Half-year Report

Steppe Cement Limited

20 September 2024

 

20 September 2024

Steppe Cement Ltd

("Steppe Cement" or the "Company")

Unaudited Interim Results for the Half Year Ended 30 June 2024 and General Market Update

Steppe Cement Ltd (AIM: STCM), is pleased to announce its unaudited interim results for the half year ended 30 June 2024, and a general market update.

A copy of this announcement and the full interim financial statements are available on the Company's website at www.steppecement.com

Unaudited Interim Results

During the six-month period to 30 June 2024 ("H1 2024" or the "Period"), the Group reported revenue of USD34.4 million, a 7% decrease from USD36.9 million in the corresponding period in 2023. This decline was mainly attributable to the 4% reduction in sales volume. Although the first quarter experienced a significant drop in volume of sales of 18%, this was offset by a 2% increase in the second quarter of the year, following price adjustments to align with market conditions. Volume of sales has continued to recover in the third quarter of 2024, and the price of cement has increased.

	6 months ended 30 June 2024	6 months ended 30 June 2023	% change
Sales (Tonnes)	719,294	749,034	-4%
Consolidated Turnover (KZT million)	15,435	16,702	-8%
Consolidated Turnover (USD million)	34.4	36.9	-7%
Consolidated (loss)/profit after tax (USD million)	(3.5)	0.1	-3,600%
(Loss)/earnings per share (Cents)	(1.6)	0.1	-1,700%
Average exchange rate (USD/KZT)	449	454	-1%

The average sales price of cement for the Company was USD48 per tonne (KZT21,458 per tonne) compared with USD50 per tonne (KZT22,665 per tonne) in the corresponding period in 2023. 

The gross margin decreased to 15% in the six-month period to 30 June 2024 compared with 26% in the same period last year due mostly to the 6% higher cost in electricity and maintenance in the period to 30 June 2024. Selling expenses and administration expenses remained constant, across the two periods, at USD6.1 million and USD3.4 million, respectively.

General inflation in Kazakhstan has eased to 8.4% during the Period.

The Group reported a net loss for the Period of USD3.5 million compared with USD0.1 million profit after tax in the same period in 2023.

Production and capex

·    Cash production costs increased by 6% in KZT in the first half of 2024 as compared to the same period in 2023, primarily due to the higher electricity, diesel and consumable costs, as the Company changed all refractories in Line 5 for the first time since its start up. It is expected that production costs (which exclude depreciation costs) for the year will increase in line with inflation.

·    Production volume of clinker increased by 7% in the first half of 2024 and is continuing to increase in the third quarter of 2024.

·    The Company started the production and sale of a mineral powder, based on limestone. The product is an additive for other industries and allows the Company to use its spare mill capacity.

·    A separator for cement mill number 2 was commissioned.

·    Line 5 had an increased capex expenditure in the first half of 2024 as the kiln was completely revamped.

·    Line 6 has now stabilised and is capable of producing approximately 2800-3000 tonnes of clinker per day.

Update on the Kazakh cement market

·    During the first half of 2024, the Kazakh cement market reduced in size by 1.6% compared to the same period in 2023.

·    The Company expects to maintain or increase its market share at around 14% for the full financial year ended 31 December 2024.

·    Exports of cement from Kazakhstan in the first half of 2024 were reduced to 0.46 million tonnes compared to 0.55 million tonnes in 2023.

·    Imports of cement in the Period represented 3.7% of the local market, 0.5% less than in 2023. 

Finance

·    Total finance costs for the Period were USD0.6 million, including interest expenses on bank debt of USD0.4 million, mostly from subsidised loans. The Company maintained interest expenses on lease liabilities at USD0.2 million following the application of IFRS 16 for the 2-year wagon leases which were previously classified as selling expenses.

·    There is USD0.9 million in advanced income tax payments that is expected to be offset against future tax liabilities.

·    As at 30 June 2024, the Company's borrowings totalled USD5.4 million, with a cash balance of USD2.0 million therefore net debt of USD3.4 million. For comparison, as at 30 June 2023 the Company had borrowings of USD6.7 million and a cash balance of USD6.0 million therefore net debt USD0.7 million. The cash was used to fund a reduction and repayment of capital of USD$4.16m, as announced on 5 April 2024, and to build a higher clinker and cement inventory, valued at USD5 million as of 30 June 2024.

