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About the Report

General information

This Kazatomprom Integrated Annual Report 2022 (the Report) is the twelfth 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 2021.

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.

GRI 2-4

Compared to Integrated Annual Report 2021, 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 2022, 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 www.kazatomprom.kz.

The Report comprehensively discloses:

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

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:

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 2-3

The scope of the Report corresponds to the annual reporting cycle of the Company. The previous Report was published in April 2022. Electronic copies of the reports for the previous years are available on the official websitе of the Company. The current Report discloses the operations and performance of Kazatomprom for the period from 1 January 2022 to 31 December 2022.

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 the 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.

GRI 2-2
Company Scopes
1 2 3
NAC Kazatomprom JSC
Kazatomprom-SaUran LLP
RU-6 LLP
APPAK LLP
JV Inkai LLP
Baiken-U LLP
ME ORTALYK LLP
JV Khorassan-U LLP
JV Budenovskoye LLP
Semizbai-U LLP
JV Akbastau JSC
Karatau LLP
Energy Asia (BVI) Limited
JV Katco LLP
JV South Mining Chemical Company LLP
JV ZARECHNOYE JSC
Kyzylkum LLP
Zhanakorgan-Transit LLP
Ulba Metallurgical Plant JSC
ULBA-CHINA Co Ltd
Mashzavod LLP
Ulba FA LLP
High Technology Institute LLP
Kazakatom TH AG
KAP-Technology JSC
KAP Logistics LLP
Volkovgeologia JSC
Rusburmash-Kazakhstan LLP
Qorgan-Security LLP
SKZ-U LLP
Uranenergo LLP
SSAP LLP

Principles for Defining Report Quality

The following principles ensure the quality of the Report:

Principles Description
Balance The Report discloses both positive (implementation of plans, achievement of goals) and negative (e.g. fines, accidents) performance. We do not exaggerate our achievements or hide the difficulties we have encountered, trying to show our results as objectively as possible.
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 the 2022 calendar year and will be published in 2023.
Sustainability context The Report provides information on the Company's contribution from an economic, environmental and social perspective and discloses the extent of the Company's contribution to the achievement of 17 Sustainable Development Goals in 2022.
Completeness The Report covers topics that show the economic, environmental and social impact of the Company's operations in the reporting period.

Independent assurance

GRI 2-5

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 in accordance with ISAE 3000 (Revised), the International Standard for Assurance Engagements Other than Audits and Reviews of Historical Financial Information, issued by the International Auditing and Assurance Standards Board. PricewaterhouseCoopers LLP was an independent auditor. The auditor's report is in the Annexes to the Report.

Forward-looking statements

The statements in the Report are considered to be forward-looking. To describe the future, the 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 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 forward- looking 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 forwardlooking statements will be achieved.

Key ESG indicators, 2020-2022

Corporate Social Responsibility

Kazatomprom headcount and staff composition, employees

GRI 2-7, 2-8, 405-1, SASB EM-MM-000.B
Indicator 2020 2021 2022
Total headcount at the end of the reporting period 21,019 20,643 20,813
Total number of employees (headcount, independent contract agreements, outstaffing contracts) 21,788 21,031 21,682
Work contracts 769 388 744
Outstaffing contracts 0 0 125
Men 17,228 16,942 17,194
Women 3,791 3,701 3,619
Managers and executives 119 258 110
Workers 20,900 20,385 20,703
Under 30 years old 3,201 2,799 2,830
30 to 50 12,260 12,034 12,219
Over 50 5,558 5,810 5,764
Average age of employees, years 41 40 40
Long-term contract 19,821 19,122 18,350
Men 16,227 15,696 15,183
Women 3,594 3,426 3,167
Term contract 1,198 1,521 2,463
Men 1,001 1,246 2,011
Women 197 275 452
Full-time employment 21,011 20,627 20,799
Men 17,222 16,931 17,186
Women 3,789 3,696 3,613
Part-time employment 8 16 14
Men 6 11 8
Women 2 5 6
Independent contractor agreements 769 388 744
Men 518 263 449
Women 251 125 295

Kazatomprom headcount broken down by gender and region, 2022

GRI 2-7, SASB EM-MM-000.B
Region М W
Almaty 339 290
Astana 397 365
Shymkent 398 203
North Kazakhstan Region 453 102
Southern Region 12,711 1,234
Eastern Region 2,887 1,418
China 5 6
United States 2 0
Switzerland 2 1
Total 17,194 3,619

Regular employees broken down by gender and region, 2022

GRI 2-7, SASB EM-MM-000.B
Region М W
Almaty 304 260
Astana 269 274
Shymkent 321 173
North Kazakhstan Region 378 93
Southern Region 11,334 1,149
Eastern Region 2,570 1,212
China 3 5
United States 2 0
Switzerland 2 1
Total 15,183 3,167

Temporary employees broken down by gender and region, 2022

GRI 2-7, SASB EM-MM-000.B
Region М W
Almaty 35 30
Astana 128 91
Shymkent 77 30
North Kazakhstan Region 75 9
Southern Region 1,377 85
Eastern Region 317 206
China 2 1
United States 0 0
Switzerland 0 0
Total 2,011 452

Full-time employees broken down by gender and region, 2022

GRI 2-7, SASB EM-MM-000.B
Region М W
Almaty 334 287
Astana 395 362
Shymkent 398 203
North Kazakhstan Region 453 102
Southern Region 12,710 1,234
Eastern Region 2,887 1,418
China 5 6
United States 2 0
Switzerland 2 1
Total 17,186 3,613

Part-time employees broken down by gender and region, 2022

GRI 2-7, SASB EM-MM-000.B
Region М W
Almaty 5 3
Astana 2 3
Shymkent 0 0
North Kazakhstan Region 0 0
Southern Region 1 0
Eastern Region 0 0
China 0 0
United States 0 0
Switzerland 0 0
Total 8 6

Structure of Kazatomprom's governing bodies and employees, %

GRI 405-1
Indicator 2020 2021 2022
Governing bodies Workers Governing bodies Workers Governing bodies Workers
Men 92% 82% 91% 86% 91% 83%
Women 8% 18% 9% 14% 9% 17%
Kazaks 74% 70% 75% 68% 82% 72%
Russians 13% 25% 16% 26% 8% 23%
Other 13% 6% 9% 6% 10% 5%
Under 30 years old 1% 15% 2% 13% 1% 14%
30 to 50 64% 58% 68% 58% 70% 59%
Over 50 35% 26% 30% 29% 29% 28%

Number of hired employees, employees

GRI 401-1
Region 2020 2021 2022
М W М W М W
Almaty 56 25 51 38 110 64
Astana 55 45 99 78 90 70
Shymkent 55 21 58 18 147 31
North Kazakhstan Region 105 39 155 65 115 24
Southern Region 1,552 68 2,084 136 2,340 182
Eastern Region 305 120 314 211 302 177
Outside of Kazakhstan (China, United States, Switzerland) 20 0 8 1 0 0
Total 2,148 318 2,769 547 3,104 548

Employees hired by Kazatomprom

GRI 401-1
Region 2022 Total
Under 30 30 to 50 Over 50
Number of hired employees Number of hired employees Number of hired employees
М W М W М W
Almaty 20 10 61 44 29 10 174
Astana 17 25 65 40 8 5 160
Shymkent 25 8 83 19 39 4 178
North Kazakhstan Region 23 6 76 16 16 2 139
Southern Region 720 54 1,339 115 281 13 2,522
Eastern Region 95 24 164 98 43 55 479
China - - - - - -
Total 900 127 1,788 332 416 89 3,652

Kazatomprom's dismissed employees and staff turnover

GRI 401-1
Region 2020 Total
Under 30 30 to 50 Over 50
Number of dismissed employees Percentage, % Number of dismissed employees Percentage, % Number of dismissed employees Percentage, %
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
Astana 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
Southern Region 266 57 9% 2.0% 886 146 31% 5.1% 355 40 12% 1.4% 1,750
Eastern Region 62 13 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
Region 2021 Total
Under 30 30 to 50 Over 50
Number of dismissed employees Percentage, % Number of dismissed employees Percentage, % Number of dismissed employees Percentage, %
М W М W М W М W М W М W
Almaty 11 9 0% 0.2% 43 27 1% 0.7% 19 5 1% 0.1% 114
Astana 26 20 1% 0.5% 62 55 2% 1.5% 18 5 0% 0.1% 186
Shymkent 17 7 0% 0.2% 63 18 2% 0.5% 16 5 0% 0.1% 126
North Kazakhstan Region 51 9 1% 0.2% 109 43 3% 1.2% 37 16 1% 0.4% 265
Southern Region 514 49 14% 1.3% 1,209 136 32% 3.6% 546 58 15% 1.6% 2,512
Eastern Region 79 16 2% 0.4% 158 62 4% 1.7% 134 76 4% 2.0% 525
China/United States - - - - 6 - - - - - - - 6
Total 698 110 1,650 341 770 165 3,734
Region 2022 Total
Under 30 30 to 50 Over 50
Number of dismissed employees Percentage, % Number of dismissed employees Percentage, % Number of dismissed employees Percentage, %
М W М W М W М W М W М W
Almaty 12 5 0% 0.2% 73 29 1% 0.7% 23 11 1% 0.1% 153
Astana 17 8 1% 0.5% 77 47 2% 1.5% 16 4 0% 0.1% 169
Shymkent 13 2 0% 0.2% 95 27 2% 0.5% 35 4 0% 0.1% 176
North Kazakhstan Region 12 8 1% 0.2% 39 10 3% 1.2% 14 7 1% 0.4% 90
Southern Region 464 69 14% 1.3% 1,046 141 32% 3.6% 455 89 15% 1.6% 2,264
Eastern Region 47 11 2% 0.4% 122 62 4% 1.7% 103 66 4% 2.0% 411
China/United States - - - - - - - - - 1 - - 1
Total 565 103 1,452 316 646 182 3,264

Staff turnover across the Group, %

GRI 401-3

Number of employees who returned to work after parental leave and childcare leave85.

Indicator 2020 2021 2022
Total number of employees who took parental leave 210 357 377
Men 20 51 67
Women 190 306 310
Total number of employees who returned to work after parental leave 143 127 158
Men 13 19 25
Women 130 108 133
Total number of employees who returned to work after parental leave (in the previous reporting period) 102 143 123
Men 7 13 19
Women 95 130 104
Total number of employees who returned to work after parental leave and continued to work twelve months after returning to work - 69 87
Men - 4 10
Women - 65 77
Return to work rate 0.68 0.36 0.42
Men 0.65 0.37 0.37
Women 0.68 0.35 0.43
Retention rate - - 0.71
Men - - 0.53
Women - - 0.74

Kazatomprom payroll fund, KZT

Indicator 2020 2021 2022 Change 2021-2022
Average monthly salary of production staff86 279,202 314,653 454,648 44%
Payroll fund, KZT million87 65,707 71,484 99,395 37%

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

GRI 405-2
Indicator 2020 2021 2022
М W М W М W
Minimum salary in Kazakhstan 42,500 42,500 42,500 42,500 60,000 60,000
Salary of entry-level employee across the Group88 42,500 42,500 42,500 42,500 60,000 60,000
Ratio 1 1 1 1 1 1

Kazatomprom staff training, man-workshops89

Employee category 2020 2021 2022
Administrative staff and management 3,854 4,265 6,344
Production staff 29,123 32,979 50,699
Total 32,977 37,244 57,044

Average number of training hours per employee

GRI 404-1
Indicator 2022
Gender
Women 45
Men 56
Total 54
Staff category
Administrative staff 60
Production staff 53
Total 54

Average number of hours spent on training of one employee, 2020-2022

GRI 404-1
Employee category 2020 2021 2022
М W М W М W
Administrative staff 43 30 35 44 59 61
Production staff 37 20 35 52 41 56
Average across all categories 40.4 41.6 54.0

Environmental Protection

Direct (Scope 1) and Indirect (Scope 2) GHG emissions, t СО2-eq

GRI 305-1, 305-2, SASB EM-MM-110a.1.
Indicator 2020 2021 2022 Change 2021–2022
Direct greenhouse gas emissions (Scope 1) 92,590 106,913 97,256 (9%)
Indirect GHG emissions (Scope 2)90 819,883 842,554 844,034 0.1%

Breakdown and source of air emissions, '000 tonnes

GRI 305-7, SASB EM-MM-120a.1
Air emissions Source 2021 2022
NOx boilers, furnaces, incinerators, stationary diesel power stations (emergency), compressors 0.123 0.197
Выбросы SOx boilers, furnaces, incinerators, stationary diesel power stations (emergency), compressors 0.849 0.756
PM emissions boilers, furnaces, machine tools operated in the machine shops 0.111 0.086
CO boilers, vehicles, gas furnaces, stoves 0.181 0.176
Volatile organic compounds vehicles, solvents, gas, wood and biomass burning 0.056 0.051
Substances of Hazard Class 1 boilers, vehicles, mercury lamps 0.012 0.002

Total water withdrawal by source, '000 m³

GRI 303-3, SASB EM-MM-140a.1
Source 2020 2021 2022
Surface water 781.4 6.5 6.5
Underground water 8,539.8 8,531.3 8,573.5
Municipal and other water supply systems 1,131.1 1,582.9 608.9
Total 10,452.3 10,120.7 9,188.9

Total waste by type, '000 tonnes

GRI 306-3
Type of waste 2020 2021 2022
Industrial waste 996.2 893.3 449
Household waste 1.8 1.6 2.3
Solid radioactive waste 3.3 2.6 5.1
Liquid radioactive waste 128.1 119.1 148.2
Total 1,129.4 1,016.6 604.6

Electricity produced by PV plants, MWh

Electricity output

Occupational Health and Safety

Kazatomprom's H&S expenses, KZT billion

Health and safety costs

Occupational injuries at Kazatomprom91

GRI 403-9, SASB EM-MM-320a.1.
Indicator 2020 2021 2022
For all employees
Number of occupational fatalities 1 2 1
Total number of high-impact occupational injuries (excluding fatalities) 2 8 1
Total occupational accidents92 8 9 3
LTIFR (per 1,000,000 hours worked) 0.25 0.55 0.11
Unsafe conditions, unsafe acts, near-miss reporting 35,529 44,271 37,581
Number of hours worked93 31,812,773 32,909,020 28,542,184
Near misses - - 121
Incident frequency rate without NMFR (per 200,000 hours worked as recommended by SASB standards) - - 0.848
LTIFR (per 200,000 hours worked as recommended by SASB standards) 0.021
Fatalities rate (per 200,000 hours worked as recom-mended by SASB standards) 0.007
For all employees (other than full-time workers) whose work and/or workplace is controlled by the Company94
Total fatal occupational accidents n/a n/a 0
Total number of high-impact occupational injuries (excluding fatalities) n/a n/a 2
Total registered occupational injuries n/a n/a 2

Socio-economic contribution

Direct economic value generated and distributed, KZT billion

GRI 201-1
Description 2020 2021 2022
Direct economic value generated
Incomes95 667.12 761.53 1,146.9
Distributed economic value, including
Operating expenses96 288.11 373.59 440.95
Salaries 50.72 53.05 71.69
Interest and dividend expenses 7.68 6.71 8.43
Taxes, except income tax 24.73 26.14 32.57
Income tax expenses 63.78 61.62 110.74
Other expenses 9.73 15.86 8.43
Social expenditures (investment in local communities) 1.01 4.54 1.13
Retained economic value (profit for year) 221.37 220.03 472.96

Taxes paid in other jurisdictions in 2022

GRI 207-4
Indicator Switzerland British Virgin Islands (provisional data)97 China Kazakhstan
Name of organisation Kazakatom TH AG Energy Asia (BVI) Limited ULBA-CHINA Co, Ltd Resident companies
Core business (as per organisation's articles of association) Marketing for distribution of uranium, trade, in particular in raw materials, investment and administration of finances, commodities, and rights Any activities not prohibited by the laws of the British Virgin Islands Warehousing and distribution; after-sales services for storage and distribution of steel products and related products in the free trade zone; international and transit trade; trade representation services; export and import of goods and machinery; simple commercial processing and provision of commercial advice services within the free trade zone According to company charters, including but not limited to the exploration, extraction and sale of uranium and its compounds, beryllium, tantalum and niobium products, international trucking, etc.
Headcount as of 31 December 2022 3 0 12 20,798
Third party sales revenue (Income from sales of products and services), KZT '000 75,612,853.00 0.00 18,084,867.00 907,472,930.00
Income from intra-group transactions with other taxation jurisdictions, KZT '000 0.00 0.00 0.00 72,741,149.00
Taxation income/loss, KZT '000 17,972,184.00 828,280.00 260,408.00 693,875,497.00
Tangible assets other than cash and cash equivalents, KZT '000 55,990,366.00 0.00 272,375.00 816,201,010.00
Corporate income tax paid on a cash basis 859,485.00 0.00 62,252.00 124,992,110.00
Corporate income tax accrued on income/loss, KZT '000 1,037,832.00 0.00 76,631.00 114,996,102.00
Reasons for the difference between the CIT accrued on income/loss and the tax payable if the tax rate is applied to the income/loss before tax There is no difference between the CIT accrued on income/loss and the tax payable Not applicable as EAL income is not subject to CIT There is no difference between the CIT charged on income/loss and the tax payable There is no difference between the CIT charged on income/loss and the tax payable

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

Company 2020 2021 2022
Turkestan Region
NAC Kazatomprom JSC 165.4 42.8 56.5
Appak LLP 40.3 43.1 72.3
JV Akbastau JSC 214.7 213.0 231.3
JV South Mining Chemical Company LLP 96.3 71.5 76.7
Volkovgeologia JSC 2.8 2.9 3.1
JV Zarechnoye JSC 20.8 21.3 21.2
JV Inkai LLP 59.9 63.9 69.3
Kazatomprom-SaUran LLP 427.8 429.5 461.2
Karatau LLP 52.9 58.8 60.8
DP ORTALYK LLP 83.1 43.3 646.7
JV KATCO LLP 3.96 227.7 371.3
JV Budenovskoe LLP 21.5 - 152.1
Kyzylorda Region
NAC Kazatomprom JSC - - -
Baiken-U LLP 42.2 43.6 44.3
RU-6 LLP 107.5 113.2 117.4
Semizbay-U LLP 26.7 29.2 30.4
Kyzylkum LLP 126.1 128.8 130.3
JV South Mining Chemical Company LLP - 26.7 28.6
East Kazakhstan Region
Ulba Metallurgical Plant JSC 7.2 7.4 7.9
North Kazakhstan Region
Semizbay-U LLP 19.1 20.9 21.7
Akmola Region
Semizbay-U LLP 19.1 20.9 21.7
Total 1,537.3 1,608.6 2,625.0

Local content in procurement across regions, 2022, %98

GRI 204-1
Region Local content in goods, works and services Local content in goods Local content in works Local content in services Local content in works and services
Akmola Region 67 72 95 52 54
Aktobe Region 49 17 85 89 88
Almaty Region 30 13 84 97 88
Atyrau Region 64 54 100 77 92
West Kazakhstan Region 92 54 100 100 100
Zhambyl Region 83 86 63 93 64
Karagandy Region 56 56 99 35 47
Kostanay Region 37 26 100 100 100
Kyzylorda Region 94 92 97 98 98
Mangystau Region 95 95 99 90 97
South Kazakhstan Region 88 83 93 93 93
Pavlodar Region 61 60 31 97 71
North Kazakhstan Region 78 78 0 100 100
East Kazakhstan Region 83 81 91 97 92
Astana 87 83 84 93 93
Almaty 83 68 96 84 92
Republic of Kazakhstan 82 76 94 87 91

Association and International Initiative Membership and Partnership

GRI 2-28
Organisation Website Year of joining
Professional nuclear power organisations
World Nuclear Association, London, UK www.world-nuclear.org 1993
Tantalum-Niobium International Study Center, Brussels, Belgium www.tanb.org 1999
World Nuclear Fuel Market, Norcross, GA, United States www.wnfm.com 2002
Nuclear Energy Institute, Washington, D.C. www.nei.org 2018
World Nuclear Transport Institute, London, UK www.wnti.co.uk 2019
The Group of Vienna IAEA, Vienna, Austria https://www.iaea.org/ 2021
National sectoral organisations
Nuclear Society of Kazakhstan, Astana, Kazakhstan www.nuclear.kz 2002
Republican Association of Mining and Metallurgical Enterprises, Astana, Kazakhstan agmp.kz 2006
KAZENERGY Kazakhstan Association of Oil&Gas and Energy Sector Organisations, Astana, Kazakhstan www.kazenergy.com 2009
Atameken National Chamber of Entrepreneurs of Kazakhstan, Astana, Kazakhstan atameken.kz 2013
International sustainability partners
United Nations Global Compact https://unglobalcompact.org 2022

Reports by Chairmen of the Board of Directors Committees for 2022

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 2022, the following members were appointed to the Committee: Neil Longfellow, an independent director, Russell Banham, an independent director, and Yernat Berdigulov, 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 6 face-to-face meetings and considered 28 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.

