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Unaudited interim group results for the half-year ended 31 March 2014
PPC Ltd
(Incorporated in the Republic of South Africa)
(Company registration number 1892/000667/06)
JSE Code: PPC
JSE ISIN: ZAE 000170049
ZSE Code: PPC
Unaudited interim group results for the half-year ended 31 March 2014
- Construction of new cement plants underway in Rwanda, the Democratic Republic of the Congo, Zimbabwe and Ethiopia
- Successful completion of the Safika Cement acquisition
- Normalised earnings increased by 4% despite additional expansion costs
- Interim dividend of 38 cents per share
Commentary
Ketso Gordhan, CEO, said: “PPC’s group cement sales ended 2% higher during this reporting period. Improvements in
export sales and the consolidation of sales from our Rwanda operation and newly acquired Safika Cement business were
partly offset by declining sales volumes in South Africa and Botswana. Our rest of Africa expansion strategy is
progressing well.”
PPC’s total cement sales volumes improved by 2% for the period under review. Group revenue increased by 9% to R4 157 million
(2013: R3 812 million) on the back of increased export volumes, the consolidation of sales from Safika Cement and CIMERWA,
improved cement pricing and the favourable impact of the devaluation of the rand against both the US dollar and Botswana pula.
Group revenue was further supported by a 9% and 22% growth in revenue for the lime and aggregates divisions respectively.
Cost of sales of R2 793 million was 9% higher (2013: R2 569 million) in line with revenue growth, resulting in gross profit
increasing by 10% to R1 364 million (2013: R1 243 million).
Administration and other operating expenditure increased by 26% to R480 million (2013: R381 million). Over half of the growth
in administration and other operating expenditure can be attributed to new businesses and currency movements; particularly,
the additional costs incurred in executing our African expansion strategy as well as the consolidation of Safika Cement and
CIMERWA overhead costs.
EBITDA increased by 5% to R1 174 million (2013: R1 123 million) and operating profit excluding the impact of BBBEE IFRS 2
charges and Zimbabwe indigenisation costs was up 3% when compared to the previous reporting period at R884 million
(2013: R862 million). During the review period both group EBITDA and operating margins contracted; recording 28% (2013: 30%)
and 21% (2013: 23%) respectively.
Cash generated from operations amounted to R780 million (2013: R1 070 million), lower due to negative working capital movements,
mainly as a result of once-off payments of the interest swaps liability of R113 million and restructuring costs of R64 million,
both provided for in the second half of our 2013 financial year. Capital investment during the half amounted to R872 million
(2013: R294 million) with R403 million being spent on the new plant in Rwanda. The group’s net debt position ended the half at
R5 198 million (2013: R3 916 million), up mainly as a result of increased capital expenditure.
Taxation of R155 million (2013: R245 million) was lower than in the previous reporting period following the revenue authority’s
assessment of prior years’ taxation returns.
Headline earnings per share ended 50% higher at 96 cents per share (2013: 64 cents per share). Normalised earnings per share of
86 cents per share, after adjusting for IFRS 2 charges, Zimbabwe indigenisation costs and prior year taxation adjustments, was
4% higher than the prior period.
The company’s dividend policy range, of between 1,2 and 1,5 times normalised earnings, is under review in light of PPC’s
expansion plans. The directors have declared an interim dividend of 38 cents per share (2013: 38 cents per share).
Cement
PPC’s South African cement sales volumes decreased by 2% while average selling prices increased by 4%. Industrial action on the
platinum belt as well as above-average rainfall in the Inland regions had a severely negative impact on cement sales volumes.
Volume growth was, however, experienced in the Limpopo and Eastern Cape regions.
Cement cost of sales rose by 4% on a rand per ton basis for the South African operations, with electricity and outbound logistics
rising by 9% and 6% respectively, partly offset by lower coal costs. This pleasing performance is a reflection of the success of
our three-large-plant strategy which focuses on clinker production at our most efficient plants. The lower volumes did, however,
reduce fixed cost absorption on a rand per ton basis.
On completion of the detailed feasibility study, Slurry kiln 8 will be upgraded to increase capacity and improve thermal efficiency;
thereby driving down operating costs.
A slowdown in the Zimbabwean economy has led to muted domestic growth in cement sales. Increased efforts to export product from
Zimbabwe to neighbouring countries has boosted cement sales volumes from these operations.
PPC Botswana’s cement sales volumes remain under some pressure due to low levels of demand as well as aggressive competitor activity.
Exports to Mozambique ended marginally below last year but favourable growth was realised with additional exports into other
African territories.
Cement EBITDA improved 3% to end the half at R1 093 million (2013: R1 065 million).
Lime and aggregates
Revenue in the lime business ended 9% higher on the back of higher burnt product and limestone sales of 5% and 25% respectively.
EBITDA consequently rose to R69 million (2013: R61 million).
Aggregates’ revenues ended 22% higher than last year at R168 million (2013: R138 million) boosted by increased sales volumes of 15%
in South Africa and 14% in Botswana. EBITDA was 33% higher at R12 million (2013: R9 million).
