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

Steppe CementAnnouncement

16/09/2020 07:01

RNS Number : 1446Z
  
Steppe Cement Limited
  
16 September 2020
  
 

Steppe Cement Ltd 
Interim Results for the Half Year ended 30 June 2020
and General Market Update 
1. Interim Results 
Steppe Cement Ltd ("Steppe Cement" and "the Company") posted a consolidated profit after tax of USD4.1 million for the six months ended 30 June 2020.
 




 


6 months
ended
30 June 20


6 months
ended
30 June 19


% of change




Sales (Tonnes)


764,752


780,315


-2%




Consolidated turnover KZT million


13,677


14,079


-3%




Consolidated turnover (USD Million)


33.8


37.1


-9%




Consolidated profit after tax (USD Million)


4.1


3.1


 




Earnings per share (Cents)


1.9


1.4


 




Average exchange rate (USD/KZT)


405


379


-7%




 
·    The Company maintained prices from last summer until the Covid crisis affected the second quarter. 
·    The average ex-factory price decreased slightly from 15,148 KZT /tonne to 14,727 KZT/tonne or 3% during the period.
·    Steppe Cement's gross margin increased from 37% to 40% in USD terms due to cost containment measures. 
·    Selling expenses per tonne decreased in USD terms by 20% and in KZT by 13% due to distribution in areas closer to the factory and the implementation of IFRS 16 as some of the rental fees for wagons have been transferred to financial leases reducing the transport costs.
·    Administrative expenses remained constant in USD.
·    The Kazakh Tenge depreciated by 7% compared to the first half of 2019 that translated in a foreign exchange loss of USD 0.6 million. 
·    The Company generated operating profit before working capital changes of USD 11 million in 1H 2020 against USD 7.9 million in 2019. 
·    Kazakhstan GDP increased by 2.7% in 1Q2020 but decreased -1.8% in 1H2020 because of Covid-19.
·    Reported inflation has been 6.5% up to the end of July 2020.

 
2. Production costs 
·    Production costs decreased by 4% in KZT mostly due to the higher production of clinker and lower maintenance and coal costs.

 
3. Update on the Kazakh cement market 
·    The Kazakh cement market increased by 2% during the first half of the year. The increase happened mostly in the 1Q while 2Q was slightly below 2019. Steppe Cement currently expects a market of about 9.1 million tonnes for the full year 2020, an increase of 2% over 2019.
·    Steppe Cement decreased its local market share from 17% in 1H2019 to 16.5% in 1H2020. We expect to maintain this share for the full year. Exports represented 11% of the volumes in the 1H2020 like last year.
·    Imports into Kazakhstan have been reduced to 0.25 million tonnes in 2020 due to the closure of the market to Iranian exports. Imports represent 6% of the market.
·    Exports from Kazakhstan have been maintained at 0.87 million tonnes.
·    Exports from Kazakhstan represent 18% of local production from 19% last year.
·    Overall production of all factories in Kazakhstan has increased by 2% to 4.7 million tonnes for the 1H2020 as closures in the smaller factures were balanced by increased in Kokshe and Gezhuoba. 
·    Currently 80% of production in the country is manufactured from dry lines. 
 
4. Financing 
·    Interest expenses on bank debt were reduced to USD 0.41 million from USD 0.55 million in 2019 while we added interest expenses on lease liabilities of USD 0.35 million due to the application of IFRS 16. The rental on those wagons was considered selling expenses before.
·    Steppe Cement recorded a net cash position of USD6.4 million compared to net debt of USD1.1 million as of 30 June 2019. 
·    The borrowings of the Company as of 30 June 2020 were USD3.2 million (USD 2.3 million current and USD 0.9 million long term) while we carried a cash balance of USD 9.6 million. For comparison, on 30 June 2019 we had USD10.1 million in borrowings and USD 9 million in cash.
·    The USD loan outstanding to Halyk Bank for the purchase of the wagons and repayable monthly till November 2021 at 6.5% p.a. was subsequently repaid in August 2020 in advance.
·    As of 31 August 2020 after paying the dividend, the financial debt was the equivalent of USD 2 million (all denominated in KZT) and the cash was USD 5.7 million.
·    We have maintained the working capital lines available for the winter.

