Steppe Cement Ltd
Interim Results for the Half Year 30 June 2018
and General Market Update
1. Interim Results
Steppe Cement Ltd ("Steppe Cement" and "the Company") posted a consolidated profit after tax of USD0.2 million for the six months ended 30 June 2018.
|
6 months ended 30 June 18 |
6 months ended 30 June 17 |
% of change |
|
|
Sales (Tonnes) |
738,228 |
650,333 |
14% |
|
Consolidated turnover KZT million |
10,539 |
8,553 |
23% |
|
Consolidated turnover (USD Million) |
32.8 |
26.8 |
22% |
|
Consolidated profit (loss) after tax (USD Million) |
0.2 |
(0.3) |
|
|
Profit (loss) per share (Cents) |
0.1 |
(0.2) |
|
|
Average exchange rate (USD/KZT) |
326 |
319 |
· The Company continued its strategy of focusing on price rather than in volume until the summer.
· The average ex-factory price increased from 11,147 KZT /tonne to 11,560 KZT /tonne or 4% during the period.
· Steppe Cement's gross margin increased from 27% to 32% in USD terms mostly because of better pricing in markets further from the factory.
· Selling expenses increased as sales to the south and exports grew significantly.
· Administrative expenses were maintained relative to turnover and were increased compared to 2017 due to bonus payment.
· The Kazakh Tenge depreciated slightly in the first half by 2% compared to the first half of 2017. The company booked foreign exchange losses of USD 0.5 million in the first half of 2018 compared to a gain of USD 0.57 million in 1H2017.
· The company generated operating profit before working capital changes of USD 5.4 million in 1H 2018 against USD 4.9 million in 2017.
· The Kazakhstan economy grew at 4.1% in the first half 2018.
· Reported inflation has been 2.9% until the end of August 2018.
2. Production costs
· Cement production costs per tonne were maintained in KZT as inflation was offset by the higher volumes achieved.
3. Update on the Kazakh cement market
· The Kazakh cement market grew at 5% during the first half of the year. Steppe Cement expects a market of about 9 million tonnes for the full year 2018 similar to 2017.
· Steppe Cement increased its local market share from 14.5% in 1H2017 to 15.5% in 1H2018. We expect to achieve 17% for the full year. Exports represented 12% of the volumes in the 1H2018 from 10% last year.
· Imports into Kazakhstan have increased by 30% in 2018 to 0.34 million tonnes and they represent 8% of the market up from 6% last year.
· Exports from Kazakhstan have increased from 0.45 million tonnes to 0.92 million tonnes in the first half of 2018, mostly due to demand from Uzbekistan.
· Exports from Kazakhstan now represent 19% of local production up from 11% last year.
· Overall production of all factories in Kazakhstan has increased by 14% to 4.8 million tonnes for the 1H2018. This increase will most likely not be maintained in the second half.
· Currently 78% of production in the country is coming from dry lines, an increase of 4% compared to last year's level.
· Construction remains strong particularly in the west and south of the country.
4. Financing
The debt position of the company as of 30 June 2018 comprised:
· A capital loan of USD 4 million from Halyk bank at 6% p.a. interest due in 2019.
· A long-term USD 7 million loan from Halyk Bank for the purchase of the wagons and repayable monthly till November 2021 at 6.5% p.a. and secured with the pledge of the wagons.
· Loans of KZT1,688 million and KZT 580 million from Halyk Bank JSC subsidised by the government for capital investment at 6%.
· We have maintained KZT3.9 billion of available working capital lines from Halyk Bank, Altyn Bank and VTB Bank. The current rates are 6% p.a. in USD and 12% p.a. in KZT.
As of 30 June 2018 we had the equivalent of USD 2.7 million outstanding from these working capital loans.
· As of 31 August 2018, the first Halyk bank loan of USD 4 million had been repaid and the working capital lines reimbursed. The total bank debt net of cash amounted to USD11 million of which 64% is denominated in USD and the balance in KZT.
The following are the unaudited condensed consolidated statements of profit and loss, comprehensive income, financial position, changes in equity and cash flows. A copy of 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 +61 8 94802500.
Broker: Contact Charlie Cryer at +44 20 3440 6800
SUMMARY OF INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2018 (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.
