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Half-year Report

26th Jan 2017 13:11

RNS Number : 2300V

Lucky Cement Limited

26 January 2017

LCK/CS/2016-17/ January 26, 2017

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, 2016

This is to inform you that the Board of Directors of our Company in their meeting held on Thursday, January 26, 2017 at 11:30 a.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 Balance Sheet, Profit and Loss Account and Directors' Report are annexed.

We will be sending you the required copies of printed financial statements in due course of time.

Yours truly

for LUCKY CEMENT LIMITED

MUHAMMAD FAISAL

Executive Director and

Chief Strategy, Finance & Investment Officer

Unconsolidated Condensed Interim Balance Sheet
As At December 31, 2016

			(Un-audited)	(Audited)
			December 31,	June 30,
			2016	2016
			(PKR in '000')
ASSETS
	NON-CURRENT ASSETS
	Fixed assets
		Property, plant and equipment	34,631,600	33,887,375
		Intangible assets	101,829	126,549
			34,733,429	34,013,924

	Long-term investments		12,572,020	12,422,020
	Long-term loans and advances		88,293	75,570
	Long-term deposits		3,175	3,175
			47,396,917	46,514,689
CURRENT ASSETS
	Stores and spares		6,113,982	5,993,969
	Stock-in-trade		1,640,720	1,588,469
	Trade debts		1,704,090	2,181,788
	Loans and advances		455,390	447,049
	Trade deposits and short term prepayments		88,275	52,038
	Accrued mark-up		146,109	125,984
	Other receivables		1,259,993	1,274,026
	Tax refunds due from the Government		538,812	538,812
	Short term investments		20,211,825	400,000
	Cash and bank balances		11,891,319	26,805,582
			44,050,515	39,407,717

TOTAL ASSETS			91,447,432	85,922,406

EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES


Authorised capital			5,000,000	5,000,000

Share capital			3,233,750	3,233,750
Reserves			69,892,754	66,089,088
			73,126,504	69,322,838
NON-CURRENT LIABILITIES
	Long-term deposits		71,126	70,666
	Deferred liabilities		7,092,723	6,898,078
			7,163,849	6,968,744
CURRENT LIABILITIES
	Trade and other payables		8,889,344	8,563,850
	Taxation - net		2,267,735	1,066,974
			11,157,079	9,630,824
			18,320,928	16,599,568
CONTINGENCIES AND COMMITMENTS

TOTAL EQUITY AND LIABILITIES			91,447,432	85,922,406

Unconsolidated Condensed Interim Profit And Loss Account
For The Half Year Ended December 31, 2016

	Half Year Ended		Quarter Ended
	December 31,	December 31,	December 31,	December 31,
	2016	2015	2016	2015
	(PKR in'000')		(PKR in'000')

Gross sales	31,242,508	26,697,331	17,193,514	14,198,454

Less:
Sales tax and excise duty	7,460,182	4,572,763	4,123,836	2,543,396
Rebates and commission	340,652	316,139	194,819	173,422
	7,800,834	4,888,902	4,318,655	2,716,818

Net sales	23,441,674	21,808,429	12,874,859	11,481,636

Cost of sales	(11,775,513)	(11,632,889)	(6,559,451)	(6,044,255)

Gross profit	11,666,161	10,175,540	6,315,408	5,437,381

Distribution cost	(1,037,958)	(1,030,683)	(547,843)	(453,748)
Administrative expenses	(507,151)	(579,396)	(263,107)	(315,762)
Finance cost	(6,904)	(5,607)	(3,941)	(2,709)
Other charges	(1,156,569)	(719,046)	(742,706)	(380,191)
Other income	948,857	661,176	497,512	302,746

Profit before taxation	9,906,436	8,501,984	5,255,323	4,587,717

Taxation
- current	(2,773,574)	(2,035,062)	(1,465,115)	(1,103,598)
- deferred	(95,446)	(211,983)	10,047	(197,393)
	(2,869,020)	(2,247,045)	(1,455,068)	(1,300,991)

Profit after taxation	7,037,416	6,254,939	3,800,255	3,286,726

Other comprehensive income for the period	-	-	-	-

Total comprehensive income for the period	7,037,416	6,254,939	3,800,255	3,286,726

