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PROFIT AND DIVIDEND ANNOUNCEMENT FOR THE SIX MONTHS ENDED 31 MARCH 1999
PRETORIA PORTLAND CEMENT COMPANY LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
COMPANY REGISTRATION NUMBER 01/00667/06
YEAR
SIX MONTHS ENDED ENDED
CONSOLIDATED INCOME 31 MARCH 31 MARCH 30 SEPT
STATEMENT 1999 1998 1998
UNAUDITED UNAUDITED AUDITED
RESTATED % RESTATED
R M R M CHANGE R M
TURNOVER 882.6 858.6 3 1785.4
OPERATING PROFIT 115.2 147.8 (22) 311.8
INVESTMENT INCOME 10.6 9.2 20.3
INTEREST RECEIVED 4.2 3.1 14.6
PROFIT BEFORE INTEREST
PAID AND TAXATION 130.0 160.1 (19) 346.7
INTEREST PAID 24.7 10.8 20.8
PROFIT BEFORE
EXCEPTIONAL ITEMS 105.3 149.3 (29) 325.9
EXCEPTIONAL ITEMS 3.0 - (0.2)
PROFIT BEFORE TAXATION 108.3 149.3 (27) 325.7
TAXATION (5.1) 44.7 84.4
PROFIT AFTER TAXATION 113.4 104.6 8 241.3
SHARE OF ASSOCIATE
COMPANIES' RETAINED.
(LOSS)/PROFIT (4.0) 1.2 1.5
NET PROFIT ATTRIBUTABLE
TO SHAREHOLDERS 109.4 105.8 3 242,8
YEAR
SIX MONTHS ENDED ENDED
31 MARCH 31 MARCH 30 SEPT
1999 1998 1998
UNAUDITED UNAUDITED % AUDITED
RESTATED CHANGE RESTATED
ORDINARY SHARES OF R1
EACH FULLY PAID IN
ISSUE (000) 49982 46758 47066
NUMBER OF SHARES UPON
WHICH EARNINGS PER
SHARE IS BASED (000) 48038 46025 46681
CENTS CENTS CENTS
EARNINGS PER SHARE
- EXCLUDING EXCEPTIONAL
ITEMS 221.5 229.9 (4) 519.4
- INCLUDING EXCEPTIONAL
ITEMS 227.7 229.9 (1) 520.1
DIVIDENDS PER SHARE 85 95 (11) 325
DIVIDEND COVER 2.5 2.4 1.6
31 MARCH 31 MARCH 30 SEPT
CONSOLIDATED 1999 1998 1998
BALANCE SHEET UNAUDITED UNAUDITED AUDITED
RESTATED RESTATED
R M R M R M
CAPITAL EMPLOYED
CAPITAL AND PREMIUM 613.9 484.7 505.8
NON-DISTRIBUTABLE RESERVES
AND RETAINED PROFIT 895.6 797.7 828.6
INTEREST OF SHAREHOLDERS 1509.5 1282.4 1334.4
LONG TERM BORROWINGS 271.9 107.7 271.9
DEFERRED TAXATION 184.2 175.0 208.8
1965.6 1565.1 1815.1
EMPLOYMENT OF CAPITAL
PROPERTY, PLANT AND
EQUIPMENT, INVESTMENTS
AND LOANS 1688.3 1425.1 1650.2
NET CURRENT ASSETS 277.3 140.0 164.9
CURRENT ASSETS 540.7 544.6 485.1
INVENTORIES & RECEIVABLES 515.7 511.0 460.1
LIQUID FUNDS 25.0 33.6 25.0
CURRENT LIABILITIES 263.4 404.6 320.2
SHORT TERM BORROWINGS 29.9 141.4 8.0
ACCOUNTS PAYABLE 233.5 263.2 312.2
1965.6 1565.1 1815.1
YEAR
SIX MONTHS ENDED ENDED
31 MARCH 31 MARCH 30 SEPT
1999 1998 1998
CONSOLIDATED CASH FLOW STATEMENT UNAUDITED UNAUDITED AUDITED
RESTATED RESTATED
