REG - Lucky Cement Ld - 1st Quarter Results
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LCK/CS/2019-20/ October 30, 2019
The General Manager
Pakistan Stock Exchange
Limited
Karachi
The Deputy Chief
Securities & Exchange
Commission of Pakistan
Islamabad
The London Stock Exchange
10 Paternoster
Square,
London
Dear Sir(s)
Financial Results for the 1st Quarter ended September 30, 2019
We have to inform you that the Board of Directors of our Company in their Meeting held on Wednesday, October 30, 2019 at 11:30 a.m., at 6-A, Muhammad Ali Housing Society, A. Aziz Hashim Tabba Street, Karachi-75350 recommended the following:
(i) Cash Dividend Nil
(ii) Bonus Issue Nil
(iii) Right Issue Nil
(iv) Any other Entitlement / Corporate Action Nil
(v) Any other Price-Sensitive information Nil
The financial results of the Company consisting of unconsolidated and consolidated condensed interim Statements of Financial Position, Profit or Loss and Other Comprehensive Income and Directors' Report are annexed.
We will be transmitting the quarterly report of the Company for the period ended September 30, 2019 in electronic form, according to Clause 5.6.4 of PSX Regulations as per your recently issued notice reference # PSX/N-4207 dated July 13, 2018.
Yours truly,
for: LUCKY CEMENT LIMITED
IRFAN CHAWALA
Director Finance / CFO
Unconsolidated Condensed Interim Statement of Financial Position
As at September 30, 2019
(Un-audited)
(Audited)
September 30,
June 30,
2019
2019
(PKR in'000')
ASSETS
NON-CURRENT ASSETS
Fixed assets
Property, plant and equipment
58,772,644
57,276,184
Intangible assets
15,635
18,152
58,788,279
57,294,336
Long-term investments
35,115,887
34,313,588
Long-term advances
90,222
99,316
Long-term deposits
3,175
3,175
93,997,563
91,710,415
CURRENT ASSETS
Stores and spares
7,916,161
6,809,724
Stock-in-trade
3,601,161
4,253,020
Trade debts
2,469,849
2,058,719
Loans and advances
808,511
686,525
Trade deposits and short term prepayments
68,438
74,223
Accrued return
88,845
113,869
Other receivables
2,126,888
2,130,907
Tax refunds due from the Government
538,812
538,812
Short term investment
1,074,044
1,055,754
Cash and bank balances
12,948,027
15,657,246
31,640,736
33,378,799
TOTAL ASSETS
125,638,299
125,089,214
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Share Capital
3,233,750
3,233,750
Reserves
89,931,698
91,084,667
93,165,448
94,318,417
NON-CURRENT LIABILITIES
Long-term deposits
188,297
90,264
Deferred liabilities
7,096,935
7,102,483
7,285,232
7,192,747
CURRENT LIABILITIES
Trade and other payables
18,218,724
19,195,617
Short term borrowings
3,350,000
2,900,000
Unclaimed dividend
52,745
53,953
Unpaid dividend
2,193,057
91,119
Taxation - net
1,373,093
1,337,361
25,187,619
23,578,050
32,472,851
30,770,797
TOTAL EQUITY AND LIABILITIES
125,638,299
125,089,214
Unconsolidated Condensed Interim Statement of Profit or Loss and Other Comprehensive Income
For the 1st quarter ended September 30, 2019 (Un-audited)
September 30,
September 30,
2019
2018
(PKR in'000')
Gross sales
13,929,982
16,011,063
Less: Sales tax and federal excise duty
4,083,620
4,390,612
Rebates and commission
217,386
215,383
4,301,006
4,605,995
Net sales
9,628,976
11,405,068
Cost of sales
(8,137,147)
(7,980,649)
Gross profit
1,491,829
3,424,419
Distribution cost
(975,317)
(657,519)
Administrative expenses
(300,427)
(273,776)
Finance cost
(19,866)
-
Other expenses
(104,537)
(245,456)
Other income
930,231
644,329
Profit before taxation
1,021,913
2,891,997
Taxation
-current
(170,064)
(550,355)
-deferred
103,995
151,189
(66,068)
(399,166)
Profit after taxation
955,845
2,492,831
Other comprehensive income:
Other comprehensive loss which will not be reclassified to statement of
profit or loss in subsequent periods
Unrealized loss on remeasurement of equity instrument
at fair value through other comprehensive income
(8,089)
(6,336)
Deferred tax thereon
1,213
950
(6,876)
(5,386)
Total comprehensive income for the period