Following a strategic review of the aggregates operations in Botswana and the difficulties being experienced in that market, an
impairment charge of R10 million has been included in exceptional items.
Board changes
We welcomed Mr Todd Moyo to the PPC Board as a non-executive director while we said farewell to Mr Andre Lamprecht
who decided not to make himself available for re-election at the latest annual general meeting, and we would like to thank him for
his many years of service to the group.
Prospects and strategy
We are pleased to note the accelerated progress in the execution of our rest of Africa expansion strategy. Construction is underway
in four countries; Rwanda, the Democratic Republic of the Congo, Zimbabwe and Ethiopia. We are particularly pleased with the fact
that at the end of calendar 2014, we will begin commissioning our 600 000 ton per annum plant in Rwanda. A positive outcome of a
detailed feasibility study into establishing cement operations in Algeria would result in the construction of yet another cement
factory in a different African country.
Shareholders recently showed support for our plans to restructure the BBBEE I transaction when they voted in favour of this motion
at our recent special general meeting. This will allow us to further align the interests of employees to those of shareholders as
our employees will be the main beneficiaries of the transaction and this transaction will also facilitate the restructuring of
our balance sheet. Finalisation of the transaction funding arrangements is underway.
PPC remains well supported in the debt capital markets with a further R750 million corporate bond raised in December 2013; being
two times oversubscribed.
We remain optimistic that cement sales volumes will improve in our operating geographies.
On behalf of the board
BL Sibiya KM Gordhan MMT Ramano
Chairman Chief executive officer Chief financial officer 19 May 2014
Dividend announcement
Notice is hereby given that an interim ordinary gross dividend of 38 cents per share has been declared payable to
ordinary shareholders in respect of the six months ended 31 March 2014. 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 5,7 cents per share, giving a net dividend payable to shareholders of 32,3 cents per
share where no exemption is applicable. The company’s income tax number is 9460015606 and the issued stated capital of
the company at the declaration date comprises 605 379 648 shares.
The important dates pertaining to this dividend for shareholder trading on the JSE Limited are as follows:
Declaration date Monday, 19 May 2014
Last day to trade “cum” dividend Friday, 6 June 2014
Shares trade “ex” dividend Monday, 9 June 2014
Record date Friday, 13 June 2014
Payment date Tuesday, 17 June 2014
Share certificates may not be dematerialised or rematerialised between Monday, 9 June 2014 and Friday, 13 June 2014,
both dates inclusive. Transfers between the South African and Zimbabwean registers may not take place between
Monday, 9 June 2014 and Friday, 13 June 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, 9 June 2014
Record date Friday, 13 June 2014
Payment date, on or shortly after Tuesday, 17 June 2014
The register of members in Zimbabwe will be closed from Monday, 9 June 2014 and Friday, 13 June 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 19 May 2014
Group company secretary Sandton
Condensed consolidated statement of comprehensive income
Six months ended Year ended
31 March 31 March 30 Sept
2014 2013 2013
Unaudited Reviewed % Audited
Notes Rm Rm Change Rm
Revenue 2 4 157 3 812 9 8 316
Cost of sales 2 793 2 569 9 5 546
Gross profit 1 364 1 243 10 2 770
Administration and other operating expenditure 480 381 26 853
Operating profit before items listed below: 884 862 3 1 917
BBBEE IFRS 2 charges 19 29 48
Zimbabwe indigenisation costs - 82 93
Operating profit 2/3 865 751 15 1 776
Finance costs (including fair value gains and losses
on financial instruments) 4 231 184 26 379
Investment income 21 10 110 22
Profit before equity accounted earnings
and exceptional items 655 577 14 1 419
Earnings from equity accounted investments 6 5 20
Exceptional items (10) (12) (1)
Profit before taxation 651 570 14 1 438
Taxation 5 155 245 (37) 507
Profit for the period 496 325 53 931
Attributable to:
Ordinary shareholders of PPC Ltd 494 325 52 931
Non-controlling interests 2 - -
Other comprehensive income, net of taxation 79 79 202
Items that will be reclassified to profit or loss
upon derecognition 79 79 193
Effect of cash flow hedges 6 21 36
Effect of translation of foreign operations 73 58 157
Items that will not be reclassified to profit or loss
upon derecognition - - 9
Revaluation of available-for-sale financial investments - - 11
Taxation on revaluation of available-for-sale
financial investments - - (2)
Total comprehensive income 575 404 42 1 133
Earnings per share (cents)
Basic 94 62 52 178
Diluted 93 61 53 175
Condensed consolidated statement of financial position
31 March 31 March 30 Sept
2014 2013 2013
Unaudited Reviewed Audited
Notes Rm Rm Rm
