Steppe Cement (LSE:STCM) — January update, Year Results, Board Changes and Development Project

0:00 Good morning, and welcome to the STEPPE CEMENT investor presentation. Throughout the quarter presentation, investors will be in listen only mode. Questions are encouraged, and they can be submitted at any time by the q and a tab situated in the right corner of your screen. Simply type in your questions and press send. The company may not be in a position to answer every question it receives in the meeting itself. Have the company can view the questions submitted today and publish responses where it's appropriate to do so. Before we begin, I'd like to submit the following poll. I'd now like to hand you over to Javier Del Ser. Good morning to you, sir. Good morning to everybody. My name is Javier Del Ser. I am the executive chairman of STEPPE CEMENT, and I have been the CEO of the company for the last twenty years. We have got a wider presence on the markets before, but at the moment, we are we are have a smaller footprint, but we still have a important name of a small minority shareholders to which I would like to take this opportunity to to try to raise our profile and and let you know how the company is doing for the last few years and what the future is. For those who never have the chance to look at the company before, I'd like to give you a small corporate video, last a couple of minutes on how the factory look like. It's in the steppe in Caraganda.

1:10 It's a big facility with a huge quarry and a number of cementless. We have six. There are four or ones we close them, but you will see now in the little video how the factory looks at the moment. It's a it's a it's an old factory. We spent quite a bit of money refurbishing it, and it's doing quite well as you can see on the numbers. So please please play the video now. Central Asia Cement is a leading company in the cement industry in Kazakhstan. It was the first manufacturer that built a new line operating the dry method of cement production in 1978. The history of the cement plant in the village of Aktau, Kartaganda region began back in 1933. Due to the large number of limestone deposits, the village and the original quarry were given the name Aktau, which means white mountain in Kazakh.

2:02 Ninety years later, the quarry and the factory are still operating as part of STEPPE CEMENT Group and remains one of the largest cement producers in the country. The original factory has been upgraded with the latest production and control equipment and is fitted with advanced filters that provide a high degree of protection for the environment. The factory continues to invest to lower energy consumption and emissions. Thanks to the introduction of advanced technologies, the company is on path to achieve a production of more than 2,000,000 tons by 2025. The plant has over 800 direct collaborators that receive continuous training. Additionally, more than 700 people work regularly as subcontractors.

2:51 After nearly one hundred years of operation, it remains a pole of industrial development in the region. Our company's products have achieved the highest quality certifications and the in house laboratory has the latest equipment to control daily the output and stability of the production. The factory produces many types of cement with a variety of additives and sells them with its own fleet of tankers. Cement is shipped in bulk in bags of 50 and big bags of one ton. Our cement is of consistently high quality and has always been in high demand. It was the first choice to build most of the structures in Nur Sultan and Karagana for the last two decades.

3:37 Significant objects of the capital and the republic were built from our cement. Expo, airports, roads and highway infrastructures, city communications, and tens of millions of square meters of housing. Central Asia Cement is happy to be an active partner of the growing cement industry in Kazakhstan as a leader of the developments of the industry and as an expert adviser to all our clients. Okay. Thank you. We are back online. So now we will we'll present a little bit what the factory has been doing. I mean, what who we are and and what the plans are for the future.

4:25 So if we can move to the to the first slide. As as you mentioned on the presentation, we are the biggest cement manufacturer in the country, and we are the main supplier of cement to the center of of Kazakhstan with a population at the moment of two and a half million people out of a total population on Kazakhstan of 20,000,000 people at the moment. The majority is located in the the South around the area of Chinquen to Almaty, which includes Parleet, Pasquen and a bit of Bisque. We achieved, we had a very, very good year in 2025. We achieved sales of, 2,070,000 tonnes, which is our record by far. It's it's maximum capacity of the factory now. We were a bit lucky because we carried some stock from the years before, so we managed to sell most of it during the season. And and the sales continue to be strong at the beginning of the winter, partly helped by very good weather.

