While all Performance Standards are applicable to this investment, IFC’s environmental and social due diligence indicates that the investment will have impacts that must be managed in a manner consistent with the following Performance Standards: - PS 1. Social and Environmental Assessment and Management System; - PS 2. Labor and Working Conditions; - PS 3. Pollution Prevention and Abatement; and - PS 4. Community Health Safety and Security. Since the project will consist of a diversification of the production lines located in the FEZ, there will not be land acquisition nor involuntary resettlement, and no impact on indigenous people or cultural property under the project, nor is it expected to have any impacts on natural habitats, forests, or protected or sensitive areas.

The project proposed for IFC support is the installation and operation of new production lines, to be located in the Company’s existing facilities in the Bishkek FEZ. The project will include the construction of a new hall adjacent to the two existing buildings where the Company operates. No residential or agricultural properties are affected by the project. The project, therefore, does not require any land use conversion, but only construction works to construct the new hall and install the new equipment. The key environmental and social issues in on-going and proposed operations are: - Capacity for assessment and management of environmental, health and safety (“EHS”) performance associated with existing and proposed operations; - Labor practices and terms of employment of the Company’ staff; and occupational health and safety related to the construction of the new hall, and the operation of all facilities; and - Management of hazardous material storage and handling, and management of waste streams emissions from existing and proposed operations. As a result of its due diligence, IFC has concluded that the potential adverse environmental and social impacts presented by the project and by the existing operations are few in number, site-specific and have been or can be readily addressed through mitigation measures, already identified by the Company. It is therefore concluded that this is a Social and Environmental Category B project.

