REG - Steppe Cement Ltd - Half-year Report
26/09/2022 07:01
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RNS Number : 5825A Steppe Cement Limited 26 September 2022
Steppe Cement Ltd
Interim Results for the Half Year ended 30 June 2022
and General Market Update
1. Interim Results
Steppe Cement Ltd ("Steppe Cement" and "the Company") posted a consolidated
profit after tax of USD10.2 million for the six months ended 30 June 2022, an
increase of 65% over the corresponding period for the previous year.
6 months 6 months % of change
ended ended
30 June 22 30 June 21
Sales (Tonnes) 837,063 840,661 0%
Consolidated turnover KZT million 19,779 16,657 19%
Consolidated turnover (USD million) 43.1 39.5 9%
Consolidated profit after tax (USD million) 10.2 6.2 65%
Earnings per share (Cents) 4.7 2.8 47%
Average exchange rate (USD/KZT) 449 424 -6%
· The Company managed to increase prices in the first during the first
half of 2022, with the average ex-factory price achieved increasing from
16,571 KZT /tonne (USD39 per tonne) to 20,485 KZT/tonne (USD 45 per tonne) or
18% compared with first half 2021.
· Steppe Cement's gross margin increased from 44% to 46% in USD terms
compared with first half 2021 due to the price increases.
· Selling expenses per tonne decreased in USD terms by 20% compared
with the corresponding period in 2021 primarily due to increased sales to
markets closer to the factory.
· Administrative expenses increased by 7% in USD terms compared with
first half of 2021.
· On average, the Kazakh Tenge depreciated by 6% compared to the first
half of 2021 but only translated in a small foreign exchange loss of USD 0.2
million.
· The Company generated operating profit before working capital changes
of USD 16.3 million in 1H 2022 against USD 12.9 million in the corresponding
period for 2021.
· Kazakhstan GDP increased by 3.4% in the first half of 2022 compared
to the first half of 2021. In the first quarter of 2022 the GDP growth was
4.6% despite the January and February local and international instability.
· Reported inflation has been 15% up to the end of June 2022.
2. Production and capex
· Production costs increased by 11% in KZT in the first half of 2022
primarily due to the higher electricity cost, diesel and spare parts for
maintenance.
· The separator of cement mill number 1 has been commissioned and work
has started in the separator of cement mill number 2.
3. Update on the Kazakh cement market
· The Kazakh cement market increased by 2% during the first half of the
year as the government has maintained its incentives for construction.
· Steppe Cement maintained its local market share at 14.5% in 1H2022.
We expect to maintain or increase this share for the full year.
· Exports at 0.54 million tonnes represented 10% of the volumes in the
1H2022 from 9% last year.
· Imports into Kazakhstan have been decreased to 0.35 million tonnes in
2022 and represent 6% of the market.
· Overall production of all factories in Kazakhstan has decreased by
0.4 million tonnes to 4.8 million tonnes for the 1H2022 as reductions in
bigger factories were balanced by increased volumes in Gezhuoba and Alacem.
· Currently 82% of production in the country is manufactured from dry
lines a similar figure than last year.
4. Finance
· Interest expenses on bank debt reduced to USD 0.2 million from USD
0.3 million in 2021 mostly on subsidised loans while we maintained interest
expenses on lease liabilities at USD 0.1 million after to the application of
IFRS 16 on the 3-year wagon leases. The rental on those wagons was previously
treated as selling expenses. The contract to rent wagons is due for renewal in
in the second half of 2022.
· Steppe Cement recorded a net cash position of USD9.3 million compared
to net cash of USD7.4 million as of 30 June 2021.
· The borrowings of the Company as of 30 June 2022 were USD5.4 million
while we carried a cash balance of USD14.7 million. For comparison, on 30 June
2021 the Company had USD6.1 million of borrowings and USD13.5 million in cash.
· Pursuant to the announcement of the Company on 13 June 2022, the
Company has reserved GBP11 million in cash (5p/share) for payment to
shareholders through a dividend or alternative process such as a capital
return, in respect of the results for the full year ended 31 December 2021.
The approach to be taken on how to proceed with payment of this amount to
shareholders in the most tax effective way remains under consideration,
however, the Company anticipates an announcement regarding this distribution
and its timing will be made in November.
