REG - Steppe Cement Ltd - Interim Results and General Market Update

Steppe CementAnnouncement

12/09/2019 07:00

RNS Number : 0891M
Steppe Cement Limited
12 September 2019
 


Steppe Cement Ltd
Interim Results for the Half Year ended 30 June 2019
and General Market Update
 
1. Interim Results
Steppe Cement Ltd ("Steppe Cement" and "the Company") posted a consolidated profit after tax of USD 3.1 million for the six months ended 30 June 2019.
 




 


6 months
ended
30 June 19


6 months
ended
30 June 18


% of change




Sales (Tonnes)


780,315


738,228


6%




Consolidated turnover (KZT million)


14,079


10,539


34%




Consolidated turnover (USD Million)


37.1


32.8


13%




Consolidated profit after tax (USD Million)


3.1


0.2


 




Profit per share (Cents)


1.4


0.1


 




Average exchange rate (USD/KZT)


379


326


-16%




 
·    The Company continued to maintain prices from last summer while taking advantage of the slight increase of volumes in the first few months of 2019.
·    The average ex-factory price increased from 11,560 KZT /tonne to 15,148 KZT /tonne or 31% during the period.
·    Steppe Cement's gross margin increased from 32% to 37% in USD terms.
·    Selling expenses decreased in USD terms but increased in KZT by 12% on per tonne basis due to inflation in transport costs.
·    Administrative expenses were reduced by 3% in KZT.
·    The Kazakh Tenge depreciated by 16% compared to the first half of 2018. However, the devaluation took part mostly in the second half of 2018 and therefore the Company only booked foreign exchange losses of USD 0.04 million in 1H 2019.
·    The Company generated operating profit before working capital changes of USD 7.9 million in 1H 2019 against USD 5.3 million in 2018.
·    The Kazakhstan economy grew at 3.8% up to April 2019.
·    Reported inflation has been 5.5% up to the end of August 2019.

 
2. Production costs
·    Production costs increased by 17% in KZT mostly due to the lower level of clinker production as both lines were stopped for longer than usual annual maintenance in 1H 2019.
·    The volumes lost in 1H should be recovered in the second half as less maintenance stops are planned.

 
3. Update on the Kazakh cement market
·    The Kazakh cement market decreased by 3% during the first half of the year. Steppe Cement expects a market of about 8.4 million tonnes for the full year 2019, a 3% decrease compared to 2018.
·    Steppe Cement increased its local market share from 15.5% in 1H2018 to 17% in 1H2019. We expect to maintain or increase slightly this share for the full year. Exports represented 13% of the volumes in the 1H2019 similar to last year's.
·    Imports into Kazakhstan have remained stable at 0.34 million tonnes in 2019 and they represent 8% of the market.
·    Exports from Kazakhstan have decreased slightly to 0.87 million tonnes from 0.92 million last year.
·    Exports from Kazakhstan represent 19% of local production.
·    Overall production of all factories in Kazakhstan has decreased by 4% to 4.6 million tonnes for the 1H2019.
·    Currently 80% of production in the country is coming from dry lines, an increase of 2% compared to last year's level.
 
4. Financing
The debt position of the company as of 30 June 2019 was USD10.7 million (USD 4.6 million current and USD 6.1 million long term):
·    A long-term USD 5.1 million loan outstanding to Halyk Bank for the purchase of the wagons and repayable monthly till November 2021 at 6.5% p.a. and secured with the pledge of the wagons.
·    A loan of KZT 1.178 billion with Halyk Bank JSC subsidised by the government for capital investment at 6% p.a.
·    A loan of KZT 500 million with Halyk Bank JSC subsidised by the government for working capital at 6% p.a.
·    We have maintained KZT3.9 billion of available working capital lines from Halyk Bank, Altyn Bank and VTB Bank. The current rates are 6% p.a. in USD and 13% p.a. in KZT respectively. As of 30 June 2019 we had the equivalent of USD 1.1 million outstanding from these working capital loans.
 
At the same time we carried a balance of USD 10.8 million in cash of which USD 8.3 million were subsequently used to pay a dividend.
 
As of 31 August 2019, the total debt was USD 9 million (53% in USD and the rest in KZT)

The total bank debt net of cash amounted to USD 5.1 million.
 
A pdf copy of the announcement and the full interim financial statements is available on the company's website at 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 94802500.
Broker: Contact Charlie Cryer at +44 20 3440 6800
 
 
 
 
 
 
 
SUMMARY OF INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2019 (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 to view the full interim financial statements.
 
