Agreed Approved

by decision of the Management Board by decision of the Board of Directors

of JSC «NC «KTZ» of JSC «NC «KTZ»
on October 27, 2015, №02/30 on November 26, 2015, №11

(Amendments and additions have

been made by the Board of Directors
of JSC «NC «KTZ»
on February 11, 2016, №2)

Joint stock company “National

Company “Kazakhstan Temir Zholy”
Development strategy until 2025

January 2016
Content
1. Introduction ........................................................................................................................................... 3
2. Brief summary ....................................................................................................................................... 4
3. Current situation analysis................................................................................................................... 5
3.1. Analysis of the external environment ......................................................................................................... 5
3.1.1. Trend overview in freight & passenger transportation ............................................................................ 5
3.1.2. Regulatory framework ............................................................................................................................. 9
3.1.4 PEST analysis ......................................................................................................................................... 11
3.2. Internal environment analysis................................................................................................................... 12
3.2.1 Comparison of operational and financial indicators with peer companies ............................................. 12
4. Mission and vision .............................................................................................................................. 21
5. Strategic initiatives ............................................................................................................................. 22
5.1 STRATEGIC GOALS OF JSC “NC “KTZ”............................................................................................. 22
To fullfil its mission and vision effectively, JSC «NC «KTZ» intends to systematically work towards the
following strategic goals: ................................................................................................................................ 22
5.2 TARGET STRUCTURE OF JSC «NC «KTZ» ........................................................................................ 22
5.3 Blocks of strategic initiatives (BSI) in the rail and 3PL sectors ................................................................ 23
BSI 1 “Development of the sales function in the domestic market” ............................................................... 24
BSI 2 “Increase in own car utilization” ........................................................................................................... 24
BSI 3 “Container transit development” ........................................................................................................... 24
BSI 4 “PASSENGER TRANSPORTATION EFFICIENCY IMPROVEMENT” ......................................... 25
BSI 5 “OPERATIONAL PERFORMANCE IMPROVEMENT”................................................................... 25
BSI 6 “PMO DEVELOPMENT” .................................................................................................................... 26
BSI 7 “CHANGING THE GOVERNMENTAL REGULATION OF THE RAILWAY INDUSTRY” ........ 27
BSI 8 “CHINA‟S SUPPORT OF TRANSIT VIA KAZAKHSTAN” ............................................................ 27
SUSTAINABILITY OF STRATEGIC INITIATIVES UNDER A STRESS SCENARIO ............................ 27
5.4 STRATEGIC DIRECTIONS FOR DEVELOPMENT types of ACTIVITIES ........................................ 27
5.5 FUNCTIONAL STRATEGIES................................................................................................................. 29
6. Target KPIs .......................................................................................................................................... 32
6.1. TARGET EVA ......................................................................................................................................... 32

2
1. Introduction
In his address “The „Kazakhstan-2050 Strategy‟ – the new political course of an
accomplished state”, the country‟s president N. A. Nazarbayev set an objective for
Kazakhstan to join the world‟s top-30 most developed states by 2050. This implies higher
effectiveness and scale of the Samruk-Kazyna Fund and its companies‟ activities.

To address this challenge, the Fund has developed a transformation program. One of the
program‟s key targets is an essentially higher level of efficiency regarding labor force and
tangible/intangible resources used by the Fund and its PCs. Accordingly, the Fund has set out
the following strategic KPIs to be achieved by JSC «NC «KTZ»:
1. Economic value added (EVA)
2. Customer satisfaction
3. Corporate governance rating
4. Transportation safety
5. Social stability rating
6. Environmental impact

JSC “NC “KTZ” is a major transport and logistics holding of national standing and is one of
the Fund‟s assets. In compliance with President Nazarbayev‟s order to establish a national
logistics operator with a full range of assets and competencies, based on JSC «NC «KTZ»,
the following companies have been placed under the company‟s management: the Aktau
seaport, Khorgos International Center of Boundary Cooperation, Khorgos – Eastern Gates
free economic zone and an airport network.

As a national logistics operator, JSC «NC «KTZ» deals with the Kazakhstan-2050 Strategy‟s
target of developing transit potential and doubling transit traffic through Kazakhstan by 2020
and increasing it 10-fold by 2050.

In addition, to develop the role of the private sector in the Kazakhstan economy, the
government initiated a Privatization Program for a wide range of state assets. The Program
will make a significant change in the asset portfolio structure of JSC «NC «KTZ» and the
industry as a whole.

As part of achieving the targets set by the President, the Government and the Shareholder,
JSC «NC «KTZ» has designed and is now implementing an operational transformation
program.

Transformation objectives are being achieved by JSC «NC «KTZ» amid a growing economic
downturn and political tensions in other EAEU countries.

Given the changing environment and the business expansion of JSC «NC «KTZ», a decision
has been made to renew the development strategy.

3
2. Brief summary
By 2025, KTZ should become an integrated transport and logistics company, whose
objectives shall include, aside shareholder value growth, implementation of the government
strategy on transit transport and logistics services. At the same time, the company shall fullfil
the goal of increasing EVA up to KZT ~ 117 bn by 2020. The company shall continue to
fullfil all of its commitments in providing its customers with quality service.
To fullfil its objectives, JSC «NC «KTZ» plans to:
■ Realize the Privatization Program in full;
■ Development of transit potential;
■ Developing a step-by-step investment plan. The plan will be updated regularly with
actual container transit growth taken into account;
■ Participation in management of companies with partial ownership (after
privatization) through corporate governance mechanisms and measure implementation
monitoring to create value at their level.

4
3. Current situation analysis
3.1. ANALYSIS OF THE EXTERNAL ENVIRONMENT

3.1.1. TREND OVERVIEW IN FREIGHT & PASSENGER TRANSPORTATION

FREIGHT TRANSPORTATION TRENDS

There are four areas [Illustration 1], changes in which affect the share of rail transport in
global shipment:
1. Changes in train productivity
2. Technological changes
3. Legislative changes
4. Changes in consignor behavior.
Sixteen trends are distributed throughout these areas, 8 of which will have the highest impact
on the share of rail transport in the next 10 years.
ILLUSTRATION 1 – FREIGHT TRANSPORTATION TRENDS
SOURCE: McKinsey Transport and Logistics Practice

Color shows the type of impact of trends on the industry (green - positive, yellow – neutral, red –
negative).
Trends in the field of productivity and efficiency
Growing competition on the rail market results in a broader supply of rail services. Using
“Big data” allows rail companies to make their services more convenient and predictable,
especially in a part of passenger transportation, which also helps to increase share of rail in
the total traffic. In turn, high level of competition with auto and requirements to decrease
costs leads to reduction of wagon loads in Europe, since they are more cost base, that
decrease the share of rail transport in economy.

