16th Sep 2013 07:00
Steppe Cement Limited
16 September 2013
Steppe Cement Ltd
Interim Results for the Half Year 30 June 2013
and General Market Update
1. Interim Results
Steppe Cement Ltd ("Steppe Cement") posted a consolidated profit after tax of USD 2.2 million for the six months ended 30 June 2013.
6 months ended 30 June 13 | 6 months ended 30 June 12 | % of change | |
Sales (Tonnes) | 564,440 | 615,838 | (8.3%) |
Consolidated turnover (USD Million) | 54.3 | 52.1 | 4% |
Consolidated profit/(loss) after tax (USD Million) | 2.2 | (0.1) | |
Earnings/(loss) per share (Cent) | 1 | (0.1) | |
Average exchange rate (USD/KZT) | 150 | 148 |
· Sales increased by 4% while volumes decreased by 8%. The average sales price increased from USD 85/tonne to USD 96/tonne or 13% during the period.
· Production costs per tonne increased by 9% in USD due to general inflation, change in product mix, and increased expenses related to quarries.
· Selling expenses have risen on a per tonne basis by 3% due to increase in railway tariff on cement transportation to customers.
· General and administrative expenses decreased by 3% during the period.
· Steppe Cement generated USD 7.4 million from operations in the 1H 2013 while managing to increase inventories of work in progress and finished product by USD 2.7 m that will be sold in the second half of 2013.
· The Kazakhstan tenge has depreciated during the last 12 months and currently stands at 153 (USD/KZT).
· The Kazakhstan economy is expected to grow at 5-6% per annum in 2013.
2. Update on the Kazakh cement market
· The Kazakhstan cement market increased by 11% during the first half of the year. Steppe Cement expects a market of 8 million tonnes for the full year 2013, an increase of 11% compared to the 7.2 million tonnes in 2012.
· Previously unknown statistical information shows imports from Iran to West Kazakhstan at 140,000 tonnes in 2012 and estimated 370,000 tonnes in 2013. Steppe Cement has factored in the import data into the revised estimates of market size and share for 2013 and adjusted the actual market data for 2012.
· Cement prices in 2H 2013 are expected to be comparable to the 1H 2013.
· Overall production of all factories in Kazakhstan has increased by 10% in the first half of 2013 compared to 2012 while the share of the imported cement increased as well from 14% to 18%.
· Steppe Cement's market share decreased from 19% in 1H2012 to 15% in 1H2013.
· The Kazakhstan Government has continued its road building plan as well as significant infrastructure projects in most cities.
· A new cement factory was commissioned in East Kazakhstan called Kazakh Cement which sold 170,000 tonnes in the first half of 2013 and it is expected to achieve an annual production capacity of 800,000 tonnes next year.
· In 2014 two new cement production lines will be commissioned:
- Our line 5 with a capacity of 1.2 million tonnes; and
- Caspi Cement belonging to Heidelberg Cement Group in West Kazakhstan with an annual production capacity of 800,000 tonnes. The later is expected to replace cement imports from Russian and Iran.
3. Production and refurbishment progress
· In 2013, contribution to production from dry and wet lines remains similar to 2012 with approximately 55% of production coming from the dry line number 6.
· The refurbishment work on line 5 is near completion as we are starting the commissioning of various sections in the autumn. Photographs of the work progress and site are posted monthly on our website.
· We expect cost savings of 5% to 10% on the original project budget of USD 40 million.
· At the time of this announcement, USD 29.5 million has been spent on line 5 project with a total commitment of USD 35.6 million.
· We have completed the electricity distribution line and substation that will allow Central Asia Services JSC, our fully owned subsidiary, to transmit electricity directly from the national grid company, KEGOC. We expect significant production cost savings for the dry lines upon its commissioning in the final quarter of 2013.
4. Financing
· Steppe Cement made USD 6.1 million of principal repayments to EBRD and HSBC during the first half of 2013 and will repay the same amount in the second half.
