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PPC - Reviewed Interim Results for the half-year ended 31 March 2003
Pretoria Portland Cement Company Limited
(Incorporated in the Republic of South Africa)
(Company registration number 1892/000667/06)
JSE Code: PPC
ISIN: ZAE000005559
Reviewed Interim Results for the half-year ended 31 March 2003
* 8% growth in domestic cement volumes
* 53% growth in regional cement export volumes
* 30% growth in dividend
* 58% growth in headline earnings per share
Consolidated Income Statement
Six months ended Year
ended
31 March 31 March 30 Sept.
2003 2002 2002
Reviewed Unaudited Audited
Restated %
Rm Rm Change Rm
Revenue 1,400.1 1,175.8 19 2,570.2
Operating profit 376.8 247.8 52 612.2
Fair value gains on
financial instruments
13.6 5.1 167 20.7
Finance costs 42.8 36.2 (18) 78.1
Income from investments 68.7 42.0 64 92.2
Amortisation of goodwill
(0.1) 2.6 3.1
Profit before exceptional 416.4 256.1 63 643.9
items
Exceptional items 3.6 (14.8) 158.9
Profit before tax 420.0 241.3 74 802.8
Tax 118.6 68.3 (74) 173.6
STC on dividends paid 60.5 51.4 (18) 55.6
Net profit after tax 240.9 121.6 98 573.6
Share of associate
companies"retained profit
1.2 9.9 (88) 26.8
Minority interest - - 0.1
Net profit attributable to
shareholders 242.1 131.5 84 600.3
Net profit per share
(cents)
- basic 450.5 246.2 83 1,121.1
- fully diluted 450.5 246.1 83 1,121.1
Earnings per share before
exceptional items (cents)
- basic 444.2 272.9 63 824.5
- fully diluted 444.2 272.8 63 824.5
Headline earnings per
share (cents)*
- basic 441.0 278.4 58 829.5
- fully diluted 441.0 278.3 58 829.5
Ordinary shares of R1 each
fully paid in issue (000)
53,744 53,733 53,744
Weighted average number of
shares in issue during
the period (000) 53,744 53,365 53,551
Dividends per share
(cents)
- special - - 600
- final - - 400
- interim 175 135 30 135
175 135 30 1,135
Determination of headline
earnings per share
Net profit per share 450.5 246.2 1,121.1
(cents)
Adjusted for (after tax):
Profit on disposal of
associate companies and
property, plant and
equipment
(9.4) (0.3) (511.9)
Impairment of goodwill and - 27.0 214.4
property
Amortisation of goodwill
(0.1) 5.5 5.9
Headline earnings per 441.0 278.4 829.5
share (cents)
*Refer notes 3 and 4 for a reconciliation of net profit attributable to
shareholders to headline earnings.
Consolidated Balance Sheet
31 March 31 March 30 Sept.
2003 2002 2002
Reviewed Unaudited Audited
Restated
Rm Rm Rm
ASSETS
Non-current assets 2,101.5 2,308.3 2,224.5
Property, plant and equipment,
investments and loans
1,986.3 2,081.5 2,110.8
Goodwill and intangible assets 0.8 102.7 1.1
Negative goodwill (1.1) - (1.2)