	(PKR)		(PKR)

Earnings per share - basic and diluted	21.76	19.34	11.75	10.16


Condensed Interim Consolidated Balance Sheet
As at December 31, 2016

		December 31,	June 30,
		2016	2016
		(Un-audited)	(Audited)
		(PKR in'000')
ASSETS
NON-CURRENT ASSETS

Fixed Assets
	Property, plant and equipment	53,287,451	52,357,646
	Intangible assets	6,815,412	7,022,261
		60,102,863	59,379,907

	Long-term investments	11,916,277	10,654,528
	Long-term loans and advances	458,965	433,207
	Long-term deposits and prepayments	39,168	39,939
		72,517,273	70,507,581
CURRENT ASSETS
	Stores, spares and consumables	7,207,223	7,016,458
	Stock-in-trade	7,117,648	6,905,826
	Trade debts	3,591,502	3,821,855
	Loans and advances	884,758	852,484
	Trade deposits and short-term prepayments	561,466	485,469
	Accrued mark-up on deposit accounts	153,085	126,286
	Other receivables	2,393,725	2,098,339
	Tax refunds due from the Government	538,812	538,812
	Taxation - net	-	1,152,299
	Short term investments	20,211,825	400,000
	Cash and bank balances	13,872,956	28,448,471
		56,533,000	51,846,299

TOTAL ASSETS		129,050,273	122,353,880

EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES


Share capital		3,233,750	3,233,750
Reserves		75,311,932	70,337,188
	Attributable to the owners of
	the Holding Company	78,545,682	73,570,938
	Non-controlling interests	8,329,810	7,888,373
	Total equity	86,875,492	81,459,311

NON-CURRENT LIABILITIES
	Long-term finances	8,632,974	8,741,955
	Long-term deposits	71,126	70,666
	Deferred liabilities	10,007,716	9,916,313
		18,711,816	18,728,934
CURRENT LIABILITIES
	Trade and other payables	19,544,341	18,532,947
	Taxation - net	931,288	-
	Accrued mark-up	128,819	146,321
	Short-term borrowings and running finance	1,286,937	1,937,184
	Current portion of long-term finance	1,571,580	1,549,183
		23,462,965	22,165,635
CONTINGENCIES AND COMMITMENTS

TOTAL EQUITY AND LIABILITIES		129,050,273	122,353,880

Condensed Interim Consolidated Profit and Loss Account
For the half year ended December 31, 2016 (Un-audited)

		Half Year Ended		Quarter Ended
		December 31,	December 31,	December 31,	December 31,
		2016	2015	2016	2015
		(PKR in'000')		(PKR in'000')

Gross sales		53,877,246	47,565,997	29,245,212	25,236,194

Less: Sales tax and excise duty		8,764,985	6,027,888	4,831,489	3,289,307
Rebates and commission		2,055,827	1,681,911	1,172,703	911,667
		10,820,812	7,709,799	6,004,192	4,200,974

Net sales		43,056,434	39,856,198	23,241,020	21,035,220

Cost of sales		(27,895,931)	(26,749,171)	(15,052,169)	(14,007,869)

Gross profit		15,160,503	13,107,027	8,188,851	7,027,351

Distribution costs		(2,131,651)	(1,923,668)	(1,118,560)	(904,498)
Administrative expenses		(1,038,256)	(1,044,275)	(533,053)	(549,080)
Finance costs		(364,151)	(468,805)	(170,908)	(208,754)
Other charges		(1,323,374)	(859,921)	(837,143)	(464,130)
Other income		1,740,984	1,284,932	867,068	664,374

Profit before taxation		12,044,055	10,095,290	6,396,255	5,565,263


Taxation
- current		(3,319,875)	(2,384,557)	(1,720,365)	(1,293,564)
- deferred		15,991	(57,049)	22,145	(100,685)
		(3,303,884)	(2,441,606)	(1,698,220)	(1,394,249)

Profit after taxation		8,740,171	7,653,684	4,698,035	4,171,014

Attributable to:
Owners of the Holding Company		8,122,743	7,169,468	4,342,348	3,871,653
Non-controlling interests		617,428	484,216	355,687	299,361