5
Changes in the field of technology has a fairly high impact on the industry and implies a
possible infrastructure expansion, as well as the creation of a developed transport network,
which, in general, should have a positive impact on capacity growth, convenient use of
services and predictability of their provision. In terms of environmental safety, the impact of
technology development on rail transport is expected to be negative, due to the energy
efficiency growth of trucks.
Changes in consignors‟ behavior will have a positive impact on the industry in terms of cargo
containerization and a higher demand for “green logistics” – the former improving
convenience for clients and the latter boosting the service‟s environmental friendliness.

Energy efficiency growth in trucks can have the strongest impact on and relevance to the
structure of Kazakhstan shipping operations. In the long term, this can bring about lower
truck costs and thus lead to higher truck competitiveness. A deeper analysis shows that, with
the help of existing technology, trucks still have a fuel saving potential of 50-65%. These
technologies include:

 measures to improve efficient use of diesel fuel;

 introduction of hybrids;
 utilization of natural gas (CNG/LNG).
Регулирование автоперевозок (устранение дисбаланса в транспортной политике)
In accordance with the transport policy of the European Union carried out the alignment of
conditions for companies operating in this sector.

In this regard, some EU countries introduced tolls on freight transport, which is likely to be
increased. Tolls for trucks, the regulation of exhaust emissions and harmonized standards can
contribute to an increase in the share railway transport. In addition, increased government
support for rail transport in the expansion of the volume of financing to cover capital and
operating costs, increase the level of subsidies.

For instance, Switzerland introduced a distance-related heavy vehicle fee in 2001, which was
mainly used to finance the New Transalpine Rail Link.
The government allocated funds for the construction of connecting rail tracks to improve
competitiveness of rail transport (based on the law introduced in 1990).
Containerization
Containerized trade has been constantly gaining share in world seaborne trade, driven by 2
factors: the shift of formerly bulk/liquid bulk cargo into the segment, and rapid trade growth
for goods, which traditionally used to be shipped in containers. As a result, the overall rate of
increase of container cargo grew at a rate of ~8% between 1995-2008.
Despite the high share of container transportation, some commodity groups maintain growth
potential (in particular, petrochemicals and commodities such as cork and wood).
PASSANGER TRANSPORTATION TRENDS

There are three areas, changes in which affect the share of rail transport in global passenger
transportation:

6
 1. Changes in train productivity
2. Technological changes
3. Legislative changes
Thirteen key trends are distributed throughout these areas [Illustration 2]
ILLUSTRATION 2 – TREND GROUPS IN PASSENGER TRANSPORTATION

SOURCE: McKinsey Transport and Logistics Practice

The colours indicate the kind of impact the trend has on the industry (green is positive,
yellow is neutral, red is negative).
Among the mentioned trends the following five are key:
 competition;
 use of Big data;
 door-to-door connectivity;
 traffic regulation and pricing;
 motor transport energy efficiency.
Regulation, pricing and energy efficiency of road transport

Introduction of unmanned vehicles and energy efficiency growth in road transport have a
potential negative effect on the industry, but are not entirely applicable to Kazakhstan in
terms of passenger transportation.
Among the changes in legislation facilitating efficient time usage and environmental safety in
passenger transportation, trends in road safety, pricing and CO2 discharge limits should be
mentioned.
Competition
Competition will have a positive impact on industry prices and costs: services will be easier
to use, more attractive and predictable, and required technological changes will be
implemented.
«Big data»
Implementing Big data in the passenger transportation segment implies real-time monitoring
and preventative maintenance. The system will allow reaching a new standard of economic
efficiency and railway service security, because it implies constant control over rolling stock

7
status, beforehand order of components, personnel and demand-oriented operating unit
management, as well as turnaround cycle increase (based on current status of rolling stock).
Resulting from the use of ultra advanced technology and preventative maintenance will be a
highly secure and accessible rail transportation system and cost-effective service provision as
a result of optimized FTE productivity and longer service life of component parts.
In addition, Bid Data helps generate profit through more precise revenue management and
collection of passenger data, and by means of a booking system. These approaches are used
by airlines and high-speed rail companies, some of which have already noted a rise in the
load factor by approximately 75% [Illustration 3]:
ILLUSTRATION 3 – PASSENGER RAIL COMPANY UTILIZATION RATE

Door-to-door connectivity
Technological advances mean, first and foremost, door-to-door connectivity, which makes
the service more convenient to use and thus has a positive impact on the passenger
transportation segment by boosting its attractiveness.
Germany‟s example shows that increased car share activity around public transportation hubs
indicates potential for intermodal door-to-door transport. Short-term car rentals are most
frequent around key transportation hubs of the local passenger transportation system. Trips
from transportation hubs to quarters conveniently located nearby and neighborhoods with
major trading centers / office buildings are predominant. However, door-to-door connectivity
implies a well-developed public transportation network.

8
OVERVIEW OF KEY GLOBAL TRENDS AS REGARDS FREIGHT AND
PASSENGER TRANSPORTATION – RELEVANCE FOR KAZAKHSTAN TILL
2025
Most relevant trends for freight transportation in the next 10 years:
 increasing competition within the segment, which leads to performance improvement
and increase in freight turnover as well as to price reduction;
 regulation of freight transportation by roads and, as a result, increased tolls, which
increase relative attractiveness of railroad transportation.
Most relevant trends for passenger transportation include:
 increasing competition and new market players, which increase network coverage
density (which assumes performance improvement and price reduction);
 door-to-door connectivity, which allows to cover all sections of a passenger‟s route;
 increasing average speed (high-speed trains), which assumes high attractiveness for
passengers.
Introduction of self-driving cars to passenger transportation and autonomous trucks to freight
transportation is not so relevant (widespread adoption of these vehicles is unlikely before
2025).
Big data, providing real-time vehicle monitoring and preventive maintenance, as well as load
optimization within revenue management, is less relevant for freight transportation and more
relevant for passenger transportation. The situation is precisely the opposite of road transport
power efficiency improvement – it leads to reduction of road transportation costs and shift to
electric cars for ecological regulations compliance, which itself is important for freight
transportation and less important for passenger transportation.
3.1.2. REGULATORY FRAMEWORK
Context
Modern stage of railroad reforms began in 2001 with the transformation of Republican State-
Owned Enterprise KTZ. Steps in the right direction were made during the years of the
reform, including spin-off of certain non-core activities from JSC «NC «KTZ», split-off of
railroad tariff into infrastructure, locomotive and car components, split-off of passenger
transportation from freight transportation, implementation of passenger transportation
subsidies with the use of government order placement system based on route subsidies,
involvement of private players of a car market, major renewal of Kazakhstan car fleet
[ILLUSTRATION 4].
ILLUSTRATION 4 – MILESTONES OF RAILROAD REFORM

