Wrap Text
Audited preliminary summarised group results for the year ended 30 September 2015
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
Audited preliminary summarised group results for the year ended 30 September 2015
COMMENTARY
Darryll Castle, CEO, said:
“PPC’s group revenue increased by 2% due to improved performance from our operations in
Zimbabwe and Botswana as well as the inclusion of the newly acquired businesses of Safika Cement
and Pronto Readymix. These offset the declines experienced in the core South African cement
business. The profit improvement programme generated R212 million which led to our group
EBITDA of R2,36 billion ending marginally above last year. We have now achieved over 50%
of our three-year profit improvement target of R400 million. The successful delivery of our
600 000 ton per annum CIMERWA plant in Rwanda, within the budgeted US$170 million,
reflects our ability to manage complex, multi-dimensional projects in the heart of the
continent. Our projects in the DRC, Zimbabwe and Ethiopia are all over 50% complete and will
ensure that we offer shareholders a diversified portfolio of businesses in different geographies.”
- Group revenue up 2% to R9,2 billion
- EBITDA of R2,36 billion marginally above last year
- Cash generated from operations up 5% to R2,7 billion
- Cash conversion ratio of 110%
- Profit improvement programme generates R212 million
- Headline earnings per share down 19% to 145 cents
- Annual dividend per share of 57 cents after final dividend of 33 cents
- 600 000 ton per annum plant in Rwanda successfully commissioned
- Funding covenants aligned to the capital structure
- New vision and strategy launched
PPC group performance
PPC’s total cement sales volumes ended 2% below last year. Group revenue increased by 2% year on
year to R9 227 million (2014: R9 039 million) due to revenue growth in Zimbabwe and Botswana and
the full-year inclusion of Safika Cement and Pronto Readymix. On a like-for-like basis, group revenue
would be 3% below last year at R8 320 million (2014: R8 561 million).
Cost of sales of R6 437 million was 3% higher than last year (2014: R6 266 million), impacted by the
consolidation of Safika Cement and Pronto Readymix. On a like-for-like basis, cost of sales of
R5 825 million would be 2% below last year (2014: R5 960 million). Costs were particularly well managed
by the South African cement business that recorded a 2% decline in variable delivered cost of sales per ton.
Administration and other operating expenditure rose 10% to R1 130 million (2014: R1 030 million).
On a like-for-like basis, excluding new businesses, the expenses increased by 5% year on year. A large
portion of the higher expenditure can be ascribed to an increased doubtful debt provision of R40 million,
originating from Zimbabwe while in our lime business a key customer applied for business rescue. Excluding
the impact of the increased doubtful debt provision and the Pronto consolidation effect, administration
and other operating expenditure would have recorded a 2% year-on-year decline.
The profit improvement programme (PIP), which is set to deliver R400 million by 2017, has generated
R212 million for the 2015 financial year and comprised mainly operational efficiencies and
overhead reductions.
Despite tough market conditions, group EBITDA ended marginally above last year at R2 362 million
(2014: R2 358 million), with an EBITDA margin of 25,6% (2014: 26,1%). In the absence of the
PIP, group EBITDA would have been 10% lower. The movement against last year can be ascribed
to lower profitability in the South African cement business which was offset by the consolidation of
new businesses and improved profitability from lime, Zimbabwe and the Botswana cement division. Excluding
restructuring and corporate action costs, EBITDA is 4% higher at R2 424 million.
Net finance costs were R468 million, a 13% increase over last year’s R414 million mainly as a result of gross
borrowings being R2 130 million above the prior year and reduced by R196 million (2014: R36 million)
capitalised to property, plant and equipment.
Cash generated from operations of R2 716 million was 5% higher than the previous period (2014:
R2 583 million). This was supported by lower net working capital which decreased by R300 million. The cash
conversion ratio of 110% is in line with the previous year and remains strong despite tough local market
conditions, demonstrating the effectiveness of PPC’s financial and operational disciplines.
The effective tax rate remains high at 37% due to the non-deductibility of some expenses including those
relating to the first BEE transaction, impairments and international business expenses. Following
impairment assessment reviews, impairments of R81 million were recorded, which includes goodwill
of Pronto Readymix and certain international business exploration costs.
Capital investments in property, plant and equipment were R3 269 million (2014: R1 908 million) with
R2 454 million utilised for the expansion strategy projects in Rwanda, the Democratic Republic of
the Congo (DRC) and Zimbabwe. Group debt has increased to R8 221 million (2014: R6 091 million)
due to project finance drawdowns, leading to group debt to EBITDA rising to 3,5 times. When non-recourse
project finance debt is excluded, this ratio drops to 2,6 times, which is well within the newly approved
financial covenant range.
Net profit attributable to PPC shareholders was R698 million (2014: R840 million) and the 17%
decline against last year can be ascribed to the lower profitability of the South African cement business
as well as increased finance costs. In line with this, headline earnings per share ended 19% lower
at 145 cents (2014: 179 cents) while normalised earnings per share of 148 cents were 15% lower than
the prior period and earnings per share of 133 cents were down 17%.
The directors have declared a final dividend per share of 33 cents (2014: 76 cents), bringing the full-year
dividend to 57 cents (2014: 114 cents) which is within the company’s previously communicated dividend
cover range of 1,8 to 2,5 times. In future, the company's dividend policy will take into account its growth
considerations as well as prudency regarding its capital structure and will therefore have a flexible dividend
policy with regard to the quantum and form of dividends instead of a cash dividend policy based on a stated
dividend cover.
CEMENT
PPC group cement revenue declined 3% to R7 506 million (2014: R7 710 million) while EBITDA
fell 5% to R2 016 million (2014: R2 132 million). Consequently the EBITDA margin fell to 26,9% from
27,7% the previous year.
South Africa
PPC’s cement sales volumes declined by 1% due to increased competitor activity, particularly in the
Gauteng and inland regions. The Mpumalanga area was hardest hit, with double-digit volume declines.
The North West region, although also under pressure, showed some resilience. In the Gauteng area, the
construction and industrial segments recorded a relatively better performance than the highly
contested retail space. In the latter part of the period, the coastal regions began to perform better on the
back of new import tariffs. Average selling prices declined 2% during the period.
Variable delivered cost of sales per ton declined 2% while fixed costs increased by 2%. Cost savings
were realised from coal, refractories, fuel and packaging, but these were offset by cost increases in power and
maintenance.
We have made tangible progress with our alternative thermal energy strategy by introducing tyre burning
at our De Hoek factory in the Western Cape. De Hoek kiln 6 is expected to have a co-processing capacity of
about 8 000 tons of recycled tyres per year, resulting in thermal heat replacement of about 15%. The
manual feed system was completed at a cost of under R10 million.
International
Zimbabwe
Our Zimbabwe operations recorded overall volume declines of 4% although domestic volumes improved
by 5%. The stronger US dollar, as well as increased competitor and pricing pressure, led to exports
declining. Price increases in the local market remained muted, with good cost control leading to improved
margins.
Botswana
Sales volumes in Botswana rose 20% on increased demand in the industrial and retail segments. Average
selling price and cost of sales both decreased from the prior year but margins were up 14% due to improved
volumes and the reduced cost of sales.
