Last checked at 16 Sep 2020 07:00
Steppe Cement Ltd
Interim Results for the Half Year ended 30 June 2020
and General Market Update
1. Interim Results
Steppe Cement Ltd ("Steppe Cement" and "the Company") posted a consolidated profit after tax of USD4.1 million for the six months ended 30 June 2020.
| 6 months ended 30 June 20 | 6 months ended 30 June 19 | % of change |
Sales (Tonnes) | 764,752 | 780,315 | -2% |
Consolidated turnover KZT million | 13,677 | 14,079 | -3% |
Consolidated turnover (USD Million) | 33.8 | 37.1 | -9% |
Consolidated profit after tax (USD Million) | 4.1 | 3.1 |
|
Earnings per share (Cents) | 1.9 | 1.4 |
|
Average exchange rate (USD/KZT) | 405 | 379 | -7% |
· The Company maintained prices from last summer until the Covid crisis affected the second quarter.
· The average ex-factory price decreased slightly from 15,148 KZT /tonne to 14,727 KZT/tonne or 3% during the period.
· Steppe Cement's gross margin increased from 37% to 40% in USD terms due to cost containment measures.
· Selling expenses per tonne decreased in USD terms by 20% and in KZT by 13% due to distribution in areas closer to the factory and the implementation of IFRS 16 as some of the rental fees for wagons have been transferred to financial leases reducing the transport costs.
· Administrative expenses remained constant in USD.
· The Kazakh Tenge depreciated by 7% compared to the first half of 2019 that translated in a foreign exchange loss of USD 0.6 million.
· The Company generated operating profit before working capital changes of USD 11 million in 1H 2020 against USD 7.9 million in 2019.
· Kazakhstan GDP increased by 2.7% in 1Q2020 but decreased -1.8% in 1H2020 because of Covid-19.
· Reported inflation has been 6.5% up to the end of July 2020.
2. Production costs
· Production costs decreased by 4% in KZT mostly due to the higher production of clinker and lower maintenance and coal costs.
3. Update on the Kazakh cement market
· The Kazakh cement market increased by 2% during the first half of the year. The increase happened mostly in the 1Q while 2Q was slightly below 2019. Steppe Cement currently expects a market of about 9.1 million tonnes for the full year 2020, an increase of 2% over 2019.
· Steppe Cement decreased its local market share from 17% in 1H2019 to 16.5% in 1H2020. We expect to maintain this share for the full year. Exports represented 11% of the volumes in the 1H2020 like last year.
· Imports into Kazakhstan have been reduced to 0.25 million tonnes in 2020 due to the closure of the market to Iranian exports. Imports represent 6% of the market.
· Exports from Kazakhstan have been maintained at 0.87 million tonnes.
· Exports from Kazakhstan represent 18% of local production from 19% last year.
· Overall production of all factories in Kazakhstan has increased by 2% to 4.7 million tonnes for the 1H2020 as closures in the smaller factures were balanced by increased in Kokshe and Gezhuoba.
· Currently 80% of production in the country is manufactured from dry lines.
4. Financing
· Interest expenses on bank debt were reduced to USD 0.41 million from USD 0.55 million in 2019 while we added interest expenses on lease liabilities of USD 0.35 million due to the application of IFRS 16. The rental on those wagons was considered selling expenses before.
· Steppe Cement recorded a net cash position of USD6.4 million compared to net debt of USD1.1 million as of 30 June 2019.
· The borrowings of the Company as of 30 June 2020 were USD3.2 million (USD 2.3 million current and USD 0.9 million long term) while we carried a cash balance of USD 9.6 million. For comparison, on 30 June 2019 we had USD10.1 million in borrowings and USD 9 million in cash.
· The USD loan outstanding to Halyk Bank for the purchase of the wagons and repayable monthly till November 2021 at 6.5% p.a. was subsequently repaid in August 2020 in advance.
· As of 31 August 2020 after paying the dividend, the financial debt was the equivalent of USD 2 million (all denominated in KZT) and the cash was USD 5.7 million.
· We have maintained the working capital lines available for the winter.