9
SOURCE: Kazakhstan regulatory documents
Since 2010 a number of initiatives aimed at developing a target railroad model for
Kazakhstan and target structure for JSC «NC «KTZ» have been implemented, in accordance
with the government policy documents (Kazakhstan transport infrastructure development
program for 2010-2014, approved by Resolution No. 1006 of the Government of Kazakhstan
dated 30th September 2010, National Program for Transportation System Infrastructure
Development and Integration until 2020, approved by Decree No. 725 of the President of
Kazakhstan dated 13th January 2014).

The following initiatives, aimed at the industry reforms, have been implemented within the
declared government policy documents:
 amendments to international agreements and to the RK national legislation on
railroad transport issues within the Common Economic Space;
 standardization of freight transportation tariffs by transportation modes;
 large scale investment program aimed at rolling stock update and railroad
infrastructure construction and modernization;
 implementation of a new subsidizing mechanism for carriers, who perform railroad
passenger transportation via socially significant interregional routes;
 optimization of JSC «NC «KTZ» holding structure and divesting of non-core and
core support assets to competitive environment;
 transport railroad machinery industry development.
At the same time there is a number of outstanding issues:
1) cross subsdization of passenger transportation by means of freight transportation and
low-profitable transportation by means of high-profitable;
2) short-term right to perform passenger transportation, which does not allow to include
the obligation for purchasing own rolling stock and infrastructure development to the
contract between a private carrier and the state;
3) incompleteness of institutional industry reforms;
4) maintenance of the government price regulations of transportation activities.

In accordance with the National Program for Transportation System Infrastructure

Development and Integration until 2020, approved by Decree No. 725 of the President of

10
Kazakhstan dated 13th January 2014, initiatives aimed at developing a target railroad model
for Kazakhstan and target structure for JSC «NC «KTZ» are being implemented.

To develop competition and private capital while forming the market economy, the
Government of Kazakhstan initiated the process of denationalization and privatization of
state-owned assets.

The privatization program aims to solve the following problems:

 improve operational efficiency of companies;
 attract financing for the development of companies;
 develop private initiatives;
 reduce government‟s participation in the economy;
 develop SMEs;
 penetrate into new markets through attracting strategic investors;
 develop Kazakhstan‟s stock market.

This resulted in formation of a List of public and quasi-public entities to be privatized, which
includes major companiesin the public companies, JSC “Samruk-Kazyna”, JSC “Baiterek”
and JSC “KazAgro”.
This list was reviewed by 13 October 2015 at a meeting of the Board of Directors of JSC
“Samruk-Kazyna”. The list included 57 subsidiaries of JSC “NC “KTZ” 1 , including 4
transferred to the Company in trust management

3.1.4 PEST ANALYSIS

PEST analysis aims to reveal Political, Economic, Social and Technological factors of
external environment influencing the business of JSC “NC “KTZ”.
# Factor group Impact
Asset portfolio structure optimization, elimination of
Legislation: unnecessary management levels.
- changes to the target Separation of the transportation business and the
industry model backbone railway network will ensure efficient
planning and use of necessary resources by activity type
Government regulation
- deregulation of
1 (P) Political Ensuring the best tariff policy
transportation services
- access of private freight
Loss of market share, lower returns and profitability
operators to the BRN
Integration: Forming mid-term and long-term transportation
- EAEC: strengthening role industry development policies and programs for the
of supranational member states. Risk of developing unaligned strategic
transportation bodies documents.
Global economy
- growth in global energy
consumption Growing cargo turnover
2 (E) Economic - high growth rates: China, Growing transit volumes
India, South East Asia Availability and low cost of capital
- growing prices for
hydrocarbons

1
The list of privatization objects of public and quasi-public sector at the time of the approval of the Development
Strategy of JSC “NC “KTZ” has not been approved and some changes in the lists are possible
11
 - cost of capital
Domestic economic policy
- GDP
- inflation Growing cargo turnover
- taxation Growing transit volumes
- currency exchange rate Refinancing of loans
- government investments in
infrastructure
Demographics:
- growing mobility of the Requirements to service quality
population Development of rapid and high-speed passenger traffic
3 (S) Social - urbanization
- growing living standards Growing payroll
- changes to consumer Requirements to service quality
behaviors Growing speed of freight and passenger transportation
energy-saving technologies
Service cost reduction
3D-printers
R&D development Growth of company‟s R&D expenses
Freight and passenger vehicles driven by powerful
new electro-driven and electric and hybrid engines will reduce road
4 (T) Technological hybrid means of transport transportation costs and, as a result, intensify
competition with rail transport
New requirements to service quality: transparency, free
high level of IT and
access to information, less staff
automation

3.2. INTERNAL ENVIRONMENT ANALYSIS

3.2.1 COMPARISON OF OPERATIONAL AND FINANCIAL INDICATORS WITH PEER

COMPANIES

The main purpose of financial and operational performance benchmarking vs. peer companies
is to identify areas with the highest operational improvement potential, and to determine KTZ
financial standing vs. foreign peers. This benchmarking will still be valid after asset
privatization - in this case the benchmarking will be applied to each specific activity.
At the same time, the operational performance benchmarking is subject to a number of
constraints, such as differences in the structure of freight and passenger flows, differences in
the cost of goods, services and capital, climatic differences, etc.
Thus, the benchmarking vs. peers may serve as an indicator of strategic focus areas to improve
company‟s performance, but should be followed by an additional analysis to fully integrate
KTZ specifics.

Operational performance benchmarking

KTZ operational performance benchmarking allows to determine the company‟s standing vs.
international peers and identify the key areas for performance improvement.