Rwanda
The new 600 000 ton per annum CIMERWA plant was officially opened in August 2015. The new plant
operated for most of the last quarter and led to volumes improving.
LIME, AGGREGATES AND READYMIX
Revenue in the lime business of R871 million was 7% higher (2014: R817 million) after a 7% increase in
burnt product sales volumes to major clients. EBITDA of R178 million was 31% higher than the previous
year (2014: R136 million) due to the higher volumes and significant cost-saving initiatives. The improved
performance occurred despite providing R14 million for doubtful debts as a major customer applied
for business rescue.
Aggregates and readymix revenues were higher at R1 042 million (2014: R576 million) due to the full consolidation
of Pronto Readymix. Consequently EBITDA rose to R168 million (2014: R90 million). Aggregates’ sales
volumes in South Africa reduced by 7%, mainly due to lower sales of concrete stone to the readymix concrete
and concrete manufacturer segments.
PROJECTS UPDATE
Rwanda
The US$170 million, 600 000 ton per annum plant was successfully completed within the allocated budget.
Provisional acceptance testing is well advanced, with outstanding testing on the raw mill, kiln and cement
mills to be completed in the last quarter of calendar 2015. Product from the new plant has been well
accepted in the market and a satisfactory ramp-up in the three months from July 2015 was achieved. In
September 2015, the plant produced at around 60% of full capacity. Gradual ramp-up to full production is
expected over the next two years.
Democratic Republic of the Congo
Construction of the US$280 million, 1 million ton per annum plant is around 55% complete and
commissioning remains on track for end calendar 2016. Major civil works and cement silos have
been completed, with construction of the packing plant and loading area under way. Structural steel
and mechanical erection began in August 2015. In tandem with mine planning, the quarry was opened
towards the end of the period and the haul road is being constructed. In conjunction with the country’s
utility company, Société Nationale d’électricité (SNEL), PPC will construct a 13km overhead transmission
line to supply power to the cement plant as a publicprivate partnership. Key agreements on financing,
construction and power supply have been signed with SNEL.
Zimbabwe
Construction of the US$85 million, 700 000 ton per annum mill in Harare is proceeding well, with the
project around 50% complete and the rail siding contract 32% complete. Design work is almost
complete, with 95% of equipment manufactured and 65% delivered to site, while civil construction is
40% complete. Roads to the site, water, sewerage infrastructure and power supply from the national
power utility are complete. Plant commissioning is expected towards the end of calendar 2016, and will
enable the company to improve use of its existing labour force as key staff members for the factory will
be drawn from staff at our Bulawayo and Colleen Bawn operations.
Ethiopia
In 2014, we announced that we were increasing our shareholding in Habesha Cement to 51% from 31%. Given that
further work to confirm the capital costs and timeframe of the project began early in 2015, we retained our
shareholding at 31% until this exercise is concluded. The 1,4 million ton per annum plant is now expected be
concluded at a capital cost of between US$170 million and US$180 million and is scheduled to be commissioned
during the second quarter of calendar 2017. The additional funds will be sourced from equity and debt funding.
Construction is progressing well, with overall project progress at 52%.
Slurry
Our Slurry factory was granted authorisation by the Department of Environmental Affairs to construct the
new kiln 9 project, a R1,5 to 1,7 billion project that will add 1 million tons per annum cement capacity to
Slurry from 2018. R241 million has been spent on this project to date.
BOARD CHANGES
Dr Daniel Ufitikirezi resigned as a director of PPC Ltd from 22 September 2015 after resigning as chairman
of the board of CIMERWA, our subsidiary in Rwanda, where he served as the representative of the Rwanda
Social Security Board. The board and executive committee thank him for his contribution and wish
him well.
STRATEGY
Since 2010, PPC has focused on its two-pronged strategy of keeping the home fires burning and
expanding into the rest of Africa. We have made significant progress with our expansion projects and
the target of generating 40% of revenue from the rest of the continent by 2017 is within reach.
In 2015, after a series of engagements with the senior management team and the PPC board, we have
revised our business strategy to ensure we remain positioned for growth. Our new vision is “to become
a world-class provider of materials and solutions into the basic services sector, taking a strategic approach
to more than doubling our business every ten years”. We will consider ourselves successful if we can ensure
a sustainable competitive excess return for all our stakeholders. Embedded in this is a requirement
for our corporate culture to change, to match our ambitious new vision. This new strategy is supported
by five key pillars:
- World-class excellence in all that we do
- Provider of materials and solutions
- Innovation culture
- Taking a strategic approach
- Doubling our business every ten years.
In 2016, we will focus on articulating the measures accompanying the different elements of our strategy.
Senior management is already cascading the new vision and strategy to all business units, understanding
that the success of our new strategy depends on the support of every member of team PPC.
In line with our new strategy, work is already under way to establish a vertically integrated materials
business. This business unit will house our readymix, aggregates and related building materials businesses
to ensure we offer our clients end-to-end solutions. In support of these ambitions, a bolt-on acquisition has
been earmarked for early 2016.
PPC has reached agreement with its debt capital providers to restructure key provisions of its funding
agreements to provide PPC with appropriate flexibility. Covenants, established in 2008 before
PPC initiated its expansion programme, limited group debt to EBITDA to 3,0 times. These had to be
realigned to better match the nature of our current business. The funders have now agreed to exclude
non-recourse project finance from the definition of PPC’s indebtedness and relax the group debt to
EBITDA covenant from 3,0 times to 3,3 times.
PPC is also investigating a solution to unwind its 2008 BBBEE transaction during 2016. The solution
will seek to restructure those aspects of the balance sheet associated with the transaction in an optimal
way, to meet PPC’s growth aspirations, and reduce refinance risk. In order to maintain our operating
licences, a plan to enhance our BBBEE credentials will be communicated.
For 2015, we retained our level 2 rating under the Department of Trade and Industry’s broad-based
black economic empowerment (BBBEE) codes of good practice. This certificate expires in December
2015 following which the revised codes will apply and we anticipate that we could drop from level 2 to level 7.
Management is developing a roadmap to achieve a more desirable BBBEE score.
PROSPECTS
Against the backdrop of a turbulent world economy, increasing cement capacity and falling cement selling
prices across the African continent, PPC is focused on disciplined cost management, innovation and
the efficient delivery of large projects. We anticipate business conditions to remain challenging.
Successfully delivering the CIMERWA project in Rwanda reflects our ability to manage complex,
multi-dimensional projects in the heart of Africa. It gives us confidence that we will also be able to
deliver on our projects and business plans in the DRC, Zimbabwe and Ethiopia.
PPC is increasingly creating a diversified portfolio of businesses in different geographies that will ensure
steady returns for our shareholders.
The company year end will change from September to March.
On behalf of the board
BL Sibiya
Chairman
DJ Castle
Chief executive officer
MMT Ramano
Chief financial officer
17 November 2015
Dividend announcement
Notice is hereby given that the final ordinary gross dividend of 33 cents per share has been declared
payable to ordinary shareholders in respect of the year ended 30 September 2015. This dividend will be paid
out of profits as determined by the directors.
