Interim Results

RNS Number : 1046S
Steppe Cement Limited
03 September 2010
 



 

Steppe Cement Limited

03 September 2010

 

 

Steppe Cement Ltd

Interim Results for the Half Year Ended 30 June 2010

and General Market Update

 

1. Interim Results

 

Steppe Cement Ltd ("Steppe Cement" or the "Company") posted a consolidated loss after tax of USD3.9 million for the six months ended 30 June 2010.

 


6 months

ended

30 June 10

6 months

ended

30 June 09

% change

Sales (tonnes of cement)

523,156

442,227

18

Consolidated turnover (USD Million)

31.5

24.8

27

Consolidated loss after tax (USD Million)

(3.9)

(18.8)

(79)

Loss per share (Cents)

(2.5)

(15.0)

(83)

Average exchange rate (USD/KZT)

147.2

145.1


 

·     Sales increased by 27% in Kazakhstan Tenge ("KZT") while volumes increased by 18%. The average sales price increased from USD54/tonne to USD61 /tonne during the period.

·     Production costs per tonne increased by 10% in USD, slightly above the 7% inflation rate in Kazakhstan. The increase is concentrated in transportation, electricity, fuel and coal and was partly offset by savings in labour and additional subcontracting. The number of employees declined from 1,199 to 1,081 as at the end of June 2010 despite the increase in production.

·     Selling expenses have grown on a per tonne basis due to higher transportation costs as the increase of sales was achieved through market share gains in Almaty and other cities further from the factory.

·     General and administrative expenses reduced by 11% during the period.

·     The KZT has remained stable as the balance of payment of Kazakhstan has remained in positive territory.

 

 

2. Update on the Kazakh cement market

 

·     The Kazakhstan cement market increased by 20% during the first half of the year from a particularly low base in 2009. Steppe Cement expects a market of 5.4 million tonnes for the full year 2010, an increase of 6% compared to 2009.

·     Prices are expected to increase marginally in the second half of 2010 compared to the first half of 2010.

·     Overall local production volumes increased by 10% in the first half of 2010 compared to 2009 while the share of imported cement is expected to decrease from 21% to 17% for the full 2010 financial year and it is mostly concentrated in West Kazakhstan due to the high transportation cost for local companies.

·     Steppe Cement increased its market share from 19% in 1H2009 to 20% in 1H2010 and we expect it to remain above 20% for the full year 2010.

·     The residential construction industry is at early stage of recovery as bank lending to real estate companies remains low.

·     The Kazakhstan Government has started a number of infrastructure projects to which the Company is supplying cement including the east west major highway.

 

 

3. Production and refurbishment progress

 

·     Line 6 production has been increasing monthly, although it was stopped for maintenance for six weeks during the winter.

·     Production resumed in March 2010 and has been increasing through June, with production levels of 2,000 tonnes per day ("tpd") of clinker or 2,500 tpd of cement.

·     Line 6 reliability has improved steadily and further gains are expected in the second half of 2010.

·     During June, Steppe Cement completed the commissioning of the multi-channel burner of line 6 and expects this to bring an increase in production from 2,000 tpd of clinker to between 2,200 and 2,300 tpd of clinker or the equivalent of 2,625 to 2,875 tpd of cement. At the same time we expect fuel saving of at least 5%.

·     The wet lines are performing at similar levels to those of 2009 and will complement the production of Line 6 depending on the market conditions.

·     Line 6 and the wet lines are expected to produce similar volumes during 2010.

·     All the cement mills are in working condition and the Company is in a position to mill up to 6,000 tpd of cement.