5:20 Because of that, the prices did not drop significantly, at least on Tengue. Of course, in dollars, we have a significant devaluation. But in Tengue, the price have been stable and maintained, and they are continuing to be maintained at the moment through the winter as we are. The company has been listed in name since what if it was listed in '19 in 2005, and so it's now twenty years. And, basically, we have 290,000,000 shares. We haven't changed the number of shares for at least the last ten years. We we don't have a debt. We have no debt at the moment. And we've been paying consistently dividend for the last, at least, for the last five or six years. We own our own limestone. We own our own clay quarry.

6:05 We can get iron ore, gypsum really close, and we have a big passing of coal. The Caraganda coal is very famous. We have a lot of coal of different qualities within driving distance. All of it is driving distance. So if we were to build this factory again from scratch, it will probably cost us, given that we have a big fleet of tankers and bargains, locomotive infrastructure, probably will cost us, like, $250,000,000 to do it from scratch. So we I have two cement two two website. If those who want to look at it, we have a cement site which website which is STEPPE CEMENT, which is the public company, and then we have a local website by local regulations called CAC. You can get some pictures and information about the product we sell and how do we operate. So CAC is the brand is the brand of the company and the and the way that we continue to develop in Kazakhstan with the CAC brand, which means Central Asia Cement.

6:56 The market has been a bit of a surprise to us in the last couple of years, particularly this year, 2025 was quite strong. We had a business growth of close to 20% of the market with more than 40,000,000 tons sold in 2025. And price is slightly higher in Tengue, of course, in dollars. They were lower than in in Tengue. Thanks to a very big industrial effort, we managed to mark maintain our market share, at 14 and a half percent. And at the moment, the on the production of the lines line, we have two dry lines operating. We call it line five and six because once lines one to four were the all wet lines that we shut down substantially eight years ago because of the high cost of production. And, we concentrate on developing and improving the two dry lines. So line five can do, at the peak, 3,400 tons per day of clinker, while line six can do 3,000 tons per day of clinker. And these online six, we will where we will concentrate our efforts in the next in the next two years.

8:00 We we have cement as you can see in the little boxes. We use animal names for the different qualities of cement, different additives, different strengths. So we have snow leopard, saiga, verkutis, Most of those are the national animals of Kazakhstan, which actually, they're national, but they're very difficult to find, particularly the snow leopard. We have the business has been, as I mentioned, good in terms of volume prices are not very good in terms of historical numbers because the thing has the value quite fast, but, we still managed to make a EBITDA margin in twenty to five estimated at around 1212%. We'll have accounts as usual in in the summer before the at the beginning of the summer, but we estimate at the moment around 12% margin. We we the cash we generate in 2025, as you are aware, was used mostly to to return money to the shareholders and some CapEx. So we maintain quite a bit of high cash balance at the end of the year in excess of $10,000,000, and this is partly because we wanted to do a a big refurbishing plan that we decided recently and we announced on the market only a week ago.

9:08 So the plan at the moment is to use this cash plus some banking debt without taking too much risk to expand the production of line six from 3000 to 4500 tons per day. We are quite experiencing in this little improvement because we did it for the last four years. So we hope that, it will continue to be, at this level in the next, in the next two years. And then as the fact that we'll come in 2019, 2027, straight away be able to increase the sales in a yearly basis to 2,500,000 tons. So the plan is to try to go from 2,000,000 tons to 2,500,000 tons in without incurring too much cost, too much debt and and and they'll be on time. So we spent quite a lot of time preparing this work. We'll talk about it later, but the plan is to keep the factory running as they are for the next fifteen months and then stop in one go as a period as short as possible and then do all the hookup of the new equipment.

10:07 If you look at the historical consumption of Kazakhstan because we are wondering where the Kazakhstan consumption can go, Cement consumption has to do with GDP growth, population, and and and age of people as well. So younger countries consume more cement because they need more housing. And, and and then countries which are richer tend to consume less cement because infrastructure is built. So Kazakhstan is now, like, a growing medium level income with a fairly high, amount of cement consumption at around 700 kilos per person, which is considered high. There are cases where it can go high. It can go to 800. It can go to 900. It can equally go down to around 500,600. So we have seen on the last twenty five years of operations at the beginning, we have very high growth per year. We have GDP growth of 10% and increase of cement on the early two thousand of 25% per year on average.