(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 2018 (UNAUDITED)
|
The Group |
The Company |
|||||||
|
6 months ended |
6 months ended |
|||||||
|
30 June 2018 |
30 June 2017 |
30 June 2018 |
30 June 2017 |
|||||
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
|||||
|
Revenue |
32,838 |
26,839 |
50 |
50 |
||||
|
Cost of sales |
(22,114) |
(20,050) |
- |
- |
||||
|
Gross profit |
10,724 |
6,789 |
50 |
50 |
||||
|
Selling expenses |
(6,450) |
(4,145) |
- |
- |
||||
|
General and administrative |
||||||||
|
expenses |
(2,838) |
(2,195) |
(145) |
(138) |
||||
|
Operating profit/(loss) |
1,436 |
449 |
(95) |
(88) |
||||
|
Interest income |
15 |
16 |
^ |
^ |
||||
|
Finance costs |
(942) |
(1,310) |
- |
- |
||||
|
Net foreign exchange (loss)/gain |
(500) |
572 |
21 |
47 |
||||
|
Other income, net |
396 |
278 |
- |
- |
||||
|
Profit/(Loss) before income tax |
405 |
5 |
(74) |
(135) |
||||
|
Income tax expense |
(199) |
(346) |
(2) |
- |
||||
|
Profit/(Loss) for the period |
206 |
(341) |
(76) |
(135) |
||||
|
Attributable to: |
||||||||
|
Shareholders of the Company |
206 |
(341) |
(76) |
(135) |
||||
|
Profit/(Loss) per share: |
||||||||
|
Basic and diluted (cents) |
0.1 |
(0.2) |
||||||
^ Insignificant amount.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2018 (UNAUDITED)
|
The Group |
The Company |
||||||||
|
6 months ended |
6 months ended |
||||||||
|
30 June 2018 |
30 June 2017 |
30 June 2018 |
30 June 2017 |
||||||
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
||||||
|
Profit/(Loss) for the period |
206 |
(341) |
(76) |
(135) |
|||||
|
Other comprehensive (loss)/income: |
|||||||||
|
Item that may be reclassified subsequently to profit or loss |
|||||||||
|
Exchange differences arising on translation of foreign subsidiary companies |
(1,756) |
2,453 |
- |
- |
|||||
|
Total other comprehensive income for the period |
(1,756) |
2,453 |
- |
- |
|||||
|
Total comprehensive (loss)/income for the period |
(1,550) |
2,112 |
(76) |
(135) |
|||||
|
Attributable to: |
|||||||||
|
Shareholders of the Company |
(1,550) |
2,112 |
(76) |
(135) |
|||||
AS AT 30 JUNE 2018 (UNAUDITED)
|
The Group |
The Company |
||||||||
|
Unaudited |
Audited |
Unaudited |
Audited |
||||||
|
30 June 2018 |
31 Dec 2017 |
30 June 2018 |
31 Dec 2017 |
||||||
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
||||||
|
Assets |
|||||||||
|
Non-Current Assets: |
|||||||||
|
Property, plant and equipment |
64,597 |
67,358 |
- |
- |
|||||
|
Investment in subsidiary companies |
- |
- |
26,500 |
26,500 |
|||||
|
Advances and prepaid expenses |
226 |
509 |
- |
- |
|||||
|
Other assets |
537 |
1,248 |
- |
- |
|||||
|
Total Non-Current Assets |
65,360 |
69,115 |
26,500 |
26,500 |
|||||
|
Current Assets |
|||||||||
|
Inventories |
14,016 |
13,014 |
- |
- |
|||||
|
Trade and other receivables |
5,469 |
3,102 |
3,435 |
3,435 |
|||||
|
Income tax receivable |
179 |
127 |
- |
- |
|||||
|
Loans and advances to subsidiary companies |
- |
- |
39,467 |
39,605 |
|||||
|
Advances and prepaid expenses |
3,707 |
3,477 |
19 |
9 |
|||||
|
Cash and cash equivalents |
3,654 |
3,045 |
90 |
13 |
|||||
|
Total Current Assets |
27,025 |
22,765 |
43,011 |
43,060 |
|||||
|
Total Assets |
92,385 |
91,880 |
69,511 |
69,560 |
|||||
|
The Group |
The Company |
|||||||||
|
Unaudited |
Audited |
Unaudited |
Audited |
|||||||
|
30 June 2018 |
31 Dec 2017 |
30 June 2018 |
31 Dec 2017 |
|||||||
|
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 |
2,494 |
2,680 |
- |
- |
||||||
|
Translation reserve |
(108,497) |
(106,741) |
- |
- |
||||||
|
Retained earnings/ (Accumulated loss) |
87,318 |
89,817 |
(8,242) |
(5,275) |
||||||
|
Total Equity |
55,076 |
59,517 |
65,519 |
68,486 |
||||||
|
Non-Current Liabilities |
||||||||||
|
Borrowings |
9,013 |
9,835 |
- |
- |
||||||
|
Deferred taxes |
794 |
638 |
- |
- |
||||||
|
Deferred income |
1,866 |
1,519 |
- |
- |
||||||
|
Provision for site restoration |
69 |
67 |
- |
- |
||||||
|
Total Non-Current Liabilities |
11,742 |
12,059 |
- |
- |
||||||
|
Current liabilities |
||||||||||
|
Trade and other payables |
9,583 |
7,684 |
2,891 |
- |
||||||
|
Accrued and other liabilities |
6,147 |
2,229 |
1,094 |
1,069 |
||||||
|
Borrowings |