ASSETS
Non-current assets 7 446 5 777 6 411
Property, plant and equipment 6 229 5 035 5 522
Goodwill 7 177 100 101
Other intangible assets 475 241 232
Equity accounted investments 8 420 275 410
Non-current financial assets 145 126 146
Current assets 2 840 2 245 2 465
Inventories 1 028 918 923
Trade and other receivables 9 1 152 1 063 1 050
Cash and cash equivalents 660 264 492
Total assets 2 10 286 8 022 8 876
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 10 (1 173) (1 236) (1 236)
Other reserves 545 446 539
Retained profit 2 116 1 843 2 257
Equity attributable to ordinary shareholders of PPC Ltd 1 488 1 053 1 560
Non-controlling interests 591 512 582
Total equity 2 079 1 565 2 142
Non-current liabilities 5 859 3 827 4 900
Long-term borrowings 11 4 432 2 451 3 462
Provisions 361 335 348
Other non-current liabilities 12 145 53 27
Deferred taxation liabilities 921 988 1 063
Current liabilities 2 348 2 630 1 834
Short-term borrowings 11 1 426 1 729 584
Trade and other payables and short-term provisions 13 922 901 1 250
Total equity and liabilities 10 286 8 022 8 876
Net asset book value per share (cents) 284 202 293
Condensed consolidated statement of changes in equity
Other reserves
Unrealised
surplus on Foreign Available-
reclassi currency for-sale Equity
Stated -fication translation financial Hedging compensation
capital of plant reserves assets reserves reserves
Rm Rm Rm Rm Rm Rm
Balance at September 2012 (audited) (1 181) 5 45 25 (43) 250
Acquired through business combinations - - - - - -
Dividends declared - - - - - -
IFRS 2 charges - - - - - 97
Total comprehensive income - - 58 - 21 -
Transfers and other movements - - - - - (12)
Treasury shares held in terms of the
FSP share incentive scheme (55) - - - - -
Balance at 31 March 2013 (reviewed) (1 236) 5 103 25 (22) 335
Dividends declared - - - - - -
IFRS 2 charges - - - - - 42
IFRS 2 charges transferred to non-controlling interests - - - - - (62)
Non-controlling interest share of foreign currency
translation reserve - - - - - -
Sale of shares, treated as treasury shares,
by consolidated BBBEE entity 1 - - - - (1)
Total comprehensive income - - 99 9 15 -
Transfers and other movements - (4) - 3 - (8)
Treasury shares held in terms of the FSP share
incentive scheme (1) - - - - -
Balance at September 2013 (audited) (1 236) 1 202 37 (7) 306
Acquired through business combinations - - - - - -
Dividends declared - - - - - -
IFRS 2 charges - - - - - 36
Non-controlling interest share of foreign translation reserve - - - - - -
Put option recognised on acquisition of subsidiary company
charged against non-controlling interest^ - - - - - -
Reclassification movements - - - - - 7
Time value of money adjustments on put options^ - - - - - -
Total comprehensive income - - 73 - 6 -
Transfer of equity compensation reserve on vesting of
certain BBBEE 1 entities 100 - - - - (100)
Transfer of equity compensation reserve on vesting of
FSP share incentive scheme allocation 16 - - - - (16)
Treasury shares held in terms of the FSP share
incentive scheme (53) - - - - -
Balance at March 2014 (unaudited) (1 173) 1 275 37 (1) 233
^For details of the put options, refer notes 12 and 15.
Condensed consolidated statement of changes in equity (continued)
Equity
attributable to
ordinary Non-
Retained shareholders controlling Total
profit of PPC Ltd interests equity
Rm Rm Rm Rm
Balance at September 2012 (audited) 2 075 1 176 - 1 176
Acquired through business combinations - - 512 512
Dividends declared (569) (569) - (569)
IFRS 2 charges - 97 - 97
Total comprehensive income 325 404 - 404
Transfers and other movements 12 - - -
Treasury shares held in terms of the
FSP share incentive scheme - (55) - (55)
Balance at 31 March 2013 (reviewed) 1 843 1 053 512 1 565
Dividends declared (201) (201) - (201)
IFRS 2 charges - 42 - 42
IFRS 2 charges transferred to non-controlling interests - (62) 62 -
Non-controlling interest share of foreign currency
translation reserve - - 5 5
Sale of shares, treated as treasury shares,
by consolidated BBBEE entity - - - -
Total comprehensive income 606 729 - 729
Transfers and other movements 9 - 3 3
Treasury shares held in terms of the FSP share
incentive scheme - (1) - (1)
Balance at September 2013 (audited) 2 257 1 560 582 2 142
Acquired through business combinations - - 140 140
Dividends declared (636) (636) - (636)
IFRS 2 charges - 36 - 36
Non-controlling interest share of foreign translation reserve - - 18 18
Put option recognised on acquisition of subsidiary company
charged against non-controlling interest^ - - (137) (137)
Reclassification movements 1 8 (8) -
Time value of money adjustments on put options^ - - (6) (6)
Total comprehensive income 494 573 2 575
Transfer of equity compensation reserve on vesting of
certain BBBEE 1 entities - - - -
Transfer of equity compensation reserve on vesting of
FSP share incentive scheme allocation - - - -
Treasury shares held in terms of the FSP share
incentive scheme - (53) - (53)
Balance at March 2014 (unaudited) 2 116 1 488 591 2 079
^For details of the put options, refer notes 12 and 15.