11:02 We have got low years where the GDP was flat most because the issues with oil prices or commodity prices. Those year, the cement sometimes was reduced to 8%, some years, the cement consumption. And we are in the period which is in between with GDP growth of four to 6% and cement growth that can be between 212%. This is where we are at the moment, 12%. So this year is a bit of an outlier because we think GDP growth probably was around 5%, while the the cement the increase for cement the the money for cement increased by 20%. So it's a bit of an outlier this year, 2025. Normally, we should not expect this type of growth going forward as much as that. However, the population is still growing. Kazakhstan had crossed last year to 20,000,000.

11:48 And if you look at the pyramid of population on the on the left, they have a gap, but they still it's it's considered a young country. So there is people are having kids. The average share of the average age of the Kazakh population is is is at least 20 lower than Europe. So the there is a potential in terms of demographic potential in Kazakhstan. Per ton, I think we are already at a fairly high level, but there is a potential for a little bit of growth still based on the number of people. And there is still some movement to the city. So although the urban population of Karakandar is 70% already, there is still more people moving to Almaty, to Astana, and to Chinquen fundamentally, which are the three cities that are growing more. Later, cities like Caracan that are still growing, so they are basically taking population from the villages, and and people are moving to the city system.

12:39 So there is a potential to steal a bit of growth. And and on this basis, plus the fact that we think we have a little bit of potential in the market, we decided to go ahead and expand the factory to maintain or maybe increase a little bit of our market share. Historically, as you can see, this year has been, as you mentioned, 2025, a bit strange, a bit of an outlier because we had, like, a 4% growth of of demand consumption historically for the last ten years, but this year has been quite extraordinary to certain extent. So but GDP has been doing well as well. So we have fairly good GDP of 5%, 4% most of the year. So it's been driven by by this GDP increase. Apart from this particular year, was the cement went a bit ahead of GDP.

13:24 So it's a mix of weather, good conditions, and and general optimism on natality. So this is a bit of an outlier here, but, I mean, it allow us to pile cash. It allow us to build some reserves for the the coming project. The market in Kazakhstan is divided in regions. The biggest market by far and the most attractive is the South market where you have the cities of Tasken. In Uzbekistan, have Biscay, you have Chinquen, you have Taras, you have Almaty, you have then you have a number of cities, and and the overall market on the South of the country is in excess of 7,000,000 tons. So there is more than 7,000,000 tons on the country, and and it's it's growing faster than the others as well. So the market on the South is approximately 7,000,000 tons. Of course, it's the place where there are more factories. The new factories that were built for the last three years mostly concentrate on that market.

14:23 The West Market on the upper left is a market which is the is like a different island. There are there was only historically one factory belonging to Heidelberg in Aktau. There are more factories now coming up, and there is a factory in Russia which imports around a half a million tons of cementing tool into the Aktobisky area. But soon there will be a couple of factories there. So that market will become more balanced. The market there, it can represent approximately 1,800,000 tons. And and at the moment, it was set by the factory, but it will be soon. So the three three factories in Kazakhstan, plus one big factory in Russia imported into Kazakhstan. The central market is approximately 3,000,000 tons, and this is where we operate. We have approximately a 60% market share there.

15:09 And this is the cities of Caraganda, Temertau, and Astana, the main city. And then we have lateral cities, which are sometimes supplied by Russia, sometimes supplied for the factories on the East. And now we have we think there is a little bit of potential for us to grow maybe half a million tons in the coming two years, given our advantage of costing plus transportation. On the East, there is approximately a 1,000,000 ton market. There are three factories of which this market has been traditionally a mining market where mines consume cement and and two small cities, which come in Agosk and and Semipalatinsky. Those factories are both wet, so they are not competitive over the long distance, but they still supply comfortably the local market. So there is the only two wet factories remaining in the country are both located on East Kazakhstan where the market has been not growing too much and and the potential for growing given the lack of big cities and and mostly the mining business is more difficult to to to think is gonna grow.

