REG - Lucky Cement Ld - 3rd Quarter Results
LCK/ANNOUNCE/2019-20 April 23, 2020
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 3RD QUARTER ENDED MARCH 31, 2020
This is to inform you that the Board of Directors of our Company in their Meeting held on Thursday, April 23, 2020 at 4:30 p.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) Interim Dividend Nil
The financial results of the Company consisting of Statements of Financial Position, Statements of Profit and Loss and Other Comprehensive Income and Directors' Report are annexed.
The 3rd quarterly report of the Company for the period ended March 31, 2020 will also be transmitted through PUCARS separately, within the specified time.
Yours truly
for LUCKY CEMENT LIMITED
Atif Kaludi
CFO/Director Finance
LUCKY CEMENT LIMITED
Unconsolidated Condensed Interim Statement of Financial Position
As at March 31, 2020
(Un-audited)
(Audited)
March 31,
June 30,
2020
2019
(PKR in'000')
ASSETS
NON-CURRENT ASSETS
Fixed assets
Property, plant and equipment
60,856,953
57,276,184
Intangible assets
14,205
18,152
60,871,158
57,294,336
Long-term investments
44,044,485
34,313,588
Long-term loans and advances
91,213
99,316
Long-term deposits
3,175
3,175
105,010,031
91,710,415
CURRENT ASSETS
Stores and spares
7,598,535
6,809,724
Stock-in-trade
2,802,882
4,253,020
Trade debts
2,613,238
2,058,719
Loans and advances
523,370
686,525
Trade deposits and short term prepayments
81,672
74,223
Accrued return
105,409
113,869
Other receivables
2,547,157
2,130,907
Tax refunds due from the Government
538,812
538,812
Short term investment
2,917,749
1,055,754
Cash and bank balances
11,803,046
15,657,246
31,531,870
33,378,799
TOTAL ASSETS
136,541,901
125,089,214
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Share Capital
3,233,750
3,233,750
Reserves
95,369,371
91,084,667
98,603,121
94,318,417
NON-CURRENT LIABILITIES
Long-term deposits
230,597
90,264
Deferred liabilities
7,131,996
7,102,483
7,362,593
7,192,747
CURRENT LIABILITIES
Trade and other payables
21,170,544
19,195,617
Short term borrowings
7,846,639
2,900,000
Unclaimed dividend
55,989
53,953
Unpaid dividend
23,706
91,119
Taxation - net
1,479,309
1,337,361
30,576,187
23,578,050
37,938,780
30,770,797
TOTAL EQUITY AND LIABILITIES
136,541,901
125,089,214
LUCKY CEMENT LIMITED
Unconsolidated Condensed Interim Statement of Profit or Loss and Other Comprehensive Income
For the nine months ended March 31, 2020 (Un-audited)
Nine Months Ended
Quarter Ended
March 31,
March 31,
March 31,
March 31,
2020
2019
2020
2019
(PKR in'000')
(PKR in '000')
Gross sales
47,947,798
52,314,992
16,852,237
17,429,651
Less:
Sales tax and federal excise duty
14,688,143
14,061,754
5,327,336
4,577,359
Rebates, incentive and commission
811,609
732,154
288,235
286,283
15,499,752
14,793,908
5,615,571
4,863,642
Net sales
32,448,046
37,521,084
11,236,666
12,566,009
Cost of sales
(27,921,847)
(26,261,232)
(9,934,705)
(8,730,172)
Gross profit
4,526,199
11,259,852
1,301,961
3,835,837
Distribution cost
(2,931,117)
(2,101,175)
(1,036,697)
(726,666)
Administrative expenses
(922,872)
(870,017)
(325,544)
(312,270)
Finance cost
(92,421)
(11,671)
(44,475)
(9,773)
Other expenses
(290,758)
(875,770)
(96,447)
(305,168)
Other income
2,989,318
2,349,194
1,280,287
742,623
Profit before taxation
3,278,349
9,750,413
1,079,085