Condensed consolidated statement of cash flows
Six months ended Year ended
31 March 31 March 30 Sept
2014 2013 2013
Unaudited Reviewed Audited
Notes Rm Rm Rm
Cash flow from operating activities
Operating cash flows before movements in working capital 1 214 1 074 2 486
Working capital movements (434) (4) 399
Cash generated from operations 780 1 070 2 885
Finance costs paid (214) (113) (269)
Investment income received 21 9 22
Taxation paid (325) (230) (525)
Cash available from operations 262 736 2 113
Dividends paid (636) (569) (770)
Net cash (outflow)/inflow from operating activities (374) 167 1 343
Investments in property, plant and equipment and intangible assets 14 (872) (294) (970)
Acquisitions of subsidiary companies 15 (377) (140) (140)
Acquisitions of equity accounted investments 8 (3) - (126)
Other investing movements (34) (26) 17
Net cash outflow from investing activities (1 286) (460) (1 219)
Proceeds from the issuance of bonds 11 750 650 650
Purchase of shares in terms of the FSP share incentive scheme (53) (55) (56)
Net borrowings raised/(repaid) 1 039 (302) (500)
Net cash inflow from financing activities 1 736 293 94
Net increase in cash and cash equivalents 76 - 218
Cash and cash equivalents at beginning of the period 492 248 248
Cash and cash equivalents acquired on acquisitions of subsidiary companies 15 84 6 6
Impact of exchange rate differences on opening cash and cash equivalents 8 10 20
Cash and cash equivalents at end of the period 660 264 492
Cash earnings per share (cents)* 50 142 404
* Cash earnings per share is calculated using cash available from operations divided by the
total weighted average number of shares in issue for the period.
Notes to the condensed consolidated interim results
1. Basis of preparation
The results have been prepared in accordance with International Financial Reporting Standards, IAS 34 - Interim Financial Reporting,
SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, financial reporting pronouncements as issued by the Financial Reporting Standards Council, JSE Listings Requirements
and the requirements of the South African Companies Act. The group’s external auditors have not reviewed or reported on these results.
The accounting policies are prepared in accordance with International Financial Reporting Standards and are consistent with those
used in the preparation of annual financial statements for the year ended 30 September 2013, except for the following revised accounting
standards and interpretations that were adopted during the period, and which did not have a material impact on the reported results:
IFRS 1 (amendment) - Government Loans
IFRS 7 (amendment) - Offsetting Financial Assets and Financial Liabilities
IFRS 11 - Joint Arrangements
IFRS 10 - Consolidated Financial Statements
IFRS 12 - Disclosures of Interests in Other Entities
IFRS 13 - Fair Value Measurements
IAS 19 (amendment) - Employees Benefits
IAS 27 - Separate Financial Statements
IAS 28 - Investments in Associates and Joint Ventures
IFRIC 20 - Stripping Costs in the Production Phase of a Surface Mine
31 March 31 March 30 Sept
2014 2013 2013
Unaudited Reviewed Audited
Rm Rm Rm
2. Segment analysis
Revenue
Cement 3 610 3 329 7 219
Lime 397 365 798
Aggregates 168 138 335
4 175 3 832 8 352
Inter-segment revenue (18) (20) (36)
Total revenue 4 157 3 812 8 316
South Africa 3 060 2 959 6 356
Rest of Africa 1 097 853 1 960
EBITDA
Cement 1 093 1 065 2 312
Lime 69 61 162
Aggregates 12 9 46
BBBEE trusts and trust funding SPVs - (12) (16)
EBITDA before restructuring costs 1 174 1 123 2 504
Restructuring costs - - (64)
EBITDA 1 174 1 123 2 440
South Africa 903 900 2 102
Rest of Africa 271 223 338
Operating profit
Cement 839 834 1 846
Lime 46 41 126
Aggregates (1) (1) 25
BBBEE trusts and trust funding SPVs - (12) (16)
Operating profit before items listed below: 884 862 1 981
BBBEE IFRS 2 charges (19) (29) (48)
Restructuring costs - - (64)
Zimbabwe indigenisation costs - (82) (93)
Operating profit 865 751 1 776
Assets
Cement 9 503 7 289 8 101
Lime 524 463 487
Aggregates 257 268 283
BBBEE trusts and trust funding SPVs 2 2 5
Total assets 10 286 8 022 8 876
South Africa 7 176 6 046 6 378
Rest of Africa 3 110 1 976 2 498
The group has four main reporting segments that comprise the structure used by the group executive committee to make key
operating decisions and assess performance. The group’s reportable segments are operating segments that are differentiated by
the activities that each undertakes and the products they manufacture and market.
