Interim Results

RNS Number : 8134C

Steppe Cement Limited

05 September 2008

 



Steppe Cement Ltd

Interim Results for the Half Year Ended 30 June 2008

and General Market Update

1.    Interim Results

Steppe Cement Ltd ('Steppe Cement') is pleased to announce a consolidated profit after tax for the six months ended 30 June 2008 of US$14.6 million.

Steppe Cement's operating results are summarized below:

	6 months ended 30 June 08	6 months ended 30 June 08	Inc/ (Dec) %
Sales (tonnes)	412,042	382,080	8%
Consolidated turnover (US$ Million)	52.3	38.7	35%
Consolidated profit after tax (US$ Million)	14.6	10.6	38%
Earnings per share (Cents)	12.8	9.3	38%
Exchange rate (USD/KZT)	120.5	123.1

Steppe Cement's net profit has increased by 38% compared to the corresponding period in 2007. At the operational level, sales grew by 32% in Tenge and volumes have increased by 8%. Average sales price rose to US$126/ton during the period compared to US$101/ton achieved in the corresponding period last year.

Production costs have increased by 19% on line with Kazakhstan inflation and mainly due to rising costs of utilities, coal, transportation, oil and labor. These cost increases will be balanced in the coming months as the dry lines are progressively brought into production.

The pace of investment has accelerated over the last 6 months after we cleared the remaining imported goods from customs. Investment in plant and equipment during the first six months was US$ 54 million.

2. Update on the Kazakh Cement Market

The Kazakhstan cement market decreased by 15% during the first half of the year. The imports' share of the market has gone down from 44% to 33% of the total while local production was stable with the exception of the temporary stoppage of the factory in Shimkent.

Steppe Cement expects an overall decrease of 20% in the market for the whole of 2008 as the summer months in 2007 witnessed a peak in consumption fuelled by the availability of credit then. The monthly consumption pattern is reverting to the trend of 2005 and 2006.

The average price per tonne in the first half has increased significantly compared to 2007 but we expect lower prices during the second half of 2008. Consumption is expected to stabilise during the summer 2008. 

The deficit in the market will continue, at least until Steppe Cement commissions its second line. The credit tightening in the world markets still affects the availability of funds for the construction sector in Kazakhstan, on the other hand the government has pledged to maintain its support for housing and infrastructure investment. 

3. Refurbishment progress

The refurbishment project for dry line 6 is now completed and commissioning began in June. All motors and electrical systems have been tested. The kiln will be fired in the coming days.  The line 6 is currently operated by 155 employees with the support of the 30 foreign specialists

Most of the imported materials for line 5 are on site or will be delivered by November 2008. Over the last three months, we experienced problems with the quality of locally manufactured steel and the delivery of structural materials as two of the sub contractors defaulted on their obligations and we had to re tender their work. This will cause a delay in commissioning of line 5 until the summer of 2009.

The new chain system for two kilns in the wet lines arrived in May but the installation has been postponed until October 2008 to maximize production during the summer months. Their existing capacity is 850,000 tons in a full year of operation. Cement mill number 7 is working as planned and cement mill number 6 will be started before the end of 2008.

4. Financing

The cash flow was applied to the refurbishment program and the same policy will apply to the second half of the year. The USD 42 m. loan of EBRD has been completely drawn down as of June 2008.  Kazcommertz Bank loan of $23.2 m. is in the process of being refinanced by HSBC Bank Kazakhstan enabling the company to save substantially in interest payments.

A pdf copy of the announcement and the interim financial statements is available on the company's website at www.steppecement.com.

Steppe Cement's AIM nominated adviser is RFC Corporate Finance Ltd. Contact Stephen Allen [phone].

INTERIM FINANCIAL STATEMENTS

FOR THE PERIOD ENDED 30 JUNE 2008

(Unaudited)

(In United States Dollars)

STEPPE CEMENT LTD

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

AND ITS SUBSIDIARY COMPANIES

INTERIM FINANCIAL STATEMENTS

CONTENTS	PAGE(S)
Condensed Consolidated Income Statement (Unaudited)	1
Condensed Consolidated Balance Sheet (Unaudited)	2 - 3
Condensed Consolidated Statement of Changes in Equity (Unaudited)	4 - 6
Condensed Consolidated Cash Flow Statement (Unaudited)	7 - 8
Notes to the Condensed Interim Financial Statements (Unaudited)	9 - 18

