09
ANNEXES

About the Report

General information

GRI 102-48, 102-49, 102-50, 102-51, 102-54

This 2020 Integrated Annual Report (the Report) is the tenth report, which discloses information on financial, economic and operational performance, as well as data about the sustainable development achievements of the Company. The Report is intended for a wide range of stakeholders. This report has been prepared in accordance with the GRI Standards: Core option.

The Report discloses Kazatomprom’s financial and non¬- financial operations connected with projects both in the Company’s country of residence, the Republic of Kazakhstan, and abroad. Non-financial disclosures relate mainly to the subsidiaries, associates and joint ventures in which the Company holds 50%+. i.e. to the Group.

Compared to the 2019 Integrated Annual Report, changes have been made to the Report in individual indicators and the disclosure of additional indicators. Detailed explanations are given in the text of the Report. In 2020, there were no significant changes in the scope and boundaries of the Report compared to the previous year.

Financial indicators are presented in the national currency of the Republic of Kazakhstan, KZT (tenge), and correspond to the IFRS audited consolidated financial statements presented in full in the Annexes to the Report and on the Kazatomprom’s website.

The Report comprehensively discloses:

  • implementation of Kazatomprom’s Development Strategy
  • business administration approach of the Company’s management
  • significant financial, economic, and production plans and performance in core operations
  • performance in occupational health and safety and environmental protection
  • contribution to the regional development, implementation of the social policy, and other sustainable development aspects

To designate Kazatomprom and its subsidiaries, the Report uses the names: “Kazatomprom”, “Company”, “Group”.

Standards and Statutory Requirements

The Report discloses basic data in accordance with the requirements of the laws of the Republic of Kazakhstan, the internal regulations and practices of the Company, and international corporate governance practices. When drawing up the Report, the Company considered the following documents:

  • Law No. 415-II of the Republic of Kazakhstan dated 13 May 2003 On Joint Stock Companies
  • The rules for information disclosure by the issuer, Requirements for the content of information to be disclosed by the issuer, and the terms for information disclosure by the issuer on the Internet resource of the Depository of financial statements as approved by the Resolution No. 189 adopted by the Board of the National Bank of the Republic of Kazakhstan on 27 August 2018
  • Information Disclosure Rules of NAC Kazatomprom JSC (2019)
  • Kazatomprom’s Corporate Governance Code approved by the Resolution of the Sole Shareholder dated 27 May 2015 (Decision No. 22/15 of the Management Board of Samruk-Kazyna JSC)
  • Regulatory requirements of the London Stock Exchange (LSE), Kazakhstan Stock Exchange (KASE), and Astana International Exchange (AIX)
  • International integrated reporting standard ( International Framework)
  • International standard for sustainable development reporting, Global Reporting Initiative (GRI Standards (Core)
  • АА1000SES Stakeholder Engagement Standard
  • Ten principles of UN Global Compact
  • Sustainable Development Goals adopted by the UN General Assembly for the period till 2030
  • ISO 26000:2010 Social Responsibility Guidance Standard

Since 2019, Kazatomprom has included the information on its contribution to the achievement of the United Nations Sustainable Development Goals in the Report. This approach is also followed in this document. The Company strives to ensure that the development strategy of the Group correlates with the objectives of achieving the UN SDGs in addressing environmental, social and economic issues, as reflected in the Report. In 2019, the Company identified a list of priority SDGs where the Group can make a tangible contribution: SDGs 3, 7, 8, 9, 12 and 13. By prioritising the Sustainable Development Goals, the Company focused on beacons relevant to the sectoral identity and strategy of Kazatomprom, as well as to the interests of its stakeholders.

Information perimeter

GRI 102-52

The scope of the Report corresponds to the annual reporting cycle of the Company. The previous Report was published in April 2020. Electronic copies of the reports for the previous years are available on the official websitе of the Company.

Нынешний Отчет отражает деятельность АО «НАК «Казатомпром» за период с 1 января 2020 по 31 декабря 2020 года.

The current Report discloses operations and performance of Kazatomprom for the period from 1 January 2020 to 31 December 2020.

The Report includes important facts that fall beyond the reporting period, but are directly related to it, as well as the medium-term plans of the Group. The Report discloses information on the most significant results of operations of Kazatomprom, its subsidiaries, associates and joint ventures. During data collection, all data of quantitative and qualitative nature across the entire Group, which can have a significant impact on making an informed decision on a significant issue, event or decision, is taken into account and disclosed. Kazatomprom is systematically developing a system of work with sustainable development indicators and aims to align the disclosure perimeter with the financial data disclosure to the full amount in the near future.

Disclosure Perimeter

Company Scopes*
1 2 3 4 5 6 7
NAC Kazatomprom JSC
LLP Kazatomprom-Damu
KAP-Technology JSC
Korgan-KAP LLP
APPAK LLP
Ulba Metallurgical Plant JSC
Volkovgeologia JSC
High Technology Institute LLP
MK KazSilicon LLP
Kazakhstan Solar Silicon LLP
Astana Solar LLP
LLP «MC «ORTALYK»
RU-6 LLP
Kazatomprom-SaUran LLP
Trading and Transportation Company LLP
Kazakatom TH AG
JV Inkai LLP
Baiken-U LLP
JV Khorassan-U LLP
Karatau LLP
JV Akbastau JSC
Semizbai-U LLP
Ulba FA LLP
JV Budenovskoye LLP
Uranenergo LLP
SKZ-U LLP
JV UKR TVS Closed Joint-Stock Company
JV Katco LLP
JV ZARECHNOYE JSC
JV South Mining Chemical Company LLP
Kyzylkum LLP
Caustic JSC
SSAP LLP
Rusburmash-Kazakhstan LLP
Zhanakorgan-Transit LLP

* The reporting area groups GRI indicators depending on which Group Companies are consolidated in the disclosure of a particular GRI indicator. The reporting area for each indicator can be found in the GRI Content Index.

Principles for Defining Report Quality

The following principles ensure the quality of the Report:

  • Materiality

    The Report discloses information on aspects where the Company, its subsidiaries, associates and joint ventures have a significant impact on the economy, environment, and society, as well as on issues of importance to stakeholders. The list of material topics and the procedure for defining the material topics are described below.

  • Comparability

    The information in the Report allows stakeholders to evaluate the Company’s operations and performance over time.

  • Transparency

    The Report is written in plain language understandable to a wide audience and contains a glossary.

  • Reliability

    All data in the Report are provided by the relevant divisions of the Group and verified for accuracy. The Report text provides links to data sources.

  • Accuracy

    Information on all material topics is detailed and allows stakeholders to evaluate the Group’s performance. All data are officially recognised by Kazatomprom and confirmed by internal and public documents.

  • Timeliness

    The Report presents information for 2020 calendar year and will be published in 2021.

Material Topics and Procedure for Defining Material Topics

GRI 102-44, 102-46

To determine the topics that are material to be disclosed in the 2020 Report, the Company analyzed all of the topics proposed by the GRI Sustainability Reporting Standards, material topics disclosed by international and Russian uranium industry companies, and those raised during the dialogue with stakeholders. The company strives to address all material topics raised by stakeholders and publishes relevant material on the measures taken in the public reporting pages and other information media available to external audiences.

Then, representatives of the Company and its key stakeholders prioritised the topics for disclosure in the Report from the perspective of materiality. Materiality was defined according to the importance of each stakeholder group for the Company.

Based on analysis of material topics for the uranium industry, as well as the stakeholder survey, the Company made a list of material topics to be discussed at the level of the Working Group of Kazatomprom.

The Working Group, including specialists in all areas of sustainable development and representatives of the top management, approved the final list of material topics and the materiality matrix for 2020.

1
Analysis of external sources
Analysis of public information about the Company and the uranium and mining industry
Benchmarking of material topics disclosed by international companies in the uranium and mining industry
Preliminary list of material topics
2
Analysis of stakeholder opinions
Interviews with functional specialists of the Company

Analysis of findings of the survey of the Company’s external and internal stakeholders

Adjusted list of material topics
3
Compilation of a list of material topics
Harmonisation of the adjusted list of material topics by the Working Group

Approval of the final list of material topics by members of the Working Group

Approved list of material topics

Kazatomprom Material Topics 2020

List of disclosed material topics

GRI 102-47

Economic topics Environmental topics Social topics Topics disclosed additionally
201: Economic Performance 302: Energy 401: Employment KAP1: Lifecycle of Production Sites
202: Market Presence 303: Water 402: Labour/Management Relations KAP 2: Readiness for emergencies
203: Indirect Economic Impacts 304: Biodiversity 403: Occupational Health and Safety KAP 3: Radiation safety
204: Procurement Practices 305: Emissions 404: Training and Education
205: Anti-corruption 306: Effluents and waste 405: Diversity and Equal Opportunity
307: Environmental Compliance 412: Human Rights Assessment
413: Local Communities
415: Public policy
419: Socioeconomic Compliance

All the identified material aspects are important both for the Company (inside the organisation) and its stakeholders (outside the organisation).

A table containing a complete list of GRI indicators and links to the disclosure of the information in the Report is presented in the Annexes to the Report (GRI Content Index).

Independent assurance

GRI 102-56

The external audit of the financial statements of the Company was performed by PricewaterhouseCoopers LLP. The auditor’s report is presented as an Annex to the Report.

The proper disclosure of non-financial information prepared in accordance with the GRI Standards has been assured.

Forward-looking statements

The statements in the Report are considered to be forwardlooking. To describe the future, terminology is used that includes words such as “believes”, “evaluates”, “expects”, “forecasts”, “intends”, “plans”, “assesses”, “will” or “may”, or in each case, comparable words and terms of a similar or comparable terminology, or references to discussions, plans, goals, objectives, future events or intentions are designed to identify statements regarding the future. All the statements in the Report, other than statements on historical facts, are considered to be forward-looking statements. These forwardlooking statements include, without limitation, statements regarding the intentions, opinions and expectations of the Company concerning, among other things, the results of operations, financial state, liquidity, prospects, growth, potential acquisitions, strategies and sectors in which the Company operates.

By their very nature, forward-looking statements involve risks and uncertainties because they relate to future events and circumstances that may or may not occur. Forward-looking statements do not guarantee future or actual performance. The actual results of the activity, the financial situation and liquidity of the Company and the development of the country and industries in which the Company operates can differ significantly from those options that are described in this document or are assumed in accordance with the statements contained in this document.

The Company does not plan and does not assume the obligation to update any information regarding the industry or any forward-looking statements contained herein, whether as a result of the obtaining new information or the occurrence of future events or any other circumstances. The Company makes no representations, provides no assurances and publishes no forecasts as to whether the outcomes described in such forward-looking statements will be achieved.

Stakeholders


Kazatomprom Stakeholder Map 2020

A list of stakeholder groups

GRI 102-40, 102-43

Shareholders Degree of influence of
the stakeholder on the
Company
5.0 Degree of influence of
the Company on the
stakeholder
4.5
Stakeholder’s interest in the Company
  • Economic profit / consolidated net profit /economic performance
  • Free funds for development and dividends
  • Net asset value (NAV)
  • Corporate governance rating
  • Market share / Market presence
  • Minimisation of environmental emissions
Stakeholder engagement mechanisms
  • Decisions of the General Meeting of Shareholders of the Company, the Board of Directors and Management Board of the Fund, the Board of Directors of the Company
  • Joint working groups, meetings, negotiations
  • Discussion of the implementation status of sustainable development processes with the Fund
  • Regular reporting to shareholders, including Samruk-Kazyna, according to the agreed format
  • Special session on sustainable development with the relevant board of directors
  • Correspondence on the activities of the Group
  • Surveys, questionnaires, testing
  • Internal corporate communication channels
  • Annual report and website of the Company
Customers Degree of influence of
the stakeholder on the
Company
4.8 Degree of influence of
the Company on the
stakeholder
4.3
Stakeholder’s interest in the Company
  • Market share / Market presence
  • Products and service labelling
  • Marketing communications
  • Minimisation of environmental emissions
Stakeholder engagement mechanisms
  • Customer feedback
  • Meetings, negotiations, questionnaires
  • Signing of agreements, memoranda, strategic cooperation agreements
  • Hotline
  • Annual report and website of the Company
Investment analysts Degree of influence of
the stakeholder on the
Company
3.1 Degree of influence of
the Company on the
stakeholder
2.5
Stakeholder’s interest in the Company
  • Analysis of various aspects of the Company
  • Inclusion of the Company in analytical ratings
Stakeholder engagement mechanisms
  • Conferences, forums, annual meetings with investors
  • Meetings, negotiations, questionnaires
  • Annual report and website of the Company
Management and staff Degree of influence of
the stakeholder on the
Company
4.8 Degree of influence of
the Company on the
stakeholder
4.7
Stakeholder’s interest in the Company
  • Employment, relations between employees and management, non-discrimination/diversity and equal opportunities / level of employee satisfaction with work and the work of Companycontrolled services
  • Training and education
  • Improvements to the production safety culture
Stakeholder engagement mechanisms
  • Fair and transparent conditions for staff remuneration, professional growth of employees, safe working conditions
  • Staff development
  • Production safety briefings and implementation of programmes to improve working conditions
  • Implementation of measures for social support of workers and members of their families
  • Continuing education, training and staff development programmes
  • Regular meetings with management, negotiations
  • Notification of employees on the activities of the Company, professional growth opportunities through corporate magazines, social networks
  • Surveys, questionnaires, testing
  • Hotline, channels of internal corporate communication, website of the Company
Stakeholder’s interest in the Company Degree of influence of
the stakeholder on the
Company
4.7 Degree of influence of
the Company on the
stakeholder
4.2
Stakeholder’s interest in the Company
  • Equal access to tenders
  • Investment and procurement practices / benefits from the implementation of category-based procurement strategies
  • Energy / specific weighting of energy costs in the production cost of finished products
  • Support for domestic manufacturers
Stakeholder engagement mechanisms
  • Requests for quotations
  • Regular analytical meetings, negotiations, business correspondence
  • Signing of agreements, memoranda, strategic cooperation agreements, licensing
  • Information/reporting on the implementation of production, investment and social plans and obligations forwarded to the Company
  • Reporting on the results of the financial and economic activities of the Company
  • Consideration of letters (appeals) addressed to the Company
  • Surveys, questionnaires, testing
  • Hotline
  • Annual report and website of the Company
Business communities (Associations, National Chamber of Entrepreneurs, Union of Legal Entities) Degree of influence of
the stakeholder on the
Company
3.0 Degree of influence of
the Company on the
stakeholder
3.1
Stakeholder’s interest in the Company
  • Participation of the Company in improvements in and compliance with industry standards
  • Participation of the Company in improvements to the business environment
  • Support for the Company at the state authorities through mechanisms of interaction of the business environment with the state authorities, assistance with the promotion of the legislative initiatives of the Company
Stakeholder engagement mechanisms
  • Development of proposals on amendments and addenda to the legislation of the Republic of Kazakhstan
  • Signing of agreements, memoranda, strategic cooperation agreements
  • Creation of working groups, meetings, negotiations, questionnaires
  • Annual report and website of the Company
Partners Degree of influence of
the stakeholder on the
Company
3.4 Degree of influence of
the Company on the
stakeholder
3.3
Stakeholder’s interest in the Company
  • Market share / Market presence
  • Unit production cost of U3O8 produced by the Company and all uranium mining subsidiaries
Stakeholder engagement mechanisms
  • Foundation agreements
  • Decisions of the General Meeting of Shareholders/participants of subsidiaries, associates and joint ventures, boards of directors, Supervisory Board of subsidiaries, associates and joint ventures, joint consultative and advisory bodies
  • Joint working groups, joint inspections
  • Meetings, negotiations, business correspondence, questionnaires
  • Reports on current activities
  • Correspondence on the activities of subsidiaries, associates and joint ventures
  • Annual report and website of the Company
Public authorities Degree of influence of
the stakeholder on the
Company
4.6 Degree of influence of
the Company on the
stakeholder
4.0
Stakeholder’s interest in the Company
  • Compliance, stability and business sustainability
  • Creation and maintenance of jobs
  • Representation of the country’s economic interests in the international arena (economic, political and image benefits for the country through the prism of development of the uranium industry in Kazakhstan)
  • Increase in the level of energy and resource efficiency of production
  • Minimisation of environmental emissions
Stakeholder engagement mechanisms
  • Verification of the compliance by the Company’s subsidiaries, associates and joint ventures with licensing and contractual obligations
  • Audit of compliance with the legislation of the Republic of Kazakhstan, development of proposals on amendments to the legislation of the Republic of Kazakhstan
  • Coordination of the subsoil use contract and state registration of the right of subsoil use
  • Submission of information/reporting on the implementation of production, investment and social plans and obligations further to requests
  • Oral negotiations, business correspondence, control, production, operational and other meetings, questionnaires
  • Reports on the performance by the Company’s subsidiaries, associates and joint ventures of licensing and contractual obligations, submission of quarterly reports to the Ministry of Energy of the Republic of Kazakhstan, reporting on the results of the financial and economic activities of the Company
  • Hotline
  • Annual report and website of the Company
International organisations Degree of influence of
the stakeholder on the
Company
2.6 Degree of influence of
the Company on the
stakeholder
2.0
Stakeholder’s interest in the Company
  • Participation of the Company in international agreements, initiatives
Stakeholder engagement mechanisms
  • Conferences, forums, annual meetings
  • Signing of agreements, memoranda, strategic cooperation agreements
  • Creation of working groups, meetings, negotiations, questionnaires
  • Annual report and website of the Company
Creditors Degree of influence of
the stakeholder on the
Company
2.9 Degree of influence of
the Company on the
stakeholder
2.8
Stakeholder’s interest in the Company
  • Economic profit / consolidated net profit /economic performance
  • Free funds for development and dividends
  • Net asset value (NAV)
  • Investment and procurement practices / benefits from the implementation of category-based procurement strategies
Stakeholder engagement mechanisms
  • Regular analytical meetings and negotiations, business correspondence, questionnaires
  • Publication of information about the Company in the media
  • Hotline
  • Annual report and website of the Company
Local executive authorities Degree of influence of
the stakeholder on the
Company
3.8 Degree of influence of
the Company on the
stakeholder
3.8
Stakeholder’s interest in the Company
  • Compliance with requirements, creation and retention of workplaces, sponsorship and charitable assistance
  • Occupational health and safety of the employees of the Company
  • Increase in the level of energy and resource efficiency of production, minimisation of environmental emissions
Stakeholder engagement mechanisms
  • Memoranda of cooperation between the local executive authorities and the Company in order to support and develop the social sector of the regions
  • General agreements between the local executive authorities and the Company on the financing of the social sector of the regions
  • Hotline, social networks
  • Annual report and website of the Company
Mass media Degree of influence of
the stakeholder on the
Company
2.8 Degree of influence of
the Company on the
stakeholder
2.4
Stakeholder’s interest in the Company
  • Media coverage of the Company
  • Investor relations
Stakeholder engagement mechanisms
  • Publication of information about the Company in the media
  • Responding to Media Inquiries
  • Hotline, social networks
  • Annual report and website of the Company
Public organisations and local communities Degree of influence of
the stakeholder on the
Company
3.7 Degree of influence of
the Company on the
stakeholder
3.5
Stakeholder’s interest in the Company
  • Improvements to the production safety culture
  • Increase in the level of energy and resource efficiency of production, minimisation of environmental emissions
  • Compliance with legislative requirements, sponsorship and charitable assistance
  • Training and education
Stakeholder engagement mechanisms
  • Holding of public hearings
  • Development of proposals on amendments and addenda to the legislation of the Republic of Kazakhstan
  • Publication of information about the Company in the media
  • Surveys, questionnaires, testing
  • Information on the current activities of the Company, subsidiaries, associates and joint ventures
  • Letters (complaints) to the Company
  • Hotline, social networks
  • Annual report and website of the Company
Trade union Degree of influence of
the stakeholder on the
Company
3.7 Degree of influence of
the Company on the
stakeholder
4.0
Stakeholder’s interest in the Company
  • Creation and retention of workplaces
  • Improvements to the production safety culture
Stakeholder engagement mechanisms
  • Holding of public hearings
  • Signing of agreements, memoranda, strategic cooperation agreements
  • Regulation of employment relations with the employees of the Company through the collective bargaining agreement
  • Remuneration of employees in accordance with the labour legislation of the Republic of Kazakhstan, training and education, safe working conditions
  • Notification on the current activities of subsidiaries, associates and joint ventures
  • Letters (complaints) to the Company
  • Hotline, social networks, corporate communications channels
  • Annual report and website of the Company
Specialized organisations (including Samruk-Kazyna Trust Social Project Development Foundation) Degree of influence of
the stakeholder on the
Company
3.0 Degree of influence of
the Company on the
stakeholder
2.6
Stakeholder’s interest in the Company
  • Implementation of projects and programs aimed at addressing socially significant issues
  • Implementation of the functions of a single charitable operator Samruk-Kazyna group companies
Stakeholder engagement mechanisms
  • Incoming and outgoing letters
  • Business correspondence
  • Meetings, negotiations, etc.
  • Current operations reports
  • Publication of information about the Company in media
  • Hotline
  • Company’s website
Subsidiaries, associates and joint ventures Degree of influence of
the stakeholder on the
Company
3.5 Degree of influence of
the Company on the
stakeholder
3.2
Stakeholder’s interest in the Company
  • Employment and level of remuneration, relations between employees and management, nondiscrimination, diversity and equal opportunities
  • Improvements to the production safety culture, training and education
  • Market share / market presence, products and service labelling
Stakeholder engagement mechanisms
  • Decisions of the Company as a participant/shareholder of the subsidiaries, associates and joint ventures
  • Reporting in accordance with the Non-Disclosure Agreement between Samruk-Kazyna and Kazatomprom
  • Decisions of the General Meeting of Shareholders of the Company/participants in subsidiaries, associates and joint ventures
  • Audit of compliance with the legislation of the Republic of Kazakhstan and the internal regulations of the Group
  • Audit of the fulfillment of the license and contractual obligations of the Company’s subsidiaries
  • Development of proposals on amendments and addenda to the legislation of the Republic of Kazakhstan
  • Provision of information at the request of the state authorities on different lines of business of the Company
  • Signing of agreements, memoranda, strategic cooperation agreements
  • Orders and instructions, management hearings from subsidiaries, associates and joint ventures
  • Information/reports on the implementation of production, investment and social plan/ commitments sent to the Company
  • Operational and other meetings, public hearings
  • Production safety briefings, training and education
  • Hotline, social networks, corporate communications channels, annual report and the website of the Company
Stock exchanges Degree of influence of
the stakeholder on the
Company
5.0 Degree of influence of
the Company on the
stakeholder
3.0
Stakeholder’s interest in the Company
  • Compliance with rules and procedures
  • Timely submission of financial statements and other information
Stakeholder engagement mechanisms
  • Meetings and negotiations
  • Company’s website
  • Report
  • Current operations reports
  • Websites of exchange regulators

ESG Performance Indicators 2018-2020

Corporate Social Responsibility

Kazatomprom headcount and staff composition, employees68

GRI 102-8, 405-1
Region 2018 2019 2020
headcount at the end of the reporting period, employees 20,507 20,592 21,019
total number of employees (headcount + independent contract agreements) 20,956 21,138 21,788
men 16,642 16,753 17,228
women 3,865 3,839 3,791
managers and executives 119 108 119
workers 20,388 20,484 20,900
under 30 3,547 3,632 3,201
30 to 50 11,545 11,707 12,260
over 50 5,415 5,253 5,558
average age of employees, years 40 39.4 41
long-term contract 19,572 19,794 19,821
men 15,974 16,188 16,227
women 3,598 3,606 3,594
term contract 935 798 1,198
men 668 565 1,001
women 267 233 197
full-time employment 20,488 20,577 21,011
men 16,629 16,745 17,222
women 3,859 3,832 3,789
part-time employment 19 15 8
men 13 8 6
women 6 7 2
independent contractor agreements 449 546 769
men 339 372 518
women 110 174 251

68 Data for 2018-2019 are taken from the previous Annual Reports of NAC Kazatomprom JSC. In 2020, the Report includes data of Ulba-FA LLP and Rusburmash- Kazakhstan LLP. In the Sustainable Development section, Social Responsibility subsection, comparative information for 2019 is presented taking into account these enterprises. Therefore, the 2019 headcount was 21,434 people, incl. 3,983 women.

Kazatomprom headcount broken down by region and gender, employees

GRI 102-8
Region 2018 2019 2020
М W М W М W
Almaty 379 276 330 272 477 326
Nur-Sultan 518 421 510 432 460 389
Shymkent 306 220 270 232 323 216
North Kazakhstan Region 940 258 866 245 811 240
South Kazakhstan Region 11,709 1,358 11,876 1,334 12,185 1,280
East Kazakhstan Region 2,781 1,326 2,892 1,317 2,963 1,333
China 5 5 5 6 5 6
United States 2 0 2 0 2 0
Switzerland 2 1 2 1 2 1
Total 16,642 3,865 16,753 3,839 17,228 3,791

Structure of governing bodies and employees, %

GRI 405-1
Indicator 2018 2019 2020
Governing bodies Employees Governing bodies Employees Governing bodies Employees
men 92% 81% 93% 81% 92% 82%
women 8% 19% 7% 19% 8% 18%
Kazaks 77% 67% 80% 69% 74% 70%
Russians 14% 26% 11% 25% 13% 25%
other 8% 7% 9% 6% 13% 6%
under 30 3% 17% 0% 18% 1% 15%
30 to 50 63% 56% 71% 57% 64% 58%
over 50 34% 26% 29% 25% 35% 26%

Number of hired employees, employees

GRI 401-1
Region 2018 2019 2020
М W М W М W
Almaty 151 13 107 11 56 25
Nur-Sultan 263 43 214 35 55 45
Shymkent 105 7 112 8 55 21
North Kazakhstan Region 254 35 340 47 105 39
South Kazakhstan Region 866 235 1,260 337 1,552 68
East Kazakhstan Region 252 152 346 209 305 120
Outside the Republic of Kazakhstan (China, USA, Switzerland) 2 0 1 0 20 -
Total 1,891 487 2,379 648 2,148 318

Kazatomprom’s dismissed employees and staff turnover

GRI 401-1
2018
Region under 30 30 to 50 over 50 Total
Number of dismissed employees Share, % Number of dismissed employees Share, % Number of dismissed employees Share, %
М W М W М W М W М W М W
Almaty 19 3 1% 0.1% 44 10 1% 0.3% 19 6 1% 0.2% 277
Nur-Sultan 49 8 2% 0.3% 114 27 4% 0.9% 49 15 2% 0.5% 233
Shymkent 25 4 1% 0.1% 58 14 2% 0.5% 25 8 1% 0.3% 137
North Kazakhstan Region 44 7 1% 0.2% 102 24 3% 0.8% 44 13 1% 0.5% 258
South Kazakhstan Region 344 54 12% 1.8% 795 188 27% 6.3% 342 105 11% 3.5% 1,672
East Kazakhstan Region 80 13 3% 0.4% 184 44 6% 1.5% 79 24 3% 0.8% 407
China - - - - - - - - - - - - -
Total 562 88 1,297 307 558 171 2,984
201969
Region under 30 30 to 50 over 50 Total
Number of dismissed employees Share, % Number of dismissed employees Share, % Number of dismissed employees Share, %
М W М W М W М W М W М W
Almaty 20 4 1% 0.1% 42 8 1% 0.3% 19 5 1% 0.2% 196
Nur-Sultan 53 10 2% 0.4% 108 21 4% 0.7% 48 14 2% 0.5% 212
Shymkent 27 5 1% 0.2% 55 11 2% 0.4% 24 7 1% 0.2% 132
North Kazakhstan Region 47 9 2% 0.3% 97 19 3% 0.7% 43 13 1% 0.4% 222
South Kazakhstan Region 367 72 13% 2.5% 754 149 26% 5.1% 335 99 12% 3.4% 1,679
East Kazakhstan Region 85 17 3% 0.6% 175 35 6% 1.2% 78 23 3% 0.8% 458
China - - - - - - - - - - - - -
Total 600 117 1,230 243 547 161 2,899
2020
Region under 30 30 to 50 over 50 Total
Number of dismissed employees Share, % Number of dismissed employees Share, % Number of dismissed employees Share, %
М W М W М W М W М W М W
Almaty 15 3 1% 0.1% 49 8 2% 0.3% 20 2 1% 0.1% 97
Nur-Sultan 38 8 1% 0.3% 127 21 4% 0.7% 51 6 2% 0.2% 251
Shymkent 19 4 1% 0.1% 64 11 2% 0.4% 26 3 1% 0.1% 127
North Kazakhstan Region 34 7 1% 0.3% 114 19 4% 0.7% 46 5 2% 0.2% 225
South Kazakhstan Region 266 57 9% 2.0% 886 146 31% 5.1% 355 40 12% 1.4% 1,750
East Kazakhstan Region 62 12 2% 0.5% 206 34 7% 1.2% 82 9 3% 0.3% 406
China - - - - - - - - - - - - -
Total 434 93 1,446 239 580 65 2,857

69 Dynamics of data for 2018-2019 presented from the previous Annual Reports of NAC Kazatomprom JSC.


Staff turnover across the Group, %


Number of employees who returned to work after parental leave and childcare leave

GRI 401-3
Indicator 2018 2019 2020
Total number of employees who took parental leave 272 257 210
men 14 21 20
women 258 236 190
Total number of employees who returned to work after parental leave 272 257 210
men 3 7 13
women 115 95 130
Return to work 0.434 0.397 0.681
men 0.214 0.333 0.650
women 0.446 0.403 0.684
Retention rate - 0.864 1.402
men - 2.333 1,857
women - 0.826 1.368

Kazatomprom payroll fund, KZT

Indicator 2018 2019 2020 Change 2020-2019
Average monthly salary of production staff70 244,543 263,997 279,202 106%
Payroll fund, KZT million71 63,413 64,884 65,707 101%

70 The indicator is calculated as the ratio of the production staff payroll fund as per the Labour Report (statistical reporting) to the actual number of production staff.