16:13 In terms of the market share of STEPPE CEMENT, we have been hovering for the last seven years, actually a bit more to around 15% market share. Fundamentally, because we didn't do any investments to grow the the business since 2017, so we have not done any significant investments. So for '16, we did the last big big expansion in '15. We improved a bit the factor, and then, basically, we just stay as we are, and we slowly lost market share, particularly in the South, to newcomers. So we went from from a peak of 19% to around 15% at the moment, depending on the month. This is one of the reasons we want to correct. We would like to go back to ideally a 16% market share in the market.

17:01 So the selling price of cement, which you can see it in in green, I mean, it's we we are reporting it in dollars for most of people who are foreigners to understand how it works. In reality, Tenge, the prices has kept going up, but there is quite a lot of inflation in Kazakhstan at the moment in excess of 12%. So you can see the price of cement that peak at $57, and and and is now around $48 per ton, 47, $48 per ton delivered. I mean, at the peak of the company, in my my life, we have a fantastic year back in the best year where at the beginning in two thousand and six, seven, we have a cement price European standard of around $80.90 up to a $100 per ton. But now for the last few years, we are looking at lower prices in dollars, around the $50 mark, sometimes $45 mark, that give us this factory price that will hover around the limit of 40 to $47 per ton. This is where we've been playing at the moment. Of course, costs are well aligned with the the selling price. So there is a significant amount of competition by all the factories, and therefore, it's difficult to get the prices to raise.

18:09 At the same time, the the costs are are in tenge. Most of our costs are in tenge. So therefore, we can actually maintain a balance and still keep, I will not say, decent EBITDA margin, but at this time, an okay EBITDA margin. For those who are like historical number, this is the figures for cement we have for the last year. So basically, this table, you have the selling price delivered, the number of tons we sold. So and then and then the the turnover as well as the EBITDA numbers. So we had we were we have very good EBITDA numbers on the twenty twenty to twenty fifteen, where where basically price of cement were at $75.78. Then 02/2015, we hit much lower prices. You can see '49, 3453.

18:56 It it recovered slightly in the years around the year eighteen to twenty. And and and at that point, we managed to get good EBITDAs in the region of 20 to $30,000,000 between 2018 and 2022. Prices in dollars dropped fundamentally because of the devaluation of a tenge from twenty twenty three, twenty four and now '25. So we managed to maintain the factory in good shape, but with lower EBITDA. So we we have to we would like to keep paying as we did before sometimes higher dividends, but but we we took a very conservative approach to not increase the debt. So as you can see in 2010, have $64,000,000 of debt. It was more or less paid off by 2017. This helped us a lot to survive. And since 2017, we never got any significant debt. We managed to buy baggles. We managed to do investments on the factory, but we never take big risk. This allow us that if anything happens on the market, we can survive comfortably. It's a very conservative approach to to running the company. We try to have little debt or no debt, and and and we do CapEx, and we balance between CapEx and dividends. So we tend to do the CapEx we need to maintain production, and and then we pay the rest as dividends.

20:09 This is the exception is now where we decide to go ahead and do an expansion because we thought the timing is right and we will know if a decision was good in a couple of years. As you can see the exchange rate as well on this figure from 2020 to now, we got from $1.48 to 522. Let's say, you if you take it to the stable exchange rate in 2013, a hundred and fifty three, so that is only twelve years. In twelve year, the ten year has gone down three and a half times, which is very significant. That's the reason why if you look at this figure in tenge, the numbers look completely different that that they were before. So but but as I mentioned for the for for the reporting to the stock market, we have accounts in dollars, and we pay dividends in in pounds. So it's probably better that we report cost and sales in dollars.

20:58 In terms of what we are trying to do at the moment, which is the new project. If people will ask us why are we doing this project and why are we, actually, decided at this point in time to that is worth doing that. A combination of things. Number one is that we were looking for the last four years of which projects which is more price we'll be able to do in the factory with little investment that will allow us to improve production little by little without high risk. So we put, additional separators on the mix. We changed the the inline case a little bit. We've been changing and touching the kiln, and most of the changes we implement were successful. So it means that we didn't take a lot of technical technological risk. So we thought if this is working for what we have done so far, it seems easy to extrapolate to limit the industrial risk of these changes in an old factory.

