Sovereign Wealth Fund 'Samruk-Kazyna' JSC
Introduction
Wealth Fund “Samruk-Kazyna” JSC was
established on November 3, 2008 in accordance with the Decree of the President
of the Republic of Kazakhstan dated October 13, 2008. The Fund was organized to
increase management’s efficiency and to optimize organizational structures in
the entities in order to successfully achieve their strategic objectives set in
the respective Government programs. Today, “Samruk-Kazyna” JSC plays a
significant role in sustainable development of Kazakhstan’s economy. For
instance, during the world economic crisis, the Government by Decree No. 1085
dated November 25, 2008 approved a Joint Action Plan of the Government, the
National Bank, the Agency on the Regulation and Supervision of Financial Market
and Financial Organizations of Republic of Kazakhstan on stabilization of the
economy and financial system for 2009-2010 (“Stabilization Plan”). The Fund I
was the principal operator for the Government in implementation of this
Stabilization Plan.area of Fund’s work is very broad that is why it is
organized into organizational business units based on their products and
services, and has seven reportable operating segments:and Gas segmentsegment
segment segmentand industrial segmentand Innovation Institutions segmentof
Corporate center and projectsmy practice from 8th of July till 1st of August in
2014 I was working in energy segment that includes operations related to
production and distribution of electricity, the function of oversight over the
input of electricity into the energy system and consumption of imported
electricity, the function of centralized operation and dispatch of facilities
in the Unified Electricity System of Kazakhstan.report is a short description
of my four weeks training practice carried out as compulsory component of the
Bachelor’s degree program in economics. The purpose of this report is to
present the knowledge gained on the activities of the organization (directorate
where I worked), a brief analysis of performed work acquired practical skills
as well as organize, consolidate and expand the theoretical knowledge.was
mainly working with the documentation during first days in “Mining and power
assets directorate”. My first task was to learn how electronic document
management system (EDMS) works. So, I tried to find necessary document by its
number, identify who is executor of a document and check electronic signatures.
Also I have analyzed company’s interim condensed consolidated financial
statements for 2012 and 2013. One more task was to understand the process of
registration of legal entity (JSC) and control all stages of the procedure. and
economic characteristics of SWF “Samruk-Kazyna”Wealth Fund «Samruk-Kazyna»JSC
was established in accordance with the Decree of the President of the Republic
of Kazakhstan dated October 13, 2008 № 669" On some measures to ensure the
competitiveness and sustainability of the national economy ". The Fund is
established in order to enhance competitiveness and sustainability of national economy
and prevent any potential negative impact of changes in the world markets on
economic growth of the country. The key purpose of “Samruk-Kazyna” is to manage
shares (interests) of national development institutions, national companies,
and other legal entities it owns to maximize their long-term value and
competitiveness in the world markets. All of the Fund’s shares are owned by the
State.and operating performance of the Fund is based on economic independence.
The company is funded by registered capital, income generated by dividends from
the national development institutions, national companies and other legal
persons, stakes (interests) are owned by the Fund on the basis of ownership or
trust, and other income that is not prohibited by the legislation of the Republic
of Kazakhstan. The Fund has its own balance, bank account, seal that indicates
the full name in Kazakh and Russian languages.fund can have its trademark and
other symbols, examples of which are approved by the Board of the Fund and are
recorded in the prescribed manner, as well as stamps in the languages of the
Republic of Kazakhstan legislation on languages, letterhead and other
props.mission of the Fund is to increase national wealth of the Republic of
Kazakhstan by increasing long-term value of organizations and effective
management of the assets of the group of the Fund.Fund's vision by 2022 is a
strategic holding that unites companies reached the best world practices, and
which is a leading catalyst for the development of non-oil and gas companies
and a foundation to maintain the stable functioning of the country's economy.