3. Operating profit
Included in operating profit:
Amortisation of intangible assets 30 17 34
Consultation fees incurred on empowerment transactions 8 - 4
Depreciation 260 244 488
Donation made in terms of Zimbabwe indigenisation
transaction - 27 27
Restructuring costs - - 64
IFRS 2 charges:
BBBEE IFRS 2 charges 19 29 48
Cash settled IFRS 2 charges 2 2 (3)
Equity settled IFRS 2 charges 17 13 29
Zimbabwe indigenisation costs - 55 62
4. Finance costs (including fair value gains and losses
on financial instruments)
Bank and other borrowings 49 36 70
Bonds 39 - 11
Long-term loans 82 82 172
BBBEE funding transaction 59 65 133
Dividends on redeemable preference shares 27 29 57
Long-term borrowings 32 36 76
Finance lease interest - 1 1
Fair value gains on financial assets (1) (9) (25)
Time value of money adjustments 14 10 21
242 185 383
Capitalised to plant and equipment and intangibles (11) (1) (4)
231 184 379
31 March 31 March 30 Sept
2014 2013 2013
Unaudited Reviewed Audited
% % %
5. Taxation
A reconciliation of the standard South African normal
taxation rate is shown below:
Taxation as a percentage of profit before exceptional items 23,8 41,6 35,3
Empowerment transactions and IFRS 2 charges not tax deductible (0,8) (5,4) (2,8)
Preference dividend and interest on BBBEE funding transaction
not tax deductible (2,5) (3,2) (2,6)
Prior year tax adjustments 11,0 - -
Withholding taxation (2,9) (2,5) (1,0)
Other non-deductible costs (0,6) (2,5) (0,9)
South African normal taxation rate 28,0 28,0 28,0
Cents Cents Cents
6. Earnings and headline earnings per share
Earnings per share
Basic 94 62 178
Diluted 93 61 175
Basic (normalised^) 86 83 214
Diluted (normalised^) 85 82 211
Headline earnings per share
Basic 96 64 179
Diluted 95 63 176
Determination of headline earnings per share
Earnings per share 94 62 178
Adjusted for:
Impairment of property, plant and equipment and
intangible assets 2 2 2
Profit on disposal of property, plant and equipment
and intangible assets (net of taxation) - - (1)
Headline earnings per share 96 64 179
Rm Rm Rm
Normalised earnings
Profit for the period 496 325 931
Normalisation adjustments^ (55) 111 188
441 436 1 119
Normalised earnings attributable to:
Ordinary shareholders of PPC Ltd 439 436 1 119
Non-controlling interests 2 - -
441 436 1 119
Headline earnings
Profit for the period 496 325 931
Impairment losses on financial assets - - 1
Impairment losses on property, plant and equipment
and intangible assets (net of taxation) 8 11 12
Profit on disposal of property, plant and equipment
and intangible assets (net of taxation) - - (9)
Headline earnings 504 336 935
Headline earnings attributable to:
Ordinary shareholders of PPC Ltd 502 336 935
Non-controlling interests 2 - -
504 336 935
^ Normalised earnings adjusts the reported earnings for the effects of BBBEE IFRS 2 and Zimbabwe indigenisation charges,
restructuring costs and prior year taxation adjustments.
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 group’s various empowerment transactions.
For the weighted average number of shares used in the calculation, refer note 10.
31 March 31 March 30 Sept
2014 2013 2013
Unaudited Reviewed Audited
Rm Rm Rm
7. Goodwill
Balance at beginning of the period 101 6 6
Acquisitions of subsidiary companies 75 100 100
Impairment loss for the period - (6) (6)
Translation differences 1 - 1
Balance at end of the period 177 100 101
Goodwill is allocated to the following subsidiary companies:
CIMERWA Ltd 102 100 101
Safika Cement Holdings (Pty) Ltd 75 - -
177 100 101
Goodwill acquired through business combinations is allocated to the subsidiary company or individual cash-generating units
of the subsidiary company. Following the goodwill impairment assessment review, the recoverable amounts of the cash-generating
units to which goodwill had been allocated was calculated to be higher that the carrying amount, which resulted in an
impairment loss of Rnil (March 2013: R6 million; September 2013: R6 million).
8. Equity accounted investments
Investments at cost at beginning of the period 305 179 179
Investments made during the period 3 - 126
Pronto Holdings (Pty) Ltd^ - - 110
Habesha Cement Share Company* 3 - 16
Investments at cost at end of the period 308 179 305
Loans advanced 49 52 46
Share of retained profit 63 44 59
Balance at end of the period 420 275 410
^ In June 2013, PPC acquired a further 25% equity stake in Pronto Holdings (Pty) Ltd, for R110 million. The purchase
consideration was determined using an EBITDA multiple less net debt and increased PPC’s total equity stake in Pronto
to 50%. The final tranche for the remaining 50% will be paid in May 2014 and Pronto will be consolidated into the group
from June 2014.
* In February 2014, PPC acquired an additional equity stake in Habesha Cement Share Company, for a purchase consideration
of R3 million (March 2013: Rnil; September 2013: R16 million), marginally increasing PPC’s shareholding in the company.