 
 
 
 
 
 
 
 
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 2019 (UNAUDITED)
 




 


 


The Group


 


The Company




 


 


6 months ended


 


6 months ended




 


 


30 June 2019


 


30 June 2018


 


30  June 2019


 


30 June 2018




 


 


USD'000


 


USD'000


 


USD'000


 


USD'000




 


 


 


 


 


 


 


 


 




Revenue


 


37,122


 


32,838


 


629


 


50




 


 


 


 


 


 


 


 


 




Cost of sales


 


(23,515)


 


(22,114)


 


-


 


-




 


 


 


 


 


 


 


 


 




Gross profit


 


13,607


 


10,724


 


629


 


50




 


 


 


 


 


 


 


 


 




Selling expenses


 


(6,584)


 


(6,450)


 


-


 


-




 


 


 


 


 


 


 


 


 




General and administrative


 


 


 


 


 


 


 


 




expenses


 


(2,380)


 


(2,838)


 


(147)


 


(145)




 


 


 


 


 


 


 


 


 




Operating profit/(loss)


 


4,643


 


1,436


 


482


 


(95)




Interest income


 


147


 


15


 


^


 


^




Finance costs


 


(554)


 


(942)


 


-


 


-




Net foreign exchange (loss)/gain


 


(36)


 


(500)


 


3


 


21




Other income, net


 


148


 


396


 


-


 


-




 


 


 


 


 


 


 


 


 




Profit/(Loss) before income tax


 


4,348


 


405


 


485


 


(74)




 


 


 


 


 


 


 


 


 




Income tax expense


 


(1,266)


 


(199)


 


-


 


(2)




 


 


 


 


 


 


 


 


 




Profit/(Loss) for the period


 


3,082


 


206


 


485


 


(76)




 


 


 


 


 


 


 


 


 




Attributable to:


 


 


 


 


 


 


 


 




Shareholders of the Company


 


3,082


 


206


 


485


 


(76)




 


 


 


 


 


 


 


 


 




Profit per share:


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 




Basic and diluted (cents)


 


1.4


 


0.1


 


 


 


 




 
^ Insignificant amount.
 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2019 (UNAUDITED)
 
 
 




 


 


The Group


 


The Company


 




 


 


6 months ended


 


6 months ended


 




 


 


30 June 2019


 


30 June 2018


 


30 June 2019


 


30 June 2018


 




 


 


USD'000


 


USD'000


 


USD'000


 


USD'000


 




 


 


 


 


 


 


 


 


 


 




Profit/(Loss) for the period


 


3,082


 


206


 


485


 


(76)


 




 


 


 


 


 


 


 


 


 


 




Other comprehensive income/(loss):


 


 


 


 


 


 


 


 


 




Item that may be reclassified subsequently to profit or loss


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 




Exchange differences arising on translation of foreign subsidiary companies


 


759


 


(1,756)


 


-


 


-


 




 


 


 


 


 


 


 


 


 


 




Total other comprehensive income/(loss) for the period


 


759


 


(1,756)


 


-


 


-


 




 


 


 


 


 


 


 


 


 


 




Total comprehensive income/(loss) for the period


 


3,841


 


(1,550)


 


485


 


(76)


 




 


 


 


 


 


 


 


 


 


 




Attributable to:


 


 


 


 


 


 


 


 


 




Shareholders of the Company


 


3,841


 


(1,550)


 


485


 


(76)


 




 
 
 
 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2019 (UNAUDITED)
 
 




 


 


     The Group


 


The Company




 


 


 


Unaudited


 


Audited


 


Unaudited


 


Audited




 


 


 


30 June 2019


 


31 Dec 2018


 


30 June 2019


 


31 Dec 2018




 


 


 


USD'000


 


USD'000


 


USD'000


 


USD'000




Assets


 


 


 


 


 


 


 


 


 




Non-Current Assets:


 


 


 


 


 


 


 


 


 




Property, plant and equipment


 


 


52,733


 


54,612


 


-


 


-




Investment in subsidiary companies


 


 


-


 


-


 


26,500


 


26,500




Loan to subsidiary company


 


 


-


 


-


 


30,160


 


30,170




Lease receivable


 


 


960


 


-


 


-


 


-




Advances and prepaid expenses


 


 


291


 


191


 


-


 


-




Other assets


 


 


2,247


 


2,203


 


-


 


-




 


 


 


 


 