R M R M R M
CASH FLOWS FROM OPERATING ACTIVITIES
CASH GENERATED FROM OPERATIONS 176.2 196.3 412.2
INVESTMENT INCOME 14.8 12.3 34.9
REPLACEMENT OF FIXED ASSETS (44.6) (26.2) (75.2)
INCREASE IN WORKING CAPITAL (80.6) (53.4) (6.5)
INTEREST PAID (26.9) (17.4) (37.2)
TAXATION PAID (7.4) (28.7) (45.4)
CASH AVAILABLE FROM OPERATIONS 31.5 82.9 282.8
LESS: DIVIDEND PAID - (14.7) (59.4)
NET CASH INFLOW FROM OPERATING
ACTIVITIES 31.5 68.2 223.4
CASH FLOWS FROM INVESTING ACTIVITIES
NET MOVEMENT ON INVESTMENTS 11.0 (28.6) (112.1)
EXPENDITURE TO EXPAND OPERATIONS (64.3) (180.0) (313.7)
OTHER CASH FLOWS - - 1.5
NET CASH OUTFLOW FROM INVESTING
ACTIVITIES (53.3) (208.6) (424.3)
CASH FLOWS FROM FINANCING ACTIVITIES
PROCEEDS FROM SHARES ISSUED (0.1) 0.2 21.3
NET INCREASE IN BORROWINGS 21.9 74.4 105.2
NET CASH INFLOW FROM FINANCING
ACTIVITIES 21.8 74.6 126.5
DECREASE IN LIQUID FUNDS - (65.8) (74.4)
LIQUID FUNDS AT BEGINNING OF
PERIOD 25.0 99.4 99.4
LIQUID FUNDS AT END OF PERIOD 25.0 33.6 25.0
DIVISIONAL ANALYSIS OF THE GROUP
YEAR
SIX MONTHS ENDED ENDED
31 MARCH 31 MARCH 30 SEPT
1999 1998 1998
TURNOVER UNAUDITED UNAUDITED AUDITED
RESTATED % RESTATED
R M R M CHANGE R M
CEMENT 632.4 631.8 - 1323.3
LIME 116.1 110.3 5 221.9
PACKAGING AND
TRANSPORT 134.1 116.5 15 240.2
882.6 858.6 3 1785.4
OPERATING PROFIT
CEMENT 90.8 112.6 (19) 249.0
LIME 17.2 29.9 (42) 52.0
PACKAGING AND
TRANSPORT 7.2 5.3 36 10.8
115.2 147.8 (22) 311.8
OPERATING MARGIN
% % %
CEMENT 14.4 17.8 18.8
LIME 14.8 27.1 23.4
PACKAGING AND
TRANSPORT 5.4 4.5 4.5
13.1 17,2 17.5
NET OPERATING ASSETS 31 MARCH 31 MARCH 30 SEPT
1999 1998 1998
UNAUDITED UNAUDITED % CHANGE AUDITED
RESTATED RESTATED
R M R M R M
CEMENT 1320.4 1176.0 12 1247.1
LIME 292.3 252.3 16 290.0
PACKAGING AND
TRANSPORT 199.0 160.3 24 157.0
1811.7 1588.6 14 1694.1
SIX MONTHS ENDED YEAR ENDED
31 MARCH 31 MARCH 30 SEPT
1999 1998 1998
NOTES UNAUDITED UNAUDITED AUDITED
RESTATED RESTATED
R M R M R M
1. PROFIT BEFORE TAXATION
INCLUDED IN PROFIT BEFORE
TAXATION
ARE ITEMS DETAILED BELOW:
DEPRECIATION 61.9 47.2 98.1
COST OF SALES 591.2 555.3 1153.1
CAPITALISED INTEREST 2.2 6.6 16.4
2. TAXATION THE CHANGE IN THE COMPANY TAXATION RATE FROM 35% TO 30% RESULTED IN
A TAXATION RATE ADJUSTMENT CREDIT OF R29,8 MILLION CALCULATED ON THE OPENING
DEFERRED TAXATION BALANCE AT 1 OCTOBER 1998. THIS IS INCLUDED IN THE CURRENT
PERIOD TAXATION CHARGE.
