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Audited Preliminary Report for the year ended 30 September 2013
PPC Ltd (Incorporated in the Republic of South Africa)
(Company registration number: 1892/000667/06)
JSE ISIN: ZAE000170049
ZSE code: PPC
JSE code: PPC
AUDITED PRELIMINARY REPORT for the year ended 30 September 2013
- STRONG CASH GENERATED FROM OPERATIONS - UP 26%
- NORMALISED EARNINGS PER SHARE INCREASED 16%
- ANNUAL DIVIDEND UP 7% TO 156 CENTS PER SHARE AFTER A FINAL DIVIDEND DECLARATION OF 118 CENTS PER SHARE
- SIGNIFICANT PROGRESS WITH REST OF AFRICA EXPANSION STRATEGY
- SIGNED AGREEMENT TO ACQUIRE MAJORITY STAKE IN SAFIKA CEMENT
- STRONG CEMENT VOLUME GROWTH IN ZIMBABWE AND SOUTH AFRICA
Ketso Gordhan, CEO, said: Our expansion strategy into the rest of the African continent has gained significant momentum,
with identified projects progressing well in a number of countries. Cement sales in our home territories, particularly
Zimbabwe and South Africa, have shown good growth which gives us the confidence and ability to execute our expansion strategy.
Commentary
Group revenue increased 13% to R8 316 million (2012: R7 346 million) due to higher cement sales in Zimbabwe and South Africa,
the depreciation of the rand against both the US dollar and Botswana pula as well as the consolidation of CIMERWA (Rwanda)
from February 2013. PPCs group cement sales volumes rose by 7% despite a relatively poor performance in Botswana and Mozambique.
Cost of sales of R5 546 million (2012: R4 809 million) rose 15% mainly due to rising electricity and depreciation costs.
Costs were also affected by sub-optimal sourcing from other PPC plants due to production issues at our Dwaalboom factory
in the first quarter and upgrading of our main finishing mill at Slurry.
Administration and other operating expenditure rose by 27% to R853 million (2012: R671 million) after providing for restructuring
costs in Zimbabwe and business development-related costs. These costs include competition commission filing fees (COMESA), consulting
costs and costs associated with integrating CIMERWA into the group.
Normalised EBITDA increased 8% to R2 504 million (2012: R2 327 million) while operating profit before broad-based black economic
empowerment (BBBEE) IFRS 2 charges, Zimbabwe indigenisation and restructuring expenses rose 6% to R1 981 million (2012: R1 866 million).
The groups normalised EBITDA margin decreased to 30,1% (2012: 31,7%) due to cost growth, particularly administration and other operating
expenses, exceeding revenue growth.
Net finance charges were R357 million (2012: R347 million) with taxation of R507 million (2012: R557 million). The effective rate of
taxation, excluding secondary tax on companies (STC), was 35,3% (2012: 35,8%). In 2012, the taxation charge included STC of R53 million
which did not re-occur in the current year after the introduction of dividend tax effective 1 April 2012. The effective rate of taxation
reflects the non-deductibility of funding costs on the companys first BBBEE transaction, IFRS 2 charges on the empowerment transactions,
costs incurred on our African growth strategy and withholding taxes on dividends received from our foreign operations.
Earnings per share, excluding BBBEE IFRS charges, Zimbabwe indigenisation and restructuring costs (normalised earnings), increased by 16%
to 214 cents per share (2012: 185 cents per share). Cash generated from operations remained strong, rising 26% to R2 885 million
(2012: R2 284 million). The groups cash conversion ratio, being cash generated from operations over EBITDA, improved to end at 1,1 times
(2012: 0,98 times) reflecting improved working capital management.
Capital investment was R964 million (2012: R609 million), with R385 million being invested in our CIMERWA plant expansion. Gross debt has
risen to R4 046 million (2012: R3 585 million) mainly as a result of the expansion strategy that is underway. PPC issued its inaugural bond
in 2013, which was 4,6 times oversubscribed reflecting the markets confidence in our balance sheet management abilities. Net debt to EBITDA
has increased to 1,5 times (2012: 1,4 times).
Dividends
The directors have declared a final dividend of 118 cents per share (2012: 108 cents per share), which increases the years total dividend
by 7% to 156 cents per share (2012: 146 cents per share). The dividend policy of 1,2 to 1,5 times normalised earnings cover is unchanged.
