Almaty, Kazakhstan - Kazakhstan Kagazy PLC (KAG LI) (the “Group”) announces its non-audited consolidated financial results for the 6 months period ended 30 June 2014 (the “Period”).

On February 11 the Kazakh Tenge (“KZT”) was devalued by 19%. As a result all financial indicators are 19% lower when being converted into US$ (“the conversion effect”). The average exchange rates used for the Period and 2013 are 176.4 and 150.9 KZT per US$, respectively. This amounts to an average 14% decline in the value of the KZT against the US$.

Financial highlights

• Group revenue of US$ 28.0 million (US$ 33.5 million a year ago)
• Gross profit of US$ 10.8 million (US$ 16.9 million a year ago)
• Gross margin of 38.4% (50.6% a year ago)
• EBITDA before exceptional items of US$ 4.2 million (US$ 8.6 million a year ago).
• EBIT before exceptional items of US$ 2.7 million (US$ 6.9 million a year ago)
• Operating Cash Flows of US$ 3.3 million (US$ 8.7 million a year ago)

The Group’s revenue has dropped by US$ 5.5 million, out of which US$ 4,7 million is attributable to the conversion effect and the rest to a drop in sales volumes of corrugated packaging.

The Group’s EBITDA dropped US$ 4,4 million, out of which US$ 1,2 million is attributable to the conversion effect and the rest, US$ 3,2 million to higher costs, mainly higher prices of waste paper (US$ 1.9 million) and US$ 1 million higher purchasing costs for chemicals and spare parts in hard currency.

Operational highlights

Paper Business

In millions of US$	H1 of 2014	H1 of 2013
Revenue	26.6	31.7
Gross Profits	10.0	15.8
Gross Profit Margin	37.6%	49.7%

Production of paper for the Period amounted to 26.3 thousand tons compared to 26.8 thousand tons for the same period of 2013.

Production of corrugated packaging for the Period amounted to 40.5 million square meters compared to 47.7 million square meters for the same period of 2013.

Sales of paper to third parties for the Period amounted to 10.1 thousand tons compared to 8.7 thousand tons for the same period of 2013.

Sales of corrugated packaging for the Period amounted to 40.4 million square meters compared to 47.4 million square meters for the same period of 2013.

The average selling price of paper and corrugated packaging increased 12% and 7%, respectively.

Despite sales volumes of corrugated products contributing by 10.2%, overall revenue fell only by 2.0%, due to the increase of paper and cardboard sales 1% and higher selling prices for both paper 0.6% and corrugated packaging 6.6%.

Logistics Business

In millions of USD	6 months of 2014	6 months of 2013
Revenue	1.4	1.8
Gross Profits	0.8	1.1
Gross Profit Margin	54.8%	61.4%

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This segment is comprised solely of revenues from the Class B logistics business, as the Class A and Container Terminal businesses were disposed to Investment Fund of Kazakhstan as of January 2013. The revenue of our Class B business dropped by US$ 0.3 million due to the conversion effect and US$ 0.1 million due to lower occupancy rates. Occupancy rate was 87% for the Period compared to 97% for the same period 2013.

Financial statements for previous years are available at http://kazakhstankagazy.com/en/investor-relations/reports.html/

For more information please contact:

Mr. Sadyr Shaguzhayev                                                              +7 727 244 02 08
Head of Investor Relations                                                        This email address is being protected from spambots. You need JavaScript enabled to view it.

Note: Q2 2013 results differ from those announced previously as in January 2014 the Group disposed of its Class A and Container terminal business