1. Productivity of KTZ personnel and key assets

Productivity of KTZ assets is determined by three key parameters: productivity of the
locomotive fleet, infrastructure utilization and productivity of the car fleet. Another key
indicator of company‟s performance is the productivity of its personnel.
Tariff freight turnover ensured by the company‟s locomotives per year is a key parameter for
assessing the locomotive fleet productivity. Productivity of KTZ locomotives exceeds that of
global and regional peers by ~20% [Illustration5].
12
ILLUSTRATION 5 - TARIFF FREIGHT TURNOVER PER LOCOMOTIVE, MLN. T-KM PER
LOCOMOTIVE PER YEAR, 2013-2014

To reflect the key factors of infrastructure utilization, it is expedient to use gross freight
turnover per track kilometer. According to this indicator, KTZ is comparable to the global
level. At the same time, KTZ has a lower infrastructure utilization than the biggest regional
peers [Illustration 6].
ILLUSTRATION 6 - GROSS FREIGHT TURNOVER PER TRACK KILOMETERS, MLN. T-KM PER KM
OF TRACK, 2013-2014

Key indicator of car fleet utilization is the tariff freight turnover per car per year. According to
this indicator, KTZ is in line with global and regional peers [Illustration 7].

13
ILLUSTRATION 7 - TARIFF FREIGHT TURNOVER PER CAR, MLN. T-KM PER CAR PER YEAR, 2013-
2014

Tariff freight turnover per FTE is a key indicator of productivity of personnel. According to
this indicator, KTZ lags far behind global peers [Illustration 8].
This indicates the potential for headcount optimization, particularly by increasing automation
and outsourcing of some functions.
ILLUSTRATION 8 - TARIFF FREIGHT TURNOVER PER FTE PER YEAR, M TKM PER FTE, 2013-2014

SOURCE: CSX, UP, CN publications; JOC; McKinsey

2. Efficiency of the company’s key OPEX

Key elements of KTZ costs are locomotive fleet fuel and power costs, locomotive repair costs,
locomotive crew payroll, and infrastructure repair and maintenance costs.
Specific consumption per gross tkm is the key indicator of fuel and power cost efficiency.
According to this indicator, KTZ lags behind its global peers in fuel consumption, while
outperforming them in power consumption [Illustration 9].
ILLUSTRATION 9 - SPECIFIC FUEL AND POWER CONSUMPTION, 2014

14
In terms of locomotive repair costs, the key indicator is repair costs per locomotive per year.
According to this indicator, KTZ is ~20% behind the peers [Illustration 10].
ILLUSTRATION 10 - LOCOMOTIVE REPAIR COSTS, USD „000 PER LOCOMOTIVE PER YEAR, 2013-
2014

SOURCE: CSX, UP, CN publications; JOC; McKinsey

Locomotive crew payroll efficiency is assessed on the basis of costs per locomotive-kilometer.
This indicator should be calculated taking into account the labor cost difference between the
compared companies. In terms of locomotive crew payroll efficiency KTZ is ~15% behind its
peers [Ошибка! Источник ссылки не найден.11].
ILLUSTRATION 11 - SPECIFIC LOCOMOTIVE CREW LABOR COSTS, USD PER LOCOMOTIVE-KM,
2013-2014

15
 ИСТОЧНИК: КТЖ, публикации CSX, UP, CN; JOC; McKinsey

The main indicators to estimate efficiency of track repair costs are costs per km of track length
and per gross tkm. According to these two indicators, KTZ lags far behind its foreign peers.
KTZ‟s track repair and maintenance costs exceed those of the peers by 30-40% without taking
into account the labor cost difference and by 50-60% with the labor cost difference
[Illustration 12].
ILLUSTRATION 12 - SPECIFIC INFRASTRUCTURE REPAIR AND MAINTENANCE COSTS, 2013-2014

SOURCE: KTZ, CSX, UP, CN publications; JOC; McKinsey

Thus, KTZ is in line with the international peers in asset productivity, but has a potential to
improve labor productivity and OPEX efficiency.
Financial benchmarking
Financial benchmarking allows to assess KTZ‟s financial standing vs. foreign peers. Key
indicators for the benchmarking are return on total assets (ROTA), return on capital employed
(ROCE) and operating margin.
KTZ‟s ROTA is similar to that of the global peers and considerably above that of the biggest
regional companies [Illustration 13].
ILLUSTRATION 13 - RETURN ON TOTAL ASSETS, 2013-2014

KTZ‟s ROCE is 1 p.p. higher than the average value for the global peers [Illustration 1].

16
 ILLUSTRATION 14 - RETURN ON CAPITAL EMPLOYED, 2013-2014

Among the world analogue companies KTZ corresponds to the average ratio of “Debt/Equity”,
which characterizes the financial stability and independence of the company. [Illustration 15].

ILLUSTRATION 15 – RATIO OF “DEBT/EQUITY”, 2014

0,85
136 136 136
125 125 0,72 125
115
115 115 115 115
107
107 107 107 107
ØØ
0,6 0,6
9292 Ø92
Ø 10392
103 0,6
Средний Ø
92103Ø 103
7878 +21% 0,52
+21% Средний
78
Средний 0,45
78 Average
+21% +21%
показатель по Средний
78
Средний +21
6969 69 69 69
between
международным
показатель
показатель компаниям
показатель
показатель
international
попо
между-
между- по между-
по между-
companies
народным
народным народным
народным
компаниям
компаниям компаниям
компаниям
Aurizon
rizon РЖД
РЖД
КТЖ КТЖ
Union
KTZUnion
BNSFBNSF
CSX
CSX
Aurizon
CSX AurizonРЖД
Norfolk
NorfolkКТЖ
Norfolk РЖД Union
BNSF
Union Union CSX
Aurizon РЖД
CSX Norfolk
Aurizon Norfolk Union CSX Norfolk
Pacific
Pacific Southern
Southern
Southern Pacific Pacific
Pacific Southern
Southern Pacific Southern