The local dividends tax rate is 15%. The dividends tax to be withheld by the company amounts to 4,95 cents per share,
giving a net dividend payable to shareholders of 28,05 cents per share where no exemption is applicable.
The issued share capital of the company at the declaration date comprises 605 379 648 shares and the company’s
income tax reference number is 9460015606.
The important dates pertaining to this dividend for shareholders trading on the JSE Limited are as follows:
Declaration date Tuesday, 17 November 2015
Last day to trade “Cum” dividend Thursday, 31 December 2015
Shares trade “Ex” dividend Monday, 4 January 2016
Record date Friday, 8 January 2016
Payment date Monday, 11 January 2016
Share certificates may not be dematerialised or rematerialised between Monday, 4 January 2016 and
Friday, 8 January 2016, both dates inclusive. Transfers between the South African and Zimbabwean registers may
not take place between Monday, 4 January 2016 and Friday, 8 January 2016, 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, 4 January 2016
Record date Friday, 8 January 2016
Payment date, on or shortly after Monday, 11 January 2016
The register of members in Zimbabwe will be closed from Monday, 4 January 2016 and Friday, 8 January 2016, 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 (ZAR).
By order of the board
JHDLR Snyman
Company secretary
17 November 2015
Sandton
Summarised consolidated statement of comprehensive income
Year ended Year ended
30 Sept 30 Sept
2015 2014
Audited Audited %
Notes Rm Rm change
Revenue 9 227 9 039 2
Cost of sales 6 437 6 266 3
Gross profit 2 790 2 773
Administration and other operating expenditure 1 130 1 030 10
Operating profit before item listed below: 1 660 1 743 (5)
Empowerment transactions IFRS 2 charges* 43 38
Operating profit 1 617 1 705 (5)
Finance costs (including fair value adjustments on financial instruments) 2 496 467 6
Investment income 28 53
Profit before equity accounted earnings and exceptional adjustments 1 149 1 291 (11)
(Loss)/earnings from equity accounted investments (16) 24
Impairments 3 (81) (111)
Other exceptional adjustments 3 - 1
Profit before taxation 1 052 1 205 (13)
Taxation 4 391 356 10
Profit for the year 661 849 (22)
Attributable to:
Shareholders of PPC Ltd 698 840 (17)
Non-controlling interests (37) 9
Other comprehensive income, net of taxation 775 309
Items that will be reclassified to profit or loss 775 309
Effect of cash flow hedges 38 7
Taxation on effect of cash flow hedges (11) -
Translation of foreign operations 752 255
Revaluation of available-for-sale financial asset (7) 58
Taxation on revaluation of available-for-sale financial asset 3 (11)
Total comprehensive income 1 436 1 158 24
Attributable to:
Shareholders of PPC Ltd 1 340 1 108 21
Non-controlling interests 96 50
EARNINGS PER SHARE (CENTS) 5
Basic 133 160 (17)
Diluted 131 158 (17)
* Comprise BBBEE, Zimbabwe indigenisation and DRC IFRS 2 charges.
Summarised consolidated statement of financial position
30 Sept 30 Sept
2015 2014
Audited Audited
Notes Rm Rm
ASSETS
Non-current assets 12 202 8 938
Property, plant and equipment 6 10 648 7 223
Goodwill 7 254 268
Other intangible assets 8 772 681
Equity accounted investments 9 125 223
Other non-current assets 10 355 534
Deferred taxation assets 48 9
Non-current assets held for sale 11 76 -
Current assets 2 979 2 637
Inventories 1 029 894
Trade and other receivables 12 1 232 1 180
Cash and cash equivalents 718 563
Total assets 15 257 11 575
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 13 (1 165) (1 173)
Other reserves 1 402 733
Retained profit 2 406 2 255
Equity attributable to shareholders of PPC Ltd 2 643 1 815
Non-controlling interests 521 603
Total equity 3 164 2 418
Non-current liabilities 8 813 7 186
Deferred taxation liabilities 1 059 1 030
Provisions 400 374
Long-term borrowings 14 6 711 5 740
Other non-current liabilities 15 643 42
Current liabilities 3 280 1 971
Short-term borrowings 14 1 510 351
Trade and other payables 16 1 770 1 620
Total equity and liabilities 15 257 11 575
Net asset book value per share (cents) 503 345
Summarised consolidated statement of cash flows
Year ended Year ended
30 Sept 30 Sept
2015 2014
Audited Audited
Notes Rm Rm
Cash flow from operating activities
Operating cash flows 2 416 2 472
Working capital movements 300 111
Cash generated from operations 2 716 2 583
Finance costs paid (408) (426)
Investment income received 28 53
Taxation paid (489) (499)
Cash available from operations 1 847 1 711
Dividends paid (559) (880)
Net cash inflow from operating activities 1 288 831
Acquisition of equity accounted investments - (3)
Acquisitions of subsidiary companies 18 - (662)
Acquisition of additional shares in subsidiary 15 (108) -
Investments in property, plant and equipment and intangible assets 17 (2 892) (2 182)
Other investing movements 5 7
Net cash outflow from investing activities (2 995) (2 840)
Net borrowings raised before bond issuances 1 796 201
Proceeds from the issuance of bonds - 1 750
Purchase of shares in terms of the FSP share incentive scheme 13 (24) (53)
Net cash inflow from financing activities 1 772 1 898
Net movement in cash and cash equivalents 65 (111)
Cash and cash equivalents at beginning of the year 563 492
Cash and cash equivalents acquired on acquisitions of subsidiary companies 18 - 149
Exchange rate movements on opening cash and cash equivalents 90 33
Cash and cash equivalents at end of the year 718 563
Cash earnings per share (cents)* 351 325
Cash conversion ratio^ 1,1 1,1
* 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.
^ Cash conversion ratio is calculated using cash generated from operations divided by EBITDA.
Summarised consolidated statement of changes in equity
Other reserves
Unrealised
surplus Foreign Available-
on reclassi- currency for-sale Equity
Stated fication translation financial Hedging compensation
capital of plant reserve asset reserve reserve
Rm Rm Rm Rm Rm Rm
Balance at September 2013 (1 236) 1 202 37 (7) 306
Acquisition of subsidiary company - - - - - -
Dividends declared - - - - - -
IFRS 2 charges - - - - - 48
Put option recognised on acquisition of
subsidiary company^ - - - - - -
Total comprehensive income - - 214 47 7 -
Transfer to retained profit - (1) - - - (5)
Treasury shares purchased in terms of the
FSP share incentive scheme (53) - - - - -
Vesting of certain shares held by BBBEE 1
entities 100 - - - - (100)
Vesting of certain FSP share incentive scheme
awards 16 - - - - (16)
Balance at September 2014 (1 173) - 416 84 - 233
Dividends declared - - - - - -
IFRS 2 charges - - - - - 59
Put option recognised on non-controlling
shareholder investment in subsidiary^ - - - - - -
Recognition of non-controlling interest in
subsidiary - - - - - -
Total comprehensive income/(loss) - - 618 (3) 27 -
Transactions with non-controlling
shareholders recognised directly in equity - - - - - -
Treasury shares purchased in terms of the FSP
share incentive scheme (24) - - - - -
Vesting of certain shares held by BBBEE 1
entities 9 - - - - (9)
Vesting of certain FSP share incentive scheme
awards 23 - - - - (23)
Balance at September 2015 (1 165) - 1 034 81 27 260
^ For details on the put options refer note 15 and 16.