A pdf copy of the announcement and the full interim financial statements is
available on the company's website at www.steppecement.com
(http://www.steppecement.com) .
Steppe Cement's AIM nominated adviser and broker is RFC Ambrian Limited.
Nominated Adviser: Contact Stephen Allen or Andrew Thomson at +61 8 9480 2500.
Broker: Contact Charlie Cryer at +44 20 3440 6800
SUMMARY OF INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2022 (UNAUDITED)
(In United States Dollars)
The Notes to the Interim Financial Statements form an integral part of the
Condensed Financial Statements. Please visit the Company's website at
www.steppecement.com (http://www.steppecement.com)
(http://www.steppecement.com) to view the full interim financial statements.
(http://www.steppecement.com)
STEPPE CEMENT LTD
(Incorporated in Labuan FT, Malaysia under the Labuan Companies Act, 1990)
AND ITS SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS
FOR THE PERIOD ENDED 30 JUNE 2022 (UNAUDITED)
The Group The Company
6 months ended 6 months ended
30 June 2022 30 June 2021 30 June 2022 30 June 2021
USD'000 USD'000 USD'000 USD'000
Revenue 43,125 39,534 670 691
Cost of sales (23,148) (22,082) - -
Gross profit 19,977 17,452 670 691
Selling expenses (5,285) (6,577) - -
General and administrative
expenses (3,183) (2,965) (165) (157)
Operating profit 11,509 7,910 505 534
Interest income 266 78 - -
Finance costs (435) (475) - -
Net foreign exchange (loss)/gain (246) (147) 3 (1)
Other income, net 940 341 - -
Profit before income tax 12,034 7,707 508 533
Income tax expense (1,831) (1,515) - -
Profit for the period 10,203 6,192 508 533
Attributable to:
Shareholders of the Company 10,203 6,192 508 533
Earnings per share:
Basic and diluted (cents) 4.7 2.8
^ Insignificant amount.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE
INCOME FOR THE PERIOD ENDED 30 JUNE 2022 (UNAUDITED)
The Group The Company
6 months ended 6 months ended
30 June 2022 30 June 2021 30 June 2022 30 June 2021
USD'000 USD'000 USD'000 USD'000
Profit for the period 10,203 6,192 508 533
Other comprehensive loss:
Item that may be reclassified subsequently to profit or loss
Exchange differences arising on translation of foreign subsidiary companies (4,941) (902) - -
Total other comprehensive loss for the period (4,941) (902) - -
Total comprehensive income for the period 5,262 5,290 508 533
Attributable to:
Shareholders of the Company 5,262 5,290 508 533
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022 (UNAUDITED)
The Group The Company
Unaudited Audited Unaudited Audited
30 June 2022 31 Dec 2021 30 June 2022 31 Dec 2021
USD'000 USD'000 USD'000 USD'000
Assets
Non-Current Assets:
Property, plant and equipment 44,599 48,438 - -
Right-of-use assets 792 1,700
Investment in subsidiary companies - - 36,200 36,200
Loan to subsidiary company - - 30,114 30,080
Advances 6 - - -
Other assets 161 155 - -
Total Non-Current Assets 45,558 50,293 66,314 66,280
Current Assets
Inventories 17,356 16,024 - -
Trade and other receivables 4,544 1,752 1,265 1,724
Other assets 2,076 2,258 - -
Income tax receivable 846 911 - -
Loans and advances to subsidiaries companies - - 39 50
Advances and prepaid expenses 8,439 5,234 17 5
Cash and cash equivalents 14,694 10,136 1,602 614
Total Current Assets 47,955 36,315 2,923 2,393
Total Assets 93,513 86,608 69,237 68,673
The Group The Company
Unaudited Audited Unaudited Audited
30 June 2022 31 Dec 2021 30 June 2022 31 Dec 2021
USD'000 USD'000 USD'000 USD'000
Equity and Liabilities
Capital and Reserves
Share capital 73,761 73,761 73,761 73,761
Revaluation reserve 1,931 2,068 - -
Translation reserve (125,379) (120,438) - -
Retained earnings 120,530 110,190 (5,098) (5,606)
Total Equity 70,843 65,581 68,663 68,155
Non-Current Liabilities
Borrowings 3,621 1,941 - -
Lease liabilities 4 9 - -
Deferred taxes 3,654 4,319 - -
Deferred income 1,868 1,588 - -