STEPPE CEMENT LTD 

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

AND ITS SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED INCOME STATEMENT 

FOR THE PERIOD ENDED 30 JUNE 2008 (UNAUDITED)

			The Group				The Company
			6 months ended				6 months ended
			30.6.08		30.6.07		30.6.08		30.6.07
	Note		USD'000		USD'000		USD'000		USD'000

Revenue	5		52,269			38,671		50		50
Cost of sales			(20,305)			(15,130)		-		-
Gross profit			31,964			23,541		50		50
Selling expenses			(3,114)			(2,335)		-		-
General and administrative expenses			(6,754)			(4,167)		(344)		(297)
Operating profit/(loss)			22,096			17,039		(294)		(247)
Investment income			3			45		-		4
Finance costs			(1,048)			(1,238)		-		-
Other income/(loss), net			80			(252)		11		-
Profit/(loss) before tax			21,131			15,594		(283)		(243)
Income tax expense	6		(6,531)			(5,009)		-		-
Profit/(loss) for the period			14,600			10,585		(283)		(243)
Attributable to:
Shareholders of the Company			14,600			10,585		(283)		(243)
Earnings per share:
Basic (cents)	7		12.81			9.29

The accompanying notes form an integral part of the Condensed Financial Statements.

STEPPE CEMENT LTD 

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

AND ITS SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEET

AS AT 30 JUNE 2008 (UNAUDITED)

The Group

The Company

Unaudited

Audited

Unaudited

Audited

As at

As at

As at

As at

30.6.08

31.12.07

30.6.08

31.12.07

Note

USD'000

USD'000

USD'000

USD'000

Assets

Non-current assets
Property, plant and equipment	8		176,582		123,064		-		-
Investment in subsidiary companies			-		-		26,500		26,500
Advances paid	12		-		19,959		-		-
Other assets	9		7,360		9,565		-		-
			183,942		152,588		26,500		26,500
Current Assets
Inventories, net	10		9,870		9,606		-		-
Trade receivable, net	11		903		554		-		-
Amount owing by subsidiary companies			-		-		657		657
Other receivables, advances and prepaid expenses	12		30,459		13,711		42		1
Cash and bank balances			6,969		5,573		208		169
			48,201		29,444		907		827
Total assets			232,143		182,032		27,407		27,327
(Cont'd)

  STEPPE CEMENT LTD 

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

AND ITS SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED BALANCE SHEET

AS AT 30 JUNE 2008 (UNAUDITED)

The Group

The Company

Unaudited

Audited

Unaudited

Audited

As at

As at

As at

As at

30.6.08

31.12.07

30.6.08

31.12.07

Note

USD’000

USD’000

USD’000

USD’000

Equity and Liabilities
Capital and reserves
Share capital			1,140		1,140		1,140		1,140
Share premium			26,647		26,647		26,647		26,647
Revaluation reserve			4,602		4,602		-		-
Translation reserve			5,617		5,590		-		-
Retained earnings/(Accumulated losses)			87,090		72,490		(2,162)		(1,879)
Total equity			125,096		110,469		25,625		25,908
Non-Current Liabilities
Bonds	13		22,754		22,731		-		-
Loans	16		57,240		24,589		-		-
Deferred tax liabilities, net			11,668		11,671		-		-
			91,662		58,991		-		-
Current Liabilities
Trade payable	14		10,795		5,293		-		-
Other payables and accrued liabilities	15		3,145		4,804		632		679
Loans	16		333		276		-		-
Amount owing to subsidiary companies			-		-		1,150		741
Taxes payable	17		1,112		2,199		-		-
			15,385		12,572		1,782		1,419
Total liabilities			107,047		71,563		1,782		1,419
Total Equity and Liabilities			232,143		182,032		27,407		27,327

The accompanying notes form an integral part of the Condensed Financial Statements.