3. NET PROFIT EXCLUDING
EXCEPTIONAL ITEMS
NET PROFIT ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 109.4 105.8 242.8
REVERSAL OF PROVISION FOR
CONTRACTUAL PENALTY 3.0 - -
OTHER - - 0.4
106.4 105.9 242.4
SIX MONTHS ENDED YEAR ENDED
31 MARCH 31 MARCH 30 SEPT
1999 1998 1998
NOTES (CONTINUED) UNAUDITED UNAUDITED AUDITED
RESTATED RESTATED
R M R M R M
4. GOODWILL
REVERSAL OF GOODWILL AND
OTHER ADJUSTMENTS WRITTEN
OFF RETAINED PROFIT - - 1.5
5. INVESTMENTS
UNLISTED AT COST 122.7 55.4 122,7
UNLISTED ASSOCIATES AT
CARRYING VALUE 34.5 40.6 47.4
DIRECTORS VALUATION OF
INVESTMENTS
UNLISTED 129.9 62.0 129.9
UNLISTED ASSOCIATES 77.9 139.4 130.8
6. BORROWINGS
THE COMPANY'S BORROWING POWERS
ARE NOT RESTRICTED
BORROWINGS 301.8 249.1 279.9
7. COMMITMENTS
CAPITAL COMMITMENTS 77.9 252.0 141.1
CONTRACTED 76.7 212.1 127.7
APPROVED 1.2 39.9 13.4
LEASE COMMITMENTS 3.4 10.2 8.3
81.3 262.2 149.4
SIX MONTHS ENDED YEAR ENDED.
31 MARCH 31 MARCH 30 SEPT
1999 1998 1998
NOTES (CONTINUED) UNAUDITED UNAUDITED AUDITED.
RESTATED RESTATED
R M R M R M
8. CONTINGENT LIABILITIES
THERE ARE CONTINGENT LIABILITIES IN RESPECT OF GUARANTEES COVERING LOANS,
BANKING FACILITIES AND OTHER OBLIGATIONS OF SUBSIDIARIES AND OTHER THIRD
PARTIES LIMITED TO R13.6 MILLION.
THE OUTSTANDING LIABILITIES AT
31 MARCH COVERED BY
GUARANTEES WERE 13.6 5.0 13.6
9. CHANGE IN ACCOUNTING POLICY
DURING THE YEAR THE COMPANY CHANGED ITS ACCOUNTING POLICY IN RESPECT OF ITS
TREATMENT OF ASSOCIATE COMPANIES FROM PROPORTIONATE CONSOLIDATION TO EQUITY
ACCOUNTING.
COMPARATIVE FIGURES HAVE BEEN RESTATED IN ACCORDANCE WITH THE NEW ACCOUNTING
POLICY. THERE IS NO EFFECT ON THE EARNINGS ATTRIBUTABLE TO THE SHAREHOLDERS OF
THE COMPANY AS A RESULT OF THIS CHANGE.
COMMENT
NET PROFIT ATTRIBUTABLE TO SHAREHOLDERS EXCLUDING EXCEPTIONAL ITEMS OF R3,0
MILLION INCREASED BY 1% TO R106,4 MILLION. EARNINGS PER SHARE DECLINED BY 4% TO
221,5 CENTS ON INCREASED SHARES IN ISSUE FOLLOWING THE CAPITALISATION AWARD IN
DECEMBER 1998.
