods, works, services from organizations of the disabled persons included in the Register of organizations of the disabled persons of the Group of Companies of Samruk-Kazyna JSC; purchase of goods from producers of the goods purchased, which are included in the Register of commodity producers of the Group of Companies of SamrukKazyna JSC; procurement from qualified potential suppliers. A supplier is selected in the Company in the following ways: holding an open tender (including reverse auctions); request for quotations (including reverse auctions); holding a tender through competitive negotiations; from single source. One of the activities of the Company is the operation of administrative buildings. The Company has in the trust management an administrative building of the Business Centre ‘Green Quarter T4’. The total area of the building is 32,706.8 square meters. The Company owns the administrative building of the Business Centre ‘Kazyna Tower’ located at the address: 10, Mangilik Yel, with the total area of 15,121 square meters.

MANAGEMENT OF IMPACT ON ENVIRONMENT PROTECTION

The Company considers environmental protection activities as an important part of its ongoing work, with recognizing the need to maintain 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. A large negative impact from the construction project is experienced by the air. The situation is often aggravated by the fact that construction sites are located in close proximity to residential areas, with forming the centres of negative impact on the atmospheric air of built-up areas and the health of the population. Emissions of pollutants into the atmosphere are formed at all stages of the construction process, from the land development of the territory of the construction site to the provision of amenities and landscaping of the territory. The sources of atmospheric pollution at construction sites are construction machines and mechanisms – crane trucks, excavators, graders, dump trucks, high sided trucks, concrete pumps and concrete mixers, rollers, asphalt pavers, binder distributors, diesel generators, welding machines, cutting machines, grinding machines, etc. The Company’s construction projects have a negative impact to varying degree on the atmosphere, and first of all, it depends on the volume of construction and installation work performed. The legislation of the Republic of Kazakhstan regulates emissions of hazardous substances into the environment. According to the provisions of the Code of the Republic of Kazakhstan On Taxes and Other Compulsory Payments in the Budget (Tax Code), a fee is charged for environmental emissions. The tax unit is the actual volume of environmental emissions within and (or) in excess of the established standards for environmental emissions: emissions of pollutants; discharges of pollutants; placed production and consumption waste. The Company monitors the mandatory conduct by developers of a comprehensive assessment of pollution during the construction of a facility, the fulfilment of their assumed obligations and compliance with the standards. When reviewing work projects, the information on environmental impact assessments and environmental implication statements are analysed. In addition, it is checked whether developers have received permits from the regional directions of natural resources and environmental control for environmental emissions during the construction of facilities.

DEVELOPMENT OF PERSONNEL POTENTIAL

The personnel are a key asset of the Company, its strategic partner in achieving sustainable development goals. Based on the Corporate Human Resources Management Standard approved by Sole Shareholder of the Company, the main business processes in terms of human resources management are kept up to date in the portfolio companies in accordance with the reference model. Employee involvement is assessed on an annual basis. The involvement index in 2021 was 86 % (2020: 63 %). This indicator has improved by 23 % and is in the positive zone. The priority areas of the Company in terms of human resources management are to meet the needs of the Company in specialists with the appropriate professional competencies in order to implement the tasks facing the Company, to develop competencies in the field of project management in construction, to attract and implement investment projects, to increase the profitability of activities of the Company. One of the important directions of the personnel policy of the Company is the development of employees and provision of employees with opportunities for professional and career growth, increase of the motivation of employees to introduce a corporate culture of high labour productivity. Given the development of digital technologies, such training methods as remote study courses, webinars and on-the-job training are actively used.

Scale of organization

To attract the specialists with the necessary skills and competencies, the Company performs open competitive procedures to search for and select the personnel. All vacancies are posted on the corporate website of Samruk-Kyzmet – Qsamruk. During 2021, 32 employees were hired through competitive procedures. All candidates go through the procedures for testing professional knowledge and assessing the potential for further development through the web-portal of the Corporate University ‘Samruk-Kazyna’.

ASSESSMENT OF EMPLOYEES’ PERFORMANCE

Regular reviews of performance – 100 %. For executive employees (members of the Management Board), the key performance indicators (KPIs) for the year are approved by the Board of Directors, and KPI performance is also assessed at the end of the year. The employees’ activities accountable to the Board of Directors (4 employees) are assessed by the Board of Directors based on KPIs approved at the beginning of the year.

The key performance indicators are cascaded to employees through each employee’s approval of a goal map for the year. The effectiveness of the activities assessment is reviewed by monitoring the implementation of the goal map for six months and a comprehensive assessment of the activities of employees for the year.

PERSONNEL TRAINING

Requirements for the process of vocational training are regulated by the Rules for vocational training and development of employees of the Company.

In connection with the adoption of the quarantine measures in the Republic of Kazakhstan for non-spread and protection against CVI, in 2021, the training of employees was conducted online. To cover all the employees of the Company with training and meet the needs for training and development in accordance with the Individual development plans developed by the employees, the employees were provided with access to the training web-portal of the Corporate University ‘Samruk-Kazyna’, and they were also provided with the opportunity to take online courses offered by the leading training centres of the Republic of Kazakhstan.

