Promoting socio‑economic development

We play a key role in the national infrastructure, providing electricity to around 19 million consumers and creating more than 17,000 jobs across Kazakhstan. Our activities contribute to regional economic growth and establish fair relationships with suppliers and contractors. We also prioritise improving people's lives and supporting social initiatives by investing in infrastructure, education and cleaner energy from renewable energy sources.

The basis of the social strategy of Samruk-Energy JSC is an integrated approach to sustainable development, enshrined in a number of regulatory documents, including the Sustainable Development Guidelines, Personnel Policy, and Labour and Environmental Protection Policy. These documents define the principles and strategic directions of interaction with local communities and other stakeholders, which allows the Company to effectively integrate social initiatives into its operations. In particular, the Company has implemented the Policy on engagement with local communities developed in accordance with the long-term Strategy of Samruk-Energy JSC for 2022–2031. This policy takes into account the existing corporate standards and norms, as well as the requirements of the applicable legislation of the Republic of Kazakhstan, ensuring harmonious and purposeful development of relations with key stakeholders.

Responsibilities and obligations in the area of external social policy management and interaction with local communities are carried out by the Corporate Governance and Sustainable Development Department, the Human Resources Management Department, and each structural subdivision within the scope of its activity.

Samruk-Energy JSC maintains an active dialogue with stakeholders at all stages of implementation of the Company's projects and takes into account their interests at all levels of activity management. The strategy of interaction with local communities describes approaches to identifying stakeholders, providing feedback and openness in informing (for more details see Stakeholder Engagement).

The main mechanisms of interaction with local communities are:

• identification and analysis of stakeholders who are (will be) directly or indirectly affected or may be affected by the interaction and development of local communities;
• planning, defining procedures at all stages of preparation and implementation, consulting;
• disclosure of information to accept and understand risks/consequences, benefits, and monitoring and reporting;
• grievance mechanism.

Socio-economic contribution

In the reporting period, we consistently implemented measures aimed at ensuring long-term fruitful relations with the regions where we operate and strengthening the image of a socially responsible Company.

We make a significant contribution to the well-being and socio-economic development of the regions where we operate through:

• supplying the population with electricity, heat and coal;
• providing jobs for the local population, paying social taxes and contributions, pension and insurance payments, covering medical service costs for employees, and offering other forms of employee support;
• implementation of investment projects that affect the development of the regions where the Company operates, improve the lives of the population, and create jobs;
• maintenance of public infrastructure to ensure significant revenues to regional budgets through taxes;
• investment in local communities through donations to charitable and non-governmental organisations and research institutions through a single operator, the Samruk-Kazyna Trust Social Project Development Fund;
• supporting social programmes, cultural and educational events.

In 2024, the Company implemented a number of social initiatives aimed at supporting society. Within the framework of humanitarian programmes, assistance to flood victims was organised, including collection of necessary resources and provision of financial support in the amount of KZT 800 million. The Company also took an active part in the charity marathon organised by Samruk-Kazyna JSC, allocating KZT 18 million for this purpose.

We have a portfolio of investment projects that are in line with the country's national economic development programmes and responsible investment principles.

In addition, we have identified 3 significant⁴¹ investment projects, the implementation of which will create new jobs and develop infrastructure in the regions where we operate.

In line with the principles of responsible investment, we consider environmental, social and governance factors when making investment decisions, in order to effectively manage risk. The Company's stakeholder engagement varies depending on the scale and nature of the project, potential risks and negative impacts on affected communities and the environment, and the level of public interest.

When implementing new projects, we consult with the local community through public hearings, preparing relevant materials within the legal framework, and liaising with the authorities. Disagreements are resolved within the legal framework, and the overall assessment of projects takes into account the interests of local communities.

Economic sustainability of regions

We create economic value for our employees and local communities, and as a socially responsible Company, we support the well-being of the country through taxes, jobs and infrastructure.

The economic value created reflects our main sources of income generation for the Company, namely income from the generation, transmission and marketing of electricity, as well as from coal sales and fees received.

The created value is distributed among suppliers and contractors, employees of Samruk-Energy JSC, shareholders and creditors, the state, and local communities.

At the end of 2024, the created economic value totalled KZT 579 billion and distributed economic value totalled KZT 491 billion, resulting in unallocated economic value of KZT 88 billion. According to the approved Development Plan for 2025-2029, it is planned to increase the created and distributed economic value in 2025.

Economic value created and distributed, thousand KZT

Tax obligations

Being a major taxpayer and strictly complying with the regulatory and legal legislation of the Republic of Kazakhstan in the field of taxation, we contribute to the overall development of the country's regions.

Kazakhstan tax legislation and practice are in a state of continuous development and therefore are subject to varying interpretations and frequent changes, which may be retroactive. In some instances, tax legislation refers to IFRS provisions to determine the tax base and the interpretation of the relevant IFRS provisions by the Kazakhstani tax authorities may differ from the accounting policies, judgements and estimates applied by management in the preparation of these consolidated financial statements, which may result in additional tax liabilities for the Group of companies of Samruk-Energy JSC. Tax authorities may conduct retrospective audits within five years after the end of the tax year.