Summarised consolidated statement of changes in equity (continued)
Equity
attributable
to Non-
Retained shareholders controlling Total
profit of PPC Ltd interests equity
Rm Rm Rm Rm
Balance at September 2013 2 257 1 560 582 2 142
Acquisition of subsidiary company - - 140 140
Dividends declared (848) (848) (32) (880)
IFRS 2 charges - 48 - 48
Put option recognised on acquisition of
subsidiary company^ - - (137) (137)
Total comprehensive income 840 1 108 50 1 158
Transfer to retained profit 6 - - -
Treasury shares purchased in terms of the
FSP share incentive scheme - (53) - (53)
Vesting of certain shares held by BBBEE 1
entities - - - -
Vesting of certain FSP share incentive scheme
awards - - - -
Balance at September 2014 2 255 1 815 603 2 418
Dividends declared (540) (540) (19) (559)
IFRS 2 charges - 59 - 59
Put option recognised on non-controlling
shareholder investment in subsidiary^ - - (422) (422)
Recognition of non-controlling interest in
subsidiary - - 256 256
Total comprehensive income/(loss) 698 1 340 96 1 436
Transactions with non-controlling
shareholders recognised directly in equity (7) (7) 7 -
Treasury shares purchased in terms of the FSP
share incentive scheme - (24) - (24)
Vesting of certain shares held by BBBEE 1
entities - - - -
Vesting of certain FSP share incentive scheme
awards - - - -
Balance at September 2015 2 406 2 643 521 3 164
^ For details on the put options refer note 15 and 16.
Segmental information
The group discloses its operating segments according to the business units which are regularly reviewed by the group
executive committee and comprise cement, lime, aggregates and readymix and other.
Revenue is split between South Africa and the rest of Africa based on where the underlying products are anticipated
to be consumed or used by the customer.
No individual customer comprises more than 10% of group revenue.
Aggregates
Consolidated Cement Lime and readymix# Other^
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
Rm Rm Rm Rm Rm Rm Rm Rm Rm Rm
Revenue
South Africa 6 795 6 671 4 999 5 395 853 792 943 484 - -
Rest of Africa 2 624 2 432 2 507 2 315 18 25 99 92 - -
9 419 9 103 7 506 7 710 871 817 1 042 576 - -
Inter-segment revenue (192) (64)
Total revenue 9 227 9 039
Operating profit before item listed below 1 660 1 743 1 422 1 590 133 96 105 57 - -
Empowerment transactions IFRS 2 charges 43 38 43 38 - - - - - -
Operating profit 1 617 1 705 1 379 1 552 133 96 105 57 - -
South Africa 1 120 1 230 881 1 072 133 96 106 62 - -
Rest of Africa 497 475 498 480 - - (1) (5) - -
Fair value adjustments on financial instruments 22 38 34 40 - 1 (12) (5) - 2
Finance costs 518 505 382 384 4 3 29 8 103 110
Investment income 28 53 19 48 1 2 8 3 - -
Profit before earnings from equity accounted
investments and exceptional adjustments 1 149 1 291 1 050 1 256 130 96 72 47 (103) (108)
(Loss)/earnings from equity accounted investments (16) 24 (16) 24 - - - - - -
Impairments and other exceptional adjustments (81) (110) (59) (81) - - (22) (29) - -
Profit before taxation 1 052 1 205 975 1 199 130 96 50 18 (103) (108)
Taxation 391 356 325 314 35 25 31 17 - -
Profit for the year 661 849 650 885 95 71 19 1 (103) (108)
Depreciation and amortisation 702 615 594 542 45 40 63 33 - -
EBITDA~ 2 362 2 358 2 016 2 132 178 136 168 90 - -
South Africa 1 706 1 790 1 364 1 569 178 136 164 85 - -
Rest of Africa 656 568 652 563 - - 4 5 - -
EBITDA margin (%) 25,6 26,1 26,9 27,7 20,4 16,6 16,1 15,6 - -
Assets
Non-current assets 12 202 8 938 11 251 7 991 310 310 641 637 - -
South Africa 5 141 5 019 4 231 4 107 310 310 600 602 - -
Rest of Africa 7 061 3 919 7 020 3 884 - - 41 35 - -
Current assets 2 979 2 637 2 536 2 191 185 192 254 253 4 1
Non-current assets held for sale 76 - 76 - - - - - - -
Total assets 15 257 11 575 13 863 10 182 495 502 895 890 4 1
South Africa 6 687 6 541 5 376 5 225 495 502 812 813 4 1
Rest of Africa 8 570 5 034 8 487 4 957 - - 83 77 - -
Investments in property, plant and equipment 2 856 2 119 2 741 2 025 45 62 70 32 - -
Capital commitments (refer note 19) 4 643 3 896 4 588 3 860 28 7 27 29 - -
Liabilities
Non-current liabilities 8 813 7 186 7 492 5 768 94 101 89 96 1 138 1 221
Current liabilities 3 280 1 971 2 921 1 707 105 48 162 143 92 73
Total liabilities 12 093 9 157 10 413 7 475 199 149 251 239 1 230 1 294
South Africa 8 343 7 446 6 692 5 789 199 149 222 214 1 230 1 294
Rest of Africa 3 750 1 711 3 721 1 686 - - 29 25 - -
# Includes readymix from effective date of consolidation of Pronto, being July 2014. Aggregates and readymix have been
aggregated in line with industry practices.
^ Comprises BBBEE trusts and trust funding SPVs.
~ Excluding empowerment IFRS 2 charges. In 2014, the restructuring costs were added back when EBITDA was disclosed in
the segment analysis. This has been amended in the current year and not adjusted when disclosing EBITDA.
Notes to the summarised consolidated year-end results
1. Basis of preparation
The preliminary summarised consolidated financial statements have been prepared in accordance with the framework
concepts, recognition and measurement criteria of International Financial Reporting Standards (IFRS) and its
interpretations adopted by the International Accounting Standards Board in issue and effective for the group at
30 September 2015 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 at a minimum and comply with the Listings Requirements
of the JSE Limited for preliminary reports and the Companies Act of South Africa applicable to summarised financial
statements. These preliminary 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 preliminary summarised consolidated financial statements have been prepared under the supervision of MMT Ramano
CA(SA), chief financial officer, and were approved by the board of directors on 17 November 2015.