71 Accrued salary, including all related taxes and deductions (pension fund deductions and personal income tax).


Benchmarking Kazatomprom’s minimum salary against Kazakhstan’s minimum salary, KZT

Indicator 2018 2019 2020
М W М W М W
Minimum salary in Kazakhstan 28,284 28,284 42,500 42,500 42,500 42,500
Salary of entry-level employee across the Group72 29,360 29,360 42,500 42,500 42,500 42,500
Ratio 1.03 1.03 1 1 1 1

72 Base wage rate of a production worker of Category 1.


Female to male base pay at Kazatomprom, ‘000 KZT

Employee category 2018 2019 2020
М W М W М W
Top management (Board of Directors, management committee or similar body) 809 809 837 837 848 848
Middle management 358 358 362 362 377 377
Administrative staff 153 153 180 178 180 180
Production staff 72 72 81 82 84 84

Kazatomprom staff training73

GRI 404-2
Employee category 2018 2019 2020
Number of manworkshops Employee training expenses, KZT ‘000 Number of manworkshops Employee training expenses, KZT ‘000 Number of manworkshops Employee training expenses, KZT ‘000
Administrative staff and management 3,338 688,532 5,021 507,951 3,854 966,132
Production staff 23,444 1,023,970 22,128 939,032 29,123 683,538
Total 26,782 1,712,502 27,149 1,446,983 32,977 1,649,670

73 Includes expenses for professional development in the Group.


Average number of hours spent on training of one employee

GRI 404-1
Employee category 201874 201974 2020
М W
Top management 59.6 51.3 21 22
Middle management 45.2 35.1 101 22
Administrative staff 31.2 30.8 43 30
Production staff 31.1 35.7 37 20
Average across all categories 32.5 35.4 40.4

74 In 2018-2019, the Company did not collect gender-based data.

Environmental Protection

Direct GHG emissions, t СО2 eq

GRI 305-1
Indicator 2018 2019 2020 Change 2020-2019
Direct greenhouse gas emissions 132,480 107,600 92,590 -13.95%

Breakdown and source of air emissions, ‘000 tonnes 75, 76

GRI 305-7
Air emissions Source 2019 2020 Change 2020-2019
NOx boilers, furnaces, incinerators, stationary diesel power stations (emergency), compressors 0.118 0.096 -18.6%
SOx boilers, furnaces, incinerators, stationary diesel power stations (emergency), compressors 0.064 0.073 +14%
Solid emissions boilers, furnaces, machine tool operation in the machine shops 0.054 0.054 0
CO boilers, vehicles, gas furnaces, stoves 0.175 0.190 +8.6%
Volatile organic compound emissions vehicles, solvents, gas, wood and biomass burning 0.827 0.815 -1.5%
Substances of Hazard Class 1 boilers, vehicles, lamps containing quicksilver 0.010 0.001 -90%
Total 1.248 1.229 -1.5%
Specific air emissions, kg/t 18.00 17.50 -3%

75 The data include air emissions by natural uranium mining and processing companies. This table does not cover ancillary and service enterprises: Ulba Metallurgical Plant JSC, Volkovgeologia JSC, Caustic JSC, SKZ-U LLP, Uranenergo LLP, and Trade and Transport Company LLP.

76 As the 2018 emissions were not accounted in this format, the table covers two years.


Total water withdrawal by source, ‘000 m3

GRI 303-3
Source 2018 2019 2020 Change 2020-2019
Surface water 951.1 865.7 781.4 -9.8%
Ground water 9,955.4 8,992 8,539.8 -5.0%
Municipal and other water supply systems 1,311.5 836.6 1,131.1 +35.2%
Total water withdrawal 12,218.0 10,694.3 10,452.3 -2.3 %

Total water recycled and reused, ‘000 m3

Source 2018 2019 2020 Change 2020-2019
Total water recycled and reused 19,840 14,512 63,029 +334%

Total waste by type, '000 tonnes

GRI 306-3
Type of waste 2018 2019 2020 Change 2020-2019
Industrial waste 1,253.5 936.4 996.2 6%
Household waste 2.5 3.1 1.8 -42%
Solid radioactive waste 3.9 4.1 3.3 -21%
Liquid radioactive waste 106.1 120.5 128.1 6%
Total 1,366.0 1,064.1 1,129.4 6.13%

Electricity produced by PV plants, MWh

Indicator 2018 2019 2020 Change 2020-2019
Electricity output, MW 4.21 4.32 3.52 -18.5%

Occupational Health and Safety

Kazatomprom’s H&S expenses, KZT billion

Indicator 2018 2019 2020
Health and safety expenses 7.38 7.23 7.63

Occupational injuries at Kazatomprom

GRI 403-9
Indicator 2018 2019 2020
For all employees
Total fatal occupational accidents 1 1 1
Total number of high-impact occupational injuries (excluding fatalities) 7 2 2
Total occupational accidents77 12 8 8
LTIFR 0.31 0.24 0.25
Unsafe conditions, unsafe acts, and near-miss reporting 6,200 34,546 35,529
Number of hours worked 38,709,677 33,510,295 31,812,773
For all employees (other than full-time workers) whose work and/or workplace is controlled by the Company
Total fatal occupational accidents 0 0 0
Total number of high-impact occupational injuries (excluding fatalities) 0 0 0
Total registered occupational injuries 0 0 0

77 It is established as the impact of a harmful and/or dangerous production factor on an employee during his/her work or performance of the employer’s assignments, with the impact resulting in an occupational injury, sudden deterioration in employee’s health or poisoning that lead to temporary or permanent disability or death.


Radiation safety indicators at Kazatomprom, mSv a year

Indicator 2018 2019 2020
Average radiation exposure dose for employees 1.55 1.51 1.45
Average natural background radiation in areas where the Group operates 0.3 – 1.2 0.4 – 1.0 0.85
Maximum annual effective dose of group-A employees 4.97 4.94 4.94

Socio-Economic Contribution

Direct economic value generated and distributed, KZT million

GRI 201-1
Expenditure 201878 2019 2020
Direct economic value generated
Incomes79 846.03 621.13 667.12
Distributed economic value, including
Operating expenses80 292.81 273.42 288.11
Salary 42.78 49.15 50.72
Interest and dividend expenses 12.67 11.96 7.68
Taxes, except income tax 23.56 27.79 24.73
Income tax expenses 28.80 33.51 63,78
Other expenses 19.99 8.51 9.73
Social expenditures (investment in local communities) 0.73 1.07 1.01
Retained economic value (profit for year) 424.69 213.75 221.37

78 Data recalculated from the 2018 Annual Report, because the Group acquired control over Baiken-U LLP in December 2018. As of 31 December 2018, the Group applied the carrying amount to account for the acquired assets and liabilities, as the valuation report was not finalised at the end of that reporting period. In June 2019, an independent appraiser completed the measurement of the fair value of the acquired assets and liabilities, and the benchmarking data were recalculated.

79 Incomes are calculated in accordance with the GRI Standards methodology and include the revenues and all incomes of the Company.

80 Operating expenses include the following expenditures: cost of sales (excluding salaries and taxes), selling expenses (excluding salaries and taxes), general and administrative expenses (excluding salaries and taxes).


Contributions to the local budget for socio-economic and infrastructure development of regions of operations, KZT million

Company 2018 2019 2020
Turkistan Region
NAC Kazatomprom JSC 504.1 154.5 165.4
APPAK LLP 32.7 37.9 40.3
JV Akbastau JSC 185.9 194.9 214.7
JV South Mining Chemical Company LLP 83.5 86.5 96.3
Volkovgeologia JSC 4.2 2.5 2.8
JV ZARECHNOYE JSC 17.4 10.1 20.8
JV Inkai LLP 11.2 58.0 59.9
Kazatomprom-SaUran LLP 0.2 387.1 427.8
Karatau LLP 45.2 52.3 52.9
LLP «MC «ORTALYK» 70.2 76.4 83.1
JV Katco LLP 11.2 11.4 3.96
JV Budenovskoe LLP - - 21.5
Kyzylorda Region
NAC Kazatomprom JSC 92.99 - -
Baiken-U LLP 37.1 38.6 42.2
RU-6 LLP 2.0 102.8 107.5
Semizbai-U LLP 23.3 26.5 26.7
Kyzylkum LLP 171.1 116.2 126.1
Almaty Region
MC KazSilicon LLP 1.8 0.3 -
East Kazakhstan Region
Ulba Metallurgical Plant JSC 7.5 6.6 7.2
North Kazakhstan Region
Semizbai-U LLP 16.6 18.9 19.1
Akmola Region
Semizbai-U LLP 16.6 18.9 19.1
Mangistau Region
NAC Kazatomprom JSC 1.9 - -
Total 1,336.7 1,400.4 1,537.3

Local content in procurement across regions, 2020, %

GRI 204-1
Region Goods Works Services Works and services
Akmola Region 98 97 95 95
Aktobe Region 13 90 100 99
Almaty Region 9 97 100 99
Atyrau Region 5 72 100 91
West Kazakhstan Region 4 100 98 100
Zhambyl Region 97 100 100 100
Karagandy Region 87 100 100 100
Kostanay Region 16 100 100 100
Kyzylorda Region 94 91 94 94
Mangystau Region 97 93 100 93
South Kazakhstan Region 50 98 97 98
Pavlodar region 89 68 100 90
North Kazakhstan Region 69 - 100 100
East Kazakhstan Region 54 85 100 89
Nur-Sultan 91 87 85 85
Almaty 30 92 92 92
Total for Kazatomprom 69 92 75 82

Reports by Chairmen of the Board of Directors Committees for 2020

Production Safety (HSE) Committee Report

Dear shareholders!

Acquiring the status of a public company has created new challenges for the Company. The importance of corporate governance and sustainable development has increased significantly, in accordance with international standards. An important role in the activities of the Board of Directors has been assigned to the Production Safety (HSE) Committee.

The main objective of the Committee is to elaborate and submit recommendations to the Company’s Board of Directors on the status of HSE at the Company and its subsidiaries, associates and joint ventures, and on social and sustainable development issues.

In August 2020, the following members were appointed to the Committee: Neil Longfellow, an independent director, Russell Banham, an independent director, and Kanat Kudaibergen, a representative of Samruk-Kazyna. The expansion of the Committee made it possible to improve communications between the Company and its major shareholder. In addition, it improved the decision-making process of the Board of Directors at meetings.

During the year, Committee members held five face-to-face meetings and considered 23 issues. On a quarterly basis, Committee members reviewed and approved reports on the state of HSE and status reports on the implementation of the ESAP Roadmap.

Every six months, the Committee considers progress reports on corporate Social Responsibility and the sustainable development of the Company, as well as a report on the implementation of the Action Plan to guarantee respective social and labour conditions for production staff.

2020 results and outlook for 2021

In its operations, the Company always recognises its responsibilities to stakeholders in relation to production safety, occupational health and safety, and environmental protection. We are confident that concerns over safety at each production stage has a positive impact on staff motivation, as well as employee satisfaction levels, the quality of work, and the economic performance of the Company.

The results of the past year create a solid foundation for further work in the priority areas of the Company. The Board of Directors is confident that positive development trends in global nuclear power are sustainable and that there are opportunities for the Company to leverage its full potential. Committee members plan to assess the extent to which employees are becoming more aware of the need for compliance with respective safety requirements, and also monitor the current level of production safety in occupational health and safety and industrial and radiation safety at the Corporate Centre and at all Company’s entities.

Neil Longfellow
Chairman of the Production Safety (HSE) Committee
Board of Directors of Kazatomprom

Audit Committee Report

Dear shareholders!

The Audit Committee of the Company was set up to oversee the reliability of financial information provided to shareholders and to assess internal control and risk management systems. The Company’s internal audit and compliance functions are accountable to the Audit Committee.

In 2020, the Committee consisted entirely of independent directors with the relevant expertise and competencies to make effective decisions. During the year, nine Committee meetings were held in presentia and in absentia, and 98 issues were considered. In order to ensure a more effective and comprehensive discussion of issues, relevant members of the Management Board of the Company and other top managers were involved as required.

In addition to the fresh opportunities offered, the Company’s new status as a public company resulted in changes that impacted the work of the Audit Committee. In particular, the Committee put in place the practice of reviewing the quarterly financial statements of the Company, with subsequent disclosures being made, in order to maintain equal access to the information for all stakeholders of the Company. The Committee also considered and recommended for approval the financial statements of the Company for 2019, which included assessing the Company’s financial ability to pay dividends at the level promised in the Securities Prospectus of the Company. In 2020, the Company held its first annual General Meeting of Shareholders, where shareholders voted on, and approved, the financial statements, as well as the dividend size per ordinary share.

In connection with the expiry of the contract with an external auditor, the Company carried out transparent procedures to select an auditor, for the provision of interested parties with reliable and confirmed information. PricewaterhouseCoopers LLP was recommended by the Committee and was appointed to be the auditor of Kazatomprom from 2020 to 2022 at an extraordinary General Meeting of Shareholders held in December 2019.

Russell Banham
Chairman of the Audit Committee
Board of Directors of Kazatomprom

Strategic Planning and Investment Committee Report

Dear shareholders!

In connection with growing interest in the activities of Kazatomprom, the Strategic Planning and Investment Committee is becoming increasingly important. Committee members now pay greater attention to our Development Strategy, international cooperation, and promoting investment. The Committee is an important part of the Board of Directors, and thanks to the main tasks performed by the Committee, the Board can successfully deal with, and adapt quickly to, continually changing environment and comply with particularly important corporate governance principles.

The main objective of the Strategic Planning and Investment Committee is to elaborate and submit recommendations to the Board of Directors of the Company on the strategic and investment activities of the Company.

In 2020, the Committee saw significant changes. On 18 May 2020, it welcomed a new member, independent director Marc Kasher.

During the year, Committee members held six face-to-face meetings and considered 27 issues. On a quarterly basis, the Committee reviewed and approved reports on the Transformation Programme, as well as reports of the Management Board on the implementation of large investment projects. It also carried out work to implement strategic KPIs based on 2019 performance. In addition, Committee members assessed the results of a benchmarking analysis of the Company against other uranium companies in the reporting period.

2020 results and outlook for 2021

In 2020, the Company once again achieved all set goals and confirmed its status as the global leader in the production and sale of natural uranium.

The Company has set new long-term goals and objectives for 2021. One of the goals is to complete the restructuring programme of Kazatomprom assets, which will facilitate the launch of products with high added value.

Neil Longfellow
Chairman of the Production Safety (HSE) Committee
Board of Directors of Kazatomprom

Nomination and Remuneration Committee Report

Dear shareholders!

The Nomination and Remuneration Committee of the Company was created to consider matters such as appointing candidates to the Board of Directors, senior management remuneration arrangements (including bonus payments), the composition of the Management Board, and the positions of Corporate Secretary, Ombudsman, and other employees.

In 2020, three of the four Committee members were independent directors. All Committee members have the relevant experience and competencies to make effective decisions. During the year, nine Committee meetings were held in presentia to consider 58 issues.

Last year, the Committee reviewed and approved individual development plans for 2020 for the Management Board members, CEO-1 job descriptions, and the structure of the central office and the total headcount of NAC Kazatomprom JSC.

The Committee also considered succession issues, including a pool of successors to be established for the positions of members of the Management Board and Corporate Secretary of the Company.

On 18 May 2020, Independent Director Marc Kasher joined the Committee as the Chairman.

Marc Kasher
Chairman of the Nomination and Remuneration Committee
Board of Directors of Kazatomprom

Statement of Responsibility from Members of the Board of Directors and Management Board

Under the Company’s Corporate Governance Code, the Board of Directors and Management Board are responsible for the correctness of the annual report, as well as the Company’s financial statements.

In accordance with the Disclosure and Transparency Rules of the Handbook of the Financial Conduct Authority, each member of the Board of Directors confirms, based on the information they have, that:

  • the financial statements have been prepared in accordance with IFRS, and give a true and reliable reflection of: assets, liabilities, and financial position; the results of the financial and economic activities of the Company; and the consolidated balance sheet of the Company and its subsidiaries
  • the management report contains accurate data on the development and indicators related to financial and economic activities and the financial position of the Company and its subsidiaries, as well as a description of the most significant risks and uncertainties that they face

As of the date of this Report, no member of the Board of Directors or Management Board has in the past five years:

  • had a criminal record for offences related to fraud
  • been a member of the administrative, managerial, or supervisory bodies of any company or partner in any partnership at the time or in anticipation of a bankruptcy, or been engaged in property management due to an insolvency or liquidation
  • been subject to official public charges or sanctions by a government organisation or regulatory body (including a professional body); have never been deprived of the right, upon a court order, to act as a member of the administrative, managerial, or supervisory bodies of a company, or been prohibited from participating in managing a company or in doing business
On behalf of the Board of Directors:
Neil Longfellow
Chairman of Kazatomprom Board of Directors,
On behalf of the Board of Directors
By order of the Board of Directors:
Galymzhan Pirmatov
Chairman of Kazatomprom Management Board,
By order of the Board of Directors

Group’s Subsidiaries, Joint Ventures, Joint Operations, and Associates

GRI 102-45

In all cases the share is equal to the Group’s voting rights, with the exception of Ulba Metallurgical Plant JSC and Volkovgeologia JSC, in which the Group has 100% voting rights.


Subsidiaries, joint ventures, joint operations, and associates of the Holding, 31 December 2020

Treatment Name Share (%)
Uranium Mining and Processing
Subsidiaries LLP «MC «ORTALYK» 100.00%
Kazatomprom-SaUran LLP 100.00%
RU-6 LLP 100.00%
APPAK LLP 65.00%
JV Inkai LLP 60.00%
Baiken-U LLP81 52.50%
JV Khorassan-U LLP 50.00%
Joint Ventures JV Budenovskoye LLP 51.00%
Semizbai-U LLP 51.00%
Joint Operations JV Akbastau JSC 50.00%
Karatau LLP 50.00%
Energy Asia (BVI) Limited82, 83 50.00%
Associates JV Katco LLP 49.00%
JV South Mining Chemical Company LLP 30.00%
JV ZARECHNOYE JSC 49.98%
Kyzylkum LLP84 50.00%
Zhanakorgan-Transit LLP85 60.00%
Nuclear Fuel Cycle and Metallurgy
Subsidiaries Ulba Metallurgical Plant JSC 90.18%
ULBA-CHINA Co Ltd86 100.00%
Mashzavod87 100.00%
Ulba FA LLP88 51.00%
Nuclear Fuel Cycle
Joint Ventures JV UKR TVS Closed Joint-Stock Company 33.33%
Investments Uranium Enrichment Centre JSC 10.00%
Ancillary Operations
Subsidiaries High Technology Institute LLP 100.00%
KazakAtom TH AG or THK 100.00%
KAP-Technology JSC 100.00%
Trading and Transportation Company LLP 99.99%
Volkovgeologia JSC 90.00%
Rusburmash-Kazakhstan LLP89 49.00%
Korgan-KAP LLP 100.00%
Joint Ventures SKZ-U LLP 49.00%
Uranenergo LLP90 79.17%
Associates SSAP LLP91 9.89%

81 The Company holds 50% (direct ownership) in Energy Asia (BVI) Limited. Energy Asia (BVI)Limited holds 40% (direct ownership) in Kyzylkum LLP and 95% (direct ownership) in Baiken-U LLP.

82 The Company holds 50% (direct ownership) in Energy Asia (BVI) Limited. Energy Asia (BVI)Limited holds 40% (direct ownership) in Kyzylkum LLP and 95% (direct ownership) in Baiken-U LLP.U».

83 In December 2019, PSIL was liquidated and its share in Energy Asia (BVI) Limited in the amount of 9.95% (direct ownership) was transferred to the Company. As a result, the Company’s share in Energy Asia (BVI) Limited (direct ownership) increased to 50%.

84 The Company holds 50% (direct ownership) in Energy Asia (BVI) Limited. Energy Asia (BVI)Limited holds 40% (direct ownership) in Kyzylkum LLP and 95% (direct ownership) in Baiken-U LLP.

85 These companies are 3rd level entities for the Company through the interests in subsidiaries, JVs and associates presented above these companies in the table. The corresponding interests belongs to the 2nd tier entities, not the Company.

86 These companies are 3rd level entities for the Company through the interests in subsidiaries, JVs and associates presented above these companies in the table. The corresponding interests belongs to the 2nd tier entities, not the Company.

87 These companies are 3rd level entities for the Company through the interests in subsidiaries, JVs and associates presented above these companies in the table. The corresponding interests belongs to the 2nd tier entities, not the Company.

88 These companies are 3rd level entities for the Company through the interests in subsidiaries, JVs and associates presented above these companies in the table. The corresponding interests belongs to the 2nd tier entities, not the Company.

89 These companies are 3rd level entities for the Company through the interests in subsidiaries, JVs and associates presented above these companies in the table. The corresponding interests belongs to the 2nd tier entities, not the Company.

90 Uranenergo-PUL LLP is a 3rd-level enterprise of the Company through Uranenergo LLP share capital. In October 2019, the General Meeting of the Participants of Uranenergo LLP approved the reorganization of Uranenergo-PUL LLP. The Uranenergo-PUL LLP is reorganised in 2020 by merging to the parent company Uranenergo LLP. Shieli-Energoservice LLP and Taukent-Energoservice LLP, are a 3rd- level enterprises of the Company through Uranenergo LLP share capital. The companies are reorganised in 2020 by merging to the parent company Uranenergo LLP.

91 On July 8, 2020, the procedure of re-registration of JV SKZ Kazatomprom LLP into SSAP LLP (Stepnogorsk Sulfuric Acid Plant) was carried out.


Assets for sale or subject to restructuring

Treatment Name Share (%)
Alternative energy sources
Subsidiaries92 Kazakhstan Solar Silicon LLP 100.00%
MK KazSilicon LLP 100.00%
Astana Solar LLP 100.00%
Auxiliary operations
Associates Caustic JSC93 40.00%

92 In accordance with the privatisation plan of non-core assets as presented in the IPO prospectus of NAC Kazatomprom JSC, a number of non-core assets have been or are to be disposed. This includes entities of the KazPV project: Astana Solar LLP, Kazakhstan Solar Silicon LLP and MK KazSilicon LLP. As previously reported, on 17 May 2019, a conditional sales contract was entered into which provided for the initial sale of 75% of the Company’s shareholding in the entities of the KazPV project (further – Agreement). However, the Agreement did not enter into force due to non-compliance by the purchaser with certain conditions. As a result, in the first quarter of 2020, the Company terminated its relations with potential buyers under this contract. The Company has received the required regulatory approvals to recommence disposal of the KazPV assets in 2021. The Group maintains its position on selling the KazPV project entities as part of the privatization program of the Republic of Kazakhstan. The assets and liabilities of the KazPV entities are presented in these condensed, audited, consolidated financial statements as assets held for sale.

93 The Group intends to sell its entire stake in Caustic JSC by the end of 2021.

GRI Content Index

GRI 102-55

General Disclosures

Standard and indicators Disclosure Report page Disclosure degree Scope94 Report sections
GRI 102 (2016): general disclosures
Organisational profile
102-1 Name of the organisation 370 fully 1 Annexes.
About the Report.
Contacts
102-2 Activities, brands, products, and services 18, 20 fully 1 About the Company.
Business Model.
Core Operations and Products.
102-3 Location of headquarters 370 fully 1 Annexes.
Contacts
102-4 Location of operations 22 fully 1 About the Company.
Geography and Target Markets
102-5 Ownership and legal form 370 fully 1 Company Asset Structure.
Annexes.
Contacts
102-6 Markets served 23, 25 fully 1 About the Company.
Geography and Target Markets.
Uranium Products Market.
Sales and Distribution
102-7 Scale of the organization 18, 129 fully 1 Company at a glance – Key Figures 2020
Sustainable Development. Social
Responsibility. Employees. Total Headcount
102-8 Information on employees and other workers 130, 131, 235, 236 fully 1 Sustainable development.
Social Responsibility.
Employees.
Total Headcount.
Annexes.
ESG Performance Indicators 2018-2020.
102-9 Supply chain 26, 121 fully 1 Sustainable development.
Procurement practice.

Supply chain information is kept confidential according to internal corporate regulations.
102-10 Significant changes to the organization and its supply chain 50 fully 1 Operation and financial review. Significant factors affecting the group’s results of operations.
102-11 Precautionary Principle or approach 157 fully 1 Environmental Protection.
102-12 External initiatives 43, 144 fully 1 About the Company.
Association Membership and International Compliance.
Social Responsibility.
Occupational Health and Safety.
Compliance of the management system with international standards.
102-13 Membership of associations 43 fully 1 About the Company.
Association membership and international compliance
Strategy
102-14 Statement from senior decision-maker 2, 4 fully 1 Message from the Chairman of the Board of Directors.
Message from the Chairman of the Management Board
102-15 Key impacts, risks, and opportunities 84 fully 1 Operating and financial review.
Risks.
Risk Management and Internal Control
Ethics and integrity
102-16 Values, principles, standards and norms of behaviour 214 fully 1 Corporate Governance and Ethics.
Corporate Ethics
102-17 Mechanisms for advice and concerns about ethics 216 fully 1 Corporate Governance and Ethics.
Corporate Ethics
Governance
102-18 Governance structure 181, 195 fully 1 Corporate Governance and Ethics.
Corporate Governance Structure
Board of Directors. Committees of the Board of Directors
102-21 Consulting stakeholders on economic, environmental, and social topics 111 fully 1 Sustainable development.
Stakeholder Engagement
102-22 Composition of the highest governance body and its committees 187 fully 1 Composition of the Board of Directors
Management Board.
Composition of the Management Board
102-25 Conflicts of interest 214, 217 fully 1 Corporate Governance and Ethics.
Corporate Ethics

Disclosure on the existence of a controlling shareholder and related parties can be found in the 2020 Consolidated Financial Statements.
102-36 Process for determining remuneration 206 fully 1 Corporate Governance and Ethics.
Remuneration
Stakeholder engagement
102-40 List of stakeholder groups 111, 227 fully 1 Sustainable Development.
Stakeholder Engagement Annexes.
Stakeholders
102-41 Collective bargaining agreements 139 fully 1 Social Responsibility.
Social Policy. Collective bargaining agreement and trade unions
102-42 Identifying and selecting stakeholders 111 fully 1 Sustainable development.
Stakeholder Engagement
102-43 Approach to stakeholder engagement 111, 227 fully 1 Sustainable development.
Annexes. Stakeholders
102-44 Key topics and concerns raised 223 fully 1 Annexes.
About the Report
Reporting practice
102-45 Entities included in the consolidated financial statements 250 fully 1 Annexes.
Group’s subsidiaries, joint ventures, joint operations, and associates
102-46 Defining report content and topic Boundaries 223 fully 1 Annexes.
About the Report
102-47 List of material topics 224 fully 1 Annexes.
About the Report
102-48 Restatements of information 220 fully 1 Annexes.
About the Report
102-49 Changes in reporting 220 fully 1 Annexes.
About the Report
General information about the report
102-50 Reporting period 220 fully 1 Annexes.
About the Report
102-51 Date of most recent report 220 fully 1 Annexes.
About the Report
102-52 Reporting cycle 221 fully 1 Annexes.
About the Report
102-53 Contact point for questions regarding the report 370 fully 1 Annexes.
About the Report. Contacts
102-54 Claims of reporting in accordance with the GRI Standards 220 fully 1 Annexes.
About the Report
102-55 GRI content index 252 fully 1 Annexes.
About the Report.
GRI Content Index
102-56 External assurance 225, 262 fully 1 Annexes.
About the Report.
Independent assurance.
Independent Limited Assurance Report
Economic
GRI 201 (2016): economic performance
201-1 Direct economic value generated and distributed 114, 242, 266 fully 1 Sustainable development.
Socio-economic Contribution.
Annexes.
Consolidated Financial Statements.
Annexes.
ESG Performance Indicators 2018-2020