· The company has the funds to both complete the remaining line 5 works and make scheduled loan repayments to EBRD and HSBC until the end of the year. Currently our short-term credit line of USD 20 million remains unutilized.
A pdf copy of the announcement and the full interim financial statements are available on the company's website at www.steppecement.com.
Steppe Cement's AIM nominated adviser is RFC Ambrian Limited.
Contact Stephen Allen or Trinity McIntyre at +61 8 94802500.
SUMMARY OF INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2013 (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 INCOME STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2013 (UNAUDITED)
The Group | The Company | |||||||
6 months ended | 6 months ended | |||||||
30 June 2013 | 30 June 2012 | 30 June 2013 | 30 June 2012 | |||||
USD'000 | USD'000 | USD'000 | USD'000 | |||||
Revenue | 54,347 | 52,155 | 50 | 50 | ||||
Cost of sales | (33,978) | (34,099) | - | - | ||||
Gross profit | 20,369 | 18,056 | 50 | 50 | ||||
Selling expenses | (9,101) | (9,653) | - | - | ||||
General and administrative | ||||||||
expenses | (5,100) | (5,242) | (266) | (264) | ||||
Operating income/ (loss) | 6,168 | 3,161 | (216) | (214) | ||||
Interest income | 30 | - | - | - | ||||
Finance costs | (1,598) | (2,268) | - | - | ||||
Other (expense)/income, net | (781) | (502) | 63 | (9) | ||||
Profit/(Loss) before income tax | 3,819 | 391 | (153) | (223) | ||||
Income tax expense | (1,599) | (500) | - | - | ||||
Profit/(Loss) for the period | 2,220 | (109) | (153) | (223) | ||||
Attributable to: | ||||||||
Shareholders of the Company | 2,220 | (109) | (153) | (223) | ||||
Earnings/(Loss) per share: | ||||||||
Basic (cent) | 1.0 | (0.1) | ||||||
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2013 (UNAUDITED)
The Group | The Company | ||||||||
6 months ended | 6 months ended | ||||||||
30 June 2013 | 30 June 2012 | 30 June 2013 | 30 June 2012 | ||||||
USD'000 | USD'000 | USD'000 | USD'000 | ||||||
Profit/(Loss) for the period | 2,220 | (109) | (153) | (223) | |||||
Other comprehensive loss: | |||||||||
Exchange differences arising on translation of foreign subsidiary companies | (1,160) | (899) | - | - | |||||
Total comprehensive profit/(loss) for the period | 1,060 | (1,008) | (153) | (223) | |||||
Attributable to: | |||||||||
Shareholders of the Company | 1,060 | (1,008) | (153) | (223) | |||||
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2013 (UNAUDITED)
The Group | The Company | ||||||||
Unaudited | Audited | Unaudited | Audited | ||||||
30 June 2013 | 31 Dec 2012 | 30 June 2013 | 31 Dec 2012 | ||||||
USD'000 | USD'000 | USD'000 | USD'000 | ||||||
Assets | |||||||||
Non-Current Assets: | |||||||||
Property, plant and equipment | 160,643 | 135,442 | - | - | |||||
Investment in subsidiary companies | - | - | 30,500 | 30,500 | |||||
Advances and prepaid expenses | 1,437 | 2,385 | - | - | |||||
Other assets | 23,372 | 40,575 | - | - | |||||
Total Non-Current Assets | 185,452 | 178,402 | 30,500 | 30,500 | |||||
Current Assets | |||||||||
Inventories | 21,782 | 18,248 | - | - | |||||
Trade and other receivables | 9,074 | 6,779 | - | - | |||||
Amount owing by subsidiary companies | - | - | 39,060 | 37,510 | |||||