That is why the company operates in three strategic areas in order to achieve
its vision and mission: Enhancing the long-term value of companies;
Participation in diversification and modernization of the national economy;
Social responsibility. Fund is subject to large businesses with an annual
average number of employees more than 250, and the average price of assets for
the year that is equal to 325 MCI. The company's assets are $86, 9 billion and
the number of employees of the all holding is 260 thousand people.Fund
“Samruk-Kazyna” has 44 subsidiaries, and with affiliated entities, their total
number reaches 404. The Fund owns 100 percent of shares of 29 subsidiaries (for
instance such companies like “Kazakhstan Temir Zholy” and “KEGOC”), and also it
owns from 1 till 75 percent of other companies’ shares.of «Samruk-Kazyna» as a
management company are based on the principles of modern corporate governance
system. The Fund evaluates corporate governance on three major components:
structure, process and transparency.to the approved structure of the Fund's
overall management of the company is controlled by The Board of Directors,
which delegates the tasks of the current activities of the Board, headed by its
Chairman. The duties and authority of the Board of Directors of the Fund is to
develop and make decisions on key issues of long-term development of the
company in charge of sustainable development objectives of the Fund and the relevant
provisions of the Fund’s Strategy.October 2009 Council of Corporate Secretaries
functions in the Fund. The Council's mission is to improve policies and
practices of corporate governance in the group of companies «Samruk-Kazyna» by
improving the efficiency of corporate secretaries who work in companies of the
Fund.Fund is a code of corporate governance and code of ethics that define the
company's values and principles of its operation and external
communications.determine the effectiveness of corporate governance in
subsidiaries and affiliated companies, the Fund uses its own methods of
diagnosis of corporate governance. The developed technique is based on best
international standards of corporate governance practices. The aim is to
improve the diagnosis of corporate governance of the Fund through a structured
and consistent approach to assessing and developing their corporate governance
systems based on best practices. The present method allows determining the
rating of compliance with best practice corporate governance and is a tool for
continuous monitoring of the process of improving corporate governance in the
companies of the Fund.high level of corporate governance not only affects an
economic performance of the company, increase transparency, usefulness of
decision-making process, but also has positive effect on the perception of
investors.to the Diagram №1, company’s structure includes individual workers
and management services, all they interact through linear and functional
connections.
Diagram
№1. Organizational structure of “Samruk-Kazyna” JSC
The supreme organ of the Fund is the
sole shareholder, the government of the Republic of Kazakhstan. It has an
exclusive competence in some matters like for instance voluntary reorganization
or liquidation of the Fund.management of the company is done by the Board of
Directors, which consist of 12 members. The chairman of the Board of Directors
is Prime Minister of Republic of Kazakhstan. The Board of Directors makes
decisions on such issues like:of the development plan of the Fund;of the order
of development, approval, monitoring and evaluation of implementation,
reporting on implementation of the development plan of the Fund, as well as the
requirements for its content;and performance analysis, evaluation of the implementation
of the Fund’s development;of key performance indicators of the Fund within the
development plan of the Fund;of the annual budget of the Fund;the procedure for
assessment of corporate governance in the Fund; Chairman of the Board of
Directors organizes the work of the Board of Directors, convenes meetings of
the Board of Directors of the Fund and presides over them, leads and signs the
minutes of the meeting.Chairman of the Management Board organizes the
implementation of decisions of the sole shareholder, the Board of Directors and
the Management Board; without power of attorney on behalf of the Fund in its
relations with third parties, allocates responsibilities and areas of authority
and responsibility among the members of the Board and other.Internal Audit
Service Fund created by the Board of Directors of the Fund to exercise control
over financial and economic activities of the Fund's assessment of internal
control, risk management systems, execution of documents in the field of
corporate governance and counseling to improve the performance of the Fund. The
Internal Audit Service reports directly to the Board of Directors about its
work. Tasks and functions, rights and responsibilities and operation of the
Internal Audit Service of the Fund determined by the Regulations on Internal
Audit Service of the Fund, approved by the Board of Directors.sum up, such
difficult organizational structure helps the company to do its work more
efficiently, strongly distribute responsibilities and tasks between company’s
employees and monitor Fund’s activities in various spheres. As a result there
is a high level of corporate management in the Fund today. The company promotes
the best practices of corporate governance in the companies, as well as focus
on building an effective Board of Directors as a strategic body.
