Kazakhstan Kagazy PLC (the “Company/Group”) has pleasure in announcing its consolidated trading update for the 3 months ended 31 March 2011 (the “Period”).  

Highlights for the period

• Revenue up USD 5.0 million (35.4%);
• Gross Profit up USD 5.0 million (141%);
• EBITDA before exceptional items and revaluation up by USD 5.5 million;
• Administrative expenses down by 7.9%.

The results for the period demonstrate the effects of the ongoing operational restructuring programme that commenced in 2010 targeting increased revenues and production efficiencies combined with reduction in overheads. The result has been a USD 5 million increase in Revenue in the Period which has flowed directly through to Gross Profit and EBITDA before exceptional items and revaluation.

Summary profit and loss statement

* EBITDA before exceptional items is defined as profit before interest, taxation, depreciation and amortisation adjusted for exceptional items.

Revenueand gross profit

Financial review

Paper

The results of the Paper business reflect the price increases of around 21% in the second half of 2010 and the increase in the volume of sales of finished goods by 24%. Gross profit margin in the Paper segment increased from 24% to 43% in the period.

Production rose to meet the increased demand:

• Corrugated packing production increased by 17.3% and reached 23.7 million m2;
• Paper and cardboard production increased by 7.7%, and reached 10,296 Tonnes;

Logistics

The Logistic business demonstrated significant improvement in financial and operational terms in the Period:

• Gross profit increased from 31% to 48%.
• Occupancy of Paragon increased from 25% to 64%;
• Occupancy of Peak increased from 38% to 69%.
• Container turnover increased by 98%.

The significant improvement reflects in part the improvement in the logistics sector in Kazakhstan but more importantly the efforts of the new management teams that have been introduced at all of the Group’s logistics business during 2010 and 2011 particularly in relation to expanding the customer base.

Financial obligations

Having completed the restructuring of the Alliance Bank loan in 2010 and the Group’s bonds in the Period the Group continues to negotiate with, EBRD and DBK. Negotiations continue to be very constructive and the Group expects to complete these negotiations in the short term. The board of the Company notes, however, that if discussions with EBRD and DBK do not result in a satisfactory outcome, the ongoing prospects of the Group continue to be uncertain.

Tomas Mateos, Chairman stated:

“The results for the first quarter demonstrate without a shadow of doubt the success of the ongoing operational measures commenced in 2011 and I expect to see further in improvement throughout the rest of 2011. We are close to completing the financial restructuring of the Group’s financial liabilities, the success of which can only by underpinned by the huge improvements in the group’s profitability and cashflow.”
The content of this document includes forward-looking statements. These relate to Kazakhstan Kagazy’s future prospects, developments and strategies, including statements regarding target returns. Forward-looking statements are identified by their use of terms and phrases such as "believe", "could", "would", "envisage", "estimate", "intend" "seek", "may", "plan", "will" or the negative of those, variations or comparable expressions, including references to assumptions. These statements are based on Kazakhstan Kagazy\'s current beliefs, assumptions and expectations of its future performance, and are subject to risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Accordingly, these beliefs, assumptions and expectations can change as a result of many possible events or factors that may cause Kazakhstan Kagazy’s business, financial condition, liquidity, results of operations and actual returns to vary materially and target returns to be revised from those expressed or implied in the forward-looking statements. None of the data in this statement has been audited and where any reference is made in this statement to the past performance of investments by persons associated with Kazakhstan Kagazy or other investments, you should bear in mind that such information is not necessarily indicative of the future performance of the relevant investments or of Kazakhstan Kagazy\'s future performance.

Contacts:

SP Angel Corporate Finance LLP
David Facey
John Mackay                                                                     +44 20 3463 2260

Kazakhstan Kagazy JSC
Aida Yelgeldiyeva                                                         +7 727 244 87 87

Kazakhstan Kagazy JSC
Nellya Kim                                                                        +7 727 244 87 96
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