Advances and prepaid expenses | 4,990 | 4,934 | 13 | 6 | |||||
Short-term investments | - | 5,998 | - | - | |||||
Cash and bank balances | 5,135 | 14,016 | 1,244 | 2,923 | |||||
Total Current Assets | 40,981 | 49,975 | 40,317 | 40,439 | |||||
Total Assets | 226,433 | 228,377 | 70,817 | 70,939 | |||||
The Group | The Company |
| ||||||||||
Unaudited | Audited | Unaudited | Audited |
| ||||||||
30 June2013 | 31 Dec2012
| 30 June2013 | 31 Dec2012 |
| ||||||||
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 | 7,318 | 8,034 | - | - | ||||||||
Translation reserve | (22,805) | (21,645) | - | - | ||||||||
Retained earnings/ (Accumulated loss) | 91,960 | 89,024 | (4,093) | (3,940) | ||||||||
Total Equity | 150,234 | 149,174 | 69,668 | 69,821 | ||||||||
Non-Current Liabilities | ||||||||||||
Borrowings | 33,892 | 40,663 | - | - | ||||||||
Deferred tax liabilities | 10,025 | 8,519 | - | - | ||||||||
Total Non-Current Liabilities | 43,917 | 49,182 | - | - | ||||||||
Current liabilities | ||||||||||||
Trade and other payables | 8,336 | 8,026 | - | - | ||||||||
Accrued and other liabilities | 10,449 | 7,080 | 1,149 | 1,118 | ||||||||
Borrowings | 13,063 | 14,527 | - | - | ||||||||
Taxes payable | 434 | 388 | - | - | ||||||||
Total Current Liabilities | 32,282 | 30,021 | 1,149 | 1,118 | ||||||||
Total Liabilities | 76,199 | 79,203 | 1,149 | 1,118 | ||||||||
Total Equity and Liabilities | 226,433 | 228,377 | 70,817 | 70,939 | ||||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2013 (UNAUDITED)
Non-distributable | Distributable |
| ||||||||||
The Group | Share capital | Revaluation reserve | Translation reserve | Retained earnings | Total/Net | |||||||
USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | ||||||||
Balance as at 1 January 2012 | 58,298 | 9,477 | (20,009) | 79,221 | 126,987 |
| ||||||
Loss for the period | - | - | - | (109) | (109) |
| ||||||
Exchange differences arising on translation of foreign subsidiary companies | - | - | (899) | - | (899) |
| ||||||
Total comprehensive loss for the period | - | - | (899) | (109) | (1,008) |
| ||||||
Transfer of revaluation reserve relating to depreciation of property, plant and equipment | - | (726) | - | 726 | - |
| ||||||
| ||||||||||||
Balance as at 30 June 2012 | 58,298 | 8,751 | (20,908) | 79,838 | 125,979 |
| ||||||
Non-distributable | Distributable |
| |||||||||||||
The Group | Share capital | Revaluation reserve | Translation reserve | Retained earnings | Total/Net |
| |||||||||
USD'000 | USD'000 | USD'000 | USD'000 | USD'000 |
| ||||||||||
Balance as at 1 January 2013 | 73,761 | 8,034 | (21,645) | 89,024 | 149,174 |
| |||||||||
Profit for the period | - | - | - | 2,220 | 2,220 |
| |||||||||
Exchange differences arising on translation of foreign subsidiary companies | - | - | (1,160) | - | (1,160) |
| |||||||||
Total comprehensive loss for the period | - | - | (1,160) | 2,220 | (1,060) |
| |||||||||
Transfer of revaluation reserve relating to the depreciation of property, plant and equipment | - | (716) | - | 716 | - |
| |||||||||
| |||||||||||||||
Balance as at 30 June 2013 | 73,761 | 7,318 | (22,805) | 91,960 | 150,234 |
| |||||||||
Distributable |
| |||||||||
The Company | Share capital | Retained earnings | Total/Net |