Sources: KTZ, publications CSX, UP, CN; NS, Aurizon; McKinsey

The value of the KTZ‟s ratio “Debt /EBITDA”, which characterizes the company's debt
burden, worse than the average value among the world analogue companies [Illustation 16].
ILLUSTRATION 16 – RATIO “DEBT /EBITDA”, 2014
3,2
136 136 136 136
125 125 125
115 115 115 115 115
107 107 107 107 107
92 2,06 92 Ø 103 92 92 Ø92103-44% Ø 103Ø 103Ø 103
78 1,99
78 1,94 +21% 78 78 78
+21% Средний СреднийØ Ø1,78 +21% +21%+21% Средний
Средний Средний
69 69 69 69 69
1,78
показатель Средний
показательAverage показатель
показатель
показатель
по между- 1,06 показатель по
по между-between по между-
по между-
по между
международным
народным народнымinternational
компаниям народным
народным народным
компаниям компаниямcompanies компаниям
компаниям
компаниям
urizon
BNSF РЖД
AurizonКТЖ
KTZ КТЖ
UnionРЖДКТЖ
BNSF
CSX
BNSF
CSX BNSF
Union Aurizon
Norfolk РЖДРЖД
Aurizon
Aurizon
CSX
Aurizon РЖД
Norfolk
Norfolk UnionUnion
Union CSXCSX CSX
Union Norfolk Norfolk
Norfolk
Pacific Pacific Southern Southern
SouthernPacific Pacific
Pacific
Pacific Southern Southern
Southern

SOURCES: KTZ, PUBLICATIONS CSX, UP, CN; NS, AURIZON; MCKINSEY

17
KTZ‟s operating margin also exceeds the global average - by 6 p.p. [Illustration 17].
ILLUSTRATION 17 - OPERATING MARGIN, 2013-2014

Thus, KTZ‟s financials are in line with international peers and outperform them in such key
indicators as return of capital employed and operating margin.

18
3.2.2 ANALYSIS OF STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS
(SWOT)
JSC «NC «KTZ»
Strengths
 Dominant position in rail freight
and passenger transportation in
Kazakhstan
 Experience and knowledge of rail
freight and passenger transportation
market
 Stable operating financials and
business growth
 Government support for the
development of Kazakhstan‟s
transport infrastructure and transit
potential
Opportunities
 Growth of business volumes driven
by China-Europe container transit
and other routes via Kazakhstan*
 Growth of business volumes and
profitability of passenger
transportation
 Potential for OPEX and CAPEX
optimization and productivity
increase
Weaknesses
 Negative current and expected EVA
including due to low CAPEX efficiency
and large social obligations
 Lagging behind peers in a number of
operating indicators
 Complex structure of assets and
activities including, apart from rail
transportation, the development of
airports, sea ports, motor roads, contract
logistics, etc.
 Numerous stakeholders complicating
quick key decision making
 Low labor productivity
 Worn out fixed assets
Threats
 Dependence of the internal freight
transportation market size on commodity
prices
 Slowdown of Kazakhstan‟s economy
and its key trade partners
 Increasing share of alternative modes of
transport (e.g. road transport)
 Competition from EAEC members, e.g.
Russian railcar operators
 Failure to agree with the member
countries upon the required rail tariff
reduction to ensure sufficient transit
19
 Development of JSC «NC «KTZ» transit business
Strengths
 Favorable geographical position on
key transit routes
 Available capacity to provide services
to the backbone railway network
Opportunities
 Growth of freight transit between
China and Europe and in other
directions via Kazakhstan
 Building a strong sales function in
China and the EU to support and control
transit via Kazakhstan
Weaknesses
 High current prices for rail transit resulting in low
share of international transit via Kazakhstan
 Instrastructure bottlenecks
 Insufficient coordination with and involvement of the
countries along the target transit routes
 Early stage of development of China and EU sales
functions
Threats
 Failure to agree with the countries along the target
transit routes on the required rail tariff reduction to
ensure sufficient transit
 Low prices for container sea freight
 Lack of demand for transit from major forwarders due to
current contracts with sea carriers
20
4. Mission and vision
MISSION

“As a backbone infrastructure company we provide a high-quality transport base for

sustainable growth of the economy of Kazakhstan, create value for the Shareholder, and
benefit consumers and society as a whole by offering demanded and competitive
transportation and logistics services”

VISION

“We aim to become a effective and innovative transport and logistics company company
operating in accordance with best business practices.

We position ourselves as a provider of the following services:

 Rail infrastructure and network services;

 Transportation and logistics services for organization of freight transit, imports and
exports

KTZ aims to become a leader both in quality and economic efficiency of services through
high professionalism of personnel, high technical standards, as well as advanced
management and production processes.”

21
5. Strategic initiatives
5.1 STRATEGIC GOALS OF JSC “NC “KTZ”

To fullfil its mission and vision effectively, JSC «NC «KTZ» intends to systematically work
towards the following strategic goals:
 Total equity value maximization;
 Transportation safety;
 Customer satisfaction;
 Effective corporate governance;
 Social stability;
 Environmental safety.
We see the maximization of total equity value as the main goal of JSC «NC «KTZ». It is an
indicator that fulfils the Shareholder‟s requirements and assesses the efficiency/inefficiency
of the JSC «NC «KTZ» management team.

All actions of JSC «NC «KTZ» in the strategic and short term horizons will be targeted at
maximizing total equity value by increasing returns (net profit).

5.2 TARGET STRUCTURE OF JSC «NC «KTZ»

To optimize the structure of portfolio assets, JSC «NC «KTZ» plans to restructure its
portfolio assets taking into account the state Privatization Program and realization of
Business transformation Programm of JSC “NC “KTZ”.
As a result, the following Group structure will be created (Illustration 18)1
ILLUSTRATION18 – STRUCTURE OF JSC “NC “KTZ”

1 The structure is made in accordance with the list of privatization objects of public and quasi-public sector discussed in
the Board meeting of JSC “Samruk-Kazyna” on Oct. 13, 2015
22
A new JSC «NC «KTZ» subsidiary - KTZ-Instrastructure JSC (with 100% of its equity held
by JSC «NC «KTZ») - will be created based on the functions and assets of the Backbone
Railway Network Directorate of JSC «NC «KTZ». This company will have the appropriate
production and non-production assets, bear responsibility for its operational and financial
results, and independently provide carriers with access to railway infrastructure.
Freight service functions will be transferred to “Freight Transportation” JSC to be created on
the basis of “Locomotive” JSC and some assets of JSC «NC «KTZ». To render freight
transportation services fully and efficiently, the new company will be provided with
backbone freight locomotives, as well as the necessary technological equipment.
Part of the shares of the largest wagon operator "Kaztemirtrans" will be realized in the
framework of the privatization program, and the blocking stake will remain in JSC "NC
"KTZ".
A part of shares of “Passenger Transportation” JSC (PT JSC) will be sold as a part of the
Privatization Program, while KTZ will keep a blocking stake to ensure stability of
functioning of the industry through participation in corporate governance bodies.
Privatization of the passenger transportation business requires agreement on key aspects of
the target market model.
After the spin-off of “KTZ-Infrastructure” JSC, JSC «NC «KTZ» will play the role of a
corporate center ensuring strategic control of JSC «NC «KTZ» Group, forming the Group‟s
asset portfolio and improving its efficiency.
Taking into account the industry-forming role of JSC «NC «KTZ», whose activity has a
major impact on the development of Kazakhstan‟s rail industry, as well as the high priority of
full implementation of industry reforms, the possible public offering of JSC «NC «KTZ»
shares will be considered after completion of the full JSC «NC «KTZ» reorganization.