STEPPE CEMENT LTD 

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

AND ITS SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 

FOR THE PERIOD ENDED 30 JUNE 2008 (UNAUDITED)

				-------------Non-distributable-------------									Distributable
The Group	Share capital			Share premium			Revaluation reserve			Translation reserve			Retained earnings			Total/Net
	USD’000			USD’000			USD’000			USD’000			USD’000			USD’000
Balance as at 1 January 2007		1,140			26,647			6,492			1,531			33,375			69,185
Exchange differences arising on  translation of foreign subsidiary  companies		-			-			-			2,735			-			2,735
Profit for the period		-			-			-			-			10,585			10,585
Depreciation of revaluation  Reserve		-			-			(897)			-			897			-
Balance as at 30 June 2007		1,140			26,647			5,595			4,266			44,857			82,505

(Cont'd)

STEPPE CEMENT LTD

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

AND ITS SUBSIDIARY COMPANIES

 

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 30 JUNE 2008 (UNAUDITED)

				-------------Non-distributable-------------									Distributable
The Group	Share capital			Share premium			Revaluation reserve			Translation reserve			Retained earnings			Total/Net
	USD’000			USD’000			USD’000			USD’000			USD’000			USD’000
Balance as at 1 January 2008		1,140			26,647			4,602			5,590			72,490			110,469
Exchange differences arising on  translation of foreign subsidiary  companies		-			-			-			27			-			27
Profit for the period		-			-			-			-			14,600			14,600
Balance as at 30 June 2008		1,140			26,647			4,602			5,617			87,090			125,096

(Cont'd)

  STEPPE CEMENT LTD 

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

AND ITS SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 

FOR THE PERIOD ENDED 30 JUNE 2008 (UNAUDITED)

 

The Company	Share capital	Share premium	Accumulated Losses	Total/Net
	USD’000	USD’000	USD’000	USD’000

 

Balance as at 1 January 2007	1,140		26,647		(1,274)		26,513
Loss for the period	-		-		(243)		(243)
Balance as at 30 June 2007	1,140		26,647		(1,517)		26,270

 

Balance as at 1 January 2008	1,140		26,647		(1,879)		25,908
Loss for the period	-		-		(283)		(283)
Balance as at 30 June 2008	1,140		26,647		(2,162)		25,625

 

The accompanying notes form an integral part of the Condensed Financial Statements.

STEPPE CEMENT LTD

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

AND ITS SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

FOR THE PERIOD ENDED 30 JUNE 2008 (UNAUDITED)

							The Group						The Company
							6 months ended						6 months ended
							30.6.08			30.6.07			30.6.08		30.6.07
							USD'000			USD'000			USD'000		USD'000
OPERATING ACTIVITIES
Profit/(loss) before tax					21,131					15,594			(283)		(243)
Adjustments for non-cash items					2,886					3,203			-		-
Operating Profit/ (Loss) Before Movement in Working Capital					24,017					18,797			(283)		(243)
(Increase)/ Decrease in
Inventories						(264)					326		-		-
Trade receivables						(348)					152		-		-
Other receivable and prepaid expenses						3,210					(852)		(40)		(40)
Amount owing by subsidiary companies						-					-		-		(107)
Increase/ (Decrease) in:
Trade payables						5,503					(182)		-		-
Other payables and accrued liabilities						2,261					2,961		(46)		48
Amount owing to subsidiary companies						-					-		408		64
Cash Generated From/ (Used In) Operations					34,379					21,202			39		(278)
Income tax paid					(8,301)					(2,627)			-		-
Interest paid					(1,006)					(28)			-		-
Net Cash From/ (Used In) by Operating Activities					25,072					18,547			39		(278)

(Cont'd)

  STEPPE CEMENT LTD

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

AND ITS SUBSIDIARY COMPANIES

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

FOR THE PERIOD ENDED 30 JUNE 2008 (UNAUDITED)

			The Group				The Company
			6 months ended				6 months ended
			30.6.08		30.6.07		30.6.08		30.6.07
			USD’000		USD’000		USD’000		USD’000
INVESTING ACTIVITIES
Proceeds from disposal of property, plant and equipment			1		2,811		-		-
Purchase of property, plant and equipment			(54,185)		(31,207)		-		-
Proceeds from short-term investments			-		16,843		-		-
Advance for non-current assets			-		(6,470)		-		-
Purchase of non-current assets			(2,206)		(12,594)		-		-
Interest received			3		103		-		-
Net Cash Used In Investing Activities			(56,387)		(30,514)		-		-
FINANCING ACTIVITIES
Proceeds from borrowings			32,708		8,130		-		-
Net Cash From by Financing Activities			32,708		8,130		-		-
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS			1,393		(3,837)		39		(278)
EFFECTS OF FOREIGN EXCHANGE RATE CHANGES			3		301		-		-
CASH AND CASH  EQUIVALENTS AT BEGINNING OF THE PERIOD			5,573		8,864		169		629
CASH AND CASH  EQUIVALENTS AT END  PERIOD			6,969		5,328		208		351

The accompanying notes form an integral part of the Condensed Financial Statements.

