Last checked at 2 Sep 2011 07:00
Steppe Cement Limited
2 September 2011
Steppe Cement Ltd
Interim Results for the Half Year 30 June 2011
and General Market Update
1. Interim Results
Steppe Cement Ltd ("Steppe Cement" or the "Company") posted a consolidated loss after tax of USD2.2 million for the six months ended 30 June 2011.
6 months ended 30 June 11 | 6 months ended 30 June 10 | % of change | |
Sales (Tonnes) | 601,099 | 523,156 | 15 |
Consolidated turnover (USD Million) | 43.0 | 31.5 | 36 |
Consolidated loss after tax (USD Million) | (2.2) | (3.8) | (42) |
Loss per share (Cents) | (1.2) | (2.5) | (52) |
Average exchange rate (USD/KZT) | 146 | 147.2 | (1) |
·; Sales increased by 36% in Tenge ("KZT") while volumes increased by 15%. The average sales price increased from USD61/tonne to USD72/tonne during the period.
·; Production costs per tonne increased by 11% in USD. The increase is concentrated in electricity and transportation and is partly offset by productivity increases. The number of employees declined from 1,081 to 1,049 as at the end of June 2011 despite the increase in production.
·; Selling expenses have grown on a per tonne basis by 34% reflecting as sharp increase in transport costs in part as markets further away from the plant are being targeted.
·; General and administrative expenses decreased by 5% during the period.
·; Steppe Cement generated USD7.3 million from operations in the 1H 2011 due to improved trading conditions and inventory reduction.
·; The KZT has remained stable and the Kazakhstan economy continues to grow at 7% per year.
·; In August 2011 Central Asia Cement, a fully owned subsidiary of Steppe Cement, repaid the principal and last coupon of the KZT2.7 billion (USD18.6 million at current exchange rates) bond issued in 2006.
2. Update on the Kazakh cement market
·; The Kazakhstan cement market increased by 4% during the first half of the year and Steppe Cement currently expects this to increase by 8% for 2011 overall to 6.2 million tonnes.
·; Prices are expected to increase significantly in 2H 2011when compared to the 1H 2011 and 2H 2010.
·; Overall local production has increased by 13% in the first half of 2011 compared to 2010 while the share of the imported cement continues to decrease.
·; Steppe Cement increased its market share from 20% in 1H 2010 to 21% in 1H 2011 and we expect it to remain around that level for the full year 2011.
·; The Kazakhstan Government has continued its infrastructure projects and ongoing support for completion of real estate projects in Almaty and Astana. It has been recently announced that this support will continue in the smaller cities.
·; The two new entrants in the market Minarat Cement (Vicat) near the Balkhash lake and Standard Cement near Taraz in the south of Kazakhstan have commenced operations and are ramping up production during the summer. They are absorbing the increased demand in Kazakhstan and contributing to reduce imports to 17% of the total market.
3. Production and refurbishment progress
·; Line 6 production has continued to increase and was up 4% in the 1H 2011 and it is already up 15% in the year to August.
·; Currently line 6 is achieving up to 2,450 tonnes per day of clinker and up to 3,000 tonnes per day of cement compared to 2,000 tonnes of clinker per day in 1H 2010.
·; The wet lines are performing at lower levels to those of 2010.
·; For the full year 2011 the volumes from the dry line are expected to exceed those of the wet lines.
·; The main cost increases are driven by electricity tariffs and the Company is taking measures to limit the impact in the coming year.
4. Financing
·; Steppe Cement's net debt was reduced to USD52 million after the redemption of the KZT2.7 billion bond and coupon in August.
·; Steppe Cement is currently negotiating to secure financing to complete line 5 in view of the more stable outlook for the market and the production cost benefits that will accrue over the existing wet process.
A pdf copy of this announcement and the full interim financial statements are available on the Company's website at www.steppecement.com.
Steppe Cement's AIM nominated adviser is RFC Corporate Finance Ltd.