Provision for site restoration 172 180 - -
Total Non-Current Liabilities 9,319 8,037 - -
Current liabilities
Trade and other payables 5,803 5,062 - -
Accrued and other liabilities 3,369 1,553 284 228
Amount due to subsidiary company - - 290 290
Borrowings 1,807 3,615 - -
Lease liabilities 966 2,018 - -
Deferred income 100 103 - -
Taxes payable 1,306 639 - -
Total Current Liabilities 13,351 12,990 574 518
Total Liabilities 22,670 21,027 574 518
Total Equity and Liabilities 93,513 86,608 69,237 68,673
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2022 (UNAUDITED)
Non-distributable Distributable
The Group Share capital Revaluation reserve Translation reserve Retained earnings Total
USD'000 USD'000 USD'000 USD'000 USD'000
Balance as at 1 January 2022 73,761 2,068 (120,438) 110,190 65,581
Profit for the period - - - 10,203 10,203
Other comprehensive loss - - (4,941) - (4,941)
Total comprehensive income for the period - - (4,941) 10,203 5,262
Transfer of revaluation reserve relating to the depreciation of property, - (137) - 137 -
plant and equipment through use
Balance as at 30 June 2022 73,761 1,931 (125,379) 120,530 70,843
Non-distributable Distributable
The Group Share capital Revaluation reserve Translation reserve Retained earnings Total
USD'000 USD'000 USD'000 USD'000 USD'000
Balance as at 1 January 2021 73,761 2,370 (118,514) 100,325 57,942
Profit for the period - - - 6,192 6,192
Other comprehensive loss - - (902) - (902)
Total comprehensive income/(loss) for the period - - (902) 6,192 5,290
Transfer of revaluation reserve relating to the depreciation of property, - (148) - 148 -
plant and equipment through use
Balance as at 30 June 2021 73,761 2,222 (119,416) 106,665 63,232
The Company Share capital (Accumulated losses)/ Retained earnings Total
USD'000 USD'000 USD'000
Balance as at 1 January 2022 73,761 (5,606) 68,155
Total comprehensive income for the period - 508 508
Balance as at 30 June 2022 73,761 (5,098) 68,663
Balance as at 1 January 2021 73,761 631 74,392
Total comprehensive income for the period - 533 533
Balance as at 30 June 2021 73,761 1,164 74,925
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2022 (UNAUDITED)
The Group The Company
6 months ended 6 months ended
30 June 2022 30 June 2021 30 June 2022 30 June 2021
USD'000 USD'000 USD'000 USD'000
OPERATING ACTIVITIES
Profit before income tax 12,034 7,707 508 533
Adjustments for:
Depreciation of property, plant and equipment 3,203 3,733 - -
Depreciation of right-of-use assets 823 1,031 - -
Non-cash items 218 478 (1,090) (1,030)
Operating Profit/(Loss) Before Working Capital Changes 16,278 12,949 (582) (497)
(Increase)/ Decrease in:
Inventories (2,922) (1,607) - -
Trade and other receivables, (6,444) (2,175) (12) (12)
advances and prepaid expenses
Loans and advances from subsidiary companies - - (24) (3)
Increase in:
Trade and other payables, 3,494 3,317 56 5
accrued and other liabilities
Cash Generated From/(Used In) Operations 10,406 12,484 (562) (507)
Income tax paid (1,785) (730) - -
Interest paid (198) (299) - -
Net Cash Generated From/(Used In) Operating Activities 8,423 11,455 (562) (507)
INVESTING ACTIVITIES
Purchase of property, plant and equipment (2,870) (4,529) - -
Purchase of other assets (18) (18) - -
Interest received 267 78 1,550 -
Net Cash (Used In)/Generated From Investing Activities (2,621) (4,469) 1,550 -
FINANCING ACTIVITIES
Proceeds from borrowings 3,346 3,350 - -
Repayment from borrowings (2,815) (4,089) - -
Payment of lease liabilities (1,090) (877) - -
Net Cash Used In Financing Activities (559) (1,616) - -
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 5,243 5,370 988 (507)
EFFECTS OF FOREIGN EXCHANGE RATE CHANGES (685) (114) - -
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD 10,136 8,214 614 1,353
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD 14,694 13,470 1,602 846
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