Cement
South Africa
PPCs South African cement sales volumes rose by 7% while industry sales for the nine months ending June 2013 increased by 4,2%*. Strong
volumes were recorded in the Gauteng and inland regions despite increased industrial action in the markets in the region. Volumes in the
coastal regions also recorded growth despite rising imports and a particularly wet winter season.
Imported cement, which is not subject to import duties and is excluded from national statistics, accounted for an estimated 7,6% of national
demand for the first six months of 2013. While cement imports have, to date, been limited primarily to KwaZulu-Natal, the effects are also
being felt in the Eastern and Western Cape.
PPCs average cement selling price per ton increased by 4% during the financial year while costs rose 6% on a rand per ton basis. Lower coal
and maintenance costs assisted in keeping cost growth contained.
Slurry finishing mill 4, the largest mill in the PPC group which was commissioned in 1974, was upgraded in May 2013 at a cost of R100 million.
This has improved mill reliability and production output, while reducing energy consumption by 15%.
The leniency agreement between PPC and the Competition Commission concluded in 2009 remains and we continue to co-operate fully with the commission.
Botswana
PPCs cement volumes in Botswana contracted as construction and industrial demand fell, mainly as a result of government infrastructure
projects being scaled back. Privately funded developments in the new central business centre in Gaborone are beginning to increase which should
stimulate demand.
Zimbabwe
Cement sales in Zimbabwe recorded double-digit growth for the period, with retail demand remaining the key driver. Increased competitor
activity has, however, constrained cement price increases.
Cost of production was well contained, aided by increased production output. To ensure optimal efficiency levels, a voluntary separation
process was undertaken and 120 people elected to apply.
Exports
Exports to Mozambique were reduced by logistical challenges after flood damage to the rail line between South Africa and Maputo. Exports
into the Tete region from our Zimbabwe operations have improved and plans to install a bulk-handling facility will further enhance efficiency.
Lime and aggregates
Lime sales were affected by major customers encountering operational interruptions. This led to a drop in burnt product sales of 8% while
limestone sales reduced 15%. Declining volumes have reduced EBITDA 14% to R162 million (2012: R188 million).
Aggregates revenue grew 12% to R335 million (2012: R299 million) as volume growth in Botswana partially offset marginally lower volumes in
South Africa. An impairment charge of R12 million has been included in exceptional items after reviewing the projected financial performance
of the Quarries of Botswana business.
Board changes
There were three executive resignations from the PPC board: Messrs Sello Helepi, Salim Abdul Kader and Peter Esterhuysen who are now pursuing
interests outside of PPC. We would like to thank them for their contribution to the company over their years of service.
Strategy
Our strategic objective to keep the home fires burning was given further impetus by purchasing a majority stake in Safika Cement Holdings.
Safika, with its well-known brand IDM, is a blended cement producer manufacturing over 20 million bags of cement per annum. This transaction
is still subject to approval by the regulatory authorities.
In support of our rest of Africa strategy, we increased our investment in Ethiopias Habesha Cement Company to 30% from 27% at an additional
cost of R16 million. Earlier in the year, we bought a majority stake in Rwandas CIMERWA Ltd, which has a 100 000 ton per annum cement-producing
plant, and construction of an additional 600 000 ton facility is well advanced.
Material progress has been made with the project in the Democratic Republic of the Congo (DRC) and construction starts in the first quarter of 2014.
Prospects
Growth and confidence in the South African economy is critical to ensure improved demand for our products. Due to modest growth, the domestic
trading environment remains tough and highly competitive. We believe our strategies have positioned PPC well in a challenging market.
With elections in Zimbabwe concluded, we expect continued growth in cement demand. The market has been dominated by retail clients and we look
forward to increased infrastructure investment. We also continue to monitor the cement market in Botswana and anticipate that government
spending on infrastructure will gradually begin to improve.
We remain confident about prospects for strong growth in the rest of Africa. We believe we are on track to meet our strategic objective of
generating 40% of our revenues from the rest of the continent by 2017.
On behalf of the board
BL Sibiya KM Gordhan MMT Ramano
Chairman Chief executive officer Chief financial officer
18 November 2013
* In March 2012, the South African Competition Commission specified that all cement sales statistics be disseminated as a national quarterly
figure delayed by three months.
Dividend announcement
Notice is hereby given that the final ordinary gross dividend of 118 cents per share has been declared payable to
ordinary shareholders in respect of the year ended 30 September 2013. This dividend will be paid out of profits as determined
by the directors.