3,224,583
Taxation
-current
(568,205)
(2,203,674)
(201,522)
(770,084)
-deferred
225,272
747,199
121,277
338,650
(342,933)
(1,456,475)
(80,245)
(431,434)
Profit after taxation
2,935,416
8,293,938
998,840
2,793,149
Other comprehensive income:
Other comprehensive (loss) / income which will not be reclassified to statement of profit or loss in subsequent periods
Unrealized (loss) / income on remeasurement of equity instrument at fair value through other comprehensive income
(9,027)
(5,912)
(8,107)
5,026
Deferred tax thereon
1,354
887
1,216
(753)
(7,673)
(5,025)
(6,891)
4,273
Total comprehensive income for the period
2,927,743
8,288,913
991,949
2,797,422
(PKR)
(PKR)
Earnings per share - basic and diluted
9.08
25.65
3.09
8.64
LUCKY CEMENT LIMITED
Condensed Interim Consolidated Statement of Financial Position
As at March 31, 2020
(Un-audited)
(Audited)
March 31,
June 30,
2020
2019
(PKR in '000')
ASSETS
NON-CURRENT ASSETS
Fixed assets
Property, plant and equipment
178,659,389
135,475,796
Intangible assets
7,419,549
7,653,720
Right of use assets
216,195
-
186,295,133
143,129,516
Long-term investments
22,276,009
18,554,210
Long-term loans and advances
615,517
551,354
Long-term deposits and prepayments
54,473
51,076
209,241,132
162,286,156
CURRENT ASSETS
Stores, spares and consumables
9,209,749
8,193,401
Stock-in-trade
20,113,865
18,299,229
Trade debts
6,009,864
4,508,468
Loans and advances
2,252,453
1,997,339
Trade deposits and short-term prepayments
1,580,020
2,092,112
Other receivables
7,460,469
6,935,242
Tax refunds due from the Government
538,812
538,812
Taxation receivable
2,131,056
2,687,513
Accrued return
114,364
156,948
Short term investments
2,917,749
1,055,754
Cash and bank balances
23,129,582
18,270,313
75,457,983
64,735,131
TOTAL ASSETS
284,699,115
227,021,287
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Share capital
3,233,750
3,233,750
Reserves
108,755,713
105,787,478
Attributable to the owners of the Holding Company
111,989,463
109,021,228
Non-controlling interests
17,575,976
16,249,228
Total equity
129,565,439
125,270,456
NON-CURRENT LIABILITIES
Long-term finances
69,904,395
32,771,993
Long-term deposits
230,597
90,264
Deferred liabilities
11,225,328
11,431,338
Lease Liabilities
178,620
-
Other long term liabilities
5,289,042
5,078,003
86,827,982
49,371,598
CURRENT LIABILITIES
Current portion of long-term finances
1,551,006
1,694,503
Trade and other payables
48,061,360
36,059,184
Provision for taxation
1,865,540
1,699,742
Accrued return
347,602
619,500
Short-term borrowings and running finance
16,272,116
12,161,232
Current portion of liabilities against assets subject to finance lease
39,845
-
Unclaimed dividend
144,519
53,953
Unpaid dividend
23,706
91,119
68,305,694
52,379,233
155,133,676
101,750,831
CONTINGENCIES AND COMMITMENTS
TOTAL EQUITY AND LIABILITIES
284,699,115
227,021,287
LUCKY CEMENT LIMITED
Condensed Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the 3rd quarter and nine months ended March 31, 2020 (Un-audited)
Nine Months Ended
Quarter Ended
March 31,
March 31,
March 31,
March 31,
2020
2019
2020
2019
(PKR in '000')
Revenue
123,988,042
103,320,389
44,429,995
35,466,328
Less: Sales tax and excise duty
24,234,883
16,764,874
8,783,377
5,463,025
Rebates, incentives and commission
5,319,131
4,489,902
1,951,896
1,657,541
29,554,014