  STEPPE CEMENT LTD 

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

AND ITS SUBSIDIARY COMPANIES

NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

1.     BASIS OF PREPARATION OF CONDENSED INTERIM FINANCIAL STATEMENTS

Basis of presentation

The condensed interim financial statements of the Group and the Company are unaudited and have been prepared in accordance with International Financial Reporting Standards ('IFRS').

The condensed interim financial statements do not include all the information and disclosures required in the annual financial statements and should be read in conjunction with the audited financial statements for the year ended 31 December 2007. The condensed interim financial statements were authorised for issue by the Board of Directors on 4 September 2008.

Use of estimates and assumptions 

The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Due to the inherent uncertainty in making those estimates, actual results reported in future periods could differ from such estimates.

2.     SIGNIFICANT ACCOUNTING POLICIES

    Basis of Accounting

The financial statements of the Group and the Company have been prepared under the historical cost convention.

The accounting policies adopted are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2007.

The principal closing rates used in translation of foreign currency amounts are as follows:

		USD
1 Sterling Pound		1.9923
1 Ringgit Malaysia		0.3061
1 Euro Dollar		1.5755
1 Kazakhstan Tenge		0.0083

		KZT
1 US Dollar		120.765

3.    REVIEW OF RESULTS FOR THE PERIOD

During the 6 months period ended 30 June 2008, Group's revenue increased by 35% to USD52.3 Million from USD38.6 Million in the preceding year's corresponding period. The increase in revenue is attributable to the increase in sales volume by 8% and higher average sales price of USD126 per ton during the period compared with USD101 per ton in the corresponding period. The Group's profit before and after taxation rose by 36 and 38% to USD21.1 and USD14.6 Million from USD15.6 and USD10.6 Million respectively in the preceding year corresponding period.

4.    SEGMENTAL REPORTING

No industry and geographical segmental reporting are presented as the Group's primary business is in the production and sale of cement which is located in the Republic of Kazakhstan.

5.    REVENUE

	The Group				The Company
	6 months ended				6 months ended
	30.6.08		30.6.07		30.6.08		30.6.07
	USD'000		USD'000		USD'000		USD'000

Sales-manufactured goods	51,796		38,366		-		-
Others	473		305		50		50
Total	52,269		38,671		50		50

6.    INCOME TAX EXPENSE

	The Group				The Company
	6 months ended				6 months ended
	30.6.08		30.6.07		30.6.08		30.6.07
	USD'000		USD'000		USD'000		USD'000

Estimated current tax payable:
- the Company	-		-		-		-
- subsidiary companies	6,531		5,009		-		-
	6,531		5,009		-		-

Income tax expense for the subsidiary company incorporated in Labuan FT, Malaysia carrying on offshore trading activities is accrued based on the lower of RM20,000 (USD6,123) or at an estimated annual effective tax rate of 3% on the chargeable profits. No income tax is accrued for the parent company which is engaged in offshore non-trading activity. 

The profits earned by the subsidiary companies incorporated in the Republic of Kazakhstan are subject to a statutory tax rate of 30%. 

7.    EARNINGS PER SHARE

Basic

The basic earnings per share is calculated by dividing the consolidated net profit attributable to shareholders of the Company by the weighted average number of ordinary shares in issue during the financial period.

	The Group
	6 months ended		6 months ended
	30.6.08		30.6.07
	USD’000		USD’000
Net profit attributable to ordinary shareholders	14,600		10,585

 

	6 months ended		6 months ended
	30.6.08		30.6.07
	‘000		‘000

 

Number of shares in issue at end of period	114,000		114,000
Weighted average number of ordinary shares in issue	114,000		114,000

 

	6 months ended		6 months ended
	30.6.08		30.6.07
	USD		USD
Basic earnings per share (cents)	12.81		9.29

8.    PROPERTY, PLANT AND EQUIPMENT, NET

The Group	Freehold land and land improvement		Buildings		Machinery and equipment		Other assets		Computer software		Construction in progress		Total
	USD'000		USD'000		USD'000		USD'000		USD'000		USD'000		USD'000
Cost (unless otherwise indicated)
At 1 January 2008	3,641		45,458		15,970		3,504		23		71,148		139,744
Additions	-		13		670		63		2		54,698		55,446
Disposals/Transfers	-		-		652		232		-		(908)		(24)
Exchange differences	(3)		(32)		(12)		(1)		-		(52)		(100)
At 30 June 2008	3,638		45,439		17,280		3,798		25		124,886		195,066

