Steppe Cement Regulatory News (STCM)

8 May 2007 08:24

Steppe Cement Limited08 May 2007 Steppe Cement Ltd 8 May 2007 Annual results, update on operations and progress with cement plant refurbishment Results Steppe Cement is pleased to announce its preliminary annual results for the yearended 31 December 2006: Year ended 31-Dec-06--------------------------------------------------------------------------------Sales (tonnes) 740,322-------------------------------------------------------------------------------- Consolidated turnover (US$'000) 55,625--------------------------------------------------------------------------------Consolidated profit before tax (US$'000) 21,483--------------------------------------------------------------------------------Consolidated Profit after tax (US$'000) 14,375--------------------------------------------------------------------------------Shareholders' funds (US$'000) 69,185-------------------------------------------------------------------------------- --------------------------------------------------------------------------------Exchange rate (Tenge to the US$) 126.0--------------------------------------------------------------------------------Turnover CAC (Tenge '000) 7,007,037--------------------------------------------------------------------------------Profit after tax CAC (Tenge '000) 1,942,672-------------------------------------------------------------------------------- 2006 saw sales volumes increase by 4% and selling prices by 11% in Tenge overthe previous year. Gross profit grew 11% for the operating company, CAC (CentralAsia Cement JSC). During 2006 the Company completed the refurbishment of three of the four wetkilns and, despite the prolonged shutdowns, production for the year was 740,000tonnes of cement, representing a 4% increase over the previous year. Theremaining wet kiln was refurbished during February and March of 2007, and withall wet lines now fully operational, the total capacity of the Company's wetlines is expected to be approximately 670,000 tonnes of clinker (for 860,000tonnes of cement per annum). Total clinker production from the wet lines during2006 was 602,000 tonnes. The consolidated profit after tax reduced from the US$16.7 million achievedduring 2005 to US$14.4 million. The 2005 consolidated result included a positiverestructuring adjustment of US$12.4 m and the 2006 result includes the impact offoreign exchange losses of US$0.4 million incurred on holding of foreigncurrency and a charge of US$0.24 million for a number of costs associated withthe refurbishment of the dry lines which were not capitalized as plant andequipment. As required by IFRS, the Group revalued its plant during the year by US$12.6million and this resulted in an increase to the depreciation charge of US $1.4million. The revaluation surplus was taken directly to the revaluation reserveaccount. Dry Line Refurbishment Steppe Cement has expanded the scope of refurbishment work of the two dry linesat its Karaganda cement plant as follows: • Line 5 and 6 - raw materials, cement milling, dispatching areas, compressors, boilers and quarry equipment that were not included in the original scope • Line 6 - upgrade the filters to improve environmental standards together with the pre-heater, kiln, cooler and coal feed equipment The contracts for additional work are expected to be signed by June 2007. With the expanded scope of works, the capital cost of the dry line upgrades arenow expected to be US$81 million for line 5 and US$39 million for line 6 for atotal of US$120 million. The original estimates before the expansion to thescope of works were US$73 million and US$20 million respectively with a total ofUS$93 million. The expected annual cement production following re-commissioning will be 1.4million tonnes for line 5 and 1.0 million tonnes for line 6. Line 6 will howeverhave capacity to produce 1.3 million tonnes of cement per annum if demandwarrants this level of production. Line 5 is expected to be re-commissioned during the summer 2008 and line 6during the summer 2007. Monthly picture updates of the refurbishment work are posted on the web sitewww.cac.kz . Financing The additional scope of works is being financed by an increase in the EBRD loanfacility (originally signed in December 2005) from US$35 million to US$65million and improved operational cash flows. The facility includes a local bank. Kazakh bond issue On 1 December 2006, the last tranche of the bond issue was disbursed. The totalamount raised was 2.7 billion Tenge (approximately US$21 million). All theproceeds have been used in the refurbishment. Market The second half of 2006 confirmed a strong market with total Kazakh cement salesexceeding 6.3 million tonnes for the year. Personnel Since December, Steppe Cement has welcomed an additional eleven expatriateprofessionals for the re-commissioning of line 6, with a further ten expected tobe engaged by the end of July. 125 workers from the wet line operations havebeen transferred to the dry line operations where they have commenced training. Announcement of 2006 Results Steppe Cement expects to release its 2006 annual report in its web sitewww.steppecement.com in second week of May 2007. The Company's Annual General Meeting will again take place in London at HansonWesthouse offices in One Angel Court, London EC2R 7HJ on 24 May 2007 at 2:30pm. This information is provided by RNS The company news service from the London Stock Exchange