Point b GRI 201-1 irrelevant. According to our estimates, the Company provides significant impact only on the territory of the Republic of Kazakhstan.
GRI 202 (2016): market presence
202-2 Proportion of senior management hired from the local community 129 fully 1 Social Responsibility.
Personnel Structure
GRI 203 (2016): indirect economic impacts
203-1 Infrastructure investments and services supported 96 fully 1 Sustainability Management.
Company’s contribution to attaining UN SDGs.
Socio-economic Contribution.
Creating Economic Value for Stakeholders
GRI 204 (2016): procurement practices
204-1 Proportion of spending on local suppliers 123, 243 fully 1 Socio-economic Contribution.
Procurement Practice.
Local Content in Procurement.
Annexes.
ESG Performance Indicators 2018-2020
GRI 205 (2016): anti-corruption
205-3 Confirmed incidents of corruption and actions taken 256 fully 1 No confirmed incidents of corruption
Environmental
GRI 302 (2016): energy
302-1 Energy consumption within the organization 171 partially 296, 397 Environmental Protection. Energy Efficiency
302-3 Energy intensity 171 fully 3 Environmental Protection.
Energy Efficiency
302-4 Reduction of energy consumption 171 fully 4 Environmental Protection.
Energy Efficiency
GRI 303 (2016): water and effluents
303-1 Interactions with water as a shared resource 166 fully 1 Environmental Protection.
Water Resources
303-2 Management of water discharge-related impacts 166 fully 1 Environmental Protection.
Water Resources
303-3 Water withdrawal 240 fully 5 Environmental Protection.
Water Resources.
Annexes.
ESG Performance Indicators 2018-2020
303-4 Water discharge 167 partially 6 Environmental Protection.
Water Resources
GRI 304 (2016): biodiversity
304-1 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas 174 fully 6 Environmental Protection.
Biodiversity
GRI 305 (2016): emissions
305-1 Direct (Scope 1) greenhouse gas (GHG) emissions 239 partially 6 Annexes.
ESG Performance Indicators 2018-2020
305-7 Nitrogen oxides (NOx), sulphur oxides (SOx), and other significant air emissions 165, 240 fully 7 Environmental Protection.
Annexes.
ESG Performance Indicators 2018-2020
GRI 306 (2016): effluents and waste
306-1 Waste generation and significant wasterelated impacts 168 fully 1 Environmental Protection.
Waste Management.
306-2 Management of significant wasterelated impacts 168 fully 1 Environmental Protection.
Waste Management.
306-3 Waste by type and disposal method 168, 240 fully 6 Environmental Protection.
Waste Management.
Annexes.
ESG Performance Indicators 2018-2020
GRI 307 (2016): environmental compliance
307-1 Non-compliance with environmental laws and regulations 158 fully 1 Environmental Protection.
Environmental Management
Social
GRI 401 (2016): employment
401-1 New employee hires and employee turnover 236, 237 fully 1 Annexes.
ESG Performance Indicators 2018-2020
401-2 Benefits provided to full-time employees that are not provided to temporary or parttime employees, by significant region of the organization 139 fully 1 Social Responsibility. Social Policy.
Social Support
401-3 Parental leave 238 fully 1 Annexes.
ESG Performance Indicators 2018-2020
GRI 402 (2016): labour/management relations
402-1 Minimum notice periods regarding operational changes 139 fully 1 Social Responsibility.
Social policy.
Collective bargaining agreement and trade unions
GRI 403 (2016): occupational health and safety
403-1 Occupational health and safety management system 149 fully 1 Social Responsibility.
Occupational Health and Safety.
Annexes.
ESG Performance Indicators 2018-2020
403-2 Hazard identification, risk assessment, and incident investigation 143, 147 fully 1 Social Responsibility.
Occupational Health and Safety.
HSE Risk Assessment.
Preventing occupational injuries
403-3 Occupational health services 147, 149 fully 1 Social Responsibility.
Occupational Health and Safety.
Preventing occupational diseases and protecting health
403-4 Worker participation, consultation, and communication on occupational health and safety 147 fully 1 Social Responsibility.
Occupational Health and Safety.
Developing the Safety Culture
403-5 Worker training on occupational health and safety 147 fully 1 Social Responsibility.
Occupational Health and Safety.
Developing the Safety Culture
403-6 Promotion on worker health 140, 147 fully 1 Social Responsibility.
Social Policy.
Sports and cultural events.
403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships 150 fully 1 Social Responsibility.
Occupational Health and Safety.
Management at contractors
403-8 Workers covered by an occupational health and safety management system 144 fully 1 Social Responsibility.
Occupational Health and Safety.
HSE Performance
403-9 Work-related injuries 147, 241 partially 1 Social Responsibility.
Occupational Health and Safety.
Preventing occupational injuries.
Annexes.
ESG Performance Indicators 2018-2020
GRI 404 (2016): training and education
404-1 Average hours of training per year per employee 137, 239 fully 1 Annexes.
ESG Performance Indicators 2018-2020
404-2 Programs for upgrading employee skills and transition assistance programs 136, 239 partially 1 Social Responsibility.
Employees.
Social policy.
Staff Development and Training.
Annexes.
ESG Performance Indicators 2018-2020
GRI 405 (2016): diversity and equal opportunity
405-1 Diversity of governance bodies and employees 130, 131, 235, 236 fully 1 Annexes.
ESG Performance Indicators 2018-2020
GRI 408 (2016): child labor
408-1 Operations and suppliers at significant risk for incidents of child labor 128 fully 1 Social Responsibility.
Employees
GRI 409 (2016): forced or compulsory labor
409-1 Operations and suppliers at significant risk for incidents of forced or compulsory 128 fully 1 Social Responsibility.
Employees
GRI 411 (2016): rights of indigenous peoples
411-1 Incidents of violations involving rights of indigenous peoples 128 fully 1 Social Responsibility.
Employees
GRI 412 (2016): human rights assessment
412-1 Operations that have been subject to human rights reviews or impact assessments 128 fully 1 Social Responsibility.
Human rights
412-2 Employee training on human rights policies or procedures 260 fully 1 The Group has no special training programmes on human rights, relevant policies or procedures.
412-3 Significant investment agreements and contracts that include human rights clauses or that underwent human rights screening 128 fully 1 Social Responsibility.
Human rights
GRI 413 (2016): local communities
413-1 Operations with local community engagement, impact assessment, and development programs 115 fully 1 Creating economic value for stakeholders.
Charity and sponsorship
GRI 415 (2016): public policy
415-1 Political contributions 217 fully 1 Corporate Governance and Ethics.
Corporate Ethics.
Government Relations and Sponsorship
GRI 419 (2016): socioeconomic compliance
419-1 Non-compliance with laws and regulations in the social and economic area 261 fully 1 The Group had no incidents of noncompliance with laws and regulations in the social and economic area
Indicators of Kazatomprom
KAP1 Production Lifecycle 123 fully 1 Socio-economic Contribution.
Field Lifecycle Management
KAP2 Readiness for emergencies 152 fully 1 Social Responsibility.
Occupational Health and Safety.
Emergency Preparedness and Response
KAP3 Radiation safety 151 fully 1 Social Responsibility.
Occupational Health and Safety.
Radiation Safety

94 The detailed disclosure perimeter can be found by this link.

96 Coal, Fuel, Heat, Electricity

97 Hydrogen

Independent Limited Assurance Report

GRI 102-56

CONSOLIDATED FINANCIAL STATEMENTS

GRI 201-1
JSC National Atomic Company Kazatomprom

Consolidated Financial Statements for the year ended 31 December 2020 and Independent Auditor’s Report

Independent auditor’s report

Consolidated Financial Statements

Notes to the Consolidated Financial Statements

31 December 2020

1. JSC NAC Kazatomprom Group and its Operations

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) for the year ended 31 December 2020 for JSC National Atomic Company Kazatomprom (the “Company”) and its subsidiaries (hereinafter collectively referred to as “the Group” or “JSC NAC Kazatomprom”).

The Company is a joint stock company set up in accordance with regulations of the Republic of Kazakhstan. The Company was established pursuant to the Decree of the President of the Republic of Kazakhstan on the establishment of National Atomic Company Kazatomprom No. 3593, dated 14 July 1997, and the Decree of the Government of the Republic of Kazakhstan on National Atomic Company Kazatomprom Issues No. 1148 dated 22 July 1997, as a closed joint stock company with a 100% government shareholding. As at 31 December 2017, 100% of the Company’s shares were held by the government via National Welfare Fund Samruk-Kazyna (hereinafter “Controlling shareholder” or “Samruk-Kazyna JSC”).

As of 31 December 2020, 75% of the Company’s shares are held by Samruk-Kazyna JSC and 25% are on free float.

The Company’s registered address is E-10 street, house 17/12, Nur-Sultan city, the Republic of Kazakhstan. The principal place of business is the Republic of Kazakhstan.

The Group’s principal activities include production of uranium and sale of uranium products. The Group is one of the leading uranium producing companies of the world. The Group is also involved in processing of rare metals, manufacture and sale of beryllium and tantalum products and scientific support of operational activities.

JSC NAC Kazatomprom is an entity representing interests of the Republic of Kazakhstan at the initial stages of the nuclear fuel cycle and production of fuel assemblies and their components. The Group is a participant in a number of associates and joint ventures which make a significant contribution to its profit (Notes 25 and 26). In 2018, the Group’s Development Strategy was revised to focus on the core business activities of mining and processing of uranium and related natural resources. The Development Strategy is designed to ensure long term value growth for all stakeholders of the Group in accordance with the principles of Sustainable Development through aligning production volumes to market conditions and adopting a market centric focus to sales capabilities, applying best practices in business activities, and developing a corporate culture consistent with the Group’s position as an industry leader.

As at 31 December 2020, the Group was a party to the following contracts for production and exploration of uranium:

Mine/area Stage Contract date Contract term Subsurface user
Kanzhugan Production 27 November 1996 26 years Kazatomprom- SaUran LLP
Uvanas Production 27 November 1996 26 years Kazatomprom- SaUran LLP
Mynkuduk, East lot Production 27 November 1996 26 years Kazatomprom- SaUran LLP
Moinkum, lot 1 (South) (south part) Production 26 September 2000 20 years Kazatomprom- SaUran LLP
Mynkuduk, Central lot Production 08 July 2005 28 years DP Ortalyk LLP
Mynkuduk, West lot Production 08 July 2005 30 years Appak LLP
North and South Karamurun Production 15 November 1996 26 years RU-6 LLP
Moinkum, lot 3 (Central) (north part) Production 31 May 2010 31 years Company
Inkai, block 1 Production 13 July 2000 45 years JV Inkai LLP
Inkai, block 2 Exploration 25 June 2018 4 years Company
Inkai, block 3 Exploration 25 June 2018 4 years Company
Zhalpak (Note 4) Exploration 31 May 2010 8 years DP Ortalyk LLP
North Khorasan, block 2 Production 01 March 2006 49 years Baiken-U LLP
North Khorasan, block 1 Exploration and Production 08 May 2005 53 years JV Khorassan LLP
Budenovskoe, block 2 Production 08 July 2005 35 years Karatau LLP
Budenovskoe, block 1 Production 20 November 2007 30 years JV Akbastau JSC
Budenovskoe, blocks 3, 4 Production 20 November 2007 31 years JV Akbastau JSC

At 31 December 2020 the Group comprises 37 entities (2019: 37), including associates and joint ventures, located in six regions of the Republic of Kazakhstan: Turkistan region, East Kazakhstan region, Kyzylorda region, Akmola region, Pavlodar region and Almaty region. At 31 December 2020 the aggregate number of employees of the Group is 21 thousand (2019: 21 thousand) people. Presented below are significant changes in the Group structure during 2020.

JSC Uranium Enrichment Center (TsOU)

In 2019 the Group has entered into a conditional contract to sell its 50% interest minus 1 (one) share in JSC Uranium Enrichment Center (TsOU) to its partner in this joint venture - TVEL JSC (TVEL). The Group maintained 1 share of TsOU, which will retain the Group’s right to access uranium enrichment services in accordance with the conditions previously agreed with TVEL. On 17 March 2020, the Group completed this sale. The contract price was Russian rubles 6,253 million or Euro 90 million fixed at an exchange rate as at 31 December 2019. Actual cash consideration received was Euro 90 million (Tenge 43,858 million equivalent).

In millions of Kazakhstani Tenge
Contract price in accordance with exchange rate as at 31 December 2019 40,485
Less: carrying value of the investment in joint venture (18,670)
Transfer of foreign currency translation reserve 248
Gain from disposal of joint venture 22,063

As at 31 December 2019 the Group classified the investment in the joint venture TsOU as an asset held for sale.

Caustic JSC

The Group intends to sell its entire stake in Caustic JSC by the end of 2021. Based upon an independent appraisal report, the fair value of the investment of Caustic JSC was lower than the carrying amount of the investment, as a result of which an impairment of Tenge 1,364 million was recognised during the year (Note 13).

KazPV project

Certain non-core assets are to be disposed under the plan presented in the IPO prospectus of NAC Kazatomprom JSC including entities of the KazPV project: Astana Solar LLP, Kazakhstan Solar Silicon LLP and MK KazSilicon LLP. As previously reported, on 17 May 2019, a conditional sales contract was entered into which provided for the initial sale of 75% of the Company’s shareholding in the entities of the KazPV project (further – Agreement). However, the Agreement did not enter into force due to non-compliance by the purchaser with certain conditions. As a result, in the first quarter of 2020, the Company terminated its relations with potential buyers under this contract. The Company has received the required regulatory approvals to recommence disposal of the KazPV assets in 2021.The assets and liabilities of the entities in the KazPV project are presented as assets and liabilities held for sale in these audited consolidated financial statements.

2. Environment of the Group

The economy of the Republic of Kazakhstan continues to display characteristics of an emerging market and is particularly sensitive to prices for oil and gas and other commodities, which constitute major parts of the country’s exports. These characteristics include, but are not limited to, the existence of a national currency that is not freely convertible outside of the country and a low level of market liquidity of debt and equity securities.

Ongoing political tension in the region and volatility of exchange rates have caused and may continue to cause negative impacts on the economy of the Republic of Kazakhstan, including decreases in liquidity and creation of difficulties in attracting international financing.

On 20 August 2015 the National Bank and the Government of the Republic of Kazakhstan took actions to discontinue supporting the Tenge exchange rate and implement a new monetary policy, which is based on an inflation targeting regime, cancellation of the exchange rate trading band and start a free-floating exchange rate. However, the National Bank’s exchange rate policy allows it to intervene to prevent dramatic fluctuations of the Tenge exchange rate and to ensure financial stability.

As at the date of issuance of these consolidated financial statements the official exchange rate of the National Bank of the Republic Kazakhstan was Tenge 418.64 per US Dollar 1, compared to Tenge 420.71 per US Dollar 1 as at 31 December 2020 (31 December 2019: 381.18 Tenge per US Dollar 1).

On 21 August 2020 Fitch Ratings affirmed the long-term foreign currency issuer default rating (“IDR”) of Kazakhstan as “BBB” with a stable outlook. This rating reflects Kazakhstan’s oil-related fiscal revenues and a strong sovereign net foreign asset position, offset by high commodity dependence, a weak banking sector relative to peers, and lower governance scores than ‘BBB’ medians. State debt remains low with the country’s fiscal position assessed as robust despite the oil price and coronavirus risks.

According to the official estimates, real GDP during the twelve months of 2020 contracted by 2.6%. In August 2020 Fitch forecasted that real GDP would contract by 2.0% in 2020 (2019: +4.5%) as coronavirus containment measures hit domestic demand, and OPEC+ oil production cuts affect net exports.

Additionally, the mining sector in the Republic of Kazakhstan continues to be impacted by political, legislative, fiscal and regulatory developments. The prospects for future economic stability in the Republic of Kazakhstan are largely dependent upon the effectiveness of economic measures undertaken by the Government, together with legal and political developments, which are beyond the Company’s control.

For the purpose of measurement of expected credit losses (“ECL”) the Company uses supportable forward-looking information, including forecasts of macroeconomic variables. As with any forecast, the projections and likelihoods of their occurrence are subject to a high degree of inherent uncertainty and therefore the actual outcomes may be significantly different from those projected.

Management believes it is taking all the necessary measures to support the sustainability and growth of the Group’s business in the current circumstances. The future economic situation and regulatory environment may differ from management’s current expectations.

In December 2019, news from China about the outbreak of a new virus first appeared. On 11 March 2020, the World Health Organization declared the outbreak of a new type of coronavirus COVID-19 a pandemic. The COVID-19 epidemic has spread globally, with a sharp negative effect on the entire global economy. According to the Decree of the President of the Republic of Kazakhstan dated 15 March 2020 No. 285 “On the introduction of a state of emergency in the Republic of Kazakhstan”, a state of emergency was introduced for the period from 16 March 2020 until 15 April 2020 and later extended until 11 May 2020.

On 5 July 2020, the State Commission for Ensuring State of Emergency under the President of Kazakhstan, in consideration of the complications of the epidemiological situation and the increase in the prevalence of coronavirus infection in Kazakhstan, introduced restrictive measures for 14 days, subsequently extended until 16 August 2020.

In the cities of Kazakhstan, including Almaty and Nur-Sultan a quarantine regime was introduced. The Company took actions to prevent the spread of coronavirus infection and ensure continuity of operations of production facilities, including shift change algorithms that were developed requiring PCR testing for shift production employees before arrival and departure from the shift and updated plans for continuity of operations and actions in case of the onset of symptoms among workers.

The Group’s response plans are constantly updated in accordance with the Resolutions of the Chief State Sanitary Doctor of the Republic of Kazakhstan.

The proactive actions taken to prevent the spread of COVID-19 during the year made it possible to ensure the smooth functioning of the production facilities of the Group’s entities.

The devaluation of the Tenge against the US Dollar since the beginning of the year was approximately 10%.

As of the date of the issuance of these financial statements, the COVID-19 situation is still developing. To date there has not been any significant effect on the Company’s revenues and deliveries. Due to COVID-19 restrictive measures, the Group decreased its exploration activities and production volumes during the year. The Group has fulfilled its 2020 sales obligations. There are currently no logistical restrictions on physical deliveries to all of the Group’s export destinations including China which resumed receiving shipments from April 2020. As at 31 December 2020 NAC Kazatomprom JSC remains a financially stable company with more than Tenge 428 billion of net current assets including over Tenge 113 billion in cash and cash equivalents, a low level of borrowings and more than Tenge 242 billion (US Dollars 574 million) of undrawn bank credit lines. The uranium spot price, which acts as a base for the pricing of the Group’s sales, increased by more than 35% from the middle of March 2020 to the end of April, and after continuous decline, at 31 December 2020, the spot price settled at US Dollar 30.20 per pound of U3O8 (US Dollar 24.93 at 31 December 2019).

Management is unable to predict the extent or duration of changes in the Kazakhstani economy or evaluate their possible impact on the financial position of the Company in the future. Management believes that it is taking all necessary actions to maintain the sustainability and growth of the Company in the current circumstances.

3. Significant Accounting Policies

Basis of preparation

These consolidated financial statements have been prepared in accordance with IFRS under the historical cost convention, as modified by financial instruments categorised at fair value through profit or loss (“FVTPL”) and at fair value through other comprehensive income (“FVOCI”). The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the periods presented.

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4.

Presentation currency

These consolidated financial statements are presented in millions of Kazakhstani Tenge (“Tenge”), unless otherwise stated.

Consolidation

(i) Consolidated financial statements

Subsidiaries are those investees, including structured entities, that the Group controls because the Group (i) has power to direct the relevant activities of the investees that significantly affect their returns, (ii) has exposure, or rights, to variable returns from its involvement with the investees, and (iii) has the ability to use its power over the investees to affect the amount of the investor’s returns. The existence and effect of substantive rights, including substantive potential voting rights, are considered when assessing whether the Group has power over another entity.

For a right to be substantive, the holder must have a practical ability to exercise that right when decisions about the direction of the relevant activities of the investee need to be made. The Group may have power over an investee even when it holds less than the majority of the voting power in an investee. In such a case, the Group assesses the size of its voting rights relative to the size and dispersion of holdings of the other vote holders to determine if it has de-facto power over the investee. Protective rights of other investors, such as those that relate to fundamental changes of the investee’s activities or applied only in exceptional circumstances, do not prevent the Group from controlling an investee. Subsidiaries are consolidated from the date on which control is transferred to the Group (acquisition date) and are deconsolidated from the date on which control ceases.

The acquisition method of accounting is used to account acquisition of subsidiaries other than those acquired from parties under common control. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured at their fair values at the acquisition date, irrespective of the extent of any non-controlling interest.

The Group measures non-controlling interest that represents present ownership interest and entitles the holder to a proportionate share of net assets in the event of liquidation non-controlling interest’s proportionate share of net assets of the acquiree.

Goodwill is measured by deducting the net assets of the acquiree from the aggregate of the consideration transferred for the acquiree, the amount of non-controlling interest in the acquiree and the fair value of an interest in the acquiree held immediately before the acquisition date. Any negative amount (“negative goodwill” or a “bargain purchase”) is recognised in profit or loss, after management reassesses whether it identified all the assets acquired and all the liabilities and contingent liabilities assumed and reviews the appropriateness of their measurement.

The consideration transferred for the acquiree is measured at the fair value of the assets given up, equity instruments issued and liabilities incurred or assumed, including the fair value of assets or liabilities from contingent consideration arrangements, but excludes acquisition related costs such as advisory, legal, valuation and similar professional services. Transaction costs related to the acquisition of and incurred for issuing equity instruments are deducted from equity; transaction costs incurred for issuing debt as part of the business combination are deducted from the carrying amount of the debt and all other transaction costs associated with the acquisition are expensed.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated; unrealised losses are also eliminated unless the cost cannot be recovered. The Company and all of its subsidiaries use uniform accounting policies consistent with the Group’s policies. When necessary, amounts reported by subsidiaries have been adjusted to conform with the Group’s accounting policies.

Non-controlling interest is that part of the net results and of the equity of a subsidiary attributable to interests which are not owned, directly or indirectly, by the Group. Non-controlling interest forms a separate component of the Group’s equity.

(ii) Purchases and sales of non-controlling interests

The Group applies the economic entity model to account for transactions with owners of non-controlling interest in transactions that do not result in a loss of control. Any difference between the purchase consideration and the carrying amount of noncontrolling interest acquired is recorded as a capital transaction directly in equity. The Group recognises the difference between sales consideration and the carrying amount of non-controlling interest sold as a capital transaction in the consolidated statements of changes in equity.

(iii) Purchases of subsidiaries from parties under common control

Purchases of subsidiaries from parties under common control are accounted for using the predecessor values method. Under this method the consolidated financial statements of the combined entity are presented as if the businesses had been combined from the beginning of the earliest period presented or, if later, the date when the combining entities were first brought under common control. The assets and liabilities of the subsidiary transferred under common control are at the predecessor entity’s carrying amounts.

The predecessor entity is considered to be the highest reporting entity in which the subsidiary’s IFRS financial information was consolidated. Related goodwill inherent in the predecessor entity’s original acquisitions is also recorded in these consolidated financial statements. Any difference between the carrying amount of net assets, including the predecessor entity’s goodwill, and the consideration for the acquisition is accounted for in these consolidated financial statements as an adjustment to retained earnings within equity.

(iv) Associates

Associates are entities over which the Group has significant influence (directly or indirectly), but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. Dividends received from associates reduce the carrying value of the investment in associates. Other post-acquisition changes in the Group’s share of net assets of an associate are recognised as follows: (i) the Group’s share of profits or losses of associates is recorded in the consolidated profit or loss for the year as the share of results of associates, (ii) the Group’s share of other comprehensive income is recognised in other comprehensive income and presented separately, (iii) other changes in the Group’s share of the carrying value of net assets of associates are recognised in profit or loss within the share of results of associates.

However, when the Group’s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates; unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

(v) Joint arrangements

The Group is a party of joint arrangement when it exercises joint control over arrangement by acting collectively with other parties and decisions about the relevant activities require unanimous consent of the parties sharing control. The joint arrangement is either a joint operation or a joint venture depending on the contractual rights and obligations of the parties to the arrangement.

The Group’s interests in joint ventures are accounted for using the equity method and are initially recognised at cost. Dividends received from joint ventures reduce the carrying value of the investment in joint ventures. Other post-acquisition changes in the Group’s share of net assets of joint ventures are recognised as follows:

(i) the Group’s share of profits or losses of joint ventures is recorded in the consolidated profit or loss for the year as share of result of joint ventures, (ii) the Group’s share of other comprehensive income is recognised in other comprehensive income and presented separately, (iii) other changes in the Group’s share of the carrying value of net assets of joint ventures are recognised in profit or loss within the share of result of joint ventures. When the Group’s share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group’s net investment in the joint ventures), the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the joint ventures.

Unrealised gains on transactions between the Group and its joint ventures are eliminated to the extent of the Group’s interest in the joint ventures. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.

If participants of joint arrangements have rights to assets and bear responsibility for obligations under joint arrangements, then the joint arrangement is classified as a joint operation.

In relation to interest in joint operations the Group recognises: (i) its assets, including its share of any assets held jointly, (ii) liabilities, including its share of any liabilities incurred jointly, (iii) its share of the revenue from the sale of its share of the output arising from the joint operation, (iv) its expenses, including its share of any expenses incurred jointly. In accordance with requirements of the relevant agreements, participants buy output of joint operations equally in accordance with their 50% ownership interest. If participants of the joint operations do not comply with this requirement during a period, a liability or receivable under joint operations is recognised for an amount equivalent to the corresponding gross margin. The liability/ receivables are settled either when participants satisfy the parity requirements or participants mutually agree to discharge the liabilities/receivables, and a corresponding loss/gain is recognised in profit and loss. Receivables and payables between participants of the joint operations are presented on a gross basis in the financial statements. No revenue from joint operations is recognised in financial statements until the Group sells the output to third parties.

(vi) Disposals of subsidiaries, associates or joint ventures

When the Group ceases to have control or significant influence, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity, are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

Foreign currency translation

The functional currency of each of the Group’s consolidated entities is the currency of the primary economic environment in which the entity operates. The functional currency of the Company and its Kazakhstan subsidiaries, and the Group’s presentation currency, is the national currency of Kazakhstan, Kazakhstani Tenge. Exchange restrictions and currency controls exist in relation of converting Tenge into other currencies. Currently, Tenge is not freely convertible outside of the Republic of Kazakhstan.

Monetary assets and liabilities are translated into each entity’s functional currency at the official exchange rate at the respective end of the reporting period. Foreign exchange gains and losses resulting from the settlement of the transactions and from the translation of monetary assets and liabilities into each entity’s functional currency at year-end official exchange rates are recognised in profit or loss. Translation at year-end does not apply to non-monetary items that are carried at historic costs.

Loans between Group entities and related foreign exchange gains or losses are eliminated upon consolidation. However, where the loan is between Group entities that have different functional currencies, the foreign exchange gain or loss cannot be eliminated in full and is recognised in the consolidated profit or loss, unless the loan is not expected to be settled in the foreseeable future and thus forms part of the net investment in foreign operation. In such a case, the foreign exchange gain or loss is recognised in other comprehensive income.

The results and financial position of Group entities, which have financial statements with different functional currencies, are translated into the presentation currency as follows:

  • assets and liabilities for each statements of financial position are translated at the closing rate at the end of the respective reporting period
  • income and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions)
  • components of equity are translated at the historic rate
  • all resulting exchange differences are recognised in other comprehensive income

When control over a foreign operation is lost, the exchange differences recognised previously in other comprehensive income are reclassified to profit or loss for the year as part of the gain or loss on disposal. On partial disposal of a subsidiary without loss of control, the related portion of accumulated currency translation differences is reclassified to non-controlling interest within equity.

At 31 December 2020 the principal rate of exchange used for translating foreign currency balances was US Dollar 1 per 420.91 Tenge (31 December 2019: US Dollar 1 per 382.59 Tenge).

Revenue recognition

Revenue is income arising in the course of the Group’s ordinary activities. Revenue is recognised in the amount of transaction price. Transaction price is the amount of consideration to which the Group expects to be entitled in exchange for transferring control over promised goods or services to a customer, excluding the amounts collected on behalf of third parties. Revenue is recognised net of discounts, returns and value added taxes, export duties, other similar mandatory payments.

(i) Revenue from sales of goods (uranium, tantalum, beryllium, niobium and other products)

Sales are recognised when control of the good has transferred, being when the goods are delivered to the customer, the customer has full discretion over the goods, and there is no unfulfilled obligation that could affect the customer’s acceptance of the goods. Delivery occurs when the goods have been delivered to the specific location, the risks of obsolescence and loss have been transferred to the customer, and either the customer has accepted the goods in accordance with the contract, the acceptance provisions have lapsed, or the Group has objective evidence that all criteria for acceptance have been satisfied.

Revenue from the sales with discounts is recognised based on the price specified in the contract, net of the estimated volume discounts. Accumulated experience is used to estimate and provide for the discounts, using the expected value method, and revenue is only recognised to the extent that it is highly probable that a significant reversal will not occur.

No element of financing is deemed present as the sales are made with an average credit term of 30-90 days, which is consistent with market practice.

A receivable is recognised when the goods are delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before the payment is due.

Delivery of uranium, tantalum and beryllium products vary depending on the individual terms of a sale contract usually in accordance with the Incoterms classification. Delivery of uranium products occurs: at the date of physical delivery in accordance with Incoterms or at the date of book-transfer to account with convertor specified by customer. Book-transfer operation represents a transaction whereby uranium account balance of the transferor is decreased with simultaneous allocation of uranium to the transferee’s uranium account with the same specialised conversion / reconversion entity.

(ii) Sales of services (transportation, drilling and other)

The Group may provide services under fixed-price and variable price contracts. Revenue from providing services is recognised in the accounting period in which the services are rendered. For fixed-price contracts, revenue is recognised based on the actual service provided to the end of the reporting period as a proportion of the total services to be provided because the customer receives and uses the benefits simultaneously.

Where the contracts include multiple performance obligations, the transaction price is allocated to each separate performance obligation based on the stand-alone selling prices. Where these are not directly observable, they are estimated based on expected cost plus margin.

Estimates of revenues, costs or extent of progress toward completion are revised if circumstances change. Any resulting increases or decreases in estimated revenues or costs are reflected in profit or loss in the period in which the circumstances that give rise to the revision become known by management.

In case of fixed-price contracts, the customer pays the fixed amount based on a payment schedule. If the services rendered by the Group exceed the payment, a contract asset is recognised. If the payments exceed the services rendered, a contract liability is recognised.

If the contract includes variable consideration, revenue is recognised only to the extent that it is highly probable that there will be no significant reversal of such consideration.

(iii) Financing components

The Group does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction prices for the time value of money.

(iv) Barter transactions and mutual cancellations

A portion of sales and purchases are settled by mutual cancellations, barter or non-cash settlements. These transactions are generally in the form of direct settlements by dissimilar goods and services from the final customer (barter), cancellation of mutual balances or through a chain of non-cash transactions involving several companies.

Sales and purchases that are expected to be settled by mutual settlements, barter or other non-cash settlements are recognised based on the management’s estimate of the fair value to be received or given up in non-cash settlements. The fair value is determined with reference to observable market information.

Non-cash transactions have been excluded from the cash flow statement. Investing and financing activities and the total of operating activities represent actual cash flows.

Interest income

Interest income is recorded for all debt instruments, other than those at FVTPL, on an accrual basis using the effective interest method. This method defers, as part of interest income, all fee received between the parties to the contract that are an integral part of the effective interest rate, all other premiums or discounts. Interest income on debt instruments at FVTPL calculated at nominal interest rate is presented within ‘finance income’ line in profit or loss.

Fees integral to the effective interest rate include origination fees received or paid by the Group relating to the creation or acquisition of a financial asset (for example, fees for evaluating creditworthiness, evaluating and recording guarantees or collateral, negotiating the terms of the instrument and for processing transaction documents).

For financial assets that are originated or purchased credit-impaired, the effective interest rate is the rate that discounts the expected cash flows (including the initial expected credit losses) to the fair value on initial recognition (normally represented by the purchase price). As a result, the effective interest is credit-adjusted.

Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets, except for (i) financial assets that have become credit impaired (Stage 3), for which interest revenue is calculated by applying the effective interest rate to their AC, net of the ECL provision, and (ii) financial assets that are purchased or originated credit impaired, for which the original credit-adjusted effective interest rate is applied to the AC.

Income taxes

Income taxes have been provided for in the consolidated financial statements in accordance with legislation enacted by the end of the reporting period. The income tax charge/(credit) comprises current tax and deferred tax and is recognised in profit or loss for the year, except if it is recognised in other comprehensive income or directly in equity because it relates to transactions that are also recognised, in the same or a different period, in other comprehensive income or directly in equity.

Current tax is the amount expected to be paid to, or recovered from, the taxation authorities in respect of taxable profits or losses for the current and prior periods. Taxable profits or losses are based on estimates if consolidated financial statements are authorised prior to filing relevant tax returns. Taxes other than on income are recorded within operating expenses.