Accumulated depreciation
At 1 January 2008	-		13,559		2,014		1,095		12		-		16,680
Additions	-		972		576		265		8		-		1,821
Disposals/Transfers	-		(2)		(3)		-		-		-		(5)
Exchange differences	-		(10)		(1)		(1)		-		-		(12)
At 30 June 2008	-		14,519		2,586		1,359		20		-		18,484
Net Book Value
At 30 June 2008	3,638		30,920		14,694		2,439		5		124,886		176,582

9.    OTHER ASSETS

	The Group				The Company
	As at		As at		As at		As at
	30.6.08		31.12.07		30.6.08		31.12.07
	USD'000		USD'000		USD'000		USD'000

VAT (reimbursable)	8,745		8,750		-		-
Spare parts	-		1,962		-		-
Prepaid insurance	-		238		-		-
	8,745		10,950		-		-
Less: Discount on VAT (reimbursable)	(1,385)		(1,385)		-		-
	7,360		9,565		-		-

VAT (reimbursable) resulted from capital expenditure incurred and is expected to be recovered in 2009-2010. 

10.    INVENTORIES, NET

	The Group				The Company
	As at		As at		As at		As at
	30.6.08		31.12.07		30.6.08		31.12.07
	USD'000		USD'000		USD'000		USD'000

Work in progress	957		1,165		-		-
Finished goods	1,092		1,846		-		-
Raw materials	2,800		2,557		-		-
Spare parts	3,992		3,449		-		-
Construction materials	-		78		-		-
Other material	1,454		936		-		-
	10,295		10,031
Less: Provision for obsolete inventories	(425)		(425)		-		-
Net	9,870		9,606		-		-

  11.    TRADE RECEIVABLE, NET 

	The Group				The Company
	As at	As at			As at		As at
	30.6.08		31.12.07		30.6.08		31.12.07
	USD'000		USD'000		USD'000		USD'000

Trade receivables from third parties	915		566		-		-
Less: Provision for doubtful receivables	(12)		(12)		-		-
Net	903		554		-		-

The standard credit period granted to trade receivables ranges from 1 to 30 days. The receivables are denominated in Kazakhstan Tenge.

12.    OTHER RECEIVABLES, ADVANCES AND PREPAID EXPENSES

	The Group				The Company
	As at		As at		As at		As at
	30.6.08		31.12.07		30.6.08		31.12.07
	USD'000		USD'000		USD'000		USD'000

Receivable from employees	138		141		-		-
Other receivables
- VAT reimbursable	8,546		3,583		-		-
- Others	3,119		1,290		-		-
	11,665		4,873		-		-
Prepaid expenses	406		451		42		1
	12,209		5,465		42		1
Advances paid to third parties	18,250		28,205		-		-
	30,459		33,670		42		1
Advances paid to third parties - non-current portion	-		(19,959)		-		-
	30,459		13,711		42		1

Other receivables comprise mainly of VAT reimbursable and others. VAT reimbursable are value added tax credits arising from purchase of materials, property, plant and equipment and repair and maintenance services by Karcement JSC in relation to its cement lines refurbishment project. Others include custom duties levied on the import of property, plant and equipment for the refurbishment project.

Advances paid are mainly those advances incurred by subsidiaries for the purchase of machinery, equipment and construction work for the refurbishment of cement plant. Short-term advances are those incurred for the purchase of materials and other services by subsidiaries for cement production. Included in the short-term advances are reclassification of USD19.9 Million from non-current advances to short-term advances as these advances paid are expected to be utilised within the next twelve months. During the period, advances of USD29.9 Million were utilised for the purchase of property, plant and equipment, materials and other services in the refurbishment project.

13.    BONDS

		The Group
		As at		As at
		30.6.08		31.12.07
		USD'000		USD'000
Bonds issued at price of:
97.1895%		5,601		5,601
98.3230%		5,231		5,231
99.0574%		2,366		2,366
99.0574%		2,865		2,865
100.0096%		5,231		5,231
		21,294		21,294
Exchange differences		1,064		1,079
Discount on bonds issued		(412)		(412)
Amounts of accrued interest on bonds issued		808		770
Total		22,754		22,731

The 5-year KZT2.7 billion bonds issued in August 2006 carries a coupon rate of 9% per annum and matures in August 2011. The interest is payable semi-annually and the repayment of principal is in one bullet payment. The bonds are listed on the Kazakhstan Stock Exchange. The interest paid is included in the finance cost.