 
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 9480 2500.
Broker: Contact Charlie Cryer at +44 20 3440 6800
 
 
 
 
 
 
 
 
INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2020
(Unaudited)
(In United States Dollars)
 
 


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 2020 (UNAUDITED)
 
 




 


 


The Group


 


The Company




 


 


6 months ended


 


6 months ended




 


 


30 June 2020


 


30 June 2019


 


30 June 2020


 


30 June 2019




 


 


USD'000


 


USD'000


 


USD'000


 


USD'000




 


 


 


 


 


 


 


 


 




Revenue


 


33,786


 


37,122


 


701


 


629




 


 


 


 


 


 


 


 


 




Cost of sales


 


(20,285)


 


(23,515)


 


-


 


-




 


 


 


 


 


 


 


 


 




Gross profit


 


13,501


 


13,607


 


701


 


629




 


 


 


 


 


 


 


 


 




Selling expenses


 


(5,162)


 


(6,584)


 


-


 


-




 


 


 


 


 


 


 


 


 




General and administrative 


 


 


 


 


 


 


 


 




expenses 


 


(2,566)


 


(2,563)


 


(135)


 


(147)




 


 


 


 


 


 


 


 


 




Operating profit


 


5,773


 


4,460


 


566


 


482




Interest income


 


112


 


147


 


^


 


^




Finance costs


 


(766)


 


(554)


 


-


 


-




Net foreign exchange (loss)/gain


 


(571)


 


(36)


 


3


 


3




Other income, net


 


248


 


148


 


82


 


-




 


 


 


 


 


 


 


 


 




Profit before income tax


 


4,796


 


4,165


 


651


 


485




 


 


 


 


 


 


 


 


 




Income tax expense


 


(736)


 


(1,083)


 


-


 


-




 


 


 


 


 


 


 


 


 




Profit for the period


 


4,060


 


3,082


 


651


 


485




 


 


 


 


 


 


 


 


 




Attributable to:


 


 


 


 


 


 


 


 




Shareholders of the Company


 


4,060


 


3,082


 


651


 


485




 


 


 


 


 


 


 


 


 




Earnings per share:


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 




Basic and diluted (cents)


 


1.9


 


1.4


 


 


 


 




 
^ Insignificant amount.
 
 
 
CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIOD ENDED 30 JUNE 2020 (UNAUDITED)
 
 
 
 




 


 


The Group


 


The Company


 




 


 


6 months ended


 


6 months ended


 




 


 


30 June 2020


 


30 June 2019


 


30 June 2020


 


30 June 2019


 




 


 


USD'000


 


USD'000


 


USD'000


 


USD'000


 




 


 


 


 


 


 


 


 


 


 




Profit for the period


 


4,060


 


3,082


 


651


 


485


 




 


 


 


 


 


 


 


 


 


 




Other comprehensive (loss)/income:


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 




Item that may be reclassified subsequently to profit or loss


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 




Exchange differences arising on translation of foreign subsidiary companies


 


(3,499)


 


759


 


-


 


-


 




 


 


 


 


 


 


 


 


 


 




Total other comprehensive (loss)/income for the period


 


(3,499)


 


759


 


-


 


-


 




 


 


 


 


 


 


 


 


 


 




Total comprehensive income for the period


 


561


 


3,841


 


651


 


485


 




 


 


 


 


 


 


 


 


 


 




Attributable to:


 


 


 


 


 


 


 


 


 




Shareholders of the Company


 


561


 


3,841


 


651


 


485


 




 
 
 
 
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020 (UNAUDITED)
 
 




 


 


     The Group


 


The Company




 


 


 


Unaudited


 


Audited


 


Unaudited


 


Audited




 


 


 


30 June 2020


 


31 Dec 2019


 


30 June 2020


 


31 Dec 2019




 


 


 


USD'000


 


USD'000


 


USD'000


 


USD'000




Assets


 


 


 


 


 


 


 


 


 




Non-Current Assets:


 


 


 


 


 


 


 


 


 




Property, plant and equipment


 


 


51,614


 


55,808


 


-


 


-




Right-of-use assets


 


 


4,707


 


6,140


 


 


 


 




Investment in subsidiary companies


 


 


-


 


-


 


36,198


 


26,500




Loan to subsidiary company


 


 


-


 


-


 


30,140


 


30,140




Advances


 


 


12


 