The local dividends tax rate is 15% and no STC credits have been utilised in this declaration. The dividends tax to be
withheld by the company amounts to 17,7 cents per share, giving a net dividend payable to shareholders of 100,3 cents per
share where no exemption is applicable. The companys income tax number is 9460015606 and the issued share capital of the
company at the declaration date comprises 605 379 648 shares.
The important dates pertaining to this dividend for shareholders trading on the JSE Limited are as follows:
Declaration date Monday, 18 November 2013
Last day to trade Cum dividend Friday, 3 January 2014
Shares trade Ex dividend Monday, 6 January 2014
Record date Friday, 10 January 2014
Payment date Monday, 13 January 2014
Share certificates may not be dematerialised or rematerialised between Monday, 6 January 2014 and Friday, 10 January 2014,
both dates inclusive. Transfers between the South African and Zimbabwean registers may not take place between
Monday, 6 January 2014 and Friday, 10 January 2014, both dates inclusive.
Zimbabwe:
The important dates pertaining to this dividend for shareholders trading on the Zimbabwe Stock Exchange are as
follows:
Shares trade Ex dividend Monday, 6 January 2014
Record date Friday, 10 January 2014
Payment date, on or shortly after Monday, 13 January 2014
The register of members in Zimbabwe will be closed from Monday, 6 January 2014 to Friday, 10 January 2014, both days
inclusive, for the purpose of determining those shareholders to whom the dividend will be paid. The dividend payable to
shareholders registered in Zimbabwe will be paid in South African rand.
By order of the board
JHDLR Snyman
Group company secretary
18 November 2013
Sandton
Summarised consolidated statement of comprehensive income
Year ended Year ended
30 Sept 30 Sept
2013 2012 %
Notes Audited Audited change
Rm Rm
Revenue 14 8 316 7 346 13
Cost of sales 5 546 4 809 15
Gross profit 2 770 2 537 9
Administration and other operating expenditure 853 671 27
Operating profit before items listed below: 1 917 1 866 3
BBBEE IFRS 2 charges 48 123
Zimbabwe indigenisation costs 93 -
Operating profit 2 1 776 1 743 2
Finance costs (including fair value gains and
losses on financial instruments) 3 379 377 1
Investment income 22 30 (27)
Profit before exceptional items 1 419 1 396 2
Exceptional items (1) -
Earnings from equity accounted investments 20 7
Profit before taxation 1 438 1 403 2
Taxation 4 507 557 (9)
Profit for the year 931 846 10
Attributable to:
- Shareholders of PPC Ltd 931 846 10
- Non-controlling interests - -
Other comprehensive income, net of taxation 202 29
Items that will be reclassified to profit or
loss upon derecognition 193 31
Effect of translation of foreign operations 157 17
Effect of cash flow hedges 36 14
Items that will not be reclassified to profit or loss
upon derecognition 9 (2)
Revaluation of available-for-sale financial investments 11 (4)
Taxation on revaluation of available-for-sale
financial investments (2) 2
Total comprehensive income 1 133 875 29
Earnings per share (cents)
- basic 178 161 10
- diluted 175 159 10
Normalised earnings per share (cents)*
- Earnings per share 214 185 16
- Headline earnings per share 5 215 185 16
* Normalised earnings per share is calculated before the impact
of BBBEE IFRS 2 charges, Zimbabwe indigenisation costs and
restructuring costs.
During this reporting period, the consolidated income statement and the statement of comprehensive income have been incorporated
into the consolidated statement of comprehensive income.
