Dear ladies and gentlemen!

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2 Dear ladies and gentlemen! Welcome to the pages of the Annual report of «QAZAQ AIR» JSC for was the period of start and establishment of the company QAZAQ AIR, which started its operations under the influence of strongly deterrent factors in the domestic economy. Development of regional passenger air transportation is of crucial importance for the future economic growth of Kazakhstan, as well as development of trade, social and economic ties between the regions of the Republic. These objectives were set by the Head of State for QAZAQ AIR during the process of organising the Company. Moving towards this goal, we strive to satisfy the needs of Kazakhstani passengers, providing them with upscale and modern facilities of the regional passenger transportation, which comply with the highest international standards of safety and comfort. On behalf of the Board of Directors and Sole Shareholder, I would like to thank the whole team of the airline QAZAQ AIR for their dedicated and fruitful work and success in Yours faithfully, M.ZH. URAZBEKOV

3 Dear readers! The main objectives of starting "QAZAQ AIR" JSC in April 2015 were the creation of the infrastructure for a regional airline, functioning to international standards, the quick launch of regular flights, as well as achieving the best possible results using the resources available at the start of the project. Not without pride I inform you that the team dealt with these challenges. Thus, after only 3 months from its establishment, the company QAZAQ AIR launched its first flight on 6 July, and regular passenger flights began in August It is safe to say that QAZAQ AIR succeeded in 2015 due to the full support of the Sole Shareholder of the company Sovereign Wealth Fund "Samruk-Kazyna JSC, and the constant attention to issues of aviation security and operational reliability. I would like to thank our clients for their choice of QAZAQ AIR, our Sole Shareholder - "Samruk-Kazyna" JSC for their support, our suppliers and my colleagues for their dedication and hard work. Yours faithfully, A.B. TREHERNE POLLOCK

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5 «QAZAQ AIR» JSC was established on 01 April 2015 to fulfill the Protocol instruction of the President of the Republic of Kazakhstan on the establishment and development of an interregional national airline dated 04 May by National Wealth Fund "Samruk-Kazyna" JSC (hereinafter "the Fund"). The main activity of the airline was determined to be the implementation of domestic and international transportation of passengers and cargo by civil aviation aircraft with the aim to meet demands of the population of the Republic of Kazakhstan. Pursuant to the Minutes of absentee meeting of the Investment-Innovation Committee of the Fund dated 16 June 2015 г. 20/15 the project of establishment and launch of regional airline «QAZAQ AIR» JSC was acknowledged as a strategic investment project.

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7 The fleet of QAZAQ AIR consists of 3 new modern Canadian made Bombardier Q400 NextGen turboprop aircraft. The benefits of these aircrafts are high reliability, low operating costs, comfortable, brightly lit interior and low noise level. The cabin of the Bombardier Q400 aircraft is economy class only with 76 to 78 seats.

8 Passenger load factor Available seat kilometers The most popular routes: Astana Almaty, Almaty - Shymkent Aktobe - Atyrau and Shymkent Aktobe of total passengers transported by QAZAQ AIR in 2015.

9 QAZAQ AIR monitored all flights, based on downloading data from the flight recorders after each flight to detect potential threats. Specialists monitored more than 90% of flights data. This helps to identify any trends of irregularities, reveals risks, and allows appropriate actions to be taken in advance that improves the quality and safety of operations. The Inspection Division conducted safety and quality monitoring of providers of such basic services as ground handling at destination airports, fuel suppliers, spare parts, flight catering, as well as others who will be affected by the operating activities of QAZAQ AIR. Crew Planning carefully monitored the flight schedule and cabin crew to meet the requirements of the Civil Aviation Committee of the Republic of Kazakhstan and ICAO Standards for the management of risks associated with fatigue that is a direct part of the system of safety management.

10 is responsible for the work schedule of crews, transportation, preparation tasks for flight, processing post-flight documentation for further cost accounting. carries out provision of information on flight status and other information about the scheduled flights, interacts with airports, Civil Aviation Committee, airlines and other parties of the aviation industry, coordinates the movement of aircraft on the ground. is responsible for full preparation of documents for the flight. In 2015 the system NavTech was adopted, which allows the Division not to be dependent on others to compile, plan the route and conduct preflight briefings to crews to ensure safe and effective flight operations. carry out inspection of the aircraft s documentation, monitoring and updating of manuals for flights, etc. monitors the validation and certification documents of the flight personnel.

11 is responsible for maintaining aircraft airworthiness. It supervises and coordinates all activities, which ensures that, at any moment, the entire spectrum of aircraft operations meets the applicable requirements of airworthiness standards, and that their status ensures safe operations. performs preparatory work, inspection and checks the technical condition of aviation equipment in the intervals between the periods of scheduled aircraft maintenance. ensures the delivery and maintenance of the technical database, a sufficient number of spare parts, tools and equipment, coordinates and monitors all the activities of the customs broker during customs clearance of imported and exported goods required to perform maintenance.

