REG - Lucky Cement Ld - Half-year Report
LCK/CS/2019-20/ January 29, 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 HALF YEAR ENDED DECEMBER 31, 2019
This is to inform you that the Board of Directors of our Company in their meeting held on Wednesday, January 29, 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 Half Yearly report of the Company for the period ended December 31, 2019 will also be transmitted through PUCARS separately, within the specified time.
Yours truly
for LUCKY CEMENT LIMITED
IRFAN CHAWALA
Director Finance / CFO
Unconsolidated Condensed Interim Statement of Financial Position
As at December 31, 2019
(Un-audited)
(Audited)
December 31,
June 30,
2019
2019
(PKR in '000')
ASSETS
NON-CURRENT ASSETS
Fixed assets
Property, plant and equipment
62,157,703
57,276,184
Intangible assets
13,245
18,152
62,170,948
57,294,336
Long-term investments
36,618,587
34,313,588
Long-term loans and advances
90,628
99,316
Long-term deposits
3,175
3,175
98,883,338
91,710,415
CURRENT ASSETS
Stores and spares
7,661,615
6,809,724
Stock-in-trade
2,365,661
4,253,020
Trade debts
3,079,131
2,058,719
Loans and advances
589,643
686,525
Trade deposits and short term prepayments
83,985
74,223
Accrued return
93,715
113,869
Other receivables
2,116,939
2,130,907
Tax refunds due from the Government
538,812
538,812
Short term investments
409,394
1,055,754
Cash and bank balances
12,852,797
15,657,246
29,791,692
33,378,799
TOTAL ASSETS
128,675,030
125,089,214
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Share Capital
3,233,750
3,233,750
Reserves
90,918,523
91,084,667
94,152,273
94,318,417
NON-CURRENT LIABILITIES
Long-term deposits
232,442
90,264
Deferred liabilities
7,184,313
7,102,483
7,416,755
7,192,747
CURRENT LIABILITIES
Trade and other payables
20,348,244
19,195,617
Short term borrowing
5,218,628
2,900,000
Unclaimed dividend
57,574
53,953
Unpaid dividend
23,897
91,119
Taxation - net
1,457,659
1,337,361
27,106,002
23,578,050
34,522,757
30,770,797
TOTAL EQUITY AND LIABILITIES
128,675,030
125,089,214
Unconsolidated Condensed Interim Statement of Profit or Loss and Other Comprehensive Income
For the half year ended December 31, 2019 (Un-audited)
Half Year Ended
Quarter Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
(PKR in'000')
(PKR in '000')
Gross sales
31,095,561
34,885,341
17,165,579
18,874,278
Less:Sales tax and federal excise duty
9,360,807
9,484,395
5,277,187
5,093,783
Rebates, incentives and commission
523,374
445,871
305,988
230,488
9,884,181
9,930,266
5,583,175
5,324,271
Net sales
21,211,380
24,955,075
11,582,404
13,550,007
Cost of sales
(17,987,142)
(17,531,060)
(9,849,995)
(9,550,411)
Gross profit
3,224,238
7,424,015
1,732,409
3,999,596
Distribution cost
(1,894,420)
(1,374,509)
(919,103)
(716,990)
Administrative expenses
(597,328)
(559,645)
(296,901)
(285,869)
Finance cost
(47,946)
-
(28,080)
-
Other expenses
(194,311)
(570,602)
(89,774)
(325,146)
Other income
1,709,031
1,606,571
778,800
962,242
Profit before taxation
2,199,264
6,525,830
1,177,351
3,633,833
Taxation
-current
(366,683)
(1,433,590)
(196,619)
(883,235)
-deferred
103,995
408,549
-
257,360
(262,688)
(1,025,041)
(196,619)
(625,875)
Profit after taxation
1,936,576
5,500,789
980,732
3,007,958
Other comprehensive income:
Other comprehensive (loss) / income
which will not be reclassified to profit
or loss in subsequent periods
Unrealized (loss) / income on remeasurement of equity instrument at fair value through other comprehensive income
(920)
(10,938)
7,169
(4,602)
Deferred tax thereon
138
1,640
(1,075)
690
(782)
(9,298)
6,094
(3,912)
Total comprehensive income for the period
1,935,794
5,491,491
986,826
3,004,046
(PKR)
(PKR)
Earnings per share - basic and diluted
5.99
17.01
3.03
9.30
Condensed Interim Consolidated Sc tatement of Financial Position
As at December 31, 2019
(Un-audited)
(Audited)
December 31, 2019
June 30, 2019
(PKR in '000')
ASSETS
NON-CURRENT ASSETS
Fixed assets
Property, plant and equipment
164,879,374
135,475,796
Intangible assets
7,486,605
7,653,720
Right of use assets
228,561
-
172,594,540
143,129,516
Long-term investments
19,917,591
18,554,210
Long-term loans and advances