 

 

4. Financing

 

·    Steppe Cement's subsidiary, Karcement JSC, repaid the main installment of the HSBC Bank Kazakhstan ("HSBC") long term loan in March and has subsequently renegotiated to restructure ("Debt Restructuring") its long term loans with HSBC and European Bank for Reconstruction and Development ("EBRD"). In September 2010, Karcement JSC, HSBC and EBRD agreed a term sheet on the Debt Restructuring. As a result of the Debt Restructuring, the interest payable will be revised according to the table below:

 

Lender

Principal Amount Outstanding (USD)

Current Margin (%)

Revised Margin (%)

EBRD - Amortising Loan (Loan A)

22,400,000

3.75%

5.00%

EBRD - Bullet Loan (Loan C)

10,000,000

5.00%

6.50%

HSBC

20,326,250

5.50%

6.50%

Total

52,726,250



 

·     The principal repayments have been deferred by two years from the original schedule.

·     The Debt Restructuring documentation is expected to be completed in the second half of 2010.

 

A pdf copy of this announcement and the full 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 or Trinity McIntyre at +61 8 94802500.

 

 



SUMMARY OF INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2010 (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 2010 (UNAUDITED)

 

 

 




The Group


The Company





6 months ended


6 months ended





30.6.10


30.6.09


30.6.10


30.6.09





USD'000


USD'000


USD'000


USD'000













Revenue



31,556


24,844


50


50













Cost of sales



(23,946)


(18,320)


-


-





--------------


----------------


----------------


---------------


Gross profit



7,610


6,524


50


50













Selling expenses



(5,083)


(3,826)


-


-


General and administrative expenses



(4,802)


(5,407)


(298)


(314)





--------------


----------------


----------------


---------------


Operating loss



(2,275)


(2,709)


(248)


(264)













Investment income



^


59


^


1


Finance costs



(3,062)


(3,640)


-


-


Other income/(expense), net



736


(13,204)


54


-





--------------


----------------


----------------


---------------


Loss before tax



(4,601)


(19,494)


(194)


(263)













Income tax credit



717


697


-


-





--------------


----------------


----------------


---------------


Loss for the period



(3,884)


(18,797)


(194)


(263)





--------------


----------------


----------------


---------------


Attributable to:











Shareholders of the company



(3,884)


(18,797)


(194)


(263)





--------------


---------------


----------------


---------------


Loss per share:






















Basic (cents)



(2.5)


(15.0)









----------------


----------------






^ - Insignificant amount

 

 

 



CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE PERIOD ENDED 30 JUNE 2010 (UNAUDITED)

 

 

 




The Group


The Company





6 months ended


6 months ended





30.6.10


30.6.09


30.6.10


30.6.09





USD'000


USD'000


USD'000


USD'000













Loss for the period



(3,884)


(18,797)


            (194)


(263)













Other comprehensive income/(loss):






















Exchange differences arising on translation of foreign subsidiary companies



758


(27,370)


-


-





--------------


----------------


----------------


---------------


Total comprehensive loss for the period



(3,126)


(46,167)


(194)


(263)





--------------


----------------


----------------


---------------


Attributable to:











Shareholders of the company



(3,126)


(46,167)


(194)


(263)





--------------


----------------


---------------


---------------


 

 

 

 



CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2010 (UNAUDITED)

 

 














The Group


The Company





Unaudited


Audited

 

Unaudited

 

Audited





As at


As at


As at


As at





30.6.10


31.12.09


30.6.10


31.12.09





USD'000


USD'000


USD'000


USD'000


Assets



 


 


 









 


 




Non-Current Assets





 


 




Property, plant and equipment



133,875


135,126


-


-


Investment in subsidiary companies



-


-


26,500


26,500


Advances paid



6,312


6,705


-


-


Other assets



28,152


28,182


-


-





------------


--------------


-------------


-------------


Total Non-Current Assets



168,339


170,013


26,500


26,500





------------


--------------


-------------


-------------







 


 




Current Assets




 

 


 




Inventories, net



15,262


14,275


-


-


Trade receivable, net



1,359


826


-


-


Amount owing by subsidiary companies



-


-


14,488


10,889


Other receivables, advances and prepaid expenses



9,630


7,483


-


4


Cash and bank balances



1,678


6,545


22


3,886





------------


--------------


-------------


-------------


Total Current Assets



27,929


29,129


14,510


14,779





------------


--------------


-------------


-------------


Total Assets



196,268


199,142


41,010


41,279





------------


--------------


-------------


-------------


 



