Deferred income tax is provided using the balance sheet liability method for tax loss carry forwards and temporary differences arising between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. In accordance with the initial recognition exemption, deferred taxes are not recorded for temporary differences on initial recognition of an asset or a liability in a transaction other than a business combination if the transaction, when initially recorded, affects neither accounting nor taxable profit. Deferred tax liabilities are not recorded for temporary differences on initial recognition of goodwill, and subsequently for goodwill which is not deductible for tax purposes. Deferred tax balances are measured at tax rates enacted at the end of the reporting period, which are expected to apply to the period when the temporary differences will reverse or the tax loss carry forwards will be utilised. Deferred tax assets and liabilities are netted only within the individual companies of the Group. Deferred tax assets for deductible temporary differences and tax loss carry forwards are recorded only to the extent that it is probable that the temporary difference will reverse in the future and there is sufficient future taxable profit available against which the deductions can be utilised.

The Group controls the reversal of temporary differences relating to taxes chargeable on dividends from subsidiaries or on gains upon their disposal. The Group does not recognise deferred tax liabilities on such temporary differences except to the extent that management expects the temporary differences to reverse in the foreseeable future.

The Group’s uncertain tax positions are reassessed by management at the end of each reporting period. Liabilities are recorded for income tax positions that are determined by management as more likely than not to result in additional taxes being levied if the positions were to be challenged by the tax authorities. The assessment is based on the interpretation of tax laws that have been enacted by the end of the reporting period, and any known court or other rulings on such issues.

Liabilities for penalties, interest and taxes other than on income are recognised based on management’s best estimate of the expenditure required to settle the obligations at the end of the reporting period.

Property, plant and equipment

(i) Recognition and measurement of property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and provision for impairment, where required.

Cost comprises purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts and rebates, and any costs directly attributable to bringing the asset to the location and condition necessary for its intended use. The cost of self-constructed assets includes the cost of materials, direct labour and an appropriate proportion of production overheads. The individual significant parts of an item of property, plant and equipment (components), whose useful lives are different from the useful life of the given asset as a whole are depreciated individually, applying depreciation rates reflecting their anticipated useful lives.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Specialised spare parts and servicing equipment with a significant initial value and a useful life of more than one year are recognised as an item of property, plant and equipment. Other spare parts and auxiliary equipment are recognised as inventories and accounted for in profit and loss for the year as retired.

Costs of minor repairs and day-to-day maintenance are expensed when incurred. Cost of replacing major parts or components of property, plant and equipment items are capitalised and the replaced part is disposed. Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss for the year.

(ii) Depreciation

Land is not depreciated. Depreciation of items within buildings category that are used in extraction of uranium and its preliminary processing is charged on a unit-of-production (UoP) method in respect of items for which this basis best reflects the pattern of consumption. Depreciation on other items of property, plant and equipment is calculated using the straight-line method to allocate their cost to their residual values over their estimated useful lives:

Useful lives in years
Buildings 10 to 50
Machinery and equipment 3 to 50
Vehicles 3 to 10
Other 3 to 20

Each item’s estimated useful life depends on its own useful life limitations and/or term of a subsurface use contract and the present assessment of economically recoverable reserves of the mine property at which the item is located.

The residual value of an asset is the estimated amount that the Group would currently obtain from the disposal of the asset less the estimated costs of disposal, if the asset was already of the age and in the condition expected at the end of its useful life. The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

Mine development assets

Mine development assets are stated at cost, less accumulated depreciation and provision for impairment, where required. Mine development assets comprise the capitalised costs of pump-in and pump-out well drilling, main external tying of the well with surface piping, equipment, measuring instruments, ion-exchange resin, estimated site restoration, acid costs and other development costs. Mine development assets are amortised at the mine or block level using the unit-of-production method. Unit-of-production rates are based on proved reserves estimated to be recovered from mines (blocks) using existing facilities and operating methods. The estimate of proved reserves is based on reserve reports which are integral part of each subsoil use contract. These reserve reports are incorporated into feasibility models which are approved by the government and detail the total proven reserves and estimated scheduled extraction by year. Since 2017, the Group uses reserve reports prepared by an independent consultant (Note 4).

Intangible assets

(i) Recognition and measurement of intangible assets

The Group’s intangible assets other than goodwill have definite useful lives and primarily include capitalised production technology development costs, computer software, patents, and licences. Acquired computer software licences and patents are initially measured at costs incurred to acquire and bring them to use.

(ii) Amortisation of intangible assets

Intangible assets are amortised using the straight-line method over their useful lives:

Useful lives in years
Licences and patents 3 to 20
Software 1 to 14
Other 2 to 15

If impaired, the carrying amount of intangible assets is written down to the higher of value in use and fair value less costs to sell.

(iii) Goodwill

Goodwill is carried at cost less accumulated impairment losses, if any. The Group tests goodwill for impairment at least annually and whenever there are indications that goodwill may be impaired. Goodwill is allocated to the cash-generating units, or groups of cash-generating units, that are expected to benefit from the synergies of the business combination. Such units or groups of units represent the lowest level at which the Group monitors goodwill and are not larger than an operating segment.

Gains or losses on disposal of an operation within a cash-generating unit to which goodwill has been allocated include the carrying amount of goodwill associated with the disposed operation, generally measured on the basis of the relative values of the disposed operation and the portion of the cash-generating unit which is retained.

(iv) Research and development costs

Research expenditure is recognised as an expense when incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when it is probable that the project will be a success considering its commercial and technological feasibility, and costs can be measured reliably. Other development expenditures are recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.

Development costs with a finite useful life that have been capitalised are amortised from the commencement of the commercial production of the product on a straight-line basis over the period of its expected benefit.

Mineral rights

Mineral rights are stated at cost, less accumulated depreciation and provision for impairment, where required. Mineral rights acquired as part of business combinations are recognised at fair value. The capitalised cost of acquisition of mineral rights comprises subscription bonus, commercial discovery bonus, the cost of subsurface use rights and capitalised historical costs. The Group is obliged to reimburse historical costs incurred by the State in respect of mining rights prior to licence or subsoil use contracts being issued. These historical costs are recognised as part of the acquisition cost with a corresponding liability equal to the present value of payments made during the licence period or subsoil use contract.

Mineral rights are amortised using unit-of-production method based upon proved reserves commencing when uranium first starts to be extracted.

The estimate of proved reserves is based on reserve reports, which are integral part of each subsoil use contract. These reserve reports are incorporated into feasibility models, which are approved by the government and detail the total proven reserves and estimated scheduled extraction by year. Since 2017, the Group uses reserve reports prepared by an independent consultant (Note 4).

Exploration and evaluation assets

Exploration and evaluation assets are measured at cost less provision for impairment, where required. The Group classifies exploration and evaluation assets as tangible or intangible according to the nature of the assets acquired.

Exploration and evaluation assets comprise the capitalised costs incurred by the Group prior to proving that viable production is possible and include geological and geophysical costs, the costs of exploratory wells and directly attributable overheads associated with exploration activities.

The decision to enter into or renew a subsoil use contract after the expiration of the exploration and appraisal period is subject to the success of the exploration and appraisal of mineral resources and the Group’s decision to proceed to the production (development) stage.

Tangible exploration and evaluation assets are transferred to mine development assets upon demonstration of commercial viability of uranium production and amortised using unit-of-production method based upon proved reserves. Once commercial reserves (proved or commercial reserves) are found, intangible exploration and evaluation assets are transferred to mineral rights. Accordingly, the Group does not amortise exploration and evaluation assets before commercial reserves (proved or commercial reserves) are found. If no commercial reserves are found, exploration and evaluation assets are expensed.

Exploration and evaluation assets are tested by the Group for impairment whenever facts and circumstances indicate assets’ impairment. An impairment loss is recognised for the amount by which exploration and evaluation assets’ carrying amount exceeds their recoverable amount. The recoverable amount is higher of the exploration and evaluation assets’ fair value less costs to sell and their value in use.

One or more of the following facts and circumstances indicate that the Group should test its exploration and evaluation assets for impairment (the list is not exhaustive):

  • the period for which the Group has the right to explore in the specific area has expired during the period or will expire in the near future, and is not expected to be renewed
  • substantive expenditure on further exploration for and evaluation of mineral reserves in the specific area is neither budgeted nor planned
  • exploration for and evaluation of mineral reserves in the specific area have not led to the discovery of commercially viable quantities of mineral reserves and the Group has decided to discontinue such operations in the specific area
  • sufficient data exist to indicate that, although development works in the specific area are likely to proceed, the carrying amount of the exploration and evaluation assets is unlikely to be recovered in full resulting from efficient development or by sale

Costs associated with activities undertaken prior to exploration such as design, technical and economical assessments are expensed as incurred.

Impairment of non-financial assets

The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, management estimates the recoverable amount, which is determined as the higher of an asset’s fair value less costs to sell (the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date) and its value in use (being the net present value of expected future cash flows of the relevant cash-generating unit). 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 the risks specific to the asset for which the future cash flow estimates have not been adjusted.

If it is not possible to estimate the recoverable amount of the individual asset, the Group determines the recoverable amount of the cash-generating unit to which the asset belongs. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets. Basis for determination of cash-generating units is presented in Note 4.

The estimates used for impairment reviews are based on detailed life of mine plans and operating budgets, modified as appropriate to meet the requirements of IAS 36 “Impairment of Assets”.

Future cash flows are based on:

  • estimates of the volumes of the reserves for which there is a high degree of confidence of economic extraction
  • future production and sales quantities
  • future commodity prices (assuming the current market prices will revert to the Group’s assessment of the long term average price, generally over a period of three to five years) and
  • future costs of production and other operating and capital expenditures

If the carrying amount of the asset exceeds its recoverable amount, the asset is impaired and an impairment loss is charged to profit and loss for the year so as to reduce the carrying amount in the consolidated statements of financial position to its recoverable amount. An impairment loss recognised for an asset in prior years is reversed where appropriate if there has been a change in the estimates used to determine the asset’s value in use or fair value less costs to sell. This reversal is recognised in profit and loss for the year, and is limited to the carrying amount that would have been determined, net of depreciation, if no impairment loss had been recognised in prior years.

Investment property

Investment property is property held by the Group to earn rental income or for capital appreciation, or both and which is not occupied by the Group.

Investment properties are stated at cost less accumulated depreciation and provision for impairment, where required. If any indication exists that investment properties may be impaired, the Group estimates the recoverable amount as the higher of value in use and fair value less costs of disposal. The carrying amount of an investment property is written down to its recoverable amount through a charge to profit or loss for the year. An impairment loss recognised in prior years is reversed if there has been a subsequent change in the estimates used to determine the asset’s recoverable amount.

Subsequent expenditure is capitalised only when it is probable that future economic benefits associated with the item will flow to the Group, and the cost can be measured reliably. All other repairs and maintenance costs are expensed when incurred. If an investment property becomes owner-occupied, it is reclassified to property, plant and equipment.

Earned rental income is recorded in profit or loss for the year within other income. Gains or losses on disposal of investment property are calculated as proceeds less the carrying amount.

If an investment property becomes owner-occupied, it is reclassified as property, plant and equipment, and its carrying amount at the date of reclassification becomes its deemed cost for accounting purposes.

Assets classified as held for sale

Assets and disposal groups (which may include both non-current and current assets) are classified in the consolidated statements of financial position as ‘Assets of disposal groups classified as held for sale’ if their carrying amount will be recovered principally through a sale transaction (including loss of control of a subsidiary holding the assets) within twelve months after the reporting period. Assets are reclassified when all of the following conditions are met: (a) the assets are available for immediate sale in their present condition; (b) the Group management approved and initiated an active programme to locate a buyer; (c) the assets are actively marketed for sale at a reasonable price; (d) the sale is expected within one year; and (e) it is unlikely that significant changes to the plan to sell will be made or that the plan will be withdrawn.

Non-current assets or disposal groups classified as held for sale in the current period’s consolidated statements of financial position are not reclassified or re-presented in the comparative statements of financial position to reflect the classification at the end of the current period.

A disposal group is a group of assets (current or non-current) to be disposed of, by sale or otherwise, together as a group in a single transaction, and liabilities directly associated with those assets that will be transferred in the transaction. Goodwill is included if the disposal group includes an operation within a cash-generating unit to which goodwill has been allocated on acquisition. Non-current assets are assets that include amounts expected to be recovered or collected more than twelve months after the reporting period. If reclassification is required, both the current and non-current portions of an asset are reclassified.

Held for sale disposal groups as a whole are measured at the lower of their carrying amount and fair value less costs to sell. Held for sale property, plant and equipment are not depreciated. Reclassified non-current financial instruments are not subject to write down to the lower of their carrying amount and fair value less costs to sell.

Liabilities directly associated with the disposal group that will be transferred in the disposal transaction are reclassified and presented separately in the consolidated statements of financial position.

Financial instruments

Key measurement terms

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The best evidence of fair value is the price in an active market. An active market is one in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

Fair value of financial instruments traded in an active market is measured as the product of the quoted price for the individual asset or liability and the number of instruments held by the entity. This is the case even if a market’s normal daily trading volume is not sufficient to absorb the quantity held and placing orders to sell the position in a single transaction might affect the quoted price.

Valuation techniques such as discounted cash flow models or models based on recent arm’s length transactions or consideration of financial data of the investees are used to measure fair value of certain financial instruments for which external market pricing information is not available. Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not based on solely observable market data (that is, the measurement requires significant unobservable inputs). Transfers between levels of the fair value hierarchy are deemed to have occurred at the end of the reporting period.

(i) Transaction costs

Transaction costs are incremental costs that are directly attributable to the acquisition, issue or disposal of a financial instrument. An incremental cost is one that would not have been incurred if the transaction had not taken place. Transaction costs include fees and commissions paid to agents (including employees acting as selling agents), advisors, brokers and dealers, levies by regulatory agencies and securities exchanges, and transfer taxes and duties. Transaction costs do not include debt premiums or discounts, financing costs or internal administrative or holding costs.

(ii) Amortised cost

Amortised cost (“AC”) is the amount at which the financial instrument was recognised at initial recognition less any principal repayments, plus accrued interest, and for financial assets less any allowance for expected credit losses (“ECL”). Accrued interest includes amortisation of transaction costs deferred at initial recognition and of any premium or discount to the maturity amount using the effective interest method. Accrued interest income and accrued interest expense, including both accrued coupon and amortised discount or premium (including fees deferred at origination, if any), are not presented separately and are included in the carrying values of the related items in the consolidated statement of financial position.

(iii) The effective interest method

The effective interest method is a method of allocating interest income or interest expense over the relevant period, so as to achieve a constant periodic rate of interest (effective interest rate) on the carrying amount. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts (excluding future credit losses) through the expected life of the financial instrument or a shorter period, if appropriate, to the gross carrying amount of the financial instrument. The effective interest rate discounts cash flows of variable interest instruments to the next interest repricing date, except for the premium or discount which reflects the credit spread over the floating rate specified in the instrument, or other variables that are not reset to market rates.

Such premiums or discounts are amortised over the whole expected life of the instrument. The present value calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate. For assets that are purchased or originated credit impaired (“POCI”) at initial recognition, the effective interest rate is adjusted for credit risk, i.e. it is calculated based on the expected cash flows on initial recognition instead of contractual payments.

Financial instruments – initial recognition

Financial instruments at FVTPL are initially recorded at fair value. All other financial instruments are initially recorded at fair value adjusted for transaction costs. Fair value at initial recognition is best evidenced by the transaction price. A gain or loss on initial recognition is only recorded if there is a difference between fair value and transaction price which can be evidenced by other observable current market transactions in the same instrument or by a valuation technique whose inputs include only data from observable markets. After the initial recognition, an ECL allowance is recognised for financial assets measured at AC and investments in debt instruments measured at FVOCI, resulting in an immediate accounting loss.

All purchases and sales of financial assets that require delivery within the time frame established by regulation or market convention (“regular way” purchases and sales) are recorded at trade date, which is the date on which the Group commits to deliver a financial asset. All other purchases are recognised when the entity becomes a party to the contractual provisions of the instrument.

Financial assets – classification and subsequent measurement

(i) Measurement categories

The Group classifies financial assets in the following measurement categories: FVTPL, FVOCI and AC. The classification and subsequent measurement of debt financial assets depends on: (i) the Group’s business model for managing the related assets portfolio and (ii) the cash flow characteristics of the asset.

(ii) Business model

The business model reflects how the Group manages the assets in order to generate cash flows – whether the Group’s objective is: (i) solely to collect the contractual cash flows from the assets (“hold to collect contractual cash flows”,) or (ii) to collect both the contractual cash flows and the cash flows arising from the sale of assets (“hold to collect contractual cash flows and sell”) or, if neither of (i) and (ii) is applicable, the financial assets are classified as part of “other” business model and measured at FVTPL.

Business model is determined for a group of assets (on a portfolio level) based on all relevant evidence about the activities that the Group undertakes to achieve the objective set out for the portfolio available at the date of the assessment. Factors considered by the Group in determining the business model include the purpose and composition of a portfolio, past experience on how the cash flows for the respective assets were collected, how risks are assessed and managed, how the assets’ performance is assessed and how managers are compensated.

(iii) Cash flow characteristics

Where the business model is to hold assets to collect contractual cash flows or to hold contractual cash flows and sell, the Group assesses whether the cash flows represent solely payments of principal and interest (“SPPI”). Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows are consistent with the SPPI feature.

In making this assessment, the Group considers whether the contractual cash flows are consistent with a basic lending arrangement, i.e. interest includes only consideration for credit risk, time value of money, other basic lending risks and profit margin.

Where the contractual terms introduce exposure to risk or volatility that is inconsistent with a basic lending arrangement, the financial asset is classified and measured at FVTPL. The SPPI assessment is performed on initial recognition of an asset and it is not subsequently reassessed.

Financial assets – reclassification

Financial instruments are reclassified only when the business model for managing the portfolio as a whole changes. The reclassification has a prospective effect and takes place from the beginning of the first reporting period that follows after the change in the business model. The entity did not change its business model during the current and comparative period and did not make any reclassifications.

Financial assets impairment – credit loss allowance for ECL

The Group assesses, on a forward-looking basis, the ECL for debt instruments measured at AC and FVOCI and for the exposures arising from loan commitments and financial guarantee contracts, for contract assets. The Group measures ECL and recognises Net impairment losses on financial and contract assets at each reporting date. The measurement of ECL reflects: (i) an unbiased and probability weighted amount that is determined by evaluating a range of possible outcomes, (ii) time value of money and (iii) all reasonable and supportable information that is available without undue cost and effort at the end of each reporting period about past events, current conditions and forecasts of future conditions.

Debt instruments measured at AC and contract assets are presented in the consolidated statement of financial position net of the allowance for ECL. For loan commitments and financial guarantees, a separate provision for ECL is recognised as a liability in the consolidated statement of financial position. For debt instruments at FVOCI, changes in amortised cost, net of allowance for ECL, are recognised in profit or loss and other changes in carrying value are recognised in OCI as gains less losses on debt instruments at FVOCI.

The Group applies a three stage model for impairment, based on changes in credit quality since initial recognition. A financial instrument that is not credit-impaired on initial recognition is classified in Stage 1. Financial assets in Stage 1 have their ECL measured at an amount equal to the portion of lifetime ECL that results from default events possible within the next 12 months or until contractual maturity, if shorter (“12 Months ECL”). If the Group identifies a significant increase in credit risk (“SICR”) since initial recognition, the asset is transferred to Stage 2 and its ECL is measured based on ECL on a lifetime basis, that is, up until contractual maturity but considering expected prepayments, if any (“Lifetime ECL”). Refer to Note 40 for a description of how the Group determines when a SICR has occurred.

If the Group determines that a financial asset is credit-impaired, the asset is transferred to Stage 3 and its ECL is measured as a Lifetime ECL. The Group’s definition of credit impaired assets and definition of default is explained in Note 40. For financial assets that are purchased or originated credit-impaired (“POCI Assets”), the ECL is always measured as a Lifetime ECL.

Note 40 provides information about inputs, assumptions and estimation techniques used in measuring ECL, including an explanation of how the Group incorporates forward-looking information in the ECL models.

Financial assets – write-off

Financial assets are written-off, in whole or in part, when the Group exhausted all practical recovery efforts and has concluded that there is no reasonable expectation of recovery. The write-off represents a derecognition event. Indicators that there is no reasonable expectation of recovery include (i) court decision, (ii) liquidation of entity from which financial asset was acquired, (iii) overdue period of 3 years and more.

Derivative financial instruments

Derivative financial instruments are carried at their fair value. All derivative instruments are carried as assets when fair value is positive and as liabilities when fair value is negative. Changes in the fair value of derivative instruments are included in profit or loss for the year. The Group does not apply hedge accounting.

Certain derivative instruments embedded in financial liabilities and other non-financial contracts are treated as separate derivative instruments when their risks and characteristics are not closely related to those of the host contract.

Financial assets – derecognition

The Group derecognises financial assets when (a) the assets are redeemed or the rights to cash flows from the assets otherwise expire or (b) the Group has transferred the rights to the cash flows from the financial assets or entered into a qualifying passthrough arrangement whilst (i) also transferring substantially all the risks and rewards of ownership of the assets or (ii) neither transferring nor retaining substantially all the risks and rewards of ownership but not retaining control.

Control is retained if the counterparty does not have the practical ability to sell the asset in its entirety to an unrelated third party without needing to impose additional restrictions on the sale.

Financial assets – modification

The Group sometimes renegotiates or otherwise modifies the contractual terms of the financial assets. The Group assesses whether the modification of contractual cash flows is substantial considering, among other, the following factors: any new contractual terms that substantially affect the risk profile of the asset, significant change in interest rate, change in the currency denomination, new collateral or credit enhancement that significantly affects the credit risk associated with the asset or a significant extension of a loan when the borrower is not in financial difficulties.

If the modified terms are substantially different, the rights to cash flows from the original asset expire and the Group derecognises the original financial asset and recognises a new asset at its fair value. The date of renegotiation is considered to be the date of initial recognition for subsequent impairment calculation purposes, including determining whether a SICR has occurred. The Group also assesses whether the new loan or debt instrument meets the SPPI criterion. Any difference between the carrying amount of the original asset derecognised and fair value of the new substantially modified asset is recognised in profit or loss, unless the substance of the difference is attributed to a capital transaction with owners.

In a situation where the renegotiation was driven by financial difficulties of the counterparty and inability to make the originally agreed payments, the Group compares the original and revised expected cash flows to assets whether the risks and rewards of the asset are substantially different as a result of the contractual modification. If the risks and rewards do not change, the modified asset is not substantially different from the original asset and the modification does not result in derecognition. The Group recalculates the gross carrying amount by discounting the modified contractual cash flows by the original effective interest rate (or credit-adjusted effective interest rate for POCI financial assets), and recognises a modification gain or loss in profit or loss.

Financial liabilities – measurement categories

Financial liabilities are classified as subsequently measured at AC, except for (i) financial liabilities at FVTPL (derivatives, financial liabilities held for trading, e.g. short positions in securities), contingent consideration recognised by an acquirer in a business combination and other financial liabilities designated as such at initial recognition and (ii) financial guarantee contracts and loan commitments.

Financial liabilities – derecognition

Financial liabilities are derecognised when they are extinguished, i.e. when the obligation specified in the contract is discharged, cancelled or expires.

An exchange between the Group and its original lenders of debt instruments with substantially different terms, as well as substantial modifications of the terms and conditions of existing financial liabilities, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. The terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate, is at least 10% different from the discounted present value of the remaining cash flows of the original financial liability. In addition, other qualitative factors, such as the currency that the instrument is denominated in, changes in the type of interest rate, new conversion features attached to the instrument and change in loan covenants are also considered. If an exchange of debt instruments or modification of terms is accounted for as an extinguishment, any costs or fees incurred are recognised as part of the gain or loss on the extinguishment. If the exchange or modification is not accounted for as an extinguishment, any costs or fees incurred adjust the carrying amount of the liability and are amortised over the remaining term of the modified liability.

Modifications of liabilities that do not result in extinguishment are accounted for as a change in estimate using a cumulative catch up method, with any gain or loss recognised in profit or loss, unless the economic substance of the difference in carrying values is attributed to a capital transaction with owners.

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position only when there is a legally enforceable right to offset the recognised amounts, and there is an intention to either settle on a net basis, or to realise the asset and settle the liability simultaneously. Such a right of set off (a) must not be contingent on a future event and (b) must be legally enforceable in all of the following circumstances: (i) in the normal course of business, (ii) in the event of default and (iii) in the event of insolvency or bankruptcy.

Cash and cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks, and other short-term highly liquid investments with original maturities of three months or less. Cash and cash equivalents are carried at AC because: (i) they are held for collection of contractual cash flows and those cash flows represent SPPI, and (ii) they are not designated at FVTPL. Restricted balances are excluded from cash and cash equivalents for the purposes of the cash flow statement. Balances restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period are included in other non-current assets.

Trade and other receivables

Trade and other receivables are recognised initially at fair value and are subsequently carried at amortised cost using the effective interest method.

Inventories

Inventories are recorded at the lower of cost and net realisable value. The cost of inventory is determined on the weighted average basis. The cost of finished goods and work in progress comprises raw material, direct labour, other direct costs and related production overheads (based on the normal operating capacity) but excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and selling expenses.

Inventory loans

The Group enters into inventory loan agreements, according to which one party (the lender) undertakes to provide the other party (the borrower) with uranium products, and the borrower obliges to return to the lender an identical amount of uranium products. The Group obtains inventory loans to facilitate the performance of its uranium supply obligations. The Group classifies inventory loans as a non-financial liability.

Upon receipt of the inventory loan, the Group accounts for the inventory at the contracted cost. Liability arising from inventory loan are recognised as part of other liabilities at the fair value of the uranium products at the reporting date. Subsequent revaluation of the inventory loan is carried out through profit or loss as part of other income/expenses in accordance with changes in the fair value of uranium products.

Prepayments

Prepayments are carried at cost less provision for impairment. A prepayment is classified as non-current when the goods or services relating to the prepayment are expected to be obtained after one year, or when the prepayment relates to an asset which will itself be classified as non-current upon initial recognition. Prepayments for assets are transferred to the carrying amount of the asset once the Group has obtained control of the asset and it is probable that future economic benefits associated with the asset will flow to the Group.

Other prepayments are written off to profit or loss when the goods or services relating to the prepayments are received. If there is an indication that the assets, goods or services relating to a prepayment will not be received, the carrying value of the prepayment is written down accordingly and a corresponding impairment loss is recognised in profit or loss for the year. Noncurrent prepayments are not discounted.

Value added tax

Value added tax (VAT) related to sales is payable to the tax authorities when goods are shipped or services are rendered. Purchase VAT can be offset against sales VAT upon the receipt of a tax invoice from a supplier. Tax legislation allows the settlement of VAT on a net basis.

Accordingly, VAT related to sales and purchases unsettled at the reporting date is stated in the consolidated statements of financial position on a net basis separately for each consolidated entity. Recoverable VAT is classified as non-current if its settlement is not expected within one year after the reporting period. Non-current VAT is not discounted.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds. Any excess of the fair value of consideration received over the par value of shares issued is recorded as share premium in equity. Additional paid-in capital primarily represents capital contributions made by noncontrolling interests in excess of their ownership.

Dividends

Dividends are recorded as a liability and deducted from equity in the period in which they are declared and approved. Any dividends declared after the reporting period and before the financial statements are authorised for issue are disclosed in the subsequent events note.

Leases

Liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the fixed payments (including in-substance fixed payments) less any lease incentives receivable. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined, which is generally the case for leases of the Group, the Group’s incremental borrowing rate is used, being the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment with similar terms, collateral and conditions.

Lease payments are allocated between principal and finance costs. The finance costs are charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.

Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture with value of Tenge 500 thousand or less.

Operating leases

Where the Group is a lessor in a lease which does not transfers substantially all the risks and rewards incidental to ownership to the lessee (i.e. operating lease), lease payments from operating leases are recognised as other income on a straight-line basis.

Loans and borrowings

Borrowings are recognised initially at fair value, net of transaction costs incurred and are subsequently carried at AC using the effective interest method.

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial time to get ready for intended use or sale (qualifying assets) are capitalised as part of the costs of those assets. The commencement date for capitalisation is when (a) the Group incurs expenditures for the qualifying asset; (b) it incurs borrowing costs; and (c) it undertakes activities that are necessary to prepare the asset for its intended use or sale. Capitalisation of borrowing costs continues up to the date when the assets are substantially ready for their use or sale.

The Group capitalises borrowing costs that could have been avoided if it had not made capital expenditure on qualifying assets. Borrowing costs capitalised are calculated at the Group’s average funding cost (the weighted average interest cost is applied to the expenditures on the qualifying assets), except to the extent that funds are borrowed specifically for the purpose of obtaining a qualifying asset.

Where this occurs, actual borrowing costs incurred on the specific borrowings less any investment income on the temporary investment of these borrowings are capitalised.

Preference shares

Preference shares, which are mandatorily redeemable on a specific date, are classified as liabilities. The dividends on these preference shares are recognised in the statement of profit or loss and other comprehensive income as interest expense.

Provisions for liabilities and charges

Provisions for liabilities and charges are non-financial liabilities of uncertain timing or amount. They are accrued when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. The Group’s provisions include site restoration, environment protection and other provisions (Note 34).

Provisions for assets retirement obligations

Assets retirement obligations are recognised when it is probable that the costs would be incurred and those costs can be measured reliably. Asset retirement obligations include the costs of rehabilitation and costs of liquidation (demolition of buildings, constructions and infrastructure, dismantling of machinery and equipment, transportation of the residual materials, environmental cleanup, monitoring of wastes and land restoration). Provision for the estimated costs of liquidation, rehabilitation and restoration are established and charged to the cost of property, plant and equipment or mine development assets in the reporting period when an obligation arises from the respective land disturbance in the course of mine development or environment pollution, based on the discounted value of estimated future costs. Movements in the provisions for assets retirement obligations, resulting from updated cost estimates, changes to the estimated term of operations and revisions to discount rates are capitalised within property, plant and equipment or mine development assets. These amounts are then depreciated over the lives of the assets to which they relate using the depreciation methods applied to those assets.

Provisions for asset retirement obligations do not include any additional obligations which are expected to arise from future disturbances. The costs are estimated on the basis of a closure and restoration plan. The cost estimates are calculated annually during the course of the operations to reflect known developments, including updated cost estimates revised subsoil use terms and estimated lives of operations, and are subject to formal reviews on a regular basis.

Although the final cost to be incurred is uncertain, the Group estimates its costs based on feasibility and engineering studies using current restoration standards and techniques for conducting restoration and retirement works (Note 4).