21:53 Then we decided to see if it was possible to do that with minimal stoppage. We came to the conclusion that we can do the the new implemented changes in a window of around three months in 2027. So the combination of being able to do it without much industrial risk, given giving us an increased capacity of 1,500 tons per day or 2,500,000 tons and lower the cost at this time because we'll save, we'll save energy in terms of electricity in kilowatts per ton and kilocalories per ton. We thought that will be a is a is a good return. Even at the current low prices of cement, we thought it would be a very, well, very no, but at least a decent return on capital invested of of approximately $2,530,000,000 dollars. We look at at the same time as the government requirement, what the government would like us to do in terms of ecology, licenses, so we decide to do everything at the same time. This has increased our cost a little bit, but we think it it will give us a certain amount of goodwill.

22:56 We hope with the government and the local authorities, the fact that we have a very, very modern technology. In the in the factory, so there was no issue about us not being able to invest and and maintain the the cleanness of the site, which has improved dramatically since we came in, but now it's getting even better with this new project. We have basically all the filters will be will be of of high performance filters. So we decided to invest in $30,000,000 on the factory plus 5,000,000 in the college improvements. That's basically mostly the filters for the for the clay crusher, for the boiler, and from the clinker of line six that will remove for the particulars small particulates emissions to the atmosphere. The project is not simple. There are a lot of little project. That's reason it's cheap.

23:44 We are basically building, a new half a million ton facility for only $30,000,000. So it is a lot of little projects. We have five new project managers that have come to the factory, plus a main contractor in Sinooma from China who will be coming to help us in approximately 10 projects. And and the rest will be done with the local contractors. So the the break is fairly advanced in terms of organization. We are starting in in February, and and we will keep the the stock market and the shareholders upgrade of where we are at the moment. We try to publish images of the jobs and and and impressions of the factory. We hope to complete then the project in eighteen months, so have the factory back up and running in the summer of two thousand and and twenty seven. So I have prepared now a list of projects that we are going to do, and then we'll explain physically how it is. The main projects for the factory is to start a new dynamic separator. At the moment, raw mill number four can give us approximately 90 tons per hour. With this project, we'll be able to increase to a 125 a 125 tons per hour.

24:51 We are lacking the factory that in Soviet times, we have a mill number field built and a mill mill number of mill number five built, but it was not fully fitted. We are going to buy a new meal, but we have the foundations, the building, the transport. So for a reasonable amount money, we'll be able to include a new meal in the system structure. This meal will be similar to, once again, a 125 tons per hour. So we'll have three meals of a 125 tons per hour feeding line six. Because the volume of material that has to be increased, that has to be taken to the upper part of the roof of the tower will be, bigger. We have to put a new elevator. So the elevator will be taking the material to the top. It will be a new elevator for approximately 400 tons per hour. And, of course, because the capacity increased 50%, we have to increase the size of the filters, the fan, all the lateral equipment.

25:42 One of the things that will help us a lot in terms of coal savings is the new in like consignor. So we are gonna increase the height and the length of the in like consignor that will allow us to have better burning of the material in a vertical status, and then that will allow us to to save probably 50 to 70 kilocalcals per ton. To that extent, we are going to as well use the opportunity with a new crane to modify the apple sequence the apple cyclones of the preheater that will give us better recovery as well. We'll save some calories there as well. And, of course, because production is up 50%, we have to increase the coffee to the preheated tower because most of the burning now will go from being in the kiln as it was historically done to the majority being done on the on the preheated tower and the cyclone and the in lichen sign. We take the opportunity as well to put a new tertiary adapt, which is a standard in modern cement factories, but ours didn't have it. Line five has it.