12 makes the journey of passengers comfortable at all airports where we fly, and also coordinates the work of airport services provided to QAZAQ AIR. is responsible for the comfort of passengers during the flight, namely for the quality of food and entertainment on Board, for cleanliness of the cabins and, of course, for the work of the flight attendants. QAZAQ AIR personnel pays great attention to make a flight as pleasant and comfortable for passengers, providing them with a warm welcome according to Eastern tradition. Drinks and snacks are offered to passengers on short flights, but on longer routes, there are delicious sandwiches provided. Also to ensure that the flights are interesting and pass quickly, daily newspapers are offered to passengers. During the year special attention was paid to the interaction of our employees with our customers and the quality of their service on the ground and in the air, thus giving the airline a key competitive advantage, excellent onboard service.

13 Airline uses hosting system Radixx International. With low operating costs, it integrates ticket sales via the corporate web-site, in automated airline booking systems and portals for travel agencies.

14 Tariffs are dependent on the world oil price. Fuel costs of the Company make up 40% of the total. A major part of all expenses of the Company (about 70%) are denominated in US dollars. Free floating of tenge made considerable difficulties for QAZAQ AIR. The airline industry is subject to seasonal fluctuations. Traditionally, peak of activity is during the period of vacations and holidays, when the maximum load on the domestic routes occurs. Risks associated with inability of counterparties to meet their obligations to QAZAQ AIR. Airline negotiates prices on a competitive basis with Kazakhstani suppliers by concluding stable contracts. The company is taking a number of measures to reduce the impact of currency risk. Airline optimises its own load. A variety of events are held offering tickets at attractive rates to increase load during winter months. With the aim to manage and reduce credit risk, the Company is in close contact with suppliers and conducts monthly reconciliation reports.

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16 Total revenue Aircraft operating lease costs Employee costs Fuel Handling, landing fees and route charges Passenger Service Transport, accommodation and subsistence costs Information technology Selling costs Property lease cost Consultancy, legal and professional fees Start-up costs Miscellaneous Total operating costs Operating loss Finance income Foreign exchange gain, net Loss before tax Income tax expense Loss and total comprehensive income for the period Fact Plan

17 Property, plant and equipment Intangible assets Prepayments for non-current assets Inventories Trade and other receivables Guarantee deposits Additional paid-in capital Trade and other payables Other taxes payable Provision for aircraft re-delivery Passenger revenue Aircraft operating lease costs Foreign exchange gain, net Income tax expense Thousand Tenge Vehicles and office equipment License for ОС Radixx, Merlot, Navtech Prepayment on purchase of 2 Bombardier aircrafts Aviation fuel and other materials Mainly represented by VAT recoverable Guarantee deposit for 3 aircraft in the lease Financial support from Samruk-Kazyna JSC Payable to suppliers/salary/other Mainly withholding income tax Accrued provision on return of 3 leased aircraft Fixed and variable payments Cash in foreign currency - Note 964 domestic flights were performed

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19 Sole Shareholder of the Company is Joint-Stock Company «Sovereign Wealth Fund «Samruk-Kazyna». Joint-Stock Company «Sovereign Wealth Fund «Samruk-Kazyna» was founded in compliance with the Decree of the President of the Republic of Kazakhstan dated October 13, «On some measures on competitiveness and sustainability of national economy» and by the Decree of the Government of the Republic of Kazakhstan dated October 17, «On measures on realization of the Decree of President of the Republic of Kazakhstan 669» by merge of two Joint-Stock Companies - Kazakhstan Holding for the Management of State Assets SAMRUK and KAZYNA Sustainable Development Fund. Exclusive competence of the Sole Shareholder of «QAZAQ AIR» JSC incudes the issues, stipulated by the laws of the Republic of Kazakhstan and Charter of «QAZAQ AIR» JSC.

20 Board of Directors of «QAZAQ AIR» JSC is responsible for general management of the Company, except for the issues referred by the legislation and (or) the Charter of the Company to the exclusive competence of the Sole Shareholder and Board of Directors. Decisions of the Board of Directors are taken in compliance with the legislation of the Republic of Kazakhstan, Charter, Corporate Governance Code and internal documents of the Company. M.ZH. URAZBEKOV Chairman H.N. MUSSIN Independent Director A.B. TREHERNE POLLOCK CEO, member of the Board of Directors

21 Management Board is a collegial executive body of «QAZAQ AIR» JSC, responsible for operating activity, acts in the interests of the Company and Sole Shareholder and is accountable to the latter and to the Board of Directors. Term of office is determined by the Board of Directors of the Company. A.B. TREHERNE POLLOCK A.L. DAULETBEK N.M. ZHAKUPOV I.A. ISSAYEV CEO DEPUTIES CEO

22 Due to rapid growth at the start of the project, "QAZAQ AIR"JSC managed to form a highly professional team from the regional labour market. However, given the growth and strategic development plan, there is a sharp need to train, motivate, retain and recruit qualified personnel. In the framework of this goal, the HR Department of "QAZAQ AIR JSC provides employees with opportunities to realise their potential in the airline, thus ensuring an effective system of personnel management, which is a strategic resource for the Company. Aware of its responsibility towards society and future generations, «QAZAQ AIR» JSC within the framework of care about environment reduces greenhouse gas emissions, as well as waste production and consumption, which are the main factors of environmental impact. At the stage of establishment of the Company a fundamental decision was made on the operation of modern turboprop aircraft, exceeding other types of aircraft in terms of fuel efficiency. In order to reduce fuel consumption, QAZAQ AIR also uses "green" approach to route planning, schedules and aircraft flight speed.