REG - Steppe Cement Ltd - Interim Results and General Market Update
Steppe Cement Ltd
Interim Results for the Half Year ended 30 June 2021
and General Market Update
1. Interim Results
Steppe Cement Ltd ("Steppe Cement" and "the Company") posted a consolidated profit after tax of USD6.2 million for the six months ended 30 June 2021, an increase of 52%.
6 months
ended
30 June 21
6 months
ended
30 June 20
% of change
Sales (Tonnes)
840,661
764,752
10%
Consolidated turnover KZT million
16,657
13,677
22%
Consolidated turnover (USD Million)
39.5
33.8
17%
Consolidated profit after tax (USD Million)
6.2
4.1
52%
Earnings per share (Cents)
2.8
1.9
47%
Average exchange rate (USD/KZT)
424
405
-5%
· The Company managed to increase cement prices during the first half of 2021.
· The average ex-factory price increased from 14,727 KZT /tonne (USD36 per tonne) to 16,571 KZT/tonne (USD39 per tonne) or 11% during the period.
· Steppe Cement's gross margin increased from 40% to 46% in USD terms due to price increases.
· Selling expenses per tonne increased in USD terms by 16% and in KZT by 21% due to increases in transportation prices from the national railways.
· General and administrative expenses increased by 16% in USD.
· The Kazakh Tenge average rate depreciated by 5% compared to the first half of 2020 but only translated in a small foreign exchange loss of USD 0.2 million as the company maintains very small loan balances in USD.
· The Company generated operating profit before working capital changes of USD12.9 million in 1H 2021 against USD 11 million in 2020.
· Kazakhstan GDP increased by 2.3% in 1H2021 compared to 1H2020 rebounding from a drop of 1.4% in the first quarter of 2021.
· Reported inflation has been 7% up to the end of August 2021.
2. Production costs
· Production costs increased by 5% in KZT mostly due to the higher electricity cost, diesel and spare parts for maintenance.
3. Update on the Kazakh cement market
· The Kazakh cement market increased by 28% during the first half of the year. The increase is due mostly to the program set in place by the government that allows partial withdrawal from personal pension funds for real estate investment or health reasons. It was done to stimulate the economy and it may bring total cement consumption in 2021 to 10.5 to 11 million tonnes in 2021, an increase of more than 1 million tonnes from 2020.
· Steppe Cement's local market share decreased from 16.5% in 1H2020 to 15% in 1H2021 due to the strong growth in the overall market. We expect to maintain this share for the full year. Exports represented 9% of the volumes in the 1H2021 from 11% last year.
· Imports into Kazakhstan have increased to 0.4 million tonnes in 2021 and represent 7% of the market.
· Exports from Kazakhstan have increased slightly to 0.97 million tonnes.
· Exports from Kazakhstan represent 17% of local production from 18% last year.
· Overall production of all factories in Kazakhstan has increased by 1 million tonnes to 5.7 million tonnes for the 1H2021 as closures in the smaller factories were balanced by increases in production by Gezhuoba Cement and Alacem.
· Currently 82% of production in the country is manufactured from dry lines up from 80% in 2020.
4. Financing
· Interest expenses on bank debt were reduced to USD 0.37 million from USD 0.41 million in 2020 mostly on subsidised loans while we reduced interest expenses on lease liabilities to USD 0.13 million from USD 0.35 million after the application of IFRS 16 on the 3 years wagon leases. The rental on those wagons was considered selling expenses previously.
· Steppe Cement recorded a net cash position of USD7.4 million compared to net cash of USD6.4 million as of 30 June 2020.
· The borrowings of the Company as of 30 June 2021 were USD6.1 million while we carried a cash balance of USD 13.5 million. For comparison, on 30 June 2020 we had USD3.2 million in borrowings and USD9.6 million in cash.