948,969
2,487,445
(PKR)
Earnings per share - basic and diluted
2.96
7.71
Condensed Interim Consolidated Statement of Financial Position
As at September 30, 2019
(Un-audited)
(Audited)
September 30,
June 30,
2019
2019
(PKR in '000')
ASSETS
NON-CURRENT ASSETS
Fixed assets
Property, plant and equipment
149,808,675
135,475,796
Intangible assets
7,571,722
7,653,720
157,380,397
143,129,516
Long-term investments
18,549,191
18,554,210
Long-term loans and advances
518,714
551,354
Long-term deposits and prepayments
55,134
51,076
176,503,436
162,286,156
CURRENT ASSETS
Stores, spares and consumables
9,517,589
8,193,401
Stock-in-trade
18,314,829
18,299,229
Trade debts
4,898,810
4,508,468
Loans and advances
2,295,352
1,997,339
Trade deposits and short-term prepayments
1,991,305
2,092,112
Other receivables
7,465,300
6,935,242
Tax refunds due from the Government
538,812
538,812
Taxation receivable
2,422,932
2,687,513
Accrued return
99,789
156,948
Short term investments
1,074,044
1,055,754
Cash and bank balances
17,872,045
18,270,313
66,490,807
64,735,131
TOTAL ASSETS
242,994,243
227,021,287
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Share capital
3,233,750
3,233,750
Reserves
104,689,423
105,787,478
Attributable to the owners of the Holding Company
107,923,173
109,021,228
Non-controlling interests
16,592,463
16,249,228
Total equity
124,515,636
125,270,456
NON-CURRENT LIABILITIES
Long-term finances
45,956,175
32,771,993
Long-term deposits
188,297
90,264
Deferred liabilities
11,314,007
11,431,338
Other long term liabilities
4,961,036
5,078,003
62,419,515
49,371,598
CURRENT LIABILITIES
Current portion of long-term finances
1,926,253
1,694,503
Trade and other payables
36,068,532
36,059,184
Provision for taxation
1,752,534
1,699,742
Accrued return
592,373
619,500
Short-term borrowings and running finance
13,378,862
12,161,232
Unclaimed dividend
147,481
53,953
Unpaid dividend
2,193,057
91,119
56,059,092
52,379,233
118,478,607
101,750,831
TOTAL EQUITY AND LIABILITIES
242,994,243
227,021,287
Condensed Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the 1st quarter ended September 30, 2019 (Un-audited)
September 30,
September 30,
2019
2018
(PKR in '000')
Revenue
34,429,646
31,315,454
Less:
Sales tax and excise duty
5,683,102
5,242,966
Rebates and commission
1,566,605
1,227,866
7,249,707
6,470,832
27,179,939
24,844,622
Cost of sales
(22,836,297)
(19,256,664)
Gross profit
4,343,642
5,587,958
Distribution cost
(1,846,745)
(1,383,702)
Administrative expenses
(1,018,820)
(755,830)
Finance cost
(625,003)
(357,213)
Other expenses
(191,640)
(341,773)
Other income
1,385,695
1,152,742
Profit before taxation
2,047,129
3,902,182
Taxation
- current
(748,827)
(1,063,608)
- deferred
228,721
323,216
(520,106)
(740,392)
Profit after taxation
1,527,023
3,161,790
Attributable to:
Owners of the Holding Company
1,272,179
2,955,800
Non-controlling interests
254,844
205,990
1,527,023
3,161,790
Other comprehensive income for the period
Other comprehensive (loss) / income which may be reclassified to statement of profit or loss in subsequent periods
Foreign exchange differences on translation of foreign operations
(261,420)
189,113
Other comprehensive loss which will not be reclassified to statement of profit or loss in
subsequent periods
Unrealized loss on remeasurement of equity investment at fair value through other comprehensive income
(8,089)
(6,336)
Deferred tax thereon
1,213
950
(6,876)
(5,386)
Total comprehensive income for the period
1,258,727
3,345,517
Attributable to:
Owners of the Holding Company
1,003,883
3,139,527
Non-controlling interests
254,844
205,990
1,258,727
3,345,517
(PKR)
Earnings per share - basic and diluted
3.93
9.14
Directors' Report (Condensed)
The Directors have the pleasure in presenting to you the financial results of your Company which include both, stand-alone and consolidated unaudited financial statements for the first quarter ended September 30, 2019.
