Last checked at 26 Sep 2022 07:00
Steppe Cement Ltd
Interim Results for the Half Year ended 30 June 2022
and General Market Update
1. Interim Results
Steppe Cement Ltd ("Steppe Cement" and "the Company") posted a consolidated profit after tax of USD10.2 million for the six months ended 30 June 2022, an increase of 65% over the corresponding period for the previous year.
6 months ended 30 June 22 | 6 months ended 30 June 21 | % of change | |
Sales (Tonnes) | 837,063 | 840,661 | 0% |
Consolidated turnover KZT million | 19,779 | 16,657 | 19% |
Consolidated turnover (USD million) | 43.1 | 39.5 | 9% |
Consolidated profit after tax (USD million) | 10.2 | 6.2 | 65% |
Earnings per share (Cents) | 4.7 | 2.8 | 47% |
Average exchange rate (USD/KZT) | 449 | 424 | -6% |
· The Company managed to increase prices in the first during the first half of 2022, with the average ex-factory price achieved increasing from 16,571 KZT /tonne (USD39 per tonne) to 20,485 KZT/tonne (USD 45 per tonne) or 18% compared with first half 2021.
· Steppe Cement's gross margin increased from 44% to 46% in USD terms compared with first half 2021 due to the price increases.
· Selling expenses per tonne decreased in USD terms by 20% compared with the corresponding period in 2021 primarily due to increased sales to markets closer to the factory.
· Administrative expenses increased by 7% in USD terms compared with first half of 2021.
· On average, the Kazakh Tenge depreciated by 6% compared to the first half of 2021 but only translated in a small foreign exchange loss of USD 0.2 million.
· The Company generated operating profit before working capital changes of USD 16.3 million in 1H 2022 against USD 12.9 million in the corresponding period for 2021.
· Kazakhstan GDP increased by 3.4% in the first half of 2022 compared to the first half of 2021. In the first quarter of 2022 the GDP growth was 4.6% despite the January and February local and international instability.
· Reported inflation has been 15% up to the end of June 2022.
2. Production and capex
· Production costs increased by 11% in KZT in the first half of 2022 primarily due to the higher electricity cost, diesel and spare parts for maintenance.
· The separator of cement mill number 1 has been commissioned and work has started in the separator of cement mill number 2.
3. Update on the Kazakh cement market
· The Kazakh cement market increased by 2% during the first half of the year as the government has maintained its incentives for construction.
· Steppe Cement maintained its local market share at 14.5% in 1H2022. We expect to maintain or increase this share for the full year.
· Exports at 0.54 million tonnes represented 10% of the volumes in the 1H2022 from 9% last year.
· Imports into Kazakhstan have been decreased to 0.35 million tonnes in 2022 and represent 6% of the market.
· Overall production of all factories in Kazakhstan has decreased by 0.4 million tonnes to 4.8 million tonnes for the 1H2022 as reductions in bigger factories were balanced by increased volumes in Gezhuoba and Alacem.
· Currently 82% of production in the country is manufactured from dry lines a similar figure than last year.
4. Finance
· Interest expenses on bank debt reduced to USD 0.2 million from USD 0.3 million in 2021 mostly on subsidised loans while we maintained interest expenses on lease liabilities at USD 0.1 million after to the application of IFRS 16 on the 3-year wagon leases. The rental on those wagons was previously treated as selling expenses. The contract to rent wagons is due for renewal in in the second half of 2022.
· Steppe Cement recorded a net cash position of USD9.3 million compared to net cash of USD7.4 million as of 30 June 2021.
· The borrowings of the Company as of 30 June 2022 were USD5.4 million while we carried a cash balance of USD14.7 million. For comparison, on 30 June 2021 the Company had USD6.1 million of borrowings and USD13.5 million in cash.
· Pursuant to the announcement of the Company on 13 June 2022, the Company has reserved GBP11 million in cash (5p/share) for payment to shareholders through a dividend or alternative process such as a capital return, in respect of the results for the full year ended 31 December 2021. The approach to be taken on how to proceed with payment of this amount to shareholders in the most tax effective way remains under consideration, however, the Company anticipates an announcement regarding this distribution and its timing will be made in November.
A pdf copy of the announcement and 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 9480 2500.
