Interim Results and General Market Update

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 [phone].

Broker: Contact Charlie Cryer at [phone]

 

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

 

 

END

 

 

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