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
INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2020
(Unaudited)
(In United States Dollars)
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 2020 (UNAUDITED)
|
| The Group |
| The Company | ||||
|
| 6 months ended |
| 6 months ended | ||||
|
| 30 June 2020 |
| 30 June 2019 |
| 30 June 2020 |
| 30 June 2019 |
|
| USD'000 |
| USD'000 |
| USD'000 |
| USD'000 |
|
|
|
|
|
|
|
|
|
Revenue |
| 33,786 |
| 37,122 |
| 701 |
| 629 |
|
|
|
|
|
|
|
|
|
Cost of sales |
| (20,285) |
| (23,515) |
| - |
| - |
|
|
|
|
|
|
|
|
|
Gross profit |
| 13,501 |
| 13,607 |
| 701 |
| 629 |
|
|
|
|
|
|
|
|
|
Selling expenses |
| (5,162) |
| (6,584) |
| - |
| - |
|
|
|
|
|
|
|
|
|
General and administrative |
|
|
|
|
|
|
|
|
expenses |
| (2,566) |
| (2,563) |
| (135) |
| (147) |
|
|
|
|
|
|
|
|
|
Operating profit |
| 5,773 |
| 4,460 |
| 566 |
| 482 |
Interest income |
| 112 |
| 147 |
| ^ |
| ^ |
Finance costs |
| (766) |
| (554) |
| - |
| - |
Net foreign exchange (loss)/gain |
| (571) |
| (36) |
| 3 |
| 3 |
Other income, net |
| 248 |
| 148 |
| 82 |
| - |
|
|
|
|
|
|
|
|
|
Profit before income tax |
| 4,796 |
| 4,165 |
| 651 |
| 485 |
|
|
|
|
|
|
|
|
|
Income tax expense |
| (736) |
| (1,083) |
| - |
| - |
|
|
|
|
|
|
|
|
|
Profit for the period |
| 4,060 |
| 3,082 |
| 651 |
| 485 |
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
Shareholders of the Company |
| 4,060 |
| 3,082 |
| 651 |
| 485 |
|
|
|
|
|
|
|
|
|
Earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted (cents) |
| 1.9 |
| 1.4 |
|
|
|
|
^ Insignificant amount.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIOD ENDED 30 JUNE 2020 (UNAUDITED)
|
| The Group |
| The Company |
| ||||
|
| 6 months ended |
| 6 months ended |
| ||||
|
| 30 June 2020 |
| 30 June 2019 |
| 30 June 2020 |
| 30 June 2019 |
|
|
| USD'000 |
| USD'000 |
| USD'000 |
| USD'000 |
|
|
|
|
|
|
|
|
|
|
|
Profit for the period |
| 4,060 |
| 3,082 |
| 651 |
| 485 |
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive (loss)/income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item that may be reclassified subsequently to profit or loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exchange differences arising on translation of foreign subsidiary companies |
| (3,499) |
| 759 |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
Total other comprehensive (loss)/income for the period |
| (3,499) |
| 759 |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income for the period |
| 561 |
| 3,841 |
| 651 |
| 485 |
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
Shareholders of the Company |
| 561 |
| 3,841 |
| 651 |
| 485 |
|
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020 (UNAUDITED)
|
| The Group |
| The Company | |||||
|
|
| Unaudited |
| Audited |
| Unaudited |
| Audited |
|
|
| 30 June 2020 |
| 31 Dec 2019 |
| 30 June 2020 |
| 31 Dec 2019 |
|
|
| USD'000 |
| USD'000 |
| USD'000 |
| USD'000 |
Assets |
|
|
|
|
|
|
|
|
|
Non-Current Assets: |
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
| 51,614 |
| 55,808 |
| - |
| - |
Right-of-use assets |
|
| 4,707 |
| 6,140 |
|
|
|
|
Investment in subsidiary companies |
|
| - |
| - |
| 36,198 |
| 26,500 |
Loan to subsidiary company |
|
| - |
| - |
| 30,140 |
| 30,140 |
Advances |
|
| 12 |
| 6 |
| - |
| - |
Other assets |
|
| 2,287 |
| 2,427 |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
Total Non-Current Assets |
|
| 58,620 |
| 64,381 |
| 66,338 |
