Annual Report / 2018

Business
Transformation

In 2015, the Company and 12 of its subsidiaries embarked on a transformation initiative, with a view to implementing the principles set out by its then sole shareholder, Samruk-Kazyna.

The principal aims of the transformation initiative were to improve transparency and operational efficiency, as well as to standardize and harmonise business processes, based on Samruk-Kazyna’s reference model. As part of the initiative, in 2016, the Company developed a portfolio of 24 projects on various aspects of Kazatomprom’s operations, such as production, procurement, resource management, and business planning and modelling efficiency. By 2017, it had implemented seven of these projects, including:

  1. A category-based procurement management system, allowing the Group to optimise its approach to procurement and achieve short- and long-term benefits, using approved category-based strategies. Kazatomprom implemented this strategy in the fuel and lubricants category and the power category.
  2. An information security model, designed to improve information security and incident management processes based on a Security Information and Event Management (SIEM) class control and analysis system. This allowed Kazatomprom to avail of unified systems, as well as the services and risk-oriented approach offered by the system.
  3. A targeted risk-management model, enabling Kazatomprom to automate risk-management processes, such as a risks registry, report monitoring, visualisation and prediction. These capabilities improved the Company’s risk-analysis capabilities and keep senior management appraised of pertinent risks, ensuring timely reaction.
  4. A sales and marketing model, designed to increase the Company’s margins by improving its market perception, strengthening its sales and marketing capabilities, developing a better understanding of the strengths and weaknesses of both Kazatomprom and its competitors, and improving the Company’s understanding of customer and potential customer needs.

In the first half of 2018, the Company’s transformation programme was expanded by the inclusion of additional initiatives aligned with the master plan for implementing the Samruk-Kazyna’s transformation programme for 2018–2021, approved by the Chairman of the Samruk-Kazyna Board on 14 May 2018.

Thus, in addition to the business-process reengineering initiative, in 2018, Kazatomprom’s transformation programme included initiatives to:

  • Digitise business
    processes
  • Simplify the legal
    structure


  • Transform
    human capital
  • Implement change management and a project management approach

As part of the business-process reengineering initiative in 2018, the Company completed the following transformation initiative projects:

  1. A new model of personnel management, aimed at ensuring the Company’s compliance with the best practices in human-resource management, strengthening staff engagement, accumulating and preserving knowledge within Kazatomprom and enhancing the role of Kazatomprom corporate culture;
  2. A new health and safety model, aimed at reducing the number of accidents at work by introducing the timely monitoring of potentially dangerous situations, by conducting behavioural safety audits at Kazatomprom facilities and by checking contractors for compliance with safety-monitoring requirements;
  3. A new model of strategic planning and performance management, aimed at creating a unified process of strategic planning and performance management, creating a clear hierarchy of goals with a specified relationship to key performance indicators (KPIs). Motivational KPIs were then set for Company executives, subsidiaries and associates, all focused on achieving the Company’s strategic goals, so as to meet its shareholders’ expectations in the strategic long and medium term.

A number of IT systems were introduced in 2018:

  1. In July 2018, the SAP Enterprise Resource Planning (ERP) system was put into commercial use in the Corporate Centre and Kazatomprom-SaUran LLP and, in December 2018, in the Trade and Transport Company LLP.
  2. In October 2018, the integrated planning system was put into operation in the Corporate Centre and four enterprises (RU-6 LLP, the Ortalyk LLP production company, APPAK LLP and Kazatomprom-SaUran LLP).
  3. In December 2018, the Digital Mine system was piloted at Kazatomprom-SaUran LLP.
  4. In December 2018, the IT service management (ITSM) system was launched in the Corporate Centre and in two Group enterprises (KAP Technology LLP and RU-6 LLP).

Based on the Transformation initiative projects implementation results the Company expects to gain economic benefits due to work efficiency increase.

Following the other initiative projects implementation in 2018a digitisation office was created, while seven subsidiaries and affiliates were removed from the structure. The company established a code of ethics and compliance with corporate values, along with a leadership development programme for 2019-2020. Leadership-development modules were run for the CEO and CEO-1 management levels. A company ethics analysis was conducted and a roadmap approved for corporate culture development in 2018-2021.

As part of the plan to implement change management and a project approach, the change-management function was structured within the business transformation department. Professional requirements for employees in certain positions in the Corporate Centre and in subsidiaries were updated to reflect project-management competencies, and training was provided for the CEO, CEO-1, CEO-2 management levels on change and project management.

In 2019, the company plans to continue implementing the following key Transformation projects:

  • SAP ERP replication in the Company’s production facilities;
  • An integrated planning system in production companies of the second wave; and
  • Digital Mine replication in two mining facilities.

Under the digitisation framework, there are plans to diagnose business problems, to identify potential growth with the need for digitalisation, to develop a portfolio of projects of digitalisation and to start implementing them.

As part of the plan to transform people, the Company plans to continue its work on the development of a corporate ethics culture and to train at least 60% of management at CEO-1, -2 and -3 levels on the leadership development programme.

To implement change management and project management approach, the Company plans to adapt and approve change- and project-management standards, update change management competencies and incorporate the Corporate Centre and subsidiaries (included in the perimeter of the transformation) into the corporate model, training mid- and lower-level corporate managers in the Corporate Centre and subsidiaries on project and change management.