Bamburi

Bamburi H107 profits Increases 16%; Strong Cash Flow Generation

Bamburi Cement Limited (NSE Listed) reported consolidated turnover of KES10 billion for the first half ended June 30, 2007, compared to KES7 billion for the same period last year.

Bamburi Cement Limited (NSE Listed) reported turnover of KES10 billion for the first half ended June 30, 2007, compared to KES7 billion for the same period last year.

Operating profit increased by KES461 million to KES2.4 billion compared to the same period in 2006. The management attributed this increase to strong sales volumes across all markets arising from higher market demand on the back of increased construction activities, especially individual home builder’s (IHB) activities and strong export markets demand.

Profit before minority interest amounted to KES1.6 billion a 17% increase compared to KES1.4 billion for the first six months of 2006. Profit attributed to shareholders amounted to KES1.4 billion a 16% increase compared to KES1.2 billion for the first six months of 2006.

BAMBURI’S CASH FLOWS:
Net Cash from operating activities for the first six months of 2007 decreased by KES35 million (or 2.04%) compared to last year, in line with the lower net earnings (when excluding the reduction in tax rates in both 2006 and 2007). Cash used in investing activities and financing activities increased by 114% and 78% respectively.

Free Cash Flows are a way of measuring cash that is available to a company for discretionary use. Free Cash Flows can be defined as cash flows from operating activities less cash outlays necessary for the replacement of operating capacity (capital expenditures). It is a measure of cash that is available for discretionary use by the company. As such, the calculation of free cash flows is somewhat arbitrary since it assumes a certain level of reinvestment to replace existing capacity. Generally it is defined as cash flows from operations less capital expenditures to maintain the company’s current operating capacity. Therefore, free cash flows are those cash flows available to grow the company, pay back debt, pay dividends, or repurchase stock.

LIQUIDITY/BALANCE SHEET
The Company ended the first half in a comfortable financial position with a ratio of long-term debt on total capitalization of 0.12 compared to 0.13 at the end of the first half of 2006. Total long-term debt as of June 30, 2007, amounted to KES2.3 billion compared to KES2.19 billion for the same 2006 period.

MANAGEMENT’S PRESS RELEASE ON INTERIM RESULTS

The growth in the group’s turnover compared to last year was fuelled by strong sales volumes across all markets arising from higher market demand on the back of increased construction activities, especially individual home builder’s (IHB) activities and strong export markets demand.

The Kenyan market maintained stable growth but we continued to face competition in Uganda, especially in the main central market. Despite a difficult operating environment, mainly power supply challenges in Uganda, longer planned maintenance shutdown and higher use of purchased clinker to meet increased market demand our profit before tax grew by 15%. We continued to benefit from various initiatives launched in 2006 to optimise operational efficiency and control costs. Power costs remained steady in Kenya but grew by 98% in Uganda compared to the same period last year.

Financing income was affected by foreign exchange losses on our dollar denominated assets as a result of a stronger shilling compared to the US dollar in both countries. The increase in working capital is mainly due to increased activity as shown by the increase in turnover. At the same time, cash resources have increased in both countries.

With the region’s economy expected to remain vibrant, we anticipate a strong performance during the second half of the year despite increasing pressure on transport, rising fuel prices and concerns on stability of power supply. We will continue with implementation of various cost optimisation initiatives to offset these escalating costs.

SECOND INTERIM DIVIDEND

A first interim dividend of 40% per ordinary share (Kshs 2.00) totaling Kshs 726 million was paid in April. The Board of Directors is pleased to announce the payment of a second interim dividend of 70% per ordinary share (Kshs 3.50 per share) totaling 1,270 million. This brings the total interim dividends to Kshs 1,996 million.

CLOSURE OF SHARE REGISTER

The second interim dividend will be paid on or about the 8 October 2007 to members on the register at the close of business on 14 September 2007. The register of members will close at 4.30 pm on 14 September 2007 and will remain closed up to 17 September 2007.

FINANCIAL STATEMENTS

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