		8,740,171	7,653,684	4,698,035	4,171,014

Other comprehensive income for the period

Foreign exchange differences on translation of foreign operations
		(13,339)	143,259	(1,563)	10,744
Items to be reclassified to profit or loss in subsequent periods:

Loss on hedge during the period		-	(2,285)	-	1,057
Income tax relating to hedging reserve		-	731	-	(338)
		-	(1,554)	-	719

Adjustments for amountstransferred to initial carrying amounts of hedged item-capital work-In-progress


		-	1,554	-	1,168
Total comprehensive income for the period		8,726,832	7,796,943	4,696,472	4,183,645

Attributable to:
Owners of the Holding Company		8,109,404	7,312,727	4,340,785	3,883,455
Non-controlling interests		617,428	484,216	355,687	300,190

		8,726,832	7,796,943	4,696,472	4,183,645

		(PKR)		(PKR)

Earnings per share - basic and diluted	33	25.12	22.17	13.43	11.97

Directors' Report:

The Directors of your Company 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, 2016.

Overview:

Cement industry in Pakistan grew by 8.7% to 19.81 million tons during the half year ended December 31, 2016 compared to 18.23 million tons during the same period last year. While local sales volume registered a growth of 11.1% to 16.90 million tons during the half year compared to 15.21 million tons during the same period last year; export sales volume registered a decline of 3.5% to 2.91 million tons during the current half year compared to 3.02 million tons during the same period last year.

Your Company achieved an overall growth of 12.5% to 3.73 million tons during the half year compared to 3.32 million tons sold in the same period last year. While local sales volume of your Company registered a growth of 23.2 % to 2.98 million tons during the current half year compared to 2.42 million tons during the same period last year; export sales volume declined by 16.3% to 0.75 million tons during the current half year compared to 0.90 million tons during the same period last year.

The EPS for the current half year was recorded at PKR 21.76 which is 12.5% higher than the same period last year's EPS of PKR 19.34.

Business Performance

a. Production & Sales Volume Performance

The production and sales statistics of your Company for the half year ended 2016-17 compared to the same period last year are as follows:




Clinker Production	3,447	3,266	5.5%
Cement Production	3,487	3,289	6.0%
Cement Sales	3,498	3,318	5.4%
Clinker Sales	235	-	100%

The production and sales volume data is graphically presented as under:

A comparison of the dispatches of the industry and your Company for the half year ended 2016-17 with the same period last year is presented below:




Cement Industry
Local Sales	16,895	15,210	1,685	11.1%
Export Sales
- Bagged	2,790	2,976	(186)	(6.3%)
- Loose	121	42	79	188.1%
Total Exports	2,911	3,018	(107)	(3.5%)
Grand Total	19,806	18,228	1,578	8.7%

Lucky Cement
Local Sales
- Cement	2,745	2,418	327	13.5%
- Clinker	235	-	235	100%
Total Local Sales	2,980	2,418	562	23.2%
Export Sales
- Bagged	632	858	(226)	(26.3%)
- Loose	121	42	79	188.1%
Total Exports	753	900	(147)	(16.3%)
Grand Total	3,733	3,318	415	12.5%



Local Sales	17.6%	15.9%	10.7%
Export Sales
- Bagged	22.7%	28.8%	(21.2%)
- Loose	100.0%	100.0%	0.0%
Total Export	25.9%	29.8%	(13.1%)
Grand Total	18.8%	18.2%	3.3%

b. Financial Performance

The financial performance of your Company for the half year ended 2016-17 compared to the same period last year is presented below:


Revenue	23,442	21,808	7.5%
GP	11,666	10,176	14.6%
OP	10,121	8,565	18.2%
EBITDA	11,424	9,819	16.4%
NP	7,037	6,255	12.5%
EPS	21.76/Share	19.34/ Share	12.5%

Revenue During the half year 2016-17 under review, your Company achieved an overall net sales revenue growth of 7.5% compared to same period last year. This was mainly attributable to increase in sales volumes.	Cost of Sales During the period under review, per ton cost of sales of your Company decreased by 10.0% compared to same period last year. The decrease was mainly attributable to efficient fuel mix.
Distribution of Gross Revenue		Distribution of Cost of Sales

