KEGOC’s Business Transformation Programme Justification of Changes Astana 2015

PositionFull nameStatus Chief Business Transformation Officer of Samruk-Kazyna JSC Adamas IlkyavichusApproved Sponsor of KEGOC’s Transformation Programme Bakytzhan KazhiyevApproved Chief Business Transformation Officer of KEGOC JSC Sergey KatyshevApproved Head of KEGOC’s Programme Management Office Yuriy MarulinApproved Approved by KEGOC’s Modernization Board Agreements and Approvals

To achieve the Kazakhstan 2050 goals of the President’s Address, we should accelerate our activity – the Fund manages country’s largest companies and contribution of the Fund group in joining the top thirty most competitive countries in the world by 2050 should be significant. That is why we should use all tools to optimize and improve efficiency of our work, and ensure effectiveness in financial, industrial, social and other areas. Background We are starting a new Kazakhstan 2050 initiative, which I announced in my Address to the people of Kazakhstan. Our country should do everything possible and work towards joining the top thirty most competitive countries in the world. Nursultan Nazarbayev, The President of the Republic of Kazakhstan Umirzak Shukeyev, Chairman of the Management Board of Samruk-Kazyna

Our current achievements make a firm foundation for future development. The world is changing fast, and we all are the witnesses of economic changes in our country and in the world, fast and sustainable development of technologies, alternation of generations and increasing number of young professionals. All these have significant impact on sustainability of business development, including our company. Business Transformation Programme will help us to realise our strengths and also determine areas for further development; we need this to stay on the leading positions in our industry. Bakytzhan Kazhiyev, Chairman of the Management Board of KEGOC Background From this day onward each of us should ask himself: ‘What step and improvement have I made?’ This great path will consist of these daily steps and consistent improvements. Adamas Ilkyavichus, Chief Business Transformation Officer of Samruk-Kazyna

Main goals of KEGOC’s Business Transformation Programme Bring the company to the level of the leading technical and system operators Achieve highest corporate governance level Improve financial and operating efficiency Make careful analysis, reengineering and standardization of company’s key business-processes

KEGOC is One of the Regional Industry Leaders  VISION In 2025 KEGOC will become world class company and a centre of expertise in electric power industry on a regional scale  MISSION Ensure reliability and efficient development of Kazakhstan UPS in accordance with technical, economic, ecologic requirements, occupational safety and health care standards  KEGOC TODAY One of the leaders among transmission companies in CIS Over KZT 100 billion of investments into construction of new network facilities and equipment rehabilitation Confirmed highest social stability rating of the personnel among Samruk- Kazyna holding companies (2014 data) Progressive management and maintenance of high standards of corporate governance

Transformation Programme will Help to Develop the Strengths of KEGOC Challenges High system risks High depreciation of equipment Limitations of tariff ing methodology Lack of formalization of NPG’s necessary reliability level by the Government and financial objectives by the Shareholder Loss of the skilled labour Strengths Existing strengths: Leader among transmission companies in CIS power industry Ultimate support from the Government and Shareholder Minor lag behind the western companies (see the diagram) Long-term strategic vision of NPG development Strengths after the transformation: Implementation of the best management practices and technologies Timely, qualitative and accurate data for making management decisions Rational use of hidden reserves and increase in labor productivity Increase transmission line capacity Provision of observability of the network and data processing in real time Provision of self-diagnosis and early warning of system emergencies TRANSFORMATION Source: KEGOC Long-Term Development Strategy 2025 Western Companies

Key Transformation Areas will Also Support Development of the Initiatives of 2025 Development Strategy Standardization and optimization of business-processes and structures Improvement of operating efficiency Creation of common information area and integrated control system Creation of business culture of continual improvement Objectives of Transformation Programme Key directions of transformation Processes Revise internal processes towards improvement of their efficiency and enhance accountability of the process owners Benchmarking with leading technical and system operators Improve energy efficiency and ecological performance Reduce bureaucracy Improve organizational structure efficiency People Improve storage and transfer of unique special knowledge and maintain high qualification of the personnel Formalize company’s value system shared by all employees Develop management skills focused on innovations promotion Team up around the common goals and common problems solving Raise awareness of personnel of their contribution in common goal Technologies Automate the processes in accordance with the modern trends Create common information area Create active-adaptive (smart) NPG Strategic directions of KEGOC Ensure proper operation and development of Kazakhstan NPG Improve operating efficiency Enhance the shareholders' value Improve and enhance electric power market efficiency Develop corporate governing practices and support sustainable development Achieve solid partnership with electric power companies of the neighboring countries

Transformation Programme Engage the Personnel for the Benefit of the Company Benefits for the personnel in the KEGOC’s business transformation centre^ Wider professional horizons Personal experience and knowledge applied for the benefit of the whole company New experience and skills of diagnosis and optimization of business processes Collaborative work in world class consultants team Benefits for KEGOC’s personnel: Work in the state of art and progressive company that appreciates high professionalism and competence Reduced of inefficient work Involvement into improvement of their labour results Uniting and trusting working environment

Implementation of the main part of the Programme according to phase-by-phase and baseline design plans, and also 6 week flexible plan Design and development of net result at all phases of the Programme Arrangement and provision of Project office External supervision of the Programme Methodological support of the Programme Planning and monitoring the progress and results of the Programme Consultant Knowledge of best global practices, experience and expertise in electric energy sector The transformation team will consist from KEGOC’s employees, Fund’s experts and engaged consultants Roles and Contributions of Programme Participants

Stage 0: Preparation – prepare and approve the framework documents, team building, engage the consultants. Stage 1: Diagnosis and design – identify the interested parties and interaction methods, list of directions for Company transformation, value chain analysis, high levels process landscape, automation prioritization, etc. Stage 2: Planning – approval of transformation projects implementation schedule. Stage 3: Implementation – launch of the projects approved for implementation in accordance with schedule. Stages of Transformation Implementation Stages Preparation Diagnostics and design Planning Implementation