Last checked at 26 Jan 2017 13:11
LCK/CS/2016-17/ January 26, 2017
The General Manager Pakistan Stock Exchange Limited Karachi | The Deputy Chief Securities & Exchange Commission of Pakistan Islamabad | The London Stock Exchange 10 Paternoster Square, London |
Dear Sir(s)
FINANCIAL RESULTS FOR THE HALF YEAR ENDED DECEMBER 31, 2016
This is to inform you that the Board of Directors of our Company in their meeting held on Thursday, January 26, 2017 at 11:30 a.m., at 6-A, Muhammad Ali Housing Society, A. Aziz Hashim Tabba Street, Karachi-75350 recommended the following:
(I) Cash Dividend Nil
(ii) Bonus Issue Nil
(iii) Right Issue Nil
(iv) Interim Dividend Nil
The financial results of the Company consisting of Balance Sheet, Profit and Loss Account and Directors' Report are annexed.
We will be sending you the required copies of printed financial statements in due course of time.
Yours truly
for LUCKY CEMENT LIMITED
MUHAMMAD FAISAL
Executive Director and
Chief Strategy, Finance & Investment Officer
Unconsolidated Condensed Interim Balance Sheet |
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As At December 31, 2016 |
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(Un-audited) | (Audited) |
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December 31, | June 30, |
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2016 | 2016 |
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(PKR in '000') |
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ASSETS |
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NON-CURRENT ASSETS |
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Fixed assets |
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Property, plant and equipment | 34,631,600 | 33,887,375 |
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Intangible assets | 101,829 | 126,549 |
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34,733,429 | 34,013,924 |
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Long-term investments | 12,572,020 | 12,422,020 |
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Long-term loans and advances | 88,293 | 75,570 |
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Long-term deposits | 3,175 | 3,175 |
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47,396,917 | 46,514,689 |
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CURRENT ASSETS |
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Stores and spares | 6,113,982 | 5,993,969 |
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Stock-in-trade | 1,640,720 | 1,588,469 |
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Trade debts | 1,704,090 | 2,181,788 |
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Loans and advances | 455,390 | 447,049 |
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Trade deposits and short term prepayments | 88,275 | 52,038 |
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Accrued mark-up | 146,109 | 125,984 |
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Other receivables | 1,259,993 | 1,274,026 |
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Tax refunds due from the Government | 538,812 | 538,812 |
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Short term investments | 20,211,825 | 400,000 |
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Cash and bank balances | 11,891,319 | 26,805,582 |
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44,050,515 | 39,407,717 |
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TOTAL ASSETS | 91,447,432 | 85,922,406 |
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EQUITY AND LIABILITIES |
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SHARE CAPITAL AND RESERVES |
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Authorised capital | 5,000,000 | 5,000,000 |
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Share capital | 3,233,750 | 3,233,750 |
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Reserves | 69,892,754 | 66,089,088 |
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73,126,504 | 69,322,838 |
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NON-CURRENT LIABILITIES |