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 2014, except for the following revised accounting standards and
interpretations that were effective during the year, and which did not have a material impact on the reported results:
- IAS 19 (amendment) Defined Benefit Plans: Employee Contribution
- IAS 32 (amendment) Offsetting Financial Assets and Financial Liabilities
- IAS 36 (amendment) Recoverable Amount Disclosures for Non-financial Assets
- IAS 39 (amendment) Novation of Derivatives and Continuation of Hedge Accounting
- IFRIC 21 Levies
- Investment entities (amendment to IFRS 10, IAS 28, IFRS 12)
- IASB improvements to IFRS 2010 - 2012 (amendment to IFRS 2, IFRS 3, IFRS 13, IAS 16, IAS 38, IAS 24, IFRS 8)
- IASB improvements to IFRS 2011 - 2013 (amendment to IFRS 1, IFRS 3, IFRS 13, IAS 40).
These preliminary summarised consolidated financial statements for the year ended 30 September 2015 have been audited
by Deloitte & Touche, who expressed an unmodified opinion thereon. The auditors also expressed an unmodified opinion
on the annual financial statements from which these preliminary summarised consolidated financial statements were
derived. A copy of the auditor’s report on the preliminary summarised consolidated financial statements and annual
financial statements are available for inspection at the company’s registered office. The auditor’s report does not
necessarily report on all of the information contained in this announcement. Shareholders are therefore advised that
in order to obtain a full understanding of the nature of the auditor’s engagement, they should obtain a copy of that
report together with the accompanying financial information from the company’s registered office. Any reference to
future financial information included in this announcement has not been reviewed or reported on by the auditor.
30 Sept 30 Sept
2015 2014
Audited Audited
Rm Rm
2. Finance costs (including fair value adjustments on financial instruments)
Bank and other short-term borrowings 48 73
Bonds 189 108
Long-term loans 313 203
550 384
Capitalised to plant and equipment and intangibles (196) (36)
Finance costs before BBBEE transaction and time
value of money adjustments 354 348
BBBEE transaction 116 110
Dividends on redeemable preference shares 42 48
Long-term borrowings 74 62
Time value of money adjustments on rehabilitation and
decommissioning provisions and put option liabilities 48 47
518 505
Fair value gains on financial instruments (22) (38)
496 467
South Africa 474 465
Rest of Africa 22 2
3. Impairments and other exceptional adjustments
Gain on remeasurement of equity stake in Pronto (refer note 18) - 1
Impairment of goodwill (refer note 7) (22) (65)
Impairment of financial asset (1) -
Impairment of loans advanced (1) -
Impairment of property, plant and equipment (refer note 6) (57) (46)
(81) (110)
Impairment of property, plant and equipment
Following reviews of property, plant and equipment, impairments were deemed necessary. These impairments are:
- Post the group’s decision to no longer pursue the current Algeria project, it was deemed appropriate that the
costs capitalised of R15 million be impaired.
- Costs of R27 million relating to a limestone quarry in Zimbabwe have been impaired due to uncertainty of future
development prospects.
- An impairment of R14 million was recorded against plant and equipment relating to the old plant
at CIMERWA that would not be used post commissioning of the new plant.
- Other minor impairments of property, plant and equipment amounting to R1 million.
In September 2014, the carrying value of the assets at PPC Aggregates Quarries of Botswana (Pty) Limited and CIMERWA
were assessed for potential impairment. PPC Aggregate Quarries of Botswana (Pty) Limited had been making operating
losses and certain assets relating to the old plant in CIMERWA were identified that would not be used post commissioning
of the new plant. Following these assessments, R17 million and R29 million was recorded against property, plant and
equipment for PPC Aggregates Quarries of Botswana (Pty) Limited and CIMERWA respectively. The impairments are included in
aggregates and readymix and cement in the segmental analysis.
4. Taxation
% %
Taxation rate reconciliation
A reconciliation of the standard South African normal taxation rate
is shown below:
Profit before taxation (excluding earnings from equity accounted
investments) 36,6 30,1
Prior year taxation impact 2,7 5,9
Profit before taxation, excluding prior year taxation adjustments 39,3 36,0
Adjustment due to the inclusion of dividend income 0,3 0,4
Effective rate of taxation 39,6 36,4
Income tax effect of: (11,6) (8,4)
Disallowable charges, permanent differences and impairments (8,9) (4,4)
Empowerment transactions and IFRS 2 charges not taxation deductible (1,1) (0,8)
Finance costs on BBBEE transaction not taxation deductible (2,1) (2,4)
Foreign taxation rate differential 1,6 0,9
Withholding taxation (1,1) (1,7)
South African normal taxation rate 28,0 28,0
30 Sept 30 Sept
2015 2014
Audited Audited
Cents Cents
5. Earnings and headline earnings
Earnings per share
Basic 133 160
Diluted 131 158
Basic (normalised)^ 148 175
Diluted (normalised)^ 147 173
Headline earnings per share
Basic 145 179
Diluted 143 176
Basic (normalised)^ 149 175
Diluted (normalised)^ 147 173
Determination of headline earnings per share
Earnings per share 133 160
Adjusted for:
Impairments and other exceptional adjustments 15 21
Taxation on impairments and other exceptional adjustments (3) (2)
Headline earnings per share 145 179
Rm Rm
Headline earnings
Net profit 661 849
Impairments and other exceptional adjustments 81 110
Taxation on impairments and other exceptional adjustments (15) (12)
Headline earnings 727 947
Attributable to:
Shareholders of PPC Ltd 759 927
Non-controlling interests (32) 20
Normalised earnings
Net profit 661 849
Normalisation adjustments^ 82 79
Normalised net profit 743 928
Attributable to:
Shareholders of PPC Ltd 775 908
Non-controlling interests (32) 20
^ Normalised earnings adjusts the reported earnings for the effects of empowerment transaction IFRS 2 charges,
restructuring costs, impairments and other exceptional adjustments net of taxation and prior year taxation
adjustments. The calculation of normalised earnings for September 2014 has been updated since published on SENS on
18 November 2014 but was adjusted in the annual financial statements.
The difference between earnings and diluted earnings per share relates 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 13.
30 Sept 30 Sept
2015 2014
Audited Audited
Rm Rm
6. Property, plant and equipment
Balance at beginning of the year 7 223 5 522
Acquisitions of subsidiary companies (refer note 18) - 225
Additions 3 269 1 908
Depreciation (612) (543)
Other movements (22) (19)
Impairments (refer note 3) (57) (46)
Reallocation to other intangible assets (refer note 8) (115) -
Transfer to non-current assets held for sale (refer note 11) (40) -
Translation differences 1 002 176
Balance at end of the year 10 648 7 223
Comprising:
Freehold and leasehold land, buildings and mineral rights 778 862
Factory decommissioning assets 87 111
Plant, vehicles, furniture and equipment 9 780 6 244
Capitalised leased plant 3 6
10 648 7 223
Assets pledged as security
Property, plant and equipment with a net carrying value of R2 167 million, R2 166 million and
R22 million (2014: Rnil, R1 502 million and Rnil) are encumbered and used as security for the borrowings
in the DRC, Rwanda and Zimbabwe respectively (refer note 14).