Overview
Cement industry in Pakistan grew by 3.0% to 11.13 million tons during the first quarter ended September 30, 2019 in comparison to 10.81 million tons during the same period last year. While local sales volumes registered a growth of 1.0% to 9.11 million tons during the first quarter in comparison to 9.02 million tons during the same period last year, export sales volumes registered an increase of 12.6% to 2.01 million tons during the quarter under review as compared to 1.79 million tons in the same period last year.
In comparison to the Cement Industry, your Company's overall sales volumes declined by 13.6% to 1.64 million tons during first quarter ended September 30, 2019. The local sales volume registered a decline of 19.4% and were 1.12 million tons in comparison to 1.40 million tons during the same period last year, however, the export sales volumes of the Company improved by 2.6% to 0.51 million tons as compared to 0.50 million tons during the same period last year.
On a consolidated basis, your Company achieved a gross turnover of PKR 34.43 billion which is 9.9% higher as compared to the same period last year's turnover of PKR 31.32 billion.
Moreover, consolidated Net Profit of the Company was PKR 1.53 billion of which PKR 0.25 billion is attributable to non-controlling interests which translates into an EPS of PKR 3.93 during the first quarter ended September 30, 2019 as compared to PKR 9.14 during the same period last year.
Business Performance
a. Production & Sales Volume Performance - Standalone
The standalone production and sales statistics of your Company for the first quarter of the financial year 2019-20 compared to the same period last year are as follows:
Clinker Production
1,270
1,801
(29.5%)
Cement Production
1,422
1,665
(14.6%)
Cement Sales
1,422
1,654
(14.0%)
Clinker Sales
213
239
(10.9%)
The production and sales volume data is graphically presented as under:
A comparison of the dispatches of the Industry and your Company's standalone business for the first quarter of the fiscal year 2019-20 compared to the same period last year is presented below:
b. Financial Performance - Standalone
The standalone financial performance of your Company for the first quarter of the fiscal year 2019-20 as compared to the same period last year is presented below:
Revenue
During the first quarter of 2019-20 under review, your Company's overall gross sales revenue declined by 13.0% as compared to the same period last year. Where, although the exports sales revenue showed an increase of 27.8% (PKR 3.21 billion vs PKR 2.51 billion) but the local sales revenue decline of 20.6% (PKR 10.72 billion vs 13.50 billion) lead to the overall drop of 13.0% in the gross sales revenue.
This was mainly due to lower sales volumes and cut-throat pricing on the back of lower demand and retentions on account of stringent 'Axle load' limits' implementation.
Cost of Sales
Moreover, during the first quarter under review, per ton cost of sales of your Company increased by 18.0% as compared to the same period last year. The increase was mainly attributable to exceptional increase in gas and other fuel prices, higher fixed costs absorption (due to lower volumes) and Coal transportation costs increase due to 'Axle load' limits' implementation.
Gross Profit
In view of the lower sales volumes & retentions and higher input costs, as mentioned above, Gross profit margins of the company for the quarter under review were 15.5% as compared to 30.0% reported during the same period last year.