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Long-term deposits | 71,126 | 70,666 |
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Deferred liabilities | 7,092,723 | 6,898,078 |
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7,163,849 | 6,968,744 |
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CURRENT LIABILITIES |
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Trade and other payables | 8,889,344 | 8,563,850 |
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Taxation - net | 2,267,735 | 1,066,974 |
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11,157,079 | 9,630,824 |
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18,320,928 | 16,599,568 |
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CONTINGENCIES AND COMMITMENTS | ||||||||
TOTAL EQUITY AND LIABILITIES | 91,447,432 | 85,922,406 | ||||||
Unconsolidated Condensed Interim Profit And Loss Account | ||||||||
For The Half Year Ended December 31, 2016 | ||||||||
Half Year Ended | Quarter Ended | |||||||
December 31, | December 31, | December 31, | December 31, | |||||
2016 | 2015 | 2016 | 2015 | |||||
(PKR in'000') | (PKR in'000') | |||||||
Gross sales | 31,242,508 | 26,697,331 | 17,193,514 | 14,198,454 | ||||
Less: | ||||||||
Sales tax and excise duty | 7,460,182 | 4,572,763 | 4,123,836 | 2,543,396 | ||||
Rebates and commission | 340,652 | 316,139 | 194,819 | 173,422 | ||||
7,800,834 | 4,888,902 | 4,318,655 | 2,716,818 | |||||
Net sales | 23,441,674 | 21,808,429 | 12,874,859 | 11,481,636 | ||||
Cost of sales | (11,775,513) | (11,632,889) | (6,559,451) | (6,044,255) | ||||
Gross profit | 11,666,161 | 10,175,540 | 6,315,408 | 5,437,381 | ||||
Distribution cost | (1,037,958) | (1,030,683) | (547,843) | (453,748) | ||||
Administrative expenses | (507,151) | (579,396) | (263,107) | (315,762) | ||||
Finance cost | (6,904) | (5,607) | (3,941) | (2,709) | ||||
Other charges | (1,156,569) | (719,046) | (742,706) | (380,191) | ||||
Other income | 948,857 | 661,176 | 497,512 | 302,746 | ||||
Profit before taxation | 9,906,436 | 8,501,984 | 5,255,323 | 4,587,717 | ||||
Taxation | ||||||||
- current | (2,773,574) | (2,035,062) | (1,465,115) | (1,103,598) | ||||
- deferred | (95,446) | (211,983) | 10,047 | (197,393) | ||||
(2,869,020) | (2,247,045) | (1,455,068) | (1,300,991) | |||||
Profit after taxation | 7,037,416 | 6,254,939 | 3,800,255 | 3,286,726 | ||||
Other comprehensive income for the period | - | - | - | - | ||||
Total comprehensive income for the period | 7,037,416 | 6,254,939 | 3,800,255 | 3,286,726 | ||||
(PKR) | (PKR) | |||||||
Earnings per share - basic and diluted | 21.76 | 19.34 | 11.75 | 10.16 | ||||
Condensed Interim Consolidated Balance Sheet | ||||||||
As at December 31, 2016 | ||||||||
December 31, | June 30, | |||||||
2016 | 2016 | |||||||
(Un-audited) | (Audited) | |||||||
(PKR in'000') | ||||||||
ASSETS | ||||||||
NON-CURRENT ASSETS | ||||||||
Fixed Assets | ||||||||
Property, plant and equipment | 53,287,451 | 52,357,646 | ||||||
Intangible assets | 6,815,412 | 7,022,261 | ||||||
60,102,863 | 59,379,907 | |||||||
Long-term investments | 11,916,277 | 10,654,528 | ||||||
Long-term loans and advances | 458,965 | 433,207 | ||||||
Long-term deposits and prepayments | 39,168 | 39,939 | ||||||
72,517,273 | 70,507,581 | |||||||
CURRENT ASSETS | ||||||||
Stores, spares and consumables | 7,207,223 | 7,016,458 | ||||||
Stock-in-trade | 7,117,648 | 6,905,826 | ||||||
Trade debts | 3,591,502 | 3,821,855 | ||||||
Loans and advances | 884,758 | 852,484 | ||||||
Trade deposits and short-term prepayments | 561,466 | 485,469 | ||||||
Accrued mark-up on deposit accounts | 153,085 | 126,286 | ||||||
Other receivables | 2,393,725 | 2,098,339 | ||||||
Tax refunds due from the Government | 538,812 | 538,812 | ||||||
Taxation - net | - | 1,152,299 | ||||||
Short term investments | 20,211,825 | 400,000 | ||||||
Cash and bank balances | 13,872,956 | 28,448,471 | ||||||
56,533,000 | 51,846,299 | |||||||
TOTAL ASSETS | 129,050,273 | 122,353,880 | ||||||
EQUITY AND LIABILITIES | ||||||||