5.3 BLOCKS OF STRATEGIC INITIATIVES (BSI) IN THE RAIL AND 3PL SECTORS
To achieve the strategic objectives defined by the President and the Government of
Kazakhstan, and the Shareholder, and taking into account the existing opportunities and
constraints, JSC «NC «KTZ» will focus on 8 blocks of strategic initiatives (BSI):

1. Development of the sales function in the domestic market

2. Increase in own car utilization
3. Container transit development
4. Passenger transportation efficiency improvement
5. Operational efficiency improvement
6. PMO development (to improve the efficiency and reduce implementation term of Strategic
Initiatives)
7. Changes to the government regulation system
8. China‟s support for transit via Kazakhstan

Those initiatives remain relevant for each of the individual companies created as a result of
KTZ asset privatization.

23
These measures include initiatives to improve within the company (BSI 2, 5, 6) as well as the
direction for the development of both domestic (BSI 1, 4, 7) and foreign markets (BSI 3, 8),
as well as require a balanced approach between decreasing cost base, increasing tariffs and
an increasing in turnover both in internal and external markets.
BSI 1 “DEVELOPMENT OF THE SALES FUNCTION IN THE DOMESTIC MARKET”
Objective: maintain and improve freight turnover in the country-bound market by focusing
on competition in segments that are most susceptible to switching to road transportation
BSI 2 “INCREASE IN OWN CAR UTILIZATION”
Objective: Increase revenues from the existing underutilized car fleet and improve
transportation conditions for freight forwarders through the best-in-market car operation
offering
BSI 3 “CONTAINER TRANSIT DEVELOPMENT”
Objective: Increase transit freight turnover through attracting container freight between
China, Europe, Middle East and Russia as a segment with the highest growth potential.
Developing of internal and external network in consolidation and distribution centers of
freight flows will create new multimodal logistics schems for transporting goods on the
Eurasian continent on the following routes:
1) From East Coast and inland provinces of China to the EU countries (northern corridor
TARN);
2) TRACECA corridor - the countries of Central Asia, the Caspian and the Black Sea
(South Caucasus, Turkey) and Iran;
3) North-South - Iran, Middle East, India.
For realizing the container transit growth potential of 1.7 mln TEU. requires initiatives in
several directions:
 Strengthen marketing and sales function in China to establish direct relations with
consignors by explaining the advantages of rail transport, such as small difference in price vs.
sea transportation and shorter delivery periods
 Decrease transportation costs for the forwarders to the level allowing to compete
with sea transportation in joint effort with all the countries of the transit corridor
 Increase the back loading ratio to the average level for each route by intensifying
sales to forwarders in Europe, possibly via partnership with existing players
 Optimize transportation costs through further implementation of the cost reduction
program with extended saving targets and through optimization of flow distribution taking
into account the use of electrified tracks and least utilized sections to reduce the requirements
to capacity increase
 Strengthen positions in freight consolidation and deconsolidation to improve
control over the flows
 Maintain competitive delivery periods of 12-14 days while significantly increasing
the transit volume to the target levels
 Ensure the quality of monitoring of implementation of the planned measures for
the development of transit transport in cooperation with involved structural units and
subsidiaries together
24
BSI 4 “PASSENGER TRANSPORTATION EFFICIENCY IMPROVEMENT”
Objective: to reduce value distroyed in passenger transportation, and to decrease the volume
of subsidies to cover expenses of “Passenger Transportation” JSC on regulated routes. This
should be achieved along while preserving current rail service range, increasing
transportation volume and quality improvement of services rendered.
BSI 5 “OPERATIONAL PERFORMANCE IMPROVEMENT”
Objective: to provide conditions enabling business growth of JSC “NC "KTZ” on external
and internal markets. In particular, KTZ needs to take leading positions in optimizing
infrastructure and locomotive facilities expenses to capture its transit potential.
At the same time, the quality and safety of provided infrastructure and locomotive services
must be maintained (average area speed, infrastructure availability level, locomotive
readiness, etc.).
Optimum quality services at minimum price will require implementation of the operational
performance improvement program.
According to the analysis of international experience the JSC “NC “KTZ” have a potential to
optimize around of 20% of the costs in 5 years. This potencial is expected to be implemented
until 2020 through the implementation of business transformation program of JSC “NC
“KTZ”, preserving reference point in 5% of the costs initially specified in the program
improved performance of JSC “NC “KTZ” until 2020, but implementing it until 2018.

One of the objectives of the program of business transformation is to improve performance.

At the core of improvement of effectiveness is performance management system - a set of
management and analytic processes that enable management to achieve certain goals.
Performance management system is based on proven, internationally accepted approaches,
the calculation results will be comparable with other companies and the system will evolve,
without losing the historical data.

The following factors are key prerequisites of successful implementation of the operational
performance improvement program [Illustration 19]:
1. Integrity of the list of initiatives: the list of operational performance improvement
initiatives shall take into account all the major initiatives applied in the global practice.
2. Streching and realistic goals: the goals set by the operational performance
improvement program shall be ambitious; at the same time, goal attainability shall be ensured
to keep the staff motivated throughout performance improvement program implementation.
3. Effectiveness of resource utilization for initiative implementation: operational
performance improvement shall be achieved through optimization of processes and practices
applied at the company without significant capital expenditures.
4. Monitoring system efficiency: a transparent system shall be established for monitoring
of initiative implementation results, enabling assessment of initiative contribution to the
company‟s cash flow.
5. Initiative implementation efficiency: a team shall be formed to be completely involved
in implementation of the programmes of operational performance improvement initiatives,
and a bonus system contributing both to motivation of people responsible for initiative
implementation and to interaction among involved divisions shall be developed.
ILLUSTRATION 19 KEY SUCCESS FACTORS OF THE PERFORMANCE
25
IMPROVEMENT PROGRAM

BSI 6 “PMO DEVELOPMENT”

Goal: efficiency improvement and reduction of the strategic initiative implementation
timelines. The PMO makes it possible to meet a number of typical challenges arising in the
course of implementation of the strategic initiatives:

 Project activity organization challenge: a division responsible for project activity

support does not have the required human resources, procedures and status, there is no single
approach to project activities among the divisions responsible for implementation of the
strategic initiatives;
 Motivation and involvement of resources challenge: there is no transparent motivation
system for personnel involved in project activity and standard incentivization mechanism,
there are barriers for involvement of project activity participants imposed by their immediate
managers;
 There is no focus on achievement of the strategic goals: no process for monitoring of
the completed projects‟ results and corrective actions.
Impact: reduction of the timelines and a higher probability of implementation of the
strategic initiative blocks, optimization of the resources involved and improvement of the
quality of monitoring of the initiative implementation results.

