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ChelyabinskZincPlant: H1 2014 Financial Results

NEWS RELEASE                                  

                                        For Immediate Release - August 29, 2014

    Chelyabinsk Zinc Plant Announces H1 2014 Consolidated Financial Results    

Chelyabinsk, Russia - August 29, 2014 - Chelyabinsk Zinc Plant (LSE, MICEX:
CHZN), Russia's largest producer of zinc and zinc alloys, is pleased to
announce its IFRS financial results for the six months ended June 30, 2014.

H1 2014 HIGHLIGHTS

  * Chelyabinsk Zinc Plant's (CZP) revenue totalled RUB 6,733 mln. 
   
  * EBITDA amounted to RUB 1,175 mln or 17% of revenue.
   
  * Net profit was RUB 925 mln or 14% of revenue.
   
Consolidated financial results

(in millions of     H1 2014  H1 2013  Change, %
Russian Roubles)                               
                                               
Revenue              6,733    6,186      9%    
                                               
Gross profit         1,838     808      127%   
                                               
    Gross margin, %      27%      13%          
                                               
EBITDA (1)           1,175     399      195%   
                                               
   EBITDA margin, %      17%       6%          
                                               
Profit / (Loss)      1,218     (71)      n/a   
before income tax                              
                                               
Net profit / (loss)   925     (109)      n/a   
                                               
      Net margin, %      14%      n/a          

(1) EBITDA, for any relevant period, represents operating profit before
interest, income tax, depreciation and amortization.

EBITDA is not a measurement of CZP's operating performance presented in the
financial information, prepared in accordance with IFRS, and should not be
considered as an alternative to operating profit or any other performance
measure derived in accordance with IFRS or other relevant financial framework.

Revenue

H1 2014 consolidated revenue increased by 9% to RUB 6,733 mln as compared to H1
2013.

The average LME zinc price in H1 2014 increased by 6% as compared to the
relevant period of the previous year and amounted to US$ 2,051/tonne. The
average LME lead quotes decreased by 3.5% to US$ 2,101/tonne. US Dollar/Russian
Rouble average exchange rate increased by 13% to RUB 34.98/US Dollar.

(in millions of    H1 2014  H1 2013  Change, %
Russian Roubles)                              
                                              
Zinc and zinc         4,779    4,474        7%    
alloys                                        
                                              
               CZP    3,387    3,591      (6%)
                                              
       Brock Metal    1,392      883       58%
                                              
Zinc tolling          1,007      574       75%   
                                              
Lead concentrate        249      270      (8%)   
                                              
               CZP       43       47      (9%)
                                              
         Nova Zinc      206      223      (8%)
                                              
Other products          698      868     (20%)  
                                              
Total revenue         6,733    6,186        9%    

Revenue structure

In H1 2014, CZP's revenue from sale of zinc and zinc alloys decreased by 6% as
compared to the H1 2013 and amounted to RUB 3,387 mln. Decrease of the revenue
was due to decline of sales on the domestic market by 20.3% (H1 2014: 41.9
thousand tonnes; H1 2013: 52.6 thousand tonnes).

Revenue of The Brock Metal Company Limited for H1 2014 amounted to RUB 1,392
mln, 58% higher than in H1 2013. This increase was due to 32.5% growth of zinc
alloys sales (H1 2014: 15.9 thousand tonnes; H1 2013: 12.0 thousand tonnes) and
22.4% growth of Pound Sterling (GBP)/Russian Rouble average exchange rate (H1
2014: RUB 58.55; H1 2013: RUB 47.83).

CZP received revenue of RUB 1,007 mln under tolling agreement in H1 2014, which
is 75.4% higher compared to H1 2013. The increase of tolling's volume (H1 2014:
37.3 thousand tonnes; H1 2013: 21.3 thousand tonnes) was due to decrease of
zinc and zinc alloys sales on the domestic market. Fixed processing fee
amounted to RUB 27,000/tonne.

Revenue from lead concentrate sales for H1 2014 amounted to RUB 249 mln (H1
2013: RUB 270 mln).

In H1 2014, revenue from CZP's other by-products decreased by 20% to RUB 698
mln as compared to H1 2013. The main reason of revenue decrease was the
temporary interruption of precious metals sales due to prices reduction
(average official prices for gold in H1 2014: RUB 1,458/gram, in H1 2013: RUB
1,515/gram; silver in H1 2014: RUB 22.6/gram, in H1 2013: RUB 26.5/gram).