SHARE CAPITAL AND RESERVES | ||||||||
Share capital | 3,233,750 | 3,233,750 | ||||||
Reserves | 75,311,932 | 70,337,188 | ||||||
Attributable to the owners of | ||||||||
the Holding Company | 78,545,682 | 73,570,938 | ||||||
Non-controlling interests | 8,329,810 | 7,888,373 | ||||||
Total equity | 86,875,492 | 81,459,311 | ||||||
NON-CURRENT LIABILITIES | ||||||||
Long-term finances | 8,632,974 | 8,741,955 | ||||||
Long-term deposits | 71,126 | 70,666 | ||||||
Deferred liabilities | 10,007,716 | 9,916,313 | ||||||
18,711,816 | 18,728,934 | |||||||
CURRENT LIABILITIES | ||||||||
Trade and other payables | 19,544,341 | 18,532,947 | ||||||
Taxation - net | 931,288 | - | ||||||
Accrued mark-up | 128,819 | 146,321 | ||||||
Short-term borrowings and running finance | 1,286,937 | 1,937,184 | ||||||
Current portion of long-term finance | 1,571,580 | 1,549,183 | ||||||
23,462,965 | 22,165,635 | |||||||
CONTINGENCIES AND COMMITMENTS | ||||||||
TOTAL EQUITY AND LIABILITIES | 129,050,273 | 122,353,880 | ||||||
Condensed Interim Consolidated Profit and Loss Account | ||||||||
For the half year ended December 31, 2016 (Un-audited) | ||||||||
Half Year Ended | Quarter Ended | |||||||
December 31, | December 31, | December 31, | December 31, | |||||
2016 | 2015 | 2016 | 2015 | |||||
(PKR in'000') | (PKR in'000') | |||||||
Gross sales | 53,877,246 | 47,565,997 | 29,245,212 | 25,236,194 | ||||
Less: Sales tax and excise duty | 8,764,985 | 6,027,888 | 4,831,489 | 3,289,307 | ||||
Rebates and commission | 2,055,827 | 1,681,911 | 1,172,703 | 911,667 | ||||
10,820,812 | 7,709,799 | 6,004,192 | 4,200,974 | |||||
Net sales | 43,056,434 | 39,856,198 | 23,241,020 | 21,035,220 | ||||
Cost of sales | (27,895,931) | (26,749,171) | (15,052,169) | (14,007,869) | ||||
Gross profit | 15,160,503 | 13,107,027 | 8,188,851 | 7,027,351 | ||||
Distribution costs | (2,131,651) | (1,923,668) | (1,118,560) | (904,498) | ||||
Administrative expenses | (1,038,256) | (1,044,275) | (533,053) | (549,080) | ||||
Finance costs | (364,151) | (468,805) | (170,908) | (208,754) | ||||
Other charges | (1,323,374) | (859,921) | (837,143) | (464,130) | ||||
Other income | 1,740,984 | 1,284,932 | 867,068 | 664,374 | ||||
Profit before taxation | 12,044,055 | 10,095,290 | 6,396,255 | 5,565,263 | ||||
Taxation | ||||||||
- current | (3,319,875) | (2,384,557) | (1,720,365) | (1,293,564) | ||||
- deferred | 15,991 | (57,049) | 22,145 | (100,685) | ||||
(3,303,884) | (2,441,606) | (1,698,220) | (1,394,249) | |||||
Profit after taxation | 8,740,171 | 7,653,684 | 4,698,035 | 4,171,014 | ||||
Attributable to: | ||||||||
Owners of the Holding Company | 8,122,743 | 7,169,468 | 4,342,348 | 3,871,653 | ||||
Non-controlling interests | 617,428 | 484,216 | 355,687 | 299,361 | ||||
8,740,171 | 7,653,684 | 4,698,035 | 4,171,014 | |||||
Other comprehensive income for the period | ||||||||
Foreign exchange differences on translation of foreign operations | ||||||||
(13,339) | 143,259 | (1,563) | 10,744 | |||||
Items to be reclassified to profit or loss in subsequent periods: | ||||||||
Loss on hedge during the period | - | (2,285) | - | 1,057 | ||||
Income tax relating to hedging reserve | - | 731 | - | (338) | ||||
- | (1,554) | - | 719 | |||||
Adjustments for amountstransferred to initial carrying amounts of hedged item-capital work-In-progress | ||||||||
- | 1,554 | - | 1,168 | |||||
Total comprehensive income for the period | 8,726,832 | 7,796,943 | 4,696,472 | 4,183,645 | ||||
Attributable to: | ||||||||
Owners of the Holding Company | 8,109,404 | 7,312,727 | 4,340,785 | 3,883,455 | ||||
Non-controlling interests | 617,428 | 484,216 | 355,687 | 300,190 | ||||
8,726,832 | 7,796,943 | 4,696,472 | 4,183,645 | |||||
(PKR) | (PKR) | |||||||
Earnings per share - basic and diluted | 33 | 25.12 | 22.17 | 13.43 | 11.97 | |||
Directors' Report:
The Directors of your Company have the pleasure in presenting to you the financial results of your Company which include both, stand-alone (duly reviewed by the auditors) and consolidated unaudited financial statements for the half year ended December 31, 2016.