In 2022, the Committee approved the Company's Human Rights Policy as well as Occupational Health and Safety, Environmental Protection, Nuclear and Radiation Safety Policy. In addition, the Committee members reviewed a report on the implementation of the Social Partnership and Social Stability Improvement Action Plan and reviewed information on the implementation of sustainable development principles during the year.

2022 results and outlook for 2023

In its operations, the Company always recognises its responsibilities to stakeholders in relation to the product 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 headquarter 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 2022, the Committee consisted entirely of independent directors with the relevant expertise and competencies to make effective decisions. During the year, 13 Committee meetings were held in person and in absentia, and 104 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 2021, which included assessing the Company’s financial ability to pay dividends at the level promised in the Securities Prospectus of the Company. In 2022, the Company held its fourth annual General Meeting of Shareholders, where shareholders voted on, and approved, the financial statements, as well as the dividend size per ordinary share.

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 a 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.

During the year, the Committee members held 8 in-person meetings and considered 36 matters. On a quarterly basis, the Committee reviewed and approved the Management Board’s reports on the implementation of major investment projects, as well as reviewed the Annual Report on the implementation of the Company's Development Strategy 2018-2028 in 2021. In addition, the Committee members reviewed the findings of the Company’s benchmarking against other uranium companies at the end of 2021.

Neil Longfellow

Chairman of the Strategic Planning and Investment 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 2022, the Committee saw significant changes. Nazira Nurbaeva joined the Committee on 27 May 2022. Assem Mamutova and Bolat Akchulakov resigned following their withdrawal from the Board of Directors of the Company. During the year, the Committee held 11 in-person meetings to consider 69 matters.

Last year, the Committee reviewed and approved candidates for election as the Company's senior independent director, members of the Company's Board of Directors and members of the Company's Management Board. In addition, it also reviewed individual development plans (IDPs) of the Management Board members for 2022, CEO-1 job descriptions, and the structure of the headquarters 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

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 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.

Neil Longfellow,

Chairman of Kazatomprom Board of Directors,

On behalf of the Board of Directors


Yerzhan Mukanov,

Chairman of Kazatomprom Management Board,

By order of the Board of Directors

Content of material topics

Material topics Positive impacts made by the Company on the economy, environment, or people, including impacts on their human rights Negative impacts made by the Company on the economy, environment, or people, including impacts on their human rights
Economic
GRI 201 Economic performance

Positive economic performance of the Company helps:

  • Improve its attractiveness to the investment community, partners and clients, as well as oftract investors to the Kazakh market
  • Step up investment, open up opportunities for creating and developing new projects and building production facilities in the regions of the Company’s operations
  • Boost local and republican budget revenues

Negative economic performance of the Company results in:

  • Deterioration of investment attractiveness of the Company and the regions of presence
  • Failure to attract additional funding if necessary
  • Significant decline in the competitive advantages in the market, and loss of market share
GRI 203 Indirect Economic Impacts
  • The Company’s subsidiaries are among the largest taxpayers in the regions of presence
  • Operations of the Company and its subsidiaries in the regions of presence (contributions to the budget for infrastructure development, assistance to schools, employment opportunities for locals, etc.) help improve social and economic development and social conditions in general

Possible withdrawal Kazatomprom from the regions of presence and corresponding cutbacks to funding of local budgets can result in deterioration in the regions’ development and social conditions

GRI 204 Procurement Practices
  • Obligations of the Company’s suppliers to protect the environment, ensure industrial safety, radiation and nuclear safety, as well as electric and occupational safety provided for in the contracts
  • Supporting domestic producers and increasing the share of local procurement
  • Maintaining social stability in the Regions of presence and encouraging local suppliers to create new production facilities
  • Risk of non-compliance by the Company’s suppliers with the obligations stipulated in the contracts regarding environmental protection, exploitation of manpower, and industrial, radiation, and nuclear safety
  • Risk of the Company concluding contracts with unscrupulous suppliers
  • Corruption risks
GRI 205 Anti-corruption
  • Regular training (for employees, suppliers and other stakeholders) in combating corruption
  • Hotline operated by an independent party
  • Dedicated specialists across all the companies run by the Company’s group
  • Mature KYC procedures (as an element of anticorruption work)
  • Annual declaration of conflicts of interest by employees
  • Enhanced anti-corruption clause in all procurement contracts (including the option to check the operations of the counterparty to identify corruption)
  • Economic inefficiency, including the inexpedient use of funds, the increase in the price of purchased products, the purchase of low-quality services and goods, etc.
  • Loss of stakeholders’ confidence (market participants, business partners, employees, local population, others)
  • Reputational risk
  • The risk of disruption of production processes due to the purchase of low quality raw materials
GRI 207 Tax

Taxes paid by the Company’s subsidiaries to the local budget and some taxes from the republican budget make the budget of the region of presence and are the primary source of funding for the public sector.

Possible withdrawal of the Company from the regions of presence and corresponding cutbacks to the funding of local budgets can result in deterioration in the regions’ development and social conditions.

Environmental
GRI 302 Energy Consumption

The Company’s 2022 Decarbonisation and Carbon Neutrality Strategy includes solutions such as investment in energy efficiency and the use of renewable energy sources, which reduce expenses, improve the security and safety of energy supplies and lessen the environmental impact of energy consumption.

In addition, the Company instils the energy efficiency culture in their employees.

The Company’s consumption of electrical and thermal energy produced by energy-generating organisations from these components directly affects Scope 2 emissions of the Company.

GRI 303 Water

To meet its production goals, the Company uses a closed-loop water cycle across its enterprises to take water. In line with the production process, water returns to the ore-bearing horizon as soon as uranium is extracted. Storm and domestic waste water is treated and then re-used for production purposes or discharged into storage ponds. The rational water management and the construction of facilities with biological wastewater treatment plants for water reuse help save the region’s water resources.

The use of water results in a reduction in water resources, and the region suffers from a shortage of water.

GRI 304 Biodiversity and Ecosystems

The in-situ recovery does not change the subsurface landscape, thus preserving the endemic flora and fauna, which excludes the killing of animals and desertification of the area. Animals return to their natural habitats as soon as uranium mining works are completed and the effects of subsoil use are eliminated.

The potential negative impacts of the Company’s operations include environmental risks that accompany production processes and may disturb the vegetative cover and drive animals out of their natural habitats.

GRI 305 Emissions

Energy is supplied to production facilities from the bulk power source. When finished products undergo heat treatment, the emissions pass through dust and gas collecting units at all times, and filters prevent pollutants into the air.

Hydrocarbon fuels are used only for heating administrative and residential premises, as well as for motor transport. Thus, their use is as limited as possible.

The use of fuels and lubricants for boiler plants, compressors, and diesel generators affects Scope 1 emissions, and the use of electrical and thermal energy affects Scope 2 emissions.

It is advisable to switch to gas heating to reduce emissions. The Company plans to reduce emissions by increasing the share of renewable energy sources, using offsetting mechanisms, upgrading their vehicle fleet (or purchasing electric vehicles), and gradually reducing carbon intensity.

GRI 306 Effluents and Waste

The Company is known for the use of in-situ leaching, the most environmentally friendly uranium extraction method (compared to openpit and mining methods), which eliminates the generation of overburden and dumps. Uranium-containing solutions undergo hydrometallurgical treatment in a closed-loop water cycle that prevents any discharge.

To reach the ore horizon, drilling operations are to take place that produce drilling waste such as drill cuttings. Drill cuttings have a high level of radioactivity and are subject to mandatory disposal.

Research is currently underway to reduce production waste.

Social
GRI 403 Occupational Health and Safety
  • The Company has ongoing multilateral monitoring in place to comply with occupational safety rules across its enterprises and look after employees’ health.
  • It has introduced seven golden rules of the Zero Injury Concept, and senior managers of the Company’s enterprises made personal commitments to occupational health and safety standards and cascaded them to improve employees’ health and safety at the workplace.
  • The Company provides compulsory social insurance and occupational injury insurance for employees.
  • It instils occupational safety culture, including the use of proactive measures.

All production operations pose risks to employees’ health and safety. The Company has a risk management system in place that takes preventive and reactive actions to mitigate such risks.

GRI 413 Local Communities

The Company contributes significantly to the wellbeing and social and economic development of the regions of presence by providing employment opportunities to locals, engaging in philanthropy, and rolling out infrastructure projects such as building playgrounds, providing drinking water and street lighting, etc.

Possible withdrawal of the Company from the regions of operations can result in deterioration in the regions’ development and social conditions.

N/A Human rights

As a member of the UN Global Compact and a responsible industry leader, the Company is aware of the need to uphold and promote human rights principles. It conducts annual employee satisfaction surveys in the corporate centre and subsidiaries to improve the level of human rights protection and assess the current human rights situation.

It cooperates with UNDP as part of its activities to protect human rights.

The Company’s Ombudsman’s Service arranges field meetings and holds consultations with employees of subsidiaries and affiliates to discuss their working and living conditions, nutrition issues, and development of corporate values and culture. The findings of anonymous surveys are discussed with the management, and recommendations are given to improve ethical standards and behaviours.

Human rights risks in the workplace, including:

  • Lack of a work environment that is free from any form of physical, verbal, sexual, or psychological pressure, or harassment, aggression, abuse, or threats in the workplace from colleagues or supervisors.
  • Discrimination against any person based on age, gender, ethnicity, religion, disability, nationality, social status, sexual orientation or other characteristics not related to individual performance.
  • Restriction of the rights of employees to freedom of assembly and association, freedom of opinion and expression.
  • Lack of equal opportunities for women and men, including equal pay for equal work.
  • Presence of child, forced and violent labor.
  • Lack of a safe and healthy work environment in the workplace.
  • Lack of respect for the cultural characteristics and customs of local communities in the regions of presence.
  • No zero tolerance for bribery and corruption.
Kazatomprom indicators
KAP1 Operational life of production sites

Stimulating the production cycle by using best practices and R&D, as well as improving the efficiency of production operations, which has a positive impact on the environment and health of the Company’s employees.

Negative economic effect on the local population, harm to the environment and employees health.

KAP2 Emergency preparedness

An early warning system for emergencies is in place. The Company has developed maps of the areas susceptible to natural and manmade disasters and identified threats, developed emergency response plans, and has relevant services in place (private fire fighting and emergency services), as well as funds to respond to them. It carries out training activities and has installed and maintained an emergency warning system.

As the area where the Company’s facilities are based is so vast and far away from the public fire fighting and emergency services, the Company’s enterprises help protect the adjacent areas (put out wildland fires).

The Company’s facilities are located far away from the public fire fighting and emergency services, therefore the Company may not have enough resources to manage very bad emergencies, which poses a possible risk of untimely management of emergency incidents and add to their scope.

KAP3 Radiation safety

The radiation effect on the Company’s employees and locals is low during the in-situ recovery of uranium: it is up to i 30% of the permissible radiation dose limit established by regulations.

The risk of radiation contamination and radiation accidents in case of non-compliance with the laws of the Republic of Kazakhstan and the Company’s internal regulatory documents on radiation safety.

Group’s subsidiaries, joint ventures, joint operations, and associates

GRI 2-2

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, and Baiken-U LLP where the direct share is 5%.

Subsidiaries, joint ventures, joint operations, and associates of the Holding, 31 December 2021

Treatment Name Share (%)
Uranium Mining and Processing
Subsidiaries Kazatomprom-SaUran LLP 100.00%
RU-6 LLP 100.00%
APPAK LLP 65.00%
JV Inkai LLP 60.00%
Baiken-U LLP99 52.50%
ME ORTALYK LLP100 51.00%
JV Khorassan-U LLP 50,00%
Joint Ventures JV Budenovskoye LLP 51.00%
Semizbay-U LLP 51.00%
Joint Operations JV Akbastau JSC 50.00%
Karatau LLP 50.00%
Energy Asia (BVI) Limited99 50.00%
Associates JV Katco LLP 49.00%
JV South Mining Chemical Company LLP 30.00%
JV ZARECHNOYE JSC 49.98%
Kyzylkum LLP 50.00%
Zhanakorgan-Transit LLP101 40.00%
Nuclear Fuel Cycle and Metallurgy
Subsidiaries Ulba Metallurgical Plant JSC 94.33%
ULBA-CHINA Co Ltd101 100.00%
Mashzavod JSC101 100.00%
Joint Ventures Ulba FA LLP101 51.00%
Ancillary Operations
Subsidiaries High Technology Institute LLP 100.00%
KazakAtom TH AG 100.00%
KAP-Technology JSC 100.00%
KAP Logistics102 99.99%
Volkovgeologia JSC 98.96%
Qorgan-Security LLP105 100.00%
Joint Ventures SKZ-U LLP 49.00%
Uranenergo LLP 79.23%
Associates SSAP LLP 9.89%
Rusburmash-Kazakhstan LLP101 49.00%
Company’s investees
Investments International Centre for Uranium Enrichment JSC 10.00%
ANU Energy OEIC Ltd. 32.7%
Uranium Enrichment Centre103 0.000018%

Assets currently for sale or subject to restructuring

Nuclear Fuel Cycle
Joint Ventures JV UKR TVS Closed
Joint Stock Company104

Auxiliary operations Associates
Caustic JSC105


GRI Index

Statement of use Kazatomprom has reported in accordance with the GRI Standards for the period 1 January 2022 – 31 December 2022
GRI 1 used GRI 1: Foundation 2021
Applicable GRI Sector Standard(s) Not applicable
Standard and indicators Disclosure Report sections Disclosure Degree Scope Comments
GRI 2: The organization and its reporting practices
2-1 Organizational details 1. Opening Up New Opportunities
1.3. Geography and Market Presence
Contacts
fully 1
2-2 Entities included in the organiztion’s sustainability reporting 5. Annexes
5.1. About the Report
5.6. Group’s Subsidiaries, Joint Ventures, Joint Operations, and Associates
fully 1
2-3 Reporting period, frequency and contact point 5. Annexes
5.1. About the Report
5.12. Contacts
fully 1
2-4 Restatements of information 5. Annexes
5.1. About the Report
fully 1 The data on energy intensity for 2020 and 2021 have been changed due to a change in the approach to determining the total energy consumption and accounting for purchased heat.
2-5 External assurance 4. Effective Governance
4.9. External audit
5. Annexes
5.1. About the Report
fully 1
GRI 2: Activities and workers
2-6 Activities, value chain and other business relationships Business Line
1. Opening Up New Opportunities
1.1. About the Company
1.6. Sales and Distribution
1.7. Uranium Products Market Overview and Competitive Environment
3. Ensuring Sustainable Development
3.7. Building a Sustainable Procurement Chain
fully 1 Operations – mining assets.
2-7 Employees 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 1 Headcount as of 31.12.2022.

There are no non-regular employees in the Company.
2-8 Workers who are not employees 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
5. Annexes
5.2. ESG Performance Indicators 2020-2022
partially 1 Data on the accounting of employees of contractors are maintained, but not ready for disclosure and will be improved in the next reporting period.
GRI 2: Governance
2-9 Governance structure and composition 3. Ensuring Sustainable Development
3.1. ESG and Sustainable Business
4. Effective Governance
4.1. Corporate Governance System
4.4. Board of Directors
fully 1
2-10 Nomination and selection of the highest governance body 4. Effective Governance
4.4. Board of Directors
fully 1
2-11 Chair of the highest governance body 4. Effective Governance
4.4. Board of Directors
fully 1
2-12 Role of the highest governance body in overseeing the management of impacts 4. Effective Governance
4.4. Board of Directors
fully 1
2-13 Delegation of responsibility for managing impacts 3. Ensuring Sustainable Development
3.1. ESG and Sustainable Business
4. Effective Governance
4.12. Corporate Ethics and Compliance
fully 1
2-14 Role of the highest governance body in sustainability reporting 4. Effective Governance
4.4. Board of Directors
fully 1
2-15 Conflicts of interest 4. Effective Governance
4.5. Management Board
4. Effective Governance
4.12. Corporate Ethics and Compliance
fully 1
2-16 Communication of critical concerns 4. Effective Governance
4.12. Corporate Ethics and Compliance
fully 1
2-17 Collective knowledge of the highest governance body 4. Effective Governance
4.4. Board of Directors
fully 1
2-18 Evaluation of the performance of the highest governance body 4. Effective Governance
4.4. Board of Directors
fully 1
2-19 Remuneration policies 4. Effective Governance
4.6. Remuneration
fully 1
2-20 Process to determine remuneration 4. Effective Governance
4.6. Remuneration
fully 1
2-21 Annual total compensation ratio not disclosed 1 Information should not be disclosed in order to protect personal information.
GRI 2: Strategy, policies and practices
2-22 Statement on sustainable development strategy Message from the Chairman of the Board of Directors

Message from the Chairman of the Management Board
fully 1
2-23 Policy commitments 3. Ensuring Sustainable Development
3.1. ESG and Sustainable Business
3.3. Taking Care of Our Plant
3.4. Creating an Attractive Working Environment
4. Effective Governance
4.12. Corporate Ethics and Compliance
fully 1
2-24 Embedding policy commitments 4. Effective Governance
4.12. Corporate Ethics and Compliance
fully 1
2-25 Processes to remediate negative impacts 3. Ensuring Sustainable Development
3.1. ESG and Sustainable Business
fully 1
2-26 Mechanisms for seeking advice and raising concerns 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
4. Effective Governance
4.12. Corporate Ethics and Compliance
fully 1
2-27 Compliance with laws and regulations 5. Annexes
5.8. GRI Index
fully 1 In 2022, there were 40 cases of non-compliance with laws and regulations for a total fine of KZT 3,219,540,140. There were no non-pecuniary fines.

In addition, we paid fines of KZT 1,107,526,908 in relation to 3 cases of non-compliance with laws and regulations that occurred in previous reporting periods.
2-28 Membership associations 5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 1
GRI 2: Stakeholder engagement
2-29 Approach to stakeholder engagement 3. Ensuring Sustainable Development
3.1. ESG and Sustainable Business
fully 1
2-30 Collective bargaining agreements 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
fully 1
GRI 3: Material Topics 2021
3-1 Process to determine material topics 3. Ensuring Sustainable Development
3.1. ESG and Sustainable Business
fully 1
3-2 List of material topics 3. Ensuring Sustainable Development
3.1. ESG and Sustainable Business
fully 1
3-3 Management of material topics 3. Ensuring Sustainable Development
3.1. ESG and Sustainable Business
fully 1
Economic Topics
GRI 201: Economic Performance
3-3 Management of material topics 3. Ensuring Sustainable Development
3.1. ESG and Sustainable Business
fully 1
201-1 Direct economic value generated and distributed 3. Ensuring Sustainable Development
3.1. ESG and Sustainable Business
5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 1 GRI 201-1.b is not relevant. We estimate that the Company has a material impact only in the Republic of Kazakhstan.
GRI 202: Market
202-2 Proportion of senior management hired from the local community 4. Effective Governance
4.5. Management Board
fully 1
GRI 203: Indirect Economic Impacts
3-3 Management of material topics 3. Ensuring Sustainable Development
3.6. Creating Shared Values
fully 1
203-1 Investments in infrastructure and supported services 3. Ensuring Sustainable Development
3.6. Creating Shared Values
fully 1
GRI 204: Procurement Practices
3-3 Management of material topics 3. Ensuring Sustainable Development
3.7. Building a Sustainable Procurement Chain
fully 1
204-1 Proportion of spending on local suppliers 3. Ensuring Sustainable Development
3.7. Building a Sustainable Procurement Chain
5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 1 Core operations are in the Republic of Kazakhstan.
GRI 205: Anti-corruption
3-3 Management of material topics 4. Effective Governance
4.12. Corporate Ethics and Compliance
fully 1
205-2 Communication and training about anti-corruption policies and procedures 4. Effective Governance
4.12. Corporate Ethics and Compliance
fully 1 No information is available on the number of members of employee governing bodies who have received anti-corruption training by category or region.
205-3 Confirmed incidents of corruption and actions taken 5. Annexes
5.8. GRI Index
fully 1 There were no incidents of corruption in the reporting period.
GRI 206: Anti-competitive Behavior
206-1 Legal actions for anticompetitive behaviour, anti-trust, and monopoly practices 5. Annexes
5.8. GRI Index
fully 1 In accordance with the Code of Ethics and Compliance, as well as the laws of the Republic of Kazakhstan, we are committed to competitive behaviour on a fair basis only.