621,983
551,354
Long-term deposits and prepayments
55,970
51,076
193,190,084
162,286,156
CURRENT ASSETS
Stores, spares and consumables
9,306,360
8,193,401
Stock-in-trade
17,599,446
18,299,229
Trade debts
5,490,109
4,508,468
Loans and advances
2,251,820
1,997,339
Trade deposits and short-term prepayments
1,953,161
2,092,112
Other receivables
6,706,253
6,935,242
Tax refunds due from the Government
538,812
538,812
Taxation receivable
2,205,726
2,687,513
Accrued return
109,736
156,948
Short term investments
409,394
1,055,754
Cash and bank balances
16,075,095
18,270,313
62,645,912
64,735,131
TOTAL ASSETS
255,835,996
227,021,287
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Share capital
3,233,750
3,233,750
Reserves
106,521,451
105,787,478
Attributable to the owners of the Holding Company
109,755,201
109,021,228
Non-controlling interests
17,659,350
16,249,228
Total equity
127,414,551
125,270,456
NON-CURRENT LIABILITIES
Long-term finances
53,765,903
32,771,993
Long-term deposits
232,442
90,264
Deferred liabilities
11,382,802
11,431,338
Lease Liabilities
178,655
-
Other long term liabilities
4,912,880
5,078,003
70,472,682
49,371,598
CURRENT LIABILITIES
Current portion of long-term finances
1,579,592
1,694,503
Trade and other payables
43,424,572
36,059,184
Provision for taxation
1,844,936
1,699,742
Accrued return
456,993
619,500
Short-term borrowings and running finance
10,436,953
12,161,232
Current portion of liabilities against assets subject to finance lease
42,092
-
Unclaimed dividend
139,728
53,953
Unpaid dividend
23,897
91,119
57,948,763
52,379,233
128,421,445
101,750,831
TOTAL EQUITY AND LIABILITIES
255,835,996
227,021,287
Condensed Interim Consolidated Statement of Profit or Loss and Other Comprehensive Income
For the half year ended December 31, 2019 (Un-audited)
Half Year Ended
Quarter Ended
December 31, 2019
December 31, 2018
December 31, 2019
December 31, 2018
(PKR in '000')
(PKR in '000')
Revenue
79,558,047
67,854,061
45,128,401
36,538,607
Less: Sales tax and excise duty
15,451,506
11,301,849
9,768,404
6,058,883
Rebates, incentives and commission
3,367,235
2,832,361
1,800,630
1,604,495
18,818,741
14,134,210
11,569,034
7,663,378
60,739,306
53,719,851
33,559,367
28,875,229
Cost of sales
(51,092,724)
(42,020,952)
(28,256,427)
(22,764,288)
Gross profit
9,646,582
11,698,899
5,302,940
6,110,941
Distribution cost
(3,749,366)
(2,837,830)
(1,902,621)
(1,454,128)
Administrative expenses
(2,037,901)
(1,531,627)
(1,019,081)
(775,797)
Finance cost
(1,185,524)
(774,333)
(560,521)
(417,120)
Other expenses
(395,250)
(901,980)
(203,610)
(560,207)
Other income
2,792,289
1,923,716
1,406,594
770,974
Profit before taxation
5,070,830
7,576,845
3,023,701
3,674,663
Taxation
- current
(1,402,122)
(2,123,114)
(653,295)
(1,059,506)
- deferred
254,107
683,531
25,386
360,315
(1,148,015)
(1,439,583)
(627,909)
(699,191)
Profit after taxation
3,922,815
6,137,262
2,395,792
2,975,472
Attributable to:
Owners of the Holding Company
3,212,118
5,795,505
1,939,939
2,839,705
Non-controlling interests
710,697
341,757
455,853
135,767
3,922,815
6,137,262
2,395,792
2,975,472
Other comprehensive income for the period
Other comprehensive (loss) / in-come which may be reclassified to statement of profit or
loss in subsequent periods
Foreign exchange differences on translation of foreign operations
(375,425)
1,200,556
(114,005)
1,011,443
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
(920)
(10,938)
7,169
(4,602)
Deferred tax thereon
138
1,640
(1,075)
690
(782)
(9,298)
6,094
(3,912)
Total comprehensive income for the period
3,546,608
7,328,520
2,287,881
3,983,003
Attributable to:
Owners of the Holding Company
2,835,911
6,986,763
1,832,028
3,847,236
Non-controlling interests
710,697
341,757
455,853
135,767
3,546,608
7,328,520
2,287,881
3,983,003
(PKR)
(PKR)
Earnings per share - basic and diluted
9.93
17.92
6.00
8.78
Directors' Report
The Directors have the pleasure in presenting to you the financial results of your Company which include both, stand-alone (duly reviewed by the auditors) and consolidated unaudited financial statements for the half year ended December 31, 2019.
