Message from our CEO

A major focus and success of 2010 was the unveiling of several projects that were years in the making. The projects which are helping to drive Chagala’s growth strategy include the development and opening of four new facilities in Aktau, Atyrau, Uralsk and Aksai and the expansion of our offerings in regions we already service. Our robust financial results partly reflect the increased returns on those projects although as expected, some additional costs were incurred. In 2010, we set targets for improvements in efficiency and operational practices for the Group and we are pleased to report that we met these goals and will strive for further improvements for our shareholders in the year ahead.

We are confident that the costs associated with the corporate re-structuring and management transition that was completed at the end of the year will pay off in future years. We accomplished a smooth transition at the Chairman, CEO, CFO level, and management is now focused on delivering strong performance in 2011. We look forward to taking advantage of the new management team’s expertise and experience in this rewarding and challenging market.

Although 2010 saw improved performance in many areas of the Group’s activities, the year was influenced by unresolved issues surrounding the delays to the Karachaganak and Kashagan projects. We are confident that the uncertainty surrounding these ambitious projects is temporary and that our related service offerings will reach their full potential once the issues are resolved. We have reduced our key customer concentration from 75% to 65% and are also actively exploring complementary projects to augment our existing business pipeline. These will further diversify our customer base and provide stability to the business.

We have a reputation for providing a high quality service and we are the established leaders in the market. For the services we offer, we are the biggest and best company in Kazakhstan. However, we are not content on resting on these accomplishments. Kazakhstan is expected to become a top-five oil and gas producer, and we must sustain our competitive position in the years ahead. We intend to further enhance our leading market position with continued growth and improving our customer service and efficiency.

Sincerely,
Francisco Parrilla,
Chief Executive Officer

Biography of Francisco Parrilla