Summarised consolidated statement of financial position
30 Sept 30 Sept
2013 2012
Audited Audited
Notes Rm Rm
ASSETS
Non-current assets 6 411 4 998
Property, plant and equipment 5 522 4 483
Goodwill 101 6
Other intangible assets 232 133
Non-current financial assets 146 106
Equity accounted investments 11 410 267
Deferred taxation assets - 3
Current assets 2 465 1 909
Inventories 923 841
Trade and other receivables 7 1 050 820
Cash and cash equivalents 492 248
Total assets 8 876 6 907
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 8 (1 236) (1 181)
Other reserves 539 282
Retained profit 2 257 2 075
Equity attributable to shareholders of PPC Ltd 1 560 1 176
Non-controlling interests 582 -
Total equity 2 142 1 176
Non-current liabilities 4 900 4 008
Long-term borrowings 9 3 462 2 716
Provisions and other non-current liabilities 375 433
Deferred taxation liabilities 1 063 859
Current liabilities 1 834 1 723
Short-term borrowings 9 584 869
Trade and other payables and short-term provisions 10 1 250 854
Total equity and liabilities 8 876 6 907
Net asset book value per share (cents) 293 225
Summarised consolidated statement of changes in equity
Year ended Year ended
30 Sept 30 Sept
2013 2012
Audited Audited
Rm Rm
Attributable Attributable
to share Non- to share
holders controlling holders
of PPC interests Total equity of PPC
Balance at beginning of the year 1 176 - 1 176 955
Total comprehensive income 1 133 - 1 133 875
Acquired through business combinations - 512 512 -
Purchase of treasury shares in terms of the
FSP share incentive scheme treated as treasury shares (56) - (56) (89)
Securities transfers tax on cancellation of treasury shares - - - (1)
Dividends paid (770) - (770) (706)
IFRS 2 charges 139 - 139 142
IFRS 2 charges transferred to
non-controlling interests (62) 62 - -
Contribution from participants of the Zimbabwe indigenisation
transaction - 3 3 -
Non-controlling interests share of foreign currency translation
reserve - 5 5 -
Balance at end of the year 1 560 582 2 142 1 176
Summarised consolidated statement of cash flows
Year ended Year ended
30 Sept 30 Sept
2013 2012
Notes Audited Audited
Rm Rm
Cash flow from operating activities
Operating cash flows before movements in working capital 2 486 2 317
Net movement in working capital 399 (33)
Cash generated from operations 2 885 2 284
Finance costs paid (269) (248)
Investment income received 22 32
Taxation paid (525) (417)
Cash available from operations 2 113 1 651
Dividends paid (770) (706)
Net cash inflow from operating activities 1 343 945
Investment in property, plant and equipment and intangible assets 6 (970) (640)
Proceeds from disposal of property, plant and equipment 15 2
Acquisitions of subsidiary companies 12 (140) (42)
Acquisitions of equity accounted investments 11 (126) (172)
Other investing movements 2 4
Net cash outflow from investing activities (1 219) (848)
Proceeds from the issuance of bond 9 650 -
Purchase of shares in terms of the FSP share incentive scheme (56) (89)
Net short-term borrowings (repaid)/received (398) 29
Other net financing movements (102) (13)
Net cash inflow/(outflow) from financing activities 94 (73)
Net increase in cash and cash equivalents 218 24
Cash and cash equivalents at beginning of the year 248 224
Cash and cash equivalents acquired on acquisition of subsidiary company 6 -
Impact of exchange rate differences on opening cash and cash equivalents 20 -
Cash and cash equivalents at end of the year 492 248
Cash earnings per share (cents)* 404 315
* Cash earnings per share is calculated using cash available from operations divided
by the total weighted average number of shares in issue for the year.
Notes to the year-end results
1. Basis of preparation
The preliminary summarised consolidated financial statements have been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards (IFRS) and its interpretations adopted by the
International Accounting Standards Board (IASB) in issue and effective for the group at 30 September 2013 and the
SAICA Financial Reporting Guides, as issued by the Accounting Practices Committee and financial reporting pronouncements
as issued by the Financial Reporting Standards Council. The results are presented in accordance with IAS 34 Interim Financial
Reporting and comply with the Listings Requirements of the JSE Limited and the Companies Act of South Africa.
These summarised consolidated financial statements do not include all the information required for full annual financial
statements and should be read in conjunction with the consolidated annual financial statements. These summarised consolidated
financial statements have been prepared under the supervision of MMT Ramano, chief financial officer, CA(SA) and were approved by
the board of directors on 18 November 2013.
The accounting policies and methods of computation used are consistent with those used in the preparation of the annual
financial statements for the year ended 30 September 2012, except for the following revised accounting standards and
interpretations that were adopted during the year, and which did not have a material impact on the reported results:
IAS 1 (amendment) Presentation of Items of Other Comprehensive Income
IAS 12 Deferred Tax (Recovery of underlying assets)
Circular 2/2013 (Headline earnings)
These summarised preliminary financial statements have been derived from the groups financial statements and are consistent in all
material respects with the groups financial statements. These summarised preliminary financial statements have been audited by the
companys auditors, Deloitte & Touche, who have issued an unmodified opinion. The auditors report does not necessarily report on all of the information
contained in this announcement. Any reference to future financial information included in this announcement has not been reviewed or
reported on by the auditors. Shareholders are advised, that in order to obtain a full understanding of the nature of the auditors
engagement they should obtain a copy of that report together with the accompanying financial information from the companys registered
office.
Any reference to future performance included in this announcement has not been reviewed or reported on by the auditors.