9. Trade and other receivables
Trade receivables 983 844 835
Impairment of trade receivables (21) (26) (19)
Net trade receivables 962 818 816
Other financial receivables 69 71 58
Prepayments 121 174 133
Taxation prepaid - - 43
1 152 1 063 1 050
31 March 31 March 30 Sept
2014 2013 2013
Unaudited Reviewed Audited
Shares (000) Shares (000) Shares (000)
10. Stated capital
Number of shares and weighted average number of shares
Number of shares
Total shares in issue at beginning of the period 605 380 566 030 566 030
Shares issued in terms of the second BBBEE transaction& - 39 350 39 350
Total shares in issue at end of the period 605 380 605 380 605 380
Shares issued in terms of the second BBBEE transaction
treated as treasury shares& (39 350) (39 350) (39 350)
Shares held by consolidated BBBEE trusts and trust funding
SPVs treated as treasury shares* (34 764) (37 972) (37 967)
Shares held by consolidated Porthold Trust (Private) Limited
treated as treasury shares@ (1 285) (1 285) (1 285)
Shares purchased and held in terms of the FSP share incentive
scheme treated as treasury shares~ (5 866) (4 745) (4 745)
Total shares in issue (net of treasury shares) 524 115 522 028 522 033
Weighted average number of shares
Used for earnings and headline earnings per share 525 694 523 352 522 678
Used for dilutive earnings and headline earnings per share 530 076 530 478 530 869
Used for cash earnings per share 524 115 522 028 522 678
Shares are weighted for the period in which they are entitled to
participate in the net profit of the group.
Rm Rm Rm
Stated capital
Balance at beginning of the period (1 236) (1 181) (1 181)
Sale of shares, treated as treasury shares, by consolidated
BBBEE trust^ - - 1
Shares purchased in terms of the FSP share incentive scheme
treated as treasury shares~ (53) (55) (56)
Vesting of shares held by certain BBBEE 1 entities* 100 - -
Vesting of shares on a portion of shares held in terms of the
FSP share incentive scheme~ 16 - -
Balance at end of the period (1 173) (1 236) (1 236)
& Issued in terms of the second the BBBEE transaction which was facilitated by means of a notional vendor funding (NVF)
mechanism. These shares only participate in 20% of the dividends declared by PPC during the NVF period, ending 30 September 2019.
The entities participating in this transaction are consolidated into the PPC group during transaction term.
* Certain of the BBBEE trusts and trust funding SPVs from PPC’s first BBBEE transaction are consolidated, and as a result, shares
owned by these entities are carried as treasury shares on consolidation. In December 2013, 3 202 770 shares vested to beneficiaries
and are no longer treated as treasury shares.
@ Shares owned by a Zimbabwean employee trust company treated as treasury shares.
~ In terms of the forfeitable share incentive scheme, 5 865 851 shares (March 2013: 4 744 733 and September 2013: 4 744 733) are held
for participants of this long-term incentive scheme. The shares are treated as treasury shares during the various vesting periods of
the awards. In February 2014, 619 457 shares vested and are therefore no longer treated as treasury shares.
^ During 2013, the Current Team Trust, a trust which was consolidated into the group in terms of the first BBBEE transaction, sold a
portion of their PPC shares.
For ease of reporting and understanding, ordinary and other shareholders have been shown together as total shareholders of the parent.
There is no impact on the earnings or net asset value per share calculations as both shareholders participate in earnings and dividends
equally.
During the period under review, shareholders approved the creation of 20 000 000 preference shares in terms of the restructure of a
portion of the company’s first BBBEE transaction. No preference shares have been issued post the approval. For an update on the status of
the restructure of the first BBBEE transaction, refer to note 18.
31 March 31 March 30 Sept
2014 2013 2013
Unaudited Reviewed Audited
Rm Rm Rm
11. Borrowings
Bonds$ 1 396 650 645
Long-term loan* 1 519 1 516 1 519
Long-term loans denominated in foreign currencies# 334 84 87
Preference shares^ 64 88 88
3 313 2 338 2 339
BBBEE funding transaction~ 1 119 113 1 123
Preference shares 452 113 482
Long-term borrowings 667 - 641
Long-term borrowings 4 432 2 451 3 462
Short-term borrowings and short-term portion of long-term borrowings 1 426 1 729 584
Total borrowings 5 858 4 180 4 046
$ Comprises two unsecured bonds. The first bond of R650 million was issued in March 2013, has a variable coupon rate
of three-month JIBAR plus 1.26% p.a. and is repayable in March 2016. The second bond of R750 million was issued in
December 2013, has a variable coupon rate of three-month JIBAR plus 1.5% p.a. and is repayable in December 2018. These
bonds were issued under the company’s R6 billion Domestic Medium Term Note programme, and are recognised net of
capitalised transaction costs.
* 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.
# The loans are denominated in US dollars and Rwanda francs, with the US dollar variable component of the loan bearing
interest at 650 basis points above Libor and the fixed interest rate loan bearing interest at 16% p.a. The Rwanda franc
loan bears interest at 16% p.a. The loans are repayable over a 10-year period ending 2024, with payments commencing
in 2016. The loans are secured against CIMERWA’s land and buildings.
^ Redeemable preference shares bearing semi-annual dividends, with variable interest rates averaging 85% of prime and
fixed rates between 9.24% and 9.37% p.a. and compulsory annual redemptions ending December 2016.