Contact Stephen Allen or Trinity McIntyre at +61 8 94802500.
SUMMARY OF INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2011 (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 INCOME STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2011 (UNAUDITED)
The Group | The Company | |||||||
6 months ended | 6 months ended | |||||||
30 June 2011 | 30 June 2010 | 30 June 2011 | 30 June 2010 | |||||
USD'000 | USD'000 | USD'000 | USD'000 | |||||
Revenue | 43,059 | 31,556 | 50 | 50 | ||||
Cost of sales | (30,757) | (23,946) | - | - | ||||
Gross profit | 12,302 | 7,610 | 50 | 50 | ||||
Selling expenses | (7,886) | (5,083) | - | - | ||||
General and administrative | ||||||||
expenses | (4,573) | (4,802) | (261) | (298) | ||||
Operating loss | (157) | (2,275) | (211) | (248) | ||||
Investment income | 17 | ^ | - | ^ | ||||
Finance costs | (2,673) | (3,062) | - | - | ||||
Other (expense)/income, net | (25) | 736 | (19) | 54 | ||||
Loss before income tax | (2,838) | (4,601) | (230) | (194) | ||||
Income tax credit | 600 | 717 | - | - | ||||
Loss for the period | (2,238) | (3,884) | (230) | (194) | ||||
Attributable to: | ||||||||
Shareholders of the Company | (2,238) | (3,884) | (230) | (194) | ||||
Loss per share: | ||||||||
Basic (cents) | (1.3) | (2.5) | ||||||
^ - Insignificant amount
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 30 JUNE 2011 (UNAUDITED)
The Group | The Company | ||||||||
6 months ended | 6 months ended | ||||||||
30 June 2011 | 30 June 2010 | 30 June 2011 | 30 June 2010 | ||||||
USD'000 | USD'000 | USD'000 | USD'000 | ||||||
Loss for the period | (2,238) | (3,884) | (230) | (194) | |||||
Other comprehensive income: | |||||||||
Exchange differences arising on translation of foreign subsidiary companies | 1,357 | 758 | - | - | |||||
Total comprehensive loss for the period | (881) | (3,126) | (230) | (194) | |||||
Attributable to: | |||||||||
Shareholders of the Company | (881) | (3,126) | (230) | (194) | |||||
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2011 (UNAUDITED)
The Group | The Company | |||||||||
Unaudited | Audited | Unaudited | Audited | |||||||
30 June 2011 | 31 Dec 2010 | 30 June 2011 | 31 Dec 2010 | |||||||
USD'000 | USD'000 | USD'000 | USD'000 | |||||||
Assets | ||||||||||
Non-Current Assets: | ||||||||||
Property, plant and equipment | 140,759 | 142,509 | - | - | ||||||
Investment in subsidiary companies | - | - | 26,500 | 26,500 | ||||||
Advances paid | 808 | 322 | - | - | ||||||
Other assets | 32,700 | 32,434 | - | - | ||||||
Total Non-Current Assets | 174,267 | 175,265 | 26,500 | 26,500 | ||||||
Current Assets | ||||||||||
Inventories, net | 13,919 | 15,334 | - | - | ||||||
Trade receivables, net | 2,549 | 2,135 | - | - | ||||||
Amount owing by subsidiary companies | - | - | 28,940 | 28,590 | ||||||
Other receivables, advances and prepaid expenses | 8,832 | 8,576 | - | 1 | ||||||
Cash and bank balances | 19,755 | 9,532 | 491 | 964 | ||||||
Total Current Assets | 45,055 | 35,577 | 29,431 | 29,555 | ||||||
Total Assets | 219,322 | 210,842 | 55,931 | 56,055 | ||||||
The Group | The Company |
| |||||||||