Cost of Sales

(in millions of Russian     H1 2014     H1 2013  Change, %  
Roubles)                                                    
                                                            
Raw materials and           3,068       3,119    (2%)       
consumables used in                                         
production                                                  
                                                            
Utilities and fuel          597         1,089    (45%)      
                                                            
Depreciation and            394         447      (12%)      
amortization                                                
                                                            
Staff cost                  461         414      11%        
                                                            
Repairs and maintenance     328         391      (16%)      
                                                            
Change in work-in-progress  113         92       24%        
                                                            
Mineral extraction tax      65          64       -          
                                                            
Other taxes                 47          43       9%         
                                                            
Production overheads        174         191      (9%)       
                                                            
Inventory provision         -           (7)      n/a        
                                                            
Change in finished goods    (427)       (552)    n/a        
                                                            
Other costs                 76          87       (13%)      
                                                            
Cost of sales               4,896       5,378    (9%)       

Cost of materials and consumables used primarily comprises of the cost of zinc
concentrate, zinc containing raw materials, materials for alloys production and
auxiliary materials used in the production process. The main reason of changes
was the volume decline of purchased raw materials due to structure changes of
zinc and zinc alloys sales related to JSC «CZP».

In H1 2014, costs of utilities and fuel decreased by 45% to RUB 597 mln mainly
due to decrease of expenses on electricity transmission services. In H1 2014
expenses on electricity transmission services were accrued applying tariffs of
OJSC "FSK UES" while during H1 2013 - applying tariffs of OJSC "MRSK-Ural". As
the result electricity tariff for CZP in H1 2014 was RUB 1.81 per kWh while in
H1 2013 - RUB 2.23 per kWh.

Besides cost of sales for H1 2014 includes adjustment for the expense for
electricity transmission services accrued for the period from 1 May 2013 till
31 December 2013 for the amount of RUB 359 mln due to termination of litigation
between JSC "CZP" and OJSC "FSK".

Staff costs increased by 11% as compared to the relevant period of the previous
year, to RUB 461 mln. The increase was due to the growth of average salaries.

Distribution, General and Administrative Expenses

In H1 2014, distribution costs increased by 10% and amounted to RUB 377 mln.
The main reason was the increase of sulphuric acid transportation costs due to
market expansion.

General and administrative expenses amounted to RUB 444 mln in H1 2014, 4%
lower than in H1 2013.

Other operating income and expenses

In H1 2014 other operating income totaled RUB 339 mln. The main reason - the
reversal of previously accrued impairment loss related to LLP "Nova Zinc".

As at 31 December 2013 an impairment loss was recognized in the amount of RUB
387 mln, related to LLP "Nova Zinc". Due to a change of forecast market data,
such as the Tenge exchange rate to the US dollar and projected zinc and lead
LME (London Metal Exchange) prices, there are indicators that previously
recognized impairment loss should be reversed.

The carrying amount of assets was recovered to their book value, that would
have had been should the impairment loss had never been recognized as at 31
December 2013. The reversal of previously accrued loss amounted to RUB 319 mln.

In H1 2014 other operating expenses totaled RUB 296 mln against RUB 81 mln in
H1 2013. The main reason - provision on potential liabilities of LLP "Nova
Zinc" relating to the environmental disputes including environmental, tax and
administrative fines and penalties for the period from 1 January 2013 to 30
June 2014.

Net profit / Net loss

Net profit for H1 2014 totalled RUB 925 mln compared to net loss of RUB 109 mln
for H1 2013. Significant net income growth was due to the increase of revenue
with a simultaneous decrease of cost of sales and also to the reversal of
previously accrued impairment loss related to LLP "Nova Zinc".

About Chelyabinsk Zinc Plant

Chelyabinsk Zinc Plant is the leading Russian zinc producer. In 2013 the plant
produced 166,357 tonnes of saleable SHG zinc.

According to consolidated IFRS accounts, revenue in 2013 was RUB 13,062 mln and
EBITDA was RUB 1,077 mln.

Ordinary shares of CZP are traded on the Moscow exchange MICEX-RTS under ticker
CHZN and Global Depository Receipts (GDR) are traded on the London Stock
Exchange under ticker CHZN.

                                                   Investor and Media Contacts:
                                             Natalya Vasilieva, PR, ngv@zinc.ru
                                                        Tel: +7 (351) 799-01-52
                                              Evgeny Ponomarev, IR, eyp@zinc.ru
                                                          Tel: +7 963 998-55-58

This announcement may include forward-looking statements. CZP's actual results
may differ materially from those made in or suggested by the forward-looking
statements contained in this announcement. By their nature, forwarding-looking
statements involve risks and uncertainties because they relate to events and
depend on circumstances that may or may not occur in the future.
Forward-looking statements are not guarantees of future performance. Even if
the actual results are consistent with the forward-looking statements contained
in this announcement, those results may not be indicative of results or
developments in future periods. CZP does not undertake any obligation to update
any forward-looking statements to reflect events that occur or circumstances
that arise after the date of this announcement. 



END



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