6


 


-


 


-




Other assets


 


 


2,287


 


2,427


 


-


 


-




 


 


 


 


 


 


 


 


 


 




Total Non-Current Assets


 


 


58,620


 


64,381


 


66,338


 


66,338




 


 


 


 


 


 


 


 


 


 




Current Assets


 


 


 


 


 


 


 


 


 




Inventories


 


 


9,668


 


10,812


 


-


 


-




Trade and other receivables 


 


 


6,173


 


5,790


 


9,710


 


8,848




Lease receivable


 


 


12


 


-


 


-


 


-




Income tax receivable


 


 


432


 


405


 


-


 


-




Loans and advances to subsidiary companies


 


 


-


 


-


 


20


 


30




Advances and prepaid expenses


 


 


4,186


 


3,683


 


26


 


16




Cash and cash equivalents 


 


 


9,567


 


9,014


 


68


 


262




 


 


 


 


 


 


 


 


 


 




Total Current Assets


 


 


30,038


 


29,704


 


9,824


 


6,156




 


 


 


 


 


 


 


 


 


 




Total Assets


 


 


88,658


 


94,085


 


76,162


 


75,494




 
 




 


 


            The Group


 


The Company




 


 


 


Unaudited


 


Audited


 


Unaudited


 


Audited




 


 


 


30 June 2020


 


31 Dec 2019


 


30 June 2020


 


31 Dec 2019




 


 


 


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


 


 


1,859


 


2,016


 


-


 


-




Translation reserve


 


 


(116,785)


 


(113,286)


 


-


 


-




Retained earnings


 


 


104,603


 


100,386


 


2,228


 


1,577




 


 


 


 


 


 


 


 


 


 




Total Equity


 


 


63,438


 


62,877


 


75,989


 


75,338




 


 


 


 


 


 


 


 


 


 




Non-Current Liabilities


 


 


 


 


 


 


 


 


 




Borrowings


 


 


2,300


 


3,893


 


-


 


-




Lease liabilities


 


 


3,147


 


4,307


 


-


 


-




Deferred taxes


 


 


4,828


 


4,652


 


-


 


-




Deferred income


 


 


1,308


 


1,421


 


-


 


-




Provision for site restoration


 


 


75


 


74


 


-


 


-




 


 


 


 


 


 


 


 


 


 




Total Non-Current Liabilities


 


 


11,658


 


14,347


 


-


 


-




 


 


 


 


 


 


 


 


 


 




Current liabilities


 


 


 


 


 


 


 


 


 




Trade and other payables


 


 


4,351


 


6,204


 


-


 


-




Accrued and other liabilities


 


 


5,033


 


1,405


 


173


 


156




Borrowings


 


 


910


 


6,420


 


-


 


-




Lease liabilities


 


 


1,988


 


2,191


 


-


 


-




Deferred income


 


 


76


 


81


 


-


 


-




Taxes payable


 


 


1,204


 


560


 


-


 


-




 


 


 


 


 


 


 


 


 


 




Total Current Liabilities


 


 


13,562


 


16,861


 


173


 


156




 


 


 


 


 


 


 


 


 


 




Total Liabilities


 


 


25,220


 


31,208


 


173


 


156




 


 


 


 


 


 


 


 


 


 




Total Equity and Liabilities


 


 


88,658


 


94,085


 


76,162


 


75,494





 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 
FOR THE PERIOD ENDED 30 JUNE 2020 (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 2020


73,761


 


2,016


 


(113,286)


 


100,386


 


62,877




Profit for the period


-


 


-


 


-


 


4,060


 


4,060




Other comprehensive loss


-


 


-


 


(3,499)


 


-


 


(3,499)




Total comprehensive (loss)/income for the period


-


 


-


 


(3,499)


 


4,060


 


561




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


-


 


(157)


 


-


 


157


 


-




 


 


 


 


 


 


 


 


 


 




Balance as at 30 June 2020


73,761


 


1,859


 


(116,785)


 


104,603


 


63,438




 
 
 
 




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




 
 
 
 
 




 


 


 


 


 


 


 




The Company


Share capital


 


Retained earnings/


 


Total




 


 


 


Accumulated losses


 


 




 


USD'000


 


USD'000


 


USD'000




 


 


 


 


 


 




Balance as at 1 January 2020


73,761


 