30 Sept 30 Sept
2013 2012
Audited Audited Rm Rm
2. Operating profit Rm Rm
Included in operating profit are:
Amortisation of intangible assets 34 22
Consultation fees incurred on empowerment transactions 4 15
Depreciation 488 439
Donation made in terms of Zimbabwe indigenisation transaction 27 -
Restructuring costs 64 -
IFRS 2 charges:
- BBBEE IFRS 2 charges 48 123
- Zimbabwe indigenisation costs 62 -
- cash settled IFRS 2 charges (3) 22
- equity settled IFRS 2 charges 29 19
3. Finance costs (including fair value gains and losses on financial instruments)
Bank and other borrowings 70 52
Bonds 11 -
Long-term loans 172 166
BBBEE funding transaction 133 136
- dividends on redeemable preference shares 57 68
- long-term borrowings 76 68
Finance lease interest 1 4
Fair value (gains)/losses on financial instruments (25) 3
Time value of money adjustment to environmental obligations 21 22
383 383
Capitalised to plant and equipment and intangibles (4) (6)
379 377
4. Taxation % %
A reconciliation of the standard South African normal taxation rate is shown below:
Taxation as a percentage of profit before exceptional items (excluding prior year taxation) 35,3 39,6
Secondary taxation on companies - (3,8)
Empowerment transactions and IFRS 2 charges not tax deductible (2,8) (2,4)
Preference dividend and interest on BBBEE funding transaction not tax deductible (2,6) (2,7)
Withholding taxation (1,0) (2,2)
Other non-tax deductible costs (0,9) (0,5)
South African normal taxation rate 28,0 28,0
5. Headline earnings per share Cents Cents
Headline earnings per share~
- basic 179 162
- diluted 176 160
- basic (normalised)^ 215 185
- diluted (normalised)^ 212 183
Determination of headline earnings per share
Earnings per share 178 161
Adjusted for:
- Impairment of property, plant and equipment and intangible assets 2 -
- (Profit)/loss on disposal of property, plant and equipment and intangible assets (2) 1
Taxation on profit/(loss) on disposal of property, plant and equipment and intangible assets 1 -
Headline earnings per share 179 162
Normalisation adjustments^ 36 23
Headline earnings per share (normalised)^ 215 185
Headline earnings
Profit for the year 931 846
Impairment losses on financial assets 1 1
Impairment losses on property, plant and equipment and intangible assets 12 -
Reversal of impairment - (1)
(Profit)/loss on disposal of property, plant and equipment and intangible assets (11) 3
Taxation on profit/(loss) on disposal of property, plant and equipment and intangible assets 2 (1)
Headline earnings 935 848
Attributable to:
- Shareholders of PPC Ltd 935 848
- Non-controlling interests - -
Headline earnings 935 848
Normalisation adjustments 188 123
Headline earnings per share (normalised) 1 123 971
Attributable to:
- Shareholders of PPC Ltd 1 123 971
- Non-controlling interests - -
The difference between earnings and diluted earnings per share is due to shares held under the forfeitable share incentive
scheme that have not vested, together with the dilution impact of the groups empowerment transactions.
^ Normalised earnings adjusts the reported earnings for the effects of BBBEE IFRS 2 charges, Zimbabwe indigenisation
costs and restructuring costs
~ For the weighted average number of shares used in the calculation, refer note 8.
30 Sept 30 Sept
2013 2012
Audited Audited
Rm Rm
6. Investment in property, plant and equipment and intangible assets
Cement 923 584
Lime 37 41
Aggregates 10 16
970 640
South Africa 441 559
Rest of Africa 529 81
7. Trade and other receivables
Net trade receivables 816 729
Other financial receivables 58 36
Taxation prepaid 43 -
Prepayments 133 55
1 050 820
8. Stated capital Shares (000) Shares (000)
Number of shares and weighted average number of shares
Number of shares
Total shares in issue at beginning of the year 566 030 586 170
Less: Cancellation of treasury shares owned by wholly-owned
group subsidiary company^ - (20 140)
Add: Shares issued in terms of the second BBBEE transaction& 39 350 -
Total shares in issue at end of the year 605 380 566 030
Less: Shares issued in terms of the second BBBEE transaction
treated as treasury shares& (39 350) -
Less: Shares held by consolidated BBBEE trusts and funding SPVs
treated as treasury shares* (37 967) (37 991)
Less: Shares held by consolidated Porthold Trust (Private) Limited
treated as treasury shares@ (1 285) (1 285)
Less: Shares purchased in terms of the FSP share incentive scheme
treated as treasury shares~ (4 745) (3 080)
Total shares in issue (net of treasury shares) 522 033 523 674
Weighted average number of shares
- Used for earnings and headline earnings per share 522 678 524 567
- Used for dilutive earnings and headline earnings per share 530 869 530 028
- Used for cash earnings per share 522 678 524 567
Shares are weighted for the period in which they are entitled to participate
in the net profit of the group.