In 2022, the Company was not involved in any lawsuits related to violations of anti-trust legislation.
GRI 207: Tax
3-3 Management of material topics 4. Effective Governance
4.11. Tax Transparency
fully 1
207-1 Approach to tax 4. Effective Governance
4.11. Tax Transparency
fully 1
207-2 Tax governance, control, and risk management due to climate change 4. Effective Governance
4.11. Tax Transparency
fully 1 For more information on the validation of tax information, see CFS 2022.
207-3 Stakeholder engagement and management of concerns related to tax 4. Effective Governance
4.11. Tax Transparency
fully 1
207-4 Country-by-country reporting 5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 1
Environmental Topics
GRI 302: Energy
3-3 Management of material topics 3. Ensuring Sustainable Development
3.2. Climate Change and Energy Efficiency
fully 1
302-1 Energy consumption within the organization 3. Ensuring Sustainable Development
3.2. Climate Change and Energy Efficiency
fully 2 The Company does not resell energy to third parties.

The Company does not consume fuel from renewable sources.

Steam and hot water consumption are included in the heat figures.

The coefficients used are in accordance with the Methodology for Fuel and Energy Balance Development and Calculation of Selected Statistical Indicators Characterising the Energy Sector.
302-3 Energy intensity 3. Ensuring Sustainable Development
3.2. Climate Change and Energy Efficiency
fully 2
302-4 Reduction of energy consumption 3. Ensuring Sustainable Development
3.2. Climate Change and Energy Efficiency
fully 2 The reduction is calculated compared to the previous reporting year.

Data is recorded in line with Kazakh laws and the Company's internal approach.
GRI 303: Water
3-3 Management of material topics 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
303-1 Interactions with water as a shared resource 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
303-2 Management of water discharge-related impacts 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
partially 1
303-3 Water withdrawal 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
5. Annexes
5.2. ESG Performance Indicators 2020-2022
partially 2 The company does not keep records of water withdrawals in water-scarce regions.
303-4 Water discharge 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
partially 2 The Company does not keep records of water discharges in water-scarce regions.

The Company does not keep records of water discharges by destination.

The Company does not keep records of water quality.
303-5 Water consumption 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
partially 2 The Company does not keep records of water consumption in water-scarce regions.
GRI 304: Biodiversity
3-3 Management of material topics 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
304-1 Operational sites owned, leased, managed in, or adjacent to, protected areas and areas of high biodiversity value outside protected areas 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
304-2 Significant impacts of activities, products, and services on biodiversity 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
304-3 Habitats protected or restored 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
304-4 IUCN Red List species and national conservation list species with habitats in areas affected by operations 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
GRI 305: Emissions
3-3 Management of material topics 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
305-1 Direct (Scope 1) GHG emissions Both stationary and mobile sources were taken into account.

3. Ensuring Sustainable Development
3.2. Climate Change and Energy Efficiency
3.3. Taking Care of Our Plant
5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 2 To estimate direct emissions (Scope 1), a calculation method is used based on calorific value factors and specific GHG emissions from fuel combustion as well as other standardised activities.

The gases taken into account in the calculation of this indicator are CO2, CH4, and N2O.

The company does not generate any biogenic CO2 emissions.

Stationary and mobile sources are taken into account.
305-2 Energy indirect (Scope 2) GHG emissions 3. Ensuring Sustainable Development
3.2. Climate Change and Energy Efficiency
5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 2 For the calculation of energy indirect greenhouse gas emissions, we have used the coefficients provided by the Greenhouse Gas Protocol and the 2006 IPCC Guidelines for National Greenhouse Gas Inventories.

The gases considered in the calculation of this indicator are CO2, CH4, and N2O.
305-3 Other indirect (Scope 3) GHG emissions 3. Ensuring Sustainable Development
3.2. Climate Change and Energy Efficiency
fully 2 To disclose other indirect greenhouse gas emissions, the greenhouse gas emissions of Category 1 'Purchased Goods and Services' and Category 4 'Upsteam Transportation and Distribution' defined by the Greenhouse Gas Protocol have been calculated.

For the calculation, the data on greenhouse gas emissions from the production of own resources, as well as standard factors published in public sources (Ecoinvent, GaBi for other purchased resources) are used.

The emissions from the most significant purchased goods and services and their transport have been included in the calculations. The indirect emissions of biogenic CO2 have not been taken into account.

Gases included in the calculation of this indicator: CO2, CH4, N2O.
305-7 Nitrogen oxides (NOx), sulfur oxides (SOx), and other significant air emissions 5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 2 The emission calculation factors used comply with Kazakh environmental legislation, including standards and reporting methodologies. The Company does not generate emissions of persistent organic pollutants (POPs).
GRI 306: Waste
3-3 Management of material topics 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
306-1 Waste generation and significant wasterelated impacts 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
306-2 Management of significant wasterelated impacts 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
306-3 Waste generated 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 2 Industrial waste generated includes drilling cuttings and other drilling waste.
Social Topics
GRI 401: Employment
401-1 New employee hires and employee turnover 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 1
401-2 Benefits provided to full-time employees that are not provided to temporary or part-time employees 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
fully 1
401-3 Parental leave 5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 1
GRI 402: Labor/Management Relations
402-1 Minimum notice periods regarding operational changes 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
fully 1
GRI 403: Occupational Health and Safety
3-3 Management of material topics 3. Ensuring Sustainable Development
3.5. Health and Safety
fully 1
403-1 Occupational health and safety management system 3. Ensuring Sustainable Development
3.5. Health and Safety
fully 1
403-2 Hazard identification, risk assessment, and incident investigation 3. Ensuring Sustainable Development
3.5. Health and Safety
fully 3
403-3 Occupational health services 3. Ensuring Sustainable Development
3.5. Health and Safety
fully 1
403-4 Worker participation, consultation, and communication on occupational health and safety 3. Ensuring Sustainable Development
3.5. Health and Safety
fully 1
403-5 Worker training on occupational health and safety 3. Ensuring Sustainable Development
3.5. Health and Safety
fully 3
403-6 Promotion of worker health 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
fully 1
403-7 Prevention and mitigation of occupational health and safety impacts directly linked by business relationships 3. Ensuring Sustainable Development
3.5. Health and Safety
fully 3
403-8 Workers covered by an occupational health and safety management system 3. Ensuring Sustainable Development
3.5. Health and Safety
fully 1
403-9 Work-related injuries 3. Ensuring Sustainable Development
3.5. Health and Safety
5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 3 Information on man-hours records and LTIFR calculation is maintained for contractors but is not yet ready for disclosure this year. It will be improved for disclosure in the next reporting period.

In 2022, there were no fatal accidents among contractors.
GRI 404: Training and Education
404-1 Average hours of training per year per employee 5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 1
404-2 Programs for upgrading employee skills and transition assistance programs 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
fully 1
GRI 405: Diversity and Equal Opportunity
405-1 Diversity of governance bodies and employees 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
4. Effective Governance
4.4. Board of Directors
4.5. Management Board
5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 1
405-2 Ratio of basic salary and remuneration of women to men 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
5. Annexes
5.2. ESG Performance Indicators 2020-2022
fully 1 The Company does not distinguish between the basic salary of men and women
GRI 406: Non-discrimination
406-1 Incidents of discrimination and corrective actions taken 3. Ensuring Sustainable Development
3.4. Creating an attractive working environment
fully 1 No incidents of discrimination were recorded during the reporting period.
GRI 408: Child Labor
408-1 Operations and suppliers at significant risk for incidents of child labour 3. Ensuring Sustainable Development
3.4. Creating an attractive working environment
fully 1 Kazatomprom respects the rights of children and does not accept any forms of child labour. No cases of child labour by the Company or its suppliers were recorded during the reporting period.
GRI 409: Forced or Compulsory Labor
409-1 Operations and suppliers at significant risk for incidents of forced or compulsory labour 3. Ensuring Sustainable Development
3.4. Creating an attractive working environment
fully 1 Kazatomprom does not accept any forms of forced or compulsory labour.

There were no recorded incidents of forced labour by the Company or its suppliers during the reporting period.
GRI 411: Rights of Indigenous Peoples
411-1 Incidents of violations involving rights of indigenous peoples 3. Ensuring Sustainable Development
3.4. Creating an attractive working environment
fully 1 There were no recorded incidents of violations of the rights of indigenous people and minorities during the reporting period.

There were also no complaints about human rights violations by these groups.
GRI 413: Local Communities
3-3 Management of material topics 3. Ensuring Sustainable Development
3.6. Creating shared values
fully 1
413-1 Operations with local community engagement, impact assessments, and development programs 3. Ensuring Sustainable Development
3.6. Creating shared values
fully 1 The activities to support and engage with local communities are carried out throughout the Group.
GRI 415: Public Policy
415-1 Political contributions 4. Effective Governance
4.12. Corporate Ethics and Compliance
fully 1
Standard and indicators Disclosure Report page Disclosure degree Report sections
Indicators of Kazatomprom
KAP1 Production Lifecycle 120 fully 3. Ensuring Sustainable Development
3.2.2. Deposit Lifecycle Management
KAP2 Readiness for emergencies 158 fully 3. Ensuring Sustainable Development
3.5. Health and Safety
KAP3 Radiation safety 156 fully 3. Ensuring Sustainable Development
3.5. Health and Safety

SASB Index

SASB indicator Disclosure Section of the Report Comments Disclosure Degree Scope
EM-MM-110a.1. Gross global Scope 1 emissions
Percentage covered under emissions-limiting regulations
3. Ensuring Sustainable Development
3.2. Climate Change and Energy Efficiency
5. Annexes
5.2. ESG Performance Indicators 2020-2022
Percentage covered under emissions-limiting regulations – 0% fully 2
EM-MM-110a.2. Discussion of long-term and short-term strategy or plan to manage Scope 1 emissions, emissions reduction targets, and an analysis of performance against those targets 3. Ensuring Sustainable Development
3.2. Climate Change and Energy Efficiency
fully 1
EM-MM-120a.1 Air emissions of the following pollutants:
(1) CO,
(2) NOx (excluding N2O),
(3) SOx,
(4) particulate matter (PM10),
(5) mercury (Hg),
(6) lead (Pb),
(7) volatile organic compounds (VOCs)
5. Annexes
5.2. ESG Performance Indicators 2020-2022
No emissions of mercury. In the Group, there are emissions of lead and its compounds only at Ulba Metallurgical Plant JSC, Volkovgeologia JSC, Karatau LLP, Semizbay-U LLP — 0.000466 tonnes partially 2
EM-MM-130a.1. (1) Total energy consumed; (2) Percentage grid electricity; (3) Percentage renewable 3. Ensuring Sustainable Development
3.2. Climate Change and Energy Efficiency
Percentage renewable: 0.33%
Percentage grid electricity: 56.50%
partially 2
EM-MM-140a.1. (1) Total fresh water withdrawn; (2) Total fresh water consumed; (3) Percentage of each in regions with High or Extremely High Baseline Water Stress 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
Total freshwater withdrawal was 4,063,900 m³. The Company does not keep records of water withdrawal in regions with a shortage of water resources. partially 2
EM-MM-140a.2 Number of incidents of non-compliance associated with water quality permits, standards, and regulations 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
In 2022, we identified three incidents of non-compliance with waterrelated requirements 1
EM-MM-150a.4 Total weight of non-mineral waste generated 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
Total weight of nonmineral waste generated is 269,281.47 tonnes fully 2
EM-MM-150a.5 Total weight of tailings produced The Group produces no tailings not applicable 2
EM-MM-150a.6 Total weight of waste rock generated The Group generates no waste rock not applicable 2
EM-MM-150a.7 Total weight of hazardous waste generated 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
5. Annexes
5.2. ESG Performance Indicators 2020-2022
The new Environmental Code changed the waste classifier. Now, we have updated and introduced a new waste classifier as part of the Corporate Data Storage project. We will disclose the information on waste according to the new classifier in the 2023 Report not disclosed 2
EM-MM-150a.8 Total weight of hazardous waste recycled The new Environmental Code changed the waste classifier.

Now, we have updated and introduced a new waste classifier as part of the Corporate Data Storage project. We will disclose the information on waste according to the new classifier in the 2023 Report
not disclosed 2
EM-MM-150a.9 Number of significant incidents associated with hazardous materials and waste management 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
In 2022, we identified seven incidents of non-compliance related to the management of hazardous materials and waste fully 1
EM-MM-150a.10 Description of waste and hazardous materials management policies and procedures for active and inactive operations 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
EM-MM-160a.1. Description of environmental management policies and practices for active sites 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
EM-MM-160a.2. Percentage of mine sites where acid rock drainage is: (1) predicted to occur,
(2) actively mitigated, and
(3) under treatment or remediation
The Group has no mine sites not applicable 1
EM-MM-160a.3. Percentage of (1) proven and (2) probable reserves in or near sites with protected conservation status or endangered species habitat 3. Ensuring Sustainable Development
3.3. Taking Care of Our Plant
fully 1
EM-MM-210a.1. Percentage of (1) proven and (2) probable reserves in or near areas of conflict The Group has no reserves in or near areas of conflict not applicable 1
EM-MM-210a.2. Percentage of (1) proved and (2) probable reserves in or near indigenous land The Group has no reserves in or near indigenous land not applicable 1
EM-MM-210a.3. Discussion of engagement processes and due diligence practices with respect to human rights, indigenous rights, and operation in areas of conflict There are no areas of conflict and indigenous people not applicable 1
EM-MM-210b.1. Discussion of process to manage risks and opportunities associated with community rights and interests 3. Ensuring Sustainable Development
3.6. Creating Shared Values
No information on community risks partially 1
EM-MM-210b.2. Number and duration of non-technical delays Number of non-technical delays – 0 fully
EM-MM-310a.1. Percentage of active workforce covered under collective bargaining agreements, broken down by U.S. and foreign employees 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
fully 1
EM-MM-310a.2. Number and duration of strikes and lockouts Number of strikes and lockouts – 0 fully 1
EM-MM-320a.1. (1) MSHA all-incidence rate, (2) fatality rate, (3) near miss frequency rate (NMFR) and (4) average hours of health, safety, and emergency response training for (a) fulltime employees and (b) contract employees 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
(1) MSHA all-incidence rate – 0.021 (per 200,000 hours worked as recommended by SASB standards)

(2) FAR = 0.007 (per 200,000 hours worked as recommended by SASB standards)

(3) Near misses frequency rate – 0.848 (per 200,000 hours worked as recommended by SASB standards)

(4) Not disclosed as the Company does not keep separate records of the number of hours of health & safety and emergency response training for its staff and contractors
partially 3
EM-MM-510a.1. Description of the management system for prevention of corruption and bribery throughout the value chain 4. Effective Governance
4.12. Corporate Ethics and Compliance
fully 1
EM-MM-510a.2. Production in countries that have the 20 lowest rankings in Transparency International’s Corruption Perception Index Kazakhstan is not on the rankings not applicable 1
EM-MM-540a.1. Tailings storage facility inventory table:
(1) facility name,
(2) location,
(3)ownership status,
(4) operational status,
(5) construction method,
(6) maximum permitted storage capacity,
(7) current amount of tailings stored,
(8) consequence classification,
(9) date of most recent independent technical review,
(10) material findings,
(11) mitigation measures,
(12) site-specific EPRP
The Group produces no tailings not applicable 1
EM-MM-540a.2. Summary of tailings management systems and governance structure used to monitor and maintain the stability of tailings storage facilities The Group produces no tailings not applicable 1
EM-MM-540a.3. Approach to developing emergency preparedness and response plans for tailings The Group produces no tailings not applicable 1
EM-MM000.A Production of (1) metal ores and (2) finished metal products 1. Opening Up New Opportunities
1.4. Analysis of Performance Dynamics
fully 1
EM-MM-000.B Total number of employees, percentage contractors 3. Ensuring Sustainable Development
3.4. Creating an Attractive Working Environment
5. Annexes
5.2. ESG Performance Indicators 2020-2022
Information on contractors' employee records is maintained, but is not ready for disclosure. It will be streamlined for disclosure in the next reporting period partially 1

TCFD Index

Indicator Section of the Report
Governance
a. Describe Board of Director’s oversight of climate-related risks and opportunities

4. Effective Governance

4.1. Corporate Governance System

4.4. Board of Directors

b. Describe Management’s role in assessing and managing climate-related risks and opportunities

3. Ensuring Sustainable Development

3.1. ESG and Sustainable Business

Metrics & Targets
a. Describe metrics used by the organisation to assess climate-related risks and opportunities

3. Ensuring Sustainable Development

3.2. Climate Change and Energy Efficiency

3.3. Taking Care of Our Plant

5. Annexes

5.2. ESG Performance Indicators 2020-2022

c. Describe targets used by the organisation to manage climate-related risks and opportunities

3. Ensuring Sustainable Development

3.3. Taking Care of Our Plant

b. Disclose Scope 1, Scope 2, and, where necessary, Scope 3 greenhouse gas (GHG) emissions and emissions-related risks

3. Ensuring Sustainable Development

3.2. Climate Change and Energy Efficiency

3.3. Taking Care of Our Plant

5. Annexes

5.2. ESG Performance Indicators 2020-2022

Strategy
b. Describe impact of climate-related risks on the organisation’s businesses, strategy, and financial planning

3. Ensuring Sustainable Development

3.2. Climate Change and Energy Efficiency

Risk Management
a. Describe the organisation’s processes for identifying and assessing climaterelated risks

3. Ensuring Sustainable Development

3.2. Climate Change and Energy Efficiency

b. Describe the organisation’s processes for managing climate-related risks

3. Ensuring Sustainable Development

3.2. Climate Change and Energy Efficiency

c. Describe the integration of processes for identifying, assessing, and managing climate-related risks into the organisation’s overall risk management

3. Ensuring Sustainable Development

3.2. Climate Change and Energy Efficiency

UNCTAD Indicators Table

Area Indicators Performance indicators
A Economic area
А.1 Revenue and/or (net) value added A.1.1: Revenue KZT 1,001.1 billion
A.1.2: Value added KZT 686.7 billion
A.1.3: Net value added KZT 607.6 billion
А.2 Payments to the Government A.2.1: Taxes and other payments to the Government KZT 259.5 billion
А.3 New investment/expenditures A.3.1: Green investment KZT 1,074.8 million in environmental expenses
A.3.2: Community investment KZT 1.1 billion
A.3.3: Total expenditures on research and development KZT 6.8 billion
А.4 Total cost of local supplier/ purchasing programmes A.4.1: Percentage of local procurement 82%
B Environmental area
В.1 Sustainable use of water B.1.1: Water recycling and reuse No data available due to revised methodology
B.1.2: Water use efficiency 9,188,900 m³ of water withdrawn. In 2022, the total water withdrawn dropped by 9% against 2021
B.1.3: Water stress

Water consumption in 2022:

  • surface water – 6,500 m³
  • ground water - 8,573,500 m³
  • municipal and other water supply systems - 608,900 m³
В.2 Waste management B.2.1: Reduction of waste generation In 2022, Kazatomprom accumulated a total of 604,600,000 tonnes of waste
B.2.2: Waste reused, remanufactured and recycled The Company does not reuse the waste
B.2.3: Hazardous waste In view of the new Environmental Code, the subsidiaries and affiliates update the reporting according to the new waste classifier (some items of waste require laboratory research)
В.3 Greenhouse gas emissions B.3.1: Greenhouse gas emissions (Scope 1) 97,260 tonnes of CO2 eq.
B.3.2: Greenhouse gas emissions (Scope 2) Market method – 844,034 tonnes of CO2 eq.
В.4 Chemicals, including pesticides and ozone-depleting substances B.4.1: Chemicals, including pesticides and ozone-depleting substances We do not use ozone depleting substances
В.5 Energy consumption B.5.1: Renewable energy 3.01 MWh of annual electricity produced by PV plants installed at production sites
B.5.2: Energy efficiency Total energy consumption was 3,929,000 GJ
C Social area
С.1 Gender equality C.1.1: Proportion of women in managerial positions Share of female managers was 9% in 2022
C.2 Human capital C.2.1: Average hours of training per year per employee Average number of hours spent on training of one employee was 54 hours
C.2.2: Expenditure on employee training per year per employee

KZT 330,200 for administrative staff and management, KZT 71,500 for production staff

C.2.3: Employee wages and benefits as a proportion of revenue, with breakdown by employment type and gender KZT 99,395 million in the total payroll fund
C.3 Employee health and safety C.3.1: Expenditures on employee health and safety as a proportion of revenue In 2022, Kazatomprom's health and safety spending made KZT 8.08 billion, equivalent to 1% of the Company's revenues
C.3.2: Frequency/incident rates of occupational injuries LTIFR was 0.11
С.4 Coverage by collective agreements C.4.1: Percentage of employees covered by collective agreements 99%
D Institutional area
D.1 Corporate governance disclosure D.1.1: Number of board meetings and attendance rate

In 2022, the Board of Directors held 14 in-person meetings to consider 239 matters.

