Steppe Cement Regulatory News (STCM)

Preliminary annual results (unaudited) for the year ended 31 December 2009

Steppe Cement Ltd ("Steppe Cement" or "the Company") is pleased to announce its preliminary annual results (unaudited) for the year ended 31 December 2009:

Steppe Cement completed its first full year of operation with increasing capacity at a time when the cement market weakened, as both prices and volumes decreased significantly. The decision of the Government to devalue the Tenge in February 2009 increased the effective cost of servicing and repaying our USD denominated debt facilities and prompted us to issue new equity in May 2009. The market has improved from the summer 2009 and we expect to benefit in the coming years as we shall enjoy the lower production cost from the dry lines.

The market decreased by 10% in 2009 but we expect a recovery in 2010

The Kazakh cement market in 2009 was 5.1 million tonnes, being 10% down from the 5.7 million tonnes in 2008 and continued the declining trend from 2007 when the peak consumption of 7.6 million tonnes was recorded. However the Kazakh cement market reached similar sizes in the second half of 2009 as in second half of 2008 and above our previously announced forecast. Our expectations are that overall market demand in 2010 will be at least similar to that in 2008.

Import volumes halved in 2009 from 2008 and the share of the market of the local producers increased from 65% to 78%. Average cement prices decreased by 34% in Tenge and by 47% in USD to USD 55 per tonne ex factory or approximately USD 63 per tonne delivered.

In spite of poor market conditions Steppe Cement managed to increase its volumes by 16% and its market share from 14% to 18%. The Company is seeking to increase sales volumes by 15% in 2010 and its market share to 20%. Alongside this trend, we expect prices to increase during 2010.

Improvement in the dry lines will help reduce our costs and increase volumes

The four wet lines produced 637,000 tonnes during 2009 while the operating dry line (line 6) contributed 293,000 tonnes. These figures will be reversed in the coming years as the reliability and capacity of the dry line increases. The second string of the pre-heater in line 6 was commissioned and improvements in the pre-heater fans, cooler and the burner will allow us to increase its capacity to 2,300 tonnes per day of clinker (the equivalent of 2,900 tonnes per day of cement).

We have improved the cement mills and they should allow us to produce over 150,000 tonnes of cement per month. We intend to run the wet lines and line 6 to their maximum capacity during the summer months and carry as much stock as we can during the winter months.

Dry line number 5 (1.4 million tonnes per year capacity) continues on stand-by. We shall study the demand and the cement pricing this summer and the Board will then decide the timing of its com-missioning during 2010. We estimate that an additional USD25 million is needed to complete line 5.

Costs were contained in 2009 but we expect some cost increases in 2010

During 2009 we managed to reduce the labour cost and maintain the cost of coal, electricity and transportation. However, in 2010 we expect costs of main inputs to increase by 5 to 15% especially electricity and transportation. Nevertheless, the increased productivity from the dry line will result in lower energy consumption per unit of production.

The labour count stands at 1,125 as of March 2010 compared with 1,313 in March 2009. We have 831 employees on the wet lines and 294 on the dry line.

The Kazakh economy has stabilized and we expect increasing demand from the government infrastructure programmes particularly in road construction

The increase in oil prices and Government spending accelerated the economic recovery and is having the desired effect in the construction sector. Some of the main banks opted to restructure their debts and cut sharply the credit to the construction companies and businesses at large. The Kazakhstan Government supported the financial sector and, early in the year, decided to devalue the currency to support the exporting industries and arrest the flight of capital. GDP was in negative territory most of the year although it just edged ahead in the last few months of 2009. The Government expects moderate growth in 2010.

The VAT and income tax rate remain at 12% and 20% respectively and it seems that further revisions are unlikely during 2010.

Financial cost and loans

In 2009 we charged nearly a full year of depreciation against line 6 totaling USD 4 million and we expensed the full interest cost on debt facilities associated with the dry line refurbishment of both dry lines 5 and 6 totaling USD 3.9 million.

During 2009 and the first quarter of 2010 we used most of our cash flow and the USD15 million proceeds from the May 2009 share issue to service and repay debt facilities. At 31 December 2009 our total indebtedness was USD 80.7 million of which USD 74.6 million corresponded to EBRD, HSBC and the bond holders.

In addition we have short term credit lines available from Halik Bank of up to USD 10 million and Bank Center Credit of up to USD 4 million to finance our working capital needs.

Dividends will not be proposed in respect of the 2009 year and it is not expected that a dividend will be proposed in respect of the 2010 year.

Javier del Ser Chief Executive Officer

Annual report and Annual General Meeting 2010

Steppe Cement expects to release its 2009 Annual Report on its web site www.steppecement.com during the week commencing 20 April 2010.

The Company's Annual General Meeting will take place in its Malaysian Office at Suite 10, 10th Floor, West Wing, Rohas Perkasa, 8 Jalan Perak, Kuala Lumpur Malaysia on Monday, 10 May 2010 at 2.00 p.m.

Steppe Cement's AIM nominated adviser is RFC Corporate Finance Ltd.

Contact Stephen Allen or Trinity McIntyre on +61 8 9480 2500.

STEPPE CEMENT LTD

(Incorporated in Labuan FT, Malaysia under the Labuan Companies Act, 1990)

AND ITS SUBSIDIARY COMPANIES

INCOME STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2009

STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2009

STATEMENT OF FINANCIAL POSITION

AS OF 31 DECEMBER 2009

STATEMENTS OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2009