| ||||||
USD'000 | USD'000 | USD'000 |
| |||||||
| ||||||||||
Balance as at 1 January 2012 | 58,298 | (3,436) | 54,862 | |||||||
Total comprehensive loss for the period | - | (223) | (223) | |||||||
Balance as at 30 June 2012 | 58,298 | (3,659) | 54,639 | |||||||
Balance as at 1 January 2013 | 73,761 | (3,940) | 69,821 | |||||||
Total comprehensive loss for the period | - | (153) | (153) | |||||||
Balance as at 30 June 2013 | 73,761 | (4,093) | 69,668 | |||||||
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2013 (UNAUDITED)
The Group | The Company |
| ||||||||||||||||
6 months ended | 6 months ended |
| ||||||||||||||||
30 June 2013 | 30 June 2012 | 30 June 2013 | 30 June 2012 |
| ||||||||||||||
USD'000 | USD'000 | USD'000 | USD'000 |
| ||||||||||||||
| ||||||||||||||||||
| OPERATING ACTIVITIES |
| |||||||||||||||||
Profit/(Loss) before tax | 3,819 | 391 | (153) | (223) | ||||||||||||||
Adjustments for non-cash items | 6,819 | 7,612 | (62) | 7 | ||||||||||||||
Operating Profit/(Loss) Before Working Capital Changes | 10,638 | 8,003 | (215) | (216) | ||||||||||||||
| ||||||||||||||||||
(Increase)/ Decrease in: |
| |||||||||||||||||
Inventories | (5,352) | 2,038 | - | - |
| |||||||||||||
Trade and other receivables, |
| 1,229 | (3,844) | (7) | - |
|
| |||||||||||
advances and prepaid expenses |
| |||||||||||||||||
Amount owing by subsidiary companies | - | - | (1,550) | 213 |
| |||||||||||||
Increase in: |
| |||||||||||||||||
Trade and other payables, | 3,807 | 4,714 | 93 | 59 |
| |||||||||||||
accrued and other liabilities |
| |||||||||||||||||
| ||||||||||||||||||
Cash Generated From/(Used In) Operations | 10,322 | 10,911 | (1,679) | 56 |
| |||||||||||||
Income tax paid | (687) | (518) | - | - |
| |||||||||||||
Interest paid | (2,267) | (1,784) | - | - |
| |||||||||||||
| ||||||||||||||||||
Net Cash Generated From/(Used In) Operating Activities | 7,368 | 8,609 | (1,679) | 56 |
| |||||||||||||
| ||||||||||||||||||
| ||||||||||||||||||
INVESTING ACTIVITIES |
| |||||||||||||||||
Purchase of property, plant and equipment | (4,766) | (1,755) | - | - |
| |||||||||||||
Purchase of non-current assets | (9,690) | (3,139) | - | - |
| |||||||||||||
Proceeds from short-term investment | 5,998 | - | - | - |
| |||||||||||||
Interest received | 30 | - | - | - |
| |||||||||||||
| ||||||||||||||||||
Net Cash Used In Investing Activities | (8,428) | (4,894) | - | - |
| |||||||||||||
| ||||||||||||||||||
| ||||||||||||||||||
FINANCING ACTIVITIES |
| |||||||||||||||||
Proceeds from borrowings | 15,876 | 8,223 | - | - |
| |||||||||||||
Repayment from borrowings | (23,600) | (4,107) | - | - |
| |||||||||||||
| ||||||||||||||||||
Net Cash (Used In)/From by Financing Activities | (7,724) | 4,116 | - | - |
| |||||||||||||
| ||||||||||||||||||
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | (8,784) | 7,831 | (1,679) | 56 |
| |||||||||||||
EFFECTS OF FOREIGN EXCHANGE RATE CHANGES | (97) | (3) | - | - |
| |||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD | 14,016 | 494 | 2,923 | 103 |
| |||||||||||||
| ||||||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD | 5,135 | 8,322 | 1,244 | 159 |
| |||||||||||||
| ||||||||||||||||||
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Steppe Cement