The attendance of meetings by Board members was 94.4% on aver-age in 2022

D.1.2: Number and percentage of women board members 14% (as of the end of the year)
D.1.3: Board members by age range

Board members by age:

  • Under 30 - 0%
  • 30-50 – 57%
  • 50+ - 43%
D.1.4: Number of meetings of audit committees and attendance rate

The Audit Committee held 12 in-person meetings and 1 meeting in absentia in the reporting year.

The attendance was 100%.

D.1.5: Total compensation and compensation per member of the board of di-rectors and management KZT 0.98 billion in total remuneration paid to the Board of Directors and Management Board billion
D.2 Anti-corruption practices D.2.1: Amount of fines paid or payable in accordance with the convictions No administrative penalties for corruption offences in the reporting period
D.2.2: Average hours of training on anticorruption issues per year per employee Not available

Independent Assurance Report

GRI 2-5

Consolidated Financial Statements

Notes to the consolidated financial statements

1. NAC Kazatomprom JSC 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 2022 for National Atomic Company Kazatomprom JSC (the “Company”) and its subsidiaries (hereinafter collectively referred to as “the Group” or “NAC Kazatomprom JSC”).

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 of 31 December 2022, 75% of the Company’s shares are held by Samruk- Kazyna JSC and 25% are on free float. Government is the ultimate controlling party of the Group. This is unchanged from the prior year end.

The Company’s registered address is Syganak Street, building 17/12, Astana 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.

NAC Kazatomprom JSC 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). The Group’s development strategy focuses 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 2022, the Group and its associates and joint ventures were a party to the following contracts for production and exploration of uranium:

Mine/area Stage Contract date Contract term
Group
Kazatomprom-SaUran LLP
Kanzhugan Production 27 November 1996 51 years
Uvanas Liquidation 27 November 1996 26 years
Mynkuduk, East lot Production 27 November 1996 31 years
Moinkum, lot 1 (South) (south part) Liquidation 26 September 2000 20 years
Moinkum, lot 3 (Central) (north part) Production 31 May 2010 29 years
DP Ortalyk LLP
Mynkuduk, Central lot Production 8 July 2005 28 years
Zhalpak Production 14 December 2021 21 years
Appak LLP
Mynkuduk, West lot Production 8 July 2005 30 years
RU-6 LLP
North and South Karamurun Production 15 November 1996 44 years
JV Inkai LLP
Inkai, block 1 Production 13 July 2000 45 years
Company
Inkai, block 2 Exploration 25 June 2018 6 years
Inkai, block 3 Exploration 25 June 2018 4 years*
Baiken-U LLP
North Khorasan, block 2 Production 1 March 2006 49 years
JV Khorassan-U LLP
North Khorasan, block 1 Exploration and Production 8 May 2005 53 years
Karatau LLP
Budenovskoe, block 2 Production 8 July 2005 35 years
JV Akbastau JSC
Budenovskoe, block 1 Production 20 November 2007 30 years
Budenovskoe, blocks 3, 4 Production 20 November 2007 31 years
Associates
JV KATCO LLP
Southern Moinkum (Northern part and Tortkuduk) Production 3 March 2000 39 years
JV Zarechnoye JSC
Zarechnoye Production 23 September 2002 23 years
JV South Mining Chemical Company LLP
Akdala Production 28 March 2001 25 years
Inkai, block 4 Production 8 July 2005 24 years
Joint Ventures
Semizbay-U LLP
Semizbay Production 2 June 2006 25 years
Irkol Production 14 July 2005 25 years
JV Budenovskoe LLP
Block 6&7 Budenovskoye Production 16 October 2020 25 years

On 31 December 2022, the Group comprises 33 entities (2021: 33), including associates and joint ventures, located in six regions of the Republic of Kazakhstan: Turkestan region, East Kazakhstan region, Kyzylorda region, Akmola region, Pavlodar region and Almaty region. On 31 December 2022, the aggregate number of employees of the Group is 21 thousand (2021: 21 thousand) people.

2. Environment of the Group

The economy of the Republic of Kazakhstan continues to display characteristics of an emerging market. Its economy is particularly sensitive to prices on oil and gas and other commodities, which constitute a major part 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 little presence of Kazakhstani debt and equity securities on foreign stock exchanges. Higher inflation, challenges posted by the domestic unrest in January 2022, ongoing political tension in the region and volatility of exchange rates have had and may continue to have a negative impact on the economy of the Republic of Kazakhstan, including decrease 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 resolved to discontinue supporting the exchange rate of Tenge and implemented a new monetary policy, which is based on an inflation targeting regime, cancellation of exchange rate trading band and start of 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 this report, the official exchange rate of the National Bank of the Republic of Kazakhstan was KZT 464.79 per 1 US Dollar compared to Tenge 462.65 per 1 US Dollar as of 31 December 2022 (31 December 2021: Tenge 431.67 per 1 US Dollar). The average exchange rate for 2022 was Tenge 460.85 per 1 US Dollar (2021: Tenge 426.03 per US Dollar 1). Uncertainty remains in relation to the exchange rate of Tenge and future actions of the National Bank and the Government of the Republic of Kazakhstan and the impact of these factors on the economy of the Republic of Kazakhstan.

COVID-19

In March 2020, the World Health Organisation declared the outbreak of COVID-19 a global pandemic. In response to the pandemic, the Kazakhstani authorities implemented numerous measures attempting to contain the spreading and impact of COVID-19, such as travel bans and restrictions, quarantines, shelter-in-place orders and limitations on business activity, including closures. Most of those measures were subsequently relaxed, however, as of 31 December 2022, there remains a risk that the authorities may impose additional restrictions in 2023 as a response to possible new variants of the virus.

Conflict between Russia and Ukraine

On 21 February 2022 the Russian President announced that the Russian government would recognise the Luhansk and Donetsk People’s Republics. On 24 February the Russian president directed its military to mobilize troops to the territory of Ukraine. As a response to the Russian actions, the United States, the European Union and a number of other states imposed sanctions against Russia including the disconnection of a number of Russian financial institutions from SWIFT. Russia is Kazakhstan's largest trading partner and is a key country of transit for trade, notably via the Caspian Pipeline Consortium (CPC) pipeline, through which up to 80% of Kazakh crude is exported.

CPC operations were temporarily interrupted in March 2022 officially due to storm damage, which did not have a significant budgetary economic impact because of rising oil prices. However, a prolonged closure by Russia of the CPC route for Kazakh crude oil would have serious consequences for Kazakh exports and the economy as a whole. The Kazakh authorities consider alternative routes to the Caspian Sea, including through Azerbaijan, Georgia and Turkey, but these will require significant additional infrastructure and it will take many years to replace the CPC route.

In connection with the Russian/Ukraine conflict and its consequences, the Tenge exchange rate began to be more volatile and the annual inflation rate was 20.3% in 2022. To date, the National Bank of the Republic of Kazakhstan has taken a number of measures to maintain the stability of the Kazakhstan financial system.

The Group’s exported products are transported through Russia which creates risks associated with both transit through the territory of Russia and the delivery of cargo by sea vessels, logistical constraints could also increase import costs. The Group constantly monitors the potential impact of sanctions on the transportation of finished products. At the date of these financial statements, there are no restrictions on the Group's activities related to the supply of the Group's products to end customers. The Group also has permission to transit uranium through the Trans-Caspian International Transport Route (hereinafter referred to as the TITR), which the Group has successfully used as an alternative route since 2018 to help mitigate the risk of the primary route being unavailable, for any reason. There are also risks associated with Russian partners in Group’s subsidiaries, associates and joint ventures, including reputational and corporate governance risks.

The Group has a Uranium Processing Agreement with the Uranium Enrichment Center (TsOU) (a resident of the Russia). At the date of these financial statements, the Group anticipates that provision of services under this agreement will continue as the situation should not affect the activities of the TsOU and its ability to enrich uranium for the Group.

As part of its ongoing risk assessment program, management is reviewing the impact of anti-Russian sanctions on the Group's operations. To date, the sanctions have not had a significant impact on the Group's operations, although the resulting market uncertainty caused by the conflict between Russia and Ukraine has led to significant volatility in the spot uranium price, the exchange rate of the national currency and the quotations of the Company's securities. During the reporting period, the Company experienced some difficulties with certain bank payments, as described in Note 28. As of December 31, 2022, all funds placed with financial institutions included in the sanctions list were withdrawn and transferred to other financial institutions.

The most significant factors that affected the Group’s results of operations during the year included:

The above factors had a positive effect on revenue from sales of uranium in the current period that increased by approximately Tenge 245,318 million (Note 9).

Most of the Group’s borrowings are denominated in US Dollars, including Tenge bonds with indexation to the US Dollar. As a result of depreciation of the Tenge against the US Dollar, loans and borrowings have increased by Tenge 4,758 million at 31 December 2022 (Note 15).

The net foreign exchange gain was larger in 2022 than in 2021 by approximately Tenge 13,959 million (Note 15) in line with the US Dollar appreciation because most of the Group’s consolidated accounts receivable and cash are denominated in US Dollars.

The economic environment has a significant impact on the Group’s operations and financial position. Management is taking necessary measures to ensure sustainability of the Group’s operations. However, the future effects of the current economic situation are difficult to predict, and management’s current expectations and estimates could differ from actual results. Additionally, the energy sector in the Republic of Kazakhstan is still 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 any economic and public policy measures undertaken by the Government which are beyond the Group’s control.

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 treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. Any difference between the purchase consideration and the carrying amount of non-controlling interest acquired is recorded as a capital transaction directly in equity. The Group recognizes 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 results 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 share of any assets held jointly, (ii) its share of any liabilities incurred jointly, (iii) revenue from the sale of its share of the output arising from the joint operation, (iv) 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/ receivable is 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 the 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. The official exchange rate of Kazakhstan Stock Exchange (KASE) as of 31 December 2022 was Tenge 462.65 per 1 US Dollar (2021: Tenge 431.80 per 1 US Dollar). 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:

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.

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) 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 30-270 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 an account with a convertor specified by the customer. A booktransfer operation represents a transaction whereby the uranium account balance of the transferor is decreased with a 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 standalone 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 reclassified exploration and evaluation costs, 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. Under existing production method the wellfields are progressively established over the orebody as uranium is depleted by blocks.

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 and probable reserves, except for capitalised development costs that are amortised based on ready for extraction volumes. Ready for extraction volumes represent a portion of proved and probable reserves that management estimates to extract from a block/mine as a result of available capitalised costs. The estimate of proved and probable reserves is based on reserve reports which are an 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. Intangible assets not ready for use is not amortised being part of intangible assets under development.

(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 and probable reserves commencing when uranium first starts to be extracted.

The estimate of proved and probable reserves is based on reserve reports, which are an 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):

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:

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 represented 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 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.

(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 pass-through 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 bank deposits 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. Balances restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period are included in other noncurrent assets.

Cash and cash equivalents also include reverse repurchase transaction (reverse repo), an investment in highly liquid government securities with the agreement to sell them at a higher price within 1 to 30 days. Repo transactions are readily convertible to cash and cash equivalents and are subject to insignificant risk of changes in value as they are backed by the government of the Republic of Kazakhstan.

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 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 received 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 noncurrent 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. Non-current 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

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 non-controlling 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 shortterm 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 asset retirement obligations

Provisions for assets retirement obligations include site restoration and environment protection provisions. Asset 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 clean-up, monitoring of wastes and land restoration). Provision for the estimated costs of liquidation, rehabilitation and restoration are established and charged to the cost of corresponding asset 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. Site restoration provisions are charged fully to the cost of mine development assets despite some of the costs might include decommissioning of property, plant and equipment in accordance with site liquidation plans and materiality grounds.

Movements in the provisions for asset retirement obligations, resulting from updated cost estimates, changes to the estimated term of operations and revisions to discount rates are capitalised within mine development assets. These amounts are then depreciated under unit of production method based on the produced volumes during the period, including losses, to the total number of proved reserves for each deposit.

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 costs and related contributions

Wages, salaries, contributions to pension and social insurance funds, paid annual leave and sick leave, bonuses, and non-monetary 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.

Change in presentation

Certain amounts in the consolidated statement of cash flows for 2021 have been reclassified in accordance with the presentation applied in 2022. The effect on comparative information for the year ended 31 December 2021 is as follows:

In millions Tenge As originally presented Reclassification As reclassified for 2021
Cash receipts from customers 782,316 (2,335) 779,981
Payments to suppliers (503,301) 14,418 (488,883)
Payments to employees (51,856) (11,380) (63,236)
Interest paid (3,265) (54) (3,319)
Other taxes paid (55,227) 4,345 (50,882)
Social payments - (3,166) (3,166)
Net other (payments)/receipts (1,499) (1,828) (3,327)

Certain amounts in the consolidated statement of financial position as of 31 December 2021 have been reclassified in accordance with the presentation applied as of 31 December 2022 as follows:

In millions Tenge As originally pre-sented Reclassification As reclassified as of 31 December 2021
Non-current assets
Investment property 2,065 (2,065) -
Right-of-use assets 838 (838) -
Loans to related parties 5,493 (5,493) -
Other financial assets - 23,671 23,671
Other non-financial assets - 24,258 24,258
Other non-current assets 39,533 (39,533) -
Current assets
Loans to related parties 3,357 (3,357) -
Short-term securities 4,986 (4,986) -
Term deposits 43,220 (43,220) -
Other current assets 7,823 (7,823) -
Other financial assets - 52,249 52,249
Other non-financial assets - 7,137 7,137

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 including the carrying amounts of assets and liabilities. Estimates and judgements are continually evaluated and are based upon 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 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 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 relevant assets as well as depreciation and amortisation expense. Estimates of uranium reserves also determine the life of mines, which in turn affect asset retirement obligation calculations.

On an annual basis, the Group engages an independent consultant to assess the Group’s ore reserves and mineral resources in accordance with the Australasian Code for reporting on geological exploration works, mineral resources and ore reserves (hereinafter JORC Code). Independent assessment of reserves and resources was carried out as of 31 December 2022 and 2021. The consultant reviewed all key information upon which the reported mineral resource and ore reserve statements for the mining assets of the Group are based.

The consultant’s reports contain an assessment of the tons 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 tons of uranium contained in ore currently planned to be extracted as envisaged by the respective life-of-mine plans (the ore reserve). The Group used the ore reserves data for calculation of impairment of long-term assets, unit of production depreciation for each of the Group’s mines as well as asset retirement obligation calculations.

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 2022.

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 2022, management conducted an analysis and did not find any impairment indicators of assets (cash generating units) associated with the production of uranium products.

Provision for asset retirement obligations (estimates)
Site restoration provisions for 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 landfills 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 are recognised when there is a certainty of incurring of such liabilities and when it is possible to measure the amounts reliably. The scope of work stipulated by the legislation and included in the calculations of the asset retirement obligations contains 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.

The calculation of the provision for production assets retirement as of 31 December 2022 was performed by the Group’s internal specialists and reviewed by an independent consultant.

On 31 December 2022, site restoration provision for mining assets was Tenge 38,116 million (2021: Tenge 31,431 million) (Note 34). The increase is mainly attributable to the update of prices for liquidation works that reflect the current economic environment, as well as the impact of introducing a unified calculation methodology across the Group mining entities that resulted in re-estimates of required liquidation works, including low radioactive waste management, dismantlement of process units and handling of construction debris.

Principal assumptions used in the estimations include:

Sensitivity analysis of the principal assumptions as of 31 December 2022 is as follows:

In millions of Kazakhstani Tenge (Decrease)/Increase of assumptions (Decrease)/Increase of decommissioning provisions
Inflation rate -1% (4,469)
+1% 5,288
Discount rate -1% 5,052
+1% (4,229)

Sensitivity analysis of the principal assumptions as of 31 December 2021 is as follows:

In millions of Kazakhstani Tenge (Decrease)/Increase of assumptions (Decrease)/Increase of decommissioning provisions
Inflation rate -1% (4,360)
+1% 5,139
Discount rate -1% 4,948
+1% (4,152)
Provision for environment protection - decommissioning of Ulba metallurgical plant

The Group has previously recognised an obligation only for the disposal of radioactive waste, landfill restoration and asset remediation for Ulba Metallurgical Plant JSC (Note 34). In 2021 the Ecological Code of the Republic of Kazakhstan (the Code) came into effect. The Code stipulates that operators of assets that are considered to have a negative impact on the environment have an obligation to decommission such assets in accordance with the requirements of the legislation. Liquidation measures will depend on the assets’ nature and the degree of their impact on the environment.

The Group has recognised for the first time a decommissioning provision as of 31 December 2022 of KZT 7,624 million based on its current interpretation of the relevant legislation and technical analysis performed. The liability recognised includes dismantlement of facilities and infrastructure located at production facility sites (technological sites, landfills, buildings and other facilities), radioactive waste disposal and subsequent land restoration.

Principal assumptions used in the estimations include:

Total provision for the Ulba Metallurgical Plant JSC as of 31 December 2022 amounted to Tenge 9,243 million (2021: Tenge 1,339 million). Sensitivity analysis of the principal assumptions as of 31 December 2022 is as follows:

In millions of Kazakhstani Tenge (Decrease)/Increase of assumptions (Decrease)/Increase of decommissioning provisions
Inflation rate -1% (3,148)
+1% 4,950
Discount rate -1% 4,665
+1% (2,986)
Discount period -1% 2,682
+1% (2,044)

Based on the Group’s analysis of current regulation, management concluded that certain other Ulba metallurgical plant’s assets should be excluded from asset retirement obligations as of 31 December 2022 since there is no reasonable calculation method for these types of assets and/or the potential amount of such liabilities is not significant. This judgement is based on the following:

As the requirements of the Environmental Code are relatively new, there is no practice of applying these requirements and there are ambiguities in the legislation, management has applied significant judgment in terms of assessing liabilities and their amounts. In case of changes in environmental legislation, its interpretation and practice of its application, as well as in the judgments and in the Group's estimates, such liabilities may be revised in the future.

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 2022, the Group did not recognise sales revenue from swap transactions of Tenge 195,958 million and related cost of sales of Tenge 207,789 million. In 2021, the Group did not recognise sales revenue from swap transactions of Tenge 146,910 million, and cost of sales of Tenge 135,158 million. The Group has recognised liabilities under swap transactions in the amount of Tenge 4,709 million as of 31 December 2022 (2021: Tenge 15,355 million) for the volume of uranium that would be returned under swap transactions (Note 36) post balance date.

Control over DP Ortalyk LLP (judgement)

On 22 July 2021 the Group completed the sale of a 49% interest in DP Ortalyk LLP (Note 39). The Group retains a 51% ownership interest and majority voting rights in the Supervisory Board of that entity. Sales activities of DP Ortalyk LLP are governed by the Marketing agreement, any amendments to which would require consent by both owners. The Group governs production activity within the 20% limit permitted by law through its power to approve the entity’s budget by simple majority vote. Decisions about financing of DP Ortalyk LLP are made by unanimous consent of both owners. Сurrently, DP Ortalyk LLP does not rely on shareholders’ or external financing. All production volumes are committed to be purchased by the Group and the minority shareholder based upon market prices. Production volumes and costs have a significant impact on financial results and are considered to be the most relevant activities for the purpose of the control assessment. Based on these facts, the Group management has concluded that the Group retains control over DP Ortalyk LLP.

5. Adoption of New or Revised Standards and Interpretations

The following amendments became effective from 1 January 2022, but did not have any material impact on the Group:

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).

6. New Accounting Pronouncements

Certain new standards and interpretations have been issued that are mandatory for annual periods beginning on or after 1 January 2023 or later, and which the Group has not early adopted. These are:

The Group is currently assessing the impact of the amendments on its financial statements.