Deferred tax assets 13.8 12.2 12.1
Long-term loan 101.7 111.9 101.7
Current assets 1,083.7 789.6 1,489.4
Investments in associate companies 5.4 52.2 -
subject to sale
Inventories and receivables 678.4 602.1 617.8
Cash and cash equivalents 399.9 135.3 871.6
Total assets 3,185.2 3,097.9 3,713.9
EQUITY AND LIABILITIES
Capital and reserves
Share capital and premium 865.8 865.4 865.8
Non-distributable reserves 13.7 73.3 109.8
Retained profit 1,069.8 935.0 1,335.1
Interest of shareholders of PPC 1,949.3 1,873.7 2,310.7
Minority interest 0.1 - 0.1
Interest of all shareholders 1,949.4 1,873.7 2,310.8
Non-current liabilities 826.2 875.3 859.6
Interest-bearing 387.5 399.9 387.5
Non-interest-bearing 125.9 129.9 119.4
Deferred tax liabilities 312.8 345.5 352.7
Current liabilities 409.6 348.9 543.5
Short-term borrowings 12.2 11.3 14.2
Accounts payable and provisions 397.4 337.6 529.3
Total equity and liabilities 3,185.2 3,097.9 3,713.9
Net asset value per share (cents) 3,627.2 3,487.1 4,299.9
Statement of Changes in Shareholders" Interest
Six months ended Year
ended
31 March 31 March 30 Sept.
2003 2002 2002
Reviewed Unaudited Audited
Restated
Rm Rm Rm
Interest of shareholders of PPC
Balance at beginning of period 2,310.7 1,939.2 1,939.2
Net movements not recognised
through the income statement
(96.1) 254.4 295.1
Increase in share capital and - 250.5 250.9
premium
Revaluation of investment - 9.1 9.1
Foreign Currency Translation
Reserve and other movements**
(96.1) (5.2) 35.1
Net movements recognised through
the income statement
(265.3) (319.9) 76.4
Net profit attributable to 242.1 131.5 600.3
shareholders
Dividends paid (507.4) (451.4) (523.9)
Balance at end of period 1,949.3 1,873.7 2,310.7
** The decrease in FCTR relates principally to the devaluation of the Zimbabwe
Dollar.
Consolidated Abridged Cash Flow Statement
Six months ended Year ended
31 March 31 March 30 Sept.
2003 2002 2002
Reviewed Unaudited Audited
Restated
Rm Rm Rm
Profit before exceptional items 416.4 256.1 643.9
Depreciation and other 96.4 101.1 184.5
Net increase in working capital (139.7) (89.5) (11.2)
Tax paid (235.1) (151.4) (179.2)
Dividends paid (507.4) (451.4) (523.9)
- ordinary (184.9) (182.7) (255.2)
- special (322.5) (268.7) (268.7)
Net cash (outflow)/inflow from (369.4) (335.1) 114.1
operating activities
Replacement capital expenditure (85.5) (35.1) (109.8)
Investment in future operations (14.0) - -
Acquisition of subsidiary - (184.4) (183.1)
Proceeds from the disposal of - 168.7 168.7
Logistics division
Proceeds from the disposal of
associate companies (net)
- - 324.4
Movements in investments and loans 8.3 13.7 21.0
Proceeds from the disposal of
property, plant and equipment
6.9 6.7 20.2
Receipt of instalment on long-term - - 10.2
loan
Net cash (outflow)/inflow from (84.3) (30.4) 251.6
investing activities
Net cash outflow from financing (2.1) (6.4) (6.8)
activities
Effects of exchange rates on (15.9) - 5.5
opening cash position
Net (decrease)/increase in cash
and cash equivalents
(471.7) (371.9) 364.4
Notes
Six months ended Year ended
31 March 31 March 30 Sept.
2003 2002 2002
Reviewed Unaudited Audited
Restated
Rm Rm Rm
1. Profit before tax
Included in profit before tax are:
Cost of sales 899.3 809.5 1,717.3
Depreciation 90.3 89.1 188.1
Fair value gains on financial 13.6 5.1 20.7
instruments
- translation of foreign currency 16.4 5.1 5.0
monetary items
- other instruments (2.8) - 15.7
2. Finance costs
Finance costs comprise:
Monetary loss/(gain) on 12.3 (1.1) 4.4
hyperinflation
Unwinding of discount on provisions 3.8 6.2 10.0
Financial lease interest 24.7 28.2 57.0
Bank and other borrowings 2.0 2.9 6.7
42.8 36.2 78.1
3.Net profit before exceptional
items
Net profit attributable to 242.1 131.5 600.3
shareholders
Goodwill impairment of Porthold - - 101.9
Profit on disposal of associate - - (263.3)
companies
Profit on disposal of properties (3.6) (0.3) (10.4)
Property impairment - 15.1 12.9
Tax on exceptional items 0.2 (0.6) 0.1
Net profit before exceptional items 238.7 145.7 441.5
4. Headline earnings
Net profit before exceptional items 238.7 145.7 441.5
Profit on disposal of plant and (1.6) - (0.4)
equipment (after tax)
Amortisation of goodwill (0.1) 2.9 3.1
Headline earnings 237.0 148.6 444.2
5. Investments
Unlisted at fair value 259.1 256.0 259.1
Unlisted associate companies
including loans at carrying value
16.0 73.2 22.2
- non-current 10.6 21.0 22.2
- current 5.4 52.2 -
Directors" valuation of investments
- unlisted 259.1 256.0 259.1
- unlisted associate companies 25.6 340.5 22.2
including loans
6. Borrowings 399.7 411.2 401.7
The company"s borrowing powers are
not restricted.