7. Goodwill
Balance at beginning of the year 268 101
Acquisitions of subsidiary companies (refer note 18) - 227
Impairments (refer note 3) (22) (65)
Translation differences 8 5
Balance at end of the year 254 268
Goodwill, net of impairments, is allocated to the following
cash generating units:
CIMERWA Limited 49 41
Safika Cement Holdings (Pty) Ltd 78 78
Pronto Holdings (Pty) Ltd 127 149
254 268
Following the goodwill impairment assessment review, the recoverable amount of Pronto Holdings of R758 million
(2014: CIMERWA of R677 million) was calculated to be lower than its carrying amount and resulted in an impairment
of R22 million (2014: CIMERWA R65 million).
30 Sept 30 Sept
2015 2014
Audited Audited
Rm Rm
8. Other intangible assets
Balance at beginning of the year 681 232
Acquisitions of subsidiary companies (refer note 18) - 428
Additions 36 63
Amortisation (90) (72)
Transfers and other movements# 118 19
Translation differences 27 11
Balance at end of the year 772 681
Comprising:
Right of use of mineral assets 191 54
ERP development and other software 143 132
Brand and trademarks 332 359
Customer relationships - contractual and non-contractual 106 132
Off market lease agreements - 4
772 681
# As communicated in the September 2014 results, the company was still finalising the split between property,
plant and equipment (PPE) and intangible assets on the contribution made by a non-controlling shareholder
into PPC Barnet DRC Holdings. This split was finalised and R115 million has been transferred from PPE and is
included under the right of use mineral assets. It will be amortised over the useful life of the reserves.
The group does not have any intangible assets with an indefinite useful life, other than goodwill.
9. Equity accounted investments
Investments at cost 126 133
Loans advanced - 46
Share of retained (loss)/profit (1) 44
125 223
Comprising:
Afripack Limited - 96
Habesha Cement Share Company 121 121
Other 4 6
125 223
In 2015 the board approved the sale of its investment in Afripack, resulting in R36 million (cost of R7 million
and share of retained profit R29 million) being classified to non-current assets held for sale (refer note 11).
30 Sept 30 Sept
2015 2014
Audited Audited
Rm Rm
10. Other non-current assets
Advance payments for plant and equipment^ 148 322
Loans advanced 1 3
Investment in government bonds# 7 -
Unlisted collective investment~ 117 114
Unlisted investment at fair value@ 82 95
355 534
^ In terms of the construction agreements with the suppliers of the new cement plants in Rwanda and the DRC, a
portion of the full contract price is required to be paid in advance of the plant construction. The advance
payments are secured by advance payment bonds, and will be re-cycled to property, plant and equipment as the plants
are constructed. The decline from 2014 is as a result of the utilisation of the advance payments in Rwanda.
# Represent government of Zimbabwe treasury bills carried at fair value. The treasury bills were issued in the current
year in exchange for funds previously expropriated by the government in 2007. The treasury bills have a face value
of R10 million, repayable in three equal annual instalments from June 2017 to June 2019. A discount rate of 12% was
applied in determining the fair value. Interest is paid bi-annually at a total rate of 5% per annum.
~ Comprises an investment by the PPC Environmental Trust in local unit trusts. These investments are held to fund PPC’s
South African environmental obligations.
@ PPC holds a 6,75% (2014: 6,75%) shareholding in Ciments du Bourbon, incorporated in Reunion. Negotiations have been
concluded for the sale of the investment and the purchase consideration is deemed to be its fair value. In the prior
year the fair value of the investment was calculated using a dividend yield valuation methodology, using comparable
company dividend yields of 6,88% and applied to forecast dividends. The sale is anticipated to be finalised during the
first quarter of 2016. The movement in fair value of R13 million (2014: R58 million) has been recorded against other
comprehensive income.
11. Non-current assets held for sale
Equity accounted investment (refer note 9)^ 36 -
Property, plant and equipment (refer note 6)* 40 -
76 -
^ PPC holds a 25% stake in Afripack Limited, which was previously held as an equity accounted investment. The company
is currently in the process of selling it’s full shareholding in Afripack. A sales agreement has been signed and the
conditions precedent to the sale are expected to be met in the new financial year and finalisation of the transaction
to occur shortly thereafter. Afripack’s carrying amount immediately before classification as held for sale was R36 million
which is lower than its fair value less costs to sell of R70 million. The fair value represents the selling price per
the sales agreement less estimated transaction costs. Afripack is included under the cement segment in the segmental analysis.
* PPC Zimbabwe intends to dispose of houses at its Colleen Bawn and Bulawayo factories over the next 12 months. No
impairment loss was recognised on reclassification as the local management expects that the fair value (estimated
based on recent market prices of similar properties) less costs to sell is higher than the current carrying amount.
30 Sept 30 Sept
2015 2014
Audited Audited
Rm Rm
12. Trade and other receivables
Trade receivables 931 1 064
Allowance for doubtful debts (70) (30)
Net trade receivables 861 1 034
Loan relating to non-current asset held for sale 46 -
Mark to market cash flow hedge 38 -
Mark to market fair value hedge 13 -
Other financial receivables 50 57
Trade and other financial receivables 1 008 1 091
Prepayments 75 61
Taxation prepaid 8 28
VAT receivable on plant and equipment imported into the DRC 141 -
1 232 1 180
Shares Shares
(000) (000)
13. Stated capital
Number of shares and weighted average number of shares
Total shares in issue at beginning of the year 605 380 605 380
Adjustments for shares treated as treasury shares:
Shares held by consolidated participants of the second BBBEE transaction& (37 382) (37 382)
Shares held by consolidated BBBEE trusts and trust funding SPVs* (34 478) (34 765)
Shares held by consolidated Porthold Trust Pvt Limited@ (1 285) (1 285)
Shares purchased in terms of the FSP share incentive scheme~ (6 343) (5 866)
Total shares in issue (net of treasury shares) 525 892 526 082
Weighted average number of shares, used for:
Earnings and headline earnings per share 526 022 526 180
Dilutive earnings and headline earnings per share 532 236 532 755
Cash earnings per share 526 022 526 180
& Shares issued in terms of the second BBBEE transaction which was facilitated by means of a notional vendor funding
(NVF) mechanism. These shares participate in 20% of the dividends declared by PPC during the NVF period, which ends
30 September 2019. With the exception of the Bafati Investment Trust, entities participating in this transaction
are consolidated into the PPC group in terms of IFRS 10 Consolidated Financial Statements, during the transaction
term.
* In terms of IFRS 10 Consolidated Financial Statements, certain of the BBBEE trusts and trust funding SPVs from PPC’s
first transaction are consolidated, and as a result, shares owned by these entities are carried as treasury shares
on consolidation. During the year, 287 361 (2014: 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, 6 342 640 (2014: 5 865 851) shares are held for participants of
this long-term incentive scheme. The shares are treated as treasury shares during the vesting periods of the awards.
During the year, 531 179 (2014: 619 457) shares vested and are therefore no longer treated as treasury shares.
Shares are weighted for the period in which they are entitled to participate in the net profit of the group.