26:34 And finally, the the thing that will help us probably most on the project is a new cooler. We were anyway thinking of changing the cooler for the last four years. So our cooler has certain design mistakes that make us break often. So we we tend to lose between fifteen and thirty days a year every year in an scheduled stoppage for the cooler. This this new cooler, we hope to be much more reliable and stable. So this is one of the key projects. I mean, two key projects here are basically the cooler and the roaming. These are the two things that basically have more to do. We are additionally touching the kiln a little bit. We are gonna change both seals on the kiln and some sections, which we have already in storage because we we need to increase the the the speed of the kiln a little bit around 15 to 20%.

27:24 So now I will play for you a small animation physically to understand where these where these changes are happening physically in the factory, and you can have a look at the at this animation. So here, you can see the main cement factory five from the left to right. This is the new this is the new raw meat, which is gonna be built inside the existing building. Then we are going to we are going to add in the upper part of the factory two stories and put new cyclones, and we are gonna put a new light inside as well. Then on the back, we are gonna put a new raw meat elevator going to the top 400 tons an hour. We are going to add sun section of the kilns and the two shields to increase the speed, and we are going to add a new cooler of 5,000 tons per hour. And we are gonna put a new tertiary air duct that at the moment we did not have. And we are gonna bring some inner gas to warm the the coal mill as well.

28:23 So this is the location. And, of course, we need a a crane to to coordinate all these place, a big crane going up a 100 meters. Okay. So this is, this is the this is the plan we have. We hope this, as we announced, will increase our EBITDA by approximately $8,000,000. All things are staying the same. I I just corporate wise, I have a couple of slides here to to introduce the board. I was hoping today that, Piotr, the new CEO, will be in the board, but, but he's personally he has a personal issue. He can he's not available. So after all these years, I will become the new executive director. Rupert Wood has been with us for nine years. He'd become the senior independent director. Saiida Yarabulova, which is a person quite known in Kazakhstan, is an independent, a new independent director. She's a banking executive with lots of experience in finance in Kazakhstan and in Europe. She was she has been in ING for the last for the last, well, twenty years, I think. And she recently returned to Almaty, and he's, I think, would be a very good addition to help us for local knowledge connections and the financing.

29:34 And finally, Afan, which has been with been with us for two and a half years already, he's the he's the son of the major shareholder of a company, so he's been with us for for two years already, and he helped us with all the Malaysian requirements of the company. Finally, for those who want to know what are the spread of sales, this information is available on the website, but the main shareholders of the company are co familiar the family of Tancias, maybe one Hamza, the family of David Watt, which now be transferred to Claire Barnes, my family, and Fiber. These are the, at the moment, the five major shareholders the five major known shareholders of the company that we we would like to that we have then disclosed in our website.

30:26 So I think this ended the presentation. We are now basically available to take any questions. So I can see this presentation is not over. We will just take it we'll take questions from the from the people who have sent us the questions, and and I will answer whatever you wanna ask me. That's great. Well, Javier, thank you very much for your presentation. Ladies and gentlemen, please do continue to submit your questions. You can do so just by using the q and a tab that's situated on the top right hand corner of your screen. But just while Javier takes a few moments for the questions that have been submitted today, I'd like to remind the recording of the presentation along with a copy of the slides and the published q and a can be accessed via investor dashboard. As you can see, we have received a number of questions both pre submitted and throughout today's live presentation.

31:12 And Javier, if I can hand back to you at this point to run through the q and a, I'll pick up from you at the end, sir. Thank you. I will start looking do it on the order that they have been received, so it's easy for for me to understand. The the first question is about the restructuring of the company. We've been progressing quite a bit on restructuring. We have finally managed to close the first stage of the of the company in Netherlands. We are gonna at the moment, we are we are basically transferring the shares from the from the Dutch company to the Malaysian company. There have been, in the meantime, a number of changes. So number one is that we can pay some dividends without withholding tax if we go straight to Malaysia. There is a limitation, think, the moment is $2,000,000 without additional tax, and we can pay more, but we have to pay still withholding tax.