Information about training of employees for 2021 (hours)

RELATIONS BETWEEN EMPLOYEES AND MANAGEMENT

For all significant projects implemented in the Company, an address to employees is prepared by the Chairperson of the Management Board. So, in 2021, the address to the Company’s employees concerned the projects for the development of corporate culture, as well as a survey on employee involvement. At the same time, as part of the relationships between employees and management, the Company regularly conducts:

• weekly operational meetings with the participation of executive employees and heads of structural units concerning operating activities;
• semi-annual meetings of the Chairperson of the Management Board with all employees of structural units concerning the implementation of functional tasks and the achievement of approved Goal Maps for the reporting period; and
• quarterly meetings of the management with the personnel in the format of the ‘Casual Meeting’ in order to informally discuss the issues, problems and suggestions of employees. The hours have been set for the management to receive the employees concerning personal matters on a weekly basis.

The Company has committees and working groups to discuss and make collective decisions on current issues of activities of the Company.

MOTIVATION SYSTEM

The Company’s remuneration system is governed by the Company’s Employee Remuneration and Bonuses Rules the purpose of which is to assist in achieving the Company’s strategic goals by establishing a remuneration system that allows rewarding the employees for the results of activities in the reporting period and assess the effectiveness of employees when they achieve their goals. In 2021, positions were graded and the salary market was analysed to assess the level of competitiveness of the salaries of employees of the Company; a remuneration system was introduced taking into account the established grades for positions of managerial and administrative employees. The Rules for providing social support to employees of the Company have been updated, which define the types and conditions of social support for employees.

The Company’s employees receive the following types of social support:

• financial assistance;
• compensation expenses;
• health insurance for employees and their family members;
• the possibility of paying for the purchase of club cards for fitness classes in instalments through advance payments made by the Company.

The Company provides for equal remuneration for the work of men and women.

Based on the results of the assessment of employees’ activities, a remuneration is provided in the form of bonuses within the planned funds for the payment of the variable part of the salary.

On the occasion of the professional holiday – the Builder’s Day – and the Independence Day, the best employees of the Company are grated certificates of honour and award pins and awarded the state awards.

ON-SITE HEALTH AND SAFETY

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

• provides access to medical insurance services (health insurance) including a 24-hour consulting and dispatching service (call centre), ambulance services, inpatient treatment, outpatient care, medical preventive examination for an employee, services of a family doctor and home nursing, dental services, flu vaccinations, etc.;
• provides financial support in the form of grants for health improvement in addition to leave; and
• promotes the policy pursued to strengthen and encourage employees to maintain a healthy lifestyle by providing rooms with sports equipment in the administrative building and the possibility of purchasing discounts for visiting sports facilities.

The Company also performs organized work to ensure the on-site safety of employees:

• training of employees on production processes is carried out by giving mandatory instructions and testing knowledge on occupational health and safety of employees, instructions are given on fire safety and labour protection, first of all, for newly hired employees; and
• regulated preventive maintenance of equipment and engineering networks in the office premises of the administrative building, computers and office equipment at employees’ workplaces is carried out.

The Company’s employees are located on floors 14-15 of the Business Centre ‘Green Quarter’ in block T4 (hereinafter referred to as the Building). Each workplace is equipped with office equipment that meets their functional purpose and requirements for occupational health and safety. Emergency routes and exits from the premises of the Building are marked with signs. The operability of the automatic firefighting equipment of the Building and the fire safety of employees while staying at their workplaces are provided by a specialized service organization under a service agreement. The inspection is carried out in accordance with the technical regulations once every six months. The training of technical personnel response skills in case of accidents, fires is carried out in accordance with the approved Training Plan (in connection with the introduced quarantine measures, the training exercises are conducted without the evacuation of employees from the Building). Newly hired employees attend a fire safety induction meeting. During working hours, the temperature, lighting, as well as the microclimate in the premises of the Building, where the workplaces are located, comply with sanitary and epidemiological requirements and are ensured through regulated periodic maintenance and scheduled preventive repairs and inspections of the engineering systems and equipment of the Building. In accordance with the introduced quarantine measures in the Buildings, the following is carried out: telemetric temperature checks at the entrance to the building of employees, visitors and staff; daily sanitization of premises with the use of disinfectants, face-mask requirements are met and distance in public areas and workplaces are observed.

SPONSORSHIP AND CHARITY

In accordance with the Charity Policy and the Beneficent Program of Samruk-Kazyna JSC, sponsorship and charitable activities are carried out through a single operator of the group of companies of Samruk-Kazyna JSC – the Social Project Development Fund of Samruk-Kazyna Trust JSC. Funds for activities in this direction were not provided for in the budget of the Company for 2021. As part of the development of the volunteer movement in the group of companies Samruk-Kazyna, employees of the Company actively participate in the volunteer movement, promotions and actions aimed at providing social assistance, such as: implementation of eco-projects; educational projects; Donor Day; volunteer clean-ups and cleaning garbage and snow, seedlings planting; improvement of the territories around the office and house territories in Esil District. Also, social support and assistance was provided to war veterans, children undergoing treatment in an oncological hospital, large families and the disabled persons; employees of the Company are actively involved in charity events and promotions.