8,759 |
10,195 |
- |
- |
||||||
|
Taxes payable |
1,078 |
196 |
7 |
5 |
||||||
|
Total Current Liabilities |
25,567 |
20,304 |
3,992 |
1,074 |
||||||
|
Total Liabilities |
37,309 |
32,363 |
3,992 |
1,074 |
||||||
|
Total Equity and Liabilities |
92,385 |
91,880 |
69,511 |
69,560 |
||||||
FOR THE PERIOD ENDED 30 JUNE 2018 (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 2018 |
73,761 |
2,680 |
(106,741) |
89,817 |
59,517 |
||||
|
Profit for the period |
- |
- |
- |
206 |
206 |
||||
|
Other comprehensive loss |
- |
- |
(1,756) |
- |
(1,756) |
||||
|
Total comprehensive (loss)/income for the period |
- |
- |
(1,756) |
206 |
(1,550) |
||||
|
Dividend payable |
- |
- |
- |
(2,891) |
(2,891) |
||||
|
Transfer of revaluation reserve relating to the depreciation of property, plant and equipment through use |
- |
(186) |
- |
186 |
- |
||||
|
Balance as at 30 June 2018 |
73,761 |
2,494 |
(108,497) |
87,318 |
55,076 |
|
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 2017 |
73,761 |
3,062 |
(106,985) |
88,203 |
58,041 |
||||
|
Loss for the period |
- |
- |
- |
(341) |
(341) |
||||
|
Other comprehensive income |
- |
- |
2,453 |
- |
2,453 |
||||
|
Total comprehensive income/(loss) for the period |
- |
- |
2,453 |
(341) |
2,112 |
||||
|
Transfer of revaluation reserve relating to the depreciation of property, plant and equipment through use |
- |
(197) |
- |
197 |
- |
||||
|
Balance as at 30 June 2017 |
73,761 |
2,865 |
(104,532) |
88,059 |
60,153 |
|
The Company |
Share capital |
Accumulated losses |
Total |
||
|
USD'000 |
USD'000 |
USD'000 |
|||
|
Balance as at 1 January 2018 |
73,761 |
(5,275) |
68,486 |
||
|
Total comprehensive loss for the period |
- |
(76) |
(76) |
||
|
Dividend payable |
- |
(2,891) |
(2,891) |
||
|
Balance as at 30 June 2018 |
73,761 |
(8,242) |
65,519 |
||
|
Balance as at 1 January 2017 |
73,761 |
(8,454) |
65,307 |
||
|
Total comprehensive loss for the period |
- |
(135) |
(135) |
||
|
Balance as at 30 June 2017 |
73,761 |
(8,589) |
65,172 |
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2018 (UNAUDITED)
|
The Group |
The Company |
||||||||
|
6 months ended |
6 months ended |
||||||||
|
30 June 2018 |
30 June 2017 |
30 June 2018 |
30 June 2017 |
||||||
|
USD'000 |
USD'000 |
USD'000 |
USD'000 |
||||||
|
|
|||||||||
OPERATING ACTIVITIES |
|||||||||
|
Profit/(Loss) before income tax |
405 |
5 |
(73) |
(135) |
|||||
|
Adjustments for non-cash items |
4,870 |
4,898 |
(21) |
47 |
|||||
|
Operating Profit/(Loss) Before Working Capital Changes |
5,275 |
4,903 |
(94) |
(88) |
|||||
|
(Increase)/ Decrease in: |
|||||||||
|
Inventories |
(1,309) |
(1,741) |
- |
- |
|||||
|
Trade and other receivables, |
(2,169) |
(2,878) |
(12) |
(11) |
|||||
|
advances and prepaid expenses |
|||||||||
|
Loans and advances to subsidiary companies |
- |
- |
- |
88 |
|||||
|
Increase/(Decrease) in: |
|||||||||
|
Trade and other payables, |
4,038 |
1,234 |
45 |
67 |
|||||
|
accrued and other liabilities |
|||||||||
|
Loans and advances to subsidiary companies |
- |
- |
138 |
- |
|||||
|
Cash Generated From Operations |
5,835 |
1,518 |
77 |
56 |
|||||
|
Income tax paid |
- |
(51) |
- |
- |
|||||
|
Interest paid |
(947) |
(1,303) |
- |
- |
|||||
|
Net Cash Generated From Operating Activities |
4,888 |
164 |
77 |
56 |
|||||
|
INVESTING ACTIVITIES |
|||||||||
|
Purchase of property, plant and equipment |
(2,437) |
(740) |
- |
- |
|||||
|
Purchase of other assets |
(28) |
(32) |
- |
- |
|||||
|
Interest received |
15 |
16 |
- |
- |
|||||
|
Net Cash Used In Investing Activities |
(2,450) |
(756) |
- |
- |
|||||
|
FINANCING ACTIVITIES |
|||||||||
|
Proceeds from borrowings |
7,253 |
13,611 |
- |
- |
|||||
|
Repayment from borrowings |
(9,013) |
(12,319) |
- |
- |
|||||
|
Net Cash (Used In)/Generated From Financing Activities |
(1,760) |
1,292 |
- |
- |
|||||
|
NET INCREASE IN CASH AND CASH EQUIVALENTS |
678 |
700 |
77 |
56 |
|||||
|
EFFECTS OF FOREIGN EXCHANGE RATE CHANGES |
(69) |
30 |
- |
- |
|||||
|
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD |
3,045 |
1,023 |
13 |
74 |
|||||
|
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD |
3,654 |
1,753 |
90 |
130 |
|||||
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