Steppe Cement Regulatory News (STCM)

16 Apr 2008 07:00

Steppe Cement Limited16 April 2008 16 April 2008 Steppe Cement Ltd Annual results, update on operations and progress with cement plant refurbishment Results Steppe Cement Ltd ("Steppe Cement" or "the Company") is pleased to announce itspreliminary annual results for the year ended 31 December 2007: Year Year Inc/ ended ended (Dec) 31-Dec-07 31-Dec-06 % Sales (tonnes) 820,287 740,322 11% Consolidated turnover (USD Million) 100.8 55.6 81%Consolidated profit before tax (USD Million) 53.6 21.5 150%Consolidated profit after tax (USD Million) 37.2 14.4 158%Earnings per share (USD) 0.33 0.13 Shareholders' funds (USD Million) 110.5 69.2 60% Exchange rate (USD/KZT) 122.5 126.0 2007 witnessed an increase in sales volume of 11%, whilst average Tenge sellingprices rose by 60% and consolidated profit after tax increased by 158% comparedto the previous year. Dividends Although cash flow and profits have shown substantial improvement over the lastyear the group still has heavy capital expenditure commitments on plantrefurbishment in the short term which precludes the payment of a dividend fromprofits for the 2007 year. Wet lines operations The wet lines performed in line with our expectations and we intend to increasetheir output marginally in 2008 as a consequence of the implementation of a newchain system inside the kilns. The Company completed the refurbishment of cement mill 7 in the wet lines areaduring 2007 and intends to refurbish cement mill 6 during 2008. This will enablethe Company to utilize the wet lines as a completely independent unit from thedry lines. Dry Lines Refurbishment In 2007 Steppe Cement invested USD 62 m in the refurbishment of lines 5 and 6.Delays were experienced with the project due to problems relating to theclearance of materials from customs during the summer as a consequence of Kazakhlegislation that was subsequently amended in November 2007. The Company hadcustom cleared the main materials for line 6 by February 2008. Furthermore, the cement plant was subject to a very cold winter that slowed theprogress of work on site and some suppliers extended the delivery period agreedbeforehand due to global material constraints. Present expectations are that the Company will commence testing line 6 (1million tonnes production capacity) in June 2008 and continue with itscommissioning during the summer. Line 5 (1.4 million tonnes production capacity)is currently scheduled to be completed by the end of 2008. All contracts for line 6 have been signed and the remaining contracts for line 5are under tender. Expenditure between lines 5 and 6 has been redistributed and the Company hasincreased the investment in the main electrical system, compressor, boiler,heating, cement mills and delivery area. Overall, the capital expenditure is nowexpected to total USD78 m for line 5 and USD51 m for line 6. Financing EBRD In addition to cash flow generated from operations during 2007, the Company drewdown USD25 m from EBRD and at the end of 2007 the undrawn proportion of the EBRDfacilities stood at USD17 m, of which USD7 m was subsequently drawn down duringApril 2008. KKB By March 2008 the Company had drawn USD16 m from the KKB facility and anadditional USD7m was committed for the settlement of outstanding letters ofcredit. The company is currently seeking to renegotiate this credit line withother banks. It is intended to finance the balance of the project with the remaining USD10 mfrom EBRD and internal cash flow. Market Until September 2007, the Company experienced an accelerating constructionsector due to the inflow of funds to the Kazakh banks in the first half of 2007.Due to the recent impact of international credit tightening, the tendencystarted to reverse in October and continues to date. The total market for 2007 reached 7.6 million tonnes, a 20% increase over 2006with imports accounting for 44% of the market. For 2008, Steppe Cement expects a decline of the market, an increase of localsupply (mainly arising from Steppe Cement's increased production) and a decreasein imports from Russia (due to high prices and demand in Russia). The Companyanticipates that imports will represent less than 20% of the market in 2008 andless than 10% in 2009 once all local plants reach their expected capacity. Costs The Kazakh government announced 18% inflation for 2007 with food and utilitiesleading the way during the second half. The Kazakh government is making effortsto contain inflation. Personnel During 2007 the Company increased the number of both the project personnel andline 6 operation team. As of April 2008, the Company has employed 35 expatriateson site and over 125 local employees that will assist to start-up the dry lines.Approximately 700 construction workers are present on site. Annual report and Annual General Meeting 2008 Steppe Cement expects to release its 2007 annual report on its web sitewww.steppecement.com during the week commencing 21 April 2008. The Company's Annual General Meeting will take place in London at HansonWesthouse offices in One Angel Court, London EC2R 7HJ on 16 May 2008 at 2:30pm. Steppe Cement's AIM nominated adviser is RFC Corporate Finance Ltd. ContactStephen Allen or Trinity McIntyre on +61 8 9480 2500. This information is provided by RNS The company news service from the London Stock Exchange