Gross Profit Your Company was able to improve its gross profit margin to 49.8% for the half year under review compared to 46.7% reported during the same period last year.
Net Profit Your Company achieved profit before tax of PKR 9,906.4 million during the current half year under review compared to PKR 8,501.9 million reported during the same period last year. Similarly, after tax profit of PKR 7,037.4 million was achieved during the half year under review compared to PKR 6,254.9 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, 2016 was PKR 21.76 compared to PKR 19.34 reported during the same period last year.

Projects - New and Ongoing

Brownfield Expansion (Installation of additional Line of 1.25 million tons per annum) at Karachi Plant

Your company expects the new line to be operational by the end of the calendar year 2017.

Fully integrated green field Cement Plant in Punjab Province of Pakistan - 2.3 million tons per annum

Your Company is still in the process of seeking approvals and necessary authorizations from the Government of Punjab for commencement of this project. Construction is expected to start by the end of June 2017.

10 MW WHR at PEZU Plant - Kiln

The project is in testing & commissioning phase currently. It is expected to be operational by the end of January 2017.

Investments

Investment in 1 x 660 MW, supercritical, coal based power project

Your company has executed EPC contract and finalized draft of the Power Purchase Agreement. It is currently in the process of finalizing the Implementation Agreement and long term Coal Supply Agreement with Sindh Engro Coal Mining Company (SECMC). The target to achieve financial close is May 2017 and Commercial Operation Date by June, 2020.

The consolidated unaudited financial statements of the Company for the half year ended December 31, 2016, include the net assets of LEPCL which is 100% indirectly owned subsidiary of the Company.

Joint Venture Investment in Cement Plant in DR Congo - 1.18 million tons per annum

The plant started Commercial Operations in December 2016.

The effect of 50% share of operating results as well as net assets of the DR Congo plant has been reflected in the consolidated unaudited condensed financial statements of the Company for the half year ended December 31, 2016.

Brown field expansion in Cement Grinding unit in Republic of Iraq - 0.871 million tons per annum

Capacity expansion in Iraq grinding unit is expected to come online by August 2017.

Corporate Social Responsibility

Your Company is fully comitted in value-creation for the society it operates in. During the half year under review, your Company extended numerous scholarships for various leading universities in Pakistan, including a scholarship fund for 16 students from The Citizens Foundation (TCF) schools who are pursuing higher education after graduating from TCF Schools. Taking on the cause of empowering women in the country, Lucky Cement recently

adopted two leading Government girls schools in Karachi in collaboration with Zindagi Trust. Your Company intends to transform these government girls schools into model campuses for the country. Your Company also donated generously for the efficient running of The Hub School and the SOS Children's Villages of Pakistan.

Ensuing its commitment of supporting quality health care projects in the country, your company continued to extend its support to Aziz Tabba Foundation, which is one of the most prominent philanthropic institutions in Pakistan, for the running of its two premium health care institutes in the country, namely Tabba Heart Institute and Tabba Kidney Institute.

Lucky Cement also donated towards the cause of community development by supporting the CPLC, an institution responsible for the safety and security of citizens.

Outlook

Your Company remains optimistic about its domestic sales volumetric growth for the current financial year. Domestic sales are anticipated to maintain the current upward momentum during the entire year as witnessed during the half year under review on the back of private and public sector construction projects as well as mega infrastructure development projects under the China-Pakistan Economic Corridor (CPEC) initiative. Your Company's strong and debt-free financial position and free cash flow generating ability would continue to support investments in projects and avenues which can bring in further operational efficiencies and enhance shareholders' value.

Acknowledgement

Your directors take this opportunity to express their deep sense of gratitude for all the stakeholders for their encouragement and support.

We would like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Lucky family.

And also our shareholders, who have always shown their confidence and faith in the Company.

On behalf of the Board

MUHAMMAD YUNUS TABBA

Chairman / Director

Karachi: January 26, 2017

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR UNRORBNAAUAR

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