7. Commitments
Capital commitments 32.4 33.6 86.1
- contracted 28.3 27.8 48.7
- approved 4.1 5.8 37.4
Lease commitments 169.8 161.6 162.2
202.2 195.2 248.3
These commitments will be met from
available resources.
8. Contingent liabilities
Guarantees for loans, banking
facilities and other obligations to
third parties.
9.2 5.1 9.2
9. Prior year restatement
The 2002 interim results have been restated to reflect the long-term loan made
by the PPC group to Saldanha Steel (Pty) Limited separately from the capitalised
lease liability relating to leased facilities at Saldanha. Previously the loan
and the liability were subject to set-off with only the net liability being
disclosed. The effect of the restatement resulted in an increase in non-current
assets of R111.9 million and a corresponding increase in non-current
liabilities. Interest paid and interest received have been restated accordingly.
The restatement achieves a higher level of reporting.
In terms of IAS 39 (Financial Instruments: Recognition and Measurement), applied
for the first time during 2002, a fair value opening adjustment of R9.1 million
was recognised in equity.
These restatements have no impact on any reported earnings per share.
10. Hyperinflationary reporting
The results of Porthold, a wholly owned Zimbabwean subsidiary, have been
restated for the decrease in the general purchasing power of the Zimbabwe
Dollar, using the current cost approach in accordance with IAS 29 (Financial
Reporting in Hyperinflationary Economies). The change in the producer price
index during the six months has been 95%.
11. Basis of preparation
The interim results have been prepared in accordance with IAS 34 (Interim
Financial Reporting). The accounting policies adopted are consistent with those
applied in the annual financial statements for the year ended 30 September 2002.
12. JSE Securities Exchange requirements
The interim announcement has been prepared in accordance with the listings
requirements of the JSE Securities Exchange South Africa.
13. Auditors" review
Deloitte & Touche have reviewed these interim results. The unqualified review
opinion is available for inspection at the company"s registered office.
Segmental Analysis of the Group"s Operations
Revenue
Six months ended Year ended
31 March 31 March 30 Sept.
2003 2002 2002
Reviewed Unaudited Audited
Restated %
Rm Rm Change Rm
Cement 1,105.9 937.3 18 2,064.9
Lime 228.2 192.5 19 389.4
Packaging 117.6 81.7 44 189.9
1,451.7 1,211.5 20 2,644.2
Less: Inter-segment revenue 51.6 35.7 45 74.0
1,400.1 1,175.8 19 2,570.2
Operating profit including income from associate companies
Six months ended Year ended
31 March 31 March 30 Sept.
2003 2002 2002
Reviewed Unaudited Audited
Restated %
Rm Rm Change Rm
Cement 313.5 222.9 41 561.4
Lime 50.1 31.7 58 66.8
Packaging 14.4 6.5 122 17.6
378.0 261.1 45 645.8
Operating profit including income from associate companies is arrived at as
follows:
Six months ended Year ended
31 March 31 March 30 Sept.
2003 2002 2002
Reviewed Unaudited Audited
Restated %
Rm Rm Change Rm
Operating profit 376.8 247.8 52 612.2
Dividends from associate
companies
- 3.4 6.8
Share of associate 1.2 9.9 (88) 26.8
companies" retained profit
378.0 261.1 45 645.8
Operating margin
Six months ended Year ended
31 March 31 March 30 Sept
2003 2002 2002
Reviewed Unaudited Audited
Restated
% % %
Cement 28.3 23.8 27.2
Lime 22.0 16.5 17.2
Packaging 12.2 8.0 9.3
27.0* 22.2* 25.1*
* Net of inter-segment revenue
Net operating assets
31 March 31 March 30 Sept.
2003 2002 2002
Reviewed Unaudited Audited
Restated %
Rm Rm Change Rm
Cement 1,442.4 1,620.0 (11) 1,407.7
Lime 441.2 465.4 (5) 434.7
Packaging 73.0 49.4 48 39.8
1,956.6 2,134.8 (8) 1,882.2
Commentary
The pleasing results for the first half are largely attributable to the
continued improvement in infrastructural spending in South Africa, strong export
sales and our Value Based Management (VBM) and Kambuku initiatives.