21,254,776
10,735,273
7,120,566
94,434,028
82,065,613
33,694,722
28,345,762
Cost of sales
(79,678,132)
(63,799,985)
(28,585,408)
(21,779,033)
Gross profit
14,755,896
18,265,628
5,109,314
6,566,729
Distribution cost
(5,799,983)
(4,296,137)
(2,050,617)
(1,458,307)
Administrative expenses
(3,185,645)
(2,308,421)
(1,147,744)
(776,794)
Finance cost
(2,015,548)
(1,151,277)
(830,024)
(376,944)
Other expenses
(603,830)
(1,313,476)
(208,580)
(411,496)
Other income
4,066,636
3,061,838
1,274,347
1,138,122
Profit before taxation
7,217,526
12,258,155
2,146,696
4,681,310
Taxation
- current
(2,005,596)
(3,332,147)
(603,474)
(1,209,033)
- deferred
469,905
1,071,569
215,798
388,038
(1,535,691)
(2,260,578)
(387,676)
(820,995)
Profit after taxation
5,681,835
9,997,577
1,759,020
3,860,315
Attributable to:
Owners of the Holding Company
4,650,969
9,260,243
1,438,851
3,464,738
Non-controlling interests
1,030,866
737,334
320,169
395,577
5,681,835
9,997,577
1,759,020
3,860,315
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
557,938
1,339,539
933,363
138,983
Other comprehensive (loss) / income which will not be reclassified to statement of profit or loss in subsequent periods
Unrealized (loss) / gain on remeasurement of equity investment at fair value through other comprehensive income
(9,027)
(5,912)
(8,107)
5,026
Deferred tax thereon
1,354
887
1,216
(753)
(7,673)
(5,025)
(6,891)
4,273
Total comprehensive income for the period
6,232,100
11,332,091
2,685,492
4,003,571
Attributable to:
Owners of the Holding Company
5,201,234
10,594,757
2,365,323
3,607,994
Non-controlling interests
1,030,866
737,334
320,169
395,577
6,232,100
11,332,091
2,685,492
4,003,571
(PKR)
(PKR)
Earnings per share - basic and diluted
14.38
28.64
4.45
10.71
Directors' Report
The Directors have the pleasure in presenting to you the financial results of your Company which include both, stand-alone and consolidated financial statements for the nine months ended March 31, 2020.
Overview
Cement industry in Pakistan grew by 7.1% to 37.04 million tons during the nine months ended March 31, 2020 in comparison to 34.58 million tons during the same period last year. Local sales volume registered a growth of 3.9% to 30.59 million tons during the current nine months in comparison to 29.44 million tons during the same period last year. Export sales volumes registered an increase of 25.7% to 6.45 million tons during the nine months under review as compared to 5.13 million tons reported in the same period last year.
In comparison to the Cement Industry, your Company's overall sales volumes declined by 2.6% to 5.80 million tons during the current nine months ended March 31, 2020. This was due to decline in local sales volumes by 7.0% which were 4.11 million tons in comparison to 4.42 million tons during the same period last year, due to competition arising from new capacities coming online. On the other hand, export sales volumes of the Company improved by 10.4% to 1.69 million tons as compared to 1.53 million tons during the same period last year.
On a consolidated basis, your Company achieved a gross turnover of PKR 123.99 billion which is 20.0% higher as compared to the same period last year's turnover of PKR 103.32 billion. The increase in turnover is mainly attributable to commencement of operations of KIA Lucky Motors.