Unless otherwise described above, 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:

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:

(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 2022 and 2021 is set out below:

In millions of Kazakhstani Tenge Uranium UMP Other Eliminations Total
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
External revenue 856,952 616,860 114,555 55,323 29,664 18,828 - - 1,001,171 691,011
Revenues from other segments 63,141 4,846 6,855 4,908 70,008 54,083 (140,004) (63,837) - -
Cost of sales (409,158) (350,052) (94,672) (42,534) (97,190) (65,175) 125,923 54,794 (475,097) (402,967)
Gross profit 510,935 271,654 26,738 17,697 2,482 7,736 (14,081) (9,043) 526,074 288,044
Net reversal/(impairment losses) (22) (5,791) (297) (200) 421 1,978 206 - 308 (4,013)
Share of results of associates and joint ventures 89,442 52,341 (1,748) (1,932) 1,382 1,174 - - 89,076 51,583
Net foreign exchange gain 16,625 2,845 672 488 7 12 - - 17,304 3,345
Finance income 15,626 6,390 743 246 958 441 - - 17,327 7,077
Finance expense (6,754) (6,237) (1,447) (464) (332) (195) 108 184 (8,425) (6,712)
Income tax expense (105,947) (58,759) (4,165) (2,606) (630) (253) - - (110,742) (61,618)
Profit/(loss) for the year 467,382 212,963 12,803 7,085 (2,920) 4,222 (4,302) (4,244) 472,963 220,026
Depreciation and amortisation charge (77,951) (63,348) (2,066) (1,924) (4,914) (4,718) 3,553 728 (81,378) (69,262)
Investments in associates and joint ventures 186,961 142,920 957 2,705 10,414 9,070 - - 198,332 154,695
Total reportable segment assets 2,361,914 2,061,161 155,011 111,224 89,774 77,142 (385,016) (299,236) 2,221,683 1,950,291
Assets of disposal groups classified as held for sale - - - - 850 1,213 - - 850 1,213
Total assets 2,361,914 2,061,161 155,011 111,224 90,624 78,355 (385,016) (299,236) 2,222,533 1,951,504
Total liabilities 813,577 657,916 71,798 36,630 25,957 19,057 (385,302) (299,200) 526,030 414,403
Capital expenditure 59,059 45,096 4,794 3,631 8,123 4,783 - - 71,976 53,510

Capital expenditure represents additions to non-current assets other than financial instruments, deferred tax assets, post-employment 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 2022 2021
China 272,291 191,212
Canada 160,278 115,163
United Kingdom (including Jersey and Cayman Islands) 150,427 156,928
USA 112,590 94,114
Kazakhstan 109,595 25,113
Russia 87,877 10,952
France 68,054 50,134
Other countries 40,059 47,395
Total consolidated revenues 1,001,171 691,011
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 324,509 million (2021: Tenge 236,204 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 services such as electricity transmission services and telecommunications.

At 31 December 2022, the outstanding balances with related parties were as follows:

In millions of Kazakhstani Tenge Accounts receivable and other assets Other financial assets Accounts payable and other liabilities Loans and borrowings
Associates 4,447 5,933 43,703 7,002
Joint ventures 6,559 94 48,428 -
Entities under common control 362 9,274 1,119 -
Controlling shareholder - - 17 -
Associates of the controlling shareholder 12 - 1,236 -
Total 11,380 15,301 94,503 7,002

Transactions with related parties for the year ended 31 December 2022 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 and other income Finance and other costs
Associates 12,321 38,503 152,580 - 699 9
Joint ventures 53,111 6,934 39,490 - 28 -
Entities under common control 41 - 11,582 - 1,090 7,543
Controlling shareholder - - - 170,541 - 1
Associates of the controlling shareholder 150 - 13,041 - - -
Total 65,623 45,437 216,693 170,541 1,817 7,553

From December 2015, JV Khorasan-U LLP (over which the Group obtained control in 2019) is a co-borrower and guarantor of a loan to Kyzylkum LLP given by the Company in 2010 in the amount of Tenge 5,945 million (2021: Tenge 8,716 million).

In June 2021, the Group provided to Uranenergo LLP repayable financial aid secured by that entity’s property in the form of a revolving credit line with a term until 30 June 2023 in the amount of Tenge 187 million. As of December 31, 2022, the remaining amount repayable is Tenge 94 million (Note 28).

The Group is a guarantor for loans obtained by SKZ-U LLP in the amount of Tenge 1,864 million (2021: Tenge 5,220 million) and Ulba-FA LLP in the amount of Tenge 17,072 million (2021: Tenge 15,934 million) (Note 36).

In 2022 the Group transfers obligatory pension payments for its employees to the state-owned Unified Accumulative Pension Fund JSC in the amount of Tenge 7,543 million (2021: Tenge 5,329 million) (Note 16).

At 31 December 2021, the outstanding balances with related parties were as follows:

In millions of Kazakhstani Tenge Accounts receivable and other assets Other financial assets Accounts payable and other liabilities Loans and borrowings
Associates 1,458 8,663 29,961 10,514
Joint ventures 4,270 187 18,508 -
Entities under common control 238 - 606 -
Controlling shareholder - - 127 -
Associates of the controlling shareholder 11 - 1,013 -
Total 5,977 8,850 50,215 10,514

Transactions with related parties for the year ended 31 December 2021 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 and other income Finance and other costs
Associates 7,833 15,028 90,966 - 912 -
Joint ventures 12,291 2,080 29,051 - - -
Entities under common control 79 - 5,867 - - -
Controlling shareholder - - - 112,561 - 90
Associates of the controlling shareholder 130 - 5,599 - - -
Total 20,333 17,108 131,483 112,561 912 90

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 associated taxes and payments. No remuneration is paid or payable to representatives of the Controlling shareholder in the Board of Directors.

In millions of Kazakhstani Tenge 2022 2021
Expense Accrued liability Expense Accrued liability
Short-term benefits
Salaries and bonuses 983 55 1,088 60
Total 983 55 1,088 60

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 2022 2021
Sales of uranium 851,427 606,109
Sales of uranium products 57,806 18,939
Sales of beryllium products 31,986 26,119
Sales of tantalum products 23,171 15,777
Sales of purchased goods 15,164 5,860
Sales of other services 11,147 6,459
Drilling services 3,730 4,357
Transportation services 3,586 3,413
Sales of materials and other goods 2,815 3,713
Research and development 339 265
Total revenue 1,001,171 691,011

10. Cost of Sales

In millions of Kazakhstani Tenge 2022 2021
Materials and supplies 261,825 241,695
Depreciation and amortisation 79,037 66,429
Payroll costs 49,348 33,294
Taxes other than income tax 32,216 25,474
Processing and other services 31,361 17,404
Transportation expenses 5,787 4,982
Maintenance and repair 5,082 4,918
Utilities 1,678 1,703
Rent expenses 234 210
(Reversal of inventory provision)/write off to net realizable value (190) 615
Other 8,719 6,243
Total cost of sales 475,097 402,967

11. Distribution Expenses

In millions of Kazakhstani Tenge 2022 2021
Shipping, transportation and storage 20,331 11,110
Payroll costs 1,744 1,456
Commissions 952 502
Rent 214 105
Materials and supplies 199 306
Depreciation and amortisation 56 65
Other 2,109 2,162
Total distribution expenses 25,605 15,706

12. General and Administrative Expenses

In millions of Kazakhstani Tenge 2022 2021
Payroll costs 20,594 18,303
Consulting and information services 5,196 4,697
Compensation for overproduction 7,310 -
Depreciation and amortisation 2,110 2,493
Fines and penalties 2,068 1,527
Insurance 822 788
Communication 509 495
Business trip expenses 497 251
Rent 460 352
Maintenance and repairs 451 390
Training expenses 416 401
Taxes other than income tax 355 661
Security 186 184
Materials and supplies 173 179
Utilities 159 187
Representative expenses 114 41
Other 3,087 3,156
Total general and administrative expenses 44,507 34,105

Compensation for overproduction relates to JV Akbastau JSC (Note 39) as a result of an assessed breach of the terms of subsoil use contract #2488 dated 20 November 2007. Although the entity had been involved in negotiations with the regulator over an extended period as it finalized its reserves assessment, the production volume exceeded the contracted level. In 2021 the entity had reached a draft agreement with the regulator which was to provide social support to the Turkestan region in the amount of Tenge 3,000 million as a compensation for the breach of license terms. An expense for this social support was recognised as other expense in 2021 (Note 15). However, in 2022 the regulator rejected the draft agreement and reassessed the amount payable to be compensation for the overproduction of uranium in the amount of Tenge 7,310 million.

The compensation was determined as the fair value of 249 tones of overproduced uranium based on current uranium spot prices. As a result, during 2022 the Group reversed social expenses in the amount of Tenge 3,000 million (Note 14) and recognized an expense of Tenge 7,310 million. On 30 December 2022 JV Akbastau JSC signed addendum #4 to the subsoil use contract #2488 and paid the compensation.

13. Net Reversal/(Impairment Loss) on non-financial assets

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

In millions of Kazakhstani Tenge Note 2022 2021
Property, plant and equipment (Note 21) 21 (1) 356
Intangible assets (Note 20) 20 - (2,169)
Mine development assets - 199
Impairment of assets held for sale - (1,084)
Other assets 177 (1,107)
Net reversal/(impairment loss) on non-financial assets 176 (3,805)

14. Other Income

In millions of Kazakhstani Tenge 2022 2021
Income from an associate development agreement (Note 25) 7,671 -
Gain from joint operations 4,217 3,513
Reversal of social expenses (Note 12) 3,000 -
Insurance receipt 1,981 -
Income from disposal of property, plant and equipment 1,384 160
Income from a joint venture development agreement 985 -
Gain from fines and penalties 306 138
Gain on disposal of subsidiary - 915
Other 2,173 2,799
Total other income 21,717 7,525

The Group has fulfilled its obligations under one of its joint operation agreements for the purchase of equal volume of uranium in 2022 and 2021; however, volatility of exchange rates and spot prices resulted in disproportionate Tenge amounts contributed by each participant and a gain in the amount of Tenge 4,217 million was recognised by the Group.

The Group received an insurance payment for losses incurred in 2016 as a result of an accident in the Indian sea.

15. Other Expenses and Net Foreign Exchange Gain

In millions of Kazakhstani Tenge 2022 2021
Remeasurement of non-financial liabilities, net of gain on disposal (Note 36) 1,906 2,872
Social expenses 1,130 4,537
Loss on suspension of production 1,126 1,626
Research expenses 887 725
Non-recoverable VAT 620 2,235
Depreciation and amortisation 175 275
Loss on disposal of property, plant and equipment 175 -
Loss on disposal of intangible assets 93 -
Loss on disposal of non-current assets - 411
Other 3,452 2,713
Total other expenses 9,564 15,394

Social expenses in 2021 include social sphere contributions to Turkestan region in the amount of Tenge 3,000 million (Note 12).

Net foreign exchange gain
In millions of Kazakhstani Tenge 2022 2021
Foreign exchange loss on financing activities, net (4,758) (1,696)
Foreign exchange gain on operating activities, net 22,062 5,041
Total foreign exchange gain, net 17,304 3,345

16. Payroll Costs

Total payroll costs 2022 2021
Wages and salaries 89,208 64,580
Including Pension contributions 7,543 5,329
Social tax and social payments 10,427 6,904
Total payroll costs 99,635 71,484

17. Finance Income and Costs

In millions of Kazakhstani Tenge 2022 2021
Interest income calculated using the effective interest rate
Cash and cash equivalents 10,433 3,087
Government securities 1,262 959
Loans at amortised cost 699 912
Term deposits 111 129
Other - 114
Other financial income
Revaluation of other investments (Note 28) 4,699 -
Financial derivative asset - 1,732
Other 123 144
Total finance income 17,327 7,077
Finance costs
Interest expense on loans and borrowings 3,689 3,546
Unwinding of discount on provisions 2,892 2,259
Other 1,844 907
Total finance costs 8,425 6,712

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 2022 2021
Current income tax 118,853 85,345
Deferred income tax (8,111) (23,727)
Total income tax expense 110,742 61,618

The income tax rate applicable to the majority of the Group’s profits in 2022 and 2021 is 20%. Income tax in the amount of Tenge 33,466 million that relates to the sales of interest in subsidiary (Note 39) was recognised in equity directly in 2021.

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

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

In millions of Kazakhstani Tenge 2022 2021
Profit before tax 583,705 281,644
Theoretical tax charge at statutory tax rate of 20% 116,741 56,329
Prior periods adjustments of income tax 2,065 5,401
Transfer pricing adjustment 7,298 5,371
Profit on income from controlled foreign company 294 1,383
Withholding tax on dividend payments 677 1,240
Share of results of joint ventures and associates (17,815) (10,317)
Other items 1,482 2,211
Income tax expense 110,742 61,618
(с) 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 2022 Credited/(charged) to profit or loss Exchange differences arising on translation of entities with foreign functional currency 31 December 2022
Tax effect of deductible/(taxable) temporary differences
Property, plant and equipment, intangible assets and mineral rights (123,495) 4,442 11 (119,042)
Accounts receivable (208) (164) - (372)
Loans and borrowings 3 9 - 12
Provisions 1,572 (1,548) - 24
Accrued liabilities on vacation payments and bonuses 1,663 604 - 2,267
Taxes 1,509 318 - 1,827
Inventories 28,076 4,347 (4) 32,419
Other assets 158 88 1 247
Other liabilities 310 15 - 325
(90,412) 8,111 8 (82,293)
Recognised deferred tax asset 30,689 3,818 8 34,515
Recognised deferred tax liabilities (121,101) 4,293 - (116,808)

Management estimates that 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 2021 is:

In millions of Kazakhstani Tenge 1 January 2022 Credited/ (charged) to profit or loss Exchange differences arising on translation of entities with foreign functional currency 31 December 2022 31 December 2021
Tax effect of deductible/(taxable) temporary differences
Property, plant and equipment, intangible assets and mineral rights (129,120) 5,483 6 136 (123,495)
Accounts receivable (374) 166 - - (208)
Loans and borrowings - 3 - - 3
Provisions 438 1,134 - - 1,572
Accrued liabilities on vacation payments and bonuses 1,155 508 - - 1,663
Taxes 916 593 - - 1,509
Inventories 12,513 15,563 - - 28,076
Other assets (111) 269 - - 158
Other liabilities 306 8 (4) - 310
(114,277) 23,727 2 136 (90,412)
Recognised deferred tax asset 13,206 17,483 - - 30,689
Recognised deferred tax liabilities (127,483) 6,244 2 136 (121,101)

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 1,274 million in 2022 (2021: Tenge 602 million) and excluded from the calculation the tax losses for the enterprises sold in 2022 with unrecognized tax losses. The tax loss carry forwards expire as follows:

In millions of Kazakhstani Tenge 2022 2021
2030 - 368
2031 470 234
2032 804 -
Total unrecognised deferred tax asset on tax losses 1,274 602

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 equals the basic earnings per share. Earnings per share from continuing operations is calculated as follows:

In millions of Kazakhstani Tenge 2022 2021
Profit for the year for the year attributable to owners of the Com-pany (in millions of Kazakhstani Tenge) 348,048 140,773
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) 1,342 543

The Company issued bonds which were included in the official list of Kazakhstan Stock Exchange JSC (hereinafter - the “KASE”). The Company is required to present information on the book value of one share calculated in accordance with the KASE Listing Rules.

Book value per share is calculated as follows:

In millions of Kazakhstani Tenge 2022 2021
Total assets of the Group (in millions Tenge) 2,222,533 1,951,504
Intangible assets (in millions Tenge) (59,159) (58,940)
Total liabilities of the Group (in millions Tenge) (526,030) (414,403)
1,637,344 1,478,161
Number of ordinary shares (in thousands) 259,357 259,357
Book value of one share (Tenge per share) 6,313 5,699

20. Intangible Assets

In millions of Kazakhstani Tenge Licences and patents Software Goodwill Other Total
At 1 January 2021
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
Additions 204 631 - 19 854
Disposals (4) (218) - (13) (235)
Depreciation charge and impairment losses on disposals/transfers 4 218 - 13 235
Amortisation charge (284) (1,163) - (96) (1,543)
Impairment - (2,169) - (777) (2,946)
Transfers from property, plant and equipment (Note 21) 2 834 - 1,833 2,669
At 31 December 2021
Cost 2,524 13,466 54,953 3,055 73,998
Accumulated amortisation and impairment (1,345) (5,870) (6,459) (1,384) (15,058)
Carrying value 1,179 7,596 48,494 1,671 58,940
Additions 136 345 - 908 1,389
Disposals (328) (784) - (259) (1,371)
Depreciation charge and impairment losses on disposals/transfers 289 188 - 35 512
Amortisation charge (284) (875) - (110) (1,269)
Impairment reversal - 590 - 222 812
Transfers from right of use assets 737 - - - 737
Transfers to property, plant and equipment (Note 21) - - - (591) (591)
Transfers - (1,706) - 1,706 -
At 31 December 2022
Cost 3,069 11,321 54,953 4,819 74,162
Accumulated amortisation and impairment (1,340) (5,967) (6,459) (1,237) (15,003)
Carrying value 1,729 5,354 48,494 3,582 59,159
Goodwill impairment test
DP Ortalyk LLP, JV Akbastau JSC and Karatau LLP

Goodwill relates to business combinations in prior periods being: 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.

At least annually, goodwill is tested for impairment. The carrying value of goodwill applicable to each of these entities is allocated to their respective cash generating units and 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 18.49% for 2022 year (2021: 12.97%). Production volumes are consistent with those agreed with the competent authority and independent consultant’s report and are based on the production capacity of the cash-generating units. Key assumptions used in calculations include forecast sales prices, production 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 2022. Production costs and capital expenditures are based on approved budgets for 2023-2027 and growth of 6.16% which approximates long-term average inflation rates. The estimated values in use significantly exceed the carrying amounts of the non-current assets of the three cash-generating units, including goodwill, and therefore even reasonably possible changes in key assumptions would not lead to impairment losses being recognised.

At 31 December 2022, the Group had contractual commitments to acquire intangible assets for Tenge 544 million (2021: 425 million).

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 2021
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
Additions - - 47 3,997 2,987 414 11,450 18,895
Transfers - - 2,004 1,772 94 96 (3,966) -
Depreciation charge - (89) (5,563) (6,802) (1,612) (799) - (14,865)
Impairment loss - - - - - - (9) (9)
Reversal of impairment losses recognised in prior periods - - 10 41 - - 314 365
Disposals (6) - (284) (1,486) (540) (220) (442) (2,978)
Impairment disposals - - - - - - 2 2
Transfer from inventories - - - 271 - 9 659 939
Transfers to intangible assets (Note 20) - - - - - - (2,669) (2,669)
Impairment in construction in progress (transfers to intangible assets) - - - - - - 777 777
Transfer from/(to) investment property - - 3 89 - (29) - 63
Depreciation charge and impairment losses on disposals/transfers - - 191 1,385 521 212 7 2,316
Changes in estimates (Note 34) - - (1,859) 13 - - - (1,846)
Transfer to mine development assets (Note 22) - - - - - - (2,255) (2,255)
Translation to presentation currency - - - - 4 1 - 5
At 31 December 2021
Cost 407 2,035 139,246 95,311 24,560 7,048 13,960 282,567
Accumulated depreciation and impairment - (1,035) (43,300) (48,232) (13,619) (4,226) (668) (111,080)
Carrying amount 407 1,000 95,946 47,079 10,941 2,822 13,292 171,487
Additions 17 - 107 7,334 5,225 431 11,011 24,125
Transfers - 38 1,941 1,150 43 104 (3,276) -
Depreciation charge - (89) (5,633) (6,742) (1,934) (732) - (15,130)
Impairment loss - - - - - - (409) (409)
Reversal of impairment losses recognised in prior periods - - 245 156 - - 7 408
Disposals - - (211) (1,765) (288) (143) (7) (2,414)
Impairment disposals - - - - - - 2 2
Transfer from inventories - - 38 506 - 6 445 995
Transfers to intangible assets (Note 20) - - - 102 - - 489 591
Transfer from/(to) investment property - - (17) - - - - (17)
Depreciation charge and impairment losses on disposals/transfers - - 207 1,525 369 136 - 2,237
Changes in estimates (Note 34) - - 8,630 585 - - - 9,215
Transfer to mine development assets (Note 22) - - - - - - (2,789) (2,789)
Translation to presentation currency - - - - (1) - - (1)
At 31 December 2022
Cost 424 2,073 150,996 101,960 28,082 7,446 19,833 310,814
Accumulated depreciation and impairment - (1,124) (49,743) (52,030) (13,727) (4,822) (1,068) (122,514)
Carrying amount 424 949 101,253 49,930 14,355 2,624 18,765 188,300

Depreciation expense of Tenge 12,774 million (2021: Tenge 12,773 million) was charged to cost of sales, Tenge 56 million (2021: Tenge 65 million) to distribution expenses, Tenge 1,257 million (2021: Tenge 1,243 million) to general and administrative expenses, Tenge 137 million (2021: 170 million tenge) to other expenses. The remaining depreciation expense is included in finished goods, work-in-process and other inventory.

At 31 December 2022 construction in progress included technical re-equipment of Ulba Metallurgical Plant JSC in the amount of Tenge 1,087 million (2021: Tenge 1,311 million),construction of a refinery in the amount of Tenge 3,267 million at JV Inkai LLP, construction of facilities for the development of a mine at Appak LLP in the amount of Tenge 681 million.