30 Sept 30 Sept
2015 2014
Audited Audited
Rm Rm
13. Stated capital (continued)
Balance at beginning of the year (1 173) (1 236)
Shares purchased in terms of the FSP share incentive scheme
treated as treasury shares (24) (53)
Vesting of shares held by certain BBBEE 1 entities 9 100
Vesting of shares for a portion of the shares held in terms
of the FSP share incentive scheme 23 16
Balance at end of the year (1 165) (1 173)
14. Borrowings
Bonds‡ 1 748 2 395
Long-term loan* 1 520 1 520
Project funding 2 306 605
US dollar-denominated# 641 359
US dollar-denominated^ 421 -
US dollar-denominated$ 938 -
Rwandan franc-denominated@ 306 246
Long-term borrowings before BBBEE transaction 5 574 4 520
BBBEE transaction 1 137 1 220
Preference shares~ 441 529
Long-term borrowings% 696 691
Long-term borrowings 6 711 5 740
Short-term borrowings and short-term portion of long-term borrowings 1 510 351
Total borrowings 8 221 6 091
‡ Comprises four unsecured bonds, issued under the company’s R6 billion Domestic Medium-Term Note programme, and
are recognised net of capitalised transaction costs, with details as follows below.
* Comprises a bullet loan, bearing interest at a fixed rate of 10,86% per annum, and is repayable in December 2016,
with interest payable bi-annually.
# Denominated in US dollar, bearing interest at 650 basis points above LIBOR and is repayable over a ten-year period
ending 2024. The loans are secured against CIMERWA’s land and buildings.
^ The loan bears interest at a six-month US dollar LIBOR plus 700 basis points with interest payable bi-annually.
First capital repayment is in December 2016; thereafter bi-annual repayments in equal instalments over five years.
The loan is secured against PPC Zimbabwe’s property, plant and equipment.
$ Denominated in US dollar, capital and interest payable bi-annually starting January 2017 ending 2025. The loan
bears interest at a six-month US dollar LIBOR plus 725 basis points. The loan is secured against DRC’s property,
plant and equipment.
@ Denominated in Rwandan franc, at a fixed interest rate of 16% per annum and is repayable over a ten-year period
ending 2024. The loans are secured against CIMERWA’s property, plant and equipment.
~ Comprises redeemable A preference shares bearing bi-annual dividends, with variable interest rates averaging 85%
of prime with compulsory annual redemptions until December 2016, redeemable preference shares being bi-annual
dividends, with variable interest rates averaging 85% of prime and fixed rates of 9,24% to 9,37% per annum and
compulsory annual redemptions ending December 2016 and B preference shares bearing interest at a rate of 78% of prime;
capital and dividends are payable by December 2016.
% B loans bearing interest at a rate of 285 basis points above JIBAR, with interest and capital repayable in December 2016.
Capital is capped at R700 million.
30 Sept 30 Sept
2015 2014
Audited Audited
Rm Rm
14. Borrowings (continued)
Maturity profile of borrowings:
One year 1 510 351
Two years 2 877 763
Three years 303 2 706
Four years 1 056 61
Five years and more 2 475 2 210
8 221 6 091
Bond number, term and interest rate Issue date
PPC 001: three years; three-month JIBAR plus 1,26% March 2013 650 650
PPC 002: five years; three-month JIBAR plus 1,5% December 2013 750 750
PPC 003: five years; three-month JIBAR plus 1,48% July 2014 750 750
PPC 004: seven years; 9,86% July 2014 250 250
2 400 2 400
Less: Transaction costs capitalised (2) (5)
2 398 2 395
Less: Short-term portion (650) -
1 748 2 395
The group is in compliance with its debt covenants for the year ended September 2015. The company’s covenants,
imposed in 2008 for our first BBBEE transaction, have been renegotiated. The new covenant levels now align with
the group’s African growth strategy.
30 Sept 30 Sept
2015 2014
Audited Audited
Rm Rm
15. Other non-current liabilities
Cash-settled share-based payment liability 5 18
Liability to non-controlling shareholders in wholly-owned subsidiary# 17 -
Put option liabilities 464 145
Retentions held for plant and equipment* 204 -
690 163
Less: Short-term portion of other non-current liabilities (47) (121)
643 42
# Relates to interest payable on initial equity contributions into the DRC group of companies by a non-
controlling shareholder. The interest will be repaid once the external funding has been settled.
* Retentions held for the construction of the cement plants in DRC. These retentions will be paid over to the
contractors once the plant achieves guaranteed performance targets.
Put option liabilities
PPC Barnet DRC
The International Finance Corporation (IFC) was issued a put option in the current year in terms of which PPC is
required to purchase all or part of the class C shares held by the IFC in PPC Barnet DRC Holdings. The put option may be
exercised after six years from when the IFC subscribed for the shares but only for a five-year period. The put option
value is based on the company’s forecast EBITDA applying an eight times earnings multiple less net debt.
Forecasted EBITDA is based on financial forecasts approved by management, with pricing and margins similar to those
currently being achieved by the business unit while selling prices and costs are forecast to increase at local
inflation projections and extrapolated using local GDP growth rates. The present value of the put option was
calculated at R422 million.
Safika Cement
With the purchase of the initial 69,3% equity stake in Safika Cement (refer note 18), PPC granted non-
controlling shareholders individual put options, with different exercise dates, for the sale of their remaining
shares in the company to PPC. One of the put options, representing 21,1% shareholding in Safika Cement, was exercised in
the current year for R108 million. The other put options were anticipated to be exercised on the fifth anniversary
of the transaction however, these will now be exercised in the next financial year with the issue of PPC’s shares
and cash, subject to shareholder's approval. The liability of R42 million (2014: R105 million) has therefore been
classified as a current liability (refer note 16). The put option value of R108 million that has been exercised was
based on the company’s forecast EBITDA applying an earnings multiple dependent on the level of EBITDA achieved less
net debt. Forecast EBITDA is based on financial forecasts approved by management, with pricing and margins similar
to those currently being achieved by the business unit while selling prices and costs are forecast to increase at
local inflation projections and extrapolated using local GDP growth rates, limited where appropriate to the installed
capacity. The remainder of the put options have been valued based on the same principle.
30 Sept 30 Sept
2015 2014
Audited Audited
Rm Rm
16. Trade and other payables
Cash-settled share-based payment liability (short-term portion)
(refer note 15) 5 16
Derivative financial instruments 1 1
Equity contribution for future non-controlling interest in
wholly-owned subsidiary~ - 115
Other financial payables 260 296
Put option liability (refer note 15) 42 105
Retentions held for plant and equipment 116 81
Trade payables and accruals 924 664
Trade and other financial payables 1 348 1 278
Payroll accruals 310 194
Restructuring costs - 6
Taxation payable 112 142
1 770 1 620
~ The amount recognised in the prior year includes the value of land and mining rights transferred by a future
non-controlling shareholder for equity in the DRC companies. Certain conditions were not met in 2014 and the shares
in PPC Barnet DRC Holdings, the holding company for the DRC group of companies, were only issued to the non-controlling
shareholder in the current year, resulting in the amount recorded as a liability in the prior year being transferred
to non-controlling interest post the issuance of these shares.