Balance at beginning of the year (1 181) -
Transfer from share capital and premium - (1 181)
Shares purchased in terms of the FSP share incentive scheme treated as treasury shares~ (56) -
Sale of shares, treated as treasury shares, by consolidated BBBEE entity% 1 -
Balance at end of the year (1 236) (1 181)
Issued share capital
Balance at beginning of the year - 53
Transfer to stated capital# - (53)
Balance at end of the year - -
Share premium
Balance at beginning of the year - (1 144)
Securities transfer tax on cancellation of shares^ - (1)
Shares purchased in terms of the FSP share incentive scheme treated as treasury shares~ - (89)
Balance at end of the year - (1 234)
Transfer to stated capital# - 1 234
Share capital and share premium - -
& Shares issued in terms of the second BBBEE transaction which was facilitated by means of notional vendor funding (NVF)
mechanism resulting in these shares only participating in 20% of the dividends declared by PPC during the NVF period,
ending 30 September 2019. These entities are consolidated into the PPC group during the transaction term.
^ In 2012, the treasury shares owned by PPC Cement (Pty) Ltd were bought back by PPC Ltd and cancelled after the repurchase.
* In terms of IFRS SIC Interpretation 12, certain of the BBBEE trusts and trust funding SPVs from PPCs first BBBEE
transaction are consolidated, and as a result, shares owned by these entities are carried as treasury shares on consolidation.
@ Shares owned by a Zimbabwean employee trust company treated as treasury shares.
~ In terms of the forfeitable share incentive scheme, 4 744 733 shares (2012: 3 079 853) were purchased on the JSE, and are
treated as treasury shares during the various vesting periods of the awards.
# In 2012, the company changed its par value ordinary shares to ordinary shares with no nominal or par value. There was no
change in preferences, rights, limitations and other terms of the ordinary shares when converted to no nominal or par value
shares.
% During the current year, the Current Team Trust, a PPC consolidated trust which was consolidated into the group in terms
of the first BBBEE transaction, sold a portion of their holding.
For ease of reporting and understanding, ordinary and other shareholders have been shown together as total shareholders of
PPC Ltd. There is no impact on the earnings or net asset value per share calculations as both shareholders participate in
earnings and dividends equally.
30 Sept 30 Sept
2013 2012
Audited Audited
Rm Rm
9. Borrowings
- Long-term loan* 1 519 1 518
- Bonds$ 645 -
- Long-term loans denominated in a foreign currency# 87 -
- Preference shares^ 88 110
2 339 1 628
BBBEE funding transaction~ 1 123 1 088
- Preference shares 482 495
- Long-term borrowings 641 593
Long-term borrowings 3 462 2 716
Short-term borrowings and short-term portion of long-term borrowings 584 869
Total borrowings 4 046 3 585
* Comprises a bullet loan, bearing interest at a fixed rate of 10,86% p.a., and is repayable in December 2016, with
interest payable semi-annually.
$ In March 2013, PPC issued a three year unsecured floating rate bond at a variable coupon of three-month JIBAR plus
1.26% per annum. The bond value is R650 million and is recognised less transaction costs capitalised in accordance with
IFRS. This bond was issued under the companys R6 billion domestic medium term note programme.
# Loan assumed on acquisition of CIMERWA Ltd, and bears interest at a rate of 16% p.a., and is repayable in 2017.
The loan is denominated in US dollars and is secured against CIMERWAs land and building.
^ Redeemable preference shares bearing semi-annual dividends, with variable interest rates linked to prime and fixed
rates between 6,92% to 9,37% p.a. and compulsory annual redemptions ending December 2016.
~ Redeemable preference shares bearing semi-annual dividends, with variable interest rates linked to prime and fixed
rates between 7,39% to 9,54% p.a. with compulsory annual redemptions until December 2016, and loans bearing interest,
after giving effect to fixed-for-variable interest rate swaps, at a rate of 11,36% p.a., with interest and capital
repayable in December 2013. During September 2013, the facilities due for repayment in December 2013 were extended
for a further three years and as a result, have been treated as long-term borrowings. Following the extension, the variable
interest rate will be 285 basis points above prime. In terms of IFRS, these long-term borrowings have been consolidated as
PPC has provided guarantees for funding that had an outstanding balance of R1 161 million as at 30 September 2013
(2012: R1 081 million).