· As of 15 September 2021 after paying the dividend, the financial debt was the equivalent of USD 5.6 million (all denominated in KZT) and the cash was USD10.5 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
SUMMARY OF INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2021 (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 2021 (UNAUDITED)
The Group
The Company
6 months ended
6 months ended
30 June 2021
30 June 2020
30 June 2021
30 June 2020
USD'000
USD'000
USD'000
USD'000
Revenue
39,534
33,786
691
701
Cost of sales
(21,230)
(20,285)
-
-
Gross profit
18,304
13,501
691
701
Selling expenses
(6,577)
(5,162)
-
-
General and administrative
expenses
(2,965)
(2,566)
(157)
(135)
Operating profit
8,762
5,773
534
566
Interest income
78
112
-
^
Finance costs
(475)
(766)
-
-
Net foreign exchange (loss)/gain
(147)
(571)
(1)
3
Other income, net
(511)
248
-
82
Profit before income tax
7,707
4,796
533
651
Income tax expense
(1,515)
(736)
-
-
Profit for the period
6,192
4,060
533
651
Attributable to:
Shareholders of the Company
6,192
4,060
533
651
Earnings per share:
Basic and diluted (cents)
2.8
1.9
^ Insignificant amount.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIOD ENDED 30 JUNE 2021 (UNAUDITED)
The Group
The Company
6 months ended
6 months ended
30 June 2021
30 June 2020
30 June 2021
30 June 2020
USD'000
USD'000
USD'000
USD'000
Profit for the period
6,192
4,060
533
651
Other comprehensive loss:
Item that may be reclassified subsequently to profit or loss
Exchange differences arising on translation of foreign subsidiary companies
(902)
(3,499)
-
-
Total other comprehensive loss for the period
(902)
(3,499)
-
-
Total comprehensive income for the period
5,290
561
533
651
Attributable to:
Shareholders of the Company
5,290
561
533
651
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2021 (UNAUDITED)
The Group
The Company
Unaudited
Audited
Unaudited
Audited
30 June 2021
31 Dec 2020
30 June 2021
31 Dec 2020
USD'000
USD'000
USD'000
USD'000
Assets
Non-Current Assets:
Property, plant and equipment
49,461
48,856
-
-
Right-of-use assets
2,571
3,483
Investment in subsidiary companies
-
-
36,307
36,294
Loan to subsidiary company
-
-
30,100
30,110
Advances
11
-
-
-
Other assets
1,887
1,901
-
-
Total Non-Current Assets
53,930
54,240
66,407
66,404
Current Assets
Inventories
11,766
11,098
-
-
Trade and other receivables
3,438
2,332
7,807
6,776
Other assets
-
305
-
-
Income tax receivable
1,037
1,435
-
-
Loans and advances to subsidiary companies
-
-
40
40
Advances and prepaid expenses
4,915
3,644
18
6
Cash and cash equivalents
13,470
8,214
846
1,353
Total Current Assets
34,626
27,028
8,711
8,175
Total Assets
88,556
81,268
75,118
74,579
The Group
The Company
Unaudited
Audited
Unaudited
Audited
30 June 2021
31 Dec 2020
30 June 2021
31 Dec 2020
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
2,222
2,370
-
-
Translation reserve
(119,416)
(118,514)
-
-
Retained earnings
106,665
100,325
1,164
631
Total Equity
63,232
57,942
74,925
74,392
Non-Current Liabilities
Borrowings
3,587
2,368
-
-
Lease liabilities
1,057
2,077
-
-
Deferred taxes
4,728
4,560
-
-
Deferred income
1,762
1,492
-
-
Provision for site restoration
177
151
-
-
Total Non-Current Liabilities
11,311
10,648
-
-
Current liabilities
Trade and other payables
5,116
4,075
-
-
Accrued and other liabilities
3,139
1,638
193
187
Borrowings
2,470
4,429
-
-
Lease liabilities
1,914
1,831
-
-
Taxes payable
1,374
705
-
-
Total Current Liabilities
14,013
12,678
193
187
Total Liabilities
25,324
23,326
193
187
Total Equity and Liabilities
88,556
81,268
75,118
74,579
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2021 (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 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, plant and equipment through use
-
(148)
-
148
-
Balance as at 30 June 2021
73,761
2,222
(119,416)
106,665
63,232
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)/income
-
-
(3,499)
-
(3,499)
Total comprehensive 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
The Company
Share capital
Retained earnings
Total
USD'000
USD'000
USD'000
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
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
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2021 (UNAUDITED)
The Group
The Company
6 months ended
6 months ended
30 June 2021
30 June 2020
30 June 2021
30 June 2020
USD'000
USD'000
USD'000
USD'000
OPERATING ACTIVITIES
Profit before income tax
7,707
4,796
533
651
Adjustments for:
Depreciation of property, plant and equipment
3,733
3,559
-
-
Depreciation of right-of-use assets
1,031
1,446
-
-
Adjustments for non-cash items
478
1,192
(1,030)
(329)
Operating Profit/(Loss) Before Working Capital Changes
12,949
10,993
(497)
322
(Increase)/ Decrease in:
Inventories
(1,607)
541
-
-
Trade and other receivables,
(2,175)
(1,411)
(12)
(872)
advances and prepaid expenses
Loans and advances from subsidiary companies
-
-
(3)
10
Increase in:
Trade and other payables,
3,317
2,251
5
16
accrued and other liabilities
Cash Generated From/(Used In) Operations
12,484
12,374
(507)
(524)
Income tax paid
(730)
(185)
-
-
Interest paid
(299)
(580)
-
-
Net Cash Generated From/(Used In) Operating Activities
11,455
11,609
(507)
(524)
INVESTING ACTIVITIES
Purchase of property, plant and equipment
(4,529)
(2,644)
-
-
Purchase of other assets
(18)
-
-
-
Interest received
78
112
-
330
Net Cash (Used In)/Generated From Investing Activities
(4,469)
(2,532)
-
330
FINANCING ACTIVITIES
Proceeds from borrowings
3,350
2,098
-
-
Repayment from borrowings
(4,089)
(9,003)
-
-
Payment of lease liabilities
(877)
(1,133)
-
-
Net Cash Used In Financing Activities
(1,616)
(8,038)
-
-
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
5,370
1,039
(507)
(194)
EFFECTS OF FOREIGN EXCHANGE RATE CHANGES
(114)
(486)
-
-
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD
8,214
9,014
1,353
262
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD
13,470
9,567
846
68
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