32:02 So this capital reduction has allowed us to basically save a significant amount of money on withholding tax and, risks as well in terms of the Kazakhstan the way Kazakhstan look at these holding companies in in jurisdictions. So we have now completed the first stage, which is closing the Dutch company. We will try to do the same in Malaysia. We have not decided what is the final structure at the moment, depends on how the legislation evolves. So we can, at the moment, pay part dividends, part capital reduction. It will depend really on the amount that we agreed to pay in terms of dividend withholding tax. At the moment, there is a new allowance to pay some dividends without significant withholding tax. And then after that, you have to pay quite a bit. So we will decide the amount depending on the advice we get from our tax advisers.

32:58 The second question is is about what the market will do this year, about what we'll do the next two years when we are already at full capacity. Well, depends on the market, of course. If, traditionally, when all the factories are working well and there is no more capacity coming in one year, which is gonna be this year, probably prices will raise if the market raise. If the market stay the same prices, probably will raise a little bit at least with inflation. And then, of course, inflation will have to be translated into into dollars with depending on the on the value of the currency. So at the moment, we think the market is gonna hold this year, probably increase a bit, and the prices probably will increase a bit at least in tenge. We cannot sell anymore. So most likely, we sell less because we have less stock than when we start last year and the factory can do probably the same as last year, a little bit better, but we don't have as much stock as we carried last year on the books.

33:48 So we expect us to do a little bit less volume and and the market to increase. So probably we may have higher prices in thinking, but as I mentioned every year, only when when when we'll be close to the summer, we will know the tenders. The the beginning the price trend is more or less fixed by May, June. Before that, we don't know what everybody will do. People can decide to sell early the stock to change the market and depends on where people focus their market. We may have bigger or smaller competition. Now the, the next question is about the payback period. At the moment, we estimate with current prices, current margins, everything we estimated by that period to be below below, four years. Probably can be three if we are lucky with the prices. Probably, it can be five if the prices are not good.

34:36 And we took the reason we took the decision to make it because the payback was below four years. Some of the investments, we have to do it anyway whether we like it or not. The cooler had to be changed because we are gonna face one day a bigger problem. So the cooler was designed long time ago in the Soviet times, and clearly, the design was not suitable for continuous production. It was geared for very long maintenance period we cannot afford at the moment. And and and the ecological investment we are making of approximately $5,000,000 a government requirement, we've been trying to postpone and do not so much because it's it's very expensive and but we we decided that basically the time to do it is right. So if you look at it, the payback of the project itself is four years. The ecological have little payback, but we need to do it anyways. It's it's a need. Another question I got as well is capacity online from competitors.

35:27 So the competitors in our region that is at the moment not coming, the region is well supplied. The competitors are coming at the moment, the more the project that are coming will be there's a project coming on the region of, Atubisky, where at the moment, there is half a million tons imported. So most of the projects have come and may come in the South and the West because there is more demand, there is not only the demand of Kazakhstan. You have Biscaycan. You have Tasquen. These are big markets. So in the region which are in a radius of probably 500 kilometers, you have a market which probably is in excess of 30,000,000 tons. It's a very attractive market. You can have easily 10 factories there. So it's at the moment more or less balanced, but if as there are big cities and they may grow, there may be more people coming to the South. On the West, there is only one factory at the moment. This is where people are putting a factory now. Hopeful to the hopeful hopefully, are trying to replace the the Russian factory, the imports from the Atominsk region.

36:21 Now another question about the savings. We expected savings in terms of energy to be around $2 per ton independent of the volume we sell. That's basically variable cost. That way, we are expecting to have $2 per ton in the price of variable cost. Because the fact is gonna be the same, we'll have no increase in fixed cost. Same personnel, same everything. And probably we will lose we will lower the maintenance cost. So we will we will lower the maintenance cost. Lowering the maintenance cost will allow us to to to save a little bit in general expense. So we will not employ more people to run the project. And on the other hand, we will try to we will try to reduce general expenses by by compressing the maintenance, particularly in the cooler area and the mills because that's that will be new areas, so we'll probably have to spend less money. So we hope to have a slightly lower general expenses, and and and variable expenses will go down by $2 per ton.

