Interim Results and General Market Update

Steppe Cement Ltd

Interim Results for the Half Year ended 30 June 2021

and General Market Update

1. Interim Results

Steppe Cement Ltd ("Steppe Cement" and "the Company") posted a consolidated profit after tax of USD6.2 million for the six months ended 30 June 2021, an increase of 52%.

·    The Company managed to increase cement prices during the first half of 2021.

·    The average ex-factory price increased from 14,727 KZT /tonne (USD36 per tonne) to 16,571 KZT/tonne (USD39 per tonne) or 11% during the period.

·    Steppe Cement's gross margin increased from 40% to 46% in USD terms due to price increases.

·    Selling expenses per tonne increased in USD terms by 16% and in KZT by 21% due to increases in transportation prices from the national railways.

·    General and administrative expenses increased by 16% in USD.

·    The Kazakh Tenge average rate depreciated by 5% compared to the first half of 2020 but only translated in a small foreign exchange loss of USD 0.2 million as the company maintains very small loan balances in USD.

·    The Company generated operating profit before working capital changes of USD12.9 million in 1H 2021 against USD 11 million in 2020.

·    Kazakhstan GDP increased by 2.3% in 1H2021 compared to 1H2020 rebounding from a drop of 1.4% in the first quarter of 2021.

·    Reported inflation has been 7% up to the end of August 2021.

2. Production costs

·    Production costs increased by 5% in KZT mostly due to the higher electricity cost, diesel and spare parts for maintenance.

3. Update on the Kazakh cement market

·    The Kazakh cement market increased by 28% during the first half of the year. The increase is due mostly to the program set in place by the government that allows partial withdrawal from personal pension funds for real estate investment or health reasons. It was done to stimulate the economy and it may bring total cement consumption in 2021 to 10.5 to 11 million tonnes in 2021, an increase of more than 1 million tonnes from 2020.

·    Steppe Cement's local market share decreased from 16.5% in 1H2020 to 15% in 1H2021 due to the strong growth in the overall market. We expect to maintain this share for the full year. Exports represented 9% of the volumes in the 1H2021 from 11% last year.

·    Imports into Kazakhstan have increased to 0.4 million tonnes in 2021 and represent 7% of the market.

·    Exports from Kazakhstan have increased slightly to 0.97 million tonnes.

·    Exports from Kazakhstan represent 17% of local production from 18% last year.

·    Overall production of all factories in Kazakhstan has increased by 1 million tonnes to 5.7 million tonnes for the 1H2021 as closures in the smaller factories were balanced by increases in production by Gezhuoba Cement and Alacem.

·    Currently 82% of production in the country is manufactured from dry lines up from 80% in 2020.

4. Financing

·    Interest expenses on bank debt were reduced to USD 0.37 million from USD 0.41 million in 2020 mostly on subsidised loans while we reduced interest expenses on lease liabilities to USD 0.13 million from USD 0.35 million after the application of IFRS 16 on the 3 years wagon leases. The rental on those wagons was considered selling expenses previously.

·    Steppe Cement recorded a net cash position of USD7.4 million compared to net cash of USD6.4 million as of 30 June 2020.

·    The borrowings of the Company as of 30 June 2021 were USD6.1 million while we carried a cash balance of USD 13.5 million. For comparison, on 30 June 2020 we had USD3.2 million in borrowings and USD9.6 million in cash.

·    As of 15 September 2021 after paying the dividend, the financial debt was the equivalent of USD 5.6 million (all denominated in KZT) and the cash was USD10.5 million.

·    We have maintained the working capital lines available for the winter.

A pdf copy of the announcement and the full interim financial statements is available on the company's website at www.steppecement.com.

Steppe Cement's AIM nominated adviser and broker is RFC Ambrian Limited.

Nominated Adviser: Contact Stephen Allen or Andrew Thomson at +61 8 9480 2500.

Broker: Contact Charlie Cryer at +44 20 3440 6800

SUMMARY OF INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2021 (UNAUDITED)

(In United States Dollars)

The Notes to the Interim Financial Statements form an integral part of the Condensed Financial Statements. Please visit the Company's website at www.steppecement.com to view the full interim financial statements.