Magic Box has presented plans to address the impacts of the project and to ensure that the existing and proposed operations will, upon implementation of the specific agreed measures, comply with the environmental and social requirements - the host country laws and regulations and the IFC environment and social Performance Standards and Environmental, Health and Safety Guidelines. The information about how these potential impacts will be addressed by the Company is described in the paragraphs that follow and summarized in the attached Environmental and Social Action Plan (“ESAP”). - PS1: Social and Environmental Assessment and Management System The Company is carrying out, on a regular basis, environmental, health and safety reviews in line with Kyrgyz legislation requirements. The Company has steadily grown in the recent years and the management is committed to play a role in being responsible in protecting the health and safety of the workforce, providing them with appropriate and compliant working conditions and terms of employment, and in protecting the environment. Since its first engagement with IFC, the Company has implemented an EHS function to ensure proper workplace monitoring and implement all appropriate management procedures. Kyrgyz regulations include mandatory education and training for all staff employed, as well as an induction program for new workers. Magic Box has developed a capacity building program and training plan for its staff. The Company employs a technical manager, who is permanently based at the Company’s premises in FEZ and is in charge of coordinating occupational safety and health preventive measures, emergency response and fire safety, as well as worker’s induction and training. Monthly refresher trainings for staff are provided and an adequate training log book is maintained. The Company developed specific work instructions which are posted on each production line, and available throughout the facility. - PS2: Labor and Working Conditions Human Resource Management: Current staff number of the Company is approximately 70. Half of the workforce are women. Staff turnover is moderate at 15 – 20 percent. As the Company is expanding it is not anticipated to have any redundancies in the near future. An additional 25 to 30 workers are expected to be hired upon completion of the project. Several workers are associated with a trade union. The current salary structure is based on base salaries, which are well above the minimum wages, as defined by law, for both administrative and productive functions, and include social security contribution. All workers are paid for overtime and there is a limit of overtime hours that can be worked per week. The Company has a bonus scheme, provides lunch for the workers free of charge, and provides transportation to and from its premises. As part of the actions implemented as part of the commitment with IFC for the first project, labor management tools are being progressively developed to facilitate labor relations and workforce flexibility, including a human resource policy and procedures, covering recruitment and hiring, discipline, compensation, promotion, access to training, retirement, and termination. The Company implemented a simple grievance mechanism for workers to raise reasonable workplace concerns. The management confirmed that employee and management relationship is executed in compliance with Kyrgyz laws, but that they are willing to develop further these tools during project implementation. Company’s management is well aware of IFC requirements in terms of non-discrimination and equal opportunities and protection of the workforce, including child labor, and confirmed that they are complying with these requirements and Kyrgyz laws. Occupational Health and Safety: Since its engagement with IFC, Magic Box has developed a basic occupational health and safety management system. The system includes procedures and work instructions to be applied to each phase of the production cycle, and it also includes relevant work-place monitoring components. Significant improvements were achieved in the existing facilities in the past two years in terms of working environment and safety conditions. As indicated above, Magic Box has a technical manager in charge of occupational health and safety, emergency response and fire safety at the plant. Incidents are recorded and corrective actions identified as needed. Emergency plans are available and posted in the facility. Smoke detectors and a fire alarm system were recently installed, in addition to the required fire extinguishers. Adequate identification signage for fire alarms and fighting equipment was also installed. In Magic Box there are limited safety hazards associated with the production processes, mainly relevant to the presence and use of electrical equipment, cutting devices, and rotating parts. Paper is tailed through the machine manually and then speeded up. There are no operational stages, where operators should come into contact with rotating parts at full speed and cutting parts in operation. Adjustments needed during the runs are made through control panels. All new production equipment, which will be installed, will have appropriate guarding devices, and automatic emergency stops. Other hazards are associated with storage and handling operations, including the operation of forklifts, which will be increased as a result of the expansion project. The Company will develop specific work instructions for the safe operation of the forklifts. The manufacture employs limited quantities of solvents, additives, and other chemicals. Printing is done with water-based inks and natural pigments; the sheet-fed offset uses an isopropyl alcohol (“IPA”) fountain with IPA concentration reported to be as low as 10 percent in the aqueous solution, and UV curing lacquers are used. The equipment and materials selected for the production operations have low or no demand for solvent-containing products. The actual hazardous properties of the materials used in the process are known to the responsible staff and material safety data sheets (“MSDS”) will be organized and made available in the proper storage and handling areas. Noise emissions of all machinery that will be purchased will not exceed 65 dB. The existing production halls are well maintained, ventilated and illuminated, consistent with the need to conduct precision works. Paving and housekeeping is adequate. Dust control is also mitigated through the use of air suction fans, adequate paving, and separation between production areas and paper waste handling area, where dust masks are provided to the workers. The new hall will also be designed to allow good working environment conditions. The Company will ensure that the construction contractor will follow all requirements in terms of worker’s safety during construction. The Company will purchase and start operating a waste paper baler with conveyer, as part of the new project. Dust measurements will be included in the regular periodic monitoring of the workplace conditions. All factory workers are given personal protection equipment (“PPE”) and are provided with summer and winter work clothes. All new personnel have to go through health screening examination at start of their job. Furthermore, there are periodical annual medical examinations for all workers to properly assess labor conditions in terms of occupational health. - PS3: Pollution Prevention and Abatement Pollution Prevention, Resource Conservation, Energy Efficiency. Printing offset plates are of aluminum covered with a photosensitive coating. This coating is exposed to light and an image is formed on the coating, to form an ink-receiving surface. Aluminum surface acts as water receiving surface. Aluminum plates have a normal life cycle that can exceed one million images. Plates are cleaned with solvents but the amount of solvents needed is very small. Electricity, water and infrastructure needed are provided to Magic Box operation by the FEZ infrastructure. Energy consumption is currently at approximately 450 MWh per year, with a specific consumption in the range of 0.25 – 0.3 MWh/ton. It is expected that the new lines will have a more efficient electrical consumption in the order of 0.1 MWh/ton, resulting in an additional 300 to 400 MWh consumption per year. Water consumption by the facility is limited and to the order of 50 liters per day and mainly sanitary water. The Company operates electricity convertor and electricity stabilization equipment, but there are not stand-by generators. Magic Box operations do not generate significant dust/particulate and gaseous emissions to air. Noise is contained within the facilities. Sewage from the facility goes into the wastewater collection and treatment system managed by the FEZ. There is no direct discharge into the natural environment. Waste paints are largely water-based, and only limited quantities are present in the effluents from the facility, with no potential harm to the wastewater treatment systems. The Company has agreed to undertake periodic analysis of wastewater samples taken from the site, before discharging to the FEZ collection system, to monitor their quality, and ensure that they meet the applicable discharge requirements and IFC guidelines. Waste: Waste generated by the Company is essentially waste paper appropriate for recycling to local paper mills. Waste paper collection and handling are currently mainly manual operations, conducted in an area adequately segregated from the production lines, to limit exposure of workers and machinery to unnecessary dust. A waste paper bailing machine with conveyer will be put in place, as part of the new project. This will improve waste paper storage and loading efficiency, as well as contributing to further limit the generation of paper dust. Conventional aluminum molds are recycled or sold to firms which use the material in roof insulation and for the manufacture of crates. Excess pallets are also recycled to the market. Domestic solid waste is collected by the local municipality. Hazardous Materials: Magic Box has dedicated storages for material storage (including chemicals and raw materials) located within the production facility and a ware houses, in the proximity of the facility within the FEZ. Chemicals used for printing are mostly water-based paints and chemicals, including IPA, solvents to clean the offset plates, lacquers and other additives, and anti-offset powder. Some products used are flammable. Storages are adequately maintained with sufficient housekeeping. The Company will ensure that ventilation, fire extinguishers, fire alarms and all relevant safety documentation are adequate in all its storages. - PS4: Community Health, Safety and Security Community Health, Safety and Security: There are no significant community health, safety and security issues for this project. Magic Box is located in the FEZ, and potential interactions with third parties and local communities are limited to safe driving during transport of raw material, products and waste outside the FEZ. Emergency Preparedness and Response: Magic Box has developed a formal emergency response plan in line with PS requirements. A fire safety procedure is available at the facilities. Smoke detectors, fire alarms and fire extinguishers are available and properly maintained at regular intervals. Fire extinguisher use training is provided to all workers during regular training. In an emergency, Magic Box can call the FEZ fire fighting department which has its own equipment. The Company is insured against fire, flooding, terror from an insurance provider based in Turkey. Magic Box is committed to maintaining emergency response equipment, and procedures to identify potential emergency situations (including life and fire safety), to respond to emergencies and to mitigate any resulting safety, health and environmental impacts. Security Personnel Requirements: The Company does not directly contract security personnel, since the production facilities are within the FEZ, which has its own security.

Magic Box is a successful company in Bishkek economy, providing job opportunities for local workers. The project is aimed at expanding production lines in the Company’s facilities located in the FEZ of Bishkek, and therefore there are no directly affected communities. The Company will disclose locally this Environmental and Social Review Summary (“ESRS”) and the associated ESAP, translated in local language.

This ESRS and the associated ESAP can be viewed at Magic Box offices, which are located at: Bishkek, Kyrgyzstan Free Economic Zone Ak-Chi Contacts within Magic Box are the following: Mr. Muammer Akkaya, Mr. Dimitri Kaidalov Magic Box Company Tel: +996 312 600 295 Fax: +996 312 600 294 Email: magicbox2005@mail.ru