Overview:
Cement industry in Pakistan grew by 8.7% to 19.81 million tons during the half year ended December 31, 2016 compared to 18.23 million tons during the same period last year. While local sales volume registered a growth of 11.1% to 16.90 million tons during the half year compared to 15.21 million tons during the same period last year; export sales volume registered a decline of 3.5% to 2.91 million tons during the current half year compared to 3.02 million tons during the same period last year.
Your Company achieved an overall growth of 12.5% to 3.73 million tons during the half year compared to 3.32 million tons sold in the same period last year. While local sales volume of your Company registered a growth of 23.2 % to 2.98 million tons during the current half year compared to 2.42 million tons during the same period last year; export sales volume declined by 16.3% to 0.75 million tons during the current half year compared to 0.90 million tons during the same period last year.
The EPS for the current half year was recorded at PKR 21.76 which is 12.5% higher than the same period last year's EPS of PKR 19.34.
Business Performance
a. Production & Sales Volume Performance
The production and sales statistics of your Company for the half year ended 2016-17 compared to the same period last year are as follows:
Clinker Production | 3,447 | 3,266 | 5.5% |
Cement Production | 3,487 | 3,289 | 6.0% |
Cement Sales | 3,498 | 3,318 | 5.4% |
Clinker Sales | 235 | - | 100% |
The production and sales volume data is graphically presented as under:
A comparison of the dispatches of the industry and your Company for the half year ended 2016-17 with the same period last year is presented below:
Cement Industry | |||||||
Local Sales | 16,895 | 15,210 | 1,685 | 11.1% | |||
Export Sales | |||||||
- Bagged | 2,790 | 2,976 | (186) | (6.3%) | |||
- Loose | 121 | 42 | 79 | 188.1% | |||
Total Exports | 2,911 | 3,018 | (107) | (3.5%) | |||
Grand Total | 19,806 | 18,228 | 1,578 | 8.7% | |||
Lucky Cement | |||||||
Local Sales | |||||||
- Cement | 2,745 | 2,418 | 327 | 13.5% | |||
- Clinker | 235 | - | 235 | 100% | |||
Total Local Sales | 2,980 | 2,418 | 562 | 23.2% | |||
Export Sales | |||||||
- Bagged | 632 | 858 | (226) | (26.3%) | |||
- Loose | 121 | 42 | 79 | 188.1% | |||
Total Exports | 753 | 900 | (147) | (16.3%) | |||
Grand Total | 3,733 | 3,318 | 415 | 12.5% | |||
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Local Sales | 17.6% | 15.9% | 10.7% |
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Export Sales |
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- Bagged | 22.7% | 28.8% | (21.2%) |
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- Loose | 100.0% | 100.0% | 0.0% |
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Total Export | 25.9% | 29.8% | (13.1%) |
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Grand Total | 18.8% | 18.2% | 3.3% |
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b. Financial Performance
The financial performance of your Company for the half year ended 2016-17 compared to the same period last year is presented below:
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Revenue During the half year 2016-17 under review, your Company achieved an overall net sales revenue growth of 7.5% compared to same period last year. This was mainly attributable to increase in sales volumes. | Cost of Sales During the period under review, per ton cost of sales of your Company decreased by 10.0% compared to same period last year. The decrease was mainly attributable to efficient fuel mix.