The amortisation or “unwinding” of the discount applied in establishing the net present value of provisions is charged to profit and loss in each reporting period. The amortisation of the discount is disclosed as finance costs.

Financial guarantees

Financial guarantees require the Group to make specified payments to reimburse the holder of the guarantee for a loss it incurs because a specified debtor fails to make payment when due in accordance with the original or modified terms of a debt instrument. Financial guarantees are initially recognised at their fair value, which is normally evidenced by the amount of fees received. This amount is amortised on a straight line basis over the life of the guarantee. At the end of each reporting period, the guarantees are measured at the higher of (i) the amount of the loss allowance for the guaranteed exposure determined based on the expected loss model and (ii) the remaining unamortised balance of the amount at initial recognition. In addition, an ECL loss allowance is recognised for fees receivable that are recognised in the consolidated statement of financial position as an asset.

Trade and other payables

Trade payables are accrued when the counterparty performs its obligations under the contract and are recognised initially at fair value and subsequently carried at amortised cost using the effective interest method.

Employee benefits

(i) Long-term employee benefits

The Group entities provide long-term employee benefits to employees in accordance with the provisions of the collective agreement. The agreements provide for financial aid for employees’ disability, retirement, funeral aid and other payments to the Group’s employees. The entitlement to some benefits is usually conditional on the employee remaining employed until the retirement age and the completion of a minimum service period.

The Group does not have any funded post-employment plans. Liability recognised at each reporting date represents the present value of the plan liabilities.

Actuarial gains and losses on post-employment obligations such as experience adjustments and the effects of changes in actuarial assumptions recognised in other comprehensive income in the period occurred. Other movements in the present value of the plan liabilities are also recognised in the profit or loss for the year, including current service cost.

The most significant assumptions used in accounting for defined benefit obligations are the discount rate, staff turnover and the mortality assumptions. The discount rate is used to determine the net present value of future liabilities and each year the unwinding of the discount on those liabilities is charged to profit or loss for the year. The mortality assumption is used to project the future stream of benefit payments, which is then discounted to arrive at a net present value of liabilities.

Employee benefits, including financial aid for employees’ disability and funeral aid to the Group’s employees and other payments, are considered as other long-term employee benefits. The expected cost of these benefits is accrued over the period of employment using the same accounting methodology as used for the defined benefit plan. The Group recognises changes in actuarial assumptions for other long-term employee benefits in profit or loss for the year. The Group receives services from an independent qualified actuary to evaluate long-term employee benefits on an annual basis.

(ii) Payroll expense and related contributions

Wages, salaries, contributions to pension and social insurance funds, paid annual leave and sick leave, bonuses, and nonmonetary benefits are accrued in the year in which the associated services are rendered by the employees of the Group. In this case, the Group applies the Defined Contribution Plans scheme. In accordance with the legal requirements of the Republic of Kazakhstan, the Group withholds pension contributions from employees’ salary and transfers them into the united pension fund.

Upon retirement of employees, all pension payments are administered by the united pension fund. The Group does not have any legal or constructive obligation to pay additional contributions other than pension contributions withheld from the salaries of the Group’s employees.

Earnings per share

Earnings per share are determined by dividing the profit or loss attributable to owners of the Company by the weighted average number of participating shares outstanding during the reporting year adjusted for share split.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s chief operating decision maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments. Reportable segments whose revenue, result or assets are ten percent or more of all the segments are reported separately.

4. Critical Accounting Estimates and Judgements in Applying Accounting Policies

The Group makes estimates and assumptions that affect the amounts recognised in the financial statements and the carrying amounts of assets and liabilities within the next financial year. Estimates and judgements are continually evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Management also makes certain judgements, apart from those involving estimations, in the process of applying the accounting policies. Judgements that have the most significant effect on the amounts recognised in the financial statements and estimates that can cause a significant adjustment to the carrying amount of assets and liabilities within the next financial year include:

Ore reserves (estimates)

Uranium reserves are a critical component of the Group’s projected cash flow estimates that are used to assess the recoverable values of assets and to determine depreciation and amortisation expense.

In 2020 and 2019, the Group engaged an independent consultant to assess the Group’s reserves and resources in accordance with the Australasian Code for reporting on geological exploration works, mineral resources and ore reserves (2012) (hereinafter JORC Code). Independent assessments of reserves and resources was carried out as of 31 December 2020 and 31 December 2019. The consultant reviewed all key information upon which the most recent reported mineral resource and ore reserve statements for the mining assets of JSC NAC Kazatomprom are based.

The consultant’s reports contain an assessment of the tonnes of uranium contained in ore which has the potential to be extracted by the existing and planned mining operations (the mineral resource), and also the tonnes of uranium contained in ore currently planned to be extracted as envisaged by the respective LoM plans (the ore reserve). The Group used reserves data according to the consultant’s report for calculation of impairment of long-term assets and unit of production depreciation for each of the Group’s mines.

Impairment of non-financial assets (estimates)

At the end of each reporting period, management assesses whether there is any indication of impairment of individual assets (or cash-generating units). If any such indication exists, management estimates the recoverable amount, which is determined as the higher of an asset’s fair value less costs to sell and its value in use. An impairment loss is recognised for the amount by which carrying amount exceeds recoverable amount. The Group tests goodwill for impairment at least annually.

The calculation of value in use requires management to make estimates regarding the Group’s future cash flows. The estimation of future cash flows involves significant estimates and assumptions regarding commodity prices (uranium and other products), the level of production and sales, discount rates, growth rates, operating costs and other factors. The impairment review and calculations are based upon assumptions that are consistent with the Group’s business plans. Due to its subjective nature, these estimates could differ from future actual results of operations and cash flows; any such difference may result in impairment in future periods which would decrease the carrying value of the respective asset.

Goodwill

Refer to Note 20 for details of the Group’s impairment testing for goodwill at 31 December 2020.

Assets related to uranium production

Assets related to uranium mines include property, plant and equipment, mine development assets, mineral rights, exploration and evaluation assets, investments in associates, investments in joint ventures, and other investments.

For the purpose of impairment testing assets are grouped at the lowest levels for which there are separately identifiable cash inflows that are largely independent of the cash inflows from other assets or groups of assets (termed as ‘cash-generating units’). The Group has identified each mine (contract territory) as a separate cash-generating unit unless several mines are technologically connected with single processing plant in which case the Group considers such mines as one cash-generating unit.

As at 31 December 2020, management conducted an analysis and did not find any impairment indicators of assets (generating units) associated with the production of uranium products.

Zhalpak field

The contract granting DP Ortalyk LLP the right to explore for uranium at Zhalpak field expired on 31 May 2018.

In 2018 DP Ortalyk LLP applied to the Ministry of Energy of the Republic of Kazakhstan to extend the exploration period and, accordingly, the term of the contract, until 31 December 2022. The Ministry of Energy of the Republic of Kazakhstan agreed in 2018 to extend the exploration period, however, the contract was not formally signed. During 2020 the Kazakhstan State Commission on Mineral Reserves approved the uranium reserves report for the Zhalpak field. In accordance with the Code of the Republic of Kazakhstan «On subsoil and subsoil use» the subsoil extraction right is granted only to the national uranium company, NAC Kazatomprom JSC. The Company is taking all measures required by the relevant legislation to obtain a contract for uranium production at the Zhalpak field and transfer it to DP Ortalyk LLP. The Company expects to obtain a subsurface use contract for uranium production at the Zhalpak field in 2021 for a period of 25 years. As of 31 December 2020 Group management concluded that no impairment loss should be recognised for the assets related to the Zhalpak field as it is confident that all required approvals will be obtained. The management also has not recognised any additional liabilities arising as a result of untimely contract extension. The carrying value of the Zhalpak field assets as at 31 December 2020 is Tenge 7,602 million.

The Company has announced its intention to sell a 49% of interest in DP Ortalyk LLP to CGN Mining. The sale is expected to be completed by the 30 June 2021.

Provision for asset retirement obligations (estimates)

Mining assets

In accordance with environmental legislation and the subsurface use contracts, the Group has a legal obligation to remediate damage caused to the environment from its operations and to decommission its mining assets and waste polygons and restore landfill sites after closure of mining activities. Provision is made based upon the net present values of estimated site restoration and retirement costs as soon as the obligation arises from past mining activities.

The provision for asset retirement obligations is estimated based upon the Group’s interpretation of current environmental legislation in the Republic of Kazakhstan and the Group’s related programme for liquidation of subsurface use consequences on the contracted territory and other operations supported by the feasibility study and engineering research in accordance with the applicable restoration and retirement standards and techniques.

Provisions for asset retirement obligations are subject to potential changes in environmental regulatory requirements and the interpretation of the legislation. Provisions for mining assets and waste polygons retirement obligations are recognised when there is a certainty of incurring of such liabilities and when it is possible to measure the amounts reliably.

The calculation of the provision for production assets retirement as at 31 December 2020 was performed by the Group based upon assessments performed by an independent consultant. The scope of work stipulated by the legislation and included in the calculations included the dismantling of facilities and infrastructure (pumping, injection and observation wells, technological units for acidification and distribution of solutions, pipelines, access roads, technological sites, landfills, buildings and other facilities) and subsequent restoration of land.

Principal assumptions used in such estimations include the estimate of discount rate and the amount and timing of future cash flows. The discount rate is applied to the nominal costs that management expects to spend on mining site restoration in the future. Management’s estimates based on current prices are inflated using the expected long-term inflation rate of 5.17% in 2020 (2019: 5.30%), and subsequently discounted using rate that reflects the current market estimates of the time value of money and those risks specific to the liability not reflected in the best estimate of the costs. The discount rate is based on a risk-free rate determined as interest rates on government bonds with the maturity as the average of Group subsoil use contracts. The discount rate used by the Group’s companies for calculation of the provision as at 31 December 2020 is 9.87% (2019: 7.13%).

At 31 December 2020, the carrying value of the site restoration provision was Tenge 23,841 million (2019: Tenge 36,505 million) (Note 34). Decrease in the estimate in 2020 for Tenge 12,221 million is attributable to a 2.74% discount rate increase, additional 5,147 million Tenge liability decrease is attributable to the change in the periods’ estimate of separate mines.

Decommissioning of the Ulba plant facility

Management has assessed whether the Group has an obligation for decommissioning and dismantling of the production facility of Ulba Metallurgical Plant JSC and concluded that the Group has no legal obligation to decommission this facility at the end of its useful life.

In addition, management considered the extent to which the Group’s policies and statements may have created a constructive obligation to decommission this production facility and concluded that no liability should be recorded as:

  • radiation contamination of the facility is limited and the costs involved in remediation are not significant
  • in the event of discontinuance of production activities, the Group will not have an obligation to liquidate buildings and other infrastructure. In addition, the possibility exists of redeployment of the production facilities to alternative uses
  • timely inspections, surveys, repair work to reduce physical damage and maintain the normal level of performance of structures and engineering equipment can extend the useful life of the facility for an indefinite period. These factors together with the extended periods over which the Group’s uranium reserves are available to be mined mean that it is not practical to estimate a reliable closure date for the UMP production facility

In the event of future changes in environmental legislation or its interpretation, as well as the Group’s policy, obligations may arise which could require recognition as liabilities in the financial statements.

Tax and transfer pricing legislation (judgements)

Kazakhstan tax and transfer pricing legislation is subject to varying interpretations (Note 37).

Swap transactions (judgements)

The Group sells part of its uranium products under swap transactions with separate agreements with the same counterparty, being for sales and purchase of the same volume of uranium for the same price at different delivery points or different timeframes. Effectively, this results in the exchange of own uranium (produced or purchased from the Group’s entities) with purchased uranium.

Normally, under a swap transaction, the Group delivers physical uranium to one destination point, and purchases the same volume of uranium at a third party converter for sale to end customers. Swap transactions are entered into primarily to reduce transportation costs for uranium delivery from Kazakhstan to end customers.

Despite the fact that swap agreements are not formally related to each other, management concluded that these transactions are in substance linked and would not have occurred on an isolated basis, driven by the existing market demand and supply forces. In management’s view, supply of the same volume of homogeneous product (uranium) for the same price represents an exchange of products, which should be presented on a net basis in the consolidated financial statements, reflecting the economic substance of the transaction. Interpretation of terms and approach to the accounting for swap transactions requires judgement.

In 2020, the Group did not recognise sales revenue from swap transactions of Tenge 71,331 million and cost of sales of Tenge 65,713 million. In 2019, the Group did not recognise sales revenue from swap transactions of Tenge 41,741 million, cost of sales of Tenge 43,091 million.

5. Adoption of New or Revised Standards and Interpretations

The following amended accounting standards became effective from 1 January 2020, but did not have any material impact on the Group:

  • amendments to the Conceptual Framework for Financial Reporting (issued on 29 March 2018 and effective for annual periods beginning on or after 1 January 2020)
  • definition of a business – Amendments to IFRS 3 (issued on 22 October 2018 and effective for acquisitions from the beginning of annual reporting period that starts on or after 1 January 2020).
  • definition of materiality – Amendments to IAS 1 and IAS 8 (issued on 31 October 2018 and effective for annual periods beginning on or after 1 January 2020)
  • interest rate benchmark reform - Amendments to IFRS 9, IAS 39 and IFRS 7 (issued on 26 September 2019 and effective for annual periods beginning on or after 1 January 2020)

6. New Accounting Pronouncements

Certain new standards and interpretations have been issued that are mandatory for the annual periods beginning on or after 1 January 2021 or later, and which the Group has not early adopted. These are:

  • sale or Contribution of Assets between an Investor and its Associate or Joint Venture – Amendments to IFRS 10 and IAS 28 (issued on 11 September 2014 and effective for annual periods beginning on or after a date to be determined by the IASB)
  • classification of liabilities as current or non-current – Amendments to IAS 1 (issued on 23 January 2020 and effective for annual periods beginning on or after 1 January 2022)
  • classification of liabilities as current or non-current, deferral of effective date – Amendments to IAS 1 (issued on 15 July 2020 and effective for annual periods beginning on or after 1 January 2023)
  • proceeds before intended use, Onerous contracts – cost of fulfilling a contract, Reference to the Conceptual Framework – narrow scope amendments to IAS 16, IAS 37 and IFRS 3, and Annual Improvements to IFRSs 2018-2020 – amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41 (issued on 14 May 2020 and effective for annual periods beginning on or after 1 January 2022)
  • interest rate benchmark (IBOR) reform – phase 2 amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 (issued on 27 August 2020 and effective for annual periods beginning on or after 1 January 2021)
  • accounting for changes in the basis for determining contractual cash flows as a result of IBOR reform
  • end date for Phase 1 relief for non contractually specified risk components in hedging relationships. The Phase 2 amendments provide some additional temporary reliefs from applying specific IAS 39 and IFRS 9 hedge accounting requirements to hedging relationships
  • additional IFRS 7 disclosures related to IBOR reform

The Group is currently assessing the impact of the amendments on its financial statements. The new standards and interpretations are not expected to affect significantly the Group’s consolidated financial statements.

7. Segment Information

Operating segments are components that engage in business activities that may earn revenues or incur expenses, whose operating results are regularly reviewed by the chief operating decision maker (CODM) and for which discrete financial information is available. The CODM is the person or group of persons who allocates resources and assesses the performance for the entity. The CODM has been identified as the Management Board of the Group headed by the CEO.

(a) Description of products and services from which each reportable segment derives its revenue

The Group is a vertically integrated business involved in the production chain of end products – from geological exploration, mining of uranium and nuclear fuel production, to marketing and auxiliary services (transportation and logistics, procurement, research and other). The Group is organised on the basis of two main business segments:

Uranium – uranium mining and processing from the Group’s mines, purchases of uranium from joint ventures and associates, external sales and marketing of produced and purchased uranium. This segment includes the Group’s share in the net results of joint ventures and associates engaged in uranium production, as well as the Group’s head office (JSC NAC Kazatomprom).

UMP (Ulba Metallurgical Plant JSC) – production and sales of products containing beryllium, tantalum and niobium, hydrofluoric acid and by-products, processing of uranium on tolling basis for the Group’s uranium entities and production and marketing of uranium powders and tablets to external markets and production of fuel assemblies and their components.

The revenues and expenses of some of the Group’s subsidiaries, which primarily provide services to the uranium segment (such as drilling, transportation, security and geological), are not allocated to the results of this operating segment. These Group’s businesses are not included within reportable operating segments as their financial results do not meet the quantitative threshold. The results of these and other minor operations are included in the “Other” caption.

(b) Factors that management used to identify the reportable segments

The Group’s segments are strategic business units that focus on different customers. They are managed separately because of the differences in the production processes, the nature of products produced and required marketing and investment strategies.

Segment financial information reviewed by the CODM includes:

  • information about income and expenses by business units (segments) based on IFRS figures on a quarterly basis
  • assets and liabilities as well as capital expenditures by segment on a quarterly basis
  • operating data (such as production and inventory volumes) and revenue data (such as sales volumes per type of product, average sales price) are also reviewed by the CODM on a monthly and quarterly basis

(c) Measurement of operating segment profit or loss, assets and liabilities

The CODM evaluates performance of each segment based on gross and net profit. Segment financial information is prepared on the basis of IFRS financial information and measured in a manner consistent with that in these consolidated financial statements.

Revenues from other segments include transfers of raw materials, goods and services from one segment to another, amount is determined based on market prices for similar goods.

(d) Information about reportable segment profit or loss, assets and liabilities

Segment information for the reportable segments for the years ended 31 December 2020 and 2019 is set out below:

In millions of Kazakhstani Tenge Uranium UMP Other Eliminations Total
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
External revenue 525,532 435,438 42,625 37,998 19,300 28,833 - - 587,457 502,269
Revenues from other segments 2,404 1,722 3,712 4,231 53,209 56,790 (59,325) (62,743) - -
Cost of sales (274,968) (258,276) (30,066) (26,663) (69,868) (81,500) 55,278 58,941 (319,624) (307,498)
Gross profit 252,968 178,884 16,271 15,566 2,641 4,123 (4,047) (3,802) 267,833 194,771
Impairment losses, net of impairment reversals 52 (3,543) (114) (480) (1,666) 621 (3) 3 (1,731) (3,399)
Gain from disposal of joint venture 22,063 - - - - - - - 22,063 -
Gain from business acquisition - 54,649 - - - - - - - 54,649
Share of results of associates and joint ventures 43,982 26,203 (1,745) (503) (2,151) 7,711 - - 40,086 33,411
Net foreign exchange gain/(loss) 2,339 228 1,379 (143) 41 (2) - - 3,759 83
Finance income 4,416 3,151 170 378 397 463 - (2) 4,983 3,990
Finance expense (7,010) (11,429) (632) (448) (167) (186) 129 108 (7,680) (11,955)
Income tax expense (60,029) (31,602) (3,315) (1,722) (432) (182) - - (63,776) (33,506)
Profit for the year 222,889 200,712 6,284 6,947 (5,662) 9,562 (2,143) (3,472) 221,368 213,749
Depreciation and amortisation charge (56,141) (56,299) (1,666) (1,552) (4,434) (4,300) 257 324 (61,984) (61,827)
Investments in associates and joint ventures 107,354 106,474 4,636 6,381 7,897 11,210 - - 119,887 124,065
Total reportable segment assets 1,690,120 1,639,531 83,820 80,073 77,413 83,957 (165,318) (149,162) 1,686,035 1,654,399
Assets of disposal groups classified as held for sale - - - - 3,244 19,734 - - 3,244 19,734
Total assets 1,690,120 1,639,531 83,820 80,073 80,657 103,691 (165,318) (149,162) 1,689,279 1,674,133
Total reportable segment 479,272 544,201 14,161 13,536 20,615 22,762 (164,977) (148,909) 349,071 431,590
Liabilities of disposal groups classified as held for sale - - - - 416 389 - - 416 389
Total liabilities 479,272 544,201 14,161 13,536 21,031 23,151 (164,977) (148,909) 349,487 431,979
Capital expenditure 33,462 38,148 4,146 3,281 3,160 3,396 - - 40,768 44,825

Capital expenditure represents additions to non-current assets other than financial instruments, deferred tax assets, postemployment benefits assets and rights arising under insurance contracts.

(e) Analysis of revenues by products and services

The Group’s revenues are analysed by products and services in Note 9. Information about finance income and costs is disclosed in Note 17.

(f) Geographical information

The Group’s main assets are located in the Republic of Kazakhstan. Distribution of the Group’s sales between countries on the basis of the customer’s country of domicile was as follows:

In millions of Kazakhstani Tenge 2020 2019
China 195,860 179,110
Russia 78,548 55,394
Canada 65,501 47,894
France 65,443 50,936
USA 56,764 32,826
United Kingdom (including Jersey and Cayman Islands) 33,856 61,091
India 32,695 38,307
Kazakhstan 21,758 6,280
Belgium 5,336 4,414
Japan 4,830 4,193
Germany 3,776 3,037
Other countries 23,090 18,787
Total consolidated revenues 587,457 502,269

Major customers

The Group has a group of customers under common control that accounts for more than 10% of the Group’s consolidated revenue. This revenue in the amount of Tenge 181,695 million (2019: Tenge 153,519 million) is reported under the Uranium segment.

8. Balances and Transactions with Related Parties

Parties are generally considered to be related if the parties are under common control or if one party has the ability to control the other party or can exercise significant influence or joint control over the other party in making financial and operational decisions. In considering each possible related party relationship, management has regard to the substance of the relationship, not merely the legal form.

Entities under common control include companies under control of Samruk-Kazyna JSC. Transactions with other government owned entities are not disclosed when they are entered into in the ordinary course of business with terms consistently applied to all public and private entities, when they are not individually significant, if the Group’s services are provided on standard terms available for all customers, or where there is no choice of supplier of such services as electricity transmission services and telecommunications etc.

At 31 December 2020, the outstanding balances with related parties were as follows:

In millions of Kazakhstani Tenge Accounts receivable and other assets Dividends receivable Loans given Accounts payable and other liabilities Borrowings
Associates 1,393 310 11,512 15,076 14,004
Joint ventures 1,347 - - 2,929 -
Entities under common control 73 - - 933 -
Controlling shareholder - - - 507 -
Associates of the controlling shareholder 10 - - 18 -
Total 2,823 310 11,512 19,463 14,004

Transactions with related parties for the year ended 31 December 2020 were as follows:

In millions of Kazakhstani Tenge Sale of goods and services Dividends received Purchase of goods and services Dividends to the Shareholder Finance income Finance costs
Associates 7,585 42,265 89,684 - 1,183 15
Joint ventures 8,767 1,005 13,976 - 5 -
Entities under common control 189 - 5,474 - - -
Controlling shareholder 1 - - 80,466 - 70
Associates of the controlling shareholder 113 - 205 - - -
Total 16,655 43,270 109,339 80,466 1,188 85

From February 2019, following the acquisition of JV Khorasan-U LLP, the Group is a co-borrower and guarantor of the loan to Kyzylkum LLP in the amount of Tenge 11,584 million (2019: Tenge 13,294 million) (Note 30). The loan was provided by the Company to Kyzylkum LLP in 2010. JV Khorasan-U LLP is a co-borrower and guarantor of the loan together with Kyzylkum LLP. The Group is also a guarantor of the loan obtained by SKZ-U LLP of Tenge 8,481 million (2019: Tenge 10,793 million) and Ulba-FA LLP of Tenge 10,909 million (2019: Tenge 4,245 million) (Note 37).

At 31 December 2019, the outstanding balances with related parties were as follows:

In millions of Kazakhstani Tenge Accounts receivable and other assets Dividends receivable Loans given Accounts payable and other liabilities Loans and borrowings
Associates 2,182 5,074 12,923 20,813 17,460
Joint ventures 1,392 - - 6,771 -
Entities under common control 83 - - 1,033 -
Controlling shareholder - - - 983 -
Associates of the controlling shareholder 11 - - 3,777 -
Total 3,668 5,074 12,923 33,377 17,460

Transactions with related parties for the year ended 31 December 2019 were as follows:

In millions of Kazakhstani Tenge Sale of goods and services Dividends received Purchase of goods and services Dividends to the Shareholder Finance income Finance costs
Associates 11,441 8,884 67,519 - 1,593 1,691
Joint ventures 9,885 739 13,630 - 100 39
Entities under common control 294 - 6,005 - - -
Controlling shareholder - - - 68,065 - 148
Associates of the controlling shareholder 108 - 6,037 - - -
Total 21,728 9,623 93,191 68,065 1,693 1,878

Key management personnel is represented by personnel with authority and responsibility in planning, management and control of the Group’s activities, directly or indirectly. Key management personnel includes all members of the Management Board and the members of the Board of Directors. The table below represents remuneration of the key management personnel, paid by the Group in exchange for services provided. This remuneration includes salaries, bonuses, as well as contributions to the pension fund. No remuneration is paid or payable to representatives of the Controlling shareholder in the Board of Directors.

In millions of Kazakhstani Tenge 2020 2019
Expense Accrued liability Expense Accrued liability
Short-term benefits
Salaries and bonuses 1,205 98 1,116 65
Total 1,205 98 1,116 65

9. Revenue

The Group’s revenue arises from contracts with customers where performance obligations are satisfied mostly at a point in time.

In millions of Kazakhstani Tenge 2020 2019
Sales of uranium products 529,196 438,518
Sales of beryllium products 21,866 19,717
Sales of tantalum products 12,205 9,543
Sales of other services 6,911 8,048
Drilling services 5,972 6,602
Sales of purchased goods 5,321 10,470
Sales of materials and other goods 3,030 5,912
Transportation services 2,798 2,818
Research and development 153 193
Sales of photovoltaic cells 5 448
Total revenue 587,457 502,269

10. Cost of Sales

In millions of Kazakhstani Tenge 2020 2019
Materials and supplies 167,546 147,331
Depreciation and amortisation 60,002 60,044
Wages and salaries 31,874 29,632
Taxes other than income tax 23,775 27,021
Processing and other services 19,738 18,566
Maintenance and repair 4,751 4,132
Transportation expenses 2,913 6,795
Utilities 1,669 1,607
Rent expenses 422 221
Research and development 115 36
Other 6,819 12,113
Total cost of sales 319,624 307,498

11. Distribution Expenses

In millions of Kazakhstani Tenge 2020 2019
Shipping, transportation and storing 10,351 6,790
Wages and salaries 1,139 1,035
Commissions 456 610
Materials and supplies 212 255
Rent 113 70
Depreciation and amortisation 66 70
Other 2,015 1,997
Total distribution expenses 14,352 10,827

12. General and Administrative Expenses

In millions of Kazakhstani Tenge 2020 2019
Wages and salaries 17,709 18,478
Consulting and information services 4,467 3,816
Depreciation and amortisation 1,744 1,611
Taxes other than income tax 950 767
Insurance 519 511
Maintenance and repair 441 644
Tax fines and penalties 441 261
Training expenses 258 469
Communication 257 362
Materials and supplies 197 224
Security 178 168
Business trip expenses 170 794
Corporate events 161 406
Utilities 160 163
Bank charges 86 93
Rent 75 315
Stationery 70 76
Representative expenses 45 82
Other 1,654 2,784
Total general and administrative expenses 29,582 32,024

13. Impairment Losses and Reversal of Impairment Losses

In millions of Kazakhstani Tenge 2020 2019
Reversal of impairment losses of financial assets 425 111
Impairment losses of financial assets (68) (334)
Reversal of impairment/(impairment losses) on financial assets 357 (223)

The Group recognised the reversal of previously recognised impairments for the following non-financial assets:

In millions of Kazakhstani Tenge Note 2020 2019
Inventories 29 963 1,313
Property, plant and equipment 21 42 49
Intangible assets 20 5 -
Other assets 34 11
Total reversal of impairment losses 1,044 1,373

The Group recognised impairment losses for the following non-financial assets:

In millions of Kazakhstani Tenge Note 2020 2019
Investments in associates 1,364 -
VAT recoverable 832 8
Inventories 29 654 1,318
Property, plant and equipment 21 252 259
Exploration and evaluation assets 24 23 1,989
Intangible assets 20 - 594
Other assets 7 381
Total impairment losses 3,132 4,549

14. Other Income

In millions of Kazakhstani Tenge 2020 2019
Gain from joint operations 4,874 16,995
Gain from write-off of other liabilities 647 670
Gain from fines and penalties 340 384
Gain on disposal of subsidiary - 5,634
Other 1,509 1,662
Total other income 7,370 25,345

Gain from joint operations represents:

  • in 2020 - the effect of exchange rate volatility and spot quotations influencing the acquisition of uranium from joint operations under the parity agreement
  • in 2019 - reversal of liability for uranium volumes not purchased by the Group from joint operations in 2018 and, which as agreed by the partners, the Group did not plan to acquire in future periods. Accordingly, the liability which was initially recorded at 31 December 2018 was derecognised in 2019

15. Other Expenses and Net Foreign Exchange Gain/(Loss)

In millions of Kazakhstani Tenge 2020 2019
Remeasurement of non-financial liabilities 1,156 -
Social expenses 1,006 1,068
Loss on suspension of production 842 1,013
Non-recoverable VAT 624 1,491
Research expenses 505 551
Loss on disposal of intangible assets 347 4
Depreciation and amortisation 172 102
Loss on disposal of property, plant and equipment 93 564
Other 2,860 2,004
Total other expenses 7,605 6,797

Net foreign exchange gain/(loss)

In millions of Kazakhstani Tenge 2020 2019
Foreign exchange (loss)/gain on financing activities, net (4,396) 1,121
Foreign exchange (loss)/gain on operating activities, net 8,155 (1,038)
Total foreign exchange gain, net 3,759 83

16. Personnel costs

In millions of Kazakhstani Tenge 2020 2019
Wages and salaries 59,270 58,723
Social tax and social contributions 6,437 6,161
Total personnel costs 65,707 64,884

17. Finance Income and Costs

In millions of Kazakhstani Tenge 2020 2019
Interest income calculated using the effective interest rate
Cash and cash equivalents 2,679 1,357
Loans at amortised cost 1,182 1,435
Term deposits 402 996
Other financial income
Financial derivative asset 435 -
Other 285 202
Total finance income 4,983 3,990
Finance costs
Interest expense on loans and borrowings 4,284 7,337
Unwinding of discount on provisions 2,629 2,791
Loss on conversion of foreign currency 140 559
Dividends on preference shares 53 53
Unwinding of discount on other financial liabilities 52 74
Financial derivative asset - 812
Other 522 329
Total finance costs 7,680 11,955

18. Income Tax Expense

(a) Components of income tax expense

Income tax expense recorded in profit or loss comprises the following:

In millions of Kazakhstani Tenge 2020 2019
Current income tax 65,492 43,948
Deferred income tax (1,716) (10,442)
Total income tax expense 63,776 33,506

(b) Reconciliation between the tax expense and profit or loss multiplied by applicable tax rate

The income tax rate applicable to the majority of the Group’s profits in 2020 and 2019 is 20%.