| 66,338 |
|
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
|
|
Inventories |
|
| 9,668 |
| 10,812 |
| - |
| - |
Trade and other receivables |
|
| 6,173 |
| 5,790 |
| 9,710 |
| 8,848 |
Lease receivable |
|
| 12 |
| - |
| - |
| - |
Income tax receivable |
|
| 432 |
| 405 |
| - |
| - |
Loans and advances to subsidiary companies |
|
| - |
| - |
| 20 |
| 30 |
Advances and prepaid expenses |
|
| 4,186 |
| 3,683 |
| 26 |
| 16 |
Cash and cash equivalents |
|
| 9,567 |
| 9,014 |
| 68 |
| 262 |
|
|
|
|
|
|
|
|
|
|
Total Current Assets |
|
| 30,038 |
| 29,704 |
| 9,824 |
| 6,156 |
|
|
|
|
|
|
|
|
|
|
Total Assets |
|
| 88,658 |
| 94,085 |
| 76,162 |
| 75,494 |
|
| The Group |
| The Company | ||||||
|
|
| Unaudited |
| Audited |
| Unaudited |
| Audited | |
|
|
| 30 June 2020 |
| 31 Dec 2019 |
| 30 June 2020 |
| 31 Dec 2019 | |
|
|
| 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 |
|
| 1,859 |
| 2,016 |
| - |
| - | |
Translation reserve |
|
| (116,785) |
| (113,286) |
| - |
| - | |
Retained earnings |
|
| 104,603 |
| 100,386 |
| 2,228 |
| 1,577 | |
|
|
|
|
|
|
|
|
|
| |
Total Equity |
|
| 63,438 |
| 62,877 |
| 75,989 |
| 75,338 | |
|
|
|
|
|
|
|
|
|
| |
Non-Current Liabilities |
|
|
|
|
|
|
|
|
| |
Borrowings |
|
| 2,300 |
| 3,893 |
| - |
| - | |
Lease liabilities |
|
| 3,147 |
| 4,307 |
| - |
| - | |
Deferred taxes |
|
| 4,828 |
| 4,652 |
| - |
| - | |
Deferred income |
|
| 1,308 |
| 1,421 |
| - |
| - | |
Provision for site restoration |
|
| 75 |
| 74 |
| - |
| - | |
|
|
|
|
|
|
|
|
|
| |
Total Non-Current Liabilities |
|
| 11,658 |
| 14,347 |
| - |
| - | |
|
|
|
|
|
|
|
|
|
| |
Current liabilities |
|
|
|
|
|
|
|
|
| |
Trade and other payables |
|
| 4,351 |
| 6,204 |
| - |
| - | |
Accrued and other liabilities |
|
| 5,033 |
| 1,405 |
| 173 |
| 156 | |
Borrowings |
|
| 910 |
| 6,420 |
| - |
| - | |
Lease liabilities |
|
| 1,988 |
| 2,191 |
| - |
| - | |
Deferred income |
|
| 76 |
| 81 |
| - |
| - | |
Taxes payable |
|
| 1,204 |
| 560 |
| - |
| - | |
|
|
|
|
|
|
|
|
|
| |
Total Current Liabilities |
|
| 13,562 |
| 16,861 |
| 173 |
| 156 | |
|
|
|
|
|
|
|
|
|
| |
Total Liabilities |
|
| 25,220 |
| 31,208 |
| 173 |
| 156 | |
|
|
|
|
|
|
|
|
|
| |
Total Equity and Liabilities |
|
| 88,658 |
| 94,085 |
| 76,162 |
| 75,494 | |
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2020 (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 2020 | 73,761 |
| 2,016 |
| (113,286) |
| 100,386 |
| 62,877 |
Profit for the period | - |
| - |
| - |
| 4,060 |
| 4,060 |
Other comprehensive loss | - |
| - |
| (3,499) |
| - |
| (3,499) |
Total comprehensive (loss)/income for the period | - |
| - |
| (3,499) |
| 4,060 |
| 561 |
Transfer of revaluation reserve relating to the depreciation of property, plant and equipment through use | - |
| (157) |
| - |
| 157 |
| - |
|
|
|
|
|
|
|
|
|
|
Balance as at 30 June 2020 | 73,761 |
| 1,859 |
| (116,785) |
| 104,603 |
| 63,438 |
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 2019 | 73,761 |
| 2,349 |
| (116,266) |
| 96,113 |
| 55,957 |
Profit for the period | - |
| - |
| - |
| 3,082 |
| 3,082 |
Other comprehensive income | - |
| - |
| 759 |
| - |
| 759 |
Total comprehensive income for the period | - |
| - |
| 759 |
| 3,082 |
| 3,841 |
Dividend payable | - |
| - |
| - |
| (8,362) |
| (8,362) |
Transfer of revaluation reserve relating to the depreciation of property, plant and equipment through use | - |
| (167) |
| - |
| 167 |
| - |
|
|
|
|
|
|
|
|
|
|