At 31 December 2022, the Group had contractual capital expenditure commitments in respect of property, plant and equipment of Tenge 5,310 million (2021: Tenge 5,615 million).

There are no capitalized borrowing costs in 2022 (2021: nil).

At 31 December 2022, the gross carrying value of fully depreciated property, plant and equipment still in use was Tenge 34,870 million (2021: Tenge 25,943 million).

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

In millions of Kazakhstani Tenge 2022 2021
Mine development assets 42,045 34,185
Mineral rights 28,237 27,917
Property, plant and equipment 15,130 14,865
Intangible assets 1,269 1,543
Right-of-use assets 19 148
Total accrued depreciation and amortisation 86,700 78,658

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

In millions of Kazakhstani Tenge 2022 2021
Cost of sales 79,037 66,429
General and administrative expenses 2,110 2,493
Distribution expenses 56 65
Other expenses 175 275
Total depreciation and amortisation charged to profit or loss 81,378 69,262

22. Mine Development Assets

In millions of Kazakhstani Tenge Field preparation Site restoration costs Ion exchange resin Total
At 1 January 2021
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
Third-party services 27,870 - - 27,870
Material used 6,823 - 867 7,690
Transfer from property, plant and equipment (Note 21) 2,255 - - 2,255
Transfer from exploration and evaluation assets (Note 24) 649 384 - 1,033
Depreciation charge (33,260) (193) (732) (34,185)
Reversal of impairment - 199 - 199
Changes in accounting estimates (Note 34) 631 4,861 - 5,492
At 31 December 2021
Cost 317,560 13,532 18,757 349,849
Accumulated depreciation and impairment (200,129) (4,457) (6,590) (211,176)
Carrying amount 117,431 9,075 12,167 138,673
Third-party services 43,649 - - 43,649
Material used 16,238 - 966 17,204
Transfer from property, plant and equipment (Note 21) 2,789 - - 2,789
Depreciation charge (40,940) (590) (515) (42,045)
Changes in accounting estimates (Note 34) 693 1,211 - 1,904
At 31 December 2022
Cost 380,929 14,743 19,723 415,395
Accumulated depreciation and impairment (241,069) (5,047) (7,105) (253,221)
Carrying amount 139,860 9,696 12,618 162,174

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 2021
Cost 646,153
Accumulated amortisation and impairment (68,642)
Carrying amount 577,511
Additions 2,466
Transfer from exploration and evaluation assets (Note 24) 897
Amortisation for the period (27,917)
At 31 December 2021
Cost 649,452
Accumulated amortisation and impairment (96,495)
Carrying amount 552,957
Additions 420
Amortisation for the period (28,237)
At 31 December 2022
Cost 649,872
Accumulated amortisation and impairment (124,732)
Carrying amount 525,140

24. Exploration and Evaluation Assets

In millions of Kazakhstani Tenge Tangible assets Intangible assets Total
At 1 January 2021 19,523 3,422 22,945
Additions 3,425 - 3,425
Transfer to mine development assets (Note 22) (1,033) - (1,033)
Transfer to mineral rights (Note 23) - (897) (897)
Changes in accounting estimates (62) - (62)
At 31 December 2021 21,853 2,525 24,378
Additions 2,393 - 2,393
Changes in accounting estimates (228) - (228)
At 31 December 2022 24,018 2,525 26,543

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 2022 2021
Carrying value at 1 January 116,892 84,626
Share of results of associates 75,736 47,294
Dividends received from associates (38,504) (15,028)
Carrying value at 31 December 154,124 116,892

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

Country of incorporation Principal activities 2022 2021
% 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% 113,920 49% 85,123
JV Zarechnoye JSC Kazakhstan Extraction, processing and export of uranium products 49.98% 18,197 49.98% 10,968
JV South Mining Chemical Com-pany LLP Kazakhstan Extraction, processing and export of uranium products 30% 16,147 30% 13,196
Kyzylkum LLP Kazakhstan Extraction, processing and export of uranium products 50% 5,017 50% 6,616
Сaustiс JSC Kazakhstan Supply of caustic soda 28% - 40% -
SSAP LLP Kazakhstan Production of sulphuric acid 9.89% 742 9.89% 693
JV Rusburmash Kazakhstan LLP Kazakhstan Geological exploration, drilling services 49% - 49% 183
Zhanakorgan-Transit LLP Kazakhstan Transportation 40% 101 40% 113
Total investments in associates 154,124 116,892

On 22 January 2018 JV KATCO LLP (“the Partnership”) received a new mining allotment for site #2 (Tortkuduk) where additional uranium reserves were found. Development of the South Tortkuduk project was approved by the participants during 2017-2018. However, no formal addendum to the Subsoil use contract was signed for the extension of the exploration period in 2015-2018. In November 2020 the Ministry of Energy refused the application of the Partnership to conclude an addendum to the Subsoil use contract for commercial development of the South Tortkuduk field. In December 2020, the Partnership applied to the Supreme Court to appeal against the actions of the Ministry of Energy. On May 24, 2021, the Supreme Court issued a decision on leaving the Partnership’s claim without consideration. On November 19, 2021, the Partnership filed an appeal against this decision.

On 17 January 2022, the Supreme Court of the Republic of Kazakhstan rejected the appeal. In 2021, the Partnership and the Government of the Republic of Kazakhstan represented by the Ministry of Energy and Ministry of Justice commenced negotiations to settle the dispute. As a result of the negotiations, on 16 August 2022, Addendum No. 10 to the Subsoil use contract was signed to extend the exploration period, a mining allotment was received and the work program was approved. Also on 31 December 2022, Addendum No. 11 to the Subsoil use contract was signed with an update of the work program.

On 11 August 2022, the Partnership participants made amendments to the Partnership Agreement on further development of JV KATCO LLP dated 10 April 2017, under which the Group became entitled to compensation in the amount of Tenge 7,671 million from the second participant, which was recognized as income in 2022 (Note 14) and other receivables (Note 27).

According to the Partnership Agreement, the Group also became entitled to an additional 11% of the Partnership's annual profit allocation starting from 2022 and until the end of JV KATCO LLP operations, with the ownership interest being unchanged.

This additional 11% impacts the allocation of JV KATCO LLP dividends, therefore, in these consolidated financial statements the Group recognized a share in the results of the Partnership for 2022 in the amount of 60%. Net assets are still recognized as 49% in accordance with the participants initial agreement.

Sales of share in Caustic JSC

On 30 December 2021 the Group concluded an agreement for the sale of its 40% stake in Caustic JSC to Trade House "United Chemical Technologies" LLP, one of the major shareholders of Caustic JSC. The selling price is Tenge 1,214 million based upon an independent appraisal of fair market value. According to the terms of the sales contract, payment and corresponding transfer of the ownership shares is to be made in instalments. The first tranche of Tenge 363 million was received in January 2022. The act of transfer of ordinary shares equivalent to 12% of the Group’s holding in Caustic JSC was signed on February 2022. The remaining consideration must be paid by the buyer within 24 months from the date of signing the contract. As of 31 December 2022 the remaining 28% investment in Caustic JSC is presented as an asset held for sale in the amount of Tenge 850 million.

Summarised financial information for 2022 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 6,757 132,298 77,223 26,011 2,515 244,804
Including cash 5 97,300 13,855 7,147 338 118,645
Non-current assets 15,619 132,022 42,114 19,593 11,493 220,841
Total assets 22,376 264,320 119,337 45,604 14,008 465,645
Current liabilities (6,766) (8,822) (33,059) (4,068) (5,099) (57,814)
Including financial liabilities net of trade and other accounts payable and provisions (3,397) (82) (21,920) (32) (894) (26,325)
Incl. loan from the Company (3,397) - - - - (3,397)
Non-current liabilities (4,038) (20,139) (10,060) (3,973) (1,308) (39,518)
Including financial liabilities net of trade and other accounts payable and provisions (2,852) - (3,286) - (835) (6,973)
Incl. loan from the Company (2,852) - - - - (2,852)
Total liabilities (10,804) (28,961) (43,119) (8,041) (6,407) (97,332)
Net assets 11,572 235,359 76,218 37,563 7,601 368,313
Group’s share of net assets of associates 5,786 115,326 22,865 18,774 390 163,141
Unrealised profit in the Group - (10,592) (6,719) (619) - (17,930)
Additional allocation of profits - 9,118 - - - 9,118
Other (768) - - 42 371 (355)
Goodwill - 68 - - 82 150
Carrying value of investments in associates 5,018 113,920 16,146 18,197 843 154,124
Total revenue 10,572 146,304 131,039 44,538 13,757 346,210
Depreciation and amortisation (682) (12,262) (6,328) (6,218) (643) (26,133)
Finance income 162 127 655 109 87 1,140
Finance costs (435) (1,282) (1,393) (347) (314) (3,771)
Foreign exchange gain/(loss) (642) 4,931 (1,331) (1,288) - 1,670
(Impairment losses)/reversal of impairment losses (2) 180 26 1 (1) 204
Income tax (368) (24,035) (21,706) (5,073) (338) (51,520)
Profit for the year (1,039) 82,891 76,114 18,939 (567) 176,338
Total comprehensive income (1,039) 82,891 76,114 18,939 (567) 176,338
Unrealised profit - (2,141) (4,307) 777 - (5,671)
Share in accumulated unrecognized losses - - - - 519 519
Share of result of associates (520) 47,593 18,528 10,242 (107) 75,736
Dividends received 1,080 18,796 15,576 3,013 39 38,504

Summarised financial information for 2021 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 3,897 125,413 57,210 15,224 2,742 204,486
Including cash 2,243 88,359 31,079 5,610 461 127,752
Non-current assets 22,383 85,480 35,287 15,777 11,510 170,437
Total assets 26,280 210,893 92,497 31,001 14,252 374,923
Current liabilities (4,318) (10,192) (29,373) (4,671) (5,283) (53,837)
Including financial liabilities net of trade and other accounts payable and provisions (3,171) (329) (22,143) (1,595) (3,266) (30,504)
Incl. loan from the Company (3,169) - - - - (3,169)
Non-current liabilities (7,192) (9,874) (11,099) (1,676) (408) (30,249)
Including financial liabilities net of trade and other accounts payable and provisions (6,152) (64) (7,645) (27) - (13,888)
Incl. loan from the Company (6,152) - - - - (6,152)
Total liabilities (11,510) (20,066) (40,472) (6,347) (5,691) (84,086)
Net assets 14,770 190,827 52,025 24,654 8,561 290,837
Group’s share of net assets of associates 7,384 93,506 15,608 12,321 1,052 129,871
Unrealised profit in the Group - (8,451) (2,412) (1,396) - (12,259)
Other movements (768) - - 43 (145) (870)
Goodwill - 68 - - 82 150
Carrying value of investments in associates 6,616 85,123 13,196 10,968 989 116,892
Total revenue 12,486 116,791 91,587 23,727 10,166 254,757
Depreciation and amortisation (672) (9,571) (5,904) (5,781) (612) (22,540)
Finance income 66 18 381 - 31 496
Finance costs (510) (857) (1,263) (166) (430) (3,226)
Net foreign exchange gain/(loss) (270) 2,032 (125) 126 - 1,763
(Impairment losses)/reversal of impairment losses (2) (1,542) (16) (11) 1 (1,570)
Income tax (536) (16,130) (13,210) (1,818) (24) (31,718)
Profit/(loss) for the year 2,385 61,016 52,477 6,853 101 122,832
Total comprehensive income 2,385 61,016 52,477 6,853 101 122,832
Unrealised profit - (620) (1,408) (872) - (2,900)
Share of result of associates 1,193 29,278 14,334 2,553 (64) 47,294
Dividends received - - 12,459 2,569 - 15,028

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 2022 2021
Carrying value at 1 January 37,803 35,261
Share of results of joint ventures 13,340 4,289
Dividends received from joint ventures (6,935) (2,080)
Other - 333
Carrying value at 31 December 44,208 37,803

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

Country of incorporation Principal activity 2022 2021
% 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% 28,252 51.00% 20,945
Ulba-FA LLP Kazakhstan Production of fuel assemblies and their components 51.00% 957 51.00% 2,705
JV Budenovskoe LLP Kazakhstan Extraction, processing and export of uranium products 51.00% 5,428 51.00% 6,071
Uranenergo LLP Kazakhstan Transfer and distribution of electricity, grid operations 79.23% 3,078 79.23% 3,095
SKZ-U LLP Kazakhstan Production of sulphuric acid 49.00% 6,493 49.00% 4,987
JV UKR TVS CJSC Ukraine Production of nuclear fuel 33.33% - 33.33% -
Total investments in joint ventures 44,208 37,803
Ulba-FA LLP

In December 2020 the Group together with China General Nuclear Power Corporation (CGNPC) finished 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. The plant is owned by Ulba-Fa LLP, a joint venture between subsidiaries of the Company and CGNPC with 51% and 49% respective interests.

During 2021 the plant was certified by the owner of the technology for the production of fuel assemblies and was also recognised as a certified supplier of nuclear fuel to nuclear power plants in China from the end user of the plant's products (CGNPC Uranium Resources Company Limited (CGNPC-URC). A long-term contract for the supply of fuel assemblies between Ulba-FA LLP and CGNPC-URC was entered into in May 2021 and in 2022 the entity started its sales activities.

Uranenergo LLP

Management concluded that the Group does not have the ability to exercise control over Uranenergo LLP. Accordingly, this investment is classified as an investment in a joint venture.

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 Ulba-FA LLP Other Total
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Current assets 37,976 30,089 153 29 121,989 51,164 5,121 3,974 165,239 85,256
Including cash 18,725 13,132 114 22 19,791 5,747 1,164 219 39,794 19,120
Non-current assets 25,111 20,687 28,801 25,791 26,142 21,939 24,808 24,846 104,862 93,263
Total assets 63,087 50,776 28,954 25,820 148,131 73,103 29,929 28,820 270,101 178,519
Current liabilities (6,153) (7,090) (1,079) (296) (92,883) (35,769) (9,675) (9,735) (109,790) (52,890)
Including financial liabilities net of trade and other accounts payable and provisions (66) (3,183) (31) (15) (4,147) (1,680) (3,219) (6,007) (7,463) (10,885)
Non-current liabilities (6,100) (4,412) (5,320) (1,933) (53,373) (32,031) (2,354) (4,239) (67,147) (42,615)
Including financial liabilities net of trade and other accounts payable and provisions - (66) (5,123) (1,933) (30,818) (31,241) - (2,877) (35,941) (36,117)
Total liabilities (12,253) (11,502) (6,399) (2,229) (146,256) (67,800) (12,029) (13,974) (176,937) (95,505)
Net assets 50,834 39,274 22,555 23,591 1,875 5,303 17,900 14,846 93,164 83,014
Group’s share of net assets of joint ventures 25,925 20,030 11,503 12,031 957 2,705 10,213 8,724 48,598 43,490
Goodwill 4,105 4,105 - - - - (1,374) (1,374) 2,731 2,731
Impairment losses - - - - - - (21) (21) (21) (21)
Other 149 120 (115) - - - 753 753 787 873
Unrealised gain - - (5,960) (5,960) - - - - (5,960) (5,960)
Unrealised profit in the Group (1,927) (3,310) - - - - - - (1,927) (3,310)
Carrying value of investments in joint ventures 28,252 20,945 5,428 6,071 957 2,705 9,571 8,082 44,208 37,803
Total revenue 55,660 40,913 - - 22,929 - 15,708 12,769 94,297 53,682
Depreciation and amortisation (5,758) (4,836) (13) - (292) (559) (1,342) (1,337) (7,405) (6,732)
Finance income 498 62 4 - 35 4 11 33 548 99
Finance costs (501) (501) (252) (1) (1,489) (1,466) (119) (107) (2,361) (2,075)
Foreign exchange gain/(loss) 807 (146) (98) 5 (2,374) (592) (455) (236) (2,120) (969)
Impairment losses (387) - (40) (14) (1) (11) (5) - (433) (25)
Income tax (6,243) (3,978) (149) (61) (425) (397) (792) (642) (7,609) (5,078)
Profit/(loss) for the year 25,215 15,569 (1,261) (280) (3,428) (3,788) 3,098 2,505 23,624 14,006
Other comprehensive income/(loss) - 34 - - - - - 2 - 36
Total comprehensive income/(loss) 25,215 15,603 (1,261) (280) (3,428) (3,788) 3,098 2,507 23,624 14,042
Other 1,382 (2,815) - - - - - - 1,382 (2,815)
Share of results of joint ventures 14,242 5,125 (643) (142) (1,749) (1,932) 1,490 1,238 13,340 4,289
Dividends received 6,935 2,080 - - - - - - 6,935 2,080

27. Accounts Receivable

In millions of Kazakhstani Tenge 2022 2021
Trade accounts receivable 251,697 215,483
Trade accounts receivable from related parties 7,024 4,713
Total gross trade accounts receivable 258,721 220,196
Provision for impairment of trade receivables (87) (148)
Provision for impairment of trade receivables from related parties (3) (24)
Total current net trade accounts receivable 258,631 220,024
Other accounts receivable 12,389 175
Other accounts receivable from related parties 81 44
Total gross other accounts receivable 12,470 219
Provision for impairment of other receivables (180) (105)
Total net other accounts receivable 12,290 114
Total current accounts receivable 270,921 220,138

Other accounts receivable include:

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 Financial Assets

In millions of Kazakhstani Tenge 2022 2021
Non-current assets
Restricted cash 29,044 17,654
Investment in ANU Energy 17,066 -
Long-term debt securities 9,202 -
Loans to related parties 2,536 5,493
Other 1,523 524
Total other non-current assets 59,371 23,671
Current assets
Restricted cash 15,923 427
Loans to related parties 3,491 3,357
Short-term debt securities 72 4,986
Term deposit 930 43,220
Other 262 259
Total other current assets 20,678 52,249
Restricted cash

In accordance with the terms of its subsoil use contracts, the Group transfers cash to long-term bank deposits to finance future site restoration activities. As at 31 December 2022 the balance of restricted cash held in long-term bank deposits related to financing of future site restoration activities was Tenge 29,044 million (2021: Tenge 17,654 million).

Short-term restricted cash includes payments of 32.3 million US Dollar, or Tenge 14,812 adjusted for foreign exchange gains and amounting to Tenge 14,956 million as of 31 December 2022, made by the Group in March 2022 to a uranium enrichment service provider whose Russian bank was subsequently included in the list of legal entities that fell under the sanctions of the Office of Foreign Assets Control of the US Department of the Treasury (OFAC).The correspondent bank which initially blocked the payment funds returned the amount to the Group (including interest) after the reporting period (Note 43).

Investments in ANU Energy

In accordance with the Framework Agreement signed on November 22, 2021, the Group and Genchi Global Limited, agreed to establish ANU Energy OEIC Ltd. The purpose of ANU Energy OEIC Ltd. is to store physical uranium as a long-term investment. The Group made an investment of 24.25 million US dollars in March 2022 (equivalent to Tenge 12,368 million), which is 32.7% of the entity's shares. The Group does not have representation in the governing body of the entity and does not take part in making decisions on key strategic issues of the entity. Accordingly, the Group does not have a significant impact on the management of the Fund, and therefore the Group recognizes this investment at fair value through profit or loss. As of December 31, 2022, the Group’s investment in ANU Energy OEIC Ltd. amounts to Tenge 17,066 and the Group recognized the fair value adjustment of Tenge 4,699 million as finance income (Note 17).

In accordance with the Framework Agreement, the Group and ANU Energy OEIC Ltd. signed a short-term contract for the sale and purchase of natural uranium concentrates, under which the Group delivered natural uranium concentrates on May 12, 2022. Under the terms of the same Framework Agreement the Group has received a uranium loan from ANU Energy OEIC Ltd. in May 2022 (Note 36).

Debt securities

On May 12, 2022, in order to diversify its treasury portfolio, the Group invested in Eurobonds issued by Development Bank of Kazakhstan JSC, in the amount of 19.9 million US dollars, or Tenge 8,804 million with a maturity of 3 years and a coupon rate of 5.75%. The bonds are measured at amortized cost. As of 31 December 2022, the amount of the long-term investment is Tenge 9,274 million.

The Group also purchases short-term debt securities. During the year the Group purchased Tenge 80,219 million and redeemed Tenge 86,006 million (2021: Tenge 126,331 and Tenge 127,341) of such securities, mainly issued by the National Bank of the Republic of Kazakhstan. As of 31 December 2021 short-term securities were represented by investment in corporate bonds of Eurasian Bank of Development JSC, denominated in Tenge with a maturity of 3 months expiring on 12 January 2022 with a discount rate of 9.6%.

