JSC National Atomic Company “Kazatomprom” (“Kazatomprom”, “KAP” or “the Company”) announces its consolidated financial results for the first half-year ended 30 June 2023, prepared in accordance with International Financial Reporting Standards (IFRS). The Company also discloses changes in its Management.

“The Company demonstrated strong financial results for the first half of 2023, which reflects a significant improvement in the situation on the uranium market over the past year. Revenue increased by 25% compared to the first half of 2022 and amounted to almost 619 billion tenge, which led to an increase in operating profit by 46%, and a near 33% increase in net profit to 222 billion tenge. This is mainly to due to an increase in uranium prices as well as in the sales volume associated with changes in the timing of customer requests for supply and corresponding differences in delivery schedules in the first half of 2023 and 2022. As for operational indicators, production volumes in the first half of 2023 were nearly at the same level as in the same period of 2022. As it was announced earlier all 2023 guidance metrics, except for production volumes, were revised using the updated spot prices estimates, exchange rates and sales portfolio expansion” - said Yerzhan Mukanov, Kazatomprom’s Chairman of the Board. “We have repeatedly stated that we will closely monitor the market situation to determine the need to increase the production volumes to 100% level in accordance with subsoil use contracts. Given the steady improvement in the dynamics of supply and demand, Kazatomprom as before plans to increase production volumes in 2024 in accordance with market fundamentals and expansion of the contract portfolio.”

“Kazatomprom will continue to take an active part in the cycle of mid- and long-term contract activity against anticipated growing demand for nuclear fuel, backed by our now-proven commitment to creating long-term value for our stakeholders by maintaining flexibility and discipline in production and sales,” – said Dastan Kosherbayev, Chief Commercial Officer.

Corporate Update

Management changes

Ruslan Beketayev, Chief Financial Officer of Kazatomprom, decided to leave his role effective 25 August 2023 at and pursue other opportunities. Mr. Beketayev has held the Chief Financial Officer position since 11 January 2023.

Starting from 28 August 2023, Sultan Temirbayev will be appointed as CFO of Kazatomprom. Previously, for three years Mr. Sultan Temirbayev held the position of deputy CFO at JV Inkai LLP, a joint venture of Kazatomprom (60% equity share) and Cameco Corporation. Sultan Temirbayev graduated from the University of Durham (UK) in 2008 with a Bachelor’s degree in Economics and has a PMP (Project Management Professional) certificate. This appointment corresponds to the approved succession plan of the Company.

Mr. Sultan Temirbayev is expected to be appointed to the Management Board, subject to internal and Board of Directors approvals, as per corporate governance procedures.

Key financial metrics
Six months ended 30 June KZT billion unless noted) 2023 2022 Change

Group’s consolidated revenue 618,7 493,7 25%
Operating profit 252,5 172,8 46%
Net profit 222,3 167,4 33%

Earnings per share attributable to owners (basic and diluted), KZT/share1
695 467 49%
Adjusted EBITDA2 331,2 224,5 48%
Attributable EBITDA 278,3 182,8 52%
Operating cash flow4 419,8 256,2 64%

1 Calculated as: Profit for the period attributable to owners of the Company divided by total share capital, rounded to the nearest KZT.

2 Adjusted EBITDA is calculated by excluding from EBITDA items not related to the main business and having a one-time effect.

3 Attributable EBITDA (previously “Adjusted Attributable EBITDA”) is calculated as Adjusted EBITDA less the share of the results in the net profit in JVs and associates, plus the share of Adjusted EBITDA of JVs and associates engaged in the uranium segment (except JV Budenovskoye LLP’s EBITDA due to minor effect it has during each reporting period), less non-controlling share of adjusted EBITDA of Appak LLP, JV Inkai LLP, Baiken-U LLP, MC Ortalyk LLP and JV Khorasan-U LLP, less any changes in the unrealized gain in the Group.

4 Includes income tax and interest paid.

Operating and Financial Review and Financial Statements
The Operating and Financial Review, and Consolidated Financial Statements (unaudited, reviewed) provide detailed explanations of Kazatomprom’s results for the first half-year ended 30 June 2023 with guidance for 2023. This press release should be read alongside these documents, all of which are available at www.kazatomprom.kz.

Changes in the Group structure
In the first half of 2023 the Group completed the following transactions:

According to the plans for the sale of non-core assets as presented in the Company's 2018 IPO Prospectus, a contract for the purchase and sale of 40% of the shares of Caustic JSC was signed on 30 December 2021 between Kazatomprom and United Chemical Technologies Trading house LLP. On March 28, 2023, United Chemical Technologies Trading House LLP made full payment according to the purchase and sale agreement. On April 07, 2023, Central Securities Depository JSC transferred shares from Kazatomprom's account. To date, the transaction has been completed in full.
Kazatomprom received a certificate of state registration of a new entity Taiqonyr Qyshqyl Zauyty LLP, aimed to implement a project for the construction of a sulfuric acid plant in the Sozak district of Turkestan region. The participants of Taiqonyr Qyshqyl Zauyty LLP: Kazatomprom (49%), RU-6 LLP (25%), Kazatomprom-SaUran LLP (26%).
Revenue, net profit, EBITDA
During the first half of 2023 the Group’s consolidated revenue was KZT 618,744 million, an increase of 25% compared to the same period of 2022 (KZT 493,716 million in the first half of 2022). The increase was mainly due to:

growth in the average realized price associated with an increase in the market spot price for U3O8;
an increase in sales volume in the first half of 2023 in comparison to the same period of 2022 mainly related to the changes in the timing of customer requirements and the resulting differences in the timing of deliveries for first half of 2023 and 2022;
increase in revenue from uranium products (fuel pellets), and UMP segment rare metal products.
Operating profit in the first half of 2023 was KZT 252,497 million, an increase of 46% compared to the same period of 2022 (KZT 172,818 million in the first half of 2022). The increase was mainly due to higher revenues in 2023 as indicated above.