~ Comprises redeemable A preference shares bearing semi-annual dividends, with variable interest rates averaging 85% of
prime with compulsory annual redemptions until December 2016, and B preference shares bearing interest at a rate of 78%
of prime and B loans bearing interest at a rate of 285 basis points above JIBAR, with interest and capital repayable in
December 2016.
~ 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 124 million (March 2013: R1 081 million and September 2013: R1 161 million).
The group is in compliance with its debt covenants and the company’s borrowing powers are not restricted by its
memorandum of incorporation.
12. Other non-current liabilities
Cash-settled share-based payment liability 2 27 2
Derivative financial instruments (cash flow hedge) - 3 2
Loan to CIMERWA from non-controlling shareholder - 23 23
Put option liability^ 143 - -
145 53 27
^ With the purchase of 69.3% equity stake in Safika Cement Holdings (Pty) Ltd (refer note 15), PPC granted minority
shareholders individual put options, with different exercise dates, for the purchase of their remaining shares. As the
put option is a contract to purchase the group’s own equity instruments, it gives rise to a financial liability for the
present value of the estimated redemption amount in accordance with IAS 32 (Financial Instruments: Presentation). The present
value of the option was calculated at R137 million and time value of money adjustments of R6 million have been recognised
since initial recording of the liability.
13. Trade and other payables and short-term provisions
Current taxation and VAT payable 49 73 42
Derivative financial instruments^ 1 109 112
Other financial payables 59 37 54
Other non-financial payables* 228 86 183
Payroll accruals 113 156 260
Restructuring provisions - - 64
Trade payables and accruals 472 440 535
922 901 1 250
^ Included in derivative financial instruments is the net financial liability payable on the interest rate swaps, and has
been netted off in accordance with IAS 32. The financial asset amounts to Rnil million (March 2013: R290 million;
September 2013: R325 million), and the financial liability amounts to Rnil million (March 2013: R374 million; September 2013:
R429 million). Interest rate swaps liabilities of R113 million were settled in December 2013.
* Includes R55 million (March 2013: Rnil; September 2013: R85 million) relating to the retention payments for the construction
of the cement plant in Rwanda.
14. Investments in property, plant and equipment and intangible assets
Cement 820 279 923
Lime 46 12 37
Aggregates 6 3 10
Investments in property, plant and equipment and intangible assets 872 294 970
South Africa 250 232 441
Rest of Africa 622 62 529
15. Acquisitions of subsidiary companies
Property, plant and equipment 63 432 433
Goodwill 75 100 100
Other intangible assets 237 119 124
Current assets 200 745 749
Cash and cash equivalents 84 6 6
Long-term borrowings - - (108)
Long-term provisions and deferred taxation (72) (187) (75)
Short-term borrowings - - (35)
Current liabilities (70) (74) (47)
Other - - (6)
Non-controlling interests (140) (512) (512)
Total consideration 377 629 629
Consideration payable for new equity in consolidated company - (493) (493)
Consideration payable to external entities 377 136 136
Safika Cement Holdings (Pty) Ltd (Safika Cement)
During December 2013, all conditions to the transaction were filled and PPC acquired a 69.3% equity stake in Safika Cement for
R377 million and consolidated from the effective date of the transaction. This transaction further enhances PPC´s South African
footprint through Safika Cement´s five blending facilities and one milling operation that produce blended 32.5N cement under three
brands: IDM Best Build, Castle and the Spar Build-It house brand. The purchase price allocation presented is provisional at the date
of this report and is not expected to be materially different when finalised.
Safika Cement favourably impacted group revenue by R219 million and reported operating profit of R10 million, inclusive of amortisation
charges of intangible assets recognised in terms of IFRS 3 (Business Combinations). The impact on both earnings and headline earnings
per share was 1 cent per share.
CIMERWA Ltd (CIMERWA)
In February 2013 PPC acquired a 51% equity stake in a Rwandan cement company, CIMERWA, for a transaction value of US$69 million
(R629 million) with US$15 million (R136 million) being paid to previous shareholders of the company, while a further US$54 million was
used to subscribe for shares in CIMERWA of which US$31 million was paid during the 2013 financial year and the balance settled during
this reporting period. As the company is consolidated, the equity subscription is payable to CIMERWA and therefore only the US$15 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.
CIMERWA favourably impacted revenue by R104 million (March 2013: R26 million; September 2013: R118 million) and reported an operating
loss of R4 million (March 2013: R5 million; September 2013: Rnil million). The transaction impact on both earnings and headline earnings
per share was -1 cent per share (March 2013: -1 cent per share; September 2013: nil cents per share).
Aggregate Quarries Botswana
In October 2011 all conditions precedent with regards to the transaction to acquire three aggregate quarries and related assets
in Botswana were met. The transaction value amounted to R52 million and was to be funded over a two year period. The final payment
of R5 million (March 2013: R4 million; September 2013: R4 million) was paid during this reporting period.