A reconciliation between the expected and the actual taxation charge is provided below:

In millions of Kazakhstani Tenge 2020 2019
Profit before tax 285,144 247,255
Theoretical tax charge at statutory tax rate of 20% 57,029 49,451
Tax effect of items which are not deductible or assessable for taxation purposes:
Share of results of joint ventures and associates (8,017) (6,683)
Transfer pricing adjustment 2,561 1,474
Prior periods adjustments of income tax 3,966 (177)
Withholding tax on dividend payments 2,310 2,755
Income which is exempt from taxation - (10,930)
Non-taxable gain from joint operations (Note 14) - (1,461)
Net gain from business combinations not subject to tax (Note 43) - (3,399)
Other items 5,927 2,476
Income tax expense 63,776 33,506

As at 31 December 2020 and 2019, the Group did not recognise a deferred tax asset on impairment losses as management did not consider it probable that future taxable profit would be available against which the deduction could be utilised.

(c) Deferred taxes analysed by type of temporary difference

Differences between IFRS and statutory taxation regulations in Kazakhstan give rise to temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their tax bases. The tax effect of the movements in these temporary differences is detailed below at 20%.

In millions of Kazakhstani Tenge 1 January 2020 Credited / (charged) to profit or loss Exchange differences arising on translation of entities with foreign functional currency 31 December 2020
Tax effect of deductible/(taxable) temporary differences
Property, plant and equipment, intangible assets and mineral rights (131,377) 2,225 32 (129,120)
Accounts receivable 83 (457) - (374)
Loans and borrowings (16) 16 - -
Accounts payable (1,301) 1,301 - -
Provisions 1,414 (976) - 438
Accrued liabilities on vacation payments and bonuses 1,104 51 - 1,155
Tax losses carried forward 198 (198) - -
Taxes 1,262 (346) - 916
Inventories 11,837 676 - 12,513
Other assets 609 (720) - (111)
Other liabilities 163 144 (1) 306
(116,024) 1,716 31 (114,277)
Recognised deferred tax asset 13,558 (352) - 13,206
Recognised deferred tax liabilities (129,582) 2,068 31 (127,483)

Management estimates that deferred tax assets of Tenge 438 million in 2020 (2019: Tenge 1,612 million) are recoverable after more than twelve months after the end of the reporting period. Investments in subsidiaries, associates and joint ventures will be recovered primarily through dividends. Dividends from subsidiaries, associates and joint ventures are not taxable, accordingly the Group did not recognise deferred tax on undistributed earnings from investments.

The tax effect of the movements in the temporary differences for the year ended 31 December 2019 is:

In millions of Kazakhstani Tenge 1 January 2020 Credited / (charged) to profit or loss Business combinations and other 31 December 2020
Tax effect of deductible/(taxable) temporary differences
Property, plant and equipment, intangible assets and mineral rights (101,273) 7,110 (37,214) (131,377)
Accounts receivable (46) 129 - 83
Loans and borrowings (32) 16 - (16)
Accounts payable - (1,301) - (1,301)
Provisions 1,396 21 (3) 1,414
Accrued liabilities 1,083 16 5 1,104
Tax losses carried forward 444 (246) - 198
Taxes 1,033 137 92 1,262
Inventories 7,494 4,343 - 11,837
Other assets 154 138 317 609
Other liabilities 84 79 - 163
(89,663) 10,442 (36,803) (116,024)
Recognised deferred tax asset 7,552 5,592 414 13,558
Recognised deferred tax liabilities (97,215) 4,850 (37,217) (129,582)

In the context of the Group’s structure, tax losses of different Group companies may not be offset against current tax liabilities and taxable profits of other Group companies and, accordingly, taxes may accrue even where there is a consolidated tax loss. Therefore, deferred tax assets and liabilities are offset only when they relate to the same taxable entity.

The Group has unrecognised deferred tax assets in respect of unused tax loss carry forwards of Tenge 5,435 million in 2020 (2019: Tenge 4,991 million). The tax loss carry forwards expire as follows:

In millions of Kazakhstani Tenge 2020 2019
2025 2,719 2,835
2026 676 676
2027 188 188
2028 1,120 1,120
2029 172 172
2030 560 -
Total unrecognised deferred tax asset on tax losses 5,435 4,991

19. Earnings per Share

Basic earnings per share is calculated by dividing the profit or loss attributable to owners of the Company by the number of ordinary shares in issue during the year (Note 32). The Company has no dilutive potential ordinary shares; therefore, the diluted earnings per share equal the basic earnings per share.

Earnings per share from continuing operations is calculated as follows:

In millions of Kazakhstani Tenge 2020 2019
Profit for the year for the year attributable to owners of the Company (in millions of Kazakhstani Tenge) 183,541 189,998
Number of ordinary shares (in thousands) 259,357 259,357
Earnings per share attributable to the owners of the Company, basic and diluted (rounded to Tenge) 708 733

On 27 September 2019, the Company issued 70 million indexed to US dollar bonds which were included in the official list of Kazakhstan Stock Exchange JSC (hereinafter - the “KASE”). The Company and the KASE concluded an Agreement on listing of corporate securities dated 19 September 2019. In accordance with the Agreement’s requirements and Listing Rules the Company should present information on the book value of one share calculated in accordance with the Listing Rules.

Book value per share is calculated as follows:

In millions of Kazakhstani Tenge 2020 2019
Total assets of the Group (in millions Tenge) 1,689,279 1,674,133
Intangible assets (in millions Tenge) (59,906) (54,697)
Total liabilities of the Group (in millions Tenge) (349,487) (431,979)
1,279,886 1,187,457
Number of ordinary shares (in thousands) 259,357 259,357
Book value of one share (Tenge per share) 4,935 4,578

20. Intangible Assets

In millions of Kazakhstani Tenge Licences and patents Software Goodwill Other Total
At 1 January 2019
Cost 2,571 4,532 54,953 1,022 63,078
Accumulated amortisation and impairment (776) (1,307) (6,459) (437) (8,979)
Carrying value 1,795 3,225 48,494 585 54,099
Additions 95 114 - 7 216
Disposals (4) (4) - (1) (9)
Amortisation charge (200) (473) - (101) (774)
Impairment - (594) - - (594)
Transfers (83) (114) - 197 -
Transfers from property, plant and equipment (Note 21) - 2,222 - 86 2,308
Transfers from assets held for sale - 1 - - 1
Transfers to right-of-use assets (550) - - - (550)
At 31 December 2019
Cost 1,897 6,634 54,953 1,329 64,813
Accumulated amortisation and impairment (844) (2,257) (6,459) (556) (10,116)
Carrying value 1,053 4,377 48,494 773 54,697
Additions 425 373 - 14 812
Disposals (22) (207) - (127) (356)
Amortisation charge (243) (551) - (95) (889)
Amortisation charge on disposals 22 47 - 127 196
Reversal of impairment - 5 - - 5
Transfers from property, plant and equipment (Note 21) 22 5,419 - - 5,441
At 31 December 2020
Cost 2,322 12,219 54,953 1,216 70,710
Accumulated amortisation and impairment (1,065) (2,756) (6,459) (524) (10,804)
Carrying value 1,257 9,463 48,494 692 59,906

Goodwill impairment test

DP Ortalyk LLP, JV Akbastau JSC and Karatau LLP

As of 31 December 2020, goodwill relates to three cash-generating units: Tenge 5,166 million relates to subsurface use operations of DP Ortalyk LLP at the area Central on Mynkuduk mine, Tenge 24,808 million relates to Karatau LLP and Tenge 18,520 million relates to JV Akbastau JSC, which independently perform subsurface use operations at the Budenovskoye mine. The recoverable amount was determined on a value in use basis from forecast cash flows over the term of subsurface use contracts. Forecast cash flows are based on the approved volume of proven reserves, estimated volumes of production and sales over a life of mine plan approved by management, using a discount rate of 12.35% for 2020 year (2019: 11.97%). Production volumes are consistent with those agreed with the competent authority and independent consultant’s report (Note 4) and are based on the production capacity of the cash-generating units. Key assumptions used in calculations include forecast prices, period direct costs and capital expenditures. Sales prices used in developing forecast cash flows were determined using an independent official source Ux Consulting LLC published in the fourth quarter of 2020. Direct costs are based on approved budgets for 2021-2025 and growth of 5.17% which approximates long-term average inflation rates. The estimated values in use significantly exceed the carrying amounts of the cash-generating units, including goodwill, and therefore even reasonably possible changes in key assumptions would not lead to impairment losses being recognised.

21. Property, Plant and Equipment

Movements in the carrying amount of property, plant and equipment were as follows:

In millions of Kazakhstani Tenge Land Railway
infrastructure
Buildings Machinery and equipment Vehicles Other Construction in progress Total
At 1 January 2019
Cost 398 2,326 125,033 80,918 17,722 4,811 19,497 250,705
Accumulated depreciation and impairment - (769) (27,259) (31,789) (10,396) (2,316) (1,787) (74,316)
Carrying amount 398 1,557 97,774 49,129 7,326 2,495 17,710 176,389
Additions 9 - 151 2,603 2,493 1,034 13,481 19,771
Additions from business combinations - - 43 10 6 122 181
Transfers - - 9,899 1,088 323 15 (11,325) -
Depreciation charge - (95) (5,488) (6,594) (1,403) (732) - (14,312)
Impairment loss (Note 13) - - (179) (49) - - (31) (259)
Reversal of impairment losses recognised in prior periods - - 8 31 - - 10 49
Disposals (1) (315) (393) (85) (20) 8 (102) (908)
Disposal of subsidiary - - (40) (9) (12) (2) (486) (549)
Transfer from/(to) inventories - - - 46 16 337 399
Transfers from/(to) intangible assets (Note 20) - - - - - - (2,308) (2,308)
Transfers from/(to) non-current assets held for sale - - 109 170 15 8 484 786
Changes in estimates - - 311 176 - - - 487
Transfer to mine development assets - - - - - - (271) (271)
(Note 22) - - 28 (260) (1) 231 - (2)
At 31 December 2019
Cost 406 2,007 135,023 83,240 20,133 6,011 19,372 266,192
Accumulated depreciation and impairment - (860) (32,800) (36,984) (11,406) (2,938) (1,751) (86,739)
Carrying amount 406 1,147 102,223 46,256 8,727 3,073 17,621 179,453
Additions 11 - 414 3,190 1,981 703 10,483 16,782
Transfers 2 28 6,638 5,406 335 119 (12,528) -
Depreciation charge - (86) (5,228) (6,470) (1,534) (768) - (14,086)
Impairment loss (Notes 13) - - (28) (1) - - (223) (252)
Reversal of impairment losses recognised in prior periods - - 8 33 - - 1 42
Disposals - - (121) (640) (444) (77) (292) (1574)
Transfer from/(to) inventories -
Transfers from/(to) intangible assets (Note 20) - - 13 56 - 18 201 288
Transfers from/(to) non-current assets held for sale - - - 19 - - (5,460) (5,441)
Transfer to investment property - - (13) - (1) - - (14)
Depreciation charge and impairment losses on disposals - - (2,135) (68) - - - (2,203)
Changes in estimates - - 110 566 412 67 214 1369
Transfer to mine development assets (6) - (503) (548) - - - (1,057)
(Note 22) - - - - - - (593) (593)
Translation to presentation currency - - 19 - 11 3 - 33
At 31 December 2020
Cost 413 2,035 139,335 90,655 22,015 6,777 11,183 272,413
Accumulated depreciation and impairment - (946) (37,938) (42,856) (12,528) (3,639) (1,759) (99,666)
Carrying amount 413 1,089 101,397 47,799 9,487 3,138 9,424 172,747

Depreciation expense of Tenge 11,773 million (2019: Tenge 12,554 million) was charged to cost of sales, Tenge 67 million (2019: Tenge 70 million) to distribution expenses, Tenge 1,318 million (2019: Tenge 1,217 million) to administrative expenses and Tenge 158 million (2019: Tenge 217 million) to other expenses. The remaining depreciation expense is included in finished goods, work-in-process and other inventory.

At 31 December 2020, construction in progress included technical modernisation of UMP JSC of Tenge 1,307 million, expansion of the production of Inkai LLP of Tenge 2,670 million. At 31 December 2019, construction in progress included technical modernisation of UMP JSC of Tenge 3,966 million, technical modernisation of the automated control system of the Karamurun mine of RU-6 LLP of Tenge 505 million, expansion of the refining production of Karatau LLP of Tenge 2,545 million.

In 2020 Karatau LLP commissioned expansion of the refining production of Tenge 2,862 million, RU-6 LLP commissioned technical modernisation of the automated control system of the Karamurun mine for Tenge 835 million, DP Ortalyk LLP commissioned technological road «Zhalpak» for Tenge 3,586 million, UMP JSC commissioned technical modernisation for Tenge 1,155 million, JSC NAC Kazatomprom completed works on: commissioning of Digital Mine project, intangible asset for Tenge 3,078 million was recognised and SAP ERP implementation for UMP, intangible asset of Tenge 1,732 million was recognised.

At 31 December 2020, the Group had contractual capital expenditure commitments in respect of property, plant and equipment of Tenge 8,304 million (2019: Tenge 1,717 million).

There were no borrowing costs capitalised in 2020 (2019: 0).

At 31 December 2020, the gross carrying value of fully depreciated property, plant and equipment still in use was Tenge 21,093 million (2019: Tenge 15,881 million).

Depreciation and amortisation charged on long-term assets for the years ended 31 December are as following:

In millions of Kazakhstani Tenge 2020 2019
Mine development assets 27,308 30,875
Mineral rights 25,531 28,257
Property, plant and equipment 14,086 14,312
Intangible assets 889 774
Right-of-use assets 267 273
Total accrued depreciation and amortisation 68,081 74,491

Depreciation and amortisation charged to profit or loss for the years ended 31 December are as following:

In millions of Kazakhstani Tenge 2020 2019
Cost of sales 60,002 60,044
General and administrative expenses 1,744 1,611
Distribution expenses 66 70
Other expenses 172 102
Total depreciation and amortisation charged to profit or loss 61,984 61,827

22. Mine Development Assets

In millions of Kazakhstani Tenge Field preparation Site restoration costs Ion exchange resin Total
At 1 January 2019
Cost 157,339 14,754 13,710 185,803
Accumulated depreciation and impairment (61,214) (886) (2,627) (64,727)
Carrying amount 96,125 13,868 11,083 121,076
Additions 21,464 - 322 21,786
Additions from business combinations 22,138 489 - 22,627
Transfers from inventory 3,412 - 457 3,869
Transfer from property, plant and equipment (Note 21) 271 - - 271
Depreciation charge (28,181) (1,697) (997) (30,875)
Changes in accounting estimates - 1,986 - 1,986
At 31 December 2019
Cost 262,393 18,255 15,931 296,579
Accumulated depreciation and impairment (147,164) (3,609) (5,066) (155,839)
Carrying amount 115,229 14,646 10,865 140,740
Additions 22,236 - - 22,236
Transfers from inventory 3,651 - 1,933 5,584
Transfer from property, plant and equipment (Note 21) 593 - - 593
Transfer from exploration and evaluation assets (Note 24) - - 26 26
Depreciation charge (25,815) (701) (792) (27,308)
Changes in accounting estimates (3,431) (10,121) - (13,552)
At 31 December 2020
Cost 285,442 8,134 17,890 311,466
Accumulated depreciation and impairment (172,979) (4,310) (5,858) (183,147)
Carrying amount 112,463 3,824 12,032 128,319

Estimated site restoration costs are capitalised when the Group recognises a provision for site restoration. The carrying value of the provision and site restoration assets is reassessed at each reporting period end (Notes 4 and 34).

23. Mineral Rights

In millions of Kazakhstani Tenge
At 1 January 2019
Cost 465,281
Accumulated amortisation and impairment (12,842)
Carrying amount 452,439
Additions 4
Additions from business combinations 178,856
Amortisation charge (28,257)
At 31 December 2019
Cost 646,153
Accumulated amortisation and impairment (43,111)
Carrying amount 603,042
Амортизация за год (25,531)
At 31 December 2020
Cost 646,153
Accumulated amortisation and impairment (68,642)
Carrying amount 577,511

24. Exploration and Evaluation Assets

In millions of Kazakhstani Tenge Tangible assets Intangible assets Total
At 1 January 2019 20,180 3,429 23,609
Additions 4,304 - 4,304
Disposals (2,593) - (2,593)
Transfer to inventory (398) (6) (404)
Impairment (1,989) - (1,989)
At 31 December 2019 19,504 3,423 22,927
Additions 938 - 938
Transfer to mine development assets (Note 22) (26) - (26)
Transfer to inventory (25) (1) (26)
Impairment (23) - (23)
Changes in accounting estimates (845) (845)
At 31 December 2020 19,523 3,422 22,945

25. Investments in Associates

The table below summarises the movements in the carrying amount of the Group’s investment in associates:

In millions of Kazakhstani Tenge 2020 2019
Carrying value at 1 January 90,943 107,434
Share of results of associates 39,482 23,547
Contribution to charter capital 163 -
Transfer to assets held for sale (2,297) -
Disposals - (31,154)
Dividends received from associates (42,265) (8,884)
Impairment of investment (Note 1, 13) (1,364)
Other (36) -
Carrying value at 31 December 84,626 90,943

The Group’s interests in its principal associates were as follows:

Country of incorporation Principal activities 2020 2019
% ownership interest held / % of voting rights Carrying value in millions of Tenge % ownership interest held / % of voting rights Carrying value in millions of Tenge
JV KATCO LLP Kazakhstan Extraction, processing and export of uranium products 49% 55,845 49% 61,642
JV Zarechnoye JSC Kazakhstan Extraction, processing and export of uranium products 49.98% 10,983 49.98% 10,011
JV South Mining Chemical Company LLP Kazakhstan Extraction, processing and export of uranium products 30% 11,321 30% 7,580
Kyzylkum LLP Kazakhstan Extraction, processing and export of uranium products 50% 5,424 50% 6,511
Сaustiс JSC Kazakhstan Supply of caustic soda 40% - 40% 3,856
SSAP LLP (former JV SKZ Kazatomprom LLP) Kazakhstan Production of sulphuric acid 9.89% 668 9.89% 689
JV Rusburmash Kazakhstan LLP Kazakhstan Geological exploration, drilling services 49% 240 49% 446
Zhanakorgan-Transit LLP Kazakhstan Transportation 40% 145 40% 208
Total investments in associates 84,626 90,943

In November 2020 the Ministry of Energy of the Republic of Kazakhstan refused approval sought by JV KATCO LLP (“the Partnership”) of an addendum to the subsoil use contract for the transition to commercial development of reserves “at the South Tortkuduk” field. In December 2020, the Partnership appealed this decision to the Supreme Court of the Republic of Kazakhstan. The result of this appeal is outstanding at the date of these financial statements. Accordingly, there is uncertainty about the ability of JV KATCO LLP to carry out commercial development of the reserves of the Southern Tortkuduk field. The Group’s management believes that the probability is low of early termination of the JV KATCO LLP contract or the failure to conclude an addendum to the contract, therefore the Group has not recognised in these consolidated financial statements any impairment loss in respect of its investment in JV KATCO LLP.

Summarised financial information for 2020 in respect of each of the Group’s material associates is set out below. The summarised financial information below represents amounts shown in the associates’ financial statements prepared in accordance with IFRS, adjusted by the Group for equity accounting purposes.

In millions of Kazakhstani Tenge Kyzylkum LLP JV KATCO LLP JV South Mining Chemical Company LLP JV Zarechnoye JSC Other Total
Current assets 1,336 73,445 40,574 10,414 3,426 129,195
Including cash 248 54,080 24,619 3,444 224 82,615
Non-current assets 25,811 73,426 34,984 16,311 11,656 162,188
Total assets 27,147 146,871 75,558 26,725 15,082 291,383
Current liabilities (4,299) (8,291) (24,674) (2,583) (6,225) (46,072)
Including financial liabilities net of trade and other accounts payable and provisions (3,144) (265) (19,999) (32) (556) (23,996)
Incl. loan from the Company (3,089) - - - - (3,089)
Non-current liabilities (10,463) (8,768) (9,804) (1,201) (398) (30,634)
Including financial liabilities net of trade and other accounts payable and provisions (9,526) (201) (6,719) - - (16,446)
Incl. loan from the Company (9,509) - - - - (9,509)
Total liabilities (14,762) (17,059) (34,478) (3,784) (6,623) (76,706)
Net assets 12,385 129,812 41,080 22,941 8,459 214,677
Group’s share of net assets of associates 6,192 63,608 12,324 11,465 1,097 94,686
Unrealised profit in the Group - (7,831) (1,003) (524) - (9,358)
Other (768) - - 42 (126) (852)
Goodwill - 68 - - 82 150
Carrying value of investments in associates 5,424 55,845 11,321 10,983 1,053 84,626
Total revenue 11,119 93,923 76,439 20,253 15,505 217,239
Depreciation and amortisation (628) (11,830) (5,252) (3,431) (1,531) (22,672)
Finance income 33 16 192 5 60 306
Finance costs (2,351) (824) (1,384) (116) (908) (5,583)
Foreign exchange gain/(loss) (11) 6,038 261 (177) (321) 5,790
(Impairment losses)/reversal of impairment losses 38 (56) (36) (7) - (61)
Income tax (201) (13,178) (10,775) (1,750) (111) (26,015)
Profit/(loss) for the year 682 52,267 41,531 6,426 (1,194) 99,712
Other comprehensive loss (47) - (41) - - (88)
Total comprehensive income/(loss) 635 52,267 41,490 6,426 (1,194) 99,624
Unrealised profit (538) (926) (192) (1,656)
Other - - - - -
Share of result of associates 341 25,073 11,553 3,020 (485) 39,482
Dividends received 1,568 30,870 7,780 2,047 - 42,265

Summarised financial information for 2019 in respect of each of the Group’s material associates is set out below. The summarised financial information below represents amounts shown in the associates’ financial statements prepared in accordance with IFRS, adjusted by the Group for equity accounting purposes.

In millions of Kazakhstani Tenge Kyzylkum LLP JV KATCO LLP JV South Mining Chemical Company LLP JV Zarechnoye JSC JV Khorasan-U LLP Other Total
Current assets 2,097 96,384 33,084 8,102 - 6,803 146,470
Including cash 1,650 70,083 9,136 1,553 - 513 82,935
Non-current assets 29,376 63,374 38,187 16,881 - 22,145 169,963
Total assets 31,473 159,758 71,271 24,983 - 28,948 316,433
Current liabilities (3,990) (7,961) (34,899) (2,909) - (7,539) (57,298)
Including financial liabilities net of trade and other accounts payable and provisions (2,799) (176) (13,043) (35) - (1,668) (17,721)
Incl. loan from the Company (2,798) - - - - - (2,798)
Non-current liabilities (12,762) (11,253) (10,848) (1,463) - (13,375) (49,701)
Including financial liabilities net of trade and other accounts payable and provisions (10,496) (325) (7,498) - - (12,509) (30,828)
Incl. loan from the Company (10,496) - - - - - (10,496)
Total liabilities (16,752) (19,214) (45,747) (4,372) - (20,914) (106,999)
Net assets 14,721 140,544 25,524 20,611 - 8,034 209,434
Group’s share of net assets of associates 7,361 68,867 7,657 10,301 - 900 95,086
Unrealised profit in the Group - (7,293) (77) (332) - - (7,702)
Other (850) - - 42 - (221) (1,029)
Goodwill - 68 - - - 4,520 4,588
Carrying value of investments in associates 6,511 61,642 7,580 10,011 - 5,199 90,943
Total revenue 11,816 78,298 57,899 18,563 4,101 18,135 188,812
Depreciation and amortisation (654) (12,390) (5,662) (3,917) (399) (2,044) (25,066)
Finance income 70 13 253 34 20 50 440
Finance costs (886) (722) (1,115) (145) (10) (1,350) (4,228)
Foreign exchange gain/(loss) (10) (227) (322) 23 (242) 65 (713)
(Impairment losses)/reversal of impairment losses - 474 - - - - 474
Income tax (107) (7,522) (6,066) (1,089) (540) (9) (15,333)
Profit/(loss) for the year 2,780 33,638 25,767 4,096 1,003 810 68,094
Other comprehensive loss - - - - - - -
Total comprehensive income/(loss) 2,780 33,638 25,767 4,096 1,003 810 68,094
Unrealised profit - (4,545) 34 (333) (167) - (5,011)
Share of result of associates 1,390 11,938 7,765 1,715 335 404 23,547
Dividends received - - 7,475 1,409 - - 8,884

26. Investments in Joint Ventures

The table below summarises the movements in the carrying amount of the Group’s investment in joint ventures:

In millions of Kazakhstani Tenge 2020 2019
Carrying value at 1 January 33,122 40,442
Contributions to charter capital 2,499 524
Share of results of joint ventures 604 9,864
Effect of translation to presentation currency - 1,712
Transfer to assets held for sale - (18,670)
Dividends received from joint ventures (1,005) (739)
Other 41 (11)
Carrying value at 31 December 35,261 33,122

The Group’s interests in its principal joint ventures were as follows:

Country of incorporation Principal activity 2020 2019
% ownership interest held Carrying value in millions of Tenge % ownership interest held Carrying value in millions of Tenge
Semizbay-U LLP Kazakhstan Extraction, processing and export of uranium products 51.00% 17,900 51.00% 15,098
Ulba-FA LLP Kazakhstan Production of fuel assemblies and their components 51.00% 4,636 51.00% 6,381
JV Budenovskoe LLP Kazakhstan Extraction, processing and export of uranium products 51.00% 5,881 51.00% 5,632
Uranenergo LLP Transfer and distribution of electricity, grid operations 79.23% 3,068 79.52% 3,055
SKZ-U LLP Kazakhstan Production of sulphuric acid 49.00% 3,776 49.00% 2,956
JV UKR TVS CJSC Ukraine Production of nuclear fuel 33.33% - 33.33% -
Total investments in joint ventures 35,261 33,122

Summarised financial information on respect of the Group’s material joint ventures is set out below. The summarised financial information below represents amounts shown in the joint ventures’ financial statements prepared in accordance with IFRS, adjusted by the Group for equity accounting purposes.

In millions of Kazakhstani Tenge Semizbay-U LLP JV Budenovskoe LLP Other Total
2020 2019 2020 2019 2020 2019 2020 2019
Current assets 14,186 13,582 194 3,358 11,742 8,276 26,122 25,216
Including cash 2,946 1,792 193 3,352 1,051 1,352 4,190 6,496
Non-current assets 20,572 20,919 23,840 19,492 52,660 46,873 97,072 87,284
Total assets 34,758 34,501 24,034 22,850 64,402 55,149 123,194 112,500
Current liabilities (2,647) (7,987) (495) (119) (11,655) (10,129) (14,797) (18,235)
Including financial liabilities net of trade and other accounts payable and provisions (72) (4,791) (13) - (6,063) (5,244) (6,148) (10,035)
Non-current liabilities (4,077) (4,605) (320) - (31,316) (21,324) (35,713) (25,929)
Including financial liabilities net of trade and other accounts payable and provisions - - (320) - (30,192) (21,019) (30,512) (21,019)
Total liabilities (6,724) (12,592) (815) (119) (42,971) (31,453) (50,510) (44,164)
Net assets 28,034 21,909 23,219 22,731 21,431 23,696 72,684 68,336
Group’s share of net assets of joint ventures 14,297 11,173 11,841 11,592 12,120 13,471 38,258 36,236
Share in accumulated unrecognised losses - - - - - 23 - 23
Goodwill 4,105 4,105 - - (1,374) (1,397) 2,731 2,708
Impairment losses - - - - (21) (21) (21) (21)
Other (7) - - - 755 316 748 316
Unrealised gain (5,960) (5,960) - - (5,960) (5,960)
Unrealised profit in the Group (495) (180) - - - - (495) (180)
Carrying value of investments in joint ventures 17,900 15,098 5,881 5,632 11,480 12,392 35,261 33,122
Total revenue 26,068 23,650 - - 12,359 15,087 38,427 38,737
Depreciation and amortisation (3,177) (2,973) - - (1,282) (1,239) (4,459) (4,212)
Finance income 85 35 - 2 36 226 121 263
Finance costs (531) (496) (20) (17) (892) (5,664) (1,443) (6,157)
Foreign exchange gain/(loss) 30 (133) 486 - (2,771) 11,426 (2,255) 11,293
Impairment losses (255) - (49) - (2,623) - (2,927) -
Income tax (2,015) (1,558) (9) - (1,248) (2,391) (3,272) (3,949)
Profit/(loss) for the year 8,082 6,552 408 (196) (4,886) 13,907 3,604 20,263
Other comprehensive income/(loss) 14 - - - - (22) 14 (22)
Total comprehensive income/(loss) 8,096 6,552 408 (196) (4,886) 13,885 3,618 20,241
Other (314) (180) - - - - (314) (180)
Share of results of joint ventures 3,807 3,161 208 (100) (3,411) 6,803 604 9,864
Dividends received 1,005 739 - - - - 1,005 739

The above joint ventures are accounted using the equity method in the consolidated financial statements.

Together with the Chinese company China General Nuclear Power Corporation (CGN), the Group is involved in the construction of a fuel assembly plant in Kazakhstan with a capacity to supply Chinese nuclear power plants with up to 200 tons of enriched uranium per annum. In December 2015, subsidiaries of the Company and CGN established a joint venture Ulba-FA LLP with 51% and 49% respective interests, which is responsible for construction and operation of the plant. The fuel assembly plant was commissioned in December 2020. During 2021 it is expected that Ulba-FA LLP will complete the certification of the plant and then begin production and sale of products according to a long-term contract signed between Ulba-FA LLP and CGN-Uranium Resources.

Management regularly evaluates whether the Group exercises control, joint control or significant influence over investees including subsidiaries, associates and joint ventures. Management applies judgement in this evaluation, including: (a) determination of availability of power that gives to the Group ability to direct the relevant activities of the investees that significantly affect their returns, and (b) determination of ability to use its power over the investees to affect the amount of the investor’s returns. Management concluded that the Group does not have the ability to use its power to exercise control over Uranenergo LLP. Accordingly, this investment is classified as an investment in a joint venture.