 


 

 

The Group


The Company





Unaudited


Audited


Unaudited


Audited





As at


As at


As at


As at





30.6.10


31.12.09


30.6.10


31.12.09





USD'000


USD'000


USD'000


USD'000





 






 


Equity and Liabilities



 






 





 






 


Capital and Reserves



 






 


Share capital



1,540

 

1,540

 

1,540

 

1,540


Share premium



41,296


41,296


41,296


41,296


Revaluation reserve



3,024


3,024


-


-


Translation reserve



(20,106)


(20,864)


-


-


Retained earnings/(Accumulated losses)



73,120


77,004


(2,950)


(2,756)





------------


--------------


-------------


-------------


Total Equity



98,874


102,000


39,886


40,080





------------


--------------


-------------


-------------


Non-Current Liabilities



 






 


Bonds

 


18,159


18,035


-


-


Loans



52,428


43,031


-


-


Deferred tax liabilities, net



6,224


6,420


-


-





------------


--------------


-------------


-------------


Total Non-Current Liabilities



76,811


67,486


-


-





----------


--------------


-------------


-------------


Current Liabilities



 






 


Trade payable



5,825


6,446


-


-


Other payables and accrued liabilities



3,136


3,214


673


748


Loans



11,443


19,683


-


-


Amount owing to subsidiary companies



-


-


451


451


Taxes payable



179


313


-


-





------------


--------------


-------------


-------------


Total Current Liabilities



20,583


29,656


1,124


1,199





------------


--------------


-------------


-------------


Total Liabilities



97,394


97,142


1,124


1,199





------------


--------------


-------------


-------------


Total Equity and Liabilities



196,268


199,142


41,010


41,279


 



------------


--------------


-------------


-------------



CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 30 JUNE 2010 (UNAUDITED)

 

 

 




Non-distributable


Distributable




Share


Share


Revaluation


Translation


Retained



The Group

Capital


Premium


Reserve


Reserve


Earnings


Total/Net


USD'000


USD'000


USD'000


USD'000


USD'000


USD'000




 









Balance as at 1 January 2009

1,140


26,647


3,365


5,400


92,369


128,921




 









Loss for the period

-


-


-


-


(18,797)


(18,797)

Exchange differences arising on translation of foreign subsidiary companies

-


-


-


(27,370)


-


(27,370)

 

-----------


-------------


-------------


-----------


--------------


-----------

Total comprehensive loss for the period

-


-


-


(27,370)


(18,797)


(46,167)




 









Issue of shares

400


14,688


-


-


-


15,088

Share issue expenses

-


(39)


-


-


-


(39)


-----------


-------------


-------------


------------


--------------


------------

Balance as at 30 June 2009

1,540


41,296


3,365


(21,970)


73,572


97,803


-----------


-------------


-------------


-----------


--------------


------------

 

 



CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 30 JUNE 2010 (UNAUDITED)

 

 

 




Non-distributable


Distributable




Share


Share


Revaluation


Translation


Retained



The Group

Capital


Premium


Reserve


Reserve


Earnings


Total/Net


USD'000

 

USD'000


USD'000


USD'000


USD'000


USD'000













Balance as at 1 January 2010

1,540


41,296


3,024


(20,864)


77,004


102,000













Loss for the period

-


-


-


-


(3,884)


(3,884)

Exchange differences arising on translation of foreign subsidiary companies

-


-


-


758


-


758


-----------


-------------


-------------


------------


--------------


------------

Total comprehensive income/(loss) for the period

-


-


-


758


(3,884)


(3,126)


------------


-------------


-------------


------------


-------------


------------

Balance as at 30 June 2010

1,540


41,296


3,024

 

(20,106)


73,120


98,874


-----------


-------------


-------------


------------


-------------


------------

 

 



CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE PERIOD ENDED 30 JUNE 2010 (UNAUDITED)

 

 

 










 


Share


Share


Accumulated




The Company

Capital


Premium


Losses


Total/Net



USD'000


USD'000


USD'000


USD'000



 