Broker: Contact Charlie Cryer at +44 20 3440 6800
SUMMARY OF INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2022 (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 STATEMENT OF PROFIT AND LOSS
FOR THE PERIOD ENDED 30 JUNE 2022 (UNAUDITED)
The Group | The Company | |||||||
6 months ended | 6 months ended | |||||||
30 June 2022 | 30 June 2021 | 30 June 2022 | 30 June 2021 | |||||
USD'000 | USD'000 | USD'000 | USD'000 | |||||
Revenue | 43,125 | 39,534 | 670 | 691 | ||||
Cost of sales | (23,148) | (22,082) | - | - | ||||
Gross profit | 19,977 | 17,452 | 670 | 691 | ||||
Selling expenses | (5,285) | (6,577) | - | - | ||||
General and administrative | ||||||||
expenses | (3,183) | (2,965) | (165) | (157) | ||||
Operating profit | 11,509 | 7,910 | 505 | 534 | ||||
Interest income | 266 | 78 | - | - | ||||
Finance costs | (435) | (475) | - | - | ||||
Net foreign exchange (loss)/gain | (246) | (147) | 3 | (1) | ||||
Other income, net | 940 | 341 | - | - | ||||
Profit before income tax | 12,034 | 7,707 | 508 | 533 | ||||
Income tax expense | (1,831) | (1,515) | - | - | ||||
Profit for the period | 10,203 | 6,192 | 508 | 533 | ||||
Attributable to: | ||||||||
Shareholders of the Company | 10,203 | 6,192 | 508 | 533 | ||||
Earnings per share: | ||||||||
Basic and diluted (cents) | 4.7 | 2.8 | ||||||
^ Insignificant amount.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIOD ENDED 30 JUNE 2022 (UNAUDITED)
The Group | The Company | ||||||||
6 months ended | 6 months ended | ||||||||
30 June 2022 | 30 June 2021 | 30 June 2022 | 30 June 2021 | ||||||
USD'000 | USD'000 | USD'000 | USD'000 | ||||||
Profit for the period | 10,203 | 6,192 | 508 | 533 | |||||
Other comprehensive loss: | |||||||||
| |||||||||
Item that may be reclassified subsequently to profit or loss | |||||||||
Exchange differences arising on translation of foreign subsidiary companies | (4,941) | (902) | - | - | |||||
Total other comprehensive loss for the period | (4,941) | (902) | - | - | |||||
Total comprehensive income for the period | 5,262 | 5,290 | 508 | 533 | |||||
Attributable to: | |||||||||
Shareholders of the Company | 5,262 | 5,290 | 508 | 533 | |||||
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022 (UNAUDITED)
The Group | The Company | ||||||||
Unaudited | Audited | Unaudited | Audited | ||||||
30 June 2022 | 31 Dec 2021 | 30 June 2022 | 31 Dec 2021 | ||||||
USD'000 | USD'000 | USD'000 | USD'000 | ||||||
Assets | |||||||||
Non-Current Assets: | |||||||||
Property, plant and equipment | 44,599 | 48,438 | - | - | |||||
Right-of-use assets | 792 | 1,700 | |||||||
Investment in subsidiary companies | - | - | 36,200 | 36,200 | |||||
Loan to subsidiary company | - | - | 30,114 | 30,080 | |||||
Advances | 6 | - | - | - | |||||
Other assets | 161 | 155 | - | - | |||||
Total Non-Current Assets | 45,558 | 50,293 | 66,314 | 66,280 | |||||
Current Assets | |||||||||
Inventories | 17,356 | 16,024 | - | - | |||||
Trade and other receivables | 4,544 | 1,752 | 1,265 | 1,724 | |||||
Other assets | 2,076 | 2,258 | - | - | |||||
Income tax receivable | 846 | 911 | - | - | |||||
Loans and advances to subsidiaries companies | - | - | 39 | 50 | |||||
Advances and prepaid expenses | 8,439 | 5,234 | 17 | 5 | |||||
Cash and cash equivalents | 14,694 | 10,136 | 1,602 | 614 | |||||
Total Current Assets | 47,955 | 36,315 | 2,923 | 2,393 | |||||
Total Assets | 93,513 | 86,608 | 69,237 | 68,673 | |||||
The Group | The Company | ||||||||||
Unaudited | Audited | Unaudited | Audited | ||||||||
30 June 2022 | 31 Dec 2021 | 30 June 2022 | 31 Dec 2021 | ||||||||
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 | 1,931 | 2,068 | - | - | |||||||
Translation reserve | (125,379) | (120,438) | - | - | |||||||
Retained earnings | 120,530 | 110,190 | (5,098) | (5,606) | |||||||
Total Equity | 70,843 | 65,581 | 68,663 | 68,155 | |||||||
Non-Current Liabilities | |||||||||||
Borrowings | 3,621 | 1,941 | - | - | |||||||
Lease liabilities | 4 | 9 | - | - | |||||||
Deferred taxes | 3,654 | 4,319 | - | - | |||||||
Deferred income | 1,868 | 1,588 | - | - | |||||||
Provision for site restoration | 172 | 180 | - | - | |||||||
Total Non-Current Liabilities | 9,319 | 8,037 | - | - | |||||||
Current liabilities | |||||||||||
Trade and other payables | 5,803 | 5,062 | - | - | |||||||
Accrued and other liabilities | 3,369 | 1,553 | 284 | 228 | |||||||