LOWER SALES VOLUMES IMPACTED NEGATIVELY ON MOST OF THE BUSINESS UNITS ALTHOUGH
TRANSPORT REVENUE INCREASED BECAUSE OF AN EXPANDED FLEET AND IMPROVED VEHICLE
UTILISATION.
THE COMPLETION OF MOST OF THE MAJOR CAPITAL EXPENDITURE PROJECTS EMBARKED ON BY
THE GROUP RESULTED IN DEPRECIATION CHARGES INCREASING BY R14,7 MILLION AND
CONTRIBUTED TO A LOWER OPERATING MARGIN OF 13,1%. OPERATING PROFIT DECLINED BY
22% TO R115,2 MILLION ON TURNOVER WHICH WAS MARGINALLY UP AT R882,6 MILLION.
HIGHER FINANCING COSTS WERE OFFSET BY A SIGNIFICANT DROP IN THE TAXATION
CHARGE, RESULTING IN PROFIT AFTER TAXATION INCREASING BY 8% TO R113,4 MILLION.
THE TAXATION CHARGE WAS REDUCED BY A DEFERRED TAXATION ADJUSTMENT OF R29,8
MILLION ARISING FROM THE DECLINE IN THE SOUTH AFRICAN COMPANY TAXATION RATE TO
30%.
CAPITAL EXPENDITURE DECLINED TO R109 MILLION (1998: R206 MILLION) RESULTING IN
THE NET CASH OUTFLOW DECLINING TO R21,8 MILLION (1998: R140,4 MILLION).
CEMENT
DOMESTIC SALES VOLUMES DECLINED AS A RESULT OF LOWER BUILDING AND CONSTRUCTION
ACTIVITY. THIS COUPLED WITH REDUCED EXPORT MARGINS AND HIGHER DEPRECIATION
CHARGES RESULTED IN OPERATING PROFITS FALLING BY 19% TO R90,8 MILLION.
OUR GLOBAL COMPETITIVENESS PROGRAMME CONTINUES TO FOCUS ON IMPROVING
OPERATIONAL EFFICIENCIES. PRODUCTION OF CLINKER AT THE JUPITER FACTORY IN
JOHANNESBURG CEASED DURING THE PERIOD. MEASURES WERE INTRODUCED AT THE OTHER
FACTORIES TO REDUCE COSTS AND STOCKHOLDINGS IN THE FACE OF LOWER SALES VOLUMES.
LIME
SALES VOLUMES DECLINED MAINLY DUE TO LOWER DEMAND FROM THE STEEL INDUSTRY. THIS
TOGETHER WITH INCREASED DEPRECIATION CHARGES AND NO CONTRIBUTION FROM PPC
SALDANHA BECAUSE OF THE DELAYED COMMISSIONING OF THE SALDANHA STEEL PLANT,
RESULTED IN OPERATING PROFIT DECLINING BY 42% TO R17,2 MILLION.
PACKAGING AND TRANSPORT
DESPITE A DECLINE IN SALES VOLUMES, THE EFFICIENCY IMPROVEMENTS FLOWING FROM
THE RECENT PLANT REFURBISHMENT ENABLED AFRIPACK TO INCREASE PROFITS DURING THE
PERIOD. GROWTH IN THE TRANSPORT DIVISION, IMPROVED FLEET UTILISATION AND THE
BENEFITS OF LAST YEAR'S RATIONALISATION RESULTED IN HIGHER OPERATING PROFITS.
ASSOCIATE COMPANIES
THERE WAS A NEGATIVE CONTRIBUTION FROM ASSOCIATES AS A RESULT OF THE LOWER
DEMAND FOR CEMENTITIOUS PRODUCTS.