Unaudited | Audited | Unaudited | Audited |
| |||||||
30 June 2011 | 31 Dec 2010 | 30 June 2011 | 31 Dec 2010 |
| |||||||
USD'000 | USD'000 | USD'000 | USD'000 |
| |||||||
| |||||||||||
Equity and Liabilities |
| ||||||||||
| |||||||||||
Capital and Reserves |
| ||||||||||
Share capital | 58,298 | 58,298 | 58,298 | 58,298 | |||||||
| Revaluation reserve | 10,940 | 10,940 | - | - | |||||||
Translation reserve | (17,587) | (18,944) | - | - | |||||||
Retained earnings/ (Accumulated loss) | 72,187 | 74,425 | (3,268) | (3,038) | |||||||
Total Equity | 123,838 | 124,719 | 55,030 | 55,260 | |||||||
Non-Current Liabilities | |||||||||||
Loans | 51,458 | 52,462 | - | - | |||||||
Deferred tax liabilities, net | 4,099 | 4,687 | - | - | |||||||
Total Non-Current Liabilities | 55,557 | 57,149 | - | - | |||||||
Current liabilities | |||||||||||
Trade payables | 6,975 | 4,465 | - | - | |||||||
Other payables and accrued liabilities | 6,617 | 3,315 | 901 | 795 | |||||||
Bonds | 18,441 | 18,258 | - | - | |||||||
Loans | 6,978 | 2,248 | - | - | |||||||
Taxes payable | 916 | 688 | - | - | |||||||
Total Current Liabilities | 39,927 | 28,974 | 901 | 795 | |||||||
Total Liabilities | 95,484 | 86,123 | 901 | 795 | |||||||
Total Equity and Liabilities | 219,322 | 210,842 | 55,931 | 56,055 | |||||||
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED 30 JUNE 2011 (UNAUDITED)
Non-distributable |
| Distributable | |||||||||||
The Group | Share capital | Share Premium | Revaluation reserve | Translation reserve | Retained earnings | Total/Net | |||||||
| USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | |||||||
Balance as at 1 January 2010 | 1,540 | 41,296 | 3,024 | (20,864) | 77,004 | 102,000 | |||||||
Loss for the period | - | - | - | - | (3,884) | (3,884) | |||||||
Exchange differences arising on translation of foreign subsidiary companies | - | - | - | 758 | - | 758 | |||||||
Total comprehensive income/(loss) for the period | - | - | - | 758 | (3,884) | (3,126) | |||||||
Balance as at 30 June 2010 | 1,540 | 41,296 | 3,024 | (20,106) | 73,120 | 98,874 | |||||||
Non-distributable | Distributable | ||||||||||||
The Group | Share capital | Share Premium | Revaluation reserve | Translation reserve | Retained earnings | Total/Net | |||||||
| USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | USD'000 | |||||||
Balance as at 1 January 2011 | 58,298 | - | 10,940 | (18,944) | 74,425 | 124,719 | |||||||
Loss for the period | - | - | - | - | (2,238) | (2,238) | |||||||
Exchange differences arising on translation of foreign subsidiary companies | - | - | - | 1,357 | - | 1,357 | |||||||
Total comprehensive income/(loss) for the period | - | - | - | 1,357 | (2,238) | (881) | |||||||
Balance as at 30 June 2011 | 58,298 | - | 10,940 | (17,587) | 72,187 | 123,838 | |||||||
Non-distributable |
| Distributable |
| |||||||
The Company | Share capital | Share Premium | Retained earnings | Total/Net |
| |||||
| USD'000 | USD'000 | USD'000 | USD'000 |
| |||||
| ||||||||||
Balance as at 1 January 2010 | 1,540 | 41,296 | (2,756) | 40,080 | ||||||
Total comprehensive loss for the period | - | - | (194) | (194) | ||||||