For further information, please contact: 

Steppe Cement Ltd	www.steppecement.com
Javier del Ser Pérez, Chief Executive Officer	Tel: +(603) 2166 0361
Strand Hanson Ltd (Nominated & Financial Adviser and Broker)	www.strandhanson.co.uk
James Spinney / Ritchie Balmer / Robert Collins	Tel: [phone]

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 2024 (UNAUDITED)

			The Group				The Company
			6 months ended				6 months ended
			30 June 2024		30 June 2023		30 June 2024		30 June 2023
		Note	USD'000		USD'000		USD'000		USD'000
Revenue		7	34,376		36,882		738		683
Cost of sales			(29,158)		(27,405)		-		-
Gross profit			5,218		9,477		738		683
Selling expenses			(6,138)		(6,154)		-		-
General and administrative
expenses			(3,417)		(3,421)		(199)		(176)
Operating (loss)/profit Interest income			(4,337) 119		(98) 93		539 88		507 -
Finance costs		8	(614)		(483)		-		-
Net foreign exchange     (loss)/gain			(251)		(14)		(4)		18
Other income, net			641		563		-		-
(Loss)/Profit before income tax			(4,442)		61		623		525
Income tax credit/(expense)		9	938		(9)		-		-
(Loss)/Profit for the period			(3,504)		52		623		525
Attributable to shareholders
of the Company			(3,504)		52		623		525
(Loss)/Earning per share:
Basic and diluted (cents)		10	(1.6)		0.1

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 AND OTHER COMPREHENSIVE INCOME FOR THE PERIOD ENDED 30 JUNE 2024 (UNAUDITED)

		The Group				The Company
		6 months ended				6 months ended
		30 June 2024		30 June 2023		30 June2024		30 June 2023
		USD'000		USD'000		USD'000		USD'000
(Loss)/Profit for the period		(3,504)		52		623		525
Other comprehensive income/ (loss):
Item that may not be reclassified subsequently to profit or loss
Exchange differences arising on translation of foreign operations		(3,140)		48		-		-
Total comprehensive (loss)/ income for the period		(6,644)		100		623		525
Attributable to shareholders
of the Company		(6,644)		100		623		525

STEPPE CEMENT LTD

(Incorporated in Labuan FT, Malaysia under the Labuan Companies Act, 1990)

AND ITS SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2024 (UNAUDITED)

					The Group				The Company
					Unaudited		Audited		Unaudited		Audited
					30 June 2024		31 Dec 2023		30 June 2024		31 Dec 2023
				Note	USD'000		USD'000		USD'000		USD'000
Assets
Non-Current Assets
Property, plant and equipment					46,475		50,543		-		-
Right-of-use assets					2,551		-		-		-
Investment in subsidiary companies					-		-		36,200		36,200
Loan to subsidiary company					-		-		30,010		30,020
Other assets					213		223		-		-
Total Non-Current Assets					49,239		50,766		66,210		66,220
Current Assets
Inventories					22,791		28,957		-		-
Trade and other receivables					1,609		1,737		894		-
Other assets					2,363		2,853		-		-
Income tax receivable					2,945		2,168		-		-
Loans and advances to subsidiary companies					-		-		66		66
Advances and prepaid expenses					5,485		2,903		24		10
Cash and cash equivalents					2,043		6,435		125		4,624
Total Current Assets					37,236		45,053		1,109		4,700
Total Assets					86,475		95,819		67,319		70,920

(Cont'd)

STEPPE CEMENT LTD

(Incorporated in Labuan FT, Malaysia under the Labuan Companies Act, 1990)

AND ITS SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2024 (UNAUDITED)

			The Group				The Company
			Unaudited		Audited		Unaudited		Audited
			30 June 2024		31 Dec 2023		30 June 2024			31 Dec 2023
		Note	USD'000		USD'000		USD'000		USD'000
Equity and Liabilities
Capital and Reserves
Share capital			69,600		73,761		69,600		73,761
Revaluation reserve			1,406		1,516		-		-
Translation reserve			(128,318)		(125,178)		-		-
Retained earnings / (Accumulated losses)			117,202		120,596		(2,525)		(3,148)
Total Equity			59,890		70,695		67,075		70,613
Non-Current Liabilities
Borrowings			1,714		2,846		-		-
Deferred taxes			2,246		3,168		-		-
Deferred income Lease Payable			2,381 2,735		2,351 -		- -		- -
Provision for site restoration			193		193		-		-
Total Non-Current Liabilities			9,269		8,558		-		-
Current liabilities
Trade and other payables			8,253		9,873		-		-
Accrued and other liabilities			5,340		2,425		154		163
Amount due to a subsidiary company			-		-		90		144
Borrowings			3,687		3,638		-		-
Lease liabilities			97		-		-		-
Deferred income			-		195		-		-
Taxes payable			(61)		435		-		-
Total Current Liabilities			17,316		16,566		244		307
Total Liabilities			26,585		25,124		244		307
Total Equity and Liabilities			86,475		95,819		67,319		70,920