 


 


 


 


 




Total Non-Current Assets


 


 


56,231


 


57,006


 


56,660


 


56.670




 


 


 


 


 


 


 


 


 


 




Current Assets


 


 


 


 


 


 


 


 


 




Inventories


 


 


12,205


 


13,381


 


-


 


-




Trade and other receivables


 


 


4,393


 


3,500


 


9,308


 


8,884




Lease receivable


 


 


612


 


-


 


-


 


-




Income tax receivable


 


 


171


 


175


 


-


 


-




Loans and advances to subsidiary companies


 


 


-


 


-


 


9,671


 


9,634




Advances and prepaid expenses


 


 


2,860


 


2,313


 


13


 


7




Cash and cash equivalents


 


 


10,777


 


5,720


 


83


 


23




 


 


 


 


 


 


 


 


 


 




Total Current Assets


 


 


31,018


 


25,089


 


19,075


 


18,548




 


 


 


 


 


 


 


 


 


 




Total Assets


 


 


87,249


 


82,095


 


75,735


 


75,218




 
 
 
 
 
 
 




 


 


            The Group


 


The Company




 


 


 


Unaudited


 


Audited


 


Unaudited


 


Audited




 


 


 


30 June 2019


 


31 Dec 2018


 


30 June 2019


 


31 Dec 2018




 


 


 


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


 


 


2,182


 


2,349


 


-


 


-




Translation reserve


 


 


(115,507)


 


(116,266)


 


-


 


-




Retained earnings/ (Accumulated loss)


 


 


91,000


 


96,113


 


(7,478)


 


399




 


 


 


 


 


 


 


 


 


 




Total Equity


 


 


51,436


 


55,957


 


66,283


 


74,160




 


 


 


 


 


 


 


 


 


 




Non-Current Liabilities


 


 


 


 


 


 


 


 


 




Borrowings


 


 


6,084


 


6,607


 


-


 


-




Deferred taxes


 


 


3,028


 


2,055


 


-


 


-




Deferred income


 


 


1,610


 


1,629


 


-


 


-




Provision for site restoration


 


 


224


 


65


 


-


 


-




 


 


 


 


 


 


 


 


 


 




Total Non-Current Liabilities


 


 


10,946


 


10,356


 


-


 


-




 


 


 


 


 


 


 


 


 


 




Current liabilities


 


 


 


 


 


 


 


 


 




Trade and other payables


 


 


15,521


 


6,615


 


8,362


 


-




Accrued and other liabilities


 


 


3,484


 


2,682


 


1,090


 


1,058




Borrowings


 


 


4,569


 


5,217


 


-


 


-




Taxes payable


 


 


1,293


 


1,268


 


-


 


-




 


 


 


 


 


 


 


 


 


 




Total Current Liabilities


 


 


24,867


 


15,782


 


9,452


 


1,058




 


 


 


 


 


 


 


 


 


 




Total Liabilities


 


 


35,813


 


26,138


 


9,452


 


1,058




 


 


 


 


 


 


 


 


 


 




Total Equity and Liabilities


 


 


87,249


 


82,095


 


75,735


 


75,218




 
 
 
 
 
 
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2019 (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 2019


73,761


 


2,349


 


(116,266)


 


96,113


 


55,957




Profit for the period


-


 


-


 


-


 


3,082


 


3,082




Other comprehensive income


-


 


-


 


759


 


-


 


759




Total comprehensive income for the period


-


 


-


 


759


 


3,082


 


3,841




Dividend payable


-


 


-


 


-


 


(8,362)


 


(8,362)




Transfer of revaluation reserve relating to the depreciation of property, plant and equipment through use


-


 


(167)


 


-


 


167


 


-




 


 


 


 


 


 


 


 


 


 




Balance as at 30 June 2019


73,761


 


2,182


 


(115,507)


 


91,000


 


51,436




 
 
 
 
 




 


 


 


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 2018


73,761


 


2,680


 


(106,741)


 


89,817


 


59,517




Profit for the period


-


 


-


 


-


 


206


 


206




Other comprehensive loss


-


 


-


 


(1,756)


 


-


 


(1,756)




Total comprehensive (loss)/income for the period


-


 


-


 


(1,756)


 


206


 


(1,550)




Dividend payable


-


 


-


 


-


 


(2,891)


 


(2,891)




Transfer of revaluation reserve relating to the depreciation of property, plant and equipment through use


-


 


(186)


 


-


 


186


 


-




 