The group is in compliance with its debt covenants, none of which are expected to represent material restrictions on funding
or investment policies in the foreseeable future.
The companys borrowing powers are not restricted by its memorandum of incorporation.
30 Sept 30 Sept
2013 2012
Audited Audited
Rm Rm
10. Trade and other payables and short-provisions
Trade payables and accruals 535 445
Cash-settled share-based payment liability (short-term portion) 22 45
Other financial payables 32 32
Derivative financial instruments~ 112 5
Payroll accruals 260 214
Restructuring provision 64 -
Other non-financial payables* 183 41
Current taxation and VAT payable 42 72
1 250 854
~ During September 2013, the facilities due for repayment in December 2013 were extended for a further three years,
however the accumulated interest on the swaps is payable in December 2013 and has been reclassified to short-term payables.
* Includes R85 million relating to the retention payments for the construction of the cement plant in Rwanda.
30 Sept 30 Sept
2013 2012
Audited Audited
Rm Rm
11. Equity accounted investments
Investments at cost at beginning of the year 179 7
Investments made during the year* 126 172
305 179
Share of retained profit 59 39
Loans advanced 46 49
Balance at end of the year 410 267
* Investments made during the year:
During June 2013, PPC acquired a further 25% equity stake in Pronto Holdings (Pty) Limited, for R110 million. The purchase
consideration was determined using an EBITDA multiple less net debt. This purchase increased the total equity stake to 50%.
The final tranche of 50% will be paid in 2014.
During July 2013, PPC acquired an additional 3% equity stake in Habesha Cement Share Company, for a purchase consideration of
R16 million, increasing the total shareholding to 30,4%.
30 Sept 30 Sept
2013 2012
Audited Audited
Rm Rm
12. Acquisition of subsidiary companies
Property, plant and equipment 433 26
Goodwill 100 6
Other intangible assets 124 22
Current assets 755 5
Long-term borrowings (108) -
Long-term provisions and deferred taxation (75) (7)
Short-term borrowings (35) -
Current liabilities (47) -
Other (6) -
Non-controlling interest (512) -
Total consideration 629 52
Paid to CIMERWA for new equity in the company 181 -
Payable to CIMERWA for new equity in the company 312 -
Paid to previous shareholders of CIMERWA 136 -
629 -
Paid to previous shareholders of Botswana quarries 4 42
Payable to previous shareholders of Botswana quarries - 10
4 52
Impact of the transaction on the results for the year-ended
September 2013:
Revenue 118 18
Operating loss - (4)
Loss attributable to PPC Ltd - (8)
Impact on EPS and HEPS (cents per share) - (1)
In January 2013 PPC acquired a 51% equity stake in a Rwandan cement company, CIMERWA Ltd, for a transaction value of
US$69 million of which US$15 million was paid to previous shareholders of the company, while a further US$54 million
will be used to subscribe for shares in CIMERWA and is payable by December 2013. At the date of this report US$23 million
is still due to CIMERWA. As the company is consolidated and US$54,4 million is paid or payable to CIMERWA, only the
US$15 million (R136 million)payable external to the PPC group is reflected as a cash flow outside the consolidated PPC group.
The fair values of assets acquired and liabilities have now been finalised, with no material changes to the amounts
previously disclosed.
In October 2011 all conditions precedent with regards to the transaction to acquire three aggregate quarries in Botswana
were met. The transaction value amounted to R52 million and the consideration paid in the year amounted to R4 million
(2012: R42 million). The purchase consideration outstanding is payable on the second anniversary of the transaction.
30 Sept 30 Sept
2013 2012
Audited Audited
Rm Rm
13. Commitments
- Contracted capital commitments 752 192
- Approved capital commitments 336 125
Capital commitments^ 1 088 317
Operating lease commitments~ 195 19
1 283 336
^ The increase is due to the capital commitments relating to CIMERWA Ltd amounting to R825 million.
~ The increase in operating lease commitments for land and buildings follows PPC signing a ten year lease agreement
for its new head offices in Sandton.
Commitments for capital expenditure are stated in current values which, together with expected price escalations, will
be financed from surplus cash generated from operations and borrowing facilities available to the group.