Management of
"Samruk-Kazyna" JSC
of financial resources of the Fund
is done by using own funds and equivalents, the mobilization of resources in
the financial market and the cash flows from the financial banking system in
the reallocation. The company has the statutory fund, and its sources are:
equity, long-term loan and budget. Also share capital has an important role in
the activity of the company, because it is a material base for many types of
Fund’s activities. The share of the share capital is calculated as the ratio of
the nominal value to the amount of the authorized capital stock. Share capital
contributes to the redistribution of property rights throughout society, but
real power over the capital is concentrated in the hands of professional
managers.main source of financial resources for the existing plants are cost of
goods sold or services rendered, various parts of which are in the process of
distribution of proceeds take the form of cash income and savings. Financial
resources are formed mainly due to income from its core and other activities,
depreciation and amortization. Along with these sources of financial resources
also are: proceeds from the sale of disposals of assets, liabilities stable,
different target incomes (for example, mobilization of domestic resources in
the construction). Moreover, significant financial resources are mobilized in
the financial market in the form of share, dividends and other
securities.assets are cash is invested in fixed assets and non-productive
direction. With a participation of fixed assets in the production process of
their value bifurcates: one part of it that is equal to wear, is transferred to
the finished product, and the other - expresses the residual value of existing
fixed assets.value of the sinking fund each year is calculated by multiplying
the book value of fixed assets at the rate of depreciation. Depreciation rates
are reviewed periodically as to change the terms of service of fixed assets, accelerating
the process of transferring their value to the product manufactured under the
influence of scientific and technological progress and other factors.
"Samruk-Kazyna" JSC uses straight-line method for calculating
depreciation.is also a part of the company's own financial resources used for
capital investments. In addition, there are revenues from disposals of assets,
resources of funds for Social Development and Housing.company needs not only
fixed assets, but also current assets. This type of assets consumed in the
production go into the sphere of circulation in the form of commodities, which
then as sales of finished products goes in the form of cash. Current assets
provide current needs of the company.of working capital is a measure of the
effectiveness of their use. Turnover is defined by the time during which the
funds make a full turn, from the acquisition of inventory and ending with the
receipt of money on account of the enterprise; duration of one turn is
expressed in days. The faster turn advances current assets, the best result is
achieved by using the same amount of funds produced and sold more products.
and power assets directorate
training practice was held during a
month in Mining and Power Assets Directorate of the Fund. The directorate basically
deals with investment activities, works on projects in business segments that
include coal mining, power generation, distribution and sale of electricity.
The directorate works with "Samruk-Energy" JSC that was established
in May 2007 and is a part of "Sovereign Wealth Fund"
Samruk-Kazyna" JSC. It includes a vertically integrated group of companies
which has approximately 47% of installed capacity and provides 36, 5% of
electricity generation in Kazakhstan UES, including its share in joint ventures.
So the directorate monitors and evaluates operational, financial and economic
activities of subsidiaries, develops new investment models and project, makes
assessment of the financial stability of the company, works on optimization of
the assets and so one. workers perform different functions and have various
tasks, but at the same time they often cooperate and consult with each other.