The PMO consists of a number of functions to efficiently achieve the strategic goals of the
company. The key functions of the PMO include [Illustration 20]:
 To structure the project activities;
 To ensure efficient use of project management information systems;
 To maintain and contribute to the single knowledge base of the company;
 To ensure operation of the system for personnel attraction, recruitment and
development in the project management area;

26
  Development and administrative support of the KPI system and motivation of
personnel involved in project activity;
 Support of the project budgeting system;
 Control over use of the single project management methodology.
ILLUSTRATION 20 – PMO ARCHITECTURE

Организационная структура
проектной деятельности

Единая методоло- Информационная

гия проектного система проектно-
управления го управления

Система Персонал
Единая база
бюджетирования
знаний
проектов

Система КПЭ и мотивации Система привлечения, отбора и

участников проектной развития персонала в сфере
деятельности проектного управления

BSI 7 “CHANGING THE GOVERNMENTAL REGULATION OF THE RAILWAY

INDUSTRY”
Goal: Freight transportation - increase in revenue from of KTZ Group. Passenger
transportation – involvement of private operators, change in the subsidizing system to
motivate the operators to improve efficiency and increase tariffs for open-pan sleeping
carriage and compartment carriage in case of an increase in the general carriage volume.
BSI 8 “CHINA’S SUPPORT OF TRANSIT VIA KAZAKHSTAN”
Goal: to increase target volumes of the container transit without reduction of the
transportation tariff.

SUSTAINABILITY OF STRATEGIC INITIATIVES UNDER A STRESS SCENARIO

Selection of strategic areas for development is inherently a choice to be made in the uncertain
external conditions. According the leading international practice the best way of taking a
decision (and approve strategic development initiatives) is to analyze sustainability of the
selected strategic initiatives in case of negative external changes.
5.4 STRATEGIC DIRECTIONS FOR DEVELOPMENT TYPES OF ACTIVITIES
JSC “Passenger Transportation”
Initiatives aimed at improving resource efficiency of passenger transportation:

27
 1. Improvement of fleet of cars operational efficiency on subsidised routes (e.g.,
reducing subsidised train downtime and repair costs by reducing average time ТО-1 before
every exit from 8 to 3 – 4 hours without compromising the quality of cars preparation and
safety level);
2. Marketing function strengthening (competitive offering analysis of other types of
transport, work on route yield increase, dynamic pricing strengthening );
3. To assess potential of new routes launch and optimisation of route network (including
reduction of transfer time in the existing route network);
4. The standardization of the product line offered by other services and the development
of their sales. As a further wave of development of the company - strengthening
digitalization and multimodal services provided.
5. Initiatives aimed at improving efficiency of “PT” JSC interaction with third party
contractors:
- Revision of Talgo train maintenance contracts in order to reduce repair costs.
- Recalculation of actual financial metrics according to the existing traffic speeds and BRN
cost on the purchase of 603 Talgo trains in replacement of retiring compartment and sleeping
cars.
Aktau Port
The major challenges faced by the Aktau international sea port are:
 Identifying the target selection and volume of trans-loaded cargoes maximising port
revenues, in view of end-to-end economics of “KTZ” JSC NC;
 Development plan and investment program optimisation in view of the target cargo
selection;
 Optimisation of operational activity aimed at, specifically, de-bottlenecking of the
logistics chain inside the port;
 Development of additional businesses (e.g., bunkering, towing, storing).
By 2025, Aktau port is supposed to fully cover the needs of JSC “NC "KTZ” in transit of
cargoes through the Caspian basin, as well as to develop a range of additional businesses
dealing with trans-loading, allowing to maximise the revenues for shareholders, and to
enhance usability of the port by shippers compared to other routes.
Airports
Airport infrastructure performs an important social task of passenger and freight carriage.
However the regional carriage needs are not always sufficient for breakeven operation of the
airport. Hence one of the most important tasks is to define the target airport portfolio
necessary for Kazakhstan‟s transport system and the volumes of carriage as well as the level
of support rendered to every airport by state and local authorities.
Another strategic development area for the airport network is close interaction with partners
from related businesses. The strongest influence on the economic model of the passenger
terminal is exerted by airlines and retail and consumer services operators. A single client
perspective of a number of partners allows to achieve revenue growth, a better use of assets
and cost reduction. It would be reasonable to start this interaction in larger airports (Astana,
Shymkent, Kostanay, etc.).