37:17 Let me see if I have some more questions. We somebody asked me as well, why are we financing the project in tenge in dollars per than in tenge? At the moment, our cost of money in Kazakhstan is approximately 22% in tenge, 23%. The interest are very high for industrial. And, in dollars, it's possible to get money at approximately between 7% is possible. That means that we are better off in dollars unless there is a 15% yearly devaluation. So that's gonna the bet is basically simply it's a bet, like, in it's a bet saying that we cannot hedge because hedging the dollar into tenge will cost us at least 15 or 17%.

38:03 So if a tenge goes down less than 50%, it's been a good operation. If tenge goes down more than 15% per year, it's a bad operation. So that's the reason we do it. So they asked me as well when the war will start. We intend to stop the factory in April 2027 mostly because the weather will be good. We need a lot of welding, so we need to do the metal works on the summer, not on the winter. It's less risky for the project. So if everything goes well, we'll prepare all the equipment in advance. We'll do all the building in the next fifteen months, and then we'll just hook up in April to 06/20/2027. That will be our hookup time. In terms of taxation, somebody has no taxation. At the moment, there is no incentive for refurbishing works of cement factories in Kazakhstan.

38:56 If you were to do a brand new projects, you can negotiate, but the government has lost a bit of interest in having more cement factories. They believe the the country is well supplied, so there is no incentive at the moment. That is probably good to avoid too much competition in the future. I mean, the factory the the country is well supplied by cement, so we all hope there will be not too many more players because that will that will make the business not so good. But at the moment, there is no incentive for that. Somebody asked me about the inflation, indication of inflation on the on the factory and on the country. Official inflation figures on the country are around 12%. Traditionally, inflation on food for people is higher. That's what's been traditionally the issue. Food inflation is much higher, but when you mix it together with day to day life fuel and computers, it goes to around 12% for last year. There's been a very big inflation in Kazakhstan, both in the housing and particularly in the factory market in electricity for the last three years.

39:55 Because the country needs more electricity because of increase on population and industrial development, they have increased very significantly the price of electricity, which is, I will not say, world level, but we are looking at price of electricity of $5.06, sometimes 7¢ US per ton, which is much higher than the $2.02 cents, 3¢ we have on the past. Traditionally, the the government has asked the industry to subsidize the population. So prices for industry used to be high, which is a bit odd to understand, but that's been the case. It seems that we understand at the moment that the government has decided there will be no increases this year after the big increases the last three years. And that instead they will be increasing the price of the riches to the population, but we will see how this work out because socially we need they need to understand whether it's gonna be acceptable or not. So, basically, this is at the moment I think I have no more questions at the moment. So if if there are no more questions, then then unless Alex or Alexander, you want to ask me some questions, basically, that's all I got at the moment.

40:58 Perfect. Well, Javier, if that's everything, what I'll just do before redirecting investors for their feedback is just ask you for a few closing comments. Okay. Thank you, Alex. So, basically, this is a 2025 has been a good year in terms of pricing, in terms of volume, better, of course, volume than pricing. The factory stuff is motivated. We have all decided to push together with with the support of the major shareholders as well that we are going to go ahead and borrow the money and do this project. We are confident that this will bring to us stability in the production and the potential to set up to one 2,500,000 tons and hopefully at good prices. We are take we are taking a little bit of risk in this $25,000,000 banking loan, which is, I think, for us quite achievable to pay back. We need a couple of good years in terms of production and sales. And with this in mind, we will continue to run the factory in a conservative way. And of course, any excess cash we have and we think is not essential for production, we will continue to give it back to the the shareholders that we did the last many years. So thank you everybody to coming for coming and listening to this. Thank you for your confidence as, shareholders, so analysts, so interested parties into interested them in, and we hope to see you soon in this platform.

42:15 Thanks a lot. That's great. Well, Javier, thank you very much for updating investors today. Could I please ask investors not to close the session as you now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. Apart from management team, STEPPE CEMENT, we'd like to thank you for attending today's presentation, and good morning to you all. Thanks a lot. Bye bye.