This cooperation makes their work more effective and helps to make everything
faster. One of the most common position in Mining and power assets directorate,
and in Company at all, is Chief expert whose task is production activities must
have work experience in large production companies (preferably in the energy
and mining industry, at least 5 years) and have experience in working with the
public authorities and in the development and implementation of normative and
technical documentation. Also he or she should be able to implement projects,
evaluate performance, and analyze financial and economic indicators. Chief
expert whose task is operational activities must have experience not less than
3 years in the major manufacturing companies preferably in the energy and
mining industry, they work in such spheres like corporate management, human
resources, budgeting, analysis of PCBs. Also workers from the directorate have
following functions:and approval of the list of key companies’ performance
indicators and their methods of calculation;of companies’ long-term strategies,
the preparation of proposals for adjustment;and approval of development plans
and adjustments of companies’ development plans, preparation of reports and
recommendations;and analysis for monitoring the execution of development plan
with recommendations about necessary corrections;of the financial stability of
companies;of the loan portfolio of companies;out economic and financial
analysis of companies and proposals for improvement;and assessment of critical
risks, development of key risk indicators. Development and monitoring of the
implementation of plan for the critical risk management;risk analysis of
projects in terms of market, industry, technical, technological, financial,
operational and other risks, development of proposals for their mitigation and
management measures;and updating methodological framework for risk management
in companies;optimization and schemes of project implementation for the
purchase and sale of assets;analysis within the framework of investment
projects;of proposals for the purchase and sale of assets;and the development
of investment models;and selection of promising investment projects;of
projects’ financial models;proposals for new investment projects;of investment
proposals of companies;of the internal and external environment;of business
areas;in the preparation of agreements and contracts;in the negotiations;, all
workers should be able to work in a team, learn new material very fast and
apply new knowledge and skills into practice. In addition, directorate’s
employees should have huge work experience and speak at least three languages
(Kazakh, Russian and English) because the company has many foreign partners
from such countries like Korea, Russia and China.should be emphasized that
there is a high level of automated information technologies in the directorate,
and in company at all. "Samruk-Energy" JSC uses different types of
information technologies for various purposes. For instance, rapid
communications help to increase productivity, allow for better decision-making
and ease a Fund’s cooperation with other companies and countries. Email servers
(Microsoft outlook), routers, internal company billboards serve as the backbone
of a company’s communications. These electronically based communication systems
are used to disseminate routine and critical information in a quick and efficient
manner. In addition, it is used to send different reports and official papers,
to update employees on critical business projects and to connect different
participants of a project. All employees have a free access to the data about
all workers, so for example if you need to know somebody’s number or email you
just write a person’s name and you will easily get that information.,
streamlined work flow systems, shared storage and collaborative work spaces can
increase efficiency in a company and allow employees to process a greater level
of work in a shorter period of time. For that purpose the Fund for example uses
Electronic Document Management System (EDMS). Document management systems use
scanners to make digital copies of every document. These documents are coded to
attach them to specific files or accounts and optical character reading,
systems provide insight into the contents of each page. From the time it enters
the organization; the digital version of the document is stored and filed for
future use. It is very convenient because you can easy find any document you
need in the system and send it to other employees by email. Also you can see
the status of the document, for example was the document signed or not, and by
whom and when it was signed. So every employee should know how to work with
EDMS in order to make all projects and tasks faster and more efficiently.I had
arrived at the place of my training practice, I signed a contract and an
obligation on nondisclosure of confidential information; I also got a temporary
pass, a desktop with a computer temporary account and email. My supervisor gave
a tour of the company, told me about the unspoken rules in the directorate and
about my responsibilities.brief description of performed workfirst days of my practice
I mainly worked with the documentation and performed the following tasks:of
subsidiaries’ documentation;and paperwork;and drafting of documents according
to the standards and regulations ( memoranda and reports);of documents;with the
Electronic Document Management System (EDMS);of documents for the registration
of a new company;I used Microsoft Outlook program during my practice to
communicate with my coworkers and representatives of the Fund’s subsidiaries.