27. Accounts Receivable

In millions of Kazakhstani Tenge 2020 2019
Trade accounts receivables from related parties - 67
Other receivables 22 -
Provision for impairment of other receivables (22) -
Total non-current net accounts receivable - 67
Trade accounts receivable 115,026 87,707
Trade accounts receivable from related parties 2,398 3,242
Total gross trade accounts receivable 117,424 90,949
Provision for impairment of trade receivables (90) (446)
Provision for impairment of trade receivables from related parties (20) (37)
Total current net trade accounts receivable 117,314 90,466
Other accounts receivable 160 921
Other accounts receivable from related parties 22 4
Total gross other accounts receivable 182 925
Provision for impairment of other receivables (78) (764)
Total net other accounts receivable 104 161
Total current accounts receivable 117,418 90,627

Information on the Group’s exposure to credit and currency risks and provision for impairment for accounts receivable is disclosed in Note 40.

28. Other Assets

In millions of Kazakhstani Tenge 2020 2019
Non-current
Restricted cash 14,846 13,167
VAT recoverable 14,544 1,029
Long-term inventories 7,790 7,333
Advances for non-current assets 972 1,104
Prepaid expenses 809 1,290
Loans to employees 454 596
Advances to related parties - 157
Term deposits 15 13
Total other non-current assets 39,430 24,689
Current
Advances for goods and services 3,402 2,981
Prepaid expenses 1,758 758
Prepaid insurance 871 874
Prepaid taxes other than income tax 767 1,520
Advances to related parties for goods and services 423 235
Restricted cash 354 485
Dividends receivable from related parties 310 5,074
Due from employees 274 330
Term deposits - 1
Total other current assets 8,159 12,258

Financial assets within other current and non-current assets include restricted cash, loans to employees and dividends receivable. Other current and non-current assets are non-financial assets.

Non-current inventories include stock of enriched uranium which has been held since Group’s inception for future use after commissioning of new facilities for production of uranium pellets. Management does not plan to use these inventories in operational activity during the year after the reporting date.

In accordance with the terms of its subsurface use contracts, the Group transfers cash to long-term bank deposits to finance site restoration activities. As at 31 December 2020 the balance of restricted cash held in long-term bank deposits related to financing of future site restoration activities of Tenge 14,751 million (2019: Tenge 13,148 million).

29. Inventories

In millions of Kazakhstani Tenge 2020 2019
Finished goods and goods for resale 185,397 171,452
Including uranium products 183,633 170,105
Work-in-process 22,923 22,317
Raw materials 20,179 19,071
Other materials 5,104 4,913
Materials in processing 1,204 1,045
Fuel 655 787
Spare parts 682 626
Provision for obsolescence and write-down to net realisable value (2,755) (3,152)
Total inventories 233,389 217,059

Movements in the provision for obsolescence are as follows:

In millions of Kazakhstani Tenge 2020 2019
Balance at 1 January (3,152) (2,672)
Reversal of provision during the year 963 1,313
Inventory write off during the year 108 206
Accrual of provision during the year (654) (1,318)
Translation of foreign currency (20) -
Transfer to assets held for sale - (681)
Balance at 31 December (2,755) (3,152)

30. Loans to Related Parties

In millions of Kazakhstani Tenge 2020 2019
Non-current
Kyzylkum LLP 8,495 10,496
Provision for impairment (72) (371)
Total non-current loans 8,423 10,125
Current
Kyzylkum LLP 3,089 2,798
Total current loans 3,089 2,798

In 2010, the Group provided an interest-bearing long-term loan to Kyzylkum LLP with maturity to 2024. The loan is collateralised by the property of Kyzylkum LLP. From December 2015, JV Khorasan-U LLP is a co-borrower of the loan to Kyzylkum LLP and is a guarantor of the loan. The weighted average annual interest rate on loans to related parties in 2020 was 8.5% (2019: 8.5%). According to internal estimates, the level of credit risk for this loan is estimated as moderate.

31. Cash and Cash Equivalents

In millions of Kazakhstani Tenge 2020 2019
Current bank accounts 95,257 82,931
Demand deposits 14,987 14,146
Reverse repo transaction 3,118 -
Cash in hand 5 14
Cash in transit - 1,495
Provision for impairment (20) (26)
Total cash and cash equivalents 113,347 98,560

32. Share Capital

At 31 December 2020 the total number of authorised and paid ordinary shares is 259,356,608 (2019: 259,356,608).

In November 2018, Samruk-Kazyna JSC placed 15% of the Company’s shares (equivalent to) 38,903,491 shares / global depositary receipts on the London Stock Exchange (LSE) and the Astana International Exchange (AIX). As of 31 December 2018, Samruk-Kazyna JSC owned 85% of the issued ordinary shares, other legal entities and individuals – owned 15% of the Company’s ordinary shares. Each ordinary share carries one vote. On 26 September 2019, Samruk-Kazyna JSC offered an additional 9,863,021 GDRs on LSE and AIX. Price for the additional offer was 13 USD per GDR. As of 31 December 2019, Samruk- Kazyna JSC owned 81.28% of the issued ordinary shares and 18.72% were on a free float. In June 2020, Samruk-Kazyna JSC offered an additional 16,281,423 shares and GDRs on AIX and LSE. The price of the additional offer was US Dollar 13 per GDR and Tenge 5,230.81 per ordinary share. As of 31 December 2020, Samruk-Kazyna JSC owned 75% of the issued ordinary shares and 25% were on a free float.

Dividends declared and paid during the year were as follows:

In millions of Kazakhstani Tenge 2020 2019
Dividends payable at 1 January - -
Dividends declared during the year 99,002 80,001
Dividends paid during the year (99,002) (80,001)
Dividends payable at 31 December - -
Dividends declared per share, in Tenge 382 308

33. Loans and Borrowings

In millions of Kazakhstani Tenge 2020 2019
Non-current
Bonds 76,300 69,300
Total non-current loans and borrowings 76,300 69,300
Current
Promissory notes issued 14,004 17,460
Bank loans 6,734 71,847
Bonds 788 716
Non-bank loans - 641
Total current loans and borrowings 21,526 90,664
Total loans and borrowings 97,826 159,964

On 27 September 2019, the Company issued 70 million bonds indexed to US Dollars on the organised securities market of Kazakhstan Stock Exchange JSC (“KASE”). The face value of one bond is 1,000 Tenge with maturity on.

27 October 2024. The purpose of the placement was to refinance bonds issued on 11 October 2018 in the amount of Tenge 70,000 million.

During 2020 the Company signed agreements to open two credit lines with Mizuho Bank, Ltd. and Sumitomo Mitsui Banking Corporation with the funds to be used for corporate purposes, including financing of working capital needs. The facilities are unsecured and are for an amount of US Dollar 120 million, for a period of three years. The undrawn facilities amount at 31 December 2020 was US Dollar 104 million.

Promissory notes were issued by JV Khorasan-U LLP in December 2014 to repay amounts owing for mine development assets. In 2019 JV Khorasan-U LLP became a subsidiary of the Group. According to the terms, the promissory notes are payable on demand at an interest rate of 0.1%. As of 31 December 2020, the right of claim under these promissory notes belongs to Kyzylkum LLP, an associate of the Group.

Information about the Group’s loans and borrowings is presented as follows:

In millions of Kazakhstani Tenge Currency Maturity 2020 2019
Bank loans
Sumitomo Mitsui Bankinq Corporation US Dollar 2021 6,734 -
Halyk Bank JSC US Dollar 2020 - 55,532
Mizuho Bank, Limited US Dollar 2020 - 16,315
Total bank loans 6,734 71,847
Non-bank loans
Kozhema-Katko-Demeu Tenge 2024 - 641
Total non-bank loans - 641
Bonds
Bonds US Dollar 2024 77,088 70,016
Total bonds 77,088 70,016
Promissory note issued
Kyzylkum LLP US Dollar on demand 14,004 17,460
Total promissory note issued 14,004 17,460

In 2020, the Group’s weighted average interest rate on fixed interest rate loans was 3.31% (2019: 3.67%) and on floating interest rate loans was 1.99% (2019: 3.91%).

Reconciliation of debt

The table below shows an analysis of the debt amount and changes in the Group’s liabilities arising from financing activities for each of the periods presented:

In millions Kazakhstani Tenge Loans and borrowings Lease liabilities Total
Debt at 31 December 2018 199,690 479 200,169
Proceeds from loans and borrowings 203,250 - 203,250
Issue of bonds 70,000 - 70,000
Additions from business combinations 17,441 - 17,441
Interest accrued 7,140 197 7,337
Repayment of loans and borrowings (255,872) (463) (256,335)
Repayment of bonds (73,500) - (73,500)
Interest paid (7,008) (176) (7,184)
Foreign currency translation (1,121) (2) (1,123)
Other non-cash changes (56) 1,359 1,303
Debt at 31 December 2019 159,964 1,394 161,358
Proceeds from loans and borrowings 119,093 - 119,093
Foreign currency translation 11,391 17 11,408
Interest accrued 4,174 110 4,284
Repayment of loans and borrowings (191,991) (465) (192,456)
Interest paid (4,149) (128) (4,277)
Other non-cash changes (656) (182) (838)
Debt at 31 December 2020 97,826 746 98,572

34. Provisions

In millions of Kazakhstani Tenge Compensation for occupational deceases Environmental protection Site restoration Other Total
At 1 January 2019
Non-current 246 2,994 29,607 38 32,885
Current 91 96 - - 187
Total 337 3,090 29,607 38 33,072
Provision for the year 36 - 1,840 2 1,878
Unwinding of discount 25 202 2,564 - 2,791
Disposals - - (22) - (22)
Additions from business combinations - - 712 - 712
Provision used (85) (46) (589) - (720)
Change in estimates - 270 2,393 - 2,663
At 31 December 2019
Non-current 228 3,420 35,799 40 39,487
Current 85 96 706 - 887
Total 313 3,516 36,505 40 40,374
Provision for the year (27) (1) (27) 2 (53)
Unwinding of discount 22 244 2,362 1 2,629
Disposals - - (24) - (24)
Reversal of provision - - (43) - (43)
Provision used (77) (100) - - (177)
Change in estimates - (459) (14,975) - (15,434)
At 31 December 2020
Non-current 154 3,061 23,135 43 26,393
Current 77 96 706 - 879
Total 231 3,157 23,841 43 27,272

Provision for environmental protection

The Group has a legal obligation to dispose of radioactive waste, eliminate and decommission contaminated items of property, plant and equipment after the closure of the facility. The amount of the provision was determined at the end of the reporting period using the nominal prices effective at that date. The amount of the provision for landfill restoration and asset remediation is determined using the nominal prices effective at the reporting dates, using the projected rate of long-term average inflation for the expected period of operation of landfills and the discount rate at the end of the reporting period.

Provision for restoration of mine sites

The Group estimates the site restoration costs for each mine operated by the Group. The undiscounted estimated cost of restoration of mine sites in 2020 is Tenge 116,533 million (2019: Tenge 97,087 million). The amount of provision for restoration of mine sites was calculated using current prices (the prices effective at the reporting date) for expenditures to be incurred and then inflated using the forecast inflation rate effective for the period until the settlement of restoration (5.17% for the period 2021-2045). The present value at 31 December 2020 has been estimated using a discount rate of 9.87% (2019: 7.13%), which is a risk free nominal rate as the future cash outflows reflect risk specific to the liability.

In view of the long-term nature of restoration of mine sites, there is uncertainty concerning the actual amount of expenses that will be incurred in performing site restoration activities for each mine (Note 4). Changes in estimates occur due to annual revision of costs for site liquidation including newly drilled wells, sand traps and other facilities subject to subsequent liquidation.

In accordance with the terms of the subsurface use agreements the Group places cash in long-term bank deposits to finance future site restoration activities. As at 31 December 2020, the accumulated transfers to restricted deposits amounted to Tenge 19,246 million (2019: Tenge 17,668 million).

Key assumptions which serve as the basis for determining the carrying value of the provision for restoration of mine sites provision are as follows:

  • there is a high probability that the Group will proceed to development and production stages for its fields which are currently under exploration. This creates a constructive obligation for the Group to recognise a site restoration provision for all mining and exploration licenses
  • the expected term for future cash outflows for the mine sites is based on the life of the mines. A substantial part of expenditures is expected to occur in 2021-2045, at the end of the life of the mine

35. Accounts Payable

In millions of Kazakhstani Tenge 2020 2019
Trade accounts payable 23,227 25,070
Trade accounts payable to related parties 18,880 32,163
Total current trade accounts payable 42,107 57,233
Other accounts payable 1,841 1,328
Other accounts payable to related parties - 1
Total current other accounts payable 1,841 1,329
Total current accounts payable 43,948 58,562

The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in Note 40.

36. Other Liabilities

In millions of Kazakhstani Tenge 2020 2019
Non-current
Advances received 3,632 3,431
Deferred income 1,309 1,397
Historical costs liabilities 396 897
Preferred shares 265 265
Issued financial guarantees 250 69
Advances received from related parties 7 12
Other 352 531
Total non-current other liabilities 6,211 6,602
Current
Amounts due under uranium swap contracts 11,588 4,178
Liabilities under inventory loan agreements 10,522 -
Accrued unused vacation payments and bonuses 5,775 5,521
Wages and salaries payable 1,509 1,694
Advances received 1,460 1,663
Social contributions payable 1,078 1,007
Historical costs liabilities 620 581
Dividends payable to other participants 265 4,775
Deferred income 203 319
Liabilities under contracts with customers 85 -
Advances received from related parties 69 218
Issued financial guarantees 7 165
Other 1,337 561
Total current other liabilities 34,518 20,682

In accordance with the terms of the subsurface use contracts the Group is required to reimburse the historical costs related to the geological research and other costs incurred by the Republic of Kazakhstan for exploration of the contractual territories before the transfer of subsurface use rights to the Group. In accordance with tax legislation, the historical costs are to be reimbursed to the Government via quarterly payments over a 10 year period, beginning from the date of commercial extraction of uranium. The liability represents the discounted cash flow of estimated future payments. The discount rate applied for historical costs denominated in USD was 3.3% and 7% for historical costs denominated in Tenge.

37. Contingencies and Commitments

Compliance with contractual obligations

According to the Decree of the President of the Republic of Kazakhstan dated 15 March 2020 No. 285 “On the introduction of a state of emergency in the Republic of Kazakhstan”, a state of emergency was introduced for the period from 16 March 2020 until 15 April 2020 and later extended until 11 May 2020. On 5 July 2020, the State Commission for Ensuring State of Emergency under the President of Kazakhstan, in consideration of the complications of the epidemiological situation and the increase in the prevalence of coronavirus infection in Kazakhstan, introduced restrictive measures for 14 days, subsequently extended until 16 August 2020.

Ensuring safety and health of employees is a major Company priority. In order to prevent the spread of coronavirus infection. JSC “NAC “Kazatomprom” undertook a number of measures during the year including suspension of mining preparation and repair and restoration. In this regard, production plans for 2020 were adjusted. As a result deviations from the contractual obligations or production of subsidiaries, associates and JV’s exceeded the levels acceptable under relevant RK regulations. All subsidiaries, associates and JV’s received certificates of the occurrence of force majeure from appropriate government authorities and sent notifications to the Competent authority about the reduction in production volumes due to the occurrence of force majeure.

On 13 April 2020 the State Commission on provision of state of emergency under the President of Kazakhstan assigned to the Ministry of Energy and other Ministries responsibility to consider postponement, without penalty, of the of the fulfillment of the contract and license obligations and working programs for 2020. Accordingly, the Group companies applied to the Ministry of Energy for sign addendums to subsoil use contracts on reduction of production volumes for 2020. The Group companies plan to sign addendums to the subsoil use contracts in 2021.

Legal proceedings

From time to time and in the normal course of business, claims against the Group may be received. Management concluded that no material losses will be incurred in respect of any such claims.

Tax legislation

The tax environment in the Republic of Kazakhstan is subject to change and inconsistent application and interpretations. In particular, existing subsurface use contracts do not have tax stability from 1 January 2009 and tax liabilities are computed under common regime. This could result in unfavourable changes to subsurface users’ tax positions, including those of the Group. Non-compliance with Kazakhstani law and regulations as interpreted by the Kazakhstani authorities may lead to the assessment of additional taxes, penalties and interest.

Kazakhstani tax legislation and practice is in a state of continuous development, and therefore is subject to varying interpretations and frequent changes, which may be retroactive. In some cases, in order to determine the tax base, tax legislation refers to IFRS provisions, while interpretation of relevant provisions of IFRS by Kazakhstan’s tax authorities may differ from accounting policies, judgments and estimates used by management in preparation of these consolidated financial statements, which may lead to additional tax liabilities. Tax periods remain open to retroactive review by the Kazakhstan tax authorities for five years.

The Group management believes that its interpretation of the relevant legislation is appropriate and the Group’s tax position will be sustained. Detailed information on pending tax disputes and assessments is presented below in this Note. In the opinion of the Group management, no material losses will be incurred in respect of existing and potential tax claims in excess of provision that have been made in these consolidated financial statements.

(a) Transfer pricing legislation

Under law on transfer pricing international transactions are subject to state control. This law prescribes Kazakhstani companies to maintain and, if required, to provide economic rationale and method of the determination of prices used in international transactions, including existence of the documentation supporting the prices and differentials. Additionally, differentials could not be applied to the international transactions with companies registered in off-shore countries. In case of deviation of transaction price from market price the tax authorities have the right to adjust taxable items and to impose additional taxes, fines and interest penalties.

Regardless of the inherent risks that the tax authorities may question transfer pricing policy of the Group related to the law on transfer pricing, the management of the Group believes that it will be able to sustain its position in case if transfer pricing policy of the Group will be challenged by the tax authorities. From 1 January 2009 the Group self-assesses additional income tax to reflect market prices. The amount of recognised additional income tax in 2020 was Tenge 1,597 million (2019: Tenge 1,474 million) (Note 18).

(b) Complex tax inspections of the Group entities

As at 31 December 2020, the Group did not have any outstanding matters with tax authorities due to lack of comprehensive tax inspections during the year.

Insurance

The Kazakhstani insurance industry is in development, and many forms of insurance protection common in other countries are not available yet. The Group does not have full insurance coverage for its manufacturing plants, including damages caused by the cease of production or obligations incurred to third parties in connection with damages caused to the property or the environment resulting from accidents or operations.

Environmental obligations

As at the reporting date management concluded that the Group has no legal or constructive obligation to finance dismantlement and restoration of Ulba plant facilities (Note 4).

Guarantees

Guarantees are irrevocable assurances that the Group will make payments in the event that another party cannot meet its obligations. The maximum exposure to credit risk under financial guarantees, provided to secure financing of certain related parties, at 31 December 2020 is Tenge 19,390 million (2019: Tenge 15,038 million) (Note 8).

Compliance with covenants

The Group is subject to certain covenants related primarily to its loans and borrowings. Non-compliance with covenants may result in negative consequences for the Group including increase in borrowings expenses and declaration of default. The Group complies with all applicable covenants as of 31 December 2020 and 31 December 2019.

38. Non-controlling Interest

The following table provides information about each significant subsidiary that has a non-controlling interest that is material to the Group at 31 December 2020:

Name Country of incorporation and principal place of business Ownership rights held by non-controlling interest Profit or loss attributable to non-controlling interest Accumulated non-controlling interest
Ulba Metallurgical Plant JSC Kazakhstan 9.82% 788 7,284
Appak LLP Kazakhstan 35% 2,889 9,387
JV Inkai LLP Kazakhstan 40% 19,304 94,682
JV Khorasan-U LLP Kazakhstan 50% 8,888 98,450
Baiken-U LLP Kazakhstan 47.5% 6,245 57,301
Total 38,114 267,104

The following table provides information about each significant subsidiary that has non-controlling interest that is material to the Group at 31 December 2019:

Name Country of incorporation and principal place of business Ownership rights held by non-controlling interest Profit or loss attributable to non-controlling interest Accumulated non-controlling interest
Ulba Metallurgical Plant JSC Kazakhstan 9.82% 370 6,761
Appak LLP Kazakhstan 35% 1,902 8,401
JV Inkai LLP Kazakhstan 40% 13,263 87,579
JV Khorasan-U LLP Kazakhstan 50% 3,759 89,563
Baiken-U LLP Kazakhstan 47.5% 4,908 61,515
Total 24,202 253,819

The summarised financial information of these subsidiaries is as follows:

In millions of Kazakhstani Tenge Ulba Metallurgical Plant JSC Appak LLP JV Inkai LLP Baiken-U LLP JV Khorasan-U LLP
2020 2019 2020 2019 2020 2019 2020 2019 2020 2019
Current assets 46,052 41,913 17,428 15,648 54,033 46,442 29,913 39,294 63,461 40,930
Non-current assets 40,019 41,232 15,578 13,603 221,077 228,141 113,575 120,579 185,335 194,694
Current liabilities (7,046) (6,304) (3,000) (2,337) (8,731) (20,959) (3,604) (8,257) (16,441) (19,666)
Non-current liabilities (7,116) (7,232) (3,052) (2,915) (35,470) (35,478) (19,086) (22,110) (35,291) (36,832)
Equity, incl. 71,909 69,609 26,954 23,999 230,909 218,146 129,798 129,506 197,064 179,126
Equity attributable to the Group 64,625 62,849 17,576 15,597 136,227 130,567 63,497 67,991 98,614 89,563
Non-controlling interest 7,284 6,760 9,378 8,402 94,682 87,579 57,301 61,515 98,450 89,563
46,338 42,229 21,970 18,378 78,973 75,819 38,060 38,477 49,290 37,589
Revenue (1,666) (1,552) (1,073) (2,192) (10,985) (11,021) (10,028) (9,195) (11,394) (7,911)
Depreciation and amortisation - - - - (3,356) (2,847) (3,992) (4,313) (6,366) (3,076)
Including depreciation and amortisation at fair value 171 378 244 110 111 187 358 717 187 150
Finance income (636) (448) (180) (170) (339) (859) (123) (100) (105) (82)
Finance costs (3,314) (1,722) (2,918) (1,524) (13,597) (8,961) (4,395) (3,799) (5,699) (3,059)
Income tax expense - - - - 658 576 800 1,027 1,273 1,166
Including tax effect of depreciation and amortisation of adjustments to fair value 1,379 (142) 388 (52) 285 156 399 (120) 1,826 251
Net foreign exchange gain/(loss) (112) (480) (78) (54) - (209) - (17) - 2
Profit for the year 5,463 3,267 8,227 5,435 33,315 33,157 13,148 10,333 17,775 7,518
Profit attributable to the owners of the Company 4,675 2,897 5,348 3,533 14,011 19,894 6,903 5,425 8,887 3,759
Profit attributable to non-controlling interest 788 370 2,879 1,902 19,304 13,263 6,245 4,908 8,888 3,759
Profit for the year 5,463 3,267 8,227 5,435 33,315 33,157 13,148 10,333 17,775 7,518
Other comprehensive income/(loss) 50 (85) 1 - (32) (293) (20) (106) - -
Total comprehensive income for the year 5,513 3,182 8,228 5,435 33,283 32,864 13,128 10,227 17,775 7,518
Dividends declared to non-controlling interest 268 - 1,902 1,533 12,189 8,613 10,450 13,775 - -
Net cash inflow/(outflow) from:
- operating activities 6,935 3,126 5,807 5,014 46,968 36,443 19,324 20,722 19,052 11,166
- investing activities (3,329) (1,796) (2,346) (1,890) (6,016) 798 (5,124) (5,594) (3,032) (1,723)
- financing activities (2,958) (308) (5,481) (4,680) (30,749) (44,152) (22,038) (29,045) (3,367) -
Net cash inflow/(outflow) 648 1,022 (2,020) (1,556) 10,203 (6,911) (7,838) (13,917) 12,653 9,443

39. Principal Subsidiaries

These consolidated financial statements include the following subsidiaries:

Principal activity Ownership
2020 2019
Kazatomprom-Damu LLP Consulting services on the Group’s investment activity 90% 90%
KAP Technology JSC Communication services 100% 100%
Korgan-Kazatomprom LLP Security services 100% 100%
Appak LLP Exploration, production, processing and sale of uranium products 65% 65%
Ulba Metallurgical Plant JSC Production and processing of uranium materials, production of rare metals and semiconductor materials 90.18% 90.18%
Volkovgeologiya JSC Exploration and research of uranium reserves, drilling services, monitoring of radiation level and environment conditions 90% 90%
High Technology Institute LLP Research, project, development and engineering consulting services 100% 100%
МК KazSilicon LLP Production and sale of metallurgical and polycrystalline silicon, recycling of silicon production waste 100% 100%
Kazakhstan Solar Silicon LLP Production of silicon of solar quality, silicon slices and photovoltaic slices 100% 100%
Astana Solar LLP Production of photovoltaic modules 100% 100%
DP Ortalyk LLP Exploration, production, processing and sale of uranium products 100% 100%
RU-6 LLP Exploration, production, processing and sale of uranium products 100% 100%
Kazatomprom-SaUran LLP Exploration, production, processing and sale of uranium products 100% 100%
Trade and Transportation Company LLP Procurement and transportation services 99.9999% 99.9999%
Kazakatom TH AG Marketing function for sale of uranium, investment and administration of finances, goods and rights 100% 100%
JV Inkai LLP Exploration, production, processing and sale of uranium products 60% 60%
Baiken-U LLP Exploration, production, processing and sale of uranium products 52.5% 52.5%
JV Khorasan-U LLP Exploration, production, processing and sale of uranium products 50% 50%

These consolidated financial statements include the following joint operations:

Principal activity Ownership
2020 2019
Karatau LLP Exploration, production, processing and sale of uranium products 50% 50%
JV Akbastau JSC Exploration, production, processing and sale of uranium products 50% 50%
Energy Asia (BVI) Limited (EAL) Commercial and investment activities 50% 50%

All entities are incorporated and operate on the territory of the Republic of Kazakhstan, except for Kazakatom TH AG, which is incorporated in Switzerland and EAL that is registered in the British Virgin Islands.

40. Financial Risk Management

Accounting policies and disclosures in respect of financial instruments are applied to the following classes of financial instruments:

In millions of Kazakhstani Tenge 2019 2020 2019
Financial assets
Trade accounts receivable 27 117,314 90,533
Current bank accounts 31 95,237 82,905
Restricted cash 28 15,200 13,652
Demand deposits 31 14,987 14,146
Loans to related parties 30 11,512 12,923
Other investments 5,423 567
Reverse repo transaction 31 3,118 -
Financial derivative asset 1,048 543
Loans to employees 28 454 596
Dividends receivable from related parties 28 310 5,074
Other accounts receivable 27 104 161
Term deposits 28 15 14
Cash in hand 31 5 14
Cash in transit 31 - 1,495
Total financial assets 264,727 222,623
Financial liabilities
Bonds 33 77,088 70,016
Trade accounts payable 35 42,107 57,233
Promissory note issued 33 14,004 17,460
Bank loans 33 6,734 71,847
Other accounts payable 35 1,841 1,329
Historical costs liabilities 36 1,016 1,478
Lease liabilities 746 1,394
Issued financial guarantees 36 257 69
Preferred shares 36 265 265
Dividends payable to other participants 36 265 4,775
Non-bank loans 33 - 641
Total financial liabilities 144,323 226,507

Financial risks are monitored by the Group’s risk management function and comprise market risk (including currency risk, interest rate risk and other price risk), credit risk and liquidity risk. The objectives of the Group’s financial risk management function are to establish risk limits, and then ensure that exposure to risks stays within these limits. Risk management policies and systems are regularly analysed for the need of revision due to changes in market conditions and the Group operations. The Group’s risk management function monitors compliance with approved policies and procedures.

This note presents information about the Group’s exposure to each of the above risks, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s policy for management of capital. Further quantitative disclosures are included throughout these consolidated financial statements.

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Management Board has established a Risk Management Committee, which is responsible for developing and monitoring the Group’s risk management policies. The committee reports regularly to the Management Board and the Board of Directors on its activities.

Credit risk

The Group has exposure to credit risk, which is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. Exposure to credit risk arises as a result of the Group’s sales of products on credit terms and other transactions with counterparties giving rise to financial assets. Financial assets, which potentially expose the Group to credit risk, consist mainly of trade and other receivables, cash and cash equivalents, term deposits and loans to employees and related parties.

The Group’s maximum exposure to credit risk by class of assets is reflected in the carrying amounts of financial assets in the statements of financial position and the nominal amount of financial guarantees (Note 37).

The credit risk on cash and cash equivalents and term deposits is limited, because the counterparties are banks with highest available credit ratings assigned by international credit rating agencies.

The table below shows credit ratings of banks where the Group had accounts as at 31 December 2020:

In millions of Kazakhstani Tenge Rated Standard & Poor’s AAA to A- Rated Standard & Poor’s BBB+ to BBB- Rated Standard & Poor’s BB+ to B- Other Total
Restricted cash 924 1,035 12,812 429 15,200
Term deposits - - 15 - 15
Current bank accounts 7,476 33,758 54,001 2 95,237
Demand deposits 651 - 14,336 - 14,987
Total 9,051 34,793 81,164 431 125,439

The table below shows credit ratings of banks where the Group had accounts as at 31 December 2019:

In millions of Kazakhstani Tenge Rated Standard & Poor’s AAA to A- Rated Standard & Poor’s BBB+ to BBB- Rated Standard & Poor’s BB+ to B- Other Total
Restricted cash 2,071 853 10,362 366 13,652
Term deposits - - 14 - 14
Current bank accounts 13,087 5,804 64,014 - 82,905
Demand deposits 131 332 13,683 - 14,146
Total 15,289 6,989 88,073 366 110,717

The Group applies the simplified approach permitted in IFRS 9 to measure expected credit losses which uses a lifetime expected loss allowance for all trade receivables.

To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics and the days past due.

The expected loss rates are based on the payment profiles of sales over a period of 24 month before 31 December 2020 or 31 December 2019 respectively and the corresponding historical credit losses experienced within this period. The historical loss rates are not adjusted to reflect forward-looking information on macroeconomic factors because those factors do not significantly affect the risk profile. The expected environment in the near future (12 months) is identical to the environment reflected in the time series used to estimate the parameters of expected credit losses.