1,577


 


75,338




Total comprehensive income for the period


-


 


651


 


651




Balance as at 30 June 2020


73,761


 


2,228


 


75,989




 


 


 


 


 


 




Balance as at 1 January 2019


73,761


 


399


 


74,160




Total comprehensive loss for the period


-


 


485


 


485




Dividend payable


-


 


(8,362)


 


(8,362)




Balance as at 30 June 2019


73,761


 


(7,478)


 


66,283



 
 
 
 
 
 
 
 
 



 


CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2020 (UNAUDITED)
 
 




 


 


 


The Group


 


The Company




 


 


 


6 months ended


 


6 months ended




 


 


 


30 June 2020


 


30 June 2019


 


30 June 2020


 


30 June 2019




 


 


 


USD'000


 


USD'000


 


USD'000


 


USD'000




 


 


 


 


 


 


 


 


 


 




OPERATING ACTIVITIES


 


 


 


 


 


 


 


 


 




Profit before income tax


 


 


4,796


 


4,165


 


651


 


485




 


 


 


 


 


 


 


 


 


 




Adjustments for:


 


 


 


 


 


 


 


 


 




Depreciation of property, plant and equipment


 


 


3,559


 


3,355


 


-


 


-




Depreciation of right-of-use assets


 


 


1,446


 


-


 


-


 


-




Adjustments for non-cash items


 


 


3,530


 


358


 


(329)


 


(631)




 


 


 


 


 


 


 


 


 


 




Operating Profit/(Loss) Before Working Capital Changes


 


 


10,993


 


7,878


 


322


 


(146)




 


 


 


 


 


 


 


 


 


 




(Increase)/ Decrease in:


 


 


 


 


 


 


 


 


 




Inventories


 


 


541


 


1,531


 


-


 


-




Trade and other receivables,


 


 


(1,411)


 


(3,401)


 


(430)


 


(430)




advances and prepaid expenses


 


 


 


 


 


 


 


 


 




Loans and advances from subsidiary companies


 


 


-


 


-


 


10


 


(27)




Increase in:


 


 


 


 


 


 


 


 


 




Trade and other payables,


 


 


2,251


 


1,517


 


16


 


34




accrued and other liabilities


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 




Cash Generated From/(Used In) Operations


 


 


12,374


 


7,525


 


(524)


 


(569)




Income tax paid


 


 


(185)


 


(85)


 


-


 


-




Interest paid


 


 


(580)


 


(420)


 


-


 


-




 


 


 


 


 


 


 


 


 


 




Net Cash Generated From/(Used In) Operating Activities


 


 


11,609


 


7,020


 


(524)


 


(569)




 


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 




INVESTING ACTIVITIES


 


 


 


 


 


 


 


 


 




Purchase of property, plant and equipment


 


 


(2,644)


 


(844)


 


-


 


-




Purchase of other assets


 


 


-


 


(29)


 


-


 


-




Interest received


 


 


112


 


147


 


330


 


629




 


 


 


 


 


 


 


 


 


 




Net Cash (Used In)/Generated From Investing Activities


 


 


(2,532)


 


(726)


 


330


 


629




 


 


 


 


 


 


 


 


 


 




 


 


 


 


 


 


 


 


 


 




FINANCING ACTIVITIES


 


 


 


 


 


 


 


 


 




Proceeds from borrowings


 


 


2,098


 


4,515


 


-


 


-




Repayment from borrowings


 


 


(9,003)


 


(5,805)


 


-


 


-




Payment of lease liabilities


 


 


(1,133)


 


-


 


-


 


-




 


 


 


 


 


 


 


 


 


 




Net Cash Used In Financing Activities


 


 


(8,038)


 


(1,290)


 


-


 


-




 


 


 


 


 


 


 


 


 


 




NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS


 


 


1,039


 


5,004


 


(194)


 


60




EFFECTS OF FOREIGN EXCHANGE RATE CHANGES


 


 


(486)


 


54


 


-


 


-




CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD


 


 


9,014


 


5,719


 


262


 


23




 


 


 


 


 


 


 


 


 


 




CASH AND CASH EQUIVALENTS AT END OF THE PERIOD


 


 


9,567


 


10,777


 


68


 


83




 


 


 


 


 


 


 


 


 


 




 
 

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