 


 


 


 


 


 


 


 


 




Balance as at 30 June 2018


73,761


 


2,494


 


(108,497)


 


87,318


 


55,076




 
 
 
 
 
 




 


 


 


 


 


 




The Company


Share capital


 


Accumulated losses


 


Total




 


USD'000


 


USD'000


 


USD'000




 


 


 


 


 


 




Balance as at 1 January 2019


73,761


 


399


 


74,160




Total comprehensive income for the period


-


 


485


 


485




Dividend payable


-


 


(8,362)


 


(8,362)




Balance as at 30 June 2019


73,761


 


(7,478)


 


66,283




 


 


 


 


 


 




Balance as at 1 January 2018


73,761


 


(5,275)


 


68,486




Total comprehensive loss for the period


-


 


(76)


 


(76)




Dividend payable


-


 


(2,891)


 


(2,891)




Balance as at 30 June 2018


73,761


 


(8,242)


 


65,519




 
 
 
 
 
 
 
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2019 (UNAUDITED)
 




 


 


 


The Group


 


The Company




 


 


 


6 months ended


 


6 months ended




 


 


 


30 June 2019


 


30 June 2018


 


30 June 2019


 


30 June 2018




 


 


 


USD'000


 


USD'000


 


USD'000


 


USD'000




OPERATING ACTIVITIES


 


 


 


 


 


 


 


 


 




Profit/(Loss) before income tax


 


 


4,348


 


405


 


485


 


(73)




Adjustments for non-cash items


 


 


3,530


 


4,870


 


(631)


 


(21)




 


 


 


 


 


 


 


 


 


 




Operating Profit/(Loss) Before Working Capital Changes


 


 


7,878


 


5,275


 


(146)


 


(94)




 


 


 


 


 


 


 


 


 


 




(Increase)/ Decrease in:


 


 


 


 


 


 


 


 


 




Inventories


 


 


1,531


 


(1,309)


 


-


 


-




Trade and other receivables,


 


 


(3,401)


 


(2,169)


 


(430)


 


(12)




advances and prepaid expenses


 


 


 


 


 


 


 


 


 




Loans and advances from subsidiary companies


 


 


-


 


-


 


(27)


 


-




Increase/(Decrease) in:


 


 


 


 


 


 


 


 


 




Trade and other payables,


 


 


1,517


 


4,038


 


34


 


45




accrued and other liabilities


 


 


 


 


 


 


 


 


 




Loans and advances to subsidiary companies


 


 


-


 


-


 


-


 


138




 


 


 


 


 


 


 


 


 


 




Cash Generated From/(Used In) Operations


 


 


7,525


 


5,835


 


(569)


 


77




Income tax paid


 


 


(85)


 


-


 


-


 


-




Interest paid


 


 


(420)


 


(947)


 


-


 


-




 


 


 


 


 


 


 


 


 


 




Net Cash Generated From/(Used In) Operating Activities


 


 


7,020


 


4,888


 


(569)


 


77




 


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 




INVESTING ACTIVITIES


 


 


 


 


 


 


 


 


 




Purchase of property, plant and equipment


 


 


(844)


 


(2,437)


 


-


 


-




Purchase of other assets


 


 


(29)


 


(28)


 


-


 


-




Interest received


 


 


147


 


15


 


629


 


-




 


 


 


 


 


 


 


 


 


 




Net Cash Used In Investing Activities


 


 


(726)


 


(2,450)


 


629


 


-




 


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 




FINANCING ACTIVITIES


 


 


 


 


 


 


 


 


 




Proceeds from borrowings


 


 


4,515


 


7,253


 


-


 


-




Repayment from borrowings


 


 


(5,805)


 


(9,013)


 


-


 


-




 


 


 


 


 


 


 


 


 


 




Net Cash Used In Financing Activities


 


 


(1,290)


 


(1,760)


 


-


 


-




 


 


 


 


 


 


 


 


 


 




NET INCREASE IN CASH AND CASH EQUIVALENTS


 


 


5,004


 


678


 


60


 


77




EFFECTS OF FOREIGN EXCHANGE RATE CHANGES


 


 


54


 


(69)


 


-


 


-




CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD


 


 


5,719


 


3,045


 


23


 


13




 


 


 


 


 


 


 


 


 


 




CASH AND CASH EQUIVALENTS AT END OF THE PERIOD


 


 


10,777


 


3,654


 


83


 


90




 


 


 


 


 


 


 


 


 


 




 




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