The credit loss allowance for trade receivables is determined according to provision matrix presented in the table below. The provision matrix is based the number of days that an asset is past due.

In millions of Kazakhstani Tenge Loss rate Gross carrying amount Lifetime ECL
2020
Trade receivables
current 0.07% 114,072 (81)
30 to 90 days overdue 0.15% 3,328 (5)
over 360 days overdue 100% 23 (23)
Total trade receivables (gross carrying amount) 117,423
Credit loss allowance (109)
Total trade receivables from contracts with customers (carrying amount) 117,314
In millions of Kazakhstani Tenge Loss rate Gross carrying amount Lifetime ECL
2019
Trade receivables
current 0.19% 87,338 (415)
less than 30 days overdue 0.47% 3,617 (7)
over 360 days overdue 100% 61 (61)
Total trade receivables (gross carrying amount) 91,016
Credit loss allowance (483)
Total trade receivables from contracts with customers (carrying amount) 90,533

The following table explains the changes in the credit loss allowance for trade and other receivables between the beginning and the end of 2020 as well as impairment provision for trade and other receivables during 2019:

In millions of Kazakhstani Tenge Trade accounts receivable Other accounts receivable
Provision at 1 January 2019 139 371
Provision for the year 395 34
Change in accounting estimates - 673
Reversal 123 18
Transfer to assets held for sale 149 -
Amounts written-off (77) (296)
Provision at 31 December 2019 483 764
Provision for the year 47 2
Reversal (398) (11)
Amounts written-off (23) (681)
Provision at 31 December 2020 109 74

The Group’s exposure to credit risk in respect of trade accounts receivable is influenced mainly by the individual characteristics of each customer. The demographics of the Group’s customer base, including the default risk of the industry and country, in which customers operate, has less of an influence on credit risk. The Group is exposed to concentrations of credit risk. Approximately 66% of the Group’s revenue for 2020 (52% of trade receivables as of 31 December 2020) is attributable to sales transactions with seven main customers (2019: 67% of Group’s revenues; 75% of trade receivables). The Group defines counterparties as having similar characteristics if they are related entities.

The Group applies a credit policy under which each new customer is analysed individually for creditworthiness before the Group’s standard payment and delivery terms and conditions are offered.

The Group does not require collateral in respect of trade and other receivables.

The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:

In millions of Kazakhstani Tenge 2020 2019
China 35,639 14,046
European Union 22,709 1,445
Russia 18,570 23,489
United Kingdom 13,265 -
Canada 9,089 3,394
Kazakhstan 6,932 4,250
USA 6,767 3,508
Japan 3,063 2,066
Argentina 1,221 -
Brazil 59 -
India - 38,335
Total 117,314 90,533

The average credit period on sales of goods is 30 days. No interest is charged on receivables for the first 30 days from the date of the invoice.

Credit risk exposure in respect of loans to related parties (Note 30) and loans to employees (Note 28) arises from possibility of non-repayment of loans. For loans to joint ventures and associates and employees the Group manages the credit risk by requirement to provide collateral in lieu of borrowers’ property. Borrowers do not have a credit rating.

Expected Credit Loss (ECL) measurement

Measurement of ECLs is an estimate that involves determination methodology, models and data inputs. The following components have a major impact on credit loss allowance: definition of default, SICR, probability of default (“PD”), exposure at default (“EAD”), and loss given default (“LGD”), as well as models of macro-economic scenarios. The Group regularly reviews and validates the models and inputs to the models to reduce any differences between expected credit loss estimates and actual credit loss experience of issued loans and guarantees.

The Group used supportable forward looking information for measurement of ECL, primarily an outcome of its own macroeconomic forecasting model. Several assumptions that are easily interpretable can be selected for analysis: GDP growth rate, inflation rate, exchange rate, crude oil price and current economic indicator. Final macroeconomic scenario includes only historically observed values of the inflation rate and the share of overdue loans. Forward-looking information is included in parameters of PD within the horizon of the next year after the reporting date. In addition, to calculate credit losses, the corporate average cumulative default probabilities are updated annually according to S&P’s Annual Global Corporate Default Study and Rating.

Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. The Group is exposed to daily calls on its available cash resources. Liquidity risk is managed by the corporate finance department of the Group. Management monitors monthly rolling forecasts of the Group’s cash flows.

The Group seeks to maintain a stable funding base primarily consisting of borrowings, trade and other payables and debt securities. The Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities as they fall due, under both normal and stressful conditions, without incurring unacceptable losses or risking damage to the Group’s reputation. The Group invests available cash funds in diversified portfolios of liquid assets, in order to be able to respond quickly to unforeseen liquidity requirements.

The Group ensures that it has sufficient cash on demand to meet expected operational expense or financial obligations which excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters.

Below is a summary of the Group’s undrawn borrowing facilities and available cash and cash equivalents, including current term deposits, which are the important instruments in managing the liquidity risk:

In millions of Kazakhstani Tenge 2020 2019
Current term deposits 14,987 14,147
Current bank accounts 95,257 82,904
Undrawn borrowing facilities 241,602 124,342
Total 351,846 221,393

The table below shows liabilities at the reporting date by their remaining contractual maturity. The amounts disclosed in the maturity table are the contractual undiscounted cash flows. Such undiscounted cash flows differ from the amount included in the statements of financial position because the statement of financial position amount is based on discounted cash flows.

When the amount payable is not fixed, the amount disclosed is determined by reference to the conditions existing at the end of the reporting period. Foreign currency payments are translated using the spot exchange rate at the end of the reporting period.

The following are the contractual maturities of financial liabilities at 31 December 2020:

In millions of Kazakhstani Tenge Carrying value Contractual cash flows On demand and less than 1 month From 1 to 3 months From 3 months to 1 year From 1 to 5 years Over 5 years
Bank loans 6,734 6,763 - - 6,763 - -
Non-bank loans - - - - - - -
Bonds 77,088 88,589 - - 788 87,801 -
Trade accounts payable 42,107 42,107 - 42,107 - - -
Promissory note issued 14,004 14,004 14,004 - - - -
Other accounts payable 1,841 1,841 - 1,841 - - -
Historical costs liabilities 1,016 1,055 - 155 465 435 -
Lease liabilities 746 898 - 133 400 262 103
Issued financial guarantees 257 19,390 19,390 - - - -
Preferred shares 265 265 - - - 265 -
Dividends payable to other participants 265 265 - 265 - - -
Total 144,323 175,177 33,394 44,501 8,416 88,763 103

The following are the contractual maturities of financial liabilities at 31 December 2019:

In millions of Kazakhstani Tenge Carrying value Contractual cash flows On demand and less than 1 month From 1 to 3 months From 3 months to 1 year From 1 to 5 years Over 5 years
Bank loans 71,847 72,064 55,425 5,593 11,046 - -
Non-bank loans 641 641 - 641 - - -
Bonds 70,016 83,183 231 462 2,795 79,695 -
Trade accounts payable 57,233 57,233 - 57,233 - - -
Promissory note issued 17,460 17,460 17,460 - - - -
Other accounts payable 1,329 1,329 - 1,329 - - -
Historical costs liabilities 1,478 1,543 - 143 428 972 -
Lease liabilities 1,394 1,677 - 183 546 832 116
Issued financial guarantees 69 15,038 15,038 - - - -
Preferred shares 265 265 - - 265 -
Dividends payable to other participants 4,775 4,775 - 4,775 - - -
Total 226,507 255,208 88,154 70,359 14,815 81,764 116

Market risk

The Group has exposure to market risks. Market risk is the risk that changes in market prices will have a negative impact on the Group’s income or the value of its financial instrument holdings. Market risks arise from open positions in (a) foreign currencies, (b) interest bearing assets and liabilities and (c) equity products, all of which are exposed to general and specific market movements. The objective of market risk management is to monitor and control market risk exposures within acceptable limits, while optimising the return on investments. Management sets limits on the value of risk that may be accepted, which is monitored on a daily basis. However, the use of this approach does not prevent losses outside of these limits in the event of more significant market movements.

Sensitivities to market risks included below are based on a change in a factor while holding all other factors constant. In practice this is unlikely to occur and changes in some of the factors may be correlated – for example, changes in interest rate and changes in foreign currency rates.

Currency risk

The Group is exposed to currency risk on sales, purchases and borrowings which are denominated in currencies other than the functional currency. Borrowings are denominated in currencies that match the cash flows generated by operating entities in the Group. Therefore, in most cases, economic hedging is achieved without derivatives. In respect of other monetary assets and liabilities denominated in foreign currencies, the Group ensures that its net exposure is kept to an acceptable level by planning future expenses taking into consideration the currency of payment. The Group is mainly exposed to the risk of US Dollars currency fluctuations.

The Group’s exposure to currency risk was as follows:

In millions of Kazakhstani Tenge 2020 2019
Denominated in US Dollars
Trade accounts receivable 105,945 84,105
Current bank accounts 60,125 50,635
Loans to related parties* 11,512 13,294
Demand deposits - 2,296
Other accounts receivable - 3
Term deposits - 1
Other assets 13,300 1,028
Total assets 190,882 151,362
Bonds* (77,088) (70,016)
Bank and non-bank loans (6,734) (71,848)
Trade and other accounts payable (1,079) (2,055)
Other financial liabilities (10,593) (50)
Total liabilities (95,494) (143,969)
Net exposure to currency risk 95,388 7,393

* loans to related parties and bonds are nominated in Tenge, but are subject to indexation for changes in USD/Tenge exchange rate.

A 14% weakening and 11% strengthening of Tenge against US Dollar as at 31 December 2020 (2019: 12% weakening and 9% strengthening) would increase/(decrease) equity and profit or loss by the amounts shown below.

In millions of Kazakhstani Tenge 2020 2019
US Dollar strengthening by 14% (2019: 12%) 10,688 710
US Dollar weakening by 11% (2019: 9%) (8,394) (532)

Movements of Tenge against US Dollar above represent reasonably possible changes in market risk estimated by analysing annual standard deviations based on the historical market data for 2020.

Price risk on uranium products

The Group is exposed to the effect of fluctuations in the price of uranium, which is quoted in US Dollar on the international markets. The Group prepares an annual budget based on future uranium prices.

Uranium prices historically fluctuate and are affected by numerous factors outside of the Group’s control, including, but not limited to:

  • demand for uranium used as fuel by nuclear power stations
  • depleting levels of secondary sources such as recycling and blended down highly enriched stocks available to close the gap of the excess demand over supply
  • impact of regulations by the International Agency on Nuclear Energy
  • other factors related specifically to uranium industry

At the end of the reporting period there was no significant impact of commodity price risk on the Group’s financial assets and financial liabilities.

Interest rate risk

Changes in interest rates impact loans and borrowings by changing either their fair value (fixed rate debt) or their future cash flows (floating rate debt). At the time of raising new loans or borrowings, management uses its judgement to decide whether it believes that a fixed or a floating rate would be more favourable to the Group over the expected period until maturity. As at 31 December 2020 approximately 93% (2019: 90%) of the Groups borrowings have a fixed interest rate.

At the reporting date, the interest rate profile of the Group’s interest-bearing financial instruments was:

In millions of Kazakhstani Tenge 2020 2019
Fixed rate instruments
Restricted cash 15,200 13,652
Demand deposits 14,987 14,146
Loans to related parties 11,512 12,923
Reverse repo transaction 3,118 -
Term deposits 15 14
Bonds (77,088) (70,016)
Promissory note issued (14,004) (17,460)
Bank loans - (55,531)
Non-bank loans - (641)
Net position (46,260) (102,913)
Floating rate instruments
Bank loans (6,734) (16,316)
Net position (6,734) (16,316)

Fair value sensitivity analysis for fixed rate instruments

The Group does not account for any fixed rate financial assets and financial liabilities at fair value through profit or loss. Therefore a change in interest rates at the reporting date would not affect profit or loss. However, fixed rate financial assets and financial liabilities are exposed to fair value risk from change in interest rates. Reasonably possible changes in interest rates do not significantly affect fair values of those financial assets and financial liabilities.

Future cash flows sensitivity analysis for floating rate instruments

An increase (decrease) in interest rates of 100 (25) basis points in 2020 (2019: increase of 20 and decrease of 20 basis points) at the reporting date would have decreased (increased) equity and profit or loss by the amounts shown below. These amounts represent management’s assessment of reasonably possible changes in the interest rates based upon current interest rates and the current economic environment. This analysis assumes that all other variables, in particular foreign currency rates, remain constant and that balances due were outstanding for the year.

In millions of Kazakhstani Tenge 2020 2019
Increase of 100 basis points (2020), 20 basis points (2019) (54) (26)
Decrease of 25 basis points (2020), 20 basis points (2019) 13 26

Fair values versus carrying amounts

With the exception of instruments specified in the following table, the Group believes that the carrying value of financial assets and financial liabilities are recognised in the consolidated financial statements approximate their fair value:

In millions of Kazakhstani Tenge 2020 2019
Carrying value Fair value Carrying value Fair value
Financial liabilities
Historical costs liabilities 1,016 759 1,478 1,097
Total 1,016 759 1,478 1,097

In assessing fair values, management uses the following major methods and assumptions: (a) for interest free financial liabilities and financial liabilities with fixed interest rate, financial liabilities were discounted at effective interest rate which approximates the market rate; (b) for financial liabilities with floating interest rate, the fair value is not materially different from the carrying amount because the effect of the time value of money is immaterial.

Capital management

The Group’s policy is to maintain a strong capital base so as to safeguard the Group’s ability to continue as a going concern, to maintain investor, creditor and market confidence, to provide returns for shareholders, to maintain an optimal capital structure to reduce the cost of capital, and to sustain future development of the business. Capital includes all capital and reserves of the Group as recorded in the consolidated statements of financial position.

The Group’s loan agreements with banks include covenants, pursuant to which the Group must comply with applicable laws and regulations, cannot create or permit any security over its assets or dispose assets, unless allowed by the loan agreements, and must obtain the lenders’ approval for any acquisitions, mergers and disposals. The Group may also sell uranium for non-military purposes and only to customers residing in countries which signed the Nuclear Non-Proliferation Treaty and are members of the International Agency on Nuclear Energy. In addition, the Group must maintain certain key financial covenants based on the Group’s consolidated financial information, such as:

  • the debt to equity ratio of not greater than 1
  • the debt ratio to earnings before interest, taxes, depreciation and amortisation (Debt/EBITDA) of not greater than 3.5.

The Group’s internal quantitative capital management targets are similar to externally imposed requirements.

The Group applies the Policy on borrowings and financial sustainability management, which is aimed to manage financial risks by adopting common principles and rules of debt management and financial sustainability for non-financial organisations.

The Group has complied with all externally imposed capital requirements during 2020 and 2019, requirements associated with borrowing facilities.

41. Fair Value Disclosures

Fair value measurements are analysed by level in the fair value hierarchy as follows: (i) level one are measurements at quoted prices (unadjusted) in active markets for identical assets or liabilities, (ii) level two measurements are valuations techniques with all material inputs observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices), and (iii) level three measurements are valuations not based on observable market data (that is, unobservable inputs). Management applies judgement in categorising financial instruments using the fair value hierarchy. If a fair value measurement uses observable inputs that require significant adjustment, that measurement is a Level 3 measurement. The significance of a valuation input is assessed against the fair value measurement in its entirety.

Assets and liabilities not measured at fair value but for which fair value is disclosed

Estimates of all assets and liabilities not measured at fair value but for which fair value is disclosed are level 3 of the fair value hierarchy.

The fair values in level 3 of the fair value hierarchy were estimated using the discounted cash flows valuation technique. The fair value of floating rate instruments that are not quoted in an active market was estimated to be equal to their carrying amount. The fair value of unquoted fixed interest rate instruments was estimated based on estimated future cash flows expected to be received discounted at current interest rates for new instruments with similar credit risks and remaining maturities.

Financial assets carried at amortised cost

The fair value of floating rate instruments is normally their carrying amount. Estimate of all financial assets carried at amortised cost is level 3 measurement. The estimated fair value of fixed interest rate instruments is based on estimated future cash flows expected to be received discounted at current interest rates for new instruments with similar credit risks and remaining maturities. Discount rates used depend on the credit risk of the counterparty.

Liabilities carried at amortised cost

Fair values of other liabilities were determined using valuation techniques. The estimated fair value of fixed interest rate instruments with stated maturities were estimated based on expected cash flows discounted at current interest rates for new instruments with similar credit risks and remaining maturities. The fair value of liabilities repayable on demand or after a notice period (“demandable liabilities”) is estimated as the amount payable on demand, discounted from the first date on which the amount could be required to be paid. The discount rates used ranged from 4.5% p.a. to 11.8% p.a. depending on the length and currency of the liability.

42. Presentation of Financial Instruments by Measurement Category

For the purposes of measurement, IFRS 9 Financial Instruments classifies financial assets into the following categories: (a) financial assets at FVTPL; (b) debt instruments at FVOCI, (c) financial assets at AC. Financial assets at FVTPL have two subcategories: (i) assets mandatorily measured at FVTPL, and (ii) assets designated as such upon initial recognition or subsequently. All of the Group’s financial assets as of the end of reporting period fell into the category AC, except for the financial derivative asset, classified as FVTPL. All of the Group’s financial liabilities were carried at AC. Fair value is approximate to carrying amount.

43. Business Combinations

The net result from business combinations in 2019 comprised an excess of fair value of investment in the associate over its carrying value of Tenge 54,649 million at the acquisition date. Additional information is provided further in this note.

In millions of Kazakhstani Tenge
JV Khorasan-U LLP
Fair value of the investment in associate at date of acquisition 85,803
Less: carrying value of the investments at date of acquisition (31,154)
Net gain from business combinations – JV Khorasan-U LLP 54,649

Baiken-U LLP, Kyzylkum LLP and JV Khorasan-U LLP

In December 2018, the Group finalised a settlement deed to complete the acquisition of 40.05% of the shares of Energy Asia (BVI) Limited and a 16.02% participatory interest in the chartered capital of JV Khorasan-U LLP from Energy Asia Holdings (BVI) Limited. As a result of this transaction:

  • the Group’s ownership interest in Baiken-U LLP, Kyzylkum LLP and JV Khorasan-U LLP increased to 52.5%, 50% and 50% respectively. Prior completion of the transaction those ownership interests were 14.45%, 33.98% and 33.98%, respectively
  • the Group maintained significant influence over Kyzylkum LLP and JV Khorasan-U LLP. The Group concluded that as at 31 December 2018 no control was obtained over JV Khorasan-U LLP pending shareholders’ approval of changes in the charter of the investee that will enable the Group to exercise the majority of votes

JV Khorasan-U LLP

In February 2019, the owners of JV Khorasan-U LLP approved changes to the charter documents of that entity, which gave the Group the ability to cast a majority vote at the supervisory board. As a result, the Group obtained control over JV Khorasan-U LLP from that date. The Group assessed the fair value:

In millions of Kazakhstani Tenge
Cash consideration paid -
Net liabilities from pre-existing relationship (1,948)
Total consideration transferred (1,948)
Fair value of investment associate prior to the acquisition 85,803
Total purchase consideration and value of previously held interest in the acquiree 85,803

Liabilities from pre-existing relationship represent receivables of JV Khorasan-U LLP from the Group, mainly for delivery of uranium.

The difference between the consideration transferred and the fair value of the acquiree’s identifiable assets, liabilities assumed and contingent liabilities led to recognition of a bargain purchase gain, as presented in the table below.

In millions of Kazakhstani Tenge Fair value
Cash and cash equivalents 5,563
Accounts receivable 10,020
Inventories 8,873
Property, plant and equipment 181
Mine development assets 22,627
Mineral rights 178,856
Other assets 6,105
Promissory note (17,441)
Accounts payable (4,527)
Deferred tax liability (36,873)
Other liabilities (1,777)
Carrying value of identifiable net assets acquired (before elimination of intra-group balances) 171,607
Less: elimination of intra-group balances (1,948)
Carrying value of identifiable net assets acquired 169,659
Less: non-controlling interest (85,804)
Total purchase consideration and value of previously held interest in the acquire 83,855

The valuation of identifiable assets and liabilities was performed by an independent professional appraiser. Based on the valuation, the assets value increased by Tenge 184,221 million to fair value, mainly due to valuation of the subsoil use (mineral) right.

The non-controlling interest represents a share in the net assets of the acquire attributable to owners of the non-controlling interest. The non-controlling interest was determined based on proportionate share of the acquire’s net assets’ fair value.

Glossary

Term Definition
AIX Astana International Exchange
CO2 Carbon dioxide
COSO Internal Control - Integrated Framework
CRM Customer Relationship Management
Code Corporate Governance Code, at entities where over 50 per cent of the shares (equity stakes) are owned directly or indirectly by Sovereign Wealth Fund Samruk-Kazyna JSC
CIS Commonwealth of Independent States
EBITDA Profit before interest, taxes and depreciation
ERP Enterprise resource planning
ESAP Environmental and Social Action Plan
EVA Economic Value Added (English EVA, Economic Value Added) — an indicator of the economic profit of the enterprise after the payment of all taxes and fees for all capital invested in the enterprise.
EPIS E-Procurement Information System
Fund Sovereign Wealth Fund Samruk-Kazyna Joint-Stock Company
GHG Greenhouse Gases
GRI Global Reporting Initiative
GDP Global Depositary Receipts
Group Kazatomprom and its consolidated subsidiaries
GMIS Geological and Mining Information System
Holding The Group, joint ventures and associated companies
HR Human Resources
HSE Production Safety Committee of the Board of Directors of Kazatomprom
ISR In-situ Leach Recovery
IEC Industrial Environmental Control
ICMM International Council on Mining and Metals
IPO Initial Public Offering
ISO International Organization for Standardization
ISSA International Social Security Association
IPS Integrated Planning System
IT Information Technologies
IFRS International Financial Reporting Standards
IAS Internal Auditor Service
ISO 45001 International Standard of Occupational Health and Safety Management Systems / Occupational Health and Safety Management Systems — Requirements
IAEA International Atomic Energy Agency
IAEA LEU Bank / IAEA Fuel Bank International Atomic Energy Agency’s Low Enriched Uranium Bank
JV Joint Venture
KAP / Kazatomprom / Company NAC Kazatomprom JSC
KPI Key Performance Indicator
LLP Limited Liability Partnership
Local content Percentage of the cost of labour of citizens of the Republic of Kazakhstan engaged in fulfilling a procurement contract in the total payroll budget of the contract, and/or the percentage of the cost of a share (shares) of local origin determined in a product (products) in accordance with the substantial transformation or finished production criteria by residents of the Republic of Kazakhstan in the total cost of the product (products) under the relevant purchase contract.
LSE London Stock Exchange (London Stock Exchange)
LTIFR Lost Time Injury Frequency Rate
LEU Low Enriched Uranium
MNPP Mangystau Nuclear Power Plant
NEA Nuclear Energy Agency
NFC Nuclear Fuel Cycle
NAV Net Asset Value
NEI Nuclear Energy Institute
PCR test Polymerase Chain Reaction test
PQC Prequalification of candidates
RF Russian Federation
RK Republic of Kazakhstan
RMS Risk Management System
RPC Reactive Power Compensators
REGSUN Annual meeting on the safety regulation of uranium production and natural radioactive material
SS of the RK ISO/ IEC 17025 State Standard of the Republic of Kazakhstan General competency requirements for testing and calibration laboratories
Samruk-Kazyna Samruk-Kazyna Joint-Stock Company
SPO Secondary Public Offering
SLRW Solid Low-Level Radioactive Waste
R&D Research and Development
WNA World Nuclear Association
WNTI World Nuclear Transport Institute
U3O8 Uranium Oxide Concentrate
UF6 Uranium hexafluoride
UO2 Uranium Dioxide
UO3 Uranium Trioxide
UN United Nations
UN FC CC UN Framework Convention on Climate Change
USA United States of America
UEC Uranium Enrichment Centre
UN SDGs UN Sustainable Development Goals

UK Tax Information

This review is based on UK law and UK government tax and customs duties at the date of this document each of which is subject to change, possibly retroactively. Unless otherwise indicated this review only addresses some of the effects of UK taxation on individuals who are the absolute beneficial owners of shares or GDRs and who (1) are UK residents for tax purposes; (2) are not residents for tax purposes in any other jurisdiction and (3) do not have a permanent establishment in the Republic of Kazakhstan which is associated with the ownership of shares or GDRs (hereinafter — Holders from the UK).

In addition this review (1) considers only the tax consequences for UK Holders who hold shares and GDRs as equity, and does not consider tax consequences that may be relevant to some other categories of UK Holders such as dealers; (2) it is assumed that the UK Holder does not directly or indirectly control 10 or more percent of the voting shares of the Company; (3) it is assumed that the holder of the GDR has a beneficial ownership of the underlying shares and dividends on such shares; and (4) tax consequences for UK Holders which are insurance companies, investment companies, charities, or pension funds, are not considered.

This review is a general guide and is not intended and should not be construed by specific Holders from the UK as legal or tax advice. Accordingly, investors should consult their tax advisers regarding general tax consequences including the consequences of acquiring, holding and disposing of shares or GDRs in accordance with UK law and UK tax and customs administration practices in their particular case.

Withholding tax

Assuming that income derived from the GDR does not have a source in the UK, such income should not be taxed at the source of payment in the UK. Dividends on shares will not be taxed at the UK source.

Dividends taxation

A UK holder receiving a dividend on shares or GDRs may be required to pay UK income or corporate tax (as the case may be) on the gross amount of the dividend paid before deduction of Kazakhstan taxes at the source of payment, taking into account the presence of any amount set off against Kazakhstan tax at the source of payment. UK holder — an individual who is a resident and resides in the UK will pay UK income tax on dividends paid on shares or GDRs that are subject to the actual tax exemption on the first £5,000 of all dividends (zero dividend rate) received for the relevant tax year, including dividends received from any other equity investments for the same tax year. UK holder — an individual who is a resident but does not reside in the UK and entitled to select UK taxation based on the transfer of funds (and where necessary, paying a transfer fee), will pay UK income tax on dividends paid on shares or GDR, to the extent that the dividend is transferred or considered to be transferred to the UK. A UK holder who is a UK resident company for tax purposes should not be subject to corporate tax on dividends paid on shares or GDRs, unless it is subject to certain rules against tax evasion.

Taxation at exclusion or conditional exclusion

The alienation of the Holder’s shares from the UK in stocks or GDRs may result in taxable income or an allowable deduction for tax purposes for UK taxable income depending on the position of the Holder from the UK and subject to tax exemption. A holder from the UK who is a resident individual and resides in the UK will be required to pay UK capital gains tax on taxable income upon alienation of a share in shares or GDRs. A UK holder who is a resident individual who does not reside in the UK and has the right to choose taxation in the UK based on the transfer of funds (and, where necessary, paying a transfer fee), will pay the UK capital gains tax to the extent that in which taxable income derived from the disposal of a share in shares or GDRs is transferred or deemed to be transferred to the UK. In particular, transactions with GDRs on the London Stock Exchange may result in the transfer of profits, which, accordingly, will be subject to UK capital gains tax. In particular transactions with GDRs on the London Stock Exchange may result in the transfer of profits which, accordingly, will be subject to UK capital gains tax. An individual - a holder of shares or GDRs who ceases to be a resident or has not resided in the UK for tax purposes for less than five full years and alienates such shares or GDRs for such a period, may be required to pay UK capital gains tax upon returning to the UK, despite the fact that during the alienation he was not a resident and did not live in the UK. A UK holder who is a legal entity will pay UK corporate tax on any taxable income from the sale of shares or GDRs.

Action of taxes of Kazakhstan at the source of payment

Dividends on shares and GDRs are subject to Kazakhstan tax at the source of payment. A holder from the UK — an individual — resident must have the right to offset the Kazakhstan tax at the source of payment withheld from such payments against UK income tax on such payments in accordance with the procedure for calculating such a setoff amount in the UK. A UK holder, a UK resident company, usually does not pay corporate tax on dividends paid and, therefore, will usually not be able to claim a deduction from any Kazakhstan taxes at the source of payment.

Stamp and equivalent of stamp tax (SEST)

Assuming that a document executing a transaction or containing an agreement to transfer one or more shares or GDRs, (i) is not signed in the UK or (ii) does not relate to any property located in the UK, or an act committed or performed in UK (which may include participation in payments to bank accounts in the UK) such a document should not be subject to stamp duty on declared value. Even if the document completing the transaction or containing an agreement to transfer one or more shares or GDRs, (i) is signed in the UK and/or (ii) concerns any property located in the UK, or an act committed or performed in the UK, in practice, there should be no need to pay stamp duty on declared value for such a document in the UK, if such a document is not required for any purpose in the UK. If there is a need to pay stamp duty on declared value in the UK, then it may be necessary to pay interest and fines. Since GDRs are securities whose value is not expressed in pounds sterling, the stamp duty on a “bearer document” should not be paid either for the issue of GDRs or for the transfer of securities that are transferred through the GDRs. Assuming that shares (i) are not registered in a registry located in the UK, or (ii) are not combined with shares issued by a UK-registered company, the transfer of shares or GDRs should not be subject to SEST.

Contacts

GRI 102-1, 102-3, 102-5, 102-53

National Atomic Company Kazatomprom Joint Stock Company

17/12, E-10 Street, Z05T1X3 Nur-Sultan, Republic of Kazakhstan
Tel: +7 7172 55 13 98
Fax: +7 7172 55 13 99
E-mail: nac@kazatomprom.kz
Website: www.kazatomprom.kz

Should you have any questions, comments or proposals concerning this Report, or if you would like to receive a printed version, please contact the following employees of Kazatomprom:

Investor Relations

Cory Cos, Director of IR and PR

Tel: +7 7172 45 81 80
E-mail: ir@kazatomprom.kz
Public Relations and Internal Communications

Torgyn Mukayeva, chief expert of GR and PR Department

Tel: +7 7172 45 80 63
E-mail: pr@kazatomprom.kz
Corporate Secretary

Maira Tnymbergenova

Tel: +7 7172 45 81 63
E-mail: mtnymbergenova@kazatomprom.kz
Auditors

PricewaterhouseCoopers LLP

34, Al Farabi Avenue, Building А, 4th floor А25D5F6 Almaty, Kazakhstan
Tel: +7 727 330 32 00
www.pwc.com/kz
Depository Bank

Citibank, N.A.

Citibank, N.A. 388 Greenwich Street, New York New York 10013, USA
Tel: +1-212-816-6622 / +1-917-533-7887