 


 


 


 

Balance as at 1 January 2009

1,140


26,647


(2,368)


25,419


 


 


 


 


 


 

Loss for the period

-


-


(263)


(263)


 


------------


-------------


------------


-----------


 

Total comprehensive loss for the period

-


-


(263)


(263)


 


 


 


 


 


 

Issue of shares

400


14,688


-


15,088


 

Share issue expenses

-


(39)


-


(39)


 


------------


-------------


------------


-----------


 

Balance as at 30 June 2009

1,540


41,296


(2,631)


40,205


 


------------


-------------


------------


-----------


 


 


 


 


 


 

Balance as at 1 January 2010

1,540


41,296


(2,756)


40,080


 


 


 


 


 


 

Total comprehensive loss for the period

-


-


(194)


(194)


 


------------


-------------


------------


-----------


 

Balance as at 30 June 2010

1,540


41,296


(2,950)


39,886


 


------------


-------------


------------


-----------


 

 

          


CONDENSED CONSOLIDATED CASH FLOW STATEMENT

FOR THE PERIOD ENDED 30 JUNE 2010 (UNAUDITED)

 

 




The Group


The Company





6 months ended


6 months ended





30.6.10


30.6.09


30.6.10


30.6.09





USD'000


USD'000


USD'000


USD'000


 











 

OPERATING ACTIVITIES











 

Loss before tax



(4,601)


(19,494)


(194)


(263)


 

Adjustments for non-cash items



6,615


19,259


(38)


-


 




----------------


---------------


-----------------


-------------


 

Operating Profit/(Loss) Before Working Capital Changes



2,014


(235)


(232)


(263)


 












 

(Increase)/ Decrease in:











 

Inventories



(990)


6,222


-


-


 

Trade receivables



(533)


254


-


-


 

Other receivable and prepaid expenses



(1,653)


147


4


(6)


 

Amount owing by subsidiary companies



-


-


(3,599)


(5,317)


 

Increase/ (Decrease) in:











 

Trade payables



(965)


(4,820)


-


-


 

Other payables and accrued liabilities



(161)


1,620


(37)


12


 

Amount owing to subsidiary companies



-


-


-


(849)


 




----------------


---------------


-----------------


---------------


 

Cash (Used In)/ Generated From Operations



(2,288)


3,188


(3,864)


(6,423)


 

Income tax paid



(303)


(1,090)


-


-


 

Interest paid



(2,938)


(3,617)


-


-


 




----------------


---------------


-----------------


---------------


 

Net Cash Used In Operating Activities



(5,529)


(1,519)


(3,864)


(6,423)


 




----------------


---------------


-----------------


---------------


 












 

INVESTING ACTIVITIES











 

Proceeds from disposal of property, plant and equipment



7


3


-


-


 

Purchase of property, plant and equipment



(442)


(505)


-


-


 

Proceeds from short-term investments



-


289


-


-


 

Interest received



^


59


-


-


 




----------------


---------------


-----------------


---------------


 

Net Cash Used In Investing Activities



(435)


(154)


-


-


 




----------------


---------------


-----------------


---------------


 












 

FINANCING ACTIVITIES











 

Proceeds from issue of shares



-


15,088


-


15,088


 

Share issue expenses



-


(39)


-


(39)


 

Net Proceeds/(Repayment) from borrowings



1,091


(3,216)


-


-


 




----------------


---------------


-----------------


---------------


 

Net Cash From by Financing Activities



1,091


11,833


-


15,049


 




----------------


---------------


-----------------


---------------


 

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS



(4,873)


10,160


(3,864)


8,626


 

EFFECTS OF FOREIGN EXCHANGE RATE CHANGES



6


(66)


-


-


 

CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD



6,545


730


3,886


136


 




----------------


---------------


---------------


---------------


 

CASH AND CASH EQUIVALENTS AT END OF THE PERIOD



1,678


10,824


22


8,762


 




----------------


---------------


----------------


---------------


 

 

^ - Insignificant amount

 


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