Overview
Cement industry in Pakistan grew by 6.5% to 24.75 million tons during the half year ended December 31, 2019 in comparison to 23.23 million tons during the same period last year. Local sales volume registered a growth of 3.5% to 20.37 million tons during the current half year in comparison to 19.67 million tons during the same period last year. Export sales volumes registered an increase of 22.9% to 4.38 million tons during the half year under review as compared to 3.56 million tons reported in the same period last year.
In comparison to the Cement Industry, your Company's overall sales volumes declined by 8.4% to 3.68 million tons during the current half year ended December 31, 2019. The local sales volumes registered a decline of 13.3% and were 2.59 million tons in comparison to 2.99 million tons during the same period last year, however, the export sales volumes of the Company improved by 6.0% to 1.08 million tons as compared to 1.02 million tons during the same period last year.
On a consolidated basis, your Company achieved a gross turnover of PKR 79.56 billion which is 17.3% higher as compared to the same period last year's turnover of PKR 67.85 billion.
Moreover, consolidated Net Profit of the Company was PKR 3.92 billion of which PKR 0.71 billion is attributable to non-controlling interests which translates into an EPS of PKR 9.93 during the current half year ended December 31, 2019 as compared to PKR 17.92 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 half year ended December 31, 2019, compared to the same period last year are as follows:
Particulars
Half Year
2019-20
Half Year
2018-19
Growth/
(Decline)
Tons in '000’
%
Clinker Production
2,948
3,742
(21.2%)
Cement Production
3,177
3,458
(8.1%)
Cement Sales
3,170
3,501
(9.5%)
Clinker Sales
507
513
(1.2%)
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 half year ended December 31, 2019 compared with the same period last year is presented below:
b. Financial Performance - Standalone
The standalone financial performance of your Company for the half year ended December 31, 2019, as compared to the same period last year is presented below:
Revenue
During the half year of 2019-20 under review, your Company's overall gross sales revenue declined by 10.9% as compared to the same period last year. Where, although the export sales revenue showed an increase of 19.1% (PKR 6.43 billion vs PKR 5.40 billion) but the local sales revenue decline of 16.3% (PKR 24.67 billion vs PKR 29.49 billion) lead to the overall drop of 10.9% 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 due to higher transportation and logistics costs.
Cost of Sales
Moreover, during the half year under review, per ton cost of sales of your Company increased by 12.0% 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 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 half year under review were 15.2% as compared to 29.7% reported during the same period last year.
Net Profit
Similarly, your Company achieved a profit before tax of PKR 2,199.3 million during the half year under review as compared to PKR 6,525.8 million reported during the same period last year.
Accordingly, after tax profit of PKR 1,936.6 million was achieved during the half year under review as compared to PKR 5,500.8 million reported during the same period last year.
Earnings per share
The earnings per share of your Company for the half year ended December 31, 2019 was PKR 5.99 in comparison to PKR 17.01 reported during the same period last year.
Projects - New and Ongoing
Brownfield cement plant expansion in KPK Province of Pakistan - 2.8 million tons per annum.
Construction and installation after slight design modifications with respect to the additional line of 2.8 million tons per annum has been successfully completed as per the given project completion timelines. The new line was made operational with the commencement of Clinker production on December 30, 2019. The total production capacity (including both North and South plants) of the Company has now increased from previous 9.35 million tons to 12.15 million tons per annum.
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 in full swing with over 60% of project completion to-date. With the completion of major design / engineering works and the expected on-site arrival of all the critical equipment in the months of February and March, the commissioning team of SEPCO III is now fully mobilized at the Project site.
Target to achieve commercial operations is 1st March 2021.
Greenfield cement plant expansion in Samawah, Iraq - 1.2 million tons per annum
Fabrication and erection work is in full swing and Project timelines are being met. Necessary manpower and contractors have also been mobilized at the Site. The contract for Cement grinding mill, Packing plant and additional Power generator is also finalized and Letter of Credit has been established.
Target to achieve commercial production is by the second quarter of financial year 2020-21.
Corporate Social Responsibility
With the primary focus on Education, Women empowerment, Health and Environment conservation, your Company remains committed towards progressive development of society and the communities in which it operates.
Education / Scholarships
Your company continues to support the deserving and less privileged segments of the society through provision of merit-based scholarships to various students of IBA, IoBM and other leading universities in Pakistan and abroad.
Women Empowerment
Your Company's focus on women empowerment through education remains an ongoing process with the collaboration of 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
The quality healthcare provision has always been your company's priority especially through the 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 in the Country.
Environment Conservation
Your Company always takes serious responsibility towards the preservation of the environment 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
Despite current economic challenges, there has been an overall growth in both Domestic and Export off-takes.
The Outlook of the Cement industry will continue to be challenging due to availability of excess capacity in the North region, which will put adverse pressure on pricing. Whereas, prices for exports from South are also very competitive due to surplus supplies available in the Region. The input costs may also rise in the future, due to higher electricity and gas tariffs, which will increase the production, as well as logistics costs.
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: January 29, 2020
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