STCM — Steppe Cement News Story

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REG - Steppe Cement Ltd - Annual Financial Report

Steppe CementAnnouncement

Wed 07:00

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RNS Number : 7826F Steppe Cement Limited 27 May 2026

27 May 2026

Steppe Cement Limited

("Steppe Cement" or the "Company")

Final Results for the Year Ended 2025

Notice of Annual General Meeting

The Board of Steppe Cement (AIM: STCM) is pleased to announce the Company's
final results for the year ended 31 December 2025, which are set out below.

Highlights:

Strong Market Recovery and Volume Growth

The Kazakh cement market experienced significant growth in 2025, with
consumption increasing by more than 20% to exceed 14 million tonnes, supported
by residential construction, infrastructure projects and ongoing urbanisation.
Steppe Cement maintained a 14.4% market share of the cement market while
increasing sales volumes by 21% to approximately 2.07 million tonnes through
improved operational reliability and increased clinker production.

Significant Improvement in Financial Performance

Revenue increased to USD 101.5 million, up 20% year-on-year, driven by higher
sales volumes and improved pricing. Gross profit rose to USD 28.4 million,
while EBITDA improved to USD 11.8 million from USD 7.5 million in 2024. Net
profit increased to USD 3.2 million (2024: USD 1.0 million), reflecting
improved operational efficiency, tighter cost control and a more favourable
market environment. The Company ended the year with a strong cash position of
USD 10.5 million.

Operational Progress and Capacity Expansion

The operational improvements implemented on Line 6 continued to deliver strong
results, with the Company's clinker production increasing to 1.63 million
tonnes in 2025 from 1.47 million tonnes in 2024. Following this progress, the
Board approved a USD 30 million expansion project to increase clinker
production capacity from 3,000 to 4,500 tonnes per day, supporting future
cement production capacity of approximately 2.5 million tonnes annually.
Completion is expected by summer 2027.

Steppe Cement wishes to inform that its Annual General Meeting will take place
at its Malaysian Office at Suite 10.1, 10th Floor, West Wing, Rohas Perkasa, 8
Jalan Perak, Kuala Lumpur, Malaysia on Friday, 26 June 2026 at 4.00 p.m.
(UTC+8).

A copy of the Annual Report 2025 and the Notice of Annual General Meeting will
shortly be made available on the Company's website at www.steppecement.co
(http://www.steppecement.com/) m (http://www.steppecement.com/) .
(http://www.steppecement.com/) (http://www.steppecement.com/)

For further information, please contact:

Steppe Cement Limited www.steppecement.com Tel: +(603) 2166 0361

Javier del Ser Pérez, Executive Chairman
Strand Hanson Limited (Nominated & Financial Adviser and Broker) James www.strandhanson.co.u (http://www.strandhanson.co.uk/) k
Spinney / Ritchie Balmer / Imogen Ellis (http://www.strandhanson.co.uk/) Tel: +44 20 7409 3494

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of
the European Union (Withdrawal) Act 2018, as amended by virtue of the Market
Abuse (Amendment) (EU Exit) Regulations 2019.

CHAIRMAN STATEMENT

Dear Shareholders,

After 27 years as Chief Executive Officer of the Company, I have transitioned
to the role of Executive Chairman while leaving the CEO role in the capable
hands of Petr Durnev. In this new capacity, I look forward to supporting
Steppe Cement as it enters its next expansion phase.

Surprisingly, the Kazakh cement market has strengthened following a period of
sustained competition and margin pressure over the past three years. Cement
demand in Kazakhstan increased by 21%, resulting in higher sales volumes and
pricing conditions in local currency terms. Consequently, industry utilisation
levels have moved upwards.

The year ended 31 December 2025 was characterised by a strong recovery in
construction activity in Kazakhstan. According to official statistics, the
total volume of construction work increased by 15.9% year-on-year to KZT 10.7
trillion or 6% of GDP. This expansion was driven mostly by residential
construction (estimated at 65%) where 20 million square meters of housing were
commissioned, followed by infrastructure (construction of roads, railways and
related projects) and by non-residential buildings.

New crane for Linpreheater tower

The residential housing sector was driven by the private sector that provided
90% of the supply while public housing was 10%.

Construction growth was geographically widespread, with increased activity
recorded in most regions, including significant expansion in the major urban
centres of Almaty, Shymkent and Astana and, as well as in the industrial
regions.

In addition to residential construction, there was continued investment in
social infrastructure, including the commissioning of schools, healthcare
facilities and other public buildings during the year.

The outlook for the Kazakh construction sector remains positive. Population
growth of more than 200,000 people per year (now reaching 20.5 million),
growing urbanisation particularly in the south, residential development and
infrastructure investment means that GDP per capita now equals or exceeds that
of Turkey or Malaysia.

While residential construction growth is expected to continue at a moderate
pace, infrastructure and non-residential projects are likely to remain
significant contributors to overall demand. At the same time, the Board
remains mindful of potential risks, including cost inflation, exchange rate
volatility and competitive pressures from imports in the southern regions that
may eventually spill in the central market. We will be watching for any change
of momentum in the market to adapt our strategy quickly.

Support equipment for new raw mill 5

The Company is well positioned to benefit from this environment, supported by
its established market position, strong operational capabilities, experienced
management team and a very sound balance sheet. Its location, near the major
industrial and urban centres of Astana, Karaganda and Temirtau, and near key
raw material sources including limestone, clay, coal, iron ore and slag,
continues to be a significant strategic advantage.