When I helped my supervisor to make a test for devaluation of company’s assets
I worked in Microsoft Excel program. In addition, I used an Information System
which is called “Paragraf”; this program contains legislative documents of
Kazakhstan and international law.
of practical tasks
my practice in Mining and Power
Assets Directorate I was working in a position of intern, so I was doing
different kinds of work. First of all I got a great experience in a new
business development and organization. One of the most important tasks during
the practice was preparation of necessary document for the registration of a
legal entity, so I was responsible for the control of the process. Now I know
that it is not so easy to register a new legal entity, everything must be done
according to the official rules, on time and you should pay attention to any
detail in the documents., I had been involved throughout the entire process of
new legal entity’s registration. We can divide the process into five
steps:1applicant calls the legal information service of the Ministry of Justice
for information on the required documents for registration of legal entities
relevant organizational and legal forms. step takes about 5-10 minutes.2of
required documents. The form of legal entity we registered was Joint-Stock
Company, so for that type of company we had to submit following documents:for
the registration; of association; of the constituent assembly;confirming the
location; or a copy of the payment order of the registration fee.this step we
looked at Code "On taxes and other obligatory payments", Art. 456.
And Law of 17.04.1995 № 2198 "On state registration of legal entities and
registration of branches”.step took about 2 days.mostly worked on the article
of association; it must be done according to the Law of the Republic of
Kazakhstan dated 13 May 2003, "On Joint Stock Companies”. So the article
of association must contain following parts:provisions.status of the company.of
the Company and its shareholders.types of activities.and capital of the
company., bonds. Conditions for allocation of securities.procedure for the
distribution of net income. Dividends on shares.Bodies.information by the
Company.and liquidation of the Company.Provisions.3applicant provides a
complete list of required documents in CHS. In the case of providing a full
package of documents a specialist accepts documents and issues the applicant a
receipt. If it is found that the documents are not complete, a specialist does
not accept documents and the applicant is required to collect the missing
documents.4specialist transmits the documents to the registration authority (
in Kazakhstan it is called the Department of Justice). Authority within one
working day from the date of registration shall send a notification of the
state registration of legal entities, branches and representative offices to
the state statistical agencies be notified . Then the state statistical agency
within one working day from the date of assignment of legal persons and other
unified identification system-account code is sent to the tax authorities the
notice for the state registration of the taxpayer. state registration of medium
and large businesses that operate on the basis of a model statute - must be
made no later than three working days after submission of the application with
all necessary documents.5applicant comes in CHS on day specified in the
receipt; he or she must present an identity card and receipts, and then
receives: certificate of state registration of a legal entity, a certificate of
the taxpayer, statistical card.reasons for refusal of registration of the legal
entity:of the order of creation and reorganization of a legal entity
established by the legislative acts of the Republic of Kazakhstan, of
constituent documents legislative acts of the Republic of Kazakhstan to act of
transfer or separation balance or lack of provisions on succession of the
reorganized legal entity, or the existence of a tax debt of more than one
monthly estimates the founder is a dormant entity and (or) if the founder and
(or) the head of the legal entity are the founders and (or) the heads of
inactive legal entities or limited legal capacity and (or) to be missing, and
(or) declared dead, and (or) convicted of a crime under Articles 192, 216, 217
of the Criminal Code of the Republic of Kazakhstan, and (or) are lost identity
documents., we had got through all these 5 steps, and finally got a certificate
of state registration of the legal entity, a certificate of the taxpayer and a
statistical card. My supervisor was satisfied with the work which I had done.,
I was preparing a brief summary on subsidiaries’ annual report for 2013.My task
was to choose most necessary and significant information from a large data
stream. In order to write the summary, I made a calculation of various
indicators and indexes, build an analytical table and diagrams using Microsoft
Excel. more important task was a test for impairment of company’s assets. I got
a lot of theoretical material from my supervisor to understand what is it and
how to make the test. So, I spent a lot of time learning the theory, which
includes presentations, some lecture notes and real examples that were made in
Microsoft Excel. Then, I helped my supervisor to calculate such indexes and
ratios like ROA, ROE, WACC, Net operational income and other.
"Samruk-Kazyna" JSC
made the analysis of "
Samruk-Kazyna" JSC in order to better understand company’s activity and
implement knowledge that were gained in the university on practice.
It should be
noticed that I used consolidated financial statements of the Fund, in other
words I used financial statements that combine the financial statements
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