14.     TRADE PAYABLES

The standard credit period granted by creditors ranges from 1 to 30 days. The trade payables are denominated in Kazakhstan Tenge.

15.     OTHER PAYABLES AND ACCRUED LIABILITIES

	The Group				The Company
	As at		As at		As at		As at
	30.6.08		31.12.07		30.6.08		31.12.07
	USD'000		USD'000		USD'000		USD'000

Liquidation fund accruals	-		42		-		-
Accruals	1,961		1,508		632		679
Payable to employees	474		346		-		-
Advances received	710		2,908		-­		-
	3,145		4,804		632		679

In accordance with the Subsurface Use Contracts requirements, the subsidiary company, Central Asia Cement JSC, shall contribute on an annual basis 0.5% from the amount of actual expenditures for limestone and loam extraction to the liquidation fund, which shall be used for site restoration and abandonment of the Group mining operations.

16.     LOANS 

	The Group				The Company
	As at		As at		As at		As at
	30.6.08		31.12.07		30.6.08		31.12.07
	USD'000		USD'000		USD'000		USD'000

Total outstanding	57,573		24,865		-		-
Current portion	(333)		(276)		-­		-
Non-current portion	57,240		24,589		-		-

In accordance with the Loan Agreement dated 13 December 2005 and amended and restated Loan Agreement dated 28 June 2007, the Group's subsidiary, Karcement JSC was granted a syndicated loan which comprises of the A loan of up to USD 32 million, the C loan of USD10 million from European Bank for Reconstruction and Development ('EBRD') and B loan has been cancelled and replaced by Kazkommertsbank JSC loan of up to USD 23.2 million. The rehabilitation of production lines number 5 and 6 shall be partially financed by the syndicated loan.  The A and C loan bears interest at LIBOR plus 3.75% per annum and LIBOR plus 5% per annum respectively.  As at 30 June 2008, Karcement JSC has fully drawn down the A and C loan and USD 15.57 million of Kazkommertsbank JSC's loan leaving the balance earmarked for Letter of Credits facilities.

During the period, Central Asia Cement JSC was granted a loan facility of USD0.5 Million by HSBC Kazakhstan. Under the agreement with HSBC Kazakhstan, Central Asia Cement JSC shall repay the principal plus interest in one lump sum on 5 June 2009 and interest is chargeable based on 3-month USD LIBOR plus 4% per annum. The loan facility is secured by a bank guarantee. 

17.     TAXES PAYABLE 

	The Group				The Company
	As at		As at		As at		As at
	30.6.08		31.12.07		30.6.08		31.12.07
	USD'000		USD'000		USD'000		USD'000

Corporate income tax	238		1,511		-		-
Property tax	3		129		-		-
Personal income tax	38		80		-		-
Other taxes	833		479		-		-
Total	1,112		2,199		-		-

18.    RELATED PARTIES

Related parties include shareholders, directors, affiliates and entities under common ownership, over which the Group has the ability to exercise a significant influence.

Transactions between the Company and its subsidiary companies, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note.

The following transactions with related parties are included in the condensed consolidated income statement as of 30 June 2008 and 2007:

	Purchase of services
	30.6.08		30.06.07
	USD'000		USD'000
Rental expenses	41		41
Services rendered by related parties	307		109

  The following balances with related parties are included under trade payables in the condensed consolidated balance sheet as of 30 June 2008 and 31 December 2007:

	Payable to related parties
	30.6.08		31.12.07
	USD'000		USD'000
Services rendered by related parties	48		38

Included in services rendered by related parties are drilling and blasting services performed by Maxam Kazakhstan of USD258,000. The contract is negotiated yearly on an arms length basis. Maxam Kazakhstan is a subsidiary company of Maxam SA. Company director, Javier Del Ser Perez, indirectly holds a 20% equity interest in Maxam Kazakhstan.

Compensation of key management personnel

Included in the staff costs are remuneration of directors and other members of key management during the financial period as follows:

	The Group				The Company
	30.6.08		30.06.07		30.6.08		30.06.07
	USD'000		USD'000		USD'000		USD'000

Remunerations	533		520		144		148
Short-term benefits	63		62		-		-
Total	596		582		144		148

The remuneration of directors and key executives is determined by the remuneration committees of the Company and subsidiary companies having regard to the performance of individuals and market trends.

 

END

 

 

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