STEPPE CEMENT LTD

(Incorporated in Labuan FT, Malaysia under the Labuan Companies Act, 1990)

AND ITS SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 30 JUNE 2024 (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
As at 1 January 2024	73,761		1,516		(125,178)				120,596		70,695
Loss for the period Other comprehensive (loss)	- -		- -		- (3,140)				(3,504) -		(3,504) (3,140)
Total comprehensive (loss) for the period Capital Reduction	- (4,161)		- -		(3,140)				(3,504) -		(6,644) (4,161)
Transfer of revaluation reserve relating to property, plant and equipment through use	-		(110)		-				110		-
As at 30 June 2024	69,600		1,406		(128,318)				117,202		59,890

(Cont'd)

STEPPE CEMENT LTD

(Incorporated in Labuan FT, Malaysia under the Labuan Companies Act, 1990)

AND ITS SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 30 JUNE 2024 (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
As at 1 January 2023	73,761		1,795		(126,267)				115,791		65,080
Profit for the period	-		-		-				52		52
Other comprehensive income	-		-		48				-		48
Total comprehensive income for the period	-		-		48				52		100
Transfer of revaluation reserve relating to property, plant and equipment through use	-		(46)		-				46		-
As at 30 June 2023	73,761		1,749		(126219)				115,889		65,180

STEPPE CEMENT LTD

(Incorporated in Labuan FT, Malaysia under the Labuan Companies Act, 1990)

AND ITS SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 30 JUNE 2024 (UNAUDITED)

The Company	Share capital		Accumulated losses			Total
	USD'000		USD'000			USD'000
As at 1 January 2024	73,761			(3,148)			70,613
Total comprehensive income for the period Capital Reduction	- (4,161)			623 -			623 (4,161)
As at 30 June 2024	69,600			(2,525)			67,075

As at 1 January 2023	73,761			(4,220)		69,541
Total comprehensive income for the period	-			525		525
As at 30 June 2023	73,761			(3,695)		70,066

STEPPE CEMENT LTD

(Incorporated in Labuan FT, Malaysia under the Labuan Companies Act, 1990)

AND ITS SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

FOR THE PERIOD ENDED 30 JUNE 2024 (UNAUDITED)

			The Group				The Company
			6 months ended				6 months ended
			30 June 2024		30 June 2023		30 June 2024		30 June 2023
			USD'000		USD'000		USD'000		USD'000
OPERATING ACTIVITIES
(Loss)/Profit before income tax			(4,442)		61		623		525
Adjustments for:
Depreciation of property,  plant and equipment			2,898		2,837		-		-
Depreciation of right-of-use  Assets			3		3		-		-
Other non-cash items			(2,413)		578		(1,094)		(1,088)
Operating Profit/(Loss) Before Working Capital Changes			(3,954)		3,479		(471)		(563)
(Increase)/Decrease in:
Inventories			5,096		345		-		-
Trade and other receivables, advances and prepaid expenses			(1,725)		(22)		(9)		(9)
Loans and advances from subsidiary companies			-		-		(67)		(20)
Increase in:
Trade and other payables, accrued and other liabilities			1,879		3,622		(4,152)		4
Cash Generated From/(Used In) Operations			1,296		7,424		(4,699)		(588)
Income tax paid			(926)		(1,777)		-		-
Interest paid			(224)		(483)		-		-
Net Cash Generated From/(Used In) Operating Activities			146		5,164		(4,699)		(588)
(Cont'd)

			The Group				The Company
			6 months ended				6 months ended
			30 June 2024		30 June 2023		30 June 2024		30 June 2023
			USD'000		USD'000		USD'000		USD'000
INVESTING ACTIVITIES
Purchase of property, plant and equipment			(2,171)		(2,721)		-		-
Purchase of other assets			7		(24)		-		-
Interest received			119		93		200		-
Net Cash (Used In)/Generated From Investing Activities			(2,045)		(2,652)		200		-
FINANCING ACTIVITIES
Proceeds from borrowings			9,629		1,703		-		-
Repayment from borrowings			(10,752)		(1,980)		-		-
Payment of lease liabilities			-		(363)		-		-
Net Cash Used In Financing Activities			(1,123)		(640)		-		-
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS			(3,022)		1,872		(4,499)		(588)
EFFECTS OF FOREIGN EXCHANGE RATE CHANGES			(1,370)		(14)		-		-
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD			6,435		4,144		4,624		1,240
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD (NOTE 15)			2,043		6,002		125		652

 

END