Since July 2020, the State Revenue Committee of the Ministry of Finance of the Republic of Kazakhstan (hereinafter – the SRC) has launched a pilot project on the introduction of horizontal monitoring, which lasted until 31 December 2023. Thus, in 2021–2022, within the framework of the pilot project on horizontal monitoring, the SRC examined historical data at EGRES-1 LLP and Samruk-Energy JSC (Corporate Centre) for a fiveyear period, following the results of which tax audits were conducted and Notifications on the results of tax audits were issued. The main violations identified included deductions for loan interest, as well as understatement of CIT at source. We disagreed, and lawsuits and complaints were filed with the courts and the Appeal Commission of the Ministry of Finance of the Republic of Kazakhstan. In December 2023, the Appeal Commission of the Ministry of Finance of the Republic of Kazakhstan ruled in favour of the Group on the Corporate Centre, on 14 August 2024, the Supreme Court ruled in favour of EGRES-1 on the deduction of loan interest that was used for the “Unit No. 1 Restoration Project” and dividend payment obligations, and in favour of the tax authority on the deduction of loan interest that was used for the acquisition of bonds. As a result, EGRES-1 paid a fine and penalty in the amount of KZT 502 million out of the previously accrued provision.

In order to regulate tax accounting based on the principles of obligation, certainty and unity of the tax system, we implemented the Tax Accounting Policy of Samruk- Energy JSC, developed on the basis of the Tax Code of the Republic of Kazakhstan and legislative acts in the field of taxation of the Republic of Kazakhstan, as well as taking into account the requirements of international financial reporting standards.

The Tax Policy of Samruk-Energy JSC shall be approved by the Company's Management Board. Decision on amendments and additions to the Tax Policy shall be made by the Company's Management Board. Heads of structural subdivisions of the financial and economic block may be the initiators of changes. Control over the implementation of the requirements is exercised by the Managing Director for Economics and Finance. The Director of the Accounting and Tax Accounting Department is responsible for management and fulfilment of the requirements, for compliance and reliability of information presentation.

Changes in the Company's Tax Policy may be initiated in cases: when changes are made to the Tax Code affecting changes in tax accounting, as well as if these changes will lead to a more reliable presentation of events and business transactions in the Company's tax reporting.

The adopted Tax Policy is consistent with the overall business strategy and approach to corporate governance and risk management.

The approach to taxation is to fully comply with applicable tax laws, treaties, regulations and other tax instructions, ensuring proper control over tax accounting and tax reporting.

To support and manage risk across all of our business units, we have implemented a process to regularly review our risk management policies and procedures to incorporate new developments and implement best practices.

Ongoing changes in international and local tax laws, as well as changing practice in the application of these laws in the courts, may lead to tax disputes and potential additional tax liabilities, therefore we continuously monitor and analyse domestic and international tax legislation, case law, guidance and practice. We regularly evaluate our tax positions to ensure that they are adequately reflected in our financial statements.

Tax accounting in the Company is based on accounting data, which is performed by the Department of Financial and Tax Accounting in accordance with regulatory legal acts and internal documents:

• The Code of the Republic of Kazakhstan On Taxes and Other Obligatory Payments to the Budget;
• The Law of the Republic of Kazakhstan On Accounting and Financial Reporting;
• International Financial Reporting Standards;
• The Standard Chart of Accounts approved by the order of the Minister of Finance of the Republic of Kazakhstan;
• The Company's corporate accounting policies;
• The Company's Corporate Chart of Accounts;
• Methodological recommendations, instructions, internal regulations and other normative acts on organisation and maintenance of accounting records.

The Tax Policy has a low tolerance for tax risk – we seek to minimise the risk of disputes with the tax authorities by being open and transparent about our tax operations. We seek to mitigate the level of tax risk arising from operations, to the extent practicable, by giving due attention to processes that could materially affect compliance with tax obligations.

Our approach is based on managing tax risks and tax payments in accordance with applicable legal requirements and the highest long-term expectations of our shareholders, taking into account operational, economic and reputational factors. Maintaining an open dialogue with tax authorities at various levels allows us to avoid adverse tax consequences and is an integral aspect of our Tax Policy.

Stakeholder engagement on tax matters

We maintain an active dialogue with stakeholders on tax-related issues. We advocate transparent interaction and open communication with tax authorities, ensuring that all reporting required by applicable law is done in a timely manner.

In connection with tax risks arising in the course of implementation of the MF RK KGD project “Horizontal Monitoring”, work was carried out with the state authorities to clarify the correctness of attributing the equipment for generation and conversion of electric energy in accordance with the Classifier of Fixed Assets to the group “Equipment”, which resulted in a favourable opinion for the Company.

We also take part in discussions on amendments to the Tax Code regarding VAT and CIT at the source of payment. Proposals are submitted for discussion of issues to be included in the New Tax Code.

We do not use unfair tax evasion schemes in carrying out our activities.

You can report any incidents and/or suspected facts of tax law violations to the “24/7 hotline” by sending a message: to mail@sk-hotline.kz, to WhatsApp 8 771 191 88 16, by phone 8 800 080 47 47, or use the feedback form on the website https://www.samruk-energy.kz/ru/navigation-andsupport/

Development of local communities

We actively participate in the implementation of various projects and programmes that contribute to the development of socio-economic aspects in the regions where we operate and promote interaction with local communities. The activity of Samruk-Energy JSC is based on creation and implementation of programmes and projects formed annually taking into account the needs and priorities of stakeholders. The initiatives are aimed at achieving the Company's strategic goals in the reporting period, including the UN SDGs.

Main projects and programmes implemented in 2024