YEAR 2000 COMPLIANCE
THE MAIN BUSINESS SYSTEMS IN PPC ARE NOW YEAR 2000 COMPLIANT. WORK ON THE
REMAINING SYSTEMS WILL BE COMPLETED BY THE END OF JULY 1999, WHICH WILL ENSURE
THAT PPC IS READY WELL BEFORE THE END OF THE YEAR. CONTINUED ATTENTION IS BEING
GIVEN TO MINIMISING THE RISK OF OUR SUPPLIERS NOT ACHIEVING COMPLIANCE.
PROSPECTS
HIGH REAL INTEREST RATES CONTINUE TO IMPACT NEGATIVELY ON THE LEVEL OF DOMESTIC
FIXED INVESTMENT EXPENDITURE. THE DECLINING TREND OF SALES VOLUMES IN THE
CEMENT AND LIME INDUSTRIES IS SHOWING NO SIGN OF REVERSING AT THIS STAGE. ANY
GENERAL IMPROVEMENT IN THE DOMESTIC ECONOMY IS UNLIKELY TO MATERIALLY AFFECT
DEMAND FOR CEMENT AND LIME IN THE REMAINING MONTHS OF THIS FINANCIAL YEAR.
INCREASED DEPRECIATION AND INTEREST CHARGES WILL IMPACT NEGATIVELY ON RESULTS
IN THE SECOND HALF OF THIS FINANCIAL YEAR.
EARNINGS FOR THE YEAR WILL BE LOWER THAN LAST YEAR AND ACCORDINGLY THE INTERIM
DIVIDEND HAS BEEN REDUCED TO 85 CENTS PER SHARE.
ON BEHALF OF THE BOARD
W A M CLEWLOW J E GOMERSALL
CHAIRMAN GROUP MANAGING DIRECTOR
7 MAY 1999
DECLARATION OF DIVIDEND NO 184
INTERIM DIVIDEND NO 184 OF 85 CENTS PER SHARE HAS BEEN DECLARED PAYABLE TO
SHAREHOLDERS REGISTERED IN THE SHARE REGISTER OF THE COMPANY AT THE CLOSE OF
BUSINESS ON 28 MAY 1999.
THE TRANSFER BOOKS AND THE REGISTER OF MEMBERS OF THE COMPANY WILL BE CLOSED
FROM 29 MAY 1999 TO 4 JUNE 1999, BOTH DAYS INCLUSIVE, FOR THE PURPOSE OF
DETERMINING THOSE SHAREHOLDERS TO WHOM THE DIVIDEND WILL BE PAID.
DIVIDEND WARRANTS WILL BE POSTED ON OR ABOUT 5 JULY 1999 TO SHAREHOLDERS AT
THEIR REGISTERED ADDRESSES OR IN ACCORDANCE WITH THEIR WRITTEN INSTRUCTIONS
RECEIVED UP TO AND INCLUDING 28 MAY 1999. THE DIVIDEND IS DECLARED AND PAYABLE
IN THE CURRENCY OF THE REPUBLIC OF SOUTH AFRICA.
BY ORDER OF THE BOARD
BARLOWS TRUST COMPANY LIMITED
SECRETARIES
7 MAY 1999
DIRECTORS:
W A M CLEWLOW (CHAIRMAN)
J E GOMERSALL * (GROUP MANAGING DIRECTOR)
D C ARNOLD, P J BLACKBEARD, R K J CHAMBERS, R H DENT, A J LAMPRECHT, A J
PHILLIPS*, I G STEVENS, P STUIVER+ C R TASKER, E P THERON.
*BRITISH +DUTCH
REGISTERED OFFICE:
BARLOW PARK, KATHERINE STREET, SANDTON 2196, SOUTH AFRICA (PO BOX 782248,
SANDTON 2146, SOUTH AFRICA)
TRANSFER SECRETARIES:
RAND REGISTRARS LIMITED, BLOCK C, 100 NORTHERN PARKWAY, ORMONDE 2091, SOUTH
AFRICA (PO BOX 82549, SOUTHDALE 2135, SOUTH AFRICA)
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