Headline earnings per share increased 58% to 441.0 cents, this after an STC
charge of 75.0 cents per share relating to the special dividend paid in January
2003 (2002: 62.9 cents).
Group revenues increased by 19% following a 53% growth in cement export volumes,
an 8% growth in local cement volumes and improved price realisations. Favourable
exchange rates and forward exchange contracts boosted export sales in the first
quarter, however the strengthening of the Rand in the second quarter resulted in
a slowdown in exports.
Operating profits increased by 52% to R376.8 million with all businesses
reporting increased operating margins and profitability for the first half. As
anticipated, Porthold reported a small operating loss under the difficult socio-
economic conditions prevailing in Zimbabwe.
Income from investments increased by 64% to R68.7 million reflecting the benefit
of interest earned on surplus cash and on the proceeds from the sale of our
interests in Natal Portland Cement Co. (Pty) Limited ("NPC") and Ash Resources
(Pty) Limited ("Ash Resources").
Exceptional items include the sale of company owned houses to employees in line
with company policy and the disposal of other surplus properties.
The STC charge includes R40.3 million arising from the special dividend paid in
January 2003 (2002: R33.6 million).
Capital expenditure for the first half amounted to R99.5 million (2002: R35.1
million). Major items include the purchase of several new quarry vehicles, the
acquisition of land and mineral rights, capital work in progress in respect of
the Afripack modernisation, and environmental upgrades at Lime Acres.
Taking into account the company"s strong cash position, the directors have
declared an increased interim dividend of 175 cents per share (2002: 135 cents
per share).
CEMENT
The strong growth in cement demand, which started in the second half of the last
financial year and continued into the first half of 2003, assisted PPC in
achieving an 8% growth in domestic sales volumes. At the same time export
volumes increased by 53% assisted by the weaker Rand early in the half and by
new export contracts.
The continued focus on global competitiveness, improved price realisations,
processing and energy efficiencies and logistics optimisation, contributed to
the improvement in operating profit. All production units ran well and De Hoek
and Dwaalboom set new production records.
Porthold Zimbabwe operated under an extremely difficult environment returning an
operating loss of R9.6 million (2002: operating profit R1.5 million) in the
half. Government regulated cement prices were not increased in the first half
while abnormally high levels of inflation continued to prevail. The plant at
Colleen Bawn was shut down on 17 February 2003 following a shortage of coal. The
company then proceeded directly with a planned maintenance shutdown and re-
opened the plant on 28 April 2003.
Operating profit including Porthold and associate companies increased by 41%
from R222.9 million to R313.5 million.
LIME
Improved lime contractual price realisations and gains in operating efficiencies
contributed to the strong performance in the first half. The PPC Saldanha
material"s handling facility is now achieving activity levels in line with
original project planning, which are well up on last year.
Operating profit increased by 58% from R31.7 million to R50.1 million.
PACKAGING
Boosted by a 225% growth in export sacks and increased volume growth across all
product lines in the local market, revenues, plant utilisation and conversion
efficiencies were higher. Operating profits increased by 122% to R14.4 million.
A R40 million modernisation programme aimed at improving market diversification,
product quality, customer flexibility and operating efficiencies has commenced.
ASSOCIATE COMPANIES
The share of associate companies" profits declined as a result of the sale of
NPC and Ash Resources in 2002.
BOARD AND MANAGEMENT
Mr DC Arnold retired as a director with effect from 31 March 2003. His valuable
contribution to the group, since his appointment as a director in 1994, is
sincerely appreciated.
Mr MJ Shaw, who was appointed a director in 2001, has been appointed Chairman of
the Audit Committee and a member of the Compliance Committee.
PROSPECTS
The current value of the Rand will significantly reduce our export
competitiveness and accordingly cement export revenues and margins will be much
lower in the second half. Domestic cement demand should continue to show year on
year growth compared to a very strong second half in 2002. Meaningful deliveries
to the Coega harbour development project are not expected until next financial
year.