Loans to related parties
In millions of Kazakhstani Tenge 2022 2021
Non-current
Kyzylkum LLP 2,548 5,547
Provision for impairment (12) (54)
Total non-current loans 2,536 5,493
Current
Kyzylkum LLP 3,397 3,170
Uranenergo LLP 95 189
Provision for impairment (1) (2)
Total current loans 3,491 3,357

In 2010, the Group provided an interestbearing 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 and guarantor of a loan to Kyzylkum LLP.

In June 2021, the Group provided repayable financial assistance to Uranenergo LLP secured by property in the form of a revolving credit line with a term until June 30, 2023 to replenish working capital. As part of this line, cash tranches for up to 12 months can be provided.The weighted average annual interest rate on loans to related parties in 2022 was 8.5% (2021: 8.5%). According to internal estimates, the level of credit risk for these loans is at an acceptable level.

29. Other Non-Financial Assets

In millions of Kazakhstani Tenge 2022 2021
Non-current
VAT recoverable 8,725 11,315
Long-term inventories 7,299 7,247
Investment property 2,046 2,065
Advances for non-current assets 1,782 1,857
Prepaid expenses 789 926
Other assets 638 848
Total other non-current assets 21,279 24,258
Current
Advances for goods and services 11,085 3,026
Advances to related parties for goods and services 3,834 1,244
Prepaid expenses 2,059 1,465
Prepaid insurance 1,309 1,025
Prepaid taxes other than income tax 443 371
Other assets 544 6
Total other current assets 19,274 7,137

30. Inventories

In millions of Kazakhstani Tenge 2022 2021
Finished goods and goods for resale 309,950 223,750
Including uranium products 308,168 222,195
Work-in-process 40,899 30,409
Raw materials 19,633 14,879
Materials in processing 15,198 3,091
Other materials 7,486 5,709
Fuel 1,488 479
Spare parts 989 789
Provision for obsolescence and write-down to net realisable value (3,022) (3,250)
Total inventories 392,621 275,856

Movements in the provision for obsolescence are as follows:

In millions of Kazakhstani Tenge 2022 2021
Balance at 1 January (3,250) (2,755)
Reversal of provision during the year 1,011 623
Inventory write off during the year 77 130
Accrual of provision during the year (821) (1,238)
Translation of foreign currency (39) (10)
Balance at 31 December (3,022) (3,250)

31. Cash and Cash Equivalents

In millions of Kazakhstani Tenge 2022 2021
Current bank accounts 131,260 138,867
Demand deposits 38,274 22,338
Cash in hand 14 8
Provision for impairment (12) (23)
Total cash and cash equivalents 169,536 161,190

32. Share Capital

At 31 December 2022 the total number of authorised and paid ordinary shares is 259,356,608 (2021: 259,356,608) of which 75% is owned by Samruk-Kazyna JSC and 25% of the shares/GDRs are freely floated with listing on the Astana International Exchange (AIX) and the London Stock Exchange (LSE). One GDR represents a share in one share. Each ordinary share carries the right to one vote. Registered share capital is Tenge 37,051 million.

Dividends declared and paid during the year were as follows:

In millions of Kazakhstani Tenge 2022 2021
Dividends payable at 1 January - -
Dividends declared during the year 227,388 150,082
Dividends paid during the year (227,388) (150,082)
Dividends payable at 31 December - -
Dividends declared during the year per share, in Tenge 877 579

33. Loans and Borrowings

In millions of Kazakhstani Tenge 2022 2021
Non-current
Bonds 83,300 77,700
Total non-current loans and borrowings 83,300 77,700
Current
Promissory notes issued 7,002 10,514
Bonds 24,016 803
Bank loans 23,953 -
Total current loans and borrowings 54,971 11,317
Total loans and borrowings 138,271 89,017

The company placed US Dollar-indexed bonds on 27 September 2019 with a maturity of 27 October 2024 and a coupon of 4% per annum. The nominal value of one bond is Tenge 1,000, total volume is 70 million.

In December 2022, the Company placed short-term commercial bonds in the amount of US Dollar 50 million on the trading floor of Kazakhstan Stock Exchange JSC (“KASE”) with a maturity in January 2023 and a coupon of 4.32% (Note 43).

Current bank borrowings primarily include short-term loan from ForteBank JSC in amount 50 million US dollars with a maturity in January 2023. Bank loans were obtained for liquidity needs.

Promissory notes were issued by a subsidiary of the Group JV Khorasan-U LLP in December 2014 to repay amounts owing for mine development assets. According to the terms, the promissory notes are payable on demand at an interest rate of 0.1%. As of 31 December 2022, the right of claim under these promissory notes belongs to Kyzylkum LLP, an associate of the Group (Note 8).

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

In millions of Kazakhstani Tenge Currency Maturity 2022 2021
Bank loans
Fortebank JSC US Dollar 2023 23,202 -
Halyk Bank JSC Tenge 2023 751 -
Total bank loans 23,953 -
Bonds
Bonds US Dollar 2024, 2023 107,316 78,503
Total bonds 107,316 78,503
Promissory notes issued
Kyzylkum LLP Tenge on demand 7,002 10,514
Total promissory notes issued 7,002 10,514

The Group’s loans and borrowings were unsecured. In 2022, the Group’s weighted average interest rate on fixed interest rate loans was 3.62% (2021: 3.52%).

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 of Kazakhstani Tenge Loans and borrowings Lease liabilities Liability of ownership interest in a subsidiary Total
Debt at 31 December 2020 97,826 746 - 98,572
Proceeds from loans and borrowings 65,525 - - 65,525
Foreign currency translation 1,749 7 - 1,756
Interest accrued 3,168 60 - 3,228
Repayment (76,108) (452) - (76,560)
Interest paid (3,143) (122) - (3,265)
Recognition of liability related to put option - - 185,210 185,210
De-recognition of liability related to put option (Note 39) - - (185,210) (185,210)
Other non-cash changes - 52 - 52
Debt at 31 December 2021 89,017 291 - 89,308
Proceeds from loans and borrowings 70,905 - - 70,905
Foreign currency translation 4,760 (2) - 4,758
Interest accrued 3,689 20 - 3,709
Repayment (26,555) (162) - (26,717)
Interest paid (3,545) (25) - (3,570)
Other non-cash changes - 51 - 51
Debt at 31 December 2022 138,271 173 - 138,444

34. Provisions

In millions of Kazakhstani Tenge Compensation for occupational diseases Environment protection Site restoration Other Total
At 1 January 2021
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 the year 14 (1) - 32 45
Unwinding of discount 23 241 1,993 2 2,259
Disposals - - (78) - (78)
Provision used (72) - 272 - 200
Change in estimates - (2,040) 5,403 - 3,363
At 31 December 2021
Non-current 129 1,261 30,725 77 32,192
Current 67 96 706 - 869
Total 196 1,357 31,431 77 33,061
Provision for the year 45 28 - 197 270
Transfers - 77 - (44) 33
Unwinding of discount 19 128 2,745 - 2,892
Provision used (61) (10) - - (71)
Change in estimates - 7,811 3,940 45 11,796
At 31 December 2022
Non-current 133 9,268 34,074 - 43,475
Current 66 123 4,042 275 4,506
Total 199 9,391 38,116 275 47,981
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 (liquidation of the consequences of the operation of facilities). 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. The change in estimate in 2022 mainly relates to inclusion of provision of Ulba Metallurgical Plant JSC as described in Note 4.

The nominal cost of restoration of liquidation facilities as of 31 December 2022 is Tenge 134,438 million (2021: Tenge 5,710 million). Key assumptions used in estimations are described in Note 4.

Provision for restoration of mine sites

The Group estimates the site restoration costs for each mine operated by the Group. The nominal cost of restoration of mine sites as of 31 December 2022 is Tenge 84,209 million (2021: Tenge 63,989 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.

In view of the long-term nature of provisions, 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 2022, the accumulated transfers to restricted deposits amounted to Tenge 33,371 million (2021: Tenge 21,963 million) (Note 28).

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

35. Accounts Payable

In millions of Kazakhstani Tenge 2022 2021
Trade accounts payable to related parties 58,668 33,620
Trade accounts payable 39,794 29,302
Total current trade accounts payable 98,462 62,922
Other accounts payable 346 3,092
Other accounts payable to related parties 1 -
Total current other accounts payable 347 3,092
Total current accounts payable 98,809 66,014

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 2022 2021
Non-current
Liabilities under contracts with customers 2,746 2,564
Advances received 2,276 3,740
Deferred income from subsidies received 1,820 1,356
Preferred shares 265 265
Issued financial guarantees 633 133
Liabilities under inventory loan agreements - 13,461
Other 1,573 1,901
Total non-current other liabilities 9,313 23,420
Current
Liabilities under contracts with customers 35,139 16,598
Liabilities under inventory loan agreements 19,147 99
Accrued unused vacation payments and bonuses 11,453 8,425
Amounts due under uranium swap contracts (Note 4) 4,709 15,355
Joint operations liabilities 4,569 4,569
Wages and salaries payable 2,420 1,561
Social contributions payable 1,795 1,301
Advances received 1,795 1,280
Advances received from related parties 735 46
Issued financial guarantees 653 90
Dividends payable to other participants 259 263
Deferred income 161 166
Liability for social sphere contributions - 3,600
Other 1,048 3,985
Total current other liabilities 83,883 57,338
Liabilities under uranium loan agreements

In 2020 the Group obtained uranium under commodity loans totalling US Dollar 21.9 million. A liability was initially recognised to return inventory at a cost of Tenge 8,597 million. This liability is subsequently measured at fair value in accordance with changes in market prices for uranium and foreign exchange rates. Accrued revaluation loss for the year ended 31 December 2022 amounted to Tenge 5,445 million (2021: Tenge 2,872 million). As of 31 December 2022, the Group reclassified inventory loans from long-term to short-term, as the repayment period is up to May and June 2023. The Group intends to extend the repayment period.

On 19 May 2022 the Group obtained a uranium loan totalling US Dollar 113.5 million from ANU Energy OEIC Ltd. that was concluded under the Framework Agreement between the Group and Genchi Global Limited (Note 28). A liability was initially recognised to return inventory at a cost of Tenge 49,089 million and subsequently measured at fair value in accordance with changes in market prices for these goods and foreign exchange rates – the revaluation loss for the year ended 31 December 2022 amounted to Tenge 4,712 million. On 20 December the Group returned the inventory, the fair value of which amounted to Tenge 53,802 million on the date of return, which was greater than the cost of inventory returned for Tenge 8,251 million.

Losses from revaluation of uranium loans to fair value as well as net gain from disposal of the loan returned to ANU Energy OEIC Ltd. are recognised in profit and loss and presented as other loss (Note 15).

Uranium loans are part of the Group’s normal inventory management policy, required to mitigate logistical risks that could affect the timely delivery of Kazakhstani uranium to Western conversion enterprises due to the current unstable geopolitical situation.

Joint operations liabilities

Joint operations liabilities represent obligations of the Group under the terms of the joint operations contractual agreements that require equal volumes of uranium to be purchased during the period by the participants. In 2021 the Group did not purchase the required volume.

The Group reports the following liabilities related to contracts with customers:

In millions of Kazakhstani Tenge 2022 2021
Non-current contract liability 2,746 2,564
Current contract liability - advances received under contracts with customer for uranium pellets 35,139 16,598
37,885 19,162

Non-current contract liabilities are rights granted to the customers to acquire additional volumes of uranium. The Group expects that revenue will be recognized in future period(s) once the associated right is executed or expires.

Current contract liabilities include advances for uranium pellets for Tenge 35,082 million under contracts with Ulba- FA LLP (2021: Tenge 16,420 million). During 2022, the Group has recognized revenue, which was included in the balance of advances received as of 31 December 2021 in the amount of Tenge 16,420 million (2021: none).

37. Contingencies and Commitments

Compliance with Kazakhstan Tax legislation

The tax environment in the Republic of Kazakhstan is subject to change and inconsistent application and interpretations. 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. Tax periods remain open to retroactive review by the Kazakhstan tax authorities for five years.

The Group’s management believes that its interpretation of the relevant legislation is appropriate and the Group’s tax positions will be sustained. In the opinion of the Group’s management, no material losses will be incurred in respect of existing and potential tax claims in excess of provision or disclosures that have been made in these consolidated financial statements.

(a) Transfer pricing legislation

In 2021 transfer pricing tax audits were started by the relevant Kazakhstan authorities across all subsoil use entities of the Group, but were not completed at 31 December 2022 due to the suspension of the audits by the tax authorities. During these audits, the tax authorities enquired into the documentary support for certain transport arrangements included in sales contracts of subsidiaries and affiliates. The legislation requires, in part, that Kazakhstani companies maintain and, if required, provide supporting evidence for the determination of prices used in international transactions.

The Company received preliminary assessments for additional income tax in the amount of Tenge 5,754 million related to transfer pricing for the period 2016-2020. In addition, the tax authorities raised a transfer pricing matter common to the Group relating to documenting the transport differential in China for subsidiaries and affiliates, the maximum estimated amount of which is Tenge 10,764 million for 2016-2022 (2021: Tenge 9,135 million). The Group introduced amendments to transfer pricing methodology in 2021 to include supporting documentation for transportation differential on sales made to China but still uncertainty exists about tax authorities interpretations.

To date, these tax audits were not finalised. Uncertainty exists as to the validity of the positions taken by the tax authorities regarding the preliminary assessments issued by and interpretations of the documentation requirements discussed above. The management of the Group believes that it will be able to sustain its position if the transfer pricing practices of the Group are challenged by the tax authorities. Accordingly, no liability has been recognised.

The Group recognized additional income tax related to transfer pricing of Tenge 7,298 million in 2022 (2021: Tenge 5,371 million), which does not relate to 2016- 2020, following a review by management of compliance with Group transfer pricing methodology.

(b) Complex tax inspections of Group entities

In 2021, most of the Group's entities underwent comprehensive tax audits, the results of which are reflected in the financial statements prepared as of 31 December 2021. Pending comprehensive tax audits at certain Group entities as of December 31, 2022 have been completed, the results of the audits are reflected in the financial statements as of December 31, 2022.

According to the results of the thematic audit of income tax at the source of payment from the income of non-residents for 2014-2018, completed in 2021, additional charges of JV KATCO LLP amounted to CIT on payments of dividends and loyalties in the amount of Tenge 10,482 million and penalties of Tenge 9,441 million. By decision of the Appellate Commission of the Ministry of Finance, the amount of the fine was reduced to Tenge 5,358 million. In 2022, JV KATCO LLP continued to appeal to the judiciary, and by the decisions of the court of first instance and the court of appeal, the amount of additional charges was reduced by Tenge 15,761 million. In November 2022, the State Revenue Department filed a complaint with the Supreme Court to overturn the decision of the Court of Appeal, and the issue is currently being considered. As at 31 December 2022, the entity or the Group did not record any liability in respect of these contested assessments.

Compliance with subsoil use contractual obligations

In accordance with the terms of the subsoil use contracts, the Group mining entities are required to comply with the obligations specified therein. Failure to comply with the conditions stipulated by subsoil use contracts may lead to negative consequences, including termination of contracts, fines and penalties. Under current subsoil use legislation, the payment of penalty does not relieve subsurface user from fulfillment of stated obligations in full.

As of December 31, 2022, at some enterprises, the underproduction of uranium exceeds the legally allowed threshold of 20%, which is associated with a shortage of strategic materials. In addition, mining enterprises failed to meet their financial obligations under subsoil use contracts, which could result in penalties of 1% of the defaulted obligation or Tenge 150-200 million for 2022. The Group has not recognized additional liabilities in the financial statements as of 31 December 2022 as it plans to settle financial liabilities in future periods in accordance with revised work programs.

Insurance

The Kazakhstani insurance industry is in development stage, and many forms of insurance protection common in other countries are not yet available. Since 2021, the Corporate Property Insurance Program of the Company’s enterprises has been implemented against the “risks” of death, loss or damage as a result of accidental and unforeseen direct physical impact (excluding equipment breakdown/ failure and interruption in production).

The Company does not have full insurance coverage for risks related to mining activities and production facilities, including for damages caused by the stoppage of production or obligations incurred to third parties in connection with damages caused to the property or the environment resulting from accidents or operations.

The Сompany provides Directors’ & Officers’ Liability insurance (D&O). D&O insurance policies offer liability cover for the Company’s managers to protect them from claims which may arise from decisions and actions taken (“alleged wrongful acts”) within the scope of their regular duties. The terms of the policy prohibit disclosure of the amount of the insurance coverage.

Environmental obligations
Changes in the Environmental Code

In 2021, a new Environmental Code (hereinafter referred to as the “Code”) came into force. The Code provides for the division of objects that have a negative impact on the environment into four categories, depending on their level of impact, which implies the differentiation of environmental requirements for each of the categories. Operators of facilities that have a negative impact on the environment have obligations to eliminate the consequences of the operation of facilities in accordance with the requirements of the legislation of the Republic of Kazakhstan.

The changes in the Code mainly affected non-mining companies of the first category, which include: Ulba Metallurgical Plant JSC (Note 4), JV SSAP LLP, SKZU LLP and Kyzylkum LLP. Following detailed technical and commercial assessments during the current year, the Group recognized in 2022 obligations to remediate the consequences of the operation of facilities (Note 34).

According to the Code, category I companies, such as Ulba Metallurgical Plant JSC also have an obligation to provide financial security to the state until July 2024 for the full amount of provision (Note 34). The Management of the Group is currently in discussions with the competent authorities regarding the method and timing of funding the liability.

As a result of the assessment of liabilities, non-mining enterprises of categories II-IV did not have significant obligations as of the reporting date.

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 2022 is Tenge 18,937 million (2021: Tenge 21,154 million) (Note 8).

Compliance with covenants

The Group is subject to certain covenants related primarily to its liabilities under credit lines and guarantee agreements. The Group complied with all applicable covenants as of 31 December 2022 and 31 December 2021 and during the periods then ended.

Legal proceedings
Administrative offense of JV Inkai LLP in terms of environmental requirements

The Department of Ecology imposed a fine in the amount of Tenge 1,639 million for the entity exceeding the permitted wastewater rate. JV Inkai LLP believes that there were errors in the calculation of the fine. JV Inkai LLP paid the fine, however, JV Inkai LLP is taking measures to dispute the fine through legal proceedings.

