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We present to your attention the Annual Report of «KazAgro» Holding» JSC for 2018. In the past year we did a great and important work towards achieving the strategic goals of the Holding. Emphasis was placed on improving the operating efficiency of the Holding and its subsidiaries, improving business processes and reflecting the challenges we have recently faced. However, temporary difficulties did not prevent the Holding from implementing large- scale funding for the industry. In 2018, KZT 400 billion was allocated to finance domestic agricultural sector - an unprecedented amount for all the years of the Holding and its subsidiaries.

96% of the volume or KZT 385 billion was directed to lending and leasing. Over the past year, about 20 thousand loans were provided.

Against the background of a decline in bank's interest in financing agriculture, the Holding actively expanded the channels of access to financial services through private financial institutions. The volume of loans through funding of credit cooperatives, microfinance organizations, second-tier banks and leasing companies increased to KZT 132 billion, or almost 48%. The volume of approved investment projects in agro- industrial complex has doubled, which demonstrates a favorable climate for development of joint ventures and attracting investments in the industry.

Great efforts were made to intensify the socio-economic activities of the Holding - we are continuously working to increase the level of employment in agro-industrial sector by developing agribusiness through the provision of long and cheap loans in the countryside.

It is important to note a number of significant achievements for us in 2018. Due to the negative financial result for 2017, which was also caused by devaluation fluctuations that hit the country's economy as a whole and still have an effect until today, we initiated a short-term strategy to repurchase foreign currency bonds that were previously placed to raise funds for the forced support of Kazakhstanis involved in agribusiness. This step allowed us to maximally neutralize the hard effect caused by currency fluctuations, and to minimize the volume of loans in foreign currency. We are currently on one pace from completely becoming independent of foreign exchange markets turmoil. All achieved results will allow the Holding and its subsidiaries to attract new loans in national currency and direct them to support agro-industrial complex, since the continuous development of the industry requires additional funding. 

In addition, we have introduced new loan products and services. The past year, for example, was marked by the successful promotion of previously canceled Sybaga lending program, aimed at raising the livestock population in the framework of implementation of Program for the Development of Beef Husbandry. Despite the fact that the launch of loan product was carried out in the second half of the year, we managed to achieve an unprecedented increase in the interest of farmers in it. The planned indicatives of past year were fulfilled, and the implementation of the program is in its active phase.

Our subsidiaries, being operators of credit programs, centrally and locally, continue to introduce modern technologies and a methodology for the most efficient interaction with the end user of our financial services. In addition, competence centers have been initiated locally to train farmers and increase their interest in launching their own personal agribusiness. To date, the digitalization of the Holding's services serves as the flagship project. The limiting factor is the low level of consumption of digital services, which so far does not allow us to speak of complete withdrawal from bureaucratic costs, but we strive to make them as convenient and attractive as possible for users.

In conclusion, I want to emphasize that the past year was a turning point for us to some extent - besides the fact that we actively sought to change the external environment, we also changed from the inside. Guided by strict requirements dictated by economic realities, we optimized the structure of the Holding and business processes. Carrying out work practically in the anti-crisis mode, in the past year we did everything possible to preserve the reputation of the corporate brand of the Holding, strengthen the financial position and, most importantly, demonstrate corporate responsibility to users of our services and employees of the Holding itself.

We still have much to do, but the changes that are taking place in the Holding are already noticeable. They are seen by our stakeholders - agricultural producers, the Government, the only shareholder - the Ministry of Agriculture of the Republic of Kazakhstan, our partners in the corporate sector, and, of course, employees who sincerely follow the agro- industrial complex, day by day giving their strength and knowledge to increase the agricultural productivity in our huge country.

Best wishes, Rustem Kurmano