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Distribution of Gross Revenue | Distribution of Cost of Sales | |
Gross Profit Your Company was able to improve its gross profit margin to 49.8% for the half year under review compared to 46.7% reported during the same period last year. | ||
Net Profit Your Company achieved profit before tax of PKR 9,906.4 million during the current half year under review compared to PKR 8,501.9 million reported during the same period last year. Similarly, after tax profit of PKR 7,037.4 million was achieved during the half year under review compared to PKR 6,254.9 million reported during the same period last year. |
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Earnings per share The earnings per share of your Company for the half year ended December 31, 2016 was PKR 21.76 compared to PKR 19.34 reported during the same period last year.
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Projects - New and Ongoing
Brownfield Expansion (Installation of additional Line of 1.25 million tons per annum) at Karachi Plant
Your company expects the new line to be operational by the end of the calendar year 2017.
Fully integrated green field Cement Plant in Punjab Province of Pakistan - 2.3 million tons per annum
Your Company is still in the process of seeking approvals and necessary authorizations from the Government of Punjab for commencement of this project. Construction is expected to start by the end of June 2017.
10 MW WHR at PEZU Plant - Kiln
The project is in testing & commissioning phase currently. It is expected to be operational by the end of January 2017.
Investments
Investment in 1 x 660 MW, supercritical, coal based power project
Your company has executed EPC contract and finalized draft of the Power Purchase Agreement. It is currently in the process of finalizing the Implementation Agreement and long term Coal Supply Agreement with Sindh Engro Coal Mining Company (SECMC). The target to achieve financial close is May 2017 and Commercial Operation Date by June, 2020.
The consolidated unaudited financial statements of the Company for the half year ended December 31, 2016, include the net assets of LEPCL which is 100% indirectly owned subsidiary of the Company.
Joint Venture Investment in Cement Plant in DR Congo - 1.18 million tons per annum
The plant started Commercial Operations in December 2016.
The effect of 50% share of operating results as well as net assets of the DR Congo plant has been reflected in the consolidated unaudited condensed financial statements of the Company for the half year ended December 31, 2016.
Brown field expansion in Cement Grinding unit in Republic of Iraq - 0.871 million tons per annum
Capacity expansion in Iraq grinding unit is expected to come online by August 2017.
Corporate Social Responsibility
Your Company is fully comitted in value-creation for the society it operates in. During the half year under review, your Company extended numerous scholarships for various leading universities in Pakistan, including a scholarship fund for 16 students from The Citizens Foundation (TCF) schools who are pursuing higher education after graduating from TCF Schools. Taking on the cause of empowering women in the country, Lucky Cement recently
adopted two leading Government girls schools in Karachi in collaboration with Zindagi Trust. Your Company intends to transform these government girls schools into model campuses for the country. Your Company also donated generously for the efficient running of The Hub School and the SOS Children's Villages of Pakistan.
Ensuing its commitment of supporting quality health care projects in the country, your company continued to extend its support to Aziz Tabba Foundation, which is one of the most prominent philanthropic institutions in Pakistan, for the running of its two premium health care institutes in the country, namely Tabba Heart Institute and Tabba Kidney Institute.
Lucky Cement also donated towards the cause of community development by supporting the CPLC, an institution responsible for the safety and security of citizens.
Outlook
Your Company remains optimistic about its domestic sales volumetric growth for the current financial year. Domestic sales are anticipated to maintain the current upward momentum during the entire year as witnessed during the half year under review on the back of private and public sector construction projects as well as mega infrastructure development projects under the China-Pakistan Economic Corridor (CPEC) initiative. Your Company's strong and debt-free financial position and free cash flow generating ability would continue to support investments in projects and avenues which can bring in further operational efficiencies and enhance shareholders' value.
Acknowledgement
Your directors take this opportunity to express their deep sense of gratitude for all the stakeholders for their encouragement and support.
We would like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Lucky family.
And also our shareholders, who have always shown their confidence and faith in the Company.
On behalf of the Board
MUHAMMAD YUNUS TABBA
Chairman / Director
Karachi: January 26, 2017