Net profit in the first half of 2023 was KZT 222,333 million, an increase of 33% compared to the same period of 2022 (KZT 167,374 million in the first half of 2022). The increase was mainly due to higher operating profit in the first half of 2023 as indicated above. There were no significant adjusting one-time effects during the first halves of 2023 and 2022. Profit for the period attributable to non-controlling interest decreased during the first half of 2023 compared to the same period of 2022, was influenced by the compensation to the Government from MC Ortalyk LLP.

Adjusted EBITDA totalled KZT 331,248 million in the first half of 2023, an increase of 48% compared to the same period of 2022 (KZT 224,457 million in the first half of 2022), while attributable EBITDA was KZT 278,257 million in the first half of 2023, an increase of 52% compared to the same period of 2022 (KZT 182,825 million in the first half of 2022). These changes were mainly driven by a higher operating profit on consolidated level and a higher EBITDA of JVs and associates mostly affected by the growth in the average realized price associated with an increase in the market spot price for U3O8.

Cost of sales
Cost of sales totalled KZT 320,543 million in the first half of 2023, an increase of 10% compared to the same period of 2022 (totalled KZT 291,532 million in the first half of 2022) mainly due to higher sales volume of U3O8 in the first half of 2023.

The cost of materials and supplies was KZT 194,574 million in the first half of 2023, a decrease of 4% compared to the same period of 2022 (KZT 202,194 million in the first half of 2022) due to decrease in the proportion of sales of uranium purchased from JVs and associates, as well as from third parties (when such uranium is sold, the cost of sales is predominantly represented by the cost of purchased materials and supplies at the prevailing spot price with certain applicable discounts). However, the purchase price of materials and supplies, including U3O8, increased as a result of inflationary pressure and an increase in the spot prices.

Selling expenses
Selling expenses totalled KZT 13,521 million in the first half of 2023 (KZT 10,592 million in the first half of 2022), a significant increase compared to the same period of 2022. The increase was due to an increase in transportation tariffs.

General & administrative expenses (G&A)
General and administrative expenses in the first half of 2023 amounted to 32,183 million tenge (18,774 million tenge in the same period of 2022).

The increase in G&A expenses includes amount of KZT 11,357 million payable to the government, which the entity is remitting to the Republic's budget for the unaccounted volume of extracted uranium by MC Ortalyk LLP. Additionally, the Company has accrued a provision for the payment of compensation to the second party of the entity, amounting to KZT 4,657 million as explained below.

Provision for compensation payment for unauthorised volume of uranium produced at Zhalpak field

Provision for payment of compensation for the unauthorised volume of uranium relates to MC Ortalyk LLP (hereinafter- Partnership). In October 2017, the Partnership obtained a Contract for uranium exploration at Zhalpak field for a period up to 31 May 2018. In May 2018, the Ministry of Energy of the Republic of Kazakhstan agreed to extend the exploration period under the Contract until 31 December 2022 for performing evaluation works. However, the approval process of the Project of Evaluation Works by the Ministry of Energy of the Republic of Kazakhstan was delayed. In May 2020, the Partnership stopped all work that was reported to the Ministry of Energy of the Republic of Kazakhstan by information letter. Test production was stopped in April 2020. In December 2021, the Company transferred subsoil use rights to the Partnership. The volume of unauthorised uranium at the Zhalpak field for the period from June 2018 to April 2020 amounted to 162.454 tons. In early 2023 the issue of paying compensation for the unauthorised volume of uranium began to be actively discussed with the government authorities. According to preliminary calculations, as of the reporting date, the amount of compensation to the Government is KZT 11,357 million.

On 15 August 2023 MC Ortalyk LLP paid a compensation of KZT 11,404 million to the Government for unauthorised volume of uranium including exchange rate difference at the date of payment.

Provision for compensation payment to the second participant of the subsidiary

According to the sale and purchase agreement of the 49% stake (hereinafter- Agreement) in the MC Ortalyk LLP, in the event of an obligation of the Partnership in respect of any unpaid amount in exceeding the threshold of 2,000,000 US dollars not accounted for as part of the sale and purchase of stake in the Partnership, and that occurred before the second participant joined the Partnership, the Company is obliged to reimburse 49% of the compensation amount to the second participant, except for the amount at the established threshold in accordance with the Agreement. Taking into account the obligation of the Partnership to pay compensation for the unsettled volume of uranium, the preliminary cost of which is KZT 11,357 million, the Company has accrued a provision for payment of compensation to the second participant of the Partnership in the amount of KZT 4,657 million.

Liquidity
The Group manages its liquidity requirements to ensure the continued availability of cash sufficient to meet its obligations on time, avoid unacceptable losses, and settle its financial obligations without jeopardizing its reputation.
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