Net Profit
Similarly, your Company achieved a profit before tax of PKR 1021.90 million during the quarter under review as compared to PKR 2,892.0 million reported during the same period last year. Apart from adverse pricing and cost inputs the profitability of your company was further impacted due to higher transportation and distribution costs on account of 'Axle load' limits implementation.
Accordingly, after tax profit of PKR 955.8 million was achieved during the quarter under review as compared to PKR 2,492.8 million reported during the same period last year.
Earnings per share
The earnings per share of your Company for the quarter ended September 30, 2019 was PKR 2.96 in comparison to PKR 7.71 reported during the same period last year.
Projects - New and Ongoing
Brownfield cement plant expansion in KPK Province of Pakistan - 2.6 million tons per annum
The construction work at project site is running satisfactorily to achieve commercial operations during the month of November 2019.
Investments
Investment in 1 x 660 MW, supercritical, coal based power project
The construction activity for setting up 660 MW super critical, lignite coal-based power plant is progressing as per project implementation schedule. Target to achieve commercial operations is 1st March 2021.
Greenfield cement plant expansion in Samawah, Iraq - 1.2 million tons per annum
Keeping in view the growing demand of cement in Central and Northern Iraq, the Company in addition to clinker production has decided to further invest in setting up a grinding unit and have a fully integrated cement production capacity of 1.2 million tons per annum in Samawah, Iraq, as part of the joint venture project with the existing local partner. The revised project cost is now estimated at USD 138 million.
The first shipment of Plant and Machinery from Sinoma is expected to reach the project site in November 2019. Civil and Mechanical teams are already mobilized. Electrical works contract is expected to be signed in November 2019. Target to achieve commercial production is by the end of first quarter of financial year 2020-21.
Corporate Social Responsibility
Your Company has a history of strong commitment for the improvement of society and the communities in which it operates, with primary focus of its CSR initiatives in Education sector, Women empowerment, Health and Environment conservation.
Education / Scholarships
Continuing with its long-term objective to provide merit-based support for the deserving and less privileged segments of the society your Company continued to extend scholarships to various students of leading universities in Pakistan and abroad.
Women Empowerment
Your Company's focus on women empowerment through education has further galvanized its collaboration with Zindagi Trust by supporting two leading Government girls' schools in Karachi. These schools have been transformed into model girls' educational institutions in Pakistan.
Health Initiatives
Provision of quality healthcare for the society at large continues to remain your Company's priority, especially through financial support of Aziz Tabba Foundation; a prominent philanthropic institution that is running Tabba Heart and Tabba Kidney institutes, which provide vital support in bridging the gap of specialized and modern medical care available in the Country.
Environment Conservation
Your Company always takes responsibility towards the environment seriously and in an effort to highlight the importance of environment conservation; your Company continued with its tree-plantation drive in and around its manufacturing sites.
Outlook
With the Country's current economic challenges and macro-economic scenario, your Company believes that in the short to medium term, the outlook of the Cement industry will remain challenging and will continue to put adverse pressure on profitability, due to cut-throat pricing, especially in the North and costs escalation due to 'Axle load' limits' implementation in the South, both for local and export sales and drop in export prices due to regional competition. The Cement Industry is engaged with the Government to resolve the 'Axle load' limits' issue and is hopeful for its resolution.
Further, to mitigate the 'Axle load' limits' the Company is evaluating to increase its logistics' fleet size, so that maximum export transportation, as well as transfers of Cement from factory to warehouses can be achieved by using its own fleet. In the first phase the Company will add another 31 Prime movers to increase its fleet-size from 112 to 143. The company will also evaluate the additional need by the end of this year to add more Prime movers to overcome the challenge of high-cost of distribution and transportation.
Acknowledgement
Directors of your Company take this opportunity to express sincere gratitude and appreciation for unrelenting commitment and contribution of its people and the trust and confidence placed in the Company by all the stakeholders.
On behalf of the Board
MUHAMMAD YUNUS TABBA MUHAMMAD ALI TABBA
Chairman / Director Chief Executive / Director
Karachi: October 30, 2019
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