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KAZAKHSTAN KAGAZY PLC
("Kazakhstan Kagazy" or the "Group")

AUDITED FINANCIAL RESULTS FOR 2014

Kazakhstan Kagazy PLC (KAG.L) announces its audited consolidated financial results for the 12 months ended 31 December 2014¹ (the “Period”).

Group highlights

		2014	2013
Revenue
Reported revenues	$mln	56.0	67.2
Gross profit	$mln	22.9	30.5
Gross margin	%	40.9	45.4
Profitability
EBITDA before exceptional items	$mln	8.7	16.1
EBITDA Margin	%	15.5	24.0
EBIT before exceptional items	$mln	5.7	12.7
EBIT Margin	%	10.2	18.9
Operating loss	$mln	(24.7)	(7.7)
Loss before income tax	$mln	(44.2)	(22.1)
Total comprehensive loss	$mln	(46.3)	(112.6)
Total basic/diluted loss per share (cents per share)	¢	(81.8)	(142.7)
Return on assets	%	(70.2)	(55.5)
Return on capital employed (ROCE)	%	25.9	12.8
Cash
Cash generated from operating activities	$mln	6.8	18.1
Net increase / (decrease) in cash	$mln	1.7	(6.1)
Key Ratio
Economic Loss	$mln	(4.2)	(6.8)
Debt (principal)	$mln	109.5	165.4

¹ Note: 2013 results differ from those announced previously as in September 2014 the Group disposed of its Class B business.

On February 11 2014 the Kazakh Tenge (“KZT” or “Tenge”) was devalued by 19%. The average exchange rates used for 2014 and 2013 were 179.2 and 152.1 KZT per US$, respectively. As a result all financial indicators are 17.8% lower when being converted into US$ (“the Conversion Effect”).

The Group's revenue has dropped by US$ 11.2 million, of which US$ 9.8 million is attributable to the Conversion Effect with the remaining decrease of US$ 1.4 million attributable to the one-off revenue effect  from the sale of excess waste paper in 2013. The Group’s Gross Profit dropped by US$ 7.6 million, from which US$ 4.1 million is attributable to the Conversion Effect and the rest is due to higher costs, mainly related to increased purchase costs in foreign currencies including US$2 million for additional costs of wastepaper purchased in Russia.

The Group’s EBITDA before exceptional items dropped by US$ 7.4 million, of which US$ 1.5 million is attributable to the Conversion Effect, US$ 3.8 million is due to a decrease in Gross Profit and US$2.1 million is due to increased administrative and other costs.

Net operating cash flow was US$ 6.8 million (2013: US$ 18.1 million), dropping by a total of US$ 11.3 million. US$ 1.0 million of this decrease was due to the Conversion Effect, US$ 5.9 million and US$ 2.7 million (from continuing and discontinued operations, respectively) was due to a decrease in the Group’s EBITDA and US$ 1.7 million was due to an increase in corporate income tax.

The Group’s Total Comprehensive loss has decreased by US$ 66.3 million, mainly due to a decrease in impairments by US$ 18.9 million and decrease in losses from discontinued logistics operations by US$ 64.3 million, compensated by the US$ 19.2 million increase in exchange difference effect within other comprehensive income.

The Group’s Debt (principal) has decreased by US$ 55.9 million mostly as a result of settlement of a US$  30.4 million debt to Alliance Bank (now Forte Bank) with transfer of selected non-core assets, including land plots and Class B warehouses. The remaining decrease is mainly due to the Conversion Effect applied to Tenge denominated bonds.

Tomas Mateos Werner, Group CEO, commented:

“2014 has been a very challenging year.

A falling oil price and the crisis in Russia have strongly impacted the Kazakh economy. In February 2014 a devaluation of almost 20% of the Tenge versus the US Dollar has increased our cost base; additionally a sharp fall in the Russian Rouble versus the Tenge in the last quarter of 2014 has depressed the production levels of our core local clients and consequently our sales and margins.

However, cost-cutting and efficiency measures implemented have stabilised our cash flow and positioned the Company for when the Kazakh economy recovers.”

Key operational highlights

Paper Business

In millions of US$	2014	2013
Revenue	56.0	67.2
Gross Profit	22.9	30.5
Gross Profit Margin	40.9%	45.4%

Production of paper for the Period amounted to 54.9 thousand tons compared to 55.1 thousand tons for the same period of 2013.

Production of corrugated packaging for the Period amounted to 86.5 million square meters compared to 98.3 million square meters for 2013.

Sales of corrugated packaging for the Period amounted to 86.3 million square meters compared to 98.1 million square meters for 2013.

The decrease in sales volume of corrugated packaging was mainly due to lower demand as a result of a weak economy, triggered by the devaluation of the Tenge described above. The average selling price in Tenge increased by 9%. The decrease in average price in US$ is a result of the Conversion Effect.

Sales of paper to third parties for the Period amounted to 20.0 thousand tons compared to 17.6 thousand tons for 2013.

The average selling price of paper in Tenge increased by 6.7%. The decrease in average price in US$ is a result of the Conversion Effect.

The Group’s 2014 Annual Report and Consolidated Financial Statements along with earlier financial reports will be available at http://kazakhstankagazy.com/en/investor-relations/reports.html

For more information please contact:

Kazakhstan Kagazy PLC
Hugh McGregor
General Counsel and Company Secretary
+ 7 (727) 244 87 87

Daniel Stewart & Company PLC
David Coffman / Liz Kirchner (Financial Adviser) / Martin Lampshire (Broker)
Tel +44 (0) 20 7776 6550

About Kazakhstan Kagazy PLC

London Stock Exchange listed Kazakhstan Kagazy PLC is the largest paper, packaging and recycling group in Kazakhstan and Central Asia.