Amount due to subsidiary company | - | - | 290 | 290 | |||||||
Borrowings | 1,807 | 3,615 | - | - | |||||||
Lease liabilities | 966 | 2,018 | - | - | |||||||
Deferred income | 100 | 103 | - | - | |||||||
Taxes payable | 1,306 | 639 | - | - | |||||||
Total Current Liabilities | 13,351 | 12,990 | 574 | 518 | |||||||
Total Liabilities | 22,670 | 21,027 | 574 | 518 | |||||||
Total Equity and Liabilities | 93,513 | 86,608 | 69,237 | 68,673 | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2022 (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 2022 | 73,761 | 2,068 | (120,438) | 110,190 | 65,581 | ||||
Profit for the period | - | - | - | 10,203 | 10,203 | ||||
Other comprehensive loss | - | - | (4,941) | - | (4,941) | ||||
Total comprehensive income for the period | - | - | (4,941) | 10,203 | 5,262 | ||||
Transfer of revaluation reserve relating to the depreciation of property, plant and equipment through use | - | (137) | - | 137 | - | ||||
Balance as at 30 June 2022 | 73,761 | 1,931 | (125,379) | 120,530 | 70,843 |
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 2021 | 73,761 | 2,370 | (118,514) | 100,325 | 57,942 | ||||
Profit for the period | - | - | - | 6,192 | 6,192 | ||||
Other comprehensive loss | - | - | (902) | - | (902) | ||||
Total comprehensive income/(loss) for the period | - | - | (902) | 6,192 | 5,290 | ||||
Transfer of revaluation reserve relating to the depreciation of property, plant and equipment through use | - | (148) | - | 148 | - | ||||
Balance as at 30 June 2021 | 73,761 | 2,222 | (119,416) | 106,665 | 63,232 |
| ||||||||
The Company | Share capital | (Accumulated losses)/ Retained earnings | Total | |||||
USD'000 | USD'000 | USD'000 | ||||||
Balance as at 1 January 2022 | 73,761 | (5,606) | 68,155 | |||||
Total comprehensive income for the period | - | 508 | 508 | |||||
Balance as at 30 June 2022 | 73,761 | (5,098) | 68,663 | |||||
Balance as at 1 January 2021 | 73,761 | 631 | 74,392 | |||||
Total comprehensive income for the period | - | 533 | 533 | |||||
Balance as at 30 June 2021 | 73,761 | 1,164 | 74,925 | |||||
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2022 (UNAUDITED)
The Group | The Company | ||||||||
6 months ended | 6 months ended | ||||||||
30 June 2022 | 30 June 2021 | 30 June 2022 | 30 June 2021 | ||||||
USD'000 | USD'000 | USD'000 | USD'000 | ||||||
| OPERATING ACTIVITIES | |||||||||
Profit before income tax | 12,034 | 7,707 | 508 | 533 | |||||
Adjustments for: | |||||||||
Depreciation of property, plant and equipment | 3,203 | 3,733 | - | - | |||||
Depreciation of right-of-use assets | 823 | 1,031 | - | - | |||||
Non-cash items | 218 | 478 | (1,090) | (1,030) | |||||
Operating Profit/(Loss) Before Working Capital Changes | 16,278 | 12,949 | (582) | (497) | |||||
(Increase)/ Decrease in: | |||||||||
Inventories | (2,922) | (1,607) | - | - | |||||
Trade and other receivables, | (6,444) | (2,175) | (12) | (12) | |||||
advances and prepaid expenses | |||||||||
Loans and advances from subsidiary companies | - | - | (24) | (3) | |||||
Increase in: | |||||||||
Trade and other payables, | 3,494 | 3,317 | 56 | 5 | |||||
accrued and other liabilities | |||||||||
Cash Generated From/(Used In) Operations | 10,406 | 12,484 | (562) | (507) | |||||
Income tax paid | (1,785) | (730) | - | - | |||||
Interest paid | (198) | (299) | - | - | |||||
Net Cash Generated From/(Used In) Operating Activities | 8,423 | 11,455 | (562) | (507) | |||||
INVESTING ACTIVITIES | |||||||||
Purchase of property, plant and equipment | (2,870) | (4,529) | - | - | |||||
Purchase of other assets | (18) | (18) | - | - | |||||
Interest received | 267 | 78 | 1,550 | - | |||||
Net Cash (Used In)/Generated From Investing Activities | (2,621) | (4,469) | 1,550 | - | |||||
FINANCING ACTIVITIES | |||||||||
Proceeds from borrowings | 3,346 | 3,350 | - | - | |||||
Repayment from borrowings | (2,815) | (4,089) | - | - | |||||
Payment of lease liabilities | (1,090) | (877) | - | - | |||||
Net Cash Used In Financing Activities | (559) | (1,616) | - | - | |||||
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS | 5,243 | 5,370 | 988 | (507) | |||||
EFFECTS OF FOREIGN EXCHANGE RATE CHANGES | (685) | (114) | - | - | |||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD | 10,136 | 8,214 | 614 | 1,353 | |||||
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD | 14,694 | 13,470 | 1,602 | 846 | |||||