Balance as at 30 June 2019 | 73,761 |
| 2,182 |
| (115,507) |
| 91,000 |
| 51,436 |
|
|
|
|
|
|
| ||
The Company | Share capital |
| Retained earnings/ |
| Total | |||
|
|
| Accumulated losses |
|
| |||
| USD'000 |
| USD'000 |
| USD'000 | |||
|
|
|
|
|
| |||
Balance as at 1 January 2020 | 73,761 |
| 1,577 |
| 75,338 | |||
Total comprehensive income for the period | - |
| 651 |
| 651 | |||
Balance as at 30 June 2020 | 73,761 |
| 2,228 |
| 75,989 | |||
|
|
|
|
|
| |||
Balance as at 1 January 2019 | 73,761 |
| 399 |
| 74,160 | |||
Total comprehensive loss for the period | - |
| 485 |
| 485 | |||
Dividend payable | - |
| (8,362) |
| (8,362) | |||
Balance as at 30 June 2019 | 73,761 |
| (7,478) |
| 66,283 | |||
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2020 (UNAUDITED)
|
|
| The Group |
| The Company | ||||
|
|
| 6 months ended |
| 6 months ended | ||||
|
|
| 30 June 2020 |
| 30 June 2019 |
| 30 June 2020 |
| 30 June 2019 |
|
|
| USD'000 |
| USD'000 |
| USD'000 |
| USD'000 |
|
|
|
|
|
|
|
|
| |
| OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Profit before income tax |
|
| 4,796 |
| 4,165 |
| 651 |
| 485 |
|
|
|
|
|
|
|
|
|
|
Adjustments for: |
|
|
|
|
|
|
|
|
|
Depreciation of property, plant and equipment |
|
| 3,559 |
| 3,355 |
| - |
| - |
Depreciation of right-of-use assets |
|
| 1,446 |
| - |
| - |
| - |
Adjustments for non-cash items |
|
| 3,530 |
| 358 |
| (329) |
| (631) |
|
|
|
|
|
|
|
|
|
|
Operating Profit/(Loss) Before Working Capital Changes |
|
| 10,993 |
| 7,878 |
| 322 |
| (146) |
|
|
|
|
|
|
|
|
|
|
(Increase)/ Decrease in: |
|
|
|
|
|
|
|
|
|
Inventories |
|
| 541 |
| 1,531 |
| - |
| - |
Trade and other receivables, |
|
| (1,411) |
| (3,401) |
| (430) |
| (430) |
advances and prepaid expenses |
|
|
|
|
|
|
|
|
|
Loans and advances from subsidiary companies |
|
| - |
| - |
| 10 |
| (27) |
Increase in: |
|
|
|
|
|
|
|
|
|
Trade and other payables, |
|
| 2,251 |
| 1,517 |
| 16 |
| 34 |
accrued and other liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Generated From/(Used In) Operations |
|
| 12,374 |
| 7,525 |
| (524) |
| (569) |
Income tax paid |
|
| (185) |
| (85) |
| - |
| - |
Interest paid |
|
| (580) |
| (420) |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
Net Cash Generated From/(Used In) Operating Activities |
|
| 11,609 |
| 7,020 |
| (524) |
| (569) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Purchase of property, plant and equipment |
|
| (2,644) |
| (844) |
| - |
| - |
Purchase of other assets |
|
| - |
| (29) |
| - |
| - |
Interest received |
|
| 112 |
| 147 |
| 330 |
| 629 |
|
|
|
|
|
|
|
|
|
|
Net Cash (Used In)/Generated From Investing Activities |
|
| (2,532) |
| (726) |
| 330 |
| 629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
Proceeds from borrowings |
|
| 2,098 |
| 4,515 |
| - |
| - |
Repayment from borrowings |
|
| (9,003) |
| (5,805) |
| - |
| - |
Payment of lease liabilities |
|
| (1,133) |
| - |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
Net Cash Used In Financing Activities |
|
| (8,038) |
| (1,290) |
| - |
| - |
|
|
|
|
|
|
|
|
|
|
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS |
|
| 1,039 |
| 5,004 |
| (194) |
| 60 |
EFFECTS OF FOREIGN EXCHANGE RATE CHANGES |
|
| (486) |
| 54 |
| - |
| - |
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD |
|
| 9,014 |
| 5,719 |
| 262 |
| 23 |
|
|
|
|
|
|
|
|
|
|
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD |
|
| 9,567 |
| 10,777 |
| 68 |
| 83 |
|
|
|
|
|
|
|
|
|
|