Business combination commitments:
Approved transaction
The final 50% tranche on the acquisition of Pronto Holdings (Pty) Limited is payable in May 2014. The purchase consideration
is determined using an EBITDA multiple less net debt.
Transactions still subject to final approvals
PPC continues to investigate business opportunities in both South Africa and the rest of Africa.
The company has signed a memorandum of understanding for the construction of a new cement plant in the DRC. The total estimated
cost of the project amounts to US$260 million. It is estimated that PPC will have a 69% shareholding in the project.
Commercial terms, including funding facilities, are in the process of being finalised.
The company has also entered into an agreement to purchase a controlling stake in Safika Cement Holdings (Pty) Limited for
a cash consideration of approximately R350 million. The transaction is subject to regulatory approval.
Further to the SENS announcement in February 2013, the group continues investigations into the construction of a new
one million ton per annum cement plant in Zimbabwe and grinding facility in Mozambique.
30 Sept 30 Sept
2013 2012
Audited Audited
Rm Rm
14. Segment analysis
Revenue
Cement 7 219 6 246
Lime 798 838
Aggregates 335 299
8 352 7 383
Less: Inter-segment revenue (36) (37)
Total revenue 8 316 7 346
- South Africa 6 356 5 786
- Rest of Africa 1 960 1 560
EBITDA
Cement 2 312 2 087
Lime 162 188
Aggregates 46 56
BBBEE trusts and trust funding SPVs (16) (4)
EBITDA before restructuring costs 2 504 2 327
Restructuring costs (64) -
EBITDA 2 440 2 327
Operating profit
Cement 1 846 1 682
Lime 126 151
Aggregates 25 37
BBBEE trusts and trust funding SPVs (16) (4)
Operating profit before items listed below: 1 981 1 866
BBBEE IFRS 2 charges (48) (123)
Restructuring costs (64) -
Zimbabwe indigenisation costs (93) -
Operating profit 1 776 1 743
Assets
Cement 8 101 6 153
Lime 487 467
Aggregates 283 285
BBBEE trusts and trust funding SPVs 5 2
Total assets 8 876 6 907
15. Events after the reporting date
There are no events that occurred after the reporting date that may have a material impact on the groups reported
financial position at 30 September 2013.
Subsequent to the year end, the following was considered by the board:
- In order to further enhance an entrepreneurial spirit and business environment within our lime and aggregates
business units, both locally and in Botswana, the company is investigating various ownership alternatives to our
current structure. Any potential outcomes will still be subject to both internal and external approvals; and
- Investigating the opportunities of restructuring the companys first BBBEE transaction.
DISCLAIMER
This document including, without limitation, those statements concerning the demand outlook, PPCs expansion projects
and its capital resources and expenditure, contain certain forward-looking views. By their nature, forward-looking
statements involve risk and uncertainty and although PPC believes that the expectations reflected in such forward-looking
statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly,
results could differ materially from those set out in the forward-looking statements as a result of, among other factors,
changes in economic and market conditions, success of business and operating initiatives, changes in the regulatory
environment and other government action and business and operational risk management. While PPC takes reasonable care to
ensure the accuracy of the information presented, PPC accepts no responsibility for any consequential, indirect, special
or incidental damages, whether foreseeable or unforeseeable, based on claims arising out of misrepresentation or
negligence arising in connection with a forward-looking statement. This document is not intended to contain any profit forecasts
or profit estimates. The information published in this report has been audited.
ADMINISTRATION
Directors:
BL Sibiya (Chairman), KM Gordhan (Chief executive officer), ZJ Kganyago, AJ Lamprecht, NB Langa-Royds,
MP Malungani, S Mhlarhi, B Modise, MMT Ramano (Chief financial officer), TDA Ross, J Shibambo
Registered office:
180 Katherine Street, Sandton, South Africa
(PO Box 787416, Sandton, 2146, South Africa)
Transfer secretaries:
Link Market Services SA (Pty) Limited, 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein, South Africa.
(PO Box 4844, Johannesburg, 2000, South Africa)
Transfer secretaries Zimbabwe:
Corpserve (Private) Limited, 4th Floor, Intermarket Centre, Corner 1st Street/Kwame Nkrumah Avenue, Harare, Zimbabwe
(PO Box 2208, Harare, Zimbabwe)
Sponsor:
Merrill Lynch South Africa, 138 West Street, Sandton, 2196
These results and other information is available on the PPC website: www.ppc.co.za
Date: 19/11/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