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 2022:

In millions of Kazakhstani Tenge 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
Name
Ulba Metallurgical Plant JSC Kazakhstan 5.67% 819 8,088
Appak LLP Kazakhstan 35% 8,029 15,449
JV Inkai LLP Kazakhstan 40% 48,497 129,891
JV Khorasan-U LLP Kazakhstan 50% 24,044 112,584
Baiken-U LLP Kazakhstan 47.5% 17,452 77,558
DP Ortalyk LLP Kazakhstan 49% 26,195 42,730
Volkovgeologiya JSC Kazakhstan 1.04% (121) 159
Total 124,915 386,459

The following table provides information about each significant subsidiary that has non-controlling interest that is material to the Group at 31 December 2021:

In millions of Kazakhstani Tenge 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
Name
Ulba Metallurgical Plant JSC Kazakhstan 5.67% 568 7,491
Appak LLP Kazakhstan 35% 4,614 11,113
JV Inkai LLP Kazakhstan 40% 45,556 123,120
JV Khorasan-U LLP Kazakhstan 50% 11,839 110,290
Baiken-U LLP Kazakhstan 47.5% 9,034 60,106
DP Ortalyk LLP Kazakhstan 49% 7,780 34,857
Volkovgeologiya JSC Kazakhstan 3.38% (138) 281
Total 79,253 347,258

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 DP Ortalyk LLP Volkovgeologiya JSC
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
Current assets 112,643 74,957 24,853 17,164 133,314 108,441 86,830 44,227 90,905 89,727 59,750 54,052 9,097 8,042
Non-current assets 42,479 37,032 27,752 20,538 215,967 216,565 102,771 106,269 181,990 182,054 36,564 29,228 11,208 8,054
Current liabilities (57,444) (31,240) (4,088) (2,880) (11,812) (11,199) (6,629) (5,060) (14,560) (16,990) (4,781) (8,569) (15,954) (7,820)
Non-current liabilities (14,355) (5,390) (4,218) (2,910) (34,053) (35,022) (19,529) (18,733) (33,004) (34,049) (4,329) (3,573) (162) (91)
Equity, incl. 83,323 75,359 44,299 31,912 303,416 278,785 163,443 126,703 225,331 220,742 87,204 71,138 4,189 8,185
Equity attributable to the Group 75,235 67,868 28,850 20,799 173,525 155,665 85,885 66,597 112,747 110,452 44,474 36,281 4,030 7,904
Non-controlling interest 8,088 7,491 15,449 11,113 129,891 123,120 77,558 60,106 112,584 110,290 42,730 34,857 159 281
Revenue 121,435 60,254 45,050 30,902 165,966 131,866 74,579 49,981 90,156 63,117 95,240 59,195 29,742 23,513
Depreciation and amortisation (2,066) (1,924) (4,084) (3,184) (11,812) (10,913) (11,921) (12,694) (14,823) (13,842) (6,490) (4,971) (1,503) (1,424)
Including depreciation and amortisation at fair value - - - - (3,088) (2,205) (5,996) (6,985) (8,588) (8,868) - - - -
Finance income 855 360 576 278 633 127 619 340 217 116 26,375 8,045 61 22
Finance costs (1,864) (467) (428) (218) (1,114) (359) (244) (69) (203) (72) (26,469) (8,186) (85) (319)
Income tax expense (4,165) (2,606) (5,688) (3,932) (26,047) (20,547) (11,082) (6,219) (14,162) (8,584) (13,982) (7,218) 69 61
Including tax effect of depreciation and amortisation of adjustments to fair value - - - - 616 441 1,202 1,404 1,718 1,774 - - - -
Net foreign exchange gain 953 488 229 12 1,542 404 529 91 3,729 613 1,686 56 (4) -
(Impairment losses)/reversal of impairment losses 1,054 (198) (20) 9 - (478) 57 (164) - - (41) 22 (18) 60
Profit for the year 12,699 5,606 22,940 13,183 96,995 76,693 36,740 19,019 48,089 23,679 53,458 27,016 (4,844) (1,511)
Profit attributable to the owners of the Company 11,880 5,038 14,911 8,569 48,498 31,137 19,288 9,985 24,045 11,840 27,263 19,236 (4,723) (1,373)
Profit attributable to non-controlling interest 819 568 8,029 4,614 48,497 45,556 17,452 9,034 24,044 11,839 26,195 7,780 (121) (138)
Profit/(loss) for the year 12,699 5,606 22,940 13,183 96,995 76,693 36,740 19,019 48,089 23,679 53,458 27,016 (4,844) (1,511)
Other comprehensive income/(loss) (726) 16 (7) 1 - - - (8) - - (11) 2 (16) (9)
Total comprehensive income/(loss) for the year 11,973 5,622 22,933 13,184 96,995 76,693 36,740 19,011 48,089 23,679 53,447 27,018 (4,860) (1,520)
Dividends declared to non-controlling interest 177 360 3,691 2,879 41,727 17,117 - 6,225 21,750 - 18,316 - 1 1
Net cash inflow/(outflow) from:
operating activities 9,777 7,561 18,166 13,376 87,391 26,366 27,041 13,777 48,124 12,606 40,252 17,440 1,719 109
investing activities (2,383) (2,838) (10,287) (6,160) (10,649) (8,894) (7,433) (3,585) (13,525) (8,557) (12,488) (2,527) (3,837) (1,057)
financing activities (4,023) (3,812) (10,547) (8,278) (75,305) (28,832) - (11,869) (47,000) (3,504) (37,382) (3) 2,791 750
Net cash inflow/(outflow) 3,371 911 (2,668) (1,062) 1,437 (11,360) 19,608 (1,677) (12,401) 545 (9,618) 14,910 673 (198)

Allocation of profit between the non-controlling interest of JV Inkai LLP and the Group is impacted by the allocation of JV Inkai LLP dividends. The distribution of dividends is made in accordance with the amendment to the agreement between the parties, and is not based on ownership interests. For 2021, dividends were distributed between the non-controlling interest and the Company in the amount of 59.4% and 40.6%, respectively, for 2022 - in the amount of 50% and 50%, respectively. This amendment was agreed by the parties to compensate the non-controlling interest for losses due to a 20% reduction in production in 2021-2022. Accordingly, the amount reclassified from profit attributable to the Group to profit attributable to non-controlling interests during 2022-2020 amounted to Tenge 30,556 million (2021-2020: Tenge 20,857 million).

39. Principal Subsidiaries

These consolidated financial statements include the following subsidiaries:

Principal activity Ownership
2022 2021
KAP Technology JSC Communication services 100% 100%
Qorgan-Security 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 94.33% 94.33%
Volkovgeologiya JSC Exploration and research of uranium reserves, drilling services, monitoring of radiation level and environment conditions 98.96% 96.62%
High Technology Institute LLP Research, project, development and engineering consulting services 100% 100%
DP Ortalyk LLP Exploration, production, processing and sale of uranium products 51% 51%
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%
KAP Logistics LLP (former 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
2022 2021
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.

Disposal of a 49% non-controlling share in DP Ortalyk LLP

In April 2021, a sale and purchase agreement was signed between the Company and CGNM UK Limited, where the value of a 49% stake in DP Ortalyk LLP was determined in the amount of 435 million US Dollar (equivalent to Tenge 186,437 million) based on fair value assessment by an independent appraiser.

On July 22, 2021, the sale of the share in DP Ortalyk LLP was completed after obtaining all state permits and fulfilling all the preconditions of the sale and purchase agreement.

The management of the Company has concluded that the Company retains control over DP Ortalyk LLP, as the Group has significant rights to manage the enterprise's production activities and influence the profits earned.

In millions of Kazakhstani Tenge
Selling price at the exchange rate as of April 22, 2021 186,437
Less foreign exchange loss (579)
Consideration received 185,858
Net assets of the subsidiary at the date of disposal of the interest 55,258
Non-controlling interest, 49% 27,076
Selling price at the exchange rate as of April 22, 2021 186,437
Less Non-controlling interest (27,076)
Minus corporate income tax (33,466)
Increase in equity attributable to the owners of the Company 125,895

Mutual cooperation between the Group and CGNM and its related entities involved (CGNM Group) is governed by commercial agreements that contain put and call options.

Call option grants the Group the right to demand CGNM Group to sell their interest in DP Ortalyk LLP and Ulba-FA LLP after occurrence of any of the following events: (1) there is a deadlock situation for a decision made by the Group and CGNM Group as participants of DP Ortalyk LLP and Ulba-FA LLP, (2) CGNM Group ceases to own its interest in Ulba- FA LLP, (3) CGNM Group submits a notice of liquidation, (4) CGNM Group causes a material breach of commercial terms of Ulba-FA LLP that has not been addressed, (5) Ulba-FA LLP does not complete any of its planned activities on the specified date because of unfulfilled liabilities by the CGNM Group, including shipment of fuel tablets within 24 months after the first order placed. CGNM Group has 60 days to eliminate an event occurred before the option is exercised. Call option is exercised at fair value of shares as of the date the notice of option exercise.

Put option grants the CGNM Group the right to demand the Group to buy their interest in DP Ortalyk LLP and Ulba-FA LLP after occurrence of any of the following events: (1) there is a deadlock situation for a decision made by the Group and CGNM Group as participants of DP Ortalyk LLP and Ulba-FA LLP, (2) CGNM Group ceases to own its interest in DP Ortalyk LLP, (3) the Group submits a notice of liquidation, (4) the Group causes a material breach of commercial terms of Ulba-FA LLP that has not been addressed, (5) Ulba-FA LLP does not complete any of its planned activities on the specified date because of unfulfilled liabilities by the Group, including shipment of fuel tablets within 24 months after the first order placed. The Group has 60 days to eliminate an event occurred before the option is exercised. Put option is exercised at fair value of shares as of the date the notice of option exercise. With respect of valuation of derivative instruments relating to above mentioned put and calls options the Group determined that such value is immaterial as the exercise price is set at the fair value of the shares.

The Group considered the impact of above mentioned call and put options on the financial statements. In particular the Group considered whether the existence of a put option requires recognition of financial liabilities at the amount equal to net present value of the redemption amount pursuant to requirement of IAS 32. Consequently, as of the date of transaction and as of 30 September 2021 the Group has recognised a liability in the amount of Tenge 185,210 million in accordance with the terms of the sale and purchase agreement of a 49% stake in DP Ortalyk LLP, which provides the right to CGNM to request the Group to buy back that entity’s ownership interest in DP Ortalyk LLP at fair value on the date of purchase if DP Ortalyk LLP does not receive a new subsoil use contract on the Zhalpak field by 31 December 2021. The Group assessed that obtaining that subsoil use contract was outside of control of the Group. The subsoil use contract was received on 14 December 2021 and accordingly the liability was derecognised. There was no material change to its fair value between initial recognition date and extinguishment date.

As of 31 December 2022 and 2021 the Group has not recognised financial liability to purchase shares in DP Ortalyk LLP as required by IAS 32 because management believes that other conditions requiring purchase of shares listed above are under the Group’s control, i.e. the Group does not have unavoidable obligation to pay cash.

Sales of 100% interests in subsidiaries - KazPV project

On 10 June 2021 the Group signed an agreement for the sale of the Group’s entire interest in Kazakhstan Solar Silicon LLP. The sale was completed on 12 July 2021 upon receipt of full payment of Tenge 323 million.

On 16 July 2021 the Group signed an agreement for the sale of the Group's entire interest in Astana Solar LLP and on 23 August 2021 signed the act of acceptance after receiving full payment under the contract. The payment received amounted to Tenge 380 million.

On 26 October 2021, an agreement for the sale of the Group's entire interest in MK Kazsilicon LLP was signed. On 19 November 2021 after receiving full payment under the contract the Group signed an act of acceptance certificate. The payment received amounted to Tenge 652 million.

Total proceeds from sales of KazPV entities was Tenge 1,355 million less Tenge 16 million cash and cash equivalents of disposed entities at the disposal date.

Liquidation of Kazatomprom-Damu LLP

In April 2021, the Group liquidated Kazatomprom- Damu LLP. As a result of the liquidation, the Group wrote off additional paid-in capital of Tenge 2,254 million and the accumulated loss attributable to non-controlling interest of Tenge 377 million.

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 Note 2022 2021
Financial assets
Trade accounts receivable 27 258,631 220,024
Current bank accounts 31 131,248 138,844
Restricted cash 28 44,967 18,081
Demand deposits 28 38,274 22,338
Investments in debt securities 28 9,274 4,986
Investment in ANU Energy 28 17,066 -
Other accounts receivable 27 12,290 114
Loans to related parties 28 6,027 8,850
Term deposits 28 946 43,220
Cash in hand 31 14 8
Other 28 1,785 783
Total financial assets 520,506 457,248
Financial liabilities
Bonds 33 107,316 78,503
Trade and other accounts payable 35 98,809 66,014
Bank loans 33 23,953 -
Promissory note issued 33 7,002 10,514
Issued financial guarantees 36 1,286 133
Preferred shares 36 265 265
Dividends payable to other participants 36 259 263
Lease liabilities 33 173 291
Historical costs liabilities 36 - 437
Liability for social sphere contributions 36 - 3,600
Total financial liabilities 239,063 160,020

Financial risks are monitored by the Group’s risk management function and comprise market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The objectives of the Group’s financial risk management policy 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, investments in securities and loans to 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 table below shows credit ratings of banks where the Group had financial assets as of 31 December 2022:

In millions of Kazakhstani Tenge Rated Standard & Poor’s AАА to А- Rated Standard & Poor’s ВВВ+ to ВBB- Rated Standard & Poor’s ВВ+ to В- Total
Current bank accounts 33,291 17,183 80,774 131,248
Restricted cash 9,908 2,842 32,217 44,967
Demand deposits 2,968 3,216 32,090 38,274
Term deposits - - 946 946
Investment in debt securities - 9,274 - 9,274
Total 46,167 32,515 146,027 224,709

The table below shows credit ratings of banks where the Group had financial assets as of 31 December 2021:

In millions of Kazakhstani Tenge Rated Standard & Poor’s AАА to А- Rated Standard & Poor’s ВВВ+ to ВBB- Rated Standard & Poor’s ВВ+ to В- Total
Restricted cash 7,449 1,206 9,426 18,081
Term deposits - - 43,220 43,220
Current bank accounts 49,430 27,613 61,801 138,844
Demand deposits 3,024 337 18,977 22,338
Investment in debt securities - - 4,986 4,986
Total 59,903 29,156 138,410 227,469

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 2022 or 31 December 2021 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 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
2022
Trade receivables
current 0.03% 258,607 (70)
less than 30 days overdue 10.53% 38 (4)
30 to 90 days overdue 20% 30 (6)
90 to 180 days overdue 20% 46 (10)
Total trade receivables (gross carrying amount) 258,721
Credit loss allowance (90)
Total trade receivables from contracts with customers (carrying amount) 258,631
In millions of Kazakhstani Tenge Loss rate Gross carrying amount Lifetime ECL
2021
Trade receivables
current 0.06% 220,084 (132)
less than 30 days overdue 32.04% 104 (32)
over 360 days overdue 100% 8 (8)
Total trade receivables (gross carrying amount) 220,196
Credit loss allowance (172)
Total trade receivables from contracts with customers (carrying amount) 220,024

The following table explains the changes in the credit loss allowance for trade and other receivables between the beginning and the end of 2022 as well as impairment provision for trade and other receivables during 2021:

In millions of Kazakhstani Tenge Trade accounts receivable Other accounts receivable
Provision at 1 January 2021 109 74
Provision for the year 184 34
Recalculation of foreign currency 1 -
Reversal (121) (2)
Amounts written-off (1) -
Provision at 31 December 2021 172 106
Provision for the year 90 76
Reversal (172) -
Amounts written-off - (2)
Provision at 31 December 2022 90 180

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 no significant influence on credit risk. The Group is exposed to concentrations of credit risk. Approximately 75% of the Group’s revenue for 2022 (84% of trade receivables as of 31 December 2022) is attributable to sales transactions with eleven main customers (2021: 65% of Group’s revenues and 53% of trade receivables attributable to seven customers). 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 2022 2021
China 143,154 68,397
Canada 54,239 60,276
United Kingdom 30,712 11,929
Russia 12,989 20,134
USA 8,338 46,564
Kazakhstan 8,100 5,792
Japan 696 1,287
European Union 403 5,645
Total 258,631 220,024

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 28) arises from possibility of non-repayment of loans. For loans to joint ventures and associates, 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 macro-economic 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 treasury 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 2022 2021
Current bank accounts 131,248 138,844
Undrawn borrowing facilities 84,665 177,902
Current term deposits 39,204 65,558
Total 255,117 382,304

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 2022:

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
Bonds 107,316 114,706 - 23,216 861 90,629 -
Trade and other accounts payable 98,809 98,809 - 98,809 - - -
Bank loans 23,953 24,161 - 24,161 - - -
Promissory note issued 7,002 7,002 7,002 - - - -
Issued financial guarantees 1,286 18,937 18,937 - - - -
Preferred shares 265 265 - - - 265 -
Dividends payable to other participants 259 259 - - 259 - -
Lease liabilities 173 259 - 12 38 154 55
Total 239,063 264,398 25,939 146,198 1,158 91,048 55

The following are the contractual maturities of financial liabilities at 31 December 2021:

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
Bonds 78,503 88,550 - - 3,080 85,470 -
Trade and other accounts payable 66,014 66,014 - 66,014 - - -
Promissory note issued 10,514 10,514 10,514 - - - -
Liability for social sphere contributions 3,600 3,600 - - 3,600 - -
Historical costs liabilities 437 437 - 90 271 76 -
Lease liabilities 291 350 - 52 156 102 40
Issued financial guarantees 133 21,154 21,154 - - - -
Preferred shares 265 265 - - - 265 -
Dividends payable to other participants 263 263 - 263 - - -
Total 160,020 191,147 31,668 66,419 7,107 85,913 40
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 2022 2021
Denominated in US Dollars
Trade accounts receivable 248,201 207,325
Current bank accounts 97,471 95,630
Other investments 26,487 -
Other accounts receivable 7,508 1
Loans to related parties* 5,933 8,663
Term deposits 922 43,212
Demand deposits 385 -
Other assets 1,646 17,252
Total assets 388,553 372,083
Bonds* (107,316) (78,503)
Bank and non-bank loans (23,202) -
Trade and other accounts payable (6,350) (13,110)
Other financial liabilities (21,740) (34,048)
Total liabilities (158,608) (125,661)
Net exposure to currency risk 229,945 246,422

A 21% weakening and 21% strengthening of Tenge against US Dollar as of 31 December 2022 (2021: 13% weakening and 10% strengthening) would increase/(decrease) equity and profit or loss by the amounts shown below.

In millions of Kazakhstani Tenge 2022 2021
US Dollar strengthening by 21% (2021: 13%) 38,631 25,628
US Dollar weakening by 21% (2021:10%) (38,631) (19,714)

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 2022 and 2021.

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:

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 except for investments in ANU Energy OEIC Ltd. (Note 28).

A 40% weakening and 40% strengthening of Tenge against spot price as of 31 December 2022 would increase/(decrease) equity and profit or loss by the amounts shown below.

In millions of Kazakhstani Tenge 2022
Spot price increase by 40% 5,324
Spot price increase by 40% (5,324)
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 2022 approximately 100% (2021: 100%) 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 2022 2021
Fixed rate instruments
Restricted cash 44,967 18,081
Demand deposits 38,274 22,338
Securities 9,274 -
Loans to related parties 6,027 8,850
Term deposits 946 43,235
Bonds (107,316) (78,503)
Bank loans (23,953) -
Promissory note issued (7,002) (10,514)
Net position (38,783) 3,487
Fair value sensitivity analysis for fixed rate instruments

The Group has only 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.

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 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 and internally imposed capital requirements during 2022 and 2021, 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.

Financial assets carried at amortised costи

Estimate of all financial assets carried at amortised cost is level 3 measurement, except for cash and cash equivalents, which is in Level 2. 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.

All financial assets of the Group as of the end of the reporting period are carried at amortised cost except as disclosed below.

Financial assets carried at FVTPL

Financial assets carried at FVTPL include derivative asset and investment in ANU Energy OEIC Ltd. (Note 28) that are recognised at fair value through profit and loss. Fair value measurements for both assets fall in Level 2. The Group estimates fair value of investment in ANU Energy OEIC Ltd. as a percentage of Group’s owned share multiplied by the fair value of uranium held by the entity as of the date. The main inputs used in fair value estimation are spot prices of uranium as of the reporting date. Fair value of a derivative asset are determined based on binominal model with uranium spot price forecasts.

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 weighted average discount rate is 4.94% p.a (2021: 4.5%).

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 2022 2021
Carrying value Fair value Carrying value Fair value
Financial liabilities
Bonds 83,300 82,288 77,700 76,305
Historical costs liabilities - - 437 326
Total 83,300 82,288 78,137 76,631

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.

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 sub-categories: (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 and investment in ANU Energy OEIC Ltd. (Note 28), classified as FVTPL upon initial recognition. All of the Group’s financial liabilities were carried at AC. Fair value is approximate to carrying amount and there were no reclassifications during the period.

43. Events after the Reporting Period

Restricted cash

On 13 January 2023 the Office of Foreign Assets Control of the US Department of the Treasury (OFAC) issued a license to return blocked funds. On 30 January 2023 the correspondent bank returned the funds in the amount of 32.7 million US Dollars, including 0.4 million US Dollars of accrued interest.

Commercial bonds issue

Short-term commercial bonds issued in 2022 were redeemed on 23 January 2023. The payment made was 50.18 million US Dollars, including a coupon amount of 0.18 million US Dollars.

Glossary

Term Definition
AIX Astana International Exchange
CO2 Carbon dioxide
COSO Internal Control – Integrated Framework
CRM Customer Relationship Management
CJSC Closed Joint-Stock Company
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 enter-prise after the payment of all taxes and fees for all capital invested in the enterprise
EVP Employer Value Proposition
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 NAC Kazatomprom JSC and NAC Kazatomprom JSC Group of Companies, Joint Ventures and Associates
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
ТНК Trade House KazakAtom AG
R&D Research and Development
WNA World Nuclear Association
WNTI World Nuclear Transport Institute
U3O8 Uranium Oxide Concentrate
UF6 Uranium hexafluoride
UME Uranium Metal Content Equivalent
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 set-off 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

National Atomic Company Kazatomprom Joint Stock Company

Р17/12, 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


GRI 102-53

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

Yerlan Magzumov, Director of IR

Tel.: +7 7172 45 81 80

E-mail: ir@kazatomprom.kz


Public Relations and Internal Communications

Sabina Kurumbekova, Director of PR

Tel: +7 7172 45 80 63

E-mail: pr@kazatomprom.kz


Corporate Secretary

Assem Mukhamedyarova

Tel.: +7 7172 45 81 63

E-mail: amukhamedyarova@kazatomprom.kz


Auditors

PricewaterhouseCoopers LLP

34, Al Farabi Avenue, Building А, 4th floor

А25D5F6 Almaty, Kazakhstan

Tel.: +7 727 330 3200

www.pwc.com/kz


Depository Bank

Citibank, N.A.

388 Greenwich Street, New York

New York 10013, USA

Tel: +1-212-816-6622/+1-917-533-7887