31 March 31 March 30 Sept
2014 2013 2013
Unaudited Reviewed Audited
Rm Rm Rm
16. Commitments
Contracted capital commitments 525 1 018 752
Approved capital commitments 341 164 336
Capital commitments 866 1 182 1 088
Operating lease commitments~ 127 18 195
993 1 200 1 283
Commitments for capital expenditure are stated in current values which, together with expected price escalations, will be financed
from surplus cash generated and borrowing facilities available to the group.
Business combination commitments:
Approved transaction
The final 50% tranche on the acquisition of Pronto Holdings (Pty) Ltd is payable in May 2014. The purchase consideration is to be
determined using an EBITDA multiple less net debt.
Transactions subject to final approvals
The company has signed a memorandum of understanding for the construction of a new cement plant in the DRC. The total cost of the
project amounts to US$280 million. PPC will have a 70% shareholding in the project. Commercial terms, including funding facilities,
are in the final stages of completion.
The company has signed a memorandum of understanding with Hodna Cement Company for the construction of a new cement plant in Algeria,
with a project cost of US$350 million. It is estimated that PPC will have a 49% shareholding in the project. Commercial terms are in
the process of being finalised.
PPC continues to investigate business opportunities in both South Africa and the rest of Africa.
31 March 31 March 30 Sept
2014 2013 2013
Unaudited Reviewed Audited
Level* Rm Rm Rm
17. Fair value of financial assets and liabilities
The application of the new standard IFRS 13:
Fair Value Measurement during this reporting period
has not materially impacted fair value measurements
of the group.
Financial assets
Available-for-sale
Unlisted investments at fair value 3 37 25 37
Loans and receivables
Loans advanced 2 4 4 4
Loans to equity accounted companies 2 49 52 46
Trade and other financial receivables 2 1 031 889 874
Cash and cash equivalents 1 660 264 492
At fair value through profit and loss
Unlisted collective investments at fair value (held-for-trading) 1 110 101 105
Total financial assets 1 891 1 335 1 558
Level 1 770 365 597
Level 2 1 084 945 924
Level 3 37 25 37
Financial liabilities
At amortised cost
Long-term borrowings 2 4 510 2 500 3 523
Short-term borrowings 1 1 426 1 729 584
Trade and other financial payables 2 531 477 567
Put option liability 3 143 - -
At fair value through profit and loss
Cash-settled share-based payment liability 2 24 27 22
Derivatives
Derivative instruments - current (cash flow hedge) 2 1 106 112
Derivative instruments - non-current (cash flow hedge) 2 - 3 2
Total financial liabilities 6 635 4 842 4 810
Level 1 1 426 1 729 584
Level 2 5 066 3 113 4 226
Level 3 143 - -
Methods and assumptions used by the group in determining fair values:
The estimated fair value of financial instruments is determined, at discrete points in time, by reference to the mid-price in
an active market wherever possible. Where no such active market exists for the particular asset or liability, the group uses
valuation techniques to arrive at fair value, including the use of prices obtained in recent arm’s length transactions, discounted
cash flow analysis and other valuation techniques commonly used by market participants.
The fair value of cash and cash equivalents, trade and other financial receivables and trade and other financial payables
approximate their respective carrying amounts of these financial instruments because of the short period to maturity of these
instruments.
* Level 1 - financial assets and liabilities that are valued accordingly to unadjusted market prices for similar assets and
liabilities. Market prices in this instance are readily available and the price represents regularly occurring transactions which
have been concluded on an arm’s length transaction.
* Level 2 - financial assets and liabilities are valued using observable inputs, other than the market prices noted in level 1 methodology.
These inputs make reference to pricing of similar assets and liabilities in an active market or by utilising observable prices and
market related data.
* Level 3 - financial assets and liabilities that are valued using unobservable data, and requires management judgement in determining
the fair value.
18. Events after the reporting period
There are no events that occurred after the reporting date that may have a material impact on the group’s reported financial position
at 31 March 2014.
On 6 May 2014, PPC advised that the proposed restructuring of a component of its first BBBEE transaction, originally expected to be
completed by 30 April 2014, has been postponed due to the finalisation of funding arrangements. Shareholders will be advised of the new
completion date in due course.
Administration
Directors:
BL Sibiya (Chairman), KM Gordhan (Chief executive officer), ZJ Kganyago, NB Langa-Royds, MP Malungani,
S Mhlarhi, B Modise, T Moyo*, MMT Ramano (Chief financial officer), TDA Ross, J Shibambo *Zimbabwean
Registered office:
148 Katherine Street (corner Grayston), Sandton, South Africa
(PO Box 787416, Sandton 2146, South Africa)
Group company secretary:
JHDLR Snyman
148 Katherine Street (corner Grayston), Sandton, South Africa
(PO Box 787416, Sandton 2146, South Africa)
Transfer secretaries:
Link Market Services SA (Pty) Limited
11 Diagonal Street, Johannesburg, 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 (Pty) Ltd
Disclaimer
This document including, without limitation, those statements concerning the demand outlook, PPC’s 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.
These results and other information is available on the PPC website: www.ppc.co.za
Date: 20/05/2014 07:09:00 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
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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,
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