Porthold is unlikely to contribute to earnings while the socio-economic crisis
in Zimbabwe continues. The government regulated cement prices, which were set in
April 2002 and not reviewed since that date, were lifted in May 2003. Prices
will however remain subject to monitoring by authorities. Continuing
interruptions relating to the supply of electricity, diesel and coal are likely
to impact on production. The cooler and clinker handling facilities have
recently been upgraded and the business remains well positioned to benefit from
any improvement in Zimbabwe and from exports.
Demand for lime and burnt dolomite is likely to decline slightly in the second
half, as steel exports ease off following the strengthening of the Rand and as
producers reduce their production levels accordingly.
While packaging should maintain its improving trend, financing costs and
depreciation charges will increase following the capital expenditure currently
in progress. The export order book has also declined as a result of the strong
Rand.
The payment of the special dividend of R6.00 per share in January 2003, and
higher levels of tax has reduced the company"s cash position and accordingly
income from investments will be lower in the second half.
Taking into account the strong results for the first half and some modest growth
in domestic cement demand in the second half, the company is expecting to report
increased operating profits and cash flows for the full year. The year on year
rate of increase in the second half is however likely to be lower than that
achieved in the first half for the reasons set out above.
The company remains well positioned to benefit from any sustained improvement in
market conditions and opportunities that may arise.
On behalf of the Board
W A M Clewlow J E Gomersall
Chairman Chief Executive Officer
14 May 2003
Dividend Announcement
Notice is hereby given that interim ordinary dividend No. 194 of 175 cents per
share has been declared in respect of the six months ended 31 March 2003. This
dividend will be paid out of profits as determined by the directors, to
shareholders recorded as such in the register at the close of business on the
record date, Friday, 6 June 2003. The last date to trade to participate in the
dividend is Friday, 30 May 2003. Shares will commence trading ex-dividend from
Monday, 2 June 2003.
The important dates pertaining to this dividend for shareholders trading on the
JSE Securities Exchange South Africa are as follows:
Last day to trade "CUM" dividend Friday, 30 May 2003
Shares trade "EX" dividend Monday, 2 June 2003
Record date Friday, 6 June 2003
Payment date Monday, 9 June 2003
Share certificates may not be dematerialised or rematerialised
between Monday, 2 June 2003 and Friday, 6 June 2003, both days
inclusive.
Zimbabwe
The important dates pertaining to this dividend for shareholders
trading on the Zimbabwe Stock Exchange are as follows:
Currency conversion date* Monday, 2 June 2003
Shares trade "EX" dividend Monday, 2 June 2003
Last day to register to
receive the dividend Friday, 6 June 2003
Payment date Monday, 9 June 2003
The register of members in Zimbabwe will be closed from Monday, 2 June 2003 to
Friday, 6 June 2003, both days inclusive, for the purpose of determining those
shareholders to whom the dividend will be paid.
* The dividend will be paid in Zimbabwe Dollars at the rate quoted by Stanbic
Bank Zimbabwe Limited as the official market buying rate of the SA Rand against
the Zimbabwe Dollar at or about 11:00am on Monday, 2 June 2003 or the first
business day thereafter on which foreign currency dealings are transacted.
By order of the Board
Barloworld Trust Company Limited
Secretaries 14 May 2003
Per AR Holt
Directors:
W A M Clewlow (Chairman), J E Gomersall* (Chief Executive Officer),
P J Blackbeard (Chief Operating Officer), R J Burn, R K J Chambers,
R H Dent, A J Lamprecht, P G Nelson, A J Phillips*, M J Shaw,
E P Theron (*British)
Registered Office:
180 Katherine Street, Sandton, South Africa
(P.O. Box 782248, Sandton 2146, South Africa)
Transfer Secretaries:
Computershare Investor Services Limited
70 Marshall Street,
Johannesburg, South Africa
(P.O. Box 61051, Marshalltown 2107, South Africa)
Transfer Secretaries Zimbabwe:
Corpserve (Private) Limited
4th Floor, Intermarket Centre,
Corner 1st Street/Kwame Nkruma Avenue, Harare, Zimbabwe
(P.O. Box 2208, Harare, Zimbabwe)
These results and other information are available on the PPC Internet website
www.ppc.co.za
Date: 15/05/2003 07:24:26 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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