Balance as at 30 June 2010 | 1,540 | 41,296 | (2,950) | 39,886 | ||||||
Balance as at 1 January 2011 | 58,298 | - | (3,038) | 55,260 | ||||||
Total comprehensive loss for the period | - | - | (230) | (230) | ||||||
Balance as at 30 June 2011 | 58,298 | - | (3,268) | 55,030 | ||||||
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2011 (UNAUDITED)
The Group | The Company |
| |||||||||||||||||
6 months ended | 6 months ended |
| |||||||||||||||||
30 June 2011 | 30 June 2010 | 30 June 2011 | 30 June 2010 |
| |||||||||||||||
USD'000 | USD'000 | USD'000 | USD'000 |
| |||||||||||||||
| |||||||||||||||||||
| OPERATING ACTIVITIES |
| ||||||||||||||||||
Loss before tax | (2,838) | (4,601) | (230) | (194) | |||||||||||||||
Adjustments for non-cash items | 6,621 | 6,615 | - | (38) | |||||||||||||||
Operating Profit/(Loss) Before Working Capital Changes | 3,783 | 2,014 | (230) | (232) | |||||||||||||||
| |||||||||||||||||||
(Increase)/ Decrease in: |
| ||||||||||||||||||
Inventories | 1,411 | (990) | - | - |
| ||||||||||||||
Trade receivables | (414) | (533) | - | - |
| ||||||||||||||
Other receivable and prepaid expenses | (1,399) | (1,653) | 1 | 4 |
| ||||||||||||||
Amount owing by subsidiary companies | - | - | (350) | (3,599) |
| ||||||||||||||
Increase/ (Decrease) in: |
| ||||||||||||||||||
Trade payables | 1,531 | (965) | - | - |
| ||||||||||||||
Other payables and accrued liabilities | 4,840 | (161) | 106 | (37) |
| ||||||||||||||
| |||||||||||||||||||
Cash Generated From/(Used In) Operations | 9,752 | (2,288) | (473) | (3,864) |
| ||||||||||||||
Income tax paid | (107) | (303) | - | - |
| ||||||||||||||
Interest paid | (2,343) | (2,938) | - | - |
| ||||||||||||||
| |||||||||||||||||||
Net Cash Generated From/(Used In) Operating Activities | 7,302 | (5,529) | (473) | (3,864) |
| ||||||||||||||
| |||||||||||||||||||
| |||||||||||||||||||
INVESTING ACTIVITIES |
| ||||||||||||||||||
Proceeds from disposal of property, plant and equipment | ^ | 7 | - | - |
| ||||||||||||||
Purchase of property, plant and equipment | (280) | (442) | - | - |
| ||||||||||||||
Purchase of non-current assets | (162) | - | - | - |
| ||||||||||||||
Interest received | 17 | ^ | - | - |
| ||||||||||||||
| |||||||||||||||||||
Net Cash Used In Investing Activities | (425) | (435) | - | - |
| ||||||||||||||
| |||||||||||||||||||
| |||||||||||||||||||
FINANCING ACTIVITIES |
| ||||||||||||||||||
Proceeds from borrowings | 6,171 | 16,219 | - | - |
| ||||||||||||||
Repayment from borrowings | (2,910) | (15,128) |
| ||||||||||||||||
| |||||||||||||||||||
Net Cash From by Financing Activities | 3,261 | 1,091 | - | - |
| ||||||||||||||
| |||||||||||||||||||
NET INCREASE/(DECREASE)/ IN CASH AND CASH EQUIVALENTS | 10,138 | (4,873) | (473) | (3,864) |
| ||||||||||||||
EFFECTS OF FOREIGN EXCHANGE RATE CHANGES | 85 | 6 | - | - |
| ||||||||||||||
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE PERIOD | 9,532 | 6,545 | 964 | 3,886 |
| ||||||||||||||
| |||||||||||||||||||
CASH AND CASH EQUIVALENTS AT END OF THE PERIOD | 19,755 | 1,678 | 491 | 22 |
| ||||||||||||||
| |||||||||||||||||||
^ - Insignificant amount