17. Investment in property, plant and equipment and intangible assets
Cement 2 777 2 088
Lime 45 62
Aggregates and readymix 70 32
Investment in property, plant and equipment and intangible assets 2 892 2 182
South Africa 933 479
Rest of Africa 1 959 1 703
30 Sept 2014
Audited
Safika Pronto Rm
Cement Holdings Total
18. Acquisitions of subsidiary companies
Fair value of assets and liabilities acquired at date
of acquisition
Property, plant and equipment 63 162 225
Goodwill 78 149 227
Other intangible assets 236 192 428
Financial assets - 1 1
Cash and cash equivalents 84 65 149
Other current assets 199 89 288
Long-term borrowings - (10) (10)
Long-term provisions and deferred taxation (72) (78) (150)
Current liabilities (71) (75) (146)
Non-controlling interests (140) - (140)
Total consideration 377 495 872
Less: fair value of the previously held equity accounted stake - (215) (215)
Consideration payable to external entities 377 280 657
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 was 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. During the year a further 21,1% was acquired for R108 million, bringing PPC’s
shareholding in Safika to 90,4%. Details on the put option are included in note 15.
Pronto Holdings (Pty) Ltd (Pronto)
During July 2014, PPC acquired the remaining 50% equity stake in Pronto, making it a wholly-owned subsidiary.
Pronto is a prominent Gauteng based readymix and flyash supplier, with nine readymix batching plants. This
acquisition provided PPC with additional ways to increase its cement distribution channel while also expanding
its range of complementary products available to the building and construction industry. In accordance with the
requirements of IFRS on step-acquisitions, the previously held equity accounted investment was revalued resulting
in an adjustment gain of R1 million which was recognised in 2014. The fair values presented at the time were
provisional and are now final, with no changes made to the provisional numbers.
Quarries of 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 was paid during the 2014 financial year.
30 Sept 30 Sept
2015 2014
Audited Audited
Rm Rm
19. Commitments
Contracted capital commitments 3 594 2 786
Approved capital commitments 1 049 1 110
Capital commitments 4 643 3 896
Operating lease commitments 171 138
4 814 4 034
Capital commitments
South Africa 2 409 242
Rest of Africa 2 234 3 654
4 643 3 896
Capital commitments are anticipated to be incurred:
Within one year 2 758 2 246
Between one and two years 1 518 1 572
Greater than two years 367 78
4 643 3 896
Project funding has been secured for the DRC and Zimbabwe projects, amounting to US$168 million and US$75 million
respectively. In addition, the IFC has subscribed for equity in our DRC project and now holds 10% equity in the
project. The one million tons per annum plant in the DRC is expected to be commissioned at the end of calendar
year 2016, while the 700 000 tons per annum mill in Zimbabwe is on track to be commissioned end calendar 2016.
The one million tons per annum kiln expansion at Slurry is planned to be commissioned during the 2018 financial
year.
20. Fair values of financial assets and liabilities
The financial assets and liabilities carried at fair value are classified into three levels as reflected below:
30 Sept 30 Sept
2015 2014
Audited Audited
Level* Rm Rm
Financial assets
Available-for-sale
Unlisted investment at fair value^ 2 82 95
Loans and receivables
Investment in government bonds 2 7 -
Loans advanced 2 1 3
Loans to equity accounted companies 2 - 46
Loans relating to non-current assets held for sale 2 46 -
Mark to market fair values 1 51 -
Trade and other financial receivables 2 911 1 091
Cash and cash equivalents 1 718 563
At fair value through profit and loss
Unlisted collective investment at fair value
(held for trading) 1 117 114
Non-current assets held for sale 2 110 -
Total financial assets 2 043 1 912
Level 1* 886 677
Level 2* 1 157 1 140
Level 3* - 95
Financial liabilities
At amortised cost
Long-term borrowings 2 6 727 5 769
Short-term borrowings 1 1 510 351
Trade and other financial payables and retentions 2 1 504 1 156
At fair value through profit and loss
Cash-settled share-based payment liability 2 5 18
Put option liabilities (refer note 15) 3 464 145
Derivatives
Derivative instruments - current (cash flow hedge) 2 1 1
Total financial liabilities 10 211 7 440
Level 1* 1 510 351
Level 2* 8 237 6 944
Level 3* 464 145
^ The unlisted investment at fair value has been transferred from level 3 to level 2 because observable market
data became available (refer note 10).
Methods and assumptions used by the group in determining fair values:
* 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 the level 1 methodology, and 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. Refer note 15 for quantitative information and significant assumptions
on the unobservable inputs used to determine fair value liabilities.
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 the unlisted investment has been valued based on the purchase agreement following the decision to
dispose of the investment. Further details are disclosed in note 10.
The fair value of loans receivable and payable is based on the market rates of the loan and the recoverability.
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.
Put option liabilities have been calculated using EBITDA forecasts prepared by management and discounted to present
value. Further details are disclosed in note 15.
The fair value of derivative financial instruments relating to cash-settled share appreciation rights is determined
with reference to valuation performed by third-party financial institutions at reporting date, using an actuarial
binomial pricing model.
Level 3 sensitivity analysis
Financial instrument Valuation Key Carrying Decrease Increase
technique assumptions value (Rm) (Rm)
Earnings EBITDA and 422 20 20
Put option liabilities multiple net debt
If the key unobservable inputs to the valuation model, being estimated EBITDA and net debt, were 1% higher/lower
while all other variables were held constant, carrying amount of the put option liabilities would decrease/increase
by R20 million.
The sensitivities are only based on the DRC put option as any movement on the remainder of the Safika put options are
not deemed material.
2015 2014
Movements in level 3 financial instruments Rm Rm
Financial assets
Balance at beginning of the year 95 37
Remeasurements (13) 58
Transfer to level 2 (82) -
Balance at end of the year - 95
Financial liabilities
Balance at beginning of the year 145 -
Exercised during the year (108) -
Put options issued 422 137
Remeasurements (14) (8)
Time value of money adjustments 19 16
Balance at end of the year 464 145
21. Events after the reporting date
There are no events that occurred after the reporting date that may have a material impact on the group’s reported
financial position at 30 September 2015.
Directors
Executive: DJ Castle (chief executive officer), MMT Ramano (chief financial officer)
Non-executive: BL Sibiya (chairman), N Goldin, ZJ Kganyago, TJ Leaf-Wright, MP Malungani, T Mboweni, SK Mhlarhi,
B Modise, T Moyo*, CH Naude, PG Nelson, TDA Ross
*Zimbabwean
Registered office
148 Katherine Street, Sandton, South Africa
(PO Box 787416, Sandton 2146, South Africa)
Company secretary
JHDLR Snyman
148 Katherine Street, Sandton, South Africa
PO Box 787416, Sandton, 2146, South Africa
Transfer secretaries^
Link Market Services SA (Pty) Ltd
13th Floor, Rennies House, 19 Ameshoff Street, Braamfontein, South Africa
(PO Box 4844, Johannesburg 2000, South Africa)
Transfer secretaries Zimbabwe
Corpserve Pvt 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
^ With effect from 1 December 2015, Computershare Investor Services Proprietary Limited will replace Link Market
Services SA Proprietary Limited as transfer secretaries.
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 historical information published in this report has been audited.
www.ppc.co.za
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