28
In terms of freight carriage it‟s necessary to study the issue of consolidation/distribution
warehouses organisation, allowing for trans-loading to vehicles, carrying out first/last mile
delivery.
For the purposes of operational efficiency improvement Airport Management Group is being
actively used, which will allow to achieve the goals, specifically, to ensure operational
standards.
JSC “NC "KazAvtoZhol”
At present activities of JSC “NC "KazAvtoZhol"” include:
 To manage state funded investment projects on highway network development;
 To manage construction, reconstruction, repair and maintenance of highways;
 Control over highway construction, reconstruction, repair, maintenance progress and
quality;
 Introduction of toll roads.
Assuming the current understanding, the company is focused on highway construction
management with a minor involvement in other activities. At the same time at the RK
Government level a new highway service company establishment is being discussed.
Company operation is also complicated by the fact that a large share of its revenues comes
from the state budget (57% in 2013), the rest comes from a toll road (Astana - Borovoye). At
the moment there is no private capital source to fund company‟s operations and company‟s
main target is to balance profitability, geopolitics and social goals.
Among the strategic directions of development of JSC "NC "KazAvtoZhol" should mark:
 Formation of the Company – a single operator of full highway life cycle (from
construction and overhaul to use and operation);
 To diversify revenue and funding sources (increase of toll road share, attraction of
private investment, e.g. PPP, direct taxes from car owners, etc.);
 Diversification of business (from participation in highway regulation and planning to
wayside business development);
 Clearly defined relations with the state on all highway life cycle issues;
 Get synergies from work with other assets (transit, 3PL, etc.);
 The ultimate goal of the Company should be break even from its operations.
5.5 FUNCTIONAL STRATEGIES
To implement and monitor the strategy, and especially initiatives on operational
improvements it is required to intorduce a number of changed in company strategies and
policies. Specifically, IT strategies and policies should be updated to aline functional IT
objectives with business tasks of each of the companies. Such alinement can be achieved
through IT related expenses with a proper focus on business needs of the company. In
particular, it‟s necessary to provide for maximum alinement of automation level with the
business requirements, to coordinate the existing project portfolio between different
companies as well as to ensure sufficient investment under the IT-strategy.
The functional policy shall also determine: distribution of authority between the holding
company and its subsidiaries in the sphere of IT, the process of key decision making and
mechanisms for effective management and control in the sphere of IT. The policy shall
provide for effective use of common IT resources between the companies of the holding.
29
As to investment activity and project management, it is proposed to introduce a milestone
project management process for all projects including those initiated by the state. This
approach will allow to reduce project implementation time, increase budget forecasting
accuracy, avoid implementation of a number of suboptimal projects and reduce the role of
manual management.
At the same time it‟s necessary for the policy to be flexible enough for quick response to
both (1) deterioration of external economic situation, e.g. reduction of capital investment in
response to a sharp decline in freight turnover in 2015 and (2) new growth opportunities
ensuring maximum possible economic efficiency for the company in a situation of shrinking
investment opportunities required to support major strategic initiatives, such as increase of
container transit traffic and projects of increase of perforemance effectiveness.
Rigid planning process for solid capital investment with more than one year time horizon, as
it was previously accepted for cars and locomotives, is inexpedient under conditions of weak
market. To account for the support provided by the company to the Kazakh manufacturers in
a proper way it is necessary to introduce several changes: to informe government authorities
on manufacturers‟ full support cost, including both capital and future operating costs, as well
as to correct EVA targets, if required, as set by the shareholder to reflect the cost of support
of local manufacturers.
In the medium run, capital investment plan shall primarily include the activities for support
of network throughput capacity, its reliability and safety, as well as activities to spur
company growth in accordance with its new priorities for the required infrastructure basis
and rolling stock. The decisions on new investments for improvement of infrastructure
bottlenecks shall be made as late as possible taking into account actual growth
dynamics of container transit in terms of separate directions with the aim of obtaining
up-to-date information for substantiation of investments.
In the sphere of finances and control it is proposed to focus on the role of financial
department in decision-making, gradually implementing value management. A special
emphasis is on the integrated efficiency management. It is also proposed to identify financial
function development priorities based on assessment of current importance/development
level of the following functions: funds management, profitability management the,
shareholder value creation, investor relations, capital structure management and support
function organisation.
In personnel management it is necessary to follow the personnel management strategy,
stipulated by the Fund that focuses on talent acquisition, retention and promotion. Best
practices on personnel recruitment should be deployed based on clear understanding of the
competencies required for each Company level. These competencies are used during regular
personnel assessment allowing to take correction measures in personnel development, from
courses and training to promotion and even dismissal. Special attention shall be focused on
company corporate culture development, starting with defining value proposition for
employees to individual behavior standards and problem solving approaches. The main focus
of the company should be on values development and strengthening. According to global
practice the values are usually used as a basis to develop personnel competencies and
behavior patterns linking company mission and vision to the competence model.

30
Procurement management shall switch from procurement process implementation function
to being an equal participant of production process. This implies a more extensive application
of best practices in procurement. These include:
 Set ambitious targets for the economy, which affects absolutely all categories of
procurement as inside and outside KTZ/SWF
 Introduction of category management including division of procurement on categories
for development of a differentiated approach to cost management and reduction of every
category through full understanding of the entire procurement life cycle of individual
categories (from identification of need to use);
 Development of procurement strategies using the following mechanisms:
– Volume consolidation between subsidiaries;
– Search for new producers, for example, in China, unavailable before (e.g. due to
volume);
– Signing partnership contracts with producers for more fully loading and usinf this in
negotiations;
– A better understanding of producer material production costs (e.g., different
specifications) and making use of this understanding in negotiating;
– Search for substitutes.
 Organisation of joint work on production in cross-functional groups for development
of initiatives on certain categories purchase cost reduction;
 Purchase cost reduction not just through price management, but also through
requirements management, the concept of total cost of ownership and process improvement.

31
6. Target KPIs
6.1. TARGET EVA
EVA – economic value added is one of 6 main corporate KPIs of the Company. Benefit of
EVA over the other accepted metrics, such as net profit and EBITDA, is cost accounting of
the employed capital. In other words, EVA shows whether the Company creates or destroys
the economic value for shareholder taking into account the cost of capital.
Correct estimation of EVA requires reasonable and fair position while determining key
assumptions, such as consideration of social tariffs, construction of social facilities, valid cost
of capital, etc. In the development of this Strategy and assess the effect of blocks of strategic
initiatives was used method of calculating EVA, developed by consultants Boston Consulting
Group for JSC “Samruk-Kazyna” in 2015.
The aggregate effect on EVA of JSC “NC "KTZ"” groups of companies from successful
implementation of 5 blocks of BSI will amount to ~ 480 billion tenge in 2020 that will
improve EVA from ~ -121 billion tenge (in 2020 without initiatives) to ~ 359 billion tenge
(in 2020 with initiatives). It is impossible to estimate the direct effect from implementation of
BSI 6 “PMO development” in monetary terms. Nevertheless, implementation of this block of
initiatives increases possibility and accelerates achievement of the rest BSI. BSI 7 and 8 can
have a significant impact on the Company‟s EVA, however these blocks of strategic
initiatives are beyond the Company‟s decisions zone and are taken outside the target EVA
metrics.
Increasing the value of transit containers is an initiative that has the greatest effect on the
increase in value of the company and thus monitor of targets achievement for the growth of
transit volumes of containers is an important element of the Strategy.
ILLUSTRATION 21 – IMPACT OF BSI 8 ON THE COMPANY‟S EVA

32