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Chagala Full Year Results 2013

Chagala Group Limited, the London-listed specialist services and facilities provider to the oil and gas industries in Kazakhstan (symbol: CHGG), is today pleased to announce its 2013 annual results.

Financial Highlights:

  • Total revenue of USD 33.6 million, 2012 USD 32.0 million
    • Room and rent revenue USD 23.9 million, 2012 USD 23.0 million
    • Food and beverage revenue USD 7.1 million, 2012 USD 6.2 million
  • EBITDA of USD 11.6 million, 2012 USD 9.6 million
  • Operating Profit of USD 5.3 million, 2012 USD 1.3 million
  • Total Assets of USD 146.7 million, 2012 USD 154.9 million

Operational Highlights:

2013 saw the Group:

  • Begin construction of Block 1 of the Saraishyk apartment complex in Atyrau – the Group’s first residential development for the resale market.
  • Established Joint Venture with Compass Offices (Hong Kong) for serviced office centers across Kazakhstan with the first center slated for opening in Almaty in Q1 2014.
  • Successfully tendered for substantial accommodation contracts with NCPOC in Bautino and Atyrau.

Kazakhstan’s economy is heavily influenced by the oil and gas industry, in particular by three main projects – Kashagan, Karachaganak and Tengizchevroil. To a large degree these projects drive most of Chagala’s business and account for the vast majority of its revenue.

The Kashagan project, located in the Kazakh sector of the north Caspian Sea, was to begin commercial production in Q4 2013. After a very brief period of production, however, the field was shut in due to issues with the pipelines connecting the offshore island production facility to the onshore processing plant. To date the field is still shut in with no firm date for a re-launch having been identified. This situation has served to cloud the future of the project more after years of delays and significant cost over runs and continues to negatively impacted Chagala’s performance in the process.

Karachaganak, a world class oil and gas condensate field located in Kazakhstan’s north west, continues to produce but its future investment plans have continued to languish. Plans for production expansion were shelved in 2013 and no indication is available on what future investment activities might be considered for the field.

Tengizchevroil continues its Future Growth Project with substantial new investments being made at the onshore Tengiz field in western Kazakhstan. With new camp facilities under construction, additional drilling programs underway and associated field infrastructure construction all moving ahead there has been a significant increase in activity at our Atyrau property.

Margarita Kapustyanskaya, Chagala’s CFO, said:

“I am pleased to see the improvement in our financial result for 2013 and believe more strongly than ever that the difficult decisions we took the previous year were the right ones. While the trading environment continues to be muted by the difficulties at some of the larger oil and gas projects, we continue to see improvements in our business. The focus we placed on improved efficiencies over the last two years has allowed Chagala to deliver on our service promises to our clients while doing so at a much lower cost. In addition, our market mix has broadened considerably which has allowed us to capture new business while bringing greater balance to our customer base. Greater detail and additional information will be made available with the filing of our Annual Report which we expect to deliver shortly. I look forward to keeping you updated on our continued progress.”

Copies of the Chagala Group’s full year 2012 audited Financial Statements and accompanying MD&A can be found on the Company’s web site – www.chagalagroup.com. There is no conference call regarding the 2013 financial results scheduled.

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For additional information please contact the Chagala Group at:

Telephone: +7 727 298 0131
Email: t.powell@chagalagroup.kz

Notes to Editors

  • Chagala’s business is focused on creating a diversified portfolio of services and property solutions, predominantly targeting oil and gas companies and their service providers operating in the Caspian Region, now firmly established as one of the biggest geographical exploration and production areas worldwide. In particular, Chagala provides residential and business accommodation, associated catering, leisure, transport, warehousing and logistics support to all of the major companies involved in the oil and gas industry Kazakhstan.
  • The Group’s mission is to improve the productivity of its existing assets with the aim of delivering satisfactory returns to shareholders and to seek out new development opportunities where it sees compelling value.
  • The Group works closely with its oil and gas clients in planning and developing properties to meet their long term needs and its own growth and development is directly related to that of the oil and gas industries in Kazakhstan.
  • Chagala is the market leader in constructing and managing high quality office space in Western Kazakhstan owning 16,000 sqm of office space in Atyrau. Tenants benefit from central air conditioning and heating, state of the art IT infrastructure, standby power generation and back up water and fire systems all designed to meet the HSE expectations of multinational companies.
  • Kazakhstan is the ninth largest country in the world by area and has one of the lowest population densities with a population of 16.4 million people. The country has excellent growth prospects with 5.4% GDP growth in 2012. The country has 40 billion barrels of oil reserves and some of the World’s most impressive natural resources including precious metals, uranium, coal and gas.
  • Some of the world’s largest oil fields are found in and around Kazakhstan, including the massive Kashagan discovery in the Kazakh sector of the Caspian Sea ranking as the largest commercial discovery in the last 40 years. Like Kashagan, most of Kazakhstan’s major oil reserves and projects are found in the western part of the country which has been the focus of Chagala’s business and development history.
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