Moreover, consolidated Net Profit of the Company was PKR 5.68 billion of which PKR 1.03 billion is attributable to non-controlling interests which translates into an EPS of PKR 14.38 during the current nine months ended March 31, 2020 as compared to PKR 28.64 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 nine months ended March 31, 2020, compared to the same period last year are as follows:
Clinker Production
5,058
5,448
(7.2%)
Cement Production
4,969
5,183
(4.1%)
Cement Sales
4,964
5,183
(4.2%)
Clinker Sales
837
771
8.6%
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 nine months ended March 31, 2020 compared with the same period last year is presented below:
Financial Performance - Standalone
The standalone financial performance of your Company for the nine months ended March 31, 2020, as compared to the same period last year is presented below:
Revenue
During the nine months of 2019-20 under review, your Company's overall gross sales revenue declined by 8.3% as compared to the same period last year. Where, although the export sales revenue showed an increase of 18.6% (PKR 9.87 billion vs PKR 8.32 billion) but the local sales revenue decline of 13.4% (PKR 38.08 billion vs PKR 43.99 billion) lead to the overall drop of 8.3% in the gross sales revenue.
This was mainly due to lower sales volumes as a result of competition arising from new capacities and low retentions due to higher transportation and logistics costs.
Cost of Sales
Moreover, during the nine months under review, per ton cost of sales of your Company increased by 9.1% 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 higher transportation costs on input materials.
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 nine months under review were 13.9% as compared to 30.0% reported during the same period last year.
Net Profit
Similarly, your Company achieved a profit before tax of PKR 3,278.3 million during the nine months under review as compared to PKR 9,750.4 million reported during the same period last year.
Accordingly, after tax profit of PKR 2,935.4 million was achieved during the nine months under review as compared to PKR 8,293.9 million reported during the same period last year.
Earnings per share
As a result of factors discussed above, the earnings per share of your Company for the nine months ended March 31, 2020 was PKR 9.08 in comparison to PKR 25.65 reported during the same period last year.
Projects - New and Ongoing
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 was moving as per Schedule before the outbreak of COVID-19 in China with the targeted Commercial Operation on 1st March, 2021. On 6th February 2020, the Construction and Supply Contractors of the Company declared other Force Majeure Event (FME) under the provisions of their respective agreements due to outbreak of COVID-19 and notified that there is possible risk of delay in Project implementation. On 27th March, 2020, the Company also received FME notice on the same account from Central Power Purchasing Agency (CPPA) notifying possible delay in COD of Lahore Matiari transmission Line and thus may cause delayed provision of interconnection facility which is required to be provided by CPPA not later than 120 days prior to Commercial Operation Date. The precise assessment of FME on the project commercial operation timeline could not be made at this stage as FME is still in place. However, the Company in coordination with its Contractors and the CPPA is taking mitigating measures to contain the delay.
Greenfield cement plant expansion in Samawah, Iraq - 1.2 million tons per annum
While major shipments of plant and machinery have reached site and erection work is under progress, some critical refractory, mechanical and electrical items are however under shipment and will reach during the month of June as per current understanding with the suppliers. Other necessary materials and resources are available at SITE and work is in progress during the locked down period arising out of COVID 19 pandemic situation.
As earlier envisaged, project completion is still targeted in the 2nd quarter of financial year 2020-21. However, if the situation of COVID 19 pandemic worsens, project completion timelines would be delayed.
Corporate Social Responsibility
With a primary focus on Education, Women empowerment, Health and Environment conservation, your Company is committed for the development of society and the communities in which it operates.
Education / Scholarships
In continuation of 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
To empower women through education has been an ongoing process with the collaboration of Zindagi Trust in which your Company has been 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 pro-environment initiatives including tree-plantation drives in and around its manufacturing sites.
Outlook
Post relaxation of COVID-19 lockdown in the North, dispatches have reached 80% of pre-lockdown volumes. Dispatches in the South however continue to suffer due to lock down in Sindh province and are at one third of normal volumes. Export volumes are also very thin due to low demand from foreign buyers.
Based on the demand projections in North and the fact that majority of players are presently operating in losses, management expects that the prices in North will recover. In South due to lower economic activity as a result of COVID-19 lock down, volumes will remain under pressure. However, once the pandemic situation eases, we also expect that the package announced for the construction industry by the Federal Government will have a positive impact on the cement demand.
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
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Karachi: April 23, 2020
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