The production facilities operated at high utilisation rates for much of the
year, reflecting both improved market conditions and the benefits of ongoing
operational improvements. Management maintained a disciplined approach to cost
control, enabling the Company to respond effectively to increased demand
despite continued inflationary pressures, particularly in energy, transport
and labour. Import volumes also increased during the year, reflecting regional
supply dynamics and price differentials.

Interior new clay crusher filter

The management continues to focus on operational excellence and disciplined
expansion. During the year, management implemented a series of improvements
that allowed to increase clinker production by 11%. Following this success,
the Board agreed an expansion plan to take production from 2 to 2.5 million
tonnes with a budget of USD30 million that includes a new cooler, a new raw
mill, rebuilding of the riser duct, new stage 4 cyclones, modifications to the
kiln drive, kiln seal, coal mill and cooler heat recovery. The expansion will
provide reduced per tonne consumption of coal and electricity and doesn't
require any increase in fixed expenses. There will be only a small increase in
number of operators for the new raw mill number 5 with a capacity of 120 tons
per hour. Completion is expected by the summer of 2027. We will be providing
updates on the construction progress.

The cement making process consumes substantial amounts of energy and emits
CO(2) both due to the heating of the materials as well as the chemical
reactions in the process. The sector has traditionally reduced these emissions
through capital investment, heat recovery projects, alternative fuels use and
clinker substitution. The Company has historically reduced its emissions with
the closure of the wet lines, the replacement of most of the process filters
and substantial improvements in the heat recovery. The energy consumption and
emissions are in line with similar factories around the world.

Clay filter purging system

To comply with future ecological standards, Steppe is negotiating a framework
agreement with the government that will set up targets in line with worldwide
Best Available Technologies standard ("BAT") by 2035. The Company has already
committed to spend USD5 million in the next two years to complete the full
transition to bag filters from electrostatic precipitators. Once the agreement
is completed, we expect the current emission tax to be substantially reduced
from its current level of USD1.4 million per year.

The current production expansion underway together with the planned increase
of slag use in the production of cement will substantially improve the
ecological footprint and lower the energy consumption per tonne.

The Board will continue to keep a cautious approach to capital allocation,
prioritising investments that deliver attractive returns while maintaining a
strong balance sheet. We intend to use our cash flow to finance the majority
of these investments, and we have arranged loans with local banks to cover the
rest.

In addition, as part of its commitment to the communities in which it
operates, the Company continues to support the village of Aktau through
partnerships which have been in place since 1998. We sponsor numerous sport
teams in the area and contribute to essential community infrastructure by
undertaking major repairs in the heating systems and other municipal
utilities. The Company also offers support to employees and ex-employees who
experience health issues and provides free annual health medical check-ups to
all employees who require them.

Following the improved trading performance in 2025, the Board is reviewing its
approach to the allocation between capex and an increased dividend. The final
decision will depend upon:

· the Company's cash generation and debt commitments during the
year.

· ongoing and planned capital expenditure requirements; and

· prevailing market conditions and outlook.

In April 2026, we managed to complete the first stage of restructuring with
the removal of two companies in the group: The intermediary holding Steppe
Cement BV and Mechanical and Electrical in Malaysia. Currently the main
operating companies in Kazakhstan are Karcement JSC and Central Asia Cement
JSC both directly owned by Steppe Cement Bhd. Sdn. in Malaysia. With the
current tax code and double taxation treaty in place with Malaysia, the
dividend withholding tax will be 5% up to USD2 million paid to the holding
from each Kazakh company and 10% for any amount higher than that.

On 19 November 2025, the Company subscribed to the first tranche of bonds
issued by its wholly owned subsidiary, Karcement, amounting to USD10 million
pursuant to a sale and purchase agreement entered into by both parties. The
bond carries a fixed annual coupon rate of 8%, payable quarterly, and has a
maturity period of 10 years from the subscription date. Interest on the bonds
is tax free.

The subscription forms part of the approved programme to issue up to USD50
million in bonds, intended initially to refinance the remaining USD13 million
outstanding on the loan owed by Steppe Cement Ltd to Karcement. Depending on
future market conditions, Karcement can also use this instrument to replace
bank debt.

A further step in the restructuring process, involving a holding company
already incorporated in the Astana International Finance Centre (AIFC),
remains under consideration. Dividends paid by companies incorporated in AIFC
to their holding companies are not subject to dividend withholding tax.

On the macroeconomic front, the Kazakhstan Tenge appreciated against the USD
during 2025, and the trend has continued well into 2026. This is unusual, as
the currency has historically depreciated by approximately 5% per year against
the USD, broadly in line with inflation and interest-rate differentials.
However, the current political conflicts, the privileged position of
Kazakhstan as a big energy production country and its geographic position
between China and Russia, point toward a positive short-term outcome for the
currency.

Current inflation is 11% and the base interest rate is still high at 18%.

Finally, I would like to thank Mr Xavier Blutel for his many years of service
to the Company, and welcome Saida Djarbolova as a new Independent
Non-Executive Director. Together with the new CEO, Petr Durnev, Ms Djarbolova
will help the Company in the relation with the Government and Kazakh
institutions.

On behalf of the Board, I would like to thank our employees, management,
customers and shareholders for their continued support.

Yours sincerely,

Javier del Ser

Executive Chairman

STEPPE CEMENT LTD